George W. Bush in Wonderland

If I had a world of my own, everything would be nonsense. Nothing would be what it is because everything would be what it isn't. And contrary-wise; what it is it wouldn't be, and what it wouldn't be, it would. You see?

– Alice, "Alice in Wonderland"

Listening to recent conservative interpretations of economic reports probably makes you think we are living in Alice's world. In this alternate universe, black is white, up is down and bad economic news is good economic news. Millions of people are still waiting for the jobs they were promised when President Bush pushed through massive tax cuts. Despite a surge in economic growth and profits, those who have jobs have seen minimal increases in their wages, while costs – especially for education, housing, and health care – have gone up. Yet the president and his conservative allies, by consistently lowering the bar on what constitutes economic progress, keep trying to convince the public that everything is hunky-dory in the U.S. economy.

For example, the Heritage Foundation claims that "there are more Americans working today than ever before." This specious argument is based on a survey of households, a much less reliable indicator than the more commonly used survey of firms (which shows that the economy had 1.9 million fewer jobs than when the recession started). Aside from this factual inconsistency, the claim in itself is largely irrelevant. Obviously, an economy with an expanding population (like the United States') should have more jobs. Saying that this is good is like arguing that the past year has been extremely successful for our personal maturity because we grew a year older. The real labor market issue is whether new entrants can find a job. Undoubtedly this is more difficult, as the share of the employed population is lower and the unemployment rate is higher than when the recession began.

Another recent example of turning bad economic news into good occurred this February when the president said things were looking better because, among other things, the inflation rate is low. Bush seemed to be saying it is too bad that people have lost their jobs, but at least the goods they cannot afford are not getting more expensive. The two issues are not unrelated. Inflation is low because increases in demand for goods and services have been slow. And because demand is not growing as fast as it typically does in a recovery, fewer people can find jobs, which keeps demand growth low. Car prices, for instance, are low because fewer people can afford to buy cars. How is this good news? In 2003, the inflation rate was actually slowing enough for the Federal Reserve to warn about the threats of disinflation as a precursor to deflation, something that would have a devastating effect on growth and employment.

Taking advantage of bad economic news has also led the administration to claim success in the education arena. Rod Paige, secretary of education, tried to portray the administration as strong on college financial aid when he said this month that more students are receiving Pell Grants than when Bush took office. However, financial aid is primarily based on family income, which, according to the U.S. Census Bureau, has fallen in recent years. In other words, because people have struggled in the labor market they have become eligible for financial aid. At the same time, college tuition has gone up 28 percent over the last three years, putting working families even more in a squeeze between lower income and higher tuition.

Even the weak labor market offers a ray of hope for those who want to make the world out to be rosier than it is. Conservatives often tout the fact that this March was the strongest month of employment creation in almost four years. Of course, compared to the abysmal job creation of the past few years, almost anything looks good. The truth of the matter is that employment growth in March was fairly typical for a recovery (neither above nor below average). But more importantly, claiming that one month of decent employment growth constitutes good labor market performance ignores the fact that this is still the weakest job market recovery since the Great Depression. Moreover, all post-war administrations (even those in office for less time than the Bush administration) have had substantially more months with this type of job creation than the current president has. Because the prior three years were so bad in terms of employment growth, however, Bush has easily been able to declare victory on a monthly basis.

A realistic assessment of the economy should be an honest accounting of where the economy really is. Growth in recent quarters has improved, but the labor market is still struggling. Millions of households continue to look for jobs and wage gains are hard to find. At the same time, costs (especially for important items like education and health care) are skyrocketing. For millions of working families, the economic picture is far from rosy. Yet while working families are struggling, conservatives are declaring victory because they have lowered the benchmark for economic progress. The next thing you know, conservatives will proclaim President Bush the "family president." After all, in his Alice-in-Wonderland-fantasy world it is a good thing that working families get to spend more time with their children now that there are fewer of those pesky jobs to keep them busy.

Christian E. Weller is a senior economist and John Lyman is a research associate at the Center for American Progress.