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Fascinating to hear just everyone evolve with the data. Certainly the markets are today, and to hear the former Saint Louis FED president say the soft landing for the US economy is in view is something that we are obviously going to hear. That's the kind of news that the White House wants to listen to. And following this job's data this morning, we may be in a different world.
It certainly feels like it then we were twenty four hours ago, certainly coming off of the Fed meeting and some of the more recent data that we've seen on GDP and jobs. Mark Hamrick joins us. Now I'm glad to say from our Washington Bureau, the bank Rate Washington Bureau chief, you's senior economic analysts at bank Rate and has been researching this job's data forest market. It's great
to have you on Bloomberg. Welcome the stuff that we were hearing just now from Jim Bullard reinforces this view that the FED may actually stick the soft landing. How are you looking at this report today?
Good to be with you, Joan, Thanks for having me. I think what he's saying is very parallel to what the FED chairman said just a few days ago, and that is there are a number of possible paths ahead, and some of those pasts may well be constructive, meaning we avoid a hard landing, we avoid a contraction in the economy in the next let's say, six to twelve months, and that the hope is indeed aligned with the prayer that inflation will continue to come down. There are other paths, though,
that could involve events that we can even predict. And so what I think I would prefer to associate myself with in this discussion is the high degree of uncertainty, to acknowledge that there are multiple paths and that we don't have a high degree of certainty about a particular path.
Okay, so we're data dependent as we have been. We're awfully used to that. But you can feel the shift in sentiment here, can't you?
Mark?
Does that change your view?
Well, it's one day's worth of data, but obviously an important set of data, you know, and you can concoct a variety of paths just from today, For example, the payrolls number coming in with a gain of one hundred and seventy five thousand jobs. That's a decline of forty percent from the previous month's revised number. So you can come up with a scenario where that trajectory goes lower that we get a much more pronounced slowing in the economy.
I don't think that's the base.
Case, but I would say broadly, this is a very well balanced report which does take sort of the hot plate of porridge out of the choice of three too hot, too cold, just right today today alone, and we'll see what the next rounds of data bring.
What are the next rounds that matter to you? Are we back to obsessing over CPI or is it the jobs report that's kind of leading your view?
I think we're mostly obsessing about the consumer price index over the job's report.
And that's painful for.
Me to say, because I've always loved following the employment data. But you know, when you're talking about the FED prioritizing the part of the mandate with stable prices. Although it's interesting to hear Chairman Powell this past week say well, perhaps we need to be paying just a bit more
attention now to maximum employment than we were before. I still think the CPI is the star of the show, because there was nothing in the statement that led us to believe that we're going to be prioritizing the employment side. It is that we need greater confidence about coming down to that. Heavily talked about two percent target.
You're looking at average hourly earnings in this report. We've been with the n I on inflation watching that number carefully of three point nine percent over the past year, pay is exceeding inflation, which is a really good thing for Joe Biden to say. But how concerning could that be if this trend continues, when we consider the possibility of a wage spiral, of this starting to become a vicious cycle where the Fed needs to worry again.
Well, I think, first of all, Chairman pal has been pretty consistent, and I think the data supports the view that the job market has not been the primary cause of inflation in the sense of wage growth, leading that we know the imbalance between supply and demand broadly, and the supply chains really fed that. The war against Ukraine as another straw to sort of break that camel's back, and we had to decline in the sort of month over month annualized look at average hourly earnings. So we're
not above four percent as were before. We're at thirty nine. So I think it's reasonable to expect that with this moderation or normalization we have in the job market, that
we will not have a wage price spiral. We had a number of things seasonally occurring at the beginning of the year, with twenty two states, dozens of localities raising their minimum wages that had to have been affecting the data, and we know there were a number of negotiated settlements involving unions that also probably lifted some of that.
So I would look at some of that.
As being seasonal or temporary, and that would probably be consistent with numbers that are not as high going forward.
Got it.
We're spending time with Mark Hamrick from Bankrate here on Balance of Power, on Bloomberg Radio and on YouTube. If you want to find us now, go to YouTube search Bloomberg Global News. You'll see Mark Hamrick's palatial office. While you're at it mark. What's the most stubborn problem here in the inflation conversation. I know you're watching oil it's a little bit of a wildcard, but shelter has been a real problem here moving forward.
It just doesn't want to budget well.
It seems to be services excluding shelter because, as the chairman said this week, the rents data has its measure doesn't seem to be matching what's happening in the marketplace, and so it is expected that as we get essentially the shelter part of all this sort of better reflected in the data, that the CPI in the shelter component
as well, services more broadly may behave better. But we know, for example, there are all kinds of almost extraordinary things going on in the economy that may not relent, and I would point to things like the extraordinary increases in the cost of car insurance that are caused by a number of different factors. With climate change is part of that. Some of them are sort of post pandemic impacts of people not seeming be able to drive very well anymore, but also the sharp rise in car prices and the
extraordinary costs associated with repairing a car. So obviously still on the services side, but we do need to see more disinflation resume on the good side, and if we can get alignment, you know, for the most part on both of those, we might be in a better shape. And I think that's sort of the consensus expectation right now.
I'm glad we could get some time with you today, Mark, don't be a stranger. Thanks for joining us on Bloomberg. That's Mark Hamrick from bank Rate on this job's Day. I'm Joe Matthew at World Headquarters in New York as we balance a couple of stories today because in this city, Donald Trump.
Is back in court, and so is Hope Hicks.
You're listening to the Bloomberg Balance of Power podcast Ken just live weekdays at noon Eastern on Applecarplay and then Rodoo with the Bloomberg Business Ad. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven.
