WEBVTT - Bloomberg Surveillance TV: December 22nd, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.720 with Lisa Bromwitz and Amerie Hordern. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify, or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:35.880 Terminal and the Bloomberg Business App. 0:00:36.400 --> 0:00:39.120 Turning to the economy, investors are watching for signals from 0:00:39.120 --> 0:00:42.080 policymakers heading into a key year for the Federal Reserve, 0:00:42.159 --> 0:00:44.839 with a new chair expected to be announced soon. Cleveland 0:00:44.880 --> 0:00:47.760 Fed President Beth Hammock among those preferring to hold rates 0:00:47.840 --> 0:00:50.400 higher for longer, while our next guest is taking the 0:00:50.440 --> 0:00:53.440 other side, voting for a fifty basis point cut at 0:00:53.479 --> 0:00:55.800 the Fed's last meeting. Joining us now is Federal Reserve 0:00:55.840 --> 0:00:57.040 Governor Stephen Myron. 0:00:57.120 --> 0:00:58.280 Very good morning to you, Steven, Thank you. 0:00:58.280 --> 0:00:59.760 So much for joining us. Good morning, thanks for having 0:00:59.760 --> 0:01:00.200 me back. 0:01:00.360 --> 0:01:03.160 So let's start with Beth Ham actually came out over 0:01:03.160 --> 0:01:05.560 the weekend, and we heard for Williams as well on 0:01:05.640 --> 0:01:08.840 Friday saying that potentially where we are right now, rates 0:01:08.840 --> 0:01:11.520 should be steady and they're looking at what's going on inflation. 0:01:11.760 --> 0:01:13.759 Even the Fed Shair was talking about, maybe you need 0:01:13.800 --> 0:01:16.319 to look at inflation the data we had with some 0:01:16.400 --> 0:01:18.880 grain of salt because of the government shutdown. How are 0:01:19.040 --> 0:01:21.600 you viewing that side of the Fed's mandate right now? 0:01:22.040 --> 0:01:24.199 Yeah, So I gave a speech on the inflation netlook 0:01:24.280 --> 0:01:27.000 last week, and you know, and I still believe everything 0:01:27.040 --> 0:01:28.880 I said last week in light of this week's print. 0:01:29.600 --> 0:01:31.520 Last week's print, I mean, look, there were a couple 0:01:31.560 --> 0:01:34.560 of anomalies in last week's print related to consequences of 0:01:34.600 --> 0:01:37.920 the government shutdown, which have distorted and delayed economic data 0:01:37.959 --> 0:01:41.240 that we need to make policy. But you know, and 0:01:41.360 --> 0:01:43.319 those consequences I think are not huge. 0:01:43.360 --> 0:01:43.920 There when you. 0:01:43.880 --> 0:01:45.280 Sort of get to when you get to sort of 0:01:45.600 --> 0:01:48.320 the ultimate PC print, which is what the Fed, which 0:01:48.320 --> 0:01:51.200 is what the FED targets, it's probably ultimately going to 0:01:51.200 --> 0:01:53.080 be in the neighborhood of two tenths of a point, 0:01:53.160 --> 0:01:54.800 maybe a tenth of that is going to be sheltered 0:01:54.840 --> 0:01:56.320 and tenth of the other stuff is going to be 0:01:56.400 --> 0:01:59.400 you know, calendar stuff like prices, like data were collected 0:01:59.400 --> 0:02:01.480 in the second half the month, or and Black Friday stuff. 0:02:01.600 --> 0:02:03.120 But we'll have to sort of see when we get 0:02:03.120 --> 0:02:06.640 the PC data. But it is true that the shelter 0:02:06.680 --> 0:02:08.840 stuff was somewhat distorted by some of the quirks of 0:02:09.240 --> 0:02:10.400 recovering from the shutdown. 0:02:11.000 --> 0:02:12.760 But it's also true that. 0:02:12.639 --> 0:02:15.280 The shelter data were distorted for most of the year 0:02:15.680 --> 0:02:19.160 because of really long lands with which shelter inflation is calculated. 0:02:19.280 --> 0:02:21.120 If you look at market rents, they've been running at 0:02:21.160 --> 0:02:23.799 about a one percent rate for about two years now, right. 