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EducateWorthington.org

The 912 Project - Glenn Beck

912 Group of Central Ohio

Please let me know if you'd like your link added

[PEACE TIME]

First lets put things in perspective. President Clinton inherited a strongly rebounding PEACE TIME economy ala Ronald Reagan, he then raised taxes, stalled growth, turned the Congress over to the Republicans, cut taxes and signed the Contract With America, signed NAFTA, and the economy boomed. Sorry Bill, it was the Republican agenda, not your agenda of Socializing Medicine and don't ask don't tell. Then after 8 years of neglecting National security and corporate oversight, George Bush takes office.

1. The economy is rapidly slowing into recession
2. The Fed is bursting the Equity/stock market bubble
3. Corporate scandals hit the headlines, revising the earnings reported during the Clinton years.
4. All this before George can sign his first tax cut.
5. The economy begins to pick up steam.
6. 9/11 hits and throws the economy for a loop
7. We have to go to war in Afganistan
8. We have to go to war with Iraq to return the credibility of the UN and enforce Resoultion 1441
9. The second tax cut passes, we win the war in Iraq, and the econmy and stock market boom.
10. More people are holding jobs than at any other time in American history.
11. NAIRU is 5.5% - 6%, current unemployment rate is 5.6, near perfect.
12. Bill Clinton created a near inflationary environment diving the unemployent rate to an unsustainable low rate, so low the Feds increased rates to slow the economy. We are simply reverting to the mean, and are exactly where we should be, 5.6% unemployment.

Here are the statistics:

George Bush inherited an economy slipping into recession with increasing unemployment. As the chart proves, adjusting for the damage done by the recession, the unemployment rate is lower than from when the recession ended. Unemployment is sharply decreasing since the tax cuts have taken place.

http://data.bls.gov/servlet/SurveyOutputSe...ame=LN_cpsbref3

The civilian labor force has increased greatly over the last 3 years, so while the unemployment rate is decreasing, more people are available to work.
Essentially, using unemployment as a key figure hides the fact that in an economy where the labor force is growing, you can create jobs and still have the unemployment rate go up.

http://data.bls.gov/servlet/SurveyOutputSe...ame=LN_cpsbref1

Household survey.  The sample  is selected  to reflect the entire
civilian noninstitutional population.  Based on responses to a series of
questions on work and job search activities, each person  16 years and over
in a sample household is classified as employed, unemployed, or not in the
labor force.

Current Level 138,566,000 Employed

ftp://ftp.bls.gov/pub/news.release/empsit.txt

Jan 2001 Level 135,999,000 Employed

ftp://ftp.bls.gov/pub/news.release/Histor...t.02022001.news

That proves that 2.5 million jobs have been CREATED since George Bush took office. More Americans hold jobs today than at any other time in history.

Where a the job losses? Cherry picking the statistics, Liberals choose Non-Farm Payroll which has the manufacturing jobs. BTW, these jobs are leaving because of unionization and Bill Clinton signing NAFTA, not because of teh rebounding economy President Bush has given us. No matter how strong the economy, these jobs are going to leave. Unions simply make our industries uncompetative. The falling dollar however has greatly slowed the exidus.

The number of persons belonging to a
union fell by 369,000 over the year to 15.8 million in 2003.  The union
membership rate has steadily declined from a high of 20.1 percent in 1983,
the first year for which comparable union data are available.  Some
highlights from the 2003 data are:

http://www.bls.gov/news.release/union2.nr0.htm

Industry Payroll Employment (Establishment Survey Data)
   
   Total nonfarm payroll employment increased by 112,000 in January to 130.2
million, seasonally adjusted.  Since August, payroll employment has grown by
366,000.  Retail trade and construction added jobs in January on a seasonally
adjusted basis.  Manufacturing job losses continued, but at the slower pace
that has prevailed in recent months.  Employment in temporary help services
edged lower, following 8 months of gains.  (See table B-1.)

http://www.bls.gov/news.release/empsit.nr0.htm

Non-Farm Payroll Dec 2003 130,043,000

http://www.bls.gov/news.release/empsit.nr0.htm

Non-Farm Payroll Jan 2001 132,129,000

ftp://ftp.bls.gov/pub/news.release/Histor...t.02022001.news

As you will note, this is where the 2 million jobs lost statistic comes from. They are playing on the fact that the public won't know the difference between a gross and net number. There has been a gross loss of manufacturing jobs, but a net gain of total jobs. While we may have lost 2 million manufacturing jobs due to their own fault and unionization, there has been 2.5 million + 2 million = 4.5 million jobs created (to show 2.5 million gain, you must first fill the 2 million jobs lost, and then add 2.5)  for a net gain of 2.5 million Jobs created overall. Once again, more people are working today in America than at any other time in its history.

