00:00Mike, I want to go back to something that Austin Goolsbee said to you about this unemployment report, this payrolls
00:06report.
00:06He said, one month is not a trend, but it's not a good month if you've got several months like
00:12that.
00:12That would be a concerning spot for the labor market.
00:15If you peel back sort of the layers of this report, is this a one-off for a host of
00:20reasons, or is this the start of a bigger trend?
00:26Well, it's hard to know, but it doesn't look good on the surface.
00:29When you look at the numbers, you look at the overall decline in jobs.
00:35A lot of it was in health care, which had been the only sector that was really hiring.
00:40And also part of that was because of a strike against Kaiser Permanente out in the West Coast with nurses
00:47on strike.
00:48But even if you add them back in, health care hiring was very weak.
00:52So if the one driver of employment has slowed down, then you may have trouble ahead.
00:59That's the big question going forward.
01:01Is this a one-off?
01:02Is this showing that things are going to remain weak?
01:06And I think what Fed officials are saying is the labor market is weak, and some of us are worried
01:15about whether or not we should do something about it.
01:17While the inflation hawks are looking at the oil prices and saying, you know, we're hopeful that inflation will go
01:24down, but we don't know how long this war is going to last.
01:27So we don't know how long oil prices are going to remain elevated.
01:30So we've got to kind of sit on the sidelines for the moment.
01:33All right.
01:33We want to talk more about that in a moment.
01:35But, Mike, I want to get to Kevin Hassett, who spoke on Bloomberg TV earlier.
01:38Of course, the White House National Economic Council director.
01:42He said the poor February jobs report was down in part to crazy weather, though, as we noted, the number
01:48of people unable to work last month wasn't out of line with historical averages.
01:51He also said that revisions to population figures are making month-to-month changes more volatile.
01:57And so he says it's important to average things out, that this was still a strong increase in payrolls.
02:02Do you agree?
02:07I would say that he is talking his book and trying to make things sound better than they are for
02:13the administration.
02:15Weather didn't really have anything to do with what we saw in the labor market report.
02:19And the BLS sort of points that out.
02:23228,000 people who couldn't go to work because of weather was not substantially different from what we saw in
02:29January.
02:29And it's about what you would expect for this time of year.
02:33So that's not really an excuse.
02:35We do have the changes to the population survey.
02:39But that really isn't making a major difference in the numbers that we got this month because they split it
02:46up.
02:46We got a new population control number.
02:49But the seasonal adjustment factors and the adjustments to hiring were in the January numbers.
02:55So really, you kind of have to take this report at face value.
03:00Like I said, it may not sustain, but you really can't wave it off.
03:05And I just want to be clear.
03:06Hassa did say, speaking on TV earlier, it's important to average things out.
03:10And there was still a strong increase in payrolls for January.
03:11You just talked about the January number.
03:15We've got a lot of questions.
03:16Yeah, it raises the question about what the Federal Reserve does on March 18th and what the Federal Reserve does
03:21at the end of April, April 29th, for that following meeting.
03:25Mike, does it change the picture at all?
03:30Well, we're not sure if it changes the picture for April.
03:32That's going to really depend on what happens with the war and with energy prices and if they stay elevated.
03:39The March 18th, they're going to sit on their hands because you have a smaller minority, maybe Mickey Bowman, Chris
03:46Waller, and definitely Stephen Myron, who think that you should be cutting rates more to get ahead of the problems
03:53in the labor market.
03:54But the people who are worried about inflation have an argument that we can't really move because we don't know
04:00what's going to happen with this and we don't want to get inflation established in the economy.
04:05We don't want inflation expectations to start to rise when people go to the gas station and see their gas
04:11prices going up quite a bit.
04:13So take that one off the table and then let's wait and see on April.
04:18April is going to be Jay Powell's last meeting as chair.
04:23So that might argue against doing anything dramatic.
04:26But if we do see a dramatic change in the inflation picture, you could see it.
04:30So you just got me thinking about the Warsh confirmation process.
04:35Does that mean that Warsh gets confirmed by the meeting after April 29th?
04:43Well, we don't know. They just sent his nomination up yesterday to the Senate Banking Committee.
04:49They've got to schedule a hearing and then there's this whole Tom Tillis not going to let anybody through while
04:54this investigation into Jay Powell is underway thing.
04:57So they've got to get that out of the way and it isn't clear exactly how they do that.
05:02But if for some reason Kevin Warsh is not confirmed, then Powell would stay on the job as a governor
05:10and the Open Market Committee would likely just reelect him as chairman of the Open Market Committee.
05:17They don't even really need to do that because they elected him for this whole year.
05:20So nothing would really change.
05:22But we don't have another meeting after the April meeting until later in June.
05:27So there's still a lot of time between now and then for Warsh to get confirmed and be in place
05:33for what would be his first meeting.
05:35Hey, Mike, you've been having lots of conversations with Fed officials.
05:39Is there a common narrative or something interesting in terms of the gaps between what you're hearing?
05:43And I'm just curious, is anybody saying stagflation?
05:49Well, Austin Goosby was saying stagflation and that's been a result of previous energy crises.
05:56Now, is this a crisis?
05:58Javier Blas, our columnist, our brilliant oil columnist, was pointing out this morning that if you take a chart of
06:05oil prices and then move it out, expand the time period,
06:11you'll see that this really isn't that big a move for oil these days, that we've seen bigger moves in
06:17recent years.
06:18And so it's not a crisis yet.
06:19If it continues, then that could be a crisis.
06:22And as Tim was saying at the top of the show, oil gets into all kinds of other products.
06:27And if it gets into those products, then prices go up, then maybe economic activity slows.
06:33But at this point, it's not likely that we're going to see stagflation.
06:37But it's a danger that the Fed is going to talk about or mention just to let people know they're
06:43on the case.
06:44They're watching this.
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