US shocked by ‘abysmal’ jobs report

Experts in the United States have been shocked by a surprisingly weak jobs report, which President Joe Biden is spinning as proof of the need for further stimulus.

His political opponents say the opposite: that a $US1.9 trillion COVID relief package Congress passed in March is incentivising Americans to remain unemployed.

According to the Bureau of Labour Statistics, the US economy added just 266,000 jobs in April, barely a quarter of the one million jobs that had been forecast by economists.

The unemployment rate ticked up from 6 per cent to 6.1. Economists had predicted it would fall to 5.8 per cent.

And on top of that, the March jobs numbers – initially reported as a gain of 916,000 jobs – got revised down to 770,000.

A year ago, towards the beginning of the coronavirus pandemic, the US lost 22 million jobs. It is still about eight million jobs short of returning to its pre-crisis employment level.

Today’s news caused a sharp fall in Treasury yields and the value of the US dollar.

Meanwhile the stock market rose to record levels, as the weak job numbers mean the Federal Reserve is now less likely to tighten its monetary policy.

Speaking at the White House, Mr Biden said there was “a long way to go” in America’s economic recovery.

“We knew this wouldn’t be a sprint, it would be a marathon,” the President said.

“We never thought after the first 50-60 days, everything would be fine.”

He has actually been in office for more than 100 days at this point.

Mr Biden insisted the recovery was moving “more rapidly” than he expected and the US was heading in “the right direction”.

“Our actions are starting to work, but the climb is steep, and we still have a long way to go,” he said.

“Today’s report just underscores, in my view, how vital the actions we’re taking are. We’re still digging out of an economic collapse.

Mr Biden has proposed an additional $4 trillion in spending via the American Jobs Plan and the American Families Plan.

“Let’s keep our eye on the ball,” he continued.

“This month’s job numbers show we are on the right track. We still have a long way to go.”

Treasury Secretary Janet Yellen echoed that argument, saying the April numbers represented “continued progress”.

“I believe we will reach full employment next year, but today’s numbers show that we are not yet finished,” she said.

The counterargument from Republicans is that enhanced unemployment benefits included in March’s COVID relief package have led Americans to stay out of the jobs market.

“Today’s jobs report is a disappointment, just like President Biden’s plan to burden families with more taxes and more debt,” said House Minority Leader Kevin McCarthy.

“While Democrats trap people in a cycle of fear and pay them not to work, it’s clear the best thing to do is end the crisis-era policies and get Americans back to work.”

Mr McCarthy was backed up by Neil Bradley, executive vice president of the US Chamber of Commerce.

“The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market,” Mr Bradley said.

“One step policymakers should take now is ending the $US300 weekly supplemental unemployment benefit.

“Based on the Chamber’s analysis, the $300 benefit results in approximately one in four recipients taking home more in unemployment than they earned working.”

The White House’s Council of Economic Advisers has blamed today’s result on month-to-month volatility, and urged people not to “read too much” into it.

“It is important to keep in mind that month-to-month job growth can be volatile,” it said.

“Month-to-month jobs numbers can be volatile at any time. The size of the month-to-month changes during the pandemic are striking partly because of the magnitude and speed of the massive 22 million job loss in March and April last year.

“It is important not to read too much into any one monthly report, and it is informative to consider each report in the context of other data as they become available.”

One of the Council’s members, Heather Boushey, tried to put a positive spin on the situation during an appearance on MSNBC.

“I think we see a lot of evidence in today’s report that we are moving in the right direction,” Ms Boushey said.

Joe Lipsky, director of the Atlantic Council’s GeoEconomics Centre, suggested the economy might be “undercooked”.

“For those who feared the US economy would overheat, the bigger risk may be that it is undercooked,” he said.

“Today’s report shows there won’t be an overnight fix for millions who remain unemployed. The US economy still has a long way to go in its recovery.

“For the rest of the world, it means they can’t rely solely on the US to power a global economic recovery in 2021.”

Dnaiel Zhao, senior economist for Glassdoor, called the April number a “head-scratcher”.

“The report is a bit of a head-scratcher that tempers recent projections of a smoothly accelerating economic recovery,” he said.

“By all accounts, the improving public health situation should drive faster job gains, but the report is a humbling reminder that the road to recovery is not a straightforward one in a pandemic.

“While vaccine distribution and an economic reopening should still drive significant job gains in the summer, today’s report tempers optimism with caution.

“Today’s report is disappointing, no way around it. But it’s not clear what the cause is.”

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