00:00Joining us now, White House Council of Economic Advisers Chair Chris Phelan.
00:03It's your first chance to be on with us, and we're very glad to see you.
00:08And what does he mean by, I won't allow that to happen?
00:15I can't speak for the president.
00:17What I can say is this is a blowout jobs report.
00:21Right now, the consensus among this network's Bloomberg economists was 55,000.
00:27This came in higher not only than the average of those, but also every single one of them, all 77.
00:35It's a sign that the administration's policies are working.
00:40We have a very healthy job market, not just this month.
00:43This year, we've added 80,000 jobs a month.
00:47In order to keep unemployment from going up, we estimate you need to average about 40,000 a month.
00:55We're doubling that.
00:57Unemployment's fallen from 4.3 to 4.1 percent.
01:01Average weekly earnings are up 3.7 percent.
01:05This is a strong labor market.
01:07It definitely is a strong labor market and a blowout report, Chris.
01:10Some of the categories we saw gain were local government, leisure and hospitality, and also information services.
01:15Is the Trump administration having a real effect in getting employment in these categories,
01:19or is the job to largely stay out of the way?
01:24Every time any statistic comes out, it's going to be an average of a whole bunch of various sectors.
01:31I think the important thing is the Trump administration has specifically said they want manufacturing to come back to the
01:39United States.
01:40There were two specific policies that they did to do this.
01:43One was the OBBB, which had full expensing of capital expenditures.
01:48Capital expenditures now are on track to be almost double in 2026 what they were in 2024.
01:55The other was tariffs.
01:56We are saying to companies, either pay a tariff, somebody pays the tariff, or produce it in the United States.
02:03And we are seeing a good fraction of them saying, okay, we'll make it in the United States.
02:10The manufacturing boom, the non-residential construction boom is real, and it's showing up in the data.
02:17It's showing up in the data for capital expenditures.
02:20It's showing up in the jobs data.
02:22Is it showing up too late for the midterms?
02:25And here's what I mean by that.
02:27You were talking about earnings.
02:28Average hourly earnings are running below the level of inflation right now.
02:323.1% this August, and inflation at 3.4% for CPI, 3.7% for PCE.
02:41And you've got gasoline at $4.15.
02:43It keeps going up.
02:45Your focus has been on how many jobs were created, but Americans seem to be focusing on their earnings and
02:51the cost of living.
02:54So I specifically talked about average weekly earnings, not hourly.
02:59Because what matters to people is what they bring home at the end of the week, which is a combination
03:04of hourly earnings and how many hours you get to work.
03:08Part of the booming economy that we're having in the labor market that was shown up in this month is
03:14not just showing up in wages, but showing up in hours.
03:18Which are, when you combine hours and wages, average weekly earnings are outstripping inflation.
03:26Going back to McKee's point, Mike McKee, diesel from the pump hit its highest ever level.
03:31It's around $4 a gallon.
03:33And the president has called the affordability issue a democratic hoax.
03:36Is that how the CEA sees it as well?
03:39Is this a concern, too, to bring those numbers down?
03:42It's affordability is always been a focus of this administration.
03:46It matters to us.
03:48We're doing specific things to make things more affordable for the American people.
03:53I think part of it is beef prices.
03:55Specific actions to bring beef prices down.
03:58Temporarily allowing some South American beef to come in.
04:02But also specific actions, for instance, to increase the shockingly low herd size in the United States.
04:09And then to make it easier for ranchers to bring their cattle directly to the market as opposed to going
04:15through, which is essentially a small number of middlemen to process it.
04:20This administration, again, looks at specific problems and tries to find ways to ameliorate them.
04:27Forgive me for asking a question this way, but the president says that when the economy is booming, we should
04:33be lowering interest rates, which would seem to be counter to what conventional economics would call for.
04:40He also says that he's going to stop trading with countries that have a trade surplus with the U.S.
04:47if the Fed doesn't cut rates.
04:50And I'm wondering, should Americans just you can't speak for the president, you say, but should Americans just kind of
04:57ignore what he's saying when his advice or his comments on the economy don't make a lot of sense?
05:05Well, let's get back to what what the business about whether you should cut or raise rates when the economy
05:10does well.
05:12Chairman Warsh was very specific in his Jackson Hole speech to say that what he looks at to decide whether
05:19to increase or decrease rates is how inflation is doing, where it is, where it's been trending, and that he
05:27pretty much specifically ruled out that things like the labor market are going to determine whether or not or what
05:35interest rate decisions should be.
05:39We also get CPI and PPI next week.
05:41How are you reading or awaiting those figures?
05:45I mean, we're now seeing more importance than them, especially after the blowout jobs report today.
05:50Absolutely what matters is inflation.
05:53We'll be looking very closely at those numbers, and we are going to be awaiting them, as is everyone else.
05:59Do you have any kind of thoughts on what we might see?
06:03Because what the hawks on the Fed are talking about is service industry prices.
06:08The Fed is kind of looking through oil and gasoline inflation, and their view is sort of the tariffs have
06:14already passed through the inflation numbers.
06:16Do you see progress being made in broader areas of the economy?
06:22So I don't see any of the data before, you know, next week, so I can't speak to that.
06:28It is the case that we, a lot of times economists get a bum rap for looking at core inflation
06:35as if food and energy don't matter.
06:38We know that food and energy matters, but we also know that they tend to be volatile.
06:43And so if you want to predict what's going to happen in the future, we look at core, which excludes
06:48food and energy because it helps predict well.
06:51Core PCE over the last three months annualized is 3%.
06:55Core PCE for the three months before that was 3.9%.
07:00It's coming down.
07:02So personally, I don't tell the Fed what to do, but personally, I don't see the justification for raising rates
07:08at this point.
07:09In real wages, they made solid growth, but the underlying costs for consumers like you and me are still very
07:14high.
07:15Again, we bring it back to what Mike McKee pointed out earlier, that the price of the pump is still
07:19around $4 a barrel.
07:20Does the president or your office have tools to bring down those prices before we see further spikes?
07:27Right now, I mean, we can look at what causes all aspects of gasoline prices, prices of crude, prices of
07:35refining, and so forth.
07:38What I can say is there is data on what people expect, what the world markets expect crude to be
07:46over the next few months.
07:48And the world markets expect crude prices to decrease.
07:53Well, you've done what you can do in terms of gasoline prices.
07:57There's not much left in the Strategic Petroleum Reserve.
08:00The president has now agreed to let more beef in to try to bring prices down there.
08:05Do you have anything else lined up to try to affect the inflation rate, to try to affect prices that
08:11consumers are watching?
08:16Well, one thing that Chairman Warsh very clearly said is, and I applaud him for saying this, he said inflation's
08:24on us.
08:25Inflation is a Fed thing.
08:29It's been above their target for 65 straight months.
08:33And he's been chairman for 100 days.
08:36I was very explicit about that.
08:40So I guess I would leave it with the man I consider to be a very capable choice for Fed
08:48chairman.
08:49Now, the president said he needs to be a patriot and cut rates.
08:55Is the president now going to get into the business of criticizing him like he criticized Jay Powell and continue
09:03to give him advice?
09:05I think that presidents giving advice and talking to Fed officials has a very long history in this country.
09:15This is not a new thing.
09:17This is the given Fed independence does not mean that the president of the United States cannot have opinion.
09:22Fed independence means that ultimately the decision is made by the Federal Reserve.
09:27It doesn't mean it gets to do it in a vacuum with no criticism.
09:31So, let's begin with our son.
09:31Let's go to the Federal Reserve.
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