Bloomberg Audio Studios, podcasts, radio news. You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and five pm Eastern on Apple, Cocklay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Non farm payrolls growth in January just one hundred and forty three thousand, lower than the one hundred and seventy five thousand estimate, but an unemployment rate lower than the estimate as well, at four percent. Then you have wage growth which was hotter than expected on both a month on month and year on your basis those figures at zero point five percent and four point one percent on
average hourly earnings growth, respectively. So when you put it all together, there is some sign of a little bit of weakness here in the new White House. The Trump administration is casting blame on the old one. We spoke with Kevin Hassett, the director of the National Economic Council here on Bloomberg about the data earlier today.
The Biden jobs market was way worse than market slot, and that's sort of consistent with the rest of our views that their policies were unwise and there's a lot of cleaning up to do. And I think that if you look at ism that just came out, the people market participants believe that President Trump is going to be able to turn things around. And with these big downward divisions, we can see that there's actually a lot of work to do.
We want to get more insight now into the work ahead. And just frankly, where we are with a former chief economist at the Department of Labor, Diana Firschcott Roth, is with me here in our Washington, d C. Studio. She's now director of the Center for Energy, Climate and Environment at the Heritage Foundation. Diana, thank you so much for being here on Jobs Day.
It's great to be with you. Katy, Well, it's.
Lovely to have you. As the White House is framing these figures of a worse buy an economy than previously thought. But what we're talking about here is an unemployment rate of four percent, which is still historically pretty low. Is that too? How you see this data?
Well, I think that there's two surveys. There's the unemployment rate, then there's the establishment data, which is jobs created and the unemployment rate. Those data have just been revised because they revised the population totals. But what's really important to focus on is the establishment data and the jobs created. There was one hundred and forty three thousand jobs created, which is why the market is looking down on this.
But it's not so much the number of jobs. It's that they were all in low paying or government sectors. So if you look at manufacturing, tiny gains, losses in oil, losses in mining and logging, in motor vehicles and parts.
When other countries want to buy our oil, and you have President Trump who says he wants to sweep away regulations, have lower electricity prices, have first to permitting to allow those high paying jobs to come back to the United States, and that's what's important that American workers have the upward mobility they need through these higher wage jobs.
Well, when we consider those some of these lower wage jobs and different sectors of the labor market in which migrant labor specifically is relied on, how are you thinking through the deportation effort that is underway and has been accelerating in the last few weeks, and how ultimately that's going to trickle into the labor market.
Well, we see that the labor force participation rate is still lower than it was during before the pandemic. It has not regained its pre pandemic levels. So there are plenty of American workers who want to do many of these high wage manufacturing jobs that we're focusing on. The point is to bring these high wage jobs back to America. There are plenty of American workers who want to do.
Them, so there won't be any labor shortages with those roles that American workers may not be so eager to fill.
There's paths for legal migration, and President Trump has always said he wants legal migrants. So if there are job openings, if there are gaps in the labor force, there's plenty of scope to bring in workers who want to come legally, who have been waiting for years and years Kayleie to come into the country. Why shouldn't those workers come and do those jobs that are needed rather than people who just walk across the border.
Well, something else President Trump wants to see is a smaller federal workforce, which is why we've seen this administration offering buyouts that tens of thousands of people, we understand, have signed up for to leave the government by the end of this month. That deadline now obviously extended until Monday. But even if not enough people take it, the administration has suggested they're still going to be trimming down a
lot of these federal agencies. What ultimately will that do to the labor market, As you mentioned government jobs and your very first answer.
Right, Well, I have the utmost admiration for anybody who wants to take President Trump's deal and have nine months of vacation and move to a different kind of job afterwards. And there's a lot of opportunities to do that and the federal workforce, as everybody knows, it's very difficult to trim the federal workforce. And so President Trump is offering this buyout opportunity, and he wants to make it more efficient.
I mean, if you have a private sector company that doesn't do a good job, it goes out of business and those workers find other positions to go to. That's not the same in the government, where people just keep jobs even if they're not doing a good job. And I have to say most government workers are doing a great job, but for those that are not, it's very difficult to get rid of them.
Well, and we do understand that might be the next stage of this that they've asked for a list of low performing employees, and that may be where some of this calling happens from here. But I just the notion of a smaller federal workforce overall. Is that going to lead to some messiness in the economic data that we could receive in the next several months.
