Economic

The jobs report that could upend Biden’s economic agenda

Democrats have downplayed the concerns, maintaining that the path back to full employment was always going to be winding and stacked with challenges. And economists are predicting the report will show 630,000 jobs were created in May, a robust number. But while Biden has been polling strongly on his handling of the economy, a second straight month of slower-than-expected job creation could embolden critics of his multitrillion-dollar infrastructure spending plans and raise fears that the labor market is facing a long road back to normal.

“There is growing anxiety about inflation, the economy overheating, unemployment not coming down fast enough and businesses that can’t find jobs,” said Brian Riedl, a former economic aide to Sen. Rob Portman (R-Ohio) and other GOP lawmakers. “Another bad jobs report may further the narrative of a White House overextending itself on stimulus and in over its head.”

The outlook for the May jobs report remains highly uncertain. Most economists are optimistic that the numbers will be strong as the country continues to reopen. But many also remain wary of the possibility that the same pressures that led to only 266,000 jobs being added in April — child-care issues and fear of the virus, among them — could keep growth low through May as well.

“All those tensions, they’re not actually going to go away even for the next jobs report,” Dallas Fed President Robert Kaplan said at a recent technology conference.

“We think you’re going to see another odd or unusual report,” Kaplan said. “We know businesses are telling us they got plenty of demand, but they can’t find workers, either skilled or unskilled.”

Some early data signal that job creation may not be roaring back. The Real-Time Population Survey, a tool backed by the Dallas Fed that aims to track unemployment trends more quickly than the Labor Department, saw a slowdown in the labor-market recovery in May, with employment ticking down to 71.1 percent from 71.8 percent the month before.

The survey has largely predicted the trends that official government reports have found in recent months, showing a big jump in job creation in March — when 770,000 net jobs were added — and a flat employment rate in April.

And while initial applications for jobless benefits have been steadily falling each week, continued claims, or the number of unemployed people who refile to receive another round of aid, have been relatively steady at roughly the same level as in early April.

The May employment report, whatever it shows, will fuel the intense debate between Democrats and Republicans over whether Biden’s proposed spending on infrastructure and family assistance programs is too much or too little, especially coming after the $1.9 trillion Covid-relief legislation he signed in March.

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