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.
00:10:34 · S8, S2, Claudia Sahm, S6, Kristina Campmany
[00:10:34] S8: I think the consumer is OK. [00:10:36] S2: And a lot of it is going to depend what does happen, for example, with the Iran war and with gas prices. You know, we're getting oil out of the Gulf because we are engaged in escort operations. But it's very expensive to get that oil out. And so the market, the oil market, is pricing in all risks around that. If we see a resolution to the Iran war, and you see a really. [00:11:01] S5: Durable a structure. [00:11:04] S2: Built around getting oil and gas out of the Gulf of Hormuz, or the Strait of Hormuz, then you're going to see oil prices come down. That's going to give immediate relief to people's pocketbooks. [00:11:14] S6: Constance, what are you going to write about this weekend? Folks, commercial free for you for the next 20 minutes. Kristina Campmany coming up with Invesco, but right now, Constance Hunter, EIU. What are you going to write about this weekend? I mean, you have such a broad mandate. I'm just fascinated. What's the Constance Hunter theme? [00:11:31] S2: Well, I'm looking at really what is happening with this global AI sell-off, right? So you had Hong Kong down. You had Taiwan down. Taiwan is engaged now in pricekeeping operations to stabilize that market. Where are those fault lines? We still have Japan engaged in this massive carry trade, invested in equities around the world. [00:11:53] S0: Are we at a tipping point there?
00:11:53 · Kristina Campmany, S2, Claudia Sahm, S6, Tom Keene
[00:11:53] S0: Are we at a tipping point there? [00:11:55] S2: What is happening with regard to economic policy that the Democrats are going to be able to enact? Obviously, this comes down to the state level, and one of the big themes that the market has been focusing on over the last several days is this sort of curb of AI. [00:12:12] S5: Build-out. [00:12:14] S2: Really, the thing is, to what extent is that happening, and are we talking about an end, or are we talking about some more sensible policies that make it more palpable to the general public? [00:12:23] S6: Right. [00:12:24] S2: Public is really against the AI build-out, and we don't do anything about it. Then we would have such significant backlash down the road. So I'll be looking at all of this and really thinking about what are the economic vectors we need to look at going forward. But if I were looking at just this jobs report, and not thinking about the shock of the election, I would say that we are on solid footing based on this jobs report. [00:12:49] S6: Thank you so much. Excuse me. Constance Hunter with us here from EIU. The last time Kristina Campmany came in, for whatever breaking news reason, we were so rude. [00:13:00] S3: You were here for. [00:13:03] S6: Two questions or something, and Vesto called up from Atlanta and said, how can. [00:13:07] S3: You treat her like that? [00:13:08] S6: So for a long conversation this morning, Kristina Campmany on this crazy global bond market and what it says to us. [00:13:17] S3: Were you in college at Villanova with Jalen?