In the middle of a drenching downpour, a shaft of bright light is always welcome – and we just got one. Last week’s good economic news does not end COVID-19’s run, resolve racial tensions, or closeout a three-month downturn by lockdowns, but it does spell hope. Here is why.
As Fox News reported on June 5, “May’s unemployment report was stunning…” To understand why the numbers matter – and what they say about the future – is worth the time. In short, while one-in-five jobs were lost in pandemic lockdowns, one-in-eight jobs lost is back. See: https://www.foxbusiness.com/economy/mays-unemployment-report-was-stunning-heres-what-happened-and-why-economists-got-it-wrong.
That is not what economists thought would happen, since it means small businesses – which make up most of the US economy – are not just surviving, but reviving. Unemployment that spiked to all-time highs was temporary – and businesses that economists predicted would close forever, are not doing so. They are rehiring and reopening.
As the report notes, “most economists expected May’s jobs report to be a disaster, possibly even the worst on record.” But that is not what happened. Against the odds, US employers added 2.5 million jobs – the most jobs ever created in one month! Unemployment fell – it did not rise.
Ironically, liberal media outlets were poised for the pounce, sure May’s numbers would darken the political landscape further, after a difficult April. CNN, for example, made April the end of the world. Scrolling back to their reporting, they inveighed: “With much of the American economy in self-imposed shutdown … April’s colossal surge in unemployment delivered a historic blow to workers …by far the most sudden and largest decline since the government began tracking the data in 1939 … more than double the 8.7 million jobs lost during the financial crisis.” See: https://www.cnn.com/2020/05/08/economy/april-jobs-report-2020-coronavirus/index.html.
Only the cited downturns in 1939 and 2008 were structural failures, markets that crashed as a result of unbridled lending, limited oversight, failed capitalization and liquidity, not a self-imposed shutdown of an otherwise strong, healthy – even thriving – free market, one where labor and capital were moving freely, stoked by less regulation and greater faith in capitalism.
Put differently, the US economy – which boils down to hardworking Americans – was less damaged and is more resilient than academics, fancy models, and media assumed. Job growth and lower-than-expected unemployment signals faster recovery than expected. It signals that President Trump’s support for small businesses with the Paycheck Protection Plan (PPP), run by his Small Business Administration, was on target, on time, and is working.
Like many actions taken in crisis, from preventive healthcare and vaccine acceleration to daily briefings, personal stimulus checks, support for hospitals, and retooling the private sector to build needed technologies, Trump’s PPP plan was an act of faith, focus, and leadership – no guarantee it would work. Passage was even delayed by Nancy Pelosi’s indignant House.
Yet this program – which incentivized employers to keep and rehire good employees – appears to be working. The President – together with Senate Republicans who prioritized PPP over peripheral, unfocused, unnecessary federal spending by the House – was right.
The strength of America is not more centralized government, higher taxes, more spending and dependency, but flexible response by a nimble, can-do, resilient private sector – and when necessary, federal “bridge programs” to restart a private sector suddenly forced to shut down.
Today, the challenge is not about spending more money at the federal level but less. It is about recognizing that the private sector is America’s strength – engine of economic growth, employment, income, investment, consumption, and quality of life. Only with a healthy, restored, confident private sector can we regain lost ground, then pay down the federal debt.
Net-net, the latest unemployment number is just one shaft of light, but the shaft tells us something. It tells us Americans are not laggards, lazy or looking for handouts. We have not been lulled into dependence, thinking Nancy Pelosi’s socialist vision – more taxes, less freedom, more reliance on federal government for wellbeing – is the way of the future. Quite the reverse.
Americans want to get back to work – at every age, in every sector, across every region, with every intent to restore the American economic engine to full power. That is good economic news, likely to reflect a subterranean pool of support for economic policies this president has pursued. To cite Churchill: This is not the end, nor even beginning of the end, but it may be the end of the beginning. In that, find hope. Shafts of light are always welcome – with more ahead!