Ask Auntie Pinko
November 20, 2003

Dear Auntie Pinko,

Do you think that our economy is really on its way back to prosperity? The Bush Administration has lately been claiming that "all the signs" point to an economic recovery, but I don't see it that way. Can you explain some key economic indicators and what, exactly, they are indicating at the moment? This site hasn't really addressed the Administration's claims; I am particularly concerned about the consistently falling job numbers and the recent reports that hunger is on the rise. It seems to me that the rich are making a killing and the poor are getting the shaft. Thanks for your insight.

Joe
Mechanicsburg, PA

Dear Joe,

Whether the economy is improving is one of those questions without a single unequivocal answer. Like whether having an elephant improves the parade - if you're watching, sure! If you're marching behind it, well…

No matter what the economy does, it's always better for some people, and not so hot for others. Even in hard times, some people prosper. It's hard for Auntie to keep it straight but I think it goes like this: when interest rates are rising, buy stocks because they will gain value. When they are falling, buy bonds because they will retain value. So an economic indicator like the interest rate means one thing to bond dealers and another thing to stock brokers. An economic indicator like falling wages might be pretty lousy for a wage earner, but provide an opportunity for an employer to expand their business and/or increase profits.

Unemployment going down? Sounds good unless you parse it out and find out that the jobs that unemployed people are getting pay less and offer fewer benefits than the jobs they lost. (Remember the old joke about the waiter at the political fundraising dinner? The guest of honor was talking about how he had created so many new jobs, and the waiter said, "I know you did, I have three of them!") We're importing more than we're exporting? Bad news, unless you're a consumer benefiting from competitively-priced imported goods, or a manufacturer taking advantage of cheaper raw materials.

Unfortunately, the "economic indicators" that really matter to most of us are not part of the Wall Street Journal or the President's Economic Advisory Council's regular talking points. The two economic indicators that most Americans really care about are:

Is my net hourly income rising or falling?
Do I have to work less hours, the same, or more hours to meet my basic costs for transportation, food, shelter, health care, etc., than I did five years ago? Ten years ago? Can I afford to save for my children's education and/or my retirement?

Is my net wealth increasing or decreasing?
Are my savings and/or investments gaining or losing value? Can I translate a portion of my income into wealth? Do I have access to cost-effective credit to help me build wealth through real estate or business investment?

And there are other key indicators that are not usually reported in Fortune or Forbes:

Is the physical infrastructure in my neighborhood, town, city, or state meeting my needs more or less effectively than five years ago? Ten years ago? How are the roads? Is there adequate public transportation? What about schools? Are my streets safe? Will the public university system still be cheaper and provide a quality education comparable to private colleges? Can I get health care easily and conveniently? Can I start a business on a shoestring, or is that something only rich people can do? If I need information, is there a public library to help? How about a communications infrastructure that provides access to the Internet?

Does keeping my lights on and my house warm in the winter cost about the same proportion of my income now as it did five years ago? Ten years ago? Is my power source reliable? Is the water coming out of my tap safe to drink? Is the air safe for me to breathe?

These are all important economic indicators to me, because they are critical to my fiscal health. A truly robust economy supports the financial well-being of individuals by providing adequate funding for the infrastructure that supports our businesses, our homes, and our children's futures.

So if Mr. Bush's administration believes "all the signs" are pointing to an economic recovery, they may be right, based on the "signs" they are looking at.

But it's pretty clear they're not looking at the "signs" in my neighborhood. Or, I suspect, in yours, Joe. Thanks for asking Auntie Pinko!

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