Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with
Speaker 1: David Gura. Daily we bring you insight from the best
Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance
Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot com, and of course
Speaker 1: on the Bloomberg Jim Glassman head economists for commercial Banking
Speaker 1: at JP Morgan Chase, and we've reached him on our
Speaker 1: phone line's gym. Great to speak with you. As always,
Speaker 1: Let's start with the broad question here. What you're looking
Speaker 1: for in in today's neber? Has this report different from
Speaker 1: the last one? Probably not too different. And I think I,
Speaker 1: like you guys have been saying, I don't think it's
Speaker 1: the entreil of these reports anymore. That matter. It's the
Speaker 1: message that is telling us about the economy. And I
Speaker 1: think what is telling us is we're doing pretty good.
Speaker 1: We still that the fact that we can have these
Speaker 1: kind of this kind of job growth with an economy
Speaker 1: that in theory is close to full employment tells you
Speaker 1: where these people coming from. It must be that we're
Speaker 1: still not really at our full capacity. So to me,
Speaker 1: the most important message that we're getting from the job
Speaker 1: market is that we still got a room to run here.
Speaker 1: And that's a very positive story for the equity market
Speaker 1: and even for the FED. I mean, it tells you,
Speaker 1: it tells you the pet needs to slowly normalized interest rates.
Speaker 1: But thanksly, there's no big rush. Where are we in
Speaker 1: the business cycle as you see it when you when
Speaker 1: you look at the economic data, when you look at
Speaker 1: the markets, where do you think we are? I think
Speaker 1: we're probably at the top of the ninth inning. But
Speaker 1: and I say that because I think I think we
Speaker 1: need another year or so this kind of growth to
Speaker 1: pull everybody back into the job market. That has is
Speaker 1: still a lot of young people, are still about a
Speaker 1: million and a half people that dropped out that are
Speaker 1: coming back, and all those part timers. But I think
Speaker 1: the more important point is the game is not over
Speaker 1: it at the ninth inning. I think this is going
Speaker 1: to go extra innings. And the reason I say that
Speaker 1: is we don't the inflation problems like we didn't normally
Speaker 1: make you think about end the cycle, and we don't
Speaker 1: see financial accesses that make you think about new problems brewing.
Speaker 1: So I think we've got a very good chance of
Speaker 1: going extra innings. I don't think there's anything many of
Speaker 1: us could look at and say this is a problem,
Speaker 1: and this is gonna throw us off course. Do let
Speaker 1: me ask you about those young people you you mentioned here.
Speaker 1: When you look at wage growth which is still lagging,
Speaker 1: what's the role that those young people are playing. Do
Speaker 1: you think that they're principally responsible here for dragging down
Speaker 1: wage growth? You know, I don't, but I think the
Speaker 1: I think the sense you get about what's true unemployment
Speaker 1: is kind of an approximate idea about how far the
Speaker 1: economy is from full capacity. I think maybe at the
Speaker 1: part time the involuntary part time guys probably put more
Speaker 1: pressure on wages. But I think the problem is everybody
Speaker 1: has is we're taking the official unoplumber rate at face value,
Speaker 1: and we're assuming four and a half percent, and we're
Speaker 1: assuming full employment is four and a half to five.
Speaker 1: I think that's maybe what's off course. I think personally,
Speaker 1: when you look at a metric of unemployment that's on
Speaker 1: an apple to apple similar to what we're used to
Speaker 1: looking at, we made me more like five and a
Speaker 1: half percent, and we're beginning to argue, we're beginning to
Speaker 1: debate is the full employment level closer to four percent. Well,
Speaker 1: if that were true, you you would say, Okay, the
Speaker 1: labor market is doing fine, but I wouldn't describe it
Speaker 1: as overly tight. So honestly, I think wages are doing
Speaker 1: a little better. They're running a little above inflation. Uh,
Speaker 1: that's a little bit of than the band. But I
Speaker 1: wouldn't describe I doesn't, it doesn't. I don't find this
Speaker 1: to be a mystery yet that despite the good sense
Speaker 1: of tone of the job market, we're not seeing big
Speaker 1: acceleration and wain wages because businesses have to manage things,
Speaker 1: you know why, they keep them competitive. They're not going
Speaker 1: to go crazy. Jim last one with us from JP
Speaker 1: Morgan as we begin our job day coverage, David Gern,
Speaker 1: Tom Keith thrilled your with us, uh nationwide, Jim blast
Speaker 1: And why are there twenty thou people lined up to
Speaker 1: work at Amazon? I've gotten tons of mail on this.
Speaker 1: I get the whole economist full employed idea. But then
Speaker 1: why are twenty thou people lined up to pack cardboard
Speaker 1: box is for Amazon? Yeah? I think it's I'm be
Speaker 1: telling you we're not really as tight as people might think.
Speaker 1: And uh, you know, part of the problem is there's
Speaker 1: a lot of disruption going on because of the Amazon phenomenon.
Speaker 1: So maybe people are saying this is the future. I'm
Speaker 1: you know, they're they're trying to shift gears a little
Speaker 1: bit and take advantage of what they think is coming.
Speaker 1: But it probably is a testimony to the disruption that's
Speaker 1: coming to the whole retail sector also from what you
Speaker 1: see going on with Amazon. Let me ask you just
Speaker 1: on a sector by sector basis what you're watching. Looking
Speaker 1: at your note here about auto sales, what we saw
Speaker 1: auto sales here, a little bit of disappointment over these
Speaker 1: last couple of days. How's that playing out in terms
Speaker 1: of what sectors are hiring at this point? Jim, You know,
Speaker 1: I think the auto industry was the first one out
Speaker 1: because credit tight credit really made it. It was a
Speaker 1: nightmare for the auto industry. When the economy opened up
Speaker 1: and credit began to flow, the auto industry was the
Speaker 1: first one out. And so I think what we're what
Speaker 1: we're seeing is that we're sort of the fact that
Speaker 1: car sales are kind of stay mobilizing now and we
Speaker 1: don't know how much of the uber phenomenon was driving
Speaker 1: sales last year, but I think, uh, it's telling you
Speaker 1: that the economy is becoming more mature. We're starting to
Speaker 1: see It's it's really hard when you look around. We're saying,
Speaker 1: a lot of every industry is picking up jobs. So
Speaker 1: we're still looking at a picture of a tide that's
Speaker 1: rising and it's helping everybody. Obviously the tech sector where
Speaker 1: everybody wants to be young kids anyway. Uh, that's the hardest.
