July 2, 2020 • 40 mins
Former U.S. Deputy Secretary of Labor Chris Lu breaks down the June jobs report. Bloomberg News Finance Reporter Zeke Faux talks about his story “Pats Fan Stole Giants’ Super Bowl Rings But Fumbled Bigger Score.” We get Businessweek Economics with Bloomberg Economics Senior U.S. Economist Yelena Shulyatyeva. Shima Hamidi, Bloomberg Professor of American Health in the Department of Environmental Health and Engineering at Johns Hopkins University, discusses the impact of COVID-19 on U.S. cities. And we Drive to the Close with Alan Zafran, Founding Partner and Co-CEO at IEQ Capital.
Hosts: Carol Massar and Jason Kelly. Producer: Doni Holloway.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
This is Bloomberg Business Week. I'm Carol Masser and I'm
Jason Kelly. We're right here every day bringing you the
latest news from the world's of business and finance, plus technology, politics, economics,
all harnessing the power of Business Week reporters and editors,
and of course Carol that's part of a team of
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and twenty countries and Jason. You can download Bloomberg Business
(00:23):
Week on iTunes, SoundCloud, bl Bloomberg dot com. You can
also listen to our radio show at two pm Eastern
on Bloomberg Radio every weekday, or watch us on YouTube
by searching Bloomberg Global News. Every time we approach Job's day,
I can speak for Carol and myself when we say
and think, we want to know what Chris Luke thinks
about all of this, no matter which way it goes.
(00:44):
He is a senior fellow at the University of Virginia
Miller Center. Of course, a former Deputary Deputy Secretary of Labor.
I get that. I sort of trip on that almost
every time. I'm sorry, Chris for me, former Deputy Secretary
of Labor under President Obama. He's on the phone with us. Now, Chris,
how are you. I'm doing good. Thank you for having me.
All right, well, it's good to have you back. Um.
(01:05):
So your initial reaction, like your gut reaction to this
and and maybe more important as you saw it, all
sort of filter through what do we need to take
away from this job's report, both monthly and UH and
then the weekly jobless claims. So there was a lot
of data today. Gut reaction was good, with a lot
(01:25):
of caveats. You know, we always tell people the monthly
jobs data is really kind of looking way back, and
in this case, it goes back really to the pay
period that began on June eighth. So in that second
week of June, the economy clearly was recovering. But when
you add that with the weekly jobs claims, you started
(01:48):
get kind of a mixed picture because we're continuing to
have again, if you add in not only the people
applying under the normal unemployment program, but the new pandemic
program for gig workers, it's about two million people applying
for unemployment every single week, new people applying, um and
you know total right now, but thirty one million people
(02:08):
on unemployment, which is not really going down. So if
you put all of this together, you get a sense
of an economy that was reopening. By the beginning of June.
Jobs were coming back, and that recovery may have slowed,
and we don't really know how much it is slowed.
And again, as we always say, we're still in the
middle of a public health crisis. And until you resolve that,
(02:30):
you really can't get a good sense about where that
the economy is going. We're still what about nineteen million
in terms of those who are on unemployment benefits that
are out of work. Yeah, I mean, if we simply
look at the number of people who apply the under
the traditional unemployment program, it was one point four million
this week, which is more than double the worst week
(02:53):
we ever had during the Great Recession. So the numbers
are still elevated. They've come down a lot, but we
all need to understand that just in the months of
March and April we lost about twenty two million jobs.
We've picked up about seven seven to eight millions. We've
picked back up again. Um, but these numbers, and we
always say jobs created, uh, and we probably this month
(03:17):
it's simply need to say jobs were stored to people
because you know, one of the quirky things about the
data as you see. You know, just in healthcare employment,
a hundred and ninety thousand UH dental jobs were created.
I suspect we didn't have a hundred ninety thousand new
dentists last months. I think because all dental assises were
closed they reopened. So again, this is positive with a
(03:41):
lot of caveats, right, I just look at my own world.
I mean I went and had a root canal, like like,
these are things that I had were not do you
know it's not I'm going to go back to my dentist.
So like, yeah, I get that it wasn't a brand
new dentist. It was not a brand new dentist. Yes, no, no, no, hey, Chris,
I feel like a more constructive conversation at this point.
I mean, these numbers are going to be what these
numbers are. I mean, we have shut down our economy.
(04:01):
We're finding our way back, whether it was a republic
in the White House or a Democrat like this is
what you're dealing with. It's really tough. I do wonder though,
when we get on the other side of this, are
there companies industries are saying you know what, we really
don't need those kind of workers anymore, or you know what.
I know there's that demand side of what the economy
is like and what's going to be needed. But I
do wonder if this is going to be a real
(04:23):
readjustment and kind of the types of jobs that ultimately
stay with us and those that ultimately go away. Yeah.
I mean, look, I I'm in Uh, I'm in the
DC area right now, which is you know, partially reopened.
I even think in a reopened economy, people just aren't
going to go to restaurants, uh if they can do
take out. Uh. You know, we know that people aren't traveling.
(04:46):
People aren't going overseas because you know, U S systems
can't leave the country functionally, at least going to Europe.
So we know that travel will be down. We know
that a lot of companies have basically said, hey, you
work remotely for the rest of the year, which has
been a cascading impact through real estate and through mom
and pop, delis and all of the other services that
(05:07):
support companies along the way. Now, there may be other
other industries that pick up along the way, but I
suspect those are not the ones that are going to
be as job intensive and so you know a lot
of the broader structural changes we've seen in the economy
will probably be accelerated as a result of this. Like
what specifically though, Well I think of this. You know,
(05:29):
I as a person who probably eats more fast food
than I should. Uh, there is you know, you can
order online on your mobile app. You can also use
a touch screen, and I suspect in this environment, uh,
they're just gonna start to move to that. And it's
not to say you don't need people, you know, handling
the food, but it's going to be a lot fewer
of those people. Um, you know, and I think a
(05:51):
lot of the companies are going to realize, you know what,
we just don't need in general this many people around
the company as much as possible. So you know, we see, um,
you know, we might end up having a full recovery,
or you know, we might just kind of be operating
at this kind of seventy level for the foreseeable future,
which in many ways I think is the worst outcome
because you'd have a half open economy. Was still all
(06:15):
of the increased infections and death. You know, we did
tease that this week was interesting. I feel like over
the last week or so that we are now once
again UM seeing updates on the virus from the White House. UM.
Vice President Pence is often conducting them. And what's interesting
is the tone has changed. They seem much more organized,
(06:35):
and you know, we were kidding that now they're saying, okay,
wear a mask, you know, but the tone has changed.
And is it just a case tell us about crisis.
I mean, you don't have the playbook initially when the
crisis hits, and you do learn as things go along.
What do you make of the progression in terms of
how the administration has handled the pandemic? Well, I really
think it's been the tale of two administrations. I mean
(06:57):
you've got even this week, while you had the Vice
President UM encouraging mask wearing, you had Secretary asar Uh
test on TV last weekend expressing concerns. Obviously Dr Fauci
this week testifying too. And then you have the President who,
while yesterday he said, you know, he's encouraging people to
wear masks, he again said that he thought this would disappear.
(07:19):
And I think that's kind of the challenge. I mean,
you know, UM, below the president, you've got the wheels
of government that are moving, um, that are ensuring that
you know, states get ventilators and PPEs and trying to
issue guidelines. But ultimately, the president has the biggest bully
pulpit um and I think the kind of lack of
(07:41):
consistent messages coming from him, I think have undermined a
lot of what you know, other people in his administration
are trying to do. I mean, you continue to see
a fairly significant number of people in this country who
you know, are not wearing masks right now. You've got
a lot of states which you know, while encouraging masks
that got and there's encouraging masks, are not mandating them
(08:02):
as well. And we know that's you know, one of
the simplest things you can do. And so um, yeah,
there certainly has been an increased, a ramped up level
of concern and engagement this week, but I think it
would be a lot more effective if the president got
on board as well. And so, Chris, we love talking
to you about all branches of government because you've worked
in all of them, and I wonder what you make
(08:23):
of Congress's response at this point, either from a stimulus
perspective or for a stimulus slash rescue perspective, or from
the perspective of sort of setting the political and and
the tone around this. Yeah, I mean it's interesting. Um.
