WEBVTT - US Consumer Sentiment Drops to Seven Month Low 0:00:02.759 --> 0:00:10.560 Bloomberg Audio Studios, Podcasts, radio news. You're listening to the 0:00:10.560 --> 0:00:14.560 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.600 --> 0:00:17.840 Eastern on Apple, Coarclay, and Android Auto with the Bloomberg 0:00:17.880 --> 0:00:21.040 Business App. Listen on demand wherever you get your podcasts, 0:00:21.320 --> 0:00:23.240 or watch us live on YouTube. 0:00:23.600 --> 0:00:27.639 Let's go to join Sue, University of Michigan Surveys of 0:00:27.760 --> 0:00:31.240 Consumer Director. Let's talk about this umished data, Joanne, a 0:00:31.240 --> 0:00:33.040 little bit weaker than expected on the surface. 0:00:33.159 --> 0:00:34.000 What can you tell us? 0:00:35.360 --> 0:00:38.280 So it came in a little bit weaker, It declined 0:00:38.280 --> 0:00:40.960 from last month, but it was actually a very pervasive drop. 0:00:41.080 --> 0:00:45.880 We sought across all demographic groups. Republicans, Independence, Democrats alike. 0:00:45.960 --> 0:00:48.400 All declined from last month and very much. So this 0:00:48.520 --> 0:00:51.720 is a worry about inflation coming back in the year ahead. 0:00:52.560 --> 0:00:54.520 Yeah, speaking of that, I mean that one year inflation 0:00:54.600 --> 0:00:57.200 expectation ticking up to four point three percent. That's one 0:00:57.240 --> 0:01:00.760 hundred bass points higher than what was estimated and the 0:01:00.760 --> 0:01:03.840 prior read that seems very significant. 0:01:03.880 --> 0:01:05.000 Can you walk us through that? 0:01:05.800 --> 0:01:08.920 Absolutely, So this is a huge jump. We very rarely 0:01:08.959 --> 0:01:12.520 see such a huge one month jump in year ahead 0:01:12.560 --> 0:01:16.759 inflation expectations. So overall consumers are just really worried about 0:01:16.840 --> 0:01:20.880 the negative impacts of tariffs, and they're really expecting tariffs 0:01:20.880 --> 0:01:23.800 to yield quite a bit of inflation in the year ahead. 0:01:23.959 --> 0:01:25.880 We're seeing a little bit of movement on the long run. 0:01:25.920 --> 0:01:29.560 I think consumers are waiting to see how things unfold 0:01:29.840 --> 0:01:33.040 before they really update their expectations over the long run. 0:01:33.120 --> 0:01:35.440 And again, the emish current conditions came in at sixty 0:01:35.480 --> 0:01:39.199 eight point seven. Consensus was seventy three point seven. Last 0:01:39.200 --> 0:01:41.800 period was seventy four. What's the again? Kind of a 0:01:41.800 --> 0:01:44.680 big drop? Does that surprise you the magnitude of the drop. 0:01:45.600 --> 0:01:48.080 The main reason for the dropping current conditions is that 0:01:48.360 --> 0:01:51.160 buying conditions for durables really plunged this month. And the 0:01:51.200 --> 0:01:54.200 main reason for that is that over the last couple 0:01:54.240 --> 0:01:56.680 of months, a lot of consumers spot like you needed 0:01:56.680 --> 0:01:59.280 to buy durables now to avoid price increases in the 0:01:59.280 --> 0:02:03.200 future because economic policy like tariffs. However, with tariffs on 0:02:03.920 --> 0:02:07.760 imminent the ones on China already implemented, people are kind 0:02:07.760 --> 0:02:10.080 of getting concerned that it's already too late to avoid 0:02:10.280 --> 0:02:13.280 those high prices for durable So that's why current conditions 0:02:13.280 --> 0:02:14.000 really took a time. 0:02:14.880 --> 0:02:15.760 Very good joined Sue. 0:02:15.760 --> 0:02:17.079 Thank you so much. Joined Sue. 0:02:17.120 --> 0:02:22.359 She's the Surveys of Consumers Director at the University of Michigan. 0:02:24.040 --> 0:02:27.720 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:02:27.800 --> 0:02:30.920 weekdays at ten am Eastern on Apple, Coarclay and Android 0:02:30.919 --> 0:02:34.240 Auto with the Bloomberg Business App. Listen on demand wherever 0:02:34.280 --> 0:02:37.400 you get your podcasts, or watch us live on YouTube. 