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Do May jobs numbers indicate economic recovery has begun?

Jobs numbers from May were unexpectedly strong, catching most economists by surprise. But the Trump administration was quick to hail them as early indications of an economic recovery already underway. How do others interpret the new data -- and what do they suggest about the future? John Yang reports and talks to labor economist Elise Gould of the Economic Policy Institute and Lisa Desjardins.

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  • Judy Woodruff:

    The unexpectedly strong jobs numbers caught most economists by surprise.

    But, as John Yang reports, the Trump administration was quick to hail them as early indications that an economic recovery is already under way.

  • John Yang:

    Judy, this afternoon in Maine, the president said that today's job support was a sign a that good times are ahead.

  • President Donald Trump:

    America's economic comeback has begun. The next year is set to be a year — and you remember I said it, but it's going to be an amazing year.

    A very big thing happened today, when we saw numbers the likes of which we have never seen in the history of our country. Good timing, because people look at that, and they say, hey, this country's great. We have done things that nobody else has ever done.

  • John Yang:

    But how to others see the numbers in that report? And how much do they tell us about the future?

    Elise Gould is a labor economist at the Economic Policy Institute, a research center here in Washington that gets funding from organized labor. And Lisa Desjardins covers economic policy on Capitol Hill for us at the "NewsHour."

    Elise, let me start with you.

    You heard the president say that, looking at this jobs report, America's economic comeback has begun.

    Do you see that in this report?

  • Elise Gould:

    Not yet.

    It certainly is a welcome surprise that the top-line payroll numbers did start to turn around. But it would be a mistake to think it is now time for policy-makers to turn off the valve and to stop providing aid to workers, their families, aid, necessary aid to state and local governments.

    We still have a long way to go.

  • John Yang:

    What does — I mean, the consensus of economists was that we would see another drop in payroll in jobs. How do you explain? Or when you look at the numbers, what does it tell you to explain this increase of 2.5 million.

  • Elise Gould:

    It is a bit of a puzzle, absolutely. Many economists did not expect this.

    I think there's a couple of factors. One is that initial unemployment insurance claims came in around 10 million, between the reference period in April and the reference period in May. That led many people to think that the job losses would still be large.

    As it turns out, it seems that maybe some of the hires have offset that. And maybe some of those claims were actually pent-up demand when people couldn't get in earlier to make those claims.

    It's also possible the Paycheck Protection Program has actually gotten people back on payrolls as well.

  • John Yang:

    Where are those new jobs come — where did they come from in May?

  • Elise Gould:

    So, in May, we saw many of the sectors that had the first big job losses, some of those have come back. Again, 31 states have begun using their stay-at-home restrictions, so I think we can see that as a result there.

    That's leisure and hospitality, retail trade. Saw some gains in health care employment, even in construction.

  • John Yang:

    Earlier today, President Trump said — was asked about what he could do to help race relations in America, and he said a strong economy was his answer. And he pointed to these jobs numbers.

    But in — even in these jobs numbers, we see the continuing disparity along racial lines. And even in — this little mini-rebound in May, we see disparity among — along racial lines.

  • Elise Gould:

    Yes, that's exactly right.

    Well, we know that there were job losses across the board, devastating job losses, right, that we saw in March and April. And those are felt by families across the economy differently. The job losses that hit black workers are actually more devastating, because they have historically higher unemployment rates, higher poverty rates, lower income, lower wages, and lower liquid savings to be able to weather that kind of a storm of those massive job losses.

    And then, in May, you see this bright light, little sign, a glimmer of some hope. But it's actually hitting white workers, not hitting black workers. So, it's adding more insult to injury. And it seems that this recovery, as it has just begun, has already started discriminate further against those black workers.

  • John Yang:

    Lisa Desjardins, President Trump this morning in the Rose Garden signed an extension of one of the efforts that Congress is making to try to help people, the Payroll Protection Program that Elise just mentioned.