0:02:23.960 --> 0:02:27.240 That's not indicative of any price pressures in housing whatsoever, 0:02:27.440 --> 0:02:29.480 but it takes a really long time for measured shelter 0:02:29.520 --> 0:02:31.600 inflation to catch up to that, just because of various 0:02:31.680 --> 0:02:34.120 quirks of the statistical measurement process that I got into 0:02:34.160 --> 0:02:36.200 my speech last week. So I do think there was 0:02:36.200 --> 0:02:38.240 maybe some downward bias in last week's print. But at 0:02:38.240 --> 0:02:40.840 the same time, there's been tons of upward bias in 0:02:40.960 --> 0:02:44.600 data for the entire year, and it's inappropriate to say, Okay, well, 0:02:44.639 --> 0:02:46.440 we have to adjust for the downward bias, but we're 0:02:46.440 --> 0:02:48.560 going to accept the upward bias that itself is a 0:02:48.600 --> 0:02:49.519 deeply biased position. 0:02:49.560 --> 0:02:50.760 We've got to be clear right about both. 0:02:50.919 --> 0:02:53.679 Well, do you feel like yourself included? But do you 0:02:53.760 --> 0:02:56.760 feel like members of the FED are cherry picking what 0:02:56.800 --> 0:02:58.560 about inflation they like or dislike? 0:02:59.120 --> 0:03:00.480 Well, I mean, you know, I think that for the 0:03:00.560 --> 0:03:03.359 last few months, we've had data come out in accordance 0:03:03.400 --> 0:03:05.520 with I think my view of the world. The inflation 0:03:05.639 --> 0:03:09.000 data has steadily come in cooler than expectations. The unemployment 0:03:09.120 --> 0:03:12.160 rate has poked up potentially above where people thought it 0:03:12.240 --> 0:03:14.240 was going to go, and so we've had data that 0:03:14.320 --> 0:03:16.799 should push people into a duvish direction. And I think 0:03:16.800 --> 0:03:19.160 it's somewhat problematic if you see those data coming out 0:03:19.200 --> 0:03:21.720 and you don't adjust your policy prescriptions in a duvish direction. 0:03:21.919 --> 0:03:24.080 What does that say about the reactiveness of policy to 0:03:24.120 --> 0:03:26.280 the economy? You know, I think it looks very it 0:03:26.280 --> 0:03:27.760 reflects very poorly upon the institution. 0:03:27.960 --> 0:03:29.680 At the end of that speech at Columbia, you nodded 0:03:29.720 --> 0:03:33.160 to the fact that recessions are inevitable. Fed's job, it's 0:03:33.200 --> 0:03:35.880 kind of forestall them as much as they can. Policymakers' jobs. 0:03:35.880 --> 0:03:38.240 For that, I'm very curious when you look at the 0:03:38.280 --> 0:03:40.200 labor market, in particularly the rise that we've seen in 0:03:40.200 --> 0:03:42.880 the unemployment rate. That's kind of rise we've seen customarily 0:03:42.920 --> 0:03:46.360 before recessions. How do you assess the risk of there 0:03:46.440 --> 0:03:48.120 being a recession here in the near term when you 0:03:48.160 --> 0:03:49.400 look at the labor market, for instance. 0:03:49.640 --> 0:03:51.440 So I don't see a recession in the near term, 0:03:51.440 --> 0:03:55.360 in part because we are adjusting our policy rate, belowering it, 0:03:55.360 --> 0:03:56.240 which is appropriate. 0:03:56.840 --> 0:03:57.040 You know. 0:03:57.120 --> 0:04:00.920 My view, as I've described is that ietya of shocks 0:04:00.920 --> 0:04:03.320 that hit the economy, you know, including changes to the 0:04:03.320 --> 0:04:05.840 population growth rate due to changes in the border policy, 0:04:06.080 --> 0:04:08.280 have pushed what we call the neutral rate down, and 0:04:08.320 --> 0:04:10.920 that policy needs to adjust downward to reflect that downward 0:04:10.920 --> 0:04:14.360 shift and neutral. If we don't adjust policy down, then 0:04:14.400 --> 0:04:18.000 I think that we do run risks of rising recessions. 