• JOBS Lucky for Santa JOBS Lucky for Santa AMERICA, HOME TO NEARLY 300 million people, managed to produce only 1,000 new jobs last month despite healthy growth in economic production. It would seem that the only people hired in
• JOBS Lucky for Santa
JOBS Lucky for Santa
AMERICA, HOME TO NEARLY 300 million people, managed to produce only 1,000 new jobs last month despite healthy growth in economic production. It would seem that the only people hired in December were shopping-mall Santas.
The American economy grew at an 8 percent annual rate from July through September. Economists think it’s still growing at about 4.5 percent. Such healthy growth rates usually are followed by healthy growth in jobs. At this point, we ought to be seeing job growth of 200,000 a month, economists say. But since August, the nation’s job count has grown by only 56,000 per month, on average. That’s a third of what we need just to match the growth in population.
The danger here is this: Consumers don’t spend as much when they’re worried about jobs. John Q. Worker is spending rather freely at the moment, but if he gets the job jitters he’ll shut his wallet and the whole economy will feel his pain.
We’re seeing signs of worry. Last month, about 300,000 people bailed out of the work force. That’s why the unemployment rate fell to 5.7 from 5.9. You’re not counted as unemployed unless you’re actively looking for a job.
Why such slow job growth? There are two possible reasons – one rosy, one thorny.
The rosy scenario: Employers are just being cautious, says economist Patrick Faeron of A.G. Edwards Inc. Employment normally lags economic recovery somewhat. After three years in economic limbo, bosses want to make sure good times are really rolling before they hire again.
The thorny scenario: We’re thinking our way out of jobs. Productivity has been rising at a fantastic rate of more than 5 percent a year for two years. We can produce more stuff with fewer people.
If productivity is the driving force here, then much of the gain from economic growth may show up in corporate profits, rather than workers’ paychecks. Corporate profits were up 17 percent last year, but wage gains have slowed and are now beneath inflation.
Both scenarios are probably playing out at once. Economists expect the rosy scenario to win out eventually. They say that the American economic engine is now revving so fast that it is bound to produce more jobs soon. If they are right – and they probably are – then more of the gains from productivity and economic growth will land in John Q’s wallet as demand for his labor rises. But it will be a slow process.
The frustrating thing is that there’s not much we can do but sit and watch. The Federal Reserve already has interest rates at the lowest level since Sputnik. Uncle Sam is spending money like he owns a mint (which he does). Government economic policy is pedal-to-the-metal.
Among those watching closely is President George W. Bush. There are still 2.3 million fewer jobs in America than when he took office. If he can’t erase that number, voters may send him to the unemployment line.
St. Louis Post-Dispatch
