Welcome to the weirdest economy ever — In a chat with economics reporters on Thursday afternoon, a senior White House official previewed today’s jobs report by essentially acknowledging what everyone already knew: The administration wanted a strong but not super strong employment report for June. “Even something below consensus would still suggest a strong labor market,” the official said, adding that a figure in the 200,000 range “would be very reassuring.” Ordinarily, you’d expect any sitting president and his staff to root for the biggest, splashiest, most awesome jobs numbers they could get. Especially a president with approval ratings as dismal as Joe Biden’s, both overall and on the economy. But these are weird economic times. And the biggest White House fears center on rampant inflation that is both emiserating consumers and pushing the Federal Reserve to quickly raise interest rates to cool the economy and tame price hikes. A giant jobs number today might have goaded the Fed into even faster hikes that could easily trigger an incumbent-crushing recession. In the event, the June number came in a bit hotter than expected at 372,000, barely below May’s quite strong 384,000. But it wasn’t so scalding that it upset markets worried that something over 400,000 or so would tip the Fed into panic mode about the labor market being way too hot. It wasn’t quite the cliched “goldilocks” figure — not too hot, not too cold — but it was close. Unemployment remained at 3.6 percent and wage gains continued to moderate. The labor force shrunk a bit, which was the biggest bummer in the report. But overall, it was pretty much exactly what the White House wanted to see. Biden can continue to tout the numbers, which he did again today, calling this “the fastest and strongest jobs recovery in American history” (which is true but largely the result of an inevitable snap back from the 22 million jobs temporarily vaporized by Covid). And the president and senior White House staff can worry a little less that Federal Reserve Chair Jerome Powell will stomp on the brakes any harder than already expected (another three-quarter-point hike later this month and some more half-point hikes after that). But the report also added to a deeply strange — in fact unprecedented — economic picture. By some measures, notably job gains and the unemployment rate, the economy looks fantastic. By others, including overall gross domestic product growth, consumer and business sentiment and public polling on the issue, it looks like we are already in a recession. “GDP: -1% (assuming GDP Now is correct, a big assumption) … Employment: +2%. We have never seen a disconnect like that before in the data (available since 1948),” Jason Furman, a former top economic aide to President Barack Obama, tweeted about the numbers. It’s a near lock that we are about to see two straight quarters of a shrinking U.S. economy, ordinarily the demarcation of recession. But whether or not any period in U.S. economic history is officially deemed a bona fide recession is determined after the fact by the National Bureau of Economic Research. And consensus among top economists is that our strange current era cannot qualify as recession by NBER standards given the employment numbers. But everyone still hates this economy . That’s largely a product of soaring gas, food and other prices. But it’s also part of a broader American post-Covid funk and the result of bitter partisanship on guns, abortion and pretty much everything else. The good news (certainly for Democrats and possibly for America) is that today’s jobs report eases rising fears of a big-time slowdown. “An American economy in free fall does not tend to produce 372,000 jobs in any given month,” wrote Joe Bruselas, chief economist at advisory firm RSM US, in a client note today. As for inflation? Some signs suggest it’s peaked. But let’s wait on that one until the latest on consumer prices hits theaters next week. Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@politico.com. Or contact tonight’s author at bwhite@politico.com or on Twitter at @morningmoneyben.
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