Millions of people are relying on jobless benefits, which was evident from the June personal income data. Stimulus checks for individuals and the extra $600 in weekly unemployment benefits bolstered incomes despite widespread joblessness. The data showed unemployment benefits made up about 7% Americans’ incomes in the month, the biggest share on record.
That extra money helped fuel spending at retailers. U.S. total retail sales have now rebounded to pre-pandemic levels, which is a win for the economy. But spending at restaurants and bars and at clothing stores -- sectors that have been hit particularly hard by the pandemic -- are far from fully recovered. In addition, total consumer outlays, which includes spending on goods and services, have yet to fully recover.
That added boost to spending expired at the end of July.
The July jobs report marked a third straight month of solid improvement for the labor market. Employers added a better-than-expected 1.76 million workers to payrolls in the month, and the unemployment rate declined further. At the same time, the report highlighted longer-term concerns: Payrolls remain 13 million below pre-pandemic levels, the number of people who have been out of work for 15 weeks or longer more than doubled from the previous month and labor force participation declined.
A more timely measure of the jobs market -- weekly applications for unemployment insurance in regular state programs -- dipped below 1 million for the first time since March. While still higher than the worst week in the 2007-2009 recession, the figures confirmed the employment picture is getting brighter -- but also that it has a very long way to go.
“I remain a little bit mystified as to why we haven’t gotten to yes,” Glenn Hubbard, chairman of the White House Council of Economic Advisers under President George W. Bush, told reporters Friday. “I do not share the optimism about a fast recovery that some conservative politicians seem to have.”
Dozens of issues and more than $1 trillion in total spending divided the White House and top Democrats when they suspended stimulus negotiations on Aug. 7.
Pelosi and Senate Democratic leader Chuck Schumer said they’d cut $1 trillion from their original $3.5 trillion stimulus plan if Republicans would raise their initial proposal to $2 trillion from $1 trillion.
“We said we’ll meet you half way, we’ll come down a trillion, go up a trillion, to again meet the needs of the state and local government,” Pelosi said Friday.
But Mnuchin said there were issues that couldn’t be resolved by simply splitting the difference. Trump and the GOP remain opposed to the Democrats’ insistence on almost $1 trillion in aid to state and local governments.