How long will it take for the United States labor market to recover from the pandemic-induced financial crisis? The May jobs report was an improvement from the previous month. However, it still did not elicit much confidence that the economy would recuperate the millions of jobs before the COVID-19 public health crisis anytime soon. Is this an indictment on President Joe Biden’s economic agenda, or does it suggest that the government’s overreaction to the once-in-a-century respiratory illness inflicted permanent damage on the Land of the Free? Bidenomics will need to toss a Hail Mary at this point.
Biden on Some Labor Numbers
According to the Bureau of Labor Statistics (BLS), the U.S. economy added 559,000 new jobs in May, falling short of the median estimate of 671,000. This is up from the 278,000 new positions in April. The unemployment rate declined to 5.8% last month, better than the market expectation of 5.9%. This is also down from the 6.1% reading in the previous month.
Most of the employment gains were concentrated in leisure and hospitality (292,000), education and health care (87,000), government (67,000), professional and business (35,000), information (29,000), and manufacturing (23,000). The construction industry shed 20,000 jobs, while the retail trade sector dropped 5,800 positions.
BLS data also highlighted that average hourly earnings rose a better-than-expected 0.5% in May to $30.33, average weekly hours slipped to 34.9, and the labor force participation rate dipped to 61.6%.
Meanwhile, the U.S. government reported on Jun. 3 that initial jobless claims plunged to a fresh pandemic low of 385,000 in the week ending May 29. The number of Americans filing for unemployment benefits clocked in at 385,000, below the projection of 390,000. When federal applications are added to the mix, the total number topped 450,000.
In total, the number of people who are currently receiving benefits from several state and federal programs is more than 15 million, down roughly 50% from the coronavirus pandemic peak.
A Market Reacts
MarketWatch perhaps had the best summary of the May snapshot: “Better, but still not booming.”
Financial markets were relieved because it was a middle-of-the-road report. Investors did not want to see too many jobs gained, but they also did not want a repeat of April. The reason? The Federal Reserve. If employment gains exceeded the forecast of 671,000, it might have given the U.S. central bank ammunition to either raise interest rates or taper its ultra-aggressive quantitative easing efforts. For an equities arena addicted to easy money, this would have initiated a sell-off. Ultimately, the figures will encourage the Fed to stay the course and “not even think about thinking about raising rates,” as Fed Chair Jerome Powell said during a press conference after May’s Federal Open Market Committee (FOMC) policy powwow.
The Dow Jones Industrial Average picked up more than 100 points, the S&P 500 added nearly 1%, and the NASDAQ Composite Index rallied close to 200 points. The Treasury market was mostly red, with the benchmark ten-year yield down 0.055% to 1.572%. The one-year bill dipped 0.003%, while the 30-year bond dropped 0.035% to 2.26%. The metals market was green across the board: gold and silver flirted with $1,900 and $28, respectively.
What are economists saying? The consensus is that the economy is on the road to recovery and is beginning to look healthy again, with July appearing to be a strong month. By the fourth quarter, the job market could be firing on all cylinders. But they do note that the decrease in construction jobs is troubling.
Morning in Joe’s America?
Can President Joe Biden resuscitate the economy from the ashes of despair? Approximately eight million jobs that existed prior to the pandemic are still missing, many of them never to return. Early retirements, a paucity of child care options, and generous jobless benefits are the driving factors for the lackluster measurements. Companies are hiring, and the employment opportunities are prevalent, but it is up to the public to submit their CVs to begin earning a paycheck again. Perhaps Bidenomics should adopt the mantra of Make America Work Again after 16 months of house arrest and sitting on the sidelines. MAWA!
Read more from Andrew Moran.