Why do experts think the August jobs report was so bad?
The US jobs market gained far fewer jobs last month than economists had hoped for and President Biden has put the blame on the spread of the Delta variant.
Last Friday the Labor Department released the August jobs report and it did not make positive reading for the White House. Economists surveyed by Dow Jones had estimated that the US jobs market would grow with 720,000 new positions, but only 235,000 new jobs were added over the course of the month.
That underwhelming total, the lowest monthly total since January, has been linked to heightened fear of the pandemic with covid-19 cases on the rise in recent months.
The Federal Reserve had been considering reducing the enormous $120 billion of monthly financial stimulus it has been adding since the start of the pandemic, but the poor jobs figures may undermine that effort.
Experts point to “harsh reminder” of pandemic threat
The journey back to a pre-covid economy was always going to be an uneven road and the latest jobs figures show that covid-19 is still very capable of putting some major obstacles in the way. Efforts to restore confidence in the US economy have been hampered by the growing threat of covid-19 restrictions over the winter months.
“The labor market recovery hit the brakes this month with a dramatic showdown in all industries,” said Daniel Zhao, a senior economist at jobs site Glassdoor.
He added: “Ultimately, the Delta variant wave is a harsh reminder that the pandemic is still in the driver’s seat, and it controls our economic future.”
The US jobs market still has around 5.3 million fewer jobs than it did in February 2020 and Biden admitted that he had been hoping for “a higher number” when the August report was released.
There is also the possibility that the data, which was collected during the second week of the month, may not accurately reflect the damage done to the US economy by the ongoing spread of the Delta variant and the impact of Hurricanes Henri and Ida in the second half of the month.
Diane Swonk, chief economist at Chicago accountancy firm Grant Thornton, warned that “the worst effects of the Delta variant have yet to hit,” adding “this is the beginning, not the end.”
Biden outlines the reason for stagnating employment increase
In a White House speech addressing the less-than-positive August jobs report, President Biden made clear that he believes the resurgence of covid-19 was to blame for the underwhelming numbers.
“There’s no question, the Delta variant is why today’s job report isn’t stronger,” he said. “We need to make more progress in fighting the Delta variant.”
“This is a continuing pandemic of the unvaccinated,” the President added. “Too many have not gotten vaccinated, and it’s creating a lot of unease in our economy and around our kitchen tables.”
However his administration has struggled to encourage the remaining unvaccinated Americans to get the shot in recent months, causing concern that he may be unable to address the slump. Businesses and local authorities have attempted to introduce vaccine mandates but they have faced push-back from Republican governors in southern states who have introduced legislation outlawing such efforts.