The American people are GETTING AHEAD: Michael Faulkender

[00:00:00] Speaker 1: Edward Lawrence, thank you very much. For more on this, let's bring in Michael Falkander, former Deputy Treasury Secretary, and E.J. Antony, Heritage Foundation Chief Economist. Gentlemen, great to see you. Michael, there's so many positive things to talk about in this report. And I'm not being Pollyannish here. These are the numbers. The numbers are in there. They're strong. And they're real private sector jobs. They're not the phony government-created jobs that created all that inflation during the Biden administration. These are solid, real private sector jobs. That's a big difference of what we saw two, three years ago. [00:00:37] Michael Falkander: It absolutely is. And it's a demonstration of just how strong the underlying economy is, because when you do things like tax reform and you have deregulation and you therefore create optimism about the future among business owners and entrepreneurs, they go out and hire. And so, just to put that number in context, if you add in the revisions, there are a quarter million more Americans working than we thought a month ago. That's just an extraordinary number. The unemployment rate down to 4.1%. Wages grew four-tenths of a percent for the month. So they're growing more than three percent on an annualized basis. The American people are getting ahead. And it's exactly because we are reprivatizing the economy. And we are creating, we are the leading economy in the world when it comes to innovation and job growth and things like artificial intelligence that are going to continue to lead the way. And David, if I can point out one other really important number, the business services was up 80,000 in this report. It was the single largest sector. Anybody that's concerned about AI displacing jobs, that's the sector where you would have seen it. And the fact that that instead is the fastest growing sector tells you that AI is complementary to labor, not a substitute. [00:01:51] Speaker 1: And E.J., there's so many differences between phony government-created jobs that not only cause inflation, but they also cause a very poor sense of growth in the economy in general. And you don't have that. You have productivity with real jobs. Real private sector jobs increase productivity. They increase the entire economy. The innovation that you get from the private sector is something you don't get from the public sector. So many areas in which it's better to have these kind of jobs than the ones we saw in the last administration. [00:02:26] E.J. Antony: A hundred percent. It's absolutely right. And actually, not only do you have that dynamic of shifting away from government jobs to private sector jobs out of the unproductive public sector into the productive private sector. But on top of that, another really great shift that we have seen in this report and over the last several is the fact that you are shifting away from part-time employment and to full-time employment. In fact, all of the net job growth in October and the last three months, if you look at them together, has come from full-time work. In other words, we've actually reduced the number of part-time jobs, and we've been adding full-time jobs. About one and a half million more over the last three months than we had back in July. So really, really great movement there. And when you look at the multiple job holders number, it becomes very clear that what people are doing is they're replacing multiple part-time jobs with one good-paying full-time job with benefits. [00:03:20] Speaker 1: Again, which increases productivity. If you can focus on one job in particular, the productive capacity of that job increases dramatically. Michael, it's not really rocket science. I mean, a lot of us were saying this back a couple of years ago that if you increase the incentives, if you increase, decrease the taxation and the over-regulation that we had in the last economy, you were going to get this kind of result. Larry was saying it time and again. In fact, he was one of the first people to use the phrase big, beautiful bill. I just want to roll a bit from March of last year. Larry Kudlow on what might happen as a result of the big, beautiful bill. Roll it. [00:04:04] Larry Kudlow: The package of across-the-board tax cuts and deregulation and new laws to trim spending will pass and will promote a burst of growth. Lower taxes create new incentives to work and invest, sweeping away regulatory barriers and boom to businesses and pass along to consumers at lower prices. Growth solves so many problems. Republicans should not forget that. [00:04:33] Speaker 1: Well, too many Republicans, I think, did. And clearly the rhetoric coming from the Democratic side is what changed the configuration of Congress. Could Congress, even though they're going to face vetoes whenever they try to reverse the benefits of the big, beautiful bill, they're going to get a veto. They might try. What can they do to hold back this economy now that it's roaring ahead? [00:04:58] Michael Falkander: I think there's very little because one of the things the president did upon returning to office was