Saturday, October 07, 2006
John Wixted makes the case that the economy is strong and the federal deficit is small by historical measures. Bizarrely, the Republicans are in a lot of political trouble. Glenn says, "So much for 'it's the economy, stupid!'", but that raises the question: why are Republicans in such trouble? There are any number of possible explanations, which I have rendered into a poll for our readers. Select the answer below that is the single most important factor, in your opinion, whether or not it is the only factor:
Please elaborate in the comments.
I listen to Bloomberg radio on my drive
in to work every morning. If I were to believe everything they told me, I'd think the economy was either going gangbusters or on the brink of a recession. Yes, even the experts disagree. It's not as simple as the MSM "misleading" people.
I think when it all comes down to it, people listen to their gut instincts on how the economy is doing. They go by how they feel about their personal economic situations. They go by how confident they personally feel about their economic futures.
Fact: wage growth has been abysmal throughout this recovery. Fact: real estate equity is drying up (bye bye wealth effect). Fact: paycheck deductions like health insurance are higher than ever. Fact: the 'fixed costs' of living (property taxes, energy costs) are also higher than ever.
And wage growth, like I said, has been abysmal.
What this boils down to, children, is diminishing wages for most people. The fact that we constantly hear about how certain corporatations are making a killing doesn't help seeing how we're the ones who work for those corporations, we're the ones who make them look so damn good and what do we see? Squat. Quitting and going to a better employer was once an attractive option but today most employers are doing the same thing. Where is one to go? The world is flat now, thanks a lot Tom Friedman.
I'm with "Anonymous" on this, and checked box #1, even though 10 times as many Tigerhawk readers who responded to this poll so far have attributed negative perceptions of the economy to how it is presented by the mainstream media. I'm basing my opinion on tangible factors - my checking account balance, 401K performance, healthcare costs and wage growth among them. Tigerhawk readers come from various economic backgrounds. What do your personal numbers indicate? Are those of you who attribute perceptions of a poor economy to mainstream media misrepresentation actually feeling secure financially?
Yep. I'm doing better now than ever in the past, and on government (i.e. low) wages! My wife is a loan officer in a bank and she's been doing well, and between the two of us we're taking care of all our bills and paying off old debts, college loans and otherwise, despite the stupidly high cost of living in California. We're expecting our first kid in the spring, and looking on buying a new truck next year.
I don't claim to be an economist (it bores me; after college I jettisoned the information) but I find any kind of doom and gloom reports hard to believe. And didn't the DOW reach a new high last week, at 11,000 some-odd?
What I find to be paradoxical is how many of the responders seem to think that the current state of how it is assumed to be is due to the way the media is spinning things. If this many people really think that, then perhaps the option that "the Republicans aren't really doing as bad as the media suggest" might be the option that best reflects the truth.
I think the economy is doing pretty good and my family income situation is a lot better than it was 3 or 4 years ago (just bought our first home and the wife can stay home with the new baby and not work). But I suspect that anonymous is right too in that the biggest hit to my income (and to several friends of mine at other employers) over the past year or so was increases in health insurance premiums. At one point my employer had announced that the increases for health insurance were going to be more than the cost of living adjustment they were giving many employees as a raise. They only backed down when they realized that meant many mid level income employees like myself were actually getting their take home pay decreased.
I think the main reason for Republican problems is that the Republican Party has lost any hint of the limited and responsible government vision that put them into power in 1994. When a Republican dominated federal government can barely pass a law to build a border fence and has out of control spending in areas from education to entitlements to plain old pork, it is hard to get excited about Republican victory, even if you dislike the Democrats.
Border Security bill is said to be full of loopholes that will undercut implementation, Bush has gone for the politically correct way to fight the war[letting AL Sadr off the hook in Fallujah etc.]Republicans refuse to curb spending,Bush coddles Muslims calling Islam a religion of peace.Bush & the republican party throw their support to Rinocrats like Chaffee, Specter,etc instead of supporting their conservative primary opponents. People think republicans control the Senate, HAH! In name only. When you have Specter, Chaffee, McCain, Lindsey Graham, Collins, Snow & Hagel along with Jumpin Jim Jeffords, That gives the Dems control with 54 members. And let us not forget the good Dr/Senator Frist,who is wishy washy on conservative issues & goes along with Bush on "comprehensie" illegal alien amnesty. That is why support is down.Even with all that, I will vote for the wimps anyway,because otherwise the loony left will be in charge of the asylum. Pollsters never ask WHY Bush & the republicans are losing support of the base. They can't afford to let the politicians know that we dont support them because they are a grouo of wimps who will not fight hard enough to win either the war on terror, or the war for conservative ideas.
