The White House receives a “Goldilocks” jobs report as they look to build on the economy



CNN

As White House officials prepared the final jobs report ahead of the midterm elections to be released Friday morning, the last thing they wanted to see was a hiring number.

It’s a political paradox that emerged in the latest major economic data before Election Day, at a time when Democrats find themselves trying to improve the economy.

The US economy added 261,000 jobs in October – more than the 200,000 economists had expected, but still landing at the upper end of the range White House officials had expected to see heading into Friday, which is about 150,000 to 300,000.

It was a “golden key” result for the White House, a number that is not too low, but not too high.

Biden announced Friday’s jobs report, saying the new data “shows that our jobs recovery remains strong.” He dismissed Republican criticism that the economy is headed for recession because he continues to receive low marks from voters on his handling of inflation.

“One thing is clear: Despite comments from Republican leaders that point to an entrenched recession, the US economy continues to grow and add jobs, even as gas prices continue to fall,” Biden said in a statement, repeating inflation. remains “our main economic challenge”.

It’s a far cry from just a year ago, when the US economy was adding jobs every month: 650,000 more jobs in October and November, about 600,000 in December, and a staggering 714,000 new jobs two months later. in February

President Joe Biden and his economic team have argued for months that a cooling of the economy is necessary to break the broad price hikes that have given Republicans a big advantage, an issue that voters keep citing.

Biden and his top advisers have struggled since the summer to underline the reason for the shift from strong job gains to an economic picture defined by “steady and stable” growth.

It’s a message aimed at tempering expectations after more than a year of a fast hiring pace, but also one that officials see as necessary to protect the many gains they regularly make.

At its heart is Biden’s most significant economic success: a dramatic job recovery from the pandemic-driven economic crisis he ushered in on his first day in office. More than 10 million jobs have been added since Biden’s inauguration and the unemployment rate rose from 3.5% to 3.7% on Friday.

The combination of continued job gains and a return to quarterly growth sits at the heart of Biden’s view that, despite the bleak national mood, the US economy is not in recession or on the brink.

“Our economy is strong,” Biden told reporters last month.

The tight labor market, however, has exacerbated price hikes that have threatened Democrats’ hold on to their majorities in the House and Senate. That has made the Federal Reserve four rate hikes in a row, including this week’s latest three-quarters move.

Fed Chairman Jerome Powell, in a news conference following the policy announcement, pointed to a “very, very strong” labor market as the main reason why rapid rate hikes have not significantly dampened price increases.

“So it may take time. It might provide a solution. You may be impatient. Inflation is likely to come down,” Powell said of the impact of the Fed’s actions. “I think you can see from our forecasts and others that it will take some time for inflation to come down.”

Biden has made it clear publicly – and privately to his team – that the Fed is an independent institution and will not tolerate political backlash from his administration as it tries to deliberately cool the US economy.

But White House officials are also acutely aware that the goal of a “soft landing,” in which the central bank manages to tighten economic conditions significantly enough to reduce inflation but not enough to send the economy into a painful recession, is elusive. needle thread

However, they see signs of a possible outcome.

“I think there’s a way to achieve that by maintaining a very healthy labor market,” Treasury Secretary Janet Yellen told CNN in an interview. “And I think we’re headed that way.”

But along the way officials say there are clear signs of a “steady and stable” environment that would leave more room for weaker job gains or more room for the Fed’s difficult task.