Tuesday, January 03, 2006

Michael Barone: The Wal-Mart model (1/9/06)

USNews.com: Michael Barone: The Wal-Mart model (1/9/06): "The American economy continues to surge ahead, though you won't read much about it in mainstream media. Economic growth in the third quarter was 4.1 percent--despite Hurricane Katrina!--the 10th consecutive quarter with growth over 3 percent. Unemployment is 5.0 percent--lower than the average for the 1970s, 1980s, or 1990s. Since April 2003 the economy has created a net 5.1 million new jobs. Core inflation is only 2.1 percent, and gas prices, which surged above $3 a gallon after Katrina, are now down around $2. Productivity growth for the five-year period of 2000-2005 is 3.4 percent, the highest of any five-year period in 50 years.

This is a remarkable performance and owes something surely to the Bush tax cuts and to Alan Greenspan's stewardship at the Federal Reserve. But it also tells us something broader about the American economy. Mainstream media coverage about the economy tends to be full of bad news, especially during Republican administrations, and to focus on economic problems. But over the longer term the story of the American economy is one of success. A quarter century ago many economic commentators said that the era of low-inflation, high-job-creation economic growth was over. In the ensuing 25 years it has come to be the norm."

An excellent column on why the "dynamic" buisness model is succeding, and the "static" buisness model is failing. Wal-Mart is a dynamic buisness, shifting to fit the market place every day. GM is a static buisness, and has a very difficult time reacting.
Highly recomended reading.

2 comments:

Anonymous said...

"Mainstream media coverage about the economy tends to be full of bad news, especially during Republican administrations..." Yes, thankfully with the internet, World Mag and such, we can seek out the "other side" of media. Media knows its power as the fourth branch of government and would like for us to think that everythng is terrible and it is all the Republican's fault. Ugh!
Anyway....good post.

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