White House jobs forecast overly optimistic, private economists say

WASHINGTON (AP) _ The Bush administration is overly upbeat in predicting that 2.6 million new jobs will be created this year, private economists say. <br><br>It is a hurdle that would require the administration,

Wednesday, February 11th 2004, 12:00 am

By: News On 6


WASHINGTON (AP) _ The Bush administration is overly upbeat in predicting that 2.6 million new jobs will be created this year, private economists say.

It is a hurdle that would require the administration, in just one year, to replace all of the jobs that have been lost in the three years since President Bush took office.

``The job machine would have to rev up very, very quickly _ it's got to be almost supercharged at some point during the year'' to do that well, said Mark Zandi, chief economist at Economy.com.

The jobs outlook, included in the president's annual economic report to Congress, comes as the economy is gaining steam. But job growth has been sluggish, with a flood of jobs going overseas, triggering election-year concerns among Republicans and providing fresh political fodder for Democrats.

The economy has lost 2.2 million payroll jobs since January 2001, giving Bush the worst job creation record of any president since Herbert Hoover.

To match the White House's jobs forecast, the economy would have to churn out well over 220,000 new jobs each month for the rest of the year, economists say. Last month, just 112,000 jobs were added _ the biggest monthly gain in three years.

``It's more than I would forecast, but I'm not running for re-election,'' said David Wyss, chief economist at Standard & Poor's.

Private economists expect job growth this year of about half the administration's estimate, spurred by hiring in health care, education services, defense and homebuilding, and later expanding to financial services, advertising, accounting, trucking, warehousing and distribution.

To reach 2.6 million, the job creation pace would have to return to the heyday of the late 1990s, a time warp that few analysts expect the economy to travel anytime soon.

But White House spokeswoman Claire Buchan said the pace of job growth is increasing and would be boosted further by Congress enacting the president's economic plan ``so we can build on this trend and create an even more robust environment for job creation.'' Bush's plan includes making recent tax cuts permanent and getting an energy bill passed.

``Hundreds of thousands of Americans have found new jobs in the past few months and we expect this momentum to continue,'' Labor Secretary Elaine L. Chao said in a statement.

Despite tax cuts, businesses are still reluctant to hire. They are faced with intense global competition and soaring health care and pension expenses, and are trying to hold down costs by working employees harder and shipping jobs overseas.

``When a good or service is produced at lower cost in another country, it makes sense to import it rather than to produce it domestically,'' the president's report says. ``This allows the United States to devote its resources to more productive purposes.''

But outsourcing of American jobs is hitting a political nerve this election year.

``President Bush's tax and trade policies have fueled this trend in outsourcing, which has clearly contributed to job losses in our economy over the past three years,'' Rep. Pete Stark, D-Calif., senior Democrat on the Joint Economic Committee, said at a hearing Tuesday. ``President Bush stands idly by as jobs continue to take flight from the U.S., and now we know why _ it's part of his economic plan.''

Republicans countered that an improving economy will lead to more jobs.

``Despite a perfect storm of blows to the economy, recent economic indicators tell us what many have already been feeling, that the economy is now experiencing a strong recovery,'' said Joint Economic Committee Chairman Sen. Robert F. Bennett, R-Utah. ``Over the next year, we can look forward to a robust economy and the job creation that will follow.''

The White House's previous job growth predictions have been off the mark. Last year, it forecast 1.7 million new jobs for 2003. The economy lost 439,000.

The administration estimated that 100,000 payroll jobs would be lost in 2002, when the economy was emerging from recession. The country lost 1.45 million jobs that year.

American factories have lost 3 million jobs in the last 42 months since a peak in July 2000.

Ultimately, investment in overseas jobs will help the U.S. economy by providing cheaper goods and services, economists say.

``There's nothing wrong with exporting jobs, as long as you're importing an equal number of jobs,'' Wyss said. ``The problem is, right now we're not doing that.''
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