1 00:00:00,600 --> 00:00:02,600 Speaker 1: So we got the jobs numbers on Friday at the 2 00:00:02,680 --> 00:00:05,280 Speaker 1: end of the week, a little lighter on the number 3 00:00:05,280 --> 00:00:07,840 Speaker 1: of jobs, a little heavier on the wage increases. How 4 00:00:07,840 --> 00:00:08,760 Speaker 1: did you interpret them? 5 00:00:09,320 --> 00:00:11,840 Speaker 2: So they actually came in pretty much as I expected. 6 00:00:11,880 --> 00:00:14,960 Speaker 3: You know, I've expected the economy to slow down in 7 00:00:15,000 --> 00:00:18,480 Speaker 3: a fairly orderly way, and this number in the one 8 00:00:18,520 --> 00:00:22,400 Speaker 3: eighty seven comes in continuing that pace. Some folks would 9 00:00:22,480 --> 00:00:25,360 Speaker 3: have liked it to be faster and a larger gap, 10 00:00:25,480 --> 00:00:27,920 Speaker 3: but I'm comfortable. I'm not expecting this to be over 11 00:00:28,440 --> 00:00:31,600 Speaker 3: in a short period of time. In terms of the wages, 12 00:00:32,120 --> 00:00:34,279 Speaker 3: it doesn't surprive me that wages are still strong. You know, 13 00:00:34,440 --> 00:00:38,199 Speaker 3: during this whole high inflation period, worker wages have trailed 14 00:00:38,280 --> 00:00:40,800 Speaker 3: inflation for quite some time, and so we're still in 15 00:00:40,800 --> 00:00:43,080 Speaker 3: that catch up period, and I expect that we will 16 00:00:43,080 --> 00:00:46,400 Speaker 3: still see strong wages. But I'll tell you when I 17 00:00:46,440 --> 00:00:48,479 Speaker 3: talk to employers, the one thing they tell me is 18 00:00:48,479 --> 00:00:50,920 Speaker 3: that whatever they're sending their wage growth at this year, 19 00:00:50,960 --> 00:00:53,080 Speaker 3: they're expecting it to be lower next year and then 20 00:00:53,320 --> 00:00:56,319 Speaker 3: lower again after that to get back to where we're 21 00:00:56,320 --> 00:00:58,200 Speaker 3: a pre pandemic. So you know, we got to keep 22 00:00:58,200 --> 00:01:00,800 Speaker 3: an eye on it. Of course, but I was not 23 00:01:00,880 --> 00:01:02,360 Speaker 3: concerned too much about that at this. 24 00:01:02,320 --> 00:01:03,720 Speaker 1: Point, and I'm sure you'd be the first to tell 25 00:01:03,800 --> 00:01:05,840 Speaker 1: me one data point isn't enough to make a decision. 26 00:01:05,880 --> 00:01:07,920 Speaker 1: But do you feel that the FED is on the 27 00:01:08,000 --> 00:01:10,679 Speaker 1: trajectory it needs to be on to get to two percent? 28 00:01:10,920 --> 00:01:13,040 Speaker 2: At some point? I do you know? 29 00:01:13,120 --> 00:01:16,959 Speaker 3: We are today in a restrictive stance, and as inflation 30 00:01:17,040 --> 00:01:20,920 Speaker 3: continues to fall, the degree to which it's restrictive actually 31 00:01:21,000 --> 00:01:23,759 Speaker 3: grows as that gap between the inflation rate and our 32 00:01:23,800 --> 00:01:28,240 Speaker 3: interest rate widens. So I think that will put enough 33 00:01:28,640 --> 00:01:31,080 Speaker 3: constraint on the economy that it will continue to slow. 34 00:01:31,400 --> 00:01:33,959 Speaker 3: But again, I'm not expecting this to be, you know, 35 00:01:34,000 --> 00:01:36,959 Speaker 3: a two month or three month period. My outlook is 36 00:01:36,959 --> 00:01:39,840 Speaker 3: that we'll still be in a restrictive territory well into 37 00:01:39,840 --> 00:01:42,280 Speaker 3: twenty twenty four, and it will just take a while 38 00:01:42,319 --> 00:01:45,039 Speaker 3: for the inflationary pressures that we've seen over the last 39 00:01:45,160 --> 00:01:47,440 Speaker 3: year and a half to fully dissipate and get us 40 00:01:47,440 --> 00:01:48,160 Speaker 3: back to two percent. 41 00:01:48,280 --> 00:01:50,120 Speaker 1: You'll need to see some more data before you come 42 00:01:50,160 --> 00:01:52,000 Speaker 1: up with a position on where you should be headed 43 00:01:52,040 --> 00:01:54,840 Speaker 1: in the future meetings. But what data points particularly will 44 00:01:54,920 --> 00:01:55,720 Speaker 1: you be focused on? 45 00:01:56,120 --> 00:01:59,120 Speaker 3: So I'm looking at really three things. The first is 46 00:01:59,240 --> 00:02:01,360 Speaker 3: the actual inflation rate, so we've got to make sure 47 00:02:01,400 --> 00:02:04,000 Speaker 3: that inflation is not moving away from target or even 48 00:02:04,080 --> 00:02:04,960 Speaker 3: starting to stall. 49 00:02:05,560 --> 00:02:07,880 Speaker 2: The second is the breadth of inflation. 50 00:02:08,080 --> 00:02:11,720 Speaker 3: So in all of these indices, you know, they track 51 00:02:11,800 --> 00:02:12,560 Speaker 3: the prices for. 52 00:02:13,120 --> 00:02:14,600 Speaker 2: A number of different goods. 