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This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amrie Hordern. Join us each day for insight from the best in markets, economics, and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from six to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg Terminal and the Bloomberg Business app. So here's the latest
this morning. Friday's payrolls report postponed as the government shut down trags on Steve Englander, whose standard showdered right in the US data quality has become quote more Fall's gold than the gold standard. We expect the uncertain quality of the data to become the bigger issue than statistical agencies and the FED have so far acknowledged. Steve joins us now for more. Steve, good morning, Good moran, tell us what you ready to think? What's going on here?
Look, you know it's become so common to say that the US data are the gold standard, and they may be compared to everything else. But there's so many holes in the data that haven't been addressed, and I'd say that you know, bls. You know, it's not political in the sense that Trump accused them of being, but they've been kind of intellectually lazy over.
The last decades too, making them intellectually lazy. You're suggesting it's not just response rates, what is it?
Well, you look at the birth death adjustment, which is basically more than half the employment growth we've been getting, and it doesn't reflect anything that's happening in real time. It's basically an auto regressive model that says what's going to happen January of this year is what happened January of last year. Now they're going to try and fix it.
As a consequence, there will be not just the usual benchmark revisions, but big revisions from April through January or April through December, as well as a big down you know, weak number we think in January.
So I stay've put the data through in England a filter, what do you look at? What would you point to?
This?
Says you know, well, I can rely on that. That makes sense. That's where the economy.
Is, you know, I've used the image of being in Plato's cave. You sort of see a lot of images in the wall, and you try and sort of put them together to make, you know, make a coherent story. But even the unemployment rate, which everybody lives and dies by, if the labor force is constant, it also takes this seventy or eighty people reporting that they're unemployed more than last month to push it up by a tenth of a percent. You know, given how much stress we put on that, that's not a big number.
Okay, So I'll take your Plato's cave analogy, and it seems like we've been living there for about six years now. At the data being called into question, and frankly a lot of fluctuations since the pandemic. I just raise a question of what's your sense then, and taking a look at all the images on the wall, do you see a labor market that's stronger than people think or weaker?
I see labor market that's pretty mediocre. It's not a disaster. There's no sign that's falling apart quickly. On the other hand, it really is the case that you're you know, if you don't have a job, it's you know, good luck and God bless. I mean, it's just not you know, the odds that you're going to find the job are relatively low. On top of that, you know, the AI think the productivity thing, we think could matter in the short term, although we're very optimistic in the longer term
that jobs will be created. I mean, cavemen, the unemployment rate is no higher now than it was in the day of the caveman.
We're really going back to caves and hieroglyphics. I'm just curious going forward about what you're watching to understand whether we're heating up and whether there is a degree of undermining the significance of this data on a permanent level as a result of the government shutdowns that make some of this data optional depending on the week.
I mean, it can't be optional because the Bond Lessons the only organization that has like a real sam that they sit down and they try and sample the entire country. If everybody else has samples of opportunity, who's posting on LinkedIn, whose payroll checks are you processing? And so on and so forth, you know, they could combine all of this.
I mean, there's so much more information out there than what the BLS is using and information that's available in a real time, they can do a much better job than they've been doing.
Trump has appointed someone new. On Friday reported about it. He confirmed it on truth Is is someone that people call a data nerd. I got messages from Biden error people and Trump people saying this is a great pick for the BLS. Do you think a new commissioner could come in and maybe take some of this on board.
I think so, But I mean the question is whether he breaks out of the BLS mindset that you know, all you do is use inside BLS and you tweak this and you tweak that, and everything is fine. You know. Look an NFP, I mean, we don't use ride shares, we don't use gig workers. They're just as much employe. They're not entrepreneurs, they're just as much employees as we are.
When it comes to report, we're not going to get it. But you have a very downbeat suggestion for how many jobs are created actually negative.
Yeah, I mean, I think we're the lowest in the street so at least as of yesterday. But look the problem is that we've estimated that the bias and the birth death adjustment you know, we estimated seventy thousand, power estimated sixty thousand. If they come up with a model that really takes current conditions into account and it's consistent with other data sources we have that are better but lagged. You know, all the numbers we've had for the last
eighteen months. You know, just the birth desk stuff will go down by sixty or seventy thousand.
Stay you're a foreign exchange guy, Yeah, uh huh, what do you advocate for the moment? Given everything you've just said over the last five minutes.