0:02:37.919 --> 0:02:40.720 You got those jobs numbers today and the immediate reaction 0:02:40.800 --> 0:02:42.799 in the market, in particular that you Mish sentiment which 0:02:42.840 --> 0:02:45.360 is the weakest, and seven months inflation expectations moving one 0:02:45.440 --> 0:02:48.079 hundred basis points higher for the next year. Joining us now, 0:02:48.280 --> 0:02:50.960 Lindsay paeisga is a chief economist. 0:02:50.400 --> 0:02:51.480 Over at Steefel. 0:02:51.639 --> 0:02:53.200 Can we just talk about the U Mish numbers for 0:02:53.240 --> 0:02:55.560 a second and the reaction within the market and that 0:02:55.639 --> 0:02:57.760 big jump in inflation expectations. 0:02:57.760 --> 0:02:58.520 What do you make of that? 0:03:00.200 --> 0:03:03.840 A concern for the market recognizing that inflation is likely 0:03:03.880 --> 0:03:06.600 to prove much stickier in nature than the Fed had 0:03:06.600 --> 0:03:10.480 previously anticipated. And this not only calls into question the 0:03:10.480 --> 0:03:14.639 Fed's earlier decision to stop short of what we've long 0:03:14.840 --> 0:03:18.080 argued should have been a much higher terminal level, but 0:03:18.160 --> 0:03:20.840 it also calls into question now the Fed's ability for 0:03:21.000 --> 0:03:24.800 further downside relief, and so you see the market responding 0:03:24.840 --> 0:03:27.360 to that, with yields pushing higher this morning after this 0:03:27.400 --> 0:03:30.040 morning's jobs report and the confidence report. 0:03:30.680 --> 0:03:32.840 So, lindsay, what did you take away from the jobs 0:03:32.919 --> 0:03:34.160 report this morning? 0:03:35.200 --> 0:03:38.240 Well, it was somewhat disappointing on the headline, no doubt, 0:03:38.400 --> 0:03:41.480 falling to a three month low in terms of that 0:03:41.560 --> 0:03:44.240 monthly job creation number. But what we see is a 0:03:44.280 --> 0:03:47.720 lot of that was likely weather related weakness. And when 0:03:47.760 --> 0:03:51.119 we look at the other components that strong upward momentum, 0:03:51.640 --> 0:03:55.119 a stronger than expected monthly jump in average hourly earnings, 0:03:55.400 --> 0:03:59.720 the unemployment rate taking down to an oppressive four percent. Again, 0:03:59.760 --> 0:04:02.800 this continues to set the stage, or set the tone 0:04:02.920 --> 0:04:07.720 of tight ish labor market conditions, supporting the Fed's assessment, 0:04:07.760 --> 0:04:11.360 as we saw in that January FOMC statement that Committee 0:04:11.400 --> 0:04:15.120 members are moving away from concerns of emerging weakness on 0:04:15.160 --> 0:04:18.480 the labor market side and conceding now that labor market 0:04:18.560 --> 0:04:22.479 conditions are likely to remain not only stable but solid 0:04:22.640 --> 0:04:24.880 going forward into twenty twenty five. 0:04:26.240 --> 0:04:28.240 The risk, though, has to be the TEARFF question. I 0:04:28.320 --> 0:04:29.720 forgot to turn on my mic. I love that I 0:04:29.760 --> 0:04:31.880 knew that on a Friday, and you saw that in 0:04:31.920 --> 0:04:34.520 you mish. Like both groups from both sides of the aisle, 0:04:34.680 --> 0:04:38.960 are worried about inflation expectations related to tariffs, particularly when 0:04:39.000 --> 0:04:41.159 it comes to say, durable goods and buying them now 0:04:41.279 --> 0:04:44.040 rather than later. We also saw wages take up in 0:04:44.080 --> 0:04:46.720 the jobs number. All of that is an inflationary spiral. 0:04:46.760 --> 0:04:49.599 No, well, it can be. It depends. 0:04:50.000 --> 0:04:52.800 Tariffs in and of themselves are not inflationary if we're 0:04:52.800 --> 0:04:56.880 talking about a one time price increase, but they absolutely 0:04:56.960 --> 0:04:59.640 can be inflationary if they result in this tit for 0:04:59.720 --> 0:05:04.119 tag retaliatory cycle that we saw during Trump's first term 0:05:04.200 --> 0:05:06.480 back and forth with China. So again it's going to 0:05:06.480 --> 0:05:09.680 depend on the scope and the intensity of these programs. 