Poweris more left promises. Longerterm there is uncertainty. And how these actions will affect real people and real purchases and real jobs. Bornhe new economy is from the crisis but it could leave some markers behind. Moreneed to think creatively about inclusion in the workforce. There is a discussion from the decisions made during the crisis and the longerterm ramifications. Get a lot of this can theoretical the connection between the fed approach and the framework and what actually happens in the real economy. Lets first talk a little bit more about these projections for the Federal Reserve. I think one of the key things is, you know, look, there is improvement. Byy see gdp only shrinking 3. 7 , they see unemployment at 7. 6 is sent, extremely elevated we were at 3. 5 going into the crisis most importantly there, inflation still nowhere near their goals. That is a big part of the reason and i think, romaine, youll be looking at why they see themselves at the factor zero rates for several years. Romaine a lot of focus was on the dot plot coming into this. They did not really shift. Ultimately what you saw is what the statement said and basically what jay powell said his you look at the 2021 and you look out to 2022 and 2023 and youre talking about 0 to a quarter percent roughly is where we will be, 1 is basically the best case scenario. You can look at that on your bloomberg terminal. Caroline no. Heve it when we plug t terminal. For is notable is a promise average inflation targeted you let inflation run hot weather projections looks like it is not going to run hot. Not until 2023. They stills inflation just about hitting 2 . One person on the committee thinks we might get to 2. 4 . Generally are we going to see inflation gather . Joe joining us for more on the feds decision is bloombergs matt boesler. Matt, it seems like a new thing that caught people by surprise was the focus on maximum employment. So, creating more of a framework and Forward Guidance. Of what wasetails announced today fit into what powell said in jackson hole several weeks ago in terms of this broader framework for the fed Going Forward . Yeah, so i think the way to understand the Forward Guidance the fed introduced today about Interest Rates and how that kind of fits into this new average inflation target framework is know, meant as coming you something to distinguish between what they are going to do this time versus what they did last time. If you go back to 2015, the fed lifted off from the zero bound after seven years and zero rates. When they were about of their estimates of full employment, but well before they hit their to. Ation goal this time they are basically saying that only a record to wait until we are at full employment estimates, but we will wait until inflation is at 2 . We expected to overshoot. Gives you aot part clue about what they are looking for in terms of maximum employment because of they think the phillips curve is really flat, that what that means is they are actually going to have to drive unemployment well below their estimates of full employment in order to generate that type of overshoot. It is really just promising longer, easier policy for longer this time around the last time. Caroline and in terms of also the focus that is on a more inclusive labor market, this is what chair powell to his credit said prior to covert, prior to this dislocation in the markets we have seen since march, is that he did want to let the economy run hot for longer because he meant that all boats can rise. Is this something he hopes to see again . The rolemates it was of the Federal Reserve to look at inequality into look at the Racial Disparities we have seen. I think this is such an important aspect of all of the shift you are seeing at the fed because they have two ways of explaining that overall change that they are undertaking and one is, you know, the very theoretical sort of aspect of inflation targeting and low, neutral Interest Rates which means they have less room to cut Interest Rates in response to downturns in the future. And so they have to get Inflation Higher so they can build more cushion. But the other you are talking about which is a very realworld labor marketsght and easier Monetary Policy has in that gets into the political backdrop. That, youuld argue know, that looms larger over the fence decisions Going Forward than just some of these theoretical considerations around the inflation rate better a little bit harder to understand if you do not have a phd in economics. You really have these two forces pushing in the same direction here. Romaine so then, matt, and i guess you once you get further out here in terms of a stagend you do get to where maybe it is apparent that rates need to start increasing, heremore explicit link between employment goals and inflation goals, does that give the fed less flexibility to move rates higher ones that time they feel arrives . Oni think it does, because the one hand we can talk about the projections foeomy and what it is going to look like several years from now, but, on the other hand, as we know from the past year or so, once we get down to these low Unemployment Rates that we are talking about the fed is looking for Going Forward, there is going to be a really serious political discussion and debate about whether or not that really represents full employment. We saw that last time around. I think we can expect to see that next time around. And so, that does really, again kind of go toward reinforcing the overall investmemessage for investors that there will be a higher bar, higher Interest RatesGoing Forward then there was last time. Romaine matt boesler, always great to have you. Bloomberg reported breaking it down for us. While he was speaking, more breaking news on the tiktok saga. Saying that oracle would oversee technical u. S. Operations. Oracle would be able to check source code to protect back doors from nonapproved sources. Board would be approved by the u. S. Government. These are some of the terms of the deal that are now crossing the wire right now. Apparently some of these terms seeking to assuage some of those concerns about whether bytedance and specifically china would still in some ways have access to u. S. User data. Joe still unclear whether it is going to actually be approved. Could seen seems like it could theoretically go either way. These are