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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along

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Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jaily. We bring you

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Speaker 1: insight from the best and economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot com,

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Speaker 1: and of course on the Bloomberg Terminal. Quietly, there's the

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Speaker 1: must read of the i m F, and that is

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Speaker 1: the Fiscal Book, the so called Purple Book. The Director

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Speaker 1: of Fiscal Affairs, Vito Gaspar joins us on the definitive

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Speaker 1: read on the fiscal world. Your theme, Vito's real simple.

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Speaker 1: You want a fair shot for all. If we have

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Speaker 1: a modest or substantial fiscal policy, how do we guarantee

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Speaker 1: that it diffuses into a system for all. The fast

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Speaker 1: shots for all is the theme of the Schill Monitor.

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Speaker 1: As you point out, Tom, I would say that the

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Speaker 1: fair shot theme allows us to stress the different three

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Speaker 1: different points. The first one is that vaccination may well

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Speaker 1: be the highest return global UH public project ever identified,

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Speaker 1: and that was exactly what the Managing director of the

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Speaker 1: i m F was stressing a moment ago, in your quote,

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Speaker 1: a accelerated pace of vaccination that would give a fair

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Speaker 1: shot of to everyone, independently of the country where the

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Speaker 1: person happens to leave to have a vaccine shot in

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Speaker 1: the arm would make the global economy bigger by nine

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Speaker 1: trillion accumulated by and that would generate uh TEXT revenues

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Speaker 1: in advanced economies alone to the tune of one trillion,

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Speaker 1: and therefore the investment in vaccination has a tremendous return.

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Speaker 1: A second aspect of the fair shot talks exactly to

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Speaker 1: your question. If we look at a blog that we

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Speaker 1: put out at the time of the release of the

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Speaker 1: Fiscal Monitor yesterday, you see that measures fiscal actions that

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Speaker 1: were put in place to a total of sixteen trillion

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Speaker 1: up to now are very and evenly distributed around the world.

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Speaker 1: Most of the action takes place in advanced economies. Emerging

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Speaker 1: markets have done significantly less, low income developing countries less still,

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Speaker 1: but also importantly, advanced economies are UH expected to persist

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Speaker 1: in fiscal support for are longer, and are now projected

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Speaker 1: to recover stronger, and that opens the possibility of a

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Speaker 1: great divergence. As mentioned by getting the copy US in

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Speaker 1: our World Economic Outlook, policies must be in place to

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Speaker 1: avoid the great divergence less point on the fair shot.

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Speaker 1: Chapter two of the Fiscal Monitor calls for a fair

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Speaker 1: shot at life success for all, a fair shot that

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Speaker 1: starts from the realization that inequality pre COVID nineteen was

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Speaker 1: high in many places of the world. The pre existing

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Speaker 1: inequalities made COVID nineteen worst, and in turn, COVID nineteen

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Speaker 1: made inequalities worse. That does threaten a visual spiral of

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Speaker 1: inequality and inequality consequences. In order to foster social cohesion

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Speaker 1: and trust, the Fiscal Monitor advices stronger redistributive policies, but

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Speaker 1: also universal access to fundamental public services like health, education,

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Speaker 1: and social security. Vito Vitour A lot of people would

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Speaker 1: agree with this. I think that actually most people would

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Speaker 1: be on the same page with these overall ideas. The

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Speaker 1: question is how you get there. And in your analysis

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Speaker 1: of the sixteen trillion dollars of dollars of fiscal stimulus,

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Speaker 1: what have been the most effective types of spending to

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Speaker 1: contract the gap between the wealthy and the poor. And

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Speaker 1: I'm not just talking about vaccinations, but not an ongoing

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Speaker 1: non pandemic economy. So if if you look at the

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Speaker 1: pandemic and you look in particular at twenty, where we

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Speaker 1: have a lot of information, we do see that the

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Speaker 1: prey rarities everywhere in the world, for all country groups,

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Speaker 1: were to enable the health system to combat COVID nineteen

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Speaker 1: and then to extend emergency lifelines to households and firms

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Speaker 1: made vulnerable by the pandemic. Those interventions were extremely effective.

