00:03:08 · Claudia Sahm, Claudia Sahm, Tom Keene, Paul Sweeney, S6
[00:03:08] S5: As I said before, we've. [00:03:09] S7: Seen some big surprises like this earlier in the year, and then they ebb away. So I've got to see some months of this before I'm really convinced we're seeing an acceleration of the labor market. [00:03:20] S5: But good news is good news. [00:03:21] S7: And the unemployment rate The overall unemployment rate did tick down with participation going up. [00:03:27] S5: So, like, that's a good setup. So we're going to take the good where we have it. But we have been head faked. [00:03:33] S7: By this labor market in terms of acceleration several times this year. [00:03:37] S3: Paul, am I right? Kevin Hassett of the White House will. [00:03:40] S1: Be with Bloomberg? [00:03:41] S3: Yes. Nine-ish? Yes. [00:03:43] S1: We're going to have him. [00:03:43] S6: Okay. [00:03:44] S1: Get his thoughts here. [00:03:45] S3: Paul Sweeney with Claudia Sahm. [00:03:46] S1: Average hourly earnings on a year-over-year basis, Claudia Sahm, came in a little bit better than expected at 3.1%. Are you surprised that number's not even higher given how tight the labor market is? Why can't I walk into my boss and say I need 10% increase if you want to keep me? [00:04:00] S7: Well, I think the boss will be like, good luck in that job. I mean, that's the thing right now. And I watch really. [00:04:06] S5: Carefully the quit rate. So we did get an update on Jolt's this week. [00:04:09] S7: And there was a little tick up, but it's still pretty low. [00:04:12] S5: And that's a good sign of the bargaining power.
00:04:12 · Claudia Sahm, Claudia Sahm, S6
[00:04:12] S5: And that's a good sign of the bargaining power. [00:04:15] S7: If workers are out there quitting to get better jobs, that's when they have the leverage for the higher wages. [00:04:20] S5: It just does— it' s just not there right now. [00:04:23] S7: If you don't have hiring being strong, the workers just don't have that ability to bargain. [00:04:28] S6: Can we like do like— there' s no recession talk, but can we do like Claudia Sahm wheelhouse here? Sure. Claudia Sahm wheelhouse, folks. She's famed for looking at how an economy slows. Let's go to the opposite way, Claudia. So when you studied at Michigan, you never, never thought about a sustained 6% or more nominal GDP. How do you presume with our new politics that we will bring in this boom economy constructively? [00:05:01] S7: So, you know, there's a lot of pieces to that. I do think going back to the question about immigration policy, labor force policy, like I'm less looking at, you know, the downturn in the labor market, but I am worried about some of the structural pieces of the labor market. And I think without a growing labor force, it's going to be hard to to really consistently have. [00:05:22] S5: Those GDP gains.
00:05:22 · Claudia Sahm, Claudia Sahm, Paul Sweeney, Tom Keene
[00:05:22] S5: Those GDP gains. [00:05:23] S7: I mean, I am optimistic about some of our technology improvements on the horizon, but that is really tough to string together quarter after quarter, year after year, improvements in productivity growth, right? And so I think you've got to have a multi-prompt approach in terms of the policy. Hanging our hats on AI is not the way forward. to go in terms of really wanting to keep those strong growth numbers. I think there are some structural pieces on the labor market that deserve attention and may very well get some attention given the election results this week. [00:05:54] S1: Labor force participation rate, again, a little bit better, 61.9%. Where's a healthy number? Like, what should we be looking for? Is that a good number, 61.9? Should it be higher or lower? [00:06:04] S5: Yeah, I mean, it is hard. [00:06:06] S7: You know, work is onerous, right? We don't want 100. People should have a choice as to what they do. I think given the fact that we have so much aging of the workforce. probably keeping a focus on. [00:06:17] S3: The prime age. [00:06:18] S5: So yeah, no, I'd say, well. [00:06:20] S7: You know, people should get to retire at some point if they want to. But I think looking at the prime age statistics, which have been really pretty solid, but there's always, you know, there's the separation of like, we look month to month, quarter to quarter at the labor market. [00:06:37] S5: And then there's the big picture.