You know again, just on this mask wearing issue, I mean,
(08:43):
Speaker Pelosi has been, you know, very open about her
wearing a mask and is basically now requiring that if
you show up at a committee room as a House member,
you have to wear a mask or you'll get kicked out.
So she's trying to set that, um example of leadership.
I do think on the stimulus may think this is
gonna be problematic, and I think you know what I
hope does not come out of today's jobs numbers is
(09:05):
that people read it and say, you know what, mission accomplished.
We don't need to do anything else. I mean, we
know that these extended unemployment benefits are expiring at the
end of July. Fortunately, the Senate this week extended UM
the PPE program or the PPP program for small businesses.
That's a good thing. But again we continue to talk
about this next wave of layoffs that might come from
(09:28):
state and local governments that are just strapped right now,
and unless Washington provide some help, we're gonna start to
see layoffs. I mean, even this week we saw Mayor
Deblasio saying, you know, he might be furloughing workers in
New York. In Maryland, yesterday, Governor Hogan uh Is announced
he's cutting four million dollars from the state budgetal impact
(09:50):
services and employees as well. So, um, we are not
out of the woods and and so. And I think
that's sort of the problematic aspect of today's positive job numbers.
I think people will read it in the wrong way. Well,
I think your point is so smart, Chris, and that
this whole idea of that you've got to go the distance,
right And you can see certainly with the president, and
I'm not being critical, it's just obvious that he has
(10:12):
moved on to running his campaign. And at the same time,
like I think about the financial crisis, it wasn't like
one program and we were fixed. We still, you know,
to some does some extent you know, are thinking about
that and still dealing with it, like you have to
continue to be on it. Yeah, I mean, look, the
lesson we learned from the Great Recession is that we
did not put enough stimulus into um into the country,
(10:35):
and we we kind of backed off way too quickly.
And you know this past week you had the said
Chairman J. Powell saying to Congress, don't get complacent, uh,
you know, in your in your economic response. And I
feel like we're getting a little complacent right now. And
the irony about the president's you know, kind of quote
unquote transition to greatness is that actually more stimulus would
(10:56):
help the economy and probably would help his re election prospects.
You Unfortunately, you know, there's this dynamic obviously with Senate
Republicans concerned about debt. Obviously, how Democrats have a pretty
expensive bill out there. So I'm hoping when they get
back from July four, um, cooler heads prevail and they
find some kind of compromise because we need that stimulus
in the economy. Absolutely, all right. Always great to catch
(11:18):
up with you. Never enough time. I feel like we
always have fifty eight more questions for you. But we
appreciate you coming with us on this day, as you
do most jobs, stays Chris Lew Senior Fellow, University of
Virginia Miller Center, former Deputy's Victory of labor under President Obama.
Johnnius on the phone from the DC area, This is
Bloomberg Business Week with Carol Masser and Jason Kelly on
(11:40):
Bloomberg Radio. I defy anyone to listen to this sentence
and not want to read this story. Sean Murphy was
an epic weed smoker, a devoted Tom Brady fan, and
the best cat Burglar that Lynn, Massachusetts had ever seen.
I mean, it's irresistible, it is you're in, it is
coming to a theater near you. Let's just put that
out there. Absolutely, and to boot the stories written by
(12:02):
one of our all time favorite writers at Bloomberg Business Week,
Zeke Fox, finance reporter for Bloomberg. He joins us on
the phone and Zeke, this story is incredible. How did
you find out about this? Well? I was I had
read a little bit about the about the case. It
was made the papers when the rings were stolen there
(12:23):
when they were recovered, and uh, these are we should
point out sorry, these are super Bowl rings. These are
um New England Patriots or excuse me, New York Giants
super Bowl rings stolen by a Patriots fan. Yis yeah,
So after the infamous helmet catch super Bowl Super Bowl
(12:44):
forty two and two thousand and eight, when the Patriots,
who were on their way to an undefeated season and
we're upset by Uli Manning and the Giants. Uh, this
kapt burglar slash furniture mover from Lynn, Massachusetts stole the
Giants Super Bowl rings and spoiler alert. I wrote to
(13:06):
him in prison and said, you know, I had heard
a little about your about this story. By any chance,
are you Patriots fan like me? Would you like to
talk about it? And over the course of the last
year or so, he's he's been telling me his story,
and the true story of what happened is, you know,
(13:27):
crazier than I even imagine. Well, this is a guy.
I mean, the stealing of the rings is one thing,
but he is quite a character right and has been,
you know, stealing things for a long time. So he's
from Lynn, which is a suburb on Boston's North Shore,
(13:50):
and when he was growing up it was a pretty
down and out place, and burglary was like a career
path that a lot of or at least a good
number of young people actually pursued and got taught by
older generations of burglars. And burglars and lymb specialized in
trying open the doors to pharmacies and stealing the pills
(14:14):
to resell. It's a pretty easy thing that could be done,
you know, in the cover of night, and you know,
you could often get away with it. And Murphy was
introduced to this world in middle school, I believe at
Christmas time sleep over at his aunt's house. His cousin
taught him how to do it. But before long he
had moved on to much bigger scores. And so what's
(14:41):
he I mean in your correspondence, like how would you
describe You do a nice job describing him the story
of but like how would you describe him to to folksy?
So he really is like a typical Boston character. He
loved the Patriots. He worked money through Friday at his
real moving company, which really did move future people's furniture.
(15:06):
He drove muscle cars. He liked to work on his Camaro,
which had a custom red vul or interior um. He
liked Motley Crue and other hair metal A lot of
the times. He had a mullet and a biker mustache
um and he liked He didn't really do drugs, which
(15:29):
was the downfall of a lot of his contemporaries among
Blend's burglars. But he really liked smoking weed and coming
up with complex heists. I mean it's remarkable, you know.
First of all, it's it's so well written. It's such
a great read. And I'm not kidding that I could see,
you know, certainly here we are working from home and
(15:51):
we've all binged on Tiger King like this is I
could see in a multi part series um on one
of the streaming services. Because it's almost too good to
be true, but it is true, um. And it's just
this fascinating character, right who It was just a way
of life for him, right in terms of where he
was born and and and you know what he did,
(16:12):
and as you said, he kind of builds up to
his crimes. I mean ultimately though, and I'm going to
say there's some interesting personal life stuff that went on too,
in terms of girlfriends and and how he went about that.
But I mean, ultimately he was caught, right, Yes, So Murphy,
(16:34):
if you talk to him, he'll say he's never really
been caught because he doesn't consider it being caught unless
he's caught in the act. The problem is that quite
a few times he has been caught. He's spent almost
i think even more than half his life in prison
because the ways that the police work is not so
(16:56):
much to catch people in the act, but to find
out about things that happened, talk to people who might
know about it, and prosecute the guilty party once they've
identified them. It's kind of like a myth that they
would catch a burglar in the act so much. Um so,
he's frequently throughout his career, I guess I'll call it
(17:18):
has been uh sold out by people who you know,
had worked with him or who knew him. In the
Super Bowl, Uh, theft was really no was they worked
out like that too? Yeah, I mean it's really I
mean there's also for for Patriots fans, and everything's turned
(17:40):
out just fine for Patriots fans. Let's not le let's
not shed any tears for for the Pats fans. But
it does take you back to a really a really
sort of pivotal time. And I mean that rivalry, and
I mean I remember watching that game and he mentioned,
you know, the helmet catch and and that was Peate
Eli man uh in many ways, and so it's just
(18:02):
it's a tail that really resonates in in time for
a lot of sports fans more than as much as anything, well, yeah,
I hope that it's Uh, it's something fun for sports
fans who haven't had anything to watch for exactly. All right,
So how do you fit it? Just before we let
(18:23):
you go, how do you feel about Brady and Tampa?
Oh well, I'm I'm a past fan myself, so I
know I hate to see it. I hate to see if,
but I'll still be rooting for him to do well.
And Cam Newton, how are you feeling about that? I
think you know he makes the past super Bowl contenders.
I'm psyched to see what Belichick comes up with for
(18:46):
him to do. Yeah, never bet against Belichick. I think
that's the one. One of the takeaways that we all
have this story. It's a must read, the perfect long
weekend read. Carol can't recommend it enough. And love, love,
love anything. Fox puts his mind to Ben Affleck maybe
does the movie. Yeah, yeah, checks out. It's just it's
such a great week and it is just kind of fascinating.
