Economy "Very Shaky", Unemployment Likely To Surge | Anna Wong, Bloomberg
Nov 28, 2024
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In this discussion, Anna Wong, Chief U.S. Economist for Bloomberg Economics, shares insights from her extensive experience at the Federal Reserve and U.S. Treasury. She addresses rising unemployment and the economic implications of tariffs and trade policies. The conversation highlights the disconnect between the labor and financial markets, consumer struggles due to rising living costs, and the anticipated economic impacts of the incoming administration. Wong offers both caution and hope regarding future recovery and the challenges ahead.
The podcast reveals a troubling picture of the economy, highlighting overlooked warnings despite recent optimism, primarily focused on the upcoming election.
Experts express concern over the weakening labor market, suggesting that government job growth is not sustainable and unemployment may rise soon.
There is apprehension regarding the potential impact of government policies on consumer finances, particularly for middle and lower-income households after the election.
Deep dives
Wall Street's Focus on the Election
In recent months, Wall Street's attention has shifted primarily towards the U.S. election, resulting in a neglect of significant economic warning signs. There is a prevailing narrative that the economy is strong, particularly following the Trump administration’s electoral success. Contrary to this belief, the economy appears to be more unstable, with indicators such as a cooling labor market suggesting potential challenges ahead. Experts point out that the data reflects an overstated job growth rate, contradicting the optimistic views circulated in financial circles.
Economic Policy Predictions Under Trump
Predictions concern potential economic policies under the Trump administration, which include the continuation of tariffs and the impacts these may have on inflation and the overall economy. While many assume that tariffs will lead to inflationary pressures, historical data suggests otherwise, with previous tariffs not significantly impacting consumer prices due to specific product targeting. The nuanced understanding of how these tariffs are executed hints at a complex interplay between pricing and employment, with possible net disinflationary outcomes. Many experts expect that the specifics surrounding tariff implementations will become clearer as the administration finalizes its economic team.
Analyzing Factors Affecting Employment
The labor market has shown signs of deterioration, despite recent improvements in unemployment figures, largely attributed to temporary government hiring related to the election. Insights indicate that the underlying job growth dynamics are weak, raising concerns of rising unemployment in a transitioning administration. The considerable reliance on government-related jobs, which could dissipate after the election, casts doubts on the sustainability of current employment figures. Economists stress the importance of closely monitoring these developments, as consumer spending heavily depends on job security.
Consumer Impact of Government Policies
Anticipated government policies could lead to adverse effects on consumers, particularly through increased costs associated with deregulation and reduced government spending. The potential cessation of student loan forbearance and changes in public service compensation structures might strain finances for many middle-income households, raising concerns about overall consumer health in the economy. Experts caution that the immediate effects of these changes may result in hardship for the lower-income demographics that have already been disproportionately affected over the last few years. This situation suggests a stark contrast between short-term challenges and potential long-term economic benefits anticipated by the administration.
Market Valuation Concerns Amid Economic Outlook
Current market valuations appear excessively high relative to historical benchmarks, with concerns rising about whether these valuations are sustainable given the potential for economic downturn. Although some analysts remain optimistic about the prospects for a long-term bull market under the new administration, caution is advised as indicators of labor market weakness become more prominent. Some experts speculate that the financial markets are dismissing critical economic signals that could necessitate a reevaluation of stock prices in the near future. The prevailing sentiment is that without greater scrutiny of the labor market's health, current bullish trends could prove to be unfounded.
The last time today's expert was on the program back in July, she was concerned about rising unemployment.
Is she still as worried about it as we prepare to enter a new year with a new Administration taking over?
To find out, we have the good fortune to talk today with Dr Anna Wong, Chief U.S. Economist for Bloomberg Economics. Prior to her current role, Anna also worked at the Federal Reserve Board, the White House Council of Economics Advisers, and the U.S. Treasury.
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#unemployment #jobs #economy
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