The Biden Boom Continues – We Have Almost Fully Recovered From The Pandemic Recession

The May jobs report was released on Friday, and the good news is that US Added 390,000 Jobs in May as Hiring Remained Robust:

U.S. employers added 390,000 jobs in May, extending a streak of solid hiring that has bolstered an economy under pressure from high inflation and rising interest rates.

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Last month’s gain reflects a resilient job market that has so far shrugged off concerns that the economy will weaken in the coming months as the Federal Reserve steadily raises interest rates to fight inflation. The unemployment rate remained a low 3.6% in May, just above a half-century low, the Labor Department said Friday.

Stock market futures fell Friday after the government released the jobs report, reflecting concern that job growth in May was high enough to keep the Fed on track to pursue what’s likely to be the fastest series of rate hikes in more than 30 years.

Note: The investor class aka the predator class only cares about the cost of borrowing money. They don’t risk their own money, they borrow money to invest. And for a number of years the cost of borrowing money has been at or near zero – essentially free money. Now that the interest rate will slightly eat into the profit margins on their investments, these greedy Wall Street predators are having a sad. They want the free money to which they have become accustomed.

Businesses in many industries remain desperate to hire because their customers have kept spending freely despite intensifying concerns about high inflation. Americans’ finances have been buoyed by rising pay and an unusually large pile of savings that were accumulated during the pandemic, particularly by higher-income households.

Workers, in general, are enjoying nearly unprecedented bargaining power. The number of people who are quitting jobs, typically for better positions at higher pay, has been at or near a record high for six months.

In May, Friday’s jobs report showed, more Americans came off the sidelines of the workforce and found jobs, a sign that rising wages and plentiful opportunities are encouraging people to look for work.

Average hourly wages rose 10 cents in May to $31.95, the government said, a solid gain but not enough to keep up with inflation. Compared with 12 months earlier, hourly pay climbed 5.2%, down from a 5.5% year-over-year gain in April and the second straight drop. More moderate pay raises could ease inflationary pressures in the economy and help sustain growth.

Nearly every large industry added workers in May. One major exception was retail, which shed nearly 61,000 positions.

Construction companies added 36,000 jobs, a hopeful sign for Americans who have bought new homes that aren’t yet built because of labor and parts shortages. Shipping and warehousing companies, still struggling to keep up with growing online commerce, added 47,000 jobs. Restaurants, hotels and entertainment venues hired 84,000.

The New York Times adds, Hiring Remains Strong Even as Fed Tries to Cool Economy:

After the strong rebound from the depths of the coronavirus lockdowns — all but 800,000 of the 22 million jobs that were lost have been recovered — the Fed has shifted its emphasis from maximum employment to its other mandate: price stability. The challenge is to apply its primary tool, a steady series of interest-rate increases, without inflicting a recession.

“I think we’re on sort of what looks like a glide path right now, and that’s good — nothing’s broken,” said Guy Berger, the principal economist at the career-focused social network LinkedIn. “But keep fast-forwarding it a year and the question marks are still big.”

The closely watched indicators include the impact on wages, which have been increasing at a pace not seen in decades, though not enough to keep up with inflation over the past year. The Fed is worried that rising labor costs will be passed along to consumers.

On that score, the Labor Department report showed little change in trajectory. Average hourly earnings rose 0.3 percent from the previous month, the same pace as in April, and were 5.2 percent higher than a year earlier, compared with a 5.5 percent year-over-year increase in April.

“It’s moderating, but it’s not moderating to a level, I think, where it’s consistent with the Fed’s inflation goals,” said Michael Feroli, chief U.S. economist at J.P. Morgan, said of wage growth. He said the Fed would probably want wages to cool toward an annualized 3.5 percent pace, at the higher end, a rate that officials view as aligned with 2 percent inflation.

[T]he continued job gains are among many indications of a vibrant economy. Reports from the nation’s largest banks show checking accounts are still above 2019 levels for nearly all income groups. New bankruptcies and debt-collection proceedings are both at their lowest levels since tracking began in 1999.

The Washington Post editorialized, We’re in the midst of a ‘great return to work.’ It’s worth celebrating.

The biggest vote of confidence in the U.S. economy is business continuing to hire at a strong rate and Americans continuing to return to work. The United States added back 390,000 jobs in May, once again beating expectations. Nearly every industry saw net employment gains, except for the retail sector. And more and more Americans are looking for jobs again — and getting them.

