Donald Lambro

Owing to a strong global economy in Europe, Asia and Latin America, U.S. exports jumped by more than 14.8 percent in the 12 months that ended in July, cutting the trade deficit by $8.3 billion.

For much, if not most, of this year, the Federal Reserve Board has told us that the housing downturn and homeowner mortgage defaults have not spilled over into the larger economy. More recently, the Fed has hedged on that view, expressing concern that interest-rate resets on adjustable-rate loans could boost those defaults in the next year or two. That remains to be seen.

With the Fed pumping more liquidity into the banking and mortgage markets, the evidence suggests that the nation will weather this credit crunch, and there are signs that the housing sector has hit bottom and will begin to turn up. We'll see.

In the meantime, people should focus on what is good in the economy and not let the end-of-the-world crowd rule over common sense.

Most economists expect the economy to slow in the third quarter, but that will be from a very strong growth rate of 3.8 percent set in the second quarter. Bear in mind that the country has seen nearly six years of nonstop growth, averaging 2.7 percent a year since pulling out of the 2001 recession, thanks to the Bush tax cuts.

Still, the economy remains one of the top concerns among voters, after the war in Iraq and terrorism, according to a recent Gallup Poll. Yet Gallup also finds that "Americans are more positive about their personal financial situations than about the economy as a whole."

A chief reason for this satisfaction: Real after-tax per-capita personal income has risen more than 12.5 percent since Bush took office in 2001. In the past 12 months that ended in August, real wages have increased by 2.2 percent.

Nonetheless, the Democratic presidential front-runners say they will raise taxes on those who save and invest most, and impose costly regulations and taxes on energy companies, leaving businesses and motorists to foot the bill.

The Republicans are pushing lower tax rates to boost incomes and jobs, including zero taxes on savings, dividends and capital gains on the middle class and making medical expenses fully tax deductible.

The American electorate will get to decide in 2008 whose policies will keep the American economy growing and prosperous over the next four to eight years.

Donald Lambro

Donald Lambro is chief political correspondent for The Washington Times.