(19:09):
The guy, like, you know, while I was in in jail,
like taught himself law, right, I think, so we can
represent himself and understand the law. Um, so it's just
a great thing. I'll put it out on Twitter. And
you guys pick up the magazine or check it out
at Bloomberg dot com. So really fascinating. Um, Seek Fox,
what I love talking to him? I could just imagine
(19:29):
the communication. I mean, that's kind of a side story.
I mean, maybe that's how you do the movie. Like
the reporter's perspective of reaching out and getting access to
seek Fox. We'll have to work on that. I'll have
to ask seek I don't know want to play him.
I don't put that on on Twitter. This is Bloomberg
Business Week with Carol Masser and Jason Kelly on Bloomberg Radio.
(19:53):
All right, let's do a little business week economics. Now.
Obviously we've been talking about it all day, the jobs
report and the is data that have come out. Obviously,
one of the strongest and most important voices that we
turned to in the administration's Larry Cutlow, the chief Economic
Advisor to the President. He caught up with our own
John Farrow this morning on Blueberg Surveillance to talk about
(20:15):
the job support. Here he talks about the trend of
temporary workers getting back to work. Well, look, first of all,
it's a spectacular number and it helps the overall situation enormously.
So you know, that's really the key point. We've created
a lot of jobs in the last couple of months,
and the trends continue. I want to say one thing
I was listening to that earlier conversation. I don't think
(20:39):
people understand that relationship the rescue package that the President
led with bipartisan support and Congress, and the p p
P that Secretary manution uh fostered and implemented. It's the
temporary layoffs, John, It's the furloughs that are coming down.
We kept people connected their employers. Okay, they did receive assistance,
(21:03):
but we kept them connected so that as the economy
reopened and the businesses reopened, roughly a small business reopened.
So we saw it again today. I mean, sixty three
and a half percent of unemployed now are temporary workers.
That number was seventy and was seven point seven million.
I don't see why that trend can continue. That's the
(21:26):
point I'm making. I don't I'm not sure. It's like
an intellectual disconnect why that trend can continue a lot
of temporary layoffs will go back to work. And certainly
is Larry Cutler, the chief Economic codpiser to the President Carol. Yeah, absolutely,
and I guess time will tell Jason right if that
trend continues. I mean, he's making that point and we'll
(21:47):
see uh in job reports to come. Certainly, that weekly
number was a bit troublesome, So let's get more analysis
of today's data set. Business Week Economics continuing with Bloomberg
Economics senior US economist Lana shill Chiva joining a sound
the phone in Long Island. So, Eleen, how did you
and the Bloomberg Economics team read the data points that
(22:08):
we got on the jobs market? Right? We got monthly
jobs numbers backward looking and before we started kind of
closing down parts of the economy again. And then of
course we got the weekly numbers absolutely and both are
very significant. So pay rolls was an upward surprise, and
it was a positive report all across, once again highlighting
(22:32):
that economic fundamentals are strong enough for the recovery to
take place once the health crisis is over. And that's
a big heavy at though. So because you know, we
we all listen to the news, we all watch the news,
and we see the big acceleration in the number of
(22:53):
COVID nineteen cases, particularly in the Sun Belt States. And
I would say that the month so July will actually
help us define the trajectory of the economic growth going
forward for the remainder of the year. So will we
see another um round of business closures or we will
(23:14):
just continue to jog along and and uh, you know
this uh recent spike in the number of cases will subside. Uh.
So I think it's it's a lot of questions the
data telling us, yes, things were looking good in June,
but well in July already, and a lot of things
(23:36):
have changed since June. Yeah, I mean a lot of
things have changed that I think we're already seeing in
some of the other data, right, Elene, I mean, what
are you looking at the givets maybe a more realistic
picture of of current issues, current economic activity beyond the
job and jobless claims. So you just mentioned one of them, right,
(23:59):
And this is the number of jobless benefits and jobless
benefits have been stubbornly, stubbornly elevated. So and that might
not be surprising given that the re acceleration in COVID
nineteen cases started right after the payroll survey week for
(24:20):
the months of June. So the second half of June
actually already saw uh pick up in cases, and that
might be telling us that some businesses were ready to reopen,
but they didn't, so that resulted in a significant in
high number in jobless claims, or maybe there were some
(24:45):
new um claimants and uh, this number may in fact rebounds.
So Jason and I caught up with as we usually
do on monthly Jobs Days, with Chris Lew, former Deputy
Secretary of Labor under President Obama. And you know, his
point is, you know that we learned some things from
(25:05):
the financial crisis that they didn't put enough stimulus out
in in the beginning. Right, So the lesson right now
is he said, you can't be complacent that we're gonna
probably need more stimulus when those benefits um stop in July. Um,
is that a given, Elena that in order for us
to maintain whatever economic recovery is happening right now, we're
going to need those stimulus checks from the government. Bottom line. Absolutely,
(25:30):
and uh and unfortunately as well. So I mean listening
to what Mr Cuddler was saying. He was saying that
they basically the package helped the companies to keep their
workers on the payrolls. And this is absolutely true. The
(25:50):
package was very timely. It was right in size, and
that's why we see all these numbers that being so strong.
And you absolutely right, if we if we see this
UH falling off a cliff, we may see a significant
decline in economic activity. Is simply due to the fact
that a wage income remains well below pre crisis level.
(26:14):
It's it's something like seven point two below that February level.
We made some progress in kind of closing that gap,
but it's way below still and going forward it will
depend on how many jobs we create and how these
jobs are playing well. The economic applications of all of
(26:35):
this are are very broad and wide, no doubt about it. Hey, Lena,
thank you so much. Have a good holiday weekend. You'll
initially Giva of course of our Bloomberg Economics team joining
us on the phone from Long Island. This is Bloomberg
Business Week with Carol Masser and Jason Kelly on Bloomberg Radio.
The virus. Jason, We've talked about this a lot. It's
(26:56):
been a big reminder about the inequalities when it comes
to health care access and those who ultimately suffer the
most really from it. Dr Shemi uh Sheima excuse me.
Dr Sheima Hamidi was recently named Bloomberg Assistant Professor of
American Health and Environmental Challenges and Engineering at Johns Hopkins University,
the Bloomberg School of Public House supported by Michael R. Bloomberg, founder,
(27:17):
Bloomberg ALP, and Bloomberg Philanthropies, and Dr Hamidi joins us
on the phone in Baltimore. Dr Remedy, It's nice to
have you here with us. We are taking, you know,
a really hard look at the virus and you know,
talking a lot more UM how different communities are impacted,
and that is something that has certainly been front and
center for you. Thank you for having me um absolutely UM. So,
(27:43):
you know, there's been a lot of UM research and
uh many many researchers have been looking at different aspects
of COVID nineteen pandemic. One aspect that has been less
studied relatively has been density. UM to what extent we
see there, you know, any connection between density and the
COVID nineteen pandemic. What we see from the conversations among practitioners,
(28:09):
UM in even in the academic context or news media outlets. Uh,
you know, you see extensive coverage that blaming density urban
density for the rapid growth of COVID nineteen, particularly in
New York City, and referring to suburban sprawl as the
United States secret weapon against Corona virus. UM. So, what
(28:31):
myself and my team have been trying to do I
was to look closer at this issue and topic, doing
a national study looking at nine d and thirteen metropolitan
counties in the US and really looking at what what
the data sells us and what does it tell you?
Because I believe in in your research, Darctor Remitte, you
(28:52):
have you distinguished between activity density density as being distinct
from crowding or overcrowding. And I feel like that's a
real important distinction to help us understand that absolutely, uh,
this is very very important because these are the two
UM concepts that are most often confounded with each other,
(29:15):
density and crowding or overcrowding. Crowding could happen when a
large number of people gathered closely together UM, and it
could happen in bars, restaurants, schools, sports events, airports, supermarket
or even on beaches as you've been UM seeing on
the news in Florida or or beaches in California. And
(29:37):
by definition, the crowding could happen even at the very
low density areas and all of these venues. UM and
always that they've been trying to distinguish between the two
crowding and density and see to what extent, Uh, you know,
when you control for the level of crowding or people's
level of social distancing, what is the relationship between density,
(29:59):
UM activity, density and the COVID nineteen spread. Yeah, it's
you know, something that's just kind of unfortunately a stark reality.
