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Highly anticipated May jobs report to frame political debate on Biden's spending plans

Democrats and Republicans are preparing to seize on today’s jobs numbers to argue for — or against — Biden’s proposal for $4 trillion in infrastructure and social safety net spending.

Why it matters: Like early in the Obama administration, the job report is serving as a monthly assessment of the president's economic policies.

  • In Biden's case, the efficacy of his $1.9 trillion relief bill will be on the line, with economists estimating an increase of 671,000 jobs, after last month's disappointing 266,000.
  • Biden raised expectations for the report Thursday afternoon when he touted the latest weekly jobless data, tweeting: "Unemployment claims are down 50% and 64% of adults are vaccinated since I took office. That’s progress."

Behind the scenes: The jobs report includes the total number of jobs added or lost, as well as the unemployment rate. It's typically delivered to the president the night before its 8:30 a.m. release, with a crisp memo prepared by the Council of Economic Advisers, highlighting trends and flagging warning signs.

  • President Obama tended to avoid appearing in public on Thursday night ahead of jobs day, lest his demeanor betray either positive or negative news.
  • President Trump wasn't as disciplined and rarely followed a regulation that forbids government officials from commenting on market-moving data for 60 minutes.
  • In June of 2018, Trump jolted financial markets with a pre-release tweet at 7:21 a.m.: "Looking forward to seeing the employment numbers at 8:30 this morning.”
  • Biden officials follow the regulations and won’t appear on the financial news networks before 9:30 a.m.

Between the lines: Biden himself said he consumed some of the cable commentary on last month’s numbers while “I was getting dressed.”

Flashback: In response to those less-than-stellar April numbers, Biden himself went to the cameras and pleaded for more time.

  • “When we passed the American Rescue Plan, I want to remind everybody, it was designed to help us over the course of a year — not 60 days, a year. We never thought that, after the first 50 or 60 days, everything would be fine," he said from the East Room.

What to watch: The political conversation will focus on the headline jobs number and the unemployment rate, which is estimated to drop to 5.9% from 6.1%.

  • Republicans will jump on any number that misses expectations as evidence that Biden’s $1.9 trillion infusion didn’t actually bolster the economy.
  • Economists will want to look under the hood for any signs of inflation and will eye how much average hourly wages increased. Estimates are for a 0.2% increase.
  • Investors will try to view the jobs report through the lens of the Fed, and may assume that a stronger-than-expected number could lead the central bank to accelerate its timetable for tapering asset purchases. That would likely lead to a drop in the stock market.

The bottom line: May’s number — like all jobs reports — will look backwards.

  • But it will help frame the debate for how effective Biden's first tranche of spending was — and how much more spending the economy needs.

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