WEBVTT - Draghi and Diversity 0:00:03.680 --> 0:00:06.720 Hello, and welcome to Stephanomics, the podcast that brings the 0:00:06.720 --> 0:00:15.360 global economy to you. And they used to say that 0:00:15.600 --> 0:00:18.280 economists are people who were good with numbers but didn't 0:00:18.280 --> 0:00:21.680 have the personality to be accountants. It sounds like a 0:00:21.760 --> 0:00:24.560 joke against accountants, but if you think about it, it's 0:00:24.600 --> 0:00:29.240 even ruder about economists. The dismal science they call it, 0:00:29.440 --> 0:00:31.840 and that's when they're being polite. Others would say it 0:00:31.880 --> 0:00:35.480 wasn't a science at all, just dismal. Maybe that's why 0:00:35.680 --> 0:00:39.440 historically you haven't seen so many women going into economics. 0:00:40.120 --> 0:00:43.159 Last year, less than twenty percent of economics undergraduates in 0:00:43.200 --> 0:00:46.360 the UK were women. The numbers for the US are similar, 0:00:46.760 --> 0:00:50.280 and they shrink as you proceed through academia. Only four 0:00:50.680 --> 0:00:54.160 percent of full economics professors in the US are women, 0:00:54.480 --> 0:00:57.800 and that is an all time high. But if you 0:00:57.840 --> 0:01:02.480 look outside the universities, women economists are starting to punch 0:01:02.680 --> 0:01:06.679 well above their weight. If you look around, several of 0:01:06.680 --> 0:01:10.800 the world's biggest banks now have female chief economists. We 0:01:10.880 --> 0:01:14.160 also have female chief economists at the International Monetary Fund, 0:01:14.200 --> 0:01:16.760 the World Bank, the Rich Country's Club, the o E 0:01:16.880 --> 0:01:20.480 c D, and the European Bank of reconstruction and development. 0:01:21.200 --> 0:01:24.039 We decided to celebrate the rising tide of women in 0:01:24.080 --> 0:01:27.320 economics this week at Bloomberg with a special invent in London, 0:01:27.640 --> 0:01:30.840 talking about everything that matters in the global economy with 0:01:30.920 --> 0:01:33.559 two women at the very top of the economics game, 0:01:34.080 --> 0:01:39.120 Janet Henry, the global Chief Economist for HSBC, and Claire Lombardelli, 0:01:39.360 --> 0:01:41.440 who is the Chief Economic Advisor to the Treasury and 0:01:41.480 --> 0:01:45.039 also runs the entire Economic service for the UK Government. 0:01:45.360 --> 0:01:47.680 We're going to play you most of that conversation in 0:01:47.720 --> 0:01:51.160 this week's podcast, but first I thought we should check 0:01:51.200 --> 0:01:54.960 in on events in CenTra, which is the royal, fancy 0:01:55.080 --> 0:01:58.720 hilltop resort that the European Central Bank brings everyone to 0:01:59.000 --> 0:02:03.120 every year to think about monetary policy and the global economy. 0:02:03.400 --> 0:02:06.720 And this one is special because not only is it 0:02:06.760 --> 0:02:11.400 the twenty year anniversary of the Euro, the single European currency, 0:02:11.440 --> 0:02:14.320 but it's going to be the last forum presided over 0:02:14.360 --> 0:02:17.160 by Mario Druggy, President of the European Central Bank, who'll 0:02:17.160 --> 0:02:20.560 be leaving office at the end of October. Paul Gordon 0:02:20.800 --> 0:02:23.040 runs our central Bank coverage in Europe out of our 0:02:23.080 --> 0:02:27.320 Frankfurt office and he's been at the center conference this week. Paul, 0:02:27.600 --> 0:02:30.000 thanks for joining me. I know there's lots going on, 0:02:30.040 --> 0:02:31.960 but what's what's the mood like at center. I know 0:02:32.040 --> 0:02:35.160 that you're an old hand at these things. Yes, I 0:02:35.160 --> 0:02:37.640 mean you have to remember it's an academic retreat and 0:02:37.680 --> 0:02:41.320 there's some quite interesting research papers and themes to deal with. 0:02:41.400 --> 0:02:43.960 But what everyone really wants to talk about is what 0:02:44.200 --> 0:02:46.840 is the ECB going to be doing in the near future. 