WEBVTT - We're Not In a Bond Rout Yet, Gross Says 0:00:00.240 --> 0:00:04.040 Runt You by Bank of America Mary Lynch. With virtual reality, 0:00:04.320 --> 0:00:09.719 virtually everything will change. Discover opportunities in a transforming world. 0:00:10.119 --> 0:00:14.440 Be of a, mL dot Com, slash VR, Mary Lynch, 0:00:14.520 --> 0:00:29.240 Pierced Fenner and Smith Incorporated. Welcome to the Bloomberg Surveillance Podcast. 0:00:29.280 --> 0:00:32.760 I'm Tom Keene with David Gura. Daily we bring you 0:00:32.840 --> 0:00:37.640 insight from the best of economics, finance, investment, and international relations. 0:00:38.120 --> 0:00:43.640 Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, 0:00:43.640 --> 0:00:51.120 and of course on the Bloomberg. We begin our job 0:00:51.159 --> 0:00:55.000 coverage in this hour with Alan Krueger of Princeton University, 0:00:55.400 --> 0:00:58.840 truly giant of modern economics, particularly his work on the 0:00:58.880 --> 0:01:00.640 hourly wage. We can talk about that in a bit. 0:01:01.040 --> 0:01:03.160 You're piling through one of my books of the summer 0:01:03.240 --> 0:01:06.760 a couple of years ago, Leonard Oiler Mathematical Genius in 0:01:06.800 --> 0:01:09.640 the Enlightenment, which is really heavy reading, a lot of 0:01:09.680 --> 0:01:13.160 math in it, a lot of formulas. Fortunately, Tom, it's 0:01:13.200 --> 0:01:15.920 the beginning of the summer. Yeah. But and it's it's 0:01:15.959 --> 0:01:18.680 it's a tough book to get through because it's got 0:01:18.720 --> 0:01:21.839 a lot of theory in it. It's a very significant book. 0:01:21.840 --> 0:01:25.640 I was more interested in his life, which very little 0:01:25.680 --> 0:01:28.800 about um. And it's tough going. I have to say, 0:01:28.800 --> 0:01:31.040 to get through the physics and the math, well that's 0:01:31.040 --> 0:01:34.319 where I wanted to do. It is the physics in 0:01:34.360 --> 0:01:37.880 the math and the era. Then the mystery why is 0:01:37.880 --> 0:01:40.920 our central banking now any different? I mean, do we 0:01:41.040 --> 0:01:44.360 have an understanding of the physics in the math of 0:01:44.400 --> 0:01:48.680 our central banking? Thinking you know what it's remarkable for 0:01:48.720 --> 0:01:52.760 me and thinking about the book is humans have been 0:01:52.760 --> 0:01:58.120 thinking about developing math for millennia and the progress was slow. 0:01:58.240 --> 0:02:01.600 Yet in the early eighteenth century they know far more 0:02:02.520 --> 0:02:07.160 than typical college student knows today. And when it comes 0:02:07.200 --> 0:02:12.359 to central banking, were you know much earlier in this period, 0:02:12.919 --> 0:02:16.680 so we're sort of pre Newton. I'd say, I want 0:02:16.880 --> 0:02:18.680 I'll put a question you. Tom often puts to two 0:02:18.680 --> 0:02:21.120 folks who are who are academics, that is, are how 0:02:21.440 --> 0:02:24.160 engaged with the mathematics or students in your department today 0:02:24.200 --> 0:02:26.840 students who are studying economics. Are they as engaged with 0:02:26.919 --> 0:02:29.400 mathematics as they used to be? Oh? Probably more so. 0:02:30.200 --> 0:02:32.359 I don't think, David, I'd be able to get into 0:02:32.400 --> 0:02:34.760 graduate school with the math that I had at Cornell today. 0:02:35.560 --> 0:02:38.400 But I would say this economics is more logic and 0:02:38.400 --> 0:02:41.280 more analysis than math, and I think the math is 0:02:41.280 --> 0:02:44.799 a proxy for someone who can think analytically. There used 0:02:44.800 --> 0:02:47.679 to be on the g R E exam an analysis part, 0:02:48.400 --> 0:02:52.520 and that was a stronger predictor of how well economists performed, 0:02:52.560 --> 0:02:55.280 how well they fared, than the math component. Yeah. But 0:02:55.320 --> 0:02:57.320 we had a great debate this week with Adam Posen, 0:02:57.360 --> 0:03:01.040 who defended the orthodoxy of Phillips curvics or etcetera, and 0:03:01.120 --> 0:03:04.120 John Riding who took him more Neil Viccellian view. It's 0:03:04.160 --> 0:03:07.359 the markets, it's we need to improve regulation, we need 0:03:07.400 --> 0:03:11.920 to change corporate texts, etcetera. More market based, more flow based. 