In the wake of Friday's employment statistics showing the largest jump in non-farm payroll since April 2000, John Kerry said the job creation was "welcome news for America's workers."
"I hope it continues," said Kerry. Does anyone believe him?
The sluggish payroll survey, after all, was the economic indicator that Democrats had clung to like a security blanket to pronounce President Bush's economic policies a failure. Since last May, when the tax cut was passed, the Dow is up about 20% and the NASDAQ up about 30%. Unemployment dropped from 6.1% in May to 5.7% as of last Friday's release.
The unemployment figure comes from the household survey, where the Bureau of Labor Statistics calls people and asks about their state of employment. The payroll figure comes from a survey of companies. In September, the New York Federal Reserve released a study concluding that many firms had taken the recession as an opportunity to increase efficiency, and therefore the usual pattern of cyclical rehiring was disrupted: a huge portion of jobs that had been lost would not come back, and job growth would instead come from new and dynamic enterprises. It's no surprise, then, that the payroll survey, which primarily consists of large and well-established firms, would lag behind the household survey.
A by-now well worn argument against the household survey is that it omits "discouraged workers" who have stopped looking for jobs and dropped out of the labor force. To the extent that that phenomenon was real, it has stopped and reversed itself: The household survey on Friday showed a growth in unemployment of one-tenth of one percent from February to March, and people entering or re-entering the workforce (call them encouraged workers) accounted for 98.4% of the increase.
Not only did 308,000 new jobs show up on the payroll survey for March, estimates for earlier months were revised upward for a total of 513,000 new jobs in the first quarter of this year (and 675,000 since the tax cut passed in May). At this rate, the proverbial two million jobs lost will have almost all returned by year's end -- most of them, of course, before election day.
Unemployment hasn't moved an election since 1982, when it reached 10.8%. The first President Bush hemorrhaged votes in 1992 not where unemployment was particularly high, but where real estate prices had tanked. With half of Americans now holding stock, either directly or in retirement accounts, equity markets are probably more important, politically, than labor. But employment figures still pack a rhetorical punch, and Democrats have used them to great effect.
Now, though, John Kerry is reduced to arguing not that jobs aren't coming back, but that no recovery is enough, and that the economic policies that he promises -- which the National Taxpayers Union calculates now include $2.76 trillion in new spending over the next 10 years -- will bring even more jobs even faster. Kerry's economic critique will only strain credibility more and more as the months pass.
The conventional wisdom up until now seems to have been that the economy is a political liability for President Bush and congressional Republicans. That can no longer be assumed. With numbers like these, the GOP should not be afraid to go on offense.
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