WEBVTT - US Logistics Will Flex to Absorb Bridge Shock 0:00:02.920 --> 0:00:10.719 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business 0:00:10.720 --> 0:00:13.960 Wait inside from the reporters and editors who bring you 0:00:14.000 --> 0:00:18.360 America's most trusted business magazine plus global business, finance and 0:00:18.400 --> 0:00:22.840 tech news. The Bloomberg Business Week Podcast with Carol Messer 0:00:23.040 --> 0:00:25.800 and Tim Stenebeck from Bloomberg Radio. 0:00:27.680 --> 0:00:30.440 You folks, we are of course continuing to follow the 0:00:30.520 --> 0:00:33.360 latest on the accident at Baltimore's Francis Scott Keybridge. Six 0:00:33.400 --> 0:00:37.599 people are presumed dead after search officials just pointing that 0:00:37.720 --> 0:00:40.920 out press conference. So loss of life continues to be 0:00:40.920 --> 0:00:43.480 obviously top of mind. The bridge, as you know, collapsing 0:00:43.560 --> 0:00:46.600 in just a matter of seconds yesterday. But the consequence 0:00:46.680 --> 0:00:50.240 is tim the catastrophic consequences could be set to stretch 0:00:50.240 --> 0:00:50.880 out for weeks. 0:00:51.040 --> 0:00:53.360 Yeah, as much as two point five million tons of coal, 0:00:53.479 --> 0:00:56.320 hundreds of cars made by Ford and General Motors, and 0:00:56.400 --> 0:00:59.680 lumber and gypsum are threatened with disruption. It's just another 0:00:59.720 --> 0:01:02.040 pot factor that may need to go into the US 0:01:02.120 --> 0:01:06.360 economic model or not if the logistical world can adapt 0:01:06.440 --> 0:01:09.080 quickly so that Carol is where we go now it is. 0:01:09.160 --> 0:01:11.119 Let's get to our Key interview on this Wednesday back 0:01:11.120 --> 0:01:13.920 with US is Bloomberg News International Economics and Policy correspondent 0:01:14.000 --> 0:01:16.600 Mike McKee. He's here in our studio in New York City, 0:01:16.800 --> 0:01:19.920 along with Bloomberg News Global Economy reporter and occurr and 0:01:19.959 --> 0:01:23.160 he's out there in our Washington, DC bureau. First up, Mike, 0:01:23.240 --> 0:01:24.840 I do kind of want to start with you. You 0:01:24.920 --> 0:01:28.360 do put always everything that's happening in our world into 0:01:28.720 --> 0:01:32.200 the economic context for us. Are we hearing anything from 0:01:32.200 --> 0:01:36.200 FED officials or from the economics community about the concern 0:01:36.319 --> 0:01:38.319 that this will have on supply chains or is it 0:01:38.400 --> 0:01:39.640 still kind of too early. 0:01:39.760 --> 0:01:44.040 Nothink from the Fed yet? We have heard from economists 0:01:44.040 --> 0:01:46.600 on Wall Street who put pencil to paper and try 0:01:46.640 --> 0:01:49.120 to figure out what the impacts might be. And while 0:01:49.120 --> 0:01:52.000 this is a terrible tragedy in human terms, and it 0:01:52.080 --> 0:01:55.440 is going to have an economic impact, certainly on Baltimore 0:01:55.880 --> 0:01:57.920 for quite some time, it is not going to have 0:01:57.960 --> 0:02:01.720 a major impact on the overall UA economy. Tim brought 0:02:01.800 --> 0:02:05.920 up the idea of how quickly logistics can adapt, and 0:02:06.280 --> 0:02:09.040 we're being told by everybody in that business that they 0:02:09.040 --> 0:02:14.520 can adapt fairly quickly. The biggest thing, as you mentioned, 0:02:14.560 --> 0:02:17.520 is that automobiles. It was the biggest port for import 0:02:17.600 --> 0:02:20.520 export of automobiles. They've got to get the port open 0:02:20.720 --> 0:02:24.080 for about half of it. BW and BMW are outside 0:02:24.080 --> 0:02:28.640 of the bridge, so they can still take in some cars, 0:02:28.680 --> 0:02:32.840 and we understand may take in other people's as well, 0:02:33.240 --> 0:02:35.520 and there are other ports. Savannah's built up a big 0:02:35.960 --> 0:02:39.400 what they call roll on roll off capability and so 0:02:39.520 --> 0:02:41.960 they will take some as well. So it looks like 0:02:42.000 --> 0:02:46.280 they may be able to work this out relatively quickly now. 0:02:46.320 --> 0:02:49.080 Pete Buddha Judge was just briefing at the White House. 