WEBVTT - Soft Jobs Data Trims Fed Rate-Hike Bets 0:00:02.480 --> 0:00:10.480 Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business 0:00:10.520 --> 0:00:14.400 Week Daily reporting from the magazine that helps global leaders 0:00:14.400 --> 0:00:18.320 stay ahead with insight on the people, companies, and trends 0:00:18.360 --> 0:00:23.360 shaping today's complex economy. Plus global business finance and tech 0:00:23.440 --> 0:00:27.280 news as it happens. The Bloomberg Business Week Daily Podcast 0:00:27.640 --> 0:00:31.720 with Carol Masser and Tim Stenebeck on Bloomberg Radio. 0:00:32.680 --> 0:00:34.159 So let's get to it, and let's get to the 0:00:34.200 --> 0:00:36.519 labor market and that report we got this morning at 0:00:36.560 --> 0:00:37.720 eight thirty am Eastern. 0:00:37.760 --> 0:00:39.239 Here's just kind of some of the details. 0:00:39.600 --> 0:00:42.280 US employers unexpectedly cut jobs in the month of July, 0:00:42.400 --> 0:00:46.640 and hiring the prior to months was revised lower, suggesting 0:00:46.640 --> 0:00:48.520 that the labor market here in the US is weaker 0:00:48.560 --> 0:00:52.280 than previously thought after surprising strength tim earlier this year. 0:00:52.440 --> 0:00:54.760 The decline in jobs, driven by cuts and government leisure 0:00:54.760 --> 0:00:58.280 and hospitality, also retail. Private sector payrolls rose by thirty 0:00:58.320 --> 0:01:00.840 thousand dollars for a second month, was led by healthcare 0:01:00.840 --> 0:01:05.840 and social assistants. Manufacturing and construction perils those continue to climb. 0:01:05.959 --> 0:01:07.440 And then there was the participation rate. 0:01:07.480 --> 0:01:10.199 The share of the population working or looking for work 0:01:10.240 --> 0:01:13.640 fell to sixty one point four percent, which excluding the pandemic, 0:01:14.080 --> 0:01:17.080 was the lowest since the nineteen seventies. Among those between 0:01:17.080 --> 0:01:19.440 the ages of twenty five and fifty four, known as 0:01:19.520 --> 0:01:23.440 prime age workers, participation edged higher, but remained near the 0:01:23.440 --> 0:01:26.119 lowest levels of the fast of the last few years. 0:01:26.280 --> 0:01:28.600 White House, Director of the National Economic Council. We're talking 0:01:28.640 --> 0:01:31.960 about Kevin Hasse and Hassett. He spoke earlier on Bloomberg 0:01:32.000 --> 0:01:34.880 TV and Radio on Open Interest with Danny Berger and 0:01:34.920 --> 0:01:36.479 Michael McKee, and. 0:01:36.520 --> 0:01:40.440 Labor force participation is kind of on a downward trajectory, 0:01:40.680 --> 0:01:43.280 which means that the break even jobs number, that is 0:01:43.319 --> 0:01:45.800 that the job's number you need so the unemployment rate 0:01:45.880 --> 0:01:49.680 doesn't go up, has gone from maybe one hundred twenty hundred, 0:01:49.760 --> 0:01:52.280 thirty thousand a few years ago to maybe about. 0:01:52.080 --> 0:01:53.240 Forty thousand now. 0:01:53.520 --> 0:01:55.520 And so what it means is that what the market 0:01:55.600 --> 0:01:58.440 is used to looking at, oh, it's like a normal 0:01:58.640 --> 0:02:00.800 tread the water kind of jobs number, if it's around 0:02:00.840 --> 0:02:02.680 one hundred, is no longer. 0:02:02.480 --> 0:02:04.520 True, all right, That, of course is white House, Director 0:02:04.520 --> 0:02:07.280 of the National Economic Council, Kevin Hassett earlier on Bloomberg 0:02:07.320 --> 0:02:09.919 joining us with more is there on Michael McKee, who 0:02:09.960 --> 0:02:12.680 was talking to mister Hassett earlier on Bloomberg. He is, 0:02:12.720 --> 0:02:16.000 of course Bloomberg TV and Radio International Economics and Policy course, 0:02:16.320 --> 0:02:18.640 joining us here in studio along with and back with 0:02:18.720 --> 0:02:21.560 us Matt Lazetti, he's chief economist at Deutsche Bank. 0:02:22.200 --> 0:02:23.280 Guys, thank you so much. 0:02:23.320 --> 0:02:24.880 I do want to kick it off with you, though, Mike, 0:02:24.919 --> 0:02:26.960 we've had a few hours for the dusk to settle. 