I think this is going to be swamped by low electricity prices leading to more manufacturing coming from Europe. I mean here, we're going to get rid of net zero. They have net zero in Europe and in the United Kingdom, driving prices higher, deindustrializing. So if we could reindustrialize to pick up some of those jobs from these European companies, we're going to be doing great.
We got other data today as well, in the form of University of Michigan consumer sentiment, which actually hit a seven month low, in part because inflation expectations for the next year picked up to more than four percent. There's concern around tariffs here, specifically on the part of American consumers. It seems we've heard from plenty of people close to Trump were aligned with his kind of economic thinking that tariffs, if anything, would be a one time price increase versus
something persistently inflationary. But if people expect inflation and inflation expectations start to run away, will not not have the same effect. Ultimately, will they not start then demanding things like higher wages? And we see this trickle back into the labor market as well well.
President Trump has shown that he wants to use tariffs as a negotiating tool, so he put the tariffs on Canada and Mexico. Then Canada and Mexico said they would increase Borda security, so he took off the tariffs. China, he left the tariffs on at ten percent. But China is very much dependent on its exports to the United States for its economic growth, it might very well swallow
some of these tariffs. And in China, China subsidizes energy labor with slave labs, burn forced labor in Shinjog, capital with low interest rate loans. I mean, Kaylee, did you know that China is selling a car for thirteen thousand dollars in Europe byd the major auto company Explorer for thirteen thousand dollars in Europe. China is subsidizing and undercutting its industries. We spend money on providing Medicare and Medicaid,
social security, housing vouchers. We keep people living well. They take their government money and they subsidize their companies to undercut ours and European companies. Volkswagen layoffs in three plants partly because of these cheap Chinese vehicles.
We don't want that here, all right, Diana, thank you so much for joining us for these important Jobs Day conversations. Diana fir Scott Rotha's director for Climate, Energy and the Environment at the Heritage Foundation, also former chief economist at the Department of Labor.
You're listening to the Bloomberg Balance of Power podcasts. Catch us live weekdays at noon and den on Apple, Cockley and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa played Bloomberg eleven thirty.
And as we end our conversation on tariffs, we of course got some news on tariffs from the President in the Oval Office earlier today when he said that he would announce next week reciprocal tariffs on our trading partners. Will have to await the details on that, But he also didn't rule out tariffs on Japan, as he said, he is looking for an end to the trade deficit with that country. All of this happening as he meets at the White House with the Prime Minister of Japan,
which is underway as we speak. Shigu or Aeshiba is sitting down with him. We expect a press conference to take place at some point this hour, and as we consider what is on the agenda for this meeting, we turn now to an important voice, the former US Ambassador to Japan, having just wrapped up several years serving in that role. Rama Manuel is with me now. He of course also served as chief of staff to President Barack Obama. Ambassador,
thank you for being here. When we consider what the Trump administration specifically might want to get out of this meeting and what Japan is hoping to get in return. What are you looking for?
Well, it's across a broad range of issues. One, Japan is our number one foreign direct investor for the last four years, about a million Americans work for them, So ensuring there's a stability in that economic relationship, it's a principal not only trading partner, but then that kind of ripples into the next period. For the United States, which is Japan's a long pole in the Indo Pacific for the United States. Indo Pacific is a home game for China,
it's an away game for the United States. You level the playing field with your allies. Our largest military footprint outside of the United States, in any single country is in Japan, well over fifty plus thousand American servicemen and women. It's the only place in the world we have a
permanent aircraft terrier permanently based there. In addition to that, whether you're looking at the quad with India, Australia, Japan, the United States, the Tryla, or relationships from the United States Japan, the Philippines, United States, Japan, and career, the constant there alongside the United States is Japan on the diplomatic front, and it's key and essential when you looked at some of the export controls that the United States put on and dealt with from China on semiconductors and
other high technology. Who's the other partner that walks walk with the United States Japan. So when you look at that composure, there's a lot to work with both on economic, state craft, national security, and also on the diplomatic to slack political arena.
Well when it comes to economic state craft, though, when Donald Trump is suggesting that tariffs on Japan potentially would be on the table, what would that do to potentially this relationship which you've just just been described as being incredibly key in the endosement Pacific.
Not only is not only for the last four years has Japan been the number one direct FORIGN investor in the United States. A million of Americans work for Japanese companies. About forty three percent is the back of the envelope, so it's not for peer review, but about forty three percent of that investment is in the manufacturing industrial place. You put tariffs on, you're going to affect a lot
of that investment in the industrial area. Second, the United States represents about nine ten percent of Japan's LNG.
