1
00:00:02,600 --> 00:00:06,960
Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

2
00:00:09,480 --> 00:00:11,719
Speaker 2: I'm Nathan Hager in New York, and we are getting

3
00:00:11,760 --> 00:00:16,720
Speaker 2: some breaking economic data crossing the Bloomberg terminal Personal Consumption

4
00:00:16,960 --> 00:00:21,200
Speaker 2: Expenditures Price Index for February. This is the Fed's preferred

5
00:00:21,360 --> 00:00:24,919
Speaker 2: gage of inflation. It comes in at two point eight

6
00:00:25,000 --> 00:00:28,520
Speaker 2: percent on a year over year basis. That is the

7
00:00:28,560 --> 00:00:33,279
Speaker 2: core deflator, which leaves out housing rents, which is very

8
00:00:33,360 --> 00:00:36,440
Speaker 2: volatile in terms of the price pressures that we see.

9
00:00:37,080 --> 00:00:41,479
Speaker 2: The personal income deflator for the month of February on

10
00:00:41,520 --> 00:00:44,960
Speaker 2: a month over month basis comes in at three tenths

11
00:00:45,000 --> 00:00:48,040
Speaker 2: of one percent. That was just shy of what economists

12
00:00:48,040 --> 00:00:51,199
Speaker 2: surveyed by Bloomberg we're expecting on a four tenths of

13
00:00:51,240 --> 00:00:56,000
Speaker 2: one percent read, so that's unchanged from the month of January.

14
00:00:56,480 --> 00:00:59,720
Speaker 2: Personal income comes in a little light at three tenths

15
00:00:59,720 --> 00:01:03,600
Speaker 2: of one one percent, that's down from one percent in January.

16
00:01:03,920 --> 00:01:07,720
Speaker 2: And personal spending comes in at eight tenths of one percent.

17
00:01:08,360 --> 00:01:11,680
Speaker 2: That's quite a bit higher than economists surveyed by Bloomberg

18
00:01:11,720 --> 00:01:14,320
Speaker 2: had been expecting, and a big jump from a two

19
00:01:14,400 --> 00:01:17,240
Speaker 2: tenths of one percent read in January. Let's bring in

20
00:01:17,480 --> 00:01:22,640
Speaker 2: Bloomberg's International Economics and Policy correspondent Mike McKee with a

21
00:01:22,680 --> 00:01:26,880
Speaker 2: little bit more context on these numbers. In terms of

22
00:01:26,920 --> 00:01:29,600
Speaker 2: the PC to flavor MIC, it looks like it comes

23
00:01:29,680 --> 00:01:31,840
Speaker 2: in bang in line with expectations.

24
00:01:33,319 --> 00:01:36,319
Speaker 1: The headline number is a little bit lower three tenths

25
00:01:36,360 --> 00:01:39,480
Speaker 1: than was expected at four tenths was the consensus, but

26
00:01:39,760 --> 00:01:44,120
Speaker 1: of course this is very tight numbers and rounding is

27
00:01:44,160 --> 00:01:47,560
Speaker 1: probably involved here. We did see inflation revised up on

28
00:01:47,600 --> 00:01:51,400
Speaker 1: a month over month basis for January from three tenths

29
00:01:51,400 --> 00:01:54,040
Speaker 1: to four tenths, so we do see a decline there

30
00:01:54,200 --> 00:01:56,280
Speaker 1: in the month over month, but the year over year

31
00:01:56,440 --> 00:02:00,640
Speaker 1: rises a little bit from two point forward a two

32
00:02:00,680 --> 00:02:05,000
Speaker 1: point five percent. That's probably base effects. The core comes

33
00:02:05,040 --> 00:02:09,360
Speaker 1: in much lower than the prior month. In January it

34
00:02:09,440 --> 00:02:12,080
Speaker 1: was up half a percent, now it's only up three tenths,

35
00:02:12,440 --> 00:02:15,680
Speaker 1: and the core deflator on a year over year basis

36
00:02:15,760 --> 00:02:18,160
Speaker 1: is down to tick two point eight percent for two

37
00:02:18,200 --> 00:02:20,960
Speaker 1: point nine percent, so it's sort of a mixed picture here.

38
00:02:21,480 --> 00:02:25,600
Speaker 1: In terms of prices, goods prices increased about half a percent,

39
00:02:26,000 --> 00:02:29,280
Speaker 1: prices for services increased three tenths of a percent. Now,

40
00:02:29,360 --> 00:02:33,519
Speaker 1: goods prices had been the major deflationary force over the

41
00:02:33,600 --> 00:02:36,760
Speaker 1: last several months. So the fact that goods prices increased

42
00:02:37,120 --> 00:02:40,080
Speaker 1: not particularly good news. We'll look for the breakdown on

43
00:02:40,800 --> 00:02:44,400
Speaker 1: what happened. Their energy prices were up two point three percent,

44
00:02:44,720 --> 00:02:47,840
Speaker 1: so that was the major problem. I think. With the

45
00:02:48,120 --> 00:02:51,480
Speaker 1: good side, food prices increased just a tenth of eight percent,

46
00:02:51,600 --> 00:02:56,079
Speaker 1: so good news there. So it looks Nathan like it's

47
00:02:56,080 --> 00:02:59,160
Speaker 1: sort of a mixed picture. It is a little bit

48
00:02:59,240 --> 00:03:03,680
Speaker 1: better than anticipated, but for the Fed it is not

49
00:03:03,919 --> 00:03:06,920
Speaker 1: enough to push them to want to make any changes

50
00:03:06,960 --> 00:03:08,880
Speaker 1: in their timing for rate cuts.

51
00:03:09,080 --> 00:03:12,000
Speaker 2: Let's talk a little bit about the revisions as well, Mike.

52
00:03:12,040 --> 00:03:14,640
Speaker 2: We've got those numbers just coming in as well.

53
00:03:16,520 --> 00:03:20,520
Speaker 1: Yes, as I mentioned the personal spending numbers and eight

54
00:03:20,560 --> 00:03:24,960
Speaker 1: tenths unrevised real personal spending, though was revised a little

55
00:03:25,040 --> 00:03:29,360
Speaker 1: bit lower from a last month inflation adjusted basis. In

56
00:03:29,480 --> 00:03:33,080
Speaker 1: January was down two tenths. It had originally been reported

57
00:03:33,120 --> 00:03:37,840
Speaker 1: down one tenth and now it's up four tenths for February.

58
00:03:37,920 --> 00:03:42,280
Speaker 1: So again, that is a good news number for the

59
00:03:42,320 --> 00:03:46,120
Speaker 1: Fed and for probably the White House because it shows

60
00:03:46,160 --> 00:03:51,000
Speaker 1: that people are getting a little bit ahead of inflation.

61
00:03:51,440 --> 00:03:54,960
Speaker 2: So let's talk a little bit more about what's driving

62
00:03:55,560 --> 00:03:58,920
Speaker 2: these latest numbers right now. You mentioned that the goods

63
00:03:59,160 --> 00:04:02,040
Speaker 2: side of the inflation picture came in a little bit

64
00:04:02,240 --> 00:04:06,000
Speaker 2: hotter in terms of the fact that this seems to

65
00:04:06,040 --> 00:04:08,640
Speaker 2: be coming in as a mixed read. What does that

66
00:04:08,720 --> 00:04:12,160
Speaker 2: tell us about how the Fed could react.

