November Jobs Day And Infrastructure

Dana is Chief Economists and Center Leader of the Economy at the Conference Board, and Um, you know, it's the consumer that makes not just a huge difference in terms of spending right now, but in terms of so many other things, including returning to the workforce as as we

have seen highlighted by today's jobs report. Dana, what's the state of the consumer's health and not just you know, financially, but in terms of getting back out there looked like to you yes, I mean, our last survey of consumer confidence for November showed that there was a dip in confidence overall. And when we ask consumers you know, what's

the problem, they cited two things. First, inflation, and the second was COVID, And certainly when we look at the number of delta variant and COVID cases overall in November, they were still pretty elevated, even though they were not as bad as say late August early September UM and I think we saw that in today's report, where we saw just two tens UH in terms of total payroll gains and very little gains in terms of leisure and hospitality, and even some other UH sectors UM in services had

negative readings. So if consumers are still not feeling safe and want to get out there and engage in these services that you have to enjoy outside of the home, and that's certainly going to in fact effect how many people UH employers are going to hire. It's been interesting to watch wage growth, but then an uptick in inflation as well the last print, and inflation was about six percent.

And I'm curious how you're thinking about the relatively strong wage growth that we got in this report though if it's not keeping up with a six percent inflation rate, real wages are still negative. How do you view these wage numbers? Sure, I think the wage numbers increasing, you know, four percent year on year UM is really telling of the continued labor shortages that we're seeing. And certainly some

industries are worse than others. So if you look at the retail I'm sorry, If you look at Lesion, hospitality wages were up almost thirteen percent year on year UM. And also transportation, I'm sorry, yeah, it's transportation and also warehousing. Uh, those prices were up more than six percent year on year. So certain areas, certainly those areas that are seen need

most acute labor shortages. Again, those sectors that need people to physically be at work, we're seeing much higher wage increases relative to overall in terms of the participation rate.

Janet Yellen a couple of days ago and her testimony said she thinks it's all about COVID that people are afraid to come back in Goldman Sachs, I think put out a report, uh, a couple of weeks ago, though, saying it's really about um returns because people have made so much money in the markets that those closed to retirement have decided they could go ahead and do it. How do you see it, Well, I think it's a

combination of both plus other things. So certainly many people have retired early, either because they were afraid of getting sick or because their forewing k plans really exploded and they said, look, we feel financially safe, we can go ahead and retire. And many of those people are probably not going to return to the labor markets. Certainly, many people are still afraid of getting sick. Um. Certainly, again looking at the more confidence data, uh far, the virus

is still very real. But you also have other factors. So for example, travel bands are still in play, so that means that labor from abroad really isn't able to come in. And still in some of those spots you still have lingering childcare issues, which are especially acute for women with working women with children. And so potentially the participation rate may not return to the level that we

saw before the pandemic. So that suggests that maybe we're closer to full employment than the participation rate is signaling. How does this Federal Reserve respond? I would argue that maybe we heard sort of a different tone out of J. Powell this week. What does this mean for a FED meeting? And on December? Well, I I think you know, when looking at this employment report, it was mixed. On the one hand, payrolls were pretty pathetic, but UM on the

household survey, we saw some good numbers there. Unemployment rate continue to fall, and certainly when you look at unemployment rates for different demographic groups, they're not as bad as they used to be. UM. Also, if you again getting back to the participation rate and reason for why you're not going to see some people come back, then you can say that, look, we're getting close to the full employment maybe in some areas we've actually reached it. But

we also have to be very concerned about inflation. Look at wages rising as acutely as they are, businesses are most likely passing some of those wage costs and other input costs down to consumers. That's showing up in consumer inflation. And if you're the FED, you have to also be concerned not just about how many people are working, but they're they're buying power, and certainly they're buying power is eroded if prices are rising, especially forces necessities like food, UM,

energy and shelter. Danny, you think do you think that the FED is going to be able to was rate, raise wages? Sorry, what am I talking about? Raise rates? UM without hurting economic growth? I mean we're only at you know, if they raise twice seventy five basis points, absolutely, I think that they can raise. As you said, if they raise interest rates two or three times, you still

very low interest rates, still very accommodative. And let's let's think about what growth may look like next year, anywhere from three to four percent, depending upon what you have in there in terms of additional fiscal stimulus and also effects from higher inflation. So three percent is still very strong, especially when a potential GDP is probably close to two percent.

