Government Helped June Labor Report
The private sector drives jobs growth in America, so most economists view public sector growth as bad because it’s unsustainable. The worst case would be a growing public sector and a shrinking private sector since the public sector needs private sector money to survive. As you can see in the chart below, the government added 35,000 new jobs, with 22,000 coming from local governments. That’s unlikely to continue as you can see the blue bars are mostly higher than the grey bars which represent the 12-month average. Like I said, even if you take away all the government jobs, it was still a great report, but it’s still worth noting the breakdown between public and private.
Restaurants Crater
The graphic below is interesting because restaurant sales have previously gone negative prior to recessions. There has been a slight improvement in the year over year numbers, but that’s only because of weak comparisons. A 1.0% decline in sales and a 3.0% decline in traffic are still disasters which imply that the consumer sentiment numbers, which have been good, aren’t translating into spending at restaurants. Restaurants are supposed to be great for millennials who like experiences over goods. Restaurants are now anchoring malls. If restaurants go down, malls will have nothing left to replace them with and they will fold. Even with these putrid results, yearly industry job growth was up 1.0% year over year in May which was a sharp deceleration from the 1.9% growth in April. It’s tough to use this stat to come up with employment estimates because it’s behind by a month, but what is fairly certain is the longer declines continue, the more likely negative impacts on the labor market will be felt.
John McCain Has Surgery
As I mentioned in a previous post, the Republicans were planning on getting a vote on the healthcare plan this week. I have been expecting something to be passed by the end of August. With Rand Paul and Susan Collins ‘hard’ no’s, and many other moderates possibly against the plan, I wasn’t expecting anything to be done this week. The chances of anything getting done this week were dashed when the news was released that John McCain had a blood clot by his eye which he needed surgery on. Without McCain, the GOP doesn’t have a majority to file a motion to proceed with the vote. McCain will stay in Arizona in the next few days. It’s not as if this plan had a great shot at passing, but McCain’s absence nixed it. The obvious response would be for McConnell to alter the bill to make it more popular. Unfortunately, that’s not as easy as it sounds because members of the GOP disagree with each other on the fundamentals of healthcare. There are very wide disagreements among the extremely moderate and extremely conservative flanks. Given Mitch McConnell’s vast experience in Washington and the need to get something done, I still think there will be movement by August. Time is on their side.