Lastly, productivity and GDP has been surging. The economy has never been larger than it is today. So even if there aren't more people working, our per capita GDP is up, and on average America is much richer. Lastly, incomes have been up every year under Bush.

Current-dollar GDP

Current-dollar GDP -- the market value of the nation's output of goods and services -- increased 5.1
percent, or $139.3 billion, in the fourth quarter to a level of $11,246.3 billion.  In the third quarter,
current-dollar GDP increased 10.0 percent, or $260.3 billion.

Personal income increased $18.8 billion, or 0.2 percent, and disposable personal income (DPI)
increased $18.5 billion, or 0.2 percent, in December, according to the Bureau of Economic Analysis.
Personal consumption expenditures (PCE) increased $35.3 billion, or 0.4 percent.  In November,
personal income increased $31.9 billion, or 0.3 percent, DPI increased $27.7 billion, or 0.3 percent,
and PCE increased $42.0 billion, or 0.5 percent, based on revised estimates.


In the fourth quarter, productivity increased 1.8 percent in the
business sector following an 8.7-percent increase (as revised) one quarter
earlier (seasonally adjusted annual rates).  In nonfarm businesses,
productivity also grew more slowly in the fourth quarter, 2.7 percent, than
it had one quarter earlier, when it rose 9.5 percent.  On an annual average
basis, productivity rose 4.3 percent in the business sector and 4.2 percent
in the nonfarm business sector.

Civilian Labor Force (Employed and Unemployed) is at an all time high.

http://data.bls.gov/servlet/SurveyOutputSe...ame=LN_cpsbref1

Non-Farm Payroll shows a dip, due to loss of Manufacturing jobs, which has been in place for 30 years.

http://data.bls.gov/servlet/SurveyOutputSe...ame=CE_cesbref1

Profitibility has been surging, which increases GDP per capita, but will slow down employment growth

http://data.bls.gov/servlet/SurveyOutputSe...ame=PR_lprbrief

GDP is at an all time high, our economy has NEVER been larger

Chart
http://www.bea.gov/briefrm/gdp.htm

Table
http://www.bea.gov/briefrm/tables/ebr1.htm

The Top 20 Boom Towns

In these cities, the growth is back. America's 20 hottest job markets, and why they need you.

http://www.business2.com/b2/boomtowns/full...,19491,,00.html

Fair and Balanced: Here is what the NY Times has to say about the issue. My problems are these:

1. The GDP is at an all time high, so if we haven't created jobs, we are doing a lot more with less, and that ain't all that bad.

2. Jobs always lag economic rebounds, but eventualy catch up.

3. Nothing the Democrats propose would have resulted in a better job market and economy. Considering the last person that raised taxes and balanced the budget to combat a collapsing economy and stock market was Herbert Hoover.

4. President Bush followed a period of extraordinary low unemployment ala stock market bubble, in fact Greenspan raised rates because he feared inflation due to the extraordinarily low unemployment rate . The unemployment rate is below the long run average, less than half of what some parts of Europe have, and is about the level I was taught was the desired natural rate of unemployment. Unemployment is simply returning to the norm, after a Y2K and telecommunications deregulation boom drove the unemployment rate to unusually low and unsustainably low rates.  Believe it or not, zero unemployment is not a good thing, and lower isn't necessarily better. The current level sustains strong economic growth, rising incomes, monthly new jobs, low inflation, and increasing productivity. That is a utopia, not something to fear.

Economic View: Two Tales of American Jobs

February 22, 2004
 By EDMUND L. ANDREWS

Washington

FOR more than a year, Bush administration officials and Republicans in Congress have seized on an intriguing statistical puzzle to suggest that job creation in the United States may be much stronger than it appears at first glance.

