According to the latest MSNBC poll, most Americans have little faith in the nation’s economy.
But what accounts for this dismal view of the U.S. economy? Is it because the economy is performing poorly, or is it due to American’s collective amnesia? Or could it be that Americans are listening to the doomsayers who ignore all the good economic news and focus on the few bad metrics. Let me list the good, the bad and the downright ugly elements of the U.S. economy.
First the good.
*The U.S. economy is expanding at a very healthy pace with overall growth for 2006 coming in above four percent, significantly above the long term trend.
*And for those who contend that we are “outsourcing all of our jobs,” the U.S. labor market will likely add as many as 3 million jobs in 2006.
*The nation's unemployment rate is a very healthy 4.6 percent. This jobless rate is well below the level that we economists thought it could go without unacceptably high inflation. Back in ancient times (early 1990s), economists considered the full employment, unemployment rate to be 6.0 percent.
*Other favorable economic indicators include low mortgage rates, the Dow 30 at a record level, solid income growth for the vast majority, and modest inflation.
Now for the bad.
* Oil prices, while down, are significantly higher than they were in 2000 but remain below their inflation adjusted price in the early 1980s.
* The trade deficit for 2006 will be greater than $700 billion. However, this deficit is due primarily to a healthy U.S. consumer buying foreign goods.
* The housing market has weakened considerably and is producing pain for those that depend on an expanding housing market.
Now the ugly.
* The federal budget deficit will approach $300 billion this year. However, this deficit is due to rapidly rising government spending driven higher by the same politicians that complain about the economy.
I am no accountant but I believe when you add up the debits and the credits, the U.S. economy is doing quite well with the American economy remaining the envy of the world and the destination for migrants across the planet who wish to be a part of it.