1 00:00:02,720 --> 00:00:07,240 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:09,920 --> 00:00:13,800 Speaker 2: We'll welcome our TV and radio audience worldwide. I'm Matt Miller, 3 00:00:13,800 --> 00:00:18,279 Speaker 2: alongside Katie Greifeld and Michael McKee, Bloomberg's international economics and 4 00:00:18,320 --> 00:00:19,439 Speaker 2: policy correspondent. 5 00:00:19,600 --> 00:00:21,120 Speaker 3: He is joining us now because we have. 6 00:00:21,079 --> 00:00:24,919 Speaker 2: An exclusive interview with the Richmond Fed President, Tom Bark 7 00:00:25,000 --> 00:00:26,960 Speaker 2: and Tom, great to have you on the program. 8 00:00:27,000 --> 00:00:29,080 Speaker 3: Thank you so much for joining us. 9 00:00:29,560 --> 00:00:32,800 Speaker 2: I have to start with the biggest question, which is 10 00:00:33,040 --> 00:00:37,360 Speaker 2: in terms of the data. We've heard from Bostic and 11 00:00:37,520 --> 00:00:42,880 Speaker 2: Cashkari that this data from Trump's trade war hasn't really 12 00:00:42,880 --> 00:00:44,840 Speaker 2: told us all that we need to know quite yet, 13 00:00:44,880 --> 00:00:47,600 Speaker 2: and maybe it won't until September. 14 00:00:47,640 --> 00:00:50,159 Speaker 3: What are you seeing in your district? 15 00:00:51,400 --> 00:00:54,160 Speaker 4: Well, I'll agree with you that the published data shows 16 00:00:54,160 --> 00:00:56,760 Speaker 4: an economy very much on the same trajectory that we've 17 00:00:56,760 --> 00:00:59,800 Speaker 4: been on for the last year or two. Low unemployment, 18 00:01:00,480 --> 00:01:04,280 Speaker 4: inflation settling toward target. There's a lot of questions about 19 00:01:04,280 --> 00:01:07,520 Speaker 4: what happens when these tariffs are imposed, but you know 20 00:01:07,560 --> 00:01:10,000 Speaker 4: how it is. There's a bunch of companies that advance. 21 00:01:09,760 --> 00:01:12,040 Speaker 3: Ordered their product. 22 00:01:12,840 --> 00:01:15,759 Speaker 4: They may have warned about price increases, but they haven't 23 00:01:15,800 --> 00:01:18,760 Speaker 4: yet passed on the prices. The customers may accept the 24 00:01:18,760 --> 00:01:21,280 Speaker 4: price increases or they may not, so we'll just have 25 00:01:21,360 --> 00:01:24,640 Speaker 4: to see how it plays out. I've been describing this 26 00:01:25,319 --> 00:01:27,119 Speaker 4: when I'm talking to businesses, which you know I do 27 00:01:27,360 --> 00:01:30,199 Speaker 4: every day. I've been describing this as driving through fog. 28 00:01:30,240 --> 00:01:33,280 Speaker 4: It's just very hard to drive when it's really foggy, 29 00:01:33,319 --> 00:01:36,399 Speaker 4: and businesses are afraid to accelerate because they don't know 30 00:01:36,880 --> 00:01:39,360 Speaker 4: what's around the next curve. And they're also afraid to 31 00:01:39,440 --> 00:01:41,800 Speaker 4: put on the gas because you don't want someone crashing 32 00:01:41,840 --> 00:01:44,880 Speaker 4: into you, and so by and large, they're pulling over 33 00:01:44,920 --> 00:01:45,920 Speaker 4: and putting on the hazards. 34 00:01:46,319 --> 00:01:49,280 Speaker 1: Well to that point that you're constantly speaking to businesses, 35 00:01:49,720 --> 00:01:53,480 Speaker 1: is anyone making big investments at this point or hiring decisions? 36 00:01:53,520 --> 00:01:56,360 Speaker 1: From your conversations, do you get the sense that firms 37 00:01:56,360 --> 00:01:59,320 Speaker 1: are closed to announcing layoffs. 