by Tula Connell, Jun 6, 2006

When 71 percent of the population does not approve of President Bush’s handling of the economy, you gotta know they’re onto something.

But even in recent days, when the latest U.S. Department of Labor jobs report showed a disappointing 70,000 new jobs created in May—nearly 100,000 fewer than what’s needed to maintain the current employment rate—Bush and his cronies continue to repeat the same mantra: Jobs are increasing and the economy is booming.

Do statistics lie? Maybe not. But they can be misrepresentative, as pointed out by Daniel Gross in a Sunday New York Times article, in which he breaks down the extremely abstruse concepts of “aggregate” statistics and “average” or “mean” measurements.

Aggregates—big picture figures like the unemployment rate, productivity and growth in the gross domestic product—are highly useful to economists. But to most people, they’re abstractions. You can’t use a low unemployment rate to pay the mortgage.

Based on Gross’ article, let’s take a closer look at what’s going on with Bush’s numbers compared with working people’s reality.

Bush: “We added 5.2 million new jobs since August of 2003.”

Working person’s reality: 2.6 million new jobs created since Bush took office in January 2001.

Bush administration: There have been substantial gains in per-capita income (8.2 percent, after inflation) and net worth (24 percent, before inflation) from the beginning of 2001 to the end of 2005.

Working person’s reality: The figures used are averages, which may not tell what’s happening to individual workers. In addition, writes Gross, averages “are of declining utility in an economy characterized by greater inequality of income and assets.”

Consider a hypothetical country with 300 million workers. Say the chief executive of an investment bank gets a $300 million raise this year, while the other 299,999,999 workers don’t get a raise. In the aggregate, the average per-capita salary has risen by $1, but only one person has more money in his pocket.

Bush administration: From 2001 to 2004, the average net worth of an American family rose 6.3 percent, according to the Federal Reserve Board’s Survey of Consumer Finances.

Working person’s reality: Not everybody grew richer. For the bottom 40 percent of families by income, the median net worth fell.

Meanwhile, after reaching a peak in February, job growth has steadily, and rapidly, declined every month since. The nonprofit Economic Policy Institute notes the outcome of the latest jobs figures is paired with other bad news:

The clear deceleration in job growth, in tandem with other weak indicators (both average weekly hours and total hours over the whole economy fell in May), point towards a possible downward shift in net job creation.

Back to aggregates. Gross concludes there’s a final reason aggregates may not accurately capture the public mood:

Aggregates shed light on the performance of the economy in the last month, or in the last quarter. By contrast, measures of sentiments and polls gauge feelings about the present and expectations for the future.

“Consumers tend to view current conditions as quite favorable, but their expectations for six months down the road are rather pessimistic,” said [Lynn Franco, director of the Consumer Research Center at the Conference Board]. “It could be that we’re nearing a peak, and this is as good as it gets.”

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