Why did it take Paul Krugman a whole week to spin a pessimistic story out of the news that the economy added 308,000 payroll jobs in February? And why, with a whole week to work on his jobs prose, was Krugman’s Friday column for the New York Times so full of amateurish factual errors? It must be that there’s almost nothing one can say that’s both true and pessimistic about the excellent job growth we had in March. It must also be that America’s most dangerous liberal pundit has backed himself into a corner when it comes to employment.
Krugman took a big step into that corner last fall. In his October 31, 2003, column, Krugman tried to spin a pessimistic story out of the announcement that GDP had grown in the third quarter at a red-hot 7.2 percent (subsequently revised upward to a white-hot 8.2 percent). At the time he wrote that
unless we start to see serious job growth — by which I mean increases in payroll employment of more than 200,000 a month — consumer spending will eventually slide, and bring growth down with it.
All he asked for was a “start,” and that’s what we got this March. And 308,000 is bigger than 200,000, even in the economics department at Princeton. So what’s left for Krugman to say?
In Friday’s column Krugman attempted to denigrate the creation of 308,000 jobs as “nothing special.” He noted that during the Clinton presidency “[t]here were 23 months with 300,000 or more new jobs.” Actually it was 26 months, according to the Department of Labor’s payroll survey. This is one error Krugman might actually correct, since Clinton’s 26 instances makes Bush’s 1 instance of 308,000 jobs seem more like “nothing special.” But even at 26 out of Clinton’s 96 months in office, we’re talking about something more than “nothing special.” Job growth greater than 300,000 happened 27 percent of the time for Clinton.
And why did Krugman use 300,000 as his yardstick when March’s job growth was actually 308,000? Simple: to make that kind of growth appear as “nothing special” as possible. During the Clinton years there were only 21 months registering 308,000 or more new jobs. That’s only 22 percent of the time — which is very much more than “nothing special.”
Krugman tried to brush away the fact that “[w]eekly first claims for unemployment insurance are down — but they’re still above the 2000 average, and job growth in 2000 barely kept up with population.” So now, even 2000 — the climax of the halcyon Clinton economy — isn’t a high-enough benchmark against which to judge the Bush economy. But Krugman has made another error here. The Clinton climax wasn’t all that halcyon: Job growth fell well short of population growth in 2000. According to the DOL’s household survey (the source of population numbers for labor statistics), jobs grew by 3.1 million in 2000, but the working-age population grew by 4.9 million. (Gail Collins, call your office: Columnists “are expected to correct every error.”)
Krugman carped that “Average weekly hours, sometimes a clue to future hiring, fell in March — in fact, they fell so much that total hours worked declined even as the work force increased.” Another error! Hours worked comes from the DOL’s payroll survey, and growth of the work force comes from the household survey. These two surveys are conducted on entirely different bases, and Krugman knows it. He’s written about the distinctions and understands that data from the two surveys simply cannot be cross-compared in this manner.
Besides, average weekly hours only fell by a lousy one-tenth of 1 percent — or six minutes out of a whole week — in March. They were up by as much in December, but Krugman didn’t mention that.
And why no celebration from Krugman that “the work force increased”? Isn’t that a good thing? After all, Krugman has complained over and over that the work force is shrinking, falsely claiming in his December 30 column that shrinkage is due to the “unusually large number of people [who] have given up looking for work.” (This ignores DOL statistics that show the number is not at all unusual). He then falsely claimed in his March 12 column that this “entirely” explains the drop in the unemployment rate since last summer (“entirely” ignoring the fact that there has been a net increase in employment since then, too).
As a final attack on the good news of 308,000 new jobs, Krugman claimed that superior job growth is nothing less than our due: “After three years of lousy job performance, we should be seeing very big employment gains.” For Krugman, this is in fact a whole new American privilege — a “job boom” is something “we both need and have a right to expect after three bad years.”
Yet another error — easily discovered by doing real economic analysis (rather than political posturing). When you examine the entire series of data from the DOL payroll survey, you find that below-average 3-year periods of percentage job growth are actually negatively correlated with subsequent above-average 1-year, 2-year, and 3-year performance. There is no 3-year “bounce back” effect. It is the opposite.
According to the payroll data, it also turns out that we’ve had almost 4 bad years, not 3. Monthly percentage job growth has been below its long-term average value since May 2000. The jobs recession began on Bill Clinton’s watch, well before George W. Bush was even nominated to run for the presidency.
So it rings especially hollow when Krugman writes that
this year’s election will be a contest between a candidate who advocates a return to economic policies that were associated with eight years of very solid job growth, and one who advocates continuation of policies that have, after three years, yielded exactly one good monthly jobs report.
One swallow does not make a spring, yet spring begins with one swallow. And job booms begin with one good jobs report. All the better that this was a great jobs report.
The October column in which Krugman dissed the huge GDP growth of the third quarter was dismissively titled “A Big Quarter.” But that quarter was followed by another big quarter. And another. Krugman’s Friday column was dismissively titled “One Good Month.” There will be another. And another. This “one month” was the “start” that Krugman challenged George Bush’s economic policies to produce. They’ve produced it.
Even the New York Times Company, parent of the newspaper that publishes Krugman’s column, admits as much. The company said in its earnings statement released this morning that “We were particularly encouraged by the revenue picture throughout our newspaper group in March, including substantial gains in help-wanted advertising revenues.” As a predictor of continued strong job growth, I’ll take that over a Krugman column any day.
– Donald Luskin is chief investment officer of Trend Macrolytics LLC, an independent economics and investment-research firm. He welcomes your comments at don@trendmacro.com.