CNBC Transcripts: CNBC’s Steve Liesman’s Interviews from the Hoover Institution Annual Monetary Policy Conference Today
CNBC’s Steve Liesman Sits Down with Hoover Institution’s John Taylor, St. Louis Fed President Jim Bullard, Cleveland Fed President Loretta Mester and Dallas Federal Reserve President Robert Kaplan
WHEN: Today, Friday, May 3, 2019
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WHERE: CNBC’s Business Day programming – interviews live from Stanford University in Stanford, CA
The following are the unofficial transcripts of CNBC interviews with CNBC’s Steve Liesman and Hoover Institution’s John Taylor, St. Louis Fed President Jim Bullard, Cleveland Fed President Loretta Mester and Dallas Federal Reserve President Robert Kaplan which aired live across CNBC’s Business Day programming today Friday, May 3rd. The interviews took place at the Hoover Institution Annual Monetary Policy Conference in Stanford, CA.
Videos of the interviews on CNBC.com are linked below.
All references must be sourced to CNBC.
First On CNBC: Hoover Institution’s John Taylor On CNBC’s “Squawk Box” (M-F 6am – 9am)
STEVE LIESMAN: Thank you, Andrew. Yeah, we’ve got a bunch of guests, but none better than John Taylor, eminent Professor of Finance Monetary Policy at Stanford University. John, I almost want to skip the jobs number and get to the broader discussion we were having about productivity. Because at the end of the day, monthly jobs don’t matter for wit if you have this strong productivity, because that changes things. When you look at these numbers, how do you judge what yesterday was 3.6% for the first quarter and you had a 1.8% for the fourth quarter, which was higher than trend?
JOHN TAYLOR: I think productivity is key right now. It’s what we’ve been hoping. That’s why we were hoping growth was going be higher. It’s not a sugar high, it’s because we’re getting some good productivity numbers coming in. It’s significant and I’m glad people are talking about that. We’re talking about it out here all the time.
STEVE LIESMAN: If these numbers are higher, the productivity numbers are higher, and we’re not really necessarily going to change the demographics because t what happened 30 years ago determines the populations we have now to work, essentially. What happened to potential growth? Is it potential growth potentially higher?
JOHN TAYLOR: Absolutely. We’ve been arguing you’ll go from a lousy 2% to above 3%, and that’s what’s been happening. The last few years it’s been going up and up and up and now 3.2% for the most recent numbers. And that consistent with the productivity numbers. The demographics are important. Remember, BLS was forecasting declines — and it’s flat. That’s a positive thing.
STEVE LIESMAN: A victory to have a flat participation rate.
JOHN TAYLOR: I think so, yeah.
STEVE LIESMAN: Because you do have the retirements.
JOHN TAYLOR: Absolutely.
STEVE LIESMAN: So, the idea that it’s — John, a 3.6% unemployment rate. You’re doing 200,000-plus jobs a month. Is the Fed in the right place?
JOHN TAYLOR: I think they made some good changes since they’ve started to normalize. I think that’s a good thing. I think that’s actually one of the positives. People forget that. To get a normalized Fed is good for the economy, good for the world –
STEVE LIESMAN: Rates up at this point, you’re saying?
JOHN TAYLOR: I think that’s good. They’re in a better place at this point, in case something happens. I think they’ll probably continue to adjust, but we’ll see what happens to the rest of the data.
STEVE LIESMAN: It’s hard not to get too wonky about this, but we had an interesting conversation last night about the relationship of productivity to interest rates. If productivity is higher, economics would suggest interest rates should be higher. Can you explain that to the audience?
JOHN TAYLOR: Well, I think in terms of the Fed, it’s the other way around. They want to see the potential of the economy to grow. We all do, of course.
STEVE LIESMAN: Right.
JOHN TAYLOR: And once that happens, the need for rate increases is diminished. Because you’ve got productivity. You’ve got the potential of the economy growing rapidly –
STEVE LIESMAN: So, they don’t have to raise rates in light of higher productivity or lower unemployment?
JOHN TAYLOR: Well, there are other things. But certainly, the productivity number. The real question you’re raising is what’s this normal interest rate?
STEVE LIESMAN: Right.
JOHN TAYLOR: And a lot of people— we’re going to be talking about this at this conference a lot, and has it come down, is it going back up again? I think it’s probably too early to say that. I’ve been a little skeptical that it’s come down as far as people think, so maybe we’ll get some better estimates.
