Economist On How Strong Jobs Report And New Coronavirus Outbreaks Affect U.S. Economy
MARY LOUISE KELLY, HOST:
President Trump kicked off this holiday weekend by highlighting increases in U.S. jobs numbers and the stock market.
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PRESIDENT DONALD TRUMP: Today's announcement proves that our economy is roaring back. It's coming back extremely strong.
KELLY: But with the coronavirus surging in many parts of the country, some governors and mayors are pulling back on their reopening plans. Texas and much of California, for example, are once again under orders to close bars and limit restaurant openings, and many beaches around the country will be shut down this holiday weekend. So what does this mean for the economy? That is a question for Douglas Holtz-Eakin. He was chief economist for George W. Bush's Council of Economic Advisers and an economic policy adviser to John McCain. Welcome.
DOUGLAS HOLTZ-EAKIN: Well, I'm glad to be on. Thank you.
KELLY: Those words - roaring back extremely strong that we just heard the president use - do you agree with his assessment of the economy?
HOLTZ-EAKIN: Well, the good news is the job report was extraordinarily strong - 4.8 million new jobs created. The unemployment rate measured more accurately than in the past and still going down to 11.2% - nothing bad in there. The unfortunate news is those data were collected the second week in June, and since then, we've seen these outbreaks. And so it's the next jobs report that's in peril.
KELLY: OK. So those numbers, as you note, the president was touting - they reflect a time period before this spike in the coronavirus got quite so awful-looking.
HOLTZ-EAKIN: Yes. And there are about 18 million Americans who are identified as temporarily unemployed. So it's easy to get them back quickly, and we've seen that in both May and June. Now with the outbreak, it's easy to make them temporarily unemployed again, and so that's the concern.
KELLY: Yeah. You know, we always hear the stock market is not the economy. Jobs numbers obviously don't represent the full economy, either. I mean, just overall, what is the picture you're looking at of our country in this particular moment heading into July 2020?
HOLTZ-EAKIN: The really good news is that we've created, you know, 7.5 million new jobs in the past two months. And the bad news is we're still 15 million jobs short of where we were in February. So we have a long way to go, and it will require sustained effort on the public health front to make people feel safe enough to go to work and to go out to enjoy American commerce.
KELLY: All right. And that's the challenge right now when, as we just noted, a lot of businesses are moving in the other direction, even ones that had reopened. Some of them are shutting down again.
HOLTZ-EAKIN: Well, I think one of the concerns is that our strategy has relied so much on these lockdowns that take an enormous toll on the economy, and it's essentially a strategy of hiding from the virus. We're going to have to accept the fact that the virus is here and is going to be here for the foreseeable future and find a way to operate the economy in the face of the virus - make the workplace safer, make the places where we shop and do commerce safer. And that's going to involve testing, face masks, spacing, all sorts of efforts that have so far not been widespread enough.
KELLY: All right. Do you buy into the economy that there is - do you buy into the idea - pardon me - that there is an inherent tradeoff; that there's a tension; that staying home, other measures, social distancing and so forth - things that might be good to contain the virus - that they're bad for the economy and business and vice versa?
HOLTZ-EAKIN: It's a very simple proposition at the moment. We have a problem in getting people to work. And if they can't be at work, they can't produce things, and so they won't have the incomes. And so we have to find a way to get people to work, and that's going to have to involve making them confident that it's safe to go to work. And that can be done by physically changing the workplace, by providing more protective equipment, providing therapeutics, testing, a whole array of things that would be ways to aid that effort.
KELLY: Yeah. Is there a particular milestone you are looking forward to? You know, a lot of people will say they don't think anything's going back to anything remotely resembling normal or healthy until there's a vaccine.
HOLTZ-EAKIN: I think that what we know about the start of the downturn is that people lost confidence in being able to go out. And so in particular, they stopped going to the doctor. So I keep a close eye on whether the health sector returns to normal functioning and people have elective surgeries, preventive visits, things like that. Those are the indicators that the conference has returned.
KELLY: Yeah. We just have a few seconds left, but I wonder if you have a single piece of advice for the president or for his opponent, Joe Biden, heading into a presidential election in the midst of a financial crisis.
HOLTZ-EAKIN: I think no magical thinking on either the virus - it's not going to go away, and the vaccine won't be here quickly. No magical thinking on the economy - there's no stimulus or infrastructure or check that's going to make things come back quickly. It's going to be hard work on both fronts, and we have to accept that fact and get to it.
KELLY: That is Douglas Holtz-Eakin, now president of the American Action Forum. He was chief economist of President George W. Bush's Council of Economic Advisers. Thanks so much for your time. Happy Fourth.
HOLTZ-EAKIN: Thank you. Happy Fourth.
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