Washington Insider-- Tuesday

Jobs Report Without Silver Lining

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

Watch on Ag Trade Issues

Dairy is expected to become the first enforcement action under the U.S.-Mexico-Canada Agreement (USMCA), with reports indicating U.S. Trade Representative Robert Lighthizer to possibly announce the action this week.

Dairy interests and several lawmakers have pressed the administration to take action on how Canada has implemented its quotas on dairy. The action could be a request for consultations which would be the first step under USMCA dispute process. Under the provisions, Canada would have 15 days to respond relative to perishable items and 30 days for non-perishable items.

Meanwhile, a U.S.-Brazil trade deal is also awaited. The U.S. and Brazil On September 14 set a 90-day timeline for the two countries to negotiate on issues involving ethanol, sugar and corn trade.

The 90-day timeline would be reached December 14. If the two sides cannot find an agreement, then Brazilian tariffs on imports of U.S. ethanol would rise.

OMB Completes Review of USDA Final Rule On Packers And Stockyards Act Actions

The Office of Management and Budget has wrapped up its review of a final rule from USDA on Undue and Unreasonable Preferences and Advantages under the Packers and Stockyards Act.

The plan was sent to OMB in August, the original goal that USDA had released for the final rule to be completed.

This final rule will amend the regs under the Packers and Stockyards Act by adding new regulations that specify the criteria that can be considered in determining whether conduct or action by packers, swine contractors, or live poultry dealers constitutes an undue or unreasonable preference or advantage and a violation of the Act.

However, as with any rules that comes from the Trump administration at this point, they could be subject to revision by a Biden administration.


Washington Insider: Jobs Report Without Silver Lining

The New York Times, along with other urban media, are reporting that the most recent jobs report is bad news — and that the November numbers offer some clues that what was once temporary unemployment is becoming more permanent.

The Times thinks the bad news in the November jobs numbers isn't in the rate of job creation, though that was pretty bad. Employers added only 245,000 positions last month, and even if you adjust for the one-time effects of temporary Census jobs being eliminated, it would take 29 more months to return to February employment levels at that rate of job creation. But at least there is good reason to expect those numbers to improve once coronavirus vaccines are widely available.

The thing that is most worrying, the Times says, is what seems to be happening among the people who have lost their jobs because of the pandemic. The report offers clues that what was once temporary unemployment is becoming more permanent — in ways that, if unchecked, could do long-term damage to millions of families and to the economic potential of the United States.

Although the unemployment rate fell last month, to 6.7% from 6.9%, it was for the worst of reasons: many Americans gave up even looking for work. The number of adults not in the labor force — neither working nor actively seeking work — rose by 560,000, as the labor force participation rate dropped by 0.2 percentage points.

The share of prime working-age Americans working — those between 25 and 54 — was unchanged in November at 76% and remains far below its 80.5% share in February. The number of people who are not in the labor force but say they want a job is 2.2 million higher than it was in February.

In addition, a growing share of the unemployed have been out of work for a long time. The number of Americans unemployed for more than 27 weeks rose by 385,000 in November. Since only September, the number of these long-term unemployed is up by 1.5 million people — a 64% increase.

Together those numbers form what NYT calls a “clear pattern”: many people who lost jobs in the spring have been without work continuously since then, and some of them have given up looking.

A central lesson of the grinding recovery that followed the 2008-09 recession is that these prolonged periods of unemployment (actively seeking a job) or nonemployment (not working, and also not looking) have long-term effects.

Even as the economy recovered, people had experienced various forms of damage. Some people's skills became outdated. But more generally, many just lost a sense of attachment to the work force. It's much harder to find a job when you've been out of work for years than when you've been on a short-term layoff.

In that recession, the share of prime-age Americans who were employed did not return to its January 2008 level until August 2019! When economists talk about what a slow, disappointing expansion that was, this is a big part of what they are referring to, NYT says.

There is a good chance to avoid that fate in the recovery from the pandemic. A quick snapback in employment after widespread vaccination is possible in 2021, and it could pull many of those long-term unemployed and non-employed back into the work force quickly, after only a year or so of detachment from the rhythms of work life.

This is normally the point in analyzing bad jobs reports where one points out silver linings — those little reasons for optimism that are hiding if you know where to look. However, this month, they are hard to find, the Times thinks.

The data in the new numbers are based on employment levels in the week of Nov. 8-14. Various real-time data sources point to a softening in economic activity since then, as coronavirus infections have risen and the weather has turned colder, limiting outdoor dining and retail options. December employment numbers could well be worse.

For a slight hint of optimism, one of the big categories of job loss that dragged down the November numbers will probably reverse. Retailers cut about 35,000 jobs, according to the official numbers, which are adjusted for the typical seasonal patterns. But if you ignore those seasonal adjustments, the sector added 302,000 jobs — stores did do holiday hiring, just less than past experience would have predicted.

The good news, such as it is, is that in January this pattern should reverse itself, creating an apparent employment surge when seasonal adjustments are applied.

In a miserable season for American workers, this is what counts as a cause for optimism: The people who weren't hired as temporary help at retailers this holiday season won't lose their jobs in January.

But the real hope for 2021 is that enough unemployed and non-employed Americans can come back to work quickly enough that the long-lasting effects of the last scarring downturn can be prevented from recurring.

So, we will see. There is hope that the struggle for yet another stimulus package will lead Congress to provide some early winter assistance, and experts say that could help — and progress toward effective vaccines does seem promising. Clearly, these are trends producers should follow closely as the annual spending package continues to be debated, Washington Insider believes.

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