>>> SO, AS THE WORLD WATCHES THE TWISTS AND TURNS OF THE WAR WITH IRAN, THE GLOBAL MARKETS ARE MIRRORING THAT CHAOS, THE OIL MARKET PLUMMETED IN THE STOCK MARKET SOARED ON MONDAY AFTER TRUMP'S ANNOUNCEMENT OF POSITIVE TALKS WITH IRAN.

IRAN'S DENIAL OF ANY COMMUNICATION CAUSED THE PRICE OF OIL TO CREEP UP AGAIN.

FEARS ARE MOUNTING THAT THIS ECONOMIC VOLATILITY COULD CREATE MAJOR, LONG-TERM DAMAGE.

>>> FORMER TOP ECONOMIC ADVISER UNDER PRESIDENT OBAMA, JASON FURMAN, ARGUES THAT MAY NOT BE ALL THAT BAD.

HE TELLS WALTER ISAACSON THAT WHILE THE WAR COULD SPARK SHORT- TERM PAINS, THE FUTURE IMPACT WILL BE MUCH LESS DRAMATIC, AND HE EXPLAINS HOW THE U.S.

ECONOMY HAS FARED, SO FAR, UNDER PRESIDENT TRUMP.

>> THANK YOU, PAULA.

JASON FURMAN, WELCOME BACK TO THE SHOW.

>> IT'S GREAT TO BE BACK WITH YOU.

>> SO, YOU'VE GOT AN OP-ED PIECE IN "THE NEW YORK TIMES," THAT SAYS, "IF YOU HATE TRUMP'S ECONOMY, I HAVE NEWS FOR YOU."

WHAT IS THE NEWS FOR US?

>> THE NEWS IS THAT THE ECONOMY OVER THE LAST YEAR WAS AN AWFUL LOT LIKE THE ECONOMY IN 2024.

NOW, IF YOU'RE DONALD TRUMP, THAT IS DISAPPOINTING, BECAUSE YOU THINK YOU TOOK SOMETHING THAT WAS A HORRIFIC WRECK AND TURNED IT AROUND, BUT IF YOU ARE A DEMOCRAT AND THOUGHT MAYBE DONALD TRUMP WAS GOING TO TAKE SOMETHING PERFECTLY GOOD AND WRECK IT, MAYBE THAT IS A LITTLE DISAPPOINTING TO YOU, AS WELL.

>> WELL, THAT IS KIND OF ODD, WE HAD THESE TARIFFS, EVERYBODY SAID TARIFFS ARE GOING TO CAUSE MASSIVE INFLATION, THEY GO UP, GO DOWN, WHATEVER, THAT DIDN'T REALLY CAUSE MUCH OF AN ISSUE?

>> I WOULD SEPARATE TWO SEPARATE THINGS.

ONE IS, HOW DID THE ECONOMY DO IN 2025 AND IN THE LAST COUPLE MONTHS?

THAT IS A FUNCTION OF LOTS AND LOTS OF THINGS.

WHAT OUR TECHNOLOGY IS LIKE, WHAT OUR PEOPLE ARE LIKE, THE DECISIONS OF OUR BUSINESSES.

AND THEN, TO SOME DEGREE -- BUT, PROBABLY NOT THE BIGGEST FACTOR --POLICY THE PRESIDENT HAS.

AND WHEN YOU TAKE ALL OF THAT TOGETHER, THE YEAR AS A WHOLE WAS NOT SUPER DIFFERENT FROM THE YEAR BEFORE.

NOW, I DO THINK 2025 WOULD HAVE BEEN EVEN BETTER, BUT FOR ALL OF THOSE TARIFFS, I PRESIDENT TRUMP HURT THINGS, MAYBE JUST NOT AS MUCH AND AS DRAMATICALLY, RELATIVE TO ALL THE OTHER HUGE FORCES THAT AFFECT THE ECONOMY.

>> SO, WHAT ARE THOSE HUGE FORCES?

>> THE BIGGEST ONE IN THE LAST YEAR HAS BEEN THE A.I.

BOOM.

A LOT OF IT IS SHOWING UP ON THE DEMAND SIDE OF ECONOMY, WHERE WE ARE BUILDING MORE DATA CENTERS AND MAKING INVESTMENTS TO MAKE A.I.