Speaker 1: But the truth is healthcare, tech, financial services, information, business services,
Speaker 1: those are all the areas. And it doesn't look to
Speaker 1: me yet yet, like anyone who's dominating, just looks to
Speaker 1: me like the kind of thing you normally see when
Speaker 1: we're in a generally recovering economy. So it still looks
Speaker 1: a lot like a recovery story. Is there consensus about
Speaker 1: how many jobs we need to be adding month after
Speaker 1: month to keep that unemployment rate from from rising. Is
Speaker 1: that something that's a more art than science. Uh, it's
Speaker 1: a little bit of both. The fact is, if you
Speaker 1: look at the working age population, that's the easiest thing
Speaker 1: you can do. Look at the population between sixteen years
Speaker 1: of age and let's call it seventy or sixty or six, Well,
Speaker 1: it's real clear. The growth of the working age population
Speaker 1: has slowed down from about two per per per month
Speaker 1: about a decade ago to about seventy five per months.
Speaker 1: So that that's why all of us say we think
Speaker 1: the steady state growth and jobs needs to be about.
Speaker 1: Anything about that will tend to bring unemployment down. The
Speaker 1: problem is there's still a lot of guys that dropped out,
Speaker 1: so that there's a lot of guys who got pushed
Speaker 1: out during the recession. So they're slowly coming back, and
Speaker 1: so you can have a period here with a labor
Speaker 1: force can grow faster than that seventy five tho just
Speaker 1: because we're still recovery from the damage from the recession.
Speaker 1: But in defense of a president job bowing in the
Speaker 1: last hour about three g d P Carl Ricka Donna
Speaker 1: covered with that with US surveillance, Jim Glass and seventy
Speaker 1: five thousand per month non farm payrolls is totally unacceptable
Speaker 1: to both Democrats, both Republicans are the governor of West
Speaker 1: Virginia who's both because our benchmarks are coming from the
Speaker 1: old days. Those those those benchmarks we used to have
Speaker 1: are obsolete, and I think politicians haven't yet figured this
Speaker 1: out because they keep talking about getting America back to work.
Speaker 1: But the truth is most of US economists think America
Speaker 1: is getting back to work, and we're pretty much back
Speaker 1: to work. Here's the problem. There's like, in the last
Speaker 1: ten years, twenty million people that the people who were
Speaker 1: fifty five years of age and older, that population has
Speaker 1: increased like twenty million. The young people millennials are up
Speaker 1: two and a half a million, forty year olds down
Speaker 1: about a million and a half. So really what's going
Speaker 1: on here is the population because we're aging, We got
Speaker 1: more and more people going into retirement. So we have
Speaker 1: to change our idea. This is not the same labor
Speaker 1: market that we've been living with for the last several decades.
Speaker 1: Jim Lastman with us that Jim Glassman, the head economists
Speaker 1: for commercial banking at JP Morgan Chase, on this job
Speaker 1: to day here in the US. Just take you through
Speaker 1: what we expect for the rest of the day. Of course,
Speaker 1: those numbers come out from the Labor Department eight thirty
Speaker 1: Wall Street time. Alan Krueger is going to join us
Speaker 1: as well this morning of Princeton University. We're also going
Speaker 1: to speak with Bill gross of course, if Janice Henderson
Speaker 1: once those numbers come out, get his reaction to those,
Speaker 1: and then we're gonna hear from Gary Khne, Gary Coon,
Speaker 1: the head of the National Economic Council, so tremendous, a
Speaker 1: great perspective throughout the morning on Jobs Day. And then
Speaker 1: of course, as I mentioned, we're following this story out
Speaker 1: of Washington as well, centering on Robert Mueller, the Special
Speaker 1: Council going to a grand jury in Washington, d C.
Speaker 1: For help with his investigation. Squarely though our focused on
Speaker 1: the job's number, can we say, Sherman, let's see. We'll
Speaker 1: see how our colleagues address up this boarding. But a
Speaker 1: lot of speculation, as you allude to there, about who
Speaker 1: might be the next chairman. Muhammad Hillarian is in Paris.
Speaker 1: Dr Hillarian, good morning. In the back of your wonderful book,
Speaker 1: the only game in town. You have the power of
Speaker 1: scenario analysis. What are the scenarios cheer Yelling has to
Speaker 1: come up with? Is she and Governor Kearney and others
Speaker 1: battle the hard data of disinflation? What Connie and Yelling
Speaker 1: have very different issues, and thank you Tom for having
Speaker 1: me on for Yelling, is the flattening of the Phillips
Speaker 1: curve in other In other words, why is it that
Speaker 1: wages and inflation have not responded to what has been
Speaker 1: very impressive job creation. Connie is in a different position.
Speaker 1: He's worried about something else. He's worried about stag inflation.
Speaker 1: That is a slow economy, but high inflation. So both
Speaker 1: central banks are facing pretty unprecedented situations and their instruments
Speaker 1: are simply not giving them enough information right now to
Speaker 1: provide them with the confidence they need on the policy front.
Speaker 1: What more could could policymakers be doing in Washington? Right? No,
Speaker 1: I'm curious what you're gonna be looking for the day,
Speaker 1: of course, But beyond that, what would you like to
Speaker 1: see Washington doing more of? So what I'd like to see,
Speaker 1: and I'm not the only one, is a handoff, handoff
Speaker 1: from excessive reliance on central brank to a more comprehensive
Speaker 1: policy response that acts on demand, supply, and debt. The
Speaker 1: longer we wait for his handoff, the greater the risk
Speaker 1: of collateral damage from relying just on moncrey policy. And
Speaker 1: that's true not just for the US, is also true
Speaker 1: for the ECB, the Bank of Japan. Both of them
Speaker 1: also faced the same dilemma. What happens there? Did somebody
Speaker 1: drop the baton halfway down Pennsylvania that was supposed to
Speaker 1: have happened, wasn't it? So two thousand and ten happened
Speaker 1: the tea party. Then you've got the polarization of Congress,
Speaker 1: and then you've got a certain amount of all hazard
Speaker 1: reliance on central banks. You saw that in Europe as well.
