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    Hot Vax Summer Is Looking Lukewarm

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    The latest jobs report suggests that getting the economy back up to speed is not going to be effortless.Scene from a diner in New York City last fall. Finding people to fill jobs, particularly those like restaurant work, is proving hard for employers.Laylah Amatullah Barrayn for The New York TimesNow that’s more like it.Employers added 559,000 jobs in May, and created more jobs in March and April than earlier estimates suggested. The shockingly weak April number that confounded economists four weeks ago (originally reported as a gain of 266,000 jobs, now revised up to 278,000) looks like an aberration, not a major downshift in the pace of recovery.But that doesn’t mean all is well. Just a few weeks ago, it seemed more likely than not that the United States was on the verge of a boom summer, a time of explosive growth that would bring the economy back to full health faster than in any recovery in memory.It has become increasingly clear, however — both from anecdotal reports and in data — that a reopening spurred on by vaccination is harder than it once seemed. The possibility of adding a million jobs a month seemed within grasp not long ago, but now looks more like wishful thinking.It’s not so much a hot vax summer as a warm vax summer.If you average the last three months of job creation, employers are adding 541,000 positions a month. In a normal expansion, that would be great; it’s a higher number than was attained for even a single month in the recovery that began in 2009. But it does not imply a return to full health in the immediate future.At the job creation rate of the last three months, it would take 14 months to return to February 2020 employment levels — longer if the goal is to return to the prepandemic employment trend.Unlike in a typical recovery, the problem appears to be the supply of labor, not the demand for it. Job openings are at record highs and employers are eager to hire, but they can’t find workers, at least not at the wages they are used to paying.The details of the May numbers support this idea. Wages are soaring — average hourly earning were up 0.5 percent, yet the share of adults in the labor force actually ticked down. The number of people not in the labor force rose by 160,000, implying more people just said, “Forget it, I’m not even looking for a job.”There have been heated debates over whether this is a result of expanded unemployment insurance benefits, which may give people less incentive to work; concerns related to child care and Covid-related health risks; or perhaps a broader psychological reset for many would-be workers.These are not mutually exclusive; all are likely to be contributors to this unusual moment in which demand for goods and services is soaring and supply of them is constrained.An open question is how much labor supply might increase in some states that end expanded jobless benefits earlier than the September expiration date contained in federal law.The details of the industries that are adding jobs similarly point to reopening struggles. The leisure and hospitality sector, which suffered the worst damage from the pandemic, added 292,000 jobs in May. That sounds great, but is actually slower than the 328,000 jobs it added in April.In other words, even as the nation was four weeks further along in achieving widespread vaccination, and seemingly every restaurant in the country was complaining it couldn’t hire enough waiters, cooks and dishwashers, the pace of recovery in that sector slowed rather than accelerated.To the degree that the labor supply shortage is about people re-evaluating their priorities, it’s not necessarily a bad thing. It could lead to a more lasting reset of compensation and work standards across the economy.But it does have implications for politics and the economy as a whole. For instance, Democrats want to run on a boom-time economy in the 2022 midterms. That will be hard to do if the supply of labor turns out to have shifted lower in the long term.In this strange reopening summer, there have been supply constraints on many things, including lumber, computer chips and used cars. But there is a big difference between those supply problems and the labor supply problem: Humans, unlike lumber and semiconductors, can make choices.To the degree that the labor shortage is caused by expanded jobless benefits or schools that are closed, it should go away in time. To the degree there is a broader rethinking of the role of work in people’s lives, this phenomenon will outlast this post-pandemic summer, whatever its temperature ultimately turns out to be. More

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    Black and Hispanic Women Still Behind as Jobs Rebound

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    The labor market recovery is uneven. Teenagers are flooding back into jobs, while those older than 55 are less likely to work than before the pandemic.Black and Hispanic women are lagging furthest in returning to work.Percent change in the number of employed people since before the pandemic, by race, ethnicity and gender More

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    Unemployment claims continue to show labor market progress.