There's clearly a place.
To improve on that or Japan can turn to other markets. I think we're the fifth largest United States LNG exporter to Japan. There's a place to be worked on from a nuclear SMR capacity, So there's a lot more economic engagement to be happened rather than just tariffs. And I think in fact, when I was there as Inbassador, we improved Japan's involvement with the United States on ethanol and other soybeans and beef, a whole host of areas agriculturally, let alone industrially.
We're the largest foreign directrofessor in Japan. So engagement is where I.
Would start rather than tariffs, because there's more to be gained giving you have a willing partner on a whole host a front. And again you're right to say, okay, let's talk about economics. But it ripples and it doesn't stay within a lane.
It affects. Then what are we doing on national straity?
I mean before there was a single tank on the Ukrainian border. Japan agreed to go to two percent defense budget two percent of GDP for the defense budget. They are the largest acquired of US weapons. They're going to become the third largest defense budget. The entire investment gained in Japan on the defense side is not in personnel but in the equipment, and we're the largest export of that area. So there's a lot of leverage points here for a more engaged partnership rather than.
Kind of hostile. Let me also then take this to a separate place. If I can't. You can have a conflict or confrontational.
Approach to your adversaries, but if you treat your allies in the same way, you then become isolated. One of the unique things we did over the last four years is isolate China in its own backyard, isolated more and more in the and around the area. If you constantly are confronting allies in the same venue which you're confronting adversaries, you become isolated. And that doesn't play on America's strength. America's strength is not replicating mirroring China's might through right,
right through might. China strategy United States strategy is to replicate its strengths, alliances, values, economic integration.
That's where we excel. And if you do a cheap.
Version of China's wolf warrier and economic coorsion, you're going to end up in the same place where China's economy is a mess right now, the political sport at home is a mess right now, and doing that will end up with the consequences. We were able in the last four years to isolate China because of their own actions. Doing the same thing China does and a poor version of it will only isolate the United States well.
As we talk about Japan as being an ally, the very fact that it is such an important ally was what led to a lot of confusion when the last administration moved to block the takeover from a Nipon Steel of US Steel. We learned from the President in the Oval Office today that he hasn't changed his mind on the idea that that deal should not go through. Now that you're out of the administration, looking back with hindsight, do you still stand by that call or should this be revisited?
As I said then, I believe said then, and I believed it then, I believe it now. One of the United States Japan relationship is deeper, stronger than a single economic transaction. Second five years ago with the United States, when US companies were looking at Tushiba, Japan put up the same barriers that the United States talked about as relates to Nippon Steele and US steal. Third, about four weeks,
five weeks, maybe a little long longer. Prior to the Nikon engagement, the United States granted a Japanese company a twenty billion dollar contract to replace all of China's cranes in every American port. Now I can't speak to what says trusted ally greater than a twenty billion dollar contract
to replace Chinese cranes as Japanese built manufactured cranes. They would be manufactured in the United States because we trust Japan not to use that technology and data to spy on us and to engage in intellectual and economic espionage.
That is a deep relationship. Will you have disagreement sover issues, Yeah, but they're the largest. They are one of the largest purchases of American weapons.
They're a big purchaser of American agriculture trucks, They're a big purchaser of American LNG. I'm not here to kind of advocate for Japan, but I'm saying engaging an ally, saying here's what we've got to see is a better strategy than to treat that ally as it's if that as if it's the same as an adversary. We have a technological channel with China. This is not a cold war of the ideological like Russia. It is a technological
challenge with China. Japan is a major technological country. From semiconductors, there's about eighteen companies that produce anywhere close to eighty percent of market share. You want them on your side in this technological warfare?
All right?
The former Ambassador to Japan, Rama Manuel, joining us here on Balance of Power. Sir, thank you very much for your time.
