Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
Speaker 2: with Lisa Bromwitz and Amrie Hordert. Join us each day
Speaker 2: for insight from the best in markets, economics, and geopolitics
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Speaker 2: Terminal and the Bloomberg Business app. Henrietta trees of Vader
Speaker 2: Partner's writing. At this point, a partial shutdown of the
Speaker 2: federal government on January thirty one appears hardly likely. However,
Speaker 2: there is bipartisan support for limiting the shutdown to just
Speaker 2: the Department of Homeland Security. Henrietta joins us now for more. Henrietta,
Speaker 2: Welcome to the program. Immigration enforcement. The President won the argument,
Speaker 2: he won the election. Is he now losing the country?
Speaker 3: I think that's pretty clear.
Speaker 4: And you have a whole bunch of Republicans, especially those
Speaker 4: that are in very at risk states, coming out clearly
Speaker 4: condemning the moves from Ice that resulted in the death
Speaker 4: of Alex Preedy over the weekend, and that kind of
Speaker 4: disruption and the fracture and the Republican Party is how
Speaker 4: you know that things need to change from the status
Speaker 4: quo that we have right now. I think, in addition,
Speaker 4: the personnel swaps that the White House is trying to
Speaker 4: do in Minnesota are just not sufficient. I was speaking
Speaker 4: with some Minnesotas last night and they don't see a
Speaker 4: difference between Bovino and Home End. So they need to
Speaker 4: see quite a bit more out of the White House
Speaker 4: than what is currently on the table. The solution is
Speaker 4: actually pretty simple from a Senate procedural process, and from
Speaker 4: a House process. It's maybe technically difficult. You got to
Speaker 4: get those members back, as Tyler was just mentioning, but
Speaker 4: you strip out the DHS funding from the underlying package
Speaker 4: of bills, get unanimous consent in the Senate to do that,
Speaker 4: move ahead, and you avoid a shutdown of the Defense Department,
Speaker 4: a shutdown to the Labor Department, and we proceed to
Speaker 4: just focus on Ice Henrietta.
Speaker 5: Just two weeks ago, you had an odds of a
Speaker 5: government shut down twenty five percent. Now they skyrocketed, So
Speaker 5: you think now, what is the percentage that we will
Speaker 5: shut down on Friday? And how long will the shutdown be?
Speaker 5: Because remember we just got over in the fall, the
Speaker 5: longest ever government shutdown.
Speaker 4: I hear a lot of optimism behind the scenes from
Speaker 4: Democrats and Republicans that the path forward, as I just mentioned,
Speaker 4: is pretty simple.
Speaker 3: You just strip out DHS funding.
Speaker 4: And the problems for the White House is really optics.
Speaker 4: They have to sort of admit that there was a
Speaker 4: catastrophe in Minnesota and there needs to be remedies here
Speaker 4: and restrictions put on ice. The White House is tacitly
Speaker 4: acknowledging that already with the personnel moves. But my base
Speaker 4: case expectation is that they do find an off ramp here.
Speaker 4: Neither Republicans nor Democrats want this shutdown to happen, which
Speaker 4: is very different than the October first shutdown that we
Speaker 4: saw last year.
Speaker 5: Well, the President so called Governor Waltz yesterday and the
Speaker 5: mayor of Minnesota. Does that bode well for the White
Speaker 5: House or for Democrats?
Speaker 6: He's the one making that.
Speaker 4: Outreach, you know, I think this is a case where
Speaker 4: the American public is demanding change, and both sides are
Speaker 4: prepared to give a little bit. Whether that's going to
Speaker 4: be sufficient to get you changed to peace of legislation
Speaker 4: on the floor remains to be seen. But every side
Speaker 4: is recognizing that the killings have to stop, and it's
Speaker 4: so overwhelming in public polling that it's just obvious you
Speaker 4: need to put your partisanship aside. You can't be talking
Speaker 4: about the Second Amendment, you can't be talking about ICEL
Speaker 4: like it's okay right now.
