Our Dismal Economy

[stetto]

In July 1996 the GDP had risen an average of 4% over four quarters; today it has risen an average of 4.8%
In July 1996 the manufacturing sector had lost 8,000 jobs over the past six month. Over the most recent six months it has gained 81,000 jobs.
In 1996 Americans gave 150.7 billion dollars to charity. In 2003 they gave 241 Billion.
In July 1996 the unemployment rate rose from 5.3% to 5.5%; In July 2004 the rate fell from 5.6% to 5.5%
In mid-1996 the "core" inflation rate (excluding energy and food) was 2.6%; Today that core rate is 1.9%.
In July 1996 the Purchasing Managers Survey, a measure of business activity, fell from 54.3 in June to 50.2. Today it stands at 62.

Despite these number the NY Times, Washington Post, and Los Angeles Times said in 1996 that the July numbers were good and encouraging and boded well for Clinton's reelection. Today these same newspapers are telling us that the July 2004 figures are very discouraging and reflect a dismal economy. Justification for this behavior is simple; George W. had nothing to do with it, whereas B.J.C. had everything to do with it...

commrnc.grassroots.com/resources/economy1996v2004.pdf

[stetto]

Now considering that these comparisons are being made not over the span of an administration but at a specific time (the months leading to an election), I find them valid. I'm sure that others better versed in the grand economic scheme of things can rebut this information, given enough rope. But as a direct comparison within the time parameters allowed, the only conclusion I can deduce is that the media, for the most part, is incapable and/or unwilling to be objective; Something most of us take these days as a gimme, but at the same time a huge slap in the face of what was once considered a noble institution...

[MadWags]

I agree.

[RetNavySuppo]

Hey Eric-R,

I had some free time and decided to pick up the gauntlet you threw down. However, due to the limitation on the length of posts, I will split up my response, assertin by assertion.

[RetNavySuppo]

When Eric-R tells us that the media is biased, he is merely preaching to the choir. Of course it is biased. Those media that favor the Democrats will nay-say the economy while those media that favor the Republicans will say that life is good. This is to be expected.

So what else is new?

What also is be to expected is the spinning or twisting of economic data to satisfy the preconceived notions of each political party's "sheep". By "sheep", I mean those who will blindly accept their favorite party's economic assertions without taking the time and effort to perform even the most rudimentary critical analysis.

Please do not think I am picking on just the Republicans - most people of both political persuasions are sheep. For instance, how many Democrats believe that Clinton left GWB a vibrant and booming economy? (The leading economic indicators in 2000 were already pointing to an economy in decline.) How many Democrats believe that Clinton reduced the national debt? (In his eight years, we ran up $1.045 TRILLION in deficits, DESPITE a booming economy.)

But Eric-R presented us with the Republican economic assertions, not the Democratic ones. So let us look at them a bit closer.


Assertion One:

"In July 1996 the GDP had risen an average of 4% over four quarters; today is has risen an average of 4.8%."

1. I find it interesting how they picked their numbers. Here are the four quarters the Republicans picked:

FY 2003 Third Quarter: GDP growth: 7.4%
FY 2003 Fourth Quarter: GDP Growth: 4.2%
FY 2004 First Quarter: GDP Growth: 4.5%
FY 2004 Second Quarter: GDP Growth: 3.0%

Notice that they were careful to include a quarter skewed upward by massive war expenditures. Also notice that the Republicans didn't draw your attention to the 33% drop in GDP growth in the last quarter. I wonder why not?

2. Let's see, what else. Did the Republicans tell you that FY 1996 GDP growth reached 5.15% for the year? So far this FY (2004), GDP growth is averaging 3.75%.

3. Did the Republicans tell you that the 1996 GDP growth was obtained with a $174 billion deficit AND NO WAR while the GDP growth they refer to was financed by a major war AND a budget deficit approaching $600 billion (remember to adjust for the artificial lowering of the deficit numbers by using the Social Security Trust Fund Surplus)? No, I didn't think so. Remind me never to have a Republican invest my money.

