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He’s my take on the economy. I know it long, but bear with me.
The stock market reached its zenith on March 3, 2000 - my birthday. This was in the Clinton twilight. Thereafter it headed south and did not really turn the corner until March 2003.
In that interval, the market lost $10 trillion dollars in wealth. That’s about one year of GDP for the US. So quickly did the economic expansion of the 90’s come to a halt that the President of Cisco Systems said in the month from November 2000 to December 2000, their sales growth went from 25 percent per annum to flat or slightly shrinking.
This scenario was repeated all over the economy. Manufacturing had taken its hit months earlier.
Then 9-11 struck. I’ve read the 9-11 cost to the economy of this was about $3 trillion. That combines to be a $13 trillion punch to a $10 trillion a year economy. Economies are highly damped systems and change direction slowly. Once everyone is hunkered down, it takes while before businesses and consumers decide that maybe the sky is not going to fall after all and then start to look upon the world more brightly. It also takes time to replenish the $13 trillion dollar loss.
I think Bush’s tax cuts and Greenspan’s aggressive interest rate cuts and vigorous pumping of the money supply have started the economy on the right course. The jobs numbers are looking better all the time. I think they would have been even better than they are, but the bump in oil prices this spring slowed things a bit. The back-to-back hurricanes will likely degrade performance slightly.
At this point, the unemployment rate is lower than it was when Clinton was up for re-election. I think the economy is now like a freight train building steam and speed. For the next two years, barring some unforeseen event, the economy will boom brilliantly regardless of who the president is.
Kerry is in the unenviable position of having to pray for bad things to happen so Bush will look bad and people will turn to Kerry. I’m glad I’m not in his shoes.
Posted by Ted at September 13, 2004 9:53 PM