WEBVTT - Gary Cohn Says to Expect More Deregulation 0:00:09.720 --> 0:00:12.880 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with 0:00:13.560 --> 0:00:16.520 David Gura. Daily we bring you insight from the best 0:00:16.560 --> 0:00:22.239 of economics, finance, investment, and international relations. Find Bloomberg Surveillance 0:00:22.320 --> 0:00:27.000 on Apple Podcasts, SoundCloud, Bloomberg dot com, and of course 0:00:27.320 --> 0:00:35.520 on the Bloomberg Jim Glassman head economists for commercial Banking 0:00:35.560 --> 0:00:37.640 at JP Morgan Chase, and we've reached him on our 0:00:37.680 --> 0:00:39.600 phone line's gym. Great to speak with you. As always, 0:00:39.640 --> 0:00:41.840 Let's start with the broad question here. What you're looking 0:00:41.840 --> 0:00:44.320 for in in today's neber? Has this report different from 0:00:44.360 --> 0:00:47.600 the last one? Probably not too different. And I think I, 0:00:47.760 --> 0:00:49.760 like you guys have been saying, I don't think it's 0:00:49.800 --> 0:00:52.360 the entreil of these reports anymore. That matter. It's the 0:00:52.400 --> 0:00:54.720 message that is telling us about the economy. And I 0:00:54.720 --> 0:00:57.240 think what is telling us is we're doing pretty good. 0:00:57.880 --> 0:01:00.120 We still that the fact that we can have these 0:01:00.200 --> 0:01:02.520 kind of this kind of job growth with an economy 0:01:02.560 --> 0:01:05.360 that in theory is close to full employment tells you 0:01:05.520 --> 0:01:08.040 where these people coming from. It must be that we're 0:01:08.040 --> 0:01:10.480 still not really at our full capacity. So to me, 0:01:10.880 --> 0:01:13.160 the most important message that we're getting from the job 0:01:13.240 --> 0:01:16.280 market is that we still got a room to run here. 0:01:16.640 --> 0:01:18.919 And that's a very positive story for the equity market 0:01:19.560 --> 0:01:21.679 and even for the FED. I mean, it tells you, 0:01:21.760 --> 0:01:24.640 it tells you the pet needs to slowly normalized interest rates. 0:01:24.680 --> 0:01:26.840 But thanksly, there's no big rush. Where are we in 0:01:27.080 --> 0:01:29.160 the business cycle as you see it when you when 0:01:29.160 --> 0:01:30.880 you look at the economic data, when you look at 0:01:31.040 --> 0:01:33.720 the markets, where do you think we are? I think 0:01:33.760 --> 0:01:36.360 we're probably at the top of the ninth inning. But 0:01:37.240 --> 0:01:38.760 and I say that because I think I think we 0:01:38.800 --> 0:01:41.680 need another year or so this kind of growth to 0:01:41.720 --> 0:01:44.360 pull everybody back into the job market. That has is 0:01:44.360 --> 0:01:46.960 still a lot of young people, are still about a 0:01:47.000 --> 0:01:49.120 million and a half people that dropped out that are 0:01:49.160 --> 0:01:52.160 coming back, and all those part timers. But I think 0:01:52.200 --> 0:01:55.160 the more important point is the game is not over 0:01:55.240 --> 0:01:57.280 it at the ninth inning. I think this is going 0:01:57.320 --> 0:01:59.440 to go extra innings. And the reason I say that 0:01:59.520 --> 0:02:02.520 is we don't the inflation problems like we didn't normally 0:02:02.560 --> 0:02:04.800 make you think about end the cycle, and we don't 0:02:04.800 --> 0:02:09.160 see financial accesses that make you think about new problems brewing. 0:02:09.200 --> 0:02:11.560 So I think we've got a very good chance of 0:02:11.639 --> 0:02:14.200 going extra innings. I don't think there's anything many of 0:02:14.240 --> 0:02:16.440 us could look at and say this is a problem, 0:02:16.480 --> 0:02:18.560 and this is gonna throw us off course. Do let 0:02:18.600 --> 0:02:20.720 me ask you about those young people you you mentioned here. 0:02:20.720 --> 0:02:23.560 When you look at wage growth which is still lagging, 0:02:23.639 --> 0:02:26.160 what's the role that those young people are playing. Do 0:02:26.200 --> 0:02:28.400 you think that they're principally responsible here for dragging down 0:02:28.440 --> 0:02:31.120 wage growth? You know, I don't, but I think the 0:02:32.000 --> 0:02:35.480 I think the sense you get