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Economy Still Weird

Plus: A Republican senator holds up high-ranking military promotions over the Pentagon’s abortion policy.

Happy Monday! Finishing the newsletter last night, we realized we should probably mention that British thing that happened this weekend at least once. So consider this our mention of that British thing that happened. 

Quick Hits: Today’s Top Stories

  • The Bureau of Labor statistics reported Friday that U.S. employers added 253,000 jobs in April, well above expectations and the largest month-over-month gain since January. The unemployment rate ticked down from 3.5 to 3.4 percent, and the labor force participation rate held steady at 62.6 percent. Average hourly earnings—a measure the Federal Reserve is watching closely in its fight against inflation—rose 0.5 percent month-over-month in April, and 4.4 percent year-over-year. 
  • The head of the Wagner paramilitary group, Yevgeny Prigozhin, seemed to reverse course over the weekend after threatening Friday to pull his mercenary forces out of the campaign for the eastern Ukrainian city of Bakhmut due to arms shortages. After the unprecedented break between the Russian defense ministry and the force that typically operates in lockstep with the Kremlin, Russia reportedly promised additional ammunition.
  • Ukrainian military officials confirmed Saturday the country successfully shot down a Russian hypersonic missile over Kyiv last week, marking the first time the Ukrainians have successfully used their newly acquired Patriot missile defense system to down one of Russia’s most advanced weapons.
  • The U.S. Supreme Court on Friday stayed the execution of Oklahoma death row inmate Richard Glossip, days after Oklahoma Attorney General Gentner Drummond filed a brief in support of Glossip, arguing his trial was “unfair and unreliable.” Glossip, who was scheduled to be executed on May 18, was convicted of arranging for the murder of his boss, but recently discovered documents appear to show the prosecution concealed that their star witness—the man Glossip allegedly paid to murder his boss—suffered from bipolar affective disorder. The stay will remain in place until the Court decides whether or not to hear Glossip’s appeal.
  • A Friday court filing revealed that at least eight of the 16 false Georgia electors who planned to declare former President Donald Trump the winner of their state’s 2020 presidential contest have accepted immunity deals in Fulton County District Attorney Fani Willis’ investigation of attempts to overturn the 2020 election. The brief filed by the electors’ defense attorney shows the electors will be immune from prosecution if they testify truthfully in the probe.
  • President Joe Biden defended his son Hunter in an interview that aired on Friday, telling MSNBC’s Stephanie Ruhle he believes his son—who could soon face federal tax and firearms charges—“has done nothing wrong,” adding that he “trust[s] him” and has “faith in him.” The White House has pledged not to interfere in the inquiry being led by David Weiss—the Trump-appointed U.S. Attorney in Delaware—but an agent at the Internal Revenue Service has reportedly sought whistleblower protections to share information suggesting the Biden administration is obstructing the investigation.
  • The White House announced Friday Dr. Rochelle Walensky, head of the Centers for Disease Control and Prevention (CDC), will resign from her post next month after more than two years on the job. Biden has not yet named her replacement. Meanwhile, the White House announced Neera Tanden, a senior adviser and staff secretary at the White House, will replace the departing Susan Rice as Biden’s domestic policy adviser. Biden originally tapped Tanden to lead the Office of Management and Budget, but her nomination stalled in the Senate in part due to lawmakers’ disdain for her previous hyperpartisan social media activity.
  • A 33-year-old man opened fire at a mall in Allen, Texas, on Saturday, killing at least eight people and wounding seven others before being shot dead by a police officer who was attending to an unrelated matter at the mall. The gunman—who was reportedly briefly in the Army before being “removed due to mental health concerns”—arrived at the mall wearing a tactical vest and with multiple firearms in his truck, and local authorities are investigating whether the massacre may have been racially motivated. A patch featuring extremist insignia was reportedly found on the gunman’s chest.
  • At least eight people were killed—and ten more injured—when a man driving a Land Rover plowed into them Sunday morning while they were waiting at a bus stop outside a Catholic Charities homeless shelter in Brownsville, Texas. The driver—reportedly a Hispanic male in his 30s or 40s—has been detained and charged with reckless driving, but local law enforcement said he has been uncooperative, giving them multiple names and refusing to submit to a breathalyzer test. Authorities are working to determine whether the crash was targeted, an accident, or the result of intoxication or a medical event.
  • Mage—a three-year-old colt trained by Gustavo Delgado—won the 149th running of the Kentucky Derby on Saturday with a time of 2:01.57. A remarkable seven horses died at Churchill Downs in the days leading up the race, however, casting a pall over the festivities.

