Mon, Nov. 06, 2006
the economy of the
YES: Economic output and employment are now at all time highs
MARK J. PERRY MCCLATCHY TRIBUNE NEWS
During the five-year economic expansion, more than 9 million jobs have been created, a pace of more than 152,000 jobs on average every single month. The national unemployment rate of 4.6 percent is the lowest in more than five years.
Forecasts by the Congressional Budget Office indicate that average to above-average growth in real output will continue for at least the next 10 years, putting the U.S. economy on track to break the previous 120-month record expansion from 1991 to 2001.
If the CBO is correct, the continuation of this economic expansion will increase output by $8 trillion over the next 10 years as technology and education continue to enhance worker productivity. By comparison, the last $8 trillion increase in goods and services took 25 years.
With economic output and employment at all-time highs, and unemployment rates near historical lows, it should be no surprise that federal and state tax revenues have exploded. All but five states currently have budget surpluses because of the strong economy and huge increases in revenue.
Federal tax payments keep hitting record highs, and they surged by more than $250 billion in each of the last two years, marking the two largest percentage increases in federal tax revenues since 1981. Especially worth noting are the annual increases of 44 percent, 47 percent and 27 percent over the last three years in income tax revenues on corporate profits, which have grown substantially as a direct result of the expansion, along with the added economic stimulus of the 2003 tax cuts.
The unexpected surge in tax revenues has brought the budget deficit down to less than 2 percent of GDP, well below the 2.7 percent average over the last 40 years. And it's not only federal and state government tax collectors who benefited from the strong economy. Private charities reaped a $63 billion increase in donations last year, the second largest boost in history.
Reflecting record corporate profits and a healthy economy, the stock market is once again reaching record-setting levels. When you add low inflation, stable interest rates, and falling gas prices to all of these positive economic indicators, you have all of the necessary ingredients for an economy that is hitting on all cylinders.
There is overwhelming evidence to suggest that the economy is not just in good shape, it's in great shape, and it keeps getting better.
Mark J. Perry is an
associate professor of finance and economics at the