The past year has been dubbed the “Great Resignation” due to tens of millions of people quitting their jobs and, usually, finding another one quickly with higher pay or better work-life balance. But the past year could just as easily be called the “Great Return to Work.”

More than 6.5 million jobs have come back in the past year, one of the greatest employment rebounds in U.S. history. Women and minorities have made especially large gains. For all the concerns about the “She-cession” early in the pandemic, women have come surging back into the workforce in recent months, especially as schools and day cares have reopened. Women’s labor force participation, especially for ages 25 to 54, has now recovered as much as men’s. And the share of African Americans working is almost back at a two-decade high.

The massive return to work was somewhat predictable as the economy reopened and many Americans were vaccinated against the coronavirus. As the risks receded, people felt safer to venture out again for work and fun activities. But the pace of the job recovery — and its enduring strength — have exceeded many forecasters’ expectations. Nearly every town has visible “we’re hiring” signs, and there are nearly two job openings for every unemployed American. This is largely due to the historic $5 trillion in aid the federal government sent out during the crisis. All that extra cash fueled buying sprees that led to record corporate profits and record numbers of job openings.

[T]he reality is that 96 percent of the jobs lost in the 2020 recession are back and many companies no longer see as much urgency to hire. But the past year has made a huge difference to millions of families that now have higher incomes and renewed careers.

It took more than six years to recover from the Great Recession. By comparison, this jobs recovery is on track to take about 2.5 years [origjnally projected to take into 2024] That’s worth celebrating.

Catherine Rampell adds the FED is aiming for The Goldilocks economy: Trying to get it ‘just right’:

When it comes to hiring, it’s a good thing for there to be lots of job opportunities for workers — particularly workers who usually don’t have much bargaining power. It’s a good thing for employers to be offering higher wages, especially for the lowest-paid, least-desirable jobs. It’s a good thing for businesses to be posting tons of job openings, especially when roughly 22 million jobs were destroyed very early in the pandemic.

Lately, as the May jobs report released on Friday shows, we’ve had these good things in spades.

We have now nearly filled in the deep jobs hole created by the pandemic. If May’s pace of employment growth (390,000 jobs added) continues, we’ll be back to the pre-pandemic level of employment in another two months or so. That would be much sooner than (nearly) anyone predicted.

Again, a good thing! Especially compared to the painfully slow recovery after the Great Recession.

But as with all things Catherine Rampell, she has a caveat.

However.

While we want a hot economy, and a hot labor market, there is also such a thing as “overheating.”

This could happen, say, because consumers have tons of cash to spend, and want to spend it (again, usually good things) — but suppliers can’t keep pace with customers’ super-strong demand for goods and services. They don’t have the capacity to scale up quickly enough. That mismatch can lead to rapidly rising prices and shortages of products. It can also manifest through shortages of workers, if businesses are trying so hard to scale up that they want to hire more people than are able or willing to work.

That has been the case for about the past year: Since May 2021, there have been more job vacancies posted at the end of each month than there were idle workers actively looking for jobs. In April 2022, the most recent month of data, there were about twice as many job openings as there were unemployed workers.

So even if every single unemployed worker suddenly got a job, there would still be tons of positions going begging.

And as with all things Catherine Rampell, she parrots the Wall Street talking points (blame worker’s wages):

One risk in a situation like this is a wage-price spiral. This occurs when companies chasing scarce workers decide to raise wages (again, usually good), but the resulting higher labor costs cause the companies to raise the prices they charge their customers. That, in turn, prompts workers — who, of course, are also consumers — to demand even bigger raises, which causes more price increases, and so on.

There has been some debate  (excerpt below) about whether we could be headed toward (or are already in) one of these dreaded spirals. There has also been debate over whether the Federal Reserve needs to act more aggressively to break or prevent such a cycle — specifically, by raising interest rates much more sharply than it already is doing.

Economist Joe Brusuelas at consulting firm RSM said workers simply don’t have the clout to push wages higher and higher. He said that the tight labor market — driven principally by pandemic-induced labor shortages and demographic shifts — is the main cause of wage increases right now.

“This is not a wage-price spiral linked exclusively to inflation in the way in which we saw during the 1970s,” said Brusuelas. At that time, labor unions represented approximately 1 in 4 American workers.

