By now, America should be in the thick of the “rocking and rolling” economy that Jared Kushner, President Donald Trump’s son-in-law and at times seemingly his only aide with any real power, had predicted the economy would be “really rocking again” by July.
So where is it?
The latest bad news for Trump’s re-election campaign came in Friday’s jobs report, which showed the unemployment rate staying in double digits at 10.2 per cent, even as the economy created 1.8 million new jobs, in line with forecasts for 1.7 million. Unemployment is still higher than any time since the Great Depression, except for the last four months. The jobs market, to borrow a rocker phrase, is not ready to start us up. Job growth was notably slower than in the last two months, and there are a lot of signs in the data that suggest the deceleration will persist.
Cue up Mick Jagger on the turntable: I know, it ain’t no rock & roll, I don’t like it, like it, nor should you!
“We lost 22 million jobs at the outset of this thing,” University of Michigan economist Justin Wolfers said. “We’ve since recovered 9 million.”
With Trump down an average of eight points to Democratic nominee and former vice president, Joe Biden, in the polls, a hoped-for economic pop this quarter is the most respectable of the October surprises that could salvage his campaign. The most speculative is the president’s claim on Thursday that a vaccine to prevent Covid-19 will be developed right around the time of the election on 3 November. And the sleaziest is the possibility that the attorney general, William Barr, will disregard the Justice Department’s policy of not interfering in elections.
Tearing down what industries added jobs makes plain how tenuous the recovery is, and how limited it is to reclaiming a smallish portion of the jobs lost since February, when unemployment was only 3.5 per cent of the workforce. It’s also notable that unemployment among the Black population is at 14.6 per cent.
Almost a third of the “new” jobs were in eating and drinking establishments, plus casinos and leisure attractions like theme parks, the Labor Department said.. Another 126,000 were in the healthcare industry, which was all but closed for elective procedures in many parts of the nation beginning in March, and is slowly recovering. Retail trade added 258,000 new jobs as stores reopened after governors across the nation relaxed restrictions on their operations.
All of these sectors are still way below their employment peaks earlier this year, the Labor Department added. And all have structural problems, either caused or exacerbated by the coronavirus crisis, that limit how much better their short-term situation can get.
Take retail. OK, it added jobs in July. But since 1 July , the list of big retailer bankruptcies is daunting. The trade Web site RetailDive.com says 23 major chains have filed for bankruptcy this year, up from 17 in all of 2019. The list includes big names — Brooks Brothers, J. Crew, Neiman Marcus and J.C. Penney. Even Dunkin Donuts, if one considers it a retailer of coffee and snacks more than a restaurant chain, is set to close 1,150 stores as three of its biggest franchisees seek bankruptcy protection.
Restaurants are opening again, but their situation is tenuous. The year-over-year drop in seated dinner reservations, as reported by industry Web site Opentable.com, is little changed since mid-June. It wobbles around from day to day, but the range of business being down by 58 per cent to 65 per cent each day has stayed constant. With capacity restrictions still in force, and Covid-19 infection rates still running higher than 50,000 a day and more than 1,200 deaths reported Thursday alone, there are important fundamental reasons not to expect things to get much better. Small restaurants have been running out of money at a steady trickle, and federal loans that propped many of them up are running out.
And, cold weather is coming within two months, cutting into the outdoor dining keeping many eateries afloat. As Jagger said, for them it will be all over now.
Not much about other economic data points to a fast rebound. Auto sales came out earlier this week for July, on a pace still about 3 million units a year below 2019. And cars plus auto parts accounted for more than all manufacturing job gains; the rest of the sector lost 17,000 jobs. Purchasing managers’ indices for manufacturing released this week pointed to weak orders, especially from overseas, and slow at best improvement in business conditions.
Likewise, construction added 20,000 jobs, but added 619,000 in May and June, remaining 444,000 below February. Construction spending showed an unexpected monthly decline in government data released last Monday.
If you’re Waitin’ on a Friend, as in Congress, to produce a new package of stimulus including support for state and local governments that accounted for 300,000 job gains in July, take Harry Truman’s purported advice about making friends in Washington and get a dog. The White House and House of Representatives remain far apart on a deal, with Republicans particularly keen on ending the $600 a week in supplemental unemployment insurance that has kept the collapse in consumer spending since February from being worse.
“People are going to start running out of weeks of benefits,” said University of Michigan economist Betsy Stevenson, who happens to be married to Wolfers. “These folks will run out beginning in mid-October.”
Put it together, and Trump can’t always get the boom that he wants. In 89 days, Americans will decide whether they want the satisfaction of re-electing him, or whether it’s all over now.
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