0:05:10.000 --> 0:05:13.880 But also from an immigration standpoint, policies that further restrict 0:05:13.960 --> 0:05:17.680 the labor supply in this country could exacerbate the already 0:05:17.720 --> 0:05:21.160 present divide between labor demand and labor supply, and as 0:05:21.200 --> 0:05:24.520 you mentioned, continue to put upward pressure on wages. At 0:05:24.560 --> 0:05:28.440 the same time, the administration has talked about raining in 0:05:28.520 --> 0:05:32.480 the size of government, reducing outlays, finding areas of waste 0:05:32.480 --> 0:05:36.240 and inefficiencies which could more than offset some of those 0:05:36.240 --> 0:05:39.760 inflationary pressures in the marketplace. So it remains a big 0:05:39.839 --> 0:05:42.440 question mark, but it does appear that investors looking at 0:05:42.520 --> 0:05:46.320 markets reaction, it does appear that investors are concerned about 0:05:46.360 --> 0:05:49.400 the upside risks to inflation at this point. 0:05:49.760 --> 0:05:52.760 So, putting all that together, Lindsey, what's your view of 0:05:52.760 --> 0:05:53.599 the consumer right here? 0:05:54.760 --> 0:05:56.880 Well, I think the consumer is still very solid. The 0:05:56.920 --> 0:06:00.280 consumer continues to prove very resilient in the fame of 0:06:00.320 --> 0:06:05.280 a difficult environment, years of elevated prices, elevated borrowing costs, 0:06:05.320 --> 0:06:08.839 the resumption now of student debt payments. That being said, 0:06:09.120 --> 0:06:14.800 there are a lot of challenges facing consumers potentially further 0:06:14.920 --> 0:06:19.200 higher prices or further increases in borrowing costs at this point, 0:06:19.600 --> 0:06:21.080 but we also have to look at the fact that 0:06:21.160 --> 0:06:25.560 consumers are incredibly savvy and with real growth in income 0:06:26.400 --> 0:06:29.480 excuse me gaining momentum, as well as access to other 0:06:29.560 --> 0:06:34.600 supplemental factors like four oh one k's hardship withdrawals credit cards, 0:06:35.360 --> 0:06:38.560 it's clear that consumers still have a good amount of 0:06:38.600 --> 0:06:42.280 spending and borrowing power left. But again, those challenges are 0:06:42.400 --> 0:06:44.839 very real as we look further into the new year. 0:06:45.200 --> 0:06:47.720 All right, Lindsay, thank you so much. Really appreciate it. 0:06:47.880 --> 0:06:51.359 Lindsay Pieza joining us chief economist over at Steefeld. 0:06:53.040 --> 0:06:56.760 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:06:56.839 --> 0:06:59.839 weekdays at ten am Eastern on applecar Play and Android 0:07:00.320 --> 0:07:03.400 with the Bloomberg Business App, Listen on demand wherever you 0:07:03.440 --> 0:07:06.400 get your podcasts, or watch us live on YouTube. 0:07:07.120 --> 0:07:09.720 One stack we're watching today is Huntington Bank shares. Over 0:07:09.720 --> 0:07:11.880 the last two days, they're up by about one percent. 0:07:12.120 --> 0:07:13.960 They had an investor day yesterday where they laid out 0:07:13.960 --> 0:07:15.720 their strategy for the next few years and where their 0:07:15.760 --> 0:07:18.119 growth opportunities are, and the market took it really well. 0:07:18.480 --> 0:07:21.720 Zach Wasserman is chief financial officer at Huntington, a national bank, 0:07:21.760 --> 0:07:24.160 and he joins us here in the studio. Thank you 0:07:24.200 --> 0:07:26.240 so much for joining us. We appreciate this. 0:07:26.480 --> 0:07:27.360 It's a pleasure to be with you. 0:07:27.440 --> 0:07:30.240 So I think Huntington, and I think a company that 0:07:30.360 --> 0:07:33.680 lends a lot to average people and small businesses and 0:07:33.720 --> 0:07:34.640 sort of knows. 0:07:34.400 --> 0:07:35.480 The economic roots. 0:07:35.480 --> 0:07:37.720 But you guys are also trying to expand that and 0:07:37.760 --> 0:07:38.760 become something different. 0:07:38.920 --> 0:07:39.800 Can you walk me through that? 0:07:40.000 --> 0:07:41.800 Sure? Yeah, you know the businesses. 