In one of the more dramatic moments in US job history, the Labor Dept. on Friday announced in the April Jobs Report, that there was a gain of non farm jobs to 428,000, helping to narrow the total jobs lost to the pandemic to a near return of 95 percent, and giving solace to not only the White House, but also to the sagging polls of President Joe Biden as he struggles to gain momentum, after being battered, albeit unfairly, for high inflation, crime, and other social and economic problems.
Unemployment, the marquee number, as we prefer to call it, held steady at 3.6 percent, but the fly in the ointment was the low, nearly unchanged labor force participation, that hung in at 62.2 percent, with a loss of participation of 363,000.
That aside, the report was solid, providing solace to many, ,and an assurance that the US economy, at least for replacing jobs lost to the Covid pandemic, was faster than expected.
Wages were up by 5.5 percent, but those rising wages, while needed to cover inflated costs for the consumer, might also threaten the already fragile inflationary surge that is felt from Main Street, to Wall Street.
President Biden, has noted that “Fighting inflation is a top priority,” for his administration and bolstered by the rate increase by the Federal Reserve Board, might make a difference, as it attempts to cool down the economy, and avoid further inflation, and the recent increase by half a percentage point, is only a path toward more.
The New York Times reported that, “President Biden pointed to the latest data as evidence of “the strongest job creation economy in modern times,” a message the White House is increasingly amplifying ahead of the congressional elections.”
All things being political and with the looming November midterms, the Times also said that, “After the Labor Department report on Friday, Ronna McDaniel, the chairwoman of the Republican National Committee, put the spotlight on inflation rather than jobs. “Families can’t afford food and groceries, wages can’t keep up with inflation, and Biden’s agenda is only going to make it worse,” she said in a statement.`
Going even further the Times noted that, “Job creation will eventually settle into a slower pace as businesses feel the pinch of soaring inflation and tighter financial conditions, but gains will stay healthy,” said Oren Klachkin, a lead U.S. economist at Oxford Economics. He forecast that the economy, which has added two million jobs in 2022, would add another two million by year’s end.”
Taking this as good news, at least on the periphery, it’s easy to see that the delicate balance between the Feds, on one hand, trying to pry loose the levers of inflation, is like a house of cards, with only a good gust of wind from an open window, or door, to send it all sailing downward.
Fed Reserve Chair, Jerome Powell, said on Wednesday at a press conference,:"So we think through our policies, through further healing in the labor market, higher rates, for example of vacancy filling and things like that, and more people coming back in we'd like to think that supply and demand will come back into balance,".
Wages were very much on his mind and the 0.3% increase, can be problematic as we said in March,with fears of further fueling inflation, and he added, "And that, therefore, wage inflation will moderate to still high levels of wage increases, but ones that are more consistent with 2% inflation. That's our expectation."
Meanwhile the American consumer, the driver of the US economy is in a party mode, and is spending and traveling, (at least those that can),and the increase in spending on goods, versus services from the lockdown, can be felt, and major US air carriers are saying “get your tickets now folks, before the prices go up,and up.”
Then there is that pesky crowd of 23 million workers who don’t seem to want to fill employers needs for trained workers, some of who are maybe afraid of covid, or remain unvaccinated, or even those that are still looking for a better opportunity, that they pondered during the lockdown,and business closures. But, whatever the reason, they are not there and don’t seem to want to be there.
Yahoo Finance noted that, “Almost 500,000 workers decided to leave the workforce in April. The large decline is a concerning prospect for businesses that are facing one of the tightest labor markets in decades," Peter Essele, Head of Portfolio Management for Commonwealth Financial Network, said in an email Friday morning.”
For the record there are 1.9 vacancies for every unemployed worker, but in a report where economists predicted a 300,000 increase the dilemma remains.
Among the higher numbers was that the job gains were led by leisure and hospitality at 78,000, and employment in restaurants and bars rocketed up to 44,000.
Transportation and warehousing shot up to 52,000 to keep up with demand, in an area that was worrisome to many, a few months ago.
The old adage of time healing all wounds may be true, but for the American economy, it’s good news, for now.
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