Latest / Trumponomics / Trump Says the Jobless Rate is Phony. Try These Stats Instead

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Trump Says the Jobless Rate is Phony. Try These Stats Instead · Trumponomics

• 0:00
  Speaker 1: We're going to attempt to answer the question just how
• 0:02
  Speaker 1: will we know from an economic standpoint if Trump is
• 0:06
  Speaker 1: actually making America great again. It's Bloomberg Benchmark, a podcast
• 0:20
  Speaker 1: about the global economy. I'm Scott Landman, an economics editor
• 0:24
  Speaker 1: with Bloomberg News in Washington, and I'm coming to you
• 0:27
  Speaker 1: by myself again today because Dan and Kate were unable
• 0:30
  Speaker 1: to join us, but fortunately I have two esteemed colleagues
• 0:33
  Speaker 1: with me today. Here in d C. Is Vince Gully,
• 0:36
  Speaker 1: a fellow editor who's been covering the U S economy
• 0:40
  Speaker 1: for two decades, and up in New York we have
• 0:43
  Speaker 1: Carl Ricka Donna, who's chief US economist for Bloomberg Intelligence. Gentlemen,
• 0:48
  Speaker 1: thanks for joining us today. My pleasure, glad to be
• 0:50
  Speaker 1: here now. Often on Benchmark we dig up unusual facts
• 0:54
  Speaker 1: or indicators to make a broader point about trends in
• 0:57
  Speaker 1: economies around the world. Today we're going back to basics.
• 1:01
  Speaker 1: It's our first show since Donald Trump took office as
• 1:05
  Speaker 1: forty president of the United States, and since Benchmark is
• 1:09
  Speaker 1: all about the economy and Trump has pledged to make
• 1:12
  Speaker 1: America great again, We're going to attempt to answer the
• 1:15
  Speaker 1: question just how will we know from an economic standpoint
• 1:19
  Speaker 1: if Trump is actually making America great again. Now, the
• 1:23
  Speaker 1: President has dismissed some traditional measures of the U. S economy,
• 1:27
  Speaker 1: such as the main unemployment rate. He called that measure
• 1:30
  Speaker 1: phony or fictional because he thinks it overestimates strength in
• 1:34
  Speaker 1: the labor market. So we're going to run down some
• 1:37
  Speaker 1: other economic indicators today. These are a bit more out
• 1:41
  Speaker 1: of the mainstream, maybe a bit down in the weeds,
• 1:44
  Speaker 1: but we think they'll show a good sense of the
• 1:46
  Speaker 1: degree of the success of the Trump administration during the
• 1:50
  Speaker 1: next four years. Uh So, obviously we're not going to
• 1:53
  Speaker 1: talk about unemployment or GDP, and instead we'll give you
• 1:57
  Speaker 1: first two ways of looking at the labor mark market,
• 2:00
  Speaker 1: then two ways of looking at the health of corporate
• 2:03
  Speaker 1: America and small businesses, and also one gauge of whether
• 2:07
  Speaker 1: if Trump is fulfilling his pledge to bring factory jobs
• 2:11
  Speaker 1: back to the US. So are you ready, guys, ready,
• 2:15
  Speaker 1: let's go all right, So, without further ado, here are
• 2:18
  Speaker 1: the first two. The first is called prime age labor
• 2:22
  Speaker 1: force participation. Now translate into English from Ecano speak, we
• 2:27
  Speaker 1: can say that is people in the peak of their
• 2:30
  Speaker 1: working years who have a job or are looking for one,
• 2:34
  Speaker 1: and the second one would be full time workers as
• 2:37
  Speaker 1: a percentage of the labor force. That refers to people
• 2:40
  Speaker 1: who have a full time job as a share of
• 2:43
  Speaker 1: everybody who has a job or is looking for work. Vince,
• 2:47
  Speaker 1: let me go to you first. Why are these good
• 2:50
  Speaker 1: gauges of both the economy and for Trump schools? Well,
• 2:54
  Speaker 1: Scott Um. Probably in the simplest terms, I'd say that
• 2:57
  Speaker 1: it boils down to potential. UM. People in this twenty
• 3:02
  Speaker 1: five to fifty four age bracket working a full week
• 3:06
  Speaker 1: have the best potential to gain work experience, UM, secure
• 3:11
  Speaker 1: better benefit packages like healthcare and four win K plans
• 3:15
  Speaker 1: that allow them to prepare for retirement. And perhaps most importantly,
• 3:20
  Speaker 1: they have greater earnings potential and they have the ability
• 3:24
  Speaker 1: to grow their earnings earn more, which contrasts with UH,
• 3:28
  Speaker 1: say teenagers who are more likely to work for minimum wage.
