>> From WXXI News.

This is connections.

I'm Evan Dawson.

>> Our connection this hour was made in the soybean industry thanks to the new Trump tariffs.

Were.

We're getting to know about a number of industries that maybe are affected, and that we haven't spent a lot of time thinking about if we don't work in them.

Right now, America's soybean farmers are breaking the glass in case of emergency.

Here's the emergency 25% of their annual market is China.

And because of the new tariff war, China is apparently currently planning to buy zero American soybeans this harvest.

They're turning to places like Brazil instead.

American farmers are saying that they are now desperate, asking the administration to end the tariffs and bring their market back.

One North Dakota farmer told his local Fox News station that he never wants to hear the word tariff again.

But the Trump team says tariffs are a huge success.

Howard Lutnick says tariffs are raising record revenues.

No one in the administration is talking about removing them.

Let's look at other parts of the economy.

According to CNBC, the U.S.

labor market showed continued weakness in August, with employers adding a mere 22,000 jobs.

The unemployment rate rose to 4.3%.

The August report also revealed that employment in June was actually down 13,000 jobs.

The first net job loss since the pandemic, and those figures contribute to a broader trend of slowing job growth over the summer.

The president has responded to this by firing the commissioner of the Bureau of Labor Statistics, Erica McEntarfer.

The president accused her of being a political appointee who was manipulating the data.

And speaking of data, The White House says maybe we should get rid of quarterly reports and go with twice annual reporting.

There's a lot to talk about.

The fed cut rates again, food prices continue to rise.

And what is stagflation anyway?

Are we in it?

My guest this hour is not here to talk about politics.

In fact, I think we all benefit if we get the politics out of this and just talk about the fundamentals of the economy.

And Eric Morris, as staff economist for Alesco Advisors, is back with us.

Dr.

Morris, I presume.

Nice to see you.

>> Ivan, always great seeing you.

>> And isn't it nice not to talk about politics.

>> For a little?

We get enough of it in different places.

So you know, sticking to the fundamentals is a good thing.

>> Yeah.

I could not agree more with that.

Now, I do want to start with tariffs, and I want to listen to some of what Caleb Ragland said this weekend.

He's a Kentucky soybean farmer and he talked to News Nation.

He was one of many soybean farmers who have taken a very public facing role in the last couple of weeks, trying to get the public attention on what they say is a worsening plight.

So let's listen to Kentucky soybean farmer Caleb Ragland.

>> Well, we depend on the Chinese market and the reason we depend so much on this market is China consumes 61% of soybeans produced worldwide.

The rest of the world is 39% of the soybeans that American farmers produce, 25% currently have been going to China.

And right now we have zero sold for this crop that's starting to be harvested right now.

So it's a five alarm fire for our industry.

That 25% of our total sales is currently missing.

And right now we are not price competitive with Brazil due to the retaliatory tariffs that are in place.

our prices are about 20% higher.

And that means that the Chinese are going elsewhere because they can find a better value.

And the American soybean farmers and their families are suffering.

There's 500,000 of us that produce soybeans, and we desperately need markets, and we need opportunity, and we need a level playing field so we can compete because we grow a great product.

But we have to be price competitive as well.

And there's an artificial barrier that is built with these tariffs that makes us not be competitive.

>> All right.

That's Caleb Ragland, the Kentucky soybean farmer.

how is his analysis?

Eric, what do you think?

>> It's pretty darn good.

you know, there's there's some things that stick out there that, that, that I think an economist would appreciate.

The first.

Is that what he's talking about here is the fact that there is a market for soybeans, and the U.S.

is growing soybeans and selling them to the number one consumer of soybeans in the world, China.

so those U.S.

farmers depend on that.

When those U.S.

farmers when the market prices, those those soybeans, the U.S.

farmers are able to to use that price and ship that off.

But when there's a tariff put on that by China, and that's what's happened here, China has put a tariff on U.S.

soybeans.

So when there's a tariff put on that by China for for Chinese importers I believe right now it's 34%.

So a 30.

So a markup of one third right on top of that.

That's I think this farmer used the expression it's an artificial barrier, an artificial obstacle.

It's not artificial.

It's manmade.

It's human made.

This is this is something that is tacked on in addition to the markets.

The markets are flowing.

They're free flowing forces.

But then humans come along and add a third to that price.

All of a sudden it becomes a third more expensive for Chinese importers.

Chinese importers don't really care where they get their soybeans from.

They want to make sure they get the soybeans.

They get them at the best price.

Well, now us soybeans all of a sudden become less appealing because they're a third, more expensive.

So why not turn to the largest grower of soybeans in the world, Brazil, who doesn't have that tariff?

And the importers will import from Brazil?

Who's happy to ship their soybeans off to China?

And the Chinese consumers are happy to consume them.

>> Part of what might be confusing here is that, you know, the current administration might say, well, look, we're not putting that tariff on Caleb Ragland or American soybean farmers.

That's China.

Ragland used the term retaliatory tariffs.

That's right.

What do you want people to understand there?

>> Right.

So these tariffs, by being human imposed and artificial in nature in that sense there is the possibility that somebody retaliates.

So with China, they have a lot of skin in the game outside of just soybeans.

There's a massive negotiation going on between the U.S.

and China.

And with this negotiation, power is very, very important negotiating power.

And if China is going to get what it wants, it wants to demonstrate that it does have some power.

And one of one of the ways you can do that is by finding a pain point that's hard to get around.

And for that, that's soybeans.

For American farmers.

and that is because while those the Chinese importers can import from anywhere else, U.S.

farmers can't sell to anywhere else, you can't just drum up a market to go sell your soybeans.