about what's true unemployment 0:02:35.520 --> 0:02:38.000 is kind of an approximate idea about how far the 0:02:38.000 --> 0:02:40.680 economy is from full capacity. I think maybe at the 0:02:40.680 --> 0:02:43.400 part time the involuntary part time guys probably put more 0:02:43.440 --> 0:02:46.600 pressure on wages. But I think the problem is everybody 0:02:46.639 --> 0:02:49.600 has is we're taking the official unoplumber rate at face value, 0:02:50.120 --> 0:02:52.240 and we're assuming four and a half percent, and we're 0:02:52.240 --> 0:02:54.359 assuming full employment is four and a half to five. 0:02:54.840 --> 0:02:57.520 I think that's maybe what's off course. I think personally, 0:02:57.560 --> 0:03:00.040 when you look at a metric of unemployment that's on 0:03:00.120 --> 0:03:02.040 an apple to apple similar to what we're used to 0:03:02.080 --> 0:03:04.200 looking at, we made me more like five and a 0:03:04.240 --> 0:03:07.120 half percent, and we're beginning to argue, we're beginning to 0:03:07.200 --> 0:03:10.799 debate is the full employment level closer to four percent. Well, 0:03:10.800 --> 0:03:13.679 if that were true, you you would say, Okay, the 0:03:13.800 --> 0:03:16.480 labor market is doing fine, but I wouldn't describe it 0:03:16.520 --> 0:03:19.880 as overly tight. So honestly, I think wages are doing 0:03:19.919 --> 0:03:23.000 a little better. They're running a little above inflation. Uh, 0:03:23.040 --> 0:03:24.320 that's a little bit of than the band. But I 0:03:24.360 --> 0:03:26.520 wouldn't describe I doesn't, it doesn't. I don't find this 0:03:26.600 --> 0:03:31.440 to be a mystery yet that despite the good sense 0:03:31.440 --> 0:03:33.679 of tone of the job market, we're not seeing big 0:03:33.680 --> 0:03:36.480 acceleration and wain wages because businesses have to manage things, 0:03:36.760 --> 0:03:38.400 you know why, they keep them competitive. They're not going 0:03:38.440 --> 0:03:40.720 to go crazy. Jim last one with us from JP 0:03:40.880 --> 0:03:43.360 Morgan as we begin our job day coverage, David Gern, 0:03:43.440 --> 0:03:47.280 Tom Keith thrilled your with us, uh nationwide, Jim blast 0:03:47.400 --> 0:03:49.480 And why are there twenty thou people lined up to 0:03:49.520 --> 0:03:52.120 work at Amazon? I've gotten tons of mail on this. 0:03:52.280 --> 0:03:56.040 I get the whole economist full employed idea. But then 0:03:56.080 --> 0:03:59.680 why are twenty thou people lined up to pack cardboard 0:03:59.680 --> 0:04:03.840 box is for Amazon? Yeah? I think it's I'm be 0:04:03.920 --> 0:04:06.600 telling you we're not really as tight as people might think. 0:04:06.640 --> 0:04:10.040 And uh, you know, part of the problem is there's 0:04:10.080 --> 0:04:13.040 a lot of disruption going on because of the Amazon phenomenon. 0:04:13.480 --> 0:04:16.920 So maybe people are saying this is the future. I'm 0:04:16.960 --> 0:04:18.760 you know, they're they're trying to shift gears a little 0:04:18.800 --> 0:04:20.800 bit and take advantage of what they think is coming. 0:04:21.200 --> 0:04:24.240 But it probably is a testimony to the disruption that's 0:04:24.240 --> 0:04:27.240 coming to the whole retail sector also from what you 0:04:27.279 --> 0:04:30.359 see going on with Amazon. Let me ask you just 0:04:30.400 --> 0:04:32.640 on a sector by sector basis what you're watching. Looking 0:04:32.680 --> 0:04:34.600 at your note here about auto sales, what we saw 0:04:34.600 --> 0:04:36.520 auto sales here, a little bit of disappointment over these 0:04:36.560 --> 0:04:38.800 last couple of days. How's that playing out in terms 0:04:38.839 --> 0:04:42.400 of what sectors are hiring at this point? Jim, You know, 0:04:42.440 --> 0:04:44.160 I think the auto industry was the first one out 0:04:44.200 --> 0:04:48.240 because credit tight credit really made it. It was a 0:04:48.320 --> 0:04:51.040 nightmare for the auto industry. When the economy opened up 0:04:51.040 --> 0:04:53.479 and credit began to flow, the auto industry was the 0:04:53.480 --> 0:04:56.600 first one out. And so I think what we're what 0:04:56.600 --> 0:04:58.400 we're seeing is that we're sort of the