Recession? What Recession?

Workers fabricating metal in an American factory (via Getty Images)
Workers fabricating metal in an American factory (via Getty Images)

Entering 2023, just about every economic indicator out there seemed to be pointing to a contraction. After an unprecedented barrage of interest-rate hikes, hiring was starting to slow, inflation finally seemed to be cooling off, and an increasing number of economists were predicting a recession would begin sometime in the second quarter of the year. Those storm clouds are still out there more than four months later, but even after a few more hikes from the Federal Reserve and the collapse of several large banks, the American economy is still chugging along.

U.S. employers added 253,000 jobs in April, according to the Labor Department’s latest employment situation summary released Friday—well above consensus expectations of 185,000 and the largest month-over-month gain since January. The unemployment rate ticked down to 3.4 percent, bolstered by gains across a number of sectors, including business services, health care, hospitality, and even construction—an industry that typically sees job losses when borrowing costs are high.

But April’s unexpectedly robust figure shouldn’t detract from the fact that hiring is slowing. According to revised figures from the Labor Department, employers have averaged 222,000 job gains over the past three months. At this time last year, that average was 524,000.

Some analysts were more focused on that bigger picture than the initial shock of Friday’s impressive tally. “While today’s report of 253,000 jobs gained was quite a bit stronger than consensus estimates, material downward revisions of nearly 150,000 jobs for February and March temper this beat somewhat,” said Rick Rieder, BlackRock’s chief investment officer of global fixed income. 

In the minds of many economists, the recession hasn’t been averted—just delayed. The Wall Street Journal’s April Economic Forecasting Survey showed 61 percent of economists still expect a recession within the next 12 months, as persistent inflation forces the Fed to keep interest rates elevated. The Federal Reserve Board recently approved another 25-basis-point interest rate hike, raising the central bank’s target federal funds rate to a range between 5 percent and 5.25 percent—the highest level since early 2008. In part due to those heightened rates, 76 percent of economists in the WSJ survey predicted there would be no soft landing—bringing inflation back down to normal levels without a major spike in unemployment.

Between that survey and the International Monetary Fund’s April World Economic Outlook report, most economists seem to think this run of growth will come to an end. But not all. “Those forecasts have been wrong, many, many, many months in a row,” Justin Wolfers, a professor of economics at the University of Michigan, told TMD. “That’s not a promise that they’ll be wrong in the future, but the single best predictor of what’s going to happen next quarter in the economy is what’s going on right now.”

“It’s the ‘Godot’ recession,” Ray Farris, chief economist at Credit Suisse, told the Wall Street Journal in early March, referring to Samuel Beckett’s infamously absent character. “By the middle of the year, people will still be expecting a recession in six months’ time.”

One theory as to why the economy has yet to slip into recession: pent-up consumer demand from the pandemic. After saving through lockdowns, people are spending more on things like going out to eat and vacations. The further we get from the pandemic, the more that delayed demand should expire, but a tight labor market is also keeping wage growth up. And the more people earn, the more they’ll spend—wages grew 4.4 percent in April year-over-year. “The American consumer is the firewall between a recession and an economy that moves forward,” Mark Zandi, chief economist at Moody’s Analytics, told NPR late last month. “And right now the firewall is holding firm.”

So, what kinds of headwinds would we expect to see on the horizon if a recession is in fact inevitable in the next year? An important indicator would be slowdowns in interest rate-sensitive sectors, like housing construction or investments more broadly. And while those areas aren’t performing perfectly, they aren’t cratering either. “If you look at the data and squint a little bit, you can see some evidence that the interest rate sensitive sectors are hurting a little, but they certainly don’t look like they’ve been brutalized,” Wolfers told TMD.

Sooner or later, as long as the Fed keeps increasing interest rates, the economy will most likely slow down—and lenders tightening their credit in the wake of the banking industry’s turmoil may also contribute to a downturn. But whether or not the slowdown is a soft landing or a harder shock remains to be seen. 

Fed Chair Jerome Powell expressed some cautious optimism last week that the central bank might be able to ease inflation without sparking widespread job loss. “It wasn’t supposed to be possible for job openings to decline by as much as they’ve declined without unemployment going up,” Powell said on Wednesday. “Well, that’s what we’ve seen. There’s no promises in this, but it just seems that to me that it’s possible that we will continue to have a cooling in the labor market without having the big increases in unemployment.”

