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. Last Updated: 07/27/2016

Employment Key to White House Race

WASHINGTON -- The U.S. job market may be strengthening in time to help President George W. Bush's campaign for re-election this November, according to political analysts such as Tom Gallagher at International Strategy & Investment Group.

The economy's addition of 308,000 payroll positions in March, reported Friday by the government, brought the first-quarter average to 171,000 a month. Gallagher, whose firm is headed by economist Edward Hyman, says the economy needs to create on average 175,000 jobs a month between June and October to help Bush's campaign. He bases that estimate on the Federal Reserve's calculation that the United States requires 150,000 new jobs per month to keep up with population growth.

"If job creation continues at this pace, then people will feel better about the economy in November," said Gallagher, who is ISI's chief Washington-based political analyst, in an interview Friday. While "it probably is a turning point," he cautioned against "reading too much into" last month's total.

A sustained increase in new jobs would help Bush respond to challenges by the Democratic presidential candidate, Massachusetts Senator John Kerry, that the economy has experienced a "jobless recovery." The addition of new positions at a monthly average of 174,000, as predicted by Global Insight, a Massachusetts-based consulting firm, would result in 2.3 million new jobs in 2004, close to Bush's target of 2.6 million.

"The history of the jobs numbers is that they jump typically to numbers in the 200,000 to 300,000 range and stay there for a good long time," said Kevin Hassett, director of economic policy studies at the American Enterprise Institute in Washington and former senior economist at the Federal Reserve Board, in an interview Friday.

After the 1990-1991 recession, job growth lagged until payrolls expanded by 213,000 in December 1992. After that, the economy created an average of 216,000 jobs monthly for the following nine months.

Wireless phone service provider Nextel Partners Inc., retailer Sharper Image Corp. and manufactured housing producer Fleetwood Enterprises Inc. are among companies planning to hire in coming months. The last time the United States added more than 150,000 positions had been November 2000.

"The Democrats have been playing with fire by making this a big issue," said Robert Dederick, former undersecretary of commerce under President Ronald Reagan who is now a consultant in Hinsdale, Illinois, said in an interview Friday. "The job market has finally caught up with the rest of the economy. We're not likely to get repeats of numbers like this, but we've passed the turning point."

Federal Reserve Chairman Alan Greenspan and economists such Gene Sperling, an adviser to the Kerry campaign, agree that a surge in productivity has hurt job creation. The gauge of output per hour of work jumped 4.4 percent last year and 5 percent in 2002, the first back-to-back increases exceeding 4 percent on record. Investment in new technology and equipment has enabled companies to create more goods and services without hiring.

The productivity effect may continue to weigh on job growth. Ford Motor Co., the Dearborn, Michigan-based fourth-largest employer in the Standard & Poor's 500 Index, said two weeks ago it plans to invest $73 million at its 5,900-worker Louisville, Kentucky, truck plant, to double production of stamped-metal parts -- without adding jobs.

Americans "have expressed apprehensions about the viability of their job skills as labor markets change due to higher productivity and global outsourcing of jobs," wrote Richard Curtin, director of the University of Michigan's consumer surveys, in a March 26 report on last month's consumer confidence, which rose more than expected. "The most recent survey found the lowest level of confidence in government economic policies since President Bush was first elected."

Kerry has sought to put Bush on the defensive over employment, promising to create 10 million jobs over four years as president, or more than 208,000 a month. Friday he said in a statement that "the one-month job creation announced today is welcome news for America's workers. I hope it continues.

"But for too many families, living through the worst job recovery since the Great Depression has been, and continues to be, far too painful," Kerry said. Even after seven months of job gains, the number of U.S. citizens with jobs, at 130.5 million, was 1.8 million fewer than when Bush took office.