Speaker 1: DJ Larian Richard Claire has sent me along a paper
Speaker 1: Pedrodocostic Business Inside has written it up as well. Yasir
Speaker 1: Abdi and Steven Deneger over at the i M F
Speaker 1: you Health Court at the i MM for years, they
Speaker 1: have a fabulous paper on technology and the effect of
Speaker 1: labor and they go into routinization, they go into how
Speaker 1: technology has changed everything we do and also offshoring is
Speaker 1: Cherry Yell and Governor Karney is all of our angst
Speaker 1: about jobs. Are we being overwhelmed by the new technology? Yes,
Speaker 1: but partly so let me explain there certainly is a
Speaker 1: structural and secular component to it, and that is understanding
Speaker 1: that technology is changing the way we do things. How
Speaker 1: is changing because of technology, and we don't yet fully
Speaker 1: understand that. But that is a structural and seculation. That's
Speaker 1: also a good or cyclical issue, which is we've had
Speaker 1: deficient aggregate demand and we've let potential output come down
Speaker 1: through policy in action. And it's important to make that
Speaker 1: distinction because you can do a lot on the second one,
Speaker 1: but it requires that other policy makers get into the
Speaker 1: game and get off the sideline. The President has been
Speaker 1: opinion a recently, but he's in West Virginia, his territory,
Speaker 1: last night talking about infrastructure. With those kind of programs,
Speaker 1: move the needle on potential g d P or do
Speaker 1: we just give up and get used to two point
Speaker 1: whatever percent run rate? There would be a tragedy if
Speaker 1: we gave up. We can move the needle. We can
Speaker 1: certainly move it towards three percent through the trifecta of infrastructure,
Speaker 1: pro growth, tax reform, and the regulations. So these are
Speaker 1: three things that the President has spoken about, and that
Speaker 1: let's not forget. President Obama also had infrastructure program. President
Speaker 1: Obama also was looking for tax reform. Um in a
Speaker 1: in a perfect world, you'd go beyond that and you
Speaker 1: deal with labor retooling and re training, you would deal
Speaker 1: with the education system, you would deal elements that talk
Speaker 1: to productivity. But no, Tom, we shouldn't just sit there
Speaker 1: we we can get it back towards three percent, but
Speaker 1: it requires Congress to step up to its economic governance.
Speaker 1: We're talking to you from Paris. Let me ask you
Speaker 1: just the degree to which excitement in the global economy
Speaker 1: has shifted to Europe from from the U S. What
Speaker 1: are we seeing in the context of the global economy
Speaker 1: in Europe today? How has that changed? A lot? More optimism.
Speaker 1: I'm very struck by the optimism that one hears here. Um,
Speaker 1: euro gloom has given way to your optimism. It helped
Speaker 1: by the latest GDP number. It's helped by the election
Speaker 1: of Marcon So there's a sense here of optimism. Um.
Speaker 1: I think that the economics tells you that it's not
Speaker 1: enough to move the soft data. With sort of soft
Speaker 1: data move in the US in a major way a
Speaker 1: few months ago, but that didn't translate to the heart data.
Speaker 1: So it's important that more be done. But the big difference,
Speaker 1: David is there's a lot more optimism. Are you coming
Speaker 1: to us from the cafe have la ground cafe? I know,
Speaker 1: but I'm talking to you. I'm talking to you from
Speaker 1: the Bloomberg offices, and as usual, they are beautiful offices
Speaker 1: in a wonderful locations. My first time here, and I
Speaker 1: think I'll try to visit more often. I know you
Speaker 1: should visit moreover, In fact, we should visit with you.
Speaker 1: I would suggest calling all the twins that we David
Speaker 1: Goer and I do a road trip with Dr Hillary
Speaker 1: into the Paris office. I'm thinking the last week of
Speaker 1: a Nosspember because it's across the street from the opera
Speaker 1: and the opera season stomps Um in September, so lets
Speaker 1: it would in September. We'll get that. We'll do that
Speaker 1: in September and you can pick the opera and well
Speaker 1: I'll attend. Dr Larin, thank you so much from my
Speaker 1: offices and studios in Paris. Friends greatly appreciated this morning.
Speaker 1: Of course writing for bloom Review and Dr Larian affiliated
Speaker 1: with Alan others. Really can't say enough about his book.
Speaker 1: It was my book of the summer. I don't know
Speaker 1: when it was the only game in town. Central Banks
Speaker 1: instability as well, really really precious chapter on game theory
Speaker 1: from Doctor Larium as well. For our cover to jobs.
Speaker 1: Stay continues now with Alan Kruegers, Professor of Public Polace
Speaker 1: and Economics at Princeton, former Chairman of the Council of
Speaker 1: Economic Advisors under President Obama here with us in our
Speaker 1: Bloomberg eleven three of studios in New York. Great to
Speaker 1: see again. As always, let's start just by a going
Speaker 1: macro if we could that we had the latest read
Speaker 1: on GDP a few days ago. Can we draw a
Speaker 1: line between that and what you think we're going to
Speaker 1: see today. I think they are part of the same picture.
Speaker 1: You know, it looks to me like the economy is
Speaker 1: continuing at the same pace it has for the last
Speaker 1: few years. Uh, there's been no change in policy, so
Speaker 1: I'm not sure why we would expect to see much
Speaker 1: change in economic performance. UM. So I think we're still
Speaker 1: at about two underlying growth. Job growth is faster than
Speaker 1: labor force growth. That should pull down the unemployment. UM.
Speaker 1: I've been a little bit disappointed that we haven't seen
Speaker 1: more wage growth. Uh. Inflation is but a little bit surprising,
Speaker 1: but I suspect that those are sort of short term
Speaker 1: phenomenon and we'll get back on track closer to percent inflation.
Speaker 1: When when you look at all that this this administration
Speaker 1: could be doing, that this Congress could be doing if
Speaker 1: its prioritization is is the watchword in Washington. I think
Speaker 1: is as we've seen the debate over healthcare unfold, and
Speaker 1: now there's a question of what we're going to see
Speaker 1: when it comes to tax from when it comes to
Speaker 1: the labor economy, and what policies they could implement there,
Speaker 1: what would be most effective. What if you were still
Speaker 1: in the White House counseling the president, would you advise
Speaker 1: him to do. My advice would be to tear up
Speaker 1: the proposal that they endorsed on immigration reform a couple
Speaker 1: of days earlier. Um that would be number one. And
Speaker 1: if you just look at the Congressional Budget Office report
Speaker 1: on the bipartisan bill that passed the Senate that would
Speaker 1: have increased immigration to the US legal immigration, that concluded
Speaker 1: GDP growth would be faster, income growth would be faster,
Speaker 1: productivity growth would be higher, We'd have more innovation, we
Speaker 1: create more companies if we reformed our immigration system in
Speaker 1: that direction. So that would be point number one on
Speaker 1: the labor market. Uh. I like their plans on infrastructure.
Speaker 1: I'd like to see them spell them out more detail.
