Bloomberg Talks New Century Advisors Chief Economist Claudia Sahm Talks Jobs Data
May 2, 2025
Claudia Sahm dives into the latest jobs data, discussing its implications amidst rising trade tensions and recession fears. She emphasizes how recent GDP declines don't necessarily predict economic downturns. The conversation highlights the balancing act policymakers must perform to tackle inflation and job market challenges. Additionally, Sahm examines the uncertainty surrounding corporate earnings and the complexities of interpreting economic data. Insights on wage growth trends also bring an optimistic note to the discussion.
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GDP Decline Reflects Tariff Shock
- Growth and employment are closely linked, though not always quarter by quarter. - The first quarter GDP decline reflects a major cost shock from tariffs, not a recession yet.
Inflation Duration Is Key
- Slowing growth, rising unemployment, and faster inflation are likely. - The crucial question for the Fed is how long inflationary shocks will last.
Avoiding Recession Requires Quick Action
- The economy has many recession ingredients but can still avoid it with quick action. - Shocks must be dialed back to prevent economy-wide feedback effects causing recession.