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http://online.wsj.com/article/0,,SB107633695034224434,00.html?mod=economy%5Flead%5Fstory%5Flsc
White House Sees 2.6 Million Jobs Created This Year
By GREG IP Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- In an optimistic forecast, the White House expects the U.S. economy to create 2.6 million jobs this year. That would erase the entire loss of jobs since President Bush took office.
The Economic Report of the President, released Monday, projects that nonfarm jobs will rise to an annual average of 132.7 million this year, above the 132.4 million where employment stood in January 2001, when Mr. Bush was sworn in. Payrolls have since fallen by 2.2 million.
The White House projections imply the creation of about 300,000 jobs a month this year, said Chris Varvares, president of Macroeconomic Advisers LLC, a forecasting firm in St. Louis. "The job gains are at the high end of a plausible range," he said. His firm expects job creation of about 200,000 a month and 1.2 million for the year. Growth has averaged 73,000 a month since September.
The White House projections are based on data available two months ago. Since then, the Labor Department has revised downward the level of employment throughout last year and reported anemic gains in December and January. That means even bigger gains would be needed to hit Mr. Bush's projections.
Nigel Gault, U.S. research director at Global Insight Inc., a Boston forecasting firm, said meeting Mr. Bush's job-creation projections would require employment to rise about 400,000 jobs a month.
Gregory Mankiw, chairman of President Bush's Council of Economic Advisers, which wrote the report, told reporters, "There's every indication that the economy will do well in 2004 and that jobs will be created." He later declined through a spokesman to comment specifically on the payroll projections.
In 2005, the White House expects nonfarm payrolls to rise a further 3.6 million. That would require monthly gains averaging 240,000 a month, Mr. Gault says, similar to his own forecast for that year.
The White House forecasts are not out of line with historical experience. They work out to 2% growth, less than the annual average of 2.4% from 1993 to 2000. But both White House and private economists have been too optimistic on job creation recently despite healthy economic growth. Employers have sharply boosted productivity, or output per employee, reducing the need to add to payrolls. Mr. Varvares says the White House forecast implies a sharp slowing in productivity growth this year.
The report also argues that the recent recession probably began sooner than the March 2001 date selected by the official arbiter. Revised data suggest October 2000 is a likelier start date, the report says.