1 00:00:02,440 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:12,000 --> 00:00:15,600 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 3 00:00:15,640 --> 00:00:19,000 Speaker 2: with Paul Sweeney. Join us each day for insight from 4 00:00:19,000 --> 00:00:23,159 Speaker 2: the best in economics, finance, investment, and international relations. You 5 00:00:23,200 --> 00:00:26,520 Speaker 2: can also watch the show live on YouTube. Visit the 6 00:00:26,520 --> 00:00:31,320 Speaker 2: Bloomberg Podcast channel on YouTube to see the show weekday 7 00:00:31,320 --> 00:00:34,320 Speaker 2: mornings from seven to ten am Eastern from our global 8 00:00:34,360 --> 00:00:39,040 Speaker 2: headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 9 00:00:39,400 --> 00:00:42,920 Speaker 2: or anywhere else you listen. And always I'm Bloomberg Radio, 10 00:00:43,120 --> 00:00:47,760 Speaker 2: the Bloomberg Terminal and the Bloomberg Business app from Wyoming. 11 00:00:47,840 --> 00:00:52,320 Speaker 2: From Jackson Hole, Wyoming for our audience worldwide, Bloomberg Surveillance 12 00:00:52,680 --> 00:00:54,520 Speaker 2: on television, on radio. 13 00:00:54,720 --> 00:00:57,280 Speaker 3: And it is a perfect, perfect. 14 00:00:56,840 --> 00:00:59,880 Speaker 2: August Friday here in Jackson Hall with a back to 15 00:01:00,120 --> 00:01:02,640 Speaker 2: up with the political miles from the Democratic Convention. I 16 00:01:02,640 --> 00:01:05,160 Speaker 2: know you stayed up Lisa time and watch the entire 17 00:01:05,720 --> 00:01:07,240 Speaker 2: every minute of it as well. 18 00:01:07,400 --> 00:01:09,040 Speaker 4: But now we turn to the Powell speech. 19 00:01:09,319 --> 00:01:11,880 Speaker 1: The key question here is how much can this fed 20 00:01:11,959 --> 00:01:14,120 Speaker 1: share ratify what we're seeing in markets, which is the 21 00:01:14,160 --> 00:01:16,959 Speaker 1: expectation for a rate cutting cycle after one of the 22 00:01:17,000 --> 00:01:20,919 Speaker 1: longest periods without any move whatsoever after a rate hiking 23 00:01:20,959 --> 00:01:22,760 Speaker 1: cycle by a federal reserve and modern history. 24 00:01:22,760 --> 00:01:24,560 Speaker 5: A question here, can they stick this. 25 00:01:24,520 --> 00:01:27,200 Speaker 1: Soft landing and will think give any guidance whatsoever to 26 00:01:27,880 --> 00:01:28,720 Speaker 1: a lot of people think. 27 00:01:28,640 --> 00:01:28,880 Speaker 3: That it's not. 28 00:01:29,120 --> 00:01:32,080 Speaker 2: I'm data dependent of at fourteen cups of coffee this morning. 29 00:01:32,120 --> 00:01:33,040 Speaker 4: They're data dependent. 30 00:01:33,080 --> 00:01:35,640 Speaker 2: They're going to get out to the speech today and 31 00:01:35,680 --> 00:01:39,919 Speaker 2: then on to the September sixth employment report, and maybe 32 00:01:39,959 --> 00:01:42,640 Speaker 2: we staggered to the believe it's September twenty. 33 00:01:42,440 --> 00:01:44,800 Speaker 1: One, meeting September eighteen. They're going to give us ense 34 00:01:44,959 --> 00:01:47,400 Speaker 1: whether they of whether they actually are. 35 00:01:47,319 --> 00:01:48,800 Speaker 5: Going to cut rates or not. 36 00:01:49,040 --> 00:01:50,920 Speaker 1: A key question that I have is how far have 37 00:01:51,000 --> 00:01:52,960 Speaker 1: we already come. Take a look at We are seeing 38 00:01:52,960 --> 00:01:55,640 Speaker 1: a rally right now in markets after yesterday's sell off, 39 00:01:55,680 --> 00:01:56,680 Speaker 1: which is the biggest. 40 00:01:56,320 --> 00:01:58,880 Speaker 5: In two weeks. But what I find fascinating is just. 41 00:01:58,800 --> 00:02:00,480 Speaker 1: That we've seen the two year yield to move so 42 00:02:00,560 --> 00:02:02,520 Speaker 1: much more than anything else. It is down more than 43 00:02:02,520 --> 00:02:05,080 Speaker 1: a percentage point from the last time that we were 44 00:02:05,120 --> 00:02:07,480 Speaker 1: here in Jackson Hole August twenty sixth, and. 45 00:02:07,440 --> 00:02:08,160 Speaker 5: You see that move. 46 00:02:08,280 --> 00:02:11,160 Speaker 1: We're up more than twenty five percent since that day 47 00:02:11,480 --> 00:02:12,440 Speaker 1: on the s and P five. 48 00:02:12,440 --> 00:02:14,520 Speaker 2: I'm going to get out front with an essay that 49 00:02:14,560 --> 00:02:17,280 Speaker 2: I only discovered. Thank you Peter or zagat Lazard for 50 00:02:17,320 --> 00:02:19,760 Speaker 2: this and that. What we're battling with here in the 51 00:02:19,840 --> 00:02:22,640 Speaker 2: years and years i've come here is we're still coming 52 00:02:22,680 --> 00:02:26,320 Speaker 2: off the pandemic. Peter or Zag with Robin Brooks at 53 00:02:26,320 --> 00:02:30,720 Speaker 2: Brookings writing a beautiful essay about do we really know 54 00:02:30,840 --> 00:02:33,720 Speaker 2: where we are off the pandemic? And that's an overlain 55 00:02:33,840 --> 00:02:36,320 Speaker 2: not being discussed here is where are we in that 56 00:02:36,360 --> 00:02:37,120 Speaker 2: continuum and. 57 00:02:37,120 --> 00:02:39,480 Speaker 1: Just sort of accentuating that overlay where the jobs or 58 00:02:39,560 --> 00:02:42,920 Speaker 1: visions that we had just earlier this week the idea 59 00:02:43,000 --> 00:02:45,840 Speaker 1: of eight hundred and eighteen thousand jobs fewer that were 60 00:02:45,840 --> 00:02:49,079 Speaker 1: added in the year ended in March versus the initially 61 00:02:49,080 --> 00:02:51,600 Speaker 1: reported we've got an incredible lineup today. We do have 62 00:02:51,639 --> 00:02:53,720 Speaker 1: about a six ten percent gain in the SMP. I 63 00:02:53,800 --> 00:02:55,840 Speaker 1: want to just get set up with Michael McHugh sitting 64 00:02:55,840 --> 00:02:57,560 Speaker 1: on set with us not wearing his hat. He's been 65 00:02:57,560 --> 00:03:02,120 Speaker 1: told not to by HMRT. Why because I think your 66 00:03:02,160 --> 00:03:04,440 Speaker 1: ten gallon hat looks absolutely fabulous when you head to 67 00:03:04,440 --> 00:03:06,280 Speaker 1: the rodeo, Mike, what are you expecting today? 68 00:03:06,400 --> 00:03:08,960 Speaker 3: Smaller hat this year? Maybe only five six gallons. 69 00:03:10,520 --> 00:03:13,200 Speaker 6: We're expecting kind of what you laid out with Tom, 70 00:03:13,280 --> 00:03:16,680 Speaker 6: the idea that the FED is fed chairman is going 71 00:03:16,680 --> 00:03:21,440 Speaker 6: to ratify the idea that rate cuts are coming without 72 00:03:21,800 --> 00:03:26,880 Speaker 6: absolutely promising it or giving any kind of amount, And 73 00:03:26,919 --> 00:03:29,600 Speaker 6: I think the markets have basically priced that in. The 74 00:03:29,720 --> 00:03:32,560 Speaker 6: rate cuts are coming is what's got the two year 75 00:03:32,680 --> 00:03:37,280 Speaker 6: yield lower. But going beyond that, the question then becomes 76 00:03:37,320 --> 00:03:39,000 Speaker 6: where do they stop? How far do they go and 77 00:03:39,040 --> 00:03:41,960 Speaker 6: how fast do they get there? And that's something else 78 00:03:42,000 --> 00:03:43,280 Speaker 6: we probably won't hear today. 79 00:03:43,560 --> 00:03:47,040 Speaker 2: What's so important? Mike McKee's the expert on this, much 80 00:03:47,120 --> 00:03:50,160 Speaker 2: less so me. The number one question I get here 81 00:03:50,200 --> 00:03:53,600 Speaker 2: at Jackson Hole, particularly by media, why hasn't there been 82 00:03:53,640 --> 00:03:54,320 Speaker 2: a recession? 83 00:03:54,600 --> 00:03:57,160 Speaker 4: Mike McKee? Why haven't we had the recession? 84 00:03:57,480 --> 00:04:01,240 Speaker 2: Everyone except Rafaelbostis predicted since time began we sent at 85 00:04:01,320 --> 00:04:02,120 Speaker 2: least out shopping. 86 00:04:05,320 --> 00:04:08,560 Speaker 6: We've had a number of reasons. Two things in particular, 87 00:04:08,560 --> 00:04:11,320 Speaker 6: well three things in particular. One is the pandemic savings. 88 00:04:11,600 --> 00:04:13,920 Speaker 6: The people got extra checks during the pandemic and they 89 00:04:13,960 --> 00:04:18,720 Speaker 6: had extra money to spend. We've also had some government 90 00:04:18,880 --> 00:04:24,640 Speaker 6: fiscal spending with the IRA and the other acts that 91 00:04:24,720 --> 00:04:27,960 Speaker 6: the Biden administration got passed. Most of that money hasn't 92 00:04:28,000 --> 00:04:30,920 Speaker 6: gone out yet, but some has and businesses have started 93 00:04:30,920 --> 00:04:34,040 Speaker 6: committing based on the idea that it's going to come in. 94 00:04:34,320 --> 00:04:37,799 Speaker 6: And then, of course, because unemployment was low, wages were rising, 95 00:04:37,880 --> 00:04:42,599 Speaker 6: and on the political side, wages have been rising faster 96 00:04:42,640 --> 00:04:45,200 Speaker 6: than inflation. But nobody really gets that. But people have 97 00:04:45,240 --> 00:04:46,840 Speaker 6: had enough money to spend well. 98 00:04:46,839 --> 00:04:48,960 Speaker 1: I will say that when I went shopping, I went 99 00:04:49,040 --> 00:04:51,440 Speaker 1: shopping in the Atlanta Airport because we were laid over 100 00:04:51,440 --> 00:04:52,240 Speaker 1: there for about. 101 00:04:52,040 --> 00:04:53,120 Speaker 5: Three and a half hours. 102 00:04:53,160 --> 00:04:55,520 Speaker 1: So that really is the key place that we want 103 00:04:55,520 --> 00:04:57,360 Speaker 1: to focus right now, and we are so glad to 104 00:04:57,400 --> 00:04:59,240 Speaker 1: have shopping expert in the Atlanta Airport. 105 00:04:59,279 --> 00:05:00,320 Speaker 5: Atlanta fed price is it at. 106 00:05:00,360 --> 00:05:02,920 Speaker 1: Raphael Bostik, who is with us here on site, really 107 00:05:02,960 --> 00:05:05,800 Speaker 1: appreciate you being with us. President bos Tak, I want 108 00:05:05,800 --> 00:05:07,760 Speaker 1: to start with a change in tone that we have 109 00:05:07,839 --> 00:05:10,320 Speaker 1: heard from you over the past couple of weeks. It 110 00:05:10,360 --> 00:05:13,520 Speaker 1: seems like three months ago you were not that urgent, 111 00:05:13,880 --> 00:05:17,200 Speaker 1: urgently feeling like we needed to see lower rates. You've 112 00:05:17,240 --> 00:05:20,480 Speaker 1: kind of changed recently and really seen the need for it. 113 00:05:20,839 --> 00:05:23,440 Speaker 7: What's caused that change, Well, I think two things have 114 00:05:23,600 --> 00:05:25,599 Speaker 7: really happened to lead to that change. 115 00:05:25,640 --> 00:05:26,839 Speaker 8: First of all, good morning. 116 00:05:26,560 --> 00:05:28,320 Speaker 7: It's good to see Y'all's good to see, really good 117 00:05:28,360 --> 00:05:31,520 Speaker 7: to be here. The one change is that inflation has 118 00:05:31,600 --> 00:05:35,240 Speaker 7: moved a lot faster than I had anticipated. We've for 119 00:05:35,279 --> 00:05:38,679 Speaker 7: the last two years have really been in a mission 120 00:05:39,200 --> 00:05:42,200 Speaker 7: of getting inflation back to our two percent goal. We 121 00:05:42,240 --> 00:05:44,599 Speaker 7: had seen a lot of progress early this year, it 122 00:05:44,640 --> 00:05:46,280 Speaker 7: seemed like it may have been stalling out. 123 00:05:46,720 --> 00:05:48,320 Speaker 8: I'm really gratified. 