WEBVTT - Inflation Jeopardizes the Fed’s Goal for Inclusive Employment 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.480 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovk. We're here every day bringing 0:00:07.320 --> 0:00:09.840 you the latest news from the world to business and finance, 0:00:09.840 --> 0:00:13.680 plus technology, politics, economics, all furnishing the power of Business 0:00:13.680 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:20.000 analyst in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.479 Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot Com. You 0:00:23.480 --> 0:00:25.439 can also listen to our radio show at two pm 0:00:25.480 --> 0:00:28.400 Eastern Time on Bloomberg Radio or watch us on YouTube. 0:00:28.400 --> 0:00:32.680 Searched Bloomberg clovel News. It was the shot scene around 0:00:32.680 --> 0:00:35.920 the world. One year ago today, Sandra Lindsay, the director 0:00:35.960 --> 0:00:38.840 of patient care at Northwill Health Long Island Jewish Medical Center, 0:00:38.880 --> 0:00:41.440 became the first person in the US to get the 0:00:41.479 --> 0:00:44.240 COVID nineteen vaccine. We all watched or saw the video 0:00:44.560 --> 0:00:46.920 right after it happened, and Tim that press conference of 0:00:46.920 --> 0:00:49.080 the event said to be viewed by some six billion 0:00:49.159 --> 0:00:53.239 people at that time or shortly thereafter. Yeah, I mean 0:00:53.240 --> 0:00:55.480 it was monumental. I remember, right, we were all working 0:00:55.520 --> 0:00:57.360 up to the vaccine and then to finally see it 0:00:57.560 --> 0:01:02.080 being put in healthcare workers arm was. It was a 0:01:02.120 --> 0:01:03.800 big deal. It was a big deal, and it's sort 0:01:03.840 --> 0:01:06.080 of I think a lot of people would be fair 0:01:06.120 --> 0:01:07.800 to say that this isn't really where we thought we'd 0:01:07.800 --> 0:01:10.320 see ourselves in a year. Apple asking people to put 0:01:10.360 --> 0:01:14.920 masks back on hospitalizations in New York? Uh are you 0:01:14.959 --> 0:01:19.319 know are up significantly after the holidays? And Governor Cathy 0:01:19.360 --> 0:01:21.760 Hicle saying she's frustrated by this need for new restrictions. 0:01:21.760 --> 0:01:23.520 All right, so let's see what Michael Dowling President and 0:01:23.560 --> 0:01:25.880 see you at Northwell Health, which is the largest healthcare 0:01:25.920 --> 0:01:28.160 provider and private employer in New York State. He's also 0:01:28.160 --> 0:01:30.759 written several books. He joins us on the phone from 0:01:30.800 --> 0:01:33.000 Long Island, New York. Michael, thank you so much. You 0:01:33.280 --> 0:01:36.480 have been so gracious always throughout the pandemic and find 0:01:36.480 --> 0:01:39.720 you so much appreciate it anytime. Thank you so much. 0:01:39.720 --> 0:01:42.400 I appreciate well we do too. How are things going? 0:01:42.440 --> 0:01:44.280 What are you seeing front and center when it comes 0:01:44.319 --> 0:01:47.280 to where we are in the pandemic? Well, compon points 0:01:47.280 --> 0:01:49.480 I want to make is one this is as you mentioned, 0:01:49.480 --> 0:01:51.920 this is a very special day and it's also important 0:01:51.920 --> 0:01:54.279 to a member the success that has a called sense. 0:01:54.320 --> 0:01:56.800 Then we're in a most better position today than we 0:01:56.800 --> 0:01:59.760 were a year ago. But everybody has to understand that 0:01:59.840 --> 0:02:04.440 this as a marathon. Uh, it's not a sprint. We 0:02:04.560 --> 0:02:06.400 still have a lot of work to do before we 0:02:06.480 --> 0:02:10.560 completely exit this pandemic crisis, and people have to be 0:02:11.520 --> 0:02:13.280 have to be a little bit patient and have to 0:02:13.280 --> 0:02:17.600 put up with some inconvenience and some disruption, and we 0:02:17.680 --> 0:02:20.840 have if we are willing to win the war against 0:02:20.919 --> 0:02:23.079 the COVID, then we have to do what is right 0:02:23.160 --> 0:02:28.880 to do. So today, um, we have three COVID patients 0:02:28.880 --> 0:02:31.840 in our hospitals. That's about double what it was prior 