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**JULY 7, 2023**
Kuttner on TAP
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**** A Great Jobs Report and a Vindication of
Bidenomics
Now, the Federal Reserve should just leave well enough alone.
The Labor Department's jobs report for June
<[link removed]>, released this
morning, showed the economy adding 209,000 jobs and the unemployment
rate staying at 3.6 percent. This is a slight slowing of recent job
growth trends. It would be hard to imagine a better jobs report both for
the Biden administration and to temper the Fed's campaign to douse the
recovery. Real wages are up slightly, while inflation keeps subsiding.
As President Biden pointed out
<[link removed]>
in a statement just released by the White House, "This is Bidenomics in
action: Our economy added ... a total of 13.2 million jobs since I took
office. That's more jobs added in two and a half years than any
president has ever created in a four-year term. The unemployment rate
has now remained below 4 percent for 17 months in a row-the longest
stretch since the 1960s."
We haven't heard a lot from Larry Summers lately. When inflation was
high, Summers mistakenly blamed it on the stimulus of Biden's several
public-investment programs, and virtually called for a recession in
order to reduce rising prices. Last October, he said that unemployment
was likely to rise to 6 percent
<[link removed]>.
As late as this past April, Summers was still predicting that recession
risks were rising
<[link removed]>.
In fact, as recent disinflation trends have made clear, the inflation of
2021-2022 was mainly the result of supply chain shocks and other
transient labor market factors related to the pandemic. And the strong
recovery continues.
It's hard to think of another economist who makes so many errors and
keeps being treated by the media as a font of wisdom. The only good
thing about Summers's posture is that it has burned his last bridge to
the White House, and we don't need to worry about Biden giving him a
government job.
This economy is about as good as it gets. Real wages have begun to rise,
especially in the service sector, but not enough to cause general price
pressures. The inflation rate, measured by the Consumer Price Index,
rose at an annual rate of just 1.2 percent in May. Inflation has
averaged 4 percent over the past year, but has been steadily declining.
The main weakness in the economy is the result of some problems of
failed regional banks, but that reflects feeble bank regulation and not
macroeconomic factors.
The Federal Reserve was wise to pause its campaign of rate hikes last
month. The June jobs numbers-some growth but not too much-should
give more ammunition to the inflation doves than the hawks. Biden is at
last beginning to get some of the credit he deserves for the improving
economy. His poll numbers are improving and his campaign is wise to
brand his suite of policies as Bidenomics.
~ ROBERT KUTTNER
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