Bush promotes latest job gains

Greenspan expresses worries about deficit, protectionism

December 03, 2005|By WILLIAM NEIKIRK AND MARK SILVA | WILLIAM NEIKIRK AND MARK SILVA,CHICAGO TRIBUNE

WASHINGTON -- Many of President Bush's supporters have urged him to make a bigger deal about an economic recovery for which polls show he is getting little credit. Yesterday he seized that opportunity with the release of a positive jobs report for November.

Bush stepped into the Rose Garden to say an economy kept strong by his policies was responsible for the creation of 215,000 payroll jobs last month, a substantial rise in hiring in view of setbacks from higher oil and gasoline prices and the devastation caused by a series of hurricanes.

"We have every reason to be optimistic about our economic future," said Bush, highlighting the economy's strength and resilience as he struggles with low popularity and a deadly insurgency in Iraq.

But even as the jobs report brought good news to a White House facing political problems, Federal Reserve Chairman Alan Greenspan warned in two speeches about potentially severe consequences from the federal deficit and rising protectionism.

But for the moment, the jobs report was a strong plus for Bush, especially after payroll jobs grew by only 44,000 in October and 17,000 in September, when Hurricane Katrina's impact was greatest.

"Our economic horizon is as bright as it has been in a long time," Bush said, pointing to low inflation, high productivity, now-declining gasoline prices and a strong housing market. "This economy is in good shape."

Analysts have pointed out for some time that the improving economy has yet to benefit Bush politically, in some ways mirroring an earlier period when a struggling economy did not hurt him.

The devastation of Katrina, soaring gas prices and a series of high-profile layoffs have helped mask the moderately good economic news.

Reprising a theme from his 2004 re-election campaign, Bush pointed to the 5 percent unemployment rate, also announced yesterday, as lower than the average rates of the 1970s, '80s and '90s - "thanks to good old-fashioned American hard work ... and sound economic policies of cutting taxes and restraining spending."

That message has yet to trickle down. In the latest Gallup survey, 36 percent polled said economic conditions are improving and 58 percent said conditions are getting worse.

Still, yesterday's report provided some cause for optimism. The employment increases spanned most sectors of the economy, including construction, retail, manufacturing, and professional services.

Average hourly earnings increased to $16.32 last month, up slightly from October. In the past 12 months, hourly earnings have gone up 3.2 percent.

Greenspan's warning somewhat tempered the upbeat White House message, focusing on the fiscal time bomb facing the country with retirement of the baby boomer generation. He said he feared the U.S. has made fiscal promises to baby boomers beyond its capacity to deliver.

One recent poll seems to indicate that a majority of Americans share Greenspan's concerns rather than Bush's optimism, which is why the president is trying to drum up more support for an economy that is chugging along despite impediments.

Thirty-seven percent of Americans surveyed in the latest Gallup Poll said they would rate economic conditions in the country today excellent or good. And 39 percent rated conditions "only fair," while 24 percent said they were poor in the Nov. 17-20 survey.

Looking beyond monthly indicators, Greenspan sounded the alarm about federal deficits and a growing U.S. trade imbalance in videotaped remarks in Philadelphia and live remarks in London.

In the Philadelphia speech, he urged Congress not to drag its feet in dealing with the deficit, which he said could grow drastically with the retirement of boomers and rising spending on Medicare and Social Security.

The expected deficit, Greenspan said, would drain money needed for business investment and "cast an ever-larger shadow over the growth of living standards. In the end, the consequences for the U.S. economy could be severe."

In London, he said he is also concerned about the potential rise of worldwide protectionism as a result of America's large trade deficit. If these trends aren't arrested, he said, "the adjustment process could be quite painful for the world economy," words that implied a global economic downturn.

William Neikirk and Mark Silva write for the Chicago Tribune.

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