Simone Del Rosario: The latest jobs report shows further weakening in the labor market. The US economy added 142,000 jobs in August. That’s lower than the 165,000 jobs expected. That said, the unemployment rate did tick back down to 4.2 % from 4.3 % in July. In July, when it hit that 4.3%, that’s when it triggered a recession indicator known as the Sahm Rule. Markets roiled for a bit after that jobs report. This is more in line with expectations but still shows that the job market is weakening. It still shows that we’re adding fewer and fewer jobs. And in fact, we have some significant revisions that are coming up in this latest August jobs report and that is the July jobs report which came out with 114,000 jobs added is actually being revised down to just 89,000 jobs added. In addition, June’s jobs report is being revised down by another 61,000 jobs. So we’re continuing to see systemic revisions downward on the number of jobs that are being added in the U.S. economy. The unemployment rate is sticking at around 4.2 percent. And we know that the Fed plans to cut in September after hearing from Fed Chair Jerome Powell in Jackson Hole stating that it is time for policy to adjust. As the numbers came out this morning, I spoke to Deputy Editor over at Business Insider, Bartie Scott, to help us break it all down.

Bartie Scott: I think this is a relief. This is a good report. I mean, we’re really happy that unemployment ticked back down from that 4.3% we saw last month to 4.2 now, which, again, historically, we have to remember, is a good, you know, a relatively low unemployment rate. And like you said, 142,000 jobs added is lower than the expected 165 but not that much lower. You know, I don’t think it’s a cause for alarm. A year ago, we were, we were seeing, you know, 200,000 jobs added, but we knew that that was going to slow down after sort of correcting after the pandemic and ramping back up, and this feels like a slowdown, but not, you know, a hole. We’re not falling off the edge of the labor market here.

Simone Del Rosario: Bartie, I want to bring this into like, a bigger perspective here, because we also got a major revision from the year ending in March. So you know, it takes time for these revisions to come through. But it found out that for the year ending in March, jobs added were 818,000 fewer than we had been told, than we had expected. You take the July revision down to 89,000 jobs. That looks pretty terrible you take in the fact that you know, the number of jobs added over the course of the past year and a half just keeps taking these hits. What are we supposed to make of this?

Bartie Scott: I do think that this is a cause for some concern. You know, like you said, the July report really set off alarm bells and made people worry that the labor market was slowing down. And it turns out that maybe that slowdown started earlier than we actually knew. And in some ways, maybe that’s a good thing that people haven’t been shocked by the jobs report over and over, because we did see the stock market go down. People really start to worry. And. We know that these kinds of reports can sometimes, like, create some some fear, and of course, we don’t want that, but it is an indication that the Fed really, again, the Fed really has to step in at this point. It’s under some pressure that maybe it has waited too long, and I think those numbers potentially back that up. You know, it’s the interest rate hikes and keeping them steady for nearly a year has really slowed down the labor market. And yeah, and those numbers are showing us that maybe it’s it started before we knew, and it’s slower than we knew. 

Simone Del Rosario: If there’s one thing both presidential candidates know, it’s that the economy is the top issue for voters. And both Kamala Harris and Donald Trump want you to believe they have the optimal economic plan over their opponent. 

Kamala Harris: He doesn’t actually fight for the middle class. Instead, he fights for himself and his billionaire friends. And he will give them another round of tax breaks that will add up to $5 trillion to the national debt.

Donald Trump: She’s raising taxes. She’s going to give a tax increase of four to five times what people and companies are paying right now. The country will go into a depression if they do it.

Simone Del Rosario: For months, voters have said they trust Trump more with the economy, but Harris is chipping away at that lead. In the latest Reuters/Ipsos poll, 43% of voters preferred Trump’s approach to the economy compared to 40% who preferred Harris’ approach. That 3-percentage-point difference is within the margin of error. Just a month ago, Trump had an 11-point lead. 

