Moody's Talks - Inside Economics - Best.Economy.Ever.

Episode Date: September 27, 2024

Is this the best economy ever? Given the big revisions to GDP and the steady stream of other stellar economic data, the Inside Economics team makes the case that it is.  Moderating inflation, full employment, stronger savings rates and steady corporate profits point to an economy that is stronger than consumer confidence suggests. The team also discusses the latest economic proposals from the presidential campaign and a recent opinion piece comparing Mark’s forecasts to those of Punxsutawney Phil. Editor’s note: Punxsutawney Phil has also been unfairly mischaracterized by the media. https://www.axios.com/2023/01/28/groundhog-day-punxsutawney-phil-spring-winterGuest: Matt Colyar - Assistant Director, Moody's AnalyticsHosts: 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' @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 Sandy, the chief economist of Moody's Analytics. I'm joined by a few of my colleagues, my two trusty co-host, Chris Reed and Marissa D. Natali. Hi, guys. Hey, Mark. Good morning, Mark. Good morning. And we've got Matt Collier. Matt, how you doing? Doing great. How are you, Mark? The name rolls off the tongue, Matt. It does. Beautiful.

Yeah. That looks for a couple years. I'm getting used to it. Yeah. Yeah. But I got it down, I think. I got it down. So everyone's doing okay? Yes. Yeah. You've been traveling as much as I've been traveling. I've been everywhere this week. Not this week.

And I had to get up. This is Sarah's fault. She makes me get up a literally. I got a four in the morning to go to Chicago yesterday. I think it was five in the morning to go to New York, or D.C. And then five o'clock in the morning for New York. You know, Sarah, I'm like, you know, look at me. I'm not a young man.

What the heck? What's going on? I don't know. No answer from Sarah. She's quiet. She knows you love it. I live for it. I live for it.

Anyway, it's good to be back at home. And in my suburbs of Philly, ground zero for this election. I'm telling you, it's all going to be determined by my street. What's the status of the neighborhood most up to date, much recent reading? Everyone's gone quiet. It's gone dark. I don't know how to interpret that. Everyone's gone from the bunker.

Maybe because you keep mentioning them on your podcast. Maybe it. Maybe yet. No yard signs? You know, the yard signs seem to be at a minimum this go around. There are a few. Have you noticed that? Yes, yes.

But I don't know if it's just timing, right? I think that last week maybe they all come out. I know they populate some of our main roads that week, right? Yeah. Or maybe the campaigns themselves don't think they're effective. I don't know. They're spending more money on. I saw a billboard.

I was on the PA turnpike and the bill, Trump campaign is using the billboards. I didn't see Harris on the, on the, yes, the electronic ones. The electronic ones, right? Yeah. Seen that.

But I've seen fewer roadside lawn signs. Yeah. Maybe that's, maybe that's strategy. I don't know. But a lot, I mean, have you noticed the advertisements? You try to watch the Eagles game.

Geez, Louise. So it's one political advertisement after the next. Incredible. We are ground zero. Okay. Well, let's talk about the economy, unless you guys want to talk about anything else. Anything else you want to talk about before we get to the economy? Is there anything else, Mark?

Is there anything else? No, there is never anything else. It's all about the economy. And we got Matt here because we got some new inflation data and some data on consumer spending and GDP revisions too. So a lot going on with the economic data this past week. Matt, you want to give us a bit of a rundown on the data? Yeah, you refer to it as new inflation data, but it's a familiar story, mostly because the PCE deflator, the inflation data we're talking about. That's the personal consumption expenditure deflator is the second inflation data point that comes out each month, obviously following the CPI a few weeks earlier. And here it was a relatively predictable, but good story. So the PCE deflator rose 0.1% from July to August.

That lowered the annual rate, the year ago rate, from 2.5% to 2.2, which is a big improvement. Spike last year in energy prices. Now we look back, we call that favorable base effects. We saw similar dynamic with the headline CPI. So getting closer and closer, bed cut by 50 basis points. They're obviously feeling comfortable about it, and this data is consistent with that comfort. Matt, one factual thing. I was reading your write-up on the deflator, I think it was your preview.

It was yesterday I was reading it about your previewing the release today. And you said that the Fed's headline inflation number is the core PCE deflator, consumer expenditure deflator X food and energy. I think that the headline is actually the core is the consumer expenditure flare, not the core, right? Am I wrong about that? I think so. If you go look at the core. It's not core. It's not core. They just target PCE. They just target this headline. Headline PCE. That in that is a 2%. I checked that as well recently because people say that. Like I've heard it both ways, but I looked back at the Fed papers and stuff. It's headline. That's their target. Their official target in the policy framework, the framework the Fed puts together every so often, says our target is 2% on the consumer expenditure deflator, not the core PCE, the actual PC deflator. So for the uninformed or sloppy, I guess, analysts that you referenced it also, like me,

that are saying core PC, do you think that's more of a near term? Just let's, you know, we're going to get volatility with energy and food. So maybe that bounces up and down. but core PCs are underlying inflation measure, and that being 2% is kind of a near-term target, or am I trying to salvage my ego here? I think the latter. You're salvaging. Well, I also think that they've always said that 2% is sort of like a medium-term target,

right, over the medium term. So they don't need it to be exactly 2% on any particular reading. They need to see kind of that heading. toward that average over the course of, you know, whatever medium term means for them. A few months, six months, a year, I don't know. So I think it's a little fuzzy on the 2% itself and when that needs to be reached. Yeah, just to make it feel better, I got called out on this just a few months ago because I was under the same mistaken impression.

It's the core PCE. It's the actual PC. And someone said, no, it's the PC. I go, no, you've got to be wrong. I always thought it was the core because the core excludes food and energy, which go up and down and all around. It gives you a better forecast of where inflation is headed. The way you described it was underlying inflation. And that's where inflation is going.

But I think in the official language in the framework document, you should go check and make sure I'm right. I think they're focused on the consumer expenditure inflator. And that, as you said, is 2.2%. That's, you know, was in a spitting distance of the target 2%. Now, let's go to core, though, the core PC deflator. What did that do? Also, 0.1% from July to August, but the year ago rate for the same, absent the same base effects that headline CPI had, or headline PC had the year ago rate for the core PC

ticked up from 2.6 to 2.7%. a little bit of rounding there. But generally watching that and kind of projecting, okay, when is the core PC going to start sliding closer to 2%. I think we see a little bit of that in the next couple months, probably closer to 2.5 by the end of the year. Our forecast has CorePC at 2% by the end of next year. That's Fed's latest projections.

