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Ärende: Press Release (0601203) for Fri, 2006 Jan 20
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Policy Memorandum: A Historical Comparison of the Current Economic
Expansion
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For Immediate Release
January 20, 2006

Policy Memorandum: A Historical Comparison of the Current Economic
Expansion


˙˙˙˙˙PDF version
˙˙˙˙˙In Focus: Jobs and Economy

To: Interested Parties

From: The White House

Date: January 20, 2006

Introduction

The American economy has exhibited tremendous strength and resiliency
during the President's years in office. When comparing the economy with the
same point in the previous business cycle, in many respects the current
expansion is even stronger than the growth of the early and mid-nineties.
This memo highlights some of those economic comparisons.

According to the National Bureau of Economic Research, the last recession
ended in November 2001. After four years of solid growth, the unemployment
rate in December 2005 was 4.9%, inflation is contained, GDP growth is
strong, and more Americans now own their homes than at any other time in
our Nation's history. One of the most encouraging measures of the Nation's
current economic strength is the rise in worker productivity _ during this
recovery, productivity has increased at the fastest rate since World War
II. Over time, productivity growth leads to higher standards of living.

In April 1995, four years after the recession of the early 1990s came to an
end, unemployment and inflation were higher than they are today, and GDP
growth was lower. In spite of a stock market collapse, recession, terrorist
attacks, corporate scandals, high energy costs, and natural disasters,
today's economy has remained resilient. A comparison with the economic
recovery of the previous business cycle illustrates our current strength.

Economic Indicator

April 1995

December 2005

Job Growth

Unemployment

5.8%

4.9%

˙˙˙˙˙˙Average over previous 12˙˙˙˙˙˙˙˙˙months


5.8%


5.1%

Unemployment rate for African Americans


10.7%


9.3%

Unemployment rate for Hispanics

8.9%

6.0%

Average monthly payroll growth (12-month time period)

290,000

168,000

Economy

April 1995

December 2005

Average GDP over most recent four quarters

2.2%

3.6%

Average monthly inflation (Core CPI over past 12 months)

3.2%

2.2%

Productivity (growth over 4 quarters)

0.3%

3.1%

Real Private Fixed Investment (growth over 4 quarters)

5.7%

7.9%

Equipment and Software Investment˙(growth over 4 quarters)

12.3%

10.0%

The American Household

April 1995

December 2005

Homeownership rate

64.8%

68.7%

Minority Homeownership rate

43.5%

51.2%

Housing Affordability Index

130.6

115.0

Household Net Worth (growth over 4 quarters)


8.1%


11.0%

Real hourly compensation (growth over 4 quarters)


-0.7%


1.2%

Stock Ownership

˙˙˙˙˙˙˙˙˙˙˙˙Percent of all American families

40.4%

51.9%

(Latest data as of 2001)

*Some December 2005 statistics are calculated from the most recent third
quarter data available.
*Data source: Bureau of Labor Statistics

Analysis

The economy today is more robust than it was in the mid-1990s. Today's
unemployment rate is lower than the average of the 1970s, 1980s, and 1990s
and even lower than it was in the expansion of the mid-1990s. Compared to
April 1995, the unemployment rate for African Americans and Hispanics is
lower, inflation is more contained, and economic growth is stronger.

At this point in the business cycle of the 1990s, American worker
productivity growth was stagnant. Over the last four years of the current
expansion, productivity has been growing at 3.4% and workers are now over
17% more productive than in 2001. Increasing productivity is delivering
benefits to working families. From 1973 to 1995, productivity grew at 1.4%
per year. At that rate, it would take 50 years to double the standard of
living. Today, productivity is projected to grow by 2.6% over the long
term. At that rate, the standard of living will double nearly twice as
fast.

More Americans now own their homes than at any time in our Nation's
history, and minority homeownership has reached record levels. Today, more
American families are invested in the stock market. Real hourly
compensation is growing faster than the previous business cycle _ when real
hourly compensation actually exhibited negative growth. Real after-tax
income is up 7.2% since April 2003.

As the Nation enters its fifth year of economic expansion, the economy is
expected to continue growing, with healthy job creation and contained
inflation. American businesses should enjoy a strong U.S. economic
environment in 2006.

The President's Agenda For Continued Job Creation And Economic Opportunity

To ensure the economy's continued momentum, the President is working with
Congress to make tax relief permanent and to restrain spending. The
President is advancing pro-growth policies to reduce America's dependence
on foreign sources of energy, help workers find affordable healthcare,
strengthen rules governing pensions, reform our legal system, give more
Americans control over their lives by expanding ownership, and open foreign
markets to American goods and services. To help Americans take advantage of
new opportunities, the President is proposing reforms to improve the
Nation's education system and job training programs so that workers have
the skills needed for success in a global economy. The President is
committed to maintaining America's economic leadership in the 21st century.
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