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    Initial claims for state jobless benefits were little changed last week, the Labor Department reported Thursday.The weekly figure was about 425,000, an increase of 6,000 from the previous week. New claims for Pandemic Unemployment Assistance, a federally funded program for jobless freelancers, gig workers and others who do not ordinarily qualify for state benefits, totaled 76,000, a decline of 17,000 from the prior week. The figures are not seasonally adjusted. (On a seasonally adjusted basis, state claims totaled 385,000, a decline of 20,000.)New state claims remain high by historical levels but are less than half the level recorded as recently as early February. The benefit filings, something of a proxy for layoffs, have receded as businesses return to fuller operations, particularly in hard-hit industries like leisure and hospitality.The government will provide a more complete look at the employment market on Friday, when the monthly jobs report for May is released. Economists surveyed by Bloomberg estimate that employers added about 655,000 positions in the month, the median forecast shows. More

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    Wage Growth Is Holding Up in Aftermath of the Economic Crash

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    The pay increases are giving Democrats a bragging point. But it comes with risks: Gains could fade, or spark quicker price inflation.When millions of workers were getting layoff notices last spring, Sharon McCown got something different: a raise.Target, where Ms. McCown was earning $13 an hour stocking shelves and helping customers, gave frontline workers an extra $2 an hour in hazard pay in the early months of the pandemic. The company later raised starting pay permanently to $15 an hour, and paid out a series of bonuses to hourly employees.The extra pay, combined with relief checks from the federal government and the forced savings that came with pandemic life, means Ms. McCown, who is 62 and lives in Louisville, Ky., will emerge from the pandemic in better financial shape than she was in before it.“I did save quite a bit of money given that I wasn’t doing as I usually do, going out to movies, going out to dinner,” she said. “I would look at my bank account, and I was really happy with it.”Workers in retail, hospitality and other service industries bore the brunt of last year’s mass layoffs. But unlike low-wage workers in past recessions, whose earnings power eroded, many of those who held on to their jobs saw their wages rise even during the worst months of the pandemic.Now, as the economy bounces back and employers need to find staff, workers have the kind of leverage that is more typical of a prolonged boom than the aftermath of a devastating recession. Average earnings for non-managers in leisure and hospitality hit $15 an hour in February for the first time on record; in April, they rose to $15.70, a more than 4.5 percent raise in just two months.President Biden’s administration is embracing those gains and hoping they shift power away from employers and back toward workers. And Federal Reserve officials have indicated that they would like to see employment and pay rising, because those would be signs that they were making progress toward their goals of full employment and stable prices. The stage is set for an economic experiment, one that tests whether the economy can lift laborers steadily without igniting much-faster price increases that eat away at the gains.“Instead of workers competing with each other for jobs that are scarce, we want employers to compete with each other to attract workers,” Mr. Biden said in Cleveland last week. “When American workers have more money to spend, American businesses benefit. We all benefit.”Data on pay gains have been hard to interpret because state and local lockdowns tossed people who earn relatively little out of work, causing average hourly earnings to artificially pop last spring. But when you look across a variety of measures, wages seem to be growing at close to prepandemic levels.That came as a surprise to economists.Earnings growth typically slows sharply when unemployment is high, which it has been for the past 14 months. Many economists thought that would happen this time around, too. Instead, paychecks seem to have been resilient to the enormous shock brought on by the pandemic: Wage growth wiggled or fell early on, but has been gradually climbing for months now.“It’s not necessarily going gangbusters, but it’s just higher than you would think” when so many Americans are out of work, said John Robertson, an economist who runs the Federal Reserve Bank of Atlanta’s widely used wage growth tracker. Payrolls are still down by 8.2 million jobs, although that number could fall when fresh data is released Friday.Even workers with less formal education, who have experienced the worst job losses and still face high unemployment rates, have seen pay accelerate this year as economies reopen and employers struggle to hire. That’s according to the Atlanta Fed gauge, which is calculated in a way that makes it less susceptible to at least some of the composition issues plaguing other wage measures. A separate, quarterly measure of overall compensation costs has also held up.The data, while messy, match anecdotes. Reports of labor shortages in service jobs that are newly reopening abound, and surveys show businesses and consumers becoming more confident that employee earnings will increase. Job openings have been surging, and the rate at which workers are quitting suggests that they have some room to be choosy.Many employers, particularly in hospitality, have blamed generous unemployment benefits — now set at an extra $300 per week — for encouraging workers