Economy is currently supercharging the productivity story, says Jefferies' David Zervos

Steve Liesman (Senior Economics Reporter) 00:00.190

joining us for more david servos chief market strategist at jeffries how do i do reading the prompter

David Zervos (Chief Market Strategist) 00:05.270

you did great what do

Kelly Evans (Anchor) 00:06.710

you think really impressed

David Zervos (Chief Market Strategist) 00:07.670

you've you've the reading thing

Steve Liesman (Senior Economics Reporter) 00:09.110

with the words one after another i'm good at that you just put

David Zervos (Chief Market Strategist) 00:12.070

you just put it together perfect here's

Steve Liesman (Senior Economics Reporter) 00:13.390

the question how good are you at productivity

David Zervos (Chief Market Strategist) 00:16.030

i think we're all getting better at product

Steve Liesman (Senior Economics Reporter) 00:17.510

tell me about

David Zervos (Chief Market Strategist) 00:17.990

what the data is telling us tell me about that telling us that america is more productive that

David Zervos (Chief Market Strategist) 00:22.630

was today's data by the way that's really been the case steve and kelly since for the last almost three years

Kelly Evans (Anchor) 00:30.110

go back and look at me

David Zervos (Chief Market Strategist) 00:31.510

go back and look at the strength of growth in twenty twenty three it was two point eight percent the unemployment rate rose that whole year by three tenths from three point five to three point eight go to twenty four growth was two point nine percent the unemployment rate rose

David Zervos (Chief Market Strategist) 00:44.270

from three point eight to four point one so we've

David Zervos (Chief Market Strategist) 00:46.590

been watching this movie unfold of higher unemployment rate very strong growth near three or possibly now we're going into the force the president likes to talk about five we'll see whether we can get there

David Zervos (Chief Market Strategist) 01:00.910

i think it's it's a story that is really not just AI well

Steve Liesman (Senior Economics Reporter) 01:04.390

it's not AI at all the first part you talked about right i mean the first part is it twenty three twenty four that's before i've got

Kelly Evans (Anchor) 01:09.550

theories about why two is when it launched but it goes back to twenty twenty even i think

David Zervos (Chief Market Strategist) 01:13.950

it's covic i really think it's covic that's where

Steve Liesman (Senior Economics Reporter) 01:16.030

i'm at the rolling

Kelly Evans (Anchor) 01:16.830

five year average is two and a half percent five year average is is now a big change from the late

David Zervos (Chief Market Strategist) 01:21.870

just got really good at doing stuff with less people 'cause we were forced

Steve Liesman (Senior Economics Reporter) 01:26.030

to do it three things work from home zoom and the other is right getting the right people into the right jobs that was allowed from work from i love

Kelly Evans (Anchor) 01:34.950

this story but let me just say here's a part i don't understand because i we got

Steve Liesman (Senior Economics Reporter) 01:37.590

a lot of time kelly you know we're just gonna talk good for the

Kelly Evans (Anchor) 01:40.110

all the way this is true you know i love the rise of the remember but how can it be that the era of the great hiring what do we call it when everyone was getting hired and getting paid crazy amounts of money right we're unwinding that now how could that era have been more

Kelly Evans (Anchor) 01:53.310

productive that's what i don't understand

David Zervos (Chief Market Strategist) 01:55.560

i i think at the end of the day well first of all we revised away a lot of those jobs that were created we thought were created so that's one

Kelly Evans (Anchor) 02:02.630

well people's raises were not revised away like some of the job hopping going on back then you're like this is crazy

David Zervos (Chief Market Strategist) 02:07.670

right the growth numbers

David Zervos (Chief Market Strategist) 02:08.590

and at the bottom end of the income distribution was where you had some of the biggest rises in twenty twenty one and twenty twenty two

David Zervos (Chief Market Strategist) 02:15.590

look i think it's a confluence of many things and one thing i will say is that looking ahead and that's what we should all be doing is looking ahead not necessarily spending so much time on the past

David Zervos (Chief Market Strategist) 02:23.950

the exciting part of this is that we are supercharging this productivity story so if the productivity story was a co initially the kindling of covid the fire is now i think going to be deregulation the tax the tax changes that are coming in the one big beautiful bill and all of

David Zervos (Chief Market Strategist) 02:41.310

the sort of productivity enhancing storylines that are coming from this new administration that

David Zervos (Chief Market Strategist) 02:46.150

to me takes us to the next level and that is what's sort of showing up in the latest data and i think is really the story for twenty six the question steve this is the most important question for the economists out there is how quickly does that sort of excitement on the

David Zervos (Chief Market Strategist) 03:02.590

productivity side 'cause people not to hire and could

David Zervos (Chief Market Strategist) 03:06.710

you really have a three and a half to four percent growth rate with the unemployment rate at five by the end of twenty twenty six and i've been saying this for a number of months now i don't know it's not my base case but increasingly it's looking like that story has some

David Zervos (Chief Market Strategist) 03:21.790

possibility i think

Kelly Evans (Anchor) 03:22.590

the jobs are coming i think it's going to come with a lag

David Zervos (Chief Market Strategist) 03:25.070

i i hope you're right i i hope i'm about the creative destruction we want the jobs that's

Kelly Evans (Anchor) 03:29.190

coming from the AI we want the jobs to come but the problem if they come is it's going to slow like it reminds me of instagram when it first launched had like twelve employees or something i mean they must have how many thousands now doesn't AI feel like that to you we're at the

Kelly Evans (Anchor) 03:40.750

stage where you can do a lot with very little but like it's coming the amount of just content moderation that's going to be involved with some of these platforms it feels like there's going to be so much new job required to support all of this like anyway i'm just curious

David Zervos (Chief Market Strategist) 03:55.070

i mean maybe i don't know steve probably has a stronger view on it than i do i just i see what i'm hearing from C suites and corporate CEO and leaders and they're they're saying the same thing over and over again which is you can do this without hiring more people that you have

David Zervos (Chief Market Strategist) 04:11.230

these tools go use them and i think that's what's getting said in our industry in the finance