- The Washington Times - Saturday, June 26, 2004

Evidence continues to accumulate that the economy will not be the political millstone for the Bush-Cheney administration that Democrats expected at the beginning of the year. That is not good news for the Kerry camp.

During the last three months, nearly 1 million jobs have been created. During the past four quarters, the U.S. economy has expanded by 4.8 percent, its fastest four-quarter growth rate since 1984. Indeed, the economy has improved so much recently that Sen. John Kerry has felt compelled to contrive a new convoluted “misery index.”

Economists and politicians have always calculated the conventional misery index by adding the unemployment rate to the inflation rate. It has been a staple of presidential campaigns involving incumbents ever since candidate Jimmy Carter brilliantly exploited it against Gerald Ford in 1976.

At this stage of the 1976 campaign, Mr. Carter incessantly reminded voters that the misery index had reached an unacceptable level; it stood at 13.6, which reflected an unemployment rate of 7.4 percent and a 12-month inflation rate of 6.2 percent. Four years later, the misery index had climbed to 21.9, dooming Mr. Carter’s re-election as 12-month inflation hit 14.4 percent and unemployment stood at 7.5 percent. During Ronald Reagan’s first term, the misery index was effectively cut in half, guaranteeing his landslide re-election 20 years ago.

Today, the U.S. unemployment rate is 5.6 percent, which is lower than the average unemployment rate during the 1970s, 1980s and 1990s. Consumer prices have risen by 3.1 percent during the past 12 months. Thus, the misery index stands at a very respectable 8.7, which is virtually indistinguishable from the 8.5 that prevailed at a comparable period in 1996 when the Clinton-Gore administration sought re-election.

In addition, inflation-adjusted disposable personal income has jumped by 4.4 percent over the past four quarters, a rate of increase more than double the 2.1 percent achieved during the comparable four-quarter period in the first Clinton-Gore term. This is not just a recent development. Through the first 13 quarters of Bush-Cheney, real disposable personal income, which takes into consideration the Bush tax cuts, has climbed more than 10 percent, while it grew by less than 7 percent during the first 13 quarters of Clinton-Gore. Moreover, in the nonfarm business sector, real pre-tax compensation per hour has increased by 2.7 percent during the past four quarters and by 4.2 percent since the beginning of 2001. This growth contrasts with the fact that real compensation per hour in 1996 was actually less than it was in 1992.

What about Mr. Kerry’s brand new misery index? Suffice to say that it purports to show that the economy performed far better during the Carter malaise than during the Reagan boom.

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