Press Briefing by Cecilia Rouse. WH Econ Adviser Blames Bad April Jobs Report On Easter Being In March…Easter Was In April

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On 5/14/2021, during news brief, Biden’s economic advisor Cecilia Rouse blamed the awful April jobs report on Easter being in March.

One problem: Easter was on April 4.

“It was also, um, it was, um, you know, getting into the details, um, it was, I think Easter happened in March this year,” Rouse explained during a press conference. “The seasonal adjustments are a little funny.”

Question: Can I ask kind of a broad-approach question? I think a lot of us have been pouring over the BLS report last week, trying to divine some type of meaning from things, which I don’t think is easy, particularly in that case. But given your expertise in this area, do you feel like it’s an indication that “normal” is just going to be very different — right? — in labor markets, whenever there is a full recovery — that people are making different decisions based on the last year, that people are looking for different kinds of jobs based on the last year, and our expectation of what a labor market — the labor market looks like will be very different post-pandemic than it was pre-pandemic?

Cecilia Rouse: So, I try not to read too much into any one month. I think I started with that point. So I really try. And I think there are many reasons to believe and to understand why — why we don’t like to do that.

For example, if you were drilling down on that report, you know that the reference week was the week of April 12th. That was a week before all adults became eligible for the — you know, for a vaccination. That was the week before. And then we know it takes five to six weeks for people to become — if they get the Pfizer or Moderna — to become fully vaccinated.

It was also — it was — you know, getting into the details, it was — I think, Easter happened in March this year; the seasonal adjustments are a little funny within the BLS report.

Question: Do you think employers should be considering paying their employees more now, as one of the solutions to the 8.1 million open jobs that currently exist?

Cecilia Rouse: You know, so the way that in our capitalist system — so the way that a market economy works is we work through prices as a signal. And so, wages are the price that we work in the labor market. So that would be the natural way for employers to try to attract employees.

Again, we’re not through this pandemic; many of those essential — especially essential workers — those jobs are not risk-free. Right? They’ve become a little more — a little riskier. And so, if employers have to pay a little bit more to compensate those employees to take on that risk, I think that’s appropriate, again, in a market economy where that’s the — that’s the currency.

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James S. Brady Press Briefing Room 5/14/2021 12:58 P.M. EDT

Psaki: Hi everyone. Happy Friday. All right. So, today, we have another special guest — it’s quite a week with special guests; our seventh of the week — Chair of the Council of Economic Advisers Cecilia Rouse, a member of the President’s Families Cabinet.

This is not her first time in the briefing room, but, as a quick introduction, she is a renowned labor economist who recently served as Dean of the Princeton School of Public and International Affairs. She previously served as a member of the Council of Economic Advisers in the Obama-Biden Administration, where I had the pleasure of working with her, and on the National Economic Council in the Clinton Administration. She is the first African American and just the fourth woman to lead the CEA in the 74 years of its existence.

She has a busy day, as we all do — a lot going on here — but she’ll take just a couple questions when she wraps up.

And I’m so happy I don’t have to put my mask back on. Okay, come on over.

Cecilia Rouse: Thank you. Okay.

Question: Hello.

Cecilia Rouse: Hello. So, this past year, we’ve been living through a once-in-a-hundred-years pandemic — or at least that’s what we certainly hope.

The speed with which we powered down the economy was unprecedented. And while we have suffered and lost much over the past year, the efficiency and speed with which we have rolled out the vaccinations — even surpassing President Biden’s own initial and, I might say, ambitious goals — has meant that the U.S. has made tremendous progress at curbing the virus.

As a result, we are now in the midst of restarting this economy in earnest and we are making good progress in doing so. However, we must keep in mind that an economy will not heal instantaneously. It takes several weeks for people to get full immunity from vaccinations and even more time for those left jobless from the pandemic to find and start a suitable job. Supply chains have been disrupted and sectors that were hardest hit are just beginning to come back.

I will also note that given the extraordinary and unprecedented circumstances of the pandemic, it will remain difficult for analysts to accurately forecast economic data until we have more fully recovered. For example, in just one day, we now anticipate an oversupply of masks and an undersupply of lipstick. I don’t know about you guys, but I — that’s what I thought of this morning.

In all seriousness, different sectors of the economy will come back online at different times and at different pla- –at different paces.

