The Strongest Jobs Streak Since 1939

The Strongest Jobs Streak Since 1939

By Yuval Rosenberg and Michael Rainey
Friday, May 6, 2022

TGIF! We’re wishing all the moms out there a very happy Mother’s Day on Sunday. Here’s the latest.

The Strongest Job Market Streak Since 1939

The U.S. economy added 428,000 jobs in April, with the unemployment rate holding steady at a pandemic low of 3.6%, the Labor Department announced Friday.

The report reveals a labor market that continues to expand with impressive vigor, adding 2.1 million jobs since the beginning of the year — and more than 400,000 jobs for 12 straight months, the strongest streak since 1939, according to Morgan Stanley. Demand for workers in the service sector in particular remains strong, with a gain of 340,000 jobs during the month.

The economy has now regained nearly 95% of the 22 million jobs lost during the pandemic. One area of concern, though, is labor force participation. The labor force shrank by 363,000 during the month, and although that number is not statistically significant, it does contribute to worries about the number of workers who remain on the sidelines despite solid wage growth.

Plenty of economists think the decline in the labor force participation rate, which fell two-tenths of a point to 62.2%, will prove to be temporary. The rate "has been trending strongly in the right direction for months," said Elise Gould of the Economic Policy Institute, adding that she is "optimistic this will simply be a blip on the way to a full recovery in [the employment-to-population ratio] by the end of 2022."

Other analysts aren’t so sure. Bloomberg’s Jonathan Levin argued Friday that the number of workers available to rejoin the labor force is getting smaller, and "the notion that a pool of untapped labor could somehow resolve the U.S.’s massive labor supply-demand imbalance was increasingly looking like wishful thinking."

Wage gains slow: Wages grew by 0.3% during April, and by a very robust 5.5% over the last year, but the three-month moving average dropped from 5.2% in March to 4.4% in April — easing concerns about the development of a wage-price spiral that could make inflation harder to combat.

"Wage growth was a little bit slower than I expected – that could conceivably be a sign of positive things to come on inflation," said former Treasury Secretary Larry Summers, a prominent inflation hawk. "The Fed’s moving in the right direction," Summers added, referring to the central bank’s decision earlier this week to step up its effort to tighten monetary conditions. "Whether they’re moving strongly enough and whether it’s going to be enough to bring inflation durably under control I think is still very much in question.

EPI’s Gould said there’s little evidence of a wage-price spiral. "On a quarterly or monthly basis, nominal wage growth is actually falling even in the face of continued inflation," she wrote. "We can keep labor markets tight without feeding inflation."

How long can it last? The continued strength of the labor market has surprised some experts, and many assume that hiring will ease up in the coming months. "We expect that as the economy evolves, both growth and monthly hiring will slow to more familiar long-term trends of around 2% growth for the economy and increases of 200,000 in hiring," Joseph Brusuelas, chief economist at the consulting firm RSM, said in a note Friday.

Oren Klachkin of Oxford Economics said that while hiring may slow, the job market will remain "a key source of resilience for the economy" for months to come. "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," Klachkin said. "We think the economy has enough strength to create over 4 million jobs this year."

Biden Sending Another $150 Million in Military Aid to Ukraine

President Joe Biden said Friday that the U.S. is sending more military aid to Ukraine.

"I am announcing another package of security assistance that will provide additional artillery munitions, radars, and other equipment to Ukraine," Biden said in a statement. "We are sending the weapons and equipment that Congress has authorized directly to the front lines of freedom in Ukraine. U.S. support, together with the contributions of our Allies and partners, has been critical in helping Ukraine win the battle of Kyiv and hinder Putin’s war aims in Ukraine."

A separate White House document specified the value of the aid package at $150 million. It’s the ninth drawdown from the larger aid fund approved by Congress soon after Russian invaded Ukraine, and Biden said that fund is now almost empty.

The president reminded lawmakers that his request for $33 billion in additional aid has gone nowhere. "With today’s announcement, my Administration has nearly exhausted funding that can be used to send security assistance through drawdown authorities for Ukraine," Biden said. "Congress should quickly provide the requested funding to strengthen Ukraine on the battlefield and at the negotiating table."

Group of House Democrats Presses Pelosi for Vote to Fund the Police

A group of 19 Democrats is urging House Speaker Nancy Pelosi (D-CA) and congressional leaders to hold a vote on bipartisan legislation to increase funding for local police departments across the country.

"We write to request that the House bring legislation to the floor in the coming months to infuse our local police departments and their personnel with new resources to ensure our communities and officers are safe and secure and invest in our officers," the House Democrats wrote in a letter first reported by NBC News. "Now is the time to send a clear message that we support investing in our women and men in blue.

Republicans have been hammering President Joe Biden and Democrats over an increase in violent crime in major cities. Democrats have responded by pulling back to some extent on calls for criminal justice reform and pushing back on progressive calls to defund the police. "The answer is not to defund the police. It’s to fund the police," Biden said in his State of the Union Address earlier this year. His budget called for increasing funding for law enforcement.

The Democrats behind the letter are mostly centrists, led by Reps. Josh Gottheimer of New Jersey and Cindy Axne of Iowa. Gottheimer, the co-chair of the Problem Solvers Caucus, is an author of the Invest to Protect Act of 2022, which would create a new grant program to fund officer training, recruitment and mental health resources as well as body cameras and other equipment for police departments with fewer than 200 officers. The House bill has 55 co-sponsors, including 36 Democrats and 19 Republicans. A companion bill recently introduced in the Senate also has bipartisan support.

White House Prepares for a Wave of 100 Million Covid Infections Later This Year: Report

The White House is preparing for a cold-weather Covid wave later this year that could infect as many as 100 million Americans if Congress doesn’t provide additional pandemic funding, The Hill’s Peter Sullivan reports: "A senior administration official told a small group of reporters on Friday that the estimate is the median of a range of models from outside experts that the administration consults, meaning it is also possible significantly more Americans catch the virus, especially if there is a major new variant."

The omicron wave this winter infected about 130 million to 140 million Americans, Sullivan says, adding that the Biden administration projects that case numbers this fall and winter could be lower if funding is made available for increased testing and updated vaccines expected to be ready by the fall. A bipartisan package providing $10 billion in pandemic funding is stalled in Congress as Republicans demand a vote on an amendment to prevent the lifting of pandemic-era immigration restrictions. Democrats may look to tie the Covid funding to an aid package for Ukraine.

"The senior administration official said the contingency plan if Congress does not provide new money is to take all funding out of testing, new treatments and vaccine education and outreach, and try to pile it up to have enough to maybe be able buy enough updated vaccines only for the elderly," Sullivan reports.

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