STEVE LIESMAN: Fed Chairman Jay Powell says the Fed is in a good place with this current policy rate. Do you think it’s in a good place?
JOHN TAYLOR: I think as long as it keeps adjusting, I think, again, what’s going to be on the table here today is these policies, strategies, rules. And as long as they are doing that, I think a big change in the last couple years, really, has been as more rules-based policy, more strategies are being considered.
STEVE LIESMAN: Where’s the inflation, John? Everybody thought we were going to have rising inflation. Instead, we have inflation, the core PCE is down three, four months in a row.
JOHN TAYLOR: I think to some extent, it’s because the supply side of the economy is picking up. Remember, these are — productivity and labor forces – supply side–
STEVE LIESMAN: Deregulation and tax cuts or supply side –
JOHN TAYLOR: Both of those – deregulation and the tax reform are both. Absolutely. I think bring the financial side in, bring the Fed in as well to that.
STEVE LIESMAN: Okay. John, we have to leave it there because we have some other imminent guests and Warren Buffett, et cetera, going from that conference there. John Taylor, thanks for joining us this morning. Andrew, back to you.
First On CNBC: St. Louis Fed President Jim Bullard On CNBC’s “Squawk On The Street” (M-F 9am – 11am)
STEVE LIESMAN: Yeah, thanks, Carl. And I have a special guest who can help us understand it. I’m joined by St. Louis Fed President James Bullard. So, Jim, it isn’t every day that we have a Vice President on talking about the Fed, the Fed and Fed policy, and I get to throw it at President, a voting member of the FOMC, who says you ought to be lowering rates and maybe not considering the employment mandate, just have an inflation mandate. Take it away.
JAMES BULLARD: I actually have supported single mandate for the Fed in the past. I’ve said that it would clarify what the Fed can actually do over the medium term. I don’t think actual policy would change very much. We would still react to the economy and everything, but it would clarify in people’s minds that the only thing the Fed can do over the medium term is try to control the inflation rate.
STEVE LIESMAN: Do the President and the Vice President have a point that growth is strong, inflation is low and the Fed ought to be cutting rates and if it did cut rates, the economy would soar?
JAMES BULLARD: I think the way you think about the current situation, you have to step back a little bit. There has been a sea change in U.S. monetary policies since January 4th when the Chair was at — in Atlanta at the AA meetings. That sea change has altered the structure of interest rates and you can really see it in the ten-year, the ten-year was trading at 325 last fall, now it’s trading low 250s. You’re talking 75 basis points on the ten-year. I would attribute the lion share of that to changed Fed policy. We know there are long and variable legs. You’ve got to wait and see how big an impact this has on the economy. So, I think we’re in great shape today. We have a great jobs report. Inflation is a little bit low. And we can talk about that. But we already made a gigantic change in policy, one which I welcomed and supported, most of the committee came to my view about the flat rate outlook and this has had a big impact.
STEVE LIESMAN: So, you’re saying you already eased through what is sort of derived – something we call open mouth operations by changing your stance on the forward outlook–
JAMES BULLARD: Policy is not just the rate. It is the expected path of the rate over the next two years. And we used to be saying, you know, 50, 100 basis points on that path. Now we’re saying zero or close to zero.
STEVE LIESMAN: And that’s brought ten-year down and real rates and the economy down—
JAMES BULLARD: Absolutely.
STEVE LIESMAN: Let’s talk about this jobs number. I mean, did your eyebrows sort of go up towards the top of your forehead when you saw 260+?
JAMES BULLARD: It is a good number. It sounds like since the first of the year we’re about 205 or something, on average, a little bit lower than last year. So, this is consistent with the idea that 2018 was going to be faster growth than 2019. I think the news in the last — just in the last month, the news is that we’re not going to get this slowdown to below 2% GDP growth. Instead we’re going to slow down to 2.5%, which is, you know, more moderate type of slowdown in 2019 compared to what people were expecting.
STEVE LIESMAN: I mean, I get that, but it looks more like we’re closer to 3. I mean, we did 3 in the first quarter.
JAMES BULLARD: And there is upside potential that you could just –
STEVE LIESMAN: Talk about that risk.
JAMES BULLARD: You could just stay at 3. You have this good productivity number which I love. Looks like productivity is picking up. There could be supply side effects here kicking in, possibly because of the tax acts. So, I think some good things are happening and it could be that you get even higher growth in 2019 than the numbers I JUST SAID.