0:02:27.840 --> 0:02:32.240 Is this a report that was weaker? Like, what's the 0:02:32.280 --> 0:02:33.120 assessment here? 0:02:33.400 --> 0:02:35.560 I think the bottom line, to just skip to the 0:02:35.639 --> 0:02:38.240 end of the book, is that the labor market is 0:02:38.320 --> 0:02:42.240 weaker than it had appeared, but it's not weak. It's 0:02:42.280 --> 0:02:46.240 not a problem for the FED to have to deal with. 0:02:46.720 --> 0:02:49.799 And there were, as you mentioned, some quirks in the 0:02:49.880 --> 0:02:52.960 data this time, and everything Kevin said was true about 0:02:53.280 --> 0:02:58.440 with the labor force declining, you need fewer jobs to 0:02:58.440 --> 0:03:01.280 employ people, so the unemployment rate can go down, and 0:03:01.480 --> 0:03:03.440 that is something the Fed's going to have to think 0:03:03.440 --> 0:03:07.120 about in terms of what is the level of interest 0:03:07.200 --> 0:03:09.280 rates that keeps the unemployment rates steady. 0:03:09.760 --> 0:03:12.480 We'll dig into all of this and more in just 0:03:12.560 --> 0:03:14.240 a min at. First, I want to bring in Matt Lazetti, 0:03:14.680 --> 0:03:17.280 chief economist over at Deutsche Bank. Do you agree with 0:03:17.480 --> 0:03:21.200 Mike's assessment here that, Yeah, on the surface, it looks weaker, 0:03:21.240 --> 0:03:23.840 but it's not as bad as sort of the headline number. 0:03:24.000 --> 0:03:26.240 Yeah, I think absolutely you got a downside surprise on 0:03:26.280 --> 0:03:28.480 payrolls you had the one hundred thousand of download divisions 0:03:28.480 --> 0:03:31.160 to prior months. But I think what it does is 0:03:31.200 --> 0:03:33.680 it confirms that that breaking number is just lower. So 0:03:33.800 --> 0:03:36.440 there's various FED estimates out there suggesting that the breaking 0:03:36.440 --> 0:03:37.440 even number could be as low. 0:03:37.360 --> 0:03:39.000 As zero per month. 0:03:39.560 --> 0:03:41.240 Over the past three or six months, we're running at 0:03:41.240 --> 0:03:44.640 twenty to forty five thousand on headline payroll numbers. With 0:03:44.760 --> 0:03:46.840 that backdrop, we've seen the auntoplane rate decline to the 0:03:46.880 --> 0:03:49.280 lowest level in eighteen months. We've seen other measures of 0:03:49.320 --> 0:03:51.720 labor Marcus slack actually tighten on the margins as well, 0:03:52.160 --> 0:03:53.840 and so I think it actually fits more with a 0:03:53.880 --> 0:03:56.360 story where the breaking number is quite low. We see 0:03:56.360 --> 0:03:59.200 payroll gains trending kind of around those levels, maybe a 0:03:59.240 --> 0:04:02.280 little bit above labor market slack tightening at the margins, 0:04:02.560 --> 0:04:04.120 But it takes away some of the upside risks of 0:04:04.120 --> 0:04:06.880 the labor market that the fed might have been contemplating. 0:04:06.520 --> 0:04:09.680 All right, So when it comes to we've got to 0:04:09.720 --> 0:04:11.960 actually a question I want to bring in from a 0:04:12.080 --> 0:04:15.160 viewer and listener. It's Mark in Toronto, and he says, 0:04:15.200 --> 0:04:18.560 what impact do boomers retiring have on the labor participation 0:04:18.640 --> 0:04:21.159 rate in unemployment make and if we. 0:04:21.160 --> 0:04:21.920 Could address that. 0:04:22.040 --> 0:04:24.000 I have to say, I have some rumors in my 0:04:24.080 --> 0:04:27.080 family who've retired recently and or in the last few years, 0:04:27.120 --> 0:04:29.240 and they have at least three or four of them 0:04:29.279 --> 0:04:32.120 that have left the labor market. Matt, is that something 0:04:32.120 --> 0:04:33.440 that is certainly at play here? 0:04:33.760 --> 0:04:34.400 Absolutely? 