WASHINGTON ‹ If you believe the usual armchair pessimists, the U.S. economy's in a tailspin. If so, then why do the numbers disagree?
The latest report from the Commerce Department says that the economy grew by a nearly 3 percent annualized rate (2.9 percent) in the second quarter ‹ a significant improvement over its earlier 2.5 estimate. That is a very strong growth rate by any criteria stronger than other industrialized economies and signals the economy is headed for a "soft landing" from its torrid and unsustainable first-quarter pace of 5.6 percent.
The economy's health will be a critical issue in this year's elections, but President Bush and the Republicans have not been getting the credit they deserve for keeping the nation's economy on track through a storm of devastating catastrophes, from Sept. 11 to Hurricane Katrina.
Much of the nation's perceptions about the economy's health come from the news media, which all too often report it in the most negative light possible. But the numbers tell a far different story about an economy in which consumer spending remains strong, exports are rising, oil and gas prices have come down a bit, and wages are increasing along with business spending.
"Much of the improvement in the second-quarter growth figure came from U.S. exports that were stronger than earlier estimated, plus stronger spending on construction of factories, offices and other commercial structures," Wash-ington Post economic reporter Nell Henderson wrote last week.
The nation's gross domestic product, which is the measurement of all the goods and services we produce, is the most closely watched number in the economy. That number has been remarkably strong and remains so today.
Most Americans do not focus on GDP numbers but on local economic circumstances they face at home and their perceptions of the economy in general. Unfortunately, that perception remains a very negative one.
Americans overwhelmingly disapprove of the way Bush has handled the economy by a lopsided 57 percent to 39 percent, according a mid-August Gallup Poll. Despite numerous speeches heralding the economy's health and continued growth, that 39 percent approval score hasn't budged.
Yet all of the other numbers by which we assess our economic health paint a much brighter picture than the voters are seeing:
5.5 million new jobs created since August 2003, producing a jobless rate of 4.8 percent (which economists consider full employment).
More people working and faster-than-expected growth has produced a surge in federal tax revenues that has slashed the federal budget deficit.
There are good reasons for all Americans to be confident and bullish about the economy whose fundamentals remain as strong as ever. Bush and the Republicans and the tax cuts they enacted which fueled the recovery had a lot to do with this.