67
00:04:14,080 --> 00:04:16,960
Speaker 1: Well, they're going to look past this, They're gonna take

68
00:04:17,000 --> 00:04:20,400
Speaker 1: it on board, but they don't meet again until May first,

69
00:04:20,480 --> 00:04:24,200
Speaker 1: so they'll have another indicator for the March numbers just

70
00:04:24,279 --> 00:04:27,720
Speaker 1: before their meeting at the end of March, and if

71
00:04:27,760 --> 00:04:30,920
Speaker 1: they see this kind of progress, it's probably not going

72
00:04:31,000 --> 00:04:33,960
Speaker 1: to be enough to get them to make any kind

73
00:04:34,000 --> 00:04:38,240
Speaker 1: of moves in May. We're still seeing the inflation numbers

74
00:04:38,320 --> 00:04:41,000
Speaker 1: a little bit on the high side for them. They

75
00:04:41,160 --> 00:04:44,919
Speaker 1: use the PCE as their target, and their target of

76
00:04:44,920 --> 00:04:47,880
Speaker 1: course two percent, and now they're two and a half percent,

77
00:04:47,960 --> 00:04:50,440
Speaker 1: so they'd want to see more progress there. They'd want

78
00:04:50,440 --> 00:04:53,680
Speaker 1: to see more progress on the core deflator, because the

79
00:04:53,720 --> 00:04:56,560
Speaker 1: only reason it looks better today is because it was

80
00:04:56,640 --> 00:04:58,400
Speaker 1: revised up in January.

81
00:04:59,080 --> 00:05:02,960
Speaker 2: Bloomberg Internet National Economics and Policy correspondent Michael McKee with

82
00:05:03,080 --> 00:05:07,760
Speaker 2: us as we continue to analyze this preferred gauge of

83
00:05:07,800 --> 00:05:11,800
Speaker 2: inflation for the Federal Reserve. The PC deflator coming in

84
00:05:12,000 --> 00:05:15,600
Speaker 2: a little bit hotter than expected, with two and a

85
00:05:15,640 --> 00:05:20,040
Speaker 2: half percent year over year read in terms of the

86
00:05:20,080 --> 00:05:25,280
Speaker 2: headline number, and three tenths of one percent also unchanged

87
00:05:25,600 --> 00:05:28,680
Speaker 2: on a month over month basis from the month of January.

88
00:05:28,800 --> 00:05:30,160
Speaker 2: Let's get some more analysis.

89
00:05:30,160 --> 00:05:30,280
Speaker 1: Now.

90
00:05:30,360 --> 00:05:33,800
Speaker 2: We're joined by Tom Porcelli, the chief US economist at

91
00:05:33,880 --> 00:05:37,000
Speaker 2: p GYM Fixed Income. Tom, great to have you with

92
00:05:37,080 --> 00:05:40,560
Speaker 2: us on this good Friday. Your reaction to these numbers, Yeah.

93
00:05:40,400 --> 00:05:43,520
Speaker 3: I mean, look, I think Mike has always nailed it.

94
00:05:43,520 --> 00:05:45,360
Speaker 3: I mean I think that it's sort of a mixed

95
00:05:45,400 --> 00:05:47,920
Speaker 3: bag here. You know. I think people will look at

96
00:05:47,920 --> 00:05:50,360
Speaker 3: the spending number and I think, you know, let's say, hey,

97
00:05:50,400 --> 00:05:52,160
Speaker 3: you know, the consumer is really sort of crushing it

98
00:05:52,200 --> 00:05:56,520
Speaker 3: here in Q one. But the reality is, I mean

99
00:05:56,520 --> 00:05:59,200
Speaker 3: this came with a drawdown in saving, an additional drawdown

100
00:05:59,200 --> 00:06:01,920
Speaker 3: in saving, which is you know again it's it's it's

101
00:06:01,920 --> 00:06:05,200
Speaker 3: sustainable only to a point, you know, and and and

102
00:06:05,240 --> 00:06:07,560
Speaker 3: so I don't like that you have this big burst

103
00:06:07,600 --> 00:06:10,000
Speaker 3: in spending with income that was, you know, sort of

104
00:06:10,040 --> 00:06:13,040
Speaker 3: fairly modest. Now again, I would say to the mixed

105
00:06:13,120 --> 00:06:15,760
Speaker 3: bag idea, if you look at wages. Wages were pretty

106
00:06:15,839 --> 00:06:20,120
Speaker 3: pretty decent. But you know the problem for me, and

107
00:06:20,200 --> 00:06:21,880
Speaker 3: you know, this is something we've been flagging if you

108
00:06:21,960 --> 00:06:24,360
Speaker 3: just look at disposable income, right, I mean, that's really

109
00:06:24,360 --> 00:06:27,000
Speaker 3: where the rubber meets the road on this, you know,

110
00:06:27,040 --> 00:06:31,560
Speaker 3: disposable income, real disposal income to be specific. You know,

111
00:06:31,640 --> 00:06:34,320
Speaker 3: it's it's it's been flat. I mean it actually it

112
00:06:34,360 --> 00:06:37,479
Speaker 3: fell slightly month on months in this report, but you

113
00:06:37,480 --> 00:06:40,200
Speaker 3: know it's been pretty flat now over the last couple

114
00:06:40,200 --> 00:06:43,320
Speaker 3: of months. That again, I think just speaks to sort

115
00:06:43,360 --> 00:06:46,160
Speaker 3: of the long term sustainability of you know, sort of

116
00:06:46,200 --> 00:06:48,120
Speaker 3: the kind of consumption numbers that we've seen over the

117
00:06:48,200 --> 00:06:50,560
Speaker 3: last couple of quarters, which is to say, we don't

118
00:06:50,640 --> 00:06:52,359
Speaker 3: think you know, you're you're looking at a sort of

119
00:06:52,360 --> 00:06:54,720
Speaker 3: a ripping backdrop here. I mean, I think things are

120
00:06:54,720 --> 00:06:56,560
Speaker 3: just sort of just moving along at a sort of

121
00:06:56,600 --> 00:06:58,960
Speaker 3: a you know, a decent pace. It's been our call,

122
00:06:59,040 --> 00:07:01,239
Speaker 3: you know that that twenty four would be a pretty

123
00:07:01,279 --> 00:07:04,080
Speaker 3: reasonable year from a growth perspective. But I think there's

124
00:07:04,200 --> 00:07:07,120
Speaker 3: enough in here and enough being happening that we know,

125
00:07:07,160 --> 00:07:09,640
Speaker 3: we sort of wonder about the ability for the consumer

126
00:07:09,680 --> 00:07:13,160
Speaker 3: to really sort of press this meaningfully. More from here.

127
00:07:13,440 --> 00:07:16,680
Speaker 3: The last thing I'll say on the inflation numbers. You know, look,

128
00:07:16,920 --> 00:07:20,360
Speaker 3: I think they basically came in as was expected, particularly

129
00:07:20,400 --> 00:07:23,679
Speaker 3: on the core. You know, core was a three tenths

130
00:07:23,680 --> 00:07:25,520
Speaker 3: and it actually rounded up to three tenths. You know,

131
00:07:25,560 --> 00:07:28,280
Speaker 3: it was actually point two six again for whatever that's worth.

132
00:07:28,720 --> 00:07:31,240
Speaker 3: But I think this is the kind of movement that

133
00:07:31,360 --> 00:07:33,000
Speaker 3: you know, we've been expecting. I think this is the

134
00:07:33,080 --> 00:07:35,120
Speaker 3: kind of movement that the Fed continues to expect. So

135
00:07:35,160 --> 00:07:37,880
Speaker 3: I think unbalanced, there's no big surprises here. I mean,

136
00:07:37,920 --> 00:07:39,760
Speaker 3: I think whatever you thought about the sort of the

137
00:07:39,760 --> 00:07:41,880
Speaker 3: backdrop before this number, I think you're going to continue

138
00:07:41,880 --> 00:07:42,240
Speaker 3: to think that.

