The next is the transcript of the interview with Gary Cohn, IBM vice chairman and former director of the U.S. Nationwide Financial Council, that aired on “Face the Nation with Margaret Brennan” on Sept. 21, 2025.
MARGARET BRENNAN: We flip now to a take a look at the U.S. economic system. Gary Cohn was the top of the White Home Nationwide Financial Council within the first Trump administration. Good morning. Nice to have you ever again.
GARY COHN: Good morning. Thanks for having me.
MARGARET BRENNAN: So, it lastly occurred. The Federal Reserve lowered rates of interest by quarter level, which was anticipated. So, charges at the moment are on this vary of 4 to 4 and 1 / 4 %, lowest degree since 2022 the President had mentioned all of this was overdue. What modifications now?
GARY COHN: So, look, I feel the Fed gave us a whole lot of necessary data this final week. As you mentioned, they began down the trail of chopping rates of interest, going to 4 to 4 and 1 / 4. In addition they gave us their outlook. So the 17 governors gave us their projections to the place they suppose rates of interest are going. In order that plot that they put out reveals that general, they consider that rates of interest will probably be minimize two extra occasions over the course of this yr. Now it is not 100% clear, as a result of the committee is split. There are about seven members of the committee that don’t need one other minimize this yr, however there are 10 members of the committee that need not less than two extra cuts, and one needs greater than two cuts. In order that averages out to 2 cuts this yr, which might take the federal funds fee, and it is necessary to know the federal funds fee, would take that down to three.6% for the- for yr finish. What can be necessary is the committee was pretty unanimous. I feel individuals have been anxious concerning the independence of the Fed. I feel the Fed clearly confirmed themselves to be unbiased thinkers. They took into consideration all the financial information, and so they got here out with a projections that made sense primarily based on what’s going on within the economic system right this moment.
MARGARET BRENNAN: So, when charges go decrease, cash will get cheaper to borrow, basically. However what does it really imply?
GARY COHN: Sure and no. So, what the Federal Reserve units is that they set the federal funds fee. That is the in a single day charges the banks cost one another to borrow on a secured foundation. It has nothing to do where- with the place American customers borrow cash. Sadly, American customers borrow cash on extra of the 5 yr, the seven yr, the ten and the thirty yr charges, as a result of that is the place car loans, bank card loans, pupil loans and mortgages are listed to these. Rates of interest usually are not decided by the Federal Reserve. They’re decided by the open market. These charges, the truth is, after they minimize charges earlier this week, went up slightly bit that mentioned they’re down over the previous couple of months. However these charges don’t robotically go down when the Federal Reserve cuts charges. They’ve extra to do with the market, and it is a provide demand state of affairs that determines these charges.
MARGARET BRENNAN: So one of many different issues the Fed highlighted right here is that the labor market is, quote, “actually cooling off.” That is what Fed Chair Powell says.
GARY COHN: Sure.
MARGARET BRENNAN: The administration, the Treasury secretary, says, information’s unhealthy. They don’t seem to be seeing that within the jobs numbers. So which is it? What’s taking place right here?
GARY COHN: Nicely, look, the chairman went out of his strategy to speak concerning the twin mandate that the Fed has. The Fed has two necessities that they are alleged to run rate of interest coverage off of, one is known as secure costs, which implies 2% inflation. The opposite is full employment. Full employment is precisely what it feels like. The Chair mentioned, look, we’re going to must cope with the complete employment a part of the equation, despite the fact that we nonetheless have inflation within the system. So, the Federal Reserve itself and the Board of Governors admitted that we’re having a declining job market, and we see that, the information during the last three or 4 months, we have now gone from creating properly over 100,000 jobs a month to creating lower than 50,000 jobs a month. It might be momentary, it could be fairly momentary, however the actuality is, we have now seen the job market degrade. We have additionally seen firms announce an infinite quantity of CapEx and capital expenditures that is going to return into the system. I feel it is fascinating to take a step again and take a look at what is going on on on this planet right this moment. I do suppose that we have now seen firms reduce on the quantity of workers they’ve. You realize, while you take firms and you place them in a really tough setting and also you improve the price of enter prices. And inputs have been going up due to tariffs. They have been going up be- different causes, and so they’re not in a position to elevate costs to the ultimate client. The one lever they’ll pull to ensure they hold their margins intact is they’ll minimize down on the price of labor. We got here out of a troublesome state of affairs in COVID the place firms have been really afraid about with the ability to entice and retain individuals, in order that they have been hoarding labor. So we went from a hoarding labor state of affairs to a state of affairs right this moment the place firms are being very aggressive about managing their bills, and the one expense they’ll handle is the price of labor. So that they’re letting their labor drive decline naturally as individuals retire out of the labor system, and we’re seeing that within the information, and I feel it is clearly exhibiting up.And the Federal Reserve. Acknowledge that on this on this week’s motion,
MARGARET BRENNAN: However while you ask the administration about this level, for instance, properly, productiveness goes to extend, and there are these technological shifts which are taking place. So this information is distorted. Are you-, talking particularly about tech, or are you saying throughout the board?
GARY COHN: I am saying throughout the board. I imply, we are– we have now seen throughout the board, and we have seen anecdotal proof of this. I’ve seen, and I’ve heard it immediately from company CEOs in each enterprise line that they’ve gone out of their strategy to minimize their- their human capital overhead. So simply the information for Q2 is fairly, fairly fascinating. Company revenues rose about 6.3% for Q2 and company earnings rose near 12%. The best way you do this, except you are elevating costs of the buyer, and we, and we have not seen a whole lot of costs go as much as client, is you need to minimize one thing out of the expense bucket. The one factor they’re chopping is that they’re chopping labor prices. We have seen it within the U.S. information. We have seen it within the non-public information, and we have seen it within the anecdotal information.
MARGARET BRENNAN: So, the president signed an government order on Friday that I wish to ask you about, as a result of you will have this function at IBM, and a few perception into tech. The order goes to impose a $100,000 one-time price for visas granted to overseas employees, extremely expert employees, H-1B visas. The “Wall Avenue Journal” is reporting that this brought on, like, a panic, as a result of there wasn’t a whole lot of element, at, like, Apple, and Google, and Microsoft. Did it trigger a panic at IBM? I imply, what is going on on?
GARY COHN: The- the- I feel it brought on a panic over the weekend as a result of individuals weren’t certain what was occurring with the prevailing H-1B visas. It has been cleaned up over the weekend, so at- at this level, there’s not a panic within the system. Everybody who’s obtained an H-1B visa understands their standing and understands how it- the way it’s- how it may work. I really suppose this can be a good concept. Should you perceive the H-1B visa program in america, traditionally, it has been a lottery system. So firms have turned in for these visas, after which the U.S. authorities lotteries them off. Should you’re now telling an organization, look, it is advisable spend $100,000 to get one in all these visas, you are not simply going to ask for a- a visa and put a reputation within the lottery, except that may be a extremely expert one who you want, who you can not rent in america. This visa program is supposed for top expert labor, the place you can not rent that particular person in america. So if that is what it is used for, finally we’ll deliver excessive expert individuals in america. It’ll assist develop our economic system, and that is good for all of us.
MARGARET BRENNAN: We’ll see. Gary Cohn, thanks to your insights, as all the time. We’ll be proper again.
