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Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | | |  | | By Ben White and Aubree Eliza Weaver | Editor’s Note: Morning Money is a free version of POLITICO Pro Financial Services' morning newsletter, which is delivered to our s each morning at 6 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro. | | | So is the economy really stalling? — The April jobs report was hot garbage, nearly 800,000 below expectations raising questions about whether jobless benefits are slowing the supply of workers for businesses that are clearly eager to hire. Or perhaps companies are not paying high enough wages to lure people out of their Covid caves. Or maybe it was just a one-month glitch that will get reversed with a blockbuster May number. We wrote about the conundrum and the policy battles it kicked off right here with Rebecca Rainey. Monthly jobs numbers, especially coming out of deep recessions, can be highly volatile. And any single number can turn out to be an anomaly reversed in subsequent months. Most other data suggest both a strong recovery and a vibrant labor market. … In August of 2011 for example, the economy created exactly zero jobs, raising fears of a double-dip recession that never materialized. Steady job growth continued the following month. Pantheon’s Ian Shepherdson: “There is nothing definitive here and we will know a lot more after the May numbers and we’ll find out whether something real is happening or this is just noise and problems with seasonal adjustments a year after Covid first hit … “People with big mouths can bang the table and say they know exactly what happened, but they don’t and we won’t know for a while.” Moody’s Mark Zandi: “This [was] a pretty shocking report for sure, but it doesn’t really dent my optimism at all … You often get these weird, curveball numbers coming out of recessions and this is the month we got the weird curveball. I really would not put a whole lot of weight on this number and would be really surprised if it doesn’t get revised higher.” I also talked about the bizarrely low jobs number with our Renuka Rayasam for POLITICO Nightly. GOOD MONDAY MORNING — Hope everyone had a lovely Mother’s Day weekend! Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben . Email Aubree Eliza Weaver on aweaver@politico.com and follow her on Twitter @AubreeEWeaver. | | | | SUBSCRIBE TO "THE RECAST" TODAY: Power is shifting in Washington and in communities across the country. More people are demanding a seat at the table, insisting that politics is personal and not all policy is equitable. The Recast is a twice-weekly newsletter that explores the changing power dynamics in Washington and breaks down how race and identity are recasting politics and policy in America. Get fresh insights, scoops and dispatches on this crucial intersection from across the country and hear critical new voices that challenge business as usual. Don't miss out, SUBSCRIBE . Thank you to our sponsor, Intel. | | | | | | | | President Biden will continue to make the case that the slowing jobs numbers simply reinforce the need for his $4 trillion infrastructure and family plans with remarks on the economy Monday afternoon … Biden will meet with bipartisan Congressional leaders on Wednesday to take about “areas of mutual agreement” on infrastructure and other policies … On Thursday, Biden will “meet with Senator Capito, Senator Barrasso, Senator Blunt, Senator Crapo, Senator Toomey, and Senator Wicker about the best ways to invest in American infrastructure.” KASHKARI ON THE JOBS NUMBER — Our David Cohen: “It’s not one specific thing related to Covid-19 that is keeping the economy down, but everything related to the pandemic, the president of the Federal Reserve Bank of Minneapolis said on Sunday. “Speaking on CBS’s ‘Face the Nation,’ Neel Kashkari said it was a complex series of factors that led to Friday’s disappointing jobs report, which showed that only 266,000 jobs were created in April, far below expectations. ‘This is unlike any other economic shock in any of our lifetimes,” he told host John Dickerson. … ‘It wasn’t simply the lockdowns from the government that put a damper on the economy … It was each of us, each of your viewers, each family taking actions to protect themselves.” NO ESTIMATE ON GIANT PIPELINE OUTAGE — Our Ben Lefebvre: “The company that operates the biggest gasoline conduit to the East Coast said … it had no estimate on when it could restart the 5,500-mile pipeline that it shut Friday after a cyberattack, boosting fuel prices in jittery financial markets to their highest level in three years. “Most of the Colonial Pipeline, which supplies nearly half of the East Coast's transportation fuel from the hub of refineries near Houston, remains offline for now … though it restarted some smaller lines that run off the main arteries. Any sustained outage could threaten to push up retail gasoline and diesel prices at the pump just weeks before the start of the summer high-demand driving season.” MORE ON THE SHOCKING JOBS REPORT — Mohamed A. El-Erian on Bloomberg Opinion: “What materialized … was a huge disappointment that constituted the biggest data miss on record. While firm conclusions about the reason will have to wait for more data over the next few weeks and months, the available partial evidence suggests possible stress and strains in the labor market’s ability to match workers to what seems to be an ample demand for them.” | | | AS SCRUTINY OF CRYPTOCURRENCY GROWS, THE INDUSTRY TURNS TO K STREET — NYT’s Eric Lipton: “When federal regulators late last year accused one of the world’s most popular cryptocurrency