Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Claudia Sam of New
Speaker 1: Century Advisory joins us now to give us some insight. Claudia,
Speaker 1: thank you so much for being with us, and happy
Speaker 1: New Year. What do you make of this Matt's point
Speaker 1: that we've seen unemployment claims basically at the same place
Speaker 1: for almost a.
Speaker 2: Year, right, so you know, as you said, we're not
Speaker 2: seeing signs of deterioration in the labor market, like the
Speaker 2: layoffs have not picked up in a way that was
Speaker 2: the downside risk that the FED has been very acute
Speaker 2: to and we haven't seen that. So we're not seeing
Speaker 2: the bad news story. Frankly, we still need to see
Speaker 2: some good news in the labor market so the claims
Speaker 2: don't get at the piece. It's really been sticky, and
Speaker 2: that's a the hiring rate has been quite low. So yes,
Speaker 2: good news on the continuing claims for this week, but
Speaker 2: they aren't still quite elevated, and so we need a
Speaker 2: little bit more of the good news. You know, the
Speaker 2: fact that the layoffs have not shown up despite you
Speaker 2: know a lot of layoff announcements, like we're not seeing
Speaker 2: them in terms of actual layoffs, and that's good news.
Speaker 1: Quaoudia, do you take anything from the idea that continuing
Speaker 1: claims came in to some of the lowest levels that
Speaker 1: we've seen going back about a month, not significant, and
Speaker 1: they are elevated, as you've said, But does that indicate
Speaker 1: that people are actually finding work.
Speaker 2: It's possible, you know, these are while the claims data
Speaker 2: are very timely. I mean we get a quick read,
Speaker 2: we have to be careful around the turn of the year.
Speaker 2: It's just really tricky with the holidays and you know,
Speaker 2: just reading these data is much harder at the turn
Speaker 2: of the year than say, in the middle of the year,
Speaker 2: but it is. It is potentially a good sign and
Speaker 2: what we're looking for are signs of more stability in
Speaker 2: the labor market, signs that those the hiring rates start
Speaker 2: to pick off a pickup off their very low levels.
Speaker 2: So this is encouraging, but this doesn't make the case yet, right,
Speaker 2: we need to see it in the hiring data.
Speaker 3: Claudia, what what does the labor market look like with
Speaker 3: the stop and immigration, no new people coming to the US,
Speaker 3: and the demographics fewer and fewer people having babies or
Speaker 3: people having fewer babies. It would seem to me that
Speaker 3: if you have the economy growing and we do, and
Speaker 3: corporate revenue and profits growing as we do.
Speaker 2: That.
Speaker 3: You know, lack of supply in the labor pool would
Speaker 3: mean more demand, but it doesn't look like that, as
Speaker 3: you point out.
Speaker 2: Right, well, you know, there are all kinds of timing issues, right,
Speaker 2: it is quite unusual. We saw, you know, in the
Speaker 2: third quarter GDP really you know, moved up higher, and
Speaker 2: so did the unemployment rate, right in a much less
Speaker 2: dramatic fashion, but it is moving higher. And so you know,
Speaker 2: you have the ingredients for the good news story of
Speaker 2: the labor market going into twenty twenty six. Consumers are
Speaker 2: still out there spending. You've still got the business investment.
Speaker 2: You know, companies will need as they expand to draw
Speaker 2: on their labor force. And we should see and I
Speaker 2: think this is the optimism that you can kind of
Speaker 2: see in the minutes from the fed's December meeting. There's
Speaker 2: an outlook there that these pieces should come together and
Speaker 2: we should have hiring pickup. It doesn't necessarily need to
Speaker 2: pick up to levels that we saw, you know, two
Speaker 2: three years ago, when immigration was much stronger, but we
Speaker 2: are at low levels that we have seen wage growth
Speaker 2: slow sum we've seen the unemployment rate tick up. That
Speaker 2: is a sign of the demand for workers is just
Speaker 2: lagging behind the supply.
Speaker 3: Diane Swank pointed out a couple of months ago that
Speaker 3: cutting rates the FED, lowering rates isn't going to help
Speaker 3: consumers in the lower quintile, you know, because subprime rates
Speaker 3: don't come down with the front end of the curve.
Speaker 3: But I wonder if it does help the labor market.
Speaker 3: You know, we've lost I think seventy thousand manufacturing jobs
Speaker 3: this year. We've got a ton of incentives in the
Speaker 3: one big beautiful Bill to I guess bring those back,
Speaker 3: and tariffs are spill to do that too. If those
Speaker 3: things don't work, does cutting rates help to bring back
Speaker 3: manufacturing jobs?
Speaker 2: Well, cutting rates is supportive of both households and businesses
Speaker 2: and expansion, I mean, and particularly say smaller businesses that
Speaker 2: you know, the interest rates that they borrow with that's
Speaker 2: a key, you know, calculus and their decision to expand.
Speaker 2: And as they expand, they can bring on more workers. So,
Speaker 2: you know, I don't you know, we shouldn't have the
Speaker 2: view that the FED has the magic wand here on
Speaker 2: the economy and it's going to on its own revive
Speaker 2: the labor market, but the FED pulling restriction out of
Speaker 2: the economy that does it helps it moves in the
Speaker 2: right direction. And again it's a piece of the puzzle.
Speaker 2: There's also more physical support coming early in the year.
