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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Balance of Power podcast. Catch us live weekdays at

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Speaker 1: noon and five pm Eastern on Apple, Coarclay and Android

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: Thanks for joining us here.

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Speaker 3: You made it to the threshold of the weekend, and

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Speaker 3: we've got a lot to talk about on this job's day,

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Speaker 3: with big concerns about the trajectory of the job market

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Speaker 3: following the data that fell short this morning, only twenty

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Speaker 3: two thousand on payrolls, unemployment up to four point three percent,

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Speaker 3: and outright losses of jobs in some key sectors, including manufacturing.

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Speaker 3: President Trump was asked last evening as he dined with

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Speaker 3: the Titans of High Tech at the White House about

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Speaker 3: the veracity of the numbers and whether he would trust

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Speaker 3: what we heard from BLS, knowing a month ago he

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Speaker 3: fired the commissioner after not thinking that the data were correct.

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Speaker 3: In fact, he suggested they were politically rigged. Here's what

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Speaker 3: the President said last evening.

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Speaker 4: We have a jobs report coming out, the first since

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Speaker 4: the BLS commissioner, who you fired.

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Speaker 5: Won't be there.

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Speaker 6: Can you commit to.

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Speaker 2: Say the number.

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Speaker 7: I don't know that the real numbers that I'm talking

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Speaker 7: about are going to be whatever it is, but we'll

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Speaker 7: be in a year from now. I think you'll see

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Speaker 7: job numbers that are going to be absolutely incredible. We're

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Speaker 7: going to see job numbers like our country has never

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Speaker 7: seen before.

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Speaker 3: I love Mark Zuckerberg having a side conversation with somebody

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Speaker 3: while the president's talking to the media. So the visuals

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Speaker 3: were great last evening, but we want to get to

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Speaker 3: the numbers here before. We're joined by Representative Jason Smith,

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Speaker 3: Chairman of Houseways and Means. Ana Wong is with us,

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Speaker 3: the chief US economist at Bloomberg Economics, and it's great

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Speaker 3: to see you. So we need to wait a year

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Speaker 3: for the Golden Age to begin in the job market.

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Speaker 2: What do you make of this?

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Speaker 8: Well, you know, for example, next week we finally will

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Speaker 8: get some revisions from last year. So indeed you have

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Speaker 8: to wait a whole year. But I think that for

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Speaker 8: today's number, there has been a historical tendency for August

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Speaker 8: to undershoot consensus. When you look at where the number

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Speaker 8: print in the first print relative to consensus since nineteen

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Speaker 8: ninety nine seventy percent of the time the initial print disappoints,

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Speaker 8: and one possible explanation is that people tend to go

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Speaker 8: on vacations in August, and this August the weather was

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Speaker 8: beautiful in the US, and so the response rates for

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Speaker 8: surveys tend to be lower as well. And the response

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Speaker 8: rate we saw today is the one of the lowest

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Speaker 8: August we've seen, the lowest since two thousand. So personally,

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Speaker 8: I do expect this number to be revised up even

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Speaker 8: within the next two months.

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Speaker 5: And traditionally the median.

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Speaker 8: Upper revision in the next two months would be about

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Speaker 8: twenty five thousand, and the disappointment is usually about twenty

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Speaker 8: five thousand to so roughly offsetting by the disappointment. That

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Speaker 8: means that eventually this number would be revised a possibly

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Speaker 8: to fifty sixty thousand.

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Speaker 2: Still last fire. For all this though, the revisions and

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Speaker 2: the lack of response rate.

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Speaker 8: Well, the lack of response rate has been going down

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Speaker 8: for a long long time, and many of these issues

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Speaker 8: are long standing and not just from one commissioner or another.

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Speaker 8: So if Trump does fire the BLS commissioner, he won't

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Speaker 8: get the upward revisions either.

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Speaker 6: There you go and a.

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Speaker 4: Fifty thousand, even in the best case scenario, still doesn't

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Speaker 4: sound like a strong labor market. I'm going to repeat

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Speaker 4: H's question, even in the best case scenario with those revisions,

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Speaker 4: is this the Trump economy?

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Speaker 8: Well, you know, and the unemployment rate increase, right, I

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Speaker 8: think that's where the real signal is because it's the

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Speaker 8: relative labor demand and supply if and what we saw

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Speaker 8: in the unemployment rate is that.

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Speaker 5: Participation rate increased.

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Speaker 8: So even though employment in the household survey actually increase

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Speaker 8: over two hundred thousand, the unemployment rate still ticked up

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Speaker 8: because in fact, people are coming back into the labor

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Speaker 8: force after dropping out in the past three months.

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Speaker 5: I do think that the bottom of.

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Speaker 8: This labor market was actually in June, and we actually

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Speaker 8: have been through the really rough patch already. In fact,

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Speaker 8: after all the revisions are done, we probably have a

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Speaker 8: couple negative prints a couple months ago. We also probably

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Speaker 8: have a negative print late last year. But I think

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Speaker 8: things should be rebounding right now.

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Speaker 3: Well, that's fascinating because we hear so much about the

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Speaker 3: huge levels of investment that are coming from some of

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Speaker 3: the individuals who were at that dinner table last yeven

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Speaker 3: but hundreds of billions of dollars in data centers alone,

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Speaker 3: that's supposed to prompt a massive amount of job growth. Correct,

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Speaker 3: is AI and the productivity from AI working against that.

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Speaker 8: So we are indeed estimating that the from AI will

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Speaker 8: be continuing on this leniar trajectory or even slightly non

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Speaker 8: lenear in the next two years, so that helps the

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Speaker 8: GDP growth right. On the other hand, we are seeing

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Speaker 8: a rising unemployment rate in sectors that are exposed to AI,

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Speaker 8: possibly because employers are not hiring us fast. And this

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Speaker 8: is where what we're seeing in the demographics group from

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Speaker 8: age twenty to twenty four that their unemployment rate is

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Speaker 8: close to ten percent right now. So it's I think

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Speaker 8: through the reduced hiring, not outright layoff, this is where ultimately,

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Speaker 8: through natural attrition and not replacing those workers, you're going

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Speaker 8: to see slow build up, acceleration and productivity.

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Speaker 2: Really interesting conversation as always with Anna Wong. Thank you

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Speaker 2: Anna for.

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Speaker 3: Your great analysis, and you can find Ana's work on

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Speaker 3: the terminal and of course online at Bloomberg dot com.

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Speaker 3: As we add the voice of Congressman Jason Smith, the

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Speaker 3: Republican Chairman of the House Ways and means. Committee is

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Speaker 3: with us right now live from Capitol Hill on Bloomberg

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Speaker 3: TV and Radio. Mister Chairman, thank you for joining us.

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Speaker 3: It's great to have you back with us here on

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Speaker 3: balance of power. I'd love your take before we get

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Speaker 3: to matters of legislation, just on the jobs print today,

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Speaker 3: what it means for our economy now that the Commission

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Speaker 3: of BLS has been fired. Do you believe these numbers

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Speaker 3: are credible?

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Speaker 9: You know, I believe that I would agree with actually

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Speaker 9: the person before me. I believe the numbers should be

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Speaker 9: a little bit higher than what was released today.

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Speaker 10: But let's look at it.

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Speaker 9: Just this year, in the first eight months of the

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Speaker 9: Trump administration, there's been five hundred thousand new jobs. And

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Speaker 9: those are American jobs. Those aren't government jobs. That's real jobs,

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Speaker 9: and I think it's going to have a huge impact.

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Speaker 9: But as the President said in one of the prior

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Speaker 9: messages that I heard, when you look at a year

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Speaker 9: from now, when the growth aspects take an effect from

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Speaker 9: the passage of the tax bill on July fourth, you're

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Speaker 9: going to see a lot of new.

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Speaker 4: Jobs, Chairman Smith. The economist though, speaking before you, Anna

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Speaker 4: Wong also said though that some of the negative prints

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Speaker 4: that have come up in the last couple of months

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Speaker 4: are likely to still be negative. Those revisions still stand.

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Speaker 4: If that weakness persists, is that indicative of the effect

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Speaker 4: of Donald Trump's tariff policy.

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Speaker 10: I don't believe so.

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Speaker 9: And I think she also said that June was probably

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Speaker 9: going to be the lowest level and then it should

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Speaker 9: only go up from that point on. But just passage

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Speaker 9: of the Big Beautiful Bill of the Small Business Deduction,

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Speaker 9: the National Federation of Independent Businesses claim that that tax

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Speaker 9: certainty will create a million new jobs each year for

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Speaker 9: the next ten years.

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Speaker 2: That's pretty substantial.

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Speaker 9: And that's just one provision within the tax bill, and

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Speaker 9: that was from the NFIB.

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Speaker 3: Well, it's interesting that you bring that up, mister chairman,

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Speaker 3: because there's been a lot of writing recently about the

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Speaker 3: branding the messaging around the bill. The President himself said

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Speaker 3: he doesn't want to call it Big Beautiful bilitymore. I

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Speaker 3: think the White House is looking more for something like

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Speaker 3: the Working Families Tax Act or the Tax Cut Act.

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Speaker 2: And I'm wondering your thought on that.

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Speaker 3: Having just come back from August recess, the messaging and

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Speaker 3: the communication with voters that needs to follow such a

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Speaker 3: massive piece of legislation passing. It's basically an opportunity to

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Speaker 3: educate people on what you just did. Does it need

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Speaker 3: a new brand, does it need a new look while

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Speaker 3: you take this on the road.

