Archive for Thursday, March 14, 2002

New jobs are best sign of recovery

March 14, 2002


Baseball legend Satchel Paige once said, "Don't look back, something might be gaining on you." The remark provides a lesson for life. If you aren't moving forward, you are losing ground.

It also provides a lesson for the U.S. economy. If it isn't creating jobs, it isn't out of recession.

Key economic indicators are more favorable today than they were a few weeks ago:

l Excess inventory has been reduced.

l The stock market is celebrating.

l Manufacturing is awakening, as is the service sector.

Even the normally reserved Federal Reserve Board Chairman Alan Greenspan says economic expansion is "well under way." The measure of economic recovery that Americans most care about is jobs. On Friday, news that the unemployment rate fell slightly and that the economy added 66,000 jobs last month are the signs that folks have been waiting to see.

If your neighbor has lost his job, it is a downturn. If you lose your job, it is a recession, if not a depression. And it isn't a recovery until you both land new jobs at decent wages.

While 66,000 new jobs are a start, they don't necessarily indicate that the hiring and investment spigots have been turned on full force.

Challenger, Gray & Christmas, a national outplacement firm that tracks these things, notes there were 40 percent fewer layoffs in February than in January. But that still means more than 128,000 jobs were lost last month, which about matches the 100,000-plus monthly job loss the country endured last year. For those reasons, the nation's top executives aren't eager to get too far ahead of the recovery.

At a recent gathering of leading executives in Boca Raton, Fla., the emerging consensus was that the recovery signs aren't strong enough to justify significant new hiring and capital spending. A strong majority of those executives who were asked projected the economy to grow a modest 1.5 percent this year, about half of the Fed's most optimistic projection.

For a while longer, most corporations will try to squeeze additional productivity and savings out of smaller work forces. But that in itself presents an untenable paradox: The economy needs jobs in order to grow, but many chief executives aren't going to add positions until their perception of the U.S. economic future improves.

History will be taken into account. The 1990-1991 recession officially ended in March 1991. The unemployment rate, however, kept climbing for more than another year because the economy couldn't grow fast enough to make up for further job losses. Despite Friday's news, the Fed hasn't revised its projection that the unemployment rate, now at 5.5 percent, could climb above 6 percent by the end of the year.

Still, consumer spending has remained surprisingly strong, in part due to low interest rates. The next round of personal income tax cuts and the government's spending on homeland security and national defense also will help to stimulate the economy this year.

And even though Congress earlier had deadlocked on a sweeping economic stimulus package, lawmakers chipped in on Friday by passing a package of scaled-down tax cuts and legislation to extend extra jobless benefits. President Bush has promised to sign the legislation. Better late than never.

But eventually, businesses also must wade more confidently into the recovery waters, investing and hiring, in order for recovery signs to become a recovery.

And when they do, here are a few words of advice from an old ballplayer: Don't look back.

 Jim Mitchell's e-mail address is

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