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- [00:00]
Podcast Announcer
Indiana University is proving how higher education can create solutions with industry. We're working side by side with industry partners to fuel economic growth that powers a future ready workforce. Explore IU's impact at iu.edu impact.
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Host (Bloomberg Anchor)
Bloomberg.
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Claudia Somm
Audio Studios Podcasts Radio News.
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Host (Bloomberg Anchor)
Claudia Somm of New Century Advisory joins us now to give us some insight. Claudia, thank you so much for being with us and happy New Year. What do you make of this? Matt's point that we've seen unemployment claims basically at the same place for almost a year.
- [00:42]
Claudia Somm
Right. So, you know, as you said, we are not seeing signs of deterioration in the labor market. Like the layoffs have not picked up in a way that that was the downside risk that the Fed has been very acute to and we haven't seen that. So, so we're not seeing the bad news story, frankly. We still need to see some good news in the labor market. So the claims get at the piece. It's really been sticky and that's that the hiring rate has been quite low. So yes, good news on the continuing claims for this week, but they are still quite elevated. And so we need, we need a little bit more of the good news. But you know, the fact that the layoffs have not shown up despite, you know, a lot of layoff announcements, like we're not seeing them in terms of actual layoffs and that's good news.
- [01:26]
Host (Bloomberg Anchor)
Claudia, do you take anything from the idea that continuing claims came in to some of the lowest levels that we've seen going back about a month, not significant. And they are elevated, as you said. But does that indicate that people are actually finding work.
- [01:42]
Claudia Somm
Is possible? You know, these are, while the claims data are very timely, I mean, we get a quick read. We have to be careful around the turn of the year. It's just really tricky with the holidays. And you know, just reading these data is much harder at the turn of the year than say in the middle of the year. But, but it is, it is potentially a good sign. And what we're looking for are signs of more stability in the labor market, signs that those the hiring rates start to pick off a pickup off their very low levels. So this is encouraging, but this doesn't make the case yet. Right. We need to see it in the hiring data.
- [02:19]
Guest Commentator
Claudia, what, what does the labor market look like with the stop in immigration, no new people coming to the US and the demographics, fewer and fewer people having babies or people having fewer babies. It would seem to me that if you have the economy growing and we do corporate revenue and profits growing as we do that, you know, lack of supply in the labor pool would mean more demand. But it doesn't, it doesn't look like that, as you, as you point out.
- [02:50]
Claudia Somm
Right. Well, you know, there are all kinds of timing issues. Right. It is quite unusual. We saw, you know, in the third quarter, GDP really, you know, moved up higher and so did the unemployment rate. Right. In a much less dramatic fashion, but it is moving higher. And so, you know, you have the ingredients for the good news story of the labor market going into 2026. Consumers are still out there spending. You've still got the business investment, you know, companies will need as they expand to draw on their labor force. And we should see, and I think this is the optimism that you can kind of see in the minutes from the Fed's December meeting. There's an outlook there that these pieces should come together and we should have hiring pick up. It doesn't necessarily need to pick up to levels that we saw, you know, two or three years ago when immigration was, was much stronger. But we are at levels that we have seen wage growth slow some. We've seen the unemployment rate tick up. That is a sign of the demand for workers is just lagging behind the supply.
- [03:50]
Guest Commentator
Diane Swonk pointed out a couple of months ago that cutting rates, the Fed lowering rates isn't going to help consumers in the lower quintile, you know, because subprime rates don't come down with the front end of the curve. But I wonder if it does help the labor market. You know, we've lost, I think, 70,000 manufacturing jobs this year. We've got a ton of incentives in the one big beautiful bill to, I guess, bring those back. And tariffs are supposed to do that, too. If those things don't work, does cutting rates help to bring back manufacturing jobs?
- [04:24]
Claudia Somm
Well, cutting rates is supportive of both households and businesses in expansion. I mean, and particularly say smaller businesses that, you know, the interest rates that they borrow with, that's a key, you know, calculus and their decision to expand. And as they expand, they can bring on more workers. So, you know, I don't, you know, we shouldn't have the view that the Fed has the magic wand here on the economy and it's going to, on its own revive the labor market. But the Fed pulling restriction out of the economy, that does, it helps. It moves in the right direction. And again, it's a piece of the puzzle. There's also more fiscal support coming early in the year. And it does appear that uncertainty just broadly about policy and maybe some of Technological change has weighed on labor market this year and as that dissipates, that's also another ingredient to kind of get hiring going again.
