Semi-Daily Journal Archive

The Blogspot archive of the weblog of J. Bradford DeLong, Professor of Economics and Chair of the PEIS major at U.C. Berkeley, a Research Associate of the National Bureau of Economic Research, and former Deputy Assistant Secretary of the U.S. Treasury.

Thursday, December 22, 2005

And here we have Matthew Yglesias reminding us that a world in which Fred Barnes is able to blather in print or in electrons is an ugly, ugly thing:

TPMCafe || Things Are Great!: Several conservative writers seem concerned recently that the American people don't believe the economy is strong even though, allegedly, it's really super-strong. So they offer the White House advice on how to improve its communications strategy. Today, Fred Barnes:

Yet there's a strong case Bush and his aides can make for impressive economic gains at the individual level. True, rising healthcare costs have cut into the gains, but tax reductions have helped. By citing micro numbers or fleshing out macro numbers, the administration would convey this message: it's not just you who's doing well. Most Americans are. The country is. For instance, there's the growth in per capita disposable personal income from $26,424 in 2003 to $27,001 in 2004 and $27,365 in 2005. That's not all. In November, hourly wages were up 3.2 percent. And people are able to spend more. Real personal consumption spending has risen nearly 3 percent in the past year. True, these last two numbers are macro, but they're ones people can understand.

Sadly, per capita numbers don't really tell you anything about how "most" people are doing. But here on the White House Economic Statistic Briefing Room website we have a link to median household income data. Median household income in 2004 was $44,389 which is a lot by world standards. But in 2003 it was $44,482 which was more. In 2002 it was $44,546 which was even more. In 2001 it was $45,062 which was even more. In 2000 it was $46,058 which was even more. In 1999 it was $46,129 which was even more. In 1998 it was $45,003 which was less, but still higher than today's median. And if you go all the way back to 1997, it was $43,430 -- lower than it is today.

That's the sort of thing that probably lies behind dour economic sentiments. Lots of people -- most, really -- haven't been doing all that well. Now at the same time, it would be foolish to pretend we're living through some kind of economic catastrophe. America is still a very rich country, GDP is growing a lot, there's a lot of productivity growth, and thanks to a rise in asset prices people have been able to keep ramping up consumption even while incomes fall slightly. In other words, there's an interesting story to tell here and a bit of a puzzle. Presumably, we'd all like median incomes to go up, rather than down; to understand this trend and wonder what can be done about it. Wouldn't it be more worthwhile to let the White House write its own propaganda and spend some time thinking about that?

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