WEBVTT - Wall Street Struggles for Solid Footing Before PPI 0:00:02.400 --> 0:00:10.520 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business 0:00:10.560 --> 0:00:13.720 Wait inside from the reporters and editors who bring you 0:00:13.840 --> 0:00:18.159 America's most trusted business magazine, plus global business, finance and 0:00:18.239 --> 0:00:22.640 tech news. The Bloomberg Business Week Podcast with Carol Messer 0:00:22.840 --> 0:00:25.520 and Tim Stenebeck from Bloomberg Radio. 0:00:25.600 --> 0:00:27.880 If you make any attention today, you know exactly the 0:00:27.920 --> 0:00:30.920 economic data that pip this morning. US retail sales broadly 0:00:30.960 --> 0:00:34.760 declining in January, indicating that consumers took a little breather 0:00:35.040 --> 0:00:38.519 after a strong holiday shopping season. So here's some numbers here. 0:00:38.520 --> 0:00:41.960 The value of retail purchases, unadjusted for inflation, decreased eight 0:00:42.000 --> 0:00:44.880 tenths of one percent from December, this after a downward 0:00:44.960 --> 0:00:48.199 revision to the prior month. This according to Commerce Department 0:00:48.280 --> 0:00:51.960 data earlier today, that drop the biggest in nearly a year. 0:00:52.040 --> 0:00:54.760 Separate data showed US factory production fell for the first 0:00:54.800 --> 0:00:57.960 time in three months in January. Following all of this, 0:00:58.040 --> 0:01:01.600 of course, is Michael Mckehe's international economics and policy correspondent 0:01:01.600 --> 0:01:04.240 for Blueberg News. He joins us right now from Washington, DC, 0:01:04.319 --> 0:01:07.319 where he's at the National Association for Business Economics conference. 0:01:07.319 --> 0:01:09.640 We're going to have more on that in just a minute, 0:01:09.640 --> 0:01:11.520 But first, Mike, I want to get to this data. 0:01:11.560 --> 0:01:14.040 The two reports that we got today, they pointed to 0:01:14.240 --> 0:01:16.800 a loss of momentum, But are they a sign that 0:01:16.840 --> 0:01:18.440 the economy is deteriorating. 0:01:20.160 --> 0:01:22.960 I wouldn't use the word deteriorating. The economy is slowing, 0:01:23.240 --> 0:01:26.000 and we know, of course that in January Shanalli went 0:01:26.040 --> 0:01:30.360 on vacation, so a lot of shopping didn't get done. 0:01:31.160 --> 0:01:33.280 A lot of it is probably weather related. When you 0:01:33.319 --> 0:01:36.880 look at what happened across the country in January, a 0:01:36.920 --> 0:01:39.680 lot of snow, a lot of people stayed home, and 0:01:39.800 --> 0:01:43.360 car sales really suffered. That was about half of what 0:01:43.400 --> 0:01:47.360 we saw in the decline. Another major part was building 0:01:47.400 --> 0:01:50.840 materials and outdoor stores, things that would be affected by 0:01:50.840 --> 0:01:53.440 the weather. Now there is some loss of momentum, there's 0:01:53.440 --> 0:01:56.000 no question about that. What we have to see is 0:01:56.040 --> 0:01:59.680 whether it comes back in this month in February, and 0:01:59.720 --> 0:02:02.080 that's what the FED will be looking for. But it 0:02:02.160 --> 0:02:05.240 kind of offsets the CPI numbers, which is why I 0:02:05.240 --> 0:02:08.960 think you're seeing some rallying inequities today. Because when the 0:02:09.000 --> 0:02:11.959 CPI came out, everybody wrote off the FED cutting rates 0:02:12.000 --> 0:02:15.040 anytime sooner. But if the economy's slowing down, maybe they will. 0:02:15.440 --> 0:02:18.560 So the psychology, the psychological game continues. 