The honeymoon for Vice President Kamala Harris has been cut short by the economy in less than two weeks.
Weaker-than-expected hiring in July brought back fears of a recession. The unemployment rate rose to 4.3%, the highest since October 2021. Overall, 7.16 million people are unemployed, also the highest in nearly three years.
Although the inflation rate is down from its four-decade high of June 2022, consumers are paying 19% more for goods and services than they were in early 2021. Democrats’ massive spending in the first two years of the Biden administration has been blamed for high prices and high interest rates, which are squeezing households and businesses.
Until this summer, as prices soared and credit card debt rose, President Biden and Ms. Harris could point to unemployment rates of less than 4% as the economic bright spot. Now that silver lining is gone.
The unemployment shocks included Intel’s announcement that it was cutting 15% of its workforce, or about 15,000 jobs, to be more competitive.
Investors reacted to the rising unemployment news with a massive sell-off on Friday. The S&P 500 was down 100 points, or 1.8%, to close at 5,346.
Sen. Elizabeth Warren, Massachusetts Democrat, said the jobs data “is flashing red.”
On social media, she called on Federal Reserve Chairman Jerome Powell to “cancel his summer vacation and cut rates now” instead of waiting to take action in September.
None of this is good news for Ms. Harris, who was formally elected as the Democratic presidential nominee on the same day the Labor Department issued the worrisome jobs report. Ms. Harris inherits the mantle of “Bidenomics” whether she likes it or not, and Republicans are tagging her with the label “Kamalanomics.”
Alfredo Ortiz, CEO of the conservative Job Creators Network, said the U.S. job market “has significantly downshifted” because consumers, who drive the economy, “are tapped out from the ongoing cost-of-living crisis under the Biden-Harris administration.”
“Conservative pro-growth policies such as tax cuts, deregulation, and domestic energy production can empower Main Street job creators to restore shared economic prosperity,” Mr. Ortiz said.
Corina Morga, president of Baltimore-based CR Construction Services, said the nonresidential construction business has come under heavier strain.
“What would be worrisome for us is what’s going to happen over the next six months,” she said in an interview. “If these trends continue that way, then we are headed into a recession, which would mean it’s going to be harder to get those contracts filling that pipeline — forget even staffing them, financing them, funding them. That part is actually contingent upon what the Federal Reserve decides to do with their rates.”
She said she has seen the pressures of inflation in her company’s costs and profit margins.
“It just creates a lot of uncertainty for our industry,” Ms. Morga said. “I’m already dealing with having to pay people more because they just can’t afford their basic things. It puts me in a tough spot when it comes to my competition. At some point, you have to ask yourself as a business owner, is it worth getting the deal when the profit margins are so low, or if it cuts into operating costs.”
Bharat Ramamurti, a former economic adviser to Mr. Biden, said, “It’s not time to panic.”
“There are still many underlying signs of strength in the economy and unemployment remains low by historical standards — but the Fed failing to cut rates in July was a mistake and it needs to rectify that mistake in September with a cut of 50 [basis points] or more,” he said on X.
The Harris campaign said the Biden-Harris administration’s economic record is far superior to that of former President Donald Trump, the Republican Party nominee. It pointed to nearly 16 million jobs created in 3½ years, including the recovery from pandemic lockdown policies.
“Donald Trump left office with the worst economic record in modern American history,” the campaign said in a statement. “The unemployment rate was 6.7% during Trump’s last full month in office [December 2020] and 10 million Americans were out of work.”
Trump campaign national press secretary Karoline Leavitt said Ms. Harris “cast tie-breaking votes in the Senate for spending that put inflation on steroids, and despite the evidence that America’s working families are hurting she tells us these failed plans are working.”
“The basic necessities of food, gas and housing are less affordable, unemployment is rising, and Kamala doesn’t seem to care,” Ms. Leavitt said.
The Labor Department said 114,000 jobs were created in July, about one-third fewer than forecast.
The government also revised downward payroll gains by 29,000 jobs each for May and June. So far this year, employers have hired an average of about 203,000 jobs monthly, down from 251,000 last year, 377,000 in 2022 and a record 604,000 in 2021, when the job market roared back from pandemic lockdowns.
Mr. Ortiz said more than two-thirds of the new jobs in July were created “in the unproductive government or quasi-government health care and social services sectors of the economy.”
• Dave Boyer can be reached at dboyer@washingtontimes.com.
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