When the job market is a "complicated, unusual, difficult situation"
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Why does the Federal Reserve think the labor market is weaker than it appears?
The labor market might be a lot weaker than we thought. From Marketplace, I'm Sabri Beneshour, in for David Brancaccio. The Federal Reserve decided to cut interest rates again at its meeting yesterday. One reason it decided to do that is because Fed officials think the labor market, which we already knew is cooling, is actually a lot weaker than it appears. Marketplace's Nancy Marshall-Genzer has that.
Fed Chair Jerome Powell says the Fed is facing, quote, a complicated, unusual, difficult situation because the Bureau of Labor Statistics could be overestimating the number of jobs being created by about 60,000 a month. Powell says the actual number could be negative, a loss of 20,000 jobs per month. The Fed Chair says this kind of forecasting is tough.
It's very difficult to estimate job growth in real time. They don't count everybody. They have a survey. And there's been something of a systematic overcount. And so we expected, and they correct it twice a year.
The BLS is going to change its modeling a bit. That could make the numbers more accurate starting this February.
What challenges does Jerome Powell discuss regarding job growth estimation?
But in the meantime, Powell says, we're in a situation... Where job creation may actually be negative.
Now, supply of workers has also gone way down. So the unemployment rate hasn't moved that much.
which could be giving workers a false sense of security. The BLS is scheduled to release the November jobs numbers next week. Jobs data from this fall is late and in some cases incomplete because of the government shutdown. I'm Nancy Marshall-Genzer for Marketplace.
Something else Fed Chair Jerome Powell mentioned yesterday was tariff inflation. He said import taxes should be just a one-time bump in inflation. Diane Swonk is chief economist at KPMG and joins us for more. Hey, Diane. So if tariffs are a one-time deal, are we past tariff inflation yet?
Well, first of all, we're not past it. And he didn't say we were past it yet. But an important issue is that's at the heart of the debate at the Fed.
Are we past tariff inflation according to Fed Chair Jerome Powell?
Tariffs are typically a one-time bump in prices. And so that is historically what you would count on. But that assumes that the tariffs occur all at once. Of course, they've been moved out in waves. And it also assumes they don't come on the heels. of a pandemic induced inflation that's persisted for nearly five years now and so the debate at the fed is some people saying listen this should be over soon we'll get through it and we can sort of look through it a bit and try to stimulate the labor market in the interim between those people who are worried that maybe this is a more entrenched bout of inflation that isn't as easily um sort of resolving on itself and that's the heart of this sort of very intense debate we see within the fed
You know, if tariff inflation is tariffs on particular goods that we import, how does that spread any further than that?
Well, there's oftentimes what we call opportunistic pricing, and that is areas that are protected by tariffs. Even if they're not specifically feeling tariffs, they can raise their prices, too. We saw that back in the trade war with China, where you know, the price of washers were tariffed, the price of dryers were not, yet they both went up by the same amount because they tend to be sold together. And so we know that there is contagion from tariffs as well. We also know that tariffs actually feed into service sector prices, a lot of medical equipment and, you know, personal protection equipment that was so important during the pandemic. A lot of that is heavily tariffed at the moment.
Diane Swonk, Chief Economist at KPMG.
How do tariffs impact inflation and pricing in the economy?
Thank you so much.
Russia's war on Ukraine continues. Central to this fight is drone warfare and the industry that makes it possible. The BBC's Gideon Long filed this report.
In a clearing in a forest in Ukraine, a soldier sends a drone high into the air. It's a small device, maybe 30 centimetres across, with rotor blades on each corner. A standard commercial drone. The kind of thing you might use to take aerial footage at your wedding or birthday party.
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Chapters
6 chapters
1
Why does the Federal Reserve think the labor market is weaker than it appears?
0:01–1:07
2
What challenges does Jerome Powell discuss regarding job growth estimation?
1:07–2:01
3
Are we past tariff inflation according to Fed Chair Jerome Powell?
2:01–3:32
4
How do tariffs impact inflation and pricing in the economy?
3:32–4:53
5
What role does drone warfare play in the Russia-Ukraine conflict?
4:53–5:59
6
How has the drone industry evolved in Ukraine since the war began?
5:59–7:02