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Tax cuts meet target in October, cumulative impact falls far short
The Bush Administration called the tax cut package, which took effect in July 2003, its "Jobs and Growth Plan." The president's economics staff, the Council of Economic Advisers (CEA, see background documents), projected that the plan would result in the creation of 5.5 million jobs by the end of 2004—in other words, 306,000 new jobs each month starting in July 2003. The CEA projected that the economy would generate 228,000 jobs a month without a tax cut and 306,000 jobs a month with the tax cut.

The October job growth of 337,000 jobs exceeded this target by 31,000. However, the projection that 4,896,000 jobs would be created over the last 16 months is not close to having been realized. In reality, since the tax cuts took effect there are 2,738,000 fewer jobs than the administration projected would be created by enactment of its tax cuts. As can be seen in the chart below, job creation failed to meet the administration's projections in 13 of the past 16 months.

Difference between actual and projected monthly job growth

Weakest job recovery since the 1930s
Since the recession began 43 months ago in March 2001, 490,000 jobs have disappeared from the U.S. economy, representing a 0.4% contraction. The Bureau of Labor Statistics began collecting monthly jobs data in 1939 (at the end of the Great Depression). To put this performance in historical perspective, in every previous episode of recession and job decline since 1939, the number of jobs had fully recovered to above the pre-recession peak within at least 31 months of the start of the recession (the average, excluding the 1991 recovery, has been a full recovery of jobs by the 20th month). In the three downturns since the early 1970s, the economy had not only recovered from any jobs lost during the recession but had also generated 4.6% more jobs than were lost in those downturns. If this standard had prevailed, the economy would have had a positive job gain of 6,114,000 by what is now the 43rd month of recovery, or 6,604,000 more jobs than we have today.

Change in total employment, 43 months after the recession began

Private-sector jobs have fared worse than public-sector jobs in this recession and recovery. Jobs in the private sector have dropped by 1,261,000 since March 2001, representing a 1.1% contraction. However, having no job losses, or gains, is a very low standard by which to judge a recovery—with history as a guide, one would have hoped that the economy would have recovered months ago the jobs lost.

Change in private-sector employment, 43 months after the recession began

Forthcoming employment revisions
The BLS commissioner announced last month that, based on preliminary analysis of first quarter unemployment insurance tax reports, payroll employment for March 2004 will be revised upward approximately 236,000. That is smaller than the average revision. It does not materially change the picture for job growth between March 2003 and March 2004. When the official revisions occur in February, the revision to October 2004 may be higher or lower than 236,000.


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