The Morning Dispatch: A Strong March Jobs Report

Happy Monday! If we did our math correctly, the winner of the TMD March Madness Bracket Pool has already been cemented, even before the championship game between Kansas and North Carolina tips off tonight. Congratulations to Rockchalk (ESPNFAN41571073)!

We’ll be in touch with all of the prize winners later this week.

Quick Hits: Today’s Top Stories

• Ukrainian President Volodymyr Zelensky denounced Russian invaders Sunday after additional evidence of Russian brutality emerged over the weekend, much of it from Bucha, a town outside of Kyiv. “Hundreds of people were killed. Tortured, executed civilians. Bodies on the streets,” Zelensky said. “Concentrated evil has come to our land. Murderers, butchers, rapists, looters, who call themselves an army and who only deserve to die after what they have done.” Journalists and filmmakers in Ukraine published footage showing bodies strewn about the streets after Russian troops departed, and later, video depicting mass graves.

• Western leaders condemned the atrocities and said that Russia would face additional sanctions as a result. French President Emmanuel Macron said:  “There are very clear indications of war crimes.” Germany’s Defense Minister urged the European Union to look again at banning Russian gas. 

• Russia, meanwhile, falsely accused the Ukrainians of staging the war crimes and called for a meeting of the United Nations Security Council to address the alleged Ukrainian propaganda effort. Independent observers in Ukraine confirmed the Russian brutality and others pointed out flaws and contradictions in the Russian claims. 

• The Bureau of Labor Statistics reported Friday U.S. employers added about 431,000 jobs in March, bumping the labor force participation rate up to 62.4 percent and dropping the unemployment rate to 3.6 percent. Approximately 1.6 million fewer Americans are working now than were in February 2020, before the pandemic.

• The Centers for Disease Control announced Friday it will revoke Title 42—the pandemic-era immigration policy that allowed officials to quickly expel migrants at the southwest border—on May 23. Border officials are bracing for a resulting surge of migrants and asylum applicants.

• A two-month ceasefire between the warring parties in Yemen—the Saudi Arabian-backed government and Iran-backed Houthi rebels—went into effect on Saturday, the first such end to the fighting since 2016. The first of 18 fuel-delivery tankers allotted during the truce arrived in the blockaded port of Hodeida on Sunday.

• Taliban leader Haibatullah Akhundzada issued a decree on Sunday banning farmers in Afghanistan from growing and cultivating opium poppy, saying violators will be “treated according to the Sharia Law.” The move is likely to drive destitute Afghans reliant on the crop further into poverty, but Afghanistan accounts for about 80 percent of the world’s opium and the United States spent billions of dollars during the Afghanistan War attempting to eradicate the drug.

• With about 98 percent of the vote counted as of last night, Hungarian Prime Minister Viktor Orbán’s nationalist Fidesz Party was leading the pro-EU United for Hungary coalition 53 percent to 35 percent. Opposition leader Péter Márki-Zay conceded defeat on Sunday, and Orbán declared a victory “so big that you can see it from the moon.”

• Dmitry Rogozin—director of the Russian space agency, Roscosmos—announced over the weekend Russia will suspend its cooperation with other countries on the International Space Station unless the West “completely” and “unconditionally” revokes its sanctions on Russia’s economy.

• The European Union’s statistics agency reported Friday Wednesday Eurozone year-over-year inflation hit 7.5 percent in March, up from 5.9 percent in February and the highest rate on record. 

• Sarah Palin—former Alaska governor and Republican vice presidential nominee—announced Friday she is running for Congress to fill the House seat occupied by the late Rep. Don Young since 1973. Nearly 40 candidates have filed to run in the special election to replace Young—who died last month—and the first round of voting will take place on June 11.

• The South Carolina Gamecocks defeated the UConn Huskies 64-49 on Sunday to win the NCAA women’s basketball National Championship, their second in six years.

Jobs On The Up (and Up?)

New job numbers dropped Friday, and here’s a three-word summary: They were good.

The Bureau of Labor Statistics (BLS) reported that U.S. employers added an estimated 431,000 jobs in March—short of economist projections of 490,000 but still a strong showing. Plus, January’s and February’s numbers were revised up a combined 95,000. 

The unemployment rate fell to 3.6 percent from 3.8 percent a month earlier, and the labor force participation rate ticked up to 62.4 percent. Leisure and hospitality—the sector hardest hit by COVID-19 layoffs—added a healthy 112,000 jobs, and total U.S. employment—having fallen by 22 million in the pandemic’s earliest days—is now just 1.6 million jobs shy of February 2020 levels.

