The economy is the strongest it's been in a very long time. Factories are busier, families are earning more, homeownership continues to rise and people are finding work. If you doubt that President Bush's tax and economic policies are working, look at the jobs figures. Nearly 1 million new jobs have been created during the last 100 days alone. Since the beginning of the year, more than 237,000 new jobs a month have come into existence. Can we do better? Certainly we can, and indeed we must.
The national unemployment rate, 5.6 percent in May, is lower than the average of the 1970s, 1980s and 1990s. Job creation was up in 44 of the 50 states in the last year, and the unemployment rate was down in all regions and in 46 of the 50 states. More than 1.4 million new jobs have been created since August. Belying the braying about a "decline in manufacturing" in America, national manufacturing employment has risen for four consecutive months, with more than 90,000 new jobs created.
The only concern about the economy right now is that the Federal Reserve Board may allow inflation to creep higher by targeting interest rates to rise gradually rather than stopping inflation in its tracks by buying and selling bonds with an eye toward price stability as measured by price-sensitive commodities and, as David Malpass wrote in The Wall Street Journal recently, the price of gold. As the Fed typically does when the economy hits the skids, it infused too much liquidity into financial markets for too long in order to ensure that the economic recovery got off the ground. In the process, it has baked probably 3 percent inflation into the economic cake for a period of time to come.
If the central bank were to cease gradually hiking the overnight interest rate and instead simply sell Treasury bonds to the market until the price of gold and other price-sensitive commodities stabilized, we could experience sustained, rapid, non-inflationary economic growth. If, however, the Fed insists on continuing its clumsy, gradualist interest-rate targeting, it will remain behind the curve and inflation will accelerate.
With all of the good news on the economy, why is John Kerry tied with George W. Bush in several public opinion polls? The only reason Kerry is even close in the polls is primarily due to the fact that 1) Iraq has dominated the headlines, and 2) elections are about the future, not the past. Neither candidate has stepped forward with a bold, positive economic agenda for the next four years.