WEBVTT - Surveillance: Fed’s Mester Says Policy in Good 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.240 --> 0:00:13.200 with Jonathan Ferrell and Lisa Brownwitz Jailey. We bring you 0:00:13.320 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.960 --> 0:00:23.840 Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com, 0:00:23.920 --> 0:00:31.159 and of course on the Bloomberg Termament. Michael McKee, what 0:00:31.200 --> 0:00:33.200 a joy. I loved what you did with Neil cash 0:00:33.280 --> 0:00:36.280 Curry here in the last number of days. And now 0:00:36.320 --> 0:00:41.000 you've got the wonderful mathematician from Cleveland, Loretta Mester. Yes, 0:00:41.080 --> 0:00:43.919 time we do. We'd like to welcome the Cleveland Fed 0:00:43.960 --> 0:00:47.480 Bank President Lorettamester to Bloomberg Television and Radio worldwide. Thank 0:00:47.520 --> 0:00:50.000 you for joining us on this beautiful morning, at least 0:00:50.040 --> 0:00:56.280 here in Boston. Uh looks like the narrative, President Mester, 0:00:56.440 --> 0:00:59.000 that the American people are going to be recovering more 0:00:59.080 --> 0:01:03.200 quickly and everybody anticipated might not be correct. I mean, 0:01:03.280 --> 0:01:07.640 they're still spending money, but not at an increasing pace. Yeah, 0:01:07.720 --> 0:01:11.119 I mean I think this is probably what we should expect. Right. 0:01:11.200 --> 0:01:14.200 We have pent up demand coming back as the vaccinations 0:01:14.240 --> 0:01:18.520 have been distributed more widely, and that's a strong demand. 0:01:18.880 --> 0:01:22.120 We also have supply issues affecting the economy, and this 0:01:22.240 --> 0:01:25.480 interplay between demand and supply is what we're seeing in 0:01:25.520 --> 0:01:27.960 some of the data coming out, whether it be today's 0:01:28.000 --> 0:01:31.440 retail sales report or the labor market reports. So the 0:01:31.520 --> 0:01:35.440 volatility month to month, I think is something we should expect. 0:01:35.880 --> 0:01:38.160 I think that what's happening, though, is that we do 0:01:38.240 --> 0:01:41.240 see the recovery continuing. It's just that we're going to 0:01:41.360 --> 0:01:45.000 have these months to month changes depending on which factors 0:01:45.640 --> 0:01:48.520 are more dominant. Is at the supply side or is 0:01:48.560 --> 0:01:51.280 it demand side? And I think the bottom line is 0:01:51.320 --> 0:01:53.520 it just you know, we're really at the beginning of 0:01:53.520 --> 0:01:58.960 this vaccinations widely distributed part of the recovery, and I 0:01:59.000 --> 0:02:01.160 think we just have to, you know, wait and be 0:02:01.200 --> 0:02:05.760 a little bit patient and let the recovery continue. Well, 0:02:05.760 --> 0:02:08.120 we just got the CDC advice that people don't have 0:02:08.160 --> 0:02:10.080 to wear masks anymore. I can tell you people in 0:02:10.120 --> 0:02:13.480 Boston are still wearing masks as they are in New York. 0:02:14.280 --> 0:02:17.800 Do you think that reluctance to go out and spend 0:02:18.120 --> 0:02:21.519 is going to fade rapidly now, Well, it's hard to 0:02:21.560 --> 0:02:25.120 see how rapidly. I mean myself, you know, I'm still 0:02:25.120 --> 0:02:27.440 you know, wearing masks when I go outside. I think 0:02:27.520 --> 0:02:30.200 it all is a good sign though, that we are 0:02:30.320 --> 0:02:33.360 getting to the other side of this. And I think 0:02:33.400 --> 0:02:37.240 that the vaccinations still have some further way to go. 0:02:37.400 --> 0:02:40.480 I think we need to distribute them more evenly across 0:02:41.240 --> 0:02:46.160 the country. But as a that continues, as we can 0:02:46.200 --> 0:02:49.119 relax mask wearing for those who have been vaccinated, all 0:02:49.160 --> 0:02:50.960 of that is on a good path to get us 0:02:51.000 --> 0:02:53.480 back to some semblance of normal. And I do think 0:02:53.480 --> 0:02:55.919 people are going to feel more comfortable re engaging. I 0:02:56.560 --> 0:02:59.399 am feeling more comfortable re engaging, and I think I'm 0:02:59.400 --> 0:03:02.280 representing of others that you know, we have a reluctance. 