Speaker 1: I'd like to see them have a strategy to congress
Speaker 1: past them. But I think that's an area where there
Speaker 1: is widespread agreement that the US needs more investment that
Speaker 1: will help labor, that will help businesses, that will help
Speaker 1: the economy down the road. Alan, you're cited in my
Speaker 1: paper to jour, I've I've been quoted folks already saying
Speaker 1: Olivia Blanchard's effort in Naples, Italy this summer was just
Speaker 1: brilliant and out of the I m f we get
Speaker 1: a working paper where you're sited. David Carter, I believe
Speaker 1: cited is well, which basically says routinization and offshoring have
Speaker 1: changed the American labor economy. Is technology the killer? Is
Speaker 1: technology a job's killer? Or can we say it's still
Speaker 1: adds vailue or is there just two America's Well, I
Speaker 1: think it's more in the too America vein. It's not
Speaker 1: a job's killer in the sense we've seen UH reasonable
Speaker 1: job growth over the last twenty five years. The problem
Speaker 1: is the nature of the jobs. The problem is that
Speaker 1: jobs in the middle have been disappearing while they've been
Speaker 1: growing at the top and the bottom. Uh. The problem
Speaker 1: is that we're seeing fewer long term employment relationships for
Speaker 1: seeing more workers move into self employment, more gig employment,
Speaker 1: workers left without a safety net or labor laws are
Speaker 1: not really set up for big independent workforce. UM. But
Speaker 1: technology has brought lots of benefits to the US economy
Speaker 1: and to consumers as well. UM. And ultimately we need
Speaker 1: technology to raise productivity, growth, raised living standards, improve life expectancy,
Speaker 1: and so on. So I think we need a better
Speaker 1: strategy for adjusting in the face of the computer information
Speaker 1: technology that's been developing. We'll come back here with you
Speaker 1: in just just a minute, but let me ask you
Speaker 1: a quick question about immigration. And you mentioned the speech
Speaker 1: to the President gave, the legislation he embraced this week.
Speaker 1: What does it seem like a conversation about him ration?
Speaker 1: It's gotten harder and harder to have in this country. Well,
Speaker 1: it's very polarizing, and UM. I was um disappointed by
Speaker 1: the White House's position on um immigration this week because
Speaker 1: to inject immigration reform in the middle of tax reform,
Speaker 1: infrastructure and just doing the basics of government. In fact,
Speaker 1: I think the Trump administration would be well served and
Speaker 1: I think they'll discover pretty soon they should just focus
Speaker 1: on getting Congress to do the basics, pass a budget,
Speaker 1: raised a debt limit, do so without drama. That's in
Speaker 1: the best interest of the American people and injecting um
Speaker 1: an immigration bilt which is not going to pass, really
Speaker 1: just done for political reasons. I think it's quite unfortunate
Speaker 1: because all it does in the end is divided the
Speaker 1: American people. David Greer right now, four minutes, thirty eight seconds,
Speaker 1: precious time with Alan Hooder. Alan great, too great to
Speaker 1: see once again we were chatting during the break here.
Speaker 1: But work you're doing on on music now, I think
Speaker 1: this is this is fascinating and your your interests are
Speaker 1: very to as we know, what are you doing exactly
Speaker 1: when it comes to the music industry, what are you
Speaker 1: looking at? Well? A long time ago I was invited
Speaker 1: to be the keynote speaker at the poll Star Concert
Speaker 1: convention and that got me involved in studying the music industry. So,
Speaker 1: together with a group of other economists, I've started the
Speaker 1: Music Industry Research Association. We're holding a conference at u
Speaker 1: c l A next week on Thursday and Friday, August
Speaker 1: tenth and eleven, UH and we have a really interesting
Speaker 1: program where people are presenting papers on copyright protection and
Speaker 1: our our copyright laws appropriate given the change in technology
Speaker 1: that we've seen on how streaming is changing the music
Speaker 1: industry on live live events. UM, I'm giving a paper
Speaker 1: on the backgrounds of musicians. We were talking before about inequality.
Speaker 1: Music historically has been a route for people who came
Speaker 1: from underprivileged backgrounds to be able to move up. Is
Speaker 1: that still the case, um? And the short answers, yes,
Speaker 1: it doesn't look like it's changed all that much. If
Speaker 1: I compare the backgrounds of UH superstar musicians and c
Speaker 1: e O s that musicians come from more disadvantaged backgrounds. Um.
Speaker 1: But interestingly, if you look at who's successful over time
Speaker 1: in the music industry, it tends to be those who
Speaker 1: are more middle class or more upper middle class. Even so,
Speaker 1: there's something about staying power which seems to be connected
Speaker 1: to the background. Have the technologists figured out the people
Speaker 1: have to get paid that. Granted, there's a revolution and
Speaker 1: we all have to sort out contracts and both sides
Speaker 1: of a contract, but have they figured out over ten
Speaker 1: difficult years that just as an example, through as CAP B,
Speaker 1: M I and c SEC, it's songwriters just possibly may
Speaker 1: have to pay the rent um. Slowly they're figuring this out,
Speaker 1: and I think this is an existential threat to the
Speaker 1: music industry as we know it, and it's not just
Speaker 1: the technologists, it's also our laws which were developed for
Speaker 1: a time of Stephen Stephen Foster. So uh, we are seeing, uh,
Speaker 1: for the first time in several years, revenue rise for
Speaker 1: recorded music because of streaming. More and more people are
Speaker 1: signing up for the subscription services, not only in the
Speaker 1: US but around the world. China's rapidly seeing growth and
Speaker 1: starting to protect intellectual property for music, which I think
Speaker 1: is a very positive development. But we're a long way
Speaker 1: from having a sustainable, stable business model in the music industry,
Speaker 1: and that's part of the reason for forming this association.
Speaker 1: What does does economic mobility and mobility generally within music
Speaker 1: tell you more broadly about economic mobility in the US today, Well,
Speaker 1: it's awfully hard to make it to um. Yeah, I'll
Speaker 1: tell you something. David I gave a speech at the
Speaker 1: Rock and Roll Hall of Fame about how the whole
Speaker 1: economy is becoming like the music industry winner take all
Speaker 1: superstar economy, and in music, the top one percent are
Speaker 1: responsible for about half of the income. In the economy
Speaker 1: as a whole, the top one percent makes of the
Speaker 1: income um and the rest of the economy has kind
Speaker 1: of been mirroring the music industry in terms of the UH,
Speaker 1: the incomes UH and the rewards from the economy going
Speaker 1: so much to the top. So I think that's that's
Speaker 1: a danger, and I think we can learn from the
Speaker 1: music industry about why that's been happening. And I think
Speaker 1: it is related to the technology that there's been kind
Speaker 1: of a flight to quality and you and that topper
Speaker 1: are generating much more attention than everyone else. And Professor Kruge,
Speaker 1: thank you so much. You've been I'm Professor of Economics
Speaker 1: and Public Affairs, Priston University. Just a real pleasure, to
Speaker 1: an honor to have them with us on this Job's Day.