0:04:34.560 --> 0:04:37.000 So if you look at the labor force participation of 0:04:37.040 --> 0:04:39.840 recent months in June, there's a big decline in prime age, 0:04:39.839 --> 0:04:42.239 which I think you alluded to, and specifically the twenty 0:04:42.279 --> 0:04:43.520 five to thirty four age. 0:04:43.360 --> 0:04:45.040 Group that partially reversed. 0:04:45.360 --> 0:04:48.640 I think the bigger structural trend is labor force participation 0:04:48.680 --> 0:04:50.919 for fifty five plus continues to collapse. 0:04:51.320 --> 0:04:54.240 There's a question about whether or not that's worrying or not. 0:04:54.680 --> 0:04:56.599 I would actually argue that it's really in line with 0:04:56.640 --> 0:04:58.840 what you would expect from demographics. So if you look 0:04:58.880 --> 0:05:02.360 at different age groups with fifty five plus, their participation 0:05:02.400 --> 0:05:04.600 rates are actually not moving around all that much. So 0:05:04.640 --> 0:05:07.599 what's happening is people are just aging into buckets where 0:05:07.600 --> 0:05:10.160 they work a lot less, where their participation rates are 0:05:10.279 --> 0:05:12.599 much lower, and we're in fact much closer to what 0:05:12.640 --> 0:05:16.359 I would expect from a demographics implied trend from the 0:05:16.400 --> 0:05:16.960 labor market. 0:05:17.560 --> 0:05:20.039 Mike, what about the other end of the demographic spectrum, 0:05:20.040 --> 0:05:23.960 and that would traditionally be new entrance to this country, 0:05:24.200 --> 0:05:27.479 entering the labor force and younger immigrants. We've seen that 0:05:27.760 --> 0:05:31.000 dry up significantly over the past few months, and it's 0:05:31.000 --> 0:05:34.280 certainly by design with this administration. You address that with 0:05:34.360 --> 0:05:36.160 Kevin Hasset a little bit in one of the questions 0:05:36.160 --> 0:05:39.760 that he answered, does that work in our economy when 0:05:39.800 --> 0:05:41.320 we're not having enough kids? 0:05:42.360 --> 0:05:44.520 It isn't good news for the overall economy. As we 0:05:44.520 --> 0:05:46.880 were talking about with Kevin Acid, the size of the 0:05:46.960 --> 0:05:51.200 labor force is one input into what potential growth is. 0:05:51.240 --> 0:05:53.480 And if the labor force isn't growing, you've got to 0:05:53.520 --> 0:05:57.200 get more out of productivity. Kevin in worsh thinks you 0:05:57.279 --> 0:06:00.960 will eventually, not yet, so it is it is a 0:06:01.080 --> 0:06:03.599 problem for the economy overall, and you could see that 0:06:03.760 --> 0:06:07.600 in the overall participation numbers as well, although prime age 0:06:07.640 --> 0:06:10.640 has ticked up a little bit. Things have loosened up 0:06:10.680 --> 0:06:13.000 a little bit compared to where they were. But the 0:06:13.040 --> 0:06:16.240 demographics at the other end, as Matt was saying, that's 0:06:16.279 --> 0:06:19.000 been going on for quite a while, as baby boomers 0:06:19.080 --> 0:06:23.320 from nineteen forty six started retiring, and now we're past 0:06:23.360 --> 0:06:27.600 the peak of baby boomers being sixty five, so that'll 0:06:27.600 --> 0:06:30.000 be less and less of an issue going forward, But 0:06:30.080 --> 0:06:31.560 it still takes a lot of people out of the 0:06:31.640 --> 0:06:32.160 labor force. 0:06:32.360 --> 0:06:32.960 Is it too soon? 0:06:33.040 --> 0:06:34.400 Well, I feel like there's a million things I want 0:06:34.400 --> 0:06:36.880 to talk about because demographics things. I know we've talked 0:06:36.920 --> 0:06:39.360 with you about it, But I do think about longer term, 0:06:39.480 --> 0:06:42.320 if we don't allow immigration into the country and we 0:06:42.360 --> 0:06:46.359 have an older workforce, you know how much the economy 0:06:46.400 --> 0:06:49.239 here in the US is at risk in terms of growth, Matt. 0:06:49.240 --> 0:06:51.040 Is that something you guys are thinking about a lot 0:06:51.080 --> 0:06:51.640 or studying. 