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Kerry and the Economy

The Washington Post had a story today on how "Kerry Will Hit Bush Harder on the Economy". The article's lead:

Sen. John F. Kerry (D-Mass.), dismissing economic and jobs growth as too little, too late, will step up his campaign accusing President Bush of saddling the middle class with lower wages and higher costs for health care, education and gasoline, top advisers said yesterday.

With polls showing voters unhappy with Bush's economic stewardship, Kerry will spend the remainder of June arguing that the president's policies have left most voters -- and the country -- in worse financial shape.

The Democratic nominee will paint a gloomy picture: the worst jobs performance since the Great Depression, an explosion of personal bankruptcies, skyrocketing bills for child care, health insurance and education, all piled on top of workers who are earning less or working more.

Sounds like a good approach to me. And, as the article grudgingly admits, Kerry, in doing so, will be generally factually accurate in his claims and reinforcing what voters actually believe about the performance of the economy under the Bush administration.

Of course, this being a standard mainstream press story, there is the obligatory attempt to show how Kerry will be lying to, or at least grossly misleading, voters, even as he is telling the truth:

But a recent spate of positive economic news threatens to complicate, if not contradict, Kerry's impending attack. The economy is growing at its fastest clip in 20 years, 1.4 million jobs have been created in the past nine months, including nearly 250,000 in May alone, and wages are starting to climb for many workers.

Well, there is no doubt that the economy, since the fall of last year, has done better than its truly deplorable performance throughout most of the Bush administration. But in their effort to be "balanced", the Post reporters rather deceptively present the economic data to make it sound like the economy's going gangbusters and Kerry has to wilfully ignore that indisputable fact.

But it is disputable. It is not correct to say "[t]he economy is growing at its fastest clip in 20 years". Rather, it's growing about at about 4 percent a year these days, which is quite ordinary, especially for this late in an economic expansion. What the reporters are apparently referring to was the annualized growth rate in the third quarter of last year which, at 8.2 percent, was indeed the highest quarterly growth rate since the fourth quarter of 1983. But that was one quarter nine months ago, not today. Well, perhaps it all depends on what the meaning of "is" is.

And what about "1.4 million jobs have been created in the past nine months"? But this figure is arrived at only by adding 6 months of pretty lousy job growth onto 3 months of pretty good job growth, so as to produce a figure of sufficient magnitude to sound impressive. I covered this deception in a previous post, but let me add a salient point here: the economy has to add about 140,000 jobs a month simply to keep up with labor force growth and prevent the number of unemployed workers from rising. And 140,000 jobs a month over nine months comes to 1.26 million jobs. Therefore, the seemingly impressive addition of 1.4 million jobs is just barely over the number of jobs the economy needed to add over that period simply to prevent the number of unemployed from increasing.

Doesn't sound so impressive that way, does it?

Finally, how about "wages are starting to climb for many workers"? Depends on what your definition of "many" is. Here's an excerpt from a recent article by economists Jared Bernstein and Dean Baker on The American Prospect website:

Back in the late 1990s, we recognized the unique nature of the first full-employment economy in decades and wrote a book to document the phenomenon. One of our observations was that fast productivity growth is a necessary condition for raising the living standards of working families, but not a sufficient condition. You also need very low unemployment to ensure that the gains are evenly distributed.

The latest data confirm our findings with a vengeance. Productivity, which accelerated in the second half of the 1990s, has sped up once again since 2000. At the same time, the unemployment rate has remained stubbornly high. The official rate, measured last month at 5.6 percent, doesn’t capture the full picture because millions of job seekers, who had given up the search due to lack of prospects, are just starting to get back in the game. If they were officially considered to be looking for work, unemployment would be over 7 percent.

This combination of strong productivity growth and weak labor markets translates into wage stagnation for most, along with increased inequality. Full-time workers’ weekly earnings, adjusted for inflation, show a widening gap between the highest and lowest wages. For workers below the 75th percentile -- those earning less than the top 25 percent are earning-- real earnings grew by less than one percent. Only those at the top of the wage scale have benefited from the economic recovery, as real earnings at the 90th percentile grew 2.5 percent for men and 4.5 percent for women. These findings suggest that at least three-quarters of adult, full-time workers currently lack the bargaining power to press for a fair slice of the expanding pie. They are contributing impressively to this economy, but it is not returning the favor.

So rock on, John Kerry. Hit 'em hard and be confident your approach is both factually accurate and likely to be well-received in the court of public opinion. The Post and the rest of the mainstream press will never give you full credit for this, in their endless quest for a spurious balance. But in the end, the ones with the votes are the ones living in the real economy, not getting spun in the newsrooms.

Comments

Well apparently inflation jumped a little more than expected (and it was expected to just pretty high) so here comes more pain.

The economic resurgence currently underway is not all good news for all of us in the employee class. As you note, real unemployment is still high. The past three years constitute an unusually long period of softness after a recession. Interest rates and prices have been depressed - this means there is pent-up demand from the finance and goods producer sectors for increased profits. Added to this is the recent spike in oil prices, and oil prices underlie all costs in the american economy. The inflation report that came out today noted that the oil price spike had started to work its way through the rest of the prices in the economy.

