WEBVTT - CohnReznick's O'Keefe: Fed Won't Move Before Election (Audio)

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<v Speaker 1>Broadcasting live to New York Bloomberg eleven LEO through Washington,

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<v Speaker 1>d C. Bloomber to Boston, Bloomberg twelve hundred to San

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<v Speaker 1>Francisco Bloomberg nine to the countries, Joe is Exam General

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<v Speaker 1>one nineteen and around the globe the Bloomberg Radio plus

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<v Speaker 1>Dappen Bloomberg got gone. This is taking stock. An update

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<v Speaker 1>on the Cleveland Cavaliers. Yes, they were defeated by the

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<v Speaker 1>Golden State Warriors for the first game of the NBA Championship,

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<v Speaker 1>but billionaire venture Capitas Gordon gunned. He is selling his

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<v Speaker 1>fifteen percent stake in the Cleveland Cavaliers. This is, of course,

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<v Speaker 1>their second year that they are playing for the NBA Championship.

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<v Speaker 1>This all, according to two people familiar with the matter.

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<v Speaker 1>Estimated value of the team one point one billion dollars

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<v Speaker 1>that comes from valuations expert Peter Schwartz. Once again, the

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<v Speaker 1>Cleveland Caliber Cavaliers fifteen percent stake of Gordon gund is

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<v Speaker 1>up for sale. Hats off to our sports reporter Scott's

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<v Speaker 1>Nick for a terrific story. Coming up now, Patrick O'Keefe

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<v Speaker 1>on the latest jobs report. First to Charlie Pellet in

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<v Speaker 1>the newsroom with a Bloomerck business flash, and I thank

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<v Speaker 1>you very much, Kathleen, thank you, Pim. We are brought

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<v Speaker 1>to you by the American Arbitration Association. Business disputes are inevitable,

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<v Speaker 1>resolve faster with the American Arbitration Association, the global leader

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<v Speaker 1>in alternative dispute resolution for over eighty five years. Learn

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<v Speaker 1>more than a d r dot Org. Oil explorers put

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<v Speaker 1>drilling rigs back to work in US fields for only

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<v Speaker 1>the second time this Year's supply and demand begin to

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<v Speaker 1>come closer into balance. Baker Hughes says. Riggs targeting crude

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<v Speaker 1>in the US rose by nine to three. Twenty five

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<v Speaker 1>were dropped last week. Crude oil down today by one percent,

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<v Speaker 1>falling forty eight cents of barrel West Texas Intermediate now

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<v Speaker 1>at seventy. The dollar plunging the most since December against

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<v Speaker 1>the euro after jobs growth trailed forecasts, weakening the case

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<v Speaker 1>for the Federal Reserve to raise interest rates as early

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<v Speaker 1>as this month. The US economy adding thirty eight thousand workers,

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<v Speaker 1>unemployment down to four point seven percent. Here's US Labor

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<v Speaker 1>Secretary Tom Perez, Well, this is below expectations, and one

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<v Speaker 1>thing that I expected was that there would be impact

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<v Speaker 1>from the Verizon strike. That's why I called him up

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<v Speaker 1>two or three weeks ago and said, come to my office.

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<v Speaker 1>We've got to resolve this because your workers and their

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<v Speaker 1>families are suffering, the company suffering, and the economy suffering.

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<v Speaker 1>So part of a big part of what we saw

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<v Speaker 1>on this report was the impact of that strike. And

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<v Speaker 1>gold today up two point six percent, surging thirty one

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<v Speaker 1>ten the ounce to twelve forty three, seventy to thirty

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<v Speaker 1>two on Wall Street. Now, let's take a look at

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<v Speaker 1>other news from around the world. Charlie, Thank you. From

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<v Speaker 1>the Bloomberg news Room by Mark Crompton. A search is

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<v Speaker 1>still underway at ford Hood, Texas, for four soldiers who

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<v Speaker 1>remained missing after their truck overturned Thursday in a rain

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<v Speaker 1>swollen creek. Here's ford Hood spokesman Chris Howe. Accidents and

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<v Speaker 1>isn't tragic The laws of unfolded One. Three others pulled

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<v Speaker 1>from the water remain hospitalized in stable condition. Parts of

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<v Speaker 1>Texas have been inundated with rain in the last week,

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<v Speaker 1>and more than half of the state is under flood

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<v Speaker 1>watches or warnings, including the county's near Fort Hood at

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<v Speaker 1>least six people died in floods last week in central

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<v Speaker 1>and southeast Texas. How Speaker Paul Ryan is announcing the