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Speaker 9: What it needs is for people to know what's in

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Speaker 9: the bill, and that's what we have to do a

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Speaker 9: better job at. We have to show how this is

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Speaker 9: a tax cut for working family, such as no tax

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Speaker 9: on tips, no tax on overtime, increasing the standard deduction,

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Speaker 9: which is what the majority of working class families use,

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Speaker 9: increasing the child tax credit to twenty two hundred dollars,

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Speaker 9: creating the Trump accounts for new children that are born

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Speaker 9: that one thousand dollars will be invested for them. These

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Speaker 9: different provisions, whether it's increasing a tax in centi for

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Speaker 9: paid family leave or childcare, these are items that need

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Speaker 9: to be discussed rather than just one big broad brush.

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Speaker 9: The bill, as you know, had one hundred and three

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Speaker 9: different tax provisions which we passed through the House Ways

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Speaker 9: and Means Committee. But it also had border security, it

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Speaker 9: had military spending, it had welfare reform, so it was

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Speaker 9: a variety of things. But just from a tax perspective,

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Speaker 9: of course, these tax cuts, the majority effect working families.

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Speaker 3: Well, I have to ask you not about only what's

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Speaker 3: just been done, but what's coming up next, mister Chairman.

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Speaker 3: There's talk of another recisions package, for instance, because after

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Speaker 3: the last one, we had a lot of Democrats come

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Speaker 3: on the air here to say that they can't trust

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Speaker 3: deals that are made surrounding appropriations in the House, and

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Speaker 3: we may well end up seeing a government shut down.

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Speaker 3: One more recisions package and we shut down, is what

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Speaker 3: I believe, Brendan Boyle said, the top Democrat on the

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Speaker 3: Budget Committee. So give us you read on this. You're

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Speaker 3: talking to your colleagues. Are we at risk of shutting

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Speaker 3: down after September thirtieth?

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Speaker 9: You know, I really hate to hear that my Democrat

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Speaker 9: colleague says no recisions at all. That's saying that everything

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Speaker 9: that's appropriated was needed to be spent. I don't think

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Speaker 9: that's the case. When you're looking at trillions of dollars,

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Speaker 9: I'm sure you can find some things that aren't being

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Speaker 9: spent and we we should rescind it. I am very disheartened,

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Speaker 9: very disheartened what I've been hearing from the other side

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Speaker 9: of the building, from the Senate, from Leader Schumer, from

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Speaker 9: Chuck Schumer by saying that there's going to be a shutdown,

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Speaker 9: we can pass a funding bill out of the House

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Speaker 9: of Representatives, and we will pass a funding bill.

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Speaker 6: The issue is you have to have sixty votes.

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Speaker 10: In the United States Senate.

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Speaker 9: There's only fifty two Republicans, so that means at least

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Speaker 9: eight Democrats are going to have to join in. But

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Speaker 9: if they refuse to join in, there will be a

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Speaker 9: government shot down.

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Speaker 4: Chairman Smith, it sounds like you're saying that a continuing

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Speaker 4: resolution may be the only option here.

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Speaker 6: How long could that last? If that's the way that

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Speaker 6: it moves forward.

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Speaker 9: I would expect that there'll be a continuing resolution for

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Speaker 9: at least a couple months, because there is clearly no

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Speaker 9: bipartisan agreement on an overall appropriations process, and so a

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Speaker 9: continued resolution is what you're going to be looking at

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Speaker 9: over the next several weeks. The question is will the

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Speaker 9: Democrats in the Senate support a continued resolution. They're saying

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Speaker 9: right now that they won't, but if they don't, they

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Speaker 9: are clearly shutting down government.

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Speaker 3: Well, it's interesting we're hearing talk now from the White

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Speaker 3: House not the first time of a full year.

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Speaker 2: CRI.

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Speaker 3: Your long cr that would bring us all the way

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Speaker 3: to the next fiscal year. Mister chairman, does that gave

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Speaker 3: you the Swiss when you hear that or could that

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Speaker 3: really happen?

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Speaker 9: You know, I would really like for us to do

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Speaker 9: our job and to appropriate getting tired of crs, but

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Speaker 9: that requires Republicans and Democrats to work together through this

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Speaker 9: appropriations process, and hopefully people will we'll be able to

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Speaker 9: do that, but it's a huge challenge. It's a huge challenge.

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Speaker 9: I think right now, if you were going to ask

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Speaker 9: me to predict, it's going to be a cr at

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Speaker 9: least for a couple months.

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Speaker 4: Well, Chairman Smith, you're talking about getting the Democrats on

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Speaker 4: your side.

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Speaker 6: Would you commit to more recision packages to do that?

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Speaker 9: Well, the Democrats don't want recision packages. As what was

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Speaker 9: said earlier. I'm all about making sure you're appropriating money

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Speaker 9: and you're cutting waste, fraud and abuse, making sure that

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Speaker 9: you're funding the things that should be cutting. So there's

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Speaker 9: times that there needs to be recisions. There's times that

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Speaker 9: items shouldn't be rescinded. But to say a blanket across

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Speaker 9: the board, no recisions, that's not how it works here.

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Speaker 3: We understand your position on that, mister Sherman, and I'd

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Speaker 3: love to know where you stand on Obamacare tax credits.

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Speaker 3: We've got a big set of expirations, is the word

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Speaker 3: I'm looking for coming up at the end of the year,

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Speaker 3: and there are questions about whether you could actually make

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Speaker 3: a deal with Democrats by extending them. There are also concerns,

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Speaker 3: as they call it the Obamacare cliff at this point,

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Speaker 3: about what it would mean for Republicans if they expired.

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Speaker 2: Should these be renewed?

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Speaker 9: I think you look at everything when it comes to

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Speaker 9: such a divided Congress is on the table and there's

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Speaker 9: a lot of negotiations throughout the whole process. I have

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Speaker 9: concerns with the premium tax credits that you're referring to

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Speaker 9: the fact that if you make six hundred thousand dollars

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Speaker 9: in Scottsdale, Arizona, you get subsidized for your healthcare. That's

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Speaker 9: not appropriate, and so those kind of reforms have to

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Speaker 9: be maintained if there's any step moving forward on ending

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Speaker 9: those credits.

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Speaker 4: Chairman Smith, can you talk to us a little bit

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Speaker 4: about some of the talk we're hearing around a second

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Speaker 4: reconciliation bill come October first?

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Speaker 6: Is that a possibility.

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Speaker 10: Do you know.

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Speaker 9: I've said all along that we needed to have one

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Speaker 9: reconciliation bill, one big beautiful bill, because if you look

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Speaker 9: at history, there has not been a case in the

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Speaker 9: history of United States where two partisan reconciliation bills passed

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Speaker 9: in the same year. That's never happened, And with these

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Speaker 9: razors and majorities, I think it's going to be very difficult.

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Speaker 9: So I'm glad that we were able to usher through

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Speaker 9: the one big beautiful bill. We delivered the largest tax

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Speaker 9: cut in US history, the largest investment in border security

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Speaker 9: in US history, the most significant welfare reforms in US history,

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Speaker 9: just to name a few things. The second reconciliation bill,

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Speaker 9: I think it'll be a whole lot more difficult to

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Speaker 9: move through the system.

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Speaker 3: Well, I can only imagine going through that exercise once again.

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Speaker 3: Even though you can doesn't mean you should. Jason Smith,

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Speaker 3: it's great to have you back, mister chairman. Thanks for

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Speaker 3: joining us. He cheers the Ways and Means Committee in

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Speaker 3: the Republican Lighthouse with us live from Capitol Hill here

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Speaker 3: on Bloomberg TV and Radio. They're going to head back home,

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Speaker 3: Creedy and come back next week to some pretty interesting challenges.

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Speaker 3: As you mentioned, what are we down to a dozen

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Speaker 3: legislative days to figure this all out?

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Speaker 4: Absolutely, and the clock is ticking. It's still unclear if

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Speaker 4: there's any way out of this.

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Speaker 3: That's true, as we just proved, I think in another

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Speaker 3: conversation about this whole deal. Democrats and Republicans are going

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Speaker 3: to have to get in a room at some point

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Speaker 3: and figure their way forward here, and they're running out

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Speaker 3: of time. September thirty, the end of the fiscal year,

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Speaker 3: alongside Creadiegupta, I'm Joe Matthew and Washington will assemble our

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Speaker 3: political panel next Ganie Schanzano and Rick Davis. Only here

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Speaker 3: I'm Bloomberg. Stay with us on Balance of Power. We'll

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Speaker 3: have much more coming up after this.

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Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch

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Speaker 1: up live weekdays at noon and five pm Eastern on Apple,

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Speaker 1: Cocklay and Android Auto with the blue Berg Business app.

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Speaker 1: You can also listen live on Amazon Alexa from our

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Speaker 1: flagship New York station, Just Say Alexa played Bloomberg eleven thirty.

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Speaker 2: Washington and New York City are colliding again.

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Speaker 3: Doesn't really have to do with Wall Street this time,

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Speaker 3: but in fact the mayor's race and Donald Trump is

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Speaker 3: investing himself. We've talked about this a bit with reports.

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Speaker 3: It began as reports this week that he might urge

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Speaker 3: a couple people, a couple of candidates you've heard of them, both,

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Speaker 3: including the sitting mayor of New York, Eric Adams, convinced

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Speaker 3: them to drop out of the race, Curtis Slee with

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Speaker 3: the other the Republicans, so we could get this down

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Speaker 3: to a one on one, right, a two way race

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Speaker 3: between Cuomo and Mam Donnie, who probably got quite a

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Speaker 3: kick out of this story. He was asked about it

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Speaker 3: earlier this week in New York.