0:02:47.200 --> 0:02:50.560 And Mario Dragging gave people plenty to talk about in 0:02:50.600 --> 0:02:53.920 his opening remarks on the first day of the conference, 0:02:54.240 --> 0:02:58.919 saying that if the economic outlook, particularly inflation, does not improve, 0:02:59.200 --> 0:03:02.680 additional mulus will be needed. Now that's quite a low bar, 0:03:03.040 --> 0:03:05.360 and he didn't say the economy has to deteriorate. He 0:03:05.440 --> 0:03:09.440 just has to say it doesn't improve, and that've got 0:03:09.480 --> 0:03:12.520 people thinking about what he's going to do. Dragging himself 0:03:12.560 --> 0:03:15.800 said everything is on the table, interest rate cuts, specifically 0:03:16.040 --> 0:03:19.079 a resumption of quantity of easing, and any other measures 0:03:19.080 --> 0:03:23.120 that might be needed. But the Governing Council members and 0:03:23.320 --> 0:03:25.760 the officials who we managed to speak to inside the 0:03:25.840 --> 0:03:28.800 room clearly gave us the sense that they're expecting if 0:03:28.840 --> 0:03:32.040 anything happens, it's going to be an interest rate cut. 0:03:32.480 --> 0:03:34.600 That would be the first step, and it could come 0:03:34.680 --> 0:03:37.080 quite soon. I'm reminding people that that's a cut from 0:03:37.120 --> 0:03:40.960 an already negative rate, which we had previously not We 0:03:40.960 --> 0:03:43.480 had sort of thought it couldn't go much lower. Yes, 0:03:43.560 --> 0:03:45.560 I mean the rate, the deposit rate, which is the 0:03:45.640 --> 0:03:49.360 key rate. There's minus zero point four percent. Now nobody 0:03:49.400 --> 0:03:51.720 thinks that's there's the lower bound what used to be 0:03:51.800 --> 0:03:54.000 called zero lower bound. But we've broken through that. Of 0:03:54.040 --> 0:03:57.440 course in Switzerland, for example, you're a minus zero point seven. 0:03:58.520 --> 0:04:01.880 But there's probably not that much room to cut before 0:04:01.960 --> 0:04:05.840 banks start complaining so much about their squeezed profitability that 0:04:05.880 --> 0:04:09.440 they stopped lending to the real economy, to companies and households. Now, 0:04:09.480 --> 0:04:12.720 there is a fudge around that, and it's one that 0:04:12.760 --> 0:04:17.520 Mary Draggie has also mentioned. That is supposedly known as tearing. 0:04:17.839 --> 0:04:21.160 But what it is is effectively exempting banks from some 0:04:21.279 --> 0:04:25.280 of the charge on their deposits. That's a contentious point 0:04:25.320 --> 0:04:27.960 within the Governing Council. Some people think it's not necessary, 0:04:28.200 --> 0:04:31.040 but it is generally accepted. It would allow the ECB 0:04:31.400 --> 0:04:34.640 to keep rates lower for longer, but again not necessarily 0:04:34.720 --> 0:04:37.720 much lower. It's possible we will lose some of our 0:04:37.760 --> 0:04:41.200 audience if we go further into the tearing analysis. But 0:04:41.400 --> 0:04:43.280 I think if we sort of stepped back and just 0:04:43.320 --> 0:04:46.560 think about the sort of big picture on this. I mean, 0:04:46.560 --> 0:04:49.200 you've got married Druggie who at least is credited with 0:04:49.320 --> 0:04:52.560 saving the euro He got the European Central Bank to 0:04:52.880 --> 0:04:56.440 create instruments that didn't exist before, for responding to the 0:04:56.440 --> 0:05:00.640 sovereign debt crisis, and he's consistently had to drag other 0:05:00.680 --> 0:05:03.560 people on the Governing Council along when he's wanted to 0:05:03.560 --> 0:05:07.000 do more to help the Eurozone economy. Was this him 0:05:07.040 --> 0:05:10.719 in his speech this this year? Was he trying once 0:05:10.760 --> 0:05:14.080 again to push the Governing Council in a way that 0:05:14.120 --> 0:05:16.520 they didn't necessarily want to go and maybe even lock 0:05:16.600 --> 0:05:19.680 in his successor because technically he's not in charge for 0:05:19.760 --> 0:05:21.680 very much longer. He might not be around for most 0:05:21.680 --> 0:05:25.040 of this loosening that he's talking about. Yes, he's definitely 0:05:25.080 --> 0:05:27.719 constrained as successor, whoever that may turn out to be. 0:05:28.080 --> 0:05:30.400 That was already the case because the Governing Council has 0:05:30.440 --> 0:05:33.080 pledged to keep interest rates at current levels at least 0:05:33.160 --> 0:05:35.760 until the second half of next year. But he may 0:05:35.839 --> 0:05:39.840 well have locked his successor into lower rates for a 0:05:39.880 --> 0:05:43.720 longer time as well. It's entirely feasible that his successor 0:05:43.880 --> 0:05:46.160 is part of that decision, of course, that already sits 0:05:46.200 --> 0:05:49.160 on the Governing Council. That decision will be taken eventually 0:05:49.400 --> 0:05:53.240 by the European Union leaders sometime over the coming weeks, 0:05:53.320 --> 0:05:56.400 possibly even over the coming months. But this is potentially 0:05:56.480 --> 0:05:58.880 something of a last hurrah. You're right for Mario dragging 0:05:59.080 --> 0:06:00.800 he will never raise in trust rates. He will be 0:06:00.800 --> 0:06:03.960 the first ECB president never to have raised interest rates 0:06:04.080 --> 0:06:08.239 and as president and that is something that no doubt 0:06:08.360 --> 0:06:10.880 is weighing on him well. Although funny enough, of course, 0:06:10.920 --> 0:06:13.160 the first thing he did when he came in as 0:06:13.200 --> 0:06:18.400 president was reverse the recent increase of his predecessor, Jean 0:06:18.440 --> 0:06:21.160 clude Twitche. So I guess you never can completely lock 0:06:21.240 --> 0:06:24.200 your successor into anything. I wonder if it will be 0:06:24.200 --> 0:06:27.560 the last Trump tweet he gets, because very soon after 0:06:27.600 --> 0:06:30.960 the speech, we had a couple of tweets from the 0:06:31.000 --> 0:06:36.400 American President talking about the markets responding to unfair comments 0:06:36.440 --> 0:06:40.240 by Mario Dragi and that this was part of a 0:06:40.240 --> 0:06:45.080 continual policy of other countries talking down their currencies making 0:06:45.120 --> 0:06:48.120 them more competitive. Against US producers. Did that come as 0:06:48.160 --> 0:06:52.560 a how do people respond to that? That tweet? CenTra, 0:06:53.400 --> 0:06:56.360 It's circulated quite quickly within the room. It is certainly 0:06:56.440 --> 0:06:59.479 raised some eyebrows here at the ECB. There was no 0:06:59.560 --> 0:07:03.080 initial official reactions that at all, although we did speak 0:07:03.120 --> 0:07:06.680 to the former chief economist Peter Prett on TV who 0:07:06.720 --> 0:07:09.840 said that this is the kind of thing, this is misguided. 0:07:09.880 --> 0:07:12.080 I forget his exact words, but he was saying, this 0:07:12.160 --> 0:07:13.880 is not what this was about. This is not about 0:07:13.960 --> 0:07:16.640 lowering the euro, weakening the euro. This is the TV 0:07:16.760 --> 0:07:19.160 doing what it has to do for its own economy, 0:07:19.240 --> 0:07:23.040 and that's perfectly reasonable. Well, if nothing else, President Trump 0:07:23.120 --> 0:07:26.600 is getting global exchange rate policy back into the headlines. 0:07:26.640 --> 0:07:29.160 I guess as economists we should be pleased. Paul Gordon, 0:07:29.200 --> 0:07:31.960 thank you very much for joining us. Enjoys intro. Thank you. 0:07:38.320 --> 0:07:41.840 Had a similar event for International Women's Day in New York, 0:07:42.400 --> 0:07:44.680 thinking about the rising tide of women in economics, but 0:07:44.720 --> 0:07:47.360 also just talking about what matters in the global economy 0:07:47.480 --> 0:07:50.040 with senior women economists, and it's one of the most 0:07:50.120 --> 0:07:53.600 kind of fun conversations I've had this year. So I'm 0:07:53.600 --> 0:07:56.800 looking looking forward to this one. If I think back then, 0:07:57.840 --> 0:08:00.920 I think Christine Legarde, the head the International muchI Fund, 0:08:00.920 --> 0:08:04.960 had just described the situation in the global economy as precarious. 