CNN Money Morning - Transcript

CNNFN

SHOW: CNN MONEY MORNING 08:30 AM Eastern Standard Time

HEADLINE: Employment Report, Martha Arrives To Prison; Euro Zone Trading; McTeer On Jobs; Friday's Trading Preview; CNNfn

GUESTS: Sen. Bob Bennett; Bob McTeer, Craig Russell

BYLINE: Kathleen Hays, Louise Schiavone, Mary Snow, Mallika Kapur, Carrie Lee

BODY:
HAYS: Mallika Kapur, it will be interesting to see if that decline in European stocks pressures (ph) some declines here in the U.S. this morning.

Thank you so much.

September non-farm payroll rose by 96,000. Less than expected. We know job growth is very important to the state of our economy and wondering how it will be playing out in the debates tonight.

We're joined this morning by Senator Bob Bennett, a Republican from Utah and chairman of the Joint Economic Committee.

Senator Bennett, great to have you on the show.

SEN. BOB BENNETT, (R-UT) CHAIRMAN, JOINT ECONOMIC COMMITTEE: Thank you.

HAYS: So Wall Street was looking for a gain of about 150,000. Less than 100,000 jobs were added and the previous month revised lower. Are you concerned about the lack of more robust jobs creation in the economy right now?

BENNETT: In political terms, sure. This isn't good for the president. In economic terms, absolutely not. If you take the reality of what happened during the period that's being measured, particularly for hurricanes hammering Florida, our third largest state. It was almost inevitable that jobs creation would be less than would have occurred if the hurricanes hadn't been here. If we hadn't had the hurricanes, I think the creation would clearly be well over 100,000.

The number of revision for last year of another 230,000 additional job that's didn't get counted at the time, taken in the overall contest of this recovery, demonstrates that the recovery has traction, it's going forward. The jobbing are coming. It's unfortunate for the president politically that they don't come in exactly the right fashion that the politicians want to talk about.

But if we get out of the political season and look at the economic situation overall, we say, as I said, the recovery is on traction, it's doing well. And, of course, the household survey numbers, we will see those this morning in our hearings, they indicate that jobs outside of the payroll sector are growing more rapidly than they have at any time in our history. The economy is doing fine.

HAYS: And, of course, I just want to remind our viewers there are two surveys the Labor Department does. One, they survey businesses. That's about a half a million businesses in that survey to get the payroll number, that 96,000.

BENNETT: Right.

HAYS: The household survey only surveys about 60,000 households. Many studies done at the Federal Reserve have concluded that it's a far less reliable indicator of what jobs are doing and that's why the Federal Reserve seems to put so much more emphasis on the payrolls.

But let me ask you about this, Senator Bennett.

BENNETT: Let me just deal with that very quickly, though. The household survey and the payroll survey have always gone in the same direction with a slight gap throughout history. During this recovery, they have separated in ways they never have before and it's causing a lot of economists to go back and revisit the conclusion.

HAYS: True.

BENNETT: But they need to look at the other one.

HAYS: Well, I would just recommend to you do a study issued by the Cleveland Fed recently, which also says that if you smooth things out, that there's also a picture of this from both surveys, which is in this period of economic expansion, we've had sub par job growth. And even if the Labor Department says, when it goes back and looks at the numbers again.

And to our viewers, again, that was in the report this morning. Louise Schiavone talked about it. They think that the economy added 236,000 more jobs in the year from March of 2003 to March of 2004. You still have a net job loss. You still have an economy that just isn't creating jobs like it has in the past. Why do you think that is so, Senator Bennet? And what should policymakers be doing to change that?

BENNETT: Well, again, I want to get more deeply in our studies. More deeply into what is happening because I think what is happening is a demonstration of fundamental changes in the economy, which are not necessarily bad. I always tell people this last recession was the first recession of the information age. It didn't behave like any previous recession, not only with respect to job creation but with respect to the various sectors that were soft in a recession, others that were very booming through the recession. It's a very different kind of recession than we've ever had before.

HAYS: To that point, AT&T (Company: AT&T Corporation; Ticker: T; URL: http://www.att.com/) cutting 7,400 jobs. Bank of America (Company: Bank of America Corporation; Ticker: BAC ; URL: http://www.bankamerica.com/) is cutting 4,500 jobs. Unisys (Company: Unisys Corporation ; Ticker: UIS ; URL: http://www.unisys.com/) is planning to cut 1,400 jobs. About 16,000 layoffs just this week from just a handful of companies. What does that suggest?

BENNETT: Well, we are losing jobs and many people say we're losing them to India, we're losing them to China. We're losing jobs to a country called productivity. And that is a trend that has been going on really for 50 years. The percentage of manufacturing jobs, for example, as a part of the entire economy, has been going down for 50 years. And it's being accelerated now as we get more and more of the impact of the computerization and the information revolution we're going through.

Long-term productivity numbers are very strong, which indicates very good things for the economy. Real after tax income has gone up since 2000 by about 10 percent. The economy is changing very fundamentally. And we make a mistake if we try to measure this present situation by industrial age markers. We're in uncharted territory with the information age and we need to understand that. So policymakers make a mistake if they say, let's use the solutions of the old to try to solve the new.

HAYS: OK. Senator Bob Bennett, thank you so much for joining us. An interesting discussion on the jobs report this morning. Appreciate your time, sir.

BENNETT: You bet.