That's where they were, I think, 2.2%. So following what seems to be a pretty predictable trajectory, lately, which is certainly a good thing. You said 0.1, and I know you're in the preview that I read, it was 0.14, so it would be rounded down to 0.1. Do you know what the number is it to the second? I do, and I'm curious that you're going to... I do know the second significant digit, and I'm curious that you're going to ask. I think we settle on. It's the third significant digit.

Okay, I don't know that. I only know the second. But the... Your ego is getting bruised here badly, I'm just saying. I'm hanging in there. No, number two. It depends if you ask what the, what the discrepancy is, because it was 0.13. So we were 100 off. Okay. I don't know.

You get one back. You get one back here. All right, good. You expected a 0.14 increase on core PC and you got a 0.13. Right. Very good. Yeah. So, and that's other forecasters.

Everybody was there. We get CPI, we get PPI data. There's a lot less volatility and or errors in forecasting PC. Because the CPI data and the producer price index data, the PPI data are used by the BEA, the Bureau of Economic Analysis, when they construct the PCEE, oh, boy, a lot of acronyms there, but yeah, exactly. Those are all the important inputs and we can get a good sense. There's marginal stuff, but, you know, seasonal adjustments, but largely, that's the story.

So forecast are pretty accurate. Okay, so step back. What does this say about inflation broadly? I go back to the Fed's very clear signal when they met. They feel good about inflation. I think they have a hard time envisioning inflation re-accelerating. And that's why they front-loaded. They moved quickly. And this report is another data point consistent with that conclusion. So prices are moderating. It's harder and harder to see. What would turn that around? I mean, looser financial conditions, people feeling great about what the Fed's done, perhaps. But in terms of the actual

underlying components, shelter we look at, we've kind of hand-waved that way because if it's oddities when it comes to measuring owner-occupied housing, it's less of effect than the PCE deflator than it is the CPI. So you see a minor impact there, even though there was an acceleration. Healthcare, durable goods, prices, everything kind of moving as it has been in recent months. So broadly, you're feeling pretty good about if we're not at Target, we're close. enough and headed in that direction. Right. Right.

And anything in the PCE deflator data that surprised you? I mean, probably not because it was 0.14.0.13. Broadly, if I take a step back, goods deflation, I think, has persisted. I thought prices would have kind of flattened out by now. A lot of that's the vehicle market. Prices keep falling. But it's not dramatic, but it's gone on a few months longer than I would have anticipated. So that's a drag on broader inflation.

but that's a minor observation and not totally unsurprising. Okay, okay. Hey, Chris, Marissa, anything on the inflation data that you want to call out or pretty straightforward? Chris? I'd say pretty straightforward. I'm Matt. Yeah, Marissa?

No, the gap between PC and CPI has narrowed. It hasn't gotten narrower, but it is more narrow than where we were a year ago, right? when there was a very big difference between the two. It's about half of what it was a year ago. What is it exactly? 0.6. 0.6, which is kind of average, that's my mind's eye. That's what I think kind of the historical difference.

Yeah, it's usually like 0.5. So it's, yeah. Okay. Matt had to go turn his camera off because we don't know why. He's having camera problems. He's having camera problems. But he's here. But he's here.

certainly in spirit. So, Matt, let's turn to the hard data, the data on the real economy, got data on consumer spending, income. And of course, I think yesterday we got the so-called GDP revisions, these sort of these annual revisions that are revised the data, I think back five years, correct me if I'm wrong. Is that right, Marissa? It's a five-year look back. It's a 2019.

It's 2019. Yeah. And you want to talk about that data? Because that, that, you know, usually, a lot of times revisions are neither here nor there, but this felt like there was something here. This was important. Do you want to describe, you know, what happened here? Real GDP, the actual, the most recent quarterly increase wasn't changed.

But what's drawn a lot of attention is the upward revision and something called gross domestic income, which is a similar-ish way of measuring GDP. measuring GDP and it typically over periods of time tracks the same way, but there had been a divergence and it was a matter of which of the two measures, either GDI or GDP, the more familiar, which would be revised towards the other. And what occurred, at least in Q3, is pretty significant upward revision in gross domestic income. In Q2. In Q2. I'm sorry, Q2. So conclusion being that, okay, if one of those stories were, one story was good, GDP had been

turning along, higher than expectations, GDI, a bit lower, very familiar, you know, kind of vibe, I guess, if you will, in recent years has been, okay, is it actually as good as the data is saying or things bad? That's in the job market. That's with GDP. So there's this sense that maybe GDI was telling the truer story, and GDP could have been pulled that, you know, pulled downward to reflect that. But the opposite happened and kind of strengthened the argument that the U.S. economy is on really solid ground and is expanding well.

That was my main takeaway. As far as the older revisions, if there's... Can you stop there for a second. So just to reiterate, that's a little confusing. So we have real GDP. That's the value of all the things that we produce. And that's based on looking at the consumption side of the accounts, the consumer spending, business investment, what the government is doing on spending and net trade.

And then there's an alternative measure of overall economic activity called gross domestic income, GDI. And that's based on looking at the income generated by the production going on in the economy. So personal income, corporate profits, and a couple of other different things. And these two things are, these two measures are trying to measure the same thing, but from different angles of the economy, different source data. and they can often diverge. And they have been diverging.

You know, more recently, GDP growth has been much stronger than GDI. In fact, I think this is right. Year over year through Q2 of 2024, before these revisions, GDP was 3% year-over-year, and GDI was closer to 1%, I think. So, and in fact, historically, the thought is that to get a better, more accurate representation of the reality of what's going on in the economy, you should average those two measures, GDP and GDI. If you did that, it would say the economy was growing 2%.

That's kind of where we were. Before the revision, post-revision, the GDP didn't get revised all that much. It's still, I think, 3% year-over-year. Correct me if I'm wrong, but I think it's still about 3% year-over-year through Q2-2020. But GDI was revised up big-time, you know, big-time. And I think it's year-over-year. I think it's over 3%. 3-5, right?

So if you average the 2, that says growth is over 3%. Real growth, real GDP growth, GDI growth is over 3%. I mean, oh, the other thing, the revision took, remember we had two quarters of GDP declines back in 2022 and everyone was kind of hand-wringing about recession, technical recession, blah, blah, blah, blah. Well, they revised away a lot of that. And actually, there's only one quarter of decline. And it's a pretty modest decline on it, very small.