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Speaker 1: We estimate that without fiscal support, the contraction of economic

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Speaker 1: activity in twenty would have been three times worse, and

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Speaker 1: that would be a fall on the scale of the

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Speaker 1: Great depression that was averted, and that is extremely important

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Speaker 1: and shows the power of physical policy. But we also

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Speaker 1: document that countries that had sounder public finances to begin with,

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Speaker 1: that had easier access to financing, that had buffers, were

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Speaker 1: able to do more and persist for longer, and that

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Speaker 1: is some thing that determines economic developments going forward. So

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Speaker 1: South public finances are crucial to be able to use

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Speaker 1: the power of fiscal pol We're out of time, Peter Gaspart,

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Speaker 1: thank you so much for joining us this morning. I

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Speaker 1: am after record of fiscal affairs. This has been a

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Speaker 1: great tradition for US at the I m F meetings.

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Speaker 1: We are in Washington, not this year. William Lee joins

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Speaker 1: us with the Milk and Institute their chief economs far

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Speaker 1: more encyclopedic ability on the Pacific rim after his service

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Speaker 1: at the International Monetary Fund. Billy, thank you so much

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Speaker 1: for joining us this morning. In my conversation with Georgieva yesterday,

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Speaker 1: there's no question we've never seen this divergence in the

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Speaker 1: American economy. To find over the next year what locomotive

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Speaker 1: America will mean for the global economy. This is the

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Speaker 1: first time in my career that I seen imagining the Arctica.

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Speaker 1: So how on the collar about the distribution of the

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Speaker 1: fiscal stimulus and how did the sparities are the one

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Speaker 1: of the greatest threats of the world economy as it

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Speaker 1: grows and and and actually I think we should back

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Speaker 1: down a little bit about the the impact that China

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Speaker 1: has odd in the global economy, because when China got

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Speaker 1: back on gear again, they did through the supply side.

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Speaker 1: They were able to export medical supplies and and electronic

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Speaker 1: equipment to the United States and that really helped them continued,

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Speaker 1: you know, their their their resuscitation from COVID. In the

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Speaker 1: case the United States, we are much more of an

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Speaker 1: important economy and we as we recover will be a

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Speaker 1: huge locomotives of the world. The problem is the world

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Speaker 1: is not ready for the locomotive effect because the vaccine

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Speaker 1: distribution is so skewed towards the US and UK that

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Speaker 1: the everyone else is still struck down. And and and

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Speaker 1: that's the real issue of of that lack of proper

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Speaker 1: distribution of the fiscal impulse that the managing, the Evaging

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Speaker 1: Director and the Purple Book is is talking about. So

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Speaker 1: let's put some numbers on this. What does that time

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Speaker 1: virgins look like. Well, it seems as though if you

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Speaker 1: just look at the vaccine distribution um in the United

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Speaker 1: States and UK, there's probably more than enough vaccine allocate

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Speaker 1: to the population. I think I've seen a number in

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Speaker 1: the US it's close to about a hundred of the

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Speaker 1: population can be vaccinated with its available supply. If you

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Speaker 1: look at Europe and you look at even Western Europe,

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Speaker 1: that number drops right back down to about and if

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Speaker 1: you look at a place like India, uh, it goes

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Speaker 1: down to the single digits. And now you have to

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Speaker 1: be fair, there's a lot of vaccine resistance out there.

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Speaker 1: A lot of people, even doctors in India are saying,

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Speaker 1: I refuse to take the vaccine because I don't really

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Speaker 1: trust the data associated with my my national produced vaccine.

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Speaker 1: So so there are several forces that work it that

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Speaker 1: are slowing down the recovery of the world economy. And

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Speaker 1: as that disparity continues, that's going to be a huge

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Speaker 1: problem of of getting the world back to its normal

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Speaker 1: growth pace. Again, how much of a locomotive can the

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Speaker 1: USB if it does not pass any additional fiscal stimulus.

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Speaker 1: We've been talking this morning about some setbacks with the

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Speaker 1: infrastructure plans. Well, Lisa, I mean as an American, I

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Speaker 1: think we both know that the one thing Americans do

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Speaker 1: well is spend, and and they think that's prevented Americans

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Speaker 1: from spending is the fact that the service sector has

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Speaker 1: been shut down through the COVID lockdowns. As soon as

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Speaker 1: the jobs come back online and people get what they

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Speaker 1: have a sense of permanent income into their pocket books,

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Speaker 1: the spending is gonna rip like you've never seen before.