0:08:05.680 --> 0:08:10.560 We were talking about the so called pivot or you turn, 0:08:10.680 --> 0:08:12.800 depending on how you look at it, by the US 0:08:12.800 --> 0:08:15.960 Central Bank and thinking about what that might mean in 0:08:16.040 --> 0:08:20.840 terms of not having further rate rises. Things have moved 0:08:20.840 --> 0:08:24.520 on a long way since March. We've had a complete 0:08:24.600 --> 0:08:30.880 change in expectations around FED policy. We've had today big 0:08:30.880 --> 0:08:34.120 shift or a signal of a big shift in European 0:08:34.200 --> 0:08:39.040 central bank policy. Janet, would you say the risks of 0:08:39.040 --> 0:08:42.720 a recession have materially increased in the last few months 0:08:43.400 --> 0:08:49.840 or have we just talked ourselves into a much gloomier place. Um, 0:08:49.960 --> 0:08:53.480 It's it's certainly been dramatic. I mean last September, I 0:08:53.520 --> 0:08:57.480 think the markets were pricing in three more FED increases 0:08:58.360 --> 0:09:01.800 and now their book to basically pricing in three break 0:09:01.880 --> 0:09:05.520 cuts by early twenties. So the move has been very, 0:09:05.640 --> 0:09:09.160 very swift. But we are now in this world and 0:09:09.200 --> 0:09:12.440 I think it's probably best summed up by Buduacure from 0:09:12.520 --> 0:09:16.000 BCB Board thinks yesterday or the day before, he made 0:09:16.040 --> 0:09:19.080 the comment on the yield curve, and it's clearly the 0:09:19.160 --> 0:09:22.800 financial markets see something that we don't. You don't ignore 0:09:23.000 --> 0:09:26.240 a signal like that, but nor do you blindly follow it. 0:09:26.640 --> 0:09:28.600 And that's why, you know, I think the message from 0:09:28.600 --> 0:09:32.080 the ECB today was, Yeah, let's talk about the instruments. 0:09:32.160 --> 0:09:34.280 Let's persuade everyone. We've got a whole raft of measures 0:09:34.360 --> 0:09:38.160 we can deliver if necessary, but we we will be 0:09:38.200 --> 0:09:40.959 ready to act if we need to. But there is 0:09:41.000 --> 0:09:43.960 this disconnect between what's in the data um and the 0:09:44.000 --> 0:09:47.600 actual available in the markets, and what's in the actual 0:09:47.720 --> 0:09:50.319 data at the moment, which is still consistent with the 0:09:50.440 --> 0:09:53.079 general slowdown compared with two thousands and seventeen and then 0:09:53.080 --> 0:09:56.480 two thousand and eighteen, but is not quite in recessionary 0:09:56.559 --> 0:09:59.680 territory yet, Employments still growing even in the ural area. 0:09:59.720 --> 0:10:02.120 Wage growkers that are ten year high, hay rolls are 0:10:02.120 --> 0:10:05.040 still rowing in the US. So yeah, the risk is 0:10:05.080 --> 0:10:08.120 that it becomes self fulfilling. We've seen brief periods of 0:10:08.160 --> 0:10:10.400 in versus Yokov over the last six months or so, 0:10:10.559 --> 0:10:13.760 and let's always triggered this this conversation. I like the 0:10:13.760 --> 0:10:15.480 way John Author's put it actually in a in a 0:10:15.480 --> 0:10:17.400 column this week, said we shouldn't be trying to sort 0:10:17.400 --> 0:10:19.280 of explain this way. You know, the bond markets might 0:10:19.320 --> 0:10:21.360 be may be behaving as if they're bracing themselves with 0:10:21.480 --> 0:10:24.640 something terrible to happen, because traders are indeed scared that 0:10:24.760 --> 0:10:27.160 something terrible is going to happen. And if you look 0:10:27.200 --> 0:10:29.320 at some of those kind of leading indicators that people 0:10:29.320 --> 0:10:30.960 talk about in the US, I think it's you know, 0:10:31.040 --> 0:10:35.120 trucking or the Empire State Manufacturing Survey. I mean, I 0:10:35.160 --> 0:10:38.599 don't know what's your what's your favorite leading indicator of 0:10:38.640 --> 0:10:40.959 recession and which way is it pointing? Well, I think 0:10:40.960 --> 0:10:42.920 what we've got at the moment is a very clear 0:10:42.960 --> 0:10:45.679 industrial recession. You know, we've had it really in different 0:10:45.679 --> 0:10:47.400 parts of the words. It's the middle of two thousand 0:10:47.440 --> 0:10:49.439 and eighteen. You know, it was led by Europe and 0:10:49.520 --> 0:10:52.480 led by Germany. You had all sorts of factors in 0:10:52.520 --> 0:10:56.680 the industrial sector related to the autosector, in particular change 0:10:56.679 --> 0:10:59.679 in vehicle licensing. You know, Italy was in recession and 0:10:59.679 --> 0:11:02.839 the second half of last year Germany avoided recession by 0:11:02.840 --> 0:11:06.079 the narrowest of margins. Then it looked like things were 0:11:06.080 --> 0:11:10.160 stabilizing to some degree. But the z W which is 0:11:10.200 --> 0:11:12.920 a survey of