Speaker 1: We welcome on Bloomberg Radio, Bloomberg Television worldwide. We wait
Speaker 1: for the Gary Khne interview. Certainly will get positive spin
Speaker 1: from Mr Crone to David Weston and John Farrell. Will
Speaker 1: look for that later, but right now joining us William
Speaker 1: Gross of Janice Anderson, as we look at it better
Speaker 1: than good job's report, Bill a little bit of enthusisa
Speaker 1: as in wage growth, is it a wage growth that
Speaker 1: is enough to change chair Yellings dialogue into the September meeting?
Speaker 1: Well maybe not, Tom, I mean it's point three as
Speaker 1: opposed to point to but the y O y as
Speaker 1: we call it as two point five percent and didn't change. So, UM,
Speaker 1: you know, obviously that's a positive, but not much. Jobs
Speaker 1: about two hundred thousand, as you mentioned, is more than
Speaker 1: expected during this point in time in the cycle. So
Speaker 1: it's a you know, it's a rather strong economic report,
Speaker 1: but I don't think it moves markets much. Um. You know,
Speaker 1: job growth to me doesn't seem to be stimulating economic
Speaker 1: growth and consumer spending like it has in prior cycles. Wages,
Speaker 1: as we talked about, our sort of anemic and the
Speaker 1: mystery surrounding the participation rate sort of places havoc with that,
Speaker 1: and UH, I think what seems most important out of
Speaker 1: policy rates in the US and globally are core inflation rates,
Speaker 1: which as you know, i've declined for one point five
Speaker 1: percent in the US UH from one point eight point
Speaker 1: three percent over the last few months. Um. You know,
Speaker 1: I think until we see a lift back to two
Speaker 1: percent in terms of the core inflation rate to fit,
Speaker 1: UH probably rgins quantitative tightening but won't raise short term
Speaker 1: rates this year. And we saw that with Governor Carney
Speaker 1: in a different calculus yesterday, Bill and the jobs reporting.
Speaker 1: I know David Gura wants to jump in here with
Speaker 1: questions on labor is well, I know that if Janice
Speaker 1: Henderson held a job's fair today, two thousand people would
Speaker 1: show up. How can you have a good labor economy
Speaker 1: and have twenty thousand plus people show up to to
Speaker 1: uh put stuff in boxes for Amazon? It's almost is
Speaker 1: if we have two separate labor economies. Well, I think
Speaker 1: we do. We talked about the participation rate, at least
Speaker 1: we've mentioned it, and it's significantly lower than what it was.
Speaker 1: And that's the mystery to all central bankers. Um To
Speaker 1: my way of thinking, it's the demographically related, it's a
Speaker 1: structural problem. It suggests that you know, boomers are getting
Speaker 1: older and older, and that they're training for new tech
Speaker 1: jobs is insignificant, and therefore they don't participate in the economy.
Speaker 1: Doesn't mean they can't come back in, but to my
Speaker 1: way of thinking, absent significant job training that they come
Speaker 1: back into those, um, you know, lower pain jobs that
Speaker 1: perhaps Amazon are providing. Bill, there's a groundhog day, ned
Speaker 1: Ryerson asked Quality two jobs day. Over these last few months,
Speaker 1: the economy seems fine, fairly normal. What's changed since the
Speaker 1: last jobs report to you? When you look at the U.
Speaker 1: S economy, UM, not much, you know. We we we've
Speaker 1: seen inflation stay low and maybe take a little bit lower,
Speaker 1: which I think is significant. We've seen strong earnings growths
Speaker 1: in terms of corporations and that's propelled the stock market.
Speaker 1: And we see continuing UH participation by central banks, not
Speaker 1: by the Fed, but by central banks up to a
Speaker 1: trillion dollars annually by the e c B and the
Speaker 1: b O J. And so to my way of thinking, yes,
Speaker 1: the U. S economy is important, but the Eurland economy
Speaker 1: is more important in terms of their inflation rate, their
Speaker 1: growth rate, and what the ECB plans to do in
Speaker 1: terms of timing UH in terms of their quantitative easy procedures.
Speaker 1: It's really the money at the checks that are being
Speaker 1: written and had been written for the past five to
Speaker 1: six years that are important in terms of financial markets.
Speaker 1: And once that stops to move in at the same pace,
Speaker 1: then I think we're going to begin to see some change.
Speaker 1: But until then, onward and upward. We have seen the
Speaker 1: US President here a touting the strength of the stock
Speaker 1: market right and left, commenting on doubt little earlier this
Speaker 1: week on Twitter and in speeches. How much credit can
Speaker 1: he claim for how the market is doing today? Oh,
Speaker 1: I don't think much. You know. Let's let's talk about
Speaker 1: regulation and deregulation, and I think there is where he
Speaker 1: can claim at least some minor progress. It's only been
Speaker 1: six months, but to the extent that the regulations have
Speaker 1: been cut, and they have been cut significantly. I'm not
Speaker 1: sure exactly where and how they apply in each particular state,
Speaker 1: but the regulations and deregulations, I think I've been the
Speaker 1: main boost that hasn't certainly been from many of his
Speaker 1: policies they have been enacted yet. Bill. I thought your
Speaker 1: essay for Janice Henderson recently Curveball was absolutely superb. And
Speaker 1: you brought up a concept that Stanley Fisher lad with
Speaker 1: at the Economic Club of New York well over eighteen
Speaker 1: months ago, and that is we miss proportional change and
Speaker 1: that short term interest rates are set really, really low,
Speaker 1: and even if they come up a bit, that's a
Speaker 1: huge proportional or percentage change in the movement of short
Speaker 1: rates is at a risk of instability for central bankers
Speaker 1: in the coming months ahead. Yeah, I think it is Tom.
Speaker 1: You know, it's a difficult concept to define, and typically
Speaker 1: central bankers have looked at changes in FED interest rates
Speaker 1: or short term interest rates in terms of their absolute magnitude. Um,
Speaker 1: you know, prior cycles have raised the FED funds by
Speaker 1: three four racist points in some cases more going back
Speaker 1: to eighty one. But proportionately, you know, since you start
Speaker 1: so low, you know, your double and maybe even quadruple
Speaker 1: at you know, at a two percent level in terms
Speaker 1: of FED funds, and that has a significant impact. Why
Speaker 1: you know, common sense basically says that if you're paying
Speaker 1: a certain interest rate cover or margin and that margin
Speaker 1: quadruples over the next few years, then that's a significant
Speaker 1: problem for interst rate coverage and for corporate profits or
Speaker 1: even individual stability. Well, the Governor Karney faced yesterday, and
Speaker 1: let's fold this right into the Bloomberg New conversation with
Speaker 1: Alan Greenspan of a few days ago. It's almost not stagflation,
Speaker 1: as Chairman Greenspan put it, but a new kind of
Speaker 1: stag in a new kind of flation. What kind are
Speaker 1: they bill? Gross? Well, I, um, you know, I've listened
Speaker 1: to uh Chairman Greenspan over the last few days. My
Speaker 1: interpretation you know, he's suggesting that there's a bubble, there's
Speaker 1: a bubble in interest rates, and the bubble has to
Speaker 1: do with real interest rates, which are exceedingly low as
Speaker 1: our nominal rates. But it's real interest rates that are
Speaker 1: a problem. I would agree with them, um, and I
Speaker 1: would say that these real interest rates low as they are,
Speaker 1: you know, ultimately, ultimately, which is the key create inflation,
Speaker 1: which is the inflation part of it. Um. The stag
Speaker 1: has to do with productivity and productivity as we've always
Speaker 1: been flatlining for the last five years. And unless we
Speaker 1: can have a higher productivity level and combination with perhaps
Speaker 1: a higher inflation rate over the next six to twelve
Speaker 1: months than we have, you know, the stagflation where productivity
Speaker 1: is low. As a thanks to two or three percent Bill,
Speaker 1: We're gonna come back with Bill Gross and countin you.