[RetNavySuppo]

Assertion Two and Four:

"In July 1996 the manufacturing sector had lost 8,000 jobs over the past six months. Over the most recent six months it has gained 81,000 jobs."

"In July 1996 the unemployment rate rose from 5.3% to 5.5%; in July 2004 the rate fell from 5.6% to 5.5%."

1. Here are the annual (not a carefully selected one-month period) unemployment rates for FY 1993 through FY 2000, the entire term of the Clinton Administration:

FY 1993 6.9%
FY 1994 6.1%
FY 1995 5.6%
FY 1996 5.4%
FY 1997 4.9%
FY 1998 4.5%
FY 1999 4.2%
FY 2000 4.0%

Now tell me again about how bad it was for the unemployment rate to go from 5.3% to 5.5% in July 1996? By the way, a 4% unemployment rate is considered by most economists to be FULL EMPLOYMENT.

2. In order for the economy just to maintain the status quo in jobs growth versus population growth, it takes 300,000 new jobs EACH MONTH. Yet Republicans would have you believe we are doing just fine despite the downward revisions in job growth for the past three months.

3. The manufacturing sector represents over 14 million jobs. I wouldn't brag about 81,000 new jobs over six months, especially considering how few jobs were created in the overall economy in the same period. More picking and choosing of out-of-context numbers by the Republicans.

4. By the way, the exact words the BLS used in their news release for the unemployment rate in July 2004 was "little changed", a term they used throughout their report. Basically, the change from 5.6% to 5.5% was probably due to rounding - it certainly wasn't due to significant job growth.

[RetNavySuppo]

Assertion Three:

"In 1996 Americans gave 150.7 billion dollars to charity. In 2003 they gave 241 billion."

1. Charitable contributions also include donations to churches and religious organizations. These even include televangelists. Unless someone can parse out what part of these donations went to feeding, clothing, housing or giving medical treatment to the unfortunate, we have no way of knowing how much of this money went to building ostentatious cathedrals, Rolex watches and Bentley's for televangelists or even political lobbying activities disguised as charitable activities. Until we can make this distinction, this comparison is meaningless. It could mean that the charity hucksters got better or that the donors just got dumber.

[RetNavySuppo]

Assertion Five:

"In mid-1996 the "core" inflation rate (excluding energy and food) was 2.6%. Today that core rate is 1.9%."

1. Hmmm, where should I start on this one? The assertion has correctly quoted the numbers it quoted. But is it really telling you what is happening? As with other Republican propaganda, it certainly does not. If none of you purchased food or health care and you lived in a lean-to in the forest (didn't use any energy resources), then this assertion might have some value and integrity. For the average American however, the core rate of inflation is only a part of his financial woes. Here are the numbers that make up the present inflation rate:

Figures for 12 months ended June 04 (unadjusted)

All Items: 3.3%
--------------------------------------------------
Food and Beverages: 3.7%
Housing: 2.7%
Apparel 0.5%
Transportation 5.7%
Medical Care 4.6%
Recreation: 1.2%
Education & Communication 2.1%
Other Goods & Services 2.0%
---------------------------------------------------

Special Indexes

Energy 17.0%
Food 3.7%

----------------------------------------------------

All Items less Food & Energy 1.9%

2. Those figures paint a different picture than the rosy one the Republicans wish you to see. With the exception of housing, food and energy are two of the biggest items in the American household budget. Yet, the Republicans concentrate on an inflation figure that doesn't include these items. I wonder why? Hmmmmm.

3. Here's something else to chew on. The "compound annual inflation rate" (not the artificially low "unadjusted rate") for FY 2004 is running so far at 4.8%. The "compound annual inflation rate" for FY 1996 was 3.0%.

[RetNavySuppo]

Assertion Six:

"In July 1996 the Purchasing Managers Survey, a measure of business activity, fell from 54.3 in June to 50.2. Today it stands at 62."

