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Another measure published Friday found the labor market to be even further behind: 11.6 million jobs below its pre-pandemic trend.
“I think it's pretty clearly a disappointing result,” National Economic Council Deputy Director Bharat Ramamurti told Yahoo Finance.
But the bad news on the economic front may actually be good news in the Biden administration’s effort to pass a $1.9 trillion economic relief bill. Ramamurti – like other administration officials following the report’s release on Friday – said the soft number “underscores the need to go big.”
During an appearance in the Oval Office Friday morning, President Biden also made his case for the relief bill noting that, with only 6,000 private sector jobs been created last month, “at that rate it’s going to take 10 years before we get to full employment.”
“I think it will certainly support those who argue to go big,” Mohamed El-Erian, president of Queens’ College at Cambridge University and and Allianz chief economic adviser, told Yahoo Finance in a separate interview on Friday.
Lessons from 2009: ‘It is an asymmetric risk situation’
Ramamurti and other White House officials also underscored lessons from the financial crisis early in Obama’s presidency.
During that time, with Biden as Vice President, Democrats faced a similar situation with a weak economy and a desire to go big, but Republicans pushed for compromise in the form of smaller stimulus packages.
For Ramamurti, the lesson is that “it is an asymmetric risk situation where the cost of doing too little is severe.” Biden said Friday that “the one thing we learned is we can’t do too much here,” but “we can do too little.”
Democrats on Capitol Hill Friday also moved closer to pass a large economic relief package without Republican support. A budget resolution was finally agreed to a little after 5 a.m. Friday morning, to set things up to pass the eventual bill using a process known as reconciliation in a few weeks. (Reconciliation can be passed with a simple majority in the Senate, meaning Democrats have the option of passing the bill with no Republican supporters.)
The back and forth this week over the relief bill’s size and prospects came after rosier-than-expected numbers were released by the Congressional Budget Office, which forecasts that economic growth could jump substantially to 4.6% in 2021.
The finding led some economists to conclude that the economy didn’t necessarily need the entire $1.9 trillion package to close the output gap.
The unemployment rate also unexpectedly declined in January to 6.3% from 6.7% in December. But the drop was largely due to a lower labor force participation rate, meaning many people simply stopped even trying to look for work.
“There is serious scarring that occurs when we have elevated unemployment levels for too long,” said Ramamurti, pointing to lifetime financial losses for people who can’t find work. “We want to avoid that as much as we can, and the American rescue plan makes sure that we will avoid that.”
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.