The Morning Dispatch: Some Surprisingly Good Jobs Numbers

Happy Monday! Between picking a new prime minister and weighing whether to return to imperial measurement units, the United Kingdom has a fateful few months ahead of it.

Derek “Onetun” Norman—the 88-year-old chairman of the Active Resistance to Metrication (ARM)—is ecstatic about the latter possibility: He’s spent decades painting and stickering over metric road and footpath signs with miles and yards.

Quick Hits: Today’s Top Stories

• The Bureau of Labor Statistics reported Friday that U.S. employers added 372,000 jobs in June, blowing past consensus expectations of 250,000 for the month. The unemployment rate held steady at 3.6 percent, and the professional and business services sector led the way with 74,000 new jobs added last month. 

• Japanese police arrested a 41-year-old man on Friday in connection with the assassination of former Japanese Prime Minister Shinzo Abe. The shooter—an unemployed former member of the country’s Maritime Self-Defense Force—used a homemade gun in the attack, and reportedly told law enforcement officials he targeted Shinzo for promoting a religious group that the suspect’s mother made enormous donations to before going bankrupt.

• The race to succeed outgoing British Prime Minister Boris Johnson is already crowded: Foreign Secretary Liz Truss, Trade Minister Penny Mourdant, current and former Chancellors of the Exchequer Nadhim Zahawi and Rishi Sunak, former Health Secretaries Jeremy Hunt and Sajid Javid, Transport Minister Grant Shapps, Equalities Minister Kemi Badenoch, Attorney General Suella Braverman, and House of Commons Foreign Affairs Committee Chair Tom Tugendhat have all thrown their hats in the ring. Defense Secretary Ben Wallace—an early favorite for the position—opted not to run, saying his focus is on his “current job and keeping this great country safe.” Tory leaders plan to whittle the field down to two by July 21 and select a new leader by September.

• Sri Lanka’s Prime Minister Ranil Wickremesinghe and President Gotabaya Rajapaksa will reportedly resign on Wednesday after months of protests over economic conditions. Thousands of protesters descended upon the capital city of Colombo over the weekend, with hundreds of them overwhelming security forces to breach the presidential residence. Videos showed rioters using the president’s pool, bedroom, and kitchen. Rajapaksa is in hiding, and hasn’t publicly confirmed his decision to resign.

• President Joe Biden signed an executive order on Friday aimed at protecting abortion access after the Supreme Court overturned Roe v. Wade. The order is primarily symbolic: It won’t override red-state restrictions, and its myriad provisions range from creating an interagency task force, to convening volunteer lawyers, to launching outreach efforts, to safeguarding access to certain abortion pills, to requesting the Federal Trade Commission chair strengthen privacy protections.

• The Pentagon announced another $400 million tranche of military assistance for Ukraine on Friday, including artillery ammunition, tactical vehicles, and four additional High Mobility Artillery Rocket Systems (HIMARS). The package brings total U.S. security aid to Ukraine to approximately $8 billion since early 2021—and $2.2 billion in the last three weeks.

• Billionaire Elon Musk wants to back out of his $44 billion agreement to purchase Twitter, claiming the social media platform fired several executives without his consent before the deal closed and hasn’t provided sufficient data on the prevalence of spam or bot accounts on the site. The company said it will sue Musk in the Delaware Court of Chancery to force him to follow through on the agreed-upon deal.

• The January 6 House committee will resume its public hearings this week, with one scheduled for Tuesday to look at alleged ties between the Trump White House and far-right militant groups like the Proud Boys and Oath Keepers. Former Trump White House Counsel Pat Cipollone met with the committee for more than eight hours on Friday, and a lawyer for longtime Trump ally Steve Bannon told lawmakers his client would testify before the committee under certain conditions after Trump sent Bannon a letter waiving his claim of executive privilege. The committee disputes the privilege claim—Bannon was not working at the White House on January 6—and the far-right strategist is facing contempt of Congress charges for refusing to comply with a subpoena last fall. 

• The Abbott baby formula manufacturing plant in Sturgis, Michigan, has resumed operations in recent days after damage from severe thunderstorms and flooding forced it to shut down in mid-June. The plant—which had only been up-and-running for two weeks when production was halted again—is prioritizing the manufacturing of EleCare, a specialty formula for babies with allergies and digestive problems.