139
00:07:44,240 --> 00:07:46,440
Speaker 1: Oh right up in Tom with a couple of numbers

140
00:07:46,440 --> 00:07:48,320
Speaker 1: to lead people up to speed on some of the

141
00:07:48,320 --> 00:07:50,560
Speaker 1: things that you're saying here. Wages and salaries were up

142
00:07:50,560 --> 00:07:53,520
Speaker 1: eight tenths, which is a very large gain after three

143
00:07:53,560 --> 00:07:59,520
Speaker 1: tenths in January. Interestingly enough, because the market has risen

144
00:07:59,680 --> 00:08:01,840
Speaker 1: so much much, we should have seen I would have

145
00:08:01,840 --> 00:08:06,160
Speaker 1: thought more income on assets, but personal interest income fell

146
00:08:06,280 --> 00:08:10,600
Speaker 1: four tenths and dividend income down by three point seven percent.

147
00:08:10,840 --> 00:08:14,120
Speaker 1: So I guess people aren't selling at this point, they're

148
00:08:14,120 --> 00:08:19,040
Speaker 1: just reinvesting. You mentioned the real personal disposable income. It

149
00:08:19,120 --> 00:08:22,200
Speaker 1: was down a tenth after being flat last month. That's

150
00:08:22,200 --> 00:08:25,760
Speaker 1: the first decline since September. So you're right about the

151
00:08:25,800 --> 00:08:29,560
Speaker 1: issue here of whether or not we're seeing people continually

152
00:08:29,720 --> 00:08:33,920
Speaker 1: able to spend. It looks like from their from their

153
00:08:33,960 --> 00:08:37,600
Speaker 1: wages and salaries they can. You mentioned the savings rate

154
00:08:37,800 --> 00:08:40,520
Speaker 1: three point six percent compared to four point one percent,

155
00:08:40,760 --> 00:08:44,280
Speaker 1: which is more important the savings rate or raises in

156
00:08:44,320 --> 00:08:45,360
Speaker 1: your weekly paycheck.

157
00:08:46,080 --> 00:08:48,880
Speaker 3: Yeah, I mean, you know, they obviously both matter. I

158
00:08:48,960 --> 00:08:51,079
Speaker 3: mean they matter for different reasons, though, I think that's

159
00:08:51,120 --> 00:08:55,040
Speaker 3: a really important idea. It's it's great that, you know,

160
00:08:55,400 --> 00:08:59,920
Speaker 3: we continue to see income at large, right through through wages,

161
00:09:00,000 --> 00:09:02,160
Speaker 3: through the wage channel, continue to move along at a

162
00:09:02,240 --> 00:09:05,920
Speaker 3: at a pretty reasonable pace. But again, this this I

163
00:09:05,960 --> 00:09:07,800
Speaker 3: think you know, we're trying to think big picture here.

164
00:09:08,040 --> 00:09:12,000
Speaker 3: So the big picture thesis is, well, look, how has

165
00:09:12,000 --> 00:09:15,600
Speaker 3: the consumer been driving spending. And they've been driving spending

166
00:09:15,720 --> 00:09:18,520
Speaker 3: through a combination of drawing down saving and then again

167
00:09:18,520 --> 00:09:20,560
Speaker 3: we're not talking about the excess savings thing, right that

168
00:09:20,559 --> 00:09:23,480
Speaker 3: that long that story is long since gone. But you

169
00:09:23,480 --> 00:09:25,719
Speaker 3: know what we're talking about now is cutting into the

170
00:09:25,760 --> 00:09:28,720
Speaker 3: muscle of saving and so if you look at you know,

171
00:09:28,760 --> 00:09:31,400
Speaker 3: sort of the bottom ninety nine percent, right, so just

172
00:09:31,440 --> 00:09:34,720
Speaker 3: excluding the top one percent, what you see is that

173
00:09:35,800 --> 00:09:38,960
Speaker 3: saving is now below where you would have been in

174
00:09:39,040 --> 00:09:42,680
Speaker 3: a sort of a pre COVID baseline estimate. You know,

175
00:09:42,760 --> 00:09:45,160
Speaker 3: that to me is noteworthy. And then you have to

176
00:09:45,200 --> 00:09:47,240
Speaker 3: also consider there's sort of the other channel through which

177
00:09:47,280 --> 00:09:50,360
Speaker 3: the consumer has really been able to sort of drive spending,

178
00:09:50,400 --> 00:09:54,040
Speaker 3: and that's that's through credit usage, which again you know

179
00:09:54,080 --> 00:09:57,880
Speaker 3: these are these are things that can persist, but you

180
00:09:57,920 --> 00:10:00,480
Speaker 3: know that that this is not necessarily the healthy way

181
00:10:01,000 --> 00:10:02,280
Speaker 3: of doing that spending.

182
00:10:03,360 --> 00:10:06,439
Speaker 2: And just to reiterate, the Fed's preferred gauge of underlying

183
00:10:06,440 --> 00:10:10,360
Speaker 2: inflation did cool last month after an even bigger January increase.

184
00:10:10,679 --> 00:10:13,800
Speaker 2: When you factor in the revisions, the core Personal Consumption

185
00:10:13,880 --> 00:10:17,720
Speaker 2: Expenditures price index stripping out food and energy increased three

186
00:10:17,800 --> 00:10:22,520
Speaker 2: tenths percent from January, following a half percent reading in January.

187
00:10:23,040 --> 00:10:24,559
Speaker 2: That was the biggest back to back gain in the

188
00:10:24,679 --> 00:10:28,640
Speaker 2: year two point eight percent on a year over year basis.

189
00:10:29,040 --> 00:10:33,280
Speaker 2: Nathan Hager in New York with more analysis of these

190
00:10:33,480 --> 00:10:38,520
Speaker 2: inflation numbers and talking about the spending that we continue

191
00:10:38,559 --> 00:10:42,280
Speaker 2: to see in this economy, the consumer continuing to hold up.

192
00:10:42,360 --> 00:10:45,720
Speaker 2: Is there still a concern Tom that that is being

193
00:10:45,960 --> 00:10:51,520
Speaker 2: driven by credit card usage by pulling into debt and

194
00:10:52,160 --> 00:10:56,360
Speaker 2: can savings bolster that when we have the kind of

195
00:10:56,480 --> 00:11:01,160
Speaker 2: inflation of elevated interest rates that we're seeing in this

196
00:11:01,240 --> 00:11:02,160
Speaker 2: economy right now.

197
00:11:02,600 --> 00:11:04,679
Speaker 3: Yeah, it can, it can it can persist. I mean

198
00:11:04,720 --> 00:11:08,200
Speaker 3: we've seen this right historically. I mean to say, if

199
00:11:08,280 --> 00:11:10,640
Speaker 3: if the consumer wants, they could draw down saving to zero,

200
00:11:11,440 --> 00:11:13,520
Speaker 3: you know, in over three point six percent, So so

201
00:11:13,600 --> 00:11:16,800
Speaker 3: it can certainly happen, and I think it can persist.