0:06:51.760 --> 0:06:52.000 Sure? 0:06:52.000 --> 0:06:53.839 I mean, I think if you look at projections for 0:06:53.920 --> 0:06:56.480 population growth in the size of the US population, as 0:06:56.520 --> 0:06:59.680 you look out five or ten years, without positive net 0:07:00.080 --> 0:07:02.960 ration flows, you have a declining labor force. 0:07:03.000 --> 0:07:04.440 You have a declining population. 0:07:05.360 --> 0:07:07.920 The US is not the only economy global economy that 0:07:08.000 --> 0:07:10.200 is dealing with We've seen this movie, right, We see 0:07:10.200 --> 0:07:14.920 these issues in various parts of Asia, Europe. Many of 0:07:14.920 --> 0:07:17.560 these economies are actually worse place than the US is 0:07:17.560 --> 0:07:20.640 from that perspective, but no doubt, we rely on positive 0:07:20.680 --> 0:07:22.880 net immigration flows as we look ahead, I think, as 0:07:22.920 --> 0:07:25.360 Mike mentioned, you know, the hope is that productivity growth 0:07:25.400 --> 0:07:28.960 can pick up. It has been pretty robust over these 0:07:28.960 --> 0:07:31.040 past two to three years, and that that can be 0:07:31.080 --> 0:07:33.600 the supporting mechanism for overall growth so far as it's 0:07:33.640 --> 0:07:36.360 working out. Okay, Yeah, that's a bigger question as you look. 0:07:36.200 --> 0:07:38.720 At Okay, I promise we oh, go ahead, Mike. I 0:07:38.720 --> 0:07:39.680 was just going to add on to this. 0:07:39.760 --> 0:07:42.320 There is one aspect of this that the productivity can't 0:07:42.400 --> 0:07:45.360 really solve, and that is the fewer people that are working, 0:07:45.840 --> 0:07:50.520 the lower the dependency ratio is. And so social Security 0:07:50.840 --> 0:07:55.120 gets less funding, Medicare gets less funding, and that is 0:07:55.160 --> 0:08:00.400 an ongoing issue and nobody has any idea and Congress 0:08:00.440 --> 0:08:01.200 is going to address this. 0:08:01.360 --> 0:08:03.160 I keep saying, if you know, robots are going to 0:08:03.240 --> 0:08:05.720 replace us, or AI makes us more productive, but you know, 0:08:05.920 --> 0:08:08.360 robots don't buy lunch, or robots don't need their shoes 0:08:08.360 --> 0:08:10.960 shined or robots don't need to go shopping for shoes, 0:08:11.320 --> 0:08:12.760 you know, like I just just. 0:08:12.760 --> 0:08:17.640 They need to be oiled. Though it depends sometimes it depends. 0:08:17.720 --> 0:08:20.480 It depends, Mike, I want to get to the conversation 0:08:20.520 --> 0:08:22.960 with Hassett. Kevin Hassett this money at one point talking 0:08:22.960 --> 0:08:26.120 about early earnings, and he then brought up weekly earnings. 0:08:26.120 --> 0:08:27.400 She said something like, I don't know if. 0:08:27.280 --> 0:08:29.680 The president's watching the Oval office saying you got your 0:08:29.680 --> 0:08:31.840 point though, and Kevin, good job, good job. And Kevin said, 0:08:31.840 --> 0:08:33.440 I don't know if he's watching, but I'll find out. 0:08:34.760 --> 0:08:36.520 And I want to get both of your perspectives. But 0:08:36.600 --> 0:08:39.439 let's Mike speaks to the president who watches a lot 0:08:39.440 --> 0:08:43.120 of TV. We know that, and respond, is that typical. 0:08:42.760 --> 0:08:43.440 Of a president? 0:08:43.640 --> 0:08:47.120 Is it shows his involvement in what the messages that's 0:08:47.160 --> 0:08:47.800 getting out. 0:08:48.720 --> 0:08:51.280 I think it's just unique to this president that he 0:08:51.760 --> 0:08:53.559 likes to do that, and he likes to hear people 0:08:53.600 --> 0:08:56.240 talking about him, and he spends a lot from all 0:08:56.320 --> 0:08:57.960 the reports we get from the White House, he spends 0:08:57.960 --> 0:09:01.280 a lot of time watching television, the various news programs. 0:09:01.320 --> 0:09:04.520 I don't know that he was watching Kevin Hasset today putting. 