Last week's report from the government's Bureau of Economic Analysis must have come as a shock to President Bush's Democratic critics when it showed the economy racing along at a brisk 3.5 percent annual growth rate in the last three months of 2006. For the year, the economy grew at a stronger than expected 3.4 percent, propelled by falling oil and gas prices, higher wage and job growth, increased consumer purchasing power and even an uptick in housing sales.The bullish report came out at a politically perfect time for Bush, as he delivered an optimistic speech on the economy on Wall Street and toured the New York Stock Exchange, where he was greeted like a rock star as the financial markets soared to record highs -- boosting worker retirement funds in the process.
The White House expected the Federal Reserve, ending a two-day meeting Wednesday, would not raise short-term interest rates, and the Fed did not disappoint the markets. A statement reassuring the country about the economy's soundness added to Wall Street's confidence that pushed the mighty Dow to over 12,600 -- on its way to over 13,000 by year's end.
The latest economic indicators "suggested a somewhat firmer economic growth," the housing market showed signs of stabilizing and core inflation had "improved modestly" in the past several months, the Fed said.
CNBC's market analyst Maria Bartiromo called it "the Bush rally," and the Gallup Poll released its latest economic survey showing "Americans' assessments of economic conditions (had) improved markedly."
What Gallup found was that Bush's low scores on the economy have improved significantly. A Jan. 15-18 survey of how Americans rate current economic conditions found that 52 percent now rate the economy as excellent or good, 33 percent say it's fair and 15 percent call it poor. That 52 percent approval rating is up from 42 percent in December.
Many things contributed to this four-year economic turnaround, most of all the entrepreneurial inventiveness of the American people, but Bush's across-the-board tax cuts spurred the economy and got it moving again.
The one thing stock markets do not like is uncertainty, but Bush sought to assure Wall Street that, as long as he is president, there was not going to be any Democratic tax hikes that would short-circuit the recovery. Asked during his visit to the stock exchange if he thinks the bull market still has a long way to go, he replied, "It will as long as we do the right things in Washington. And keep taxes low."