Jobs report fuels White House optimism that recession will be averted
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White House officials are expressing cautious optimism that the economy will not slide into recession this year, as a strong jobs report and new wage data give the administration a boost after months of brutal economic headlines.
President Biden and his top surrogates have argued for months that economic growth and recruitment are strong enough to offset the Federal Reserve’s moves to raise interest rates. That statement has been viewed with skepticism by many economists and Wall Street analysts, who have seen sharp signs of a slowdown domestically and globally.
But new economic data released last week appeared to strengthen the administration’s case, with the Labor Department reporting Friday that 372,000 new jobs were created in June, while the unemployment rate stood at 3.6 percent, the lowest rate ever. is one of. Economists at the White House insisted it was too early to declare victory, as the central bank is expected to continue trying to cool the economy with additional interest rate hikes. But administration officials insisted that the fast recruitment pace suggests an economic slowdown is not yet approaching the country.
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“I think if you want to talk about recession panic, you should look at today’s jobs report. White House Council of Economic Advisors member Jared Bernstein told MSNBC shortly after the jobs report was released on Friday. That kind of number is very inconsistent with any kind of recession call. “When you’re looking at creating an average of 350,000 jobs for the last quarter — not a recession.”
Voter frustration about the economy has proved to be one of the administration’s most persistent challenges over the past year, with large sections of voters angered by rising prices. Inflation hit a 40-year high of 8.6 percent in May, with energy costs especially squeezing American consumers, due to the disruption caused by Russia’s invasion of Ukraine. Biden’s approval rating on the economy has steadily declined amid inflation that devastated the administration when officials first dismissed it as “transient” last year.
Recently, the White House has been concerned that if the central bank is forced to apply the brakes on the economy too quickly, the economy could slide from inflation to recession. But, even there, Biden’s aides have seen some encouraging signs. Gas prices have been falling steadily over the past three weeks from their highest levels in June, while mortgage rates – after rising nearly 6 percent – have fallen. US manufacturing has surpassed its pre-pandemic levels. Stock market indexes have appeared to stabilize in recent weeks, after their worst first six months of any year since 1970.
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Additionally, annual wage growth fell from 4.6 percent to 3.8 percent from May to June, a healthy sign amid expanding labor supply, according to Adam Ozimek, chief economist at Economic Innovation Group, a nonpartisan business organization. This suggests the workforce is growing to meet higher demand, easing inflationary pressures, Ozimek said — rather than contracting demand in front of a smaller workforce. Bernstein similarly said that the drop in wage benefits is “very much in the spirit of what the president is talking about when he talks about the transition from a breakneck pace, economic growth, to one that is more stable, Stable infection.” Bharat Ramamurthy, deputy director of the White House National Economic Council, said, To tease the media for allaying fears of a recession.
“Although the situation is not necessarily worse, the mood around economic management in the White House is very bad, even as many of these people were trying to navigate the economy through the depths of the financial crisis. White House Advisors One outside spoke on condition of anonymity to describe private conversations with administration officials, saying it felt grim and difficult to navigate politically, even on the scale of the loss. where nothing bad happened.”
Other economists see more mixed evidence from recent data. According to several analysts, economic growth has also worsened with the country’s GDP contracting in the first quarter of this year and forecast to do so again in the second quarter. The mismatch between strong employment and weak economic growth is unusual, but suggests a possible recession outside the labor market.
And Skanda Amarnath, executive director of the left-wing think tank Employee America, pointed out that one in two employment surveys showed potentially troubling signs. The payroll survey, which contacts firms, showed a healthy improvement. But the second, less-cited survey, which interviews households, showed uneven results for the third month in a row. That household survey showed a drop in jobs in April, a slight increase in May, then falling to 315,000 in June.
“We have one survey that is telling you things are fine, and there’s another survey that shows at least a flat line of progress after showing considerable progress last year,” Amarnath said. “I don’t think there is any reason to panic – but there is a reason to be on elevated alert. The job market in this survey is slowing down.”
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Amarnath said: “The trend has shifted from a breakneck recovery to a flatlining, or at least, a short correction. May prove tentative from April to June. … But we are in the middle of a recession, and we One must be mindful of the claims we are making about the state of the economy.”
Still, the White House is guessing at confidence. “The strength of this labor market is historic,” Brian Deez, chairman of the White House National Economic Council, said in an interview on MSNBC. Dees stressed that the US private sector has now passed all the private sector jobs lost during the pandemic, calling it a “significant milestone”.