0:03:12.240 --> 0:03:15.359 Which where's the tendency right now? Are we going to 0:03:15.520 --> 0:03:17.920 end up back to the orthodoxy of ten years ago? 0:03:18.280 --> 0:03:21.040 In ten years I don't know. Those are so inconsistent, 0:03:21.080 --> 0:03:22.919 to be perfectly honest, If you think about where the 0:03:22.919 --> 0:03:25.799 Phillips curve comes from, I think of it more is 0:03:25.880 --> 0:03:30.480 coming from my dynamic view of the economy. So I 0:03:30.520 --> 0:03:33.600 don't see a conflict. I can tell you I uh 0:03:33.760 --> 0:03:37.120 put some weight on historical estimates of the Phillips curve, 0:03:37.720 --> 0:03:39.800 and I also think making sure that we've got a 0:03:39.840 --> 0:03:42.800 proper regulatory regime for a financial system is important to 0:03:42.880 --> 0:03:45.680 make UH the economy work for everyone. Let's get to 0:03:45.720 --> 0:03:47.800 this job support. What are you gonna be looking for today? 0:03:47.800 --> 0:03:49.680 What's this report going to indicate to you about the 0:03:49.840 --> 0:03:54.520 health of the U s economy? Well, you know, the 0:03:54.560 --> 0:03:56.640 most important number in the jobs report is the top 0:03:56.720 --> 0:04:02.120 line UH peril growth number. But under the surface labor 0:04:02.160 --> 0:04:06.120 force participation, what's happening with wages? It seems pretty clear 0:04:06.160 --> 0:04:08.400 that job growth has been moderating the first six months 0:04:08.400 --> 0:04:11.120 of this year. That's not surprising given where we are 0:04:11.160 --> 0:04:13.280 in the business cycle, given that the unemployment rate is 0:04:13.320 --> 0:04:15.960 below four and a half percent. So I'll be looking 0:04:15.960 --> 0:04:19.279 closely to see if their further science of moderation, focusing 0:04:19.279 --> 0:04:22.400 on manufacturing, which has been pretty much moving sideways, although 0:04:23.160 --> 0:04:25.800 with the decline in auto sales, I'm concerned that could 0:04:25.800 --> 0:04:29.760 pull down all of manufacturing. UM. So those are the 0:04:30.440 --> 0:04:33.320 main aspects of the report. I'll look at from a 0:04:33.360 --> 0:04:36.520 policy perspective, what what could what could improve those manufacturing numbers? 0:04:36.560 --> 0:04:40.719 That do you think? Um, that's a good question. I 0:04:40.760 --> 0:04:45.200 think fundamentally we need to invest more in research and development, manufacturing, 0:04:45.600 --> 0:04:51.479 and what drove manufacturing is developing new products, products that 0:04:51.520 --> 0:04:56.520 can do new things. Uh. Also what drove manufacturing is 0:04:56.560 --> 0:05:00.560 productivity growth, and that's continuing. It's driving down employment. So 0:05:00.640 --> 0:05:02.240 I think we need to think more on the product 0:05:02.279 --> 0:05:06.080 side and how can we leverage our technology to create 0:05:06.640 --> 0:05:09.159 products that improve people's lives and put people to work. 0:05:09.960 --> 0:05:12.280 I think we need to rip up the script. We're 0:05:12.279 --> 0:05:15.760 coming back and talk to Alan Krueger about everybody wants 0:05:15.800 --> 0:05:20.600 to hear about. I'm gonna guess Professor Krueger, correct me, 0:05:21.120 --> 0:05:25.120 Card Krueger. Krueger Card a definitive paper on the labor 0:05:25.200 --> 0:05:29.440 economy of this nation. There is no other topic in 0:05:29.560 --> 0:05:34.760 labor economics now about the efficacy and result of twelve, 0:05:34.880 --> 0:05:38.920 thirteen and fifteen dollars per our minimum wage. Something everyone's 0:05:38.960 --> 0:05:43.159 been waiting for. Alan Krueger of Princeton on the minimum wage. Okay, 0:05:43.200 --> 0:05:46.680 here's the debate. The Washington Examine or conservative rag comes 0:05:46.680 --> 0:05:49.159 out and says liberals hate this report. And then the 0:05:49.200 --> 0:05:52.440 Washington Post comes out liberal rag and says, wait, the 0:05:52.480 --> 0:05:56.920 Washington Examiner's got a point. Essentially correct me if I'm wrong. 