0:04:18.320 --> 0:04:20.680 I don't think it's too late to prevent that, and 0:04:20.720 --> 0:04:22.799 so I think it's important that we keep on adjusting 0:04:22.800 --> 0:04:24.839 our policy rate down. But at the moment it's not 0:04:24.880 --> 0:04:26.640 my base case, in part because I think that we 0:04:26.760 --> 0:04:29.760 ultimately will end up continuing to adjust interestraights down. 0:04:29.760 --> 0:04:31.039 I want to ask you about the utility of the 0:04:31.080 --> 0:04:32.000 myrone descent. 0:04:32.200 --> 0:04:35.440 So we had the FED share asked that press conference 0:04:35.480 --> 0:04:38.640 about the increasing confractured nature of the FED Committee. We've 0:04:38.640 --> 0:04:41.880 talked about quiet descents as well. What are you achieving 0:04:41.960 --> 0:04:43.880 or so what's the reaction been to you dissenting as 0:04:43.880 --> 0:04:46.480 you have been kind of in the conversation among the committee. 0:04:46.720 --> 0:04:49.599 Yeah, so, look, I mean there's not really any strategy here. 0:04:49.680 --> 0:04:52.080 I'm just transparent and say what I think and always 0:04:52.080 --> 0:04:53.680 have and that gets me in a lot of trouble. 0:04:54.000 --> 0:04:56.360 And does it or is it a constructive So when 0:04:56.360 --> 0:04:57.839 you descend in the way in which you do, is 0:04:57.839 --> 0:04:59.880 it a constructive descent? Do you find that others are 0:05:00.160 --> 0:05:03.360 willing to engage with you and your perspective on inflation 0:05:03.400 --> 0:05:03.880 for instance? 0:05:04.080 --> 0:05:06.960 Yeah, Well, my perspective on inflation is you know, look 0:05:06.960 --> 0:05:08.920 at my first speech, I talked about inflation a little bit, 0:05:08.960 --> 0:05:11.239 but I mostly was focused on neutral. 0:05:11.880 --> 0:05:13.000 My speech last week. 0:05:12.839 --> 0:05:15.120 I really drew out a lot about my outlook for 0:05:15.160 --> 0:05:17.480 inflation that was sort of implicit in the first speech 0:05:17.480 --> 0:05:21.479 and sort of just cursely, curse cursorily treated, and I 0:05:21.480 --> 0:05:23.640 really drew that out. So my views and inflation haven't 0:05:23.640 --> 0:05:25.640 been out there, fully fleshed out for the committee for 0:05:25.720 --> 0:05:27.919 so long, and now running into holiday season. But I 0:05:27.960 --> 0:05:30.320 have found that that people are constructive, they want to 0:05:30.320 --> 0:05:32.880 discuss these things, and I think that's important. And you know, look, 0:05:32.960 --> 0:05:36.880 one positive benefit of me potentially dissenting like this is 0:05:36.880 --> 0:05:40.560 that it introduces more a wider variety of views. I 0:05:40.560 --> 0:05:42.960 think it's really really important to avoid group think. I 0:05:43.000 --> 0:05:45.800 think if you fall into group think, you stop questioning 0:05:45.839 --> 0:05:47.520 where you could be wrong, and then it just becomes 0:05:47.600 --> 0:05:50.400 much easier to be a complacent consensus that is in error. 0:05:50.480 --> 0:05:52.080 I think we've seen that over and over this year. 0:05:52.200 --> 0:05:53.320 For example, on tariffs. 0:05:53.920 --> 0:05:56.800 Let's talk potentially about tariffs. The President is pushing for 0:05:56.920 --> 0:05:59.520 this two thousand dollars tariff, give it in the Church 0:05:59.640 --> 0:06:02.560 Secretary talking about these tax refunds start of twenty twenty six, 0:06:02.680 --> 0:06:06.279 is there potential that more money in consumers pockets could 0:06:06.279 --> 0:06:06.960 goose inflation? 0:06:07.680 --> 0:06:10.640 Yeah, so there is potential for some of these factors 0:06:10.640 --> 0:06:13.440 to boost economic growth. With respect to sort of tax refunds, 0:06:13.440 --> 0:06:15.920 you know, I think that sorry, with respect to terriffic refunds, 0:06:15.920 --> 0:06:17.159 I think we need to sort of wait and see 0:06:17.200 --> 0:06:21.800 what the policy looks like before getting into analyzing its consequences. 