Surveillance: U.S. Jobs Report With Kudlow

to say. On Bloomberg TV and Bloomberg Radio. We're joined by Larry Cardlo, National Economic Council Director Larry fantastic to catch up with you. Sir. You're looking well, let's get straight to it. Payrolls looking good. What does that payrolls report mean for the talks that you guys are having on Capitol Hill on the next steps of the fiscal policy. Well, look, I think the continued rise in payrolls and and bear in mind, Jonathan, you know this is a hotspot par

Row report. This is July twining it to eighteen, and the surging hotspots in the South and West and some other places began in the back end of June and lasted through July. You know, there was some pullback of reopenings and so forth, and yet, and yet we still got one point eight million with a big decline, almost a full percentage point drop in the unemployment rate, which will move to single digits easily in the summer and fall. So I think that's a very key point just in

terms of the economy. Now, how that reacts, how that reflects on the talks. The talks are rather stalemated right now. It was a better tone earlier this week, but through last evening there hadn't been any breakthroughs. That's unfortunate. However, the President has said several times in the last forty eight hours, and I can attest to it because I'm

working on it. He's going to use executive orders, administrative discretion, the full powers of the fellow government in order to get certain priorities through, for example, a payroll tax cut, which will incentivize work returning to work, uh and also give a bonus to those stalwarts who stayed on the job. We'd like to reform unemployment. We'd like to put in benefits for reemployment or some kind of business retention credits. We want to make sure the eviction moratorium continues a pace.

We think the executive branch can do that. We think he has the authority to do that. We are exploring and drafting documents as you and I speak this morning, and people should take it very, very seriously. If the Democrats side don't want to get it done certain essentials, we will get it done to make sure that folks go back to work, to make sure that kids can go back to school, and to make sure that this V shaped recovery continues well through this year. Well, Arry,

I'll stay away from the V shape predictions. Let's stick to policy and what you kind suprupt to with the money. For a threat to be credible, we have to test the credibility of that threat. Now I'm trying to understand if you can do this, why haven't you done it? If you can do something with executive powers, what are you waiting for? Well, stay tuned. I mean, look, we've been in a negotiation that has to come first. I'll

say is stay tuned. The President, I'm sure we'll be weighing in with his own views as the day goes on. Would you have a deadline, Larry, is at the end of the day the talk scheduled for today. If they're not successful, I need some color hit do you have talk scheduled for today on Capitol Hill. I'm sure there will be talks, whether formally or informally. I have no doubt about that. Uh, Chief Mark Meadows. So the other day, if we didn't get it done by Friday, we may

not get it done at all. Um, I think he's just being realistic about that. Secretary Manuchtion is in their pitching away. But you know a lot of the other teams asks are just not realistic. They lack common sense and um a lot of it. You know, probably as much as a trillion dollars was obligated that unspent through the March Cares Act. So we've been able to repurpose that. So look, we're you know, there's a process here understud

sesses negotiations. But the President is said with great clarity in the last two days, if need be, he is more than happy. Indeed, I think he would like to use executive authority to get things done. Look, we stand for lower taxes and rollback of regulations and fair loves. There our principles I'm going to get He is not going to give that back because of the Calcagant House

of Representatives. Executive authority, executive authority. If you don't have a successful breakthrough by the end of today, are you going to do it or not? Are we're going to carry on having this conversation through to next week? Well, Jonathan, we might. You know, I'm always willing to talk to you if you want to talk next week. I'd love to talk next week. I don't want to second guess

what the President is going to do. Uh, he's a very good communicator, and you can be assured he will be out and about today and probably tomorrow talking about this. It will beyond his time. I'm not here to announce anything. It's up to him. Well, it's not in our time, is it. And to be fair, it's not on the presidency either, Larry, because the real deadline was last week

when the enhanced unemployment benefits expired. This south impost Friday deadline was about politicians too scared to go home and face the embarrassment of not getting a deal done on Capitol Hill. So we can talk about the scope for compromising now. So let's do that. As far as I understand, the Republicans in the White House has offered four hundred dollars per week. It enhanced unemployment benefits. Democrats are a six hundred. They're pushing back. As far as I understand,