And while the actual economy will likely change from week to week, reported data will lag the progress. As a result, as the economy recovers, there will be data that come in below expectations and data that come in above expectations. We saw that this week with the CPI and last week with the jobs report. Today’s report on retail sales in April came in softer than most expected after a large increase last month.

At moments like this, it is important to focus on trends and not month-to-month or week-to-week oscillations. In that vein, we know that the initial estimate for first-quarter GDP was 6.4 percent, outpacing growth in the Eurozone. And employment has grown an average of 500,000 jobs per month since January.

Even while the overall trend in the economy is positive, the administration is working to help displaced workers with their searches so that they can find a good, suitable work.

And as the President emphasized earlier this week, if offered a suitable job, a worker receiving unemployment benefits must take it.

We are also emphasizing to employers that there are resources to help them to hire workers part-time without those workers losing their unemployment benefits through short-time compensation. And we’re reminding employers of the extension of the Employee Retention Tax Credit in the American Rescue Plan.

While it is important we continue to support workers, families, and businesses until the virus is more robustly contained, we also recognize the imperative of supporting the healing of our labor market.

In the meantime, we know that the mismatch between different parts of the economy will show up in unexpected ways until the economy more fully recovers. As such, the President — as the President urged earlier this week, we must be patient.

At the same time, we also cannot forget that the longer-term structural problems our economy faces as well. The Economic — the Council of Economic Advisers released an issue brief yesterday on the economic framework underlying the American Jobs Plan and the American Families Plan.

Addressing these structural issues is so important to ensuring a strong, economic future for our country, and that’s why I am so incredibly proud to be a member of the American Families Plan Cabinet, which was the original reason for me to be here today.

And so, I am now happy to take a few questions.
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Press Briefing by Cecilia Rouse. WH Econ Adviser Blames Bad April Jobs Report On Easter Being In March…Easter Was In April https://t.co/mUHxqklSa6

— HYGO News (@HygoNews) May 14, 2021

Psaki: All right. Nancy, kick us off.

Question: Thank you so much. Cecilia, I know — I hear what you’re saying about the fact that the economic numbers are going to be kind of unpredictable right now. But what did you make of the jump in consumer prices last month — the largest hike since 2008?

Cecilia Rouse: Yes. I mean, that’s an — that’s obviously an important question. And it was interesting to me that even the Federal Reserve was a bit surprised by the jump. So we hadn’t forecasted that; the forecasters hadn’t expected that.

But if you dig below the surface, what you see is, for example, 30 percent of that increase was in the used car sales market. And we know that there was supply issu- — supply chain issues there with the semi-conductors. And if you think about getting back and healing markets, we know that rental car companies are buying — they have to replenish their stocks because they liquidated their stocks last year when people were not renting cars.

We know that, because of the American Rescue Plan, people were buying cars because many people were afraid of taking public transit, which is not good either. But taking — instead of taking public transit, they wanted to buy more new cars. But with the shortage in the semiconductor supply chain, the supply just wasn’t meeting demand. So that’s where a big part of the jump was.

Another part was: In those sectors that were really hit by the virus, we saw some of them are starting to come back. The most vivid example that we found was in the airline industry, where we saw a 10 percent increase in their prices, month to month.

Well, I don’t know about you guys, but I know lots of — okay, I’m working here, so I don’t get time to do this — but other people I know are looking forward to taking time off for the summer, and they’re buying air- — they’re buying airplane tickets. So there was a 20 percent increase in airline tickets, but it’s still — a 10 percent increase in airline tickets, but it’s still 20 percent below where it was before the pandemic.

So those prices are increasing because we were at unusual lows because of the pandemic. They are rebounding as the economy starts to heal, but many of those sectors are actually not even back to where they were before.

So we expect there’s going to be a period — as, you know, supply starts to equal demand and sectors are healing and recovering — that we’re going to see some — you know, there’s going to be some choppiness.

Question: But even if that’s the case, at what point does concern about inflation become its own economic problem?

Cecilia Rouse: So, look, you know this is really the purview of the Federal Reserve, and, you know, we try to maintain their independence. But what economists worry about is when inflation becomes de-anchored. And so, at the moment, it looks as though people fully expect this inflation to be temporary — where temporary is when the economy more fully recovers — but that we understand that there are not sort of structural factors that should lead to an inflation that the Federal Reserve cannot control.

Psaki: Justin, go ahead.

