Stephen K. Baughton and EJ. and Tony join me to talk about the latest jobs miss and the implications for the economy and jobs in general. We also discuss the impact of the Black Friday and Cyber Monday hurricanes on the economy.
00:01:43.000We have been saying, and Microsoft didn't again announce today more layoffs off the big, I think 2,500 layoffs they were going to have a couple of weeks ago.
00:01:53.000Folks, this is the beginning of the AI apocalypse.
00:02:00.000Now, not all these jobs are related to AI.
00:02:02.000In fact, a lot of these were not even layoffs.
00:02:06.000What they were is not filling jobs that came open, not filling billets that came open.
00:02:10.000The businesses are just going to on a wait-and-see basis.
00:02:13.000A lot of this is also on a wait-and-see basis of what artificial intelligence and artificial intelligence as an aid to workers,
00:02:21.000particularly low-skilled or particularly white-collar workers and kind of those entry-level jobs or the second-tier, you know, entry-level plus jobs about what can be taken away.
00:02:34.000It's going to, I think, influence what's happening at the White House today as people are going to be talking about this.
00:02:40.000This was a miss, and it was not anticipated, although myself and Cortez have been up, and also the Axios guys are saying there's something going on in the job market.
00:02:49.000You can see that one of the things we can see is that recent graduates are not having the opportunities that people anticipated, particularly with an economy that's starting to turn around.
00:03:00.000Remember, President Trump's entire program is on turning around the doldrums of the Biden economy, doing a supply-side tax cut, and getting to 2.83%, 3.5% growth.
00:03:11.000The American economy, to be robust, to be replacing jobs, to keep unemployment down, to keep the whole apparatus or the whole project moving forward, you need minimum of like 3% growth.
00:03:25.000And particularly in Scott Besson's plan at Treasury, you need, and I think Chip agrees with 3.5%, but even at 3%, you start to get ahead of where you're growing the economy and tax revenues and tariff revenues higher than you're adding deficits from spending.
00:03:42.000Now, that's what a supply-side tax cuts about.
00:03:47.000Well, it's not risky in the fact of you understand the elements that you're putting in there, and you understand how you're going to unlock the animal spirits, how you're going to unlock the vitality of the American economy.
00:04:05.000E.J., I had you on here because we were going to talk about the big, beautiful bill in the growth package.
00:04:10.000Of course, you're one of the nation's leading, I would say, labor economists and thinking about labor.
00:04:15.000You've been on for four years here, giving it to us.
00:04:18.000Was this kind of a bombshell report today, or am I over-reading this?
00:04:22.000What happened on this labor report today, sir?
00:04:25.000Well, Steve, I think part of what we're dealing with still is the fallout of the last four or five years and all of the disruptions that we had from COVID.
00:04:35.000So, you know, unfortunately, there's a couple different things we have to remember.
00:05:00.000The other thing is our baseline, if you want to call it that, has been completely messed up because of COVID.
00:05:06.000For example, the first couple of years of the Biden administration, how many times did they tell us, we're adding all these jobs, we're adding record jobs.
00:05:14.000No, you're simply just returning back to the previous level that you had.
00:05:19.000After a massive decline, you then get a massive increase.
00:05:23.000But if you look over time and if you look at the trend there, nothing's really changed, right?
00:05:28.000So context is probably the most important thing to remember here.
00:05:33.000I want to go back the – in regards to that context, for years you would come on this show and we'd have these monthly and quarterly reports.
00:05:49.000The Labor Department – and far be it for me to say that the administrative state would ever try to chop block Donald Trump or his administration.
00:05:56.000But in the recalibrations or the resets we would always have or the reconfigurations and rethinking of the numbers were always – the numbers were more positive.
00:06:07.000And later we'd get the reality check that they really weren't as good as they were.
00:06:12.000Do you think there's the reverse happening here that the minions over at the Bureau of Labor Statistics in payback to Steve Bannon and EJ and Tony bad-mouthing them consistently or having payback on President Trump by overstating what the losses are?
00:06:32.000And they're going to come back in a month and they're going to restate and it's not going to be as bad, sir?
00:06:39.000One of the things that – well, actually, let me put it this way.
00:06:42.000One of the problems when we look at certain data sets like the job openings numbers is the fact that the response rate on those surveys is absolutely horrific.
