President Joe Biden portrayed the May jobs report as a jumping-off point for more government spending — essentially an argument for his agenda.
But the employment numbers issued Friday also hinted at the limits of how much government aid should be pumped into the world’s largest economy.
“We’re on the right track,” Biden said. “Our plan is working. And we’re not going to let up now. We’re going to continue to move on. I’m extremely optimistic.”
The May jobs report showed the difficulty of restarting the economy after pandemic lockdowns and an unprecedented surge in government spending.
Biden’s administration saw 559,000 jobs added in May and a 5.8 percent unemployment rate, yet hiring was lower than what many economists expected after his $1.9 trillion relief package.
Biden’s challenge is to convince Americans that his administration’s efforts are supporting faster growth instead of creating inflation and imbalances that could jeopardize public support for his spending plans.
The report suggested that not enough people are seeking work, a problem for a president who is hoping to get the country back at full employment by 2022.
While Biden viewed the jobs figures as a full-speed-ahead argument for his agenda, several economists urged caution to see whether more Americans will start looking for jobs after the steep losses caused by lockdowns.
Republicans argued against Biden’s plans to finance more government programs through tax increases on the wealthy and corporations. Their concern is that generous unemployment benefits have prevented people from accepting jobs and that the government aid — much of it still forthcoming — will fuel inflation.
Texas Rep. Kevin Brady, the top Republican on the House Ways and Means Committee, said Biden should divert more of the coronavirus relief money to infrastructure.
“If we want to help families build their lives and rebuild the U.S. economy for the long term, it’s time for the emergency spending and the endless government checks to end,” Brady told Fox Business.
The big red flag in the jobs report was that the labor force participation rate ticked down to 61.6 percent. Despite the government spending, it’s essentially unchanged from last summer and down from 63.3 percent before the pandemic hit 14 months ago.
For some economists, it’s evidence that Biden’s $1.9 trillion relief package was excessive. The government spending has so far generated more demand for workers and goods than the economy could produce, vindicating some Republican criticisms.
“We have a general sense of what’s going on at this point: We are not able to create the jobs fast enough relative to the demand we’re infusing into the economy,” said Marc Goldwein, senior vice president for the Committee for a Responsible Federal Budget.
Because demand for workers is greater than their current supply, the silver lining for Biden is a sharp jump in average hourly earnings. That’s a clear benefit to working Americans that can be sold on the campaign trail, but it risks inflation that could choke off growth.
Brian Deese, director of the National Economic Council, said the White House plans to release next week a review of how to make supply chains more resilient.
“On a lot of these issues,” Deese said, “there is no immediate short-term, magic bullet fix.”
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