STEVE LIESMAN: Okay, we’re going get to Sara in just a second, Sara, if you would just bear with me. If you have a 2.5 forecast, with a 3 upside, is 2.4, the current funds rate, the right rate for that environment and that potential?
JAMES BULLARD: Well, I think we’re a little tight on the rate, not too much, but a little bit tight. I think the global safe real interest rate short-term is about zero and if you –
STEVE LIESMAN: Real rate.
JAMES BULLARD: Real rate.
STEVE LIESMAN: So, explain that to people.
JAMES BULLARD: The real rate is zero. If you add the 2% inflation target to that, you get to 2%, we’re at 240. Sounds a little tight to me. I don’t think it is a — something to really worry about, but sounds tight. And you’ve got Core PCE inflation running at 1.6. It is making me a little nervous. I think inflation expectations are a little on the low side.
STEVE LIESMAN: Do you agree with — that it is transient?
JAMES BULLARD: I would like to re-center inflation, take this opportunity to re-center inflation expectations at 2% that would pay handsome dividends for the Fed going forward.
STEVE LIESMAN: We’ll come back to transient. Let’s get Sara’s question in. Sorry about that, Sara.
SARA EISEN: My question is on transient, Professor Bullard.
STEVE LIESMAN: Go ahead.
JAMES BULLARD: Excellent.
STEVE LIESMAN: Thought it might be.
SARA EISEN: I was wondering what you made of the market reaction to the Fed meeting. I mean it seemed like there was real disappointment in market positioning around the fact that Chairman Powell describes inflation as transient or transitory and therefore, suggested it is not persistent enough to make a rate cut.
JAMES BULLARD: Yeah. I think, you know, again, we have made a big move in monetary policy over the last three or four months. And I think it is time to wait and see how that is going to impact the economy going forward. It is true that the — the core PCE numbers have come in a little bit light. But, of course, there is noise in the data as the Chair noted. And you could look at the Dow’s Fed trimmed mean, which is a measure I’ve liked in the past. That is at 2%. So, I think this is a point where we probably want to be assessing the data.
STEVE LIESMAN: So, Jim, if indeed we’re going to be running 1.5 core PCE, which is the better measure you guys think of inflation, how tight is the Fed here? Do you think it ought to be cutting rates?
JAMES BULLARD: Well, like I say, I’m not averse to the idea that we should try to re-center inflation expectations while the economy is good, and make sure that we’re centered at 2%. They look a little light to me. It looks like markets expect, you know, something below 2% inflation over the next five years. And I don’t think that’s a good place for us to be. There will be days in the future where the economy is not performing so well and those expectations will go down even further. So, I think it is — a reasonable option is to try to re-center inflation expectations on 2%.
STEVE LIESMAN: Tell us how, as a policymaker, you react when you hear the President talk about what the Federal Reserve should be doing with interest rates?
JAMES BULLARD: Well, as you know, all these discussions are very — get very technical very quickly. And so, I think we have our mandate, we’re supposed to get full employment, we’re supposed to hit our inflation target, keep inflation low and stable. Many factors come into that. We get advice from all kinds of people including you and including other politicians who — the Chair goes before the Senate Banking Committee, House Financial Services committee, they all comment on monetary policy. So, we get a lot of input from a lot of different angles. We’re used to that and we try to make the best decisions we can. But we have this mandate we have to come back to. That’s a law.
STEVE LIESMAN: Alright, Jim, I want to see where your forecasts are here. We’re at 3.6 now on the unemployment rate. How low does it go and at what level does it make you more nervous about the potential for inflation?
JAMES BULLARD: You know, I think we have talked about this before but the empirical Philips curve is very, very weak in this environment. You might be talking about a ratio of 10 to 1. So you need 100 basis points of gap to get ten basis points on inflation. And, you know, what do you think? 3.6 — is that 100 basis points below the natural rate? I don’t know. A lot of people think not. How much inflation are you thinking you’re going to get out of the low unemployment rate in this environment?
STEVE LIESMAN: And then before we go, real quick, your GDP number for this year.
JAMES BULLARD: I would be at 2.5 sitting here today.
STEVE LIESMAN: Great. Jim Bullard, thanks very much for joining us.
JAMES BULLARD: Alright. Thanks a lot.
STEVE LIESMAN: And we’ll check back with you at the end of the year.
JAMES BULLARD: Okay.
