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This is a very good number, and we got revisions on some of the previous months. If we get more jobs reports like this with the unemployment rate, hopefully settling in in kind of the low fours type of range, while we're simultaneously getting inflation reads that are right at or even below the 2% target, it would give me, I can't speak for anyone else on the committee by the rules, but it would give me more comfort that we are achieving exactly where we want to be and was our goal.

That was Federal Reserve Bank of Chicago President Austin Goolsbee speaking with our very own Jennifer Schonberger earlier today. Goolsbee praising this month's jobs report, while also reiterating no one should get too high or too low from one month's numbers. Joining us now to help us understand what the Fed is thinking and what it could do next. Randy Kroszner, University of Chicago professor of Economics and former Federal Reserve Governor, Randy, it is great to have you on the show as always. Uh stronger than expected jobs report, Randy, was it stronger than you expected?

Yes, I think it was stronger than pretty much anyone expected. It was above the, uh, I think the highest estimates that the Wall Street economists had, um, and you, in addition to being a strong report, we also had upward revisions. So strong on, uh, on, uh, every, uh, every dimension.

Uh Randy, Julie here, you have of course the coterie of Fed doubters come out, uh, after this, uh, report came out and said, why did they do 50 basis points? They shouldn't have done it. It was a mistake. You know, how are you thinking about that and how does the Fed sort of think about it when new data comes out like this?

So it's always, uh, when new data come out is always say, oh, somebody made a mistake in the past. Seems a little unfair to, to do that. Uh, they didn't know. It was reasonable that they should start the cutting cycle. Basically every other central bank around the world has started the cutting cycle. The Fed has actually started a little bit later, but they started a little bit more boldly. Um, but they have the option if the, the, uh, the data continue to be strong, they're going to get one more employment report right at the beginning of, of November just before they, they meet and just before the election. Uh, and if the, um, if the numbers are still kind of screaming like this, uh, they may decide not to cut it all.

So you think a potential pause is even on the table, Randy?

I, I think that's not likely. I think the most likely scenario is that, um, so Austin who's a good friend and, uh, and a former colleague from University of Chicago, I think put it well. Uh, if, if the inflation rate keeps moving down and the job market stays reasonably strong, then they can kind of be on the path that they've been on with some smaller cuts. But let's say the inflation rate doesn't start to come down. Maybe this strength that we're seeing in the labor market is reflected in higher wages because wage growth is still 4%. You know, their goal is to get inflation down to 2%. Now, if you have really strong productivity growth, then you can have 4% wage growth and still get 2%, uh, consumer price growth. But right now we're not seeing, uh, productivity grow quite that strongly, so they've got to bring the wage growth down. Um, if the wage growth isn't coming down, if there's still a lot of pressure, they may have to, and the labor market remains strong. They might have to reconsider whether they're going to cut at all. Many other central banks around the world did an initial cut and then took a pause.

Randy, tease that out a little bit for us because if I'm somebody who's watching who and I don't have a degree in economics, and I hear you say, well, the Fed doesn't want wages to go up too much, right? Because, you know, for people who are seeing that, they might say, well, that's good news. Why does the Fed want to put a cap that, right? So explain that a little bit more, how you can, you know, why that is a problem to have wages going up?

Sure. And so I think the Fed and everybody else would like to see, you know, people have higher incomes and that's really great. Um, but they also have this goal of trying to get inflation down to, to 2%. One of the key inputs into, um, into, uh, really any production process, whether it's services or traditional manufacturing is wages. And so if wages are going up at 4%, your key input cost is going up at 4%. Unless those workers are becoming more productive, that is having high output per hour, high productivity growth, it's very hard to square having your key input go up at 4% when prices are only going up 2%. And, and so that's where the tension is. If we get productivity growth up, that would be terrific. Uh, but otherwise we may have to see a little slowing of the, uh, the heat in the, uh, the wage growth to make all these pieces fit to get to their 2% target.

Randy, final issue I want to get your take on. Immigration, hot button political issue in this election year. How is that impacting our labor market?

Well, there have been a lot of estimates that, uh, because there were, they seem to be so much, so much growth, so much growth of jobs without the number of people, uh, in the labor force really growing that much. And so, um, some people have estimated that because so many immigrants have come over the border that the, they are not fully counted, uh, and, but they are, uh, they are working and they are producing. And so, uh, that to some extent some people argue has been a bit of a relief valve of how we could have such robust, such a robust job market but not have even higher wage pressures coming in. But that's going to be a really key issue because if you really stop the inflow of, of laborers, all the things being equal, the price of labor is going to go up, wages are going to start to go up faster, and then it's going to be tough for the Fed to meet that 2% goal.

Randy, it's always great to have you on the show. Thank you so much.