38 00:02:00,320 --> 00:02:02,400 Speaker 4: On the hiring side, you're definitely not saying that. Lots 39 00:02:02,400 --> 00:02:05,280 Speaker 4: of hiring freezes, of lots of deferred hiring, and you 40 00:02:05,320 --> 00:02:07,840 Speaker 4: see that in the data as well. In terms of 41 00:02:07,880 --> 00:02:11,680 Speaker 4: investment decisions, investment moves that were already underway seem to 42 00:02:11,680 --> 00:02:16,160 Speaker 4: be continuing. I've heard very few cancelations, but some of 43 00:02:16,200 --> 00:02:18,200 Speaker 4: the big things that you might expect to happen when 44 00:02:18,240 --> 00:02:20,679 Speaker 4: the terms of trade change. I think people are still 45 00:02:20,680 --> 00:02:24,760 Speaker 4: waiting to get whatever they think is final in terms 46 00:02:24,800 --> 00:02:26,720 Speaker 4: of layoffs. You clearly hear and see about it in 47 00:02:26,720 --> 00:02:30,200 Speaker 4: the government sector and in those sectors related to government spending. 48 00:02:30,720 --> 00:02:33,359 Speaker 4: But outside of that, I just think people have the hazards. 49 00:02:33,040 --> 00:02:37,120 Speaker 5: On how long are companies telling you they can hold 50 00:02:37,120 --> 00:02:38,920 Speaker 5: out before they have to make some sort of decision 51 00:02:38,960 --> 00:02:41,680 Speaker 5: as to whether to go ahead and invest or to 52 00:02:41,960 --> 00:02:42,840 Speaker 5: cancel plans. 53 00:02:44,600 --> 00:02:47,320 Speaker 4: Well, I think people are pretty patient on the investment. 54 00:02:47,320 --> 00:02:49,959 Speaker 4: A lot of these are growth investments, and they're waiting 55 00:02:49,960 --> 00:02:53,240 Speaker 4: to see what the terms are. If you're thinking of 56 00:02:54,480 --> 00:02:57,720 Speaker 4: building a new facility somewhere, you kind of want to 57 00:02:57,760 --> 00:03:00,000 Speaker 4: know what the rules are before you before you build. 58 00:03:00,360 --> 00:03:02,520 Speaker 4: So I think there's a lot going in there. I 59 00:03:02,560 --> 00:03:06,079 Speaker 4: also don't think there's much case for canceling. Nothing's really 60 00:03:06,120 --> 00:03:09,240 Speaker 4: changed in the economic environment. You just have policy uncertainty, 61 00:03:09,280 --> 00:03:11,200 Speaker 4: and I think people are just going to wait policy 62 00:03:11,240 --> 00:03:13,200 Speaker 4: uncertainty out. They do think there's a light at the 63 00:03:13,280 --> 00:03:16,040 Speaker 4: end of the tunnel that there will be some certainty, 64 00:03:16,320 --> 00:03:19,079 Speaker 4: whether it's the tax bill or some of the trade terms. 65 00:03:19,520 --> 00:03:21,920 Speaker 3: But I think they're just waiting it out. Hey, Tom, 66 00:03:21,919 --> 00:03:23,280 Speaker 3: I was on Saturday. 67 00:03:23,320 --> 00:03:26,600 Speaker 2: I went down to Fredericksburg to purchase a used motorcycle, 68 00:03:26,639 --> 00:03:28,880 Speaker 2: and I drove it all the way back here to 69 00:03:28,919 --> 00:03:31,920 Speaker 2: New York through much of your district, I imagine through Washington, 70 00:03:32,000 --> 00:03:32,200 Speaker 2: d C. 71 00:03:32,360 --> 00:03:35,040 Speaker 3: Of course, and I was thinking. 72 00:03:34,880 --> 00:03:38,080 Speaker 2: About DOGE, the Department of Government Efficiency, the cuts that 73 00:03:38,160 --> 00:03:43,000 Speaker 2: DOGE made. Have they had any specific impact on the companies, 74 00:03:43,400 --> 00:03:45,880 Speaker 2: on the constituents in your district. 