00:00A blowout jobs number. How much momentum is in this economy? Yeah, you mentioned the word momentum and that was
00:07exactly when we were talking about today's number last night with the president. Momentum was really the key theme of
00:13the briefing that Pierre, the CEA chair and I discussed with the president. The fact is that there's so much
00:19momentum because of all the positive policies, the deregulation, the low tax rates, and you're seeing all the positive stories
00:27about no tax on tips and no tax on overtime.
00:30I, by the way, was at a restaurant yesterday and I asked all the waiters how much money they made
00:33on the no tax on tips and the range was from $3,000 to $10,000 and they were all
00:38so happy. So that's like a positive momentum creating thing that I think if you have your eye on the
00:44horizon, as America's corporations do, absolutely explains why job markets are booming. And so I think that if you keep
00:53your eye on the horizon, if you understand the long run growth, the golden age is coming because of our
00:57policies, then this jobs number makes
00:59complete sense. The final thing I want to say is I want to tip my cap to my former colleague
01:03in the Trump White House in the first term, Anna Wong, who's now the chief economist for you guys.
01:09You know, I always read everything she writes, but at the beginning of the week, she said almost exactly this
01:14is what's going to happen. And she was the only person in the universe that did it.
01:17I commend her because she's got a great model and she got the number almost exactly right. And finally, in
01:23her report, she said, if you really want to wonder about
01:25momentum, you can also look at the three month moving average because we had like that that big blip down
01:30in the previous month. And she said with her really optimistic outlook, it was going to go up to
01:3561,000 average per month. And it's actually closer to 68,000 now. And so it really is a very,
01:41very positive day. 68 on the money, the three month average. And I was looking for 150 headline today. We
01:46got 178.
01:48Ramo, do you think that Kevin might be popular in restaurants at the moment? I think very much so. I
01:52think that he's trying to exploit that, trying to get some free onion rings.
01:55Kevin, no doubt we've got momentum and lots of reasons for it. We've got the tax refund starting to come
02:00through. The Fed had cut rates at the back end of last year.
02:03Some of the biggest companies on the planet are spending a lot of money. Those CapEx intentions are huge for
02:08the year ahead. How insulated do you think the U.S. economy is,
02:11given the shock of the Middle East and the reality that energy prices now are a lot higher than they
02:16were a few months ago?
02:18Well, well, one thing is that the U.S. is really the engine that drives the global economy again. We
02:24kind of lost that status, I think, under the previous administration.
02:28And so I know that there are starting to be some supply disruptions in the East and so on. But
02:34the U.S.
02:34is standing ready to export more to these countries, more refined product, more crude.
02:40And also, we've taken a number of steps to minimize the disruptions here in the U.S., doing things like
02:46waiving the Jones Act so that we could get U.S.
02:49gas and finished product over to the West Coast. And so I think that in the end, the strength of
02:56the U.S. economy is going to be something that's kind of like a safety net
02:59for Asia as they're dealing with the fact that they have to import all their oil. And so shocks, they're
03:05more sensitive to shocks.
03:06They're experiencing real shortages. We've seen fuel rationing in places like Indonesia. Certain governments introduce four-day weeks.
03:13No doubt we have abundant supply across much of this nation, with the exception of a couple of places.
03:18But we're still price takers in America. And, Kevin, I wonder, from your perspective, given the momentum we have and
03:25given the higher prices in energy,
03:27just what is the prospect for broader price pressure picking up from here for the year ahead?
03:32What I would urge you guys to do, and you have the technical capability to do it, is something that
03:37I look at every day, is look at what the futures markets think.
03:40And also, if you look at the options markets, you can construct a sort of 95 percent confidence interval of
03:47what's possible with energy prices.
03:49And if you look at that, then pretty much futures markets agree with President Trump that this is going to
03:54be a temporary disruption.
03:55And then the strength of the U.S. economy is going to basically be a bulwark for the global economy.
04:01And so I would suggest I keep a close eye of the futures markets. You know, forecasting these things is
04:07very difficult.
04:07But the futures markets have, you know, basically prices going back towards normal over the summer.
