Claudia Sahm Talks US Jobs Report

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**Tom Keene** (0:07)
Across America, without commercial interruption, we report on the American labor economy. We are going to extend our discussion with Dr. Sahm after seeing this jaw-dropping report. Peter Scheer looks like a genius right now, with us an hour ago. Futures explode up 23, Dow futures up 164, NASDAQ up half a percent, and the VIX comes in to a new low 16.14. We're going to get a 15 VIX here in a moment. Over on the Sweeney front, the two-year yield comes in. All of a sudden, rate increases. What do you think, Paul?

**Paul Sweeney** (0:41)
Feels like they pushed out a little bit here. Looking at the two-year, comes in about four and a half basis points, 4.12%.

**Tom Keene** (0:48)
Looking at the data here, we're going to give Dr. Sahm time to digest it as she does. Claims were steady here on a compressed Thursday, Friday wall of data, continuing claims are depressed as well. Hourly earnings on target, the unemployment rate, as John Tucker said, and all that complex math improves from 4.3% to 4.2%.
But it is the revisions, that's what I want to focus with Dr. Sahm on. We are thrilled from New Century. Claudia Sahm is with us for this important report. Again, futures up 23
Claudia, there's non-farm payrolls, and there's two month net revision, which gives me a negative statistic. And then we have six months or every year, other adjustments. We continue to overguess our labor enthusiasm. Does it surprise you to see a two month net revision that's negative?

**Claudia Sahm** (1:48)
I wouldn't say it's surprising. I mean, revisions are a natural part of the process. We want to get a snapshot on the US economy as quickly as possible, with over 150 million workers and tens of millions of businesses. Like, you don't do that in two weeks on the first try. So the revisions are part of the process getting a clearer and clearer picture.
So I kind of push back on that the system is broken, we're always going to get these kind of revisions. We've seen some upward revisions recently too. So I think there were some things maybe that were a little puzzling in, say, last month's data, some big jump in government deployment. And so it takes some time to work out the numbers. So I wouldn't take too much from it. It just all this underscores again, don't get too hung up on the latest number, look at averages, look under the hood. I think that's a consistent message.

**Tom Keene** (2:37)
Non-farm payrolls was 188,000 three months moving average. That comes down almost 20,164.
So that drops down to three months moving average. And the new three months moving average is 111,000. And that'll adjust. Dr. Sahm, is that politically acceptable in America to have a 90 day moving average of 111,000?

**Claudia Sahm** (3:05)
What really matters is that the people out there who are looking for jobs can get jobs and they're good jobs, right? So the payrolls are kind of a tricky way to read that just because we can have changes in how many people are out there looking for jobs. I still feel like the unemployment rate is a better place to start that conversation than the payroll numbers. Though, of course, I mean, the difference is that it matters to people, even if you're in the 4.3, 4.2 percent isn't a lot of unemployed. But if you're one of those, it's a big deal, right? So you're going to, and that may affect your vote. So, but I think payrolls is a tough one. And I will say even with the number, the three month moving average of payrolls being revised down, that's still well above what estimates were, what we think the labor force is growing at. So that could still be a good number.

**Tom Keene** (3:51)
I'm just, you know, Claudia is so young, and you're Sweeney, you're just a kid. And the answer is 111,000 is un-American. We're supposed to be vibrant at 150, 200, 210, and those days are just evaporated.

**Paul Sweeney** (4:07)
Claudia, how do you think our new Fed Chairman and the Federal Reserve is going to view this data point?

**Claudia Sahm** (4:15)
This, today's report is going to keep their focus squarely on inflation. So there, I mean, you know, what you're looking for are red flags, downside risks. And this, this doesn't show signs of it. I think the one place that I find somewhat disconcerting is, you know, the unemployment rate did tick down to 4.2 percent, but it came with a three-tenths decline in the labor force participation rate. And so that's, you know, people can retire, people can, like, go and, you know, the change is, that's not a thing the Fed gets involved with, but that does give me a little bit of concern just about the, again, the structure of the labor force, the workforce that's out there. So, you know, I think they'll keep a watchful eye on this, but this, I don't see red flags in this in terms of them turning attention into problems in the labor market.