The captain of the ship admits he can't trust his own navigation charts. For years, you've been told to hang on every word of the monthly jobs report. Now a Fed president confirms what we've all known: the official numbers are becoming a fantasy, polluted by bad data and guesswork. Focus instead on the "bathtub" metaphor he uses. It is the key.
He calls the job market "steady but thin," meaning there is barely a trickle of water coming in, even though it is not draining out. Companies are too scared to fire anyone, and you're too scared to quit. This situation is paralysis. It's an economy holding its breath, and the only people who benefit are the ones who can afford to wait it out. He talks about people dropping out of the labor force and how the unemployment rate doesn't capture them. Finally.
They're a decade late, but they're finally admitting that the health of a country requires more than a good-looking government spreadsheet. A system that makes millions of its own people invisible merely hides the evidence of its failure. The real measure of a strong economy is whether you can lose your job and not have your life fall apart. Everything else is just noise.
The argument kinda seems like the captain can't trust his own navigation charts because it's pretty clear that they are leading into a swamp, but isn't it better to have some chart, than no chart at all?
It feels like everyone is waiting for an AI caused mass layoffs or for AI to be revealed as bullshit.
My current personal situation feels very meta as a contract accountant for a data center construction and operating company. Everyone's a contractor because they don't want to hire anyone in case this pops, the amount of money flowing through this place is mind boggling, we don't use AI for a single thing in accounting.
> the BLS data is the best there is, but it’s not without flaws and it’s in an environment where people don’t like answering their phone and they don’t like doing surveys.
Is there a better way to conduct these survey that would lower the dislike factor of phones, etc.? Are there startups working on this?
It was very nice interview thank you. I have to wonder though do you like me think that sometimes nobody has any idea what's going on? I have a deep suspicion that the economic academics are just making stuff up to justify their existence.
Seems employment mirrors the bifurcated equity market, with stability (apparently) at top levels, while the vast majority of everyone else is in a fragile ambiguity. I think the current fragile balance is shifting to overall weakness everywhere, which will stall the economy more broadly.
Interesting interview - but the response to the AI questions seemed to miss the mark. Of course employers are going to look to take advantage of increases in production and avoid hiring people. "We want high productivity growth... If you don’t have productivity growth, real wages can’t rise, and that’s a far bigger problem." Hasn't that been the exact problem form 5 decades?
Fascinating to hear from President Goolsbee about the Chicago Fed Labor Market indicators, and his perspective on the difficulty of tracking and forecasting employment and the potential impact of AI by sector when we don't have comprehensive government data to rely on.
I've been developing a methodology of using Indeed.com job postings and the most recently available JOLTS hires-to-openings ratio to make sectoral forecasts, and I should have a preprint ready within the next week as a more robust follow-up to this exploratory piece I wrote last year: https://www.2120insights.com/p/how-to-peek-6-months-into-the-future
When it comes out, I'd love to hear feedback from the team at the Chicago Fed or anyone else who is doing similar work!
I’d like to hear more about why exactly increased productivity due to AI is expected to increase wages when that effect has actually been lessening over the last couple decades
Great interview. This is an obviously very complex issue with lots of unknowns and assumptions, but I feel like I have a much better grasp of it now.
Thanks!
Excellent. “So far, it (the job market) is not falling apart”. That’s just plain good news.
As to vibes that’s experiencing a little turbulence, meaning opportunity & hardship at the same time.
The Kyla narrative around the Attention Economy is relevant. Where we exit this turbulence will depend on what we believe.
Totally - there is a lot of importance in the messaging of how all of this ends up.
The captain of the ship admits he can't trust his own navigation charts. For years, you've been told to hang on every word of the monthly jobs report. Now a Fed president confirms what we've all known: the official numbers are becoming a fantasy, polluted by bad data and guesswork. Focus instead on the "bathtub" metaphor he uses. It is the key.
He calls the job market "steady but thin," meaning there is barely a trickle of water coming in, even though it is not draining out. Companies are too scared to fire anyone, and you're too scared to quit. This situation is paralysis. It's an economy holding its breath, and the only people who benefit are the ones who can afford to wait it out. He talks about people dropping out of the labor force and how the unemployment rate doesn't capture them. Finally.
They're a decade late, but they're finally admitting that the health of a country requires more than a good-looking government spreadsheet. A system that makes millions of its own people invisible merely hides the evidence of its failure. The real measure of a strong economy is whether you can lose your job and not have your life fall apart. Everything else is just noise.
Thanks for this honest comment. I wish she said this to him for feedback.
The argument kinda seems like the captain can't trust his own navigation charts because it's pretty clear that they are leading into a swamp, but isn't it better to have some chart, than no chart at all?
It feels like everyone is waiting for an AI caused mass layoffs or for AI to be revealed as bullshit.
My current personal situation feels very meta as a contract accountant for a data center construction and operating company. Everyone's a contractor because they don't want to hire anyone in case this pops, the amount of money flowing through this place is mind boggling, we don't use AI for a single thing in accounting.
Thanks Kayla. This comment stood out to me:
> the BLS data is the best there is, but it’s not without flaws and it’s in an environment where people don’t like answering their phone and they don’t like doing surveys.
Is there a better way to conduct these survey that would lower the dislike factor of phones, etc.? Are there startups working on this?
https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcS4iMDDjnq3Z9df3o6vjZACgZ58CoexgXDSkY1wT2FgbQ&s
Not trying to compare you to Krusty, but kid me never thought I'd find this interesting, yet I am. Mahalo to both of you for posting this interview
It was very nice interview thank you. I have to wonder though do you like me think that sometimes nobody has any idea what's going on? I have a deep suspicion that the economic academics are just making stuff up to justify their existence.
Seems employment mirrors the bifurcated equity market, with stability (apparently) at top levels, while the vast majority of everyone else is in a fragile ambiguity. I think the current fragile balance is shifting to overall weakness everywhere, which will stall the economy more broadly.
Interesting interview - but the response to the AI questions seemed to miss the mark. Of course employers are going to look to take advantage of increases in production and avoid hiring people. "We want high productivity growth... If you don’t have productivity growth, real wages can’t rise, and that’s a far bigger problem." Hasn't that been the exact problem form 5 decades?
I continue to be shocked at the lack of useful analysis from the fed.
https://www.apolloacademy.com/why-is-job-growth-so-slow-when-gdp-is-so-strong/
"...the Fed should focus less on the slowdown in job growth and more on the ongoing uptrend in inflation, see the fifth and sixth charts."
Fascinating to hear from President Goolsbee about the Chicago Fed Labor Market indicators, and his perspective on the difficulty of tracking and forecasting employment and the potential impact of AI by sector when we don't have comprehensive government data to rely on.
I've been developing a methodology of using Indeed.com job postings and the most recently available JOLTS hires-to-openings ratio to make sectoral forecasts, and I should have a preprint ready within the next week as a more robust follow-up to this exploratory piece I wrote last year: https://www.2120insights.com/p/how-to-peek-6-months-into-the-future
When it comes out, I'd love to hear feedback from the team at the Chicago Fed or anyone else who is doing similar work!
Excellent interview.. extremely insightful.. I am biased though, as I've always been a big Goolsbee fan.. TY for sharing 🙏👍
I’d like to hear more about why exactly increased productivity due to AI is expected to increase wages when that effect has actually been lessening over the last couple decades
Totally - interesting paper on that here: https://www.epi.org/productivity-pay-gap/ I guess the goal is AI starts to close that gap?
Sooo confusing, but hopeful for the future