The Fed deserves the praise for America’s jobs turnaround. But Trump benefits


The political obituaries of Donald Trump were all prepared. At the end of a week that has seen American cities convulsed by protests over the killing of George Floyd, the president would be faced with an increase in unemployment worse than anything seen in the Great Depression.

Well, it didn’t turn out like that. The US economy actually created 2.5 million jobs in May and the unemployment rate went down rather than up. The consensus among analysts was that it would shed 7.5 million jobs, a colossally wrong call. And a deeply significant one.

Instead of Trump being the new Herbert Hoover – the one-term occupant of the White House from 1929-33 – the amazingly good jobs figures hold out the prospect of him stealing Bill Clinton’s nickname and being the next comeback kid.

The US has a reputation for bouncing back from adversity quickly, but even by its own standards the turnaround has been remarkable. If the data from the Bureau for Labour Statistics (BLS) are to be believed, large numbers of workers who lost their jobs when the economy went lockdown in March were rehired as restrictions were eased from mid-May onwards. On Thursday, the day before the official payroll data was released, there had been figures out showing almost 2 million Americans had filed jobless claims the previous week, taking the total to more than 40 million since the crisis began.

Trump seemed as surprised as anyone by the news, but for once his hyperbole was fully justified. The president tweeted that the numbers were incredible, stunning and stupendous – as indeed they were. He also praised himself for the sudden reversal of fortune, which was less justified. If any one man can claim credit, it is the chairman of the Federal Reserve, Jerome Powell, who acted early and acted big to provide record amounts of stimulus.

Stock markets soared on the news. For days, equity prices have been rising amid optimism about a V-shaped recession, even though there has been little hard evidence to support this view. Now there is. The BLS said there had been sharp increases in hiring in those sectors especially hard hit by the Covid-19 lockdown: hospitality, leisure, retail, construction and education. Average earnings also fell, a sign that the lower-paid employees that bore the brunt of the pandemic-induced layoffs have started to find work again.

All that said, the labour market is still a long way from being in the sort of rude health that an incumbent president would wish it to be five months before an election. The number of job losses for March was revised up, meaning that employment in the US has fallen by 20 million since peaking earlier this year. The unemployment rate has almost quadrupled from 3.5% to 13.3% and social distancing is likely to mean that the pace of hiring will be slower than it would be otherwise. There could be a second wave of the virus when temperatures start to drop in the autumn.

But there’s no getting away from the fact that this was good news for Trump at a time when he appeared to be overwhelmed by a triple-whammy of coronavirus, street protests and rising unemployment. He will now be hopeful of further falls in unemployment as lockdown restrictions are eased in the densely populated north-eastern states, and that the better jobs news will continue to keep the stock market running hot.

None of which is to say that Trump will get a second term come November. But if he does, the May jobs report will have proved to have been a decisive moment.

Facebook’s stance on presidential tweets risks a staff exodus

Compare the responses of two social media giants to President Trump’s threat to Americans protesting about the death of George Floyd at the hands of police. “When the looting starts, the shooting starts,” Trump tweeted, later claiming that he had been ignorant of the rhyme’s racist origins.

Both Facebook and Twitter hosted the message, but the latter quickly distanced itself from the president’s words, hiding the post on the grounds that it glorified violence. In a bold move, a private company censored the White House.

Facebook, on the other hand, took a long hard look at what Trump had said and shrugged its shoulders. Its founder and boss, Mark Zuckerberg, said Facebook was aware of the racist resonance of the president’s comment but had a policy of allowing states to warn the public about the potential use of force.

Reports of Facebook’s demise are usually premature, but this could yet prove a defining moment.

It isn’t so much that Facebook risks sparking an exodus of socially conscious young people. After all, it is already the social network of their parents’ generation rather than their own. Its users are, typically, a cohort who have little appetite for migrating to new platforms but who wield the kind of spending power that keeps advertising dollars rolling in.

The Silicon Valley starlets who keep Facebook at the cutting edge of progress might prove more of a problem. Its staff are famed for their almost cultish devotion to Zuckerberg’s empire but their dear leader’s stance has sparked insurrection. Hundreds staged a walkout while several came forward to condemn Zuckerberg’s stance. Some have even quit in disgust.

Facebook has no shortage of brilliant engineers queuing up to work at the company. But in the fast-evolving world of Silicon Valley, it needs to attract and retain the very best. Many of them may now be looking elsewhere.

This crisis must not become a reason to postpone climate action

For those hoping the coronavirus crisis might be the moment to steer Britain towards a greener, cleaner future, the publication of the list of companies who have benefited from the Bank of England’s cheap Covid-19 loans will have made depressing reading. Airlines and car manufacturers are among the major beneficiaries.

That list was disclosed amid revelations that the government has been pondering car industry demands for a “market stimulus”, or scrappage scheme, that would not discriminate between diesel and electric vehicles.

With the chill winds of an economic reckoning ahead, once the lockdown spring and summer is over, it could be tempting to simply boost demand and preserve any and all jobs. Right now, simply to restore a functioning economy and society might appear a sufficiently worthwhile and ambitious target for government. But the hard truth is that when the pandemic is over, the climate emergency will loom ever closer and larger – as even Boris Johnson acknowledged on Friday’s World Environment Day.

The prime minister’s tweets had the scent of a Green New Deal, talking of a recovery that would help shape more resilient, relevant industries for the future. The world economy has now seen how its foundations can be rocked by a natural disaster – and, sooner or later, there will be another one. But few will now have faith that the government’s actions will match its environmental rhetoric.

So far, the only condition imposed on emergency funding appears to be demanding fare rises on Transport for London’s public services. It would be perverse indeed now to refrain from the tough love of attaching environmental conditions to private firms. Any scrappage scheme that simply allowed the UK taxpayer to subsidise the purchase of more fossil-fuel cars, and did not attempt to significantly alter emissions and infrastructure, would be an appalling missed opportunity.


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