2013-06-23 at 10:30:07 pm #2217Job Numbers Show Economic WeaknessJob Increase Less Than AnticipatedIn Total, 821,000 Fewer Jobs Than When Bush Came to Office
WASHINGTON (Oct. 2004)-Employers' payrolls grew by just 96,000 in September in a weaker-than-expected government report Friday that provided a final snapshot before Election Day of a lackluster jobs market.
The Labor Department report means President Bush will face the electorate with 821,000 fewer jobs in the country than when he took office, though 1.78 million jobs have been added in the past year.
Economists had predicted net job growth of 150,000 in September. Hurricanes probably didn't affect the data, the government said. The unemployment rate held at 5.4 percent as 221,000 job seekers dropped out of the labor pool.
The economy is growing, yet businesses remain reluctant to hire new workers because of global pricing pressures and skyrocketing costs for health care and pensions.
Democrat John Kerry seized on the report ahead of his town-hall style debate with Bush on Friday night.
"Our economy has failed to create even enough jobs to cover new workers coming into the job market, not to speak of the millions who are unemployed, working in part-time or temporary jobs or who have given up and dropped out,'' said Kerry, who consistently leads Bush in polls on jobs and the economy.
The White House said the report was proof that Bush's economic policies were working.
"The president's policies are working to create jobs and keep the economy moving forward, but there is still more work to do,'' White House spokesman Scott McClellan said. Bush's campaign launched an ad on national cable networks touting the creation of "nearly 2 million jobs in just over a year.'' The report showed that 1.78 million jobs were added since September 2003.
On Wall Street, stocks closed lower on the jobs report and the price of oil topping $53 per barrel. The Dow Jones industrial average lost 70.20 points and the Nasdaq fell 28.55.
Much of September's payrolls increase was in government hiring, with 37,000 net new jobs. The service sector continued to add jobs in such categories as professional and business services, financial services and leisure and hospitality.
But growth was weighed down by losses in manufacturing, retail and information services. August payrolls were revised down to 128,000 from the 144,000 initially reported. July's payrolls were revised up by 12,000 to 85,000.
"On a macro-economic basis, we're falling behind,'' said Bill Cheney, chief economist at MFC Global Investment Management.
Some economists said the Federal Reserve, which raised short-term interest rates three times this year, now might hold off at November's meeting.
The report particularly reverberates in Rust Belt battleground states that have lost thousands of manufacturing jobs during Bush's presidency. The sector shed 18,000 net jobs in September and has lost 2.7 million jobs overall since Bush took office.
The economy must create about 150,000 new jobs a month to keep pace with population growth. Payrolls should be growing by 250,000 a month or more at this point in the recovery.
"The reality is that a 96,000 increase in a work force of a 131 million base is an anemic rise, and is in no way a satisfactory increase,'' said economist Ken Mayland of ClearView Economics.
Government analysts, in their annual revisions based on more available data, estimated that payrolls could be 236,000 higher for the year ended March 2004. Any changes would occur in February.
The four hurricanes striking Florida and other coastal states the past two months appear "to have held down employment growth, but not enough to change materially'' the national jobs picture, the report said.
Still, some economists refused to discount the storms. "I still believe in my heart of hearts that these numbers were negatively impacted by the hurricanes,'' said Anthony Chan, senior economist with JP Morgan Fleming Asset Management. He said his review of previous hurricanes showed that business payrolls had always declined.
Regardless, "this is a very disappointing report at this stage of an expansion,'' Chan said.
Bush is the first president since the Great Depression to seek re-election or to close a term with a jobs deficit, economists said.
"Times will remain tough,'' said Peter Morici, an economist and international business professor at the University of Maryland.
He cited factors likely to depress hiring: soaring energy prices, the expanding trade deficit, sluggish wage growth, production cutbacks at Ford and General Motors, and layoffs in the airlines, telecommunications, furniture and textile industries. Businesses announced more than 16,000 layoffs just this week.
Consumer confidence last month dropped to its lowest levels since midsummer amid such worries, according to an AP-Ipsos consumer confidence index. That's a concern for economists because consumer spending accounts for two-thirds of total economic activity.
Last Job Count Before Election: Always a Political Number
WASHINGTON, Oct. 8 – It's official. pres bush will be the first president since Herbert Hoover to face re-election with fewer people working than when he started.
No president may have more than an indirect influence on unemployment, and Mr. Bush had the bad luck to take office in January 2001, just before the economy was about to slide into a recession.
