ALEX CHADWICK, host:
Back now with DAY TO DAY.
President Bush is seeing how the economy plays in Peoria today. He's in the Illinois city to tour the Caterpillar plant there and to make the argument that his trade agreements and tax cuts are creating jobs for American workers. Joining us is John Dimsdale from MARKETPLACE. John, I gather this is part of a larger public relations campaign by the White House?
JOHN DIMSDALE: Yeah, that's right. He's devoting the next couple days to try to get some more credit for his handling of the economy. Tomorrow, he's making a major speech on the state of the economy. He'll deliver that from Wall Street. Now that he's hurting in the polls, the president's trying to highlight some good news.
Indeed, the economy has been steadily growing ever since a recession earlier in the decade. That's pretty long, as business cycles goes. Even though we're in what they call a mature phase of the economic expansion, unemployment remains low, productivity - that's output per hour of work - is up, wages have been improving, stock market is strong, as are corporate profits with some notable exceptions like the auto industry.
We're going to get the gross domestic product numbers later this week, and the consensus among economists is that GDP put in a really respectable 3-percent growth in the last quarter of 2006. So the president's saying all this is partly due at least to his tax cuts, his trade deals that have opened up markets for American manufacturing, and that's the message he's trying to get out here.
CHADWICK: He's down in the polls because of Iraq. But with the economy so healthy, how come he hasn't at least been able to capitalize on that?
DIMSDALE: Well, you know, there's general anxiety about job security, healthcare costs, of course. You saw Senator James Webb from Virginia refer to the concerns of the middle class in the Democrats' response to the State of the Union last week.
All the news about layoffs and downsizing contributes to these worries, but there are new consumer confidence statistics out today which show an improvement in the way Americans feel about their own circumstances. In fact, it's the best showing since 2002.
Today's survey indicates Americans believe there's a favorable job market out there, that salaries will keep going up, and all that should make them more willing to spend more at the mall.
CHADWICK: John, the Federal Reserve Board is meeting today and tomorrow and talking about the economy and interest rates. How's the strong economy and consumer confidence going to affect Fed policies?
DIMSDALE: Well, the Fed's been - after they gradually raised interest rates over two years, they've been holding them steady since June. Economists had hoped that the next move would be a drop in interest rates, and anticipation of that has been a boon on Wall Street, of course. Now there's more a feeling that the Fed may have to step on the brakes a bit harder to keep things from overheating with this strong economy. While it's unlikely they'll raise rates tomorrow, it could be soon.
Later on MARKETPLACE, we're going to look at carbon caps and how fighting pollution might just be a boost to the economy.
CHADWICK: Thank you, John Dimsdale for public radio's daily business show MARKETPLACE, produced by American Public Media.
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