I THINK WE HAVE SEEN SOME TENTATIVE DATA SHOWING THAT MAYBE IT IS ACTUALLY STARTING TO SHOW UP IN PRODUCTIVITY, ENABLING PEOPLE TO DO MORE WITH EACH HOUR OF WORK.

>> AND WE ARE INCREASING PRODUCTIVITY BECAUSE OF IT, RIGHT?

>> I HAVE JUST --I HAVE BEEN SKEPTICAL THAT IT WAS SHOWING UP IN PRODUCTIVITY, BECAUSE BUSINESSES ARE SLOW TO ADAPT AND FIGURE OUT HOW TO USE IT.

IN FACT, IN THE SHORT RUN, I SOMETIMES FIND MYSELF SPENDING HOURS TO FIGURE OUT THE LATEST AND BEST WAYS TO USE THE LATEST TECHNOLOGY, IN SOME SENSE, NOT GETTING ANYTHING DONE IN THOSE HOURS OTHER THAN AN INVESTMENT, HOPEFULLY, IN MY FUTURE PRODUCTIVITY.

WE HAVE SEEN THAT IN A LOT OF BUSINESSES, BUT THE LATEST DATA SUGGESTS THAT BUSINESSES REALLY ARE STARTING TO FIGURE IT OUT, IT IS STARTING TO SHOW UP IN THE ECONOMY AS A POSITIVE.

>> WHAT IS HAPPENING WITH YOUNG WORKERS AND GENERATION Z, THEY SEEM TO BE THE ONES THAT ARE GETTING HIT AND THEY ARE THE ONES VERY, VERY UPSET ABOUT THE ECONOMY.

I THINK "THE NEW YORK TIMES" -- WHICH YOU WORK WITH --THEY ASKED ABOUT THE LABOR MARKET TO A FOCUS GROUP OF GEN Z PEOPLE AND THEY SAID IT WAS "A SCAM," "UNFAIR," "HORRIBLE."

WHAT ARE SOME OF THE ECONOMIC CHANGES THAT ARE AFFECTING PEOPLE WHO ARE, LIKE, IN THEIR EARLY 20s?

>> SO, WE HAVE SEEN THE SLOWDOWN OF HIRING OF YOUNG PEOPLE.

A.I.

IS NOT THE BIGGEST FACTOR IN THAT.

SOME COMPANIES BLAME IT ON A.I., BUT IT ISN'T REALLY A.I., THEY JUST HAVE SOME OTHER REASON WHY THEY WANT TO CUT BACK ON HIRING.

SOME OF IT HAS BEEN THE FED, IN AN EFFORT TO SLOW THE ECONOMY, KEPT INTEREST RATES HIGH FOR A LONG TIME.

THAT WAS THE RIGHT CALL, GIVEN HOW HIGH INFLATION WAS, BUT IT HAS A DOWNSIDE.

AND THAT DOWNSIDE SHOWS UP IN THE LABOR MARKET AND IT SHOWS UP IN THE LABOR MARKET OFTEN FIRST, FOR YOUNGER WORKERS.

NOW, ONE REASON WHY I DON'T THINK IT IS A.I., IS IF YOU LOOK AT THE PATTERN OF THAT JOB LOSS, IT'S NOT JUST, YOU KNOW, COLLEGE EDUCATED WORKERS.

YOU SEE IT ACROSS THE EDUCATIONAL SPECTRUM.

IN FACT, A HIGHER LEVEL OF EDUCATION HISTORICALLY HAS BEEN --AND STILL IS --SOME OF THE BEST INSURANCE YOU CAN HAD AGAINST JOB LOSS.

>> WE HAVE HAD THE HIGHEST TARIFFS NOW I THINK SINCE THE 1940s, IS THAT RIGHT?

>> YES, SINCE THE 1940s.

>> SO, WHY HASN'T THAT TICKED UP INFLATION?

>> IT HAS ADDED TO INFLATION.

INFLATION RATE WOULD PROBABLY AT THE FED'S TARGET OF 2.0%, BUT FOR THE TARIFFS, BECAUSE OF THE TARIFFS, THEY ARE ADDING ABOUT A HALF POINT, MAYBE A LITTLE MORE, TO INFLATION.

SO, WHEN I SAY, INFLATION HAS BEEN ROUGHLY UNCHANGED OVER THE LAST COUPLE OF YEARS, IN SOME SENSE, IT WOULD HAVE FALLEN, BUT THE TARIFFS PREVENTED IT FROM FALLING.

