The Bush Economy: A Needed Reappraisal
So George W. Bush is a bit more popular than Mitt Romney, according to a Bloomberg poll. W has a favorable ratings of 46% and unfavorable ratings of 49%. Romney has favorable ratings of 43% percent and unfavorable ratings of 50%.
This gives me a news hook to again point out the huge misperception of the Bush economy:
1. There was an eight-month recession in 2001 that officially began in March and ended in October. It was marked by a huge decline in business investment, while consumer spending stayed positive. Good luck explaining how his policies caused a stock and investment bubble to burst in 2000, months before he was elected.
2. The 2002-2006 period was the core of the Bush recovery after the 2001 recession. GDP growth averaged 2.7 percent a year, and the economy added an average of 102,000 jobs a month. Hardly a powerful rebound. But then again, we shouldn’t have expected one given how mild the downturn was. As a Fed study said late last year, recoveries “tend to be faster” after severe recessions, such as the one we just had. The deeper the downturn, the more robust the rebound. The 2001 recession was mild, and so was the recovery after.
3. Isn’t the most obvious explanation for the “weak” Bush recovery simply one of mean reversion? Things more or less returned to average. The Clinton boom veered too far above the real growth and job creating potential of the U.S. economy, so it was balanced off by a weak recovery after the 2001 recession.
From 1996-2000, GDP growth averaged 4.3 percent a year, and average monthly jobs growth was 240,000 jobs per month. Now, if you combine those five years with the 2002-2006 Bush recovery, what you end up with is average GDP growth of 3.3 percent and monthly job growth of about 170,000 a month. Both figures are right around the average for the U.S economy. The Clinton economy was a bit on the hot side, so the Bush years were a bit on the cool side. The U.S. economy reverted to its mean.
And again, the Bush polices didn’t cause the Great Recession, no matter what Obama campaign ads say.
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Comments:
Nov '10
Re: The Bush Economy: A Needed Reappraisal
Yes, mean reversion. But, wasn't there also massive "mal-investment" (as the Austrians would call it) going on all through this period as the housing bubble swelled? If that investment was driven by artificial factors that themselves were above or below the mean (policy driving expansion of subprime & Alt-A mortgages, Fannie & Freddie swelling their balance sheets with these mortgages, the Fed providing easy money, new derivative markets encouraging new financial instruments, etc.), wouldn't the normal salutary effects of production be somewhat muted?
There is no such thing as a... well, everyone here at Ricochet knows how to finish that sentence.
Apr '11
Re: The Bush Economy: A Needed Reappraisal
Whoa there, Pethokoukis.
The AEI article you cite talks about tax policy not monetary policy. Fed policies have caused almost every boom and bust since 1913.
Bush pushed the "ownership society," one of the dumb ideas that made the housing bubble. The Fed was happy to oblige Bush with easy credit, another dumb idea. Bush's fiscal policies wer atrocious. He signed enormous social spending bills. He grew government imprudently, and he trespassed beyond the limits established by the Constitution. Bush policies (along with the Fed's almost treasonous malpractice) are a proximate cause of this recession.
Obama took Bush's policies, multiplied the errors, and deepened and lengthened the recession. Obama is FDR without the class. And Bernanke is the most dangerous man ever to manage the Fed. Ever.
And the recession shows no sign of ending. Doesn't that make it a depression?
Edited on September 29, 2012 at 9:56amJun '11
Re: The Bush Economy: A Needed Reappraisal
This Ricochet post was sponsored by the George W. Bush Presidential Library.
Sep '10
Re: The Bush Economy: A Needed Reappraisal
No one can be certain if Bush's policies were a major contributor to the "financial crisis" or not, but it is certain his policies did not prevent the financial crisis. One other thing is certain when given a choice between a market response to the crisis or a massive government response, in keeping with his governing philosophy he chose the government response. He failed to prevent the worst terrorist attack in US history and the second worst financial crisis and yet Republicans try to make of him something other than a failure.
The American public seems to be on to something however, Romney could be worse. Perhaps the message of this campaign is that the majority of Americans have had their fill of moderate, big government, establishment, Republicans.
Obama has proven himself incompetent and the majority of Americans are aware of it. But given the alternative he may win and the Republicans have no one to blame but themselves.