0:02:49.360 --> 0:02:51.320 He was asked how long it will take to get 0:02:51.320 --> 0:02:53.160 the port open, which is going to be the key 0:02:53.200 --> 0:02:56.800 economic question, and he said it's still too early to tell. 0:02:56.840 --> 0:02:59.320 They're trying to figure it out. It'll be up to 0:02:59.400 --> 0:03:03.160 how fast to the core of engineers can get Iron 0:03:03.320 --> 0:03:05.480 out of the way out of the harbor. 0:03:05.680 --> 0:03:07.520 Right, hey, and come on in here, because Mike just 0:03:07.560 --> 0:03:10.120 went through some of those individual companies and what they 0:03:10.160 --> 0:03:12.720 could do to adapt. But as you and the team 0:03:12.720 --> 0:03:16.160 writing the Economics Daily newsletter out earlier today, the US 0:03:16.240 --> 0:03:19.000 economy is in a different position right now. It's in 0:03:19.040 --> 0:03:21.280 a much better position than it was a few years 0:03:21.320 --> 0:03:24.880 ago to handle a challenge such as this, do we 0:03:24.919 --> 0:03:27.720 have the pandemic to thank for this or is it 0:03:27.800 --> 0:03:28.360 something else? 0:03:29.639 --> 0:03:31.959 Yeah, So anytime we got a kind of a supply 0:03:32.120 --> 0:03:35.920 chain scare, it's always benchmarked against what happened in the pandemic, 0:03:35.920 --> 0:03:38.640 which was such an unusual time. We had this year 0:03:38.680 --> 0:03:41.440 in the Red Sea crisis a you know, earlier part 0:03:41.440 --> 0:03:42.880 of this year, people were saying, is it going to 0:03:42.920 --> 0:03:45.240 be another global supply crunch? And of course now we 0:03:45.280 --> 0:03:49.200 have this disaster yesterday with the human tragedy first and foremost, 0:03:49.320 --> 0:03:51.360 with people asking what will this mean for the supply 0:03:51.480 --> 0:03:53.880 chain story. I think, as Mike was saying, it's more 0:03:53.880 --> 0:03:56.480 benign this time around, because there are a couple of differences. 0:03:56.520 --> 0:03:59.360 There's a lot of capacity on international and shipping at 0:03:59.360 --> 0:04:01.560 the moment, a lot of spare containers, a lot of 0:04:01.600 --> 0:04:04.080 spare ships. Sure rates have gone up a bit, but 0:04:04.440 --> 0:04:06.280 it's there, it's available if needed. 0:04:06.280 --> 0:04:08.240 That's number one. And number two. 0:04:08.280 --> 0:04:11.440 Of course, demand for goods is not like it was 0:04:11.600 --> 0:04:13.960 during the pandemic. So one of the reasons that there 0:04:14.040 --> 0:04:17.000 was such a choke point at ports and in manufacturers 0:04:17.000 --> 0:04:19.080 around the world a few years ago was just the 0:04:19.240 --> 0:04:22.040 share demand by people in the US spending their money 0:04:22.120 --> 0:04:24.080 staying at home buying the stuff that they need. That's 0:04:24.080 --> 0:04:25.960 not really there now. The hot side of the economy 0:04:26.240 --> 0:04:28.600 is more on the service side of things, So that's 0:04:28.640 --> 0:04:31.680 another reason why it's not expected to be, you know, 0:04:31.920 --> 0:04:34.600 the complete choke point that you might suggest on paper. 0:04:34.839 --> 0:04:37.920 And then as Mike's outlining, there's other options within the US. 0:04:37.960 --> 0:04:40.760 You got the West Coast for other alternative ports. There's 0:04:41.120 --> 0:04:44.000 road freight options to take some of this. So when 0:04:44.040 --> 0:04:47.480 you stack it up, it's certainly a complication. It's certainly 0:04:47.480 --> 0:04:50.560 a major issue for the regional economy up there around Baltimore, 0:04:51.000 --> 0:04:54.080 but I don't think anyone's yet suggesting this is going 0:04:54.120 --> 0:04:56.839 to be a major, major supply choke for the US 0:04:56.960 --> 0:04:58.080 or the global economy. 