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and five pm Eastern on Apple, Cocklay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
I am d Kaylee Lines in Washington. We're at the White House as we speak. A meeting is underway between President Trump and Prime Minister Ishidaba of Japan. We are expecting a joint press conference from the two was slated to begin actually about thirteen minutes ago. It seems we're running a little bit behind schedule after some extended remarks
in the Oval Office from earlier. But when that joey press conference begins in the East Room of the White House, we will of course bring it to you, and I'm sure the President and his team are eager to get that underway. Is he has a pretty jam packed schedule for the rest of the day. Expected to sign some
executive orders later this afternoon. Before heading to joint Bass Andrews and then getting on Air Force One to go down to mar A Lago where a dinner will take place this evening with the President and with Senate Republicans and their spouses. The question is going to be is an opportunity for those Senate Republicans to convince the President
to go with their plan on budget reconciliation. Remember, the Senate idea is to split things up, do two different bills, reconciliation bills, one focusing on border and energy and defense first. We actually just got that resolution outline from the Senate Budget Chair Lindsay Graham, then deal with tax policy later. This run counter to what the House wants to do, one big, beautiful bill, roll it all into one, and that is what they spent hours working on at the
White House yesterday. The House Speaker Mike Johnson, as of yesterday evening, was suggesting they could have a framework and details out by today, but today he's saying it's going to have to wait until the end of the weekend
or perhaps Monday. So things are squashy here, to say the least, and we want to get into it now with our political panel today Jeanie Shanzeno is with me, democratic analyst and senior Democracy Fellow at the Center for the Study of the Presidency in Congress, alongside Republican strategist Leinster. Lester Munson has been a long week, y'all. He's head
of the international practice at BGR Group. So, Lester, when we consider here, and you spent a lot of time, of course, in the Senate, this notion that the Senate is essentially trying to front run the House. They're losing patients here and want to move first. Is this likely to happen or does President Trump put his foot down at dinner tonight?
Uh?
Great, wonderful mystery to have, Kaylee. I don't pretend to know the answer. How this is going to shake out. The Senate's been sticking to its plan. The House has been sticking to its plan. It's a great lesson in
civics and the differences between the two houses. The Senate is a little more able to resist the enthusiasms of the President and the people, and so their definite views on these issues are a little more kind of solid, whereas in the House you can see the Speaker and the President want to kind of build up a lot of momentum behind all of these wonderful Trump policies, put them in one bill, and then Yahoo, get all the
Republicans to vote for it. Because the House is a little more subject to kind of the emotions of the time. So it's I don't know how it plays out, but it's a great lesson in civics.
Yeahoo, Genie, Well, when we consider the House specifically, of course, their whole idea of one big bill is essentially because they need sweeteners for people who are going to be unhappy with parts of it, and that's why they want everything included. The hardline conservatives who may not be happy with the level of spending cuts for example, or things like the salt cap being raised, at least getting what they want when it comes to the b or and energy.
If you split these things and you do the border and energy incentives first and then the tax policy, the salt people don't get what they want, it becomes less likely that both both of those reconciliation packages can get through the House.
Right, That's absolutely right. You know, I'm getting a sense that the Senators don't feel for Mike Johnson the way I feel for him, thinking about how he's gonna thread this needle. You're absolutely right. They want the big bill because they want to put sweeteners in there, because he has a one vote two votes depending on when these specials occur majority. And this is the challenging part of it. Usually it's the Senate because they have to meet a filibuster.
Not in this case, it's the House that has the uphill battle. And so you'd think the Senators would have mercy on Johnson, let him try to push through his one big, beautiful bill, but they're not. And I was fascinated to hear Jody Errington say, we still want essentially the one big bill, but if Donald Trump wants to go with the Senate's plan, we'll go with that. So maybe there's an opening there, and maybe it's going to
depend really on where Donald Trump lands on this. And of course he seems not to care so much the process, but he wants what he wants in these bills, and that includes, you know, no tax on tips, no tax on social Security, all of those things that he wants to include in there. He seems to say that if he can get all those, he doesn't quite care how this moves forward. So it may be up to Donald Trump in the end.
Well, and add to that list that Gene began lester obviously the salt cap which we mentioned, but apparently also ending the carried interest tax break, ending tax breaks for billionaire owners of sports teams. Interesting to introduce that idea as he gets ready to have travel to New Orleans for the super Bowl this weekend. But when we consider all of these disparate ideas, is it likely that he actually is going to get all of it, whether it's one piece of legislation or two.
No, but these are all great negotiating tools and items. I think what the President really cares about is this no taxes on tips idea, which has proven to be enormously popular. I recall President Trump's opponent in the last campaign immediately adopting the same issue as a great idea. So I think this a lot of what we're seeing is still kind of shaping the negotiation to come. We've got a long way to go before anything gets passed.