You know when you look at this, how can we
do better going forward? Because this is just you know,
in terms of how people are living and their exposure.
I feel like it's a reality. But how do we
(30:20):
change that? So the first thing I want to mention is,
which is our biggest message, is that density is not
a factor. Uh. Dense places are not linked to a
higher infection rates per capital infection rates and mortality rates.
They quiet the opposite. These places are linked to significantly
(30:42):
lower death rates. But what is really important is crowding. UM.
I have done a follow up study that's currently under
under review by a journal looking at New York cities,
for example, and different neighborhoods in New York and what
we've see in of the special disparities of the infection
(31:04):
rates and built environment. And what I found on these
twistories and the other one is that, uh, it's it's
about crowding, crowded housing. UM, it's about crowded businesses um
as assign mentioned bars, restaurants or other venues where you
have a large number of people gathered together. UM. And
it's about um, the social demographic and racial disparities. The
(31:29):
most significant factor being um, you know being um racial
disparities or percentage of African Americans who are more vulnerable
to the pandemic. According to CBC. The other big factor
is to what extent people are working on job sectors
that allow them to do social distancing for example, UM,
(31:50):
you know, um, the the educational attainments and job sectors. UM.
The other very important factor, particularly in New York City,
is the extent to be people could actually leave the
city and emptying out um the city uh to scape
dependemic and you have you you can see that particularly
in Manhattan, New York. In Manhattan, part of New York
(32:14):
City where um the majority of neighborhoods had a significant
portion of residents leaving the city and by definition, you
can't get the virus, you know, if you leave the
city right But you can only do that if you
can afford to leave rightly in terms of your jobs.
And that is definitely something we've talked about a lot,
certainly on our broadcast in fact, just talking about some
(32:37):
of the closings when it comes to Manhattan real estate
right now and what's going on. But that that exodus
is something we've talked about and who can do it?
Dr Sima Hamdy, she is Bloomberg Assistant Professor of American Health,
Environmental Challenges and Engineering at Johns Hopkins University, joining us
on the phone from Baltimore, and all but you let
(33:01):
me drive? Oh no, no, no no, no, honey, please, I'll
do the riding drivel. I want to drive. Just drive, baby,
good questions trying. This is the drive to the Globe community.
(33:27):
Thanks well, try us on Bloomberg Radio. Well, all right,
as we drive to the clothes on this Thursday, the
end of the trading week ahead of the long holiday weekend,
let's check in with our pal, Alan Zaffron, founding partner
in co CEO of I e Q Capital. He joins
us on the phone from Foster City at California, Alan,
how are you. I'm doing great, seventy three the grades, Johnny,
(33:50):
no humidity. It is a beautiful day in California. My
friend good well, I'm glad to hear it. Um. I
gotta ask you. You know, you get to the end
of this week, you see the job to report, you
see the jobless claims to report. You're seeing the headlines
in California that we are that are pretty scary when
it comes to what's going on with the virus in
(34:11):
California and Texas, in Arizona and Florida and elsewhere. How
do you square it all? You square it all because
you realize a lot of the capital that the balance
sheet is expansion. For the sad it's happening is going
right to the stock market. It's not connected to people
working in the leisure and hospitality industry are out here
in southern California's the motion picture and sound recording industry.
(34:33):
Those people have lost jobs and it's not clear they're
coming back. So there's clearly a disconnect between the current
status of the financial markets in the main economy and
it's it's difficult because patients is going to play out
that probably this was the right thing to do, is
goose up the economy, and it's very hard to swallow
if you don't have a job right now, you watch
(34:54):
the market go up and you feel like you're not participating.
It's a very difficult visceral thing to experien because you're
not participating. I think that's the one thing to alan
that I do get a little concerned that folks in
Washington the administration are focusing maybe too much as are
on the stock market as an indicator of us bouncing
back from the virus. When we know that a large
(35:17):
part of Americans don't participate in the equity markets. Well
that's right. You know something close to six Americans have
less than twenty five thousand dollars of safet. Do you
wonder why there's a gap that says it right there?
And unfortunately think COVID has accelerated a lot of trends,
one of which is the widening gap between the rich
and report. If you have a balance sheet, you're actually
(35:40):
benishiting as we bounced back. If you live you know
day to day, Um, you may have lost that job
and you don't have any savings. The benefit here, um,
it is incredibly difficult um to message properly. But you know,
I look at the Sandilis said, President of Buller just
came out and he said, we're keeping the balot a
sheet loose for a long while because we are worried
(36:03):
about a potential wave of bankruptcies if the health crisis
gets out of control. It's not our base case, but
we have to be ready in advance. We can't react
after the fact that the consequence of that if you
get an expansion the FED balance sheet, and if you
believe Morgan Stanley and Jeffreys, somewhere between seventy the balance
(36:24):
sheet expansion flows right through the stocks. And so we asked,
why are we bouncing up right now? The belief is
the Fed is going to expand the balance sheet kind
of around ten trillion dollars. Well, we've already expanded six trillions.
And so you say to yourself, you know what does
that mean? Well, put it in context. So follow the
(36:44):
math the market right now, the SMP five hundreds worth
about twenty seven trillion. Every one trillion dollars a stimulus
adds so quickly. And if you go back to Europe,
in Japan, their balance sheets in the Central Bank are
a hundred percent of ep R GDP is twenty trillion.
Instead of going from six to ten trillion, we go
(37:04):
from six to twenty trillion. Bearing in mind that slows
through the stocks. You're gonna see a huge move up
on the stock market. And that's why you don't fight
the fact if money is flowing right into the stock most,
and that's that's a really hard bill to swallow. If
you were working in the motion theater industry or a
(37:26):
sight seeing industry, or some kind of transiitent ground transportation,
those are all the jobs have been lost, and it's
really tough to swallow. And so um the fat has
to play that loose because and then we've gotta wave
a bankruptcy. There's got to be a mechanism to take
care of those people who don't have the jobs. So
Alan talk to me about real estate because it's something
that I know you think about. We think about it
(37:46):
here on the East Coast. I think if you're in
one of these like highly or very expensive areas, both
from a commercial and a residential perspective, you sort of
wonder what the future is. You wonder where the other
shoote ops if it does when it comes to real estate,
how do you think about real estate in this environment?
Real estate is really challenged because I don't know what
(38:07):
the rules are regarding poor bearance. So um, I think
all you can do is recognized the banks don't want
to take possessions of buildings if you're a landlords. Landlords
like they're getting stuck with the fact that they have
to deal with people differing the rent payments. The reality
of a lot of people differing the rent payments can't
afford to make the payments. I'm not sure everyone's game
playing the system. I think it is difficult to be
(38:29):
an investor in real estate in the short run, in
that you don't know what your cash flows are going
to be from people renting apartments, store owners in office buildings.
I think the assurances if you're it's like everything else,
if you're in the right location with the right type
of property, Um, you can recognize today this is still
going to be a somewhat temporary, uh situation of diminished
(38:52):
cash flow as long as in the white property. If
you're in a tertiary property in an office building, good luck.
So I think this whole crisis reinforces real esty comes
down to a quality of property, and even if you
think there's a modest diminishment of cash flow in the
next three to twelve months, um, that property is going
to hold during value long one. We will get through
this eventually, and there will still be people eventually working
(39:14):
out of office buildings, and people will still be paying
the rent, paying the rent because they will still mostly
be employed. It says to me, though, alan the building
boom that we've seen in so many different cities, you know,
out of the Great Recession, and certainly in the last
few years, you know it's going to ultimately they'll mean
that we've done some overbuilding here. We've done a lot
of overbuilding, particularly in retails. You're gonna see retail, by
(39:36):
the way, is going to get repurposed um in the
forms of things life apartment buildings, or in the thing
that hip and cool office going forward, but with more
square foot per employee, which may make it a little
less attractive cash flow perspectives. But the reality is we
are over retailed, we are overbuilt selectively. The flip side
of that is you're going to see renewed demand for housing,
(39:57):
suburban housing. You're going to see a whole new wave
of interest either in high quality apartment or in single
family residential away from the city and more towards the suburbs. Interesting. Yeah,
I mean I feel like there's a lot left to
be figured out and written and said about this. Allen Zaffron,
Always good to catch up with you, so thoughtful as always,
(40:18):
Joining us from Foster City, California. Allen Zaffron, founding partner
and co CEO of I e Q Capital. Thanks so
much for listening to Bloomberg Business Week. Download the podcast
on iTunes, South Cloud, Bloomberg dot com, or wherever you
get your podcasts. And of course you can always listen
to our radio show at two pm Eastern on Bloomberg Radio,
or watch us on YouTube by searching Bloomberg Global News.