First On CNBC: Cleveland Fed President Loretta Mester On CNBC’s “the Exchange” (M-F 1pm – 2pm)
STEVE LIESMAN: Kelly, thanks very much. Here at the Hoover Institution Annual Monetary Policy Conference. It’s become quite a deal, right? Practically the whole committee, you could take a vote in there on interest rates now if you wanted to.
LORETTA MESTER: A lot of people listening to this conference, exactly.
STEVE LIESMAN: Loretta, thank you for joining us. Let’s talk about the jobs report this morning. 260,000-plus jobs created. Are you ready to go raise rates because the economy’s running so hot?
LORETTA MESTER: No. You know, I fully support our patient approach to looking at what the data is telling us as it comes in. The job market is strong and today’s report just reinforces that we have a strong labor market, which is great. We have inflation a little bit below our target, but stable prices. We have productivity growth growing, which is a good positive for the economy and growth has — came in in the first quarter a little bit stronger than people had anticipated. Now, grant you, some of that was inventory-building, so we’ll have to look to see what it implies for the second quarter, but growth is good. So, I think we’re in a really good place. Our interest rate policy I think is exactly appropriate for now and we’ll just see how the economy evolves.
STEVE LIESMAN: 3.6% unemployment. Do you worry that the employment market’s too tight?
LORETTA MESTER: No. I think we have to take on the ground. You know, we don’t see inflationary pressures building. We do see people getting back to work. Labor force participation is growing over time, although it was down a little bit in this last report. People are working. Wages are not accelerating, but they’re growing, so that’s a good thing. They’re growing in line with productivity growth, so this is a strong economy. These are good numbers.
STEVE LIESMAN: Can you put more detail on that, when you say growing in line? Because the Vice Chairman Clarida said that today as well. 3.2% is in line, more or less, with recent productivity numbers or whatever. As long as it’s not above the combined productivity and inflation, you don’t worry that that pushes inflation up higher?
LORETTA MESTER: Yeah, because usually you’d see in the longer run that wages are going to be going with productivity growth and inflation. As long as it doesn’t go above that, then there’s no real feed through to price inflation.
STEVE LIESMAN: So I can factor in the future, if it’s 4%, that’s still okay, as long as it’s below those two numbers –
LORETTA MESTER: Yeah, as long as — well, productivity growth rising is a good thing for the economy, right?
STEVE LIESMAN: Did you see the recent decline, President Mester, of the core inflation numbers as being transitory or something to worry about?
LORETTA MESTER: So again, you don’t want to overreact to one report. I do think that we have to take seriously our 2% inflation goal and work to try to get inflation back to our goal over time, but I also agree that we need to be patient about it and we need to look at the data and underlying data to understand what’s going on. I would be concerned if inflation and expectations were falling, if aggregate demand was falling, if the signal of low inflation was that growth was going down, but there’s no evidence of that. The economy’s in a really strong place. So, I’m willing to be patient, right, on the inflation on the down side as well as inflation on the upside.
STEVE LIESMAN: Does patient mean you want to do something eventually? Do you have an idea of where you’d like policy to go? Would you be –
LORETTA MESTER: No, I honestly think we’re in a good – we’re well calibrated right now. And of course, we always have to be forward-looking, but it’s got to be based on where we think the economy is going.
STEVE LIESMAN: But you would not prefer, for example, there were some people who had a neutral rate of 3% — you would not prefer to get there, but you’re just patient in getting there.
LORETTA MESTER: No, because, as you know, and what Clarida talked about today is that those numbers are measured with a lot of confidence bands around them. So, they’re estimates. And so, you always have to be taking the signals from the market, signals from the real economy, signals from the price data, to calibrate where your policy is. We’re about at a neutral rate because we can see that in the economy. We don’t have building pressures, inflation, we have growth a little bit above trend, and that’s a good economy to be in.
STEVE LIESMAN: So, that growth above trend is interesting. We did 3% last year. We did a surprise 3% in first quarter, but there’s some stuff in there.
LORETTA MESTER: Right.
STEVE LIESMAN: What’s your best guess for what we do this year?
LORETTA MESTER: Yeah, so I’m at a — between 2% and 2.5%. The first quarter came in a little bit stronger than I thought it was going to, so I’m probably in the upper part of that range now —
STEVE LIESMAN: So 2.5%–
LORETTA MESTER: Yeah, probably, I would say.
STEVE LIESMAN: Is the risk to the up side or the down side would you say, or would you–
LORETTA MESTER: I think it’s balanced right now. I think there’s good reason to think that some of the upside, if you know, some of the uncertainty on trade come offs that would be an upside surprise. So, you know, I’m seeing balanced risks out there.
