This page was last updated on August 26, 2004.

As of July 2004, the unemployment rate is 5.5%.  During President Clinton’s 1996 reelection campaign, CNN reported unemployment “was an already-low 5.6 percent.”¹  In President Bush’s reelection year, the mainstream media outlets talk about 5.5% unemployment in Great Depression-like terms.

This editorial is an example of the Times jumping on the mainstream media bandwagon to turn good news into bad.  As John Kerry, the Times editorial board is changing the rules regarding what constitutes good employment news.  Historically, we used the unemployment rate to score the job environment.  With the unemployment rate below the average of “the-good-old-days” 1990s, anti-Bush groups needed to find another way to keep score, however.

Below is a detailed critique of the subject editorial.

“Last week’s report that the U.S. economy had added only 32,000 jobs in July was frightening not because of the impact it might have on the presidential election but because it reveals fundamental weaknesses that could be crippling.

“The recession from which the economy technically has emerged was a relatively shallow one.  Yet instead of rebounding, job creation has stalled.”

[RWC] Let me get this straight.  The already low unemployment rate dropped to 5.5% and that is frightening?  To whom, liberals who need bad news for America for liberal candidates to succeed?

Let’s play the Times’ game and look at job creation and ignore the employment rate.  It is true the reported payroll increase for “non-farm workers” in July 2004 was 32,000.  What most people in the media don’t tell us is that this figure does not cover the full U.S. economy and consistently underreports jobs.  The payroll survey excludes farm employment as well as small businesses and the self-employed.  When you consider total employment, the economy generated 629,000 new jobs in July.²  More people work now than at any time in U.S. history.

“We’re not arguing for job preservation.  Jobs are churned constantly in the U.S. economy, and that’s one reason it has remained so vibrant.  Job creation, not job preservation, is what the U.S. economy is all about.

“Traditionally, though, the churning has been acceptable because the payoff was that many more jobs were created than were lost.  That’s not happening in this recovery.”

[RWC] The editorial contradicts itself.  In one paragraph it says the economy gained 32,000 jobs, but in another it claims more jobs were lost than were generated.  Recalling Sir Walter Scott, “Oh what a tangled web we weave, when first we practice to deceive!”

“The Associated Press reports Wall Street had expected 235,000 new jobs in July.  Since May, the economy has created 318,000 jobs when economists and investors had been expecting 710,000 for the last three months.

“What makes those numbers chilling are the ways in which the federal government has been priming the pump.”

[RWC] Ah, the numbers are “chilling.”  More scare tactics to go along with “frightening” and “crippling.”

“Interest rates are at all-time modern lows, which make it less expensive for companies to borrow money to invest in expansion, thereby creating jobs, and tax cuts are supposed to lead to more investment and to put more money into the hands of consumers, thereby fueling growth.

“Lower interest rates have also led homeowners to refinance their homes.  The money refinancing freed up via lower mortgage rates and access to equity - plus all the extra money from tax cuts - helped sustain consumer spending through the recent recession.

“While this was happening, the United States had the rare luxury of having low inflation and low interest rates at the same time.”

[RWC] If you didn’t know better, you would think the editorial was saying President Bush has done the right things to reverse the recession he inherited.

“That run is almost over.

“High oil prices don’t just hit you at the pump.  Because they touch just about every part of the U.S. economy, they also are a hidden form of inflation.  Americans could deal with that if the national economy was creating jobs at a pace that offset the negative impact of inflation, but it’s not.

[RWC] I don’t understand how job creation offsets inflation.  If I have a job, how is another person getting a job going to cut my cost of living?  In truth, at some point a high employment rate could fuel inflation.

 “Massive federal borrowing to fund deficit spending also hurts the economy.  First, it sucks money out of the economy that could be used for private investment.  Second, as its need for borrowed money grows, the federal government has to offer buyers of its bonds a good rate of return, which translates into higher interest rates.”

[RWC] I have to admit I don’t like deficit spending.  The editorial says deficit spending “sucks money out of the economy that could be used for private investment.”  What the editorial conveniently omits is taxes also suck money out of the economy.

“Predicting which way the economy will go is a fool’s game.  But it all starts - and ends - with jobs.  What is scary about the present situation is that the government has used all the tools at its disposal and has very little to show for it.”

[RWC] In this single editorial, the Times has called an unemployment rate of 5.5% and the creation of 629,000 jobs in one month “frightening”, “crippling”, “chilling”, and finally “scary.”  How gullible does the Times believe we are?

1. U.S. jobless rate hits six-year low; CNN; July 5, 1996.

2. Employment Situation Report; U.S. Bureau of Labor Statistics; August 6, 2004.

© 2004 Robert W. Cox, all rights reserved.