News : Here comes $2 trillion in stimulus — More big payroll gains to come

Monday, March 8, 2021

Here comes $2 trillion in stimulus — More big payroll gains to come — Cuomo holds on for now

Mar 08, 2021

Editor's Note: Morning Money is a free version of POLITICO Pro Financial Services' morning newsletter, which is delivered to our subscribers each morning at 6 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day's biggest stories. Act on the news with POLITICO Pro.

Quick Fix

Here comes another $2 trillion — Let's face it. Congressional approval of President Biden's nearly $2 trillion stimulus package was never really in doubt. Sure there was plenty of drama over the $15 minimum wage (gone) and stimulus checks and unemployment benefits (trimmed a touch by moderate Dems in the Senate).

But Biden was always going to get his Covid stimulus bill and it's now very close to his desk. It should get through the House by Tuesday and then on to the White House for the president's first big signing ceremony.

And it's a big win, to be sure . The stimulus checks and extended jobless benefits are massively popular, which makes all the GOP opposition a little weird. And they are likely to further juice a 2021 economy already likely to race ahead by close to double digits. The fear — and it's not entirely a ridiculous one — is that it's too much and will juice inflation and force Fed action. That action could pop multiple financial bubbles from Bitcoin to meme stocks.

Both the central bank and the White House have simply thrown up their hands and said, "Fine, if a couple bubbles burst or inflation spikes for a while, we will deal." And the calculus is that going bigger than necessary on stimulus is better than not going big enough, as the Obama White House did in 2009.

This is PROBABLY the correct calculus . But it's not 100 percent certain that it is. There are real pockets of absurd speculation in markets and a ton of untapped consumer demand fueled by strong savings rates and stimulus. The chances for big fiscal/monetary mistakes in the back half of 2021 are real.

Our Natasha Korecki and Christopher Cadelago on Biden's first big win: "Just six weeks into his administration, the president was already telling Americans he had delivered on a signature promise."

Not so easy next time — Compass Point's Isaac Boltansky: "This is a significant victory for Democrats, but the failure of the symbolic minimum wage vote and the last-minute drama with Sen. Manchin (D-WV) serve as unambiguous reminders that the next reconciliation package will face a far steeper climb to enactment."

GOOD MONDAY MORNING — Happy Monday all. Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on aweaver@politico.com and follow her on Twitter @AubreeEWeaver.

SUBSCRIBE TO "THE RECAST" TO JOIN AN IMPORTANT CONVERSATION: Power dynamics are changing. "Influence" is changing. More people are demanding a seat at the table, insisting that all politics is personal and not all policy is equitable. "The Recast" is our new twice-weekly newsletter that breaks down how race and identity are recasting politics, policy and power in America. And POLITICO is recasting how we report on this crucial intersection, bringing you fresh insights, scoops, dispatches from across the country and new voices that challenge "business as usual." Don't miss out on this important new newsletter, SUBSCRIBE NOW. Thank you to our sponsor, Intel.

Driving the Day

MORE BIG PAYROLL GAINS TO COME — Pantheon's Ian Shepherdson: "The 355K jump in payrolls in the leisure and hospitality sector in February is just a taste of what's to come over the next couple of months and, we hope, beyond. …

"Restaurants and bars now employ almost two million fewer people than in February last year, just before Covid struck, so the scope for further big gains is clear as more states re-open these and other consumer services businesses. The rising trend in airline passenger numbers and hotel occupancy rates … also bodes well for the accommodation sector, where payrolls currently are down 640K—that's 32%—from their preCovid level."

COVID SET BACK WOMEN, BUT WILL POST-PANDEMIC BE BETTER? — Via Aubree: "Prior to last February, women had been making major strides in the workforce — with women forming businesses at a faster rate than men, creating more jobs and becoming an increasingly important source of growth in the U.S. economy.

"But according to a recent study from Wells Fargo, the pandemic has disproportionately affected women in the workforce. Over the last year, approximately 2.5 million women have left the labor force, compared to 1.8 million men — a nearly 28 percent difference. And while women still weren't earning the same wages as men prior to Covid, the wage gap has taken an even greater hit since February 2020.

"But Wells Fargo economists argue that the post-pandemic outlook could be more promising for women: "Once the virus is brought under control, we expect the U.S. economy to continue the transition to a more knowledge-based economy, which should benefit women's career and business prospects, particularly given women's higher education attainment."

CUOMO HOLDS FIRM — Our Nick Niedzwiadek and Michelle Bocanegra in Albany: "Embattled New York Gov. Andrew Cuomo doubled down in defending himself against calls for his resignation … saying that quitting would be 'undemocratic.' His comments during a press briefing came after two more women came forward over the weekend to accuse him of inappropriate behavior."