Speaker 3: You got to move forward from both sides.
Speaker 5: So if we have this off RAM but the DHS
Speaker 5: funding stripped out, what do Democrats need to see to
Speaker 5: then sign up for DHS funding because majority leader Fund's
Speaker 5: going to need them to pass that through at the
Speaker 5: end of the day.
Speaker 4: Yeah, absolutely, I think that Democrats are still pulling together
Speaker 4: a concrete list of what they want. There were some
Speaker 4: conference calls throughout the day yesterday. I think the most
Speaker 4: extreme is probably for DHS head Christy Noam to resign,
Speaker 4: and that's definitely going to be something that stays on
Speaker 4: the front burner. She's actually scheduled to testify on March third,
Speaker 4: if I'm not mistaken, so her time in the spotlight
Speaker 4: hasn't really even begun yet, and I think that's going
Speaker 4: to be a major point of focus for the Democrats,
Speaker 4: and it's a convenient out for a lot of the
Speaker 4: Republicans who want to see some real visible change to
Speaker 4: the immigration policies that are really dragging the president down
Speaker 4: right now with the American public.
Speaker 6: I'm glad you brought that up.
Speaker 5: Do you think she is going to make it to
Speaker 5: that hearing because we have had Senator Tillis block all
Speaker 5: these DHS appointees until she decided to come on the
Speaker 5: Hill for hearing, and they've been dragging that out.
Speaker 4: Yeah, they really have. And March third is a really
Speaker 4: long time away. Think about what's going to come in
Speaker 4: between them. The President has to deliver a State of
Speaker 4: the Union address. Immigration is going to have to be
Speaker 4: in the forefront. You know. Hopefully there's no other escalation,
Speaker 4: and ICE really stepped back from its very aggressive sort
Speaker 4: of patrolling of the streets right now. You have a
Speaker 4: lot to do before we get to March third. I
Speaker 4: think the question of whether she makes it that long
Speaker 4: is a really good one. I don't know, but it's
Speaker 4: not a guarantee.
Speaker 2: Well, speaking of they Senator from North Carolina, he's got
Speaker 2: a big role to play in the process to nominate
Speaker 2: and confirm the next FED chair, Henrietta. I thought this
Speaker 2: was going to happen months and months ago. What's happening?
Speaker 3: You know, I've said this to clients quite a bit.
Speaker 4: If you think in the grand scheme of things of
Speaker 4: what's going on in DC, from trying to annex Greenland
Speaker 4: to raising tariffs in South Korea to the killings in Minnesota,
Speaker 4: the FED parlor game is actually the least you know,
Speaker 4: insane or really scary or problematic part of the administration's
Speaker 4: focus right now.
Speaker 6: They don't need.
Speaker 4: A predecessor for j. Powell until May, so they can
Speaker 4: drag this out. It's already been, you know, a couple
Speaker 4: of months past due. Secretary Besson said, you know it
Speaker 4: was coming at Davos. I think they got time, and
Speaker 4: I don't think it's a high stakes thing. Obviously the
Speaker 4: Street is very closely watching it, but it's really just
Speaker 4: a parlor game between a couple of options that the
Speaker 4: Street is pretty comfortable with. So as long as you know,
Speaker 4: even if there is a new hat thrown into the ring,
Speaker 4: like Secretary Bessett as a potential nominee, I don't think
Speaker 4: that that's comparatively a problem for the street, and the
Speaker 4: White House is happy to have that parlor rate game
Speaker 4: go on for a while longer.
Speaker 2: Stay with us, multplinbeg Savannah's coming up off to this.
Speaker 7: I have Mary Bara here, the CEO and chair at
Speaker 7: General Motors, I'm pleased to say, and Mary really knocking
Speaker 7: the cover off the ball with these earnings that you
Speaker 7: see with your outlook, more than two billion dollars in
Speaker 7: extra profit and profit jump for twenty twenty six. Let
Speaker 7: me start by asking what you attribute this to. Is
Speaker 7: it just the great sales and the financing of the
Speaker 7: higher margin vehicles like a Sierra Can Escalade.