0:06:21.800 --> 0:06:24.040 If there does end up being a policy with respect 0:06:24.040 --> 0:06:27.360 to tax refunds that are results of the already legislated 0:06:27.920 --> 0:06:30.560 tax bill, the One Be Beautiful Bill Act from last year. 0:06:30.680 --> 0:06:33.120 Those are already baked into the forecast and they will 0:06:33.120 --> 0:06:35.359 provide a little bit of demand stimulus. But there's so 0:06:35.440 --> 0:06:37.560 much other stuff going on as a result of policy, 0:06:37.640 --> 0:06:41.240 in O triple B, in deregulation, in other things that 0:06:41.279 --> 0:06:43.480 are going on in policy that ultimately push out the 0:06:43.480 --> 0:06:45.880 supply side of the economy too. And my view is 0:06:45.880 --> 0:06:47.839 that if you push out the demand side while you're 0:06:47.880 --> 0:06:50.000 putting the brakes in the supply side, you get inflation. 0:06:50.279 --> 0:06:52.200 If you push out supply and demand at the same time, 0:06:52.240 --> 0:06:54.200 it doesn't really have an effect on priceis do you. 0:06:54.160 --> 0:06:56.200 Think it was a mistake that when we had under 0:06:56.200 --> 0:06:59.000 the Biden administration the American Rescue Plan Inflation Reduction Act 0:06:59.040 --> 0:07:00.839 sending out checks to and consumers. 0:07:01.120 --> 0:07:01.920 Was that an error? 0:07:02.080 --> 0:07:04.600 Well, it's not appropriate for you know, for a member 0:07:04.600 --> 0:07:06.840 of the Federal Reserve described to man as an error 0:07:06.960 --> 0:07:08.440 or not. But I do think that if you if 0:07:08.480 --> 0:07:10.680 you hit if you hit the gas on demand while 0:07:10.720 --> 0:07:12.760 you're hitting the brakes on supply at the same time, 0:07:13.000 --> 0:07:14.440 it will result in higher prices. 0:07:14.480 --> 0:07:16.480 That is that is, that is an economic. 0:07:16.200 --> 0:07:19.800 When two thousand dollars checks do a similar reaction as 0:07:19.800 --> 0:07:22.160 we saw on by the other checks during the American 0:07:22.200 --> 0:07:22.880 Rescue plan. 0:07:22.760 --> 0:07:24.680 Well it depends what's happening on the supply. So two 0:07:24.680 --> 0:07:27.200 things matter. One is the state of the demand, state 0:07:27.200 --> 0:07:31.200 of aggregate demand outside of those checks. And if you 0:07:31.240 --> 0:07:33.680 go back several years, the economy was recovering on its 0:07:33.720 --> 0:07:36.760 own from COVID. Right, What COVID was not like you know, 0:07:36.800 --> 0:07:40.280 the great the financial crisis which had lingering deleveraging effects 0:07:40.360 --> 0:07:43.440 for a decade plus, which meant that demand was was 0:07:43.480 --> 0:07:47.520 persistently depressed. After COVID, you know, we started getting vaccines, 0:07:47.520 --> 0:07:50.080 we started getting at the virals. Places started opening back up. 0:07:50.080 --> 0:07:52.280 The economy started returning to normal on its own, and 0:07:52.280 --> 0:07:54.800 so demand was growing quite healthily, and jobs numbers were 0:07:54.840 --> 0:07:58.080 beating every month, and so throwing more economic support on 0:07:58.120 --> 0:08:00.680 top of that wound up sort of pushing and already 0:08:00.680 --> 0:08:03.480 expanding demand side to expand even further. Right now, you 0:08:03.520 --> 0:08:05.800 see the unemployment rate is tilting up on its own. Right, 0:08:05.880 --> 0:08:07.840 So demand is in a separate is in a very 0:08:07.840 --> 0:08:09.960 different place than it was in twenty twenty one, But 0:08:10.080 --> 0:08:12.679 so is supply, and I think that if you're taking 0:08:12.720 --> 0:08:14.840 policy steps that are going to push out supply, or 0:08:14.840 --> 0:08:17.040 supply is moving out for reasons other than policy, for 0:08:17.080 --> 0:08:20.120 instance AI, which I find difficult to quantify, but a 0:08:20.160 --> 0:08:22.480 lot of people put a lot of faith in if 0:08:22.520 --> 0:08:25.320 supply is moving out for whatever reasons, it can accommodate 0:08:25.360 --> 0:08:27.840 increasing demand, and so the effect on prices could be 0:08:27.920 --> 0:08:28.440 very different. 