This is a fascinating development here in the criminal trial, the former president hush money trial, of course, that's now under way. Hope Hicks, one of his closest associates over the years, a personal assistant, who was always there to take care of Donald Trump, is now testifying against him. Speaking as we speak about the day she learned of the access Hollywood tapes. Quite remarkable, she said. After getting the email about the tape, she went to the twenty
fifth floor of Trump Tower to talk about it. Donald Trump was doing debate prep at that moment in a conference room with Jason Miller, Kelly and Conway, Steve Bann and Jared Kushner and his no longer friend Chris Christi. She verbally explained the email, She said to Trump, and the group sought to quote absorb the shock of it unquote. We're joined in studio here in New York right now
in the throes of this conversation by Dave Ehrenberg. Yes, the Palm Beach County State Attorney is here and with us in studio.
It's great to see you, sir, what a treatment.
Great to be back with you.
Joe.
Absolutely.
I don't know what's got you in Manhattan, but we're watching this trial unfold here, and I believe you made clear already at one point that Hope Hicks could be the slam dunk testimony for the prosecution.
What are we learning so far well.
At first, she started by saying she doesn't remember being in the room where they had that discussion between Pecker, Cohen and anyone else in the room at the time. I think it was in Trump himself back in August twenty fifteen where everything hit the fan. They were trying to plan a strategy to suppress these bad stories. Now that's trouble that she doesn't remember that. How do you not remember being in that meeting? You think you'd remember that.
She does remember, though, being on a conference call on calls with these players. So she's going to help the prosecution, but perhaps not as much as a state thought.
What do they want to hear from her today? When is the job done?
They want to hear corroboration that Trump was part of the scheme, and that this scheme was in response to the Access Hollywood tape, because after they came out, people thought the campaign was doomed and they couldn't afford another Stormy Daniels to come out where there was more trash about Trump, and so that's why they entered into the
scheme to influence the election. Because prosecutors have to prove that not just there was a falsification of business records, but it concealed a campaign finance crime, and that would be the felony.
Is Hope Hicks testimony then more credible than Michael Cohen or Stormy Daniels because of her prior relationship with Donald Trump. That's been the conventional wisdom.
Here, prior and current relationship.
You can are they still close?
Well, they're not enemies. She has no axigrind. I don't know how close they are, but she has no axagrind. That's why she's powerful for the state. You see, the defense is going to try to discredit Michael Cohen, the key witness, by saying, you guys hate each other, Michael Cohen has prior felonies, all that stuff. They're going to try to discredit David Pecker by saying you're under a non prosecution agreement. It's in your incentive to deal with
the prosecuers and makeup stuff. And they've already tried to discredit Davidson, Keith Davidson by saying you're a sleezebag, You have sleez bag clients, You travel in this sleazy world of paparazzi. Of course Trump travel in that world too, but with Hope picks. What do they have? They have a loyalist who's trying to do the right thing apparently and tell the truth, although sometimes her memory seems to be faltering, got it?
So what does cross examination look like for her?
Then they're going to try to poke holes in her testimony. They're probably going to treat with kid gloves, Yeah, okay, And they're going to try to say, you don't remember this, you don't remember that, do you?
Yes?
And that's where they'll try to say, like, you know, you can't rely on her to corroborate Michael Cohen when she doesn't remember a lot of these specifics.
How about that there's a gag order ruling that we're waiting for a second gag order ruling as well. Four more violations alleged the hearing yesterday. Does that mean another four thousand dollars which Donald Trump would probably write at dinner anyway.
Yeah, it's pocket change for him, you know, as long as they're going to find him, and they're pretty limited to how much they can find him. They've got the statute for one thousand dollars per violation, and Dug Mashawan is stuck. If he really wants to ratchet it up. He could put him in time out. They have like a little holding cell inside that courtroom inside the Yeah, I don't think they'll go to that. I mean, but maybe there's no way he's going to be incarcerated pre trial.
But could he be put in a room to sit there for a few hourly?
Do that?
Though he's got the authority to do it. The Secret Service would have to have some kind of a sidebar, right, how would that work?
And they could just put him in a room by.
Himself, give him an office and shut the door. Yeah, right, time out.
That'll teach you. Yeah, yeah, So you know, he should be treated like everyone else. In my mind, I mean, if you violate a court's gag order, you should be sanctioned. Defendants in my courthouse, if they criticize the judge or witnesses yours, yeah you're done?
What done? You go to jail?
Or?
I mean what if Joe Matthew was standing in there and I said that, you know, this guy's a sleezbag and did all of that stuff?
Is there a first warning? I get it. Do I start with a fine? Or would you actually lock me up?
Now?
They would start with a fine, and they'd a strong warning. If you continue to do it, you would be wearing.
Ten to what now, fifteen violations that would be in jail.
Yeah, they'd fit you with some steel bracelets.
Okay, great, I mean, you know, we do need to ask these questions, particularly as he talks about the weaponization of the justice system, when he is in fact being treated better than anyone else would be.
His supporters say that there's a two tier system of justice. I would agree, but not in the way they're thinking. I think he's being treated better. And the other defendant who did this continually and intentionally violated the courts gag order and went after the judge and his daughter, Oh yeah, I mean they'd be picking up trash on the side of the highway.
There seems to be a feeling, based on smarter minds than mine who come on this program, that this trial is not going to need six to eight weeks. We're moving along here. What do you think of the timeline at this point.
Judge Marshan is a no nonsense judge. She's moving things along. It is pretty telling when Trump was complaining that he can't be on the campaign trail because of this. This is this is not right. But on the same time he's also complaining how quickly the trial is going. So you know, whatever it is, it's grievance on both sides. Too fast, too slow, it's too cold in the court room.
Whatever it is, he's being treated unfairly. Bottom line is judge's matter, and Judge Murshan wants this thing to get finished sooner than later, and it will.
You know, he made clear yesterday on truth Social that he's not been sleeping. Did you see that in the courtroom?
He said he was like.
He's closing his beautiful blue eyes.
Yes, it's taking it all in very poetic.
You know, he's got to keep up with images, right, he's the alpha male, and alpha males don't fall asleep during testimony, especially when he's calling the current president's sleepy Joe. You can't use that, Moniker if you're falling asleep while you're at your own trial.