• San Francisco Mayor London Breed announced late last week she will appoint Brooke Jenkins to serve as the city’s district attorney after voters recalled Chesa Boudin, the former DA, last month. Jenkins—who will hold the position until a November special election—was an assistant DA in the city for several years but left the office in 2021 and supported Boudin’s ouster, claiming he shifted prosecutors’ focus from victims to defendants.

• Pfizer and BioNTech announced Friday their COVID-19 vaccine received full approval from the Food and Drug Administration for use in adolescents, after operating under emergency use authorization for the past 14 months. 

• A group of gunmen killed at least 15 people at a bar in Soweto, South Africa, early Sunday morning. Police said 23 people were shot in total, and the perpetrators are still at large.

Another Good Jobs Report

Did the growing chorus of doomsayers predicting an imminent economic recession jump the gun? 

The Bureau of Labor Statistics reported June’s jobs numbers on Friday, and they were … good. U.S. employers added 372,000 workers to their payrolls last month—far more than economists’ consensus projection of 250,000—and the unemployment rate held steady at 3.6 percent, a near-record low. After a harrowing couple of years, total U.S. employment is now just 524,000 jobs shy of pre-pandemic levels. Looking solely at private sector employment, we’re already ahead of February 2020 numbers by 140,000.

Despite a number of high-profile companies announcing layoffs or hiring freezes in recent weeks—and the labor force participation rate ticking down from 62.3 percent to 62.2 percent—just about every sector added workers in June. Employment in professional and business services increased by 74,000, the leisure and hospitality sector grew by 67,000 jobs, the health care industry added 57,000 workers, and employment in transportation and warehousing was up 36,000.

The continued labor market expansion—June was the fourth straight month employers added between 350,000 and 400,000 jobs—comes at a time when other parts of the economy are finally exhibiting signs of cooling off. Consumer spending is slowing, housing sales are decelerating, and commodity prices are falling. 

What could explain the disconnect? “Demand is slowing rapidly but employers still want to hire/hold onto workers,” Jason Furman—economics professor and former chair of President Barack Obama’s Council of Economic Advisers—put forth as one possible rationale. “Either because they view demand reductions as temporary (e.g., inventories), are worried about ability to hire so labor hoarding, or moving towards more normal staffing.”

Those demand reductions are largely the byproduct of the Federal Reserve’s most aggressive tightening cycle in decades to rein in inflation, with central bankers increasing the cost of borrowing by raising their target federal funds rate a whopping 75 basis points last month and signaling they’d do it again in a couple of weeks. Friday’s numbers are unlikely to steer the Fed off-course—which is largely why the stock market’s reaction to the “good” jobs numbers was so muted.

“[The report] reaffirms that the economy is strong and there is still a lot of momentum in the labor market and that is a good thing,” Atlanta Fed President Raphael Bostic told CNBC on Friday. “We can move by 75 basis points at the next meeting and not see a lot of protracted damage to the economy.”

“No country is better positioned than America to bring down inflation, without giving up all of the economic gains we have made over the last 18 months,” President Joe Biden said Friday, lowering expectations for the rest of the year. “Additional job growth from this strong position will be slower. That is not a bad thing, because our economy should move to stable growth for the years ahead.”

It’s rare a politician touts slowing growth on his or her watch as “not a bad thing,” but runaway inflation has a funny way of turning things upside down. One of the best pieces of news from Friday’s report, for example, was the fact that the pace of Americans’ average hourly earnings increases had begun to slow. “No wage-price spiral here,” Axios’ Neil Irwin noted.

Making economic predictions is a fool’s errand—particularly in a world where Vladimir Putin and the coronavirus are on the loose—but the Bureau of Labor Statistics on Friday provided Americans inclined to look on the positive side reasons to hope. 

“At some point, you know, we will see a less rapid growth,” Commerce Secretary Gina Raimondo said yesterday. ”Inflation is our problem, and it is our top priority. And so I think perhaps a transition to a more traditional growth level, but I don’t think we should be talking ourselves into a recession.”