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Speaker 11: Listen today's news that the White House is considering job

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Speaker 11: offers for Eric Adams and curtisl A. It is not

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Speaker 11: newsed that carries a meaning because of any impact it

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Speaker 11: will have on this race. We feel just as confident

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Speaker 11: as we did yesterday that we will win this race

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Speaker 11: in November. This is, however, about an affront to our democracy,

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Speaker 11: an affront to what makes so many of us proud

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Speaker 11: to be Americans, that we choose our own leaders.

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Speaker 3: It's interesting, creedy because Donald Trump doesn't appear to be

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Speaker 3: backing down from these reports, and he actually talked about

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Speaker 3: this when he was asked, he's maybe looking for a

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Speaker 3: job for Eric Adams at housing in urban development, maybe

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Speaker 3: in Saudi Arabia.

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Speaker 4: Do you see this report, I mean the New York

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Speaker 4: Times talking about a potential ambassadorship. Yeah, has Eric Adams

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Speaker 4: been to Saudi Arabia?

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Speaker 2: I don't know. They talk about Turkey a lot. But

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Speaker 2: let's hear from Donald Trump.

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Speaker 3: He actually got into this just last evening when he

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Speaker 3: was at the table with the tech Titans.

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Speaker 2: Here's what the President said, Are you.

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Speaker 12: Urging or encouraging any candidates in the New York City

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Speaker 12: mayor's race to drop out to clear the field?

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Speaker 7: No, I don't like to see a communist become mayor.

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Speaker 7: I will tell you that. And I don't think you

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Speaker 7: can win unless you have one on one Because somehow

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Speaker 7: he's gotten a little bit of a lead.

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Speaker 2: I would know.

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Speaker 7: I have no idea how that happened, but I'd prefer

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Speaker 7: not to have a communist mayor of New York City.

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Speaker 7: And you know that's what he is based on his

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Speaker 7: policy if you look at his statements in the past.

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Speaker 7: So I would I would like to see two people

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Speaker 7: drop out and have it be one on one, And.

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Speaker 3: I think that's a race there could be one, generating

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Speaker 3: a flurry of headlines.

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Speaker 2: Trump wants two way race for New York City mayor.

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Speaker 3: Adams considering dropping out of race after secret meeting in Florida.

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Speaker 3: Talks between Adams and Trump advisors center on Saudi ambassadorship. Apparently,

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Speaker 3: Eric Adams being town next week now, according to the

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Speaker 3: New Post, is going to sit down with Steve Whitcoff

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Speaker 3: to talk about next steps. Got to play this to

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Speaker 3: the panel. Rick Davis and Genie Shanzano are with us

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Speaker 3: now Bloomberg Politics contributors. Genie is in New York as

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Speaker 3: we speak, Democracy visiting fellow at Harvard Kennedy School's Ash Center.

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Speaker 3: Rick Davis partner at Stone Core Capital, or Republican strategist.

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Speaker 3: As the Democrat on the panel here, Genie, I don't

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Speaker 3: know your thoughts of Donald Trump removing the Republican candidate from.

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Speaker 2: This race, but where is this going?

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Speaker 3: We will the President of the United States dictate the

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Speaker 3: next mayor of New York.

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Speaker 13: That is what mum Downey says he is trying to do,

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Speaker 13: you know, and it is stunning.

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Speaker 6: I will tell you.

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Speaker 13: The local media here had something of a mini field

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Speaker 13: day because the mayor was supposed to have a press

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Speaker 13: conference that got canceled. Not that there was any direct

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Speaker 13: tie between this, but of course every little movie makes

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Speaker 13: now is watch to see is he going to be

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Speaker 13: announcing he's out of this race or suspending his campaign.

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Speaker 13: I think what's so stunning is that most of us

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Speaker 13: thought that Mundani was something of a gift to the Republicans,

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Speaker 13: like this was going to be the Republican foil. You know,

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Speaker 13: he is the new Speaker of the House, Nancy Pelosi

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Speaker 13: or AOC and Republicans will be running against him for

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Speaker 13: the next several election cycles. And yet what do we

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Speaker 13: see as we see Donald Trump saying no, we want

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Speaker 13: him out, which is quite stunning. And I thought it

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Speaker 13: was interesting that Donald Trump has now re categorized him.

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Speaker 13: He is no longer a democratic socialist, he is now

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Speaker 13: a communist. But I guess we can't let little semantics

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Speaker 13: get in the way.

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Speaker 4: Rick way in here and maybe explore the hypothetical with us,

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Speaker 4: if you can, if this does ultimately become a one

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Speaker 4: on one race with Andrew Cuomo versus or Madonni, does

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Speaker 4: Andrew Clomo have a shot here?

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Speaker 14: Well, you know, assuming that the sliwa and Adams have

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Speaker 14: probably somewhere between twenty five and thirty percent of the vote.

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Speaker 14: That shift makes a difference, right, I mean that would

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Speaker 14: be a material impact on the race if it all

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Speaker 14: went to Cuomo. The problem is we don't know if

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Speaker 14: they're all going to go to Cuomo. A lot of

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Speaker 14: them are going to probably just stay at home. A

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Speaker 14: lot of Republicans who back Sliwa are never going to

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Speaker 14: vote for Cuomo. They're never going to vote for Mandami,

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Speaker 14: so they're not going to vote. So it's kind of hard.

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Speaker 14: It's very much a moving average, right, But without them

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Speaker 14: out of the race, there's no chance Mario Cuomo can win,

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Speaker 14: and so it's really just a shut in the dark

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Speaker 14: at this stage. You've got, you know, only a few

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Speaker 14: months left before the election. This is going to take

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Speaker 14: some time to sort of play its way out as

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Speaker 14: far as getting these folks out, and a lot of

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Speaker 14: attention on Adams and this offer potentially to become an

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Speaker 14: ambassador or something like that, but we're not hear much

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Speaker 14: about Sliva, who's got more support than Adams does, and

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Speaker 14: he's already said I don't want a job, which would

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Speaker 14: make sense.

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Speaker 2: So how do you get him out of the race,

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Speaker 2: because he's.

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Speaker 14: Really probably the more important candidate to move out of

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Speaker 14: there than Adams at this stage, just because of the

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Speaker 14: basis of he's got twice as much.

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Speaker 3: Support, Curtis Lee wa got the whole makeover, and every

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Speaker 3: means he's not going to drop out of the race.

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Speaker 2: Now.

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Speaker 3: I'm guessing right, by the way, I'm guessing Andrew Cuomo

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Speaker 3: would love to get some Mario Cuomo signs up there.

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Speaker 3: I know we're both old, Rick, but Andrew Cuomo, of course,

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Speaker 3: who's who we're talking about here. But I just I'm

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Speaker 3: curious Rick Ageenie touched on something important. I thought, Mom

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Speaker 3: Donnie was the foil that Donald Trump wanted for the

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Speaker 3: next couple of years. Do you believe his intentions here?

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Speaker 10: Not really.

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Speaker 14: I mean, look, you got to understand him. By the way,

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Speaker 14: sorry for that Mario slip. I've been fighting him, you know,

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Speaker 14: for most of my career, so he's still embedded in

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Speaker 14: my brain. Donald Trump has a lot of his business,

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Speaker 14: uh in New York. He has a lot of assets

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Speaker 14: in New York. He is Floridian now, but his entire

442
00:23:09,760 --> 00:23:13,480
Speaker 14: life has been defined by New York. And I do

443
00:23:13,520 --> 00:23:17,159
Speaker 14: think there is an aspect to that that is, you know,

444
00:23:17,240 --> 00:23:19,200
Speaker 14: all his friends, A lot of the people sitting around

445
00:23:19,200 --> 00:23:21,440
Speaker 14: at dinner last night, you know, have.

446
00:23:21,960 --> 00:23:22,840
Speaker 10: Homes in New York.

447
00:23:22,960 --> 00:23:27,240
Speaker 14: They don't want to see, uh, a socialist, as Genie

448
00:23:27,280 --> 00:23:31,960
Speaker 14: puts it, put in as mayor. And so yeah, we're

449
00:23:31,960 --> 00:23:34,960
Speaker 14: going to have a time of our life if he

450
00:23:35,000 --> 00:23:35,760
Speaker 14: becomes mayor.

451
00:23:36,040 --> 00:23:37,120
Speaker 10: And you know, we can.

452
00:23:37,040 --> 00:23:40,879
Speaker 14: Talk about this leftist surge inside the Democratic Party and

453
00:23:40,920 --> 00:23:43,120
Speaker 14: it'll be very hard for Democrats to run away from

454
00:23:43,280 --> 00:23:47,000
Speaker 14: their largest city mayor in the country. But at the

455
00:23:47,080 --> 00:23:49,879
Speaker 14: end of the day, it's it's bad for New York City.

456
00:23:50,680 --> 00:23:54,840
Speaker 14: Donald Trump knows that, Uh, it's it. And so I

457
00:23:54,840 --> 00:23:58,159
Speaker 14: think a lot of what's motivating him is to you know,

458
00:23:58,320 --> 00:24:02,240
Speaker 14: do no harm to New York City, his assets, his businesses,

459
00:24:02,320 --> 00:24:06,399
Speaker 14: his friends' businesses. I mean, it's it's it could be

460
00:24:06,520 --> 00:24:09,959
Speaker 14: having a dramatic effect on his opinion about what to

461
00:24:10,000 --> 00:24:10,920
Speaker 14: do about this race.

