Transcription
I DON'T KNOW WHAT KIND OF VOICES YOU.
DID BACK IN THE.
SENIOR US ECONOMIST AT DEUTSCHE BANK.
A BLUE DRESS.
BEHALF OF MY COLLEAGUE.
HERE, JOE KERNEN, I APOLOGIZE.
PLEASE WEIGH IN, WEIGH IN ON THE NUMBER. IF YOU COULD NOT ALL OF THE OTHER PART OF IT. SURE.
FIRST, HAPPY HOLIDAYS.
TO.
YOU AND.
THANK YOU FOR HAVING ME ON THE PROGRAM, ON THE ON THE JOBLESS CLAIMS NUMBERS. YOU KNOW, I THINK YOU HAVE TO LOOK AT THE FOUR WEEK AVERAGE, OBVIOUSLY, GIVEN THE VOLATILITY. AND ON THAT NOTE ON INITIAL YOU'RE DOWN ABOUT A PERCENTAGE POINT OR ALMOST TWO PERCENTAGE POINTS YEAR OVER YEAR. AND CONTINUING CLAIMS ARE UP A LITTLE BIT ABOUT 1.5%. BUT THOSE AREN'T VERY CONCERNING NUMBERS. AND THEY'RE IN LINE WITH WHERE I THINK THE UNEMPLOYMENT RATE ROUGHLY IS. THE UNEMPLOYMENT RATE MAY BE A LITTLE BIT OVERSTATED AT THE MOMENT, BUT IT'S BEEN GRADUALLY RISING. AND THE QUESTION, I THINK, IS TO WHAT DEGREE IS STEVE POINTED OUT, IS THE SLOWDOWN IN THE LABOR MARKET, DEMAND DRIVEN VERSUS SUPPLY DRIVEN. AND THAT'S REALLY WHAT'S BEEN DRIVING THE FED DEBATE. AND THAT'S A HEALTHY DEBATE. AS FED CHAIR POWELL HAS TALKED ABOUT WITH THE RECENT DISSENTS. THEY WANT A HEALTHY DEBATE. THAT'S THE SIGN OF A HEALTHY INSTITUTION.
WHAT DO YOU THINK IS REALLY HAPPENING? BECAUSE YOU LOOK AT THE GDP NUMBERS AND YOU THINK, OKAY, THINGS ARE GREAT. YOU LOOK AT THE THE JOBS NUMBERS, YOU MIGHT SAY, NOT SO GREAT. AND IF YOU'RE THE FED, THERE'S NOT MUCH YOU CAN DO ABOUT THAT BECAUSE THAT WILL JUST SQUEEZE YOU RIGHT IN THE MIDDLE.
RIGHT? I THINK YOU HAVE A LOT OF POLICY CHANGES HAPPENING AT THE SAME TIME, A LOT OF DIALS BEING TURNED, AND THAT'S KIND OF CREATING A LITTLE BIT OF CONFUSION. I THINK IT'S A LITTLE BIT OF BOTH. YOU HAVE A YOU HAVE A DECENT TREND IN GDP GROWTH IN CAPEX INVESTMENT ESPECIALLY. YES, IT IS DRIVEN BY AI, BUT IT'S BEING DRIVEN BY SOMETHING AND THAT'S IMPORTANT. AND NUMBER TWO, YOU HAVE A LABOR MARKET THAT YES, HIRING HAS BEEN LOW, BUT FIRING IS ALSO LOW. AND SO WHAT HAPPENS WITH THE ADP NUMBERS, FOR EXAMPLE, YOU KNOW, OVER THE SUMMER WHEN THE SEASONAL FACTORS ARE PREDICTING STRONGER HIRING AND YOU DON'T GET IT, YOU GET WEAK NUMBERS. BUT THEN DURING THE MONTHS WHERE YOU'RE EXPECTING LARGE LAYOFFS AND YOU DON'T GET IT, YOU GET LARGER NUMBERS. SAME THING.