Another boost to Harris’ camp is that independent analyses show Trump’s economic proposals will add more to the growing national debt than Harris’. According to the Penn Wharton Budget Model, Harris’ campaign promises would increase deficits by $2 trillion over the next 10 years, while Trump’s promises would add $4.1 trillion in deficits, more than double that of Harris. 

That’s not the only source, we’re going to go to another one now. Let’s bring in Marc Goldwein, Senior VP and Senior Policy Director of the Committee for a Responsible Federal Budget. 

CRFB is the place to go to know how individual policies and proposals affect the country’s bottom line. Trump says his policies, like his tax cuts, will pay for themselves through economic growth. But are you also finding that the damage to the nation’s deficits is more under Trump’s proposals than Harris’? 

Marc Goldwein: Well, I think it’s too soon to tell who’s who is worse on the debt. Vice President Harris actually has not released most of her agenda yet, and so it’s very premature. And for President Trump, we do have a lot of tax cuts, but we also have things like tariffs that raise revenue. What I think we do know is that neither candidate is winning any awards for deficit reduction, right? Both candidates, it does look like they’re likely to be in the red. Neither candidate has put forward a plan that’s going to save Social Security, make Medicare solvent, stop our debt from reaching record levels as a share of the economy, or get our interest cost under control.

Simone Del Rosario: Yeah, really fair point. I was going to bring that up. Both are trying to, you know, vie for this idea that they are the ones who are more fiscally responsible. But at the end of the day, both plans would add to the nation’s debt, which, what is it? $35 trillion now,

Marc Goldwein: yeah, it’s tremendous. I mean, I like to measure debt relative to the economy, and by that measure, we’re at like 100% we’ve only ever been there once in our history, and it was right after World War Two.

Simone Del Rosario: Yeah, okay, the economy will grow under Trump’s policies more than Harris’s, though, right from what we know, from what they’re planning. 

Marc Goldwein: President Trump supports a lot of policies that are, I think, probably pro growth. For example, lowering taxes on Social Security benefits and for for businesses and individuals, but he also supports a lot of policies that would shrink economic growth. For example, tariffs, tariffs, I think, are almost universally understood to slow economic growth and deportation, if by no other reason than you’re literally losing the number of workers. So I think if you look at Trump’s plan on the whole, it’s not actually clear which direction it goes. To similar situation with Vice President Harris’s plan. We don’t have all the details. In general, the tax increases she’s talked about are going to try things tend to reduce economic growth, but if she pays for them that that can be a step in the right direction.

Simone Del Rosario: Yeah. These analyses also assume that either candidate gets their way. You know, Harris, like you said, plans to pay for her spending by raising taxes on corporations and the wealthy. Congress has to agree to that, and there’s no guarantee that’s going to happen. How important is that part of her plan to minimize how much the national debt would grow under her spending policies? And you know, what happens if she doesn’t get those tax raises?

Marc Goldwein: Well, look, it’s really important that both candidates be firm here that they’re not going to support their agenda unless it’s fully paid for, right? Because what happens to the campaign, what happens in Congress is obviously always going to be different. What’s important is that you have that bottom line. This is what sort of President Obama did. He said, Look, I’m going to negotiate the details of my health care plan, but it’s got to be fully paid for. This is what you know. I mean, we see similar things from other administrations as well, on the left and right. You got to have that bottom line,

Simone Del Rosario: yeah, talk to me specifically about the main differences between these two candidates and their proposals. What groups stand to benefit the most from each candidate’s economic policies.

Marc Goldwein: Well, actually, what’s interesting to me is maybe a lot of the similarities, there’s a tit for tat here where President Trump says no taxes on tips. And so vice president Harris says, Well, I’m not going to do that either. The Democrats say a $3,000 child tax credit. So vice president so candidate Vance, Senator Vance, says, maybe it’s 6000 $5,000 So Democrats come back and say $6,000 what I’m actually mostly worried about is the commonalities. Is they are trying to outbid each other to see who can cut taxes more and who can increase spending more. And they’re not trying to outbid each other at all on who can reduce the deficit more or save Social Security better.

