Earlier this week, Heather Boushey and other members of US President Joe Biden’s economic team warned that the Omicron variant may have temporarily depressed employment, and so the January jobs report should be taken with tweezers.
But when the data landed Friday morning, with payrolls beating expectations on top of significant revisions to previous months, it served as both a sign of the recovery’s resilience and vindication of Biden’s economic record.
“This is an emotional turning point . . . it tells us a lot about where we are,” said Boushey, a member of the White House Council of Economic Advisers. of the recovery, the strength of wage gains – it’s all a testament to how the economy is changing. We just needed to ride out this bump of the pandemic.”
Biden has been forced to get on the defensive for months over his economic policies as supply chain disruptions and high inflation have clouded the outlook and opened the door to increasingly vicious attacks from from the Republicans.
When job growth appeared to slow when the Omicron variant began spreading in December, it hurt the president even more. According to an NBC poll last month, 38% of Americans approved of Biden’s handling of the economy, while 60% disapproved – contributing to a generally bleak assessment of his first year in office.
But evidence that the US economy weathered surging infections across the country this winter without too much damage to the labor market could help undermine criticism of Biden and offer Democrats fresh ammunition as the election nears. mid-term.
Austan Goolsbee, an economics professor at the University of Chicago and former economic aide to Barack Obama, said there could finally be “light at the end of the tunnel” and people’s perception of the economy could change .
“Maybe we are saying now that we can put this horrible mess behind us. If Omicron hasn’t caused the kind of job loss that previous waves have created, then maybe it’s conceivable that by the summer we could be back to something like normal,” he said. -he declares.
Big data revisions — and failures to meet economists’ expectations — have become more common during the pandemic, complicating policy messaging around jobs reports.
Republicans who previously criticized Biden and Democrats for slowing job creation in December found themselves with fewer arguments this time around. Kevin Brady, a senior Republican from Texas in the House of Representatives, acknowledged that Americans are “finally coming off the sidelines,” but only because the government’s support for the $1.9 billion stimulus bill – including unemployment benefits and child tax credit payments – had faded.
He added there was no need for additional government support for the economy, including Biden’s $1.75 billion Build Back Better social and climate spending plan, which is all way blocked in Congress.
Democrats who have defended Biden’s economic plans have drawn the opposite conclusions, saying January’s jobs report showed big spending helped generate exactly the kind of rapid rebound — or “high pressure” economy — that they were considering.
They said not only did the economy create 6.6 million jobs last year, but the job and wage gains were also benefiting low- and middle-income Americans.
“We Democrats learned the lesson of what was a less than robust approach to getting us out of the Great Recession of 2008. That’s why we pushed so hard to put in place the strong stimulus we did, and it works,” Tina Smith, a Democratic senator from Minnesota, told the FT. “And it not only works, it works on every level.”
Biden’s greatest policy vulnerability to the economy has been high inflation, meaning many U.S. households are not feeling the benefits of the strong recovery.
“If the price of oil is $90 a barrel, it won’t be like 1984 or even 1999 where people look and say, ‘This is what a boom looks like,'” Goolsbee said. “The [are] also downsides still substantial: large groups have legitimate beef, they don’t feel like it’s going well. So I don’t think anyone should be overconfident.
The White House has taken some of its own steps to bring prices down, including trying to ease supply chain bottlenecks at ports and holding talks with energy-producing countries to boost the price. ‘offer. But administration officials and Democratic lawmakers have also grown more comfortable with the idea of the Federal Reserve tightening monetary policy to ease price pressures.
Goolsbee said the strong jobs report could give the central bank more leeway to stage a “soft landing” without triggering a recession. “Looks like there’s a bit of wiggle room for the Fed to raise rates and the economy to be strong enough to handle the return to normal or start a return to normal,” he said. he declares.
Lauren Melodia, deputy director of macroeconomic analysis at the Roosevelt Institute, a progressive think tank, said that due to the large swings in labor market data during the pandemic, it was “important to look at the numbers and to be patient and not to expect that we are ‘going to have all the answers in real time’.
But she thought the lesson of this week’s jobs report — and what it said about the strength of Biden’s recovery — would endure.
“Because of fiscal policies and public health measures put in place over the past year, we have seen American workers and businesses weather the storm of the recent variant and its disruptions,” she said.