124 00:05:47,760 --> 00:05:50,200 Speaker 7: To see that it's continuing back on that pace, and 125 00:05:50,240 --> 00:05:52,760 Speaker 7: that's a very good thing. And then the second part 126 00:05:52,839 --> 00:05:56,080 Speaker 7: is the employment side. So we know that unemployment rates 127 00:05:56,080 --> 00:05:58,320 Speaker 7: have gone from about three point four percent to four 128 00:05:58,320 --> 00:06:02,000 Speaker 7: point three percent. That's a big change. Now it's from 129 00:06:02,240 --> 00:06:04,880 Speaker 7: super hot to solid, right. So I don't want to 130 00:06:04,920 --> 00:06:07,360 Speaker 7: make it seem like labor markets are a week, but 131 00:06:07,600 --> 00:06:09,680 Speaker 7: it really starts to tell me that things are much 132 00:06:09,720 --> 00:06:12,800 Speaker 7: more in balance than they have been for quite some time. 133 00:06:13,040 --> 00:06:16,840 Speaker 7: And that's really a sign that our policy has done 134 00:06:16,880 --> 00:06:20,359 Speaker 7: his job, and now we need to start the path 135 00:06:20,480 --> 00:06:22,760 Speaker 7: back to our more neutral stance. 136 00:06:22,960 --> 00:06:24,720 Speaker 2: More than anyone at the FED, you've got a more 137 00:06:24,760 --> 00:06:27,400 Speaker 2: holistic view with John Show and at Stanford, with all 138 00:06:27,440 --> 00:06:31,279 Speaker 2: the academics you've done in southern California about racism, about 139 00:06:31,320 --> 00:06:34,599 Speaker 2: society and all. We're in the maelstream of a political election. 140 00:06:34,720 --> 00:06:36,920 Speaker 2: Greg Ypp, writing in the Wall Street Journal in the 141 00:06:37,000 --> 00:06:42,360 Speaker 2: last twenty four hours, says, the politicians are not practicing economics. 142 00:06:42,600 --> 00:06:44,400 Speaker 4: How does the FED get to the. 143 00:06:44,400 --> 00:06:48,720 Speaker 2: September meeting, get to the November meeting and avoid the 144 00:06:48,760 --> 00:06:52,600 Speaker 2: first Tuesday of November. How do you maintain FED independence 145 00:06:52,800 --> 00:06:55,080 Speaker 2: with this crazy economic dialogue? 146 00:06:55,080 --> 00:06:58,039 Speaker 7: We're here so I actually don't think it's that hard 147 00:06:58,080 --> 00:07:00,960 Speaker 7: to remain independent. I think for us us the job 148 00:07:01,080 --> 00:07:04,640 Speaker 7: is to keep our heads down, do our work, read 149 00:07:04,680 --> 00:07:08,440 Speaker 7: the data, study it, get input from businesses and people 150 00:07:08,520 --> 00:07:11,400 Speaker 7: all over this country to get a good handle about 151 00:07:11,400 --> 00:07:13,920 Speaker 7: where the economy is, how it's moving, and how people 152 00:07:13,960 --> 00:07:16,680 Speaker 7: feel is going to move forward, and then use that 153 00:07:16,760 --> 00:07:20,200 Speaker 7: information to figure out what the most appropriate policy is. 154 00:07:20,600 --> 00:07:22,920 Speaker 7: The worst thing that we can do is not do 155 00:07:23,280 --> 00:07:27,760 Speaker 7: the right thing for reasons other than this not being 156 00:07:27,760 --> 00:07:30,320 Speaker 7: the right thing right and to me, I think we 157 00:07:30,440 --> 00:07:35,040 Speaker 7: must at all times be true to Our job is 158 00:07:35,080 --> 00:07:38,280 Speaker 7: to set up a long run environment for this economy 159 00:07:38,320 --> 00:07:41,320 Speaker 7: so that it's got a firm foundation, and that means 160 00:07:41,360 --> 00:07:44,840 Speaker 7: we can't be focused and pulled into the shorter run issues. 161 00:07:45,040 --> 00:07:46,160 Speaker 8: So I'm just gonna keep my head down. 162 00:07:46,280 --> 00:07:49,360 Speaker 7: The FED has a long history of doing whatever it takes, 163 00:07:49,400 --> 00:07:52,520 Speaker 7: whenever it takes, and that's what I expect we'll do too. 164 00:07:53,040 --> 00:07:55,520 Speaker 6: You've been criticized. The Fed's been criticized by a lot 165 00:07:55,520 --> 00:07:57,920 Speaker 6: of people on Wall Street who say you're too data dependent, 166 00:07:58,000 --> 00:08:01,360 Speaker 6: you're looking backwards too much. I don't think they realize 167 00:08:01,360 --> 00:08:03,960 Speaker 6: that you're constantly talking to people in your district to 168 00:08:04,000 --> 00:08:05,320 Speaker 6: get the current lay of the land. 169 00:08:05,600 --> 00:08:06,880 Speaker 3: So what is that lay of the lane? 170 00:08:06,920 --> 00:08:09,880 Speaker 6: What are CEOs telling you about their plans and their 171 00:08:09,960 --> 00:08:12,760 Speaker 6: view of demand and business going forward? 172 00:08:12,960 --> 00:08:15,840 Speaker 7: Well, you should tell people more often. We spend a 173 00:08:15,840 --> 00:08:18,440 Speaker 7: lot of time looking forward. That's actually a really important thing. 174 00:08:18,680 --> 00:08:22,200 Speaker 7: We do surveys. Our bank has a lot of surveys 175 00:08:22,200 --> 00:08:24,360 Speaker 7: that we do, asking what's your outlook for the next 176 00:08:24,360 --> 00:08:25,760 Speaker 7: six months, for the next twelve months. 177 00:08:25,760 --> 00:08:28,080 Speaker 8: In the light we hear a couple things. 178 00:08:28,320 --> 00:08:32,800 Speaker 7: So one we hear the demand for product is weakening. 179 00:08:32,360 --> 00:08:33,920 Speaker 8: But it's still quite solid. 180 00:08:34,640 --> 00:08:38,760 Speaker 7: We hear that businesses are not expecting to expand their 181 00:08:38,760 --> 00:08:42,080 Speaker 7: workforces in a very significant way, but they're also not 182 00:08:42,120 --> 00:08:44,840 Speaker 7: expecting to light people off that that is not the mode. 183 00:08:44,880 --> 00:08:47,200 Speaker 7: That they're really in a steady state where they can 184 00:08:47,240 --> 00:08:50,120 Speaker 7: handle where things are, and their outlook for the next 185 00:08:50,280 --> 00:08:53,400 Speaker 7: six to twelve months is by and large positive. Maybe 186 00:08:53,400 --> 00:08:56,480 Speaker 7: a little lower in terms of revenues and profits from 187 00:08:56,600 --> 00:08:58,240 Speaker 7: where we've been last two or three years, but last 188 00:08:58,280 --> 00:09:01,559 Speaker 7: two or three years have been record breaking pretty much 189 00:09:01,600 --> 00:09:04,840 Speaker 7: in every sector, every industry. So it's a solid picture, 190 00:09:05,440 --> 00:09:08,320 Speaker 7: and it's one of the reasons why I do think 191 00:09:08,320 --> 00:09:11,000 Speaker 7: that we've had some space to be patient with our 192 00:09:11,000 --> 00:09:14,119 Speaker 7: policy moves, and we'll just have to see. 193 00:09:13,880 --> 00:09:16,360 Speaker 8: Whether their outlook plays out. I'm hopeful that it does. 194 00:09:16,880 --> 00:09:19,040 Speaker 6: Given the problems least we talked about earlier with the 195 00:09:19,120 --> 00:09:21,280 Speaker 6: data and coming out of the pandemic and everything. How 196 00:09:21,280 --> 00:09:24,760 Speaker 6: certain are you that your data is correct enough that 197 00:09:24,800 --> 00:09:25,959 Speaker 6: you're not behind the curve? 198 00:09:26,640 --> 00:09:30,959 Speaker 7: Well, I mean, we try really hard to get our 199 00:09:31,080 --> 00:09:35,000 Speaker 7: view based on the pulse that business leaders are showing 200 00:09:35,000 --> 00:09:38,240 Speaker 7: at every moment. We talked to folks day to day, 201 00:09:38,400 --> 00:09:41,560 Speaker 7: week to week, and we ask two questions all the time. One, 202 00:09:41,800 --> 00:09:44,080 Speaker 7: what's your outlooked for the next six months, and how 203 00:09:44,120 --> 00:09:46,760 Speaker 7: has that changed relative to where you were two weeks 204 00:09:46,760 --> 00:09:49,360 Speaker 7: ago or three weeks ago. We are trying really hard 205 00:09:49,600 --> 00:09:52,679 Speaker 7: to notice those inflection points so that we can speak 206 00:09:52,679 --> 00:09:55,679 Speaker 7: to that, we can bring that to our policy table 207 00:09:55,720 --> 00:09:58,719 Speaker 7: and make sure that we're not behind the curve. But 208 00:09:59,080 --> 00:10:01,360 Speaker 7: this is a turbulent as you know. I mean, you'll 209 00:10:01,520 --> 00:10:06,360 Speaker 7: recover the economy. Things are happening in unexpected ways, in 210 00:10:06,480 --> 00:10:09,959 Speaker 7: many different venues and many different parts of the economy, 211 00:10:10,200 --> 00:10:13,280 Speaker 7: and so there is a natural trend. There's always some uncertainty, 212 00:10:13,480 --> 00:10:15,559 Speaker 7: and we've just got to sort of navigate our way 213 00:10:15,600 --> 00:10:17,640 Speaker 7: through and do the best that we can to get 214 00:10:17,679 --> 00:10:19,880 Speaker 7: as much information so we can make good policy. What 215 00:10:19,920 --> 00:10:24,520 Speaker 7: does gradual means, Well, that's a very good question. So 216 00:10:25,080 --> 00:10:29,760 Speaker 7: to me, I think it is taking one step at 217 00:10:29,760 --> 00:10:33,440 Speaker 7: a time and after each step, looking around to see 218 00:10:33,440 --> 00:10:34,800 Speaker 7: how the economy is evolved. 219 00:10:34,800 --> 00:10:37,480 Speaker 1: Okay, what everyone's asking is really is that step twenty 220 00:10:37,480 --> 00:10:38,240 Speaker 1: five basis points? 221 00:10:38,320 --> 00:10:41,240 Speaker 5: Is it fifty basis points? Does one mean gradual? And whatnot? 222 00:10:41,720 --> 00:10:45,959 Speaker 7: So I would say this the first step. It will 223 00:10:46,000 --> 00:10:48,120 Speaker 7: depend on what the next couple of data points come in. 224 00:10:48,360 --> 00:10:51,760 Speaker 7: The next couple of data points come in, and inflation 225 00:10:51,920 --> 00:10:55,280 Speaker 7: is moving and unemployment is staying pretty stable, I think 226 00:10:55,720 --> 00:10:56,760 Speaker 7: a move would be on. 227 00:10:56,720 --> 00:10:58,360 Speaker 8: The lower side. 228 00:10:58,679 --> 00:11:01,520 Speaker 7: But there's a there's a narrative that says inflation comes 229 00:11:01,559 --> 00:11:04,079 Speaker 7: in super hot and maybe we don't move at all, 230 00:11:04,720 --> 00:11:08,280 Speaker 7: or that unemployment spikes in an unexpected way and we 231 00:11:08,360 --> 00:11:09,200 Speaker 7: have to move bigger. 232 00:11:09,600 --> 00:11:11,760 Speaker 8: I don't want to really. 233 00:11:11,440 --> 00:11:16,959 Speaker 7: Be sitting on any one action as my modal expectation today. 234 00:11:17,000 --> 00:11:19,440 Speaker 7: I'm really gonna let things play out. And you know, 235 00:11:19,480 --> 00:11:21,240 Speaker 7: one of the things I've learned very much in the 236 00:11:21,280 --> 00:11:25,800 Speaker 7: last four years is that getting too far out ahead 237 00:11:25,800 --> 00:11:28,839 Speaker 7: of what actually happens just causes me. There's been a 238 00:11:28,880 --> 00:11:31,360 Speaker 7: lot of extra energy that I wind up having to 239 00:11:31,400 --> 00:11:34,360 Speaker 7: sort of undo and then get to where the reality is. 240 00:11:34,360 --> 00:11:36,680 Speaker 7: So I really am trying as much as possible to 241 00:11:36,760 --> 00:11:38,800 Speaker 7: be in the moment and of the moment. 242 00:11:39,280 --> 00:11:41,560 Speaker 6: Well, markets are forward looking, they're not in the moment. 243 00:11:41,640 --> 00:11:44,080 Speaker 6: So everybody wants to know where do you end up? 244 00:11:44,080 --> 00:11:46,800 Speaker 6: Where do you think neutral is going to end up 245 00:11:46,880 --> 00:11:48,640 Speaker 6: when you finish your cutting cycle. 