I think I heard sleepy done at the White House course Bonds dinner, right, that's already out there now.
Yes, I didn't know he had blew lies by the way.
He didn't.
No, I didn't pay that close attention.
Well, I think he said they're beautiful.
He did say they're beautiful blue eyes.
Yeah, so maybe he'll be out of this thing sooner than he thinks. At what point when this trial, when the testimony resumes, how long will we wait for this to go to the jury.
What's that process going to be like?
After the testimony is over, you'll have closing arguments and then it goes to the jury right after the judge reads the jury instructions, and then we'll see if you can get a unanimous twelve member jury to agree on a verdict. It could be a hung jury, and I do think though it's very unlikely to be an acquittal. The evidence that I've seen, the witnesses i've seen him been pretty powerful. So if I had a guess, I
would say this is headed towards a conviction. Now. I don't think he's going to serve any prison time for this. I think he gets probation or maybe house arrests at most, but he'll appeal whatever the final vertical will be.
Anyways, if he's found guilty, though, and he's brought in, he's brought into the courthouse for all of that stuff there he is, he's going to end up in a room at some point that day, right, I mean, what happens if he's found guilty and he's not given jail time. Does he just walk out of there and get in the suv or there's still going to be a long day for him to do whatever is done with the paperwork at the rest of it.
Yeah, he'll get processed, but he'll leave, He'll go home. He's not going to be remanded to back into a jail cell. And then he'll come back for sentencing, which could take place a month later. And then the sentencing I think will will not force him into jail. And even if they did say your sentence includes incarceration, he will appeal and then the appeals will last well beyond the election.
I got it.
You're going to the courthouse now I'm flying home, okay. Yeah, man, going back party in Palm Beach this week, and you heard about that, right. Did you get invited, Marla, A big Deep Steaks party.
Yeah, But somehow my invitation I think was.
Awso the man, I think it's is it in Hollywood floor, No, it's in Palm Beach.
I didn't get mine either.
Yeah.
Also, I'm not eligible to be VP because if you come from the same state. Your electoral votes in Florida will be tossed.
Marco Rubio is going to move to another state, is what I heard?
Yeah, Yes, Marco Rubio is the VP nominee. I will eat my ID badge that they gave me today at Bloomberg.
If you're with us on YouTube, you see still he's got the coolest pin in the room. Someday I want one of those with the badge. Dave Ehrenberg, Palm Beach County State Attorney, a great help to us getting through this legal saga. And it's great to see you in person. Dave here in New York at home safe. I'm Joe Matthew at World Headquarters. This is balance of power. As we add the voice of Tim O'Brien, What a perfect day to have the senior executive editor of Bloomberg Opinion,
who of course wrote the book on Donald Trump. And Tim, it's great to see you, welcome back. What is it like for Donald Trump to see loyalists like Hope Hicks sit on the stand today.
Well, I think he has to weigh whether people who have traditionally been loyalists Joe are willing to sacrifice themselves to someone who's always ed loyalty as a one way street, and there are a lot of people around whom are loyal to him, but they haven't been tested in a court room. And I think one of the complications for Hope Picks is she doesn't want to perjure herself in this trial.
She really has nothing at stake.
Because she was a message bearer for Donald Trump. But if she lied about things she knew about his relationship with either of the women, and there's there's material evidence that maybe what she said publicly was at odds with what was an email or other people witnessed, I think that she'll probably not want a toy with that reality and run into deeper trouble simply in the interests of being loyal to Donald Trump. So I assume she's speaking her mind up there. I've been following it. I was
in the courtroom yesterday. I wasn't there today, and I'm following her testimony right now at a distance, and she seems to be preceding apace, and I have to believe that that absolutely ranked as Donald Trump.
Did you say you there yesterday, Tim, Yeah, I've gone on.
I've been I've been at the courthouse several times. Now, yeah, and I was there yesterday.
Well, take me into the courtroom, especially with your view, what are you seeing that.
The first thing to recognize, Joe is this is you know, this is the criminal court of the New York State Supreme Court, and both the civil and criminal branches of the court are very bonfire of the vanities, venues populated by judges with lots of different personalities, and lots of cases have historically moved through those courtrooms that involve powerful names in New York and scandalous comings and goings, and this is probably one of the most epic cases in
that context to ever roll through there. And there's a huge media gaggle every day. There are no Trump supporters at all. He's been saying people are outside protesting with It's speak, and virtually like the only guy out there is a troubled man with a large bell and a cross and some verbies about Trump on his T shirt, walking around the park every morning, rigging his bell, starting at about seven am, which is typically when I get there. Yeah,
reporters are shepherded in. There's a main courtroom where some of our Bloomberg reporters are, and then there's a joint overflow room, and I've been in the overflow room.
So you haven't made eye contact with him yet.
No, I have not made eye contact with Donald Trump. I'm trying to, you know, I don't know the last time. The last time he and I ran into each other was at a White House correspondence dinner, the famous one where Obama.
That was a fateful night for our nation.
If yeah, yeah, if we're to believe that that's when Donald Trump decided to make a comeback.
But I think these other things were at work.
Yeah, if he gets elected, is the White House correspondents dinner back on ice?
You know, I imagine it is. He has always hated black tie events. He famously reporters. He loves reporters. He hates bad coverage. He's a media addict. But he authentically hates charitable events and black tie events. And you know, Manhattan real estate it's lifeblood. Are these fundraisers that the elite of the real estate community go to. And I used to talk to him. I asked him a number of times, why don't.
You go to these? And I hate those things.
You wouldn't find me dead in a black eye and then in very blue language. He described me what he'd rather be doing on a Saturday night that I can't share on your radio show.
Okay, but I think he'd want.
Nothing to do with the White House Correspondence Center generally.
Is this wearing on him or is he emboldened by being in court four days a week.
