Moody's Talks - Inside Economics - A Downer Podcast

Episode Date: November 26, 2025

Scott Hoyt joins the podcast to provide a look into the holiday retail season and to discuss the state of the U.S. consumer more broadly. The team reviews the downbeat data on consumer confidence, the labor market, inflation and housing, and contemplates the implications for consumer spending this Christmas. The team remembers to take a listener question on income inequality and the mood gets even darker. Happy Thanksgiving everyone!Hosts: Mark Zandi – Chief Economist, Moody’s Analytics, Cris deRitis – Deputy Chief Economist, Moody’s Analytics, and Marisa DiNatale – Senior Director - Head of Global Forecasting, Moody’s AnalyticsFollow Mark Zandi on 'X' and BlueSky @MarkZandi, Cris deRitis on LinkedIn, and Marisa DiNatale on LinkedIn Questions or Comments, please email us at [e-mail]. We would love to hear from you.  To stay informed and follow the insights of Moody's Analytics economists, visit Economic View. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Inside Economics. I'm Mark Zandi, the chief economist of Moody's Analytics, and I'm joined by a bevy of colleagues. We've got my two co-host, Chris DeRides, Marisazina-Talli. Hi, guys. Hi, Mark. Good to see you. Good to see you as well. We got Scott Hoyt. Scott, our colleague, Scott, is been a while since you've been on. Good to have you back on. Thank you. My pleasure.

Thank you. My pleasure. Oh, no. I'm sorry. That sounds way too formal for inside economics. Good to be with you. That's what happens when you haven't had me on it so long, Mark. He doesn't know what to say. That's true. But good timing because we got retail sales this morning for the month of September. And of course, we're going to talk about the consumer and holiday sales and all that good stuff. But a lot going on. I notice I'm in a different room today. You look like you're in a child's bedroom. It is a child's bedroom. It's my daughter's bedroom. And we've kind of memorialized it.

She's left a number of years ago. I'm going to say she's not a child anymore. She's not a child anymore. But, you know, it's a very girly kind of room. Can I say that without bending anybody? Okay, yeah. You can say that to me, Anna. Yeah, it's okay. I hope I didn't offend her. Why would I offend her? It's her room. It's very girly. It's really girly room. A lot of pink, you know, all that kind of little dolls everywhere. Actually, I never really looked at it that carefully until now. Not a cool. It's a good backdrop for you.

I'm glad I'm in this room. Well, by the, I'm in this room because it's Thanksgiving and we have guests coming in. And so I've been relegated to the boughs of the, not that my daughter's room is in the boughs, but, you know, I should just shut up, shouldn't you? Yeah, we were talking about, we were talking a little bit chit-chatting before we got on the podcast. And I was saying, I feel tense. And I'm not sure why I feel tense. How do you guys feel in the same way? Or maybe it's the whole holiday thing, carrying up for the holidays. Maybe that's what it is.

I think it's your Bitcoin portfolio. Oh, yes, my Bitcoin portfolio. Yeah, right. Yeah, look at, look at, like, you've dressed down. You're a lot less wealthier than you were. Would you consider this, by the way, Chris, would you consider this a crash, a Bitcoin crash, or is it too early to call it another crash?

It's down like 30% or something, isn't it, from the peak? It is, but it's just back down to April. It's hardly still 80K. I don't know. It doesn't seem like a, and it's so volatile that it's hard to suggest that it's a crash. I don't know. That's my page.

I got a question about crypto, and I'm not, expecting an answer, or maybe there is a simple answer, and I just don't know it. Why is it that Bitcoin has risen so much, but Ethereum has kind of gone nowhere in the last five years? It goes up, it goes down, it goes all around, but it's gone nowhere last five years. Bitcoin, despite this correction crash, is still up a lot. You don't know the answer to that? Or it's probably an obvious thing, and I just don't know. No? Chris, you should, this is your, this is your world. That's my domain. Domain. You're the subject matter expert.

It seems just to the popularity. I'm sure someone out there inside economics land will know the answer to that question or have a theory. But maybe it's a dumb question. Even though Ethereum, my understanding is actually more technologically advanced. Right. So you think that was just popular. Does that mean it's less because it's more technologically advanced? It's less of a speculative vehicle, is what you're saying.

maybe i think i think it's still a speculative vehicle but uh less of yeah all right i don't know anyway anyway i was just you know i don't know why that popped into my head oh because you mentioned the bitcoin portfolio right but it's been bothering me i don't know the answer to that question but um we got a lot of data today uh you know the government has reopened and is now pumping out a lot of numbers this is some of the numbers are backward looking you know kind of September, but still, very important. And we've gotten some more recent data that on the job market from ADP came out today. So we want to talk about that. But why don't we do this? Why don't we talk about the data that came out today? I'll leave the retail sales and consumer

confidence. That's another one that came out for the end of this part of the conversation, because then we can enter into the conversation with Scott about the state of the American consumer. So, Chris, where do you want to go? Where do you want to? What's the first thing you want to point to in this cornucopia of data that we got? Well, we got quite a bit of housing data. So how can knock that out? It got a lot of housing data, but it doesn't really say too much.

It's kind of just still status quo. We have some house price indices that came out. It's bad, right? It's not good. Not great, no. Not great. No. I guess the good news is not falling further, right?

