MARY REICHARD, HOST: Coming up next on The World and Everything in It: The Monday Moneybeat.
NICK EICHER, HOST: Well, we’re connecting with financial analyst and adviser David Bahnsen today by phone in California.
DAVID BAHNSEN, GUEST: I’m ready…
EICHER: Alright, despite the early hour, good morning.
BAHNSEN: Good morning. Good to be with you.
EICHER: We talk about jobs quite a bit. We do that because it’s so crucial to understanding where we are with the economy.
But I want to know whether the week we just had, with the two jobs metrics we look at consistently—new unemployment claims and continuing unemployment claims—things look a lot better.
Do you think we’ve turned a corner?
BAHNSEN: Yeah, I do. I mean, there’s no question that in both metrics it was the best week we’ve had since March COVID.
And I think that the big drop in the weekly claims, that now reflects an accurate California number, are very important. And by the way, they also show us that things were probably better than we thought the last several weeks while we were using, effectively, a fake California number.
But the continuing claims dropping that much and continuing at the pace they’re dropping, it’s more and more isolating the reality of the present unemployment situation. Which is, yes, some permanent unemployment has ticked higher and is a really structural tragedy of everything, and yet the isolation of where the ongoing unemployment lies becomes very evident and we really have isolated that to primarily hourly type workers that continue to be punished in certain states and localities by policy.
EICHER: I want to isolate the COVID conversation from the presidential debate last week: I cut this together, because in just a few words it captures the difference, really, in attitude between the two candidates. Very quick here.
TRUMP/BIDEN: I say we’re learning to live with it. We have no choice. We can’t lock ourselves up in a basement. We have to recover. We can’t close up our nation, or you’re not going to have a nation. … Learning to live with it? C’mon! We’re dying with it.
Now, let’s jump into our time machine, back around the end of June, from this program.
BAHNSEN: I believe that we’re in a transition period right now where the economy is going to have to lead the way for the media in accepting the reality of COVID cases as a long-term reality. I guess in a crass way what I’m saying is, is the economy on the verge of being prepared to live with coronavirus? I very much think that’s what’s going to happen. I really believe that then you get to the question of what’s going to be just the economic comfort level with coexistence.
EICHER: Yeah, congratulations. I think that comment has aged well, David. June 30th—more than three months ago.
But I set this out here for no other reason than that we seem finally to be at that core question. In your view: Have we arrived at the place where we can manage a real problem, a health devastation, without creating another real problem, an economic devastation?
BAHNSEN: Nick, I know we’re at that point. I know it.
Whether or not every governor or mayor in the country acts accordingly, obviously, is outside our control, but there’s no question—by the way, it was—I think it lasted somewhere around 8 or 9 minutes in the debate the other night—but everything the POTUS said about COVID in that period was spot on.
But that comment I made back in June and that you heard echoes in the president’s comment is exactly right, and it’s not because anybody—certainly not myself—is downplaying the virus or our desire to protect the vulnerable. But we know so, so, so much more. And we knew a lot more in June, when I made that comment, than we did in March and April, and we know more now than we did in June.
And there is this notion that one has to pick: either everyone’s going to die or we have to save the economy is ridiculous. Coexistence is not even a choice. It’s a mandate. We have to deal with these two realities at once and we can do it now with more information than we had and we’re also not prioritizing things morally.
They are both moral mandates.
Joe Biden, by the way, has made some economic comments throughout this that have been spot on. It is true that wealthy people and comfortable people are still comfortable and they’re still wealthy. And it’s the lower income people who are getting hurt most. The problem is some then go on, including himself, to advocate the policies that are exacerbating that divide.
And I think morally right now I’ve never seen such a disconnect in our country of people who are saying they support the little guy and supporting policies that explicitly hurt the little guy. And explicitly do not hurt everybody else. That’s the world we’re in right now and I truly believe our economy and the business environment is and has been ready for the task at hand.
EICHER: Very quickly before we go, a little preview maybe of 3rd quarter gross domestic product, which we should see this week. The market-data firm IHS Markit saying its index had hit the highest level in 20 months. Where a 50-score on the index is the dividing line between activity increasing or below it activity is decreasing and the number was 55.5—more than a point higher than the previous month.
How much do you read into this economic activity index?
BAHNSEN: Not a lot other than just how it can be supportive to other data as well, but left on its own it doesn’t tell you a complete story—and yet as we talked so many times in other economic categories as well, we are aware that we’re having a great pickup in activity. The problem is we’re having that great pickup from very low levels in some categories. And so there’s some parts of the economy that we now see beyond the relative category pre-COVID numbers are being recovered in certain parts of the economy, certain are not. Manufacturing is one in which we’ve gotten back about two-thirds of the lost output. And I believe that we need more time to see more and more production come online.
I’ve become much more convinced, by the way, a lot of time spent studying the pent-up demand over the last two weeks, and I feel very confident where we’re headed.
EICHER: David Bahnsen, financial analyst and adviser. Good to see you in the dark there in California. Thanks for joining us so early.
BAHNSEN: Thanks for having me. Take care.