KRUGMAN: One Good Month

Published April 9, 2004 in The New York Times

At last, a favorable surprise on jobs: estimated payroll employment rose 308,000 in March, above almost everyone's expectations. You can't blame the administration for trying to play up the good news, and for being dismayed when the sound of popping Champagne corks was drowned out by the crackle of gunfire. But has the economy, after so many false starts, finally started to deliver?

For perspective, it helps to remember what solid job growth looks like. During Bill Clinton's eight years in office, the economy added 236,000 jobs per month. But that's just an average: a graph of monthly changes looks like an electrocardiogram. There were 23 months with 300,000 or more new jobs; in March 2000, the economy added 493,000 jobs. This tells us not to make too much of one month's data; payroll numbers are, as economists say, noisy. It also tells us that by past standards, March 2004 was nothing special.

And we should be seeing something special, because our economy should be on the rebound. Bad times are usually followed by big bouncebacks; for example, last year long-suffering Argentina had the fastest growth rate in the Western Hemisphere (8.7 percent!), not because of the excellence of its economic policies, but because it was recovering from a severe slump.

America hasn't had an Argentine-level slump, but we have a lot to recover from. After three years of lousy job performance, we should be seeing very big employment gains — and even after last month's report, we're not. It would take about four years of reports as good as the one for March 2004 before jobs would be as easy to find as they were in January 2001.

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