- The Washington Times - Friday, August 1, 2003

The economy shed another 44,000 jobs in July, posting a sixth straight monthly decline that shows this spring’s pickup in economic growth was not strong enough to foster employment.

As in past months, the job losses reported by the Labor Department yesterday were concentrated in manufacturing, where another 71,000 positions were eliminated, overwhelming the addition of jobs in professional and business services, temporary help and a smattering of other areas.

Discouragement at finding few jobs prompted more than a half-million job seekers to drop out of the labor force, causing a drop in the unemployment rate to 6.2 percent from 6.4 percent in June.

Signs that the jobless recovery remains in place caused a down day on Wall Street yesterday, where investors had been celebrating other reports this week showing slowly building improvement in the economy. The Dow Jones Industrial Average dropped 80 points to 9,154.

The news presented a dilemma for President Bush, who yesterday after a Cabinet meeting sought to assure the public that, while growth picked up to 2.4 percent this spring and is likely to go higher, the administration is working to further improve the economy.

“Our economy is growing, and we’re confident that over time people will be able to find a job. But we’re not going to rest,” Mr. Bush said. “Even though some of the numbers are good, there are still too many people looking for work, and so we’re going to keep working on the economy until people can find a job.

“There’s a positive feeling in America,” Mr. Bush said. “This administration focuses on lives” and that is why it worked throughout the 2001 recession to enact tax cuts to spur growth and jobs. “A deep recession would have meant more people would have been out of work, and we want people to work in America.”

While Democratic presidential contenders jumped on the job losses as evidence that Mr. Bush has mishandled the economy, the president laid some of the blame on television coverage of the war in Iraq.

“On some TV screens there was a constant reminder to the American people: ‘march to war.’ Now war is not a very pleasant subject in people’s minds. It’s not conducive for the investment of capital,” he said.

The administration is banking heavily on its $330 billion in tax cuts and various spending initiatives helping to perk up growth to between 3 percent and 4 percent by the end of the year, at which point they predict the economy will start creating jobs again.

Lending support to those predictions, other reports out yesterday showed manufacturing grew last month for the first time since February — despite job losses — as well as rises in consumer spending and incomes during June.

While many private economists agree with Mr. Bush that jobs should start growing again as the recovery gathers speed in the next year, they caution that the economy is likely to take years to replace the 3 million jobs lost since the recession.

The United States may never regain many of the 2.6 million lost manufacturing jobs, as many industrial concerns have closed shop altogether or moved to less costly places to do business overseas, economists say.

Political analysts say Mr. Bush’s dilemma stems from the divergent trends in the economy. While growth is improving, they say, consumer sentiment and public opinion tend to focus more on the state of the job market than the rate of growth or other measures of economic health.

“Why isn’t the public feeling more jubilant about the recovery? The most obvious answer continues to be the national unemployment rate,” said Frank Newport, editor in chief of Gallup Tuesday Briefing.

The unemployment rate is derived from the department’s monthly survey of households in which individuals are asked to declare their employment status, while the jobs figures are derived from a survey of businesses.

“Changes in the unemployment rate filter through to the public,” Mr. Newport said. Even for the majority of Americans who still have jobs, widespread or prolonged joblessness experienced by others can provoke feelings of job insecurity that causes skittishness about the economy and the future.

A report out this week showed that fears spawned by joblessness caused a drop in consumer confidence last month, overriding an improving stock market and other positive developments.

Perceptions of joblessness strongly affect the public’s overall view of the economy, Mr. Newport said.

“Only 13 percent of those who know someone out of work have a positive view of the economy, while 59 percent have a negative view,” he said.

While the unemployment rate, at 6.2 percent, remains historically low, it is up dramatically from 3.9 percent when President Bush was elected. His Democratic opponents have sought to exploit this vulnerability and the public’s perception that the economy is the country’s number one problem.

“The Bush administration is telling us that good news is right around the corner but this is an economy that has left millions behind,” said Sen. John Kerry, a Massachusetts Democrat and presidential contender.

“It seems that the only people doing better under the Bush economy are Bush’s wealthiest friends,” he said.

“The unfortunate truth behind the drop in unemployment [last month] is that many workers have simply given up finding a job in this bleak Bush economy,” said another would-be nominee, Sen. Joe Lieberman, Connecticut Democrat.

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