This is Bloomberg Business Week. I'm Carol Masser and I'm
Jason Kelly. We're right here every day bringing you the
latest news from the world's of business and finance, plus technology, politics, economics,
all harnessing the power of Business Week reporters and editors,
and of course Carol that's part of a team of
twenty seven hundred journalists and analysts more than a hundred
and twenty countries and Jason. You can download Bloomberg Business
(00:23):
Week on iTunes, SoundCloud, bl Bloomberg dot com. You can
also listen to our radio show at two pm Eastern
on Bloomberg Radio every weekday, or watch us on YouTube
by searching Bloomberg Global News. Every time we approach Job's day,
I can speak for Carol and myself when we say
and think, we want to know what Chris Luke thinks
about all of this, no matter which way it goes.
(00:44):
He is a senior fellow at the University of Virginia
Miller Center. Of course, a former Deputary Deputy Secretary of Labor.
I get that. I sort of trip on that almost
every time. I'm sorry, Chris for me, former Deputy Secretary
of Labor under President Obama. He's on the phone with us. Now, Chris,
how are you. I'm doing good. Thank you for having me.
All right, well, it's good to have you back. Um.
(01:05):
So your initial reaction, like your gut reaction to this
and and maybe more important as you saw it, all
sort of filter through what do we need to take
away from this job's report, both monthly and UH and
then the weekly jobless claims. So there was a lot
of data today. Gut reaction was good, with a lot
(01:25):
of caveats. You know, we always tell people the monthly
jobs data is really kind of looking way back, and
in this case, it goes back really to the pay
period that began on June eighth. So in that second
week of June, the economy clearly was recovering. But when
you add that with the weekly jobs claims, you started
(01:48):
get kind of a mixed picture because we're continuing to
have again, if you add in not only the people
applying under the normal unemployment program, but the new pandemic
program for gig workers, it's about two million people applying
for unemployment every single week, new people applying, um and
you know total right now, but thirty one million people
(02:08):
on unemployment, which is not really going down. So if
you put all of this together, you get a sense
of an economy that was reopening. By the beginning of June.
Jobs were coming back, and that recovery may have slowed,
and we don't really know how much it is slowed.
And again, as we always say, we're still in the
middle of a public health crisis. And until you resolve that,
(02:30):
you really can't get a good sense about where that
the economy is going. We're still what about nineteen million
in terms of those who are on unemployment benefits that
are out of work. Yeah, I mean, if we simply
look at the number of people who apply the under
the traditional unemployment program, it was one point four million
this week, which is more than double the worst week
(02:53):
we ever had during the Great Recession. So the numbers
are still elevated. They've come down a lot, but we
all need to understand that just in the months of
March and April we lost about twenty two million jobs.
We've picked up about seven seven to eight millions. We've
picked back up again. Um, but these numbers, and we
always say jobs created, uh, and we probably this month
(03:17):
it's simply need to say jobs were stored to people
because you know, one of the quirky things about the
data as you see. You know, just in healthcare employment,
a hundred and ninety thousand UH dental jobs were created.
I suspect we didn't have a hundred ninety thousand new
dentists last months. I think because all dental assises were
closed they reopened. So again, this is positive with a
(03:41):
lot of caveats, right, I just look at my own world.
I mean I went and had a root canal, like like,
these are things that I had were not do you
know it's not I'm going to go back to my dentist.
So like, yeah, I get that it wasn't a brand
new dentist. It was not a brand new dentist. Yes, no, no, no, hey, Chris,
I feel like a more constructive conversation at this point.
I mean, these numbers are going to be what these
numbers are. I mean, we have shut down our economy.
(04:01):
We're finding our way back, whether it was a republic
in the White House or a Democrat like this is
what you're dealing with. It's really tough. I do wonder though,
when we get on the other side of this, are
there companies industries are saying you know what, we really
don't need those kind of workers anymore, or you know what.
I know there's that demand side of what the economy
is like and what's going to be needed. But I
do wonder if this is going to be a real
(04:23):
readjustment and kind of the types of jobs that ultimately
stay with us and those that ultimately go away. Yeah.
I mean, look, I I'm in Uh, I'm in the
DC area right now, which is you know, partially reopened.
I even think in a reopened economy, people just aren't
going to go to restaurants, uh if they can do
take out. Uh. You know, we know that people aren't traveling.
(04:46):
People aren't going overseas because you know, U S systems
can't leave the country functionally, at least going to Europe.
So we know that travel will be down. We know
that a lot of companies have basically said, hey, you
work remotely for the rest of the year, which has
been a cascading impact through real estate and through mom
and pop, delis and all of the other services that
(05:07):
support companies along the way. Now, there may be other
other industries that pick up along the way, but I
suspect those are not the ones that are going to
be as job intensive and so you know a lot
of the broader structural changes we've seen in the economy
will probably be accelerated as a result of this. Like
what specifically though, Well I think of this. You know,
(05:29):
I as a person who probably eats more fast food
than I should. Uh, there is you know, you can
order online on your mobile app. You can also use
a touch screen, and I suspect in this environment, uh,
they're just gonna start to move to that. And it's
not to say you don't need people, you know, handling
the food, but it's going to be a lot fewer
of those people. Um, you know, and I think a
(05:51):
lot of the companies are going to realize, you know what,
we just don't need in general this many people around
the company as much as possible. So you know, we see, um,
you know, we might end up having a full recovery,
or you know, we might just kind of be operating
at this kind of seventy level for the foreseeable future,
which in many ways I think is the worst outcome
because you'd have a half open economy. Was still all
(06:15):
of the increased infections and death. You know, we did
tease that this week was interesting. I feel like over
the last week or so that we are now once
again UM seeing updates on the virus from the White House. UM.
Vice President Pence is often conducting them. And what's interesting
is the tone has changed. They seem much more organized,
(06:35):
and you know, we were kidding that now they're saying, okay,
wear a mask, you know, but the tone has changed.
And is it just a case tell us about crisis.
I mean, you don't have the playbook initially when the
crisis hits, and you do learn as things go along.
What do you make of the progression in terms of
how the administration has handled the pandemic? Well, I really
think it's been the tale of two administrations. I mean
(06:57):
you've got even this week, while you had the Vice
President UM encouraging mask wearing, you had Secretary asar Uh
test on TV last weekend expressing concerns. Obviously Dr Fauci
this week testifying too. And then you have the President who,
while yesterday he said, you know, he's encouraging people to
wear masks, he again said that he thought this would disappear.
(07:19):
And I think that's kind of the challenge. I mean,
you know, UM, below the president, you've got the wheels
of government that are moving, um, that are ensuring that
you know, states get ventilators and PPEs and trying to
issue guidelines. But ultimately, the president has the biggest bully
pulpit um and I think the kind of lack of
(07:41):
consistent messages coming from him, I think have undermined a
lot of what you know, other people in his administration
are trying to do. I mean, you continue to see
a fairly significant number of people in this country who
you know, are not wearing masks right now. You've got
a lot of states which you know, while encouraging masks
that got and there's encouraging masks, are not mandating them
(08:02):
as well. And we know that's you know, one of
the simplest things you can do. And so um, yeah,
there certainly has been an increased, a ramped up level
of concern and engagement this week, but I think it
would be a lot more effective if the president got
on board as well. And so, Chris, we love talking
to you about all branches of government because you've worked
in all of them, and I wonder what you make
(08:23):
of Congress's response at this point, either from a stimulus
perspective or for a stimulus slash rescue perspective, or from
the perspective of sort of setting the political and and
the tone around this. Yeah, I mean it's interesting. Um.
You know again, just on this mask wearing issue, I mean,
(08:43):
Speaker Pelosi has been, you know, very open about her
wearing a mask and is basically now requiring that if
you show up at a committee room as a House member,
you have to wear a mask or you'll get kicked out.
So she's trying to set that, um example of leadership.
I do think on the stimulus may think this is
gonna be problematic, and I think you know what I
hope does not come out of today's jobs numbers is
(09:05):
that people read it and say, you know what, mission accomplished.
