Press Briefing by Bob Rubin, Assistant to the President for Economic Policy, Laura Tyson, Chair of Council of Economic Advisers and Robert Reich, Secretary of Labor
The Briefing Room
10:15 A.M. EST
MR. RUBIN: Hi, I'm Bob Rubin, Coordinator of the National Economic Council. Very briefly, we are obviously very pleased with this morning's numbers, and you'll hear them discussed in greater detail in a moment.
The President started with a broadbased economic strategy, has stuck through it through a lot of very tough decisions. And as we have said many times before, we have had a good recovery in this country, and in our judgment, there is no question that that recovery would not have occurred without the President's economic strategy, particularly deficit reduction, but also the other programs, especially investment in the areas of education, training and equipping the American work force.
Last night, or yesterday, rather, GATT passed, which is a major step forward and another component of the President's broadbased economic strategy. Going forward, we will continue to pursue that strategy. We will be consistent with where we've been in the sense of functioning within the framework of that strategy. We will insist on financial responsibility, fiscal responsibility, since we think that has been central to the recovery and central to positioning this country for the long-term. And we will strive earnestly and ardently to continue to put this country on the right track, both for now and for the long-term.
With that I will turn the podium over to the Secretary of Labor Bob Reich.
SECRETARY REICH: Thank you, Bob. The Goldilocks recovery continues -- not too hot, not too cold. It's just right. We are seeing buoyant jobs growth without any sign of accelerating inflation. And you couldn't have it better than this. In fact, the news is even better than that because there's plenty of room for Goldilocks to get a raise.
Since January '93, the economy has added well over 5 million new jobs. America's unemployment rate has sunk to a fouryear low. Manufacturing employment has grown for 11 straight months. The industrial Midwest is in terrific shape. November's manufacturing jobs had their highest one-month increase in six years.
What's more, productivity is up at an annualized rate of 2.7 percent. And corporate profits are extremely strong, which means there is room for wages to grow.
Now, I don't want to be overly rosy in the sense that we still have a lot of work to do to ensure that all Americans participate and get the benefits of this economic recovery. There is still some slack in labor markets, well over -- not well over -- but there is over 7 million Americans are still unemployed. And approximately 6 million additional Americans are working part-time, they'd rather be working full-time, or who are available to work, want work, and are not getting work.
And I should also add, a big challenge to this country, that we still have to deal with, almost one-third of black teenagers today are looking for work and can't find it. So there is plenty to do, but we are on the right track. This is a strong, sturdy recovery and it's very difficult to find any problems with it at all. These are great days to be a Labor Secretary.
DR. TYSON: Well, I don't really have that much to add, except I just want to emphasize -- this is points of emphasis here -- the U.S. economy does continue to look very strong. It is undergoing an investment-led expansion, which is providing both more jobs and improved incomes for many American families. If you look at the increase in private wages and salaries which was reported this week, it is the third largest increase in that particular series.
Now a lot of that increase comes from the fact that there are simply more people employed, and that they are working longer hours. There were also some bonus payments in October, which added to the growth of that particular series -- private wages and salaries.
But as the Secretary has stated, it is still the case that many American workers who have jobs that they would not have had without this expansion, and are working longer hours than would have been the case without this expansion, have still not seen an increase in their real earnings per hour. And that is something that is an important factor to keep in mind because what it shows is that an investment-led expansion is going to be necessary to the improvement of the lots of many American workers, but not sufficient. There's a whole training and education agenda that we have to remain committed to. And we have to wed that training and education agenda with our trade agenda so that we can give American workers the skills they need for the high-wage opportunities created by growing international trade liberalization, which we realized last night with the historic vote on GATT.
Let me also confirm what Secretary Reich said about the inflation side of the picture. The economy's strong growth has been accompanied by continued good news on the inflation front. Recent indicators suggest that inflation is holding steady at a modest pace. There really are very few signs -- actually no signs in the major price indices -- of any acceleration in inflation this year.
So as the year ends we can think of the economy as presenting a gift to the American families, a gift that healthy economic expansion can bring -- more job opportunities, improvements in income, and the promise of a more prosperous future. But the promise of a more prosperous future does require that we remain committed to helping American workers and helping American families attain the skills and training they need to compete in the new world of technology and the new world of international trade.
Q: Secretary Reich, you said that there are no problems with the current recovery, but economists are looking to the high work week and their trend of rising earnings and this trend of 280,000 new jobs per month as very reasons why to be afraid of potential future inflation and why to be afraid that the Fed will have to come in and yank back the recovery so that we don't have an inflation problem that can't be controlled later. So how can you say there are no problems when these things could manifest later --
SECRETARY REICH: Let me just say very quickly, we are not seeing right now any accelerating inflation. And we are seeing rapid, buoyant job growth. This is a strong, sturdy recovery.
Q: But in can't continue, can it, without being an inflation problem, because inflation sort of -- with that many people coming into the work force, they've got high incomes, they've got long work weeks, they'll be spending money faster than you can rein them back by interest rate hikes. So that would be inflationary, right?