A possible outcome of this scenario is prices rising relatively sharply while unemployment is still high - backwards from the situation at the end of the last two recessions, where the recovery was quick enough for employment to take off before any inflation set in. In that scenario, wage pressures were at the starting end of the inflationary spiral, rather than pent-up producer demand and expensive goods transportation. Back to stag-flation!

Despite his best efforts, W finds himself doing exactly what his father did 12 years ago - looking at "good" numbers in the reports that cross his desk, and wondering why ordinary americans don't think they add up to good news for themselves. The "good" numbers in the GDP reports only mean houses that are too expensive for them to buy and corporate profits that they don't share.

My personal anecdotal evidence:

In the period Nov 2003-Jan 2004, I, a skilled, albeit 50-year old (a negative factor in this job market) java programmer, I spent 2 1/2 months between my layoff notice and the time I landed, somewhat by luck, a consulting contract that lasted 4 months.

In the first two weeks of June, I spent just two weeks on unemployment to land a 6-month consulting gig in the same field.

So, the glass is half full. Things are clearly better than they were. On the other hand, nobody yet is offering guys like me permanent employment and I don't expect that to change anytime soon. I don't expect that to happen even under a Kerry administration, but under another Bush admin, I'm sure I'll never see it.

Kerry needs to use that term "middle class squeeze" over and over and over again until it becomes part of the American vernacular. It's brilliant and voters instantly relate to it. It also sums up 300 pages of position papers in three little words. Reagan had "lower taxes, less government", Kerry can have "stop the middle class squeeze." I hope the Kerry campaign is reading this (and he picks John Edwards as v.p.--who better to articulate the middle class squeeze?).

THE BUSH PRESIDENCY IS A NIGHTMARE FROM WHICH I AM TRYING TO AWAKE.

(In honor of the 100th anniversary of James Joyce’s Bloomsday, June 16, 2004)

I hate James Joyce more than I hate George W. Bush.

Ruy,
I find it amusing that you consider the Post and the mainstream press to be against Kerry. The conservative blogs I visit seem to think that Kerry gets a free pass and all the stories are anti-Bush.

Which papers do you consider pro-Bush? Which media outlets (besides Fox)? Anyone?

> Which papers do you consider pro-Bush?

None of them deliberately, but all of them by default. Reporters are lazy and there is too much spin in the news for them to sort out the facts from the BS. So they print Republican talking points that sound like facts. If they were to print Dem talking points, there would be a week of outrage.

"Which papers do you consider pro-Bush? Which media
outlets (besides Fox)? Anyone?"

Wrong question. Hypothetically, reporters try to be objective and report the facts., right? The question should be: "which news outlets succeed in being non-partisan, and which ones spin the interpretation so that it mostly comes out supporting a political viewpoint? BTW, I give Fox relatively good marks on objectivity - that is, when Brett Hume and his friends are not spinning like tops.

Actually, most journalists don't believe that true "objectivity" is possible. Everyone has a viewpoint, and a body of belief and experience that is going to affect how they see things and what they write. So, instead they focus on being "fair". This is what is taught in journalism schools, by the way.

Point of view shows up not just in spin, but in editorial decisions. Which facts did you include, and which did you leave out?

Oh, and by the way, I'm pretty sure I'm above the 75th percentile as a wage-earner, but things haven't been all that rosy for me either. I spent 3 months at half-pay last year, and got a new job at a 10 percent pay cut (10 percent off the nominal full salary, that is) after that. No noise about raises or bonuses at the new company either.

But the fact that I could even get a different job represents an improvement, it must be said. "Middle-class squeeze" -- I love it.

Middle Class Squeeze! Yes! Can we print the bumper stickers now?

I think it's important to note several details that politicians of both parties don't seem to talk about too much:

1) Housing costs have gone up 2 to 4 times as fast as compensation since 1980. Your income may have doubled, but the cost of the house has quadrupled.

2) This and other factors has led to the rise of the two income family. Since 1980, the percentage of two income families has gone from less than 40% to over 70%. How do you raise a family when both parents have to work?

3) The percentage of the federal budget, and therefore our tax dollars, that goes to service the national debt, has gone from 3-4% before 1980 to between 10 and 15% yearly now. This is overwhelminly because of debt accumulated since 1980.

(These percentages are from memory. Could somebody check my numbers?)

Lawrence, Jay,
Thanks for the input. I agree; maybe my question should have referred to editorials and not reporting. I'm OK with slanted (biased?) editorials because they are opinions, but reporting should be objective.

Since we are discussing the job situation, here's my $.02. I was laid off last April (as a mainframe consultant) and out of work until July. The job I took (and still have) was at a 5% salary cut (and went from four to two weeks' vacation). But recently, I have gotten some e-mails telling me about local job openings in my field. That tells me that things are picking up and companies are hiring again.