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Speaker 1: The pistol impulse has been a temperate infusion of funds

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Speaker 1: into people's pockets. And as we know from econ one

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Speaker 1: on one, transitory income or what's not considered permanent income,

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Speaker 1: is something that doesn't get spent completely and that's why

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Speaker 1: you see the savings right so high. Right now, Billy,

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Speaker 1: I want to touch on Kaushure Mabu Boni, the giant

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Speaker 1: intellect from Singapore and his book has China One. You

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Speaker 1: are with Marble Boni, our Pacific RIM expert. What do

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Speaker 1: we over emphasize or miss in our present study? And

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Speaker 1: worry worry, worry, worry about the Pacific RIM give us

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Speaker 1: perspective there. Our Bloomberg audience is absolutely focus on the

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Speaker 1: fact that China represents a huge market. Everybody wants to

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Speaker 1: go there, from JP Morgan, Jamie Diamond to to the

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Speaker 1: smallest business UH entrepreneur who wants to sell their parts

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Speaker 1: into into China and sell their services into China. One

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Speaker 1: thing that we're missing, which I'm glad Bloomberg columnists are

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Speaker 1: picking up on, is China's continued focus on Taiwan. UH.

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Speaker 1: The very first question that Joe and I asked UH

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Speaker 1: President Nixon and Dr Kissinger when they opened up was

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Speaker 1: what are we gonna do about Taiwan? Everybody else had,

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Speaker 1: you know, Vietnam and all sorts of other items on

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Speaker 1: the agenda, but China has been laser focused on Taiwan.

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Speaker 1: Right now, we see an enormous amount of air incursions

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Speaker 1: by the Chinese Air Force into taiwan airspace. They're just

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Speaker 1: trying to get the Taiwanese pilots to fire on them

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Speaker 1: first and to provoke the war. And I think the

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Speaker 1: threat to the United States and to the rest of

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Speaker 1: the world, the Western world is if we lose Taiwan,

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Speaker 1: we lose t s MC, the huge manufacturer of Semichi

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Speaker 1: darctors out there, and once we lose that, UM, it's

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Speaker 1: game over for for the digitalized economy as we're development

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Speaker 1: in the West. Bill, there's a huge accusation undepending a

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Speaker 1: comment you just made, and I just want to highlight

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Speaker 1: it and pull you up on it just for a second.

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Speaker 1: Do you really think they're trying to provoke a war

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Speaker 1: or they're trying to assert their power, show their power

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Speaker 1: that dominance in the region to the rest of the world.

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Speaker 1: There is a difference, Uh, John, That's why I'm not

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Speaker 1: a diplomat in the State Department. So yes, that's exactly

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Speaker 1: the right way to put it. But I think I

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Speaker 1: want the emphaside to our audience how serious the issue is. Um.

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Speaker 1: They will go to the edge of war to assert

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Speaker 1: that China is back in the global diplomatic game under

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Speaker 1: truth as an equal to the United States, and they

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Speaker 1: should not be thought of as an emerging market except

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Speaker 1: in w t O where they still want the subsidies.

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Speaker 1: I'm no diplomat either, everyone knows that. But it's going

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Speaker 1: to catch up. Bill like William Lee Milkin's the chief

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Speaker 1: chief Economists, Thank you sir. Right now we digress and

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Speaker 1: is not an annual visit, but at this time of year,

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Speaker 1: it is always important to speak to Dennis Gartman. He

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Speaker 1: is with the University of Akron and their endowment fund

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Speaker 1: legendary in his newsletter, and what you need to know

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Speaker 1: is he lives next to a golf course, because that's

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Speaker 1: really what he does. It gets up at six am

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Speaker 1: after writing a gartment letter and tries to get in

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Speaker 1: will nine holes, if not eighteen as well, Dennis Gartman,

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Speaker 1: I've got to go to golf. The Masters is upon us.

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Speaker 1: It is what it is. Time stands still and Dustin

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Speaker 1: Johnson is going to really try to do what Tiger

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Speaker 1: Woods did in two thousand one, two thousand two. Can

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Speaker 1: heat do it? Is he really that dominant right now?

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Speaker 1: He is really that dominant. He is the the best

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Speaker 1: player in the world, no question about it. He drives

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Speaker 1: it well, he's in control of his iron play. Keep

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Speaker 1: an eye on him. He's right now, he's probably the favorite.

