Guest opinion submitted by Idaho Senator Mike Crapo
With recent upbeat news about the economy both in Idaho and nationwide, weâ??re hearing terms like unemployment rate, gross domestic product (GDP), durable goods, consumer confidence, housing starts and new home sales, to name a few. These different components of the overall economy, evaluated comprehensively, create an encouraging financial outlook. Idahoâ??s unemployment rate, the percentage of the population unemployed who actively looked for work, fell to 3.2 percent in March, the lowest since July 1979. Idahoâ??s job growth increased 4.9 percent over the past year, the third highest in the nation. Gross domestic product (GDP) is the broadest gauge of our economy, measuring the output of goods and services from labor and property located in the United States. GDP is comprised of individual measurements of goods and services that households buy; business investment in structures and capital including residential housing; government expenditures and investment; and, net exports (exports minus imports). Growth in GDP has been strong and steady for years now, reflecting critical features of reliability and resilience in our national economy. New orders for durable goods reached their highest monthly level since June 2000. Durable goods are products that donâ??t wear out quickly--cars, appliances, furniture and computers. The durable goodsâ?? estimate in GDP reflects money spent on such goods in a given period of time. Economists believe that durable goods represent the most cyclical component of what people spend their money on. Due to the lasting nature of such goods, expenditures on these goods can be delayed in difficult times. Therefore, changes in durable goodsâ?? statistics suggest similar changes in consumer confidence.Measures of consumer confidence come from multiple sources, the most often-cited ones being the University of Michigan and The Conference Board. For its Index of Consumer Sentiment, the University of Michigan uses five questions: Are families better or worse off than they were a year ago; do they think theyâ??ll be better or worse off in a year; do they think the country will experience good or bad financial times over the next year and the next five years; and, is right now is a good time to buy major household items. In April, consumer confidence was at its highest level in almost four years. We have heard about the sizeable increase in housing starts in Idaho recently. In fact, housing starts were 18,484 in 2004, and 23,105 in 2005, representing a 25% increase--the highest since at least 1998. Housing starts (building of new homes) are important economic markers because they reflect investment that supports the standard of living. Some feel that housing starts are a good indicator of business confidence because businesses wonâ??t generally make that kind of investment without a healthy promise of a return. For the same reasons as housing starts, new home sales are a good indicator of consumer confidence. While the news is good overall, there are still areas of concern and room for improvement. Rural Idaho is still experiencing higher-than-average unemployment rates, requiring renewed efforts to boost infrastructure and investment in these communities. There is also considerable worry about the cost of gasoline. It is Congressâ??s top priority to closely examine the multiple factors involved in the rising costs of fuel. Thankfully, our strong economy is a bright spot considering these difficulties.Iâ??m confident that our nation will continue to experience the growth in jobs and the economy that reduced tax rates and new investment have thus far brought to fruition. This growth has real meaning for our families and our future.