Abused statistics serve well for those in power. You can talk all you want about average wages rising, but once you say the average worker's wages are up, you're talking about real median wages, and lying. The DJIA is still well below it's real record (inflation adjusted).
The unemployment rate is another lie. Even the MSM is afraid to look under the covers, if it takes more than 30 seconds. If you are a discouraged worker, you don't count, you don't exist, period.
Well paying jobs are hard to come by in my community.
Finding jobs in the private sector that provide health care benefits, a pension plan or even a matching 401k, are no longer easy to come by. The cost of education to improve one's skills is exhorbitant. The trend of employing individuals for less than 32 hours a week to avoid paying employee benefits is real.
The private sector is being squeezed hard. If you work in the public sector (federal, state, municipal, schools) or if you work in health care (medical or dental) where costs are picked up by a combination of insurance and taxes, you are somewhat cushioned from what is taking place in the private sector. Meanwhile, publicly financed institutions are confronting a tapped out taxpayer. School budgets are routinely shot down.
Losing my job is a real possibility since my job is tied to the housing sector. Yes, I'm anxious. I know what underemployment means. Over the past 20 years, I've seen my father laid off, my brother laid off, my uncle laid off and I'm getting set to watch my mother retire on $800/month teacher's pension after 20 years of teaching and unable to collect full social security because of tax laws against "double dipping."
The goldilocks economy is a fairy tale. Very few can carry a mortgage, health insurance premiums and a self-financed retirement plan on a job in the retail sector. Now add on child care and/or elder care and you're one financially-distressed individual.
The Republican Party's failure to reign in pork, the bridges to nowhere, and the cronyism, Michael Brown, the Lincoln Group, are a real insult.
"I listen to Bloomberg radio on my drive
in to work every morning. If I were to believe everything they told me, I'd think the economy was either going gangbusters or on the brink of a recession"
Fine observation. In fact it's neither. The economy is fine. It is not good enough to help the GOP or bad enough to hurt them. What's hurting the GOP is (1) the sorry state of Iraq/Afghanistan and (2) the Foley scandal.
Why doesn't Bush give a prime time speech about the economy in the next few days?
That would force networks to cover the economy, and force Democrats to issue a "rebuttal." Democrats would accuse him of trying to duck the issue of Iraq, and might even accuse him of overstating the health of our economy.
It would end attention to the Foley scandal and eliminate the need to expend so much effort bringing up the economy closer to the election date. Republicans could then focus all that time on the Iraq war (especially because Dems would have previously complained there was not enough focus on Iraq).
I am very satisfied with the economy. I am simi-retired at age 58. I teach high school part time. We have no debts other than morgages on two places. There is nothing I could likely want, that I could not afford. I save or invest over $500 a month and my wife puts away even more. She just got a new job that amounts to a $40,000/year raise. We paid cash for the last three cars we bought. I use dividend reinvestment plans to buy stock in banks, power companies, oil companies, technology companies and retail stores. I have seen examples in the press of articles throwing cold water on the economy. If we get a Democrat administration, they will start crowing about the economy again just like they did in the Clinton administration. The Republicans are doing bad because of the war and the hostile media.
I and most of my circle of friends are self-employed (consultants) and have never been counted as part of the employed. I haven't filled out a W-4 or received a W-2 since 1976. I pay all my taxes including property tax on three properties and am still able to save money hand over fist, maybe because we're happy with living simply. The economy has been great for us, especially the last five years since I started investing in the economy. I know that some are not doing as well, but I look around me and around my community and I can't help, but think that media hyping has much to do with perception.
The economy in my neck of the woods (North Texas) is really quite good. We are doing well finacially and if I were to lose my current job, I am fairly confident to get one within a month (the Good Lord willing).
Wage increase has always been a misnomer. Outside of 3-4 years in the late 90's the average wage increase I remember my parents getting was 3-4% annually. That is about what I get now. The late 90's I got 5-10%, but that was an abberation, and not the rule.
For the people who say their economies in their communities are not going so well, do you live in states with higher state taxes, do you live in states with mostly democratically controlled governments?
The best thing the govt can do is get out of the way. Lower taxes to the optimum amount (where the govt is bringing in the maximum amount of money it can, Laffer curve) and then get out of the way. Let the ingenuity and entrepenerial spirit of the American people do the rest.
I live in a low tax high growth state, so the economy here tends to do well.