0:02:31.919 --> 0:02:36.359 to Thanksgiving. And we do anticipate now that we're going 0:02:36.360 --> 0:02:39.880 into the Christmas week that we will see another up 0:02:39.919 --> 0:02:43.959 in hospitalizations post Christmas. We don't know exactly what the 0:02:44.040 --> 0:02:46.280 numbers would be like, but we're anticipating that we will 0:02:46.320 --> 0:02:49.720 see an increase. So the positivity rates are going up, 0:02:49.919 --> 0:02:53.040 but they are the hospitalizations, at least in the city 0:02:53.200 --> 0:02:56.920 in down State. While they are increasing, we do not 0:02:57.160 --> 0:03:01.200 have in any in any situation a disasters circumstances. We're 0:03:01.200 --> 0:03:03.480 easily able to handle it. The volume is not too 0:03:03.600 --> 0:03:06.720 much we're handling it is different than what's happening upstate 0:03:06.800 --> 0:03:09.280 and in other places around the country. Well, Michael tell us, 0:03:09.480 --> 0:03:12.519 if you can um how many of those patients you 0:03:12.600 --> 0:03:15.280 are in the hospital right now are are people who 0:03:15.280 --> 0:03:20.320 are vaccinated, less than twenty are vaccinated. All that means 0:03:20.320 --> 0:03:23.320 over of the people in the hospital are people that 0:03:23.400 --> 0:03:27.840 are unvaccinated. So in many ways, we have an unvaccinated crisis, 0:03:28.639 --> 0:03:32.200 a crisis of unvaccinated people. And that's the issue. That's 0:03:32.280 --> 0:03:36.160 that's what that's disturbing because we we we know the 0:03:36.280 --> 0:03:40.160 vaccine works, we know it can dramatically reduce the illness 0:03:40.240 --> 0:03:44.320 and dramatically prevent hospitalizations. And the fact that people are 0:03:44.320 --> 0:03:46.440 still out there making all sorts of arguments that they 0:03:46.440 --> 0:03:49.240 shouldn't get vaccinated, in my view, makes appolutely no sense. 0:03:50.120 --> 0:03:55.040 Um so um that the if there are people the 0:03:55.120 --> 0:03:57.840 people who are in the hospital that have been vaccinated 0:03:58.680 --> 0:04:01.280 and and have covie it and and I was sick, 0:04:01.400 --> 0:04:03.680 which are few and not few in number, but these 0:04:03.680 --> 0:04:07.320 are people that most in most cases have other major 0:04:07.440 --> 0:04:11.520 medical issues that they're suffering from the vaccine. If you 0:04:11.600 --> 0:04:14.880 get the vaccine, it will it will limit the illness, 0:04:15.120 --> 0:04:20.039 and it will in all likehood dramatically limited any hospitalization. 0:04:20.160 --> 0:04:23.320 So it definitely has proven to be to be successful. 0:04:23.440 --> 0:04:26.000 Younger older. Is there something interesting in terms of the 0:04:26.560 --> 0:04:31.880 people are well, they're older, um, and especially the paper 0:04:31.920 --> 0:04:34.880 holding the I c O went quite sick um, but 0:04:35.360 --> 0:04:39.919 they are the sickest ones are the ones that are unvaccinated. 0:04:41.080 --> 0:04:43.960 Let's also talk a little bit about gun safety, because 0:04:44.000 --> 0:04:46.400 something that you're doing, Michael, and that you've been doing 0:04:46.680 --> 0:04:49.840 at Northwell Health for the last three years, has been 0:04:49.960 --> 0:04:54.360 the Gun Violence Prevention Forum. UM investor Susan rice Is 0:04:54.360 --> 0:04:57.560 is going to be headlining it. I'm wondering about how 0:04:58.160 --> 0:05:01.040 that fits into our idea of public safety, especially during 0:05:01.040 --> 0:05:04.120 the pandemic. Well I you know, in many ways you 0:05:04.160 --> 0:05:06.320 could argue we have two pandemics. We have the COVID 0:05:06.320 --> 0:05:08.880 pandemic and we have a pandemic of gun violence. I mean, 0:05:08.920 --> 0:05:11.320 we've had over six hundred mass shootings this year, a 0:05:11.360 --> 0:05:17.039 long during COVID going ownership increase, the sale of guns increased, etcetera, etcetera. 