0:07:41.840 --> 0:07:44.960 We've been performing exceptionally well recently, and one of the 0:07:44.960 --> 0:07:49.120 reasons is because we're driving expansion both geographically and in 0:07:49.160 --> 0:07:52.120 our commercial business, expanding in a number of special de 0:07:52.240 --> 0:07:55.560 vertical areas and national business lines. Just this year, we've 0:07:55.600 --> 0:08:00.360 launched into three new states, North Carolina, South Carolina, and Texas, 0:08:00.400 --> 0:08:03.200 and we've also established eight new specialty verticals that are 0:08:03.280 --> 0:08:07.040 national for example of funds financed vertical that's supporting private 0:08:07.040 --> 0:08:10.840 equity clients, one that's focused on the mortgage ecosystem, and 0:08:10.880 --> 0:08:14.160 other national commercial areas. 0:08:15.120 --> 0:08:17.480 Talk to us about loan growth, what I do know 0:08:17.520 --> 0:08:18.360 about the bank of business. 0:08:18.440 --> 0:08:20.800 That's an important driver. So talk to usbout loan growth, 0:08:20.840 --> 0:08:22.000 where it's coming from, where. 0:08:21.800 --> 0:08:23.440 You're seeing it, and is it kind of in line 0:08:23.440 --> 0:08:24.480 with what you were expecting. 0:08:24.520 --> 0:08:26.440 You know, we've actually had very strong loan growth of 0:08:26.440 --> 0:08:28.520 the last two years. If you take us to back, 0:08:28.600 --> 0:08:31.840 much of the industry has been in a pretty neutral position, 0:08:32.000 --> 0:08:35.559 not actually growing. Huntington has grown outperformed that by about 0:08:35.600 --> 0:08:38.120 ten percentage points. And for us, the growth is coming 0:08:38.120 --> 0:08:42.760 from both our core business, which is consumer small business, 0:08:42.760 --> 0:08:46.160 and then mid corporate typically private commercial clients, and then 0:08:46.200 --> 0:08:49.280 also these new initiatives that I just mentioned before launching 0:08:49.280 --> 0:08:52.240 into three new states, a number of specialty businesses. 0:08:52.280 --> 0:08:54.240 So we're seeing a nice breadth of growth. 0:08:54.280 --> 0:08:59.800 Actually, one thing that's actually you know, a nice indication 0:08:59.840 --> 0:09:02.920 of the economic strength as we're seeing strong demand from 0:09:02.960 --> 0:09:06.160 small businesses from our regional banking business, typically in the 0:09:06.240 --> 0:09:08.800 kind of smaller middle market client set. So it's a 0:09:08.880 --> 0:09:10.640 it's been a healthy dynamic we've been. 0:09:10.520 --> 0:09:13.000 Seeing before you were in this position. 0:09:13.320 --> 0:09:16.600 You also was chief financially financial officer to Visa, and 0:09:16.640 --> 0:09:18.640 I know that Huntington is trying to get into the 0:09:18.960 --> 0:09:22.840 payments business in a particular way too. What's the what's 0:09:22.880 --> 0:09:25.040 the market for that? And how do you guys play 0:09:25.040 --> 0:09:25.760 and compete in that? 0:09:26.400 --> 0:09:29.120 You know, the market for payments is incredibly broad, and 0:09:29.480 --> 0:09:30.200 if you think, if you took a. 0:09:30.200 --> 0:09:32.640 Step back to categorize it, actually like is that zell 0:09:32.880 --> 0:09:33.640 or like what is that? 0:09:33.760 --> 0:09:35.559 You know, it is so broad. The one that really 0:09:35.559 --> 0:09:37.319 needs to to zoom into it. 0:09:37.480 --> 0:09:40.880 You know, we have a number of card based payment products, 0:09:40.920 --> 0:09:46.200 so think consumer cards, commercial cards, but also importantly treasury management, 0:09:46.240 --> 0:09:48.520 and that's really the biggest driver right now we're seeing 0:09:48.520 --> 0:09:52.720 in payments growth supporting commercial clients with the ability to 0:09:52.800 --> 0:09:56.840 accept payments and then make payments in essentially every form 0:09:56.880 --> 0:09:59.959 you can imagine, Alex, so big big growth driver there. 