The puzzle is the enormous divergence between the two
surveys that are used by the Bureau of Labor Statistics to measure job creation and unemployment. The payroll survey, which is based on a monthly poll of 400,000 employers, shows a loss of more than two million jobs since 2001. The household survey, based on questions posed to people in 50,000 households, shows an increase of more than 500,000 jobs over the same period.

If the payroll survey is correct, Mr. Bush is on track to
be the first president since Herbert Hoover to complete a
term in office with fewer jobs than when he started. If the household survey is correct, Mr. Bush can claim credit for creating jobs despite the blows of a recession, terrorist attacks and two wars.

The household survey also seems to support a political
theory: that many people dropped from the company payrolls
are not unemployed but rather self-employed. While the
payroll survey suggests economic malaise, the household
survey implies entrepreneurial energy.

"The household survey shows that we're at an all-time high
in employment,'' said Senator Don Nickles, Republican of Oklahoma and chairman of the Senate Budget Committee, at a hearing this month. "It shows that, at least if you look at this trend, the employment situation has improved rather substantially.''

Administration officials are more cautious.

"At this
point, the gap between the payroll and the household data continues to be a puzzle,'' said N. Gregory Mankiw, chairman of the White House Council of Economic Advisers, in a speech this month. But, he added, the number of self-employed workers has risen by 326,000 in the last three years and the "extent of self-employment has changed as the economy has changed.''

Unfortunately for the optimists, the Federal Reserve has
just thrown cold water on the household data. It concludes
that the gloomy payroll data is essentially accurate and
that the household survey is probably off base.

"I wish I could say the household survey were the more accurate,'' Alan Greenspan, the Fed chairman, said in his testimony at a House hearing on Feb. 11. "Everything we've looked at suggests that it's the payroll data which are the series which you have to follow.''

To test the self-employment theory, the Fed adjusted the household survey by taking out all the kinds of workers who do not show up on the payroll survey - self-employed people, but also farm workers and family workers in family-run companies. Even then, Mr. Greenspan said, the discrepancy remains large.

The Fed's conclusion was that the household survey's
results have been inflated by overestimates of population growth.

Because the household survey is a sample, the Bureau of
Labor Statistics infers the total change in jobs by
multiplying the ratio of employed to unemployed workers in
the household survey by its estimate of the total
population. If the population estimate is too high, the estimated number of jobs will also be too high.

THE Bureau of Labor Statistics bases its population
estimate on the 2000 census, but it updates that estimate yearly with data on births, deaths and immigration. Immigration numbers are largely guesswork, however, because so much immigration is illegal. Fed officials suspect that the immigration estimate is inflated, because it fails to reflect tighter immigration controls after Sept. 11, 2001, as well as declines caused by the economic slowdown.

Indeed, the Bureau of Labor Statistics lowered its
population estimate in January. Plugging the new estimate
into the previous household surveys, the bureau found
nearly half the apparent increase in jobs during the last
three years vanished.

Not content, Mr. Greenspan also devised a "synthetic'' population estimate by crossing the household survey's ratio of employed workers to work force data in the unemployment insurance system. The results? "A significantly slower pace" of population growth, according to the Fed chairman.

The good news for the job market is that both surveys are
now pointing to increases in employment. The bad news is
that, compared with previous economic recoveries, both
measures suggest that job growth remains well below par.

http://www.nytimes.com/2004/02/22/business...tml?ex=10786292
86&ei=1&en=20982b802ec058c9
 

This makes my point. The NAIRU is 7%, that is the target level for a non inflation rate of unemployment. President Bush has it over a full 1% below that. Just because President Clinton want to play Russian Roulette with inflation and the economy doesn't mean President Bush should join the game.

According to the regression line, NAIRU (i.e., the rate of unemployment for which the change in the rate of inflation is zero) is about 7 percent.

http://www.econlib.org/library/Enc/Phillip....html#chart%201

Have the Tax Cuts Saved America from Eurosclerosis?
http://www.heritage.org/Research/Taxes/BG1702.cfm

Expected Inflation and the Natural Rate of Unemployment
http://www.j-bradford-delong.net/multimedi...ia/PCurve2.html

More evidence President Bush is right on target. He has unemployment right in the sweetspot of unemployment.