0:03:02.320 --> 0:03:05.119 But now as things continue on, and you know, we've 0:03:05.200 --> 0:03:08.400 intellectualized the fact that we have gotten vaccinated and we 0:03:08.440 --> 0:03:11.440 are protected, we're going to be more able and willing 0:03:11.480 --> 0:03:13.240 to go out and re engage. And I think we're 0:03:13.240 --> 0:03:15.320 going to see that, you know, over the rest of 0:03:15.360 --> 0:03:18.000 the year. This is where I put in my plug 0:03:18.040 --> 0:03:20.000 to come visit you in Cleveland and do the next 0:03:20.080 --> 0:03:23.360 interview there. Uh, neither you or I have had a 0:03:23.360 --> 0:03:26.080 real chance to dig into these retail sales numbers. But 0:03:26.120 --> 0:03:28.640 the interesting thing about retail sales is they're reported in 0:03:28.760 --> 0:03:31.639 dollar terms, and so one would have thought that there 0:03:31.680 --> 0:03:35.720 would be a big impact from the April CPI numbers. Uh, 0:03:35.960 --> 0:03:38.720 what was your reaction to that and the idea that 0:03:39.000 --> 0:03:45.240 maybe inflation is accelerating more quickly than the Fed anticipated. Well, again, 0:03:45.320 --> 0:03:49.320 I think we're seeing the clash between you know, kentup demand, 0:03:49.360 --> 0:03:53.320 the surgeon demand, and some of the supply issues that 0:03:53.360 --> 0:03:56.760 we're seeing. And coupled on, you know, with that also 0:03:56.840 --> 0:03:59.240 is the fact that the month you know, year over 0:03:59.360 --> 0:04:03.760 year number are really incorporating those very low inflation readings 0:04:03.760 --> 0:04:07.760 we had um last year. As those you know, come 0:04:07.760 --> 0:04:10.600 out of the numbers, we're gonna just seem mathematically inflation 0:04:10.640 --> 0:04:13.280 going up. But no doubt, you know, we're seeing some 0:04:13.520 --> 0:04:17.760 real supply constraints in particular areas. I think you were 0:04:17.800 --> 0:04:22.600 mentioning lumber earlier. There's commodity prices, there's energy prices now 0:04:22.640 --> 0:04:25.719 with the pipeline issue, so you're we're seeing those in 0:04:25.760 --> 0:04:29.440 the inflation data. I think the real question for monetary 0:04:29.520 --> 0:04:32.880 policy is is that gonna you know, abate over the 0:04:32.920 --> 0:04:36.039 rest of the year as supply comes back on, as 0:04:36.080 --> 0:04:40.320 some of the stimulus checks that people have um are 0:04:40.520 --> 0:04:42.720 used up, and so I think we're gonna see that 0:04:42.800 --> 0:04:46.479 play out. And my baseline scenario for inflation is that 0:04:46.520 --> 0:04:50.120 we're gonna have high higher inflation this year above two percent. 0:04:50.680 --> 0:04:54.760 But then as some of those constraints on supply ease UM, 0:04:54.800 --> 0:04:57.160 I think we're gonna see inflation go back down and 0:04:57.200 --> 0:04:59.920 we'll have to you know, monitor that as we go forward. 0:05:00.640 --> 0:05:04.800 I'm really focused on inflation expectations because I think that 0:05:04.960 --> 0:05:07.880 is really where you know, you'll begin to see if 0:05:07.920 --> 0:05:11.280 those go up UM, and they're going up a little 0:05:11.279 --> 0:05:13.600 bit now, we'll have to look to see whether longer 0:05:13.720 --> 0:05:16.640 run expectations are going up, and that's really a key 0:05:16.680 --> 0:05:19.560 to me in terms of you know, where inflation is 0:05:19.600 --> 0:05:24.720 likely to go um over the longer run. Wall Street's 0:05:24.720 --> 0:05:27.760 favorite drinking game is the word transitory with BEETE officials, 0:05:28.200 --> 0:05:31.440 how do you define transitory? How long is it? When 0:05:31.440 --> 0:05:33.840 would you know whether you're right or wrong about your 0:05:33.839 --> 0:05:38.000 inflation forecast? Right? So again, I think transitory is a 0:05:38.120 --> 0:05:42.360 word that was meant to convey whether those are supply 0:05:42.520 --> 0:05:45.919 issues that will abate over time and that's what push 0:05:46.000 --> 0:05:49.000 pushing up prices, or whether it really is in these 0:05:49.080 --> 0:05:53.760 underlying inflation