0:09:04.280 --> 0:09:06.400 Pressure on then his members of his team when they're 0:09:06.440 --> 0:09:06.760 on air. 0:09:06.840 --> 0:09:10.200 Well, yes, but every White House does that in a 0:09:10.280 --> 0:09:13.439 sense that you're sending out a spokesman for the White House, 0:09:13.480 --> 0:09:16.160 so that person is not going to say, yeah, we 0:09:16.200 --> 0:09:18.320 blew it, this was a bad policy or something like that. 0:09:18.320 --> 0:09:20.360 They're always going to try to present the best numbers. 0:09:20.600 --> 0:09:22.160 And I was thinking when Kevin and I were having 0:09:22.160 --> 0:09:24.280 that conversation, you know the old saying about you can 0:09:24.320 --> 0:09:26.920 torture the statistics any way you want to get the 0:09:27.000 --> 0:09:27.800 numbers that you want. 0:09:28.840 --> 0:09:30.440 The bottom line for. 0:09:30.520 --> 0:09:34.800 The White House, though, is that we are average hourly 0:09:34.800 --> 0:09:38.480 earnings are falling behind inflation. And whether you use one 0:09:38.520 --> 0:09:42.480 measure or another doesn't really matter because the public thinks 0:09:42.559 --> 0:09:44.959 that's happening, and that's their political problem. 0:09:45.040 --> 0:09:48.000 Well, speaking of communications, you and Danny Berger asked Kevin 0:09:48.040 --> 0:09:52.760 Hassett about the communications between the President and Kevin Worsh. 0:09:52.960 --> 0:09:54.400 Let's listen to what he had to say. 0:09:55.080 --> 0:09:57.360 There have been some new stories that the President's talking 0:09:57.440 --> 0:10:01.040 to Kevin Worsh, and of course he is, you know, 0:10:01.120 --> 0:10:02.959 and he talked to Jay Powell too. But the other 0:10:03.000 --> 0:10:05.040 thing is that that Kevin Worsh and the President have 0:10:05.120 --> 0:10:07.760 a very close, long term relationship from New York City, 0:10:07.960 --> 0:10:11.320 from Florida, and they talk about the economy all the time. 0:10:11.360 --> 0:10:13.280 It's very very natural for the President to do something 0:10:13.400 --> 0:10:17.040 like say, hey, you know, Chairman worsh what do you 0:10:17.080 --> 0:10:19.920 think about today's job number. That's a very normal thing 0:10:19.960 --> 0:10:21.559 for him to do. But I think that's the way 0:10:21.559 --> 0:10:23.600 you should think about the balance of the conversations. 0:10:24.880 --> 0:10:29.200 Earlier on Bloomberg TV with Danny Berger and Mike McKee, Matt, 0:10:29.240 --> 0:10:31.520 I want to toss this over to you because Kevin ass 0:10:31.559 --> 0:10:34.360 had also said that the President respects the independence of 0:10:34.400 --> 0:10:37.160 the Federal Reserve. And I'm curious, based on the reporting 0:10:37.160 --> 0:10:39.320 that we've seen around the conversations happening between the FED 0:10:39.400 --> 0:10:41.880 Chair and the President and what the President said publicly 0:10:41.880 --> 0:10:44.840 and on social media throughout this term in his previous term, 0:10:45.880 --> 0:10:47.640 is the view now is the market viewing that the 0:10:47.679 --> 0:10:49.640 president respects the independence of the FED? 0:10:50.679 --> 0:10:52.560 Look, I think we don't really know that the context 0:10:52.559 --> 0:10:54.760 of the conversations that are happening. It seems like it 0:10:54.800 --> 0:10:58.000 might be more frequent than what has the interactions between 0:10:58.000 --> 0:11:00.440 the President and the FED Chair than in the past. 0:11:01.360 --> 0:11:03.439 If you look at market measures, I think what we 0:11:03.600 --> 0:11:06.360 like to look at our inflation expectations showing anything that 0:11:06.480 --> 0:11:09.920 is worrying. Are they suggesting that the Fed's credibility is 0:11:09.960 --> 0:11:12.280 at risk? I think last week you did see a 0:11:12.320 --> 0:11:15.160 notable rise in inflation expectations. I don't know that there 0:11:15.200 --> 0:11:17.280 was anything kind of tied to the President or but 0:11:17.320 --> 0:11:20.360 if I think it was tied to Chairwash's specific comments 0:11:20.400 --> 0:11:25.080 around willingness to potentially raise rates, unwillingness to say that 0:11:25.400 --> 0:11:28.360 they were targeting two percent PCE price inflation, and just 0:11:28.400 --> 0:11:31.480 the overall conversation I think and the language that he use, 0:11:32.400 --> 0:11:35.160 I think raise some risks from a market perspective about 0:11:35.160 --> 0:11:36.760 whether or not the FED would do what's necessary to 0:11:36.800 --> 0:11:37.720 keep inflation in check. 