Jobs bounce back ... but not fast enough — Labor power may not last — Corporate pledges fall flat

From: POLITICO's Morning Money - Tuesday Jul 06,2021 12:03 pm
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By Ben White and Aubree Eliza Weaver

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Quick Fix

Jobs bounce back… but still not enough — The June jobs report at 850K was a relief after two crummy months. The report is likely to ease some pressure on President Joe Biden over the labor market's slower-than-expected recovery. The GOP has hammered Biden over generous federal jobless benefits, which governors and lawmakers say are among the reasons workers have been reluctant to reenter the market.

While the June jobs figure would be considered outstanding during normal economic times, it is still nowhere near the kind of growth needed to quickly restore the jobs that remain missing since Covid slammed the U.S. in the spring of 2020. The U.S. is still about 7 million jobs short of February 2020 levels. And that figure actually understates the damage done given the number of jobs that would have been created absent Covid.

Pantheon’s Ian Shepherdson : “[M]ost of the improvement from the 583K headline increase in May was in the state and local government sector, while the increase in June private sector payrolls was not statistically significantly bigger than in May.

“And total payrolls remain some 8.8M short of the level we would have expected if the Covid pandemic hadn't happened. At the current rate of increase, that gap won't disappear for more than a year. Progress would be much faster if millions of people missing from the labor force return, but that's not happening in size yet.”

But labor power still may not last — Our Megan Cassella: “Wages are rising, employers are giving hiring bonuses and more Americans are quitting their jobs, sparking hopes from the White House on down that the workers who were hit hardest by the pandemic are finally being empowered. Even labor advocates, however, say that newfound leverage is unlikely to last. …

“[W]ithout significant structural changes — including legislation aimed at increasing workers’ bargaining power — the labor market will return to normal in a matter of months, handing the balance of power back to employers where it has been trending for decades, economists and worker advocates say.”

GOOD TUESDAY MORNING — Happy Tuesday from Aberdeen, Md., where MM remains for a kid baseball tournament that runs through today at the fantastic facility run by Cal Ripken and his family. 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.

 

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HOW BIG WILL BIDEN GO ON HOUSING? — Our Katy O'Donnell: “Biden’s move to fire the top U.S. mortgage regulator is triggering calls from fellow Democrats to use the agency to expand access to loans for lower-income people, who have struggled to buy homes since the financial crisis.

“That’s setting up a clash with Republicans over how far the government should go in shaping an industry that makes up one-fifth of the U.S. economy. … Progressives are concerned that Biden will be too timid in changing course at the powerful agency overseeing Fannie Mae and Freddie Mac, the two companies that stand behind half of the $11 trillion U.S. mortgage market. Top Democrats are calling on Biden to quickly name a permanent leader"

WOW THAT WAS FAST — “6 months after Capitol assault, corporate pledges fall flat,” by AP’s David Klepper: “Dozens of big companies, citing their commitment to democracy, pledged to avoid donating money to the 147 lawmakers who objected to Congress’ certification of Joe Biden’s victory … It was a striking gesture by some of the most familiar names in business but, as it turns out, it was largely an empty one. …

“When it comes to seeking political influence through corporate giving,business as usual is back, if it ever left. … The companies contend that donating directly to a candidate is not the same as giving to a PAC that supports them. Given America’s porous campaign finance laws, that’s a distinction without a difference to campaign finance experts. … Walmart’s moral stand lasted three months.”

GOP HITS BIDEN ON GAS PRICES — Our Matthew Choi:”Americans are hitting the road in droves … and Republicans are turning to another tried-and-true tradition: blaming the president for high gasoline prices. Prices at the pump have climbed to a national average of $3.126 per gallon, nearly $1 higher than a year ago when the nation was cooped up at home as the pandemic raged. …

“GOP operatives and lawmakers are ramping up their focus on gas prices, and rising inflation more broadly, to counter other areas of the Biden economy — such as jobs and wages — that are delivering strong gains for U.S. workers as they emerge from the pandemic. They’re hoping to blunt some of the political upside for Biden by highlighting the most visible product price across the U.S., one that’s long been a source of irritation for American drivers.”

