00:00What jumps out for you? Honestly, it sounds like more of the same. Yeah. I know that's not very
00:05newsy, but that's what I'm reading, at least so far. But, you know, Tim's faster than me,
00:10so maybe he's seen something different on page five by now. Well, I go to page two and I go
00:14to
00:15what to prices because I'm interested in what these districts are reporting when it comes to
00:18inflation. Prices increased moderately in recent weeks with eight districts reporting moderate
00:22price growth and foreseeing slight or modest increases. Many districts reported that cost
00:27rose across several non-labor inputs, including insurance utilities and energy metals and other
00:32raw materials. An issue for inflation or is that to be expected? I mean, I think that the worrisome
00:38sign about that is that this all happened before the war in Iran started over the weekend. So those
00:43are really like, you know, things that you might start to think about, particularly on the energy
00:47side, as far as like what might be a risk for the inflation outlook here domestically, should this
00:53be a more prolonged conflict if we really start to see a sustained energy shock in oil and gas markets?
01:00Too soon to say that just yet. And of course, if this starts to impact other parts of the supply
01:05chain and logistics, we're just not seeing that yet. But so far, it seems like this is a fairly benign
01:11looking beige book. Also on the employment side, stable is what most districts seem to report. And that's what
01:18exactly what the Fed wants to see. And that really jives with the characterization that Powell and others
01:23have been saying that the labor market appears to be stabilizing. Got that a little bit with ADP this
01:28morning. And we'll probably, we'll try to see that with the jobs report on Friday as well. But there
01:33might be a little bit of noise with some other factors in that one. Yeah, I thought it was interesting
01:37too. I mean, that they highlighted things about firms continuing to pass tariff related cost
01:43increases through to their customers. Others began to do so after having absorbed previous increases. And we
01:47thought we would get to a point in the stage where companies were like, got to move it along, got
01:52to
01:52move it along. And the other thing I think is interesting is in terms of labor, we saw wages
01:57rising at a modest or moderate pace in most districts, firms competing for talent in select
02:02areas, including the skilled trade. So, you know, it just to me, Molly reminds what I feel like a lot
02:08of
02:08guests come say that we're not quite there on inflation. And it feels like the scales are tipped that it
02:13could go higher. That's even backing out the war in Iran. Totally. And I feel like what we've seen
02:19in the latest, the last couple of producer price indexes, so this is the wholesale inflation level,
02:25they've been very firm. You're not seeing that as much on the consumer price side, but PPI tends to
02:32lead what consumer prices see. So it's really just a matter of time then if firms are seeing these
02:37increased input costs that you usually somewhere down the next couple of months, that usually does
02:43translate to consumer prices.
02:44Any of this, and we're going to talk about this at three o'clock with Steve Moore, a former
02:48advisor to, a former economic advisor to President Trump. Fed Governor Stephen Myron said it's still
02:55appropriate to continue cutting rates.
02:56Wait, he does?
02:57Yeah.
02:58What? Shocker!
02:59I know, I know.
03:00Sorry.
03:01But it does raise a question if anything that could happen, at least on a macro level, not just in
03:07the U.S.,
03:07but outside of the U.S. with Iran, with prices as increasing because of shipping issues,
03:13because of, I don't know, what happens with energy, if that changes his view or changes anyone
03:19on the Fed view who is actually dovish right now.
03:22I mean, I think we've known for a while Myron's an outlier here.
03:26So we'll leave his view.
03:28Hence why Carol was like, really?
03:30Welcome to the show, Captain Obvious.
03:32Are you talking to me?
03:33I kid, I kid.
03:34We'll put his views over in one bucket.
03:37For everybody else, definitely much more wary of the inflation risks to the mandate, which is why
03:44the stance to keep rates on hold right now really is the pervasive view, and that especially with
03:49what we've seen with the labor market recently, there do seem to be signs more validating that
03:54stabilization stance.
03:56This doesn't call for a job market that needs immediate rescue in any way.
03:59I want to ask you about going to the overall economic activity, and they said activity increased
04:04at a slight to moderate pace in seven of the 12 Federal Reserve districts, while the number
04:09of districts reporting flat or declining activity increased from four in the prior period to
04:14five in the current.
04:14And they said although consumer spending increased slightly in balance, two districts reported
04:19ongoing declines.
04:20Many noted that sales were dampened by economic uncertainty, increased price sensitivity, and
04:25lower income consumers pulling back on spending.
04:28And again, not a new narrative, but you do wonder if there's still this feeling of unease.
04:34And this, should we assume, this is prior to what happened last weekend in terms of the
04:39invasion on Iraq.
04:40None of that is included in here.
04:41Yeah, no, this is before the Iran war.
04:44So this is...
04:45Iran.
04:45Right, yes.
04:46No, yeah, we're...
04:47I remember that one.
04:48That one's all behind us.
04:49I remember that one, too.
04:50Sorry, but go ahead.
04:51That's all right.
04:52I mean, I think, you know, there have been some economists lately who have raised some doubts
04:56about what we call this K-shaped economy.
04:58Yeah.
04:59So that idea that wealthier consumers are propelling all of spending right now and that
05:03lower income consumers are really falling behind.
05:05I think where their doubt stems from not so much that the wealthy are continuing to spend,
05:11but just how much low income consumers are not spending as much.
05:14How much are they pulling back?
05:16And when you see...
05:17I mean, granted, all of this is anecdotal data.
05:19Like, we don't have any hard numbers in this report.
05:22This is just what Fed presidents and their districts observe as far as activity in their
05:27areas.
05:28That still speaks to, though, that this trend is very much still happening.
05:31Yeah.
05:32And you do see evidence in the hard data that would support the idea that lower income
05:36consumers are spending less.
05:38All right.
05:38Going to leave it there.
05:39Listen, thank you so much.
05:40We're on to, though, the jobs report.
05:41Just real quickly before I let you go, what are we anticipating on Friday?
05:44It's going to be a tough read, I think.
05:46The payrolls number, there was significant strike activity in February, as well as winter
05:51weather that could make the payrolls figure a little messy.
05:54So we're looking at the unemployment rate to keep it clean.
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