Happy Thursday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
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THE BIG DEAL—Trump says ‘decoupling’ from China on the table: President Trump on Thursday said options to “decouple” the U.S. economy from China were on the table.
- Decoupling refers to a process of separating the two countries’ intertwined economies and supply chains, which would amount to a major economic realignment.
- On Wednesday, U.S. Trade Representative Robert Lighthizer testified before the House Ways and Means Committee that he didn’t think a full decoupling was possible, though he favored moves to bring supply chains back to the United States.
“It was not Ambassador Lighthizer’s fault (yesterday in Committee) in that perhaps I didn’t make myself clear, but the U.S. certainly does maintain a policy option, under various conditions, of a complete decoupling from China. Thank you!” Trump tweeted Thursday afternoon.
The Hill’s Niv Elis explains here.
The background:
- The issue of decoupling has resurged in foreign policy circles as the U.S.-China relationship has become increasingly combative. The trade war, followed by the hunt for key health supplies during the COVID-19 pandemic, put a spotlight on the idea of reducing dependence on foreign suppliers for certain goods.
- Similar issues have come up in the field of telecommunications, with officials raising flags that parts manufactured by Chinese giant Huawei could give China a backdoor into U.S. communications if they were used in key infrastructure, such as building 5G networks.
The catch: But outside of supplies with public health or national security implications, some economists warn that decoupling would amount to building giant trade barriers between the world’s two largest economies, which could send the cost of goods up, reduce economic growth and set the table for an economic cold war.
LEADING THE DAY
More than 1.5 million file new jobless claims in second week of June: More than 1.5 million Americans filed new claims for unemployment insurance in the second week of June, according to data released by the Labor Department on Thursday.
- In the week between June 7 and 13, the total number of seasonally adjusted initial claims for jobless benefits fell to 1,508,000 from a revised total of 1,566,000 in the first week of June.
- Roughly 760,526 Americans also filed new claims for Pandemic Unemployment Assistance, an extension of jobless benefits to workers who lost their jobs during the pandemic but do not qualify for standard unemployment insurance. Slightly more than 705,000 workers applied for those benefits in the first week of June.
What it means: Experts say the millions of new jobless claims filed since the start of June signal how long it could take the U.S. to fully recover from the pandemic-driven downturn. While roughly 15 million unemployed Americans say they expect to return to their pre-pandemic jobs, according to the Labor Department, millions may be unable to come back to work in industries severely restricted by the pandemic.
Read the full story from me here.
Looming deadline: The Coronavirus Aid, Relief and Economic Security (CARES) Act signed by President Trump in March added $600 to weekly unemployment benefits, pushing the aid above the average weekly wage in 38 states.
- Democrats are at odds with Trump and GOP lawmakers over extending those benefits after they expire on July 31 as the economy faces new threats from surging coronavirus cases in Texas, Arizona, Florida and many other states.
- Republicans argue that the enhanced unemployment benefits create a disincentive for people to return to work if they can make more money staying home.
- Democrats counter that extending the boost will protect high-risk workers from potentially lethal trade-offs while supporting the millions of unemployed who worked in leisure and hospitality, travel, entertainment and other fields where the risk of contracting COVID-19 remains high.
Democrats unveil $1.5 trillion infrastructure plan: House Democrats unveiled a $1.5 trillion infrastructure plan Thursday that calls for a huge increase in funding to repair roads and bridges while expanding broadband access in rural areas.
Democrats described the bill as the biggest legislative effort to fight climate change, with Speaker Nancy Pelosi (D-Calif.) saying the package would “make real the promise of building infrastructure in a green and resilient way.”
“It’s job-creating in its essence, but it’s also commerce-promoting. So it grows the economy of our country,” she said.
The legislation is the latest attempt to advance an infrastructure package that has been discussed since the early days of the Trump administration but continuously fails to gain traction. The Hill’s Rebecca Beitsch breaks it down here.
GOOD TO KNOW
- New York Times: “Black customers risk being racially profiled on everyday visits to bank branches. Under federal laws, there is little recourse as long as the banks ultimately complete their transactions.”
- A group of conservative organizations is urging Treasury Secretary Steven Mnuchin to extend the July 15 tax deadlines into next year, arguing that this should be an “immediate priority.”
- President Trump on Thursday announced his intention to nominate Securities and Exchange Commission (SEC) senior counsel Caroline Crenshaw to fill an open Democratic seat at the financial regulator.
- Since the start of the coronavirus pandemic in the U.S., Americans have skipped payments on 100 million student loans, auto loans and other forms of debt, according to The Wall Street Journal.
- Stocks on Thursday closed relatively flat after a day of volatility.