0:11:37.840 --> 0:11:41.640 President Trump did an interview with punch Bowl today and 0:11:41.679 --> 0:11:44.440 he reiterated his preference for lower interest rates, but acknowledge 0:11:44.440 --> 0:11:47.360 it is not the central bank chief's decision alone. So 0:11:47.480 --> 0:11:49.400 kind of making our taking a little bit of a 0:11:49.440 --> 0:11:52.120 softer tone in some of the criticisms. I mean, when 0:11:52.120 --> 0:11:54.160 it comes down to it, I know we are already thinking, Okay, 0:11:54.200 --> 0:11:57.400 what does the FED do next? We've got inflation prints 0:11:57.400 --> 0:12:00.560 to get through, right, Mike, We've got more economic data 0:12:00.600 --> 0:12:03.600 who knows where the FED will be and Kevin Walsh 0:12:03.720 --> 0:12:06.640 and everybody on the FOMC at the next meeting. 0:12:06.679 --> 0:12:11.040 So clearly, you don't trade FED fund's futures. You're right, 0:12:11.160 --> 0:12:13.440 we don't know. But the people who do trade these 0:12:13.440 --> 0:12:15.880 things have to decide on a minute to minute basis 0:12:16.080 --> 0:12:18.760 what they're going to do. And they have backed off 0:12:18.760 --> 0:12:22.320 the idea of a September rate hike. But the important 0:12:22.320 --> 0:12:24.960 thing is we're going to have two more inflation reports, 0:12:25.679 --> 0:12:30.360 two more, well one more after this jobs report, and 0:12:30.440 --> 0:12:32.199 so there will be a lot of data for them 0:12:32.520 --> 0:12:34.760 to hang a decision on. We don't know what that 0:12:34.880 --> 0:12:37.520 data is going to say, and so at this point 0:12:37.559 --> 0:12:41.800 it's too early to speculate. I mean, it's been going 0:12:41.800 --> 0:12:44.120 into this, everybody was saying, well, if we get a 0:12:44.160 --> 0:12:46.760 bad number, then the FED might have to back off. 0:12:46.800 --> 0:12:48.560 And we got a bad number, so they're saying the 0:12:48.600 --> 0:12:51.280 Fed's going to back off. Now we're all onto, Well, 0:12:51.360 --> 0:12:53.480 let's see what we get on Wednesday with CPI and 0:12:53.520 --> 0:12:54.280 we'll make a decision. 0:12:54.320 --> 0:12:56.240 It's a favorite part of well, Matt, what is what 0:12:56.840 --> 0:12:58.800 should you know? It's the FED is a duel mandate. 0:12:58.880 --> 0:13:01.360 But and I for a lot of people last few 0:13:01.360 --> 0:13:05.160 months have said, Okay, the labor market is strong, so 0:13:05.840 --> 0:13:08.360 the focus should be on getting inflation down. After today's 0:13:08.400 --> 0:13:10.880 print is does that view change? Should the Fed still 0:13:10.880 --> 0:13:13.600 be squarely focused on on that part of the dual matter? 0:13:13.600 --> 0:13:14.280 I think it changes. 0:13:14.480 --> 0:13:16.680 You know, clearly you had a downside surprise and payrolls, 0:13:16.720 --> 0:13:18.720 but if you think the break even numbers close to zero, 0:13:18.800 --> 0:13:21.880 you're actually running at or near those levels. The underplanning 0:13:21.920 --> 0:13:24.840 rates at four point one percent, it is below well 0:13:24.880 --> 0:13:26.320 below what the Fed thought it was going to be 0:13:26.320 --> 0:13:29.000 at the end of this year. It remains our best 0:13:29.040 --> 0:13:31.560 measure of labor market slack. I think you have a 0:13:31.640 --> 0:13:33.720 shift of risk distribution around the labor market. Now there's 0:13:33.720 --> 0:13:36.560 not as much upside risk. But September will be about 0:13:36.559 --> 0:13:38.920 the inflation data that we get over the next two months, 0:13:39.360 --> 0:13:41.240 especially we get a bounce back in payrolls next month. 