Jan 10, 2022

The state of the economy.

Friday's jobs report has a lot of people talking.

I’m Isaac Saul, and this is Tangle: an independent, ad-free, subscriber-supported politics newsletter that summarizes the best arguments from across the political spectrum on the news of the day — then “my take.”

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Today's read: 10 minutes.

We're covering the latest jobs report from Friday and what it means for the economy. Plus, a question about prosecuting the Jan. 6 rioters, a podcast landmark, and a very important "story that matters."

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Quick hits.

  1. All three men convicted of murdering Ahmaud Arbery were sentenced to life in prison. (The sentences)
  2. At least 19 people, including nine children, were killed in an apartment fire in New York City. It is one of the worst fires in the city's history. (The fire)
  3. Tennis star Novak Djokovic had his visa cancellation overturned and was released from immigration detention in Australia, where he is trying to compete in the Australian Open despite being unvaccinated. (The ruling)
  4. Kazakh President Kassym-Jomart Tokayev said he weathered a coup attempt. Violent unrest led to the deaths of 16 security forces, and the number of civilians killed is estimated at 164. (The unrest)
  5. Wisconsin Sen. Ron Johnson (R), who had previously planned to retire, now says he will seek re-election. (The announcement)

Today's topic.

The latest jobs report. On Friday, the latest jobs report was released, giving one final look at the state of the economy as we head into 2022. The report's numbers drew both celebration and disappointment in certain quarters, with a mixed bag of data on where things stand.

The good news: The U.S. ended the year with 6.4 million more jobs than there were at the end of 2020, the largest increase on record. The unemployment rate dropped to 3.9% (from 6.4%), the largest one-year decrease in history, and the first time in 50 years a president has had an unemployment rate below 4% in his first year in office. Jobless claims were about 207,000 last week, close to the lowest in five decades. The October and November jobs reports were revised as well, adding a combined 141,000 jobs. Wages climbed 0.6% on the month and were up 4.7% year over year.

The bad news: We're still 3.6 million jobs short of where we were before the pandemic. The economy only added 199,000 jobs, well short of the 400,000+ economists were expecting. These numbers are mostly drawn from the hiring spree that occurred in early December, meaning the impact of Omicron is not yet in the picture. Companies are still struggling to hire workers. Inflation has wiped out much of the wage growth and is still causing problems across the country.

Given that this was the jobs report for the last month of 2021, it sparked a lot of reflection about the Biden economy, the state of the country and where things are.

Below, we're going to take a look at some reactions from the left and right, then my take.


What the left is saying.

  • The reviews are mixed, with some cheering on the state of unemployment and others pointing to ominous signs.
  • Some say inflationary pressures are coming from corporations, not government spending.
  • Still others say it's clear the pandemic is still dictating the economy.

Paul Waldman said the latest report is a reminder of a marvelous bipartisan success.

"Here’s the simple fact: In the 11 full months that Joe Biden has been president, the U.S. economy added more than 6 million jobs... And when Biden took office, the unemployment rate was 6.4 percent. Now, it’s 3.9 percent. A triumph!" he wrote. "The truth is that we made a collective decision at the beginning of the pandemic about our economic crisis — a bipartisan decision... There seems to be a misconception that Biden was the one who spent all that money, but that’s just false. Let’s review our history:

"In March 2020, Congress passed the Coronavirus Preparedness and Response Supplemental Appropriations Act, which spent $8.3 billion to begin responding to the pandemic. President Donald Trump signed the bill. Two weeks later, they passed the Families First Coronavirus Response Act, at a cost of $192 billion. Trump signed it. At the end of March 2020, Congress passed the Cares Act; Trump signed that one as well. It spent more than $2 trillion, though its final cost after loans were repaid was estimated at $1.7 trillion. The next month, Congress passed the Paycheck Protection Program and Health Care Enhancement Act, at a cost of $483 billion. Trump signed it. In December 2020, Congress passed the Consolidated Appropriations Act, which added $868 billion in pandemic relief spending. Trump signed it. In March 2021, Congress passed the American Rescue Plan, with an estimated cost of $1.8 trillion. This time, not a single Republican voted for it; Biden signed it.