you're offering two hundred billion for state aid. The Democrats want a trilliant they're pushing back. The spread right now is still two trillion dollars. Where's the scope for compromise? Larry Well, Jonathan, much as I might like to, um, I'm really not here this morning to negotiate with you. All right, I'm gonna let the negotiators fully understood, but send a message to the American You guys are going to do the right thing. And while you're willing to

get something done instead of nothing. Uh well, it looks that something has to be good. It has to be smart, it has to be efficient, and it has to have job and economic growth incentives. That's something. And again, the President has a clear set of growth principles and he is more than willing to help where help is necessary. Throughout the economy, there's still hardship. You know, good jobs

numbers Today we have a lot of numbers. I s m s are booming, inventories are falling, car sales are surging. That tells you this is a self sustaining recovery. We want to keep it that way. His message is gonna be lower taxes, smart spending, and uh continued deregulation as well as fair trade deals. So that's his principles, and we could use a lot of executive authority. As I said, it's being drafted right now. I'm not going to negotiate here. I'm just saying, if you just want to, that's what

I want to understand. The balance of risk is is one of those amorphous phrases about let me put it better way, then what's the biggest risk for you? Now? The risk? Please let me finish my sense. I'm just saying, if if the Congress does not act, if there's no deal, and right now it doesn't look that great, then the president will take his own actions. The solution here is to come to a pro growth, the common sense, pragmatic compromise.

Thus far that has been elusive, And in that case, the president, who is a great leader and makes good on his promises, will exercise his leadership and all of his executive federal authorities. You can count on that. You can take that to the bank. The one thing you didn't though, Larry, was what you guys would do with executive powers on state aid. I've spoken to New York State. They've told me, if they don't get the aid, the

austerity begins immediately. Now, you're an economisty, it's got way more experience than Night on Wall Street going back decades. You know that the federal government is the only one right now that cann act countercyclically. States do not have that benefit. They do not have that option. And you also know if they don't get that aid, the austerity

starts immediately. So as the administration of the government, we've got to understand what's the federal strategy when the state level austerity kicks in because we can't find an agreement on state aid. You know, it's hard to say, Jonathan, that the Cares Bill and other bills in the last three or four months is austerity. I mean, we've put out right three and a half trillion dollars of fiscal

assistance in many forms. The Federal Reserve all in has put out over seven trillion dollars through the any supply and their lending facilities. This is not austerity. I mean, that's what from the federal government. Larry, I'm not suggesting it will be I'm saying from states, they will have to come the states. The states, I will say this because of the pandemic contraction. The income statements of state and local governments and the federal government have deteriorated absolutely. Now,

what is the solution. Some of the solution is an aid. Some of the solution is economic growth, where the revenues will start pouring in and more people go back to work and they pay taxes and so do businesses. We have given the states, through prior deals, literally hundreds and hundreds of billions of dollars. Now I don't want to second guess. I'm not here to negotiate. We are looking at all of these asks from our friends across the aisle.

I know the President is especially interested in make be sure there are sufficient resources to get the kids back to school. If we apply the guidelines of distancing and masking and testing and good hygiene, the kids can get back to school. If the school need more equipment, if there's COVID related expenses, I think there's a chance to President would be happy to pitch in. But the bill that we have been given from the other team goes way, way way beyond that, and there's a lot of Democrat

asks that simply don't make sense. Uh, certainly not in the present context, and so we have to separate that out. It's not so simple to just say there's fiscal austerity in the states. Hundreds and hundreds of billions trillions of dollars have now passed from federal to states. So let's try to be smart and efficient, and let's target again. I want to target people getting back to work, target kids going back to school. I want to target and

o woymen incentives, not unemploying incentives. I want to target reemployment incentives. I want to make sure that people do not get evicted from their apartments or their homes. These are things we may be able to do through executive authority because the Congress can seem to get together for a Bible. Let's let's see if it happen to get it done, grows, grows, schools, jobs, kids. Let me make this real simple, and we will do whatever federal levels

we have at our disposal. That is the President's pledge, and you'll hear plenty from him. Larry coming hours and days I've set across from you. I know you're a good man. I know that you want the best for the American people. I've also watched what it's like to watch your dad come home because the business has got to close. I've watched what happened when the house has to be sold and your family has got to move in,