0:05:17.080 --> 0:05:20.560 And we just obviously on Michigan last week with that, 0:05:20.720 --> 0:05:23.640 with that fifteen year old, we have a real crisis here. 0:05:23.680 --> 0:05:26.159 So we've been working on this for a couple of 0:05:26.240 --> 0:05:29.680 years and my my my position is that we have 0:05:29.880 --> 0:05:32.400 to look at gun violence as a public health issue 0:05:33.480 --> 0:05:35.680 because we see the results of it in our emergency 0:05:35.760 --> 0:05:38.719 rooms and outside wards in you know, the dislocation of 0:05:38.800 --> 0:05:41.560 families and the disruption of families, etcetera. We see the 0:05:41.640 --> 0:05:44.599 medical and psychological issues as a result of gon violence. 0:05:44.600 --> 0:05:47.239 So it's a public health issue. And I believe large 0:05:47.240 --> 0:05:50.880 health care organizations have the broadened concept of health. It's 0:05:50.880 --> 0:05:53.240 a lot more than just a provision of provision of 0:05:53.279 --> 0:05:56.479 medical care. So we have to be we have to 0:05:56.520 --> 0:05:59.800 be out there as catalysts and advocates to look much 0:05:59.800 --> 0:06:02.360 more broadly, and gun violence is one of those issues. 0:06:02.400 --> 0:06:05.239 So tomorrow do we We do have our fun national 0:06:05.320 --> 0:06:08.040 meeting and Susan Rice is one of the headline ers. 0:06:08.520 --> 0:06:12.479 We do have a big meeting in Washington on those 0:06:12.560 --> 0:06:14.440 that night where we have a demo with a lot 0:06:14.440 --> 0:06:16.960 of to keep people from around the country, and we've 0:06:17.000 --> 0:06:20.680 developed a learning collaborative. I've been trying very hard to 0:06:20.760 --> 0:06:23.640 get a lot of the health systems around the country 0:06:23.279 --> 0:06:27.239 to stand up and basically say this is in our lane, 0:06:27.520 --> 0:06:29.640 this is what we should be working on. This is 0:06:29.680 --> 0:06:31.520 a public health issue and we've got to deal with 0:06:31.560 --> 0:06:35.880 it well well said another pandemic and an important public 0:06:35.920 --> 0:06:38.560 health issue as well. Michael, thank you so much. Happy 0:06:38.600 --> 0:06:41.120 holidays and and be well and stay safe. Michael Darling 0:06:41.440 --> 0:06:43.640 his presidency. You at north Well Health, as we said, 0:06:44.760 --> 0:06:46.880 home to the first vaccine that we got in the 0:06:47.000 --> 0:06:51.000 United States one year ago. Today, you're listening to Bloomberg 0:06:51.040 --> 0:06:54.720 Business Week with Carol Messer and Bloomberg Quick Takes. Tim 0:06:54.760 --> 0:06:58.400 Stinovic on Bloomberg Radio. We know you know the FED 0:06:58.480 --> 0:07:01.400 has a dual mandate keeping Asian in check and also 0:07:01.440 --> 0:07:04.560 reach maximum employment. The thing is that's not so easy 0:07:04.560 --> 0:07:06.520 to do, especially if Fed cher J. Pale sticks to 0:07:06.560 --> 0:07:10.400 his plan of max employment for all. Tim. There's also 0:07:10.440 --> 0:07:15.640 this element of modifiers, broad based and inclusive. Matthew Bosler 0:07:15.680 --> 0:07:19.000 writes all about it. He's Federal Reserve reporter at Bloomberg News. 0:07:19.080 --> 0:07:21.640 His story is featured in the upcoming issue of Bloomberg 0:07:21.640 --> 0:07:23.320 Business Week magazine. You can read it now on the 0:07:23.360 --> 0:07:26.200 Bloomberg Terminal and at Bloomberg dot com slash business Week. 0:07:26.360 --> 0:07:29.040 Joel Weber is editor at Bloomberg Business Week. He's with 0:07:29.120 --> 0:07:31.960 us in the Bloomberg Interactive Broker Studio. This was a 0:07:32.000 --> 0:07:34.240 perfect story for today as we think about what's going 0:07:34.240 --> 0:07:37.920 on with the Fed, Joel. Uh. But it also includes 0:07:37.960 --> 0:07:40.520 so much, so so many parts of the questions that 0:07:40.560 --> 0:07:42.880 we've been asking, which are really what what is full 0:07:42.880 --> 0:07:46.280 employment today? And how does the FED define that? Big time? 0:07:46.400 --> 0:07:48.720 And and we're gonna you know this being kind of 0:07:48.920 --> 0:07:52.600 Fed Fed week here at Bloomberg, Well we will we 0:07:52.600 --> 0:07:55.400 will find out more soon enough. Uh. Not a job 0:07:55.480 --> 0:07:59.360 that I would want, um, and Placio j peal and 0:07:59.400 --> 0:08:02.000 navigates it. Um. So So, Matt, what's on your list? 0:08:02.000 --> 0:08:04.360 What are the things that they were all going to 0:08:04.400 --> 0:08:08.560 be watching for? Yeah, so, you know, speaking broadly about 0:08:08.560 --> 0:08:10.960 the meeting tomorrow, Joel, Um, the two big things that 0:08:10.960 --> 0:08:14.320 we're expecting are for the Fed to um accelerate the 0:08:14.320 --> 0:08:16.800 wine down of its bond buying program and you know, 0:08:16.840 --> 0:08:18.560 look to conclude that by the end of the first 0:08:18.640 --> 0:08:21.360 quarter of next year, and then also signal more interest 0:08:21.440 --> 0:08:23.840 rate increases in the forecast for next year then they 0:08:23.840 --> 0:08:26.240 had previously been signaling. And of course those two things 0:08:26.280 --> 0:08:29.760 are linked. If they wind down the bond buying program earlier, 0:08:30.440 --> 0:08:33.160 and that clears the deck for earlier interest rate increases, 0:08:33.200 --> 0:08:34.840 and of course this is all coming at a time 0:08:34.880 --> 0:08:38.240 when UM inflation has accelerated over the last few months 0:08:38.240 --> 0:08:41.760 to UM the highest levels in nearly forty years, and 0:08:41.800 --> 0:08:44.120 the FED is facing a lot of political pressure from 0:08:44.120 --> 0:08:46.600 both sides of the aisle to do something about it. 0:08:48.000 --> 0:08:51.160 You mentioned the inflation, We're there and I'm wondering how 0:08:51.240 --> 0:08:55.400 that runs into inclusive employment UM and and and the 0:08:55.480 --> 0:08:57.920 dual mandate for that matter, Like, how has that changed 0:08:57.960 --> 0:09:01.920 the conversation from from just a two months ago. Well, yeah, 0:09:02.000 --> 0:09:05.319 it's really interesting because if you go back to last year, UM, 0:09:05.400 --> 0:09:07.640 we were kind of in the middle of a national 0:09:07.720 --> 0:09:11.080 reckoning on race, right with both the pandemic and of 0:09:11.080 --> 0:09:13.440 course the killing of George Floyd that led to protests 0:09:13.480 --> 0:09:17.280 across the country against police brutality, and a lot of 0:09:17.320 --> 0:09:21.720 institutions came out UM and made pledges, uh, you know, 0:09:21.800 --> 0:09:23.440 to do their part to try to fix this. And 0:09:23.480 --> 0:09:27.359 for the Fed's part, UM, its pledge was to consider 0:09:28.240 --> 0:09:30.760 racial disparities in the labor market when it's trying to 0:09:30.800 --> 0:09:33.840 make its assessments of how close the economy is the 0:09:33.880 --> 0:09:37.280 maximum employment and therefore you know, what to do with 0:09:37.360 --> 0:09:40.880 interest rates and so UM. That was clearly top of 0:09:40.960 --> 0:09:44.719 mind a year ago. And like you said, the FED 0:09:44.800 --> 0:09:48.000 has two mandates. Now, obviously inflation is kind of taking 0:09:48.040 --> 0:09:51.960 center stage politically, and um, the FED you know, isn't 0:09:51.960 --> 0:09:56.280 necessarily you know, getting that sort of prodding from Democrats 0:09:56.280 --> 0:09:59.199 on the employment issue. Um that it was a year ago. 0:09:59.280 --> 0:10:02.720 And so this is become less of a partisan debate. 0:10:02.880 --> 0:10:06.360 You know, should the FED prioritize employment broad based or 0:10:06.360 --> 0:10:09.960 should it prioritize inflation. Um, you've kind of got both 0:10:10.000 --> 0:10:13.760 sides wanting it to deal with inflation first and foremost, 0:10:13.800 --> 0:10:16.040 just the way the political wins are shifting behind it. 0:10:16.440 --> 0:10:18.880 So is there a chance not that the FED won't 0:10:18.880 --> 0:10:22.160 be able to achieve its goal of broad based and inclusive? 