More on Greenspan's testimony before Congress last week. Text via FDCH Washington Transcript Service. Today's focus: Job creation

Greenspan:

"My own expectation is that the rate of productivity advance, which has been five percent plus over the recent past, is going to slow down significantly. And it's just a matter of arithmetic that if the overall demand continues roughly where it is -- the overall growth in demand essentially where it is, is that you will begin to create significant job growth.

"Is the administration's forecast (of 2.6 million jobs in 2004) feasible if productivity growth slows down to a more historic level? It's probably feasible. But we have not as yet seen any evidence that that is indeed the case. In other words, we're still seeing very little evidence of new job hiring ...

"No, I don't think it's fantasy-land. I think it's probably the most likely projection."

Chairman Greenspan paints a relatively rosy picture of the near term future job market. The $10,000 question is: Where are these jobs going to be physically located?

That assumes that the numbers of jobs forecast are even produced.

Being the skeptic that I am, I must be shown that job growth is accelerating in the U.S. before I buy into Greenspan's and the the Bush Administration's forecasts. This chart illustrates the difficulty that this administration has had in painting an accurate picture of future employment levels.(I am not saying that this is easy, it is most difficult)

The White House on Tuesday,10 Feb. 2004 revised its job numbers down from 2.6 million in 2004, to 325,000 jobs per month. The economy needs to generate roughly 160,000 new jobs per month to keep pace with population growth.

Mankiw, in the above article, rebuts Greenspan's numbers(which are the White House's numbers) Truly odd. Mankiw is now calling for roughly 2 million new jobs in 2004. Mankiw is also being chastened by his remarks about job 'outsourcing' being a good thing.

The latest trends show a falling off of job growth. Employers are hesitant to hire as the strength and longevity of the recovery remains in question. These are always unknowns, but this time around, an increase in worker productivity and 'outsourcing' have combined to thwart the recovery in jobs some 34 months into a recovery.

Given that many businesses have dramatically rearranged their cost structure -- with no real finite end in sight -- job growth may be less satisfactory than even these projections, and we while a decrease in the unemployment is possible, we are almost certain not to see a decrease in unemployment and a boost in real wages anytime soon. This due to in large part to 'outsourcing.'

That people have new concerns about the economy was confirmed in the unexpectedly sharp decline in consumer confidence, which is a forward looking indicator.

At this juncture, it's hard to know where the economy, and job creation are headed over the short term. Longer term, consumer and government debt at record levels, and record deficits, both trade and governmental do not bode well for robust growth.