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<v Speaker 1>launch of the House GOP election year agenda project. Titled

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<v Speaker 1>a Better Way. It lists six proposals, including some to

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<v Speaker 1>help lift Americans out of poverty. We can start to

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<v Speaker 1>tackle our problems before they tackle us. This is what

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<v Speaker 1>Americans do. We don't accept the client we don't give

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<v Speaker 1>into division. We find a better way. Speaker Ryan may

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<v Speaker 1>the announcement during the Republican's Weekly Address, which was released today,

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<v Speaker 1>one day earlier than usual. New York City's top financial

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<v Speaker 1>officer says the city's child welfare agency didn't properly monitor

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<v Speaker 1>provide writers who were supervising troubled miners as part of

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<v Speaker 1>a citywide juvenile justice program. Controller Scott Stringer says the

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<v Speaker 1>city's Administration for Children Service quote abdicated its responsibility. He

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<v Speaker 1>found in and audited that city workers sometimes skip visits

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<v Speaker 1>to group homes and missed calls and visits to check

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<v Speaker 1>on the children. Global News twenty four hours a day,

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<v Speaker 1>powered by our hundred journalists and more than one hundred

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<v Speaker 1>fifty news bureaus around the world from the Bloomberg Newsroom.

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<v Speaker 1>I'm Mark Crumpton, Charlie, and we thank you and again

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<v Speaker 1>recapping a move lawer for stocks. We are well off

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<v Speaker 1>our session Low's SMP five hundred index down five at

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<v Speaker 1>two thousand ninety nine, down three tenths of one percent.

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<v Speaker 1>I'm Charlie Pallafat's of Bloomberg Business Flash. You're listening to

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<v Speaker 1>Taking Stock with Bim Box and Kathleen Hayes on Bloomberg Radio. Now,

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<v Speaker 1>Marry how slice it? It's hard to call today's May

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<v Speaker 1>employment report from the US Labor Department anything but disappointing,

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<v Speaker 1>if not week joining us now to dissect the report,

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<v Speaker 1>what it means for the economy, and what it means

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<v Speaker 1>for the Fed Reserve as it gets ready to meet

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<v Speaker 1>on June fourteenth and debate whether or not to high

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<v Speaker 1>rates again. Patrick o'cafe he is director of economic research

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<v Speaker 1>at Cone Resnick. He's also a former Deputy Assistant Secretary

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<v Speaker 1>at the Department of Labor. Patrick, welcome back to the show.

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<v Speaker 1>It's great to be here. What is your take? Let

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<v Speaker 1>me just sum up for our listeners yet again, only

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<v Speaker 1>thirty eight net new jobs. Unemployment falling because so many

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<v Speaker 1>people left the labor force wages pretty much flat. What

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<v Speaker 1>does it tell you, Well, it was a report that

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<v Speaker 1>made pessimists like myself. I was one of the low

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<v Speaker 1>predictors on this one. Made the pessimists look like Pollyanna's

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<v Speaker 1>And it just was totally unexpected. I know. The secretary

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<v Speaker 1>pointed to the strike as being one of the reasons

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<v Speaker 1>why jobs growth was down, but uh, this is the

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<v Speaker 1>smallest increment of jobs since the jobs recovery began, uh

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<v Speaker 1>seventy six months ago. Even if we UH discount the

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<v Speaker 1>impact of this of the of the strike, we go

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<v Speaker 1>from being the weakest in seventy six months to the

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<v Speaker 1>sixth weakest since in seventy six months. It um, it

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<v Speaker 1>was to be expected that there was deceleration in the

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<v Speaker 1>labor market, particularly in the jobs part of it, going forward.

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<v Speaker 1>This is a mature recovery, but these numbers were were

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<v Speaker 1>far weaker than any of us anticipated. All right, Patrick,

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<v Speaker 1>and wondering if you could explain, because when you, let's say,

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<v Speaker 1>when you decide you want to have a softball team, right,

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<v Speaker 1>and you pick all the best players you want to pick,

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<v Speaker 1>you pick them usually the first is there anything to

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<v Speaker 1>indicate that we are at the very end of the

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<v Speaker 1>hiring cycle as a result of so many workers having

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<v Speaker 1>already gone back to work. UM, there are still plenty

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<v Speaker 1>of job seekers and potential job seekers. As Kathleen pointed out,

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<v Speaker 1>the labor force participation dropped dramatically in this particular month.

