and our economy. it leads to environments that are long lasting, that will lead to a less productive economy in the united states and around the world. david: are you worried at the fed about the enormous amount of debt the federal government has? jay: i am very worried about it. from the fed standpoint, we are really looking at a business cycle kind of length -- that's our frame of reference -- and the long-term fiscal sustainability is not something that plays into the medium term that is relevant for our policy decisions. it's a long-run issue that we definitely need to face, and ultimately will have no choice but to face. david: now, as a result of quantitative easing, the fed bought a lot of securities, and now you're letting them roll off. is that the correct policy as opposed to selling them? you're just letting them expire. is that the correct policy in your view? jay: we wanted to have the balance sheet return to a more normal level, a level no larger than it needs to be to conduct monetary p

that means that when the economy is really week, inflation doesn't go down much, and when the economyally strong, inflation tends to be rooted close to 2%. david: are you worried about the slowing growth rate in the chinese economy and its impact on our economy? jay: it is a concern. something we are watching. the chinese economy has slowed down. it is showing up a lot in consumer spending. we also saw two week manufacturing and services surveys. the thing you are also seeing, though, is that the chinese authorities are doing repeated rounds of things to support the economy. just over and over again, different things. i still think the baseline case for china is going to be another year of solid growth. i don't see -- there is no reason to think it will be something worth on that. david: do you think the tariffs we have imposed on chinese imports is a good thing for our economy, a harmful thing for the chinese economy? jay: so i don't think that the tariff on either side have had much of a visible mark on the respective economies. i would not comment on the administration's trade poli

celebrations are inevitable that's part and parcel of a market oriented economy. but that cyclical slowdown is worsened by policy decisions particularly the trumpet ministrations tariffs on foreign steel aluminum and in a ray of goods made in china trump also rattled investors with unprecedented criticism of the federal reserve the nominally independent u.s. central bank it's really been a one two punch cycle slow down first then the trade sanctions trade war rhetoric whatever you want to call it and the question right now is are we ready or what is the next punch going to be in are we are we ready for it. in december general motors said it would close five plants and lay off thousands of workers in part due to soaring steel costs companies large and small are scaling back plans for twenty nineteen. los angeles businessman tommy yep sells toys made in china. and michelle thought to start store to next year but that may be back to the drawing board germany sweden italy switzerland russia and other developed countries have all had negative growth for at least one qu

how does this affect the economy? will it have an effect on the economy? we know it affects the government employees who are not receiving paychecks. will it have an effect on the economy overall? guest: so far, government employees are still receiving paychecks. the question is will they receive them on january 11? question of whether the shutdown will be resolved next week. one of the indicators we have is the last shutdown in 2013, which lasted 16 days. that was a shutdown that affected the entire federal government, nonessential services. this partial government slowdown is not so much a shutdown. it only affects about 25% of federal spending. that means fewer workers and fewer government contractors that are impacted. if they were to miss that next paycheck, family of them have an emergency reserve fund they can tap into until they will receive their likely backpay? for businesses in the last government shutdown, there were cash flow concerns if the business was not getting paid. how much cash did they have on the side? a morelooking at having partisa

and global economy.ou clarify does the fomc see risks skewed to the downside, particularly after you removed the statement about risk being balanced? >> we had an extensive discussion of the baseline and of also the risk to the baseline and the risks are of course the fact that financial conditions have tightened. that global growth has slowed as well as some let's say government related risks like brexit and trade discussions and also the effects and ultimate disposition of the shutdown. so we looked at, we look at those and the way we think of it that policy, well use policy and we have, to offset risks to the baseline. we review the baseline still solid. part of that is the way we adjusted our baseline to address those risks that is the way we're thinking about that now. >> sam. and then risk. >> thanks, sam fleming from "the financial times." the fed linked its commitment in patience in part to subdued inflation outcomes. would you be comfortable continuing patience if there are modest, transient ove

