This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

Employers added 1.8 million jobs in July and the unemployment rate fell to 10.2%, marking only partial progress toward recouping massive losses tied to the coronavirus pandemic. Jeff Sparshott and Greg Ip here to take you through the key numbers.

Maybe Not a V, but Not a U Either

July’s payroll growth, at 1.8 million, still leaves total payrolls 12.9 million lower than in February. And yet if job gains continued at July’s pace, that deficit will be erased by March, 2021. If payrolls reclaim their last peak in 13 months, that would be remarkably fast. It took more than six years after the last recession. So can they maintain that pace? In July, job gains were blunted by a resurgence of the virus in the South and West which put the brakes on economic reopening. With cases slowly trending down now, economic activity should pick up, though that hasn’t shown up yet in private data such as credit card spending. Spending could also take a hit from the recent expiration of enhanced unemployment insurance benefits; Congress is struggling with an extension. And it’s unlikely that the pandemic is going to completely disappear by next year, so neither will the damage to many industries such as tourism and retailing. —Greg Ip

KEY THEMES

Labor-Market Churn

The unemployment rate fell for mostly the right reasons. Some people dropped out of the labor force but not nearly as many as found a job. Measures across the board improved, including the share of workers who wanted full-time work but were stuck in a part-time job.

The number of workers on temporary layoff fell and the number of permanent job losses was little changed last month, suggesting that many workers are getting recalled to old jobs or are able to switch into new ones. “The rate of churn in the labor market remains incredibly high, but a notable positive detail in this month’s report was the downtick in the rate of new permanent layoffs,” economists at Morgan Stanley wrote.

One potentially worrisome sign: The number of long-term unemployed is on the rise. That suggests that some people are at risk of getting locked out of the labor market—and ultimately exhausting unemployment benefits.

Job losses and gains haven’t been evenly distributed. Initially Blacks were less hard-hit than some other racial groups in the early stages of the recession, but the drop in their unemployment rate in July was the smallest among racial groups. —Greg Ip

Some of that was due to growing labor force participation; the Black employment-to-population ratio rose more than for Hispanics and whites. —Greg Ip

Who’s Hiring?

Some of the industries hit hardest by March and April lockdown orders experienced some of the biggest gains last month. Bars and restaurants, retailers, healthcare, laundry services and gambling halls posted big gains from June to July, reflecting efforts to reopen the economy by relaxing social distancing requirements.

While positive, July’s gains only begin to retrace earlier losses. And it’s not clear that the Labor Department data fully captured rising Covid-19 caseloads toward the end of July, which caused state and local governments to halt or roll back reopening plans and consumers to show renewed caution.

Not everything may be as it seems with the monthly figures. Government jobs, mainly in public schools, rose by a seasonally adjusted 300,000 in July. That’s welcome relief for a sector that typically stabilizes the economy in downturns, but which has been hard hit by the pandemic. However, it may be a mirage. On an unadjusted basis public-school jobs continued to decline in July, but the decrease was smaller than seasonal factors expected—because so many jobs have already been cut. Bottom line: If large school districts holding class online this fall don’t rehire staff, job losses will resume in the public sector soon. —Eric Morath

Can We Fix It?

One final note: The Labor Department appears to have largely solved misclassification problems that had artificially suppressed the unemployment rate. In March, April and May the agency counted millions of workers as absent—something that usually applies to vacation or sick leave—when they probably should have been classified as unemployed. That subtracted as many as 5 percentage points from the headline rate. The issue now accounts for less than 1 percentage point, Labor said Friday.