And so these farmers are really going to hurt from this.

And it's because their soybeans have gotten more expensive.

And by the way, they're having to sell their soybeans for a third higher.

But that money does not go into the farmers pocket.

That, that that winds up being collected by the government of China.

So that retaliation tactic by China is probably quite effective because it's creating a real pain point.

Now, the negotiations between the U.S.

and China are ongoing.

there's been there's been some frameworks released.

There's been some progress that's been stated.

There's sort of these tangential discussions with TikTok and whatnot that's been going on.

there's a lot going on there.

So where this ultimately settles, I think, is we don't know yet, but it's certainly something that in the meantime, it's a scary situation for us soybean farmers.

>> okay.

And part of what I wonder when I hear retaliatory tariff there is you're right.

There's a lot of economic dynamics that they might be retaliating for, or they might be trying to use leverage regarding, but is in some ways retaliation for the new tariffs that the United States government has imposed on China's exporting to the United States.

>> That's 100%, right.

So but for U.S.

's new tariffs, the new tariffs in 2025 under the Trump administration.

But for those this tariff on soybeans would not exist.

>> okay, okay.

And so it will be interesting to see if there's a deal struck sometime sometime soon.

The reason I find that curious, and we talked a little bit about this and we kind of really got into tariffs earlier this year with Dr.

Morris here.

What I find interesting here is that this administration has said to what I think are competing ideas, unless there's a way to hold both of these together.

One is tariffs are good and they should be in place.

And they're going to raise a lot of money for the United States.

And they are just good on their own.

And we should have been doing them for a long time.

And we're going to do them and we're going to do them in the future.

The other is the tariffs are a way to put pressure to get what you want.

And if we get what we want, then we can remove them.

So can you.

Can both of those be true?

>> You can't have both.

You can certainly have one or the other.

And and you could have tariffs at the same time on different countries that are being used for different things.

But it's important to understand what the purpose of the tariff is, because let's say this if if China wanted to raise a bunch of money by putting a tariff on U.S.

soybean farmers, it wouldn't do so because Chinese importers aren't going to import any soybeans.

And so then therefore, they're not going to pay any of the tariff tax.

But if they wanted to gain power in a negotiation to be able to rearrange things, then they're doing so very effectively with that.

Good.

And the same applies when you flip it to the U.S.

If the U.S.

is going to put tariffs on, you know, different countries and different goods, it's really important for the U.S.

to understand what the desired outcome is, because it's going to impact how you treat the different countries and the different goods.

Are you trying to raise revenue?

If you are, you want to make sure that people are going to pay that tariff, not that they're going to stop importing that.

Good.

or are you trying to rearrange renegotiate a trade arrangement, try to get you know, the other side of the argument is try and get maybe a fairer trade so that ultimately the tariffs do go away.

But you've gotten some sort of you know, reciprocal benefit for that.

Well, then you have to treat those tariffs differently.

You have to be very, very intentional about what goods you're, you're putting tariffs on and how you're doing it.

>> last thing on tariffs before we move to some other issues with Eric Morris who is staff economist for Alesco Advisors.

And joining us this hour to talk about the economy.

is there anything on tariffs so far that has rolled out this year that has surprised you?

I ask because the Treasury Secretary is not kind when he talks about your profession.

The vice president is not kind.

They talk about, you know, these economic ivory tower folks who had all had the same idea about tariffs and tariffs are going to raise record revenues.

The Treasury secretary says, you know, our coffers are going to be overflowing with tariff revenue.

And isn't that a good thing?

And you know, the economy is going to be great.

And so is there anything that so far that has surprised you?

>> Let me try and directly answer the question without getting defensive.

okay.

What surprised me?

I think what surprised me is the willingness of American importers.

So, you know, your Walmart's your Home Depot.

It's out there, right?

These companies import a lot of their goods and then sell them to us consumers.

Typically what happens when there's a tariff put on their goods is that they pass that cost along to the U.S.

consumer themselves.

What I found surprising is the willingness of those companies Walmart and Home Depot to pay the tariff themselves and not pass the full brunt of the cost onto the consumer.

Now, that's interesting because it's it is unlikely to continue that way.

>> That's not sustainable.

>> Those are publicly traded companies.

They're, they have a responsibility to their shareholders.

And right now they are in the short term willing to sacrifice some of their own profit margin in order to not overly increase the cost of their goods to the consumers, thinking that in the short run, this may be a good place to keep customers coming back.

but many companies have stated in their quarterly reports that the plan would be to increase the their prices in the future in order to help offset this.

Now, there's a there's a reason I was surprised at first this was happening, but there actually is a pretty good, solid reason why companies aren't doing this and why they're able to do this is because companies are actually pretty flush with cash, and they have been for a while.

so they're able to have a little bit of runway.

And the second thing is that they had a little bit of a warning this was going to happen.

And so they're able to run up inventories as well.

And we saw this in the data.

Again we'll talk a little bit about data.

But we saw this in the data for the economy as a whole is that there was a massive run up in imports, which translated to a massive build up in inventories for companies that were going to be susceptible to these tariffs.

so one way or another, these tariffs are paid by either U.S.

companies that are importing the goods or U.S.

consumers that are consuming the imports right now.

It's interesting to see that the split is so much skewed towards the U.S.

companies.

whether or not that remains the case in the six months year, 18 months, two years ahead is stands to be seen.

But that to me has been surprising about the tariff situation.

>> All right.

On the subject of quarter quarterly reporting.

Sure.

And I confess on this point, there are times where I don't know, I just I actually don't know if some of what, for example, the president is saying or posting about is actual policy or possible policy or just musings, but I so I don't know if the president could wave a wand and say, we're getting rid of quarterly reporting, we're going to do it twice annually.

or if there's a different mechanism that would have to happen for that to change.

