WEBVTT - Tannenbaum: U.S. needs to improve growth potential

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<v Speaker 1>Global business news twenty four hours a day at Bloomberg

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<v Speaker 1>This is a Bloomberg Business Flash and I'm Karen Moscow.

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<v Speaker 1>the clients amid retail sales data that rekindled concern that

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<v Speaker 1>the world's largest economy isn't immune to slowing growth overseas.

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<v Speaker 1>And we checked the markets every fifteen minutes throughout the

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<v Speaker 1>trading day on Bloomberg SNP EVENY futures down eleven points down,

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<v Speaker 1>EVENI futures down eighty four, NAS doc euny futures down

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<v Speaker 1>sixteen and the decks in Germany's down eight tenths per cent.

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<v Speaker 1>Can your treasury up eleven thirty seconds? The yeld one

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<v Speaker 1>point nine two percent yield on the two year point

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<v Speaker 1>nine three percent. Now I'm ex screwed. Oil down two

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<v Speaker 1>point seven percent or dollar one to thirty six sixteen.

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<v Speaker 1>A barrel comaxs goal there is down seven tenths per cent,

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<v Speaker 1>or nine dollars ten cents to twelve thirty six and

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<v Speaker 1>ounce the euro at dollar eleven nineteen. The end one

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<v Speaker 1>twelve point seven one. That report showed US retail sales

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<v Speaker 1>dropped a tenth of upper cent in February, and the

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<v Speaker 1>prior months gain was revised to a decline. Now calls

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<v Speaker 1>into question the narrative that bigger gains and consumer spending

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<v Speaker 1>with propelled economic growth at the start of the year.

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<v Speaker 1>Separated data showed wholesale prices in the US felt you

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<v Speaker 1>tenths per cent in February, held down by lower fuel

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<v Speaker 1>costs that have kept inflation languishing below the Federal Reserve school.

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<v Speaker 1>And that's a Bloomberg Business flash, Tom and Mike Karra Mosco,

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<v Speaker 1>thank you very much. Some other numbers, oh wal Street.

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<v Speaker 1>The following is from Bloomberg View. Opinions and commentary from

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<v Speaker 1>Bloomberg columnists. I'm Justin Fox, a columnist for Bloomberg View.

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<v Speaker 1>The past decade and a half have been tough for

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<v Speaker 1>American workers. The median household brings in less money than

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<v Speaker 1>it did in two thousand, adjusted for inflation. The percentage

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<v Speaker 1>of adults without jobs has risen. Recent economics were urch

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<v Speaker 1>gives trade with China. Some of the blame. Politicians and

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<v Speaker 1>voters have taken notice. Raising trade barriers is a major

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<v Speaker 1>theme of the surprisingly successful presidential campaigns of Donald Trump

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<v Speaker 1>and Bernie Sanders. That got me wondering there are other

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<v Speaker 1>wealthy countries where the average workers seems to have fared

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<v Speaker 1>better since two thousand than in the US. Can that

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<v Speaker 1>be chalked up to higher trade barriers? It doesn't look

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<v Speaker 1>like it. To get a sense of where things might

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<v Speaker 1>be going better for workers, they used the United Nations

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<v Speaker 1>Inequality Adjusted Human Development Index, which combines income measures with

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<v Speaker 1>health and education indicators. Then I looked at the International

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<v Speaker 1>Chamber of Commerce's Open Markets Index, which measures a country's

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<v Speaker 1>openness to trade. Of the twenty six countries that score

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<v Speaker 1>higher than the US on the Human Development Index, all

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<v Speaker 1>but three also score higher on the trade openness ranking.

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<v Speaker 1>Free trade and widely shared prosperity are clearly not incompatible.

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<v Speaker 1>I'm justin Fox, a columnist for Bloomberg View. For more

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<v Speaker 1>bloom our opinion in commentary, please get a Bloomberg View

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<v Speaker 1>dot com or view go on the Bloomberg terminal. This

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<v Speaker 1>has been Bloomberg View. Bloomberg View commentaries can be heard

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<v Speaker 1>hourly weekdays on Bloomberg Radio tagtown. You're in, Yeah, Carl

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<v Speaker 1>tannembob with this as we look at the American economy

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<v Speaker 1>and uh, the backdrop here is a sharp revision negative

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<v Speaker 1>to retail sales markets to move on the news and good.

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<v Speaker 1>Mr tannemb Im. Dr Tannembom pushes against it and says

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<v Speaker 1>there's some glimmers of optimism out there as well. Carl,

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<v Speaker 1>I just made up a chart, which I'm hesitant to

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<v Speaker 1>say in March will be my chart of the year.

