Bloomberg Surveillance Sep 21, 2026
With Nancy Lazar, Chief Global Economist at Piper Sandler
Weekly unemployment claims are down 10% year over year. Nancy Lazar's advice on reading the Federal Reserve is to stop parsing the statement and watch that number, because it is the one the chair named.
A rate-hiking cycle is supposed to be the point at which activity slows. Lazar's indicators say the opposite is happening — and her explanation is that the liquidity underneath the economy has not been withdrawn.
"Bottom line is there's a lot of liquidity in the economy. And that helps explain, one, why economic activity is solid and getting stronger, and two, why inflation is indeed sticky."
Lazar is Piper Sandler's chief global economist. She runs her own inflation diffusion index and a daily consumer survey, tracks money supply and bank lending because she calls herself a monetarist, and reads company revenue lines as a cross-check on the official consumer data.
The full segment is covered here so you can skip it.
Here are the 6 numbers that matter.
Key Takeaways
Claims are down 10% year over year, which she reads as a labor market healing quickly rather than one cooling
Warsh named weekly claims as a key indicator, so her advice is to watch what he watches rather than read the statement
Her inflation diffusion index says too many prices are rising 0.3% or more — the definition of sticky
Wage inflation is a 2027 story on her forecast, as a strong labor market broadens into pay
M2 is growing 7% and bank loans 7%, alongside heavy defense-led government spending, which keeps nominal activity strong
Nominal consumer spending is up 6%, corroborated by American Express at +8% and Visa at +12%
The middle-income consumer has joined the high-income one, on 4% wage growth in manufacturing and construction
1. Watch What Warsh Watches
Asked what she took away from the Fed meeting beyond the 25 basis-point hike the market had priced, Lazar's answer was about method.
Take the chair literally
it's to listen seriously to what Chair Warsh says. He said one of the key indicators, economic indicators he's watching are weekly unemployment claims.
Nancy Lazar
Her case for the indicator is that it is a hard statistic with a long relationship to the labor market, and it is currently pointing one way.
What claims are saying now
claims are down 10% on a year-over-year basis, which means the labor market is healing really quickly. Layoffs are down. And that also implies employment is indeed going up.
Nancy Lazar
She reads that as corroboration of the August payroll report — "there's maybe more truth than fiction" to it, in her phrase — and as a window into the chair's own thinking.
The instruction she wanted listeners to take away
So listen to what he says and watch what he's watching, which is the labor market along with inflation.
Nancy Lazar
2. Wage Inflation Is Next
On the inflation half of that pair, Lazar has her own measure and it agrees with the Fed's diffusion index.
Too many prices are moving at once
We have our inflation diffusion index. It tells you there's too many prices that are increasing 0.3% or more.
Nancy Lazar
The forward-looking version of the argument is where the labor market and inflation meet. If employment keeps strengthening, she expects the pressure to broaden out of goods and into pay.
Her call for next year
we think that's going to become more of a story indeed as we see this stronger labor market then leading to stronger wage inflation in 2027.
Nancy Lazar
3. Liquidity Is Everywhere
The host noted that Kevin Warsh said little about the balance sheet, and asked what she is watching there.
The question from the desk
Hey, Nancy, we didn't hear too much from Kevin Warsh about the Fed's balance sheet. What are you watching there?
Bloomberg Surveillance
Lazar watches the balance sheet, money supply, the banking system and bank lending — and says the chair's own framework points the same way.
Why she reads him through money
He is a monetarist. He made that clear in the monetary policy report. He made that clear at Jackson Hole.
Nancy Lazar
The balance sheet is off its peak and still very elevated, which on her account keeps supplying liquidity to Wall Street and, through it, to financial markets and the economy.
The single sentence version
Bottom line is there's a lot of liquidity in the economy. And that helps explain, one, why economic activity is solid and getting stronger, and two, why inflation is indeed sticky.
Nancy Lazar
The simpler measure she prefers is M2, and it lines up with credit and with the government.
Three numbers pointing the same way
It's growing 7% right now. And 7% money supply growth, 7% bank loan growth, very strong government spending right now led by defense.