So the whole thing that felt like the whole economy, now. look at the data, the economy did a lot, has done a lot better since the pandemic hit, and most recently a lot, lot better than the data would suggest. It was already doing well, but now it's doing, dare I say, exceptionally well, exceptionally well. So did I get that right, Matt? I know I reiterated what you said just because there was a lot there. Yeah, no, no disagreement for me. Yeah. Chris, Marissa, anything? What do you think? Yeah, I mean, GDI for the past three quarters is running faster than GDP, right?

Which was the opposite of what we had seen prior to those revisions. Yeah, it's pretty remarkable. And then the other big revision is the savings rate. Yeah, but one more thing I want to say about the GDP for going to saving rate. And that is if the economy grew over 3% year over year, through Q-224, and unemployment rose during that period. I don't know what it is, but maybe six, seven-tenths of a percentage point, which is not inconsequential.

And that's all related, excuse me, to labor supply, going back to the immigration, all these folks coming into the country, getting asylum, applying for work, going to work, you know, nine, 12 months after they, you know, apply. And that's showing up in the labor force. So that you get all this labor force growth and, you know, their unemployment, rates are a little bit higher than the native born, and therefore you get this push up on unemployment. But nonetheless, unemployment is pushed up. What does that imply, Chris, about the economy's potential rate of growth? It's higher, right? That's a lot higher. Okay. Pick it up,

what do you get is. The other point I'd make, oh, what do I think it is? Yeah. Based on the, you know, I mean, you complies so-called Oaken's Law. Remember Oaken's Law that relates the change in GDP relative to potential to the change in the unemployment rate. And if you kind of do the simple arithmetic there, and Okins Law, by the way, is a regularity in the economic data that has been there for a long time. And every time the economy diverges from Okun Law, the data gets revised back to Okun's Law. So Okun's Law, if you do the arithmetic, says potential growth in the economy over the last year has been close to 4%. Close to 4%. It's extraordinary.

Extraordinary, yeah. Exceptional, exceptional, right? And it makes sense in the context of all the labor force growth given the immigration and also the labor productivity growth. We've also seen a surge in labor productivity growth for reasons that are still not quite clear, right? Well, that's where I was going, right? So we have this GDP revision upward. We have this labor market revision downward, right, that we saw recently. So Dante, Dante, you know.

Our colleague, Dante. Just say. Verdictivity on the rise here. Talk about a bruised ego, and he's not even here. Yeah. Just preparing the... Just preparing them for, yeah. Because this would mean what you're saying,

what upper revisions to the productivity... Productivity growth, right? That has to be the case. Right. So all this suggests another reason for the Fed to ease policy, right? I mean, the economy's potentials rip-roar, And if you're holding back the economy, given that fast potential rate of growth, you're going to get rising unemployment for no good reason because you're not going to get inflation as a result of the strong growth, right? So there's just another, you know, the screaming reason why the Fed should normalize interest rates here as fast as possible, you know, given the – now, I don't think the economy's underlying potential greater growth is going to sustain that 4%.

I'm not arguing that because already immigration is starting to slow, given President Biden's executive order. and that's slowed down the amount of asylum seekers coming across the border. And I can't imagine productivity growth staying at this pace. But nonetheless, nonetheless, pretty extraordinary, right? And Mercy, anything on that point before we go to the personal summary? Because that's another really important thing. The labor force portion of it. We'll get back to the personal saving rate.

But on this, anything you want to say about that before we move on? No, I don't think so. I mean, I think you're right. we know from border crossing data that immigration has dropped off about 50 from where it was, you know, encounters at the border, the latest data that we have compared to earlier in the year. So it's not sustainable. And given both presidential candidates proposals on immigration, it's unlikely that we'll see any sort of bounce back anytime soon.

Although one's got a very different perspective on that than the other, right? Yes. But either way, we're not going to see the immigration. that we saw for the past couple years. Right. Which I think everyone would say that's probably a good thing. We don't. Right.

Yeah. Right. But bottom line, the economy's, can I say rip-orin? It's rip-ri-ri-Rorin, right? No? Come on. Could you counter be, though? It's rip-rip-rip-Rorin in 2024, no?

Anyone? The question is, what's 2025, right? Okay. All right. Let's go to then, okay, in that regard, in that regard, go to the other revision that you were bringing up, Marissa, earlier, the personal saving rate. Describe what that would happen there. So that was revised significantly higher. So the personal saving rate, if you recall, we talked about it a few times.

And that had fallen down into the low 3% range over the past year or so. And this, too, with these revisions back to 2019, was revised higher. Now you're seeing an average savings rate that's up around 5% as opposed to 3%. So that could suggest that either spending, spending has not been as strong or spending will slow more or people just have a lot of cash, which was also backed up by the data that we got the other day from the consumer expenditure survey. Just to stop, maybe I'm wrong. But the revision up, I don't think it's because it's less consumer spending, right?

Because that, it's the income. That goes back to GDI. Yeah. We got a lot more income, right? Yeah. Okay. Yes. Yes.

Okay. Okay. So the saving rate, we had been observing it, it was kind of in the, correct me if I'm wrong, I think it got below three last month in the pre-revised data. I think we got to 2.9% in August. And, you know, just for context, pre-pandemic, the personal saving rate was six, six and a half percent. And we kind of take that as, you know, the kind of the, I'll call it the equilibrium saving, right? Kind of, you know, when everything is kind of where it should be for consumers and the economy, interest rates, everything else.

It's about six, six and a half percent. And we had seen it come way down and now falling below three. and with this revision to the income data and the GDI, we revise up the personal same rate, now we're closer to five. So it's not quite back to the six, six and a half. But five is a big difference than five in rising as opposed to three and falling is a big difference.

Yeah. Right. And that would argue, what does that say about consumer future going to Chris's point about 20, 25? What does that mean for growth going into 2025? Marissa. I mean, it...

I don't mean this is a high school... This is a college contest. Sorry about that. But just to state it, what does it mean? Mercer? Well, I mean, it could mean that spending is more constrained if people are saving more money, right? No, no. It means it has more firepower.

What is, they're spending. Spending is strong. We're getting 3% GDP growth. What it means, in my mind, is it means that they have more financial firepower going into 2025 so that they can spend. Yes, I mean, I think it has meant that. But like, what's the direction of the savings rate? If savings keeps rising, people are saving more?

Could it be that they're not spending as much or they're more worried about their finance? Agreed. But it's one thing if you're at three and you have to get back to six and a half if that's equilibrium. It's another thing if it's five and you have to get back to six. That's a totally different ballgame. Okay. Yeah. And it just means relative to what we thought the consumer is in a much better financial spot,

they have more saving, the saving rates higher. They're in a better financial spot so they don't need to be less likely they're going to be more cautious next year, or put it this way, as cautious as they would have been otherwise. That augurs well for consumer spending in the broader economy in 2025. Chris, do you disagree with what I do. I'd say the only wrinkled argument is the distributional part of it. I think much of that saving is still going towards the middle, upper end of the income distribution.