• 3:32
  Speaker 1: And the reason this is important is that, UM, these
• 3:36
  Speaker 1: are the folks who are most likely to spend, and
• 3:40
  Speaker 1: they'll probably spend big, whether it's buying a new car
• 3:43
  Speaker 1: or house or what have you. UM the more potential
• 3:47
  Speaker 1: to earn a good living will allow them to spend
• 3:50
  Speaker 1: and that in turn boost the economy and encourages more
• 3:53
  Speaker 1: hiring and more spending, and you get this sort of
• 3:57
  Speaker 1: virtual circle for the economy. Corrow, what's been going on
• 4:01
  Speaker 1: with primate labor force participation in recent years and why
• 4:05
  Speaker 1: is it cutting criticism from Trump and his team. Well,
• 4:09
  Speaker 1: the participation rate goes through longer term structural fluctuations. So
• 4:16
  Speaker 1: it climbed from the ninth late nineteen fifties up until
• 4:21
  Speaker 1: about two thousand UH. This was partly a phenomenon of
• 4:25
  Speaker 1: the baby boomers coming through the system. Also, while women
• 4:29
  Speaker 1: entering the workforce in increasingly large UH proportions. About the
• 4:35
  Speaker 1: time of two thousand UH, the participation rate peaked and
• 4:40
  Speaker 1: began to decline. At the time of the two thousand
• 4:44
  Speaker 1: and seven to two thousand and nine recession, the Great Recession,
• 4:48
  Speaker 1: it actually accelerated the pace of decline UH. And so
• 4:52
  Speaker 1: the question is how much of this UH is really
• 4:56
  Speaker 1: due to long term structural trends in the economy. If
• 5:00
  Speaker 1: we think of the baby boomers going through the system
• 5:03
  Speaker 1: like that python that swallowed an egg or some large objects,
• 5:08
  Speaker 1: so part of that is just an inevitable trend. But
• 5:13
  Speaker 1: the question is, UH, this acceleration since the end of
• 5:17
  Speaker 1: the Great Recession, and a lot of economists are wringing
• 5:20
  Speaker 1: their hands saying there's no way to forecast labor participation
• 5:25
  Speaker 1: and whatnot. And I think that if we take a
• 5:27
  Speaker 1: step back and take a very straightforward, common sense approach,
• 5:31
  Speaker 1: there is a way uh to actually model that out,
• 5:35
  Speaker 1: at least to some degree. And we can do that
• 5:38
  Speaker 1: by looking at economic conditions or getting back to the
• 5:43
  Speaker 1: uh UH prior comment the prospects of earning a good living. UH.