STEVE LIESMAN: How about the global risks that are out there? Chairman Powell talked on Wednesday that some of that has subsided. Do you have less concern now about what’s happening in Europe?
LORETTA MESTER: I think some of it has subsided. We do have more positive numbers out of China. Brexit was postponed, so that was an uncertainty there, postponed. But again, I think we have to watch the data. We have to see how it’s going in Europe. There are weaker numbers coming in on certain parts of Europe and stronger numbers in other. So basically, we’re in this sort of monitoring the economy now.
STEVE LIESMAN: President Mester, thank you. For joining me today.
LORETTA MESTER: Thank you.
STEVE LIESMAN: Kelly, back to you, where things are remarkably cool here in San Francisco.
Dallas Federal Reserve President Robert Kaplan On CNBC’s “Closing Bell” (M-F 3pm – 5pm)
STEVE LIESMAN: Yeah, Wilf, thanks very much. We have enough FOMC members here to hold a meeting and raise rates if you wanted to. Not in the cards?
ROBERT KAPLAN: Not in the cards.
STEVE LIESMAN: Robert Kaplan, Dallas Fed President, joining us. What did you make this morning of this very strong jobs report today?
ROBERT KAPLAN: Consistent with an economy that’s I think growing at a solid rate, maybe not as well as last year but still solid rate of growth. And we expect that to continue into 2019.
STEVE LIESMAN: Did you — were you surprised by the strength of the number?
ROBERT KAPLAN: I think it’s still my view that we’re running out of capacity in the workforce. We, you know, we keep saying that the unemployment rate’s now 3.6.
STEVE LIESMAN: Running out of capacity, running out of capacity, running out of capacity. We do 200, 200, 200. We’re not running out of workers at all.
ROBERT KAPLAN Well, we’re bringing people in off sidelines but we’re starting to approach prime age participation pre-crisis. We’re reaching pre-recession lows on discouraged workers in a good way. I would expect it’s going to slow down but I don’t think that would be necessarily a bad sign, in that it’s just a fact when you’ve got this low rate of unemployment. But we’re going to grow, we think, at solid rates. We would like to see ways to continue to grow the workforce and we may have to start looking at other alternatives. And that may be, you know, transportation issues, child care, and yes, immigration, even though it’s a sensitive issue.
STEVE LIESMAN: You don’t get worried about inflation when the unemployment rate falls to 3.6%?
ROBERT KAPLAN So you know, the trimmed mean measure that we use at the Dallas Fed is hovering around 2% it’s not quite as–
STEVE LIESMAN: Hold on, because Jerome Powell made that famous on Wednesday, talking about the Dallas trimmed mean. And what you do is you get rid of the — all the noise on the top and bottom—
ROBERT KAPLAN: The outliers.
STEVE LIESMAN: — the outliers. And it’s not just food or energy, could be one thing one month, one thing another month.
ROBERT KAPLAN: It tends to change month to month. I like that measure better and I think it’s a better indicator —
STEVE LIESMAN: It’s been doing what exactly?
ROBERT KAPLAN: It ended last year around 2. It slipped a little bit early this year, 1.8, 1.9. It’s now around 2. And so, the point is it’s not that we don’t have any inflation, but the reason though, and you’ve heard me say this before, inflation forces I think are going to continue to be muted is technology, technology-enabled disruption and to some extent globalization. Businesses have less pricing power today. And this comes through in corporate earnings reports, it comes through in all my conversations. Businesses just don’t have pricing power. To the extent they have wage pressure or cost pressure it’s going to come out of margins more likely than being translated to prices.
STEVE LIESMAN: So at 2.4 are you at a neutral rate do you think right now? Are you still stimulating the economy with your balance sheet and with the funds rate?
ROBERT KAPLAN: I mean, in my own view, yeah. At the rate we are, 2.25, 2.5, we’re in the neighborhood of neutral right now. And so—I think sort of the performance of the economy reinforces to me that we’re in the neighborhood of neutral.
STEVE LIESMAN: How so?
ROBERT KAPLAN: I think potential growth for the U.S. economy, let’s say we get a little improvement in productivity, I still think it’s around 2%, we think we’re going to grow around 2.25. And I think all that’s consistent with a policy setting that’s probably in the neighborhood of neutral.
STEVE LIESMAN: Did somebody — Sara or Wilf have a question? I thought I heard something.
SARA EISEN: I can ask a question, Steve. Thank you. President Kaplan, good to see you.