It seems to be kind of bouncing on the bottom here. So that's the good news, but nothing really terribly uplifting here. The house price, we got a couple of house price series from the FHFA and K. Schiller, 1.4, 1.7% year over a year. So, you know, still positive, but certainly much slower than it has been. Pending home sales, also a little bit of a bump, but, you know, off a pretty low base. So still we're trending around that four. 4.1 million existing home sales per year. So, you know, it's okay.

It's stable, but it's not really showing much sign of a renaissance here. Mortgage rates are still in that 6.3, 6.4% range. So helpful, but not really a game changer here. So, yeah, I'd say that. We did get some construction data, which also showed pretty much the same thing in terms of, or some estimates of construction that showed, again, home builders kind of leveling off here in terms of housing starts and permits. So home sales, blah, you know, the good news is they're not continuing to decline. Maybe they're up a little bit, but they're

consistent with about as low as they get, right? I mean, got to go back to the teeth of the pandemic or the height of financial crisis to see this week. So it's really blah. House prices, blah, blah, blah. I mean, right? I mean, going there where a fast. And so that's blah, blah, blah. Well, yeah, and that's from Dodge. The folks at Dodge, our good buddy, Eric Gouse, who's former colleague, is now chief economist at Dodge. We've got to get him on the podcast. He has made an estimate of housing starts and blah, blah, blah, blah, blah, blah, right? I mean, really not that good. Less than 1.4 million units. So that's pretty. So housing is in the dump. not going it's not going further down but it's in the dumper right that's right i'd say i'd say that's a okay a good characterization okay not the word i would have used but i'll take it really what was the word you would have used uh i'd say uh i think my last article was muddling through oh that's so boring it's so boring muddling through what do you think really dumper i don't know

what is it negative you're It's pretty negative. It's pretty negative. Yeah, yeah, it's true. But the housing is pretty much in the dumper, I'd say. Moving on. Moving on. And we also got some inflation data, PPI, producer price index, wholesale prices for the month of September. Marissa, do you have a chance to look at that? Yes, I'm looking at it. Okay. What did it say? So this is for the month of September, delayed release because of the government shutdown. So total PPP, final demand prices were up 0.3% over the month in September. That followed a very small decline in prices in August. Food and energy were the main drivers over the month in September. So energy prices were up 3.5%. They've come down since September, so that should fade as we get more data for the months of October and November. And food prices were up quite a bit. Wholesale food prices were up 1.1% over the month, which is very big, right? And we've talked a bit about the increase in food prices recently. You take out food and energy prices were up point two over the month,

and service prices were unchanged from August. So overall, you get a point three. kind of been in that range, if you take a longer run view of it. Year over year prices ticked up slightly. So we went from 2.6% year over year in August to 2.7% year over year in September on total CPI. So definitely going upward on PPI, right? That's right. So it's a little on the hot side, right? PPI generally is soft, much softer than that.

So it feels like tariffs, maybe immigration policy are playing some role in their eye. You know, I don't want to draw too strong conclusion because I haven't looked, but it feels like it's on the low, we actually, so we do calculate, you know, import-sensitive component of both CPI and PPI. PPI, import-sensitive goods actually slowed.

Prices slowed a bit for import-sensitive stuff. They fall? The rate of increase slowed? No, they didn't fall. They slowed. The rate of increase slowed from the previous month. Yeah. Still up, but slower than in August.

Okay. What were they? Do you know? It was 0.1. Okay. Okay. Okay. Okay, very good.

Okay, before we go to Scott, there was one other data point that came out. And it's a new data point, and it's more timely. It's from ADP, the human resource company, the folks that process, that's a lot of payrolls, including our own. They're now releasing a publicly, a weekly estimate of employment. And Chris, what did that say? They was down 13,500 jobs. That's the average weekly over the last four weeks.

So can I multiply by four and say in the last month it's down, I don't know, 40, 50K? Yeah, something like that. Of course, that, you know, there might be some. lumpiness there, but yeah, that would be the implication. Was last week the survey week for the BLS? Payroll household survey? It includes the 12th of the month. Was that last week or the week before? I don't know what the shutdown if anything is. Yeah, they moved it. They moved it? Yeah, they moved it back a week. So yes. I think so. Okay. Okay. So that would argue could be a pretty difficult number when we get. We know October's job number is going to be bad because of the end of the deferred resignation for federal government workers that are going to come up

payroll. So that's going to be, I would be surprised. I wouldn't be surprised if we got a negative October employment number. It feels like if you find ADP, November's going to be pretty bad too. Yeah. Yeah. Just feels like to me the labor, I don't know. The labor market feels like it's just, it's soft and getting softer, no? What do you? What's your son to? Yeah. Yeah. Yeah. I agree. Feels like that. Yeah. Okay. Uh, um, anything else on the ADP, Chris? I don't know if you had a chance to look at it. I should say to the listener, this is Tuesday, November 25th. We're obviously recording this early because of the Thanksgiving holiday. We're going to release this early. So we're moving quickly. So we haven't had a chance to take a deep dive into the data. But it feels like the data that we've gotten, and we haven't talked about retail sales yet and consumer confidence, but the data on housing, the data on job market. our weak economy and inflation doesn't feel like that. That feels like it's still a little bit on the hot side.

