With Consumers Wary, Bush Summons Cavalry

Times Staff Writers

Frustrated that Americans are giving him low marks for economic stewardship, President Bush and about two dozen of his top aides will hit the road today to argue that the economy is in better shape than many people think, and that Bush deserves some of the credit.

They may find that much of the nation is skeptical.

Polls show that more than half of the public thinks the economy is in bad shape and that Bush is doing a poor job of managing it. In one recent survey, three in 10 participants said the country was in a recession, even though the economy has grown for the last 2 1/2 years.

Workers and consumers have reasons to be anxious.

Although the economy as a whole is growing, many analysts attribute its progress in part to a far more competitive -- and less secure -- workplace.

"This Darwinian economy has got people concerned," said John R. Stanek, chairman of ISR, a research firm in Chicago that conducts worker surveys. "If you feel there's a decent chance you may be laid off -- and over a third of U.S. workers feel that could happen to them -- you're not going to stop looking over your shoulder. You realize that the laying off of you may be part of the 'good things' that are happening to the overall economy."

David Kelly, managing director of Putnam Investments in Boston, said job insecurity was moving from factory floors to front offices, thanks in particular to outsourcing of jobs overseas.

Consumers, who have propped up the economy for years, may be running out of gas. The consumer confidence index of the Conference Board, a business-sponsored research group, has bounced back from a dip after Hurricane Katrina, but it remains just above its level of 1985, when the unemployment rate averaged 7%, a full 2 points higher than today's. Consumers are satisfied with present conditions but gloomier about prospects six months out.

"Employment gains haven't been that strong," said Lynn Franco, the board's director of consumer research. "Consumers need to see consistent strong job growth, but instead the economy takes one step back for every two it takes forward."

Consumers are also concerned because average hourly earnings of production workers and nonsupervisory personnel are not keeping up with inflation. Healthcare bills are rising and energy costs -- gasoline last fall, heating oil and natural gas now -- are draining cash from wallets.

For years, consumers have compensated by borrowing against the value of their homes. As a result, their spending has exceeded their after-tax income for the last six months. But now the housing market, especially in urban areas on the coasts, appears to be cooling, potentially shutting off this source of cash.

Kelly said Bush's basic problem was that he had a tough act to follow -- the booming economy of the late 1990s.

It is true, as Kelly said this week and Bush and his cavalry will no doubt say today, that the recent unemployment rate is lower than the average for any of the last three decades. The unemployment rate stood at 5% in November. Today, the government will issue December's.

But the job growth that Bush trumpets -- an average of about 150,000 a month in the last 2 1/2 years -- pales beside the 240,000 average monthly growth from 1995 through 1999. Worse yet, the 2001 recession cost so many jobs that although about 2 million more Americans are employed now than when Bush took office, the increase is not enough to keep up with population growth. So, the jobless rate has risen from the 4.2% rate of Bush's first month in office.

In an ABC News/Washington Post survey released this week, 60% of participants described the economy as "not good" or "poor"; 61% in a Gallup survey in mid-December rated it no better than "fair." In a National Public Radio survey released this week, 54% disapproved of the way Bush was handling the economy, and 59% said the same in a poll conducted in mid-December by the American Research Group. In the latter survey, 28% said the economy was in a recession.

Many analysts say the public is more pessimistic than the economic data warrant. Growth is not the only bright spot. Productivity has risen rapidly. Small businesses are thriving. Homeownership and household net worth have hit all-time highs.

Karlyn H. Bowman, a public opinion analyst at the conservative American Enterprise Institute, said apprehension about the war in Iraq might be souring opinions on seemingly unrelated issues. "The negative perceptions of Iraq seem to be washing over all of the good news about the economy," Bowman said.

To get the good news out front, White House officials have organized a one-day sales blitz promoting their economic stewardship. While Bush is talking up the economy before the Chicago Board of Trade, Vice President Dick Cheney will be at a Harley-Davidson motorcycle plant in Kansas City. Treasury Secretary John W. Snow will drop in on the New York Stock Exchange. Three other Cabinet secretaries and at least 17 deputy and assistant secretaries and assorted other officials will make appearances from Miami to Seattle.

White House advisors said the sales blitz reflected an administration consensus that perceptions of Bush's economic leadership had been undermined last year by his ill-fated campaign to restructure Social Security and the political furors associated with the Gulf Coast hurricanes, Supreme Court vacancies and the war in Iraq.

"This was actually something they started to do last summer, but they got completely sidetracked by hurricanes and court openings," said GOP strategist Charles Black.

The White House's frustration was echoed when Bush advisors and GOP leaders met recently at a Maryland resort to plan strategy for 2006. House Speaker J. Dennis Hastert (R-Ill.), usually a low-key, team player, chastised White House aides for not doing more to communicate how much the economy was improving, officials who attended the meeting said.

But economists argue that a public relations offensive can be no more effective than economic circumstances allow. And Kelly, for one, said the recovery from the 2001 recession left a lot of Americans behind. He likened the economy to an hourglass, with some in the middle class moving upward but many squeezed down into lower income brackets.

Jared Bernstein, an economist with the Economic Policy Institute, a labor-affiliated research group, said workers lacked the clout to fight for higher wages because their job tenure was increasingly shaky.

The median hourly wage fell 1.3% short of keeping up with inflation in the 12 months ending in November, Bernstein said. For workers near the bottom of income distribution, the decline was 2%; workers near the top, by contrast, gained 0.7%.

Bernstein is worried about the debt burden on working families, which is growing as fast as interest rates rise. In the third quarter of last year, he said, total obligations on home mortgages, consumer debt and car leases totaled 17% of after-tax personal income, their highest level since records were begun in 1980.

Times staff writer Janet Hook contributed to this report.

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