Jobs report could be a stinker

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Soft jobs number ahead? — Not looking great for another juicy jobs report on Friday after the ADP private payrolls survey missed terribly at 330,000 against expectations of 653,000. The July number was a big drop from June’s 680,000.

It was the smallest gain since February and suggests that the spread of the Covid-19 Delta variant is slowing the return of workers to the labor force even as demand remains high and businesses are desperate to hire.

Markets took a bit of a dip on the ADP number. But as the survey is not an especially reliable predictor of the official number, which comes out Friday, so losses were not severe. And corporate earnings mostly continue to come in strongly, limiting fears of a big Delta hit to the economy.

And many analysts remain fairly bullish on the official July jobs number on Friday. Via S&P’s Beth Ann Bovino: “We now expect 800,000 job gains for nonfarm payrolls in July, as the reopening solidified through the BLS July survey week which includes the 12th.

“The real question may be whether this is a pause as reopening may have been slowed a little by the Delta variant, continued supply chain issues and the case of the missing workers, or if it is a true slowing of the jobs market. With so many openings, we tend to believe it is some combination of the former at play.”

Mizuho’s Alex Pelle: “The street is forecasting 870k jobs … along with a decline in the unemployment rate to 5.7% after unexpectedly rising to 5.9% … Our view is that the street is overly optimistic and that both payrolls and the unemployment rate are likely to disappoint.

“At a high level, trend is a powerful force. The 3-month average of job growth is running near 570k per month, and 870k would represent a meaningful acceleration from that trend. Moreover, this would be occurring in the context of clear deceleration in growth momentum … The economy has now for a few months not lived up to the most bullish economic expectations.”

GOOD THURSDAY MORNING — Email me on [email protected] and follow me on Twitter @morningmoneyben.

DELTA PUMPS ECONOMY’S BRAKES — Via Morning Consult’s August Economic Outlook report out this a.m.: “The spread of the Delta variant slowed economic activity in July, and added uncertainty to the longer-term outlook for recovery. … Fewer adults were willing and able to work in July, and a smaller share of a shrinking labor force had a job.

“Consumer confidence is at its lowest level since March 9, 2021. The decrease, largely driven by worsening expectations of future business conditions, is the sharpest 3-week decline since November 2020.”

Via Brad McMillan, chief investment officer at Commonwealth Financial Network on Friday’s jobs report: “[The] outlook looks likely to be too optimistic. The major reason is the sudden resurgence of the pandemic, with the Delta variant taking case growth to five times the level at the end of June.

“Beyond the rising medical risks, the job market also faces the question of whether the labor shortage is starting to get better. Medical risks make workers less likely to move back into the labor force, which is a headwind. But there were expectations that the expiration of federal supplemental employment benefits would start to force workers back, which would be an offsetting factor.”

DEBT LIMIT LOOMS — Our Caitlin Emma and Jennifer Scholtes: “Democrats are likely to pass up their best chance to avoid a standoff over the debt limit without GOP votes, a move that will thrust Congress into risky territory this fall as the threat of economic ruin approaches.

“There will be no language on raising or suspending the debt ceiling in the budget measure Senate Democrats expect to unveil within days to advance a $3.5 trillion spate of liberal spending plans without Republican buy-in, according to a Democratic aide close to budget talks.

SEE YOU IN SEPTEMBER — “Instead, the party is looking to a short-term funding bill designed to avert a government shutdown at the end of September as the next opportunity for debt limit action, one top lawmaker said — an approach that would require Republican support.”

VACCINE MANDATES SPLIT CORPORATE AMERICA — WSJ’s Chip Cutter, Sarah Nassauer and Bob Tita: “Business leaders broadly agree they need to get more workers vaccinated to keep the U.S. economy humming in the face of the fast-spreading Delta variant.

“But they’re split over how best to do that. Some are dangling bigger bonuses or other incentives to cajole employees into getting the Covid-19 vaccine. Others have started requiring workers get the shot. … In recent days, companies from … Walmart … to Microsoft … have imposed vaccine mandates mostly on white-collar workers returning to offices. Meatpacker Tyson Foods Inc. on Tuesday took a harder line, saying all its workers must get the vaccine by Nov. 1.”

