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Alan Krueger: Congress Should Invest In Infrastructure (Audio) · Bloomberg Intelligence

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  Speaker 1: a Bloomberg Business flash. You're listening to Taking Stock with
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  Speaker 1: Kathleen Hayes and Pim Fox on Bloomberg Radio. I'm Kathleen Hayes,
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  Speaker 1: broadcasting live at the US Tennis Open here in Flushing Meadows,
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  Speaker 1: Corona Park, Queens. My co host Pim Fox is on vacation.
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  Speaker 1: He'll be back in the office and on the show
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  Speaker 1: on Tuesday. Phillion for him today. Well, actually, he's a
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  Speaker 1: very special guest here at the Open every year on
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  Speaker 1: Bloomberg Radio. Alan Krueger. He's the been and Professor of
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  Speaker 1: Economics and Public Affairs at Princeton University's former head of
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  Speaker 1: the Council of Economic Advisers, and he's also an avid
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  Speaker 1: tennis fan. Alan is always great to have you here.
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  Speaker 1: You have the will this job? Tell me about it
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  Speaker 1: every year every year, my friend and watch a ton
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  Speaker 1: of tennis. You know. There we're gonna talk about jobs
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  Speaker 1: and there are you know jobs created here at the
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  Speaker 1: Open for two weeks, right, because they do do a
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  Speaker 1: lot of hiring and to put on this event that
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  Speaker 1: is just so complicated has so many moving parts, but
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  Speaker 1: you know, come in and come out. It's a great
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  Speaker 1: sports event in some respects. I guess the US economy
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  Speaker 1: is going in that direction and that we have more
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  Speaker 1: and more workers who are working as contract workers and
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  Speaker 1: freelancers doing short term jobs. Now, Ellen, that's a good
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  Speaker 1: question to look at, because we got the jobs report
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  Speaker 1: today a hundred fifty one. Um, you know, Lord Amester
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  Speaker 1: of President Cleveland, Cleveland Fed went out of our way,
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  Speaker 1: I think to point out, you only need seventy five
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  Speaker 1: to a hundred fifty jobs to keep the unemployment rate steady,
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  Speaker 1: if not moving lower. So so we get that. But this,
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  Speaker 1: this move from part time to uh, full time, is
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  Speaker 1: what a lot of people still aspire to, don't you think?
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  Speaker 1: Or or are we really in such a gig economy now? Well,
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  Speaker 1: over the last decade we've had very fast growth in
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  Speaker 1: independent contract work, freelancers, workers being contracted out. And for
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  Speaker 1: some workers that's a better situation they have more control
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  Speaker 1: over their hours, more flexibility for companies that could be
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  Speaker 1: more efficient or productive. Uh. Yet for others they prefer
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  Speaker 1: to have its traditional job. So I think it's a
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  Speaker 1: very heterogeneous sector. Um. We're also seeing over the last
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  Speaker 1: few years, very rapid growth in on demand work uber
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  Speaker 1: type jobs, task grabbit. They still only represent about half
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  Speaker 1: a percent of the workforce. We don't do a very
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  Speaker 1: good job capturing them in the statistics that came out
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  Speaker 1: this morning. Uh. Fortunately they're still small, so it's not
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  Speaker 1: really distorting our picture of how the economy is doing.
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  Speaker 1: But over time it's going to be a much bigger concern. Now,
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  Speaker 1: what about the momentum in the economy. Yesterday we've got
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  Speaker 1: the Institute a Supply Management Manufacturing reported fell back below fifty. Uh.
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  Speaker 1: The consumer has been just about the only consistent driver
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  Speaker 1: of growth this year GDP year over year on a
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  Speaker 1: are just the last three quarters of something around one percent.
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  Speaker 1: Maybe it's going to bounce up to three percent when
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  Speaker 1: you look at the jobs numbers, when you look at
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  Speaker 1: all these different factoris how does it look to you?
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  Speaker 1: Do look okay to me? I think we're going to
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  Speaker 1: grow about two percent this year. Having the consumer power
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  Speaker 1: of the recovery, I think that's actually very helpful. Consumers
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  Speaker 1: account for seventy of the US economy, so seeing households
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  Speaker 1: in a stronger position with higher income with lower gasoline prices,
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  Speaker 1: I think that should support the economy. I think there's
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  Speaker 1: still room for housing to expand. So this recovery is
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  Speaker 1: not going to be the strongest one on record, but
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  Speaker 1: it could well be the longest. And I think that's
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  Speaker 1: what we should be rooting for. Okay, and I guess,
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  Speaker 1: but the question is the longest on record? Do you
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  Speaker 1: need to start raising interestates? You and I were both
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  Speaker 1: attendees at the Jackson Hole the Kansas City Fits im
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  Speaker 1: Poseum in Jackson Hole, Wyoming. In fact, just a week
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  Speaker 1: ago we were sitting listening to some very very big papers.
