When President Bush gave a major speech in North Carolina early last month touting the strength of the U.S. economy, House Minority Leader Nancy Pelosi (D-Calif.) wasn't buying it. "Platitudes and photo-ops by the president suggesting a strong economy simply do not make it so," she said.
If timing is everything in politics, then Rep. Pelosi's could not have been worse, for in the next few weeks a geyser of positive economic reports burst forth from various government and private agencies. Credit President Bush, Fed Chairman Alan Greenspan, or just a positive turn in the business cycle, but for whatever reason the U.S. economy is firing on almost every cylinder. Among the evidence for Rep. Pelosi to consider:
Incomes are rising. The Commerce Department reports that personal income grew 0.3 percent in November and is up 12.6 percent in the last four years.
Companies are hiring. The Labor Department says the unemployment rate is 5 percent, well below historic norms. The economy added 215,000 jobs in November, according to the department, and has added 4.5 million jobs since May 2003.
Factories are humming. The Federal Reserve estimates that U.S. industrial production rose almost 3 percent from November 2004 to November 2005, including a 0.7 percent increase in November 2005 alone.
The economy is growing. The Commerce Department reports that U.S. GDP increased at a rate of 4.1 percent in the third quarter of 2005, and the Organization for Economic Cooperation and Development (OECD) predicts a growth rate of 3.5 percent for the United States in 2006.
Businesses are investing. The U.S. Bureau of Economic Analysis reports that investment has surged to a 9.2 percent annual rate since 2003, much higher than the historically normal rate. Business investment is one of the keys to productivity growth and rising living standards. (Supply-side economists like to point out that the current investment boom followed President Bush's tax cuts on capital gains and dividends.)
Bosses are smiling. A Business Roundtable survey found that 87 percent of CEOs from large U.S. companies expect their sales to increase in the first half of 2006. Sixty percent expect to raise capital spending and 40 percent expect to hire more workers (up from 33 percent in September).
All this good news does not mean that everything economic is rosy. The housing market softened a bit in October and November, energy costs remain high (even as gasoline prices have dropped from post-Katrina spikes), and it may take a miracle to keep General Motors out of bankruptcy. Meanwhile, 2005 brought the United States one year closer to an imminent Medicare and Social Security crisis, with Congress putting its collective head in the sand and showing every sign of maintaining that stance in 2006. Numerous problems could derail economists' projections of another year of solid growth with low inflation.
But only a determined pessimist-or a leader of the minority party in Congress-could fail to see the bright side of the U.S. economy as the new year begins. "Barring an unforeseen, catastrophic event, 2006 is shaping up as a copy of '05," economist Bill Sirakos told the Fort Worth Star-Telegram. "Steady growth and pretty good times."