0:05:56.960 --> 0:06:02.679 Professor Seattle and others are finally getting the minimum wage 0:06:02.880 --> 0:06:08.320 back up to its inflation adjusted level from another time 0:06:08.320 --> 0:06:11.360 and place. In recent decades, a minimum wage has been 0:06:11.400 --> 0:06:16.240 set below that inflation adjusted glide path from before, and 0:06:16.279 --> 0:06:19.760 now at eleven fifteen dollars an hour, we're really beginning 0:06:19.800 --> 0:06:25.360 to test what's the best minimum wage. How's the test going? Well, 0:06:25.400 --> 0:06:28.040 I think it's very preliminary, so I will go with that. 0:06:28.279 --> 0:06:31.679 I would reserve judgment. I've looked at the studies from Seattle. 0:06:31.720 --> 0:06:35.960 There's more than one, and I think that the conventional 0:06:36.000 --> 0:06:39.440 wisdom which has become that modest increases in the minimum 0:06:39.440 --> 0:06:43.839 wage don't have a noticeable impact unemployment is still correct, 0:06:44.320 --> 0:06:47.520 and we don't know where the turning point is. UM. 0:06:47.640 --> 0:06:51.120 The UH evidence that we're going to start to get 0:06:51.240 --> 0:06:54.599 from Washington State, from Los Angeles, from a few other cities, 0:06:55.160 --> 0:06:57.520 I think might help us to determine where that turning 0:06:57.560 --> 0:07:01.440 point is. I've been concerned that fifteen dollars and hours 0:07:01.440 --> 0:07:05.680 beyond what we've experienced. UM. On the other hand, adjusted 0:07:05.720 --> 0:07:08.440 for inflation, that would put us throrom eleven twelve dollars 0:07:08.480 --> 0:07:11.200 an hour. Every business person listening to this right now 0:07:11.280 --> 0:07:13.640 is going Professor Greg go back to Princeton. We gotta 0:07:13.680 --> 0:07:16.440 live in the real world. We can't wait for more data, 0:07:16.520 --> 0:07:20.480 more time, more responsible economic studies. What do you say 0:07:20.520 --> 0:07:23.040 to the person going, wait, I gotta go from X 0:07:23.080 --> 0:07:25.920 to fifteen or thirteen eleven, and the only way I'm 0:07:25.920 --> 0:07:30.720 gonna do this is productivity, efficiency, robots and depreciate labor 0:07:30.880 --> 0:07:34.800 unit count. I mean, it's just fewer people employed, right, Well, 0:07:34.840 --> 0:07:37.480 I think it's more complicated than that. Um. I think 0:07:37.520 --> 0:07:41.760 what many individual businesses miss is that their competitors are 0:07:41.800 --> 0:07:44.760 also facing higher prices. So one of the things we've 0:07:44.800 --> 0:07:47.000 seen in the past is that minimum wage increases are 0:07:47.040 --> 0:07:50.400 often passed on in the form of higher prices. UM. 0:07:50.440 --> 0:07:53.240 And given how low inflation is at the moment, Uh, 0:07:53.280 --> 0:07:55.480 there might be some who actually think that it's not 0:07:55.480 --> 0:07:57.560 not the end of the world. But I think that 0:07:57.640 --> 0:08:02.040 the impact on an individual business is is not as 0:08:02.080 --> 0:08:06.200 great as often as perceived because it's affecting the entire market. 0:08:07.000 --> 0:08:10.240 Let me ask you a broader question about policy making 0:08:10.520 --> 0:08:12.280 in the year two thousand and seventeen. Tom brings up 0:08:12.320 --> 0:08:14.760 the minimum wage, but you see a lot of decisions 0:08:14.760 --> 0:08:16.320 being made at the state and local level that in 0:08:16.360 --> 0:08:18.200 the past have been made at the federal level. What 0:08:18.200 --> 0:08:20.240 does that city about the role of the federal government 0:08:20.280 --> 0:08:24.280 if you have UH cities and states tackling regulatory issues 0:08:24.360 --> 0:08:27.680 minimum wage issues. So what's changed. We've seen this before 0:08:27.720 --> 0:08:31.240 with the minimum wage in the nineteen eighties, when the 0:08:31.280 --> 0:08:35.160 federal government didn't raise the minimum wage, the states stepped up. 0:08:35.640 --> 0:08:39.880 That's what's been taking place since two and nine, the 0:08:39.960 --> 0:08:43.400 last time the federal minimum wage increased. Donald Trump proposed 0:08:43.440 --> 0:08:45.400 raising the minimum wage to ten dollars an hour when 0:08:45.440 --> 0:08:48.760 I ran for office. That struck me as a reasonable compromise, 0:08:48.800 --> 0:08:51.199 a reasonable level. I don't believe he's ever brought that 0:08:51.320 --> 0:08:55.640 up again, um and I think that's something which consensus 0:08:55.640 --> 0:09:00.400 could be formed behind and might lead to a national floor, 0:09:00.520 --> 0:09:05.280 which is UH leading to UH more people to be 0:09:05.360 --> 0:09:09.599 able to earn a living that they can survive. On 0:09:09.600 --> 0:09:11.079 one other thing, I wanted to point out time we're 0:09:11.080 --> 0:09:14.679 in a strange time now because job openings have been 0:09:14.679 --> 0:09:19.680 growing very quickly, much faster than hiring, and it raises 0:09:19.720 --> 0:09:22.640 the question why aren't we seeing more more wage growth? 0:09:22.720 --> 0:09:24.839 And historically in that kind of environment, I think we 0:09:24.840 --> 0:09:27.520 would have seen stronger wage growth. One of the reasons 0:09:27.520 --> 0:09:30.200 why this is taking place now, I think is because 0:09:30.240 --> 0:09:34.679 companies have imposed non compete clauses on their workers make 0:09:34.720 --> 0:09:37.200 it harder for them to switch. Even McDonald's has a 0:09:37.280 --> 0:09:41.760 requirement that franchisees can't hire away employees from other McDonald's 0:09:41.800 --> 0:09:43.760 unless they've been out of work for more than six months. 0:09:44.080 --> 0:09:46.000 So I think this is chilling the labor market and 0:09:46.640 --> 0:09:48.559 putting a lid on wages, and it's one of the 0:09:48.600 --> 0:09:51.720 reasons why we're not seeing wage growth, which the minimum wage. 0:09:52.080 --> 0:09:53.839 You know, historically when we were in this type of 0:09:53.840 --> 0:09:55.560 a labor market, we would see an increase in the 0:09:55.559 --> 0:09:59.440 federal minimum wage. Somebody's nine and they go to eleven 0:09:59.440 --> 0:10:01.720 dollars to any five cents in our minimum wage, whatever 0:10:01.720 --> 0:10:04.720 the geography is, whatever the state does. Everybody else go 0:10:04.800 --> 0:10:07.199 up a buck or two as well. There is often 0:10:07.240 --> 0:10:09.840 a big spell over. There's a debate in the profession 0:10:09.840 --> 0:10:13.600 now about how high that spellover goes. Um that's one 0:10:13.600 --> 0:10:17.560 of the issues they are looking for. It does tend 0:10:17.640 --> 0:10:20.840 to ratch it up the whole wage distribution, which makes sense. 0:10:20.880 --> 0:10:24.120 Workers care about their relative their relative pay. That's one 0:10:24.120 --> 0:10:26.760 of the reasons why employers resist pay increases because it's 0:10:26.760 --> 0:10:29.680 not just the individual employee. It's the whole pace will 0:10:29.679 --> 0:10:32.800 be effective. This is this is desperately important. You just 0:10:32.840 --> 0:10:36.440 stated there's a lot of job openings. Why don't they 0:10:36.520 --> 0:10:42.600 just raise the wage? Money talks. I can't get welders, 0:10:42.600 --> 0:10:45.960 I can't get economics professors like you know, I can't 0:10:46.000 --> 0:10:51.440 get why you yet you know, just raise the wage 0:10:51.440 --> 0:10:54.559 and why you en right? I think employers have gotten 0:10:54.640 --> 0:10:57.079 used to an environment which were no longer in, but 0:10:57.240 --> 0:10:59.800 an environment where we had a surplus of labor. And 0:10:59.840 --> 0:11:02.520 I think we're heading more towards a labor shortage economy, 0:11:03.000 --> 0:11:05.360 partly because of our demographics, partly because of our new 0:11:05.400 --> 0:11:10.040 immigration policy. UM and I think that employers need to 0:11:10.080 --> 0:11:12.320 adjust to this new environment. And I think the more 0:11:12.440 --> 0:11:15.200 enlightened ones will see it's in your interests to respond 0:11:15.240 --> 0:11:17.360 to these market conditions. What do we need to know 0:11:17.360 --> 0:11:20.360 about the skills gap are calling? Michael McKee was in Cambridge, 0:11:20.360 --> 0:11:22.880 Massachusetts yesterday. He spoke with a darn a smugglof of 0:11:23.040 --> 0:11:25.320 m I t about this very issue. It struck me 0:11:25.360 --> 0:11:28.680 talking to Mike Boston. Cambridge in a very privileged place. 