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  Speaker 1: We were listening to Janet Yellen say the case for
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  Speaker 1: great high has strengthened, which seems very broad. That doesn't
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  Speaker 1: incline you to any direction. In two separate interviews, now
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  Speaker 1: what verst in Jackson Hall and then on Bloomberg Television
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  Speaker 1: this week, stand Fish of the vice chair seems to
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  Speaker 1: really be trying to push in the direction of hey,
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  Speaker 1: at least one interest rate increase this year. You get
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  Speaker 1: a sense that perhaps that the vice chair is trying
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  Speaker 1: to lead the chair towards the rate hike if he
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  Speaker 1: thinks it's so necessary. It is a committee, and members
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  Speaker 1: of the committee can have different views. My own view
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  Speaker 1: is that the Fed should move slowly to raise rates.
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  Speaker 1: I think one rate hike later this year would be appropriate. Uh,
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  Speaker 1: you have to bear mind, even if rates can hop
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  Speaker 1: another twenty five basis points, we're still going to have
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  Speaker 1: very accommodative monetary policy. I think what the FED wants
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  Speaker 1: to do and should do is avoid a situation where
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  Speaker 1: it has to ratchet up rates very quickly. So if
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  Speaker 1: they move up one rate hike this year, two next year,
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  Speaker 1: I think that's moving out a pace set slow enough
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  Speaker 1: that they're going. Uh. If the recovery continues as I
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  Speaker 1: as I expect it would, I think there'll be in
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  Speaker 1: a better position so that they don't have to yank
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  Speaker 1: up rates very quickly and pull the rug out of
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  Speaker 1: the recovery. I'm speaking with Alan Krueger, Professor of Economics
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  Speaker 1: and Public Affairs at Princeton University, former head of the
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  Speaker 1: Council of Economic Advisors in the Obama administration, and we're
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  Speaker 1: live at the US Open in Queens and New York.
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  Speaker 1: Alan productivity. We also got numbers this week which showed
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  Speaker 1: the productivity is just lagging and sagging every which way
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  Speaker 1: it can businesses. That's a big question. Why are they
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  Speaker 1: so uncertain? Why won't they commit to longer term projects.
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  Speaker 1: Some people blame very low interest rates as as part
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  Speaker 1: of that borrowing costs are low. Let people look out
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  Speaker 1: over the horizon and they're uncertain because they figured this
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  Speaker 1: situation has to change. What's hurting our productivity so much?
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  Speaker 1: That's an excellent question, and I don't think there's uh
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  Speaker 1: compelling answer. To be honest, I think there is a
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  Speaker 1: lot of uncertainty out there. I think some of it's
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  Speaker 1: coming from the presidential election. I mean, we have a
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  Speaker 1: candidate who said he'd like to renegotiate the US debt,
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  Speaker 1: So it's possible Donald Trump wins, we're gonna have quite
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  Speaker 1: dramatic change in economic policy, in my view, not for
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  Speaker 1: the better. Also, there's a lot of uncertainty in the
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  Speaker 1: world economy. I think that's probably more important than Federough
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  Speaker 1: Reserve policy. And in fact, the low interest rates should
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  Speaker 1: facilitate investment. So this you just said on one of
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  Speaker 1: the big themes from everybody who speaks from the Federal
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  Speaker 1: Reserve lately, and they seems to be people are trying
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  Speaker 1: to get the message across. If you're a central banker
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  Speaker 1: in almost any country that monetary policy only has so
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  Speaker 1: much power at this point when you're when you've been
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  Speaker 1: at zero rates or lower for so long, and now
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  Speaker 1: governments have to step up. Legislators have to agree on
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  Speaker 1: steps because if we're going to move ahead, we need
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  Speaker 1: we need some sort of fiscal push, some kind of
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  Speaker 1: government spending. Do you agree with that? I think it's
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  Speaker 1: been that way for a while. I think the US
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  Speaker 1: Congress should have done much more a few years ago
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  Speaker 1: in terms of investing more infrastructure, helping a long term
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  Speaker 1: unemployee get back on their feet. Uh, there's only so
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  Speaker 1: much that monetary policy can do. I think making investments