462
00:24:12,800 --> 00:24:15,879
Speaker 4: Jenny way In here again explore the hypothetical with me.

463
00:24:15,960 --> 00:24:18,600
Speaker 4: If Eric Adams is no longer in the race and

464
00:24:18,640 --> 00:24:22,440
Speaker 4: he is being considered for many roles within the cabinet,

465
00:24:22,520 --> 00:24:26,960
Speaker 4: whether it's at hud or whether it's at in Saudi Arabia,

466
00:24:27,240 --> 00:24:29,320
Speaker 4: would Eric Adams make a good ambassador.

467
00:24:29,320 --> 00:24:33,080
Speaker 6: What do you think, Well, Gritty.

468
00:24:32,720 --> 00:24:36,320
Speaker 13: He hasn't made a very good mayor, so I you know,

469
00:24:36,440 --> 00:24:39,080
Speaker 13: maybe it would be a better job for him than

470
00:24:39,320 --> 00:24:41,120
Speaker 13: the mayor mayoralty.

471
00:24:42,200 --> 00:24:44,480
Speaker 6: You know, he was subject.

472
00:24:44,200 --> 00:24:48,320
Speaker 13: Not long ago to public corruption charges that Donald Trump's

473
00:24:48,400 --> 00:24:53,200
Speaker 13: doj pulled back on and those were dropped. So this

474
00:24:53,280 --> 00:24:56,760
Speaker 13: is somebody with a record. This is somebody who has

475
00:24:56,880 --> 00:25:00,280
Speaker 13: had you know, a large lot of serious charges brought

476
00:25:00,280 --> 00:25:05,320
Speaker 13: against him, by the way, Andrew Cuomo as well. Certainly

477
00:25:05,520 --> 00:25:08,879
Speaker 13: neither of them found guilty or anything like that, although

478
00:25:09,320 --> 00:25:13,679
Speaker 13: Governor Cuomo did you know, leave his important post as

479
00:25:13,720 --> 00:25:15,960
Speaker 13: a result. I would say a lot of this is

480
00:25:16,000 --> 00:25:18,920
Speaker 13: being driven by polls which show that if it's a

481
00:25:18,960 --> 00:25:24,360
Speaker 13: two way race, Andrew Cuomo certainly can be competitive, with

482
00:25:24,440 --> 00:25:28,359
Speaker 13: even one poll showing him beating Mumdani that said, he

483
00:25:28,520 --> 00:25:32,000
Speaker 13: lost to Mumdani in the primary by double digits. I

484
00:25:32,040 --> 00:25:35,320
Speaker 13: would also say there is a very serious concern I

485
00:25:35,320 --> 00:25:38,040
Speaker 13: would think amongst Donald Trump and many people in the

486
00:25:38,080 --> 00:25:42,639
Speaker 13: administration that the financial capital of the world would be

487
00:25:42,800 --> 00:25:45,640
Speaker 13: certainly America, but the world as well would be run

488
00:25:45,720 --> 00:25:49,639
Speaker 13: by somebody who describes themselves as a democratic socialist and

489
00:25:49,720 --> 00:25:53,800
Speaker 13: has policies that are very, very out of the norm

490
00:25:53,960 --> 00:25:56,920
Speaker 13: of what we have seen in the United States. There

491
00:25:57,080 --> 00:26:00,720
Speaker 13: was a very interesting study. You know, he talks about

492
00:26:00,760 --> 00:26:04,880
Speaker 13: no need for billionaires, but roughly half of the income

493
00:26:04,920 --> 00:26:07,560
Speaker 13: tax in New York City is paid for by the

494
00:26:07,600 --> 00:26:10,800
Speaker 13: top two percent. Imagine what that would do to New

495
00:26:10,840 --> 00:26:12,639
Speaker 13: York City if those people flee.

496
00:26:12,720 --> 00:26:13,800
Speaker 6: And flee they might.

497
00:26:14,200 --> 00:26:18,200
Speaker 13: So there's a very real serious economic repercussions to all

498
00:26:18,240 --> 00:26:20,639
Speaker 13: of this depending on if he does win, and he

499
00:26:20,800 --> 00:26:23,280
Speaker 13: certainly could win if things stay as they are now.

500
00:26:24,480 --> 00:26:26,479
Speaker 3: President Trump is not only weighing in on the New

501
00:26:26,560 --> 00:26:28,800
Speaker 3: York mayoral race, He's weighing in on what will be

502
00:26:29,320 --> 00:26:32,800
Speaker 3: a barnburner of a congressional race now that Jerry Nadler

503
00:26:32,840 --> 00:26:34,880
Speaker 3: has decided to not run for reelection.

504
00:26:35,000 --> 00:26:36,920
Speaker 2: And he's untruth social about this too.

505
00:26:37,000 --> 00:26:40,080
Speaker 3: Rick Davis, the President writes, I'll be careful here, but

506
00:26:40,160 --> 00:26:42,480
Speaker 3: this is the president. Jerry Nadler, one of the most

507
00:26:42,520 --> 00:26:46,600
Speaker 3: disgusting congressmen in USA history, is at long last calling

508
00:26:46,600 --> 00:26:50,399
Speaker 3: it quits. He's finally leaving Congress. I've been beating this bum,

509
00:26:50,440 --> 00:26:53,480
Speaker 3: he says, for forty years. First as a New York

510
00:26:53,520 --> 00:26:55,800
Speaker 3: City developer, where he opposed me for no reason at

511
00:26:55,800 --> 00:26:58,399
Speaker 3: every corner, but could never stop me from getting the

512
00:26:58,480 --> 00:27:01,840
Speaker 3: job done. He goes on to talk about than running

513
00:27:01,880 --> 00:27:05,480
Speaker 3: against him as president, where this psychopathic nut job, together

514
00:27:05,560 --> 00:27:08,720
Speaker 3: with crazy Nancy Pelosi, impeached me twice and lost.

515
00:27:08,760 --> 00:27:09,600
Speaker 2: I could keep going.

516
00:27:09,720 --> 00:27:12,160
Speaker 3: If you're with us on Bloomberg TV, you see it's

517
00:27:12,160 --> 00:27:13,320
Speaker 3: a pretty long post here.

518
00:27:13,240 --> 00:27:14,440
Speaker 2: Rick, We've got less than a minute.

519
00:27:14,440 --> 00:27:17,520
Speaker 3: Will Donald Trump be stumping in New York for these

520
00:27:17,560 --> 00:27:18,159
Speaker 3: two races?

521
00:27:19,920 --> 00:27:23,520
Speaker 14: You know, he may stump if there's a decent Republican

522
00:27:23,520 --> 00:27:26,760
Speaker 14: in the Natler district, which may be irrelevant because it's

523
00:27:26,760 --> 00:27:30,560
Speaker 14: a pretty democratic district. And you can tell, I mean,

524
00:27:30,640 --> 00:27:33,880
Speaker 14: Nadler should be very happy that he has had such

525
00:27:33,920 --> 00:27:36,280
Speaker 14: a big impact on the psyche of Donald Trump.

526
00:27:38,840 --> 00:27:42,439
Speaker 2: That's pretty impressive. He calls him a lightweight in the

527
00:27:42,480 --> 00:27:44,240
Speaker 2: same post. I don't know. We got to pick one.

528
00:27:44,320 --> 00:27:47,879
Speaker 3: Rick, Thank you, Genie, Thank you Bloomberg Politics contributors Rick

529
00:27:47,960 --> 00:27:50,560
Speaker 3: Davis and Jeanie Shanzeno. We always learned something with these two.

530
00:27:50,800 --> 00:27:53,880
Speaker 3: An important conversation I had with Austin Goulsby only here

531
00:27:53,960 --> 00:27:56,959
Speaker 3: on Bloomberg TV and radio. Stay with us on Balance

532
00:27:57,000 --> 00:27:59,160
Speaker 3: of Power. We'll have much more coming up after this.

533
00:28:03,960 --> 00:28:07,480
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch

534
00:28:07,520 --> 00:28:10,600
Speaker 1: us live weekdays at noon and five pm Eastern on

535
00:28:10,720 --> 00:28:13,960
Speaker 1: Apple Cocklay and Android Auto with the Bloomberg Business App.

536
00:28:14,000 --> 00:28:17,000
Speaker 1: You can also listen live on Amazon Alexa from our

537
00:28:17,040 --> 00:28:18,359
Speaker 1: flagship New York station.

538
00:28:18,880 --> 00:28:21,560
Speaker 2: Just say Alexa Play Bloomberg eleven thirty.

539
00:28:22,920 --> 00:28:25,960
Speaker 3: I'm Jill Matthew. Yes, indeed, alongside Credie Gupta in Washington.

540
00:28:26,040 --> 00:28:28,040
Speaker 3: Great to have you with us on the Friday edition

541
00:28:28,119 --> 00:28:30,159
Speaker 3: of Balance of Power. Jobs Day and a lot of

542
00:28:30,200 --> 00:28:32,560
Speaker 3: questions about the trajectory of our economy. As we had

543
00:28:33,040 --> 00:28:36,760
Speaker 3: for the next FED meeting here in Creedy, there are

544
00:28:36,840 --> 00:28:39,360
Speaker 3: concerns about a slowdown in the job market, which may

545
00:28:39,360 --> 00:28:42,000
Speaker 3: well justify the interest rate cuts that President Trump has

546
00:28:42,000 --> 00:28:42,520
Speaker 3: been pushing for.