thing for the chinese economy?i don't think the tariffs on either side have had much of a visible mark on the economies. i would not comment on the administration's rate policy. i will say this, though. if this process leads us to a fairer, more open, lower-tariff environment for trade, that will be good for the global economy and it will be good for our economy. where it leads to environments that are long lasting, that will lead to a less productive economy in the u.s. and around the world. david: are you worried at the fed about the enormous amount of debt the federal government has? jay: i am very worried about it. we are really looking at a business cycle kind of length -- that's our frame of reference -- and the long-term sustainability is not something that plays into the medium term that is relevant for our policy decisions. it's a long-run issue that we need to face, and ultimately will have no choice but to face. david: now, as a result of quantitative easing, the fed bought a lot of securities, and now y

hard for the chinese economy held longer can this go on before it hurts the economy? scenic i don't think that they've had much of a visible mark on the economy. chinese exports and imports don't show anymore from that and we have a 20 trillion-dollar economeconomy of the mouth so fs actual much of a mark. and again we don't do that trade policy or we would never comment on the trade policy but i will say this. if this process leads us to a more open environment that would be good for the economy. if instead it leads to the environment where they are higher and teachable and long lasting than that will lead to a less productive economy in the united states and around the world. >> do you think about if it occurs what's going to happen to the economy and what is your view on that? >> the main point of contact has been the institutions that have operations in the uk and the continent and we have quite a long time to get ready for that and also the tenth superpositions from the authorities i think it's very possible anyone should have humility trying to predict what the

economy. right now, monetary policy is expanding ingesting more liquidity pushing for proactive fiscal policy reducing taxes stuck in financial sector if you go in real economy confident big forces of positive changes for chinese economy whether entrepreneurship innovation the fact services are rising service productivity rising organizations the trouble is really financial system how to match investment and savers and give the household more ability to consume if you are if the real interest rate on bank deposits most saving is stock is earning zero in last 10 years 20 years economy growing at 6 to 8%, you are not using that potential to the household to private sector so it is all about unleashing latent dynamism ins private sector. >> do you think opening of markets do you think the trade issue, with the united states, will in fact impact the real economy in china. >> i think that trade war has come as a benefit in disguise the external prern for china to undertake important reforms as i me

that means that when the economy is really week, inflation doesn't go down much, and when the economyreally strong, inflation tends to be rooted close to 2%. david: are you worried about the slowing growth rate in the chinese economy and its impact on our economy? jay: it is a concern. something we are watching. the chinese economy has slowed down. it is showing up a lot in consumer spending. we also saw two week manufacturing and services surveys. the thing you are also seeing, though, is that the chinese authorities are doing repeated rounds of things to support the economy. just over and over again, different things. i still think the baseline case for china is going to be another year of solid growth. i don't see -- there is no reason to think it will be something worth on that. david: do you think the tariffs we have imposed on chinese imports is a good thing for our economy, a harmful thing for the chinese economy? jay: so i don't think that the tariff on either side have had much of a visible mark on the respective economies. i would not comment on the administration's trade po

signs that the economy is slowing. see 2019 unfolding? of that momentum continue? >> i think the pessimism about her session is completely misplaced. he cannot get a recession in the united states without having also sector go south. there is no reason for a very strong hustle sector to pull back that sharply. over the final three months of 2018 payroll expanded at a rate of 7% and that the great annual growth rate. a strong foundation for income and we should see continued momentum into 2019. no question. will the economy slow? yes. inevitably it will slow and the question is toward what? 2% or 2.5%? that's the real issue. is not a recession but what will the slowdown look like. gerry: what could go wrong? from the fall we saw a few months ago people's confidence is headed for a one oh cave get hit, housing market is weak and could that really hit the household sector? >> you can tell stories about it all going on. no question about it. we are weak points in the us economy and housing sector is weak. no question. it's