Speaker 2: And it does appear that uncertainty, just broadly about policy
Speaker 2: and maybe some of technological change has weighed on labor
Speaker 2: market this year. And as that dissipates, that's also another
Speaker 2: ingredient to kind of get hiring going again.
Speaker 1: Uncertainty has also been pretty strong because we haven't known
Speaker 1: how much we can trust the data, whether we're going
Speaker 1: to ben get the data. And even in this latest
Speaker 1: batch of numbers or one terminal user points out that
Speaker 1: seasonal adjustment, if you strip that out, you actually see
Speaker 1: initial job as claims that are higher than the previous week.
Speaker 1: So what do you make of these types of seasonal adjustments,
Speaker 1: of these types of calculations that have raised more questions
Speaker 1: than given answers.
Speaker 2: Right well, these issues with seasonal adjustment, these are the
Speaker 2: mainstay of trying to read macroeconomic data. Right Like, as
Speaker 2: I said around the turn of the year, claims data
Speaker 2: are tough from Thanksgiving into early in the year is
Speaker 2: just that that's just a hard, hard read, and so
Speaker 2: you do a lot of averaging kind of look at
Speaker 2: the basic trend, and the basic trend looks pretty good, right,
Speaker 2: So don't make too much out of one week. But yes,
Speaker 2: these are our regular issues. Unfortunately, we're also dealing with,
Speaker 2: you know, the backlog of the government shutdown and data
Speaker 2: collection having been very disrupted, and even as we're getting
Speaker 2: data and the claims data, this is not apply to them,
Speaker 2: but saying like the CPI or the labor market data,
Speaker 2: you know, there's these shutdown casts a long shadow, like
Speaker 2: we have distorted data in a way that we don't
Speaker 2: typically have distortions. We don't typically lose a month of
Speaker 2: data and then try and pick up the pieces afterwards.
Speaker 2: So it does make it more complicated, but you know,
Speaker 2: thankfully there's a lot of information out there. You just
Speaker 2: kind of, you know, pull it all in and get
Speaker 2: a sense of what's going on. And really the tenor
Speaker 2: of the data in general is pretty good, I mean solid.
Speaker 2: Like I said, we still need labor market to pick up,
Speaker 2: but the ingredients are there.
Speaker 1: When I feel want to feel good, I walk down
Speaker 1: the street and I see all these people going to
Speaker 1: stores and being together and going to work, and when
Speaker 1: I want to feel bad, I read the news and
Speaker 1: I read all these stories about how computers are coming
Speaker 1: for our jobs, and how a lot of places are
Speaker 1: seeing opportunities to replace human labor with algorithmic algorithmic programs.
Speaker 1: I'm just wondering, based in the data that you've been
Speaker 1: looking at, how much credence is there behind this sort
Speaker 1: of placement concept of AI.
Speaker 2: Well, I think looking at surveys industry level data that
Speaker 2: when we think about the labor market being somewhat slow
Speaker 2: right now, I don't think that AI really can you know,
Speaker 2: you can point to that as a key driver. Broadly.
Speaker 2: There are some industries in tech, increasingly in finance where
Speaker 2: you see more adoption and there probably are cost savings
Speaker 2: happening with employers. I think, you know, it does fit
Speaker 2: into this piece of the broader uncertainty right like do
Speaker 2: you need to hire? Do you need these workers? That's
Speaker 2: much harder to parse out of the data, because there's
Speaker 2: a lot of different sources of uncertainty right now that
Speaker 2: businesses have. But in terms of you know, the adoption
Speaker 2: really holding back the labor market, I think it's hard
Speaker 2: to point to a broad story, but it is certainly
Speaker 2: something something to watch. But we should also remember that
Speaker 2: the new technology also enables new jobs and new uses
Speaker 2: of technology, So it's not just about saving labor. It's
Speaker 2: also about making labor more productive, and that can be
Speaker 2: a real good news story over the long haul.
Speaker 3: Goottie, I love when you're on because I learned so
Speaker 3: much from you, and because of your notable achievements in economics,
Speaker 3: but also because you went to Dennison and I spent
Speaker 3: a year there. My dad went to Dennis, and my
Speaker 3: mom went to Dennis, and I grew up in Granville.
Speaker 3: What do you think of the value of a college
Speaker 3: education for the average American these days? Because so many
Speaker 3: not just kids, but adults are having trouble meeting repayment
Speaker 3: requirements well into their forties, and it doesn't look like
Speaker 3: recent graduates are getting a huge advantage in the jobs market.
Speaker 2: All right, Well, technical skills and training are. I mean,
Speaker 2: they're always important for getting ahead. They do payoff. I
Speaker 2: have a very ecumenical view. I had an excellent education
Speaker 2: at Dennis and University Liberal Arts College, but that's not
Speaker 2: for everybody. I mean, my daughter's in engineering school Illinois.
Speaker 2: She's you know, different technical training, and I think you
Speaker 2: know in the trades and there's there are lots of
Speaker 2: ways to gain skill, and we certainly don't want to
Speaker 2: push every child through a college education, particularly with the
Speaker 2: cost of it. But it doesn't you know. I still
Speaker 2: think you know, and the data bear this out. Like
Speaker 2: the education and the skills, they do pay off.
Speaker 1: Claudia Sum of New Century Advisors, wonderful to see you,
Speaker 1: Happy new year. Thank you so much, see you in
Speaker 1: twenty twenty six.