So you have that perfect backdrop for the said relatively strong growth meaning well above trend at least one one to two percentage points above trend um, elevated prices, rising inflation expectations, and also an employment back drop that's significantly better and deep. When you look at number of missing persons from payrolls, you're around three million compared to two million back in February March of last year. So we've

come a long way. Is that what I mean? A flattening yield curve on the two s tends right now below eighty basis points, and you could argue maybe eighty basis points feels low. It's the flattest that we've had since pre pandemic. And it's also the rate of change at which we've gotten to eight basis points. What is that flattening of the old curve telling you about a pull forward of some of these rate hike expectations. Well, I think markets are are kind of confused a little bit.

On the one hand, you do have the strongest signaling from the FED. Certainly during the testimony from the chair he said, let's get rid of that word transitory and think more about the fact that some of these inflations elements are potentially a little bit more persistent, given the fact of the pandemic is persisting, and there may be some other things that even after the pandemic may linger,

such as I wages. And also, meanwhile, you have the armicron variant cropping up, and we know that the delta variant has and is continuing to affect economic activity. So I would imagine markets probably don't know which way to go on this. But again, looking ahead to next year, um in the springtime or mid year, the conditions are probably going to be ripe. Among the things that I've already mentioned for the FED to go ahead and start

raising interest rates a little bit. I want to ask a question that I know you don't want to be political. No economists wants to be political, unless you're Paul Krugman or Brian Westbury, But build back better? Does that kind of spending add to inflation? Or um? Does it help us avoid inflation? Or is it a question of your

time span? I think a lot of it to a combination of what's in the bill, which we we do know um and certainly it's already been scored by the CBO, and the timing of when the outlays happen, and certainly UM, I think the outlays are meant to be accelerated across the ten year period or however long the period is. And so that means that you have stronger growth potentially next year and and and also in the year after.

And so that means that you also may have stronger demand UM, certainly from businesses that are uh, you know, certainly investing such that they can meet the demands of required by the bill UM. And so that means higher prices and certainly UM potentially higher prices for consumers as well. So, taking together stronger growth somewhat stronger inflation, and so again that provides additional space are a reason for the said to go ahead and begin raising interest rates from zero.

It's int sting. I do wonder you know, what do you think about sort of this intersection of increase in fiscal and monetary stimulus. I think we knew post financial crisis there was a lot of pressure to do monetary stimulus because we didn't have the fiscal stimulus this time around. Actually could argue that the fiscal side has really been

front and center along with monetary policy. Does that sort of also give the Fed officials room to pull back because as notwith saying this massive fiscal stimulus that is coming, well, I think, um, you're right. We had lots of fiscal copious amounts of fiscal and monetary policy stimulus amid the pandemic.

And certainly when we look at the drivers of inflation, all that is not linked to the FEDS low interest rates or quantitae and vias, and some of it is linked to the very strong demand for good um and services you can consume at home from discill stimulus checks. But still them all of the said is looked to to manage the economy in the financial system and certainly the FED can help cool lost some of the the heat that we're seeing in the economy and certainly in

an inflation by raising interest rates. So again, you know, we have two very powerful policy impulses, and certainly in the FED can pull back on its policy impulses consistent with its dual mandate. All right, Dana, thanks so much, great to get your insight today. It's been a truly fascinating I mean, the last couple of years have been clearly unprecedented, but we've had an amazing week as well

in terms of trading. Dana Peterson, Chief Economist and Center Leader of Economy, UM Strategy and Finance at the conference board, let's get over right now and talk a more in depth way about the job's number right now. Jani Bailey joins US right now, chief workforce analysis at employee Bridge and Johnny, you know, the President is going to come out and say, yeah, I was a too. It was a two hundred and fifty thousand, two hundred sixty thousand miss.