I think, well, we don't have that much longer to go though, before some government funding bills or continuing resolution needs to get passed, because yes, we still have to deal with that. By mid March, and we got some conflicting messaging today Genie from the Speaker of the House and others, with Mike Johnson warning talks over the immediate spending had stalled on government funding. The House Minority Leader Haking Jeffries saying that Johnson's comment was just projection since
Republicans hold all the power. But does this portend over the coming weeks Democrats, it's not being willing to play ball on these must pass measures as they have been for the last several years.
I think that's exactly what we're hearing. You listen to Democrats on the ground, they are incredibly frustrated given the first two to three weeks of Donald Trump's administration and the way he is plowed ahead with They feel little respect for the separation of powers and the right of Congress to control the purse and many other things. They feel that it is the height of insanity for their elected officials in Congress to agree to anything with Republicans
at this point. So there is a big debate on the Democratic side. Do we go ahead sort of agreeing, say, with his nominations, and we saw yesterday with vote the answer is no. And so I think it's it's going to become excuse me, Kaylee, It's right, it's going to become increasingly difficult for them in the face of their own base if you will, to negotiate with Republicans on many of these things unless they get very big assurances on things like say USAID and so many other things
that are critical to Trump. So you know, the reality is Republicans own it, and Democrats are saying, you want to plow ahead like this, you have to bring your own people along, and of course on things like the debt ceiling, that is a non starter for conservative Republicans. So it is a going to be a real battle in the Congress.
So with all that said, Lester, what odds do you put on a mid March government shutdown.
I still think it's low. I think I know it seems like it's imminent. I think it's still four or five weeks away, plenty of time for Republicans to sort out these trivial differences.
Trivial, Okay, Well, and your point is well taken. Four to five weeks can be a long time, as it's been less than three weeks since Donald Trump took office, and I think we all know how long these last several weeks have felt this week included, just given the
pace of news that we've been receiving. But Lester, are some of the things that Genie was alluding to here that Democrats may be looking for, For example, assurances on Usaid, which the President was talking about today as something that needs to be closed down, the ongoing efforts of Elon Musk in Doge, which we've obviously discussed at length at this point. Are any of those things likely to change in the immunate future given the political reality of Republican control of Washington.
Well, my sense of the of the aid issue in particular is that the kind of the destruction part of this, of this this effort is coming to a close, and the rebuilding part is kind of imminent. So I think, you know, the administration still has a certain amount of money from Congress that it's obliged by law to spend on foreign assistance that is going to happen in some form, and it looks like they're starting to put to put
together the pieces to actually spend that money. So I think we'll know a lot more about this Usaid issue in a week or two and what and how the Trump administration actually plans to be positive on these issues
in some way instead of just destroying everything. So I think, I think this thing's about to take a turn in a different way, and that and what that looks like and what the priorities are and how many people actually end up being fired, and that kind of thing is to is going to be the thing that's discussed, not so much what's happening today.
Genie. Do you see this as a phoenix will rise from the ashes kind of scenario.
No, you know, I really don't. And I'm listening to Lester and he's saying, they have time, they have a little bit of time to resolve their differences. But let's just think back to December. There was no resolution of those differences. That's why they pushed this until March. And so I'm not quite sure what is changed. I mean, you still have Republicans in the House who say, like Chip Roy, there is nothing that is going to change my mind. I'm lifting the debt ceiling. You have to
have pay for us. You have a president who wants tremendous cuts. You know, the list just goes on and on. So, you know, sure, if they can resolve these differences, with you know, sticks or carrots. In some way, they may get to a resolution, but I'm hard pressed to imagine how they do it. You know, the reality has been it is Democrats who have gotten Republicans across the line in the last few years and kept the government open.
If Republicans have to do it on their own, which is seeming likely at this point, how do they thread that needle? When do the chip Roys of the world come along? And what do they get in return for that?
All right, Geenie Shanzeno and Lester Munson are a political panel on this Friday. Thank you both so much for joining me. And I just want to point out, as Genie brings us back to December. December fourteenth was actually the Army Navy football game in which President Trump or he was then president elect, and Republican leadership in Congress all went to the Army Navy football game. They were
supposed to hash out reconciliation during that game. Now Here we are on the eve of the Super Bowl, with both the Speaker of the House and President Trump's slated to attend. Still don't know what that reconciliation path forward will look like, but maybe they'll figure it out in New Orleans as they watch the Chiefs and Eagles.
Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already an Apple, Spotify, or wherever you get your podcasts, and you can find us live every weekday from Washington, DC at noontime Eastern at Bloomberg dot com.