![]() This solid growth means that American workers are seeing their paychecks rise and that American families are better off than they were last year. Over the past year, wages have risen 4.0 percent. The economy is doing well but is not growing so quickly as to raise concerns of an illusory bubble.Īverage wages are also growing, rising 0.2 percent in January to $17.09 an hour. Aside from the tech bubble, unemployment has not been as low as 4.6 percent since the mid-1970s. The unemployment rate was lower in the late 1990s, but that proved unsustainable when the tech bubble collapsed in 2000. Again, this is low but not excessively so. The unemployment rate increased a statistically insignificant 0.1 percent to 4.6 percent in January. That is good job growth, but not excessive. Revisions to earlier figures also revealed that employers created over 400,000 more jobs in 2006 than the government had previously estimated. Entrepreneurs and businesses created 111,000 new jobs in January, most of those in professional and business services, education, and health. This growth rate is above historical averages but is still moderate enough to ease fears that the economy could enter an inflation-induced bubble. ![]() The economy grew 3.4 percent in 2006, slightly more than in 2005. It increased at a 3.5 percent pace in the fourth quarter of 2006, above expectations and up from 2.0 percent in the third quarter. The economy is growing at a good pace, and Members of Congress should not do anything to harm that. This would be a heavy blow to American workers. Each of these tax hikes-and especially all three together-would impose strong disincentives to work, save, and invest. Three different tax hikes are being discussed in Congress to pay for more spending: the automatic tax hike from the Alternative Minimum Tax (AMT) raising the cap on wages that are subject to payroll taxes and repealing the Bush tax cuts. That is why Congress should not impose a triple whammy of tax hikes on the American workers who are doing so much to keep the economy growing. Because it is not entering an inflationary boom the Federal Reserve can keep interest rates low. It is growing, adding jobs, increasing wages, and staying well away from a recession. Like Goldilocks's breakfast, the economy is neither too hot nor too cold. Overcome with enthusiasm, one distinguished economist gushed, “This expansion will run forever.The economy is growing steadily. Low interest rates and low inflation combined to propel the American stock market to valuation levels without precedent, along the way creating $10 trillion of wealth in barely four years, and most of this wealth was still intact after the market correction in the summer and fall of 1998. Freed from the restraint of restrictive monetary policy that had choked earlier expansions, and with its fires stoked by the lowest medium-term and long-term nominal interest rates in three decades, the economy charged ahead and achieved a state of high growth – noninflationary bliss that some have dubbed the “Goldilocks economy” (neither too hot nor too cold, but just right). The failure of inflation to accelerate allowed the Federal Reserve to avoid raising short-term interest rates after early 1997, and even to lower them in late 1998. This benign outcome for inflation stands in contrast to the significant acceleration that occurred when unemployment last dipped below 6 percent, in the late 1980s. Despite near universal forecasts in 1994 of accelerating inflation that would accompany a dip of the unemployment rate below 6 percent, inflation actually decelerated significantly between 19. The civilian unemployment rate has remained below 5 percent for one year and below 6 percent for almost four years. The American Economy of the mid-1990s has been a source of envy for the world and of puzzlement for macroeconomists.
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