Good news for Joe Biden: America is back to work
By Anneken Tappe, CNN Business
The recovery in the US labor market hit a roadblock in late summer and early fall. In recent months, the number of jobs added to the economy has been disappointing.
But economists are optimistic that the string of bad news will end with the October jobs report, which is due on Friday morning. This could be good news for President Joe Biden after voters sent a strong message this week about their disappointment with the US economy.
Analysts polled by Refinitiv expect some 450,000 jobs to have been added to the economy last month, more than in September and August. Employment figures in those months were well below expectations, worrying economists about the state of the recovery. But the Delta variant infections, which were largely to blame for slow hiring, are fading, giving economists hope the job market can recover quickly.
“Mitigating the Delta wave will reduce disruption to schools and encourage companies to resume hiring,” said Daniel Zhao, senior economist at Glassdoor. “However, the latest wave hasn’t fully receded, so gains will likely be further limited compared to hot summer job growth.”
During this hot summer streak, the US economy created 2.7 million jobs between May and July.
ADP’s employment report, which counts private wages in the United States, on Wednesday reported a good number of 571,000 jobs created in October. Last month, the ADP report overtook the official government job tally, mainly because government jobs were lost.
With optimism that October will finally get job growth in the country back on track comes a series of expectations for Friday’s report. Economists at Japanese bank Nomura predict 650,000 jobs were created last month, while Goldman Sachs expects 525,000.
That said, no matter how good Friday’s report is, it won’t solve the labor shortage in the United States.
Labor shortages will persist
As the economy reopened completely over the summer and consumer demand exploded, businesses stepped up their hiring efforts. This has created a labor market in which workers have their choice of jobs, forcing companies to work harder to attract and retain staff.
In August, a record 4.3 million workers left their jobs, for example, demonstrating the influence employees have on the pandemic economy. The number of jobs opened in that month stood at 10.4 million, down from the all-time high of 11.1 million reached in July.
The reopening of schools – as well as the expiration of improved unemployment benefits during a pandemic in early September – may have pushed some Americans back into the workforce since the summer, “but not enough to meet strong demand for workforce, ”Zhao said.
“Employers are likely to continue to raise wages in sectors affected by the shortage, although at a slower pace than during the summer,” he added.
Even though these conditions look promising enough for workers, nearly two-thirds of Americans see the economy as poor, according to a poll by the Associated Press-NORC Center for Public Affairs Research. Only 35% of those polled said the economy was doing well.
The culprit for the bad mood is the high inflation as well as supply chain bottlenecks that have crippled global logistics this year.
Meanwhile, the Back-to-Normal Index created by CNN Business and Moody’s Analytics is 94% and US consumers are still spending a lot, good news for the economy as the all-important shopping season approaches. Holidays.
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