But um, the unemployment number has fallen to four point two percent. Even experts didn't anticipate that. Are we in a good place as far as unemployments? Concerned. Well, first of all, thanks for having me. UM, great to be with you this morning, and I can tell you this Job's report, UM, it does have a little bit of a mixed message because you're right, that headline number was

not that strong. We were expecting a number of five hundred and fifty thousand jobs created and only saw two hundred and ten thousand jobs created for the month of November, so that was a disappointment. How Ever, there is a lot of good news in this report. When you look at the overall labor force. UM, we saw that almost six hundred thousand people entered back into the labor force,

which was a really good sign. We have a hundred and sixty two million people that are participating in the labor force compared to November last year, it was a hundred and sixty million UM. And even better is that we're seeing the number of employed people expand as well. UM. That was over one point one million people added in the month of November, so we now have a hundred and fifty five million people working and that's what's really driving down that unemployment rate. So UM, there is a

lot of good news in this report as well. Though, you know, I wouldn't be surprised. Maybe if next month maybe they revised the numbers and it's a little bit better and we see a little bit more job creation. But UM, I was surprised that the that the overall job creation number was only two UM and twenty one. And you bring up a good point. Talk to us about the revisions because we've seen a lot of those

in the past reports. Is there something UM changing were different about the way the payrolls report is is calculated. I mean, I've heard a lot of people starting their own businesses and job formation and employ you know, new sort of employer creation, and it's sort of changing the

way that we should be looking at a traditional payrolls report. Yeah, you know, it's very interesting because then you can also enter into the gig economy UM and and see, you know, how many people are participating in that and actually working and is that being calculated UM correctly. But I can tell you from a revision standpoint, you know, UM not

has really changed in the way they're calculating it. We we see every month, UM, the first Friday of the month, when the Bureau of Labor Statistics puts out the report, they will also revise the last or the previous two months, and you know, the past few months we have seen upward revisions. UM. This month in November, they actually revised September and October ups and it was an additional eighty seven thousand jobs created in those months. So the reports

were actually even better. And I wouldn't wouldn't be surprised if we see that, you know, next month when we look at the December jobs report, UM, maybe November will get revived upwoard and well we will see a stronger number. UM. But overall there you know, the sectors, if you really kind of break it down and look at where the jobs were created, UM, it was kind of interesting. We did not see uh strong job growth in leisure and hospitality.

Only twenty three thousand jobs were created in that sector, and that was expected to perform much stronger since we've seen people start to travel again. UM. I don't know about all of you, but you know, just being an airport lately, the flights are packed, the airports are packed. Restaurants certainly are you know, um at full capacity. So, uh surprise, we didn't see a stronger number there. But there was good job growth in construction and manufacturing. Both

sectors added thirty one thousand. We're also seeing trade and transportation UM at about fifty thousand. It was a little over forty nine tho jobs created in that sector. So I think it really speaks to our economy right now in the demand and supply chain, UM, there's a lot of jobs available and where we're adding people back back in those sectors. I mean there are a ton of job We we focus so much on the people that haven't come back into the labor force because the participation

rate is has historically been so important. UM. But there are so many openings there. And your company, employee Bridge, is widely recognized as the biggest industrial staffing firm in America. Where where do you see the most need right now? And how difficult is it for you to fill those positions? Yes, So at employee Bridge, we have organized ourselves really by brands. So we have a division called pro Drivers and they place UM CDL drivers and also non CDL drivers. UM.

There is demand just right now for for drivers. So that is an area UM that we're seeing pay rates significantly up there, up eight year over year, and we have tons of job openings. In fact, we could I was talking to the president of that division yesterday. He said, we could double inside if we could just find more people. Well, and by the way, I don't want to get too far off from this tangent because I've always wanted to

be a truck driver, long haul truck driver. But well, I've looked, I've looked into it though I've I've been reading a lot more about it lately. And not only is it a incredibly difficult you know, just to do to operate these big rigs, um, and you want to operate them safely, so you need experience, but it's it's not easy to get licensed either. I mean, how how difficult is it for someone who who'se you know, biggest truck experience is like an F one fifty to be

driving an eighteen wheeler across America. Well, there's you know, great training programs and schools to teach them. So if they're they have to be twenty one years old um and a clean, cleaned living record, um. But there's great opportunities and many companies are you know, offering to pay for the training to help them, you know, and get them, you know, put them to work. So lots of opportunities in that area. Interesting. Is it happening fast enough though?

