Experts say economy should grow despite who wins White House in Nov.
By Vicki Needham - 09/02/12 05:00 AM ET
The economy could churn out 12 million jobs in the next four years regardless of who wins the White House in November, economists said.
It’s a prediction in line with a promise made by the GOP presidential ticket.
Republican presidential nominee Mitt Romney and his running mate Paul Ryan each pledged in their speeches during the GOP convention that they would create 12 million jobs over the next four years with a series of familiar policies that include reducing regulatory and tax burdens on small businesses and ramping up international trade.
Despite the slowly healing job market, Romney and Ryan have ignored the danger of going out at least part of the way on a political limb, with forecasts of a much faster pace of job growth on their side.
"Most forecasts for employment growth are very close to 12 million over the next four years regardless of who wins the presidency," Mark Zandi, chief economist with Moody's Analytics, told The Hill.
Creating that many jobs in the next four years "is very doable," he said.
President Obama has learned the hard way in making promises on jobs, after ensuring that an $800 billion economic stimulus package in 2009 would "save or create" 2.5 million jobs and drop the unemployment rate down to about 6 percent by now. Since then, the White House has shied away from making specific job creation predictions.
Meanwhile, the Romney campaign, as well as congressional Republicans, have seized on the White House's failure to lower the jobless rate, making it central to their argument as to why Obama's policies have hampered a stronger recovery and why he should be denied a second term.
Obama will likely argue next week at the Democratic National Convention that electing Romney would return the country to the same Republican policies that mired the nation in a deep economic hole.
Republicans argue that not only did the Obama administration miss the mark on the jobless rate, which has remained stuck above 8 percent for the bulk of his presidency, but he has also failed to make headway on creating enough jobs to make up for those lost during the recession.
"And unlike the president, I have a plan to create 12 million new jobs," Romney said Thursday night in a speech where he accepted the GOP nomination.
Romney outlined five steps including, energy independence by 2020; updating workers skills and giving parents school choice; forging new trade agreements and leveling "unmistakable consequences" for violating trade rules; helping small businesses by reducing taxes and regulations; and cutting the deficit and balancing the budget by repealing Obama's signature healthcare law.
When it comes to the Romney-Ryan vow, Keith Hall of George Mason University’s Mercatus Center and the former head of the Bureau of Labor Statistics, which produces monthly job and other data, said while there is some "ambition" in creating that many jobs over four years, it is certainly possible if the economy starts "clicking on all cylinders."
To get there, the economy would need to create, on average, 250,000 jobs a month beginning in 2013 and the nation could get back to near full employment, around 6 percent, and nearly a full recovery by mid-2016, Zandi and Hall said.
President Clinton's first term was the only time a recovery has generated more than 12 million jobs. Nearly 23 million jobs, averaging 237,000 jobs a month, were created during his eight years in office.
At this point, Obama is still 316,000 jobs in the hole, despite job growth every month since October 2010, Hall said.
The economy needs to create upward of 190,000 jobs a month just to cover population growth and, so far, the Obama economy is only generating about 127,000, Hall said.
By contrast, President George W. Bush left office with only 1.1 million net jobs created during his two terms, an anemic 11,000 a month, according to Hall.
Still, not everyone is sold on the possibility of it happening regardless if Obama wins reelection or whether Romney sweeps into office.
Judy Conti, federal advocacy coordinator with the National Employment Law Project, called it an "unrealistic promise," especially with the looming threat of federal budget cuts, the lack of cooperation in Congress to agree on policies that could help boost the labor market and continued fiscal struggles at the state and local level that are a drag on job creation and the economy as a whole.
National unemployment would be 7 percent if state and local governments had not shed so many workers.
"Anyone who thinks the next Congress will do more regardless of the balance of power is very naive," she said.
"I'd love to see it but I don't think it's going to happen," Conti said.
From Zandi's perspective, the potential is in place because the economy is on track to create 2 million jobs this year. As long as the recovery maintains at its current pace, 8 million jobs would be created over the next four years.
A good batch of those jobs should come from more home building and commercial construction, which are still at incredibly low levels of activity, and "will increase substantially," he said.
"Even under very conservative assumptions" 4 million jobs could be created over the next four years in construction and construction-related industries like manufacturing, transportation, distribution and financial services.
"The economy’s fundamentals have improved significantly since the recession, and this will shine through in the next several years," Zandi said.
The Labor Department has projected that employers will create 20.5 million jobs from 2010 to 2020 with the healthcare sector expected to grow the most rapidly, while construction jobs could struggle to recover positions lost during the recession.
In a CNN interview in early August, Romney said the creation of 250,000 jobs a month is "what happens in a normal process."
"We should be seeing two, three, 400,000 jobs per month to gain much of what’s been lost, that’s what normally happens after a recession," he said.
But Hall said the recovery has been anything but normal and the rebound over the past three years has, in terms of economic growth, amounted to the worst economic recovery on record.
Still, Hall says it has been a "humbling time" for economic policy with the recession testing the limitations of what the government or Federal Reserve can do to spur more robust growth.
"I don't know what more the Federal Reserve or government could have done," he said.
