Good Friday and welcome back to On The Money, where we can feel it coming in the air last night. I’m Sylvan Lane, and here’s your nightly guide to everything that affects your bills, bank accounts, and bottom line.
THE BIG DEAL – Five takeaways from the July post: The Friday edition of the July jobs report gave a clearer view in a labor market clouded by mixed signals of real-time data and concerns about emerging cases of coronavirus across the country. The U.S. cut another 1.8 million jobs last month – slightly above economists’ expectations but well below May and June gains – pushing unemployment to 10.2 percent.
While the U.S. economy continues to recover from the shock of pandemics, the report is a little more complicated than the headline numbers indicate. Here are five key points to make into the July job report.
The recovery is still going, but slower: The story of the coronavirus recession is a story of declines in size and speed of record breakers. Between March and April, the US lost roughly 10 years of job gains and followed it up with an annual decline of 32 percent in economic growth in the second quarter.
The US made solid progress in recovering part of the more than 20 million jobs lost to the pandemic with gains of 2.7 million in May and 4.8 million in June. But the 1.8 million jobs created in July mark a notable decline in the pace of recovery.
Economists have warned since cases of coronavirus began to spike in mid-June that the resurgence would hamper the pace of growth, even if states do not re-impose closures. Those warnings carried out in the July July report, reinforcing the need to control the virus before the economy can fully recover.
The report gives both sides ammo in stimulus talks: The state of the economy rarely fits into a clean political narrative and the July jobs report is no exception.
Democrats can point to the slower pace of job growth and the long road to recovery to support their call for another $ 3 trillion incentive.
“The latest task report shows that the economic recovery brought about by the investments passed to Congress is losing steam and more investment is urgently needed to protect the lives and livelihoods of the American people,” House Speaker said. Nancy Pelosi
Nancy PelosiDemocratic convention lineup to include Ocasio-Cortez, Clinton, Warren: reports Trump completes executive orders on economy but will not sign yet (D-Calif.) And Leader of the Senate Minority Charles Schumer
Chuck SchumerPostal Service says it has lost .2 billion over a three-month period A stimulus of three trillion dollars, but Charles Schumer for sustainable energy – leading companies want to change that Democrats try to force Trump to produce medical supplies MORE (DN.Y.) in a statement issued Friday.
But the White House and Republican lawmakers are considering the expectation-beating job creation and the lack of increasing permanent layoffs to make the case behind a pared down bill aimed at rebuilding the economy.
“The most responsible thing we can do is take proactive measures to get people back to work safely, instead of continuing to shut down the economy,” Rep said. Kevin Brady
Kevin Patrick BradyOn The Money: Five takeaways from the July job report on Stimulus Controls debate now focuses on large, eligible Pelosi crawling with chairmen over surprise bills but dealing with disastrous ME (R-Texas), rank member of the House Ways and Means Committee.
The job market is still a long way from recovery: Despite three months of gains with seven figures, the US economy is still in a deeply damaged state. The July unemployment rate of 10.2 percent is roughly even with the peak of unemployment during the Great Recession of 10 percent in October 2009. And the true level of U.S. unemployment may be higher, given how difficult the pandemic is to determine and track who is really in the workforce.
It took a decade of steady economic recovery – the longest in modern American history – for unemployment to fall to a 50-year low of 3.5 percent in February, leaving the nation a long way from where it was for the pandemic.
“At the current rate, it would be good in 2021 to recover the 12.9 million jobs lost since February,” wrote Diane Swonk, chief economist at Grant Thornton, in an analysis of Friday of the job report.
The increase in government jobs is likely to be misleading: Employment in the government – which includes public schools – rose by 301,000 in July.
At first glance, this is a welcome sign of resistance, as state and local governments are facing severe budget cuts driven by falling tax revenues and waning unemployment demands. But economists warn that the rise is likely to be the result of a seasonal adjustment designed to account for the large number of school teachers and staff who take on payroll roles in the summer before returning to work in the autumn .