I mean overall too across sectors? Where where are all the workers? What is not in I mean there are the pay increases that we've seen, not enough to bring workers back. Well, that is such a great question, um, And I think everyone's kind of scratching their head. You know, it's it's probably a combination of things. Because certainly COVID um impacted many families. We saw, you know, women drop out of the workforce that how to stay home and

maybe help their children with online schooling. Um. We've also seen that, you know, the impact of covid has maybe made people reevaluate, you know, are we going to have to you know, working you know, parents or maybe one going to stay home. People are reevaluating themselves, So that certainly has been an impact. Safety health and safety is

still a factor. UM. But you know, when I look at labor participation and you break it down, I'm I'm more concerned that we don't see enough women actually participating in the workforce. So I think employers are going to have to think differently about how they and you know, attract women to the workforce, whether it's more flexibility, more

work from home opportunities. Um, there's an opportunity to increase labor participation that someone could kind of crack the code on figuring out how to make it more attractive for women to come back. Well, I have a great idea. What if What if major employers also had daycare in preschool? Yeah, the major employers. I mean, it is something you know, to think about. For a while, I felt like we were headed down, you know track, And you really don't

hear that as much today, partly because of COVID. You know, many UM employers have moved the professional jobs and said, you know, you can work remotely or have a hybrid schedule. Um. But that is something the major employers where they have all, you know, all of their employees at big locations. UM, that would be a great, great benefit to offer employees. So I don't want to get again. I don't want to get political. And I've been flamed lately for being

a bleeding hero. Can you believe that on on social media? Um? Do you think build Back Better, if passed in its current state, would help to increase to get women back into the labor force. Oh gosh, that is a loaded question. Um. Okay, I didn't mean to I don't. I didn't mean for it to be that way. I really don't know. No, I think you know, I'm not I have to be honest, but I'm not sure that that is the ants, sir.

I think we do need programs absolutely that support women, UM, that supports families, UM, and you know, offer training and opportunities to get people back to back to work. My concern would be too much social assistance is not going to help get people back to work. And there's got to be a balance. So that's why I say that's a loaded question. There needs to be a balance. We definitely you know, you can be an economist, well, I can't say it's I see it more so on the

front lines with workers. When we were you know, when our country was offering all of the supplemental insurance for the unemployment benefits, you know, we had many people that we would call and so, we have a great job for you, and they would say, well, I'm actually making more money on unemployment right now, and so why would

I risk going to work? And so that that's always a topic that's debated, but I could tell you firsthand this this was a real issue that we dealt with for a while and now that that's kind of run its course, and those benefits did go away in the beginning of September, but it took a while for us to kind of get back and get people participating in the workforce. UM. And I can tell you right now we're seeing more applications, so so to you know, to

answer your your question, I think it's a balance. Let's be careful that we don't offer so much social assistance that people don't want to come back to work and don't want to participate. We can't make it too easy. You know, our country was built on strong you know, values and work ethic and we need people out there working in all sectors. We need them training, we need them learning, um, and we need them participating. I'm really

passionate about labor participation. We need to get more people participating. Really appreciate your time. What a wide ranging interview. Johnny Biley of Horse Title here chief workforce analyst at Employee Bridge. Let's get over and out of Tom Giinville. As I said, he's going to join us from LaSalle Network, leading American staffing firm to talk about the job's number. We had a big miss, Uh, Tom and nonetheless unemployment came down

to four point two with the participation rate rising. What's your take, did we have a big miss? I get it that economists want to look and predict the future of what everything is going to be. You know, we had to revive UH for October of five and forty six thousand, right, so we're revising the previous month off. We added two hundred and ten thousand jobs, the participation rate increased, and unemployment rate decreased. I don't see how that's a myth. Talk to us then about the reaction

within some of them. For just for the record, I get your point, but um, we had a print of two ten and we were looking for five fifty. So well, Tom, take into us for this a little bit then, I mean, if you're thinking about all the visions higher, is that the case here? Of what we're thinking about is that we'll get another revision next month for this month and boost the top line number that that, of course Matt

