- The Washington Times - Monday, December 8, 2003

The November report for new job creation was not as strong as expected, but it still carried plenty of good economic news — which is not so uncommon these days. Indeed, with each new piece of economic data, one thing is becoming increasingly clear: This booming economy is voting for George W. Bush.

Overall, the outlook for robust job gains remains unchanged for the months ahead. According to the Labor Department’s latest survey, non-farm payrolls increased by only 57,000 in November — but this is the fourth consecutive rise, bringing the total jobs-gain since July to 328,000. Meanwhile, hours worked and overtime also increased last month.

As for private payrolls, expect larger gains in the months ahead. These payrolls lag temporary-worker payrolls by two quarters, and temporary payrolls have increased for seven straight months by a total of 166,000. This indicates there could be nearly 100,000 new private jobs in December and up to 750,000 in the first quarter of next year.

Household employment gains tell an even more impressive story. The Labor Department’s household survey counted 589,000 newly employed workers in November, following October’s robust rise of 441,000. This measure has increased in three of the last four months by a total 1.13 million.

Moreover, the household survey shows the ranks of self-employed increased by 118,000 in November. This continues an impressive run for this sector, which is not sufficiently covered in the Labor Department’s establishment survey of payroll jobs. The number of self-employed Americans has gained in five of the last six months by a total of 517,000, strongly implying the labor market is healthier than the headlines suggest.

There are even more indications of a strengthening labor market and economy. Although the recent productivity boom has created a wedge between aggregate workhours and real output, data on hours worked are still a significant coincident economic-growth indicator. Since 1970, the annual growth rates of real gross domestic product and hours worked have been closely linked. With increases in October and November, hours worked are running at 2.6 percent annualized above third-quarter GDP, pointing to continued economic expansion (41/2 percent or more) in the fourth quarter. Accelerating job growth, which has risen to its highest level in three years, also reflects more widespread hiring.

Finally,unemployment is down to 5.9 percent — the lowest since March. It will undoubtedly continue to drop next year.

Nonetheless, the dollar fell on the employment news. But when doesn’t the dollar drop these days? Not even a strong report on factory orders (nondefense capital-goods orders are up 34 percent at an annual rate over the past three months, with actual shipments 13.8 percent above the third-quarter average) could halt the dollar’s slide. Nor could the president’s decision to end steel tariffs (although this was a strong pro-growth move on its own merits). Nor could the incredibly positive reports on productivity, profits and manufacturing.

Of course, the Federal Reserve could help stabilize the dollar by changing its policy announcement at the open-market meeting on Tuesday, in particular by removing its guarantee to keep the overnight interest rate low “for a considerable period.” And yet, when you step back a bit, it becomes clear there is no dollar crisis.

A broad dollar index (of 30 currencies around the world) has round-tripped between early 2000 and now, revealing the dollar has essentially been stable over the past four years. And recent increases in gold and commodity prices have more to do with the stockpiling of raw materials, finished goods and precious metals from the China boom than any excess money from Greenspan & Co.

To be sure, the Fed is properly accommodating President Bush’s supply-side tax cuts on capital formation, which will continue to grow the economy near the 5 percent average rate of the past two quarters. Outsized productivity gains, stronger-than-expected profits, surging investment in capital goods and accelerated job creation will all result from higher after-tax capital returns and lower capital costs.

All of which seems very unfair to the Democrats: With each new piece of positive economic data, a second Bush term becomes more and more of a foregone conclusion.

Lawrence Kudlow is a nationally syndicated columnist and is CEO of Kudlow & Co., LLC, and CNBC’s economics commentator.


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