• 5:49
  Speaker 1: The health of the economy and strength of the economy
• 5:53
  Speaker 1: impacts how much workers are moving off of the sidelines
• 5:57
  Speaker 1: and into the economy. So over the past UH seven
• 6:01
  Speaker 1: uh ten years, economic conditions have not been great. Wage
• 6:06
  Speaker 1: stagnation has been a big problem, and the job prospects
• 6:09
  Speaker 1: have not been particularly strong. UH. And this means that
• 6:14
  Speaker 1: a lot of would be workers have remained on the
• 6:18
  Speaker 1: sidelines UH and that has taken a toll on participation. Now,
• 6:23
  Speaker 1: what Janet Yelling, Chair of the Federal Reserve, and UH
• 6:26
  Speaker 1: some other economists also on the Open Markets Committee UH
• 6:30
  Speaker 1: want to do is explore the potential of pursuing a
• 6:36
  Speaker 1: high pressure economy, as she terms it, or as New
• 6:40
  Speaker 1: York Fed President Bill Dudley mentions letting the economy run
• 6:43
  Speaker 1: a bit hot. Uh, And what they mean by this
• 6:46
  Speaker 1: is by letting the economy exceed its growth rate and
• 6:50
  Speaker 1: being slow to push back with the monetary policy or
• 6:54
  Speaker 1: interest rate policy. Uh, they can actually lead to a
• 6:58
  Speaker 1: pickup in inflation and wage pressures, and that will coax
• 7:02
  Speaker 1: folks off of the sidelines and possibly bend the trend
• 7:07
  Speaker 1: uh in terms of declining labor force participation. Now, this
• 7:11
  Speaker 1: is not something they completely can fix, but at the
• 7:15
  Speaker 1: margin they can influence it. Now, how do you square
• 7:19
  Speaker 1: the ability to get people off the sidelines, Say, if
• 7:23
  Speaker 1: you know the Fed supports accommodative policy, or if trumpettacts
• 7:27
  Speaker 1: fiscal stimulus with the idea that you know, I've read
• 7:30
  Speaker 1: these articles about one. You know, some of the reasons
• 7:32
  Speaker 1: why you have such a downturn and primate participation is
• 7:37
  Speaker 1: because maybe the prevalence of drugs, people on pain medication. Uh,
• 7:43
  Speaker 1: you know, men in their twenties and thirties playing too
• 7:46
  Speaker 1: many video games. Is an improving economy enough to reverse
• 7:50
  Speaker 1: trends that are maybe more baked into the economy at
• 7:55
  Speaker 1: this point, I think an improving economy is a critical
• 7:58
  Speaker 1: part of the picture Now, opioid addiction and a lot
• 8:02
  Speaker 1: of other factors certainly do extend a toll. But if
• 8:06
  Speaker 1: you're let's say, for example, you're sitting on your couch
• 8:09
  Speaker 1: playing video games or watching movies UH and collecting maybe
• 8:14
  Speaker 1: an unemployment check or maybe a welfare check or disability
• 8:18
  Speaker 1: payment UH, and suddenly you see your your your neighbor
• 8:22
  Speaker 1: across the street is buying a new car or renovating
• 8:25
  Speaker 1: their home or taking a nice vacation. UH. That type
• 8:29
  Speaker 1: of UH, for lack of a better term, envy UH
• 8:32
  Speaker 1: coaxes people to say, well, the welfare check is good enough,
• 8:36
  Speaker 1: but I'd like to do a little bit better, and
• 8:38
  Speaker 1: I'm willing to re enter the labor force. So you know,
• 8:40
  Speaker 1: in some sense there are people that will not be
• 8:43
  Speaker 1: able to re enter. But in a lot of instances,
• 8:46
  Speaker 1: for example, in a dual income household, one parent maybe
• 8:50
  Speaker 1: choosing to stay home UH to oversee childcare rather than
• 8:54
  Speaker 1: take a job that barely pays for the cost of
• 8:58
  Speaker 1: UH sending their children elsewhere full rock childcare. Now, let's
• 9:02
  Speaker 1: talk about the other indicator. I was discussing the share
• 9:05
  Speaker 1: of full time workers out of the labor force. You
• 9:08
  Speaker 1: can talk all you want about improving economy, getting people
• 9:11
  Speaker 1: off the sidelines and into the labor force. But if
• 9:14
  Speaker 1: those jobs are not the kinds of full time, good
• 9:18
  Speaker 1: paying jobs that Vince was talking about. Uh. You know,
• 9:21
  Speaker 1: one criticism we've heard from Trump and and and also
• 9:25
  Speaker 1: a lot of other economists about the economy in recent
• 9:28
  Speaker 1: years is that a lot of jobs that have been
• 9:30
  Speaker 1: created are actually either part time in services and low paid,
• 9:36
  Speaker 1: or they're in the gig economy with the rise of
• 9:39
  Speaker 1: such services as as uber. As we're all well aware
• 9:45
  Speaker 1: what's going on with the state of full time and
• 9:47
  Speaker 1: part time work, are there a lot of people Vince
• 9:51
  Speaker 1: who who are working part time who would rather have
• 9:54
  Speaker 1: full time jobs? Um? Well, we have seen um some
• 9:59
  Speaker 1: of that uh people that are working part time uh
• 10:03
  Speaker 1: that won a full time job. We have that, uh
• 10:07
  Speaker 1: seen that start to reverse here um lately, So I
• 10:11
  Speaker 1: think there is some improvement there. UM And a lot
• 10:15
  Speaker 1: of the um, A lot of this too, UM you
• 10:19
  Speaker 1: could probably attribute to a service economy. And um, some
• 10:25
  Speaker 1: people just want to work part time and not worry
• 10:29
  Speaker 1: about having work full time position. I know UM that
• 10:34
  Speaker 1: President Trump has mentioned the cost of childcare needing to
• 10:38
  Speaker 1: come down, and UM, a lot of you know, a
• 10:43
  Speaker 1: lot of housewives, if you will, are choosing to stay
• 10:47
  Speaker 1: home rather than uh, than than go seek a full
• 10:50
  Speaker 1: time employment. Carl, how do you see this playing out?
