White House hopes slower August job growth is a sign the economy is cooling at a manageable rate

CNN

By Phil Mattingly and Kate Sullivan, CNN

President Joe Biden on Friday touted an August jobs report that slightly exceeded analyst forecasts and marked another month of slowing job gains — something White House officials have been hoping for in recent months.

White House officials have been anxiously eying the release of August’s job report numbers for signs of a managed cooling off of a red-hot economy that has driven inflation not seen in decades. Biden and his top advisers have spent several months focused on laying the groundwork for an employment picture that moves away from the blockbuster numbers of the rapid post-pandemic economic recovery.

“Bottom line is: Jobs are up, wages are up, people are back to work. And we’re seeing some signs that inflation may be, may be — I’m not going to overpromise you — may be beginning to ease,” Biden said in remarks from the White House.

While the push toward the transition to “steady and stable” growth, as officials have termed it, serves as expectations setting for the public, it’s also underpinned by clear White House economic objectives as inflation remains hot.

Rapid job and wage growth will need to temper for prices to start to decelerate in a meaningful manner, officials note. The Federal Reserve’s aggressive rate increases are a critical driver of the necessary cooling, but so is a cyclical transition that officials believe the economy is set to experience.

The August report, to some degree, hit a sweet spot in what officials have described in past weeks as what they’d want to see. The employment number, at 315,000, underscores there is no dramatic fall off in a historically strong labor market. The unemployment rate ticked up — but for a positive reason: more Americans are coming off the sidelines and looking for work. Wage growth also moderated.

Officials are keenly aware another gangbusters report would have almost certainly locked in another jumbo interest rate increase by the Federal Reserve this month. The Fed in July approved a super-sized interest rate hike of three-quarters of a percentage point for the second time in a row to temper rising costs for Americans amid the highest price increases in decades.

While Friday’s number doesn’t mean the Fed won’t go down that path, it’s more in line with a jobs market transitioning into a steady growth cycle.

The President touted the growth in manufacturing jobs since he took office and noted companies like First Solar, Corning and Micron have committed to investing tens of billions of dollars to expand manufacturing in the US.

While Biden has made the Federal Reserve’s independence the central pillar of his administration’s inflation fight, officials are quietly aware that if the Fed sustains its rapid tightening — as Federal Reserve Chairman Jerome Powell telegraphed last week — there could be dramatically negative effects on the very people Biden’s entire agenda was structured to assist.

Still, Biden has made explicit that neither he nor his economic team will attempt to pressure or influence Fed policy, something that makes each data release that tracks with the administration’s goals all the more important, officials note.

Biden on Friday also announced the 21 recipients of a regional economic development competition who will each receive between $25 million and $65 million for projects that Biden said are “going to uplift underserved communities and include them as key parts of America’s economic recovery for 21st century.”

The President said the program is “centered around a vision that as our economy recovers and modernizes, as science and technologies accelerate and change the nature of how we manufacture, we want workers and small businesses leading this transition, making sure they’re a part of it, not just being shunted aside, instead of fearing that the transition’s going to leave them behind.”

The grants will go toward a range of projects, including programs to support the transition from traditional cars to electric vehicles, build a digital finance sector for small businesses in tribal communities, rebuild pharmaceutical supply chains and install solar energy on former coal land. More than $270 million of the funding will go toward developing workforce training and development programs, the White House said.

The White House says the awards will allocate $87 to two primarily Tribal coalitions and more than $150 million will go toward projects serving communities impacted by the declining use of fossil fuels.

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