One variable that has economists worried is the potential of default should Congress and the White House fail to raise the debt ceiling soon enough. While the exact effects of a debt default aren’t clear, it’s the type of event that could shock the economy into recession or even a depression. “The technical term for how I feel about all this is I’m s—t scared,” said Wolfers. “The economic consequences are unknown, and the problem with ‘unknown’ is that [it] includes remarkably bad news that could occur.” 

Michael Feroli, the chief U.S. economist at JPMorgan Chase, put the fallout of a default even more bluntly: “If you have a flu, you don’t want to get hit by a bus. But you never want to get hit by a bus.”

Blocking the Brass

We don’t know if there’s a secret club where former defense secretaries get together to shoot the breeze, but they seem to at least have a shared Google Doc for drafting stern joint letters to Congress. The proof of this theory is the letter—signed by every living former defense secretary dating back to the Clinton administration—sent to the Senate last week decrying Republican Sen. Tommy Tuberville’s hold on promotions of high-ranking military officers to force an abortion policy change.

“We believe placing a hold on all uniformed nominees risks turning military officers into political pawns, holding them responsible for a policy decision made by their civilian leaders,” the secretaries wrote. “The blanket hold on the promotion or reassignment of these senior uniformed leaders is harming military readiness and risks damaging U.S. national security.”

After the overturning of Roe v. Wade, a RAND Corporation study estimated about 80,000 female active-duty service members lived in states with severe restrictions or outright bans on abortion. Noting that service members don’t get to decide where they live, Secretary of Defense Lloyd Austin argued these patchwork restrictions would have “readiness, recruiting, and retention implications.”

The Hyde Amendment bars federal funding for abortions except in cases of rape, incest, or risk to a mother’s life, which restricts what military healthcare can cover. But Austin announced DOD would offer administrative leave and pay travel costs for female service members and qualifying dependents seeking abortions. “There is no higher priority than taking care of our people, and ensuring their health and well-being,” Austin wrote. “The Department of Defense will continue to closely evaluate our policies to ensure that we continue to provide seamless access to reproductive health care as appropriate and consistent with federal law.”

Tuberville argues the new policy violates restrictions on abortion spending. “Austin’s new abortion policy is immoral and arguably illegal,” the Alabama Republican said in a statement. “If he wants to change the law, he needs to go through Congress.” In protest, he’s holding up confirmations of general and flag officers—the equivalent of one star generals and above, which represent about 900 of the U.S.’s 1.3 million active duty service members. These aren’t political appointees, but they require Senate confirmation—which is usually granted in bulk via a perfunctory unanimous consent agreement. Tuberville can’t actually block their promotions on his own, but by refusing unanimous consent he forces the Senate to leave the promotions languishing or else spend valuable floor time voting on them one by one.

Since his hold began in late February, Tuberville has delayed nearly 200 promotions and accompanying job changes, including for officers slated to command fleets positioned to counter Iranian and Chinese aggression, as well as NATO and Cyber Command officers. Existing commanders aren’t abandoning their posts while they wait for replacements, but the delays disrupt long-planned command handoffs and relocations. If Tuberville’s hold continues, it could delay the replacement of Gen. Mark Milley when his term as chair of the Joint Chiefs of Staff ends in September.

Senators often hold up various confirmations in a bid to force unrelated policy changes—Sen. Ted Cruz, for instance, blocked State Department nominees to get a vote on a bill sanctioning the Nord Stream 2 pipeline, and Sen. Josh Hawley stalled confirmations to secure a hearing on the withdrawal from Afghanistan. But lawmakers usually limit their holds to political or controversial appointees, not career military officers up for routine promotions and job changes—and they tend to keep blanket holds brief. 

Tuberville told The Hill he’d be willing to drop his hold if the Senate votes on a measure to bar the DOD from spending taxpayer money to help service members obtain abortions. Senate Majority Leader Chuck Schumer so far refuses to bring up such a vote, insisting rewarding Tuberville’s hold with a vote would set a precedent encouraging other senators to gum up military promotions in the future. “None of us want to live in a world where military appointments get routinely politicized,” Schumer said. “He’s inflicting unnecessary damage to our military leadership.”

The GOP hasn’t roundly condemned his actions, but a few Republican lawmakers have expressed some unease. Sen. Lindsey Graham said he was “concerned” about Tuberville’s hold until the Alabama senator offered to drop it in exchange for a vote, which Graham argued Schumer should grant. Sen. Susan Collins of Maine, meanwhile, suggested Tuberville hold up political appointees instead. “They’re the ones who make the policy,” she told The Hill. “I think that would be an equally effective and better approach, but obviously, the approach he chooses is up to him.”