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Speaker 1: The guy that I'm really going to be pulling forward

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Speaker 1: is young Mr Speke, whose game has really come around

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Speaker 1: in the last two two or three months. So it's

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Speaker 1: good to see. It's good to see him back top.

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Speaker 1: But right now, there's no question Dustin Johnson is the

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Speaker 1: best player in the world, and he's he's he's the

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Speaker 1: favorite far and away. We want to talk more in golf,

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Speaker 1: but I just go to message from Lisa. No one

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Speaker 1: cares about this. Get to the markets here. She's right,

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Speaker 1: of course. Dennis Gartman, yesterday we heard on this program

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Speaker 1: that it was probably not a good thing to cut

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Speaker 1: your winners. The stocks go up and there's such an urgency.

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Speaker 1: I get to a price target Cell Cell Cell, and

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Speaker 1: your letter has been gospel and let your winners run.

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Speaker 1: What do you do with the things? What do you

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Speaker 1: do with a big tech right now? Is they re emerge?

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Speaker 1: You know? The interesting thing is I have been detrimental.

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Speaker 1: I haven't looked a approvingly on the high tech stocks.

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Speaker 1: I'd rather on the things that I've been made famous

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Speaker 1: by wanting down the things that if I dropped them

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Speaker 1: on my foot will hurt. Steel, tires, shipping, railroads, the

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Speaker 1: things that I understand. But right now, everybody whose own

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Speaker 1: tech has done well, it's suffered egregious losses. At one

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Speaker 1: point that the the Archaego circumstance last week did a

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Speaker 1: lot of damage to the psychology. But they keep coming

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Speaker 1: right back. So hold on to your winners. The my

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Speaker 1: my first rule of trading is do more of that

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Speaker 1: which has been working, and try your darnedest to do

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Speaker 1: less of that which is not. It works in life,

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Speaker 1: and it works in trading. Do more of that which

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Speaker 1: is working, and less of that which is not. In

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Speaker 1: the tech has been working, it has worked without me

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Speaker 1: being involved in it. Again, rather own steel, I'd rather

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Speaker 1: on tires. I'd rather own railroads, I'd rather own ships.

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Speaker 1: I'd rather own copper miners. But boy, the people who

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Speaker 1: have owned that the high tech have done extraordinarily stunning,

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Speaker 1: lee shockingly well, God bless them. If the old economy place, Dennis,

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Speaker 1: why the old economy place? Right now? Why the old economy?

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Speaker 1: What John for you said? The old economy place, the

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Speaker 1: things that if you draw up, they would hunt your foot,

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Speaker 1: the old economy stories, the cyclicals. Why don't you want

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Speaker 1: to stick with them? It's the things that I understand.

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Speaker 1: I can count the amount of steel that has been

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Speaker 1: created an export, and I can count the ships that

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Speaker 1: are moving. I can count the railroads that have moved.

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Speaker 1: I can account containers ships, I can count tires, I

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Speaker 1: can count ball bearings, those sorts of things. I can

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Speaker 1: count what's gonna happen in those what they have been doing.

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Speaker 1: I can make a projection forward and as long as

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Speaker 1: the domestic and global economy continues to work, those stocks

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Speaker 1: are gonna do well. Plus they pay a dividend. So

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Speaker 1: to me, at my age of seventy years old, I

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Speaker 1: have to look at things that I understand, things that

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Speaker 1: pay me a dividend, things that pay me an income

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Speaker 1: going forward, and I'll let the younger people in the

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Speaker 1: market's trade the high tech stocks, which I simply do

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Speaker 1: not understand and never shall was saying beforehand, I'm still

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Speaker 1: astonished at Scope or a Skype and Zoom that we

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Speaker 1: can do what we do nowadays. I don't understand how

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Speaker 1: it works, but they work. Let other people do the

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Speaker 1: trade them and do well with them. God bless them.

