America's Economic Miracle

On April 3, 2000, the judge in the Microsoft anti-trust case ruled against the goose that laid the golden egg and in favor of breaking it up, Microsoft shares lost $80 billion U.S., and the NASDAQ fell 349 points. The ridiculously over-inflated technology stock bubble on which the late-1990s economic boom was built, had popped. By the end of the year, over half the NASDAQ’s former value had vanished.

Nine months later came the worst-ever attack on American soil, targeting America’s civilians, commerce, and government. One million Americans were out of work within just three months.

A few months and one war after that, corporate accounting scandals rattled already-shaken investor confidence. And all the while, America’s illegal alien population was swelling by 40 percent to 12 million, straining public services and cramming employment rolls.

Another war followed, along with all the stock market uncertainty and national strain that entails, and this was a war that would refuse to be dispatched conveniently.

Then the price of gas exploded, heaping yet another wet blanket on economic activity and increasing inflationary pressure. And as oil spiraled upward last fall, America was bombarded by the worst hurricane season in living memory. One of America’s major cities was practically washed away, and an entire region was shut down to varying degrees for months, a region that also happened to be central to America’s oil production, refining, and importing.

And yet here we are, after America has been besieged on all sides for over six years, with a 4.6 percent unemployment rate that is better even than the 5.7 percent average for the “booming” 1990s; 11 consecutive quarters of GDP growth; per capita disposable income higher by 8 percent -- $2,500 U.S. -- than before 9/11; the biggest boom in new home construction since the 19th Century; and the richest Treasury haul in American history, now measured in multiple trillions.

In under three years, the U.S. economy has created more jobs – 5.3 million -- than there are people in Finland.

The entire economic output of Sweden, Switzerland, and Ireland together is equal to only the growth in America’s GDP last year of $674 billion U.S.

This is not to say that the economic mood is nearly so buoyant. A recent Gallup poll found a dismal 24 percent of respondents viewing the economy positively. High gas prices presumably depress economic optimism, discontent over Iraq or illegal aliens, etc. may be a drag on public perceptions across the board, and partisan acrimony could make it difficult for a good portion of the population to acknowledge national success, economic and otherwise.

And then there is the news. Most American news outfits seem to treat good economic news like national secrets, while blabbing actual national secrets in their top stories. Over 21 days in April and May, the three traditional television networks ran 183 news stories on the high gas price, to only four on the low unemployment rate, and two on the growth in GDP.

Despite the unusually low unemployment and indefatigable GDP growth, etc., the American people remain discouraged about their economy. But they keep to the grindstone, producing, innovating, creating, and working an economic miracle.

There are in fact things to be discouraged about.

Oil-driven inflation has been threatening to pinch economic activity and necessitate more interest rate hikes, which drains cash from stocks and deters potential borrowers for big-ticket purchases like new homes.

Wage growth has been lagging behind growth in jobs, particularly as higher unemployment had made workers cheaper. But as unemployed Americans become rare, wages are responding, increasing by 3.8 percent from a year ago.

America’s unfathomably expensive federal budget – now $2.57 trillion U.S. – is in deficit, running to -$412 billion U.S. last year. Congress and the President have spent like drunken sailors, increasing even non-defense “discretionary” expenditure by a dizzying 49 percent since 2001. Still, U.S. debt as a percentage of GDP is lower today than it was in the balanced-budget 1990s, and the deficit is now projected to decline by 27 percent this year, as the rising economy generates a tidal wave of tax revenue. Anyway, since when have wartime budgets been in the black?

And the United States imports more than it exports, by $726 billion U.S. in 2005. But with far and away the largest domestic market on earth, America is not export-dependent. America’s economy is built on the American consumer; exports are only the icing on the cake.

With exports making up 40 percent of Canada’s economy, and 85 percent of those going to the United States, at least a third of our prosperity stems directly from America’s. We would all be much worse off if America did not produce so very much wealth, and thankfully it seems America can make money even with the world crashing down around it.

Andrew W. Smith, Cape Sable Island, Nova Scotia and Tulsa, Oklahoma

Published in The Chronicle-Herald, Halifax, Nova Scotia