A new stimulus package long awaited by U. S. stocks failed to be finalised on Friday. After the release of the non-farm report in July, this important issue related to the recent trend of U. S. stocks may be up in the air throughout August.

On the other hand, after bipartisan negotiations in Congress failed, Trump signed an executive order to extend part of the aid bill, but its legal effect and actual effect were questioned.

Are non-farmers not helping in July?

Friday's non-farm payrolls report showed that the US added 1.763 million jobs in July, a better-than-expected 1.6 million. In addition, the unemployment rate fell to 10.2 per cent from 11.1 per cent in June. The better-than-expected results boosted U. S. stocks for the day, but analysts said it was not good for stimulus negotiations.

Krishna Guha and Ernie, analysts at Evercore ISI, pointed out that the better-than-expected job market report will further complicate the next round of fiscal stimulus negotiations, and Republican lawmakers may think the report gives them more leverage.

The main difference between Democrats and Republicans is the amount of unemployment benefits for Americans. The White House said it was in favor of reducing federal aid to $200 a week, while Democrats called for it to be kept at $600 a week.

Henrietta Treyz, head of economic policy research at Veda Partners, said she now thought there was little chance of a deal in August, compared with 65-75 per cent earlier this week.

In view of Friday's jobs report, and congressional staff and other advisers made it clear that there is little urgent need for Democrats or Republicans to meet in the middle, the expectation of a deal with a 65% chance of reaching a deal in August was revised to a 65% 75% chance of reaching a deal in September. "

In Treyz's view, it is still possible for both parties in Congress to resume negotiations and pass a deal this week, but that is highly unlikely.

James Knightley, chief international economist at ING, also said bluntly that while Friday's report was certainly better than expected, it could be the worst outcome in the medium term. Because this does not increase the pressure on American politicians to compromise on the fiscal stimulus package, it means that unemployment benefits of $600 a week will not be restored for at least the next week. It also means that 31 million Americans will continue to face a sharp drop in income and a scarcity of jobs.

Trump Executive order, political significance is more important than Economic significance

As Congress stalled, Trump signed four executive orders on Saturday extending unemployment benefits, including a temporary moratorium on payroll taxes and relief for student loans.

Whether these executive orders are publicly denounced as "unconstitutional" by House Speaker Pelosi, their economic effectiveness may also be greatly reduced.

First, Trump ordered an extension of unemployment benefits, down from $600 a week to $400 a week, but the federal government will only provide 75% of the extension of unemployment benefits through the disaster relief fund. The remaining 25% will be borne by the states. But as a result of the pandemic, tax revenues have fallen, in fact, the fiscal position of the states is getting worse. In other words, the benefits that end up in the hands of the unemployed may be even less.

Second, the executive order says extended unemployment benefits will be provided until December 6, a month after the US presidential election, or until the balance of the disaster relief fund falls to $25 billion. However, the current balance of the fund is only about $70 billion. According to Goldman Sachs Group economists, this may only last for a month.

The practical effect of delaying payroll tax is not guaranteed. The executive order signed by Mr Trump requires that employees earning less than $4000 every two weeks or less than $104000 a year from September 1 to December 31 do not have to pay a 6.2 per cent payroll tax.

But while Trump has the power to order the IRS to suspend the collection of these taxes from employees' salaries, he cannot directly exempt them, which requires congressional intervention. As a result, although the executive order delays payroll taxes, companies responsible for withholding taxes will still be required to pay those taxes in the future, so they are likely to hoard cash rather than hand it over to employees.

Of course, the executive order may have put some pressure on the bipartisan agreement to some extent. After Mr Trump issued an explicit executive order, Democrats said they would reduce spending requirements to $2,000bn from the $3.4 trillion requested in May. However, Democrats are also asking for higher bids-Republicans are proposing a $1 trillion plan. There is still a $1 trillion gap between the two.