fact that 0:04:58.480 --> 0:05:00.880 car sales are kind of stay mobilizing now and we 0:05:00.920 --> 0:05:03.520 don't know how much of the uber phenomenon was driving 0:05:03.560 --> 0:05:06.600 sales last year, but I think, uh, it's telling you 0:05:06.640 --> 0:05:09.400 that the economy is becoming more mature. We're starting to 0:05:09.400 --> 0:05:12.120 see It's it's really hard when you look around. We're saying, 0:05:12.120 --> 0:05:15.840 a lot of every industry is picking up jobs. So 0:05:16.040 --> 0:05:18.520 we're still looking at a picture of a tide that's 0:05:18.640 --> 0:05:21.920 rising and it's helping everybody. Obviously the tech sector where 0:05:21.920 --> 0:05:26.160 everybody wants to be young kids anyway. Uh, that's the hardest. 0:05:26.200 --> 0:05:33.000 But the truth is healthcare, tech, financial services, information, business services, 0:05:33.000 --> 0:05:34.919 those are all the areas. And it doesn't look to 0:05:34.920 --> 0:05:38.039 me yet yet, like anyone who's dominating, just looks to 0:05:38.080 --> 0:05:40.160 me like the kind of thing you normally see when 0:05:40.160 --> 0:05:44.039 we're in a generally recovering economy. So it still looks 0:05:44.080 --> 0:05:47.960 a lot like a recovery story. Is there consensus about 0:05:47.960 --> 0:05:49.839 how many jobs we need to be adding month after 0:05:49.920 --> 0:05:52.320 month to keep that unemployment rate from from rising. Is 0:05:52.320 --> 0:05:56.240 that something that's a more art than science. Uh, it's 0:05:56.240 --> 0:05:59.480 a little bit of both. The fact is, if you 0:05:59.560 --> 0:06:02.000 look at the working age population, that's the easiest thing 0:06:02.000 --> 0:06:04.640 you can do. Look at the population between sixteen years 0:06:04.640 --> 0:06:07.880 of age and let's call it seventy or sixty or six, Well, 0:06:07.880 --> 0:06:11.120 it's real clear. The growth of the working age population 0:06:11.160 --> 0:06:14.839 has slowed down from about two per per per month 0:06:15.600 --> 0:06:19.680 about a decade ago to about seventy five per months. 0:06:19.720 --> 0:06:22.480 So that that's why all of us say we think 0:06:22.520 --> 0:06:25.239 the steady state growth and jobs needs to be about. 0:06:26.000 --> 0:06:28.600 Anything about that will tend to bring unemployment down. The 0:06:28.600 --> 0:06:30.960 problem is there's still a lot of guys that dropped out, 0:06:31.520 --> 0:06:33.520 so that there's a lot of guys who got pushed 0:06:33.520 --> 0:06:36.560 out during the recession. So they're slowly coming back, and 0:06:36.600 --> 0:06:39.640 so you can have a period here with a labor 0:06:39.640 --> 0:06:42.320 force can grow faster than that seventy five tho just 0:06:42.360 --> 0:06:45.000 because we're still recovery from the damage from the recession. 0:06:45.080 --> 0:06:47.440 But in defense of a president job bowing in the 0:06:47.520 --> 0:06:50.320 last hour about three g d P Carl Ricka Donna 0:06:50.400 --> 0:06:54.320 covered with that with US surveillance, Jim Glass and seventy 0:06:54.360 --> 0:06:59.719 five thousand per month non farm payrolls is totally unacceptable 0:07:00.279 --> 0:07:04.200 to both Democrats, both Republicans are the governor of West 0:07:04.279 --> 0:07:08.599 Virginia who's both because our benchmarks are coming from the 0:07:08.600 --> 0:07:10.960 old days. Those those those benchmarks we used to have 0:07:11.000 --> 0:07:14.080 are obsolete, and I think politicians haven't yet figured this 0:07:14.120 --> 0:07:16.840 out because they keep talking about getting America back to work. 0:07:16.840 --> 0:07:19.360 But the truth is most of US economists think America 0:07:19.440 --> 0:07:21.000 is getting back to work, and we're pretty much back 0:07:21.000 --> 0:07:23.760 to work. Here's the problem. There's like, in the last 0:07:23.800 --> 0:07:27.880 ten years, twenty million people that the people who were 0:07:27.920 --> 0:07:30.440 fifty five years of age and older, that population has 0:07:30.520 --> 0:07:34.680 increased like twenty million. The young people millennials are up 0:07:34.840 --> 0:07:36.560 two and a half a million, forty year olds down 0:07:36.600 --> 0:07:38.640 about a million and a half. So really what's going 0:07:38.720 --> 0:07:41.920 on here is the population because we're aging, We got 0:07:41.920 --> 0:07:44.360 more and more people going into retirement. So we have 0:07:44.440 --> 0:07:47.040 to change our idea. This is not the same labor 0:07:47.080 --> 0:07:49.760 market that we've been living with for the last several decades. 