Job creation good news for Biden … bad news for consumers
The job report for July was amazing. More than 528,000 jobs were created – double the anticipation of the leading economists. Unemployment dropped to 3.5 percent – a fifty-year low. This is in the range that economists consider full employment. There is no such thing as zero unemployment.
In any other environment, that would be unmitigated good news. But the United States is in a very weird place – economically speaking. Inflation is the number one problem. It destroys the purchasing power of every American.
The trend toward increasing wage levels is generally viewed as good news. Unfortunately, those gains — for those who got them – are more than wiped out by the loss of purchasing power. On average, Americans are poorer today than they were yesterday.
While the United States slumped into a recession by definition – two-quarters of negative growth – the latest jobs report suggests that it may have been a brief technical dip. America could be back to positive growth in the current quarter. Have to wait and see.
The drop in the unemployment rate is generally good news, but there are unique circumstances that may be accounting for it. We may be looking at apples and oranges if we are comparing pre-Pandemic unemployment levels with the post-Pandemic numbers. There are two unique factors. First is the unprecedented number of individuals who have stopped looking for jobs. That lowers the unemployment rate. It is not because people are taking jobs.
That is especially true when you look at the unprecedented number of job openings that are going unfilled. While we have low unemployment numbers, the nation is not as fully employed as the numbers suggest. That means a greater number of people who are unable – or unwilling – to work. And unfortunately, that means more financial welfare for non-producing consumers – and a greater burden and higher taxes on the producer/consumer folks.
Then there is the problem of inflation. Jerome Powell and the folks at the Federal Reserve Bank are not doing their happy dance over the new job creation figures. No. No. No. They know it means more inflation. And they have been trying very hard to INCREASE unemployment to rein in the inflation.
The very large job creation number is exactly what they do not want to see. The Fed has been aggressively increasing the cost of credit to do two things to put the brakes on inflation – slow down consumer buying by shrinking the money supply and increasing the unemployment rate. All those new workers, however, will now have more money to spend – and that means price increases (inflation). It also means paying more to use those credit cards or to purchase big-ticket items, such as homes and cars.
It also means that the Fed is going to have to raise credit rates again – and significantly. If they overdo it, however, the nation will be thrown into a serious recession – and one bad enough that no one can re-define it for political purposes. But so far, the Fed has been too little, too late. The Fed’s failure to cool the economy earlier, the Biden spending and the war in Ukraine have all contributed to the current inflation.
The job and unemployment numbers are not good for the stock market – and millions of Americans will see the value of their investments and pension funds decline over the next period.
The very small percentage of Americans who took jobs or experienced nice pay increases are the winners. But that vast – I mean VAST — majority of Americans are getting kicked in the keister by the inflation. The jobs report and the unemployment rate do nothing but exacerbate the situation.
It will take a while for the experts to determine why they were so wrong in predicting a job creation number half of what was announced. The number could be revised downward later – and this number suggests that the previous jobs report could be revised upward in the near future. It is very common to have revisions – although they do not typically get the same level of media attention as the initial reports.
Politically, the current report is good news for Biden and Democrats. It may help in the poll numbers – and possibly in the voting booth. But that is because they know the general public will not see the big picture. In life – and especially in politics – perception is reality.
We have to wait to see what the Fed does next and where inflation goes in the next few months.
So. There ‘tis.
no matter how many jobs are suposibly created ,this bidens ecomony is killing american ! you dont belive those numbers !acording to biden evereything is great !
If God was a Democrat, Larry would say Jesus was just meh.
Biden hasn’t caused any growth in the economy.
Growth in jobs?
But yeah, a technical recession is not growth.