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The job market was strong in May, but is still overshadowed by high inflation

MARY LOUISE KELLY, HOST:

U.S. employers added nearly 400,000 jobs last month, the kind of news that ordinarily would prompt celebrations at the White House. But for many people, the strong job market is overshadowed by high inflation. This week, the Biden administration tried to show that it is on the job, highlighting the president's efforts to get prices under control. We're going to talk through the politics and economics with NPR White House correspondent Asma Khalid and NPR economics correspondent Scott Horsley. Hi, team.

ASMA KHALID, BYLINE: Hi there.

SCOTT HORSLEY, BYLINE: Good to be with you.

KELLY: Scott, these job numbers today, these were better than many forecasters had expected. Why?

HORSLEY: Yeah, this was another solid jobs report. Employers added 390,000 jobs in May. That is a little bit slower than we saw earlier this year. But, you know, that's kind of what you'd expect as we get this close to full employment. The U.S. has now replaced 96% of the jobs that were lost early in the pandemic.

KELLY: Wow.

HORSLEY: And last month's gains were pretty widespread. You know, we saw job gains in bars and restaurants, factories, construction companies. One exception was retailers. They cut close to 61,000 jobs in May. But overall, employment in the retail industry is still well above where it was before the pandemic. And that's thanks in part to the buying binge that Americans have been on for the last couple of years.

KELLY: Are employers able to find enough workers?

HORSLEY: It's not easy. This is a very tight job market. There's still a lot of turnover as workers shift from one job to another. But the workforce did expand last month. Some 330,000 people joined or rejoined the labor force. And that's good to see, because when unemployment's as low as it is, you have to keep adding workers if you're going to add jobs. I talked to Denise Beckson, who's with Morey's Piers. That's a waterpark and amusement center in Wildwood, N.J. They typically hire about 1,500 people for the summer season. And Beckson says she's feeling pretty confident they will have the workers they need this summer.

DENISE BECKSON: Our typical employees are teens and college students, retirees, teachers. And we're seeing, you know, a lot of interest in coming back to seasonal summer jobs.

HORSLEY: There was a pretty sizable jump last month in people aged 55 and older coming out of retirement and looking for jobs. You can see that as a positive - maybe they think the pandemic is less threatening so they feel safer coming back to work, or maybe as a negative, that they're being forced back into the workforce by rising prices and battered retirement accounts. Beckson says the waterpark also has seen a return of foreign-born workers on seasonal visas this summer. That's a program that a lot of resorts have traditionally relied on that was largely on hold in 2020 and 2021.

KELLY: President Biden sounded happy about these jobs numbers. He described the new report as excellent this morning. He also did acknowledge Americans are anxious about inflation. He knows it's weighing not only on people's pocketbooks, but also on his approval ratings. The question, Asma, what can he do about it?

KHALID: That is an excellent question. You know, I will say the president and his team are speaking more directly about the pain that people have been feeling. In a nutshell, their message is, I hear you. I feel you. We are working on it. And this week, you saw a bit of a PR push from the White House trying to spin that, you know, economic inflation message on TV airwaves. You heard a bit about what that message sounds like in the president's remarks today.

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PRESIDENT JOE BIDEN: There's no denying that high prices, particularly around gasoline and food, are a real problem for people. But there's every reason for the American people to feel confident that we'll meet these challenges. Because of the enormous progress we've made on the economy, the Americans can tackle inflation from a position of strength.

KHALID: That last line is the White House's central argument. They feel confident they can tackle inflation from a position of strength. And essentially, they're saying that because of economic gains in 2021, you know, job growth, increased family savings, a smaller deficit, the country is in a better position to try to cool the economy without crashing it.

KELLY: Yeah. How is that sales pitch working for the White House?

KHALID: It is a tough sell. I was speaking with Austan Goolsbee earlier this week. He was one of the top economic advisers in the Obama White House. And he was telling me that really, it doesn't matter what message any White House tries to deliver to reframe inflation. So long as inflation is high, voters are going to be in a sour mood. And the president, really like any president, has limited levers to do anything about inflation. The president himself, President Biden, tried to explain that this week. He met with the chairman of the Federal Reserve, and he emphasized the independence of the Fed in fighting inflation.

HORSLEY: And can I just say the Fed is keeping a really close eye on the job market for signs of which way inflation might be going. Today's report does show upward pressure on wages start to cool a little bit last month. That's what the Fed wants to see. Average wages in May were up 5.2% from a year ago. That's a smaller jump then we've seen in previous months. Wages are still climbing faster than the central bank is comfortable with though. So you can expect the Fed to keep raising interest rates pretty aggressively for now. The Fed wants to put the brakes on inflation, but not cause the economy to skid into recession. There are lots of skeptics who don't think the Fed's going be able to pull off that balancing act. But if you try to imagine, you know, the flight path to a so-called soft landing, it might look something like this jobs report.

KELLY: Asma, we've just got about 30 seconds, but how worried is the White House about, as Scott just put it, the economy skidding into recession?

KHALID: You know, I will say the messaging we have heard from this White House seems to suggest that they think, you know, that they have a confidence that the economy has safeguards to weather inflation better than other countries. But I will say, Mary Louise, there's the economic storyline and the political storyline. And those two things do not often align. There are elections in November.

KELLY: And Asma Khalid and Scott Horsley, thanks to you both.

KHALID: My pleasure.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.