Julia Pollack Talks Jobs
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What recent trends are affecting the U.S. job market?
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Bloomberg Audio Studios. Podcasts. Radio. News. Hey, we talked about the market, the U.S. 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 near-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 in by mid next year. We should know, 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 U.S. labor market. Let's head to the Bloomberg News Bureau in D.C.
to someone well-known to our Bloomberg audience. She was formerly chief economist over at ZipRecruiter. She is Julia Pollack, and she's chief economist for the U.S. Department of Labor. Julia, good to have you back here on Bloomberg. How worried are you about rising unemployment?
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 100,000 or more federal workers who took the fork and came off payrolls, and some of them have gone into temporary frictional unemployment situations. And the second big distortion in this report is the Schumer shutdown, which forced 900,000 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 rate, the rising and rising youth unemployment? Are you concerned about that?
So 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 3.5%. We have a bigger 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 2026 and beyond with the One Big Beautiful Bill Act, which has hugely stimulative policies. And you'll see those macro stimulative effects build into 2026. They are things like expensing fast and accelerated, full and accelerated expensing for business investments, no tax on tips, no tax on overtime, no tax on Social Security.
So, Julie, 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... You're 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 2026.
So I think the reason that employment growth, the job growth slowed so dramatically between mid-2022 and mid-2024 is that rates were high. And the longer rates stay restrictive, the more of the economy gets hurt. The more businesses have to refinance, the double the more families go out there and try to buy a home and find that it's just unaffordable.
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