More good news for the economy, bad news for Democrat political ambitions:
Stocks held gains at midmorning on Tuesday after a better-than-expected report on U.S. consumer confidence in June helped soothe investor concerns about the economy’s ability to match expectations built into the market’s three-month rally.
The Conference Board reported its U.S. Consumer Confidence Index slipped to 83.5 in June from 83.6 in May. Economists in a Reuters survey had predicted the June number would come in at 82.4.
“(The consumer confidence index) was a decent number and people are breathing a sigh of relief,” said Tony Cecin, managing director at U.S. Bancorp Piper Jaffray. “There’s still concern for earnings going forward and people feel things are getting better, but they still need signs to evaluate that.”
Currently, the DOW is up 60.
PG
Unemployment? I’m happy to hear that my stock portfolio is doing better, but I’d like for my friends to have jobs as well.
John Cole
Unemployment, as well as interest rates and many times corporate profits are known as lagging indicators. Unemployment always rebounds after the economy, not ahead of or at the same time.
This is not to downplay unemployment- it is no fun, but we are still, in the big scheme of things, dealing with a relatively low % of unemployment.
Andrew Lazarus
Consumer confidence slipped, but less than expected.
Democratic victory hopes increased, but less than expected.
Jobs lost under Bush now at 3MM (including mine) and CONTINUING TO INCREASE EVERY MONTH.
John Cole
You blame your job loss on Bush? When did you lose your job, what was it, and what did he do, exactly, that it is his fault?
Andrew Lazarus
March 02.
I don’t blame Bush for loss of job (I’m a computer geek), but I do lay at the Administration’s feet the weakness and indifference to economic recovery that makes it hard to get a new one. We have empirical evidence, namely another 2.3MM jobs lost, that the 2001 tax cut did nothing to improve the job market (but it did put an end to those pesky surpluses) and evidence that the 2003 tax cut is merely a waystation on the route to dismemberment of the social safety net on which I am unfortunately likely to rely.
Courtney
My dad lost his job twice while Clinton was president, indirectly as a result of the oil bust circa 1988. Now, would it be fair to blame Bill Clinton for that?
Just curious.
Steve Malynn
I lost my military job under Clinton. There was direct cause and effect, I was part of the peace dividend. Of course, so was 9/11.
JKC
Steve, buddy, I gotta challenge you on the assertation that 9/11 was a result of the peace dividend. If those planes had been hijacked by North Koreans (or even Iraqis), maybe. But by terrorists? That was the fault of botched (or ignored) intelligence, not decreases in defense spending.
Steve Malynn
JKC, the military abroad was our only buffer against terror. The intelligence community never recovered from the malaise begun during the Carter era, and the congressional gutting in response to Reagan trying to accomplish things that Congress disapproved of. There was little covert work against terror, despite dozens of incidents. The police/FBI simply were not asked to or competent to impact international terrorism.
Reducing military capabilities, running from Somalia, using cruise missles to accomplish nothing, ignoring attacks that targeted US Embassies and US Military were all aspects of Clinton spending the Peace Dividend that harmed the anti-terror efforts that existed.
By the way, Bush the elder was also eager to spend the peace dividend, but more constrained by events. Base Closure and rethinking missions that started under Reagan were rational reorganizations of defense spending. (Bush started reduction (about 10% of force) but the real gutting of active duty forces came during the Clinton years.)
That said, you are right, before 9/11 no one in government ever really thought to spend the amount of money necessary to prevent 9/11. That our weak responses to the acts of terrorism between 1993 and 2000 contributed to/caused 9/11 is my gut instinct, the level of the connection is something for historians. That we need to stay serious is a given (but my real worry). My old buddies who have connections to HQMC worry that spending against terror will only last 2 more years.
Steve Malynn
I really did not mean to hijack this thread, but my uncompleted thought was that the president really only controls government employment. The economy reacts to myriad world events, and bad policy by the most powerful man in the world will often only surface years/decades later in ways that are completely unforseen.
Which of course is why the idea of subsidiarity works best. Local acts take effect immideatly, and locals can adjust quicker. Limit the Federal Govt. to the big things, then maybe they will have the focus to make less big blunders, that won’t be fully felt till the next administration.