united states economy. there was exports and imports that don't show a mark from that. we have a 20 plus trillion dollar economy. it doesn't show much of a mark. we don't do trade policy, i would never comment on the administration. i will say this. if this leads us to a fairer, if this process leads us to a fairer, more open lower tariff environment for trait, that will be good for the global economy. if instead it leads to more protections, tariffs are higher and mutual and long-lasting, that will be to a less productive economy here in the united states and around the world. >> what about the rdx it? do think it will hurt? what is your view? >> our main has been with u.s. financial expertise -- the uk and also in the comment. we've now had quite a long time to get ready for that. they've also had institutions with stupidest supervision. they are prepared for the full range outcomes. i think it's very possible, anyone should have humility trying to predict the consequence would be. i would say the base ca

economy after last month giving the economy of -- a thumbs-up.ing and market data give the central bank reason to worry. move as asee the next rate cut that will be the first in a decade. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is "bloomberg." tom: thank you so much. today,o the market futures up 32, dow futures advance. the euro is stronger. there it is. 107.99, weaker. the 30 year bond up three basis points. that is remarkable. guy: let's talk about what we have got in terms of reaction. the data on this side of atlantic. the euro has come softer as we see that different -- disappointing cpi print. equity markets did not get a chance to respond to the cut. bider did and it is better as a result. tom: let us begin our coverage with james glassman of jpmorgan. expert on the american labor economy and combines it with frequent flyer miles as he listens to commercial customers. thrilled to have you with us. what have you learned in

how does this affect the econo economy, will it have an effect on the economy. we know that it affects the government employees were not receiving paychecks but will have an effect on the u.s. economy overall. >> guest: so far government employees are still receiving paychecks but the question is will they receive them on january 11. that depends on whether the shutdown will drag on much longer or will be resolved nexte week. interns of what affects the economy is a lack shutdown at 2013 which lasted about 16 days. however, that was a shutdown that affected the entire federal government in all essential services. this partial government should slow down is not complete shutdown only affects 5% of federal spending and fewer workers and contractors are affected. in the way it affects them is that if they were to miss that next paycheck how many of them do have an emergency reese served funds they can tidee themselves over until they get their backpay. the businesses in the last government shutdown there is concerns.cash flow if the business wasn't getting paid how

of the chinese economy? and not to have that visible mark there were chinese exports and imports we have a 20 plus trillion dollar econom. and then never to comment on the administration. if this leads to a fair and more open their lower tariff environment for trade that's good for the economy but if it's more protectionismen where tariffs are higher in mutual a long lasting than that will lead to a different economy around the united states and around the world. >> do you think the exit will hurt the economy quick. >> so for us to have quite a long time to get ready for 214 t 14 so they are ready for the full range of outcomes but it is very possible there is no precedent for brexit but anybody should have humility but the base case there will be some effect on the uk economy but it doesn't seem significant unless there are financial constructions. >> we are running at $1 trillion or more. and without enormous amount of debt the government has? and with that fiscal non- sustainability is something thats is

the economy is still doing well.culties we need to watch but overall, the sentiment is not as good as it should be. we are still in the favorable growth environment. that seems to get overshadowed by most of the discussions. shery: what is the environment like in shanghai as you speak to all of these companies in china? axel: monetary policy and the retreat of monetary policy, the fed raising rates and possibly going into a pause now, the european central bank stopping it's purchase program, those are all events that have changed what the global economy was driven by for the last couple of years. markets have to get used to that. that adjustment is a difficult one, but i think markets will manage. monetary policy will be very responsive to economic situation. the economic situation is cooling off somewhat. there is less upswing then we might have seen last year. there is no reason to be skeptical. we still have a relatively good global economy. we still have a relatively good performance on trade. yes, there are trad

the data suggests we have a pretty strong economy. consumers consumer spending is 2 thirds of all spending in the economy. with strong job growth and income growth, debt burdens having been reduced substantially. housing prices having risen, oil prices down, putting some money in consumers pockets, consumer spending as j said, spending over christmas was strong, that is a strong base for the economy next year. i don't think expansions fully engaged, two things usually end them. one is financial imbalance in the other is the fed. usually when the fed ends a recession it ends in expansion because inflation has gotten out of control and the fed needs to tighten to bring it down and the said is well positioned with inflation being low and inflation dynamics being favorable in the sense that the linkage, so i believe there is linkage between slackening the labor market and product markets and inflation but the source of that linkage is not very great. we have relatively flat phillips curve is another way of putting that and in addition inf