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Speaker 1: Do you think tennis there is a broader generational issue

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Speaker 1: around still selection right now, Oh, no question about it. John,

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Speaker 1: There is a real, real generational change, generational change. There

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Speaker 1: was a great book in the nineties sixties on trading

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Speaker 1: in the stock market, and I'm trying to remember. I'm

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Speaker 1: drawing a blank right now, but the great thesis was,

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Speaker 1: I gotta get me a kid. Kids understand younger members

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Speaker 1: of our younger people and in the younger generation understand

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Speaker 1: what's going on in high tech. I don't, and I understand,

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Speaker 1: and I get that. I understand that. I know there's

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Speaker 1: a generational shift. I know what I'm good at, and

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Speaker 1: I know what I'm not good at. Well, I say,

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Speaker 1: forget bitcoin, it's roebucks. If you want to bet with

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Speaker 1: the children in terms of what their currency of choice is,

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Speaker 1: given your analysis of things that when you drop them,

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Speaker 1: they hurt your foot, can you talk a little bit

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Speaker 1: about the price increases that we've seen not only in lumber,

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Speaker 1: but in corn, in the food staples. And this is

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Speaker 1: crimping a lot of the lower income earners frankly that

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Speaker 1: are not seeing wage heights at the same kind of pace.

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Speaker 1: Do you see them continuing or is there some sort

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Speaker 1: of stasis reaching as people plant more crops and harvest

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Speaker 1: more trees. All was interesting about the crop numbers coming

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Speaker 1: out last week with the prospective Planning report in soybeans

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Speaker 1: and corn that the government had well, the South Street

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Speaker 1: Chicago had missed what the government report was by about

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Speaker 1: two million acres. Farmers were not going to increase production

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Speaker 1: as dramatically as I thought they would, and as many

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Speaker 1: people on Wall Street and LaSalle Street had thought that

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Speaker 1: they would. The Prospective Planet's report could be egregiously wrong

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Speaker 1: and missed the number. Eventually what gets put in the

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Speaker 1: ground by a rather large factor. But nonetheless, farmers have

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Speaker 1: not responded as aggressively as we thought they would. Plus

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Speaker 1: the fact that the monetary authorities have been so expansionary,

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Speaker 1: that is the major precursor of the major driving force

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Speaker 1: behind rising commodity prices. And quite honestly, I don't see

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Speaker 1: anything that's going to stop the rising commodity prices. Lumber

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Speaker 1: might be a little overdone at a thousand seventy five

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Speaker 1: dollars per thousand board feet, up from three hundred dollars

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Speaker 1: per thousand board feet a year ago. Maybe lumber is

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Speaker 1: a little excited on the upside, but corn can go higher.

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Speaker 1: We can go higher, beans can go higher, Cotton can

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Speaker 1: go higher. Commodity prices generally have been moving from the

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Speaker 1: lower left of the upper right, and as long as

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Speaker 1: the monetary authorities continue to be expansionary, that's not going

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Speaker 1: to change. Dennis, let's end on this something that you've

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Speaker 1: been expert on for decades, that is gold. That is

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Speaker 1: one commodity that is not participated in this in a

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Speaker 1: bull rally. In fact, a lot of people have wondered

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Speaker 1: why it's remained suppressed. Some people say people are investing

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Speaker 1: in bitcoin instead. What's your view here? How much more

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Speaker 1: upside is there in a world that is still dominated

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Speaker 1: by some of these younger, new fangled ideas such as bitcoin.

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Speaker 1: There's no question that bitcoin ethereum at all have taken

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Speaker 1: at the margin some of the buying that would have

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Speaker 1: gone into the gold market, no question about that, and

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Speaker 1: that's going to continue again. Just like I avoid the

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Speaker 1: high tech stocks, I've avoided bitcoin. You know, woe betide

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Speaker 1: me when I start to trade it. But those who

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Speaker 1: have done well in it, I wish them well. I

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Speaker 1: hope it continues, and I'm not sure that it shall.

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Speaker 1: I'm still gonna own gold, and I think the gold

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Speaker 1: and now at the at ninth at the past several

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Speaker 1: days is broken out to the upside. I think most

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Speaker 1: of the selling has occurred. And as the chairman of

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Speaker 1: the University of Akron's endowment, we uh five weeks ago,

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Speaker 1: six weeks ago made of took our first position in

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Speaker 1: gold for the first time ever. Interesting just to hedge

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Speaker 1: away against inflation. Was the pushback on Nick Dennis? What

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Speaker 1: was the pushback on your conservative endowment fund to guardman

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Speaker 1: getting up on the table and screaming gold. There was pushback,

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Speaker 1: no question about it. But my my insights and my