0:07:50.480 --> 0:07:52.640 Jim Lastman with us that Jim Glassman, the head economists 0:07:52.640 --> 0:07:54.920 for commercial banking at JP Morgan Chase, on this job 0:07:54.960 --> 0:07:56.680 to day here in the US. Just take you through 0:07:56.720 --> 0:07:58.240 what we expect for the rest of the day. Of course, 0:07:58.240 --> 0:08:00.559 those numbers come out from the Labor Department eight thirty 0:08:00.560 --> 0:08:02.960 Wall Street time. Alan Krueger is going to join us 0:08:02.960 --> 0:08:05.400 as well this morning of Princeton University. We're also going 0:08:05.440 --> 0:08:07.640 to speak with Bill gross of course, if Janice Henderson 0:08:07.640 --> 0:08:09.520 once those numbers come out, get his reaction to those, 0:08:09.520 --> 0:08:11.640 and then we're gonna hear from Gary Khne, Gary Coon, 0:08:11.680 --> 0:08:14.240 the head of the National Economic Council, so tremendous, a 0:08:14.240 --> 0:08:16.440 great perspective throughout the morning on Jobs Day. And then 0:08:16.480 --> 0:08:18.680 of course, as I mentioned, we're following this story out 0:08:18.680 --> 0:08:21.560 of Washington as well, centering on Robert Mueller, the Special 0:08:21.600 --> 0:08:23.880 Council going to a grand jury in Washington, d C. 0:08:24.040 --> 0:08:26.720 For help with his investigation. Squarely though our focused on 0:08:26.840 --> 0:08:31.520 the job's number, can we say, Sherman, let's see. We'll 0:08:31.560 --> 0:08:34.120 see how our colleagues address up this boarding. But a 0:08:34.160 --> 0:08:36.160 lot of speculation, as you allude to there, about who 0:08:36.240 --> 0:08:52.840 might be the next chairman. Muhammad Hillarian is in Paris. 0:08:53.080 --> 0:08:57.120 Dr Hillarian, good morning. In the back of your wonderful book, 0:08:57.160 --> 0:09:00.240 the only game in town. You have the power of 0:09:00.400 --> 0:09:04.800 scenario analysis. What are the scenarios cheer Yelling has to 0:09:04.840 --> 0:09:08.480 come up with? Is she and Governor Kearney and others 0:09:09.000 --> 0:09:14.560 battle the hard data of disinflation? What Connie and Yelling 0:09:14.640 --> 0:09:16.800 have very different issues, and thank you Tom for having 0:09:16.800 --> 0:09:20.240 me on for Yelling, is the flattening of the Phillips 0:09:20.280 --> 0:09:23.000 curve in other In other words, why is it that 0:09:23.080 --> 0:09:26.920 wages and inflation have not responded to what has been 0:09:27.120 --> 0:09:31.840 very impressive job creation. Connie is in a different position. 0:09:32.640 --> 0:09:35.439 He's worried about something else. He's worried about stag inflation. 0:09:36.240 --> 0:09:42.400 That is a slow economy, but high inflation. So both 0:09:42.440 --> 0:09:48.760 central banks are facing pretty unprecedented situations and their instruments 0:09:48.760 --> 0:09:51.680 are simply not giving them enough information right now to 0:09:51.760 --> 0:09:54.920 provide them with the confidence they need on the policy front. 0:09:55.920 --> 0:09:58.839 What more could could policymakers be doing in Washington? Right? No, 0:09:58.840 --> 0:10:00.400 I'm curious what you're gonna be looking for the day, 0:10:00.440 --> 0:10:03.000 of course, But beyond that, what would you like to 0:10:03.000 --> 0:10:06.200 see Washington doing more of? So what I'd like to see, 0:10:06.200 --> 0:10:09.040 and I'm not the only one, is a handoff, handoff 0:10:09.080 --> 0:10:13.040 from excessive reliance on central brank to a more comprehensive 0:10:13.080 --> 0:10:18.880 policy response that acts on demand, supply, and debt. The 0:10:19.000 --> 0:10:22.720 longer we wait for his handoff, the greater the risk 0:10:22.760 --> 0:10:25.640 of collateral damage from relying just on moncrey policy. And 