to stay home and making it harder for them to hire. More than 20 states, all led by Republican governors, have moved to cut off pandemic unemployment programs before their scheduled September end date.Republicans have warned that as employers lift pay to attract scarce workers, they may be forced out of business or pass along added labor costs in the form of higher prices. That could turn an inflation surge now underway as the economy reopens into one that’s longer lasting.But Democrats and many at the Fed think the risk of a persistent and rapid acceleration in prices is smaller, and many of them are embracing the apparent increase in pay and benefits as a long-awaited opportunity.The financial cushion of unemployment benefits and repeated rounds of relief checks from the federal government has given many low-wage workers more leverage with potential employers. That’s after decades of steady declines in workers’ share of the nation’s overall income.“You’re giving those frontline workers a little more bargaining power because they’re not as financially strapped and they can make some choices,” said Julia Coronado, president of MacroPolicy Perspectives, an economic consulting firm.Like Ms. McCown, Lake Shircliff got a $2-an-hour raise at the Louisville-area Target where they work.Luke Sharrett for The New York TimesWhen Kentucky’s governor ordered most businesses to shut down in March 2020, Lake Shircliff kept his job. His sister, McKenzie, did not. But neither of them suffered financially in the pandemic.Mr. Shircliff, 21, works at the same Louisville-area Target as Ms. McCown, and was considered an essential worker. He also got a $2-an-hour raise, to $15, and now earns $15.60.Ms. Shircliff, who lives with her brother, was styling hair in a salon when the governor announced that nonessential businesses were closing. She applied for unemployment benefits after closing that evening, before she even left the salon.“Thinking that I wasn’t going to have a job was pretty scary,” she said.But unemployment benefits helped fill the gap, and when Ms. Shircliff’s salon reopened after Memorial Day last year, business was booming. The salon has been able to raise prices twice over the past year, which means higher commissions for workers. In the end, Ms. Shircliff, 25, earned nearly as much last year as the year before, even before unemployment benefits and federal relief checks. She ended the year with more money in her savings account.“It just gives me more peace of mind,” she said. “Now if something really terrible happened it would not scare me like it would before.”It is unclear whether today’s gains will persist, or whether they could slow as employers work through short-term hiring challenges.“The psychology of this downturn was different,” said Michelle Meyer, an economist at Bank of America who thinks the trend could continue. Employees don’t expect pay gains to slow, since they look around and see employers hungry for workers, so they may continue to demand more pay.“This cycle is in some ways a continuation of the last one,” Ms. Meyer said, referring to the record-long economic expansion in place before the pandemic.But there’s a big caveat. If the millions of workers who are currently sidelined start searching for jobs, they could flood the market with a new supply of workers, holding back pay.At its Taco Cabana and Pollo Tropical restaurants, Fiesta Restaurant Group is paying all employees an extra $1 per hour “just for the time being, to get us through this labor crunch,” Richard Stockinger, the chief executive, said in a May 13 earnings call. The company planned to raise prices to help cover the wage boost.If higher pay is passed along through price increases, that carries its own risks. Faster inflation would leave those who were out of work worse off, and if it is severe enough, it could prompt the Fed to dial back its economic support policies. Abrupt policy shifts tend to cause recessions, throwing workers out of jobs.But it is unclear whether businesses will be able to consistently charge more. Companies have struggled to raise prices for years because of increased competition from the internet and abroad and consumer expectations for relatively steady prices. Even in 2019, when unemployment was low and pay steadily rising, inflation remained calm.If some firms choose to take the hit to their profits rather than scare away customers, wage growth could tilt economic power away from companies and toward the people they employ.That is what Kenneyatta Cochran, a McDonald’s worker in Detroit, is hoping for. Ms. Cochran, 38, has been working at McDonald’s for three years and makes $10 per hour, and she’s part of a group of workers pushing for a $15 wage and a union.She can’t take advantage of more attractive job options elsewhere because she can’t afford a car. McDonald’s is reachable by bus. She received neither hazard pay nor big wage increases during the depths of the pandemic.Asked for comment, McDonald’s noted it had recently announced that the entry-level range for its work crews was climbing to at least $11 to $17 per hour. That applies to stores it owns, rather than franchises.“I worked straight through — I couldn’t afford to take off,” said Ms. Cochran, who has a 1-year-old daughter, Olivia Grace. Ms. Cochran lived in fear that she would either die from Covid-19 and leave her child alone or pass the virus along to the baby, who had a breathing problem when she was born.“If I lose my child or if I lose my life, McDonald’s is still going on — they feel like we’re replaceable, disposable,” she said during a phone interview, her voice tight. She added, as if talking straight to the company: “It makes no sense that y’all can’t provide us with the things that we need, and it’s not like you can’t afford it.” More