the weakening economy basically illustrates how china's slowdown is rippling across neighbouring economiesharply from october to december on sluggish sales of semiconductors. although this was offset by government spending and an improvement in private construction —— consumption. construction came around. this data comes one day after china reported its slowest growth in nearly three decades last year. around a quarter of south korea's exports go to china and its economy is especially vulnerable to the swings and economic fortunes of its north asian neighbour. thank you very much indeed. now let's brief you on some other business stories. tencent has suffered a fresh blow to its bid to get new computer games approved by china's regulator with none of its title on the latest list. 93 new games have been approved but for the third time none of them are from the tech giant. approvals were put on hold for most of last year amid concerns of growing addiction in the world's biggest gaming market. the world's biggest miner bhp has warned that a string of problems last year could cost it $600m. o

as we look at these figures, it is bound to affect the economy, possibly not ina to affect the economyy, it could affect things. yes, if the shutdown is resolved in the next week, then aside from people taking a hit to their pay cheques in the short term, it is likely the economy will rebound fairly quickly. but the longer it goes on, the more the danger increases, and that is an exponential increase. looking ahead, what we are seeing is the deadline for the debt ceiling to be raised in march, and even if that goes perfectly in march, before that, as we get to that, investors are going to start to get worried. 0n we get to that, investors are going to start to get worried. on top of that, you are starting to get to wards a perfect storm of bad economic indicators. we have seen manufacturing going down. we have seen apple and the other fang companies reporting much worse results than expected. we have seen a trade war, and the top of that, the fundamentals of the american economy weaker than they should be right now because of president trump's tax cuts, which has increased the deficit.

reviving zimba bwe‘s economy.he government calls for unity after protests over a failing economy and soaring prices, but can the president deliver? live from london, that's our top story on wednesday the 23rd of january. zimbabwe was once the bread—basket of africa, but the latest fuel protests highlight how millions of lives now suffer with economic hardship. also in the programme: the brexit fallout continues, with sony being the latest firm to announce it's moving its headquarters out of the uk. european markets have opened in negative territory. and we'll be live in davos, where trade disputes are on the agenda amid mouting worries that they threaten a global economic slowdown. so who will blink first to avoid a full blown trade war? sally is standing by for us there. and netflix fims have been nominated for 15 oscars this year. so is streaming a big threat to the traditional film industry? do you prefer to watch movies at home or are you still a big cinema goer? let us know, use the hashtag #bbcbizlive. hello

we have a strong economy consumer spending is two-thirds of the spending in the economy with strong jobwth, debt burdens having been reduced substanti substantially, housing prices having risen, oil prices down, putting money in consumers' pockets. i think consumer spending looks, as jay said, spending over christmas was strong, that's a strong base for the economy next year i don't think expansions die of old age. two things usually end them. one is financial imbalances and the other is the fed and usually when the fed ends a recession it ends an expansion because inflation has gotten out of control and the fed needs to tighten to bring it down and i think the fed is now very well positioned with inflation being low and inflation dynamics being favorable in the sense that the linkage -- so i believe that there is a linkage between slack in the labor market and product markets and inflation but the strength of that linkage is not very great so we have relatively flat phillips curve is another way of put ing th putting that so inflationary dynamics are favorable it gives my former collea

even though were the largest economy, we now live in a global economy. this whole idea of the slowness going on will eventually impacts us know which is why a lot of economists are calling second half of the year early into next year going into recession. i don't believe for going into one, that you have at least half of them thinking that now. >> nobody's talking about the fact this is the first time i remember the chinese specifically linking the arrest of this huawei ceo with trade talks. the fact that it was made explicit, does that have any significance? >> first of all i'm skeptical about these reports because i don't think they want to make the connection between the two. huawei is a private company. you don't want to link it to his date actions, so i would be hesitant to believe the headline worth reading right now. >> we've spoken on this often. huawei has been on the radar of the united dates for years under president obama they did not allow huawei to move anywhere near a military base. so now, you know, if the chinese government, you do this