Simone Del Rosario: I don’t want to pick on people who you know. Know, make a lot of their living on on tips, but for both parties saying that this is a policy that they want to move forward with. You know, sounds great to get people to vote for you, but, but that’s not a good policy when it comes to the budget, right?

Marc Goldwein: Yeah, I’ve yet to meet an economist that thinks we should have a lower tax rate for somebody that’s a waitress making $15 an hour versus somebody working at McDonald’s making $15 an hour. So I’m not sure this is the right kind of policy. That’s what we see during campaign season. A lot of policies that maybe don’t make sense in the real world because they’re trying to buy votes. And that’s again, why fiscal responsibility is so important. Because if you have to tell the voters Sure, you get this, but in exchange, you’re going to get less of this, you’ve got to pay more on that. That allows people to weigh the trade offs appropriately.

Simone Del Rosario: As voters decide in November who they want to run the economy, who they whose proposals they like the best. What’s your advice for them to look out for? Because you know, we can go over the analyzes all we want, but it’s hard to sift through all this information, especially knowing what may or may not come to fruition once they are elected. What is your advice for voters, as they’re trying to educate themselves?

Marc Goldwein: Yeah, I would say, if something seems too good to be true, it probably is right. I mean, it’s very easy to make promises. It’s very hard to deliver on them, and it’s even harder to sustain them if you don’t have a good plan to pay for your promises.

Simone Del Rosario: Marc Goldwein, Senior VP and Senior Policy Director of the Committee for a Responsible Federal Budget. Thank you so much for that today.

Simone Del Rosario: Have you been paying too much for rent? 

Across the country, rent prices skyrocketed in 2022 and 2023, and it could be because of illegal activity. 

The Justice Department on Friday filed an antitrust suit against RealPage, a Texas-based software company that’s accused of using algorithms to allow widespread collusion among landlords.

AG Merrick Garland: Everybody knows the rent is too damn high. And we alleged this is one of the reasons why when companies, and in this case, landlords, use a software tool to facilitate cooperation with respect to rents, they violate the antitrust laws, they make rents higher than they would otherwise be, and they prevent rents from going down.

Simone Del Rosario: The federal government joins attorneys general from eight states in suing RealPage. 

The company, which has been fighting these allegations for years, says the case lacks merit and will do nothing to bring down rent prices. 

“We are disappointed that, after multiple years of education and cooperation on the antitrust matters concerning RealPage, the DOJ has chosen this moment to pursue a lawsuit that seeks to scapegoat pro-competitive technology that has been used responsibly for years,” RealPage said in a statement. 

We have high rents, accusations of collusion and an algorithm in the middle of it. To understand more about the case, I’m joined by Spencer Weber Waller, Professor and Director of the Institute for Consumer Antitrust Studies at Loyola University. 

Professor, what is the difference between real page suggesting rent prices and say what we would see from a Zillow or Redfin estimate?

Spencer Waller: Well, as I understand it, I’m only working on publicly available information. RealPage is a software system that has a very high market share among landlords in places like New York and I think some other cities. And the gist of this case, and it’s an interesting, it’s a collusion case, it’s a price fixing case, it’s a cartel case, but it’s not one where the landlords are accused of directly communicating or agreeing among themselves. It’s kind of what we would call a hub and spoke conspiracy, where the people who are the defendants, the landlords are using a common agent, a third party to coordinate their behavior. And the complaint talks about how each of these large landlords feeds a variety of confidential proprietary information. And then the algorithm and real page communicates with them only.

But it’s effectively the same as them communicating with each other because RealPage has access to all of this confidential information, uses it to formulate according to the complaint, common recommendations that are inevitably followed by the landlord. And you end up with essentially the same result as if they had gone into a room or emailed each other and agreed to a common and ever escalating rent for the various apartment buildings and other stuff that they own.