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    Here Are The 5 Ways to Track the United States' Economic Recovery

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    The ebbing of the pandemic has brought price increases, supply bottlenecks and labor shortages. Key indicators will show whether it’s just a stage.This is a strange moment for the U.S. economy.Unemployment is still high, but companies are complaining they can’t find enough workers. Prices are shooting up for some goods and services, but not for others. Supply-chain bottlenecks are making it hard for homebuilders, automakers and other manufacturers to get the materials they need to ramp up production. A variety of indicators that normally move more or less together are right now telling vastly different stories about the state of the economy.Most forecasters, including policymakers at the Federal Reserve, expect the confusion to be short-lived. They see what amounts to a temporary mismatch between supply and demand, brought on by the relatively swift ebbing of the pandemic: Consumers, flush with stimulus cash and ready to re-engage with the world after a year of lockdowns, are eager to spend, but some businesses lack the staff and supplies they need to serve them. Once companies have had a chance to bring on workers and restock shelves — and people have begun to catch up on long-delayed hair appointments and family vacations — economic data should begin to return to normal.But no one knows for sure. It is possible that the pandemic changed the economy in ways that aren’t yet fully understood, or that short-term disruptions could have long-lasting ripple effects. Some prominent economists are publicly fretting that today’s price increases could set the stage for faster inflation down the road. Historical analogues such as the postwar boom of the 1950s or the “stagflation” era of the 1970s provide at best limited insight into the present moment.“We can’t dismiss anything at this point because there’s no precedent for any of this,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, a forecasting firm.On Friday, the Labor Department will release its monthly snapshot of the U.S. labor market. Last month’s report showed much slower job growth than expected, and economists will be watching closely to see whether that disappointment was a fluke. But don’t expect definitive answers. A second month of weak job growth could be a sign of a faltering recovery, or merely an indication that the temporary factors will take more than a couple of months to resolve. A strong report, on the other hand, could signal that talk of a labor shortage was overblown — or that employers have overcome it by bidding up wages, which could fuel inflation.To get a clearer picture, economists will have to look beyond their usual suite of indicators. Here are some things they will be watching.1. PricesChange in consumer prices from a year earlier

    Source: Federal Reserve Bank of San FranciscoBy The New York TimesConsumer prices rose 4.2 percent in April from a year earlier, the biggest jump in more than a decade. But the largest increases were mostly in categories where demand is rebounding after collapsing during the pandemic, like travel and restaurants, or in products plagued by supply-chain disruptions, like new cars. Those pressures should ease in the coming months.What would be more concerning to economists is any sign that price increases are spreading to the rest of the economy. Researchers at the Federal Reserve Bank of San Francisco studied sales patterns from early last year to categorize products and services based on the pandemic’s impact. Their Covid-insensitive inflation index so far shows little sign of runaway inflation beyond pandemic-affected areas.Economists will also be watching other, less pandemic-specific measures that likewise aim to discern the signal of inflation amid the noise of short-term disruptions. The Federal Reserve Bank of Cleveland’s trimmed-mean C.P.I., for example, takes the Labor Department’s well-known Consumer Price Index and strips away its most volatile components.“What we’re looking for is what does underlying inflation look like,” said Ellen Zentner, chief U.S. economist at Morgan Stanley.For those looking for a simpler measure, Ms. Zentner offers a shortcut: Just look at rents. The rental component of C.P.I. (as well as the “owner’s equivalent rent” category, which measures housing costs for homeowners) is the largest single item in the overall price index, and should be less affected by the pandemic than some other categories. If rents start to rise rapidly beyond a few hot markets, overall inflation could follow.2. Inflation ExpectationsConsumer inflation expectations in the short and long term

