Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hey, we talked about the market, the US jobs market
Speaker 2: earlier with Michael McKee. It's sluggish, not rapidly deteriorating. And
Speaker 2: we did see that data that came out saw traders
Speaker 2: refraining from boosting bets on your term fed rate cuts,
Speaker 2: setting stocks lower and bonds wavering. So we're not you know,
Speaker 2: it's not like all of a sudden traders are saying, Okay,
Speaker 2: we're going to get more rate cuts because of that
Speaker 2: labor data we got this morning.
Speaker 3: Yeah, a reduction is fully priced ined by mid next year,
Speaker 3: you should not. But we're not seeing those bets go up.
Speaker 2: No, exactly. I'm curious to see what our next guest
Speaker 2: has to say specifically about the US labor market. Let's
Speaker 2: head to the Bloomberg News bureau in DC to someone
Speaker 2: well known to our Bloomberg audience. She was formerly chief
Speaker 2: economist over at ZIP Recruiter. She is Julia Pollock and
Speaker 2: she's chief economist for the US Department of Labor. Julia,
Speaker 2: good to have you back here on Bloomberg. How worried
Speaker 2: are you about rising out employment.
Speaker 1: I'm not so. This report overstates understates the strength of
Speaker 1: the labor market right now because there are two huge
Speaker 1: temporary distortions at play in the data here. The first
Speaker 1: is one hundred thousand or more federal workers who took
Speaker 1: the fork and came off payrolls and some of them
Speaker 1: have gone into temporary frictional unemployment. And the second big
Speaker 1: distortion in this report is the Schumer shutdown, which forced
Speaker 1: nine hundred thousand federal workers off the job. But it
Speaker 1: also led to weakness in the private sector because it
Speaker 1: forced work stoppages for federal contractors and led to temporary
Speaker 1: layoffs there. So I expect the unemployment rate to jump
Speaker 1: back down very soon.
Speaker 3: What about the youth unemployment right and rising youth unemployment?
Speaker 3: Are you concerned about that?
Speaker 1: So you know, the unemployment rate is exactly where it
Speaker 1: was when President Trump first took office in his first term,
Speaker 1: and he has a track record of bringing it all
Speaker 1: the way down to three point five percent. We have
Speaker 1: a bigg ti challenge this time because of the Biden
Speaker 1: inflation hangover, which forced the Fed to slam the brakes
Speaker 1: on the economy, and that has hurt marginal workers the most.
Speaker 1: But we are setting the stage for a huge comeback
Speaker 1: in twenty twenty six and beyond with the One Big
Speaker 1: Beautiful Bill Act, which has hugely stimulative policies, and you'll
Speaker 1: see those macro stimulative effects build into twenty twenty six.
Speaker 1: They are things like like expensing fast and accelerated, full
Speaker 1: and accelerating expensing for business investments, no tax on tips,
Speaker 1: no tax on overtime, no tax on social security.
Speaker 2: So, Julia, if I may just jump in just because
Speaker 2: we only have about five minutes left here. So it
Speaker 2: sounds to you like that there's and we've heard this
Speaker 2: certainly from guests here on Bloomberg, more liquidity coming into
Speaker 2: the market, things to support economic growth. It sounds like
Speaker 2: you said that the labor picture is actually better than
Speaker 2: what the data showed. So it sounds to me then
Speaker 2: that the FED is correct, Jay Powell is correct in
Speaker 2: being or you know, actually, forgive me, what your sounding
Speaker 2: like you're saying is that maybe the FED doesn't need
Speaker 2: then ultimately to be cutting rates. That things actually look
Speaker 2: pretty rosy for twenty twenty six.
Speaker 1: So I think the reason that employment growth, the job
Speaker 1: growth slowed so dramatically between mid twenty twenty two and
Speaker 1: mid twenty twenty four is that rates were high and
Speaker 1: The longer rates stay restrictive, the more of the economy
Speaker 1: gets hurt, the more businesses have to refinance it double
Speaker 1: the rate, the more families go out there and try
Speaker 1: to buy a home and find that it's just unaffordable.
Speaker 1: So rates right now are still restrictive, and they are
Speaker 1: still a problem for much of the economy.
Speaker 2: But you said you were You said you weren't concerned
Speaker 2: about rising unemployment, So I'm a little confused.
