Happy Friday! A big jobs report today and a big weekend ahead, as the Senate prepares to vote on the bipartisan infrastructure bill after what seems like months of haggling. Wait, it has been months. But we're nearing the finish line ... on the Senate side. Here’s what you need to know.
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U.S. Economy Added 943,000 Jobs in July, Before the Delta Surge
U.S. employers added 943,000 jobs in July, the most since last August, and the unemployment rate fell by half a percentage point to 5.4%, a 16-month low, providing evidence that the economic recovery from the coronavirus pandemic has some momentum — or at least did before the recent surge in Covid-19 infections driven by the spread of the Delta variant of the virus.
Friday’s report from the Labor Department was a blockbuster. Not only did job gains surpass the roughly 870,000 expected by economists, but the previous two months’ gains were revised to show 119,000 more jobs added.
“I’ve been doing this a long time — this is one of the best monthly jobs reports that I’ve seen in my career arc,” Joe Brusuelas, chief economist at the firm RSM, told The Washington Post.
Private payrolls grew by 703,000 last month, while government employment surged by 240,000, primarily in public school jobs. Analysts at Goldman Sachs note that the end of the school year produced fewer layoffs, with many staffers already out of work, while The Wall Street Journal’s Eric Morath reports that the gains likely reflect many schools offering larger summer programs after a year disrupted by the pandemic.
Overall, the labor force grew by about 261,000 last month, raising the labor force participation rate by 0.1 percentage points to 61.7%. Some two-thirds of newly hired workers last month came off the sidelines of the labor market. And the number of workers reporting being on temporary layoff fell by the most since last October while the number of long-term unemployed dropped from to 3.4 million, down from 4 million in June. Average hourly earnings, meanwhile, climbed by 0.4% from June and 4% year over year as employers continued to raise wages as they try to address labor shortages.
“We saw a welcomed upward shift in July, and that’s a significant handoff because the amount of government support is decreasing,” Nela Richardson, economist at human-resources software firm Automatic Data Processing, told The Wall Street Journal. “Still there are concerns about whether the variants will stifle or dampen the tremendous momentum we saw in early July.”
The surveys for the jobs report were conducted in the middle of last month, before the resurgence in Covid cases had reached its current levels and spurred new restrictions and a rethinking of office-reopening plans in many places.
Biden warns of virus: President Joe Biden touted the job gains as proof that his economic plan is working, but he also used the report to urge more Americans to get vaccinated. “My message today is not one of celebration. It’s one to remind us we got a lot of hard work left to be done both to beat the Delta variant and to continue our advance of economic recovery,” Biden said from the White House. “This is a pandemic of the unvaccinated, so we have to get more people vaccinated.”
Biden also said that Covid cases are still going to rise before they come back down.
Forcing the Fed’s hand? The jobs gains in July could spur the Federal Reserve to scale back its stimulus by reducing its $120 billion in monthly bond purchases. Analysts at Goldman Sachs said that they now see a 25% chance of a formal tapering announcement in November, up from 20% before, and a 55% chance of an announcement in December. "We think the odds continue to rise that tapering begins before the end of 2021," Conrad DeQuadros, senior economic advisor at Brean Capital in New York, told Reuters.
The bottom line: The economy has added 4.3 million jobs this year, but employment levels remain 5.7 million jobs below the February 2020 peak.
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Number of the Day: 50%
Half of the U.S. population has now been fully vaccinated against Covid-19, White House Data Director Cyrus Shahpar said Friday. Shahpar added that the seven-day average of new vaccinations is up 11% from last week and 44% over the past two weeks. More than 58% of the U.S. population aged 12 and older has been fully vaccinated, according to data from the Centers for Disease Control and Prevention as of Thursday.
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Infrastructure Weekend: Senate Set for Key Vote, Despite Clash Over Crypto
The Senate is on the verge of handing President Joe Biden a major victory by passing a $1 trillion bipartisan infrastructure bill.
“It’s a bill that would end years of gridlock in Washington and create millions of good-paying jobs, put America on a new path to win the race for the economy in the 21st century,” Biden said Friday.
After weeks of negotiations and wrangling — and some last-minute hold-ups — Senate Majority Leader Chuck Schumer on Thursday set up a critical procedural vote on the package for Saturday. Efforts to speed the bill to passage Thursday collapsed as senators worked on amendments and freshman Sen. Bill Hagerty (R-TN) refused to expedite the process.
