Cautious Optimism on July Jobs Numbers: Prudence, Resilience Will Aid Recovery

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In July, 1.8 million new jobs were created, and the unemployment rate dropped to 10.2 percent. That is a welcome follow-up to the second quarter’s disastrous GDP decline, which was the steepest in American history. At this point, the third quarter is already almost half over. Anything can happen, but July’s experience bodes well for a relatively quick recovery. At this point, roughly half of the jobs lost to COVID-19 have come back in some form.

People are adapting to the new reality, although telework and remote learning have their limits. Time will tell, but August’s job growth may slow as these limits are reached. It will still likely to show net gains.

Full economic recovery likely hinges on a COVID-19 vaccine or other proven treatment becoming widely available. The news is promising on this front, but treatment is still likely months off, at least.

Regardless of what officials say or do, most people will likely continue with some form of masks, lockdowns, and physical distancing until they feel safe. Government is not necessarily in charge of these decisions; ordinary people are. Social norms are more powerful than top-down policy making.

If prudence wins the day, the long-term economic outlook will be bright, even if the short term is at best mixed. If imprudence makes the outbreak worse, the economy will almost certainly suffer. More importantly, so will people and their morale.

Today’s good news shows that people are resilient. Whole industries have retooled, and brand-new business models have emerged, in less than six months. People are finding ways to help each other and stay afloat during a difficult time.

Government officials’ waiving of more than 800 #NeverNeeded regulations have aided resilience in industries from front-line health care to restaurants. With more than 1.1 million regulatory restrictions still on the books at the federal level alone, policy makers have a lot of low-hanging fruit left to pick.

But there are threats to the recovery. President Trump’s new aluminum tariffs sparked immediate retaliation, as these things always do. If he goes through with them, $5.4 billion of goods will be taxed for no good reason—$2.7 billion by the U.S. government, and the same amount by Canada’s. The timing is almost comically bad.

The continuing bipartisan antitrust threat against the tech industry, which has made so much pandemic resilience possible, is another ill-timed threat to recovery. So is complacency among policy makers. Eight hundred regulations are not a lot when compared to the 1.1. million regulatory restrictions found in the Code of Federal Regulations. There is much more to do.

Ideas for what to do next are at