Speaker 8: Well, first, I have to start by thanking the entire
Speaker 8: Generalmoters team, our suppliers, and our dealers for doing a
Speaker 8: phenomenal job. You know, twenty twenty five was an exceptional year,
Speaker 8: especially when you look at all the challenges that we face,
Speaker 8: and I think it really demonstrates one of the core
Speaker 8: capabilities of GM, and it's our agility and our resilience.
Speaker 8: But the core of it starts with our great product portfolio,
Speaker 8: whether it's very affordable evs like the Chevrolet Tracks all
Speaker 8: the way up to you know, a supercar like what's
Speaker 8: behind me with the Corvette ZR one x.
Speaker 6: So couldn't be more proud of the team.
Speaker 7: The ZR one x with twelve hundred and fifty horse power,
Speaker 7: it is indeed, I would call it a hypercar. Mary,
Speaker 7: That's not the bread and butter though for you. You
Speaker 7: really make these highly profitable, highly capable big trucks, and
Speaker 7: Americans are buying more of those and fewer.
Speaker 6: Of the evs.
Speaker 7: Do you expect to continue to sell fewer of the EV's.
Speaker 7: I know you took a seven billion dollar and change
Speaker 7: right down for that business in twenty twenty five.
Speaker 8: Well, you know the whole industry. We were on a
Speaker 8: path that we were working to get to forty to
Speaker 8: fifty percent evs by twenty thirty. So now that the
Speaker 8: regulatory environment has changed and the consumer incentives have gone,
Speaker 8: there is going to be slower EV adoption. We're still
Speaker 8: committed evs and we've got a great portfolio that we're
Speaker 8: working on taking costs out. But in the meantime, we
Speaker 8: also have a great internal combustion engine platform, and you're right,
Speaker 8: full size trucks are one of the strengths we have
Speaker 8: as well as full size SUVs, mid sized crossovers. So
Speaker 8: we really have a strong lineup across the board and
Speaker 8: that is really what is, you know, fueling our business success.
Speaker 7: I have had as the host of Hot Pursuit of
Speaker 7: Bloomberg podcast about cars, the opportunity to drive a lot
Speaker 7: of your evs, from the Sierra EV to the Hummer
Speaker 7: EV to the Escalade IQ, and they're fantastic products. Are
Speaker 7: you Are you not deterred that Americans aren't buying more
Speaker 7: of these vehicles? You know how capable, how capable they are,
Speaker 7: you know how we useful they are in daily life.
Speaker 7: What needs to happen for more Americans to buy these evs?
Speaker 8: Well, I think that consumer is very rational when they're
Speaker 8: making a decision about what CARDI by.
Speaker 6: Let's remember it's one.
Speaker 8: Of the most important and expensive decisions that they make.
Speaker 8: And one of the things we have to continue to
Speaker 8: work on to drive EV adoption is a more robust
Speaker 8: charging infrastructure, and that still is continuing to happen. So
Speaker 8: every quarter, more and more chargers are available. I think
Speaker 8: we as people in their individual communities, see that they've
Speaker 8: got a robust charging network and believe if they have
Speaker 8: to go on a road trip there's that as well.
Speaker 8: They're going to make that choice. And what we do
Speaker 8: see is once someone buys an EV, they see about that,
Speaker 8: they see the technology, they see the driving experience, never
Speaker 8: having to go to the gas station, and they stick
Speaker 8: with evs. So I think it will happen over time,
Speaker 8: and that's why during this period we've already got a
Speaker 8: great portfolio of EV's. We're going to continue to work
Speaker 8: take cost out to get our EV portfolio profitable, and
Speaker 8: we're going to be well positioned as EV demand grows
Speaker 8: over the next hand full of years.
