Why Labor Data Is 'Most Critical' to BlackRock's Rick Rieder

Bloomberg

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00:00And it's not just the Fed that needs to make decisions without data.

00:03It's this market.

00:04As we exist in this black hole and try to parse through alternative data sets,

00:09how much conviction can you have on fixed income and where yields go during this government shutdown?

00:16So, listen, by the way, I've said it for a long time.

00:18One of the ways we actually get really good data is corporate data.

00:22Like, I've found, like, I think survey data is interesting.

00:25I think I tend to think it's skewed.

00:27It tends to move with sentiment, tends to move, quite frankly.

00:29I always find with the S&P 500 moves a lot of these surveys.

00:33What I focus on, more so, and obviously we need to get the data.

00:36We need to get the payroll data.

00:37That is good data, generally.

00:39What we need to get, you know, what I think is fascinating, and particularly in today's world,

00:44is you look at some of the corporate numbers and you look at what's happening with hiring,

00:47what's happening with productivity, how are they managing inventories.

00:50Listen, more data is better.

00:52You know, we do loads of things with AI now and looking at how you scrape the Internet,

00:56how you look at credit card data.

00:57So, anyway, this is one of the pieces you'd like to have, but you certainly don't feel

01:01like you're operating in a vacancy.

01:04I mean, I was just talking with Mike McKee about this during the break, and I don't know

01:09how much granular data you need to know that core CPI is going to be about 3%, right?

01:15It seems to hang out there forever, and everybody's fine with it.

01:19So, what are the most important pieces you're looking for?

01:24Is it on the labor market as opposed to on the inflation side?

01:29You know, Matt, I mean, it's such a funny thing.

01:32I've been doing this for a really long time.

01:33I'm always blown away that we sit around, and particularly in my business, we sit around

01:37and wait for that CPI report, and it's a couple of hundreds of a percent that seem to

01:41shift sentiment one way on inflation.

01:43At the end of the day, it's actually not that big a deal, to your point, where price

01:46stability is actually at a pretty extraordinary level.

01:50We're ticking up a little bit because of tariff transmission.

01:52That is a big deal.

01:54And obviously, in the short term, but our sense is that's going to come down, a la productivity,

01:58et cetera.

01:59To me, it is for the next five years, the most critical piece of information is going to

02:06be labor.

02:06However, I do think that productivity, innovation, technology, the amount of money that's going

02:11into it will ultimately bring down wage pressure and will bring down, consequently, will bring

02:17down inflation.

02:18Labor, to me, is a big deal.

02:20Think about what's happened in the last few months.

02:23You're actually watching the economy.

02:24We print, what, 3.8 percent real GDP.

02:27The economy, we think, for the year, is going to print over 5 percent, 5-ish percent.

02:30So, nominal GDP, companies are printing tremendous earnings reports, but they don't need the same

02:37amount of infrastructure.

02:39Labor, you know, you look at what's happening to SG&A, cost of goods sold, labor, much productivity

02:44is happening.

02:45It's not like AI is two years from now.

02:47Productivity, not just AI, inventory management, logistics, how you run your business more efficiently.

02:54And by the way, part of what's playing out is companies gaining scale.

02:57They're trying to get scale because you think about how you can run your business, higher

03:00margins, lower cost infrastructure, long-winded way of saying, we need to keep more people

03:06employed in this country.

03:08And I think the primary trend or the primary focus has got to be, let's keep full employment

03:13where it is, however we get there.

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