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Wednesday, October 27, 2021

Job Growth Slows In August, But Unemployment Rate Falls To 5.2 Percent

UPDATE, 7:49 AM PT: President Joe Biden said that “there’s no question the Delta variant is why today’s jobs report isn’t stronger.”

“Because of the groundwork we laid with the American Rescue Plan and our vaccination strategy, we are seeing an economy and a job market that can weather the ups and downs of the Delta variant, and anything else that comes our way.”

Biden called for passage of his infrastructure plan and a massive reconciliation bill, the latter of which would boost spending on child care, Medicare and other social programs.

He also decried corporate interests lobbying against the plan, as his administration has called for raising the corporate tax rate, as well as those on upper incomes.

“Our country needs these investments,” he said.

PREVIOUSLY: The pace of job growth slowed considerably in August, in what was seen as a sign of the impact of a new uptick in Covid-19 cases throughout the country.

The U.S. added 235,000 jobs during the month, while the unemployment rate fell to 5.2%, a drop of 0.2 from July.

While that is still significant job growth, it’s far less than analysts had expected, and a drop from 1.1 million jobs added in July and 962,000 in June. Employment in retail declined over the month, while jobs in retail and hospitality were essentially unchanged, according to the Bureau of Labor Statistics. Some 36,000 jobs were added in arts, entertainment and recreation, but that was offset by a 42,000 loss in jobs in restaurants and bars.

The labor force participation rate, meanwhile, was flat.

President Joe Biden will address the latest numbers on Friday morning, but he is expected to call for passage of his infrastructure proposals as a way to stimulate the economy. That’s a counter to fears of inflation.

New York Times columnist Paul Krugman, reacting to the jobs numbers, wrote on Twitter, “Tell me again about how we were providing way too much stimulus and the economy was going to drastically overheat.”

Still, Jason Furman, who was chairman of President Barack Obama’s Council of Economic Advisers, wrote on Twitter that “most striking is how tight labor markets seem to be. Average hourly earnings were up 0.6% in a single month. That is an incredibly fast pace–if it was repeated every month for a year would be 6.9% wage growth. It is double the pace of the first seven months of the year.”

He added, “In terms of the future, I don’t know. There are so many openings, so much consumer demand, & so much desire for normalcy that my guess is we continue to make progress at a pace between the blistering progress of July and the mixed progress of August. But that is a guess.”

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