UNEMPLOYMENT RATE COMING AT
5.9%.
JOINING ME RIGHT NOW IS THE
FORMER PRESIDENT AND CEO OF THE
ATLANTA FEDERAL RESERVE DENNIS
LOCKHART, GREAT TO HAVE YOU THIS
MORNING, THANK YOU VERY MUCH FOR
BEING HERE.
WHAT ARE YOUR EXPECTATIONS FOR
THE JOB’S PICTURE?
WE KNOW THE EXPECTATIONS ARE 650
OVERALL.
THERE’S SOME ECONOMIST THAT IS
GO AS HIGH AS -- AS 1 MILLION
JOBS.
BUT, I GUESS, OVERALL, WHAT’S
YOUR SENSE OF WHERE WE ARE ON
JOBS RIGHT NOW?
>> WELL, LET’S HOPE IT’S 650 OR
HIGHER.
THE INDICATORS WE’VE RECEIVED
THIS WEEK, THE ADP REPORT OF A
COUPLE OF DAYS AGO AND THE
CLAIM’S REPORT YESTERDAY WERE
BOTH VERY ENCOURAGING, I
THOUGHT.
SO I THINK THERE’S A DECENT
CHANCE THAT THE APRIL REPORT WAS
JUST AN ANOMALY AND WE WERE
GOING TO BOUNCE BACK TO A GOOD
PACE OF JOB ACCUMULATION.
BUT WE SHALL WE IN ABOUT 25
MINUTES FROM NOW.
MARIA: WELL, WHAT ABOUT GROWTH
OVERALL, DENNIS?
I KNOW THE ATLANTA FEDERAL
RESERVE IS EXPECTING 10.3%, THAT
NUMBER HAS MOVED AROUND A LOT
CLEARLY.
WHAT’S YOUR SENSE OF THE
ECONOMIC BACKDROP TODAY IN TERMS
OF GROWTH?
>> STRONG, VERY STRONG.
YOU CITED THE TRAFFICKING
ESTIMATE OF THE ATLANTA FED AND
THE NEW YORK FED ALSO HAS ONE.
IT’S QUITE A BIT LOWER.
IT’S A LITTLE BIT OVER 4% BUT I
THINK THE OVERALL POINT IS THAT
THE ECONOMY IS PERFORMING WELL
AND THE ECONOMY IS RECOVERING
VERY STRONGLY AND WE ARE GOING
TO CONTINUE TO SEE VERY HIGH
GROWTH NUMBERS, UNPRECEDENTED
HIGH GROWTH NUMBERS IN SOME
RESPECTS.
MARIA: LET ME BRING IN LIZ PEEK,
GO AHEAD, LIZ.
LIZ: GOOD MORNING.
IF WE HAVE A BLOW-OUT JOB’S
REPORT, LET’S SAY A MILLION JOBS
ARE CREATED, WHAT DOES THAT DO
TO THE THINKING OF THE FED ON
THE TIMING OF WINDING UP ITS QE,
BOND-BUYING MARKET, DOES IT
HAPPEN SOONER BECAUSE OF THE BIG
JOB’S NUMBER, DO YOU THINK?
>> WELL, I’VE BEEN FOLLOWING ALL
OF THE COMMENTARY OF THE FED
OFFICIALS AND SOME ARE BEGINNING
TO HINT THAT THEY ARE READY TO
START THINKING ABOUT THINKING
ABOUT AND --
LIZ: YEAH.
>> THEY HAVE A MEETING COMING UP
IN A FEW DAY’S TIME.
IT CAN BE ON THE AGENDA FOR THE
JUNE MEETING BUT I SUSPECT IT’S
A MULTI-MEETING TASK IN ORDER TO
FORM A CONSENSUS AND COME UP
WITH A PLAN FOR TAPERING.
SO THEY MAY START NEXT WEEK OR
THEY MAY WAIT TILL THE JULY
MEETING.
MARIA: WELL, LOOK, IT’S A GOOD
QUESTION BECAUSE THE CENTRAL
BANK HAS ALREADY ANNOUNCED THAT
IT WILL SELL OFF CORPORATE BONDS
AND SOME EXCHANGE TRADE FUNDS
THAT IT ACQUIRED LAST YEAR,
DENNIS.
I WAS SURPRISED THAT THIS DID
NOT SUGGEST THAT THE TAPERING
WAS ABOUT TO BEGIN.
