Question Details	Asked By	Asked On
U.S. Economy	Ccl471	03/21/06
Back at the height of the dot.com boom, I read an article online that said the U.S. is the richest country in the world, and getting richer all the time. I know right now America is still the richest country, but can she continue to get richer and richer indefinitely? Just how well is America doing economically? Did she reach the peak of her economic power at the height of the dot.com boom and is about to be "over the hill?" I keep hearing negative stuff about how America is doing. Like how American citizens can no longer have the kind of job security they used to have. Gone are the days when after graduating from college one can work a job for 43 years in a single company and then retire. Now people get laid off from corporate downsizing, or because their job gets outsourced. Since George Bush became president in 2000, the federal government has spent up all of its surplus and then has gone deeper into debt, and just look at the projected budget for the next fiscal year -- there seems no end sight for the deficit spending. The Air Force placed an order for only 125 of the new F-22 Raptor fighter - with each new generation of fighters that comes along, the Pentagon can afford fewer and fewer of them. Just look at all the budget cuts the government is making - I am disabled, and now Medi-Cal is no longer paying for my prescription drugs. I had to select a Medicare Part D prescription drug plan, where now I pay $3 for each brand-name drug prescription, and $1 for each generic drug prescription. So is America starting to decline economically? Many thanks, C.L.
Answered By		Answered On
ETWolverine		03/22/06
Hello CL, I think that the first thing we need to do is review your underlying assumption: that the American economy is in decline. As it turns out, if you look at any of the standard economic indicators (job growth, GDP, GNP, average hourly wages, hours worked, inflation, Construction spending, etc.) they all indicate a strong and growing economy. Let's look at some of them: Job Growth/Unemployment Rate Since Bush took office in January 2001, we have seen 5,479,000 new jobs created. Our current level of employment is 143,257,000 people... by far the highest ever (or at least since 1946 when the information started being gathered). Unemplyment in Feb 2006 was 4.8%. Since 1970, there have only been 50 months in which the rate was lower. 46 of those months were during the dot.com craze that you mentioned. So from a job-growth and unemployment rate perspective, we're doing pretty darn well... better than a majority of our history since WWII. There are clealry more people working and a larger percentage of the population working. Average Wages Average wages in the private sector have increased by $2.18 since Bush took office. The current average hourly wage is $16.52 (as of Febraury 2006) vs. $14.34 when Bush took office. Assuming a 40 hour week, that's an average increase of approximately $5,000 per year. Moreover, benefits to employees have increased fairly dramatically as well. 50% of employees participate in some form of retirement plan (a 2% increase in the last 5 years). 14% of all employees have access to emplyer-assisted child care (a 10% increase in the last 5 years). 17% of all workers have access to flex benefit plans (a 10% increase in the last 5 years). 77% of all emplyees have access to paid holidays (up from 75% just 6 years ago) and 90% have access to paid vacations. 53% of all workers have access to health plans. This is not the picture of a failing economy. If the economy were failing, employers would be giving fewer benefits and lower wages, not more benefits and higher wages. Inflation Rate 3.6% per annum. 'nuff said. Construction Total construction spending in January 2006 increased by 7% over January 2005. Residential housing construction spending grew by 6.5% in the same period. People don't spend more money for housing construction unless they have the money to spend. Construction also means employment. That is why construction, especially residential construction, is considered a good economic indicator... and this indicator is positive. GDP & GNP GDP in the 4th quarter of 2005 grew 5% to $12,485.7 Billion vs. $11,734 billion in 2004 and $10,971 billion in 2003. The economy is growing, as seen from this annual domestic earnings indicator. The bottom line is that your basic assumption, that the economy is a wreck, is dead wrong. As for your job security comment: the fact is that job loyalty works both ways. The days of sitting at the same desk for 45 years went out decades ago. These days, employees in corporate America make several moves during a career, usually based on better offers from other employers. So it is not just that companies are no longer loyal to their employees; emplyees are no longer loyal to the companies. The job market is much more mercenary than it was in our parents' day. The lack of job loyalty is a two-way street, and these days job loyalty is a rarity. As for budget cuts, frankly, this government hasn't made nearly enough budget cuts, and that is one of my few gripes with Bush. But if you are getting away with $1 for generic and $3 for name-brand, you are getting off pretty friggin' cheap. I pay as much as $70 on my perscription plan. So no, I don't see Medicare D as an indicator that the economy is in a shambles. I just think it's an indicator that we need to establish personal medical-savings accounts, just as Bush recommended. That way, YOU get to pay with your own money that was saved for that specific purpose, pre-tax, without government waste. But I think you get my point. Your assumption of a dying economy is a false one. As all the economic indicators will show. Elliot

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