Mark (3:41)

Jill, the Federal Reserve chair Jerome Powell frequently says the Fed and he are data dependent. That's probably a virtue, except when the data is messy and cloudy and full of conflicting signals. That seems to be prevalent right now.

Major Garrett (3:57)

Well, I think there is a real problem in that. If you look at the last five years, our data is all over the place. The pandemic really did create a doozy of a problem on the economy, but also the way we track the economy and you know, I know people got really freaked out about those preliminary estimates to the revisions to all that data for 12 months through March of this year. That preliminary revision showed 911,000 fewer jobs than we originally originally thought. Now this is always part of an annual process. We'll get the final number in February. But what I guess is important is there are so many different aspects to what's going on in the economy right now. The cross currents are really difficult. So yes, we know the labor market is weakening, but we're not seeing widespread job losses. Thank goodness. There is no evidence that we are in a recession currently. The economy is growing. But we do have that niggling problem of prices starting to rise again. And I think that that price increase because of those tariffs, because of certain aspects, even the service economy, I think that's a real cross current. To be clear, the Fed, the amazing people who work there, the amazing economists that are out there doing the research, so many of them say to me, you know what? This is the most difficult time to judge the next steps of the economy in the last 40 years.

Mark (5:25)

Jill, as you know, there's a phrase going around describing the job market and it goes as follows. No fire, no Hire. What does that mean practically for somebody in the job market or just graduating from college, trying to break in?

Major Garrett (5:39)

Yeah, this is a very difficult labor market. I mean, granted, we are, again, we are not like we are in a recession. We are not seeing widespread layoffs. Thank goodness there are pockets of layoffs that are happening in different sectors. We are seeing contractions. We're seeing people who are retiring and those jobs not being, being refilled. But I think that anyone who has a job right now, when I talk to HR people, they basically say to me, hey, you know what? Tell people to stay where they are. Don't fly off the handle the job hugging. Staying engaged with your boss, engage with the company. Very important right now. If you are seeking a job, you know where the jobs are. Right now we see the most activity in healthcare, health services. So if you're somebody who is trained to do one job, try to find a job in the sector, at least that is adding positions. I might be a programmer and I might not have an ability to get a job at a big tech company. Maybe I go to a big hospital chain. These are the kinds of things we have to kind of get outside of ourselves. The adaptable candidate is going to be the one that wins in this economy.

Mark (6:47)

Jill, let's talk about tariffs because it is a conversation and a way of trying to assess that. This country has no recent experience with at least 50 or 60 years of trying to assess what a tariff does when it is widespread throughout the global economy. So a lot of us are trying to get used to this. Economists are trying to get used to it. Policymakers are trying to get used to it. Our trading partners are trying to get used to it. What is the story of tariffs so far and has it been fully written?

Major Garrett (7:17)

Nothing fully written. So very important here because when those tariffs were announced in April and then they were moved higher and then they were frozen for a while, the tariff story was an uncertain one. I think it's that cloud of uncertainty that was really hanging over the labor market over the past four months. But right now, what we do know is that the industries most directly impacted by tariffs are not hiring as much. We know that. We know that they are losing some jobs. We also know that tariffs are creeping into the economy and not in a huge way yet. But what we are clear about is that prices are set to rise over the next, say, six months or so. Not great for holiday shopping, I know. But what we also know is that we consumers, we are very canny. Once those prices go up, we'll switch and make different choices. So that is why economists believe that this kind of tariff regime is one where we'll see prices rise but not keep rising. Now, that doesn't really help you if you're going out and shopping. I understand that. But maybe the best news that I can have is that you're not going to feel like you did from the year 2021 to 2022 where it just felt like prices were going up, up, up, up, up. It is likely to be that prices and the Consumer Price Index, from the, from the way that the Fed looks at this, the PC Index, these measures of inflation will start to rise over the next few few months. Then they'll kind of steady. But the problem major is that consumers are going to be stuck with price levels that are higher. And I think that is going to be very hard to swallow for anyone who's in the lower to middle earning.

Mark (8:58)

Joe, one other part of the economic scenario I want to discuss with you because when people talk about inflation, they say just tell me what energy cost is and I'll tell you what inflation is going to be. But yet there's a dual reality there. Natural gas and prices at the pump are down, but electricity paid for by consumers, either businesses or at home, are up.

Major Garrett (9:20)

Yeah, I mean the great news is that prices at the pumps. Okay, totally happy with that. Everyone's good. The price of crude oil sort of in the low 60s, no problem. That electric, the electricity story is a story of artificial intelligence because to build artificial intelligence it needs a lot of energy in terms of electricity or in the form of electricity. That's why you were seeing those prices go up. But again, what I have come back to over this process of the last few years, the last five years of all these different impacts on the economy, we've never been here before. And so what I want to try to emphasize is that we can't hang our hat on what has happened in the past. Right now I can look at a lot of different companies and say, wow, these companies are making a ton of money. Big technology companies. We are seeing the s and P500, the NASDAQ, the Dow, all at all time highs. And you have to reckon that with, with the problem. The other side of that, which is consumers feel burdened. And, and I think that's going to be the story of this year and next. How will consumers get out of this if the labor market weakens from here? I think that's a problem. If we see a resumption of growth and the labor market starts to strengthen the average worker will be able to afford what's going on in the economy. But it does come down to that labor market.

Jill Schlesinger (10:45)

Okay, so we'll see what they do. I think it's a quarter, could be a half, I guess. But it's going to be a lot of commentary. Now you have the basic outlines of what I think is going on in the economy. And if you can quibble with that, you may have a different opinion. You may agree with it doesn't matter. We're just going to have a lot of conversations about what's going on in the economy because we are in this murky transitional period. If you would like to get in touch with us about the segment or about something going on in the economy, but more likely something going on in your financial life, get in touch with us. Go to jillonmoney.com click the contact us button, write us a note. And of course, if you'd like to join us on the air, check the box. Mark will do. Everything else. Don't forget to sign up for the free weekly newsletter comes out on Fridays. And check out our subscription service. It's called Jill on Money Live. That's where you have access to quarterly live webinars, the back catalog of those webinars, including our most recent webinar on estate planning. We've got bonus audio and video content. It will cost you 45 bucks for the next 12 months so you can check that out. All right. Don't forget to lift someone up. Change your work, change your wealth, change your life. Thank you for listening and we'll talk to you tomorrow.

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Judge Dan Mentzer (13:14)

Three judges one bench, zero room for nonsense. I'm Judge Dan Mentzer. Joining me are Judge Rachel Juarez and Judge Yodit Towelde. And on Hotbench, we don't just hear cases, we debate. What she's asking for is for the payments that she made on his car.

Judge Rachel Juarez (13:29)

But there's still payments to be made. Correct.

Judge Dan Mentzer (13:31)

And we deliver justice. That is the verdict of the court. Follow and listen to the Hot Bench podcast on the free Odyssey app or wherever you get your podcasts.