00:06:54.000And so when your response rate is that low, it creates an incredible amount of variability in the data.
00:07:02.000In other words, if I'm going to tell you I am 90 percent confident that the actual number falls within a certain interval between, let's say, 1 and 10, just random numbers here.
00:07:12.000And if I'm going to say, look, I am maybe 50 percent confident that the number falls between 5 and 6, a much narrower range.
00:07:20.000Well, when your response rate is this low, for you to have any degree of confidence, you need an incredibly wide range.
00:07:27.000In other words, I'm 90 percent confident the number falls between not 1 and 10, but 1 and 30.
00:07:33.000So, again, when we look at these different data sets, that's a very, very important thing to keep in mind.
00:07:41.000And this goes back to what we were just talking about with those huge revisions.
00:07:45.000I would not be surprised if you do end up in coming months, in coming quarters, seeing these massive revisions to the original projection.
00:07:54.000In part because the original problems with the data that we identified how many times over the last several years, Steve, right, we kept pounding the drum that, look, there are problems in these data sets.
00:08:07.000A lot of those problems have not been fixed even today.
00:08:11.000And I'm wondering what on earth is the Labor Secretary doing now in order to fix those problems and make these numbers more accurate to ensure that we don't have the same kind of inaccuracies under this administration that we had under the last one?
00:08:26.000Okay, all that being contextual, let's go.
00:08:58.000And we're also, the other important thing I think is that as we look at people who are leaving jobs, we're finding increasingly two things.
00:09:07.000Number one, the actual number of people who are quitting, who are leaving their jobs is going way, way down.
00:09:14.000And that has to do in part with the fact that they're finding it more difficult to find comparable work for comparable pay.
00:09:23.000And even among those who are leaving jobs, they're not actually, they're not able to find work as quickly.
00:09:31.000So when you see those two things go hand in hand like that, that tells us that it's sending the exact same signal about the labor market.
00:09:39.000And this is part of the reason why the whole mentality of the Federal Reserve right now on interest rate cuts, it just doesn't make any sense.
00:09:48.000They're clearly acting for political purposes because when you compare the labor market data that we have right now with what we had in the fall, it is crystal clear that the labor market is softer today than it was back then, at least for most sectors, maybe not for all sectors.
00:10:05.000That tells us there's much more of a case for interest rate cuts right now than there was in the fall.
00:10:10.000So why did they cut rates then and not right now?
00:10:13.000It has to do with elections and that's it.
00:10:16.000So, again, the labor market's a very mixed bag.
00:10:20.000We have some very positive indicators, especially when we look at native born Americans being able to get jobs today versus this time last year.
00:11:22.000Your point is that on this second, you've seen obviously a softening in the labor market overall over a period of time.
00:11:30.000Last October, right before the election, they did an interest rate cut and President Trump went nuts because it appeared to people that they were trying to juice the markets and get a pop in the stock market and positive results right before Election Day.
00:11:44.000And your point is that since this is one of their responsibilities, I know a lot of us argue they shouldn't have two responsibilities.
00:11:50.000It only should be inflation and prices, that if it is labor, and that's one of the ones they're officially mandated with, you have to act accordingly.
00:11:58.000And your point is that, set aside President Trump, just as a labor economist, you're saying it's obvious that the Federal Reserve should step in here and do the rate cut because you have a softening labor market.
00:12:13.000Is that a correct assessment of your position?
00:12:17.000Right, Steve, when we look at the Fed's models that they use, their own Keynesian models tell them that they should cut rates today, or at the very least, those Keynesian models say there's a much stronger case for cutting rates right now than there was back in the fall.
00:12:33.000Now, look, I'm not saying I agree with the Keynesian models.
00:12:36.000I'm not saying that I think we should even have a central bank set up the way we do right now.
00:12:42.000That's not my point. My point is simply that using the Fed's own logic, using the Fed's own models and the mandate which they so often cite, that dual mandate that you just articulated, Steve, under the rules of the game that the Fed says they play the game by, we should be cutting rates today, pure and simple.
00:13:03.000That's literally just the fact of the matter. The numbers are what they are. Inflation has improved. The labor market has softened.
00:13:10.000Again, by the Fed's own rules, they should be cutting rates, and yet they're not.
