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 appear to be headed for a happy holiday season.
By most measures, the economy appears to be doing just fine. No, scratch that, it appears to be booming.
But as always with the United States economy, it is not quite that simple.
Consumer confidence is bouncing back from what was arguably some of its worst readings in years. Gasoline prices-the national average is now $2.15, according to the Energy Information Administration- have fallen because higher prices tamped down demand and supplies in the Gulf Coast have been slowly restored. The latest read on home sales, released today, contradicts virtually every other recent measure of housing activity that generally indicate a slowdown. And yes, manufacturers' fortunes are on the mend, but few besides airplane makers are celebrating.
It all means that the economy is likely to end the year with a splash, but that does not mean the broad economic picture next year will be even better.
How can anyone read that and not laugh?
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38 comments:
Aren't you picking at low hanging fruit though?
Newsroom pessimism might be a by-product of the sorry state of newspapers.
If you work for a company that is firing people, tightening belts, in turmoil, and full of grumbling (damn TimesSelect) then pessimism must flow like tap water.
Also might explain the sourness at CNN compared to the peppiness at FNC, it's not only ideological, it's a function of failure and success.
If you are failing you see failure everywhere. If you are succeeding, you see success. Could be as simple as that.
Ann, anyone looking to bring the Republican Party and its elected officials down would read the last sentence you quoted hopefully.
EddieP, be careful about that briar patch! Remember that the economy was roaring in the late 1990s, right up until the Tech Bubble burst in March of 2000. I'm not saying that I think we're headed for disaster in 2006, just that things aren't always as good as they appear. The future is unknowable.
XWL:
I agree- you have offered a great analysis. Like the old saying goes..."it's a recession when your neighbor loses his job, but a depression when you lose your own job". That could explain the newsroom negativity but I suspect it's all about maligning the current White House occupant.
I really think newspapers still believe that bad news and controversy, even if it is laughably inaccurate or misleading, will draw subscribers (as one of your posters once mentioned).
As the LAT how well that works.
I like this one:
Unemployment Plummets!
I think XWL, AJ and Pat are all onto something. How can the economy be good when the newspaper industry is bleeding? And how are you going to solve that problem with articles that read in total: "All in all, the economy's doing fine. Now get back to work." And if you print that, He-who-must-not-be-named will try to take credit.
Ignorance + Bias = Journalism
>>Unemployment Plummets!
You need to report that as the NY Times would report it.
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Blacks, Women, Hardest Hit by Declining Unemployment Payments
Memphis, TN -- The Department of Commerce's announcement concerning the historic level of unemployment last month is no consolation to Mychal Brown. Brown, who is African American, had his unemployment relief payments cut off last month, a situation that Senatory Harry Reid described as "Despicable... Thuffering Thuccotash."
Like thousands of other African Americans near Memphis, Brown lost his benefits when he obtained work in a factory opened by food processing company that had relocated from New Orleans following the failed Bush Adminstration relief efforts. Experts blame the decrease in unemployment benefits on the Bush administration, and a stingy, ultra-right wing conservative Republican Congress.
Haley Barbour, an extremist right wing conservative republican governor from Mississippi, said that it was unfair to blame falling unemployment payment rates on President Bush. Barbour, who was the RNC chairman, stated "of course you're going to have dropping unemployment payments when there are more jobs."
Princeton Economist Paul Krugman noted that "the unemployment scandal is just another example of the Bush lies." House leader Nancy Pelosi asked, "now, do you see what we're up against?"
Still, the scandal means little to Mychal Brown, an honest, hard working African American man. All he knows, is that his unemployment benefits were cut off. "That's a payment of $790 a month I don't have coming in any more."
The Department of Commerce noted that the jobless rate of 4.8% was an historic low, especially coming in the Fall, which is typically a time of higher unemployment rates.
Jayson Blair contributed to this article.
---------------
See? It's not hard to write like the NY Times. You just need to drink a big cup of the Kool Aid, and you can do it too.
The economy is growing nicely, but people don't see it that way. How many jobs have been created in the last five years? I don't even think it's a million. Remember - the population of this country has grown by about twelve million over the last vive years.
And the stock market has done absolute nothing over the last five years either. It hasn't budged.
So if the economy is booming, where are the tangible signs that people can see? It's not jobs, it's not wages. It's in corporate profits, which is fine, but since the stock market hasn't budged nobody is seeing the benefits there either.
The only real signs are in the property market.
Come Ann, The hills are alive with the sound of music -- right before the Nazis come and ruin it all.
Al Maviva - sounds like you ought to be writing for The Onion, Point Five, or Scrappleface... that was beautiful.
The people at the New York Times have pretty big buts.
downtownlad,
Some perspective:
According to the DOL, the economy has created more than 5 million new jobs since 2000, and current unemployment is 5.0%. Many would argue that 5.0% represents structural full employment.
