Danielle DiMartino Booth: We're In A Recession That Won't Be Acknowledged for Years
Summary
Fed Disconnect: Guest argues the Fed is tone-deaf to weakening labor and consumer sentiment data, citing surveys and headline layoffs that contradict official resilience narratives.
Labor Recession: Extensive discussion of rising unemployment risk, underemployment among recent graduates, and deteriorating job prospects signaling an ongoing labor recession.
AI: AI’s rapid capability gains threaten entry-level roles in finance, accounting, architecture, transportation, and CRE analysis, demanding urgent worker retraining and policy planning.
BNPL: Widespread BNPL use for medical, dental, utilities, food, and discretionary spending highlights consumer stress and potential credit risk buildup.
Consumer Credit: Mortgage, credit card, and auto delinquencies are near or rising toward record levels, suggesting household strain despite headline stability.
Commercial Real Estate: CRE stress is evident with record office delinquencies and distressed sales pressuring regional bank loan books and CMBS exposure.
Companies Mentioned: CBRE and DoorDash were referenced as illustrative examples amid AI-driven market moves and gig work trends, though no single stock was pitched.
Policy Outlook: Guest calls for the Fed to use alternative data, acknowledge credit stress, and prepare for AI’s employment impact rather than relying on backward-looking indicators.
Transcript
I think it's incumbent upon the Fed to say, "We're going to grow up. We're going to start following headlines. We're going to start following alternative data sets. We're going to stop ignoring that the the shift in the University of Michigan consumer sentiment survey, which dates to 1968. We we've had seven consecutive months of Americans who foresee the unemployment rate rising in the next 6 months north of 60%. Unprecedented." The shift in the Yumish data was now Americans feel that not just that the unemployment rate is going to go up, but that they're going to lose their jobs themselves. Danielle D. Martino Booth, CEO and chief strategist at QI Research. It is so wonderful to welcome you back to the show. Great to see you as always, Danielle. I I can't I wish I was in New York hanging out with you, but I'm glad I'm not in New York just cuz I want to avoid >> Yeah. >> walking around that all weather. No, I mean it's it's it's not a pretty place to be right now. So next time >> but next time um maybe it's a little bit warmer weather next time we are together in studio. But great to see you as always. Um today uh normally we'd be talking on Fed day for FOMC day, but we have the minutes out today and um you predicted that these minutes would be clean as a whistle and not massaged. So the question for you is were they? Well, if anything, I think they might have been massaged the other direction. Um, I mean, if you want to talk about out of left field, there were several quote unquote several participants who felt that the next move might should be a rate hike. And, you know, I did a double take. I'm like, wait, what? Um, I I'll I'll juxtapose that with a Gallup poll that is I I believe it's a postwar Gallup poll of Americans perception of their financial well-being, which has now fallen to a record low. A record low. I I have um the I can't even be polite and say that that Fed officials right now are being tonedeaf. I I think they're being borderline cruel. >> Wow. Okay, that okay that right there it feels like there not even feels like there is a disconnect if you point if you're pointing out the perception of the financial well-being >> the American people aren't feeling so great right now yet when you read the minutes the Fed talks about the resilience of the economy >> is that disconnect like what what gives >> look um I you know Julia I hope we get past this chapter in Fed history where policy makers are making policy despite the administration. Um because I think that that's I think that that's the only thing that's um that's at work here. um you know, True Flation, which you know, I follow TRU and I've been following it for years, but since it was um since it was placed on the Bloomberg terminal, and now you can get the the data on a daily basis, um the street has really started to notice true inflation. It uses the blockchain to track 35 million prices a day. You know, it's it's at I think.7ish% right now. 7. And we saw in the cooler than expected CPI and core CPI data. Um you that was unexpected. The entire street was poised for something that would validate all of these what what these fed speakers have been saying. But it it it didn't. The CPI report did not. the payroll report may have, if you can forget about the million jobs that were revised away into thin air and the fact that I'm going to get wonky here for a second if you would allow, Julia. >> Oh, let's do it. We love it. >> Um, every year in December, we tend to have a lot of job gains that are seasonal. And every year in January, we tend to have a lot of seasonal job losses. So the Bureau of Labor Statistics always um corrects for seasonality knowing that this is going to be holiday workers, holiday workers left let go. Well, in one particular area of education and healthcare, the the seasonal adjustment factor was bizarrely uh flattered to the tune of 140,000 jobs. I mean, we charted it out for our clients. It it it was so far off. Again, we're talking about a 20 and 30-year average that all of a sudden, miraculously, there were 140,000 fewer seasonal firings that occurred in the month of January. And that I think that more than offsets the headline figure that was 137,000. And on top of that, the only jobs that were created on a net basis, there were 5,000 jobs created in manufacturing. We can talk about the good news there if you want because there there actually is a restocking cycle going on that we've been writing about in the Father. But the 137,000 jobs were also more than created by the education and health services sector. When you net those two sectors out, I want to say since the middle of 2024, we've had 419,000 job losses. So, I reiterate, I don't know what data these Fed officials are pretending to follow because when you have almost 800 PhDs, somebody can do the analysis that we're doing at the Fed. What >> What do you think they're missing on the labor side then? I I think they're missing I think they're missing headlines. I think they're missing layoff announcements. Uh Macro Edge tends to frontr run Challenger. They do a little bit better job than Challenger of tracking layoff announcements. We checked in with them midFebruary and they're tracking at 118,000 job cuts for the month, which would surpass the 110 some odd thousand job cuts announced in January. Um, but again, they're only tracking headlines, Julia. >> Headlines that anybody can