Bebeto Matthews/AP Photo
Construction workers install roofing on a high-rise in Manhattan’s financial district, April 11, 2023, in New York.
The Labor Department’s jobs report for June, released this morning, showed the economy adding 209,000 jobs and the unemployment rate staying at 3.6 percent. This is a slight slowing of recent job growth trends. It would be hard to imagine a better jobs report both for the Biden administration and to temper the Fed’s campaign to douse the recovery. Real wages are up slightly, while inflation keeps subsiding.
As President Biden pointed out in a statement just released by the White House, “This is Bidenomics in action: Our economy added … a total of 13.2 million jobs since I took office. That’s more jobs added in two and a half years than any president has ever created in a four-year term. The unemployment rate has now remained below 4 percent for 17 months in a row—the longest stretch since the 1960s.”
We haven’t heard a lot from Larry Summers lately. When inflation was high, Summers mistakenly blamed it on the stimulus of Biden’s several public-investment programs, and virtually called for a recession in order to reduce rising prices. Last October, he said that unemployment was likely to rise to 6 percent. As late as this past April, Summers was still predicting that recession risks were rising.
In fact, as recent disinflation trends have made clear, the inflation of 2021-2022 was mainly the result of supply chain shocks and other transient labor market factors related to the pandemic. And the strong recovery continues.
It’s hard to think of another economist who makes so many errors and keeps being treated by the media as a font of wisdom. The only good thing about Summers’s posture is that it has burned his last bridge to the White House, and we don’t need to worry about Biden giving him a government job.
This economy is about as good as it gets. Real wages have begun to rise, especially in the service sector, but not enough to cause general price pressures. The inflation rate, measured by the Consumer Price Index, rose at an annual rate of just 1.2 percent in May. Inflation has averaged 4 percent over the past year, but has been steadily declining. The main weakness in the economy is the result of some problems of failed regional banks, but that reflects feeble bank regulation and not macroeconomic factors.
The Federal Reserve was wise to pause its campaign of rate hikes last month. The June jobs numbers—some growth but not too much—should give more ammunition to the inflation doves than the hawks. Biden is at last beginning to get some of the credit he deserves for the improving economy. His poll numbers are improving and his campaign is wise to brand his suite of policies as Bidenomics.
