Bloomberg Audio Studios, Podcasts, Radio News.
Hey, we talked about the market, the US jobs market earlier with Michael McKee. It's sluggish, not rapidly deteriorating. And we did see that data that came out saw traders refraining from boosting bets on your term fed rate cuts, setting stocks lower and bonds wavering. So we're not you know, it's not like all of a sudden traders are saying, Okay, we're going to get more rate cuts because of that labor data we got this morning.
Yeah, a reduction is fully priced ined by mid next year, you should not. But we're not seeing those bets go up.
No, exactly. I'm curious to see what our next guest has to say specifically about the US labor market. Let's head to the Bloomberg News bureau in DC to someone well known to our Bloomberg audience. She was formerly chief economist over at ZIP Recruiter. She is Julia Pollock and she's chief economist for the US Department of Labor. Julia, good to have you back here on Bloomberg. How worried are you about rising out employment.
I'm not so. This report overstates understates the strength of the labor market right now because there are two huge temporary distortions at play in the data here. The first is one hundred thousand or more federal workers who took the fork and came off payrolls and some of them have gone into temporary frictional unemployment. And the second big distortion in this report is the Schumer shutdown, which forced
nine hundred thousand federal workers off the job. But it also led to weakness in the private sector because it forced work stoppages for federal contractors and led to temporary layoffs there. So I expect the unemployment rate to jump back down very soon.
What about the youth unemployment right and rising youth unemployment? Are you concerned about that?
So you know, the unemployment rate is exactly where it was when President Trump first took office in his first term, and he has a track record of bringing it all the way down to three point five percent. We have a bigg ti challenge this time because of the Biden inflation hangover, which forced the Fed to slam the brakes on the economy, and that has hurt marginal workers the most.
But we are setting the stage for a huge comeback in twenty twenty six and beyond with the One Big Beautiful Bill Act, which has hugely stimulative policies, and you'll see those macro stimulative effects build into twenty twenty six. They are things like like expensing fast and accelerated, full and accelerating expensing for business investments, no tax on tips, no tax on overtime, no tax on social security.
So, Julia, if I may just jump in just because we only have about five minutes left here. So it sounds to you like that there's and we've heard this certainly from guests here on Bloomberg, more liquidity coming into the market, things to support economic growth. It sounds like you said that the labor picture is actually better than
what the data showed. So it sounds to me then that the FED is correct, Jay Powell is correct in being or you know, actually, forgive me, what your sounding like you're saying is that maybe the FED doesn't need then ultimately to be cutting rates. That things actually look pretty rosy for twenty twenty six.
So I think the reason that employment growth, the job growth slowed so dramatically between mid twenty twenty two and mid twenty twenty four is that rates were high and The longer rates stay restrictive, the more of the economy gets hurt, the more businesses have to refinance it double the rate, the more families go out there and try to buy a home and find that it's just unaffordable. So rates right now are still restrictive, and they are still a problem for much of the economy.
But you said you were You said you weren't concerned about rising unemployment, So I'm a little confused.
Well, the Fed has a duel mandate full employment on the one hand, and and price stability, and this president has shown that his policies deliver both. In the first Trump administration, we had non inflationary growth. And you can do that with policies that don't throw fuel on the fire of demand and restrict supply, but do the exact opposite. So through deregulation, through reshoring incentives, we're going to see this labor market take off again and in a non inflationary way.
Well, on the resharing part of this motivation for reshoring, on shoring, imposing tariffs to bring back the Midwest to revitalize what many consider the American dream, Secretary Vessett has said it's been harmed by global trade. The manufacturing industry, though it keeps shedding workers, when can we expect a data to reflect progress that the administration is trying to make in restoring that American dream.
So the economy shed manufacturing jobs for about two year, years before President Trump took office. Again, this latest report shows the largest increase in construction jobs in over a year. And that's really the front end of those investments in mining and energy and manufacturing, and there is signal that manufacturing job growth will pick up.
So okay, you know, you look at the labor market, I mean in terms of initiatives that will potentially help the US labor market. You know, the conversation around artificial intelligence at your j Powell even addressed it and saying
it hasn't impacted US jobs yet. So I'm just curious, how are you factoring that into as you look at some of the upcoming moves the President ramping up in terms of hiring people to really focus on technology AI specifically in the administration, so looking to make more investments so that the US certainly has a dominant role. Just how then you factor that into your estimates for the impact on the US labor market.
Well, the AI boom is driving huge demand for workers in the skills trades, in advanced manufacturing, and of course workers with AI skills, and it is our job at the Labor Department to ensure that US workers are prepared for those jobs of the future. For the first time, labor policy and education policy of pulling in the same direction.
We've aligned labor and education for the first time ever, and we are now focusing very heavily on getting workers access to job connected training that sets them up for in demand jobs and that doesn't push them to expensive degrees that leave them with nowhere to go.
Let's talk personnel a little bit. We're curious about why it's taken so long to make another nomination as BLS commissioner. Is your name in the ring? Is your hat in the ring?
I have no idea. You'd have to ask the President that would you.
If you were asked, would you serve as that well?
I think there is a tremendous amount of work to do there tracking AI's labor impact, improving the timeliness, the granularity, the accuracy of the data I have at the Labor Department made it my priority to push forward a very aggressive labor market data modernization agenda that puts workers and learners first and gives them more access to the data
collected on them. So right now, I love partnering with the BLS on all of those kinds of initiatives, and I am happy to serve in whatever role the presidencies fit.
If we're thinking just thirty seconds, but if we're thinking about previous commissioners, how will this nominee or this next commissioner be different just twenty seconds?
Thank you.
I have no idea, but I think that whoever comes in has a very clear mandate. I'm the president to put workers and learners at the center of what we do, UH, to change the data paradigm to a real time data paradigm, and to make sure that the data is accurate and has the utmost integrity.
All right, Julia, thank you so much. Julia Apollo, Chief Economists for the US Department of Labor,