    Source: University of MichiganBy The New York TimesOne reason economists are so focused on inflation is that it can become a self-fulfilling prophecy: If workers think prices will keep rising, they will demand raises, which will force their employers to raise prices, and so on. As a result, forecasters pay attention not just to actual prices but also to people’s expectations.In the short run, consumers’ inflation expectations are heavily affected by the prices of items purchased frequently. Gasoline prices weigh particularly heavily on consumers’ minds — not only do most Americans have to fill up regularly, but the price of gas is displayed in two-foot-tall numbers at stations across the country. Economists therefore tend to pay more attention to consumers’ longer-run expectations, such as the five-year inflation expectations index from the University of Michigan, which recently hit a seven-year high.Forecasters also pay close attention to the expectations of businesses, investors and other forecasters. Many economists pay particular attention to market-based measures of inflation expectations, because investors have money riding on the outcome. (One such measure, derived from the bond market, is the five-year, five-year forward rate, which forecasts inflation over a five-year period beginning five years in the future.) The Federal Reserve has recently begun publishing a quarterly index of common inflation expectations, which pulls together a variety of measures. It showed that inflation expectations rose in the first quarter of this year, but remain low by historical standards.3. Labor SupplyUnemployed workers per job opening

    Source: Bureau of Labor StatisticsBy The New York TimesRestaurants, hotels and other employers across the country in recent months have complained that they cannot find enough workers, despite an unemployment rate that remains higher than before the pandemic. There is evidence to back them up: Job openings have surged to record levels, but hiring hasn’t kept up. Millions of people who had jobs before the pandemic aren’t even looking for work.Many Republicans say enhanced unemployment benefits are encouraging workers to stay on the sidelines. Democrats mostly blame other factors, such as a lack of child care and health concerns tied to the pandemic itself. Either way, those factors should dissipate as enhanced unemployment benefits end, schools reopen and coronavirus cases fall.But not all workers may come rushing back as the pandemic recedes. Some older workers have probably retired. Other families may have discovered they can get by on one income or on fewer hours. That could allow labor shortages to persist longer than economists expect.The simplest way to track the supply of available workers is the labor force participation rate, which reflects the share of adults either working or actively looking for work. Right now it shows plenty of workers available, although the Labor Department doesn’t provide breakdowns for specific industries.Another approach is to look at the ratio of unemployed workers to job openings, which provides a rough measure of how easy it is for businesses to hire (or, conversely, how hard it is for workers to find jobs). Data from the Labor Department’s Job Openings and Labor Turnover Survey comes out a month after the main employment report, but the career site Indeed releases weekly data on job openings that closely tracks the official figures.Both those approaches have a flaw, however: People who want jobs but aren’t looking for work — whether because they don’t believe jobs are available or because child care or similar responsibilities are keeping them at home temporarily — don’t count as unemployed. Constance L. Hunter, chief economist for the accounting firm KPMG, suggests a way around that problem: the number of involuntary part-time workers. If companies are struggling to find enough workers, they should be offering more hours to anyone who wants them, which should reduce the number of people working part time because they can’t find full-time work.“The data is not necessarily going to be as informative as it would be in a normal recovery,” Ms. Hunter said. “I would not normally tell you coming out of a recession that I’m going to be closely watching involuntary part-time workers as a key indicator, but here we are.”4. WagesPrivate-sector wages and salaries, change from a year earlier