But let's talk about this.

The president says maybe we should get rid of quarterly reporting.

Maybe it should be twice annual.

What do you think?

>> So I think it would be beneficial for for listeners to really dig into what we're talking about here.

So with quarterly reporting, what Evan's talking about is that for publicly traded companies, these are companies whose shares of ownership are traded on stock exchanges, that it's a requirement by the government that if you're going to be traded out there, publicly traded, you have to publish data and information about your company so that people who are going to buy that share of ownership have the ability to learn more about your company.

They know what they're buying.

It's a transparency play, right?

This is why the SEC exists.

So to be transparency, if you're going to take the risk of becoming an owner in a company, you ought to be able to have at least available to you a pretty robust set of of data that is updated every quarter from companies.

So what the president has floated is the idea of going from a quarterly to a less frequent reporting for that.

Now, the idea of, oh, the reason why, let me say this, is that creating these reports is not a is not a small task.

companies, publicly traded companies have entire departments that are dedicated to this sort of hamster wheel of every single quarter.

Creating these reports and publishing them.

and that is that's onerous to companies.

So to become a publicly traded company is, is not, you know, all sunshine and rainbows.

You know, you do have these requirements that are government regulated requirements.

Requirements.

What we've seen is that the the flow of companies choosing to become public has actually slowed down.

A lot more companies are choosing to be large private companies instead of go out to the marketplace and raise cash by becoming publicly traded.

And that's been concerning.

So President Trump's thinking, hey, we might be able to to slow the the pace of reporting so that it reduces some of the, the the pressure of that.

>> kind of the regulatory burden.

>> That's right.

The regulatory burden.

Exactly.

And that might be able to help companies do better.

The trade off to that is that you get less transparency.

Now, this is not a new conversation.

This is a conversation that's happened for a long time.

And it's all over the world.

what's interesting is that several years ago two very, very important people to the financial world, Warren Buffett, you might have heard of and Jamie Dimon, who is the chair and CEO of JP Morgan.

they came out and wrote a piece together encouraging a new policy adoption of not reporting quarterly earnings estimates of reducing that earnings estimates, not earnings estimates, are different than different than the reports.

They come out at the same time.

But the reports contain all sorts of things that are full of accounting and and backward looking measures that show exactly what happened over the past quarter.

the earnings estimates are forward looking.

Their projections.

And so what Jamie Dimon and Warren Buffett were trying to do was to say, look, we need to move away from that, not for to limit transparency or to remove the burden, but to get people away from thinking about these forecasts and projections, because the forecasts and projections are never accurate.

And it leads people to do certain things, and it leads companies to behave in certain ways when they're beholden to these, these forecasts.

So that was something that's been talked about for a while now.

This is different.

And some people in the public sphere, when I read on the internet they've conflated the two.

They said that Trump is talking about the same thing that Jamie Dimon and Warren Buffett.

>> okay.

>> They're not they're different things.

But there are advantages and disadvantages to both sides of this, right?

So plain and simple.

If you reduce the amount of reporting that's required, you pick up the advantage of of maybe easing the regulatory burden for companies and maybe thinking more in the long term, if you're not reporting every quarter and chasing that, that you know, rabbit or going around that gerbil wheel the disadvantage there is that you lose the transparency.

And so if you're somebody who buys stocks whether or not you're an institutional investor or you're a retail mom and pop, you know, you, you, you do your own 401(k) picking and things like that.

you will have less transparency.

I think reasonable people can disagree about the merits of that.

I think it's a conversation that that's worth debating.

This isn't like a one side is absolutely right, and the other side is absolutely wrong sort of thing.

but I think it should be weighed very carefully, and it really needs to be nuanced.

You know, what what the requirements would be.

there's been some talk that even if the requirements even if companies were no longer required to report quarterly, let's say the requirement is you have to report at least semiannually.

So twice a year that many companies would probably choose to continue quarterly reporting because they don't want to be seen as trying to hide anything.

They don't want to be seen as less transparent.

You know, if Pepsi and Coca-Cola are both you know, both out there shopping for investors and Coca-Cola decides, well, we're not going to publish quarterly reports, we're only going to do it twice a year.

And Pepsi decides, well, then we're going to do it four times a year, even though we don't have to.

We want to show people that we're being transparent.

Well, there could be investors out there that say, look, Coca-Cola is too big of a risk for us now.

We don't.

We only see the reports twice a year.

Let's stick with Pepsi.

>> Are there penalties if your earnings projections are wildly off?

>> if they're if they're based in reasonable, defensible you know, arguments or.

>> Sure, if you can defend the projection.

>> No, there's no, there's no penalty for.

>> But I mean, I'm sure these departments I don't want to be cynical or are creating the best rosy scenarios that they could make for the marketplace.

Aren't they?

Not always.

>> No.

You have to be honest.

if you're not honest, then things do often come back.

you know, Enron wasn't honest, right?

>> Yeah.

>> you know, we.

>> Didn't end well for them.

>> It didn't end well.

But for a while there, the party was going yeah.

You know, and there are all these cautionary tales out there.

I'm sure that there are companies that try to paint the rosiest picture possible out there.

But, you know, the the ultimate, the ultimate judge here will be that investors will see that what they're forecasting doesn't come to fruition, and they will be punished by the markets.

They don't need the government to come in and punish them.

The markets will do so.

>> The president's idea here seems interesting to me.

I mean, there does seem to be some logic, and I would love to see a sober, just fair debate that tries to take the politics out of this, because I'm I'm, again, as a layperson who's just not qualified to say too much about economic policy or getting into the weeds of it.