Speaker 1: Well, the Fed has a duel mandate full employment on
Speaker 1: the one hand, and and price stability, and this president
Speaker 1: has shown that his policies deliver both. In the first
Speaker 1: Trump administration, we had non inflationary growth. And you can
Speaker 1: do that with policies that don't throw fuel on the
Speaker 1: fire of demand and restrict supply, but do the exact opposite.
Speaker 1: So through deregulation, through reshoring incentives, we're going to see
Speaker 1: this labor market take off again and in a non
Speaker 1: inflationary way.
Speaker 3: Well, on the resharing part of this motivation for reshoring,
Speaker 3: on shoring, imposing tariffs to bring back the Midwest to
Speaker 3: revitalize what many consider the American dream, Secretary Vessett has
Speaker 3: said it's been harmed by global trade. The manufacturing industry,
Speaker 3: though it keeps shedding workers, when can we expect a
Speaker 3: data to reflect progress that the administration is trying to
Speaker 3: make in restoring that American dream.
Speaker 1: So the economy shed manufacturing jobs for about two year,
Speaker 1: years before President Trump took office. Again, this latest report
Speaker 1: shows the largest increase in construction jobs in over a year.
Speaker 1: And that's really the front end of those investments in
Speaker 1: mining and energy and manufacturing, and there is signal that
Speaker 1: manufacturing job growth will pick up.
Speaker 2: So okay, you know, you look at the labor market,
Speaker 2: I mean in terms of initiatives that will potentially help
Speaker 2: the US labor market. You know, the conversation around artificial
Speaker 2: intelligence at your j Powell even addressed it and saying
Speaker 2: it hasn't impacted US jobs yet. So I'm just curious,
Speaker 2: how are you factoring that into as you look at
Speaker 2: some of the upcoming moves the President ramping up in
Speaker 2: terms of hiring people to really focus on technology AI
Speaker 2: specifically in the administration, so looking to make more investments
Speaker 2: so that the US certainly has a dominant role. Just
Speaker 2: how then you factor that into your estimates for the
Speaker 2: impact on the US labor market.
Speaker 1: Well, the AI boom is driving huge demand for workers
Speaker 1: in the skills trades, in advanced manufacturing, and of course
Speaker 1: workers with AI skills, and it is our job at
Speaker 1: the Labor Department to ensure that US workers are prepared
Speaker 1: for those jobs of the future. For the first time,
Speaker 1: labor policy and education policy of pulling in the same direction.
Speaker 1: We've aligned labor and education for the first time ever,
Speaker 1: and we are now focusing very heavily on getting workers
Speaker 1: access to job connected training that sets them up for
Speaker 1: in demand jobs and that doesn't push them to expensive
Speaker 1: degrees that leave them with nowhere to go.
Speaker 3: Let's talk personnel a little bit. We're curious about why
Speaker 3: it's taken so long to make another nomination as BLS commissioner.
Speaker 3: Is your name in the ring? Is your hat in
Speaker 3: the ring?
Speaker 1: I have no idea. You'd have to ask the President
Speaker 1: that would you.
Speaker 3: If you were asked, would you serve as that well?
Speaker 1: I think there is a tremendous amount of work to
Speaker 1: do there tracking AI's labor impact, improving the timeliness, the granularity,
Speaker 1: the accuracy of the data I have at the Labor
Speaker 1: Department made it my priority to push forward a very
Speaker 1: aggressive labor market data modernization agenda that puts workers and
Speaker 1: learners first and gives them more access to the data
Speaker 1: collected on them. So right now, I love partnering with
Speaker 1: the BLS on all of those kinds of initiatives, and
Speaker 1: I am happy to serve in whatever role the presidencies fit.
Speaker 3: If we're thinking just thirty seconds, but if we're thinking
Speaker 3: about previous commissioners, how will this nominee or this next
Speaker 3: commissioner be different just twenty seconds?
Speaker 2: Thank you.
Speaker 1: I have no idea, but I think that whoever comes
Speaker 1: in has a very clear mandate. I'm the president to
Speaker 1: put workers and learners at the center of what we do, UH,
Speaker 1: to change the data paradigm to a real time data paradigm,
Speaker 1: and to make sure that the data is accurate and
Speaker 1: has the utmost integrity.
Speaker 2: All right, Julia, thank you so much. Julia Apollo, Chief
Speaker 2: Economists for the US Department of Labor,