Rapid job growth: an economic El Nino

December 16, 1998

The Chicago Tribune said in an editorial Saturday:

THE astonishing American job machine -- the economic equivalent of the meteorological El Nino -- continues to confound. By all rights, the U.S. economy shouldn't have created more than a quarter of a million jobs in November, any more than we should have experienced record high temperatures in December. But it did.

Industrial decline

The Asian financial crisis and its double whammy of cheaper imports and evaporating export markets certainly has taken its toll on the manufacturing sector. A total of 47,000 manufacturing jobs were lost in November and more than 100,000 have disappeared in just the past three months.

And there is a steady drumbeat of companies announcing planned layoffs -- Boeing, Johnson & Johnson, Exxon and Mobil, to name just a few. Some are attributable to drooping sales, others to mergers.

Setting records

Layoffs topped 50,000 in November and reached nearly 575,000 for the first 11 months, according to Challenger, Gray & Christmas, which tracks such things. By year's end, 1998 may yet break the old record of 615,000 layoffs set in 1993.

But those statistics tell only half the story in an economic expansion that now -- at seven years, nine months -- has officially entered the record books as the longest consecutive period of peacetime growth in modern American history.

Even with jobs lost and more layoffs, says investment analyst Abby Joseph Cohen of Goldman Sachs, the "U.S. economy has created 13 million new jobs net over the last five years." And, she adds, two-thirds of those are paying not only well above minimum wage; they are paying above the median wage. To put that into perspective, Ms. Cohen notes, European economies in that same period lost a net of one million jobs.

That is the other half of the story and it explains why the recent drumbeat of jobs lost hasn't created the kind of outrage that accompanied earlier layoff waves in the '80s and early '90s.

There is nothing written in the stars that guarantees this relatively benign condition in the midst of global turmoil will continue indefinitely.

But there is nothing either to indicate it won't. Most past periods of economic growth didn't die of old age; they were killed by some shock to the system or by people in charge making policy mistakes.

So far, the U.S. economy has been lucky and smart. It is surely growing more slowly than it was, but its vital signs are still good.

Pub Date: 12/16/98

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