But I do feel like, always trying to chase your quarterly reports leaves you with a short term mindset.

And I would love to see more long term thinking in American companies.

And if this is the way to help us move that in that direction, that seems pretty logical.

I mean, maybe there maybe there's logic.

>> Here, there's absolutely logic there, and there's actually a whole burgeoning movement.

There's a new stock exchange that's trying to really get get started with the idea that it would require less reporting and that it would be strictly focused on companies with that long term mindset.

>> All right.

That'll be an interesting one to follow.

Now, on the subject of things that don't always pan out or get revised a lot jobs reports we've talked about this.

So jobs reports you get that report.

And then often I feel like three months, six months later they get revised in a different direction.

And all of a sudden, you know, the story's pretty different.

So what I was reading from CNBC, I'll read that again and you can tell me where you see the jobs.

Sort of the situation with the jobs reporting.

vis a vis, you know, where we actually are.

CNBC says the U.S.

labor market showed continued weakness in August, with employers adding a mere 22,000 jobs.

The unemployment rate rose to 4.3%, and the August report revealed that the June report was off.

That was too rosy.

CNBC says the June report is now a loss of 13,000 jobs, the first net job loss since late 2020.

Pandemic year.

These figures contribute to a broader trend of slowing job growth in this country over the summer, and they point out that the president and The White House have said, you really can't believe this data.

They fired Erika McEntarfer, who was the commissioner of the Bureau of Labor Statistics, because the president said they were manipulating the jobs data.

So how do we contextualize jobs reports here?

>> There's so much to talk about here.

I want to start with with identifying the fact that it is a wildly different excuse me, not different.

Difficult exercise of wildly difficult exercise to try to count up on a monthly basis.

The net amount of jobs that have been created in an economy with over 150 million working people in it.

>> Yeah, that would seem to be really hard.

>> It is a wildly difficult thing to do.

The Bureau of Labor Statistics tries to do it, and they're doing so to provide data for people, particularly policymakers, government officials, but also companies and people like like me and everyday people, you know, that are out there thinking about these things.

They try to do so.

And what they do is they have a team of several thousand economists, statisticians, even accounting folk as well, and they work together using data science, statistical science, survey science to try to cobble together the best numbers they can get right.

And I think that's important because.

>> The most accurate numbers.

>> Exactly the most accurate numbers they can get.

And I think it's important because I think oftentimes when people get upset about the jobs numbers, they're they're saying, well, why didn't these people get it right the first time?

Well, the goal isn't to get it exactly perfect because you can't it can't be perfect.

Anyone that's familiar with surveying and statistical science knows that.

That's why you report a margin of error.

That's why you have standard deviation.

That's why you have all these things.

They exist because it's impossible to get it absolutely right.

But they work as hard as they can to get it.

Right.

Now, the BLS with jobs has two different surveys that they that they use to cobble together this entire report.

The first is called the Household Survey.

And that is where they're they're working with people directly with workers trying to figure out people that have gotten jobs and haven't gotten jobs, and they use other data to round it out as well, not just surveys, but they use payroll data and tax filings and things like that.

And the second survey they do is the establishment survey, which is businesses, and they're asking businesses again, thousands and thousands of businesses to to respond to a survey every month to say how many people they've fired, how many people they've laid off, what that looks like.

This is, again, an onerous thing for businesses because, you know, they have a job to run their business and they can't always get to that survey right away.

What we find is that for the first publishing of that establishment survey, that about 60% of businesses have responded.

So they're publishing that data with about 60% of respondents in.

It's enough to give a rough idea and for the BLS to say, hey, this is where we think this is going.

But over the course of the following months, the rest of those surveys wind up coming and they're able to collate that data and they're able to get a much clearer view of what's going on, which is why they continuously revise this.

So the reason why they can't get it exactly right is because we don't all have a microchip in us that's telling us, telling the government whether we're working or not, there are employees that have to because we live in a free country, we have to use data science and surveys and all sorts of things to get the best possible view.

And the more that that it gets in the rear view, the clearer it becomes, because the more data you're able to use and put together.

Furthermore, the states collect their own surveys, right?

So the BLS is a national organization.

The states collect their own surveys, and the states are much closer to the businesses.

So when you take all the individual 50 states that are collecting this, their data ends up getting shared with the federal government, and that makes it even clearer.

But that doesn't happen for months down the road.

So that's why we have, you know, the first month's initial report, your first revision, your second revision.

Six months later, they look back on the six months before, and then a year after that, they look back again.

The more it winds up in the rear view, the clearer it gets.

And I know I just rambled on and on and on for a while there, but I really want to stand up for the folks that are that are in these statistical fields because there's a real misunderstanding here about what they're doing.

And I think that with people's problems with this data, I would encourage people to think about what are you asking for from the data, right.

Like, what are what are we asking for when it says that only 22,000 jobs get created?

Is that 22,000 exact?

Is it 22,542?

Is it you know, it's it's impossible to say.

Right.

so they're just doing the best they can with that.

I hope that makes sense for listeners.

>> It does.

And again, this is not intended as a political question.

I just want to ask you, is there anything that you have seen that indicates that the process that you just described has been fudged or manipulated politically?

>> Fudge or manipulated politically?

Politically?

No, I would say that it could stand to be improved, not because there's some sort of bias or leaning in it in terms of politics, but because there's probably some technological innovations that we can leverage here to get a little bit better at it.

Right.

you know, the surveys, the responses started to go down around COVID.

And actually, this was a societal wide thing, whether it's surveys for political polls you know, Gallup surveys or Siena surveys or you know, all sorts of different surveys having to do with any type of topic.