0:08:28.960 --> 0:08:31.400 On higher goods inflation, there is a prevailing narrative that 0:08:31.400 --> 0:08:33.080 the terroist policy has a lot to do with what's 0:08:33.080 --> 0:08:35.160 been pushing that up, and you kind of push back 0:08:35.160 --> 0:08:36.480 against that. You did that in the speech that you 0:08:36.480 --> 0:08:39.720 delivered at Columbia as well. At the same time, you 0:08:39.720 --> 0:08:42.480 talk a lot about humility, how much uncertainty there is. 0:08:42.480 --> 0:08:44.079 I think you nodded to Mervin King in that speech 0:08:44.120 --> 0:08:45.600 and what he's written about uncertainty. 0:08:46.160 --> 0:08:47.040 What's it going to take. 0:08:47.679 --> 0:08:49.200 Do you feel like you have a grasp of the 0:08:49.200 --> 0:08:51.000 effect of the tarist policy thus far or are you 0:08:51.080 --> 0:08:52.800 still waiting to figure out sort of what that's going 0:08:52.800 --> 0:08:54.520 to mean for the economy broadly, And yes when it 0:08:54.520 --> 0:08:55.720 comes to goods inflation. 0:08:56.040 --> 0:08:58.320 Yeah, So look in the speech I did discuss how 0:08:58.320 --> 0:09:01.760 there's this consensus has emerged that tariffs are a significant 0:09:01.840 --> 0:09:04.440 driver of inflation in the same way consensus emerged earlier 0:09:04.480 --> 0:09:06.080 in the year the tariffs are going to drive some 0:09:06.120 --> 0:09:11.200 sort of crazy recession, you know that was there. And 0:09:11.240 --> 0:09:13.000 I think that consensus is wrong, and I think and 0:09:13.000 --> 0:09:17.520 I think it's complacent. I described camera factuals, right. If 0:09:17.559 --> 0:09:20.920 you're describing a result in prices to tariffs, you need 0:09:20.960 --> 0:09:23.679 to say what the world would have been like without tariffs. Now, 0:09:23.840 --> 0:09:25.880 what most people do is they look at what we 0:09:25.920 --> 0:09:27.880 call the pre trends, what were the trends of various 0:09:27.920 --> 0:09:29.640 items before tariffs? 0:09:29.720 --> 0:09:29.840 Right? 0:09:30.160 --> 0:09:33.320 And most people select pre trends from the two decades 0:09:33.360 --> 0:09:36.960 before the pandemic, right when the world was very, very different. 0:09:37.160 --> 0:09:39.680 I don't think that that's really appropriate. Instead, the counter 0:09:39.760 --> 0:09:41.720 factors that I want to look at that I describe 0:09:42.040 --> 0:09:44.480 in the speech and I include pictures for them, are 0:09:44.600 --> 0:09:48.559 two things. One what are imported goods imported core goods 0:09:48.640 --> 0:09:51.480 in the PC index doing relative to overall core goods? 0:09:51.800 --> 0:09:55.319 And two what are what's happening on an international basis? 0:09:55.360 --> 0:09:58.200 And in both of those cases, I don't see anything 0:09:58.240 --> 0:10:00.439 that would indicate to me that tariffs are the are 0:10:00.600 --> 0:10:02.920 the driver of core goods inflation. When you look at 0:10:02.920 --> 0:10:06.960 imported goods versus overall core goods, they're inflating at similar rates. 0:10:07.200 --> 0:10:09.600 Importive goods don't stick out. We look at US core 0:10:09.640 --> 0:10:12.360 goods versus other countries. Again, US core goods are in 0:10:12.400 --> 0:10:13.920 the middle of the pack, and there hasn't been a 0:10:14.000 --> 0:10:15.880 change that would indicate to me that there's some sort 0:10:15.880 --> 0:10:18.319 of very significant terror show. So I think it's actually 0:10:18.400 --> 0:10:22.040 quite complacent for people to ascribe all this inflation to tariffs. 0:10:22.160 --> 0:10:24.480 And indeed, if you look at CPI core goods, and 0:10:24.520 --> 0:10:27.280 CPI bottomed down in the middle of last year, right 0:10:27.520 --> 0:10:29.480 seven or eight months before tariffs were implemented. 