• 10:53
  Speaker 1: Are are we going to see more UH people getting
• 10:56
  Speaker 1: full time jobs or or is the trend toward more
• 10:59
  Speaker 1: part time work? Uh? You know something that that's just
• 11:02
  Speaker 1: effective life now, Well, I think we have two trends
• 11:05
  Speaker 1: moving in opposite directions. With the advent of the gig
• 11:09
  Speaker 1: economy and task grabbit and Uber and all these sorts
• 11:12
  Speaker 1: of things, UH, the availability of part time work becomes
• 11:17
  Speaker 1: UH significantly elevated, so that that will be a longer
• 11:22
  Speaker 1: term trend. But what we watch more closely as economists
• 11:27
  Speaker 1: is part time work for economic reasons. So this is
• 11:31
  Speaker 1: not someone who's driving Uber on the weekend for a
• 11:33
  Speaker 1: little extra cash. But these are workers who can only
• 11:37
  Speaker 1: find part time employment, although they would prefer full time employment.
• 11:42
  Speaker 1: And if we watch that trend, and this is something
• 11:44
  Speaker 1: again that that Cher Yelling has referenced at the FED. UH,
• 11:49
  Speaker 1: this is UH moving in the right direction but not
• 11:52
  Speaker 1: fully normalized. So UH, in a in a very odd sense,
• 11:57
  Speaker 1: cheer Yelling and President Trump are on the same page
• 12:00
  Speaker 1: in questioning the signal from the national unemployment rate. Cherryoh,
• 12:06
  Speaker 1: and long before President Trump was criticizing the unemployment rate,
• 12:10
  Speaker 1: that was making the same point, saying that that is
• 12:12
  Speaker 1: an incomplete measure of conditions in the labor market, and
• 12:18
  Speaker 1: so instead she looked at these other broader measures, one
• 12:21
  Speaker 1: of which was part time workers for economic reasons. Yeah,
• 12:25
  Speaker 1: Jannah and Donald are probably gonna find some common ground
• 12:29
  Speaker 1: the next time, you know, when they actually have their
• 12:31
  Speaker 1: first meeting together, despite uh Mr Trump's criticism of her
• 12:35
  Speaker 1: during the campaign. Let's move on to another indicator. This
• 12:39
  Speaker 1: one doesn't need much of much deciphering. It's the number
• 12:43
  Speaker 1: of manufacturing workers on payrolls in the economy. A lot
• 12:47
  Speaker 1: of Trump's campaign was about how NAFTA and China have
• 12:51
  Speaker 1: killed all these jobs over the last twenty years and
• 12:54
  Speaker 1: how he would restore them. Carl, what are the chances
• 12:56
  Speaker 1: that this is going to happen? Well, some of the
• 13:00
  Speaker 1: jobs are are gone and certainly are not coming back.
