Economic pessimists have had a field day ever since GDP was reported a little over a week ago at only 1.1 percent for the fourth quarter. But the latest jobs report released on Friday blew them out of the water.
Including revisions, January employment is a huge 317,000 above the initial December level. In fact, over the past three months, non-farm payrolls have increased an average 229,000 per month. That's explosive. We're on pace for another 2 million jobs in 2006, following gains of 2 million in 2004 and 2005. Wages are also picking up steam, and with gasoline prices falling, consumer purchasing power and retail sales are climbing.
So the question for the Bush administration is this: What are you waiting for?
As soon as the breakout employment news was released, Salesman in Chief George W. Bush should have been in the Rose Garden giving it airtime. He should have declared that jobs have continued to grow big-time, while the unemployment rate has fallen -- all the way down to 4.7 percent. He then could have used this optimistic data to build his already strong case for extending the tax cuts on dividends and capital gains. These 2003 tax cuts, along with lower income taxes, are a good reason why job numbers are strong and the economy is prosperous.
What are they waiting for?
In his State of the Union message, Bush noted that recent tax relief has left $880 billion in the hands of American workers, investors, small businesses and families -- money that has been used to help produce more than four years of uninterrupted economic growth. People will spend their money more wisely than government will.
Bush ought to keep this drumbeat up. On Friday, the drums were deafeningly silent.
The latest numbers from the Congressional Budget Office show a clear supply-side effect where lower tax rates and higher after-tax rewards for work and investment have expanded the economy and created a huge surge of tax collections. Dan Clifton of the American Shareholders Association first reported that actual revenues from the lower capital-gains tax rate came in $46 billion higher over the last three fiscal years and $62 billion higher over the last three calendar years than congressional estimates. The Laffer curve is alive and well.
The naysayers are always quick to pounce on low-growth glitches in the economy, such as the Hurricane Katrina-induced GDP report for the fourth quarter. But a glitch is just a glitch. The greater reality is that the economy is growing nicely, jobs are being created, wages are rising, profits are strong, and productivity trends are excellent.