I think the answer is yes to both of those questions, but for different reasons. It is absolutely wearing a Donald Trump is aged so significantly even since I think twenty twenty two, but certainly since twenty twenty, and definitely since twenty sixteen. He's a little more hunched over. His hair is getting harder to paste in an effective peekaboo way on the top of his head. His eyes are pouchy
and red. He is tired, as we know. He's nodding off or at least going into some fugue state of meditation during the court proceedings, and he hates being there.
He's not in control of the script.
This is the worst reality TV show a reality TV star could ever participate in, and he can't control the proceedings. So yeah, and he doesn't want to go to jail for whatever bravado he puts out there. People close sum have said he does not want to go to jail. The testimony in this case. He had a porn star into the front office of the Trump organization, which is on the twenty sixth floor of Trump Tower, and his residence where his wife was nursing their four month old child,
barn is about thirty floors above that. I don't know that he wants any of that out in the public, and it's there now. Oh no, he doesn't like this. On the other hand, I think he also is happy to use it as a venue to make his case that he's a victim and he's being unfairly prosecuted.
I'm really glad you could join us today. I didn't realize it was your day off of court. Tim, thank you for being there for us as you bring your thoughts to Bloomberg Opinion. Find him on the terminal OPI and go or at Bloomberg dot com. Tim O'Brien, Bloomberg Opinion Senior executive editor, who, as I mentioned, wrote the book on Donald Trump, and it's great to get his view here on social media. The former president quote, contrary to the fake news media, I don't fall asleep during
the crooked DA's witch hunt, especially not today. I simply close my beautiful blue eyes, sometimes listen intensely and take it all in kind of like here.
On Bloomberg Radio.
You're listening to the Bloomberg Balance of Power podcast Ketch just live weekdays at newon Eastern on Appo, CarPlay and then Roudoro with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Following the release of this job's report, the headline says, at all US jobs post smallest gain in six months as unemployment rises. We got reaction earlier today on Bloomberg TV and Radio from the Acting Labor Secretary Julie Sue.
Here, she is wage gains continue to outpace inflation. That means that there's more money in workers' pockets. This is obviously, as you say, this is a sign of how good people feel, and a good job changes lives, and a good jobs with wages that are enough to sustain a family are really important, and we continue to combat inflation and high prices.
Reaction from the Labor Department today. Now, let's get reaction from the White House. Joining us now from the North Lawn on Bloomberg TV. And radio is Heather Bousche, member of the Council of Economic Advisors. Heather, thank you so much for being here on Bloomberg. Obviously, while we did see some softening, perhaps it is not all too unexpected. The fact of the matter remains, though, that employment is
something of a lagging indicator. If we're starting to see the softness show up in a more material way, now, where do you expect that we will be by November?
Well, today's report is really good news. You know, the Secretary talk the Acting Secretary talked about it. You know, we have seen this unemployment rate below four percent for whopping twenty seven months. That's the longest stretch going back over half a century. And we don't see a lot of signs of softening. When you dig under the hood
you look at the report. For example, we've seen that for women who are between the ages of twenty five and fifty four, so the working age population, their labor force participation and their employment rates have hit serious high going back to nineteen forty eight when Rosie the Riveter went home. And of course we also saw the block unemployment rate fall last month. So when you dig in, you actually see signs of people coming back into the
labor force. You see, you know, a strong labor market overall at that steady pace that we need to see at this point in the economic recovery.
So slow and steady have been the magic words from you from the get go, Heather, As we've been talking about this since the very start of this administration, as we consider the idea of a soft landing, is this actually more the definition of stable growth?
This is what you want to see at this point in recovery. You know, our analysis at the Council of Economic Advisors is that you need about one hundred thousand jobs per month just to keep pace with population growth. And at one hundred and seventy five thousand, you know, in two hundred and forty some one thousand over the past three months, we are certainly above that basic pace. And you know, we continue to see healthy gains in wages.
They've been abating in recent months, but certainly you see those steady gains and particularly those stronger gains for the bottom eighty percent of the labor market that are production and non supervisory employees. These are the kinds of gains that we want to see month after month, people being able to go out there and get a job. That low unemployment rate, those jobs that are being available but yet not so hot that it's overheating the economy.
Well, how they're speaking of what we've seen month over month, as you alluded to the statistic twenty seven months in a row with an unemployment rate below four percent. When you're modeling out what's going to happen to unemployment as we move forward, when are we going to be breaking above that four percent level.
Well, I'd like to see us break the next record in that streak going so it's not just going back for more than fifty years, but going back more than that. You know, certainly, you know the president's goal from day one was to get people back to work, keep that
unemployment rate low. That is what helps boost wages across the country, makes it easy for folks who are out there who want a job to get into the labor market, to find that work, to switch jobs, and so we certainly want to see that unemployment rate kept in that low space. It's one of the goals of what we
mean by a strong, stable jobs recovery. And I just want to emphasize that one of the things that we've seen that I think has been really impressive in this recovery, of course, has been that we've hit these historic lows for black unemployment rate in the gap in the unemployment
rate across states. We aren't at those lows right this month, but we have seen those, you know, over the past year, and being able to see this kind of recovery that's giving so much opportunity to people all across the country in a way that is equitable and is reaching into pockets of the economy that this is exactly what the President wants to see. It's good for the American people.
Well, Heather, I fully understand that the President would like to see unemployment remaining below four percent. Is just a question of whether or not that's going to continue to be realistic if we're talking about policy that is still tight and the lagged effects of the tightening that we've seen starting to kick in more substantially. I just wonder if realistically you think unemployment can stay this low, still remain this high for much longer.
Well, you know, I cannot comment on FED policy, which I think is implicit in this question. I think you know, what we are looking to see is the President has made all of these investments all across the United States, investments in infrastructure, investments in new technology and manufacturing and good jobs, and we are still seeing those play out. We have had these very high numbers for investment, investment in the construction of new manufacturing facilities.
We are seeing.
