It takes a licking and keeps on ticking; maybe that makes it a watch rather than a monk. In any event, the economy’s unwillingness to actually dip into a recession is becoming a bit of an embarrassment for some.
There is no doubt that the economy has taken some hard hits, including the bursting of the housing bubble, the broader credit crunch, and steadily increasing energy costs. Nevertheless, when the first quarter’s data came out, the gross domestic product was still growing, albeit slowly, at 0.6% for the second quarter in a row. The market soared today, largely on optimism about economic prospects.
Two quarters of essentially zero growth is nothing to brag about, of course. But it has become an article of faith among most politicians that “we are in a recession.” Questioning that proposition is perceived as failing to feel the pain of voters, so no one is interested in doing so. However, since a recession is defined as two consecutive quarters of negative GDP growth, the claim that we are in one still does not appear to be true, although, of course, a recession could start any time.
This is important, not because there is a huge difference between +.6% and -.6%, but because the Democrats are using the presumed recession as a refutation of all of George Bush’s economic policies of the last seven years, from the tax cuts forward. This is silly, but it will pass for truth unless someone stands up to it. That someone should be John McCain, who has in the past defended the “Bush economy” but more recently has seemed unwilling to do so. McCain seems overly eager, these days, to triangulate by distancing himself wherever possible from President Bush’s record. The danger is that McCain will be perceived as different from Bush on every issue except the one where the President is truly unpopular, i.e., Iraq.
In reality, the economy of the past seven years has ranged from good to excellent. The danger of a severe recession following September 11 was averted, and solid gains have subsequently been posted in GDP, employment, real compensation, and just about every other index of economic well-being. The Democrats are desperate to raise taxes, increase regulations, discourage trade, and otherwise pillage the economy for their presumed political benefit. In truth, there is no crisis warranting the hysteria that the Democrats want to stir up, and it is up to John McCain, more than anyone else, to take a more realistic view of where the economy has been and where it is going.