Survey responses in general have gone down, and that applies.

And that's hurting that applies to BLS and that's hurting jobs data too.

but there's nothing in there that says that there's some sort of political fudging going on.

I think that the process could be improved, but not because of politics, because of just data science.

>> Well, I mean, if you're standing in a dark room, totally dark, the largest room in your house, wherever you live, the dark, it's all dark and at your feet, up to your knees are baseballs, basketballs, tennis balls, softballs, soccer balls.

And your charge is to figure out how many tennis balls.

Now, let's say soccer balls, similar material are in that room, and you got five minutes to do it and the lights are off.

You're going to do your best.

But at the end of that five minutes, you're not going to have a fully accurate picture.

Now, if you go back an hour later and you get a full 60 minutes, you can turn the lights on.

You're going to get a more accurate picture.

That's right.

And you're going to be able to say, well, we thought there were this many soccer balls.

We actually miscounted somewhere.

Basketballs.

That's right.

And here's the deal.

And there was a few that we didn't see in the corner.

And and we're going to give you the fuller picture.

I would rather you just wait.

Why do I need that first report?

Why why is that first job if it's not accurate or not?

If it could stand to be better, why do we need that first report?

Can't we just wait?

Eric.

>> Yeah.

This relates to kind of one of those I think top of the program bullet points that you laid out.

And it has to do with policy making.

It has to do with the Federal Reserve is one of the key consumers of this data.

And the Fed's job is to keep as many people working in the American economy as it as it can stand.

and with that, the fed needs to know, at least in some sense, where we where we stand generally.

And it really it's also about kind of like trends.

Right.

So whether in June we we gained 30,000 jobs, gained 100,000 jobs, lost 20,000 jobs.

What we what we're seeing is a trend of softening in the job market.

And what that means is that there are fewer new jobs being created.

And wherever that June report or wherever the August report landed, the ultimate trend is showing that.

And so the Federal Reserve this week acted by cutting interest rates, by it's cutting its policy interest rate by a quarter of a percentage point.

and that was because of the data that's coming in.

Now, the hope is that the data is not so wrong that it leads policymakers to do something, you know, remarkably out of line.

we haven't seen that.

but these policy are certainly thinking about the data in the way that I'm talking about it, in terms of contextualizing it and saying that it doesn't matter if it's exactly right.

What we need is we need a general picture, because macroeconomics is just messy.

We've talked about this before.

Macroeconomics is the study of the entire economy as a whole.

And when you do that, when you look at an economy as a whole, you're lumping together different industries like the medical industry and the construction industry and the services industries like accounting and leisure and hospitality.

And, you know, if you're looking at counting the ticket takers at the Red wings game, along with the doctors at strong, along with the, you know, the workers in the the farms and the outlying area in Rochester, New York.

That's a tough exercise.

And you lump them all together for macro.

So it's really, really, really messy.

And I think those policy makers understand that.

And they're dealing with that as well.

they're not asking for the from the data, something that the data can't give them.

So that's why they're not up in arms about this whole situation is because they know.

>> Right.

But right now to your to your point about the larger context, it's this it's one thing to say, yeah, we revised it by 25,000 jobs.

It's another to say we were off by a quarter million.

And it's more likely the former than the latter, although we've seen pretty big revisions at times.

But what I think you're saying is the policy at the fed and elsewhere are looking at the jobs market right now, and they're saying it's not good.

>> I think what they're saying, what they're saying is that the job market is softening.

Right.

What's interesting is that when I say the job market softening, there's less new jobs being created.

And at times there are jobs being taken away from the economy.

On the whole, the general trend is that there's new jobs being created every single month.

There's fewer new jobs being created right now, which is typically a pretty notable problem.

But what's interesting is that's the, the demand for, for workers, right, is how many new jobs are being created.

What's interesting is that the supply of workers is going down at the same time.

And so it's created a balance.

And one of the big reasons supply of workers is going down is because there's been tighter immigration controls.

So there's been less immigration, both legal and illegal immigration to fill those jobs.

So we're seeing that the workforce, the amount of people in the workforce decline slowly.

And we're seeing the number of jobs available, decline slowly.

So there's been a little bit of a balance, which is why the unemployment rate is still at a pretty darn good 4.3%.

>> Yeah.

And so last thing on this.

And then I'll take after our only break, I'll take a few of listener questions that have come in.

And then we're going to hit a few other topics with economist Eric Morris.

That June report got a lot of attention because it's the first one since COVID to be a net job loss.

Is it as big of a deal as it seems in those headlines?

>> it depends on which headlines you're talking about.

You know, the ones that are saying like, oh, this is the first one since COVID.

So we're headed towards a recession.

I don't think that you can say that at all.

I think there's a whole bunch of things that are supporting a fairly, a fairly healthy looking economy right now in different ways.

I think it depends on where you sit, but we're certainly not on the precipice of some disaster that's going to occur, you know, this minute.

based on the data, the data show that the economy is maybe in a downshift, but certainly not a downturn.

so it's a situation where, you know, yes, you have a month of negative job creation, negative net job creation.

It's, you know, it's notable, but it's not alarming.

>> After we take this break, some of your questions for economist Eric Morris.

And then we get back and we'll dig into a few other issues like what is stagflation as a term?

I want a definition here.

We're going to go to school here and we're going to talk a little bit more about the stickiness of prices.

That's a subject we talked about in the past with Eric.

And you know, your grocery bills have not come down.

So why is that?

What are some of the fundamentals involved there?

We'll come right back on connections.

Coming up in our second hour, a new film brings the story of doulas back to the big screen at the little theater tonight.

