Business & Economy

On The Money: Unemployment gains lower than expected | Jobs report lights fire under coronavirus relief talks

by Sylvan Lane

Happy Friday and welcome back to a special Jobs Report Day edition of On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

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THE BIG DEAL—Dismal jobs report lights fire under COVID-19 relief talks: Growing momentum behind a long-sought coronavirus relief deal accelerated Friday after the release of the November jobs report spiked fears about the state of the economy.

Congressional leaders in both parties had appeared to make progress toward breaking a months-long stalemate over another round of economic aid throughout the past week.

But the Friday morning arrival of a weak November jobs report made clear the potential risks of inaction and may have brought Democrats and Republicans closer to a deal.

Breaking down the November jobs report: The pace of job growth was widely expected to slow for the fifth consecutive month in November as skyrocketing coronavirus cases continued to strain the U.S. economy. But the actual decline between October and November’s job gains was far worse than projected by economists.

  • The U.S. added just 245,000 jobs in November, well below the roughly 400,000-increase expected by economists and much lower than the 610,000 jobs added in October, according to revised figures released Friday by the Labor Department

  • While the unemployment rate fell from 6.9 percent to 6.7 percent, the drop was attributable in part to a decline in the labor force participation rate.

  • The November jobs report also showed stagnation in several hard-hit sectors that had steadily regained jobs they hemorrhaged during the onset of the pandemic

I’ve got more on the ins and outs of the report here.

What it means: The surprisingly steep drop-off in job gains last month is a red flag for the fragile economy. 

  • A monthly gain of 245,000 jobs in the pre-pandemic economy would have been cause for celebration in the pre-pandemic economy, and the U.S. has now regained roughly 11.6 million of the 21 million jobs lost to the onset of the pandemic.

  • But the U.S. has yet to recover about 9.4 million of the jobs claimed by COVID-19, and the looming winter will make it harder for businesses to adapt to the pandemic.

  • Skyrocketing coronavirus cases, hospitalizations and deaths have also prompted more states to reimpose business restrictions, and the raging pandemic has suppressed economic activity even without curbs on capacity and operations.

Washington responds: Democrats and Republicans don’t typically view our tout monthly jobs reports from the same perspective despite the non-partisan nature of how the data is compiled. But the disappointing jobs report evoked rare agreement among both parties, which may help clear the path to a deal.

  • “This is a grim jobs report. It shows an economy that is stalling. It confirms we remain in the midst of one of the worst economic and jobs crises in modern history,” said President-elect Joe Biden.

  • “There’s still over 10 million people who are jobless. And that’s not good. That is hardship. And, by the way, that should be a target with any assistance package,” Larry Kudlow, the top White House economic adviser, told reporters.

  • “The alarming November jobs report is another urgent warning that real relief is needed to crush the virus, stop the mass layoffs of essential workers and put money in the pockets of the American people,” said Speaker Nancy Pelosi (D-Calif.) in a statement.

  • “What I’m seeing now I’m not liking it. Today’s unemployment report, it missed its mark, OK? But more importantly it revealed some of these structural underlying issues that we’re going to have to deal with,” said White House trade adviser Peter Navarro to reporters.

The impact on coronavirus relief talks: There had already been signs of progress toward a deal before Friday’s jobs report. 

  • Pelosi and Senate Minority Leader Charles Schumer (D-N.Y.) dropping their opening bid from a nearly $2 trillion bill to a $908 billion bipartisan, bicameral offering released this week was seen as a major step toward an agreement. 

  • Majority Leader Mitch McConnell (R-Ky.) told reporters Tuesday that he expected coronavirus relief to be added to a must-pass government funding bill and spoke Thursday with Pelosi about the need to approve more aid. 

  • Senate Republicans are also pressuring McConnell to accept a deal even if it’s more expensive than the $500 billion measure he introduced.

When the November jobs report came out, the urgency on all sides appeared to increase.

  • Biden urged Congress during a Friday press conference to pass the $908 billion bipartisan bill backed by Pelosi and Schumer as soon as possible and pass another measure once he takes office in 2021.

  • Pelosi said earlier in the day that Congress cannot afford to break before passing more coronavirus relief and vowed not to take up any measure that did not have sufficient bipartisan support.

  • Both Kudlow and Navarro both reiterated the need for another relief bill in interviews Friday, emphasizing the need for targeted aid to hard-hit industries and the unemployed.

The remaining obstacles: Of course, there are plenty of things that still need to happen and plenty of things that can still go wrong before a deal reaches Trump’s desk.

  • The passage of coronavirus relief is closely tied to reaching a deal on another government funding bill, which negotiators are still trying to finish.

  • There’s also some opposition from progressive Democrats over the bipartisan measure backed by Pelosi and Schumer. Sen. Bernie Sanders (I-Vt.) came out against the bill Friday, and several Democratic lawmakers are pushing to include another round of direct payments in an eventual deal.

  • President Trump, the perennial wild card in any bipartisan negotiation, has also been largely silent on the negotiations. He’s thrown late wrenches into talks before, so you can never rule it out.

GOOD TO KNOW

  • Stocks on Friday closed at new highs, brushing aside signs of a slowing recovery as the prospects for a lame duck COVID-19 relief bill grow.

  • The Cheesecake Factory has settled charges filed by the Securities and Exchange Commission (SEC) over misleading disclosures about the impact of the COVID-19 pandemic on its business.

  • The House on Friday passed sweeping legislation that would decriminalize marijuana at the federal level, the first time either chamber of Congress has voted to legalize cannabis.

  • Two CNBC hosts got into an extraordinary early morning fight over COVID-19 restrictions and masks on Friday during a discussion over how restaurants are being devastated by the pandemic.

  • Two additional coal companies this week filed for bankruptcy as the coronavirus pandemic accelerates an already existing decline in the industry.