Moneybeat – Americans are going back to work


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

NICK EICHER, HOST: Americans suffered record-setting job losses with the economy largely on lockdown because of the coronavirus threat. But in the month of May, record-setting job gains as the economy reopens.

Two-and-a-half million jobs came back. That’s a record number going back to 1948 when the government first started keeping track.

The job gains were broad among both goods-makers and service-providers: construction jobs went way up, as did education, health, and hospitality jobs.

But an indication of how far we have to go is this: the unemployment rate fell nearly two percentage points and yet sits above 13 percent, 13.3.

Financial analyst and adviser David Bahnsen joins us now. David, good morning.

DAVID BAHNSEN, GUEST: Good morning, Nick.

EICHER: Well, what a week. Let’s have a listen to White House economic adviser Larry Kudlow’s analogy on the jobs front.

KUDLOW: It was like a bad hurricane or a bad snowstorm. There’s a lot of heartache in that and there’s a lot of hardship in that, absolutely. But they’re sharp and fast and they recover fast. And we’re beginning to see this rapid recovery, which I believe will extend well into the third quarter and the fourth quarter.

Sharp and fast down, sharp and fast up. We’re seeing a rapid recovery—agree or disagree with Mr. Kudlow?

BAHNSEN: Oh, I definitely agree. And I’ve felt throughout this whole experience that the recovery was going to be rapid, it’s just that the questions around it were when that recovery could even start because the lockdown ended up lasting so much longer than initially had been anticipated. 

And then the question will end up being: if you get a 90 percent recovery in some industries that have, let’s say, 30 percent margins, that’s a substantial recovery. But if you get a 95 percent recovery in something that has 3 percent margins, that’s not even good enough. And so it’s going to vary industry by industry.

But as far as the employment side, when you say 2-and-a-half million jobs coming back, that’s the accurate number. But you have to contrast it against an additional 8 million that they anticipated being lost. So, the net difference of what we got in the jobs data versus expectation was 10.5 million. 

That is profound. 

But it calls into question a whole lot of other economic data going forward that people have to say, wait a second, how much better could other things be than have been previously anticipated?

EICHER: Still, though, we’re 20 million jobs down. Recovery may be on, but we’re not back by any stretch.

BAHNSEN: Of course not. That’s right. Now, 13.3 percent unemployment rate in an absolute sense would be absolutely horrific. But these things are not measured that way. 

They have to be measured by trajectory and by a relative comparison to where we were and where we thought we’d be and things of that nature. 

The 1.5 million jobs—give or take—from bars and restaurants and the million or so in leisure hospitality, that is incredibly indicative of a very temporal and transitory situation. 

Will you have hundreds of thousands of white-collar jobs that become permanent losses? Very possibly. But you’re not going to have millions. And so in a macroeconomic sense, the early indicators are that we’re going to be outperforming our negative expectations. 

I think it was 169,000, if I remember correctly, in permanent job losses that went higher. So there were some negative little pieces in that data overall, but the fact of the matter is we do see some silver linings on the employment side. 

And, I think intuitively, I don’t know, Nick, if you’ve been able to get back out into restaurants and things yet. Orange County started this reopening where I am in Southern California right now. I’m not back in my New York City office yet. I know it’s going to be a different picture there. But I’ve got to tell you, the restaurant scene here, it’s back. The waiters, waitresses, those jobs are back. Clearly. They’ve reopened and you see that. And I think we’ve got to be encouraged by that.

EICHER: Two final things, and let’s run fast here. Want to do a what’s next on an economic package in Congress but also the market week. I see the Nasdaq has recovered to its pre-COVID level, near its all-time high in February. Tech stocks, mainly. The Dow and the Standard & Poor’s not quite that good, but doing a lot better. So, what’s the market story?

BAHNSEN: Well, the market story continues to be the same story that it has pretty much been since the end of March, only this week it just took another quite significant leg higher. And that story is that markets are pricing in what they believe about the future. And that the future is significantly better than it was at the peak level of COVID hysteria in the middle of March. 

The NASDAQ, indeed, has done better. You have some of those big tech names that were never really all that affected. But this week you saw financials, real estate, industrial, some of those more cyclical names really turn it on. And I think investors probably have to feel good if they did in fact avoid panicking back in March.

EICHER: You mentioned the widespread belief of another 8 million jobs lost, but instead we re-gained 2.5 million, for net plus 10.5. Does that change the politics of the negotiations between the White House and Congress on what to do next?

BAHNSEN: It does. That’s a great question, by the way, because you immediately saw some of the parties go into damage control. When Senate Minority Leader Chuck Schumer for the Democrats immediately went out and said, oh, you cannot be taking a victory lap, 13.3 percent unemployment is still very bad, so forth and so on, that was him posturing for the next level of stimulus. But the point is politically this would set that back. And it sets the timing back. 

I noticed that my friend Larry Kudlow, I didn’t get a chance to ask him about this yesterday. I saw him in the press say we’re going to start negotiations now after July 4th. Previously they had been saying finish by July 4th. And so they may also buy themselves more time when there isn’t the urgency of legislating. That’s what happened with the CARES Act. The economy was in free fall. We were in total panic, jobs, I mean, it was brutal. You remember. And we were on air together talking about it. 

That forced them to do that quickly. This is different. So, I absolutely think that this even further pushes out—a bill’s still coming and they’re going to spend trillions of dollars, but it’s going to push it out a bit now and give, perhaps, a little bit more leverage to people as to what their agenda may be.

EICHER: Alright, David Bahnsen, financial analyst and adviser. Thank you, sir. Appreciate it.

BAHNSEN: Thank you, Nick.


(AP Photo/Michael Dwyer) Tracy Casavant, left, owner of Bittersweet Shoppe on Newbury Street, sells lemonade with Cheryl Johnson, Saturday, June 6, 2020, in Boston. 

WORLD Radio transcripts are created on a rush deadline. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of WORLD Radio programming is the audio record.

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