We don't need to do anything else. I mean, we
know that these extended unemployment benefits are expiring at the
end of July. Fortunately, the Senate this week extended UM
the PPE program or the PPP program for small businesses.
That's a good thing. But again we continue to talk
about this next wave of layoffs that might come from
(09:28):
state and local governments that are just strapped right now,
and unless Washington provide some help, we're gonna start to
see layoffs. I mean, even this week we saw Mayor
Deblasio saying, you know, he might be furloughing workers in
New York. In Maryland, yesterday, Governor Hogan uh Is announced
he's cutting four million dollars from the state budgetal impact
(09:50):
services and employees as well. So, um, we are not
out of the woods and and so. And I think
that's sort of the problematic aspect of today's positive job numbers.
I think people will read it in the wrong way. Well,
I think your point is so smart, Chris, and that
this whole idea of that you've got to go the distance,
right And you can see certainly with the president, and
I'm not being critical, it's just obvious that he has
(10:12):
moved on to running his campaign. And at the same time,
like I think about the financial crisis, it wasn't like
one program and we were fixed. We still, you know,
to some does some extent you know, are thinking about
that and still dealing with it, like you have to
continue to be on it. Yeah, I mean, look, the
lesson we learned from the Great Recession is that we
did not put enough stimulus into um into the country,
(10:35):
and we we kind of backed off way too quickly.
And you know this past week you had the said
Chairman J. Powell saying to Congress, don't get complacent, uh,
you know, in your in your economic response. And I
feel like we're getting a little complacent right now. And
the irony about the president's you know, kind of quote
unquote transition to greatness is that actually more stimulus would
(10:56):
help the economy and probably would help his re election prospects.
You Unfortunately, you know, there's this dynamic obviously with Senate
Republicans concerned about debt. Obviously, how Democrats have a pretty
expensive bill out there. So I'm hoping when they get
back from July four, um, cooler heads prevail and they
find some kind of compromise because we need that stimulus
in the economy. Absolutely, all right. Always great to catch
(11:18):
up with you. Never enough time. I feel like we
always have fifty eight more questions for you. But we
appreciate you coming with us on this day, as you
do most jobs, stays Chris Lew Senior Fellow, University of
Virginia Miller Center, former Deputy's Victory of labor under President Obama.
Johnnius on the phone from the DC area, This is
Bloomberg Business Week with Carol Masser and Jason Kelly on
(11:40):
Bloomberg Radio. I defy anyone to listen to this sentence
and not want to read this story. Sean Murphy was
an epic weed smoker, a devoted Tom Brady fan, and
the best cat Burglar that Lynn, Massachusetts had ever seen.
I mean, it's irresistible, it is you're in, it is
coming to a theater near you. Let's just put that
out there. Absolutely, and to boot the stories written by
(12:02):
one of our all time favorite writers at Bloomberg Business Week,
Zeke Fox, finance reporter for Bloomberg. He joins us on
the phone and Zeke, this story is incredible. How did
you find out about this? Well? I was I had
read a little bit about the about the case. It
was made the papers when the rings were stolen there
(12:23):
when they were recovered, and uh, these are we should
point out sorry, these are super Bowl rings. These are
um New England Patriots or excuse me, New York Giants
super Bowl rings stolen by a Patriots fan. Yis yeah,
So after the infamous helmet catch super Bowl Super Bowl
(12:44):
forty two and two thousand and eight, when the Patriots,
who were on their way to an undefeated season and
we're upset by Uli Manning and the Giants. Uh, this
kapt burglar slash furniture mover from Lynn, Massachusetts stole the
Giants Super Bowl rings and spoiler alert. I wrote to
(13:06):
him in prison and said, you know, I had heard
a little about your about this story. By any chance,
are you Patriots fan like me? Would you like to
talk about it? And over the course of the last
year or so, he's he's been telling me his story,
and the true story of what happened is, you know,
(13:27):
crazier than I even imagine. Well, this is a guy.
I mean, the stealing of the rings is one thing,
but he is quite a character right and has been,
you know, stealing things for a long time. So he's
from Lynn, which is a suburb on Boston's North Shore,
(13:50):
and when he was growing up it was a pretty
down and out place, and burglary was like a career
path that a lot of or at least a good
number of young people actually pursued and got taught by
older generations of burglars. And burglars and lymb specialized in
trying open the doors to pharmacies and stealing the pills
(14:14):
to resell. It's a pretty easy thing that could be done,
you know, in the cover of night, and you know,
you could often get away with it. And Murphy was
introduced to this world in middle school, I believe at
Christmas time sleep over at his aunt's house. His cousin
taught him how to do it. But before long he
had moved on to much bigger scores. And so what's
(14:41):
he I mean in your correspondence, like how would you
describe You do a nice job describing him the story
of but like how would you describe him to to folksy?
So he really is like a typical Boston character. He
loved the Patriots. He worked money through Friday at his
real moving company, which really did move future people's furniture.
(15:06):
He drove muscle cars. He liked to work on his Camaro,
which had a custom red vul or interior um. He
liked Motley Crue and other hair metal A lot of
the times. He had a mullet and a biker mustache
um and he liked He didn't really do drugs, which
(15:29):
was the downfall of a lot of his contemporaries among
Blend's burglars. But he really liked smoking weed and coming
up with complex heists. I mean it's remarkable, you know.
First of all, it's it's so well written. It's such
a great read. And I'm not kidding that I could see,
you know, certainly here we are working from home and
(15:51):
we've all binged on Tiger King like this is I
could see in a multi part series um on one
of the streaming services. Because it's almost too good to
be true, but it is true, um. And it's just
this fascinating character, right who It was just a way
of life for him, right in terms of where he
was born and and and you know what he did,
(16:12):
and as you said, he kind of builds up to
his crimes. I mean ultimately though, and I'm going to
say there's some interesting personal life stuff that went on too,
in terms of girlfriends and and how he went about that.
But I mean, ultimately he was caught, right, Yes, So Murphy,
(16:34):
if you talk to him, he'll say he's never really
been caught because he doesn't consider it being caught unless
he's caught in the act. The problem is that quite
a few times he has been caught. He's spent almost
i think even more than half his life in prison
because the ways that the police work is not so
(16:56):
much to catch people in the act, but to find
out about things that happened, talk to people who might
know about it, and prosecute the guilty party once they've
identified them. It's kind of like a myth that they
would catch a burglar in the act so much. Um so,
he's frequently throughout his career, I guess I'll call it
(17:18):
has been uh sold out by people who you know,
had worked with him or who knew him. In the
Super Bowl, Uh, theft was really no was they worked
out like that too? Yeah, I mean it's really I
mean there's also for for Patriots fans, and everything's turned
(17:40):
out just fine for Patriots fans. Let's not le let's
not shed any tears for for the Pats fans. But
it does take you back to a really a really
sort of pivotal time. And I mean that rivalry, and
I mean I remember watching that game and he mentioned,
you know, the helmet catch and and that was Peate
Eli man uh in many ways, and so it's just
(18:02):
it's a tail that really resonates in in time for
a lot of sports fans more than as much as anything, well, yeah,
I hope that it's Uh, it's something fun for sports
fans who haven't had anything to watch for exactly. All right,
So how do you fit it? Just before we let
(18:23):
you go, how do you feel about Brady and Tampa?
Oh well, I'm I'm a past fan myself, so I
know I hate to see it. I hate to see if,
but I'll still be rooting for him to do well.
And Cam Newton, how are you feeling about that? I
think you know he makes the past super Bowl contenders.
I'm psyched to see what Belichick comes up with for
(18:46):
him to do. Yeah, never bet against Belichick. I think
that's the one. One of the takeaways that we all
have this story. It's a must read, the perfect long
weekend read. Carol can't recommend it enough. And love, love,
love anything. Fox puts his mind to Ben Affleck maybe
does the movie. Yeah, yeah, checks out. It's just it's
such a great week and it is just kind of fascinating.
(19:09):
The guy, like, you know, while I was in in jail,
like taught himself law, right, I think, so we can
represent himself and understand the law. Um, so it's just
a great thing. I'll put it out on Twitter. And
you guys pick up the magazine or check it out
at Bloomberg dot com. So really fascinating. Um, Seek Fox,
what I love talking to him? I could just imagine
(19:29):
the communication. I mean, that's kind of a side story.
