Forty-seven percent of Americans, according to a recent poll, believe the economy is doing "badly." Or, as a woman I encountered at a party recently put it, "Bush put the economy in the toilet." Really?
The feds just revised upward -- again -- the economic performance of the last quarter. From January through March 2006, the economy grew at a rate of 5.6 percent -- higher than any in the last two-and-a-half years. Despite recent inflation scares, inflation remains low, at a 2.1 percent core rate. Unemployment, at 4.6 percent, represents a lower rate than the average during the '60s, '70s, '80s and the '90s. Since August 2003, the economy has created more than 5.3 million jobs.
States report record tax receipts. Sixteen states report revenue growth of more than 10 percent, with the strongest -- Georgia -- showing a 20.5 percent increase. Increased tax revenues occur during economic prosperity, with increasing incomes and therefore larger personal and corporate tax payments, as well as increased revenues from sales tax.
The unpopular war in Iraq explains some of this economic pessimism. But many attribute the negativity to high gas prices. And, according to a recent poll, 82 percent of Democrats think President George Bush is either entirely or partly responsible for the high price of gasoline. Among Republicans, "only" 29 percent think so.
How responsible is Bush for gas prices?
Three months ago, USA Today wrote a "primer" on gas prices. It named the factors causing the uptick in prices: reformulation and additional chemicals required to meet summer clean-air regulations; production worries with ethanol (a substitute for the additive MTBE, now linked to health problems and banned in many states); lowered refining capacity more than half a year after Katrina and Rita damaged oil platforms and major refineries; fears of future hurricanes hurting refining capacity again; and state, federal and local taxes.
Add to that rising crude oil prices -- which accounts for 59 percent of the price at the pump, versus 47 percent in 2004 -- due to increased world demand, especially from China and America; a supply of crude tightly matched to demand; and fear that geopolitical risk -- particularly with high-producers Iran, Nigeria and Venezuela -- could reduce supply and send prices soaring (fears of a shortfall in supply add about $20 to the price of a barrel).
And Congress recently ordered the Federal Trade Commission to once again look into allegations of price-gouging. The commission turned up no evidence of price manipulation or collusion by "Big Oil."