0:04:58.200 --> 0:05:01.599 One thing you just mentioned that Secretary of Budha Judge 0:05:01.600 --> 0:05:05.000 brought up as after the pandemic, the Biden administration set 0:05:05.080 --> 0:05:09.280 up a command post in the Transportation Department for logistics, 0:05:09.960 --> 0:05:13.480 and they're activating that now so that they can work 0:05:13.560 --> 0:05:16.560 with not just the UPS's and the Fedexes and the 0:05:16.600 --> 0:05:19.280 trucking companies in the area, but all the smaller companies 0:05:19.320 --> 0:05:21.760 in the area that need to coordinate getting in and 0:05:21.800 --> 0:05:24.680 out and getting their stuff together. So he was suggesting 0:05:24.720 --> 0:05:28.760 that that might make it easier for particularly smaller companies 0:05:28.800 --> 0:05:29.280 to adjust. 0:05:29.360 --> 0:05:29.520 Yeah. 0:05:29.600 --> 0:05:31.440 Right, if you remember logistics, it's the big guys, but 0:05:31.480 --> 0:05:33.080 there's a lot of little players too that get all 0:05:33.320 --> 0:05:35.960 that stuff to us. Having said that, Mike, right during 0:05:35.960 --> 0:05:38.040 the pandemic, as and I was pointing out, we were 0:05:38.040 --> 0:05:40.600 buying so much stuff because we couldn't go anywhere. Now 0:05:40.600 --> 0:05:42.680 we just want to go anywhere. And in my house too, 0:05:42.720 --> 0:05:43.760 I'm like, I'm done with this stuff. 0:05:43.800 --> 0:05:46.960 You don't need another couch. You're not going to need anything. 0:05:47.000 --> 0:05:49.200 I hope you're not going to drive through Baltimore. 0:05:49.680 --> 0:05:51.880 I'm not anytime soon. 0:05:52.240 --> 0:05:55.240 Having said that, goods inflation it's come down way, like 0:05:55.279 --> 0:05:57.239 where are we And if we do see a little 0:05:57.240 --> 0:05:59.480 bit of pressure on the good side, can we afford 0:05:59.480 --> 0:06:00.600 that economy? 0:06:01.200 --> 0:06:03.760 Yes, we could afford it. It was going down for 0:06:03.839 --> 0:06:05.800 months and months, and then in the last couple of months, 0:06:05.839 --> 0:06:08.880 goods inflation has gone up a little bit, and that 0:06:09.040 --> 0:06:11.520 is something the Fed is keeping an eye on because 0:06:11.560 --> 0:06:14.600 if it starts to if it continues to do that 0:06:14.960 --> 0:06:17.000 and picks up speed, then that's more of a concern. 0:06:17.040 --> 0:06:20.719 They did expect goods inflation to flatten out, and basically 0:06:20.760 --> 0:06:23.360 that's where we are with some minor increases. So we'll 0:06:23.400 --> 0:06:26.120 have to see if this does push any prices higher. 0:06:26.200 --> 0:06:30.159 Probably not, because of the fact that the country is 0:06:30.200 --> 0:06:33.240 so big and this is such a small area in 0:06:33.320 --> 0:06:36.200 terms of prices that will be affected. New car prices 0:06:36.480 --> 0:06:42.560 have gone down, they're going down now, actually disinflating, and 0:06:42.640 --> 0:06:46.240 so even if this puts a little straight on auto inventories, 0:06:46.320 --> 0:06:48.040 shouldn't raise prices too much. 0:06:48.360 --> 0:06:50.360 Might do we expect to hear from the FED at 0:06:50.400 --> 0:06:50.920 all on this? 0:06:51.640 --> 0:06:55.240 Oh? I would imagine that FED officials who speak will 0:06:55.279 --> 0:07:00.560 get asked about it. I would imagine they will say this, Jaye, how. 0:07:00.560 --> 0:07:02.080 Is are you talking on Friday? 0:07:02.200 --> 0:07:04.039 Friday? 0:07:04.080 --> 0:07:06.760 They will say the same thing that everybody else is saying. 0:07:06.760 --> 0:07:09.039 It All the officials at this point is we just 0:07:09.080 --> 0:07:12.040 don't know. We have to see how this plays out. Obviously, 0:07:12.040 --> 0:07:15.640 there are logistical issues around the world right now, from 0:07:15.680 --> 0:07:18.960 the Red Sea to Africa to. 0:07:20.680 --> 0:07:22.720 Asia and so all that. 0:07:22.640 --> 0:07:25.800 Will play into this, but it doesn't look like at 0:07:25.800 --> 0:07:27.280 this point it would be huge. But I don't think 0:07:27.280 --> 0:07:28.640 they have a good handle on it. 0:07:28.720 --> 0:07:31.320 And another element to this is certainly the job market 0:07:31.440 --> 0:07:34.080 right we're essentially back at full employment. I mean, how 0:07:34.120 --> 0:07:36.560 does that so that if one other port somewhere needs 0:07:36.600 --> 0:07:38.840 more workers are sown and so forth to pick up 0:07:38.880 --> 0:07:41.760 the slack as a result of what's going on in Baltimore, 0:07:43.160 --> 0:07:43.920 that's a positive. 