He didn't do a very good job. There just hasn't been the kind of recovery one would have expected with the amount of money that was pumped into the economy.
Idiot. Making shit up, bigtime.
This article has it about right. The economy recovered well from 9/11, but the money put into it made it more fragile (although only marginally). When the Dems kept shoving mortgages down the throats of people who obviously couldn't afford them, the collapse came.
But clearly, Bush did something right in his handling of the economy after 9/11. Many people were forecasting major economic gloom, and he totally avoided it.
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9/11 left U.S. economy on a fragile footing
By Rich Miller and Matthew Benjamin
Published: TUESDAY, SEPTEMBER 12, 2006
WASHINGTON: The terrorist strikes of Sept. 11, 2001, changed the U.S. economy in ways that no one expected five years ago.
Instead of plunging the United States into a recession, as many economists predicted, the attacks helped set the stage for a consumer-powered recovery as the Federal Reserve lowered interest rates and the government increased spending and cut taxes.
Since the attacks, the economy has grown at an average annual rate of 3.1 percent, close to the pace set in the 1990s.
The economy's resilience came with a $500 billion increase in government spending on homeland security and the wars in Iraq and Afghanistan, a $4 trillion jump in household debt and a 50 percent rise in house prices. While these helped speed the recovery from the attacks, they may have left the economy more vulnerable should such a shock occur again.
"We've become more unbalanced and fundamentally more precarious as a result," said Stephen Roach, chief global economist at Morgan Stanley in New York.
Consumer debt, including mortgages, credit cards and car loans, mushroomed in five years to $12.2 trillion from $7.9 trillion as Americans used the low interest rates engineered by the Fed to finance a spending spree. The median price of an existing home has ballooned to $230,000 from $153,000 in September 2001.
In the meantime, the price of a barrel of crude oil is $68, up from $28 five years ago. A gallon of regular gasoline averaged $2.73 last week, compared with $1.53 on Sept. 10, 2001, according to Energy Department figures.
The combination of increased consumer and government debt, an inflated housing market and elevated energy prices means the United Statesmay find it harder to weather another shock like Sept. 11.
"The U.S. economy is more fragile now," said Allen Sinai, president of Decision Economics, a consulting firm in New York.
Not all economists agree, pointing out that in some ways, the economy is better off now. When the terrorists struck in 2001, the economy was already struggling, having grown at an annual rate of just 1.2 percent in the second quarter of that year. In the second quarter of this year, the economy grew at a 2.9 percent rate.
In the wake of the terror attack, economists threw out their predictions for growth in the fourth quarter of 2001 and said the economy would shrink at a 1.3 percent annual pace during the period, according to the October 2001 Blue Chip survey of leading forecasters.
Instead, the economy rebounded, growing at a 1.6 percent pace in the fourth quarter, aided by an easing of monetary policy under Alan Greenspan, then the chairman of the Federal Reserve. By the close of 2001, the central bank had cut its benchmark rate in half, to 1.75 percent, and by 2003 it had reduced the rate even further, to 1 percent, to help spur growth.
The Fed may not be able to act as aggressively now. Powered by consumer demand and the rise in oil prices, inflation is running at a year-on-year rate of 4.1 percent now vs. 2.7 percent in August 2001. That limits the leeway the central bank has to cut interest rates.
Even if the Fed were to cut rates now, its easier monetary policy might not have as big an impact.
"A lot of the monetary stimulus the last time worked through asset prices," said Philip Swagel, an economist at theprivate American Enterprise Institute in Washington and a former official at the White House and the International Monetary Fund. "It's hard to imagine housing prices are going to take off again even if the Fed cut rates."
The U.S. government's reaction after the terrorists struck also stimulated growth.
Congress authorized $40 billion in emergency spending to pay for relief efforts and ended up accelerating tax cuts already on the books to aid the economy.
Lawmakers have appropriated $430 billion to the war on terror and conflict in Iraq, according to the Government Accountability Office.
"We had a lot of room to react in 2001 because the budget was in surplus," said Michael Mussa, a former IMF chief economist who is now with the Institute for International Economics in Washington. "Now we don't have the room to engage in a major fiscal stimulus if the economy goes into recession." |
