President Biden now has his very own pandemic: The one driven by the Delta variant of the coronavirus.
Hiring retreated in August, largely because the highly contagious Delta strain is now ravaging parts of the country with tenacity rivaling the original coronavirus outbreak last year. Employers created just 235,000 new jobs in August, barely one-third of what economists were expecting. The average for the three prior months was 876,000 new jobs per month. Job growth in August was the slowest since January, when coronavirus vaccines weren’t yet widely available.
Hiring dropped off as coronavirus death rates surged anew. The daily coronavirus death rate bottomed out at 225 in early July, but has now soared well above 1,000. The death rate is now back to levels of March, and most of those dying from coronavirus now are unvaccinated Americans succumbing to the Delta variant.
The retail sector lost 29,000 jobs in August, as more consumers worried about the Delta variant stayed home. There were no job gains in leisure and hospitality, ending a six-month recovery in the hard-hit sector. “The Delta variant is scaring off customers,” Capital Economics explained in a research note. “Delta fears could also prevent people from returning to the labor force.”
The worst month of Biden’s tenure
August was the worst month of Biden’s presidency, with Americans shocked by the chaotic withdrawal of U.S. troops from Afghanistan and the death of 13 US servicemembers in an Aug. 26 suicide bombing near the Kabul airport. Biden needs good news at home to make voters forget Afghanistan and bring his sinking approval rating back up. The August job news didn’t provide the bump Biden was hoping for.
The surging Delta variant isn’t Biden’s fault, and his administration has generally done a good job of administering vaccines that came online right before Biden took office. But Biden did promote a return to normal that hasn’t materialized. In June, for instance, the Biden White House proclaimed that the July 4 holiday weekend would kick off “a summer of freedom.”
Whoops. The summer of freedom is now morphing into the autumn of anxiety, as Americans wait out the Delta variant and wonder what comes next. Booster shots for the vaccinated could prolong immunity for those comfortable going out, but boosters may take longer than Biden or many vaccinated Americans want. In mid-August, Biden suggested boosters could be available for all vaccinated American adults 8 months after their first round of shots. But government scientists appear to be scaling back that ambition. Booster shots for the Moderna and Johnson & Johnson shots aren’t ready yet and it’s not clear when they will be. Pfizer boosters may only go to select groups, at first. Biden is developing a pattern of overpromising on what the government can deliver.
Economists expect the economy to roar ahead once major impediments are out of the way. But those impediments are stubborn. Delta would be less of a problem if all eligible Americans were vaccinated, but only about three-quarters have their shots, leaving plenty of fertile targets for the cagey virus. Anti-vaccine fervor isn’t Biden’s fault either, but on the other hand he hasn’t solved a problem that’s been apparent for months.
Federal jobless benefits that have kept many people afloat expire on Sept. 6. Federal and state eviction bans are expiring as well, leaving some struggling Americans vulnerable to homelessness. Government support programs can’t prop up the economy forever, but the August swoon in jobs and consumption might not just be a one-time aberration. “September and October are going to be white-knuckle months for households, employers and the Federal Reserve,” economist Bernard Baumohl of the Economic Outlook Group warned clients on Sept. 3.
The weak job numbers could prompt the Fed to prolong the point at which it begins to tighten monetary policy. Would that be a good thing or a bad thing? Financial markets love easy money, so stocks and other risky assets might continue to benefit from extended Fed stimulus. But it would be easy money for the wrong reason: Unexpected economic weakness. Bad news is bad news, even if markets initially misinterpret it.
Biden addressed the August job numbers after they came out, acknowledging that “there’s no question the Delta variant is why today’s jobs report isn’t stronger.” He says new measures are coming to “address the Delta variant, address some of those fears and concerns.” Delta wasn’t a force when Biden became president, but now that it’s here, he owns it. Unless he tames the variant, it will own him.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidential tips, and click here to get Rick’s stories by email.
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