The Wall Street Journal predicted that the September jobs report would show an increase of 500,000 jobs. Other economists also guessed that the nation was starting to put its problems with the supply chains behind us and employers would begin hiring people in earnest.
But what the economists didn’t figure into their calculation was the “Biden Effect.”
The Biden Effect is the effect on the economy of Joe Biden’s ruinous tax-and-spend policies that, despite trillions of dollars in stimulus, are sending the economy into the toilet.
The economy added 194,000 jobs in September, the smallest gain since December 2020 and down from the upwardly revised 366,000 jobs added in August, the Labor Department said Friday. The jobless rate fell to 4.8% from 5.2% a month earlier. The rate fell largely because many workers exited the labor force.
Throw that fact back in the face of Biden supporters when they cheer the drop in the unemployment rate.
The figures add to evidence that fears about the virus and global supply constraints continue to hold back the economic recovery. The biggest factor behind last month’s weak payroll gain was a decline in public-sector jobs, mainly at schools. Employment in private-sector industries rose by 317,000 in September, with modest gains across several industries.
Silver linings in the numbers are few and far between. The leisure and hospitality sector added 74,000 jobs as unemployment dropped in that industry from 9.1 percent to 7.7 percent.
On cue, the New York Times is celebrating the dismal numbers. “The New Jobs Numbers Are Pretty Good, Actually,” blares the headline. Actually, they suck. But watch how the Times can put lipstick on this pig and make it into something it isn’t.
But when you peel apart the details, there is less reason to be concerned than that headline would suggest. The story of the economy in the second half of 2021 remains one of steady expansion that is more rapid than other recent recoveries. It is being held back by supply constraints and, in September at least, the emergence of the Delta variant. But the direction is clear, consistent and positive.
They’re right. But this downturn was nothing like anything the economy had ever experienced. There’s been $4 trillion in stimulus for the economy already and instead of taking off into the stratosphere with growth and job creation, the economy is sputtering and choking like my 1977 Buick Regal when you turned off the engine.
Yes, there are supply bottlenecks. But there is also fear that the government will raise taxes needlessly high and create the biggest budget deficits in history. This will put a crimp in any recovery and may short-circuit economic growth entirely if inflation also runs out of control.
Perhaps if economists came to expect high unemployment and a bad economy under Biden, they wouldn’t be “surprised” when they come to pass.