The Morning Dispatch: July’s Sizzling Jobs Report

Happy Monday! A French scientist posted a picture of a slice of sausage Friday, claiming it was a shot of the star Proxima Centauri. Thousands of people fell for it, and we can’t blame them—we’re all hungry for cool space pictures.

Quick Hits: Today’s Top Stories

• The Senate on Sunday passed the $750 billion Inflation Reduction Act in a 51-50 party-line vote, with Vice President Kamala Harris breaking the tie. If passed by the House, it would spend more than $300 billion in tax credits over 10 years to boost electric vehicles and renewable energy, among other climate provisions. It would also allow Medicare to negotiate the prices of some drugs, add a 15 percent minimum tax on large companies, and spend $80 billion to expand the Internal Revenue Service.

• China on Saturday announced military drills lasting through August in the Bohai and Yellow Seas—north of Taiwan, bordering North and South Korea—on the heels of last week’s live-fire exercises encircling Taiwan in retaliation for House Speaker Nancy Pelosi’s visit to the island democracy. Taiwan’s defense ministry called the drills a “simulated attack” and said Chinese jets crossed the median line of the Taiwan Strait. China, which considers Taiwan part of its territory, sanctioned Pelosi and her immediate family on Friday and froze climate talks and other bilateral cooperation with the United States.

• Indiana Gov. Eric Holcomb on Friday signed into law a near-total ban on abortions, with exceptions for rape or incest up to 10 weeks after conception, to protect a mother’s life or physical health, and for fetuses diagnosed with lethal anomalies. Only hospitals and hospital-owned outpatient centers may perform abortions under the law, which takes effect Sept. 15. Doctors who perform or fail to report illegal abortions will lose their licenses. Indiana currently allows abortions up to 20 weeks of a pregnancy.

• Israel and the Iran-backed Palestinian Jihad militant group in Gaza declared an Egypt-brokered truce Sunday after three days of fighting. Israel killed a leader of the group Friday and another Saturday in an airstrike on an apartment building in a refugee camp, also killing two other militants and five civilians. Gaza officials said at least 40 people died in strikes including civilians and children, and Israel’s army said Gaza militants fired nearly 1,000 rockets toward Israel.

• Matthew DePerno—Trump-backed GOP nominee for Michigan attorney general—was involved with improperly accessing a vote counting machine to search for evidence of voter fraud in the 2020 presidential election, Reuters reported Sunday. Michigan Attorney General Dana Nessel’s office on Friday alleged that several pieces of evidence connect DePerno to the incident and requested a special prosecutor be named to avoid a conflict of interest in the investigation—DePerno is running to unseat Nessel.

• A Texas jury on Friday ordered Infowars’ Alex Jones to pay $45.2 million in punitive damages to the parents of a child killed in the Sandy Hook school shooting, on top of $4.1 million in compensatory damages awarded Thursday. Jones was found liable last year for defaming Sandy Hook victims’ families with his false claims that they were actors and the shooting was a hoax. The House committee investigating the Jan. 6 Capitol attack has requested the contents of Jones’ phone revealed during the trial to examine his role in the attack.

You Could Fry an Egg on July’s Jobs Report

No one knew quite what to expect from July’s jobs report. Recent layoffs at high-profile companies including Tesla, JPMorgan Chase, and Walmart hinted that wince-worthy inflation reports and softening consumer spending could be putting some slack into the jobs market. Meanwhile, strong wage growth—though not strong enough to match inflation—suggested the labor market was still tight, forcing employers to compete for workers. But two consecutive quarters of shrinking gross domestic product looked like an economic downturn that could nudge employers to start shedding jobs.

So economists estimated the economy had added 250,000 jobs in July, which—after a year of months with more than 400,000 new jobs—would qualify as a tepid report. The White House pre-spun the data as evidence the economy was transitioning to sustainable growth accompanied by lower inflation.

But it turns out the only thing hotter than July’s weather was the jobs market. The Bureau of Labor Statistics reported that non-farm employers added a scorching 528,000 jobs—more than double economists’ predictions. That’s an estimate and may be adjusted in future months—nor does it match February’s 714,000 new jobs—but it trounces the last four months’ average gains of 388,000 jobs. The BLS also revised its estimates for May and June, adding a total of 28,000 jobs to those tallies.

