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As you may have heard Friday, the U.S. added 431,000 jobs in March, while unemployment hit a pandemic-era low of 3.6 percent. But those numbers only tell part of the story. Roben Farzad, who examines business and culture as host of “Full Disclosure” on public radio, joins Geoff Bennett for more on what's ahead for Americans and the economy.
As you may have heard yesterday, the U.S. added 431,000 jobs in March, bringing unemployment to down to 3.6%. That's a pandemic era low. But those numbers only tell part of the story. For more on what's ahead for Americans and the economy, I'm joined by Roben Farzad, he's the host of Public Radio's full disclosure podcast, which examines business and culture. It's great to have you here in the studio.
And so Roben, we should say this is an exceptionally strong March jobs report. But White House officials I've talked to are all too aware that Americans perceptions of the economy matter more than strong numbers on a piece of paper and perceptions right now, we're so colored by inflation and high gas prices?
Roben Farzad, Host "Full Disclosure": Yeah, if I were an alien kind of dropping down and telling you that unemployment is at three and a half percent, you'd be running victory laps, look 11 straight months of 400,000 plus jobs created that's the best clip I think since the end of the Great Depression. But, but, but —
Inflation, gas prices, the war premium abroad, maybe the specter of a recession. And unfortunately, you know, outside of the theater — the theoretical, the gas price print is something that you see every day, it's emblazoned on your general sense of costs, the grocery card basket, what you're paying for rent. Rents are super expensive in some markets and housing is also very unattainable for many Americans.
And there also is this notion that, you know, it's a great thing that more people have jobs, it's a great thing that more people are getting paid better wages, but yet that also adds to inflation.
That's right. They want a not too hot not too cold market. You can also be the Biden administration and saying, wages are up what five and a half percent. But the problem is inflation is up closer to 8%, right? And you don't have to — again, subscribe to the theoretical to know you're not keeping up with inflation. Right now, for better for worse, the default wage for a lot of service sector workers in restaurants where people are begging them to come back is closer to $15. That wasn't done by Congress or by the other binding. But just by dint of how slow it's been to hire workers to convince them to come back after the great resignation, and yes, invariably, that's going to lead to capital I inflation.
What about the housing market? Are we sort of on the precipice of a housing bubble again, given how high prices are, for houses across the board?
It's definitely frothy when you think about people for going home inspections, these ridiculous stories, right here —
Not quite a bubble, but a little frothy.
Oh, you know, stalking people who may or may not list their homes. And yet the systemic outliers that we had in the Wall Street crash in 2007, 2008, are probably not there. You have Federal Reserve stress tests, but certainly a lot of buyers out there are fetishizing, this idea that housing prices can just keep going up double digits every year. In this case, I think it's up to 19%, on average, and that just defies economic physics. And the question is, how are they going to handle the letdown after this? And they're going to say, well, if I have negative equity, I'm going to walk away from this. And if a lot of people kind of decide to sell, they end up selling at a discount, and then you see a housing bust, if not an outright crash.
So what more can the administration, what more can the Fed do to address any of these issues? No president has direct control over the — over the cost of gas, the Feds trying to raise interest rates that might not be enough to sort of, you know wrangle the inflationary pressure, what more can be done, it's a limited sort of toolkit?
And yet this is probably the most micromanaged economy in American history. You used to have the threat of failure and bankruptcy and depression and everything. And the modern Federal Reserve by taking rates to negative levels and to zero and to having to ratchet them back up. It's like really managing a reservoir. It's far removed from the natural lake that the economy was in while we might not get breadlines and, you know, soup, kitchen and destitution the extent we did during the Depression, you certainly have problems coming out of it. You have inventory problems, inflationary problems, housing not affordable for a generation of Americans. And we didn't even mention the stock market. I mean —
Yeah, I mean, let's talk about that in a minute that we have left, the stock market.
It's done so well during this pandemic, which is paradoxical, but people have embraced risk assets. If you're privileged enough to have been sitting on cash and dry powder, you have a wealth effect, you could look at your 401(k). You could look at your Roth, your stock portfolio and say, wow, that's great. Problem is, again, millennials, other people who are trying to save for a home who are trying to pay off academic debt. And now with inflation, they're always feeling so chronically behind and there has to be a bill to pay for that.
Yeah, absolutely. Roben Farzad, great to have you here. Thanks so much for your insights.
Likewise, my pleasure, Geoff, thank you.
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