Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: The nvidiopaths Gents of One saying concerns around AI's impact
Speaker 2: on the workforce are over blown. Torson's lack of apolloer
Speaker 2: Grease writing there is zero evidence of job losses because
Speaker 2: of AI. Non farm pay rolls for May could come
Speaker 2: in significantly higher than the around ninety k expected. Torston
Speaker 2: joints us for more Toaston, good morning, get to see it.
Speaker 2: What are people getting wrong?
Speaker 3: Well, I think what people are getting wrong is this
Speaker 3: whole notion that it's not only about individual companies.
Speaker 4: It's what's happening at the macro level.
Speaker 3: And at the macro level, it's become much easier to
Speaker 3: open a business.
Speaker 4: You see this in the surveys from the Census of.
Speaker 3: How many business are created every week is exploding higher.
Speaker 3: You're also seeing data from Stripe showing you the number
Speaker 3: of solo founders of new businesses is also exploding higher.
Speaker 4: So that's a lot of new businesses that are created.
Speaker 3: Yes, some of them will probably only be one employer,
Speaker 3: namely the founder, but a lot of these businesses will
Speaker 3: also with the result in a lot more jobs. So
Speaker 3: it's not only about the displacement that there might come
Speaker 3: on some micro levels. It's much more about the aggregate,
Speaker 3: where we have a significant increase in the number new
Speaker 3: businesses that are formed.
Speaker 2: It doesn't help as you know that some of the
Speaker 2: individuals are the frontier of this massive persure talking about
Speaker 2: a white collar wash out when it comes to the
Speaker 2: lay before. So what's your message to them.
Speaker 3: Well, this has started actually already in the spring of
Speaker 3: last year, where there was a lot of people beginning
Speaker 3: to talk about well, within one year's time, we will
Speaker 3: already have layoffs and we'll a have entry level jobs
Speaker 3: that may no longer exist. But here we are with
Speaker 3: ADP on a weekly basis for the last eight weeks
Speaker 3: producing thirty forty thousand jobs every week job this claim
Speaker 3: still being low ism today, over the last six months,
Speaker 3: ism has gone up. We have about fifty Ism is
Speaker 3: likely going to be also high today. And now we
Speaker 3: have some very strong tail when's not only from the
Speaker 3: AI spending boom, but also from the one big beaultiful bill.
Speaker 3: This economy really is on fire in the sense that
Speaker 3: we both have strong growth and we also have upward
Speaker 3: pressures on inflation, and now we also have of course
Speaker 3: the ultimate risk that if AI does result in more
Speaker 3: job growth, it will be really the miracle drug that
Speaker 3: both creates higher productivity and also creates higher job growth.
Speaker 1: That can be true at the same time that John's
Speaker 1: assertion can be true, which is at white collar jobs
Speaker 1: can decline its proportion of overall jobs. If you look
Speaker 1: at the job growth and where it's come from, it's construction,
Speaker 1: it's manufacturing, it's in healthcare, it's an education, it's not
Speaker 1: in finance, it's not in media and media services. So
Speaker 1: how do you square those two ideas.
Speaker 3: Well, if you look at also the unimployer rates and
Speaker 3: now we'll get more data on Friday, if look at
Speaker 3: their own impliner rate for people that are between twenty
Speaker 3: and twenty four years old, that has exactly gone down
Speaker 3: in the last six months, also telling you that is
Speaker 3: not the case that young people can't find a job.
Speaker 3: There's some issues around what type of job they can get,
Speaker 3: and yes, maybe they may not be getting an issue
Speaker 3: to the job that they wanted. That may be something
Speaker 3: else about expectations for young people when it goes into
Speaker 3: that discussion.
Speaker 4: But the bottom line feel really here is that at
Speaker 4: the end of the day, young people.
Speaker 3: Are actually doing really well because the own implorner rate
Speaker 3: for young people is actually lower than where was six
Speaker 3: months ago.
