GovernmentExecutive.com

Of all the challenges facing President Bush today, the most perplexing is the public disapproval of his handling of the economy.

Preliminary numbers from the Commerce Department on October 28 showed that the economy grew at an impressive 3.8 percent in the third quarter, despite Hurricane Katrina. This improvement was on top of growth in the gross domestic product of 3.3 percent in the second quarter and 3.8 percent in the first quarter, and a most impressive 4.2 percent for all of 2004. The Blue Chip Economic Indicators survey of 52 top economists, released in early October, showed a consensus forecast of 3.5 percent GDP growth rate for 2005, a level that almost any president would love to have.

And yet Bush's job-approval rating on the economy has languished for more than three years, and clear majorities have disapproved of his handling of the economy since April. Figures compiled by The Hotline show his approval rating at 37 percent, with disapproval at 58 percent.

How do you square very impressive levels of economic growth with high disapproval ratings for the president on his handling of that same economy? One explanation is that when Americans are angry or disillusioned with a president, their unhappiness tends to taint their assessment of him on most things. Thus, discontent over the war in Iraq is no doubt infecting virtually every measure of the president's performance. But that still doesn't explain all the unhappiness over the economy.

Perhaps a better explanation is that an improving economy has left a number of people behind. An important segment of the U.S. economy has been rolling along, as globalization and technology lower the labor costs of producing goods and as intense worldwide competition forces businesses to be more productive. The result has been dramatically higher corporate profits and a level of growth that has driven the forward momentum in our national economy in recent years.

But three other groups have not enjoyed the bounty.

The first group includes those people who are doing fine but are worried about the future. Maybe they are fearful about the security of their pensions, or concerned that the stock market, which has been so lackluster in the last few years, has not grown at the pace it did in the late 1990s. Still others are worried about their kids' futures and their job opportunities.

The second group is made up of those who are working but struggling financially because their wages have not kept pace with inflation. In fact, many of the income gains that people have enjoyed in recent years were actually in the form of higher health insurance premiums paid by employers and treated as income. Such "gains" never made it into the pockets of workers. Also, these people may not hold the same kind of jobs with the same income and benefits that they had five or 10 years ago.

The final group includes those who aren't making it at all. The poverty rate has increased for four consecutive years now, evidence that the fabulous rates of economic growth that the country as a whole is enjoying simply aren't trickling down.

Many of the people in the second and third groups do not have the education or skills to compete in this new knowledge-based economy. In some cases, they do possess the skills but are competing with workers elsewhere in the world who make one-fifth or less of what the U.S. worker makes, while receiving few if any benefits.

So while one important segment of the economy is enjoying explosive growth, others are not. The situation is reminiscent of the story about the fellow who had one foot in a pot of boiling water and the other foot in a bucket of ice: On average, he was very comfortable. Our national average of growth is very comfortable, but that masks segments of the economy that are white-hot and others that are ice-cold.

Retooling the American workforce to adapt to the painful changes that are taking place in the world economy is a necessity, but it is also an important political challenge, made all the harder by a difficult budgetary situation. If the president is going to connect better with the American people on the economy, Bush has to make the issue of the changing workforce a constant theme in his messages and policies.