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September 9, 2010
Business Cycles Are Independent of Politics and Party Majorities
By Clint Burdett CMC®
Business cycles are independent of politics and party majorities. Economic programs promised to a political base take months to impact business, often with unexpected results or credit taken years later, but in the end only business competitiveness matters to create jobs.
USA peak capacity (the blue line - a proxy for competitiveness) is trending down. Job creation, the percent of the US population employed (the red line at the bottom of the chart) has peaked and is also trending down. The slope of the black lines represents the pace of job creation/month from the end of a recession to the beginning of the next. The green vertical lines mark inaugurations of new Presidents (Nixon, Ford, Carter, Reagan, Bush1, Clinton, Bush2, Obama). The business cycle is independent of the election cycle: for example, Ford's quiet craftmanship led to Carter's burst of job growth; Volker killed inflation and Reagan took off; Bush1 built the foundation for a recovery (and so doing, cost him the election) and then Clinton bragged; Bush2's tax cuts did not accelerate job creation over eight years. Presidents react. Individual business choices, structural changes in competitiveness, create or shed jobs.
 Click to see a larger image - updated montly
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