Business Section News - Page B2
CLINTON ECONOMY REPORT POSTS NO ECONOMIC GAINS IN THREE YEARS
by Staff Journalists, The Daily Republican Newspaper
SACRAMENTO - Economic indicators are in. The story tells of another lackluster performance by the Clinton administration. This week is a busy one for major economic indicators, starting with the consumer price index and retail sales for April, both at 8:30 a.m. EDT today.
The consumer price index is expected to have posted a modest gain in April amid a jump in gasoline prices, which apparently rose about 9% on an unadjusted basis. Sixteen economists surveyed by Dow Jones forecast, on average, a 0.4% increase in the CPI and a 0.2% rise in the core rate, which excludes food and energy.
Retail sales are expected to have been unchanged last month, while retail sales excluding autos are seen up 0.3%, according to the average estimate of 15 economists surveyed by Dow Jones. Retail sales rose 0.1% in March.
Wednesday at 9:15 a.m., the Fed reports on the nation's industrial production and capacity utilization for April. Early estimates call for a 0.5% rise in industrial production and for capacity utilization to increase to 82.7% from 82.5% in March.
A crackdown on Medicare and Medicaid fraud in five states over the last year has produced $42.3 million in recovered funds, the Department of Health and Human Services said Monday. That's a return of $10 for every $1 spent by the federal government on the pilot project in New York, Florida, Illinois, Texas and California, said department officials.
The focus of the Operation Restore Trust project has been on home health agencies, nursing homes and medical equipment suppliers. Convicted perpetrators of fraud have been ordered by criminal and civil judges to pay restitution and fines, which have been deposited in the Medicare Trust Fund and U.S. Treasury
Meanwhile, some newspapers have reported that wages and salaries advanced 1 % in the first three months of the year. The New York Times reported that "After years of concern about stagnant wages, the increase is the first sign that many workers are beginning to enjoy increases in pay that outpace the cost of living."
The Times Business Section story stated: "Wages Climb 1% in Quarter; Pace Is Fastest In Five Years." The Washington Post played up a story on its Business page stating "Wages Grew 1% in 1st Quarter; Gain Is Largest in 5 Years."
It is true that the wage-and-salary component of the Bureau of Labor Statistics (BLS) quarterly Employment Cost Index (ECI) increased by 1 % during the first quarter of 1996 -- a compounded annual rate of 4.1 %.
It is not true, as the New York Times reported, that "many workers are beginning to enjoy increases in pay that outpace the cost of living." In April the BLS reported that its most appropriate cost-of-living index affecting these same workers - the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) - increased during 1996's first quarter at a seasonally adjusted annual rate of 4.3 %, which not only exceeds the ECI's wage-and-salary annual rate of increase but also represents a significant acceleration in consumer inflation from 1995's fourth-quarter annual rate of 2.4 %. This means that wages and salaries, adjusted for inflation, truthfully declined in the first quarter. They did not make a gain.
More depressing is the fact that under the Clinton administration wage-and-salary incomes of blue-collar and service workers increased last quarter at an annual rate of only 2.8 %, fully 1.5 % below the first quarter's increase in the CPI-W. When the decline in the value of their fringe benefits (health insurance, paid leave, retirement and savings plans, etc.) is factored in, the total compensation of blue-collar workers increased at an annual rate of only 0.8 %, well below the accelerating increase (4.3 %) in their cost of living. Even the increase in the total compensation of white-collar workers lagged the increase in inflation.
The Washington Post's story: "Rise in U.S. Income Beat Inflation in '95." That story offered what reporter John Berry represented as economic facts: "Americans' average incomes grew 2.6 % faster than inflation last year, the biggest rise in nearly a decade," The statistic he cited is inflation-adjusted disposable (after taxes) personal income per person, which includes not only wages and salaries but also corporate dividends, rental and interest income and government benefit programs. " Berry asserts that economists regard changes in this broad, inflation-adjusted number as the best single indicator of gains in the nation's standard of living."
By this economic measure, former President Ronald Reagan's economic achievements completely overwhelm Bill Clinton's. Using this measure, in the eight years of the Reagan administration, this income statistic grew at a compounded average annual rate of 2.1 %, compared to the 1.2 % compounded average annual rate achieved by President Clinton during his three years.
Having inherited an economy registering negative growth in 1980 and reflecting a prime rate of 21.5 % and a price level that had increased 27.5 % during the previous two years, Mr. Reagan had to endure a horrendous recession in 1981 and 1982. Nevertheless, he still managed to achieve an eight-year average annual rate of 2.1 %.
By comparison, President, William Clinton, inherited an economy growing at 3.7 % with an annual inflation rate below 3 % and a prime rate of 6 %. In his three years of the White House, the economy has grown at an average 2.3 % annual rate. Nonetheless, Clinton has managed to increase real disposable personal income per person by an average compounded annual rate of only 1.2 %. During Mr. Reagan's last six years - his years of economic growth - that income statistic, believed by many economists to be "the best single indicator of gains in the nation's standard of living," soared by over 2.8 % per year, nearly 150 % higher than the rate at which comparable income has grown under Clinton.
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