Woohoo, life is great and nobody should be complaing! After all, the economy added a whopping 193,000 payroll jobs! It can’t get any better than that! I tell ya’ those idiots on Wall Street don’t know what is good for them.
Okay, maybe not. Despite all of President Bush’s “Rah-rah, the economy is strong pap,” these payroll numbers are frankly anemic by historical standards. The decrease in the unemployment rate is good news, but overall it isn’t great. Acceptable…at best. Consider what payroll employment looked like from 1992 to 2000–i.e. during the last expansion:
If one were to look at the average net change over that time period the number of payroll jobs would be around 225,000 new jobs per month. If we look at the average from 2002 (i.e., about the same amount of time from the end of the last recession) we see a paltry average of 78 thousand new payroll jobs per month. Even if we look at only 2004, 2005 and January of 2006 the final number is still an underwhelming 170,000 new jobs on average per month. That is nothing to be happy about or describe as strong when the last recession was over 4 years ago.
So I find it rather pathetic when Bush goes out and proclaims that his tax policy the direct cause of the…well to be perfectly honest rather disappointing payroll numbers. Will keeping taxes low help continue this kind of job growth? If so, then the economy is in trouble since this kind of job growth is sub-par.
I don’t know what the solution is. Frankly, I don’t think to many economists know either. This is one reason why the Bush Administration kept making all the erroneous job growth predictions. They looked at past recessions, and economic policies of previous presidents and concluded that this last recession would be pretty much the same. That when the recession ended, employment would spring back. But this didn’t happen. Why? I don’t know. Some research has suggested structural changes in the economy and employment which have made the employment situation more uncertain than in the past. Maybe that is part of the answer. However, it isn’t clear that keeping taxes lower, increasing spending, and running large deficits will solve this problem.
Still the cheering for the recent unemployment report by some on the Right strikes me as naive and foolish. These numbers are okay at best, and nothing to be bragging about.