read, headlines that any scraper can scrape and feed into a spreadsheet. This is not rocket science. And for Fed officials to maintain that the labor market is in a stable place or in a solid place is is just an insult and an affront to the Americans who are losing their jobs. I had somebody tweet out a few days ago, you know, I'm I'm I'm a traveling medical worker and my income's down upwards of 20%. Um, over the last year, so I signed up on four gig platforms and I haven't gotten a nibble, not a ride, nothing. And he actually tweeted back out today, uh, it looks like he might get some work from Door Dash. Th this is not a stable labor market. >> As you um you wrote you wrote um in the Daily Feather about this. Um I think it was Yeah, you wrote about this in the Daily Feather, but also like if you look at the minutes, they flagged that the job gains are concentrated in less cyclic cycllically sensitive sectors. They flag that as a vulnerability signal. That's exactly the education and health services anomaly you've you've highlighted. Um, did the Fed kind of acknowledge though a labor recession in plain sight? um Jerome Powell himself a few meetings ago at the podium acknowledged as much and if they're following what's happening and and the reason they bring up nonsyclical the word nonyclical is because the only economy that monetary policy can address is the cyclical economy. >> They can't address recessionp proof sectors. You're always going to send your kids to school. You're always going to take your kids to the dentist if they have a cavity. You're going to take them to the doctor if they're sick. It it doesn't matter where the economy is. And that's why the fastest area of adoption for buy now pay later, which I made mention to you the last time we spoke is medical and dental bills, >> which really tells you something, too, because Yeah, those are you. Okay. You said last time we spoke you were going to write about that. Um, >> I did. >> What's that? Yeah. What? Okay. Tell us what you unearthed there because you did mention I remember our last conversation. People are using it for their medical bills, >> utility bills, >> utility, like basic things that you need. >> And there's also kind of the Gen Z millennials who are really using it or at least they used it um at the very tail end of last year for vacations and concert tickets. So there's this there's this sense especially among younger voters, why do I care? I'm just going to buy it. I don't have to pay it off. Somebody's going to bail me out. And that's that's another affront, at least to me, is that the rule of law, the rule of contract law has gone out the window for a lot of younger Americans who just assume it's it's who cares? It's debt. I don't have to pay it off. Mhm. >> And then there there are the other struggling parents who are actually doing using buy now pay later to put food on the table to keep the lights on to pay their kids' medical bills. It's just it sometimes I think that there's a societal have and have not, if you will, because there are the younger generations who just don't give a damn. And then there are the struggling masses who are working but not getting by. And I, >> you know, it this gets us into the lovely world of politics and we don't have to go there. Um, but you know, the millennials and the Jenzers make up 52.5% of voters in this country. And if they want to vote to not work and get paid, they can come 2028. >> Are you concerned about the pendulum swinging in that direction then? Like you're kind of mentioning like not working and getting paid. Mhm. >> UBI. >> Mhm. Sure. I mean, that's again, if you're taking on debt to go have fun, even though you can't afford it, that's a statement. It's a statement that says they're obligations, sort of. Let's put the obligations part in air quotes. They're not really obligations. They're just kind of obligations because I won't have to service them. I won't have to pay them. Um, so I won't plan on it, but I will live life today. >> Hey everyone, I hope you are enjoying this interview. If you can take a quick moment and hit that subscribe button, we are on a mission to hit our next goal of 100,000 subscribers and your support could really help us get there. Thank you so much and enjoy the rest of the interview. Yeah, that's I wonder if that's almost like Yeah. Um, a bit of like a revolt against the the system. I don't know. I get kind of worried like swinging too far in that direction. >> No, I mean they're going to stick it to the boomers who've stuck it to them. I mean it's just it's look this is it's it's highly non it's highly unproductive as a society and it's taking the country in the wrong direction. >> Yeah. Um Danielle on just like on the Fed, like staying on the topic of the Fed, you've written open letters to the Fed. Um well, they didn't read the Well, I don't know if they didn't read them. I didn't listen to you. >> I didn't listen. They did indeed. We learned today that they did indeed elect Jerome Powell um to carry out any and all responsibilities as head of as head of the FOMC committee um through the end of 2026 should the individual who's meant to replace him is not in office by then. >> So maybe they read that part. But you, what I like about your letters is you do write on behalf of like every hardworking American. >> Mhm. >> Who's been left behind. >> who's been left behind. Um, and I think a lot of these folks, they intuit it something maybe went wrong. Um, do you I don't know exactly how I want to ask this, but do you feel like are we headed in the wrong direction still? like >> are you going to >> I think until I I and and by the way that's the dedication of my book Fed Up. That's why I repeat it over and over again. >> Um and I you know my mom never said apologized because she appreciated I mean I would have dedicated the book to my mom. >> Um who is the hardest working American I've I've ever met. Um but instead I dedicated it to the to all the hardworking American men and women who wake up every morning asking themselves what went wrong. Uh you've got a an administration right now that is outright lying to Americans about the economy and you have monetary policy makers who are effectively agreeing with the administration with the administration's gaslighting by saying it's a great economy because we're building a bunch of AI data centers that require construction workers for a period of time and then pretty much just two people to keep the lights on and run them after that. >> How about though, let me ask this. Um the thing that surprised you in the minutes was this notion that there's language that several participants, there was language around them wanting rate hikes if inflation stayed elevated. That's that is different from what President Trump wants, lower rates. Um >> again it's it's it's monetary