"That 5.5 to 6 percent consensus is easily explained: it's where the actual unemployment rate is. And that is usually been true: the estimated NAIRU tracks actual unemployment.
http://www.huppi.com/kangaroo/L-chinairu.htm
 

Funding for Veterans up 27%, But Democrats Call It A Cut
Money for Veterans goes up faster under Bush than under Clinton, yet Kerry accuses Bush of an unpatriotic breach of faith.

 http://www.factcheck.org/article.aspx?docID=144

 

[The Facts Show Increase of Jobs Under Bush]

The Facts Show Increase of Jobs Under Bush

Paige McKenzie, NewsMax.com
Wednesday, Feb. 25, 2004

The media and Democrats keep repeating it over and over: "2.3 million jobs lost" since President Bush took office. His could be the worst job record since before World War II, they claim.
One little problem: It's not true.

Not only has there been no net loss of jobs during the Bush administration, there has been a net gain, even with the devastation of 9/11. At least 2.4 million jobs have been created since the president took office, 2 million of those in 2003. The gains more than offset the losses.

While Democrats continue to beat their election-year drums about outsourcing, manufacturing losses, unemployment and slow growth in employment, America’s economy has been steadily creating jobs.

At least 366,000 jobs have been created in the last five months, over 100,000 of those in January, White House press secretary Scott McClellan has noted. And though the eight-month recession “officially” ended in November, economic indicators are surprising economists and pointing toward a take-off in the recovery.

The signs:


The 5.6 percent unemployment rate is the lowest in two years and below the average of the 1980s (7.3 percent) and '90s (5.8 percent), and still continues to drop.

The nation's economic output revealed the strongest quarterly growth in 20 years. The data for the fourth quarter of 2003 show that the civilian labor force rose by 333,000, while the number of unemployed in the labor force dropped by 575,000. Even better, the number of so-called discouraged workers declined in December.

Consumer spending grew between 4 percent and 5 percent last year, and real hourly earnings rose 1.5 percent. Real earnings have risen over the last three years.

Exports doubled to 19 percent in the fourth quarter, compared to less than 9 percent in the third.

The number of American workers is at an all-time high of 138.5 million, a level never before attained in U.S. history.

Jobless claims are 10 percent below the average of the last 25 years and still falling.

Hiring indices are up, even in manufacturing.

Productivity growth is extremely high.

Now the doomsayers are criticizing the validity of the unemployment rate, which at 5.6 percent does not fit their gloomy story.


Faulty Counting


The problem is the areas of biggest job growth are usually not even being counted at all.


Though 75 percent of jobs are created by small companies, according to the Small Business Administration, this sector’s entrepreneurial activity and the jobs it creates are left out by Washington bean counters when calculating official new job numbers.


The Bureau of Labor Statistics (BLS) does its Payroll Survey by phoning businesses to crunch the number of jobs that have been gained or lost. This is where Democrats grabbed onto their lifeline, the 2.3 million figure. Look only at the Payroll Survey, and there has been a gain of only 522,000 jobs since Bush took office.

But here’s the rub. The Household Survey is used to determine the unemployment rate and accounts for those who are self-employed, and small emerging businesses that might be overlooked by the Payroll Survey. But the number of U.S. firms isn’t static, and the "fixed list" used by the BLS for phoning established businesses does not reflect new entrepreneurial activity.

People are called at home and asked if they have jobs, or if they are in the market for a job. In contrast to the Payroll Survey, the Household Survey shows that 2.4 million jobs have been created so far during Bush's time in office.

As Economy.com writer Haseeb Ahmed recently wrote, "something is amiss in the [Payroll] survey."

Credit Where Credit Is Due

That’s not all. When doomsayers, and media spoiling for a fight in an election year, laughed at Bush’s prediction of 2.6 million new jobs this year, not everyone was scoffing.

Ahmed, Federal Reserve Chairman Alan Greenspan and others hardly batted an eye. Greenspan said it was "probably feasible" the economy would reach the Bush administration's forecast of adding 2.6 million jobs this year, provided growth continues and the productivity rate slows to more typically levels.

