Dysfunctions in Labor Markets with Jason Furman

and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course, on the Bloomberg So when it's play rolls Friday, your median estimate in our Bloomberg survey one hundred and ninety thousand added to the month of May, the unemployment rate expected to stay at three point nine percent, and the closely watched wage growth figure. The estimate their two point six percent year on year, in line with the previous read. I'm really pleased to

say to give us his personal read. It's Tom Porselli OBBC Capital Markets chief US economist who joins us in the studio morning. So, good morning, good to see. What are you looking for this morning? So we're looking for two fifteen headline and private, and we're looking for a three nine on the unemploymer No change there. Look, I think you know, let's be let me be the only

honest economist on this point. Whether it comes in at consensus one nine d I think you said, are my two fifteen or even it comes a little lighter than that. To be honest, it's still very consistent with a totally rock solid labor backdrop. Tom and I were talking about

this on on TV or earlier. I mean, I think, just look at sentiment with regard to the labor backdrop, um the conference boards, Uhum, sentiment measures as as good as any and what you see is that people continue to say that they have they're holding a really positive view on labor. So um, I think from not just from a numbers perspective, do I think things look good, but from a sentiment perspective, Um, people continue to feel good about the backdrop? What does it say about where

we are that we can still get prints of? So I love this question because I really think it gets to drive home this one point. I think that there's a heck of a lot of people us but but time I love you though, and it doesn't love me, which is why I like being on with both of you. I get the best of both worlds. Uh. So I would say that what it what it really drives home is, you know, we're we're probably not quite at full employment

yet in the United States, right. I mean, I think a lot of people think of full employment as somewhere between four and four and a half percent. I think it's reasonable to actually wonder allowed or really between three and a half and four percent from a full employment perspective. And if that's true, if that thesis is true, then what that means is that there's still pipeline wage pressure. Again, something else Tom and I talked about on on air

a little earlier. But I would say that if you consider that, UM, the tighter labor markets get, or as labor markets get the most tight, I e. Once you get down toward full employment, that's when wage pressures really start to take off. So I would tell you that I think there's pipeline pressure, not just actual pressure. Today, Tom, you're thinking out loud, do you get the impression that the Federal Reserve is doing the same thing I do?

In fact, you know, look at the beige book. I mean you know that that the Fed's homegrown piece, right, it's within the bage book. We have this great we have a couple of great indicators within the bage book. UM. We've we've sort of scraped the bage book over the decades, and we have something called the bage Book Labor Shortage Index UM. And if you overlay that with the unemployment rate,

it actually has a fantastic relationship. UM. And guess what you continue to hear from the Page book, UM that their companies are really having a heck of a hard time finding qualified workers and they're paying up for it. And we should say this with great, great love and honor to the late Richard Yamarona Bloomberg, who was really out front and re re affirming the value of the Beige Book. And what you see there and what this comes down to, Tom Porcelli, Everyone listening coast to coast

is saying, Okay, raise wages. So when you'll find the people. Yeah, so it's happening. So I I would tell you that it's happening already. So look at so the Atlanta Fed. Right again just picking on sort of the Fed data. Um,

look at the Atlanta Fed. They have the wage accord and when the breakdown of the tracker is pretty interesting, right, they have um wage wage tracker for job leavers, So someone who left a job to go take another and for jobs stay or someone who's just staying at a job, um, And the spread is about a full percentage point higher for people that are leaving to take a job, So you're being rewarded for taking a job right now. Um,

So yeah, I think it's already happening. And again it's a speed question, right, like is it happening to the speed to which people want it to happening? That is a philosophical view, you know, Like I I can't get into that philosophical view on that. Tell me what your expectations were, and I'll tell you if you were going to be wrong, you know. Um, But the reality is wage pressures have already materializing, will continue to materialize given

some of the things we just talked about. Sumple Sully right to catch up with this morning on scary thoughts on the on the labor market and payrolls coming out of eight thirty East and sample Sully jointing us from rb C. The capital market is chief US economists tell we would usually talk to Mr Purcelli for two to three hours here, but we can't today because we have national lose not a trade war. I'm not willing to

say that yet, but boy was yesterday and eventful. As we try to do on surveillance, we try to bring you the nation's experts, people really thinking about this, and that would be Edward Old and Ted Alden of the Consul on Foreign Relations. I can't say enough about his book Failure to Adjust. Ted Alden, what is the failure to adjust that President Trump is doing right now? Well, he's you know, his basic approach is that there are you know a number of Americans have not done well

