Thursday, October 19, 2006

Economic Doom and Gloom

George Will traces the disconnect between what is actually going on in today's economy and how the media and the Democrats seek to portray it. It really is remarkable that such a booming economy constantly gets so badmouthed.
Never a connoisseur of understatement, Clinton said America is "now outsourcing college-education jobs to India."

But Clinton-as-Cassandra should not persuade college students to abandon their quest for diplomas: The unemployment rate among college graduates is 2 percent .

Clinton is always a leading indicator of "progressive" fashions in rhetoric. And every election year -- meaning every other year -- brings an epidemic of dubious economic analysis, as members of the party out of power discern lead linings on silver clouds.

"Worst economy since Herbert Hoover," John Kerry said in 2004, while that year's growth (3.9 percent) was adding to America's gross domestic product the equivalent of the GDP of Taiwan (the 19th-largest economy). Nancy Pelosi vows that if Democrats capture Congress they will "jump-start our economy." A "jump-start " is administered to a stalled vehicle. But since the Bush tax cuts went into effect in 2003, the economy's growth rate (3.5 percent) has been better than the average for the 1980s (3.1) and 1990s (3.3). Today's unemployment rate (4.6 percent) is lower than the average for the 1990s (5.8) -- lower, in fact, than the average for the past 40 years (6.0). Some stall.
Will calls this mood "economic hypochondria" and blames it on spoiled boomers who can't take any bad news in the economy without thinking that the sky is falling.
Never a connoisseur of understatement, Clinton said America is "now outsourcing college-education jobs to India."

But Clinton-as-Cassandra should not persuade college students to abandon their quest for diplomas: The unemployment rate among college graduates is 2 percent .

Clinton is always a leading indicator of "progressive" fashions in rhetoric. And every election year -- meaning every other year -- brings an epidemic of dubious economic analysis, as members of the party out of power discern lead linings on silver clouds.

"Worst economy since Herbert Hoover," John Kerry said in 2004, while that year's growth (3.9 percent) was adding to America's gross domestic product the equivalent of the GDP of Taiwan (the 19th-largest economy). Nancy Pelosi vows that if Democrats capture Congress they will "jump-start our economy." A "jump-start " is administered to a stalled vehicle. But since the Bush tax cuts went into effect in 2003, the economy's growth rate (3.5 percent) has been better than the average for the 1980s (3.1) and 1990s (3.3). Today's unemployment rate (4.6 percent) is lower than the average for the 1990s (5.8) -- lower, in fact, than the average for the past 40 years (6.0). Some stall.
Will quotes a column by Kevin Hassett and Aparna Mathur of the American Enterprise Institute showing how benefits, lower taxes, and consumer behavior should be considered when talking about compensation.

I think another study that Kevin Hassett (my daughter's former boss at AEI) tells the story more clearly of why this economy is not getting the respect it deserves. In that study, Hassett and John Lott documented media bias in covering economic news depending on whether there was a Republican or a Democratic president in the White House. The results are quite striking.
When GDP growth is reported, Republicans received between 16 and 24 percentage point fewer positive stories for the same economic numbers than Democrats. For durable goods for all newspapers, Republicans received between 15 and 25 percentage points fewer positive news stories than Democrats. For unemployment, the difference was between zero and 21 percentage points. Retail sales showed no difference. Among the Associated Press and the top 10 papers, the Washington Post, Chicago Tribune, Associated Press, and New York Times tend to be the least likely to report positive news during Republican administrations, while the Houston Chronicle slightly favors Republicans. Only one newspaper treated one Republican administration significantly more positively than the Clinton administration: the Los Angeles Times' headlines were most favorable to the Reagan administration, but it still favored Clinton over either Bush administration. We also find that the media coverage affects people's perceptions of the economy. Contrary to the typical impression that bad news sells, we find that good economic news generates more news coverage and that it is usually covered more prominently.
That was for results of a study in 2004. I would bet that the disparity would be larger if you looked at the coverage since 2004. And this is during a period while we've been conducting two military engagements and had a catastrophic hurricane plus a huge spike in oil prices. And still the economy is doing so well. Just imagine what the mood in the country would be if the media had covered the past years of economic good times in the same celebratory fashion as they covered the economy during Clinton's presidency.

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