Spin the Payrolls

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http://www.nytimes.com/2004/08/10/opinion/10krugman.html?hp

 

Spin the Payrolls

 

By PAUL KRUGMAN

 

E-mail:* krugman

<krugman

 

Published: August 10, 2004>

 

> When Friday's dismal job report was released,

> traders in the Chicago pit

> began chanting, " Kerry, Kerry. " But apologists for

> President Bush's

> economic policies are frantically spinning the bad

> news. Here's a guide

> to their techniques.

>

> First, they talk about recent increases in the

> number of jobs, not the

> fact that payroll employment is still far below its

> previous peak, and

> even further below anything one could call full

> employment. Because job

> growth has finally turned positive, some economists

> (who probably know

> better) claim that prosperity has returned - and

> some partisans have

> even claimed that we have the best economy in 20

> years.

>

> But job growth, by itself, says nothing about

> prosperity: growth can be

> higher in a bad year than a good year, if the bad

> year follows a

> terrible year while the good year follows another

> good year. I've drawn

> a chart of job growth for the 1930's; there was

> rapid nonfarm job growth

> (8.1 percent) in 1934, a year of mass unemployment

> and widespread misery

> - but that year was slightly less terrible than

> 1933.

>

> So have we returned to prosperity? No: jobs are

> harder to find, by any

> measure, than they were at any point during Bill

> Clinton's second term.

> The job situation might have improved somewhat in

> the past year, but

> it's still not good.

>

> Second, the apologists give numbers without context.

> President Bush

> boasts about 1.5 million new jobs over the past 11

> months. Yet this was

> barely enough to keep up with population growth, and

> it's worse than any

> 11-month stretch during the Clinton years.

>

> Third, they cherry-pick any good numbers they can

> find.

>

> The shocking news that the economy added only 32,000

> jobs in July comes

> from payroll data. Experts say what Alan Greenspan

> said in February:

> " Everything we've looked at suggests that it's the

> payroll data which

> are the series which you have to follow. " Another

> measure of employment,

> from the household survey, fluctuates erratically;

> for example, it fell

> by 265,000 in February, a result nobody believes.

> Yet because July's

> household number was good, suddenly administration

> officials were

> telling reporters to look at that number, not the

> more reliable payroll

> data.

>

> By the way, over the longer term all the available

> data tell the same

> story: the job situation deteriorated drastically

> between early 2001 and

> the summer of 2003, and has, at best, improved

> modestly since then.

>

> Fourth, apologists try to shift the blame. Officials

> often claim,

> falsely, that the 2001 recession began under Bill

> Clinton, or at least

> that it was somehow his fault. But even if you

> attribute the eight-month

> recession that began in March 2001 to Mr. Clinton -

> a very dubious

> proposition - job loss during the recession wasn't

> exceptionally severe.

> The reason the employment picture looks so bad now

> is the unprecedented

> weakness of job growth in the subsequent recovery.

>

> Nor is it plausible to continue attributing poor

> economic performance to

> terrorism, three years after 9/11. Bear in mind that

> in the 2002

> Economic Report of the President, the

> administration's own economists

> predicted full recovery by 2004, with payroll

> employment rising to 138

> million, 7 million more than the actual number.

>

> Finally, many apologists have returned to that old

> standby: the claim

> that presidents don't control the economy. But

> that's not what the

> administration said when selling its tax policies.

> Last year's tax cut

> was officially named the Jobs and Growth Tax Relief

> Reconciliation Act

> of 2003 - and administration economists provided a

> glowing projection of

> the job growth that would follow the bill's passage.

> That projection

> has, needless to say, proved to be wildly

> overoptimistic.

>

> What we've just seen is as clear a test of

> trickledown economics as

> we're ever likely to get. Twice, in 2001 and in

> 2003, the administration

> insisted that a tax cut heavily tilted toward the

> affluent was just what

> the economy needed. Officials brushed aside pleas to

> give relief instead

> to lower- and middle-income families, who would be

> more likely to spend

> the money, and to cash-strapped state and local

> governments. Given the

> actual results - huge deficits, but minimal job

> growth - don't you wish

> the administration had listened to that advice?

>

> Oh, and on a nonpolitical note: even before Friday's

> grim report on

> jobs, I was puzzled by Mr. Greenspan's eagerness to

> start raising

> interest rates. Now I don't understand his policy at

> all.