and moving with the relevant with a relative. I know that feels like the economic pain that people are going through in this country at the moment. And Larry, what really upsets me, and I think it's borderline embarrassing, is that this equity market was lower. I think you and i'd have a different conversation, wouldn't we There'd be much more urgency. And what I don't understand is the lack of urgency right now, Larry, I just don't understand it. If you can do these things to make the lives

of people better, why weren't they done yesterday? Jonathan, let me say this. Look, Uh, I'm a bleeding hard to Okay, I'm a Jack Kemp bleading hard conservative on the supply side. You can't measure these things and just dollars spent. I mean, we know this, we know this. You put in three and a half trillion dollars already. The other team wants another three or four trillion dollars. Is that the answer? There are other better targeted ways. I want everybody to

go back to work. You know, we've created over nine million jobs. We're clawed back about of the terrible laws from the pandemic to Larry if you wanted to go and eat with me, to like we can't even inside a restaurant in New York City. Come on, you gotta the only ask I have right now? Sure you let me finish my car. You had a little you had a little sermon at and I enjoyed it very much. And I respectfully that wasn't a sermon. That was meeting person.

And you understand, Please, can are many other ways to deal with these problems. Okay, throwing money at them is not only the answer. You have to create economic growth incentives. But look, we are willing to spend money. I mean, that's not the point. The President himself has endorsed another round of direct mail checks. He has endorsed that. He

has also endorsed continued unemployment assistance. The question is what is the overall policy to make sure that it makes sense that there are incentives to go back to work. And we have a very full fledged plan to do exactly that. We want to reward people and the businesses that work for to go back to work. We will extend the p P P. That is part of our package. Again, I'm not going to negotiate, but that's in our mix. We have retention credits for new jobs, we have benefits

for reemployment. We want to cut the payroll tax, which would give existing workers a tremendous boosting income. I think with even in five months it would still be twelve dollars a year or more. All Right, people who are not working can go back to work and realize they're after tax wage is higher than the unemployment. That's a good thing. So we gotta be smart. It's not just a question. You know, I'm not gonna seed the ground of compassion. We are all compassion, We all want everybody.

We all know people, families, cousins, kids, neighbors who have been damaged by this terrible pandemic. Correction, Uh, that's we know that. And we've been working on this now for five months at warp speed. We are even at the point now where six or seven companies aided by federal money, large chunks of it, are in phase three of vaccination testing. Which is a huge part of the story. And as far as getting the kids back to school, in addition to the masking and the distancing and the hygiene and

so forth, we are willing. We have it in our negotiating position, a good deal of money, well over a hundred billion dollars to happen got to school. So we're trying to target things, but we're not going to allow a transformation of the economy whereby the government and its planners run everything, healthcare, energy, you name. We are not going to go down that road. We've tried that in the past and it does not work. You have to be smart. You have to focus on the incentive model

of growth, and then we will see the successes. We've had plenty of economic comebacks in this country. Throwing money at every problem of them is not the best course of action. Let's be smart, let's be efficient, and let's provide incentives. And again, if we can't get a compromise the way we did last March, then the President will act with his own executive powers. And let me tell you it's not a bluff funny question, because I'm gonna get in trouble with the White House for keeping you

too long, Glarry. What am I going to see first executive action on all the things you describe or sanctions on Carrie Lamb Jonathan, those are completely disconnected. I'm not going to respond to that to expect annotment on that a little bit later. Jonathan, I'm not here to talk about those. We have already UH done an executive order with respect to UM sanctions on Hong Kong and China for their many misdeeds, not only taking away the freedom

of Hong Kong and breaking a fifty year deal. But Chinese have to be held accountable on their bad behavior during the pandemic. They're bad human rights records, what they're doing militarily in the China in the South China Sea. Uh. And we are putting out as you probably know, we are going to protect American investors with a much tougher approach with respect to the auditing of Chinese public companies and the Public Accounting Board and the SEC. We had

a treasury or we're a financial working group. We just published this stuff. We're gonna give one year to shape up on the audits and on the working papers behind the audits to see if they deserve a listing on American exchanges. We have to protect our own investors, we have to protect our national security. Those are tough, gritty issues, and we're making progress. Those are separate issues, however, from

these fiscal negotiations. Larry, I know you remand with a good hop and I appreciate your time every First Friday whenever we get the pay rolls report. I'm ready to a good sport. Thanks for you wanting us, and I hope for the best a little bit like to as well. Larry caldlaf nationally Canomy Council's director. Right now linking much of this report back into the financial Marcus Jeffrey Rosenberg joins US portfolio manager of the Systematic Multi Strategy Fund. Jeff,