00:06:37 · Claudia Sahm, Claudia Sahm, Tom Keene, S6, S2
[00:06:37] S5: And then there's the big picture. [00:06:38] S7: I mean, we've had some demographic groups that for decades have been puzzling, like men, prime age working, used to all work, and there's been declines over many decades. So then there's questions about why is that happening? But that's not this near-term discussion. So I don't have a ready answer of what's the right number because it depends on people and their lives. [00:06:59] S3: Spearheading our labor coverage, I should say. Claudia's with us. Thank you. Thank you so much this morning. [00:07:08] S6: Look for her publications and, of course, wonderful out on Twitter and particularly on LinkedIn as well. With a bigger, broader picture, futures up 10, NASDAQ up where it was pretty much level 1.3%, but yields higher today, 10-year yield by a solid four basis points as well. Constance Hunter joins us, Chief Economist, EIU and her work with Julia Coronado, Macro Policy Perspectives as well. Constance, I look at this and it's clearly a fully employed America, Link it to what we observed in the election. I see two Americas, and there's an America that isn't in the jobs report this morning. [00:07:49] S2: Well, if we look at the voter turnout, a lot of the voters probably had jobs, right? So I wouldn't say that this was an election determined by the unemployed. We have a very low unemployment rate. And of course, remember that 33% of the population are made up of independents, and those are the swing votes. [00:08:09] S5: That put the sort of moderate.
00:08:09 · Claudia Sahm, S2, Paul Sweeney, Kristina Campmany
[00:08:09] S5: That put the sort of moderate. [00:08:10] S2: Democrats in states like Iowa and Nevada and Texas into office, even in Ohio. [00:08:19] S5: I would say. [00:08:20] S2: So I think that this election is a reflection of what's happening in foreign policy with Iran and possibly Ukraine, what's happening with inflation. [00:08:30] S5: That was the number one issue. [00:08:33] S2: And it doesn't necessarily mean that that the economy isn't churning and working underneath. It's just people are still feeling the effects of the price, the level changes we had during covid. Then they didn't dissipate. Then we've had another step up in levels. And and that is what people voted about. [00:08:53] S1: So that kind of goes to the issue. Again, we look at average hourly earnings on an annualized basis, constants of three point one percent. That's better than then forecast better than last period. We had an upper revision for last period, actually, to 3.2%. But that's just not keeping pace with inflation for most people. Something's got to give there. [00:09:12] S0: Well, it's a double-edged sword, right? [00:09:15] S2: Certainly what we don't want to see is we don't want to see runaway inflation that's demand pull. And so what we see here is a lot of costs push inflation, and the Fed is trying to curb that. [00:09:27] S0: You had Beth Hammack and Barkin.
00:09:27 · Kristina Campmany, S2, Claudia Sahm, Paul Sweeney, S8
[00:09:27] S0: You had Beth Hammack and Barkin. [00:09:29] S2: Coming out yesterday, Barkin, who will be a voter in 2027, saying the Fed should raise rates. And what I'm looking at in this labor market is sort of how durable is it? And when we look at things like the diffusion index, we had a solid increase there. [00:09:43] S5: And one of the things that I've been watching. [00:09:44] S2: This year is the mix of cyclical versus non-cyclical jobs. [00:09:48] S5: And now let's remember the big concern when we were coming off the. [00:09:53] S2: COVID highs, that we were still having high headline prints, but it was dominated by health care and government. [00:09:59] S5: And social assistance workers, non-cyclical jobs. [00:10:02] S2: Now we're in a situation, really starting this year, where we can see a surge in cyclical jobs, and cyclical jobs are dominating the hiring, that suggests that there's some underlying economic momentum. Now, it may take time for people to feel that, but it's certainly there in the data. [00:10:22] S1: So given the labor backdrop, what's your view of the consumer going forward here? It's kind of, boy, if you have a job, you're in That's a big, big part of the game here. Is the consumer OK? [00:10:34] S8: I think the consumer is OK.