measures. So far, we don't see right much 0:05:53.839 --> 0:05:57.560 impact on measures like the Cleveland Fits Median cp I 0:05:58.080 --> 0:06:00.719 and other measures that really try to look at what 0:06:00.839 --> 0:06:03.680 the trend in inflation is. And the key to that 0:06:03.839 --> 0:06:06.960 is this real inflation expectations. So it really is going 0:06:07.000 --> 0:06:10.160 to depend on how long it takes her supply conditions 0:06:10.200 --> 0:06:12.839 to to ease and get back to normal, and that 0:06:12.880 --> 0:06:14.760 could take some time. It's going to depend on what 0:06:14.880 --> 0:06:17.560 commodity we're looking at. It's going to depend on what 0:06:17.720 --> 0:06:20.200 part of the economy we're looking at. You know, we 0:06:20.320 --> 0:06:23.520 all have talked about the chip you know shortage, that's 0:06:23.520 --> 0:06:25.440 going to take some time. When we talk to our 0:06:26.120 --> 0:06:29.160 um contacts in the auto industries, many of them are 0:06:29.200 --> 0:06:32.440 saying it's gonna be six months to even nine months 0:06:32.520 --> 0:06:34.400 for that to get back to normal. So some of 0:06:34.400 --> 0:06:38.960 those transitory gives the impression of over and done very quickly. 0:06:39.080 --> 0:06:41.600 I don't think that's what we'll see. I think some 0:06:41.680 --> 0:06:44.719 of those are gonna last longer. But whether that gets 0:06:44.720 --> 0:06:48.799 embedded in underlying inflation rates, which is what the FED 0:06:48.920 --> 0:06:52.320 looks at, that's a different story. And that in that sense, 0:06:52.360 --> 0:06:55.400 I think a lot of the supply conditions that are 0:06:55.400 --> 0:07:00.320 pushing up inflation now will abate over time. Well, there's 0:07:00.320 --> 0:07:03.120 definitely gonna be a staring contest between the Federal Reserve 0:07:03.240 --> 0:07:05.720 and the people on trading guests on Wall Street over 0:07:05.720 --> 0:07:08.240 the next couple of months we get this economic data. 0:07:08.839 --> 0:07:11.760 Are you gonna be able to resist pressure from the 0:07:11.800 --> 0:07:16.320 markets if they see concern about inflation and start raising rates. 0:07:16.600 --> 0:07:19.320 I'm sure you'll tell me yes, you can. But traders 0:07:19.360 --> 0:07:23.240 also remember December of two thousand eighteen. You know, we 0:07:23.400 --> 0:07:28.080 have been very clear, I hope in UM telling everyone 0:07:28.200 --> 0:07:31.240 sort of our strategy and the fact that we want 0:07:31.240 --> 0:07:34.680 to see right it in the data. We want to 0:07:35.040 --> 0:07:38.600 not just based our our policy actions on what we 0:07:38.720 --> 0:07:41.600 project is going to be happening, but also seeing it 0:07:43.360 --> 0:07:46.240 really in the data. And I think that's a really 0:07:46.240 --> 0:07:49.440 good strategy for times like this where you have demand 0:07:49.560 --> 0:07:54.000 and supply factors clashing and coming together and the outcomes 0:07:54.000 --> 0:07:56.000 and the data. So again, you know, I think we're 0:07:56.000 --> 0:08:00.640 gonna be looking at outcomes are forward GUIDs tells us, 0:08:00.840 --> 0:08:04.520 you know, tells the markets and the public where what 0:08:04.560 --> 0:08:07.600 we're looking at we want to see inflation go up, 0:08:08.000 --> 0:08:10.040 and we want to see it be on track to 0:08:10.120 --> 0:08:13.600 go above two percent um and that's you know, what 0:08:13.600 --> 0:08:16.280 we're going to be looking at and basing our inflation 0:08:16.360 --> 0:08:18.280 on the inflation side, and we want to get back 0:08:18.320 --> 0:08:22.440 to maximum employment. You know, we still are in spite 0:08:22.480 --> 0:08:25.400 of the pretty good labor market data we've gotten over 0:08:25.440 --> 0:08:28.640 the past several months. Despite last month's a little bit 0:08:28.720 --> 0:08:33.120 disappointment in that report, we're still making progress on the 0:08:33.200 --> 0:08:37.960 labor market side. But right again, supply issues are affecting 0:08:37.960 --> 0:08:41.320 those numbers too, and you know, we have to sort 0:08:41.360 --> 0:08:44.280 of continue