Many Americans are looking wistfully back at the Bush years as having been good economic times. In this diary I hope to prove that the apparent Bush prosperity was a complete fraud.
Consider the following table showing the exchange rate in $/Euro at the end of each year from http://www.x-rates.com, the US Per Capita GDP in US dollars from http://www.bea.gov, and the US Per Capita GDP in Euros using the exchange rate given:
Year Exchange Per Capita Per Capita
($/Euro) GDP ($) GDP (Euros)
1997 0.910746 31619 28797
1998 0.851861 32643 27807
1999 0.993048 33702 33468
2000 1.065180 34547 36799
2001 1.123470 34501 38761
2002 0.953743 34673 33069
2003 0.793840 35207 27949
2004 0.738662 36086 26655
2005 0.844452 36836 31106
2006 0.757748 37623 28509
2007 0.684791 38020 26036
Official Per Capita GDP is not available after 2007, but it is clear that the apparent prosperity gain was non-existent if you have to travel or do business outside the United States. Essentially, the Bush prosperity was a fiction, based on an artificially high value of the US dollar: Valued in Euros, the wealth of the United States declined by 33% between the end of 2001 and the end of 2008. The strong dollar has the not so incidental effect of harming US manufacturers, and valuing the US economy by another currency shows that effect dramatically.
But one would might argue that the beneficiaries of the "ownership society", the "investor class" nevertheless benefitted, increasing the long term wealth of society as a whole. So consider the Dow Jones Industrial Average and the Standard and Poor 500 Average valued in Dollars and Euros (from Yahoo Finance):
Year DJIA DJIA S&P 500 S&P 500
($) (Euros) (%) (Euros)
1997 7908.25 7202.41 970.43 883.82
1998 9181.43 7821.30 1229.23 1047.13
1999 11497.12 11417.19 1469.25 1459.04
2000 10787.99 11491.15 1320.28 1406.34
2001 10021.57 11258.93 1148.08 1289.83
2002 8341.63 7955.77 879.82 839.12
2003 10453.92 8298.74 1111.92 882.69
2004 10783.01 7965.00 1211.92 895.20
2005 10717.50 9050.41 1248.29 1054.12
2006 12463.15 9443.93 1418.30 1074.71
2007 13264.82 9083.63 1468.36 1005.52
Valued in euros, the Dow declined 19% and the the S&P 22% between the end of 2001 and the end of 2007. So the investor class got screwed, too. So much for the benefit of the tax cuts.
And that doesn't even take into account what has happened over the past year: The exchange rate as of yesterday was 0.793903 euros/dollar, which actually represents a substantial rise in the dollar's value since last summer. But the Dow closed yesterday at 6763.29 dollars, which is 5369.49 euros, and the S&P at 700.82 dollars, which is 556.38 euros. Unfortunately, while the Bush prosperity was a fiction, the Bush depression is not.
We must use every means to get this message across so that those who want to return to these disastrous policies never get close to the levers of power ever again.