put everything in the one big, beautiful bill. So a lot of the agenda items were put into that package that I helped negotiate when I was deputy secretary and that the president signed in July of 25. And we are now seeing the benefits of it. And, and Larry was not just talking theory there, David, he was talking about the experience we had in the first Trump administration, you know, and in the Reagan administration and in the Reagan administration. But again, if you think about, we did a tax bill in 2017. We did a lot of deregulation in 17 and 18. And where it really took off was in 2019. I think you're going to see the same thing here. The tax bill was in 25. We're still doing the implementation of it and the deregulation. I think 20 27 is going to be exceptionally strong. And I do not think because of the reasons you just said, you know, they, the president is, it's going to veto anything Congress sends up his way that tries to reverse his economic package. There's still a lot of work to do on the deregulatory side that they can do without the Congress. I think that the Congress is going to maybe spend time investigating and otherwise wasting the American people's time. But I don't see that distracting from the work the administration is [00:06:13] Speaker 1: going to do to continue unleashing this economy. Now, EJ, what could the Fed do to mess this up? We know that Warsh, unlike most of the people at the Fed, doesn't believe that that strong growth necessarily leads to inflation. He doesn't believe in the Phillips curve. But can he hold back the onslaught by the Phillips curve believers in the Fed who probably see this as a threat of more inflation rather than just more growth? David, I think that's exactly right. And in fact, [00:06:43] E.J. Antony: not only does he have to worry about those kinds of Keynesian fallacies, but in addition to that, we are still, when we look at today's inflation, we are still fundamentally facing an energy shock. Now it's looking less and less like an energy shock because those higher energy prices are now spilling over into core. And even if you use trimmed mean or median CPI and PC, you're seeing the exact same thing. Higher energy prices are putting upward pressure on prices throughout the economy, but it's not a monetary phenomenon. You cannot solve a non-monetary problem with monetary tools. [00:07:14] Speaker 1: But will Walsh be the lone defender of what you just said? Will he be, I mean, he is the chief of the Federal Reserve, but at the same time, there are a lot of people that he's going to be up against. Can he turn the back on this fundamental point? I mean, are they going to raise rates based on this strong jobs report? Very simple question. [00:07:34] E.J. Antony: I think there's a very, very good chance. Absolutely. Because they're looking at inflation numbers that again, even though it's not a monetary phenomenon, it's higher than they want it to be. They're going to make, that means they're essentially looking at the exact same mistake the previous Fed made back in the 1970s, hiking into an oil shock, right? And then as well, to your point, they're looking at strong jobs numbers and somehow thinking they have to crush growth [00:07:58] Speaker 1: in order to bring down prices. And finally, Michael, you kind of teased this with your description of the kinds of jobs we have. I think we can put up a full screen of the October jobs reports with the details of the sectors that had the big increases. That's the overall number. Do we have that October jobs report? The professional business services increased by 70,000. The private ed, health services, 53,000. Manufacturing 19,000. All of these can relate to what's happening with the AI boom in our economy now at the very time that 70% of Americans bought the, I think, the myth that AI is a bad thing, even though it's not killing these jobs. These jobs, the ones that they said were going to be affected by AI are growing, not diminishing. That's right. If you look at the dispersion of the [00:08:54] Michael Falkander: job growth, it was quite spread out across a lot of sectors. And again, the fact that business professional services, that's really what contributed, I think, to a wage number, an increase in wages that was higher than what they were forecasting is because business professional services are also tend to be higher paid than, say, something like leisure and hospitality. You know, the healthcare jobs are going to continue to grow because we've got an aging population, but also that manufacturing job number is great. We've got about 100,000 manufacturing jobs that have been created in the last year. And again, this is such a reversal of what we saw during the Biden administration. And again, takes us back to that blue collar boom that we had during the first Trump term. And it once again says, the president's policies to redomesticate manufacturing are working. [00:09:42] Speaker 1: Yeah. Yeah. And privatize the overall economy, which is, is the number one goal. And he seems to be, seems to getting a lot of done, a lot done there. Michael Faulkner and EJ and Tony, great to see you both guys. Thank you so much.