So stagflation feeling to it all, no? Would you disagree with that? No? Stackflation-ish. Stackflation-ish, right? Ish. Yeah. It's not screaming stagflation, but certainly moving in that direction.

Marissa, same the view. Yeah, I think everything's moving in the wrong direction. Wrong direction. Like, nothing's horrible, but it's not going. the trajectory is not good. Well, let's turn to the data on retail sales and the consumer. And Scott, that's your purview. What did the retail sales number say to you?

Well, keeping in mind that this is like the PPI back in September, but we had top line sales growth of 0.2%, which was relatively weak. The last three months had all been 0.6% or better. There was a little bit of a mix in performance vehicle sales were down a little bit. Gasoline station sales grew strongly. So core sales, which exclude those two components, were even weaker at 0.1%. A lot of negatives. Interestingly enough, non-store retailers, which almost always grow.

Their sales fell. Sporting goods and hobby stores fell. apparel sales foul, electronics and appliance, store sales foul. So overall, a fairly weak report, although growth was just a tiny bit positive. What was home improvement? Because that gets to so-called control retail sales, which goes into the NEPA data, the GDP data. Yeah, building supply store sales were up 0.2%. So they were right along with average.

Oh, okay. So if I go to control, which would be retail, sales, less, I guess that's less vehicles, gas, and building materials, right? Isn't that control? So at least one of the definitions, yeah. Yeah, so that sounds like that's going to be zero or even negative for the month of September. I think slightly positive. I'm thinking probably point one. Slightly positive?

Okay. Point one. Okay. All right, but a very weak report. I guess, you know, retail sales are volatile month to month. then as you pointed out, we'd had several months of strong retail sales.

So, you know, maybe shouldn't read too much into this? I would agree with that. I mean, I think the trend is still, you know, healthy. Not,

I wouldn't call it strong, but I think I would call it healthy. You know, I think there are reasons for concern that we'll get into later. But yeah, for now, I think the trend is still healthy.

Yeah, do you know offhand, like a year-over-year retail sales? So that would abstract from the, the monthly vagaries of the data. Do you have any sense of that? Year over year for top line was up 4.3%.

Okay, all right. I mean, of course, inflation for these products are up too because of the tariffs, but still real growth is probably around two, something like that, which is kind of sort of

where we've been all year, right? Around two? Yeah, I think through the summer it was probably even a little stronger. Retail sales were quite strong. Yeah. Right. Okay.

All right. But, you know, all the, and we should kind of think about high-end, middle, low-end, that kind of stuff, the K-shaped economy. Before we get there, the fundamentals for consumer spending retail sales feel to be, to me, to be on the soft side, no? I mean, we talked about jobs. We know that there's a lot of pressure because of financial pressure because of higher debt loads, interest rates have remained elevated. house prices are weak. I guess the other thing that came out today was consumer confidence from the conference board survey. That was also weak, Scott, wasn't it?

Yeah, that was a really bad report. Came in below everybody's expectations. Preliminary number for November is 88.7, which is down from 95.5 in October and is the lowest since April, and the second lowest in, I think, three or four years. The decline was led by the expectations component, although present situations fell notably as well. So it was a broadly weak report on confidence for November. Jobs hard to get? Jobs easy? Do you know what that did? Because that's a good read on unemployment. Yeah, jobs plentiful, went down a little bit.

but so did hard to get. There was an increase in the middle, not so plentiful. Yeah, the differential fell. Yeah, minus 11.9. So remind me, is that, what does that mean in terms of the unemployment rate? Does that mean a higher unemployment? No, that's bad. Do I got it backwards, lower unemployment?

No, it's bad. It's bad. It's bad, right. Yeah, bad, bad, right. Yeah, bad. Yeah, I always get turned upside down with that one. So it's jobs, plentiful, less jobs hard to get. Right. And they both moved in the wrong direction, meaning higher unemployment.

Okay. All right. So, okay, so job markets weak, confidence is down. It's actually pretty low. I mean, we're back to kind of pandemic lows. The Michigan survey is close to a record low. Yeah, it's really. record low. I mean, there's biases

and all kinds of stuff, so you can't read put too much weight on it, but you've got to put some weight on it. Debt loads are up. Delinquencies are up. I'm just kind of going down the litany of things, because it's not all bad. I mean, the other thing is

I mean, asset values are up, stock prices are up. I guess housing values aren't, but so if you're at the high end, okay, but for the rest of the American consumer, did I miss any other fundamental? I mean, jobs, wage growth is slowing. Unemployment is moving higher. Confidence is weaker. Okay, now we'll come back to debt loads in just a second. But broadly speaking, what's that? Prices. Inflation. Yeah. Yeah, it's cutting into affordability and purchasing power. So if you take, you could put all these factors that drive consumer spending into a pot, mix it up. Before we get to the particulars and you challenge.

me on debt. We can, we will go there. But it feels like it's a, it's not a noxious brew, but it's not a good tasting brew, right? No, it's definitely very weak. And I mean, we're, we're expecting, you know, retail sales and consumer spending growth more broadly to be to weaken going forward. Yeah, no, it's, it's definitely a bad situation for consumers right now overall. Bad, bad. That's a strong word bad. I wasn't going to go that far, but okay. Mercer, would you characterize this bad situation? Yeah, I mean, I think I'm looking at this conference board, consumer confidence. I think that just encapsulates it. Everything is,

people feel worse about their future. People feel less stable about their personal finances. People feel worse about the job market. People are planning fewer vacations and big tickets spending, right? So it's like every metric of sort of people's financial perceptions of their own financial stability, as well as the broader economy, people feel that there's more likelihood of a recession now than there was even a month ago. There's nothing good in this report. And it seems to be true across most demographic and income distribution categories with a few exceptions. Really?