financial analysts came out this morning. It 0:11:13.040 --> 0:11:17.200 was shockingly bad. The Empire Survey New York State, not 0:11:17.320 --> 0:11:20.400 really representative of the Holy United States, but at these 0:11:20.480 --> 0:11:24.040 kind of levels. But remember, in most economies, particularly someone 0:11:24.080 --> 0:11:28.640 like the United States, the economy is consumer spending. So 0:11:28.720 --> 0:11:31.559 you can have a disconnect between this extreme weakness in 0:11:31.600 --> 0:11:35.120 the industrial sector, which is pretty much in recession from 0:11:35.160 --> 0:11:38.840 services for a while. But the more that industry remains 0:11:38.840 --> 0:11:41.240 in a recession, if that starts to impact the labor market, 0:11:41.320 --> 0:11:44.280 then if construction gets hit by the labor market, that 0:11:44.360 --> 0:11:47.800 impacts on consumer spending, and then the slowdown and consumer 0:11:47.840 --> 0:11:51.720 spending actually starts to follow. So yeah, industry, there is 0:11:51.720 --> 0:11:55.520 no question, there's very little side of turnaround. But for now, 0:11:55.640 --> 0:11:58.959 the consumer side is okay. And I think, as you say, 0:11:59.000 --> 0:12:03.280 when where market are scared, they're scared that you know, 0:12:03.440 --> 0:12:05.280 the rest of the economy will follow. We know that 0:12:05.320 --> 0:12:08.120 your investment is not going to pick up in a 0:12:08.200 --> 0:12:13.760 world where we've got these trade tensions persistently influencing on 0:12:13.840 --> 0:12:16.840 the outlook for the global economy in a negative way. Now, Claire, 0:12:16.880 --> 0:12:19.480 you're very kind to come along today because it is 0:12:19.640 --> 0:12:22.559 a week when the Minetary Policy Committee for the UK 0:12:22.679 --> 0:12:25.520 is meeting and in our great kind of British colonial phrase, 0:12:25.559 --> 0:12:27.960 that means you're in perda, so you can't talk about 0:12:28.000 --> 0:12:31.920 the sort of short run issues around monetary policy. But 0:12:31.960 --> 0:12:36.880 if you look at the UK, even independent of Brexit, 0:12:36.920 --> 0:12:38.800 I was struck by one of our UK Economy is 0:12:38.920 --> 0:12:42.000 saying that the case for for holding policy and just 0:12:42.120 --> 0:12:47.880 generally the case for concern around the economy has increased 0:12:48.520 --> 0:12:51.040 independent of what's going on Brexit and the last few months. 0:12:51.040 --> 0:12:53.440 I mean that that the material risk of the UK 0:12:53.559 --> 0:12:55.560 economy have gone up in the last few months. You 0:12:55.559 --> 0:12:57.880 think that's right, Well, I think it's I mean, it's 0:12:57.960 --> 0:13:00.559 very hard to distinguish or to separate hour what's going 0:13:00.559 --> 0:13:03.640 on in the UK economy from Brexit, but I mean 0:13:03.679 --> 0:13:07.199 I do think the impact of these global uh the 0:13:07.240 --> 0:13:09.760 global movements that we've seen on the UK or also 0:13:09.840 --> 0:13:13.160 having a having an effect, and you can't separate that. 0:13:13.200 --> 0:13:15.440 I mean, we are an open and small economy, we 0:13:15.480 --> 0:13:18.360 are very exposed to that, so to an extent that 0:13:18.480 --> 0:13:20.960 is an additional risk. That is definitely the case that 0:13:21.000 --> 0:13:23.600 the concern globally will translate into one in the UK 0:13:24.160 --> 0:13:26.079 and Stan it said. I mean again, consumption PA is 0:13:26.120 --> 0:13:28.640 an important well in the UK as it doesn't in 0:13:28.679 --> 0:13:31.680 the US, and that has continued to hold up reasonably well. 0:13:32.240 --> 0:13:33.959 But the recent data that we saw we were actually 0:13:33.960 --> 0:13:36.079 the data and Q one was was strong. But when 0:13:36.080 --> 0:13:37.480 you look at that, a lot of that was around 0:13:37.640 --> 0:13:39.200 inventories and lot of things we might think to be 0:13:39.240 --> 0:13:42.040 short terms. So I think again, in the same way 0:13:42.080 --> 0:13:44.920 as in the global position for the UK, the position 0:13:44.960 --> 0:13:47.839 is quite subdued. And when you're thinking about it, I 0:13:47.880 --> 0:13:49.720 mean looking at it an