Moneybeat – Still bleeding jobs

MARY REICHARD, HOST: Coming up next on The World and Everything in It, the Monday Moneybeat.

NICK EICHER, HOST: Let’s dive right in with financial analyst and adviser David Bahnson—joining us each week since the financial crisis that grew out of the COVID-19 policy response. David, good morning to you.

DAVID BAHNSEN, GUEST: Well, good morning, Nick.

EICHER: Well, I see a small drop in claims for unemployment once again: 2.4 million last week. Now, you said that you’re really waiting to see those claims fall below a million and I understand that. 

I wonder about this week’s number, though, David, because it does technically mark eight weeks in a row where the number has dropped. Because I also read that this is the first week in which gig workers and self-employed are not included in the total. 

So, it’s possible unemployment claims may have gone up, and maybe at this point that big national number is not as important a number as more of a state-by-state view, as the economy starts to reopen.

BAHNSEN: Yeah, I think that there is some hair on the number every week around various nuances. But, look, there’s no bigger wildcard to the unemployment claims week by week than what the federal government’s going to do about the $600 per week subsidy. If they extend that and make it dependent on not having a job, then that is going to be millions of people that are financially better off to not be working. 

And so there’s a number of different things on the table for whatever the next government program’s going to be. But the future of the unemployment numbers, to your point, is going to have a lot to do with the state by state reopenings and then—particularly in the food and beverage, hospitality, and service businesses—but then I think the second wildcard is around the federal government subsidy of unemployment.

EICHER: Well, since you brought that up, let’s go ahead and talk about Stimulus II in Washington. The Senate adjourned for the holiday and took no action on it. 

But you’re talking about the additional $600 per week tacked on to unemployment checks from Stimulus I, the Paycheck Protection Program, that makes not working—purely from a dollars-and-cents perspective—a more attractive proposition to going back to work.

Clearly Congress is going to do something additional here, given the unprecedented times, but what’s your sense of it?

BAHNSEN: So, the way I’m summarizing it for people, and this is fallible, Nick, I don’t think I have perfect political prognostication skills, but I think that the House Democrats are going to get what was most important to them, which was direct support to states and local governments, and they’re going to get another direct payment to taxpayers, which was the $1,200 to single, $2,400 married couple, $3,400 to a family of four. And just yesterday or the day before you saw President Trump saying he’s open to doing that. Those are the big markers for the Democrats. The Republicans, it’s liability protection for businesses so they can be free and safe to reopen without fear of the trial lawyers.

But then the two areas that I just simply don’t know the answer and that I’m utterly obsessed with getting the answer to is where this will go on the unemployment benefit, which was part of the House bill, and the payroll tax cut, which the White House has said is a sine qua non for them. But the Senate Republicans have not. And there’s been quite a bit of pushback from Democrats. 

So, what we have is kind of one area I really think the Democrats are going to get. Another area I really think the Republicans are going to get, and two areas that I just think are two be determined.

EICHER: Let’s, before we go, talk about the week on Wall Street. Good week. Major indexes picking up three percent or more on the week and, yet, a major bankruptcy that we just read about: Hertz Rental Car company. 

Now, I understood that the company’s financials were not very strong and they were not very strong for a long time going into the economic lockdown. So, you can talk about that if you choose. But are you seeing any signs in the corporate world of business reawakening, the supply side that you’ve been looking for?

BAHNSEN: Yeah, I’m seeing a lot of signs of it. We’re seeing two things right now that are positive. One is some of the businesses and sectors and areas just beginning to pick up, to get off of those bottoms and see some bit of activity. And then number two is we’re seeing a lot of data of area that weren’t ever as bad as had been feared, including some businesses that actually came out of the whole COVID lockdown with revenues higher. 

The Hertz issue was very well expected. Look, if you have bond yields trading at 20 percent, the company’s going bankrupt. So, so far the bankruptcy filings have been much less than what we expected. But, you have to remember, most of the courts are closed, so I think there’s actually administrative delays in getting to some of the bankruptcy filings that will end up happening. 

But the green shoots for the economy, it’s still too early to get very excited. But I think that just simply having some businesses reopen is better than where we were a few weeks ago. And, like I said, there continues to be certain areas in which the numbers never really got as bad as has been expected. And that’s something giving me a little bit of optimism.

EICHER: David Bahnsen, financial analyst and adviser. David, thank you so much and Happy Memorial Day to you.

BAHNSEN: Likewise, Nick. Take care.

(AP Photo/John Minchillo) An NYPD officer walks along a sparsely populated Wall Street, Friday, May 1, 2020, in the Manhattan borough of New York. 

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