Even people 55 and older feel really bad about their prospects. Oh. Chris, this brew of factors behind consumer spending, how would you characterize it?

Scott says bad. Dumber? Dumber? No, no. It's not going to use dumper. Yeah. Don't say muddling through.

Don't say muddling through. You don't like muddling. All right. I don't like that. Well, I mean, it's okay. I'm just saying, you know, no, how is it? Concerning, definitely. Concerning?

Yeah. Although I think you're going to go into the K shape, right? Yeah. Yeah, we're looking at the aggregates, say one thing, but there's certainly very different patterns across the distribution here. And, you know, confidence is one thing. People are still spending. It's not that they're giving up entirely.

So there's the revealed behavior and the, uh, kind of psychological, behavior or psychological view. I should point out, just to make it clear to everybody, the retail sales numbers were for September, but the conference board survey data was now. November, yeah, very recent. November. And the ADP data on jobs, that's now. That's November.

So, you know, we had a soft print for September. We don't know what October and November are, but all these fundamentals of dry spending say it's going to be soft. It's going to be on the, to use Scott's word, bad. It's going to be bad. Okay. Yeah. All right.

So let's go to go back. You wanted to push me on the debt on the debt. Yeah, because, I mean, the level of debt is high, but debt burdens are not. If you look at the Federal Reserve's debt service ratio, it's lower than it was in 2019. And at that time, that was a record law. I mean, obviously it went lower during the pandemic, but I'm going to, you know, discount that. So, you know, debt burdens in aggregate are low. There are certainly segments, you know, subprime auto student loans.

There's certainly pockets of problems out there. I'm not going to deny that. But in aggregate, burdens are low. And I don't see, I mean, certainly they're not a positive lending standards are tight. It's not, you know, rates are, you know, fairly high. it's not a good time for consumers to borrow but their current burdens in aggregate are not high and not worrisome.

Yeah, I'm going to push back on your pushback. Okay. You know, yeah, this is where I think we get into trouble when we look at averages and kind of medians in the middle of distribution because this distribution is all messed up, right? Because this goes to the case-shaped economy. You got folks at the top end of the distribution

of income and wealth, they have no debt. They have zero debt, nothing. They may have a mortgage loan, but that's only because it's basically free money. I mean, their mortgage rate is lower than they're getting on their money market account, so why would you ever pay it off? And that is if they have, they don't have any credit card debt, they don't have any auto debt, they don't have a student loan, they're fine. So if you look at that part of the distribution, there is no debt service burden.

It's like nothing. But then you go to the other side of the distribution, lower income households and middle income households, I, you know, almost by definition, doing some arithmetic, you it, there's where the problems are. That's where the debt service is higher. No? Disagree? No, I do agree.

I agree. You agree. Okay. So maybe we don't disagree. So you're not pushing on me. I'm not pushing back on your pushback. I mean, I think it's more. We're in agreement.

I think, as I said, I think there are pockets where there are definite problems. I'm not denying that. From a macroeconomic perspective, I don't think debt burdens are awake on consumer spending. I don't know. See, this is where economists, I think we get messed up on because it has macroeconomic consequence if the low and middle income households are struggling. I mean, if they can't, you know, continue to spend.

I mean, you're right. The world can move forward with the high end doing its thing, but not well. It's a very fragile kind of situation, right? Even from a macroeconomic perspective. True, although I think our debate may be a little bit as well in the middle. I mean, I agree the low, I agree the low end's in trouble and the high end's doing well. I'm not sure that the middle is necessarily in trouble. I don't think they're in great shape.

I think they're leveling through to use a term I'm probably not supposed to use. But, you know, you can use anything you want, but you'll get my ridicule if you use it. I'm used to it. No, no, maybe we don't disagree at all. I mean, you're right. I mean, low end really, I think leverage is a problem. That's a problem. The middle tier, it's not an overarching weight on the middle income groups, but, I mean, it doesn't feel good.

You know, those are the folks with the student loans, right? A lot of them are, you know, with the student loans, and they're struggling with that. So, okay, but again, the other piece in here, though, is that lending standards have been tightened for nearly three years now. So if marginal borrowers are having trouble getting credit, and that's a mitigating factor as well. And they have been for at least a year in terms of the impact of, you know, debt burdens. Because if the marginal borrowers are having trouble getting credit, then things aren't going to turn bad as they have in many past recessions. Well, I would argue that you're looking at it from a credit perspective. You're saying delinquency rates maybe not going to.

But from a spending perspective, that's also a problem. Absolutely. Right. Right. I mean, I can't get credit. I can't spend. right, if my income is constrained. So another reason to be a little bit nervous.

