Fed's Tom Barkin Talks Employment, Inflation
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What is the main topic discussed in this episode?
Hello and welcome. This is The Michelle Hussein Show. I'm Michelle Hussein. I speak with people like Elon Musk. I think I've done enough. And Shonda Rhimes. That's so cute. This will be a place where every weekend you can count on one essential conversation to help make sense of the world. So please join me, listen and subscribe to The Michelle Hussein Show from Bloomberg Weekend, wherever you get your podcasts. You certainly ask interesting questions. Bloomberg Audio Studios. Podcasts. Radio.
News. Joining us this morning, Richmond Fed President Tom Barkin here on Bloomberg Television and Radio Worldwide. And on radio they can't see it, but on television people can see you have a bit of a bandage on your head. You just had one of those older people's kind of operations. Yeah, there's no truth that it was what happened in the last meeting.
Yeah.
All right. Speaking of the last meeting, we came out of that believing that, or at least Wall Street, that you're going to cut rates again in October and maybe in December. But since then, we've gotten some numbers that show GDP is hotter. Inflation is still running hot. And the jobless claims numbers suggest companies aren't laying anybody off. So should we have less confidence in the path going forward?
Well, I don't think you can mark to market the next meeting every week, even though that's what the markets do. I mean, let's see what happens on the unemployment side. We'll get some important data in a couple minutes here on the inflation side, and I think we'll get there when we get there.
Well, the majority... Majorities seem to believe, at least according to what the chairman tells us, that inflation is going to be a one-time rise in the price level. Then overnight, we got a bunch of new tariffs, as you just saw, on a lot of different things from the president. How much confidence do you have in any kind of inflation forecast at this point? Not much.
I mean, what I definitely see happening is there are cost increases that suppliers want to pass on. There's no question about that. And tariffs are a big part of it. But you could put health insurance and other places, other costs in there, too. But those costs are going to attempt to get passed on to a consumer who's, frankly, exhausted of price increases.
What are the current challenges in employment and inflation?
And so we're seeing a lot of trading down, branded to private label kind of choices. But we're also seeing people trade off. And it wouldn't surprise me at all if people who are forced to accept certain price increases therefore don't buy something else on the other side. And that's your classic relative price tradeoff. And that may mean that you won't see as much broad-based inflationary impact as you'd see price increases on particular items. We'll see.
And yet you get PCE in an hour and basically you've already calculated the numbers. Inflation is not moving in the right direction. So can you still justify or how long can you justify cutting rates in that environment?
Well, we have inflation moving in the wrong direction. Unfortunately, we also have unemployment moving in the wrong direction. And that was the backdrop. of the last meeting, you have to ask yourself, are the risks still the same as you saw them two, three, four months earlier when you had unemployment in the right direction and inflation in the wrong direction? My overall thesis, though, is that while it's not ticking in the right place, the downside is relatively limited. I see the inflation downside is limited by this customer pushback that I just talked about. Also productivity, which I think is, we're seeing that at real scale. And so that means there's less pressure to pass costs on. And then on the unemployment side, obviously labor supply is dropping at the same time as labor demand.
And that's keeping the unemployment rate relatively balanced. And that's the combination of immigration and redistribution. revocation of temporary status. Also, our generation, Mike, which is leaving the workforce.
How does the recent economic data impact Fed's rate decisions?
I mean, you're seeing a million three more people over 65 out of the workforce every year.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:00–2:17
2
What are the current challenges in employment and inflation?
2:17–3:54
3
How does the recent economic data impact Fed's rate decisions?
3:54–8:02
4
What factors are influencing inflation forecasts right now?
8:02–9:47
5
How does consumer behavior affect inflation and pricing?
9:47–11:22
Speakers
5 identifiedMore from Bloomberg Talks
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