Tepid economy seen in weak jobs data
WASHINGTON -- Payrolls barely rose in December, an indication the economy still lacks the steam needed to sustain job growth and could be a setback to President Bush's reelection hopes.
The Labor Department said yesterday that 1,000 new jobs were created last month, well below the 130,000 to 150,000 many economists had expected from the holiday shopping season. The December level was down from the 43,000 new hires in November, a figure revised lower from the original 57,000.
"This is a big surprise, not least of which for the White House," said Wayne Ayers, chief economist for FleetBoston Financial Corp. "It's hard to find any good news in these numbers."
The disappointing employment report supplied Democratic presidential hopefuls with ammunition in their bid to unseat President Bush. Though Bush's approval ratings have swelled recently on bullish economic data and corporate earnings reports, languishing employment levels continue to blight his record on the economy.
"Over the past couple of months, President Bush has all but declared `mission accomplished' on an economy that is still not generating jobs and that is losing manufacturing jobs each and every month," retired General Wesley K. Clark, said while campaigning in Little Rock, Ark. "I think it's time that George W. Bush loses his job so that we can put the American people back to work."
The United States has shed 2.3 million jobs in the last three years, Democrats stress. Bush is the first president to preside over a decline in employment during the first three years of his term since Herbert Hoover.
The report's one bright spot was the decline in the US unemployment rate to 5.7 percent, the lowest level in more than a year. Bush seized on the rate's decline in remarks before a meeting of women entrepreneurs at the White House. "I'm optimistic because I see things happening," he said. "Unemployment dropped today to 5.7 percent. That's not good enough. We want more people still working. But nevertheless, it is a positive sign that the economy is getting better."
Economists, though, said the drop masked the problems in the job market.
"Yes, unemployment fell," Ayers said, "but that's only because people dropped out of the work force altogether."
Economists were particularly surprised by the December decline in the number of retail jobs, considering that holiday spending drove retail sales up 4 percent in December.
Factory employment also declined, but at a much slower rate, extending a trend that began in the fall.
"We'll probably see a modest recovery in the first quarter of this year," said David Huether, an economist at the National Association of Manufacturers.
Commerce Secretary Donald L. Evans said the payroll data intensified the need for Congress to approve Bush's initiatives to enlarge the work force.
"The pace of December job growth reinforces the need to pass all the elements of the president's plan for job creation," Evans said. "Congress should make tax relief permanent and act with urgency on the rest of President Bush's jobs and growth agenda."
To end his first term with a net growth in jobs, Bush needs the economy to create 200,000 to 300,000 jobs each month to net the 160,000 or so needed to employ new entrants in the work force, according to economists. Since Bush's tax cuts were implemented in June, the economy has created 221,000 jobs, compared with the 1.8 million the administration estimated its tax cuts would create by the end of 2003, according to the Economic Policy Institute, a prolabor Washington think tank.
Economists blamed the weak employment figures on rising productivity rates. That makes the economy more efficient, even as it renders many jobs redundant. They also cited aggressive outsourcing -- increasingly of white-collar jobs as well as blue-collar work -- to countries with lower wages.
"Neither business nor potential employees have confidence in the economy," said Sung Won Sohn, executive vice president and chief economic officer of Wells Fargo & Co.
"Businesses are squeezed by intense competition from here and abroad with little pricing power."
Unless the United States sees payroll growth soon, China's trade surplus with America -- at $140 billion and rising -- could emerge as a centerpiece campaign issue. The Bush administration has so far refrained from pressuring China to stop manipulating currency rates to make its products less expensive in overseas markets, and the president's Democratic challengers are spotlighting the growing trade imbalance as a White House failure.
"In reality, economic growth will probably come in lower than 4 percent this year," said Peter Morici, a professor at the University of Maryland's Robert H. Smith School of Business.
"This is due to the drag of the trade deficit, which has its origins in Asian currency manipulation."
Stephen J. Glain can be reached at glain@globe.com.
