#1 Jobs  President Biden: “We’re going to be talking about the recovery package, but we saw the jobs report that only 6,000 private sector jobs have been created.  And at that rate, it’s going to take 10 years before we get to full employment.” US employment data released today showed a small increase in the nonfarm payrolls of 49k and the jobless rate fell to 6.3%. Some analysts were predicting strong NFP of between 100-250k and most thought the rate would stay at 6.7%. Two aspects of this data. First, the rate fell because there were 400k people who left the workforce, meaning this drop is meaningless. Second, the 49k reflects lackluster growth due to the pandemic. As the BLS states, “In January, notable job gains in professional and business services and in both public and private education were offset by losses in leisure and hospitality, in retail trade, in health care, and in transportation and warehousing.”

 

My takeaway: get the vaccinations done and things will improve significantly, quickly. Prior to the outbreak, we had 3.5% unemployment and 5.7 million people unemployed. Now, it’s 6.3% and 10 million.  Since we’re doing comparisons, here are a few comparing January 2021 employment to February 2020 employment: Retail trade -383,000, Health care -542,000, Transportation -105,000, Manufacturing -582,000, Construction -256,000.  As you can see by the quote above, this data will be utilized to justify (CEA Bernstein and Bousey) President Biden’s $1.9 trillion stimulus plan. BTW, I think Biden is quoting CBO’s last, incorrect assessment of the return to trend growth in GDP and jobs.

 

#2 Stimulus:  Yes, the stimulus plan has moved forward in the Senate after Vice President Kamala Harris cast her first tiebreaking vote as no Republicans supported the budget resolution. The House passed a similar, but different resolution on Wednesday and will vote again on the Senate’s resolution. After that vote, then we get to the budget resolution process, which can again move forward without any Republicans voting to support it.

Here are the major provisions:

  • $1,400 direct payments
  • $400 per week jobless benefit through September 2021
  • $350 billion in state, local and tribal government relief
  • $160 billion for vaccination program, virus testing and PPE gear.
  • $170 billion for K-12 schools and higher education institutions
  • A $30 billion rent and utility assistance fund

No increase in the minimum wage.

The question is this: will this bill help those the most in need without wasting a massive amount of (eventually) taxpayer money? Like the previous 3 stimulus bills, there will be mistakes made and money not directed to those who need it most. Yet almost every economist/analyst is predicting rapid growth for the US economy and rapid job creation for 2021 should we get COVID under control. There’s a balance that needs to be struck. Yet, $1.9 trillion tells you how that seesaw is working.

 

We’ve heard from Tsy Sec. Yellen and others on the risk of doing too little. What’s the risk of doing too much? Red hot economy, long end of yield curve going up, financial instability, rapidly rising home prices, inflation and a lower US dollar. Oh, yeah, and a massive, massive increase in the federal debt. See, no downside whatsoever from going big or going home. The goal should be to help those most negatively impacted by the virus. Let’s do that. Hey, but don’t believe me about this, even Larry Summers thinks there’s a problem.

 

#3 Trump Impeachment Trial *Reminder, impeachment and trial of a president is a political act. It is not in a civil or criminal court and therefore doesn’t operate like one.*  The trial of former President Trump begins on February 9th with Sen. Patrick Leahy presiding over the trial and the Senate as the jury. Chief Justice Roberts will not be there because Trump is no longer president and Roberts is not constitutionally needed. After two of his legal team left, the Trump defense team apparently has zeroed in on their best line of defense: no defense at all. They will not argue about whether Trump encouraged or incited violence during his speech outside the White House on January 4th. They will simply argue that the Senate lacks jurisdiction trying an ex-president of “high crimes and misdemeanors” and is unconstitutional. While they may cite Trump’s First Amendment right, they will do their best to stay away from this and to stay away from the election result. This is the strongest approach to the defense and should ensure Trump is not convicted. If the team deviates, legal scholars warn they risk losing. But they will likely risk something more, the ability of Republicans to appeal to voters.

Democrats will pursue a very different strategy attempting to show Trump not only called the crowd to come to DC, but also incited them to violence. According to Time, “House impeachment managers argue that legal definitions of incitement or limitations to the First Amendment are irrelevant because an impeachment is a political proceeding, not a legal one. “The First Amendment does not apply at all to an impeachment proceeding,” their filing says.” One can expect these managers to use testimony from those in the mob who have been arrested and provided statements saying they were told by Trump to go to Congress and act to prevent the certification of the election. They will likely show video of Trump’s speech, his supporters marching afterwards and the violence that occurred. It will be powerful, but it will not likely be enough to get 17 Republicans to join Democrats for a conviction. But it will continue to mold a negative public opinion of Trump and Republicans. And that’s the greatest damage they can do at this point.