Hagerty said he objected because of a Congressional Budget Office score of the bill showing that it will add $256 billion to deficits over the next 10 years. “While we’ve heard for weeks that [the infrastructure bill] would be paid for, it’s not,” Hagerty said in a statement, adding that he was especially concerned that Democrats were looking to pass this bill so they could move on to a $3.5 trillion budget resolution, which he called a “tax-and-spend spree.”
But the CBO score did not appear to significantly weaken the support from other Republicans, leaving the package on track to pass eventually.
A clash over cryptocurrency rules: The $550 billion in new spending in the infrastructure bill is financed in part by new IRS reporting requirements for cryptocurrency brokers, which are expected to raise $28 billion over 10 years. But Sen. Pat Toomey (R-PA) and others have sought to narrow who would be subject to the new reporting requirement, warning that the text as written could have a “chilling effect” on the development of crypto mining and software.
An amendment being pushed by Senate Finance Committee Chair Ron Wyden (D-OR) and Sens. Toomey and Cynthia Lummis (R-WY) would reportedly limit how the new rules would be applied, but the White House pushed back on the proposal, saying Thursday that it prefers a competing amendment from Sens. Rob Portman (R-OH), Mark Warner (D-VA) and others. That measure would exempt more players in the cryptocurrency world from the reporting requirement, but still isn’t as broad as the proposal from Wyden, Toomey and Lummis. For more details on the differences in the dueling plans and the issues involved, see The Washington Post or CNBC.
The bottom line: The Saturday vote will require 60 votes to advance, meaning that at least 10 Republicans will need to support it. Senators could still push for additional amendments, which would extend debate. But if the bill can avoid a filibuster, it will be headed for passage, with a final vote coming as early as Saturday afternoon or potentially being pushed into next week.
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News
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- Biden Nudges Senate Over ‘Historic’ $1T Infrastructure Bill – Associated Press
- Cryptocurrency Brawl Bogs Down Infrastructure Bill, as Yellen and White House Fight Changes – Washington Post
- Dueling Crypto Plans Pit White House Against Key Democrat – Bloomberg
- GOP Senators Look to Add $50B for Defense Into Infrastructure Bill – Politico
- Biden to Extend Freeze on Student Loan Payments Until Jan. 31 – Politico
- Obamacare Architect Floated for Top FDA Job – Politico
- Vaccine Demand Jumps in States Pummeled by Delta Variant – Politico
- DeSantis Criticizes Masks, Restrictions as Coronavirus Roars to Record Levels in Florida – Washington Post
- CDC: Unvaccinated More Than Twice as Likely to Get COVID-19 Reinfection – The Hill
- How Trump Stiff-Armed Congress — and Gaslighted the Courts — to Build His Wall – Politico
- Manchin Takes on the Fed, Rejecting Biden’s Inflation Defense – Politico
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Views and Analysis
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- A Big Policy Fight Is Brewing on the Right. And It’s Not All About Trump. – Eliana Johnson, Politico
- The Senate Infrastructure Bill Puts America Closer to Another New Deal – Adie Tomer, Brookings Institution
- In Praise of Smoke and Mirrors – Paul Krugman, New York Times
- July’s Great Jobs Report Comes With an Enormous, Delta-Shaped Asterisk – Catherine Rampell, Washington Post
- This Is the Job Market We’ve Been Waiting For – Neil Irwin, New York Times
- The Eviction Moratorium Mess Exposes the Decay in American Politics – David von Drehle, Washington Post
- Fact Checker: DeSantis’s Effort to Blame Biden for the Covid Surge in Florida – Glenn Kessler, Washington Post
- Too Many Republicans Are Taking Covid-19’s Side in the Fight Against the Pandemic – Eugene Robinson, Washington Post
- No, the Unvaccinated Aren’t All Just Being Difficult – Bryce Covert, New York Times
- All Companies Should Require Vaccines for Workers Now – Timothy L. O’Brien, Bloomberg
- How the Pandemic Changed, and Measures to Tackle Delta – Carlos Del Rio, The Hill
- Get Vaccinated. Get Masked. It’s the Only Way Out of This. – New York Times Editorial Board
- The Only Way Out of This Delta Variant Misery Is Through Vaccinations – Washington Post Editorial Board
- Be Careful About Covid-19 Optimism. There Are Still Plenty of Ways for Things to Go Wrong. – William Haseltine, Washington Post
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