Simone Del Rosario: Yeah, the real page has been obviously fighting these allegations for a couple of years now, ever since this reporting first started to come out and then the allegations and the lawsuits. But real page first off is saying, look, we’re not the ones that are the reason that prices are so high. That’s a lack of housing, which that’s a very fair point. We certainly need more housing in this country. But two, that their customers aren’t required to use this price. And in fact, many of them don’t use the suggested price, that this is an algorithm and it gives them information for them to do what they want with it. So I guess I would say it’s not as if this case is quite cut and dry, right? It’s pretty complex. Where’s the argument here that the DOJ and these other states are gonna have to make in order to prove their case?

Spencer Waller: Yeah. Yeah. And there’s two sets of cases going on. And we can talk about them if you want. One is this government action that was filed late last week. And then there’s separate, some class actions where groups of consumers are saying that they’ve overpaid. So the antitrust laws would not deal with a situation where a landlord had high prices on their own, unless they were a monopoly. And that isn’t at stake here. So high prices by themselves are not a violation of the antitrust laws without something more.

Something more in this case is that real page is being alleged, a civil case, nobody’s going to jail. The government case has no fines, but the government is trying to stop the use of a common platform, a common algorithm, a common kind of coordination point. And this has been done before. If you go all the way back to the 1930s, there was a similar kind of case involving the movie industry where the government won, where they couldn’t really prove that the movie studios were trying to coordinate on price that would be charged in the movie theaters during the Great Depression. They couldn’t really prove that the movie studios talked to each other, but they had each sent sort of a common letter to their distributors talking about the prices that would be set. And that was enough. So this hub and spoke where you use a third party to coordinate is an accepted legal strategy. Of course, the government has to prove this, but the complaint has a solid legal theory. Other countries use similar kinds of coordination. I was an expert for the government of Chile some years ago where supermarkets were coordinating their price through a wholesaler. But again, there was no evidence that they specifically talked to each other. They may have, but the government couldn’t prove it. But to use a common agent to then formulate a plan to set a common price and or raise it, those are illegal under US law. Again, if you can prove it.

Simone Del Rosario: If you can prove it and wondering because this has to do with an algorithm, it has to do with a specific software. We are really entering an era where AI and algorithms are going to be ruling business. How important is it to be, I don’t know, mindful or what sort of things can we take away from the fact that algorithms are gonna be calling a lot of the shots more and more?

Spencer Waller: Yeah, antitrust is grappling with this. We didn’t quite have a chance to talk about this, but the basic requirement for violation of Section 1 in the Sherman Act is some agreement in restraint of trade. It doesn’t have to be a written agreement. It doesn’t even have to be a formal agreement. It can be approved by direct or circumstantial evidence. And if you saw a bunch of people on and you asked them how much for an apple on the street, and they each said $0 .25. And you just said, that would be kind of odd. And you look into it, and you try to see if they had some mechanism by which they coordinated that price. Now, it would be a pretty cut and dried case if each real estate company or anybody else coordinated through an accountant, through a trade association or just like some expert consultant, there are all kinds of cases like this, where if you feed this common, highly proprietary, highly detailed, forward looking information to a third person who formulates recommendations, right? And then the recommendations are followed. That has held in other circumstances, other factual circumstances, to be enough to show an agreement. And that’s what the government is alleging here. And the fact that it’s a permutation involving an algorithm rather than a human or an old fashioned way of coordinating is interesting. But that’s acceptable in a legal theory. And again, the law is reasonably easy. The facts are hard.

Simone Del Rosario: Okay, and what do you expect RealPage to come forward with to say this is absolutely not collusion, it’s not an antitrust violation?