"I don't think it's 'Fantasyland,'" Greenspan said.

"I agree with him," said John Ryding, chief market economist at Bear Stearns. "I think that we will create 2.5 million, possibly more, jobs over the balance of the year."

Ahmed is convinced that "the revision patterns of the early-1990s recovery cycle" will be repeated. A total of 1.4 million job gains were revised upward to 2.9 million in the first 21 months after the end of the last recession, just after Bush Sr. was voted out of office.

Next: If elected, will John Kerry get credit for the jobs created under the Bush administration? And find out why so many workers are not being counted.

http://www.newsmax.com/archives/articles/2...25/171833.shtml

ECONOMY  
 
 Business-Spending Rebound
Boosts U.S. Economic Growth

A WALL STREET JOURNAL ONLINE NEWS ROUNDUP


The U.S. economy was a bit stronger in the fourth quarter than earlier projected as businesses boosted spending and inventories. Exports saw their largest increase since late 1996.

Gross domestic product, a measure of all the goods and services produced in the nation, increased at a 4.1% annual rate, the Commerce Department reported Friday. That was half its blistering 8.2% pace of the third quarter, but a solid performance nonetheless. In its original estimate a month ago, the government said GDP grew 4% during the fourth quarter.

Economists had expected the revision to show 3.7% growth, according to a survey by Dow Jones and CNBC.

"The capital-spending rebound is in high gear,'' said Ken Mayland, president of ClearView Economics.

That trend could bode well for job creation, said John Lonski, an economist for Moody's Investors Service. "The same forces that give direction to capital spending give direction to employment," he said, adding that it wouldn't be surprising if nonfarm payrolls were growing by 225,000 jobs a month by the end of 2004.
 
Business spending shot up 9.6%, a sharp increase from the previous estimate of 6.9%. In an especially encouraging sign that companies are feeling more confident in the staying power of the recovery, spending on equipment and software shot up 15.1%. But spending on nonresidential structures dropped 7.1%.

Another indication of optimism in the board room: companies enlarged their inventories by $14.9 billion, more than double the original estimate of a $6.1 billion increase. The change in inventories added 0.92 of a percentage point to GDP growth.

Real final sales of domestic product -- that is, GDP less the change in private inventories -- rose at a 3.2% annual rate. That figure was revised down from the originally reported 3.4% advance.

A sustained turnaround in capital spending by business is a key ingredient of an economic recovery. It was deep cuts to such spending that thrust the economy into a recession in 2001. The economy struggled mightily to achieve firmer footing and finally in the second half of 2003 managed to cast off its lethargy.

Exports jumped 21%, which was the largest increase since the fourth quarter of 1996. Imports advanced by 16.4%. The government originally reported those figures as increases of 19.1% and 11.3%, respectively.

Another key factor in the recovery is spending by consumers, which accounts for about two-thirds of economic activity. Such spending rose at a 2.7% annual rate, slightly higher than the first estimate of 2.6%.

Consumers' spending on durable goods, those meant to last at least three years such as cars, slipped 0.1%, revised down from a previously reported 0.9% rise. Spending on nondurables rose 5.2%, revised up from a previously estimated 4.4% increase.

Federal-government spending increased 1.6%, more than double the initial estimate of 0.7%. State and local government spending climbed 0.4% in the fourth quarter, less than half the previously reported 0.9% increase.

Inflation rose slightly more than previously thought. The price index for gross domestic purchases rose at a 1.1% rate; it was first estimated as climbing 1%. The price index for personal consumption went up at a 0.7% rate.

In all of 2003, the economy grew 3.1%, its best rate since 2000's 3.7%. Analysts expect solid growth in 2004. The National Association for Business Economics last week said its forecasters raised their estimate on the economy and predicted 4.6% expansion this year, up from a prior 4.5% projection. The panel also feels the outlook will improve for the job market, which has been sluggish with the economy's climb.

Will Consumers' Moods Improve?

