As long as people feel secure and baring another terrorist attack; the state of the job market is what will determine this election.
>>>>February Job Growth Surprisingly Weak
By Tim Ahmann, Reuters
WASHINGTON (March 5) - The nation's added a paltry 21,000 jobs last month, according to a surprisingly weak government report Friday that turned up the heat on President Bush as he seeks re-election.
The Labor Department report was the latest to dash hopes that employment was following the rest of the economy higher, leaving some economists to warn that robust hiring may still be some way off.
''The job market is stuck in a cycle of inertia,'' said John Challenger, head of the outplacement firm Challenger, Gray & Christmas. ''The fact is, we are going to have to get used to slow job creation in this country.''
Details in the report were as bleak as the headline figure. Private-sector employment was actually unchanged in February, while the government added 21,000 workers.
It also showed job creation in December and January was weaker than previously thought. The count of job gains for January was revised to 97,000 from 112,000 and for December to just 8,000 from 16,000.
February's unemployment rate held at 5.6 percent, but only because people dropped out of the labor force. Employment as measured by a survey of households actually plummeted.
Chris Low, chief economist at FTN Financial, described it as an ''unambiguously ugly report''. Wall Street firms had forecast a February gain of 125,000 jobs and the market reaction was swift and sharp.
The dollar weakened and U.S. Treasury bond prices shot up, sending interest rates down, on the view the Federal Reserve would hold borrowing costs steady for a long while.
Expectations of steady rates helped support stocks, which turned up modestly in early trade after dipping at the open.
''This is a terribly disappointing report,'' said Joel Naroff of Naroff Economic Advisors in Holland, Pennsylvania. ''The economy clearly needs to see better job growth to support consumer spending.''
The political reaction was swift as well.
''At this rate the Bush administration won't create its first job for another 10 years,'' Democratic presidential candidate John Kerry said in a written statement.
Democrats have repeatedly criticized Bush for presiding over the weakest period of jobs creation for any president since Herbert Hoover during the Great Depression. Since he took office, 2.2 million jobs have vanished.
The Bush administration released a forecast last month that looked for average growth of about 300,000 jobs a month this year -- well above most private forecasts. But with each disappointing employment report, that projection looks increasingly pie-in-the-sky.
Administration officials said Kerry's economic prescription of rolling back tax cuts for the wealthy was wrong-headed, contending that the weak labor market made it all the more vital to cut business costs and keep tax cuts from expiring.
''The numbers suggest we need to keep the economy growing and reinforce our view that it would be a terrible mistake to raise taxes on American families and American businesses that are working to create jobs,'' Treasury Secretary John Snow said.
An average of just 42,000 jobs have been created each month in the last three months, down from the 79,000 average of the prior three months. Economists say gains near 150,000 are needed each month just to keep pace with labor force growth.
In addition, the average length of time workers who had lost jobs stayed unemployed climbed to 20.3 weeks in February, the longest period since January 1984.
Construction employment tumbled by 24,000 in February, while the factory sector shed 3,000 workers, the 43rd straight monthly drop. The service sector also proved unexpected weak, creating just 46,000 new positions.
Economists were hard-pressed to explain why job growth had fallen so far short of expectations, although some said poor weather ahead of the week in which the Labor Department surveyed businesses may have played a role.
For the most part they pinned the weakness on the ability of businesses to boost output without taking on new workers.
''At this time in the cycle, businesses are extremely cautious about hiring, and they are extremely focused on productivity gains,'' said Kurt Karl, chief economist at Swiss Re in New York.
Some economists warned consumer spending could falter later in the year, once a boost from big tax refunds pass, if job creation does not pick up more smartly.
Many economists and Fed officials believe productivity gains will slow soon, leading to more hiring. But expectations for bigger employment gains have been repeatedly dashed.
Analysts say the Fed needs to see more robust jobs creation before bumping up overnight interest rates from their current 1958 low of 1 percent -- a level officials have warned cannot be maintained forever.<<<