Cecilia Rouse is chair of the White House Council of Economic Advisers.
These are extraordinary times for the American economy. Recent data shows that our labor market remains strong even as inflationary pressures show signs of easing.
The jobs report earlier this month showed that US employers added 517,000 jobs in January, much higher than what private forecasters expected. The unemployment rate in January was the lowest since 1969. More than 12 million jobs have been created since the President. Joe Biden take office.
Certainly, as we know it today, inflation was still too high; Its road ahead is likely to be unstable as world events continue to affect commodity prices, especially food and energy. However, there are signs that inflation is easing. Annual inflation back in June 2022 was 9.1%; last month, it fell to 6.4%. In fact, annual inflation has fallen for seven consecutive months.
At the same time, we experienced the fastest job recovery from a recession in three decades. While the Council of Economic Advisers, of which I chair, has always been cautious about the month’s numbers, the inflation and employment reports and the revisions that came with them underpinned the strategy. the administration’s economic strategy to recover from the global pandemic.
The labor market is an important indicator of the health of the economy as a whole, so the specifics of the jobs report deserve attention. Job growth in January was relatively broad, with the strongest gains in the leisure and hospitality, healthcare, and professional and business services sectors. Manufacturing jobs have now grown by more than 800,000 in the past two years. Average wages rose in January and inflation-adjusted wages were higher than in June of last year.
Much of the job growth has been for the lowest earners – think fast food workers. Workers return to hospitals, nursing homes and long-term living facilities. The number of people reporting sick leave fell by more than 2 million this January compared with last year.
In January, the unemployment rate was 3.4%, with the unemployment rate for blacks and the unemployment rate for workers with less than high school degrees near record lows. And this has been one of the fastest recoveries of the highest-age labor force participation rate in history, with the labor force participation rate of women aged 25 to 54 coming almost back. pre-pandemic levels.
Positive signs of resilience in our economy aren’t just in the jobs report. Fourth-quarter GDP shows an economy that continued to grow last year. Annual inflation has fallen every month for the past seven months. Since the start of the Biden administration, more than 10 million small businesses have been established. Initial unemployment insurance claims remain near historic lows.
What’s more, by some measures, families are doing better financially than they were before the pandemic. Americans still have about $1 trillion in additional savings from the pandemic. The middle class’s inflation-adjusted median wealth has increased by $65,000 per adult since the pandemic, and the bottom half’s wealth has more than doubled. These resources have contributed to the continued growth of (inflation-adjusted) retail sales through 2022 and we see evidence that household spending on services such as Restaurants, live events and hair salons are starting to normalize again.
What does all this tell me? Our economy is in the process of recovering from the unbelievable shock of the Covid-19 pandemic.
Importantly, thanks to the significant investments made in the bill signed by President Biden — the bipartisan Infrastructure Act, the Science and CHIPS Act, and the Inflation Reduction Act — the economy Ours is poised to transition into a period of strong, sustained economic growth shared by all Americans.
It is estimated that these inputs into infrastructure, clean energy, healthcare and the digital economy will mean more than $3.5 trillion. in public and private sector investment over the next decade. The main challenge going forward is to make sure these dollars are spent wisely and efficiently, which is why President Biden has assembled an “America investment cabinet” to focus on. in the realization of these historic achievements.
But the work is not done yet. Our economy is sustained by workers and we need to make sure they have the support they need to enter the labor market while taking care of their loved ones. The key to doing so is providing access to quality child and aged care, as well as ensuring paid leave for new parents, those who are sick or people with sick relatives, like all other advanced nations. Education and training to build skills is also important so that all workers are prepared for the jobs of the future. Health insurance must be affordable so that all Americans can access the care they need.
Looking back at where we were when President Biden took office and the progress we’ve made has been phenomenal. In March 2020, economic activity came to a sudden halt as people around the globe sought safe haven from a new virus. We will never power a $22 trillion economy overnight, and bumps in the road to recovery were (and still are) inevitable. But the fact that we almost went back is a credit to this administration’s economic vision.
