This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.
Fast Fall, Slow Recovery
Coronavirus obliterated the best African-American job market on record. Near the end of a decadelong economic expansion, African-Americans were finally finding some financial stability. Unemployment had reached record lows, and their wages had begun rising modestly. The coronavirus pandemic and shutdown brought all of that—one of the most promising economies in recent memory for African-Americans—to a crushing end, Eric Morath and Amara Omeokwe report.
Even when unemployment was low, African-Americans’ overall economic situation was fragile. As a group, they had less job security and wealth than whites, leaving them especially vulnerable when the economy shut down. Historically, African-Americans’ recovery from recessions has been much slower than those of other groups.
WHAT TO WATCH TODAY
U.S. consumer prices in May are expected to be unchanged from a month earlier. Excluding food and energy, prices are also expected to be flat. (8:30 a.m. ET)
The Federal Reserve releases a policy statement and its first set of economic projections since December at 2 p.m. ET, and Chairman Jerome Powell holds a press conference at 2:30 p.m. ET. Read our preview here.
U.S. federal budget figures for May are out at 2 p.m. ET.
TOP STORIES
Unemployment Undercount
The Labor Department is struggling to accurately document how many workers are unemployed. A “misclassification error” caused the overall unemployment rate to be lower than it would have otherwise been, the department said in the May jobs report. It was the third straight month the department issued such a warning. While the figures may differ, the error doesn’t change the broader story: The number of Americans without jobs remains historically high and signs of a labor-market recovery emerged in May as payrolls rose and the unemployment rate, however it is calculated, fell from the prior month, Eric Morath reports.
The specific error is occurring because many respondents to the survey that determines the unemployment rate are reporting themselves as “employed but absent from work.” The department believes many people falling in that category in recent months should be counted as unemployed.
Misclassification isn’t the only problem. Surveys used to determine key economic figures have been hampered by the pandemic, making the data less robust. The Census Bureau, for example, isn’t conducting as many in-person interviews and fewer people are responding to its Current Population Survey. The CPS is used to calculate the unemployment rate and other labor-market metrics. The Bureau of Labor Statistics has struggled to collect consumer price data, resulting in “an increase in the number of prices considered temporarily unavailable and imputed,” BLS said last month. “The upshot of the heightened data uncertainty is that it will be even more important not to rely on a single data source or data point, but to use many different sources in drawing conclusions about the economy,” said Evercore ISI economist Ernie Tedeschi. —J.S.
Don’t Stand So Close to Me
Mandatory social distancing prevented many millions of additional infections from Covid-19, a study published in Nature this week concludes. No shock there: it would be weird if shutting down an entire economy didn’t prevent infections. The greater contribution of the research, by Solomon Hsiang of the University of California, Berkeley and 14 co-authors, is the estimated effects of individual measures across six countries, including the U.S. and China. Stay-at-home orders slowed growth by about 10 percentage points in the U.S. School closures were actually associated with faster infection spread. The findings are necessarily imprecise since many factors may have simultaneously influenced infections, including voluntary efforts. Still such rankings can help policy makers struggling with the tradeoff between lives and livelihoods. For example, isolating the infected reduces the disease by as much as closing businesses, but with much less economic disruption. —Greg Ip
Open for Business
Shoppers are returning to reopened stores faster than expected. Macy’s Chief Executive Jeff Gennette said sales at reopened stores are down by about half compared with before the pandemic, which is better than the 85% decline the company had predicted. At Kohl’s, stores are doing about three-quarters of their pre-pandemic sales volume, up from about two-thirds in late May, Chief Executive Michelle Gass said. Macy’s began reopening stores on May 4 and said it would have more than 400 locations reopened by this week. Kohl’s has reopened most of its more than 1,100 stores, Suzanne Kapner reports.
“Each tranche that we’re opening up is opening up a little better. And each week that they’re open, they’re getting a little bit better.” —Macy’s Chief Executive Jeff Gennette
Smaller retailers are also getting back to work. Data from scheduling and hiring software firm Homebase shows businesses that stayed open or have reopened since the coronavirus pandemic hit are almost back to pre-Covid operating levels. The problem? Even in states like Georgia, which were among the first to ease lockdowns, about one-quarter of smaller retailers are still shut. Ray Sandza, vice president of data and analytics at Homebase, said it’s not clear if those locations are permanently closed or just need some more time. But the figures suggest “the current reopen trends may soon reach a plateau, especially among states that have been reopened for multiple weeks,” Mr. Sandza said. —J.S.
Worst-Case Scenario
The Organization for Economic Cooperation and Development expects the global economy to contract by 6% this year—if a second wave of coronavirus infections and containment measures can be avoided. The OECD took the unprecedented step of offering two series of growth forecasts, reflecting the high level of uncertainty around the pandemic’s course. If a second wage of coronavirus emerges, the global economy would shrink by 7.6% this year, Paul Hannon reports.
Street Smarts
China is trying an old remedy to revive its economy: street stalls. With unemployment rising amid China’s first economic contraction in four decades, Beijing is turning to sidewalk trade as a way to unleash its animal spirits. It’s a big policy reversal: After the Chinese economy took off, officials and some citizens came to see street vendors as chaotic and unruly. Dogged by complaints over food-safety violations, counterfeit goods and environmental damage, vendors in some big cities were forced into the suburbs or out of cities completely, Jonathan Cheng reports.
WHAT ELSE WE’RE READING
Efforts to contain the coronavirus fell especially hard on minority-owned businesses. “The number of active business owners in the United States plummeted by 3.3 million or 22% over the crucial two-month window from February to April 2020. The drop in business owners was the largest on record, and losses were felt across nearly all industries and even for incorporated businesses. African-American businesses were hit especially hard experiencing a 41% drop. Latinx business owners fell by 32%, and Asian business owners dropped by 26%. … These findings of early-stage losses to small businesses have important policy implications and may portend longer-term ramifications for job losses and economic inequality,” University of California at Santa Cruz’s Robert Fairlie writes.
SIGN UP FOR OUR CALENDAR
Real Time Economics has launched a downloadable calendar with concise previews forecasts and analysis of major U.S. data releases. To add to your calendar please click here.
from Real Time Economics https://ift.tt/3dPnFy3
No comments:
Post a Comment