Bloomberg.com: Top Worldwide

I don't understand. As a previous post shows, we lost almost a million jobs (964,232) and this story shows that a portion of them were replaced by lower paying jobs (3.6% lower household income) so I'm confused about the strength of the economy.
Maybe I need to take an economics course to figure out how wages can go down, we can lose that many jobs and still have a healthy ecomony.
I still believe that the best way to weather these things is to build a home business and not worry about being laid off. It's hard to be scared of losing a job you aren't that interested in if you have a business that is sending a check every month.

Namaste,
Brian Baldwin

Bloomberg.com: Top Worldwide

Bush Says Tax Cuts Must Be Permanent to Ensure Growth (Update1)

Jan. 6 (Bloomberg) -- President George W. Bush said the strength of the U.S. economy demonstrated the need for Congress to make his tax cuts permanent.

``There are a lot of people in Washington who don't believe in tax cuts,'' Bush said in a speech at the Economic Club of Chicago. ``The United States Congress must make the tax cuts permanent.''

Bush and other administrations fanned out across the U.S. today to take credit for an economy he said has a ``full head of steam'' and a jobless rate of 4.9 percent. Democrats assert Bush is out of touch with the middle class, which is struggling with higher prices for medicine, college tuition and home heating costs, amid stagnant or declining wages.

``Bush has his eye on the big picture, claiming credit for the economy,'' said Merle Black, a political scientist at Emory University in Atlanta. ``This is Ronald Reagan politics: Cut taxes, get the economy back.''

Senate Democratic Leader Harry Reid said in a statement yesterday that his party would work to increase the minimum wage, push for lower costs prescription drugs through government negotiations and offer more home heating aid. ``Democrats are concentrating on other parts of the economy that aren't doing very good,'' Black said.

Household Income

Average household income, after inflation, has fallen 3.6 percent to $44,389 today from $46,058 when Bush took office, Census Bureau figures show.

``Unfortunately, the record they're touting is not the reality for most Americans,'' Senator Charles Schumer, Democrat of New York, said in a statement yesterday. ``Life is getting tougher for the average American, not better.''

The Bush administration maintains that the tax cuts during the past five years helped the economy emerge from a 2001 recession and contributed to 10 consecutive quarters of growth that exceeded a 3 percent annual rate.

``The president and I have no intention of letting the big spenders in the Washington take a bigger share of your paycheck,'' Vice President Dick Cheney said after touring a Harley-Davidson motorcycle plant in Kansas City. ``Our job now is to maintain the momentum of this economy, and to keep the confidence level high.''

Bush also laid out a 2006 agenda that included controlling health care costs and expanding global trade.

The president said the U.S. would push for a conclusion of world trade talks, with a goal ``to see that this world trades more fairly, and more freely.''

Yield Curve

While the administration points to the economic improvements, some economists and investors say bond yields herald an economic slowdown later this year or early next. Yields on 10-year Treasury notes ended 2005 below those of two-year notes for the first time since December 2000. Such an inversion in the yield curve has preceded the past four recessions.

``That's a horse with a track record we would rather not go against,'' David Rosenberg, chief North American economist at Merrill Lynch & Co. in New York, told clients this week.

U.S. employers added 108,000 workers in December, less than the 200,000 median forecast by 62 economists in a Bloomberg News survey. Today's Labor Department report also showed the jobless rate fell 0.1 percent to 4.9 percent.

At stake for Bush and his allies are the mid-term elections in Congress, where all 435 seats in the U.S. House of Representatives are up for grabs and one-third of the U.S. Senate. Republicans now control both chambers.

Gasoline Prices

Average retail gasoline prices that peaked at $3.07 cents a gallon on Sept. 5 after Hurricane Katrina have fallen to $2.23 a gallon, Energy Department figures show.

With falling gasoline prices, Bush's handling of the economy has improved, though it's still below 50 percent. An ABC News/Washington Post poll taken Dec. 15-18 showed 47 percent of those surveyed approved of his stewardship, the highest since June, and up from 36 percent in a Nov. 2 Post/ABC survey. The telephone poll of 1,003 adults had an error margin of plus or minus 3 percentage points.

After the economic shock from the Sept. 11 attacks, the ``real story of the last few years is the incredible resilience of our economy,'' Cheney said.

U.S. Treasury Secretary John Snow visited the New York Stock Exchange and did three television interviews today to hail the economy. ``The fundamental news here is a good story, a wonderful story,'' Snow said in an interview. Snow predicted the unemployment rate would continue to drop. ``It is already lower than the average in the '70s, '80s and '90s, but I'm confident we can continue to make progress.''

In addition to Bush, Cheney and Snow, Commerce Secretary Carlos Gutierrez and about 20 other officials from the Treasury, Labor, Energy and Commerce departments were scheduled to talk about the economy in speeches or meetings in 19 different states, according to a White House schedule.

`Under the Surface'

``Democrats are predictably trying to draw attention to things under the surface'' that the economy isn't quite so rosy, said Charles Gabriel, a senior political analyst at Prudential Equity Group in Washington. Still, ``inflation is controllable and energy prices are peaking,'' he said.

Cheney and Bush will maintain their argument for spending restraint, as the administration prepares for the State of the Union address on Jan. 31 and a budget message on Feb. 6.

The federal budget deficit was $319 billion in fiscal 2005, down from $412 billion the previous year. Bush took office in 2001 with a budget surplus of $236 billion. The administration's goal is a deficit of no more than $260 billion by 2009. The official budget numbers don't include spending for the wars in Iraq and Afghanistan, which have been funded through ``emergency spending'' measures totaling $326 billion since September 2001.

To contact the reporter on this story:
Brendan Murray in Chicago at  brmurray@bloomberg.net
Holly Rosenkrantz in Kansas City  hrosenkrantz@bloomberg.net

Last Updated: January 6, 2006 13:32 EST