“Back when unions played a much larger role in the economy, many contracts were tied to inflation,” Brusuelas continued. “In the late ‘70s, the United Mine Workers were able to extract almost a 12% increase in pay — in one year — linked specifically to inflation.”

Brusuelas pointed out that while retirees on Social Security receive automatic annual cost-of-living adjustments now, very few workers do.

He said companies have been able to pay higher prices for supplies, and higher wages to attract workers, without hurting their profit margins. To him, that’s evidence the pressure to raise wages isn’t hurting employers or the economy.

Meanwhile, that pressure is helping lower-income workers whose wages have lagged for decades. “What we’re seeing is a resetting of wages — especially for lower-income cohorts,” Brusuelas said. “The working class, the poor and the lower strata of the U.S. middle class are seeing wages go up.”

“Higher wages are a good thing in the American economy and not to be feared,” Brusuelas continued. “We do not have a classic wage-price spiral, and that can’t be repeated often enough.”

[In] April, Fed Chair Jerome H. Powell referred to the labor market as “too hot. It’s unsustainably hot.” He added that “It’s our job to get it to a better place where supply and demand are closer together.”

But that doesn’t mean he wants hiring or economic growth to come to a halt, obviously, or for the economy to crash. What he and other policymakers have been looking for — what could help them avoid having to raise interest rates more drastically — is sometimes called the “Goldilocks” economy: not too hot, not too cold. Just warm enough. Just right.

Powell and others have acknowledged that getting and staying on that “just right” path would be challenging. But at least based on the jobs report released on Friday, there is reason for optimism.

For all the media fear mongering about a recession – I would point out that until we recover every job lost during the Pandemic we are still not officially out of the Pandemic Recession, we still have 800,000 jobs to go – bank economists (the people who actually get paid to know, unlike reporters who know nothing about economics) are not as concerned about a reccession. American Bankers Association predicts US will avoid recession this year:

The American Bankers Association is forecasting that the Federal Reserve will be able to tamp down the country’s blistering inflation while avoiding a recession this year.

The ABA’s Economic Advisory Committee announced its updated economic forecast on Friday. The group of economists predicts 1.6% inflation-adjusted growth this year and 1.5% growth in 2023. While still well below last year’s red-hot 5.5% gains, the prediction keeps U.S. growth in the black.

[Fed] Chairman Jerome Powell is trying to pull off a so-called “soft landing,” which is when the central bank is able to drive down inflation while preventing a recession and a surge in unemployment.

Many economists define a recession as two consecutive quarters of negative GDP growth, so Friday’s ABA forecast is a welcome prediction as it shows positive GDP growth this year. This year’s quarter 1 real GDP growth was negative 1.5%, but the ABA predicts 2.7% growth this quarter and in the third quarter.

“Broadly speaking, the best way to think about this is, I think, a successful soft landing,” said Richard DeKaser, the committee’s chairman and the executive vice president and chief corporate economist at Wells Fargo, during a Friday call.

The ABA is also forecasting that inflation will remain well above the Fed’s 2% target this year. It expects Consumer Price Index inflation to fall to a 6.3% annual rate in quarter 4 of this year. It predicts that headline figure will decline to 2.4% by the final quarter of 2023.

The ABA isn’t alone in its prediction of Powell and the Fed managing a soft landing. In a recent report, the Congressional Budget Office also forecast continued economic expansion this year. The nonpartisan budget office indicated that U.S. real GDP would increase by 3.1% this year.

So the word of the day is “PATIENCE” – it takes time to unwind the effects of a global pandemic and the resulting economic disruptions, compounded by Vladimir Putin’s illegal war of aggression against Ukraine and his using Russian oil and Ukraine’s grain to wage war against the rest of the world.

We are all pissed off about the high price of gasoline. The government has nothing to do with this. There is still plenty of oil on the world market without Russian oil. The problem is a lack of refining capacity. American producers shut down a number of refineries and have not invested in new refineries because of investor demands. U.S. oil refiners’ margins smash records, but few plan to build more plants (except):

According to the Energy Information Administration, the United States will be using about 95% of its refining capacity in June. Yet, we’re refining about a million barrels per day less than we were just a couple of years ago.

When COVID-19 hit and demand for fuel fell dramatically, a lot of refining companies shut plants down, he said.