Shovels in the ground for all these infrastructure projects, and so I remain optimistic that as we see this recovery progress, we'll be able to keep this kind of steady job gains. We've been able to deliver this for years now, and this is the economy. It's been a little engine that could. But we have a lot of you know, investment that still has yet to come, and hopefully that will give some strength to the labor market. And we're starting from very solid foundation here.
Spending time with Heather Bouchet, who's talking with us live from the White House on Bloomberg TV and Radio. Heather, we started the program with a special con with the former Saint Louis FED President Jim Bullard. By the way, this is not a question about FED policy, don't worry, but he did say that a soft landing for the US economy is in view. Do you agree at this point? Is it already happening. Is this the type of report that confirms that.
Well, you know, as we have seen month after month, and I've talked to you and you know, folks around the country about this, this is that kind of stable growth, you know, a soft landing implies, you know that we already know exactly what's happened, that it's in the rear view mirror, but we're living this in real time. So I think that you know, as we watch the data as we always do, this is the kind of the
recovery we want to see. And you know, of course, on top of it, you know, we have seen that you know, prices have come down sixty percent from their peak. We've actually seen over the past year the prices for some goods facing consumers like milk and eggs and used cars and airline fares, you know, those are lower than they were a year ago. So we have seen some
relief for families over time. And I think combined, this is the kind of you know, trying to find that sweet spot where you can keep growing and you keep adding jobs and you keep making sure that workers receive their fair pay.
Heather, we were speaking earlier this week with someone from the groundwork collaborative. It used to work alongside Elizabeth Warren when we were talking about the way that FED policy, which I won't ask you to comment on directly what the Fed should do with this policy, but the way
that it is transmitting in the economy. Now that we have seen something of a stagnation in progress in getting inflation down, it bears questioning whether or not actually just pure interest rate policy is going to be able to get us that last mile down to two percent or is it going to take something else, like more action from this administration.
Well, you know, this president has remained committed to lowering you know, pain points for families in terms of prices across the economy, is taking a series of steps, you know, a series of steps for example on junk fees, you know, making it possible for you know, consumers to not face those fees that just add up those hidden fate those hidden fees. You know. I often think of, you know, what the Consumer Financial Protection Bureau is done with credit
card fees for consumers. But that's just one example of the variety of the ways that the President is focused on lowering prices. Name about what he's done to lower prescription drug prices, lower the price of insulin, lower the price of health care for families. You know, all of this adds up and gives relief to families pocketbooks. The President has been focused on creating these jobs and you addressing real problems facing families all across the country.
Heather, it's hard to underscore the impact that immigration is having on our job market right now. It's born out in the numbers, and I wonder to what extent the White House will make the case in the coming months, in the coming days that immigration is an important driver of our job market and is in fact having an impact potentially for the better on inflation.
How would you answer that, Well, you know, the President came into office, he had an immigration plan that he released on day one. You know, he has worked to find sensible solutions here. You know, certainly, what we want to see in the labor market is you want to see those folks who are on the sidelines, who want to get into the labor force, you know, get access
to those jobs. It's why I point into the fact that you have this historic high and labor force participation among women between the ages of twenty five to fifty four, and you've seen good numbers on labor force participation. More generally, that's people coming into the labor market seeing those those economic opportunities.
Heather Bouchet of the White House Council of Economic Advisors with us live from the North Lawn at the White House. Heather, it's great to see you. Thanks for coming back to talk to us today on balance of power. I'm Joe Matthew in New York. Kayley Lines is in Washington, and Kayley, it's just a remarkable reminder on what a difference a single day's data could make on sentiment, if not infestrates themselves.
Yeah, I mean, think about the round trip we have made in terms of expectations for FED cuts, which Heather Bouche would not talk to us about. We started the year thinking the Fed might cut up to six times, then we were down to one cut. It seems that we're pricing more of them back in on what many are saying is of Goldilock's jobs report. And we know, Joe that President Biden is standing by his prediction last we heard that there will be rate cuts this year.
Well, he may seem pressient at this point, and we all know this has a direct impact to what is happening on the campaign trail, and where we're going to be, say, post Labor Day, when people really start paying attention, Kaylee. Young people who are actually watching interest rates with hopes to buy their first home, people who are of course looking at the gas pump every time they need to
fill up their car. All of that's going to really start combining and colliding into people making opinions that are going to last until November. So they are hoping, no matter what they can say or not say about the FED, they're hoping that cuts are coming.
Yeah.
Absolutely, it's going to make a difference the timing of those cuts. And of course we heard from Chairman Powell in the press conference earlier this week saying they don't think about the political context at all. So all the market expectation that be hard to cut in September just ahead of the election or November just after it, maybe that is a not so much the case if you're actually sitting on the FMC.
That's right.
Let's assemble the panel to get their take on another important news day. Genie Schanzano was with us, of course, Bloomberg Politics contributor Democratic Analysts joined today by Republican strategist Lisa Camuso Milner, the former RNC communications director at host of the Friday Reporter podcast, What's to take here? Genie, Goldilocks is a word we keep throwing around. The fact of the matter is a slowing job market, not exactly.
The greatest story for the White House to be telling is exactly what they want, isn't it.
It absolutely is, And I think you could hear it in both your great interview with Heather Bouche and the and you know Julie Sue's comments. You can hear they are elated by this report. It is all good news. I mean it was only you know, just a few days ago people were saying we wouldn't see a cut until after the election. Now the possibility it may come earlier has opened up. So that is all good news
for the White House. From a campaign perspective, I think the Biden campaign, and I know they will, has to keep their eye on the ball. You cannot tell people about good numbers. That is not going to work. So yes, you know, all of his supporters and everything else they know these numbers are good. But for the people on the ground in these key seven states, this is more about talking about what Donald Trump has said CNBC. He says he's going to cut Social Security. That has to
go out. They have to be focusing on the threat Donald Trump is to the economy, not trying to sell Joe Biden's accomplishments. Let the data speak for itself and talk about the threat that is looming if people vote for Donald Trump. Rather, that's the campaign strategy.
