tv WSJ at Large With Gerry Baker FOX Business May 5, 2019 11:30am-12:01pm EDT
universities today also stay on for fox news channel on the futures live on fox news and start your weekdays between six and 9:00 a.m. eastern right here on foxbusiness with mornings with maria. thank you for watching i will be here next time. . >> welcome to the "wall street journal" at large the economy is booming on friday the labor department has another huge gain of jobs created last month the employment rate fell at three.6 percent the lowest half a century the news is even better despite the record that the jobless rate is inflation is likely to rise but employers will attract more workers in fact, some
economists worry it is too weak ad to have a slightly higher rate with wage increases. so a tightly burn market must be a company by a sharp rise in prices so what is going on? earlier this week i talked with christine the guard in california. and i asked her with those strong economic numbers if there was a sustained and elevated growth over the last decade? . >> where that is coming from clearly there is a big jump in the number we are not seeing consumption with big investment either with point
number two it will be critically important the productivity numbers will be good and if that's the case we have been waiting for for productivity to be higher across the board. but given the investment with those cap next movements if we see that it is encouraging because it means our growth potential has improved to lead to more sustainable growth of higher levels. if it was on the lower and i would not be as optimistic. >> one variable is the same around the world is inflation. we have significantly suppressed inflation.
we shared relatively weak inflation. the euro zone low inflection rates in china a little higher but we are going into this prolonged period with low levels of unemployment despite sustained growth. what do you think is the best explanation. >> ifi had the answer. [laughter] thank you. [laughter] it is a bit of a mystery because given that we have very low unemployment look at germany where unemployment is at flat bottom inflation is
high but yet it is in between one.2 and one one.seven and inflation expectation is the same core inflation we may see higher inflation in the months to come on the price of oil. it is difficult to explain. those who try we say all those numbers are relatively high because of the baby boomers exiting the stock market. more younger people are joining therefore they are employed at lower salaries which could be one explanation. people coming to the market who are not at the market coming in with lower employment and lower wages
unfortunately. you have factors so you have to dig into the unemployment numbers to really understand whether or not that will work at some stage we do feel it should work to pick up gradually and slowly. maria: but given how weak inflation is do you think the central banks was anticipating a significant timing? but they were misjudged? it has underperformed the fed's expectations over the last seven years. "demonic" t one - - monetary policymakers have this wrong?
. >> i would not say they got it wrong. know. they have a mandate that is price stability. the approximate number set with the growth of the economy. >> there is a discussion given with weak inflation do you? . >> no. i will tell you what i find quite extraordinary. if you can get it up at two white is for make the expectations higher? i am very practical i just don't see the lad - - a logic may be more practical economist have seen. [laughter] i wasn't referring to you kim jung-un clearly not. [laughter]
but do you not think the world economy we should be looking for extra inflation? . >> no, no, no. we could do more inflation but that isn't setting the expectation as a necessary trigger. it will be a month of wages in supply and demand and the economy responding to that. >> a little french humor i asked madame about the criticisms we will be right criticisms we will be right back. run with us
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as the rules no longer seem to apply as a shift occurred? . >> it is certainly one that is beginning to factor in that aging phenomenon almost the entire global economy with the african sub-saharan countries but look at the rest of the world it is a very significant impact in all the factors that you have mentioned whether inflation or the relationship between interest rates i see that as strongly related to aging on the landscape productivity has remained low but what will take us out is productivity which is why i'm focused on the numbers we will be seeing i want us at the imf
to better measure and assess those technologies we will not be looking at that security any longer with services are much stronger and on and on. >> there is some soul-searching about capitalism with fundamental reform or even if it should be replaced with socialism mentioned for the first time in this country. jaime dimon one of the most successful capitalist in history wondering if that can survive so what do you think is wrong in the one minute what can be done to fix capitalism? [laughter] and you just lost ten seconds. [laughter] . >> sometimes it's good to have a sense of humor. i don't think globalization will go away.
i don't think it can sustainable with the inequality around the world and if they are not addressed at political levels in terms of opportunity or the desire for people to have their culture to feel respected and included for women to be part of the game at all levels of society public investment in particular and private education going forward then the system will be under threat on a continuous basis i fully appreciate why others are fighting this but there's no need to fight it but what do we do about it and how do we address the issue with inequality and inclusion
because i have seven seconds left we can talk about that if the planet is gone so the m environment is more important. [applause] gerry: more than halfway through as your second term at the head of the imf the queen of the economy you turn it over 2021 do you want to serve another term? . >> if i have the option may be. i will keep my options open. [laughter] gerry: up next one of the best financial journalist in the world joins me to give me his take on the state of the economy. fact is, every insurance company hopes you drive safely. but allstate actually helps you drive safely...
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gerry: joining me now to discuss the economy in general and madame t20 and the pulitzer prize-winning journalist from the "wall street journal" congratulations. let me start with this question of inflation. but yet inflation seems to be subdued. what is going on echo christine t20. it is really mysterious there are three or four things going on here there are demographics like the asian population and a couple of forces happening with normalization and there
are a bunch of things that are opening on - - messing up the model people have been using for years you can say even the models were not right to begin with but at least there are three or four factors happening right now that are confounding everybody. gerry: that means we would eventually see at this level of activity are the upsurge of inflation? . >> all the models say that you should that these are transitory effects that this will all go away eventually and there is some level of unemployment. it keeps going down but at some point it has to. but the question is how far? and the more open question is what if we don't really know how it works? . >> so we grew up thinking inflation is a terrible thing.
so that has been one of the greatest achievements. is it a bad thing if inflation is too low? . >> one.6 percent is not the end of the world or a deflationary spiral where people begin to radically change their behavior look at japan and notice even a much lower level the japanese have changed but society is fine it is not falling apart. >> so the question i would ask is one of the potential explanations that there is a big change of the power structure in the labor force
to divide up the shares and much more of that goes to businesses to stay there. that is something that can lead to other bad outcomes. so it is in the inflation itself but what causes it. gerry: the us economy is in pretty good's shape right now line - - right now we had good numbers over the last four quarters plus 3 percent growth. headed to the tenth birthday of the expansion. but then it has to end at some
point. the major economic sectors fire well, technology continues to dominate their lots of things that suggest. >> so next year would be the longest expansion ever. . >> there are isolated places people worry about the borderline borrowers. with the decreased quality. in those structural worries and then pouring money into illiquid accents - - assets
but there is nothing of the stature. >> and looking back the financial system is in much healthier shape. >> undeniably. much higher levels of capital much more attention to liquidity much better monitoring. certainly there is in hindsight some problems. gerry: what do we worry about? . >> a lot of things like reshaping of the world order, changing dynamics between us and china, these
are very long-term issues. >> and inequality that is something causing issues you cannot have quite the level and cannot sustain the level going to the top that it has been. >> so what happens? so very quickly we are running out of time but how is that addressed? . >> i suspect with a political question there is a re- thinking of the structures. and the alternatives.
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gerry: the us economy is unusually good shape unemployment low growth is strong and inflation subdued what is impressive this is happening europe is lagging but the key question is can they gain the loss the expansion will be ten years old the longest on record that balances that. in the financial markets elsewhere but to suggest it continue growing at a healthy clip. but for now that combination low inflation rising wages is going across the country. but it's hard to argue with most americans.