Today on Blogcritics
Home » Economic Growth So Strong It Can’t Be Ignored

Economic Growth So Strong It Can’t Be Ignored

Please Share...Tweet about this on Twitter0Share on Facebook0Share on Google+0Share on LinkedIn0Pin on Pinterest0Share on TumblrShare on StumbleUpon0Share on Reddit0Email this to someone

When the New York Times has to reluctantly admit the existence of an economic boom, while doing everything in their power to minimize and distract from the basic facts, you know that a strong economy has really arrived.

First we had unemployment reported at a 6 year nationwide low of 4.7% – well under 4% in many areas of the country. A rate so low that only two years in the last 40 have had lower unemployment. In addition, the actual rate of employment is at a record high of over 66%, a rate exceeded by only 3 years in the last 40. That’s good news, but the latest reports on the economy show even more encouraging data.

Job growth goes hand in hand with low unemployment, and in the first quarter of this year we’ve seen an unprecedented total of 590,000 new jobs added to the workforce. This continues the trend of massive job growth which has produced an impressive increase of 2.7 million new jobs since the first quarter of last year.

Another bit of good news in the job sector is that the trend for hourly wages to increase which began last year has continued, with the average non-farm hourly wage up $.55 an hour from March of last year, meaning more than $1000 a year in additional earnings for the average worker. Gains were strongest for highly skilled workers, with computer manufacturing jobs increasing by $.76 an hour on average, utility workers gaining $.81 an hour, those providing professional and business services going up $.93 an hour and the big winners were those in information services who gained $1.17 an hour. Overall this is the second largest rate of wage increase in any year since records started being kept in 1964. The average rate of wage increases in the last 40 years has been $.33 per year.

In the latest report from the Bureau of Economic Analysis the raw quarterly growth rate in the Gross Domestic Product for the first quarter of this year is reported at an unprecedented 8.2%. That’s an incredible rate of economic growth, a full 3 points higher than the very impressive 5.2% reported in the fourth quarter of last year. Adjusted for the current value of the dollar the GDP growth was even better relative to last year, at 4.8% compared to 1.7% in the fourth quarter of 2005.

This GDP surge was largely driven by consumer spending – an area which had been lagging until recently – which increased by 7.4%in the first quarter of 2006. This was largely driven by a growth in personal income which started last year with a growth rate of 9.4% in the fourth quarter of 2005 and 6.7% in the first quarter of 2006. Disposable income was up even more impressively – despite increases in housing and fuel prices – by 9.8% in the fourth quarter and 5.8% in the first quarter of this year.

Business spending was up even more dramatically, although it’s a smaller part of the economic picture. Spending on equipment and software was up 16.4% this quarter, the highest rate of business spending since the Tech Boom in the first quarter of 2000.

While consumers are spending more, the rate of increase in consumer borrowing, which has been an ongoing concern, has slowed significantly in the first quarter of 2006. February set a record low with borrowing increasing only 1.8%. This puts the first quarter significantly below last year’s average, which was historically low. Even better, credit card borrowing – the worst kind for consumers – has been held to a growth rate of only 3%, the lowest rate in 13 years. The issue of consumer debt is being hit hard by the political left, especially on Air America Radio, but the data suggests that the strong growth in employment and wages more than negates the very low rate of growth in borrowing.

A positive side effect of this growth in personal income is an increase in projected income tax revenues, a trend which if it continues would have a significant impact on the deficit. The Congressional Budget Office projected a 12.6% growth in personal income tax revenues for 2006. However the rate of increase in income tax revenues for the first quarter is estimated at 17.2%. If that same trend of higher growth applies to corporate taxes and social security taxes the net result would be about an additional $100 billion to apply to the deficit, almost cutting the rate of increase in half, and leading to a balanced budget several years earlier than projected.

Core inflation (not including fuel and food) is also down from the fourth quarter of last year, at 2%. That means that those workers who are earning more and spending more are not seeing prices rise as much as they had been, giving them more purchasing power. Soaring oil prices will likely have a negative impact on overall inflation during the coming year, but they may be balanced out by a projected decrease in housing costs.

The economy is doing so well that the Federal Reserve is considering raising interest rates one more time to try to slow growth a little bit before laying off the rate increases for a couple of years.

For a desperate attempt to put a negative spin on all of this, don’t forget to check out the article in the New York Times, where they try to throw in every possible red herring to distract from the simple fact that the Bush tax cuts – focusing heavily on the middle class and the working poor – have had a remarkable impact on a failing economy, turning it around and creating a burgeoning boom. This, of course, leads to one inevitable conclusion. We absolutely must make the tax cuts permanent to continue down the road to economic prosperity.