0:02:18.680 --> 0:02:21.040 But let's draw the connection between the inflation data we 0:02:21.120 --> 0:02:23.840 got and the retail sales number. If inflation is indeed 0:02:23.840 --> 0:02:27.160 hotter then you expect, Mike, then wouldn't consumers start to 0:02:27.160 --> 0:02:28.600 slow down more into the year. 0:02:30.480 --> 0:02:33.239 Well, there's two ways to consider this. One is that 0:02:33.639 --> 0:02:36.720 inflation is built into the prices. These are nominal numbers 0:02:36.720 --> 0:02:40.800 for retail sales. So if inflation is higher and you 0:02:40.880 --> 0:02:43.399 subtract it out to get the real figures, they're even 0:02:43.440 --> 0:02:47.160 worse than they looked. But I think the kind of 0:02:47.240 --> 0:02:52.320 inflation that we saw in many service industries it was 0:02:52.360 --> 0:02:55.440 the primary reason that we saw the CPI go up, 0:02:55.480 --> 0:02:57.360 so it may not have had as much of an 0:02:57.360 --> 0:03:00.000 effect on retail sales, which are largely good. 0:03:00.720 --> 0:03:03.120 Okay, Mike, Anything else in these two reports that we 0:03:03.160 --> 0:03:05.080 got earlier today that we need to make sure we 0:03:05.160 --> 0:03:05.960 understand here. 0:03:07.320 --> 0:03:09.160 Well, one thing I would point out is that for 0:03:09.200 --> 0:03:11.639 the first time in about nine months, we saw import 0:03:11.639 --> 0:03:15.839 prices rise, and that's even ex petroleum. Petroleum prices push 0:03:15.880 --> 0:03:18.320 them up. But we also saw some goods prices go 0:03:18.440 --> 0:03:23.519 up in import prices. The Philadelphia surveyed reported that their 0:03:23.560 --> 0:03:26.960 prices paid index went up, not much, it's still low, 0:03:27.000 --> 0:03:30.680 but it went up. So with CPI and those two things, 0:03:30.720 --> 0:03:34.480 it may be a bit worrying that inflation might be 0:03:34.520 --> 0:03:36.640 picking up. And again we just have to look at 0:03:36.640 --> 0:03:40.800 the retail sales numbers and say, maybe that's offsetting it somewhat. 0:03:40.800 --> 0:03:43.640 If the economy is slowing, then inflation should slow. 0:03:45.160 --> 0:03:48.000 The question yet becomes to there's a lot of economic 0:03:48.040 --> 0:03:51.000 data still ahead, Mike. Tomorrow we get producer prices as well. 0:03:51.240 --> 0:03:55.839 What's the expectation, Well, the expectations we get a little 0:03:55.840 --> 0:03:59.240 bit of inflation. Producer prices have run below the CPI 0:03:59.400 --> 0:04:02.920 significant for quite some time. They're in the one percent 0:04:03.080 --> 0:04:05.240 range one to two percent range on a year over 0:04:05.320 --> 0:04:08.880 year basis, so there's no reason to really think that 0:04:08.920 --> 0:04:12.080 they're going to go up significantly. If they do, we'll 0:04:12.120 --> 0:04:16.560 want to see what categories where might some inflation pressure come. 0:04:17.000 --> 0:04:21.239 Also tomorrow we get the University of Michigan's consumer sentiment numbers, 0:04:21.560 --> 0:04:23.760 and that's always important to the FED because they want 0:04:23.800 --> 0:04:28.839 to see what people's inflation expectations are. They've been moving down, 0:04:29.080 --> 0:04:32.920 they were significantly lower last month, and so if that continues, 0:04:32.960 --> 0:04:36.080 then the FED is a little less worried about what 0:04:36.120 --> 0:04:37.320 the CPI might mean. 0:04:37.800 --> 0:04:39.800 We got news Mike just in about the last hour 0:04:39.880 --> 0:04:42.440 that Fed Jo J. Powell is going to be testifying 0:04:42.720 --> 0:04:45.800 before the House Financial Services Committee come March sixth, this 0:04:45.880 --> 0:04:48.919 from punch Bowl. Is this a surprise at all? What 0:04:48.960 --> 0:04:51.640 do we need to understand about him testifying? And wow, 0:04:51.800 --> 0:04:52.440 less than a month. 0:04:53.960 --> 0:04:56.480 This is his regularly scheduled what we used to call 0:04:56.560 --> 0:05:00.000 Humphrey Hawkins testimony. He'll talk to the House Financial Service 0:05:00.000 --> 0:05:01.480 this is a committee one day, and then he'll talk 0:05:01.520 --> 0:05:04.880 to the Senate Banking Committee the next day. So it's 0:05:04.920 --> 0:05:07.599 not a surprise. It's a little bit later than usual, 0:05:07.680 --> 0:05:09.600 but we had been warned off the record that it 0:05:09.680 --> 0:05:13.240 wasn't probably going to come until March. What will be 0:05:13.320 --> 0:05:15.800 interesting is that that gets us very close to the 0:05:15.839 --> 0:05:19.520 next FED meeting on March twentieth, So we have a 0:05:19.560 --> 0:05:22.279 lot of Fed speak between now and then. That may 0:05:22.320 --> 0:05:25.080 not matter because Wall Street's going to wait and see 0:05:25.080 --> 0:05:27.640 what Jay Powell has to say those days, and I 0:05:27.720 --> 0:05:30.880 bet you we get on Bloomberg Radio and television big 0:05:30.960 --> 0:05:34.240 ratings on March sixth, at least when he first starts 0:05:34.240 --> 0:05:37.000 to give his view of the economy and what policy 0:05:37.120 --> 0:05:38.080 might be going forward. 