THEY SAY that a week is a long time in politics, and we’ve just had proof of how true that is. It now seems hard to remember that just a few weeks ago George W. Bush was considered to have a sure winner in his Iraq policy, and an equally sure loser in his no-new-jobs recovery. With Iraq now in turmoil, and the president seemingly wavering between a tough response to, and appeasement of, the mixture of terrorists, radical dissidents, and imported fanatics who have set Iraq aflame, the White House is suddenly downplaying Iraq and talking about the economy, jobs, and the new economic boom.
After the latest jobs report was published, some analysts said that they could hear champagne corks popping in the White House. Not only did the Department of Labor announce that the economy had added 308,000 new jobs in March–the largest increase since April 2000. In addition, the government revised its job creation figures for January and February from 118,000 to 205,000. It is the latter figures that Fed watchers say chairman Alan Greenspan deems most significant, since they show that the jobs market is finally gaining some momentum. Since August 2003, payroll employment has risen by 759,000.
Better still from the president’s point of view, the gains were spread across the entire economy. Employment is up in the construction, health care, retail trade, and social services sectors, and the number of factory jobs has stabilized.
If this rate of job creation continues until the election in November, the economy will have regained all of the jobs that have been lost in the recession that Bush inherited when he moved into the White House. That would have profound political and economic consequences.
INDEED, even this one-month figure is having noticeable effects. One month may not make a trend, but in this political year every scrap of economic data is a weapon for one side or the other. John Kerry has been scoring points by accusing Bush of being the first president since Herbert Hoover to preside over a reduction in the number of jobs available to American workers. Kerry says that this reduction is due to “outsourcing” and he has rolled out the big Democratic guns promising to stop CEO-traitors from shipping jobs to China and India.
Hillary Rodham Clinton, who is campaigning for Kerry while secretly hoping he loses so as to clear the way for her own presidential bid in 2008, says, “I thought I had lost the ability to be shocked”–one can only guess which events resulted in that loss–but finds that she has not. To her ears the Republicans’ claim that outsourcing is just another aspect of free trade which will eventually enrich us by making our firms more efficient, “goes beyond the pale.” So much for any attempt to introduce reason into debates about economic policy in an election year.
NOW, Kerry will have to reconsider his “It’s the economy, stupid,” campaign. So far, all he has done is dismiss the new jobs figure as a one-shot affair. But if job creation remains at the 200,000-plus per month level, he will have to refine his argument if he is to continue labeling the president as the Darth Vader of the jobs market. The Massachusetts senator is not without ammunition. He can point out that 4.7 million Americans who are working part-time would prefer to have full-time employment. And that over half a million workers have abandoned the job hunt “because they believed no jobs were available for them,” according to the Labor department.
Still, that doesn’t have the sound-bite resonance of his earlier argument that Bush is a latter-day Herbert Hoover, creating jobs for Chinese and Indian workers, but not for Americans.
NOR IS KERRY likely to make much headway by blaming high gasoline prices on the president, whom he charges has not been tough enough with the OPEC cartel. Not that the president, whose family has long and seemingly enduring ties to the Saudi rulers, has done very much to persuade the Saudi royal family and other leading cartelists that it would be in their interests to step up, rather than curtail production. It is that Kerry, who proposes a foreign policy noticeably less muscular than the president’s, can’t explain just what he would do to whip the Saudis into line. And he has to worry that the Kingdom’s oily ambassador to the United States, Prince Bandar bin Sultan bin Abdulaziz Al-Saud, slipped into the White House to assure the president that his nation’s target price is $25 per barrel, and that in the near future they expect prices to fall by $10 per barrel from the current $35 level, as hedge funds unwind positions and the weather warms. Bandar, of course, is more famous for his lavish entertaining of key legislators than for his skill as an oil-price forecaster. But if he delivers on this promise, Kerry will see still another plank removed from his economic platform.
Kerry is not the only person in Washington doing some hard thinking. Greenspan, who has long anticipated renewed job growth, will have to decide whether to retain his stated “patience,” and keep interest rates at current low levels. Economists at Goldman Sachs say they sniff “a whiff of inflation” in the air. Commodity prices are up in response to buying pressure from a resurgent American economy and double-digit growth in both China and India. A continuation of anything like the March performance of the jobs market should quickly sop up excess capacity in the domestic labor market. But Greenspan has a global view, and knows that there is enough excess capacity in world labor markets to prevent a major domestic wage spiral from forming. He is more, rather than less, likely to sit tight for a while.
Meanwhile, the new jobs figures are likely to give consumer confidence a shot in the arm. The latest report by the non-profit Conference Board showed confidence steady, with the main deterrent to an increase in cheerfulness being that consumers “claimed jobs were less readily available” than in the recent past, according to Lynn Franco, director of the Board’s consumer-research center. That was two days before the new job report, so consumers are undoubtedly cheerier now, and will become cheerier still if they can be assured that the president and this week’s guest, British prime minister Tony Blair, have a reasonable plan to dispose of those Iraqis most threatened by our success there.
Irwin M. Stelzer is director of economic policy studies at the Hudson Institute, a columnist for the Sunday Times (London), a contributing editor to The Weekly Standard, and a contributing writer to The Daily Standard.