About Dave Nalle

  • http://absent-mind.blogspot.com/ Jet in Columbus

    Gentlemen: Thank you-all of you. A man never learns anything if he’s right all of the time.

    I’ve learned through life experience that if you get lost trying to find somewhere, you never forget where it is afterwards.

    I’m just trying to find my way…

  • zingzing

    aww, it just makes him feel like a big man asking someone if they feel like a big man. leave big man alone. big man make dinner for me. where’s my dinner, big man?

  • http://somethingaboutchelsea.blogspot.com Chelsea Snyder

    “Gentlemen: Thank you-all of you. A man never learns anything if he’s right all of the time.”

    According to my vagina, I’m a female. Despite the fact I can easily beat Sussman up.

  • http://www.elitistpig.com Dave Nalle

    Zing, ‘big man’ more commonly known as ‘big brother’ took your dinner and gave it to an illegal alien. Your chimichangas are waiting for you in Guadalajara.

    Dave

  • fiddlercrab

    My ,there is an awful lot speculation on what’s wrong with the economy out there.I know there’s an awful lot of retired people under that $50,000 figure someone mentioned.And we who where lucky enough to
    make it thru the wars, the hippies,yippies,yuppys and all that says this is who I am.Seems like greed, stupidity,and a lack of saving a buck will be the future generations downfall if they do not plan, and save for retirement.I guess I should be thankful that I was able to retire.NOT saying that I may have to Try to return to work,for it is happening that many retired people Have To because of the economy.And I can tell the way you kids talk that you are part of the generation that has a lot of us taking care of Grandkids.Theres another factor you might consider when you buy those “Designer jeans’, torn ,and with your asses hanging out.And being a 2 and 3 car family,(one being a SUV gas guzzling monster.You are not going to have it easy for sure,so I’d save if I were you.I do give the younger generation a lot of credit,the inventions are mind boggling,(I remember Hi-Fi),and you made us very aware of the dirty politics,dirty air,and other social and economic injustices that have occured in the past.Most of you do not even remember Harry S Truman..but one of the things that he wanted to do was extend OPA (office of price administration)By the way he was the last honest,sincere President we had ,who also didn’t have a Bimbo running up and down the White House back stairs.Congress would have toed the mark with this guy.They’d be in “Session” a hell-uv-a- lot more than they do now.And it is so difficult to listen to people criticize a leader like him.He wouldn’t let anyone charge $600 for a toilet..period. I went to CHK (college of hard knocks)and I do hope you will follow an old geezers advise…
    1.Have mass identification.”They know all about you if you pay taxes (flat)legally vote,register a car,been in a hospital,been fingerprinted,dentists,DNA etc etc.
    all on one card.I was born here and I will show that card to any Authority.You bet it would weed out all those illegal immigrants and Non-green cards.And by the way folks they are coming as far away as Paraguay,thru Mexico.Fox ,their president could care less.Do you think it’s difficult for them to go back over the border South?
    2.Be serious about Mass transportion…Check out Europe and Japan’s movement of the masses.It would help the environment also.This Global warming sounds like serious stuff.And before we get to serious about Nuclear Fuel we damn sure better take care of Hanford WA.and a few other hot spots.
    3.The economy seems to me like a big game,this%this and %that % this.Can’t we print more money?What difference does it make when a guy can walk off the job with $400 mil and some guy who has worked for US Steel,(ad infinitum) for 30-35 years and he gets screwd out of his job and pension.Do not bury your head in the sand,there’s a lot of that out there today.And let us not forget that old adage of Minimum wage “we can’t pay him any less!! American kids are lazy Bull.If an American works,PAY him a decent wage.He has to pay the same for a loaf of bread for his family, as the guy who walked with 400mil.
    3.Try not to let your kids be latch key kids.Having Mom OR Dad home is a good thing.And the way things are going many of you will be working in your own homes anyways.We are becoming more and more a high tech and Service industry.Do I see Socialism creeping in.
    See I just made it so easy for you.DON’T FIGHT OVER MONEY.You are talented and intelligent enough to ignore,or out-smart the fools who can make your life miserable with their “Econmic Bull—-.
    4.I know one other thing also the Islamic or Arab people are not allowed to charge interest..Do you understand what that’s all about?So why when American banks charge up to19%?,I would say that even the Bible thumpers on TV say, “God only ask for 10%” Hmmm….Very strange………..

  • zingzing

    mexico! cheap livin! mexicana hermana!

  • http://www.elitistpig.com Dave Nalle

    Fiddler, American banks can get away with charging way more than 19%. Try at least 28%.