on the path we're on until we get 0:08:44.280 --> 0:08:47.800 more people back into the labor market um and more 0:08:47.800 --> 0:08:51.160 progress towards our goals. So again, I think we're seeing 0:08:51.200 --> 0:08:55.040 this play out in both labor markets and product markets, 0:08:55.440 --> 0:08:57.440 and the FED is just going to be focused on 0:08:57.480 --> 0:09:00.520 outcomes to see that, you know, and Greek calibrate our 0:09:00.960 --> 0:09:04.680 policy appropriately to the outcomes. What you're saying about the 0:09:04.679 --> 0:09:08.200 employment report, um, do you have a read on what 0:09:08.360 --> 0:09:11.360 happened there? Do you think that, uh, the enhanced unemployment 0:09:11.360 --> 0:09:14.880 benefits play a major role, is a lot of least 0:09:14.920 --> 0:09:19.360 politicians thing. So I think a lot of things that 0:09:19.360 --> 0:09:21.840 are going on in the labor markets still reflects some 0:09:22.040 --> 0:09:24.720 moneys that we were talking about earlier in terms of 0:09:24.760 --> 0:09:27.720 re engaging. And I also believe that the and we 0:09:27.800 --> 0:09:30.320 hear this from our context all the time, the childcare 0:09:31.000 --> 0:09:35.600 school reopening that is affecting the labor markets. I think 0:09:36.160 --> 0:09:38.800 people are making decisions based on those things, but the 0:09:38.840 --> 0:09:42.400 fact that they have the unemployment benefits gives them the 0:09:42.440 --> 0:09:46.120 financial wherewithal to actually be making those decisions, whereas in 0:09:46.120 --> 0:09:48.959 the past they may not have been able to make 0:09:49.040 --> 0:09:52.000 the decision they would like to meet be able to 0:09:52.080 --> 0:09:54.760 meet make because they didn't have the wherewithals. So in 0:09:54.760 --> 0:09:58.120 that sense, it's interacting. But I think the main drivers 0:09:58.200 --> 0:10:02.920 are these other considerations in terms of the virus and schools, 0:10:02.960 --> 0:10:04.840 and that's why I think we're going to see some 0:10:04.960 --> 0:10:08.880 of that downward pressure on labor supply abate too over time, 0:10:08.880 --> 0:10:11.640 because I think as schools reopened, as people get more 0:10:11.679 --> 0:10:16.400 comfortable with the vaccinations being widely distributed, I think people 0:10:16.400 --> 0:10:19.160 will feel more comfortable coming back into the labor market, 0:10:19.520 --> 0:10:21.720 and we're gonna be watching for that. I certainly will 0:10:21.760 --> 0:10:24.080 be watching for that. Um as we go through the 0:10:24.080 --> 0:10:27.719 rest of the year. Let me ask you this, A 0:10:27.840 --> 0:10:30.720 number of people, including your former colleague Bill Dadley, the 0:10:30.760 --> 0:10:34.199 former President of the New York Fed have been speculating 0:10:34.280 --> 0:10:38.480 lately that the economy could rebound more quickly and more 0:10:38.520 --> 0:10:41.840 strongly than people anticipated, and that by the time you 0:10:41.880 --> 0:10:45.200 get around to looking at actual realized data, you will 0:10:45.240 --> 0:10:49.280 have passed maximum employment and the inflation danger will rise, 0:10:49.400 --> 0:10:51.760 and then you're gonna have to raise rates farther and 0:10:51.880 --> 0:10:56.320 faster than you thought. What's your view on that? So, 0:10:56.360 --> 0:10:58.440 I think, you know, we are going to be watching 0:10:58.600 --> 0:11:02.920 very closely how the economy and the recovery evolves over 0:11:02.960 --> 0:11:05.760 the year UM as we get more data in so 0:11:06.360 --> 0:11:11.400 and we're guided by our our dual mandate goals progress 0:11:11.440 --> 0:11:15.040 towards there's goals. So yes, there's you know, uncertainty around 0:11:15.040 --> 0:11:17.760 the outlook, there's risks around the outlook. Things could you know, 0:11:17.800 --> 0:11:21.080 pick up faster than we anticipate, Things could go slower 0:11:21.120 --> 0:11:24.439 than we anticipate, and we're prepared for that. I think 0:11:24.440 --> 0:11:26.960 we're in a good place right now with our policy, 0:11:27.040 --> 0:11:29.720 and we're going to adjust it as appropriate depending on 0:11:29.800 --> 0:11:34.400 how the actual recovery um progressive. So that's why this is, 0:11:34.480 --> 0:11:36.840 you know, not the time to really be adjusting anything 0:11:36.840 --> 0:11:39.680 on policy. It really is a time for watchful waiting 0:11:40.120 --> 0:11:42.959 seeing how the recovery evolved, seeing how some of this 0:11:43.120 --> 0:11:47.480 apply constraints dissipate or not seeing what happens on the 0:11:47.559 --> 0:11:51.320 labor side, um and keeping focused on our dual mandate goals. 