This is the stimulus update for Thursday, July 2nd.
Infrastructure and PPP
Yesterday the House representatives did in fact pass the Moving Forward Act. That is at $1.5 trillion green infrastructure plan.
However, this is mostly symbolic because Mitch McConnell has said, “That naturally, this nonsense is not going anywhere in the Senate.” And President Trump criticized the legislation as full of wasteful Green New Deal initiatives.”
Also yesterday, the House approved the bill that was previously approved by the Senate that would extend the Paycheck Protection loan application deadline from June 30th to August 8th.
So for those of you still haven’t applied for PPP loan, all you business owners out there, sole proprietors, S-corp, C-corp, whatever you are for your business, consider applying for this.
The bill has been passed by Congress to extend the deadline to July 8th. I believe the president will sign this bill, especially given some comments that Secretary of the Treasury Mnuchin made at the press conference after the jobs report.
Trump’s Fox Business News Interview About Stimulus
I do want to talk about President Trump’s interview yesterday on Fox Business News. In which he asked once again about more direct cash payments to the people.
Reporter: Mr. President, thank you for talking to Fox Business. We appreciate it. A lot to get to, let me start with Phase 4 and what might potentially come later this month, another round of direct payments for individuals. Do you support that at this time?
Donald Trump: I do. I support it, but it has to be done properly and I support actually larger numbers than the Democrats, but it’s got to be done properly. We had something, where it gave you a disincentive to work last time. And it was still money going to people and helping people. So I was all for that, but we want to create a very great incentive to work. So we’re working on that and I’m sure we’ll all come together.
All right, just a little bit confusing, right? Because it starts off with, Trump saying I actually support larger numbers than the Democrats.
I’m thinking. Oh, okay. So do you want more than $1,200 stimulus checks in the next round? Okay. Okay. That’s cool. That’s awesome. That’d be great.
But then it gets a little bit confusing, right? Because then he starts talking about it giving you a disincentive to work and he wants to create a very great incentive to work. Trump, help me out here.
Are you talking about more stimulus checks or are you talking about some kind of supercharged unemployment benefits?
Because I don’t think that your administration would support even more supercharged unemployment benefits than what the Democrats are pushing for. Right?
Which under the HEROES Act is an extension of the $600 weekly through July 31st or the Democrats Senate bill introduced by Chuck Schumer, which would be that kind of where the payment amount per state is based on that state’s unemployment rate.
I wouldn’t think that Trump wants to do more than the Democrats with respect to unemployment. Especially because he says he wants to create a very great incentive to work.
There’s some clues later on here, that might clue us in a way he’s talking about it, but honestly, it’s not abundantly clear to me.
And the reporter, it wasn’t abundantly clear to him either, because then he specifically asked the president, you want the direct payments larger or the unemployment larger? Right? Here’s what the president had to say.
Reporter: Do you want the direct payments larger or the uninsurance benefits larger?
Donald Trump: I want the money getting to people to be larger, so they can spend it. I want the money to get there quickly and in a non-complicated fashion. And they wanted to make it too complicated. Also, it was an incentive not to go to work. You’d make more money, if you don’t go to work, that’s not what the country’s all about. And people didn’t want that. They wanted to go to work, but it didn’t make sense because they make more money if they didn’t. And we had some of that. And so we don’t want to have that. We want to have people get out and we want to create a tremendous incentive for people to want to go back to work.
So Trump doesn’t really answer the question. All he says is, “I want the money getting to people to be larger, so they can spend it. I want the money to get there quickly and in a non-complicated fashion.”
But again, are you talking about the unemployment? Are you talking about more stimulus payments?
But he says something there at the end though, that I think may give us some clues to what he’s thinking about right now. And he could be just jumping off from thing to thing, in his mind as well.
But at the end there, he says, we want to have people get out and we want to create a tremendous incentive for people to want to get back to work.
So maybe what he’s thinking about is something like a back-to-work bonus.
We know that Kevin Brady has proposed that $600 a week back-to-work bonus, a couple of weeks. We know that Rob Portman, was it the $450 week back to work bonus? I think I’ve covered them before.