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<v Speaker 1>It's a thirty year look at real GDP, which is

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<v Speaker 1>migrated on a regression from under four percent to under

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<v Speaker 1>two percent. How do we turn that around? It's the

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<v Speaker 1>politic politics of the moment, it's the economics of the moment.

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<v Speaker 1>Retail sales consumer is not going to do that. How

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<v Speaker 1>do you turn around real GDP? Wow, that's weighty question

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<v Speaker 1>for early morning. But I think the long term issues

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<v Speaker 1>that we've got are really to to see what we

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<v Speaker 1>can do to improve our potential rate of economic growth. Tom.

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<v Speaker 1>The chart that you may be looking at a similar

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<v Speaker 1>to others that I've seen that take a look at

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<v Speaker 1>a tenure moving average over let's say forty or fifty

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<v Speaker 1>years that show the decline, and of course the economists

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<v Speaker 1>would tell you that you build up to that with

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<v Speaker 1>two quantities. One is the population or labor force growth

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<v Speaker 1>and productivity growth. Obviously, we've got baby boomers retiring and

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<v Speaker 1>deservedly so, but we'll need to renew the labor force

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<v Speaker 1>in numbers and also skills. The discussions really centers on

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<v Speaker 1>in that realm around immigration, which is a huge issue

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<v Speaker 1>so far on the campaign trail, but from a number's perspective,

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<v Speaker 1>typically immigration is very beneficial to those countries that assimilate well.

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<v Speaker 1>And then on the productivity side, we've got a lot

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<v Speaker 1>of thesis out there is to what we might do

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<v Speaker 1>or or or not do, frankly, to to increase that level.

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<v Speaker 1>A lot of the public spending on infrastructure that we

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<v Speaker 1>need in order to remain economically fluid has been stunted

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<v Speaker 1>by the fiscal austerity that's needed. Not even so much

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<v Speaker 1>at the national level, but as you know, a lot

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<v Speaker 1>of this is handled at the state and local level,

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<v Speaker 1>where finances in many places are a lot more tenuous.

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<v Speaker 1>And then also I think that there's an opportunity for

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<v Speaker 1>whomever is sitting at whatever seats next January to find

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<v Speaker 1>those in near term incentives to get a little bit

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<v Speaker 1>more investment in R and D and CAPEX going, so

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<v Speaker 1>that if we can make the investments today, will reap

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<v Speaker 1>the returns tomorrow, and the dire predictions of the economists

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<v Speaker 1>like Bob Gordon or Larry Summers will not come true. Um.

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<v Speaker 1>My name is Carl Tannerbaum and I'm running for president.

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<v Speaker 1>I was a little taken about. I mean, Bob Gordon

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<v Speaker 1>is not really dire making dire predictions. He's just saying

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<v Speaker 1>productivity won't be as high as it was. Well, Mike,

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<v Speaker 1>his last paper where he wrote the book, I think,

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<v Speaker 1>was entitled the End of American Growth. So I don't

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<v Speaker 1>know how much dark are you can get on that front. Well,

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<v Speaker 1>perhaps he stole a page from the tabloid newspapers and

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<v Speaker 1>exaggerate the headlines to copies of the paper. Here's my

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<v Speaker 1>question for you, Carl. We're talking earlier with our political

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<v Speaker 1>and and c J. Done and uh Chuck Todd who

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<v Speaker 1>suggests that given the nature of the campaign we've had,

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<v Speaker 1>it's gonna be very difficult for anybody to govern next year.

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<v Speaker 1>So what happens You're you're suggesting that there are things

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<v Speaker 1>they could do to get productivity going in the economy going.

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<v Speaker 1>What happens if nothing happens, what happens to the economy, Mike,

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<v Speaker 1>would be hard to imagine an environment where governance is

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<v Speaker 1>harder than it is today. I'll just say that at

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<v Speaker 1>the outset it so, I'm not sure that we're going

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<v Speaker 1>to see such a paradigm change as we deal with

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<v Speaker 1>a new administration. I will say though, that there's a

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<v Speaker 1>body of work in economics that finds that that uncertainty

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<v Speaker 1>policy uncertainty is the enemy really of business progress and

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<v Speaker 1>market progress, and we're certainly getting tested on that front today.

