♪ carolyn: from bloomberg world headquarters in new york and right here in london, i'm caroline hyde. romaine: the s&p closing at another record high. joe: the question is --"what'd you miss?" caroline: this economic recovery feels like it is picking up steam, but some like chair powell say it is uneven and

weak. he also urged people to get vaccinated, not just in developed countries but globally. the lack of vaccinations is seen as a key risk to progress. chair powell focusing in on equality. also, the fed has the tools to curb any sort of price pressure we may see. joe: exactly right. we have heard this from the fed in a -- for a while. they are serious in believing that robust growth can help eliminate the inequality that fed chair powell was speaking of earlier. >> the recovery remains uneven and incomplete. the unemployment rate in the bottom quartile is still 20%. there's still 8.5 million people out of work, and this unevenness

we are talking about is a serious issue. viruses are no specters of borders, and until the world, really, is vaccinated, we will all be at risk of new mutations. romaine: he has sort of been pounding this message for a while, but definitely some reassurance about what the fed will do until we start to see some achievement of those targets. joe: joining us now, bloomberg's chief u.s. economist. thanks for joining us. what is your take away about powell and where he sees us on the path to full recovery? >> i feel very much on the same page of jerome powell, thinking about slack in the economy and how that will play into inflation pressures. he mentioned 8.5 million unemployed. that is basically the number if we compare the level of employment in the economy now

compared to last year before the pandemic began, nonfarm payrolls are about 8.5 roughly lower than where they were at that point in time. to put this into perspective, coming out of the global financial crisis, that deficit was actually 8 million, so despite the dramatic job gains we saw in the march employment reports and over the last couple of months, we are still in worse shape, basically, compared to where we were coming out of the last recession and certainly coming out of the last recession , that was not in the inflation environment, so the fed was embarking on balance sheet expansion and whatnot. the inflation never came, and i think jay powell is very much on the same page realizing things may have changed to some degree during the course of this crisis, and we all realize working remotely is may be more viable than we thought prior to the pandemic, but by and large,

the economy has not changed its stripes in terms of how it generates inflation pressures. caroline: interesting. the fed's kashkari weighing in today as well. we had a great discussion earlier in the week about getting they had around the unemployment rate around various rates as well and factoring that in two when the fed moves. >> i see plenty of slack in the labor market. what my team did was go through sector by sector in the labor market and look at if all of this slack, those eight point 5 million jobs, were concentrated in obvious sectors like restaurant workers, hotel workers, high touch services that were hit most seriously by

the pandemic, or if it was more broad-based. certainly, restaurants, leisure, hospitality dominate. in fact, the vast majority of sectors are still operating from below pre-pandemic levels, so that speaks to really broad-based slack in the economy, and that means that while we will see some signs of inflation pressure. for their, shortages of goods as the economy reopens, it need not be a wage price type of spiral. the last time the economy was in a deep recession and suddenly sprang out of that recession, that was 1983 and 1984. romaine: if we are going to draw parallels coming out of that 1983 period, for investors, we are looking to monetary policy, and more important, justly government overall and the role there. what are the lessons we can look to? >> i think the lessons are that we can have growth significantly

above its trend pace and not necessarily generate inflation pressure. there is a lot of slack in the economy, if we are looking at output cap pressures for effective levels of unemployment, soap it is coming out of the deep downturn of 1981-1982. inflation was only marginally higher over the first two years of that recovery when the economy was growing at a pace similar to what was projected for this year and next. caroline: we always love having you. thank you. meanwhile, stay tuned for more fed commentary. we will have an exclusive interview from the san francisco fed president. meanwhile, coming up, millions across the globe are tumbling out of the middle class in a historic setback. we break down the trend.

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caroline: the international monetary fund and world rank meetings are being held this week and wiley imf upgraded its forecast, concerns about the widening inequality of the global vaccine rollout. quick the road ahead looks very different where you are -- the road ahead looks very different where your. >> vaccine policy is economic policy and only vaccinating everybody everywhere would get us out of the risk of this

mutation. caroline: growing vaccine nationalism is hitting the world's most disadvantaged nations the hardest. the head of the world health organization is calling it a growing chasm. many of the poorest nations continue to wait for millions of doses. >> no longer can we expect poor countries to stand in a queue waiting to get vaccines. the fact that who digi said 17 million vaccine doses today have been administered by 10 countries today. the inequity of vaccine distribution is glaring. caroline: covax is a program in which vaccines are supposed to be distributed to middle and low income countries, many of which have no way of affording them on