Oh, I could add more reasons to be nervous, too. Oh, really? What would they be? The one you missed, in my opinion, is all of the buying ahead that's been going on this summer. Oh, interesting. I mean, I think there's clear evidence that consumers have been buying more of the goods where prices, where they expect prices to go up, the tariff-sensitive goods, and less of the tariff, less sensitive goods. But if you buy ahead, you get what economists call spent up demand,

then there's less need down the road. And so that's going to be, I mean, first of all, the buying ahead is going to end. It probably is starting to end. And then you're going to go into the reverse situation where you're going to have less buying because you bought ahead. Yeah, you know, it's interesting you say that. I guess you're pointing to the strong spending we got this summer as being

juiced by buy-ahead kind of spending. I thought, I just felt like we'd been talking about that earlier in the year, and I thought we'd gotten to the other side of that. But you're saying it's just now that we're getting to the other side of that. That's my view, yes. I think the, I mean, unfortunately, we only have good spending data through August. But, I mean, it certainly wasn't over in August, in my opinion. I mean, it may be over by now, but you mean now through September with the retail sales.

I think it's, but I mean, it's like anything else. It's a process. You go from buying ahead to not buying ahead to buying a head to buying less because you bought a head. And I think we're in the, probably in the transition now, but we still have room to go down. And I guess the other thing on vehicle sales is all the EV subsidies, electric vehicle subsidies, they kind of juiced up vehicle sales and that they're now the summer and now they're done right we're on the side of that so you would expect that to start showing with weaker vehicle sales yeah more depressed vehicle sales numbers you would yes that's right i think i think vehicles are a poster child for what

i'm talking about but i think it's happening in other other goods that are particularly sensitive potentially particularly sensitive to tariffs as well right right so so Christmas sales, I mean, there's kind of this cottage industry of forecasting what Christmas sales. First, you've got to define what Christmas sales mean. I know that. But why don't you define them in your definition? What's Christmas going to look like this year? Well, I tend to like to talk about it qualitatively rather than quantitatively because I agree everybody's definition is different. But, I mean, from a total retail perspective, you know, our outlook is for total retail sales growth to be a little bit weaker this year than it was last year.

If you look at measures of holiday-specific segments, I think it looks a little better there, probably about flat with last year. Although most of those definitions don't include e-commerce, and the September e-commerce numbers look really weak, I think e-commerce sales growth is probably going to be weaker than last year as well. So overall, it's not going to be, It's not going to be terrible, but it's going to be sort of at best about the same as last year,

which I think retailers probably defined as okay, but not great. Okay, so that was a bit unsatisfying. I'm sorry. That answer. Yeah, I know. So let's parse that a little bit. So what's your definition of holiday sales? What, like, Thanksgiving to Christmas or Thanksgiving to the end of January or?

What retail sales? What do you include in Christmas sales? It kind of depends whether I'm forecasting an actual number or whether I'm looking at it in retrospect. I mean, in retrospect, I'd look at November, December, or November, December, January. When I'm forecasting, I usually look at just the whole fourth quarter because that's, as you know, the native frequency of our forecasts

is calendar quarter. I'm still not satisfied. I asked a National Federation of Retailers. Is that what it is? National Federation of Retailer, NFR. They say Christmas sales are going to be up, I'm making up a number, 4% year over year. And they've got a definition of what they're counting in that number,

and then they give me a number. Can you do that? The answer is no. The problem is I don't have the number in front of me, but I think, okay, fourth quarter retail sales at, Really, fourth quarter, October, November, December? Really? Doesn't that seem like holiday? Is that holiday for you?

The season's gotten stretched out, right? It starts, I feel like it starts so much earlier now than it used to. I always thought it goes into the January of next year. I thought, no. In October, really? That's Halloween in my household. Halloween starts in August now. Oh, it's ridiculous. Well, judging by the amount of candy, I still have left, I don't know. Some of my neighbors had Halloween decorations up in early September, I think. They put them up like Labor Day. It was absurd.

Okay. So what does NRF say? I think there are numbers around three and a half, and I think they use select segments. They take vehicles and restaurants and a couple other things out of retail and look at November and December. And I don't have their press release in front of me, but I think they're about three and a half. Okay. So there's three and a half. What are you, roughly speaking, where are you?

I'm probably there a little weaker, three to three and a half. Okay. And what do you think inflation is for retail goods? A little under three. Including that two percent? We're probably closer to three. I'd say under three, but probably closer to three. especially by the fourth quarter because I mean especially by the fourth quarter because I mean inflation's inching higher right now okay so you're saying my interpretation of what you're saying is real retail's Christmas sales if I look at Christmas sales after inflation this year they may be up but they're going to be up yeah very little 1% at best and that's that and that encapsulates your kind of bad the view of bad okay all right it's it's not recession

that would be obviously negative real after inflation numbers. But it's like, I think you said, did you say treading water? Is that another way you described it, kind of treading water? I've heard that expression. I don't think it came out of my mouth, but yeah, I've heard that. Okay, all right, but that's kind of what you're saying. Sounds like something I'd say. Okay.

Okay, so if that's the case, if it's on a real after inflation basis, you know, barely positive, does that mean that for folks in the bottom part of the income, in wealth distribution, it's actually negative? Probably. Probably, right? Okay. And thus, the consumer confidence numbers. That means your standard of living is now lower this Christmas compared to last Christmas.