I have a very simple metric for economic vitality that hasn't failed me for the past 15 or 20 years -- I look at the billboards along I95 from FL ro NY as I'm driving that trip a couple of times a year.
When empty billboards start to appear, the economy is going to sag. Lower payback media ad dollars are the first thing cut by businesses when the bucks get tight.
When billboards are all full, people have extra money to spend advertising in the lower payback media markets and times are good.
Simple, and 100% accurate so far.
I'll be making a trip to upstate NY in the next week or so, so I'll know how the economy is really doing when I get there ;->
The first few years under Bush the economy mostly went sideways, which was actually better than what I had feared in the aftermath of the dot-com bust. In the last couple of years there seems to have been slow but steady improvement where I live (Silicon Valley). Against this is the spike in the price of gas, highly visible as well as annoying though it is starting to come back down.
Bottom line: the economy is pretty decent, but maybe not enough to offset other hot-button issues. Of course the press is spinning things negatively, but I don't think this has much effect because people don't have to read a newspaper to know how they are doing.
Here's the problem with anecdotal evidence. I haven't gotten a raise (COLA or otherwise) in two years. My healthcare premiums have increased. I also have two kids in college, and I got divorced and so have no second income. Therefore the economy is declining, no?
Well, our parent company went through Chapter 11 and got financing through a private firm, which is much more interested in holding costs down to maximize their profit, which they're entitled to. Hence, raises are pushed back, my healthcare expenses are increasingly subsidized by me, and who knows how much profit we're making, and, more importantly, who cares? Bad business decisions make for loss of control.
My debt has increased substantially, mostly because of my kids' needs. I'm also looking at a lump sum payout for my ex's share of the house in a couple of years. And yet the economy keeps growing, and presumably my 401(k) grows with it.
My point is that most people don't think about how complicated economics are, and think their situation encapsulates the big picture.
Health care is growing as a job creator, but we know that everyone can't have a job providing health care to everyone else. But the HMOs and hospitals in my area are building like mad and hiring nurses like there is no tomorrow.
High-tech is diminishing and that is reason to be worried. From what I can tell, nation wide the technology sector in the US has lost 3 to 5 million jobs over the last few years. Many if not most of which moved overseas to China and India.
Our state government has capped jobs and as the housing bubble slowly deflates, local governments too are not hiring.
My concern (I'm obviously not an economist) is that the US economy usually has a driver - a single sector that leads the way for the other sectors. We were an industrial economy for decades and as that declined we became a technology driven economy, and now that tech is declining, what is driving our economy? In my area all the growth is in health care, contstruction, and government and I don't see how those sectors can sustain an economy.
I picked "it's Iraq". I think that Democrats (and the media) are flailing around at anything anti-Bush because of Iraq. The problem with trumpeting Iraq itself is that no one - including Bush - has any idea what to do next. Barring a good idea, deflection has to suffice.
My economic barometer is new, clean cars. I usually wait 10 minutes or so for the bus to work (too lazy to walk) each morning and see several hundred cars pass. If they are new and clean, the economy is doing well. I also live near a car-wash. If it is busy, the economy is doing well. There are a lot of shiny cars in Denver right now - and they are not Kias.
I with the spin ... I can agree that wages are somewhat stagnant to the ever increasing cost of stuff. However, I can't help by plot a more realistic trend line, estimating what might have been if not for the excesses, crime, and abuses of the "internet economy".
I remember Greenspan's warnings about "irrational exhuberance", and I remember that economists stated you'd have to increase the markets and market shares of the darling stocks to justify the P/Es. So you can whine all you want, and if you use the high water mark pre-Sarbanes and accountability, pre-brokerages taking huge fines, and pre-snotnose tattooed punks as internet execs, then [IMHO] you're not seeing things clearly.
We regard good times as our due, and bad times as some terrible robbery by dark forces. We get used to new levels of affluence quickly, and simply don't see what we have. Yes, health care costs are up, but so is health. I took 7 medicines at one time or another in 2005 - 4 of them did not exist in 1995, and only 1 existed in 1985 (aspirin). Houses are larger, cars last 200-300K miles, average people travel abroad and take cruises. Fruits and vegetables are always in season.
Consider also that before 1970, families tended to be intact and resources pooled - and we were still much poorer!
I am putting my third son through college and the fourth starts next year. We have a house mostly paid off. And I still hope to retire early. My wife and I don't get paid much, compared to what I read about, but how can that not be rich?
Of course, volunteering in Romania and adopting two kids from there does tend to give one a different perspective. What to become rich? Visit Eastern Europe. You'll be rich when you come home.