AND THAT IS ONE OF THE THINGS THAT HAS COMPLICATED THE FED'S JOB.

IT IS ONE OF THE REASONS IT HASN'T CUT INTEREST RATES AS MUCH AS PEOPLE WOULD HAVE LIKED FOR THEM TO CUT RATES.

>> WHAT DO YOU THINK THE FED SHOULD BE DOING, NOW?

>> THEY ARE GOING TO BE VERY NERVOUS ABOUT THE INFLATION RATINGS OVER THE NEXT COUPLE OF MONTHS.

THEY ARE REALLY GOING TO SPIKE, AS GASOLINE PRICES RISE AS A RESULT OF THE IRAN CONFLICT.

I THINK WE SHOULD LOOK THROUGH THAT AND IGNORE IT.

THERE IS NOTHING THE FED CAN DO TO SETTLE THE AFFAIRS IN THE MIDDLE EAST.

THAT IS NOT AN ECONOMIC PROBLEM, THAT IS A NATIONAL SECURITY PROBLEM.

THEY SHOULD FOCUS ON THE UNDERLYING INFLATION RATE AND PROBABLY BE WILLING TO CONSIDER CUTTING RATES, IF IT LOOKS LIKE THE ECONOMY NEEDS IT, IF IT LOOKS LIKE THE LABOR MARKET IS WEAKENING.

>> BUT, LET'S TALK MORE ABOUT THOSE EFFECTS OF THE IRAN WAR.

SORT OF A LOT OF VOLATILITY, THESE DAYS.

BUT, IN SOME PLACES, YOU CAN SEE THE PRICE OF GASOLINE AT THE PUMP PUSHING CLOSER TO FIVE DOLLARS FOR PREMIUM AND CERTAINLY FOR DIESEL.

DOESN'T THAT FILTER THROUGHOUT THE ENTIRE ECONOMY AND CAUSE INFLATION?

>> OH, ABSOLUTELY, WE WILL SEE EXTRA INFLATION, WE WILL SEE DIFFICULTIES FOR CONSUMERS.

YOU KNOW, THE IMPACT ON THE ECONOMY AS A WHOLE IS MORE MUTED BECAUSE WE ALSO ARE NET WEREN'T, FOR EXAMPLE, IN 19 -- 1979 WHEN THE IRANIAN REVOLUTION SENT OIL PRICES SPIKING.

OUR INDUSTRIES DON'T USE NEARLY AS MUCH OIL AS THEY USED DECADES AGO.

SO, FOR AGGREGATE GDP, IT IS GOING TO BE A SMALL HIT, BUT FOR CONSUMERS, IT WILL BE A MUCH LARGER HIT.

>> THE PRESIDENT YOU WORKED FOR, PRESIDENT BARACK OBAMA, ONCE SAID THE STRONGEST CORRELATION TO HIS POPULARITY RATINGS WAS THE CORRELATION BETWEEN THEM AND THE GAS PRICE AT THE PUMP.

TO WHAT EXTENT ARE WE GOING TO SEE SOME POLITICAL FALLOUT, HERE?

>> I THINK WE PROBABLY WILL.

WHEN GAS PRICES WENT UP, WE WOULD GO INTO PANIC MODE IN THE WHITE HOUSE.

WE WOULD BE LOOKING AT EVERY SINGLE ECONOMIC INDICATOR TO PREDICT WHAT WAS GOING TO BE HAPPENING, THINK ABOUT EVERY SINGLE POLICY TOOL TO UNDERSTAND WHAT WE COULD DO.

YOU SEE THIS ADMINISTRATION DOING THAT WITH BASICALLY ALLOWING RUSSIA TO EXPORT ITS OIL, ALLOWING IRAN TO EXPORT ITS OIL, COORDINATING A GLOBAL RELEASE.

ALL OF THAT, THOUGH, IS REALLY SMALL COMPARED TO THE MORE THAN 10 MILLION BARRELS PER DAY, ABOUT 1/10 OF GLOBAL OIL PRODUCTION, THAT IS NOW OFF- LINE BECAUSE OF THE CLOSURE OF THE STRAIT OF HORMUZ.