0:10:29.760 --> 0:10:31.800 I just want to get a sense before you leave us, 0:10:31.840 --> 0:10:33.520 how are you thinking about the next meeting, because it 0:10:33.520 --> 0:10:36.120 couldn't potentially be your last. Do you plan on dissenting 0:10:36.240 --> 0:10:37.960 in favor of fifty basis point cut again? 0:10:38.320 --> 0:10:41.160 Look, I plan on pushing for the policy that I 0:10:41.200 --> 0:10:43.480 think is appropriate at the time. I will say, when 0:10:43.480 --> 0:10:45.400 I got to the FED, we hadn't cut rates at 0:10:45.400 --> 0:10:47.960 all this year, and so it was very important for 0:10:48.040 --> 0:10:51.040 us to move rates down quickly. Since then, we've pushed 0:10:51.080 --> 0:10:54.079 rates down three times seventy five basis points of cuts 0:10:54.080 --> 0:10:56.560 to the policy rate, so the need for me to 0:10:56.559 --> 0:10:59.520 dissent for fifty becomes a little bit less as we 0:10:59.559 --> 0:11:01.520 come down. I haven't yet decided whether I'm going to 0:11:01.520 --> 0:11:03.560 push for twenty five or fifty next meeting. I think 0:11:03.600 --> 0:11:06.680 it depends on a variety of factors. So I could 0:11:06.720 --> 0:11:09.160 see voting for twenty five, but I do think it's 0:11:09.200 --> 0:11:11.880 important that we continue steadily reducing the policy rate. 0:11:12.040 --> 0:11:13.679 So basically, you'll vote for twenty five with the rest 0:11:13.679 --> 0:11:15.360 of the committee's there. If they're not going to push 0:11:15.360 --> 0:11:20.480 through twenty five, you may alert everyone of your disfatisfaction 0:11:20.600 --> 0:11:21.720 with them by going for fifty. 0:11:22.559 --> 0:11:25.839 Well, no, it depends. I think I want to see 0:11:25.880 --> 0:11:27.960 the data. You know, we're still witting on a lot 0:11:27.960 --> 0:11:29.320 of data because of the shutdown, right, so I want 0:11:29.360 --> 0:11:31.480 to see what the data do to my forecast going forward, 0:11:31.720 --> 0:11:33.840 and they and how they change my forecast going forward. 0:11:33.880 --> 0:11:35.079 But the truth is that I think that it was 0:11:35.120 --> 0:11:38.240 really important to vote to sorry to cut in bigger 0:11:38.240 --> 0:11:42.120 clips when policy was very high. As we continue reducing policy, 0:11:42.240 --> 0:11:44.240 I think you sort of get into into territory where 0:11:44.280 --> 0:11:47.199 you can start micromanaging instead of big instead of big 0:11:47.240 --> 0:11:49.480 cuts and I don't know whether we're here yet or 0:11:49.480 --> 0:11:51.240 it would sort of still take a couple more cuts 0:11:51.240 --> 0:11:52.839 to get there. But at some point you sort of 0:11:52.880 --> 0:11:54.800 start to become okay with sort of steady twenty five 0:11:54.800 --> 0:11:56.680 business point cuts instead of fifty business point cuts. 0:11:56.679 --> 0:11:58.160 Do you think it's going to be your last meeting? 0:11:58.280 --> 0:12:00.199 Has the White House reached out about whether or not 0:12:00.240 --> 0:12:01.400 you were going to stay on at the FED? 0:12:01.960 --> 0:12:02.720 I have no idea. 0:12:02.800 --> 0:12:04.760 I mean, look, you know, if nobody is confirmed in 0:12:04.800 --> 0:12:07.360 my seat by January thirty, first I assume that I 0:12:07.360 --> 0:12:07.800 will stay. 0:12:07.880 --> 0:12:08.800 I will stay in my seat. 0:12:09.080 --> 0:12:11.360 You know, you can stay in a seat until a 0:12:11.400 --> 0:12:15.120 successor is confirmed, and then beyond beyond that, you know, 0:12:15.120 --> 0:12:18.240 it'll all depend on who the President ultimately nominates to 0:12:18.280 --> 0:12:21.800 be the next chairman of the FED, because it'll depend on, 0:12:22.000 --> 0:12:23.679 you know, what seats are available and who the President 0:12:23.720 --> 0:12:24.480 wants to fill them. 0:12:24.360 --> 0:12:26.760 When it comes to the next chairman of the Federal Reserve. 