Matt is referring to. Historically, there there is a percentage of the population that's unemployable and people don't want to talk about that, and sure as heck, politicians don't. The number used to be between two and a half and three percent of the population is unemployable, and whether for whatever reason they don't want to they don't have the abilities. There's a discrepancy and skill sets versus what's in demand. But there's a certain percentages of the population that isn't

a contributing member of the workforce. And what we've got is a situation where every single if we if we remove politics, right and I'm a centrist, if we remove politics from this equation and and Biden and Trump and all this craziness and COVID, what we still have is a small percentage of holdback due to COVID, meaning parents who left the workforce and are still out of the workforce because they need to be home when their kids are sick or if there's COVID, you also have a

second percentage of population that people were contemplating leaving the workforce to be stay at home parents, and with COVID they realize how much they actually enjoy being around their kids and they don't want to come back. You can't recreate you can't recreate history. That's just factual. So now what we've got is a more stabilized situation. I know we have the the other variant that's potentially coming through from Africa. Um, but we can't worry about that until

we have something to worry about in this country. What we have is, as I said earlier, participants participation rate is at the highest level since pre pandemic. Right, it doesn't get me, It really doesn't get that much better than that unemployment drop. Companies are hiring now ten thousand maybe because give or take, that might be the only available workers to add to the situation who want to work interesting, Uh take, and I get um your points?

What about your at your business right now, little sound network? Um, how in demand are your services? Because we see an amazing amount of job openings and how difficult are you finding them to fill? We are up almost fifty over a year ago. Our October itself was up over fifty seven percent over a year ago. Our temporary staff and we do all white collar are temporary staffing business is we can't find enough people. Our search business is the

best it's ever been in twenty four years. And internally we are high. We've hired over a hundred people this year in recruiting in sales roles, and we're adding another hundred and fifty next year. Business has never been better, and we do operations in thirty eight of the of the continental forty eight. And is this the wage growth that we are seeing that comes in again pretty strong in this report that is attracting um some of those people to come back out and and continue to be

participating in this labor force. Is it a wage growth that that you're finally seen. Yeah, I mean people people want to work when they're paid more, There's no doubt about it. But I also believe that there was a certain percentage of the population that didn't under you know, we want to talk about, Oh, September numbers will be great because the federal unemploymental stop and and people need to get back to work. And maybe we just saw two or three months lag from that number two, And

that is people just the until the benefits stop. Then people start to look, and then it takes time when they start to look to find a job, and and then you contribute to the system here. So just because the benefits ended at the end of August doesn't mean that all of a sudden the September numbers were going

to be great. I'm not so sure that we didn't see a lag from the benefits ending and in addition to increased wages and increase the people realizing that we are not going to turn into a socialist government and everything is going to be free, and I gotta get my head back in the game. Wow, if everything we're free, I live under a socialist government here in a sense social democrats. A lot of stuff is free kind of,

but I have to pay half of my income in taxes. Now, let's talk about the energy industry, right and out with the chief executive of e O S Energy Enterprises, Joe master Angelo joins us UH and we are going to get a little bit into the Infrastructure Bill and some grants to expand US battery research. First of all, Joe, UM, what's your take on what we saw in the Infrastructure Bill and how do you think it's going to change the energy industry. Yeah, I think you know, the industry

and of itself. We're at a tipping point right now of really accelerating into more and more um energy storage, more and more renewables, and I think what you see in the Infrastructure Bill is going to help us get there. And I also think it's important to think about in the Build Back Better Bill as well. There's some great incentives for people to make investments in the standalone energy storage outside of just doing energy storage with solar, which is also going to help us firm up the grid

and allow higher use of renewables. Joe, I think it's so fascinating. I think six months ago we were all talking about the chip shortage, and know we're still talking about the chip shortage, but everyone says that a year from now it is going to be a battery shortage. Do you agree depends on the technology, I think, I think um, I think the shortage is driven by the demand.

