Jobs, Pay - Good News

People who live in a golden age usually go around complaining how yellow everything looks, observed the poet Randall Jarrell. So it is with America's current economy.

Consider what happened when Alan Greenspan and his Federal Reserve Board colleagues raised interest rates at the end of March.

Fed critics on the left and right piled on. Union leaders and their allies in Congress complained that, by stepping on the brakes, Mr. Greenspan was trying to halt pay raises and job creation. Politicians on the right muttered that the Fed chairman was stifling economic growth and harming export industries by causing further strengthening of the dollar.

But look at the facts. Can union bosses and House minority leader Richard Gephardt really object to an economy that produced the fastest wage rises in seven years? An economy that cut the jobless rate from an already low 5.3 percent to 5.2 percent in March? If the growth in jobs continues at this pace, it could push unemployment below 5 percent for the first time in close to a quarter century.

The Labor Department reports that pay rose at an annual rate of 4 percent. With the official consumer price inflation rate at about 3 percent (and perhaps exaggerated by 1 percent), wages are rising almost twice as fast as the cost of consumer goods. No reason for complaint there.

And what about economic growth?

Last week the National Association of Purchasing Management found in a survey that the economy's manufacturing sector grew at the fastest rate in more than two years. The construction sector also boomed ahead, with a 2.3 percent rise in February - and the addition of 109,000 new construction jobs. No reason for complaint there.

And those jobholders aren't complaining. Despite a tough winter in many areas - and a wintry stock market - consumer spending is robust. Over the past six months household purchases have risen at the fastest rate in nine years.

Despite all these rosy percentages, are the shaky stock and bond markets telling us something unpleasant about the future? Perhaps. There are always cyclical theorists and short sellers whose reputations and purses benefit if they can persuade investors that a bleak period lies ahead. A watch has already started to see if Greenspan will step harder on the brakes when the Fed again considers interest rates May 20. Too much braking could ruin the party.

But, again, consider the facts: The US economy is growing healthily (3.8 percent in the final quarter of l996). Inflation remains low. Jobs are plentiful, pay rising. (Consider, by contrast, the double digit unemployment rates in much of continental Europe.) US export industries are competing successfully around the world. (Consider, by contrast, the slowdown among Asian exporters.)

If the Fed does raise interest rates too much, that will strengthen the dollar. That risks damaging exports. And that, in turn would almost certainly cause Greenspan & Co. to reverse course and lower interest rates again.

So let's quit complaining that everything looks so yellow.