Moody's Talks - Inside Economics - Confidence, Consumers, and Cowbells

Episode Date: November 19, 2021

Diane Swonk, Chief Economist of Grant Thornton, joins Mark, Cris, and Ryan to discuss the current state of the American consumer. They focus on what factors are driving the holiday sales, excess savings, and an outlook on inflation and it's effects on consumers.Full episode transcript can be found here.Recommended ReadThe Passionate Economist: Finding the Power and Humanity Behind the Numbers, by Diane Swonk, purchase a copy here. 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 my two colleagues, trusted colleagues, Ryan Sweet, Ryan's Director of Real-Time Economics. Hey, Ryan. Hey, Mark. You're wearing my sweatshirt there, Ryan. Yeah, I know, we're dressing like, I'm going casual Friday. I've been waiting for Biden to pick his fed chair, so I might as well get comfortable.

You're going to have to wait a lot longer. Yeah, hopefully you're going to stay next week. And the listener, that's, that's an interloper. She's like diving right in. That's Diane. That's Diane Swan. Yeah, but we're going to introduce her formally in just a minute. But I have to introduce Chris.

Chris, Diane, Chris is very quiet. It looks like James Bond over here, doesn't he? Oh, my goodness. One week he's like, you know, a Ferrari driver. The next week he's James, right, Chris? Ryan? The International Man of Mystery. Yeah.

Yeah. And Chris, I can vouch. I can see him. Yeah, right? I'm telling you. Deputy Chief Economist, good to have him. And of course, Diane, it's so good to have you. Thank you for joining. You are, you are now the Chief Economist of Grant Thornton, right? Yes, I'm the Chief Economist of Grant Thornton. And we've had a long, illustrious career. And I, Diane, you won't believe this.

You're dating us both, Mark. Well, yeah, that's true. That's true. Because we've met each in a long time. Yes, we have. I knew you. Well, the first time I met you, I remember you were working for the chief economist of First Chicago, I believe. Yes.

And for the last time, I can't remember his name. What's his name? Jim Annable. Oh, Jim Annable. Yeah. Yes. He was my mentor. Yes.

Yes. Yes. And we reported to Bill McDonough, who was vice chairman of the bank who became president of the New York Fed. Yeah. Yeah. Oh, I didn't know that. That's interesting. Yeah, I got my first bonus ever and my first a note from Bill. My first year on the job, I did a big study and he wrote me a special note telling me how good it was. It was great. Oh, that's wonderful. Double my bonus the next year. So that was really great. That's even better. That's even better. And you and I were, well, I'm not going to say when that was, but a long, long time ago. We were focused on regional economics.

Yes, we were both regional accounts. Yeah, because at that time, it was the breakdown of, it was an advent of interstate banking. And all the banks were trying to figure out how to increase the middle of all the strategy on that. Yes. And I was like, you know, I was specialist on the Midwest economy. You know, I started out, Mark. I moved from Ann Arbor to Chicago. And they said, well, you're from Detroit, you know, the auto industry.

And I'm like, I don't know the auto industry. And actually, I do. because I've been walking production plan since I was two years old because my dad worked at GM and my stepfather worked at Ford. So I knew a lot more about it than I realized, but that was the first thing. They said, you're an auto analyst. That's your thing. Just because of where I was from, the Detroit area.

Well, I mean, the auto industry is big now, but back then it drove the economic train, right? It was huge. I remember this will really date me, Mark. I remember when the 1986 tax reform went in. And we used to watch the ticker. It was printed out on paper. The 10-day auto sales reports. I remember that.

And auto sales skyrocketed because the tax reform didn't allow consumers after December to deduct the interest on their... Oh, that's right. auto loans on their taxes anymore. And then you got the switch to home equity lines of credit became really big. But that was, I started in September, 1985.

Wow. Well, you just dated yourself. So I did just date myself. But I did my undergraduate and graduate degree really quickly. And so I started at 23. So I'm 59. Is that right?

I did. Wow. And I did another graduate degree at Chicago. All right. Well, that switch over to home equity, that worked out really well, didn't it? I remember raising red flags about it in the 80s in the early 90s. Hey, there's a lot. This stuff's going on like crazy here.

