Claudia Sahm Talks Inflation Duration, Investment and Consumer Spending

Summary

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Bloomberg Talks: Claudia Sahm Talks Inflation Duration, Investment and Consumer Spending

Date: April 9, 2026
Host: Tom Keene (Bloomberg)
Guest: Dr. Claudia Sahm, Chief Economist, New Century Advisors

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Episode Overview

This episode features Dr. Claudia Sahm’s expert insights on the recent patterns and persistence of inflation, the role of supply shocks, the current state of the labor market, investment trends, and the challenges of economic growth amidst shifting demographics. The discussion also touches on productivity, AI's future impact, and some candid talk about "vibe coding" and adapting to new technological tools. The tone is conversational, analytical, and clear-eyed about economic realities post-pandemic.

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Main Discussion Points and Insights

1. The Nature and Duration of Recent Inflation

[00:36–02:23]

• Supply shocks as the new normal: Dr. Sahm attributes much of the current inflation to a series of supply disruptions, each with its own unique "long tail" of impact—drawing a distinction between products like beef (long production cycles) versus chickens (shorter cycles).

• Persistence: These supply-driven shocks have drawn out the inflation process, making it last longer than most anticipated.

  "We've had a whole series of supply shocks of different kinds and some of them are very severe... it took, you know, several years to work its way through."
  —Claudia Sahm [01:30]

• "Run of bad luck": Dr. Sahm notes that with one shock after another, this cycle of disruptions is becoming the expectation rather than the exception.

  "We've kind of had a run of bad luck in terms of one supply shock, cost shock after another. And that's kind of become the norm."
  —Claudia Sahm [02:07]

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2. Rethinking Recession Indicators and Labor Market Norms

[02:23–03:51]

• Labor market is not following old rules: Dr. Sahm challenges traditional recession signals, such as consecutive months of payroll declines, explaining that with slower population and labor force growth, fewer job additions can still mean a stable job market.

  "Normally should send off like recession is coming, we're in a recession. But that's not what this is. We are in a low growth type of economy."
  —Claudia Sahm [03:30]

• Key data patterns: Since 2025 began, 40% of months have shown payroll declines, but this reflects a labor market with a very low baseline requirement for new jobs—essentially "bumping around zero."

  "The amount, the number of jobs the economy needs to create to keep up with the workers coming in is really low. It's practically close to zero."
  —Claudia Sahm [03:11]

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3. Real Wage Dynamics and Productivity

[03:51–04:35]

• Real wages not keeping pace: Despite fewer available workers, gains in real wages have not materialized as one might expect, nor are wage increases reflecting productivity advances.

• Labor shortages haven’t shifted the balance: The dynamic is not one where workers have newfound leverage; rather, it’s an economy that is simply slower growing across the board.

  "We’re not seeing the gains of this having fewer workers...we’re just in an economy that we’ve got fewer resource, fewer workers kind of adding to it."
  —Claudia Sahm [04:13]

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4. Investment Trends and Consumer Spending

[04:35–05:38]

• Broad-based investment: Core goods orders indicate robust, diversified investment beyond just headline sectors like AI or data centers.

• "More than just AI": There’s a broader spectrum of investment holding steady in the economy.

• Consumers still spending— but inflation is eroding real gains, making the economic backdrop challenging.

  "It's not all just AI, it's not all just data centers. There is more going on in terms of investment now... investment still holding up, consumer spending still holding up."
  —Claudia Sahm [05:05]

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5. Demographics, Productivity, and the Case for AI

[05:38–06:14]

• Growth without population increase: Economic expansion in a stagnant or shrinking labor force fundamentally depends on productivity improvements.

• Policy implication: With low or flat immigration, productivity (potentially from AI and innovation) becomes essential for future growth.

  "If you get down to a place where you're not growing the labor force, it is all about productivity... we need AI to really deliver."
  —Claudia Sahm [05:57]

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6. "Vibe Coding" and Adapting to AI

[06:14–06:41]

• Dr. Sahm's approach to AI tools: Candid about still learning how to integrate AI coding into her workflow, she admits she’s currently faster coding the old-fashioned way, but emphasizes the importance of adopting new tech.

  "Frankly, I'm still learning how to use the tool, so I'm still faster coding on my own. But I think it's important to try it out and get better at the tools that are out there."
  —Claudia Sahm [06:29]

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Notable Quotes & Memorable Moments

• On inflation and supply shocks:

  "Once you have a disruption, it's a very long tail to it as opposed to chickens, which have a shorter production cycle."
  —Claudia Sahm [01:45]

• On rethinking economic "normal":

  "Low is as good as it gets."
  —Claudia Sahm [03:46]

• On productivity in the face of demographic change:

  "We need AI to really deliver if we're flatlining labor force growth."
  —Claudia Sahm [06:02]

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Timestamps for Key Segments

• 00:36–02:23 — Causes and duration of recent inflation
• 02:23–03:51 — Why traditional recession signals aren't working
• 03:51–04:35 — Wage and productivity dynamics
• 04:35–05:38 — Investment beyond AI and consumer resilience
• 05:38–06:14 — Can economies grow without more people?
• 06:14–06:41 — Personal tech adaptation and "vibe coding"

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Conclusion

Dr. Claudia Sahm provides a nuanced view of today’s economic landscape—marked by stubborn inflation due to a sequence of supply shocks, a labor market where old metrics can mislead, and investment more diverse than headlines suggest. She emphasizes how demographic realities are putting pressure on productivity to pick up the slack, making innovation and technology, especially AI, more critical than ever. The tone is measured and pragmatic, with Sahm urging audiences to adjust expectations for what constitutes a "healthy" economy in this new era.

