The labor market in the United States continued to defy expectations in May, adding 339,000 new jobs. The figure was far above what economists had expected and signals that ongoing efforts to cool the economy and lower inflation are having, at best, only mixed success.

The increase in jobs came along with steadily rising wages. The figures released Friday show a 4.3% year-over-year increase in workers’ pay. The new jobs were also spread over various sectors of the economy, with professional services, government, health care, construction and transportation all showing significant increases.

The data also showed an upward revision of previous estimates of job growth for March and April, indicating another 93,000 jobs were added over those months.

“For all the talk of recession coming, you’d never know it by looking at the job market,” Greg McBride, senior vice president and chief financial analyst for Bankrate.com told VOA. “Another month of strong payroll growth, upward revisions to both March and April, and payroll growth that tended to be concentrated in higher paying jobs. You don’t see that very often … and that speaks to the robustness of the labor market.”

Unemployment ticks up

Counterintuitively, the Labor Department also reported an uptick in the unemployment rate from 3.4% to 3.7%. The number remains near historic lows, and it is not uncommon for the unemployment rate to increase even as the number of jobs increases. This is because the “establishment” survey, which the government uses to count jobs, and the “household” survey, which it uses to measure unemployment, are different.

The disparity was largely because many people previously listed as self-employed are now seeking work in the regular workforce, temporarily skewing the unemployment figures.

The numbers point to an American economy that has remained resilient through a period of sharp interest rate increases by the Federal Reserve, which has raised rates from near zero to between 5% and 5.25% in the 14 months since March 2022.

The aim of the Fed’s rate hikes has been to lower inflation, which spiked in 2022, hitting an annual rate of 9.1% in June of last year.

The rate of inflation has slowed markedly since then, to 4.9% in May, the latest data available. That figure is still outpacing wage growth, which leaves many workers feeling as though they are losing ground even with higher take-home pay.

Unalloyed good news

Joseph E. Gagnon, a senior fellow with the Peterson Institute for International Economics, told VOA that while there were many nuances to the report, one piece of what he called “unalloyed good news” is that the U.S. labor force is continuing to grow.

Friday’s data showed a seasonally adjusted U.S. labor force of 168.8 million, well above pre-pandemic levels, which Gagnon said is good for the economy as a whole and for those concerned about inflation.

“It means people are getting more income and more employment opportunities,” Gagnon said. “But it also means that there’s less inflation pressure, because if there’s more workers out there, they can produce more, and that can actually hold prices down.”

Biden celebrates

In Washington, Democrats and Republicans elected to view the jobs report through their preferred lenses.

In a statement released after the report, President Joe Biden celebrated the news, while noting that he had recently negotiated a deal with Republicans in the House of Representatives to raise the nation’s debt ceiling and avoid the potential for a catastrophic default on the nation’s debts.

“We have now created over 13 million jobs since I took office,” he said. “That is more jobs in 28 months than any President has created in an entire 4-year term.”

He added, “In short, the Biden economic plan is working. And due to the historic action taken by Congress this week, my economic plan will continue to deliver good jobs for the American people in communities throughout the country.”

GOP counters

Republicans were quick to point out that the rosy jobs report belies the fact that many Americans continue to feel that they are struggling economically.

“Real wages are down as 60 percent of workers report living paycheck-to-paycheck and 83% say the economic situation of the nation is negative,” the Republican National Committee tweeted. “Biden’s inflation is killing the financial well-being of American families.”

The Republicans’ claim that the strong economy is not benefiting all Americans appears to have some resonance with the public. On Tuesday, The Conference Board, which tracks consumer sentiment, reported that its consumer confidence index had dropped from 103.7 to 102.3 in May. (The Conference Board uses a scale that sets consumer confidence measured in 1985 as 100.)

“Consumer confidence declined in May as consumers’ view of current conditions became somewhat less upbeat while their expectations remained gloomy,” Ataman Ozyildirim, senior director of economics at The Conference Board, said in a statement.

