MARIA: WELCOME BACK TO THE
PROGRAM.
WE ARE CONTINUING MY
AND CEO ROBERT KAPLAN.
ROBERT, YOU JUST MENTIONED A
THAT WE ARE SEEING IN THIS
ECONOMY PARTICULARLY RELATED TO
JOBS.
WHAT DO PEOPLE DO WHO ARE
NERVOUS THAT AUTOMATION,
TECHNOLOGY, WILL REPLACE THEM?
HOW DO YOU MAKE SURE YOU'RE BEST
POSITIONED FOR THIS NEW NORMAL?
>> YEAH.
SO THERE'S NO QUESTION THAT
AUTOMATION IS CAUSING BUSINESSES
TO REPLACE PEOPLE WITH
TECHNOLOGY.
AND A LOT OF PEOPLE SAY WELL,
IN MY VIEW, IT'S BEEN
ACCELERATING IN THE LAST TEN
YEARS, PARTICULARLY WITH
DISTRIBUTED COMPUTING POWER,
MEANING CONSUMER HAS IN THE PALM
OF HIS OR HER HAND MORE
COMPUTING POWER TODAY THAN MOST
COMPANIES DID 20 YEARS AGO, AND
IT'S CHANGED THE PRESSURE ON
BUSINESSES AND THE LEVERAGE THE
CONSUMERS HAVE.
PROBABLY IN A POSITIVE WAY, BUT
IT MEANS BUSINESSES HAVE LESS
PRICING POWER, AND THE WAY THEY
ARE RESPONDING TO THE LOSS OF
PRICING POWER IS TO FURTHER
AUTOMATE IN ORDER TO REDUCE
COSTS.
AUTOMATION, BUT THE IMPACT ON
EDUCATION OR BETTER, ALL THE
STUDIES SHOW YOU'RE PROBABLY
ADAPTING TO THIS TYPE OF TREND
PRETTY WELL, NOT WITHOUT SOME
PAIN, BUT YOU'VE GOT THE SKILLS
TO ADAPT.
THE CONCERN IS IF YOU'RE ONE OF
THE 46 MILLION WORKERS IN THIS
COUNTRY THAT HAVE A HIGH SCHOOL
EDUCATION OR LESS AND YOU ARE
NOT HIGHLY SKILLED, YOU'RE
FINDING YOUR JOB RESTRUCTURED OR
ELIMINATED.
THAT'S WHY YOU HAVE HEARD ME SAY
WE NEED FOR STARTERS IMPROVE
EARLY CHILDHOOD LITERACY,
COLLEGE READINESS, MATH SCIENCE
JUNIOR COLLEGES AND TO SOME
EXTENT OUR HIGH SCHOOLS.
WE ARE DOING THAT IN THE UNITED
STATES.
WE ARE MAKING PROGRESS, JUST NOT
NEARLY FAST ENOUGH TO KEEP UP
WITH THIS TREND, AND I THINK
HALF OF ALL SMALL BUSINESS IN
THIS COUNTRY REPORT THEY CANNOT
FILL THE JOBS THEY HAVE OPEN FOR
SKILLED WORKERS.
SO THIS IS A BIG OPPORTUNITY.
IF WE CAN FILL THESE SKILL JOBS
AND IMPROVE SKILLS TRAINING, WE
CAN GROW GDP BECAUSE WE CAN
I THINK YOU ARE RIGHT, BIG
BUT THE PRIVATE SECTOR AS WELL.
THAT'S VERY IMPORTANT IF YOU CAN
SEE THAT KIND OF COMBINATION.
I'M WITH YOU ON FINANCIAL
LITERACY AT A YOUNG AGE.
THAT'S FOR SURE.
SO MANY CHANGES AFOOT, ROBERT,
WHETHER IT BE THAT CORNER OF
WITH THE ECONOMY.
THE FEDERAL RESERVE HAS
INDICATED WE COULD SEE AS MANY
AS FOUR INTEREST RATE HIKES THIS
YEAR.
PEOPLE ARE QUESTIONING THAT
BECAUSE YOU HAVE UNPRECEDENTED
SITUATION NOT ONLY WITH THE
STRENGTHENING ECONOMY BUT WITH
THE FED TRYING TO UNRAVEL THIS
BALANCE SHEET OF 4 1/2 TRILLION
DOLLARS.
HOW WORRIED ARE YOU THAT THE FED
WILL BE ABLE TO MANAGE THIS AND
DO THIS WITHOUT REAL DISRUPTION
DEBATING, I'M ALWAYS THINKING
ABOUT WITH MY TEAM AT THE FED IS
AND AT THE DALLAS FED WE'RE
AT A TIME WHEN YOU'RE MEETING
YOUR DUAL MANDATE, MEANING YOU
ARE AT OR PAST FULL EMPLOYMENT
AND WE'RE MEETING OUR 2%
INFLATION GOAL.