Nancy Lazar
What that buys, in the part investors care about
That all suggests nominal activity is going to stay strong, which is very, very supportive of corporate revenue, corporate revenue growth.
Nancy Lazar
Her conclusion is that this is what is cushioning the economy against the backup in interest rates, for now.
4. Spending Beats Confidence
The hosts said they keep being surprised by the resilience of the US consumer in the face of inflation, particularly at the pump. Lazar agreed, and went to the revenue lines.
The consumer read from company results
Nominal consumer spending, which is what drives revenue for all these big retailers, are growing right now 6%. That's echoed, say, by an American Express, whose revenues are actually up 8%, and Visa, whose revenues are up 12%.
Nancy Lazar
Confidence is the indicator that does not agree, and her first move was to tell listeners which survey to drop.
Her instruction on the sentiment data
Don't use U of Mich. If you use Conference Board or our own daily survey, consumer confidence is kind of sluggish. It's not collapsing, but it is sluggish.
Nancy Lazar
The disconnect between spending and confidence has, on her account, a mechanical explanation rather than a behavioral one.
One counts people, the other counts dollars
everybody's treated equal, high, middle, low-income consumers are treated equal in the consumer confidence numbers. It's a measure of people, whereas nominal consumer spending is a dollar metric, right?
Nancy Lazar
That is why the high and middle-income consumer dominates the spending series and barely moves the confidence one — and, she says, why the spending data keeps surprising people. She saw the same thing in August retail sales.
5. The Middle Joins In
The high-income consumer has been carried by the stock market, which is carried by the liquidity in section three. What has changed is the tier below.
Where the middle-income raise is coming from
Goods producing jobs, manufacturing jobs, construction jobs are high paying jobs and wages in that sector are growing 4 percent.
Nancy Lazar
And what that has done to their income
And income in that space for those consumers is also now hitting all time highs, even adjusted for inflation.
Nancy Lazar
The sector doing the hiring
Manufacturing is very strong. Breadth in manufacturing is broadening out.
Nancy Lazar
Manufacturing jobs are now joining construction jobs in supporting that middle-income consumer, which is the part of her consumer call that is new.
6. The Low End Is Stuck
Lazar did not leave the bottom of the distribution out of it, and she was blunt about where it sits.
Her view of the low-income consumer
The low end consumer gets a lot of the press and my heart bleeds. I mean, they're in a terrible situation given gasoline prices and they are in a lot of these lower paying jobs.
Nancy Lazar
Why it matters beyond the spending data
That needs to change because in politics, everyone's counted the same at the voting booth.
Nancy Lazar
Her economic conclusion is nonetheless that consumer spending stays solid, because the middle-income consumer has now joined the high-income one in carrying it.
Bonus Insights
Her method is to triangulate the official data against company results
my point is I love to look at multiple different indicators to gauge what's going on in the economy, in this case looking at consumer-oriented companies.
Nancy Lazar
That is what the American Express and Visa revenue figures are doing in her argument — not illustrating the spending number but testing it.
Piper Sandler runs its own daily consumer survey
She named it alongside the Conference Board as one of the two sources she will use for confidence, which is how she can say the series is sluggish rather than collapsing while the spending data accelerates.
She told listeners which survey to stop reading
The instruction to drop the University of Michigan series was unprompted and came before she gave her own reading of confidence — the one editorial judgment in the segment that a listener could act on immediately.
Lazar's bottom line is that the labor market is healing, the liquidity that powered the expansion is still in place, and the same two facts are why inflation is sticky and why wage inflation is the story for 2027.
Products, Companies & Tools Mentioned
Federal Reserve (Hiked 25bps; she reads the chair as a monetarist and points at his named indicator, weekly claims)
Piper Sandler (Her firm, whose inflation diffusion index and daily consumer survey she uses in place of the standard sentiment series)
American Express and Visa (Revenue up 8% and 12% respectively — her corroboration that nominal consumer spending is running at 6%)
Conference Board and University of Michigan (The two standard consumer-confidence gauges; she tells listeners to use the first and not the second)
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