April 19, 2007
Any economic comparison that uses four-year presidential terms is highly misleading. The Clinton years will always look better than the Bush years with that approach. A better analysis, which compares the two business cycles from their previous trough, shows the opposite, says Brian S. Wesbury is chief economist at First Trust Advisors.
The most interesting comparison is in the job market, says Wesbury:
- According to the payroll survey, the current recovery has been weak, with just 6.7 million new jobs versus 11.3 million in the first 64 months of the '90s recovery.
- But the payroll survey has major problems, mostly because it cannot capture the dynamic nature of our new economy.
- The civilian jobs survey is much better because it captures self-employment and does not undercount small business, is much better; it shows 9.9 million new jobs in the 2000s, just slightly less than the 10.1 million new jobs the survey shows for the first 64 months of the '90s recovery.
- During the first 64 months of the '90s recovery, real average hourly earnings fell 0.2 percent, while the unemployment rate fell to 5.5 percent.
- For the current recovery, during its first 64 months, real average hourly earnings are up 1.8 percent, while the unemployment rate is down to 4.4 percent.
- In the first five years of the current recovery, pretax corporate profits are up 107.9 percent.
- That is a significant improvement from the 73.8 percent growth during the first five years of the '90s recovery.
While some argue that the growth in profits is a sign that greedy rich people are benefiting at the expense of workers, this is not shown in the data, says Wesbury. Civilian job growth in the past five years is not statistically different than it was in the early '90s, while wages, for every income level, have experienced better performance.
Source: Brian S. Wesbury, "Economic Showdown," Wall Street Journal, April 19, 2007.
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