John Cole
That was my point asking Andrew about his job, Steve. Democrats love blaming the President for this, because he is currently a Democrat. As unemployment is a lagging indicator and the recession started roughly a year before Bush was president, how many of these job losses are accurately assessed as “Bush job losses.”
Second, if the recovery starts vigorously right now, unemployment will pick up probably around February-March (maybe later). IF Bush looses next fall- do we ascribe all the job gains to Bush, or his successor.
All of this is my biggest pet peeve- Presidents get too much credit and too much blame for the economy, particularly in cyclical downturns such as that we have been in.
Another thing, Andrew- this statement is a classic false dichotomy:
We have empirical evidence, namely another 2.3MM jobs lost, that the 2001 tax cut did nothing to improve the job market
IS it possible we could have lost an additional 5 million jobs had we not had the tax cuts? BTW- Democrats were against tax cuts, period, so it is alittle rich to be using rhetoric that states ‘Bush didn’t cut enough taxes to help the economy.’
Another thing, particularly with the surpluses comments. Those ten year surplusses NEVER existed- they were projected surplusses. Never, in my lifetime, has there EVER been a ten year projection that was accurate. The declining revenue taken in because of the economic downturn and a projected lower growth rate are what killed the mythical surplusses, not anything Bush has done. In fact- the projected doomsday deficits that Democrats are trying to hang around Bush’s neck are just as real as those great surplusses ‘Clinton left us.’ Inother words- neither of them are real.
Andrew Lazarus
John, you make some good points. I can’t prove that job losses wouldn’t have been even worse without the 2001 tax cut. You can never “prove” or “disprove” counterfactuals. And I agree that the 10-year out economic predictions are almost worthless.
Nevertheless, I think there are strong reasons to believe that the statement “Bush’s 2001 tax cut did not create jobs” is true (just as I believe the statement “9/11 wouldn’t have happened if Bush’s tax cut had been defeated” is false, but neither you nor I can prove it’s false).
1. Bush made specific promises during his campaign that his tax cuts would preserve the budget surplus IN THE SHORT TERM. It didn’t, that we know for sure. Either Bush doesn’t understand the economic implications of his tax cut, or he didn’t tell the truth. Either possiblity speaks against the credibility of his less testable statement that the tax cut created jobs.
2. Even many conservative economists agree that the particular details of the Bush cuts, weighted very heavily towards taxes paid by the wealthiest Americans, are unlikely to stimulate demand very much. Hence, even economists who feel we need a tax cut to get out of recession don’t think Bush’s plan would be effective.
3. I believe Bush has now set the record for most consecutive months with job loss, since the Depression. That seems to me to be evidence things could barely have been worse in the absence of the tax cuts.
4. Although the long term projections of the Clinton Administration were dubious, you must admit that we were doing much better then economically, incidentally over against the claims of the Republicans, who insisted his 1994 tax package would lead the country into ruin. (It didn’t.)
Bush’s belief in tax cuts is a mania that has nothing to do with job creation. That’s a mere talking point.
Garyn Dunbar
John,
Your right that employment is a trailing indicator that an economy is exiting a recession, but it is also a leading indicator when we’re heading into one.
Normally, a recession starts when consumers start feeling afraid for some reason like increased layoffs, and reduce spending, leading to corporate cutbacks. Companies keep cutting until they see renewed growth from people deciding they need to replace stuff like cars, washing machines etc. So the recovery starts while people are still loosing their jobs.
This time it was corporations that began the recession by cutting back capital investment and consumer spending has remained strong. So there is no pent up demand to restart the economy. Its possible that people will see enough of their friends/family members/etc to stop consuming at current levels. So writing employment numbers off entirely is a mistake, IMO.
David Perron
All I have to say is anyone who places any amount of weight whatever to promises a President makes about economic recovery, jobs, or anything at all outside his immediate purview, is destined for disappointment. That would be you, Andrew.
Just out of curiosity, is there anything else at all Bush has said that you’ve got any faith in? Because liberals in general seem to think that Bush is completely untrustworthy. This makes the belief that he’d deliver on something that was really never in his power to deliver doubly odd.