0:07:43.960 --> 0:07:47.960 I'm assuming, well, that's the hopeful case that you know, 0:07:48.040 --> 0:07:50.360 people are back in the workforce, they are available, and 0:07:50.400 --> 0:07:53.200 the flexibility there. But you know, it depends, you know, 0:07:53.240 --> 0:07:56.000 if there was a real crunch on at the ports, 0:07:56.160 --> 0:07:58.080 remember the threat of labor action in some of the 0:07:58.120 --> 0:08:00.920 ports as well. You know, not benign to would be tested. 0:08:01.000 --> 0:08:03.360 Because we know that broadly speaking, the jobs market's so 0:08:03.520 --> 0:08:06.440 strong and there are plenty of employers in America complaining 0:08:06.440 --> 0:08:09.200 that they can't get stuff so right here right now, 0:08:09.920 --> 0:08:12.040 as we heard the White House say yesterday, the jobs 0:08:12.040 --> 0:08:15.400 market is in good order. People are there and working. 0:08:15.640 --> 0:08:17.560 That's a plus when you have something like this happening. 0:08:17.720 --> 0:08:20.080 But of course it's not hard to see how the 0:08:20.160 --> 0:08:21.960 labor market will be stretched a bit thin if there 0:08:22.080 --> 0:08:23.920 was a further stress test. 0:08:24.200 --> 0:08:27.560 One interesting aspect is that it will take time to 0:08:27.600 --> 0:08:31.800 get the port open, and the job's survey is taken 0:08:31.880 --> 0:08:33.800 during the week that includes the twelfth of the month. 0:08:33.840 --> 0:08:36.880 So if they're not open in two weeks, there's one 0:08:36.960 --> 0:08:40.000 hundred and forty thousand workers at the Port of Baltimore, 0:08:40.320 --> 0:08:44.560 and if they can't, they have stuff that's come in 0:08:44.600 --> 0:08:47.199 already that they're working and moving out. But if all 0:08:47.200 --> 0:08:49.640 that stuff moves out it isn't replaced, then you could 0:08:49.640 --> 0:08:52.240 have people who are laid off, and it could show 0:08:52.360 --> 0:08:55.480 up in the April jobs report. I mean, hopefully it's 0:08:55.559 --> 0:08:57.840 only temporary, but one hundred and forty thousand a lot 0:08:57.880 --> 0:09:00.000 of people who wouldn't who might not be at. 0:09:00.720 --> 0:09:02.800 It's not like, to Mike's point, those one hundred and 0:09:02.840 --> 0:09:05.920 forty thousand folks could pack up and go south to 0:09:06.040 --> 0:09:08.320 another port, or go north to the Port of New 0:09:08.400 --> 0:09:11.920 York and New Jersey. Is their capacity? You mentioned capacity 0:09:11.960 --> 0:09:15.160 on ships, but is there actual number of workers in 0:09:15.200 --> 0:09:19.320 capacity at the ports to accept more well. 0:09:19.360 --> 0:09:21.160 As I say, one of the big concerns of the 0:09:21.200 --> 0:09:23.040 ports around the US at the moment is the threat 0:09:23.080 --> 0:09:25.000 of strike action. If that was to go ahead, that 0:09:25.040 --> 0:09:28.640 would potentially cause significant disruption. But I think beyond that, 0:09:29.240 --> 0:09:31.800 my understanding is that ports are pretty much handling capacity 0:09:31.840 --> 0:09:34.439 at the moment and even with the extra capacity that's 0:09:34.440 --> 0:09:36.520 going to have to be spread out from Baltimore. Everyone 0:09:36.559 --> 0:09:38.720 I spoke to you yesterday said it can be absorbed 0:09:39.000 --> 0:09:40.679 into the system, but will just take a bit of 0:09:40.760 --> 0:09:43.320 reshuffling up and down the East coast and maybe across 0:09:43.400 --> 0:09:45.480 the West coast. I