DR. TYSON: Can I say something about this? You have to think of this expansion as creating both supply and demand. And one of the important features of the expansion, which the administration has emphasized again and again, is the increases in capacity coming from investment spending. Investment spending over the past four quarters in plant and equipment, business equipment, has been growing at a pace of 18 percent. We've also mentioned again and again that it's at a post-war high.
So we are adding capacity to the economy even as incomes increase and that adds demand to the economy. I think you have to look at a variety of indicators. We are watchful, always watchful, for signs of inflationary pressure developing. I think it's important to point out that the news this year has been, on the one hand, the economy has been growing faster than most forecasters anticipated, including administration forecasters. But inflation -- the inflation forecasts have been right on the mark. That is, the inflation numbers have looked very good. It looks quite likely that the CPI will indeed come in for the year in the 2.8 to 2.9 range.
And again, if you look at the numbers, if you look at the CPI -- CPI for finished goods, the PPI -- PPI for finished goods, if you look at unit labor costs, if you look at employment cost index -- all of those major, reliable indicators of inflation, and what's happening actually show either steady numbers through the year, or in some case, a deceleration. So it's not to say that one shouldn't be watchful and mindful of indicators that inflation may up-tick somewhat, but so far the news has really been very good.
Q: The President is going to be meeting with Gingrich and Dole this afternoon. These latest numbers -- how do they bode for cooperation with the new Republican leadership in Congress, especially on the economic issues that are part of their contract --a capital gains tax cut, as well as tax credit for children?
MR. RUBIN: Wolf, let me respond in large measure, perhaps by not responding. (Laughter.)
Q: Thank you very much. (Laughter.)
MR. RUBIN: He has said consistently that he will draw a line in the sand on fiscal responsibility, and I think actually that may have been repeated this morning. And he's also said consistently, and I believe said in his press conference after the election, that we have a process right now to look at all these issues and make the judgments we're going to make, and we're going to do it in a very thoughtful and serious way. We are absolutely going to be fiscally responsible, and the judgments that we have to make on the various questions that we need to deal with have not been made yet.
Q: What about a middle-class tax cut?
MR. RUBIN: Same answer. We are looking at all sorts of issues. He has said, as you know, in his press conference, that whatever we do has to be paid for and paid for with real and serious numbers and no gimmicks. And beyond that, we just have to weigh and balance and make judgments on all these things. And Secretary Reich and Laura Tyson and all the rest of us are sitting around with him almost every day now, discussing these issues.
Q: Along that line, have you determined in your budget meetings whether or not there will be any significant deficit reduction element to the fiscal year 1996 budget that you'll release --
MR. RUBIN: Any question that deals with the specific will get the same answer, because all of these questions are on the process of being worked through right now. Other than to say what I said a moment ago, which is that we will insist on fiscal responsibility, serious numbers an no gimmicks.
Q: How about the Pentagon spending increases that were proposed yesterday? How does all that figure in?
MR. RUBIN: Well, the President had a press conference on that. I think that that speaks for itself.
Q: Can you tell us where the money is coming from? Nobody who briefed us yesterday had any idea.
MR. RUBIN: I think before you can get specifics on the budget, we have to finish our budgetary process. I don't think that's an unreasonable place for us to be.
Q: Secretary Reich, on your assessment of the economy -- economic news being a sort of Goldilocks, fairy tale, everything going well -- but the bond market today, they initially responded to the news as good news, but then pulled back, apparently fearful that the Fed might step in and again raise interest rates. Do you share the bond markets view that the Fed is somewhat of a wolf in this fairly tale?
SECRETARY REICH: Your suggesting that I watch the bond market very carefully, minute by minute. I can't speak for the bond market. I think we've already stated it -- that is, we don't see any accelerating inflation right now. We see the fundamentals all heading in exactly the right direction. And I want to emphasize this. We are looking at the fundamentals, we are looking at them very carefully. Ms. Tyson is looking at them hour by hour, and all of the fundamentals --
MS. TYSON: I'm going right now to look at them. (Laughter.)
SECRETARY REICH: It's about time for you -- (laughter) --
MS. TYSON: Back to my screen --
SECRETARY REICH: All of the indicators, in terms of employment and everything else are going in exactly the direction we want and --
Q: Could I ask, though, do you share a concern that the Fed might step in again and raise rates again --
SECRETARY REICH: I can't comment on the Fed. Maybe -- would you like to comment on the Fed?
MS. TYSON: I'm a well known noncommentor on the Fed.
Q: For Mr. Rubin, you talk about no gimmicks. Well, the Republicans are in the position now, since they control the CBO, to decide what's a gimmick and what's not. Are you talking about dynamic scoring? I mean, are you worried and are you concerned about that?
MR. RUBIN: By dynamic scoring? I think we are very concerned about any budgetary methodology that doesn't, in our judgment, provide a responsible way of dealing with the budget. I think dynamic scoring raises very, very serious questions with respect to responsibility; that is correct. So do inflated growth expectations and various other things that can be done to try to justify -- or, that really constitute gimmicks in dealing with the federal budget.
THE PRESS: Thank you.
END 10:28 A.M. EST
William J. Clinton, Press Briefing by Bob Rubin, Assistant to the President for Economic Policy, Laura Tyson, Chair of Council of Economic Advisers and Robert Reich, Secretary of Labor Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/269760