Giuliani Dismissing Concerns about the Economy

Daniel Gross has a nice article about all those economic statistics being tossed around by the Bush Pollyannas, which include Rudolph Giuliani:

In Iowa last month, Rudolph W. Giuliani bluntly dismissed concerns about the economy and higher gas prices by saying, “I don’t know what we’re all so upset about.”

I wonder how much Exxon stock is in Giuliani’s portfolio? It is true that the reported unemployment rate is 4.6% but compare the 63% employment to population ratio now to the 64% plus employment to population ratio during most of Clinton’s second term.

Gross noted more spin from Treas. Sec. Snow:

In addition, aggregates generally are averages, which are of declining utility in an economy characterized by greater inequality of income and assets. In an interview with The Wall Street Journal in March, Mr. Snow took pains to point out that there had been substantial gains in per-capita income (8.2 percent, after inflation) and net worth (24 percent, before inflation) from the beginning of 2001 to the end of 2005. The data he cited were averages, or means, and that can be misleading. “The average wage is a useful indicator if you want to know what’s happening to the tax base, but it might not tell you what’s going on for the individual worker,” said Alan B. Krueger

Rising inequality is a good point but the notion that we are all much wealthier does not hold up under closer analysis. Let’s remember that per capita wealth at the end of 2005 was about the same as it was at the end of 1999. And even if we 2001 as the start date, the New Economist reminds us that mean growth is not the same as median growth. The median household saw very little increase in real wealth over this period.

Most of the increases in income have accrued to profits and not real wages. Real wages for many have fallen with the increase in fringe benefits is largely going to pay for more expensive health insurance premiums. As far as real GDP growth, real GDP for 2005 was only 13.4% higher than it was for 2000, which represents an average annual growth rate of only 2.55% – as compared to the 3.7% average growth from 1993 to 2000.

I know Rudi has appointed himself to be head Bush cheerleading but seriously – I don’t know what he is so giddy about?

Update: Via Mark Thoma comes Glenn Hubbard that the pie is getting bigger. As Mark notes, most of us will have to wait for our slice of that yummy pie. While I might agree with Dr, Hubbard that the formerly expansionary monetary policy was a good thing, I’m a little shocked at his praise for Bush’s fiscal policy:

And tax policy? Investment incentives, lower marginal tax rates and cuts in dividend and capital gains taxes promoted investment at a time when investment decisions faced many headwinds. Are we to believe that higher marginal tax rates would have led to better outcomes for output and employment over the past five years? Should we think that raising taxes on capital income would be an encouraging sign for foreign investors about the U.S. investment climate?

Look – had this Administration cut government spending to go along with the reductions in marginal tax rates, he might have a point. But as the economy is getting closer to full employment, the continued fiscal stimulus is forcing the Federal Reserve to raise interest rates. Can you say “crowding-out”?