don't think that's going to be 0:09:46.080 --> 0:09:48.839 the primary concern. The bigger issue is going is I 0:09:48.920 --> 0:09:51.160 think effectively going to be on the port itself. How 0:09:51.200 --> 0:09:53.360 long will this block a germain? How long will it 0:09:53.400 --> 0:09:55.439 take to get that port reopened again, and how long, 0:09:55.480 --> 0:09:58.000 of course will take the bridge to get built. Everyone 0:09:58.040 --> 0:10:00.240 I've spoken to say that the rest of the just 0:10:00.280 --> 0:10:02.520 six network should be able to absorb what's going to 0:10:02.559 --> 0:10:03.640 happen over to coin months. 0:10:03.760 --> 0:10:05.320 All right, one thing I want to just kind of pivot. 0:10:05.360 --> 0:10:07.319 We've got about four minutes or so left here, and 0:10:07.360 --> 0:10:10.920 I'm thinking, Mike, certainly about the Friday inflation read. You 0:10:10.960 --> 0:10:13.400 guys are going to be here live reporting it out. 0:10:13.840 --> 0:10:14.080 Yeah. 0:10:14.240 --> 0:10:17.200 Jen Tecker was talking about people who get days off. 0:10:18.559 --> 0:10:21.280 Oh, come on, you love this stuff. Jay Powell's going 0:10:21.360 --> 0:10:26.800 to speak a few hours after that inflation reading. What's 0:10:26.880 --> 0:10:28.319 top of mine? And then I want to kind of 0:10:28.360 --> 0:10:30.480 spin it to you and about kind of the global 0:10:30.520 --> 0:10:32.839 inflation picture, because I do feel like we focus on 0:10:32.880 --> 0:10:34.319 the US, but you know, we got to kind of 0:10:34.320 --> 0:10:35.960 think about what's happening around the globe. But let's talk 0:10:36.000 --> 0:10:36.960 about Friday's data. 0:10:37.040 --> 0:10:40.800 Well, Friday is the income spending in PCEE numbers for 0:10:41.040 --> 0:10:46.360 the latest month for February, and it's it comes out 0:10:46.400 --> 0:10:49.040 much later than CPI, but the Fed follows the PCEE 0:10:49.120 --> 0:10:52.000 inflation numbers, so they're going to be very important, and 0:10:52.040 --> 0:10:54.640 they're expected to rise just a little bit the way 0:10:54.679 --> 0:10:58.160 that CPI did, but not as much as we saw 0:10:58.320 --> 0:11:00.800 in CPI, so there will be a lot of attention 0:11:01.280 --> 0:11:04.520 paid to those. We also get the income and spending numbers. 0:11:04.520 --> 0:11:08.400 Retail sales we're not particularly great, so there'll be some 0:11:08.480 --> 0:11:12.320 focus on whether Americans are still spending once you fold 0:11:12.360 --> 0:11:15.000 in the services. I mean, you're taking your trips, you're 0:11:15.040 --> 0:11:16.920 doing services, you're not buying goods. 0:11:17.120 --> 0:11:20.560 But we need to see some strength there. 0:11:20.720 --> 0:11:22.760 The one thing we have seen on a regular basis 0:11:22.880 --> 0:11:26.760 is that incomes have been relatively strong, particularly when you 0:11:26.800 --> 0:11:30.160 look at wages and salaries, and if that continues, then 0:11:30.200 --> 0:11:32.240 you relax a little bit about the spending, and that 0:11:32.679 --> 0:11:35.960 you know that people can afford it. They tend to 0:11:36.000 --> 0:11:39.679 spend what they earn. So that's why we're looking at 0:11:39.679 --> 0:11:41.440 all that, and then of course we get almost a 0:11:41.480 --> 0:11:47.320 real time reaction from the chairman. I'm sure first question 0:11:47.360 --> 0:11:51.760 will probably be the inflation numbers that day, and so 0:11:52.280 --> 0:11:55.000 we'll get a sort of set up. It's very early. 0:11:56.160 --> 0:11:59.000 They just met last week and we don't have another 0:11:59.000 --> 0:12:01.800 FED meeting till May first. First, so you have to 0:12:01.880 --> 0:12:04.840 kind of take anything. Jay pol says, not with a 0:12:04.880 --> 0:12:07.920 grain of salt. But obviously it's going to be a while. 