Ozyildirim reported that consumers’ experience of the economy seems to be at odds with official numbers. Survey respondents estimated job availability to be lower than the government reports it to be and said that they expect higher inflation over the next six months, even as the official rate falls.

Impact on Fed

It is unclear, at this point, how the larger than expected jobs numbers for last month will affect the thinking of policymakers at the Federal Reserve, who had been signaling that they might be prepared to pause interest rate increases while they assess the impact current rates are having on inflation.

The Fed has been attempting to engineer what economists call a “soft landing.” That is, policymakers are attempting to slow the economy enough to push inflation down to a more manageable level, but not so much that the country is tipped into a recession. One expected effect of a cooling economy was supposed to have been slower, or even negative, job growth.

Gagnon said that it’s possible the central bank might consider another small rate increase this month but said much of the urgency that marked large rate increases a year ago no longer applies.

“I think the Fed is not in an ideal place, but it’s not horrible,” he said. “It can be patient, or slow. It’s a close call as to whether they might want to raise rates a bit more, but I don’t see the urgent need that we had a year ago of raising 75 basis points every meeting. We’re not there now.”
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President Joe Biden delivered remarks Friday evening on the Fiscal Responsibility Act, bipartisan legislation achieved following weeks of tough negotiations that suspends the government’s debt limit and avoids a potentially disastrous default. For the first time Biden spoke from the Oval Office, signifying the occasion’s importance. White House Bureau Chief Patsy Widakuswara has this report.
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Уряд із червня підвищив тариф на електроенергію для побутових споживачів до 2,64 грн/кВт-год
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President Joe Biden is set to sign the Fiscal Responsibility Act, legislation that suspends the U.S. government’s debt limit through January 2025 and avoids a potentially disastrous default on U.S. financial obligations.

He is scheduled to deliver remarks on the legislation’s passage Friday evening.

The U.S. Senate voted Thursday night 63-36 in support of the measure. Democratic senators John Fetterman, Elizabeth Warren, Ed Markey, Jeff Merkley and Bernie Sanders, who is an independent but caucuses with Democrats, joined 31 Republicans in voting against the bill.

“Tonight, senators from both parties voted to protect the hard-earned economic progress we have made and prevent a first-ever default by the United States,” Biden said in a statement Thursday.

The bill allows the government to continue to borrow more money over the next 19 months to meet its obligations, exceeding the current $31.4 trillion debt limit.

Despite objections by far-right Republican lawmakers who said it did not go far enough to cut spending and from Democratic progressives who said it trimmed too much, the bill passed the House of Representatives under a 314-117 vote Wednesday night.

The legislation does not set a new monetary cap, but the borrowing authority would extend to January 2, 2025, two months past next year’s presidential election.

In addition, the legislation calls for maintaining most federal spending at the current level in the fiscal year starting in October, with a 1% increase in the following 12 months.

“With the latest debt limit debate now behind us, our leaders must get serious about reforming this process so that we never again jeopardize the full faith and credit of the United States,” Kelly Veney Darnell, interim CEO of the Bipartisan Policy Center, said in a statement sent to VOA.

“Bipartisan legislation like the Responsible Budgeting Act, introduced in the last Congress, would require lawmakers to routinely address our fiscal health by annually debating and voting on significant deficit reducing legislation — but without the full faith and credit of the country hanging in the balance,” she said.

Republican House Speaker Kevin McCarthy, who negotiated the deal with Biden, told reporters that getting the bill passed “wasn’t an easy fight.” He emphasized the budget savings and criticized Democrats who wanted to separate the debate about future government spending from the need to suspend the debt limit so current financial obligations could be met.

“We put the citizens of America first and we didn’t do it by taking the easy way,” McCarthy said. “We didn’t do it by the ways that people did in the past by just lifting [the debt ceiling]. We decided you had to spend less, and we achieved that goal.”