0:10:25.679 --> 0:10:28.360 that's true not just for the US, is also true 0:10:28.400 --> 0:10:31.160 for the ECB, the Bank of Japan. Both of them 0:10:31.240 --> 0:10:34.800 also faced the same dilemma. What happens there? Did somebody 0:10:34.840 --> 0:10:37.680 drop the baton halfway down Pennsylvania that was supposed to 0:10:37.679 --> 0:10:40.960 have happened, wasn't it? So two thousand and ten happened 0:10:41.280 --> 0:10:44.959 the tea party. Then you've got the polarization of Congress, 0:10:45.559 --> 0:10:47.680 and then you've got a certain amount of all hazard 0:10:48.320 --> 0:10:52.680 reliance on central banks. You saw that in Europe as well. 0:10:53.800 --> 0:10:56.480 DJ Larian Richard Claire has sent me along a paper 0:10:56.559 --> 0:10:59.840 Pedrodocostic Business Inside has written it up as well. Yasir 0:11:00.000 --> 0:11:02.400 Abdi and Steven Deneger over at the i M F 0:11:02.480 --> 0:11:04.880 you Health Court at the i MM for years, they 0:11:04.920 --> 0:11:09.200 have a fabulous paper on technology and the effect of 0:11:09.360 --> 0:11:12.760 labor and they go into routinization, they go into how 0:11:12.840 --> 0:11:17.280 technology has changed everything we do and also offshoring is 0:11:17.360 --> 0:11:20.200 Cherry Yell and Governor Karney is all of our angst 0:11:20.240 --> 0:11:25.880 about jobs. Are we being overwhelmed by the new technology? Yes, 0:11:25.960 --> 0:11:29.200 but partly so let me explain there certainly is a 0:11:29.360 --> 0:11:33.239 structural and secular component to it, and that is understanding 0:11:33.280 --> 0:11:37.360 that technology is changing the way we do things. How 0:11:37.559 --> 0:11:41.920 is changing because of technology, and we don't yet fully 0:11:42.000 --> 0:11:47.079 understand that. But that is a structural and seculation. That's 0:11:47.120 --> 0:11:50.520 also a good or cyclical issue, which is we've had 0:11:50.800 --> 0:11:54.360 deficient aggregate demand and we've let potential output come down 0:11:54.520 --> 0:11:58.680 through policy in action. And it's important to make that 0:11:58.880 --> 0:12:02.360 distinction because you can do a lot on the second one, 0:12:02.640 --> 0:12:06.679 but it requires that other policy makers get into the 0:12:06.679 --> 0:12:09.400 game and get off the sideline. The President has been 0:12:09.440 --> 0:12:12.880 opinion a recently, but he's in West Virginia, his territory, 0:12:13.000 --> 0:12:18.880 last night talking about infrastructure. With those kind of programs, 0:12:19.120 --> 0:12:23.000 move the needle on potential g d P or do 0:12:23.040 --> 0:12:25.400 we just give up and get used to two point 0:12:25.480 --> 0:12:28.840 whatever percent run rate? There would be a tragedy if 0:12:28.880 --> 0:12:31.520 we gave up. We can move the needle. We can 0:12:31.600 --> 0:12:36.480 certainly move it towards three percent through the trifecta of infrastructure, 0:12:38.000 --> 0:12:40.959 pro growth, tax reform, and the regulations. So these are 0:12:41.000 --> 0:12:44.520 three things that the President has spoken about, and that 0:12:44.640 --> 0:12:48.560 let's not forget. President Obama also had infrastructure program. President 0:12:48.679 --> 0:12:52.120 Obama also was looking for tax reform. Um in a 0:12:52.200 --> 0:12:54.480 in a perfect world, you'd go beyond that and you 0:12:54.640 --> 0:12:58.200 deal with labor retooling and re training, you would deal 0:12:58.240 --> 0:13:00.840 with the education system, you would deal elements that talk 0:13:00.920 --> 0:13:04.600 to productivity. But no, Tom, we shouldn't just sit there 0:13:04.640 --> 0:13:07.640 we we can get it back towards three percent, but 0:13:07.720 --> 0:13:11.400 it requires Congress to step up to its economic governance. 0:13:12.200 --> 0:13:14.680 We're talking to you from Paris. Let me ask you 0:13:14.720 --> 0:13:17.400 just the degree to which excitement in the global economy 0:13:17.440 --> 0:13:19.480 has shifted to Europe from from the U S. What 0:13:19.520 --> 0:13:21.800 are we seeing in the context of the global economy 0:13:21.800 --> 0:13:26.040 in Europe today? How has that changed? A lot? More optimism. 