Earlier this month, the Labor Department released its report on employment in March, which said that overall unemployment dropped by .1 percent in March to a five-year low of 4.7 percent. March saw the creation of 211,000 non-farm jobs; while this was slightly down from the 225,000 created in February, it was still above the average job production number of 197,000 since December. Additionally, some economists are saying that this job creation trend is proving to be especially important for the economy as the housing market continues to soften.
President Bush used the good news to defend his economic policies at a press conference earlier this month. "The tax cuts I signed left $880 billion with our nation's workers, small business owners and families. They have used that money to fuel our economic resurgence."
Bush also cited economic data showing that the economy has been growing for 31 months now (seventeen straight quarters) and that last year the United States economy grew by 3.5 percent. In Bush's words, "That's the fastest rate of any major industrialized economy."
Bush may have gone a little too far in his generalizations, however, especially when citing information about his tax cuts. "These millions of new jobs are evidence of an economic resurgence that is strong, broad, and benefiting all Americans. Real after-tax income has grown by more than eight percent per person since I took office," Bush said. "That means on average Americans have an income that is $2,100 higher than when I took office in 2001 after adjusting for inflation."
Another interpretation of the data, one that Democrats would assert, is that these averages do not represent true gains by the average American family, but rather that the wealthiest Americans have in fact benefited disproportionately, skewing the averages.
Additionally, the report came at a good time for Bush, who is currently entangled in a scandal regarding the leak of intelligence concerning Iraq's alleged weapons of mass destruction. Notwithstanding the positive economic outlook, polls show that few Americans in general credit the President for the country's economic success, and his approval rating last week fell to an all-time low of 36 percent.
The job creation report should be taken with a grain of salt, however, for the drop in the unemployment rate suggests an upward pressure on wages, prices, and inflation, since employers are being required to pay more to attract workers. Additionally, this information seems to have sealed the common expectation that in May the Federal Reserve will again-for the sixteenth straight time-raise its target federal funds rate by a quarter point, from 4.75 percent to five percent.
Despite the report of healthy job creation, US stocks tended to remain flat or fall after the report became public, as concerns about higher interest rates weighed more heavily in traders' thoughts than the promise of larger corporate profits.