00:13:18.000E.J., you're on here to talk about the Treasury Department, the president's growth plan. I want to, if you just hold through the commercial break, we're going to come back to that.
00:13:26.000A labor report today, as E.J. said, kind of a mixed bag, but there's a lot of positive, and we'll get E.J. to reiterate numbers for native-born Americans.
00:13:36.000Would that be of interest to you, native-born Americans? The employment's looking better. Also, wage growth.
00:13:41.000So it's a lot of good stuff in there, and it shows President Trump's program is starting to be executed.
00:13:45.000Philip Patrick and the team. So this afternoon, if we can pull it off, we will have the Secretary of Treasury, Scott Bessett, on the 5 o'clock show this afternoon,
00:13:53.000depending on kind of what happens on the rules in the House, but the Secretary of Treasury will join us to discuss this.
00:13:59.000Also, Philip Patrick and the team are now in Rio. They're prepping for their meetings.
00:14:05.000They're going to be meeting with finance ministers, central bankers, all of it.
00:14:10.000Philip Patrick's going to give us a highlight on that this afternoon.
00:14:14.000Enter the dollar empire. Get up to speed. Be the smartest person at your backyard 4th of July barbecue.
00:16:50.000It's just a matter of when and what the rate of change is going to be.
00:16:53.000I don't know that I agree with that, but I do agree that the glide path is going to be headed down.
00:16:59.000But I think it's going to be a long glide path.
00:17:01.000And the relationship between ADP and the Labor Department's statistics that will be seen tomorrow.
00:17:06.000As Steve adequately pointed out, there's a wide spread there.
00:17:10.000When I look at what happened with jolts yesterday, when I consider most of the press and headlines over tariffs and the current administration's policies,
00:17:19.000it doesn't shock me that there may be more uses of the word firing than hiring.
00:17:24.000But maybe it's the contrarian end of this that we should pay more attention to.
00:17:28.000Maybe we should learn a lesson about what the equity markets did, about the kind of counter trend rally we had that briefly push yields down.
00:17:36.000Although I think that much of that may be in the rear view mirror.
00:18:03.000So once again, with the positive news again, there were native born Americans and wages, real wages rising.
00:18:12.000Give us your assessment of what Santelli just said.
00:18:15.000Well, I think the key element that he touched on there, Steve, is the fact that the relationship between the ADP numbers,
00:18:24.000which is what showed that drop today, in particular with the service sector, right?
00:18:29.000The service sector is really what took it on the chin.
00:18:31.000But whatever the case, the fact that ADP numbers came down, showed negative job growth.
00:18:36.000That has actually very little correlation with the nonfarm payroll number we're going to get tomorrow from the Bureau of Labor Statistics.
00:18:43.000And by the way, that actually has been the case even after ADP changed their methodology to try to make their private payroll numbers better reflect the nonfarm figure from BLS.
00:18:57.000So even with trying to adjust the methodology in a post-COVID world, the correlation there has been very, very poor.
00:19:04.000All that being said, again, I still have pretty high level of confidence that we're going to get a positive number tomorrow, that we're not going to drop into the negative.
00:19:14.000And that's even with the labor market being a lagging indicator.
00:19:18.000In other words, things like the stock market tends to be a leading indicator.
00:19:23.000The fact that stocks went down in April following Liberation Day, that caused plenty of economic disruptions.
00:19:30.000But you can see now stocks are right back up because a lot of those disruptions at this point have been smoothed over.
00:19:35.000So is it possible that you get some decline in employment temporarily because businesses got scared and then they just go right back and hire everybody?
00:19:46.000Going back to your other question, though, in terms of native born employment, this is something that I think the Trump administration is not getting enough credit for.
00:19:54.000If you look at not just the level of jobs, but who has the jobs, native born Americans are increasingly doing better.
00:20:02.000What we saw under Biden was repeatedly the annual growth in jobs among native born Americans versus foreign born workers.
00:20:09.000The foreign born workers were were consistently beating out their native born cohort, native born counterpart, that is.
00:20:17.000So what what happened over the last year?
00:20:19.000Well, over the last year, and this obviously is not all Trump, but it shows you the amount of improvement Trump has made in just a few months.
00:20:26.000Native born Americans added about one point four million jobs.
00:20:32.000That's phenomenal news, especially when you consider that foreign born workers only saw an increase of about seven hundred thousand.