0:10:22.640 --> 0:10:24.280 And and what do we know about the definition of 0:10:24.280 --> 0:10:26.440 broad based and inclusive because you run through some numbers 0:10:26.440 --> 0:10:28.200 here that show that there's a long way to go 0:10:28.320 --> 0:10:31.000 when it comes to certain parts of the American population 0:10:31.040 --> 0:10:34.280 getting back to work. Right that So this is the 0:10:34.320 --> 0:10:37.880 most interesting part, right because you know, some you know, 0:10:37.960 --> 0:10:41.199 a lay person might say, well, broad based and inclusive employment, 0:10:41.240 --> 0:10:43.839 maybe that means the black and the white unemployment rates 0:10:43.880 --> 0:10:46.800 are equal and there isn't this big gap between them. 0:10:46.800 --> 0:10:49.720 Like exists now. Right, Black unemployment is six point seven 0:10:50.720 --> 0:10:54.400 white unemployment is three point seven percent. That doesn't obviously 0:10:54.480 --> 0:10:57.520 meet uh, you know, a lay person's definition of broad 0:10:57.520 --> 0:10:59.920 based and inclusive. But the FED has been very careful 0:11:00.120 --> 0:11:03.079 not to put numbers on this, not to define what 0:11:03.120 --> 0:11:05.760 they mean. And so when it comes to this question of, 0:11:05.840 --> 0:11:07.920 you know, will they be able to meet their goal 0:11:08.120 --> 0:11:11.240 of broad based and inclusive employment, what we're kind of 0:11:11.240 --> 0:11:15.160 seeing is they've got plenty of latitude um that they've 0:11:15.160 --> 0:11:18.959 given themselves to sort of redefine that goal. And that's 0:11:19.040 --> 0:11:23.080 kind of what people are increasingly expecting them to do. Uh, 0:11:23.120 --> 0:11:25.840 you know, if not tomorrow, then in the coming months 0:11:26.320 --> 0:11:29.880 as inflation increasingly becomes a bigger priority. It's one of 0:11:29.920 --> 0:11:32.080 those things you do wonder, right, you figure out, you 0:11:32.120 --> 0:11:34.360 do your modeling because you're asking the question, you're asking 0:11:34.400 --> 0:11:36.640 your story, Matt. How much more could the black white 0:11:36.679 --> 0:11:39.280 unemployment gap now if the economy were allowed to run 0:11:39.320 --> 0:11:42.320 hot for longer? Right, We just don't know, and it 0:11:42.559 --> 0:11:44.600 would have to be an experiment in real time. And 0:11:44.679 --> 0:11:47.920 maybe the gap does get reduced and things do improve 0:11:48.000 --> 0:11:52.640 for black unemployment. Maybe it doesn't. Yeah, And this is 0:11:52.679 --> 0:11:56.200 another great aspect of this whole conversation because the FED 0:11:56.400 --> 0:12:00.720 has essentially thrust itself into this very long running political 0:12:00.800 --> 0:12:03.440 debate in America over what are the true causes of this? 0:12:03.600 --> 0:12:06.400 Right on one side, um, you know, going back decades 0:12:06.400 --> 0:12:10.080 and decades, it's always been about education. We need to um, 0:12:10.120 --> 0:12:14.120 you know, expand educational opportunities and job training for these 0:12:14.200 --> 0:12:18.319 underserved communities and you know, position them to uh succeed 0:12:18.640 --> 0:12:23.000 uh better in the workforce. The other side has often said, well, no, 0:12:23.160 --> 0:12:26.960 it's really not about um, you know, training for these jobs. 0:12:26.960 --> 0:12:30.160 It's about are these jobs available in the first place. 0:12:30.160 --> 0:12:32.280 And so that kind of gets to this question of, 0:12:32.440 --> 0:12:36.280 you know, is the answer not just the government needs 0:12:36.280 --> 0:12:39.400 to spend more money via fiscal policy, the Federal Reserve 0:12:39.480 --> 0:12:42.800 needs to run the economy hot or via monetary policy, 0:12:42.880 --> 0:12:45.520 and these things are going to start to sort themselves 0:12:45.960 --> 0:12:49.400 out on their own in the private sector or labor markets. 0:12:49.400 --> 0:12:51.280 And we got a little bit of a taste of that, 0:12:51.640 --> 0:12:54.280 you know, before the pandemic UM in the years leading 0:12:54.320 --> 0:12:57.040 up to it, UM, with the unemployment rate getting solo, 0:12:57.160 --> 0:13:01.040 you did see employers starting to um increasingly higher into 0:13:01.160 --> 0:13:05.199 these um you know, underserved communities tap into these labor pools, 0:13:05.240 --> 0:13:06.960 and you started to see some movement there, but of 0:13:07.000 --> 0:13:09.960 course it was truncated by the pandemic. And so in 0:13:10.000 --> 0:13:12.280 some sense, you know what, a lot of people wanted 0:13:12.360 --> 0:13:14.520 to kind of get back to that place where we can, 0:13:14.840 --> 0:13:17.320 um at least get back