And if that's the case, that doesn't feel very good. So you think these confidence numbers are kind of consistent with the reality of things just not going all that well for the lot of folks. And I think compounded by the job market situation and the fact that, you know, there's so few jobs out there. You can't change jobs. It's very difficult to get extra hours. You know, the kinds of things you might want to do to supplement your income around the holiday season are probably harder this year than they've been in quite a few years. Got it. Got it.

Okay. Mercer, anything on the consumer retail floor on Christmas you want to bring up? no other than I've just in the news right if you read headlines about retailers some of them are looking a little shaky this this holiday season I've warned about lower sales yeah right is that right we saw like a big you know layoff announcement from Target for example um so that doesn't bode well. And again, Walmart had a real good release just in the last week or so. So, I mean, I think there is evidence of trading down, which is consistent with the story that we're telling. Right. Right. Okay. Chris, anything to add on this on the Christmas sales, consumers more broadly, anything we missed? Any other factors that are going into people's thinking, do you think, in terms of decisioning around spending? I know. I think the uncertainty.

It's a huge part of it. I don't know, maybe a question for Marissa. I think I saw a headline around holiday employment. Is that correct? Is down substantially this year relative to last year as well? Yeah. So, yes, there are reports that seasonal hiring is lower this year than last year. Yep.

Yeah, so that would also be consistent with this kind of more pessimistic view. It feels like this is a bit of a downer of this podcast. I'm pretty depressed right now. Yeah. I mean, it feels like really on the soft side of things. Okay. Well, anything else, Scott, you want to bring up while we're on the topic before we move on to the game and the listener questions? I'm going to totally ruin my statistic.

But, yeah, I think the one other... Well, you don't have to do that. No, because we've kind of already ruined it. So I'm going to just finish it off. Okay. All right. Go ahead. I'm going to have to come up with something else quick.

The 4.3% year-over-year growth comes on the heels of 5% in August and is likely to trend down further because if you remember, we had a ramp up in consumer spending and retail sales growth the last three, four months of last year. So the comparisons get much more difficult for year-over-year growth as we go through the remaining months of this year. And that's another weight on reported holiday sales. And one of the reasons why everybody's putting out numbers that are lower than what we saw in September for year over year growth. Oh, you're saying a difficult year-over-year comparisons. Last Christmas, the end of last year, consumer spending is quite strong.

And so it makes it, you know, it makes it on a year-over-year basis even more difficult. Correct. Last year was almost the mirror image of this year. The summer was weak, and then the fall and early winter was strong. And this year, we seemed to be doing the reverse. So we had inflated year-over-year comparisons during the summer, and we're going to have relatively weaker ones as we move through the remainder of the year. Yeah, one more quick question. There may not be an answer, but are there any private sector data that you look at to get a more real-time read on what's going on with the consumer? I mean, are you looking at? like what's coming out of Bank of America credit card and J.P. Morgan, they put out some stuff, MasterCard Visa, all those payment processors, you know, put out data or any other data. Anything you look at that you find valuable? There are several that I look at. Bank of America is one. CNBC has one. There's another one. I can't think of it off top of my head. And I look at them. I find they don't correlate real well.

So I take them with a heavy dose of salt. But, I mean, if your follow-up question is what are they suggesting about October? We don't have any November reads yet, obviously. They're all suggesting weaker growth, at least on a year-over-year basis. Yeah. I'm just going to mention one thing before I move on. I talked to a lot of folks in that world and retailers and, you know, other consumer-oriented product companies.

And interestingly enough, this is all anecdotal. Even the high end has gotten softer here in the last month or two. And people are in these anecdotes, the folks I'm talking to, they're perplexed by it as well. They're going, what's going on? Why would that be the case? Because the stock market is roaring, right? You know, up until recently, and you would think the positive wealth effects would be you know,

they're juicing that spending up by those groups, and they're saying they're not observing that. And I'm wondering if that goes back to the job market and the concerns about jobs that people are, you know, now starting to get worried about because there's no hiring. There's no job growth going on. And even, you know, this is a high level of speculation. I speculate all the time.

There's a high order of speculation, you know, even kind of well-to-do, high income, high net worth, boomers, With kids that are coming out of school and finding that they can't get jobs, that makes the whole family nervous, you know? It makes, it's even the parents, like, this, they, I gladly give up my, my kids are fine. I'm just saying these are, I can see it, I can hear it. But, you know, it just, I just wonder stuff like that's going on here where we're, you know, it's, even though the stock market is up, the job market is down and prospects don't feel all

that good in the context of all the conversations around AI and everything else and uncertainty, people are just, you know, even at the high end, starting to grow more cautious. Have you heard those kind of anecdotes, too? Have any of you guys heard of any of those anecdotes? Or it's just, just me? I haven't heard the boomer anecdote that you're saying. It certainly makes sense if there's a chance that you might have to get out of your daughter's bedroom for the podcast because she's moving back in, right? Exactly. But we've been interviewing for, for, open positions that we have and I was talking to one of the job candidates yesterday I was interviewing him and he was saying that among the people in his his economics master's program

there's a lot of angst around finding a job that it's becoming much more difficult to to find a job than he's seen in previous years right right okay all right let's play the game the stats game we each before a stat the rest of the group tries to figure that out with clues questions to of reasoning. The best stat is one that's not so easy when we get it right away, one that's not so hard we never get it. And if it's apropos to the topic of hand, at hand, the consumer, all the better, but it doesn't have to be a lot of things going on. And maybe, Mercia, I'll turn to you. It's tradition. Your first step, what's your stat? My stat is 55%. 55% related to data that came out today on Tuesday, November 25th.

goodness that wasn't a trick question i thought i know now i actually don't know if it came out today or did it come out oh but it's a recent stat yeah it did come out today it did come out oh is it a government stat yes is it in the retail sales numbers no pPI yes 5% of the Goods and services included in the PPI, no. Some kind of response rate. Oh, that seems high. Or no, actually, that would be low, wouldn't it, 55%. That'd be terrible.

