Democrats, Media Distorted Economic Data in '92 Election
Study shows recovery well under way by November vote
I COMPLAINED during the 1992 campaign about the way the United States economy was being reported - and the impact of this misrepresentation on the electorate. Available data showed that the bottom of the recession had come in the spring of 1991, and that by election day 1992 the recovery was well advanced. But voters were told throughout the campaign that the sky was continuing to fall on the country; if George Bush couldn't recognize this, he was hopelessly out of touch. Of course the US economy had problems. But it was not the failure that it was portrayed to be.
We now have an additional 15 months of data, and this longer perspective makes it even clearer that former President Bush got a raw deal in the 1992 coverage. Most of the mainstream press depicted the economy as a basket case when in fact it was (1) recovering and (2) doing pretty well by international comparisons.
In the March/April issue of The Public Perspective magazine, my colleagues and I have compiled charts that track the economy's performance from the beginning of 1989 through early 1994.
The charts tell a story with a consistency rarely seen in social/economic data. Whatever the measure - change in the number of nonfarm payroll jobs, new orders for durable goods, retail sales, sales of new and existing homes, the purchasing managers' index, or the growth in the gross domestic product - the trend lines are the same. Each measure shows the economy slipping in the latter part of 1990 and in early 1991, and reaching bottom in the spring of 1991. Then the lines all turn upward.
For example, the figures on nonfarm employment first turned negative in July of 1990; the number of jobs fell by 204,000. This measure stayed negative in each monthly reporting for the rest of the year and through April of 1991. The May figure showed a small gain; the next 10 months were a mix of small gains and losses. By March of 1992, the job data were consistently positive, and jobs were being added at a fairly brisk pace at election time.
Data on gross domestic product (GDP) show the same progression. Controlling for inflation, the Commerce Department's GDP measure showed declines in the second half of 1990 and the first quarter of 1991. After slow growth for next three quarters, the economy expanded throughout 1992: from 3.5 percent in the first quarter all the way to 5.7 percent in the fourth, when the presidential balloting took place. The 5.7 figure may well have been caused by some sort of static. But solid growth clearly occurred through the year. The rate of growth for 1993 is about the same as in 1992.
Since the election, there has been the usual short-term movement in all the measures - up and down - with much of this bounce not real but an artifact of the measurement systems themselves. Nonetheless, the trend lines are clear: They have stayed, without exception, on an upward course since the early months of 1991. The Bush-Clinton recovery is now into its third year. More than half the recovery can be found in the last 18 months of Bush's watch.
The Democrats' case that Bush and the Republicans messed up the economy and left it mired in recession was seen by the public as a normal partisan stance - and thus by itself could have been discounted. But when much of the press presented the same argument as fact, it necessarily assumed greater credence and - the polls show clearly - was believed.
The same is true of the other half of the Democrats' brief against the GOP's custody of economic affairs over the Reagan-Bush years - that the US was sliding badly in international competition. Over the late 1980s and into the early 1990s, Japan's supposed economic triumph over the nation that had defeated it just four decades earlier was trumpeted in much of the press as unquestionable. It was in fact pure fiction.
This is not to say that Japan has not done well overall, or that the US economy has been without real problems. But readily available data have consistently shown this country faring well in international competition generally and with regard to Japan in particular. Real per capita GDP, measured by the Organization for Economic Cooperation and Development in terms of ``purchasing power parities,'' was $22,200 in the US for 1992, compared with $19,100 in Japan. Over the 1981-92 span, the US created far more jobs, proportionate to the size of its economy, than Japan did in proportion to its size.
All this is finally and belatedly being acknowledged. The Japanese stock market has lost half of its value, compared with its high point in the 1980s. Japan is mired in recession. Last month we learned that the Japanese government appears set to throw in the towel on its system of high definition television, which just five years ago was heralded in the US press as proof positive of the wisdom of Japan's state-centered industrial policy. Now we're told that the American system for enhanced television is winning out. So the news goes across many sectors of the economy.
US voters need an accurate picture of the economy. In the late 1980s and early 1990s, they didn't get it from most of the mainstream press. They were told their economy was failing. The data shows it wasn't.