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Speaker 1: history have prevailed. We'll see if I'm I'm right. Thus far,

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Speaker 1: I'm up at one or two percent, which is good help,

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Speaker 1: but no question about it. There was pushedback, and it

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Speaker 1: was there. People were reticent to move out of equities

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Speaker 1: and to move even at the margin. We only move

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Speaker 1: three percent, but people there was discussion and pushback within

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Speaker 1: the within the committee, but eventually I prevailed. We'll see

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Speaker 1: if I'm right, Dennis. We will and we look forward

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Speaker 1: to catching up against soon. Can we finish where we

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Speaker 1: starts hit Dustin Johnson, the robot of golf? Is this

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Speaker 1: bad for the game? Dennis that this is the greatest

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Speaker 1: player in the world right now. I think the one

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Speaker 1: thing that's bad for the game is how far these

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Speaker 1: young men are hitting the ball. They're making They're changing

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Speaker 1: golf courses around the country. They're making golf courses obsolete,

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Speaker 1: and we're gonna have to do something to slow down

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Speaker 1: the ability for these young men to hit the ball

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Speaker 1: three thirty yards. Something has to change, and probably that

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Speaker 1: means the golf ball has to change. What about the club?

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Speaker 1: I gave up my Persimmon driver only a couple of

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Speaker 1: years ago. I'm an old guard guy. I love Tom

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Speaker 1: getting in getting involved in golf. He's never played golf.

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Speaker 1: He's alive. What Dennis we should tell to him, just

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Speaker 1: in case he doesn't know? Tom? Do you know who

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Speaker 1: Dustin Johnson has been dating for a long time? Yeah,

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Speaker 1: I'm aware of that Mr Gretzky story. That's the only

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Speaker 1: thing he's interesting. Honestly, forget to Dustin Johnson. Dennis is

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Speaker 1: going to catch out. Dennis Government University of Acronic down

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Speaker 1: and chairman, former editor of the Government Lets it right

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Speaker 1: Doma Shawmyer, where it's a Bank of America head of

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Speaker 1: the US economics and really outstanding on the pulse of

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Speaker 1: the American economy. Michelle, I want to call aid in

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Speaker 1: if I can all the Bank of America economic research.

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Speaker 1: Do you people look at it as a linear path

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Speaker 1: forward in the coming quarters and even coming years or

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Speaker 1: is there an accelerant to all of this good news? Yeah,

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Speaker 1: it's UM. I would say it's somewhat hump like UM

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Speaker 1: in that we are looking at a bit of an

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Speaker 1: explosion of growth right now, and that's gonna lead to

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Speaker 1: very very strong Q two GDP growth. We think in

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Speaker 1: the order of ten percent at an annualized basis UM,

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Speaker 1: and then Q three will moderate a bit, still very

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Speaker 1: strong given the handoff from the second quarter, very likely,

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Speaker 1: so maybe about eight percent growth, and then we returned

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Speaker 1: to to kind of a mid single digit growth rate.

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Speaker 1: But I think what's important when you're looking at growth

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Speaker 1: rates is to think about the starting point. So right now,

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Speaker 1: we still have growth to be kind of made up

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Speaker 1: for from the COVID shock UM and we haven't yet

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Speaker 1: closed the output gap, So a fast balance now the

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Speaker 1: data that we're seeing, it's still quite reasonable, especially given

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Speaker 1: all the stimulus and other support for the economy. So

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Speaker 1: there's kind of still this cash up that's happening in

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Speaker 1: correcting for the COVID shop and returning to the trend

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Speaker 1: level of growth that we would have seen previously. Once

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Speaker 1: you close the output gap, then you're running above, right,

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Speaker 1: and the question is how much above will you run

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Speaker 1: and how overheated will the economy become in that regard, Michelle,

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Speaker 1: you've got the data dead on the last couple of weeks,

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Speaker 1: important data points. Retail sales right in there, right on

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Speaker 1: the button with claims right now, Yes, say wrung kind

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Speaker 1: of upside surprise, but payrolls on Friday, you were looking

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Speaker 1: for a million, we got north k What is it

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Speaker 1: that you're looking at right now? That is a decent

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Speaker 1: guide for what kind of numbers this economy is churning out. Well.

