The Labor Departments latest jobs report, for November, puzzled the forecasters. The general expectation was another month of job growth of half a million or more, but the departments payroll survey showed that the economy added only 210,000 new jobs.
This suggests that we are far from an overheated economy, and that it is way premature for the Federal Reserve to pull back from its policy of very low interest rates, despite the clamor on Wall Street for a rate hike. The report also strengthens the case for more public investment and for fixing the supply chain mess, which has not only raised some prices due to bottlenecks but left employers a little more reluctant to hire.
Our friends over at the Economic Policy Institute view the November numbers as a temporary blip, and project that the economy is on track to add a total of well over 6.5 million jobs by the end of 2021 and a full recovery by the end of 2022. Thats also a credit to the Biden program.
As even the naysayers like Larry Summers admit, Build Back Better deserves support because it is mostly about fixing long-term holes in our social infrastructure. It is not about short-term economic stimulus.
The Labor Department jobs reports often seem contradictory, because they rely on two different surveys which sometimes produce divergent results. The November report was even more of a puzzle than usual, with the survey of households showing a much brighter picture of 1.1 million new jobs (which may include gig work). Most economists view the payroll survey of actual employment as the more accurate.
Taken together, the two reports show that the Biden recovery is on track, that the economy still has spots of fragility, and that this is no time to pull back on public investment.