It’s another solid jobs report in a string of them: March is the eleventh straight month that U.S. employers added more than 400,000 jobs, a feat that occurred just twice from 2010 to 2020. All in all, an “incredibly robust recovery,” Microsoft economist David Rothschild argued.

“This report increases my confidence that we’re going to get back to the trend we were on prior to the pandemic,” Jason Furman, an economics professor at Harvard University, told The Dispatch. “The big thing is—do we get back to something like the employment rate we had prior to the pandemic? And this is making me optimistic we could get there by the end of the year.”

The reason we haven’t already surpassed February 2020 jobs totals may have more to do with workers than employers. According to BLS data reported last Tuesday, there were 11.3 million unfilled job openings at the end of February—about 1.8 for each of the 6.3 million unemployed people in the country at that point. “By many measures, the labor market is extremely tight,” Federal Reserve chairman Jerome Powell said in a recent speech. “Significantly tighter than the very strong job market just before the pandemic.”

There’s no one, monocausal theory explaining why workers aren’t returning in full force, but economists have outlined plenty of possibilities: lingering COVID-19 symptoms keeping people home sick, bank accounts still flush with stimulus money allowing people to delay a return to work, and—particularly for leisure and hospitality jobs—lasting reluctance to return to professions with high COVID-19 exposure risk. Remote schooling and lack of childcare kept many mothers out of the workforce throughout the pandemic, but with nearly all students back in the classroom, women made up a disproportionate amount of March’s gains. (One thing most economists aren’t blaming for the shortage: The recent surge in workers quitting, dubbed the “Great Resignation.” Many of those “quitters” are remaining in the labor force, just changing jobs or careers.)

Much like previous months, March’s numbers show employers offering higher wages to lure increasingly elusive workers. Average hourly earnings increased 5.6 percent year-over-year in March, up from 5.2 percent in February and 5.4 percent in January. 

Those figures are all more than double the average annual earnings boost from 2010 to 2020, but in today’s economy, they’re eclipsed by inflation. The Personal Consumption Expenditures (PCE) Price Index was up 6.4 percent year-over-year in February. “We’re actually seeing wages fall, adjusted for inflation, at the fastest rate they have in 40 years,” Furman said. “Prices adjust more quickly and more fully. And workers are losing out as a result.” (Some sectors are an exception—pay in transportation and warehousing jobs, where demand has skyrocketed, leaped 11.1 percent over March 2021, and some leisure and hospitality wages were up 14.9 percent.) 

This slipping purchasing power is likely why Americans aren’t thrilled with the state of the economy despite the near-record-low unemployment rate. In a February Gallup poll, 42 percent of respondents described economic conditions as poor, and 70 percent said they were getting worse. Both numbers are tied for the highest since April 2020.

The inflation-earnings issue is a tricky one. If the former outpaces the latter, workers’ purchasing power falls and you get the malaise we see today. But employees’ incomes growing faster than prices could intensify the wage-price spiral, where workers ask for raises to cover higher costs and employers raise prices to cover the salary hikes. 

President Joe Biden shrugged off those concerns on Friday.

“After decades of being mistreated and paid too little, more and more American workers have real power now to get better wages and to do what’s best for themselves and their families. Some people see that as a problem,” he told reporters. “I don’t. I see it as long overdue.”

The continued wage increases—and 3.6 percent unemployment rate—will give the Federal Reserve all the ammunition it needs to justify further interest rate hikes as it seeks to return annual inflation to its 2 percent target. The central bank hiked rates by 0.25 percentage points in March—the first bump since 2018—and penciled in seven more quarter-percentage-point increases before the end of the year. But after Friday’s jobs report, the odds of a half-percentage-point hike jumped.

For about two years now, near-zero interest rates have rendered it more or less free to borrow money—to buy a house, or a car, or a factory, or anything else. Demand skyrocketed as a result, at the same time businesses were dealing with post-lockdown supply-chain disruptions. Raising these rates will, over time, make that borrowing more expensive, theoretically cooling demand and easing price growth. 

But it’s a balancing act. Cooling inflation “comes with the risk of materially setting back or reversing some of the broader economic recovery,” write Karen Dynan and Wilson Powell of the Peterson Institute for International Economics. And according to an analysis by investment bank Piper Sandler, the Fed has triggered a recession eight of the nine times it’s raised interest rates to fight inflation. 

Chair Jerome Powell is hoping to make that eight in ten. “Our goal is to restore price stability while fostering another long expansion and sustaining a strong labor market,” he said in a speech last month. “In [our projections], the economy achieves a soft landing, with inflation coming down and unemployment holding steady. Growth slows as the very fast growth from the early stages of reopening fades, the effects of fiscal support wane, and monetary policy accommodation is removed.”

