Have you ever met President Bill Clinton

UNITED STATES.

Positive economic development, noticeable growth and the associated steady decline in unemployment in the USA as well as resolute budget consolidation since 1993 are reasons for President Clinton's re-election. In the same way, Clinton owes his re-election in 1996, despite numerous enlightened and unenlightened scandals, to the sustained high public approval of his administration.

I. The economic situation in the USA at the end of the Clinton era

The positive economic development, the noticeable growth and the associated steady decline in unemployment in the USA as well as the determined budget consolidation since 1993 not only owe President Clinton his re-election in 1996, but also his sustained high public approval despite numerous enlightened and unenlightened scandals his administration.

If one compares the basic data of the US economy at the time of President Clinton's inauguration in 1993 with the economic data of his last year in office (2000), the upward development in almost all areas of the American economy is indeed impressive. The gross domestic product has grown at an average of 3.9% per year since Clinton's inauguration, whereas the average growth in the 1980s was only 2.7%. Since 1991, the US has been in the longest-lasting economic upturn in its history. Around 21 million new jobs were created between 1993 and summer 2000. The unemployment rate in 1992 was 7.3%; since mid-1997 it has been continuously below 5%. The national average was 4.1% in the first half of 2000. It was lowest in Connecticut, where the de facto labor shortage is 2.1%. Unemployment among the black population is still above average and was around 8% at the beginning of 2000, which nevertheless marks an all-time low for this population group. In 1992 it was 14.2%. Among Hispanics, the rate fell from 11.6% in 1992 to 6.4% at the end of 1999.

Despite high growth and de facto full employment, the monetary value remained stable: the inflation rate was continuously below 3%, in 1999 it had reached 1.9%. There has also been a cautious upward trend in wages: since Clinton's inauguration, dependent employees have only recorded a real wage increase of 6.6%. For the first time since the 1960s, real wages grew continuously between 1995 and 2000. In the second half of the 1990s there was even a moderate increase in the real incomes of middle and lower income earners, which had stagnated for a long time. Despite the regional and sectoral bottlenecks on the labor market, no wage explosion was observed in the USA; wages remained largely constant despite falling unemployment. Several factors explain this paradox: The sharp rise in total employment had an overall wage-depressing effect. In many regions of the United States, employers are now recruiting sections of the population who were previously not or only occasionally in the work process: The spectrum of the new labor pool ranges from retirees, student workers and former housewives to former drug addicts in rehabilitation programs and former welfare recipients, etc. As long as these unexploited resources there is no need for companies to increase wages across the board. The development of a reservoir of labor that was hardly used in the past - especially in jobs with medium to lower wages and qualifications - also explains why the blessings of the New Economy are not felt by all employees. More Americans than ever before are working longer than ever to make a living. This explains why the economic barometer of the population is far worse than the general economic data suggests.

Economists Lawrence Katz (Harvard) and Alan Krueger (Princeton) identify the third and most important reason for the absence of significant wage increases and subsequent rise in inflation in demographic developments that led to the fall of the so-called "natural unemployment rate". The natural unemployment rate keeps the supply and demand for labor in balance and thus leads to stable and moderate wage increases. If actual unemployment is well above the natural rate, wage pressures ease and do not generate any inflationary tendencies. However, if unemployment falls well below the natural level, this puts pressure on wage increases and thus increases the risk of inflation. In the 1980s and early 1990s, economists estimated the natural unemployment rate to be around 5.5–6%. With the unemployment rate dropping well below this mark since the mid-1990s without creating wage pressure across the board or creating the risk of inflation, the nature of the US economy must have fundamentally changed since the early 1990s. Katz and Krueger cite three demographic developments: The drastic increase in temporary workers and the disproportionate entry of younger workers has weakened the bargaining power on the employee side. In addition, a very high percentage of potentially unemployed people in the USA, especially the black male and the poorly educated white male population, are in prisons and are therefore not included in the official statistics.

These tendencies indicate that the natural unemployment rate that is relevant today, which guarantees stable wage increases on a moderate basis, is well below 5.5%. Nonetheless, the actual unemployment rate in 1999 and 2000 is around 4% below the natural rate - regardless of whether it is set at 5.0 or even 4.5% - and thus creates sectoral and regional wage pressure upwards, which in turn Fears of inflation, which the central bank has been fighting preventively for more than a year by regularly raising key interest rates.

The main theme of American economic policy since the late 1970s has been the steadily growing budget deficit. At the beginning of the Clinton administration it was nominally 290 billion US dollars, the deficit ratio was over 4% of gross domestic product (GDP). From 1993 the deficit ratio fell and by 1998 it had fallen to 0.3% of GDP. Since then, the USA has been one of the few OECD countries with a federal budget in surplus. When it presented its last draft budget for fiscal 2001 in February 2000, the President's Budget Office forecast a budget surplus of $ 746 billion over the next ten years. As early as June 2000, the White House doubled the estimates to $ 1.87 trillion. This includes $ 400 billion expected revenue from state health insurance Medicare to be used to pay off debt. This calculation does not include the surpluses of the social security trust fund, i.e. the state pension insurance. These amount to $ 2.3 trillion for the next decade. Overall, the budget surplus for the first decade of the 21st century amounts to 4.19 trillion US dollars. In the end of 2000, the surplus is $ 211 billion, compared to $ 124 billion in 1999. On the other hand, there is a negative balance in the development of the trade deficit, which increased from approx. 60 billion in 1993 to more than 250 billion US dollars.