The surprisingly strong January jobs report reflects real employment and productivity growth, not just growth in government and government-adjacent jobs, Breitbart Economics Editor John Carney said Friday. explained in an interview. interview With Fox Business host Larry Kudrow.
Mr. Kudlow initiated the discussion with Mr. Carney, former Congressional Budget Office Director Douglas Holtz-Eakin, and Mr. Carney. shark tank “Mr. Kevin O’Leary of O’Leary Ventures said conservative pundits were trying to dismiss Friday’s explosive jobs report that showed the economy added 353,000 jobs in January. said Kevin O’Leary of O’Leary Ventures.
“I know a lot of people who are trying to poke holes in this and shoot it down,” Kudlow said. “They’re people of the conservative persuasion, let’s say. They’re people who want to say they don’t want Joe Biden to be re-elected. I think they don’t want him to be harmed. They don’t want him to be re-elected. I don’t want to get re-elected. But I’ve looked up and down these numbers and made some calls. And as far as these numbers go, they’re always subject to revision, but to me it’s pretty It looks realistic.”
“Yes, they are very real,” Carney agreed. “If you remove all government jobs, there are only 36,000. [and] If you subtract all government-adjacent jobs, i.e. social assistance, there are only 217,000 jobs. Even if you remove all the supposedly non-cyclical jobs, this is a very good jobs report. ”
Mr. Carney dissected the employment statistics on Friday’s show and debunked various conspiracies surrounding them. Breitbart Business Digest (emphasis in original):
the important thing is, Employment growth was widespread.. In January, professional and business services added 74,000 jobs, manufacturing added 23,000 and retail added 45,000.
[…]
While it’s fashionable to complain that much of the job growth is due to government jobs and therefore not a sign of the health of the private sector, that doesn’t seem to be the case in January. Government employment increases by 36,000 people, lower than last year’s average of 56,000 people. Of those, 11,000 are federal employees, excluding education, and 19,000 are state and local employees.
private payroll calculationMeanwhile, sales increased by 317,000, beating expectations of 142,000.
Even if we exclude what we sometimes call “Departments adjacent to government”The private sector has since added 217,000 jobs, including social assistance, health care, and education. The reason some analyzes exclude them is that many of the jobs are non-cyclical and do not indicate economic growth. However, this may only be partially true, as a significant portion of spending on these services is discretionary and therefore sensitive to business cycles.
These job numbers are not only “real,” Kudlow said, but “gaining momentum.”
Governor Carney agreed, emphasizing that this means there is no prospect of the Federal Reserve ever cutting rates. In a press conference this week, Federal Reserve Chairman Jerome Powell dashed market expectations for a rate cut after the March Fed meeting. But Carney argued those jobs numbers may have poured cold water on cuts ahead of November’s election.
“What this means is that not only will March be cancelled, but May will cut us off from the table. [and] Probably a June rate cut,” Carney said. “If the Fed doesn’t cut rates by July, I don’t think they’ll cut rates at all until after the election. The November meeting starts the day after Election Day. They delayed it by a day. Normally Tuesday through Wednesday. Wednesday through Thursday in November.”
Former CBO Director Douglas Holtz-Eakin pointed out that the most important data to look at is not the number of employees, but the impressive growth in productivity.
“Numbers are numbers, and I was just as surprised by the numbers as anyone,” Holtz-Eakin said. “I don’t think the really important number is the one in this report… it’s the productivity growth. The productivity growth, especially in the second half of 2023, came out of nowhere. And productivity growth brings great luxury. This would allow the Fed to significantly suppress demand while maintaining output growth without giving up on disinflation.
“So by 2023, everything has broken the path of growth and disinflation,” Holtz-Eakin continued. “What I would like to note is that things don’t always go your way. I mean, there’s going to be some bad news in the next few months, and we need to be prepared for that. I think that’s why the Fed is being so cautious. They have an economy that is very likely to have inflationary pressures again, and they don’t want to ease too quickly.”
O’Leary offered his thoughts on what is driving this unexpected productivity boom.
“My guess is that it’s the digitalization of the U.S. economy that happened during the pandemic,” he said. “Profit margins for S&P 500 companies and small businesses improved by about 2.5 percentage points overall, as they eliminated middlemen in distribution and sold direct to consumer and B2B models. You see it everywhere, whether it’s a company with 500 million in sales across the country.”
Federal Reserve Chairman Jerome Powell speaks after President Joe Biden announces Powell’s nomination for a second four-year term as Federal Reserve Chairman, Nov. 22, 2021. (AP Photo/ Susan Walsh)
He also predicted that the latest jobs report would “put the nail in the coffin” for the Fed’s May interest rate cut.
“This is a nail in the coffin for anyone considering a rate cut in May,” he said. “Productivity he is at 75%. Some are betting on rate cuts. In fact, the market thinks there will be 3 rate cuts (25 bip each) immediately after March. [Fed meeting], which has zero probability of cutting. I can not see it. ”
Mr. O’Leary argued that the Fed risks being seen as political if it attempts to cut rates in an election year, even though all the data shows the economy is heating up.
“It’s going to be political,” he said. “The incumbents want to talk about the economy, they want to talk about jobs, but they never want to be in an environment where interest rates are rising. They want the Fed to lower rates. So, especially right before they go into the voting booth, There will be a lot of political pressure for the Fed to cut rates once we get into the third quarter, which is the magical period when they can cut rates.
Carney agreed with Holtz-Eakin, who stressed the importance of improving productivity, and with O’Leary, who said the Fed would not cut interest rates anytime soon.
“The disinflation of all goods has pretty much been washed out of the economy. Anything that probably could have been gained by increasing worker participation has been washed out of the economy,” Carney said. “If we don’t increase productivity, we’re going to see more inflation. That is, if productivity continues to increase, by the way, because we were just exploring, no one knows why, and if it We don’t even know if we can continue. So that’s the big risk. That’s what Jay Powell is afraid of. They don’t want to cut, but they have to go back and raise. So , they’re going to hold out. I think Kevin O’Leary is absolutely right. No cuts in May. No cuts in June.”
“They won’t have a quota in my lifetime,” Kudlow quipped.
“In all seriousness, interest rates could be permanently higher. That’s one of the things we have to get used to,” Carney said.
Rebecca Mansour is a senior editor at Breitbart News. Follow her on X @Ramsour.
