Jobless claims down as Mnuchin vows no more lockdowns of economy
The tenth-straight weekly decline in jobless claims punctuates a month that has seen signs that the economy has begun to rebound after a six-week coronavirus lockdown.
“Initial claims for state unemployment benefits fell 355,000 to a seasonally adjusted 1.542 million for the week ended June 6,” reports Reuters. “The 10th straight weekly decline pulled claims further away from a record 6.867 million in late March. Economists polled by Reuters had forecast 1.55 million new claims in the latest week.”
The government’s Bureau of Economic Research said this week that the country’s economy entered a recession in February, but a surprisingly strong jobs reports last week signaled that economic activity was increasing.
The Fed’s Open Market Committee says that interest rates will stay the same, and says that rates will remain low for the foreseeable future to stimulate the economy.
“We’re not thinking about raising rates, we’re not even thinking about thinking about raising rates,” said Fed chair Jerome Powell this week.
Reports CNBC: “Fed sees interest rates staying near zero through 2022, GDP bouncing to 5 percent next year.”
Low interest rates are in response to a weak economy and are meant to make it easier to lend and borrow money.
The Fed has a dual mandate to provide full employment and combat inflation. Powell and other government officials continue to worry about the implications of a second wave of coronavirus-inspired lockdowns in the economy.
“We can’t shut down the economy again. I think we’ve learned that if you shut down the economy, you’re going to create more damage,” Treasury Secretary Steve Mnuchin told CNBC’s Jim Cramer.
“And not just economic damage, but there are other areas and we’ve talked about this: medical problems and everything else that get put on hold,” he added. “I think it was very prudent what the president did, but I think we’ve learned a lot.”
Democrats and Republicans are waging a war over reopening the economy, with both sides seeing the battle as key to Trump’s reelection prospect.
As the news hit that the economy entered a recession in February, liberals were quick to dub it the “Trump recession.”
Republicans are eager, however, to contrast a quick recovery under Trump with previous recoveries, especially Obama’s languid recovery from 2009 to 2016. Obama’s GDP growth rate was only 2 percent, while the Fed is forecasting 5 percent GDP growth for 2021.
Trump is hoping the economy will start to gain steam by the late summer, with economic momentum apparent in time for the November elections. While it’s too much to expect that this year will end up with positive GDP growth, the second half of the year could see unprecedented growth after an unprecedented recession.
For Trump, getting the economy on track and preventing a recession from becoming a depression will be a major, reelection-worthy accomplishment.
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