US job picture brightens, but it's not likely to boom

Economists debate whether the growth and job outlook are good enough to boost Mr. Bush's reelection prospects.

Sinai says Bush will be helped, especially since, unlike his father, he "harps on jobs and more jobs all the time." His tax cuts were billed as job creating. And the Federal Reserve has clearly indicated it will maintain an easy monetary policy until the job market is bustling.

Bringing zest to the scene, the value of US corporate stock has gained about $4 trillion since an October 2002 trough.

If stock prices rise "solidly" throughout the first quarter of 2004, Bush's chances of reelection are "probably fairly good," maintains Mark Vitner, an economist at Wachovia Bank. If the market declines, he's likely to be "in real trouble."

But Mr. Mishel of the EPI says the view that the economic issue is going away for the president is "wishful thinking."

"Income and wages are still depressed," he says. "People are still vulnerable to job loss. They won't experience the recovery the Republicans talk about."

EPI maintains a site on the Web (jobwatch.org) that each month compares the number of new jobs actually created with the number projected by the president's Council of Economic Advisers when it was selling the tax cuts to Congress and the public. Last February, the CEA said the cuts would mean 344,000 new jobs per month starting in mid-2003. Through October, new jobs are 995,000 short of the original CEA projection. Last month, Treasury Secretary John Snow lowered the bar to 2 million new jobs by election time - about 166,000 a month.

Democrats say the tax cuts were badly designed to get the largest job boost possible for the lost amount of revenues.

Sinai finds a different explanation. He sees "structural changes" in the economy that may have weakened its job- creating zip.

Business, for example, is doing more outsourcing of service jobs to places like China and India. As more sales are made over the Internet, fewer clerks are needed in the stores. With the costs of health insurance and other nonwage costs rising fast, companies are reluctant to hire more workers as business increases. They prefer to work current employees harder and longer. It's cheaper.

In the third quarter, weekly hours worked rose 0.7 percent.

Historically, growth in the number of jobs in the private sector has closely tracked growth in gross domestic product, notes Mickey Levy, chief economist of Banc of America Securities in New York.

The current expansion has been relatively weak. And in the last two quarters, business has liquidated inventory rather than, as usual in a recovery, building it up. That can't continue, Levy says. So business will have to start hiring. That means "moderate job gains" ahead.

Page: 1 | 2