Positive U.S. Jobs Report Stuns Economists; U.S. Stocks Boom On Shock 2.5 Million Jobs Gain.
RICHARD QUEST, CNN BUSINESS ANCHOR: Sixty minutes to the close of business on Wall Street, and what an extraordinary session we have seen on the back of some remarkable jobs numbers. The market up over nearly three and a quarter percent, out like a rocket, never looked back, 800 points, who knows how the last hour will go as people go in and come into the final bits of trading. The markets and the reasons why, there is but one. Millions of jobs have been added in the United States. It's the biggest shock Jobs Report in history. Airline stocks are leading the charge. Boeing is up an extraordinary amount. Schedules are coming back to life. And in Europe, Spain is moving to the next phase of reopening, to lure back the tourists. It is Friday, it is June the 5th. I'm Richard Quest, and of course, yes, on this busy day, I mean business. Good evening. We will of course fully update you on what's happening with the outrages and the valiant policing later in the program in the United States. We'll have that story for you. We begin, though, with what has to be the most unbelievable May Jobs Report that we've ever seen. Investors had braced for the worst. The fear was that unemployment would go to some 20 percent. The reality was the opposite. Two and a half million jobs were actually added. It shocked the market, surprised beyond belief. The Dow, as you saw, now over nearly three and a third higher, and to give you a sense of how shocking it was, it's the way in which 20 percent was forecast for May and it turned out to be 13.3 percent, a fall from 14.7. So far from going up, it actually went down. Julia Chatterley is the anchor, of course, of "First Move." She joins me now. Julia, in a moment we'll discuss with Jason Furman why these numbers may not be right, but give me the nuts and bolts of what these numbers said.</s>JULIA CHATTERLEY, CNN BUSINESS ANCHOR, "FIRST MOVE": Well, it's great to be shocked when it's good news like this, and oh, boy, we take good news where we can get it. What we actually saw was 7.5 million people getting jobs, five million people losing jobs. So the net result here, Richard, as you mentioned, 2.5 million jobs gained. It was a huge surprise. It's great news. The jobs are coming back, I think, quicker than we thought. We always thought that we would see a spike back in jobs as states reopened. It's just kicking in sooner than expected. They were in leisure, they were in hospitality, construction, and manufacturing. All some of the sectors that were hardest hit as a result of the shutdown. Within this, there's bad news though that the government sector still will shed over 500,000 jobs. They have pointed that state and local governments still need support here, too. But you know, the key takeaway for me here, Richard, is that as states reopen, jobs are coming back, whether that's in part due to the support of the PPP, the loan program for small businesses keeping on their workers. What we don't know now is what the path forward looks like. How many staff do you need to keep as you get a sense of what pandemic employment looks like and how many customers you get through the door? There's still lots of unknowns. But we can't take away from the good news in this report. Jobs are coming back and they're coming back quicker than we thought.</s>QUEST: Julia, let's do -- I want to delve into that. You alluded to it. Hospitality and leisure added 1.2 million jobs. That's the most of any sector. Mainly bars and restaurants. It was also construction, education, health services, and the like. And when you look at those numbers, now, retail, some shops are reopening. Hospitality, bars and restaurants and hotels aren't properly open. So, how do you square that circle for me that that was one of the better performers?</s>CHATTERLEY: Well, if you remember, hospitality and leisure were 40 percent of the job losses in the prior months, so you would suggest or expect to see as things start to reopen some staff being required. What you've got to remember when we're looking at the bounce back that we are seeing as we see activity pick up and the shutdowns and lockdowns being reduced, is that you will expect to see people employed. We've still got more than 20 million Americans, Richard, out of work. If you add in things like discouraged workers, workers that would like to be working more than they are at this stage, we're still talking one in five American workers impacted. It's called the U-6 unemployment rate, which is still above 21 percent in America.</s>CHATTERLEY: Even the statistics agency that provided this data said, look, if everyone who said they were unemployed actually said that rather than being absent from the workforce, this statistic would be three percentage points higher. We would be talking around a 16.5 percent unemployment rate. So for all of the optimism and the jobs that we're seeing added back here, the complexities, the complications, the challenges here in the American jobs market remain, and we don't know yet whether we can sustain this pace of job creation and what the future looks like. And actually what the job market can withstand while keeping cases of COVID down. There are so many unknowns here, but hey, like I said to begin, we'll take good news where we can get it and today is good news.</s>QUEST: Julia Chatterley. Julia, thank you. Now, with me is Jason Furman, the Harvard Professor, former Chair of the White House Economic Advisers. Jason, we'll come to your point that you've been writing about in just a moment in terms of the numbers. But did this morning's number take you by surprise, too?</s>JASON FURMAN, FORMER CHAIR OF THE WHITE HOUSE ECONOMIC ADVISERS: It took me by surprise, Richard. I was expecting to see millions of jobs added in the second half of May, which would have been too late to be captured by this report. It looks like I might have been off by about two weeks and you saw millions of jobs added in the first half of May.</s>QUEST: So, you are of the opinion that, as Julia was alluding to, that the number -- the real number -- this doesn't reflect it because of the way the numbers are counted? Explain.</s>FURMAN: There's two issues. One is there's a set of people who were not working, not getting paid, but didn't really quite give a reason why that was the case. There were I think about four million of them. They probably were unemployed, but they weren't counted as unemployed. Another big issue is just millions of people left the labor force, they gave up looking for jobs because May did not seem like a particularly good month to be searching for a job. And if you count them as unemployed in the first group, the unemployment rate would have been 17 percent. Now, that still would have been down from a comparable unemployment rate for April. So no matter how you look at it, May was better than April. But no matter how you look at it, the economy was still in a very, very depressed state in the month of May.