their own. poorer countries are being left behind well-developed nations power ahead with most of the adult population having already received a vaccine. the u.s. is celebrating almost 170 million shots in arms, though it is pledging to do more outside its borders. >> the world has to come together to bring the covid pandemic to an end everywhere. for that to happen, the united states must act and we must lead. caroline: well developed countries have been making strides, inequality continues to build. the fate of underdeveloped countries rests on fiscal support of government, the actions of central banks and, crucially, the distribution of vaccine. joe: another repercussion from the pandemic is a hit to the global middle class. the demographic shrinking last year for the first time since 1990 with about 150 million people falling down the

socioeconomic ladder, so here with the latest is bloomberg news senior economic writer. we almost consider how extraordinary it is. lots of people think that we could get back to normal or full employment shockingly soon, a lot sooner than we would have thought a year ago at this time. your perspective globally, that is not the story. >> in the united states, that optimism depends on where you sit. it really is a very different picture when you look outside the u.s. and especially in emerging economies and beyond china. i think one of the things we heard from the imf this week over and over and over again was vaccine policy is economic policy, and this real fear of emerging economies struggling to catch up with the u.s. and the

rich and as a result having a much slower recovery. that hits this demographic that the world's businesses have been betting on for 30 plus years, and that is the middle class. we used to think this was an ever-expanding middle-class, and for the first time with this pandemic, we have actually seen it shrink. that is the first time since the 1990's. that's a big deal. romaine: is there a way to catch up? we have seen the optimistic part of the vaccine story concentrated in the u.s., maybe to a smaller extent in europe. once we get to a level where you start to see more of that in europe and asia, do you think that will be enough to help those countries catch up? >> sure. i think the real question is when that will happen. that may not happen until well into next year and possibly a year after that. the question becomes -- how long can folks put up with that?

how much economic disruption can you put up with, and what are the scars that come from that? we really are still trying to figure out what the damage is from this pandemic, and it's even more complicated when you start looking at emerging markets. caroline: just break it down. is it india that seems to be the most outside hit here? if you are a company that has been betting on certain parts of the emerging market and the middle class therein, where are you most affected by the shrinkage? >> first of all, we have had this amazing kind of exception to the rule, which is china where the economy never even contracted last year versus most other emerging economies that did contract. india took the hardest hit with tens of millions of people falling out of the middle class. when we define the middle class, really, we are talking about people earning between $10 and

$50 a day. it is a very different demographic than the u.s. middle class. just to put it in perspective, if you are in a minimum-wage job in the united states working an eight-hour day, you are taking home just eight dollars a day or so. in a place like india, that puts you solidly into the middle class, but a lot of those people are in the same way that american middle-class people will tell you, are in a kind of paycheck-to-paycheck world for a fairly fragile place economically. any hit, and certainly a big hit like this, hurts very badly. joe: i don't know if the people you talk to have a view on it, but going back to the vaccine, the gap between what we have here in terms of vaccine versus the rest of the world, absolutely extraordinary. how much more could have been done early on had rich countries put some focus on it, put some

money on it, such that vaccine distribution today could have been more equitable with a higher volume of high-quality vaccines globally? >> i'm not an expert in vaccine production, but we do know there have been production logjams, and there is a question of capacity as well. a lot of people in the developing world have been clamoring for the u.s. and other rich nations to essentially allow an extension -- exception on commercial property rights that would allow countries like india with big, generic drug makers to ramp up production. pharmaceutical companies point out that it's not that easy. there's also a question of all that go into vaccines, and, you know, it is remarkable we have had a vaccine this weekly, but rolling it out now is -- i mean, it's going to take longer to roll this vaccine out to the entire world than it has taken to develop a vaccine, and that

is just going to cast a huge shadow over big parts of the global economy for a long time. romaine: coming up, we talked about the corporate bond market. some of the liquidity concerns still remain according to our next guest, columbia law school professor catherine judge. she is joining us next. this is bloomberg. ♪

remain: i don't know if you remember about a year ago, we were going through this huge frenzy in the market where we were tightening adjustment spreads and what it all meant. joe: i thought it all just worked out. romaine: that invisible hand