policy maybe even just in name only nominally being made in spite of the administration but not being made for the people and that's look in inside the the minutes it talks about the fact that small business borrowing costs remain prohibit prohibitedly tight. Well if you're going to acknowledge it do something about it. Um, and then even I'm looking again in the minutes. Um, they're talking about like delinquency rates on small business CMBBS loans were a little changed. Um, they said for households delinquency rates for mortgage for most mortgage types remained near historic lows while those for credit card and auto loans remained above prepandemic levels. Do you also think like maybe the Fed's being a bit more um like sanguin around the credit side of things? I mean, the New York Fed produces some pretty darn good research and showed that the fastest rising area of delinquencies is mortgages. That credit card delinquencies didn't go up a ton, but oh, hey, wait, they're near record levels. And auto delinquencies also didn't rise a ton, but they are also at near record levels. Um, and we're talking about near record levels from '09 and in 2010. I mean, this was like Armageddon for the household sector. And it's in-house data that they have all full access to. So to talk it down when office delinquencies just hit the highest level on record and distressed office sales are clearly putting some regional banks under pressure in their loan books. Again, I'm describing things that are the Fed's job. They are a banking supervisor and regulator. So for them to be saying everything's kind of hunky dory, let's talk it down is irresponsible. >> What would be Okay. So what do you think um what would be the responsible thing to do? Like what would be the responsible conversation to have >> and then the responsible policy to follow? >> I think it's incumbent upon the Fed to say, you know, we're going to grow up. We're going to start following headlines. We're going to start following alternative data sets. We're going to stop ignoring that the the shift in the University of Michigan consumer sentiment survey which dates to 1968 which revealed in February which was a departure from January that we we've had seven consecutive months of Americans who foresee the unemployment rate rising in the next 6 months north of 60%. Unprecedented. The longest stretch in 2009 was six months in a row. Now we've had seven months in a row. But that wasn't the shift in the Yumish data. The shift in the Yumish data was now Americans feel that not just that the unemployment rate is going to go up, but that they're going to lose their jobs themselves. And so we published last week a daily feather that said it's getting personal. So the old adage, it's one thing if your neighbor loses his or her job, it's quite another if you lose yours. people are worried they're going to lose their jobs. So, yeah, the Fed can pay attention to a data set that goes to 1968. >> Also, when you talk about like people are worried about losing their jobs, you've talked about like if you have a job, keep your job, do everything you can. And we've also talked about just the young people, the I'm talking about the college graduates, like the large percentage of them. I I saw a headline somewhere. I don't know the exact percentage. Um >> 42% are undermployed. And that might be stale data because I haven't looked at the endrails. Um I haven't looked at the guts of the most recent payroll, >> but >> call it half. It's a big number. Yeah. And >> oh 52%. Okay, I flagged this. I have a bookmark. 52% read that on I read that. >> 52% of college graduates are undermployed per the Federal Reserve Bank of St. Louis. And that was Luke Groman had surfaced that that one um or retweeted it and I was ask March graduation's in two and a half months, two months for a new batch, a new vintage of college graduates. >> So, okay, I think this kind of ties all together. Do does this have to do does this have to do with AI? AI is responsible for a lot of what's going on, but AI is more responsible for what's going to happen in the future. I mean, if if if if it's finance or accounting, architecture, these entry- levelvel jobs that anthropic is, you know, they were dropping bombs every day last week saying, "Oh, we've AI can do this, AI can do that, AI can do it." you know fundamental commercial real estate um analysis the you know the stock of CBRE the highest flyer crashed that day AI can make a distributor 300 to 400% more productive without hiring a single person transportation stocks took it on their chin these are entry level jobs and I'm not saying that we should deny AI's existence I'm saying we should be thinking really hard right Now about the productivity miracle that everybody keeps talking about AI, we need to be thinking really hard about retraining workers, rejiggering the labor market and trying to figure out how to get in front of the societal implications of mass unemployment of our youth. >> And I think that right there that that's the concern too, like when you mentioned 2028, that's what drives the pendulum swing. You know, that's why I'm wondering like if you go in that direction, I mean, I don't even want to think that far out, but like what happens? >> Yeah. Look, Michael, it's not easy to swing back. >> Michael Bar is um Michael Bar is a governor on the Federal Reserve Board. He made a speech yesterday that said we'll have to be cognizant. We'll have to fiscal policy. will have to be aware of the role that it will play when it comes to jobs that are going to be destroyed by AI. That sound a lot like at least expanding the social safety net to me if not UBI, >> right? And then you have to look at our fiscal picture today like where we are and like what's even >> we've got plenty of wiggle room. We can borrow couple trillion more. Who cares? >> Yeah. A couple more trillion. Yeah. Um yeah, with 38.7 trillion for our US national debt just today. So yeah, just add it to the tab, I guess. Um okay, so we do the last Okay, this did not happen the last Okay, it was right after we had spoken the Kevin W the Kevin W news came out after you and I had last been together on a podcast. Um, so maybe the question for you was what's your kind of read on him? What are you positive on? What are maybe a bit more negative on? Um, how are you kind of reading into him? And maybe what do you hope to see from him? Well, so um in my Saturday intelligence briefing, which goes out to my institutional clients, I quoted Jay Powell from his first congressional testimony in I think it was June of 2018. And he was very resolute and adamant and it is not our job to look after the stock market. And then he got his backside handed to him and the bond market seized up. There wasn't a single junk bond issued in the country for 41 straight days. The stock market melted