So there are differences there. That lower end consumer I think is certainly seeing an improvement in their financial condition, but they are the ones that will probably have to rebuild their savings to a larger degree than the other parts of the distribution, right? So they may be pulling back on their spending way, for they may not have quite that impact that you're referring to. Yeah, no, no doubt. I mean, the bulk of the saving is in the folks at all times is in the folks in the top

part of the distribution of income, the kind of the top third. Actually, we do calculate saving rates by income based on survey of consumer finance data and financial account data from the Fed. So it's a little bit different than this data we're talking about right now. You know, it's trying to measure the same thing, but from a different angle looking at changes in the value of assets and liabilities held by, you know, the household sector. And it does show that the folks in the top, that's where the bulk of the saving is, and that's where the so-called excess saving is still, you know, the saving that was built up

during the pandemic. And there's still plenty there, which augurs well. And it's the folks in the top there that, you know, kind of drive the train, right? Because they account for typically based on consumer expenditure survey data, 55% of the spending. So they kind of drive the train. interestingly in that data it's the folks that are kind of a high middle kind of the 60 to 80 percent of the percentile of the distribution kind of just above the middle part of the

distribution where they've drawn down the saving the most that's where the excess saving has been drawn then the most which I which is yeah interesting I'm not sure how much to read into it and that's why you kind of did the shimmy there yes you saw a shimmy It was very subtle. I saw this shimmy. Yeah. I saw the shimmy. Okay.

But my broader point, though, Chris, when you do you agree with what I'm saying here in terms of, you know, compared to where we were before the revision and are thinking about the consumer, the consumer is in a better spot. Yes, you know, the low income consumer has to repair their balance sheet. But broadly speaking, you got to feel. better about the consumer, no, going into 2025? Yes, the balance is better than what we had seen previously. Okay. That's clear. I guess that, you know, we also got some real personal spending data over the last

couple of days, right? We had a little bit of a deceleration in August relative to earlier. So it does seem as though consumers may be pulling back a bit on their spending, right? So we have to also adjust. what is their ultimate target in terms of the saving might get back to, right? So it could still be, it could still be the case that their balance sheet has improved, but they still want to save a bit more, and therefore they're going to pull back on their spending. Well, in fact, that's our forecast, right?

Exactly. You look at our forecast, we have growth slowing back down to two, and that doesn't, that happens because consumers are more, particularly high-end consumers, but also low-end consumers, low-income consumers are more cautious in poor. they don't cut spending. They just don't increase it quite as fast. Exactly. I'm just tempering your rip-roaring comment.

Yeah. I, you know, I've, you know, I mean, I'm even, it feels like we got to revise up our growth rates for next year, you know, given what's happening here. I mean, you know, it may be higher than two. Maybe, you know, maybe it's going to be closer to two and a half because we're growing three. You know, we're growing three. Anyway, okay, so here's the thing.

I'm looking at all this data. You know, GDP 3%, GDI, 3 and a half percent. Unemployment, 4.2%. Solid job growth. You know, it's slowing, but that's by design. No layoffs. Record stock market, record housing values. Price of gas.

Huh? Price of gas. Price of gas coming in. What is it now? I saw $3.20 yesterday. Okay, $3.20. $3.20. Okay, that's got to feel good.

Inflation, we just talked about, you know, back in the bottle, so to speak. What? This economy is, I'm going to just say it. Unbelievably good. No? Unbelievable. I mean, of course, there's pockets. There's, you know, it's a big economy.

It's a big elephant. It depends on where you touch the elephant. But you look at the elephant, the economic elephant, it's like, really? Have you seen a time in your career when things are as good as they are today? I'm just asking. I mean, I've been around for a long time, 30, 35 years, and I'm having a hard time saying, yeah, I find there's an economy that's better than this economy. No? 1999.

What? August 3rd, 1999? Okay, 1999. I disagree. Because that was... You think it was worse. Huh? You think it was not as strong back then. No, I think it was being juiced by a massive bubble in the equity market.

Yes, that is true. But it felt, it felt good. No, no, no. But I'm saying fundamentally, fundamentally, fundamentally. Yeah. Fundamentally, you know, is this the best economy that you've ever experienced? Chris, can come with another day, date? No, got to think about it.

No, I'm thinking about it. I'm like the housing boom. I'm telling you, I am telling you, in the 35, 40 years that I've been watching this economy, I'm, I'm, I'm, maybe there are, maybe they're, you know, we've got to think about it more deeply. But I'm hard pressed to find a time when things are better than they are today. Really, by objectively looking at the economic data. Yeah. Okay.

Well, think about that. Okay. Okay, let's change subjects a little bit. you see that Wall Street Journal piece, opinion piece about, you know, my forecast per hour. Did you guys catch that? Oh, was there a piece? And I'll have to say, I've kind of ignored it because, you know, I thought it was not worthy

of spending much energy and time on it. So I didn't really read it that carefully. So maybe, Chris, can you, can you, can you? summarize what it said in a nice way. Unlike Matt, my ego is fragile. I have a fragile ego. I'll undid it. Matt's got a tough ego.

I've got a fragile. It's less tough now. It's less tough now. Yeah, less tough now. What did it say? Well, ostensibly, I guess from the title, it was a piece that was directed towards your election forecast, right? It was saying that the Trump campaign has nothing to worry.

about because you, Mark Sandy, were based on your election model forecasting that Harris would win. Right. So that was the leading thesis. That was the title. That's what I thought I was going to get. And I thought it was going to be, oh, they're going to go back and look at all of our election predictions. Yeah, right. You know, there was the miss, of course, with Clinton versus Trump, right? That was a miss of the election model. But pretty good track track record before that. right? And I thought that was what the piece was going to be about. But then the author started to review all of your forecasts, right?

All of the economic forecast historically. And I would argue there's quite a bit of cherry picking that went on in that review, right? She was brought up just various forecasts. Then you make thousands of forecasts, of course, right? Right, right. Continuously. So, yeah, pretty easy to find some where you were wrong, when the economy did turn out differently. I also thought the piece lacked some of the context, right, that these forecasts require.