75 00:03:47,160 --> 00:03:49,440 Speaker 4: Well, first of all, congratulations on making it through the 76 00:03:49,480 --> 00:03:53,080 Speaker 4: Fredericksburg to DC ninety five district. That's a place that 77 00:03:53,640 --> 00:03:55,320 Speaker 4: I travel a lot, and it's not very easy to 78 00:03:55,360 --> 00:03:59,560 Speaker 4: travel it. There's no question that what we're seeing happen 79 00:03:59,600 --> 00:04:02,520 Speaker 4: in terms of government spending cuts is affecting, especially the 80 00:04:02,560 --> 00:04:06,560 Speaker 4: DC metro area part of my district. You see it 81 00:04:06,600 --> 00:04:10,320 Speaker 4: in both announced job losses. If you look at Challenger 82 00:04:10,480 --> 00:04:13,680 Speaker 4: job announcements in February and March, they were quite significant. 83 00:04:13,720 --> 00:04:16,800 Speaker 4: Particularly government. We see it in the week to week 84 00:04:16,839 --> 00:04:21,640 Speaker 4: governments spending numbers in retail spending, particularly discretion of retail spending. 85 00:04:21,640 --> 00:04:24,720 Speaker 4: In the DC metro area, job postings are down about 86 00:04:24,720 --> 00:04:28,719 Speaker 4: a third. We're even seeing listings come up in the 87 00:04:28,760 --> 00:04:31,839 Speaker 4: residential real estate area, so you're definitely seeing that impact 88 00:04:31,839 --> 00:04:32,679 Speaker 4: in DC Metro. 89 00:04:33,240 --> 00:04:35,760 Speaker 1: Also, I get your opinion on what's going on with 90 00:04:35,800 --> 00:04:38,320 Speaker 1: the relationship between hard and soft data. It's something that 91 00:04:38,360 --> 00:04:40,800 Speaker 1: we talk about on the show quite frequently because you 92 00:04:40,839 --> 00:04:43,680 Speaker 1: have the soft data suggesting that things look a lot 93 00:04:43,720 --> 00:04:47,360 Speaker 1: more stagflationary than the hard data actually shows. And I'm 94 00:04:47,360 --> 00:04:50,400 Speaker 1: wondering whether the sentiment data, the survey data that we receive, 95 00:04:50,720 --> 00:04:53,680 Speaker 1: is still a reliable indicator of what the hard data 96 00:04:53,720 --> 00:04:54,920 Speaker 1: will eventually reflect. 97 00:04:56,160 --> 00:04:56,280 Speaker 3: Well. 98 00:04:56,320 --> 00:04:58,800 Speaker 4: I separate business and consumer sentiment on that. I think 99 00:04:58,880 --> 00:05:01,680 Speaker 4: business sentiment is a very good indicator of what you're 100 00:05:01,680 --> 00:05:03,240 Speaker 4: seeing and what you're here. What you're seeing in the 101 00:05:03,240 --> 00:05:07,960 Speaker 4: business sentiment is the surgeon optimism that came anticipating pro 102 00:05:08,000 --> 00:05:11,039 Speaker 4: business policies after the election has backed off, and you 103 00:05:11,080 --> 00:05:14,479 Speaker 4: see hesitancy to invest, hesidency to hire, And that's the 104 00:05:14,480 --> 00:05:17,359 Speaker 4: same thing you're seeing, you know, as you talk to businesses, 105 00:05:17,400 --> 00:05:19,640 Speaker 4: and so I think that's very consistent by the way 106 00:05:19,640 --> 00:05:21,359 Speaker 4: we saw the same thing in twenty nineteen, and I 107 00:05:21,360 --> 00:05:23,680 Speaker 4: think it played out in a very similar way. A 108 00:05:23,720 --> 00:05:28,279 Speaker 4: consumer sentiment seen, which historically has been strongly correlated with 109 00:05:28,320 --> 00:05:30,760 Speaker 4: consumer spending, has not seemed to be for the last 110 00:05:30,800 --> 00:05:34,320 Speaker 4: two or three years. I think that's pretty simple. Inflation 111 00:05:34,520 --> 00:05:37,479 Speaker 4: is a big bugaboo in people's minds. As you know, 112 00:05:37,560 --> 00:05:42,240 Speaker 4: everybody hates inflation, and the prospect of inflation drives sentiment 113 00:05:42,320 --> 00:05:47,799 Speaker 4: down significantly, you know, And today's always on media environment 114 00:05:48,240 --> 00:05:51,000 Speaker 4: where people look at notifications all day long that notifications 115 00:05:51,000 --> 00:05:55,680 Speaker 4: they are seeing are tariff's tariffs, inflation, and they're anticipating that. 116 00:05:55,720 --> 00:05:58,320 Speaker 4: You can see that in terms of the consumer sentiments 117 00:05:58,360 --> 00:06:01,240 Speaker 4: expected inflation five or ten year, one year, five year, 118 00:06:01,279 --> 00:06:04,880 Speaker 4: ten or whatever, and that takes sentiment down. There's no 119 00:06:04,960 --> 00:06:09,240 Speaker 4: evidence yet that that inflation driven drop in sentiment drops spending, 120 00:06:09,480 --> 00:06:11,760 Speaker 4: and nothing I'm seeing in the real time spending data 121 00:06:11,760 --> 00:06:15,440 Speaker 4: suggests that spending is dropping. But that's why I say 122 00:06:15,480 --> 00:06:18,920 Speaker 4: there's the disconnect on the consumer side. Sentiment seems very 123 00:06:19,800 --> 00:06:22,680 Speaker 4: very clearly moving things on the business side, less clear 124 00:06:22,720 --> 00:06:23,679 Speaker 4: on the consumer side. 125 00:06:23,920 --> 00:06:26,280 Speaker 5: Tariff's tariffs, tariffs, as you mentioned, is what we've been 126 00:06:26,279 --> 00:06:28,520 Speaker 5: talking about for some months. But now we have the 127 00:06:28,520 --> 00:06:31,600 Speaker 5: budget bill on the horizon, the fiscal side of it. 128 00:06:32,160 --> 00:06:34,000 Speaker 5: What are people telling you in your district and you 129 00:06:34,040 --> 00:06:35,960 Speaker 5: have a lot of rural areas as well, about the 130 00:06:36,000 --> 00:06:39,719 Speaker 5: potential effects on the economy from the bill. Some see 131 00:06:39,760 --> 00:06:43,280 Speaker 5: stimulus from no tax on tips, no tax on overtime. 132 00:06:43,480 --> 00:06:46,560 Speaker 5: Maybe that's an inflation problem going forward, and others say 133 00:06:46,680 --> 00:06:50,559 Speaker 5: maybe there's a problem with consumer spending going forward because 134 00:06:50,560 --> 00:06:55,800 Speaker 5: people are losing income from Medicaid and other cuts. How 135 00:06:55,839 --> 00:06:57,600 Speaker 5: do you see that affecting the economy. 136 00:06:58,760 --> 00:07:00,599 Speaker 4: Well, I was in rural Virginia, as I was telling 137 00:07:00,680 --> 00:07:02,800 Speaker 4: you earlier last week, and we had a lot of 138 00:07:02,800 --> 00:07:07,520 Speaker 4: conversations about how they're saying policy. I don't think this 139 00:07:07,640 --> 00:07:11,400 Speaker 4: has reached the level of much focus in the small towns, 140 00:07:11,680 --> 00:07:14,760 Speaker 4: at least in my district. I think people are focused 141 00:07:14,800 --> 00:07:19,840 Speaker 4: on the basics the places people do. They worry about healthcare. 142 00:07:20,080 --> 00:07:23,720 Speaker 4: Rural healthcare is a pretty big issue in the small towns, 143 00:07:24,480 --> 00:07:27,160 Speaker 4: and people wonder about how any changes to healthcare is 144 00:07:27,160 --> 00:07:30,800 Speaker 4: going to affect rural hospitals. And I think people just 145 00:07:30,800 --> 00:07:33,080 Speaker 4: waiting to see where Washington lands on this. 146 00:07:33,800 --> 00:07:38,760 Speaker 2: We had a drop in GDP that surprised me last quarter. 