0:05:38.279 --> 0:05:40.520 Yes, people want to watch him, and people want to 0:05:40.560 --> 0:05:42.400 see him and hear what he has to say, of course, 0:05:42.640 --> 0:05:44.000 but we want to hear what's going on at the 0:05:44.279 --> 0:05:46.240 conference that you're at, Mike, I didn't know this thing 0:05:46.279 --> 0:05:49.760 started on Valentine's Day. What happened yesterday? What's going on 0:05:49.800 --> 0:05:54.040 today and tomorrow? Down in DC, yesterday was quite interesting. 0:05:54.080 --> 0:05:57.520 We had a presentation from Charlie Cook, he's the guru 0:05:57.760 --> 0:06:01.720 of political analysts here in why Washington, who suggested that 0:06:01.760 --> 0:06:06.320 the Biden administration is in trouble, not because people think 0:06:06.360 --> 0:06:10.120 that Donald Trump's a great guy, but because the economy's 0:06:10.279 --> 0:06:14.359 improvements haven't registered with the average voter yet and that's 0:06:14.400 --> 0:06:17.360 got to turn around or it could be an issue 0:06:17.400 --> 0:06:20.640 for Joe Biden. That we heard from Michael Barr, who 0:06:20.680 --> 0:06:23.160 is the Vice Chairman for Supervision at the FED, who 0:06:23.480 --> 0:06:27.200 said that basically two things, He's with j Powell and 0:06:27.640 --> 0:06:30.120 slowing down and waiting to see more data as far 0:06:30.160 --> 0:06:33.160 as monetary policy is concerned. But he also addressed to 0:06:33.160 --> 0:06:36.880 all the concerns on Wall Street about NYCB and regional 0:06:36.920 --> 0:06:40.520 banks and their exposures to commercial real estate, suggesting that 0:06:40.560 --> 0:06:43.600 this was maybe a one off because NYCB had bought 0:06:43.680 --> 0:06:47.919 signature banks bad loans and that the system was under control, 0:06:48.000 --> 0:06:50.920 there was no real systemic danger that the FED was 0:06:51.200 --> 0:06:53.840 on top of it. That was kind of reinforced at 0:06:53.839 --> 0:06:57.400 a seminar today on commercial real estate, where basically the 0:07:00.040 --> 0:07:05.880 consensus was that we will see some some banks struggle 0:07:05.960 --> 0:07:09.680 with commercial real estate loans, but in general the system 0:07:09.800 --> 0:07:14.920 isn't as bad as it has been portrayed. So so far, 0:07:15.000 --> 0:07:17.760 so good. We also had Mario Draghi here today talking 0:07:17.800 --> 0:07:21.480 about globalization, and of course he's always a big favorite 0:07:21.520 --> 0:07:22.440 of everyone. 0:07:22.800 --> 0:07:24.840 Michael McKee gonna have to leave it there, don't have 0:07:24.880 --> 0:07:26.960 too much fun in Washington. I hope you come back 0:07:26.960 --> 0:07:29.440 tomorrow and we can see here in the office. That's 0:07:29.480 --> 0:07:32.840 Michael McKee, International Economics and Policy correspondent, joining us from 0:07:32.840 --> 0:07:36.520 the National Association for Business Economics conference in Washington. 0:07:37.400 --> 0:07:40.920 You're listening to the Bloomberg Business Week podcast. Catch us 0:07:40.960 --> 0:07:44.160 live weekday afternoons from two to five pm Eastern Listen 0:07:44.240 --> 0:07:46.400 on Apple car Play and then Brout Auto with a 0:07:46.400 --> 0:07:50.560 Bloomberg Business app or watch us live on YouTube. 