{"id":36963,"date":"2022-06-04T23:10:44","date_gmt":"2022-06-04T23:10:44","guid":{"rendered":"https:\/\/harchi90.com\/maybe-itll-all-work-out\/"},"modified":"2022-06-04T23:10:44","modified_gmt":"2022-06-04T23:10:44","slug":"maybe-itll-all-work-out","status":"publish","type":"post","link":"https:\/\/harchi90.com\/maybe-itll-all-work-out\/","title":{"rendered":"Maybe it’ll all work out"},"content":{"rendered":"
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President Biden reportedly feels he can’t catch a break. But some good news might be right in front of him, unfolding in slow motion.<\/p>\n

The employment report for May was about as good as Biden could have hoped for. It wasn’t a blockbuster, like some of the historic job gains we saw in the rapid recovery from the COVID recession. In fact, job growth slowed by 11% from April to May. But slowing job (and wage) growth is exactly what the Federal Reserve hopes to see in its battle to bring inflation down.<\/p>\n

Employers created 390,000 new jobs in May. The average monthly gain during the prior 12 months was 550,000 new jobs. In the year before the COVID pandemic hit in 2020, job growth averaged 198,000 new jobs per month. So the pace of job growth is cooling but still above normal levels.<\/p>\n

Wages are growing at an annual rate of 5.2%. That’s also a modest slowdown from the prior month. Before the pandemic, wage growth averaged 3.1%. So that, too, is elevated but on the way back toward normal levels.<\/p>\n

Wage growth is obviously good for workers, but it contributes to inflation, because it raises production costs and prices and gives workers more money to spend. Ordinarily, the Fed would cheer robust wage growth. But taming inflation is the Fed’s main job, and with inflation way too high at 8.3%, the Fed is deliberately trying to slow the pace of job and wage growth. The May jobs report was a small but encouraging sign the Fed’s plan is beginning to work.<\/p>\n

[<\/em><\/strong>Follow Rick Newman on Twitter<\/em><\/strong><\/a>, <\/em><\/strong>sign up for his newsletter<\/em><\/strong> or <\/em><\/strong>send in your thoughts<\/em><\/strong>.]<\/em><\/strong><\/p>\n

Biden, whose approval rating is a weak 40% or so, clearly realizes how crucial the Fed is to his own political fortunes. Biden held a highly choreographed meeting with Fed Chair Jay Powell on May 31, where he basically said he has nothing to say to Powell. “My plan to address inflation starts with this simple proposition: Respect the Fed, respect the Fed’s independence,” Biden told a national TV audience. He was obviously referring to President Trump’s repeated hectoring of Powell, which began after the Fed began raising interest rates in 2018.<\/p>\n