in uh in recent years. You know. I talk about them as being those left behind in my book. And President Trump's approach to this is to say, well, the foreigners are to blame for what's gone wrong in your lives. And he's you know, going after our allies on trade. He's obviously doing the same thing on immigration in different ways. So so he's really trying to externalize this problem. And and I fear, unfortunately he's going to make the problem

much bigger. You know, I know the economic news is pretty good, but there's a huge layer of uncertainty here as a result of these trade acts. In the in the micro theory, the microeconomics of terroiffs, and this applied to me on the typical martialian cross. There's all of this stuff, and part of it is the deadweight loss. Is the deadweight loss of this trade war different than the eight deadweight losses of the eight last trade wars going back to the seventeenth century. And we don't know

the answer to that question yet. I mean, yeah, there's always you know, there's always huge deadweight loss in the trade war, and there will be in this one too. We just we just don't know how big it's gonna get. I mean, we this may be as far as it goes. If I had to predict, I would argue that there's several more shoes to drop. But but we just don't know yet. This president is obviously very unpredictable and uh and and so he keeps us all guessing about what

the next move is gonna be. And is there something we could characterize at this point as a trite war if this is as far as it goes, um, I would actually, you know, and I'm among those, I'm among those who's been very reluctant to use that term. But to me, a trade war is tipped for had terror retaliation outside the rules of the trading system, and the US action here. This claim that this is based on national securities a bogus claim. It's a pretty clear violation

of the w t O rules. And in fact, the retaliation by our trading partners also falls outside w t O rules. They they are making up this story that this is in a national security move. It's a conventional safeguard, and therefore they are justified in you know, in the language of trading grom suspending equivalent concessions. So it's bogus on both sides. So to me, that really is trade

war territory. How is aluminum a national security concern? Well, I mean it can be right, and so can still be there important for for a lot of defense applications, for you know, for airplanes, for tanks, for other things. You can at times make an argument that these things are very important for national security. What what was very strange about the way this administration approached it is every time these analyzes have been done in the past, allies

were included as part of the defense industrial base. You know. The notion that Canada somehow would not be a reliable supplier of stealing illumined to the United States in time of war is ludicrous. And yet that is the interpretation that the Trump administration made in order to justify these actions. So I tend what we have here really is a disagreement over the approach the administration is taking because I find it very hard to disagree with the problems the

administration identifies. There are quite clearly substantial barriers to entry in foreign markets and heavily subsidized industries elsewhere. We do not have a level playing field. So Ted, let's talk more about the approach. You've taken issue with the approach. What should they be doing to get these barriers to entry to below with two level the playing field and

the way they desire. Well, if you look at where the biggest barriers to entry are there in China, and you know, this administration has picked trade fights with its closest allies instead of building some kind of coalition to go after the underlying problems in China. To the extent that there are barriers in other countries, ensure they are you know, there are issues with you know, dairy access in Canada. The Europeans have a higher auto tariff than

than we do. There are negotiating procedures to try to deal with those things under NAFTA into the w t O. The Europeans are willing to do a bilateral deal. They have been for a long time. So there are other ways to go after these problems. This administration's theory is that if they threaten and punish enough, other countries will

make bigger concessions than they would have otherwise. So far, with the exception of South Korea, which agreed to a significant cut in its steel exports the United States, that theory has proven to be a failure. Instead, other countries are hitting back. They're they're not knuckling under to this kind of pressure. Ted, thank you so much for this timely interview. I'll put out, folks and feature on Tom king books Failure to Adjust How Americans got left behind

in the global economy. And now, folks for your briefing and Deutsche Bank we are advantaged by Eliza Martin newsy Deutsche Bank stock is down a hundred and forty since Alisa started writing about Deutsche Bank more than a few years ago at Lisa Good Morning. What is different now versus the rationalizations of a year ago, or frankly, the rationalizations of Ackerman any number of years ago. What's different

right now? I think if we want to take this particular moment, in this particular marriage of bad news and compare it to the last time they were in a similar situation. You want to look at two numbers. One is the liquidity buffer, and that shows how much liquidity the bank is sitting on at the moment, and that is higher than it was in when it was a bigger bank. So that points to the bank being in

a much more comfortable position right now. Um. And the other metrics that investors might look at is the measure of financial strength, the common equity tier one way shot, and again that that number is significantly higher than it was in twenty sixteen when the bank was the midst of discussions about a large fine. You and I have read the articles of liquidity versus solvency, and this is

