- The Washington Times - Sunday, April 4, 2004

Much to the understandable delight of the White House, the roaring U.S. economy finally received a jobs report commensurate with its rapid growth over the past three quarters. Vastly overwhelming consensus projections, the numbers for March were stunning. Compared to an expected payroll increase of about 125,000, the economy generated 308,000 nonfarm jobs in March.

It was the largest monthly increase since April 2000, when an identical number of jobs were created near the peaks of the stock-market and business-investment-spending bubbles. The bursting of both bubbles precipitated the latest recession, which arguably began sometime during the second half of 2000. Those two collapses were also responsible for generating lackluster economic growth until the economy began to expand robustly during the third quarter of 2003.

During the second half of last year, the economy grew at an annual rate of 6.1 percent, the fastest growth rate over a six-month period in 20 years. However, payroll growth continued to lag, largely because the annual growth in productivity (output per hour) rapidly accelerated. Indeed, much of the weakness in the labor market since the recession ended in late 2001 could be explained by the fact that the two-year (2002-2003) growth rate in nonfarm business productivity was the highest since 1949-1950.

Not only did March nonfarm employment expand by more than 300,000 jobs; major upward revisions to January and February employment numbers added an extra 87,000 jobs to first-quarter job growth. Thus, the average monthly increase during the first quarter exceeded 170,000 jobs, which is nearly three times the 60,000 jobs per month that were created during the fourth quarter.



What a difference a month makes. One month ago there was widespread gloom over a labor market that had generated a paltry 126,000 jobs during the December-February period. Today, with March’s job explosion and the hefty upward revisions to January and February payroll data, the latest numbers reveal that more than 500,000 jobs have been created during the January-March period.

Across the board, the job expansion in March was encouraging. Construction employment increased by 71,000. The service sector generated a net increase of 230,000 jobs, including 199,000 in the private sector. And after declining over 43 consecutive months, manufacturing employment stabilized, and the durable-goods-producing industries actually added jobs for the third month in a row. Manufacturing clearly has borne the brunt of the jobs lost since the recession began. But that is largely due to the fact that manufacturing productivity has soared faster than any other sector, having increased by nearly 13 percent over the previous two years.

The unemployment rate, which is generated by the volatile household (and not the payroll) survey, ticked up in March by a tenth of a percentage point to 5.7 percent. However, even that development reflected the fact that in March more than 175,000 workers entered the labor force, which had declined by more than 700,000 over the previous three months. At 5.7 percent, the March unemployment rate was 0.6 percentage points below its June peak of 6.3 percent; and, as the White House has frequently noted, the current unemployment rate remains lower than the average unemployment rate during the 1970s (6.2 percent), the 1980s (7.3 percent) and the 1990s (5.75 percent).

Given the ongoing attacks from the Democrats over the Bush administration’s economic record, the jobs report is good news indeed for the White House.

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