And the idea of doulas in the delivery room is not new, but more Americans are using doulas when they give birth.

And that's not just for the wealthiest in the population.

There is a movement afoot to make doulas available and accessible for everyone.

And we'll talk about how next hour.

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>> It's connections at wxxi.org.

If you want to reach the program, you can join us on the YouTube chat.

If you're watching on the Wxxinews.org YouTube channel.

You can call us 844295 28442958255263 WXXI.

If you're in Rochester 2639994.

Although my 13 year old always reminds me, nobody calls anybody anymore dad.

But sometimes people call.

But.

But I yeah, but feel free to send us notes and let me start to read some of yours.

Joel writes to say you should ask about the $100,000 fee for H-1b visa holders.

JPMorgan told its employees who hold that visa to return to the United States by September 21st, and some economists have suggested that this policy could slow economic growth.

What's going on here?

>> So I'm certainly not a immigration specialist in terms of the the nuts and bolts of how people coming into the country.

I look at the data and I'm also not a political analyst here, but those visas are typically used by companies to bring in highly skilled workers into the U.S.

to work.

vast majority, I think are from India, actually.

and so those highly skilled workers getting visa to come to the U.S.

and work is typically a good thing for the U.S.

economy because they're getting some productivity from it.

Now, somebody could say, well, that that job is being taken by somebody who's not in the U.S.

But if a, if a company is going to go to all the trouble to import a worker for this, chances are it wasn't somebody that they could find in the U.S.

with the same skills.

Putting $100,000 fee on that.

I think right now the cost of one of those is around $1,000.

With all the administrative costs putting an extra $99,000 on top of that would make it prohibitive for companies to bring people highly skilled workers into the country to do that.

So whether or not there are enough highly skilled Americans to fill those jobs who don't already have other jobs and whether or not companies would actually pay the 100,000, I think is stands to be seen.

But my instinct would be that that the economists that are saying this could slow productivity or at least prevent productivity from being what it could be.

Otherwise, if you're bringing those skilled workers into the country.

I think that's right.

>> Charlie writes to say, Evan, I read in the Wall Street Journal that American farmers are losing $57 billion of soybean sales to China.

You said it is nice not to talk about politics, but I still can.

America and the world's economy is a balancing act with each country giving and giving and taking a little.

Our president, whose companies went bankrupt six times, does not understand or refuses to admit that I'm sick of what he's done to this country.

That's from Charlie.

Charlie, you can talk about politics all you want.

All I was saying with Eric at the outset is Eric Morris is an economist.

His job is not to analyze the politics of a decision or a policy.

His job is to look at the results and the fundamentals underlying them.

So what do we know about tariffs generally?

What are we seeing so far specifically?

what does that portend possibly for the future?

and, and that gets us away from, you know, any personal biases, good, bad or otherwise.

And that's all I'm saying with Eric.

I mean, listen, but you, Charlie, if you're not, if you're feeling good or bad about things, go for it, man.

You can say what you want.

Sean in South Lima says, I live in northern Livingston County.

I noticed many fields near my home that were left fallow this year for the first time since I moved to the area.

It looks like the dairy farms planted their fields to grow silage corn and hay for their herds, but many cash crop farms did not plant corn or soybeans like they have in years past.

I had thought that it could have been due to having a very wet spring, but now I'm thinking that the commodity prices were a major factor in the farm's decision not to plant.

That's from Sean.

I don't know, Sean.

I don't know the answer to that.

I don't know if you're farming and you're you're sort of doing rotational crops when you're making that decision or what would drive that.

So I don't want to speculate too much.

I mean, I, I guess it's possible, but I don't have enough information on that.

>> I can't speak to the specifics there.

But what I can say is that farmers are in a really interesting position.

So unlike a company that isn't sort of beholden to the seasons and to Mother Nature and to growing things and all the things that come along with that.

you know, farmers have to make those decisions in advance and they have to prepare for it.

And you know, so they're, you know, longer term plan is determined in advance.

And if something happens to change the dynamics of that situation, it sends you back to square one.

And so farmers have a harder time just given the nature of what no pun intended, given the nature of what they're dealing with.

they have a harder time being as nimble as maybe a small manufacturer or a services organization that that has to deal with a instant price increase in the market or a tariff in that.

In that.

>> Sense, I appreciate that point.

That's why the soybean farmers are all over the place now talking about this, because they're about to harvest.

They can't take that train off the tracks.

>> Yeah, and there's a shelf life to those soybeans.

It's not like, you know, you made a bunch of you know, cell phone parts that you think, well, we'll keep these for now, and maybe we'll find another use for them in the future.

No.

Those soybeans, there's a shelf life for.

So, if you can't sell them, then they're gone.

They're dust.

>> Francis is a big Eric Morris fan, she says.

Quick quick note to say thank you for the excellent coverage of the economy, especially the jobs report on today's show.

It's really clarifying this topic for me.

And she liked my ball analogy in the dark room that was off the cuff, man.

>> Good.

>> That's pretty good, right?

>> We weren't we were talking about baseball just before we got on.

>> So you can see where my brain always goes.

and Dallas makes the point, he says.

One thing I know is that Republicans have been saying the economy has been holding on by a thread since Biden was first elected, hearing how terrible it is now coming from the left won't cause that much damage to Trump's polls.

Again, that's a political comment.

I will say this though.

Dallas, it is interesting that this administration has been selling since last year when they were running, that they could change things overnight, which is not generally how the economy works, although with big economic policy changes and the tariffs are a big one, that can have probably a more short term impact than a lot of other slow moving turning a ship around in a tight space.

