ECONOMICS: Jobfull Recovery
Wesbury, Brian S.
ECONOMICS BRIAN S. WESBURY Jobfull Recovery INALLY WE CAN SAY SAYONARA to the "Jobless Recovery?' The payroll employment data is telling us what all of the other economic data has been saying...
...above the world price...
...That was a bad decision...
...What that means is that all of those producers in China or service providers in India demand goods and services themselves and want higher standards of living...
...However, this was a "war quarter...
...These "saved" resources are then used to produce new goods and services and develop new technologies to benefit U.S...
...But Say's Law says that "Supply creates its own demand...
...The BLS is stubborn about this...
...The real driving force behind growth in the economy in 2004 is the Bush tax cut of 2003...
...economy is based on a flawed economic theory...
...It was before the tax cut became effective...
...It was before venture capital, M&A activity, IPO issuance, and the stock market started a sharp upward trend...
...In addition, my long-term forecast of the job market with current policies in place, suggests 10.6 million jobs will be created in the next four years...
...Sayonara, Jobless Recovery...
...Earlier this year, Mankiw was drawn and quartered for predicting 2.6 million new jobs in 2004...
...With the return of jobs, the Fed will most likely start hiking interest rates this summer...
...During this same period, initial claims for unemployment payments averaged 343,000 per week...
...is in a "Jobless Recovery" are basing their belief on two current trends: rising productivity growth rates and the outsourcing of jobs...
...As living standards rise in China and India, the U.S...
...Producers also want to know that the recovery is for real before going to the expense of hiring new workers...
...is on track to produce another 3 million jobs in the year ahead...
...Recently, weekly jobless claims have fallen back to 340,000, suggesting that the U.S...
...By cutting taxes on income, capital gains, and dividends, the entrepreneurial spirit of the U.S...
...Job growth was the last piece of the puzzle to fall into place...
...has a shortage of workers...
...However, with its February release, the BEA revised its estimates for the second half of 2003 by incorporating unemployment insurance records from Q3 2003...
...ECONOMICS BRIAN S. WESBURY Jobfull Recovery INALLY WE CAN SAY SAYONARA to the "Jobless Recovery?' The payroll employment data is telling us what all of the other economic data has been saying for months—the U.S...
...Nonetheless, the economy has become so strong that payroll employment is rising despite all the problems in measuring it...
...The BLS baselines its payroll employment data to State Unemployment Insurance records and every corporation must file complete data with the states in which they operate...
...This resulted BRIAN S. WESBURY in an upward revision to wages and salaries in January of $29 billion, or a 0.7 percent increase above previous estimates...
...Most importantly, U.S...
...This data includes information on wages, salaries, and employment levels...
...If you read closely, those who fear outsourcing base their concerns on a zero sum model of growth...
...As long as the tax cuts remain in place, the economy is on track to continue its boom...
...They have told my office in numerous telephone conversations that they will not incorporate the stronger third quarter data until February 2005 when they do what are called "annual benchmark revisions...
...But, something must be done, and soon...
...This undermined the competitiveness of steel-using firms and cost them more jobs than were saved at steel producers...
...economy was brought back to life...
...For example, steel tariffs may have helped steel producers, but they also raised the cost of steel in the U.S...
...The Bureau of Economic Analysis (BEA) uses the same data to calculate its estimates of personal income, wages, and salaries...
...is the only consumer of goods and services in the world...
...Chinese and Indian workers want to watch U.S.movies, talk on cell phones made by Motorola, surf the web, and play video games...
...Free and open trade is a win-win proposition...
...economy would suffer as foreign trade was reduced...
...T HOSE WHO ARGUE that the U.S...
...President Bush has put forward a new policy for immigration and both Democrats and Republicans have called it Dead on Arrival...
...In March, the number of temporary workers actually declined after increasing by 213,000 between April 2003 and February 2004...
...A.= Brian S. Wesbury is chief economist at Griffin, Kubik, Stephen & Thompson, Inc., a Chicago-based investment bank...
...January and February jobs estimates were upwardly revised by a total of 87,000 jobs and the average monthly job gain in the first quarter was 171,000—an annual rate of more than 2 million...
...Therefore, anything that is produced overseas is a dead weight loss for America...
...Three million new jobs in 1995, on a base of 115 million, was a 2.7 percent 34 THE AMERICAN SPECTATOR MAY 2004 increase...
...These worry warts act as if the U.S...
...Current employment statistics use the Q2 2003 corporate filings as a baseline...
...That is why a coherent and sensible policy to deal with immigration is so important...
...While we should not expect 300,000 new jobs every month, the evidence suggests that once all the revisions are made, the forecast made by Mankiw will be correct...
...Corporations have increased productivity, but now must hire workers to increase output...
...providers of goods and services keep prices down for consumers and increase profits for shareholders by sourcing products from overseas...
...citizens...
...MAY 2004 THE AMERICAN SPECTATOR 35...
...I have written extensively on each of these issues for The American Spectator, but more needs to be said...
...This was great news for President Bush, who has been politically flailed for losing jobs...
...It was before the 8.2 percent boom in third quarter growth...
...While a global world economy is tough to get our arms around, demand follows supply as sure as night follows day...
...Another problem with employment data—and specifically the Bureau of Labor Statistics' Establishment Survey—is that it is based on lagged information...
...In other words, the BLS is still using the weakest quarter of the past year to estimate employment levels today...
...All of that seems to be behind us now...
...could produce significantly more than 3 million jobs in the year ahead...
...Employment data lags far behind the economy as a whole in every recovery because producers typically have extra capacity when coming out of recession...
...But don't forget, the job gains in the mid-1990s were from a much lower base...
...But interest rates could rise by a full 3 percent from current levels before they actually signal a restrictive Fed policy...
...In the end, however, the entire U.S...
...Those who want to stop globalization may help those who compete directly with foreigners for a short time...
...John Kerry is promising 10 million, but that represents a slowdown from current trends...
...It was also good news for the chairman of the President's Council of Economic Advisors— Gregory Mankiw...
...In addition, the Fed has been holding rates at extraordinarily low levels...
...Following the last recession, between 1994 and 1997, non-farm payrolls increased by 253,000 per month, or 3 million jobs per year...
...Some believe that any rate hikes will harm the economy...
...economy is strong and getting stronger...
...The White House distanced itself from the forecast and excuses were made...
...With economic data playing such an important role in the current political environment, this inability to incorporate new data is unfortunate...
...Mark my words—the next stop on this economic train will be the realization that the U.S...
...March 2004 payrolls increased by 308,000, the strongest gain in four years...
...Three million jobs this year, on a base of 130 million, is a 2.3 percent increase...
...That's the way markets work...
...The theory that outsourcing is bad for the U.S...
...It is highly likely that the U.S...
...Call centers in India use Dell computers, Microsoft software, serve water bottled by Coca-Cola, and cool their offices with Crane air conditioners...
...does not lose—it wins...
...The same size revision to nonfarm payrolls would add 734,000 jobs to current estimates of payroll employment between July 2003 and January 2004—more than 100,000 jobs per month...
Vol. 37 • May 2004 • No. 4