Andrew Lazarus
David, as you knew before you asked, I didn’t believe a word Bush said. What I’m trying to do here is show that no one else should, either.
Did you know that Bush’s “average” tax cut figures are calculated using (a) mean and not median [elementary statistical blunder that works in his favor] and (b) conveniently omit many taxpayers whose cut was $0?
Ricky
***Bush made specific promises during his campaign that his tax cuts would preserve the budget surplus IN THE SHORT TERM***
Those were false claims predicted on the assumption that we’d keep having 4% growth and no terrorist attacks. Had that occurred, we’d probably have very small deficits (although the latest spending spree doesn’t bode well).
***a) mean and not median [elementary statistical blunder that works in his favor] ****
Not a blunder. That’s what AVERAGE means. Median is NOT the average, but the midpoint. This is a talking point from places like Tapped & is wrong, because “mean” and “average” are basically the same thing, while “median” is something entirely different.
***conveniently omit many taxpayers whose cut was $0?***
Income tax payers?
Sweet Lou
Andrew,
If you need a job, you need to lose the “It’s Bush’s fault” attitude immediately. In fact, the whole “fault” mentality is pure poison to the job hunting process.
And what are you doing reading blogs? You should be out networking. Live in Central Texas and got a resume? Send it to me. You a PhD? Why aren’t you working on an independent research project?
Speaking as a recently re-employed computer geek.
David Perron
Anyone who claims to be halfway decent at software ought to have the whole average/median thing straight in his head, IMO.
Andrew Lazarus
OK guys, first off, mean, median, and mode are all “averages”. For different situations, different statistics are in order.
In economics, in many cases the MEDIAN is the statistic of interest. If we lived in a 3-person version of Haiti, where the annual income is $1, $10, and $1 million for the three people, we could say that the “average” person (meaning the person in the middle, i.e., the median) has an income of $10. Or we could say that the average income is $333,337, using the mean. Generally speaking, this is a situation in which if you have to express the entire distribution in just one number, the median is “correct”. (Check any 12th grade statistics textbook. There will be a chapter on this subject, and some variation of this problem will be in it.)
President Bush’s tax cut number is a mean. The cut received by the median taxpayer is much, much smaller. Consider an example in which all but one taxpayer gets no cut and Bill Gates’ taxes are reduced to zero. Could you tell a crowd “You will receive an average tax cut of $2.” No, everyone listening will receive zero. Obviously the numbers are very contrived, but this is a settled issue among absolutely every statistician and economist not employed by the Bush campaign.
[post continued]
Andrew Lazarus
Now, Sweet Lou, thanks for the offer. I’m afraid I can’t move to Texas. (My wife has a good job.)
Networking is a little tricky since my former boss is also out of work, and most of my former colleagues are in companies expected to downsize. But, yeah, it’s also a personality issue. Too introverted in person. Right now I’m doing some volunteer DB computer work, not expecting paid work there (impossible), but to see if anyone is impressed enough to tell their friends. I’m in the SF Bay Area, and qualified programmers are on every street corner now. I’m interviewing at two companies now that reported over 200 applicants. (I made it to the last three.) My last gig was an equity-only job and even that attracted over 120 resumes in 3 days, after which they junked them unread.
I’ve been trying very hard to ignore the macroeconomic disaster I see down the road, because it certainly won’t help me. But I think you are falling into the illusion that it’s impossible for the middle class to get squeezed out of existence by bad macroeconomics. Ask an Argentine.
Andrew Lazarus
One last followup for Ricky.
As for your first defense of Bush, what does it mean that his claim that surpluses would continue was predicated on 4% growth? What crazy fine print! He promised that the economy would continue to grow at a rate that would maintain surpluses even under his tax plan. It didn’t. This isn’t the fault of some anonymous economy; it’s his fault for idiotic forecasting (that was intended only for campaign purposes). And unless you believe that 9/11 did almost $1,000,000,000,000 damage to the economy, that excuse won’t wash either.
We had a go-round before on inflated vs real dollars, and I’m sorry I lost my temper then. So I’ve taken a DEEP breath after reading your lecture on averages and I’ll just say, “Don’t teach your grandmother how to suck eggs.” Or if you prefer the Russian version, “Don’t tell your parents how to fuck.”