STEVE LIESMAN: Go ahead, Sara. I had something in my ear. I wasn’t sure what it was.
SARA EISEN: Probably a producer. President Kaplan, when you see jobs numbers like today and when you talk about a pretty decent outlook for the economy, see us outgrowing the world, how much do you think it is the tax cuts that we saw adding sort of an extra jolt of stimulus this late in the recovery?
ROBERT KAPLAN: So our own view in our work at the Dallas Fed is there were three elements of the fiscal stimulus. One of them was an individual tax cut. One of them was a big spending bill. And then the third was corporate tax reform. And I would say at this point we think those first two items are waning. But the corporate tax reform probably we think will have some sustainable positive impact. And I think that’s likely to help here.
WILFRED FROST: President Kaplan, Sara said it in her question. The U.S. is outgrowing the rest of the world, the developed world at least. How concerned are you about a prolonged or further strengthening U.S. dollar and what that might do to growth prospects in the 18 months ahead or so?
ROBERT KAPLAN: So, it’s — listen, I’ve learned from 30 years in the markets, it’s hard to forecast what the currency’s going to do. I do worry, though, on your point, I worry that weak growth outside the United States, particularly in Europe, we’re not immune to it and some of that is spilling over. And particularly that’s the case because, you know, almost 50% of S&P 500 earnings and profits come from outside the United States. So, I think that’s a bigger issue that I think will have some muting effect on GDP growth here.
STEVE LIESMAN: Let me follow up on Wilf’s question. What other things concern you? Corporate leverage inside the United States, it doesn’t seem like at this conference which I’ve been to now for five or six years, there’s a pressing issue on the table of something that must be done or addressed right now.
ROBERT KAPLAN: So to me the big issues are — it’s still the case our workforce is ageing and workforce growth is slowing. And we still think that’s going to be an issue to deal with for the next number of years. We’re getting a good bout of pulling people back into the workforce. We’ve still got an aging issue. And also our skills of our labor force, math, science and reading are lagging. We’re not investing enough in our human capital skills training and education. And then our third thing, you’ve heard me talk about corporate debt. Corporate debt is at record levels. Triple b debt has tripled over the last ten years leverage loans have doubled. And I think in a downturn if we slow more that could be a bit of an amplifier to the slowdown. And so, I still — I think it’s worth continuing to talk about that.
STEVE LIESMAN: President Kaplan, Vice President Mike Pence this morning on our air questioned whether the Fed ought to be following the dual mandate and said maybe it should just be following inflation. What do you make of that?
ROBERT KAPLAN: Yeah, my own view, and I was a market participant for a long time and now I’ve been on the Fed close to four years, there are periods in our history where we’re very glad we’ve got a dual mandate, where we worry about employment and inflation. There are periods where it seems like because right now we’re at near or past full employment we worry a bit more about inflation. I think the key is our framework needs to stand the test of time. It can’t be the framework that’s right for the next six months, or the next 18 months. It has to be a framework that works for the foreseeable future on a sustainable basis. So, I’m glad for one that we’ve got a dual mandate.
STEVE LIESMAN: So, Texas doesn’t have its own district for nothing it’s a major, major – I mean, as a country it would be a stand-alone country with a major economy. Two issues are huge in texas right now that are huge for the U.S. economy. Immigration and trade, if I could put those as one, and oil and gas. Is what’s happening at the border now hurting the Texas economy? Is it helping the Texas economy?
ROBERT KAPLAN: The issue at the border, because it hasn’t been that widely reported, the migrant issue is a very real issue, and I was just down at the border last week, in that we have a record number of migrants moving up from Central America. What border patrol is doing is diverting personnel to deal with that. And so, a lot of the commercial traffic we’re hearing from businesses is being impeded. So, for example, the average number of trucks across the El Paso border, our contacts tell us is 3,000 a day commercially. It’s down to 1,500. This is affecting logistics and supply chains, not just in Texas and the Southwest but also in the Midwest. The issue is does it go on. Right now, it’s not gone on for long enough to have a material impact on Texas.
STEVE LIESMAN: It could.
ROBERT KAPLAN: It could, and it’s something we’re watching.
STEVE LIESMAN: Let’s leave it there, President Kaplan and we’ll come back and ask you about the energy and oil and gas business next time.
ROBERT KAPLAN: Thanks Steve.
STEVE LIESMAN: Dallas Fed President from the Hoover Institution Monetary Policy Conference in Stanford.