let's get systematic right now. And that I see higher yields. Is it a modest adjustment or can you say that we will pull back from those lower nominal yields of the last number of days. I think it's a really modest adjustment, Tom, and I think earlier you really nailed it when you linked the report not to the implications for monetary policy, but to the implications for fiscal policy. So when you're looking at the bond market, and the

yield reaction. You really got to go out a lot of decimal points to see a reaction to this report, because this isn't really about influencing monetary policy, because monetary policy has been very clear that it is going to be highly accommodated, that they're going back to trying to get the economy to run hot. So you needed to have a very very big number here, and even if you had a big number, I'm not sure that would

have changed the monetary policy outlook. This is much more about influencing the market direction is taking its direction from fiscal policy and and to what you talked about earlier. You know, I think this is a little bit more of a positive report that makes it a little bit harder to argue for the really big project, the really big program, Well we'll see where that plays out, but it is much more about fiscal policy. We welcome all

of you on Bloomberg Radio, Bloomberg Television. It is Bloomberg Surveillance. It's about conversation. Jeffrey Rosenberg with us with black Rock. David blanche Flower of Dartmouth College will join us here. Really looking forward to talking to blanch Flower about the quality of these jobs. Lisa, Yeah, I gotta say, Jeff, you were talking about the idea of Washington, d C And the need for fiscal stimulus and time. We've been

talking about that all morning. But Jeff, right now, it seems like there isn't a ton of urgency based in the fact that Republicans are going home and there might be some sort of executive order. This report isn't going to light of fire. Is the market to sanguine about the idea of another round of fiscal support? Well, I think there's a lot of uncertainty now, and I think if anything, you look at the report and it adds to that uncertainty. You know, the market is expecting some

kind of compromise, some kind of deal. Perhaps they were leaning towards the higher end. I think that's going to challenge this. I think eventually the market is expecting some kind of next round program to come through. And today's payroll report, you know, it still gives a bit of ammunition. You know, we talked about the ten point to percent unemployment rate. You know, we're making progress, but it also highlights just the significant amount of damage that has been

done and continues to impact people. That is the argument for another program here, how do you use the economic data that we get to decide how to trade? So, you know, it's been a big challenge because the economic data is just so dramatic. Let's just take the payroll report itself here. You know, we came in kind of pretty close to the expectations, but the range of those expectations is greater than than anything you've seen in any time.

That the inflows and outflows are orders of magnitude greater, and the variability around the expectations ranged from you know, minus six over three million. So what it means is that when you look at economic data relative you know, what we what we emphasize is the surprise. Well, what what the uncertainty means is it's much harder to gauge

what is that surprise level? And so your your impact of any economic data relative to expectations because you don't know how to anchor those expectations all have to be very dampened relative to two kind of more normal periods, Jeff. Within the mathematics of all this is a point where you shift from a yield study to a price study.

And certainly in the tension this week, I've seen that are we now at a point where people are just buying full faith and credit just because they're buying it and they'll take it at any price, and price matters up, Up we go in the bid well in terms of the safe assets. When you talk about you know, full faith and credit is really about treasuries and treasury yields, you know, it's it's about monetary policy and monetary policy expectations.

We we've really changed the functioning of fixed income markets. How we set prices is a lot less about you know, what do these economic numbers mean about expected inflation and

short term movements. It's much more first about what does it mean to the policy response, because the policy today is moving towards a contemplation of full outright control called yield curve control of the bond market, and so it's really much more about our assessment of what does this do about the change in policy, less about the economic data a directly impacting trading, and so it's it's a very different kind of environment for setting of interest rates

by the bond market. Is that where are you on a call on the bonds? I mean you're running a systematic portfolio and there's the Carnegie Mellon matthewist to it. I get all that, but what is your call on the full faith and credit market, Jeff Well, the call is that the policy is very clear, and the policy is maintain market fund functioning and then pivoting towards accommodation. And so what that means is we're going to have

very low interest rates for a very long time. Zero interest rate policy is going to be with us for a very long time. I don't think we're going to go and see negative interest rates, but the control of the long term interest rates is very much part of