• 13:04
  Speaker 1: We are moving, uh, you know, in an increasingly automated
• 13:09
  Speaker 1: assembly lines. I've been reading recently about some assembly lines
• 13:13
  Speaker 1: where they don't even turn the overhead lights on until
• 13:16
  Speaker 1: something needs to repair because there are are basically only
• 13:20
  Speaker 1: robots who are happy to work in the uh, in
• 13:24
  Speaker 1: the dark, on those assembly lines. So uh, to some degree,
• 13:28
  Speaker 1: a lot of the manufacturing jobs that you imagine uh,
• 13:31
  Speaker 1: your your, your father, grandfather working at are probably not
• 13:35
  Speaker 1: coming back. However, if we are sourcing more production in
• 13:41
  Speaker 1: US factories, there will be an impact on manufacturing jobs.
• 13:44
  Speaker 1: So some jobs will come back. Uh. And the general
• 13:48
  Speaker 1: rule of thumb is that for every one manufacturing job,
• 13:52
  Speaker 1: there's about three service sector jobs that support it, whether
• 13:56
  Speaker 1: it's engineering, design, transportation, finance, etcetera. Uh. Uh So even
• 14:01
  Speaker 1: if we bring back some manufacturing jobs, that will have
• 14:04
  Speaker 1: a very powerful impact. Now I hear time and time again,
• 14:09
  Speaker 1: well the jobs aren't coming back, so what's the what's
• 14:12
  Speaker 1: the point in pursuing it? There are tremendous economic benefits
• 14:18
  Speaker 1: uh to manufacturing activity happening on US soil. So yes,
• 14:23
  Speaker 1: there's a question mark over how many jobs will actually
• 14:26
  Speaker 1: come back. But innovation happens on the shop room floor. Uh.
• 14:32
  Speaker 1: And so if the vehicles uh and widgets are being
• 14:35
  Speaker 1: assembled on US soil, UH, then the engineers and the
• 14:39
  Speaker 1: design folks and all of that other higher level sophisticated
• 14:45
  Speaker 1: doubt work tends to happen in close proximity to the factory.
• 14:49
  Speaker 1: So when the factory moves overseas, it's not long until
• 14:53
  Speaker 1: the engineering, design, and management jobs tend to follow. UH.
• 14:58
  Speaker 1: And so there's an intend will benefit uh much much
• 15:02
  Speaker 1: more comprehensive than just the actual job count from sourcing
• 15:06
  Speaker 1: production back on US soil. So we're at just over
• 15:09
  Speaker 1: twelve million manufacturing jobs right now. You don't really see
• 15:12
  Speaker 1: that moving a whole lot, but it could it could
• 15:15
  Speaker 1: go up. What are you thinking. I think it could
• 15:17
  Speaker 1: trend higher depending how aggressively President Trump pursues the initiative
• 15:23
  Speaker 1: of sourcing production. And uh, you know, we're only a
• 15:26
  Speaker 1: few days into the new administration, but based on the
• 15:29
  Speaker 1: tone of the inaugural address and some of the measures
• 15:33
  Speaker 1: he has emphasized early on whether it's uh, you know,
• 15:38
  Speaker 1: restrictions on manufacturers from reimporting partially manufactured goods to uh
• 15:45
  Speaker 1: trying to pressure pipeline construction to use US UH manufactured
• 15:51
  Speaker 1: materials where possible. Uh, it seems like it's going to
• 15:54
  Speaker 1: be a very high priority item for the for the
• 15:58
  Speaker 1: new administration. And mind you uh, you know, what we've
• 16:01
  Speaker 1: seen just in these first couple of days are already
• 16:05
  Speaker 1: likely the beginnings of the re election campaign for twenty twenty.
• 16:10
  Speaker 1: President Trump's path to the White House largely went through
• 16:15
  Speaker 1: the rust belt Pennsylvania, Ohio, Michigan, Wisconsin. And if he
• 16:19
  Speaker 1: wants to return to the White House in uh, he's
• 16:22
  Speaker 1: going to have to perform well in those states and
• 16:26
  Speaker 1: those uh disenfranchised workers who feel like they've been roadkill
• 16:33
  Speaker 1: on the path to globalization, that have to feel that
• 16:36
  Speaker 1: they have gotten some kind of benefit out of this administration.
