President Bush said in a speech the other day that the economy has created 5.1 million jobs since August 2003. This was an anecdote given to show the economy is healthy.
The adds up to 31 months of jobs reports not counting August 2003 or April 2006. 5.1 million divided by 31 months works out to an average of 164,000 jobs per month. I think remember hearing that average job creation in an expansion has historically run at about 200,000 jobs per month.
I also seem to recall hearing in several places that the economy needs to create 150,000 jobs per month just to stay in place. Is it possible that I have any of this correct? If I do that means actual new jobs created works out to 14,000 per month or a total of 434,000 new jobs.
On a different note Larry Kudlow said "poverty is no longer poverty in this country." This might be the single most insensitive thing I have ever heard from someone in the media. Wow!
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10 comments:
My favorite Kudlow moment was a day when GM announced a bunch of plant closing. He had quite a gleam of joy in his eye as he went on and on about the "gales of creative destruction" sweeping the land.
Terrifyingly, because I'm overweight both sectors, I hear he might have finally capitulated on energy and gold after trying to talk them down for years. Sell sell sell!
This gets back to the huge divergence between the jobs survey (weak) and the household survey (strong).
You quoted Bush speaking about the jobs survey. A lot of growth in consultants, small business, etc does not show up in the jobs survey data, but does show up in the household survey. This area has been very strong.
I think that is accurate. The economy is strong and the Fed is trying to slow things down. This is all represented in the household survey, housing, inflation, etc.
Large and even medium sized companies are outsourcing manufacturing, call centers, etc. I would not expect strong growth in the jobs survey for years to come.
Things are changing. Both large and small businesses will continue to coexist. But, growth will be off shore for big companies and in the US it will favor small and micro businesses.
As I have said before the household survey is smaller, but can not be wrong month after month after month. The strong 4.7% unemployment rate is not imaginary and neither is the weak jobs survey data over the last few years. Neither seem inaccurate to me, but if you listen to the “experts” it sure gets distorted a lot.
This is consistent with my buy Asia theme.
KL
KL
You may be right about the household survey but a portion of the 4.7% is due to reduced labor force participation.
If the household number is stronger why does bush talk about the job survey?
I can not explain a lot of what Bush speaks about, but my guess would be his critics want to focus on the weak number. Complex explanations do not make good sound bites so he responds by quoting a large number (simple explanation). This forces his critics into a complex explanation about how it is not big enough. In politics it frequently is the complex explanation that loses whether it is right or wrong.
Times change, wealth changes, population age changes, so participation rates will change as well. I'm sorry but you are going to have a hard time convincing me the economy is not strong and people are not doing well if MORE people can CHOOSE to not look for a job and there by lower the participation rate.
I know several people who have lost their job in the last year and those who needed a job never stopped looking for one until they found a job.
If housing or stocks drop I think the participation rate will increase. In the mean time I also know people who do not feel like they need a job that bad but they do golf a lot to pass the time.
Looking forward though I think ageing will tend to lower the participation rate.
Remember choosing not to participate in the job market was instituted by the Kennedy administration and has correctly stayed that way for decades. Current employment statistics are valid for comparison back to the early 1960’s
Basically I do not think you should become too dependent on a single number like the jobs data. You have to look at all the data. When you look at all the data both employment and the economy look good to me.
KL
If you lived in an old rust belt union city like I have you might have a different perspective. These semi -literate union people were so overcompensated for so long, that finally they're getting their comeuppance.
I'm 64 years old and all my life I saw these people by and large not only spend everything they made, but would go into debt to try to outdo one another buying adult toys and big houses. Very few were savers or investors nor did they encourage their children to get educated. In recent years their adult children now tell their fathers that if they hadn't pushed so hard they might not have lost their jobs and there might have been jobs for them as most either had to take jobs at subsistence wages here or in another part of the country.
The whole country by your reasonsing is insensitive whey they refuse to purchase products with $73 per hour labor compensation costs built-in.
Have you noticed that the kids that did Monday's homework Friday night are now in great shape and the kids who went out and got drunk Friday night are now in trouble? So, who's got the last laugh now-call it the revenge of the nerds, if you like, but I guess I'm being insensitive!
why in the world should the media be sensitive.
In reading your blog for a few months that's the silliest thing I've heard you say
The employment numbers are way understated. Since Bush took office in 2001 it is estimated that illegal immigration has added somewhere between 5,000,000 to 7,000,000 new jobs. Neither the establishment nor the household surveys pick up these jobs for obvious reasons. That adds about 100,000 per month on average over the past 63 months. Anectdotally, we have the lowest unemployment rate ever recorded here in our area and the local newspaper today just interviewed area businesses on the difficulty of adding new hires. I live in one of two areas in our state with the highest illegal immigration rate. Even illegal immigration is not enough for our labor market.
Alex,
thank you for the heavy lifitng
Ken,
I guess I'm silly
No, Roger. You don't have this wrong. You've obviously NEVER held a political postion before, however. According to the BLS, Bush's statistics are correct. He's just left out the 2.6 million jobs that have been lost since day one of his presidency during the recession. In other words, he's only added half as many jobs as he claims but is painting whatever picture sounds best for him. It's called Busholoitics.
Poverty in Africa is when you are unable to feed yourself. Poverty in the Western world is when you do not own a digital TV.
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