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Some say President Bush is engineering an economic boom to coincide with the election.

The shortest recession since the United States began keeping records in the early 20th century appears to be over.

After a peak in March 2001, the U.S. economy went into recession. But with a rising GDP, rising stock market prices and other indicators of an expanding economy, an economic boom seems impending – just in time for the 2004 presidential election.

For some, it seems like too much of a coincidence that the economy would recover just before the election. Instead, some people think George W. Bush has engineered an economic boom to help him win in November.

“There is a theory that in presidential election years both fiscal and monetary policy are expanding, so people are happy and vote for the incumbent,” said economics Professor Aaron Tornell.

For example, democratic multimillionaire and investor George Soros has publicly stated he believes Bush’s current economic policies will cause an election-time boom in 2004, to be followed by a bust in 2005.

But most people do not seem to anticipate a bust after the election.

“The post-election recession was a habit, but that was the old world,” said economics Professor Earl Thompson.

Thompson said it is very difficult under today’s circumstances for presidents to engineer an economic election-time boom because doing so would require the help of the Federal Reserve.

In the past, the Federal Reserve was much more politically affiliated than it is today, so past presidents were able to lean on their chairman for a little help.

The election years of 1948 and 1956 both experienced booms, followed by busts in the following years. Similarly, 1972 experienced a boom that was followed by a long period of inflation.

But since the Federal Reserve is now supposed to be nonpartisan, Thompson said he does not expect current chairman Alan Greenspan to show any sort of party affiliation.

“I think Greenspan wants to avoid even the appearance of supporting Bush’s re-election,” Thompson said.

Tornell also noted investors are closely watching every move the Federal Reserve makes, so he expects the institution to be sure its primary objective is for GDP to rise and inflation to decrease, regardless of the political climate.

But even if Bush is unable to enlist the help of the Federal Reserve, he still has the potential to impact the economy.

“Is Bush going to do everything that he can to be sure we’re in the recovery phase of the economic cycle? Of course he is; it is his responsibility as our president,” said economics Professor Jack Hou.

In a 60 Minutes interview, journalist Bob Woodward claimed Bush struck a deal with the Saudi royal family to lower oil prices in the months prior to the election.

Lower oil prices would allow consumers to spend more money on other products, therefore stimulating the economy.

Aside from such alleged activities, Bush’s presidential policies such as tax cuts and government spending have impacted the economy. Tax cuts are widely believed to stimulate economic growth, as does high government spending.

Bush has pushed for tax cuts since entering office. Largely as a result of the wars in Iraq and Afghanistan, he has also presided over the largest percentage increases in government spending since the early 1980s.

The question becomes whether these policies were implemented primarily to improve the pre-election economy, and if they will later complete the political business cycle theory by resulting in a bust.

“The concept of Bush engineering a political business cycle has a lot of smoke, but I don’t see any fire behind the smoke,” Hou said.

Most people seem to think the tax cuts were designed to affect the election overall, not just the months before the election, and will continue to have a positive effect. As for increased spending, the deficit has the potential to hurt the economy, but many expect it to shrink as tax revenues increase.

Therefore, instead of expecting a boom in 2004 followed by a bust in 2005, many economists expect a steady expansion throughout both years.

“If this year is good, next year is also going to be good,” Tornell said.