The election remains undecided as key battleground states continue count votes. American Action Forum President Douglas Holtz-Eakin joins Yahoo Finance Live to discuss.
- Also, we got the update in terms of the unemployment front the Department of Labor giving us the update on a weekly jobless claims, and that number coming in largely as expected, roughly in line with what we've seen over the last couple of weeks. For the week ending October 31 there, 751,000 jobless claims filed versus that 735,000 expectation level there. So what does all that mean for the recovery as it continues here, depending-- and perhaps not depending-- on who's in the White House after all this shakes out? Here to talk to us about that is Douglas Holtz-Eakin, American Action Forum president and former director of the Congressional Budget Office.
And Doug, it's good to be chatting with you again here. A lot to discuss, not sure which one you want to kick off with there in terms of where this election seems to be shaking out or the update we got on the unemployment front. But regardless of who comes in as president here next year, they're gonna be dealing with a shaky recovery. So what's your take on where we sit right now?
DOUGLAS HOLTZ-EAKIN: Well, I think we're seeing the private sector continue to climb out at a steady if unspectacular pace. You know, the jobless claims are consistent with that. We've seen purchasing manager indexes from the ISM in both manufacturing and non-manufacturing show steady expansion of both employment production. And, you know, we're seeing the economy recover.
It could probably recover quicker, particularly for some low-skill, low-wage workers who have been out of work for quite some time if there was an additional relief package. And we saw some movement on that front out of Mitch McConnell, the Senate Majority leader, this week. So regardless of who wins the presidency, I think there's a good chance that they can sit down and do business in a lame duck session of Congress and get a smaller but more front-loaded package out and give the economy a little bit of a boost.
- Yeah, so there is a recovery, Doug. But there's no question if you look at the numbers that came out today, as well as the ADP numbers earlier this week, that recovery is slowing. Given where things stand right now on the electoral map, looking at where the Senate is in play and likely still controlled by the Republicans, where does that put the state of the stimulus package?
DOUGLAS HOLTZ-EAKIN: I think it happens sooner, but not as big. I mean, at this point, it looks quite likely-- no guarantee-- quite likely that Republicans will continue to control the Senate. That means that Mitch McConnell is gonna have to be dealt with one way or another. He'd rather make a deal in the lame duck because he'll have more senators now than he will later. Nancy Pelosi's gonna have more House members now than later. And there's no reason why President Trump should oppose this move.
So it seems to me the logic of a deal is there. That would be good news, I think, for the economy. So President Biden, if he were to win, could then come in with another set of priorities. Probably infrastructure-- that's a bipartisan effort-- would also give the economy a boost. So there's a path forward regardless of how the presidency shakes out to get something done and sort of hopefully get a little quicker recovery.
- And Doug, I mean, you just heard Jess bringing us the updates there on the election. I think a lot of people are right to maybe wait and say, look, we don't know how the Senate race is gonna go here. There's still a lot of balls up in the air. We got to count the votes.
But there was one interesting dynamic here playing out for me when we looked at Georgia, because we've been tracking the insured unemployment rates here across the US by state. We've been racking up the worst-hit economies by state. Hawaii, California, New York have been on the top of the list when we look at insured unemployment rates.
Strangely, Georgia is also up there. And leading into the election, its insured unemployment rate was doing worse relative to the rest of the country. And in Georgia, of course, they have a Republican governor. Nevada's also on that list, but they have a Democratic governor. So I'm curious to know, in your mind, how maybe that played into what we're seeing play out here in Nevada and Georgia being closely watched states.
DOUGLAS HOLTZ-EAKIN: What we saw in the polling was very clear. If you asked what's the leading priority, it was about even between enhancing the economic recovery and fighting the coronavirus. But inside those numbers, these are 90-10, 80-20 issues. Democrats focus on fighting the coronavirus. Republicans focus on economic recovery. And I think really that just played out all across the country. There's no question about it.
The other interesting thing about this election, from the perspective of conservatives, is this doesn't look like a repudiation of Republicans at all. It looks like a referendum on the president, and he may or may not survive. But certainly Republicans did quite well. They picked up seats in the House. They held onto a Senate in a way that people didn't expect. And Georgia's going to be the key, I think, for just how much strength they have in the next Congress.
- Doug, any economic recovery, as we've spoken before, tied to how this virus plays out. And we're looking at daily case counts now hitting 100,000. Sure, you know, the election seemed to show that there was definitely a fear of an economic shutdown that could have led to sort of support for Republicans. But given where things stand with the pandemic, how do you see that weighing on the recovery moving forward?
DOUGLAS HOLTZ-EAKIN: I think it's a very important factor. We have known since last March that all the public health experts warned us of a resurgence of the virus in the flu season, and we're seeing that. That was always a headwind to the recovery. The antidotes to that are to have, you know, testing and PPE and better therapeutics and, ultimately, a vaccine.
So that has to remain a priority. And when they look at the next, quote, "stimulus package," a big chunk of that ought to be focused on making sure that we can operate the economy in the face of the virus. Shutting it down has proven to be too damaging as a way of fighting the virus. So you have to somehow operate the economy in the face of the virus. And that means all those different tools must be at your disposal.
- Yeah, shutting down, I mean, we've talked about that being a blunt tool. And at the state level, obviously, governors there not really onboard with the idea of shutting down at a level that large anymore. We're seeing some communities, though, especially in El Paso-- we're gonna get to that later on in the show-- seeing incredible outbreaks there and battles right now at the state and county level about shutting down.
v when you think about the impacts to some of these smaller businesses, we already saw what PPP and that support did for some of these smaller businesses. But when you look at the latest employment data that we've been getting here, there's still a large amount of pain in those smaller employers. Apollo is just kind of looking at the data there, and it just shows that about employment in small businesses remained 2 million jobs below where it was in February. So when you look at that, how drastic is the need for that support for small businesses, since they employ a pretty large chunk of Americans?
DOUGLAS HOLTZ-EAKIN: I think this is a really important issue. You know, you can be deceived by just staring at the top-line numbers. Are we getting GDP growth? Are we getting overall employment growth? Are we seeing the continuing claims go down? Because underneath that, there really are two worlds, all right? One world is the world of high-skilled labor, where the recession is essentially over and large companies who have weathered it by and large intact. And then there's the world of low-skilled workers and small businesses, where there's just a tremendous amount of economic pain.
You want to make sure that the stimulus package addresses that and maintains their capacity to operate and hire people as a matter of getting them through this period. It's a really important issue for the economy.
- All right, the latest there as we continue to track all that recovery. Douglas Holtz-Eakin, appreciate you joining us, American Action Forum President, former director of the CBO. Be well.