You're making forecasts at a point in time based on available information. That doesn't mean that that's how the economy is going to play out if other factors come into play, right, and kind of take the economy off course. So it's, you know, fair to review every forecast and backtest, of course. But the piece seemed to me to really be a dig at all of your forecast to kind of discredit the election forecast. I think that was the— Discredit the election. The election. Or discredit more fundamentally me, no?

Don't you think? To me, I think that was the device to really underscore. I think don't listen to this guy because he gets all the forecasts wrong. But really about the election, right? It was kind of tying back to the election. Oh, interesting. That's how I interpreted. Interpretive mercy.

Just using all the other forecasts as a way to demonstrate or support the argument. Right. I did like the little Easter egg in the art. I don't know. I missed that in my skimming. The Easter egg. The Easter egg I saw was that she made a comparison to Puxetani Phil. Oh, I love Puxetton.

You love Bucksstine. And we all know all the eggs. listeners to the podcast know that Groundhog Day is your favorite movie. So I thought that was a very clever, very endearing that the author intentionally inserted there. Oh, yeah. You think that was an olive branch, Chris. You think I didn't pick up, I didn't pick up on it that way. Okay. Well, clearly it was doing the research. Yeah. Deep research. So I figured, oh, it must be that must be the tie in here. That's funny. Brisset, do you have any other takeover? Did you read the piece, I'm sure.

I did, yeah. Did you underline it, yellow highlight, that kind of stuff? Or no? No, I did not enjoy reading it, Mark. It made me not happy. Yeah, I mean, I think she just, you know, my thing reading it was like, why you? Why is she going after you? And I think the reason is because you have an election model, right?

And they just, she doesn't like the fact that you're saying that Kamala Harris is going to win. And so therefore, let's go back through this guy's history and let's cherry pick all these times. He was quote unquote wrong and therefore you can't believe his election model. I mean, you could do that with any professional economist, go back through their history, cherry pick things that they got wrong. It was quite unfair and obviously politically motivated. You know, thank you for that. I appreciate that. My wife and relatives and friends said pretty much the same thing.

So that was very kind. I'll have to say a couple things. One, I actually, and I don't tend to read those kinds of things. I mean, there's been other stories like that in the past, and I tend not to, because you can't get wrapped up in that stuff. I clearly hit a nerve, maybe more than. to one, probably a few nerves. And I made someone angry, you know, and I, I suspect that journalist did not write the piece. I think she probably, it was placed, you know, someone else wrote the piece and, you know,

gave her, I can't imagine she did that research. That was one thought. The other thought was, I was actually kind of flattered because is that weird to feel flattered? I mean, that that must mean that what I'm saying has like an impact. Otherwise, why would you write the piece, right? Yeah. I mean, you know, actually someone sent it to me early in the morning.

And I'm looking at it and I go, oh, you know, this is probably some three, you know, third rate kind of media, you know, off some website in the dark web. I don't know. And then I see the kind of the opinion logo and I go, you know, that looks like the Wall Street Journal. could that that can't be the wall street no way could that be the bolster journal so i click on it it's the wall street journal so shouldn't it i mean i'm going oh gee i i feel kind of flattered by this this is kind of kind of cool and then the third thing that him goes the irony of it is that the one of the best forecast calls i've ever made just happened and it goes to this great economy i mean the entire world was saying nearly the entire world, almost every economist, every CEO, you know, almost everybody's saying,

we're going into recession in 2020. Right. We're going into recession. And I'm sitting there, yield curve is inverted. That never is wrong. Blah, blah, blah. And I'm saying, no, no. You know, clearly the risks are high.

You know, history would suggest when the Fed's jacking up interest rates, you got a higher risk. But we never had a recession in our forecast, never had a recession in our forecast. never had a recession in our forecast. In fact, we've underestimated the growth that's occurred, you know, since then. So I'm thinking, you know, of all, I mean, that seems to be, you know, economists predict locks things. We do a lot of forecasts. I mean, Chris, you said thousands. In my career, I've probably been tens of thousands of forecasts, right? You have to update them all the time every day. But the key, ones that matter the most are turning points in the economy. when the economy's turning up or it's turning down.

And I would say, go but take a look. I feel pretty good about my track record. And this last one is well documented. You can go take a look at it and see. So I thought, wow, that's really weird. You know, I mean, I actually felt pretty good about my forecasting. And here they're digging at my forecasting. So, and then I go, the election model, finally, a little thing I'll say,

I'm actually feeling pretty good about that election model. I'll have to tell you. That election model says, this election is going to be won by Kamala Harris, and it's going to boil down to PA. The state of Pennsylvania, our state that we live in, and I'm feeling pretty good about that at this point in time. Obviously, there's, you know, I don't know, six weeks to go here, things happen. But if you look at the, you know, all the betting markets and the polling and the economic data, you know, if that's the number one issue for Americans, I know many Americans, and still feel the sting of the inflation and the higher prices back a couple three years ago and why there's this disconnect between the happy talk of economists like me and the American people.

I get it. I understand it. It makes sense. But at the end of the day, the economy is objectively as good as I've ever seen it. And that ultimately, I think, will shine through. Anyway, that's what I have to say on the subject. Has there been any, like, fallout of this? You didn't know this was coming, I had no idea.

Okay. No fallout, no. In fact, I think I probably will call it undue attention to it now with the podcast. But up to this point, there's been no, as far as I can tell, according to Sarah, who won't monitors these things, you know, there's been very little attention paid to it. Can I just say two more things about it? Yeah, yeah. Just about the forecast.

Like, the irony of it was that your election model has actually been incredibly accurate. since 1990. I mean, there's only been one miss. So the whole premise of the article was, we can't believe the selection model, because Mark Zandi's always wrong, but yet that's been one of the most accurate things you forecast, which she didn't mention.

She also called out the House Price forecast back in 2005, 2006, right, as one of the things you got wrong. But correct me if I'm wrong, But my recollection of that was that, yeah, you were wrong about the magnitude of the decline in house prices. But I think you were one of the only economists saying that house prices nationally in aggregate were either not going to grow or we're going to fall, right? Like very few, maybe like Noriel Rabini because everything's terrible, right, in his forecasting world. But other than that, I don't remember anybody else saying nationally house prices. were going to decline.

I'm actually very proud of our house price forecast. Yeah. We wrote a, we wrote a, we've got a paper that we wrote saying prices are going to fall. And it was a modest decline, I think, in the single digit decline. This was back in late 06 or 07, somewhere in that period before prices actually started to decline, well before they started declining was 06. And to say that national house prices were going to decline was, Chris, you know, because you were Fannie Mae at the time, to say that was like, you're out of your mind. That never happens.