the policy. And so you're looking at a period of very low interest rates front and interest rates basically pegged and functioning like a surrogate for cash, and long term interest rates really under of the thumb of monetary policy until we can start to see some real progress on inflation. And until then it's it's a it's a low and stable interest rate environment. If you just joined us. We're speaking with Jeff Rosenberg of black Rock following a better

than expected jobs report. Initially there was a pop inequity futures. There is a roll over at this point as people dig a little bit further, a little bit deeper down into the negative and tenure yields initially popped up, but are little change, just a tiny bit. Jeff, talking about inflation, we've been really focused on real rates in the United States at negative one point one percent all time lows. Question,

how low can they go? What's the answer? Well, you know, a lot of the movement in the real interest rates is pricing in a recovery in inflation and inflation expectations, while at the same time, the FED is basically pegging nominal interest rates, you know, so we we could see that move a little bit more, but it's very unlikely that we're going to see significant increases in inflation exp dictations absent significant increases in actual or perceived inflation pressures,

and we're very far away from that. The COVID shock is a massive disinflationary shock, and so what we're seeing in terms of those negative real interest rates is really a recovery off of those extremes and a little bit fueled by some of the short term recovery in terms of commodity prices. But we are still in a very low interest, low inflationary environment, and until we break that environment, which I don't think it's happening anytime. In the short run,

We're not going to see significant changes there. Jeffrey Rosenberg, thank you so much. With black Rock. Right now we go to Hanover, New Hampshire. David blanch Flower, is it with Dartmouth College. David blanch Flower is definitive on wages. David blanch Flower is definitive on the nuances of our employment and are underemployment as well? Danny blanch Flower. Wonderful to have you with us today. How underemployed is America? Well, it certainly is, although we've seen a decline in that

in the data now. I mean, the reality is that the unemployment numbers have really come down. Under employment, which is reflected in U six has come down a little bit. But what we're going to see is we just don't have very great measures of that. So the question is if people go back to work, are they going to get the same hours and the same income as they had in the past, or are they going to have less hours and less income? And that looks to be

the thing we're going to need to look at. You know, if you're a restaurant work over, the restaurant opens, are you going to get the same amount of work as you had in the past, So I think the underemployment story is something we need to watch. But this is definitively a good a good report better than probably I expected, on every on every component, so that establishment that data is good. The household data is good, employment, population rates up,

the label force participations up. So so these are good numbers. But the question obviously is what and state by state and what happens down the road when and if the stimulus and payments run out Within your study at the Bank of England, and granted the United Kingdom is a different economy, what is the risk of a one month of a better report? Can you extrapolate it out or do you just simply have to wait for the first week of September. Well, I think this is this is

unprecedented territory. We've never seen anything, any dip of the kind that we saw, not even so much necessarily the scale of the dip, but the speed. So there's really no precedent. And Mike was talking about what happens state by state, We yet to know that. But I think I do think you're right that what we have to very carefully do is watch things month by month um

and see where we go. I mean, I have nothing in the past really to help me with this, but this is this is encouraging and the government is going to be able to say, look, you know, recovery, recovery is coming. The question is, you know, are we headed towards a cliff? That's the question. We don't know, and we're going to have to watch and wait and see if there is a second Is there a second round of the virus? Is there a second round of layoffs from firms? I mean, we're still at the point of

ten unemployment rate plus, which people haven't talked about. Plus another point for that misclassification this month. It's not as big as it was, but my reading is that you had another percentage point because people wrongly were classified as as employed was really they were unemployed. Denny. One idea of yours that I absolutely love is this idea of

walk about economics. This idea that you get away from the charts, you get away from the formulas, and you walk around and you take a look at how it feels and what it looks like. And you said back in two thousand and eight, if policymakers have been able to do that, they would have come up with a very different result. Right now, what is walk about economics telling you? The first thing walk about Economics tells you is that we're not doing much walking about. I call

it now the economics are walking about the Internet. Right. But I think the answer is that we're hearing I mean, it's really important to get too deep within the numbers. We are hearing recovery, but actually we're hearing slowing coming in big states like Arizona and Texas and Florida. And the question is does our sense of what's happening the reports the Pulse survey that the census is doing and that report was rather more weak if you like them this, So I think we have to look and do what

