Reply #26: Doesn't look like republican sand to me.

[snippy]

I think job creation is unlikely to be as strong as Snow hopes. Bush may have the benefit of a better economy at election time, but it may continue to be a jobless recovery.

Even if economic growth continues, job growth is facing several headwinds. These include increasing productivity, globalization, foreign outsourcing, merger and acquisition activity, and the excess capacity which still exists with a lack of pent up demand to drive the creation of additional capacity. There are also a significant number of part time workers who will work increased hours. Plus, when the new overtime regulations go into effect employers will find it cheaper to work existing employees longer hours rather than hiring new employees. Add to these factors the fact that since the 1920's, republican presidents always have been bad for job creation.

Since the depression, not a single republican president has had a better rate of job creation than any democratic president. The highest rate of job growth under a republican was 2.2% per year during Nixon's time in office. The lowest rate of job growth under a democrat was 2.3% per year during Kennedy's time in office.

One other factor relating to unemployment is that discouraged workers will be returning to the labor market if economic growth continues. This will prevent the unemployment rate from declining as much as it otherwise would due to whatever job creation which occurs. The unemployment rate including discouraged workers and part time workers seeking full time work in December 2003 was 9.9%. This does not include under employed workers.

As for the fact that employment is a lagging indicator, remember that we are now in the tenth quarter of this recovery. Employment has indeed lagged but it does not lag forever. We may very well be near a peak in job creation within the next few months.

One final comment about the upcoming employment report for January which will be released on February, 6. It is very possible that it will show a large number of jobs created in January. However, much of the increase in jobs may be due to a statistical aberration arising from the "seasonal adjustment." The same statistical aberration may have understated the number of jobs created in December 2003.

The "seasonal adjustment" for December assumes that some new retail jobs are only temporary Holiday hiring and subtracts some number from the number actually reported. In January the assumption is that some of the decrease in retail jobs also are the result of temporary hiring so a smaller decline is assumed and reported. Some economists believe that this seasonal adjustment has been distorted since December, 2001 because of the effect on the economy of 9/11. There is not a consensus that this has occured. But, if the January jobs number is larger than expected, this may be an explanation.