A Bounce For Bush
Steady interest rates and an expanding economy give the president some good news, for a change
Consumers will most likely keep pulling out their credit cards while jobs remain plentiful. Which they are: Unemployment is only 4.6 percent; an average of 187,000 new jobs a month were created in 2006, plus 111,000 in January.
Feeling the pain. Most economists seem to agree with the Fed in predicting that growth in 2007 will be moderate, somewhere in the 2.5 percent to 3.0 percent range. Yet Bush conceded in his Wall Street speech that not everyone is fully benefiting from the five-year economic expansion and that the good top-line numbers may mask underlying economic anxiety. "I know some of our citizens worry about the fact that our dynamic economy is leaving working people behind," Bush said. "We have an obligation to help ensure that every citizen shares in this country's future. The fact is that income inequality is real. It's been rising for more than 25 years."
The admission may be a response to the populist economic message that Democrats employed to pound Republicans during the fall congressional campaigns-when they weren't talking about Iraq, of course. And Democrats have hammered away into the new year, most notably in Virginia Sen. Jim Webb's rebuttal to Bush's State of the Union speech. Webb lambasted the growing gap between CEO pay and workers' wages. "The middle class of this country," he said, "... is losing its place at the table."
Bush's response last week was to defend globalization and free trade, press the need for better education to increase middle-class incomes, and scold corporate boards for not reining in undeserved executive compensation packages. The Bush message: I care. "This speech said that 'I understand your pain, I understand things look good from the 30,000-foot, macro level but maybe not so good from the Main Street level,'" says Gregory Casey, president of BIPAC, a pro-business lobbying group. "But where was this speech six months ago?"
Whether such populist issues continue to bite six months from now will probably depend on whether income and wages, which lagged during the early part of the economic expansion, keep playing catch-up.
For now, though, Bush is happy just to have something to celebrate.