0:07:51.000 --> 0:07:52.880 Well, here's some good news. At a mere one point 0:07:53.000 --> 0:07:55.840 nine percent, the state of Maryland has the lowest unemployment 0:07:55.920 --> 0:07:58.240 rate in the entire country, and at more than one 0:07:58.320 --> 0:08:00.680 hundred and eight thousand dollars a year, got the highest 0:08:00.680 --> 0:08:04.640 median household income in the US. And then there's the 0:08:04.680 --> 0:08:07.080 not so good news. Maryland's economy is growing at a 0:08:07.120 --> 0:08:10.200 slower rate than the US economy and its neighbors Pennsylvania 0:08:10.280 --> 0:08:13.880 and Virginia, and labor force participation has not recovered to 0:08:14.000 --> 0:08:17.280 pre pandemic levels. These figures are highlighted in a report 0:08:17.320 --> 0:08:19.720 last month from the Maryland State Controller's Office, the first 0:08:19.760 --> 0:08:22.560 report of its kind to be released. Let's get to 0:08:22.560 --> 0:08:25.520 the interview we have with us this afternoon, Maryland's Comptroller 0:08:25.520 --> 0:08:29.760 Brook Leerman. She joins us from our Washington DC Bureau Comptroller. Welcome, 0:08:30.160 --> 0:08:32.240 It's good to have you on the program this afternoon. 0:08:32.320 --> 0:08:33.959 As I mentioned, there are a lot of good numbers 0:08:34.200 --> 0:08:36.839 in the report, but there's also a lot of challenges here. 0:08:37.440 --> 0:08:40.559 Take your biggest challenge, give us your biggest challenge. What 0:08:40.679 --> 0:08:42.040 in here concerns you the most? 0:08:43.080 --> 0:08:45.280 Thank you so much. Tim, As you said, you know, 0:08:45.320 --> 0:08:47.960 Maryland is doing so well in so many ways. But 0:08:48.080 --> 0:08:51.760 what we saw in this report through our numbers and 0:08:51.840 --> 0:08:54.840 analysis as well as roundtables around the state, is that 0:08:54.880 --> 0:08:57.160 our labor force is constrained. You know, we have a 0:08:57.200 --> 0:09:01.520 traditionally very high labor force participation rate in Maryland and 0:09:01.559 --> 0:09:03.600 we still have a rate that is higher than the 0:09:03.679 --> 0:09:07.719 national average, but we haven't quite recovered from COVID, and 0:09:07.760 --> 0:09:11.080 so some of our economy is really constrained in the 0:09:11.120 --> 0:09:14.320 private sector growth. We're seeing good federal sector growth, but 0:09:14.360 --> 0:09:18.120 the private sector growth is constrained because of this, uh labor, 0:09:18.240 --> 0:09:21.360 these labor force challenges. So you know, we were excited 0:09:21.360 --> 0:09:24.240 to release this report so that our policy makers, our 0:09:24.280 --> 0:09:26.560 governor and others can and can really start to tackle 0:09:26.600 --> 0:09:28.920 these challenges and our economy can continue to grow. 0:09:29.000 --> 0:09:32.840 Now, controller what are the biggest challenges in the workforce 0:09:33.000 --> 0:09:36.000 and who is bearing the brunt of the pain here? 0:09:37.600 --> 0:09:39.559 So it's a good question. You know, we are really 0:09:39.880 --> 0:09:43.520 fortunate as a state to have a robust and unique 0:09:43.600 --> 0:09:46.120 set of industries in the state. You know, from federal 0:09:46.160 --> 0:09:50.640 to government to the port to unique biotech and cybersecurity 0:09:50.640 --> 0:09:54.080 and more all across the state, as well as numerous universities. 0:09:54.440 --> 0:09:57.960 What we saw in the data is that women have 0:09:58.120 --> 0:10:02.559 left the workforce at a higher rate in Maryland then nationally, 0:10:02.880 --> 0:10:06.080 So that's something that we're really focused on. We also 0:10:06.120 --> 0:10:08.560 have seen some health challenges over the years because of 0:10:08.559 --> 0:10:12.719 the opioid epidemic and so and continuing health concerns, and 0:10:13.080 --> 0:10:15.079 so we want to make sure that we're focusing gotten 0:10:15.120 --> 0:10:18.240 there as well. And then finally, I will say, you know, 0:10:18.280 --> 0:10:21.480 our population growth is so important. You know, when you're 0:10:21.520 --> 0:10:24.200 talking about labor force, it's about you know, the number 0:10:24.240 --> 0:10:27.160 of people both who live in Maryland and are participating. 0:10:27.480 --> 0:10:30.520 And we have seen lower numbers of growth in terms 0:10:30.520 --> 0:10:33.640 of population in the past few years since COVID, and 0:10:33.720 --> 0:10:35.640 so we want to make sure that there's a place 0:10:35.679 --> 0:10:38.000 for everyone in Maryland that they can afford a home, 0:10:38.040 --> 0:10:40.199 that they can send their kids to our great public schools. 