June 19, 2006

Brian Wesbury Points to the Large Swath of Underrported Good Economic News

Filed under: Economy,MSM Biz/Other Bias,MSM Biz/Other Ignorance — Tom @ 1:34 pm

Assuming that this is the same guy, even though his employer has changed, the last contribution of Mr. Wesbury to economic sanity that I caught was his excellent piece on the state of the economy last December in OpinionJournal.com that I blogged about here.

His post Friday at Real Clear Politics looks at more recent economic data that is also mostly strong, and mostly not known:

The Resilient Economy

Imagine you were working on a 500-piece puzzle and had assembled 497 pieces, but found out that the last three pieces did not fit. In fact, you realized that they were from a completely different puzzle all together. What would you believe, that the three pieces were the right ones and the 497 were wrong, or vice-versa?

This is an important question for people looking at economic data these days. Those who think the economy is slowing focus on the 0.1% increase in retail sales during May. But, one or two-month slowdowns in economic data mean nothing. Retail sales are up 7.6% in the past year and 8.5% at an annual rate over the past six months. Excluding autos, retail sales increased 0.4% in May and are up 9.1% in the past year and 9.6% at an annual rate in the past six months.

Moreover, the future for retail sales does not look dour at all. Yes, non-farm payrolls increased by a less than expected 75,000 in May, but the household survey reported a 288,000 jump in employment. The Household Survey has been a much more accurate predictor of economic strength in this recovery than the Establishment Survey.

….. Wages and salaries have accelerated as well, rising at a 7.9% annual rate in the first four months of 2006. Tax revenues to the federal government are growing even faster (13% above last year during the first eight months of this fiscal year) and people do not pay taxes on income they do not earn.

While industrial production data showed a decline of 0.1% in May, output has climbed 5.2% at an annual rate in the past three months and 4.4% in the past year – both faster than overall GDP.

Early data for June signals a rebound. Initial unemployment claims have fallen to 295,000, while the Philadelphia Fed manufacturing survey was 13.1 in June – a level that is indicates real growth in the 3.5% to 4.0% range.

….. When put together, a vast majority of the data reflects an economy that continues to roll along much as it has for the past three years.

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