Some refineries just shut down because of lack of demand, and they’re not coming back on. Then there was some weather-related issues also,” Daigle said. Last year’s freeze in Texas knocked several refineries offline, and some are still not operating at full capacity.

[Hurricane season is upon us and a hurricane from New Orleans to Houston could knock refineries off line and drive gas prices even higher. A hurrican is an act of God.]

But if refiner’s margins are so big and they’re making a killing on every barrel of fuel they get to market, why don’t energy companies just build more refineries while the money’s there?

It takes a lot of money and time to build refineries. Additionally, “investors do not want to see companies pouring money into organic oil and gas growth,” Gabelman said.

The long-term prospects for fossil fuels are uncertain. Most investors don’t want to be asked to chip in for long-term growth. In the present economic climate, they’re demanding a quicker return on their investment.

So don’t blame the government for high gas prices,  it is because of the business practices of Big Oil and the demands of the greedy investor class aka predator class.

Despite the projection of a soft landing this year, the ABA economists emphasized the high degree of uncertainty surrounding the country’s economic recovery and assigned a 40% chance of the economy entering a recession in 2023.

“It looks like the Federal Reserve will successfully bring inflation down to more tolerable levels in the foreseeable future,” said DeKaser. “However, there are substantial risks to this outlook.”

Goldman Sachs predicts a 35% chance of a recession in the next two years, while Wells Fargo’s economic model projects a 30% chance of a recession occurring in the next six months alone.

A Democratic President has not had a recession since the post-World War II recessions on 1945 and 1949 under Harry Truman. Every recession since has occurred under a Republican president. So unless you elect Republicans to Congress – who know nothing about economics – to enable them to sabotage the Biden administration, the historical odds are good that there will not be a recession next year.





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8 thoughts on “The Biden Boom Continues – We Have Almost Fully Recovered From The Pandemic Recession”

  1. UPDATE: Bloomberg reports, “Inflation Is Poised to Ease According to These Three Key Indicators” , https://www.bloomberg.com/news/articles/2022-06-06/peak-inflation-signs-are-flashing-in-chips-shipping-fertilizer?srnd=premium-asia&sref=nXmOg68r

    Three of the key supply-side factors driving today’s global inflation levels have already turned around, meaning relief could be on the horizon for shoppers worldwide.

    A bellwether semiconductor price — a barometer of costs of finished electronics products as diverse as laptops, dishwashers, LED bulbs, and medical devices delivered worldwide — is now half its July 2018 peak and down 14% from the middle of last year.

    The spot rate for shipping containers — which tells us more about expenses we can expect later in the pipeline for apparel in Chicago, luxury items in Singapore or home furnishings in Europe — has declined 26% since its September 2021 all-time high.

    North America’s fertilizer prices — an indicator of where global food inflation is going, including bills for tomatoes in London or onions for sale in a Johannesburg market — is 24% below its record high in March.

    Even as central bankers raise rates, more economists are coalescing around the idea that peak inflation is behind us — though there will be a lag before the lower costs of raw materials filter through to the prices shoppers see.

    Though few forecasters are predicting a return to pre-pandemic prices in the short run, global retail giants like Walmart Inc. are now struggling to unload bloated inventory to a less enthusiastic shopper. So a moderation in those supply-side pressures could eventually allow central bankers to slow their tightening cycles.

    “While inflation in some parts of the world are yet to peak, there are at least some signs emerging that we may not be too far off in terms of a turning point at which we start to see the annual inflation rate start to head lower,” said Khoon Goh, Singapore-based head of Asia research at Australia & New Zealand Banking Group.

    That’s a promising development for relief in imported-goods inflation worldwide, said Goh. In addition, lower container freight rates and improving supplier delivery times in purchasing managers indexes point to easing bottlenecks that should curb price pressures later this year, he said.

    • Like I said, Republicans know nothing about economics. The numbers speak for themselves, Troll Boy.

    • John Kavanagh is saying that the AZGOP and Ducey are failing, because they run this state, and if this state isn’t doing well he has only himself to blame.

      He really doesn’t think things through.

      He’s also lying, as he’s been caught doing here over and over again. As a state rep he should have access to the economic numbers.

      Or he’s actually that incompetent.

      But more importantly, right now some one is planning on shooting up a church or mall or school while John Kavanagh is trolling the internet.

      He won’t do anything to stop the slaughter of children because he’s a coward, like the entire GQP.

