The Wall Street Journal's Jon Hilsenrath reports that his survey of forecasters expects growth in employment only half as fast as the administration's forecast released last Monday. In fact, looking at the distribution as it is partially revealed--with only 14 out of 55 at more than 180,000 average payroll jobs per month in 2004--makes me doubt that more than one or two out of the 55 would agree with the administration:
Jon Hilsenrath: In a monthly survey of 55 private economists conducted by The Wall Street Journal's online edition, payroll employment -- a broad measure of the number of jobs created by established companies -- is expected to grow by 1.4 million between February and Election Day. That averages out to 155,000 additional payroll jobs a month during the nine months and would correspond with an average level of about 131 million payroll jobs for 2004 as a whole.
In the Economic Report of the President released this week, the White House projected that the level of payrolls would average 132.7 million in 2004. That projection was completed in early December, before two recent months of anemic growth data were released and before recent benchmark revisions to payroll data by the Bureau of Labor Statistics. Based on the data available at the time, that administration estimate corresponded with monthly payroll gains in excess of 300,000 throughout 2004.
"Their employment numbers are way too strong for this year," said David Wyss, chief economist with Standard & Poor's, who projects monthly payroll growth of 156,000 in the months ahead. Gregory Mankiw, the head of the White House's Council of Economic Advisers, declined to comment on the private-sector estimates or on the administration's findings.
One difference between the forecasts is that the White House projects a sudden slowdown in productivity growth. The productivity of the nation's work force has surged in recent years, and that has meant that companies have been able to produce gains in output without adding new workers.
As productivity slows, the White House expects companies to have to add more workers to meet rising demand. Its estimate corresponds with a slowdown in productivity growth to a 1.4% rate in 2004, compared with a 5.3% growth rate in 2003. Mr. Wyss, by contrast, expects companies to squeeze out 2.5% productivity growth in 2004.
"No. We're not highballing the employment growth forecast," various senior administration officials who have demanded anonymity claim to various reporters. "Why would we create a forecast that we are unlikely to meet, and have to face bad news for the rest of the year? Why set a really high bar?"
It is a mystery, isn't it? the mystery is compounded by the CEA's refusal to utter a public word in defense of its forecast. For me, that's a very bad sign.
Posted by DeLong at February 13, 2004 12:18 AM | TrackBack
Prof-
Are there markets where forecasts are traded?
Posted by: praktike on February 12, 2004 09:10 PM156K/mo. jobs in this country or in some other country? I don't understand in what sector the jobs will be created in. It was my understanding that huge expansions in the economy are usually accompainied by huge investments in new technology or massive infrastucture projects. It looks to me as if the growth in the GDP is being generated by outsourcing. Are firms really going to slow their profit taking by paying more for labor here when they can get it so much cheaper elsewhere? Something about the employment forecast doesn't make any sense, especially when you consider how many working Americans are currently involved in Iraq and Afghanistan, even with their absence, unemployment is still too high.
Posted by: bcinaz on February 12, 2004 09:14 PMForecasters think the White House estimate is high. The record of the past 14 months suggests the forecasters are high. CNN/Money ran a table just after the January jobs data were released, showing that over the past 14 months, the cumulative mismatch between median estimates in Reuters forecaster surveys of jobs growth and the reported number is 595,000. That is, forecasters have been too high by an average of 49,583 per month over the past 14 months.
Posted by: K Harris on February 13, 2004 04:16 AMI have a hunch this mystery is caused by a deviation from Bush administration standard policymaking processes: George himself got directly involved.
Someone indiscretely let slip that his administration was on track to a net loss of jobs, possibly mentioning Hoover in the process. Bush wasn't gonna have that, no way, no how, nuh-unh. Confronted with this blithering implacability, the Bush economics team quickly calculated that it would be equally bad to be massively wrong in their forecast as it would be to tell the country the truth. So they shrugged their collective shoulders and told the world what George wanted to hear.
Posted by: David Yaseen on February 13, 2004 07:09 AMI compare the Bush (modified) jobs forecast to the Blue Chip forecasts here:
http://econ4dean.typepad.com/econ4dean/2004/02/the_CEA_and_the.html
They imply more than a million more jobs in 2004 than the average of the top 10 forecasts.
The number I see kicked around in the media for the number of jobs lost in the Bush years is 2.2 million. If you pro-rate the 2.6 million forecast ahead to election day in November, you come up with very nearly 2.2 million recovered by that day. Thus, I think the forecast was the number established by the need (set by Rove) to insulate Bush from the charge that he would be the first president since Hoover to preside over job loss. The forecast was arrived at by dividing 2.2 million by (10/12).
Posted by: Bob H on February 13, 2004 07:40 AMAt last it is clear how the Bush administration reached such a large jobs number. They added in all the jobs they plan on outsourcing to India to their calculation of US jobs.
Posted by: bakho on February 13, 2004 02:22 PM"We're not highballing the employment growth forecast," various senior administration officials who have demanded anonymity claim to various reporters. "Why would we create a forecast that we are unlikely to meet, and have to face bad news for the rest of the year?"
Well, presumably for the same reasons they are demanding anonymity--obviously the political influence of the WH extends to these cowards.
Or are we to believe that they face severe penalties for not meeting forcasts? Loss of credibilty? I know --their jobs will be out-sourced...
IMHO, beating the 'improving employment growth' drum to support the idea of a recovering economy is bogus. It ignores the employment shifts away from good paying jobs that provide discretionary income. So I expect to see a continuation of weak demand despite these "improving employment" statistics. Despite the WH tax cuts to refresh the consummer. And despite the GM lottery. And now that every fool has returned to the stock market, despite the lower mortgage rates.
The march of The Fall in the Standard of Living has started folks.
George Soros,
Please register people to vote.
TV ads are not enough. What is needed is door to door, personal explanation that you *do* make a difference, stuff.
TV might be useful, right *now* to enroll people in the door-to-door organizing in the month before election day.
Thought: can the Clark Web organization be turned to this? Obvious doubt: they couldn't produce for Clark, so why would one think they could produce for voter registration?
Can anybody refer me to a good smart sociologist who has useful real-world thoughts about why Americans don't vote?