According to the BLS, average wages have grown about 15% corrected for inflation over five years. Not great, but it certainly beats a poke in the eye with a sharp stick.
The markets actually have done quite a lot. No doubt, the 2000-2002 correction was painful, unless you timed the market, but indexed funds haved done quite well since June of 2002, returning 30+ %.
Consumer confidence is up this month.
Perhaps, we're spoiled, but our economic glass is clearly more than half full. The American economic machine is far from perfect, but it's certainly the best that ever was.
Old Dad - What are the numbers since February of 2001 when Bush took office? I don't think it's five million. There was actually a zero net increase in jobs during Bush's first term, and job growth this year has been running well below 200,000 a month.
It's very easy to say the stock market has bounced back from a low, but the market is still well below the highs that it reached in 2000. Remember - the market peaked in March of 2000. Bush took office well after that bust. Yet stocks have still not moved since then.
http://finance.yahoo.com/q/bc?s=%5EDJI&t=5y
I don't blame Bush for this. But i think this is why people generally think the economy sucks.
Downtownlad -
Those are decent points.
I believe labor is always the last thing to recover. The 2000-2001 downturn resulted from one of the biggest over-investments in technology ever: it was a real big fall off a real big bubble. Since it was technology being invested in, what that means is that there's still a lot of excess technology already in place that industries of all kinds are figuring out how to fully utilize as the economy picks up steam.
So they don't need to hire right away, exactly because of the nature of the bubble and collapse we just went though, moreso than in some other recessions.
This is my semi-lay-person's understanding of it.
Oh, and 9-11 was the about the worst economic shock the country's gone through since the Depression, right as the recession might normally have been beginning to end more menaingfully than it has.
As for the NYT article, this sentence bothers me:
"Consumer confidence is bouncing back from what was arguably some of its worst readings in years."
Is there a singular-plural problem there with "was?" It refers to the word 'some,' right? It's definitely awkward. I think it'd be awkward with "were," too. (For a professional writer, does sloppiness indicated feveredness at all?)
All the economic pessimism has merit. In general, it just needs to be remembered that the worst-possible perspective is also probably not entirely accurate.
Also, even though it can come across as 'mocking of doomsayers,' we really have faced situations in the recent past that were accompanied by similar "there is no way out" predictions. Reagan's deficits; the S&L fiasco come to mind.
It isn't like those things were harmless, but our economy does have a penchant for adapting and moving on.
Thinking longer-term in the past, a specific variable that negative analyists often ignore, I think, is the growth in the labor pool in the last 20 years resulting from an unbelievable amount of immigration, much of it consisting of people who weren't going to earn a lot for a while.
So as they inevitably add to the ranks of the lower-income, it becomes an unremarked or taken-for-granted aspect of the USA - the simple ability to absorb something like that. More than sborb it; we end up using it to add to the gradual increase in prosperity. (So far.)
I read an article a while back - City Journal? that's a must read - saying that the economic performance of native-born African Americans has been very, very good for the past several decades. I should try to find it, it was interesting.
The Economic Policy Institute is known for its pessimistic and even alarmist predictions.
The truth is somewhere between the sky is blue and the sky is falling.
Grim,
BLS cites 137,532,000 employed in Oct. 2000 and 143,340,000 in Oct. 2005. More than a 5 million job increase no? And isn't 15.5% "about 15%" as I posted?
Dave B,
Just cruise dol.gov. Lot's of numbers.
downtownlad,
No the market is not at its historic high, but so what? It's trading higher than for almost all of the Clinton years. I personally don't think that political leadership has much to do with market performance. Under what reasonable analysis can it be said that the "economy sucks"? It sucked in 1979 and it sucked even harder in 1929, but we're rolling along pretty well today.
Kevin Drum:
"So in an economy that's allegedly in terrific shape, workers will see an average pay increase that....barely matches inflation."
What's he's referring to is the average increase of 3.5% compared to expected inflation of 3%; meaning (roughly) the actual annual wage increase will be half a percent.
For the moment I'm ignoring his other points about how the signifcant wage increases are concentrated in relatively few fields, and many workers will do worse than the average; although I am struck by the implication that a situation of all workers gaining above the average is the only morally aceptable outcome.
I want to focus on the 3.5 minus 3 thing. When put into context of the always grindingly slow increase in national prosperity, relatively speaking, adjusted for inflation, a gain of .5 percent in one year isn't bad at all. Add that up over 10 and 20 years, compounded, and it means some pretty steady increases in well-being, geivn that you accept these kinds of figures as having any validity at all, and any relationship with happiness.
No the market is not at its historic high, but so what? It's trading higher than for almost all of the Clinton years.
