Jewish World Review March 10, 2004 / 17 Adar, 5764

Jack Kelly

Jack Kelly
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Consumer Reports

Economy is being politically driven | Consumers are losing confidence in the economy even as almost all economic indicators suggest that for more than six months, it has been growing faster than at any time in nearly 20 years.

ABC News and Money magazine conduct a weekly poll of consumer confidence. In mid-January, 44 percent of those surveyed described the U.S. economy as "good" or "excellent," up from barely 20 percent in the summer of 2003. But by the first week in March, only 33 percent of Americans described the economy as "good" or "excellent," noted Bob Rayner, a business writer for the Richmond Times-Dispatch.

What has caused the downturn in consumer confidence has not been an economic event, but a political event. Democrats have been talking down the economy throughout the Democratic primaries, and the news media have been giving enormous — and uncritical — publicity to their charges.

This is evidenced, Rayner notes, by an anomaly in the consumer confidence surveys. Though only 33 percent of those surveyed described the economy as a whole as "good" or "excellent," 56 percent described their own personal financial situation that way.

The Democratic argument is that this has been a jobless recovery, an argument fueled when the Bureau of Labor Statistics (BLS) reported that U.S. employers added only 21,000 jobs in February.

Employers reported that this January 130,132,000 Americans had jobs, down from 132,388,000 in Jan. 2001, the month that President Bush took office. Displaying the cavalier attitude many Democrats have toward arithmetic, Sen. John Kerry describes this as a loss of "3 million" jobs.

But in addition to contacting employers to ask them how many people they've hired, the BLS also surveys households to inquire how many people in them are working. According to the household survey, 138,566,000 Americans were working this January, up from 137,790,000 in Jan. 2001.

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There are always some differences between the employer survey and the household survey, but this difference — 8.43 million jobs — is pretty profound. How come?

Part of it could be sampling error. BLS contacts 400,000 businesses of all types each month for its employer survey, but only 60,000 households.

A bigger part of the problem is that the employer survey under-counts small businesses, which are the first to hire new people when a recovery begins, and doesn't count the self-employed at all.

My wife, Pam, is an illustration of this dichotomy. She quit her job at the newspaper where I work to free lance and write a book. Pam would be a job loss in the employer survey, but if BLS had contacted us in its household survey (it didn't), she'd have said emphatically that she was working.

The decline in the unemployment rate from 6.3 percent last June to 5.6 percent in February suggests that the household survey is the more nearly accurate.

It is understandable that Democrats would choose to emphasize the employer survey, because it is in their interest to paint the economic picture as gloomily as possible. What is not excusable is the failure of most in the media even to mention the household survey, the disparity between the household survey and the employer survey, and the possible reasons why this is so.

"I will suggest to those reporters covering the John Kerry campaign that the next time he says Bush cost the U.S. economy 3 million jobs, they gently remind their viewers and readers that, while it's a fine applause line, it is — not to put too fine a point on things — inaccurate," wrote the Times-Dispatch's Rayner.

But many in the news media are more interested in helping the Democrats beat Bush than in providing viewers and readers with the facts and perspective that would help them judge economic performance.

An example of this is how the unemployment numbers are being spun. By coincidence, the unemployment rate in January — 5.6 percent — is exactly the same as it was in Jan. 1996, when President Clinton began his re-election campaign. CNN, described it as "low" then, but says now the very same unemployment rate indicates a weak job market. (The average annual unemployment rate since 1980 has been 6.3 percent, Rayner notes.) President Bush must do more to get the truth to the American people, because the people whose job it is to report the facts have other priorities.

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JWR contributor Jack Kelly, a former Marine and Green Beret, was a deputy assistant secretary of the Air Force in the Reagan administration. Comment by clicking here.

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