I remember back in the day, and I shouldn't digress as much, but I was working on our credit card portfolio, which was a wonderful thing, all this real-time data. And I said, well, wait a minute here. Don't you have any linkage? You guys are giving people home equity lines of credit. and credit cards when you give them a mortgage in the early 90s. And I said, you know, don't you have any linkage here in terms of defaults? Because, you know, they're linked.

They're like, oh, people will never default on their house. So always pay the house. And I'm like, that's ridiculous. And I said, no, they'll keep their credit lines going longer. Yeah. Because they want access to credit. And it takes longer to foreclose the house. And, oh, well, there's a story for you, Diane, that you may not know.

the company I started with my brother, and you may remember Paul Gettman, who's now retired, Paul came to me and said, let's start a company. And I said to him, okay, Paul, I'll do it if we get a consulting project. And so we started looking around for projects. I wrote a proposal like one week later to first Chicago, the credit card company. And it was a project around determining the effectiveness of their marketing for cash advances, you know, on credit cards. Yeah, yeah, yeah.

And we literally got the project two days later. I could not believe it. Like I said, I thought there's no way this is going to happen. I'm going to be started right. I mean, back in the day, I mean, I know some of the inside of, I mean, I loved our credit card people. I used to go out. We had a separate facility. Did you ever visit it?

Yeah, oh, yeah, an Elgin. It was a lot of year. Yeah, with the waterfalls. the ducks and childcare. I mean, the margins and credit card were really huge. Those guys were making tons of money. It was just something else.

And I knew them all really well. And I mean, it would always stun me how I was never allowed to talk at the time about the margins that we were making or predatory lending or anything like that because it wasn't predatory lending. It was just we got really good margins. I mean,

fine line diane fine line yeah yeah it was it was incredible though when you work with the cut of car people you're like i mean and they had casual days before anyone did i mean this was in the 90s i mean early 90s and stuff it was yeah well here's the thing you had for chicago at the time remember this had seven million cardholders we got tapes for all seven million car holders delivered through the mail, I think, I can't remember. We put them up on the computers at Penn, University of Pennsylvania, their mainframe. And we, that's what we processed it. Yeah.

Can you believe we had access to the information for 7 million people? Yeah. I mean, it's one of the things that gave me a huge edge for a long time because I would get comps all across the country of what was going on. And we didn't have big data in the way we do now that you can get this credit card data. but I had a lot of information that gave me incredible insights. And it wasn't as real time as it is now. But yeah, they're pretty lax about it.

Yeah, that was, yeah, that one implication is you got data. The other implication is really? You've got. Yeah, yeah, it's pretty lax. Yeah, pretty lax. The company doesn't exist anymore. Can you imagine that? Yeah, we were the biggest processor of data, I think, in the East Coast that year.

So yeah, it was like that right. Anyway, we definitely digress. We definitely digress. Yeah, but all good stuff because it's relevant to the topic of the big topic of the day. And that's the consumer, which we're going to talk about in a few minutes. But so, okay, you were for Chicago and then, and then what? What happened after that? I went to Mesrow Financial, so 30 years from finance.

And actually, I have one in my house. I have a house in Michigan because I'm from Michigan. It's only an hour and 10 from where I am right now. And I'm going there later after this. but it has a cup that's moody's dot com do you really yeah i said one of your old cups market house and and we thought we were going to make a fortune on those by the way diane selling those selling those trinkets yeah well and actually you know i mean i don't know if you remember this but one of my son's best friends ended up working for you he went to berkeley um working

with her brother and who's that uh colby oh yeah sure yeah really good yeah i mean i mean since kindergarten. We still know Kobe. I mean, he's like another son to me. But Colby's now working in. He's going to graduate school in New York at Columbia, and he's working on climate change. Went from Berkeley to Columbia to work on climate change engineering to cool the planet. Oh, very cool. Yeah. Yeah, we have a lot of linkages. Yeah. And then Mesrow, you went, you were. And then I had my own company.

