BlackRock Global Fixed Income CIO Rick Rieder Talks Jobs Report, Fed Chair
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What is the main topic discussed in this episode?
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After the latest jobs numbers, which came out just under an hour ago, some mixed messaging coming from it. Where do you concentrate on? Let's bring in BlackRock's Chief Investment Officer of Global Fixed Income, Rick Reeder. And Rick, great to see you this morning. Thanks for joining us. I'm sure you've been poring over the numbers. What is the concentration? Is it growth that comes in less than expected? Is it the revisions for October and November? Or is an unemployment rate now just at 4.4%?
I think what Mike McKee said was right in that the Fed talked about the unemployment rate. I have to tell you, I have a different take on it. I think there is a, we're talking about 50,000 jobs and then a revision down over 70,000 jobs. If you take, we're growing now, if you go to the last six months moving average, if you take out healthcare jobs, we're actually running negative jobs for the last six months away from healthcare, which is non-cyclical, not interest rate sensitive. Actually, if you go back eight months, The total net jobs is negative 213,000 jobs, net of health care. What I think is going on is we have a productivity revolution of extraordinary proportion, that we have an economy that's growing at a quite robust rate, but we just don't need the people.
And I know when people say, well, you know, they're focused on could this be 60,000 jobs, 70,000 jobs, 80,000 jobs. If you go back to 2021, now that was post-COVID, we were running 600,000 jobs. Now, big pullback from 20. But then in 22, 380,000 jobs a month. 2022, you were running 217,000 jobs. 23, you were running, sorry, 24, you were running 170,000 jobs. We're talking about last year, you ran 50,000 jobs. Net of healthcare, no jobs. This year, you're running at a number, well, we just saw 50,000, 39,000 was in healthcare jobs. Point being, and part of why I think the interest rate tool doesn't really affect healthcare and doesn't really affect education, which was another part of the job market.
Meaning, I think we're just seeing a productivity revolution.
What insights does Rick Rieder share about the latest jobs report?
I mean, you break down the numbers and you really look at it, it's pretty extraordinary. And I think the labor dynamic is quite significant on the backside of that.
Where do you see that, Rick? Because I was just listening to Oddlots, the Oddlots podcast that Joe and Tracy do with Jan Hatzius from Goldman Sachs. He says that AI has added about 20 basis points of productivity to growth. And their new incoming chief equity strategist, Ben Snyder, said out of all 500 S&P companies, only six have been able to quantify added productivity from AI. So... I hear about it all the time, and I see the stock soaring, but what's the evidence that we have actually increased productivity with these tools?
So, by the way, Jan's right as normal, as usual. I will say one thing. People like to take productivity and say, oh, it must be a two-letter word, AI. AI is coming. By the way, so is robotics, so is automation, so are other forms of productivity. But if you go back the last two years, and I broke it down on a call we did, logistics, inventory management, customer procurement, freight, how you use freight, efficiency of how you manage your inventory, efficiency of how you manage your receivables. Every company today is running, why is revenue growth a decent place? But what's really happening is earnings growth is spectacular. Earnings growth is spectacular because you're reducing your cost infrastructure, cost of goods sold, SG&A are coming down.
Because you've come up with a better way
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:00–2:39
2
What insights does Rick Rieder share about the latest jobs report?
2:39–4:36
3
How does Rick Rieder interpret the current unemployment rate?
4:36–7:52
4
What does Rick Rieder say about the productivity revolution and its implications?
7:52–12:37
5
How does AI impact job creation and productivity according to Rick Rieder?
12:37–21:42
Speakers
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