Maybe you get a price declines in Texas when the oil price buzz, but a national house price decline, not possible. Right? Am I wrong, Chris? No, I recall at the time, the stress test was assuming that two major regions in the U.S. would have house price declines. Because historically, you had one, right? It might have been Texas. It might have been California at a different place, but you never had a national, you know, coast-to-coast decline. So, yeah, it was that forecast made a splash, certainly. Yeah, okay. Anyway, this is a lot of fun.

I appreciate it. That's appreciate the kind words. Thank you. Can I make one quick nod? I think you should take it in the spirit of a celebrity roast, right? Oh, okay. I like that too. I'll take that.

I'll take that. Matt, you were going to say something? I already showed you a little appreciation of your Twitter response. I thought that was good and it deserves some kind of call out. you held up and a triumphant Puxetani Phil was being held up at Groundhog's Day and that was the tweet with a subtle acronym. I think three people in the world understood that tweet and you were one of them. Yeah, I was happy. Here's the funniest thing. The funniest thing about that. Sarah, I keep talking about Sarah because Sarah's like critical to everything. Sarah,

her tweet writes that because she goes, did you get help with that tweet? Because it's like zero, zero probability that I could come up with that tweet. You're right. I did not come up with a tweet. It was my daughter who came up with the tweet. That's good.

Yeah, yeah, it was sharp. I hit up, Sarah, and I said, great job helping out Mark with that. I had nothing to do with it. That's so funny. Yeah.

That is so funny. Anyway, let's move on. Let's play the, you want to play the game? I'm going to play the stats game? Let's play the status game. We each put forward to statistic. The rest of the group tries to figure that out through clues, deductive reasoning, questions, and the best stat is one that's not so easy. We get it immediately. One that's not so hard. We never get it. And if it's apropos to the topic at hand, all the better. I'm not sure what

that topic is. Oh, the exceptional economy, I'd say, is the topic at hand. All the better. Marissa, as tradition has it, you're up. Okay. 225,000. It's not UI claims, is it? Four week moving average? Yeah, you got it. Oh.

Yeah, that's it. Okay. I just want to say, Chris, do you see how that's done? Nicely done. Anyway, that's an inside joke. Yes, that's the four week moving average of UI claims. latest read on UI claims from the week ending September 21st, in line with this theme of an exceptional economy, right?

UI claims have now been falling since they peaked in the summer and they're kind of back down to this very low sub-220 a month, 220 a week level. So still no evidence that even though we have the unemployment rate is elevated from where it was a year ago, you know, it's totally a supply side phenomenon. on we don't see layoffs in the economy. I'm feeling increasingly good about the job market. Mercer, if I said to you, Mercia, what is the number of UI claims you would say is perfect? What would be the perfect number of UI claims?

What would you say it is? I mean, it feels pretty good where we're at right now. I would have answered 225,000. Yeah, I mean, right around, this is like, remember before, four UI claims started rising in the summer, they were like 220, 220 every month, right around there within a few thousand upper down. And the unemployment rate was inching higher. But I mean, it was still right around 4% where it is today. So yeah, I mean, again, back to the back to this is the best economy I've ever seen. Yeah. That is literally the number, if you had asked me that question.

Mark, how many UI claims would be consistent with an exceptional economy? Perfect. You know, Right exactly where you want to see them. What would that number be? I would say $225,000. And that's what it is, right? Yep. Yeah. No layoffs.

Amazing. Chris, you're up? 2.96%. That sounds like a GDP-related number. It does indeed. It is related. Oh. The GDP report.

GDP report. Is it consumer spending? No. Is it the 2024 Q2 annualized growth rate for something in the GDP accounts? Or is it the year over year? It is a percent change quarter to quarter. Oh, it's a percent change quarter to quarter. 2.96.

Matt, you know what that would be? Investment related? No. No. Is it nominal? No. Something nominal related? Is it nominal? Is it not real? Or is it nominal growth? It is nominal. Oh, nominal growth? Yeah. Yeah. That doesn't help, though.

No, no. No. So it's a component of GDP. It's not a component of corporate profits grew 2.9 per 6. Okay. Marisa. Merissa. Mark, amazing. Way to come back. Is that before or after tax? The listener thinks you guys are easy on me and giving me feeding me these answers.

That is not what's happening here. Clearly, no, it's not. Before or after tax, Mark. Oh. I don't know, but I'd say before tax because that's what you'd probably go with before tax. Nope, after tax. Oh, it's after tax. Okay.

Oh, geez. Bummer. Before was 3.1.7. Oh, okay, okay. Pretty close. Pretty close. Pretty close. Okay, so talk about corporate profits.

Did they get revised up? I didn't even look. Do you know? Oh, I didn't look for revision. I'm curious. I should have, but yeah, I don't know. I would suspect yes, but yeah, I would look. Probably would be my guess.

Probably, yeah. But yeah, 2.96 remains a healthy profit growth rate. It's above average. And I chose this for a couple of reasons. One, it's, you know, we still have healthy profit and yet inflation is moderating yours, right? So kind of going back to that price gouging argument, you can have kind of a healthy corporate sector and inflation coming in. So that was one of the main reasons I chose this.

The other is just, you know, we do want corporations to remain healthy. We don't want them to fall apart. And this suggests that they are, you know, continuing to deliver. And that should be favorable for the economic growth that going forward, favorable to the labor market, if they're not feeling quite the pinch, right? Certainly in the profitability. But that should all auger well for continued growth here. Yeah, I mean, I think that goes back to the layoffs, right?

I mean, if businesses are profitable making money, then they're under less pressure if something doesn't stick exactly to script to layoff workers, right? So, I mean, one reason why we're seeing exceptionally low layoffs is we're seeing really good profitability, you know, really good profitability. And this also goes back to the productivity growth, right? I mean, because you can get, and if you have strong productivity growth, that offsets your labor costs, your wage, the growth in wages, so you can maintain your margins.

And everyone benefits, right? You can pay your workers more and you still get more profits, stock market at a record high. So, you know, another reason to think. another data point that says best economy ever, right? I mean, feels pretty good. Yeah. Yeah. Okay. Can I ask, I don't know if you dug any deeper, but when I look at profitability, sometimes I go look at non-financial corporate profits. I throw out the financial sector because that goes up and down and all around. How did that look? How did that look at that? Did not look? Okay, no worries. No worries at all. Okay, Matt, you want to go next?

Yeah, going back, corporate profits were revised up, so they do look better. Oh, okay. And I think Dante is in trouble because, like, if the economy's potential growth rate is way up, I think that profit story really does point to the productivity side of it more than the labor force growth, as we can tell right now. I mean, it's fast in real time, but it's tough to tell in real time. Labor, my number is 12.6. I know what that is, and you guys are going to be so amazingly impressed.

