Good Friday evening. It has been eight months — 245 days — since the October 7 attack by Hamas on Israel and 120 hostages are still believed to be captive in Gaza as the brutal war there continues.
Here’s what we’re watching.
Biden Announces $225 Million in Aid to Ukraine, Apologizes for Funding Delay
President Joe Biden offered a forceful defense of democracy Friday in a speech in Pointe du Hoc, France, where U.S. Army Rangers doggedly battled their way to the top of cliffs 80 years ago to eliminate Nazi gun positions and help ensure the success of the D-Day invasion. Biden cited the heroism of those forces who helped turn the tide of World War II to urge Americans against retreating into isolationism and to argue for continued support of Ukraine in its war against Russia.
"Does anyone doubt that they would want America to stand up against Putin's aggression here in Europe today?" Biden said of the soldiers who stormed Normandy’s beaches and changed the course of history. "They fought to vanquish a hateful ideology in the ‘30s and ‘40s. Does anyone doubt they wouldn't move heaven and earth to vanquish hateful ideologies of today?"
Biden’s speech came after he announced a new $225 million package of aid to help Ukraine defend and rebuild its power grid. Biden also apologized publicly and personally to Ukrainian President Volodymyr Zelensky for the lengthy delay in delivering additional funding, which Biden blamed on congressional conservatives, who had blocked the aid for months. Lawmakers approved $61 billion in new aid as part of a $95 billion national security spending package passed in April.
"We're not going to walk away from you," Biden told Zelensky. "I apologize for those weeks of not knowing what was going to pass in terms of funding, because we had trouble getting a bill that we had to pass that had the money in it from some of our very conservative members who were holding it up. But we got it done, finally."
Blockbuster Jobs Report Sends Mixed Message to the Fed
Job growth accelerated in May as employers hired 272,000 workers, the Labor Department reported Friday. The results handily beat expectations for growth of 185,000 jobs, reflecting a labor market that is still showing signs of surprising strength and durability in the aftermath of the pandemic.
Job gains were broad-based and led by the service sector, with the education, health, government, and leisure and hospitality sectors accounting for about 60% of the growth.
Wage growth was robust, as well, as average hourly earnings rose 0.4% on a monthly basis and 4.1% on an annual basis. Both numbers topped forecasts.
At the same time, the unemployment rate ticked higher by one-tenth of a percentage point, rising to 4.0% after spending 27 months below that level. Forecasters had expected the rate to remain at 3.9%, and the surprise increase served as a reminder that for all its strengths, the labor market has cooled off since the highs seen in 2022 — though whether that cooling trend remains in place remains an open question.
A drop in the labor force participation rate from 62.7% in April to 62.5% in May was notable, but it was driven by a decline in the number of workers between the ages of 20 and 24. Meanwhile, the participation rate for prime-age workers (ages 25 to 54) rose to the highest level in more than two decades.
What analysts are saying: "The May jobs report is a Rorschach blot," wrote Bill Adams, chief economist for Comerica Bank, per Barron’s. "Optimists about the growth outlook will see solid payrolls growth as a sign the expansion continues unabated. Pessimists will focus on the unemployment rate’s uptick to the highest since early 2022, the increase in part-time employment, and the dip in temporary employment, which is often a leading indicator of broader job market weakness."
Some economists downplayed the significance of the data. "For everyone getting excited about the reported increase in the unemployment rate, it was nowhere near statistically significant," Ian Shepherdson, chief U.S. economist at Pantheon Macroeconomics, wrote on social media. "Neither were the changes in household employment, unemployment and the labor force. All just noise."
Even so, most analysts agreed that overall, whether it’s surging or just puttering along, the labor market is in a good place. "From our vantage point, this is the strongest labor market since the 1950s," said Joseph Brusuelas, chief economist at RSM.
The White House was glad to agree. "The great American comeback continues," President Biden said in a statement. "On my watch, 15.6 million more Americans have the dignity and respect that comes with a job. Unemployment has been at or below 4% for 30 months—the longest stretch in 50 years. And a record high share of working-age women have jobs."
Fed in the wings: The May jobs report provides one of the last significant pieces of data Federal Reserve policymakers will see before their meeting next week, and most analysts agreed that the latest numbers all but eliminate the possibility of an interest rate cut this summer as Fed policymakers remain focused on reducing inflation to their 2% target level.
"One step forward, two steps back," said Seema Shah of Principal Asset Management, per CNBC. "Today’s data undermines the message that other recent economic data have been giving of a cooling U.S. economy, and slams the door shut on a July rate cut."
Analysts also suggested that a September rate cut was doubtful. "This report is going to complicate the Fed’s job," Julia Pollak, chief economist for ZipRecruiter, told the Associated Press. "No one’s getting those very clear signals that they were hoping for that a rate cut is appropriate in July or September."