0:12:26.880 --> 0:12:29.440 There are two individuals that you've worked closely with just 0:12:29.480 --> 0:12:31.600 this year alone, Kevin Hassett of course, and you were 0:12:31.880 --> 0:12:34.400 at the White House, and also Christopher Wallernent Waller of. 0:12:34.400 --> 0:12:35.360 Course with you at the FED. 0:12:35.640 --> 0:12:38.120 Can you just give us your evaluation of both those individuals, 0:12:38.160 --> 0:12:41.160 given the fact that you have a very good, I 0:12:41.160 --> 0:12:42.800 imagine relationship with both of them. 0:12:43.200 --> 0:12:43.440 Yeah. 0:12:43.480 --> 0:12:47.440 Look, they're both supremely talented economists and extremely effective individuals 0:12:47.440 --> 0:12:48.960 that I have the utmost respect for, and I think 0:12:48.960 --> 0:12:51.760 the country would be very lucky to have either of them. 0:12:52.160 --> 0:12:54.400 A quick question just about what you've witnessed in terms 0:12:54.440 --> 0:12:55.840 of the chairman's role at the FED. 0:12:55.880 --> 0:12:57.000 You've been there for a few months. 0:12:58.120 --> 0:13:00.160 Is there anything that's surprised you about the way that 0:13:00.200 --> 0:13:02.880 fed Share Powell is able to kind of go to 0:13:02.920 --> 0:13:05.520 get people to galvanize themselves around any kind of unanimity. 0:13:05.520 --> 0:13:06.840 The way that he runs the committee. I think we 0:13:06.880 --> 0:13:08.920 think about the fed sharers this kind of principal position. 0:13:08.960 --> 0:13:10.840 The President kind of makes us think that way that 0:13:10.880 --> 0:13:12.280 this is going to be a highly persons have a 0:13:12.320 --> 0:13:15.240 lot of determinism himself, but the FED Chair's responsibility is 0:13:15.240 --> 0:13:17.600 to try to get everybody on board with decisions. What 0:13:17.640 --> 0:13:19.600 if you wouldness about fed Share Powell's ability to do that, 0:13:19.640 --> 0:13:21.840 what would you say to the president down that facet 0:13:21.960 --> 0:13:23.680 a FED chair has to have to be effective. 0:13:24.160 --> 0:13:26.640 Look, you know, I think that there's obviously a lot 0:13:26.640 --> 0:13:29.840 of people on the committee who are not comfortable with 0:13:29.840 --> 0:13:33.320 with three cuts. And I think that's the wrong economic 0:13:33.360 --> 0:13:35.040 position at the moment, given the data that we have 0:13:35.040 --> 0:13:36.960 available to us, and the forecast that we have available 0:13:36.960 --> 0:13:39.880 to us, and the very well known, very well understood 0:13:39.960 --> 0:13:43.360 upward biases that are that are affecting inflation measurement at 0:13:43.360 --> 0:13:45.600 this moment in time, I think that's the wrong the 0:13:45.600 --> 0:13:48.400 wrong view, no question about it. Nevertheless, I think you 0:13:48.480 --> 0:13:50.880 have to give Chairman Powell, you know, a credit for 0:13:50.920 --> 0:13:53.839 having wrangled, you know, wrangled three cuts out of these 0:13:53.880 --> 0:13:56.600 guys in succession. And and it's a it's a it's 0:13:56.640 --> 0:13:58.319 a it's a it's a cat hurting task. 0:13:58.760 --> 0:13:58.840 Uh. 0:13:58.960 --> 0:14:00.600 And you know, and I think we have to, you know, 0:14:00.720 --> 0:14:01.760 we got to give a little. 0:14:01.559 --> 0:14:02.079 Credit for that. 0:14:03.200 --> 0:14:06.520 Stay with us, multiple IMPEX surveillance coming up off to. 0:14:06.559 --> 0:14:17.840 This still with us as Governor Stephen Myron, he heard 0:14:17.840 --> 0:14:20.080 that Neil Dutta of Renmack was coming up. So we 0:14:20.120 --> 0:14:22.720 want to stay around for this discussion because you heard 0:14:22.720 --> 0:14:24.520 something in the green room. You liked what Neil had 0:14:24.560 --> 0:14:26.960 to say, and you were potentially going to include it 0:14:27.040 --> 0:14:28.440 maybe in some of your speeches or right. 