WEBVTT - Single Best Idea with Tom Keene: Jim Glassman

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news, single best idea and

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<v Speaker 1>what's so interesting about the guests, from guests to guests

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<v Speaker 1>to guests is to pay attention to their lineage, their background,

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<v Speaker 1>how they became notorious or famous or both. Today is

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<v Speaker 1>a tour de force. It is two moments with James Glassman.

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<v Speaker 1>First of all, there's two James Glassman. It's wicked confusing.

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<v Speaker 1>There's James Glassman, wonderful academic on Dow thirty six thousand

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<v Speaker 1>and the uproar years ago with a wonderful book. This

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<v Speaker 1>is a different Jim Blassman. This is Jim Glassman, who

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<v Speaker 1>was legendary at JP Morgan. Like a lot of retired economists,

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<v Speaker 1>he's like pseudo fake retired. He delivered a forty nine

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<v Speaker 1>page power point for his retired interview. But Jim Glassman

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<v Speaker 1>today and the first idea here is really important. Doctor

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<v Speaker 1>Glassman came out of Northwestern in the Crucible the Combine

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<v Speaker 1>of freshwater economics with Robert Gordon. He's always at a huge,

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<v Speaker 1>huge respect for what we can't see in the labor market.

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<v Speaker 1>Here is Jim Glassman on your twenty twenty six, two

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<v Speaker 1>thousand and thirty Technology you would.

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<v Speaker 2>Think that if labor markets are so tight and you

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<v Speaker 2>got people retiring, and you would think the wind would

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<v Speaker 2>be at the back of the labor sector. But in fact,

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<v Speaker 2>the share of income going to them has come down

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<v Speaker 2>from before the pandemic and really has been coming down

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<v Speaker 2>for the last twenty five years. And I think that

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<v Speaker 2>tells you something really important about the dynamic that's playing out.

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<v Speaker 2>It's all about technology and the changes in the US economy,

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<v Speaker 2>and it exposes a real weakness in the thought process

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<v Speaker 2>in the economics community about the role of labor. We

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<v Speaker 2>sort of came out of school with this idea that

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<v Speaker 2>if labor markets are tight, that can be inflationary. But

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<v Speaker 2>when you see what's going on and you think about

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<v Speaker 2>all the changes going on in the economy, how competitive

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<v Speaker 2>it's become, what's going on with technology, it's becoming more

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<v Speaker 2>clear to me that we got this story backwards. It's

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<v Speaker 2>really wages don't drive prices. It's more that prices are

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<v Speaker 2>driving wages. And that picture tells you that if you're

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<v Speaker 2>worried about tight labor markets, tight labor markets are not

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<v Speaker 2>inflationary if the share of the pie going to workers

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<v Speaker 2>is not really down.

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<v Speaker 1>Textbook Jim Glessman can't say enough about that in the

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<v Speaker 1>opposite there if you will, the price theory or the

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<v Speaker 1>microeconomics the dynamics of labor. Is it rising wages affect

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<v Speaker 1>prices or is it rising prices affect wages. It's just

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<v Speaker 1>some food for thought. You can pick up any labor

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<v Speaker 1>economics textbook and your eyes will glaze over by page

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<v Speaker 1>twenty five over the ambiguities in the dynamics of each

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<v Speaker 1>part of the of the labor economy. It speaks to

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<v Speaker 1>what Mike McKee does every day. Don't take for granted

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<v Speaker 1>the complexity that Mike McKee has to deal with in

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<v Speaker 1>driving all of our labor force coverage. Here now is

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<v Speaker 1>short and sweet. Jim Glassman on the Fed.

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<v Speaker 2>None of us really know where the neutral rate of

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<v Speaker 2>the Fed funds rate is. My guess is it's around

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<v Speaker 2>the terminal rates, around three percent. If you ask both

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<v Speaker 2>Fed people, I'll bet most of them will tell you

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<v Speaker 2>that's where we should be in the long run. Now

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<v Speaker 2>that this inflation scare has really kind of disappeared, and

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<v Speaker 2>when you get the kind of data we're getting, it

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<v Speaker 2>tells you there's no big rush to get there. But

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<v Speaker 2>the really The debate about the FED is not about

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<v Speaker 2>today's economy or today's labor market. It's about where do

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<v Speaker 2>you think they should be in the long run if

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<v Speaker 2>they don't want to do trouble for the economy.

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<v Speaker 1>Jim Glassman formerly with JP Moore, just a tour to

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<v Speaker 1>force effort by him today on this odd labor economy.

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<v Speaker 1>And we make note the ginormous number with the revisions

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<v Speaker 1>that we saw on Friday, and now it's shifted here,

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<v Speaker 1>we'll shift into this week. The other part this week

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<v Speaker 1>will be earnings with JP Morgan on Friday. It'll be

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<v Speaker 1>good to hear Lisa Abramo. It's with James Diamond. I

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<v Speaker 1>believe we do that tomorrow. We're out on YouTube. Subscribe

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<v Speaker 1>to Bloomberg Podcast. It's simple. You got to commute and

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<v Speaker 1>Idea

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<v Speaker 2>Seven