President Bush's chief economic advisor told a congressional committee Tuesday that the future is bright for the U.S. economy despite disappointing job growth.
Gregory Mankiew, the chairman of the president's Council of Economic Advisors, says the economy will register four percent economic growth this year and will create 2.6 million jobs. He said the economy has proven to be very resilient in responding to several shocks.
"Over the past few years the economy has had to deal with several major contractionary shocks: the end to a stock market bubble, corporate governance scandals, terrorist attacks, and slow growth among our major trading partners, particularly Japan and much of Europe," he said.
The shocks, said Mr. Mankiew, led to the mild 2001 recession. The recovery since then has gathered momentum to the point where the economy registered five percent growth in the last half of 2003.
But the weakest element of the recovery is employment. Since President Bush took office three years ago the economy has lost over two million jobs. Mr. Mankiew acknowledges that the pace of job creation has been slower than expected.
"I think the labor market has turned the corner this summer," he said. "But we still have a ways to go. We want to see more jobs created. We want to see the unemployment rate continue to go down."
Mr. Mankiew said that 125,000 new jobs must be created each month just to match the growth of the labor market. The U.S. unemployment rate stands at 5.6 percent. The presidential economist repeated President Bush's pledge to reduce the government's budget deficit by half over the next five years.