0:11:51.320 --> 0:11:54.760 So you know, I understand where bills coming from. I 0:11:54.800 --> 0:11:57.000 think the way I would what would I would say 0:11:57.000 --> 0:12:01.920 in responses. We're well positioned now for upside and downside risks, 0:12:01.960 --> 0:12:03.960 and we're just gonna have to be patient where we 0:12:04.000 --> 0:12:06.880 are now and wait a little bit a little bit 0:12:06.960 --> 0:12:10.040 longer looking at the data to see where this recovery 0:12:10.120 --> 0:12:13.400 is going. But I'm very I have a positive outlook. 0:12:13.440 --> 0:12:15.760 I think the outlook is bright. I just think that 0:12:15.880 --> 0:12:20.160 we need to let it continue on a little bit longer, because, 0:12:20.200 --> 0:12:22.720 you know, opening up the economy after such a deep, 0:12:22.840 --> 0:12:28.040 deep UH shocked downward right is proving to be you know, 0:12:28.120 --> 0:12:30.640 there's some some stumbles along the way, and I think 0:12:30.679 --> 0:12:33.920 we should have expected that, and I think that's what 0:12:33.960 --> 0:12:36.880 we're seeing in the data right now. Well, let me 0:12:36.880 --> 0:12:38.880 ask you one last quick question. Do you think it's 0:12:38.880 --> 0:12:42.160 a foregone conclusion that when you finally talk about or 0:12:42.320 --> 0:12:45.439 talk about talk about UH tapering, that you're going to 0:12:45.520 --> 0:12:47.319 get a taper tantrum that the markets are going to 0:12:47.360 --> 0:12:49.800 try to reprice immediately and we're going to have a 0:12:49.840 --> 0:12:54.440 market disruption. Well, I mean, obviously that would not be 0:12:54.480 --> 0:12:57.559 a good outcome. I think we've been very clear and 0:12:57.640 --> 0:13:00.320 Share Palace been very clear that we are going to 0:13:00.400 --> 0:13:06.400 be communicating well in advance UM what our policy stance 0:13:06.600 --> 0:13:09.760 is and where it's going. And my hope is that 0:13:10.360 --> 0:13:14.000 UM will be articulate enough UM and explain enough our 0:13:14.120 --> 0:13:18.720 rationales and and our UM expectations that we will avoid 0:13:18.960 --> 0:13:23.000 the worst UM in terms of the financial markets. I mean, 0:13:23.080 --> 0:13:27.360 bolatil and financial markets is what financial markets are. UM. 0:13:27.440 --> 0:13:29.720 We just want to make sure that you know, we're 0:13:29.720 --> 0:13:33.439 communicating as best we can our rationales and our approach 0:13:33.520 --> 0:13:36.280 to policy. And you know, we'll just have to wait 0:13:36.320 --> 0:13:40.160 and see how how well we do that. Laura Best, 0:13:40.360 --> 0:13:42.760 the President of the Federal Reserve Bank of Cleveland, thank 0:13:42.800 --> 0:13:45.360 you very much for joining us this morning here on 0:13:45.400 --> 0:13:51.200 Bloomberg Radio and television worldwide. Fantastic Marchael McKay that with 0:13:51.240 --> 0:13:54.280 President Mesta, always right to hit from President Mesta as well. 0:14:01.360 --> 0:14:03.200 Let me get onto our next guest, because she is 0:14:03.320 --> 0:14:06.240 very valuable. There are economists to come on here and 0:14:06.240 --> 0:14:09.840 they warble gaily. And there are very few, I think 0:14:09.920 --> 0:14:15.400 John Taylor of Stanford University who actually have a Bloomberg function. 0:14:15.880 --> 0:14:18.760 Claudius Sam is one of our great thinkers, and she 0:14:18.960 --> 0:14:22.240 nailed the recession mathematics a number of years ago at 0:14:22.240 --> 0:14:24.760 the FED. And there is the some rule which you 0:14:24.760 --> 0:14:28.560 could find on the Bloomberg which shows a horrific recession 0:14:28.960 --> 0:14:31.920 of this instant pandemic. And then out we came to 0:14:32.080 --> 0:14:36.000 a better America. Except Claudia Sam and said, wait a minute. 