AS LONG AS THAT IS CLOSE, EVERYTHING ELSE IS JUST DANCING AROUND THE EDGES TO MITIGATE JUST A SMALL FRACTION OF THE DAMAGE THAT THAT IS DOING.

>> WELL, ONE OF THE THINGS I LEARNED IN ECONOMICS IS THAT THE ECONOMY AND ESPECIALLY THE MARKETS KIND OF LIKE CERTAINTY.

AND, BOY, ONE OF THE THINGS THAT HAS HAPPENED IN THE PAST YEAR HAS BEEN AMAZING VOLATILITY.

YOU KNOW, TARIFFS GO WAY UP, THEY GO DOWN, THEY GO BACK, THEY GO FORTH.

LIKEWISE, OIL PRICES, MAYBE THEY WILL STABILIZE FOR, YOU KNOW, WEST TEXAS, MAYBE IT WILL BE AROUND $80 PER BARREL BUT IT HAD GONE UP TO $100, DOWN TO $60, SO HOW DOES THAT VOLATILITY AFFECT THE ECONOMY?

>> LOOK, THERE'S TWO SEPARATE THINGS, HERE.

HOW DOES IT AFFECT THE STOCK QUITE A LOT.

WE SAW A LOT OF DRAMA IN APRIL OF LAST YEAR AROUND LIBERATION DAY, AND WE SAW DRAMA IN THE LAST COUPLE WEEKS AROUND IRAN.

HOW DOES IT AFFECT THE ECONOMY?

SOMEWHAT, BUT NOT QUITE AS MUCH AS THE DRAMAS IN THE FINANCIAL MARKET HEADLINES.

BECAUSE IT TURNS OUT, THERE IS JUST AN AWFUL LOT THAT MATTERS IN THE ECONOMY.

SOME PEOPLE ARE MAKING DECISIONS BASED ON THIS, BUT AN AWFUL LOT OF BUSINESSES ARE MAKING DECISIONS ENTIRELY UNRELATED TO THESE OIL PRICE GENERATIONS.

>> YOU SAY THAT THE PRESIDENT CAN'T DO MUCH TO CHANGE THE ECONOMY, IT HAS BEEN PRETTY MUCH THE SAME WHETHER IT WAS JOE BIDEN OR DONALD TRUMP, BUT DO THE THOUGHT EXPERIMENT FOR ME, IF DONALD TRUMP HAD NOT IMPOSED TARIFFS OFF AND ON, AND HIGH TARIFFS AND NOT DONE THIS WAR WITH IRAN, WOULD THE ECONOMY BE BETTER?

AND IF SO, HOW MUCH SO?

>> YEAH, I THINK IT WOULD BE BETTER.

THE TARIFFS HAVE PROBABLY ADDED HALF A POINT TO THE INFLATION RATE, THE WAR IS GOING TO ADD AT LEAST ANOTHER HALF POINT, PROBABLY MORE THAN A PERCENTAGE POINT, SO INFLATION WOULD BE LOWER IF DONALD TRUMP HADN'T DONE THESE TWO THINGS.

ECONOMIC GROWTH WOULD BE HIGHER.

I AM NOT QUITE SURE HOW MUCH HIGHER, THAT IS PROBABLY MORE LIKE A FEW TENTHS RATHER THAN A PERCENTAGE POINT OR TWO.

BUT, YOU WANT TO SEPARATE, YOU KNOW, TWO THINGS IN HER MIND, ONE IS PRESIDENTS DO MATTER AND EVERY 10th MATTERS AND WE SHOULD FIGHT FOR EVERY 10th ON GROWTH AND EVERY 10th REDUCTION ON INFLATION, BUT THEY DON'T MATTER QUITE AS MUCH AND AS DRAMATICALLY AS THE WAY WE SOMETIMES TALK ABOUT THEM, AND BOTH OF THOSE STATEMENTS ARE TRUE.

>> ONE STATISTIC THAT ALWAYS SEEMS IMPORTANT TO ME IS THE OVERALL PURCHASING POWER OF WAGES.

EXPLAIN WHAT THAT IS, AND HOW THAT HAS BEEN AFFECTED, RECENTLY?

>> YEAH, SO, ECONOMISTS LIKE TO LOOK AT, ON AVERAGE, HOW FAST DID WAGES GROW?

AND COMPARE THAT TO, HOW FAST DID PRICES GROW?