Steve,
I'm sorry to hear about your situation because I was there. Where are you located? As I stated earlier, it looks like Columbus, OH is starting to pick up.

Lots of engineers here! I too am a 50 year old Java (& C and C++) programmer. But I have not been out of work since 1995 (knock on wood!). However, I moved back to the Bay Area partly because it is a mother load of engineering jobs. Any Java programmers in northern california can send me their resumes...

Weisman is a clueless idiot. What do you expect? Fortunately, voters don't learn about the economy from reading clueless WaPo columns. Real voters learn about the economy from applying for work, asking for raises, looking at our paychecks and hearing the successes and challenges of our friends and relatives. No amount of spin can dampen a good economy nor brighten a lousy one. BTW- it is not "the economy, stupid". It is "the jobs, stupid". A good job alleviates all kinds of headaches from health care to lifestyle- you name it. No job or a bad job creates all kinds of stress and frustration. A friend or relative with no job can be a stress whether or not you have a job. Say your kid can't find a job and moves back home?

Beyond criticizing Bush, Kerry must convince voters that jobs will be more plentiful in a Kerry administration than a Bush administration. I think Kerry is doing just that, but the WaPo article concentrates on the Rove spin. Voters who have good jobs and increasing wages may think Kerry too pessimistic. Voters unemployed or underemployed may think Bush criticisms are too out of touch. This is how the economy will affect the election.

The way to counter the "good economic news" is to point out that everything positive that has happend has happened at the cost of a staggering national debt.

W has run up YOUR CREDIT CARD, and YOUR CHILDREN'S FUTURE has been mortgaged.

That was easy wasn't it? Want more work, take the national debt divided by the number of net new jobs created. I forget the exact number, but its pretty big.

I'm very glad Kerry is finally speaking out. What's a bit dispiriting is that Teixeira feels a need to root him on to do so. When you consider how many polls are coming out showing just how much Americans things are worse off (such as today's blog about the Mother Jones poll), clearly a Democrat needs to take the gloves off and pull no punches. There's a problem in that Kerry does not have much visceral contact with the world of normal Americans. It's not his fault personally -- the entire Senate has become a virtual House of Lords. All I can hope for is that he listens to real people and speaks from what he knows in his heart, and doesn't allow himself to be watered down by the courtiers who fill the political world.

Now that the Philadelphia Inquirer has come out for Kerry, all but telling its readers that Bush is dangerously crazy and practically guilting them into working to win Pennsylvania for Kerry, maybe that too will help Kerry realize that he doesn't have to pussyfoot around.

Larry, thanks for that note on the Inquirer.

I don't hear posters here saying Kerry shouldn't be aggressive in defining himself and what he's for. I do hear disagreement on when he should do that. And most of the posters here seem to think he should not set a date for Iraq troop withdrawal as a way of distinguishing himself from Bush on Iraq and generally, at least not at this point in the campaign.

I read the Inquirer endorsement at the link Larry was kind enough to provide:

http://www.philly.com/mld/philly/8933725.htm?1c

You have to register but it only takes a couple of minutes.

Wow. Even if that endorsement came the Sunday before the election it would be notable in several respects.

Bt, I wasn't really responding to what other posters were saying on that. Actually I agree with PhillyGuy that "middle class squeeze" is a pretty good mantra to keep saying over and over again, though not as viscerally grabbing as Republican mantras such as "death tax" and "tax-and-spend liberal." (Actually, "middle class squeeze" sounds like it could make a pretty good parody. Imagine a 50-something guy in a bar introducing his mistress, a cross between Bette Midler and a soccer mom. "I'd like you to meet Jennifer -- my middle-class squeeze.") I also agree with bakho, that Kerry needs to do more than say how bad Bush is, but convince them he has a plan to bring more and better jobs to America.
I think promising exactly what he will on Iraq is probably not a good idea at this time. It's seven months until Inauguration Day, and a lot of things can happen between now and then.
BTW, there are a lot of engineers on this board. And I thought engineers were all solidly Republican!

What struck me most about the editorial other than its timing was just how explicit it was in telling people how to get off their asses and help Kerry win.

By writing this early they obviously have made a decision that forecloses the possibility that Bush will, or even can, do anything before November that might change their minds. I find that quite remarkable.

Bush already is moving to the center. The signs of that are in his embracing positions on Iraq Kerry had been advocating for a long time, in his almost fawning remarks about Clinton at the WH the other day at the unveiling of Clinton's portrait there, and probably other ways I'm not aware of. They may not use the phrase "compassionate conservative" this time around. But their strategy to win the votes of enough independents and moderates with moderate-sounding and deceptive rhetoric and the usual emotional appeals tethered to treasured American symbols, beliefs and fears--the strategy underlying the "compassionate conservative" rhetoric last time around--is one they are already beginning to use again.

That strategy could work if enough voters are allowed to forget that he is a radical, not a moderate or even a conservative. As mencken asked, "Are we a bunch of sheep?" We'll find out come November but in the meantime I'm trying to help Kerry in as many ways as I can! He really needs for all of us to be as shrewd and energetic as possible on his behalf.