A separate report showed consumer sentiment fell sharply in February. The University of Michigan reported Friday its gauge of consumer sentiment dropped to 94.4 from 103.8 at the end of January. The drop in the final reading for February was presaged by the unexpectedly weak 93.1 recorded midmonth, so economists weren't really caught off guard. Measures of both current conditions and expectations for the future both declined, with the latter tumbling nearly 12 points to 88.5.

Several economists speculated that perhaps the January surge was simply an anomaly, and that it is now back in a more reasonable range. Most forecast a rebound, particularly as tax refunds start flowing in. However, some worry that consumers may grow more cautious if the labor market doesn't begin to show more of an improvement in the coming months.

Chicago Factory Activity Slows

A third report, on manufacturing in the Chicago region, showed that overall activity declined in February. The Chicago branch of the National Association of Purchasing Managers reported its business barometer slipped to 63.6 from 65.9 in January. Readings above 50 indicate expansion, while those below that mark point to contraction.

Measures of production, new orders, and prices paid declined, as inventories accumulated. However, a gauge of employment in the sector climbed to 54.8, its highest level since April 1998, from 48.3. The manufacturing sector has been among the hardest hit by layoffs and the slowest to resume hiring.

The Chicago barometer is among the regional readings that are closely watched ahead of the national report on manufacturing from the Institute for Supply Management, which is due out on Monday.

Write to the Online Journal's editors at newseditors@wsj.com7


Note how GWB inherited a recession as demonstrated by the negative numbers to the left.

Unemployment rate is below 6%, and note how it was going into a sharp increase when GWB took office.

The NASDAQ had dropped 40% by the time GWB took office.

Greenspan: Productivity stifles jobs
 
Fed chief sees sluggish employment; says China currency moves might not slow cheap imports.
February 27, 2004: 11:35 PM EST
 
STANFORD, Calif. (Reuters) - Federal Reserve Chairman Alan Greenspan said Friday that U.S. job growth was "very sluggish" and unlikely to change until strong productivity growth slows, and cautioned that a revaluation of China's currency might do little to stop the flow of cheap-labor goods to the U.S.

http://money.cnn.com/2004/02/27/news/econo...dex.htm?cnn=yes

Great Economic Website for Power Point Presentations

More Work Is Outsourced to U.S.
Than Away From It, Data Show

By MICHAEL M. PHILLIPS
Staff Reporter of THE WALL STREET JOURNAL


WASHINGTON -- Despite the political outcry over the outsourcing of white-collar jobs to such places as India and Ghana, the latest U.S. government data suggest that foreigners outsource far more office work to the U.S. than American companies send abroad.

The value of U.S. exports of legal work, computer programming, telecommunications, banking, engineering, management consulting and other private services jumped to $131.01 billion in 2003, up $8.42 billion from the previous year, the Commerce Department reported Friday.

Imports of such private services -- a category that encompasses U.S. outsourcing of call centers and data entry to developing nations, among other things -- hit $77.38 billion for the year, up $7.94 billion from 2002. Measuring imports against exports, the U.S. posted a $53.64 billion surplus last year in trade in private services with the rest of the world.

Under government accounting, when a U.S. company opens a technical-support center in India that handles inquiries from the U.S., that is considered a U.S. import of services. When a U.S. lawyer in New York does work for a German auto company or a New York investment banker works on a deal for a Japanese company, that is an export of services.

 
The numbers suggest that congressional efforts to restrict outsourcing by U.S. companies may backfire, if they provoke retaliation by U.S. trading partners. Economists also say that U.S. service exporters -- insurers, for instance -- might lose some competitive edge if they can't use foreign suppliers for call centers or other back-office operations.

"If you try to protect and limit outsourcing, you will have a negative impact on the exports of service activities, which generate a lot of jobs," said Catherine Mann of the Institute for International Economics, a Washington policy research group.

Despite the developments in services trade, the current-account deficit, the most inclusive measure of the U.S. trade gap, hit another record in 2003, reaching $541.8 billion, or 4.9% of the gross domestic product, up from $480.9 billion in 2002, or 4.6% of GDP. The increase came even though the deficit for the final three months of year narrowed to $127.5 billion, from $135.3 billion in the third quarter.