THAT'S A POINT AT WHICH YOU
DON'T WANT TO BE OVERSTIMULATING
LEVERAGE AND OTHER ISSUES THAT
CAN BE PAINFUL TO DEAL WITH
LATER.
ON THE OTHER HAND, YOU DON'T
WANT TO RAISE RATES SO FAST THAT
YOU CHOKE OFF OR SUFFOCATE THE
EXPANSION.
SO THAT'S THE BALANCE.
MY OWN VIEW, AND WHERE I COME
OUT IN THAT DEBATE IS WE OUGHT
TO BE MOVING TOWARD A NEUTRAL
LEVEL FOR THE FED FUNDS RATE.
NEUTRAL MEANS IT'S A LEVEL THAT
IT IS A THEORETICAL LEVEL.
MODELS, BUT ALSO LOOKING AT THE
YIELD CURVE AND LOOKING AT OTHER
FACTORS, IT'S PROBABLY ARRANGES
AROUND -- IS MY BEST JUDGMENT IS
WHERE NEUTRAL AT.
IF WE'RE AT 1.75 TO 2 PERCENT
RIGHT NOW, I BELIEVE WE OUGHT TO
BE GRADUALLY, KEY WORD GRADUALLY
NEUTRAL.
MARIA: MEANWHILE THE PRESIDENT
SAYS HE'S NOT HAPPY WITH THE
BECAUSE YOU HAVE BEEN INCREDIBLY
INDEPENDENT.
WE KNOW THAT.
THE FED IS SUPPOSED TO BE
COMMENTED ABOUT THE FEDERAL
RESERVE, PEOPLE ARE QUESTIONING
THAT INDEPENDENCE, IN SOME
CORNERS OF WALL STREET.
HERE'S WHAT THE PRESIDENT SAID
RECENTLY.
HE TOLD REUTERS I'M NOT THRILLED
WITH HIS RAISING OF INTEREST
RATES.
NO, I'M NOT THRILLED, REFERRING
TO JAY POWELL, YOUR THOUGHTS ON
THE PRESIDENT'S RESPONSE TO THE
FED'S WORK.
>> SO I WON'T COMMENT DIRECTLY
ON THAT, BECAUSE I DON'T THINK
IT WOULD BE APPROPRIATE, BUT I
WILL SAY THIS, PART OF THIS JOB,
FED FOR THREE YEARS, AND ONE OF
THE REASONS I WENT FROM THE
CHALLENGING TO QUOTE UNQUOTE
NORMALIZE MONETARY POLICY.
AND THE KEY PART OF THIS JOB IS
THE FED NEEDS TO DO ITS WORK
AND SO MY CHALLENGE AND I THINK
OUR CHALLENGE IS TO ANALYZE THE
ECONOMY, WEIGH THIS BALANCE THAT
I JUST TALKED ABOUT, AND MAKE
GOOD MONETARY POLICY DECISIONS,
AND I THINK WE -- PART OF THE --
THE CHALLENGE OF THE JOB IS DO
IT AS MUCH AS HUMANLY POSSIBLE,
DIVORCE FROM POLITICAL
CONSIDERATIONS OR POLITICAL
INFLUENCE.
MARIA: WHAT ABOUT TRADE, DO YOU
WORRY THAT THIS TRADE SPAT WITH
CHINA UPSETS YOUR EXPECTATIONS
IN TERMS OF GROWTH?
>> YOU'VE HEARD ME SAY I THINK
THE TRADE DEBATE WITH CHINA, THE
TRADE ISSUE WITH CHINA IS VERY
APPROPRIATE FOR US TO BE
ATTACKING.
STEALING FROM US FOR DECADES;
RIGHT?
BE WELL SERVED TO GET OUR TRADE
AGREEMENTS SHORED UP WITH
MEXICO, CANADA AND WITH EUROPE.
I THINK WE WOULD BE FAR MORE
FORMIDABLE TO FIGHT THIS BATTLE
IF WE HAVE SHORED UP THESE OTHER
ARRANGEMENTS.
ECONOMIC IMPACT, THESE TRADE
TENSIONS CLEARLY ARE RAISING
INPUT COSTS.
I THINK HOPEFULLY IT WILL BE
TRANSITORY.
BUT SO FAR, WHILE IT'S AFFECTING
CERTAIN INDUSTRIES AT THIS
POINT, IT'S NOT HAVING THE
MATERIAL EFFECT ON GDP GROWTH.