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Transcript

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[Claudia Sam]

Bloomberg Audio Studios podcasts, Radio news

[Tom Keene]

this is a joy. Claudia Sam with us. And it's not like the Fed day. We got to be adults. It's not the jobs day. Boring. Claudia is there a recession? What a Joy to have Dr. Sam with us here, chief economist, New Century Advisors today. I just heard back from Torsten Slack. One of the magic things that folks, as we go back and forth with our guests through the show, if I say something stupid, Neil Dutt is the first one to email in and just say, tom, you don't know what you're talking about. Carson Slott comes back on the price of beef. And Dr. Sam I did, I did a log chart of beef back to 1966. And the thing that is striking is the duration of the expensive cow that's out there. What is the duration, the X axis look like of our inflation we're living now? Hmm.

[Claudia Sam]

Right. Well, I think, you know, what we've seen in recent years really going back to the pandemic is we've had a whole series of supply shocks of different kinds and some of them are very severe. In the pandemic, it had like echoes and it took, you know, several years to work its way through. I think if you look at beef prices, that's another one where the supply chain for beef prices, it takes a long time to make make more beef. Right. Like, so it just once you have a disruption, it's a very long tail to it as opposed to chickens, which have a shorter production cycle. Like we're learning so much and reminding so much about the physical nature of production. And so it's just one more supply shock. And frankly, as kind of came up at the press conference with Powell, you know, we've kind of had a run of bad luck in terms of one supply shock, cost shock after another. And that's kind of become the norm. And that's what we got to be prepared for. These shocks that do have sometimes some pretty long tails to them.

[The Hartford Announcer]

Claudia, you have posts on LinkedIn recently how you say that the typical recession rules of thumb are no longer working. What do you mean by that?

[Claudia Sam]

Right. So there's we, I think there's been a lot of discussion recently about, you know, what's a good payroll number, right. Like what's this break even rate and discussions about well, we've got a lot less labor supply out there. Immigration really took a step down. We've got an aging population. And so what we've seen since the beginning of 20, 25, 40% of the months we've had a decline in payrolls. That kind of pattern is something of a we're in a recession or the year after a recession. That's when you see those kind of pace. But actually right now that's a labor market that's doing pretty okay because the amount, the number of jobs the economy needs to create to keep up with the workers coming in is really low. It's practically close to zero. So that means in any month you've got weather, you've got some kind of shock. We just have some noise in the measurement, the data. We're going to this bumping around zero, some declines and positives. And so I think this is a normal we're in which normally should send off like recession is coming, we're in a recession. But that's not what this is. We are in a low growth type of economy. A lot of discussion already about in terms of payrolls. I think, you know, in a moment today where you get gdp, we got to understand that's going to start showing up in those GDP numbers too, right? Low is as good as it gets.

[Tom Keene]

So the heart of the matter quickly here, Dr. Sama, we're going to come back with you after we get the market open. The key thing to me is the real wage. Are you suggesting we get a literal negative real wage?

[Claudia Sam]

Well, the real wage discussion is there's a lot more to that. What we've seen is the real wage is not reflecting all the productivity gains that we've had and wage growth, nominal wage growth is still slowing. So we're not seeing the gains of this having fewer workers. So we're not like in a shortage of economy where the tables are turning and workers are getting the upper hand. But we're just in an economy that we've got fewer resource, fewer workers kind of adding to it. And that's going to show up in a lot of statistics. We're used to being bigger.

[Tom Keene]

Claudia Sam, please stay with us as we get the market opening. Thrilled to have Claudia Sam of New Century Advisors with us. What's the state, Claudia, that You see of what I'm going to call private non government investment, which is made up of any number of parts. What do you see as a state of investment?

[Claudia Sam]

I have to say we've, you know, big picture, gotten some pretty good news on that. So our most recent reading on core goods orders, really it was pretty broad based in terms of being a solid reading. Like if you look at the data, it's not all just AI, it's not all just data centers right there. There is more going on in terms of investment now. You know, more is always better. But I think there's, there's a little more breadth than May news gets in terms of, of what's happening on the investment side. So investment still holding up, consumer spending still holding up. But, you know, the backdrop is difficult. With inflation being higher, that really does cut into the real gains.

[The Hartford Announcer]

Claudia, can the US Economy, or any economy for that matter, grow consistently without population growth?

[Claudia Sam]

So, you know, the two ingredients for growth are going to be the growth of the labor force and then the growth of labor productivity. And so if you get down to a place where you're not growing the labor force, it is all about productivity. You know, and again, with immigration policy, such as it is, like growth is really going to be held up by labor productivity. Like we need AI to really deliver. If we're flatlining. If we're flatlining labor force growth.

[Tom Keene]

Claudia, we got to run here, but we just had a fancy guy from HBS and, and he was talking about vibe coding. Does Claudia Somm Vibe code?

[Claudia Sam]

I certainly use the AI coding to try and do some tasks. Frankly, I'm still learning how to use the tool, so I'm still faster coding on my own. But I think it's important to try it out and get better at the tools that are out there.

[Tom Keene]

That sounds like my to do list for April.

[The Hartford Announcer]

Yeah.

[Tom Keene]

Claudia. Sam, thank you, thank you, thank you so much for your commitment to what we're doing here at Bloomberg Surveillance. Can't say enough about her out of Michigan. We didn't have time there to talk Michigan basketball.

[The Hartford Announcer]

No. You know, how about that?

[Tom Keene]

Yeah, Maintained, but there it is, Claudia, So thank you so much. And we really look forward to a jobs day and a Fed day commitment from her Dr. Samas with new Sentry advisors.

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