0:12:08.280 --> 0:12:10.960 He could change his mind depending on what other data 0:12:11.000 --> 0:12:13.679 we get. But you know, the markets come Monday morning 0:12:13.679 --> 0:12:15.440 are all going to come in and react to it. 0:12:15.480 --> 0:12:17.920 And if you get notes from the bond market people, 0:12:17.920 --> 0:12:21.040 they're not really happy that he's doing this on a 0:12:21.160 --> 0:12:22.680 day when the markets are closed. 0:12:22.880 --> 0:12:25.320 You know, Josenthalen is you know, five things to watch 0:12:25.360 --> 0:12:27.160 every morning, and we all kind of read through it. 0:12:27.200 --> 0:12:28.880 And one of the things he was looking at is 0:12:28.920 --> 0:12:34.000 global inflation and a Canadian CPI for February grew less 0:12:34.000 --> 0:12:37.400 than expectations. You can flight inflation falling to its lowest 0:12:37.440 --> 0:12:40.240 level in over two years. Coming in also cooler than expected. 0:12:41.160 --> 0:12:45.120 I think Spain's preliminary harmonized CPI measure was less than 0:12:45.160 --> 0:12:48.240 expected slightly. I mean, and as he writes, every economy 0:12:48.240 --> 0:12:50.439 has its own story, but we are seeing a lot 0:12:50.480 --> 0:12:55.160 of it feels like correlation between global economies and global inflation. 0:12:56.520 --> 0:12:58.560 What do we know about that, what's the importance of 0:12:58.600 --> 0:13:00.839 that and what it tells us maybe about what's going 0:13:00.880 --> 0:13:03.840 on more globally around the world when it comes to 0:13:04.440 --> 0:13:05.720 price pressures. 0:13:06.320 --> 0:13:09.400 Carol, Absolutely, inflation's coming off right around the world. I 0:13:09.440 --> 0:13:11.679 heard an economists this morning actually make the point that 0:13:11.720 --> 0:13:14.360 in Europe inflation is going to come off much quicker 0:13:14.360 --> 0:13:17.240 than people anticipate, and that's going to clear away from 0:13:17.240 --> 0:13:19.840 mortgage rates, boring costs come down. Around the world, it's 0:13:19.880 --> 0:13:22.880 a very similar story. I mean, the US has had 0:13:22.880 --> 0:13:24.439 a bit of a scare earlier this year, as Mike 0:13:24.600 --> 0:13:27.160 was alluding to there, but broadly speaking is on track 0:13:27.200 --> 0:13:30.880 everywhere else. Let's not forget that the world's number two economy, China, 0:13:31.280 --> 0:13:34.839 is battling deflation. They've never had the inflation outbreak to 0:13:34.920 --> 0:13:38.120 begin with, but the other are Plenty of analysts will 0:13:38.120 --> 0:13:40.280 tell you that when Shawn is battling deflation that will 0:13:40.280 --> 0:13:44.880 take pressure off the global prices as well. So everyone 0:13:44.880 --> 0:13:46.520 I speak to you and everything I read suggest that 0:13:46.600 --> 0:13:49.200 this remains the year of this inflation around the world. 0:13:49.520 --> 0:13:51.880 Boring costs and industrates are going to come down. Switzerland 0:13:51.920 --> 0:13:55.400 has already moved, they had room to do so, of course, 0:13:55.400 --> 0:13:57.520 but several others are expected to follow suit, and I 0:13:57.559 --> 0:14:00.200 think once we get to midyear, you'll hear a loup 0:14:00.240 --> 0:14:02.800 more chatter around which major tuns of mind would be 0:14:02.840 --> 0:14:04.520 going first and by how much. 0:14:05.040 --> 0:14:07.559 Mike's final thought, well, I think the one thing we 0:14:08.160 --> 0:14:10.679 want to watch, particularly because it's a political year here 0:14:10.679 --> 0:14:13.080 in the United States, gasoline prices. Oil prices have been 0:14:13.120 --> 0:14:15.880 going up. We're getting into the season where there's more 0:14:15.880 --> 0:14:18.439 oil demand and more gasoline demand, so that'll put some 0:14:18.480 --> 0:14:23.600 pressure on prices, which would push headline inflation higher. That 0:14:23.880 --> 0:14:26.440 is a certain concern to the FED because they look 0:14:26.440 --> 0:14:28.960 at headline inflation. But it's also going to be a 0:14:28.960 --> 0:14:31.680 factor in probably the political races. 