This week in Bidenomics: Shortages bite
Nobody saw this coming a year ago, when coronavirus shutdowns caused an abrupt recession: A shortage of workers and goods is now holding back the economy.
Economists expected employers to create around 1 million new jobs in April, and the unemployment rate to drop. But they added just 266,000 jobs, and the unemployment rate rose. A big part of the explanation: widespread shortages—including workers—that have cut into production.
Video transcript
SEANA SMITH: Time for Bidenomics. This week, we talked a lot about shortages in the economy. We had the chicken shortage, ongoing chip shortage. That's affecting numerous industries across the board. And then today, talk of a labor shortage after that huge jobs miss. We want to bring in Rick Newman for a little bit more on this.
And Rick, when we talk about shortages in a number of parts of the economy, I guess, let's just start with jobs because help explain this. I think it's a little bit hard for people to wrap their heads around because we have 8 million fewer jobs in the economy right now than we did pre-pandemic, yet we can't find the workers. So what's going on?
RICK NEWMAN: If you hear anybody saying there's one single narrative, they are wrong. This is not that simple. But it does appear that one of the reasons we saw a huge disappointment in the job numbers is that companies cannot find the workers that they want to hire. So if you look at just one example of that, the National Federation of Independent Business, a small business group, they have the most job openings reported by their firms in the history of this survey that goes back to 1974.
So the thinking there is that the job numbers would have been much higher if companies could find the workers they need. Now, some Republicans and the US Chamber of Commerce, they've jumped all over this and said, aha, see? We shouldn't be paying people that extra $300 a week on unemployment benefits because they're just staying home and collecting benefits because they can make more money than doing that than they can working. I don't think it's that simple. Biden pushed back on that today. His other Biden officials are pushing back on that as well.
And I think Biden is right, to some extent, when he says, look, it's not so simple that you have some unemployed people over here. And you have job openings over here. They're not necessarily in the same areas or the same industries. And you can't just say that these people should fill these jobs over here. It's not simple. But we've got a lot going on. And I think the takeaway is this is sort of the first bad economic report under Biden. And his critics now have at least a little bit of ammunition for those hugely generous relief programs.
ADAM SHAPIRO: Kevin Brady already fired a nuke at the administration over this one, but let me ask you a question. The experts missed it dramatically. One million-- that's what the experts were telling us and even the administration. How do you recover from that big a mistake?
RICK NEWMAN: The economy is completely out of whack. We do not have good metrics for figuring out what is the semiconductor shortage. How is that actually impacting jobs? I mean, I think what happened this-- what we learned today is we've heard anecdotal examples. You know, some of the automakers, they've had to shut down assembly lines. Economists did not translate that into, oh, there's actually going to be a loss of jobs in the auto sector, which there was. So we're seeing anecdotal reports now turning up in hard data. And this has been such an abrupt recession and such a fast recovery that I think that economists are applying old models to try to figure out what's coming. And they just don't work, given the way things are right now.
SEANA SMITH: All right, Rick Newman, thanks as always for hopping on here with us. And of course, you at home can read Rick's column on Bidenomics at YahooFinance.com.
