This week in Trumponomics: A premature victory lap
The latest batch of monthly job numbers is a mirage showing what a robust economic recovery might look like in a nation winning the war against the coronavirus. Alas, that is not the United States.
Employers added 4.8 million jobs in June, on top of 2.7 million in May. Those 7.5 million new jobs might sound phenomenal, but they’re not. In February, there were 152.5 million workers earning a paycheck. There are now 137.8 million. We’ve still lost nearly 15 million jobs due to the pandemic and widespread business closures, and have repaired only about one-third of the damage to workers.
President Trump is unconcerned. “Our economy is roaring back,” Trump said in a short address on July 2. “These are historic numbers in a time that a lot of people would have wilted. They would have wilted. But we didn’t wilt, and our country didn’t wilt.”
The wilting is underway, however. The Labor Department’s jobs report is based on a monthly survey, which in this case concluded on June 12. At the time, there had been a steady decline in the number of coronavirus cases detected daily in the United States. A week later, the infection count began to climb, and it has now hit the highest levels yet, with nearly 53,000 new cases reported on July 1, the highest daily tally so far. That has forced states that had let businesses reopen early, like Texas and Florida, to close businesses all over again.
If the coronavirus case count continued to go down, we might see more blowout job creation like we did in June. We’re now more likely to se the opposite, however, with job losses, rather than gains, possible in July, as reopening trends go in the wrong direction. The economy tracks the virus, and the resurgence of the virus probably foretells a retrenching in the economy. For these reasons, this week’s Trump-o-meter reads WEAK, the third lowest score.
There will be three more monthly job reports before the election on Nov. 3, and Trump obviously hopes he can keep celebrating “Historic Jobs Numbers!” But it’s more likely job growth will go sideways or even backwards. Many of the new jobs in May were people going back to work after being temporarily furloughed, rather than companies creating new positions. Those are the easiest jobs to “create,” statistically speaking. It’s harder to get companies to commit to new hires and the costs those jobs entail, especially in such an uncertain environment.
Overshadowed by the jobs report: Another 1.4 million people filed for unemployment during the week, an extremely elevated level just a tick lower than the week before. So while some people are going back to work, others are newly unemployed. That also suggests trouble ahead. “With the spread of the virus accelerating again, we expect the recovery from here will be a lot bumpier and job gains far slower,” forecasting firm Capital Economics wrote to clients on July 2. “With the high-frequency data suggesting that activity is beginning to stall and in some cases go into reverse, the pace of job gains will be much weaker over the coming months.”
Trump continues to insist the only reason coronavirus infections are increasing is that testing is more widespread. That’s part of it, but hospitalizations are also rising, which means the virus is a worsening problem and a rising threat to public health. While some people ignore the risk and try to go about life as normal, it’s clear millions of others are locking themselves down and spending less. Trump wants people to go out and spend regardless of the virus, but many won’t do as long as they consider it risky.
Trump suggested this week that maybe wearing a mask isn’t so bad after all, because it makes him look like the Lone Ranger. But he still hasn’t worn a mask in public, fueling the resistance of other virus deniers. A vigorous federal campaign to expand testing and flood hotspots with contact tracers and other resources is still the best thing Trump could do to boost the economy and help his reelection odds. But no. He told Fox Business this week that he still thinks the virus is “going to sort of just disappear.” That’s what he thought in February. It didn’t.
Trump’s rival in the presidential election, former vice president Joe Biden, now leads Trump by double-digits in national polling, which is a direct reflection of Trump’s passivity on the virus and the resulting struggles in the economy. Biden, so far, is running a low-wattage campaign focused on everything Trump does, normally a winning strategy when an opponent is stumbling. “There’s no victory to be celebrated,” Biden said during an online rebuttal to Trump’s chest-thumping on the jobs report. “Trump wants to declare the health crisis over and unemployment solved. He’s deadly wrong.” For now, Biden’s right, and many voters see it all around them. If Trump keeps declaring premature victory, it will mean defeat in November.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. Confidential tip line: rickjnewman@yahoo.com. Encrypted communication available. Click here to get Rick’s stories by email.
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