{Originally written in 2004, the rule that media creates harm more than reports it when if comes to economy rings true today. It is my belief that the DNC’s efforts alone to win the presidential election in 2008, fueling the barrage of gloom by the media, amplified and expanded what should not have been a national recession, and certainly not a “crisis”.}
I am sick and tired of all the armchair economists who never set foot in a college classroom, or those that did and never ran their own business or so much as intentionally invested a penny in the stocks, bonds or mutual funds.
Every economist actually IN THE GAME says the economy has been improving (against amazing odds in my opinion), and only politicians with axes to grind are nitpicking it. And the REAL economists don’t go out of their way to attribute negative or positive economic realities to specific candidates or policies, except where a relationship actually exists …
If you want to understand what’s going on, talk to your investor if you have one. Here’s an except from the latest “Legg-Mason” investment newsletter:
Addressing Tough Questions in the Current Environment
Q. Is the economy performing better?
We believe there is little doubt that the U.S. economy is experiencing a transition to slower, but more sustainable, growth. Growth in the economy is also changing from the exclusive beneficiaries of low interest rates and tax cuts. The median forecast for the economy this year is for GDP growth around 4%. The risk to this forecast comes from a continued rise in energy prices and acts of terrorism that reduce economic activity.
Q. What about jobs?
Job creation has been slower than originally expected. Economists cite reasons that include productivity growth of the existing workforce, which is subduing the need for additional hiring, and higher healthcare costs for employers, which is causing them to be hesitant to add new workers. The economy has created 1.5 million jobs in the last 11 months and the employment picture is poised to improve with a moderately growing economy. The major risk to employment conditions is a slowing economy.
Q. What is the outlook on oil prices?
Energy prices have become a pivotal driver in financial markets. Growing demand and fears of supply disruption are pushing crude oil prices higher. Crude oil production is increasing and is expected to exceed demand in the fourth quarter of 2004. However, capacity utilization of existing production is estimated at 97%, the highest level in decades, and leaves a thin cushion if supplies are curtailed for just a modest period.
Based on past relationships of demand, production, and inventories, crude oil would be expected to sell for $30-$35 per barrel versus the present range of $42-$47. The price difference is based on the fear of disruption as well as speculators attracted to the trading volatility of crude oil. The risk to the supply of crude oil is from the instability of the major oil-producing regions in the Middle East, Russia, and Venezuela.
…
And an unrelated article excerpt:
Since the beginning of the year 2000, we have experienced several “big” events that have had a significant impact on financial markets. From the bursting of the technology bubble and September 11th to the corporate scandals and the war with Iraq, negative events have eclipsed positive ones. The upcoming presidential election and its focus on the negative aspects of each candidate has followed suit. This negativity has led to investor uncertainty…
That says it all. The propaganda machine is hurting economic growth, moreso than the events themselves. So if you’re going to vote, don’t do it on the grounds that the economy is bad, or that Bush should take credit or blame for things beyond a president’s control. USE YOUR HEAD!
I’m not George W. Bush, or John Kerry … and I approve this message.