OVER THE LAST YEAR, WAGES GREW 1.4 PERCENTAGE POINTS FASTER THAN PRICES GROUP.

GOOD NEWS FOR WORKERS, IT'S ACTUALLY TOWARD THE UPPER END OF WHAT WE HAVE SEEN OVER THE LAST DECADE.

BUT, YOU KNOW, IT'S STILL A LITTLE BIT DISAPPOINTING IN THE GRAND SCHEME OF WHAT WE HAVE SEEN OVER TIME.

I THINK WE WOULD HAVE DONE EVEN BETTER, HAD IT NOT BEEN FOR THE TARIFFS, BUT IT IS ABOUT, YOU KNOW, THE SAME PACE WE HAD SEEN IN THE YEAR BEFORE.

OF COURSE, THAT'S AN AVERAGE.

FOR SOME CONSUMERS, IT WAS A LOT WORSE, BUT FOR SOME, IT WAS EVEN BETTER.

>> WAGES HAVE BEEN STAGNATING FOR YEARS, WHY ARE THEY STARTING TO GO UP, NOW?

>> YOU KNOW, THEY HAVE BEEN -- THE LAST COUPLE OF YEARS, ACTUALLY, IT STARTED AROUND 2015, SO WE HAVE NOW, A DECADE WHERE REAL WAGES HAVE BEEN RISING FASTER, AND SOME OF THAT IS, PRODUCTIVITY IS FASTER.

WHEN YOU GET MORE PRODUCTIVE, YOU TEND TO HAVE HIGHER WAGES.

SOME OF IT IS THE INCREASE IN INEQUALITY AMONG WAGE EARNERS HAS STABILIZED.

YOU STILL HAVE A GROWTH OF INEQUALITY BETWEEN WEALTH AND ARE NOT SEEING THE SAME INCREASE IN INEQUALITY YOU WERE SEEING BEFORE.

>> WHAT AFFECTS HAVE CAME FROM THE CRACKDOWN ON IMMIGRATION, LEGAL AND ILLEGAL?

>> THAT HAS DRAMATICALLY SLOWED THE PACE OF JOB GROWTH.

WE BASICALLY HAVEN'T HAD ANY JOB GROWTH OVER THE PAST YEAR.

PREVIOUS YEARS WE HAD HAD, YOU KNOW, 100,000 JOBS PER MONTH OR MORE BUT IT ALSO MEANS WE DON'T NEED AS MANY JOBS TO KEEP THE UNEMPLOYMENT RATE CONSTANT, SO EVEN THOUGH JOB GROWTH HAS SLOWED, UNEMPLOYMENT ONLY INCREASED A LITTLE BIT OVER THE LAST YEAR, AND THAT IS BECAUSE WHEN YOU HAVE MORE IMMIGRANTS, LEGAL OR ILLEGAL, YOU NEED MORE JOB GROWTH, SO WE DON'T NEED QUITE AS MUCH JOB GROWTH AS WE USED TO NEED.

>> IS THAT WHAT CHAIRMAN JEROME POWELL MEANT WHEN HE SAID, "IT LOOKS LIKE THAT IS ABOUT WHAT THE ECONOMY NEEDS," IN TERMS OF DEALING WITH VERY, VERY LOW GROWTH IN THE LABOR FORCE WHEN HE SAID, "IT DOESN'T REALLY JOB GROWTH?

>> YEAH, THAT IS EXACTLY RIGHT.

I MEAN, THE QUESTION FOR ANY COUNTRY, YOU KNOW, WHETHER YOU ARE LOOKING AT GERMANY, OR LUXEMBOURG, OR CHINA, IS, HOW MANY JOBS DO YOU NEED?

IN LUXEMBOURG, YOU DON'T NEED THAT MANY JOBS.

IT IS SMALL.

IN CHINA, YOU NEED AN AWFUL LOT OF JOBS.

TO ANSWER THAT QUESTION, IT'S NOT JUST THE SIZE OF THE COUNTRY, BUT THE DEMOGRAPHY.

WE HAVE A LOT OF PEOPLE WHO ARE REACHING RETIREMENT AGE NOW, WE HAVE FEWER PEOPLE REACHING WORKING AGE NOW, SO YOU TAKE ALL OF THAT INTO ACCOUNT, AND ABSENT IMMIGRATION, OUR LABOR FORCE IS ROUGHLY FLAT.