Speaker 1: Thank you, Bloomberg Television for being with us. We wait
Speaker 1: for the day where the President tweets about Bill Gross.
Speaker 1: Here's the president, excellent jobs number just released, and I've
Speaker 1: only just begun. I have only just begun. Many jobs
Speaker 1: stifling that many jobs stifling regulations continue to fall. Movement
Speaker 1: back to the USA exclamation point. Bill Gross can a
Speaker 1: president affect the job's economy and the jobs report, well,
Speaker 1: you know, perhaps long term. You know, we've talked Tom
Speaker 1: in the past about what President Trump is trying to
Speaker 1: do in terms of individual corporations, and we've talked about
Speaker 1: individual states and trying to bring jobs to those particular states.
Speaker 1: So you know, I think a president can affect, uh,
Speaker 1: those areas to some extent, but really, uh, you know,
Speaker 1: job growth, to my way of thinking, is a functional
Speaker 1: longer term structural factors such as demographics and the expected
Speaker 1: return on capital, and those are things that I don't
Speaker 1: think Trump ever studied about in uh in his master's thesis.
Speaker 1: I heard that you heard that you could get that
Speaker 1: grossying sarcasm there on Bloomberg Radio Worldwide. Bill, we are
Speaker 1: ten years on into this financial crisis. It's an honor
Speaker 1: to have you with us every job's day, and here
Speaker 1: we are ten years on. You have been the clarion
Speaker 1: voice on financial repression. Let's revisit that right now. Do
Speaker 1: you assume that our enjoyment of low yield after any
Speaker 1: kind of inflation will be called financial repression for years?
Speaker 1: I think? So, you know, that's we've forgotten about Rogoff
Speaker 1: and Reinhardt, right, that's about seven or eight years ago
Speaker 1: when they sort of reinvented the thesis. But this has
Speaker 1: been occurring for centuries. That financial repression for a long time, occurred,
Speaker 1: you know, between the nineteen forties and actually up until
Speaker 1: Vulgar in nineteen seventy nine, where central banks and the
Speaker 1: FED repressed short term interest rates relative to inflation. So
Speaker 1: financial repression has been with us. I think it will
Speaker 1: continue to be with us. It has to do with
Speaker 1: the neutral rate of interest, which is an amazing topic
Speaker 1: of interest by central bankers everywhere, and to the extent
Speaker 1: that the neutral rate of interest is far far lower
Speaker 1: than what it was, and and FED officials think it's
Speaker 1: below zero percent in real terms by the way, Um,
Speaker 1: then financial repression will continue to exist. It basically means
Speaker 1: that savers can't earn anything close to the rate of inflation,
Speaker 1: let alone something for productivity growth and real growth. So um, yes,
Speaker 1: And I think it's a negative. You've mentioned how I
Speaker 1: talked about how it's a negative for financial institutions, business
Speaker 1: models like consurance companies, pension funds, and even banks. And
Speaker 1: one of these days, one of these years, perhaps, uh,
Speaker 1: the economy is going to pay the price for financial
Speaker 1: repression as opposed to reaping the rewards. Bill, tell us
Speaker 1: what you see when you look at the yield curve? Now,
Speaker 1: we were speculating yesterday as Governor Carney spoke in London
Speaker 1: about the degree to which he's paying attention to to
Speaker 1: the yield curve. There, what do you see when you
Speaker 1: look at him? Well, I see it, Uh, you know,
Speaker 1: a fairly normal yield curve. It has been flattening obviously
Speaker 1: over the past three or four years, depending upon how
Speaker 1: you measure it, whether it's two tens or two thirties
Speaker 1: or even bills to UH to ten year treasures, there's
Speaker 1: been a significant flattening. Um. The question becomes as a
Speaker 1: rosen uh, as I wrote in my Investment Outlook of
Speaker 1: a month ago, as to how flat it can go
Speaker 1: before recession is threatened. And again, I think because of
Speaker 1: the leverage inherent in the US economy and globally, that
Speaker 1: you can't really flatten occurred much more or else the
Speaker 1: danger for recession increases. Bill, I want to rip up
Speaker 1: the script. A lot of people don't know, Bill, that
Speaker 1: you've written very thoughtful, very matthew articles for the cf
Speaker 1: A Institute we see another hedge fund today go down
Speaker 1: in flames. This is the esteemed Andy Hall, with a
Speaker 1: great track record in oil, oil strategy, oil trading of course,
Speaker 1: iconic at City Group years ago. And Bill, this goes
Speaker 1: into again making big bets and getting something wrong. You've
Speaker 1: had the humility any number of times of being humbled
Speaker 1: by the markets. What is it about hedge funds and
Speaker 1: concentrated bets? When are we going to learn the value
Speaker 1: of a good level of diversification versus betty knowing at
Speaker 1: some point you're gonna be wrong, wrong, wrong, big. Well.