I mean, maybe that's how you do the movie. Like
the reporter's perspective of reaching out and getting access to
seek Fox. We'll have to work on that. I'll have
to ask seek I don't know want to play him.
I don't put that on on Twitter. This is Bloomberg
Business Week with Carol Masser and Jason Kelly on Bloomberg Radio.
(19:53):
All right, let's do a little business week economics. Now.
Obviously we've been talking about it all day, the jobs
report and the is data that have come out. Obviously,
one of the strongest and most important voices that we
turned to in the administration's Larry Cutlow, the chief Economic
Advisor to the President. He caught up with our own
John Farrow this morning on Blueberg Surveillance to talk about
(20:15):
the job support. Here he talks about the trend of
temporary workers getting back to work. Well, look, first of all,
it's a spectacular number and it helps the overall situation enormously.
So you know, that's really the key point. We've created
a lot of jobs in the last couple of months,
and the trends continue. I want to say one thing
I was listening to that earlier conversation. I don't think
(20:39):
people understand that relationship the rescue package that the President
led with bipartisan support and Congress, and the p p
P that Secretary manution uh fostered and implemented. It's the
temporary layoffs, John, It's the furloughs that are coming down.
We kept people connected their employers. Okay, they did receive assistance,
(21:03):
but we kept them connected so that as the economy
reopened and the businesses reopened, roughly a small business reopened.
So we saw it again today. I mean, sixty three
and a half percent of unemployed now are temporary workers.
That number was seventy and was seven point seven million.
I don't see why that trend can continue. That's the
(21:26):
point I'm making. I don't I'm not sure. It's like
an intellectual disconnect why that trend can continue a lot
of temporary layoffs will go back to work. And certainly
is Larry Cutler, the chief Economic codpiser to the President Carol. Yeah, absolutely,
and I guess time will tell Jason right if that
trend continues. I mean, he's making that point and we'll
(21:47):
see uh in job reports to come. Certainly, that weekly
number was a bit troublesome, So let's get more analysis
of today's data set. Business Week Economics continuing with Bloomberg
Economics senior US economist Lana shill Chiva joining a sound
the phone in Long Island. So, Eleen, how did you
and the Bloomberg Economics team read the data points that
(22:08):
we got on the jobs market? Right? We got monthly
jobs numbers backward looking and before we started kind of
closing down parts of the economy again. And then of
course we got the weekly numbers absolutely and both are
very significant. So pay rolls was an upward surprise, and
it was a positive report all across, once again highlighting
(22:32):
that economic fundamentals are strong enough for the recovery to
take place once the health crisis is over. And that's
a big heavy at though. So because you know, we
we all listen to the news, we all watch the news,
and we see the big acceleration in the number of
(22:53):
COVID nineteen cases, particularly in the Sun Belt States. And
I would say that the month so July will actually
help us define the trajectory of the economic growth going
forward for the remainder of the year. So will we
see another um round of business closures or we will
(23:14):
just continue to jog along and and uh, you know
this uh recent spike in the number of cases will subside. Uh.
So I think it's it's a lot of questions the
data telling us, yes, things were looking good in June,
but well in July already, and a lot of things
(23:36):
have changed since June. Yeah, I mean a lot of
things have changed that I think we're already seeing in
some of the other data, right, Elene, I mean, what
are you looking at the givets maybe a more realistic
picture of of current issues, current economic activity beyond the
job and jobless claims. So you just mentioned one of them, right,
(23:59):
And this is the number of jobless benefits and jobless
benefits have been stubbornly, stubbornly elevated. So and that might
not be surprising given that the re acceleration in COVID
nineteen cases started right after the payroll survey week for
(24:20):
the months of June. So the second half of June
actually already saw uh pick up in cases, and that
might be telling us that some businesses were ready to reopen,
but they didn't, so that resulted in a significant in
high number in jobless claims, or maybe there were some
(24:45):
new um claimants and uh, this number may in fact rebounds.
So Jason and I caught up with as we usually
do on monthly Jobs Days, with Chris Lew, former Deputy
Secretary of Labor under President Obama. And you know, his
point is, you know that we learned some things from
(25:05):
the financial crisis that they didn't put enough stimulus out
in in the beginning. Right, So the lesson right now
is he said, you can't be complacent that we're gonna
probably need more stimulus when those benefits um stop in July. Um,
is that a given, Elena that in order for us
to maintain whatever economic recovery is happening right now, we're
going to need those stimulus checks from the government. Bottom line. Absolutely,
(25:30):
and uh and unfortunately as well. So I mean listening
to what Mr Cuddler was saying. He was saying that
they basically the package helped the companies to keep their
workers on the payrolls. And this is absolutely true. The
(25:50):
package was very timely. It was right in size, and
that's why we see all these numbers that being so strong.
And you absolutely right, if we if we see this
UH falling off a cliff, we may see a significant
decline in economic activity. Is simply due to the fact
that a wage income remains well below pre crisis level.
(26:14):
It's it's something like seven point two below that February level.
We made some progress in kind of closing that gap,
but it's way below still and going forward it will
depend on how many jobs we create and how these
jobs are playing well. The economic applications of all of
(26:35):
this are are very broad and wide, no doubt about it. Hey, Lena,
thank you so much. Have a good holiday weekend. You'll
initially Giva of course of our Bloomberg Economics team joining
us on the phone from Long Island. This is Bloomberg
Business Week with Carol Masser and Jason Kelly on Bloomberg Radio.
The virus. Jason, We've talked about this a lot. It's
(26:56):
been a big reminder about the inequalities when it comes
to health care access and those who ultimately suffer the
most really from it. Dr Shemi uh Sheima excuse me.
Dr Sheima Hamidi was recently named Bloomberg Assistant Professor of
American Health and Environmental Challenges and Engineering at Johns Hopkins University,
the Bloomberg School of Public House supported by Michael R. Bloomberg, founder,
(27:17):
Bloomberg ALP, and Bloomberg Philanthropies, and Dr Hamidi joins us
on the phone in Baltimore. Dr Remedy, It's nice to
have you here with us. We are taking, you know,
a really hard look at the virus and you know,
talking a lot more UM how different communities are impacted,
and that is something that has certainly been front and
center for you. Thank you for having me um absolutely UM. So,
(27:43):
you know, there's been a lot of UM research and
uh many many researchers have been looking at different aspects
of COVID nineteen pandemic. One aspect that has been less
studied relatively has been density. UM to what extent we
see there, you know, any connection between density and the
COVID nineteen pandemic. What we see from the conversations among practitioners,
(28:09):
UM in even in the academic context or news media outlets. Uh,
you know, you see extensive coverage that blaming density urban
density for the rapid growth of COVID nineteen, particularly in
New York City, and referring to suburban sprawl as the
United States secret weapon against Corona virus. UM. So, what
(28:31):
myself and my team have been trying to do I
was to look closer at this issue and topic, doing
a national study looking at nine d and thirteen metropolitan
counties in the US and really looking at what what
the data sells us and what does it tell you?
Because I believe in in your research, Darctor Remitte, you
(28:52):
have you distinguished between activity density density as being distinct
from crowding or overcrowding. And I feel like that's a
real important distinction to help us understand that absolutely, uh,
this is very very important because these are the two
UM concepts that are most often confounded with each other,
(29:15):
density and crowding or overcrowding. Crowding could happen when a
large number of people gathered closely together UM, and it
could happen in bars, restaurants, schools, sports events, airports, supermarket
or even on beaches as you've been UM seeing on
the news in Florida or or beaches in California. And
(29:37):
by definition, the crowding could happen even at the very
low density areas and all of these venues. UM and
always that they've been trying to distinguish between the two
crowding and density and see to what extent, Uh, you know,
when you control for the level of crowding or people's
level of social distancing, what is the relationship between density,
(29:59):
UM activity, density and the COVID nineteen spread. Yeah, it's
you know, something that's just kind of unfortunately a stark reality.
You know when you look at this, how can we
do better going forward? Because this is just you know,
in terms of how people are living and their exposure.
I feel like it's a reality. But how do we
(30:20):
change that? So the first thing I want to mention is,
which is our biggest message, is that density is not
a factor. Uh. Dense places are not linked to a
higher infection rates per capital infection rates and mortality rates.