00:20:39.000In other words, the vast majority of jobs being added over the last year are going to native born Americans.
00:20:47.000Now, I actually think that it's good we're still adding jobs for for foreign born workers, because if you look at the if you look at the total number of jobs that we need to add to the economy, we don't actually have enough workers here at home.
00:21:01.000Now, unless you take literally all of the people who are now sitting on the sidelines and manage to bring them back into the labor force instantly, you're really not going to be able to fill all of those jobs job openings.
00:21:14.000Now, that's obviously something we want to happen over time.
00:21:17.000But if we look at what happened during the first Trump administration, you were able to add not only plenty of jobs for foreign born workers, but you were able to add plenty of jobs for native born Americans.
00:21:29.000And that's one of the key reasons why the Trump economy was so successful the first go around.
00:21:35.000And it's why it stands in stark contrast to what happened under Biden.
00:21:39.000Under Biden, native born Americans didn't gain any ground at all.
00:21:43.000All of the net job growth went to foreign born workers.
00:21:47.000We want an economy where there are so many jobs that not only are there enough for all native born Americans to get jobs.
00:21:55.000But you even have more jobs than that, to the point where you're willing to take on some of that foreign born labor to further grow the economy.
00:22:03.000My recommendation of the Trump administration, the mainstream business media is not going to reach into this number like E.J. and Tony and put up exactly what the reality is.
00:22:15.000This needs to this once again needs to be sold because it needs to be exposed.
00:22:20.000Plus, the the job growth are the Axios.
00:22:24.000The Axios, I think, has done a very good job of warning about the upcoming potential for this A.I. jobs apocalypse, particularly in entry level white collar jobs in tech, in service economy, managerial, you know, STEM, etc.
00:22:40.000Is anything you've seen in the data today?
00:22:43.000We just had Microsoft announce another layoff.
00:22:46.000You've got Intel just announced a big layoff.
00:22:48.000Is there any concern that you see right now in looking at this of a coming A.I. jobs apocalypse for white collar workers, sir?
00:22:58.000Even when we look at, as I mentioned, the service sector is really what what took it on the chin here.
00:23:02.000But even when we drill down into those numbers, it looks like most of most of the service sector jobs where we are seeing that negativity has to do with with things where there's actual labor involved as opposed to just sitting at a computer.
00:23:18.000So, for example, even though I personally have seen this in my own work where I no longer have to go to, let's say, an intern and ask them to write me several lines of code to execute a data scraping program.
00:23:34.000What we're really seeing in the macro level data is things like the leisure and hospitality industry not having to hire as many as many waitresses right now, not having to hire as many as much housekeeping staff in hotels.
00:23:48.000So, again, right now, at least in the macro level data, what we are seeing is more so the jobs where there's human labor, physical labor involved as opposed to things related simply to I.T.
00:24:00.000We're going to go to the House floor in a moment.
00:24:04.420I think they're now starting to debate the rule.
00:24:06.600We want to go and pick up some of that debate.
00:24:08.600E.J., I asked you to be on here, not for labor.
00:24:12.720But actually to make the case that President Trump put it on true social today, that the essence of the big, beautiful bill, and we're going to go to the House in a minute and see this debate on the rule itself, is about growth.
00:24:25.180I know that you've been one of the big proponents working with Scott Besson and others about a supply-side tax cut because it's about growth.
00:24:32.240Can you walk us through the best argument to pass President Trump's legislation, given that people are saying CBO says it's going to add $3 trillion to the deficit?
00:24:42.280What is your argument from a supply-side, sir?
00:24:45.160I think a lot of those arguments, Steve, that say, oh, the bill is going to do all these terrible things, they're kind of confusing stocks and flows, frankly.
00:24:55.080So if you want to think of it this way, your net wealth as a household is a stock.
00:25:00.180It's your assets minus your liabilities.
00:25:04.940And those things are not directly comparable.
00:25:08.040To a certain extent, it's apples and oranges.
00:25:10.200And people are making the same kind of fallacious comparisons with this bill when they say the deficit is going to go up if you pass this bill.
00:25:50.480If you do nothing, spending goes up at a faster rate.
00:25:53.940The deficit gets worse at a faster rate.
00:25:56.320The debt gets much worse at a faster rate.
