The US Economy

Thomas - Now that's the Thomas I've come to know and admire! Good stuff. Yes, I do believe that the Bush tax cuts did more than no cuts at all, but I also believe that the only reason any other cuts were floated was because Bush made it known that we would have cuts one way or the other. (I could certainly be wrong on that point.)

Now, whether some other unspecified set of tax cuts might have done more to boost the economy (or done as much for less) is impossible to prove. I certainly think a complete repeal of capital gains taxes would have done more, but then folks on the left side of the aisle would not allow that at this time.

I am not familiar with the options put forth by the Dems, but I do know that none of them were able to gain enough support to be put into effect.

"Coming apart at the seams", huh?

Yes, when real GDP growth is at 3,8% - a growth percentage down all of 0,3% compared to the year before - that is sure-fire evidence of an economy practically stumbling at the edge of collapse.

And such a lousy record on "economic expansion", were it, in Thomas proposed hypothesis, "a sure election-winner all by itself", would surely have left Gore dumped unceremoniously at the side of the highway.

Now, the Bush government is a wholly different story, as its doing much better at economic expansion. After all, real GDP growth for 2003 is estimated (same source) at ... 2,6%.

And in 2004 it will be, according to current optimistic estimates ... 3,9%! A whole tenth of a percentage point more than in 2000.

OK OK, I'll quit teasing - I get the point - economic growth is rising now - rather steeply in fact - and it was falling then.

But it was falling only extremely marginally then, and from a significantly above-average level in the first place. To call a decrease from 4,1% to 3,8% "coming apart at the seams" is therefore really a bit too much of an overstatement, no? After all, it was still doing as well as the economy is predicted to do even in 2004, if the current upturn continues for another year from now.

All Thomas was suggesting was that, "If an economic expansion was a sure election-winner all by itself, the current president would be Al Gore". This may have provoked you into an outburst about how, "based on FACTS", you "were well into an economic downturn during the last year (+?) of Clinton/Gore", and "if the economy were the only thing that mattered, Gore would be right where he is today" - but please do take note that a 3,8% growth, even if it was a few tenths of a percent down from the absolute top it reached in the nineties, was still considerably higher than either the 1985-1994 average (2,9%) or the 1995-2004 average (3,2%). It was also better than either the Euro area, Japan or the UK were doing in that year.



Note that the economic boom of the nineties reached its apex at 4,4% in 1997. Five years after Bush Sr left, yes, in the second term of Clinton in fact, up significantly even compared to 1995 (2,7%), three years after Bush Sr left.

The knee-jerk reaction to redefine any economic gains as holdovers from whatever Republican administration was last in power and any economic losses as the legacy of whatever Democrat administration was last in power (or vice versa) is never much convincing. One can either make the case that Presidents have little impact on the matter altogether or that they do - but if you do the latter you'd have to compliment both Bush Jr and Clinton.

Don't be so mean, nimh -- I'm sure Scrat is more than willing to give Jimmy Carter credit for the "Morning in America" that won Ronald Reagan the re-election

Heh ;-).

That IMF site got a really neat feature: the World Economic Outlook Database.

Forget y'r PDF reprints. Here you can download data series of annual figures concerning any selection of some twenty indicators, for any selected time range between 1980 and 2004, for a range of G7, EU and developing countries. And the data series are configured as .txt with tabs so that you can download them and open them with your own Excel program - and make any graph you want.

I chose this one:

US GDP, annual percent change, 1980 - 2004

nimh, Do you happen to know what happened in 1984? Interesting one year up-tick.

"This recovery was created by the incentives of tax-rate reductions, which shifted resources away from government [and] back to American producers, savers, and investors." - Ronald Reagan (1984)

Yup, Reagan's tax cuts caused the boost in '84.. And nimh's chart no doubt will require adjustment as regards the '03 and '04 columns, too. The 2.9% GDP increase estimate used to build the column for '03 is already out the window, and Q4 results haven't even come into play. '04 could well see GDP growth in the mid-5%-to-low 7% range.

Well, it's not my chart, really, it's the IMF's (that is, I just turned their numbers into a graph).

But yeh, Timber's right, the 03 and 04 figures are based on projections from last September - so they'll have to be adjusted over time!

Here's an update on November retail sales. Not good news for our economy where 70 percent depends on consumer spending.
http://story.news.yahoo.com/news?tmpl=story&cid=580&e=3&u=/nm/20031204/bs_nm/retail_sales_dc

Nimh - Thanks for sharing the chart. Now, I wonder whether you comprehend the word "trend" and notice any in the chart you shared? Just using your source it seems quite evident that Clinton and Gore were handing over an economy in decline. (If "coming apart at the seams" overstates it a bit for you, let's agree it was "in decline", okay?)