BUT IS HE A DEAD MAN WALKING? — Our David Siders and Anna Gronewold: "From all appearances, the implosion of … Cuomo is near complete. Top aides are leaving his office, and new revelations about his nursing home scandal continue to drip out. Over the weekend, the newspaper of record in his adopted hometown called for his resignation, while two more former aides came forward with accusations of inappropriate conduct. …

"Yet if Cuomo's reign as 'America's governor' has come to an end, it's far less certain that his actual governorship is end-stage. Ralph Northam, the Virginia governor who was on a political death watch following his blackface scandal, survived. So did an on-the-ropes President Bill Clinton, in whose administration Cuomo served during impeachment, giving him an up-close look at how to survive the seemingly unsurvivable."

GAMESTOP BOOSTS STOCK TRADING TAX — WSJ's Alexander Osipovich: "The wild volatility in GameStop Corp. shares this year has emboldened Democrats who support a tax on stock trades. … To be sure, the odds are still against an FTT passing Congress. There is broader support among Democrats for other ways to raise revenues …

"'There's much broader support and interest in the concept among members of Congress than there was a decade ago,' said Antonio Weiss, a Treasury Department official in the Obama administration who proposed his own version of a transaction tax last year."

Markets

INVESTORS WEIGH HOW FAR TECH STOCKS CAN SLIDE AFTER VOLATILE WEEK — Reuters' Lewis Krauskopf: " As U.S. technology shares stumble, investors are debating whether the decline is an opportunity to scoop up bargains or a sign of more pain to come for stocks that have led markets higher for years.

"The Nasdaq Composite, an index heavily populated by tech and growth names, has slumped 8.3 percent since its Feb 12 closing record, over three times the decline for the S&P 500. Drops in popular growth stocks have been even steeper, with Tesla shares off 27 percent and Peloton down 32 percent."

COVID CRASHED THE STOCK MARKET A YEAR AGO. WHAT LESSONS WERE LEARNED? — WSJ's Akane Otani: "A year ago, the longest-ever bull market ended. The comeback in the stock market since then has been nothing short of astounding.

"The S&P 500 took just 126 trading days to swing from a record to a bear market and back to a new high — marking the fastest such recovery in history. That was even as market prognosticators warned stocks were due for another bout of selling, based on the growing death toll and unprecedented job losses caused by the coronavirus pandemic."

STIMULUS-FUELED RISK BOUNCE LIKELY TO COME WITH HIGHER YIELDS — Bloomberg's Netty Idayu Ismail: "Risk assets are poised start the week with a spring in their step as the $1.9 trillion economic stimulus plan approved by the U.S. Senate and a surge in China's exports boost confidence in the global recovery. But it's all likely to point to further gains in Treasury yields.

"Biden's Covid-19 relief legislation, which passed on Saturday, exceeded many Wall Street estimates given the Democrats' thin margin of control in the Senate. Though the measure next goes back to the House for a final vote, expected Tuesday, economists are already boosting their forecasts for growth."

FIND OUT THE LATEST WHISPERS FROM THE WEST WING: Add Transition Playbook to your daily reads to find out what's really happening inside the West Wing, who really has the president's ear, and get the latest scoop from inside cabinet departments and agencies. Track the people, policies and emerging power centers of the Biden administration. Don't miss out. Subscribe today.

Fly Around

TO JUICE THE ECONOMY, BIDEN BETS ON THE POOR — NYT's Jim Tankersley: "To jump-start the ailing economy, President Biden is turning to the lowest-paid workers in America, and to the people who are currently unable to work at all.

"Mr. Biden's $1.9 trillion economic relief package, which cleared the Senate on Saturday and could be headed for the president's signature in a matter of days, would overwhelmingly help low earners and the middle class, with little direct aid for the high earners who have largely kept their jobs and padded their savings over the past year."

U.S. SET TO POWER GLOBAL ECONOMIC RECOVERY — WSJ's Tom Fairless: "The U.S. could help drive a powerful global economic recovery this year, as it plays a more central role in the comeback than after the financial crisis, reflecting the unusual nature of the Covid-19 shock and the flexibility of the American economy.

"The world economy is likely to grow by around 6 percent this year, according to Oxford Economics, the fastest rate in almost half a century, as vaccine campaigns allow pandemic restrictions to be lifted and businesses to snap back. For the first time since 2005, the U.S. is expected this year to make a bigger contribution to global growth than China, said the research firm."

CHAMBER OF COMMERCE DECLINES TO REBUKE LAWMAKERS WHO VOTED TO OVERTURN ELECTION —WP's Aaron Gregg: "America's largest business lobby says it will not pull support for members of Congress based solely on whether they voted against certifying President Biden's election win in Arizona and Pennsylvania, providing cover for 147 Republican lawmakers."

Follow us on Twitter