The Bush administration faces a lot of problems, but the U.S. economy isn’t one of them.
We are nearing the fifth year of an economic recovery that is one of the largest expansions on record, with no signs it is in danger of significantly slowing down anytime soon.
“I don’t see any major reasons that it will stop,” economist John Taylor told me during a week of interviews here with top economic analysts at the Hoover Institution. “We’re in a new world where expansions will be a lot longer and slowdowns a lot shallower and shorter.”
Even the usually pessimistic New York Times, hardly known for patting President Bush on the back, put it this way last week in a Page One story on the economy:
“Gasoline is cheaper than it was before Hurricane Katrina slammed into New Orleans. Consumer confidence jumped last month and new home sales hit a record. The stock market has been rising. Even the nation’s beleaguered factories seem headed for a happy holiday season.”
True, Times economic reporter Vikas Bajaj then detailed every dark cloud he could find to cast a shadow over the sunny horizon painted in his lead. But there was no denying the clear sign posts of an economy overall doing well in a high growth global environment that is one of the most prosperous ever recorded. Among the latest upbeat signals:
In a classic supply-and-demand scenario, gasoline pump prices have dropped — falling to a national average of $2.15 a gallon. The reasons: oil prices have fallen as OPEC’s oil-producing countries have boosted production and the hurricane-damaged Gulf oil rigs and refineries were put back into operation sooner than expected.
The torrid pace of home sales is clearly cooling, but are still running at a respectable record pace — even with home mortgage rates rising to around 6 percent.
The Commerce Department, for example, last week reported new home sales rose a robust 13 percent in October — pushing the yearly sales total to a record 1.42 million homes.
Home sales may continue easing off from their spectacular levels of the last few years, but the housing market will still perform very decently so long as lending rates stay relatively low. Signs the Federal Reserve Bank may be near the end of its interest rate increases could give the housing market a new injection of sales growth.
Economic growth, despite the ongoing restructuring in manufacturing, is still quite strong by any comparison. The gross domestic product (GDP), the national measure of all goods and services the United States produces, has been racing along at about 4 percent a year. Forecasters see that settling down to 3 percent or more by year’s end, still a robust economic pace.
National employment growth, despite storm-related nudges up and down, has remained relatively strong — creating an average 200,000 jobs a month in the first seven months of the year and smaller numbers during a summer soft patch. Analysts expect job creation will continue expanding in the next year as growth continues upward, propelled partly by Katrina recovery pumping a lot of investment into the economy.
All this has boosted consumer confidence polls, a politically pivotal measure of what Americans think about the economy and their future. The Conference Board, a blue-chip business research group, reported last week consumer confidence has shot up a bullish 16.1 percent. That is still below its pre-Katrina mark, but a healthy sign people believe the U.S. economy is headed in the right direction — which should improve Mr. Bush’s economic job approval numbers.
Interviews with Hoover economists on the Stanford University campus elicit similar views about the U.S. economy’s forward motion. It is one of the Bush presidency’s strongest performances, outside the response to the terrorist attacks, and merits more public approval than it has thus far received.
“I’d like to see the administration talk more about it and the role that the Bush tax cuts played in creating this astounding growth,” said economist John Cogan.
Bragging has never been one of George Bush’s strong points, but he’s entitled to do a little self-promotion on the economy’s performance under his fiscal policies. It is on a higher trajectory, fueled by pro-growth, pro-investment tax cuts on income and capital that have lifted it into a higher orbit. Another reason to feel very optimistic about our financial future and what the Times calls the economy’s “upbeat signs.”
Donald Lambro, chief political correspondent of The Washington Times, is a nationally syndicated columnist.