Speaker 7: What about the hybrids, Mary, I mean, GM was really
Speaker 7: a front runner not only in EV technology, but in
Speaker 7: hybrid technology with the Chevy Volt. I remember when the
Speaker 7: Tahoe came out with a six lider gas engine and
Speaker 7: electric battery power. Will you start to sell more of
Speaker 7: the hybrid vehicles.
Speaker 8: Well, we have always focused. As you said, we have
Speaker 8: great hybrid technology, we have great EV technology. We're one
Speaker 8: of the few OEMs that invested in a dedicated EV
Speaker 8: platform that allows us to have the portfolio we have.
Speaker 8: So we're focused on the endgame and we have affordable evs.
Speaker 8: So I think that's where our primary focus is. We
Speaker 8: understand the technology, we have it in other regions, you'll
Speaker 8: see us with a handful of hybrids as we move forward,
Speaker 8: But right now, our focus is really on having the
Speaker 8: right internal combustion engine portfolio and the right EV portfolio
Speaker 8: moving forward. And I think we're demonstrating that that's a
Speaker 8: winning formula because over the last four years we've gained
Speaker 8: share each year.
Speaker 7: I wonder how much your racing efforts push towards that,
Speaker 7: And I know this is something I've talked about with
Speaker 7: your president Mark Royce on a number of occasions, but
Speaker 7: you're getting into so many more leagues. I watched the
Speaker 7: hypercars in Lament this summer and looking forward to watching
Speaker 7: you participate in Formula one. Do you think this really
Speaker 7: boosts your brand awareness around the world.
Speaker 6: Absolutely, we definitely see that it does.
Speaker 8: And I think when you look at Cadillac and the
Speaker 8: strength of Cadillac, it is true luxury, true American luxury.
Speaker 8: F one is the place that Cadillac should be showcased.
Speaker 8: So we're very proud to be a full works American team,
Speaker 8: anxious to enter this year in Australia, but I think
Speaker 8: it's going to be very important for the Cadillac brand,
Speaker 8: and we do have a really robust program that takes
Speaker 8: what we learn on the track and we incorporate into
Speaker 8: our vehicles to make our vehicles better. It's true for
Speaker 8: Chevrolet as well as Cadillac and the entire portfolio.
Speaker 7: I got to ask about the finance arm. GM Financial
Speaker 7: provided a massive liquidity buffer I think thirty six billion
Speaker 7: dollars there. How do you think about, because you're doing buybacks,
Speaker 7: returning a lot of cash to shareholders. I'm sure they're
Speaker 7: happy about the stock is near an all time high,
Speaker 7: but how do you think about putting that aside for
Speaker 7: protection versus supporting shareholder returns, you know, in case the
Speaker 7: autocycle turns at some point.
Speaker 8: Well, we've indicated that eighteen to twenty billion is our
Speaker 8: cash target. Last year we finished the year strong at
Speaker 8: around twenty two billion, and we have a capital allocation
Speaker 8: framework of first reinvesting in the business, second making sure
Speaker 8: that we have an investment grade balance sheet, and then
Speaker 8: returning cash to shareholders. And we think, based on the
Speaker 8: strength of our business and the cash that we generate,
Speaker 8: we can continue to do that well.
Speaker 6: And that's where our focus is.
Speaker 7: You know, the financial arm has added I think more
Speaker 7: than two billion dollars to twenty twenty five profits, So
Speaker 7: it's really a contributor, kind of a quiet profit stable lot.
Speaker 7: Is that turning though, as delinquencies and charge offs rise
Speaker 7: a little bit? Is that starting to concern you as
Speaker 7: consumer balance sheets fin out.
Speaker 6: Well?
Speaker 8: It's something that we watch very closely that I think
Speaker 8: GMF does a great job in their business, and it
Speaker 8: is a very important business. Shout out to the gm
Speaker 8: Financial team for the great work they do. It's also
Speaker 8: very important from a loyalty perspective because having a captive
Speaker 8: and being able to interface with a consumer on a
Speaker 8: monthly basis as they make their car payments, I think
Speaker 8: is just part of the ecosystem that we're building to
Speaker 8: really make sure we have that great relationship with the customer,
Speaker 8: and it shows that we have the highest loyalty in
Speaker 8: the US of any OEM.