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Speaker 1: Our our team has been really focused on alternative data sources,

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Speaker 1: high frequency data sources, so we've been heavy consumer of

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Speaker 1: all kinds of data and that has really helped us,

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Speaker 1: I think, in the sense of being able to gauge

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Speaker 1: in real time some of these monthly statistics um and

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Speaker 1: kind of get a good sense of the direction of

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Speaker 1: the surprise. UM. So for jobs claims is one indicator,

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Speaker 1: but it's only one on UM we look at a

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Speaker 1: variety of different survey measures. We also look at measures

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Speaker 1: of actual demand, UM, you know, how much people are spending,

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Speaker 1: how much they're moving, measures of mobility, and all of

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Speaker 1: that kind of filters in to an estimate at the

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Speaker 1: end of the day. UM. Yeah, Well, given the given

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Speaker 1: the high frequency focus and your ability to pinpoint where

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Speaker 1: we are, what is the labor market dynamic? We're hearing

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Speaker 1: about labor market shortages, particularly in the services sectors that

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Speaker 1: are trying to come back on. Are you expecting more

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Speaker 1: wage pressure than the street currently agrees on? You know,

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Speaker 1: not necessarily. I think on the wage side you could

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Speaker 1: see on you know, certain sectors temporary increases in wages,

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Speaker 1: but I don't anticipate a big and sustainable move high

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Speaker 1: and wages at this point in time because of where

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Speaker 1: the labor force participation rate is. It's only partially recovered,

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Speaker 1: and I imagine that the labor supply will be picking

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Speaker 1: upright meaningfully once we get to the point where a

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Speaker 1: aren't just share of the population is vaccinated and can

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Speaker 1: safely return to work, especially in those leisure sectors where

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Speaker 1: there's a lot of in person activity, when schools are

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Speaker 1: properly reopened and you can go back out into the workforce,

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Speaker 1: concern over childcare um, and when the job opportunities are

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Speaker 1: very clearly there, we still have more to do in

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Speaker 1: terms of labor demand as well, particularly again in those

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Speaker 1: leisure sectors. So in the short term there could be

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Speaker 1: frictions and you probably will see some wage increases, but

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Speaker 1: I think in the next year so there's still a

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Speaker 1: lot of labor supply that's going to come into the

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Speaker 1: into the economy, and that should mitigate some of the

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Speaker 1: upside when we're doing a million a month or whatever

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Speaker 1: we're gonna do in jobs. For shelle Meyer, what do

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Speaker 1: the death siles of this nation look like? I mean,

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Speaker 1: and your acclaim with housing. We've clearly got to have

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Speaker 1: housing market, but what is the death sile the tenths

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Speaker 1: of our population break up right now in the America

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Speaker 1: and the labor economy well, I mean this the cycle

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Speaker 1: has been dubbed the case shaped recovering and that's for

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Speaker 1: good reason. If you look at the top third of

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Speaker 1: the income distribution, they actually normalized the labor market right

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Speaker 1: jobs return to pre COVID level within a few months

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Speaker 1: of the pandemic right summer of last year. Um the

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Speaker 1: middle income tire they kind of normalize the level of

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Speaker 1: jobs by the fall of last year, but that bottom

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Speaker 1: third of the income distribution, the level of jobs is

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Speaker 1: still considerably below where we were prior to COVID. So

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Speaker 1: when you think about the amount of makeup that has

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Speaker 1: to be done or catching up in the sense of

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Speaker 1: getting the economy back to normal, it's very heavily concentrated

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Speaker 1: amongst the lower income population. And that's really where I

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Speaker 1: think policymakers are keenly focused right now. That's where the

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Speaker 1: hunt work begins right now. Michelle great to catch up

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Speaker 1: wonderful work Stella work the last couple of weeks, specifically

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Speaker 1: Michelle mad Banks America Securities, Head of US Economics. This

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Speaker 1: is the Bloomberg Surveillance Podcast. Thanks for listening. Join us

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00:25:57,400 --> 00:26:00,280
Speaker 1: live weekdays from seven to ten a m. East Turned

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Speaker 1: on Bloomberg Radio and on Bloomberg Television each day from

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Speaker 1: and international relations. And subscribe to the Surveillance Podcast on

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Speaker 1: Apple podcast, SoundCloud, bloomberg dot com and of course on

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Speaker 1: the terminal. I'm Tom Keene, and this is Bloomberg