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December 6, 2021

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Poor jobs data setback for Biden’s plans

The United States added just 210,000 jobs last month, the government reported last Friday, less than half the increase analysts were expecting in the latest headwind for President Joe Biden.

The White House has been banking on a solid economic recovery to bolster support for Biden and his massive Build Back Better spending bill that is inching its way through Congress.

But the new data presented a complicated picture of the labor market as American businesses try recover from the COVID-19 pandemic but struggle to find workers.

The administration got good news in the big drop in the unemployment rate to 4.2 percent, a decline of four-tenths of a point from the prior month, according to the Labor Department. And despite the lackluster hiring, the country has gained an average of 555,000 jobs a month this year.

But major sectors such as retail and leisure and hospitality saw underwhelming hiring, while businesses are bracing for the spread of the Omicron variant of COVID-19, which could hamper the recovery just as the Delta wave did over the summer.

“We’re looking at the sharpest one-year decline in unemployment ever. Simply put, America is back to work,” Biden said in a speech at the White House, where he called the report “very strong.”

But his political opposition blamed him for the undershoot, with the Republican National Committee tweeting that “Biden’s disastrous November jobs report is the worst of his time in office.”

Another threat to the Democratic president’s agenda is inflation, which has surged across the world’s largest economy this year and pushed him to launch a series of measures aimed at cutting prices.

However, the Federal Reserve is the institution best equipped to fight inflation, and economists believe the lackluster jobs data will not dissuade the central bank from moving more quickly end its stimulus measures, which then would allow it to hike interest rates from zero earlier than expected.

“While this report is disappointing, it does not change our view that faster tapering will be announced in December, unless the scientific news on the Omicron variant over the next couple weeks is disastrous,” said Ian Shepherdson of Pantheon Macroeconomics.

The economy remains short nearly 4 million jobs compared to before the pandemic, but the data nonetheless contained signs of improvement.

Unemployment dropped 542,000 to 6.9 million, although that remains higher than the pre-pandemic level of 5.7 million. The number of people on temporary layoff, which hit 18 million in April 2020, dropped to 801,000, about where it was before COVID-19 struck the economy.


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