Speaker 7: I look at loan originations in the fourth quarter and
Speaker 7: I see that they're down pretty substantially, about twenty one percent,
Speaker 7: and I wonder if that's a deliberate choice by GMF.
Speaker 7: Are you tightening your credit standards or is that reflecting
Speaker 7: a softer demand today? Rates and prices which are both
Speaker 7: fairly high.
Speaker 8: Well, the car company and the finance company. They work
Speaker 8: together to make sure we have the right equation and
Speaker 8: what's going to optimize profitability for the enterprise. And so
Speaker 8: I don't think you can look at one quarter. It
Speaker 8: goes up and down depending on what's happening in the
Speaker 8: external world.
Speaker 6: But GMF is a very.
Speaker 8: Important part of our portfolio of companies, and again, as
Speaker 8: I said, it works in concert with the car company
Speaker 8: to make sure that we have a strong business overall.
Speaker 7: I have to when I think of credit standards, I
Speaker 7: think of First Brands among some of the other businesses
Speaker 7: that have fallen to Chapter eleven this year. And I
Speaker 7: saw a report in the Financial Times overnight that you,
Speaker 7: along with Ford, your crosstown rivals, are negotiating to help
Speaker 7: send them a rescue line of sorts. Can you comment
Speaker 7: on that at all, Mary.
Speaker 8: Well, what we're very much focused on is while we
Speaker 8: make sure we have secure supply is that transition period.
Speaker 8: So I think what you see General Motors and other
Speaker 8: ims working together to do is make sure that we
Speaker 8: don't have supply chain disruptions because of their financial situation.
Speaker 6: We've been working on it.
Speaker 8: But I think as we look at you know, the immediate,
Speaker 8: what's happening next week, next month. That's the work that
Speaker 8: we're doing, as well as in parallel making sure we
Speaker 8: have longer term supplies. So that's what you're seeing with
Speaker 8: that announcement.
Speaker 7: When you talk about a supply chain, I think about
Speaker 7: the concessions you're able to get out of your suppliers.
Speaker 7: I know that you're trying to keep costs down. You're
Speaker 7: under a thread of tariffs or you already face tariffs,
Speaker 7: and a lot of the places you've produced, how much
Speaker 7: of those tariffs have you been able to pass through
Speaker 7: to consumers where you haven't been able to cut costs
Speaker 7: or get concessions from suppliers.
Speaker 8: I think if you look at our portfolio, I think
Speaker 8: you know, for the most part, we've worked to offset
Speaker 8: it and with efficiencies across the board, making smart decisions
Speaker 8: on where we produce, and so very little has gone
Speaker 8: to the consumer because we are such a cost sensitive
Speaker 8: business and it's such a competitive business. But we continue
Speaker 8: to look at all those levers and we stay focused
Speaker 8: on consumer affordability.
Speaker 7: You're operating Mary in the heart of America, and America's
Speaker 7: undergone some really tough times, especially over the last few
Speaker 7: weeks in Minnesota. What are you doing, What is General
Speaker 7: Motors doing to kind of keep the temperature down to
Speaker 7: kind of keep the calm at your company and with
Speaker 7: your suppliers.
Speaker 8: Well, we want to make sure that everyone stays focused
Speaker 8: on the business and is part of the solution, meaning
Speaker 8: de escalating. I believe that's starting to happen. So that's
Speaker 8: what we continue to reinforce.
