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Following two weak months of job growth, growth in August modest |
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Job growth was a modest 144,000 in August, enough to absorb the increase in working-age population but, in the long-term, too small to actually lower unemployment (unless the labor force shrinks again, as it did last month). August's job growth follows two months of very weak growth of 73,000 in July and 96,000 in June and is substantially slower than the 295,000 jobs created monthly (on average) in March, April, and May. This pace of job creation is far slower than what the Bush Administration said would follow as a result of its 2003 tax cuts. The Bush Administration called the tax cut package, which took effect in July 2003, its "Jobs and Growth Plan." The president's economics staff, the Council of Economic Advisers (CEA, see background documents), projected that the plan would result in the creation of 5.5 million jobs by the end of 2004 — 306,000 new jobs each month starting in July 2003. The CEA projected that the economy would generate 228,000 jobs a month without a tax cut and 306,000 jobs a month with the tax cut. Thus, it projected that 4,284,000 jobs would be created over the last 14 months. In reality, since the tax cuts took effect, there are 2,668,000 fewer jobs than the administration projected would be created by enactment of its tax cuts. The August job growth of 144,000 fell 162,000 jobs short of the administration's projection. As can be seen in the chart below, job creation failed to meet the administration's projections in 12 of the past 14 months.
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