down on Christmas Eve of 2018 and a few days later he had to do an about phase. So then I went on to quote Kevin Worsh and um some comments that he had made about how Fed policy fed the inequality divide, how it was not the Fed's job to make the wealthy wealthier, how the Fed's footprint in the uh Treasury market and in the mortgage back securities market was too big and how it was the responsibility of of of monetary policy makers to shrink the size of the Fed's balance sheet. I I agree with all of these things. Um, we just don't know how Kevin Worsh is going to react if he gets punched in the mouth. To quote the great Mike Tyson, because we thought that Powell was going to have the Constitution when faced with some nasty backlash in the financial markets, but he didn't. he had to backtrack and say I really do believe in QE and markets recovered after that. So I I want to see how strong of an individual Kevin Worsh can be given who nominated him if he sticks to his stated it on the public record philosophy. Do you think one of the problems um is the Fed is just too beholden to the market? >> The Fed is too beholden to the market and the Fed becomes more beholden to the market every time the market melts down and it rides to the rescue. And for somebody who didn't like QE, which Powell did not, to to go from 4 to 9 trillion in a heartbeat, that was pretty shocking. And so, you know, fighting that impulse, I I don't know how it happens. I just don't I don't know what monetary policy maker on planet earth could weather the storm of the wrath of Wall Street and the loss of wealth in this country and the implications that would that it would have for the real economy as layoffs became severe as liquidity dried up. It's it's really hard to say. Julia. >> Mhm. >> Do you think um you when you made this prediction the last time a year from now >> unemployment is going to be much higher? I don't remember exactly what handle you gave unemployment on that >> but I take it obviously it's been a couple weeks nothing's changed but >> but the but the response rate >> people aren't changes changed the response rate fell to a record low for the survey that creates the unemployment rate. So that that is that has changed. >> So we know that the data that we're getting is >> less and less reliable and efficacious. That much we know. >> So does the Fed by the way. >> Um but I mean I follow a lot of unemployment indicators. Yes, you do. >> And Civic Science is another one of them that I have followed. Pentacific Science, they come out with a a survey every two weeks. So that one hit just yesterday and they've been tracking prospects for the US economy, prospects for personal finance, prospects for making a major purchase runs parallel to a lot of the things that we see in conference board and University of Michigan. But the prospects for landing a new job fell to a record low in the two weeks ended a few days ago. A record low. Maybe the unemployment rate as it's reported with its record low response rate is not reflecting reality. And I'm not saying this to be defensive. I'm just saying that policy makers and politicians in the administration, they can gaslight Americans. I'm not going to gaslight Americans. I'm not going to tell them that their perceptions of the job market are a figment of their collective imagination. I'm just not doing it. and nor should you because you are someone again you speak on behalf of every hardworking American out there. Before I let you you go here, Danielle. Um and I apologize if you hear my dog barking. There's probably a husky outside in the dog park. So I I apologize everybody. Um that's that's Winston. Okay. Looking ahead, we have the March FOMC coming up. >> Um and even beyond that, what's your base case for the economy um for the for the year? And what do you think lies ahead? Soft landing, recession risk, um something in between. >> No, I mean I think the I think the labor market recession continues >> and um you know I think that the revisions that we get we've never had 12 consecutive months of realtime revisions. I'm not talking about the benchmark revisions that applied to 2024 through the end of March of 2020. I'm not I'm not referring to benchmark revisions. talking to real time every time it's that that that payrolls are reported that that revisions are announced for the prior two months. We've never ever ever had 12 months in a row of negative real-time revisions and yet there we are. So anybody with a pulse acknowledges that the labor market is in is in recession and that there was a story on Bloomberg today that said we've never had a time of the labor market being as weak as it is and GDP being as strong as it is. Of course, GDP, you know, it takes a long time to revise. It takes years to revise GDP. So, I think that the recession that we're currently in might not be acknowledged for a few years, but >> wow. >> It's undeniable to the people who are in it. >> Yeah. Well, you were again, you were someone who has covered this thoroughly. Um, all right. Final question for you. Um, let's go back to our usual one because you you always have like such um great wisdom. So, what is something uh that's keeping you up at night these days? Um, what's been on your mind of late? And then what's something that's making you more hopeful and optimistic? So, um, you know, I want for the educators of tomorrow to be thinking about how to educate our children in a world of AI and how education needs to change in a world of AI and how AI can lift up the accessibility of public education for all Americans. And I really want for the AI geniuses, whoever they may be, to be thinking hard about how to implement the improvements we're going to see, whether it's research and development in far for pharmaceutical companies or discovering how to cure cancer, whatever it may be, whatever the promise of AI is, that's not going to destroy jobs, I want for that to be the focus. >> I love that. Danielle D. Martina Booth, CEO and chief strategist at QI Research, author of The Daily Feather on Substack, and also author of the book Fed Up, an insiders take on why the Federal Reserve is bad for America. I think that's the right title. Got the subtitle. >> You got it. You got the subtitle right. You >> should have said the first few versions of the subtitle. I was like, "No." Anyways, >> I can only imagine. Um, we might have to add an additional chapter at some point, but it's always wonderful having you on the show. This audience loves you. I love having you on. I love when we're in person usually and I don't I don't think we'll be together in March, but the next one we'll definitely do. Um, but in the meantime, I hope you have um a wonderful rest of your day and week and I look forward to our next conversation. Thanks again, Danielle. >> Likewise. Thank you, Julia. Peace.
