Dangerfield Economy Gets No Respect

By Mark J. Perry

Sunday, July 2, 2006

No matter how good the U.S. economy gets, no matter how many new jobs are created, the red-hot economy still gets no respect from the media, leading The Wall Street Journal to call it the "Rodney Dangerfield economy."

The media have consistently downplayed the turbo-charged U.S. economy, now in its fifth year of solid economic expansion. And yet almost any country in the world would gladly trade their economic conditions for a U.S. economy.

In Canada, it was headline news in June that the unemployment rate fell to a 32-year low of 6.1 percent. In more than a decade, the United States has not had an unemployment rate higher than 6 percent except for five months in 2003; our media disparagingly dismissed that period as a "jobless recovery."

With the same unemployment rates of about 6 percent, it's a "jobless recovery" according to the U.S. media and the strongest economic expansion in more than a generation in Canada!

Another example of the media's downplaying of the U.S. economy is its neglect of the history-making news that nine states have set record-low unemployment rates so far in 2006; an additional 15 states are within a percent of their historical low jobless rates. Almost half of all states are at or near their lowest jobless rates in history. We hear nothing about it from the media.

Even though a national unemployment rate of 4.6 percent gets no respect from the media here, almost any country in Europe would love to have our labor market conditions.

It's been more than a quarter century since France or Germany has had unemployment rates anywhere close to 4.6 percent and 30 years since the European Union countries as a group have had a jobless rate that low. If the European Union were a U.S. state, its current overall unemployment rate of 7.5 percent would rank it the highest in the United States except for Mississippi.

Where are the stories about the more than 5.2 million U.S. jobs that have been created in the last two years, a pace that adds more than 142,000 jobs every month? Where is the coverage of the phenomenal 5.2 percent growth in real U.S. output so far this year, which is double the growth rate of most European countries?

And what about the dire warnings of the "2003 tax cuts for the rich" that the media trumpeted so loudly several years ago? Where are the reports today about the explosion in tax revenues generated by the strongest economy in a decade and the increasing share of taxes paid by "the rich?"

In the first eight months of the current fiscal year, federal tax receipts have increased by 13 percent, the second-highest rate of growth for that eight-month period in the last 25 years, surpassed only by last year's increase of 15 percent.

Further, the share of taxes paid by the wealthiest 10 percent has increased in each year since the 2003 tax cut, rising from less than 50 percent of all income taxes paid in 2003 to almost 60 percent in 2005.

In other words, the media spin about "tax cuts for the rich" never materialized -- tax revenues have increased significantly and the rich are paying more in taxes. Where are the news stories now about the "tax hike for the rich"?

Even in its worst recession, the U.S. economy is still stronger than almost any other country in the world during their best years. And yet even now when the U.S. economy has a historically high level of employment, historically low unemployment rates in nine states, and higher national income, output and tax revenues than at any time in U.S. history, the Dangerfield economy still gets no respect.

Mark J. Perry is an associate professor of finance and economics at the University of Michigan at Flint.