But I will say this I don't know that it's healthy to say that if your guy is president, that it's the previous guy's fault until things get better, and then if things get better, it's our guy's gain.

Because both sides play that game and I don't like it.

I'm.

I feel like you're playing that game.

And if you were saying that since Biden first got elected, then what you're actually saying is, in that first year when he was elected, it was hanging on by a thread because of what happened.

You know, when Donald Trump was president.

So it takes a long time to move the economy.

And I would give people grace.

I would give this administration grace.

I would give the next administration grace on things like gas prices, food prices, inflation.

It's tough.

but just try to hold the same standards for everybody.

That's the challenge.

If your principles are consistent, your criticism will be consistent no matter who's in office.

That's all I'm asking.

Now, on the subject of how slow things change.

We have not seen food prices come down.

You and I have talked about stickiness of food prices.

That's right.

egg prices have come down a lot.

And that was expected.

They were in the stratosphere.

They're way down.

But meat prices chicken, beef up, up, up.

milk.

I mean, pretty much everything that's a food staple.

I think grocery bills in general are 10 to 20% higher this year.

So what's going on there?

What do we know about where food prices are going?

>> So right now the pace of grocery prices is growing at about the pace of the overall inflation rate.

So it's not necessarily an outlier right now.

It had been an outlier.

But this is important because you said grocery prices aren't going down.

They're certainly not going down because the overall price level continues to go up to the tune of, you know, high twos, around 3% per year.

That pace and food prices did go up very, very quickly.

So we're not seeing those grocery bills come down.

They they went up shockingly.

We're seeing these higher prices.

And now those higher prices are staying.

And that's that stickiness piece.

They're staying there and they're not coming back down.

They're growing more slowly than they had been.

And they're growing in line with sort of the average of everything else right now for grocery prices.

Interestingly, food away from home, which is going to a restaurant, or whether it's sit down or takeaway or what have you is growing faster than that.

And the difference between the two is, in all likelihood, service wages.

Right?

That's that's pushing the price up.

Because when when a, when a restaurant has to pay for both the food in preparation and all the servers and the chefs and whatnot, that that goes into their ultimate bottom line, their price.

And so that's, that's growing a little bit faster right now.

you know, when we when we lump all food together, it is interesting.

You know, we saw egg prices going as crazy as they did.

there were there were other items that weren't doing that.

And so with, with the food, the entire food picture there's a lot of dynamics that, that impact different food items.

right now you can look at the, the global agriculture situation.

You can think about soybeans.

How might that impact you know, the the soy product prices in the future?

there could be an increase in soy product prices.

We don't know.

It could be a decrease.

It could make it so that soy is now more plentiful in the U.S.

These farmers have to get rid of their product.

They're going to slash their prices.

They might go out of business, but so it could be really cheap for the next year.

So it's very interesting in that sense.

>> okay.

and stickiness in general as a concept, you want to remind us when we think about inflation not everything is as sticky.

What makes something sticky.

>> Yeah.

So the stickiness would be like, if the price goes up, does it stay up or does it come back down?

So the price of gas, as people are accustomed to goes up and it comes down.

>> So not sticky.

>> Not sticky.

Gas prices are not sticky.

the price of food is a little bit stickier.

and it just it happens to be that you don't see those, those, those fluctuations.

And that's mostly because consumers can continue to pay the price.

So as the price gets ratcheted up, that continues to happen.

because gasoline is so commodities based with the price of oil and refining that oil, that commodity supply and demand really impacts the price of gas for other things that are a little bit more sticky.

It's more of like the structural underpinnings are stronger so that when it when a price goes up, it's not apt to come down.

>> all right.

I mean, I think it's going to be really interesting.

Gas prices is one that is interesting.

Just because the president talks so much about it.

he said this summer that gas prices were under $2 and they are not the lowest in the country at the time.

And I think it's still right around here was Mississippi around 275 a gallon, plenty over $3, and gas prices have only gone up a little bit this year, but they're up a little bit.

So, you know, I think I'm trying to just make sure I understand what's happening and why.

And then I hear people talk about stagflation.

I thought I thought we were talking about inflation.

What is stagflation here?

>> So stagflation is a combination of two words a portmanteau the stag portion of it refers to stagnant, which is talking about the state of the economy.

so it's either a stagnant economy, so it's not growing, which is bad because we're used to growth.

And if it's not growing, that means that we're going to feel like it's shrinking or a downright shrinking economy contracting economy.

So that's what Stag refers to.

So bad economic environment, along with inflation, which is.

inflation for inflation.

So the reason that this is so troubling, stagflation is because inflation is typically a byproduct of a healthy oceans, healthy of oftentimes healthy but sometimes unhealthy growing economy.

okay.

Inflation is a byproduct of a growing economy.

Too much economic growth can lead to inflation.

Why would you say there's too much economic growth?

Precisely because it leads to inflation.

We want the economy to be growing, but not too fast.

It's like having a car on the highway.

You want to be going.

You want to be going at a good pace.

But if you've got it floored, pedal to the metal, you're going to create some real unintended consequences there, right?

Your engine is going to overheat.

the opposite would be like if the economy is not growing or it's shrinking, oftentimes we see inflation come down and sometimes there's actually negative inflation.

which happened in the great financial crisis.

It was the last time, I can think of it, that really happening in any type of material way.

and that's, that's not good either.

for a number of reasons.

I don't want to get into the dynamics of deflation, but it's really not a good situation when prices go down across the board.

And the reason why is because we're not not only are we all consumers, but we're also producers.

So there's a flip side of that coin is that if the prices of the things that you're going to sell are going down, that means you're not going to earn as much in return.