Danielle DiMartino Booth: We're In A Recession That Won't Be Acknowledged for Years
Summary
Transcript
I think it's incumbent upon the Fed to say, "We're going to grow up. We're going to start following headlines. We're going to start following alternative data sets. We're going to stop ignoring that the the shift in the University of Michigan consumer sentiment survey, which dates to 1968. We we've had seven consecutive months of Americans who foresee the unemployment rate rising in the next 6 months north of 60%. Unprecedented." The shift in the Yumish data was now Americans feel that not just that the unemployment rate is going to go up, but that they're going to lose their jobs themselves. Danielle D. Martino Booth, CEO and chief strategist at QI Research. It is so wonderful to welcome you back to the show. Great to see you as always, Danielle. I I can't I wish I was in New York hanging out with you, but I'm glad I'm not in New York just cuz I want to avoid >> Yeah. >> walking around that all weather. No, I mean it's it's it's not a pretty place to be right now. So next time >> but next time um maybe it's a little bit warmer weather next time we are together in studio. But great to see you as always. Um today uh normally we'd be talking on Fed day for FOMC day, but we have the minutes out today and um you predicted that these minutes would be clean as a whistle and not massaged. So the question for you is were they? Well, if anything, I think they might have been massaged the other direction. Um, I mean, if you want to talk about out of left field, there were several quote unquote several participants who felt that the next move might should be a rate hike. And, you know, I did a double take. I'm like, wait, what? Um, I I'll I'll juxtapose that with a Gallup poll that is I I believe it's a postwar Gallup poll of Americans perception of their financial well-being, which has now fallen to a record low. A record low. I I have um the I can't even be polite and say that that Fed officials right now are being tonedeaf. I I think they're being borderline cruel. >> Wow. Okay, that okay that right there it feels like there not even feels like there is a disconnect if you point if you're pointing out the perception of the financial well-being >> the American people aren't feeling so great right now yet when you read the minutes the Fed talks about the resilience of the economy >> is that disconnect like what what gives >> look um I you know Julia I hope we get past this chapter in Fed history where policy makers are making policy despite the administration. Um because I think that that's I think that that's the only thing that's um that's at work here. um you know, True Flation, which you know, I follow TRU and I've been following it for years, but since it was um since it was placed on the Bloomberg terminal, and now you can get the the data on a daily basis, um the street has really started to notice true inflation. It uses the blockchain to track 35 million prices a day. You know, it's it's at I think.7ish% right now. 7. And we saw in the cooler than expected CPI and core CPI data. Um you that was unexpected. The entire street was poised for something that would validate all of these what what these fed speakers have been saying. But it it it didn't. The CPI report did not. the payroll report may have, if you can forget about the million jobs that were revised away into thin air and the fact that I'm going to get wonky here for a second if you would allow, Julia. >> Oh, let's do it. We love it. >> Um, every year in December, we tend to have a lot of job gains that are seasonal. And every year in January, we tend to have a lot of seasonal job losses. So the Bureau of Labor Statistics always um corrects for seasonality knowing that this is going to be holiday workers, holiday workers left let go. Well, in one particular area of education and healthcare, the the seasonal adjustment factor was bizarrely uh flattered to the tune of 140,000 jobs. I mean, we charted it out for our clients. It it it was so far off. Again, we're talking about a 20 and 30-year average that all of a sudden, miraculously, there were 140,000 fewer seasonal firings that occurred in the month of January. And that I think that more than offsets the headline figure that was 137,000. And on top of that, the only jobs that were created on a net basis, there were 5,000 jobs created in manufacturing. We can talk about the good news there if you want because there there actually is a restocking cycle going on that we've been writing about in the Father. But the 137,000 jobs were also more than created by the education and health services sector. When you net those two sectors out, I want to say since the middle of 2024, we've had 419,000 job losses. So, I reiterate, I don't know what data these Fed officials are pretending to follow because when you have almost 800 PhDs, somebody can do the analysis that we're doing at the Fed. What >> What do you think they're missing on the labor side then? I I think they're missing I think they're missing headlines. I think they're missing layoff announcements. Uh Macro Edge tends to frontr run Challenger. They do a little bit better job than Challenger of tracking layoff announcements. We checked in with them midFebruary and they're tracking at 118,000 job cuts for the month, which would surpass the 110 some odd thousand job cuts announced in January. Um, but again, they're only tracking headlines, Julia. >> Headlines that anybody can read, headlines that any scraper can scrape and feed into a spreadsheet. This is not rocket science. And for Fed officials to maintain that the labor market is in a stable place or in a solid place is is just an insult and an affront to the Americans who are losing their jobs. I had somebody tweet out a few days ago, you know, I'm I'm I'm a traveling medical worker and my income's down upwards of 20%. Um, over the last year, so I signed up on four gig platforms and I haven't gotten a nibble, not a ride, nothing. And he actually tweeted back out today, uh, it looks like he might get some work from Door Dash. Th this is not a stable labor market. >> As you um you wrote you wrote um in the Daily Feather about this. Um I think it was Yeah, you wrote about this in the Daily Feather, but also like if you look at the minutes, they flagged that the job gains are concentrated in less cyclic cycllically sensitive sectors. They flag that as a vulnerability signal. That's exactly the education and health services