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If a gut punch can be considered a wake-up call this jobs number was every bit of all of that: Professor

Austan Goolsbee, University of Chicago Booth School of Business Professor & Fmr. Council of Economic Advisers Chair under Obama joins the Yahoo Finance Live panel to discuss the latest Jobs Day report, Chaos on the Capitol and Trump finally conceding as Biden will become the next President of the United States.

Video Transcript

ZACK GUZMAN: The markets still largely shrugging a lot of the updates there in that jobs report off, but our next guest here is warning that the underlying data could be signaling perhaps a double dip recession on the horizon. I want to bring him on, one of our favorite guests here on Yahoo Finance Live, that would be Austan Goolsbee, University of Chicago Booth School of Business professor and former Council of Economic Advisors Chair under President Barack Obama. Professor Goolsbee, good to have you back with us. I mean, you just heard Brian--

AUSTAN GOOLSBEE: What do you mean one of your favorite guests?

[LAUGHTER]

ZACK GUZMAN: All right, I'll revise that. It's revised, its revised. Our favorite guest here. Professor, I mean, when you run through the numbers, obviously, the market seems to not be reacting, perhaps because there's hopes of more powerful stimulus on the other side when President-elect Joe Biden comes into office, but what are you seeing in terms of the difficulties of eventually making our way below 6.7% unemployment here? What needs to be done?

AUSTAN GOOLSBEE: Yeah, I can't speak for the sentiment in the markets. I think part of the sentiment in the markets came from the election results on Tuesday. But if a gut punch could be considered a wake up call, this jobs number was every bit of all of that. You know, to lose 100,000 plus jobs a month, that's a recession kind of a number. That's not a recovery number. And I think that is a signal that when the virus rages out of control, it wrecks the economy. And that the administration has gone months and months and months without an active plan to get control of the virus, you see what happens. We can have a comeback, but there's a high danger that this puts us on a path to a double dip recession. That's what I think.

AKIKO FUJITA: Yeah, and also when you talk about the [? serves ?] that we've seen, services sector hit really hard. We've also saw the government employment also down, and let's move the conversation ahead here, because we're 12 days out from the Biden administration coming into office, the expectation of these $2,000 stimulus checks, and more importantly, direct aid to local and state governments. How supportive is that going to be in reversing course, at least when we're talking about the labor market?

AUSTAN GOOLSBEE: Well, as you know, and as we've talked about, I don't consider these payments to be stimulus in the traditional sense. I think they're rescue payments that will prevent it from getting even worse, but not of the form, ah, let's make this payment, and we'll get a massive multiplier and see a big jump in GDP growth or improvement in employment. I think money to states and local governments, it's obvious in the data that we've entered this contingency, this negative contingency where they're laying off over a million workers. That teachers, firefighters, police, those are going to be the next shoes to drop in the job market.

I'm thankful that in this last rescue package, we're going back to try to help small business from having millions of those small businesses shut down. I think that would have been a second shoe to drop. But all of this is going to hinge on how quickly can we slow down the spread of the virus and how big would this relief be. So if they're only able to squeak through something very modest for state and local relief money and it takes them a long time to do it, I kind of think they will be too little too late, and it won't make that much of a difference. So I think they're going to need to revisit that pretty much right out of the gate as soon as the president-elect gets in office.

ZACK GUZMAN: Yeah, and it's one of those points that you and your counterpart, Jason Furman, have stressed. I mean, it's not political, it's just kind of watching what played out in the aftermath of the Great Recession, kind of these two forces moving in opposite directions at the state level and federal level. You'd want to work in tandem on that front to support the economy and the job losses there. But let's talk about one of the age groups that perhaps is overlooked quite a bit here in this. That would be younger workers here. Their unemployment rate still pretty high, 12.5% versus the 6.7% on a national level there.

And college graduates, my little brother continues to remind me, excluded from the stimulus checks that we were discussing there, high levels of student debt. Also if you just graduated in this pandemic, can't necessarily tap unemployment benefits here too. So when we talk about that lasting years down the road, this new age of American workers and citizens maybe being at an economic disadvantage, how important is that in this recovery to address when the new administration--

[INTERPOSING VOICES]

AUSTAN GOOLSBEE: Oh, I think it's extremely important. I mean, now you're thinking about long term issues, which is what we should have been thinking about from the beginning of this. All of these problems were totally obvious in March and April, and we discussed them on this program, and it's really a shame that we're only getting around to it now. So if you have a deep recession, if you look back, one of the-- not an upside, but one of the silver linings of recessions is that it usually is a moment that young people take to go get more schooling and to upskill so that on the back end of the recession, they come out a little better off. So the demand for going to school and educational attainment is countercyclical.

But not this time, because you've got the schools shutting down because of the virus, they don't have the money, and the Trump administration has been pretty hostile to student aid. It's tried to cut many of those programs, has offered little to no relief on student debt and changed the Consumer Financial Protection Bureau to not enforce fraudulent practices against student borrowers. So I think all of that is a big mess of a combination, and that's going to be one that they better address also right at the beginning. Otherwise, it's going to be a persistent problem that lasts with us, really, if not for the entire careers of the young people now, for many, many years. That's what the data show from past recession.

AKIKO FUJITA: And also, and it's worth noting, that this is the last jobs report under this administration. You have heard the repeated pitches President Trump has made over the last four years in terms of job creation. Give me one headline here on the president's jobs record. How do you sum it up?

AUSTAN GOOLSBEE: I mean, he's the first president since we've been keeping records to lose jobs while he's been in office, and you know why that is. It's because they did not take the virus seriously, and the number one rule of virus economics, and I always say is that if you want to help the economy, you got to get control of the virus. And their actions are what led to the worst job performance of any president.

ZACK GUZMAN: It's straight talk, it's true facts. One of our favorite guests, I said earlier, revised to our favorite guest to ever come on this show from the University of Chicago Booth School of Business--

AUSTAN GOOLSBEE: Thank you.

[LAUGHTER]

ZACK GUZMAN: Former Council of Economic Advisor Chair under President Barack Obama, Austan Goolsbee. Thanks again, man. Be well.

AUSTAN GOOLSBEE: Thanks.