when the economy is really weak, inflation doesn't go down very much when the economy is really strong, it doesn't go up very much so it tends to be pretty close to 2%. >> historically it used to be thought when oil prices were high, very high, that was not good for our country's inflation rate now that we're the biggest producer in the world, is it good when the opec prices go down or is it good when it is $70 a barrel because we produce so much >> it is a much different call than it used to be still on balance we think there's still a modest benefit overall in the aggregate from lower oil prices but not if you work in the oil industry or you work in an area that's heavily leveraged to the oil industry >> is there any price that you think is the equilibrium >> that's hard to say. what is the break even for the shale producers. >> are you worried about the chinese economy and its impact on our economy >> it is a concern something we're watching the chinese economy is slowing town and it is showing up in consumer spending. weak retail spending everyone saw the apple news last week, i su

take care of it because we on the downturn of the global economy and in the economy as director of the. of international economics thank you very much. the president of it was because ton as in a berlin today president shot mr yes wants to boost time with but once known for its repressive regime it is now opening its doors to the rest of the world and introducing liberal reforms a construction boom has hit the city of smart and not everybody's happy about it. tradition for progress past a future in some icon where walls look like the backdrop of a beautiful fairy tale this question is more topical than ever. like almost no other city in the past some good space samarkand is known for its ancient architecture and to the survival of tradition but could this fairy tale of a thousand and one nights be over if more skyscrapers are built here. authorities have been building in some a cunt for the past year. more than apartments are desperately needed as well as luxury shops and large hotels. third largest city is preparing itself for large numbers of tourists from around the world but they a

and our economy is 3.8% unemployment right now.o if trade deficit are so bad, why is our economy so strong? >> so, if you look at when china joined the world trade organization, in 2001, we went on a period of time where our growth fell from an average of 3.5% a year, in the preceding 5 1/2 decades, to 2%, a loss of 1.5% gdp a year, which is tantamount to millions of jobs and trillions of dollars of revenue, okay? what was the difference? it was, like, the explosion of the deficit, these unfair trade practices. now, president trump, using tax cuts, deregulation, unleashing the energy sector, and bringing about these trade deals, has boosted that growth rate up now above 3%. we're healthy and strong and moving. but in order to continue that, we're gonna have to restructure our economy, balance our trade deficit, and make sure that we have a strong manufacturing and defense industrial base. >> but i just want to point out, though, that in the times since china joined the world trade organization, the american economy has grown, and w

economy does still have its weak spots and that is giving some worry is the u.s. do you think heading towards a recession i think the u.s. is i'm what i call that unsustainable boom at the moment. we've had this very late cycle fiscal stimulus and that if you like is hothouse economic activity during the course of the last twelve months or so but that stimulus is going to start to fade and the legacy of that stimulus is two very large deficits a very large budget deficit and a very large external deficit the tariffs that mr trump is imposing on imports will not change that fact the u.s. is consuming far more than it's producing and at the moment that means that the trade deficit will expand and in many ways the u.s. economy right now is looking similar to the way it did in the mid one nine hundred eighty s. during the period of reaganomics it was another era of twin deficits and it was another area that ended rather badly it was a period of extreme volatility in financial markets and also in policymaking so my concern is that the u.s. looks good for now but that t

economy.the health of the my is very strong underpinnings of the economy are strong very good fundamentals. and, obviously, unemployment rate kicking up because there's more labor precipitation so that wasnd one of the issues during obama yearsrs with low visitatin so people are engages and they're making more money so this is a very, very positive thing one of the reasons why federal reserve had to move and likely will move again is that you've got to make sure tay we're taming inflation and you're ine a period of time whee federal government is borrowing this amount of money. one of the things federal reserve has to protect the united states from its dollar crisis so raising rates because of the strength of the economy also helps treasury go into capital markets in a much easier way god forbid you have a dollar crisis going on, and we're at the tail end of an economic cycle. >> having worked in the white house in washington, d.c. what does this administration what does trump administration d

