(U-WIRE) DURHAM, N.C. – Recent reports seem to indicate a light at the end of the tunnel for the U.S. economy and job growth. However, they could also signal a dead end for the Democratic party’s presidential ambitions in 2004.
During the third quarter, which ended in September, the nation’s economy grew at a 7.2 percent annual rate, its highest growth rate since 1984. Consumer spending accounted for two-thirds of this growth, increasing at a 6.6 percent annual rate. Additionally, unemployment dropped to 6 percent in October.
The Bush administration points to a number of its economic policies coupled with low interest rates as the stimulants for this surge of improvement. Since May, income taxes for many Americans have been cut and rebate checks have been sent to millions of families. The federal government also increased spending by 1.4 percent in the third quarter.
The upturn of the economy has the potential to significantly impact next year’s presidential election. Michael Munger, chair of the department of political science said Democrats could be in “real trouble” in 2004 if the economy is strong.
“The Democrats criticized the president for a bad economy,” said Munger, who is also a professor of economics. “When the economy turns good, they’re stuck. They don’t have an issue.”
A November Gallup poll indicated 37 percent of people surveyed believed the greatest problems facing the nation today are economic, down from 46 percent last month. Most people polled were more concerned about non-economic problems, and the war in Iraq topped the list. Munger pointed out that unless things take a turn for the worse in Iraq, President George W. Bush’s odds for reelection will be high.
“It’s very difficult to imagine Bush not winning by a lot if the economy is good,” Munger said. “In a good economy the incumbent wins, and that’s just that.”
Republican politicians are confident that the economy will remain strong. In a recent statement, Commerce Secretary Don Evans said he expects economic growth and productivity to continue in the coming months.
Business leaders are also confident that current trends will be sustained. Seventy-four percent of Chief Financial Officers recently surveyed by the Fuqua School of Business and Financial Executives International said they were more optimistic about the upcoming fourth quarter than they had been about the third.
Nevertheless, Democrats are skeptical about how substantial the economic growth is and how sustainable it will prove to be. Duke Democrats Co-Presidents Jared Fish and Zeb Smathers weighed in with their opinions on the state of the economy.
“Economic growth figures say very little except that someone is producing more and someone is making a profit,” said Fish, a sophomore.
“The important question is ‘Who?’ Unemployment can fall, but that means less than the fact that the income of the wealthiest 20 percent of the population is 200 times greater than that of the poorest 20 percent. Economic growth is no growth if only the top 1 or 10 or 20 percent benefits.”
Nearly 9 million Americans are still unemployed, 23 percent of whom have been searching for jobs for 27 weeks or more. Additionally, 19 percent of the 286,000 jobs added to the market since July are designated temporary.
“I have a hard time believing that anything with the word temporary is good,”said Smathers, a junior. “Americans want stable jobs. These are dangerous jobs.”
Munger, however, explained that the relatively high percentage of temporary jobs is not an anomaly.
“It’s misleading to focus on these temporary jobs,” he said. “They’re common, particularly near the holiday season.”
Munger instead pointed to manufacturing and job benefits as the most important issues to consider when looking at the future of the nation’s economic growth.
“The recession is over, the economy is back up,” he said. “The question is how many manufacturers will open plants here and not overseas. Also, a thing that could stall the recovery is if there’s not some plan to decrease health care costs.”
Munger added that partisan bickering over the recent economic upswing is unwarranted. “Democrats are wrong to doubt and Republicans are wrong to claim it,” he said.