Maybe Trump, in his mind right now, he’s answering this question.
Maybe that’s what he has in mind. Some payments to the people to incentivize them to get back to work.
Well, what about those people who are out of the workforce? What about those folks?
What about those who don’t have a job to go back to?
And then the reporter kind of bumbles this next question right here.
Reporter: On that, and the uninsurance benefits, Mitch McConnell yesterday signaled his support for an extension, the $600 figure. Do you agree with that number? Do you think it should be less?
Okay. So this is kind of confusing because the reporter said that Mitch McConnell quote, “Signals his support for an extension.” The $600 figure. And then he asks Trump if he supports it.
I’ll show you what Trump said in a second. But that’s just confusing, because McConnell has not signaled his support for the $600 figure.
What McConnell said this week is unemployment is extremely important and we need to make sure for those who are not able to recover their jobs, unemployment is adequate.
That is a different issue from whether we ought to pay people a bonus, not to go back to work. And so I think that was a mistake.
So it seems very clear that when McConnell looks at the extra $600 week blanket, to everybody on unemployment, he thinks that that was a bonus for people not to go back to work. right. He thinks that was a mistake.
So I think very clearly Mitch McConnell does not support the extra $600 a week. He does acknowledge that unemployment is important.
We need to make sure for those not able to go back to work, unemployment is adequate, but that doesn’t translate to that he supports an extension, the $600 figure.
Maybe, maybe the reporter knows this, but just that question was reported poorly.
Reporter: On that and the uninsurance benefits. Mitch McConnell yesterday, signaled his support for an extension, the $600 figure. Do you agree with that number? Do you think it should be less?
Donald Trump: We’re getting together. We’re going to meet tonight and we’re going to make a determination, but it’s going to be a good number. It’s a substantial number. People are going to be very happy. One thing that’s happening and you see it, you see it with the numbers and we have big numbers coming out. Hopefully they’re going to be good. They’re very important. But when you see what’s happening with jobs, when you see that we’re doing record numbers of jobs. In the history of our country, we’ve never created more jobs. And what we did last month, that last month number, retail sales are at record number, especially when you talk about increase. When you look at percentage increase, nobody’s ever seen anything like it. So we’re headed back in a very strong fashion with a V and I think we’re going to be very good with the coronavirus. I think that at some point that’s going to sort of just disappear, I hope.
Reporter: You still believe so, disappear-
Donald Trump: I do. I do. Yeah, sure. At some point, and I think we’re going to have a vaccine very soon too.
All right. So of course Trump is vague. He says, it’ll be a good number, a substantial number. People will be very happy.
Then he starts talking about jobs and then he says something very interesting.
That the virus is just going to disappear and the reporter kind of asks him in disbelief, you still believe so. And Trump says, “Well, sure, I do. And I think we’re going to have a vaccine pretty soon.”
Okay. So just disappear, right? Media is having a field day with this. Because obviously that is pretty much very optimistic, almost naively optimistic, thinking to think that something like a coronavirus will just “disappear”.
That said maybe Trump is referring to the development and administration of a vaccine that could cause the vaccine or that could cause the virus to disappear.
I’m just trying to think of ways that this could be presented in a way that makes sense. Or maybe he’s thinking about the 1918 flu pandemic.
If you recall, there was that first wave, there was that even deadlier second wave. But at the tail end of that second wave, the flu virus didn’t seem in many cases to just disappear.
In Philadelphia, for example, in October 1918. They’re reporting over 4,000 deaths from the flu a week. But then in November there were very few deaths in Philadelphia.
So it did in a sense kind of just disappear, but let me say this. For a virus to just disappear like that without a strong intervention, like a vaccine, or other preventative measures, it takes millions of lives with it.
It’ll basically just run its course and take everybody who’s susceptible to it down with it.
And obviously we did not want that in this country. That’s just my two cents as a nonmedical professional.
