BlackRock CIO Talks Job Report, Rates, Bonds

**SPEAKER_1** (0:02)
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**Dani Burger** (0:07)
Joining us now is BlackRock Chief Investment Officer of Global Fixed Income, Rick Rieder. So, Rick, the unemployment rate goes down, but the a surprise contraction in jobs. Last time we spoke for last month, you said the employment picture is stable, broadly unimpressive. Has your assessment of this labor market changed since then with these numbers in hand?

**Rick Rieder** (0:27)
No, broadly not impressive, I think is the right terminology. In fact, I was thinking about it. I think it's actually remarkable how unremarkable the data is. Listen, I think when you look at, people say, well, gosh, we're not hiring many people because we have a supply issue.
And you saw some of that play through today. But that being said, you're not seeing any wage growth. So meaning, there's not that demand for labor that you would expect when you got an economy that's doing as well as it's doing. I mean, we're going to grow. I think you're going to see 6% nominal GDP. You've got corporate top line revenue that's strong, earnings are strong. But you're seeing operating leverage for companies kick in like you read about. I mean, you look at all these earnings reports, particularly in the tech space, companies are growing, they're spending immense amounts of capex, but you're actually cutting people in many cases. So anyway, I think we're seeing a productivity revolution. I think we're watching it play out month in and month out. I mean, to have only 20,000 jobs on a three month moving average, you strip out health care, you're having negative job growth in aggregate. So anyway, I think it's, listen, I just think we're going through, I think when they summarize this years from now, they're going to witness something that is productivity. People say it's AI kicking in. I actually think it's just been an ethos around companies growing their business and seeing how you can operate without that much employment.

**SPEAKER_1** (1:44)
Well, also, you've got the fall in immigration that is probably contributing to these big declines we're seeing in the labor force.
But the people who want jobs are apparently getting jobs with unemployment of 4.1%. So I assume this tells you as well as the Fed that we don't have a problem with the labor force side of the mandate.

**Rick Rieder** (2:05)
Yeah, I mean, I think that's right, Mike. I mean, I, you know, I've been pretty adamant about I don't think the Fed needs to hike. And I don't think you really will solve the inflation dynamic. Part of why I think these task forces will be so powerful is you'll get into what are some complex subjects. When you break down inflation and you look at the difference between services and goods, you think about what's still sticky in inflation, education, health care, insurance, as you're moving the overnight funds rate up really do much.
How and you get so the point being, if you're restrictive on rate and you're driving mortgage rates higher, I just don't see that as really effective trying to bring inflation down. I just got what I would argue is maybe it's an okay labor market, but you still need, in particular, we have this much debt on the country. You need to grow faster. You need to put more people to work. And I think that to me is the philosophy that the Fed has to employ today.

**Dani Burger** (2:56)
Well, on the inflation side of things, Rick, I know you've been a big proponent again. The type of inflation we have isn't something that's fixed by hikes, but perhaps by policy, not monetary policy, but fiscal policy. What is the policy you think that could start to eat away at inflation? Is it just like ending a war, basically?

**Rick Rieder** (3:15)
I mean, listen, the war is a big deal. I mean, obviously, not only do you get higher prices in terms of fuel, but there's a transmission effect through that. When you talk about obviously trade getting slowed somewhat. So anyway, the war is a big deal, obviously. So that will change.
Then the dynamic of people will focus on tariffs. You know, the goods inflation, you know, with the US economy, it's not that large of an importer of goods. So yes, and I think people got really worked up about that last year. So what do you do? And how do you create fiscal velocity? You know, there's a bunch of things you could do. And I think, quite frankly, deregulation is powerful. I think the idea around how do you help with housing, things like zoning, permitting, et cetera. How do you get like some of the stuck student loan asset or liabilities on that young people have? How do you transition some of that? How do you help with some of that? I think there's a whole series of fiscal dynamics that can help with inflation. But I don't think moving the overnight funds rate will really do it.