by J. Slavich | As employment increases, Bush comes closer to a second term.
Last week, the Labor Department reported that job growth accelerated in March to 308,000 new jobs. The 308,000 jobs created last month is the largest growth in a single month in the last four years. This was welcomed news for the nation, which has been looking for strong signs of an economic recovery. The new jobs led to a jump in the stock market and financial sector optimism suggesting large economic growth is around the corner.
But those who think the large job increase in March is the first sign of job growth have not been paying attention to the economy for the last few months. According to the Department of Labor, there has been positive job growth every month since September 2003. Since September, 759,000 jobs have been created. Although job growth has been slow to start, the most recent numbers show the possibility of tremendous gains in future months. Most new jobs were added in the construction industry, retail, healthcare, and education, but for the third straight month there was neither positive nor negative change in manufacturing jobs.
Along with the growth in jobs, the unemployment rate has also fallen over the last year. Since the unemployment rate spiked in June 2003 at 6.4%, it has now fallen to 5.7% in March. Although the drop has been relatively slow, it still is one more indicator that Americans are finding new jobs and that American companies are beginning to invest in new employees. The unemployment rate only measures those who are seeking employment and is found through a household survey. Thus, many economists see the measure of payroll jobs as a better indicator of the job market.
The growth in jobs has also created the prospect of the growth in consumer confidence. This prospect has led to optimism in the financial market. If consumer confidence is bolstered by the prospect of additional job opportunity, it will likely lead to a greater growth in consumer spending. Because consumer spending accounts for roughly 2/3 of the spending in the US economy, a boost in consumer spending would translate into growth for the economy.
All of this is good news but will not be very important unless job growth continues along a similar trend. A large decline in job growth or negative job growth will bring back thoughts of employment uncertainty, potentially nullifying the current economic upswing. Whether job growth is positive or negative in the next few months, the numbers will have an effect in two areas, the US economy, as already mentioned, and the upcoming election.
The changes in unemployment and the economy will play a huge factor in the upcoming US Presidential campaign. In different polls conducted in March by both the Associated Press and CBS/New York Times, the economy and jobs were cited as the most important issues in the upcoming election. Obviously, jobs are a major concern of the American public and could easily play a role in the election of the president.
Bush welcomed the news of the 308,000 jobs created last month. He cited his tax cuts as one of the important factors for creating more employment. For Bush and other Republicans, the link between more jobs and tax cuts is obvious. Temporary tax credits and cuts for small business and corporations have helped spur growth in the economy, allowing more companies to hire more employees.
If job growth continues, Kerry could be caught without a case concerning the economy and jobs. Recently, Kerry has been on the campaign trail pointing out the loss of jobs during the recession that occurred during the Bush presidency. Kerry seems intent on blaming Bush for losses in employment that were primarily a result of uncontrollable factors like the bursting of the technology bubble and the effect of terrorist attacks. In reaction to these problems during his presidency, Bush chose to cut taxes to help spur growth of US companies. If job growth continues as it has for the last six months, the public may be spared from hearing a large portion of Kerry’s whining.
As the election draws closer, job numbers will become more and more important. If US voters perceive the economy as continuing to recover strongly over the next few months, the Democratic Party will be hard pressed to find an issue confronting the incumbent President Bush.
Mr. Slavich is a sophomore majoring in International Relations.
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