economy. what they are concerned about is how the international economy. into the u.s. if the rest of the world is slowing, whether it is because of trade wars or just secular change. they have to worry about that and the other to have an influence because dollar raises .he rate there isn't a whole lot they can do to boost up the chinese economy, but they can restore people and rejuvenate them. i would expect it more to be the with the closely. look at what happened with apple and some of the data that has come out. manufacturing seems to be suffering. the service data today was very solid. can i put that down for trade? michael: maybe. it is a little too early to say. that the jobs report, 32,000 manufacturing jobs created. we saw average hourly earnings up 3.5%. they were also up that much for nonsupervisory production workers. the highest for that category since 2009. i does appear that either the is the numbers that came out and scared boston yesterday are , they are a sentiment indicator. in the job support today, we saw rise.work in overtime it'll probably take a

the economy is doing well.e saw strength in the december employment report, 312,000 jobs created. 2018 afterhinking the rate increase in december was 75 basis points from being at a setting that is a letter bit restrictive. almost neutral. that with myetting outlook for a good economy, i would say, we could sit at that into we see the economy decelerate to trend inflation, hang around 2%. the unemployment rate continues to be good. timing is not a big deal. were to increase rates in june, you have june-december. a lot of it is timing. i do not have a lot of rate increases slated for 2020. 2020,happens in 2019 or with all of the uncertainty with other things going on, europe's softening, we are well-positioned to assess how the data are coming in, whether or not business contexts see things proceeding differently than the national data.'we can respond appropriately.'we can be patient. back, preceding the december meeting, we knew there was a trade war going on. we knew there was a global slowdown occurring. the

and to see some slowing in the global economy. and that greater potential. . >> and those tax cuts and to find ourselves in a bad spot but is that priced in? . >> and to break that off time record that the economy will grow more slowly. and then to purchase for a long time and then this was enacted close to a full point and then that stimulus will die down over time to slow the growth and then in 2017 that we see this the takeback of geopolitical considerations and then growth globally is a little bit less strong so it does have some moderation if they don't die of old age they get murdered instead. [laughter]te right now i don't see anybody hiding behind the curtains and to say and then to have that flexibility that is responsive to the markets. >> the federal reserve chair not navigating the political system and then to be happy with those rate increases so have you had any direct communication from the white house? [laughter]ed about unhappiness with that season? no. i have no news for you on that. >> if he invited you would yo

economy in december, smashing expectations. fed, this is "i told you so." >> there is too much gloom and doom. i prefer boom. >> how should central banks react? two said presidents share exclusive insight. >> my own view is we should be patient. >> the time is going to tell us. we are going to be looking at the data, assessing conditions. it will tell us if we are about right or if we still have more work to do. >> it is all straight ahead on " bloomberg best." hello and welcome. this is "bloomberg best," your weekly review of the most important business news, analysis, and interviews from the u.s. and around the world. the first-day of the trading week was the last day of 2018 and despite the partial government shutdown creating uncertainty, there were signals from the white house that sparked some optimism. >> there is signs of easing trade tension between the u.s. and china as an american delegation gears up to travel to beijing for talks. president trump sees big progress. what do we know so far? >> the talks are back on. p

it was a very good year for the economy.t was very strong a historically strong on unemployment, labor force participation going up, and inflation staying near our target. we see continued momentum from the data right through the beginning of this year. we also see the financial market expressing a view of concern about downside risks associated with global growth and trade. so how do you put those two different signals together and i think we are actually in a good place. leads us with inflation low and under control is that we have the ability to be patient and watch as we see evolve and see which one of these two narratives is going to be the story of 2019. mr. rubenstein: last year in december, people thought that two fed funds rate increases as a part of your plan. is it not a part of your plan today? chair powell: there is no such plan. we do not vote on a path or plan for interest rates. we had each individual participant on the fomc submit their projections four times a year. we did that in december and two rate incr