President Bush's Saturday radio address dealt with the economy. He played head cheerleader, telling everybody just how wonderful things are going. Of course, he forgot to mention many facts or provide historical comparison so we could judge how well he is doing. The comparisons lie below the fold.
Here's the money quote from the address.
One politician in Washington said in 2003 that our tax cuts were "ruining our economy and costing us jobs." The truth is that since August 2003, America has added almost 5 million new jobs. Our unemployment rate is now 4.8 percent -- lower than the average of the 1970s, 1980s, and 1990s. Real after-tax income is up 8 percent per person since the beginning of 2001. More Americans now own their own homes than at any time in our history, and minority homeownership is at record levels. Consumer confidence is at its highest level in nearly four years. Productivity has grown strongly over the past five years, and our small business sector is thriving.
The truth is that since August 2003, America has added almost 5 million new jobs
Once again, the administration has used 2003 as the starting point for their jobs analysis. Ever wonder why that is? Well, it makes their record look good. The only problem is it's a bad number. According to the National Bureau of Economic Research - the government agency that provides analysis to the Federal Reserve and determines the dates of economic cycles - the recession ended in November2001. According to the Bureau of Labor Statistics, there were 130,883,000 establishment jobs in November 2001 and 134,789,000 establishment jobs in February 2005, giving this "recovery" total establishment jobs growth of 3,906,000 million - a full 1 million less than Bush's claim.
Real after-tax income is up 8 percent per person since the beginning of 2001
Here Bush is making the classic Right Wing Noise Machine argument. He is using a macro number that he thinks describes everybody's circumstances. Anyone with an MBA knows smaller constituent parts make-up these numbers. For example, non-supervisory wages represent the pay of about 80% of Americans. Real wages for "everyday folks" have increased an inflation adjusted 1.86% since Bush took office. Since November 2001 - when the recession officially ended - inflation adjusted non-supervisory wages have decreased .31%. Thanks Mr. President.
Also notice that Bush doesn't mention anything about the effects of the tax cuts on revenue for the Federal government? I wonder why that is.... Let's see. According to the Congressional Budget Office, revenue from individual taxpayers was $994 billion in 2001 and $927 billion in 2005 for a decrease of 6.7%. Shouldn't those have increased according to the Laffer curve?
More Americans now own their own homes than at any time in our history, and minority homeownership is at record levels.
First, home ownership has increased gradually from 62.9% in the first quarter of 1965 to 69% in the fourth quarter of 2005. In addition, this number usually reaches a "historical peak" during an economic expansion. In other words, this is a good figure but isn't a surprising development. What Bush failed to mention was the record amount of debt Americans are taking on in order to buy their homes. According to the Federal Reserves Flow of Funds report, total mortgage debt outstanding has increased from $4.871 trillion in the first quarter of 2001 to $8.208 trillion in the third quarter of 2005. That's a 68% increase in 4 ¾ years and a compound annual growth rate of 11.61%. Also notice how the word "bubble" didn't enter into his address, nor did he mention that Merrill Lynch and Moody's have both estimated that 50% of this expansion's growth is real estate based. The bottom line is the US' over-reliance on real estate could be a double-edged sword if the market slows (and considering new and existing home inventories have risen steadily for the last year, that's a real possibility).
The bottom line is Bush's cheerleading shows his bias. His friends in business are doing well. The average American has not seen his paycheck rise for 5 years. No wonder he's pissed.