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Speaker 1: Right, John as Linda Chief Economists, it's default to preview

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Speaker 1: the US Jobs report numbers coming out Friday morning. Will

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Speaker 1: Street time now n Z. Will you be going through

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Speaker 1: it and looking particularly at two items. One will be,

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Speaker 1: of course, the headline and the second being the average

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Speaker 1: hourly wages. Well, I think right now the headline numbers

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Speaker 1: certainly will be driving at least the knee jerk reaction

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Speaker 1: from the market. We are looking for an a rise

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Speaker 1: around two d and fifty thousand, which isn't noticeable slow

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Speaker 1: down from the over three thousand pace we saw in August,

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Speaker 1: and a further retreat from roughly five thousand in July,

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Speaker 1: but this should be enough to maintain the characterization of

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Speaker 1: solid job creation as we've heard from the FED. But

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Speaker 1: the other thing that I think I'm going to be

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Speaker 1: focused on more is the unemployment rate, because we have

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Speaker 1: seen the unemployment rate take up slightly, but this has

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Speaker 1: been primarily a reflection of workers on the sidelines coming

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Speaker 1: back into the labor market seeking gainful employment. So it

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Speaker 1: may be quite a counterintuitive, but I would argue that

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Speaker 1: a further back up than the unemployment rate, at least

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Speaker 1: near term, may be a positive indicator of labor market conditions.

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Speaker 1: So we're in a sort of bad news is good

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Speaker 1: news period from the stock market. The only thing is

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Speaker 1: not too bad, right, You don't want the report to

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Speaker 1: to suggest that we're tumbling down into recession. What's a

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Speaker 1: number that would be say, friendly to risk assets? I

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Speaker 1: think at this point anything above two hundred thousand is

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Speaker 1: going to be seen as still solid and keeping the

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Speaker 1: Fed very firmly on their pathway to hire interest rates.

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Speaker 1: So in order for more of an expectation of a

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Speaker 1: pivot or a softer tone from the Fed, we would

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Speaker 1: have to see a noticeably disappointing read below two hundred thousand,

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Speaker 1: and maybe even coupled with a stronger reversal in the

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Speaker 1: unemployment rate pushing up to three eight or maybe even

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Speaker 1: closer to four percent. So I mean, what would the

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Speaker 1: Fed really be taking from this? What would they like

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Speaker 1: to be seeing? Well, I think they're pleased with the

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Speaker 1: idea that the economy is slowly after all, that is

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Speaker 1: the point of raising the cost of borrowing. You tap

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Speaker 1: down consumption, tap down investment, and by extension, then you

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Speaker 1: do see a slowdown in the economy, which results in

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Speaker 1: more benign inflation. So in part. I think a slower

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Speaker 1: than expected or weaker than expected employment report would be

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Speaker 1: seen as a positive indication that earlier policy metrics are

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Speaker 1: already having the intended effect on the economy. Yeah. I suppose,

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Speaker 1: you know, the FEDS talking about maybe getting unemployment up

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Speaker 1: to four and after five percent, But they wouldn't want

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Speaker 1: it to happen too fast, right, They wouldn't be happy,

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Speaker 1: for instance, to see actually a loss of jobs in

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Speaker 1: this report. Well, that that's exactly what it's this delicate balance.

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Speaker 1: They do want to see a slow, low down destruction

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Speaker 1: and demand, but at the same time they don't want

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Speaker 1: to see the economy falling off a cliff. At that point,

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Speaker 1: it's too late, and it's very clear then the Fed

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Speaker 1: has gone a bob and beyond the level of tightening

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Speaker 1: that's appropriate to rain in price pressures. Okay, with the

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Speaker 1: one of the mind, how do you see growth faring

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Speaker 1: in all this? Because it does, of course seem that

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Speaker 1: the uh killing the beast of inflation is being done

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Speaker 1: with of course a little regard for what really happens

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Speaker 1: ultimately with growth that would would would see it would

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Speaker 1: seem to be the case. But it give me a

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Speaker 1: sense of how how low growth could they tolerate well

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Speaker 1: Without a more robust return of the consumer, the U

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Speaker 1: S economy is unlikely to it prove markedly from that

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Speaker 1: that's lump that we've seen across the first six months

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Speaker 1: of the year. But this does seem to be quite

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Speaker 1: counter counter to what the FED has been predicting in

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Speaker 1: terms of positive growth for not only this year, but

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Speaker 1: the next celeration in activity to I don't think the

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Speaker 1: Fed is going to necessarily be looking too much at

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Speaker 1: top line GDP because it is so backward looking. I

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Speaker 1: think more important will be those monthly reports not only

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Speaker 1: on consumer spending but job creation. Of course, first and

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Speaker 1: foremost the inflation numbers. So in looking at the jobless

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Speaker 1: claims data today, what did you make of that? I mean,

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Speaker 1: they rose more than expected, but but still kind of

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Speaker 1: at low levels, right, yeah, exactly. We have seeing some

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Speaker 1: increased volatility over the past couple of weeks, but really

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Speaker 1: in this type range only slightly above the very low

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Speaker 1: levels that we've seen, and so from a jobless claims perspective, again,

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Speaker 1: that data point really is not going to be moving

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Speaker 1: the needle. The FED will be focused on the Friday

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Speaker 1: jobs report well beyond any sort of movement that we're

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Speaker 1: seeing in claims unless we see a discernible upward trend

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Speaker 1: being established in those numbers, lindsay, in terms of what

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Speaker 1: the FED is trying to do here, we heard from

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Speaker 1: Scott Minor today that it's it's always during FED hiking

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Speaker 1: cycles that you get mistakes. And as an economist, I'm

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Speaker 1: not a market player, I'm kind of curious in your

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Speaker 1: thoughts on this. I mean, is the FED moving so

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Speaker 1: fast that something will break something in the financial system. Well,

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Speaker 1: the FED essentially is trying to break the economy, not

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Speaker 1: necessarily break the markets, but the markets will be a

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Speaker 1: reflection of how weak the economy becomes. And so it's

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Speaker 1: sort of I mean more like is where it's sort

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Speaker 1: of is it has systemic importance, it breaks something that

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Speaker 1: is just too big. Well, arguably, we saw the indications

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Speaker 1: of breakage overseas, and of course the b o E

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Speaker 1: was quick to jump in, and I would imagine that

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Speaker 1: if we saw a similar scenario play out here in

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Speaker 1: the US, the FED would be forced to move off

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Speaker 1: of that pathway of whatever it costs, in order to

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Speaker 1: bring down inflation and focus on stabilizing financial markets. Now

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Speaker 1: they haven't said as much, and they want to continue

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Speaker 1: to convince the markets that inflation is their their focus.

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Speaker 1: But if that volatility sets in, I suspect them taking

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Speaker 1: a much more dubbish tone. Lindsay, thank you. Lindsay Pig's

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Speaker 1: chief economist at Stifle