I MEAN, THE FED HAD PURCHASED
ASSETS THROUGH THE EMERGENCY
LENDING FACILITY TO CONTAIN THE
ECONOMIC FALLOUT OF THE PANDEMIC
BUT BANK OFFICIALS ARE SAYING
THAT THE DECISION IS UNRELATED
TO MONETARY POLICY.
THEY MADE SURE TO SAY THAT SO
THAT PEOPLE WOULD NOT SEE THIS
AS THE BEGINNING OF TAPERING.
DO YOU THINK THIS IS THE
BEGINNING OF TAPERING?
>> NO.
I DON’T THINK YOU CAN CONNECT
THOSE TWO THINGS.
I THINK UNWINDING THE EMERGENCY
PORTFOLIOS WHICH WERE IN
CORPORATE BONDS AND ETF’S AS YOU
MENTIONED IS REALLY UNCONNECTED
TO THE QUESTION OF TAPERING THE
QE PURCHASES.
SO I JUST DON’T THINK THOSE TWO
THINGS ARE CONNECTED AND I THINK
THEY HAVE MADE VERY CLEAR THAT
UNWINDING THOSE PORTFOLIOS IS
NOT PART OF THE POLICY SETTING
AT THE MOMENT.
MARIA: SO -- SO WHAT’S -- WHAT’S
THE IMPACT HERE OF THE INWIND?
>> THE MARKETS APPARENTLY ARE --
ARE OPERATING, FUNCTIONING
APPROPRIATELY SO THEY WILL BE
CAREFUL NOT TO DISRUPT MARKETS
IN ANY WAY.
THAT’S A QUESTION OF HOW QUICKLY
THEY SELL OFF THEIR ETF’S, THEIR
BOND HOLDINGS, BUT IT SHOULD
BECOME A NON-EVENT.
I DOUBT THAT IT’S GOING TO GET
ANY ATTENTION TO SPEAK OF IN A
FEW DAYS’ TIME.
MARIA: REAL QUICK, IN TERMS OF
MOST IMPORTANT JOB’S REPORT WHEN
WE GET THE REPORT IN ABOUT 20
MINUTES.
ONE ISSUE IS WAGE INFLATION AND
I WILL BE LOOKING AT HOW THE
INCREMENTAL INCREASES THAT WE
HAVE BEEN SEEING, WAGE
INFLATION, ARE WE GOING TO SEE
WAGES GO UP SIGNIFICANTLY AND
WOULD THAT INDICATE AN
INFLATIONARY STORY, WORST THAN
WHAT WE THOUGHT.
IS THERE ANYTHING THAT WE SHOULD
FOCUS OUT OF THIS REPORT?
>> WELL, I PAY ATTENTION TO
PARTICIPATION BECAUSE WHAT HAS
HAPPENED, OF COURSE, OVER THE --
THE COVID-19 PANDEMIC MONTHS IS
PEOPLE DROPPED OUT OF THE
WORKFORCE SO IT’S A QUESTION OF
WHETHER THEY ARE COMING BACK
INTO THE WORKFORCE AND
PARTICIPATION IS RISING.
THE UNEMPLOYMENT RATE ITSELF IS
TO SOME DEGREE A FUNCTION OF
UNDERLYING PARTICIPATION AND I
DON’T THINK IT TELL YOU MUCH
UNLESS YOU REALLY LOOK AT THE
COMBINATION OF PARTICIPATION AND
THE UNEMPLOYMENT RATE.
YOU MENTIONED WAGES, YOU KNOW,
WE SEE A LOT OF BOTTLENECKS, IF
YOU WILL, IN THE LABOR MARKET
WHERE YOU HAVE PEOPLE OUT OF
WORK AND AT THE SAME TIME
EMPLOYERS SAYING THEY CAN’T FIND
QUALIFIED CANDIDATES.
SO ONE RESPONSE TO THAT IS TO
RAISE WAGES.
SO WE SHALL SEE WHETHER OR NOT
THAT’S HAPPENING AND CONNECTION
TO INFLATION, I THINK, IT’S TOO
EARLY TO SAY QUITE FRANKLY
BECAUSE THIS CAN BE SIMPLY AN
ADJUSTMENT IN A PERIOD OF TIME
IN ORDER TO TRY TO ATTRACT THE
WORKFORCE THAT A COMPANY NEEDS.
MARIA: YEAH.
YEAH.
WELL, MAKES SENSE BECAUSE A LOT
OF THEM ARE DESPERATE TO GET