0:10:00.240 --> 0:10:03.080 One of the things that we've done recently is invest 0:10:03.160 --> 0:10:07.280 to expand our merchant acquisition capability. Merchant acquiring is when 0:10:07.440 --> 0:10:12.240 a company accepts payments electronically, and it's often the lynchpin 0:10:12.480 --> 0:10:15.360 of their business. The lifeblood of the company is how 0:10:15.360 --> 0:10:18.400 they accept payments. So we launched a merchant acquiring business 0:10:18.480 --> 0:10:21.680 just in October and it's been going incredibly well. So, 0:10:22.160 --> 0:10:24.440 you know, kind of almost every area there's growth in 0:10:24.440 --> 0:10:27.920 payments for sure, but for US treasury management and commercial 0:10:28.160 --> 0:10:30.120 payments in particular as a major growth driver. 0:10:30.559 --> 0:10:33.600 Talk to us about your long portfolio, specifically your exposure to. 0:10:34.240 --> 0:10:35.720 Office, yeah, real estate. 0:10:36.160 --> 0:10:39.960 You know, office and commercial real estate generally for Huntington 0:10:40.040 --> 0:10:44.560 is a very small exposure. Actually, typically for large regional banks, 0:10:44.840 --> 0:10:48.160 the average commercial real estate within the loan portfolio might 0:10:48.200 --> 0:10:50.760 be fifteen or twenty percent of the loan book. For US, 0:10:50.760 --> 0:10:53.840 it's nine percent, so we're relatively smaller. In a office 0:10:53.880 --> 0:10:55.880 is only one percent of that nine Give you a sense. 0:10:56.160 --> 0:10:58.560 With that being said, you know what we're seeing in 0:10:58.600 --> 0:11:01.400 that commercial real estate environment is this is gonna this 0:11:01.440 --> 0:11:05.079 is gonna be a situation that plays out over multiple years. Thankfully, 0:11:05.559 --> 0:11:10.240 we are seeing a fairly orderly process of refinancing and 0:11:10.600 --> 0:11:15.200 generally seeing pretty sound ability for our commercial real estate 0:11:15.240 --> 0:11:21.840 developers to maintain their financing and to successfully roll through maturities. 0:11:22.240 --> 0:11:24.040 But it'll take a while to run through. 0:11:24.280 --> 0:11:27.480 To give you a sense, something like twenty percent of 0:11:27.520 --> 0:11:30.560 the portfolio matures any given year, so this will be 0:11:30.600 --> 0:11:32.439 you know, on average, it will take five years to. 0:11:32.400 --> 0:11:33.120 Really roll through. 0:11:33.640 --> 0:11:35.440 So I think that's a kind of an industry dynamic 0:11:35.440 --> 0:11:37.760 we're seeing, which this is a dynamic that will play out. 0:11:37.679 --> 0:11:38.600 Over quite sometime. 0:11:39.360 --> 0:11:41.959 What part of this encompasses any kind of M and 0:11:42.040 --> 0:11:45.800 A versus organic I guess you know, for. 0:11:45.760 --> 0:11:50.280 Us, we're focused on organic growth. You know, M and A. 0:11:50.840 --> 0:11:53.400 It can be a tool for banks to grow, certainly, 0:11:53.559 --> 0:11:55.360 we've seen m and A in the industry over time. 0:11:55.720 --> 0:11:58.600 With that being said, it can also be distracting to 0:11:58.720 --> 0:12:01.800 the progress that the companies making on organic growth. And 0:12:01.880 --> 0:12:05.240 for us Alex we're seeing so much progress on our 0:12:05.360 --> 0:12:10.960 organic growth initiatives, both acquiring customers but also importantly putting 0:12:11.000 --> 0:12:13.520 more and more focus around the value added fee services 0:12:13.520 --> 0:12:17.040 that come around that come to them, namely payments, wealth management, 0:12:17.080 --> 0:12:20.120 and capital markets, and so, you know, just the customer acquisition. 0:12:20.200 --> 0:12:24.160 We're seeing the success in those businesses. That's where our 0:12:24.160 --> 0:12:25.680 focus is. To give you a sense in the fourth 0:12:25.760 --> 0:12:28.040 quarter just that we just closed a ten percent year 0:12:28.040 --> 0:12:31.000 over year revenue growth really driven by those organic strategies. 0:12:31.559 --> 0:12:33.959 What's a typical corporate customer for you guys? 0:12:34.280 --> 0:12:38.400 You know, often, Paul, they are middle market companies that 0:12:38.440 --> 0:12:39.120 are private. 