Well, certainly, when the data was looking better than it is now, when we were talking of payrolls growth north of three hundred thousand plus, he still wasn't getting credit for the economy. So I understand that sentiment. Genie, does that mean, Lisa? For Republicans, the economy is going to be the best issue. If Biden can't talk about it, or talk about it well enough, frame it well enough for voters to actually give him credit for it, then that's all opportunity to the other side.
Absolutely, Kelly. I mean, I think more than anything, Genie took the words right out of my mouth. I mean, regardless of how good the numbers are, you can't tell people how the economy is performing if they don't feel that way. And so that's why we talk about consumer sentiment. And we talk about a variety of other things, because.
That's really the way that people approach election day, right, So Republicans will be doing everything they can to define and continue to define this White House is not being good on the economy, even though the data says otherwise.
And so this is the word.
This is the word verse word.
Game that's going to happen between now and November in a way that's going to get harder and more difficult to navigate. So sure, in the playbook for Republicans, it's to talk about how Joe Biden's not great for the economy. And in the playbook for the Democrats, they're going to do the same and talk about how Donald Trump is not doing what they need to excuse me, would not do what he needs to do in order to continue to grow it.
Let's distill this conversation into a simple question. Jennie Shan say, noh, does Joe Biden need interest rate cuts to win reelection?
You know, they would be amazing, Joe Matthew, that would be great. He's hoping for them. You know, he would probably tell you he doesn't need them, he can't control them. The economy, of course, is gonna matter. But again, there is no majority out there just so excited to vote for Joe Biden. So the way they have to frame this electorally is Donald Trump the threat to everything Joe Biden has achieved. And you know, it's hard for us not to talk about our own individual accomplishments, which is
what this campaign wants to do. And Joe Biden, look, I did this, this, and this, stop it. Don't talk about what you've done, talk about what the other guy will do. You're the incumbent. This is a referendum on you. He is a threat to what you've achieved. But you've got to stop talking about achievements and focus on threat.
There's no plainer way to say it. And they have the benefit of it, you know, having an opponent who should keep his mouth shut and let the attention be on Joe Biden, but always wants to talk about himself. So let him.
And of course he's in court again today. We'll probably hear from him as he's walking out at the end of the proceedings today. As usual, Genie Shanzo and Lisa Caamusa Miller will be sticking with us. We have much more to discuss with them, including Joe another big problem for President Biden. The economy is not the only issue
on the list for this incumbent president. Increasingly it is his policy toward Israel and the ramifications of that, including what we have seen playing out on college campuses across the country.
You're listening to the Bloomberg Balance of Power podcast kens just Live weekdays at noon Eastern on Apple car Play and then roud Oro with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa Play Bloomberg eleven thirty.
I'm Jill Matthew in New York. Kaylee Lines is in Washington. Coming up, We're going to spend some time with Jessica Kavanaugh of the Carnegie Endowment for International Peace with the latest and a potential cease fire between Israel and Hamas right now. It's a pleasure, though, to bring in my colleague here in New York, Anne Marie hor Durn, with an important conversation we've been looking forward to. A Member
of Parliament is with us here at World Headquarters. Alex Berghardt and Anne Marie will hand things over to you.
Thank you so much. Joe, that's right. I'm joined by Alex Burghart, UK Cabinet Office Minister leading on AI in the public sector. I want to start out with your role in artificial intelligence. This role wouldn't exist even as two or three years ago, and need to live in the United Kingdom. We've seen this government, led by the Prime Minister Rishi Sunac really want to invest and hone AI even within the government. I know you're in the
beta mode of this red box. Tell us a little bit about what you're doing, what you're focused on, and how the government could potentially harness this.
Thanks Am Marie, thank you for having me on and it's great to be in New York to talk about the work we're doing in the UK government at the moment. As you said, the Prime Minister is really passionate about AI. We held the first AI safety summit that the world
has seen last year, very very productive. But the work that I'm doing is on how we can deploy AI for the public good and that means how we can You know, it's about eighteen months ago we sat down and said this new technology is emerging potentially one of the great leaps forward. How are we going to harness it to improve the quality of public services and drive down costs for the taxpayer. And there's a number of ways in which that's emerging. And the first is that
you can now automate tasks like never before. And I have you mentioned Red Box, which is named after the you know, the red ministerial box that British ministers carry around.
I still hope they'll do that for show and the Yeah.
Absolutely.
But what we now have we've been building as a tool that can summarize huge documents very very quickly, that can relate them to what's been going on in Parliament, what's been going on in the press, and can pull out kind of key points that ministers need to focus on. And that's saving my private office hundreds of hours. But it's also starting to build a tool that is going to create institutional memory, recreate institutional memory in our government department.
So you know, when we're starting out on a project, we'll be able to ask, have we tried something like this before? Why didn't we carry on with it? You know what was good about it? So that huge resource of documentation that's currently lying unused in government is going to come back into play.
So two questions immediately come to mind. One talent and the other security. Let's start with talent first. If you work in AI, you can get paid handsomely going to say open AI. How do you attract that talent to say, come work as a civil servant.
It's a great question. We were really worried about this at the start because we can't pay that money. And you know, I've got a really great head of the program, Laura Gilbert, who's out in New York with me at the moment, and she said, as long as we can pay something bit more than we pay our normal civil servants. What we have is data. We have really good data,
lots of centralized data. And if you are an AI addict, if you're one of these super smart, crazy clever people who wants to get involved, the thing you want to play with is data. And so we've we've been looking at huge quantities of data and things like public prescriptions health service, looking how we can improve the quality of prescriptions, drive down cost. We've been looking at how we can
eliminate fraud and error in the benefit system. We have two hundred and eighty billion pound benefit and pension system and we currently employ thousands and thousands of people to check for fraud. We think we're going to be able to vastly reduce that and improve.
