CohnReznick's O'Keefe: Fed Won't Move Before Election (Audio)

fifteen percent stake in the Cleveland Cavaliers. This is, of course, their second year that they are playing for the NBA Championship. This all, according to two people familiar with the matter. Estimated value of the team one point one billion dollars that comes from valuations expert Peter Schwartz. Once again, the Cleveland Caliber Cavaliers fifteen percent stake of Gordon gund is up for sale. Hats off to our sports reporter Scott's Nick for a terrific story. Coming up now, Patrick O'Keefe

on the latest jobs report. First to Charlie Pellet in the newsroom with a Bloomerck business flash, and I thank you very much, Kathleen, thank you, Pim. We are brought to you by the American Arbitration Association. Business disputes are inevitable, resolve faster with the American Arbitration Association, the global leader in alternative dispute resolution for over eighty five years. Learn

more than a d r dot Org. Oil explorers put drilling rigs back to work in US fields for only the second time this Year's supply and demand begin to come closer into balance. Baker Hughes says. Riggs targeting crude in the US rose by nine to three. Twenty five were dropped last week. Crude oil down today by one percent, falling forty eight cents of barrel West Texas Intermediate now

at seventy. The dollar plunging the most since December against the euro after jobs growth trailed forecasts, weakening the case for the Federal Reserve to raise interest rates as early as this month. The US economy adding thirty eight thousand workers, unemployment down to four point seven percent. Here's US Labor Secretary Tom Perez, Well, this is below expectations, and one thing that I expected was that there would be impact

from the Verizon strike. That's why I called him up two or three weeks ago and said, come to my office. We've got to resolve this because your workers and their families are suffering, the company suffering, and the economy suffering. So part of a big part of what we saw on this report was the impact of that strike. And gold today up two point six percent, surging thirty one ten the ounce to twelve forty three, seventy to thirty two on Wall Street. Now, let's take a look at

other news from around the world. Charlie, Thank you. From the Bloomberg news Room by Mark Crompton. A search is still underway at ford Hood, Texas, for four soldiers who remained missing after their truck overturned Thursday in a rain swollen creek. Here's ford Hood spokesman Chris Howe. Accidents and isn't tragic The laws of unfolded One. Three others pulled

from the water remain hospitalized in stable condition. Parts of Texas have been inundated with rain in the last week, and more than half of the state is under flood watches or warnings, including the county's near Fort Hood at least six people died in floods last week in central and southeast Texas. How Speaker Paul Ryan is announcing the launch of the House GOP election year agenda project. Titled a Better Way. It lists six proposals, including some to

help lift Americans out of poverty. We can start to tackle our problems before they tackle us. This is what Americans do. We don't accept the client we don't give into division. We find a better way. Speaker Ryan may the announcement during the Republican's Weekly Address, which was released today, one day earlier than usual. New York City's top financial officer says the city's child welfare agency didn't properly monitor provide writers who were supervising troubled miners as part of

a citywide juvenile justice program. Controller Scott Stringer says the city's Administration for Children Service quote abdicated its responsibility. He found in and audited that city workers sometimes skip visits to group homes and missed calls and visits to check on the children. Global News twenty four hours a day, powered by our hundred journalists and more than one hundred fifty news bureaus around the world from the Bloomberg Newsroom.

I'm Mark Crumpton, Charlie, and we thank you and again recapping a move lawer for stocks. We are well off our session Low's SMP five hundred index down five at two thousand ninety nine, down three tenths of one percent. I'm Charlie Pallafat's of Bloomberg Business Flash. You're listening to Taking Stock with Bim Box and Kathleen Hayes on Bloomberg Radio. Now,

Marry how slice it? It's hard to call today's May employment report from the US Labor Department anything but disappointing, if not week joining us now to dissect the report, what it means for the economy, and what it means for the Fed Reserve as it gets ready to meet on June fourteenth and debate whether or not to high rates again. Patrick o'cafe he is director of economic research at Cone Resnick. He's also a former Deputy Assistant Secretary

at the Department of Labor. Patrick, welcome back to the show. It's great to be here. What is your take? Let me just sum up for our listeners yet again, only thirty eight net new jobs. Unemployment falling because so many people left the labor force wages pretty much flat. What does it tell you, Well, it was a report that made pessimists like myself. I was one of the low predictors on this one. Made the pessimists look like Pollyanna's