Well, you know, I, like I said, labor market is soft and software. In fact, you know, what it tells you is that productivity growth when we get the numbers that are based on the revised data, are likely to be even stronger than what's been reported. We believe the productivity numbers, you know, we're serving in the wash camp where it's sort of you know, we think that there's
something happening in productivity. Productivity normally does not pick up four years into the recovery five years into the recovery, and that's usually a signal it's something structural. That's what we saw in the late nineties that is what we saw in the mid sixties. So we think that's the most by far, the most important thing that's happening in the economy right now. And you know, arguing about about twenty five basis points here or there, it's kind of a waste of time.
What do you think we should be arguing about.
Oh, we should be trying to estimate productivity growth better and understand the dynamics that's going to happen. For example, we're dollar bulls because we think the US has the labor market flexibility. You don't need a Bloomberg journalist. You let them go, but you find some place. Yeah, no, sorry, I didn't need that. You don't need a foreign change economists to let them go. But you find somebody who's
going to you find something. You know, but you're making money somewhere else, and you look at the profits numbers that we're getting. Historically, US firms hire when when they're making money, they might not hire the same people they hired two years ago, but they'll say, Okay, where are we making money. Let's pick up some people and see if it works elsewhere in the world. In France, you buy a truck, you don't like the truck. You know, for business, you sell it in six months, you hire
a worker. Seven months later, you decide you don't like the worker. You know, he's more fixed capital than the truck.
And this has been a sacred source of the American economy for a long time. Deep capital markets, bankruptcy and flexible lane markets. Are we losing any dynamism?
I mean there's a risk that we are. Look, you know there's also stuff that you know, Trump is trying to do, or is people are trying to do. I think that's positive for the economy in terms of deregulation, but you know, the sert of willingness to sort of say, yeah, I see a problem, I'm going to fix it, you know, like some of the things they've talked about the housing market. You know, to fix the housing market you have to increase housing supply, not housing demand. You'll just get higher
housing prices, but the same number of price. I think they have to be careful about their willingness to interface.
That's my concern too, that we're not embracing the dynamism that traditionally has laid the foundation for the American success story. Anything we're questioning you in the last twelve in fact, never mind the last twelve months, the last five years, and maybe you can go further back than there. Stay with us. More Bloomberg surveillance coming up after this. Terry Haynes of PAN Geopolicy writing, it's a strong signal that Trump is walking and chewing gum at the same time,
not letting geopolitics distract from US economic attention. Terry joined us now for more, Terry, that raises the question, then who's next.
That's a very good question, John, And you know, I'd look for, among other things, a strengthening of the US EU deal, you know, which has been kind of on off on for Davos related reasons. And you know, beyond that, I would look for probably we should go out and look at Asia a little bit more, where the trade deals can be strengthened even further.
Terry Tyler mentioned it, but Prime Minister Modi was one of the first officials to come to the White House. It was almost a year ago, February thirteenth of last year. Yet basically a year later we were getting a deal. Was damage done in pushing India towards say China or Russia because this deal took so long.
There's been a lot of you know, the mode he's got his own politics, of course, but the you know, there's been a lot of back and forth and a lot of kind of raw elbows between the United States and India and all kinds of things, ranging from the geopolitical scrapes with between India and Pakistan and you know, frankly Trump's desire to take credit for the lessening of hostilities there, to the Russian oil, all kinds of other things, many of which Tyler mentioned, And you know that has
made things more difficult than they appeared to be last year when Mody was talking about Mega plus Mega equals mega or mega whatever it was, and the you know, but they have had a desire to do a deal for quite a while. It's been obvious that things have been thawing, and you know, I think there's there's still some prickliness there, but you know, there's a desire to
do a deal. The other thing I'd say is that, you know, there's a lot of handwringing in markets always for the for the lack of detail of these things, and that's entirely fair, but you look at the other way that this this has been done in prior years where deals have been negotiated, negotiated, negotiated, they're never finalized. Finally they're finalized, like the EU with Mercosur, which took twenty five years and they're still not done. And so
markets prefer progress. So that's positive for markets.
Well, when you talk about the prickliness of this deal, the President made it clear they're not going to buy any more Russian oil. We didn't hear that from Mody.
