U.S. economy may dodge recession bullet

by David Olive

There are just 218 days to go until the end of the Bush Administration, and hope of a U.S. economic revival that will spill over into Canada.

You wonder some days if the Republican majority on the U.S. Supreme Court that installed George W. Bush in the White House in 2000 sought to restore Herbert Hoover's reputation. The hapless 31st U.S. president at least tried to soften the blow of the Great Depression, though his methods were not the radical prescription required to save capitalism from itself.

The Bush administration seems not just powerless but not much interested in the current U.S. economic malaise. True, Bush went along with the demand of a Democratic-controlled Congress for a $168 billion (U.S.) emergency stimulus package. But the $600 cheques cut by the U.S. Treasury that began going out last month have mostly been swallowed up in credit-card paydowns and soaring fuel and food costs. Bush also buckled to Congress' demand that he halt additions to the U.S. Strategic Petroleum Reserve, which was intended to remove a source of demand and thus curb rising prices. Alas, pump prices are up 23 cents since the president acted.

Bush famously doesn't read the papers, so his sanguine aspect in delivering an economic pep talk June 6 did not surprise. Bush and his economic advisers seem oblivious to the 28-year low in U.S. consumer confidence, the 441,000 private-sector jobs lost over the past six months, and a financial sector still crippled by the housing crisis and that now denies loans even to the most credit-worthy individuals and companies.

On that particular Friday of Bush's "fundamentally sound" talk:

• The Dow Jones Industrial Index plunged nearly 400 points;
• Bush's own Labor Department reported a fifth consecutive month of job losses and that the jobless rate had surged to 5.5 per cent in May, the biggest monthly increase in 22 years;
• And there was a double-digit increase in crude prices.

Bush simply regurgitated old news, including the stimulus package of doubtful efficacy. He called for stepped-up U.S. domestic crude exploration, presumably off the California coast and in the Arctic National Wildlife Refuge (ANWAR), which Bush knows are political non-starters, and perhaps doesn't know would add little to global reserves even at full production.

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