- The Washington Times - Sunday, February 8, 2004

If it is the first Friday of the month, it must mean more disappointing jobs data for the U.S. economy. Right on cue on Friday, the Department of Labor issued its employment report for January. And economists responded with what has become a monotonous refrain, expressing great disappointment over the numbers’ failure to meet expectations.

The consensus projection, according to a survey by Dow Jones Newswires and CNBC, called for an increase of 160,000 nonfarm jobs in January. The economy generated only 112,000. Reactions from economists, as compiled by the Journal, included: “very disappointing” — Dominic Konstam, head of interest-rate strategy at Credit Suisse First Boston; “definitely disappointing” — Bill (no relation) Cheney, chief economist at John Hancock Financial Services; “certainly disappointing for the 26th month of an alleged economic recovery” — William Sullivan, market economist at Morgan Stanley; “the weakest job-creation rate relative to economic growth on record” — Steven Wood, chief economist at Insight Economics.

Noteworthy is the fact that, for all the disappointment that the January numbers generated, last month’s job growth was still the highest during the three years of the Bush administration. In fact, it was the highest since December 2000, the last full month of the Clinton administration, during which the monthly nonfarm job growth averaged 236,000 over eight years, or more than twice the 112,000 jobs created last month. While January represented the fifth consecutive month of job growth, fewer than 375,000 jobs have been created during that period, when the monthly average increase was less than a minuscule 75,000. January’s data revealed that employment has declined by 2.35 million jobs since the March 2001 cyclical peak and by more than 700,000 jobs since the recession ended in November 2001.

For all the expressions of disappointment among private-sector economists, it’s safe to say that disappointment among White House economists is probably even greater. Friday’s underwhelming jobs report arrived two days after the first anniversary of the Bush administration’s widely touted Feb. 4, 2003, report by the White House Council of Economic Advisers (CEA). Titled “Strengthening America’s Economy: The President’s Jobs and Growth Proposals,” the report projected extensive job creation if Congress passed the president’s 2003 tax cut. Compared to fourth-quarter employment in 2002, the CEA estimated that roughly 2.5 million new jobs would be created by the fourth quarter of 2003 in the absence of the president’s tax plan. An additional 510,000 jobs would be generated by the fourth quarter of last year if Congress passed the plan, the CEA’s report asserted.

With a few minor changes, Congress approved the tax cut. But the 3 million new jobs projected by the CEA never materialized. In fact, rather than being 3 million jobs above fourth-quarter 2002 nonfarm employment, fourth-quarter employment in 2003 was actually a quarter-million jobs below year-earlier levels. It can hardly get more disappointing than that.

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