0:14:36.160 --> 0:14:39.600 The inequality that out there is tangible. Claudia, I want 0:14:39.600 --> 0:14:42.120 to get to the inequalities right now, and I want 0:14:42.120 --> 0:14:44.520 to get to what all case say from John Edwards 0:14:44.720 --> 0:14:48.480 is three America's you got an elite boom. You've got 0:14:48.560 --> 0:14:51.440 McDonald's and the rest of them telling us Amazon they're 0:14:51.440 --> 0:14:54.480 gonna hire low wage at a higher wage. And then 0:14:54.480 --> 0:14:57.080 there's the rest of America. How do we pull them 0:14:57.120 --> 0:15:02.760 into the dialogue? Right This is absolutely the right question 0:15:02.800 --> 0:15:06.080 to be asking right now, because we have not in 0:15:06.120 --> 0:15:10.680 the past any good job policymakers getting a recovery for everyone. 0:15:11.320 --> 0:15:13.280 Up to this point. We've seen a lot of messaging, 0:15:13.320 --> 0:15:15.440 We've seen a lot of actions by Congress with the 0:15:15.480 --> 0:15:18.320 Rescue Plan, the FED with their new framework to say, 0:15:18.320 --> 0:15:21.680 we're going to fight for those people, to get everybody back, 0:15:21.760 --> 0:15:25.520 particularly those from minoritized groups. But we got to see it, 0:15:25.680 --> 0:15:28.720 and what you see right now are the other two groups, 0:15:29.120 --> 0:15:33.320 the elite, the wealthy and the large corporations, making a 0:15:33.360 --> 0:15:35.960 lot of noise that they need to be taken care of, 0:15:36.000 --> 0:15:39.760 and not those at the bottom, Claudia. Within the three Americas, 0:15:39.840 --> 0:15:42.480 there's the idea of yeah, we get back, We're gonna 0:15:42.480 --> 0:15:46.000 be fully employed, fully employed, four percent unemployment rate, whatever 0:15:46.040 --> 0:15:50.000 the number is. That math doesn't compute. If we have 0:15:50.120 --> 0:15:53.960 so many people left aside because of technology, because of 0:15:54.080 --> 0:15:58.200 education in the last twenty or thirty years, what's the 0:15:58.360 --> 0:16:02.520 program to actually pull them from a modern welfare state, 0:16:02.600 --> 0:16:06.240 however you want to call it into an actual productivity 0:16:06.280 --> 0:16:12.640 for America? Right? Well, are people are our most valuable asset, 0:16:12.680 --> 0:16:15.000 the thing that we should be investing in, and that's 0:16:15.040 --> 0:16:19.000 where and our infrastructure, right so physical infrastructure, invest in 0:16:19.000 --> 0:16:22.240 our people. We have two proposals going to Congress in 0:16:22.600 --> 0:16:25.120 varying forms, like there's so much we can do in 0:16:25.200 --> 0:16:27.520 terms of investing in people and families in the next 0:16:27.560 --> 0:16:31.200 generation and our physical infrastructure. Those are the kind of 0:16:31.240 --> 0:16:33.400 things we need to do now, like we have to 0:16:33.440 --> 0:16:36.200 fight this recession. But it is not good enough to 0:16:36.240 --> 0:16:38.760 get back to pre COVID because pre COVID there were 0:16:38.760 --> 0:16:41.640 a lot of problems and frankly, our productivity as a 0:16:41.720 --> 0:16:44.280 country had slowed down. I mean we were all suffering, 0:16:44.920 --> 0:16:47.880 and some were suffering even more. And we can fix 0:16:47.960 --> 0:16:51.120 that with good policy and a lot of push from 0:16:51.320 --> 0:16:53.520 markets too. I mean, the private sector has a big 0:16:53.600 --> 0:16:57.560 role to play. Also, Claudia, the complexity of productivity. And 0:16:57.640 --> 0:16:59.960 I really try, Claudia on a Friday not to talk 0:17:00.040 --> 0:17:03.120 about productivity. But I'll dive off the deep end here 0:17:03.680 --> 0:17:07.240 on productivity. It is about this strange m I t 0:17:07.520 --> 0:17:13.280 solo word technology. Are we less productive because we're overwhelmed 0:17:13.760 --> 0:17:17.400 by not the negative but just the realities of our 0:17:17.440 --> 0:17:22.320 