00:00What's your first take this morning?
00:01My first take is, the strong data seems to be correcting for some of the seasonal issues that we've seen.
00:07The prior two months saw substantial declines in leisure and hospitality.
00:10That has just since corrected. In July it was minus 20, in June it was minus 50,
00:15so the fact that it bounced back doesn't really imply that much happening under the surface.
00:19The unemployment rate did end up ticking up a little bit, nearly rounding up to 4.2, it was 4
00:23.14.
00:24Wages were 0.27, so they just made it to 0.3, but it was a skinny 0.3.
00:31So I think the hawkish price action is maybe taking the print a little bit too far.
00:36I mean, of course, it's a labor market that's doing fine,
00:39but realistically it's going to be the inflation data that are going to dictate what the Fed do.
00:43Yeah, does this have consequences or not for the committee meeting in a few weeks?
00:46I mean, at the margin, of course, it plays into the narrative
00:49and it confirms that the labor market is not something to worry about.
00:52So really the decision is going to be a question about does inflation end up coming in kind of below
00:570.3,
00:58and that's likely going to be the deciding factor here.
01:00Ultimately, this does represent, though, a good deal of strength.
01:04It kind of supports the idea that the participation rate doesn't necessarily mean
01:08that this is an overall weaker economy than maybe the 4.1 percent unemployment rate would suggest.
01:13Do you think that this does support the idea that policy is not restrictive
01:18if the labor market seems to be chugging along and, if anything, breaking to the upside rather than to the
01:23downside?
01:24Yeah, I mean, I think it's a signal that the labor market is in very good balance.
01:27So it tells you that rates are close to where they need to be,
01:31and inflation is probably driven by a lot of the one-off factors, as Governor Waller talked about yesterday.
01:35And we're likely seeing disinflation in the next couple of months,
01:38partially because seasonal factors held it up earlier in the year on top of tariffs and the Iran war and
01:44the chip shortage.
01:45So long story short, we're probably going to see an environment where inflation is running in the sort of mid
01:50-to-high twos,
01:51which is obviously not where they want to be,
01:53but not quite at the 3-plus percent range as CorePC is currently printed.
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