    Source: Bureau of Labor StatisticsBy The New York TimesWage growth remained relatively strong during the pandemic, at least compared with past recessions, when low-wage workers, in particular, lost ground. Many businesses that stayed open during last year’s lockdowns had to raise pay or offer bonuses to retain workers. Now, as the pandemic eases, companies are raising pay again to attract workers.The question is whether the recent wage gains represent a blip or a longer-term shift in the balance of power between employers and employees. Figuring that out will be difficult because the United States lacks a reliable, timely measure of wage growth.The Labor Department releases data on average hourly earnings as part of its monthly jobs report. But those figures have been skewed during the pandemic by the huge flows of workers into and out of the work force, rendering the data nearly useless. Economists are still watching industry-specific data, which should be less distorted. In particular, average hourly earnings for nonsupervisory leisure and hospitality workers should reflect what is happening among low-wage workers.A better bet might be to wait for data from the Employment Cost Index, which is released quarterly. That measure, also from the Labor Department, tries to account for shifts in hiring patterns, so that a rush of hiring in low-wage sectors, for example, doesn’t show up as a decline in average pay. It showed a mild uptick in wage growth in the first quarter, but economists will be paying close attention to the next release, in July.5. Everything ElseThe indicators mentioned above are hardly a comprehensive list. The Producer Price Index provides data on input prices, which often (but not always) flow through to consumer prices. Data on inventories and international trade from the Census Bureau can help track supply-chain bottlenecks. Unit labor costs will show whether increased productivity is helping to offset higher pay. Economists will be watching them all.“During normal times, you can just track a handful of indicators to know how the economy is doing,” said Tara Sinclair, an economist at George Washington University who specializes in economic forecasting. “When big shifts are going on, you’re tracking literally hundreds of indicators.” More

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    Here's One Thing Missing from President Biden's Budget: Booming Growth