0:13:26.040 --> 0:13:30.360 I'm very struck by the optimism that one hears here. Um, 0:13:30.440 --> 0:13:35.160 euro gloom has given way to your optimism. It helped 0:13:35.280 --> 0:13:38.200 by the latest GDP number. It's helped by the election 0:13:38.240 --> 0:13:41.720 of Marcon So there's a sense here of optimism. Um. 0:13:41.760 --> 0:13:45.840 I think that the economics tells you that it's not 0:13:46.000 --> 0:13:47.920 enough to move the soft data. With sort of soft 0:13:48.000 --> 0:13:50.200 data move in the US in a major way a 0:13:50.200 --> 0:13:52.560 few months ago, but that didn't translate to the heart data. 0:13:53.040 --> 0:13:56.280 So it's important that more be done. But the big difference, 0:13:56.360 --> 0:13:58.920 David is there's a lot more optimism. Are you coming 0:13:58.960 --> 0:14:02.760 to us from the cafe have la ground cafe? I know, 0:14:02.880 --> 0:14:04.440 but I'm talking to you. I'm talking to you from 0:14:04.480 --> 0:14:08.079 the Bloomberg offices, and as usual, they are beautiful offices 0:14:08.120 --> 0:14:10.600 in a wonderful locations. My first time here, and I 0:14:10.679 --> 0:14:12.320 think I'll try to visit more often. I know you 0:14:12.320 --> 0:14:14.600 should visit moreover, In fact, we should visit with you. 0:14:14.720 --> 0:14:17.800 I would suggest calling all the twins that we David 0:14:17.800 --> 0:14:19.920 Goer and I do a road trip with Dr Hillary 0:14:19.960 --> 0:14:22.680 into the Paris office. I'm thinking the last week of 0:14:22.720 --> 0:14:27.520 a Nosspember because it's across the street from the opera 0:14:27.600 --> 0:14:30.280 and the opera season stomps Um in September, so lets 0:14:30.280 --> 0:14:32.440 it would in September. We'll get that. We'll do that 0:14:32.480 --> 0:14:35.120 in September and you can pick the opera and well 0:14:35.200 --> 0:14:38.000 I'll attend. Dr Larin, thank you so much from my 0:14:38.440 --> 0:14:42.960 offices and studios in Paris. Friends greatly appreciated this morning. 0:14:43.000 --> 0:14:46.200 Of course writing for bloom Review and Dr Larian affiliated 0:14:46.200 --> 0:14:49.320 with Alan others. Really can't say enough about his book. 0:14:49.360 --> 0:14:51.480 It was my book of the summer. I don't know 0:14:51.480 --> 0:14:54.280 when it was the only game in town. Central Banks 0:14:54.920 --> 0:14:59.760 instability as well, really really precious chapter on game theory 0:14:59.800 --> 0:15:15.640 from Doctor Larium as well. For our cover to jobs. 0:15:15.640 --> 0:15:18.320 Stay continues now with Alan Kruegers, Professor of Public Polace 0:15:18.360 --> 0:15:20.400 and Economics at Princeton, former Chairman of the Council of 0:15:20.400 --> 0:15:23.000 Economic Advisors under President Obama here with us in our 0:15:23.000 --> 0:15:25.360 Bloomberg eleven three of studios in New York. Great to 0:15:25.360 --> 0:15:28.400 see again. As always, let's start just by a going 0:15:28.440 --> 0:15:30.640 macro if we could that we had the latest read 0:15:30.640 --> 0:15:32.480 on GDP a few days ago. Can we draw a 0:15:32.520 --> 0:15:33.920 line between that and what you think we're going to 0:15:34.000 --> 0:15:37.880 see today. I think they are part of the same picture. 0:15:38.520 --> 0:15:40.520 You know, it looks to me like the economy is 0:15:40.520 --> 0:15:42.400 continuing at the same pace it has for the last 0:15:42.440 --> 0:15:46.560 few years. Uh, there's been no change in policy, so 0:15:46.600 --> 0:15:48.480 I'm not sure why we would expect to see much 0:15:48.560 --> 0:15:52.400 change in economic performance. UM. So I think we're still 0:15:52.440 --> 0:15:56.600 at about two underlying growth. Job growth is faster than 0:15:57.160 --> 0:16:01.080 labor force growth. That should pull down the unemployment. UM. 0:16:01.120 --> 0:16:03.080 I've been a little bit disappointed that we haven't seen 0:16:03.120 --> 0:16:06.760 more wage growth. Uh. Inflation is but a little bit surprising, 0:16:07.000 --> 0:16:09.440 but I suspect that those are sort of short term 0:16:09.440 --> 0:16:12.400 phenomenon and we'll get back on track closer to percent inflation. 