The bottom line: With strong job creation and rising wages, the May jobs report delivered good news for American workers and the broader economy – but also another reason for Fed officials to hold steady on high interest rates as they await clearer signs that inflation is continuing on a downward path.
Quote of the Day
"What the Trump team is saying is alarming, unusual and really beyond the pale of anything we’ve seen."
– Eloise Pasachoff, a Georgetown professor and expert on budget and appropriations law, quoted in a Washington Post article describing plans by former President Donald Trump and his aides to "wrest key spending powers from Congress if elected this November, promising to assert more control over the federal budget than any president in U.S. history."
Trump and his team are reportedly preparing to challenge a 1974 law limiting the president’s authority over federal spending and plan to cut off money for some programs even if Congress has funded them. "That pledge could provoke a dramatic constitutional showdown, with vast consequences for how the government operates," the Post’s Jeff Stein and Jacob Bogage write.
Number of the Day: 130
Some congressional Democrats and the Biden administration are targeting pharmaceutical companies’ patent abuses as one path to lowering drug prices. As The Washington Post’s Dan Diamond reports: "Sen. Elizabeth Warren (D-Mass.) and Rep. Pramila Jayapal (D-Wash.) this week wrote to eight pharmaceutical company CEOs, urging them to remove 130 patents from a key federal registry, according to letters shared with The Washington Post. The Democrats are targeting Novo Nordisk, including some of its patents related to expensive drug Ozempic; GlaxoSmithKline; and other companies that produce asthma and diabetes medications."
The 130 patents Warren and Jayapal included were among more than 300 "junk patent listings" challenged by the Federal Trade Commission in warning letters it sent in April to 10 companies, part of a wider crackdown on anticompetitive practices. The FTC says improper or inaccurate patent listings "can delay cheaper generic alternatives from entering the market, keeping brand name drug prices artificially high."
The April warnings followed November challenges by the FTC to more than 100 patent listings, focused largely on asthma inhalers and EpiPens. "The Commission’s November challenges led to Kaleo Inc., Impax Labs, GlaxoSmithKline, and Glaxo Group delisting patents in response to the FTC’s warning letters," the FTC said in April. "Subsequently, AstraZeneca, Boehringer Ingelheim, and GlaxoSmithKline all announced commitments to cap inhaler out-of-pocket costs at $35."
A spokeswoman for PhRMA, the drug industry trade group, said in a statement to the Post that the patent challenges fail to address the real issues affecting patients and instead pointed to pharmacy benefit managers and insurers as driving up costs.
Fiscal News Roundup
- Biden Defends Democracy in France, Drawing Implied Contrast With Trump – Washington Post
- Trump Plans to Claim Sweeping Powers to Cancel Federal Spending – Washington Post
- Strong US Payrolls and Wage Growth Push Back Bets for Fed Cuts – Bloomberg
- Minority Groups’ Uninsured Rate Has Plunged in Recent Years, Reports Find – New York Times
- U.S. Considers Expanded Nuclear Arsenal, a Reversal of Decades of Cuts – New York Times
- Democrats Ramp Up Patent Fight With Drug Industry in Bid to Lower Prices – Washington Post
- Gaza Aid Pier Suffered at Least $22 Million in Damage, Pentagon Assesses – Washington Post
Views and Analysis
- The Law-and-Order Party Defunds the IRS. Again – Catherine Rampell, Washington Post
- Republican Governors Are Refusing Free Meals for Millions of Kids – Grace Segers, New Republic
- Weight-Loss Drugs Are So Popular They’re Headed for Medicare Negotiations – Renuka Rayasam and McKenzie Beard, Washington Post
- Why You Shouldn’t Obsess About the National Debt – Paul Krugman, New York Times
- Biden’s Economy: Good Metrics, Bad Vibes, Few Levers – Adam Cancryn, Politico
- Strong Jobs Report Presents Conundrum for Biden – Tobias Burns, The Hill
- Note to Fed: It’s Okay to Cut Interest Rates Now – Jim Parrott and Mark Zandi, Washington Post
- Stunning Job Numbers May End Up Being Just OK – Jonathan Levin, Bloomberg
- The Increase in Employment Among Immigrants Is Not a Biden Conspiracy – Philip Bump, Washington Post
- Biden's Border Rule Exposes America's Rightward Shift – Erika D. Smith, Bloomberg
- The Biden Administration Is the Most Progressive in U.S. History – George F. Will, Washington Post
- Editor’s Note: Running the Numbers in Congress – Jason Dick, Roll Call
- New York Should Lead the Way on Congestion Pricing, Not Delay It – New York Times Editorial Board