anomaly you've you've highlighted. Um, did the Fed kind of acknowledge though a labor recession in plain sight? um Jerome Powell himself a few meetings ago at the podium acknowledged as much and if they're following what's happening and and the reason they bring up nonsyclical the word nonyclical is because the only economy that monetary policy can address is the cyclical economy. >> They can't address recessionp proof sectors. You're always going to send your kids to school. You're always going to take your kids to the dentist if they have a cavity. You're going to take them to the doctor if they're sick. It it doesn't matter where the economy is. And that's why the fastest area of adoption for buy now pay later, which I made mention to you the last time we spoke is medical and dental bills, >> which really tells you something, too, because Yeah, those are you. Okay. You said last time we spoke you were going to write about that. Um, >> I did. >> What's that? Yeah. What? Okay. Tell us what you unearthed there because you did mention I remember our last conversation. People are using it for their medical bills, >> utility bills, >> utility, like basic things that you need. >> And there's also kind of the Gen Z millennials who are really using it or at least they used it um at the very tail end of last year for vacations and concert tickets. So there's this there's this sense especially among younger voters, why do I care? I'm just going to buy it. I don't have to pay it off. Somebody's going to bail me out. And that's that's another affront, at least to me, is that the rule of law, the rule of contract law has gone out the window for a lot of younger Americans who just assume it's it's who cares? It's debt. I don't have to pay it off. Mhm. >> And then there there are the other struggling parents who are actually doing using buy now pay later to put food on the table to keep the lights on to pay their kids' medical bills. It's just it sometimes I think that there's a societal have and have not, if you will, because there are the younger generations who just don't give a damn. And then there are the struggling masses who are working but not getting by. And I, >> you know, it this gets us into the lovely world of politics and we don't have to go there. Um, but you know, the millennials and the Jenzers make up 52.5% of voters in this country. And if they want to vote to not work and get paid, they can come 2028. >> Are you concerned about the pendulum swinging in that direction then? Like you're kind of mentioning like not working and getting paid. Mhm. >> UBI. >> Mhm. Sure. I mean, that's again, if you're taking on debt to go have fun, even though you can't afford it, that's a statement. It's a statement that says they're obligations, sort of. Let's put the obligations part in air quotes. They're not really obligations. They're just kind of obligations because I won't have to service them. I won't have to pay them. Um, so I won't plan on it, but I will live life today. >> Hey everyone, I hope you are enjoying this interview. If you can take a quick moment and hit that subscribe button, we are on a mission to hit our next goal of 100,000 subscribers and your support could really help us get there. Thank you so much and enjoy the rest of the interview. Yeah, that's I wonder if that's almost like Yeah. Um, a bit of like a revolt against the the system. I don't know. I get kind of worried like swinging too far in that direction. >> No, I mean they're going to stick it to the boomers who've stuck it to them. I mean it's just it's look this is it's it's highly non it's highly unproductive as a society and it's taking the country in the wrong direction. >> Yeah. Um Danielle on just like on the Fed, like staying on the topic of the Fed, you've written open letters to the Fed. Um well, they didn't read the Well, I don't know if they didn't read them. I didn't listen to you. >> I didn't listen. They did indeed. We learned today that they did indeed elect Jerome Powell um to carry out any and all responsibilities as head of as head of the FOMC committee um through the end of 2026 should the individual who's meant to replace him is not in office by then. >> So maybe they read that part. But you, what I like about your letters is you do write on behalf of like every hardworking American. >> Mhm. >> Who's been left behind. >> who's been left behind. Um, and I think a lot of these folks, they intuit it something maybe went wrong. Um, do you I don't know exactly how I want to ask this, but do you feel like are we headed in the wrong direction still? like >> are you going to >> I think until I I and and by the way that's the dedication of my book Fed Up. That's why I repeat it over and over again. >> Um and I you know my mom never said apologized because she appreciated I mean I would have dedicated the book to my mom. >> Um who is the hardest working American I've I've ever met. Um but instead I dedicated it to the to all the hardworking American men and women who wake up every morning asking themselves what went wrong. Uh you've got a an administration right now that is outright lying to Americans about the economy and you have monetary policy makers who are effectively agreeing with the administration with the administration's gaslighting by saying it's a great economy because we're building a bunch of AI data centers that require construction workers for a period of time and then pretty much just two people to keep the lights on and run them after that. >> How about though, let me ask this. Um the thing that surprised you in the minutes was this notion that there's language that several participants, there was language around them wanting rate hikes if inflation stayed elevated. That's that is different from what President Trump wants, lower rates. Um >> again it's it's it's monetary policy maybe even just in name only nominally being made in spite of the administration but not being made for the people and that's look in inside the the minutes it talks about the fact that small business borrowing costs remain prohibit prohibitedly tight. Well if you're going to acknowledge it do something about it. Um, and then even I'm looking again in the minutes. Um, they're talking about like delinquency rates on small business CMBBS loans were a little changed. Um, they said for households delinquency rates for mortgage for most mortgage types remained near historic lows while those for credit card and auto loans remained above prepandemic levels. Do you also