0:12:39.400 --> 0:12:41.720 That's the most typical company, you know. 0:12:42.480 --> 0:12:45.840 You know, the regional banks serve a really important niche 0:12:45.880 --> 0:12:48.800 within the overall US economy because you know, the client 0:12:48.840 --> 0:12:52.960 set that we are servicing are typically you know, focused 0:12:52.960 --> 0:12:54.000 on their local market. 0:12:54.080 --> 0:12:55.559 They want a bank with a. 0:12:55.480 --> 0:12:59.319 Company that is deeply embedded in the community and knows 0:12:59.360 --> 0:13:03.040 them personal, but importantly can bring down to them the 0:13:03.080 --> 0:13:06.640 power of a large bank in terms of specialized capabilities. 0:13:06.720 --> 0:13:08.880 It's actually one of the reasons why we've been so 0:13:08.920 --> 0:13:10.840 successful in these new geographic launches. 0:13:12.280 --> 0:13:15.400 How about private credit? Is that a competitor to you? No, 0:13:15.480 --> 0:13:15.920 It's funny. 0:13:15.920 --> 0:13:18.000 We get this question all the time and the answer 0:13:18.120 --> 0:13:22.000 generally is no. Okay, you know, private credit is looking 0:13:22.160 --> 0:13:25.360 for the sort of you know, the kind of loans 0:13:25.360 --> 0:13:28.600 that they finance are typically where there's more leverage, where 0:13:28.600 --> 0:13:31.240 there's more yield to be had. Because of the risk, 0:13:31.559 --> 0:13:34.760 that's not the core client for Huntington. And so we 0:13:34.840 --> 0:13:37.040 actually were up on stage at our investor day yesterday 0:13:37.040 --> 0:13:39.600 and our head of Commercial Business mentioned that only in 0:13:39.679 --> 0:13:42.400 two cases last year across our entire business did we 0:13:42.440 --> 0:13:45.960 see commercial borrowers actually go to a private credit facility 0:13:46.200 --> 0:13:48.080 away from our own lending facility. 0:13:48.080 --> 0:13:49.920 All right, Zach, thank you so much. We appreciate that. 0:13:50.040 --> 0:13:53.520 Zach Wasserman, chief financial office of Huntington National Bank located 0:13:53.559 --> 0:13:58.320 in Columbus, Ohio, Miller Columbus, Ohio as well. 0:13:58.720 --> 0:14:00.319 So he's still banks there even here. 0:14:00.320 --> 0:14:01.000 Well, he's a player. 0:14:01.280 --> 0:14:03.360 I think it's just this is old, this is a 0:14:03.440 --> 0:14:04.360 Miller account. 0:14:04.679 --> 0:14:07.000 Okay, this is different. Gotcha. 0:14:08.120 --> 0:14:11.800 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:14:11.880 --> 0:14:15.240 weekdays at ten am Eastern on Applecarcklay and Android Auto 0:14:15.360 --> 0:14:18.440 with the Bloomberg Business App. Listen on demand wherever you 0:14:18.480 --> 0:14:21.440 get your podcasts, or watch us live on YouTube. 0:14:22.000 --> 0:14:24.000 Right back to the market and what we're seeing right now. 0:14:24.360 --> 0:14:27.120 We saw the job's number coming a little bit of 0:14:27.120 --> 0:14:30.040 a disappointment, but then we had revisions higher. So the 0:14:30.080 --> 0:14:33.640 idea was that relatively neutral for the jobs world. Average 0:14:33.680 --> 0:14:36.280 hourly earnings though beating expectations, and then we got you 0:14:36.320 --> 0:14:38.800 missed around ten and that really jolted markets as well, 0:14:38.840 --> 0:14:41.080 falling to the lowest and seven months. Also, the inflation 0:14:41.200 --> 0:14:44.400 expectation for one year rose one hundred bases points. 0:14:44.440 --> 0:14:47.240 It was a very big jump. We wanted to get. 0:14:47.120 --> 0:14:49.480 More into all of this and sort of encapsulate what 0:14:49.600 --> 0:14:52.960 is happening within the jobs market. Kate Dushane is CEO 0:14:53.120 --> 0:14:55.480 of RGP joining us. 0:14:55.560 --> 0:14:57.720 What was your biggest takeaway? 0:14:58.400 --> 0:15:01.200 Well, I think this job's report really a mixed bag. 0:15:01.320 --> 0:15:05.760 We saw some numbers moving lawyer lower, as you said, 0:15:05.760 --> 0:15:09.000 but also others getting revised higher. So I think it's 0:15:09.160 --> 0:15:13.920 it's fairly neutral given the pressures from the LA wildfires 0:15:13.960 --> 0:15:16.440 and some of the frigid weather that we've all endured 0:15:16.480 --> 0:15:20.680 in January across the country, so we have to just 0:15:20.760 --> 0:15:24.000 keep watching what's happening in the couple of months to come. 0:15:25.120 --> 0:15:27.680 So, Kate, I guess one of the big issues is 0:15:27.960 --> 0:15:31.200 what this might mean just from an overall labor market. 