Question: I mean, I was wondering if I could follow on that a little bit. There seems to be this assumption that we’ve heard from people within the administration that this inflation is temporary and that it’ll — we’ll get through the choppiness by the end of the year.

And I’m wondering what you’re seeing in the data that — that suggests that’s true. Is it just sort of hopeful guesses based on coming out of the pandemic? Or are you actually seeing something that doesn’t lead to that worst-case scenario?

Cecilia Rouse: So, as I just gave an example, much of the increase last month was in airline prices. So airline prices ticked up because they had completely cratered last time — last year, this time. So they — you know, there’s been a robust increase, month to month, but they’re still not even close to where they were this time last year.

So, clearly the airline industry is recovering. I do not expect those prices to continue — you know, continue past where they were last year. Because, at some point, people will stop — you know, I don’t think people take multiple vacations. But I think many people have been cooped up in their houses and they would like to travel. And so we’re seeing, you know, increased demand in the airline industry.

So, you know, let’s take the auto sector, which accounted for a third of that increase. Again, I expect that to be one time.

So there’s going to be this kind of misalignment. And, you know, as the — that’s what happens in — in economics. Prices are signals, right? They signal when something is in short supply, when something is in oversupply. And I fully expect that that will work itself out in the coming months.

Question: Right. But, I mean, Michigan’s Consumer Sentiment Survey come out today. It was much lower than expected, which indicates that people might be fearful that this is a trend beyond just, “Okay, yeah, we’re all buying plane tickets for the first time,” or, “There’s one sector of the economy.”

So I guess I’m — I guess I’m curious: Are you really just chalking it up to these initial stumbles? Or do you believe that there’s this —

Cecilia Rouse: So this was an unprecedented economic downturn. I don’t know about your lifetimes; I think I may be older than most of you, so —

Like, we have not had, first of all, the pandemic — so where we completely powered down the economy. And therefore, we’ve never had a recession that was not tied to a problem in the economy, but that was tied to a health problem. And so there’s even uncertainty about the recovery because our recovery is hitched to the — to the virus.

We are making fabulous progress in this country in terms of controlling the virus, but I’d like to remind you that only 58 percent of adults have had one shot — at least one shot. But if we actually drill down, if we’re going to take the example of the labor market, only a quarter of those who are age 18 to 29 are fully vaccinated, and only a third of those age 30 to 39 are fully vaccinated.

We are just not to the other side of this yet. So, you know — obviously, you know, I — we sincerely don’t want to see our economy end up in a hyperinflation of some kind, but it is just too early to be drawing that conclusion when we consider the depth and the nature of this economic recession.

We are still 8 million jobs down from where we were this time last year. We have a long way to go.

Psaki: Trevor.

Question: So you talked about these areas where there’s these little pockets of supply-demand mismatch in the economy. You know, there’s — I think others have talked about lumber and just kind of random areas within the economy.

Have you done any analysis of whether tariff reduction would be helpful in some of those areas?

Cecilia Rouse: Well, so, you know, our — our international trade policy is part of a longer-term — you know, it’s part of the longer-term economic plan. And I know that our trade representatives are looking at all of those factors.

But let’s — let’s face it: The pandemic — we all hope to be on the other side of the pandemic, you know, next year. There may be some tailwinds, you know, just because, again, this was unprecedented. Trade policy is a much bigger issue, and that needs to be worked out in the context of our global partners and as part of having a really well-running and efficient global economy.

Question: And does inflation create a bit more of an argument for deficit reduction, as you go forward and start looking at, kind of, your budget planning and whether there needs to be a change in — in how the gov- — how much debt the government is taking on as it spends into the economy?

Cecilia Rouse: Right. So — so the — you know, the expenditures over the past year, because of the pandemic — most recently, with the American Rescue Plan — were all deficit-financed and — because we were in a complete emergency. And so — and it was the right thing to do. It was the right way for us to get the economy back on track.

Let’s remember that our ability to deal with the debt is not just a factor of the level of debt, but it has to do with the size of the economy. In order to keep the denominator — the size of the economy — larger, we needed to be supporting families and businesses and other — and keeping that activity going to the extent it could.

The American Jobs Plan and the American Rescue Plan, the President — you know, are longer-term investments. They’re designed to be paid out over 8 to 10 years. And the President has put on the table ways to raise revenue to pay for them, and they will be fully paid for over 15 years.

