Unsanitized: The COVID-19 Report for July 2, 2020

Jobs Reports Struggle to Catch Up to Today's Reality
Plus, the case count/death count divergence at the state level

 

Shoppers mill about Garden State Plaza in Paramus, N.J., on Monday. The
June jobs report showed 4.8 million jobs gained, many in retail. (Seth
Wenig/AP Photo)

First Response

We got a rare Thursday jobs day thanks to the holiday, leading to a
simultaneous monthly report for June and a first-time jobless claim
report for last week. And they're telling two different stories.

The monthly report ,
for which the reference week was June 8, shows the height of the
reopening across the country. Put it this way, the jobs report
correlates pretty well with where infections are at in the past week or
two-elevated. The report shows 4.8 million jobs gained and an
unemployment rate down to 11.1 percent. Leisure and hospitality led the
way with +1.5 million jobs, about 40 percent of the total. Retail added
another 740,000. Even government jobs went up slightly, though this is
likely due to a complicated seasonal adjustment error
.

The reporting error that showed up in the last jobs report was more
muted this time, as questioners were better trained at classifying those
temporarily laid off as laid off rather than employed and absent from
work. The Bureau of Labor Statistics said in a note that this resulted
only in a 1 percent undercount, much smaller than the 3 percent
undercount in last month's report. So even if you apply that, the
unemployment rate is down to 12.1 percent from 16.3 percent last month.

By contrast, first-time jobless claims remained high
,
hovering at around 1.4 million for last week. And continuing claims
increased slightly. Over 31.1 million Americans are taking jobless
benefits right now, either regular benefits or the special "Pandemic
Unemployment Assistance" for gig workers and freelancers.

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The difference is clear: the June jobs report references a moment when
state governors were allowing restaurants and bars and retail shops to
reopen, and the first-time jobless report references last week, as
governors in many states put a pause on that process. This only worsened
this week. It shows the difficulty of using a monthly barometer like the
jobs report to supply information during a fast-moving pandemic, which
can rebound and change the economy much more quickly than a month at a
time.

In the face of this, Senate Democrats just unveiled a plan to tie
expanded unemployment to the monthly jobless rate
.

That seems... wrong for this particular crisis? The bill, from Sens. Ron
Wyden (D-OR) and Chuck Schumer (D-NY) would start phasing out the
$600/week boost when unemployment in a particular state falls below 11
percent. The state numbers come later in the month, but if the national
rate is tentatively at 11.1 percent, many states are likely below that.
And if you only get a monthly snapshot, you're not going to catch up
to increases in cases necessitating lockdowns. You could have a
worker's unemployment check drop for a month at the precise moment
when it's more difficult to get a job. If we had a vibrant public job
sector, maybe this would be fine, but we don't.

In fairness, the Wyden/Schumer calculation is based on a rolling
three-month average, which would smooth out the kinks a little bit. And
the decrease is only $100/week for each percentage point, until it fully
phases out once unemployment hits 6 percent. The three-month lag, of
course, could mean that "good" months linger in the calculation when
the state of things has radically changed. And an individual seeking
work is disconnected to everyone around her seeking work, yet her
unemployment benefits will rely on the level of unemployed, which is a
little odd.

The proposal also maintains gig/freelancer benefits until next March,
and extends benefit weeks, both with triggers tied to the state
unemployment rate. The biggest impediment to "automatic stabilizers"
like this has been the Congressional Budget Office, so good for Wyden
and Schumer for not waiting for, or worrying about, a score. And in
general, I prefer automatic stabilizers too. But they're inevitably
tied to a lagging indicator when the virus moves quickly. In the current
environment, with unemployment replacing so much lost income, it might
create a yo-yo effect, with lowered benefits leading to tighter consumer
spending leading to higher job loss leading to higher benefits.

Automatic stabilizers that rescue people in moments of crisis happen to
have solid support across the country, with 79 percent support

according to a Groundwork Collaborative poll. And three-quarters of
voters

want expanded benefits to continue right now. But Senate Republicans
want expanded benefits to die
,
and the outdated June jobs report will give them ammunition. Even though
we haven't even climbed more than one-third of the way out of the hole
created by pandemic job loss, the direction of the gains will create a
narrative of success that will spur Republicans to cut off benefits.

The narrative is that expanded benefits are a disincentive to work,
which doesn't at all square with 7 million people going back to work
in May and June. Ultimately, the virus, not the level of unemployment
benefits, is dictating the state of the job market. We need a policy
response to fit those particular circumstances.

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The Missing Rise

Case counts reached 50,000

in the U.S. on Wednesday; death counts remained at 697, lower than a
week ago. This anomaly has been covered in this space

for a couple weeks, and I wanted to do a slightly deeper dive on it.

So I went to the COVID Tracking site
and pulled out the data for the fifteen states with the most intense
rises in cases right now, to see if the national aggregate was hiding
any state spikes in deaths. Of those fifteen states, only
three-Arizona, Texas, and South Carolina-showed anything close to an
increase in deaths. In the other twelve, deaths are sloping down,
despite cases rising for a month. For South Carolina
the increase is
barely visible. Arizona and Texas do seem to be having more trouble,
though in Arizona
that's driven by two outlier days (one yesterday) with a lot of
deaths, and in Texas really
by yesterday's total (otherwise you'd see a plateau). Meanwhile,
case rises and even hospitalizations all happened a month ago.

If hospitals can't handle patients

in these states more deaths will occur by default, which is why it's
imperative to get a handle on cases. And the real death toll is just
obviously higher

than the official number; at best we're looking at trends.

Everyone is bracing for the worst
,
which is appropriate. But it's really the case that treatment has
improved

after six months of dealing with the disease, that medical interventions
are happening earlier with better testing, that older people are being
more wary of infection and higher caseloads are seen in the young. This
pandemic is bad news if only 100 people die per day, and we're far
from that. But I just wouldn't expect the kind of numbers we saw in
April.

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Days Without a Bailout Oversight Chair

[link removed]
97
.
But I'm not alone! Public Citizen and 27 other groups have written to
Congressional leadership
,
demanding a chair to the Congressional Oversight Commission without
further delay. The lack of a chair means no staff, no hearings, and
oversight that's muted at best. Given that this was a rallying point
for Democrats on the CARES Act, it should be embarrassing to their
leadership that this position remains unfilled.

Meanwhile, the Wall Street Journal blares that junk bonds are suddenly
underperforming

(they've been in the same range for a month). Yet collateralized loan
obligations tied to junk bonds are soaring
,
thanks to the Fed backstop. This could be a subject of inquiry for the
bailout oversight chair!

We Can't Do This Without You

Today I Learned

* The House passed the PPP deadline extension

that the Senate passed earlier. (USA Today)

* The U.S. scoops up the global supply

of remdesivir. (The Guardian)

* Congratulations, we're all the proud owners of a trucking company
.
The government took a 30 percent equity stake for an emergency $700
million loan to YRC Worldwide. Equity stakes are good. (Washington Post)

* Airlines reach deals

on their emergency loans. (CNBC)

* By contrast, nobody seems

to want to use the Main Street Lending Program. (Wall Street Journal)

* Still a lot of weddings going on
,
in a tempt of fate. (The Cut)

* Plenty of people didn't want to wear a mask

in 1918 either. (Washington Post)

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