Yellen’s `Mood Music’ Limited by Data: Shepherdson

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April 1 (Bloomberg) -- Ian Shepherdson, chief economist at Pantheon Macroeconomics, and Ken Sena, managing director at Evercore, discuss Federal Reserve Chairman Janet Yellen’s approach to communication and how economic data is weighing on the U.S. economy on Bloomberg Television’s “Bloomberg Surveillance.”

Ian shepardson.

Let me get you the take on it -- on janet yellen and different approach to monetary policy.

A little storytelling thing going on there.

The mood music was very dovish.

If you look at what she said, no different than the standard headline about tapering steady pace and contingent upon the data.

The thing is, you can only push this so far.

The data ultimately tells them what to do.

If we print friday to 50 instead of 200 and the next one is 200 as well.

The mood music will count for nothing because they will stop pushing for the fed to be more aggressive.

What she is trying to do while you have this data behind you, then you talk the self mood music and it works.

If the data starts to move against you you have to be nimble on the way back.

Homophones like she is stating the obvious.

Absolutely.

When the data tells you things are still in the low market, you go out and tell stories about individuals whose stories that the big victor data.

The fed is driven by big picture data when it comes to policy.

Individual stories do not cut it in the macros move the other way.

It has a limit.

The limit is driven by the data.

Where do you see inflationary pressures?

We talked about rising prices, coffee and orange juice.

Why does that not count as inflation?

Unless it comes back to wages, it is just a relatively price shift -- relative price shift.

The biggest thing is rent.

Is says there is pressure building because we have a very tight markets and are seeing a steady acceleration.

Here is the headache right now.

We begin the second quarter.

The idea of core pc inflation.

Down we go.

Thus inflation.

Is this the nightmare, the idea that within that all the blather in the mix that you look at every day, when inflation stays level we can see further disinflation?

I would be surprised to see further disinflation.

Some of the things pulling the chart down, financial services prices slowed down and picking up again and rent is gradually grinding up.

Window receive wage growth?

-- when do we see wage growth?

Anytime now.

With unemployment falling toward six percent, we should see a little bit of a report for sure.

Small companies complaining they cannot get the people they want to hire.

Usually that means they have to pay more for them.

I would suggest that is the most e-mails we get.

Someone in a suit and tie says a lot of small business people tell us we are crazy.

Small business accounts for two thirds of the hiring according to john growth.

Here is something that jumped off from one of the reports.

I read this overnight that healthcare services, effectively hospitals, account for 11%. and that hospital expansion goes up.

They have been going down.

They have slowed a lot.

Part because of the sequester and part because of obama care.

When the wage bills are rising at two percent per year and effectively seeing a margin squeeze, so we've seen consolidation, laos and this is not sustainable.

We saw this in the 1990's. the game is over.

The pressure built became unsustainable.

I think that will happen this year or early next year as well.

Such a big chunk being displayed.

So friendly and favorable coming down, down.

The margin pressure is too intense.

I want to go back to wage pressure and how they are not building up.

Ken senna covers financial companies.

These are the companies -- you cover social media companies.

They are not the employee and a lot of people.

Facebook has 6300 employees.

Certainly with most technology you see a certain amount of wealth move into probably fewer hands.

I think ian is probably a better person to stick to the macro effects of that.

Certainly the competition for talent continues to increase as well.

That is just a fact of silicon valley, and also throughout the u.s. and technology.

Fewer employees, higher pay.

We talk a lot about income disparity.

If you were to take out the guys at the top, is it really as bad?

A very small sliver of the population.

You get a lot of headlines.

In terms of the income flow, still pretty small.

The big story really is the median guy on the salary.

In real sense it has gone down or stagnated.

With wage growth at two percent and core inflation just below two percent, real wage gains are pretty minimal.

The high-frequency trading up for right now of mainstream versus wall street in your world of broader incomes and aggregation, is america widening out right now?

Are we getting ever wider as we enter the second quarter?

Unquestionably.

That will change as the labor market gets tighter.

We have had a long time of such low wage growth of people who have traction and income, entrepreneurs and people in senior positions have done very well but for the median worker, it has been very difficult but it will change.

This text has been automatically generated. It may not be 100% accurate.

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