Blumberg is fantastic at. Talk to people, talk to people on the ground, talk to employers, and say to them what's going on. I mean, I've heard stories saying big firms are doing okay, small firms are doing okay. The story is about mid sized firms. How are they doing? So I think that that back to back to Tom's question, do we know what's going on the answer is we don't. But the right thing to do listen Bloomer, because oh

my goodness, we did not pay him. I promised a job advert But but it's really very good at this And certainly in two thousand and eight, if people have done the economics are walking about, they would have seen the recession much more than economists who were playing with their silly models are missed it entirely. But it was absolutely clear when you talk to employers and you talked to people, they saw this thing coming. So I think we have to be very mindful of using that market

intelligence to tell us where we're going. And this report I think is a little more positive than the market intelligences. But let's see where we go. And there's a question also of something Tom keeps talking about rightly so, which is the income inequality. And initially during the pandemic, people were saying this was going to be exacerbated dramatically by the COVID era. Do we still feel that way based on the fact that a lot of the lower wage

jobs are coming back as the economy comes back online. Well, we are. I mean, we we're seeing across the board change ages and I was just looking at this, but but we're certainly still seeing very much higher rates for U African Americans, for Hispanics, for less less less educated. First two points. First of all those folks are the ones who also disproportionately have this error, which means you

top the numbers up. There are also the people who disproportionately are impacted by by under employment, and you see this big inequality. But one story I think we all have to get to is in a period of lockdown where people have been temporarily laid off and furloughed, what about young people? What about the youngsters who left school in June's going to hire those and they're missing out on these numbers. We're going to start to see them

coming through. But the story about minority unemployment, less skilled on what are those kids going to be doing? And general? In some sense, I think the social unrest we've seen is a function of young people have nothing to do. And literally a new history is from Blanchard in summers there as well, Danny, I want to take the time here and rip up the script and I want to

talk to you. I I've had the privileged folks of standing with Mr Blanche Flower in his lecture halls at Dartmouth and Warble and gaily to the assembled Danny does virtual learning work not only at the Dartmouth level but down to kindergarten. Do you think this nation can actually virtually teach art students? Well, I can talk to the classes that I taught in the in the spring, and I'm about to go and teach again. I think they went extremely well. We put a lot of resources into it. Um.

I think it was very really pretty successful. I'm not so sure about how you're going to deal with eight year olds and ten year olds, UM, But I think on the model for the university student, I think has changed the world. It's changed the campus experience. I mean, it was very active. And I've got a class of fifty fifty students who are coming to in the in the full and I'm going to teach them about you know what, what Bloomberg does the economics is walking about

and we can do it pretty well. And there's there's people in China, there's people in Argentina. So I think that it's pretty good. But it's it goes because it's been successful. It's going to challenge this higher education model. The question is down down the line, what are you gonna do for for the young ones, and I think that's a greater challenge. David was they need more hand holding.

But I think our students, certainly at the Darmoud level, we've done pretty down well, I think, and it's gone well. Now we've got to leave it there. David Blanchwards, thank you so much for Darmouth's perspective, and of course on this historic job stake, Tiffany wildly demands that you only come on at so she is a full hour to digest what has been row Tifficty. In the hour that you've had since the jobs report out at PIMCO, what could you slice? What can you dice here? What is

the observation you have? Well, thanks for having me on, Tom. I'm not sure. I'm not sure about the demands, but um, you know, I think in terms of the report today, I mean, clearly it was a it was a stronger than expected report. Um, but I think we have to keep in mind here that the state is lagging in terms of when it says that July report, it really means halfway through July because that's when the survey has taken. So it's really capturing halfway through June to halfway through July.

And there was still some momentum in the labor market at that time. But what we've seen, you know, we look at a lot of what we call higher frequency data now because this virus crisis has been so fast moving, and what we see across a range of that data is that momentum has slowed, you know, quite dramatically flattened out, quite dramatically. Um. You know, in July as the whole month.

