White House: 3.8 million new jobs
Bush expects 320,000 new jobs per month, or 3.8 million, in 2004, not 2.6 million as first reported.
February 10, 2004: 12:02 PM EST
By Mark Gongloff, CNN/Money Staff Writer
NEW YORK (CNN/Money) - The White House forecast for job growth this year is even more optimistic than it first appeared -- a source says the Bush administration expects about 3.8 million new jobs in 2004, as opposed to the 2.6 million widely reported on Monday.
A White House source said Tuesday the President's Council of Economic Advisers expects an average of about 320,000 new jobs to be created every month in 2004, or about 3.8 million in total.
That forecast is significantly different than the one implied by the Economic Report of the President, released on Monday, which implied growth of about 5 million jobs this year. The implied job growth was reported as 2.6 million on Monday by several news organizations.
The new 3.8 million forecast reflects the impact of lower-than-expected payroll growth in December of 2003.
Though the economy has not consistently added 320,000 jobs per month since 1994, and most economists don't expect that kind of job growth this year, the White House source said the forecast was not unreasonable. The forecast assumes a 2.9 percent growth rate in payrolls, which would still be slower than payroll growth in the mid-1990s and the late 1980s.
Still, the White House source acknowledged that productivity growth would have to slow fairly dramatically in order for its forecast to come true. Driven by technological innovation, productivity, a measure of output per worker hour, rose 4.9 percent in 2002 and 4.2 percent in 2003.
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The White House source said its new forecast assumes that productivity growth will slow to a 1.5-percent pace this year and in 2005.
Non-farm payrolls grew by just 112,000 jobs in January, the Labor Department said last week. After revisions to prior months' data, January's payroll growth was the biggest in about three years, but was lower than most economists' forecasts.
The White House has made several optimistic projections about job growth in the past. A February 2003 report by the Council of Economic Advisers in support of Bush's tax-cut proposal included a chart that appeared to indicate the White House expected the economy to grow about 300,000 new jobs every month beginning in July 2003.
Separately, in the 2003 Economic Report of the President, the White House again implied payroll growth of more than 300,000 new jobs per month.
The White House says the chart it issued in February 2003 was inaccurate and that it actually expected job growth of just more than 200,000 per month in 2003, a prediction stated by Treasury Secretary John Snow late last year. In any event, those predictions have not come true.
It was reported on Monday that the White House expected job growth of 2.6 million in 2004, but that arose from a misinterpretation of a chart used in the Economic Report of the President, released yesterday, the White House source said. That chart, in fact, implied job growth in 2004 of more than 5 million jobs -- a rate of job creation not seen since World War II.
But the White House source said that chart used old data that didn't take into account weaker than expected job growth in December 2003. Using new data, the expected rate of job creation is much lower -- though still among the most robust job growth in post-War history. |