0:14:28.320 --> 0:14:29.040 Here on the program. 0:14:29.200 --> 0:14:31.160 I did look, I think I think Neil said something 0:14:31.360 --> 0:14:33.960 very eloquently which which I think is a really fantastic 0:14:34.000 --> 0:14:35.680 way of framing it, which is Neil said that there 0:14:35.680 --> 0:14:39.760 are three drivers of inflation. There's shelter, there's labor, and 0:14:39.800 --> 0:14:43.200 there's energy, and neither of them is remotely flashing orange 0:14:43.240 --> 0:14:44.720 right now, let alone the red. When you look at 0:14:44.720 --> 0:14:47.000 those three drivers, it looks like cool all around. So 0:14:47.080 --> 0:14:48.800 as a result, you know, you got to make some 0:14:48.800 --> 0:14:50.440 conclusions about where inflation's going. 0:14:50.360 --> 0:14:54.080 Over the next year or two. Yel what do you 0:14:54.120 --> 0:14:55.760 want me to say? I mean, it's true. 0:14:55.960 --> 0:14:57.920 I mean, well, so, I think the one thing I 0:14:57.960 --> 0:15:00.960 would say is that everyone's kind of lamenting the fact 0:15:00.960 --> 0:15:04.080 that the BLS made these assumptions around the last inflation number. 0:15:04.160 --> 0:15:07.760 What if assuming zero for shelter inflation was the right assumption. 0:15:08.400 --> 0:15:10.600 You know, there's a lot of focus on non housing 0:15:10.640 --> 0:15:13.360 services as well, but as the labor markets continue to 0:15:13.360 --> 0:15:15.960 cool off, the prices for those things will also cool off. 0:15:15.960 --> 0:15:18.440 I mean, the quits rate is actually at a cycle 0:15:18.480 --> 0:15:22.320 low in the private sector, so that tells me that 0:15:22.400 --> 0:15:25.520 workers don't really have the confidence to leave their jobs, 0:15:25.600 --> 0:15:28.120 which means that the balance of power in the jobs 0:15:28.120 --> 0:15:32.440 market I think has shifted towards employers, and so I 0:15:32.480 --> 0:15:36.120 think that's encouraging for the inflation outlook. And with respect 0:15:36.120 --> 0:15:40.400 to energy, I mean, look, retail gasoline prices are falling now. 0:15:40.400 --> 0:15:42.840 Obviously that's sort of a one time thing, but it 0:15:42.880 --> 0:15:45.920 will take pressure off of household inflation expectations, which the 0:15:45.960 --> 0:15:51.080 FED says that they're concerned about. So I'm encouraged by 0:15:51.080 --> 0:15:54.160 the inflation outlook, and I think the balance of risks 0:15:54.440 --> 0:15:57.720 are such that the FED should be supporting growth. 0:15:57.960 --> 0:16:00.440 But you're less encouraged by what's going on in the 0:16:00.480 --> 0:16:01.080 labor market. 0:16:01.160 --> 0:16:02.200 Is that correct? 0:16:03.040 --> 0:16:04.800 I mean, what's there to be encouraged about. All the 0:16:04.880 --> 0:16:08.040 jobs growth is basically coming from healthcare. I mean that 0:16:08.160 --> 0:16:11.240 was true in the last number as well. Cyclical industries 0:16:11.280 --> 0:16:13.560 are still slowing, and you have to look at you know, 0:16:13.560 --> 0:16:16.800 to me, it's important to kind of think about, you know, 0:16:16.840 --> 0:16:19.160 sort of an add up exercise looking at the underbelly 0:16:19.200 --> 0:16:21.160 of the jobs market and like where's the jobs growth 0:16:21.240 --> 0:16:23.240 coming from? You know, home build we talk about record 0:16:23.280 --> 0:16:25.520 high profit margins. A lot of that's driven by tech 0:16:25.840 --> 0:16:29.280 that's not a big driver of employment. You look at 0:16:29.280 --> 0:16:32.560 the margins for home builders home builder profit margins have 0:16:32.640 --> 0:16:34.840 been eroding. I mean, it's very challenging to keep buying 0:16:34.880 --> 0:16:37.320 people down at you know, at these at the rates 0:16:37.320 --> 0:16:40.440 that they've been doing. That opens up risk for residential 0:16:40.480 --> 0:16:44.320