Bush and Kerry eye last jobs figures

By Andrew Walker BBC economics correspondent

The US jobs situation can be interpreted as both good or bad

The final pre-election employment report shows an increase of 96,000 in the number of Americans with jobs.

That is the figure from the closely watched Department of Labor Survey.

The number might sound quite large, but most economists regard it as disappointing.

There were fewer new jobs than they expected - 140,000 was the average expected figure. And the US economy needs to create more than 96,000 to keep up with a growing population.

For the election campaign the key points are these.

According to the most widely followed survey, the growth in employment under President Bush has been disappointing, but it has perked up in the last year or so.

The context is a recession (although by some definitions it was a slowdown rather than a proper recession) in 2001.

The start coincided very roughly with President Bush's inauguration, although few hold him responsible for it.

Depressing comparison

The recovery which started late in the year was rather fitful before gaining momentum in terms of growing output in the last year or so.

But it didn't seem to create new jobs at a normal rate for a period after a recession. Indeed it was often called a "jobless recovery".

The employment market has clearly picked up in the last year or so and more people are getting jobs.

But if we look at the most closely watched survey published by the Department of Labor, there are still fewer people in employment now than there were when President Bush took office.

So the great charge that Senator John Kerry makes is that Mr Bush will be the first President to preside over a decline in employment since Herbert Hoover in the Great Depression of the 1930s.

Unrepresentative?

Now the US economy today does not have much in common with that disastrous period, so the comparison can easily sound overblown.

And there are some economists who think the survey figures today don't tell the real story. It's a survey of employers, often called the payroll survey.

Dr Tim Kane of the Heritage Foundation in Washington says it doesn't pick up self employment - consultants, real estate agents, mothers working twenty hours a week for themselves - who don't appear on company payrolls.

He prefers to focus on another survey, of households, which suggests a much stronger labour market.

He also points to the unemployment rate. At 5.4% it's quite low by the standards of the last three decades, even if it is higher than in the period just before the recession.

In any case, unemployment at below 4% as it was then was, he argues, so low that it was unsustainable.

Slow recovery

The current figure is close to what he regards as the "natural" rate for the US.

He could also justifiably point out that the current rate is a good deal lower than in France, Germany or Italy.

Nonetheless, most economists think the payroll survey more reliable, including the Federal Reserve Chairman Alan Greenspan.

Jared Bernstein of the Economic Policy Institute in Washington points out that the US has now gone the longest period on record without recovering the number of jobs lost since the recession.

Three years on, he says and the US is still about 900,000 jobs below the level before the recession.

He also argues the unemployment rate is misleading because people who have given up looking for work are not counted as unemployed - they are classified as out of the labour force.

Short hours

He does, however, say that the jobless recovery is past and the US economy is producing a sustainable increase in the number of people with jobs.

The problem is that it is not very rapid job creation. The US has a growing labour force so it needs more jobs all the time and, according to Jared Bernstein, it's not happening fast enough to take up much of what he calls "the slack in the labour market".

Some commentators are also concerned about the type of jobs that are being created, that they are disproportionately temporary, part-time and often lower paid than what workers had in previous jobs. Part timers don't generally get health insurance or pensions.

According to Department of Labor figures, there are about four and a half million people working part time who would rather be full time.

That is 40% higher than just before the recession, but it is similar to the level of ten years ago.

Other issues

Where does all this leave the election campaign?

In terms of jobs, Mr Bush does say the recent improvement owes a lot to his tax cuts. There are plenty of economists who dispute that.

And Mr Kerry can point to that unfavourable comparison with Hoover.

Nonetheless, the employment situation is not the political millstone for Mr Bush it would have been had America been going to the polls a year ago.