00:00I always enjoy having you on the show, Martha. I think you make what's happening in the U.S. economy
00:07understandable, digestible for a broad portion of people. What did you see in the data this
00:11morning? What was the story it was telling you? I mean, it's interesting. This is one of those
00:17reports where, as an economist, you kind of open it up, look at it and go, wow, this is really
00:21great. Not a ton going on here. And then close it and go get your coffee. So, you know, I
00:27think
00:28this is a report that looks like what it is. Job growth is really strong. You know, some
00:33lags on the wage side, particularly compared to inflation. But if you're thinking about where
00:38the Fed goes from here, this is certainly giving them room to try to do some action on inflation
00:44with interest rates. There is an AI story here. But when we spoke to San Francisco Fed President
00:50Mary Daly yesterday, we had to get to where is policy right now? I just want to play you
00:55a soundbite from what she said. Right now, policy is in a good place. We are prepared to respond
01:00either way, whatever the economy brings. But I think giving more forward guidance about what's
01:05possible could be misguiding in the end because we just have to wait for the economy to evolve.
01:10Everybody wants to resolve the uncertainty today. But I think that's a mistake because it will close off
01:16our mind about what we really have to look at. I think that's pretty standard interim Fed speak,
01:23let's say. But one of the things we tried to get at is, is AI showing up in productivity data?
01:29Or
01:29are you seeing anything that may be suggesting the labor market companies big and small holding off
01:35hiring because they just don't know what AI will or won't do for them? I wonder if you see any
01:41evidence
01:42at all. I really am not seeing any evidence of major AI impacts in the economic data at this time.
01:50I should say, you know, obviously on the investment side and things like that, it is making a difference.
01:55But if it doesn't seem to be holding back companies from hiring at this point, it doesn't really seem to
02:00be showing up in the productivity data. You know, in some ways, we wouldn't expect it to. I know I
02:06keep
02:06saying this and I'm a broken record, but it is still early in this. It is really, really early in
02:10this
02:11technology. And in some ways, we're holding it to an impossible standard to say, wow, it must already be
02:16impacting the labor market. Martha, I mean, you're not alone in saying that. I think that's really
02:21important to point out. People come on Bloomberg Tech every week and say this very early. One thing
02:26I really want to try and get deep into is the impact of the capital expenditure. So, you know,
02:33the numbers are just ginormous. And as you just mentioned, like in the capital markets, whether it's
02:37IPO or what Alphabet's doing in its equity offering, is all of that inflationary or is it
02:45disinflationary? Like some of the utilities would even argue that, like, if the
02:49hyperscalers take the burden of these big projects, it may cause energy prices to come
02:53down. And it's always been an argument that we found hard to track. So, first of all, I think it's
03:00important to say that the most important inflationary impact on the energy side right
03:04now is what's going on in the Middle East. That's going to trump anything else. I do think the evidence
03:09is
03:10clear if you're looking at the inflation data that there is some upward impact from what is going on
03:15in the AI space. You know, if we change what's happening on the utility side and how these things
03:22are financed, that might start working in the other direction. But I don't think that's happening quite
03:26yet. Yeah, I just, you know, people sometimes have short memories. I go back, I think it was two
03:31quarters ago where Meta said one reason we're raising CapEx is not because we need to spend more. It's
03:37because the cost of what we're trying to do is higher because of the environment. And what I'm
03:41trying to work out is how circular that is, how much that feeds back into inflation.
03:46I mean, I think right now this is a sector that people really want to invest in. It's also an
03:52incredibly expensive sector to invest in. These models are not free. The data centers are not free.
03:59And so as you're having money pile into that sector, it's going to drive prices up. And then if you
04:05want
04:05to keep investing, you're going to have to pay those prices.
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