0:13:41.880 --> 0:13:43.559 Reinflation is still a problem. 0:13:43.280 --> 0:13:45.640 Right, so in our view it is. 0:13:45.679 --> 0:13:48.240 I mean, if you look at PC inflation, which is 0:13:48.280 --> 0:13:50.920 what the FED targets, it is the highest that it's 0:13:50.920 --> 0:13:53.200 been since nineteen ninety two, if you strip out COVID 0:13:54.600 --> 0:13:57.839 and we agree with an evolving FED assessment from many 0:13:57.880 --> 0:14:00.680 officials that it is more broad based, is more demand 0:14:00.720 --> 0:14:04.840 driven AI related an investment as a source of inflationary pressures. 0:14:05.240 --> 0:14:08.400 Underlying inflation is stuck closer to three percent. None of 0:14:08.440 --> 0:14:10.640 that changed today. We'll get an update on that next 0:14:10.640 --> 0:14:11.400 week from the CPI. 0:14:12.120 --> 0:14:13.800 Okay, I want to just throw this last one at you, 0:14:13.840 --> 0:14:16.120 even though we don't have enough time, Mike Lisa Cooke, 0:14:16.440 --> 0:14:19.480 because in the conversation right independse of the Fed, since 0:14:19.520 --> 0:14:22.760 we heard from Kevin Hassett this morning, our Bloomberg News 0:14:22.760 --> 0:14:24.840 team reporting that President jump has revived this threat to 0:14:24.960 --> 0:14:28.800 file fire Federal Reserve Governor Lisa Cook over those unproven allegations. 0:14:29.040 --> 0:14:29.960 Update us here on. 0:14:29.880 --> 0:14:32.760 This, Well, they apparently sent Lisa Cook a letter that 0:14:32.920 --> 0:14:36.880 said the President is considering firing you because of the 0:14:36.920 --> 0:14:39.760 allegations of mortgage fraud, and you have three weeks to 0:14:40.000 --> 0:14:42.800 respond to this letter. Remember, the Supreme Court said that 0:14:43.040 --> 0:14:47.080 the President couldn't fire her, but because she didn't get 0:14:47.160 --> 0:14:51.240 due process, they didn't decide the legality of her particular case. 0:14:51.520 --> 0:14:52.520 And so now the White. 0:14:52.360 --> 0:14:55.560 House is coming back and trying to follow the dictate 0:14:55.680 --> 0:14:58.480 of the court and give her the opportunity to respond. 0:14:58.960 --> 0:15:00.560 And we don't know how this will low play out, 0:15:00.640 --> 0:15:04.400 because even if she's found not guilty, the president could 0:15:04.440 --> 0:15:07.560 come back and say, well, yeah, but she was implicated 0:15:07.640 --> 0:15:10.400 or something. So this is just it's Friday. Put it 0:15:10.440 --> 0:15:12.160 that way, and this is the kind of thing you 0:15:12.200 --> 0:15:12.840 get on Friday. 0:15:12.880 --> 0:15:14.600 Hey for the lawyers, that's all I'm going to say. 0:15:15.360 --> 0:15:17.800 Matt Lezetti, chief US economist at Deutche Bank, thank you 0:15:17.840 --> 0:15:20.000 so much. And of course, our own Mike McKee, Bloomberg 0:15:20.000 --> 0:15:23.440 TV and Radio International Economics and Policy correspondent, do more 0:15:23.520 --> 0:15:24.480 on a labor market. 0:15:25.440 --> 0:15:29.280 You're listening to the Bloomberg Business Week Daily podcast. Catch 0:15:29.360 --> 0:15:32.040 us live weekday afternoons from two to five e's during 0:15:32.280 --> 0:15:36.160 Listen on Applecarplay and Android Otto with the Bloomberg Business app, 0:15:36.360 --> 0:15:39.080 or watch us live on YouTube. 0:15:39.320 --> 0:15:44.880 We have been reporting US employers unexpectedly unexpectedly cut jobs 0:15:44.920 --> 0:15:46.720 in the month of July, and hiring the prior two 0:15:46.760 --> 0:15:49.800 months was revised lower, suggesting the labor market is weaver 0:15:50.000 --> 0:15:51.480 weaker than previously thought. 0:15:51.480 --> 0:15:53.080 Man, do I need a weekend? 