In The Guardian, Robert Reich said the latest numbers mean The Fed is going to raise interest rates — the wrong medicine for the economy.

"Higher interest rates will cause more job losses. Slowing the economy will make it harder for workers to get real wage increases. And it will put millions of Americans at risk. The Fed has it backwards,” Reich said. “Wage increases have not caused prices to rise. Price increases have caused real wages (what wages can actually purchase) to fall. Prices are increasing at the rate of 6.8% annually but wages are growing only between 3-4%.

"The most important cause of inflation is corporate power to raise prices. Yes, supply bottlenecks have caused the costs of some components and materials to rise. But large corporations have been using these rising costs to justify increasing their own prices when there’s no reason for them to do so," Reich added. "Corporate profits are at a record high. If corporations faced tough competition, they would not pass those wage increases on to customers in the form of higher prices. They’d absorb them and cut their profits.”

In The Washington Post, Catherine Rampell called it a "swing and a miss."

"This is not good news," she wrote. "For a while we were rapidly filling in the huge crater in employment levels created by layoffs during the early months of the pandemic; more recently, progress has slowed a lot. And the vast numbers of Americans forced into isolation because of positive covid cases over the past several weeks may well halt even that slowed growth, at least temporarily.

"As of mid-December, the U.S. economy was 'missing' about 3.6 million jobs relative to the employment levels from just before the pandemic began," she wrote. "There are a few likely factors at play. Even before the recent omicron surge, people were still getting sick and missing work. In December, 1.7 million people who were still counted as employed said they missed work because of their own illness. That’s nearly 600,000 more people than the number who missed work because of illness in the December right before the pandemic started."


What the right is saying.

  • The right says the economy is failing Americans, and ended the year with a whimper.
  • Many tie government spending to inflationary pressures.
  • Others say it will only get worse with Omicron and Biden's policies.

The New York Post editorial board said "another bad jobs report shows the obvious: Bidenomics is a total disaster."

"The Labor Department reported that the United States added just 199,000 jobs in December. That’s the worst of the year, with the fewest jobs added since the president took office and significantly less than half the 422,000 jobs economists expected,” the board wrote. “Yes, the unemployment rate fell to 3.9%, down from 4.2%, but that’s because the rate doesn’t count people who’ve given up.

"Sorry, but 3.6 million Americans lost their jobs thanks to the pandemic and have yet to get them back. And it’s that $2 trillion 'rescue plan' — passed unilaterally by Democrats at a time when the last thing the already-recovering economy needed was a 'rescue' — that has fueled inflation,” the board added. “Worse, it seems Biden, unlike the Republicans he denounced, is itching to do even more economic damage: The same day the jobs report came out, his lawyers were before the Supreme Court arguing for his vaccine mandate on employers — which would force them to lay off workers who refuse the jab and require them to waste resources on enforcement.”

But in The National Review, Dominic Pico called it a set of more "unusual data."

"The unemployment rate is unlikely to get too much lower. There will always be some people who are unemployed because they’re in between jobs. In February 2020, the unemployment rate was 3.5 percent. The last time it was below 3.5 percent was May 1969. The lowest it has ever been was 2.5 percent in May 1953,” Pico wrote. “People who want to work can find work. That’s good news. Less than a year after a recession, it’s very unusual for this to be the case. Low unemployment is good.

"The jobs are out there, and if people come out on the other end of this disruption in a job they enjoy better than the one they had before, that’s a good thing," Pico added. "Hopefully some of the people who have left the labor force will get wind of that and come back to fill the millions of available jobs. It bears repeating: There has never been a job market like this less than a year after a recession. The patterns of specialization and trade that were disrupted by the pandemic are being reassembled one piece at a time, often in different configurations than before. That’s going to create some unusual data."

