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White House officials express cautious optimism that the economy will not sink into recession this year, as a solid report on jobs and new wage data give a boost to the administration after months of brutal economic headlines .
President Biden and his top deputies have argued for months that economic growth and hiring are strong enough to outpace Federal Reserve movements to raise interest rates. This narrative has been viewed with skepticism by many Wall Street economists and analysts, who have seen intensive signs of a slowdown both nationally and globally.
But new economic data released last week seemed to bolster the administration’s case, as the Labor Department reported Friday that 372,000 new jobs were created in June, while the unemployment rate remained at 3.6 percent, among the lowest rates in history. White House economists stress that it is too early to declare victory, as the central bank is expected to continue trying to cool the economy with further interest rate hikes. But administration officials stressed that the rapid pace of recruitment suggests that an economic slowdown is not yet affecting the country.
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“I think if you want to talk about the nervousness of the recession, you should look at today’s employment report. Figures like this are very inconsistent with any kind of recession call,” said Jared Bernstein, a member of the Advisory Board. White House economists told MSNBC shortly after the work report was released on Friday. “When you’re generating 350,000 jobs on average over the last quarter, not in recession.”
Voters ’frustration with the economy has proven to be one of the most persistent challenges for the administration over the past year, with large sections of the electorate angry at rising prices. Inflation in May reached 8.6 percent, a 40-year high, with energy costs, in particular, squeezing U.S. consumers, in part due to the disruption caused by the invasion of ‘Ukraine by Russia. Biden’s approval ratings for the economy have fallen steadily amid inflation, which has affected the administration since officials first ruled it out as “transitory” last year.
More recently, the White House has been concerned that the economy may move from inflation to recession if the central bank is forced to curb the economy too quickly. But, there too, Biden’s aides have seen some encouraging signs. Gas prices have been falling steadily over the past three weeks since the June highs, while mortgage rates, after rising by around 6 per cent, have fallen. U.S. manufacturing has surpassed its pre-pandemic levels. Stock market indices, after falling in the worst first six months of any year since 1970, appear to have stabilized in recent weeks.
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In addition, annual wage growth fell from 4.6% to 3.8% from May to June, a healthy sign amid expanding labor supply, according to chief economist Adam Ozimek of Economic Innovation Group, a non-partisan business organization. This suggests that the labor force is growing to meet higher demand, reducing inflationary pressures, Ozimek said, rather than contracting demand in the face of a smaller labor force. Bernstein similarly said that the slowdown in earnings “is very much in the spirit of what the president is talking about when he talks about the transition from a dizzying pace, economic growth, to one that is a more stable and stable transition.” . Bharat Ramamurti, deputy director of the White House National Economic Council, posted a meme on Usher’s Twitter to mock the media for fears of recession.
“While the situation isn’t necessarily worse, the mood around economic management in the White House is much worse than it was even when many of these same people were trying to navigate the economy in through the depths of the financial crisis. It has seemed sad and difficult to navigate politically, even on the scale of the damage, “said an adviser outside the White House, speaking on condition of anonymity to describe private talks. with administration officials. “But this is a day where nothing bad happened.”
Other economists see more contradictory evidence from recent data. Economic growth has also been faltering, with the contraction of the country’s gross domestic product in the first quarter of this year and the forecast to do so again in the second quarter, according to numerous analysts. The mismatch between high employment and weak economic growth is unusual, but suggests a possible slowdown outside the labor market.
And Skanda Amarnath, executive director of Employ America, a left-wing think tank, noted that one of the two employment surveys showed potentially worrying signs. The payroll survey, which puts companies in touch, showed good improvement. But the other, less-cited survey, which interviews households, showed uneven results for the third month in a row. This household survey showed that jobs fell in April, rose slightly in May and then fell by 315,000 in June.
“We have a survey that tells you everything is fine, and there is another survey that shows at least uniform progress after showing considerable progress last year,” Amarnath said. “I don’t think there’s any reason to panic, but yes to be on high alert. The job market is slowing down in this poll.”
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Amarnath added: “The trend has shifted from a dizzying recovery to a flat reduction or at least a minor improvement. Maybe from April to June it will turn out to be a coincidence.… But we are in the middle of a slowdown, and we should go with the statements we make about the state of the economy. “
Still, the White House is building confidence. “The strength of this job market is historic,” Brian Deese, chairman of the White House National Economic Council, said in an interview with MSNBC. Deese stressed that the US private sector has now regained all the private sector jobs lost during the pandemic, calling it an “important milestone”.