147 00:07:38,840 --> 00:07:40,880 Speaker 2: I talked to the experts here at Bloomberg about it, 148 00:07:40,880 --> 00:07:42,360 Speaker 2: and they told me that's okay. It's because we were 149 00:07:42,360 --> 00:07:47,800 Speaker 2: pulling forward so much ahead of President Trump's tariffs, and 150 00:07:48,440 --> 00:07:52,480 Speaker 2: now that he's pushing those tariff dates back, I wonder 151 00:07:52,560 --> 00:07:55,920 Speaker 2: if you think companies and consumers are going to continue 152 00:07:55,960 --> 00:07:59,360 Speaker 2: to pull forward and bring so many imports in that 153 00:07:59,400 --> 00:08:02,640 Speaker 2: we get another big drop in GDP. Tom could we 154 00:08:02,680 --> 00:08:04,680 Speaker 2: have a technical recession because of this? 155 00:08:06,320 --> 00:08:09,640 Speaker 4: Well, so, the businesses who are facing these tariffs go 156 00:08:09,720 --> 00:08:12,360 Speaker 4: in one of two directions. There's some set of people 157 00:08:12,400 --> 00:08:16,240 Speaker 4: who pull forward, and you certainly saw that in pharmaceuticals 158 00:08:16,520 --> 00:08:20,240 Speaker 4: in the first quarter. Stockpile inventory is in advance of tariffs. 159 00:08:20,360 --> 00:08:23,640 Speaker 4: But there's another set that are actually pulling back and 160 00:08:23,680 --> 00:08:25,680 Speaker 4: saying and we saw that in China. If you look 161 00:08:25,720 --> 00:08:27,800 Speaker 4: at the shipments out of China, out of the ports, 162 00:08:28,400 --> 00:08:29,960 Speaker 4: and they're saying, look, I'm not taking this till I 163 00:08:29,960 --> 00:08:32,439 Speaker 4: see where it goes. Now we've got a different tarif 164 00:08:32,440 --> 00:08:35,520 Speaker 4: regime in China for some period of time, we're not 165 00:08:35,640 --> 00:08:39,160 Speaker 4: yet seeing much movement in terms of shipments out of China. 166 00:08:39,520 --> 00:08:41,800 Speaker 4: I think takes a few weeks to get that going. 167 00:08:41,840 --> 00:08:43,960 Speaker 4: And I just think we're going to see some back 168 00:08:44,000 --> 00:08:47,760 Speaker 4: and forth on this this quarter next quarter, and we 169 00:08:47,880 --> 00:08:49,040 Speaker 4: just have to get off to get the other side 170 00:08:49,080 --> 00:08:50,560 Speaker 4: of it again. It's part of why I say there's 171 00:08:50,559 --> 00:08:53,360 Speaker 4: so much fog here because you might say we had 172 00:08:53,360 --> 00:08:56,480 Speaker 4: a great consumer spending month in March because auto sales boomed, 173 00:08:56,760 --> 00:08:59,000 Speaker 4: or you might say that people bought their cars before 174 00:08:59,640 --> 00:09:00,800 Speaker 4: they saw price increases. 175 00:09:01,280 --> 00:09:04,840 Speaker 5: Well, as we wrap this up, when you look forward, 176 00:09:05,120 --> 00:09:07,800 Speaker 5: which part of the mandate do you think we'll see 177 00:09:07,840 --> 00:09:12,600 Speaker 5: an effect first on the inflation side or the employment side. 178 00:09:13,040 --> 00:09:15,000 Speaker 4: I'm more balanced than a lot of what you read. 179 00:09:15,080 --> 00:09:17,720 Speaker 4: I could describe you how some of these forces like 180 00:09:17,760 --> 00:09:20,840 Speaker 4: tariffs might be inflationary. I can describe to you how 181 00:09:20,960 --> 00:09:24,000 Speaker 4: other forces like lower gas prices might be disinflationary. 182 00:09:24,200 --> 00:09:25,640 Speaker 3: I can describe you how. 183 00:09:27,880 --> 00:09:30,240 Speaker 4: Less government spending might be less employment, and that has 184 00:09:30,280 --> 00:09:33,120 Speaker 4: issues on the employment side. I can also describe you 185 00:09:33,160 --> 00:09:36,800 Speaker 4: how people who haven't hired for eighteen months, if spending continues, 186 00:09:36,880 --> 00:09:39,599 Speaker 4: might need to start hiring. And so I'm waiting to 187 00:09:39,640 --> 00:09:41,160 Speaker 4: see what happens, all right. 188 00:09:41,080 --> 00:09:43,560 Speaker 1: A great conversation to start this week. Are big thanks 189 00:09:43,559 --> 00:09:47,559 Speaker 1: to Richmond FED President Tom Barkin and Bloomberg's Michael McKee.