The Times Has to Eat Crow
There are dozens of GDP-helps-Bush stories today. But I take particular delight from the one in the Old York Times:
Businesses were broadly unprepared for the recovery. The government guesses that inventories fell during the quarter, but there is a good chance that it is underestimating the decline. If so, the third-quarter growth rate will be revised down, but the needed inventory restocking will lift fourth-quarter growth.Then what? Economic bears point to new layoff announcements at Sony and Electronic Data Systems and predict consumer spending will slow without new tax rebates, leaving retailers with a disappointing Christmas.
The alternative forecast is for a self-sustaining recovery that is already under way. “You’ve got supercharged monetary stimulus and a tax cut,” said Robert J. Barbera, the chief economist of ITG/Hoenig. “Look at history. When you get a lot of stimulus and a 7 percent quarter, it does not go away quickly.”
If he’s right, there will be reason for celebration in the White House. It could even turn out that the difference between the two Presidents Bush was a matter of timing as much as anything else.
The 1990-91 recession ended in February 1991. Almost two years later, in January 1993, came the report of the first quarter to show growth above 5 percent. The 2001 recession ended in November 2001, and once again a report of a good quarter arrived nearly two years later.
Unfortunately for George H. W. Bush, he had lost his race for re-election before the economic news turned positive. Now, strong growth has appeared a year before the 2004 election. George W. Bush had good reason to call yesterday’s growth report “encouraging.”
There’s another crucial difference between Bush 1 and Bush 2: Bush 1 raised taxes; Bush 2 cut them. The resulting GDP growth was no coincidence.
– PoliPundit