August 11, 2004
While President Bush crisscrosses the country touting our nation's strong economy, the data suggests that any economic strength is far overstated.
After three months of robust employment growth, job growth stalled in June and July. Only 78,000 jobs were created in June, and a scant 32,000 jobs were generated in July.
According to the President's Council of Economic Advisers, the tax-cut package that took effect in July 2003 was supposed to help create 306,000 jobs a month, for a total of 5.5 million jobs by the end of 2004. So far, only two months -- March and April 2004 -- met or exceeded the council's monthly goal.
The types of jobs the economy is generating is also a concern. Growth has been most robust in service occupations, especially in the lower-paying services like food and health services. People are feeling the pinch, especially in states like Ohio and Michigan, where job losses swell into the hundreds of thousands.
What's worse, while job growth is weak, oil prices are rising and dragging down the level of economic growth. In the second quarter this year, growth was only a disappointing 3 percent.
In early August, oil prices reached record highs of nearly $45 a barrel. Many economists estimate that the pace of economic growth could lag as a result, since rising oil prices dampen travel and tourism.
Despite our weak economy, consumers have buoyed growth rates with incessant spending. That is, until now.
Even consumer spending is slowing as wages remain stagnant, prices inch upwards and the weak job market sparks consumer anxiety.
The number of personal bankruptcies has reached an all-time high as consumers who bet their home mortgage (through refinancing to tap home equity for ready cash) that their circumstances would improve are now finding themselves stuck with less income.
Last month, consumer spending slid by 0.7 percent, the biggest drop since September 2001. Consumer spending represents two-thirds of our economy, and when spending falters, so does our economy. With so many consumers tapped out, spending is not likely to rebound until there is robust job growth.
The White House claims that the economy has "turned the corner" on jobs, but the Bush administration has failed to provide an effective economic plan that does something other than give tax cuts to the wealthy.
Without employment policy geared toward the worse off -- like African-Americans, who had a 10.9 percent unemployment rate last month, or workers in those Midwestern states who have shouldered much of the manufacturing job loss -- the country's economic luster will remain dimmed.
Interestingly, those who have benefited from the Bush tax cuts do not seem to have invested their largesse in the domestic economy. Most employers seem reluctant to hire, adopting a "wait and see" attitude on the economy, preferring to offer temporary jobs without benefits over permanent jobs.
Federal Reserve Chairman Alan Greenspan characterizes our weak economy as simply having hit a "soft patch" that will improve when growth does. But with high oil prices and a wobbly job market, this growth cannot take place with lip service alone.
People are reminded of our economic weaknesses daily.
When they look at their stagnant paychecks.
When they fill their gas tanks with rising prices.
When they write checks for their medical insurance premiums.
When they tighten their belt and avoid spending.
The continued weakness in the job market is a shaky foundation for a healthy economy.
Julianne Malveaux, a Massachusetts Institute of Technology-trained economist, is author of several books, including "Wall Street, Mean Street and the Side Street: A Mad Economist Takes a Stroll" (Independent Publishers Group, 1999). She can be reached at firstname.lastname@example.org.