US ‘way below’ jobs potential, former Reagan economic adviser says
White House watching May jobs report after US economy heavily missed expectations in April
Art Laffer, a former economic adviser to Ronald Reagan, argues that ‘the U.S. is way below its potential of what it would have been had it continued growing right before the pandemic.’
Art Laffer, a former economic adviser to Ronald Reagan, told "Mornings with Maria" on Thursday that he is "not optimistic about the Biden long-term jobs situation."
"I don’t have really a lot of hope for the jobs market long-term in the U.S.," he added.
Laffer made the comments on Thursday, the day it was revealed weekly jobless claims fell to a pandemic low and private-payroll job growth surged past expectations.
Data released Thursday showed 385,00 Americans filed for first-time jobless benefits in the week ended May 29, the lowest amount since the pandemic began in March 2020. Separately, the ADP National Employment Report found private-sector payrolls grew by 978,000 workers last month. The reports both topped Wall Street's expectations.
"When I look at jobs report and look at the long-term picture, the U.S. is way below its potential of what it would have been had it continued growing right before the pandemic," Laffer told host Maria Bartiromo, adding that "we have a long way to go to catch back up."
Laffer made the comments one day before the May jobs report is scheduled to be released by the Labor Department.
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Last month, the U.S. economy heavily missed expectations, adding just 266,000 new jobs, with the unemployment rate rising unexpectedly to 6.1%. Economists had expected the report to show unemployment falling to 5.8%, with 978,000 jobs created.
Economists surveyed by Refinitiv expect Friday's report to show the economy adding 650,000 nonfarm jobs and the unemployment rate falling to 5.9%.
"When you look at the jobs report you have two factors playing against each other," Laffer said. "One is we’re paying people not to work that’s with special bonuses and not only that, we’ve got a huge gap to fill to grow back up, which would lead to higher jobs."
The federal unemployment insurance benefit, which is set to expire in early September, provides $300 per week to those unemployed in addition to standard unemployment payments, which vary state by state.
White House officials told Fox News they are not putting too much weight on any one piece of data and are instead focusing on overall economic trends, which they say point to substantial economic progress. The officials said this week they expect "ups and downs" as the U.S. economy recovers from the COVID-19 pandemic.
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Former Reagan economist Art Laffer provides insight into employment and spending under President Biden.
A White House official also told FOX Business that the White House is focused on the 500,000 jobs created since President Biden took office and said trends in initial unemployment insurance claims have been reduced by nearly 50%.
Republicans are arguing that regardless of the jobs numbers on Friday, the White House and Democrats will use the data as justification to push forward with Biden’s spending plans — the American Jobs Plan and the American Families Plan.
Biden’s American Jobs Plan and the American Families Plan initiatives would invest billions in the nation's infrastructure – including roads and bridges, as well as transit systems, broadband and green energy – and would vastly expand the government's social safety net. The plans would be paid for with a slew of new tax hikes on wealthy Americans and corporations. Combined, the plans are projected to cost nearly $4 trillion.
The Biden administration’s three major stimulus proposals total about $6 trillion (the American Rescue Plan, the American Jobs Plan and the American Families Plan).
"It’s crazy," Laffer said, reacting to the stimulus proposals.
"I mean this is just so far out of the norm out of anything that’s rational," he added.
He stressed that "this administration has a lot of gap to fill" and that "this type of budget will not do it."
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"Paying people not to work and taxing them if they do work is a losing proposition and that’s exactly what this budget is," Laffer said.
He added that he is "very disappointed in this budget" and "very disappointed in the economic policies of this administration."
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FOX Business’ Jonathan Garber, Megan Henney and Fox News’ Brooke Singman contributed to this report.