Saturday :: Dec 4, 2004

Is This The Best It Will Get For A Bush Recovery?

by Steve

Three years into the Bush recovery, we still have not crawled our way back to where we were when he came into office, nor are we generating enough jobs to keep pace with population growth.

The economy added 112,000 payroll jobs in November, far fewer than the month before and not enough to keep up with average increases in the adult population, the Labor Department reported on Friday.

The gain was well below Wall Street forecasts, and employment in manufacturing was flat for the third consecutive month.

The report cast a shadow on expectations for holiday spending this year, given that consumers face higher gasoline and heating prices without much rise in real personal income.

Three years after the last recession officially ended in November 2001, the rebound in jobs remains slower than in any previous economic recovery since World War II.

Unemployment inched down by 0.1 percentage point last month, to 5.4 percent, but the United States still has at least 200,000 fewer jobs than it did before the recession began. At the same time, the adult population has grown by about four million.

Itís bad enough that we arenít even generating enough jobs to keep up with our population growth. Itís even worse that the one good month we had recently was actually an aberration for which the original results will be revised downward again.

Many analysts were stunned last month when the government reported a spectacular jump of 337,000 jobs in October. But on Friday, many said that the October jump was mostly an aberration in the more enduring trend of slow growth in jobs and wages.

On Friday, the Labor Department revised down its October estimate to 303,000 jobs from 337,000. But analysts said even that number was exaggerated by special events and statistical issues.

"October now clearly stands as an outlier, partly thanks to the hurricane effect and partly, we think, to plain old sampling error," wrote Ian Shepherdson, chief United States economist at High Frequency Economics in Valhalla, N.Y.

Ah, there we go again, sampling error. But then we know that the pollsters and the GOP are experts at that, donít we?

Check out some of the comments from analysts about our jobs picture:

"The economy is adding jobs, but not at a feverish pace," said Richard Yamarone, chief economist at Argus Research, an economic research firm in New York. "Economic growth is not expanding at a pace that can engender stellar job growth, and I think you have to get used to these kinds of numbers."

Mr. Yamarone, if we have to ďget used toĒ job growth of only 100,000-200,000 a month, then we are all in trouble, given that many of these jobs are temp help, lower wage jobs. How will the Bush Administration finance its deficits if more and more people are making less than they did last year? Who will be buying what Corporate America has to sell if wages keep failing behind inflation?

"Available data suggest the recovery remains surprisingly resilient, despite concerns about energy costs," wrote Robert V. DiClemente, a senior economist at Citigroup. "Gains in employment of 185,000 per month suggest an expansion proceeding at cruising speed."

Job growth of 185,000 represents an expansion at "cruising speed?" Remind me not to pay attention to anything said by anyone at Citigroup from now on.

And why is the economy slowing? Well, sure it is good that the well-off are doing just fine. But what happens when the middle class and the lower-income households lose ground because their wages havenít been keeping up with inflation? Retail suffers, thatís what.

Retailers actually added nearly 300,000 more workers last month. But hiring was far less robust than usual going into the holiday period: Adjusting for seasonal hiring patterns, the figure represents a decline of 16,000 jobs, according to the Labor Department. It is the fourth year in a row that November retail hiring has fallen on a seasonally adjusted basis. Gasoline stations, department stores and stores selling clothing, sporting goods, books and music all reported declines last month.

The fall reflected several factors, analysts said. Many retailers cut back on holiday hiring as they sensed weakening demand from middle- and lower-income households, whose wages have not kept up with inflation.

But that is your Bush recovery. Only the upper third are doing well, and the gap between them and the rest of the economy is only growing.

I hope the red staters who voted for Bush are happy.

Steve :: 12:30 PM :: Comments (11) :: Digg It!