LEILA FADEL, HOST:
For more on this post-election economy, we're joined by Mark Zandi. He's chief economist at Moody's Analytics, and he's back with us to talk about these numbers. Good morning and welcome back to the program.
MARK ZANDI: Hey, Leila, good to be with you.
FADEL: So as we just heard from Scott, companies added more jobs than expected last month. Does this mean anything for Americans struggling to afford the basic things they need for life?
ZANDI: Well, it's good news, right? We're creating a lot of jobs...
FADEL: Yeah.
ZANDI: ...And unemployment's down. Four-point-one percent is - I'll take it. I mean, that's pretty close to what you consider full employment. There's a lot of blemishes, though. I mean, hiring remains very morbid, particularly for young people. And you pointed out wage growth. That's kind of key metric for most - to people with jobs. They - you know, they want to make sure that their wages are rising at a pace that's faster than inflation, and that's not happening. But, you know, I'll take the numbers. I will point out that these monthly numbers go up and down and all around. I mean, I remember last month, we were talking, Leila, and they were pretty weak. So...
FADEL: Yeah.
ZANDI: ...You got to - you know, it's making a case, but it's overstating the case. So I think the reality is that the economy - it's OK, but not as good as these numbers might suggest at this point.
FADEL: What does it maybe tell us about people's pocketbooks, though? 'Cause that's really what people care about right now is when will things feel like they can afford them.
ZANDI: You know, my sense is they won't feel good about things until inflation comes in, right? Until gas prices are back closer to $3 a gallon, as opposed to over four, until mortgage rates are back down closer to 6 instead of over 7%. I mean, until they can, you know, afford the groceries that they're buying and the healthcare and, you know, all the cost of living is higher. And it's really all about that, the cost of living and inflation. So that has to turn the corner, has to start to come in. And I think, you know, the first step in that is it goes back to the Iran war. That's what's behind all this. That has to come to an end. Unless that does, unless inflation comes in, I don't think people are going to feel very good about what's going on.
FADEL: What policies could Democrats try to push in Congress that will make a real-world difference? I mean, you mentioned that Iran war.
ZANDI: Well, yeah, I mean, they're in a tough spot - right? - because they control Congress, but, you know, to get anything really done legislatively, they need to get the president on board, and that's going to be a pretty heavy lift, I think, given the political situation. But there's things they can do on the Iran war. That's - you know, if that could wind down here and get oil prices moving lower in the near future, that would be a big deal. And Congress can't end the war. They need the president to do that. But they can, you know, put pressure, political pressure, the kind of hearings.
Or they could even have - there is a possibility that there might be an ability to influence the amount of funding that goes to the military to prosecute the war 'cause, you know, the war is very expensive right now. It's almost $50 billion in total cost. So that could be a way for them to have some influence. But at the end of the day, you know, this is a decision by the president, and he's the one who's going to make the decision to wind this thing down.
FADEL: So given that the president has talked about vetoing - but he's also talked about working with Democrats - when they're...
ZANDI: Yeah.
FADEL: ...In charge in the House and Senate, do you anticipate major economic policy changes next year?
ZANDI: I don't. You know, I think gridlock's the word. I don't expect a lot of change. I mean, there might be some forcing mechanisms. I mean, the budget I mentioned, there's the Treasury debt limit that's going to come around. And for those things, we need legislation. So when that happens, you know, other things might come into play. I mean, for example, the Democratic Congress is really interested in bringing back the Affordable Care Act subsidies, kind of rolling back the cuts to the food assistance program, SNAP, and the Medicaid program has been, you know, cut back, and they want to roll that back. So maybe there will be an opportunity for them to do that. But, you know, at the end of the day, again, it's about legislation, and that requires the president, and that's going to be very difficult in the current political environment. So I don't expect a lot.
FADEL: The Federal Reserve meets next month. It's been under pressure from President Trump to cut interest rates. Now that Democrats will control Congress, what does the future look like for the Fed?
ZANDI: Well, I'm actually very much more encouraged about the Fed. I mean, as you know, there's been a lot of concern about Fed independence. The president's been pounding the drum about lowering interest rates and been working really hard to change the people on the Fed to be more consistent with his perspective on things. And, you know, in the grand scheme of things, we want a Fed that's independent that sets monetary policy interest rates based on the economy, not based on politics. And I think that's now much more likely because, you know, to get anyone on the Fed, it has to run through the Senate. They will have to approve the nominee that the president puts forward, and they're not going to approve anybody that's not consistent with Fed independence.
FADEL: How soon do you expect, or do you expect at all, inflation to come down?
ZANDI: I do. You know, I am optimistic about the war. You know, I do think it - I don't think there's going to be a nice clear ending here. My sense is it's just going to fade away. We'll get more oil flowing, we'll get gas prices down and we'll start moving in the right direction. So I'm optimistic that we - and the economy - you know, the Fed's working hard to get inflation back down. So I am optimistic that we will see inflation lower a year from now than today, and certainly two years from now, compared to today.
FADEL: Mark Zandi is chief economist at Moody's Analytics. Thank you for your time.
ZANDI: Thanks, Leila. Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