Still, despite the stimulus from three rounds of tax cuts, a spectacular expansion of the federal budget deficit and enormous assistance from the Federal Reserve, which slashed interest rates 13 times, the nation has at least 585,000 fewer jobs now than when Mr. Bush took office.
On Friday, as the Labor Department issued its last update on job creation before the elections, the Bush campaign aggressively defended its record in a barrage of interviews and in a new television advertisement, declaring that the nation has added "nearly two million jobs'' since August 2003.
"Nearly two million more people with more security,'' the ad declares. "Nearly two million more reasons why Americans are optimistic about our future.''
But the overall track record is much less sunny. In contrast to previous economic recoveries, including the so-called jobless recovery that helped Bill Clinton defeat Mr. Bush's father in 1992, this economic recovery was nearly two years old before the nation stopped losing jobs.
That is far from what the Bush administration predicted when it was pushing Congress to approve its third round of tax cuts in early 2003. At that time, the White House Council of Economic Advisers predicted that the nation would add 306,000 jobs a month through the end of 2004, an annual pace of more than three million jobs. It forecast that the tax cuts alone would add more than one million new jobs.
Economists estimate that the nation needs to add roughly 150,000 jobs a month to keep pace with the growth in the working-age population, and it needs to add many more than that to make up for the ground that has been lost.
But job creation over the last year has barely kept up with current population growth, much less overtaken the job losses from the recession and its aftermath.
More troubling, employment growth is once again sputtering. Over the last three months, job creation has averaged below 100,000 a month and has failed even to keep pace with the increased number of workers.
"That is not a typical pattern,'' said Nigel Gault, chief United States economist at Global Insight, an economic forecasting firm. "At some point in a recovery you really get going with the expansion. You don't want to have this pattern, where you have three or four really good months and then just fizzle again.''
Administration officials frequently note that the unemployment rate has declined from 6.3 percent in June 2003, to 5.4 percent in September. But the official jobless rate provides an artificially rosy picture, in part because millions of adults have dropped out of the work force.
The reasons remain unclear. Many workers become discouraged during a downturn and stop looking for work. Others decide to resume their education and many are forced to stop working because of illness or incarceration.
Whatever the reasons, the percentage of adults who either have a job or are looking for a job has declined significantly over the last three years. The employment-to-population ratio in September was 62.3 percent, about 2.1 percentage points below where it was when Mr. Bush took office.
The decline in work force participation was particularly marked for teenagers, Hispanics and blacks. The only demographic group with more members at work than in 2001 are those age 65 and older who decided to postpone retirement.
Mr. Bush and his economic advisers contend that the job situation would be even worse had he not pushed through tax cuts that will drain the Treasury of about $1.9 trillion over 10 years. Those tax cuts include rate reductions for people at all income levels, additional tax breaks for two-income families with children and a big reduction in taxes on stock dividends and capital gains.
Most economists agree that the tax cuts did indeed soften the downturn, helping encourage consumers to keep spending even when unemployment was rising.
"The tax cuts were incredibly well timed,'' said Richard Yamarone, chief economist at Argus Research, an investment advisory firm. "I can't imagine that the economy would not have been in a deep recession, had it not been for those tax cuts.''
But most economists also contend that the immediate impact of the tax cuts was blunted because they overwhelmingly favored the very wealthiest households; middle-income and lower-income people are more likely to spend their entire tax reduction much faster.
"The tax cuts could have been designed to provide more short-term stimulus, at a lower cost,'' said William C. Dudley, senior economist at Goldman Sachs.
The problem for the next president, whether Mr. Bush or Mr. Kerry, is that many of the recent job losses are outside government control. Manufacturers have shed more than two million jobs in the last three years, and most of those jobs are not coming back. Corporate profits have soared and industrial production is nearly back to its level when Mr. Bush took office.
But manufacturing companies have added fewer than 100,000 jobs, a tiny fraction of the number eliminated, and the Labor Department estimated on Friday that manufacturing payrolls shrank again, falling by 18,000 jobs in September.
Neither Mr. Bush nor Mr. Kerry has any control over world oil prices, which reached $53 a barrel this week and are slowing economic growth. Nor do presidents set interest rates; they were pushed to rock-bottom levels by the Federal Reserve but are now being gradually increased.
Also, the next president will have little or no opportunity for another round of tax cuts: with this year's budget deficit at $415 billion and no sign of an end to war costs in Iraq, both Republicans and Democrats have little appetite for more federal borrowing.
* Post was edited: 2004-10-10 10:40:00