WITH THE AUSTIN GOOLSBEE A COUPLE OF WEEKS AGO OR MAYBE TEN DAYS AGO. HE SAID, LOW FIRE, LOW HIGHER IS NOT NORMAL. YOU GET LOW FIRE AND IT MEANS YOU HAVE AN EXPANSION. LOW HIRE MEANS YOU HAVE A CONTRACTING OR WEAKENING ECONOMY, HE SAYS. IT'S UNCERTAINTY AND IT'S ECONOMIC POLICY THAT IS KEEPING EMPLOYERS FROM HIRING PEOPLE, BUT ALSO KEEPING THEM FROM FIRING PEOPLE. I DON'T KNOW IF THIS IS A TAIL RISK OR IT'S AN ISSUE FOR NEXT YEAR. LET'S POSIT THAT ECONOMIC POLICY BECOMES MORE CERTAIN. COULD YOU SEE AN ACCELERATION IN THE JOB MARKET AS A RESULT OF THAT?
WELL, YES. AND YOU'RE GOING TO SEE AN ACCELERATION IN GDP ON THE FISCAL POLICY ALONE. I MEAN, TAX TAX REFUNDS THIS YEAR ARE GOING TO BE HUGE. WE ESTIMATE ROUGHLY 50 TO 60 BILLION IN EXTRA TAX REFUNDS. THAT ACTS LIKE A STIMULUS THAT SHOULD FUEL SOLID GROWTH IN THE FIRST HALF OF NEXT YEAR. WE'RE AT 2.8% ANNUALIZED IN THE FIRST HALF OF NEXT YEAR. THE SECOND HALF OF NEXT YEAR BECOMES A LITTLE BIT OF A QUESTION. BUT I THINK THE OTHER PART OF THIS IS THE POLICIES IN PLACE THAT ARE ENCOURAGING BUSINESS INVESTMENT. OTHER PARTS OF THE ECONOMY, ASIDE FROM AI, SHOULD START TO PICK UP, AND YOU SHOULD START TO SEE INVESTMENT THERE. AND THE QUESTION IS, ARE YOU GOING TO HAVE ENOUGH WORKERS TO MEET THAT DEMAND? BECAUSE YOU'RE SEEING LITTLE TELLTALE SIGNS IN CERTAIN SECTORS, CONSTRUCTION BEING ONE WHERE EMPLOYMENT IS DOWN, BUT WAGE GROWTH LOOKS LIKE IT'S INFLECTING THE NFIB SURVEY THAT ASKS, WHAT'S YOUR WHAT'S YOUR BIGGEST PROBLEM. QUALITY OF LABOR IS STARTING TO PICK UP. IT WAS FALLING FOR TWO YEARS NOW. QUALITY OF LABOR IS STARTING TO RISE. THE PERCENTAGE OF RESPONDENTS POINTING TO QUALITY OF LABOR. SO THE TAIL RISK HERE IS THAT YOU COULD ACTUALLY HAVE SOMEWHAT TIGHTENING OF THE LABOR MARKET AT SOME POINT NEXT YEAR. GROWTH IS STRONG.
PROBLEMS WITH TRYING TO FIGURE OUT THE ECONOMY IN A TRUMP ADMINISTRATION. THERE ARE SO MANY DIFFERENT THINGS THAT ARE BEING CHANGED RIGHT NOW, AND THEY ALL SORT OF INTERACT IN A WAY THAT LIKE, FOR EXAMPLE, YOU COULD SAY IT'S A CLEAN PRODUCTIVITY INCREASE, FED CAN CUT RATES AND GO DOWN, BUT YOU HAVE THE IMMIGRATION THING WHICH INTERACTS WITH IT IN A WAY THAT MAKES IT A LITTLE BIT MORE UNCERTAIN. WHAT DOES THE FED DO IN THIS SITUATION? DO THEY CUT OR DO THEY WAIT TO SEE WHETHER OR HOW THESE TWO THINGS INTERACT? ALL THE OTHER THINGS INTERACT AS WELL.
YOU HAVE TWO CAMPS RIGHT NOW, RIGHT? YOU HAVE THOSE THAT THAT WANT TO THAT THINK THEY NEED TO CUT FURTHER TO ADDRESS DOWNSIDE RISKS. AND THOSE THAT ARE OF A HIGHER NEUTRAL RATE SAYING, LET'S WAIT A MINUTE, LET'S TAKE A STEP BACK HERE. WE'RE STILL ABOVE TARGET INFLATION HERE. AND IT'S N