0:11:28.720 --> 0:11:32.480 They're surrounded by great academic institutions and have their pick 0:11:32.520 --> 0:11:34.760 of a lot of those graduates becoming tougher and deffort 0:11:34.800 --> 0:11:37.559 to get those graduates to stick around the greater Boston area. 0:11:37.679 --> 0:11:39.080 What do we need to know about the skills gap 0:11:39.080 --> 0:11:41.520 and how to how to narrow that divine? Well, I 0:11:41.520 --> 0:11:43.280 think there is a skills gap, and I think we 0:11:43.320 --> 0:11:47.000 need to start early. I think it's a long term problem. 0:11:47.000 --> 0:11:48.400 I think it's been a problem for a long time 0:11:48.400 --> 0:11:51.760 for the US. But that can't explain the entire puzzle 0:11:51.840 --> 0:11:55.920 that we're facing because the fastest growth in job openings 0:11:55.920 --> 0:12:01.160 has been for restaurant workers, for hotel workers, retail um work, 0:12:01.440 --> 0:12:06.520 which has relatively low credentials uh generally lower education levels. 0:12:06.840 --> 0:12:08.480 So I don't think it's only a matter of skills. 0:12:08.520 --> 0:12:10.600 I think it's partly a matter of employer policy and 0:12:10.640 --> 0:12:14.360 reluctance to pay more for for both high and low skills. 0:12:14.400 --> 0:12:18.040 Are we exporting our skilled jobs? I mean you just 0:12:18.240 --> 0:12:21.440 mentioned three job categories or everybody's going I don't want 0:12:21.480 --> 0:12:23.319 my kid to do that. You know they can you know, 0:12:23.360 --> 0:12:25.280 minimum wage, fine, and go get a summer job. Great, 0:12:26.000 --> 0:12:31.000 But are we struggling with our skilled jobs because they're 0:12:31.000 --> 0:12:34.560 going abroad? Is that the new globalization? Well, that's a 0:12:34.679 --> 0:12:38.679 risk I think with our new immigration policy, because, uh, 0:12:39.000 --> 0:12:41.280 if you look at the mix of immigrants coming to 0:12:41.320 --> 0:12:45.000 the US, it's both a highly skilled and the low skilled. 0:12:45.960 --> 0:12:49.959 It's a barbell and also very ambitious people at all levels. 0:12:50.480 --> 0:12:53.560 Um And to the extent we're making the US less 0:12:53.600 --> 0:12:57.880 friendly for immigrants, that's gonna hurt employers. It's gonna hurt 0:12:58.040 --> 0:13:01.840 employees across the spectrum be cause, uh, the jobs that 0:13:02.280 --> 0:13:06.120 the skilled workers would help create for less skill workers 0:13:06.120 --> 0:13:10.559 won't be here, some of them. David mentions Michael Michael mckem. 0:13:10.640 --> 0:13:12.319 Meeting it up at m I M I T. You 0:13:12.360 --> 0:13:13.640 may not know the l A M I T is 0:13:13.679 --> 0:13:16.559 a school up on a river in Boston. I was 0:13:16.640 --> 0:13:20.480 very impressive. You can both pronounce as I have Smart. 0:13:20.559 --> 0:13:22.520 The one that I can pronounce smart. Crumpton helps you 0:13:22.640 --> 0:13:24.920 know what people don't know. The only reason I can 0:13:24.960 --> 0:13:27.760 pronounce these names is Crumpton is in my ear telling 0:13:27.760 --> 0:13:30.560 me how to pronounce it. He's the best. Okay, long 0:13:30.679 --> 0:13:33.319 term growth and his research up at m I T 0:13:34.080 --> 0:13:38.959 is institutions, institutions, institutions. Where are we on an institutional 0:13:39.280 --> 0:13:43.600 flexibility that gives us a better long term growth? I 0:13:43.640 --> 0:13:46.200 think their own their own smog is an excellent work 0:13:46.240 --> 0:13:49.120 in this area. UM. And historically, I think one of 0:13:49.160 --> 0:13:51.359 the great strengths of the U S has been our institutions, 0:13:51.720 --> 0:13:56.320 our institutions of free press or institutions of UH Central Banking, 0:13:56.440 --> 0:13:59.840 Congressional Budget Office, UH checks and balances. That we have 0:13:59.880 --> 0:14:04.520 a government and UH. Frankly, I'm worried that UH they're 0:14:04.559 --> 0:14:09.800 they're under stress now with the new administration. UM. I 0:14:09.840 --> 0:14:13.520 think we need to really praise our our institutions. By 0:14:13.559 --> 0:14:15.400 the way, I was listening to your show last week 0:14:15.400 --> 0:14:17.720 and I heard you both you listen to us. I 0:14:17.800 --> 0:14:19.680 was driving into work and I just broke and he 0:14:20.560 --> 0:14:23.560 heard you both mentioned the CBO executive summaries. I think 0:14:23.560 --> 0:14:26.560 probably on the healthcare bill. UH. CBO's an institution where 0:14:26.560 --> 0:14:28.800 you have to cherish even when I disagree with him. 0:14:28.800 --> 0:14:31.080 I think it's an institution that I have tremendous regard for. 0:14:31.560 --> 0:14:34.840 We're up to seven listeners in New Jersey. That's unbelievable. 