If production is up in major industries, demonstrating an increase in capital expenditures, can dramatic job growth be far behind?
Maybe it is far behind. Ours is an economy in transition. Although political candidates of the party not in power like to blame any economic difficulties on the party in power, policies have less to do with the slow return of manufacturing jobs than high productivity per worker. And the reason for that productivity is principally high-tech.
So in and of itself, the production increase in big industry in January — a highly hopeful 0.8 percent, says the Associated Press, compared to 0.6 percent last year and a decline of 0.2 percent the year before — does not tell you jobs are on the way.
But so much is positive right now that there is reason for great hope. Economic growth the second half of last year was higher than 6 percent, a 20-year record for that period. If some current predictions hold up, the growth for this year could set an annual 20-year record, and when overall economic growth is greater than productivity growth, jobs return.
Even as it is, unemployment is not terribly high. Any unemployment, of course, can be tragic for the unemployed, but the current rate of 5.6 percent is hardly astonishing by historic standards. Keep in mind that the trend lately has been downward and that many economists believe that, at any given time, roughly 4 percent of the work force is out of work while changing jobs. If true, that would mean about 98 percent of all Americans who want jobs either have one or soon will.
Meanwhile, much is positive on the economic scene, such as a homeownership rate that has never been higher in the entire history of our country. The Federal Reserve's low interest rates deserve much credit for that, just as President Bush's tax cuts deserve much of the credit for economic growth, stock market advances and more money in the pockets of millions of Americans. Policies do affect some economic statistics, if not all of them, at least not immediately.