Bush: Another 2.6 Million Jobs in 2004

Bush: Another 2.6 Million Jobs in 2004

By Simon Kennedy

Bloomberg News Service

The U.S. economy will create about 2.6 million new jobs in 2004 and unemployment will decline over the next several years, according to President George W. Bush's annual economic report.

U.S. non-farm payrolls will rise to 132.7 million through this year, from a 2003 average assumed to be 130.1 million and which the Labor Department recently reported to be 129.9 million, said Bush's Council of Economic Advisers.

"As 2004 begins, America's economy is stronger and getting stronger," Bush said in a statement at the start of the 412-page report.

The economy's failure to create jobs has become a burden for Bush as he seeks re-election. In last year's report, White House economists forecast the creation of 1.7 million new positions. The economy lost 53,000, according to Labor Department statistics.

Payrolls have been cut by 2.2 million since Bush took office, raising the risk that Bush will be the first president to lose jobs during his term since Herbert Hoover. The economy added fewer jobs than forecast in January, the Labor Department said.

"We expect more jobs coming forward and there is every indication that jobs will do well in 2004 and that jobs will be created," said Greg Mankiw, the council's chairman.

With the administration anticipating the economy to expand at an average of 3.7% from 2003 to 2007, it predicted the jobless rate will decline to 5.6% this year and 5.4% in 2005 from the 6% average of last year. By 2007 the jobless rate will decline to 5.1% and remain there through the following two years, it said.

That outlook assumes the economy will grow 4% this year when you compare fourth quarter 2003 to fourth quarter 2004. Gross domestic product rose 4.3% in the fourth quarter of 2003 from the same three-month period a year earlier.

Productivity, a measure of how much an employee produces for every hour of work, will grow at a 2.1% annual rate through 2009, "virtually the same as that recorded during the 43 years since the business-cycle peak in 1960," the administration forecasts.

After productivity rose 5.3% on a year-over-year basis in 2003, White House economists said, "a period of slower productivity growth is likely as firms shed their hesitancy to hire." The administration said it's "wiser to base the productivity forecast on longer-term averages."

Interest rates are expected to increase as the economy strengthens. The White House expects the yield on the Treasury's 3-month bill to rise to 1.3% this year after 1% in 2003. In 2005, it's forecast to rise to 2.4%.