</s>QUEST: So are you suggesting that all of these numbers -- I say all. It is a good news. It is a good number. But are you suggesting that what this number is really doing is borrowing or taking from later in the year and bringing it forward, which would be good news, but it doesn't tell us much about what the hardened level, the elevated hardened level of unemployment is in the United States?</s>FURMAN: Yes, that's exactly right, Richard. They report the number of people who are on temporary layoff. That number went down 2.7 million in May relative to the month before. In some sense, that was bad news because those were people who weren't actually fired from their jobs. They just temporarily weren't at their jobs. And so all 2.5 million new jobs we got, roughly speaking, were people who were taken off that temporary layoff. If you look at the number of people who have been fired from their jobs, not just temporarily but permanently, that actually went up in May relative to where it was before. That's what's worth looking at in terms of the longer-term trajectory that we're on.</s>QUEST: Jason, we're going to deal with the politics of this in just a moment. But on the sheer economics, somebody hearing this news today would say, well, it's starting to look like a V-shaped recovery. Maybe it's a V that's going a little longer, it won't be identical V, but it's starting to look that way. Would we expect that to be reflected next in GDP? In manufacturing? In PPI?</s>FURMAN: I think we're going to see that in a wide range of data. You won't see it in GDP until we get the numbers for Q3, which is in October, the GDP that is still lagged. But absolutely, for the next couple of months, we're going to see, I would expect, very rapid growth in retail sales and industrial production, in new orders, in housing, and everything, and it will look like we're starting to go up a V. I'm just worried we're only going to go up half of it because the first half of the climb is the easy part. It's the second half that's much harder.</s>QUEST: Feel free to steal this. I call it the reverse tick. We sort of come down. You know how a tick goes. It comes down, but just flip it around and that's what it is. Jason, we will talk more about it. I'm so grateful on a busy day that you found time to talk to us. I appreciate it. Thank you.</s>FURMAN: Great talking to you, Richard.</s>QUEST: Now, President Trump, not surprisingly, has called it and I am going to quote, "probably the greatest comeback in American history." So, let's move from the economics and the numbers to the politics, because nothing this year, nothing at this time, in fact, nothing this year full stop can fail to be seen other than through the lens of the political election. This is what the President said about how this number reflected his policy of reopening America.</s>DONALD TRUMP, PRESIDENT OF THE UNITED STATES: When we had a problem, we were able to cut it off, stop it just like this, stop it. Keep everyone inside, keep them away, keep them together, away, uninfected, and we saved millions of lives. And now, we're opening and we're opening with a bang and we've been talking about the V. This is better than a V. This is a rocket ship.</s>QUEST: Now, the White House correspondent John Harwood is in Washington. We have much ground to cover here, John, and I'm glad that you're with us to do so. All right, this is it, isn't it? This is the -- he blames -- the President blames China for the pandemic and he takes the credit for the recovery.</s>JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: Richard, the President today was like a fighter who has been staggered, punch drunk around the ring by a series of blows. He lands one punch and all of a sudden he is intoxicated and completely exhilarated by what he has done. The President of course is exaggerating the situation, claiming victory prematurely, because as Jason Furman said, this was the low-hanging fruit. This is the easy part of the recovery that when you switch the economy back on, he did that so to that extent, yes, the President by pushing the reopening of the economy generated these gains. What we don't know, though, as you alluded to before is, what does the virus have to say about it? Did they reopen too early? Is the virus going to spike again and cause another downturn of economic activity? And then secondly, now that you've reconnected people who were temporarily displaced from the workforce, what about all of the others? The businesses that may have gone under? People who may have left the labor force? We don't know what the continued climb is going to be. You get a boost in the beginning, but we've got a long, long way to go, which is why economists in both parties who I talked to today were very cautious in interpreting this data.</s>QUEST: But we know that the President is nothing, if not a superb salesman and the ability to spin. Now, if you accept he doesn't have to convince Democrats, hardened Democrats and all of those states that have borne the brunt of the losses, he only has to convince those in the middle and those on his side. I mean, this is exactly the news he needed.</s>HARWOOD: It's the news he wanted. I'm not sure it's what he needed, though, Richard. Remember, he's in a very deep political hole right now and just think back a little while ago before the coronavirus pandemic hit and we shut down the economy. Think about 2018, for example. The economy was booming in 2018 and Republicans were hammered. The President was trailing Joe Biden in the polls before the coronavirus pandemic. A lot of the negative judgments of the President have nothing to do with the state of the economy, they are about his personal behavior and how his approach to the office is and that's one of the things that people recoiled from this week in his response to the protests in American cities. So, it is certainly good news for the President. It's better than a much higher number. But 13 percent unemployment is still higher than we have seen since the Great Depression. And so the President still has millions and millions and millions of Americans who had jobs a few months ago who do not have jobs now and there's a political price to pay for that. It's better, but he needs a lot more than that.</s>QUEST: John. John Harwood in Washington, thank you. We will talk more, that much I know about. Thank you.</s>HARWOOD: You bet.</s>QUEST: As we continue on QUEST MEANS BUSINESS this Friday, we will watch the numbers and we'll watch the market very closely. The police tactics are now under the microscope in the United States. Police brutality, it's another important part of what is being seen following the George Floyd death last week.