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Speaker 1: Right now. We're joined by Stephen Blitz, chief US economist

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Speaker 1: at T. S. Lombard, to preview the jobs report tomorrow.

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Speaker 1: I know you can run through the numbers for a Stephen,

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Speaker 1: but is it possible that we've seen a structural change

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Speaker 1: in the economy and that because of the past a

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Speaker 1: couple of years that companies have had a tough time

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Speaker 1: finding the right workers that they don't want to get

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Speaker 1: rid of them now and they will hold onto them

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Speaker 1: and find other ways to cut costs, and that could

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Speaker 1: distort the overall picture for the FED. Uh. Yes, that's

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Speaker 1: the short answer. Though I was hoping you'd dominate the

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Speaker 1: speaker of the house. Okay, we'll throw your hat in

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Speaker 1: the ring. Why not? Um? But I think that yes.

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Speaker 1: And first of all, look, firms tend to they first

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Speaker 1: hire less before they lay off more. If you look

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Speaker 1: at the pattern on unemployment claims, they tend to rise

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Speaker 1: later after the official starters session because firms, really, you know,

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Speaker 1: the first thing they do is a higher less and

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Speaker 1: they cut hours in the last thing they do is

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Speaker 1: actually laid people off. And that's it's gonna be especially

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Speaker 1: true in this cycle because of exactly because of the

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Speaker 1: reasons you said, however, that's more likely to be true

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Speaker 1: in manufacturing and that kind of mid skill work. Uh,

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Speaker 1: then it's gonna be in UH in business and professional services,

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Speaker 1: where we're already seeing a lot of announced lay offs

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Speaker 1: as we've seen in Google and other places. UH. And also, um,

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Speaker 1: the higher rate is now below where it was in

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Speaker 1: so UH and and and profits in the fourth quarter

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Speaker 1: its we brought the samsucks story. UM, is that the

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Speaker 1: profits are gonna be we are gonna disappoint in Q

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Speaker 1: for based on the tax receipts UH to the federal

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Speaker 1: government in December. Given the stickiness of the job mugget

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Speaker 1: is steven. I mean, is it possible that the Federal

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Speaker 1: Reserve actually really overtightens and becomes over restrictive. Um? No,

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Speaker 1: but they are not over restrictive now. So for them

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Speaker 1: to be over restrictive, you need the nominal economy to

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Speaker 1: really slow down UM and UH on its own, and

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Speaker 1: it's not really you know, at three percent growth and

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Speaker 1: say three percent inflation, just pin a low number on it.

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Speaker 1: He's there. My six percent nominal growth with four and

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Speaker 1: a half percent costs the money. That's still not restrictive.

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Speaker 1: So for the Fed to suddenly become restrictive, which is

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Speaker 1: kind of what the the doves on the on the

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Speaker 1: FED are really anticipating. You really need exactly what you're

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Speaker 1: talking about, which is they stop hiking, or they hike

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Speaker 1: much more slowly, and the economy slows underneath that, and

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Speaker 1: it suddenly turns a negative real rate into an increasingly

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Speaker 1: positive lital rate and then they'll cut. Well, how about

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Speaker 1: this as a parallel story that what what this might

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Speaker 1: mean the stickiness of labor, pardon me, is that you

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Speaker 1: never get to that really bad recession because you have

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Speaker 1: still so many people continuing to work as inflation comes

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Speaker 1: down slowly like it has been, or at least the

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Speaker 1: pace has been slowing. Uh, that you maybe just get

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Speaker 1: a very light recession as a result of all those

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Speaker 1: people still working and still spending. Yeah, and that's my anticipation, right,

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Speaker 1: So I'm not thinking about any kind of recession like

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Speaker 1: two thousand eight, two thousand nine, maybe something more like

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Speaker 1: two thousand one. I mean, I hate to talk in

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Speaker 1: these terms because you're the one that loses your job.

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Speaker 1: It's it's a depression, right, So, um, I want to

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Speaker 1: be aware of the not insensitive to the human aspect

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Speaker 1: of that. But to your point, yeah, and and the

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Speaker 1: problem then is the flip, which is that the FED

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Speaker 1: cuts and then they're chasing again later in the year

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Speaker 1: because you don't get that much of a recession. So

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Speaker 1: inflation comes down. But remember that target is set, so

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Speaker 1: sure it comes down from six, five, four, but now

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Speaker 1: you're trading in a three three to three to four

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Speaker 1: percent inflation world. You're still a hundred hundred georgia basis

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Speaker 1: points above the FED target. Um, they're gonna chase, Stephen.

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Speaker 1: We gotta go, but love your saucy comments, saucy style. Um,

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Speaker 1: love to have a beer sometime. I'm in Hong Kong.

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Speaker 1: You're in New York. Riches here anyway, we'll see you

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Speaker 1: next time on the radio. Stephen Blitz, chief US economist

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Speaker 1: at TS Lombard