The movies vs. reality

Billy Crystal is a fine actor, but he is woefully unprepared when it comes to economic and political commentary, says Brian Wesbury, chief economist with Griffin, Kubik, Stephens & Thompson in Chicago.

As host of the 2004 Academy Awards, Crystal recalled the first time he hosted the Oscars 13 years ago: "Things were so different then. You know how different it was? Bush was president, the economy was tanking and we'd just finished a war with Iraq." The audience thought this was hilarious, but they should have scratched their heads, says Wesbury.

According to the National Bureau of Economic Research:

In the most recent two quarters real GDP has expanded at a 6.1 percent annual rate, the fastest growth in 20 years.

The recession ended two-and-a-half years ago, in November 2001.

While Hollywood is quick to blame the recession on George W. Bush, the economy turned downward well before the 2000 election. Despite terrorism, corporate scandals and war, the economy is accelerating sharply today, explains Wesbury:

According to the Bureau of Labour Statistics, 1.4 million civilian jobs have been created in the past year; between the Oscars of 1990 and 1991, civilian jobs declined by 1.4 million.

According to the Institute for Supply Management (ISM), manufacturing activity has operated at the fastest rate in 20 years during the past three months.

The Dow Jones Industrial Average has increased by 35 percent in the past year. During the year ended March 1991, the Dow gained just 7.6 percent.

Today the economy is healthy and getting stronger, so perhaps Hollywood and Crystal should stick to what they do best – making movies, not analysing the economy, says Wesbury.

Source: Brian S. Wesbury, An Oscar for Economics? Wall Street Journal, March 2, 2004.

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FMF Policy Bulletin\9 March 2004