The honeymoon for Vice President Kamala Harris was cut short by the economy in less than two weeks.
Weaker-than-expected hiring in July has brought back fears of a recession, with the unemployment rate rising to 4.3%, the highest since October 2021. Overall, 7.16 million people are unemployed, also the highest in nearly three years.
While inflation has come down from its four-decade high of June 2022, consumers are still paying 19% more for goods and services than they were in early 2021. And there’s more finger-pointing over Democrats’ massive post-COVID spending in the first two years of the Biden administration, as high prices and high interest rates squeeze households and businesses.
Until this summer, as prices soared and credit card debt rose, President Biden and Ms. Harris could always point to unemployment rates of less than 4% as the bright spot. Now that silver lining is gone, too.
The unemployment shocks included the announcement by chipmaker Intel that it is cutting 15% of its workforce — about 15,000 jobs — to try to be more competitive.
Investors reacted to the rising unemployment news with a massive selloff on Friday. The S&P 500 was down 100 points, or 1.8%, to close at 5,346.
Even some Democrats are raising the economic alarm. 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 taking action in September.
None of this is good news for Ms. Harris, who wrapped up the Democratic nomination online Friday on the same day that the Labor Department issued the worrisome July jobs report. Ms. Harris inherits the mantle of “Bidenomics” whether she likes it or not, and Republicans are tagging her with a new 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, said business is under heavier strain in her field of non-residential construction.
“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 felt 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 GOP nominee. It pointed to nearly 16 million jobs created in 3.5 years, including the recovery from the pandemic, when many businesses were coming back from 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 fired back that 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 forecasters expected.
The government also revised downward payroll gains for May and June by 29,000 fewer jobs for each month. So far this year, employers have hired an average of about 203,000 jobs a month, 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 healthcare and social services sectors of the economy.”
• Dave Boyer can be reached at dboyer@washingtontimes.com.