Yay, it’s Friday! And there’s good news about the economy! Here’s what’s going on:
Unemployment Rate Falls to Lowest Level Since Start of the Pandemic
The U.S. economy added a robust 678,000 jobs in February, the Bureau of Labor Statistics announced Friday, in a report that showed stronger-than-expected growth in multiple sectors, including leisure and hospitality, health care and construction.
The unemployment rate fell to 3.8%, the lowest level since the pandemic began, and both the labor force participation rate and the employment to population rate rose.
Wages, however, barely budged, as average hourly earnings increased by just a penny, to $31.58. Though it’s too soon to say, the lackluster wage growth could be driven by the return of more workers to the job market, which could reduce upward pressure on wages.
Here’s a roundup of reaction to the report:
Pandemic easing: “Covid is loosening its grip — the virus ruled through fear and that fear is fading. You see that around the country, as people are willing to go back out to jobs that they weren’t willing to take in the midst of the pandemic.” –Austan Goolsbee, who led the Council of Economic Advisers in the Obama administration.
Torrid growth: “We added 678,000 jobs in February, for a total of 7.9 million jobs added since the end of 2020. It’s mindbogglingly fast and sustained growth—well over half a million jobs added per month on average for more than a year.” – Heidi Shierholz of the Economic Policy Institute.
A triumph for fiscal policy: “We are on pace to recover EIGHT YEARS faster than we recovered from the Great Recession. Why do we have such a fast recovery this time around when other recent recoveries have been so weak? That’s because of CARES and ARPA.” – Shierholz again, crediting the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act and the $1.9 trillion American Rescue Plan Act for the rapid recovery. (See the chart below from Calculated Risk’s Bill McBride to get a sense of both the severity of the initial recession and speed of the jobs recovery.)
But still a ways to go: “Overall, the economy is still 3.5 million jobs and 1.4 million workers short relative to pre-pandemic projections (adjusted for lower than expected population growth), as labor supply continues to fall short of labor demand.” – Jason Furman, who also led the Council of Economic Advisers in the Obama administration.
Another green light for the Fed: “This report is likely to reaffirm recent comments from Federal Reserve officials indicating that they still plan to increase rates at their upcoming March meeting, despite the market volatility stemming from the situation in Ukraine.” – Mike Fratantoni, chief economist at the Mortgage Bankers Association.
Strong growth should continue: “The labor market continues to be quite hot. It looks like the labor market is still primed for lots of strong employment growth.” – Nick Bunker, an economist at Indeed.
But Russia’s invasion of Ukraine could change the picture: “Should that conflict lead to the removal of the 6 million barrels of oil per day that Russia exports—which we think is only days away—from the global markets, with a commensurate surge in oil prices, it is only a matter of time before there is a material change in the pace and composition of hiring in the American labor market.” – Joseph Brusuelas, chief economist at the consulting firm RSM.
Number of the Day: 10,000
The Internal Revenue Service plans to hire 10,000 employees as it seeks to deal with a massive backlog of unprocessed returns, which stood at nearly 24 million as of the start of this tax season, The Washington Post reports. “The agency plans to use money from its existing budget, a large share of it from coronavirus stimulus funding, to pay for the new hires, to be made over the next two years,” the Post’s Jacob Bogage and Lisa Rein say. “The number of new jobs would represent a 14 percent increase in the IRS workforce.” A government official told the Post that the IRS does not expect to resolve its backlog until the end of 2022.
Rick Scott Doubles Down on His Plan to Raise Taxes
Republican Sen. Rick Scott of Florida is doubling down on his policy agenda — including a controversial call for all Americans to pay some income taxes — despite some intense pushback from fellow GOPers.
In an op-ed for The Wall Street Journal titled "Why I'm Defying Beltway Cowardice," Scott defends his 11-point proposal, which also calls for having all federal legislation sunset after five years, slashing the IRS budget, finishing the southern border wall (and naming it after former President Donald Trump) and imposing 12-year term limits for members of Congress and “government bureaucrats.”
Scott, who serves as chairman of the GOP campaign arm devoted to having the party win back the Senate, argues that Republicans must lay out an agenda to fight what he calls the “militant left” push toward a “woke socialist utopia.” Critics have called Scott’s overall plan a “batshit crazy” appeal to the MAGA right, but the senator portrays himself as a bold truth-teller willing to buck Republicans who are afraid of Democratic attacks:
Scott goes on to defend his call to have everyone pay some income taxes in order to have “skin in the game” — a proposal that has drawn fierce blowback from both Democrats and Republicans, forcing him to later explain that his plan wouldn’t apply to seniors or those who are not “able bodied.” He writes: “The change we need is to require those who are able-bodied but won’t work to pay a small amount so we’re all in this together. That means both free-loaders who abuse the welfare system and billionaires who pay lawyers and lobbyists to help them get around the tax laws.”