So attracted that talent hasn't been an issue.
No, No, we've We've been really pleasantly surprised that loads of people have applied and they've passed our very very stringent tests to get in.
The one concern as well as security. You put all of this now, documents that live in a cloud, you're working more with AI. How do you safeguard that to say adversaries?
Yeah, it's a central question and we have a very effective security service in the UK and we're constantly learning from partners. I was out in talent in Estonia right on the fringes of NATO a few weeks ago, learning from them because they were party to some enormous cyber attacks a few years ago and have become very very resilient.
So it's uppermost in our mind when we're vetting people, but also when we're building systems to make sure that they're not that they can't be attacked by enemy operator.
If you use AI in the defense sector in the UK government, how important is it that all that technology comes in house out of House well because of these concerns.
No, no, I think it's not just defense. Right when we were starting out, we could easily have gone and picked a number of big companies, Big UK companies have fantastic a sector in London. But we wanted to understand this technology ourselves. So we've hired this cracked team of thirty people going up to seventy who are going to be able to build bespoke systems for us.
Now.
In the future, I think there'll be a case of some stuff we will build ourselves and use many times, some stuff we will build bespoke for particular apartments perhaps like defense, and some things we will buy in. But having people who actually know how it works and know what government's needs are I think is central to getting this revolution right.
I know you're in New York, so you're missing all the morning press in the UK after a critical election last night, and you know you saw the Bellwether parliamentary seat that the Conservatives lost. Do you honestly think the Conservative Party if the elections are going to be held this year at some point I know the Prime Minister said at the second half of the year, do you think the current Conservives will be able to hold onto power.
I do think they will be able to and I'll tell you what. Look, we've had a tough night. The truth is that in twenty twenty one, when this cycle of elections was last on, we had a vaccine bounce that was a very good year for us. We always suspected we might come down. But there is a silver lining to this cloud, and it's the fact that Ben Houchin are mayor in Teesside, in the northeast, traditionally quite a deprived part of the country, which under the Conservatives
is now flourishing. He's won, he's held on, He's done a very good job there, and I think when it comes to the election and people actually have to make a choice about who they want to see in power for the next five years, is it going to be the Prime Minister and the Conservatives that has got us through COVID, that has seen off inflation and the energy crisis and has a plan for the future, or is it to be a Labor party that really has no plan and no agenda. I think they're going to come with us.
Do now regret though potentially removing Boris Johnson, just from an electability point of view.
No, I don't because Boris certainly had his strengths, but things weren't working out and he made some mistakes and we couldn't have pretended that those mistakes haven't harmed.
Besides Ai, which I know the Prime Minister is really focused on, but a lot of that has feels a little bit like it's not tangible yet to voters and the electorate. What does Rischie Sunac need to do. Number one thing he needs to do going into this election.
So I think there are some really good stories to tell. I mentioned t side up in the Northeast when I was the Minister for Skills. I was lucky enough to be part of this great piece of work where Ben Houchin, the mayor, persuaded the energy companies to come and build hydrogen plants on the condition that they offered training courses
for young boys and girls in the local colleges. So you have, you know, the government setting up a free pot and teaside, the mayor bringing in the business, and then the business securing the training places so that young people get those new jobs in their community. And that that is what we call leveling up in the UK. And we're starting to see the fruits of it, you know, new business in towns which have been left behind, and local people getting those jobs and adding to the prosperity
of the places where they live. That's something that didn't happen under thirteen years of labor. It's happening under the Conservatives and I've been proud to be part of it.
Do you want to break some news. Do you know when the election will be?
Well, I'd love to tell you, but the primary don't know yet. I don't know yet.
Okay, all right, we'll leave it there. Thank you so much for your time. That was Alex Burghart, UK Cabinet Officer, Minister leaning on AI in the public sector, Joe.
Kayley, Ane Marie Hordurin live in New York. Thank you so much for the great conversation. Anne Marie.
If you're listening to the Bloomberg Balance of Power podcast, catch Just Live weekdays at noon Eastern on Apocarplay and then Proudoro with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
This is something that perhaps the administration is trying to hang their hats on, Joe. The continued strength it seems of the US economy, but of course they're facing a number of other headwinds as well, as we continue to see campus protests, pro Palestinian protests across the country and abroad, still efforting a cease fire deal between Israel and Hamasta that to this point has not yet come to fruition.
Well that's true, Kayley.
You and I started this week on Monday with talk of an imminent announcement like that day or night, and it's been five days and we're still waiting. So now a new clock is ticking. An important headline this morning in the Wall Street Journal Israel gives Hamas a week to strike a deal on a RAFA, or rather a RAFA offensive will begin. And it gets us back to the site idea question at least whether RAFA is a
bargaining ship or indeed something that Israel is telegraphing will happen. Kaylee, We're lucky to be joined by Jennifer Kavanaugh right now, senior fellow in the American state Craft Program at the Carnegie Endowment for International Peace, and it's.
Great to have you with us. Jennifer.
We have a lot of questions about what's happening right now, including the status of talks now that HAMAS delegation is joining the situation in Cairo, what do you expect to happen this weekend.
Well, I heard the same report that you did that Hamas has indicated that they are willing to continue negotiations, so there's still a chance for a deal, But there are a number of stumbling box one of which you just mentioned, which is the fact that Netanyahu has made it clear that the IDF the Israeli defense for US and tends to move on Rafa whether or not there is a deal, which really reduces Hamas's incentive to strike any sort of a cord, given that it doesn't seem
to buy them anything in the long term. Of course, the other stumbling block is the lack of a real plan for the future of Gaza. What happens if this is not a long term seas fare or if it is to Gaza in the long term, And those are things I think that are likely weighing on the minds of Hama's leaders as they're going into these negotiations.
Well, so, Jennifer, it's interesting that you raise the incentives or perhaps lack thereof, for Hamas, knowing that perhaps Israel will be moving into Rafa. Either way, that if they release hostages, they are losing some of the leverage that they have remaining. Why would Hamas agree to a temporary ceasefire at this point, Well.
