How Come the Treasury Can't Sell Us a Porsche?

Jan. 20 (Bloomberg) — The Treasury Department has invited journalists to its Cash Room this morning to sell them on the U.S. economy. The idea is that face time with big names under the bronze chandeliers will win over those doubting the quality of the product.

There's a sense of desperation here. But then, the attacks on the Bush administration have been rough. Typical was Senator Hillary Clinton's accusation in a Harlem church on Martin Luther King Day. Clinton apologized "on behalf of a government that left you behind, that turned its back on you." She said that this presidency will go down "as one of the worst."

But this economy is not a "worst." It is not even a clunker. It is a Porsche 911, zooming along last year at growth of 3.5 percent or more. As for unemployment, it was 4.9 percent in December. Not quite Ferrari class, but not bad. After all, only a decade ago Federal Reserve economists told us that any unemployment rate below 6 percent was not natural.

As labor scholar Richard Vedder of Ohio University points out, 4.9 percent is not merely low for this decade, or even low by post-World War II standards. It is below the average for the past century.

Deep Reluctance

Certainly, the economy has problems. Our domestic automakers have become pension companies. But things could be worse. Sure, workers need retooling, but we read that Ford Motor Co. is offering to buy out workers by paying their way through college.

So why do Treasury officials have to work so hard? Some of the skepticism comes from the bond market. It acts as if the economy has run too hot, and it may be right.

The rest is political.

There is a deep reluctance on the part of many Americans, including many Republicans, to acknowledge strong growth under President George W. Bush.

So perhaps it is worthwhile to try an experiment. Forget who is president. Extract that 4.9 percent datum from its current political context and think about what life was like at such points in the past.

Take the autumn of 1957 — another 4.9 percent moment. Americans weren't happy about everything — in early October, the Soviets launched their "traveler's traveler," the Sputnik, and the U.S. had nothing to match. Still the general feeling was that America had a strong future.

Confidence in Nomads

The confidence was especially visible in the cars they drove. There was the Chevy Nomad, a station wagon with two doors and prodigious fins. It attempted the impossible, reconciling family and sex, in the same way that the sport-utility vehicle does today. Like a dream, the Nomad was even available in sky blue.

Then there was the 1957 MGA. British, but as an MG hobbyist Web site notes, 13,869 out of 16,467 were left-hand drive cars for the U.S. market. The red version did such a good job of capturing the joy of the postwar boom that my brother bought one more than four decades later.

The important stories here were the car and the boom they represented, not the president. It was Ike, by the way.

Consider likewise July 1964, or June 1970, two other points where we were experiencing 4.9. Again, in both cases the country was feeling pretty good. Many will never forget the ugly, optimistic experience of the 1970 Oldsmobile Vista Cruiser. The Vista's advertising slogan was "keeps a sharp lookout with eleven windows."

Then there were the mid-1990s, when gains from computers really did bring more productivity, after all. Then unemployment pushed down into the threes. One emblem of that period was the Ford Explorer, a name evoking a willingness to haul what remained of the nuclear family wherever it wanted to go.

Changed Mode

Indeed, if you get out of the political, or the bond-market mode, you can see something. In some cases low unemployment spells inflation. But in others, it just represents the country at its best. The Apples and iPods, not to mention Google, mass merchandisers like Costco, booming biotechnology, are all replacing old jobs with new ones, says Mickey Levy, chief economist of Bank of America Corp. "They are providing the jobs that the Big Three cannot."

The benefit in these numbers can even extend to the crowd that Senator Clinton addressed. Black unemployment was down to 9.3 percent in December. Not ideal, but well below the level of a couple of years ago. And lower than the 10.6 percent level at the time President Bill Clinton was re-elected.

Deserves Credit

What about now? Bush deserves some of the credit for this economy, just as Clinton deserved some for his 3.8 percent. Both men made major errors. Clinton raised taxes too much. Bush created the drug entitlement. Bush, like Lyndon Johnson, allowed way too much spending. But "worst"? We'll leave such titles for Richard Nixon and Jimmy Carter.

My own sense is that the war, more than anything, is what is skewing perceptions this time. It's a sad little law of life — sad for economic people, at least — that foreign policy tends to trump economics. Americans who oppose the war in Iraq or Bush's handling of it can't contain their anger. The rage spills over into debates about Jack Abramoff or the quality of recoveries.

But this is a shame, for this recovery has been worth enjoying, no matter what your foreign policy.

You didn't have to vote for the Republicans in the late 1950s to love that '57 Chevy. And you don't have to back Bush or his party to acknowledge what's going on in the economy. Bonds, politics, and war: none should prevent you from getting your patch of sky blue.

(Amity Shlaes is a Bloomberg News columnist. The opinions expressed are her own.)

© Copyright 2006 Bloomberg

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