1. Another example of "cherry-picked" data. Several things are misleading about this assertion. First let's look at the 1996 numbers. By the way, you would think that the Republicans could afford a competent fact checker, given all the money they have. The actual economic indicator is the Purchasing Managers INDEX, not SURVEY (it makes a difference when you are searching for historical data - as well the republicans know). Secondly, they didn't even get the numbers right. The PMI for June 1996 was 53.6, not 54.3. The PMI for July 1996 was 49.7, not 50.2. By the way, this is from the website of the people who actually generate these numbers.

2. So the PMI in July dropped from 53.6 to 49.7. That is correct, even if the Republicans got their numbers from an inaccurate source. But is that bad OR are the Republicans AGAIN trying to mislead their sheep? Let's look at the entire year's PMI's for 1996 and 2004 (through July):

1996 2004

Jan 45.5 63.6
Feb 45.9 61.4
Mar 46.9 62.5
Apr 49.3 62.4
May 49.1 62.8
Jun 53.6 61.1
Jul 49.7 62.0
Aug 51.6
Sep 51.1
Oct 50.5
Nov 53.0
Dec 55.2

What do these numbers show? It shows that the PMI bounces up and down, from month to month, regardless of year. It shows that the Republican propagandists "cherry-picked" the month with the highest decease while disregarding the fact that the 1996 PMI trend was decidedly positive. The 2004 trend, on the other hand, has a slight negative bias. The 1996 PMI started out at 45.5 and ended at 55.2. The 2004 PMI started out at 63.6 and is now at 62. Hmmm, I wonder why the Republicans didn't mention that?

A word about the PMI. The absolute numbers don't mean much. Rather, it is the trend demonstrated by the numbers that is important. For instance, the PMI gave lower absolute numbers to Carter's years than to this year, and roughly equal absolute numbers to the Clinton years as the Carter years. Yet the Carter years were the only years of sustained average double-digit GDP growth in over 40 years. In other words, the PMI absolute numbers were meaningless but the trends they indicated were mostly (but not always) correct.

That it for the present analysis. I apologize for the length of my answer but it was important to demonstrate exactly how misleading these assertions were.

By the way, here are some of the references I used:

www.ism.ws/ISMReport/files/MfgPMIIndex04.xls

www.bls.gov/news.release/empsit.nr0.htm

www.cbo.gov/showdoc.cfm?index=1821&sequence=0&from=7#t12

Now come on guys. Some of you Republicans are pretty bright, based on what I have read in your past postings. Don't disillusion me by swallowing, hook line and sinker, the bullcrap that the RNC spews forth on a regular basis. That goes the same for you Democrats and the propaganda from the DNC.


A non-subject note for Eric-R (stetto):

Are you the professional painter? If so, I have couple questions for you. I need some work done on my house but I think I smell a scam in what some of the bidders are telling me.

[stetto]

Re: Your painting concerns, I'll answer any questions I can for you, You can PM me (the function works on this board!), email me or simply post a thread (this IS the Skeeter Pond after all ), and if I have the answers I'll give them to you...

As far as the topic above is concerned, I'm no economist, but assuming (what I do best) that the info presented in my original post is derived the same way by BOTH "parties" involved, in the same time frames during the years in question, using the same "formulas" for those specific numbers, I see no reason not to consider them. If the papers in question are comparing the EXACT SAME (albeit twisted and manipulated) DATA from the categories selected, then on some logical level somewhere they must be valid--to me.

RetNav, you have been long established in our community here and @ Flightlines as a valuable and dependable source when it comes to dissecting data such as this. I appreciate your input and thank you for putting it forth in a way that laymen can make heads or tails of it. Please understand, however, that there are likely more folks absorbing and processing this kind of info the way I do than the way you do. I judge the economy based on how my business fares, and my view of the national picture is usually cursory on most economic issues...Maybe sad, but so far has worked for me.

Perhaps the last thing that the administration (pick one) and politicos-in-waiting (and of course the media) want is for people like you to be educating the rest of us to understand the numbers.