Speaker 2: Stay with us. Mulblemberg. Savannah's coming up off to this
Speaker 2: a sensitive federal reserve. The Central Bank is set to
Speaker 2: make his first right decision of the YA tomorrow as
Speaker 2: threats to FED independence build. Joining us now is the
Speaker 2: former Kansas City FED president as the George as the
Speaker 2: welcome bank to the program. Before we get into substance,
Speaker 2: the Economic Bank drop the policy. I want to pick
Speaker 2: up on the more assertive stunts, the more aggressive posture,
Speaker 2: if you will. The Chairman Pouse seemed to be taken
Speaker 2: this year to defend central Bank independence. I'd love your
Speaker 2: reaction to that and whether you believe he'll carry that
Speaker 2: into the news conference tomorrow afternoon.
Speaker 3: Yeah.
Speaker 1: Good, Marnie, Jonathan. I think the Chairman had to take
Speaker 1: this move. I think we have been dancing around these
Speaker 1: threats to independence and really trying not to make too
Speaker 1: much of it. But I think the Chairman reached a
Speaker 1: point where he really did have to speak out and
Speaker 1: send a message to the public about how important the
Speaker 1: decision making of the Central Bank is that it not
Speaker 1: get caught up in political issues. And as you saw,
Speaker 1: the reaction from around the world from former policy makers
Speaker 1: was quite supportive of that, as was I.
Speaker 5: That's when it comes to the video he released in
Speaker 5: reaction to the subpoena from the DOJ. But he also
Speaker 5: recently went to the Supreme Court to attend the hearing
Speaker 5: of Lisa Cook, and the administration said that he was
Speaker 5: now politicizing that hearing. What's your reaction to that movement
Speaker 5: from J Powell?
Speaker 1: Well, I think the Supreme Court's decision is absolutely consequential
Speaker 1: to the future of the Federal Reserve and thinking about
Speaker 1: how this body will weigh in on the ability of
Speaker 1: removing FED governors. So clearly, I think as a leader
Speaker 1: of this institution, his interest would be high and understanding
Speaker 1: how the courts might be talking about this and what
Speaker 1: the arguments are that are presented.
Speaker 3: I didn't view that as a political.
Speaker 5: One given these stances we have seen from him, do
Speaker 5: you think in the press conference he's going to be
Speaker 5: more willing to engage when reporters obviously ask a number
Speaker 5: of questions that are really on this line when it
Speaker 5: comes to politics.
Speaker 1: Well, I'm quite sure he's going to get a number
Speaker 1: of questions, and I suspect he will address them at
Speaker 1: the same time, though, trying to keep the focus on
Speaker 1: what it is this committee is really focused on, and
Speaker 1: that is responding to economic conditions in the United States,
Speaker 1: and so yes, I think he will have to address
Speaker 1: what are likely to be a number of questions, and
Speaker 1: he may do so in the fashion he did in
Speaker 1: his previous statement. Again bringing it back though to this
Speaker 1: is the job of the Central Bank and where he
Speaker 1: most likely will want to focus today.
Speaker 2: As did you think that the economic backdrop at the
Speaker 2: moment gives them the space the hit post for a
Speaker 2: little while.
Speaker 1: Yeah, I agree that it's time to take a breath
Speaker 1: on these rate cuts. They've made a number of cuts
Speaker 1: that are still feeding through the economy, and so I
Speaker 1: think it makes sense in the face of elevated inflation
Speaker 1: and what seems to be coming this year, that it
Speaker 1: would be a good time to pause and really take
Speaker 1: stock of how they assess the economy on both sides
Speaker 1: of their mandate.
Speaker 2: What do you expect is coming this year on the
Speaker 2: inflation side.
Speaker 1: Well, my own view, Jonathan is that inflation is something
Speaker 1: we've got to keep a careful eye on because I
Speaker 1: continue to hear this idea that the full impulse of
Speaker 1: the tariffs has not fed through yet. I think companies
Speaker 1: have been trying to do their best in managing pushing
Speaker 1: through those costs, but you could expect I think that
Speaker 1: the first half of the year we will see more
Speaker 1: price pressures coming in there. You have easy financial conditions now,
Speaker 1: and you have a fiscal situation that I think is
Speaker 1: going to be a tailwind both on the consumer side
Speaker 1: and business side with some of the new rules coming
Speaker 1: into play, and so I think all of that should
Speaker 1: make us very cautious about inflation expectations staying firmly anchored
Speaker 1: at that two percent and really raising I think the
Speaker 1: attention that the Fed has to pay on that inflation mandate.
