The Bush Economy: A needed reappraisal
By James Pethokoukis @ AEI (September 28, 2012)
This gives me a newshook to again point out the huge misperception of the Bush economy:
1. There was an eight-month recession in 2001 that officially began in March and ended in October. It was marked by a huge decline in business investment, while consumer spending stayed positive. Good luck explaining how his policies caused a stock and investment bubble to burst in 2000, months before he was elected.
2. The 2002-2006 period was the core of the Bush recovery after the 2001 recession. GDP growth averaged 2.7 percent a year, and the economy added an average of 102,000 jobs a month. Hardly a powerful rebound. But then again, we shouldn’t have expected one given how mild the downturn was. As a Fed study said late last year, recoveries “tend to be faster” after severe recessions, such as the one we just had. The deeper the downturn, the more robust the rebound. The 2001 recession was mild, and so was the recovery after.
3. Isn’t the most obvious explanation for the “weak” Bush recovery simply one of mean reversion? Things more or less returned to average. The Clinton boom veered too far above the real growth and job creating potential of the U.S. economy, so it was balanced off by a weak recovery after the 2001 recession.
From 1996-2000, GDP growth averaged 4.3 percent a year, and average monthly jobs growth was 240,000 jobs per month. Now, if you combine those five years with the 2002-2006 Bush recovery, what you end up with is average GDP growth of 3.3 percent and monthly job growth of about 170,000 a month. Both figures are right around the average for the U.S economy. The Clinton economy was a bit on the hot side, so the Bush years were a bit on the cool side. The U.S. economy reverted to its mean.
And again, the Bush polices didn’t cause the Great Recession, no matter what Obama campaign ads say.