Washington Insider-- Monday
Relatively Weak New Job Numbers
Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.
South Korea's Yoo Drops Out Of WTO Chief Race
The next leader of the WTO appears set to be former Nigerian finance minister Ngozi Okonjo-Iweala in the wake of South Korean Trade, Industry and Energy Minister Yoo Myung-hee ending her bid to lead the world trade body.
"Due to the prolonged vacancy of the leadership at the WTO, the future of the organization also has become uncertain," Yoo said at a briefing in Seoul, according to Yonhap News. "To speed up the consensus building among the member countries on selecting a new director-general, I have decided to renounce my candidacy through close cooperation with the United States, our strong ally."
Her last statement suggests she has coordinated the withdrawal or at least alerted the U.S. to her decision. The Trump administration had blocked the naming of Nigeria's Okonjo-Iweala, with then-U.S. Trade Representative Robert Lighthizer arguing that the trade body needed to be headed up by someone with trade experience.
The Biden administration said Friday they now strongly backed putting the Nigerian atop the world trade body, setting the stage for that to happen soon.
FAO Makes Major Downward Revision For Global, China Corn Stocks
China's large imports of corn on the global market prompted the UN Food and Agricultural Organization (FAO) to “undertake a further review of its maize supply and demand balance sheet for China.”
The big imports and high domestic prices, FAO said, “point to much higher feed utilization in China than earlier anticipated, and hence a much greater drawdown of stocks than earlier estimates suggested.” FAO said their review resulted in changes to China's balance sheet starting from the 2013-14 season.
The FAO raised its global corn utilization forecast for 2020-21 to 1.179 billion metric tons, up 21.4 mmt from 2019/20, with China's use pegged at 190 mmt, up 15.5 mmt from December. China's 2020-21 corn carryover is now pegged at around 139 mmt, down nearly 54 mmt from December.
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The agency puts China's corn imports at 20 mmt, up 10 mmt from December. “The revision reflects exceptionally large purchases in recent weeks, primarily from the United States of America,” FAO said.
Attention now shifts to USDA's WASDE report February 9 where the agency has maintained its forecast for Chinese imports of corn at 17.5 mmt. The U.S. ag attache in Beijing is carrying a China 2020-21 corn import figure of 22 mmt.
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Washington Insider: Relatively Weak New Job Numbers
Well, there is a lot of tea-leaf reading over last week's jobs report, the Washington Post — and many others — are reporting this week. The Post says the “data come as negotiations over a new stimulus package heats up in Congress and found that the U.S. gained back a paltry 49,000 jobs in January, “a sign that the economic recovery may be faltering under ongoing pressure from the coronavirus.”
It reported that the unemployment rate fell to 6.3% from 6.7% in December, but that decline was driven by more than 400,000 people who left the workforce instead of getting jobs.
And, it concluded that the January data, released by the Bureau of Labor Statistics, is another reminder of how much ground the labor market still needs to regain to return to pre-pandemic levels. The U.S. now has more than 9.8 million fewer jobs than it did in February 2020, recovering less than half of what was lost during the early days of the pandemic.
The report dramatized the situation by estimating that “at January's growth rate, it would take more than 16 years to regain all of those jobs.” And, it cited expert opinions that were equally gloomy. “We lost momentum over the winter and the wounds are getting deeper, which opens the door to more scarring,” said Diane Swonk, chief economist at Grant Thornton LLP. “Everyone keeps waiting for this to be a temporary phenomenon. But when you're a year into it, you have to stop waiting for the next bounce and start worrying about what the long-term costs are—and how much this sets us back over the long haul.”
The report found that rapid job loss continued in the leisure and hospitality industry, which shed 61,000 jobs as layoffs hit amusement and gambling businesses, hotels, restaurants and bars. Retailers lost another 38,000 jobs after an uptick during the holiday season. Health-care facilities lost 30,000 jobs, transportation and warehousing, 28,000.
The report also showed that the labor market was weaker late last year than initially estimated. There were 72,000 fewer jobs created in November than originally reported. In December, the United States lost 227,000 jobs rather than the 140,000 initially estimated, the BLS said. Even a lone bright spot on the report came with an asterisk: 97,000 jobs were added in the professional and business services sector, but 81,000 of those were temporary.
The report comes as Democrats move closer to passing President Biden's $1.9 trillion stimulus plan, the Post said. The proposal would extend unemployment benefits through September as well as provide $1,400 stimulus checks for many Americans.
Jared Bernstein, a member of the White House Council of Economic Advisers, said on Friday that the jobs report “underscores the urgent need for the president's rescue plan,” citing particularly weak job growth in the private sector. “That is a labor market stall,” he said. “We have a plan in the wings that can finally get American families and businesses to the other side of this crisis.”
President Biden, in brief remarks, told reporters that the numbers underscored the scope of the economic crisis. “This is about people's lives. This is not just about numbers,” he said. “They are really hurting. Just look at all the number of people who are needing and seeking mental health help.”
The pandemic's disproportionate impacts on minorities and women were also reflected in the labor report. Unemployment rates for minorities continue to significantly outpace the 6% rate of White people — 8.6% for Hispanics, 9.2% for Black people and 6.6% for Asians. Of the more than 4 million people who left the workforce in January, nearly 60% are women, Swonk noted.
And the data show that many of the unemployed have been suffering for a long period. About 3.5 million people once considered temporarily unemployed have now permanently lost their jobs, the BLS said. Of the overall 10 million people currently unemployed, about 40% have been out of work for more than six months. Meanwhile, the number of people filling new jobless claims remain well above pre-pandemic records, far outpacing previous crises.
And the disproportionate impact on low-income workers combined with the unique circumstances of the pandemic likely helped conceal the true depths of the crisis, Swonk said.
Coronavirus cases have recently started trending down after the deadliest month so far during the pandemic and economists expect that the declining caseload will speed an economic rebound in the spring. But they remain concerned about the threats posed by new, more transmissible variants—another potential complication for the recovery.
So, we will see. A major development is the new downward trend in coronavirus cases, along with new threats to the recovery — trends that are vital to the economic outlook and which producers should watch especially closely as the season progresses, Washington Insider believes.
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