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U.S economy's performance, 2001-2008: Where you stand depends on where you sit

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One issue likely to influence voters' choice for U.S. president in November is the U.S. economy.

The Iraq War/War on Terror, and other issues, such as health care concerns, are likely to be factors as well, but look for concern about the economy to be paramount. Of course, political science teaches us that party identification and voters' attitude toward each candidate will also help determine the vote for president.

(In a nutshell, the political science theory that best predicts vote is PI + ATC + MSI = Vote. Or, Party Identification + Attitude Toward the Candidate + Most Salient Issues = Vote. But more on that, some other time.)

Further, regarding the U.S. economy, there's been considerable coverage regarding its health -- sometimes too much -- but not as much clarity. So, without further ado, some "givens" or clarity about the U.S. economy.

  • U.S. GDP: The U.S. economy is experiencing anemic growth, but technically, it is not in a recession. Unemployment is trending up -- now at 6.1% -- put is still relatively low, compared to unemployment levels in previous economic slowdowns. [Note: The above is not to slight anyone who has lost his/her job; each job lost is a serious problem/concern for the person involved.]
  • Median income: The median U.S. family income is down. In 2006 the median U.S. family income, adjusted for inflation, was $58,407, according to the most recent U.S. Census Bureau data, down from $59,398 in 2000. Since the economic slowdown started in October 2007, it's possible, but not likely, that median family income rose in 2008, but more than likely it fell. Moreover, it probably fell during that time period, for most families.

However, that last phrase, "for most families," is a key, and it highlights why some may currently view the U.S. economy as being in better shape than others. That's because during the current decade income from dividends, interest, capital gains, and rental royalties are actually up substantially. [Trust yours truly when he says he has a great deal of personal knowledge about income from rental royalties.]

Further, if your family income is above $300,000 you've probably experienced a great eight years, financially. And if your family income is more than $1 million, chances are you've experienced the best decade, financially, in your history.

Parting point: The above describes how one can frequently get conflicting analysis regarding the U.S. economy. On GDP, the U.S growth rate is low, but the economy is not in a recession. On unemployment, it's rising, but still low compared to previous economic slowdowns. On median U.S. family income, most families have not kept pace, but a fortunate segment has done fantastic in the current decade.

That last item may be the most relevant for investors/readers. Further, while generalizations sometimes do not capture complexity, the statement, "In the past decade, if you're rich or very rich, you've done well. If you're not, you haven't" would be an accurate conclusion.

**

Editor Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.

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Last updated: November 24, 2009: 11:47 PM

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