July 3, 2020

US Payroll Data Confirmed One Compelling Story

US Payroll Data Confirmed One Compelling Story

Americans have spent their first round of stimulus checks that were included under the CARES Act. But, the recent emergence of coronavirus has constraint the economic reopening process in the US, and Americans are desperately hoping for a second round of stimulus checks.

The big question among them is if the HEROES ACT that passed the House will get a rubber stamp from the Senate. Donald Trump told Fox Business that his vision of the second stimulus check is “larger” than Democrats.

This was the boldest statement by Trump on the second stimulus check subject to date, making people wonder if the second stimulus check would be larger than $1,200. Some are hoping that there may be monthly stimulus checks, given the fact that the majority of Americans are out of jobs. 

The US jobs report released today confirmed that the employment situation had improved again for the second month in a row, and the fact is that you cannot continue to hope for another round of stimulus checks or payroll protection programs while the recovery in the job market is strong. 

Here is more on this 

Current Stimulus Programmes: HEROES ACT And Other Stimulus Check Proposals 

The 2,000 monthly stimulus check proposal would be the most unlikely scenario, regardless if Trump said he supports the stimulus check program. Payroll tax waivers and similar tax cut programs are likely to get a more favorable reaction. The HEROES Act, which includes stimulus checks, and has passed one major obstacle, remain an unpopular proposal.  

June’s Payroll Report And A Second Stimulus Check 

What can increase the odds of a second round of stimulus checks and who will qualify for one are determined by the US payroll data. 

The US Non-Farm Employment change number confirmed today that the US economic recovery from coronavirus is coming back with a bang. The US labor market created 4.8 million jobs against a forecast of 3.03 million when the previous month’s number was 2.69 million. 

The US payroll protection program received good news today as the US unemployment rate fell to 11.4% against the 12.4% forecast when the previous reading was 13.3%. 

All of the above confirms that things are looking up for Americans. As employers are hiring more than the expectations, the chances of getting your job back are higher. This also means that the odds of bigger stimulus checks may have partially evaporated, but they are still there. 

The Reasons Why We Still Need Second Round of Stimulus Checks 

We still need more stimulus support for Americans because today we also had the US Initial and Continuous Jobless Claims Data. The Initial Jobless Claims Data was worse than expected, actual 1427K, forecast 1350K. There was also an echo of this in the Continuous Claims Data, actual 19290K; forecast 19000K. Both data points, initial and continuous jobless claims, are not likely to fall anytime soon. 

Second Stimulus Checks And Bankruptcies 

According to the US bankruptcy filing, during the second quarter, 76 companies have filed for bankruptcy, most of them in the energy and the retail sector. The bigger issue is that the US bankruptcies have started to stack up and are now at their fastest pace since 2009. The fact is that the more bankruptcies we have, the harder it will be to bring the overall US unemployment rate below a double-digit number.

Trump’s Support For “larger” Stimulus Check Should Be Taken Carefully 

In his interview with Fox Business, Trump mentioned about “return-to-work” bonus. He favors this over other unemployment benefits or a payroll protection program. Trump’s support for the second stimulus check should be taken with caution because during his interview, he said “You’d make more money if you don’t go to work. That’s not what this country is all about. We want to create a tremendous incentive for people who want to go back to work.” 

This is the right approach, and it is likely that this topic will be given a higher priority in the coming days. There is a strong possibility that second stimulus checks may supplement the bonus payment to bring US workers back in the labour force. But it is up to Congress to make the final decision.

Will Trump Get $2 Trillion Stimulus? 

Congress is scheduled to vote on a new stimulus program this month. The current month’s unemployment number will be a critical factor in their vote on stimulus checks and the stimulus program. Congress is going to pay attention to the US labor force market, which confirms that Americans need more help but not a bigger second round of stimulus check. 

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