547
00:28:42,840 --> 00:28:45,240
Speaker 4: There's the slowdown, there's We knew we were kind of

548
00:28:45,240 --> 00:28:47,880
Speaker 4: getting on the off ramp of hiring anyway, but the

549
00:28:48,000 --> 00:28:50,760
Speaker 4: margin of that off ramp is really what's surprising here.

550
00:28:50,760 --> 00:28:53,560
Speaker 4: The estimate was seventy five thousand. We're getting twenty two thousand.

551
00:28:53,560 --> 00:28:55,280
Speaker 4: We had an along earlier come and talking to us

552
00:28:55,320 --> 00:28:57,720
Speaker 4: about the fact that we might actually get an upward provision.

553
00:28:57,760 --> 00:29:00,680
Speaker 4: But even say fifty thousand, which was HERB case scenario.

554
00:29:01,160 --> 00:29:02,200
Speaker 6: Doesn't sound too juicy.

555
00:29:02,400 --> 00:29:05,040
Speaker 3: You'd still be short, I guess, technically of the estimate

556
00:29:05,040 --> 00:29:06,760
Speaker 3: in this particular case. So glad to say that we're

557
00:29:06,840 --> 00:29:09,680
Speaker 3: joined today in Washington by Michael McKee. He's been down

558
00:29:09,680 --> 00:29:12,240
Speaker 3: for a couple of days with the Steven Myron hearing,

559
00:29:12,280 --> 00:29:14,360
Speaker 3: and now for an important conversation that we're going to

560
00:29:14,360 --> 00:29:16,480
Speaker 3: bring you with Austin Goolsby, of course, the president of

561
00:29:16,480 --> 00:29:19,880
Speaker 3: the Fed Reserve Bank of Chicago. Michael is Bloomberg's international

562
00:29:19,880 --> 00:29:24,120
Speaker 3: economics and policy correspondent. And this is the day before

563
00:29:24,280 --> 00:29:26,600
Speaker 3: the blackout period starts, so this is the last we're

564
00:29:26,600 --> 00:29:26,959
Speaker 3: going to hear.

565
00:29:27,000 --> 00:29:28,920
Speaker 12: We got about ten hours to go, so we're hoping

566
00:29:28,960 --> 00:29:31,560
Speaker 12: that we can squeeze in nine and a half. With Austin.

567
00:29:31,640 --> 00:29:35,480
Speaker 12: Here a full view of what the Fed is thinking.

568
00:29:35,560 --> 00:29:37,520
Speaker 2: Well, what's on your mind as you read the data

569
00:29:37,720 --> 00:29:38,240
Speaker 2: this morning?

570
00:29:38,280 --> 00:29:41,080
Speaker 3: The White House is framing this as kind of a

571
00:29:41,120 --> 00:29:43,040
Speaker 3: one off, even though last time we got a bad

572
00:29:43,160 --> 00:29:45,120
Speaker 3: job support the BLS commissioner was fired.

573
00:29:45,160 --> 00:29:46,440
Speaker 2: Michael, how do we interpret this?

574
00:29:46,520 --> 00:29:49,280
Speaker 12: Well, that's an improvement, I suppose. In the White House response, Ye,

575
00:29:49,720 --> 00:29:52,120
Speaker 12: I mean you can't blame him. It's the same thing

576
00:29:52,160 --> 00:29:54,520
Speaker 12: for any party. When the news is bad, you try

577
00:29:54,520 --> 00:29:56,920
Speaker 12: to spin it as good. In this case, the news

578
00:29:56,960 --> 00:30:00,120
Speaker 12: is bad, but the president may get what he he

579
00:30:00,160 --> 00:30:02,880
Speaker 12: was looking for. It's not the reason he wants to

580
00:30:02,920 --> 00:30:05,000
Speaker 12: get what he was looking for, but it's likely he's

581
00:30:05,040 --> 00:30:08,880
Speaker 12: going to get interest rate cut. So I mean, we'll

582
00:30:08,920 --> 00:30:11,840
Speaker 12: ask the president goals be about that in a few minutes.

583
00:30:11,880 --> 00:30:15,520
Speaker 12: But it seems like Jay pillill set the stage for that,

584
00:30:15,880 --> 00:30:18,040
Speaker 12: and these numbers certainly ratify that decision.

585
00:30:19,640 --> 00:30:22,480
Speaker 4: There were still questions though about just kind kind of

586
00:30:22,640 --> 00:30:24,719
Speaker 4: hiring pauses or freezes that we saw where we did

587
00:30:24,800 --> 00:30:26,200
Speaker 4: have that negative revision's number.

588
00:30:26,400 --> 00:30:27,960
Speaker 6: Are we expecting a bounce back here?

589
00:30:28,000 --> 00:30:30,120
Speaker 4: If this is a one time data set, Does it

590
00:30:30,160 --> 00:30:31,000
Speaker 4: get better from here?

591
00:30:32,000 --> 00:30:35,920
Speaker 12: There is a lot of theorizing that it probably will,

592
00:30:35,920 --> 00:30:39,000
Speaker 12: that maybe this is kind of the low period right now,

593
00:30:39,320 --> 00:30:43,680
Speaker 12: that once the uncertainty over tariffs lifts some more and

594
00:30:43,720 --> 00:30:47,920
Speaker 12: the stimulus from the big beautiful Bill starts to flow

595
00:30:47,960 --> 00:30:51,640
Speaker 12: into the economy, that company investment will pick up, and

596
00:30:51,720 --> 00:30:57,440
Speaker 12: that maybe some of this will rebound, but we don't

597
00:30:57,480 --> 00:30:58,040
Speaker 12: know for sure.

598
00:30:58,560 --> 00:31:01,400
Speaker 2: Well, it's a great pleasure to have you with us here.

599
00:31:01,720 --> 00:31:06,080
Speaker 3: In Washington, and of course President Golesby in Chicago.

600
00:31:06,240 --> 00:31:07,760
Speaker 2: Michael, why don't you take it away. We're going to

601
00:31:07,800 --> 00:31:08,440
Speaker 2: be watching and listen.

602
00:31:08,720 --> 00:31:12,200
Speaker 12: All right, we'd like to welcome Austin Golesby to our

603
00:31:12,240 --> 00:31:15,240
Speaker 12: broadcast have Bounce Power here on Blooeberg Television and on

604
00:31:15,400 --> 00:31:20,040
Speaker 12: radio worldwide. Austin, you've heard us talking here. Twenty two

605
00:31:20,040 --> 00:31:24,160
Speaker 12: thousand jobs, four point three percent unemployment. How's that economy

606
00:31:24,160 --> 00:31:24,960
Speaker 12: of yours holding up?

607
00:31:26,600 --> 00:31:27,000
Speaker 10: Well?

608
00:31:27,320 --> 00:31:30,120
Speaker 15: You know, you never make too much of any one month,

609
00:31:30,200 --> 00:31:32,960
Speaker 15: but it's definitely below what we would consider the break

610
00:31:33,080 --> 00:31:37,200
Speaker 15: even for job growth. The only thing I want to

611
00:31:37,280 --> 00:31:40,840
Speaker 15: highlight is we're getting some cross currents in the data,

612
00:31:40,880 --> 00:31:44,520
Speaker 15: and so we want to be careful thinking about where

613
00:31:44,560 --> 00:31:49,120
Speaker 15: we are in the business cycle. We know that in

614
00:31:49,200 --> 00:31:52,840
Speaker 15: twenty twenty four, and going back into twenty twenty three

615
00:31:52,920 --> 00:31:58,280
Speaker 15: as well, when immigration was high, we were getting jobs

616
00:31:58,400 --> 00:32:01,520
Speaker 15: numbers of one hundred and eighty five thousand a month,

617
00:32:01,720 --> 00:32:04,320
Speaker 15: which was faster than the break even, but it wasn't

618
00:32:04,360 --> 00:32:07,080
Speaker 15: a very good indication of where we were in the

619
00:32:07,120 --> 00:32:10,680
Speaker 15: business cycle. And that could be at work in these

620
00:32:10,760 --> 00:32:14,840
Speaker 15: numbers too, that they could be artificially lower than the

621
00:32:14,880 --> 00:32:18,960
Speaker 15: break even because immigration's going the other way and labor

622
00:32:19,000 --> 00:32:23,920
Speaker 15: supply the other way. So for me, I like looking

623
00:32:23,960 --> 00:32:27,200
Speaker 15: at a at a broader portfolio of numbers, and I

624
00:32:27,240 --> 00:32:30,760
Speaker 15: think things that are rates and ratios prove to be

625
00:32:30,800 --> 00:32:34,760
Speaker 15: a little more accurate as indicators of business cycle. Last year,

626
00:32:35,680 --> 00:32:40,160
Speaker 15: those include the unemployment rate, the layoff rate, the vacancy rate,

627
00:32:40,200 --> 00:32:41,000
Speaker 15: the hiring rate.

628
00:32:41,200 --> 00:32:43,560
Speaker 10: And you see a million of those.

629
00:32:44,760 --> 00:32:49,000
Speaker 12: You've called them the four horsemen of the labor.

630
00:32:48,400 --> 00:32:50,400
Speaker 10: Four horsemen of truth on the labor market.

631
00:32:50,520 --> 00:32:55,280
Speaker 12: Yeah, the labor market does seem though, to have deteriorated some.

632
00:32:55,440 --> 00:32:58,520
Speaker 12: Does this report today basically lock in or rate cut

633
00:32:58,520 --> 00:33:01,200
Speaker 12: for September seventeenth.

