Job market remains weak with only 21,000 new jobs created in February
miami.com
BY KEN MORITSUGU
Knight Ridder Newspapers
Posted on Fri, Mar. 05, 2004
WASHINGTON - (KRT) - The U.S. economy created only 21,000 jobs in February, falling short of economists' predictions and dimming the Bush administration's hopes that an early recovery of the job market would help the president's re-election bid.
The job figures, reported by the Labor Department on Friday, came in far below the 200,000-plus that would signal a healthy recovery. The unemployment rate remained at 5.6 percent.
The Labor Department also lowered its estimates for the previous two months, reporting that 97,000 jobs were added in January and only 8,000 in December.
The continued weakness in the job market renewed worries that the pick-up in economic growth that began last summer could peter out. Without the stimulus provided by more Americans getting jobs, consumer demand could falter.
The weakness also exposed Bush - who says his tax cuts will help create jobs - to a new round of Democratic attacks. A White House economic report last month had predicted that the economy this year would average 2.6 million more jobs than it did last year.
"Since the start of this recession, George Bush has promised the American people that new jobs are on the way," said Massachusetts Sen. John Kerry, who all but locked up the Democratic nomination this week. "But he's overpromised and underdelivered."
Kerry, in a prepared statement, offered voters an alternative: They can "give George Bush a new job, bring change to America and get our economy back on track."
White House officials tried to put a positive face on the numbers, noting that the economy has added jobs for six straight months. Since Bush's tax cuts took effect last summer, however, fewer than 300,000 new jobs have been created.
"The economy is strong and growing stronger. New jobs are being created," White House spokesman Scott McClellan said in Crawford, Texas. "But the bottom line is, there are still people hurting in this economy. There's more to do."
Labor Secretary Elaine Chao said the unemployment rate is low by historical standards.
"As the president has said many times, we're not going to rest until every American who wants a job can find one," she said.
Bush is banking on forecasts by many economists that job creation will pick up this year. The economy accelerated in the second half of last year, and forecasters expect growth to top 4 percent this year.
In the past, that pace has generated jobs as companies ramped up production to meet demand.
"The economy should be producing 200,000 to 300,000 jobs per month," said Sung Won Sohn, a Minneapolis-based chief economist at Wells Fargo bank. "Obviously, the relationship between economic growth and employment has broken down."
In part, new technologies mean fewer workers are needed. Also, entire departments such as accounting and customer call centers have been outsourced to specialty companies. They do the work with fewer workers - and sometimes send the jobs overseas.
Consumer spending remains strong, in part because of the tax cuts passed last year. But that effect is expected to fade once the income tax refund season is over. Then, consumers will need a new source of income growth. Typically, that's jobs.
"We really don't know how long we can keep this going," said Nigel Gault, an economist at Global Insight, a forecasting firm in Lexington, Mass. "What happens to the consumer in the second half of the year if we're still not creating jobs? There's a risk the consumer could fall away."
Stocks plunged initially on the jobs report, but then recovered. The Dow Jones industrial average finished up 7.55 points at 10,595.55. The tech-heavy Nasdaq slipped 7.48 points to 2,047.63.
Interest rates fell sharply, as the poor jobs report suggested that the Federal Reserve is unlikely to raise its key federal funds rate anytime soon. The rate on the 10-year Treasury note, which affects 30-year mortgage rates, dropped to 3.84 percent from 4.04 percent on Thursday.
The biggest job gains in February came in temporary help, which added 32,000 jobs. That suggests that companies aren't willing to hire full-time workers. Government payrolls added 21,000 jobs, mainly at the state level.
Construction led the losers, falling by 24,000 jobs. Harsh winter weather may have been partly to blame. America's factories lost jobs for the 43rd straight month, though the small decline of 3,000 jobs signaled that the worst may be over.
Even the relatively low unemployment rate wasn't cause for celebration.
Many people have given up looking for work, and they aren't included among the unemployed. If they were, the unemployment rate would reach 7.4 percent, according to the Economic Policy Institute, a liberal research group in Washington.
The labor force shrank by 392,000 people last month. Only 66 percent of the working-age population remains in the labor force, the lowest level since 1988.
"When we think about 5.6 percent unemployment, it does not adequately reflect how poor the job situation is," said Economic Policy Institute President Larry Mishel.
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On the Web: The Labor Department's February employment report: bls.gov.
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(Ron Hutcheson contributed to this article from Crawford, Texas.)
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© 2004, Knight Ridder/Tribune Information Services. |
