Today’s release of the Institute for Supply Management’s Non-Manufacturing Activity Report, which measures business conditions in the 86% of the economy other than manufacturing, came in with a reading of 60.7, after recording a 59.7 last month.
As has been customary, the report whipped the pants off of “expectations.” This Thomson Financial article at Forbes predicted a decline to 58.1 instead of the full-point increase that occurred, as did this AFX piece.
This was the 51st consecutive reported month of expansion for the Non-Manufacturing Index (any reading above 50 indicates expansion). It comes on the heels of Monday’s ISM Manufacturing Report, which came in at 56, marking the 47th month of expansion in that index in the past 49 months.
So 14% of the economy is expanding nicely, while the other 86% can fairly be said to be nearly booming. Who knew?
At the halfway point of 2007, this is indeed a good time to look at how the Bush 43 Economy, as measured by the ISM indices, has performed. The dominant theme that seemed to rule Old Media’s coverage earlier in the decade was that the economy was “the worst since Herbert Hoover.” Even recently, though the earlier meme has receded, a substantial majority of Americans gives the president poor marks for his current stewardship of the economy, with a substantial plurality of Americans even believing that the the economy is, even now, in a recession.
The chart below shows the average Manufacturing Index during each era’s term of “budget and economy responsibility” from the index’s inception in January of 1948 through June 2007, and the average Non-Manufacturing Index during the two eras since it was first published in July 1997.
The fact is that the Bush 43 Economy is looking pretty darned good, even stellar, compared to most other eras:
“Budget and economy responsibility” begins with the inception of the first federal fiscal year (October 1) after the presidential election preceding the beginning of the era, because it is the first budget a new president can directly influence.
- Bush 43′s Manufacturing Index performance is the best in 30 years, going all the way back to Nixon-Ford.
- The Clinton Era Manufacturing Index performance trails Bush 43′s by a substantial margin, as does the Reagan Era.
- Bush 43′s Non-Manufacturing Index performance is ahead of the portion of the Clinton Era that was measured. The first 36 measured months of the Clinton Era were probably the best of Clinton’s presidency, but were then followed by 15 months of deterioration due to the fallout from the bursting of the dot-com bubble.
- Bush 43 began his budget-econ responsibility with Manufacturing and Non-Manufacturing readings in the high 40s, even before the September 11 attacks that pre-dated the onset of his responsibility by a few weeks.
- The highest Non-Manufacturing Index number during the Clinton Era was 62.6 in August and October of 1997. The Bush 43 Era has had nine months with a higher result.
- Going further back into history, Carter’s very good Manufacturing Index average masks a disastrous 1980, where the index’s reading at one point (May of that year) fell to an all-time near-death low of 29.4.
Many, if not most, exclusive consumers of Old Media have no idea what has really been happening in the economy. Here’s just one small example of the distorted economic coverage Old Media has engaged in. On February 28, the New York Times’ David Leonhardt claimed that the economy’s manufacturing sector was in recession (the TimeSelect abstract claims the entire country was in recession, though Leonhardt’s original did not). In the four-plus months since Leonhardt’s report, ISM has issued 5 reports for the months of February through June. All have come in as expansions. Though one can’t be certain because of the TimeSelect firewall, searches of the Times on “manufacturing recession” and “Leonhardt manufacturing” (both without quotes) appear to indicate that the Times reporter has never retracted his recession call.
I think that we’ll have to wait until the second quarter GDP results are released to be completely convinced that the economy is on track after very disappointing first-quarter growth. But in light of the ISM reports and history, it’s pretty hard to make a case that the economy is in bad shape, and it’s even harder to claim that the Bush 43 Era has been one of poor economic performance.
Not that Old Media reporters like David Leonhardt and so many others won’t continue to try.
Cross-posted at NewsBusters.org.