really what happens when trust is at risk. Are we at that point where with Deutsche Bank, their customers are saying, let's measure the liquidity, let's measure the solvency. We're not getting that sense at all at the moment. Clearly they You know, the bank has communicated that it has been a difficult quarter, um, and we've seen that for for

the last couple of years. The erosion of business that the bank has suffered, and not just in business's words for trenching, but beyond those just because you know, clients are not are not sure whether the bank is going to be around with the same remit in a in a couple of years, and that's led to them losing

some businesses they didn't want to lose. And I think what they will investors will be looking for quickly from Christians Saving the new CEO is that he's able to draw a line under that and then you know, put a stop to that erosion and and and see the bank growing in the businesses and wants to keep and the Liza, we should highlight what you've basically touched on is that the downgrade from standard and pause in the

last twenty four hours was not about liquidity. In fact, they highlighted that being okay, It was about execution risk of the overall strategy and significant execution risk. What can Christian Saving actually do to push away these concerns around the execution of his strategy. But one thing they'll be looking at is, you know how much you know the costs he can keep costs under control um and that

was one error that the previous management failed in. And they also want to see that you know, he's pushing through the job cuts that he's announced um, and that he's retrenching where he said he would. So it's really the execution and delivering on that execution, and that is other banks have shown when they've undertaken on similar structuring. Take for example, the u B S is something they have to prove every quarter to maintain investor support. So

we learned yesterday in several reports too. I believe that the bank, the US subsidiary of the bank, is on the f d i C Problem Bank List. How much of an issue is that if that is indeed true, Well, I think you know, you'd probably be looking at a couple of concerns. One is obviously the mark that leaves on the bank, so the pr associated with being on

that list, which obviously isn't god. And you've also got to think about potential restrictions on on on some of the decision making process that we understand might have been imposed on the bank. Um. But you know, having said that there's no there's no measuring offense yet that it's led to a particular reaction from clients as a result

of being on that list. And at the moment you'd have to say that morale Eliza must absolutely stink at the Bank, and I think Christian's Eving, the CEO of Dorge Bank, acknowledging that fact, how difficult is it working

inside Dorge Bank at the moment. It's actually quite quite interesting because unlike his predecessor to and Servings message hitherto had been morather positive, today's message was you know, it seems seemingly much more realistic in that his acknowledging that you know, staff is fed up with all the bad news um, and it was much more intelle like crime used to be in underscoring just how tough that situation is.

Right now, you're the board members Mark plat or Clee, Garrett Cox, Brittisy Hyder Rose, you're Game Matting's board, Douche Simon Eschelbach Schultz and a few others. What in God's

name are they doing well. I think what we've seen on the recent management reshuffle, which was, you know, rather tumultuous, is that, you know, the governance UM and then the government's under Paul last night and the chairman's leadership has been questioned by investors because so much management change of the course of the last three or four years, so

many strategy revamps. I mean, we're talking about three and three years have raised questions about you know exactly what you're asking, what you know, what has the board been doing? This has been brilliant at least a thing. You so much and thank you for your years of work on Italian, German and European banking as well. These are Martin Newsy with Bloomberg News this morning and now joining us William

Gross of Janice Henderson. Bill Gross, Let's let's get to the jobs report before we go on to other issues, including our trade policy of the nation. But this is Bill Gross, a make America Great Again jobs report? Does that just solidify rate increases? And can those rate increases be uniformly beneficial for America? Well? I think it solidifies certainly, June tom and that's not saying much because I was percent going in. But you know, but perhaps another one

if these types of numbers continue. I think the most important number to me was the average hourly earnings at point three and now annualized at the two point seven percent. And so, you know, are we making America great again? I guess from the standpoint of jobs and g d p M inflation moving higher in terms of wages and so you know, it's pretty much of a scenario where the Fed, the FED hawks basically think that they can move forward once twice, some say three times. I say

June is the last. Oh, that's an important and that's a distinctive feature. We'll get to that in a moment. But Bill Gross, what's so important here? This goes to your work on financial repression out years. We get a higher rate regime, fine, but with that higher inflation, can you see a higher real rate? Can you see higher real wages? Well, we have seen higher real rates actually, Tom, Although yields have come down in the last several weeks, you know, most of the increase has has been on

the real side. On the tips side, in terms of their yields, we have a ten year reel yield around seventy basis points um, a five year a little bit less, and so you know, real reels are not what they were, but they're better than zero. And it's not exactly the financial repression that we knew three or four years ago with interest rates closed to zero. But it's getting better still. I would say that we're in for a long period

of financial repression. As real yields that should be around two percent real or at seventy basis points, so that the average saver has been robbed by a percent or two a year. But I didn't want to take the opportunity to talk about your performance. It's been a week which many people have reported on your funds performance, and I think it's only right and only fair that we give you the opportunity and the right to respond to some of what has been criticism um of your strategy.