The white-collar trade issue has risen to the top of the political agenda and has led to legislative proposals to prevent outsourcing, or expose it when it occurs. Sen. John Kerry of Massachusetts, the likely Democratic presidential nominee, wants U.S. companies to reveal to callers that their telephone inquiries are going overseas. Others in Congress legislation to restrict government contractors from sending work abroad.

Politicians have largely ignored the jobs created in the U.S. when Americans sell white-collar services to foreign customers.

"I can understand why members of Congress are responding to what a lot of constituents feel, and I can understand why their constituents feel that way because there has been so much publicity about the potential loss of jobs," said J. Robert Vastine, president of the Coalition of Service Industries. But, he said, "a lot of it is hype, and one of the big problems in this debate is there hasn't been enough analysis."

In addition to hiring more U.S. businesses to provide services, foreigners doubled last year the amount of money invested in U.S. companies, plants, offices, stores and other facilities. That foreign direct investment swelled to $81.98 billion in 2003, from $39.63 billion in 2002, the government said.

Write to Michael M. Phillips at michael.phillips@wsj.com3

 URL for this article:
http://online.wsj.com/article/0,,SB1079198...0754591,00.html


 
 

QUALITY OF DATA, NOT JOBS, IS POOR

*************************
Here are bullet points followed by the full text.
1)  In my opinion, the quality of jobs isn't the issue, but rather the quality of the jobs data.
2)  Despite the fact that first-reported payroll employment provides an extremely distorted view of the labor market, both policy officials and investors make important decisions based on this flawed information.
3)  The distorted employment data may even have an impact on who gets to sit in the Oval Office at the White House.
4)  My hunch is that the economy is once again generating more new jobs than shown by the Labor Department's first reports. Interestingly, this happened every year from 1992 through 2000, with the upward revision averaging 609,000 per year.
5)  Despite the tendency of first-reported data to underestimate employment growth during good times, I would not be surprised by a surprisingly strong payroll jobs report over the next few months given the uniformly upbeat readings coming from all the other labor market indicators.
*************************
Following the release of February's disappointing payroll employment report, the naysayers observed that even the few jobs that have been created in recent months were low-paying and temporary ones. In my opinion, the quality of jobs isn't the issue, but rather the quality of the jobs data. The difference between the first-reported and subsequently revised change in monthly payroll employment data can be huge, frequently as large as 100,000 or more, with a strong tendency for first-reported data to seriously underestimate the revised data when the economy is expanding. I believe this occurs because the surveys and models used by the statisticians in the U.S. Labor Department to estimate payroll employment every month don't do a good job of measuring job growth among small businesses.

In my opinion, we need to increase the Labor Department's budget to improve the accuracy of the first-reported employment data. Despite the fact that first-reported payroll employment provides an extremely distorted view of the labor market, both policy officials and investors make important decisions based on this flawed information. Indeed, the Federal Reserve's policy committee was probably set to raise interest rates at the March 16 meeting, but held off because "Although job losses have slowed, new hiring has lagged," according to the statement released by the Fed. Protectionist sentiments are gaining strength as Congress considers legislation to discourage outsourcing to "protect" American jobs.

The distorted employment data may even have an impact on who gets to sit in the Oval Office at the White House. If the recovery remains seemingly jobless, then President George W. Bush might lose his bid for a second term just as his father lost it in November 1992 when Bill Clinton ran on "It's the Economy, Stupid." Ironically, the employment situation turned out to be much better than widely perceived back then. The so-called jobless recovery of the early 1990s was a statistical illusion. As first reported, payroll employment rose only 423,000 during 1992. Subsequent revisions raised the number to 1,157,000--or 96,417 per month, on average, rather than 35,250 per month, on average. The 1993 total was subsequently raised from 1,637,000 to 2,785,000 net new jobs.

My hunch is that the economy is once again generating more new jobs than shown by the Labor Department's first reports. Interestingly, this happened every year from 1992 through 2000, with the upward revision averaging 609,000 per year. There were downward revisions of 519,000 and 579,000 for 2001 and 2002, respectively, suggesting that the first-reported data may also underestimate the weakness in the labor market during recessions. Last year, when the economy was recovering, there was another upward revision of 203,000, which could be increased again during the next round of "benchmark revisions," as more data become available from unemployment insurance tax records.