So that — those investments and those really important programs are not premised on the idea of further deficit reduction. In fact, they’re premised on having the adequate revenue to fund the government so the government can partner with the private sector and make these really important investments.

Question: And is that a red line — that it needs to be paid for?

Cecilia Rouse: So, the President has put forth robust plans to raise revenue in order to fund these important investments.

Psaki: Phil, it’s got to be the last one.

But given your expertise in this area, do you feel like it’s an indication that “normal” is just going to be very different — right? — in labor markets, whenever there is a full recovery — that people are making different decisions based on the last year, that people are looking for different kinds of jobs based on the last year, and our expectation of what a labor market — the labor market looks like will be very different post-pandemic than it was pre-pandemic?

It was also — it was — you know, getting into the details, it was — I think, Easter happened in March this year; the seasonal adjustments are a little funny within the BLS report.

So this is all reasons why we just can’t — oh, and viral loads were increasing, at least in parts of the country, in that — in that period of time as well. So I think it’s really important not to read too much into that one report.

If we look over the long — you know, if we look over the last three months or the three months before that, and we know that employment is rising. Do we expect there may be some sectoral reallocation as a result of the pandemic? Probably. We probably expect we’ve accelerated a bit more into remote kinds of employment and activities.

But we also know that it’s important that we make investments where we address, for example, the existential threat of climate change. We know this country needs to be making those kinds of investments. We know that we need to be making investments in infrastructure. We get — seem to be reminded of that almost on a monthly basis, that this country has really great infrastructure needs.

So, we know that there are a lot of fundamental jobs. If we think about care: a quarter of our pop- — you know, our population is aging, and it’s important that we have people who can take care of our older people and have good, quality homecare workers.

So there — so that we know that there are many jobs which are not going to go away, and which are going to be very important in order for us to go forward.

Question: Just one real quick one: Do you think employers should be considering paying their employees more now, as one of the solutions to the 8.1 million open jobs that currently exist?

Psaki: Thank you so much for joining —

Question: Can I ask you a quick follow-up? And I promise I won’t mention Larry Summers.

But on — you mentioned UI. Right?

Psaki: That’s quite an introduction.

Cecilia Rouse: Yeah, I know. Right? (Laughter.)

Question: But I just want to understand the White House’s position on the enhanced UI. Is it the White House’s position that enhanced payments for unemployment insurance isn’t having any effect on the supply side of labor markets?

Cecilia Rouse: So, I will tell you what my — I think this is our position, is that the employ- — you know, the decision to enter the labor market is very complicated right now, that the primary determinants for people to make that decision are: Are there — is there a suitable job available? What’s the status of the virus? What are the health considerations? And what are the care considerations?

The President has emphasized that if a worker is offered a suitable job, they must take it if they’re on unemployment insurance benefits.

We recognize we’re in an unprecedented recession, that we have a long way to go. And we want to be in the position of helping employers understand how they can be bringing back employees part time, which is going to be the suitable way for more employers to bring back more workers — they can’t go from 0 to 100 just overnight; through short-time compensation; reminding employers that there’s the Employee Retention Tax Credit.

And so, we recognize that, right now, most of those who are — you know, who are working age are not fully vaccinated. It’s going to take time.

But workers — as they become fully vaccinated, as the economy starts to open up — we’re expecting that they will be looking for suitable jobs, and they will be finding them, and we will get back to normalcy sooner than later.

Question: But UI is or is not a factor for supply side on the labor market?

Cecilia Rouse: So, there are many factors that go into whether a person is taking a job. Right? If they — if somebody is not fully vaccinated, if there’s still a lot of COVID in their area, if they have still childcare constraints, there are many factors that this pandemic has caused that are going to play into people’s decision — ability to go back to work.

UI has served a very important role through this pandemic. It has allowed people to pay the rent, which we know is very important for the landlord; it’s allowed people to put food on the table, which is important for them and their families. And so, we stand behind that those are very important supports. They’re supports to help us bridge to the end of this pandemic.

So, we believe that it’s complicated, but that the labor market will be healing. And we are standing at the ready, and we want to encourage that to happen as quickly as safely possible.

Psaki: All right. Thank you so much for joining us.

Cecilia Rouse: Thank you.
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Press Briefing by Cecilia Rouse. WH Econ Adviser Blames Bad April Jobs Report On Easter Being In March…Easter Was In April https://t.co/mUHxqklSa6

— HYGO News (@HygoNews) May 14, 2021