economists, but also when you 0:13:49.800 --> 0:13:53.280 have to be you know, thinking about the fiscal outlook 0:13:53.400 --> 0:13:56.320 for the UK, what the planning framework is going to 0:13:56.360 --> 0:13:59.760 be for the next few years. A year or so, 0:14:00.200 --> 0:14:02.120 we might have said we still had quite a long 0:14:02.120 --> 0:14:06.360 way to run in this economic cycle. Do we do 0:14:06.400 --> 0:14:09.560 we conclude from the last year that actually there's a 0:14:09.559 --> 0:14:12.120 good chance that this is that we've got less time 0:14:12.120 --> 0:14:15.800 than we thought, or is this just more feels more 0:14:15.840 --> 0:14:17.960 like a sort of temporary slowdown. We shouldn't change our 0:14:18.000 --> 0:14:21.040 fundamental view of the recovery. I mean, if you look 0:14:21.080 --> 0:14:25.320 at the actually the fiscal numbers, you wouldn't necessarily I 0:14:25.360 --> 0:14:28.840 mean the large change that as people know our forecasting 0:14:28.880 --> 0:14:31.120 has done sort of quite an independent body, the Office 0:14:31.160 --> 0:14:33.760 of BUDGECT responsibility. And actually the large change they made 0:14:33.760 --> 0:14:36.560 on the fiscal forecast was towards the end that was 0:14:37.000 --> 0:14:39.240 last year, in the budget last year, and actually they 0:14:39.280 --> 0:14:44.080 recognized that sort of systematically um our fiscal reouslys have 0:14:44.120 --> 0:14:46.360 been coming in higher than they previously thought, and so 0:14:46.480 --> 0:14:48.520 that was the point at which they made a large adjustment. 0:14:48.560 --> 0:14:51.240 So in a sense quite separate from these trends that 0:14:51.280 --> 0:14:53.360 we're talking about. Only part that was basically just looking 0:14:53.400 --> 0:14:55.360 at the backward data and what had actually happened and 0:14:55.400 --> 0:14:57.240 seeing that the forecast that they've been running toward them 0:14:57.280 --> 0:14:59.600 were not actually in line with with the outturns of 0:14:59.600 --> 0:15:01.680 what we or um So then I feel they've moved 0:15:01.720 --> 0:15:04.920 to a more central post, which is actually particular fiscal side, 0:15:05.160 --> 0:15:08.760 the position to continue to be recently strong. Have you, 0:15:08.800 --> 0:15:11.120 I mean, have you changed your view of the of 0:15:11.160 --> 0:15:13.280 the cycle or where we might be in it as 0:15:13.520 --> 0:15:17.640 on the basis of the last few months. Uh no, no, 0:15:17.760 --> 0:15:20.200 we haven't. We know from that that we're absolutely brilliant 0:15:20.240 --> 0:15:23.840 at forecasting, so well we are. But actually in July, 0:15:24.880 --> 0:15:28.520 this US expansion becomes the longest in the post war period. 0:15:28.720 --> 0:15:32.600 It goes just over ten years, which was the previous 0:15:32.640 --> 0:15:36.160 longest throughout the nineteen nineties. And you know, we had 0:15:36.200 --> 0:15:39.920 always expected a slowdown in growth, and we've longed for 0:15:39.920 --> 0:15:43.680 as long as we've been forecasting, we've had interest rate 0:15:43.800 --> 0:15:47.080 cuts in our profile. It's just that, yeah, in the 0:15:47.120 --> 0:15:48.960 course of the last couple of months, we've become the 0:15:48.960 --> 0:15:52.080 hawks in the room because suddenly everyone's forecasting a rate 0:15:52.120 --> 0:15:55.720 cut in July. So I think it's just the balance 0:15:55.760 --> 0:16:01.480 of risks has materially shifted, and it's already impacting on 0:16:01.600 --> 0:16:04.200 sentiment and on some of the Now some of the 0:16:04.240 --> 0:16:07.480 industrial indicators, it looks like maybe the auto sector isn't 0:16:07.480 --> 0:16:10.880 even worth shape, the tech sector, the semiconductor still looks 0:16:10.880 --> 0:16:14.560 a bit weak, and as I say, any evidence of 0:16:14.560 --> 0:16:17.760 any investment pick up is more likely to continue to 0:16:17.760 --> 0:16:20.080 be constrained. So it's more about, no, we haven't changed 0:16:20.080 --> 0:16:23.200 our central profile, but the risks around it a have 0:16:23.320 --> 0:16:34.600 certainly become much more skew to the downside. You know, 0:16:34.680 --> 0:16:39.360 we've seen obviously populism