Speaker 1: I think in many cases markets do and individuals do
Speaker 1: know the value of diversification, and certainly even pension funds
Speaker 1: in terms of that mix. But hedge funds, almost by
Speaker 1: their nature, are leveraged players. And to the extent that
Speaker 1: leverage is injected into a market, whether it's a bet
Speaker 1: on gold or whether it's a bet on oil one
Speaker 1: way or the other, then there's a significant potential I
Speaker 1: guess for damage and destruction. I used to when I
Speaker 1: play blackjack, Tom, I used to play black jack, and
Speaker 1: I used to be a lot called Gambler's Ruin. And yes,
Speaker 1: you couldn't bet you couldn't bet more than one fiftieth
Speaker 1: of the stake of the chips on your table. You know,
Speaker 1: before you're being threatened by what they call gamblers ruin,
Speaker 1: which is a restraint of bad luck. Well, this is
Speaker 1: so important, folks, that we have the honor of Ed
Speaker 1: Thorpe of Massachusetts Institute of Technology. You in with Barry
Speaker 1: Les recently, and I've interviewed at Thorpe and Bill you
Speaker 1: and I've read at Thorpe cover to cover almost as
Speaker 1: religion to our listeners who don't have the sophistication of
Speaker 1: Andy Hall or Bill Grocer, John Tucker. The basic idea
Speaker 1: here of diversification, How do you do that ten years
Speaker 1: on from this financial crisis, with the odd fixed income
Speaker 1: market that we have, How does Bill Gross diversify? Well,
Speaker 1: you diversified carefully, and you diversified Tom with a sense
Speaker 1: of trades. Carried trades, trades that supposedly yield um. You know,
Speaker 1: a positive number, whether it be a spread, or whether
Speaker 1: it be an interest rate tenure treasury at two point
Speaker 1: two five or whatever. You do it very carefully because
Speaker 1: all carried trades, all interest rates, spreads and risk premiums
Speaker 1: are compressed and so you have to take that into consideration,
Speaker 1: and too, pality. You can't just talk about stocks and
Speaker 1: bonds because stocks and bonds are both artificially elevated. And
Speaker 1: so what you do the the essence of the short
Speaker 1: answer to your question, Thomas, you you begin to raise
Speaker 1: much more cash because gat cash is the ultimate cushion.
Speaker 1: I guess in terms of the risk of market. Is
Speaker 1: your Mexican trade tired? You've been arbitraging Mexican yields here
Speaker 1: and there and everywhere. Have we've seen enough of an
Speaker 1: e m in a Mexico move where you've got to
Speaker 1: go find something else to do with your marginal cash? Yeah?
Speaker 1: I think so. I was in uh, you know, Mexican
Speaker 1: linkers so to speak, tips, Mexican tips, and you know
Speaker 1: they yield three and a half percent real. Um, you know,
Speaker 1: I got out of those about a month ago. But um,
Speaker 1: you know, Mexico still is a very undervalued pay so
Speaker 1: especially in real terms, and especially when you compare to
Speaker 1: the you know, the Big MAC index which the economist runs. Um,
Speaker 1: you know, their big max are very very cheap, like
Speaker 1: two and a half bucks versus states, and so ultimately
Speaker 1: the pace at the pace, so the Mexican Paso has
Speaker 1: a way to go in terms of strengthening relative to
Speaker 1: the dollar. And that's the biggest bet I've met in Mexico.
Speaker 1: What would be your counsel for Republicans in Washington to
Speaker 1: jump start after what they've been through. What's your advice
Speaker 1: to senators to representatives up for re election in two
Speaker 1: thousand eighteen. They got a rebuild, they got a restructure.
Speaker 1: What's the bill grows prescription to get Washington to assist America. Well,
Speaker 1: my prescription is more of a populist as opposed to
Speaker 1: corporate type of prescription. That's not the Republican mantra, unfortunately.
Speaker 1: But my wave of the future Tom and that's five
Speaker 1: or ten years out, and it depends on the next president,
Speaker 1: of course, But my wave of the future continues to
Speaker 1: believe that populism and that universal income, uh, universal benefits
Speaker 1: are really the wave of the future because, uh, you know,
Speaker 1: people are being replaced by technology and by robotization, and
Speaker 1: to the extent that they can't find jobs, they need help.
Speaker 1: And I think one of the biggest problems with government
Speaker 1: is that, yes they've embraced technology, and yes corporations have
Speaker 1: run that way, but but governments have failed to take
Speaker 1: care of people that have been displaced by them. And
Speaker 1: so that's what I would say to Republicans, get a
Speaker 1: little more democratic. Bill Gross, thank you so much, and
Speaker 1: may you speak to David Gura for a lengthy time.
Speaker 1: It's times. It's a conversation, ly, Bill Gross. He's an
Speaker 1: agent for Colin Kaepernick because he tries to find the
Speaker 1: job in the NFL as well. Right now to our
Speaker 1: David Weston and John Ferry. Here's David. No one in
Speaker 1: the country were focused on than Gary Khane, director of
Speaker 1: the President's National Economic Council. Gary joins us now from
Speaker 1: the White House. Welcome back to the program. Thanks David,
Speaker 1: thanks for having me. Okay, So Gary gives us as
Speaker 1: we've already heard from the President in a tweet. He
Speaker 1: thinks there's are really good numbers, although there's more to come.
Speaker 1: Give us your sense and the presidents for that matter,
Speaker 1: about how you look at these numbers, and specifically the
Speaker 1: number of jobs added, the participation rate, and the wage growth.
Speaker 1: So look, David, the President's completely right. These are good numbers.
Speaker 1: Two nine thousand non farm payroll jobs, unemployment rate down
Speaker 1: to four point three percent, down to a sixteen year low.
Speaker 1: We're bringing Americans back into the workforce, and that's what
Speaker 1: the presidents set out to do, and that's what the
Speaker 1: President is doing. That is our objective, and we've done
Speaker 1: that without our major policy initiatives being able to take place.
Speaker 1: Number one policy initiative to deregulate the US environment. We
Speaker 1: still haven't gotten most of our nominees through the regulatory process.
Speaker 1: We out a couple through yesterday in a big package
Speaker 1: of nominees that went through. We got some of our
Speaker 1: CFTC members through. We didn't get our firm members through.
Speaker 1: We didn't get other members through. When we get those
Speaker 1: members through, we're gonna be able to continue deregulating markets
Speaker 1: and the environment so we can can continue to invest
Speaker 1: capital in the United States and can continue to create great,
Speaker 1: high paying jobs in America. This is all about not
Speaker 1: only growing the economy, but growing the economy so we
Speaker 1: can create great, high paying jobs for Americans and bring
Speaker 1: more and more people back to the workforce. That's what
Speaker 1: the President's committed to do. That's what I'm committed to do.
Speaker 1: So let's talk about those high paying jobs. Because wage
Speaker 1: growth is up about two and a half percent year
Speaker 1: over year. A lot of commons still find that rather tepid,
Speaker 1: and it's good, but it's not good enough. How do
Speaker 1: you explain this phenomenon where we have really a robust employment,
Speaker 1: some people think full employment, and yet we're not seeing
Speaker 1: the wage growth. So it is on the twelve month
Speaker 1: or two and a half, the one month was three
Speaker 1: tents of a percent, So the one month is annualizing
Speaker 1: high higer than the twelve months, which is which is
Speaker 1: interesting news to us. We spend time this morning discussing
Speaker 1: what that means. If that's a new trend, we would
Speaker 1: obviously like to see some wage inflation in the system.
