http://www.nationalreview.com/nrof_b...0312010924.asp
December 01, 2003, 9:24 a.m.
Third Quarter Pounder
A meaty economy gets super-sized.
By Jerry Bowyer
Now we know the critics were right: The economy did not grow at 7.2 percent in the third quarter. But the bad news for the critics is that it grew even faster: Gross domestic product for the third quarter of 2003 expanded at an incredible 8.2 percent. How fast is that? Well, it roughly triples America's historic 2.5 to 3 percent growth rate (that is, if this pace continues) and it is the second-fastest-growing quarter in twenty years.
BuzzCharts investigated why the Commerce Department underestimated GDP growth in their report early last month. After consulting Economy.com and GKST Economics, we learned the following: It turns out that American businesses bought $21 billion more inventory in the third quarter than was originally estimated. That's a lot of optimism to be shown by the people who have skin in the game — the retailers. In addition, corporate profits grew by an annualized 12 percent.
The most interesting aspect of this amazing growth spurt is that it accentuates the basic defining principle of supply-side economics: Demand is never the problem (people always want new goods and services), supply is the problem (entrepreneurs will only supply goods and services when they are not punished for doing so).
In 2001 the president was pressured by congressional Democrats to defer the portion of his tax cuts that applied to wealthy individuals — that is, the people who supply the most goods and services. Instead, the president deepened and accelerated rebates for the poor and middle class to “put money back in people's pockets” and get them spending again. The results were meager: The economy came out of recession, but barely so. In May of this year, however, the president came back to the supply side. He insisted on tax cuts for the wealthy in the form of marginal rate decreases, and for capitalists of every economic class in the form of dividend and capital-gains tax cuts. The results are all too apparent.
Now, if the president can only resist the siren call of protectionism and weak dollar diplomacy, this Bush Boom might just keep on booming.