0:15:31.200 --> 0:15:34.160 But my takeaway would be, I've got a market that 0:15:34.200 --> 0:15:36.480 seems at four point one percent, it feels kind of 0:15:36.520 --> 0:15:40.200 fully employed. I've got wages that are rising faster than inflation. 0:15:41.880 --> 0:15:43.320 Is that what you see when you when when you 0:15:43.360 --> 0:15:45.880 talk to your clients out there in terms of their 0:15:46.000 --> 0:15:47.160 view of the labor market. 0:15:48.200 --> 0:15:50.520 Yeah, I would still say this is a really strong 0:15:51.120 --> 0:15:55.360 labor market. I think we have seen in our client 0:15:55.440 --> 0:16:01.880 base employers or excuse me, employees staying put. So as 0:16:01.960 --> 0:16:06.680 companies now are starting to increase some of their transformation 0:16:06.880 --> 0:16:13.240 projects again, they're turning to other labor sources like outside 0:16:13.600 --> 0:16:17.560 talent to supplement the teams that exist within their environments. 0:16:18.600 --> 0:16:21.160 One of the biggest outside risks right now, like the 0:16:21.200 --> 0:16:23.920 impact of terrorists, for example, the unknowns that we think 0:16:23.960 --> 0:16:24.520 are coming. 0:16:25.000 --> 0:16:27.040 How does it transmit into the jobs market. 0:16:27.560 --> 0:16:31.040 Right Sorry about that. Unknowns make everyone nervous and that 0:16:31.720 --> 0:16:36.800 can be a dampening effect on the labor market. But 0:16:36.880 --> 0:16:41.640 there's also tremendous pent up demand in terms of innovation, 0:16:42.400 --> 0:16:48.560 technology transformation, digital transformation that's happening in our client base. 0:16:49.520 --> 0:16:54.240 There's a push around cost cutting and supply chain optimization. 0:16:54.920 --> 0:16:58.040 Those pressures in a business don't go away. So we 0:16:58.160 --> 0:17:02.120 have some countervailing I would say pressure is happening in 0:17:02.160 --> 0:17:06.040 the marketplace that we see in our client base. I 0:17:06.080 --> 0:17:11.840 would say, on the average, we are cautiously optimistic that 0:17:12.240 --> 0:17:18.280 the environment for labor continues to improve throughout twenty twenty five. 0:17:18.880 --> 0:17:22.439 But there are uncertainties related to Trump's trade policies and 0:17:22.480 --> 0:17:26.680 immigration policies, and how they all play out and what 0:17:26.720 --> 0:17:31.360 the timing is will certainly impact what is the ultimate outcome? 0:17:31.960 --> 0:17:32.160 Kate. 0:17:32.200 --> 0:17:35.240 Yeah, you mentioned immigration, and as this administration begins to 0:17:35.400 --> 0:17:40.280 perhaps implement some changes, what kind of impact do you 0:17:40.320 --> 0:17:43.360 think that could have. If there's in fact lower immigration, 0:17:43.440 --> 0:17:47.120 maybe even forced deportations, how do you think that will 0:17:47.160 --> 0:17:48.720 be felt within the labor market. 0:17:49.720 --> 0:17:53.560 Well, it'll certainly impact certain sectors of the labor market 0:17:53.600 --> 0:17:54.840 in certain industries. 0:17:55.280 --> 0:17:56.000 You know, our. 0:17:55.880 --> 0:18:01.480 Business is primarily professional services. You are looking at professional 0:18:01.520 --> 0:18:07.719 and business services. Talent pools, and those, especially in this 0:18:07.840 --> 0:18:12.440 hybrid environment, can often be delivered remotely, and we can 0:18:12.480 --> 0:18:15.879 tap into labor pools that are global in nature. But 0:18:16.160 --> 0:18:22.160 things like retail or construction or healthcare workers that have 0:18:22.240 --> 0:18:24.920 to be on site. I think some of these immigration 0:18:25.040 --> 0:18:31.040 policies will create supply and demand problems and put more 0:18:31.080 --> 0:18:31.919 pressure there. 