      And next time a child’s body needs to be identified with DNA because it’s been shredded and liquified by a military weapon, think of John Kavanagh.

      Please donate to RAICESTEXAS dot org in Honor of Arizona Rep John Kavanagh.

      It’s the only thing the guy is good for is reminding people that RAICES provides free or low cost legal help to immigrants.

      • Our little Johnny isn’t merely stupid or incompetent or a coward, he’s just a shining example of what the Repug party has gone out of their way to embody those traits. But let’s give credit where credit is due. Being the contemptible clowns they are, Kavanagh and his ilk have gone a long way to promoting diversity by making the N word colorblind.

        • He’s a prime example of how our political system, especially the primary system, both political parties, and the media have failed us.

          And I just realized in my “sway-doh-nym” I proclaimed him dumbest Arizona rep.

          I apologize to Debbie Lesko. Or whatever name she’s using these days.

          RAICESTEXAS dot org > John Kavanagh

          marchforourlives dot com > AZGQP

          Hey John, instead of your disingenuous trolling, maybe give us your views on your LEO brothers in Texas bravely guarding a parking while someone used an AR15 to liquify children for an hour, or the Tempe cops who watched a guy drown last week and did nothing.

          Back on topic, companies are throwing money at people in my line of work and have been for over a year, my current employer can’t hire fast enough because better offers are coming in, and my home value has doubled in the last few years.

          My paycheck and my home value, the two biggest indicators of how well people are doing, and we’re in much better shape than when Bush or T4ump left office.

          Kavanagh likes to come here and whine and use “partisan” as an insult, it’s not, while he lies and peddles his own partisan BS.

          • You and Wileybud should check out Troll Boy’s GQP primary opponent, Jan Dubauskas, who is running to the right of him (hard to imagine.)

            Jan Dubauskas earned a bachelor’s degree from the University of Oregon in 1997, and a law degree from the Arizona State University, Sandra Day O’Connor College of Law in 2007. Jan worked as General Counsel and Chief Operations Officer for an insurance carrier and began to make a name for herself as an outspoken leader against the disaster of government-run healthcare [read Obamacare; also the VA, Medicare and Medicaid?] She quickly became a staple in conservative media as a leading health care advocate and nationally recognized expert, appearing on Fox News, Fox Business, Newsmax, Cheddar, and OANN.

            In 2020, Jan volunteered as a poll watcher [True The Vote?] where she interacted with many out of state Democratic poll watchers who vowed to turn our beautiful state blue. Driven to action, Jan walked away from her dream career to run for office. In addition, Jan recently volunteered as a counter for the Arizona audit [so a committed Big Lie election denier] and continues to volunteer as a poll watcher. Jan is an America First conservative [a Trumpster fascist], committed to traditional conservative values and keeping Arizona red.

            See Ballotpedia questionnaire, https://ballotpedia.org/Jan_Dubauskas#Campaign_themes

            Her campaign website says she is a “Wife, mother, Christ-follower, community leader, and freedom-loving patriot.” “A follower of Christ, Jan lives by the verse from Joshua 1:9, “Be strong and courageous. Do not be afraid; do not be discouraged, for the Lord your God will be with you wherever you go.” And this: “Life begins in the womb. Period…I know that life begins at conception.” See, https://janforaz.com

            Sounds lke a White Christian Nationalist Trump cultist in the mold of Wendy Rogers and Kelly Townsend. She is younger and better looking than Troll Boy, so he may finally be in trouble this year with the GQP crazy base, after darkening the Arizona legislature for the past 16 years.

          • Thanks AZ.

            I dunno’, her website says she’s a freedom loving patriot.

            Hey, so am I!

            Her “endorsed by” webpage is a list of kooks and grifters.

            I just checked out some of Jan’s appearances on right wing media. She’s a shill for the for profit healthcare industry.

            She’s not a Christian, being a Christian means living your life in service to Christ and in a Christlike manner.

            My extreme right-wing Northern Idaho family told me that.

            But Jan ain’t doing any of that.

            She’s all about that money, and that ain’t living the J-man lifestyle.

            I suppose she’s right of the Coward John Kavanagh (RAICESTEXAS) but not by much.

            What an odd seat to challenge. Maybe the Coward John Kavanagh (RAICESTEXAS) didn’t do enough to overthrow the election so they’re sending in someone with bigger grapes.

            Also, RAICESTEXAS.

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