January 9, 2004 | WebMemo on Taxes
Today's employment report disappointed most analysts. But there is still reason for Americans to be optimistic.
While the Bureau of Labor Statistics report recognizes a number of short-term weak spots and shows that more work has to be done, it also reveals some longer-term, positive employment trends.
The economic plans of the Bush Administration and the Federal Reserve appear to be working as expected, slowly moving the economy in the right direction. Among the other signs that the recovery continues:
Tax relief has lowered the cost of capital, made existing enterprises more profitable and investment and expansion more attractive. As the economy continues to grow and expand, stronger job performance will follow.
While today's report shows that the recovery in the job market has not been a smooth, steady climb, it is moving in the right direction. Since June:
Manufacturing Down, Service Up
For now, the continued sharp declines in manufacturing are of particular concern. This past year's declines are greater than expected. However, manufacturing jobs as a share of the economy have been declining steadily since 1952. This is happening for two reasons:
This service part of the economy shows that the economic recovery is underway, even in employment. For example,
Despite this disappointing jobs report, expectations for a robust job market in 2004 remain.
To identify long-term trends one must measure economic indicators over a longer period of time. One month's data does not negate the overall positive signs both in terms of the overall economy and the jobs market.
Forecasting companies, such as Global Insight, predict over 2 million more jobs will be created in 2004.