think like maybe the Fed's being a bit more um like sanguin around the credit side of things? I mean, the New York Fed produces some pretty darn good research and showed that the fastest rising area of delinquencies is mortgages. That credit card delinquencies didn't go up a ton, but oh, hey, wait, they're near record levels. And auto delinquencies also didn't rise a ton, but they are also at near record levels. Um, and we're talking about near record levels from '09 and in 2010. I mean, this was like Armageddon for the household sector. And it's in-house data that they have all full access to. So to talk it down when office delinquencies just hit the highest level on record and distressed office sales are clearly putting some regional banks under pressure in their loan books. Again, I'm describing things that are the Fed's job. They are a banking supervisor and regulator. So for them to be saying everything's kind of hunky dory, let's talk it down is irresponsible. >> What would be Okay. So what do you think um what would be the responsible thing to do? Like what would be the responsible conversation to have >> and then the responsible policy to follow? >> I think it's incumbent upon the Fed to say, you know, we're going to grow up. We're going to start following headlines. We're going to start following alternative data sets. We're going to stop ignoring that the the shift in the University of Michigan consumer sentiment survey which dates to 1968 which revealed in February which was a departure from January that we we've had seven consecutive months of Americans who foresee the unemployment rate rising in the next 6 months north of 60%. Unprecedented. The longest stretch in 2009 was six months in a row. Now we've had seven months in a row. But that wasn't the shift in the Yumish data. The shift in the Yumish data was now Americans feel that not just that the unemployment rate is going to go up, but that they're going to lose their jobs themselves. And so we published last week a daily feather that said it's getting personal. So the old adage, it's one thing if your neighbor loses his or her job, it's quite another if you lose yours. people are worried they're going to lose their jobs. So, yeah, the Fed can pay attention to a data set that goes to 1968. >> Also, when you talk about like people are worried about losing their jobs, you've talked about like if you have a job, keep your job, do everything you can. And we've also talked about just the young people, the I'm talking about the college graduates, like the large percentage of them. I I saw a headline somewhere. I don't know the exact percentage. Um >> 42% are undermployed. And that might be stale data because I haven't looked at the endrails. Um I haven't looked at the guts of the most recent payroll, >> but >> call it half. It's a big number. Yeah. And >> oh 52%. Okay, I flagged this. I have a bookmark. 52% read that on I read that. >> 52% of college graduates are undermployed per the Federal Reserve Bank of St. Louis. And that was Luke Groman had surfaced that that one um or retweeted it and I was ask March graduation's in two and a half months, two months for a new batch, a new vintage of college graduates. >> So, okay, I think this kind of ties all together. Do does this have to do does this have to do with AI? AI is responsible for a lot of what's going on, but AI is more responsible for what's going to happen in the future. I mean, if if if if it's finance or accounting, architecture, these entry- levelvel jobs that anthropic is, you know, they were dropping bombs every day last week saying, "Oh, we've AI can do this, AI can do that, AI can do it." you know fundamental commercial real estate um analysis the you know the stock of CBRE the highest flyer crashed that day AI can make a distributor 300 to 400% more productive without hiring a single person transportation stocks took it on their chin these are entry level jobs and I'm not saying that we should deny AI's existence I'm saying we should be thinking really hard right Now about the productivity miracle that everybody keeps talking about AI, we need to be thinking really hard about retraining workers, rejiggering the labor market and trying to figure out how to get in front of the societal implications of mass unemployment of our youth. >> And I think that right there that that's the concern too, like when you mentioned 2028, that's what drives the pendulum swing. You know, that's why I'm wondering like if you go in that direction, I mean, I don't even want to think that far out, but like what happens? >> Yeah. Look, Michael, it's not easy to swing back. >> Michael Bar is um Michael Bar is a governor on the Federal Reserve Board. He made a speech yesterday that said we'll have to be cognizant. We'll have to fiscal policy. will have to be aware of the role that it will play when it comes to jobs that are going to be destroyed by AI. That sound a lot like at least expanding the social safety net to me if not UBI, >> right? And then you have to look at our fiscal picture today like where we are and like what's even >> we've got plenty of wiggle room. We can borrow couple trillion more. Who cares? >> Yeah. A couple more trillion. Yeah. Um yeah, with 38.7 trillion for our US national debt just today. So yeah, just add it to the tab, I guess. Um okay, so we do the last Okay, this did not happen the last Okay, it was right after we had spoken the Kevin W the Kevin W news came out after you and I had last been together on a podcast. Um, so maybe the question for you was what's your kind of read on him? What are you positive on? What are maybe a bit more negative on? Um, how are you kind of reading into him? And maybe what do you hope to see from him? Well, so um in my Saturday intelligence briefing, which goes out to my institutional clients, I quoted Jay Powell from his first congressional testimony in I think it was June of 2018. And he was very resolute and adamant and it is not our job to look after the stock market. And then he got his backside handed to him and the bond market seized up. There wasn't a single junk bond issued in the country for 41 straight days. The stock market melted down on Christmas Eve of 2018 and a few days later he had to do an about phase. So then I went on to quote Kevin Worsh and um some comments that he had made about how Fed policy fed the inequality divide, how it was not the Fed's job to make the wealthy wealthier, how the Fed's footprint in the uh Treasury market and in the mortgage