246 00:11:48,800 --> 00:11:51,800 Speaker 7: So I'll say two things on this one. In the 247 00:11:51,920 --> 00:11:54,000 Speaker 7: SEPs and the dot plus, we have to put a 248 00:11:54,040 --> 00:11:56,240 Speaker 7: long run number for me. Right now, that long run 249 00:11:56,320 --> 00:11:58,960 Speaker 7: number is three percent. I think it's a little higher 250 00:11:59,000 --> 00:12:01,479 Speaker 7: than where it was that the depths of the pandemic, 251 00:12:02,840 --> 00:12:06,320 Speaker 7: But where that is precisely is unclear. The second thing 252 00:12:06,360 --> 00:12:09,160 Speaker 7: I would say, though, is I've really been focused much 253 00:12:09,200 --> 00:12:11,400 Speaker 7: more on making sure that inflation gets to two percent 254 00:12:11,679 --> 00:12:14,720 Speaker 7: than what a long run number is, and now that 255 00:12:14,760 --> 00:12:19,280 Speaker 7: we're close to moving on that way, that's a question 256 00:12:19,320 --> 00:12:21,440 Speaker 7: that I will spend a lot more time with my 257 00:12:21,520 --> 00:12:25,480 Speaker 7: team trying to figure out. In my building, we started 258 00:12:25,480 --> 00:12:29,520 Speaker 7: to have discussion slash arguments about this, and in my book, 259 00:12:29,559 --> 00:12:32,280 Speaker 7: I get views ranging from two and a half to 260 00:12:32,360 --> 00:12:35,400 Speaker 7: four and a quarter. Right, that's a large range, and 261 00:12:35,480 --> 00:12:38,200 Speaker 7: we're going to have to narrow that down, and so 262 00:12:38,240 --> 00:12:40,960 Speaker 7: I'm really looking forward to a robust discussion that will 263 00:12:40,960 --> 00:12:43,760 Speaker 7: help me get a sense of where I think it is. 264 00:12:43,840 --> 00:12:46,680 Speaker 1: Two years ago, J. Powell's speech was eight minutes long. 265 00:12:46,760 --> 00:12:48,000 Speaker 1: How long do you think this speech. 266 00:12:47,760 --> 00:12:48,120 Speaker 4: Is going to be? 267 00:12:48,640 --> 00:12:50,839 Speaker 7: So you know, I don't get any insights on that. 268 00:12:51,480 --> 00:12:56,319 Speaker 7: Eight is historically a record breaking short. I'm not expecting 269 00:12:56,400 --> 00:12:59,840 Speaker 7: a break records today, but we'll have to see what happens. 270 00:13:00,360 --> 00:13:02,360 Speaker 1: President of the Atlanta Fed, thank you so much for 271 00:13:02,400 --> 00:13:15,680 Speaker 1: being with us. She is former Cleveland FED president Loretta Mester. 272 00:13:15,920 --> 00:13:18,720 Speaker 1: This is the first time that she's joining us as 273 00:13:18,880 --> 00:13:22,240 Speaker 1: a non FED member in ten years. At this Jackson 274 00:13:22,240 --> 00:13:25,880 Speaker 1: Hole meeting, Lorettamester, President Master, I will still call you 275 00:13:25,920 --> 00:13:29,040 Speaker 1: that You've always been a thought leader. How much do 276 00:13:29,080 --> 00:13:33,560 Speaker 1: you hear more dissent than usual among members at a 277 00:13:33,600 --> 00:13:36,160 Speaker 1: time where we really are at a pivot. 278 00:13:36,880 --> 00:13:39,240 Speaker 9: I'm not hearing that much to send Frankly, I think 279 00:13:39,280 --> 00:13:41,440 Speaker 9: we're in a good place in terms of where the 280 00:13:41,480 --> 00:13:44,640 Speaker 9: economy is. If you think about inflation, look how much 281 00:13:44,640 --> 00:13:46,599 Speaker 9: it's come down. You know, we're in two and a 282 00:13:46,679 --> 00:13:50,480 Speaker 9: half percent range, and the labor market is moderating. There's 283 00:13:50,480 --> 00:13:54,240 Speaker 9: definite signs of that, but it's not weak, right, It 284 00:13:54,280 --> 00:13:57,880 Speaker 9: hasn't turned into a strong you know, weakness coming into it. 285 00:13:57,960 --> 00:14:00,680 Speaker 9: So we're in a good spot. And now what the 286 00:14:00,679 --> 00:14:03,920 Speaker 9: Fed needs to do is make sure that it can 287 00:14:04,200 --> 00:14:06,679 Speaker 9: maintain the momentum of inflation going all the way back 288 00:14:06,679 --> 00:14:10,000 Speaker 9: down to two percent while keeping the labor market healthy. 289 00:14:10,040 --> 00:14:12,560 Speaker 9: And I think that's where the focus is gonna be. 290 00:14:12,640 --> 00:14:15,800 Speaker 9: If you remember at the start of the tightening cycle, 291 00:14:16,320 --> 00:14:19,880 Speaker 9: you know, we had to go very aggressively because policy 292 00:14:19,920 --> 00:14:23,240 Speaker 9: wasn't well calibrated to where the economy is and where 293 00:14:23,240 --> 00:14:26,080 Speaker 9: it was going, uh or was and where it was going. 294 00:14:26,200 --> 00:14:28,720 Speaker 9: And now we wanna make sure that you know, the 295 00:14:28,760 --> 00:14:32,160 Speaker 9: FED wants to make sure that policy stays well calibrated 296 00:14:32,200 --> 00:14:34,560 Speaker 9: to the economy. So the discussion now, I think, is 297 00:14:34,600 --> 00:14:37,480 Speaker 9: about we have a dual mandate. We have to focus 298 00:14:37,560 --> 00:14:40,400 Speaker 9: on both parts of that. We have to be forward looking. 299 00:14:40,720 --> 00:14:43,040 Speaker 9: You know, it's where the economy is going, not necessarily 300 00:14:43,040 --> 00:14:46,080 Speaker 9: where it death is here today, but where it's going. 301 00:14:46,600 --> 00:14:49,720 Speaker 9: And that's why I think now it's it's actually appropriate 302 00:14:49,800 --> 00:14:53,000 Speaker 9: to really be thinking about, Okay, it's time now to 303 00:14:53,120 --> 00:14:56,920 Speaker 9: enter this new phase where we can start normalizing the 304 00:14:56,920 --> 00:14:57,640 Speaker 9: policy rate. 305 00:14:58,120 --> 00:15:02,560 Speaker 2: Wall Street and the financial media want specificity, they want certitude, 306 00:15:02,560 --> 00:15:05,120 Speaker 2: they want single point statements. 307 00:15:04,600 --> 00:15:06,000 Speaker 4: About exactly where we are. 308 00:15:06,600 --> 00:15:09,320 Speaker 2: The reality is just a look at productivity is a 309 00:15:09,320 --> 00:15:13,440 Speaker 2: capital analysis, a labor analysis, and an all in analysis, 310 00:15:13,520 --> 00:15:17,600 Speaker 2: call it total factor productivity. The noise in there, to me, 311 00:15:17,840 --> 00:15:22,200 Speaker 2: with the overlay of technology is highly uncertain. Do you 312 00:15:22,240 --> 00:15:26,840 Speaker 2: have any handle of the overlay of productivity and technologies 313 00:15:26,840 --> 00:15:29,760 Speaker 2: effect on the Cleveland and American economy. 314 00:15:30,160 --> 00:15:33,960 Speaker 9: Well, I mean we've seen over history, right, that technology 315 00:15:34,040 --> 00:15:37,160 Speaker 9: can be very additive to productivity growth, right, I mean, 316 00:15:37,160 --> 00:15:41,200 Speaker 9: that's kind of the engine of an economy that's increasing 317 00:15:41,280 --> 00:15:46,600 Speaker 9: and having potential growth rise. But in any point in time. 318 00:15:46,640 --> 00:15:48,680 Speaker 9: It's very hard to measure productivity growth. 319 00:15:48,720 --> 00:15:49,240 Speaker 5: Even if we. 320 00:15:49,200 --> 00:15:53,880 Speaker 9: Didn't have this big technological innovation of AI, it's very 321 00:15:53,880 --> 00:15:56,240 Speaker 9: difficult to measure it. So you have to take into 322 00:15:56,240 --> 00:15:59,440 Speaker 9: account that there's uncertainty around productivity growth. I mean, some 323 00:15:59,600 --> 00:16:02,360 Speaker 9: estimates saying that we're still in a low productivity regime. 324 00:16:03,760 --> 00:16:06,520 Speaker 9: Other restamates are saying, well, let's look forward and maybe 325 00:16:06,520 --> 00:16:08,480 Speaker 9: we're going to be in a higher But for the 326 00:16:08,480 --> 00:16:11,000 Speaker 9: FED right now, right that's not sort. 327 00:16:10,840 --> 00:16:11,400 Speaker 5: Of the focus. 328 00:16:11,440 --> 00:16:15,720 Speaker 9: The focus is, you know, are we calibrated well, it's 329 00:16:15,800 --> 00:16:17,040 Speaker 9: policy calibrating well. 330 00:16:17,120 --> 00:16:19,880 Speaker 2: To the court, you've been great on this. She just 331 00:16:19,880 --> 00:16:23,400 Speaker 2: said they're not focused on productivity. We have to be 332 00:16:23,400 --> 00:16:28,000 Speaker 2: because business leaders every day are focused on those outcomes 333 00:16:28,240 --> 00:16:28,960 Speaker 2: and they're invested. 334 00:16:29,000 --> 00:16:31,640 Speaker 6: Well, they've sort of been forced to by inflation and 335 00:16:31,680 --> 00:16:34,000 Speaker 6: a lack of workers, and they've been forced to put 336 00:16:34,800 --> 00:16:36,720 Speaker 6: investment into productivity and. 337 00:16:36,720 --> 00:16:38,480 Speaker 3: We'll see if it starts to pay off. 338 00:16:38,720 --> 00:16:41,080 Speaker 6: But Loretta is right, at the moment, you know, you don't, 339 00:16:41,120 --> 00:16:43,960 Speaker 6: you're not seeing it. But that's not the key for them. 340 00:16:44,640 --> 00:16:47,720 Speaker 6: But I do want to know how you respond to 341 00:16:47,760 --> 00:16:51,960 Speaker 6: the criticism that the FED has not communicated well what 342 00:16:52,000 --> 00:16:56,440 Speaker 6: it's thinking and what it's planning, or if not planning, 343 00:16:56,480 --> 00:16:59,160 Speaker 6: you know, what are the potential outcomes because we've seen 344 00:16:59,200 --> 00:17:02,040 Speaker 6: some very wild in the markets as data comes around. 345 00:17:02,560 --> 00:17:04,680 Speaker 3: Have you said data dependent too much? 346 00:17:05,520 --> 00:17:08,720 Speaker 9: I think there's a misunderstanding what data dependant means, and 347 00:17:08,760 --> 00:17:12,760 Speaker 9: that means that I think Chairpal today will be explaining 348 00:17:13,359 --> 00:17:17,879 Speaker 9: where he sees policy going, not necessarily at the next meeting, 349 00:17:17,920 --> 00:17:20,280 Speaker 9: whether fifteen to twenty five, which in some sense is 350 00:17:20,320 --> 00:17:23,600 Speaker 9: really not the big issue. I know for financial markets 351 00:17:23,640 --> 00:17:26,120 Speaker 9: it is, but not in terms of monetary policy. It's 352 00:17:26,160 --> 00:17:29,600 Speaker 9: really what's the path forward? Are we beginning now to 353 00:17:29,720 --> 00:17:33,760 Speaker 9: bring policy down? And the pace, of course, and the 354 00:17:34,000 --> 00:17:37,520 Speaker 9: magnitude eventually of how far our indust rates go down, 355 00:17:37,600 --> 00:17:40,680 Speaker 9: that's going to depend on how the economy evolves, right, 356 00:17:40,720 --> 00:17:43,000 Speaker 9: But we're going to enter this new phase, I think, 357 00:17:43,080 --> 00:17:47,040 Speaker 9: and appropriately so in July. I probably wouldn't have supported 358 00:17:47,560 --> 00:17:49,640 Speaker 9: actually moving the rate down in July, and of course 359 00:17:49,680 --> 00:17:52,080 Speaker 9: the committee didn't, but I could have made a case 360 00:17:52,119 --> 00:17:55,000 Speaker 9: for it. And that's a change, right, That's the economy 361 00:17:55,040 --> 00:17:58,000 Speaker 9: has changed enough, Inflation has come down quite a bit. 362 00:17:58,440 --> 00:18:00,640 Speaker 9: It's on a path I think where we can be 363 00:18:00,680 --> 00:18:03,200 Speaker 9: pretty confident it'll get back to two percent, and now 364 00:18:03,280 --> 00:18:05,360 Speaker 9: we really have to balance both sides of the mandate. 