0:16:13.160 --> 0:16:15.280 When when you look at all that this this administration 0:16:15.280 --> 0:16:17.360 could be doing, that this Congress could be doing if 0:16:17.720 --> 0:16:20.600 its prioritization is is the watchword in Washington. I think 0:16:20.680 --> 0:16:23.520 is as we've seen the debate over healthcare unfold, and 0:16:23.560 --> 0:16:25.120 now there's a question of what we're going to see 0:16:25.120 --> 0:16:26.920 when it comes to tax from when it comes to 0:16:27.360 --> 0:16:29.600 the labor economy, and what policies they could implement there, 0:16:29.640 --> 0:16:31.320 what would be most effective. What if you were still 0:16:31.320 --> 0:16:33.400 in the White House counseling the president, would you advise 0:16:33.480 --> 0:16:37.080 him to do. My advice would be to tear up 0:16:37.120 --> 0:16:40.240 the proposal that they endorsed on immigration reform a couple 0:16:40.240 --> 0:16:43.200 of days earlier. Um that would be number one. And 0:16:43.280 --> 0:16:46.200 if you just look at the Congressional Budget Office report 0:16:46.520 --> 0:16:48.960 on the bipartisan bill that passed the Senate that would 0:16:48.960 --> 0:16:53.000 have increased immigration to the US legal immigration, that concluded 0:16:53.240 --> 0:16:56.040 GDP growth would be faster, income growth would be faster, 0:16:56.080 --> 0:16:58.600 productivity growth would be higher, We'd have more innovation, we 0:16:58.720 --> 0:17:01.920 create more companies if we reformed our immigration system in 0:17:01.960 --> 0:17:04.159 that direction. So that would be point number one on 0:17:04.200 --> 0:17:07.720 the labor market. Uh. I like their plans on infrastructure. 0:17:08.880 --> 0:17:10.760 I'd like to see them spell them out more detail. 0:17:10.800 --> 0:17:12.720 I'd like to see them have a strategy to congress 0:17:12.760 --> 0:17:15.400 past them. But I think that's an area where there 0:17:15.480 --> 0:17:19.199 is widespread agreement that the US needs more investment that 0:17:19.240 --> 0:17:21.920 will help labor, that will help businesses, that will help 0:17:21.920 --> 0:17:25.120 the economy down the road. Alan, you're cited in my 0:17:25.200 --> 0:17:28.040 paper to jour, I've I've been quoted folks already saying 0:17:28.040 --> 0:17:31.359 Olivia Blanchard's effort in Naples, Italy this summer was just 0:17:31.440 --> 0:17:33.360 brilliant and out of the I m f we get 0:17:33.359 --> 0:17:35.760 a working paper where you're sited. David Carter, I believe 0:17:35.840 --> 0:17:41.760 cited is well, which basically says routinization and offshoring have 0:17:41.920 --> 0:17:46.560 changed the American labor economy. Is technology the killer? Is 0:17:46.600 --> 0:17:50.520 technology a job's killer? Or can we say it's still 0:17:50.560 --> 0:17:54.119 adds vailue or is there just two America's Well, I 0:17:54.119 --> 0:17:56.560 think it's more in the too America vein. It's not 0:17:56.640 --> 0:18:01.040 a job's killer in the sense we've seen UH reasonable 0:18:01.119 --> 0:18:04.400 job growth over the last twenty five years. The problem 0:18:04.480 --> 0:18:06.800 is the nature of the jobs. The problem is that 0:18:07.520 --> 0:18:09.639 jobs in the middle have been disappearing while they've been 0:18:09.640 --> 0:18:12.880 growing at the top and the bottom. Uh. The problem 0:18:13.000 --> 0:18:16.320 is that we're seeing fewer long term employment relationships for 0:18:16.400 --> 0:18:20.720 seeing more workers move into self employment, more gig employment, 0:18:21.080 --> 0:18:23.960 workers left without a safety net or labor laws are 0:18:24.080 --> 0:18:28.520 not really set up for big independent workforce. UM. But 0:18:28.640 --> 0:18:31.280 technology has brought lots of benefits to the US economy 0:18:31.320 --> 0:18:35.560 and to consumers as well. UM. And ultimately we need 0:18:35.600 --> 0:18:40.520 technology to raise productivity, growth, raised living standards, improve life expectancy, 0:18:40.560 --> 0:18:42.880 and so on. So I think we need a better 0:18:42.960 --> 0:18:48.400 strategy for adjusting in the face of the computer information 0:18:48.440 --> 0:18:51.800 technology that's been developing. We'll come back here with you 0:18:51.840 --> 0:18:52.920 in just just a minute, but let me ask you 0:18:52.960 --> 0:18:55.119 a quick question about immigration. And you mentioned the speech 0:18:55.119 --> 0:18:57.640 to the President gave, the legislation he embraced this week. 0:18:58.160 --> 0:19:00.200 What does it seem like a conversation about him ration? 