Economy

Unemployment Climbs, Kudlow Says No Stimulus

JM Ashby
Written by JM Ashby

The unemployment rate climbed to a post-Great Depression high of 14.7 percent during the month of April according to the latest report from the Bureau of Labor Statistics and that does not include a significant number of people.

At least 20.5 million jobs were lost last month, but several million more people lost their jobs in the last week and the statistics do not include many others.

The trail of job losses was heaviest at restaurants, retailers and hotels, but every major industry suffered. The health-care sector even lost nearly 1.5 million jobs amid the worst health crisis in American history, according to the Labor Department data released Friday morning. [...]

If millions of Americans who have been furloughed and expect to return to their jobs are counted, the Bureau of Labor Statistics said the jobless rate would have almost 5 percentage points higher at nearly 20%.

A broader measure of unemployment that includes discouraged job seekers and other people on the fringes of the labor market skyrocketed to a record 22.8% in April, painting an even grimmer picture.

In related news, Trump's top economic adviser, Larry Kudlow, appeared in front of cameras this morning where he said the White House will not talk to members of Congress about stimulus for the rest of the month for the most foolish of reasons.

They apparently drank their own Kool-aid and believe the economy will return to normal over the next four weeks.

WASHINGTON (Reuters) - The White House has halted talks with Congress over any further coronavirus stimulus package as it awaits the impact U.S. state reopenings have on the economy this month, White House economic adviser Larry Kudlow told reporters on Friday.

“Well we just had another big infusion,” Kudlow said with regard to why there was a pause in talks. [...]

“No one could look at today’s jobs report, the highest unemployment since the Great Depression, and say we should hit the pause button on further government action,” U.S. Senate Democratic leader Chuck Schumer said in a statement. “We need a big, bold approach now to support American workers and families.”

Unemployment is mostly likely going to be even higher at the end of this month, not lower, even as some businesses reopen on a limited basis. Consumer demand in the services sector, which represents the lion's share of the economy, is not going to be "normal" anytime soon and possibly not even this year. The Congressional Budget Office (CBO) estimates that unemployment will average at least 10 percent through 2021.

But the White House isn't hitting the pause button on stimulus for economic reasons. This is a political message.

To agree to sign or even talk about more stimulus is to say that the economy is still in trouble and needs more help. Trump wants to project confidence and an image of normalcy even if it requires an enormous amount of magical thinking to believe in it. Trump's only chance to be reelected depends on getting enough people to think things are normal, so he will most likely spend the rest of the year congratulating himself even though our expected death toll from the virus is now well above 100,000.

I do not necessarily expect the Trump regime's refusal to talk about stimulus will actually last for the rest of month, but that's this week's message. The message is that things will be "great again" soon.

  • muselet

    Kevin Drum has, as I’ve mentioned before, a somewhat contrarian view of the employment situation:

    This is ridiculous. It’s like passing Prohibition and then following up with a breathless headline about people buying less booze. I mean, if you literally order 30 million people to stop working, then of course the BLS is going to report that 30 million jobs have been “lost.” It’s completely meaningless.

    Which I agree with.

    That doesn’t mean the people who are newly without jobs don’t need help, or that the government shouldn’t do what it can to keep individuals and businesses afloat financially (not for stimulate the economy, just as a stopgap until the economy can restart), it just means that obsessing about the unemployment rate is unhelpful.

    As for the White House, the “impact U.S. state reopenings have on the economy” will probably be a sharp spike in Covid-19 cases, followed hotly by reimposition of shelter-in-place orders and a sharp drop in economic activity. Except in red states, where the spike in cases will be followed by yet more cases and yet more deaths, and a sharp drop in economic activity.

    Regardless, the federal government is going to have to keep deficit spending until testing and tracking are universally available. Over, naturally, the loud and irrational objections of the Rs, and the armed ninnyhammers pestering various legislatures and governors about their god-given right to infect non-stupids with a deadly disease.

    I hate this timeline.

    –alopecia

    • JMAshby

      I don’t agree that it’s meaningless because the reason the numbers are so high is because of our poor response; Trump’s response. And a significant number of people aren’t going to return to work because there won’t be anything to go back to.

      In short: things are worse than they had to be if the Trump regime had done anything at all in February

      • muselet

        Even if the US had done everything exactly right back in January and February, the unemployment numbers would still have looked cataclysmic, because “exactly right” would still have included shelter-in-place orders. People would have been laid off and some businesses would have failed.

        The difference is that in the “exactly right” timeline, those shelter-in-place orders would have been relatively short-lived, until testing and tracking could be rolled out (well, plus a few weeks to account for the incubation period); also, we’d still be doing social distancing until a vaccine was widely available. In our timeline, the administration sat on its collective thumb because Donald Trump was laser-focused on hyping the economy and didn’t (doesn’t) give a monkey’s about the death toll. Or testing. Or tracking. Or a vaccine.

        So yes, you’re right, things are worse than they could and should be, mostly because of incompetence in the administration.

        Kevin Drum’s point (and mine) is that comparing the unemployment rate to that seen during the Great Depression is misleading.

        –alopecia