A release yesterday from the Department of Commerce confirms that the economy is growing rapidly. We see now that earlier estimates for the rate of growth for the first quarter of this year were wrong and needed to be revised upward to an exuberant 4.4% growth from 4.2%. This means, when added together with the two prior quarters, that the average growth rate since last year’s tax cut is 5.7%. Here’s some context: The average growth rate for the past 30 years is 3.1%, for President Clinton’s first term it was 3.3% and for Mr. Clinton’s second term

it was 4%. In other words, the economy is growing at a quicker pace than average and is significantly higher than during the Clinton years. Furthermore, the pace of growth is not falling off but rather accelerating. This is not news to anybody who follows the economy. What is news is that these data hold enormous implications for job stability, especially when compared to the prior administration’s growth spurt.

During the boom of the 1990s a transition occurred. In the early phase, corporate profits and payroll increases progressed together. New jobs that were created were backed up by new profits. Later, profit growth began to diminish and eventually, in 1998, turned negative. Job growth, however, continued, and even accelerated. In the years 1998 through 2000, corporate profits dropped a total of $175 million, while in those same three years we added more than 7 million new jobs. In 1998 in particular, a $328 million drop in profits coincided with nearly two million new jobs created. In other words, a great deal of hiring in the late 1990s was financed out of investment accounts (typically from venture capitalists) and not from profits. It was speculative. And when the speculation turned out to be wrong, the jobs disappeared.

Not so with the current recovery, which is an “un-bubble.” According to Economy.com, corporate profits increased by $14.4 billion in the first quarter of this year. The pattern with the Bush recovery is the opposite of that of the late 1990s. Job growth is occurring but does not outstrip business profits. The difference becomes startling when one looks at the numbers. In the first three years of the Bush administration, in aggregate, each new job added was accompanied by an average profit increase of more than $285,000. In the last three years of the Clinton administration, in aggregate, each new job coincided with an average decrease in profits of almost $28,000. This doesn’t mean that you can associate any one job with this profit or loss, but surely it is clear that a job boom backed by plunging profits is not as sustainable as one backed by surging profits.

Many hand-wringers have complained about the slow pace of job growth. Senator Kerry does so practically every day. Many of the same hand-wringers have complained about capitalism’s “excesses” and “irrational exuberance.”Well, they’re going to have to take their pick, because they can’t complain about both of them at the same time and avoid stumbling over their own contradictions. The corrective to an investor-fueled jobs bubble is a steady profit-fueled job recovery, just like the one we’re in right now — the “Un-Bubble.”