And you're point is? The stock market has historically gone up 10% a year. By the time Bush took office, the market had already had a rather major correction, so asking for a 10% per year increase after that would not be asking for much.
Instead - the market is lower than when he took office. In other words, had it just done what it normally does, the market would have been about 60% higher than it is today. I could have made more money by keeping my money under my mattress. People have the right to be upset by the pathetic performance of the market.
Again - I don't blame Bush for this. But I don't call this a boom either. Stock markets go up in a boom. The U.S. is one of the worst performing markets in the world over the last five years. Please explain to me again how that is good?
I did not vote for Clinton, but everyone I talk to will readily concede that they got bigger raises when Clinton was in office.
Maybe the market is finally picking up. I hope so. But until people see it in their paycheck, the economic numbers certainly haven't trickled down to the average consumer yet.
By the way, if you check out the comments on the Drum post here -
http://www.washingtonmonthly.com/archives/individual/2005_11/007664.php
- aside from any merit on the state of the economy these days, you'll be treated to a cornucopia of Republican-hatred. Conservatives and Republicans are only happy when most people are poor and poor people are suffering - that kind of thing.
So conservatives are actually pretty damn demonic, don't ya know. That's really all you need to know about them.
The reality-based community forges on ahead...
downtownlad,
It sure seems to me that you are blaming bush. If not, then of what relevance is your observation that the market is lower today than when he took office?
Pick another arbitrary time frame, say June 2002 until today. Presto--there's your boom.
My point is simple and irrefutable. The American economy is the greatest in the world, and we live like kings. Actually, that's a little misleading. We live better than most kings ever did.
There is a lot to point to from the economic news to support both pessimistic and optimistic scenarios, but to say there aren't some troubling storm clouds is naive.
Things that worry me in no particular order.
1. Large increases in liquidity in the global economy with the likelihood that this is leading to unproductive distortions in "real" economy investment.
2. That this increase in liquidity is substantially due to more sophisticated and expanded use of derivatives and backed securities, which on a daily basis reduce risk and provide expanded access to credit but whose operation and stability is not well understood in a crisis.
3. Negative savings rate in the US.
4. Large budget deficits in the US during a time of strong economic expansion. Big structural problem here.
5. What will happen to consumer spending now that refi equity extraction has peaked. Will business investment pick up the slack if consumer spending slows?
6. Job growth concentrated in government jobs and real estate. (See concern #1)
7. Are the official inflation measures accurate representations of costs as experienced by most households?
There is always some aspect of the economic picture that is troubling and most gloomy predictions never come to pass. Just like most threatening clouds do not drop a tornado on your house. However, there are some structural concerns about the global, and in particular, our economy that should not be dismissed out of hand. Maybe I'm just too conservative and need to get jiggy with our new age economy.
In the big picture, the dramatic improvemment in the average standard of living for India and China occurring now is a marvelous change, and one that has long been hoped for. However, while good in a global sense, the change is not without some downside risks to our economy during the transition decades.
Grim,
The employment numbers came from the BLS CES. The comp numbers came from BLS NCS and were adjusted for inflation according to the BLS. don't know if these are the preferred data sources or not, but still argue that they indicate our economic glass is more than half full.
Are there dark spots? Sure, but there's more good economic news than bad.
And I wouldn't trade places with any monarch born before 1950.
Grim -
The first I meant as a sort-of-unfair joke. Although it's not quite as unfair as you say, I don't think; I think you could take his words as implying that *most* people advancing better than the average is the only proper goal.
The scond point: it stands unaffected. In the sentence I quote he's sneering at the importance of 3.5 - 3, all aside from his other points, and that's how I was addressing it.
As for the "so what" on the snarky commenters: because that's what the Dems have become, or are gradually letting themselves be taken over by, even on what you might hope is a relatively intelligent site like Drum's.
Intelligent people luxuriating in stupid hate: such an attractive group of people with which to associate.
I could pre-answer "the right is no better" but I'll just leave it as "yes it is." And that's why the rational folks are gradually sliding that way.
I door-knocked for Wellstone, by the way. A lot. I like to think if he was still alive, he'd be playing some kind of role of telling his erstwhile supporters to calm the hell down. He was not a hate-filled man.
The beginning of Bush's term is not arbitrary. Most Americans are going to give credit to economic circumstances to the party in power.
What is arbitrary is picking the lowest point of the stock market over the last four years as a starting point . . .
People didn't care that the malaise of the early 1980's was caused by Carter. They still blamed Reagan during the recession of 1982, and it wasn't until the economy had actually bounced back from that recession and recovered lost ground that people started to give Raegan credit.
Bush has been President for five years, and we still haven't made up for lost ground in terms of the stock market and we've barely budged in terms of job growth.
Until that changes - perceptions on the economy will not change either.