some of the details hopefully from oracle in tiptop perhaps perspective in the smoother deal about to go forward. Caroline we see are rising after hours, sold off on the news it would not be assuaging, the key issue still stumbling blocks coming from many a who whispers into the air president. Coming up, more on the Federal Reserve. Returning to our discussion. Bank chiefhird investment strategist. This is bloomberg. Romaine today we are focused on how the feds decision in the u. S. During the crisis will affect the real economy Going Forward. Joe, we did get a barometer earlier today with those retail Sales Numbers, which i guess were a little bit of a disappointment it joe they came in below expectations. This is a glass halffull, glass half empty sort of thing. The deceleration, little bit below expectations. A little ominous. On the other hand, retail sales are v. If youre looking for some aspect of the economy, that is a vshaped economy. That is a v right there. From one perspective, that is extremely impressive chart reckitt. Caroline what else is impressive is not only retail but the Homebuilder Optimism. Area ofnues to be this support for the u. S. Economy, as we see record low rate near zero till 2023 at the fed, that means record low mortgage offerings at the bank. Feedhis is continuing to into the optimism surrounding building houses, buying houses and we see Homebuilder Optimism hitting a record when you got that number out of the u. S. Homebuilder Confidence Index rising to 83. Versus 78 last month. Joe super impressive housing and retail, two fht pillars two of the pillars of this recovery. I want to bring in Jeff Korzenik. Much fornk you foso joining us. I do not think a lot of people in march and april would expect retail sales to the a vshap ed recovery or housing to boom in the middle of a pandemic. Yet, here we are purely saw in the feds forecast, they brought down their Unemployment Rate expectation for the end of the year. Picture, house of price are you at the progress the u. S. Economy has already made in digging itself out of theh ole . Thehole . Jeff one of our early observations as we should expect a fast recovery because we enter this downturn with any fundamental economic imbalances. The long drawn out, tweezing out imbalances and repair from that just did not have to happen this cycle. That being said, we have to say the resiliency of the u. S. Economy takes credited romaine and the resiliency of consumer spending. Those retail Sales Numbers that we saw, of course, back above prepandemic levels. Whetherthe concern is some of that spending was either a pull forward or whether it was just all of us rushing out and buying essential items that we needed for the home. And whether that is going to be sustainable enough to keep gdp or get gdp back on track. Combination of factors. The Paycheck Protection Program was helpful, the subsidy to Unemployment Insurance was incredibly supportive and spending. There is a pentup demand impact. Looking in the past. I think it is going to get more difficult. One of our concerns here is that once you look at who is actually unemployed and critically how long they have been unemployed, we are going to flip the switch. 27 weeks unemployment, or longer, is when it starts soaring because people who work in march and april will be longterm unemployed and there is a very negative consequence. To that caroline and it is something well discuss after the break later with you about the inclusion that can be focused on when you look at the labor market. Of whatrested in some is the Federal Reserves focus in this new targeting, of inflation and a more average inflation rate being looked at. Do you ever see and overshoot . Jeff think i there is always a potential for an overshoot. It seems so far away now. Ishink the fed rightlly saying that is a problem we will address if we need to. Today. Ts talk about we heard the fed be explicit about it strategy here and they said, we going to wait for maximum employment. At one point chair powell said we unemployment back to 3. 5 . He said yes, emphatically. How much will that help the ofnomy, the lack uncertainty that investors do not have to think it all about possible rate hikes for a long time until basically we are there . Big i think it is a positive. That being said, i am not as confident that the fed will be able to get to that level. If you look at it, you know, below 4 unemployment is the exception rather than the rule. Romaine jeff, but the concern get toough whether they that employment or that inflation level independent of one another is one thing. The idea that the link these two in tandem in the market is now inspecting that any sort of move upward and rates is going to have to be confirmed by both of these ends in tandem. Does that give you worry about the flexibility of the fed may or may not have down the road . Jeff i think it is actually a positive. We are favorable on this policy. If you look back at what businesses on the ground were doing back in the fall, they were starting to change, up their investment in capital goods to deal with a limited labor force. They were starting to reach deeper into the labor pool. Some of those items towards a more inclusive economy. And that is actually not just a social good but an economic good. We can grow our labor force for just the patient rate and grow our economy faster. Caroline talking about participation we will be discussing much more with you about how we can see perhaps a Second Chance hiring, helping me outcomes, looking at felons in particular. But away from the area of that part of the labor market, talk to us about how surprised were not you have been about chair powell really talking to this inclusive nature in the labor market, looking to ensure that, paying lip service to the fact that they see the racial divide building unemployment. They see the gender divide, and they are looking to try and push government that way but also realize what Monetary Policy has to do with his. With this. Jeff it was very striking in this press conference but two of the reporters later on asked a question in that arena. This is defense. Lastmonth, democrats in the house put forward a piece of legislation the Federal Reserve racial and Economic Opportunity act that would add this as a third mandate to the fed. I think the fed does not want to have that constriction on