Those aspirations likely explain why Fed officials were so slow to address inflations, and why even their hawkish pivot would keep interest rates below 2 percent at the end of 2022. “Everything the Fed is talking about for this year is more consistent with still having its foot on the accelerator, just not pressed down as hard,” Furman said. “It’s a big question as to whether that’ll be enough.”

Worth Your Time

• With Russian forces retreating from Kyiv and repositioning themselves in eastern Ukraine, the magnitude of the atrocities committed there is becoming more clear. “Journalists entered the town of Bucha, a suburb northwest of the capital, and saw numerous corpses strewn on the streets,” David Stern, Joel Achenbach, Robyn Dixon, and Adela Suliman write for The Washington Post. “Video posted to social media and verified by The Washington Post showed what appeared to be at least nine dead, including one child. Bucha’s mayor, Anatoly Fedoruk, said in an interview that around 270 local residents had been buried in two mass graves. He estimated that 40 people were lying dead in the streets. Some had been bound and executed—shot in the back of the head, he said.” Russian officials denied the claims, but graphic video evidence—like this, compiled by the New York Times’ Axel Boada and Nailah Morgan—tells a different story.

• In American Purpose, Jonathan Rauch—a self-described “sixty-one year-old homosexual male”—discusses the similarities and differences between today’s transgender activism and the gay rights fights of the early 1990s. “I’m an outsider to the trans movement, but until fairly recently—like most gay Americans—I’ve seen the trans movement as an extension of our own. I believe trans people deserve equality in all its meaningful respects,” he writes. “[But] insisting that it’s always hateful to draw distinctions based on biological sex in sports, prisons, and medical training strikes most of the public as nutty, unfair, and dangerous. The backlash that is forming will harm trans people, gay and lesbian people (who are already caught in the undertow), and everyone who hopes for candor and compromise. Radicalism makes the only path forward—social negotiation tailored to diverse situations—unattainable. The first step out of the radicalization trap is what’s already happening: decoupling trans civil rights from radical gender ideology by recognizing that they are not at all the same. You can support the former and reject the latter.”

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Toeing the Company Line

• On the site over the weekend, Andrew Fink wrote about Ukraine’s attack on a Russian fuel depot and Guy Denton published Part I of his magnum opus on The Simpsons’ early years. And today, we’ve got still more from Fink on what’s likely to happen to Russian-occupied territory outside the Donbas region if Russia lowers its territorial aims in Ukraine, a dispatch from Chris Stirewalt on Sarah Palin’s entry into Alaska’s* congressional primary, and another from Emanuele Ottolenghi on Iranian, Russian, and Venezuelan Spanish-language propaganda in Latin America.

• Friday’s Uphill (🔒) provides an update on the state of Russian trade relations negotiations in Congress, explores how a vote on renaming a Tallahassee courthouse went sideways, and explains why Kevin McCarthy has finally had enough of Madison Cawthorn. “It takes a lot to get McCarthy’s attention,” Haley writes. “[But] Cawthorn stumbled across a clear red line this week.”

• The latest Dispatch Podcast features Sarah, Jonah, David, and Scott Lincicome discussing Biden’s decision to tap the United States’ strategic oil reserves, the president’s international gaffes, and the Will Smith and the cocaine-fueled orgies news cycles.

• On Friday’s episode of Advisory Opinions, David and Sarah revisit the free speech controversy at Yale before turning to some Supreme Court potpourri and whether Donald Trump committed a crime on January 6.

• After brief pit stops on the word “potpourri” and the federal government’s budgeting process, Friday’s G-File turns to reports Vladimir Putin’s advisers are afraid to tell him the truth about Ukraine. “Authoritarian societies are like stands of oaks,” he writes. “They can withstand all the wind in the world so long as the wind isn’t very strong. A field of reeds can withstand any wind, because reeds bend while oaks rely on their strength and their strength alone.”

• In Sunday’s French Press, David ruminates on increasing childhood anxiety and depression in the United States—and the parenting decisions that may be behind the trend. “As all parents know, there is no formula for raising kids,” he notes. “But we still know that we as a people—and we as parents—are prone to expressing greater anxiety and greater fear in the face of lesser threats and lesser dangers than generations of parents in the past, and it’s time to wonder if one of the reasons why our kids are anxious and in pain is that they’re reflecting and amplifying the anxiety and pain they see in their parents every day.”

Let Us Know

Last night, the Grammys dubbed Jon Batiste’s We Are the album of the year. If you listen to new music, what was your album of the year?

Correction, April 4, 2022: Sarah Palin is running in Alaska’s congressional primary.