Thanks to Omicron, The Washington Examiner said things are about to get worse.

"Biden took office last January with the easiest job perhaps of any president in history," The Washington Examiner said. "He inherited newly approved vaccines to deal with COVID, plus a full-blown recovery already well in progress from one of the most sudden and acute economic disasters in the nation's history. There was a V-shaped recovery going on. All Biden had to do was sit back and avoid interfering — just watch the job creation and take credit.

"Instead, he meddled," they wrote. "He began his presidency by putting his boot on the neck of the gas and oil industries and approving a massive inflationary spending measure. More recently, he has imposed crushing pandemic-related measures that have harmed workers — especially parents who have nowhere to put their children when malingering teachers unions refuse to work. Now, Biden is trying to shovel even more inflationary spending out the door, despite the current alarming levels of inflation."


My take.

I'm not an economics reporter (thankfully), but one thing I've learned from covering the economy — and its deep ties to politics, the state of mind of Americans, and how Congress acts — is that the long view is always preferred.

In that regard, I do think Biden has plenty to celebrate. Returning the economy to sub-4% unemployment numbers, averaging over 500,000 new jobs a month, and seeing healthy stock market gains on the year (despite the latest dip) is actually a "triumph," as Paul Waldman put it, by any traditional metrics that Democrats and Republicans ordinarily love to use. It's easy to forget that at the beginning of this pandemic we had unemployment rates near 15% and some 20 million jobs lost over the course of a single month. Simply put: If someone gave you these prospective numbers at the beginning of Biden's term, I am 100% certain his administration (and most Republicans) would have taken them gladly. As Waldman said, this is a bipartisan success story. Trump and Republicans deserve credit, too.

It's also true that if inflation is your number one gripe, and you tie inflation to government spending, then Republicans and Democrats share the blame. Inflation is a big deal, one that is impacting Americans from the top of the economic ladder to the bottom. But there is more than one force at work that's driving it, and I don't find it particularly fair to lay the blame squarely at the feet of President Biden. Robert Reich's take on the corporate squeeze is compelling. So are the supply chain issues. And the argument The Fed is in control. And that government spending and quantitative easing caused it. And the fact it’s a global issue. So... maybe they all play a role?

When it comes to unemployment numbers, there are all sorts of other factors at play, too. Both Catherine Rampell and Dominic Pico highlighted them: 1.7 million people called out sick from work in December, 600,000 more than the December before the pandemic began. Many older workers have retired early. Staffing shortages across various industries are being driven by fear of Covid-19, vaccine mandates, and burnout. New immigration has fallen and backlogs in the visa system have left many immigrant workers unable to legally stay on the job, creating a labor shortage. Childcare shortages are forcing many parents to stay home, too.

The numbers, in a word, are really noisy.

All told, the overarching feeling I have is "things could be a lot worse." On a personal note, I started a business in the middle of the pandemic, one that — so far — has been a resounding success (please subscribe to keep us going!) Pandemic aid helped my wife and me weather some of the lowest points of the pandemic, wages for workers are growing, mobility in the labor market is up, and the fact there are lots of job openings and lots of people quitting their jobs can easily be seen as a positive. A lot of my friends are quitting "okay" jobs to pursue careers they really want, and finding a lot of success doing it.

As we enter year two of the Biden presidency, though, things are on solid footing. It's not cataclysmic or dire, which means the pressure is on in a big way for Biden to produce a strong year of growth, oversee the easing of inflation, and help guide policy that keeps things trending in the direction they are going now. Mixed results like this won’t cut it in 2022. Anything less than a return to the pre-pandemic economy will cost Democrats big in 2022 and beyond.


Your questions, answered.