to running that experiment. Um. 0:13:17.360 --> 0:13:19.800 But in the meantime, uh, you know, we've got some 0:13:19.880 --> 0:13:23.480 other issues to deal with that are still being driven 0:13:23.480 --> 0:13:28.520 by the pandemic, perhaps, like inflation. Genuine question, how many 0:13:28.720 --> 0:13:33.200 balls can JP juggle at one moment time? That's a 0:13:33.200 --> 0:13:35.640 great question, you know, hopefully at least two because that's uh, 0:13:37.400 --> 0:13:43.520 I think it's given like four more and see what happened. Hey, 0:13:43.559 --> 0:13:45.960 I just wanted to end Matt very briefly with talking 0:13:46.000 --> 0:13:48.280 about the idea of looking at some other metrics here 0:13:48.280 --> 0:13:51.080 because you spoke to David Wilcox here at Bloomberg Economics. 0:13:51.120 --> 0:13:54.240 He has a US economic research for Bloomberg Economics. What 0:13:54.240 --> 0:13:55.760 about the other data that we get just in about 0:13:55.800 --> 0:13:59.440 thirty seconds. Sure, so you know a lot of people 0:13:59.440 --> 0:14:02.960 are playing to job opening, fast wage growth, um. And 0:14:03.080 --> 0:14:05.880 you know survey measures that suggests the labor market is 0:14:05.960 --> 0:14:09.000 very tight. This is really interesting rerun of the conversation 0:14:09.080 --> 0:14:11.000 we had in the wake of the Great Recession in 0:14:11.240 --> 0:14:14.400 the years like two thousand nine. So it's kind of 0:14:14.440 --> 0:14:17.520 following a similar pattern. Even those circumstances are very different. 0:14:17.679 --> 0:14:19.920 Who wants to change places with j Pal's your hand, 0:14:21.040 --> 0:14:24.520 but he's raising their in mattout Bosler, Thank you so much. 0:14:24.560 --> 0:14:27.360 Matt Bosler is Federal Reserve reporter at Bloomberg News, joining 0:14:27.400 --> 0:14:28.920 us on the phone from New York City. Check out 0:14:28.920 --> 0:14:31.120 his story. It's going to feature in the upcoming issue 0:14:31.120 --> 0:14:33.200 of Bloomberg Business Week magazine. You can read it now 0:14:33.480 --> 0:14:36.080 on the Bloomberg terminal, also at Bloomberg dot com slash 0:14:36.160 --> 0:14:39.720 business Week. It's it's it's tricky. It's tricky, especially when 0:14:39.720 --> 0:14:41.800 there's so many questions out there in the economy. By 0:14:41.800 --> 0:14:44.360 the way, Matt's going to be I assume watching closely 0:14:44.440 --> 0:14:47.479 tomorrow and perhaps asking a question or two. Yeah, he's 0:14:47.520 --> 0:14:50.920 on a plane headed to uh, Mexico. I think did 0:14:50.920 --> 0:14:53.000 everybody go to Mexico right now? Joe Weber, of course, 0:14:53.000 --> 0:14:55.160 the editor of Bloomberg Business Week, he's in our studio. 0:14:55.200 --> 0:14:58.400 Al right, stick around, you're listening to Bloomberg Radio. This 0:14:58.720 --> 0:15:02.480 is Bloomberg Business Way with Carol Messer and Bloomberg Quick 0:15:02.480 --> 0:15:06.920 Takes Tim Stinovic on Bloomberg Radio. So we're just under 0:15:06.960 --> 0:15:11.760 twenty three hours away from the last decision here, it's 0:15:11.800 --> 0:15:14.480 like sixty minutes. That's that's what we're doing. Um, probably 0:15:14.480 --> 0:15:16.160 not an easy one for the US Central Bank this 0:15:16.200 --> 0:15:18.800 time around, considering the long list of uncertainties and questions 0:15:18.800 --> 0:15:21.960 and really pressures that face FED chair J. Powell and company. 0:15:22.000 --> 0:15:24.320 So we thought we would get a strategy play on 0:15:24.360 --> 0:15:26.960 the FED with the perfect, perfect go to voice for this. 0:15:27.160 --> 0:15:30.440 It's Dr Stephen Skanky. He's chief Economic advisor at keel Point, 0:15:30.440 --> 0:15:33.360 also former U S Treasury and White House National Security 0:15:33.400 --> 0:15:36.480 Council staff member. He is with us after what a 0:15:36.520 --> 0:15:39.680 two year break since we've seen him in the Bloomberg studios. 