dominating a lot of the political 0:16:39.440 --> 0:16:47.720 debate in the US, across Europe and clearly in the UK. Um. 0:16:47.760 --> 0:16:51.280 I sometimes wonder whether there could there will be risks 0:16:51.320 --> 0:16:54.440 in if we have a similar response to the next crisis, 0:16:55.640 --> 0:16:59.000 which is fundamentally driven by quantitive easing, as well as 0:16:59.000 --> 0:17:02.080 maybe some fiscal polar see does that then so the 0:17:02.120 --> 0:17:05.640 seeds for another populous backlash because people do associate, rightly 0:17:05.720 --> 0:17:07.760 or wrongly. People think the printing of money to push 0:17:07.800 --> 0:17:10.320 up asset prices is helping people who own assets, which 0:17:10.400 --> 0:17:13.320 is wealthy people, at the expense of, or at least 0:17:13.320 --> 0:17:17.320 expense of increasing inequality. Do you think central banks should 0:17:17.359 --> 0:17:20.720 be wary of that sort of the political impact of 0:17:20.760 --> 0:17:24.560 those kind of tools. I think the difficulty with central 0:17:24.560 --> 0:17:28.480 banks in the last down swing was clearly that they 0:17:28.480 --> 0:17:31.600 were overburdened. You know, we could sometimes be forgiven for 0:17:31.640 --> 0:17:35.200 thinking that the only thing that causes growth is monetary policy, 0:17:35.240 --> 0:17:39.880 cutting interest rates and buying assets, which arguably there's rise 0:17:39.960 --> 0:17:43.280 and asset prices contributed to income and equality. Were wealth 0:17:43.320 --> 0:17:48.359 inequality not so much income inequality. So I think, you know, 0:17:48.560 --> 0:17:51.639 we need to think about what actually generates breath. And 0:17:51.680 --> 0:17:54.320 I think this is again part of the message that 0:17:54.359 --> 0:17:56.439 we were getting from Mario Dragging in his in his 0:17:56.560 --> 0:18:00.040 central speech, it was yes, we've We've got this a 0:18:00.119 --> 0:18:02.800 of instruments we can deliver. We can do more quantitative easing, 0:18:02.920 --> 0:18:06.800 we can cut interest rates more negative. But we still 0:18:06.840 --> 0:18:09.000 need to see the political integration. We still need to 0:18:09.000 --> 0:18:10.919 see a fiscal union. We still need to see a 0:18:10.920 --> 0:18:14.959 banking union and a capital markets union. And perhaps if 0:18:15.000 --> 0:18:19.800 governments didn't overburden central banks to the same degree, then 0:18:19.880 --> 0:18:23.160 we could get something that's more supportive for for growth 0:18:23.960 --> 0:18:28.920 longer term. But I think central banks will protect UM 0:18:28.960 --> 0:18:32.119 as much as their independence and their political neutrality as 0:18:32.359 --> 0:18:35.280 they possibly can. You should see who the next banking 0:18:35.400 --> 0:18:39.240 and governor is. Who whether you have strongly Defenser, I mean, Claire, 0:18:39.240 --> 0:18:43.200 you're in a really interesting position because we were sort 0:18:43.200 --> 0:18:45.000 of used to, you know, out of Bloomberg, sort of 0:18:45.200 --> 0:18:48.920 market economists with no offense to Janet Henry, who is 0:18:48.960 --> 0:18:52.280 at the top of this tree. But you know, we 0:18:52.359 --> 0:18:55.080 have a lot of people who were talking about how 0:18:55.119 --> 0:18:59.520 macro relates to markets UM. But the economists who worked 0:18:59.560 --> 0:19:03.600 for you are actually shaping the way policymakers think about 0:19:03.640 --> 0:19:06.000 economics and the sort of models they have in their 0:19:06.000 --> 0:19:08.840 heads when they're thinking about policy. There's a lot of 0:19:08.840 --> 0:19:12.439 criticism since the crisis of the models that people used 0:19:13.040 --> 0:19:18.600 being faulty and leading us a straight How much do 0:19:18.640 --> 0:19:21.399 you think we've fixed that right on on the ground level. 0:19:21.440 --> 0:19:24.040 How much are you working to kind of broaden people's minds. 