Markets

WORLD SHARES CLING NEAR RECORD HIGHS — Reuters’ Tom Arnold and Kevin Buckland: “World stocks clung close to record highs on Monday as worries about the Delta variant of Covid-19 offset positive sentiment from surging euro zone business activity and a welcome U.S. jobs report.

“The STOXX index of 600 leading European companies was flat, reversing earlier losses after data showed euro zone businesses expanded activity at the fastest rate in 15 years in June. … S&P 500 futures signaled a 0.1 percent dip for Tuesday's open, after the index closed 0.8 percent higher at a record on Friday. The Dow Jones Industrial Average rose 0.4 percent and the Nasdaq Composite added 0.8 percent to also hit a record.”

BITCOIN RESUMES LOSING STREAK — Bloomberg’s Cecile Gutscher: “Bitcoin started off the week on the backfoot after a recovery over the weekend proved fleeting. The largest cryptocurrency dropped as much as 6.3 percent Monday and was trading at $33,656 as of 3:15 p.m. in London. Strategists have cautioned that a break below the key $30,000 level could spell trouble, while a move toward or above $40,000 is seen as heralding further gains.”

CHINA WIDENS DATA-SECURITY PROBE OF U.S.-LISTED TECH COMPANIES — WSJ’s Chong Koh Ping and Serena Ng: “A unit of China’s cybersecurity regulator launched data-security reviews of apps operated by two U.S.-listed Chinese companies, days after announcing a similar probe into ride-hailing giant Didi Global Inc.

“The latest action targets two truck-hailing apps operated by Full Truck Alliance Co. and an online recruiting app owned by Kanzhun Ltd. Both companies went public in the U.S. in June. Like Didi, they were ordered to stop adding users while the probes are conducted.”

 

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Fly Around

WHY MORE HIGHWAY SPENDING WON’T REV UP THE ECONOMY — WSJ’s David Harrison: “One of the few things that Democrats and Republicans agree on is that spending billions of dollars on America’s roads would boost productivity and the U.S. economy’s growth prospects. Economists aren’t so sure. A wide body of research focused on the effects of highway spending suggests that major new investment in U.S. roads would generate little, if any, long-term economic gain.

“While the projects would spur hiring and spending temporarily, both when they are announced and under way, they aren’t likely to raise the economy’s productivity and, in turn, its overall growth potential in a lasting way, many researchers find. That is because the U.S. already has an extensive system of roads, so building more wouldn’t add much to productivity, economists say.”

FEWER WORKING-AGE PEOPLE MAY SLOW ECONOMY. WILL IT LIFT PAY? — AP’s Christopher Rugaber: “As America’s job market rebounds this summer and the need for workers intensifies, employers won’t likely have a chance to relax anytime soon. Worker shortages will likely persist for years after the fast-reopening economy shakes off its growing pains. Consider that the number of working age people did something last year it had never done in the nation’s history: It shrank.”

DIDI CYBER PROBE BLINDSIDES SHAREHOLDERS DAYS AFTER DEBUT — Reuters’ Julie Zhu, Kane Wu and Scott Murdoch: “Chinese regulators have gained a reputation for aggressive action, but even hardened investors were shocked by the announcement of a probe into ride-hailing firm Didi just two days after its $4.4 billion New York stock market debut.

“While Didi's initial public offering prospectus did mention some of the regulatory risks to its operations, there was no indication that the Cyberspace Administration of China would begin investigating the company and ban it from accepting new users during the review.”

CREDIT SUISSE HIRES GOLDMAN TECH VET IN MANAGEMENT REVAMP — WSJ’s Margot Patrick: “Credit Suisse Group AG hired a top technology executive from Goldman Sachs Group Inc., the latest revamp to the Swiss bank’s management team in the wake of twin scandals. Joanne Hannaford will become the bank’s new chief technology officer and chief operating officer, replacing James Walker in the COO role. Mr. Walker will become deputy chief executive officer at Credit Suisse’s U.S. holding company, the bank said.”

 

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