- [05:11]
Host (Bloomberg Anchor)
Uncertainty has also been pretty strong because we haven't known how much we can trust the data or whether we're going to get the data. And even in this latest batch of numbers, one terminal user points out that seasonal adjustment, if you strip that out, you actually see initial jobless claims that are higher than the previous week. So what do you make of these types of seasonal adjustments of these types of calculations that have raised more questions than given answers?
- [05:40]
Claudia Somm
Right. Well, these issues with seasonal adjustment, these are the mainstay of trying to read macroeconomic data, right. Like as I said, around the turn of the year, claims data are top from Thanksgiving into early in the year is just that, that's just a hard, hard read. And so you do a lot of averaging, kind of look at the basic trend. And the basic trend looks pretty good, right? So don't make too much out of one week. But yes, these are our regular issues. Unfortunately, we're also dealing with, you know, the backlog of the government shutdown and data collection having disrupted. And even as we're getting data and the claims data, this is not applied to them but say like the CPI or the labor market data, you know, there's a, the shutdown casts a long shadow. Like we have distorted data in a way that we don't typically have distortions, we don't typically lose a month of, of data and then try and pick up the pieces afterwards. So it does make it more complicated. But you know, thankfully there's a lot of information out there. You just kind of, you know, pull it all in and get a sense of what's going on. And really the tenor of the data in, in general is pretty, pretty good. I mean, solid. Like I said, we still need labor market to pick up, but, but the ingredients are there.
- [06:50]
Host (Bloomberg Anchor)
When I feel, want to feel good, I walk down the street and I see all these people going to stores and being together and going to work and when I want to feel bad, I read the news and I read all these stories about how computers are coming for our jobs and how a lot of places are seeing opportunities to replace human labor with algorithmic, algorithmic programs. I'm just wondering, based on the data you've been looking at, how much credence is there behind this sort of replacement concept of AI?
- [07:20]
Claudia Somm
Well, I think looking at surveys, industry level data, when we think about the labor market being somewhat slow right now, I don't think that I really can. You know, you can point to that as a key driver. Broadly, there are some industries in tech, increasingly in finance, where you see more adoption and there probably are cost savings happening with, with employers. I think, you know, it fit into this piece of the broader uncertainty, right? Like do you need to hire, do you need these workers? That's much harder to parse out of the data because there's a lot of different sources of uncertainty right now that businesses have. But in terms of, you know, the adoption, really holding back the labor market, I think it's hard to point to a broad story, but it is certainly something, something to watch. But we should also remember that the new technology also enables new jobs and new uses of technology. So it's not just about saving labor. It's also about making labor more productive. And that that can be a real good news story over the long haul.
- [08:20]
Guest Commentator
Claudia, I love when you're on because I learned so much from you and because of your notable achievements in economics, but also because you went to Denison and I spent a year there. My dad went to Denison, my mom went to Denison. I grew up in Granville. What do you think of the value of a college education for the average American these days? Because so many, not just kids, but adults are having trouble meeting repayment requirements well into their 40s. And it doesn't look like recent graduates are getting a huge advantage in the jobs market.
- [08:55]
Claudia Somm
Right? Well, technical skills and training are, I mean, they're always important for getting ahead. They do pay off. I have a very ecumenical view. I had an excellent education at Denison University Liberal arts College, but that's not for everybody. I mean, my daughter's in engineering school at Illinois. She's different. Technical training and I think in the trades. And there are lots of ways, ways to gain skills. And we certainly don't want to push every child through a college education, particularly with the cost of it. But it doesn't, you know, I still think, you know, and the data bear this out. Like the education and the skills, they do pay off.
- [09:30]
Host (Bloomberg Anchor)
Claudia, some of New Century advisors, wonderful to see you. Happy New Year. Thank you so much. See you in 2026.
- [09:37]
Podcast Announcer
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