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Much to everyone's excitement, John McCain this morning pronounced the fundamentals of our economy to be strong. Now obviously we're having a variety of economic troubles right now, as McCain conceded, but perhaps the underlying fundamentals are still doing well. So I did a little research and e-mailed some experts about what counts as a fundamental, and it turns out that, well, no, the fundamentals are not in fact strong. Some examples:
- GDP. This is most likely what McCain was referring to; last quarter the U.S. posted 3.3 percent growth. The previous two quarters were .6 percent and 1 percent. 3.3 percent isn't bad but the previous two quarters were awful. We also still haven't seen the final report from last quarter. In any event, one quarter of growth isn't conclusive.
- Unemployment Data. Currently, unemployment is at 6.1 percent, or about 9.4 million Americans, and has been increasing. A measurement that reflects people who cannot find full employment or who have been unable to find employment after 15 weeks would put the rate at 10.7 percent. These are high rates -- the highest since 2003.
- Real Median Income. The median income of all Americans has actually gone down $324 since 2000 -- the first time it hasn't risen since at least 1969. This reflects the drop in real wages.
- Consumer Confidence. Up a little in the last two months -- 56.9 percent, with only 13.2 percent saying business conditions are good -- but still at it's lowest level since 2003.
- Inflation. Inflation has been increasing -- 5.6 percent -- but my understanding is that while this development isn't great, there is no need to be worried right now.
- The Markets. These markets are down. Uh -oh.
- Deficits. The U.S. deficit is currently $389.4 billion, double what it was last year. Our trade deficit, reflecting that the U.S. imports far more than it exports, has grown in the last year to $62.2 billion.
Do you think the fundamentals of our economy are strong?
--Tim Fernholz
