[Mb-civic] NYTimes.com Article: Bad News on the Job Front

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Bad News on the Job Front

August 7, 2004
 


 

There is no sugarcoating yesterday's employment report. The
consensus forecast was for the American economy to add more
than 200,000 new jobs in July. The actual number was
32,000. June's already weak report was revised downward, to
78,000 jobs from 112,000. Even May's hopeful numbers turned
out to be less so, with 27,000 fewer jobs created than
originally reported. The report's immediate impact will be
to neutralize, if not undercut, President Bush's campaign
boasts of a strong economic recovery. 

Mr. Bush runs the risk of being the first president since
Herbert Hoover to preside over a net decline in the number
of jobs. This may not be all his fault; he inherited a
bursting bubble, after all, and there are limits to a
president's ability to counter economic cycles. But Mr.
Bush is always just as eager to have the buck stop at his
desk to take credit for good economic news as he is to deny
or spin bad news. Yesterday was no exception. 

Addressing a conference of minority journalists in
Washington, President Bush was unwilling to acknowledge the
implications of the jobs report. "Economic growth is strong
and it's getting stronger,'' he said. Meanwhile, the White
House economic team was peddling its tired line that the
administration's tax cuts, which were costly without being
effective as a stimulus for hiring, had helped bring about
an 11th consecutive month of job growth. 

Left unsaid was that it was a sputtering, tepid month, just
at the time when the recovery should be gathering steam.
The disappointing numbers come on top of - and help explain
- other recent signs of a slowdown, including an abrupt
drop in economic growth, to a 3 percent annual rate in the
second quarter from 4.5 percent in this year's first
quarter. Consumer spending, the mainstay of the economy,
fell 0.7 percent in June, its steepest drop since September
2001. Financial markets reacted bearishly to the latest
news, with stock market indexes hitting new lows for the
year yesterday, and the dollar weakening against other
currencies. 

Even worse for the president, three years of tax cuts and
war have left him with virtually no policy tools to
counteract economic weakness in the near term. A direct
fiscal stimulus is precluded by the staggering $445 billion
deficit expected for the year. The White House tried to
whitewash the release of that latest estimate last week by
noting that the shortfall was lower than its initial
(conveniently large) projection, instead of lamenting that
it was higher than last year's deficit. 

The Federal Reserve Board is also unable to come to the
rescue because it is rightly concerned about the danger of
keeping short-term interest rates below the rate of
inflation. Next week, Alan Greenspan and his colleagues are
expected to continue on their course of gradually inching
up rates, which have been at emergency-level lows. This may
turn into a sequel of the 1992 tensions between the Fed
chairman and a Bush White House that wants looser monetary
policy on the eve of an election. 

Most economic forecasts have predicted a healthy economy in
the second half of the year, and consumer surveys have been
bullish, even as people have trimmed their spending. The
trouble is, companies will have to start adding at least
200,000 new jobs a month to justify this optimism,
especially now that the government's ability to apply a
fiscal or monetary stimulus is so constrained. Those
stubbornly high fuel prices show how external shocks can
slam the brakes on the pace of this recovery. 

Voters deserve to have both presidential candidates address
and debate solutions to some of the structural problems
that are thwarting a stronger economic recovery, like our
nation's dependence on foreign oil and the spiraling cost
of health care. But like the rosy estimate of hundreds of
thousands of new jobs for July, such a meaningful debate
may be too much to count on. 

http://www.nytimes.com/2004/08/07/opinion/07sat1.html?ex=1092903912&ei=1&en=978cdab3c09f9786


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