And no one's feeding me this. I just know what this is. It's the labor market differential in the conference board confidence survey. That's right. I'm surprised. Okay, okay. Okay. Come on.

Bow down. I'm like, I'm, this is, I am, like, on fire here. No? Yeah. Something is a lot of fire. Something happened. Light a fire on you. It would be very motivated.

I'm motivated, baby. This is great. Yes, that's right. So just to clarify, it's the conference board, consumer confidence survey. The survey asks people what they think about the labor market, so are jobs easy to get, in your opinion? Or are they hard to get, hard to find, take the difference between the two. And 12.6 is the lowest, you ignore pandemic wackiness. It's the lowest since 2017, so kind of an indication or suggestive that the labor market is cooling.

I don't put a ton of stock in it. I think it is something that people can point to to say, you know, the labor market's turning, trending downwards or is softening too much. But, yeah, at least a little bit of evidence for those who are concerned about the labor market. Well, I looked at that, and it makes me a little nervous. But what the thing that made me most nervous is the conference board survey, the top line conference. Index still, I think it was 98.7, right? I think that was the read for the month of August. You know, it's still very consistent with the long run average. I look at this, that measure of

confidence very closely. I think that's a very good leading indicator of the economy's movements in consumer spending and ultimately the economy. It's a good leading indicator of recession. When that starts falling dramatically for a couple, three months, you know, five, ten points, that signals that consumers are kind of losing faith. They're getting nervous. They're going to pull back. And, you know, that's when you get layoffs and go into recession. So 98.7 is right around the long run historical average. And when I say a long run, that survey's been around since the 70s. So we've got a lot of data points. So it's okay. But that fell in August compared to July. In July, it was like 105.3 if memory serves. That's a, that, you know,

You know, it can move, but that was a pretty big decline, particularly given that I expected to actually increase because, you know, it's the best economy ever. Gas prices are down. Gas prices tend to really have a big impact on consumer sentiment and confidence. And they fell pretty sharply in the month of August, and I expected that to push up the conference board. But, you know, the labor market seems like it might be a little more squishy than I thought, and that brought down the number.

So are you, what do you think about all that, Matt? Is that worrisome to you? I know you've relied on the conference board consumer survey as, and dismissed University of Michigan, frankly, because it's just been so low and people have been so downbeat for so long that it's difficult to really make sense of it

or it's easy to discount. I still, this is a sentiment survey, and I tend to think that it's not, if you see UI claims running a 225, as Marissa alluded to, I don't know how squishy the job market can be. I tend to just take anything sentiment related with a grain of salt, even this measure. It's people's impressions of the job market. They haven't been laid off. Hiring is still okay. They're still spending. So I think I'm just committed to not moving off of anything in Ticely. It's such to show up in hard data like UI claims are consistent, you know, consistent week, monthly job growth. Yeah. Okay. So you

You kind of downweight this as a measure to look at. Yeah. I mean, best economy in your career as a professional economist, then it's at 98.7, which is, you know, mediocre okay economy. So there's just a gap there that I think it's just a dissonance that I have a hard time. Yeah. Okay. Okay. Marissa, I mean, at 12.6 on the labor market differential, the lowest that has been since, I think March, Matt, you said March of 2021.

worried about that at all or not so much? No, I definitely took note of it. You know, both things can be true. We don't have layoffs, but we know that hiring has softened quite a bit. So people could be perceiving that it is harder to find a job because employers just aren't hiring, right? It doesn't necessarily mean that they're going to be laying people off soon. I just I'm not worried I'm not worried about the number but it's it's notable and it could also be what people's perception people have gotten used to over the past few years right I mean we've gone from an economy where we were adding half a million jobs a month to one that's now adding 150,000 jobs a month so it could just be sort of that disconnect in like where the economy was a couple, the job market specifically was a few years ago compared to where it was

where it is now. And it's just sort of that expectation gap. Yeah. I get the other thing that I get a little so, correct me if I'm wrong about it, but I think if you look at the average of the labor market differential throughout the history of the conference board over the period of which they've been asking this question, the average is actually zero or actually maybe even on the south side of zero a little bit. Yeah, I don't have that exact, but I was same conclusion. Like, it's an expanding economy. Yeah, I mean, so an economy, kind of an equilibrium is one where, you know, market's

not tight, it's not weak, it's zero. And so we're still on the high side of zero. So, you know, I took some solace in that. Okay. Well, I thought we would end the conversation going back to the election because that's coming up here pretty quickly. what, six weeks away. And the candidates, Harris, Trump, are out on the campaign trail and putting out a lot of economic policy. Obviously, the economy is number one in people's,

the voters' minds and key to the election. And I just wanted to ask, because there's a blizzard of things that are being put forward and that are being said, are there's anything that you have heard recently that you want to call out in terms of policy or, It gives some sense of what the candidates think about economic policy. Anything out there that – I'll go around the horn. Chris, anything that you noticed in the policy? All the tariff chatter. All the tariff chatter.

Somewhat disturbing to me. The latest proposal I heard was a 200% tariff on John Deere's imports into the country. This is former President Trump, right? Correct, correct. John Deere, of course, a large. U.S.-based agricultural machinery manufacturer. They are intending to move some other or have moved some of their production down to Mexico because of cost differentials and they're focusing more on the higher end of the production line

in the U.S., right? So specialization, kind of the classic story around economic motivation, but a 200% tariff on those imports, I think, is going to be pretty devastating, right? And I know the intent is to then keep that work in the U.S., but it may ultimately lead us to losing that production altogether. John Deere may not be able to sustain that production in the U.S., and therefore it just goes overseas to some other company, not a U.S.-based company. So I worry about all these proposals here to really try to engineer a result in the economy that ignores comparative advantage. and all of the thinking around, you know, free and open trade here. Yeah, you make a great point.

I mean, when we talk about tariffs, economists hate tariffs. I mean, you put 100 economists in a room, 97 will tell you they don't like them. The other three, I'm not sure they, you know, I can't tell you who they are, but I'm sure you'll find three. But the one, and everyone's focused obviously on the obvious, and that is it's just a tax on consumers. you know it's going to jack up the prices for things that are imported and it's going to put it on low income middle income households are going to have to pay more but the thing that i don't think gets enough appreciation and that your john dear example kind of brings strikes that point home is it's very capricious right i mean uh it's capy crony capitalism at its at its worst where because if you go back to the tariffs under president trump's first term they set up i think some kind of i would say bored that might be not the right word but a group of government of government remember officials who decided, well, which companies had to bear the tariffs, which products, which goods, which countries, over what period of time, you know, you make all those choices. You know, that, and it's not transparent.

