December 2, 2005

Bizzy’s AM Coffee Biz-Econ Links of the Day (120205): 43% of the Country Believes We’re in a Recession!

NOTE: Moved “AM Coffee” post to the top for few hours (pre-lunch coffee?) because of the importance of the topic.
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“Grouches” like BizzyBlog, Larry Kudlow, Neil Cavuto, and Investors Business Daily are not the only ones lamenting the awful coverage of the consistently growing economy.

In an OpinionJournal.com column, Brian Wesbury, chief investment strategist with Claymore Advisors LLC, joins the chorus of the frustrated (requires free registration), and, at the end, reminds us why the economy in reality has done well in the past few years (bolds are mine; links to the page supporting the 36% and 43% “we’re in a recession” figures added by BizzyBlog):

Pouting Pundits of Pessimism
Every bit of good economic news gives them reason for despair

During a quarter century of analyzing and forecasting the economy, I have never seen anything like this. No matter what happens, no matter what data are released, no matter which way markets move, a pall of pessimism hangs over the economy.

It is amazing. Everything is negative. When bond yields rise, it is considered bad for the housing market and the consumer. But if bond yields fall and the yield curve narrows toward inversion, that is bad too, because an inverted yield curve could signal a recession.

If housing data weaken, as they did on Monday when existing home sales fell, well that is a sign of a bursting housing bubble. If housing data strengthen, as they did on Tuesday when new home sales rose, that is negative because the Fed may raise rates further. If foreigners buy our bonds, we are not saving for ourselves. If foreigners do not buy our bonds, interest rates could rise. If wages go up, inflation is coming. If wages go down, the economy is in trouble.

This onslaught of negative thinking is clearly having an impact. During the 2004 presidential campaign, when attacks on the economy were in full force, 36% of Americans thought we were in recession. One year later, even though unemployment has fallen from 5.5% to 5%, and real GDP has expanded by 3.7%, the number who think a recession is underway has climbed to 43% (page down halfway at link for both stats–Ed.).

….. Sharp declines in consumer confidence and rising oil prices were supposed to hurt retail sales; but holiday shopping is strong. Many fear that China is stealing our jobs, but new reports suggest that U.S. manufacturers are so strong that a shortage of skilled production workers has developed. And since the Fed started hiking interest rates 16 months ago, 3.5 million new jobs and $750 billion in additional personal income have been created. Stocks are also up, which according to pundits was unlikely as long as the Fed was hiking rates.

….. One key reason the U.S. economy has outperformed other industrialized nations, and exceeded its long-run average growth rate during the past two years, is the tax cut of 2003. By reducing taxes on investment, the U.S. boosted growth, which in turn created new jobs that replace those that are lost as the old economy dies. Ireland is also a beautiful example of the power of tax cuts to boost growth and lift living standards.

Economic growth is the only true shock absorber for an economy in transition. To minimize the pain of technological globalization and address the anxiety that these forces are creating, free-market policies must be followed. While tremendous pressures are building to increase government involvement in the economy, it is important that the U.S. stay the course that brought it out of recession.

I was skeptical about the ability of the WORMs (Worn-Out Reactionary Media, known to most as The Mainstream Media) to influence actual economic results until I read and sourced Wesbury’s paragraph about how many people think we’re in a recession.

Other key findings in the American Research Group data (based on “1,100 completed telephone interviews among a random sample of all adults age 18 and older living in telephone households in the continental United States”) show just how much the views of those surveyed differ from reality:

  • After 10 quarters of 3%-plus GDP growth with low inflation and 5% unemployment, “A total of 35% of Americans rate the national economy as excellent, very good, or good and 63% rate it as bad, very bad, or terrible.”
  • In the near-total absence of data that would indicate that there is trouble ahead, “A total of 13% of Americans say that the national economy is getting better, 36% say it is staying the same, and 50% say the national economy is getting worse.”
  • This one’s more judgmental, but with no compelling evidence of economic storms on the one-year horizon, “A total of 17% of Americans say they believe the national economy will be better a year from now, 20% say it will be the same, 61% say it will be worse, and 2% are undecided.”