0:15:39.920 --> 0:15:42.360 It is really great to have you with us, Dr Skanky, 0:15:42.360 --> 0:15:44.880 How are you. I'm great, Thanks, and it's wonderful to 0:15:44.920 --> 0:15:48.840 be back here. It's exciting to be back in your studio. Okay, 0:15:48.880 --> 0:15:51.120 So tell us right now, what the what the Federal 0:15:51.120 --> 0:15:54.120 Reserve officials are thinking. What is what's going through the 0:15:54.120 --> 0:15:56.240 mind of J. Powell. They're trying to figure out how 0:15:56.240 --> 0:15:58.600 they're going to lay this out in an effective way 0:15:58.640 --> 0:16:02.600 that doesn't spook the market, restores confidence and shows that 0:16:02.640 --> 0:16:05.800 they're not behind the curve. Uh. Is that possible? I 0:16:05.840 --> 0:16:08.520 think it is. I mean, it's it's a big challenge that. 0:16:08.600 --> 0:16:10.960 The good news is that j. Powell had a very 0:16:11.000 --> 0:16:18.640 bad experience in UH December of when he badly miscommunicated 0:16:18.640 --> 0:16:21.200 to the market, and he understands the response and uh, 0:16:21.480 --> 0:16:27.760 and that was about taper UH and reducing liquidity in 0:16:27.520 --> 0:16:31.520 the economy. And so he gets that and how sensitive 0:16:31.560 --> 0:16:33.720 the market is to that. And so that's what we're 0:16:33.720 --> 0:16:37.640 talking about for tomorrow, speeding up the rate of taper UH, 0:16:37.800 --> 0:16:40.920 probably ending it by by the end of March. So 0:16:40.960 --> 0:16:43.800 they have plenty of room than to do whatever they 0:16:43.800 --> 0:16:45.520 want to do about interest rates. All right, so help 0:16:45.560 --> 0:16:49.880 me out here, price stability, full employment or maximum employment. Uh. 0:16:50.320 --> 0:16:56.080 No market tantrums. That's not part of their mandage exactly. 0:16:56.120 --> 0:16:59.320 But they do keep a close watch on the markets. Oh, absolutely, 0:16:59.320 --> 0:17:03.440 because it's spills over into the economy. It affects consumer confidence, 0:17:03.480 --> 0:17:06.399 business confidence. And we actually got some good news this 0:17:06.440 --> 0:17:11.040 morning with the small business optimism and tell me, yeah, 0:17:11.080 --> 0:17:13.200 talk to us about this, because small business right back 0:17:13.200 --> 0:17:16.879 gone of our economy what what did you glean from 0:17:16.920 --> 0:17:19.399 that report? Well, I want to be honest, I was 0:17:19.440 --> 0:17:24.160 surprised because these small businesses are are on the receiving 0:17:24.280 --> 0:17:27.760 end of higher costs for services, higher costs for intermediate 0:17:28.119 --> 0:17:31.760 goods in their production. You know, you saw the producer 0:17:31.800 --> 0:17:35.400 price index out this morning up nine point six percent 0:17:35.880 --> 0:17:40.240 for final demand. Big impact on small business, and yet 0:17:40.280 --> 0:17:45.680 they came out with a moderate increase in their optimism. 0:17:45.720 --> 0:17:48.840 That's very encouraging. UH. They're also on the hiring end, 0:17:48.960 --> 0:17:53.639 and so they're very much affected negatively by all the 0:17:53.760 --> 0:17:57.200 unfilled jobs as they're trying to expand and build their businesses. 0:17:58.080 --> 0:18:02.199 And and we know that for every job that's available, 0:18:02.440 --> 0:18:05.160 there's less than one person available to fill that job. 0:18:05.640 --> 0:18:09.000 So does the information that we're getting and I think 0:18:09.000 --> 0:18:11.440 that Small Business Optimism report was a big one too. 0:18:11.440 --> 0:18:14.679 I agree with you. Um, does it give the FED 0:18:15.160 --> 0:18:16.960 you talked about the importance of their messaging and how 0:18:16.960 --> 0:18:19.480 they put it out there, Steve, does it give them 0:18:19.520 --> 0:18:22.159 more room to be a little bit more hawkish or 0:18:22.200 --> 0:18:24.680 do they just stay the course at this point? From 0:18:24.680 --> 0:18:26.720 what we last heard from j Pow when he's really 0:18:26.800 --> 0:18:30.119 up before UH congressional lawmakers, they are going to be 0:18:30.160 --> 0:18:32.800 more hawkish. They want to come across as more hawkish, 0:18:32.920 --> 0:18:35.760 but they don't want to sound panicked and uh and 0:18:35.880 --> 0:18:40.200 so the small Business Optimism index that helps consumer confidence 0:18:40.240 --> 0:18:42.760 