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President Bush can't understand why Americans aren't giving him credit for how well the economy is doing. Paul Krugman explained the other day that GDP growth isn't making its way into the paychecks of many American workers, and Americans don't judge how well the economy is doing by statistics, but by what they see around them with their own lyin' eyes. Bonddad made the same point here yesterday.

But Krugman is a notorious liberal and Bonddad is just a blogger for God's sake. So let me offer another authority for the same proposition: Alan Greenspan.

Greenspan's last appearance before the House Financial Services Committee was on July 20, 2005. I got to ask questions.


MR. MILLER OF NORTH CAROLINA: Thank you.

Mr. Chairman, last July you testified before this committee that average hourly wages of non-supervisory workers had been subdued in recent months and barely budged in June.

I cannot find any reference in your testimony today to average hourly earnings with non-supervisory workers. Mr. Frank pointed to the information in your report about earnings, or wages, but it does not seem to match that figure.

It does say that the employment cost index for hourly compensation had actually gone down about half a percentage point from what it had been the last couple of years.

So I asked him, what's up with "average hourly earnings of non-supervisory workers"? He began with an explanation of the methodology used in the analysis, apparently based on an incorrect assumption that I was intellectually curious about that. But then he really did answer, at least for those who can decipher Fedspeak:


MR. GREENSPAN:
...
We have another set of data which essentially endeavors to pick up production workers as distinct from supervisory workers, and that is about 80 percent of the workforce. So we separate the wages and salaries into production workers and into supervisory workers, essentially, the 20 percent, or the skilled management professional.

What we find is the production workers' average hourly earnings are rising very modestly; but because of the distribution of skilled worker supply and demand, we are finding that the increase implicitly in supervisory workers' average hourly earnings is going up very much more rapidly.

So we are getting a bivariate income distribution. And as I have said many times in the past: For a democratic society, this is not healthful, to say the least; and as I have indicated on numerous occasions, I believe this is an education problem, that requires us to get the balance of skills coming out of our schools to match the skills that our physical facilities require.

So there is a reconciliation, and the reconciliation is that we are getting some really divergent trends.
...

I have served on the House Financial Services Committee for three years now, so I now can understand conversational Fedspeak. "Bivariate income distribution" means that we are living in two Americans, one for the wealthy and privileged, and the other for the rest of us.

So why are Americans not giving President Bush credit for the economy? They are. They're giving him credit for the economy in their America. And for most Americans, the economic news in their America is not good.

Originally posted to Rep Brad Miller on Thu Dec 08, 2005 at 07:32 AM PST.

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