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How Robust Is the Current Economic Expansion?
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| Contributor | ArmyDem |
| Last Edited | ArmyDem Jul 07, 2008 12:58pm |
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| Category | Analysis |
| News Date | Tuesday, April 22, 2008 06:00:00 PM UTC0:0 |
| Description | Proponents of the 2001 and 2003 tax cuts often argue that the economic and employment growth of the past several years establishes that these tax cuts “worked” and had strong beneficial effects. More recently, some have also argued that, with growth slowing, new tax cuts are needed and would reinvigorate the economy.
It now appears that the economic expansion that began in 2001 is drawing to a close. The economy may be entering a recession; if not, it is certainly entering a slow-down. Now is therefore a good time to take stock of the recent economic expansion as a whole. We examine the expansion from 2001, when it began, through the third quarter of 2007, before the slow-down in economic growth in the last part of 2007.
The evidence on the 2001-2007 expansion provides no support for the claim that the tax cuts generated exceptional economic growth. Rather, examination of a broad range of key economic indicators indicates that the economic expansion that began in 2001 was, on balance, weaker than average. In fact, with respect to GDP, consumption, investment, wage and salary, and employment growth, the 2001-2007 expansion was either the weakest or among the weakest since World War II.
Moreover, the economy’s performance between 2001 and 2007 was weaker, overall, than its performance in the equivalent years of the 1990s, years following significant tax increases. GDP growth was somewhat weaker than in the 1990s, and job creation, investment, and wage and salary growth all were substantially weaker.
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