I really have to wonder how much better the economy would be if such a large plurality didn’t have beliefs that clearly differ from reality–after all, at least some of those clearly under the spell of what Dr. Sanity calls “Command Hallucinations” must be acting on those beliefs.

The “in recession” finding alone is the best evidence I’ve seen yet that the WORMs have had a negative impact on the economy that in a just world they would be held accountable for. Perhaps they are, as New Media continues to flourish, and the WORMs continue to lose readers and viewers. In light of the above, all I can say is “Faster, please.”

And I finally understand (a bit) why some allegedly conservative politicians in Washington who should know better are considering a tax increase (known in some circles as “repealing the Bush tax cuts”). Please, ladies and gentlemen–ignore the polls, vote the reality. Remove the expiration dates on the current tax structure.
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UPDATE: Add the 215,000 net new jobs in October to the good news list, along with “objective” AP reporterette Jennifer Loven’s snarky aside: ” Bush, faced with the lowest approval ratings of his presidency….”

UPDATE 2: Willisms has a lot more on the jobs report and the growing economy.

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12 Comments

  1. Run Hillary Run…….Everyone else Run For your Very Lives

    This is the game plan……..Run Bill, get Hill elected………he won’t have a word to say when the evil deed is done mind you, it will be Hillary’s sandbox all the way. Don’t for one second underestimate Billary.Why America would even

    Trackback by Atlas Shrugs — December 2, 2005 @ 1:38 pm

  2. This Probably Isn’t A Bad Thing

    In spite of California’s deep, structural problems, America’s economy as a whole is chugging along nicely, though you probably wouldn’t know it from the mainstream media. Which is why business-oriented Bizzy Blog has a post headlined, “43% of the C…

    Trackback by Ed Driscoll.com — December 2, 2005 @ 2:33 pm

  3. You seem to miss the obvious reality here.

    Instead of blaming the public for being so stupid as to be manipulated by the evil MSM, you should recognize that when people are asked for their opinion of the economy, they answer from their own perspective, according to their own sphere of expertise. The general public are not trained economists, able to plumb reams of economic statistics in order to make meta-level judgements about the state of the economy as a whole.
    They answer on the basis of their own economc situation, and the situation of their family, friends, and (very) local communities.

    That the economy as a whole is healthy, but that over 40% of the people feel that THEY are in a recessionary situation, should illuminate the problem that republican economic policy tends to bring about. The persistent lack of effective trickle-down from policies that explicitly favor those at the top.

    The fact that y’all think this is madness, given that you and yours are doing well, and the overall numbers are healthy, simply illustrates how out of touch you are with the concerns and realities of average Americans.

    Focus your minds on the statistics that actually mean something to the average citizen. What is the inflation-adjusted income for the avearge family today, relative to the past? How does it compare to such numbers for the wealthy, or for the economy as a whole?

    Stop looking for excuses, or reasons to play your name-calling games, and get serious about your subject.

    Comment by Tano — December 2, 2005 @ 4:34 pm

  4. [...] is such a startling number, considering the facts. 5% unemployment 4.3% GDP growth rate BizzyBlog has more. Much more. Filed in: Media Bias | No Comments » No comments yet. RS [...]

    Pingback by Pundit Review » Blog Archive » 43% of public thinks we are in a recession — December 2, 2005 @ 4:37 pm

  5. #3, Two points:

    A – I didn’t call anybody stupid. They’re busy. In another post today, I alluded to the 86% of the population that isn’t engaged. Not being engaged doesn’t mean you’re stupid, it means you’re not engaged (busy with job, kids, etc.). The result if you are not engaged is that just about all you will hear will be in hurry-up soundbite/superficial mode, and will be the crap the WORMs feed us at the top-of-hour radio news, the evening network and local broadcasts, and the Katie-Matt-Diane-Charles nonsense. You’re not going to hear the other side from New Media. THAT’S why 43% think we’re in a recesssion.

    B – Survey respondents are most decidedly NOT projecting their own situation onto the national economy, I didn’t post the portions of poll that asked about people’s own situations in the interest of space.

    So here they are from the link:

    - When it comes to rating their (current) household financial situations, 54% of Americans give an excellent, very good, or good rating and 44% give a bad (21), very bad (16), or terrible (7) rating. Comparable negatives for the economy are bad (31), very bad (13), and terrible (19), for a total 63%, a 19% swing to the negative (most of it to terrible).