0:19:00.200 --> 0:19:03.440 It's gotten harder and harder to have in this country. Well, 0:19:03.480 --> 0:19:08.400 it's very polarizing, and UM. I was um disappointed by 0:19:08.600 --> 0:19:15.080 the White House's position on um immigration this week because 0:19:15.560 --> 0:19:20.800 to inject immigration reform in the middle of tax reform, 0:19:20.960 --> 0:19:24.200 infrastructure and just doing the basics of government. In fact, 0:19:24.240 --> 0:19:26.480 I think the Trump administration would be well served and 0:19:26.480 --> 0:19:29.240 I think they'll discover pretty soon they should just focus 0:19:29.280 --> 0:19:32.160 on getting Congress to do the basics, pass a budget, 0:19:32.359 --> 0:19:35.119 raised a debt limit, do so without drama. That's in 0:19:35.119 --> 0:19:39.040 the best interest of the American people and injecting um 0:19:39.080 --> 0:19:41.320 an immigration bilt which is not going to pass, really 0:19:41.359 --> 0:19:44.480 just done for political reasons. I think it's quite unfortunate 0:19:44.520 --> 0:19:46.280 because all it does in the end is divided the 0:19:46.280 --> 0:19:50.480 American people. David Greer right now, four minutes, thirty eight seconds, 0:19:50.520 --> 0:19:55.320 precious time with Alan Hooder. Alan great, too great to 0:19:55.359 --> 0:19:57.440 see once again we were chatting during the break here. 0:19:57.440 --> 0:19:59.199 But work you're doing on on music now, I think 0:19:59.240 --> 0:20:01.480 this is this is fascinating and your your interests are 0:20:01.560 --> 0:20:03.159 very to as we know, what are you doing exactly 0:20:03.160 --> 0:20:04.720 when it comes to the music industry, what are you 0:20:04.720 --> 0:20:07.800 looking at? Well? A long time ago I was invited 0:20:07.840 --> 0:20:10.640 to be the keynote speaker at the poll Star Concert 0:20:10.680 --> 0:20:14.840 convention and that got me involved in studying the music industry. So, 0:20:15.240 --> 0:20:17.840 together with a group of other economists, I've started the 0:20:17.920 --> 0:20:21.119 Music Industry Research Association. We're holding a conference at u 0:20:21.119 --> 0:20:24.400 c l A next week on Thursday and Friday, August 0:20:24.400 --> 0:20:28.000 tenth and eleven, UH and we have a really interesting 0:20:28.040 --> 0:20:31.560 program where people are presenting papers on copyright protection and 0:20:32.280 --> 0:20:35.399 our our copyright laws appropriate given the change in technology 0:20:35.440 --> 0:20:38.080 that we've seen on how streaming is changing the music 0:20:38.119 --> 0:20:42.200 industry on live live events. UM, I'm giving a paper 0:20:42.240 --> 0:20:45.880 on the backgrounds of musicians. We were talking before about inequality. 0:20:46.359 --> 0:20:48.960 Music historically has been a route for people who came 0:20:49.040 --> 0:20:52.960 from underprivileged backgrounds to be able to move up. Is 0:20:52.960 --> 0:20:56.320 that still the case, um? And the short answers, yes, 0:20:56.359 --> 0:20:58.359 it doesn't look like it's changed all that much. If 0:20:58.400 --> 0:21:02.200 I compare the backgrounds of UH superstar musicians and c 0:21:02.320 --> 0:21:08.119 e O s that musicians come from more disadvantaged backgrounds. Um. 0:21:08.160 --> 0:21:10.879 But interestingly, if you look at who's successful over time 0:21:10.920 --> 0:21:13.760 in the music industry, it tends to be those who 0:21:13.760 --> 0:21:16.879 are more middle class or more upper middle class. Even so, 0:21:16.960 --> 0:21:19.640 there's something about staying power which seems to be connected 0:21:19.640 --> 0:21:23.560 to the background. Have the technologists figured out the people 0:21:23.680 --> 0:21:28.159 have to get paid that. Granted, there's a revolution and 0:21:28.200 --> 0:21:31.560