President Biden got a big boost Friday.
The economy added 943,000 jobs in July, according to the Bureau of Labor Statistics. It was the best monthly showing in almost a year, bringing the unemployment rate down to 5.4 percent.
Unemployment soared at the beginning of the pandemic, spiking to 14.8 percent in April 2020.
The robust jobs report helps Biden in several ways.
It lends him a tailwind as he faces the challenge of rising COVID-19 infection rates. It bolsters the morale of the public at large, with whom the president’s approval ratings had begun to edge downward. And it is a potent rebuttal to the conservative argument that the White House’s economic policies are restraining growth.
Criticism from the right was at its loudest three months ago, when the jobs report for April came in vastly below expectations. Conservatives blamed Biden — specifically, his championing of an extension of a weekly $300 payment of supplemental unemployment insurance (UI).
Back then, the U.S. Chamber of Commerce accused Biden of “paying people not to work.”
Rep. Kevin Brady (R-Texas), the ranking member on the House Ways and Means Committee, condemned the president for “his job-killing policies.”
Many GOP-led states announced plans to end the extra unemployment payments early, rather than let them run to September as Biden and congressional Democrats intended.
But the conservative case has grown weaker in the months since then as hiring has soared.
“The jury is still out but, based on the data we have, there is no evidence that supplemental UI had an impact on jobs and working decisions,” Mark Zandi, chief economist for Moody’s Analytics, told this column.
Zandi based that view on several factors.
He noted that around 850,000 jobs had been added in June, at a time when only a handful of states had ended the supplement. The numbers for July, he said, showed that more jobs were being taken by people who had dropped out of the workforce, rather than those who had been receiving unemployment benefits — the opposite of what would be expected if the GOP argument were correct.
Two studies released earlier this week, first reported by CNBC, made a similar point. The separate studies from payroll companies Homebase and UKG showed states that had maintained the unemployment benefits were enjoying stronger employment gains than the states that had ended those payments.
It’s no surprise liberals are now cheering.
Jesse Lee, a senior adviser at the left-leaning Center for American Progress and a veteran of the Obama White House, said the conservative argument against extra unemployment insurance “has basically gone away as a serious critique.”
He added, “If you look at almost a million jobs gained and employment gains starting to get within striking distance of full employment again, there is no basis for saying something is going on that is holding things back.”
Biden was careful not to take too euphoric a victory lap when he spoke about the jobs numbers at the White House on Friday. But it was a victory lap nonetheless.
“While our economy is far from complete and while doubtlessly we’ll have ups and downs along the way as we continue to battle the delta surge of COVID, what is indisputable now is this: The Biden plan is working, the Biden plan produces results, and the Biden plan is moving the country forward,” the president said.
The relative silence from usually voluble Republicans in Washington over the new job numbers was notable. But the Republican National Committee did respond, albeit with a scattershot argument that contended that too few Americans were employed but also that Biden’s policies were fueling inflation.
As a general rule, slack in the labor market mitigates the risk of serious inflation.
The Biden administration and Federal Reserve Chairman Jerome Powell have argued that current inflation is transitory. The core of their argument is that year-on-year comparisons are not particularly useful given the unprecedented circumstances of one year ago.
The political stakes of the broader debate are huge. Republicans have typically enjoyed an advantage among voters when it comes to stewardship of the economy. But if Biden comes to be seen as having guided the nation effectively out of the pandemic, his party could reap big rewards.
Lee argued that voters had typically seen their choice on the economy as between Democrats prioritizing fairness and Republicans prioritizing growth.
“If Biden can capture both of those elements — boosting the middle class and boosting economic growth, which is what you are seeing so far — that has the chance to make the Democrats the party of the economy,” he said.
Still, the fact that COVID-19 cases are climbing so sharply has the potential to upend everything, throwing a wrench in the recovery.
Beth Ann Bovino, the chief U.S. economist of S&P Global Ratings, acknowledged that it was “hard to see anything wrong” with Friday’s jobs report.
But she worried about the impact of the delta variant in the months ahead, especially if it were to affect school plans to reopen for in-person learning in September.
Bovino said she had expected September to be a “seismic” month for the economy as children returned to school, liberating many parents to return to the workforce.
“I’m afraid the delta variant calls all that into question,” she told this column. “Right now, schools say they are going to reopen, but we all know how fast COVID works. It can change on a dime.”
That is surely one reason why Biden again stressed the importance of vaccinations on Friday, even while welcoming the new jobs data.
If people got their shots and wore masks when recommended, the president said, “all of that will save lives, and it means we’re not going to have the same kind of economic damage we’ve seen when COVID-19 began.”
How the pandemic develops from here, and how the economy performs, will have a profound impact on his presidency.
The Memo is a reported column by Niall Stanage.