WE HAD AS MANY PEOPLE RETIRING AS ENTERING THE WORKFORCE.

WE ACTUALLY DON'T NEED JOBS IN ORDER TO KEEP UNEMPLOYMENT CONSTANT.

NOW, I WOULD RATHER WE HAD MORE IMMIGRATION, AND MORE JOB GROWTH, AND MORE ECONOMIC GROWTH, BUT IN TERMS OF JOBS FOR EVERYONE WHO NEEDS ONE, RIGHT NOW, A NUMBER OF 25,000 OR 50,000 PER MONTH, IS PLENTY.

>> WE HAVE WHAT IS CALLED, A CAKE SHAPE ECONOMY WHERE THE SPENDING BY WEALTHY AMERICANS IS DRIVING A GREATER SHARE OF THE GROWTH WHILE WORKING CLASS AND POOR AMERICANS, LESS SO.

WHAT ARE THE RAMIFICATIONS OF THAT?

>> WELL, I AM NOT ACTUALLY SURE THAT WE ARE SEEING THAT IN THE DATA ON CONSUMPTION.

UNFORTUNATELY, THE GOVERNMENT DOESN'T REPORT DATA ON CONSUMPTION BY INCOME GROUPS, SO DIFFERENT ECONOMISTS HAVE CUT IT DIFFERENTLY.

THE BEST MEASURES I HAVE SEEN ACTUALLY SHOW MODERATE INCOME FAMILIES CONSUMING AT, YOU KNOW, AS MUCH OF A RATE AS HIGH INCOME.

MAYBE EVEN A FASTER RATE.

NOW, JUST TO BE CLEAR, THERE IS A LOT OF INEQUALITY.

THERE IS GROWING WEALTH INEQUALITY, GIVEN HOW MUCH THE STOCK MARKET HAS RISEN, BUT WAGE INEQUALITY, IF ANYTHING, HAS NARROWED OVER THE LAST DECADE, SO THE INEQUALITY TRENDS ARE A LITTLE BIT COMPLICATED.

SOME MEASURES OF IT GO UP, SOME MEASURES OF IT GO DOWN.

THE STARKEST IS THE STOCK MARKET, BUT THE BEST NEWS IS COMING OUT OF THE LABOR MARKET, WHERE YOU HAVE STARTED TO SEE BOARD.

>> YOU SAID, THE ECONOMY HASN'T CHANGED THAT MUCH BUT THERE IS ONE ISSUE THAT REALLY, OVER THE PAST 10, 15, 20 YEARS KEEPS GETTING WORSE, WHICH IS AFFORDABILITY.

AND THAT ESPECIALLY COMES DOWN TO HOUSING AFFORDABILITY, AND FOR PEOPLE, AS WE SAY, IN THE YOUNGER PEOPLE, PEOPLE IN THEIR 20s, THINGS JUST AREN'T AFFORDABLE.

WHAT HAS BEEN CAUSING THE AFFORDABILITY CRISIS?

>> YEAH, SO, ANYTHING YOU WANT TO CONTEXTUALIZE OVER 10 OR 15 YEARS, I WILL COMPLETELY AGREE WITH YOU.

WHAT I DON'T LIKE IS SAYING, "ALL OF A SUDDEN, AFFORDABILITY IS A PROBLEM AND IT WAS FINE BEFORE."

HOUSING IS -- WE JUST DON'T LET PEOPLE BUILD AS MUCH AS THEY WOULD LIKE TO BUILD IN THE PLACES THAT ARE MOST DESIRABLE.

I THINK SUPPLY IS THE BIGGEST PART OF IT.

INTEREST RATES AND HIGH MORTGAGE RATES ARE ANOTHER PART OF IT, AND THAT IS RELATED TO HAVING A LARGE BUDGET DEFICIT.

WHEN THE GOVERNMENT IS BORROWING A LOT, IT IS COMPETING FOR CAPITAL, DRIVES UP INTEREST RATES, THAT MEANS, YOU KNOW, ORDINARY AMERICANS MORTGAGES.

HEALTHCARE HAS BEEN ANOTHER CHRONIC AFFORDABILITY ISSUE.