0:10:40.440 --> 0:10:42.160 And so that's where we're focusing as well. 0:10:42.320 --> 0:10:44.600 Okay, Controller, I want to zero in on one issue 0:10:44.640 --> 0:10:47.320 that you mentioned, it's women leaving the workforce. I was 0:10:47.360 --> 0:10:51.040 really shocked to see the decline of childcare centers in 0:10:51.120 --> 0:10:55.200 this report in the state of Maryland. We are seeing 0:10:55.559 --> 0:10:57.880 that you predict by twenty twenty seven there will be 0:10:57.920 --> 0:11:00.920 only twenty seven hundred child care providers in the state, 0:11:00.960 --> 0:11:04.679 down from nearly six thousand in twenty eighteen. I've got 0:11:04.679 --> 0:11:07.520 two little kids. Childcare is front and center for my 0:11:07.600 --> 0:11:10.040 wife and I. How do you fix this in the state? 0:11:10.160 --> 0:11:11.480 Can you do that? As Controller? 0:11:12.640 --> 0:11:14.760 So, you know, one of the things about my job 0:11:14.800 --> 0:11:19.160 that I love is that I can partner with our governor, 0:11:19.640 --> 0:11:23.160 you know, with other our General Assembly or Speaker, Senate presidents. 0:11:23.520 --> 0:11:27.240 So as the Controller, I really serve as the elected CFO. 0:11:26.880 --> 0:11:27.880 Of the state of Maryland. 0:11:27.880 --> 0:11:31.280 And this report is about identifying some of those challenges 0:11:31.600 --> 0:11:34.080 so that our General Assembly and our governor have the 0:11:34.120 --> 0:11:37.680 information and can then formulate policies to tackle some of 0:11:37.679 --> 0:11:41.360 those challenges and seize opportunities. And this childcare one is 0:11:41.360 --> 0:11:44.280 a huge one. I'm also a mom with two children. 0:11:44.320 --> 0:11:47.720 I understand the challenge of finding childcare and it is 0:11:47.840 --> 0:11:50.000 essential that we get it right right, that we make 0:11:50.040 --> 0:11:53.400 sure that they're space in our economy for childcare providers 0:11:53.400 --> 0:11:56.199 of all types, the private settings, but also the in 0:11:56.280 --> 0:12:00.959 home care that many Marylanders and many folks who are 0:12:00.960 --> 0:12:04.440 below meeting income really rely on. And so that is 0:12:04.480 --> 0:12:07.199 certainly a focus of the General Assembly and the governor 0:12:07.440 --> 0:12:09.280 in fact mentioned it in a State of the State 0:12:09.320 --> 0:12:10.320 of the address this year. 0:12:10.480 --> 0:12:12.880 Do you think it's something that the state can fix 0:12:12.920 --> 0:12:15.120 on its own or do you need the federal government 0:12:15.120 --> 0:12:15.520 to help. 0:12:16.520 --> 0:12:18.600 I think it's going to have to be a partnership. 0:12:18.640 --> 0:12:20.680 You know, we will work with the federal government in 0:12:20.720 --> 0:12:24.400 terms of the childcare block grant program. You know, many 0:12:24.480 --> 0:12:28.120 years ago we changed how we paid in Maryland to 0:12:28.160 --> 0:12:31.079 pay more. In fact, in the Office of the Controller. 0:12:31.320 --> 0:12:35.440 Just this past year, we completely changed how, working with 0:12:35.440 --> 0:12:38.840 the Maryland State Department of Education, how we reimburse childcare 0:12:38.840 --> 0:12:42.640 providers so that we could provide repayments and reimbursements in 0:12:42.679 --> 0:12:46.080 a much more timely fashion. So we're very focused on 0:12:46.160 --> 0:12:49.080 that childcare piece to ensure that women have the opportunities 0:12:49.080 --> 0:12:51.240 that they want to work out of the home. 0:12:51.880 --> 0:12:53.400 I want to switch gears a little bit here, and 0:12:53.440 --> 0:12:55.800 I want to talk about something that's on the top 0:12:55.840 --> 0:12:57.600 of a lot of people's minds right now. It is 0:12:57.720 --> 0:13:01.120 tax season. I want to think about your posturing versus 0:13:01.120 --> 0:13:03.800 some of the others around you. For example, vir Junior 0:13:03.840 --> 0:13:06.960 Governor Glenn Youngkin has been of the side of saying 0:13:07.000 --> 0:13:10.679 that taxes are too high yet at state and local levels, 0:13:10.760 --> 0:13:13.800 and at the federal level, we're obviously facing a massive 0:13:13.880 --> 0:13:16.560 constraints on budgets. How do you think about the tax 0:13:16.600 --> 0:13:18.680 equation for the folks who live in Maryland. 