202
00:11:16,880 --> 00:11:18,679
Speaker 3: And I think, you know, if I think about our

203
00:11:18,720 --> 00:11:22,640
Speaker 3: forecast for this year and even into next year, you know,

204
00:11:22,720 --> 00:11:24,320
Speaker 3: I think you're looking at a sort of you know,

205
00:11:24,360 --> 00:11:27,280
Speaker 3: well again what will be sort of a trend like growth.

206
00:11:27,679 --> 00:11:30,600
Speaker 3: So I have no I have no challenge with the

207
00:11:30,640 --> 00:11:32,760
Speaker 3: actual numbers. What I have the challenge. What I have

208
00:11:32,760 --> 00:11:36,360
Speaker 3: a challenge with is is how it's being achieved, because

209
00:11:36,400 --> 00:11:38,720
Speaker 3: that that that's not enduring, right, I mean, you don't,

210
00:11:38,760 --> 00:11:42,120
Speaker 3: you don't you don't generate and enduring you know, slash

211
00:11:42,280 --> 00:11:47,240
Speaker 3: lasting economic expansion when when when that's doing the driving

212
00:11:47,559 --> 00:11:49,440
Speaker 3: I think what we need to really look to is

213
00:11:49,520 --> 00:11:51,559
Speaker 3: the sort of the labor backdrop, and look, I think

214
00:11:51,559 --> 00:11:55,319
Speaker 3: that there's certainly some slowing that's taking place in pockets

215
00:11:55,800 --> 00:11:58,160
Speaker 3: of the labor backdrop. I think that's, you know, been

216
00:11:58,200 --> 00:12:03,040
Speaker 3: pretty apparent now for the lack tendful of months. I

217
00:12:03,080 --> 00:12:08,880
Speaker 3: am encouraged by the wages and salaries increase. We'll want

218
00:12:08,920 --> 00:12:11,440
Speaker 3: to dig into that more just to sort of see

219
00:12:11,480 --> 00:12:14,360
Speaker 3: what the details were on the back of this number.

220
00:12:15,160 --> 00:12:18,800
Speaker 3: But that kind of story for us really sort of

221
00:12:18,800 --> 00:12:20,920
Speaker 3: fits snugly into our view. I mean, we think you

222
00:12:20,920 --> 00:12:22,520
Speaker 3: can easily run at a one and a half to

223
00:12:22,520 --> 00:12:24,720
Speaker 3: two percent pace this year, and I don't see any

224
00:12:24,760 --> 00:12:27,880
Speaker 3: reason to sort of alter that view at this point.

225
00:12:27,920 --> 00:12:30,920
Speaker 1: We had a little something here on the markets because

226
00:12:30,920 --> 00:12:34,839
Speaker 1: we talked about how dividend and interest income was down

227
00:12:35,000 --> 00:12:39,240
Speaker 1: during the month. We also see that the contributions to

228
00:12:39,400 --> 00:12:43,800
Speaker 1: inflation from Wall Street are down significantly, I guess because

229
00:12:44,320 --> 00:12:48,320
Speaker 1: maybe everybody's just reinvesting and not taking profits. But financial

230
00:12:48,360 --> 00:12:52,679
Speaker 1: services fees and commissions just up a tenth of a

231
00:12:52,920 --> 00:12:56,880
Speaker 1: percent after rising more than two percent last month, So

232
00:12:57,480 --> 00:13:01,480
Speaker 1: a little bit less inflation pressure coming out of Wall Street.

233
00:13:01,559 --> 00:13:04,200
Speaker 1: What we had called the pogo problem. As we do

234
00:13:04,320 --> 00:13:09,400
Speaker 1: well on Wall Street, it increases inflation. But that brings

235
00:13:09,480 --> 00:13:13,360
Speaker 1: up another question for you, Tom, and that is the

236
00:13:13,400 --> 00:13:16,840
Speaker 1: wealth effect. The FED worries that the wealth effect is

237
00:13:17,240 --> 00:13:21,720
Speaker 1: going to drive the economy longer. Do we see that

238
00:13:21,880 --> 00:13:26,280
Speaker 1: really from the gains that we have seen in equity markets?

239
00:13:26,360 --> 00:13:29,040
Speaker 1: Are people out spending that money or is that a

240
00:13:29,120 --> 00:13:32,440
Speaker 1: subset of people who are making money who don't really

241
00:13:32,440 --> 00:13:36,520
Speaker 1: have a marginal propensity to consume that is all that

242
00:13:36,679 --> 00:13:37,920
Speaker 1: very high?

243
00:13:38,280 --> 00:13:40,960
Speaker 3: So I will say that I believe in the wealth

244
00:13:40,960 --> 00:13:44,600
Speaker 3: effect in the extremes, and I think it's very fair

245
00:13:44,640 --> 00:13:46,760
Speaker 3: to say that we're in an extreme. I mean, if

246
00:13:46,800 --> 00:13:49,720
Speaker 3: you think about sort of the single biggest asset for

247
00:13:49,840 --> 00:13:52,680
Speaker 3: most people in this country, the single biggest outset at

248
00:13:52,679 --> 00:13:55,440
Speaker 3: their house. And I think what people see is that

249
00:13:55,480 --> 00:13:58,640
Speaker 3: their home prices have accelerated and accelerated in a very

250
00:13:58,679 --> 00:14:01,200
Speaker 3: notable way. And I don't doubt for second that that

251
00:14:01,400 --> 00:14:05,079
Speaker 3: feeds into this sort of hey, you know, I'm actually

252
00:14:05,160 --> 00:14:09,160
Speaker 3: doing pretty good here, and that emboldens people to continue

253
00:14:09,160 --> 00:14:12,520
Speaker 3: to go out and feel comfortable spending. Of course, I

254
00:14:12,520 --> 00:14:15,080
Speaker 3: think what we have to recognize is it's great that

255
00:14:15,120 --> 00:14:17,360
Speaker 3: home prices have written as much as they have, but

256
00:14:17,640 --> 00:14:20,920
Speaker 3: you know, any of that home equity is trapped, right,

257
00:14:21,040 --> 00:14:24,080
Speaker 3: This trapped because we're in a higher rate environment and

258
00:14:24,720 --> 00:14:28,280
Speaker 3: it becomes incredibly complicated or very expensive for people to

259
00:14:28,280 --> 00:14:32,760
Speaker 3: basically extract that money. So you know, again, i'd be

260
00:14:32,800 --> 00:14:35,640
Speaker 3: careful with that idea. I mean again, I don't doubt

261
00:14:35,640 --> 00:14:39,840
Speaker 3: for a second that it's happening, but it's paper wealth

262
00:14:40,480 --> 00:14:43,520
Speaker 3: because because of high rates, no one can extract any

263
00:14:43,560 --> 00:14:43,760
Speaker 3: of that.

264
00:14:44,960 --> 00:14:46,600
Speaker 2: And tom as you know, we're going to be hearing

265
00:14:46,720 --> 00:14:49,280
Speaker 2: from Chairman Powell in just a couple hours here eleven

266
00:14:49,360 --> 00:14:51,320
Speaker 2: thirty am Wall Street time. He's going to be taking

267
00:14:51,320 --> 00:14:54,720
Speaker 2: part in a moderated discussion. Do you expect these numbers

268
00:14:54,720 --> 00:14:57,080
Speaker 2: are really going to change the message that we hear

269
00:14:57,600 --> 00:15:01,120
Speaker 2: from Powell? As he's sounded a little at least a

270
00:15:01,160 --> 00:15:06,680
Speaker 2: little bit more comfortable with the way the inflation roadmap

271
00:15:06,680 --> 00:15:07,840
Speaker 2: has been going up to this point.