Oh, wow. 55, in the PPI report, is some product up 55% year, every year, every year? Really? Yes. Is it, is Scott, be a food item. It is a food item. Eggs. Not eggs. Is it coffee? No. Bananas. Bananas. No. Beef. No. It's an important good. Weed. It's weed. It's weed. It's weed. It's cannabis. It's not

cannabis. I don't think that's in the PPI. It should be in the PPI, though, shouldn't it? I think it should be. judging by when I walk down the streets of New York all they do smell cannabis is a product that people are definitely using. All right, Scott, come on, man. You're the consumer product guy. I have no idea. Really?

What do you consume that's up 55%? Gold, gold, jewelry. Is that in PPI? I don't even know if this is a food item. It's a food item. Oh, it's a food item. You can't eat gold, though. They have gold.

Don't they have gold plates? You can eat jewelry. There's candy, necklaces. There you go. Orange juice. All right, we give up. Orange juice? No.

Pomegranates. Something like that. Is that close? Pomegranates? No. It's not at all. Tequila. I don't know.

I give up. What is it? Turkey. Oh, of course. Oh, my gosh. Oh, that's terrible. Process turkey prices. are up 55% year over year.

But what's the mean to be processed? I was going to say, because I thought I'd heard that the whole bird prices were down. That's what I thought, no? Read it and weep, folks. Really? What does process mean? Like, they've been slaughtered and done things too.

Really? It's up 55%. Yeah. I think, is that fake news, Scott? I don't know, because, you see, Because I thought I'd heard that the average cost of a Thanksgiving dinner was down this year. So that's why I didn't even go in that direction. I wonder who they're up almost 7% just over the month.

Actually, the past two months, they've been up 7%. Wow, wow, wow. Okay. All right. Well, that was a great one. That was a really good one. I thought it was a seasonal. Yeah, that's good.

Is that the meatbackers? Scott, you want to go next? What was that? Sure. Is that related to the meatpackers, like a decline in the number of meatpackers or difficulty hiring? I don't know. Anyway, we can move on. Yeah, I have one.

I came up with one. 15.3 down from 18.2. In the retail sales numbers? In the consumer confidence. Yes. Say it. Okay, say it again one more time. 15.3 down from 18.2. Uh, that's not the differential. No, the differential is negative.

Yeah. Uh, uh, is your purchase, uh, is it for a different, um, demographic group, the confidence for a demographic group? Uh. I saw this number You glanced glossed over it And I thought oh good I'll bring it out I'm trying to remember what it was

It's not the share Of survey respondents Who think It's not the probability Of recession in the next year Is it? Is it like a question like that though Scott Something like that?

I guess I'd say no No you'd say no okay uh is it on the expectation side of the survey okay they so expect to uh purchase a car in the next six months or something like that take a vacation take a vacation is it's one of those things though oh jeez all right i give up i give up it's Like, set back to inflation to be over 5%.

The share that expect their income to be higher in six months. Oh, that's another good one. So what are the numbers again? 15.3 down from 18.2. What's typical? It's been floating around in the high teens. Okay. So it's not like falling off.

It's down, but it's not falling off. Yeah, although it's the lowest in a while. it's not okay yeah that's good that's good hey chris you're up what's your set all right one trillion dollars on the note he's got his got his finger right here like what the hell is that it's his doctor evil one trillion dollars i shows this number just because i could do this that's all one trillion on the nose one trillion dollars yes but the isn't it like the annual sale of eli lily the market value of eli lily oh it did just cross that line but that's not the number i'm thinking of oh my gosh that's good um mercia that's that's that's that's amazing that you know

that how do you know that it's been like a headline for the past thing yeah i'd say i've just missed it? Is it related to our discussion? Crypto. No, related to our prices. Is there some measure of holiday sales? Yes, it's the National Retail Foundation's our Federation's estimate of holiday sales. The first time it goes above a trillion dollars.

Oh, okay. But only up 3.5% from last Christmas. Well, they say 3.7 to 4.2. So that's like 4%. Okay. Okay, very good. They give themselves a wide range there. Yeah, wide ranging.

Okay, let's move on to the listener questions. We promised we would do this every podcast, and that's a Q to you listener. If you have a question, fire away. And Chris remind me, where did they go to pose the question? The email address is either Help Economy at Moody's.com or inside economics at Moody's.com. Okay. I prefer inside economics at Moody's.com. Okay. That's a good one. It's much more intuitive. It's much more intuitive. Yeah. So what's the question, Marissa? The question of the week. Okay. This is a new feature. Yeah. Let's do this one. There was a good crypto question, too, but we'll save that. I think this is more germane.

do you see any way in which wealth inequality in the U.S. gets better? How would one design policy to fairly improve unequal distribution? Sub question. Do booms and busts in the economy disproportionately impact the wealthiest? And is there any realistic way for those who are left behind to catch up, especially with housing being so unaffordable? Ooh, this is a tough one. This is a tough question. Chris, do you want to take a crack at it?