McCarthy said he intends to follow Wednesday’s action with more efforts to cut federal spending.

The measure does not raise taxes on the wealthy, a step wanted by Democrats. Nor will it stop the national debt total from continuing to increase, perhaps by another $3 trillion or more over the next year-and-a-half until the next expiration of the debt limit.

Other pieces of the legislation include a reduction in the number of new agents hired by the country’s tax collection agency, a requirement that states return $30 billion in unspent coronavirus pandemic assistance to the federal government and extending from 50 to 54 the upper age bracket for those required to work in order to receive food aid.

Ken Bredemeier contributed to this report.
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The nation’s employers stepped up their hiring in May, adding a robust 339,000 jobs, well above expectations and evidence of strength in an economy that the Federal Reserve is desperately trying to cool. 

Friday’s report from the government showed that the unemployment rate rose to 3.7%, from a five-decade low of 3.4% in April. 

The stronger hiring demonstrates the job market’s resilience after more than a year of rapid interest rate increases by the Fed. Many industries, from construction to restaurants to health care, are still adding jobs to keep up with consumer demand and restore their workforces to pre-pandemic levels. 

Having imposed 10 straight rate hikes since March 2022, the Federal Reserve is widely expected to skip a rate increase when it meets later this month, though it may resume its hikes after that. Chair Jerome Powell and other Fed officials have made clear that they regard strong hiring as likely to keep inflation persistently high because employers tend to sharply raise pay in a tight job market. Many of these companies then pass on their higher wage costs to customers in the form of higher prices. 

The May jobs report adds to other recent evidence that the economy is still managing to chug ahead despite long-standing predictions that a recession was near. Consumers ramped up their spending in April, even after adjusting for inflation, and sales of new homes rose despite higher mortgage rates. 

Some cracks in the economy’s foundations, though, have begun to emerge. Home sales have tumbled. A measure of factory activity indicated that it has contracted for seven straight months. 

And consumers are showing signs of straining to keep up with higher prices. The proportion of Americans who are struggling to stay current on their credit card and auto loan debt rose in the first three months of this year, according to the Federal Reserve Bank of New York. 

Fed officials are expected to forgo a rate increase at their June 13-14 meeting to allow time to assess how their previous rate hikes have affected the inflation pressures underlying the economy. Higher rates typically take time to affect growth and hiring. The Fed wants to avoid raising its key rate to the point where it would slow borrowing and spending so much as to cause a deep recession. 

The U.S. economy as a whole has been gradually weakening. It grew at a lackluster 1.3% annual rate from January through March, after 2.6% annual growth from October through December and 3.2% from July through September. 

The Federal Reserve’s so-called Beige Book, a collection of anecdotal reports mostly from businesses across the country, reported this week that the pace of hiring gains in April and May had “cooled some” compared with previous reports. Many companies reported that they were fully staffed. 

At the same time, despite some high-profile job cuts by financial and high-technology companies, the pace of layoffs remains unusually low. The number of people seeking first-time unemployment benefits, a proxy for layoffs, barely rose from a low level last week.

Many employers are still engaged in so-called “catch-up hiring,” particularly in such sectors as restaurants, hotels and entertainment venues. Even as customer demand in these industries has spiked, the number of employed workers remains below pre-pandemic levels.

Consumers, who drive roughly two-thirds of economic activity, are still mostly spending at a solid pace, despite higher prices and borrowing rates. Their spending jumped 0.8% in April, the fastest monthly pace since January, as Americans flocked to airports, restaurants and concert halls, among other places. 
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A combination of crises, including high indebtedness, global inflation, the war in Ukraine, and a slow recovery from the COVID-19 pandemic has left many countries in the developing world without sufficient employment opportunities to support their populations, according to a report from the International Labor Organization.

The ILO’s annual Monitor on the World of Work finds that in much of the developing world, employment rates have still not returned to pre-pandemic levels, even as developed countries like the U.S. face labor shortages and wage inflation.

