Year ends with Bush projections falling far short of actual job growth
The president specifically promised that the tax bill would generate an additional 510,000 jobs by the end of 2003, growth above and beyond the jobs that an economy in recovery would naturally generate. In fact, the Council of Economic Advisers (CEA) projected that, with no change in policy, the resilient U.S. economy would generate a baseline of 4.1 million jobs by the end of 2004, even without the tax cut. (That baseline 3% gain in jobs was modest compared to earlier recovery periods without tax cuts: job growth was 4% over a comparable period of time following the early 1990s recession.) The CEA explained that, on top of that baseline job growth, the tax bill would add 510,000 jobs by the end of 2003 and a total of 1.4 million more jobs by the end of 2004. All told, the Bush Administration projected growth of 5.5 million jobs by the end of 2004 if its tax cuts were adopted, or an average growth rate of 306,000 jobs a month from July 2003 to December 2004.
The December 2003 job gain of 1,000 is a staggering 305,000 jobs below the promised monthly increase. In fact, job growth has never reached even a third of the promised rate of 306,000 jobs a month since the tax cut was implemented in July 2003.
Overall, jobs increased by a total of 221,000 in the six months that the tax bill has been in effect. This total increase did not even reach the 510,000 jobs that President Bush promised over and above the baseline for those six months, much less the total of 1,836,000 jobs promised with the baseline included.
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Labor market not benefiting from economy's growth
Thus, two years into the new business cycle, GDP growth is strong. But the fruits of that growth have yet to flow to working families in the form of rising real wages and faster job growth. The economic recovery will not be on firm ground until consumption and growth are able to rest on broad-based gains in labor income.
Greatest sustained job loss since the Great Depression
Since the official end of the recession in November 2001, total jobs have shrunk by 0.8 million (an 0.6% contraction) and private-sector jobs have dropped by 0.9 million (or 0.8%).
Copyright © 2004 by The Economic Policy Institute. All rights reserved.