Good news is all over this still very new year. The “January effect” -- the traditional January stock market rally that follows the traditional December sell-off -- was the best since 1999. Same-store retail sales in January beat all projections with a 5.2 percent yearly gain. Car sales have had a nice comeback. And consumer confidence has now increased for three straight months.
Even wages are coming online. According to the Bureau of Labor Statistics, average weekly earnings are up 3.6 percent year-on-year. That’s the best since 2000. Then there’s the personal-income proxy derived from hours worked multiplied by wages. This measure registered a 6 percent gain in the year ending January, way up from 4.5 percent last October. With retail gasoline prices coming down 23 percent last fall, from $3.07 to $2.36, real wages are on the rise.
Pessimists can obsess about a mild housing slowdown, but expanding businesses and jobs are throwing off plenty of income. If only the president would jump on all this positive economic data, the pessimists would be exposed as data-deprived, hyperbolic, and just plain wrong. More, by truly seizing the economic moment, he would strengthen his case for tax-cut extensions. Right now, he doesn’t yet have the votes in the Senate. The battle must be joined.
Additionally, the Bush administration has just requested another $70 billion for the battlefronts of Iraq and Afghanistan, another $18 billion for Gulf Coast recovery, and $2.3 billion in case the Avian Flu epidemic ever arrives. This is essential spending, but it is also essential that budget makers dig deep for spending offsets. A $400 billion budget-deficit estimate will politically damage the tax-cut case. New House Majority Leader John Boehner must really get moving on the road to budget reform.
If there is no turnaround, overspending and headline deficits will politically crowd out the vital tax-cut extensions that are so necessary to investor, business, and consumer confidence.
The supply-side economic growth plan is working. But the governing GOP coalition must close the circle on budget restraint. Economic growth and Republican political longevity depend on it. The president must do his part by turning up the volume on the good-news economic data.