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  Speaker 1: in recent arch and development and an infrastructure who will
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  Speaker 1: raise our competitiveness and productivity in the future, especially given
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  Speaker 1: the low rates today, it makes a lot of sense. Well, Alan,
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  Speaker 1: you've done so much research in depth, from your your research,
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  Speaker 1: from all the people you've worked with. When you think
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  Speaker 1: of the said invest in infrastructure, can you give us
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  Speaker 1: something specific, an idea maybe people have not looked out closely,
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  Speaker 1: or something that has been tried that you see as
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  Speaker 1: an example of something that can be productivity boosting, job boosting, well,
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  Speaker 1: just maintaining our existing infrastructure. Uh, Repairing our roads and
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  Speaker 1: bridges and highways has a very high return. UH. So,
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  Speaker 1: I know people are worried about shovel already and so on,
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  Speaker 1: but we have all of this infrastructure out there that's
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  Speaker 1: in disrepair. Think about how many potholes you've run over
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  Speaker 1: the pothole tax. I know I've paid quite a bit
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  Speaker 1: this year to to have my car repaired because of
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  Speaker 1: uh roads that are dysfunctional. Um So that's an easy
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  Speaker 1: thing to do and also would put a lot of
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  Speaker 1: construction workers back to work. There's other things which are
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  Speaker 1: also pretty easy. We had during the Recovery Acts something
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  Speaker 1: called Build America bonds. Build America bonds were taxable municipal bonds.
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  Speaker 1: They're much fairer, much more democratic form of investment because
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  Speaker 1: moderate income people, lower income people benefit from having Build
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  Speaker 1: America bonds and their portfolios. So we could bring back
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  Speaker 1: Build America bonds. Okay, So we are at the US
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  Speaker 1: Open and you come out here every year. So um
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  Speaker 1: jack sock an American having a pretty good match with
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  Speaker 1: the Silk today. Who are you rooting for? Who are
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  Speaker 1: you betting on the on the men's side, Well, it's
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  Speaker 1: hard not to bet against marian and Djokovic. But it
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  Speaker 1: is nice to see Americans doing well. I was watching
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  Speaker 1: Ryan Harrison and I actually left during a tie break
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  Speaker 1: to come here to join you. So I'm glad you
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  Speaker 1: got the tennis, um, and it is nice to see
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  Speaker 1: so many young Americans doing well. How about on the
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  Speaker 1: women's side. On the women's side, of course, it's hard
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  Speaker 1: to bet against against Serena UM. I watched matched earlier today,
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  Speaker 1: So that's Ova who had up at mugu Rosa, and
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  Speaker 1: it was very exciting. She lost the first three games
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  Speaker 1: and then came storming back. Uh. So be interesting for
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  Speaker 1: me to see how far she can go. Uh. In
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  Speaker 1: terms of tennis broadly, Uh, what could you tell people
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  Speaker 1: who have never been tennis fans that? What? What draws
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  Speaker 1: you to it? Why are you so addicted to tennis watching? Well,
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  Speaker 1: this is a great event. You see the best athletes
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  Speaker 1: in the world playing tennis. You can watch them up close.
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  Speaker 1: During the first week in the outer courts, I sat
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  Speaker 1: right behind Sevetzolva's coach and two friends who went to
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  Speaker 1: high school with her. So Uh, it's an easy event
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  Speaker 1: to go to. There are plenty of seats, especially there
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  Speaker 1: are the early rounds and uh, just a great spirit
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  Speaker 1: out here. I agree, and it helps that people like
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  Speaker 1: you join us every year. I'm happy to come back.
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  Speaker 1: I know Alan Kruger faces and he's not working for
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  Speaker 1: the U. S Tennis Association. By the way, those are
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  Speaker 1: sincere comments and I couldn't agree with you more. Alan Krueger,
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  Speaker 1: then then professor of Economics and Public Affairs at Princeton University,
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  Speaker 1: is also former head of the Council of Economic Advisors. Again, Alan,
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  Speaker 1: thanks so much for joining us. Coming up, we're gonna
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  Speaker 1: be taking a look at Dave Wilson, our stocks editor
• 11:07
  Speaker 1: Chart of the day. I'm Kathleen Hayes, and this is
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  Speaker 1: Bloomberg