• 16:40
  Speaker 1: All right, well, let's move on to a broader indicator
• 16:43
  Speaker 1: of corporate America and American business. That would be capital spending. Vince.
• 16:50
  Speaker 1: When we talk about capital spending, what does that refer
• 16:53
  Speaker 1: to and what's been happening with that in the last
• 16:56
  Speaker 1: few years. UM. It's basically spending by companies on like
• 17:01
  Speaker 1: plants and buildings and UM equipment, machinery. And from the
• 17:09
  Speaker 1: last part of fourteen through uh this last year's third quarter,
• 17:16
  Speaker 1: it's been averaging a basically a paltry uh, you know,
• 17:19
  Speaker 1: zero point two percent UM on average UM. Now, part
• 17:23
  Speaker 1: of this is owed to the slowdown in the oil patch,
• 17:26
  Speaker 1: but not all of it. And on the flip side,
• 17:29
  Speaker 1: when when the energy industry was spending hand over fist
• 17:33
  Speaker 1: at the start of the recovery, investment was spending pretty
• 17:37
  Speaker 1: nicely now UM As for small businesses UM, it's a
• 17:42
  Speaker 1: little difficult to measure, but the National Federation of Independent
• 17:47
  Speaker 1: Business Data UM show that until recently optimism has been
• 17:52
  Speaker 1: fairly tepid, certainly well below the levels leading up to
• 17:56
  Speaker 1: the last recession. And part of that is due to
• 17:59
  Speaker 1: this dud to economic recovery, and UM, you know, a
• 18:03
  Speaker 1: good devil. A good deal of it can probably be
• 18:07
  Speaker 1: attributed to government policies, you know, from you know, Obamacare
• 18:11
  Speaker 1: to government regulation. They've they've actually mentioned that UM in
• 18:16
  Speaker 1: in the surveys that the n f i B does UM.
• 18:19
  Speaker 1: More recently, however, the UH the gauge, the NFIBS gauge
• 18:24
  Speaker 1: of optimism has shot up in this last report, but
• 18:29
  Speaker 1: actually by the most since nineteen eighty. Now small businesses
• 18:33
  Speaker 1: are liking what they hear from the Trump administration. They
• 18:37
  Speaker 1: just want less government intrusion and a clear path through
• 18:41
  Speaker 1: doing business. So obviously it hasn't it's been kind of
• 18:45
  Speaker 1: UH seen kind of poultry gains in recent years, but
• 18:50
  Speaker 1: optimism is picking up. Carl, is that going to be
• 18:53
  Speaker 1: enough to translate into higher spending that actually boost GDP. Well,
• 18:59
  Speaker 1: the jury is still out on that question. So absolutely,
• 19:04
  Speaker 1: animal spirits are a critical element of capitalist system. So
• 19:09
  Speaker 1: if everyone's feeling depressed, uh in assaulting away their paychecks
• 19:14
  Speaker 1: into savings, that can have dire economic consequences. Uh. Since
• 19:19
  Speaker 1: election Day, we've seen a significant rise in household sentiment,
• 19:23
  Speaker 1: home builder sentiments, small business sentiment, even other broader measures
• 19:27
  Speaker 1: of economic sentiment like the stock market for example. However,
• 19:32
  Speaker 1: we haven't seen much hard data yet to support that,
• 19:36
  Speaker 1: and that's because economic data is released with a lag.
• 19:40
  Speaker 1: That being said, uh, you know, vehicle sales were strong
• 19:43
  Speaker 1: at the end of December, retail activity seem to end
• 19:47
  Speaker 1: the year on relatively solid footing. So there seems to
• 19:50
  Speaker 1: be some evidence uh that positive sentiment is actually impacting
• 19:55
  Speaker 1: the economy, but again it's still very much in the
• 19:59
  Speaker 1: early stages. Let me give you a term net business births.