“The findings of this report are a stark reminder of growing global inequalities,” ILO Director-General Gilbert F. Houngbo said in a statement.

Houngbo called for concerted international investment in job creation in developing nations through an effort the ILO has called the Global Coalition for Social Justice.

“Investing in people through jobs and social protection will help narrow the gap between rich and poor nations and people,” he said. “The coalition will bring together a wide range of multilateral bodies and stakeholders. It will help to position social justice as the keystone of a global recovery, and make it a priority for national, regional, and global policies and actions.”

Regional differences

According to ILO data, unemployment is particularly acute in Africa and many Arab countries that, according to the agency’s projections, will remain below pre-pandemic levels of employment at least through the end of 2023.

In North Africa, for example, the unemployment rate is projected to be 11.2% in 2023, still above the 10.9% measured in 2019.

Other regions around the globe have enjoyed a more robust recovery. Unemployment is forecast to be 6.7% in Latin America and the Caribbean for the year, compared to 8% in 2019. In the region the ILO classifies as Northern, Southern, and Western Europe, unemployment will be 6.3% this year, compared to 7% in 2019. In Central and Western Asia, the rate will be 7.8% this year, compared to 9.2% prior to the pandemic.

‘Jobs gap’ revealed

Most assessments of global labor force participation rely on official unemployment reports, which often undercount the number of people who would work if they had the opportunity. To address the undercount, the ILO has developed a metric it refers to as the “jobs gap,” which supplements the official reports with information from labor force surveys to paint a fuller picture of individual countries’ job markets.

The global unemployment rate, according to ILO data, is 5.3% in 2023, lower than the pre-pandemic rate of 5.5% measured in 2019. However, the ILO argues that the jobs gap data shows a real unemployment rate of 11.7% globally, a little more than double the official rate.

The size of the jobs gap varies greatly across countries. On average, low-income countries face a jobs gap of 21.5%, the agency finds. That compares with just 11% in middle-income countries and 8.2% in high-income countries.

The disparity also varies by gender, with women experiencing a 14.5% gap worldwide compared to a 9% gap for men.

Heavily indebted countries

A lack of jobs is particularly acute in countries that are already experiencing high levels of indebtedness. Global increases in interest rates have made it significantly more expensive for many developing countries to service their debt, leaving less money for domestic investment.

The International Monetary Fund considers countries to be in “debt distress” when default or debt restructuring is either ongoing or imminent. According to ILO data, the jobs gap in debt-distressed countries is 25.7% on average, compared to just 11% in developing countries the IMF views as being at low risk of distress. Again, the gap for women in debt-distressed countries is especially high, at 31%.

“The correlation between debt distress and the jobs gap rate points to the critical importance of international financial support for debt-distressed countries in promoting both an economic and a job recovery,” the report finds.

Investment pays dividends

The report makes the case that social protection regimes that provide income support to the vulnerable — particularly old-age pension programs — can be a powerful job-creating force.

The report notes that there is a high correlation between countries that do not provide old-age pensions or other financial support to the elderly and significant jobs gaps. It estimates that the introduction of universal old-age pensions in developing countries where they do not currently exist would increase GDP by 14.8% over 10 years.

Old-age pensions, the report finds, are “a potentially extraordinary policy lever for sustainable development and social justice, and furthermore one that is backed by the strong international consensus on social protection floors.”

‘A particular crisis’

Cynthia M. Hewitt, director of the International Comparative Labor Studies Program at Morehouse College, told VOA that the ILO findings square with what she has observed in her work, which focuses primarily on Africa.

“Unemployment is a particular crisis, because a lot of small businesses went out of business during the pandemic,” she said. “Little restaurants, small hotels, they just simply went out of business.”

Hewitt said the ILO’s partial prescription for the problem — stronger social support programs — is necessary but difficult to achieve.