back securities market was too big and how it was the responsibility of of of monetary policy makers to shrink the size of the Fed's balance sheet. I I agree with all of these things. Um, we just don't know how Kevin Worsh is going to react if he gets punched in the mouth. To quote the great Mike Tyson, because we thought that Powell was going to have the Constitution when faced with some nasty backlash in the financial markets, but he didn't. he had to backtrack and say I really do believe in QE and markets recovered after that. So I I want to see how strong of an individual Kevin Worsh can be given who nominated him if he sticks to his stated it on the public record philosophy. Do you think one of the problems um is the Fed is just too beholden to the market? >> The Fed is too beholden to the market and the Fed becomes more beholden to the market every time the market melts down and it rides to the rescue. And for somebody who didn't like QE, which Powell did not, to to go from 4 to 9 trillion in a heartbeat, that was pretty shocking. And so, you know, fighting that impulse, I I don't know how it happens. I just don't I don't know what monetary policy maker on planet earth could weather the storm of the wrath of Wall Street and the loss of wealth in this country and the implications that would that it would have for the real economy as layoffs became severe as liquidity dried up. It's it's really hard to say. Julia. >> Mhm. >> Do you think um you when you made this prediction the last time a year from now >> unemployment is going to be much higher? I don't remember exactly what handle you gave unemployment on that >> but I take it obviously it's been a couple weeks nothing's changed but >> but the but the response rate >> people aren't changes changed the response rate fell to a record low for the survey that creates the unemployment rate. So that that is that has changed. >> So we know that the data that we're getting is >> less and less reliable and efficacious. That much we know. >> So does the Fed by the way. >> Um but I mean I follow a lot of unemployment indicators. Yes, you do. >> And Civic Science is another one of them that I have followed. Pentacific Science, they come out with a a survey every two weeks. So that one hit just yesterday and they've been tracking prospects for the US economy, prospects for personal finance, prospects for making a major purchase runs parallel to a lot of the things that we see in conference board and University of Michigan. But the prospects for landing a new job fell to a record low in the two weeks ended a few days ago. A record low. Maybe the unemployment rate as it's reported with its record low response rate is not reflecting reality. And I'm not saying this to be defensive. I'm just saying that policy makers and politicians in the administration, they can gaslight Americans. I'm not going to gaslight Americans. I'm not going to tell them that their perceptions of the job market are a figment of their collective imagination. I'm just not doing it. and nor should you because you are someone again you speak on behalf of every hardworking American out there. Before I let you you go here, Danielle. Um and I apologize if you hear my dog barking. There's probably a husky outside in the dog park. So I I apologize everybody. Um that's that's Winston. Okay. Looking ahead, we have the March FOMC coming up. >> Um and even beyond that, what's your base case for the economy um for the for the year? And what do you think lies ahead? Soft landing, recession risk, um something in between. >> No, I mean I think the I think the labor market recession continues >> and um you know I think that the revisions that we get we've never had 12 consecutive months of realtime revisions. I'm not talking about the benchmark revisions that applied to 2024 through the end of March of 2020. I'm not I'm not referring to benchmark revisions. talking to real time every time it's that that that payrolls are reported that that revisions are announced for the prior two months. We've never ever ever had 12 months in a row of negative real-time revisions and yet there we are. So anybody with a pulse acknowledges that the labor market is in is in recession and that there was a story on Bloomberg today that said we've never had a time of the labor market being as weak as it is and GDP being as strong as it is. Of course, GDP, you know, it takes a long time to revise. It takes years to revise GDP. So, I think that the recession that we're currently in might not be acknowledged for a few years, but >> wow. >> It's undeniable to the people who are in it. >> Yeah. Well, you were again, you were someone who has covered this thoroughly. Um, all right. Final question for you. Um, let's go back to our usual one because you you always have like such um great wisdom. So, what is something uh that's keeping you up at night these days? Um, what's been on your mind of late? And then what's something that's making you more hopeful and optimistic? So, um, you know, I want for the educators of tomorrow to be thinking about how to educate our children in a world of AI and how education needs to change in a world of AI and how AI can lift up the accessibility of public education for all Americans. And I really want for the AI geniuses, whoever they may be, to be thinking hard about how to implement the improvements we're going to see, whether it's research and development in far for pharmaceutical companies or discovering how to cure cancer, whatever it may be, whatever the promise of AI is, that's not going to destroy jobs, I want for that to be the focus. >> I love that. Danielle D. Martina Booth, CEO and chief strategist at QI Research, author of The Daily Feather on Substack, and also author of the book Fed Up, an insiders take on why the Federal Reserve is bad for America. I think that's the right title. Got the subtitle. >> You got it. You got the subtitle right. You >> should have said the first few versions of the subtitle. I was like, "No." Anyways, >> I can only imagine. Um, we might have to add an additional chapter at some point, but it's always wonderful having you on the show. This audience loves you. I love having you on. I love when we're in person usually and I don't I don't think we'll be together in March, but the next one we'll definitely do. Um, but in the meantime, I hope you have um a wonderful rest of your day and week and I look forward to our next conversation. Thanks again, Danielle. >> Likewise. Thank you, Julia. Peace.