Richmond Fed President Tom Barkin Talks Iran War
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What insights does Tom Barkin share about the Iran war's impact on the economy?
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Let's turn to the data. Jobless claims coming in at a nice 213 against an estimate of 215 and the previous number of 212. Lisa, jobless claims and continuing claims speak to the same thing we've been talking about for quite a while. Low hire, low fire. Low fire captured in jobless claims, initial claims being very low. Low hire captured in some very sticky high continuing claims. Yeah, and if you take a look at the initial claims for a week moving average, it actually has gone lower from 220,000 in the week before to 215,000 essentially with this latest data, so highlighting that. But you're right, continuing claims you've got to pay attention to because it actually kicked upward. to 1.868 million, up from 1.82 million.
A question here about whether that means that people aren't hiring, whether that's the issue, whether this is just a snafu tied to weather or some other disruption, or whether this really does highlight that maybe initial jobless claims don't really show the pain that people are experiencing under the surface. This labour market has been frozen for quite a while and this data this morning speaks to the same thing. It's the right kind of downside surprise on initial claims and it's the wrong kind of upside surprise on continuing claims. Mike McKee standing by, he's having a look at the data and he's got a special guest for us as well. Good morning, Mike. Good morning, John. Well, claims are not the only number out this morning that matters.
We're also looking at import prices for the month of January. On a month over month basis, they're up two tenths of a percent after a decline in the prior month. And we're also seeing ex-petroleum up four tenths. That puts kind of a lie to the idea that foreigners are absorbing the tariffs because the prices should go down if that's the case. Also, productivity up 2.8 percent, which sounds good, except it was up by 5.2 percent in the third quarter. So not as great a news as perhaps people had hoped. Let's get a read on how the economy is doing now. You mentioned a special guest, and indeed we do have one, Tom Barkin. president of the Richmond Fed. We're here at the Richmond Fed with him. And I know you haven't had a chance to really look at these numbers, but in general, the low-fire, low-hire economy and the tariff-affected economy seem to be about what they have been.
Well, it's always good to come on right after a bunch of data comes out. But I wouldn't be as negative on the productivity as you just were. 2.8% on the last 10 or 20 or 30-year basis is a really good number. And I think we are seeing companies invest in productivity and deliver it. Some of that technology, AI, but I think a lot of it is you were caught short workers three years ago. You invested in new processes, new staffing models, automation, and people are seeing the results today.
Yeah.
And that holds down inflation. It does hold down inflation and it allows people to maintain margins at times when their input costs might be might be coming up.
Well, input costs are probably going up for people who use petroleum. So I want to start there with obviously the Iran war just started. But what's your gut feel about how that's going to impact prices and the economy?
I don't have any sense on how long it's going to take or what the implications are going to be. Obviously, you watch oil prices. While the U.S. is no longer a net importer, it's still the case that the price at the pump matters a lot in terms of sentiment, in terms of crowding out other spending.
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