Economy Under George W Bush

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Categories: Economy | George W. Bush

This page contains a variety of statistics on the economy from January 20th, 2001 to present.

Successive speakers at the Democratic National Convention poured scorn on President Bush's economic record. The clear aim was to justify the party's call for "change," and to undermine support for Republican presidential nominee John McCain. His election would mean a "third Bush term," delegates groaned. Yet Democrats cited no good evidence for their claims that the administration has produced a stagnant economy, widening disparities of income and wealth, high unemployment, and a heavy burden of government debt (supposedly resulting from an unwise military intervention in Iraq).

How does the performance of the U.S. economy really compare with other advanced economies over the eight years of George Bush's presidency? Data published by the International Monetary Fund (IMF), the Organization for Economic Cooperation and Development (OECD), the World Bank, the International Comparison Program (ICP) (a cooperative venture coordinated by the World Bank) and the U.S. Census Bureau allow a nonpartisan, factual assessment. Here are some of the findings:

- Economic growth. U.S. output has expanded faster than in most advanced economies since 2000. The IMF reports that real U.S. gross domestic product (GDP) grew at an average annual rate of 2.2% over the period 2001-2008 (including its forecast for the current year). President Bush will leave to his successor an economy 19% larger than the one he inherited from President Clinton. This U.S. expansion compares with 14% by France, 13% by Japan and just 8% by Italy and Germany over the same period. The latest ICP findings, published by the World Bank in its World Development Indicators 2008, also show that GDP per capita in the U.S. reached $41,813 (in purchasing power parity dollars) in 2005. This was a third higher than the United Kingdom's, 37% above Germany's and 38% more than Japan's.

- Household consumption. The ICP study found that the average per-capita consumption of the U.S. population (citizens and illegal immigrants combined) was second only to Luxembourg's, out of 146 countries covered in 2005. The U.S. average was $32,045. This was well above the levels in the UK ($25,155), Canada ($23,526), France ($23,027) and Germany ($21,742). China stood at $1,751.

- Health services. The U.S. spends easily the highest amount per capita ($6,657 in 2005) on health, more than double that in Britain. But because of private funding (55% of the total) the burden on the U.S. taxpayer (9.1% of GDP) is kept to similar levels as France and Germany. The U.S. Census Bureau reports that 84.7% of the U.S. population was covered by health insurance in 2007, an increase of 3.6 million people over 2006. The uninsured can receive treatment in hospitals at the expense of private insurance holders. While life expectancy is influenced by lifestyles and not just access to health services, the World Bank nevertheless reports that average life expectancy in the U.S. rose to 78 years in 2006 (the same as Germany's), from 77 in 2000.

- Income and wealth distribution. The latest World Bank estimates show that the richest 20% of U.S. households had a 45.8% share of total income in 2000, similar to the levels in the U.K. (44.0%) and Israel (44.9%). In 65 other countries the richest quintile had a larger share than in the U.S....

- Employment. The U.S. employment rate, measured by the percentage of people of working age (16-65 years) in jobs, has remained high by international standards. The latest OECD figures show a rate of 71.7% in 2006. This was more than five percentage points above the average for the euro area. The U.S. unemployment rate averaged 4.7% from 2001-2007. This compares with a 5.2% average rate during President Clinton's term of office, and is well below the euro zone average of 8.3% since 2000.

The evidence shows that much of the Democratic Party's criticism of President Bush's economic record is wide of the mark. True, the economic slowdown now affecting most advanced countries will likely result in rising unemployment over the coming months. But thanks to sensible policies pursued by the Bush administration (not always with adequate support from a Democratic-controlled Congress), the U.S. economy is sufficiently flexible to keep unemployment below the 7.7% peak reached in the last postrecession year of 1992.

The main risk is that, if elected, Barack Obama will pursue a "social justice" strategy. This would encompass higher taxes on entrepreneurs, savers and investors, more direct government intervention in the economy, and protectionist policies (including revoking existing trade agreements) aimed at safeguarding the jobs of his union backers in "old" industries and public services. If so, the pain is likely to be more widespread and prolonged.