A RECENT poll released by ABC News revealed that 70 percent of Americans feel that the economy is in "bad shape" and only 42 percent of Americans approve of President Bush's handling of the economy. Given the overwhelmingly negative portrayal of the economy in broadcast and print news over the past two years, coupled with recent criticism from Democratic presidential hopefuls, it isn't entirely surprising that most Americans are pessimistic about the path the economy is on. While the U.S. economy did officially slip into a recession in March of 2001, most economists agree that it was mild and short-lived. A simple examination of economic issues and world events over the past two years reveals that rumors of a "bad economy" are just that and the U.S. economy is clearly on the road to recovery.
Contrary to popular belief, the U.S. economic downturn was not the result of the $500 billion budget deficit or President Bush focusing "too much attention" on Iraq. The war in Iraq began 18 months after the recession ended. Rather, the economic slump can be attributed to other factors. The massive run-up in the stock market and capital spending and the subsequent "hangover" caused by the burst of the tech bubble put the economy on the ropes. Sept. 11, 2001, a shock to the economy as much as it was to citizens, very nearly knocked the U.S. economy down for the count. It's remarkable that these events, coupled with the Enron and WorldCom debacles as well as serious geopolitical concerns didn't drag the economy down further than they did.
With the volume of stories over the past couple years on TV about John Doe losing his job as a machinist to someone in India or Sally Smith wondering how she was going to make next month's rent, you'd have thought that we were back in days of the Great Depression. Most Americans would probably be floored to learn that the economy has actually been growing and at an increasing rate since the third quarter of 2001. Yes, a recession occurred, so naturally business spending fell and jobs were lost. The economic prosperity of the 1990s lured too many people into believing the U.S. economy would never again lapse into a recession.
If people took the time to look past the economic rhetoric of the "Democrat Gang of Nine" and catch the 15 seconds Tom Brokaw devotes to economic numbers on the nightly news they would find that the economic picture is actually quite rosy. Many experts agree GDP growth is expected to go over four and half percent next year, which would be the highest level since growth reached 4.4 percent in 1997. The Dow Jones Industrial Average is at its highest level in 15 months, the NASDAQ is at its highest level in 18 months. Higher stock prices mean more money in the pockets of the average American investor. Additionally, interest rates remain at historically low levels, which will continue to stimulate capital and business service spending.
The one remaining piece of the economic recovery puzzle is the U.S. jobs market. The unemployment rate continues to hover above six percent, and initial unemployment claims are above 400,000. The gloom and doom in the job market is not unprecedented; in fact, a quick glance back to the early 1990s reveals that the exact same thing happened the last time the U.S. economy was in a recession. On the heels of a recession, the average unemployment rate between 1992 and 1994 was 6.8 percent, yet at the same time GDP grew at 3.2 percent. As the growth kicked in and continued to increase, the unemployment rate fell for the next six years. Therefore, we should expect that with the current and future GDP growth, jobs will come back and unemployment will fall.
We can all read the public opinion polls that the primary concern of most Americans is no longer terrorism but rather the economy. With high unemployment rates and a large budget deficit, Americans do indeed have reason to be concerned with the economy. Do not, however, believe everything you see or hear. The Democratic presidential hopefuls and the writers at NBC Nightly News are not experts on the economy. The numbers don't lie, the U.S. economy is on the rebound and by this time next year, concerns about the economy will be as distant a memory as Ben and J-Lo.
(Joe Schilling's column appears Tuesdays in The Cavalier Daily. He can be reached at jschilling@cavalierdaily.com.)
Read More
UPADHYAYA: The Great and not-so-Good sides of U.Va.’s 2030 housing plan
By Apal Upadhyaya | YesterdayInstead of improving the dire state of existing infrastructure, however, the University has shifted attention away from it and chosen to expand.
EDITORIAL: Support low-barrier shelters in Charlottesville
By Editorial Board | 2 days agoInvesting in low-barrier shelters now will pay off in increased stability for the homeless, which will undoubtedly improve the safety of shelters and the community writ large.
SHRAUGER: McIntire’s three-year model limits opportunities for first-year students
By Alex Shrauger | 4 days agoBy pigeonholing students into commerce so early, the University violates its own mission of providing a holistic education that produces students capable of succeeding in a variety of fields.
