Transcript: Mark Zandi on "Face the Nation," July 5, 2020

Zandi: Job numbers will be "meaningfully worse" in July
Zandi: Job numbers will be "meaningfully wors... 05:22

The following is a transcript of an interview with chief economist for Moody's Analytics Mark Zandi that aired Sunday, July 5, 2020, on "Face the Nation."


MARGARET BRENNAN: The U.S. added 4.8 million jobs in June, but that data was compiled before the coronavirus spikes that started mid-month. Mark Zandi, chief economist at Moody's Analytics, joins us now from Philadelphia this morning. Good morning to you, Mark. 

MARK ZANDI: Good morning, MARGARET. 

MARGARET BRENNAN: You had already predicted this would be the shortest but arguably most severe recession in history. What did we learn from the data we got this week?

MARK ZANDI: Well, it was good, about as good as you could expect. Almost five million jobs were created during the month. That's on top of 2.7 million in the month of May. So we've gotten about a third of the jobs back that we lost in- in March and April. Unemployment declined. Properly measured, it's about 12%. Hard to imagine that that's a good number. But it is a good number compared to 20%, which we got in- in April. That was the peak. But here- here's the thing, MARGARET, the unfortunate thing. You know, the unexpected, better economic news is the result of the very rapid increase in business reopenings, too fast. Because now the virus is reintensifying, and the pandemic is raging. In a lot of key states across the country they're pulling back. And that's not in the data yet. That's coming down the road. So I fear that the best economic news was in June. And as we look to July and going forward, the job statistics are going to look meaningfully- meaningfully worse. The- the pandemic is a real issue now.

MARGARET BRENNAN: And these are- these states that are seeing these spikes are important to the U.S. economy, very large economies: Texas, California, Florida. How much do you expect to see consumers pull back?

ZANDI: They are, they're big. I mean, if you add up California, Texas, Florida, let's throw in Arizona, you're, you know, you're now talking about over a fifth of the economy, probably closer to a third of the economy right there. And I do expect that we're going to see pullbacks by businesses in those states. And here's the- here's the thing, it's not just businesses that are directly impacted. It's not just restaurants and retailers. I think all businesses are going to be nervous about the uncertainty that this all creates. And so they're gonna become even more cautious in- in hiring back workers. And then, of course, you've got consumers.

MARGARET BRENNAN: Right.

ZANDI: You and I, you know, we- we're- we already had one hand on the bunker. I can't imagine that many of us aren't going to go right back into the bunker as a result of all this and wait this out. So this is very disconcerting. And if Dr. Fauci is right and we're headed towards 100,000 per day, I think the prospects of going back into recession are pretty high.

MARGARET BRENNAN: Well, we know certainly at the White House and on Capitol Hill, they're going to have to take a look at what kind of emergency aid will need to be provided in light of some of this changing information that we're receiving. In your view, do you think Congress needs to provide some kind of help to American families? Eighty million Americans have children under the age of 18. They can't necessarily send them back to school in the summer. Maybe not in the fall. Child care is also in question. How important is it to address that specific challenge?

ZANDI: Critical. It's absolutely critical.You know, if Congress and administration don't get it together in the next few weeks before Congress goes away on its August recess, I fear we're going back into recession because it- the economy needs a lot of help. And you- you point out there's a lot of- even though unemployment's back down, if you add up folks that are unemployed, people who have got their hours cut, they're still working, but they got their hours cut, and then consider those folks that are still working, haven't gotten their hours cut but got their pay cut, you're talking about a third of all American workers that are still struggling here. And if they don't get some additional help on- and as you know, the- the unemployment insurance expansion that was part of--

MARGARET BRENNAN: Right.

ZANDI: --the original help to the economy is- is going away in two to three weeks. So if Congress and the administration don't figure out how to provide more help to these folks, they're going to have absolutely no choice but to stop paying bills, cut spending, and the economy is really gonna struggle. Here's the other thing, state local governments are hemorrhaging red ink.

MARGARET BRENNAN: Right.

ZANDI: So every- every state, and government across the country, it doesn't matter whether you're in a Republican state or a Democratic state, you're hemorrhaging red ink. And they're slashing payrolls. And these are middle income jobs, they're teachers, they're fire, they're police, they're emergency responders. These are the kinds of folks we need working at anytime time, but particularly in a pandemic. So it's- it's just absolutely critical- critical that Congress doesn't take the wrong message-- 

MARGARET BRENNAN: Right.

ZANDI: --from the June jobs number and says, OK, mission accomplished, we're OK here. We're far from it. They need to provide a lot more help and very soon.

MARGARET BRENNAN: But what about the specific childcare issue? How does- how does Congress solve that?

MARK ZANDI: Well, they're- I mean, you're right. They- they have to provide support through- to- support for child care on the other side- during the pandemic and once schools, during the summer and if schools don't reopen. So there has to be additional support there. You know, there's different ways of providing that support, direct aid to people who are unemployed or, you know, through unemployment insurance or through the tax code. There is a child tax credit that could be used to make it refundable to different households so that they can get cash back if they have child care needs. But, you know, all those things need to be part of any additional support that Congress comes forward with. And hopefully, again, they come forward with that quickly here. 

MARGARET BRENNAN: And we'll be covering it. Mark Zandi, thank you. We'll be back in a moment.