Speaker 5: I understand you're concern about inflation potentially pushing higher, but
Speaker 5: hasn't the Fed basically acknowledged that they're no longer looking
Speaker 5: for two percent target given how many cuts we've had
Speaker 5: and it's been closer to three.
Speaker 1: Well, they've certainly moved in the direction of putting more
Speaker 1: weight on the labor market part of their mandate and
Speaker 1: have emphasized that. And I think you know fair enough
Speaker 1: to look at that, because you have seen a dramatic
Speaker 1: change in the data from a labor market that was
Speaker 1: really tied a number of job openings and that's sort
Speaker 1: of reversed and pulled back. At the same time, though
Speaker 1: this is a FED that just released its framework saying
Speaker 1: two percent was the target, they have to keep their
Speaker 1: eye on inflation expectations. And the truth is, households and
Speaker 1: businesses are beginning to agitate a bit, if you will,
Speaker 1: even in these survey measures about their concern about future inflation.
Speaker 1: So I think it's a very good time just to
Speaker 1: reassess and be quite confident about your assessment of inflation
Speaker 1: before making further rate cuts.
Speaker 5: When it comes to the potential tariff paths through, we
Speaker 5: have heard from Amazon they're saying that more of the
Speaker 5: tariff pass through is actually starting to creep into some
Speaker 5: of the prices. But do you think that consumers will
Speaker 5: bear the brunt of it, or really, will it still
Speaker 5: be corporate America that tries to bear the brunt of
Speaker 5: it this year as well?
Speaker 1: Yeah, Marie, We'll have to see how this plays out.
Speaker 1: I mean, so far, I think businesses have been very
Speaker 1: careful not to overwhelm consumers with these price increases. But
Speaker 1: there is a limit to that, as you know, and
Speaker 1: I think consumers have been bearing the cost of this,
Speaker 1: and I think they will continue to.
Speaker 6: We saw some.
Speaker 1: Of that, I think come through in the Fed's Page
Speaker 1: book most recently to say that is still very much
Speaker 1: on the minds of businesses as they come into this
Speaker 1: new year.
Speaker 2: I s's so strange to have a conversation right now,
Speaker 2: this really robust backdrop for economic growth at the same
Speaker 2: time we have these concerns about a weaker labor market.
Speaker 2: What do you think explains that disconnect of the last
Speaker 2: twelve months and do you see it reconciling in the
Speaker 2: next twelve.
Speaker 1: Well, it's easy to start with the data, Jonathan and say,
Speaker 1: you know, the government shut down gave us a little
Speaker 1: scramble as it relates to that.
Speaker 3: So it's going to.
Speaker 1: Take a little while, both on inflation data and labor
Speaker 1: market data to work through that, But I think we
Speaker 1: also have to recognize that while demand has come off,
Speaker 1: and you can say demand came off from employers because
Speaker 1: of uncertainty, because of making more technological investments that would
Speaker 1: substitute for labor, you've also seen the supply side be
Speaker 1: hit directly too, and so those two things have left
Speaker 1: us with an unemployment rate that looks pretty low all
Speaker 1: all in, but it does make you ask questions about
Speaker 1: where that labor market is headed when you know people
Speaker 1: characterize a low higher low fire environment and you see
Speaker 1: very narrow sectors of the economy that are actually adding labor.
Speaker 1: So again, I think all of that weighs in the
Speaker 1: balance for the FED of saying, let's wait and understand,
Speaker 1: given what we've done so far, what these dynamics are
Speaker 1: in the labor market.
Speaker 2: This is the Bloomberg Surveillance Podcast, bringing you the best
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