VIRUS INFECTIONS TOP 200 MILLION — NYT’s Marc Santora and Isabella Kwai: “The known total of global coronavirus infections surpassed 200 million on Wednesday, according to the Center for Systems Science and Engineering at Johns Hopkins University, a daunting figure that also fails to capture how far the virus has embedded itself within humanity. …

“A surge in case numbers has in most cases been followed by a crush of people crowding emergency rooms and, several weeks later, a rise in fatalities. The official tally stands at more than 614,000 deaths in the United States. More than 550,000 in Brazil. More than 425,000 in India.”

CRYPTO TAX CHANGES SPUR WH-DEM SENATOR CLASH — Our Kellie Mejdrich, Victoria Guida and Brian Faler: “A bipartisan group of lawmakers are on a collision course with the Biden administration over a push to make last-minute changes to cryptocurrency tax provisions buried in the infrastructure bill before the Senate.

“Finance Committee Chairman Ron Wyden (D-Ore.), senior tax writer Pat Toomey (R-Pa.) and Sen. Cynthia Lummis (R-Wyo.) want to narrow who would be subject to new tax reporting requirements that are intended to improve tax compliance among those trading digital currencies. Echoing concerns from the cryptocurrency industry, they say the legislation’s definition of who counts as a ‘broker’ — and therefore subject to the new rules — is overly broad, and will sweep in too many unintended targets. They want to amend the legislation to specifically exclude people like software developers.”

Update from Victoria: “The Joint Committee on Taxation found as a result of the amendment, revenue for the $550 billon bill would be reduced by $5.17 billion, according to a person familiar with the estimate. A small fraction of a large bill, to be sure, but source said it would still be ‘a big revenue hole in the bill.’”

CUOMO BATTLES ON Our Anna Gronewold in Albany: “For the second time this year, Andrew Cuomo finds himself alone in an almost unthinkable political quagmire. And for the second time this year, Cuomo has given no signals that he will back down. Instead, he’s preparing to fight back.

“But unlike in March, when multiple allegations of sexual harassment first emerged, it’s now hard to see any new escape route for the governor, who is under criminal investigation and is facing almost certain impeachment … The only one who seems to be unaware of the desperate state of affairs is the governor.”

CRIMINAL PROBES MOUNT — Our Erin Durkin: “Cuomo is facing four potential criminal investigations over findings that he sexually harassed and inappropriately touched multiple women.

“District attorneys in Manhattan, Nassau County, and Westchester County said Wednesday they are reviewing evidence in the case, after the Albany County district attorney announced his own probe on Tuesday.” Shannon Young contributed to this report.

FLOOD INSURANCE HIKES COULD BE CAPPED – Our Zachary Warmbrodt: “Coastal senators are beginning to rally support for an infrastructure bill amendment designed to shield homeowners from National Flood Insurance Program premium increases triggered by an upcoming overhaul of rates.

The amendment, sponsored by Sens. Robert Menendez (D-N.J.), John Kennedy (R-La.), Cindy Hyde-Smith (R-Miss.) and Bill Cassidy (R-La.), would cap annual NFIP premium increases at 9 percent — down from 18 percent under current law. The affordability-focused amendment would also provide means-tested vouchers for low- and middle-income homeowners and renters”

BIDEN RATING DIPS ON COVID SURGE Our Maeve Sheehey: “Americans’ approval of President Joe Biden’s handling of the pandemic slipped to 53 percent, while his job approval rating fell more slightly, as concerns about the U.S. Covid-19 response mounted, according to a poll released Wednesday.

“The poll was conducted by Quinnipiac University and surveyed attitudes about topics including Biden’s handling of Covid-19, the bipartisan infrastructure bill and the congressional investigation into the Jan. 6 Capitol insurrection.”

ECON RATING ALSO DOWN — “[T]he share of Americans who approved of the president’s Covid-19 handling fell to 53 percent, down 12 points from May. His job approval fell to 46 percent, from 49 percent in May. Approval of Biden’s handling of the economy also fell, with 43 percent approving and 48 percent disapproving.”

TRANSITIONS — Nora Richardson will be director of membership development at the Managed Funds Association. Richardson was most recently director in the prime brokerage business consulting team at Bank of America Securities.

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