I mean, I could take a crack at it. But do you want to take a crack at it? Well, the not so graceful way is a crash, a big crash, right? Given the, given how much in the stock market in particular, I'd argue, given how disproportional stock ownership is in the wealthier upper income part of the distribution. So, yeah, there'd be some compression there that has other consequences, though. So if you just look at wealth, that might be one thing, but then a crash of that magnitude may also have really negative impacts on the labor market. So that labor market income gets crushed and that lower income household, you know, yeah, great that their wealth inequality is a little bit better, but how income inequality is actually worse in that environment.

So that'd be the negative view of this. Otherwise, yeah, there were certainly policies we could take, tax policy that could certainly, you know, address if we thought this was a, as a society thought it was something we wanted to address or would be beneficial to ameliorate. Yeah. Scott, do you have a view? I mean, before I express mine, but do you have a view on that question about wealth and equality, how to address it?

Will it get any better how to address it? it from a policy perspective? I mean, I agree with everything Chris said. I think the other things, and I know you guys have had podcasts on this in the past, is just to address the housing on affordability. I mean, if you can create a way to build more starter homes so more folks can afford to buy homes.

And, you know, I think that would help as well. Yeah, you're right, Chris. I mean, one way to address it is bring down the wealth of the wealthy. That doesn't feel like that's what you really want to do. You want to lift the wealth of the folks that don't have wealth, don't have assets. And I think for most Americans, lower middle income Americans, it's about a home, you know, owning a home. And home ownership is under extreme pressure right now. I mean, for lots of reasons we've been talking about, housing is just unaffordable.

so people are locked out, young people in particular, and I think people view owning a home as very critical to financial success. That's part of the so-called American dream. So I think we should be focused on policies that address that. And we've talked about that a lot on the podcast about what can be done there. So I think that's really very, very important to do is try to increase homeownership. It's not easy to do. do, but, you know, something that we, we need to do. I also think, you know, obviously a lot depends on education. You know, I still believe at the end of the day, you know, an educated population is more likely to be one where, you know, you'll have less wealth than inequality.

People with no skills in education, with skills and education will be able to generate higher incomes and more wealth over their lifetime. So we should be investing in that, not disinvesting from that. And then in the, you know, in the design of fiscal policy, you know, I do think it's important that we look at all policy decisions that we make through the prism of what it means for the income and wealth distribution as a criteria in making that decision. So, for example, when you cut Medicaid or you cut Affordable Care Act, health care subsidies or you pair back snap, which is the food assistance program, you know, obviously you're really doing a lot of damage to the financial health of folks

in the bottom part of the distribution. It's making it completely impossible for them to save any money and to build any wealth. So, you know, that might be a case in point where you might not want to do that or, you know, or, you know, you certainly should think about ways to make those programs more efficient and make sure that those benefits go to the right people. But at the of the day, you know, you cut those things, you're, you're exacerbating the income and wealth distribution problems. So, you know, I think housing, very much so. You got to think about health care, food assistance, and, you know, just making sure that, you know, people are getting the education and skills that they need. I think those are really important to addressing

this. I will say the skewing of the income and wealth distribution has been long in the making. It's not due. It's been, you know, ongoing for the last few decades. And it doesn't feel like, you know, given everything that's going on, we're going to make much progress suggesting this anytime soon. I think this is a problem that's with us and more remain with us for the foreseeable future. So I hate to end this on a down note, but I kind of feel like that's where we're going to It's kind of a downer kind of podcast all in all. But anything else to add on that, Marissa, did you want to add anything to that? I would just say two other costs that I think would go a long way in terms of policy, perhaps to lift the bottom would be child care and making

education more affordable. So you talked about the importance of getting an education, but higher ed prices. have been just runaway rampant and out of reach for a lot of lower and middle class families. So if you could improve affordability of, and I don't know, I'm not pretending to know how you fairly and equitably do either of these things, but I do think child care costs are a major concern. And that has labor market implications. So it's kind of a double whammy. It's not only are you paying these costs, but the costs are so high that someone in the household can't work to the full extent that they could. And then I think the cost of education is is out of reach for a lot of households now as well. Yeah, great point. And I throw in elder

care while we're at it, right? That's also, you know, child care and elder care is. And you're right, it's certainly a factor in limiting labor force participation. I mean, and we want people to be able to go to work, but they can if they have to, you know, take care of children and take care of their parents. But anyway, but that was a great question. I was a really good question. And I think we're going to call us a podcast. Is this because, well, I don't know why, but just because. Is you stick of this conversation?

It's time. We've got to move on. We've got to move on. We've got holidays. And I want to wish everyone out there a very happy Thanksgiving. It's a wonderful holiday. We all get together. Everyone hopefully can get together with their family.

And it's just a really good time. So I wish you guys a great Thanksgiving and we'll see you on the other side. So with that, dear listener, take care now. Talk to you soon.