• 20:04
  Speaker 1: It sounds kind of odd, but it's just another way
• 20:07
  Speaker 1: of saying the number of businesses that are created in
• 20:10
  Speaker 1: a period, uh, minus the number that closed. It's another
• 20:15
  Speaker 1: indicator about of the health of the economy. Uh. You know,
• 20:19
  Speaker 1: as we can look at it under President Trump. Vince,
• 20:23
  Speaker 1: why did we pick this one and what's been happening
• 20:25
  Speaker 1: with that lately? Simply because you know, new businesses are
• 20:29
  Speaker 1: basically the lifeblood of the economy. I mean, you have
• 20:32
  Speaker 1: a new business created, they're successful, they hire, they get
• 20:36
  Speaker 1: even more successful. The more hiring will do UM. After
• 20:40
  Speaker 1: the recession ended in two thousand nine, UM, it wasn't
• 20:43
  Speaker 1: until a year later that business birth actually exceeded the
• 20:48
  Speaker 1: number of you know, firms that went out of business.
• 20:51
  Speaker 1: UM currently net burs or about where they were during
• 20:56
  Speaker 1: the last expansion, but they're well below the peak that
• 20:59
  Speaker 1: we had in two thous and five. So I think
• 21:01
  Speaker 1: that a pick up in UM, you know, company formation
• 21:04
  Speaker 1: will likely depend on how successful you know, Trump and
• 21:08
  Speaker 1: Condress are in making it easier for entrepreneurs to do business.
• 21:13
  Speaker 1: And Carl, how important would this be to to drive
• 21:15
  Speaker 1: the economy? Oh, it's absolutely critical. So business births tend
• 21:20
  Speaker 1: to be among small and medium sized businesses, which account
• 21:24
  Speaker 1: for the vast majority of jobs in the in the
• 21:28
  Speaker 1: private sector, I think roughly eighty five percent are attributed
• 21:33
  Speaker 1: to firms of five employees are less. Uh. Now, you
• 21:37
  Speaker 1: know business births and UH also business investments so two
• 21:41
  Speaker 1: themes that de Vince was hitting on both tend to
• 21:45
  Speaker 1: be late cycle components of the economy. So early on
• 21:50
  Speaker 1: in cycles, we tend to see UH growth driven by
• 21:53
  Speaker 1: things like a consumer spending and housing. And then later
• 21:57
  Speaker 1: on in the cycle, with the economy continuing to row,
• 22:00
  Speaker 1: businesses start to face capacity constraints and so they invest
• 22:04
  Speaker 1: in the equipment and software and structures that Vince was highlighting.
• 22:08
  Speaker 1: That also tends to be the stage where we see
• 22:10
  Speaker 1: more formation of businesses as folks are more confident uh
• 22:15
  Speaker 1: in the overall economic outlook. So the fact that we're
• 22:19
  Speaker 1: seeing both of those measures kind of only normalizing UH,
• 22:23
  Speaker 1: now we're starting to pick up maybe some clues that
• 22:27
  Speaker 1: this cycle is going to be unique and that it
• 22:31
  Speaker 1: is going to be much longer uh than the typical
• 22:35
  Speaker 1: UH post World War two or even in the modern
• 22:37
  Speaker 1: era business cycle in let's say UH present if we
• 22:43
  Speaker 1: can call that the modern era so UH in FED terms,
• 22:46
  Speaker 1: that's vocal green Span, Bernankey and yelling business cycles have
• 22:51
  Speaker 1: averaged about UH thirty two quarters were in the thirty
• 22:55
  Speaker 1: first quarter of the current cycle. So by that measure,
• 22:59
  Speaker 1: you would say a wow, UH. The next ro session
• 23:01
  Speaker 1: can't be too far off. But when we start to
• 23:04
  Speaker 1: look at underlying fundamentals, like what's driving the economy or
• 23:08
  Speaker 1: where are the late cycle indicators? Have they engaged yet? Uh,
• 23:12
  Speaker 1: They're not really there, and so this economy is not
• 23:15
  Speaker 1: as long in the tooth as a pure calendar based
• 23:19
  Speaker 1: measurement would otherwise suggest. So Carl, taking a big step
• 23:23
  Speaker 1: back and thinking about what you just said there and
• 23:25
  Speaker 1: what we've been talking about, what are the chances that
• 23:29
  Speaker 1: President Trump can fulfill his promises to make America great
• 23:33
  Speaker 1: again in the next four years? Well? Uh, you know
• 23:36
  Speaker 1: this is gonna be a an economist answer, but it
• 23:40
  Speaker 1: really depends on how you want to measure that. So
• 23:44
  Speaker 1: will GDP growth be stronger? I know you said we
• 23:46
  Speaker 1: can't talk about GDP at the start, but if we are,
• 23:51
  Speaker 1: you know, financing significant tax cuts and infrastructure spending by
• 23:56
  Speaker 1: borrowing more than that is a cheap sugar high. Uh,
• 24:00
  Speaker 1: that can elevate economic growth until it comes around to
• 24:05
  Speaker 1: actually paying the bill. So you know, there could be
• 24:08
  Speaker 1: a short to medium term acceleration in the pace of
• 24:10
  Speaker 1: growth purely for that reason. The unemployment rate. I'm gonna
• 24:14
  Speaker 1: break all the rules you said we can't talk about unemployment.
