Micro Economics

THE WHITE HOUSE regularly bemoans the fact that the economy is humming along impressively but the public doesn’t recognize it. Just last week, President Bush told NBC News anchor Brian Williams that he’s “a little bit” frustrated by the public’s negative attitude. “I also think it’s important to understand why people don’t see or don’t feel the improved economy,” Bush said. But he didn’t offer an explanation.

In truth, there are two explanations. One is the media, which dwells on bad economic news at the expense of good. As gasoline prices soared past $3.00 a gallon, the press couldn’t say enough about this ugly trend. More recently as prices plummeted, the media was far less interested in touting the dramatic reversal.

The second explanation involves the Bush administration itself. Al Hubbard, the head of the White House’s national economic council, conceded in a session with reporters this week that the administration hadn’t spread the word effectively about the strong economy. He said it’s “so easy in the White House to get caught up” in daily events and “forget about the importance of communications.” Indeed, the administration has done an inadequate job of trumpeting dramatic economic gains in 2005 and earlier.

How do we know the media has poisoned the public’s view of the economy? It’s really very simple. Opinion polls show basically that people believe overwhelming that they’re doing well financially but the country isn’t. And they know for sure their own economic condition. They experience it personally on a daily basis. On the other hand, what they know about the broader national economy comes largely from the media.

And this leads to a sharp dichotomy in the public’s take on the economy. In a Gallup poll, 85 percent of Americans expressed satisfaction with the ways things are going in their own lives. But in another Gallup survey, 50 percent said they believe the economy will worsen, not stay the same or get better. And by a roughly two-to-one margin–64 percent to 33 percent in a new AP survey–Americans have consistently agreed that the country is headed in the wrong direction. The wrong track number isn’t an exact proxy for negative feelings about the economy, but it is at least a partial reflection.

Now, what about the administration? The problem is chiefly that it has emphasized the macro and not the micro. While the macro economic numbers–overall economic growth, the jobless rate, and so on–are astonishingly favorable, I’m afraid the average citizen doesn’t identify with those figures. And Democrats insist it’s the micro numbers that are important: how individuals and households are faring. Naturally, Democrats argue that these show average Americans aren’t doing well in the pocketbooks.

President Bush came to the Rose Garden on December 2 to tout good economic news and he instantly fell into the macro trap. Here’s what he said:

“Our economy added 215,000 jobs for the month of November. We’ve added nearly 4.5 million new jobs in the last two-and-a-half years. Third-quarter growth of this year was 4.3 percent. That’s in spite of the fact that we had hurricanes and high gasoline prices. The unemployment rate is 5 percent. And that’s lower than the average for the 1970s, 1980s, and 1990s.”

You’ll notice there wasn’t a micro number in the bunch. Nor did he put the national numbers in terms of individuals. It was as if he were aiming his remarks at a room full of economists, money managers, and investment bankers. No doubt they would have been thrilled. Average folks would have drawn a blank.

Yet there’s a strong case Bush and his aides can make for impressive economic gains at the individual level. True, rising healthcare costs have cut into the gains, but tax reductions have helped. By citing micro numbers or fleshing out macro numbers, the administration would convey this message: it’s not just you who’s doing well. Most Americans are. The country is.

For instance, there’s the growth in per capita disposable personal income from $26,424 in 2003 to $27,001 in 2004 and $27,365 in 2005. That’s not all. In November, hourly wages were up 3.2 percent. And people are able to spend more. Real personal consumption spending has risen nearly 3 percent in the past year. True, these last two numbers are macro, but they’re ones people can understand.

Home ownership figures are also conducive to being highlighted through individual examples. Records have been set in 2005 on overall and minority home ownership. Why not mention some specific examples of people who never thought they’d become home owners but have?

The public’s assessment of the economy is a lagging indicator. In other words, it takes a long time–years–before the fact of a strong economic recovery dawns on people. But the lag time doesn’t have to be as long as it has been. Indeed, that would happen if the media toned down its bad news bias and the Bush administration improved the way it markets good economic news.

Fred Barns is executive editor of The Weekly Standard.

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