272
00:15:08,160 --> 00:15:10,600
Speaker 3: Yeah, that's it's a resounding no. I mean that these

273
00:15:10,680 --> 00:15:14,200
Speaker 3: numbers will not change anything for Powell. He literally just

274
00:15:14,240 --> 00:15:18,000
Speaker 3: spoke there will be no reason for him to alter

275
00:15:18,160 --> 00:15:21,520
Speaker 3: any of his messaging. Again, I think you know, this

276
00:15:21,560 --> 00:15:24,760
Speaker 3: is something that they were looking for, particularly this core deflator,

277
00:15:25,120 --> 00:15:27,440
Speaker 3: you know, hovering here at it now at two eight

278
00:15:28,520 --> 00:15:30,120
Speaker 3: I think that this is this is the path that

279
00:15:30,120 --> 00:15:33,120
Speaker 3: they were expecting from from an inflation perspective, and you know,

280
00:15:33,160 --> 00:15:35,520
Speaker 3: and and again, I think the one thing that really

281
00:15:35,560 --> 00:15:38,760
Speaker 3: came through very loud and clear during his last press

282
00:15:38,800 --> 00:15:42,080
Speaker 3: conference was this this idea of over time, right. He

283
00:15:42,160 --> 00:15:44,680
Speaker 3: kept on saying. In fact, I think he literally even said,

284
00:15:44,680 --> 00:15:49,480
Speaker 3: we stress over time inflation will improve. Uh. And he

285
00:15:49,480 --> 00:15:51,960
Speaker 3: said the multiple times. And I think that that that

286
00:15:51,960 --> 00:15:54,960
Speaker 3: that fits very nicely with the numbers that we just saw.

287
00:15:55,960 --> 00:16:00,200
Speaker 3: It is continuing to prove improve over time. I think

288
00:16:00,200 --> 00:16:01,760
Speaker 3: the other thing that was really interesting, and this is

289
00:16:01,760 --> 00:16:04,880
Speaker 3: probably more micro, but on Powell, I thought it was

290
00:16:04,880 --> 00:16:07,360
Speaker 3: really interesting that he was that he acknowledged sort of

291
00:16:07,440 --> 00:16:09,800
Speaker 3: these these base effects that we're going to start to

292
00:16:09,800 --> 00:16:11,920
Speaker 3: bump up against in the second half of the year.

293
00:16:12,920 --> 00:16:14,960
Speaker 3: You know, it's it's going to be a challenge for

294
00:16:14,960 --> 00:16:18,480
Speaker 3: for inflation to really improve in earnest from a month

295
00:16:18,480 --> 00:16:20,840
Speaker 3: on month perspective, because you're going to have these easy

296
00:16:20,920 --> 00:16:23,880
Speaker 3: year ago comps, excuse me, these unfavorable year ago comps

297
00:16:24,440 --> 00:16:26,320
Speaker 3: in the second half of the year. So if you

298
00:16:26,360 --> 00:16:28,400
Speaker 3: think about excuse me, if you think about sort of

299
00:16:28,400 --> 00:16:32,520
Speaker 3: a direction of inflation, you know, you'll continue to drift lower.

300
00:16:32,560 --> 00:16:34,400
Speaker 3: I mean, here we are at what two seven or

301
00:16:34,400 --> 00:16:36,920
Speaker 3: excuse me, two eight rounds up to two eight, and

302
00:16:36,960 --> 00:16:39,400
Speaker 3: I think you'll get probably down to a round two

303
00:16:39,480 --> 00:16:43,160
Speaker 3: four ish in the next few months. But as you

304
00:16:43,240 --> 00:16:45,600
Speaker 3: roll into the second half of the year, it's going

305
00:16:45,640 --> 00:16:47,920
Speaker 3: to start to accelerate again. You know, you can get

306
00:16:47,960 --> 00:16:50,480
Speaker 3: easily back up to about two point seven percent after

307
00:16:50,600 --> 00:16:52,560
Speaker 3: hitting two point four percent around middle of the year,

308
00:16:52,640 --> 00:16:55,680
Speaker 3: just because of comps and I and one of the

309
00:16:55,680 --> 00:16:57,800
Speaker 3: reasons why I love that he said that is because

310
00:16:58,200 --> 00:17:00,400
Speaker 3: he's I think, you know, trying to pre empt what

311
00:17:00,840 --> 00:17:03,640
Speaker 3: could be what will be a conversation around hey, but

312
00:17:03,720 --> 00:17:07,080
Speaker 3: inflation is accelerating again. But again it's important to note

313
00:17:07,119 --> 00:17:11,000
Speaker 3: that it's comp challenge, you know, that's and just to

314
00:17:11,000 --> 00:17:13,160
Speaker 3: be clear, sorry to make sure this is abundantly clear.

315
00:17:13,720 --> 00:17:16,600
Speaker 3: If you print two tents month on month between now

316
00:17:16,600 --> 00:17:18,920
Speaker 3: and the end of the year, that's how those year

317
00:17:18,920 --> 00:17:20,800
Speaker 3: ago comps will unfold. You'll get it down to his

318
00:17:20,840 --> 00:17:22,920
Speaker 3: lowes two four, and then you can get that bounced

319
00:17:22,960 --> 00:17:25,080
Speaker 3: back up to around two seven. So I like that

320
00:17:25,119 --> 00:17:27,560
Speaker 3: he's sort of, you know, trying to draw attention to that.

321
00:17:28,040 --> 00:17:30,320
Speaker 3: But again, yes to The short answer to your question

322
00:17:30,400 --> 00:17:32,639
Speaker 3: is no, I don't think that there's anything here that

323
00:17:32,680 --> 00:17:36,679
Speaker 3: will that will alter his his view on what he already.

324
00:17:36,440 --> 00:17:38,720
Speaker 2: Said, and we will get that message at eleven thirty

325
00:17:38,720 --> 00:17:42,320
Speaker 2: am Wall Street Time live coverage of Chairman Powell's moderated

326
00:17:42,359 --> 00:17:46,680
Speaker 2: remarks at the San Francisco Fed later on this morning. Tom,

327
00:17:46,720 --> 00:17:49,200
Speaker 2: thanks for being with us as we dig a little

328
00:17:49,200 --> 00:17:53,000
Speaker 2: deeper into this latest inflation data. Tom Porcelli there, the

329
00:17:53,200 --> 00:17:56,639
Speaker 2: chief US economist at PGIM Fixed Income, and I'm Nathan

330
00:17:56,680 --> 00:18:00,480
Speaker 2: Hayger along with Bloomberg International Economics and Policy Corps. Responded

331
00:18:00,840 --> 00:18:03,720
Speaker 2: Michael McKee. As we continue to get some more analysis

332
00:18:04,160 --> 00:18:07,919
Speaker 2: of the PCE deflator. We're joined now by Sarah House,

333
00:18:08,040 --> 00:18:12,520
Speaker 2: the senior economist at Wells Fargo. So it seems, Sarah,

334
00:18:12,640 --> 00:18:15,679
Speaker 2: a bit of a mixed bag. The bumpy road to

335
00:18:15,760 --> 00:18:18,959
Speaker 2: disinflation seems to continue following these numbers.