53 00:02:14,840 --> 00:02:19,080 Speaker 3: At the height of the inflation trouble, eighty percent of 54 00:02:19,080 --> 00:02:21,400 Speaker 3: the goods they tracked had inflation rates a five percent 55 00:02:21,480 --> 00:02:25,799 Speaker 3: or more. Today is twenty eight percent, and this is 56 00:02:25,800 --> 00:02:28,880 Speaker 3: in the CPI, and then in the ordinary times is 57 00:02:28,880 --> 00:02:30,440 Speaker 3: fifteen to twenty so we can. 58 00:02:30,360 --> 00:02:32,880 Speaker 2: Get back to that. That's a great thing. 59 00:02:33,040 --> 00:02:36,120 Speaker 3: And then the third is expectations, because as you know, 60 00:02:37,000 --> 00:02:39,200 Speaker 3: people make decisions based on what they expect things to 61 00:02:39,200 --> 00:02:41,280 Speaker 3: be in the future, and if they start to expect 62 00:02:41,320 --> 00:02:44,200 Speaker 3: that inflation is going to be different than our two 63 00:02:44,200 --> 00:02:46,760 Speaker 3: percent target and that's not what's happening now, then they're 64 00:02:46,760 --> 00:02:50,440 Speaker 3: going to make different decisions and our economic capacity will 65 00:02:50,480 --> 00:02:52,400 Speaker 3: be lower, and we definitely want to make sure that 66 00:02:52,440 --> 00:02:53,040 Speaker 3: doesn't happen. 67 00:02:53,160 --> 00:02:54,960 Speaker 1: You talk about the breadth of the inflation, let's talk 68 00:02:54,960 --> 00:02:57,400 Speaker 1: about it breath in a different sense. You were responsible 69 00:02:57,440 --> 00:03:00,360 Speaker 1: for a good sized region of the country. There have 70 00:03:00,400 --> 00:03:03,000 Speaker 1: to be variations within that region. You've got Atlanta, you 71 00:03:03,080 --> 00:03:05,560 Speaker 1: got Miami, You've got a lot of rural areas. As 72 00:03:05,600 --> 00:03:07,320 Speaker 1: you look at that region, where do you see the 73 00:03:07,320 --> 00:03:10,000 Speaker 1: biggest variations that we should be paying attention to. 74 00:03:10,360 --> 00:03:11,560 Speaker 2: Well, they're a good number of them. 75 00:03:11,600 --> 00:03:13,840 Speaker 3: And you know, it's funny that you say that because 76 00:03:14,080 --> 00:03:17,120 Speaker 3: in my district is all are parts of six states 77 00:03:17,400 --> 00:03:20,440 Speaker 3: in the Southeastern United States, very large and very diverse, 78 00:03:20,880 --> 00:03:23,200 Speaker 3: and right before the pandemic, we were using a theme 79 00:03:23,560 --> 00:03:27,080 Speaker 3: one district, many economies, and so when you look across 80 00:03:27,120 --> 00:03:33,160 Speaker 3: the Southeast, you have the big metros Atlanta, Nashville, Tampa. 81 00:03:33,639 --> 00:03:37,040 Speaker 3: These places are growing fast as there's a lot of 82 00:03:37,040 --> 00:03:40,320 Speaker 3: pressure on housing as a result, but the trajectory there 83 00:03:40,360 --> 00:03:41,200 Speaker 3: is very positive. 84 00:03:41,680 --> 00:03:43,920 Speaker 1: What are the best investments from your point of view, 85 00:03:43,920 --> 00:03:47,200 Speaker 1: for what you understand that will drive the most productivity. 86 00:03:47,800 --> 00:03:49,120 Speaker 2: I think there are two things. You know. 87 00:03:49,160 --> 00:03:52,120 Speaker 3: The first is I know that a lot of businesses 88 00:03:52,200 --> 00:03:55,680 Speaker 3: have been thinking about how do they improve their processes? 89 00:03:55,920 --> 00:03:59,880 Speaker 3: Introduce automation allows them to get more done with less, 90 00:04:00,200 --> 00:04:03,360 Speaker 3: and that's happening across the board. You go to a restaurant, 91 00:04:03,360 --> 00:04:06,760 Speaker 3: now oftentimes you do the ordering on a screen and 92 00:04:06,800 --> 00:04:09,800 Speaker 3: that reduces the baseline costs and increases productivity. 93 00:04:10,000 --> 00:04:11,200 Speaker 2: And then the second is really to. 94 00:04:11,240 --> 00:04:13,880 Speaker 3: Invest in our workers to make sure that they're getting 95 00:04:13,920 --> 00:04:17,119 Speaker 3: the skills that allow them to compete for the jobs 96 00:04:17,160 --> 00:04:20,320 Speaker 3: of tomorrow. When you think about all the automation that's happening, 97 00:04:20,400 --> 00:04:24,279 Speaker 3: all the new manufacturing, it's a different set of skills 98 00:04:24,400 --> 00:04:27,240 Speaker 3: that workers need relative to what they needed in the 99 00:04:27,279 --> 00:04:29,240 Speaker 3: old factory, and we need to make sure that we're 100 00:04:29,279 --> 00:04:32,960 Speaker 3: investing in ways that allow our workforce more broadly to 101 00:04:33,120 --> 00:04:36,200 Speaker 3: be competitive, to participate and then get those higher wages. 102 00:04:36,320 --> 00:04:38,120 Speaker 1: Rafael Bustik, thank you so much for joining us. That's 103 00:04:38,200 --> 00:04:40,960 Speaker 1: Raphael Bostik. He is the president of the Atlanta Fed.