from the Michigan survey earlier this week is up a 0:18:42.800 --> 0:18:46.440 little bit. That also takes away some of the um 0:18:46.480 --> 0:18:50.119 anxiety and fear in what they're doing, so it it 0:18:50.200 --> 0:18:53.640 gives them some breathing space. Also, energy prices are down some, 0:18:53.920 --> 0:18:57.119 food prices are down some. It makes it easier for 0:18:57.160 --> 0:19:00.720 them to be hawkish without look like with looking like 0:19:00.760 --> 0:19:03.760 their way behind the curve and scrammedy catch up what 0:19:03.800 --> 0:19:06.280 do you think is baked in and starts expectations go? 0:19:06.640 --> 0:19:11.320 You did say that you expect to see tapering probably 0:19:11.440 --> 0:19:15.480 ending by by the end of March. Um what spooks 0:19:15.480 --> 0:19:20.200 the market though tomorrow? What well? What spoots the market 0:19:20.400 --> 0:19:23.159 if they get something that doesn't look like that? Number one, 0:19:23.200 --> 0:19:25.320 if the if the Fed doesn't change the rate of 0:19:25.359 --> 0:19:29.399 taper from UH fifteen billion a month to say thirty 0:19:29.440 --> 0:19:31.359 which we get them finished up by the end of March, 0:19:32.119 --> 0:19:35.199 then they look like they're out of touch. If they 0:19:35.320 --> 0:19:37.280 try to do something too much, or if they actually 0:19:37.359 --> 0:19:41.120 talk about their target for raising interest rates in two 0:19:41.680 --> 0:19:44.320 that would spook the market all of a sudden. They said, Okay, hey, 0:19:44.320 --> 0:19:47.520 we were thinking maybe in June or something right exactly whatever, 0:19:47.960 --> 0:19:53.160 because that that that sounds hum scrambling, sounds desperate. Uh. 0:19:53.320 --> 0:19:54.840 And if they can just be out there and say, hey, 0:19:54.880 --> 0:19:56.960 you know, look, we've you know, Powill set the stage 0:19:57.000 --> 0:20:00.240 with his November thirty testimony, if he can just allow 0:20:00.320 --> 0:20:03.040 up with that, and and remember we talked about the 0:20:03.040 --> 0:20:06.320 minutes a couple of weeks ago. They are ready to 0:20:06.680 --> 0:20:09.400 increase the rate of taper. So if they just go 0:20:09.440 --> 0:20:12.439 along with that, and it sounds business as usual, we 0:20:12.520 --> 0:20:16.520 are on course. We understand where it is. We're comfortable 0:20:16.520 --> 0:20:20.240 with that. Market will love it. Um. It doesn't doesn't 0:20:20.240 --> 0:20:22.480 mean it won't sell off some but but but but 0:20:22.560 --> 0:20:24.159 it's not going to be a panic. This is the 0:20:24.160 --> 0:20:26.280 first this will be the first meeting in the first 0:20:26.280 --> 0:20:29.720 time we hear j pol questioned by journalists who cover 0:20:29.880 --> 0:20:33.320 him since he essentially banned the word transitory or said that, 0:20:33.800 --> 0:20:35.680 you know, that's not a term we should use anymore. 0:20:35.720 --> 0:20:39.320 Is there anything about what he says about inflation that 0:20:39.359 --> 0:20:42.320 could that could spook people? The idea that it has 0:20:42.400 --> 0:20:44.399 become something that is more persistent, or is that or 0:20:44.440 --> 0:20:46.000 do we know that with all the data that we've 0:20:46.000 --> 0:20:47.720 been getting. I think he put that out on the 0:20:47.760 --> 0:20:51.920 table on November thirty. Uh. Now since then we've had 0:20:52.000 --> 0:20:56.439 the November c p I UH six point eight and 0:20:56.560 --> 0:20:59.840 the November pp A Producer Price Index at nine points, 0:21:00.560 --> 0:21:04.679 so that those higher numbers are out there. But but 0:21:04.760 --> 0:21:07.560 he's already been clear. Well, I like, you know, David 0:21:07.560 --> 0:21:10.760 Weston talking with Brian Moynahans EO Bank of America. Come on, folks, 0:21:10.840 --> 0:21:14.240 we know that there's inflation out there. How possible is it, Steve? 0:21:14.400 --> 0:21:16.960 I mean, if you think about the last year and 0:21:16.960 --> 0:21:19.760 a half or since the pandemic started, right, the economy 0:21:19.920 --> 0:21:22.879 shut down, right, and then all of a sudden, you know, 0:21:23.160 --> 0:21:25.480