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    For all the administration’s focus on transformational policies, it’s not forecasting an outburst of economic potential.President Biden’s budget proposal includes billions of dollars for clean energy, education and child care — ideas being sold for their potential to increase America’s economic potential. One thing it does not include: an outright economic boom.In the assumptions that underpin the administration’s budget, economic growth is strong in 2021 and 2022 — but strong enough only to return the economy to its prepandemic trend line, not to surge above the trajectory it was on throughout the 2010s.Then in 2023, the administration expects gross domestic product, the broadest measure of economic activity, to rise at a slower 2 percent rate, then 1.8 percent a year through the mid-2020s. That is lower than the 2.3 percent average annual growth rate experienced from 2010 to 2019.The administration’s outlook is consistent with projections by other forecasters, including at the Congressional Budget Office and in the private sector. But it means that the Biden White House is not — at least not formally — expecting the kind of rip-roaring growth that characterized periods like 1983 to 1989 (with an average annual G.D.P. growth of 4.4 percent) and 1994 to 2000 (4 percent).Those two episodes coincided with much more favorable demographic trends. They also helped propel two presidents to comfortable re-elections.If the new projections were to prove accurate, it would imply two years of strong growth paired with moderate inflation as the nation recovered from the pandemic heading into the 2022 midterm elections, but then comparatively low growth in the run-up to the 2024 election.The sober estimate contrasts with the approach Mr. Biden has taken to selling his agenda publicly. The framing of his signature plans for infrastructure and family support has been that they will enable the economy to become more vibrant and productive.“There’s a broad consensus of economists left, right and center, and they agree what I’m proposing will help create millions of jobs and generate historic economic growth,” Mr. Biden said in an address to Congress in April.It is a striking contrast with the approach taken by the Trump administration — a gap between presidential styles buried on Table S-9 of the two presidents’ budgets. The Trump administration’s final prepandemic budget proposal, published in February 2020, forecast that the economy would grow around 3 percent per year throughout the 2020s.If the Trump projections materialized, by 2030 the economy would be more than 11 percent bigger than what the Biden projections envision. However, the Trump administration persistently underdelivered on growth. G.D.P. rose an average of 2.5 percent in the three nonpandemic years of his presidency. The results are weaker still if you include the contraction of the economy in 2020.A wind farm in Carbon County, Wyo. The Biden administration says investment in clean energy will help America fulfill more of its long-term potential.Benjamin Rasmussen for The New York TimesCasey B. Mulligan, a University of Chicago economist who worked in the Trump White House, said in an email that the reduced growth forecasts were similar to those that career economic staff recommended in the Trump years. “They perennially overestimated Obama-era growth and underestimated Trump nonpandemic growth,” but you couldn’t see it in the published documents in the Trump years “because normally the political appointees such as me have a say in what is published.”The Biden administration has been inclined more broadly to a strategy of underpromising and overdelivering, most notably with the rollout of vaccines.Even before the budget’s official release, its growth projections became a subject of Republican attacks. “The Obama-Biden administration famously accepted slow growth as America’s ‘new normal’ while pursuing policies that sent jobs overseas,” House Republicans on the Ways and Means Committee said in a blog post. “President Biden appears to be lowering the bar even further.”Political volleys aside, it can be easy both to overestimate the ability of government policy to move the dial on overall growth — and to underestimate how much even small gains in productivity can mean when they compound over many years.In the 1980s boom, for example, the labor force was growing much more rapidly than it is now, helped by demographic trends and a rise in women entering work. In the 1990s boom, a surge in productivity resulted in large part from innovations in information technology, unconnected to government spending.“We are a really big economy where really big forces are shaping what happens to G.D.P. growth,” said Wendy Edelberg, director of the Hamilton Project at the Brookings Institution and a former C.B.O. chief economist.Even these moderate projections by the Biden administration imply that its policies will lift growth in economic activity by a few tenths of a percent each year over a decade. This is significant when comparing it with the growth that would be expected by simply looking at demographic factors and historical averages of productivity growth. The forecast is more inherently optimistic about Mr. Biden’s policies — and their potential to increase productivity and the size of the work force — than it might seem at first glance..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-16ed7iq{width:100%;display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-box-pack:center;-webkit-justify-content:center;-ms-flex-pack:center;justify-content:center;padding:10px 0;background-color:white;}.css-pmm6ed{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;}.css-pmm6ed > :not(:first-child){margin-left:5px;}.css-5gimkt{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:0.8125rem;font-weight:700;-webkit-letter-spacing:0.03em;-moz-letter-spacing:0.03em;-ms-letter-spacing:0.03em;letter-spacing:0.03em;text-transform:uppercase;color:#333;}.css-5gimkt:after{content:’Collapse’;}.css-rdoyk0{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-eb027h{max-height:5000px;-webkit-transition:max-height 0.5s ease;transition:max-height 0.5s ease;}.css-6mllg9{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;position:relative;opacity:0;}.css-6mllg9:before{content:”;background-image:linear-gradient(180deg,transparent,#ffffff);background-image:-webkit-linear-gradient(270deg,rgba(255,255,255,0),#ffffff);height:80px;width:100%;position:absolute;bottom:0px;pointer-events:none;}.css-1jiwgt1{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;margin-bottom:1.25rem;}.css-8o2i8v{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-8o2i8v p{margin-bottom:0;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-1rh1sk1{margin:0 auto;overflow:hidden;}.css-1rh1sk1 strong{font-weight:700;}.css-1rh1sk1 em{font-style:italic;}.css-1rh1sk1 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#ccd9e3;text-decoration-color:#ccd9e3;}.css-1rh1sk1 a:visited{color:#333;-webkit-text-decoration-color:#ccc;text-decoration-color:#ccc;}.css-1rh1sk1 a:hover{-webkit-text-decoration:none;text-decoration:none;}“Making the claim that your fiscal policies will boost growth by four-tenths of a point seems optimistic, but I can see how they could get there,” she said.Jason Furman, the Obama administration’s former top economist, said: “I think there’s a problem that people have in their head — more extravagant ideas about what economic policy can do and how quickly it can do it. When you’re talking about productivity enhancement, you’re talking about compounding that becomes a big deal for a long time.”In other words, the difference of a few tenths of a percent of G.D.P. growth might not mean much for a single year, but a gap of that size that persists for many years has a big impact on living standards.Some of the administration’s policies, by design, would focus on the very long-term impact on the nation’s economic potential. For example, additional money for community colleges might actually depress the size of the labor force, and thus G.D.P., in the short run if more adults go back to school. But it would then increase those workers’ productive potential, and thus contribution to growth, for the decades that follow.Conservatives, for their part, view the Biden agenda as likely to restrain growth, particularly once tax increases and new regulatory action go into effect. Mr. Mulligan, the Trump adviser, said he believed the Biden agenda would reduce the nation’s growth path by around 0.8 percentage points a year compared with its Trump-era trajectory. Douglas Holtz-Eakin, president of the American Action Forum, said he thought Mr. Biden’s policies could create faster growth in the short term but slower growth in the long run because of taxes and spending.The Biden White House is more optimistic about what is possible for American workers. After the post-pandemic recovery, it projects a 3.8 percent unemployment rate from 2023 on, which is a bit lower than the levels forecast by the C.B.O. (an average of 4.2 percent from 2023 to 2031) or the Fed (4 percent is the median longer-run unemployment forecast of its leaders). It’s also lower than the 4 percent post-2023 jobless rate included in the Trump budget.The administration is optimistic about the post-pandemic recovery in the job market, projecting a 3.8 percent unemployment rate from 2023 on.Hannah Beier for The New York TimesThis reflects the lessons of 2019, when the jobless rate was consistently below 4 percent without causing excessive inflation or other problems. It’s a welcome sign for anyone who thinks that running a tight labor market — a high-pressure economy, as Treasury Secretary Janet Yellen calls it — is a good thing.Forecasts, on their own, aren’t worth more than the paper on which they are printed. A bold prediction of the boom that’s coming wouldn’t mean much if it didn’t materialize. And the world described in the Biden team’s forecasts is hardly a gloomy one: Low unemployment, low inflation and steady growth is a nice combination, and one that could describe much of the period from 2016 to 2019.The question for Mr. Biden is whether that will be enough to qualify as building back better. More