You want to see people talking about a booming economy? How about the Stock Market actually hitting new highs. Then you'll get your talk about a boom.
downtownlad,
Now I get it. You don't blame Bush, but you do want to burden him with a recession that began before he took office.
Gee, Kerry must really feel like a loser. Couldn't even beat a sitting President in the midst of economic Armageddon.
When the market tops 11,000 will the President get out of your dog house? Didn't think so.
lakema,
Part of the problem is that the piece is poorly written. Take the quote you cite:
"It all means that the economy is likely to end the year with a splash, but that does not mean the broad economic picture next year will be even better. "
The economy is apparently splashing, not tanking. We assume the reporter thinks that splashing is good, but what does it mean? Let's assume that it means "good," say 6 on a scale of 1-10.
The reporter then brilliantly concludes that because the economy is now a 6 is not proof that it will next year be a 6 or better. Well, duh. It's also not proof that it will be a 5 or worse.
It's called damning with faint praise.
Lurking in back of all the left-leaning criticism of the economy is the overriding task: using every single issue, domestic and foreign, to paint W as totally corrupt, overwhelmingly incompetent, and as simply evil as possible.
All he wants to do is trash the environment; all he's done is absolutely horrible for the economy and everyone should have seen it from the beginning; all he wants to do is destroy international cooperation so he and his rich friends can lord it over eveyone in the entire world. And so on.
I really don't think I'm exaggerating. I suspect that's even what some of the commenters here believe, or try to believe.
And it all goes back to the Iraq war: finding reasons that refusing to give any possible justification the time of day, regardless of the potential impact on all of us now that we're there, is not only okay, but is the only permissible approach.
Dave B,
I was responding to downtownlad. My only response to you was to reference the BLS data.
Will take your word for it about the BLS data despite the BLS claims that its data are adjusted for inflation. Note, too, your data is for one year, my claim is for five. Agree that there is a big difference between a prorated 10% and my claim of 15% real wage growth. Neither is stellar.
Grim, I'll give it one more shot, but seriously, all you're doing is dancing around the points.
1. I'm either a terrible writer or you're willfully misunderstanding my point about Drum's sentence there. I get his larger points. Fine. But that sentence, by itself, it's not taking it out of context, makes the point that an economy gaining 3.5-3 is in itself deserving of the sneer "allegedly in great shape."
That's all he's talking about. Read it without your perception that I'm cruelly twisting it. That sneer stands on its own. It's a small point I thought was worth pointing out, that here was an intelligent liberal exhibiting a kind of vague, inaccurate understanding of what those numbers mean. Gee, .5 is real small - it must mean nothing! But 3.5 -3 is not "barely matching inflation" in this context. It's actually pretty good.
If you think I'm misreading him, fine. It would mean he's an even worse writer than I am.
2. As I'm sure you already know, a larger discussion of relative merits of left versus right in terms of civility and rationality would include an acknowledgment that of course there is plenty of yahooness to go around. You know where I stand on it, though I don't pretend to have convinced you. But your specific example of righty nastiness may not be quite the ringing triumph you seem to believe it is.
3. As for the final point in your next comment, what I was doing is making a benign obervation to a group of largely like-minded individuals you've stumbled upon here. It's a point about the general tendency we all see on the left side of the political world to demonize W as much as possible, and to me, I believe it all goes back to Iraq the way I described.
Again, as for your specific - but he doesn't mention Iraq in the article! - that could not be more beside the point.
Sorry, man. There is a slowly growing group of not-entirely-stupid and only-semi-deluded former and quasi lefties who are real mad at the rest of the left these days. That's what I do, talk about that, it's my metier. I can be annoying. But you gotta face up to the anger among a lot of your compadres. (If I'm reading you right, who you are, I mean.)
Grim,
Here's the BLS site for the employment data:
http://data.bls.gov/PDQ/servlet/SurveyOutputServlet
I'm interested in your thoughts, regardless. CW suggests that 5.0% unemployment is pretty good, but that depends on definitions.
Personally, I've noticed a big change in the economy in the last few years. Back in 2001 and 2002 I had a lot of trouble finding decent work. I'd put my resume out there and send out dozens and dozens of cover letters, and I rarely got a response, let alone an interview. In 2005 it could not be more different. I put my resume out there and I get recruiters calling me before I even start writing cover letters. And the two times I've gone looking for work this year I've gotten job offers in less than a week, at very respectable pay rates. And my resume is not much different than it was in 2002. I'm sure there are other factors at play, but it's clear to me that the economy is pretty hot right now.
I think we seem to be doing pretty well considering not much time has passed since the dot-com bubble burst AND then 9/11 happened. But what do I know.
"The basic point is that the economy has bright and dark spots."
Yes. So does the Sun. If you stand back a little way, you can see whether the bright or dark spots predominate. In the economy, as the Sun, right now it's the bright spots.
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