336
00:18:18,960 --> 00:18:22,119
Speaker 4: Your thoughts, Yeah, I think that's right, especially when we

337
00:18:22,160 --> 00:18:24,520
Speaker 4: look at inflation. So we did see some bumps in

338
00:18:24,600 --> 00:18:28,080
Speaker 4: terms of the underlying movers shift around a bit. So

339
00:18:28,240 --> 00:18:31,280
Speaker 4: this month we actually saw some more moderation in terms

340
00:18:31,280 --> 00:18:34,000
Speaker 4: of the services side, but you did see the goods

341
00:18:34,040 --> 00:18:36,600
Speaker 4: inflation pick up a little bit on a month of

342
00:18:36,640 --> 00:18:39,600
Speaker 4: a month basis, which again I think just speaks to

343
00:18:39,840 --> 00:18:41,760
Speaker 4: that month a month. You are going to see some

344
00:18:42,320 --> 00:18:46,760
Speaker 4: volatility in these numbers, but I think overall you're still

345
00:18:46,760 --> 00:18:50,399
Speaker 4: seeing signs of at least the overall trend grinding lower.

346
00:18:50,440 --> 00:18:52,600
Speaker 4: But it's certainly a slow grind that we're seeing.

347
00:18:55,119 --> 00:18:59,640
Speaker 1: It's Michael McKee. I'm looking at the super core number

348
00:18:59,720 --> 00:19:02,000
Speaker 1: for pee. We haven't talked about that yet this morning,

349
00:19:02,000 --> 00:19:04,480
Speaker 1: and on a month over a month basis, it's up

350
00:19:04,600 --> 00:19:07,879
Speaker 1: by two tenths after seven tenths gained the month before.

351
00:19:07,960 --> 00:19:10,800
Speaker 1: So that's probably going to make the Fed and j

352
00:19:11,000 --> 00:19:14,360
Speaker 1: POL happy because they've been particularly worried about services prices.

353
00:19:15,240 --> 00:19:17,200
Speaker 4: Yeah, I think that's at least one of the more

354
00:19:17,280 --> 00:19:20,600
Speaker 4: encouraging developments of this morning's data in terms of the

355
00:19:20,640 --> 00:19:25,560
Speaker 4: inflation trajectory. But when we think about the services side,

356
00:19:25,600 --> 00:19:28,119
Speaker 4: you know, we really do need this to start shipping

357
00:19:28,160 --> 00:19:32,320
Speaker 4: in more so. We've had significant goods goods disinflation over

358
00:19:32,359 --> 00:19:33,960
Speaker 4: the past year. So if you look at just the

359
00:19:35,119 --> 00:19:37,880
Speaker 4: change in the year of rear rates of inflation, basically

360
00:19:37,880 --> 00:19:40,040
Speaker 4: two thirds of it has had two thirds of the

361
00:19:40,080 --> 00:19:43,040
Speaker 4: decline has come from the good side, and so given

362
00:19:43,080 --> 00:19:45,760
Speaker 4: how big a share services is, we need to see

363
00:19:45,760 --> 00:19:49,120
Speaker 4: that to clerate more. So this is a good month,

364
00:19:49,560 --> 00:19:51,640
Speaker 4: but the Fed's certainly going to need to see more

365
00:19:51,800 --> 00:19:56,159
Speaker 4: months like this in terms of that services inflation subsiding

366
00:19:56,200 --> 00:19:56,680
Speaker 4: a little bit.

367
00:19:57,200 --> 00:19:57,760
Speaker 3: Well, what's the.

368
00:19:57,680 --> 00:20:00,919
Speaker 2: Outlook then about whether we are going to more months

369
00:20:01,000 --> 00:20:03,800
Speaker 2: like this. Something else we haven't talked about is the

370
00:20:03,880 --> 00:20:07,040
Speaker 2: disruption at the port of Baltimore after the bridge collapse,

371
00:20:07,080 --> 00:20:10,800
Speaker 2: and think about what effect that could have on goods

372
00:20:10,800 --> 00:20:13,960
Speaker 2: inflation down the line. I mean, is that something that

373
00:20:14,000 --> 00:20:15,280
Speaker 2: we can factor in at this point.

374
00:20:16,160 --> 00:20:18,280
Speaker 4: I think it's really hard to put a number around

375
00:20:18,280 --> 00:20:20,320
Speaker 4: what that's going to do, but I think it certainly

376
00:20:20,359 --> 00:20:25,840
Speaker 4: doesn't help in terms of seeing further goods deflation or

377
00:20:25,880 --> 00:20:28,800
Speaker 4: at least a still pretty low rate of goods inflation.

378
00:20:29,040 --> 00:20:31,680
Speaker 4: So it's just one more hurdle. We've seen a lot

379
00:20:31,720 --> 00:20:35,760
Speaker 4: of the benefits from the initial unwinding of supply chains

380
00:20:35,800 --> 00:20:38,359
Speaker 4: already feed through, and we look at even before we

381
00:20:38,400 --> 00:20:42,680
Speaker 4: saw this Baltimore bridge collapse, that supply chain pressures have

382
00:20:43,119 --> 00:20:46,520
Speaker 4: really neutralized. So I think when we look out over

383
00:20:46,560 --> 00:20:48,920
Speaker 4: the course of this year, you aren't going to see

384
00:20:48,960 --> 00:20:52,760
Speaker 4: as much help coming from the goods side in terms

385
00:20:52,840 --> 00:20:55,360
Speaker 4: of in terms of the core, and so again that

386
00:20:55,440 --> 00:20:57,479
Speaker 4: means that services are going to have to pick up

387
00:20:57,480 --> 00:20:59,160
Speaker 4: the baton and we are going to need to see

388
00:20:59,560 --> 00:21:02,399
Speaker 4: more inflation coming from the services side if we're going

389
00:21:02,480 --> 00:21:04,159
Speaker 4: to keep moving back towards two percent.

390
00:21:06,680 --> 00:21:08,560
Speaker 2: So is there much more that the FED can do

391
00:21:09,240 --> 00:21:13,840
Speaker 2: to get that services side of the equation down?

392
00:21:15,480 --> 00:21:18,119
Speaker 4: I think so. They've had a lot of help in

393
00:21:18,200 --> 00:21:20,679
Speaker 4: terms of the supply side on services too, when we

394
00:21:20,720 --> 00:21:23,400
Speaker 4: think about the labor market and just how much we've

395
00:21:23,400 --> 00:21:26,240
Speaker 4: seen labor force growth improve, and that's been a big

396
00:21:26,280 --> 00:21:30,719
Speaker 4: help in terms of reducing those wage pressures. But when

397
00:21:30,760 --> 00:21:32,600
Speaker 4: we look at some of the wage numbers, they're getting

398
00:21:32,640 --> 00:21:35,000
Speaker 4: close to where the FED would need them to be,

399
00:21:35,119 --> 00:21:37,160
Speaker 4: but not there yet, and where we still haven't hit

400
00:21:37,200 --> 00:21:40,919
Speaker 4: two percent inflation, let alone on a sustained basis. I

401
00:21:40,920 --> 00:21:43,119
Speaker 4: think this is going to be a waiting game. So

402
00:21:43,160 --> 00:21:47,080
Speaker 4: we've already seen expectations for any easing get pushed out

403
00:21:47,119 --> 00:21:50,080
Speaker 4: a little bit, and I think until we see I

404
00:21:50,080 --> 00:21:52,840
Speaker 4: think more improvement on the services side, it's going to

405
00:21:52,880 --> 00:21:57,040
Speaker 4: continue to be a matter of Okay, So do you

406
00:21:57,080 --> 00:22:00,359
Speaker 4: get that timing of when the FED be against the

407
00:22:00,359 --> 00:22:04,600
Speaker 4: cut rates start pushing back and see that even move further.