    - A total of 24% of Americans say they think the financial situations in their households are getting better, 40% say staying the same, and 33% say getting worse. Comparable numbers for the economy are better (13), same (36), and worse (50), a 17% swing to worse.

    - Looking to a year from now, 31% of Americans say that they think their household financial situations will be better than today, 46% say the same as today, and 20% say worse than today. Comparable numbers for the economy are better (17), same (20), and worse (61), a 41% swing to worse!

    There’s a vast difference between how people see their own situations and that of the economy. Part of it may be anecdotal (knowing neighbors, friends, or relatives who are struggling), but I doubt that it’s much of a factor, because if it was, it would rub off into worrying about their own situation a lot more.

    SO the vast majority of the explanation for the difference between how they feel about their own situation and prospects and how they see things for the economy as a whole is that they’re hearing a constant drumbeat of pessimism about the economy from the WORMs, to the point where 43% actually believe the economy is in a recession after TEN STRAIGHT QUARTERS 3%-plus GDP growth (second longest consecutive string since quarterly statistics began being kept 58 years ago).

    That’s “the obvious reality” that YOU are missing.

    Comment by TBlumer — December 2, 2005 @ 5:27 pm

  6. So 43% think the economy is going to hell because of their personal situation and 5% of the workforce is unemployed. I don’t understand how you can cram the experience of 43% of the folks into 5% of the folks. I’d better just stick to namecalling.

    Comment by digitalbrownshirt — December 2, 2005 @ 7:06 pm

  7. #6, it’s even worse than what you humorously alluded to–43% think the economy is going to hell even though their own personal and household situation is relatively OK (see comment 5).

    Comment by TBlumer — December 2, 2005 @ 7:15 pm

  8. Trivia Tidbit Of The Day: Part 233 — America’s Booming Economy.

    The United States Economy Is Thriving- Today’s November jobs report is out, and the news is very encouraging: 215 thousand new jobs created in November. And remember, that’s a net figure, so it means that 215,000 more jobs were created…

    Trackback by WILLisms.com — December 2, 2005 @ 8:22 pm

  9. We want a Boom, not a Bubble.

    And the media is helping. Unwittingly.
    Good numbers on the economy recently has gotten everyone talking about it and more importantly, talking about the media’s coverage of the economy (we have to get that extra layer of abstraction in there,….

    Trackback by NixGuy.com — December 2, 2005 @ 11:12 pm

  10. The fascinating thing is that the media completely ignores comparative figures, as do a lot of the so-called intelligentsia (see post #3). When The top 5% of American incomes account for 55% of the taxes and the top 10% account for 66% of the taxes, they still complain that the “little guy” is getting soaked. In fact, the top 50% of wage earners paid 96.6% of the taxes. So if they are “rich”, then it does stand to reason that the tax cuts do favor the rich. (See detailed numbers at my blog http://patsrick.blogspot.com/2005/10/taxes-for-2003.html)
    Remember Dan Blather commenting on why people would volunteer for the military? “Perhaps in this economy, it is the only job they can find.”
    And that was when unemployment was 5.5%, compared to double-digit unemployment in Europe.

    Comment by Pat'sRick© — December 5, 2005 @ 8:33 am

  11. It’s the economy, stupid – or is it?

    Bizzy Blog has a great post about the bizarrely negative polling numbers on the economy. Quoting this column by Brian Wesbury (who is a great writer as well as an extremely perceptive economics guy), he also adds some great source information. Go a…

    Trackback by Ereblog — December 6, 2005 @ 9:51 am

  12. Rich Karlgaard noted this discrepancy between personal financial situation and views on the economy as a whole back in his 9/19/05 “Digital Rules” column. He cites a July poll by ABCNews/WaPo that claimed that 59% of Americans weren’t happy with the economy, but at the same time 59% liked their own financial condition. As he said, “Go figure! These conflicting sentiments make no sense.”

    I think they do make sense, and TB and Wesbury and others (including me lay the blame on a completely agenda-warped media sphere.

    Comment by Ryan Waldron — December 6, 2005 @ 9:56 am

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