0:14:31.720 --> 0:14:32.600 I care when I go to the pump. 0:14:32.640 --> 0:14:35.000 Don't you care what everybody cares? That's everybody cares about 0:14:35.040 --> 0:14:36.880 the pump big time, all right. 0:14:36.920 --> 0:14:40.200 Mike McKee, International Economics and Policy correspondent here at Bloomberg 0:14:40.240 --> 0:14:43.160 End occurrent Global Economy Reporter. Bloomberg Radio will be live 0:14:43.240 --> 0:14:46.640 Friday for that inflation read in of course Chair Powell 0:14:46.720 --> 0:14:49.440 and his comments and speech. This is Bloomberg. 0:14:50.800 --> 0:14:54.480 You're listening to Bloomberg Business Week with Carol Messer and 0:14:54.560 --> 0:14:57.800 Tim Stenebeck on Bloomberg Radio and Television. 0:14:58.520 --> 0:15:01.760 All right, everybody, Carol mass inctentic life here in our 0:15:01.840 --> 0:15:04.520 New York studio. So I got to say that this 0:15:04.600 --> 0:15:06.240 is something we talk a lot about, Tim, and that 0:15:06.320 --> 0:15:09.920 is how financial inclusion major issue around the world. McKinsey 0:15:10.000 --> 0:15:12.320 noting last year that nearly a billion and a half 0:15:12.360 --> 0:15:15.760 people living in emerging economies don't have access to formal 0:15:15.800 --> 0:15:19.080 savings and credit, and that while the overall global wealth 0:15:19.080 --> 0:15:22.080 and income graph has narrowed since the eighties, inequality has 0:15:22.120 --> 0:15:25.720 actually increased within advanced economy. So it's not just emerging, 0:15:25.760 --> 0:15:26.800 it's advanced as well. YEH. 0:15:26.880 --> 0:15:28.760 Needless to say, there's still a lot of work to 0:15:29.600 --> 0:15:32.520 be done. And Shamina Saying knows that she's the founder 0:15:32.520 --> 0:15:35.560 and president of MasterCard Center for Inclusive Growth. She's held 0:15:35.640 --> 0:15:38.920 senior positions in the White House and the House of Representatives, 0:15:38.960 --> 0:15:42.120 including appointments by President Obama. She joins us now from 0:15:42.240 --> 0:15:45.600 New York City. Welcome, Shamina, How are you doing well? 0:15:45.600 --> 0:15:46.920 Thanks, thank you so much for having me. 0:15:47.000 --> 0:15:48.800 Yeah, thanks so much for joining us on this. So 0:15:49.000 --> 0:15:51.600 a lot of your professional life, what you've done as 0:15:51.640 --> 0:15:54.480 an adult, has centered around the global economy that takes 0:15:54.840 --> 0:15:58.400 everyone into account. It's not something that is actually happening 0:15:58.600 --> 0:16:01.680 right now. What's the nut that needs to be cracked 0:16:01.680 --> 0:16:04.240 to break the great financial divide that we talk about 0:16:04.280 --> 0:16:04.720 so much? 0:16:06.320 --> 0:16:08.160 Well, it's such an important point, and I think Carroll 0:16:08.200 --> 0:16:11.560 started off rather well, which is it really is about 0:16:11.640 --> 0:16:14.920 financial inclusion? You know, I think we take for granted 0:16:15.760 --> 0:16:18.080 that you know, sitting here in New York City certainly 0:16:18.520 --> 0:16:20.840 and a lot of times in the United States, you know, 0:16:20.920 --> 0:16:24.280 you have a phone that gives you access to a 0:16:24.320 --> 0:16:27.400 train ticket or a train or a bus ticket, or 0:16:27.440 --> 0:16:30.720 any kind of digital access that you need. That's just 0:16:30.760 --> 0:16:34.480 not true for many millions of people around the world. 0:16:34.920 --> 0:16:38.760 But we're making progress. I mean, I think at MasterCard 0:16:38.800 --> 0:16:41.440 in the Center, we actually made a commitment to bring 0:16:41.520 --> 0:16:45.920 a billion people into the formal financial system by twenty 0:16:46.200 --> 0:16:48.800 twenty five, and we're almost there. We're at about eight 0:16:48.920 --> 0:16:51.360 hundred and seventy million, so we are well on our 0:16:51.400 --> 0:16:54.640 way to hitting that goal. But it's also important that 0:16:54.680 --> 0:16:57.680 we make sure that small business owners succeed in what's 0:16:57.720 --> 0:17:01.360 increasingly becoming