White House Council of Economic Advisers Chairman Christopher Phelan Talks Unemployment

**SPEAKER_1** (0:02)
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**Mike McKee** (0:07)
Well, let's see how bonds are moving following the jobs print. I mean, it's basically the curve is doing what you would expect. It is flattening at the short end. We're seeing two years and five year note yields higher on the day. The 10 year and the 30 year are a little bit lower as maybe there's more credibility in the idea of the Fed raising rates and in the long run, clamping down inflation. And the dollar is moving higher, which is what you would expect if markets are thinking that maybe we're going to see the Fed raise rates. Now we have heard just a moment ago from President Trump about the jobs report. No surprise that he is happy with the total number of jobs created, the 162,000. But he goes on to tell the Fed what to do, saying the Fed board with its great new leader must get smart, be patriots for a change. High interest rates put the USA at a very unfair disadvantage, and I won't allow that to happen.
Joining us now, White House Council of Economic Advisers Chair, Chris Phelan. It's your first chance to be on with us, and we're very glad to see you. And what does he mean by I won't allow that to happen?

**Christopher Phelan** (1:20)
I can't speak for the president. What I can say is this is a blowout jobs report.
Right now, the consensus among this network's Bloomberg Economists was 55,000. This came in higher not only than the average of those, but also every single one of them, all 77 It's a sign that the administration's policies are working. We have a very healthy job market, not just this month. This year, we've added 80,000 jobs a month.
In order to keep unemployment from going up, we estimate you need to average about 40,000 a month. We're doubling that. Unemployment has fallen from 4.3 to 4.1 percent.
Average weekly earnings are up 3.7 percent. This is a strong labor market.

**Isabel Lee** (2:11)
It definitely is a strong labor market and a blowout report. Chris, some of the categories we saw gain were local government, leisure and hospitality, and also information services. Is the Trump administration having a real effect in getting employment in these categories, or is the job to largely stay out of the way?

**Christopher Phelan** (2:29)
Every time any statistic comes out, it's going to be an average of a whole bunch of various sectors.
I think the important thing is the Trump administration has specifically said they want manufacturing to come back to the United States. There were two specific policies that they did to do this.
One was the OBBB, which had full expensing of capital expenditures. Capital expenditures now are on track to be almost double in 2026 what they were in 2024 The other was tariffs. We are saying to companies, either pay a tariff, somebody pays the tariff, or produce it in the United States. And we are seeing a good fraction of them saying, okay, we'll make it in the United States. The manufacturing boom, the non-residential construction boom is real, and it's showing up in the data, it's showing up in the data for capital expenditures, it's showing up in the jobs data.

**Mike McKee** (3:27)
Is it showing up too late for the midterms? And here's what I mean by that. You were talking about earnings. Average hourly earnings are running below the level of inflation right now. 3.1% this August, and inflation at 3.4 for CPI, 3.7% for PCE, and you've got gasoline at $4.15. It keeps going up.
Your focus has been on how many jobs were created, but Americans seem to be focusing on their earnings and the cost of living.

**Christopher Phelan** (3:59)
So I specifically talked about average weekly earnings, not hourly, because what matters to people is what they bring home at the end of the week, which is a combination of hourly earnings and how many hours you get to work. Part of the booming economy that we're having in the labor market that was shown up in this month is not just showing up in wages, but showing up in hours, which are when you combine hours in wages, average weekly earnings are outstripping inflation.

**Isabel Lee** (4:31)
Going back to McKee's point, Mike McKee, decals from the pump hit its highest ever level, it's around $4 a gallon, and the president has called the affordability issue a democratic hoax. Is that how the CEA sees it as well? Is this a concern to you to bring those numbers down?

**Christopher Phelan** (4:47)
It's affordability has always been a focus of this administration. It matters to us. We're doing specific things to make things more affordable for the American people. I think part of it is beef prices, or specific actions to bring beef prices down. Temporarily allowing some South American beef to come in, but also specific actions, for instance, to increase the shockingly low herd size in the United States. And then to make it easier for ranchers to bring their cattle directly to the market as opposed to going through, which is essentially a small number of middlemen to process it.