0:14:34.840 --> 0:14:38.360 Why you unreal? Alan Krueger, thank you so much. We'll 0:14:38.440 --> 0:14:40.280 leave it there with the fact that you listen to us. 0:14:40.400 --> 0:14:43.400 I'm Bloomberger eleven three oh in serious XM Channel one nineteen. 0:14:43.520 --> 0:14:46.200 We said good morning one or six one FM Boston, 0:14:46.760 --> 0:14:50.720 Good morning to all of Sloane at Massachusetts Institute. What's 0:14:50.720 --> 0:14:54.000 the name of the schools up river? I can't I 0:14:54.000 --> 0:14:59.520 can't remember Leslie University. Watch yourself younger. That will get 0:14:59.600 --> 0:15:17.520 us into trouble as well. Really, really, thank Jim Glassman 0:15:17.600 --> 0:15:21.200 for joining us today from scenic Glendale, calif waking up 0:15:21.240 --> 0:15:24.400 early for yes, you really appreciate your early morning hours. 0:15:24.840 --> 0:15:29.440 How important is this job's report? Dr Glassman? You know, 0:15:29.600 --> 0:15:33.480 it's always important because it's yet another view of what's 0:15:33.520 --> 0:15:35.480 really going on in the economy. But I think we 0:15:35.600 --> 0:15:37.840 got to remember these things can be very volts a 0:15:37.840 --> 0:15:40.600 month to month, and May, June July have tend to 0:15:40.640 --> 0:15:42.480 be really volatile in the last couple of years. Remember 0:15:42.560 --> 0:15:44.720 last year we had a really weeked May, then we 0:15:44.840 --> 0:15:48.120 got this booming June number. Last month we've got a disappointment, 0:15:48.960 --> 0:15:50.640 And so you know, you have to sort of lick 0:15:50.680 --> 0:15:52.880 through the noise. And I think we got the idea 0:15:53.200 --> 0:15:56.280 the U s economy is back on its feet. Unapployments 0:15:56.360 --> 0:15:58.240 quite low. There may be still a few pockets of 0:15:58.320 --> 0:16:04.960 hidden unemployment. Inkly, Uh, this report is important because it 0:16:04.960 --> 0:16:07.280 backs up what we already know that the US economy 0:16:07.320 --> 0:16:10.000 isn't pretty good shape. It doesn't mean we're doesn't mean 0:16:10.000 --> 0:16:11.880 we solved all the problems, but we're pretty much there. 0:16:12.040 --> 0:16:14.960 I agree that months a month there seems to be 0:16:15.120 --> 0:16:19.280 a good metric, but also a new metric where is 0:16:19.520 --> 0:16:22.360 normal non farm payroll growth? You and I used to 0:16:22.400 --> 0:16:26.440 be one eight was terrible, two was okay, to twenty 0:16:26.560 --> 0:16:29.320 was great. You've got a whole new mathematics now, don't you. 0:16:30.200 --> 0:16:34.680 Exactly because of the demographics. And you know, the thing 0:16:34.720 --> 0:16:36.880 to remember is that the population has been growing about 0:16:36.880 --> 0:16:39.680 one percent a year since over the last ten years, 0:16:39.680 --> 0:16:42.280 but our labor force has been growing about a half 0:16:42.400 --> 0:16:46.000 percent past sixty a month. So this is why economists 0:16:46.040 --> 0:16:48.840 tell you we really as long as we're getting employment 0:16:48.880 --> 0:16:53.920 growing set you almill, say seventy five hundred thousand a month, 0:16:54.320 --> 0:16:57.760 that's considered to be pretty normal with this slow demographics 0:16:57.800 --> 0:17:00.360 that we have, the demographics I'm referring, who is the 0:17:00.360 --> 0:17:04.119 baby boom generation moving to retirement. So it's a real 0:17:04.160 --> 0:17:06.480 big deal. It's we've had to change our mind about 0:17:06.480 --> 0:17:08.880 what kind of growth you need to get the economy 0:17:08.880 --> 0:17:11.200 back on its feet. That's what we've been learning over 0:17:11.200 --> 0:17:13.560 the last decade or so, and