04:12But there is a pretty wide 95 percent confidence interval.
04:15There is a question, though, Kevin, how much you can really model out right now, given how quickly moving things
04:20are on the ground.
04:21And a lot of people who we speak to expect oil prices to remain higher for longer.
04:25We're looking right now at diesel prices at five and a half, five dollars and 53 cents.
04:29We're looking at average gasoline prices at above four dollars.
04:33Can you still see four percent GDP growth this year if oil prices remain at these levels?
04:40Yeah, absolutely.
04:41I don't think, as you saw with today's jobs report, that we should expect that people are going to have
04:48to revise their annual forecasts very much.
04:50And I think that the main reason for the U.S. and the main reason is that we're a much
04:54different economy than we were in the 1970s when we were so energy dependent.
04:58I do think that there will be some negative repercussions that will be very short lived in the Asian economies.
05:05And we expect that disruption to be over really, really soon.
05:09It's something the president has emphasized over and over and emphasized again with me last night.
05:13How much are you modeling, though, what happens if this goes on through June, through July, through August?
05:19I mean, how much do you have contingency plans for what type of levers you could pull to help support
05:24an economy that has enough momentum in it heading into this at a time when people already are cutting back
05:29around the margins?
05:30You can see this in certain discretionary spending types of surveys that are coming out in real time.
05:35You know, our job is to prepare for every scenario, but to be realistic about what we expect.
05:44And what we expect with a high confidence is that what you're seeing in today's jobs market will continue and
05:50that this situation in the Middle East will be over very shortly, as the president has said, over and over.
05:56And then people can put their eyes back on the horizon and see that we're creating a golden age.
06:01But, of course, you know, we're very careful to think about what could be disrupted and what we could do
06:06to do something about it.
06:08And as an example, we found that some Asian economies were holding back jet fuel shipments to some of our
06:15airports to the West Coast.
06:16And so we waived the Jones Act to make sure that we could get some Gulf oil to the West
06:20Coast so that their airports could continue to run.
06:23There are little things like that all around the world that happen every day.
06:26And we've got people who are watching every single one of them to minimize the disruption.
06:30How much are you pushing, Kevin, also to remove certain taxes on gasoline, on diesel, in order to also make
06:37it more affordable in the near future?
06:40Well, I think that right now the focus is on, you know, finishing the job.
06:46And our strong belief is that if we do that, then we're going to get things back to normal very,
06:51very quickly.
06:51And don't forget, we're talking about the cost of what we're doing.
06:54The benefit is that we're, you know, hopefully ending the time when this really murderous country can cause turmoil throughout
07:05the Middle East.
07:06And if you think about that, then, you know, I'm sure that some of your Wall Street friends could give
07:11you some guest events today.
07:13But what's the higher risk premium that's capitalized into markets all around the world because of Iranian terrorism?
07:18How much more investment would there be in the Middle East if people aren't worried that the Iranians are going
07:24to be throwing rockets at them all the time?
07:26These are all long-run big positive effects.
07:28And if this ends shortly, then I think that you're going to see a recovery, even in the places that
07:34are currently most heavily burdened by this,
07:38because they're the ones who have been really suffering so much under the oppression of this country.
07:44Kevin, can we finish on the war?
07:45And I don't expect you to talk about strategy and timelines.
07:48We've talked about that before.
07:49You wouldn't want to compromise the safety of our troops in the region at the moment.
07:53I'd like to finish on objectives and reopening the Strait of Hormuz,
07:56because some of the communication for the week has been slightly contradictory in the minds of some.
08:01That on the one hand, the president has said, open up the Strait or else.
08:04And on the days, the president has said, it's up to other people to open up the Strait because they're
08:09more dependent on it.
08:10Where are we on that front at the moment?
08:12Is it the objective of the administration to reopen the Strait of Hormuz?
08:17I'm going to continue to let the president speak on that matter.
08:21I think that we are moving full speed ahead with our plans.
08:26And we believe that as we do that, things will return back to normal relatively quickly.
08:32But as far as talking about short-term policy, I'll let the president speak for himself.
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