They quiet the opposite. These places are linked to significantly
(30:42):
lower death rates. But what is really important is crowding. UM.
I have done a follow up study that's currently under
under review by a journal looking at New York cities,
for example, and different neighborhoods in New York and what
we've see in of the special disparities of the infection
(31:04):
rates and built environment. And what I found on these
twistories and the other one is that, uh, it's it's
about crowding, crowded housing. UM, it's about crowded businesses um
as assign mentioned bars, restaurants or other venues where you
have a large number of people gathered together. UM. And
it's about um, the social demographic and racial disparities. The
(31:29):
most significant factor being um, you know being um racial
disparities or percentage of African Americans who are more vulnerable
to the pandemic. According to CBC. The other big factor
is to what extent people are working on job sectors
that allow them to do social distancing for example, UM,
(31:50):
you know, um, the the educational attainments and job sectors. UM.
The other very important factor, particularly in New York City,
is the extent to be people could actually leave the
city and emptying out um the city uh to scape
dependemic and you have you you can see that particularly
in Manhattan, New York. In Manhattan, part of New York
(32:14):
City where um the majority of neighborhoods had a significant
portion of residents leaving the city and by definition, you
can't get the virus, you know, if you leave the
city right But you can only do that if you
can afford to leave rightly in terms of your jobs.
And that is definitely something we've talked about a lot,
certainly on our broadcast in fact, just talking about some
(32:37):
of the closings when it comes to Manhattan real estate
right now and what's going on. But that that exodus
is something we've talked about and who can do it?
Dr Sima Hamdy, she is Bloomberg Assistant Professor of American Health,
Environmental Challenges and Engineering at Johns Hopkins University, joining us
on the phone from Baltimore, and all but you let
(33:01):
me drive? Oh no, no, no no, no, honey, please, I'll
do the riding drivel. I want to drive. Just drive, baby,
good questions trying. This is the drive to the Globe community.
(33:27):
Thanks well, try us on Bloomberg Radio. Well, all right,
as we drive to the clothes on this Thursday, the
end of the trading week ahead of the long holiday weekend,
let's check in with our pal, Alan Zaffron, founding partner
in co CEO of I e Q Capital. He joins
us on the phone from Foster City at California, Alan,
how are you. I'm doing great, seventy three the grades, Johnny,
(33:50):
no humidity. It is a beautiful day in California. My
friend good well, I'm glad to hear it. Um. I
gotta ask you. You know, you get to the end
of this week, you see the job to report, you
see the jobless claims to report. You're seeing the headlines
in California that we are that are pretty scary when
it comes to what's going on with the virus in
(34:11):
California and Texas, in Arizona and Florida and elsewhere. How
do you square it all? You square it all because
you realize a lot of the capital that the balance
sheet is expansion. For the sad it's happening is going
right to the stock market. It's not connected to people
working in the leisure and hospitality industry are out here
in southern California's the motion picture and sound recording industry.
(34:33):
Those people have lost jobs and it's not clear they're
coming back. So there's clearly a disconnect between the current
status of the financial markets in the main economy and
it's it's difficult because patients is going to play out
that probably this was the right thing to do, is
goose up the economy, and it's very hard to swallow
if you don't have a job right now, you watch
(34:54):
the market go up and you feel like you're not participating.
It's a very difficult visceral thing to experien because you're
not participating. I think that's the one thing to alan
that I do get a little concerned that folks in
Washington the administration are focusing maybe too much as are
on the stock market as an indicator of us bouncing
back from the virus. When we know that a large
(35:17):
part of Americans don't participate in the equity markets. Well
that's right. You know something close to six Americans have
less than twenty five thousand dollars of safet. Do you
wonder why there's a gap that says it right there?
And unfortunately think COVID has accelerated a lot of trends,
one of which is the widening gap between the rich
and report. If you have a balance sheet, you're actually
(35:40):
benishiting as we bounced back. If you live you know
day to day, Um, you may have lost that job
and you don't have any savings. The benefit here, um,
it is incredibly difficult um to message properly. But you know,
I look at the Sandilis said, President of Buller just
came out and he said, we're keeping the balot a
sheet loose for a long while because we are worried
(36:03):
about a potential wave of bankruptcies if the health crisis
gets out of control. It's not our base case, but
we have to be ready in advance. We can't react
after the fact that the consequence of that if you
get an expansion the FED balance sheet, and if you
believe Morgan Stanley and Jeffreys, somewhere between seventy the balance
(36:24):
sheet expansion flows right through the stocks. And so we asked,
why are we bouncing up right now? The belief is
the Fed is going to expand the balance sheet kind
of around ten trillion dollars. Well, we've already expanded six trillions.
And so you say to yourself, you know what does
that mean? Well, put it in context. So follow the
(36:44):
math the market right now, the SMP five hundreds worth
about twenty seven trillion. Every one trillion dollars a stimulus
adds so quickly. And if you go back to Europe,
in Japan, their balance sheets in the Central Bank are
a hundred percent of ep R GDP is twenty trillion.
Instead of going from six to ten trillion, we go
(37:04):
from six to twenty trillion. Bearing in mind that slows
through the stocks. You're gonna see a huge move up
on the stock market. And that's why you don't fight
the fact if money is flowing right into the stock most,
and that's that's a really hard bill to swallow. If
you were working in the motion theater industry or a
(37:26):
sight seeing industry, or some kind of transiitent ground transportation,
those are all the jobs have been lost, and it's
really tough to swallow. And so um the fat has
to play that loose because and then we've gotta wave
a bankruptcy. There's got to be a mechanism to take
care of those people who don't have the jobs. So
Alan talk to me about real estate because it's something
that I know you think about. We think about it
(37:46):
here on the East Coast. I think if you're in
one of these like highly or very expensive areas, both
from a commercial and a residential perspective, you sort of
wonder what the future is. You wonder where the other
shoote ops if it does when it comes to real estate,
how do you think about real estate in this environment?
Real estate is really challenged because I don't know what
(38:07):
the rules are regarding poor bearance. So um, I think
all you can do is recognized the banks don't want
to take possessions of buildings if you're a landlords. Landlords
like they're getting stuck with the fact that they have
to deal with people differing the rent payments. The reality
of a lot of people differing the rent payments can't
afford to make the payments. I'm not sure everyone's game
playing the system. I think it is difficult to be
(38:29):
an investor in real estate in the short run, in
that you don't know what your cash flows are going
to be from people renting apartments, store owners in office buildings.
I think the assurances if you're it's like everything else,
if you're in the right location with the right type
of property, Um, you can recognize today this is still
going to be a somewhat temporary, uh situation of diminished
(38:52):
cash flow as long as in the white property. If
you're in a tertiary property in an office building, good luck.
So I think this whole crisis reinforces real esty comes
down to a quality of property, and even if you
think there's a modest diminishment of cash flow in the
next three to twelve months, um, that property is going
to hold during value long one. We will get through
this eventually, and there will still be people eventually working
(39:14):
out of office buildings, and people will still be paying
the rent, paying the rent because they will still mostly
be employed. It says to me, though, alan the building
boom that we've seen in so many different cities, you know,
out of the Great Recession, and certainly in the last
few years, you know it's going to ultimately they'll mean
that we've done some overbuilding here. We've done a lot
of overbuilding, particularly in retails. You're gonna see retail, by
(39:36):
the way, is going to get repurposed um in the
forms of things life apartment buildings, or in the thing
that hip and cool office going forward, but with more
square foot per employee, which may make it a little
less attractive cash flow perspectives. But the reality is we
are over retailed, we are overbuilt selectively. The flip side
of that is you're going to see renewed demand for housing,
(39:57):
suburban housing. You're going to see a whole new wave
of interest either in high quality apartment or in single
family residential away from the city and more towards the suburbs. Interesting. Yeah,
I mean I feel like there's a lot left to
be figured out and written and said about this. Allen Zaffron,
Always good to catch up with you, so thoughtful as always,
(40:18):
Joining us from Foster City, California. Allen Zaffron, founding partner
and co CEO of I e Q Capital. Thanks so
much for listening to Bloomberg Business Week. Download the podcast
on iTunes, South Cloud, Bloomberg dot com, or wherever you
get your podcasts. And of course you can always listen
to our radio show at two pm Eastern on Bloomberg Radio,
or watch us on YouTube by searching Bloomberg Global News.
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