Brian Wesbury: The Bush boom vs. the Clinton expansion
[Mr. Wesbury is chief economist at First Trust Advisors L.P. in Lisle, Ill.]
The Misery Index was first employed by Jimmy Carter in 1976 to unseat President Gerald Ford. That year, the index, which is calculated by adding the unemployment rate to the inflation rate, averaged 13.2%. Four years later it had climbed to 18.2%, and Ronald Reagan used it to unseat Mr. Carter.
Today the Misery Index isn't revealing much misery. As of February 2007, it was only 6.8% (4.5% unemployment plus a 2.3% 12-month increase in the PCE deflator) -- a level bettered in only four years since 1967, and all those years were in the so-called "bubble economy" of the late 1990s.
One would think that complaints about the economy would be few and far between. But complaining has become the national pastime. Not directly about the Misery Index, but about the economy in general, and how much worse we have it today than we did during the Clinton economy in the 1990s in particular.
While I find it hard to believe that every complaint is politically motivated, it is difficult to imagine another justification for those who assert that the Clinton economy was better than the Bush economy.
For most Americans, who aren't familiar with economic analysis, it's impossible to determine what's actually happening. But the debate over Bush versus Clinton would be silly, if it weren't potentially influencing policy.
President Clinton took office in January 1993, almost two years after the 1990-91 recession had ended. On the other hand, President Bush took office just two months before the 2001 recession began.
As a result, 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. The Bush economy is equal to or better than the Clinton economy in almost every area.
President Clinton benefited from gale-force tailwinds. The price of oil fell from $19.82 a barrel in the first quarter of 1993 to $12.84 a barrel in the fourth quarter of 1998. Inflation remained very low. President Clinton also benefited from being in office immediately after the Cold War had ended, allowing him to enjoy the "peace dividend" -- a rapid decline in defense spending which helped bring federal spending down. More importantly, the fall of the Iron Curtain accelerated the global movement of capital and goods.
President Bush, on the other hand, has been faced with gale-force headwinds. In the midst of deflation and an epic stock-market meltdown, the 9/11 attacks occurred just eight months into his term, while the recession he had inherited was still underway. President Bush's massive increase in security spending has effectively offset the benefits of the peace dividend. The burden of government spending, and the cost of shifting resources toward security, are drags on the private sector. In addition, Hurricane Katrina flooded New Orleans, the 38th largest city in the U.S., while oil prices climbed above $70 a barrel....
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The Misery Index was first employed by Jimmy Carter in 1976 to unseat President Gerald Ford. That year, the index, which is calculated by adding the unemployment rate to the inflation rate, averaged 13.2%. Four years later it had climbed to 18.2%, and Ronald Reagan used it to unseat Mr. Carter.
Today the Misery Index isn't revealing much misery. As of February 2007, it was only 6.8% (4.5% unemployment plus a 2.3% 12-month increase in the PCE deflator) -- a level bettered in only four years since 1967, and all those years were in the so-called "bubble economy" of the late 1990s.
One would think that complaints about the economy would be few and far between. But complaining has become the national pastime. Not directly about the Misery Index, but about the economy in general, and how much worse we have it today than we did during the Clinton economy in the 1990s in particular.
While I find it hard to believe that every complaint is politically motivated, it is difficult to imagine another justification for those who assert that the Clinton economy was better than the Bush economy.
For most Americans, who aren't familiar with economic analysis, it's impossible to determine what's actually happening. But the debate over Bush versus Clinton would be silly, if it weren't potentially influencing policy.
President Clinton took office in January 1993, almost two years after the 1990-91 recession had ended. On the other hand, President Bush took office just two months before the 2001 recession began.
As a result, 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. The Bush economy is equal to or better than the Clinton economy in almost every area.
President Clinton benefited from gale-force tailwinds. The price of oil fell from $19.82 a barrel in the first quarter of 1993 to $12.84 a barrel in the fourth quarter of 1998. Inflation remained very low. President Clinton also benefited from being in office immediately after the Cold War had ended, allowing him to enjoy the "peace dividend" -- a rapid decline in defense spending which helped bring federal spending down. More importantly, the fall of the Iron Curtain accelerated the global movement of capital and goods.
President Bush, on the other hand, has been faced with gale-force headwinds. In the midst of deflation and an epic stock-market meltdown, the 9/11 attacks occurred just eight months into his term, while the recession he had inherited was still underway. President Bush's massive increase in security spending has effectively offset the benefits of the peace dividend. The burden of government spending, and the cost of shifting resources toward security, are drags on the private sector. In addition, Hurricane Katrina flooded New Orleans, the 38th largest city in the U.S., while oil prices climbed above $70 a barrel....