Then the president asks about masks. He speaks about them pretty positively, a little bit vainly as well. But I think it’s pretty funny. Here’s the clip or read the transcript below:
Reporter: Speaking of COVID-19 Goldman Sachs put out a model yesterday saying that if there’s universal masks, it would be a net positive for GDP. We know the IHME models says that if there were universal masks, that it would be beneficial, it would save lives. So if there is an economic benefit, sir, and there is a public health benefit, sir, why not go forward and say, there should be mandatory masks all across this country?
Donald Trump: Well, I don’t know if you need mandatory, because you have many places in the country where people stay very long distance. You talk about social distancing, but I’m all for masks. I think masks are good. If I were in a group of people and I was close.
Reporter: You would wear one?
Donald Trump: I have. I mean, people have seen me wearing one. If I’m in a group of people where we’re not 10 feet away but usually I’m not in that position and everyone’s tested because of the president. They get tested before they see me. But if I were in a tight situation with people, I would absolutely.
Reporter: Do you think the public will see that at some point?
Donald Trump: I mean, I’d have no problem. Actually. I had a mask on. I said, “I liked the way I looked” Okay. I thought it was okay. It was a dark black mask. And I thought it looked okay. It looked like the Lone Ranger, but no, I have no problem with that. And if, people feel good about it, they should do it.
All right, so Trump thinks he’s got a Lone Ranger look going on with his mask. I don’t know. I see these politicians wearing these fancy mask.
Pelosi with her thing. And then, Trump says his Lone Ranger look apparently.
I just wear the normal white one. I guess I’m not as fancy as these Washington hot shots.
In this interview they start talking about Joe Biden and the election and Biden’s tax plan. I might do some more videos as the election comes closer, about Biden’s tax plan and stuff like that. But I want to keep this video on focus, keep it on stimulus, keep it on the economic recovery. If you want to watch that full interview on Fox Business News with Trump, here’s the link to the video.
The June Jobs Report
This morning, the Department of Labor, released the June 2020 jobs report.
Similar to the main report, this was shocking in a positive way. Most economists believe that in June, the economy would add between one and three million jobs.
The actual increase in unemployment, according to this report, is 4.8 million. However, in this report, it says, “The number of unemployed persons who are on temporary layoff decreased by 4.8 million in June.”
Does that 4.8 million sound familiar?
Oh yeah, because that’s the same number I just said before.
So the total nonfarm payroll employment rose by 4.8 million. Also those who are on temporary layoff decreased by 4.8 million.
That’s telling me and anybody who reads this report that this, “Record breaking.” Right in the words of Donald Trump.
Job numbers are largely attributable. If not, almost entirely attributable to simply people who are temporary laid off due to lockdowns. Now getting to go back to work.
What’s more scary is the permanent job losers. And the report says that the number of permanent job losers continued to rise increasing 588,000 to 2.9 million in June.
That’s the group. That’s the segment that will struggle the most and create the most drag on the economy.
Somebody who was temporarily laid off, right? Probably from a lower wage position. And who was able to collect an extra $600 a week in unemployment on top of normal state benefits.
They’re going to come out okay. It’s these permanent job losers, who I am far more concerned about. Because that number has continued to rise month over month.
If that number continues to rise in July as well and into the summer, we could be looking at some very scary times.
Because the headlines, right, if you saw the news conference this morning, the press conference and Mnuchin. They’re saying, “Oh, 4.8 million. That’s like the most ever.” Okay. Well I guess technically, but what you got to keep in mind is, the unemployment rate rose very sharply.
Because the lockdowns and now it’s going to have a decrease sharply as well. But then what about those folks that do not have a job to go back to? Those are the folks we really want to be concerned for.
In terms of industries, as you would imagine, leisure and hospitality and retail. They had the largest increases. Leisure and hospitality employment increased by 2.1 million, retail by 740,000.
Other sectors that had gains was education, health services, manufacturing, professional, and business services, construction, transportation, wholesale trade financial activities and government.
It says, mining continuing to lose jobs in June. In June, the average hourly earnings for all employees on private nonfarm payrolls fell by 35 cents to $29.37. That makes sense. Right?