TWEET OF THE DAY

[wsj-responsive-sandbox id = “0” ]

WHAT ECONOMISTS ARE SAYING

“This is not a V-shaped recovery. Adding 1.8 million jobs is not sufficient for any sort of speedy recovery after the astronomical job losses of early spring.” —Nick Bunker, Indeed

“The pace of job growth slowed in July, but the gains over the past three months represent an impressive rebound during the ongoing economic challenges brought forth by the pandemic.” —Mike Fratantoni, Mortgage Bankers Association

“Recovery in jobs to pre-pandemic levels will likely be slow and prolonged, one that will restrain the pace of recovery.” —Rubeela Farooqi, High Frequency Economics

“These numbers suggest that the surge in virus cases since late June has so far not prevented the continued re-opening of the economy at the national level.” —Brian Coulton, Fitch Ratings

“The slowdown we’re seeing is a reminder that a return to economic stability is ultimately hinged on addressing the public health crisis.” —Daniel Zhao, Glassdoor

“The economy is expanding, but the pace of improvement has slowed.” —Jim Baird, Plante Moran Financial Advisors

“The huge remaining level gap in employment—still 12.9m lower than in February before the Covid shock hit—will keep the Fed firmly focused on supporting the recovery.” —Krishna Guha, Evercore ISI

“The payroll count still reveals a slowing in the pace of the labor market recovery. In the absence of additional fiscal aid, the broad economy risks losing momentum as it shifts into the second phase of its rehabilitation.” —Kathy Bostjancic, Oxford Economics

SIGN UP FOR OUR CALENDAR

Real Time Economics has launched a downloadable calendar with concise previews forecasts and analysis of major U.S. data releases. To add to your calendar please click here.

Source link

قالب وردپرس

Source link

قالب وردپرس

This week’s Goodfellows conversation was a bit more contentious than usual. The most interesting part, I think, is our little dust-up over TikTok, following Niall’s Bloomberg commentary.

As in the rest of this series I am the skeptic of jumping in to Cold War II — or at least against lashing out against all things China without an overall strategy. So I pushed hard on my colleagues — Be specific. Just exactly what is the danger you fear about allowing a Chinese social media company to operate in the U.S?

Let us remember TikTok is a private company, not a direct arm of the Chinese Communist Party. It loudly says it keeps data private and locates that data outside China. Certainly, one could and should ask for long lists of assurances on data privacy to be allowed to operate in the US. Yes, under Chinese law, the Chinese government can demand data. And then we’ll see what happens. But let us not confuse the facts on the ground as they are.

But admitting all that, be specific. Exactly what is the danger to US national security if the Chinese Communist Party gets TikToks data that finds Suzie Derkins really likes fluffy cat videos? What is special about Chinese ownership that makes TikTok super-dangerous? 

Judge for yourself, as it is unfair for me to post too many late hits at my colleagues’ responses, but I remain unconvinced. Sure, 40 years from now Suzie might be a Supreme Court nominee and China might release an embarrassing video from her teenage years. But China can archive Reels or twitter or YouTube just as easily.

Many other answers seemed to me to veer off to other issues. Niall thinks TikTok is like crack cocaine, addictive to young and feeble minds, because it has AI algorithms that feed what you want to read. OK, but that has nothing to do with China and national security. Reels will be just as bad. HR is back to countering China’s quest for “economic dominance.” But I guess that means cutting off all Chinese companies, and we’ve had the argument before whether strategic mercantilism or innovation is the right answer there.

The argument broadened to one of general freedom of speech and regulation of the internet. Niall is still worried about all the fake news, and thinks that by regulating internet platforms as publishers all will be well. I notice current publishers are full of fake news too, and that the internet allows much more freedom to respond, and provide a counter-narrative. There is a bottom line, I think, whether one trusts people with freedom of speech and counter-speech, or some hope that some regulatory system, either top-down (which Niall disavows) or through the legal system, being able to sue publishers for wrong stories, will stem fake news and protect people from their feeble-mindedness. It’s a second-best world — I notice all the gatekeepers are just as feeble minded, and trust caveat emptor a lot more, I think, than my colleagues. Facebook’s idea that all postings on covid-19 must conform to current CDC or WHO guidelines, for example, is laughable. The robust and acrimonious debate over policy in the current crisis has been enormously beneficial.

I do think traditional limitations on free speech are allowable, of course. Posting on Facebook “the cops are busy tonight, everybody meet at the Nike store on N. Michigan avenue,” as apparently happened in Chicago last weekend, falls under the crying fire in a crowded theater exemption to free speech.

I won’t prejudice the conversation further. We will surely return to these issues.



Source link

قالب وردپرس