Andrew Lazarus
Here, here (“The median income is usually more informative than the mean income, for example.”), here (“Salary data are usually skewed right (Billionaires92 data set in DoStat), median
income is often reported rather than the mean income.”) and here (“So the median is often preferred for variables like income which have a relatively small number
of extremely high scores.”) are online sources that the median is the correct measure of income. The first two sites are professionals in the field and the other two are online college course notes.
You can find which measure of central tendency (i.e., average) is correct for incomes or house prices (it’s always “Median Home Prices rose”, for the same reason as incomes: the distribution is skewed right) in Weiss and Hassert, Introductory Statistics, p. 59; Campbell, Statistics You Can’t Trust, p. 84; and Mendenhall, Reinmuth, and Beaver, Statistics for Management and Economics, Exercise 2.30b, p. 46.
This is from the undergraduate textbook Sanders, Statistics
That’s you, guys. You’re the consumers being misled, and like the suckers in every other con game, it’s because you want to be.
I’m currently doing a little consulting as a statistician for a nationally-known law form, and I’ve taught the subject, so with your permission, we’ll consider the case closed at least until you find corroboration for your position that doesn’t emanate from the Bush campaign. This question is a no-brainer. I hope I explained it well enough.
Of course, this has no bearing on whether Bush’s job creation numbers, Saddam-Al Qaeda links, Niger uranium, and WMD are ALSO bogus pronouncements concocted for his re-election. And of course, none of this is about something important, like a blow job. Although, come to think of it, you could make a BETTER argument that being the passive partner in fellatio isn’t really sex than the argument that the mean, notwithstanding its colloquial meaning as an average, is the correct measure of central tendency for the tax cut.
David Perron
Well of course the tax cut for the median income is much smaller, Andrew. The median income is barely on the threshold of paying any tax at all. Anyone who can make a claim to being conversant in statistics should know that. Given that the top two quintiles pay about 95% of all federal income tax, it’s hard to see how your quibble about median vs average has any meaning whatever.
I’ll try to make it simple for you. Since the median income pays nearly zero tax, setting the tax rate to zero would have a similar end effect as the egregiously unfair Bush tax rate cut. Using your standards, I mean.
Andrew Lazarus
David, where do you get your numbers? According to the Census Bureau, median household income for 2001 was $42,228 (a 2% drop from 2000), and according to my copy of TurboTax, a family of four with that income (all W2) using standard deduction would pay $2848 in income tax. I wouldn’t call that “nearly zero”.
You have again been led astray with nonsense numbers that, as you put it, have no meaning whatsoever. The percentage of income tax paid by the top two quintiles means ABSOLUTELY NOTHING without more information on the distribution. Here is an extreme example: Ten people, nine make $10, Bill Gates makes $100 million, tax rates are 40% up to $11 and 50% beyond. Bill Gates pays just about 100% of the total tax. A tax cut imposes a flat rate of 39%. The mean tax cut is more than $1 million. Nine people receive a dime. And yet, they are still paying tax, probably at a very painful rate for them.
I believe that in the actual distribution, Bush’s promised “average” tax cut applies to less than 15% of the public, maybe less than 10%. So even if it were true that the median income paid almost no tax, that would not justify or excuse the unprofessional use of mean instead of median, against the standard professional practice of the eight sources I cited yesterday plus countless more. This is a deliberate distortion intended to fool the listener into expecting a much larger tax reduction than he will receive, since many people think their income is “above average”. I’m at something of a loss to see how a decent person could call this quibbling. I don’t believe any of those textbooks use the word “quibbling”; they used words like “mislead” and “mistake”. When George Bush says that 2+2=5, is my objection “quibbling”? (Actually, I should be happy: quibbling is a concession, just very ungracious.)
David Perron
I think I can comfortably say I understand mean and median just about as well as it’s possible to understand them. I stand by what I said. If you don’t grasp the progressive nature of the US income tax burden, maybe you need to read a bit more. I suggest looking at http://www.cbo.gov/showdoc.cfm?index=1545&from=4&sequence=0 a bit. In fairness, I incorrectly used 95% as a gauge of federal taxes paid by the top two quintiles, when it’s actually their share of *total* tax paid. The top two actually only pay 84% of federal tax. My bad.