So those two situations are typically we see positive growth with inflation, negative growth with deflation, or maybe some disinflation, which means less inflation, stagflation takes the worst of both.

The stagnant or shrinking economy, along with higher prices.

And I don't I don't think you need to be an economist to put those pieces together and say, boy, that's not good, right?

We want to avoid that.

This happened in the 1970s in the U.S., and it was really driven by oil prices pushing up the price of everything else in the economy because we were very oil dependent economy.

And gas was expensive to begin with, and it got even more expensive and restrictive.

and then at the same time, the economy was shrinking.

We fell into a recession.

So people lost their jobs and the cost of everything they were paying for went up.

So that was a really, really bad situation.

you asked, are we in that now?

Is that right?

Yeah.

We're not.

>> Not right now.

>> We're not in that now.

No.

There is a fear that that winds up happening.

It probably is, because a lot of the the tricky situation that the Federal Reserve is in right now with interest rates, trying to figure out what the exact right interest rate would be.

you know, there is some downward pressure on the job market and some upward pressure on inflation.

But those are pressures.

They're not where we are right now with unemployment at 4.3%, even with the jobs numbers, we were talking about, the job market is relatively healthy for certain pockets of the job market.

It's not.

There are the newest members of the workforce.

College graduates are having as hard a time finding a job as they have since the Great Recession, which is very, very difficult for them.

There are certain pockets of the workforce that, that have that have that have also been suffering as of late.

But on the whole, the job market is holding up relatively well.

and inflation, again, there's some upward pressure.

But, you know, we might not be at that 2% inflation mark we're looking at, but we're a far cry from the 9% inflation that we saw in 2022.

So we're not in a situation where we're seeing stagflation.

There might be stagflationary pressures, but the data don't show that we are in that situation right now.

>> Dallas followed up to say, I think our forecasts are still a lot better than Europe or China's.

So to quote Caddyshack, I got that going for me.

>> Which is nice.

>> Which is nice.

That is Dallas.

Anybody who quotes Caddyshack is welcome.

Thank you.

Welcome on the show here.

>> Mike says regarding H-1B, medical residents, not only skilled workers, but a full 30% of all medical residency slots in the United States are filled by H-1b holders because those spots cannot be filled by us medical MD grads.

This will have a huge impact in this area.

>> That's really fascinating.

I didn't know that.

so thank you.

Mike.

and now I have to chew on that for a little bit because, you know, my job is I think about the the national and global economy, but I'm also doing quite a bit of work with the local economy and thinking about that as well.

So, Mike, thank you for that.

I gotta I gotta go chew on that one a little bit.

>> And Jeff says the Brazilian soybeans are going to China.

So who's not getting the Brazilian soybeans.

Can the American farmers fill that void?

My guess would be Africa.

But I'm guessing pivoting and the shipping costs are big factors.

>> Yeah, that's a that's a good question.

My guess would be that they are being consumed locally in Brazil.

So Brazilians will probably say like, okay, we'll ship some of our local consumption out, and then they're spread across all over the world and probably different pockets and places.

The Brazilian farmers are probably much be much happier just having China paying maybe a little bit marginally higher price than, than their own domestic consumers have been paying and not having to worry about shipping it to many different markets.

Just like thinking about, hey, this is this is our saucer right here.

so they're happy to do it.

Now, those other different markets, I'm sure that U.S.

suppliers could cobble something together, but they've again lost that power of, of negotiation because they had it so good with China.

>> Oh, my gosh, we got a minute left.

We barely even got to the fed.

You mentioned the fed rate cut a quarter of a point.

What's the likely impact?

What does that mean?

>> Yeah, I mean a quarter of a point is not likely to have a massive rippling effect on the entire economy.

But it sends a message that the fed hadn't cut interest rates since January.

It held them steady.

And it sends a message that the fed is looking to accommodate more economic growth.

They're a little bit worried about the job situation.

They don't see it as a crisis, but they want to kind of show that they're watching it and they want to help a little bit.

and it might also show that that the inflation that they're seeing, they don't believe that it's going to spin out of control, that that it is a little bit higher than we'd like to see, but that we can stand to bring rates down a little bit because you know, they want to support a growing economy and understand that, that inflation is an undesirable but tolerable effect on the macro economy as a whole.

Again, individual circumstances vary.

And that is a reality.

But from a macro perspective, that's what they're thinking.

>> Last 20s Nancy wanted to know we're not in a recession either, are we?

>> We are not in a recession.

>> okay, that was easy.

>> That was so easy.

>> any fundamentals on the horizon that would make you not surprised if in the next 12 to 24 months, we enter a recession?

>> The thing to watch is consumer spending.

And consumer U.S.

consumer spending dictates almost 70% of the entire economy.

So that's huge.

If consumers start to slow down, which they haven't, we've not seen any evidence of that.

Consumers really, really slow down and go negative in their spending.

Then that's when you would be looking at a recession.

>> Is the holiday shopping season an indicator in any elevated way.

>> Of that?

>> Yeah.

Relative to other holiday seasons, like past holiday seasons, they might look at that, but okay.

Yeah.

>> We'll see.

>> You want to come back in a few months.

>> And we'll see how it's going.

>> To come back.

Evan I love it here.

>> I really enjoy having you here, I appreciate that.

Thank you for making the time.

>> Thank you.

Evan.

>> Where do people find you when you're working?

>> I'm at Alesco advisors.

and our website is Alesco Advisors.

Com.

You can find me.

>> There when you're working, like you're not.

>> Working.

Always working.

>> Eric Morrissey, staff economist, chief economist.

Can I.

>> Promote you?

Sure.

>> Absolutely.

>> Super economist.

>> Alesco advisors, more connections coming up in a moment.

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