Q: If we shouldn't throw the book at the [Jan. 6] rioters, what is the appropriate "punishment" or legal ramifications for their actions? Should rioters who showed premeditation (social media, conversations with family, etc) for criminal activity or violence before the event be treated differently than ones who might have been carried away in the excitement of the mob? Does intent matter?

— Rachel from Tennessee

Tangle: I think it really depends on the crime. By a measure of consistency, rioters who assaulted police officers or caused serious damage to the Capitol building should definitely be doing time in prison. It's a common refrain from many conservatives to ask why rioters from the summer of Black Lives Matter protests weren't prosecuted, but many may not like the answer: As of August, over 300 cases were being prosecuted, and the more than 70 defendants who were sentenced by August got an average of about 27 months behind bars, with at least 10 receiving prison terms of five years or more, according to the Associated Press.

On the face of it, that's fewer prosecutions but more serious punishment for those people versus the Jan. 6 rioters. And that was five months ago. It was also for crimes committed in cities across the country, some of which were probably prosecuted at the local level — not a well documented attack at the Capitol which obviously draws more federal scrutiny.

To answer your questions even more directly: Yes, I think premeditation (people who planned to storm the Capitol, cause damage and try to halt the count of the electoral vote) should draw stronger penalties than folks who got caught up in the fever. I think fines and probation are appropriate responses for the vast majority of the people involved in Jan. 6th, and I don't think the people who ran into the Capitol for a selfie or a YouTube video should be going to prison.

Which, for what it's worth, brings me to my most radical political view, which I've stated here for the record several times, and that's that prison is not going to do much good for anyone, regardless of whether they are rioters from the summer of 2020 or folks who stormed the Capitol on Jan. 6. I don't think locking human beings in cages is good for society or good for the people inside, an idea that is shockingly uncommon in our country (save some far left liberals and super anti-government Libertarians). Prison is not a good way to punish or rehabilitate people. It's only an effective way to isolate extremely dangerous people from society as a last resort.

Given that view, in a vacuum, I think the number of folks from Jan. 6 who need or deserve prison time is probably fewer than a couple dozen.

Want to ask a question? You can reply to this email and write in (it goes straight to my inbox) or fill out this form.


A story that matters.

Between 2020 and 2021, fentanyl overdoses became the leading cause of death for adults between the ages of 18 and 45 in America. The synthetic opioid can be deadly, even in small amounts, and has been found laced into drugs like heroin, meth, cocaine and marijuana. The Drug Enforcement Agency (DEA) says most fentanyl comes into the U.S. from Mexico and China. 37,208 people in the 18-45 age group died of fentanyl overdoses in 2020, and 41,587 died of fentanyl overdoses in 2021. More adults aged 18 to 45 died of fentanyl overdoes in the last two years than any other leading cause of death, including COVID-19, motor vehicle accidents, cancer, and suicide. Fox News has the story.


Numbers.

  • 37%. The percentage of Americans who said Covid-19 was one of their top five priorities for the government to work on in 2022, according to an early December AP News poll.
  • 53%. The percentage of Americans who said Covid-19 was one of their top five priorities for the government to work on at the same time a year ago.
  • 68%. The percentage of respondents who mentioned the economy in some way as a top 2022 concern.
  • 14%. The percentage of respondents who named inflation as a top five issue in the recent poll.
  • <1%. The percentage who named inflation as a top five issue a year ago.
  • 41-57. The percentage of voters who approved-disapproved of Biden's handling of the economy.

Have a nice day.

About 27 people who were ice fishing and walking on Lake Michigan in Wisconsin had to be rescued after the ice they were standing on broke off from shore. The chunk of ice, carrying more than two dozen people, floated for about an hour and a half and drifted nearly a mile from land before the people on it were rescued by a combination of local authorities and the Coast Guard. Some described the sound of the ice breaking like a "gunshot." The incident took place north of Green Bay and every person involved in the incident was rescued without injury in about 90 minutes. USA Today has the story.


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