STEVE INSKEEP, HOST:
Well, what is a good assessment of the economy, given that we've lost some visibility? We could, as Scott Horsley suggested, check in with the guy at the barbershop who seems to know everything, but the barbershop is not open this early. So we have called Mark Zandi, who is chief economist at Moody's Analytics and has been a guest many times here. Mr. Zandi, welcome back.
MARK ZANDI: Good morning, Steve. Good to be with you.
INSKEEP: We don't know the employment numbers, obviously, but the outside estimates sound like they were not that great. How strong do you think the labor market is?
ZANDI: Not strong. I think it's struggling. Job growth has come to a virtual standstill in recent months. You know, some - you know, we're seeing some job growth in health cares. We heard that in the previous report - hospitality. But we're losing jobs in manufacturing, construction, transportation, distribution, mining. So net-net, we're going nowhere fast. And the real problem is that businesses just aren't hiring. It feels like a hiring freeze across the economy, which is obviously very hard on younger people trying to get into the labor market. Businesses have cut back hours. That's the other way of kind of handling this. They've cut back temp jobs. So they've done everything but lay off, and that's key. The layoffs are the firewall between an economy that continues to grow and avoid recession, and that firewall has not been breached. So businesses aren't laying off. So hopefully that continues to happen. But everything else has, and the job market is struggling.
INSKEEP: Are we doing this to ourselves? By which I mean, the United States government is continuously almost daily changing tariff policies? There's a lot of uncertainty, and so businesses are standing still for that reason?
ZANDI: Yes. I think you can blame the tariff war and the impact that's had. And, in fact, you look at job growth. It was hanging in there pretty well right up till April. That's, of course, Liberation Day and the reciprocal tariffs. And since then, the job market has gone flat to down. And, of course, the highly restrictive immigration policy is having an impact as well. There's just no labor supply. The labor force - that's the number of people out there working, looking for work - that has gone completely flat over the past year as the foreign-born labor force declines. So you just simply can't create jobs in lots of industries where immigrants work.
INSKEEP: Although...
ZANDI: So these two policies are key.
INSKEEP: I just mentioned, though, I mean, the theory was that was going to be good for domestic workers because there would be more demand for them. Is it not working out that way in the end?
ZANDI: No. We've not seen that. There's - on net, the labor force has gone nowhere since this time last year. It's been flat. So seeing declines in foreign-born. A little bit increase in native-born, but that's typical. And the net of that is no labor force growth, which is very atypical, very unusual.
INSKEEP: At what point does the shutdown become a drag on the economy? I assume not yet.
ZANDI: No, not yet, assuming that there's no layoffs. I mean, there's more (ph), you know, conversation around that. If there's layoffs - big layoffs of government workers as a result of all this, then, yeah, that's going to be a problem. But, you know, barring that, you know, a shutdown of a week or two, no big deal. We've been down this path many times before. You know, it's clearly a nuisance for the government workers that aren't on the job and not getting paid, but no big deal. You know, if it extends beyond that, if it's three, four weeks, then it becomes a deal. You know, it starts to become a real problem. Those government workers not getting paid can't - have to make some hard choices. Contractors that are working with the government don't get their money. They - they're not doing business. If it lasts more than a month, that's a very big deal. And in the context of the very weak economy that we have right now, that would be the fodder for a recession.
INSKEEP: I want to ask about another aspect of this because the Bureau of Labor Statistics was in the news even before the jobs report disappeared today, as you know very well.
ZANDI: Right.
INSKEEP: President Trump, earlier this year, didn't like a jobs report and some revisions of jobs reports so he fired the Bureau of Labor Statistics director. He then nominated a conservative economist who was a much-debated choice. There was bipartisan opposition for a variety of reasons. The administration has now withdrawn that person, and now the numbers themselves have been disrupted. Given everything that's happened this year, should we believe what we hear whenever we do hear it from the government about statistics on the economy?
ZANDI: We should, but the quality of the data is eroding. No doubt about it. You know, the survey responses were already falling well before all of this drama, but now they're - I'm sure going to be way off because they're just not going to get done. We don't have the same number of folks at these agencies collecting the data. I mean, the consumer price index is a good example. Yeah. If you go back to the beginning of the year, about 10% of the goods and services - prices for goods and services were imputed. You mean that they weren't being collected. They were determined by looking at other data. Now we're up to 35%. That gives you a sense of things. So I - you know, I trust the data as far as it goes, but the quality of the data is certainly eroding.
INSKEEP: I think, as just a yes or no here, you're telling me more and more of the stats are a ballpark estimate rather than gathering hard information.
ZANDI: You got it. Exactly right.
INSKEEP: Mark Zandi, always a pleasure. Thank you so much.
ZANDI: Yeah. Any time. Transcript provided by NPR, Copyright NPR.
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