Worth Your Time

• It’s more or less conventional wisdom at this point that the United States is heading into an imminent recession—if it isn’t already in one—but Conor Sen isn’t so sure. “At a time when there are so many shocks rolling through the economy, the labor market is the best bellwether we’ve got to determine whether we’re in growth or contraction mode,” the financial analyst writes for Bloomberg, citing the 2008-like negative growth in goods consumption. “[And] the labor market has come a long way over the past year. Aggregate hours worked, which includes both the number of workers and the length of the work week, is now up 4.6% year-over-year. People who were unemployed a year ago have gotten jobs. People who weren’t even in the labor force a year ago, perhaps because they feared Covid-19 or because of weak economic conditions, have re-entered the labor force and secured jobs. In May, total hours worked finally surpassed its pre-pandemic high, and it’s likely that we’ll see another new record in June. Growth in hours worked signals that employers are still confident in future demand and workers have more income to help them cope with elevated inflation. In every recession going back 50 years we’ve seen hours worked shrink by at least 2%. We’re a long way from that at a time when Americans are still re-entering the labor force and employers continue to hire at a robust rate.”

• There was no shortage of (well-deserved) tributes to Shinzo Abe over the weekend. To Hudson Institute fellow Arthur Herman, Shinzo was a “profound strategic thinker” who understood that a strong and assertive Japan “was an essential part of the fabric of peace and security in Asia, and a key to preserving a liberal international order in the face of China’s ambition.” Former National Security Adviser John Bolton expressed his appreciation for Shinzo’s “friendship toward the United States.” Washington Post columnist Josh Rogin highlighted Shinzo’s “personal diplomatic skill,” and Noah Smith recalled how—initially antagonistic toward the former prime minister’s administration—he was won over by Shinzo’s economic agenda and expansive view of immigration. To Hoover Institution fellow Michael Auslin, Shinzo’s legacy is “unmatched” by any Japanese politician since the 1950s, despite his “uneven” regulatory reform that did little to jumpstart Japan’s “stagnant” growth. “Shinzo Abe made the world better,” David Frum wrote Friday, consistently advancing “a vision of the Pacific region that was safe for democracy.”

• To best understand what happened—and what’s likely to happen—between Elon Musk and Twitter, read Bloomberg columnist Matt Levine. “Elon Musk is the richest person in the world, and, like many other rich people, he has some unusual and expensive hobbies. One of his hobbies is that he sometimes likes to pretend that he will acquire public companies,” he writes. “‘Elon Musk had a well-thought-out business and financial plan for Twitter that worked in the economic conditions of early April 2022, but conditions have changed and the model no longer works’ does not strike me as the most plausible description of what is going on here. ‘Elon Musk whimsically thought it might be fun to own Twitter, so he signed a merger agreement without taking it too seriously and then lost interest a week later’ feels more true to the situation. My first reaction to his proposal to buy Twitter, that it was a joke, may have been the correct one. He was just a lot more committed to the bit than I expected.”

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Toeing the Company Line

• Would the Supreme Court be improved by some more mediocrity? Follow Jonah down that Hruskian rabbit hole in Friday’s G-File, with pit stops at one-legged NBA players, edible razor blades, and mock snuff films. “Run through the list of politicians garnering passionate support from partisans,” he writes. “Some are smart, many are dumb. Some know how to do their jobs, many don’t have the first clue how policy is made or legislating is done.”

• After yet another mass shooting perpetrated by a broken young man, David argues it’s past time to update our national dialogue about masculinity. “The evolution of economies and cultures would be challenging enough for men and boys. Filter these changes through our polarized, extremist politics, and radical ideologies proliferate,” he writes in Sunday’s French Press. “The goal isn’t to embrace or reject stereotypes, but rather to realize that no matter your son’s temperament, there is always a path to raising a boy to be his own version of a good man.”

• On the site over the weekend, Isaac Willour dove into a new movie about Chinese dissident Jimmy Lai, and Peter Meilaender reviewed Geetanjali Shree’s Tomb of Sand. And on the site today, Chris Stirewalt examines Democrats’ efforts to take one last stab at passing a version of Build Back Better, Jacob Becker writes about how the current day’s political fervor leads partisans on hunts for heretics within their own ranks, and Arthur Herman says President Biden’s upcoming trip to Saudi Arabia should focus on forging stronger ties with Saudi Prince Mohammed bin Salman.

Let Us Know

Like Derek “Onetun” Norman—the anti-metric system crusader in the United Kingdom—everyone has that one niche thing they’re super passionate about. What’s yours?