0:13:20.240 --> 0:13:22.400 I think we can never enter into a race to 0:13:22.440 --> 0:13:25.160 the bottom. You know, Maryland and Maryland. We're proud of 0:13:25.200 --> 0:13:29.240 our amazing public schools. I graduated from Maryland public schools. 0:13:29.240 --> 0:13:32.079 My two children are in public schools. We have amazing 0:13:32.120 --> 0:13:35.800 state parks, we have a robust healthcare system, and so 0:13:36.080 --> 0:13:38.880 I would caution us against, you know, entering into any 0:13:38.920 --> 0:13:41.280 sort of race to the bottom. As in terms of 0:13:41.320 --> 0:13:43.839 tax policy, I think what we have to focus on 0:13:44.040 --> 0:13:47.120 is making sure that Marylanders are getting the support that 0:13:47.160 --> 0:13:50.520 they need, that our businesses are able to grow and 0:13:50.679 --> 0:13:53.520 thrive here in the state of Maryland, and that we 0:13:53.600 --> 0:13:57.560 have the labor force available, a well educated, a well 0:13:57.559 --> 0:14:01.040 trained workforce available for employers so that they know that 0:14:01.120 --> 0:14:03.680 they can grow here over the long term. 0:14:03.720 --> 0:14:05.600 Curious about the race to the bottom a little more, 0:14:05.679 --> 0:14:09.559 how do you compete with other states that are participating 0:14:09.720 --> 0:14:12.000 in that race to the bottom, particularly if you're trying 0:14:12.000 --> 0:14:12.880 to build a labor. 0:14:12.679 --> 0:14:14.920 Force well over the long term. 0:14:14.960 --> 0:14:17.680 What you see is you know, although Marylanders, if you 0:14:17.720 --> 0:14:21.080 look at the age brackets, Marylanders may be moving out 0:14:21.080 --> 0:14:24.320 of state when they're younger, when they're older, we actually 0:14:24.360 --> 0:14:28.600 see you know, the prime work age workforce age Maryland 0:14:28.640 --> 0:14:32.200 people moving into the States. And that's because of our schools, 0:14:32.240 --> 0:14:35.040 it's because of our opportunities, it's because of our housing stock. 0:14:35.440 --> 0:14:39.600 Those are those folks are finding their way to Maryland 0:14:39.680 --> 0:14:43.600 because of its reputation for being such a family supporting state. 0:14:43.760 --> 0:14:46.000 And so you know, that's where we have to focus 0:14:46.040 --> 0:14:49.400 on making sure then that those Marylanders are can find 0:14:49.400 --> 0:14:52.040 the housing that they need. Right, I think where I 0:14:52.080 --> 0:14:54.800 would focus is on making sure that the housing is 0:14:54.800 --> 0:14:58.200 available so that people can grow here, thrive here, and 0:14:58.240 --> 0:15:00.240 then retire here as well. 0:15:00.560 --> 0:15:03.560 I want to talk about federal government employment because a 0:15:03.640 --> 0:15:06.320 relatively large portion of the state compared to other states, 0:15:07.160 --> 0:15:10.080 works for the federal government five point seven percent of 0:15:10.320 --> 0:15:13.040 Maryland total of total Maryland employment, compared to one point 0:15:13.120 --> 0:15:17.080 nine percent of total employment nationally. Obviously, it's good for 0:15:17.120 --> 0:15:20.080 stability because these government jobs are stable. But I'm wondering 0:15:20.120 --> 0:15:23.520 what the downsides are of having so many government workers. 