Thursday, April 19, 2007

They teach economics there, don't they

A Northwestern grad learned about the importance of comparing at same point in business cycle:

When Bill Clinton became president in 1993, he was dealt the greatest hand since Phil Jackson became coach of the Chicago Bulls with probable future hall-of-famers Michael Jordan and Scottie Pippen already on the team. The U.S. economy was already expanding, and the disintegration of the Soviet Union seemingly meant that defense spending could come down–which encouraged Federal Reserve Chairman Alan Greenspan to cut interest rates. Then Clinton got a Republican Congress in 1995 that was also eager to bring the budget into balance.

By contrast, Bush inherited an expansion that was on its last legs, and then he had to raise defense spending to deal with the biggest attack on America in its history–of course, neither Bush nor Congress has shown a whole lot of interest in controlling nondefense spending. Now, one way to statistically compare the two economic records is by looking at the Bush expansion vs. the Clinton expansion. And 21 quarters into each, the economy has grown 16.6 percent under Bush vs. 19.9 percent under Clinton–advantage No. 42. And the unemployment rate 22 quarters into each expansion–jobs numbers come out more frequently – show that the current unemployment rate is 4.4 percent vs. 4.5 percent under Clinton. Slight edge to No. 43. Now, when you add in–or subtract out–the effects of the stock market (for Clinton) and housing bubbles (for Bush) and where each president began, I think this ends up as a "pick 'em" situation at this point.

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