Knowing how and why the current GOP economic plan has not worked for most Americans is immensely important. How GOP Economic ‘Expansion’ Failed UsBy Cliff Montgomery – Nov. 3rd, 2008An April report from the Center on Budget and Policy Priorities, a major economic think-tank, perhaps is even more timely now, just before most Americans cast their ballot tomorrow on Election Day.It describes–in clear, easy-to-understand English–how the Bush economic ‘expansion’ from 2001-2007 was nowhere near the high-performer its proponents have claimed.Whomever you vote for tomorrow, knowing how and why the current GOP economic plan has not worked for most Americans is immensely important. Below has provided some of the report’s key points. You also may pull down the full study, for your own perusal.HOW ROBUST WAS THE 2001-2007 ECONOMIC EXPANSION?“Proponents of the 2001 and 2003 tax cuts often argue that the economic and employment growth of the past several years establishes that these tax cuts ‘worked’ and had strong beneficial effects.”More recently, some have also argued that, with growth slowing, new tax cuts are needed and would reinvigorate the economy.”It now appears that the economic expansion that began in 2001 is drawing to a close. The economy may be entering a recession; if not, it is certainly entering a slow-down. Now is therefore a good time to take stock of the recent economic expansion as a whole.”We examine the expansion from 2001, when it began, through the third quarter of 2007, before the slow-down in economic growth in the last part of 2007.”The evidence on the 2001-2007 expansion provides no support for the claim that the tax cuts generated exceptional economic growth. Rather, examination of a broad range of key economic indicators indicates that the economic expansion that began in 2001 was, on balance, weaker than average.”In fact, with respect to GDP [Gross Domestic Product], consumption, investment, wage and salary, and employment growth, the 2001-2007 expansion was either the weakest or among the weakest since World War II.”Moreover, the economy’s performance between 2001 and 2007 was weaker, overall, than its performance in the equivalent years of the 1990s, years following significant tax increases [for the wealthy]. GDP growth was somewhat weaker than in the 1990s, and job creation, investment, and wage and salary growth all were substantially weaker.What the Data Show: The Key Findings“We examine Commerce Department, Labor Department, and Federal Reserve Board data on seven economic indicators: the Gross Domestic Product, personal consumption expenditures, private domestic fixed non-residential investment, net worth, income from wages and salaries, payroll employment, and corporate profits. For each indicator, we look at average growth both since the economy hit bottom in November 2001 and since the last business-cycle peak in March 2001.”We compare average growth over these periods with the average growth that occurred over comparable periods in the other business cycles since the end of World War II. (Growth is measured after adjusting for inflation, except for employment levels, where such an adjustment is inapplicable.)
- • For six of the seven indicators, the average annual growth rate between 2001 and 2007 was below the average growth rate for the comparable periods of other post-World War II economic expansions.Notably, this expansion was among the weakest since World War II with respect to both overall economic growth and growth in fixed non-residential investment. These two indicators should have captured any positive “growth effects” of the tax cuts.• The labor market also was weaker during the 2001-2007 expansion. Both employment growth and wage and salary growth were weaker during this expansion as a whole than in any prior expansion since the end of World War II.• The 2001-2007 expansion outperformed the average post-World War II expansion in only one area: corporate profits, which grew much more rapidly than average.
“These conclusions hold whether one focuses on comparisons that examine the period since the expansion began or comparisons that examine the period since the last business-cycle peak (i.e., since the 1990s expansion ended).The 2001-2007 Expansion“As noted above, we have examined the performance of these economic indicators in two ways: from the start of the expansion in November 2001 (that is, since the fourth quarter of 2001) through the third quarter of 2007; and from the previous economic peak (the first quarter of 2001) through the third quarter of 2007. This section focuses on the expansion period.”The Gross Domestic Product, consumption, net worth, non-residential investment, wages and salaries, and employment all grew less rapidly than during other comparable expansionary periods.”Labor market progress was especially weak, with employment and wage and salary growth far below average and, in fact, lower than in any previous post-World War II expansion. Employment grew at an average annual rate of only 0.9 percent since November 2001, as compared with an average of 2.5 percent for the comparable periods of other post-World War II expansions.”In addition, real wages and salaries grew at a 1.9 percent average annual rate in the 2001-2007 expansion, as compared with a 3.8 percent average annual rate for the comparable periods of other post-World War II expansions.”Corporate profits fared exceptionally well. The sole exception to the 2001-2007 period’s lackluster performance was the growth of corporate profits. They experienced average annual growth of 10.3 percent, as compared with average growth of 7.4 percent for other comparable postwar periods.”Like what you’re reading so far? Then why not order a full year (52 issues) of thee-newsletter for only $15? A major article covering an story not being told in the Corporate Press will be delivered to your email every Monday morning for a full year, for less than 30 cents an issue. Order Now! Wait, why does an independent news source run advertisements? The Spark answers in its advertising policy. * Please check out our ads–they help keep this news site running. Thanks!