Elise Gould, senior economist at the left-wing Institute for Economic Policy, notes that public sector employment is still 1 million jobs below its February level after many layoffs during the start of the pandemic.
“We have seen in recent months large reductions in employment for the state and local public sector – a sector that has disproportionately affected women and black workers,” Gould wrote.
“I warn data watchdogs to consider these gains with a grain of salt, and to look at the overall changes from February (pre-COVID-19) to July.”
Assistance to state and local governments is one of the biggest obstacles to gathering GOP support behind another incentive bill, so this rise could factor into the rhetoric surrounding the negotiations.
The report raises tough questions for negotiators: Each monthly job report has a delay of about two weeks between the time the data was compiled – around the 12th of that month – and the release of the report.
While economic conditions at that time typically did not change drastically, July was an exception. The $ 600 weekly boost to unemployment benefits and the federal ban on expulsions and advances in March introduced both between the survey period and job vacancies, and much of the money borrowed through the Paycheck Protection Program was spent at the end of the month. That means lawmakers are seeing a glimpse of the economy with far more fiscal support than it currently has, posing difficult choices about how much more is needed to keep the economy afloat.
Yet economists urge lawmakers not to rest on their laurels because the U.S. faces a difficult road ahead.
“Any idea that the improvement of the topline provides a handy excuse for policymakers to avoid hard decisions around a fifth-round fiscal aid aimed at the unemployed should be summarily dismissed,” wrote Joe Brusuelas, chief economist at tax- and audit firm RSM, in a Friday analysis.
Talks about a new coronavirus relief package went bad for the report and stormed hours after it was released.
LEARN THE DAY
Trump includes jobs reports signal delay: The White House is trying to capitalize on the latest numbers of jobs, claiming they point to one strong economic recovery below President Trump
Donald John TrumpJoe Arpaio loses bid for his old position as Sheriff Trump blames opinion that Russia denigrates Biden: ‘No one is harder on Russia than I am’ Trump truncates executive orders over economy but will not yet report even as millions remain unemployed and states struggle with increases in coronavirus infections.
However, the data point to an economic downturn, challenging the White House’s Bullish predictions for a rapid V-shaped recovery. The figures also come amid collapsed talks between the Trump administration and Democratic leaders over a coronavirus relief package, which economists say is desperately needed to prevent a deeper recession.
“This is not a rocket ship,” said Martha Gimbel, senior manager of economic research at Schmidt Futures. “It’s really unclear if the economy will reach escape rates before the lack of government spending crashes or before … we have to shut down again, which is a total possibility.”
The Hill’s Morgan Chalfant and I explain why here.
White House view: White House economic adviser Larry Kudlow
Larry KudlowMORE, which conducted the rounds on cable news on Friday morning, declared that the figures showed an ‘independent recovery’ and predicted that the United States would see unemployment in the single figures in the autumn months.
“The concern that some partial shutdowns or some pausing shutdowns would wreck the numbers of jobs did not materialize. “I think that shows signs of strength,” Kudlow told Fox Business.
The economists take: Economic analysts say that despite the work report, additional fiscal stimulus is still needed. Many point to an extension of the extended benefits for unemployment and additional assistance to states as necessary steps to revive the economy through recovery until there is a vaccine for the coronavirus.
“This task number addresses the unintended need for additional federal support,” said Isaac Boltansky, director of policy research at investment bank Compass Point Research & Trading.
GOOD TO KNOW
- Two major U.S. stock indices closed with meager profits Friday amid the collapse of talks on bilingual incentives and a report on jobs in July that showed a marked delay in recovering from the coronavirus recession.
- Chinese tech company Tencent saw its stock tumble after President Trump signed a few executive orders Thursday night targeted Chinese apps WeChat and TikTok.
- Canada announced plans Friday retaliate against the US after President Trump announced Thursday that he would reintroduce aluminum tariffs.
ODDS AND ENDS
.
