A Good Friday…for the Economy

A Good Friday…for the Economy[/u]
Jerry Bowyer
April 6, 2004

By now, everybody who cares about politics or economics knows that last Friday the government released data that shows that employment grew extremely rapidly in the month of March. What most people don't know is that the Bureau of Labor Statistics, in addition to finding 308,000 new jobs in March, also found 87,000 additional jobs which it had missed during its first count of January and February. These 87,000 are above and beyond the 118,000 new jobs that it had already spotted in its original reports.

It turns out that since last May, when all of the president's tax cuts finally got implemented, the payroll survey finds 675,000 new jobs. Here's the kicker?-that's the pessimistic survey; the one that tends to miss new start-ups because it's based on established businesses. The other one, the household survey, shows an increase since last spring's tax cut of almost 800,000 new jobs. Some "jobless recovery", huh? Although I believe that the proper way to measure the effectiveness of a president's policy is to measure what's happened since his economic policies have been implemented, I'll tell you the job-count since President Bush took the oath of office in January 2001. The household survey shows a net increase of 508,000 jobs, which includes the time-period during which we were still in recession.

Things were bad already for the economic pessimists: the ISM manufacturing index (econo-speak for a survey of corporate managers who buy manufactured goods) showed rapid expansion two days before the jobs numbers came out. Their mood isn't going to get any better this week, either: today's ISM for the service sector (which constitutes 4/5 of American business economic activity) came in at a chart-topping 65.8. This is the most rapid pace of economic expansion ever seen in the seven-year history of the index. To make matters worse (for those who don't want things to get better) the forward-looking stuff like new orders and backlogs is doing swimmingly. This means that the rapid growth in overall economic production does not seem to be slowing down. The only two full quarters that we've seen since last May's tax cut have shown an average of 6.15% annual growth, which is better than Clinton's first and second terms and much better than Bush's father's four years in office. As a matter of fact, it is nearly twice the post-WWII average growth rate, and considerably higher than the post-Reagan boom. The latest set of numbers telegraph that this pace will be continuing.

Most of this we already knew before Friday. What we learned on Friday is that the phrase "jobless recovery" couldn't have been more wrong. Friday's numbers are irreducibly un-spinnable. You can't say they were all Wal-Mart jobs, because the entire increase in retail comes out to about a seventh of the new jobs, which means that at least 6/7 of the new jobs had to appear in other places. You can't say that these are low-wage jobs, because the personal income statistics have shown increases in average income and average wages (an average of almost 3% annualized for the past quarter.) You can't say that these are all part-time jobs because the average work week is roughly 34 hours and holding steady. You can't say that people have given up looking for work, because the numbers tell us that almost 180,000 people in March just entered the work force.

If you're a Bush-basher and an economic pessimist, pretty much all you can do now is go pour yourself a glass of water, and pop a Prozac or two. But I should warn you that you will only make matters worse; this transaction is likely to show up in the quarterly growth of the pharmaceutical sector.

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