Spencer Waller: Well, at this stage, a complaint has been filed that I’m to put on my hat as a civil procedure professor rather than an antitrust person. What happens now is the defendant has a choice. They can either file an answer, which just says, you admit, you deny, or you don’t know about the allegation. they would admit that they’re a real page and they’re incorporated wherever they’re incorporated. And they would then admit and deny the key paragraphs of the complaint. And then the case goes into discovery. Most defendants in this situation file a motion to dismiss that says even if the law, even if everything in the complaint is true, it doesn’t amount to a violation of the law. Judge has to decide that. As I understand it, the government’s case is going to be decided by a judge, not a jury. I might be wrong about that. But anyway, the judge has to decide a motion to dismiss and the judge has to accept everything in the complaint as true and then measure it up against the law. And as I was saying, the law is supportive of the government’s case. They’re smart people. They have good lawyers on this. The states are important partners in this case. They have other very gifted antitrust lawyers who work on this in conjunction with the DOJ. And so a little bit’s about the predilections of the judge, but I would expect that this is a strong complaint that’s a good chance of making it through the motion to dismiss. At that point, the defendants have kind of a moment of truth. Do they want to spend the time and money turning over all their documents and depositions and other information to the government, a bunch of which they’ve already had to do. So they sort of know what’s coming. And at that point, given that nobody’s going to jail and the government doesn’t get any money out of this, I would expect them to have some serious conversations about settling this case if, again, they survive that motion to dismiss. If the defendants are successful in their motion to dismiss, cases over and the government would have to appeal.

Simone Del Rosario: Okay, all right, Spencer Weber Waller, professor and director of the Institute for Consumer Antitrust Studies at Loyola University. Thank you so much for breaking this down for us. Like you said, it is a complex case and we’re glad you were here to do it.

Spencer Waller: All right, thanks, Simone.

[JEROME POWELL]

The time has come for policy to adjust.

[SIMONE DEL ROSARIO]

There you have it. For the first time in definitive terms, Federal Reserve Chair Jerome Powell says it’s time to cut rates. 

In his keynote speech at Jackson Hole’s economic symposium, he noted the cooling in the labor market is “unmistakable.” 

[JEROME POWELL]

The direction of travel is clear in the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks, we will do everything we can to support a strong labor market as we make further progress toward price stability with an appropriate dialing back of policy restraint, there is good reason to think that the economy will get back to 2% inflation while maintaining a strong labor market the current level of our policy rate gives us ample room to respond to any risks we may face, including the risk of unwelcome further weakening in labor market conditions.

[SIMONE DEL ROSARIO]

Left open to interpretation are how big those cuts will be and at what pace. But given these remarks, we can almost certainly write down a September rate cut in permanent ink. 

After hiking and holding rates higher than they’ve been in more than two decades…

[JEROME POWELL]

My confidence has grown that inflation is on a sustainable path back to 2%

[SIMONE DEL ROSARIO]

It’s the closest he’s gotten to a “mission accomplished” moment. 

In his highly-anticipated speech, Powell weaved a story of how the economy got to this point post-pandemic. And he addressed how wrong he and the Fed were in the early days of inflation’s rise. The infamous statements that inflation was “transitory” turned out to be one of the Fed’s biggest missteps. 

[JEROME POWELL]

Standard thinking has long been that as long as inflation expectations remain well anchored, it can be appropriate for central banks to look through a temporary rise in inflation. The good ship transitory was a crowded one with most mainstream analysts and advanced economy central bankers on board. I think I see some former former shipmates out there today. (hold for laughs)

The data turned hard against the transitory hypothesis. Inflation rose and broadened out from goods to services, and it became clear that high inflation was not transitory, and that it would require a strong response if inflation expectations were to remain well anchored.

[SIMONE DEL ROSARIO]

There are lessons to take away from how the economy reacted to the shock of the pandemic and its aftermath. And lessons to be learned from how the Fed reacted. What’s missing from Friday’s speech is any definitive direction on how policy may change in the future, though the Fed will do an exhaustive review of monetary policy later this year. 

For Straight Arrow News, I’m Simone Del Rosario.