Donald Trump

Things are so much worse than even the Great Recession that the red line almost doesn’t fit on the same chart as the others. It starts with a near-vertical downward drop, followed by a short spike upward.

Again, it is great that the hiring trend has, in fact, turned upward. But there are still 14.7 million, or about 10 percent, fewer payroll jobs than there were at the start of the pandemic recession. And as you can see, even if job growth continues at what President Trump calls “rocket ship” pace, the country still has a long way to go before reaching an acceptable altitude — that is, until U.S. payrolls are anywhere near pre-pandemic levels.

There’s also reason to worry that our little “rocket ship” might slow down — or perhaps already has.

Thursday’s jobs report reflects activity in mid-June. (The Bureau of Labor Statistics’ employer survey always covers the pay period that includes the 12th of the month.) In some senses, only a couple of weeks feels like ages ago.

Since mid-June, confirmed coronavirus cases have surged, especially across the Sun Belt. Some states have halted or even reversed their reopening plans, especially in the industries that reported the greatest job gains at mid-June: Leisure and hospitality, which Thursday’s jobs report shows as adding 2.1 million positions in June, accounted for two-fifths of the overall gain in total payroll jobs. But Florida and Texas, for instance, once again shut down on-site bar drinking. On Wednesday, California’s governor directed 19 counties to shut down indoor family entertainment venues (bowling alleys, arcades, etc.) as well as indoor dining at restaurants. In the near term, this will hurt the industry’s business activity and hiring.

There is also evidence that what matters more for economic activity than these government shutdown decrees is the virus itself — and consumers’ or workers’ fears of contracting it.

A recent working paper from University of Chicago economists Austan Goolsbee and Chad Syverson used cellphone records data from SafeGraph on customer visits to more than 2.25 million individual businesses across 110 industries. They concluded that overall consumer traffic fell by 60 percentage points but that “legal restrictions explain only 7 percentage points of this. Individual choices were far more important and seem tied to fears of infection.”

As such research suggests, recent metrics point to a slowing in economic activity that predates the latest shutdown orders. The initial jobless claims data, which were also updated Thursday morning, revealed that an additional 1.4 million people filed for benefits.

Foot traffic to stores had picked up in May but seems to have plateaued, according to recent SafeGraph data.

Consumer spending, as tracked by Chase, was picking up through the spring yet more recently seems to have dipped again.

The same goes for trends in restaurant reservations, as measured by OpenTable.

Other data, including from Homebase (which offers scheduling software to small businesses), suggests that small-business operations and employment were recovering in the spring but have also plateaued in recent weeks.

“While cities like New York and San Francisco had lower troughs, they’ve steadily improved, while cities like Houston and Phoenix have plateaued or given back some of their early gains,” Homebase analysts said in a recent report. “These plateaus suggest we may have ~20% permanent closures on Main Street.”

Federal Reserve officials have expressed concern that economic conditions could get much worse with a renewed spike in infections, according to meeting minutes released Wednesday. The path of the pandemic aside, other major economic risks loom on the horizon.

In particular, a major fiscal time bomb is about to detonate.

Enhanced unemployment benefits are scheduled to expire at the end of July, and Republicans have said that no way, no how will the program be renewed, even if unemployment remains in double digits. Some have expressed concerns that the enhanced benefit — a flat $600 federal top-up — might disincentivize work because some workers receive more in benefits than they earned in wages. But that design could be amended.

Additionally, states and localities are going broke. Thanks to covid-19, their tax revenue has plummeted and their expenses have gone up. Lucy Dadayan of the Tax Policy Center estimates that the pandemic will reduce state revenue alone by $200 billion over fiscal 2020 and 2021. Governors (and mayors and other local officials) have pleaded for federal help. Unlike most states and municipalities, after all, the feds don’t have to worry about balanced budgets.

While there is bipartisan support in Congress for providing state aid, it hasn’t happened yet. The Democratic-controlled House passed another stimulus bill that included funding for states, but Republican Senate leaders declined to take it up. They have said they don’t plan to finalize their own bill until the end of July. Perversely, the gains in Thursday’s jobs report might reduce pressure on lawmakers to pass this needed legislation.

This week, however most states started a new fiscal year. Already, states and localities have laid off about 1.5 million employees since the pandemic began. Unless federal aid comes through soon, expect huge new public-sector layoffs and service cuts in the months ahead, followed by knock-on job losses in the private sector.

That “scariest jobs chart" could well get scarier.