634
00:33:02,120 --> 00:33:03,040
Speaker 10: You know the rules.

635
00:33:03,400 --> 00:33:05,880
Speaker 15: I'm not allowed to speak for the rest of the FED,

636
00:33:05,960 --> 00:33:09,680
Speaker 15: the FMCAM only speak for myself. I want to get

637
00:33:10,240 --> 00:33:15,640
Speaker 15: more information. I'm still undecided as we're going into this,

638
00:33:16,040 --> 00:33:20,040
Speaker 15: if it looks like the labor market is deteriorating on

639
00:33:20,200 --> 00:33:23,360
Speaker 15: grounds more than just the monthly payroll numbers, because I

640
00:33:23,400 --> 00:33:28,680
Speaker 15: want to emphasize again, when you have population growth changing

641
00:33:28,720 --> 00:33:33,560
Speaker 15: around behind the scenes, just the aggregate monthly payroll growth

642
00:33:33,840 --> 00:33:37,320
Speaker 15: is not a great indicator of the business cycle. If

643
00:33:37,320 --> 00:33:42,960
Speaker 15: we start to see deterioration across all the four horsemen

644
00:33:43,000 --> 00:33:46,440
Speaker 15: of truth in the labor market, the unemployment rate, the

645
00:33:46,520 --> 00:33:50,200
Speaker 15: hiring rate. If we were to start seeing layoffs, then

646
00:33:50,600 --> 00:33:53,000
Speaker 15: I think we would be nervous on the employment side

647
00:33:53,040 --> 00:33:56,800
Speaker 15: of the mandate. But we can't disregard We got to

648
00:33:56,840 --> 00:34:01,920
Speaker 15: look at the inflation side too, And the more mild

649
00:34:02,000 --> 00:34:05,440
Speaker 15: numbers we get on inflation, the better I'll feel about

650
00:34:05,520 --> 00:34:08,720
Speaker 15: just focusing on the labor market. But in the last

651
00:34:09,000 --> 00:34:14,200
Speaker 15: inflation reports, we also had this uptick in inflation coming

652
00:34:14,200 --> 00:34:16,839
Speaker 15: from services, so I think we want to make sure

653
00:34:16,880 --> 00:34:20,400
Speaker 15: that that that's more of a blip and not a

654
00:34:20,680 --> 00:34:23,000
Speaker 15: more ominous indicator.

655
00:34:24,040 --> 00:34:26,520
Speaker 12: Well, let me ask this, because you'll be in the

656
00:34:26,560 --> 00:34:29,640
Speaker 12: blackout when we get the CPI report next week. What

657
00:34:29,719 --> 00:34:32,319
Speaker 12: would it take for you to hold off on a

658
00:34:32,400 --> 00:34:37,880
Speaker 12: rate cut In terms of an inflation result, I don't know.

659
00:34:38,239 --> 00:34:40,520
Speaker 15: It's not going to be a specific number of if

660
00:34:40,600 --> 00:34:44,040
Speaker 15: you saw x number than you would change it would be.

661
00:34:44,480 --> 00:34:46,719
Speaker 15: We're trying to get the through line of where the

662
00:34:46,760 --> 00:34:52,600
Speaker 15: economy is, and one side of that shows relative weakness

663
00:34:52,920 --> 00:34:56,279
Speaker 15: in the job market, at least measured by monthly payroll

664
00:34:57,120 --> 00:35:03,000
Speaker 15: more stability looking at more accurate measures, and then on

665
00:35:03,040 --> 00:35:07,960
Speaker 15: the other side. If the inflation numbers come in and

666
00:35:08,000 --> 00:35:14,759
Speaker 15: they give some indication that the inflation from tariffs is

667
00:35:14,800 --> 00:35:19,319
Speaker 15: not looking to be persistent, or that the uptick in

668
00:35:19,320 --> 00:35:25,400
Speaker 15: inflation on services again does not look to be persistent,

669
00:35:25,880 --> 00:35:29,280
Speaker 15: looks to be more like it was just a temporary

670
00:35:29,280 --> 00:35:32,680
Speaker 15: blip in the data, then that would that would provide

671
00:35:32,719 --> 00:35:36,160
Speaker 15: comfort to me that we're still on the what I

672
00:35:36,360 --> 00:35:38,919
Speaker 15: was calling the golden path, and that race can come

673
00:35:38,960 --> 00:35:39,800
Speaker 15: down a fair amount.

674
00:35:41,200 --> 00:35:44,480
Speaker 12: Well, the administration thinks that you've fallen off the path.

675
00:35:44,640 --> 00:35:50,160
Speaker 12: The universal response from administration officials today, including the President,

676
00:35:50,360 --> 00:35:53,200
Speaker 12: is that you're still too late, that you should have

677
00:35:53,239 --> 00:35:54,120
Speaker 12: been cutting earlier.

678
00:35:57,760 --> 00:35:59,879
Speaker 10: Factually, yes, that is what they said.

679
00:36:01,000 --> 00:36:05,480
Speaker 15: My view is, we go to the FMC meeting and

680
00:36:05,960 --> 00:36:09,200
Speaker 15: we look at the data and the economic outlook as

681
00:36:09,239 --> 00:36:12,200
Speaker 15: best we can to figure out the through line. A

682
00:36:12,200 --> 00:36:15,680
Speaker 15: lot of people outside the FOMC have a lot of opinions,

683
00:36:16,000 --> 00:36:21,200
Speaker 15: but the independence of the monetary authority from political interference

684
00:36:21,280 --> 00:36:24,400
Speaker 15: is critically important if we don't want inflation to come.

685
00:36:24,239 --> 00:36:29,400
Speaker 12: Back, well for the economy's sake, are you behind the curve?

686
00:36:32,600 --> 00:36:35,440
Speaker 15: It depends what you make of what the through line

687
00:36:35,520 --> 00:36:38,040
Speaker 15: is on the economy. So as I say, if you

688
00:36:38,120 --> 00:36:41,880
Speaker 15: take the payroll employment numbers, they show weakness. If you

689
00:36:41,960 --> 00:36:45,759
Speaker 15: take the open job vacancy rate, or you look at

690
00:36:45,800 --> 00:36:48,880
Speaker 15: the layoff rate, they don't show weakness. They show pretty

691
00:36:48,920 --> 00:36:52,799
Speaker 15: stable full employment kind of values, sort of where they

692
00:36:52,840 --> 00:36:57,360
Speaker 15: were sometimes even better than they were pre COVID in

693
00:36:57,480 --> 00:37:01,000
Speaker 15: what was a pretty tight labor market. The inflation side,

694
00:37:01,040 --> 00:37:06,120
Speaker 15: we've had some really benign readings which would not give

695
00:37:06,200 --> 00:37:11,560
Speaker 15: you any indigestion on that side. But we now have

696
00:37:11,640 --> 00:37:17,160
Speaker 15: at least one report where you see services inflation bumping up,

697
00:37:17,200 --> 00:37:20,640
Speaker 15: and services inflation is not a thing that would likely

698
00:37:20,680 --> 00:37:25,840
Speaker 15: be coming from tariffs, so would tend not to be

699
00:37:27,080 --> 00:37:30,600
Speaker 15: a one time cost increase. So we got some currents

700
00:37:30,600 --> 00:37:34,440
Speaker 15: that we have to balance out here, and that's fine.

701
00:37:34,520 --> 00:37:39,760
Speaker 15: This is what always happens. There are conditions change. The

702
00:37:39,760 --> 00:37:43,680
Speaker 15: central bank is supposed to be the steady hand, and

703
00:37:44,080 --> 00:37:49,799
Speaker 15: there's political argument, and there are market arguments up down sideways.

704
00:37:50,200 --> 00:37:52,600
Speaker 10: They have a lot of variability.

705
00:37:52,480 --> 00:37:55,840
Speaker 15: And as I say, we're supposed to be taking the

706
00:37:55,840 --> 00:37:57,800
Speaker 15: steady hand and figuring out the through line.

707
00:37:59,360 --> 00:38:01,520
Speaker 12: The president's argument seems to be, at least the way

708
00:38:01,560 --> 00:38:04,200
Speaker 12: he was talking last night, is yeah, these numbers may

709
00:38:04,400 --> 00:38:08,680
Speaker 12: be bad, but kind of challenging. Channeling his inner Brooklyn

710
00:38:08,680 --> 00:38:12,600
Speaker 12: Dodger fandom, he said, wait till next year. Next year,

711
00:38:12,640 --> 00:38:15,319
Speaker 12: when all these tech palaces are built, we're going to

712
00:38:15,320 --> 00:38:17,480
Speaker 12: see hiring like crazy. You've got to put in a

713
00:38:17,560 --> 00:38:22,240
Speaker 12: new forecast for unemployment and for inflation at the next meeting.

714
00:38:22,600 --> 00:38:26,200
Speaker 12: Do you see a rebound ahead and stronger economic growth

715
00:38:26,280 --> 00:38:28,839
Speaker 12: and employment growth in twenty twenty six?