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<v Speaker 1>I think redlock the status quo is not good fiscally

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<v Speaker 1>because of the hill of healthcare costs and social security

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<v Speaker 1>costs and pension costs we have at the local level

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<v Speaker 1>that we're facing. We do need to face those as

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<v Speaker 1>soon as as possible, because kicking the can down the

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<v Speaker 1>curb is going to run into a wall in the

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<v Speaker 1>not too distant future. When you look, Carl at the

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<v Speaker 1>makeup here, and this has been the art debate, it

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<v Speaker 1>can go either way, optimist or pessimis do you look

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<v Speaker 1>at the all in economy? Are are things so distorted

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<v Speaker 1>that X out trades and even energy dynamics right now,

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<v Speaker 1>which is it. I think you have to be very careful,

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<v Speaker 1>including the energy dynamics, because it's challenging to understand where

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<v Speaker 1>energy will settle in and what the American component of

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<v Speaker 1>that will look like. Our own view is that over

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<v Speaker 1>the long term, you know, energy demand globally is going

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<v Speaker 1>to be strong, and the supply but that we have

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<v Speaker 1>now will eventually dissipate. That should be good for our

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<v Speaker 1>producers and bring that back to being an important contributor

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<v Speaker 1>to our economy. But the fundamentals that we talked about earlier,

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<v Speaker 1>which are you know, what is our potential for growing,

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<v Speaker 1>are the ones that are going to be much more lasting,

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<v Speaker 1>and I think those need to be the focus of policy.

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<v Speaker 1>Before we let you go here, we have to ask

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<v Speaker 1>about the other numbers out today. Do you pay a

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<v Speaker 1>whole lot of attention to pp I essentially pp I

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<v Speaker 1>file demand flat and then um the New York I

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<v Speaker 1>s M numbers. So the pp I mike. We've had

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<v Speaker 1>kind of a quiet recovery and energy and commodity prices

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<v Speaker 1>over the last several weeks of taking the edge off

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<v Speaker 1>of that on inflation, and that certainly will feed into

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<v Speaker 1>the conversation that begins with the FED today, where I

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<v Speaker 1>think the numbers are better than they thought they'd be

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<v Speaker 1>a month ago. It will be very interesting at the discussions. Carl,

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<v Speaker 1>thank you so much, Carlam Company surveillance correction here I said,

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<v Speaker 1>New York, IM, they're not the I s M. They

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<v Speaker 1>don't come from the purchasing managers. They come from survey

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<v Speaker 1>by the New York Federal Reserve. Empire Manufacturing. It was

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<v Speaker 1>up to positive zero point six to from sixteen point

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<v Speaker 1>six four, So a big change there. Well, I'm glad

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<v Speaker 1>you bring it up and that folks were buried by

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<v Speaker 1>tertiary economic data. And what I find interesting is some

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<v Speaker 1>of it, like the Dallas inflation statistic, has real merit. Mike,

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<v Speaker 1>what do you think of all these you know, sub

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<v Speaker 1>sub sub indusicries like Empire Manufacturing. Well, they don't tell

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<v Speaker 1>you much about what's going on in the in the

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<v Speaker 1>national economy, and there's no relationship between the Empire number

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<v Speaker 1>and the national I s M number. But if you

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<v Speaker 1>put them all together, it gives you sort of a

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<v Speaker 1>region by region picture of how things are going. And uh,

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<v Speaker 1>we have seen a deterioration across the country. And now

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<v Speaker 1>if this one's leading us back up again, that would

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<v Speaker 1>be good news. Yeah, it's just fascinating, folks. All of

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<v Speaker 1>our interviews on radio, out at iTunes, out on podcasts,

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<v Speaker 1>we are thrilled to reoffer that to your team is

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<v Speaker 1>doing a great job of getting those out. Going to iTunes,

0:09:49.520 --> 0:09:54.440
<v Speaker 1>search Bloomberg's Surveillance and you will find any number of

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<v Speaker 1>good interviews, including Richard Hass yesterday with the consul and

0:09:58.480 --> 0:10:02.040
<v Speaker 1>Form Relations and dr In A Bomb and Alan Ruskin

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<v Speaker 1>and others. A futures negative eleven, Dow futures negative eighty three.

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<v Speaker 1>I'm gonna call it a two week churn to the market.

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<v Speaker 1>With a better equity framework, we forgot the doubt closing

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<v Speaker 1>seventeen thousand two nine, the vix not at mass complacency,

0:10:21.320 --> 0:10:25.199
<v Speaker 1>but nevertheless very good sixteen point nine two, way below

0:10:25.240 --> 0:10:29.400
<v Speaker 1>the twenty long term average yields, come into the risk

0:10:29.520 --> 0:10:32.439
<v Speaker 1>off off the retail data they were in earlier, and

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<v Speaker 1>come in more ever more in one but still a

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<v Speaker 1>churn to the market. And you know, the press conference tomorrow,

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<v Speaker 1>what what does she not say at the press conference?

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<v Speaker 1>What does she not say? And she doesn't talk about

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<v Speaker 1>dates were times data dependent. Yeah, actual progress Green Shoots.

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<v Speaker 1>Remember Green Shoots. We were younger. Green Shoots was a

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<v Speaker 1>few years ago. Futures negative eleven death futures Neinka of

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<v Speaker 1>eighty four, Another hour of Bloomberg's surveillance