As White House officials prepare for the last jobs report before the midterm elections set to be released Friday morning, the last thing they want to see is a blowout hiring number.
It’s the political paradox that looms over the last major piece of economic data before Election Day – one that comes at a moment that finds Democrats desperately trying to make up ground on the economy.
Economists forecast a gain of roughly 200,000 jobs in October – a number that would land in the window of the 150,000 to 300,000 jobs added that White House officials are hoping to see. It would be the “Goldilocks” outcome for the White House – a number that’s not too low, but not too high.
It’s a far cry from just one year ago, when the US economy was adding jobs each month at an eye-popping clip: More 650,000 jobs in October and November, close to 600,000 in December, followed two months later by a whopping 714,000 new jobs in February.
President Joe Biden and his economic team have known for months that a cooling of the economy is a necessity to crack the pervasive price increases that have handed a significant advantage to Republicans on the issue which voters consistently cite as most important.
Biden and his top advisers have taken pains since the summer to underscore their rationale for the transition from major job gains to an economic picture defined by “steady and stable” growth.
It’s a message intended to temper expectations after more than a year defined by the rapid pace of hiring, but also a goal viewed by officials as a necessity in order to protect many of the gains they regularly tout.
At its heart is Biden’s most significant economic success: A dramatic jobs recovery from the pandemic-driven economic crisis he walked into on his first day in office. More than 10 million jobs have been added since Biden’s inauguration and the unemployment rate sits at 3.5%.
The combination of continued job gains and a return to quarterly growth sit at the center of the Biden’s contention that, despite the dour national mood, the US economy is not in or on the precipice of a recession.
“Our economy is strong as hell,” Biden told reporters last month.
The tight labor market, however, has exacerbated the soaring price increases that have imperiled Democrats’ hold on their majorities in the House and Senate. That, in turn, has driven the Federal Reserve to trigger four consecutive jumbo rate increases, including the most recent three-quarters-of-a-point move this week.
Fed Chairman Jerome Powell, in his news conference after the policy announcement, pointed to a labor market that “is just very, very strong” as a central reason the rapid rate increases haven’t tangibly dented soaring prices.
“So it may take time. It may take resolve. It may take patience. It’s likely to get inflation down,” Powell said of the effect of the Fed’s actions. “I think you see from our forecasts and others that it will take some time for inflation to come down.”
Biden has made clear publicly – and to his team privately – that the Fed is an independent entity and won’t face any political pushback from his administration as it attempts to intentionally cool down the US economy.
But White House officials are also keenly aware that the stated goal of a “soft landing” where the central bank manages to significantly tighten economic conditions in order to drive inflation down, but not enough to tip the economy into a painful recession, is a difficult needle to thread.
They do see indications that it’s a possible outcome, however.
“I believe there’s a path to accomplishing that while maintaining a very healthy labor market,” Treasury Secretary Janet Yellen told CNN in an interview. “And I believe we’re on that path.”
But that path includes officials rooting for more modest jobs gains, or clear signs of the “steady and stable” environment that would create more room for the Fed’s difficult task.