Market Myth: Worst Economy Since The Great Depression?

by | Sep 2, 2004

To hear John Kerry tell it, America is mired today in the worst economy since the Great Depression. How dumb does he think voters are? We just set a record for yearly production: a GDP of nearly $12 trillion, or $120,000 per family. As for what really counts, personal well-being: A record 69 percent of […]

To hear John Kerry tell it, America is mired today in the worst economy since the Great Depression. How dumb does he think voters are?

We just set a record for yearly production: a GDP of nearly $12 trillion, or $120,000 per family. As for what really counts, personal well-being: A record 69 percent of Americans own their own homes, and the account balance in the average 401(k) plan is $77,000, up 22 percent in three years.

On the eve of his nomination at the Republican Convention in New York, Bush can be proud of the U.S. economy and what he’s done to keep it growing.

He was dealt an extremely miserable hand by his predecessor. As Bill and Hillary Clinton were leaving the White House, the tech-stock bubble was deflating, and GDP and employment growth were slowing sharply. A recession began two months later.

The fraud at Enron, WorldCom and other companies, which would bloom into historic scandal in the fall of 2001, also occurred under Clinton‘s watch. And, then, of course, there was 9/11.

It is, frankly, a miracle that the U.S. economy is as good as it is today. How good? The Economist magazine says the U.S. will grow more than twice as fast as Europe this year, and our unemployment rate is roughly half that of France and Germany.

More interesting, compare Bush’s economy to Clinton‘s at the same stage. “On many of the key variables that voters care about, the economy looks uncannily like it did in the summer of 1996,” writes Michael Mandel in the current Business Week.

The unemployment and inflation rates today are precisely the same as at this time in 1996. Total job gains from January to July were somewhat higher in 1996 than in 2004, but in 1996 manufacturing jobs actually fell — while they rose by 81,000 in 2004. Also this year, GDP growth and productivity were considerably higher than in 1996.

The ABC News/Money Magazine personal-finance index is 59 percent — which is higher than the 18-year average. “I think economic growth will be faster in the second half of 2004 than in the first,” writes David Malpass, the highly regarded Bear Stearns strategist.

So why all the gloom and doom? Three reasons

Ambassador Glassman has had a long career in media. He was host of three weekly public-affairs programs, editor-in-chief and co-owner of Roll Call, the congressional newspaper, and publisher of the Atlantic Monthly and the New Republic. For 11 years, he was both an investment and op-ed columnist for the Washington Post.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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