WASHINGTON — A springtime surge in hiring rumbled into a second month as employers added nearly 300,000 new jobs in April, lowering the unemployment rate to 5.6 percent.
In a second dose of good economic news Friday, congressional budget forecasters predicted this year’s federal deficit will be smaller than they had expected.
The timing couldn’t have been better for President Bush, who has been dealing with international fallout from the abuse of Iraqi prisoners by U.S. soldiers. The economy, which had been assumed would be a major drag on Bush’s re-election bid, now may prove otherwise.
The Labor Department reported that payrolls have risen for eight months in a row, with almost 900,000 new jobs created so far this year. Nearly three in four of those jobs were added in the last two months. The unemployment rate dipped in April from 5.7 percent to 5.6 percent.
“I’m officially declaring the jobless recovery dead,” said Ken Mayland, president of ClearView Economics. “I think we are now on a path of what will be substantial job gains.”
On Wall Street, the report sent stocks tumbling, with investors’ worried about the speeding economy’s effect on interest rates. The Dow Jones industrial average fell almost 124 points to close at 10,117.34. The Nasdaq lost almost 20 points to close at 1,917.96. Analysts expect the Federal Reserve to start raising rates this summer.
Bush, promoting his economic policies on a Friday tour of Iowa and Wisconsin, both of which he lost in 2000, said, “Our economy is strong, and it is getting stronger.” That’s because “we have left more money in the hands that earned it,” he said, again crediting the tax cuts he has championed for good economic news. They also have contributed to record deficits.
This year’s federal deficit could be less than the $477 billion predicted, the Congressional Budget Office said. It was the latest indication of possible improvement in the government’s short-term fiscal picture.
Even so, the shortfall already is at $284 billion for the first seven months of the fiscal year. That means the final 2004 deficit is likely to surpass or at least come close to last year’s $374 billion, a record in dollar terms.
Bush is on track to be the first president since the Great Depression to have lost jobs during his watch. Hiring gains in recent months have helped shrink those losses, however, to about 1.5 million. His administration was widely criticized for an overly optimistic forecast that 2.6 million new jobs would be created this year. Economists now say the chugging economy could approach that mark.
“I don’t think these two months of big increases are a flash in pan,” Mayland said.
Public support for Bush’s handling of the economy stood at 43 percent early this month, according to an Associated Press-Ipsos poll. That was the lowest approval rating since Ipsos-Public Affairs began tracking the question in 2002.
Democratic challenger John Kerry said Bush shouldn’t get a pass for Friday’s positive economic news.
“Any step forward in the job market is good news for America’s workers, but let’s be clear: we still have a long way to go to get America working again,” Kerry said.
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