• 24:16
  Speaker 1: The unemployment rate is uh, you know, running below it's
• 24:20
  Speaker 1: a natural level. UH. And so you know, we're starting
• 24:24
  Speaker 1: to see increasing evidence of shortages of workers, which will
• 24:28
  Speaker 1: mean workers have greater bargaining power uh, and more wage
• 24:32
  Speaker 1: pressure and and wage creation as a result. So from
• 24:35
  Speaker 1: that perspective, it's also going to look better. So you know,
• 24:39
  Speaker 1: part of the economy or the country feeling greater, uh
• 24:44
  Speaker 1: is just the you know, the the inevitable result of
• 24:49
  Speaker 1: stretching on and prolonging the recovery from a very severe
• 24:53
  Speaker 1: economic downturn. On top of that, then the icing on
• 24:57
  Speaker 1: the cake will be things like trade uh policy which
• 25:01
  Speaker 1: could favor the rest belt states, and tax cuts which
• 25:04
  Speaker 1: could to help certain sectors of the economy. So in
• 25:09
  Speaker 1: some context, yes, I don't see a recession coming for
• 25:12
  Speaker 1: quite some time. So uh. The uh, the tone and
• 25:16
  Speaker 1: temperament of the economy will feel significantly better in the
• 25:20
  Speaker 1: next several years, in some part due to the new
• 25:23
  Speaker 1: administration and some part just due to where we stand
• 25:26
  Speaker 1: in the cycle. All right, Carl, we'll have to leave
• 25:28
  Speaker 1: it there. Thanks so much for joining us, my pleasure,
• 25:30
  Speaker 1: and Vince, thanks thank you for joining us too. For
• 25:33
  Speaker 1: more on this you can actually call up a graphic
• 25:35
  Speaker 1: we put together that you can find on Bloomberg dot
• 25:37
  Speaker 1: Com called how We'll know if Trump is making America
• 25:41
  Speaker 1: great again? And Benchmark will be back next week. Until then,
• 25:45
  Speaker 1: you can find us on the Bloomberg Terminal and Bloomberg
• 25:47
  Speaker 1: dot Com are newly revamped Bloomberg app, as well as
• 25:50
  Speaker 1: on iTunes, pocket casts, and Stitcher. While you're there, please
• 25:54
  Speaker 1: rate and review the show so more listeners can find
• 25:56
  Speaker 1: us and let us know what you thought of the show.
• 25:59
  Speaker 1: You can follow me on Twitter at at scott Landman.
• 26:02
  Speaker 1: Carl you are at reckon Omics R I C C
• 26:06
  Speaker 1: A N O M I X, and Vince you are
• 26:10
  Speaker 1: at double spelled out T Goalie in support of my
• 26:14
  Speaker 1: alma mater, Texas Tech University. All Right. Benchmark is produced
• 26:18
  Speaker 1: by Sarah Patterson. The head of Bloomberg Podcast is Alec McCabe.
• 26:23
  Speaker 1: Thanks for listening and we'll see you next time.