Before Friday’s report, the United States was about 524,000 jobs short of February 2020. We leaped that gap in July and have now officially recovered the more than 20 million jobs lost during the pandemic. Unemployment also ticked down from 3.6 percent to 3.5 percent, matching February 2020’s half-century low.

“If this were a baseball game, the jobs report just hit it out of the park,” senior Bankrate economic analyst Mark Hamrick wrote.

President Joe Biden took a victory lap. “It’s the result of my economic plan to build the economy from the bottom up and middle out,” he said in a statement touting the report and growth in manufacturing jobs. “I ran for president to rebuild the middle class—there’s more work to do, but today’s jobs report shows we are making significant progress for working families.”

“We think it’s good news for the American people,” White House press secretary Karine Jean-Pierre added. “We think we’re still heading into a transition to more steady and stable growth.”

Health care and leisure and hospitality posted some of the biggest job gains—though the service sector is still more than 1 million jobs below its pre-pandemic level. Public-sector employment is also still 597,000 jobs below pre-pandemic numbers, likely because local governments and public schools are struggling to compete with the wage hikes offered in the private sector.

And wages did keep rising in July, according to the report. Hourly pay for non-farm private employees rose 15 cents, or 0.5 percent from June, for a year-over-year 5.2 percent rise. As ever, this didn’t match inflation—the latest personal consumption expenditure index numbers showed inflation rose 6.8 percent year-over-year in June. That mismatch is a big reason why 69 percent of Americans surveyed in a recent ABC/Ipsos poll said the economy is getting worse.

Another dim spot on a bright report: the BLS noted that 3.9 million people were working part-time for economic reasons in July, up a seasonally-adjusted 303,000 from June. These involuntary part-time workers are people who’d like to work more but either can’t find a full-time position or have had their hours cut. This volatile metric is still well below February 2020’s 4.4 million tally, but its growth hints at businesses cutting back as the economy slows. 

Predictably, the stock market cringed at July’s strong report. Major indexes posted gains overall last week but dropped Friday—the tech-heavy Nasdaq Composite led the way, declining 0.5 percent Friday while rising 2.2 percent over the week.

Blame the Federal Reserve for Friday’s stock market shudder. Any sign of a hot economy increases the odds of higher interest rate hikes at September’s Fed meeting and beyond. Fed officials previously cited hints of a cooling labor market—easing wage growth, some reduction in job openings, unemployment insurance filings edging up—as signals that the central bank could reach for smaller rate hikes at future meetings.

“There’s a feeling that the labor market is moving back into balance,” Fed chair Jerome Powell said at a late July news conference. “We think that demand is moderating. We do. How much is it moderating? We’re not sure.” Friday’s jobs report certainly validates his uncertainty—though inflation reports including the one due next week will still play the starring role in the Fed’s rate hike decisions.

“What normally is good news for the economy, e.g., more people employed and earning a paycheck has become a symbol of concern as inflation continues to remain above the Fed’s target,” Raymond James chief economist Eugenio Aleman said in a statement.

Top Obama administration economist Jason Furman put it more bluntly. “Uncomfortably hot jobs report,” Furman wrote Friday. “Not the sweet spot.”

Worth Your Time

• The Inflation Reduction Act has come under fire from some progressives for its provisions promoting pipeline construction, but “natural gas is a better option than many environmentalists would care to admit,” Matt Yglesias writes in his latest Bloomberg column. “Gas plants have the convenient property of being easy to turn on and off. So a grid with plenty of gas attached to it can run mostly from wind and sunshine, with gas being provided on calm or cloudy days to ensure reliability. This mix of cheaper-than-ever renewables with cheap gas helped bring about large reductions in American CO2 emissions over the past 15 years, helping to drive many coal plants out of business and making the air much cleaner. But the world is still not done with coal and oil. The US still has more than 200 coal-fired power plants. Oil is widely used to keep houses warm in the Northeast. And beyond US borders, Europeans are actually re-opening coal plants as Russia shuts off supplies of natural gas. Increasing the flow of supplies from the Marcellus shale to the Northeast, as well as using the Atlantic coast LNG terminals to ship gas to Europe, will make the energy mix cleaner, not dirtier.”