0:18:33.320 --> 0:18:34.399 What about Doge. 0:18:34.720 --> 0:18:37.560 We just heard Scott Beson talking about Doge. If we 0:18:37.640 --> 0:18:41.640 cut a boatload of government workers, doesn't that just lead 0:18:41.720 --> 0:18:44.320 to so much supply in the labor market and just 0:18:44.520 --> 0:18:46.359 really tick that unemployment rate higher. 0:18:47.640 --> 0:18:50.120 Well, it depends on the skill sets that are coming 0:18:50.280 --> 0:18:53.639 out of that environment. So we need to learn a 0:18:53.680 --> 0:18:58.160 lot more before I think we decide what the impact 0:18:58.240 --> 0:19:02.760 will be. You know, typically about six percent of federal 0:19:02.800 --> 0:19:06.600 workers retire or resign in a typical year. It's looking 0:19:06.680 --> 0:19:09.840 like that could be much much higher given the activities 0:19:09.840 --> 0:19:13.840 that we're listening to around Doze right now. But it's 0:19:13.920 --> 0:19:15.960 really going to depend on what are the skill sets 0:19:16.000 --> 0:19:18.560 coming into the marketplace and are they the kind of 0:19:18.600 --> 0:19:23.080 skill sets that private industry is looking for to decide 0:19:23.119 --> 0:19:24.760 what impact might. 0:19:24.680 --> 0:19:28.240 Come an old topic, but one I like revisiting is 0:19:28.520 --> 0:19:30.520 the whole hybrid work thing. What do you are you 0:19:30.560 --> 0:19:33.639 seeing any trends evolving here or is it kind of 0:19:33.640 --> 0:19:37.080 set in stone? Hybrid three four days? Is that kind 0:19:37.119 --> 0:19:38.600 of the new normal now? 0:19:39.600 --> 0:19:41.919 We really believe it is, and that's supported by a 0:19:41.960 --> 0:19:46.720 recent Gallup poll that said hybrid has really landed in 0:19:47.200 --> 0:19:50.359 the economy. Here, and we see that to be true 0:19:51.240 --> 0:19:54.760 in our client service. I'd say the only industries where 0:19:54.800 --> 0:19:59.359 that maybe is less true is in financial services, which 0:19:59.400 --> 0:20:03.000 tends to want people on site. We saw that with 0:20:03.080 --> 0:20:09.280 the JP Morgan announcement last month, and healthcare certainly has 0:20:09.359 --> 0:20:13.320 been more on site than others. But otherwise, you know, 0:20:14.080 --> 0:20:17.080 we think about seventy five percent of our clients are 0:20:17.160 --> 0:20:18.840 solidly in the hybrid camp. 0:20:19.680 --> 0:20:22.679 You have like twenty years of experience working with C 0:20:22.840 --> 0:20:27.720 suites and helping them to manage transformation initiatives. So what's 0:20:27.760 --> 0:20:30.880 your best guess on what happens with DEI. 0:20:32.720 --> 0:20:33.520 So thank you. 0:20:33.560 --> 0:20:37.760 I mean, we've certainly all been reading lots of headlines 0:20:37.800 --> 0:20:41.359 about what's happening around DEE and I I think what's 0:20:41.400 --> 0:20:45.160 getting lost is that businesses can deliver the best results 0:20:45.200 --> 0:20:48.199 for their customers or clients when they can attract the 0:20:48.280 --> 0:20:52.600 smartest and innovative talent from a wide range of backgrounds 0:20:52.600 --> 0:20:53.640 and experiences. 0:20:53.760 --> 0:20:55.280 And that's what we focus on. 0:20:55.480 --> 0:20:59.400 It's really about what are the skill sets and perspectives 0:20:59.440 --> 0:21:03.159 you need for the best problem solving and fostering an 0:21:03.280 --> 0:21:06.160 environment where employees can do their best work is how 0:21:06.200 --> 0:21:10.120 businesses will compete and win and that's what we focus on. 0:21:10.200 --> 0:21:14.640 It's really about problem solving and getting different perspectives. 0:21:16.359 --> 0:21:19.520 Is AI a do you think is a net positive 0:21:19.600 --> 0:21:23.520 for employment or net negative? A lot of folks saying, Gee, 0:21:23.520 --> 0:21:25.919 it may take some jobs away from from individuals, but 0:21:25.960 --> 0:21:28.040 then others say, no, it's just simply going to improve their. 0:21:30.280 --> 0:21:31.880