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Election-Year Economics: Key Pocketbook Issues of 2004

This analysis by Chief Economist C. Tannenbaum explores critical pocketbook issues during the 2004 election year, emphasizing the pivotal role of the economy in electoral outcomes. Key topics include trends in GDP, employment puzzles, deficits, consumer confidence, and the impact of healthcare costs on wages. The discussion covers factors influencing housing and trade dynamics, highlighting the relationship between a weaker dollar and export promotion. As the election year unfolds, Tannenbaum predicts a competitive race, underscoring the necessity for economic improvement to meet voter expectations.

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Election-Year Economics: Key Pocketbook Issues of 2004

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  1. Election-Year Economics A Look at the Pocketbook Issues of 2004 C. Tannenbaum Chief Economist

  2. “It’s the economy, stupid!” -- Bill Clinton, 1992

  3. Trends in U.S. GDP Quarterly Change, Annualized “Potential”

  4. Year over Year Change in Retail SalesExcluding Food and Autos

  5. Index of Industrial Production

  6. Key Concerns • The Employment Puzzle

  7. Non-Farm PayrollsYear-Over-Year Change Source: BLS

  8. Unemployment and Labor Force Participation Percent Rate

  9. Consumer Confidence

  10. The $100 Million Question: Why hasn’t hiring picked up?

  11. Cost of Health Care Benefits As a Percent of Total Hourly Compensation Source: BLS

  12. Hourly Wages for Selected Occupations, U.S. vs. India Source: Bardhan and Kroll, Fisher Center for Real Estate and Urban Economics, UC Berkeley

  13. Productivity Source: BEA

  14. Initial Jobless Claims Source: BLS

  15. Key Concerns • The Employment Puzzle • Deepening Deficits

  16. Deficit and Surpluses as Percent of GDP Source: OMB

  17. The Boom is Coming The Future of Social Security Source: Social Security Trustees Report

  18. Federal Government: Outlays

  19. Yield CurveU.S. Treasury Securities • Rates are at risk if the deficit persists

  20. Housing: Still A Bright Spot U.S. Home Sales • Sales and starts are holding up • Mortgage rates are still reasonable • Carry over spending to come Millions of Units

  21. S&P 500

  22. Sustaining Investment • Diversification is Essential • Reinforcing the Public Trust • Maintaining a Balanced Tax Posture

  23. Key Concerns • The Employment Puzzle • Deepening Deficits • How Free is Free Trade?

  24. Our Trade Balance

  25. Brother, Can You Spare the Dollar? • A weaker currency makes it easier to export • One notable exception: China • How long can this last? Dollars per Euro

  26. Thoughts on Trade • Weak foreign economies limit demand for U.S. products • Protectionist measures will lead to retaliation • Who’s responsible for the shift of production and jobs? We are!

  27. The Scorecard

  28. Closing Thoughts • The remainder of the year should see good economic performance • The risk of underachievement is rising • The election looks like a real horse race!

  29. “If the economy doesn’t improve, you’re fired!” -- Carl Tannenbaum’s boss, 2004

  30. Election-Year Economics A Look at the Pocketbook Issues of 2004 C. Tannenbaum Chief Economist

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