A Time-Wasting Presidential Economics Conference
August 14, 2002
This week, George W. Bush hosts a conference in Waco, Texas, to discuss the economy with 250 experts and some average Americans. Don't expect much, warns Bruce Bartlett.
Average people really don't know anything about the economy. Not that economists are all-knowing -- but their errors nearly always result from lack of information that they can later revise. A good example is the extensive revision to the gross domestic product data released July 31 by the Commerce Department.
- Economists had been operating on the assumption that last year's recession was exceptionally mild, and published data showed only one quarter of negative real growth.
- Now it appears that there were 3 quarters of negative growth.
- Corporate profits data for 1999 and 2000 were also marked down sharply, leading columnist Robert Novak to suggest that the Clinton Administration had artificially inflated the data to keep the stock market up through the election.
- But even if they had wanted to do such a thing, the way the data are constructed would have made it impossible to do so -- and Commerce Department's data on profits have little, if any, impact on stock prices because they come out only with long lags.
If Mr. Bush wants to learn what is going on in the economy, he should simply spend more time listening to the economists he already has working for him and stop listening to his political advisers when they give him economic advice. Had he done so, the nation might have been spared tariffs on imported steel, massive new subsidies for farmers and a budget that is rapidly spinning out of control.
Reversing the impression that he looks first at the political implications of economic policy will do more to boost the economy than 100 conferences.
Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, August 14, 2002.
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