And it just was totally unexpected. I know. The secretary pointed to the strike as being one of the reasons why jobs growth was down, but uh, this is the smallest increment of jobs since the jobs recovery began, uh seventy six months ago. Even if we UH discount the impact of this of the of the strike, we go from being the weakest in seventy six months to the

sixth weakest since in seventy six months. It um, it was to be expected that there was deceleration in the labor market, particularly in the jobs part of it, going forward. This is a mature recovery, but these numbers were were

far weaker than any of us anticipated. All right, Patrick, and wondering if you could explain, because when you, let's say, when you decide you want to have a softball team, right, and you pick all the best players you want to pick, you pick them usually the first is there anything to indicate that we are at the very end of the hiring cycle as a result of so many workers having already gone back to work. UM, there are still plenty

of job seekers and potential job seekers. As Kathleen pointed out, the labor force participation dropped dramatically in this particular month. What we have to realize is that the five percent unemployment rate or the four point nine unemployment rate is drawn down because of people withdrawing from the labor force. So they don't disappear. They're out there, they're willing to work, they would look for work, but they're frustrated they haven't been able to find work. And so I don't think

we have a shortage of labor. We may have some mismatches in terms of what the qualified qualifications for the jobs are and the qualifications of the employees seeking them, but overall this is UM is not a situation where we have inadequate supply. And in fact, if you look at the broader measure of unemployment, the underemployment rate is still up at nine point which does include of course people working part time because they can't find full time jobs, etcetera.

Uh I was exchanging some emails with then Irana Cultural Lacoda this morning in earlier this afternoon, who is a former president at the Minneapolis FED, and of course he has been also uh, certainly barish on the notion that the FED should be raising rates. If anything, he thinks they might have to contemplate negative rates. He said, of course that what's more troubling to him. He said, you know, if you look at the household employment figures, the survey

of people actually who have jobs or don't have them. Patrick, Uh, maybe the report wasn't so bad, but his concern is that inflation remains far from the Fed's target, and inflation expectations remain so low, and they aren't rising. And one of the reasons why they're not rising is because the FED continues to rely on the definition of an unemployment rate that doesn't acknowledge the substantial drop that we've had

in labor force participation. We play around with something called the participation adjusted to unemployment rate, where we go back and we say, if not for the drop in participation, where would the unemployment rate be? Depending on the assumptions you want to use for that counter factual, we're fairly confident that the unemployment rate in any reasonable sense is still above eight percent. Still yes, when you take account of of people withdrawing out of frustration because they couldn't

find jobs, that's then you get that high rate. So can we just get that that? You know? The question we have to ask about the Fed June July, September me up am I made me not until then? UM? I think for the FED, UM, the f O m C has made the case repeatedly that their data dependent. What they, I think are realizing now is that the data is not dependable. The market and the economy overall has had a long run. It's been a fairly good run,

all things considered. But this is a mature recovery and we can't look for it to accelerate, particularly given external conditions. So uh that I don't think the said moves this summer. I don't think the said is going to move before the election. How about home construction and consumer spending? Both of those reports were pretty good. They were pretty good this month, but overall, home construction is still well down

from where it was prerecession. UH. Consumer spending is up, but not not up so much that the savings rate has UH tipped down. Much of the the household sector is spending, but a lot of what they're spending is the benefit of lower gas prices, and as gas prices move up, that's going to rearrange where that money's being spent. Thank you very much for joining us. Patrick O'Keefe is the director of Economic Research at colne Resnick, also former

Deputy Assistant Secretary of the US Department of Labor. Speaking about today's government report on non farm payrolls adding just thirty eight thousand workers in many you're listening to taking Stock on Bloomberg Radio. This Hampton's Commuter Minute is brought to you by Landrover. Visit your local Tri state area Landrover retailer for special lease and finance offers. Landrover above and Beyond