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<v Speaker 1>What we have to realize is that the five percent

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<v Speaker 1>unemployment rate or the four point nine unemployment rate is

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<v Speaker 1>drawn down because of people withdrawing from the labor force.

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<v Speaker 1>So they don't disappear. They're out there, they're willing to work,

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<v Speaker 1>they would look for work, but they're frustrated they haven't

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<v Speaker 1>been able to find work. And so I don't think

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<v Speaker 1>we have a shortage of labor. We may have some

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<v Speaker 1>mismatches in terms of what the qualified qualifications for the

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<v Speaker 1>jobs are and the qualifications of the employees seeking them,

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<v Speaker 1>but overall this is UM is not a situation where

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<v Speaker 1>we have inadequate supply. And in fact, if you look

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<v Speaker 1>at the broader measure of unemployment, the underemployment rate is

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<v Speaker 1>still up at nine point which does include of course

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<v Speaker 1>people working part time because they can't find full time jobs, etcetera.

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<v Speaker 1>Uh I was exchanging some emails with then Irana Cultural

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<v Speaker 1>Lacoda this morning in earlier this afternoon, who is a

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<v Speaker 1>former president at the Minneapolis FED, and of course he

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<v Speaker 1>has been also uh, certainly barish on the notion that

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<v Speaker 1>the FED should be raising rates. If anything, he thinks

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<v Speaker 1>they might have to contemplate negative rates. He said, of

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<v Speaker 1>course that what's more troubling to him. He said, you know,

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<v Speaker 1>if you look at the household employment figures, the survey

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<v Speaker 1>of people actually who have jobs or don't have them. Patrick, Uh,

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<v Speaker 1>maybe the report wasn't so bad, but his concern is

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<v Speaker 1>that inflation remains far from the Fed's target, and inflation

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<v Speaker 1>expectations remain so low, and they aren't rising. And one

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<v Speaker 1>of the reasons why they're not rising is because the

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<v Speaker 1>FED continues to rely on the definition of an unemployment

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<v Speaker 1>rate that doesn't acknowledge the substantial drop that we've had

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<v Speaker 1>in labor force participation. We play around with something called

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<v Speaker 1>the participation adjusted to unemployment rate, where we go back

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<v Speaker 1>and we say, if not for the drop in participation,

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<v Speaker 1>where would the unemployment rate be? Depending on the assumptions

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<v Speaker 1>you want to use for that counter factual, we're fairly

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<v Speaker 1>confident that the unemployment rate in any reasonable sense is

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<v Speaker 1>still above eight percent. Still yes, when you take account

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<v Speaker 1>of of people withdrawing out of frustration because they couldn't

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<v Speaker 1>find jobs, that's then you get that high rate. So

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<v Speaker 1>can we just get that that? You know? The question

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<v Speaker 1>we have to ask about the Fed June July, September

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<v Speaker 1>me up am I made me not until then? UM?

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<v Speaker 1>I think for the FED, UM, the f O m

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<v Speaker 1>C has made the case repeatedly that their data dependent.

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<v Speaker 1>What they, I think are realizing now is that the

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<v Speaker 1>data is not dependable. The market and the economy overall

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<v Speaker 1>has had a long run. It's been a fairly good run,

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<v Speaker 1>all things considered. But this is a mature recovery and

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<v Speaker 1>we can't look for it to accelerate, particularly given external conditions.

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<v Speaker 1>So uh that I don't think the said moves this summer.

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<v Speaker 1>I don't think the said is going to move before

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<v Speaker 1>the election. How about home construction and consumer spending? Both

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<v Speaker 1>of those reports were pretty good. They were pretty good

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<v Speaker 1>this month, but overall, home construction is still well down

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<v Speaker 1>from where it was prerecession. UH. Consumer spending is up,

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<v Speaker 1>but not not up so much that the savings rate

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<v Speaker 1>has UH tipped down. Much of the the household sector

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<v Speaker 1>is spending, but a lot of what they're spending is

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<v Speaker 1>the benefit of lower gas prices, and as gas prices

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<v Speaker 1>move up, that's going to rearrange where that money's being spent.

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<v Speaker 1>Thank you very much for joining us. Patrick O'Keefe is

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<v Speaker 1>the director of Economic Research at colne Resnick, also former

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<v Speaker 1>Deputy Assistant Secretary of the US Department of Labor. Speaking

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<v Speaker 1>about today's government report on non farm payrolls adding just

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<v Speaker 1>thirty eight thousand workers in many you're listening to taking

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<v Speaker 1>Stock on Bloomberg Radio. This Hampton's Commuter Minute is brought

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