00:25:59.220And at the same time, you're going to you're going to start a four trillion dollar tax hike on the American middle class beginning in 2026.
00:26:07.500So, again, if the alternative is doing nothing, that's a pretty catastrophic scenario.
00:26:12.040So even though the big, beautiful bill has has plenty of flaws, I'm not saying it's perfect.
00:26:16.740It's not it's not the bill you or I would have would have written.
00:26:20.120But it is still far superior to doing nothing.
00:26:23.860And hopefully we can build on this progress in the future.
00:26:27.520Hopefully the White House will continue to send rescission packages, including pocket rescissions at the end of the fiscal year.
00:26:33.560And hopefully we will continue in terms of Congress to make progress towards further cuts in all of these crazy spending programs.
00:26:43.940E.J., where do people go on your social media, particularly your Twitter account, because you're you come in pretty hot and you keep people pretty informed where they go.
00:26:52.120Twitter is going to be the best place to find me.
00:28:14.780In Congress, we can measure how much people really believe in their position by whether they're willing to come and join their leaders on the House floor.
00:28:22.380Well, I count four members on the Republican side, and we've got over 75 over here.
00:28:27.220And, you know, but if I were them, I wouldn't want to be associated with this bill either.
00:28:32.760Mr. Speaker, I'm going to urge we defeat the previous question.
00:28:35.480And if we do, I'll offer an amendment to the rule to consider amendment number 156 offered by Leader Jeffries,
00:28:40.920which strikes all provisions that would cause millions of Americans to lose health care and food assistance.
00:28:46.160Mr. Speaker, I ask you unanimous consent to insert the text of my amendment into the record,
00:28:50.480along with any extraneous material immediately prior to the vote on the previous question.
00:37:51.260I help people live the fullest life they could, given the cards they were dealt.
00:37:54.820I worked at a school for children with disabilities in a nursing home, helping seniors maintain their independence.
00:38:01.200I know exactly what it means to cut a trillion dollars from Medicare, Medicaid, and Affordable Care Act, which is exactly what this big, ugly bill does.
00:38:10.580Taking away health care for 17 million Americans won't make us any healthier.
00:38:15.580Stealing food away from the neediest children, seniors, and veterans won't make us any stronger.
00:38:21.160Giving billionaires a tax break won't make us any richer.
00:38:34.680I urge my Republican colleagues to stand up, grow a spine, stop bowing down to your King Donald Trump, represent your constituents like you were elected to do, and vote no on this horrible, big, ugly bill.
00:38:49.140For the third time, the Chair would remind members not to engage in personalities toward the President, or they will be called out of order.
00:39:34.480Mr. Speaker, if there are no other Republican members willing to speak for this bill, we can send some members over to you just to state the facts as to what's in this bill.
00:39:53.600I rise today to remind my colleagues that this bill is more than words on paper.
00:39:59.600The policies we're debating today have real impacts on real people, people like four-year-old Amir Rich, who visited my office earlier this month.
00:40:07.600Amir was born at just two pounds and spent 452 days in the hospital.
00:40:14.600Today, although he still depends on feeding tubes and oxygen tanks, he is thriving.
00:49:32.600She was on fire calling people liars, calling the president liar, calling everybody liars.
00:49:36.600You see how many times the gentleman running, sitting for the speaker, kind of running the floor today, banging the gavel saying you're out of order.
00:49:43.600You can't have personal tax the president.
00:49:45.600Every single Democrat gets up there and attacks the president by name.
00:49:50.600They're coming and we got a fighter on our hands and we're going to fight.
00:49:53.600If you if you're going to vote for this bill, you got to defend this bill.
00:49:56.600And there's so much to defend every, you know, every time, five times in a row or four times in a row has been hadn't had a guy.
00:50:01.600And then you get a guy like Joe Wilson talking about the bombing of Iran.
00:50:06.600It's not it's not pertinent till today to today to today.
00:50:21.600And if you didn't have the votes for the rule, then maybe you should have waited.
00:50:26.600You have to go to the White House, have to come back and get organized.
00:50:31.600Right now, folks, if you've got a problem with the IRS, if you see what's happening here, they're going to need they're going to have to plug the gap by getting every piece of tax money that they believe is owed to them.
00:50:44.600If you have a notice from the IRS or you're late, you're late.