The LEI has been on the rise since April 2009, and continued inching up in May. However, the six-month change in the index has moderated to 3.9% through May 2010, down from 5.2% in the previous six months.
The most worrisome aspect of the LEI may have been the comments of Bart van Ark, chief economist for the Conference Board, who sees debt adding to the headwinds against growth in the U.S. and Europe. "The index points to continued, though slower, U.S. growth for the rest of this year," van Ark said, in a statement. "Public debt and deficits weigh heavily on growth prospects on both sides of the Atlantic. We project a serious slowdown in European growth in 2011, which could further weaken the U.S. outlook."
Conflicting Data and a Persistent Problem
Perhaps as a harbinger, the Philly Fed index, which had edged higher for four straight months, plunged 13.4 points to 8 in June -- its lowest reading in 10 months.
Two of the survey's components provided conflicting data regarding the economy. The new-order component rose 3 points, but the shipments component fell 2 points.
A persistent problem area for the U.S. economy showed up in the latest Philly Fed report -- demand for labor. The employment component fell to -1.5 from +3.2. Until this month, companies' responses had suggested that labor market conditions were improving, but components for current employment and work hours were both slightly negative in June, the Philadelphia Fed said.
Taken together, both the LEI and Philly Fed survey confirmed that the U.S. economy continues to grow, but the pair also highlighted the danger signals that are currently flashing.
Given that the U.S.'s 3% GDP growth rate in the first quarter did not generate enough jobs to substantially decrease the nation's unemployment rate, an even-slower GDP growth rate would further delay employment gains and perhaps cause the unemployment rate to start rising again. That scenario would undoubtedly prompt additional public policy action.
The nation’s job base grew at an annual rate of 0.28 percent during Bush’s eight years as president – by far the slowest pace for any of the 11 presidents in the postwar era, according to Bizjournals. Bizjournals is the online media arm of American City Business Journals, The Business Review's parent company.
The previous low had been set by Bush’s father, George H.W. Bush, with an annual job-growth rate of 0.59 percent. The elder Bush served **************** 1993.
Bizjournals used seasonally adjusted data from the U.S. Bureau of Labor Statistics to calculate employment-growth rates for the administrations of all presidents since Harry Truman. Each president’s record was based on a comparison of job totals in the final full month served by his predecessor and his own final month. George W. Bush’s span ran from December 2000, when nonfarm employment totaled 132.5 million, to December 2008, when it reached 135.5 million.
The administration with the strongest growth rate since World War II was that of Lyndon Johnson, who served between November 1963 and January 1969. Employment increased at an annual pace of 3.74 percent during that period.
Bizjournals also looked at five subsets of job growth, with the younger President Bush finishing last in four of those categories – private-sector, manufacturing, retail-trade and government employment. The exception was construction employment, where Bush ranked ninth with an annual growth rate of 0.08 percent. The nation suffered losses of construction jobs under two presidents: Gerald Ford (down 3.75 percent per year between 1974 and 1977) and George H.W. Bush (down 3.22 percent per year).
Johnson was the top-rated president in three of the subsets – private-sector, manufacturing and government employment. Harry Truman, who was president from 1945 to 1953, led the other two – construction and retail-trade employment.
Annual employment-growth rates for all 11 postwar presidents are listed below:
Total employment
1. Lyndon **************************. Jimmy Carter (1977-81), 3.11%
3. Bill **********************.42%
4. Harry Truman (1945-53), 2.38%
5. Richard **************), 2.30%
6. John Kennedy (1961-63), 2.28%
7. Ronald **********************%
8. Gerald Ford (1974-77), 0.95%
9. Dwight Eisenhower (1953-61), 0.87%
10. George H.W. Bush (1989-93), 0.59%
11. George W. Bush (2001-09), 0.28%
Read more: Job growth under Bush was worst since WWII - Jacksonville Business Journal
But none of the new federal programs--if passed by Congress--will come even close to achieving the 5.5 million-household increase in minority homeownership the President set as his target.
Instead, most of the heavy lifting was assigned to two mortgage market players that have sometimes come under fire from Bush administration officials and Congressional Republicans: Fannie Mae and Freddie Mac.
Fannie's and Freddie's commitments are the bedrock core of the President's ambitious plans--but didn't get the headlines. Fannie Mae agreed to increase its already substantial lending efforts to minority families by targeting another $260 billion of mortgage purchases to them during the next nine years. Freddie Mac agreed to buy an additional $180 billion in minority-household home loans during the same period.
Both corporations also announced specific plans to increase home purchases by African-Americans, Hispanics and immigrants. Fannie Mae, for example, pledged to create an entirely new mortgage product “designed to meet the unique needs of New Americans.” The new loan concept would include underwriting changes that remove some of the common barriers immigrants encounter here--denial of credit because of inadequate or short credit histories, reliance on communal funds for downpayment money, and language and cultural issues. Fannie also promised to establish 100 “outreach partnerships” with predominantly-minority churches, mosques and “other faith-based institutions” to fund mortgages for their congregations.
Besides its $180 billion mortgage purchase commitment, Freddie Mac gave President Bush a promise to implement a 25-point program aimed at increasing minority homeownership. Some of the points were cutting-edge. For example, as part of an effort to remove the fear of financial loss from first-time minority home buyers, Freddie committed itself to “explor(e) the viability of equity assurance products to protect home values in economically distressed areas.”
Pressed for details on “equity assurance” by RealtyTimes, Freddie Mac vice president Craig S. Nickerson said the idea is still at an embryonic stage, but might involve limited guarantees or insurance coverage to protect buyers from the possibility of loss of their initial equity stakes should property values in their neighborhoods decline.
Some “urban neighborhoods get passed over (by potential buyers) because of fears of where the market might go,” said Nickerson. Freddie's effort would be to examine “whether we can create structures to minimize (buyers') downside risks”--whether through some form of new equity-preservation insurance, public-private “rainy day” funds, or federal assistance targeted to backstop values in predominantly minority neighborhoods.
Also on Freddie's 25-point to-do list: “cross-border credit” efforts that would allow immigrants' credit files from their home countries to be acceptable to U.S. lenders; “automating non-traditional credit,” where minority borrowers have no or minimal existing bank or credit reference but do have rental and utility payment histories; and a variety of new “downpayment assistance” plans to put cash in the hands of first-time buyers.
Published: June 24, 2002
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