I think what we've tried to do is is position ourselves to be able to scale rapidly with how we've designed both are our manufacturing process and our supply chain. And we're ready to scale. And we're in the midst of investing in our factory in in Turtle Creek outside Pittsburgh, Pennsylvania.

We've added, you know, close to a hundred jobs, and we're continuing to add manufacturing capacity to go from a run rate of around two hundred fifty megawatt hours per year to eight hundred megawatt hours pre by the end of next year. So we're excited to keep building out and just keep working through the challenges and bring great technology to market. Tell us, by the way, for those who don't know what you do at EOS, the ticker

is e O se UM. But you have a long career in working in power at GE from turbo machinery to gas power systems. What do you do now at EOS? Yeah? Yeah, man, I've been in the energy industry for for thirty years. UM Eos is a is a stationary energy storage company that is based on zinc Roman technology for its electro like that allows you to store and discharge energy UM back, pull energy from the grid and discharge it back on

the grid. We do this with earth abundant, non toxic, fully recyclable materials, and do this in a way that allows extreme operating flexibility. It's it's a it's a great technology whose time has arrived, and it's just very exciting to lead the firm. Can you talk to us, Joan. I'm thinking big picture here, the shift to renewables and the impact that that has had on gas prices. There have been some concerns that the way in which we're shifting we're not doing it in a reliable way. What

is this sort of ideal shift? What does that look like to you? Yeah, so funny, I would I would start off and always say that the energy value chain is always going to have a mix of technologies, and I believe that there is a mix for gas turbine technology. As we move forward, as renewables have come on, you know that the reality of renewables is the sun isn't always shining and the wind isn't always blowing, so you have these moments of time where either you have too

much or you don't have enough. And what the industry is now moving towards is to add this stationary storage to allow you to store energy when there's excess and discharge it when there's a need. So it allows those renewable technologies to become a firming resource so that when we flipped the switch in our house, the lights come on. And that that's the key trick here. As you want to add more renewables, you need reliable storage in order

to do that. It's it's such a fast eating industry and I think it's going to become more and more important. What do you think in terms of the growth, what's your what's your forecast for the growth of just the energy storage industry. I think it depends on it depends on what forecasts you look at. I mean, we're in we're in a tremendous growth cycle where you're talking about you know, compound average growth rates in as we look

out over the over the next few years. I think a catalyst to accelerate that growth goes back to where we started the conversation with the Build Back Better Bill of allowing people to get investment tax credits to bring new technology on that also incentivizes them to take American may technology. You know, we're a company, the technology was

invented in the US. Of our suppliers are in the US, are factories in the US, and allowing us to do this is going to allow us to gain energy independence as we look to more green and lower carbon solutions. Talk to me more about that, are we honest ring fasten us? Well? I think right now you have UM you have a lot of companies like ours or other companies. You know, EOS is not you know, I'd love to

tell you that we're going to be a solution. It's gonna take a lot of us to be able to do what we need to do because there's a lot of different use cases. So there are other companies out there that are behind us in their commercialization and industrialization path that need to be that pushed to to be able to to to grow into a full scale manufacturer. I think of what we're doing now is going to

allow us to do that. The timing is right in the market to get other technologies besides lithium ion into the grid and allow us to to bring more renewables on and and and shore up our supplying demount of power. You've come on at a well, I guess, a very

volate time for your stock. It's shot up and then came back down to levels we saw before your chief executive officer, what's going on with the more Look, you know, what we control is how we execute, how the orders that we win, in the product that we deliver, and that's what we're focused on every day. As you know, there's a lot of other things that go on around

a stock price. But what we've said from the day we've gone public is we just want to show people that we're the company that executes and delivers and we're going to continue to show that prove those proofpoints and show people that we're great investment for the future in a growing industry with a great technology, and now we just have to show our ability to deliver, and that's what we're that's what we're focused on right now. Adios

all right, Joe, thanks so much for joining us. Great to hear a little bit more about your company and your industry. Joe Master and Jello there, the CEO of EOS Energy Enterprises. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller nineteen seventy three. And I'm

Fall Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio.