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Mortgage News |
Economy May Work in Bush's Favor Part Two
But in reality, the economic picture is decidedly mixed. And for Bush, as it has been for the economy as a whole these past three years, the housing market may prove to be a salvation. The homeownership rate -- at 68.6 percent of U.S. households -- hit an all-time high in the last three months of 2003. New and existing home sales set records last year, while construction of new homes in December hit its highest pace in 25 years. The appreciation of housing values, on the coasts but also in heartland cities like Green Bay, has given owners an expanded sense of self-worth. In the past four years, Sherise Patterson has suffered two layoffs, months of unemployment, discouraging job hunts and missed bill payments, all as the young widow prepared to put three children through college. But a year ago January, Patterson, a dental-insurance customer service representative, locked onto a low interest rate, left behind her 1950s-era, 1,277-square-foot house on Milwaukee's northwest side and moved into a new, 2,000-square-foot home near downtown. The dining room she had always wanted was hers. So was the fireplace, the family room, the two-car garage -- luxuries that for years had been just out of reach. Patterson did not vote for Bush in 2000, nor is she about to this year, she said. But her anger at the president revolves around undiscovered weapons of mass destruction in Iraq and a perceived tilt to the rich, she added, not her own economic fortunes. "Matter of fact, I guess I'm doing well," said Patterson, 42. "There was a time when you picked up the Sunday want ads and there were two thick pages of jobs. Now there's barely a section. But as for my home, I'm making it." That positive outlook is no surprise to Prakken, whose election forecasting model leans heavily on housing starts. As a barometer for economic well-being, housing catches people's sense of risk and optimism, Prakken said. If voters are willing to take out large, long-term loans to move into new and larger houses, they must be feeling upbeat. Global Insight Inc., another forecasting firm, does look at unemployment rates, but the more important factor is income growth, said Nariman Behravesh, the firm's chief economist. "In the end, it is disposable-income growth that really drives things," he said. "It's a pocketbook issue: How fast is my income growing?" And there, Bush has himself to thank for Global Insight's prediction of his 6.5-percentage point victory. Weekly wage growth has been sluggish since 2001, rising 8.2 percent since Bush came to office, 4.1 percent if adjusted for inflation, Labor Department statistics show. But three successive tax cuts -- coupled with the slowing economy -- have helped bring personal tax payments down by 19 percent since 2001, according to the Commerce Department. Disposable income in that time has risen 11 percent, in large part because of falling tax payments. "In the end, if they've got money in their pockets, it doesn't matter if it came by hard-earned work or tax cuts. That's where the president may have played his cards very well," Behravesh said. Of course, for unemployed -- even recently unemployed -- voters, the labor market matters. Tim Hackett, a Republican and Bush supporter in 2000, lost his job as director of employee relations in November when Mercury Marine in Fond du Lac, Wis., began cutting costs. The plant will soon ship as many as 400 jobs to China when the company moves its assembly line for small outboard motors overseas, and Hackett holds the president responsible, to some extent. Bush, he said, will not get his vote in November. "With all the attention paid to war and security, there's an essential disconnect between the Washington people and what people are really worried about," Hackett said. "They're taking security to an ideological extreme." Celinda Lake, a Democratic pollster and president of Lake Snell Perry, said the electorate is dividing sharply into two groups. Voters with individual stocks, usually college-educated, are feeling optimistic and leaning Republican. Voters who say they personally know someone who is unemployed -- especially young voters and blue-collar workers -- are pessimistic and leaning Democratic. But no matter how bad the labor market is, the vast majority of voters have jobs, and for them, incomes are rising, stocks are recovering and interest rates remain low, said Fair of Yale. For the president, the traditional signs lead to reelection. Back to Original Article: News You Can Use
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