• Rep. Liz Cheney is all but certainly going to lose to a Republican primary challenger later this month, but she seems at peace with the decisions that led her to this point. “If the cost of standing up for the Constitution is losing the House seat, then that’s a price I’m willing to pay,” she told Jonathan Martin last week. Cheney is adamant she doesn’t want to leave the GOP—which she described as “very sick” and possibly unsalvageable in the short term—but she’s moved on from the “reflexive partisanship” that she admits was present earlier in her political career. Ms. Cheney long ago stopped attending meetings of House Republicans. When at the Capitol, she spends much of her time with the Democrats on the Jan. 6 panel and often heads to the Lindy Boggs Room, the reception room for female lawmakers, rather than the House floor with the male-dominated House G.O.P. conference,” Martin writes. “When she attended the funeral last year for Mike Enzi, the former Wyoming senator, Ms. Cheney welcomed a visiting delegation of G.O.P. senators. As she greeted them one by one, several praised her bravery and told her to keep up the fight against Mr. Trump, she recalled. She did not miss the opportunity to pointedly remind them: They, too, could join her. ‘There have been so many moments like that,’ she said at the bank, a touch of weariness in her voice.”

• Can humanity “de-extinct” woolly mammoths? Should we? “Creating a baby woolly mammoth today is the objective of Colossal, a bioscience and genetic-engineering company founded last year by the Harvard geneticist George Church and the serial entrepreneur Ben Lamm,” Jill Lepore reports in The New Yorker. “The plan is to reconstruct the DNA of the woolly mammoth, use crispr to combine it with the DNA of an (endangered) Asian elephant, make an embryo, implant it in an Asian elephant—or, perhaps, into a not yet invented artificial womb—and begin to “de-extinct” the species. Resurrected mammoths would populate the permafrost and avert its melting by turning wet tundra into dry grasslands, which better sequester carbon and reflect sunlight, keeping the permafrost cooler and helping, thereby, to save the planet. … ​​Aside from the countless ethical problems, technological hurdles, and scientific improbabilities of this venture, it makes almost no sense as climate-change mitigation; it’s too little, too late. And that’s not even considering the plight of the motherless baby mammoths, alone and wandering helplessly.”

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Toeing the Company Line

• Don’t miss Harvest’s dispatch from the Washington, Wisconsin, county fair, up on the site today, about Sen. Ron Johnson’s attempt to punch his ticket for a third term on the back of “election integrity” posturing. And Chris Stirewalt has a great column about the financial reasons why Donald Trump is waiting to officially jump into the 2024 race. 

• Can an atheist oppose abortion?  Of course, David argues in Sunday’s French Press, pointing to one who helped broadened David’s own pro-life perspective to include more than abortion. “We might not agree on faith, but we can agree on biology, and biology implicates morality,” David writes. “There is a secular case for life.”

• On the site this weekend, Peter Meilaender reviews not a book but a press—Archipelago Books, which caught his eye with its designs and his wallet with its selection of classic and contemporary literature from around the globe. Read it and see if you can resist browsing its volumes yourself.

• Guy Denton meets public intellectual Jonathan Haidt for lunch and a grim conversation on the future of American democracy. They cover Haidt’s trajectory and the “emotional scurvy” of America’s young people and finish with a glimmer of hope.

• Curtis is back from sabbatical and joins David on this week’s Good Faith to talk sabbath rest and the spiritual discipline of giving up the illusion of control. Also: the nature of remembrance and loss at the 9/11 Memorial.

• Jonah took advantage of his jaunt to Maine and included some thoughts on Ted Kennedy at Chappaquiddick on Saturday’s Remnant, followed by a tirade against the foolishness of the new right and racist politics.

• “I hate new ideas,” Jonah declares in Friday’s G-File, before spending the rest of his ink on explaining that, when you get down to it, what he actually hates is people touting failed old ideas as shiny new ones. 

• In Friday’s Uphill, Haley takes a look at White House opposition to a bill in Congress that would redefine the United States’ relationship with Taiwan—and the Biden administration’s overall approach to China relations.

• Chris Stirewalt weighs in (🔒) on the implications of Kansas’ abortion vote, explaining the state’s history on the issue, the process of proposing the amendment, and the shockingly high turnout on vote day. Plus: underwater farms, GOP primary losses, and some mailbag thoughts on religion.

Let Us Know

What’s your take on going the Jurassic Park route for woolly mammoths?

Correction, August 8, 2022: The rape and incest exceptions in Indiana’s abortion bill apply only until 10 weeks after conception, and abortions not covered by other exceptions are illegal from conception.