platforms of illegally selling $1.38 billion worth of digital money to investors, it was a pivotal moment in efforts to crack down on a fast-growing market — and in the still-nascent industry’s willingness to dive deeply into the Washington influence game. “The company, Ripple Labs, has enlisted lobbyists, lawyers and other well-connected advocates to make its case to the Securities and Exchange Commission and beyond in one of the first big legal battles over what limits and requirements the government should set for trading and using digital currency.” JUSTICE DEPARTMENT PROBING FINTECHS OVER PPP LOAN CALCULATIONS — Reuters’ Koh Qing and Pete Schroeder: “The U.S. Department of Justice is investigating whether financial technology companies including Atlanta-based Kabbage Inc may have erred while distributing billions of dollars in pandemic aid to struggling small businesses, three people with knowledge of the matter told Reuters. "The investigation, led by the Justice Department's civil division, is examining whether Kabbage and other fintech companies miscalculated how much aid borrowers were entitled to from the Paycheck Protection Program (PPP) due to confusion over how to account for payroll taxes, the three people said.” SOME STARTUPS WENT FROM RESCUE PPP LOANS TO SPAC WINDFALLS — WSJ’s Heather Somerville: “Thousands of venture-capital-backed startups applied for U.S. government-assistance loans when the pandemic hit. Many of them then went on to raise hundreds of millions of dollars each by going public. More than 30 venture-funded tech startups with valuations of more than $150 million announced a deal with a special-purpose acquisition company, or SPAC, within about a year of receiving taxpayer-funded forgivable loans designed to help small businesses pay their employees through the pandemic. “Another 15 companies, each valued at more than $200 million, had traditional initial public offerings within about a year of taking a loan, according to a Wall Street Journal analysis of data provided by research firm PitchBook Data Inc.” | | | | SUBSCRIBE TO WEST WING PLAYBOOK: Add West Wing Playbook to keep up with the power players, latest policy developments and intriguing whispers percolating inside the West Wing and across the highest levels of the Cabinet. For buzzy nuggets and details you won't find anywhere else, subscribe today. | | | | | | | | ECNOMISTS DISAGREE OVER HOW MUCH ‘HERD IMMUNITY’ NEEDED FOR RECOVERY — WSJ’s Phred Dvorak: “As countries rush to get their citizens vaccinated, a debate is heating up among economists about how much herd immunity matters for the world’s economic recovery—or even if it does. “Some view herd immunity—the point at which a critical mass of a population become immune to a disease-causing virus or bacteria—as a key factor in determining when Covid-19 will be conquered and economies will return to normal. Until herd immunity is reached, some say, governments will restrict activities to prevent the disease’s spread, resulting in fewer goods and services being produced and consumed. Other economists say businesses can reopen and economic activity can rebound without full herd immunity, and likely will.” DID HIRING SLOW BECAUSE OF A ‘LABOR SHORTAGE’? — AP’s Christopher Rugaber: “The anticipation for the U.S. jobs report for April, released Friday morning, was high. Most experts agreed that after a yearlong pandemic, tens of millions of layoffs and widespread disease and death, a likely second straight month of nearly 1 million added jobs would send a clear signal: The economy was bounding back toward full health after a devastating recession. “Instead, the report was a clunker. To nearly everyone’s surprise, employers added a comparatively paltry 266,000 jobs, down drastically from a gain of 770,000 in March, which itself was revised down from an initially much higher figure of 916,000.” RAIMONDO: U.S. STILL HAS A LONG WAY TO GO TO RECOVER FROM COVID — Reuters: “Many Americans are still struggling to return to work after the coronavirus pandemic and last week’s lower-than-expected jobs numbers were a reflection of that, Commerce Secretary Gina Raimondo said on Sunday. ‘I think we have a long way to go to recover from the pandemic,’ Raimondo said on CBS’ ‘Face the Nation’ program. ‘There are so many Americans still struggling’ and 8 million fewer jobs than there were before the pandemic, she said.” KASHKARI SAYS JOB MARKET STILL NEEDS HELP TO HEAL — Bloomberg’s Alister Bull: “The U.S. labor market remains in a ‘deep hole’ and needs aggressive support to speed its healing from the Covid-19 pandemic, said Federal Reserve Bank of Minneapolis President Neel Kashkari. ‘We are still somewhere between 8 and 10 million jobs below where we were before the pandemic,’ Kashkari said Sunday on CBS’s ‘Face the Nation.’ He said there was ‘some truth’ to the idea that enhanced jobless benefits create a disincentive to returning to work.” FUTURE FOR PRIVATE-EQUITY STOCKS DOESN’T REST ON TAXES — WSJ’s Telis Demos: “Taxes have long been a key element of the business of private equity. But while past tax regime changes have been big moments for the industry, that might not be the case for the Biden administration’s proposals. “One revenue stream for private-equity firms is what is known as carried interest, or the slice of the profits on their limited partners’ investment gains that the firms get to keep. Crucially, carried interest has been taxed at the capital-gains rate. Critics have long argued it is more akin to labor income — i.e. being paid for work — than investment gains, but that treatment has remained.” | | | | Follow us on Twitter | | | | Follow us | | | | |  |
