One Good Month


At last, a favorable surprise on jobs: estimated payroll employment rose 308,000 in March, above almost everyone's expectations. You can't blame the administration for trying to play up the good news, and for being dismayed when the sound of popping Champagne corks was drowned out by the crackle of gunfire. But has the economy, after so many false starts, finally started to deliver?

For perspective, it helps to remember what solid job growth looks like. During Bill Clinton's eight years in office, the economy added 236,000 jobs per month. But that's just an average: a graph of monthly changes looks like an electrocardiogram. There were 23 months with 300,000 or more new jobs; in March 2000, the economy added 493,000 jobs. This tells us not to make too much of one month's data; payroll numbers are, as economists say, noisy. It also tells us that by past standards, March 2004 was nothing special.

And we should be seeing something special, because our economy should be on the rebound. Bad times are usually followed by big bouncebacks; for example, last year long-suffering Argentina had the fastest growth rate in the Western Hemisphere (8.7 percent!), not because of the excellence of its economic policies, but because it was recovering from a severe slump.

America hasn't had an Argentine-level slump, but we have a lot to recover from. After three years of lousy job performance, we should be seeing very big employment gains and even after last month's report, we're not. It would take about four years of reports as good as the one for March 2004 before jobs would be as easy to find as they were in January 2001.

Of course, we can hope that the March numbers are just the beginning of a torrent of good news. But the straws in the wind aren't wildly encouraging. Weekly first claims for unemployment insurance are down but they're still above the 2000 average, and job growth in 2000 barely kept up with population. Average weekly hours, sometimes a clue to future hiring, fell in March in fact, they fell so much that total hours worked declined even as the work force increased.

These indicators suggest that the odds are less than even for job growth between now and the election that will match or beat the Clinton-era average, let alone deliver the job boom we both need and have a right to expect after three bad years. Which brings us to politics.

Leaving the details for another day, it's pretty clear what John Kerry's economic philosophy will be. He's surrounding himself with advisers closely tied to Bill Clinton, and even more closely tied to Robert Rubin, the legendary former Treasury secretary. In office, we can surmise, Mr. Kerry would follow a Rubinesque strategy of bringing long-term budget deficits under control through a mixture of tax increases for upper-income families and spending restraint. No doubt he would move slowly on deficit reduction as long as the economy remained weak, but his advisers would tell him, as Mr. Rubin told Mr. Clinton, that responsible long-run budget policies are good in the short run, too, because they help keep interest rates low.

George Bush has, of course, tried to be the anti-Clinton in all things. His advisers rejected Rubinomics and hearkened back to Reaganomics, insisting that long-run tax cuts, never mind the effect on the budget deficit, are the key to growth. For three years, they've had nothing but red ink to show for their efforts. Now they've had one good but not great month.

In short, this year's election will be a contest between a candidate who advocates a return to economic policies that were associated with eight years of very solid job growth, and one who advocates continuation of policies that have, after three years, yielded exactly one good monthly jobs report. I know: Mr. Clinton doesn't deserve all or even most of the credit for the good times on his watch, and Mr. Bush doesn't deserve all the blame for the bad times on his. Still, on the face of it there's nothing to recommend Mr. Bush's approach. But will voters see it differently?

My guess is no. If the election is driven by economics at all which seems doubtful right now, with the debacle in Iraq accelerating it will reflect the job situation on the ground, which remains grim.

Originally published in The New York Times, 4.9.04