716
00:38:31,480 --> 00:38:37,279
Speaker 15: Yes, I mean I think the to me, until we

717
00:38:37,480 --> 00:38:42,160
Speaker 15: get more convincing evidence otherwise, I still think we're most

718
00:38:42,400 --> 00:38:46,080
Speaker 15: likely in a kind of a full employment space where

719
00:38:45,719 --> 00:38:49,960
Speaker 15: we're generating jobs in the economy continues to grow. This

720
00:38:50,640 --> 00:38:56,879
Speaker 15: slowed down in payroll employment, the aggregate jobs number, as

721
00:38:56,920 --> 00:39:00,360
Speaker 15: I say, you got to be extremely careful taking as

722
00:39:00,360 --> 00:39:04,960
Speaker 15: an indicator of the business cycle when things like immigration

723
00:39:05,560 --> 00:39:10,200
Speaker 15: or labor supply and labor force participation are moving around

724
00:39:10,640 --> 00:39:14,600
Speaker 15: behind the scenes. So to the extent that anybody's saying

725
00:39:14,640 --> 00:39:16,919
Speaker 15: they think it's a strong job market and the job

726
00:39:16,960 --> 00:39:20,640
Speaker 15: market may get even stronger going into twenty six, that's

727
00:39:20,800 --> 00:39:27,600
Speaker 15: entirely a possibility. And if it is, to me, that's

728
00:39:27,680 --> 00:39:32,440
Speaker 15: still on the golden path, that we're around stable fuel employment.

729
00:39:34,520 --> 00:39:38,880
Speaker 12: We can't unfortunately, avoid politics in these situations these days.

730
00:39:38,920 --> 00:39:42,480
Speaker 12: Just a few hours ago, Treasury Secretary Scott Bessen came

731
00:39:42,520 --> 00:39:44,920
Speaker 12: out with quite a broadside against the Fed in the

732
00:39:44,960 --> 00:39:48,080
Speaker 12: Wall Street Journal, laying out a lengthy bill of particulars

733
00:39:48,400 --> 00:39:52,200
Speaker 12: against the Central Bank. Your research is bad, your forecasts

734
00:39:52,200 --> 00:39:56,480
Speaker 12: are bad. You've contributed greatly to income inequality. You've destroyed

735
00:39:56,520 --> 00:39:59,920
Speaker 12: the housing market, blurred the lines between fiscal and monetary policy,

736
00:40:00,440 --> 00:40:04,440
Speaker 12: and created a culture in Washington where policymakers rely on

737
00:40:04,520 --> 00:40:07,200
Speaker 12: the FED to bail them out after they make poor

738
00:40:07,239 --> 00:40:11,120
Speaker 12: fiscal choices. Are these criticisms fair or unfair?

739
00:40:14,640 --> 00:40:18,160
Speaker 15: That's for the American people, or the pundits or somebody

740
00:40:18,200 --> 00:40:20,799
Speaker 15: to decide. Like I say, what we do at the

741
00:40:20,840 --> 00:40:24,640
Speaker 15: Federal Open Market Committee is go down there as a

742
00:40:24,719 --> 00:40:28,480
Speaker 15: collection and do what the law requires us to do.

743
00:40:28,640 --> 00:40:34,319
Speaker 15: That is set monetary policy based on maximizing employment.

744
00:40:33,880 --> 00:40:35,360
Speaker 10: And stabilizing the prices.

745
00:40:35,760 --> 00:40:39,040
Speaker 15: At a moment like this, where we're getting shocks that

746
00:40:39,080 --> 00:40:44,200
Speaker 15: are pushing us in a stagflationary direction, driving down employment

747
00:40:44,280 --> 00:40:48,759
Speaker 15: and driving up prices simultaneously, that's a difficult environment for

748
00:40:48,840 --> 00:40:51,960
Speaker 15: the Central Bank to be in. I've been in the

749
00:40:52,040 --> 00:40:55,359
Speaker 15: FED for coming on three years, so I don't know

750
00:40:55,440 --> 00:41:03,160
Speaker 15: about the long historical litany of complaints that someone might have. Overall,

751
00:41:03,800 --> 00:41:06,359
Speaker 15: we just go there and do our job. That's what

752
00:41:06,400 --> 00:41:09,239
Speaker 15: the law requires us to do. And so I'm not

753
00:41:09,239 --> 00:41:11,759
Speaker 15: going to get into political argument about it.

754
00:41:13,080 --> 00:41:16,359
Speaker 12: Well, let me ask it this way. One of the

755
00:41:16,440 --> 00:41:19,040
Speaker 12: criticisms he makes is that the FED has a gain

756
00:41:19,080 --> 00:41:22,480
Speaker 12: of function problem. In other words, since the Great Financial Crisis,

757
00:41:22,480 --> 00:41:24,840
Speaker 12: you've had a lot of tools to the toolbox, including

758
00:41:25,160 --> 00:41:28,919
Speaker 12: quantitative easing, forward guidance, things like that, and the FED

759
00:41:28,960 --> 00:41:32,880
Speaker 12: also straight into climate change. You've heard those arguments before

760
00:41:32,920 --> 00:41:39,800
Speaker 12: and other things like that the fate idea for inflation.

761
00:41:41,040 --> 00:41:44,399
Speaker 12: Are any of those valid and anybody at the FED

762
00:41:44,520 --> 00:41:48,400
Speaker 12: working on whether or not they have worked as you

763
00:41:48,560 --> 00:41:50,600
Speaker 12: hoped and should be kept in the toolbox?

764
00:41:52,160 --> 00:41:55,879
Speaker 15: Well, yes, people are working and thinking about that all

765
00:41:55,920 --> 00:41:59,600
Speaker 15: the time, both at the FED and among economic researchers

766
00:42:00,080 --> 00:42:03,480
Speaker 15: terry researchers around the country. As I say, these are

767
00:42:03,520 --> 00:42:05,800
Speaker 15: a bunch of things that are from the years before

768
00:42:05,800 --> 00:42:07,920
Speaker 15: I was at the FED, I'm certainly not going to

769
00:42:08,200 --> 00:42:11,240
Speaker 15: speak to them. I don't have any privileged information about

770
00:42:11,560 --> 00:42:16,160
Speaker 15: how those those were determined. I think on overall dual

771
00:42:16,239 --> 00:42:19,719
Speaker 15: mandate grounds, you have to say that as you look

772
00:42:19,800 --> 00:42:24,040
Speaker 15: at twenty twenty three and twenty twenty four, we've got

773
00:42:24,080 --> 00:42:27,160
Speaker 15: the inflation. We're coming off a period where inflation was

774
00:42:27,239 --> 00:42:31,000
Speaker 15: well higher than the two percent inflation target, but we

775
00:42:31,280 --> 00:42:35,440
Speaker 15: succeeded in getting inflation down almost as much as it

776
00:42:35,480 --> 00:42:38,719
Speaker 15: has ever fallen in a single year, and for the

777
00:42:38,760 --> 00:42:43,439
Speaker 15: first time ever in the United States and probably of

778
00:42:43,480 --> 00:42:47,040
Speaker 15: any rich country in the world, we had that massive

779
00:42:47,080 --> 00:42:51,440
Speaker 15: of drop of inflation without having a recession, without the

780
00:42:51,560 --> 00:42:56,279
Speaker 15: unemployment rate rising dramatically. And that's what we should be

781
00:42:56,400 --> 00:42:59,879
Speaker 15: trying to do. That is absolutely our goal to carry

782
00:43:00,080 --> 00:43:02,680
Speaker 15: out the Golden Path and to continue to carry it

783
00:43:02,719 --> 00:43:03,240
Speaker 15: out now.

784
00:43:03,640 --> 00:43:05,960
Speaker 10: And that involves figuring out.

785
00:43:05,800 --> 00:43:08,480
Speaker 15: The through line of where we are in the economy,

786
00:43:08,840 --> 00:43:14,480
Speaker 15: not overreacting to one month's report or two weeks what

787
00:43:14,520 --> 00:43:16,200
Speaker 15: happened in the market two weeks ago.

788
00:43:16,600 --> 00:43:18,080
Speaker 10: The law is very clear.

789
00:43:18,520 --> 00:43:25,080
Speaker 15: If FOMC stabilizes prices, maximizes employment, doesn't say anything about

790
00:43:25,600 --> 00:43:29,840
Speaker 15: make administrations happy, make the stock market happy. None of

791
00:43:29,880 --> 00:43:33,000
Speaker 15: those are in the mandate. Congress has given us the mandate.

792
00:43:34,239 --> 00:43:36,480
Speaker 12: You know, they might want to change that mandate down

793
00:43:36,560 --> 00:43:41,879
Speaker 12: at sixteen hundred Pennsylvania Avenue. Ultimately, Treasury Secretary Beston says,

794
00:43:41,920 --> 00:43:45,400
Speaker 12: what's at stake is that that's credibility and political legitimacy.

795
00:43:45,760 --> 00:43:48,960
Speaker 12: Have you seen signs or has anybody suggested to you

796
00:43:49,120 --> 00:43:50,840
Speaker 12: that either of those have diminished.

797
00:43:53,280 --> 00:43:57,360
Speaker 10: No, I agree with those with those sentiments.

798
00:43:57,400 --> 00:44:01,440
Speaker 15: The credibility of any central bank, and the FED especially

799
00:44:01,800 --> 00:44:05,600
Speaker 15: is critically important, so that when you go through episodes

800
00:44:05,800 --> 00:44:10,279
Speaker 15: like happened coming out of COVID, where inflation goes way up,

801
00:44:10,640 --> 00:44:14,720
Speaker 15: but if you look at market expectations of what inflation

802
00:44:14,800 --> 00:44:18,799
Speaker 15: would be in the future, people believed the FED when

803
00:44:18,800 --> 00:44:20,759
Speaker 15: it said we're going to get inflation back down to

804
00:44:20,800 --> 00:44:24,840
Speaker 15: two percent. That is a sacred covenant between a central

805
00:44:24,880 --> 00:44:29,440
Speaker 15: bank and the American public that it's going to do

806
00:44:29,520 --> 00:44:37,080
Speaker 15: the job as the law requires it. So I and

807
00:44:37,760 --> 00:44:41,560
Speaker 15: everyone I know involved with the FED system is open

808
00:44:41,640 --> 00:44:47,080
Speaker 15: to criticisms, critiques and analyzes of models, how can they

809
00:44:47,120 --> 00:44:50,799
Speaker 15: be improved? Of forecasts, of the FED tools. All of

810
00:44:50,800 --> 00:44:52,680
Speaker 15: those things should be on the table. We should have

811
00:44:52,719 --> 00:44:57,120
Speaker 15: adult conversation about those how can we improve our decision making.