I think that's what 0:17:13.680 --> 0:17:15.560 we're watching here, and that's why I think it's going 0:17:15.640 --> 0:17:18.040 to be a tough story to figure out what's good 0:17:18.040 --> 0:17:20.000 and what's not good. I think the key thing is 0:17:20.040 --> 0:17:23.720 as long as employment is holding steady at a low level, 0:17:24.400 --> 0:17:26.720 no matter what the job growth is, it means that 0:17:26.760 --> 0:17:29.800 we're kind of in steady state. Jim, I know you've 0:17:29.800 --> 0:17:32.040 been looking at layoffs. What do those numbers tell you 0:17:32.080 --> 0:17:34.960 about the state of the labor economy? Pretty darn good, 0:17:35.480 --> 0:17:37.280 you know. To me. To me, you're getting a lot 0:17:37.280 --> 0:17:39.360 of news, pockets of news that are kind of squishy 0:17:39.359 --> 0:17:42.560 and soft, and yet that's just the piece of the economy. 0:17:42.600 --> 0:17:45.680 The layoffs are telling you something about the entire economy, 0:17:45.720 --> 0:17:47.320 every corner of the economy that we don't see in 0:17:47.359 --> 0:17:49.679 the numbers. A lot of it, and those trends that 0:17:49.760 --> 0:17:52.840 that layoff pace jumping around week a week, But basically 0:17:52.880 --> 0:17:56.679 we're floating around two fifty thousand per week, which is 0:17:56.720 --> 0:17:59.800 a really steady. It just tells you we're holding high 0:18:00.000 --> 0:18:03.399 and there's nothing really bad happening. Uh. If there are 0:18:03.400 --> 0:18:06.560 pockets of weakness, there are other pockets that are offsetting it. 0:18:06.600 --> 0:18:08.840 So it looks pretty good to me, and we've got 0:18:08.880 --> 0:18:10.359 you know, at this time of the most summer months, 0:18:10.359 --> 0:18:12.600 the auto industry goes through a lot of adjustments and 0:18:12.640 --> 0:18:15.959 it could be really noisy, but frankly, these layoff trends 0:18:16.000 --> 0:18:19.879 are pretty steady and in a really good zone. What 0:18:19.920 --> 0:18:22.800 are you gonna learn about the confidence of employers from 0:18:22.840 --> 0:18:26.840 from this report about the momentum in this US economy? 0:18:27.800 --> 0:18:30.920 I'm not sure, because as the economy gets on his 0:18:31.040 --> 0:18:33.000 feet and we get close and closer to full employment, 0:18:33.040 --> 0:18:35.359 it's gonna be harder for people to hire folks, and 0:18:35.440 --> 0:18:38.080 so the job growth may slow down. The way you 0:18:38.200 --> 0:18:41.120 see the confidence is the wage trends start doing better. 0:18:41.520 --> 0:18:44.320 People have had to pay up. The interesting thing to me, 0:18:45.119 --> 0:18:49.040 this is music to economists ears employers everywhere complaining about 0:18:49.080 --> 0:18:51.119 not being able to find people, not being able to 0:18:51.119 --> 0:18:53.919 find people with the right skills. So that to me, 0:18:54.119 --> 0:18:58.000 the fact that that companies are actually hiring and they're 0:18:58.040 --> 0:18:59.600 having to and they had to pay up for it 0:18:59.640 --> 0:19:02.800 means to me the businesses are pretty confident of what 0:19:02.880 --> 0:19:04.720 lives ahead, and that's why they're doing this. That's why 0:19:04.720 --> 0:19:07.280 they're hiring aggressively, and you see more and more signs 0:19:07.280 --> 0:19:11.320 around of people needing help. Help on the signs the 0:19:11.320 --> 0:19:16.280 old fashioned way. Pretty interesting. Market is not a problem. 0:19:16.320 --> 0:19:18.359 We're just talking to Allen Krueger about this. Where's the 0:19:18.400 --> 0:19:23.399 wage growth? It's not there yet, but I think you know, uh, 0:19:24.119 --> 0:19:25.879 inflation is pretty low too, So you said, I had 0:19:25.880 --> 0:19:29.000 to look at things relative to inflation and productivity. But 0:19:29.160 --> 0:19:31.440 it's it's been a little disappointing right in the last 0:19:31.560 --> 0:19:33.960 particularly the last several months. But all of us economists 0:19:33.960 --> 0:19:37.200 sort of hold on to this idea that the closer 0:19:37.280 --> 0:19:40.080 we get, the tighter labor market gets, the lower unemployment follows. 