Because very likely, most of those folks will return to work, they were likely on the lower end of the income spectrum. And so that would explain why the average hourly earnings decreased.
I want to talk about that misclassification error. Because the rates in this report of the unemployment is 11.1%.
Now, if you remember in May. We went over the May jobs report. The May number was 13.3%.
But there was that footnote in the main jobs report that said that there’s this misclassification error, that could cause the unemployment rate to be understated by as much as three percentage points.
So making the actual employment rate potentially as high as 16.3%. That same language regarding that error is in this June jobs report.
But they’re saying that the maximum potential error that could be in this June jobs report is a one percentage point error.
So according to the Department of Labor, they’re saying, “Okay, it’s 11.1% maybe actually could be as high as 12.1%.” But they say that that one percentage point that they state represents the upper bound of our estimate or misclassification and probably overstates the size of the misclassification error.
So that misclassification error, that was up to five percentage points in April, three in May, one in June. They’re getting better and better at figuring that out.
So hopefully going forward, we’ll have more and more dependable data about the actual unemployment rate.
We have to keep in mind that these June numbers, these 4.8 million net, these increases. I imagine that some of those folks would write back on unemployment.
Because many states are rolling back their reopenings, many counties are rolling back the reopenings. In my home state of California, just yesterday, Gavin Newsome said that, or he ordered that indoor non-essential businesses in 19 counties, including the county where I live, Los Angeles County must close.
Those employees and those businesses they’re going to be right back on unemployment. But of course my fear is that some in Congress, specifically Republicans in Congress will look at the June jobs report.
They’ll think it’s a major victory and they’ll say, “The Phase 4 stimulus, it doesn’t really have to be that big. Maybe some stuff for businesses, but the people, they really don’t need a whole lot. Because look, they’re doing a lot better. Right?”
I think that’s very shortsighted. Problem is, as more and more states are scaling back the reopenings throughout July.
We’re not going to have the July jobs report until the beginning of August. And that will likely be too late to see another stimulus check, if there is one until September.
So I hope that those in Congress look at the periphery data. They don’t just look at the headline.. at the 4.8 million.
I hope you look at things like the permanent job losers. Not just the headlines.
San Francisco, Federal Reserve Bank, president Mary Daly said yesterday, “I would hesitate to call this a recovery. The longer the viruses with us, the more permanent job separations occur.”
She’s looking at the right things. You’re looking at those permanent job separation, it’s not just those temporary layoffs.
Because obviously if you shut down the country for a couple of months, of course, when you can reopen it, it’s going to have a huge increase,
That doesn’t speak to the longterm effects of this virus and I do hope that our leaders are not so shortsighted as to think that this headline figure of 4.8 million increase in unemployment in June should be communicated as we don’t need more stimulus.
San Francisco Federal Reserve Bank President Mary Daly also said, “If we can get the public health issue under control, either through a really robust mitigation strategy or a vaccine, then we can re-engage in economic activity really quickly.”
Elise Gould, Senior Economist at the progressive Economic Policy Institute (this is a left leaning think tank. So keep that in mind.) said, “Given the likelihood that states may have to re shutter parts of their economies with the rise in cases, the job gains we see may not last.”
But that’s true, right? I mean, that’s true. If this virus takes off like crazy, and businesses have to shutter down again. Well, unemployment will go up again. Just common sense.
Sixty-five percent of Americans in a Gallup survey released yesterday, said that the coronavirus situation is either getting a little or a lot worse. That it’s a new high.
Also a new high yesterday, the US reported over 50,000 new cases of COVID-19. That is a record folks.
Julian Castro on Rental Assistance
In light of the crisis. Julian Castro, who you recall was vying for the democratic presidential nomination and he was Obama’s housing and urban development secretary, said yesterday. “That the government should give the people $100 billion to pay their rent.”
He said, “We should invest 100 billion in direct rental assistance that the HEROES Act would include as well as emergency solutions grants.”
I don’t know how Mitch McConnell would feel about that, but that is my stimulus update for today.