812
00:44:57,800 --> 00:45:02,279
Speaker 15: That's something different than should there be political interference with

813
00:45:02,360 --> 00:45:05,880
Speaker 15: the setting of monetary policy? Should the central bank not

814
00:45:06,120 --> 00:45:11,000
Speaker 15: be independent? And I'm totally opposed to taking away the

815
00:45:11,040 --> 00:45:16,040
Speaker 15: independence of the central bank, as are unanimously all economists

816
00:45:16,080 --> 00:45:19,640
Speaker 15: that I know of, because just look at places where

817
00:45:19,640 --> 00:45:23,920
Speaker 15: there is not central bank independence, inflation comes back, growth

818
00:45:23,920 --> 00:45:28,359
Speaker 15: is slower, unemployment is worse. So we really don't want

819
00:45:28,400 --> 00:45:31,560
Speaker 15: to go there, and I don't think I don't think

820
00:45:31,600 --> 00:45:32,799
Speaker 15: that's what they're calling for.

821
00:45:34,120 --> 00:45:35,880
Speaker 12: Unfortunately, I have to ask you one more question, and

822
00:45:36,000 --> 00:45:38,879
Speaker 12: Stephen Myron looks like he will be joining you at

823
00:45:38,920 --> 00:45:43,440
Speaker 12: the sixteenth and seventeenth of September meeting. He had some

824
00:45:43,480 --> 00:45:45,759
Speaker 12: not some nice things to say about you in his

825
00:45:45,920 --> 00:45:50,200
Speaker 12: paper on FED reform last year. Was your appointment, sinister?

826
00:45:50,640 --> 00:45:54,280
Speaker 12: Does he have a point about a revolving door between

827
00:45:54,800 --> 00:45:57,480
Speaker 12: political administrations and people who are on the FED.

828
00:45:59,239 --> 00:46:01,160
Speaker 15: I'm not going to get in the policy he said.

829
00:46:01,160 --> 00:46:06,480
Speaker 15: My appointment was, Sinister. I served in an administration and

830
00:46:06,600 --> 00:46:09,920
Speaker 15: some twelve years later I joined the FED. So I

831
00:46:10,520 --> 00:46:13,920
Speaker 15: think it's a little strange to call that a revolving door.

832
00:46:13,960 --> 00:46:19,239
Speaker 15: But I look forward to to meeting Steven Myron, and

833
00:46:20,160 --> 00:46:23,360
Speaker 15: I'm proud he's coming from the Council of Economic Advisors,

834
00:46:23,360 --> 00:46:26,000
Speaker 15: which was seeming he had the same job I had

835
00:46:26,360 --> 00:46:27,920
Speaker 15: had twelve years before.

836
00:46:27,719 --> 00:46:28,640
Speaker 10: I joined the FED.

837
00:46:29,440 --> 00:46:33,760
Speaker 15: So and there's a long history of CEA folks coming

838
00:46:33,760 --> 00:46:35,879
Speaker 15: over to the FED and doing a very effective job.

839
00:46:35,960 --> 00:46:40,120
Speaker 15: I think anybody who comes and joins the FOMC is

840
00:46:40,160 --> 00:46:44,120
Speaker 15: going to take the job very seriously. It's it's an

841
00:46:44,120 --> 00:46:48,000
Speaker 15: important function, and we all just go down there and

842
00:46:48,080 --> 00:46:50,560
Speaker 15: try to maximize employment stabilized prices.

843
00:46:50,560 --> 00:46:53,160
Speaker 10: That's our That's that's what the law says.

844
00:46:54,640 --> 00:46:57,640
Speaker 12: Well, Austin Gilsby, thank you very much for being diligent

845
00:46:57,760 --> 00:46:59,440
Speaker 12: enough to come talk to us, and hopefully you'll talk

846
00:46:59,480 --> 00:47:03,080
Speaker 12: to us after the next meeting. I suspect it's going

847
00:47:03,120 --> 00:47:08,120
Speaker 12: to be a very interesting meeting. Austin Willsby from the

848
00:47:08,200 --> 00:47:10,960
Speaker 12: Chicago Fed, President of the Chicago Fed, former chairman of

849
00:47:11,000 --> 00:47:14,000
Speaker 12: the Consol of Economic Advisors, as he noted as someone

850
00:47:14,000 --> 00:47:18,120
Speaker 12: with a vast experience in Washington and in monetary policy.

851
00:47:18,200 --> 00:47:21,480
Speaker 3: Sinister, huh, interesting that he has not made up his

852
00:47:21,600 --> 00:47:22,120
Speaker 3: mind yet.

853
00:47:22,120 --> 00:47:23,600
Speaker 2: This meeting is days away.

854
00:47:23,760 --> 00:47:26,040
Speaker 12: Well, I kind of wonder, I mean, we don't have

855
00:47:26,080 --> 00:47:28,680
Speaker 12: time to really go into depth with him, but I

856
00:47:28,719 --> 00:47:32,479
Speaker 12: was wondering what other indicators he was expecting. There there'll

857
00:47:32,480 --> 00:47:35,120
Speaker 12: be another jobless claims report, but that's about it. In

858
00:47:35,200 --> 00:47:37,800
Speaker 12: terms of the labor market. Between now and the meeting,

859
00:47:38,760 --> 00:47:40,800
Speaker 12: I think if you read between the lines, he's saying

860
00:47:41,400 --> 00:47:45,120
Speaker 12: he's open to a rate cut as long as inflation

861
00:47:45,239 --> 00:47:46,239
Speaker 12: doesn't come in bad.

862
00:47:46,960 --> 00:47:49,080
Speaker 4: The piece on the labor market, that thought was crucially said, well,

863
00:47:49,120 --> 00:47:50,839
Speaker 4: there's no there's no layoffs just yet.

864
00:47:50,880 --> 00:47:52,719
Speaker 6: That would be the alarm bell ring.

865
00:47:52,840 --> 00:47:56,319
Speaker 4: Anecdotally, we've heard of these hiring freezes, hiring pauses on

866
00:47:56,360 --> 00:47:59,360
Speaker 4: Wall Street in the tech space as well. Is this

867
00:47:59,440 --> 00:48:01,080
Speaker 4: just a matter of time? Is that kind of where

868
00:48:01,560 --> 00:48:02,839
Speaker 4: Oscoolsby's leading us.

869
00:48:03,040 --> 00:48:05,239
Speaker 12: Well, we're kind of at an inflection point. We don't

870
00:48:05,239 --> 00:48:07,239
Speaker 12: know which way it's going to tip. Companies have been

871
00:48:07,280 --> 00:48:10,080
Speaker 12: telling FED officials for quite some time that they are

872
00:48:10,120 --> 00:48:12,400
Speaker 12: on hold. They don't know what's going to happen to

873
00:48:12,440 --> 00:48:14,520
Speaker 12: the economy, so they're not hiring, they're not adding to

874
00:48:14,600 --> 00:48:18,279
Speaker 12: their expenses. We're starting to see some companies say we

875
00:48:18,360 --> 00:48:22,120
Speaker 12: need to trim because the uncertainty it just goes on.

876
00:48:22,640 --> 00:48:25,160
Speaker 12: But do they start to trim a lot of people?

877
00:48:25,280 --> 00:48:27,920
Speaker 12: That's the issue. The Fed watches the unemployment rate because

878
00:48:27,960 --> 00:48:30,840
Speaker 12: it tends to, as Claudia sum always says, tends to

879
00:48:30,840 --> 00:48:33,279
Speaker 12: start going up fast once it starts going up, and

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00:48:33,320 --> 00:48:35,600
Speaker 12: it went up for the last two months in a row.

881
00:48:35,680 --> 00:48:39,319
Speaker 12: So if that continues then we might see that, but

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00:48:39,400 --> 00:48:39,719
Speaker 12: we just.

883
00:48:39,680 --> 00:48:40,319
Speaker 2: Don't know yet.

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00:48:40,520 --> 00:48:42,640
Speaker 3: Real pleasure to have you plan into Balance of Power

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00:48:42,640 --> 00:48:44,760
Speaker 3: today and thank you for bringing us that important conversation

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00:48:44,800 --> 00:48:45,480
Speaker 3: Michael McKee.

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Speaker 2: Always a pleasure to have you in Washington. Thanks for

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00:48:48,040 --> 00:48:50,040
Speaker 2: listening to the Balance of Power podcast.

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00:48:50,680 --> 00:48:53,799
Speaker 3: Make sure to subscribe if you haven't already, at Apple, Spotify,

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00:48:53,920 --> 00:48:56,480
Speaker 3: or wherever you get your podcasts, and you can find

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00:48:56,560 --> 00:48:59,359
Speaker 3: us live every weekday from Washington, DC at New Time

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Speaker 3: Eastern at Bloomberg dot com.