Speaker 1: Wage inflation means that we're putting more income in consumers pockets.
Speaker 1: When consumers have more income, and then we lower their
Speaker 1: tax rates on top of that, they'll have more money
Speaker 1: to spend, driving more and more economic growth. So that's
Speaker 1: really what we want to see. We need to create
Speaker 1: the jobs. We need to create the jobs by getting
Speaker 1: rid of the regulation that's bogging down industry. We need
Speaker 1: to reform the tax code so we can incentivize companies
Speaker 1: to invest in America. That's what we're trying to do.
Speaker 1: We're totally committed to doing it, and we're we feel
Speaker 1: confident that we can get that done between now and
Speaker 1: the end of the year. Gary, you've inherited an economy
Speaker 1: where the headline numbers for the labor market look really
Speaker 1: quite solid, and they point towards a tight labor market,
Speaker 1: and we haven't seen the wage growth we thought we
Speaker 1: would get over the previous few years, and it's starting
Speaker 1: to creep in. But I just wonder whether you think
Speaker 1: there's a lot more specapacity, a lot more slack in
Speaker 1: the lay up a market than the headline numbers suggest.
Speaker 1: I think there is some slack in the labor market.
Speaker 1: I think we can get the participation rate higher. I
Speaker 1: think we can bring more Americans back to work by
Speaker 1: creating the jobs and creating incentives and make it easier
Speaker 1: for small and medium sized businesses to grow, make it
Speaker 1: easier for businesses to start by making credit available, by
Speaker 1: getting rid of regulation. We do think that there is
Speaker 1: much more potential to bring people back into the labor force.
Speaker 1: And Gared, do you think those issues You've pointed out
Speaker 1: some structural issues, but you think really predominantly the issues
Speaker 1: are quite cyclical. Uh, you know, we argue that that
Speaker 1: all the time, what we're committed on right now is
Speaker 1: to create the best possible jobs environment that we can create.
Speaker 1: And we know, we really do know that when people
Speaker 1: think about investing capital, and investing capital is what you
Speaker 1: need to grow in economy, people look at a couple
Speaker 1: of fundamental factors. Regulation and taxes are two of the
Speaker 1: main driving factors they look at, and those are two
Speaker 1: factors that we are spending an forrmous amount of time
Speaker 1: and making better for anyone that wants to invest capital
Speaker 1: in the United States. Garrett, you raised the taxes. We've
Speaker 1: talked to you before about the plan. You came out
Speaker 1: with the Group of Six as it's called, with an
Speaker 1: outline of a plan. Where are you on that plan?
Speaker 1: When are we going to see the specific legislative language?
Speaker 1: So as you're right, the Group of Six continues to meet.
Speaker 1: We put out a notice last week that shows how
Speaker 1: well coordinated the six of us are, how we all
Speaker 1: agree on the skeleton of the tax plan. We're now
Speaker 1: working quite actively with the House Ways and Means Committee
Speaker 1: and the Finance Committee in the Senate to actually get
Speaker 1: some muscle structure on the skeleton to really drive tax
Speaker 1: reform to where where we have to drive it. We're
Speaker 1: gonna continuously meet over August and hopefully be able to
Speaker 1: deliver a comprehensive tax bill early in the fall. Is
Speaker 1: that September it's early, and that's early in the fall,
Speaker 1: but there's a lot of other dates that are early
Speaker 1: in the fall as well. And how confident you are
Speaker 1: you at this point, given all the difficulties that have
Speaker 1: been occurred ring up in Congress, that you've abibly get
Speaker 1: this through this year, as you said before, is really
Speaker 1: your goal. Look, I think the members of Congress understand
Speaker 1: how important tax reform is. And if we're really going
Speaker 1: to drive the economy and drive economic growth and get
Speaker 1: from the muddling two percent to three percent, then we
Speaker 1: have to do something structural to the US economy. The
Speaker 1: structural things we have to do, and I've talked about
Speaker 1: red reform, so I'll talk about taxes. We really have
Speaker 1: to change our tax rate. We cannot be substantially higher
Speaker 1: than the O E c D average tax rate out
Speaker 1: there at a thirty five percent tax rate against a
Speaker 1: tree O E c D average tax rate, you know,
Speaker 1: percent higher taxes than the O E c D average
Speaker 1: just does not make us competitive. We've got to get
Speaker 1: in line with the rest of the world. We've got
Speaker 1: to entice capital to be invested in the United States. Gary,
Speaker 1: we caught up with Muhammeddalarian, a man of course that
Speaker 1: you know well, and he talked about the much needed
Speaker 1: handoff from monetary policy to to fiscal Do you think
Speaker 1: we've relied too much on monetery policy in a country
Speaker 1: a lot of the United States too long? Look, I
Speaker 1: don't think this is a US issue. I think the
Speaker 1: globe has been dealing with the whole monetary fiscal policy
Speaker 1: issue since the two thousand and eight financial crisis. Central
Speaker 1: banks did what they were supposed to do. But we
Speaker 1: do have to transition the economy and in the system
Speaker 1: to a more normalized system. And does that require a
Speaker 1: handoff from monetary policy to fiscal Gary, is that way
Speaker 1: you guys can help? Yeah, we can help. We can
Speaker 1: help by removing barriers. We can help by making it
Speaker 1: easier for capital flow into the United States. We can
Speaker 1: get a more competitive tax system here, we can remove
Speaker 1: regulation that stops capital from coming into the United States.
Speaker 1: That's exactly what we're trying to do. Gary. As you
Speaker 1: go back to your office there in the White House,
Speaker 1: behind that behind you right now? What is will be
Speaker 1: your number one priority? And today are you more confident
Speaker 1: in achieving that or less than the day you walked in. David,
Speaker 1: my number one priority for him now to the end
Speaker 1: of the year is taxes. My second priority is taxes,
Speaker 1: and if you're confused, my third priority is taxes. Gary
Speaker 1: the U s National Economic Council with Director John Pharaoh
Speaker 1: and David Weston in conversation from the White House Lawn
Speaker 1: with Mr Kohn of the National Economic Council as well.
Speaker 1: To summarize here, a great week. Thanks to all of
Speaker 1: our team for their sport, particularly an exhaustive, exhausted team,
Speaker 1: I should say in Washington, which has just really done
Speaker 1: a a great job. For special thanks to Kevin Surreally,
Speaker 1: our our chief Washington correspondent. Thanks for listening to the
Speaker 1: Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at
Speaker 1: Tom Keene. David Gura is at David Gura. Before the podcast,
Speaker 1: you can always catch us worldwide. I'm Bloomberg Radio s