0:15:23.560 --> 0:15:26.240 Since those jobs are so stable, doesn't mean the working 0:15:26.280 --> 0:15:29.000 population doesn't necessarily have the same rate of people going 0:15:29.040 --> 0:15:31.880 and starting their own businesses of entrepreneurship. Talk to us 0:15:31.880 --> 0:15:32.600 a little bit about that. 0:15:33.560 --> 0:15:35.800 Sure, you know, we haven't seen that in Maryland. We're 0:15:35.920 --> 0:15:39.320 very fortunate to have I think this high federal employment, 0:15:40.040 --> 0:15:42.600 although it sometimes says get a little dicey when the 0:15:42.600 --> 0:15:46.200 federal government might shut down, but you know, for the 0:15:46.200 --> 0:15:48.440 most part, it's a real boom to Maryland. And we're 0:15:48.480 --> 0:15:52.400 really excited to be welcoming the FBI headquarters to Maryland 0:15:52.400 --> 0:15:55.480 in the coming years. Because we have such a robust 0:15:56.800 --> 0:16:00.240 series of research universities and the state as well well, 0:16:00.440 --> 0:16:03.440 including of course JOHNS Hopkins, the University of Maryland System 0:16:03.520 --> 0:16:08.040 and more Morgan State. We have a number of entrepreneurs 0:16:08.480 --> 0:16:11.640 and ideas and sort of that's that are coming out 0:16:11.680 --> 0:16:16.800 of those universities. We see enormous tech transfer possibilities. We 0:16:16.880 --> 0:16:20.040 also are really fortunate to have, you know, a large 0:16:20.080 --> 0:16:23.000 number of immigrants in the state of Maryland, and we 0:16:23.120 --> 0:16:26.160 see a number of immigrants who are great entrepreneurs opening 0:16:26.240 --> 0:16:27.560 businesses in the state as well. 0:16:28.480 --> 0:16:31.600 Com Schuller with the type of fighting, if you hill, 0:16:31.760 --> 0:16:34.360 that we've been seeing coming out of Congress. Do you 0:16:34.560 --> 0:16:36.960 share a concern with so many federal workers being in 0:16:37.000 --> 0:16:39.760 Maryland of a risk of a government shut down. 0:16:41.560 --> 0:16:45.600 Absolutely, you know, it's for so many reasons. A government 0:16:45.600 --> 0:16:50.800 shut down is irresponsible and challenging, you know, certainly globally, 0:16:51.320 --> 0:16:53.760 but here in Maryland it is as well. You know, 0:16:53.840 --> 0:16:56.160 those workers are having to go to work and they're 0:16:56.200 --> 0:16:59.440 not getting paid, or they're not working and they're not 0:16:59.440 --> 0:17:03.320 getting paid. It's incredibly challenging. Over the long term, they 0:17:03.400 --> 0:17:06.320 do get paid, and so the revenue does come in 0:17:06.359 --> 0:17:10.360 both to their household and to the state. The most challenging, 0:17:10.680 --> 0:17:12.919 one of the most challenging times that our economy has 0:17:12.960 --> 0:17:17.160 had relating to the federal government was actually was actually 0:17:17.240 --> 0:17:21.840 after Seaquestration. We saw real challenges after that because of 0:17:21.880 --> 0:17:24.080 the long term effect that sequestration had. 0:17:24.520 --> 0:17:26.439 We only have about thirty seconds left. But you were 0:17:26.440 --> 0:17:28.920 a Democratic delegate back in twenty sixteen. I got to 0:17:28.920 --> 0:17:32.000 ask you a national question about the Democratic Party. Why 0:17:32.000 --> 0:17:34.440 do you think there haven't been more competition from within 0:17:34.480 --> 0:17:37.760 the Democratic Party against President Biden given the challenges that 0:17:37.800 --> 0:17:38.800 he faces for reelection. 0:17:40.520 --> 0:17:45.240 President Biden and the Democrats in Congress have passed more 0:17:45.359 --> 0:17:49.680 important legislation in the past two years than I can 0:17:49.720 --> 0:17:53.760 remember in decades. I mean, from the IRA to the 0:17:53.880 --> 0:17:57.240 Chips Act to the Infrastructure Bill. I mean, the legislation 0:17:57.359 --> 0:18:00.000 that has come out is in phenomenal and it is 0:18:00.080 --> 0:18:03.119 game changing for not just the state of Maryland in 0:18:03.160 --> 0:18:05.760 the coming years, but really for our country. And so, 0:18:06.200 --> 0:18:08.080 you know, I just think the progress that has been 0:18:08.080 --> 0:18:12.119 made under the Democrats, it can't be denied. And our 0:18:12.160 --> 0:18:16.040 economy has grown as well, and so I'm excited about 0:18:16.040 --> 0:18:16.560 what's happening. 0:18:16.640 --> 0:18:18.960 Controller, thank you so much for joining us. That's Brooklearman, 0:18:19.040 --> 0:18:20.880 Maryland's controller, joining us from Washington. 0:18:22.840 --> 0:18:26.720 You're listening to the Bloomberg Business Week podcast. Listen live 0:18:26.800 --> 0:18:29.960 each weekday starting at two pm Eastern on applecar Play 0:18:30.040 --> 0:18:32.880 and Android Auto with the Bloomberg Business App. You can 0:18:32.920 --> 0:18:36.159 also listen live on Amazon Alexa from our flagship New 0:18:36.240 --> 0:18:40.119 York station, just Say Alexa playing Bloomberg eleven thirty. 0:18:41.359 --> 0:18:44.920 Well. US retail sales broadly declined in January, indicating consumers 0:18:44.960 --> 0:18:47.800 took a breather after a strong holiday shopping season. The 0:18:47.880 --> 0:18:51.480 value of retail purchases, unadjusted for inflation, decreased eight tens 0:18:51.480 --> 0:18:54.600 of one percent from December. This after a downward revision 0:18:54.600 --> 0:18:57.359 to the prior month. This according to Commerce Department data 0:18:57.400 --> 0:19:00.480 that we got earlier today, that drop was the biggest 0:19:00.760 --> 0:19:03.520 in nearly a year. For more on this and more 0:19:03.520 --> 0:19:06.000 when it comes to retail, let's bring in Angie Solanki, 0:19:06.440 --> 0:19:09.400 National director of US Retail at Colliers. She joins us 0:19:09.440 --> 0:19:12.760 from San Francisco. Good to have you back on the program. 0:19:13.080 --> 0:19:14.639 I want to start with today's data, but then I 0:19:14.640 --> 0:19:17.080 want to move beyond that and get to what you're 0:19:17.119 --> 0:19:21.359 seeing in your work in terms of AI, in terms 0:19:21.359 --> 0:19:24.320 of efficiencies, and really what we're seeing in the future 0:19:24.320 --> 0:19:27.080 of retail. But were these numbers at all a surprise 0:19:27.160 --> 0:19:29.040 to you that we got a little earlier today. What 0:19:29.119 --> 0:19:30.240 are you seeing in your work? 0:19:31.280 --> 0:19:33.280 Yeah, I mean, if we look at the numbers, you know, 0:19:33.359 --> 0:19:36.439 it's a reasonable start to twenty twenty four. It's just 0:19:36.560 --> 0:19:39.199 you know, our January numbers, it's not fatal. If we 0:19:39.280 --> 0:19:42.879 really look at core retail in terms of increase, it 0:19:42.920 --> 0:19:45.119 was about two point eight percent, so that's pretty healthy. 0:19:45.480 --> 0:19:47.760 And if we really look at you know, back two 0:19:47.800 --> 0:19:50.840 to three years, you know what we've seen from retailers 0:19:50.880 --> 0:19:54.320 is really that operational efficiency and how they're looking forward 0:19:54.359 --> 0:19:59.160 in terms of utilizing different tools and platforms to increase 0:19:59.200 --> 0:20:01.280 their EFFICI season margins going for. 0:20:01.880 --> 0:20:04.120 A big question that a lot of investors have too 0:20:04.280 --> 0:20:07.520 is if they're using money to invest in things like 0:20:07.560 --> 0:20:11.080 AI to increase operational efficiency, how much of that money 0:20:11.240 --> 0:20:16.680 is turned around and used to pay employees? For example, 0:20:17.200 --> 0:20:19.920 do you need to raise prices for consumers in order 0:20:19.960 --> 0:20:23.000 to invest more? How does the equation work at the 0:20:23.080 --> 0:20:23.600 end of the day. 0:20:24.600 --> 0:20:27.720 Yeah, you know, it's really dependent upon each of the retailers. 0:20:27.760 --> 0:20:30.920 So each retailer will have a slightly different business model. 0:20:30.920 --> 0:20:33.880 But what we have seen or are monitoring, I should 0:20:33.920 --> 0:20:38.720 say closely, is using AI from an operational efficiency perspective 0:20:39.040 --> 0:20:41.440 can be a savings of sixty to seventy percent. 0:20:41.880 --> 0:20:43.560 Then what happens is we start. 0:20:43.320 --> 0:20:46.840 To layer on and I'll use grocery as the category 0:20:46.920 --> 0:20:50.800 or segment as the example, is that you then can 0:20:51.240 --> 0:20:55.760 offer additional products through a private label system. So when 0:20:55.800 --> 0:20:58.600 you do that, you're actually seeing a better margin increase. 0:20:59.000 --> 0:21:04.920 So operational efficiencies margin increases allows that retailer to actually provide, 0:21:05.240 --> 0:21:07.280 to your point earlier better wages. 0:21:07.560 --> 0:21:09.560 What's the what are the inputs that that give them 0:21:09.560 --> 0:21:12.000