The latest ADP National Employment Report raises red flags about the U.S. economy under Biden’s policies, according to a new report from Fox Business.
June saw just 150,000 new jobs added, missing expectations and signaling a cooling labor market.
This slowdown comes amid the Federal Reserve’s aggressive interest rate hikes, now at their highest since 2001.
It’s a direct response to the inflationary pressures created by the administration’s massive spending and monetary expansion – hallmarks of what’s been dubbed “Bidenomics.”
Breaking down the numbers, we see some worrying trends.
The services sector, particularly hospitality and leisure, carried the bulk of job growth. Meanwhile, manufacturing and natural resources saw job losses. As ADP’s chief economist Nela Richardson put it, “Job growth has been solid, but not broad-based.”
Wage growth, while slowing to 4.9%, still outpaces the Fed’s 2% inflation target.
Private sector employment increased by 150,000 jobs in June and annual pay was up 4.9 percent year-over-year. The ADP National Employment Report is available at https://t.co/wRScuaNXRF. #labormarket #economy pic.twitter.com/O8iZj46IP4
— ADP Research (@AdpResearch) July 3, 2024
This gap between wages and inflation goals puts the Fed in a tight spot, reminiscent of the challenges faced during the 1970s stagflation era.
The concentration of growth in lower-wage sectors is particularly concerning.
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It suggests a potential decline in overall economic productivity – a key ingredient in the stagflation recipe.
Looking ahead to the Labor Department’s June jobs report, expectations of 190,000 new jobs and a steady 4% unemployment rate might seem reassuring.
But don’t be fooled. These surface-level stats mask underlying economic instabilities.
The parallels to the 1970s are hard to ignore.
The IMF slams the US with urgent warnings over its debt, deficits, and trade barriers https://t.co/bAdpkxpgsD
— Markets Insider (@MktsInsider) June 30, 2024
Then, as now, we saw a mix of sluggish growth, persistent inflation, and a job market that’s losing steam. It’s a toxic economic cocktail that could lead us straight back to stagflation if left unchecked.
Biden’s economic approach, with its focus on government spending and loose monetary policy, is setting the stage for potential long-term problems.
The current mix of slow growth, stubborn inflation, and a cooling job market is eerily similar to the conditions that preceded the economic troubles of five decades ago.
Without a significant shift in policy, we risk falling into a cycle of low growth and high inflation – the very definition of stagflation.
In the end, the latest job data isn’t just a monthly blip – it’s a wake-up call.
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Unless we see a major policy pivot, Bidenomics could lead us down a path we’ve walked before, with consequences we’d rather not relive.