So I think in August you're gonna see, um, you're gonna see even more slowly you know, report for for jobs most sort of inside baseball, but I'll go there. The next report obviously will be what it will be. But are you suggesting we could see substantial revisions to this good report? Um? I mean, certainly revisions are are possible. Um. You know, I think I think it's you know, we did see in the high frequency data though there was

still some momentum in jobs at the end of June. Um. You know, maybe we could have seen a little bit of noise as a result of of the uh the July fourth holiday. Um. But I think in August what's clear is that labor market momentum has has has very much slowed. I mean, we could see a you know,

kind of net zero job gains there, you know. But I think maybe what's more important about this report, unfortunately, is about how it impacts negotiations for the ongo you know, for the stimulus bill that we could see at a Washington you know. And although you know, we currently expect you know, around one and a half to two trillion bill, I certainly think that this report was stronger probably at a minimum, gives those thirty or so Republicans who kind of opposed any deal it to them sort of a

stronger position to stand on, you know. But again, it's we have to revert as a lagging report, so it doesn't change the fact that things have slowed down even since uh this data was captured. So given that it's a lagging report, Tiffany, and given that we have a pretty good feel when we look at the high frequency data that the momentum is slowing across the economy, including the jobs market. Um, what do you think this fiscal stimulus bill needs to include? Does it need to include

you know, state and look, municipal support. Um? I mean so yeah, certainly, um so many state and you know, virtually all states require uh you know, balanced budgets, so they're not like the federal government where they can issue debt to fund to deficit. So all of that means that the massive hole that's been blown in state budgets as a result of lower revenues because businesses are closed, you know, that just means that they have to reduce spending.

And what do states reduce spending on. It's things like services, so education, um, you know, a garbage pickup, fire and leaves and things like that. So ultimately, unless uh, you know, the government, the federal government steps in with some funding for states, you know, there they are going to have to slash those budgets. That's going to be a drag on the broader economy, uh you know, and so of

course we want to see that. I think the other thing that's really important about you know, getting in this bill is a continuation of the unemployment that the kind of booster, if you will, emergency unemployment insurance benefits which were six hundred dollars a week. You know, they probably do go down a little bit, but I think it's really important that we see those that we're already seeing a lapse in coverage of that six D six hundred dollars a week because it expired at the end of July.

So it'll be really interesting to see how consumers, you know, start to react with their spending not getting that extra six dollars a week. What what would be the jump if August colors like you're saying, what would be the jump of the unemployment rate? Are we talking about, you know, nuancing tenths of a percentage point? Are you talking, antiffany about a real reversal to a more grim unemployment rate? You know now that the high frequency of data that

we look at is again a slowing of momentum. So it's not that it's employment is outright falling yet at least we're not seeing that. We're basically seeing kind of flat I think. Yeah, So if you if you think about just the change of employment, I think it very well could be something closer to flat um. And then that would suggest, you know, nuances in the participation rate or whatever the unemployment. This is well said, brilliant, maybe the smartest thing I've heard all the morning from a

lot of smart people. Flat isn't acceptable, right, Yeah, I mean we need to see continued improvement. I mean, even with this report it was better than many expected, but we've only seen of the jobs lost in August and April recouped, and that's not you know, and we're the unemployment rate right now is still above where you know where kind of the highest that it got after the two thousand eight financial crisis. So ultimately, we want to road to recovery here and we're we're not We're still

not close to being fully recovered. Um, you know, so

at this point, flat is not acceptable. All right, So Tiffany, as you put all this into your Pimpco economic model, give us a sense of how you think the economy is gonna kind of, you know, kind of recover in terms of you know, the remainder this year going into well, I mean, ultimately, we had always expected, you know, kind of a boost of activity right as the economy reopened, and we got that, and that was actually stronger than we had hoped because of the fiscal stimulus measures that

really amped that up. And after that we thought, you know, things will flatten off, but we still will get growth. It will be a longer recovery. Um. You know, I

think that broad baseline is still intact. I think one thing that is good news though, is because we've you know, seen some flattening out or um, you know, even a little bit more weakness and the high frequency data, you know, I think that has moved our congressional leaders to provide more stimulus for I'm Washington and from the federal government.

The question is the timing on that, so that will help growth in the fourth quarter, I think, um, you know, but we continue to expect it to see a long road from here with you know, the unemployment rate not getting back to kind of where we pre crisis levels, to where we were, you know, until I think at the early use at the earliest, maybe even a little bit after that. So it's still a long road unfortunately. Tiffany, thank you so much. Tiffany welding with us week him.

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 Keene before the podcast. You can always catch us worldwide. I'm Bloomberg Radio.