modern technology. So I don't want to point paint that 0:17:22.520 --> 0:17:26.960 dark of a picture. I will say, you know, productivity 0:17:27.000 --> 0:17:29.000 is the sum of what we do not know. Right 0:17:29.160 --> 0:17:32.560 is very hard to measure. It's very hard to really 0:17:32.600 --> 0:17:35.080 say where we're at and why it's slowed down. But 0:17:35.200 --> 0:17:41.320 we do know that education helping workers have stable lives, 0:17:41.359 --> 0:17:45.439 economic security, job ladders, right, Like, it's not even if 0:17:45.480 --> 0:17:48.840 we can't see it in the GDP data, Like, that's real, 0:17:48.920 --> 0:17:51.480 that matters to people. So I don't want to like 0:17:51.560 --> 0:17:54.160 technology has always been with us, Automation has always been 0:17:54.200 --> 0:17:56.679 with us. That's not an excuse to throw in the 0:17:56.760 --> 0:18:00.560 towel here, Claudia, you're every Republican leaders worst nightmare. They 0:18:00.560 --> 0:18:02.760 won't they won't talk to you, They hang up the phone. 0:18:02.800 --> 0:18:05.360 They call hello, the Jane Family Institute. But we don't 0:18:05.400 --> 0:18:09.040 want to talk to that wacko economists. Okay, but are 0:18:09.080 --> 0:18:13.080 the people of the Republican Party in sync with their 0:18:13.200 --> 0:18:16.879 leaders or do you buy what's percolating in Washington that 0:18:17.000 --> 0:18:22.160 President Biden can get societal support of Republicans even if 0:18:22.200 --> 0:18:26.240 he doesn't get the leadership support. Yeah, well, I will 0:18:26.280 --> 0:18:29.640 say I talked to Republican voters every day. That being parently, 0:18:30.920 --> 0:18:33.479 I grew up in Indiana. I'm not a political person. 0:18:33.840 --> 0:18:36.639 I do think we need to have policy in an 0:18:36.640 --> 0:18:39.400 economy that works for everyone, but frankly, that is not 0:18:39.560 --> 0:18:42.359 like that's what everybody wants in the United States. There 0:18:42.359 --> 0:18:44.200 are big debates about how to do it best and 0:18:44.280 --> 0:18:47.400 what the role of government versus an old individuals are. 0:18:47.520 --> 0:18:51.000 But I think this is one where we the politics 0:18:51.080 --> 0:18:55.040 that are just crushing work in Congress, in the administration 0:18:55.080 --> 0:18:58.480 and have for decades. This is a real disservice to 0:18:58.560 --> 0:19:00.600 the American people. And I try and am I Lane 0:19:00.640 --> 0:19:03.480 on the economics and not the politics. But it's it's 0:19:03.560 --> 0:19:05.919 it's hard to watch. It's a Brea exclusive, folks, it's 0:19:05.920 --> 0:19:10.280 a surveillance break exclusive here this morning, Claudius Um speaks 0:19:10.320 --> 0:19:14.640 to members of the GOP. It's an extraordinary mom mclaude. 0:19:14.680 --> 0:19:16.880 I want to go back to University of Michigan where 0:19:16.880 --> 0:19:19.080 you took your PhD. It's really been one of our 0:19:19.119 --> 0:19:23.840 hotbeds of inflation and research. What is your observation on 0:19:23.920 --> 0:19:29.280 the fear, the worry, the angst, the pendulum of inflation. Yes, 0:19:29.440 --> 0:19:31.280 I feel like we all just got a step back 0:19:31.280 --> 0:19:34.280 and take a deep breath. Right, there's been a way 0:19:34.400 --> 0:19:36.919 too much attention to the last set of data points, 0:19:36.960 --> 0:19:40.560 whether it's jobs or inflation or today retail sales. Right, 0:19:40.600 --> 0:19:43.600 we have a twenty one trillion dollar economy. We have 0:19:43.920 --> 0:19:47.160 really tried to push it intentionally to get people back 0:19:47.240 --> 0:19:49.840 to work and back on track. This is exactly what 0:19:49.880 --> 0:19:53.280 we said was going to happen, right, Like, you can't 0:19:53.600 --> 0:19:57.840 get all excited about a historic forecast myths or like 0:19:58.000 --> 0:20:01.040 numbers are coming bigger than we thought because this world, 0:20:01.160 --> 0:20:03.560 like the entire last year. I mean, remember last year, 0:20:03.560 --> 0:20:06.560 they were all way worse than we expected. Right, So 0:20:06.600 --> 0:20:09.520 I think there's