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    How It Looks to Live in N.Y.C. During a Pandemic on $100 a Week

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    Ms. Galán’s home is small, but happy. Christopher, 11, Mia, 7, and Ian, 1, get along. The older children help keep the space tidy. The youngest has kept them giggling during the long year they’ve spent together indoors. Before the pandemic, Ms. Galán worked at a dry cleaner in the Bronx, earning about $350 per […] More

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    Unemployment claims fell last week.

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    New claims for unemployment benefits fell last week, the government reported on Thursday, as the labor market slowly recovers from the staggering losses wreaked by the coronavirus pandemic.About 487,000 workers filed first-time claims for state benefits during the week that ended May 8, the Labor Department said, a decrease from 514,000 the week before. In addition, about 104,000 new claims were filed for Pandemic Unemployment Assistance, a federal program covering freelancers, part-timers and others who do not routinely qualify for state benefits.Neither figure is seasonally adjusted. On a seasonally adjusted basis, new state claims totaled 473,000.After more than a year of being whipsawed by the pandemic, the economy has been showing new life. Restrictions are lifting, businesses are reopening and job listings are on the upswing. But hiring in April was weaker than expected.Some employers, particularly in the restaurant and hospitality sectors, have complained of having trouble finding workers. The U.S. Chamber of Commerce and several Republican governors have asserted that a temporary $300-a-week federal unemployment supplement has made workers reluctant to return to the job.The U.S. Labor Department said that as of Wednesday, six states — Iowa, Mississippi, Missouri, Montana, North Dakota and South Carolina — had notified the department that they were terminating federal pandemic-related unemployment benefits next month.The unemployment rates in those states in March, the latest month for which data is available, ranged from 3.7 percent in Iowa to 6.3 percent in Mississippi.Several other states with Republican governors, including Tennessee, Arkansas, Alabama, Wyoming and Idaho, have said they also plan to withdraw from the federal program. Tennessee and Alabama are among the states that offer the lowest maximum benefit to qualified individuals each week.But economists are skeptical that jobless benefits are playing anything more than a bit part in the pace of the job market’s recovery.“There is tremendous churn in this labor market,” said Gregory Daco, chief U.S. economist at Oxford Economics. “There are still major supply constraints and unemployment benefits are not the most important one. The virus is.”Many workers have children at home who are not attending school in person. Others are wary of returning to jobs that require face-to-face encounters. Covid-19 infections have decreased since September but there are still 38,000 new cases being reported each day and 600 Covid-related deaths. Less than half the population is fully vaccinated.There is halting progress from employers as well, as businesses continually update their assessment of costs and customer demand. “The hiring pattern isn’t going to be smooth,” Mr. Daco said. “Businesses hire and then reassess. They need to find the right balance, it’s a trial and error process more than anything.”Federal jobless benefits are due to expire in September. Prematurely halting them is “detrimental to the economy,” Mr. Daco said. “You’re voluntarily hurting certain vulnerable tranches of the population.”Nationwide, the unemployment rate was 6.1 percent, and there are 8.2 million fewer jobs than in February 2020. More