    As for the younger generation, statistics suggest that they are saving and investing more actively than any other generation before them. Deep down they know not to trust in the government for their future and they’re taking advantage of the opportunities for tax free investment that let them take care of themselves.

    Dave

  • RogerMDillon

    “According to my vagina, I’m a female.”

    Maybe that’s because Jet wasn’t thanking you since your butting in didn’t help the situation.

  • http://www.elitistpig.com Dave Nalle

    What troubles me is that her Vagina talks and has opinions.

    dave

  • http://musical-guru.blogspot.com Michael J. West

    Doesn’t Erin McMaster also claim to have a Talking Vagina?

  • Blue Meanie

    Usurers running the banks, sidestepping the rules and printing their own money by only holding 10% in reserve. All the while doubling your rates when they have you in a bind, and after so many years of owning the Congress, they get the bankruptcy laws they want passed, peaople can’t get clear, but corporations can and do.

    All the while, the Corps go belly up when it suits them, and shove their obligations and retirement debt onto, you guessed it, the verage guys that pay taxes.

    Wake up people, your future is being sold out from under you to the Chinese national bank, while your past is hoarded in a P.O. box in the Grand Caymans tax free

  • zingzing

    vaginas do not talk. they make funny noises (hi-larious noises), sometimes they spit… but i have never heard an intelligent, intelligible phrase uttered by a vag.

  • http:jpsgoddamnblog.blogspot.com JP

    I can’t disagree with this misguided article more. I’m so confused, real wages for average citizens going down, but corporate profits going up, does not mean an “economic boom” for all. The tax cuts do NOT favor the middle class and working poor, and should be repealed.

    And the “Fair Tax” is a joke–trust me, I live in the home of Boortz’ radio program. He’s a nutcase.

  • http://www.elitistpig.com Dave Nalle

    I can’t disagree with this misguided article more.

    Especially since you apparently didn’t read it.

    I’m so confused,

    There you’ve hit the nail on the head.

    real wages for average citizens going down,

    No, read the article. Real wages are going up, and substantially – even historically for average people.

    but corporate profits going up, does not mean an “economic boom” for all. The tax cuts do NOT favor the middle class and working poor, and should be repealed.

    You’re ill-informed. You’ve been listening to propaganda instead of facts. The 2003 tax cuts were 2% for the top income earners and 3% for the middle groups, while huge numbers in the lowest two quintiles were removed from the tax rolls alltogether. That’s the truth. Might want to use that for reference instead of whatever propaganda you’ve been reading.

    And the “Fair Tax” is a joke

    I’m not a fair tax fan either, but it’s an interesting idea and worth thinking about.

    Dave

  • troll

    *The 2003 tax cuts were 2% for the top income earners and 3% for the middle groups*

    or one could say that the gal with an income of 1 million had her tax liability reduced by 20 grand and the guy with a hundred grand income had his liability reduced by 3 grand

    …it takes money to make money…I guess

    empowering the investor class with this injection worked – for that class particularly and for the economic indicators…now comes the delayed ‘trickle down effect’ and the benefits of a ‘wartime’ economy…..right – ?

    all that borrowed money has to end up in somebody’s pocket

    troll

  • http://indemnification.blogspot.com -E

    why are people talking about my vagina? and what does that have to do with economic growth?

  • http://www.futonreport.net/ Matthew T. Sussman

    Erin, you need to do next week’s podcast.

  • http://www.elitistpig.com Dave Nalle

    The vagina can be a powerful engine for economic productivity. Go see the thread on legalizing prostitution if you don’t believe me.

    …it takes money to make money…I guess

    Truer words were never said, Troll.

    empowering the investor class with this injection worked – for that class particularly and for the economic indicators…now comes the delayed ‘trickle down effect’ and the benefits of a ‘wartime’ economy…..right – ?

    I have no reason to doubt that this will be the case. We’re certainly seeing a damned strong economy at every level, including all the factors noted in the article – which extend to the working class as well as everyone else.

    Dave

  • http://www.maskedmoviesnobs.com El Bicho

    “The vagina can be a powerful engine for economic productivity.”

    That’s true. Look at this quote from a famous businessman who made a big splash in the ’80s with imports.

    Tony Montana: In this country, you gotta make the money first. Then when you get the money, you get the power. Then when you get the power, then you get the women.

  • http://www.elitistpig.com Dave Nalle

    Tony was a wise man, but he might have that backwards. You get the women, they earn you the money and the money gives you the power. This is all assuming, of course, that your pimp hand is strong.

    Dave