right? joe: yeah. it really was a run on the entire system last year, and now you see the long-term chart, just another blip. we are back to normal, and absolutely to your point, massive intervention. all the treasuries, not just corporate bonds. caroline: those options now getting no pickup whatsoever, but the question is if that doesn't exactly align risk-taking the way it should be. joe: joining us with more insight, a columbia law school professor, member of the task force sponsored by the brookings institution and university of chicago. thank you so much. obviously, the world did not fall apart. the fed did its job. we are here. also, people are not crazy about the fact that it had to be done in the first place. how should the administration,

when thinking about regulation going forward -- crises are going to happen again in the future that are totally unexpected. think about addressing some of the frailties that may have been exposed a year ago? >> i think the nice thing about a year ago is because both fed and congress stepped in very quickly and managed to contain a lot of the damage that otherwise the events would have inflicted. most of the financial markets did not spill over into the real economy. that said, we cannot take for granted that type of aggressive intervention. i really think we need to go back to the events of last march -- really february and march and look at what was wrong, consider how much worse things might have been without the fed intervention, and use that as a starting point for creating a laundry list of some areas that require greater attention.

romaine: sometimes failure is necessary as well to shake out some of the, i guess, issues that sort of plague our markets. how much of that was actually shaken out by the fed intervention, or are we just now sort of dealing with a sleeping giant? >> i would say the sleeping giant situation. you are right -- oftentimes, we do not learn our lesson. something is still really, really wrong. it was a great example of the near miss, and we made some modifications, but they were relatively modest. now we face a situation where in a variety of areas, things could have gone much worse than they did. we are very lucky that they did not, but we should still take this opportunity to try to establish the resilience that we want the markets to have. caroline: janet yellen looks like she is taking this moment

of calm, right? >> that is a thing we will see. there are many in the industry talking about yelling taking the helm, so this is something we know she had on the agenda. it is a full agenda. there's climate-related risk and other things they are trying to tackle. this is on the list of issues she is looking at, and i will say that even if you look at her comments in the summer of 2020 before she was nominated for her current position, she also pointed out that there had been meaningful problems in a number of areas really having to do with non-bank financial intermediation that had not been adequately addressed. i think that is a reason to be hopeful, at least, that this will be a priority, not just for the treasury department, but for all the member agencies.

joe: let's go back. it is easy enough to say we have this crisis, people stopped spending money. people started worrying about your companies were going to go out of his and his. liquidity dried up. there was a run on the corporate bond market. as you say, this is something that indicated problems. what is the thing about the structure of the market that could be addressed such that in a similar event in the future, there is some more resilience and we don't have to hope that the fed has the political inclination to step in? >> yeah, there are a number of different fixes. one, for example, looking at the bond market, swing pricing might well be appropriate. one of the big concerns was something -- with something like the open-ended bond buying was there the first movers.

the cost of liquidating in really difficult circumstances is born by the other sectors, and there's a whole variety of things. it's a number of different mechanisms that you will collectively need, so what we do is try to figure out how we get the treasury market liquidity that clearly has to be a component. we have to think about the structure of corporate bond markets generally speaking. these have always been thinly traded markets. romaine: i'm still confused about the systemic risk issues. if we move to a system that is more weighted towards etf's with regard to bonds here, and some issue erodes, it would seem like some of the risk would be spread out, maybe be a little more disparate if it were -- then if it the normal issues in the bond market. what am i getting wrong? >> no, i think if we have more etf's, we have less reason to be concerned. if you think about the bond

market traditionally, a lot of that has sat on the balance sheets of insurance funds and pension funds, and they buy and sit on it. they do not need particular liquidity during periods of investor stress. the way an etf works, which is kind of a mix between an open and fund and closed end fund, you get a discount if you are trying to sell. we sought etf's selling, and that is actually a good thing because it means those investors are only going to share -- sell their shares if they need liquidity. in an open bond on, it is the opposite. instead, you are encouraged to run for the door, and it is that first mover advantage that we really need to address. caroline: we could go on much longer with you. we thank you for the details. all things about corporate bonds and also if this impacts equity

funds as well. the liquidity mismatch that happened over here in the u.k. as well. joe: "bloomberg technology is up next. romaine: have a great evening. this is bloomberg. ♪

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emily: i'm emily chang in san francisco, and this is " bloomberg technology." coming up, a historic vote about amazon employees in alabama deciding if they will unionize. plus, it is the technology behind every major nfc