You can roll your eyes all you want, but the chart shows it no more "in decline" (let alone "coming apart at the seams") than the economy was in, say, 1986. Or 1989 perhaps. (Look at the chart again to check what I mean).
Anyways, to just lurch for the obvious bit there - listen to what you're saying: "an economy in decline". There you go again, after your earlier "downturn" quip. We were talking an annual 3,8% growth of the economy there. Can't turn an above-average growth rate like that into a "decline" by any linguistic trick. Ah, but you say, the way above average growth of the economy had just turned into an almost as big growth of the economy! Yeh, quite.

If for the fourth year in a row the economy is doing better than in seven out of the eight years that had gone before ... keeping up the "best in a decade" rates of the three years before by again scoring a growth rate of the kind the US had attained only three times in all of the twelve years of Reagan and Bush I rule ... coming in clearly above the average of both the 1985-1994 and the 1995-2004 timespans ... then I think no eye-rolling can make an "economy in decline, coming apart at the seams" claim seem any more "obvious".

Ye-es, people - pooh - well - how bout them Mets, huh?

Beginning with the steel tariff reeking of economic stupidity for votes (spend and elect) continuing with enhanced farm subsidies (spend and elect) continuing with Medicare spending $400 Billion sans a single dollar raised to cover the bill (spend and elect). The repubs now offer us the omnibus spending bill with pork gone out of any sense of control. Is this Bush administration and this republican congress so vested in the short term that they are willing to risk the long term economic survival of america? What price glory?

dys, Haven't you heard? They're doing it for the American People. Just look at his approval rating; it's still over 50 percent. Americans aren't dumb.

Are they?

Awright ... call me graph-crazy (I am), but I made another chart on the basis of the same IMF data ... for those who have some trouble with graphs showing economic growth rates ... here's another chart with US GDP per se, constant prices, in billions of US $, 1980 -2004.

(The red line would represent the linear trend line).

nimh, I'm not sure what you are using for the basis of this graph, but it looks amazing to this reader. The growth has not only been constant since 1982, but pretty much ramained on a constant upward track for over 20 years (at constant prices) - no matter who the president.

Well, the only time there was negative growth in the past twenty years was in 1991 ... with the last time before that being in 1980 and 1982 (when it was really bad). In all the other years the line kept going up, it's true - and pretty much always within the 2% - 4,5% growth range, too, with only 1984 over that and 1990-91 and 2001 under it.

So you're right, looking at it in the long term the consistency of it is actually much more striking than the individual ups and downs from year to year. And the sheer volume of it is hard to believe, really.

You gotta note that the bottom line of the graph is at 4,000 billion, though. If i'd put it at zero the proportional rise over time would have looked slightly less dramatic.

Oh and "what I'm using" is still those IMF data, see that link to the world economic outlook database I put up earlier.

Back to current economics ... conflicting perceptions of popular perception, it seems ...

On the one hand, a sharp increase in consumer confidence ...



But "The optimism of a rebounding economy hasn’t yet trickled down to Main Street, USA", according to a Zogby poll: "20% still say they are afraid they or someone in their immediate family will lose a job within the next year. And 21% say they are working at a job that pays less than an immediate previous job." Which is not much better than the 22% and 19% saying so, respectively, last June - and compares rather starkly to 10% each on those counts back in Clinton-era June 1999.

Source

http://www.bea.doc.gov/bea/dn1.htm
They have data going back to to as far as 1929 including quarterly data.

I've made graphs of the most meaningful data.

Real GDP from 1929 to 2002 with polynomial trendline:

It reveals that we have a "built-in" GDP and any changes in the economy has a relatively little impact on total GDP. I did a graph for GDP in current dollars too. It had similar results though the trend was more exponential than polynomial. It was polynomial starting from about 1960.

Next is Real GDP percentage change by quarter from Q1 1980 to Q3 2003.

You'll see that historically after 2 quarters of huge increasing Real GDP growth rates, it comes down by at least 2.5% and usually significantly more so in Q4 2003 expect growth of no more than 5.7% possibly closer to 4.7%. After that is anyone's guess.

When we view the quarterly graph, it seems very chaotic without any clue about the cumulative long-term trend. It's really awesome to see both, and realize the ups and downs during the year is a 'natural' dynamic of our economy.