Can you just walk us through what did happen this week build and how you set up coming out of a side Well, you give me some time on this and and the strategy basically, which was the basis of your question, has been a strategy that has been short the German Bund and long U S treasuries. You know, the spread between the two is historically high. For instance, on on the tenure U S Treasury versus the tenure Bund, it's a two fifty basis points. It's never been at

that level. And for those that would cite the inflation differences, I would say, you know, in terms of the linker market for buns and the tips market for us on the five year basis, real yields on five year tips are two in twenty basis points difference two point two percent higher in the US and in Germany. And I would suggest it at some point, um, you know, this has got to reverse because that the two Germany and

the United States are equal credits. And what's the difference is simply the function between the ECB in terms of their monetary policy and the FED in terms of their monetary policy. And so um. You know, that was the basis for the uh, you know, the bad day and the bad trade, but certainly not the basis for some of the negative publicity from the New York Times that intertwined my financial trade with my divorce of six to

twelve months ago. I think it was outrageous and I can talk about that, but you probably talk about some other things. Well, I don't know, we can talk about that bill. We've got a lot of time here as well. I don't know. I'd rather talk about your stamp collection or the forty nine years. But this is so important, folks. I want to bring us in because you know, we we showed the articles the other day on Mr Gross and on Janice Henderson unconstrained took a hit here off Italy.

I want to go to the chart and John Farroll, I'm going to go to you, to go to Mr Gross. This is what Bill Gross is talking about. Folks, We're gonna use the Lumberg ramy come in here. This is the linkage of the US and Germany. And Mr Gross is looking at sustained higher US yields and at the same time this reduced German tenure yield And there's been a little bit of upset here, John. So that that gap John, between Germany US ten years is massive, is

the only way to describe it. A Bill Gross, we are not going to make you talk about a divorce live on Blombag TV and live on block Back Radio. So let's keep on the market. Excuse me, No, we have a few other divorces we could talk about, Mr. We could talk about a few of Tom's and that's for sure, we can watch yourself. But we could talk about the bund market. Let's talk about buns. The j g B market for such a long time was called the widow maker, and I just wonder whether the bund

market could become the same thing. What are your thoughts on that? Bill, Well, let's uh, let's let's talk about buns. Why are they so low and yield and why basically our half of the the buns in terms of the maturities all the way out to two thousand and twenty four, so we're going out six years, where are they still negative? Well, obviously for one reason, the e C b still is

succeedingly low in terms of their short rate. But secondly, and you bring up Italy, you know, I haven't really dealt in Italy or been short Italy or along Italy. That hasn't been the problem with the trade. But Italy affects German buons because ultimately, if Italy, from the standpoint of a political direction, you know it decides to leave the EU, then the consequences are severe and and Germany

if the EU breaks up. You know, back in the day when when Greece was a significant problem, there was talk about Germany leaving the EU because they didn't want to share the burden. And so if if Germany leaves the EU, then all of a sudden, their bonds, their buons become denominated in German marks and that makes them appreciate significantly. So Italy affects the German bund market basically because of the potential for Italy leaving the EU, and

that's what's happened in the past week or two. Bill Gross with us, said Jennie Henderson. We will return. We've got lots to talk about, as John correctly mentions, really interesting dynamics within the bond market that Mr Gross and off other bond managers have had to deal with. And of course the backdrop here is a really strong jobs report which good again reaffirms stronger dollar, d X y higher as well with yen one euro eight three, lifting yields in the bond market using the thirty year bond

as a proxy three point out six percent. We had a lot higher yields here not too long ago Bloomberg surveillance with William Gross of Janice Anderson. We continue John Brian Allen, Professor Kruger back with us. Alan, I know we had some problem with the connection. You are joining us from Europe, so we appreciate your time ahead of that payroll to release. Let's just talk about the president's tweet looking forward to seeing the employment numbers at eight

thirty this morning. It seems like a very innocent tweet. The problem is for market participants fully aware that the president has access to those numbers before their release. How unprecedented is it for the president to be talking about the payrolls and number the morning golf ahead of time. I can't remember another example, certainly president tweeting or even commenting on the job numbers. They're treated like state secrets. So surprising within the Professor Krueger is how this is

actually done? What do you do hand an envelope to the president and say here's one statistic? Does he get a full briefing? I mean, is there a procedure to this? Like the military guy that carries the bomb codes behind the president? How do you actually tell a president what

the jobs report will be? Excellent question? Uh. First of all, Tom, going back to the Nixon administration, the Office of Management the Budgets has procedures for how sensitive economic indicators are to be treated and UH they require that government administration officials did not comment on sensitive numbers until after one hour after they released. UH. Is dictates who can receive the numbers ahead of time and how they should be