You know, it's not clear. You know, that leads to, I think, generally a lot of uncertainty with regard to global trade and it just raises the cost of doing business and ultimately, you know, causes trade to break down and does a lot more damage in the long run as a result. So it's not just about the tariffs themselves, it's about how you implement them. And there's no good way of implementing. It's a very messy thing.

And this John Deere example is a great example of that. Yeah, that's absolutely right. And we can think about, oh, we want to protect smaller manufacturers or help smaller manufacturers. And then once those tariffs come into effect, then all of a sudden we discover, oh, well, there's a critical intermediate component that you need. Right.

Let's create an exception for that. And let's create another exception over here. And then it becomes a real mess to try to understand what the impacts are. And then on top of that, it's a very dynamic system as well. It's going to be retaliation, right? So it's hard to think three, seven steps ahead to really understand what the impact is of these terrorists. But at the end of the day, our history has shown that they often backfire or they don't achieve the goals that they set up. out to do, or they become so complex that they fall under their own weight.

That's a good one. Hey, Mercer, you hear anything on the campaign trail you want to call out? Tariffs is the one that bothers me the most. The immigration talk from the Trump campaign as well, I think would be very detrimental to the economy. Deportations, you mean? Yes. Yeah.

Yeah. I mean, you hear people push back on that and saying, oh, there's no way they're going to deport you know, lots of immigrants in the country. Practically, you can't do that. It's just talk. What do you think of that? I mean, that, I think former president Trump tends to do things that he says he's going to do. He may not get exactly what he wants, but he will certainly try to do it.

So there's probably some kernel of reality in that. But it's also what that does to the sort of perception of immigration into the country, right? If immigrants think that this is going to be a very hostile place to be, then they will not even attempt to come or try to come. Some will voluntarily leave. We saw that back in 2017. So just given what we know about demographics in this country, we know that we're going to be totally reliant in 15 years on immigration to fuel population growth here. So just taking that out of the equation will be very detrimental to U.S. growth. Now, I'm not arguing that the immigration surge we saw over the last couple years is what we want or is healthy or was well controlled at all. But to sort of put these very high barriers up to immigration at a time when we really need this to fuel growth is bad economic policy.

Yeah. Okay. Hey, Matt, anything you noticed on the campaign trail you want to call out? Either this week or last, Trump campaign mentioned influencing or capping interest rates that credit card companies are charging. So if 97 out of 100 economists hate tariffs, I think more would hate that. So is it just campaign bloviating maybe? But that's the kind of thing where it's just to game it out. It's like, okay, and if you're a credit card lender, who are you lending to? Only the point. prime, assuming these interest rates are artificially low, it just cuts out so much credit. Costco way up, just a really silly, unworkable policy, bad policy. Yeah, interesting. Yeah, I think there is, I'm really curious to see with the Fed rate cuts how quickly credit card rates start to come in.

Because, you know, the spread or the difference between credit card rates and the cost of funds for banks, the credit card companies, is very wide. I think it's historically wide and really, you know, would be interested, can't wait to see what happens here. I mean, it's really important that they start to come in, particularly going back to low-income consumers who took on a lot of credit card debt to supplement their income when inflation was strong. They need that relief, but I'm a little nervous that there isn't competition, enough competition in that market to bring down those rates. Now, I'm not at all arguing rate caps. I think that makes no sense whatsoever. It's like, you know, on the price-couging debate, you know, that's a pretty vexed way of,

you know, trying to address higher prices, you know, in the wake of a crisis. But, but nonetheless, I think it's worth, you know, paying close attention to. Okay. I was going to call out, you know, the three of you talked about Trump, you know, VP Harris did give a speech. recently and talked about tax subsidies to the manufacturing base. And I'll have to say, historically, I've been kind of queasy about, you know, kind of targeting tax policy to help one sector specifically over another. But, you know, in the context of our VEX relationship with China, which is resulting in, I think this is an hyperbole, it's changing our business model. I mean, I think historically, you know, before the last several years, we viewed China as kind of our manufacturing base.

You know, the quid program, we would invest in their manufacturing. They would produce cheaply and send it back here. And we would send them tech, you know, they would buy our technology and send their kids to our schools. And we'd have this, you know, kind of very symbiotic kind of trading relationship. But it's clear that that's not working. And so we can't rely on China for manufactured goods. And so I'm increasingly of the mind that for national security issues, we need more manufacturing here and subsidizing, at least for a while, subsidizing investment in manufacturing here in the

U.S. is probably a pretty good idea in the context of that national security risk. What do you think of that argument? Does that resonate, Chris, with you? Are you more skeptical? No, certainly there are key. industries that I understand we need to have a capacity to produce. But I'd rather see us again kind of focus more of that effort towards freer trade with other countries, right?

So build up, you know, additional trading partners who could replace China, right? Maybe more friendlier countries, more closer to home, not necessarily try to force, artificially force, say, an outcome within the U.S. if that's not going, if it's going to be very costly, very inefficient, right? I think we need to think more broadly. Yeah, I think I use the word incent as opposed to artificially force. I guess that depends on your... Depends how big if the incentive.

Yeah, it depends on your... My point is if the incentive is so large, you're enforcing an outcome, right, then the economy really doesn't support that... It's not sustainable. at the outcome and you're really, you know, first-hand. Okay, well, why don't we, between now and Election Day in these podcasts, we'll do the same thing. We'll listen carefully to what the candidates are saying and call. And maybe they won't say anything and we won't do it.

But, you know, let's call, let's do this. I think this is useful to kind of call out things that the candidates are saying and have a discussion around it. Okay, I think we're long in the tooth, as I want to say. I think we should call this a podcast. I do want to say, hey, listener, keep bringing those questions. If you've got questions for us, we would be very happy to answer them. I think it makes for a useful conversation, and we'd love to get those questions. So if you've got questions, concerns, anything you want to talk about, fire away,

and we'll talk about them in future podcasts. Okay, guys, anything? Anything else before we call it a podcast? Yeah, you can send those questions to Help Economy at Moodys.com. Thank you. I would never, I always forget that. Okay, Marissa, Matt, anything? Make them good questions. Make them good questions. Absolutely. It goes without saying. Okay. All right, dear listener, thanks so much for tuning in. I hope you enjoyed the podcast, and we will talk to you next week. Take care now.