0:19:24.520 --> 0:19:26.800 I mean, look, it's very fashionable I think these days 0:19:26.840 --> 0:19:29.879 to blame economists for all sorts of things, and some 0:19:30.000 --> 0:19:33.080 of the criticisms of the economics professional are fair, and 0:19:33.280 --> 0:19:35.880 an awful lot of them, I think are are misplaced, 0:19:36.320 --> 0:19:38.679 and it's important sort of distinguished between the two. I mean, 0:19:38.720 --> 0:19:41.280 there are things we can and should do better. I 0:19:41.280 --> 0:19:43.600 mean one of the things you sort of alluded to there, 0:19:43.640 --> 0:19:46.920 I think is around the diversity of the profession. And 0:19:47.240 --> 0:19:49.760 it's certainly the case that we are not a profession 0:19:49.760 --> 0:19:53.400 that's as diverse as we should be. You know, if 0:19:53.440 --> 0:19:57.200 you if you look at economists and you think about 0:19:57.200 --> 0:19:59.040 what people think of when they think of economists, they 0:19:59.040 --> 0:20:02.800 don't generally turn to the of a representative group across society. 0:20:02.920 --> 0:20:05.080 I mean, it is important that we have a more 0:20:05.119 --> 0:20:08.600 diverse bunch of people doing this this discipline party because 0:20:08.600 --> 0:20:10.280 it has quite a big impact on people that I mean, 0:20:10.400 --> 0:20:14.000 economics has a disproportionate impact and economists have a disproportionate 0:20:14.000 --> 0:20:17.560 impact on on outcomes for people. And there's quite a 0:20:17.560 --> 0:20:19.760 lot of evidence that we all know that diversity correlates 0:20:19.760 --> 0:20:21.359 to performance. I mean, we just saw that in the 0:20:21.880 --> 0:20:25.360 in the charts that you, um you showed. I mean, 0:20:25.560 --> 0:20:27.080 one of the things you've got to think about if 0:20:27.119 --> 0:20:29.040 you're trying to address this. And I know this is 0:20:29.040 --> 0:20:31.920 sort of badged as a sort of rising tide of 0:20:31.960 --> 0:20:34.200 women in economics, though we need to be clear economics 0:20:34.320 --> 0:20:36.639 is not very diverse on any other factors either. You 0:20:36.720 --> 0:20:40.040 area terrible outcomes in terms of the number of black 0:20:40.080 --> 0:20:43.480 and Asian I think, minority of people in their profession. 0:20:43.760 --> 0:20:45.800 You know, we also a very terrible if you look 0:20:45.840 --> 0:20:47.960 at the sort of socioeconomic background, you look at where 0:20:48.000 --> 0:20:50.280 we're all based. I mean most economists work in London, 0:20:50.560 --> 0:20:53.480 live in London, the Southeast, or in some other globalized city. 0:20:53.880 --> 0:20:56.720 You know, it's not surprising then that people load the 0:20:56.800 --> 0:20:58.200 charge at us that we're a bit out of touch 0:20:58.640 --> 0:21:01.320 with what's going on. And put it's particularly important I 0:21:01.359 --> 0:21:03.800 think for the government Economic Service because the work that 0:21:03.840 --> 0:21:05.679 we do, like you say, some of it is you know, 0:21:05.840 --> 0:21:08.840 sort of macroeconomic issues. We've talked about today, some of 0:21:08.880 --> 0:21:11.240 it actually is doing things like looking at how individual 0:21:11.280 --> 0:21:13.720 health programs affect people on the ground in certain regions 0:21:13.960 --> 0:21:17.560 and things like So, actually it's really really important. I mean, 0:21:17.720 --> 0:21:19.520 one of the worrying things. You've got to look at 0:21:19.560 --> 0:21:22.199 those what is the pipeline. So it's very good that 0:21:22.240 --> 0:21:26.679 there's been lots of high profile appointments of senior women 0:21:27.040 --> 0:21:29.760 to high profile economics jobs, you know, chief economists here 0:21:29.760 --> 0:21:32.719 there and all over. But actually when you look at 0:21:32.720 --> 0:21:36.399 who is studying economics, those numbers are not moving at all. 0:21:36.440 --> 0:21:40.200 About a third of economic students undergrads are women. I 0:21:40.200 --> 0:21:42.560 mean actually over the last ten years, that's not increased. Infact, 0:21:42.600 --> 0:21:45.000 it's actually going down slightly at the moment. And that 0:21:45.080 --> 0:21:47.280 suggests actually quite a worrying trend in terms of the 0:21:47.320 --> 0:21:51.119 pipeline of where this is going. You know, if you 0:21:51.119 --> 0:21:53.359 look at that, then throughout the academic spectrum you again 0:21:53.400 --> 0:21:56.040