0:19:40.080 --> 0:19:43.840 It's just a matter of time before workers start to 0:19:43.840 --> 0:19:46.480 see better pay increases because companies are having to work harder. 0:19:46.840 --> 0:19:48.520 So you're seeing a lot of you're seeing really good 0:19:48.560 --> 0:19:53.800 gains in areas that are strong that the technology sectors. Uh, 0:19:54.160 --> 0:19:57.000 we just hadn't seen a real convincing up trends. It 0:19:57.040 --> 0:19:59.240 looked like he was moving in the right direction, moving 0:19:59.280 --> 0:20:00.840 up from two and a half percent. Then it kind 0:20:00.840 --> 0:20:04.359 of stalled out. But I suspect I would be really 0:20:04.400 --> 0:20:07.520 shocked if this time next year we're not looking at 0:20:08.119 --> 0:20:11.840 faster gains and in errors in in wage rates. And 0:20:12.119 --> 0:20:13.639 you know, the other thing to keep in mind is 0:20:14.160 --> 0:20:17.480 average genially learnings aren't the only part of the labor 0:20:17.520 --> 0:20:20.400 pay story. Companies have to pay for all kinds of benefits, 0:20:20.800 --> 0:20:23.119 health care, insurance and things like that, and so if 0:20:23.160 --> 0:20:25.360 they have to pay more for that kind of stuff, 0:20:25.400 --> 0:20:27.760 they can't be as generous with average gerially learnings. And 0:20:27.840 --> 0:20:30.440 that's part of what may be going on with the 0:20:30.480 --> 0:20:33.800 health insurance premiums moving up. I'm not underemployment. How much 0:20:33.800 --> 0:20:35.439 attention should we pay to that figure when we get 0:20:35.480 --> 0:20:39.040 it this morning? You know, I think the trends, you know, 0:20:39.119 --> 0:20:42.080 it's always been worth paying attention to because there's a 0:20:42.080 --> 0:20:45.000 lot of unemployment that is not reflected in the uneployment rate. 0:20:45.400 --> 0:20:47.679 So we watch that trend pretty carefully. I look at 0:20:47.720 --> 0:20:52.360 the involuntary part time guys and the young adults, and 0:20:52.920 --> 0:20:55.600 the thing that's interesting is all those signs of undeployment 0:20:55.720 --> 0:20:58.480 really getting better. And that's that's not visible in the 0:20:58.520 --> 0:21:01.200 headline numbers when we you the payroll numbers, but it's 0:21:01.240 --> 0:21:04.399 really something that's been going on in the background which 0:21:04.760 --> 0:21:07.359 tells you. But you know, whether it's people who are 0:21:07.440 --> 0:21:10.600 unemployed for very long periods of time, or people who 0:21:10.640 --> 0:21:13.720 are working part time, or young adults. All of those 0:21:13.760 --> 0:21:17.159 trends are getting better. So you know, it doesn't in 0:21:17.240 --> 0:21:20.600 my book when you take it all into account, I 0:21:20.600 --> 0:21:24.200 think you could argue despite the fact that the undeployment 0:21:24.280 --> 0:21:26.439 rate is for I think you could argue that we're 0:21:26.440 --> 0:21:28.240 still in the top of the ninth inning. We still 0:21:28.280 --> 0:21:31.040 have a little bit more work to do because there 0:21:31.080 --> 0:21:35.359 are these pockets of hidden unemployment and underemployment. But I 0:21:35.400 --> 0:21:38.880 think we're doing a pretty good job getting there. Is it? 0:21:38.920 --> 0:21:41.919 Is it okay, Dr Glassman? If I steal your spectacular 0:21:42.040 --> 0:21:46.600 chart of non farm payrolls and claims inverted, which shows 0:21:46.600 --> 0:21:49.080 that we are we are. We are in a tenally 0:21:49.280 --> 0:21:53.880 unusual time. Yeah, we really are. And and I think 0:21:53.920 --> 0:21:55.960 to think to remember about this. I mean, I love 0:21:55.960 --> 0:21:58.480 Hayte nonfarm payrolls and job Day because you're getting a 0:21:58.480 --> 0:22:01.600 real good picture of the economy. But we don't know 0:22:01.840 --> 0:22:05.920 what's really going on with small businesses. It takes the BLS, 0:22:06.000 --> 0:22:07.800 you know, a little while to figure this out. The 0:22:07.840 --> 0:22:10.320 thing I like about jobless claims is it catches everybody, 0:22:10.359 --> 0:22:12.399 no matter where you are. No matter who you work for, 0:22:13.000 --> 0:22:16.400 you're in those numbers. So it's good to compare both 0:22:16.480 --> 0:22:21.640