408
00:22:05,400 --> 00:22:07,800
Speaker 2: So can you say at this point whether a read

409
00:22:07,960 --> 00:22:10,760
Speaker 2: like this will change the equation in terms of what

410
00:22:10,800 --> 00:22:14,120
Speaker 2: the FED is thinking about the rate path at this point,

411
00:22:14,160 --> 00:22:16,480
Speaker 2: I mean, they've already penciled in. I think in the

412
00:22:16,520 --> 00:22:20,000
Speaker 2: dot plot the median is still three. I mean, does

413
00:22:20,040 --> 00:22:22,239
Speaker 2: that really change things after a reading like this.

414
00:22:23,040 --> 00:22:25,760
Speaker 4: I don't think so. I mean, especially if we're focused

415
00:22:25,760 --> 00:22:29,600
Speaker 4: on inflation. That came in pretty much in line. It

416
00:22:29,760 --> 00:22:33,119
Speaker 4: was a touch softer for going out to two decimals,

417
00:22:33,160 --> 00:22:36,200
Speaker 4: but it came on top of the upward versions of January,

418
00:22:36,280 --> 00:22:38,680
Speaker 4: so it doesn't really change the picture. And at the

419
00:22:38,760 --> 00:22:41,119
Speaker 4: end of the day, you still have consumers that are

420
00:22:41,160 --> 00:22:43,920
Speaker 4: out there willing to spend, and so that's going to

421
00:22:44,000 --> 00:22:46,760
Speaker 4: make it harder for that demand side to chip in

422
00:22:46,800 --> 00:22:49,280
Speaker 4: and help drive inflation lower. As we maybe are seeing

423
00:22:49,320 --> 00:22:52,720
Speaker 4: some of the supply side benefits begin to fade this year,

424
00:22:53,000 --> 00:22:56,240
Speaker 4: as we have seen much more normalization and supply chains,

425
00:22:56,240 --> 00:22:58,959
Speaker 4: and I think you're going to get only more incremental

426
00:22:58,960 --> 00:23:02,280
Speaker 4: growth and labor supply. After two big years of labor

427
00:23:02,320 --> 00:23:02,959
Speaker 4: force growth.

428
00:23:04,760 --> 00:23:08,760
Speaker 1: We did see some improvement, very small improvement, but improvement

429
00:23:08,840 --> 00:23:12,240
Speaker 1: in housing prices in PCE of four tenths for the

430
00:23:12,280 --> 00:23:15,840
Speaker 1: month after a five tense gain last month. So I

431
00:23:15,840 --> 00:23:19,959
Speaker 1: guess I would ask, partly from your national experience, Sarah,

432
00:23:20,000 --> 00:23:22,439
Speaker 1: but also from being in the Charlotte area, which has

433
00:23:22,480 --> 00:23:25,600
Speaker 1: been a hot real estate area, are we finally going

434
00:23:25,640 --> 00:23:27,640
Speaker 1: to start to see the declines that the FED has

435
00:23:27,680 --> 00:23:28,920
Speaker 1: been looking for in housing?

436
00:23:30,200 --> 00:23:32,720
Speaker 4: I think there's still some room to go in terms

437
00:23:32,760 --> 00:23:36,560
Speaker 4: of the housing disinflation story. So obviously that's been a

438
00:23:36,600 --> 00:23:40,720
Speaker 4: big part of the stronger prints to start the year,

439
00:23:40,760 --> 00:23:42,760
Speaker 4: even as again we did see a little bit more

440
00:23:42,800 --> 00:23:46,320
Speaker 4: moderation in the February numbers here today. But I think

441
00:23:46,359 --> 00:23:49,240
Speaker 4: when we look at everything that we're seeing in terms

442
00:23:49,280 --> 00:23:52,360
Speaker 4: of the private sector measures, that there is still more

443
00:23:52,400 --> 00:23:55,159
Speaker 4: disinflation in training to come in housing. I think the

444
00:23:55,160 --> 00:23:59,480
Speaker 4: big question is the magnitude of how much further that falls,

445
00:23:59,480 --> 00:24:01,920
Speaker 4: and of course some of the timing. So I think

446
00:24:02,520 --> 00:24:05,800
Speaker 4: we feel pretty confident in the direction that it seems

447
00:24:05,840 --> 00:24:08,920
Speaker 4: like Chuirpal feels pretty confident in the direction he spoke

448
00:24:08,960 --> 00:24:12,200
Speaker 4: to out specifically in his press conference, but there's still

449
00:24:12,240 --> 00:24:15,119
Speaker 4: a lot of questions around the timing and if it

450
00:24:15,160 --> 00:24:18,080
Speaker 4: takes too long and you start to see that impulse

451
00:24:18,160 --> 00:24:23,040
Speaker 4: from the downward impulse from goods deflation begin to peter out.

452
00:24:23,400 --> 00:24:26,400
Speaker 4: That's going to be a contributing factor to inflation being

453
00:24:26,440 --> 00:24:28,720
Speaker 4: a bit stickier as we move through this year.

454
00:24:30,200 --> 00:24:32,320
Speaker 1: Well, let me circle back to one more thing before

455
00:24:32,640 --> 00:24:34,840
Speaker 1: we let you go here, and that is a personal

456
00:24:34,840 --> 00:24:38,360
Speaker 1: income wages and salaries up eight tenths of eight percent

457
00:24:38,720 --> 00:24:42,520
Speaker 1: after just three tenths in January. Does that tell you

458
00:24:42,560 --> 00:24:46,160
Speaker 1: anything in particular? Is that noise or are companies having

459
00:24:46,200 --> 00:24:49,280
Speaker 1: to pay up more to attract workers with still a

460
00:24:49,320 --> 00:24:50,280
Speaker 1: strong labor market.

461
00:24:51,119 --> 00:24:53,080
Speaker 4: Yeah, So I think that's reflective of the fact that

462
00:24:53,119 --> 00:24:56,800
Speaker 4: we did see another strong month of hiring in February,

463
00:24:56,960 --> 00:24:58,959
Speaker 4: and you saw the work week pick up two So

464
00:24:59,040 --> 00:25:02,159
Speaker 4: I think overall that that's reflecting that the labor market

465
00:25:02,200 --> 00:25:04,520
Speaker 4: is still strong. And this is really important for the

466
00:25:04,600 --> 00:25:08,240
Speaker 4: durability of consumer spending ahead. Even if it looks like

467
00:25:08,320 --> 00:25:10,879
Speaker 4: consumers we're having to save a little bit less to

468
00:25:11,359 --> 00:25:15,639
Speaker 4: fund their outlays here in February. But I think that's

469
00:25:15,840 --> 00:25:18,359
Speaker 4: one of the bright spots in terms of seeing this

470
00:25:18,440 --> 00:25:22,000
Speaker 4: economy continue to expand and deal with these higher interest rates,

471
00:25:22,000 --> 00:25:25,560
Speaker 4: is if the labor market continues to chug along that

472
00:25:25,560 --> 00:25:29,280
Speaker 4: that's going to be helpful for the bulk of consumers.

473
00:25:30,119 --> 00:25:32,640
Speaker 2: Sarah, We're in this unusual circumstance where all this data

474
00:25:32,680 --> 00:25:37,320
Speaker 2: are coming out on a holiday, the stock trading and

475
00:25:37,520 --> 00:25:41,479
Speaker 2: the bond markets are both closed for Good Friday. What

476
00:25:41,600 --> 00:25:45,399
Speaker 2: kind of market reaction can we expect to data like

477
00:25:45,480 --> 00:25:47,680
Speaker 2: this when the market's finally open on Monday.