Despite the tendency of first-reported data to underestimate employment growth during good times, I would not be surprised by a surprisingly strong payroll jobs report over the next few months given the uniformly upbeat readings coming from all the other labor market indicators:

1) The latest comes from the quarterly Manpower Employment Outlook Survey. U.S. employers expect the seasonally adjusted hiring pace from April to June to be stronger than it has been since the first quarter of 2001. Of the 16,000 U.S. employers that were surveyed, 28% said they plan to increase hiring activity for the April-June period, while 6% expect a decrease in employment opportunities. Another 62% of employers foresee no change in hiring, and 4% are uncertain of their staffing plans. When the seasonal variations are removed from the data, the outlook for the second quarter is more positive than it was last quarter and is nearly twice as strong as it was last year at this time. This marks the third consecutive quarter of increased hiring activity.

2) Also encouraging is that the Manufacturing Employment Index compiled by the Institute for Supply Management jumped to 56.3 in February, the highest level since December 1987. It is highly correlated with the three-month change in factory payroll employment, which should soon expand if this relationship persists, as I expect.

3) Small businesses are also reporting that they may be hiring more workers according to a monthly survey conducted by the National Federation of Independent Business. The Labor Department uses a model rather than actual data on the new jobs being created by small firms and start-ups. The agency admits that its model may be missing something.

4) My upbeat assessment of the prospects for employment is also based on the recent drop in the number of persons receiving unemployment insurance benefits. During the week of December 27, 2003, there were 3,278,000 continuous claims. During the week of March 13, continuous claims were down by 274,000 to 3,004,000. The yearly percent change in payroll employment is highly correlated with the inverse of continuous claims. There is also an inverse correlation between payroll employment and initial unemployment claims, which fell to 341,500 during the week of March 20, the lowest reading since January 2001.  Over the past 52 weeks, initial claims totaled 20.6 million, which means that there is enormous turnover in our labor market, which increases the difficulty of counting everyone that finds a job.

Payroll employment was basically flat in February from a year ago. The relationship with continuous claims suggests that we should soon start seeing year-over-year gains of at least 1%. This implies annualized job gains of 1.3 million, or 108,000 per month. This is well above the 42,000 per month gains of the past three months. A very similar drop in the number of people collecting unemployment insurance occurred during late 1992. Coincidently, payroll employment growth jumped from zero to almost 2%.

I conclude that the first-reported payroll employment data are very poor quality data. I prefer the household employment data, which are based on a monthly survey of households rather than employers. Over the past 14 months from January 2003 through February 2004, household jobs rose 1.8 million, while payroll employment rose 57,000. Even so, the Labor Department warns that the 90%-confidence interval for the monthly change in household employment is on the order of plus or minus 290,000!
 

Outsourcing actually creates U.S. jobs, study finds
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Tech trade group says sending positions overseas will pay off; a Fed governor and the Treasury secretary agree. And a new book says some exported jobs are coming home.

By MSN Money staff and news services

Has outsourcing -- the practice of sending jobs to low-wage countries such as India and China -- been unfairly pegged as the culprit behind U.S. economic woes? A new study, a new book and an influential Federal Reserve governor think so.

http://moneycentral.msn.com/content/invest...xtra/P79592.asp
 

ECONOMY  
 
U.S. Payrolls Grew in March
At Fastest Pace in Four Years

By GREG IP
Staff Reporter of THE WALL STREET JOURNAL
April 2, 2004 4:54 p.m.

WASHINGTON -- Job creation jumped to a four-year high in March as the economic recovery finally filtered through to the long-suffering jobs market.

The Labor Department said Friday that nonfarm payrolls soared by 308,000 in March from February, the biggest monthly gain since April 2000, at the height of the stock-market bubble. It also revised upward the tally for January and February, showing total job creation in those months of 205,000 instead of the previously reported 118,000.
 
The March payroll gain blew past a consensus estimate that called for the addition of only 120,000 jobs. Read economists' and analysts' reactions to the employment report.

The unemployment rate, which is derived from a different survey than payrolls, rose a tenth of a percentage point to 5.7% as 179,000 people re-entered the labor force in search of jobs.

http://online.wsj.com/article/0,,SB1080912...,00.html?mod=zb