Claudia Sahm Talks Inflation Duration, Investment and Consumer Spending
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Bloomberg Audio Studios. Podcasts, radio, news. This is a joy. Claudia Somm with us. And it's not like the Fed day. We got to be adults. It's not the jobs day. Boring. Claudia, is there a recession? What a joy to have Dr. Somm with us here, Chief Economist, New Century Advisors today. I just heard back from Torsten Slack. One of the magic things, folks, is we go back and forth with our guests through the show. If I say something stupid, Neil Dutt is the first one to and just say, Tom, you don't know what you're talking about. Torsen Slott comes back on the price of beef. And Dr. Somm, I did a log chart of beef back to 1966. And the thing that is striking is the duration of the expensive cow that's out there.
What is the duration, the x-axis look like of our inflation we're living now?
Hmm. Right. Well, I think, you know, what we've seen in recent years, really going back to the pandemic, is we've had a whole series of supply shocks of different kinds. And some of them have been very severe in the pandemic. It had like echoes and it took, you know, several years to work its way through. I think if you look at beef prices, that's another one where the supply chain for beef prices, it takes a long time to make more beef. Right. Like so it just once you have a disruption, it's a very long tail to it, say, as opposed to chickens, which have a shorter production cycle. Like we're learning so much and reminding so much about the physical nature of production. And so it's just one more supply shock.
And frankly, as kind of came up at the press conference with Powell, you know, we've kind of had to run a bad luck in terms of one supply shock, cost shock after another. And that's kind of become the norm. And that's what we got to be prepared for. These shocks that do have sometimes some pretty long tails to them.
Claudia, you have posts on LinkedIn recently how you say that the typical recession rules of thumb are no longer working. What do you mean by that?
Right. So there's we I think there's been a lot of discussion recently about, you know, what's a good payroll number, right? Like what's this break even rate and discussions about, well, we've got a lot less labor supply out there. Immigration really took a step down.
What is the current state of inflation in everyday products?
We've got an aging population. And so what we've seen since the beginning of 2025, 40 percent of the months we've had a decline in payrolls. That kind of pattern is something of a we're in a recession or the year after a recession. That's when you see those kind of pace. But actually, right now, that's a labor market that's doing pretty OK because the amount the number of jobs the economy needs to create to keep up with the workers coming in is really low. It's it's practically close to zero. So that means in any month you've got weather, you've got some kind of shock. We just have some noise in the measurement of the data. We're going to have this bumping around zero, some declines, some positives.
And so I think this is a normal we're in, which normally should send off like recession is coming. We're in a recession, but that's not what this is. We are in a low growth. type of economy. A lot of discussion already about in terms of payrolls. I think, you know, in a moment today where we get GDP, we got to understand that's going to start showing up in those GDP numbers too. Low is as good as it gets.
So the heart of the matter quickly here, Dr. Sama, we're going to come back with you after we get the market open. The key thing to me is the real wage. Are you suggesting we get a literal negative real wage?
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