President Bush's former director of the Office of Management and Budget sees generally rosy news in the economy, but acknowledges a significant number of others do not.
That's a big reason he believes the traditional political model for projecting the outcome of presidential elections-a strong economy always benefits an incumbent-may be turned on its head later this year.
Speaking to NAFCU's conference here, Mitch Daniels said that "honestly, as I scan the terrain of the American economy, I am stunned by the positive news and good signs I see."
Daniels, who spent two and a half years as OMB Director and was given a 10-year service pin by the President when he left the job because "it felt like 10 years," further said the economy is on track to regain all of the jobs lost since the burst of the Internet bubble, and that worker productivity is at levels "never before thought attainable." He further noted the so-called "misery index" is at a lower level than when President Clinton was reelected in 1996, and Clinton ran on the strength of the economy.
"Now, in light of all of this, why doesn't it feel better?" he asked. "I don't know very many people, even in the face of this data, who aren't hesitant and gun shy. I think there are two reasons: One, is that there is still a degree of shell shock. We have been through a lot. We've been through the bursting of a bubble. 9/11 was a big shock, both economically and psychologically. And we were no more out of that than we had the corporate governance disgrace. Now we're in the middle of the campaign season, and there's always a bit of exaggeration on both sides."
Daniels, who called retail sales at Wal-Mart the "handiest measure" of consumer spending, said he sees other good news in the economies of Japan and China, and added he believes inflation will remain under control.
Daniels, who is running for governor of Indiana but made no mention of it, also believes the election involving his old boss signals a turning point. "All the political models in the past forecast elections based on the economy. But that may not be the case this year," he said. "This election coming up is as close to a yes/no referendum as we've ever had in American history. I don't think a lot of people are rushing out to vote for Sen. Kerry, but we could have 50% or more voting against George Bush."