It's possible if they would see an advantage to having some time to rebuild their forces or to solidify their grounds before Israel moved in, So it's possible that that is one way they're thinking.
Another is that.
This idea that even a temporary seasfire could become permanent. There have been some who have indicated that even on the Israeli side, there's a recognition that a temporary cease fire would likely be a permanent one. So there's the potential that this uh that Yahoo's threat to move on Ralpha to regardless of a deal, is just that it's a bluff and that what what is what starts as
a temporary spire would become permanent. But that raises a whole host of other questions about what that means for the long term, and there's a lot of uncertainty for Hamas.
You know.
Another big news item this week was this idea of a Israeli Saudi normalization deal and it's hard to see how that moves forward without a plan for a permanent Palestinian state, But Israel has indicated that it's not interested in moving in that direction either, So from Amas's perspective, there's definitely an incentive to keep the talks going in hopes that they can delay any sort of further military operation, but it's hard to see what the incentives are for
actually striking that deal without a lot more information and give on the Israeli side.
Jennifer does the arrival potentially this weekend is what we're hearing of a temporary peer to deliver humanitarian aid to Gaza. The US military of course building that.
As we speak.
Does it change the dynamic at all in these talks. Does it increase the chance for a ceasefire once it's up and running.
I'm not sure that really factors in all that much.
I mean, the most efficient way to get aid into Gaza is with trucks over land borders, so the peer will offer some temporary relief possibly, But even if that aid starts arriving this weekend, it's going to face delays and actually getting into the hands of population because it's still not really clear how that AID is going to get from the peer to the population, and the big bottlenecks are the security checks of that AID as it moves from the peer onto land, and it's not there's
no protocol yet or procedures that have been outlined for how that process is going to occur. That's going to be faster than what's already been put in place. So I'm not sure that that factors in, although it certainly would be beneficial for the god of population long term to be able to get access to more AID.
Well, you raise the question of perhaps bottlenecks that could arise once things are off the peer. There's also just the question of the security of the peer itself. This is something that the Defense Secretary, Lloyd Austin, was asked about earlier in Honolulu, and this was his response.
The first question was regarding any incredible information that we have that AMAS is going to attack our troops. Of course, I don't discuss intelligence information at the podiums, but I don't see any indications currently that there is an active intent.
To do that.
Having excited that this is this is a combat zone and a number of things can happen. A number of things will happen.
A number of things, Jennifer, he said, can and will happen. Could this peer be something of an impetus for actual US troops getting involved in a more material way if indeed there were to be an attack, Well, there's certainly.
The risk that that could happen. That's one of the uh one of the criticisms that has arisen of the plan for this per since the start is that it's not clear how US troops are going to be protected and how they're going to keep them from being on the land, which then could signal a larger US role in this conflict. Then then the Defense Department has indicated it intends to have or that it wants to have. You know, one of Hamas's goals has been throughout this
conflict to separate Israel from its Western support. So attacking US forces and sort of forcing this decision of how in Israel's camp is the United States willing to be certainly could be a tactic, and so attacks on the pier are certainly not out of the question in terms of trying to force the US hand in that way. At the same time, I don't think any player involved in this conflict whether it's the United States. Hamas Aaron Israel wants to see an escalation to any sort of
regional regional conflict. Hamas certainly would like to have de escalation, not escalation, and so that could weigh on the other side of keeping them from from putting any pressure on US forces.
Jennifer, what happens if, as some are predicting, Israel opens a new front to the north, What happens to talks with Hamas if Israel attacks has Belah?
Well, I mean, that's a that's a tough question, but I think the better question is whether or not Israel can really resource a second front without additional US support, And I would my estimate is is probably not. If Israel decides to open a second front, that opens a number of hard questions for the United States about how far it's willing to lean in terms of providing offensive military to the United States to excuse me, to Israel.
And that's already been a contentious issue in the United States, with some senators calling for conditions on AID and uh and and putting pressure on President Biden to come out more strongly in terms of leaning on the leverage that the United States gains from providing military aid in terms of reigning Natanyaku in to limit this conflict, to prevent it from becoming a regional one, which is a real risk if Israel war to move into Lebanon.
Well, Jennifer, as you talk about the idea of limiting aid, certainly there is a chunk of people in the US right now, including some members of Congress, who would not like to see the US continuing to provide unconditional aid to Israel because of concern around Palestinian life and what's happening in Gaza, And certainly that has shown up on college campuses across the country as we have seen what was a pro Palestinian movement perhaps morphing into something that
could have more anti Semitism involved. What effect do you think the visuals and the rhetoric around these protests is actually having with the situation or on the situation on the ground in the Middle East. Is that something that emboldened to Moss Does it embolden Israel, you know, make them more secure in the notion that they have to fight vigorously for their right to exist. How do you view that?
I could see it as possibly emboldening the Moss in the sense that it is eroding the golob credibility and reputation of both the United States and Israel, which is one of the long term goals of these groups.
Uh.
For Israel, you know, seeing global protests against the way the war has been conducted certainly helped shift public opinion against them and limit their flexibility to continue the war. And for the United States, it raises questions about a
double standard. You know, some countries across the Global South especially have been very critical of what they see as a double standard between the way the United States has responded to Israel's conduct of its war in Gaza and Russia's conduct of its war in Ukraine, which which the
United States has come up very strongly against. Now, there are obviously very significant differences between those two conflicts, but that connection has been made, and that narrative, which has been fueled by disinformation and by Russian sources and by anti Israel sources, has has taken and that can have an impact on US influence across places in Africa and other parts of the Middle East as well.
All Right, Jennifer Kavanaugh, great to have you on Balance of Power today. Thank you so much for joining us she, of course, is a Senior Fellow in the American state Craft Program at the Carnegie Endowment for International Peace.
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