President Joe Biden faces conundrum

The May jobs report released on Friday showed payrolls increased by 272,000 and wage growth reversed a three-month downward trend, providing an unexpected upward revision to the strength of the labor market and the U.S. economy.

But the news is a double-edged sword for the Biden administration, as low unemployment and strong job growth amid soaring home prices and a tight housing market have not translated into positive sentiment about the economy among voters.

Hopes for a domestic economic recovery hinge in part on the timing of an interest rate cut by the Federal Reserve that could please investors and stimulate the economy.

But Friday’s jobs report leaves that timing up in the air, along with any possibility of a victory lap about the success of the economy’s soft landing ahead of next week’s meeting of the Fed’s interest rate-setting committee.

“Looking ahead to next week [Fed] “The meeting, robust job creation and solid wage growth are likely to reinforce policymakers’ backward-looking, hawkish tendencies,” EY economist Lydia Boussour wrote in a Friday commentary. [of the easing cycle] September is growing.”

While the employment report itself is strong, there is a significant discrepancy between the Labor Department’s household survey and establishment survey, which are the data sources for the monthly employment report, which could indicate that workers’ situations are not as good as they appear.

The employer survey of establishments showed 272,000 new jobs were created in May, but the household survey showed the number of employed people in the economy overall fell by 408,000.

While the disparity is influenced by factors other than employment, such as the number of retirees and the response rate to the survey itself, it’s still noteworthy for economists who pay close attention to public sentiment.

“I think the disconnect between employer and worker surveys goes a long way to explaining this ‘downturn.’ The economy looks strong on paper, but people in the field aren’t feeling it fully yet,” Michelle Evermore, a former Labor Department official in the Biden administration, wrote in the analysis.

Elise Gould, an economist at the Economic Policy Institute, said the weakness in the household survey could be due to more shaky employment situations among younger people and that the numbers were more likely a “temporary fluctuation” following seasonal adjustments over the summer.

Despite the mixed signals from the May jobs report, the Biden administration and Democrats are focusing on the strength of Friday’s top-line number and the longer-term trend of job growth it continues.

“During my term, more than 15.6 million Americans will have the dignity and respect that comes with work, and the unemployment rate has remained below 4 percent for 30 months, the longest streak in 50 years,” President Biden said in a statement Friday.

Rep. Richard Neal (Mass.), the ranking Democrat on the Ways and Means Committee, also praised the report, noting its “objectively strong” character.

“How many consecutive months of job gains will it take before Republicans stop opposing an objectively strong economy? After 40 years, they will finally acknowledge the record-breaking successes that were built for working people and driven by working people,” he said in a statement.

While objectively strong job growth may favor Democrats, the subjective impact of how people feel about the economy, always a top priority for voters, may have the biggest impact on the election.

The economy has become a top issue for both Democrats and Republicans in the 2022 midterm elections, with eight in 10 registered voters citing the state of the economy as a “very important” factor in deciding who they will vote for. Pew Research Institute.

Economic issues such as inflation, health care costs and the budget deficit are top concerns ahead of this election. May poll Notably, unemployment is the lowest-ranked issue in the poll, with Democrats and Republicans largely in agreement on its level of importance.

Voters’ opinions of Biden’s economic policies have also proven weak in recent months. Public Opinion on the Economy From the lows in 2022, fewer than 10% of Republicans and fewer than 30% of Democrats considered the situation to be “very good” or “good,” but things have generally improved since then.

Persistent concerns about inflation have prompted the Biden administration to launch a multi-front campaign against price gouging in the private sector, which has played a major role in post-pandemic inflation as companies exploited the glut created by fiscal and monetary stimulus to expand profit margins to record levels.

The efforts range from a Federal Trade Commission report pointing out unusually high profits in the grocery sector to a long-dormant lawsuit by the Department of Justice’s Antitrust Division against well-known companies like Ticketmaster.

Such moves may elicit some sympathy from voters about the state of rising prices and may deter companies from raising prices further, but there is little sign that such clamoring will help bring prices down in an election-critical period.

“We’re actually in a pretty good place when it comes to the normal monetary policy tools, so turning to antitrust law might make sense politically, but as an economist I’m skeptical,” Jeremy Hopdahl, an economist at the University of Central Arkansas, told The Hill.