Max Sawick notes that the Bush administration is now predicting that employment will grow at an average of 200,000 a month for the next year and a half--a long-overdue climbdown from their previous bizarrely ludicrous forecast of 344,000 net new jobs a month:
Weblog Entry - 10/21/2003: "ALL THE PRESIDENTS JOBS, THE CLIMB-DOWN": Secretary of the Treasury John Snow has announced that the President's pledge to add five and a half million jobs is now inoperative. As we've been telling you, this would require 344,000 new jobs a month. Since July, the numbers have been negative for every month except the most recent one. The latest Snow job promises 200,000 jobs a month. You need 170,000 new jobs a month just to keep the unemployment rate from increasing. We remind you that the economy is in the unusual situation of having fewer jobs now than at the beginning of the "recovery." Historic. At least the nation's foreign affairs are well in hand. Oh wait . . .
But as the New York Times's Edmund Andrews points out, even this forecast seems bizarrely optimistic:
Posted by DeLong at October 21, 2003 01:06 PM | TrackBackTreasury Chief Sees a Jobs Boom, but Most Don't: ...But most economists, including those at the Fed and many in the private sector, predict that job growth will remain very modest and that the unemployment rate will remain near 6 percent. The reason for such caution is that companies have been increasing productivity at an annual rate of well above 4 percent for much of this year. If the economy really were to start generating 200,000 jobs a month, it would have to grow by at least 4 percent throughout the next year and productivity growth would have to slow. "The risk of being wrong on at least one of these counts seems dangerously high from a political perspective," wrote Mr. Hatzius of Goldman Sachs...
Before crowing too loudly about the Bushies obvious mendacity and general wrongheadedness, how about a comment on the deficit? It strikes me that an $80B move on the deficit could signal a dramatic strengthening of the economy which could generate such a strong recovery that all the past blundering is forgiven. Remember how the recovery in 1983-4 led to "Morning (i.e., massive deficits) in America."
Or, they might have moved something off the books, like a war or two.
Posted by: Charles on October 21, 2003 10:03 PMA clever fellow at Bloomberg put together a chart showing that if one scratches a line through the last six months or so of payroll employment changes and then just extends that line till it hits 200k/month, the 200k level is hit sometime in 2005. Now, there is no good reason to think that such an arbitrary predictor will define job market developments for the next year and more, but it is a pretty good indication of how much public wishfulness is going on.
Anybody else think Max's 170k/month standard for holding the jobless rate steady is a bit high?
Posted by: K Harris on October 22, 2003 05:23 AMI read in the NY Times this morning that Snow "bet his reputation" that the economy would add 2 million jobs by election day. The question is, does he have a reputation to lose? I'll bet my reputation he's wrong. I'll even throw in my yacht.
Posted by: Phil P on October 22, 2003 05:59 AM