BlackRock Global Fixed Income CIO Rick Rieder Talks Growing Economy, Data Center Spending

**SPEAKER_1** (0:02)
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**Dani Burger** (0:07)
Let's get more on markets now. I'm so pleased to say that I'm joined by the BlackRock CIO of Global Fixed Income, Rick Rieder. Rick, great to see you. I know freshly back from Davos. Hopefully the jet lag hasn't got you. What was your take on this jobs figure?
115, finally we got back to back gains for this jobs market.

**Rick Rieder** (0:25)
Yeah, I mean, there's some good things going on. And it's healthy to see that sort of positive gain. You say back to back. I mean, listen, I think the economy is growing. I think the economy is growing quite vigorously. I think you could hit 6% nominal GDP this year. But I always think when we look at the top line number, it's not nearly as interesting as what's happened under the surface.
The last six month moving average of jobs is pretty incredible. It's 55,000 jobs, 54,000 are in healthcare. So meaning you don't really have any job creation. If you go deeper into it, you have an economy that's doing really well. But the bifurcation is incredible. So you think about, I was looking at the numbers of manufacturing, as you said, is softer. Real estate is negative jobs.
And so if you think about, gosh, the sectors that I think, and this is getting to the interest rate tool, the sectors that are sensitive to interest rates are still difficult today. And actually, well, the one I also think is fascinating, we look at information hiring. So that's in and around technology. And you look at the last four months, it's negative.

**Dani Burger** (1:26)
Yeah.

**Rick Rieder** (1:26)
Why is that happening? You actually have what is extraordinary, capex by these companies that are spending on capex. Well, you don't need the people.
And you're seeing companies that are spending huge amounts of capex, and then they're announcing significant layoffs. So you have an economy that, the top line is interesting. When you strip out health care, it's like, we need to create a little bit more hiring. The supply is not that high, so the unemployment rate doesn't move. But there's something underneath the surface, when you think about what's happening and how the economy is stratified, that I think is pretty fascinating today.

**Dani Burger** (1:59)
I think that is so interesting too, Rick.
And this is something that I've been looking at over in the past week, of, okay, we have all this spending on data centers. What does that actually do to jobs? Here was kind of cobbling together various studies, the picture that I got. So for every $1 billion invested in data centers, it only creates 50 permanent jobs. If you were to compare that to something like a traditional automotive or pharmaceutical plant, that same spending would create 1500 to 2000 jobs. This idea that you build the plant, that requires work, but the permanent people, it's like a few HVACs running around trying to fix things. Is it dangerous that that's what we're spending on in this economy? Something that doesn't create as many permanent jobs that other types of capex would?

**Rick Rieder** (2:41)
And I mean, that was pretty good describing. I could describe it better than that. I think that's exactly right. I mean, I think we have a dynamic and we have a productivity revolution coming. And if you think about, what's fantastic is you've got to get an aging demographic that supports healthcare jobs.
You've had job creation, education, that's great. But you have a dynamic that if you, and I think from a Fed's perspective, otherwise, if your perspective about where we're going, real productivity means, gosh, you don't need to use as much labor.
And today, you look at the average hourly earnings number today and like, you know, there seems to be a bit more slack than that top line number would suggest.
I think today, numbers are pretty good. You would think, sorry, I say the numbers are okay. If you think that, you know, the next month you could have also decent jobs because you're hiring some people in health care, maybe a little bit of infrastructure build. But the perspective, I think, is a bit more concerning. And, you know, I think the training, the retraining, how the economy transitions people, I think, is going to be a really big deal going forward. It's part of why I believe we got to get housing moving. You got to get real estate moving because it creates so much velocity in areas that are not as AI sensitive.

**Dani Burger** (3:56)
Well, what about beyond housing, Rick? And it's a point that you've made well on this program many times before on what's necessary to get this economy going. But I just wonder if this is the future that we're heading to. I mean, things are advancing so fast. Anthropics growth is like bigger than Zoom during the pandemic, bigger than Google during the.com run up to the.com bubble. I mean, what do we do when these things are growing so fast? I mean, part of me just being a pessimist and maybe a skeptical journalist just feels like we're in a world and an economy that's not fully prepared for that future.