On The Money: Job numbers raise hopes for quicker recovery | Trump signs bill giving businesses more time to spend coronavirus loans
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THE BIG DEAL—Shocking job numbers raise hopes for quicker recovery: A positive May jobs report has raised hopes of a faster recovery from the coronavirus-induced recession.
Economists had expected the unemployment rate to rise from a post-World War II record of 14.7 percent in April to Great Depression-era levels of 20 percent or higher. Instead, the economy added 2.5 million jobs and the unemployment rate dropped to 13.3 percent.
“It indicates the recession is over and the recovery has begun,” said Mark Zandi, chief economist of Moody’s Analytics.
The Hill’s Niv Elis and I break it down here.
Inside the jobs report:
- The stunning gains were mainly due to the return of 2.7 million workers from temporary layoffs or furloughs, half of them reporting back to restaurants, bars and other businesses in the leisure and hospitality industry.
- Keeping workers connected to their employers is crucial to a quick recovery, and experts see the swift end of some temporary layoffs as a strong start.
- Even so, 15.3 million workers haven’t returned from layoffs they believe will be temporary and it remains unclear how many of those job losses will become permanent. The number of permanent job losses in the U.S. also increased by 295,000 in May, raising questions about the durability of the rebound.
Still, the swift move in the right direction spurred hope among experts and investors as well as politicians seeking reelection.
“I had expected that the job losses would continue and that the unemployment rate would be higher, so I was surprised,” said Erica Groshen of Cornell University’s School of Industrial and Labor Relations, a former commissioner of the U.S. Bureau of Labor Statistics.
However, the report also had a cruel reminder of the plight facing African Americans amid the pandemic, the subsequent economic downturn and centuries of unequal treatment.
Black unemployment hit its highest rate in a decade in May despite the surge of jobs that lowered the national rate. For black workers, the May unemployment rate was 16.8 percent, a slight uptick from the 16.7 unemployment rate in April, according to BLS numbers.
LEADING THE DAY
Trump signs bill giving businesses more time to spend coronavirus loans: President TrumpDonald John TrumpTwitter CEO: ‘Not true’ that removing Trump campaign video was illegal, as president has claimed Biden formally clinches Democratic presidential nomination Barr says he didn’t give ‘tactical’ command to clear Lafayette protesters MORE on Friday signed legislation offering more flexibility for a program meant to provide aid to small businesses adversely impacted by the coronavirus.
Trump signed the bill, approved by the Senate earlier this week, during a Rose Garden event during which he cheered the surprisingly positive federal jobs report issued Friday morning.
The bill extends the window for businesses to spend loans granted under the Paycheck Protection Program (PPP), which was established by the $2.2 trillion coronavirus relief legislation signed at the end of March.
- The original coronavirus relief package gave businesses eight weeks to spend PPP funds. The bill signed into law Friday extends that period to 24 weeks.
- It also adjusts a 75-25 ratio included in the March bill requiring businesses to spend 75 percent of the loan on payroll and 25 percent on other fixed costs to a 60-40 ratio.
“I want to thank the Democrats. I think we had essentially unanimous votes in the Senate and the House,” Trump said at the news conference, calling it a “very important” piece of legislation. The bill passed the Senate by unanimous consent on Wednesday after the House approved the bill in a 417-1 vote last week.
The Hill’s Morgan Chalfant explains here.
ON TAP NEXT WEEK
- The House Financial Services Committee’s task force on financial technology holds a hearing on ways to improve the delivery of stimulus payments, 2 p.m.
GOOD TO KNOW
- Stocks closed out the week on a high note following an unexpectedly good jobs report Friday.
- Bankruptcies declared by businesses in the U.S. rose nearly 50 percent in May, as the economy continues to feel the sting of the coronavirus pandemic.