Jobs Report Bolsters Biden’s Economic Pitch, but Inflation Still Nags

WASHINGTON — Gradually slowing job gains and a growing labor force in March delivered welcome news to President Biden, nearly a year after he declared that the job market needed to cool significantly to tame high prices.

The details of the report are encouraging for a president whose economic goal is to move from rapid job gains — and high inflation — to what Mr. Biden has called “stable, steady growth.” Job creation slowed to 236,000 for the month, closing in on the level Mr. Biden said last year would be necessary to stabilize the economy and prices. More Americans joined the labor force, and wage gains fell slightly. Those developments should help to further cool inflation.

But the report also underscored the political and economic tensions for the president as he seeks to sell Americans on his economic stewardship ahead of an expected announcement this spring that he will seek re-election.

Republicans criticized Mr. Biden for the deceleration in hiring and wage growth. Some analysts warned that after a year of consistently beating forecasters’ expectations, job growth appeared set to fall sharply or even turn negative in the coming months. That is in part because banks are pulling back lending after administration officials and the Federal Reserve intervened last month to head off a potential financial crisis.

Surveys suggest that Americans’ views of the economy are improving, but that people remain displeased by its performance and pessimistic about its future. A CNN poll conducted in March and released this week showed that seven in 10 Americans rated the economy as somewhat or very poor. Three in five respondents expected the economy to be poor a year from now.

As he tours the country in preparation for the 2024 campaign, Mr. Biden has built his economic pitch around a record rebound in job creation. He regularly visits factories and construction sites in swing states, casting corporate hiring promises as direct results of a White House legislative agenda that produced hundreds of billions of dollars in new investments in infrastructure, low-emission energy, semiconductor manufacturing and more.

On Friday, the president took the same approach to the March employment data. “This is a good jobs report for hard-working Americans,” he said in a written statement, before listing seven states where companies have announced new expansions this week that Mr. Biden linked to his agenda.

But as he frequently does, Mr. Biden went on to caution that “there is more work to do” to bring down high prices that are squeezing workers and families.

Aides were equally upbeat. Lael Brainard, who directs Mr. Biden’s National Economic Council, told MSNBC that it was a “really nice” report overall.

“Generally this report is consistent with steady and stable growth,” Ms. Brainard said. “We’re seeing some moderation — we’re certainly seeing reduction in inflation that has been quite welcome.”

But analysts warned that the coming months could bring a much more rapid deterioration in hiring, as banks pull back on lending in the wake of the government bailout of depositors at Silicon Valley Bank and Signature Bank.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote Friday that he expected job gains to fall to just 50,000 in May, and for the economy to begin shedding jobs on a net basis over the summer. But he acknowledged that the job market continued to surprise analysts, in a good way, by pulling more and more workers back into the labor force.

“Labor demand and supply are moving back into balance,” Mr. Shepherdson wrote.

In May of last year, Mr. Biden wrote that monthly job creation needed to fall from an average of 500,000 jobs to something closer to 150,000, a level that he said would be “consistent with a low unemployment rate and a healthy economy.”

Since then, the president has had a complicated relationship with the labor market. Job creation has remained far stronger than many forecasters — and Mr. Biden himself — expected. That growth has delighted Mr. Biden’s political advisers and helped the economy avoid a recession. But it has been accompanied by inflation well above historical norms, which continues to hamstring consumers and dampen Mr. Biden’s approval ratings.

The March report showed the political difficulty of reconciling those two economic realities. Analysts called the cooling in job and wage growth welcome signs for the Federal Reserve in its campaign to bring down inflation by raising interest rates.

But that cooling included a decline of 1,000 manufacturing jobs, for which some groups blamed the Fed. “America’s factories continue to experience the destabilizing influence of rising interest rates,” said Scott Paul, president of the Alliance for American Manufacturing, a trade group. “The Federal Reserve must understand that its policies are undermining our global competitiveness.”

Republicans blasted Mr. Biden for falling wage growth. “Average hourly wages continue to trend down even as inflation has wiped out any nominal wage gains for more than two years,” Tommy Pigott, rapid response director for the Republican National Committee, said in a news release.

Representative Jason Smith, Republican of Missouri and the chairman of the Ways and Means Committee, said the report showed that “small businesses and job creators are reacting to the dark clouds looming over the economy.”

In his own release, Mr. Biden nodded to one of the clouds that could turn into an economic storm as soon as this summer: a standoff over raising the nation’s borrowing limit, which could result in a government default that throws millions of Americans out of work. Republicans have refused to do so unless Mr. Biden agrees to unspecified spending cuts.

Mr. Biden has refused to negotiate directly over raising the limit. He closed his jobs report statement on Friday with a shot at congressional Republicans’ strategy. “I will stop those efforts to put our economy at risk,” he said.