This is a partial transcript of "Special Report with Brit Hume", April 2, 2004 that has been edited for clarity.

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JIM ANGLE, GUEST-HOST: Finally, some good news on the job front. Today's report on unemployment shows that 308,000 jobs were created in March alone, almost three times what economists expected. Not only that, but the previous two months were revised upwards by another 87,000 jobs, bringing the total number of new jobs in today's report to almost 400,000.

To help us figure out what to make of all that, we're joined by Greg Valliere, chief political strategist at Schwab Washington Research Group.

Greg, thanks for joining us.

GREG VALLIERE, SCHWAB WASHINGTON RESEARCH: Great to see you.

ANGLE: Let me ask you first, what do you make of today's numbers? What should we take away from this report?

VALLIERE: Unabashedly positive. I suppose you can't say one number is conclusive. But a number that big, 308,000, I think you have to say that we have turned corner on hiring. The only negative, Jim, I guess you have to find something wrong; the only negative is interest rates.

I think interest rates now have clearly bottomed. The bond market rally is over and if anyone is still procrastinating on doing a refinancing of their mortgage, they better hurry up and do it.

ANGLE: Now would be the time to answer one of those unsolicited e- mails.

VALLIERE: Yes, indeed. Mm-hmm.

ANGLE: Now, are there any -- there were some critics in town today pointing to one thing or another. Do you see any dark clouds at all in this report?

VALLIERE: Pretty hard to say that. I mean manufacturing jobs didn't grow, but they stopped falling. I mean The Democrats say with some justification that if you look at the entire Bush presidency, there's still been a huge loss of jobs.

I think the other argument, though, is you have to look at the trend and I think now that a new trend is emerging and that is a very good one for Bush.

ANGLE: Let's talk about that. There are only, if I count correctly, because the November jobs report comes out after -- or the October report comes out after the November election, the presidential election, so you have six more job reports left.

And in a way, President Bush is running a race against time here to create enough jobs by Election Day to look better. And the Democrats are obvious watching closely as well.

If you look out six months, what would you assume, based on what we now know, or what is being projected about economic growth and what we see in at least this one-month, and the revisions in the last two months jobs reports?

VALLIERE: I think a pretty good story. Not totally positive because I think discouraged workers may now come back in looking for jobs. So, the unemployment rate might actually tick up a little more.

ANGLE: Let's look at the unemployment rate. The rate did tick up 1/10 percent and we're saying it went from 5.6, where it was in January and February up to 5.7. That is because when people re-enter the job market, but don't find a job, they're counted as unemployed.

VALLIERE: Sure. And I think you may see more of these people come back in. So the rate might stay around 5.6, or 5.7. The big story though, Jim, is this monthly non-farm payroll figure.

And I think there is a very good chance we'll average 150,000, 170,000. Not 308,000, I think that is an exception. But I think the numbers will be solid and this will probably go from being an albatross for Bush to, in my opinion, probably a neutral for him.

ANGLE: At least a positive trend. Now, let me read you something from one of the various economic things I get from Wachovia Bank, who said today that, "this confirms the conditions for stronger job growth are now firmly in place, on pace to create two million net new jobs this year. Which they say they still feel is a "bit conservative." Would you go that far?

VALLIERE: That is a big number, two million. You could worry -- economists like to worry about things. You could worry that in the second half of the year, all of the stimulus from tax refund check, which people are getting now, could start to taper off a bit. You could worry that the momentum might slow a bit to mid three's on GDP growth by late this year. I think right now, though, we're right in the middle of a 4.5 to 5 percent GDP growth path.

ANGLE: And that would -- that suggests what about job growth?

VALLIERE: It will stay strong for at least the next two or three months. I think through midsummer, which is a crucial time for public attitudes ahead of an election. I think this is going to turn out to be a pretty good story for the White House.

ANGLE: Now there is still about $40 billion -- well, there was $40 billion in stimulus coming this year from the tax cuts already in place. Some people, who file early, no one I know, have already gotten than money. But most people have not. And obviously as you were suggesting, that will be a little boost for consumers as well.

VALLIERE: Yes. And I think Secretary Snow will remind us daily that the tax cut has been a big, big beneficiary. And I think most economist, whether they're on the left wing or the right wing would agree that the tax cuts came along at just the right time.

ANGLE: Now, with the reports over the last -- this month and the last couple of months, we now have, I think, President Bush as -- is looking at about 1.9 million jobs lost since he took office.

VALLIERE: Yes. Yes.

ANGLE: Obviously the Democrats point to that, though they use a slightly higher number at this point, and say, you know, this is the first administration to lose jobs since the Great Depression. If this stays on track, as you suggest it could be a positive trend, so you were suggesting this might be a neutral. How would that work?

VALLIERE: Well, I think the Democrats have to be very careful and not sounding like sour grapes. And if they keep saying that things are horrible or falling off a cliff, and we have decent numbers every month, I think their credibility might be questioned. So, they have to handle it, I think, very adroitly.

The key to the ism-states, like Ohio where there's still great anxiety over job losses. The key maybe is to emphasize outsourcing. There is still issues where Kerry may get some traction. I just think that they've lost a lot of their ammunition after today's report.

ANGLE: Let me ask you about outsourcing. There has been a lot of to- do about the outsourcing numbers. Though some people suggest it's pretty much a wash that we lose some overseas, but we also bring in jobs for foreign manufacturers who come here. How do you see it?

VALLIERE: I mean trade is dynamic. It is a two-way street. We create jobs. We lose jobs. That happens in a healthy economy. I think where the White House may have fallen down during the winter is that they didn't handle it very well from a P.R. standpoint saying outsourcing is good and...

ANGLE: They acknowledged that, by the way.

VALLIERE: They stumbled a lot on the atmospherics, the style rather than the substance. I think they got the message. And I think they're going to sound a lot more engaged now.

ANGLE: OK. Greg Valliere, thank you very much for joining us. We appreciate it.

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