Well, exactly, that's and you know, I made clear when I wrote that the details of this met many details of this were not final And I imagine, and I am this is instinct on my part. I imagine that the timing of winding down Russian oil purchases is the major reason why Mody isn't talking about that. And I also imagine that there are a variety of other details that the United States and the India want also relating to timing purchases of what, when and how, all those
sorts of things. And that's about I think that's the reason why we have kind of a sliding deal here.
Is there a telling, miss Harry that perhaps the US is taking a harder approach with Russia as a result of some of the ongoing negotiations with European allies about the war with Ukraine and Russia, and asked this, because that's a key component of this deal, Russia, excuse me, India agreeing not to buy Russian crude.
Yeah, I think so. I think it's a I think it's a major signal from this deal. You know, the you know, Trump, Trump likes to do what he can do to butter up major adversaries, and that that gets off putting for domestic audiences sometimes. But I think there's no doubt that what the United States is doing right now is trying to push Russia and squeeze the life blood of its war machine. Then European allies are helping. You know, a lot of the ghost fleet activity coming
back into European waters has been harassed and more. And you know, so what you're seeing is a kind of a ramped up effort based on what not only then, but more importantly, the Europeans are willing to do. They were not willing to, for example, take frozen Russian assets and convert those for Ukrainian use, but they are willing to do that. So the policy is shifting to that, and that will have the usual effect on Russia's economy, but it also makes China's support and pumping up of
the Russian client state even more obvious. Senators today stay with us.
More Bloomberg surveillance coming up after this, We've got some data from Yulanta should say for the conference boards. She writes this about consumer confidence. Confidence collapsed in January, hitting at the lowest level since May twenty fourteen. Concerns worse than across all age groups, income levels, and political affiliations. This wasn't a one month fluke Ulana joins us now
for more. J Lema, good morning, come morning. This one is really hard to internalize, the idea that consumer confidence is worse now than it wasn't the pandemic. Can you make sense to some of this for us?
And what makes it even worse is that it's a trend. It's just not one month's thing, right. We have seen it declining for quite some time now, and that what makes it very legitimate. Actually, so confidence right now is at the worst level since two ten years ago, but it was worth before if you go back to the Great Recession. Coming out of the Great Recession, that's how consumers feel felt at that time, So think about it this way. Now, consumers are feeling actually that as bad
as they were coming out of the Great Recession. So that tells you something. So what does it tell.
You, Because a lot of people come on the show, they say ignore it because frankly it has not been instructive to how the economy has done. And frankly, how you've seen companies and even workers demonstrate their spending capacities.
Well, every bird likes its own nest, and kind of like, I do believe in the data, just again, because it's a trend. It's not just a one month thing, So I think there's something to it. Consumers are worried about jobs, consumers are worried about affordability, and consumers are worried about the income levels. So this is very important because that
actually coincides with what the actual data telling us. If everybody was talking about how great GDP numbers were in Q three, but I looked at income data in the same exact VIA report, and that data is telling me that disposable personal income in real terms, which is income essentially adjusted for inflation and taxes, that has been flat since Q three of this year. So that is weakening and that is the fuel for consumers to spend going forward.
Is this an economic issue or is this a political issue.
In terms of consumer confidence?
And I asked this because ultimately, if you look at the averages, they're pretty good. But if you look at the politics, it's the affordability crisis that you're talking about, and certainly a lot of people are feeling every single day. So does this get represented in the overall economic data or in terms of what policies are going to come out of Washington, DC to respond some of these issues.
I think it's both. It's really about how unaffordable things are, and it's all about the economy stupid right, At the end of the day, it's about prices, it's about jobs. Consumers are not feeling confident about finding a job, so it is about the economy. I do think that political things and other disruptions are playing a role as well. Consumers do hear the news and oftentimes you know, confidence and sentiment indicators reflect what is happening in the news.
And there's like even some special indexes like news heard in the Michigan survey, right, so that that is something to take into accounty.
And a lot of guests will come on and they're talking about the excitement the tax rebate. Where do you see that money going?
I think, you know, I'm very cautious about that because I think that people spend a lot of money during the holiday season and they may have to return this money. It's spent, it's already spent. You do see a significant pickup in credit card balances over the last several months, and that is the data coming from the New York Fed.
And I think that given you know, the constraints in terms of income roles, in terms of the labor market, people will be cautious and we'll try to get to pay back some depth.
This is the Bloomberg Survandons podcast, bringing you the best in markets, economics, anngio politics. You can watch the show live on bloombag TV weekday mornings from six am to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg Terminal and the Bloomberg Business Amp.