365 00:18:05,520 --> 00:18:09,000 Speaker 9: So it's basically keep the momentum going on inflation at 366 00:18:09,040 --> 00:18:12,520 Speaker 9: the same time making sure that labor markets remain healthy. 367 00:18:13,040 --> 00:18:15,280 Speaker 6: What do you think it would take for the committee 368 00:18:15,280 --> 00:18:17,840 Speaker 6: to decide you needed to do more than the standard 369 00:18:17,880 --> 00:18:19,840 Speaker 6: twenty five basis point cut? 370 00:18:20,160 --> 00:18:23,040 Speaker 9: So I think it would have to be that, you know, 371 00:18:23,520 --> 00:18:26,399 Speaker 9: somehow they thought they were a little behind and they 372 00:18:26,440 --> 00:18:28,639 Speaker 9: needed to catch up, and frankly, I don't see that 373 00:18:28,720 --> 00:18:30,800 Speaker 9: in the data. I think they're actually in a very 374 00:18:30,840 --> 00:18:34,040 Speaker 9: good place now. If it turns out that, you know, 375 00:18:34,119 --> 00:18:36,680 Speaker 9: the forecasts are saying, wow, you know, we may be 376 00:18:36,920 --> 00:18:42,720 Speaker 9: seeing the moderation in labor markets being more than moderation 377 00:18:42,840 --> 00:18:45,520 Speaker 9: and we actually see a weakening, they may have to 378 00:18:45,560 --> 00:18:48,680 Speaker 9: adjust that and then do more. But I think there's 379 00:18:48,720 --> 00:18:50,879 Speaker 9: sort of a record if you think about when we 380 00:18:51,000 --> 00:18:54,280 Speaker 9: started to raise rates, right, we started at a twenty 381 00:18:54,280 --> 00:18:56,400 Speaker 9: five and then a fifty. Then we did our seventy five, 382 00:18:56,520 --> 00:18:59,840 Speaker 9: and that's sort of the preferred path because that means you're, no, 383 00:19:00,280 --> 00:19:03,080 Speaker 9: you're not doing too much too ahead of time, And 384 00:19:03,119 --> 00:19:05,160 Speaker 9: the other thing I think I would be worried about 385 00:19:05,280 --> 00:19:08,159 Speaker 9: is if you do a fifty to start with the 386 00:19:08,240 --> 00:19:11,120 Speaker 9: market send you know, building even more. And I think 387 00:19:11,160 --> 00:19:13,400 Speaker 9: that's a calibration that you have to think about when 388 00:19:13,400 --> 00:19:17,760 Speaker 9: you're doing this. So I think being steady right, thinking 389 00:19:17,800 --> 00:19:21,080 Speaker 9: about what the right pace is gear to how the 390 00:19:21,119 --> 00:19:24,080 Speaker 9: economy is working and evolving, it's the right way to go. 391 00:19:24,359 --> 00:19:25,399 Speaker 5: You said that you expect j. 392 00:19:25,560 --> 00:19:27,440 Speaker 1: Powell to come out and give a sense of where 393 00:19:27,440 --> 00:19:29,639 Speaker 1: we're going. And I think that's actually the frustration for 394 00:19:29,640 --> 00:19:31,760 Speaker 1: a lot of people in markets. We don't know where 395 00:19:31,800 --> 00:19:33,520 Speaker 1: we're going. We don't have a sense of what the 396 00:19:33,560 --> 00:19:36,120 Speaker 1: neutral rate is. Right now, the market has about two 397 00:19:36,160 --> 00:19:38,280 Speaker 1: hundred basis points of rate cuts priced in by the 398 00:19:38,359 --> 00:19:39,080 Speaker 1: end of next year. 399 00:19:39,600 --> 00:19:40,520 Speaker 3: Is that appropriate? 400 00:19:40,640 --> 00:19:41,520 Speaker 5: What is neutral? 401 00:19:41,640 --> 00:19:44,920 Speaker 9: Well, remember what the markets are doing is and appropriately 402 00:19:44,960 --> 00:19:47,560 Speaker 9: so looking at different scenarios, right and they're waiting and 403 00:19:47,560 --> 00:19:49,720 Speaker 9: then when they when you get those kind of things 404 00:19:49,760 --> 00:19:51,680 Speaker 9: out of the financial markets about how many rate cuts, 405 00:19:51,720 --> 00:19:55,040 Speaker 9: it's balancing different scenarios. When the fence talking about you 406 00:19:55,040 --> 00:19:57,800 Speaker 9: know where they're seeing is they're talking about, here's what 407 00:19:57,800 --> 00:20:01,840 Speaker 9: we think if the economy evolves as we expect, wouldn't 408 00:20:01,840 --> 00:20:04,960 Speaker 9: be appropriate policy path. But they also have to think 409 00:20:04,960 --> 00:20:08,360 Speaker 9: through alternative scenarios too, So it's kind of a different 410 00:20:08,720 --> 00:20:12,560 Speaker 9: answer or different question answer to a question, and that's 411 00:20:12,840 --> 00:20:16,359 Speaker 9: I think the frustration is that the FED is trying 412 00:20:16,400 --> 00:20:19,040 Speaker 9: to answer a different question is here's where we see 413 00:20:19,440 --> 00:20:22,040 Speaker 9: policy going. But of course they don't want to commit 414 00:20:22,080 --> 00:20:25,199 Speaker 9: themselves to something because the economy could evolve differently, and 415 00:20:25,200 --> 00:20:26,600 Speaker 9: that's been hard to communicate. 416 00:20:27,400 --> 00:20:32,520 Speaker 6: You founded an inflation lab at the Cleveland FED. 417 00:20:33,359 --> 00:20:36,040 Speaker 3: What do you think inflation dynamics are now? 418 00:20:36,119 --> 00:20:40,160 Speaker 6: Is this a completely different kind of situation post pandemic 419 00:20:40,560 --> 00:20:46,360 Speaker 6: than models coming out of other recessions have worked with. 420 00:20:46,920 --> 00:20:49,560 Speaker 9: Well, I think one thing that we saw during the 421 00:20:49,560 --> 00:20:53,000 Speaker 9: pandemic and the aftermath, who sent the supply side right 422 00:20:53,119 --> 00:20:56,040 Speaker 9: had a lot to do with inflation dynamics. But the 423 00:20:56,119 --> 00:21:00,359 Speaker 9: key thing to remember is that those supply shocks would 424 00:21:00,359 --> 00:21:04,439 Speaker 9: not have necessarily resulted in higher inflation if we hadn't 425 00:21:04,520 --> 00:21:07,800 Speaker 9: had a very strong demand side of the economy. So 426 00:21:07,840 --> 00:21:10,879 Speaker 9: it's this balance between supply and demand. Typically right in 427 00:21:10,920 --> 00:21:13,680 Speaker 9: the past, right, it was all about demand. Supply you 428 00:21:13,680 --> 00:21:16,879 Speaker 9: could sort of say it was sort of stable, and 429 00:21:16,920 --> 00:21:19,080 Speaker 9: it was all about how demand was moving around. In 430 00:21:19,080 --> 00:21:22,520 Speaker 9: this event, right, it was both supply and demand, and 431 00:21:22,560 --> 00:21:25,040 Speaker 9: that made it more challenging. And so in that sense, 432 00:21:25,080 --> 00:21:29,520 Speaker 9: I think there's a renewed understanding that dynamics on inflation. 433 00:21:30,200 --> 00:21:33,520 Speaker 9: It's both sides, that's supply and demand, and understanding both 434 00:21:33,960 --> 00:21:36,040 Speaker 9: I think is going to be a focus going forward. 435 00:21:36,160 --> 00:21:38,359 Speaker 6: Well as if it goes into its review process for 436 00:21:38,480 --> 00:21:43,640 Speaker 6: its Monetary policy framework, does what happened change the way 437 00:21:43,680 --> 00:21:47,080 Speaker 6: you think the committee should look at policy? In other words, 438 00:21:47,160 --> 00:21:49,680 Speaker 6: maybe you want to be a little bit more preemptive 439 00:21:49,720 --> 00:21:50,200 Speaker 6: than you were. 440 00:21:50,840 --> 00:21:53,800 Speaker 9: So I know a lot of people characterized the FED 441 00:21:54,200 --> 00:21:56,800 Speaker 9: in the framework that came out in twenty twenty as 442 00:21:57,400 --> 00:22:00,240 Speaker 9: walking away from being preemptive, but if you actually look 443 00:22:00,240 --> 00:22:03,240 Speaker 9: at the language in there, still says preemptive. I agree 444 00:22:03,280 --> 00:22:06,040 Speaker 9: with you that it sounded like we were just being 445 00:22:06,160 --> 00:22:09,800 Speaker 9: data dependent in the moment. But we've always were focused 446 00:22:09,800 --> 00:22:12,640 Speaker 9: on where is the economy going? So it's data coming in, 447 00:22:13,400 --> 00:22:17,440 Speaker 9: assess that data relative to your outlook. If it's materially 448 00:22:17,520 --> 00:22:19,920 Speaker 9: different than you expect, you might have to change your outlook, 449 00:22:19,960 --> 00:22:23,520 Speaker 9: and therefore you might have to change policy, your policy 450 00:22:23,560 --> 00:22:27,160 Speaker 9: expected policy paths. So I think we've always been forward looking. 451 00:22:27,280 --> 00:22:30,280 Speaker 9: I expect the FED to remain forward looking. They may 452 00:22:30,480 --> 00:22:33,439 Speaker 9: change the language in the statement so that that's a 453 00:22:33,480 --> 00:22:36,240 Speaker 9: little bit more transparent, if you will, so that people 454 00:22:36,280 --> 00:22:39,720 Speaker 9: actually understand that the policy has to look forward. 455 00:22:40,000 --> 00:22:41,919 Speaker 2: I would never ask you this question if you're on 456 00:22:41,960 --> 00:22:44,399 Speaker 2: the watch, But now that you're gainfully retired and in 457 00:22:44,440 --> 00:22:46,440 Speaker 2: the real world, I'm going to ask you this question. 458 00:22:46,960 --> 00:22:50,840 Speaker 2: Cleveland has reasonable real estate, but Shaker Heights as a 459 00:22:50,920 --> 00:22:54,960 Speaker 2: boom real estate economy. And part of that asset success 460 00:22:55,000 --> 00:22:58,879 Speaker 2: of Shaker Heights and the Shaker Heights of America is 461 00:22:58,920 --> 00:23:03,800 Speaker 2: the gains thats are getting from this financial system. How 462 00:23:03,800 --> 00:23:08,120 Speaker 2: does the FED distribute the benefit more across America rather 463 00:23:08,160 --> 00:23:10,880 Speaker 2: than this illusion than only the have nots that own 464 00:23:11,200 --> 00:23:13,840 Speaker 2: the havelves that own Nvidia are making way? 465 00:23:13,920 --> 00:23:18,879 Speaker 9: Yeah, I mean the FED always focuses on the macro economy, right, 466 00:23:18,920 --> 00:23:22,280 Speaker 9: It doesn't have tools that can really do much about 467 00:23:22,440 --> 00:23:27,399 Speaker 9: red distributing or fairness or making sure that everyone gains. 468 00:23:27,440 --> 00:23:29,920 Speaker 9: But what we can do in the FED, and what 469 00:23:29,960 --> 00:23:32,199 Speaker 9: the new committee will be doing at the FED, is 470 00:23:32,240 --> 00:23:36,320 Speaker 9: making sure that we maintain healthy labor markets, which again 471 00:23:36,440 --> 00:23:42,040 Speaker 9: helps distribute and brings inflation and you know, the inflation 472 00:23:42,160 --> 00:23:45,440 Speaker 9: rate down and getting back to price stability is also 473 00:23:45,600 --> 00:23:48,080 Speaker 9: very key to having a strong economy so that everyone 474 00:23:48,119 --> 00:23:51,080 Speaker 9: can prosper from the economy. The FED really can't do 475 00:23:51,160 --> 00:23:53,320 Speaker 9: the other part of what you're talking about, and that's 476 00:23:53,359 --> 00:23:56,439 Speaker 9: what the federal government policies are about, and the fiscal 477 00:23:56,480 --> 00:23:57,320 Speaker 9: policy is about. 478 00:23:57,640 --> 00:23:59,040 Speaker 1: We thought that you were going to retire and build 479 00:23:59,080 --> 00:24:03,080 Speaker 1: homes to offset some of the supply issues. Lurida, there 480 00:24:03,119 --> 00:24:06,240 Speaker 1: is this question Mike was talking about how the Queen 481 00:24:06,400 --> 00:24:08,919 Speaker 1: of Inflation studies and how the Cleveland Fed really does 482 00:24:09,200 --> 00:24:11,679 Speaker 1: have an incredible metric for that. Do you have a 483 00:24:11,760 --> 00:24:15,000 Speaker 1: sense of how much more inflationary this post pandemic economy 484 00:24:15,080 --> 00:24:16,640 Speaker 1: is and that really speaks. 485 00:24:16,359 --> 00:24:18,080 Speaker 5: To what is the new neutral? 486 00:24:20,320 --> 00:24:24,280 Speaker 9: Well, there are certain factors that really affect inflation, right, 487 00:24:24,320 --> 00:24:27,119 Speaker 9: but the basics are similar to what we saw before. 488 00:24:27,240 --> 00:24:27,480 Speaker 8: Right. 489 00:24:27,600 --> 00:24:31,359 Speaker 9: Inflation expectations are still an important driver of inflation. Making 490 00:24:31,359 --> 00:24:35,680 Speaker 9: sure they remain stable is helping to keep inflation moving down, 491 00:24:35,720 --> 00:24:39,440 Speaker 9: which is important. Supply side conditions matter, and the labor 492 00:24:39,480 --> 00:24:41,679 Speaker 9: market tightness matters. We're going to hear a paper at 493 00:24:41,760 --> 00:24:45,240 Speaker 9: Jackson Home that's really addressing that how much tightness in 494 00:24:45,240 --> 00:24:48,600 Speaker 9: the labor market affects what you want to see when 495 00:24:48,840 --> 00:24:52,120 Speaker 9: demand gets out of lap with supply, so again it's 496 00:24:52,119 --> 00:24:55,240 Speaker 9: the same basic factors, but of course the supply side 497 00:24:55,280 --> 00:24:58,119 Speaker 9: during the pandemic changed quite a bit, and those factors 498 00:24:58,359 --> 00:25:00,680 Speaker 9: are going to become I think, more signal and going 499 00:25:00,720 --> 00:25:02,639 Speaker 9: forward than perhaps they were in the past. 500 00:25:02,800 --> 00:25:04,800 Speaker 1: Are you having more fun now that you're not on 501 00:25:05,040 --> 00:25:05,720 Speaker 1: the committee? 502 00:25:05,760 --> 00:25:06,560 Speaker 9: I'm having fun. 503 00:25:07,920 --> 00:25:11,080 Speaker 1: Well, hopefully you can go hiking or enjoy the beautiful 504 00:25:11,240 --> 00:25:15,399 Speaker 1: Wyoming Lord Semester, formerly of the Cleveland Federal Reserve. Just 505 00:25:15,440 --> 00:25:17,879 Speaker 1: going back to the end of June, when you step 506 00:25:17,920 --> 00:25:19,879 Speaker 1: down and she is here for the first time in 507 00:25:19,960 --> 00:25:33,480 Speaker 1: it ten years, Joining us now is someone who has 508 00:25:33,560 --> 00:25:36,040 Speaker 1: been in that room, who has seen the decision making 509 00:25:36,040 --> 00:25:38,800 Speaker 1: in the speech crafting former Saint Louis FED President Jim 510 00:25:38,840 --> 00:25:42,920 Speaker 1: Bullard Joining us now. Jim, I would love your take 511 00:25:42,960 --> 00:25:45,400 Speaker 1: on this speech. What did you think of it? 512 00:25:46,119 --> 00:25:49,120 Speaker 10: I thought this was a good speech. I thought it 513 00:25:49,320 --> 00:25:55,199 Speaker 10: was not quite a victory lap, but certainly emphasizing that 514 00:25:55,240 --> 00:25:58,800 Speaker 10: this policy since twenty twenty two has been extremely effective 515 00:25:59,080 --> 00:26:02,840 Speaker 10: in inflation down substantially putting us on a path to 516 00:26:02,880 --> 00:26:08,119 Speaker 10: two percent inflation without substantial weakening in the labor market. 517 00:26:08,119 --> 00:26:11,639 Speaker 10: That labor market was super hot. It has cooled, but 518 00:26:11,680 --> 00:26:15,040 Speaker 10: it's only cool to a sort of normal labor market, 519 00:26:15,080 --> 00:26:17,720 Speaker 10: and so that's why everyone's talking about the soft landing. 520 00:26:17,760 --> 00:26:20,640 Speaker 10: So I think to the extent there are critics out there, 521 00:26:20,680 --> 00:26:24,600 Speaker 10: which is great, they have to contend with the fact 522 00:26:24,640 --> 00:26:27,640 Speaker 10: that this policy worked very, very well over the last 523 00:26:27,640 --> 00:26:28,120 Speaker 10: two years. 524 00:26:28,920 --> 00:26:34,240 Speaker 2: Appropriate Jim Bowler to your acclaimed speech years ago on 525 00:26:34,560 --> 00:26:38,520 Speaker 2: regimes of a FED staggering from regime to regime or 526 00:26:38,600 --> 00:26:43,560 Speaker 2: planning from regime to regime. Does this speech signal a 527 00:26:43,600 --> 00:26:45,680 Speaker 2: new post pandemic regime? 528 00:26:48,080 --> 00:26:50,119 Speaker 10: You know this is going to be studied for years. 529 00:26:50,119 --> 00:26:57,760 Speaker 10: In this episode about disinflation without recession will be studied 530 00:26:57,760 --> 00:27:02,320 Speaker 10: for many years, and exactly how it works is a 531 00:27:02,400 --> 00:27:05,679 Speaker 10: good question. But Chair Powell said in the speech, I 532 00:27:05,680 --> 00:27:09,520 Speaker 10: think basically lined out the argument. If you can keep 533 00:27:09,520 --> 00:27:15,680 Speaker 10: inflation expectations on target, and even when the world seems 534 00:27:15,720 --> 00:27:20,240 Speaker 10: to be exploding with inflation, then you can get the 535 00:27:20,280 --> 00:27:24,159 Speaker 10: disinflation to occur relatively rapidly and relatively pain mostly. So 536 00:27:24,200 --> 00:27:28,760 Speaker 10: I think that's a new mode for many people and 537 00:27:28,920 --> 00:27:30,959 Speaker 10: thinking about how monetary policy works. 538 00:27:32,680 --> 00:27:35,359 Speaker 2: I've been asking his question, Jim Bollard of many and 539 00:27:35,440 --> 00:27:38,520 Speaker 2: with great respect to your public service, out of Saint Louis. 540 00:27:39,320 --> 00:27:42,760 Speaker 2: Where is the unemployment rate that begins to hurt for 541 00:27:42,880 --> 00:27:45,840 Speaker 2: Jim Bullard. I think a lot of America wants to 542 00:27:45,840 --> 00:27:49,960 Speaker 2: know what's a statistic and unemployment rate where it says 543 00:27:49,960 --> 00:27:53,520 Speaker 2: some pain? Is it five percent? Is it four point 544 00:27:53,720 --> 00:27:56,119 Speaker 2: x percent? Where's that number for Jim Bullard? 545 00:27:56,240 --> 00:27:56,320 Speaker 5: Go? 546 00:27:58,200 --> 00:28:01,240 Speaker 10: You know, estimates of the natural rate for most people 547 00:28:01,480 --> 00:28:06,040 Speaker 10: are in the mid four percent range somewhere. And so 548 00:28:06,200 --> 00:28:09,359 Speaker 10: I think it's true that unemployment has come up, but 549 00:28:09,400 --> 00:28:11,440 Speaker 10: it has come up from this, you know, a three 550 00:28:11,480 --> 00:28:14,880 Speaker 10: handle that it was apt for several years. I think 551 00:28:14,960 --> 00:28:17,200 Speaker 10: what you should think about is if the three handles 552 00:28:17,400 --> 00:28:21,240 Speaker 10: the thing that's unusual for the US economy, four handle 553 00:28:21,320 --> 00:28:26,920 Speaker 10: would be a very normal market turn. And now we're 554 00:28:26,960 --> 00:28:27,600 Speaker 10: at that level. 555 00:28:27,720 --> 00:28:27,840 Speaker 2: Now. 556 00:28:27,840 --> 00:28:29,960 Speaker 10: If it goes up from here, it goes up substantially 557 00:28:30,000 --> 00:28:33,120 Speaker 10: from here, you know that's going to be a substantial weakening. 558 00:28:33,200 --> 00:28:38,040 Speaker 10: That's why I think Cherpel didn't want to get any 559 00:28:38,200 --> 00:28:40,560 Speaker 10: anything further to happen in the labor market. 560 00:28:40,600 --> 00:28:42,760 Speaker 11: I think he said, further cooling is unwelcome. 561 00:28:43,360 --> 00:28:48,840 Speaker 2: Yeah, Jim, I said Jim Bullard here easily a decade 562 00:28:48,880 --> 00:28:52,560 Speaker 2: ago with Alan Meltzer of Carnegie Mellon, and he lectured 563 00:28:52,600 --> 00:28:56,600 Speaker 2: me on the silliness of a fifty basis point move. 564 00:28:57,200 --> 00:29:01,840 Speaker 2: If we discuss a fifty basis point, are we defeating 565 00:29:02,280 --> 00:29:05,720 Speaker 2: all the history of measured and all the value of 566 00:29:05,760 --> 00:29:06,960 Speaker 2: a gradual approach. 567 00:29:08,920 --> 00:29:11,080 Speaker 11: Yeah, I just think right now, they just probably don't 568 00:29:11,120 --> 00:29:13,840 Speaker 11: need to go fifty basis points. I think that would 569 00:29:15,080 --> 00:29:19,720 Speaker 11: you know, trigger expectations about a really rapid pace of 570 00:29:21,000 --> 00:29:21,760 Speaker 11: rate decline. 571 00:29:22,440 --> 00:29:23,840 Speaker 4: They probably don't need to do that. 572 00:29:24,320 --> 00:29:27,160 Speaker 10: They would like to ask them toe the have the 573 00:29:27,440 --> 00:29:31,800 Speaker 10: inflation come, ask them tote down to two percent. Also, 574 00:29:32,640 --> 00:29:35,480 Speaker 10: you know, basically with this speech and certainly with the 575 00:29:35,560 --> 00:29:39,280 Speaker 10: July meeting as well, they've been heavily signaling that they're 576 00:29:39,320 --> 00:29:42,200 Speaker 10: going to make this move in September and subsequent moves. 577 00:29:42,240 --> 00:29:45,280 Speaker 10: So that's already been pricing in the market. So they'll 578 00:29:45,280 --> 00:29:49,800 Speaker 10: just be confirming at a September meeting of what's pretty 579 00:29:49,880 --> 00:29:52,000 Speaker 10: much already happened as far as market price. 580 00:29:54,360 --> 00:29:56,760 Speaker 1: Jim Bullerd, the former Saint Louis fed President, thank you 581 00:29:56,800 --> 00:29:57,440 Speaker 1: so much for. 582 00:29:57,360 --> 00:29:58,000 Speaker 5: Being with us. 583 00:30:07,920 --> 00:30:10,040 Speaker 2: But the real issue is this is a German Paul 584 00:30:10,080 --> 00:30:12,160 Speaker 2: who at the back end of the speech said, now 585 00:30:12,240 --> 00:30:15,320 Speaker 2: is the time for humility. Yeah, I think that's an 586 00:30:15,320 --> 00:30:20,240 Speaker 2: allusion to the election and the incredibly intense economic policies 587 00:30:20,240 --> 00:30:21,920 Speaker 2: we're getting both from Trump and Harris. 588 00:30:22,360 --> 00:30:23,520 Speaker 4: You're just trying to roll up. 589 00:30:26,000 --> 00:30:27,959 Speaker 5: Is here he is. Let's go to him right now. 590 00:30:28,000 --> 00:30:32,360 Speaker 1: Former Kansas City Fed Thomas Ahoning. I'm very curious to 591 00:30:32,400 --> 00:30:36,440 Speaker 1: see why you actually think maybe it is too soon 592 00:30:37,000 --> 00:30:39,640 Speaker 1: to sort of sound the all clear and the victory 593 00:30:39,680 --> 00:30:42,440 Speaker 1: signal that we seem to hear from Federal Reserve Chair 594 00:30:42,880 --> 00:30:43,600 Speaker 1: Jerome Powell. 595 00:30:44,440 --> 00:30:46,880 Speaker 12: Well, I understand where he's coming from, first of all. 596 00:30:46,920 --> 00:30:49,120 Speaker 12: And you know, first of all, we have an economy 597 00:30:49,120 --> 00:30:52,240 Speaker 12: that is strong but slowing, which is what you want. 598 00:30:52,760 --> 00:30:55,680 Speaker 12: You have a labor market that has been strong but 599 00:30:56,320 --> 00:31:00,720 Speaker 12: slowing as you would expect and want, and you've had 600 00:31:01,080 --> 00:31:06,640 Speaker 12: a relatively tight interest rate environment. If you think about it, 601 00:31:06,680 --> 00:31:09,080 Speaker 12: interest rates, real interest rates are between two and a 602 00:31:09,160 --> 00:31:11,959 Speaker 12: quarter and two and three quarter percent. If the equilibrium 603 00:31:12,040 --> 00:31:14,600 Speaker 12: raise around two, you're modestly tight. So you would expect 604 00:31:14,760 --> 00:31:17,240 Speaker 12: a continuation, and that's what he said. We expect to 605 00:31:17,240 --> 00:31:21,880 Speaker 12: see a continuation and the decline of inflation. So with 606 00:31:21,960 --> 00:31:24,480 Speaker 12: that in mind, we are getting close to where we 607 00:31:24,520 --> 00:31:26,440 Speaker 12: can make a cut. So that's the statement. But the 608 00:31:26,480 --> 00:31:29,920 Speaker 12: fact of the matter is, and here's the catch, inflation 609 00:31:30,960 --> 00:31:32,720 Speaker 12: is between two and a half and three percent. I 610 00:31:32,760 --> 00:31:34,800 Speaker 12: know they like to use the PCEE, but there is 611 00:31:34,800 --> 00:31:37,880 Speaker 12: a CPI two and this CPI is three percent, and 612 00:31:37,920 --> 00:31:40,520 Speaker 12: that's what people index to and that's what people look at. 613 00:31:40,680 --> 00:31:43,040 Speaker 12: So inflation is still if you say three percent, it's 614 00:31:43,080 --> 00:31:46,200 Speaker 12: fifty percent above target. So why are you in such 615 00:31:46,200 --> 00:31:49,120 Speaker 12: a rush? So that's that's the counter argument to that. 616 00:31:49,480 --> 00:31:52,280 Speaker 12: But I think based on what he said was, you know, 617 00:31:52,360 --> 00:31:56,320 Speaker 12: we were very close. The next move is down, and 618 00:31:56,360 --> 00:31:59,200 Speaker 12: that's what they've been saying for nine months, and that 619 00:31:59,280 --> 00:32:03,200 Speaker 12: gives the markets kind of a let's say we're gonna speculate. 620 00:32:03,280 --> 00:32:05,800 Speaker 12: Let's speculate long because rates are going to go down. 621 00:32:05,840 --> 00:32:09,280 Speaker 2: The heritage of this discussion out of your Iowa State 622 00:32:09,320 --> 00:32:12,920 Speaker 2: economics and all you did in building Kansas City, is 623 00:32:12,960 --> 00:32:15,840 Speaker 2: a distrust of those people over in the east coast 624 00:32:15,880 --> 00:32:19,520 Speaker 2: and maybe the left coast about the debt and the deficit. 625 00:32:20,080 --> 00:32:21,280 Speaker 4: Tom Hanig, right. 626 00:32:21,080 --> 00:32:24,360 Speaker 2: Now, on what you got, you got every every Trump supporter, 627 00:32:24,760 --> 00:32:26,840 Speaker 2: every Hair supporter is looking at the debt and the 628 00:32:26,880 --> 00:32:30,440 Speaker 2: deficit and saying, you've got to be kidding me. How 629 00:32:30,480 --> 00:32:34,720 Speaker 2: afraid of you are the fiscal realities of America folded 630 00:32:34,760 --> 00:32:36,280 Speaker 2: into our monetary policy. 631 00:32:36,400 --> 00:32:37,760 Speaker 4: Oh, it's very much folded in. 632 00:32:38,480 --> 00:32:43,000 Speaker 12: For example, regardless of what they do, the deficit is 633 00:32:43,000 --> 00:32:45,040 Speaker 12: only going to grow. We know the interest on the 634 00:32:45,080 --> 00:32:48,760 Speaker 12: debt is exploding. We have a huge UH deficit of 635 00:32:48,800 --> 00:32:51,040 Speaker 12: two trillion. It's going to continue to be well above 636 00:32:51,080 --> 00:32:54,080 Speaker 12: the train for some time. So here's the question, who's 637 00:32:54,080 --> 00:32:57,600 Speaker 12: gonna who's gonna learn the money. There's gonna be the 638 00:32:57,600 --> 00:32:59,760 Speaker 12: foreign interest and they're pulling away from the dollars somewhat, 639 00:33:00,000 --> 00:33:01,600 Speaker 12: it's going to be domestic. How much do you want 640 00:33:01,640 --> 00:33:03,520 Speaker 12: to take away from the private sector to fund the 641 00:33:03,560 --> 00:33:06,080 Speaker 12: debt right and then maybe redo it in some kind 642 00:33:06,080 --> 00:33:09,840 Speaker 12: of fiscal stimulus it's less efficient. Or are you going 643 00:33:09,840 --> 00:33:12,080 Speaker 12: to turn to the Federal Reserve? And I call it. 644 00:33:12,720 --> 00:33:15,360 Speaker 12: I call it knocking on the central Bank's door, because 645 00:33:15,800 --> 00:33:17,600 Speaker 12: when you're the only source, if you're going to keep 646 00:33:17,600 --> 00:33:19,960 Speaker 12: integration from exploding, the Fed's going to happen. 647 00:33:19,960 --> 00:33:22,560 Speaker 2: Well reported, you've got kruger Ins and your your addresser 648 00:33:22,600 --> 00:33:25,560 Speaker 2: in your bedroom. Gold at twenty five hundred. I mean 649 00:33:25,640 --> 00:33:27,200 Speaker 2: we go back to Wayne Angel. We can go back 650 00:33:27,240 --> 00:33:31,480 Speaker 2: further than that. The primal Midwest economist has got to 651 00:33:31,520 --> 00:33:34,600 Speaker 2: be screaming about the combination of the debt and the 652 00:33:34,640 --> 00:33:37,080 Speaker 2: deficit in gold at twenty five hundred. 653 00:33:37,240 --> 00:33:39,680 Speaker 12: Well, I hope it's more than the Midwest because it 654 00:33:39,760 --> 00:33:42,560 Speaker 12: affects the whole nation, and it is. It is a 655 00:33:42,720 --> 00:33:45,440 Speaker 12: very significant problem. You know, the dollar used to be 656 00:33:45,520 --> 00:33:47,600 Speaker 12: a stable coin, right. 657 00:33:47,800 --> 00:33:52,080 Speaker 2: Tied to the gold because first somebody take a note 658 00:33:51,840 --> 00:33:54,320 Speaker 2: ut stable coin. 659 00:33:54,160 --> 00:33:55,120 Speaker 4: Really look at it. 660 00:33:55,120 --> 00:33:58,080 Speaker 12: It was backed by the goal and therefore you had 661 00:33:58,120 --> 00:33:59,200 Speaker 12: you had discipline around. 662 00:33:59,240 --> 00:34:03,720 Speaker 4: It's all fiat, right, which is fine. If your policy is. 663 00:34:03,760 --> 00:34:04,760 Speaker 2: Can we extend an hour? 664 00:34:04,880 --> 00:34:08,480 Speaker 4: He's just getting fired up. Look, well, think about it. 665 00:34:08,520 --> 00:34:09,719 Speaker 4: That's all I'm asking you to do. 666 00:34:10,160 --> 00:34:14,960 Speaker 12: Think about what is the discipline to the value of 667 00:34:15,000 --> 00:34:18,920 Speaker 12: our currency. It's the FMC with more and more pressure 668 00:34:18,920 --> 00:34:20,719 Speaker 12: coming from the size of the death that we have 669 00:34:20,840 --> 00:34:21,720 Speaker 12: to fund. 670 00:34:22,000 --> 00:34:23,719 Speaker 4: Someone has to fund that not to go. 671 00:34:23,680 --> 00:34:26,719 Speaker 1: Too far afield. When we're talking about the gold standard. 672 00:34:27,200 --> 00:34:30,000 Speaker 1: This goes back to the question of inflation and just 673 00:34:30,080 --> 00:34:34,560 Speaker 1: how pegged inflation is in this economy that does look 674 00:34:34,600 --> 00:34:38,520 Speaker 1: different than it did pre pandemic. Do you have any 675 00:34:38,560 --> 00:34:42,480 Speaker 1: concerns about the fact that we don't understand neutral and 676 00:34:42,520 --> 00:34:45,879 Speaker 1: we talk about normalizing policy without a sense of where 677 00:34:45,880 --> 00:34:46,360 Speaker 1: we're going. 678 00:34:47,160 --> 00:34:49,799 Speaker 12: Well, I think people know where we're going, and you know, 679 00:34:49,840 --> 00:34:53,399 Speaker 12: the estimates are neutral, are like every other estimate. It's 680 00:34:53,440 --> 00:34:57,600 Speaker 12: not certain, but many researchers now are saying neutrals around 681 00:34:57,600 --> 00:35:01,560 Speaker 12: two percent. So if neutrals two percent and the rate 682 00:35:02,000 --> 00:35:04,680 Speaker 12: the Fed Funds rate is real rate is two to 683 00:35:04,760 --> 00:35:07,080 Speaker 12: quarter two to three quarters percent, you have a type 684 00:35:07,080 --> 00:35:09,840 Speaker 12: policy and the other part of it isn't And I 685 00:35:09,880 --> 00:35:14,160 Speaker 12: will say Chairman Power emphasizes is inflationary expectations. So if 686 00:35:14,200 --> 00:35:18,680 Speaker 12: they can stay firm in terms of we're not gonna 687 00:35:18,680 --> 00:35:21,840 Speaker 12: ease so much that we reignite inflation. We don't know 688 00:35:21,880 --> 00:35:24,320 Speaker 12: what that is, but we know we are somewhere around 689 00:35:24,520 --> 00:35:27,359 Speaker 12: real rate of two percent, we'll get our rate down 690 00:35:27,400 --> 00:35:30,439 Speaker 12: to two percent as inflation comes down. And if they 691 00:35:30,480 --> 00:35:32,960 Speaker 12: move in September, the main thing will be how they 692 00:35:33,000 --> 00:35:35,719 Speaker 12: message it, because if they don't message your right, the 693 00:35:35,719 --> 00:35:38,120 Speaker 12: markets will immediately start saying, well, what's the next quarter 694 00:35:38,160 --> 00:35:40,279 Speaker 12: or a half or some point, and then you will 695 00:35:40,280 --> 00:35:41,120 Speaker 12: lose that anchor. 696 00:35:41,280 --> 00:35:43,879 Speaker 1: I like what you said because it hints to where 697 00:35:43,920 --> 00:35:45,680 Speaker 1: I was going to go next. Is this a fetter 698 00:35:45,719 --> 00:35:48,480 Speaker 1: reserve that wants to see a market rally, because ultimately 699 00:35:48,560 --> 00:35:53,640 Speaker 1: that's more supportive of no further deterioration in the label market. 700 00:35:54,160 --> 00:35:56,680 Speaker 12: I think this is a FED that not necessarily want 701 00:35:56,680 --> 00:35:58,680 Speaker 12: to see a market rally, but it does not want 702 00:35:59,000 --> 00:36:02,600 Speaker 12: to see inflation night, nor does it want to see 703 00:36:03,440 --> 00:36:06,719 Speaker 12: unemployment struct a rise. So they're in that tight spot 704 00:36:07,320 --> 00:36:09,279 Speaker 12: and that's why they're being very careful as they go 705 00:36:09,360 --> 00:36:09,920 Speaker 12: forward from here. 706 00:36:09,960 --> 00:36:11,600 Speaker 4: But they have a lot on their shoulders. 707 00:36:11,680 --> 00:36:14,080 Speaker 2: There's a state in the vicinity of tom Honing. It's 708 00:36:14,080 --> 00:36:18,279 Speaker 2: called Missouri. McChesney Martin came out of Missouri, and he 709 00:36:18,320 --> 00:36:21,600 Speaker 2: and Truman of Missouri had a pitched battle in the 710 00:36:21,640 --> 00:36:25,200 Speaker 2: early nineteen fifties. Are we going to reduct fed independence 711 00:36:25,239 --> 00:36:30,120 Speaker 2: battle into twenty twenty five? Well, it's yes, as possible 712 00:36:30,400 --> 00:36:33,480 Speaker 2: because of the pressure to print money to buy the 713 00:36:33,520 --> 00:36:36,319 Speaker 2: debt of the US government. And that's when the FED, 714 00:36:36,600 --> 00:36:39,160 Speaker 2: I think it's hard decisions are ahead of them, because 715 00:36:39,360 --> 00:36:40,880 Speaker 2: I think the FED is going to have to say 716 00:36:42,040 --> 00:36:45,360 Speaker 2: behind the doors, I don't care how they do it, Congress, 717 00:36:45,360 --> 00:36:47,719 Speaker 2: get your house in order. We cannot carry these kinds 718 00:36:47,719 --> 00:36:53,760 Speaker 2: of debt forward and retain ourselves as the strongest, most 719 00:36:53,800 --> 00:36:55,360 Speaker 2: reliable currency in the world. 720 00:36:55,440 --> 00:36:56,120 Speaker 4: We're at a time. 721 00:36:56,200 --> 00:36:59,160 Speaker 2: Can you get beefun toasts back on the menu at 722 00:36:59,160 --> 00:37:02,520 Speaker 2: the Pioneer Grip? With all your power, can you get 723 00:37:02,520 --> 00:37:03,920 Speaker 2: the menu back to what it was? 724 00:37:04,120 --> 00:37:06,400 Speaker 12: I don't I'm not hosting this anymore, so my power 725 00:37:06,440 --> 00:37:08,279 Speaker 12: is kind of limited, so I can't probably. 726 00:37:10,000 --> 00:37:10,880 Speaker 4: Give you my opinion. 727 00:37:11,920 --> 00:37:13,800 Speaker 3: Give you a toast to Jackson Hole. 728 00:37:14,440 --> 00:37:17,760 Speaker 1: I'm a fan former Kansas City FED President Thomas Honeg 729 00:37:17,920 --> 00:37:18,879 Speaker 1: joining us here in. 730 00:37:18,920 --> 00:37:19,680 Speaker 5: Jackson Hall. 731 00:37:30,040 --> 00:37:30,959 Speaker 3: From Jackson Hole. 732 00:37:31,160 --> 00:37:34,960 Speaker 6: For our radio and television audiences worldwide. This is a 733 00:37:34,960 --> 00:37:38,919 Speaker 6: Bloomberg special interview following up on the J. Powell Fed 734 00:37:39,000 --> 00:37:43,040 Speaker 6: Chairman's speech. Here in Jackson Hole, we have Philadelphia FED 735 00:37:43,080 --> 00:37:47,560 Speaker 6: President Patrick Harker joining me, Lisa Bradwitz and Tom Keene, 736 00:37:47,640 --> 00:37:49,480 Speaker 6: and we'd like to thank you very much, Pat for 737 00:37:49,520 --> 00:37:54,600 Speaker 6: coming out, uh, interrupting your your seminar rumor? 738 00:37:54,640 --> 00:37:57,280 Speaker 13: Has it you're going to cut rates? 739 00:37:58,480 --> 00:37:59,040 Speaker 5: Was it you? 740 00:37:59,040 --> 00:38:01,920 Speaker 3: You've been some what reluctant? Are you on board? 741 00:38:02,320 --> 00:38:02,400 Speaker 8: No? 742 00:38:02,560 --> 00:38:06,319 Speaker 13: I said the last couple of days that it's time 743 00:38:06,480 --> 00:38:08,640 Speaker 13: to start a process. And I think it's a process. 744 00:38:08,680 --> 00:38:12,680 Speaker 13: It's not about a particular number. The process needs to 745 00:38:12,680 --> 00:38:16,319 Speaker 13: be dictated by the data we see but we need 746 00:38:16,360 --> 00:38:19,040 Speaker 13: to start moving rates down, no question about it. 747 00:38:19,640 --> 00:38:22,239 Speaker 6: Well, if you start moving rates down. The one thing 748 00:38:22,280 --> 00:38:24,760 Speaker 6: that didn't come through in the speech is by how much? 749 00:38:25,080 --> 00:38:27,040 Speaker 13: Yeah, And again I think we need to let the 750 00:38:27,080 --> 00:38:29,600 Speaker 13: data dictate this. I think what matters more than a 751 00:38:29,640 --> 00:38:31,680 Speaker 13: particular number. Now, I've been out and about in my 752 00:38:31,719 --> 00:38:35,160 Speaker 13: district all summer talking to contacts, and one thing I 753 00:38:35,200 --> 00:38:38,319 Speaker 13: heard is twenty five point fifty. That doesn't matter so 754 00:38:38,400 --> 00:38:42,480 Speaker 13: much as commit to a process. Be methodical about the 755 00:38:42,520 --> 00:38:46,720 Speaker 13: process in particular, because what I've heard, particularly from the bankers, 756 00:38:46,760 --> 00:38:50,480 Speaker 13: is they need time to absorb the changes. So don't 757 00:38:50,520 --> 00:38:54,719 Speaker 13: just stop and start. Don't just do a large decrease 758 00:38:55,120 --> 00:38:57,239 Speaker 13: and then stop and then starting it. Just start a 759 00:38:57,280 --> 00:38:58,560 Speaker 13: process and keep it moving. 760 00:38:58,920 --> 00:39:02,280 Speaker 1: This to me, really underscores what LORDA Master was saying 761 00:39:02,560 --> 00:39:05,560 Speaker 1: formerly of the Cleveland Fed Reserve, where it makes sense 762 00:39:05,560 --> 00:39:07,560 Speaker 1: for the Fetch Reserve to go by twenty five basis 763 00:39:07,560 --> 00:39:11,520 Speaker 1: points to begin with and then potentially cut more significantly 764 00:39:11,600 --> 00:39:14,120 Speaker 1: later on, because then you're not signaling to markets that 765 00:39:14,120 --> 00:39:14,959 Speaker 1: you're going to go much further. 766 00:39:15,000 --> 00:39:15,840 Speaker 5: Isn't what you agree? 767 00:39:15,960 --> 00:39:18,120 Speaker 13: And we'll see how things. You know, there are a 768 00:39:18,160 --> 00:39:20,160 Speaker 13: lot of risks are out there in the economy and 769 00:39:20,160 --> 00:39:23,360 Speaker 13: the global economy. So we start with twenty five and 770 00:39:23,400 --> 00:39:26,400 Speaker 13: we just let it run and keep moving that and 771 00:39:26,480 --> 00:39:28,319 Speaker 13: we're already seeing it, right, We're seeing the long end 772 00:39:28,320 --> 00:39:31,080 Speaker 13: of the curve start to come down. That's been good. 773 00:39:31,200 --> 00:39:34,359 Speaker 13: The mortgage business is back. You talk to bankers, they're 774 00:39:34,360 --> 00:39:37,319 Speaker 13: starting to write mortgages again. That's all good news for 775 00:39:37,400 --> 00:39:38,040 Speaker 13: the economy. 776 00:39:38,200 --> 00:39:41,520 Speaker 2: I've got to ask the engineer the question. Susan Collins 777 00:39:41,640 --> 00:39:44,720 Speaker 2: was channeling Patrick Kreker here the other day. She says, 778 00:39:44,920 --> 00:39:47,160 Speaker 2: we need to lose a pessimism. We need to be 779 00:39:47,200 --> 00:39:51,120 Speaker 2: more optimistic about where we are right now. You, more 780 00:39:51,160 --> 00:39:53,920 Speaker 2: than anyone I know, listens to business. What are you 781 00:39:54,000 --> 00:39:56,759 Speaker 2: hearing from business about investment next year? 782 00:39:57,000 --> 00:39:58,600 Speaker 4: About their confidence forward? 783 00:40:00,160 --> 00:40:02,640 Speaker 13: They're cautiously optimistic, I would say, right now, I think 784 00:40:02,640 --> 00:40:07,360 Speaker 13: they are optimistic. But depends on the industry and depends 785 00:40:07,920 --> 00:40:11,439 Speaker 13: on where they are in their own business cycle, right. 786 00:40:11,719 --> 00:40:15,080 Speaker 13: But yeah, generally we're seeing take housing for example, Housing 787 00:40:15,160 --> 00:40:17,400 Speaker 13: is a good example. We know that a lot of 788 00:40:17,440 --> 00:40:19,799 Speaker 13: developers are sitting on their hands waiting for rates to 789 00:40:19,880 --> 00:40:22,960 Speaker 13: come down for this process to start. I think that's 790 00:40:23,000 --> 00:40:26,960 Speaker 13: a good thing because we need them to build affordable houses, 791 00:40:27,400 --> 00:40:30,799 Speaker 13: loan moderate income houses, and I think they will do 792 00:40:30,880 --> 00:40:32,480 Speaker 13: that as we start this process. 793 00:40:33,680 --> 00:40:36,480 Speaker 6: When the Chairman's book today, he suggested that the balance 794 00:40:36,480 --> 00:40:39,719 Speaker 6: of risks has changed. Inflation is coming down and it's 795 00:40:39,800 --> 00:40:42,279 Speaker 6: probably not going to shoot up again because of the 796 00:40:42,400 --> 00:40:45,880 Speaker 6: rising unemployment rate. But the rising unemployment rate in turn 797 00:40:46,200 --> 00:40:48,360 Speaker 6: is a bigger risk. At this point, how much of 798 00:40:48,400 --> 00:40:52,319 Speaker 6: a risk do you see of downturn from unemployment? 799 00:40:52,480 --> 00:40:55,480 Speaker 13: So I don't see a large outside risk. The employment 800 00:40:55,520 --> 00:40:57,719 Speaker 13: unemployment can go up some right, and it probably will 801 00:40:57,719 --> 00:41:00,959 Speaker 13: go off a little bit. It will definitely, in our view, 802 00:41:01,280 --> 00:41:04,399 Speaker 13: not peak above say five percent. I mean it will 803 00:41:04,400 --> 00:41:07,520 Speaker 13: be below that for sure. Well not for sure. We 804 00:41:07,680 --> 00:41:10,960 Speaker 13: never nothing for sure. But you got to look at 805 00:41:11,000 --> 00:41:12,920 Speaker 13: the totality of the data too. It's not just about 806 00:41:12,960 --> 00:41:17,480 Speaker 13: that number, right, It's about what we're hearing from our contacts, 807 00:41:17,680 --> 00:41:20,879 Speaker 13: the claims data, the job to job transition data. There's 808 00:41:20,920 --> 00:41:22,640 Speaker 13: a host of data. You have to look at it. 809 00:41:23,320 --> 00:41:26,319 Speaker 6: Well, this is a confidence question. Recessions are always a 810 00:41:26,360 --> 00:41:30,680 Speaker 6: confidence question. You're talking about confidence CEOs that the business 811 00:41:30,760 --> 00:41:32,359 Speaker 6: is going to be okay. But what do you hear 812 00:41:32,400 --> 00:41:35,640 Speaker 6: from the average person who could pull back if. 813 00:41:35,520 --> 00:41:37,359 Speaker 3: They see the unemployment rate going up. 814 00:41:38,239 --> 00:41:42,360 Speaker 13: It really is a tale of two consumers. To simplify things. 815 00:41:42,400 --> 00:41:45,360 Speaker 13: Those who have the money are spending the money. They're 816 00:41:45,400 --> 00:41:50,839 Speaker 13: not that concern. Low moderate income households are really still 817 00:41:50,840 --> 00:41:53,520 Speaker 13: feeling the pain. They're feeling the pain of housing prices, 818 00:41:53,640 --> 00:41:56,719 Speaker 13: food prices, you name it. So they are very concerned. 819 00:41:56,719 --> 00:41:59,560 Speaker 13: So it really depends. It's not one size fits all. 820 00:41:59,560 --> 00:42:02,600 Speaker 13: There's not the average consumer. That person doesn't exist in 821 00:42:02,640 --> 00:42:03,480 Speaker 13: our economy. 822 00:42:03,960 --> 00:42:06,719 Speaker 1: So everyone's talking about this process, right, You talked about 823 00:42:06,719 --> 00:42:06,960 Speaker 1: that too. 824 00:42:07,000 --> 00:42:08,440 Speaker 5: This is the beginning of a process. 825 00:42:08,880 --> 00:42:11,759 Speaker 1: One thing that Neil dot noticed was missing was the 826 00:42:11,760 --> 00:42:14,319 Speaker 1: word gradual from Jpalas, which we can get to that 827 00:42:14,360 --> 00:42:14,920 Speaker 1: in a second. 828 00:42:15,320 --> 00:42:16,760 Speaker 5: Do you have a sense of where we're heading? 829 00:42:17,120 --> 00:42:19,279 Speaker 13: Yeah, so I like the word methodical. That's what I'm 830 00:42:19,320 --> 00:42:23,520 Speaker 13: hearing from my contacts. Please just make it so that 831 00:42:23,600 --> 00:42:27,400 Speaker 13: we know where you're going in a very clear way, 832 00:42:27,920 --> 00:42:30,320 Speaker 13: and then you start that process and don't just stop 833 00:42:30,320 --> 00:42:30,680 Speaker 13: and start. 834 00:42:30,719 --> 00:42:32,520 Speaker 1: As I said earlier, So where are you going. 835 00:42:33,200 --> 00:42:35,600 Speaker 13: Well, we're going to go back to whatever that new. 836 00:42:35,719 --> 00:42:36,440 Speaker 8: Neutral rate is. 837 00:42:36,719 --> 00:42:37,920 Speaker 5: We have an idea of what that could be. 838 00:42:38,560 --> 00:42:40,480 Speaker 13: Yeah, I mean we don't know exactly what it is. 839 00:42:40,520 --> 00:42:42,800 Speaker 13: We'll know it when we get there. Let's be honest, 840 00:42:42,880 --> 00:42:45,799 Speaker 13: you can't know it out priori, but you know it's 841 00:42:45,840 --> 00:42:49,040 Speaker 13: probably around something around three percent, is sure, you know, 842 00:42:49,160 --> 00:42:51,399 Speaker 13: or somewhere around that, But we don't know that for sure. 843 00:42:51,760 --> 00:42:54,520 Speaker 2: One of the new things that social media is wonderful people. 844 00:42:54,560 --> 00:42:57,160 Speaker 2: There's a guy named Triple Net Investor that's out there 845 00:42:57,480 --> 00:43:01,360 Speaker 2: revealing empty office buildings for next to nothing. 846 00:43:01,640 --> 00:43:02,480 Speaker 4: We got good news. 847 00:43:02,520 --> 00:43:05,200 Speaker 2: Philadelphia is not on the latest list of this city, 848 00:43:05,280 --> 00:43:08,440 Speaker 2: that city and the other city. From where you stand 849 00:43:08,600 --> 00:43:11,680 Speaker 2: and from all your contexts, and Philadelphia's let on this. 850 00:43:12,280 --> 00:43:15,080 Speaker 2: Where are we on the washout and clean up of 851 00:43:15,120 --> 00:43:16,320 Speaker 2: commercial real estate? 852 00:43:16,960 --> 00:43:17,200 Speaker 8: Again? 853 00:43:17,320 --> 00:43:20,839 Speaker 13: Let's commercial real estate isn't one size fits all thing. 854 00:43:21,280 --> 00:43:24,800 Speaker 13: So downtown office is what we're talking about. The dentist 855 00:43:24,880 --> 00:43:27,640 Speaker 13: in the suburban office mall is doing just fine. Right, 856 00:43:27,680 --> 00:43:30,919 Speaker 13: it's that downtown office space. We are starting to see 857 00:43:30,920 --> 00:43:33,720 Speaker 13: that clean out some again, it's going to take some time, 858 00:43:34,320 --> 00:43:37,680 Speaker 13: whether it's new businesses moving into that space at much 859 00:43:37,719 --> 00:43:41,120 Speaker 13: lower rents or conversion. We're seeing a lot of conversion 860 00:43:41,160 --> 00:43:41,919 Speaker 13: activity as well. 861 00:43:42,040 --> 00:43:45,120 Speaker 2: Do you have a confidence that the banking industry is 862 00:43:45,239 --> 00:43:48,399 Speaker 2: resilient to that conversion that's so far? 863 00:43:48,560 --> 00:43:51,279 Speaker 13: Yes, I do, but it's something we clearly need to 864 00:43:51,360 --> 00:43:51,920 Speaker 13: keep our eye on. 865 00:43:52,560 --> 00:43:55,800 Speaker 6: Let's sticky with real estate. Let's talk about the residential side. 866 00:43:55,880 --> 00:43:58,680 Speaker 6: You were populistic at the start of the interview here 867 00:43:58,680 --> 00:44:01,640 Speaker 6: talking about mortgages coming back. There's been a lot of 868 00:44:01,640 --> 00:44:04,840 Speaker 6: criticism of a FED maybe breaking the mortgage market because 869 00:44:05,000 --> 00:44:08,600 Speaker 6: interest rates rose above what the majority of people had 870 00:44:08,680 --> 00:44:09,600 Speaker 6: for their mortgage rate. 871 00:44:10,680 --> 00:44:11,399 Speaker 3: Do you have an. 872 00:44:11,320 --> 00:44:16,160 Speaker 6: Idea of what level housing it takes for housing to 873 00:44:16,200 --> 00:44:19,120 Speaker 6: come back and is that figured into your calculations of 874 00:44:19,160 --> 00:44:20,200 Speaker 6: where neutral should be. 875 00:44:20,880 --> 00:44:24,640 Speaker 13: Yeah, so we had to do what we did to 876 00:44:24,680 --> 00:44:27,920 Speaker 13: get inflation under control. So I don't know apologies that 877 00:44:27,960 --> 00:44:32,120 Speaker 13: we took rates up quickly. I think about my generation, 878 00:44:32,400 --> 00:44:35,120 Speaker 13: the Baby Boomers, the largest generation to go into retirement. 879 00:44:35,400 --> 00:44:38,719 Speaker 13: We're sitting on these low mortgages. We want to move, 880 00:44:39,080 --> 00:44:42,280 Speaker 13: We don't want that big house anymore. That lock in effect, 881 00:44:42,400 --> 00:44:45,080 Speaker 13: it will start to ease as rates come down, and 882 00:44:45,120 --> 00:44:47,560 Speaker 13: we're already starting to see a little bit of that again. 883 00:44:47,719 --> 00:44:50,400 Speaker 13: I talked to the bankers. They're writing mortgages again, not 884 00:44:50,480 --> 00:44:53,960 Speaker 13: just refise, but they're writing new mortgages again. That combined 885 00:44:54,000 --> 00:44:57,359 Speaker 13: with the new supply that'll come on the market I'm 886 00:44:57,400 --> 00:44:59,200 Speaker 13: pretty optimistic we can get this. 887 00:44:59,200 --> 00:45:02,400 Speaker 2: This is a critical statement from mister Harker, the idea 888 00:45:02,440 --> 00:45:04,799 Speaker 2: of like, when the rate comes down, where does the 889 00:45:04,840 --> 00:45:05,719 Speaker 2: fevers step in? 890 00:45:05,800 --> 00:45:06,600 Speaker 4: Again, are you. 891 00:45:06,600 --> 00:45:11,000 Speaker 3: Looking in Jackson? It would take a lot, a lot. 892 00:45:11,160 --> 00:45:12,760 Speaker 3: It would take a lot for that to happen. 893 00:45:13,520 --> 00:45:16,320 Speaker 6: Another question that comes up now that you're essentially starting 894 00:45:16,320 --> 00:45:18,319 Speaker 6: the path to rate cuts is what do you do 895 00:45:18,360 --> 00:45:21,279 Speaker 6: about the balance sheet? Because in theory they work in 896 00:45:21,320 --> 00:45:25,040 Speaker 6: opposition to each other, and it had been sort of 897 00:45:25,080 --> 00:45:28,320 Speaker 6: the fence policy that we wouldn't do them simultaneously. 898 00:45:28,520 --> 00:45:29,840 Speaker 3: But it looks like you're going to be doing that. 899 00:45:30,040 --> 00:45:30,719 Speaker 8: Yeah, that's okay. 900 00:45:30,800 --> 00:45:33,640 Speaker 13: I think again we I've always been in the camp 901 00:45:33,640 --> 00:45:37,000 Speaker 13: of putting the balance sheet on autopilot, essentially starting the process, 902 00:45:37,520 --> 00:45:40,360 Speaker 13: letting it run until we get and get there. We 903 00:45:40,480 --> 00:45:42,920 Speaker 13: definitely don't know exactly where that's going to end. The 904 00:45:43,040 --> 00:45:46,160 Speaker 13: data will dictate when we end that process. I'm okay 905 00:45:46,200 --> 00:45:48,840 Speaker 13: with doing that because it's in the background, it's running. 906 00:45:49,080 --> 00:45:52,200 Speaker 13: We need to get back to ample it reserves. We 907 00:45:52,239 --> 00:45:54,320 Speaker 13: don't know what that number is, but we'll know what won't. 908 00:45:54,400 --> 00:45:56,960 Speaker 3: You get an estimate about when that might be? 909 00:45:57,480 --> 00:46:02,719 Speaker 13: I do, but I'm not gonna. It's so uncertain. We 910 00:46:02,800 --> 00:46:05,319 Speaker 13: had an estimate last time we did this, right, we're off, 911 00:46:05,760 --> 00:46:07,520 Speaker 13: So I'm cautious about that. 912 00:46:07,600 --> 00:46:08,880 Speaker 5: If he told you, you'd have to kill you. 913 00:46:08,960 --> 00:46:12,520 Speaker 1: I think that there's this question right now about heading 914 00:46:12,520 --> 00:46:15,480 Speaker 1: into your end. And Adam Posen was really highlighting this earlier. 915 00:46:15,520 --> 00:46:18,600 Speaker 1: There's this anxiety about what the fiscal backdrop will do 916 00:46:19,080 --> 00:46:23,680 Speaker 1: to derail some of the calm, the methodical aspects of 917 00:46:24,040 --> 00:46:27,839 Speaker 1: FED policy. I don't know that you can or want 918 00:46:27,880 --> 00:46:31,840 Speaker 1: to comment on basically what that policy could be. But 919 00:46:31,920 --> 00:46:34,040 Speaker 1: how much does that keep FED officials up at night? 920 00:46:34,080 --> 00:46:35,920 Speaker 1: How much is that part of the discussion what you 921 00:46:36,000 --> 00:46:40,560 Speaker 1: have to do to respond to any potential expansion of 922 00:46:40,600 --> 00:46:43,040 Speaker 1: the deficit that could be inflationary next year. 923 00:46:44,000 --> 00:46:46,640 Speaker 13: So I stay out of fiscal policy. Honestly, you have 924 00:46:46,680 --> 00:46:48,880 Speaker 13: to respond, We have to respond to it exactly. And 925 00:46:48,920 --> 00:46:51,000 Speaker 13: so I can't speak for the FED either, but for myself, 926 00:46:51,200 --> 00:46:54,879 Speaker 13: what keeps me up are many risks. That's one of them, right. 927 00:46:55,239 --> 00:46:59,359 Speaker 13: There's also if we see what we're seeing around the world, 928 00:46:59,680 --> 00:47:02,960 Speaker 13: content licks get worse. I mean that would be tragic 929 00:47:03,080 --> 00:47:07,920 Speaker 13: to humanitarian tragedy alone, but the tragedy also to the economy, 930 00:47:07,640 --> 00:47:09,080 Speaker 13: the hurt to the economy. 931 00:47:09,360 --> 00:47:10,680 Speaker 4: So there are a lot of risks that keep me 932 00:47:10,760 --> 00:47:11,239 Speaker 4: up at night. 933 00:47:11,280 --> 00:47:12,000 Speaker 8: That's just one of them. 934 00:47:12,160 --> 00:47:16,560 Speaker 1: Well, tariffs, were you more or the deficit depends. 935 00:47:17,360 --> 00:47:20,759 Speaker 13: It depends the devil's in the detail, Like what's specific 936 00:47:20,760 --> 00:47:23,959 Speaker 13: about the tires, what specifically we're investing in in terms 937 00:47:24,000 --> 00:47:28,200 Speaker 13: of deficit. You know, I'm a simple guy. I think 938 00:47:28,480 --> 00:47:32,160 Speaker 13: if we're investing in something that's improving the productivity of 939 00:47:32,200 --> 00:47:35,440 Speaker 13: the American economy, that's a good thing. If we're spending 940 00:47:35,480 --> 00:47:38,760 Speaker 13: money that doesn't do that, that worries me more. So, Again, 941 00:47:38,960 --> 00:47:41,680 Speaker 13: it's not just one one thing. It really depends on 942 00:47:41,719 --> 00:47:42,239 Speaker 13: what we're doing. 943 00:47:42,320 --> 00:47:44,920 Speaker 6: So you mentioned productivity. We had the big revision to 944 00:47:45,200 --> 00:47:48,320 Speaker 6: the non farm payrolls right this week, but that should 945 00:47:48,360 --> 00:47:52,319 Speaker 6: raise productivity. You view that as good news offsetting the 946 00:47:52,360 --> 00:47:53,600 Speaker 6: bad news of Lord John. 947 00:47:53,680 --> 00:47:56,080 Speaker 13: That's an interesting that's an interesting way of thinking about it. 948 00:47:56,320 --> 00:48:01,440 Speaker 13: We were expecting this adjustment and we looked at in 949 00:48:01,480 --> 00:48:04,000 Speaker 13: Philly FED. We've been looking at this the payroll adjustments, 950 00:48:04,360 --> 00:48:06,160 Speaker 13: and we knew this was coming. It's a little larger 951 00:48:06,160 --> 00:48:07,920 Speaker 13: than we expected, but we knew it was coming, so 952 00:48:07,960 --> 00:48:10,640 Speaker 13: that wasn't a surprise. And it's still a good number overall, 953 00:48:10,640 --> 00:48:12,680 Speaker 13: if you average out over twelve months, we're still doing 954 00:48:12,840 --> 00:48:15,640 Speaker 13: just fine in the American economy. But there's risk there. 955 00:48:15,719 --> 00:48:17,800 Speaker 13: That's why we need to start to take action now. 956 00:48:18,040 --> 00:48:19,720 Speaker 3: Well, we'll see you on September eighteenth. 957 00:48:19,800 --> 00:48:23,160 Speaker 6: Patrick Harker, President of the Philadelphia Fed, thank you very 958 00:48:23,239 --> 00:48:25,680 Speaker 6: much for joining us on Bloomberg Radio and television. 959 00:48:26,120 --> 00:48:29,319 Speaker 2: This is a Bloomberg Surveillance podcast, bringing you the best 960 00:48:29,360 --> 00:48:34,120 Speaker 2: in economics, finance, investment, and international relations. You can also 961 00:48:34,200 --> 00:48:38,239 Speaker 2: watch the show live on YouTube. Visit the Bloomberg Podcast 962 00:48:38,360 --> 00:48:42,399 Speaker 2: channel on YouTube to see the show weekday mornings from 963 00:48:42,440 --> 00:48:45,680 Speaker 2: seven to ten am Eastern from our global headquarters in 964 00:48:45,800 --> 00:48:49,480 Speaker 2: New York City. Subscribe to the podcast on Apple, Spotify, 965 00:48:49,840 --> 00:48:53,319 Speaker 2: or anywhere else you listen, and always on Bloomberg Radio, 966 00:48:53,560 --> 00:48:56,760 Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. 967 00:49:01,120 --> 00:49:01,400 Speaker 4: Really