I’m a little unclear about something, here. It’s not clear to me whether you’re outraged that Bush misled you, or that Bush misled some other people. Or perhaps he said mean when he should have said median? Or vice versa? It’s not clear to me what the source of your dissatisfaction is.
According to Citizens for Tax Justice (not exactly friendly to the Bush tax policy, BTW) the average family in the middle bracket (which is pretty close to the median) will pay about $289 less in taxes under the Bush plan. According to your numbers, that’s a reduction in taxes of about 10%. In what way do you think this is a bad thing? Your mythical 4-child family will pay a LOT less, because of the child tax credit.
Professionally speaking, when I say average, I mean mean. Average doesn’t mean median. It sounds as if your own misunderstanding is responsible for your outrage, not anything Bush said. If so, I don’t think I can help you with that.
Andrew Lazarus
According to you, Citizens For Tax Justice says the median family will get a cut of $289. Except, I went to their website (instead of relying on Republican talking points) and read their analysis, THAT’S THE TOTAL FOR FOUR YEARS; so the correct figure is $72.25. (Not really, it goes down year by year.)
David Perron
That last was gratuitous AND inaccurate, all in one sentence. But while we’re all indulging in silliness, I’d like to invite you to point out just precisely which one of your sources state that average and median are ever confused with each other. Just so I can ridicule them in public, I mean.
Your comments about CTJ’s figure for tax savings isn’t supported at all. Try looking here and tell me what you think it says. What it says to me is “Details of the Effects of the Bush 2003 Tax Cut Plan in 2003”, which to me means it’s $289 per year. BTW your link says nothing about median income, only mean. Which, at the risk of repeating myself, I’d like to point out are quite different.
But based on your link, I conclude CTJ doesn’t really have its analytical ducks in a row. So I have to disqualify my own link to them as well.
Andrew Lazarus
I believe your link from January (which I didn’t visit until your post) is for the cuts as originally proposed and my links (May/June) are as finally passed.
When operating over a less skewed distribution, namely when restricted to particular quintiles, the median and mean are much closer. However, I didn’t see any evidence that “average” at CTJ is being used as “mean”. If they are using mean, WHICH IS NOT EVIDENT TO ME (did I miss it?), it’s wrong, and incidentally unfair to Bush (!) because it increases the size of the cut for the top taxpayers much more than for the average taxpayers, because of the right skew.
When students use the textbooks I cited in future, do you think the teacher is obligated to cross out “median should be used instead of mean for income”?
David Perron
No. Just as you shouldn’t tell water polo players that the sport has nothing to do with ponies.
David Perron
Oh, hooey.
Andrew, I think that mean income probably has some use or other. Maybe mean income isn’t as meaningful an indicator as median, but that doesn’t mean when someone refers to average income that one ought to interpret it as median.
And I now think we’ve beaten that subject to death. I’m hoping we agree that median and average have distinctly different meanings.
David Perron
Uhh…hooey. Lemme recap:
Mean and median are different.
Average and median are different.
Median income and average income aren’t the same.
Bush lied.
Are we there yet? Ooops, dammit, that last one was just a joke.
Andrew Lazarus
Yeah, close. My three last points are
1. Bush didn’t, in this case, lie. He misled, in the way of a magician’s patter.
2. I believe mean income is often used IN COMPARISON to the median as a handy nut rough indicator of how skewed income distribution is. That is, in Haiti it is much higher than in Sweden (at least on a percentage basis).
3. Sigh: although the most common colloquial use of “average” is in reference to the mean, as a term-of-art it is applied also to medians and modes, and even sometimes so in general conversation.
David Perron
Misled whom? You? Or some people you think have been misled?
I can say I wasn’t misled. I didn’t jump with joy at the prospect that Bush was going to save my ass, in terms of tax burden. I instead waited for the details to come out and looked for myself to see what the impact to me, personally, would be. Why is it so difficult to imagine that others haven’t done the same?