Bloomberg Audio Studios, podcasts, radio news. Claudia Sam of New Century Advisory joins us now to give us some insight. Claudia, thank you so much for being with us, and happy New Year. What do you make of this Matt's point that we've seen unemployment claims basically at the same place for almost a.
Year, right, so you know, as you said, we're not seeing signs of deterioration in the labor market, like the layoffs have not picked up in a way that was the downside risk that the FED has been very acute to and we haven't seen that. So we're not seeing the bad news story. Frankly, we still need to see some good news in the labor market so the claims don't get at the piece. It's really been sticky, and
that's a the hiring rate has been quite low. So yes, good news on the continuing claims for this week, but they aren't still quite elevated, and so we need a little bit more of the good news. You know, the fact that the layoffs have not shown up despite you know a lot of layoff announcements, like we're not seeing them in terms of actual layoffs, and that's good news.
Quaoudia, do you take anything from the idea that continuing claims came in to some of the lowest levels that we've seen going back about a month, not significant, and they are elevated, as you've said, But does that indicate that people are actually finding work.
It's possible, you know, these are while the claims data are very timely. I mean we get a quick read, we have to be careful around the turn of the year. It's just really tricky with the holidays and you know, just reading these data is much harder at the turn of the year than say, in the middle of the year,
but it is. It is potentially a good sign and what we're looking for are signs of more stability in the labor market, signs that those the hiring rates start to pick off a pickup off their very low levels. So this is encouraging, but this doesn't make the case yet, right, we need to see it in the hiring data.
Claudia, what what does the labor market look like with the stop and immigration, no new people coming to the US, and the demographics fewer and fewer people having babies or people having fewer babies. It would seem to me that if you have the economy growing and we do, and corporate revenue and profits growing as we do.
That.
You know, lack of supply in the labor pool would mean more demand, but it doesn't look like that, as you point out.
Right, well, you know, there are all kinds of timing issues, right, it is quite unusual. We saw, you know, in the third quarter GDP really you know, moved up higher, and so did the unemployment rate, right in a much less dramatic fashion, but it is moving higher. And so you know, you have the ingredients for the good news story of the labor market going into twenty twenty six. Consumers are still out there spending. You've still got the business investment.
You know, companies will need as they expand to draw on their labor force. And we should see and I think this is the optimism that you can kind of see in the minutes from the fed's December meeting. There's an outlook there that these pieces should come together and we should have hiring pickup. It doesn't necessarily need to pick up to levels that we saw, you know, two three years ago, when immigration was much stronger, but we are at low levels that we have seen wage growth
slow sum we've seen the unemployment rate tick up. That is a sign of the demand for workers is just lagging behind the supply.
Diane Swank pointed out a couple of months ago that cutting rates the FED, lowering rates isn't going to help consumers in the lower quintile, you know, because subprime rates don't come down with the front end of the curve. But I wonder if it does help the labor market. You know, we've lost I think seventy thousand manufacturing jobs this year. We've got a ton of incentives in the one big beautiful Bill to I guess bring those back,
and tariffs are spill to do that too. If those things don't work, does cutting rates help to bring back manufacturing jobs?
Well, cutting rates is supportive of both households and businesses and expansion, I mean, and particularly say smaller businesses that you know, the interest rates that they borrow with that's a key, you know, calculus and their decision to expand.
And as they expand, they can bring on more workers. So, you know, I don't you know, we shouldn't have the view that the FED has the magic wand here on the economy and it's going to on its own revive the labor market, but the FED pulling restriction out of the economy that does it helps it moves in the right direction. And again it's a piece of the puzzle. There's also more physical support coming early in the year.
And it does appear that uncertainty, just broadly about policy and maybe some of technological change has weighed on labor market this year. And as that dissipates, that's also another ingredient to kind of get hiring going again.
Uncertainty has also been pretty strong because we haven't known how much we can trust the data, whether we're going to ben get the data. And even in this latest batch of numbers or one terminal user points out that seasonal adjustment, if you strip that out, you actually see initial job as claims that are higher than the previous week. So what do you make of these types of seasonal adjustments, of these types of calculations that have raised more questions than given answers.
Right well, these issues with seasonal adjustment, these are the mainstay of trying to read macroeconomic data. Right Like, as I said around the turn of the year, claims data are tough from Thanksgiving into early in the year is just that that's just a hard, hard read, and so you do a lot of averaging kind of look at the basic trend, and the basic trend looks pretty good, right, So don't make too much out of one week. But yes,
these are our regular issues. Unfortunately, we're also dealing with, you know, the backlog of the government shutdown and data collection having been very disrupted, and even as we're getting data and the claims data, this is not apply to them, but saying like the CPI or the labor market data, you know, there's these shutdown casts a long shadow, like we have distorted data in a way that we don't
typically have distortions. We don't typically lose a month of data and then try and pick up the pieces afterwards. So it does make it more complicated, but you know, thankfully there's a lot of information out there. You just kind of, you know, pull it all in and get a sense of what's going on. And really the tenor of the data in general is pretty good, I mean solid. Like I said, we still need labor market to pick up, but the ingredients are there.
When I feel want to feel good, I walk down the street and I see all these people going to stores and being together and going to work, and when I want to feel bad, I read the news and I read all these stories about how computers are coming for our jobs, and how a lot of places are seeing opportunities to replace human labor with algorithmic algorithmic programs.
I'm just wondering, based in the data that you've been looking at, how much credence is there behind this sort of placement concept of AI.
Well, I think looking at surveys industry level data that when we think about the labor market being somewhat slow right now, I don't think that AI really can you know, you can point to that as a key driver. Broadly. There are some industries in tech, increasingly in finance where you see more adoption and there probably are cost savings happening with employers. I think, you know, it does fit into this piece of the broader uncertainty right like do
you need to hire? Do you need these workers? That's much harder to parse out of the data, because there's a lot of different sources of uncertainty right now that businesses have. But in terms of you know, the adoption really holding back the labor market, I think it's hard to point to a broad story, but it is certainly something something to watch. But we should also remember that the new technology also enables new jobs and new uses
of technology, So it's not just about saving labor. It's also about making labor more productive, and that can be a real good news story over the long haul.
Goottie, I love when you're on because I learned so much from you, and because of your notable achievements in economics, but also because you went to Dennison and I spent a year there. My dad went to Dennis, and my mom went to Dennis, and I grew up in Granville. What do you think of the value of a college
education for the average American these days? Because so many not just kids, but adults are having trouble meeting repayment requirements well into their forties, and it doesn't look like recent graduates are getting a huge advantage in the jobs market.
All right, Well, technical skills and training are. I mean, they're always important for getting ahead. They do payoff. I have a very ecumenical view. I had an excellent education at Dennis and University Liberal Arts College, but that's not for everybody. I mean, my daughter's in engineering school Illinois.
She's you know, different technical training, and I think you know in the trades and there's there are lots of ways to gain skill, and we certainly don't want to push every child through a college education, particularly with the cost of it. But it doesn't you know. I still think you know, and the data bear this out. Like the education and the skills, they do pay off.
Claudia Sum of New Century Advisors, wonderful to see you, Happy new year. Thank you so much, see you in twenty twenty six.