Gradually slowing job gains and a expanding workforce in March delivered good news to President Biden, nearly a year after he declared that the job market needed to cool significantly to tame high prices.
“This is a great jobs report for hard-working Americans,” Biden said in a written statement Friday morning.
But analysts warn that the coming months could bring a much more rapid slowdown in hiring, as banks pull back loans after the government's bailout of depositors at Silicon Valley Bank and Signature Bank. Such a scenario would be a challenge for the president and his team as they try to help stabilize the economy without falling into a recession.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote on Friday that he expects job gains to fall to just 50,000 in May, from 236,000 in March, and for the economy to start shedding jobs in a net way over the summer. But he acknowledged that the job market continues to surprise analysts, in a good way, by drawing more workers back into the workforce.
“Demand and supply of labor are back in balance,” wrote Mr. Shepherdson.
In May last year, Mr. Biden wrote that the monthly job creation need to fall from an average of 500,000 jobs to around 150,000, a level he said would be “consistent with low unemployment and a healthy economy.”
Since then, the president has enjoyed a complicated relationship with the labor market. Job creation remains much stronger than many forecasters – and Mr. Biden himself, would have hoped. The growth pleased Mr Biden's political advisers and helped the economy avoid a recession. But that has been accompanied by persistently high inflation, which continues to weaken consumers and reduce Mr. Biden's approval rating.
However, the president has toured the country fighting for the jobs created by laws he signed that invest in infrastructure, low-emission energy, and semiconductor manufacturing, even as inflation, while slowing, remains well above historical norms.
The March report showed the difficulty of that balancing act. Analysts have called cooling jobs and wage growth a good sign for the Federal Reserve in its campaign to reduce inflation by raising interest rates.
But the cooling included a 1,000 drop in manufacturing jobs, which some groups blamed on the Fed. “America's factories continue to experience the destabilizing effects of rising interest rates,” said Scott Paul, president of the Alliance for American Manufacturing, a trade group. “The Federal Reserve must understand that its policies undermine our global competitiveness.”
And Republicans lashed out at Mr. Biden for the slump in wage growth. “The average hourly wages are continuing downtrend even as inflation has wiped out nominal wage increases for more than two years,” Tommy Pigott, director of rapid response for the Republican National Committee, said in a news release.