AND, YOU KNOW, THE ISSUES GET VERY, VERY COMPLICATED IN DELIVERY SYSTEM REFORM, THERE IS NOT A SINGLE MAGIC BULLET THAT WILL SOLVE THAT, BUT THERE IS LOTS AND LOTS OF THINGS THAT YOU KNOW, WE SHOULD BE DOING.

>> IF YOU TALK ABOUT LONG-TERM ISSUES, THE BIGGEST ONE SEEMS TO BE THE HOLLOWING OUT OF AN AMERICAN MIDDLE CLASS, AND AN AMERICAN WORKING CLASS.

IS THAT TRUE?

AND HOW CAN THAT BE REVERSED?

>> LOOK, SOME OF THE HOLLOWING OUT IS PEOPLE WHO ARE MIDDLE- CLASS BECOMING AFFLUENT.

WE JUST HAVE MORE AND MORE OF OUR POPULATION AS AFFLUENT THAN EVER BEFORE AND THAT IS A REALLY WONDERFUL THING.

WE HAVE SEEN FASTER WAGE GROWTH FOR HOUSES AT THE 10th, 20th, AND 30th PERCENTILE, THEN WE HAVE AT THE 80th OR 90th PERCENTILE, THAT HAS BEEN GOING ON FOR ABOUT A DECADE, NOW.

THAT IS ANOTHER PIECE OF GOOD NEWS.

BUT, WE NEED TO BOTH PREPARE PEOPLE BETTER FOR JOBS --I THINK EDUCATION WILL CONTINUE TO MATTER.

I AM WORRIED ABOUT WHAT A I WILL DO TWO JOBS, I AM MORE WORRIED FOR PEOPLE THAT DON'T HAVE A COLLEGE DEGREE THAN PEOPLE WHO DO, NOTWITHSTANDING ALL THE CONVERSATION ABOUT WHAT IT DOES FOR WHITE-COLLAR JOBS.

AND THE OTHER THING WE NEED IS TO RUN AN ECONOMY THAT IS A STRONG AS CAUGHT POSSIBLE, SO MORE BALANCED ECONOMIC GROWTH, LESS RELIANCE ON ONE SECTOR OF THE ECONOMY, YOU KNOW, MORE SPREADING IT ACROSS THE BOARD.

>> WELL, LET ME PUSH BACK A LITTLE ON WHAT SEEMS TO BE YOUR OPTIMISTIC SCENARIO, WHICH IS THAT, REALLY, IN THE PAST 30, 40 YEARS, THAT ABILITY TO GET A GOOD JOB, AND A GOOD WAGE, LIKE AT A MANUFACTURING PLANT OR A FACTORY, KNOW THAT JOB WOULD BE SECURE, BE ABLE TO BUY A HOME BY AGE 30, THAT SEEMS REALLY TO HAVE BEEN GUTTED.

AM I WRONG ABOUT THAT?

>> I LOOK AT WHAT FRACTION OF THE POPULATION AGED 25 TO 54 IS WORKING, FOR EXAMPLE, BECAUSE YOU CAN EXCLUDE SOME PEOPLE OF RETIREMENT AGE AND OF SCHOOL AGE AND THAT IS BASICALLY NEAR THE HIGHEST IT HAS BEEN IN 25 YEARS.

LOOK AT HOW WAGES COMPARED TO PRICES.

THEY HAVE GROWN FASTER FOR ABOUT A DECADE, NOW.

I LOOK AT THINGS LIKE THE SIZE OF THE HOUSES THAT PEOPLE HAVE TODAY, THE NUMBER OF SQUARE FEET, THE AMOUNT OF APPLIANCES, ALL OF THAT, MORE THAN IT WAS IN THE PAST, SO I THINK WE DO HAVE A LITTLE BIT TOO MUCH OF A BAD NEWS BIAS AND WE NEED TO SIMULTANEOUSLY KEEP IN OUR MINDS, THINGS COULD BE EVEN BETTER.

WE HAVE MADE UNFORCED ERRORS, WE HAVE NOT DONE SOME OF THE THINGS THAT COULD HELP.

WHILE ALSO REMEMBERING, YOU KNOW, LIFE 25 YEARS AGO WASN'T QUITE AS IDYLLIC AS WE SOMETIMES REMEMBER IT AS HAVING BEEN.

>> JASON FURMAN, THANK YOU SO MUCH FOR JOINING US.

>> THANK YOU.