Speaker 1: Okay, to build on that, the conversation yesterday among some
Speaker 1: of the people who might be entering the workforce in
Speaker 1: a not so distant future plumbing a discussion around becoming
Speaker 1: a plumber because you're going to make a lot of
Speaker 1: money in plumbing, but you're not necessarily going to make
Speaker 1: a lot of money going into white collar workforce. So
Speaker 1: at what point is that the type of work that
Speaker 1: is going to be the future of a lot of
Speaker 1: the job creation. Is that what we're seeing right now
Speaker 1: some of the data.
Speaker 4: Yeah, But I'm also critical of this whole idea that white.
Speaker 3: Collar workers are just going to say, oh, I got fired.
Speaker 3: I'm just going home my basement and sitting here rolling
Speaker 3: my thumbs.
Speaker 4: Of course, those white collar.
Speaker 3: Workers are going to say, hey, maybe we should open
Speaker 3: a business. Maybe I have some friends, maybe I had
Speaker 3: some connections from my last job. And I think that
Speaker 3: that's exactly what's going to make it a lot easier
Speaker 3: with us language models, with agents to build a new model.
Speaker 3: And that's exactly why business formation is going up. That's
Speaker 3: why the number of sol founders solo founders has also
Speaker 3: been going up, and that business formation will ultimately also
Speaker 3: result in a lot more job growth.
Speaker 5: We touch on something you said about expect that might
Speaker 5: be about expectations of those entering the workforce. Are you
Speaker 5: saying that potentially younger generations, if they don't like some
Speaker 5: of the characterists of a job, they are going to
Speaker 5: not go into the workforce, potentially maybe start their own
Speaker 5: business or do something else.
Speaker 3: Well, there is certainly a lot of, of course, discussion
Speaker 3: around well is it because young people.
Speaker 4: Can't find a job.
Speaker 3: They can certainly find a job, But then why we're
Speaker 3: having this discussion Maybe exactly to your point, and Marie,
Speaker 3: maybe we are actually hearing more young people just not
Speaker 3: having met their expectations of where they could get a job.
Speaker 3: In other words, maybe they didn't get the job that
Speaker 3: they thought that they could get. So yes, maybe there
Speaker 3: is something also when it comes to the expectations of
Speaker 3: younger households and younger people when they enter the label folds.
Speaker 5: Well, you're describing me sounds like entitlement.
Speaker 4: But we'll leave it there.
Speaker 5: I want to ask you another question. Do you think
Speaker 5: the Federal Reserve has been quote undergoing a stress test.
Speaker 4: Well, I saw Jay Powell of God yesterday. He did
Speaker 4: say at the last press Comfy was going to keep
Speaker 4: a low profile.
Speaker 3: But this obviously is generating some attention here today. So
Speaker 3: I do think that it is clear that, of course
Speaker 3: we'll have new leadership. That leadership is in my view,
Speaker 3: absolutely going to be completely doing all the right things
Speaker 3: and moving in the right direction. But it is a
Speaker 3: little bit noteworthy that the outgoing chair here does bring
Speaker 3: up issues just in the not in the eleventh hour,
Speaker 3: but a few minutes after midnight exactly this discussion around Well, okay,
Speaker 3: let's now give the new fit chair a chance and
Speaker 3: he can then run with it.
Speaker 4: She will do in a very good way.
Speaker 2: And Kevin wash the thing was hopeful that we'd see
Speaker 2: the disinflationary impact of this massive push through odds this
Speaker 2: technology and then be able to have easier monetary policy.
Speaker 2: Where do you stand on that, Tourston.
Speaker 3: Well, we probably have to wait a little while for that,
Speaker 3: because initially the AI boom will certainly be inflationary. It's
Speaker 3: very clear when you look at semiconductor prices. When we
Speaker 3: look at energy prices, we'll look at labor, meaning what
Speaker 3: is the price of contructing a data center. And it's
Speaker 3: also of course when you look at the broader equipment prices,
Speaker 3: it is also very clear that this is going to
Speaker 3: be inflationary on top of the upward pressure on inflation
Speaker 3: coming from the lack effects of tariffs and of course
Speaker 3: also higher energy prices. So initially, in the initial phase
Speaker 3: of the buildout, we should actually expect the AI data
Speaker 3: center buildout to be inflationary rather than this inflationion.
