1115.org

Torrance:”You better bring your most optimistic economic predictions.”
Isis:”Oh, they’ve already been broughten.”

Since the end of the last recession, happy talk about the economy has been a constant refrain from the President and anyone else from his administration who stumbled across a microphone. “Look at all the jobs we’ve created” is a big favorite, despite employment that hasn’t even kept up with population growth, and wages that have stagnated, and in some cases fallen in the face of skyrocketing energy costs. Yet Bush and company trot out statistics like low inflation, high average wages, and continuing productivity gains in an attempt to justify their economic policy, such as it is.

Low inflation is important, but vital for those with substantial bank balances. High average wages would be a more accurate barometer of the economy were they not skewed by a 435-to-1 ratio of CEO vs. rank and file worker pay. Productivity gains are usually distributed across the spectrum, yet are currently only resulting in layoffs and corporate cost cutting. These outcomes, though counter to the stated goals of the Bush economic plan (read: tax cuts on top of tax cuts) and the interests of most Americans, are exactly what their architects intended: an opportunity to reward those at the very top who supported the President.

After campaigning on a tax cut to “give the people their money back” when there was a surplus, Bush turned around and prescribed the same medicine when faced with a flagging economy and exploding deficits. To sell this idea that defies logic, Bush used the argument made by supply-siders for a generation: Tax cuts pay for themselves. It’s a line of reasoning that simply won’t die despite a complete absence of affirmative proof and ample examples to the contrary. The latest to recognize this shell game is Ohio Republican Senator George Voinovich who recently said:

“It is time to recognize a simple fact of life. Contrary to what some of my colleagues seem to believe, tax cuts do not pay for themselves.”

Not only do tax cuts not pay for themselves, they don’t create jobs:

(Charts via United for a Fair Economy using Department of Labor data. Click to enlarge.)

Despite widespread support from investors, the Bush tax cuts haven’t done much for the stock market either. From early 2002 to present, the market is up 300 points, or less than 1% per year. With nothing to show for these “stimulative” tax cuts, even some supply-side ideologues are expecting rates to go up. The fact of the matter is that the reason a Fox News business channel won’t work is the same reason that few are fooled by all the sunny economic talk: people know how much money is in their wallet and how secure they feel in their current employment situation. The nonsense may work at the margins, but no one is going to be tricked into thinking they are better off when their bank statement and credit card bills come. Some on the right however, haven’t learned this lesson.

Each November, as the year winds down and the shopping season heats up, attention turns to retail prognostication. A losing year can turn into a win (and vice versa) on the strength (or weakness) of holiday receipts. Predictions this year varied widely, from slightly negative growth to up 6%. While the retailers themselves pushed the 6% number, most media outlets were a bit more cautious, factoring in stores lost to Katrina, high energy prices, and falling real wages. But their caution didn’t erode the quantity of media coverage, and certainly didn’t limit the annual Bring It On-style cheerleading.

The “Brace for Black Friday” stories began running earlier than ever, peaking with near-constant live remotes from malls and shopping centers on the day itself. A look at CNN’s transcript page for November 25 reveals a concentration of coverage usually reserved for dead Republican Presidents and in-progress car chases. When Black Friday sales were softer than expected, the media raised their pom-poms for Cyber Monday, a term coined just days earlier in a retail organization’s press release. But even this blatant shilling was not enough to please the captains of the cheer squad.

Torrance: Courtney, this is not a democracy, it’s a cheerocracy. I’m sorry, but I’m overruling you.
Courtney: You are being a cheer-tator Torrance and a pain in my ass!

This year it was Brent Bozell’s Free Market Project leading the cheertatorship:

Every program was negative in tone…
[…]
The year was filled with numerous examples of media misstatements, wildly incorrect predictions and good economic news either downplayed or ignored.
[and of course]
As usual, the facts belie the media accounts. The numbers that were rung up at the nation’s cash registers this Thanksgiving weekend, along with the final tallies of the online purchases made on “Cyber Monday,” indicated that once again, the American press had underestimated both consumers’ desires and their ability to spend money.

I’ll get to the numbers in a minute, but first let’s examine the absurd logic that FMP is peddling. All media outlets depend on advertising revenue, and all advertisers are skeptical of every dollar they earmark for ads. Department store magnate John Wanamaker once said “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.” It’s this sentiment that has driven the media to extremes unthinkable to their predecessors, including blatantly rewarding sponsors with value-added perks like sunny reviews of unwatchable movies, shameless product hawking, and radio ads recorded by station DJs/hosts. It’s squarely in their interest to create a narrative that convinces viewers that “everyone’s shopping,” and they would have to be literally suicidal to downplay good retail news because it might undermine the effectiveness of the ads they run along with the financial situation of the businesses that pay their salaries.

When the numbers were in for Black Friday, the picture could best be described as mixed:

“Despite the fact that November sales were in line with our projection, the strength was largely driven by promotions and did not provide as strong of a start to the holiday season as some retailers would have liked,” said Michael Niemira, chief economist and director of research [at International Council of Shopping Centers].

…and:

ShopperTrak RCT Corporation’s National Retail Sales Estimate (NRSE) today reported that the 2005 holiday retail season got off to a relatively flat start as compared to 2004 as the season’s first major shopping day, Black Friday, fell a very slight 0.9 percent.

While total sales were down a bit in the early going, credit card use was up 13.9%, possibly indicating that more Americans are interested in testing out the new bankruptcy law personally.

As the season wore on, things didn’t get much better:

Retailers faced slower-than-expected traffic in stores on the last shopping day before Christmas Saturday as extended hours and steep discounts failed to draw a big crowd of shoppers.

And finally, the late rush that was supposed to save retailers didn’t materialize:

…the International Council of Shopping Centers found that sales at 69 chain stores rose 3.9 percent from 2004. The group’s chief economist called the performance “soft.”

Taken together, the reports suggested that the big finish that retailers had hoped for was not so big after all.

So sales were up, but not by much, and credit cards financed an increased share of holiday spending. The media played it down the middle by relying on industry groups and actual sales data for their reports. But it’s not enough for “Big Red” Bozell who just wants you to cheer harder. Republicans can push their tax cut panacea until words fail, but the proof, as always, is found on the scoreboard. A stock market moving sideways and retailers showing “soft” numbers (including Wal-Mart’s worst December in five years) is further proof that the Bush tax cuts either aren’t working or weren’t designed to strengthen the overall economy. Or both.

Maybe it’s time to get Sparky Polastri in here for some “spirit finger” lessons.