“There should be a floor of social support for people,” she said. “However, it’s not a zero-sum game. It requires the political will to shift the use of funds, and that’s what’s usually not available.”

Hewitt was also cautious about the call for wealthy countries to invest in job creation in the developing world, pointing out that in Africa especially, there is a long history of powerful foreign interests exerting outsized control over domestic economies.

She said it is important to maintain local control and endorsed a policy put forward by Patrice Lumumba, the former prime minister of the Republic of the Congo in 1960, who advocated a 49% limit on the foreign ownership share of any company in the country.
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The U.S. Senate could vote as soon as Thursday on a measure to suspend the government’s borrowing limit until early 2025 to avert a first-ever default when the United States in four days runs out of cash to pay its bills.

The House of Representatives overwhelmingly voted Wednesday night, with wide support from Republican and Democratic lawmakers alike, to allow the government to continue to borrow more money over the next year-and-a-half to meet its financial obligations, exceeding the current $31.4 trillion debt limit.

The legislation does not set a new monetary cap, but the borrowing authority would extend to January 2, 2025, two months past next year’s presidential election.

In addition, the legislation calls for maintaining most federal spending at the current level in the fiscal year starting in October, with a 1% increase in the following 12 months.

“The responsible thing for America is to pass it,” one Senate leader, Democrat Dick Durbin, told reporters. Durbin said he expects the bill to be approved Thursday night or Friday.

Both Democratic Senate Majority Leader Chuck Schumer and Mitch McConnell, the Senate Republican leader, support suspension of the debt limit and are calling for swift passage of the legislation so it can be sent to President Joe Biden for his signature.

Schumer told the Senate, “Time is a luxury the Senate does not have if we want to prevent default. There is no good reason — none — to bring this process down to the wire. … I hope we see nothing even approaching brinksmanship. The country cannot afford that now.”

The timetable for a Senate vote was uncertain, with a handful of senators calling for votes on changes they want to make to the House-passed legislation. If the Senate approves any of their amendments, the legislation would have to be sent back to the House for another vote.

“Any change to this bill that forces us to send it back to the House would be entirely unacceptable,” Schumer said. “It would almost guarantee default.”

The House approved the legislation on a 314-117 vote despite objections by far-right Republican lawmakers who said it did not go far enough to cut spending and from Democratic progressives who said it trimmed too much.

Seventy-one lawmakers from the majority Republican party in the House voted against the bill, as did 46 Democrats.

In a statement following Wednesday’s vote, Biden celebrated the agreement as a “bipartisan compromise.”

“It protects key priorities and accomplishments from the past two years, including historic investments that are creating good jobs across the country,” Biden said. “And, it honors my commitment to safeguard Americans’ health care and protect Social Security, Medicare, and Medicaid [pensions and health care insurance for older Americans and welfare payments for impoverished people]. It protects critical programs that millions of hardworking families, students, and veterans count on.”

Republican House Speaker Kevin McCarthy, who negotiated the deal with Biden, told reporters that getting the bill passed “wasn’t an easy fight.” He emphasized the budget savings and criticized Democrats who wanted to separate the debate about future government spending from the need to suspend the debt limit so current financial obligations could be met.

“We put the citizens of America first and we didn’t do it by taking the easy way,” McCarthy said. “We didn’t do it by the ways that people did in the past by just lifting [the debt ceiling]. We decided you had to spend less and we achieved that goal.”

McCarthy said he intends to follow Wednesday’s action with more efforts to cut federal spending.

The measure does not raise taxes, nor will it stop the national debt total from continuing to increase, perhaps by another $3 trillion or more over the next year-and-a-half until the next expiration of the debt limit.

Other pieces of the legislation include a reduction in the number of new agents hired by the country’s tax collection agency, a requirement that states return $30 billion in unspent coronavirus pandemic assistance to the federal government and extending from 50 to 54 the upper age bracket for those required to work in order to receive food aid.
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