    There is anecdotal evidence that you have that there — that this is helping. Is that right? And, also, what's in this extension that the president signed?

  • Lisa Desjardins:

    This is something critical for many of these — millions of these small businesses, John, who have been waiting for weeks, worried they were not going to be able to use this money.

    This, of course, is the program that is meant to help businesses with 500 or fewer workers. The idea is, this program essentially floats most of the fixed costs for those businesses for two months. That's how much money the federal government is giving.

    However, those businesses were only given an eight-week window to use that money. So, let's — that was a problem for a lot of them.

    So, let's look at a graphic about what has changed, what the president signed today. First of all, the president's — the bill from the Congress and the president said, the — these funds can be spent over 24 weeks. It was eight weeks, so that's a huge extension.

    Now, 60 percent of that money must go to salaries. That's a lower figure than, previously, it was — it was 75 percent. Some of these businesses said, we don't spend 75 percent on our salaries. Sixty percent is too much.

    So, essentially, John, what's happened here is, businesses aren't getting more money, but they're getting a lot more flexibility. There are some technical problems with the way this bill was written, however. We're working — we're seeing what changes may come when this is actually administered.

    But as far as evidence that this bill, that this program made a big deal in our economy, this was clearly the largest infusion of cash in the economy in the past months.

    Let's look a little bit at what this program did, another graphic here for you. We have got a program that so far has used $510 billion. It still has more than $100 billion left to spend that's been approved.

    Now, this is 4.5 million American small businesses that have used these funds. And, John, the average loan is not that large, considering the situation right now, about $114,000 on average. So, we are talking about small businesses across this country.

    And if you look at the data, if you look at exactly when this money hit, most of these businesses got this money in May. And that could have something to do with these unemployment numbers.

  • John Yang:

    Lisa, what do — what do you think these unemployment numbers will do to the thinking on Capitol Hill about another — or more stimulus down the line?

  • Lisa Desjardins:

    Speaking with sources across the Capitol and in both parties, I will tell you, Republicans feel that this bolsters their argument that it is time to stick — to take a pause and to wait before there is more money spent, more relief given. They want to see what the relief so far has done.

    Now, House Democrats, Speaker Pelosi sent out a statement today, saying she thinks the opposite, that this money spent shows that it was spent well, that the unemployment results are from previous relief. And if they stop spending the money, she is saying, she thinks unemployment will go back up.

    I have to tell you, John, I think, overall, the Republicans seem to be winning the momentum contest here. And there is a very large debate. Unemployment benefits also were extended under the CARES Act because of the pandemic. And Democrats would like to keep that going. It's $600 more for unemployment than previously. And they would like to keep that going.

    But that runs out at the end of July. And they admit to me, John, that these unemployment numbers are going to make it harder for them to get that extension.

  • John Yang:

    Elise Gould, when they were doing the CARES Act on Capitol Hill and talking about the unemployment benefits, there was an argument made by some Republicans that it was a disincentive to employment by raising the unemployment benefits and also extending them.

    What — as a labor economist, what's your reaction to that?

  • Elise Gould:

    Well, the $600, it is — my argument would be, it is very important to extend that. That does run out in July. That has been vital to keep workers afloat during this time.

    It has allowed workers who live in states that have very low replacement rates to try to continue to make ends meet, to continue to put food on their tables, put a roof over their heads.

    And without that money, they are going to be absolutely economically devastated.

    I think it speaks more to the fact that wages are so low for many workers across this country that $600 could actually make that much of a difference. So, it is vital to keep that turned on.

    And when workers get called back to work, they can't keep collecting that $600. They're going to have to go back to work. So, as a disincentive to work, I don't really see that happening there.

  • John Yang:

    With thunder rolling in the background here in Washington, D.C., Elise Gould of the Economic Policy Institute, Lisa Desjardins, our congressional correspondent for the "NewsHour," thank you very much.

  • Lisa Desjardins:

    You're welcome.

  • Elise Gould:

    Thank you.

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