DANA, I KNOW LISA IS
FOCUSED ON THE JOB ECONOMY BUT I WANT TO GO TO YOUR CALL FOR
RESTRICTION BY THE FED AFTER JACKSON HOLE.
ARE WE GOING TO CALIBRATE FOR SEPTEMBER 1 AFTER JACKSON HOLE,
DO WE JUST NEED TO GET TO WYOMING BEFORE WE CAN LOOK TO
THE FED MEETING? DANA: WYOMING IS BEAUTIFUL, BUT I
THINK THE FED IS CERTAINLY DATA-DEPENDENT
AND WE WILL GET SEVERAL MORE READINGS ON INFLATION, ANOTHER
JOBS REPORT, AN UPDATE ON GDP, AND I THINK THE FED WILL BE
LOOKING ALL OF THESE TO DETERMINE WHETHER OR NOT IT
NEEDS TO GO ANOTHER 75 BASIS POINTS OR 50 BASIS POINTS.
WHATEVER IS, THEY WILL CONTINUE TO RAISE INTEREST RATES. TOM:
IF IT IS .
1.75 OR 2.5, WHETHER THERE ARE TWO, DOES IT MATTER? DANA:
I THINK GETTING ABOVE 3% ON THE FED FUNDS RATE, THAT IS
RESTRICTION. WE CAN ARGUE ABOUT IT BUT --
TOM: WE DO NOT DO THAT HERE.
DNANA: RAISING RATES THIS QUICKLY, IT
WILL FEEL RESTRICTIVE. WE ALREADY SEE THAT IN THE GDP
DATA. LISA: DO YOU BUY THE DATA WE GOT ON
FRIDAY? WE HEARD PETER SHEARER SAYING
THAT DATA DOES NOT SEEM TO COHERE WITH THE GRANULAR ON THE
GROUND SPECIFICS AND INPUT. DO YOU THINK IT WILL GET
REVISED LOWER AND GIVE A LESS ROSY PICTURE OF THE LABOR
MARKET? DANA: HOW MUCH CAN YOU REVISED DOWN?
THAT WAS AN AS DOWN THE NUMBER, MORE THAN HALF A MILLION JOBS
AS OF JULY. REVISIONS WILL PROBABLY BE
MINOR. WHAT THE LABOR MARKET IS TELLING US AS WE STILL HAVE A
STRONG LABOR MARKET, MANY PEOPLE HAVE SEEN WAGES RISE,
PEOPLE HAVE BEEN HIRED IN THE IN PERSON SERVICES, AND IT
REALLY IS ASTOUNDING WHAT WE ARE SEEING.
I DO NOT THINK THE NUMBERS ARE LYING. LISA:
TELL ABOUT WHAT WE HEARD FROM PETER, WHICH I THOUGHT WAS
FASCINATING, HE SAID THAT PEOPLE ARE OVER HIRING.
COMPANIES ARE SCARRED BY WHAT HAPPENED POST-PANDEMIC WHEN
THEY FIRED PEOPLE AND THEN TO BRING ON STAFF THAT WAS NOT
THERE. HOW MUCH WILL THAT BE A PERSISTENT THEME THROUGHOUT
WHATEVER HAPPENS IN THE NEXT CYCLE? DANA:
WE THINK LABOR SHORTAGES ARE HERE TO STAY.
A LOT IS DEMOGRAPHIC. YOU HAVE MORE PEOPLE RETIRING
THAN YOUNG PEOPLE AVAILABLE. WE HAVE STRICT IMMIGRATION
POLICIES AS WELL, THAT MAKE IT DIFFICULT TO FIND A LABOR FROM
OUTSIDE OF THE COUNTRY. STILL, YOU HAVE PEOPLE THAT
CHALLENGE THE CHILDCARE ISSUE. PEOPLE DO NOT WANT TO WORK TWO
OR THREE JOBS, HAT'WHY THEY -- THAT IS WHY THEY ARE TRYING TO
FIND HIGHER WAGE JOBS. THIS WILL BE IN ISSUE BEYOND
WHAT WE THINK WILL BE A BRIEF RECESSION. KAILEY:
WHAT DOES THAT MEAN FOR HOW PERSISTENT UPWARD PRESSURE ON
WAGES IS LIKELY TO BE? DANA: CERTAINLY, IF INFLATION
CONTINUES TO BE ELEVATED AND THE FED STRUGGLES TO GET BACK
DOWN TO THE 2% INFLATION TARGET, WE THINK THAT THERE IS
PROBABLY THE POTENTIAL FOR A WAGE CHRIST SPIRAL -- WAGE
PRICE SPIRAL. THE
Y ARE BOTH MOVING TOGETHER AND THAT IS A CHALLENGE THE FED IS
TRYING TO PREVENT FROM HAPPENING WITH ITS ACTIONS.
KAILEY: OBVIOUSLY, IS ACTIONS DO HAVE A
LAG EFFECT, IT TAKES A WHILE TO SEE THE IMPACT.
SO, CAN THE FED ACTED QUICKLY ENOUGH THAT THEY ARE ACTUALLY
GOING TO BE ABLE TO GET THAT UNDER CONTROL OR WILL WE BE
LOOKING AT A SITUATION WHERE THIS ENDS UP OUT OF THE FEDERAL
RESERVE'S HANDS? DANA I: THINK THE FED IS ACTING AS
QUICKLY AS IT CAN. OTHER THAN RAISING RATES EVERY
MONTH, AT EVERY MEETING SINCE MARCH OF THEY HAVE RAISED
INTEREST RATES, AND I THINK THEY ARE DOING WHAT THEY CAN.
BUT MONETARY POLICY COMES WITH A LAG.
FIRST YOU WILL SEE THE EFFECTS ON THINGS LIKE MORTGAGE RATES,
THE HOUSING MARKET, THEN CONSUMER SPENDING, THEN
INFLATION. IT WILL TAKE TIME BUT WE FEEL
THAT THE FED CAN PROBABLY DO HIS JOB AND GET THINGS DONE IN
TERMS OF BRINGING DOWN INFLATION. TOM:
DOES ANY MEASUREMENT OF HOUSING RENT OR OWNERSHIP GET IN THE
WAY OF THEIR PLAN?
CAN HOUSING HAVE SUCH A CRISIS, BE SO EXPENSIVE THAT IT GETS IN
THE WAY OF BEST OUTCOMES? DANA: HOUSING IS A HUGE DRIVER OF
INFLATION RIGHT NOW FOR CONSUMERS IN THE U.S.
AS LONG AS HOME PRICES, EVALUATIONS OF NEW AND EXISTING
HOMES CONTINUE TO RISE, THAT
WILL SHOW US THINGS WITH A LAG, SO THAT PRESENT A CHALLENGE FOR
THE FED.