UH transmitted. Um. Different presidents do things differently. I could tell you with President Obama on most Thursdays before the job release, I would head over to the Oval office and greets among the numbers. In person, I would also bring a one page memo with me which talked about h top line numbers and on job roots and the table survey, plummer rate before participation, wage growth, the key

UH component of the report. And of course if something else stood out and there was an issue with the weather or something like that, the metal would cover it. But normally I would spend tent to teen minutes reefing the President on the report, and if he was not in the White House, sometimes I would reach him by secure phone. I remember I called him once on Air Force one on a secure phone. I called him the night before the Democratic Convention before his speech at the

convention on the secure phone. UM and a member of Time where I just sent in a memo, didn't actually talk to him by phone or in person. I am seeing. Are we gotta be very careful, folks. We welcome all of you worldwide with Alan Krueger of Princeton University. These are delicate matters, and John and I and our team, Collin Tipton and others, we're really trying to keep this in order. Futures were up twelve, they're now fractually up thirteen, And you know, Alan, if I look, it'll log interday

chart of the two year yield. The fact is I have a move of a hundred and thirteen pips from two point four four ish up to two point four five one three, which I would suggest, Professor correlates with that word good, doesn't it. Well, you know, the reason why the O and B has its procedures is to prevent unnecessary politization of the numbers, which the nixt administration did, uh,

and to reduce unnecessary volatility. I think at this point, see how he said, like next to new it's very he doesn't because I would always I would also take the view this morning, Tom that it's very hard to infer price action off the back of this tweet. What I do think, this tweet writes, though, is a question as to whether that privileged access should ultimately exist. What

are the benefits of having that privilege access. Why should the president of any color, Republican, Democrat, whatever that political stripes might be, Alan, why should they have access to that data? Well, you know, that's an interesting question, John, and Um. We want the statical agencies to be independent, we want them to have credibility. I think it's very unfortunate that people have criticized UH, good regis statistics, made

unfounded allegations about them making up the numbers. Well, we've got another problem there. That's right where I was gonna go with my next question. Let's leave it there. With Alan Krueger, we thank him from Trent to Italy. Has been an extraordinary moment one morning in the history of economic analysis, economic statistics, in the communication of said statistics. We were honored with Alan Krueger with us earlier today, who was cordially scathing in his critique of the president

releasing UH an early tweet. UM Lawrence Summers, uh is well put out a tweet, UH said, uh quite simpler. Lawrence Summers put out a tweet the Washington Post as if during the clintoner Obama administrations there had been a statement from the President or anyone senior official in the morning before the employment report, it would have been a major scandal, with all sorts of investigations following on the

moments ago. Yeah, let me share this with you. Does a counterpoint to that White House Economic advisor Larry Cudlow says that President Trump, that's about the jobs report last night? Yeah, I get it, and he says it wasn't meant to send a signal. Here's the reality, folks, we deal with before we bring in Jason Furman. Here's the reality. You and I pim can't move markets. And I've been honor it's a very flattering I moved the Japanese yen ones. Great,

blah blah blah. We're not here to move the two year yield. The fact is I observed the two year yield with log convexity off of the tweet go up ever so slightly. That's our precursor to bringing in dr firm. And he's a former chairman of the President's Council of Economic Advisors. Jason, you were out first and you were scathing discuss the president's tweet. Here, Tom, I got these

numbers every month in advance. I was authorized to share them with the Chair of the Federal Reserve, the Treasury Secretary, the NBC director, and the President of the United States. I took that really, really seriously and worked hard to protect the integrity of the data. Um I can tell you that if President Obama had done this tweet, I would have had exactly the same action and conveyed it directly to him and everyone else in the White House that it was a major, major problem that he had