478
00:25:48,920 --> 00:25:51,480
Speaker 4: Yeah, So I think on net this shows that the

479
00:25:51,560 --> 00:25:55,080
Speaker 4: consumer is still out there spending. It's no shrinking violet,

480
00:25:55,160 --> 00:25:58,199
Speaker 4: and so I think that does question how much the

481
00:25:58,240 --> 00:26:02,119
Speaker 4: demand side is going to help bring inflation lower. And

482
00:26:02,160 --> 00:26:05,880
Speaker 4: so I think that's maybe the most important takeaway from

483
00:26:05,960 --> 00:26:09,600
Speaker 4: today's report, considering that the inflation numbers came in essentially

484
00:26:09,640 --> 00:26:10,680
Speaker 4: as expected.

485
00:26:12,600 --> 00:26:15,240
Speaker 2: And so what kind of do you do you expect

486
00:26:15,240 --> 00:26:19,400
Speaker 2: then that we could see bond volatility when the markets

487
00:26:19,400 --> 00:26:20,240
Speaker 2: reopen on Monday.

488
00:26:21,000 --> 00:26:22,600
Speaker 4: Well, they'll have some time to digest this. I mean,

489
00:26:22,640 --> 00:26:24,439
Speaker 4: I think it's also going to depend on what we

490
00:26:24,520 --> 00:26:27,560
Speaker 4: hear from from Powell this afternoon. So we'll see if

491
00:26:27,560 --> 00:26:29,760
Speaker 4: he makes waves. I think he tries. He tries not to,

492
00:26:29,960 --> 00:26:32,720
Speaker 4: but I think it'll It'll be a combination of both

493
00:26:32,720 --> 00:26:34,880
Speaker 4: today's numbers and what the chair has to say.

494
00:26:35,320 --> 00:26:37,560
Speaker 2: Yeah, and again we are going to have those comments

495
00:26:37,560 --> 00:26:40,600
Speaker 2: from Chairman Powell. Eleven thirty am Wall Street Time here

496
00:26:40,640 --> 00:26:44,560
Speaker 2: on Bloomberg Radio in that moderated discussion hosted by the

497
00:26:44,600 --> 00:26:47,680
Speaker 2: San Francisco FED. I asked Tom earlier, if you're expecting

498
00:26:47,720 --> 00:26:51,800
Speaker 2: any change to the messaging. Do you expect that we'll

499
00:26:51,800 --> 00:26:55,960
Speaker 2: hear much change from Chairman Powell after this inflation data.

500
00:26:56,800 --> 00:26:59,600
Speaker 4: I don't think so, considering that, again, the inflation data

501
00:26:59,840 --> 00:27:03,760
Speaker 4: was pretty much pretty much spot online with expectations going

502
00:27:03,800 --> 00:27:07,399
Speaker 4: in once you mapped both the CPI and PPI data,

503
00:27:07,520 --> 00:27:10,240
Speaker 4: And it hasn't been that long since since he spoke,

504
00:27:10,440 --> 00:27:12,439
Speaker 4: since he spoke before, so I think we're going to

505
00:27:12,480 --> 00:27:14,920
Speaker 4: continue to hear him say that they need to see

506
00:27:14,920 --> 00:27:18,760
Speaker 4: more confidence that yes, they're looking for inflation to come down,

507
00:27:19,000 --> 00:27:21,800
Speaker 4: to come down over time, but I think in the

508
00:27:21,880 --> 00:27:25,600
Speaker 4: mediate term there's still no catalyst I think for moving

509
00:27:25,600 --> 00:27:26,360
Speaker 4: imminently here.

510
00:27:26,920 --> 00:27:29,320
Speaker 2: Appreciate this. Sarah, thanks for coming on with us on

511
00:27:29,359 --> 00:27:33,400
Speaker 2: a market holiday. Sarah House there a senior economist at

512
00:27:33,400 --> 00:27:38,520
Speaker 2: Wells Fargo. As we continue to digest this preferred inflation

513
00:27:38,680 --> 00:27:42,879
Speaker 2: gauge for the Federal Reserve, the PCE deflator coming in,

514
00:27:43,720 --> 00:27:45,359
Speaker 2: as you mentioned, Mike, with a little bit of a

515
00:27:45,400 --> 00:27:48,800
Speaker 2: mixed bag, kind of in line on a year over

516
00:27:48,880 --> 00:27:51,400
Speaker 2: year basis, but some slight cooling month over month.

517
00:27:53,040 --> 00:27:55,480
Speaker 1: Yeah, it's not the kind of thing that Sarah said

518
00:27:55,600 --> 00:27:59,600
Speaker 1: would change the Fed's mind. It would be considered relatively

519
00:27:59,600 --> 00:28:03,600
Speaker 1: good news for the FED in terms of continued progress

520
00:28:03,640 --> 00:28:07,080
Speaker 1: on inflation, but as you mentioned, continued slow and bumpy

521
00:28:07,119 --> 00:28:08,760
Speaker 1: progress on inflation.

522
00:28:12,200 --> 00:28:15,840
Speaker 2: Yeah, it seems like that last mile, as the Fed

523
00:28:15,880 --> 00:28:18,760
Speaker 2: has been reiterating for quite some time, that last mile,

524
00:28:18,880 --> 00:28:21,879
Speaker 2: is going to be quite a ways to go in

525
00:28:22,000 --> 00:28:26,200
Speaker 2: terms of getting inflation back down to that two percent target.

526
00:28:26,880 --> 00:28:29,320
Speaker 2: Of course, that the FED has been talking about now

527
00:28:29,400 --> 00:28:35,480
Speaker 2: for months, as we've continued to watch this inflation journey

528
00:28:35,840 --> 00:28:38,800
Speaker 2: go on to try to get these price pressures back

529
00:28:38,880 --> 00:28:43,840
Speaker 2: under control, and again with the PCE data coming out

530
00:28:43,840 --> 00:28:47,680
Speaker 2: this morning, slightly cooler than a lot of economists have

531
00:28:47,720 --> 00:28:50,560
Speaker 2: been expecting, particularly on a month over month basis, when

532
00:28:50,640 --> 00:28:53,520
Speaker 2: you factor in the revisions for January that had come

533
00:28:53,560 --> 00:28:56,920
Speaker 2: in even bigger than expected, three tenths of one percent

534
00:28:57,040 --> 00:29:01,520
Speaker 2: increase month over month on the headline pclator and a

535
00:29:01,560 --> 00:29:05,280
Speaker 2: two point eight percent year over year. I'm sorry, two

536
00:29:05,320 --> 00:29:07,880
Speaker 2: point five percent. For the headline, it was two point

537
00:29:07,920 --> 00:29:11,719
Speaker 2: eight percent year over year when you strip out the

538
00:29:12,040 --> 00:29:15,479
Speaker 2: food and energy from the PCEE deflator. You've been listening

539
00:29:15,480 --> 00:29:20,320
Speaker 2: to live coverage of this economic data. The FEDS preferred

540
00:29:20,320 --> 00:29:23,400
Speaker 2: inflation gauge coming in with a bit of a mixed bag.

541
00:29:24,200 --> 00:29:30,280
Speaker 2: Nathan Hager alongside Bloomberg International Economics and Policy correspondent Michael McKee.

542
00:29:30,560 --> 00:29:34,800
Speaker 2: Stay with us. Your top business headlines and global news

543
00:29:34,840 --> 00:29:37,520
Speaker 2: stories are coming up right now.