Senate Minority Leader Mitch McConnell (R-KY) this week publicly bashed some Scott proposals, telling reporters that if Republicans win control of the Senate next year, he as leader would decide where their focus would be. "Let me tell you what would not be a part of our agenda,” McConnell said. “We would not have as part of our agenda a bill that raises taxes on half the American people and sunsets Social Security and Medicare within five years. That will not be part of a Republican Senate majority agenda.”
A reality check: Scott may be looking to carve out a political lane for himself ahead of a potential 2024 presidential run, but a Politico/Morning Consult survey this week found that 51% of voters — including 62% of Democrats and 39% of Republicans — oppose his proposal to have all Americans pay some federal income tax. Only 33% support it. (The same poll found much greater support among voters for some other parts of his plan, with the idea of term limits for Congress backed by 79% of respondents.)
Even conservatives who like the idea of having everybody pay some income tax have questioned Scott’s plan, while others have just wondered about Scott’s logic.
“Most Americans who do not pay federal income taxes already do pay thousands in Medicare and Social Security taxes, property taxes, sales taxes, etc.,” writes John McCormack at the conservative National Review. “But what’s really baffling about Scott’s defense of his plan is his assertion that Americans who do not pay taxes now might only have to pay ‘a few bucks.’ Does anybody believe that raising an American’s income-tax liability from $0 to $3 is going to change how that American views federal spending? Does three dollars really count as ‘skin in the game’?”
Quote of the Day
“It all comes down to Joe. He wants to keep changing things. The great mystery has been why is it so damn hard to have senators sit down and work out the details?”
− An unnamed Democratic senator quoted in a piece at The Hill detailing the party’s frustration with the lack of progress on what had been called the Build Back Better agenda — and with West Virginia Sen. Joe Manchin’s latest proposal for the plan, which would leave out big social programs like expanded child care, universal pre-kindergarten, national paid family leave and long-term home health care. The unnamed senator added: “We’re all so tired of BBB.”
Tweet of the Day
Let’s end the week on a lighter note from Sen. Tina Smith (D-MN):
- Democrats Frustrated With Latest Manchin Pitch on Build Back Better – The Hill
- Biden Announces Strengthened Buy American Rule to Help Boost Domestic Manufacturing as He Touts February Job Numbers – CNN
- Biden Argues Jobs Report Shows US Can Tackle Inflation – The Hill
- Ukraine War, Excess Stimulus Raise 1970s Stagflation Risk, Summers Says – Bloomberg
- White House Considering Ban on Russian Oil Imports to U.S. – Bloomberg
- Biden's Approval Rating Jumps to 47 Percent After State of the Union Address – The Hill
- Key Democrat Says Negotiators Making 'Progress' in Border Wall Funding Talks – The Hill
- Decades of Neglect Leave I.R.S. in Tax Season ‘Chaos’ – New York Times
- Fearing Filing Season Chaos, IRS Hits Pause on Web Tool for Child Tax Credit – Politico
- Senate GOP Passes Resolution to Nix COVID-19 Emergency – The Hill
- Moderna, WHO Set for Vaccine Clash as Patents Threaten mRNA Use – Bloomberg
- For Families, $6B Deal With OxyContin Maker Is Just a Start – Associated Press
Views and Analysis
- Beyond the Jobs Report — a More Troubling Picture – Rep. Adrian Smith (R-NE), The Hill
- Companies Exploit Inflation to Pad Their Bottom Lines – Nir Kaissar, Bloomberg
- Biden's Had Many Surprises This Term — the Budget Crisis Isn't One of Them – Robert L. Bixby, The Hill
- Why I’m Defying Beltway Cowardice – Sen. Rick Scott (R-FL), Wall Street Journal
- This Republican Senator Just Won't Stop Trolling Mitch McConnell – Chris Cillizza, CNN
- Progressive Economic Policy Only Gets Harder From Here – Conor Sen, Bloomberg
- Biden Says ‘Fund the Police.’ Well, They Aren’t Exactly Strapped for Cash. – Jamelle Bouie, New York Times
- Afghanistan’s Money Belongs to Afghans – Bloomberg Editorial Board