0:15:53.600 --> 0:15:56.800 This is after some surprising strength earlier this year. We're 0:15:56.800 --> 0:15:58.480 going to stay on the labor market. We've been trying 0:15:58.480 --> 0:16:00.560 to look at this from different vantage points, and that's 0:16:00.600 --> 0:16:01.760 where our next guest comes in. 0:16:02.120 --> 0:16:05.320 We've got Laura Ulrich with US Director of Economic Research 0:16:05.360 --> 0:16:07.840 in North America at Indeed Hiring Lab. She's also a 0:16:07.880 --> 0:16:11.160 former senior Regional economist and senior manager at the Federaliserve 0:16:11.200 --> 0:16:14.000 Bank of Richmond, primarily focused on research related to higher 0:16:14.080 --> 0:16:16.720 education and workforce dynamics, which, by the way, we got 0:16:16.760 --> 0:16:19.800 some great questions from our audience coming in just about this. 0:16:19.920 --> 0:16:22.480 She was also an economics professor and associate dean for 0:16:22.560 --> 0:16:28.240 undergraduate programs at Winthrop University. She joins US from North Carolina. Welcome, Welcome, Welcome. 0:16:28.440 --> 0:16:30.720 How would you describe today's payrolls report and how it 0:16:30.800 --> 0:16:34.680 changes your view of the labor market if at all? 0:16:34.720 --> 0:16:37.440 I wouldn't say it necessarily changes my view of the 0:16:37.520 --> 0:16:40.120 labor market. We at the Hiring Lab and Indeed have 0:16:40.240 --> 0:16:43.720 been kind of describing the market as a market that 0:16:43.840 --> 0:16:46.360 is cooled, not necessarily that is cooling, and we're kind 0:16:46.360 --> 0:16:49.480 of bouncing along the bottom. And I see that as 0:16:50.280 --> 0:16:52.320 the same today as I really did yesterday. 0:16:52.360 --> 0:16:53.680 However, I do think it is. 0:16:53.640 --> 0:16:57.760 Important to acknowledge that the payroll employment report came in 0:16:57.800 --> 0:17:00.720 about one hundred thousand jobs below consensus today and so 0:17:00.840 --> 0:17:04.840 that's notable, right, It was much softer than what people 0:17:04.840 --> 0:17:05.640 were expecting. 0:17:06.200 --> 0:17:08.360 So I am curious too, and tell us a little 0:17:08.400 --> 0:17:11.000 bit more if you would, Laura, about the activity you 0:17:11.040 --> 0:17:13.840 are seeing on the platform. What are the job listings, 0:17:13.880 --> 0:17:15.760 what are the jobs people are looking for? Give us 0:17:15.800 --> 0:17:19.359 an idea and how it gives us some context about 0:17:19.480 --> 0:17:22.960 data today versus maybe six months ago or just trends, 0:17:23.000 --> 0:17:25.960 because you guys see a lot we do. 0:17:26.160 --> 0:17:26.520 We do. 0:17:27.280 --> 0:17:30.360 We have access to a lot of data both on 0:17:30.560 --> 0:17:32.240 labor supply and labor demand. 0:17:32.400 --> 0:17:36.920 I would tell you that we've been in kind of. 0:17:37.000 --> 0:17:40.199 A I wouldn't call it a steady state, because there 0:17:40.240 --> 0:17:42.359 has been a bit of turbulence, right, We've been balancing 0:17:42.400 --> 0:17:46.199 a bit. But we've been at about a job posting 0:17:46.200 --> 0:17:49.000 index of one hundred and two ish, between about one 0:17:49.080 --> 0:17:51.240 hundred and one and one hundred and two since about 0:17:51.320 --> 0:17:55.080 September of last year. So that's kind of what leads 0:17:55.359 --> 0:17:58.240 partially to our viewpoint in that this is kind of 0:17:58.440 --> 0:18:00.680 a cool market that's bumping on on the bottom. 0:18:01.040 --> 0:18:03.800 One interesting point, though, and you did see. 0:18:03.359 --> 0:18:07.320 This reflected potentially in today's job payroll employment report. We 0:18:07.440 --> 0:18:10.640 have seen some strength in some sectors where we were 0:18:10.680 --> 0:18:12.919 seeing considerable weakness before. 0:18:13.000 --> 0:18:14.960 So software development. 0:18:14.560 --> 0:18:18.560 Jobs, for example, are up fifteen percent since early twenty 0:18:18.600 --> 0:18:22.000 twenty five, and we had seen considerable cooling in tech 0:18:22.080 --> 0:18:25.399 jobs and in the payroll employment report, jobs in both 0:18:25.560 --> 0:18:29.359 information and professional business services were up today. So we 0:18:29.520 --> 0:18:32.120