done it. UM, and I would hope that that's what's happening right now in the White House. I mean, I'm seeing Mr Cutler and CNBC as we speak, rationalizing this. And I'm sure that you know you've always been collegial with Dr hess at the present chairman of the president Council of Economic Advisors. What do they suggest to General Kelly or to the President so this doesn't happen again, I don't know, you know. In one would be reminding him of the seriousness and importance of this and telling

him to make sure it doesn't happen again. A second option would be not giving him the number. A third option to the DLS not giving the number to the White House. And the fourth that b LS might want to consider is doing what is done by government statistical agencies for other data, which is, when part of the data comes out in advance, they provide the full release immediately before the release time UM. And it's something that they might need to be prepared to do UM in

the event that that ever happens in the future. I think these are you know, these are all terrible options. I I don't think we should do any of them. I don't think we should be happy about doing any of them. But I think we have to, um, we

have to be seriously considering it. Uh. Well, you know, Mr Ferman, I'm wondering, just to play devil's advocate here, is it possible that you know in previous years, uh, that you know there were news conferences that were called suddenly for the non farm payroll report on Friday, and you have a news conference if that was good, but not a news conference if it was bad. I mean, hasn't this kind of already been telegraphed in one way or another? Is it all that different now in a

world of instant communications? Should we just expect this to happen? Nothing's gonna stay confidential. Oh, we actually took pains to avoid that. So if you know, if we would have gotten President Obama the number at five pm, but he was going to be out at five thirty and taking a question, we'd wait until after that to make sure it was I understand all that, but but I guess what I'm trying to get it, and this is not

to come down one way or the other. It's to recognize that the world is a very different place when no communication that is electronic is any longer confidential, and that we live in a world where instantaneous communication exists. But just the fact that I would suggesting this is away from Dr Furman's expertise. We've got a president who's

alone and by himself in the ramifications are here. The question, Jason Furman is if we've seen this, and yes, we saw the market move, I'm willing to say that now, folks, even though I wasn't saying it in real time. What do we do next month? Do we need to have a White House debate on this, Jason Furman? Or do we just say, oh, it's a president, that's the way

it is. I just think, you know, if we are in a world of instantaneous communication, that maybe the president shouldn't get this anymore because, um, you know, it makes me worried. I'm also worried by the way Tom sour President talks a lot of people late at night on his phone. President who likes to brag about things, I think without even being malicious, without intending to be conveying

insider information. Is he talking to his friends at night and telling them, hey, you know, great jobs number coming tomorrow. I don't have confidence that that's not happening. I really wish I could say I did, but I you know, I'm not sure. The question comes up and let us move on now. Is this will be a topic certainly within economics and Dame and Poletta has it on the cover of the Washington Post, So it's not just like

an inside Bloomberg story, folks. This has really reached the so of the zeitgeist of the nation right now as well. Dr Ferman, three point eight percent is a victory lap for anybody. Is our three percent unemployment the same as it was in the nineteen fifties? You know, we have dysfunctions in our labor market we didn't have in the nineteen fifties. We have a much lower participation rate for men than we had UM in the nineteen fifties. UM, we also have a hired one for women UM than

we had in the nineteen fifties. I think from a cyclical perspective though, assessing what the FED is doing, how we're doing in the recovery from the recession, UM, the unemployment rate is the right number to focus on, and that number tells a very positive story about our recovery. Tom Percelly earlier today noticed the vector of real wage growth actually rising. Do you agree read with that? And can we get to a positive and constructive real wage growth?

We're not there yet, but can we get there? It's going to be hard. UM. The biggest constraints on our real wage growth is our lack of productivity growth. You know, if you look at the difference between what we've seen in real wage growth of the last couple of years and what we saw in real wage growth in es UM, that difference almost entirely explained by we had much faster productivity than than now. So I think a tight labor market will help. I'm in favor of a tight labor market. UM,

it's one of the dials that we have. But until we get more innovation, productivity, capital investment in our economy, UM, we can't have more sustainable wage growth. Do you believe that there's going to be an acceleration and inflation. We're already seeing some firming up of inflation, and UM, I would expect to see more firming up of inflation. Could we have a two and a half percent rate? UM? At some point over the next year. Absolutely, because that

I'm worried very very much. UM, not at all. The feed has said their target is symmetric. I no, I agree it should be symmetric, and so you know, after a lot of years below two, you know, some years of a bit about two. UM, I think that would be just fine. Jason Firman, thank you so much. He's a former chairman of the President's Council. Are you can have advisors? Greatly appreciate his attendance on short notice this morning.

Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keane before the podcast. You can always catch us worldwide. I'm Bloomberg Radio.