Speaker 2: Can we finish on the price of AI. There were
Speaker 2: some CEOs, not all, but some CEOs excited about the
Speaker 2: prospects for a genter KI and replacing the human labor
Speaker 2: force with that. When they start to realize the actual
Speaker 2: cost of this, well they have second thoughts on replacement.
Speaker 4: Well.
Speaker 3: This is also a huge discussion around token demand and
Speaker 3: token usage, and at the end of the day, token
Speaker 3: users is not necessarily the same thing as creating higher productivity.
Speaker 3: So that's why businesses as we speak are exactly trying
Speaker 3: to figure out how much token demand do we have
Speaker 3: and do we ultimately need and will it pay off?
Speaker 3: And with the price of that token demand also be
Speaker 3: worth it relative to the cost of labor, So it
Speaker 3: really is a transition where we will need to figure
Speaker 3: out over time exactly what does the endpoint look like.
Speaker 3: Are we going to get to a point where we
Speaker 3: will be much more productive and will be in my view,
Speaker 3: probably need more labor and not less labor, especially in
Speaker 3: the aggregate.
Speaker 4: From the macro perspective, you're.
Speaker 1: Pointing to a very much inflationary backdrop. And this comes
Speaker 1: ahead of the labor market report that we get on
Speaker 1: Friday that could be hotter than expected. If we see
Speaker 1: the same kind of trend continue as we saw last month,
Speaker 1: what do you think the Fed's response will ultimately be
Speaker 1: given the fact that no one has the appetite to
Speaker 1: raise rates.
Speaker 3: Well, this is of course the challenge that the expectations
Speaker 3: for a long time in the dot plot has been.
Speaker 3: The rates are going down and the fat is going
Speaker 3: to cut. And now markets and FED fund futures are
Speaker 3: slowly beginning to say, well, maybe there could be a highcoming.
Speaker 3: And we all know that if there's a hike coming
Speaker 3: then it doesn't come alone. Hiking cycles are never just
Speaker 3: one hike and that's it. It will always be three
Speaker 3: or four hikes on more. So that's why the market
Speaker 3: is debating with itself in breaks.
Speaker 4: Well, if there is a rate.
Speaker 3: Hike cycle beginning because of these factors that we both
Speaker 3: have a low unemployment rate and at the same time
Speaker 3: we also have up pressure on inflation, then all those
Speaker 3: things would certainly argue for the risks to the upside
Speaker 3: name of the rates are going to stay higher for longer.
Speaker 1: The picture that you're painting of both an inflationary buildout
Speaker 1: of AI plus a labor market that's poised for expansion
Speaker 1: not contraction due to the extra economic activity is one
Speaker 1: that could call for a rate hiking cycle. What could
Speaker 1: you potentially see, I mean, what is increasingly your base
Speaker 1: case going into twenty twenty seven.
Speaker 3: Yeah, because this is a fit's do a mandate if
Speaker 3: it has two goals exactly as you're saying, Lisa, name
Speaker 3: need the unemployment rate and that's been going down, and
Speaker 3: it's likely Zoo, according to the consensus, continue to go
Speaker 3: down and inflation by the end of the year is still,
Speaker 3: according to the consensus, three percent. So if you're three
Speaker 3: percent inflation and a very strong label market, that indeed
Speaker 3: opens up a much high likelihood that we will see
Speaker 3: a stronger economy. Also because of the tail when the
Speaker 3: not forget it's not only the AI boom, but it's
Speaker 3: also the one Big Briti for Bill. And both these
Speaker 3: things are not sensitive to interest rates. It's really unique
Speaker 3: those factors that are sensitive to ingistrates in GDP and MEH,
Speaker 3: housing and autos.
Speaker 4: They are slowing down.
Speaker 3: But the factors that are driving growth at the moment,
Speaker 3: the AI boom and the One Big Bril for Bill.
Speaker 3: It doesn't matter what their Fed funds Radi is doing.
Speaker 3: We will have an AI boom. It doesn't matter what
Speaker 3: their Fed funds ready is doing. The One Big Ril
Speaker 3: for Bill will continue to support GDP for the next
Speaker 3: several quarters.
Speaker 2: Tilston, It's going to say it always is. Thank you.
Speaker 2: Tustin Slock that of Apollo