Full Employment to Be a Challenge for Years, BlackRock's Rieder Says

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Transcript

00:00Have we got a labour market problem?

00:02I do. And by the way, I don't think it's a cyclical phenomenon.

00:05I think there is, by the way, Lisa, I think we have a productivity revolution that is pretty extraordinary.

00:10People point to AI as an exclusive driver of that.

00:13If you look across what companies are doing, including second quarter earnings, third quarter earnings,

00:18if you look at the dynamic around how you think about logistics, freight management, predictive maintenance,

00:25customer procurement, companies are doing more with less.

00:28And I think that is a secular dynamic that's going to be with us for a couple of years now.

00:33I think, I mean, we can talk about there's a bit of elevated inflation because of tariffs,

00:37but I think we're going to be dealing with something.

00:39By the way, you also put robotics, automation.

00:42You know, this to me is a structural dynamic.

00:43I think full employment will be the challenge for the next couple of years.

00:47So we mentioned the spread between earnings growth, fantastic, employment growth, terrible.

00:52How are we closing that gap if ever?

00:54So I think, by the way, I actually think that's not a coincidence.

00:58Those aren't coincident factors.

00:59What's happening is companies literally, the top line revenue is pretty good generally.

01:03But what's happening is they're cutting costs of goods sold.

01:05They're cutting their SG&A costs.

01:07They're reducing their cost infrastructure.

01:09By the way, AI is a technology.

01:11There's historically been this dynamic of when you have new technology, it moves people into other higher value jobs.

01:18This technology, by the way, I put robotics and automation on top of it, autonomous driving, et cetera,

01:22is literally designed to replace human input.

01:26You have a dynamic that is pretty extraordinary that I think, you know, if, you know, as a central banker or whatever,

01:32as you think about being anticipatory of where the world is going, that is where the world is going.

01:36And I think that is a challenge.

01:37The economy is doing fine, divergent, and quite frankly, only operating on a couple of cylinders.

01:43Huge CapEx, which we talk about from cloud, from infrastructure, from power.

01:48And you've got higher income, wealthy savers.

01:51They're doing great and supporting consumption in the economy.

01:55And then you have the part of the economy that's interest rate sensitive that's really struggling.

01:59And that's part of why the interest rate tool needs to address low income, small business, housing.

02:05And that's where I think you square the circle.