So far, the Biden administration has given no public indication it plans to drop the DOD’s new policy, and Austin has warned Congress of consequences for conflict readiness if the impasse continues. “There are a number of things happening globally that indicate that we could be in a contest on any one given day,” he said in March. “Not approving the recommendation for promotions actually creates a ripple effect through the force that makes us far less ready than we need to be.”

Worth Your Time

  • In a piece for Bloomberg, Francis Wilkinson writes about the rapidly changing political dynamics in Washington County, Pennsylvania. “Washington County was never known as Crazytown,” he writes. “And yet, if you look at local politics, the landscape appears as disfigured as a mountaintop lopped off for quick, gruesome profit. The volcanic dissolution of Republican politics, from conservative to MAGA, from solidly corporate to chaotically Trumpist, has worked its way deep into small towns and counties, too.” From elected officials throwing drinks at one another (glasses and all) at a Christmas party to Republican leaders being driven out of a memorial service for a friend, Wilkinson dives deep to show how Trump’s election lies have filtered down to the local level. “Republican Diana Irey Vaughan has been the dominant force on the [Washington County] commission for years,” he writes. “But Vaughan is a Reagan conservative in a party with no appetite for cheerful conservatism. A born-again Christian who says she and her husband, a captain in the county sheriff’s department and retired colonel in the US Army Reserve, have five AR-15 semi-automatic rifles at home, Vaughan asserts that she doesn’t hate anyone. In a different era, that might have registered as a personal disposition or religious declaration. But in MAGA world, it’s a political pronouncement, and a defiant one at that. Vaughan is frequently called ‘Democrat Diana’—it’s not meant as a compliment—on MAGA social media. After 28 years as a commissioner, she is not running for reelection. She is more than a little concerned about who her successor might be.”

Presented Without Comment 

New York Times: Asked About Age, Biden Says He Knows ‘More Than the Vast Majority of People’

Also Presented Without Comment 

Mediaite: Neil Cavuto Admits ‘Fixation’ On Adele in Devoted Tribute For Singer’s Birthday: ‘My Wife Is Fine With This’

Toeing the Company Line

  • In the newsletters: Haley recaps (🔒) Director of National Intelligence Avril Haines’ comments during last week’s global threat assessment hearing, Chris bemoans (🔒) the Donald Trump content trap, Jonah bounces from coffee addiction to male chick culling to The Incredibles, Nick argues (🔒) Trump and his allies are pivoting away from the culture war, and the Dispatch Politics team checks in on the Arizona senate race and Democrats’ risky efforts to attack Trump on his age. 
  • On the podcasts: Drucker talks to former New Jersey Gov. Chris Christie about his potential run for president, Bridgegate, and Trump.
  • On the site over the weekend: Luis lauds comedian John Mulaney’s latest Netflix special while Alec pans HBO’s newest miniseries, White House Plumbers.
  • On the site today: Chris argues that Democrats may be underestimating Trump’s 2024 prospects. “Republicans have been too quick to forget how badly Trump has damaged their party and its brand since 2018,” he writes. “But Democrats have certainly overlearned the lesson and concluded Trump can’t win. That could prove to be a perilous assumption.”

Let Us Know

Should more senators be taking advantage of their ability to unilaterally disrupt congressional proceedings to rein in/extract concessions from the administration? If you consider yourself pro-life, do you agree with Sen. Tuberville’s decision to hold up military nominations over the Pentagon’s new abortion policies?

Declan Garvey is the executive editor at the Dispatch and is based in Washington, D.C. Prior to joining the company in 2019, he worked in public affairs at Hamilton Place Strategies and market research at Echelon Insights. When Declan is not assigning and editing pieces, he is probably watching a Cubs game, listening to podcasts on 3x speed, or trying a new recipe with his wife.

Esther Eaton is a former deputy editor of The Morning Dispatch.

Mary Trimble is the editor of The Morning Dispatch and is based in Washington, D.C. Prior to joining the company in 2023, she interned at The Dispatch, in the political archives at the Paris Institute of Political Studies (Sciences Po), and at Voice of America, where she produced content for their French-language service to Africa. When not helping write The Morning Dispatch, she is probably watching classic movies, going on weekend road trips, or enjoying live music with friends.

Grayson Logue is the deputy editor of The Morning Dispatch and is based in Philadelphia, Pennsylvania. Prior to joining the company in 2023, he worked in political risk consulting, helping advise Fortune 50 companies. He was also an assistant editor at Providence Magazine and is a graduate student at the University of Edinburgh, pursuing a Master’s degree in history. When Grayson is not helping write The Morning Dispatch, he is probably working hard to reduce the number of balls he loses on the golf course.