a digital economy. So we made a commitment 0:17:01.400 --> 0:17:06.240 there to ensure that we bring fifty million small business 0:17:06.240 --> 0:17:10.040 owners into the formal economy again by twenty twenty five, 0:17:10.080 --> 0:17:12.840 and we're almost there, that we're at forty eight million 0:17:12.960 --> 0:17:15.840 right now. But the final piece around small business and 0:17:15.880 --> 0:17:19.239 financial inclusion, to your point about closing that gap or 0:17:19.280 --> 0:17:24.080 cracking that nut, is to ensure that we include marginalized 0:17:24.080 --> 0:17:28.120 communities in those small business ownerships. And so as part 0:17:28.160 --> 0:17:30.760 of our commitment, we wanted to make sure that at 0:17:30.840 --> 0:17:35.480 least twenty five million of our target were women owned 0:17:35.560 --> 0:17:38.000 or women led businesses. And I'm really happy to say 0:17:38.000 --> 0:17:41.760 today that we surpassed that target and are now on 0:17:41.800 --> 0:17:45.280 our way to even going further. So I think that. 0:17:45.840 --> 0:17:47.879 What I want to one thing I want to ask you, 0:17:47.960 --> 0:17:50.000 and I think folks would applaud your efforts in the 0:17:50.000 --> 0:17:52.119 progress that you guys have made, and it seems like 0:17:52.160 --> 0:17:54.520 ahead of schedule. Having said that, I'm going to get 0:17:54.560 --> 0:17:56.320 a ton of hate mail if I don't ask you this, 0:17:56.400 --> 0:17:59.439 and this is major credit card companies. To be fair, 0:17:59.840 --> 0:18:03.120 they are quick to amp up rates on customers, even 0:18:03.200 --> 0:18:06.760 good customers, but that may have a balance that maybe 0:18:06.920 --> 0:18:09.480 is growing a little bit unwieldy, if you will, but 0:18:09.480 --> 0:18:12.480 nonetheless maybe making their payments a way above the Fed 0:18:12.520 --> 0:18:15.000 Funds rate, way above the prime rate. I mean, I'm 0:18:15.040 --> 0:18:16.840 talking about what we've got a Fed funds rate I 0:18:16.880 --> 0:18:19.720 think at about five or five and a half percent here, 0:18:19.760 --> 0:18:22.120 and you're talking about rates that go to eighteen, nineteen, 0:18:22.240 --> 0:18:27.359 twenty twenty eight percent so quickly on individuals. So what's 0:18:27.400 --> 0:18:30.680 the thinking around that to make it easier for more 0:18:30.720 --> 0:18:33.480 consumers and also for small business folks. 0:18:33.960 --> 0:18:35.600 I think it's I mean, look, I think it's a 0:18:35.680 --> 0:18:40.400 really important point. We've seen rates around the world, especially 0:18:40.400 --> 0:18:46.439 in unregulated markets, climb way above even twenty percent, and. 0:18:46.400 --> 0:18:49.200 Even in the US market, which is a regulated market, 0:18:49.200 --> 0:18:51.160 we see them climb and I know it's within the law, 0:18:51.240 --> 0:18:54.280 but nonetheless it seems many would argue, really not. 0:18:54.359 --> 0:18:59.480 Fair, No exactly. I mean, the truth is that unless 0:18:59.520 --> 0:19:03.159 we're working on making sure that small business owners and 0:19:03.240 --> 0:19:06.480 those who are interested in participating in the digital economy 0:19:06.840 --> 0:19:10.720 through regulated bank accounts, which is where we're focused. It's 0:19:10.720 --> 0:19:12.880 going to be really important that we also include responsible 0:19:12.960 --> 0:19:16.560 lending practices and the education that's required to ensure that 0:19:16.840 --> 0:19:20.440 once you join the formal financial system, you're operating within 0:19:20.480 --> 0:19:23.040 it in a way that helps you not only survive 0:19:23.400 --> 0:19:25.280 but thrive in the digital economy. 0:19:25.320 --> 0:19:28.520 If parents don't teach their kids that stuff, where are 0:19:28.560 --> 0:19:29.399 they supposed to learn it? 0:19:30.840 --> 0:19:34.600 So I think that's again it's a great point. As 0:19:34.640 --> 0:19:36.439 part of the work that we've been doing in the 0:19:36.520 --> 0:19:39.119