What is really going on with the economy? Is it beginning to turn around for the average worker? Are better days already here, as George W. Bush keeps insisting?
Bush is on fairly firm ground in saying things are looking up. Last week
brought better -than-expected employment numbers — 308,000 new jobs created in March, the most in four years — and a big drop in the number of people
claiming unemployment benefits. And then came the strongest
retail sales figures of the year.
“The economy is strong and getting stronger,” said Bush on the campaign trail after the new job figures came out. “The policies are working.” And Terry Holt, a spokesman for the Bush campaign, observed that the employment numbers were “good news for almost everybody except John Kerry.”
Perhaps. The economy is the key issue of this election season, and it had been shaping up as Bush’s core vulnerability. (The oft-cited stat about Bush having presided over more job losses than any president since Hoover about says it all; as the New York Times recently noted, “Republicans cringed on the first Friday of every month, when the government released its latest employment report.”) No longer? Well, not quite.
The problem, for Bush, is that even if the economic indicators are pointing in the right direction, it’s not clear that ordinary people — voters, that is — are feeling the benefits. In fact, says the Times, citing analysts, “two major uncertainties still weigh heavily on Mr. Bush’s political prospects. First, do the new job numbers represent the start of an enduring trend? Second, will people actually feel better about their prospects by election time in November, or is their anxiety rooted in something deeper than the unemployment rate?”
Kerry clearly understands this. In the face of good economic news, he said this week, “The more George Bush tells people the economy is getting stronger, the more at odds he is with the reality that people see in their own lives.”
For now, though, the momentum seems to be with Bush, whose tortured — if understandable — efforts to take the credit for the job surge are well described by Slate‘s Daniel Gross:
Talk about flip-flops.
… Last Friday’s report showed what a difference a single number can make. Now that it is showing impressive job growth, the payroll survey — which the Bushies had faulted for its inability to pick up the formation of new companies and the rise in self-employment — has been suddenly redeemed in the eyes of the White House and its fellow economic travelers.
Bush suporters, including many high finance figureheads, cite statistics pointing to his effective economic stewardship in pulling the country out of a three-year downturn. Productivity is up and the economy is set to expand at a healthy 4 percent; the unemployment rate of 5.7 percent is nearly level with that of the Clinton years. The recession officially ended less than three months after the Sept. 11, 2001 terror attacks.
Wall Street Journal editorial complains that the media is painting a dismal picture of what is really a sunny economy:
Friday’s report of roaring job numbers for March, along with the sharp upward revisions for the previous two months, was good news that even the chattering classes couldn’t deny. Then again, give them a day or two and they’ll have us back in Hooverville. Like Rodney Dangerfield, this is the recovery that can’t get no respect.
According to the Journal, people are blind to U.S. economic strength under Bush. Household wealth hit an all-time high last year, Americans’ income rises by 4.1 percent annually, corporate profits hit record levels in the last quarter of 2003, and even manufacturing is making a comeback, according to a variety of economic indicators.
That leaves the inescapable conclusion that the problem is perception. This pessimism is understandably fed by Democrats who want to retake the White House.
Still and all, by November the American people will have had ample time to figure out the good news behind this smokescreen of negativity. Sooner or later, the Dangerfield economy is going to command some respect.
A Fortune (subscription) magazine story leads with a plea for rational thinking about employment:
Could we all please take three deep breaths and resume thinking clearly about jobs? The election-year hysteria over outsourcing, or, more precisely, “offshoring,” has thrown up such a whirlwind of half-truths, spurious trends, and scary statistics that millions of Americans, including media chatterers and presidential candidates, have snapped into panic mode, when rational thought becomes impossible.
But it’s not quite that simple. John Kerry and the Democrats use the same standard economic measurements as Bush to blast him, choosing of course to emphasize the 3 million jobs lost on his watch, and playing on popular fears of outsourcing.
And from the point of view of the average worker, it’s hard to see much to thank the Bush administration for. Corporations are turning back the clock to cripple workers’ negotiating powers on a scale not widely seen since before the creation of the weekend. Most Americans can expect a series of pink slips and career changes in their working years, as a guaranteed paycheck with built-in healthcare is a thing of the past.
For the first time in modern memory, corporations took a larger share of increased income than their workers did, according to a Northeastern University study. In the past, companies reaped less than one-fifth of national income growth while employees got 65 percent, but now corporate profits are taking 41 percent versus 38 percent for workers.
A New York Times column by Bob Herbert decries the trend:
While the economy, as measured by the gross domestic product, has been strong for some time now, ordinary workers have gotten little more than the back of the hand from employers who have pocketed an unprecedented share of the cash from this burst of economic growth.
What is happening is nothing short of historic. The American workers’ share of the increase in national income since November 2001, the end of the last recession, is the lowest on record. Employers took the money and ran.
The recent productivity gains have been widely acknowledged. But workers are not being compensated for this. During the past two years, increases in wages and benefits have been very weak, or nonexistent. And despite the growth of jobs in March that had the Bush crowd dancing in the White House halls last Friday, there has been no net increase in formal payroll employment since the end of the recession. We have lost jobs. There are fewer payroll jobs now than there were when the recession ended in November 2001.
This is a radical transformation of the way the bounty of this country has been distributed since World War II. Workers are being treated more and more like patrons in a rigged casino. They can’t win.
Corporate profits go up. The stock market goes up. Executive compensation skyrockets. But workers, for the most part, remain on the treadmill.
I have to laugh when I hear conservatives complaining about class warfare. They know this terrain better than anyone. They launched the war. They’re waging it. And they’re winning it.
Even Warren Buffet, the wizard investor worth $42.9 billion, said much the same last month, blasting high CEO pay and corporate tax breaks as a danger to U.S. economic health in the Washington Post.
So much for the bad news. The good news — in the form of strong economic indicators — might not be so good. The economist James K. Galbraith, writing in Salon
cautions against excessive optimism about last month’s job creation numbers:
The fact is, March 2004 was only one good month. How many more would we need just like it to get back to where we were four years ago?
Answer: Four more years. It wouldn’t happen until March 2008.
Not that 308,000 is such a large number. Want to know how many times monthly payroll employment gains hit the 300,000 mark under Clinton and Gore? Twenty-four. That’s one month in every four. Numbers like that didn’t make the front pages under Clinton.
But this is the first time it’s happened under Bush. In fact, it’s the first time payroll gains under Bush passed the 200,000 mark. The previous high under Bush? 159,000. So 308,000 is almost twice his personal best.
If you think this expansion is going to continue at this pace for four more years, in the face of what will soon enough be rising interest rates, huge deficits and the pressure to cut them, a deflating housing bubble and, most of all, the proven indifference of Team Bush to jobs policy, then frankly you haven’t been paying attention. Four more months — that I’d believe. But they haven’t got a clue what to do after that.
All the March payroll numbers tell us, in a nutshell, is that the White House knows the date of the election.