Economy adds jobs in September
By Ken Moritsugu
Knight Ridder News Service
Deborah Booker • The Honolulu Advertiser
WASHINGTON — The U.S. economy added jobs in September for the first time in eight months, the Labor Department reported yesterday, raising hopes on Wall Street and in the White House that a long-awaited rebound in employment may be getting under way.
Leimaile Guerrero of Ala Moana waits while her friend, Roger Cuenca, fills out an application at a job fair at Blaisdell Center. The number of jobs in the United States increased in September for the first time in eight months.
Stocks rallied on the unexpected good news, though economic analysts cautioned that it would take a few more months to determine whether the economy is really on the mend.
The economy grew by 57,000 jobs in September, the department's figures showed, after shrinking by 551,000 jobs over the previous seven months. The modest rise wasn't enough to bring down the unemployment rate, which remained at 6.1 percent.
"This report offers evidence of some stabilization in the labor-market front, but it is way too premature to conclude from the details that we have fully turned the corner," David Rosenberg, chief North American economist for Merrill Lynch, wrote in an analysis for clients.
Many analysts had been expecting job growth to pick up toward the end of this year and into 2004. The economy perked up in the spring and appears to have gained further momentum in the summer. That growth should translate into more jobs.
The question is whether the growth will last. The economy is benefiting from two one-time boosts: more government spending for the war in Iraq in the spring and a new round of income-tax cuts that took effect in the summer. When the impact of those boosts fades, as it inevitably will, the recovery could peter out.
"Once the tax cuts are in and the spending is in, where's the next act?" wondered David Wyss, chief economist at Standard and Poor's bond rating agency in New York.
The stakes are high, not only economically but also politically. Democrats are attacking President Bush for his stewardship of the economy, a concern that recent polls suggest is more important to voters than the war in Iraq. How the economy performs over the next 12 months could make or break Bush's prospects for a second term.
A key political issue is the dramatic loss of manufacturing jobs, the hardest-hit sector in this slow economy. Factory jobs fell by another 29,000 in September, though that was a smaller drop than the average loss in previous months. The gains were mostly in construction and the services sector, with some improvements in healthcare, transportation, warehousing and financial services.
To last, the recovery must become self-sustaining. The tax cuts and increased government spending have to create enough jobs to jump-start the economy. Those jobs would lead to more consumer spending, which would drive companies to ramp up production, starting a new round of job creation and consumer spending.
That virtuous cycle, as economists call it, hasn't taken hold in the 22 months since the recession officially ended in November 2001, making this jobless recovery the longest one on record. The economy has shrunk by 1 million jobs over that period, on top of the 1.7 million jobs it already had lost during the eight-month-long recession.
The economy has had false starts before. It showed signs of life this time last year, adding 65,000 jobs in September and 119,000 more in October, but the recovery didn't last, in part because of the brewing war with Iraq.
Companies were reluctant to take on more workers because they didn't know what effect a war would have on the economy.
This time, there's no looming threat of war, though the possibility of a major terrorist act derailing the economy remains in the background.
Many analysts expect moderate job gains next year, similar to the 1.2 million jobs that were added in the tepid recovery in 1992, when the first President Bush lost his re-election bid. A robust recovery didn't come until 1993, when the economy added 2.8 million jobs.