their policymaking. Experience with the Business Community and the policymaking community, is this is something we all get paid as americans we want our country land of to be a opportunity. Across racial boundaries. That is part of jay powells operating system as well. Joe Fifth Third Bank chief investment strategist. You will be sticking with us for more on the economic recovery and Second Chance hiring and again, building a more inclusive labor market. That discussion continuing next. This is bloomberg. Caroline today we are focused on other how the feds decision during the crisis affects the real economy, which which which leads us to one of the big things we discussed over the past few months, our un equal focus. You are seeing permanent changes at the moment in terms of the labor force. Joe lets go back to a chart we have shown a few times because i think it really does set the stage for this discussion and that is that cap between temporary and permanent unemployment. , geted wants to target back to 3 . It is important to note that that headline number can be misleading. Headlinehave seen the unemployment dropped impressively below nine percent again, permanent unemployment, that blue line is ticking up. As chair powell said today, we will look at a range of indicators. There is no single number that will tell them what is defined as maximum unemployment. We talk about maximum employment we have to talk about the people that are on the fringes of the economy. Remember when we were having this sort of labor shortage a couple years ago. And you had a lot of employers who are starting to reach out, convicts and other people that would be shone from the labor force this is something that has come up again and again when people talk about not only Prison Reform but the idea of getting people who have been incarcerated and served their time a chance of getting back in the labor force. You can see the disparity between people who have been incarcerated and people who have not. And the Unemployment Rate difference between those two groups. To go back to our guest, Jeff Korzenik at Fifth Third Bank. Romaine was saying, one of the really good things that we sort of learned about, so materialized in the late stages skill training and potential employees that they may not have previously can. For example, people who had been imprisoned. How much does that experience help them inform policy now. It really sort of rethinking that. Jeff it is extraordinarily important in two ways. One, the Business Community has not had a discussion a seat at the table for many discussions. Very often people very active in criminal Justice Policy just do not have experience in the Business Community and understand their needs. Having the Business Community bep up in that way and involved in the policy process correctly has been critically important delivering better policy. The other factor is it is simply working. When we find businesses who adopt a model where you are selective about who youh ire, having people ready for employment and then critically provide them tools to stay employed. That might mean just housing or transportation, you ge not just an employee, you get a good employeet. Caroline you were recently elected membership for the council on criminal justice in recognition for the work you have done to how do you think policy is developing in this way . Is there optimism Going Forward . Even if we paid service to what trump has achieved in terms of prison focus on policy. How will it develop postnovember . Jeff there is a tremendous amount of Energy Around us. S pessimistic when Unemployment Rates went soaring that this would get sidelined but im gratified it has not paid as you mentioned, the president has been very active in this. The passage of the First Step Act which governed outcomes for federal prisoners. 7 ofl prisoners early the prison population, but that was extraordinarily important on a symbolic basis. Now it is going at the state or local level. Most of this legislation is at the state level. And i am seeing a lot of reform movements. That are involving business friendly reforms so i think that is going to have a positive impact bit romaine with regards to the current recession and the current downturn in the labor market, some of the gains we have been making with regards to getting some of those types of people back into the workforce, have those gains been interrupted . Jeff they have to some degree. But there is new a new angle. I hate to use that word. But there is a new element that have not been part of the discussion. And that is if you look at people with felony convictions in the united states. There are 19 million. An enormous population that is underemployed and really could contribute to the economy. Also has the characteristics. And one of the tragedies of our nation is that one in three black men in america has a felony conviction. That is a tremendous obstacle to Economic Opportunity. To live up tohope our aspirations to be the land of opportunity for all until we offer Second Chance employment. So that is helping drive the initiative right now anything that is a big plus. Joe our thanks to Jeff Korzenik. Great perspective, appreciate the real world look at the ramifications of all this. Jeff korzenik, Fifth Third Bank chief investment analyst. Caroline and we are going to be focusing much more on the continuation of the un equal recovery but an interesting point in terms of policymaking focus. You had celebrities talk about this, about the reform needed in terms of parole that is needed, some of the probation and parole system and how that incentivizes many to return to the prison system rather than help foster re scaling. Romaine this is not just about getting those people back into the workforce but is really about adding another contributor to the economy. There has been some really great papers out there by some economists much smarter than us that have written about this and why it is so important. Caroline that is all for whatd you miss . Joe Bloomberg Technology is up next. Romaine have a great evening. This is bloomberg. Welcome to Bloomberg Technology. Off andcks selling stocks falling across the board. Fed chair jay powell saying he has not sure the economic recovery will continue as quickly as expected. Giants like apple and facebook sliding. Facebook facing another [indiscernible] vi