just we're losing context. And I get it. 0:20:09.520 --> 0:20:13.400 It's scary, it's uncertain. But if you look at especially 0:20:13.440 --> 0:20:17.560 I look at the consumer expectations numbers, I mean, people 0:20:18.040 --> 0:20:20.720 they don't like inflation, this is true, but they will 0:20:20.760 --> 0:20:24.560 tolerated to a moderate level like three. This is not 0:20:24.680 --> 0:20:27.640 as long as wages are rising. But what is really 0:20:27.840 --> 0:20:30.640 really hard is not to have a job very great, 0:20:30.720 --> 0:20:32.960 So we have to keep it in balance. I'm running 0:20:33.000 --> 0:20:35.800 out of time, Claudia, but very quickly. Here is the 0:20:35.920 --> 0:20:39.280 argument of corporations that they've got to pay sixteen seventeen 0:20:39.320 --> 0:20:42.639 dollars an hour going to overwhelm the Deep South that 0:20:42.720 --> 0:20:47.560 wants to pay seven dollars an hour. So there's gonna 0:20:47.600 --> 0:20:50.200 be a lot of adjustments in the labor market coming 0:20:50.200 --> 0:20:53.280 out of this. Again, we're a dynamic economy and it's 0:20:53.359 --> 0:20:56.040 so different across the country. But right now there's a 0:20:56.080 --> 0:20:57.920 lot of talk and we just have to. I mean, 0:20:57.960 --> 0:21:00.640 these are business decisions. This is not something we can 0:21:00.680 --> 0:21:03.560 fine tune from Washington, d C. We've got to leave 0:21:03.560 --> 0:21:05.600 it there. Clodius, I'm thank you so much with the 0:21:05.720 --> 0:21:15.399 Jane Family Institute and their senior fellow today let's go 0:21:15.440 --> 0:21:17.280 to this right now. We are thrilled to bring you 0:21:17.320 --> 0:21:20.439 a Craig Moffatt, Michael Nathanson. Moffatt Nathanson. Of course for 0:21:20.520 --> 0:21:23.960 decades at Sanford at Bernstein, they are definitive on what 0:21:24.040 --> 0:21:26.919 we do in our houses and what we watch and 0:21:26.960 --> 0:21:29.240 when we watch it. Michael Nathan said, let me go 0:21:29.280 --> 0:21:31.080 to you first. On Disney. I know, John's got a 0:21:31.080 --> 0:21:33.919 bunch of questions to to me, it was just simply 0:21:33.960 --> 0:21:37.399 they didn't have Mandalorian too. How much did Disney and 0:21:37.480 --> 0:21:43.240 Mr Chpeck miss Baby Grow Goo? They missed by about 0:21:43.320 --> 0:21:46.880 five to six million subs, and in the New Disney 0:21:47.480 --> 0:21:50.960 that really matters. So it's you know, it's perverse, but 0:21:51.119 --> 0:21:55.000 they crushed every other number but Disney plus subs, And 0:21:55.160 --> 0:21:57.600 unfortunately that's what happens on the stock trades. The way 0:21:57.640 --> 0:21:59.040 it does. I mean, it's the way it is, and 0:21:59.119 --> 0:22:01.240 it's a battle out there. Craig Moffatt you've been doing 0:22:01.240 --> 0:22:04.200 this year is particularly the cabling of it, the routing 0:22:04.240 --> 0:22:06.359 of it, and what we do with our checks. What's 0:22:06.400 --> 0:22:09.719 the theme for you, Craig Moffitt right now into the 0:22:09.760 --> 0:22:13.280 summer in the streaming wars. Well, you know, as much 0:22:13.320 --> 0:22:18.000 as the streaming wars dominate the video side of it. 0:22:19.040 --> 0:22:21.159 The companies that I cover, especially A T and T 0:22:21.520 --> 0:22:24.159 and Verizon, you can talk about media for them if 0:22:24.200 --> 0:22:27.040 you want, but fundamentally it's about It's about the wireless 0:22:27.080 --> 0:22:30.880 business and UM while streaming is sort of a benefit 0:22:30.960 --> 0:22:33.720 that they give away for free, the real battle is 0:22:33.720 --> 0:22:36.960 going to be on networks, capital investment. In five G 0:22:37.840 --> 0:22:40.359 you mentioned capital investment. I don't need to know. We 0:22:40.359 --> 0:22:43.679 don't have time now for a treatment on Verizon. But 0:22:43.880 --> 0:22:47.960 are the traditional companies Craig Moffat, that you follow done 0:22:48.119 --> 0:22:51.520 pretending that they can be the companies that Michael Nathanson follows. 0:22:52.440 --> 0:22:55.200 Not entirely. A T and T is making a good 0:22:55.359 --> 0:22:58.840