Yeah, your own company. Yeah. And then I had a bunch of suitors that wanted to work with me. Yeah, that's great. This was the best mix because I love middle market. And you get so much rich information from your clients. And you can add a lot of value. So that's why I'm where I met. And it's nice to be out of finance. I often say, you know, I spent a lot of my career, my hope over 30 years in finance. And I worked a lot of great people. But I, I spent. spend a lot of time swimming with sharks as well. Yeah. And I'm kind of swimming with dolphins. That's Ryan.

Ryan is like, you know, he'll, you know, as soon as I turn my back. Right. Right. You're the only reason you have me on this podcast. Watch up. Watch out. It's all about us, but they don't know anything about the economy. Well, okay.

We better talk about that then. Yeah, good point. Thank you for that little nudge. We got to back the business. It's just fun talking with you, Mark. Yeah, I know, absolutely. Okay, okay, you know, Diane, we play this bit of a game. First thing we're going to do is talk a little bit about the statistics and do it with a little bit of a game because, you know, for some, not you and I and Chris and Ryan, we can, we live on this stuff.

For most people, pretty hard to digest the economic statistics. So we play a little bit of a game. We state the statistic and then we, the rest of us try to figure out what that statistic is. The best statistic is one where it's not a slam dunk. We're all going to get it fast, although sometimes that's hard. And one that's not so hard, we'll never get it. And this is bonus if you can come up with a statistic that's relevant to what's going on in the broader economy and to the topic of the day. So that's the criteria we use.

And we always lead with Ryan, because Ryan, actually, Ryan is absolutely fabulous at this. You know the data better than anybody. And I will put this out there first, Mark. I don't know if you know this about me. I'm severely dyslexic. I did not know that. And so I can do calculus in my head. It's like an idiot, savant thing.

But I flip numbers. Oh, so are you warning this that if you say 15, it's actually 31? I may flip a number, you know. Okay, that's good to know. That's a big hint. That's a really good thing. Guys, if you get that.

I hate PowerPoints. Have you seen me in the one time that I do PowerPoints in a group that we're in together? But I don't, I hate. That's really. I never do PowerPoints, never, ever. I get, I'm a very good storyteller without,

because, you know, numbers, the economy is about linking the, making a story out of the numbers and linking the dots. Absolutely. You know, if you flip the dots.

Yeah, that could be a problem. Yeah. I've got a good story about that. Diane, I got another good story about that. Well, we'll come back to the podcast for a second. So I'm sitting in front of a screen with my brother, Carl, you know, who is still with us and still manages the business. And I'm looking at the data and I, you know, I'm starting to explain, oh, that's because of X, Y, Z, this and that and everything goes, oh, I forgot to multiply by negative one. So. So. And then, of course, I dove into a why, why? Well, here's the reasons why that.

That's the case. It's even better. That's even better. The data gets turned around and you can still tell a story. There's always a story in the data. Listener, I think we, there's people behind the numbers. We should cut that out, I think, Ben. No, I'm only kidding, the listener.

We're going to keep that in. Yeah. Anyway. You know, there's also, I mean, people also forget there's people behind the numbers. I know this seems kind of right, but people always think we're thinking, you know, when they talk to us, what's the first question you always get, Mark? what is the stock market going to do? And like, that's like the last question you want to answer.

Yeah. But the real question, I mean, you guys, right? It's in the, I mean, the real issue is like, Diane, what's the stock market going to do, Diane? No. I mean, you know, isn't it, isn't the real question we all really? Yeah. Oh, but we actually, we're going to come back to that, though.

You can't talk about the consumer without talking about asset values, right? Well, you have to talk about that. But that's, but that's different. But it, you know, but the issue is that we're all talking about collective human behavior. whereas on average behavior going to go. And it matters on average versus not on average as well. Yeah, absolutely. Okay, Ryan, down the business.

Give us a good statistic. I got two numbers for you. Two, okay. Oh, no. I'm going to write them down. And I'll probably write them down backwards. Yeah. Fire away, Ryan.

Right. Down 28,000 and down 47,250. Okay, initial unemployment claims down over the last four weeks. Yeah. Right? Yeah. Okay. Okay.

Wait. Wait. Is that right, Ryan? Yes, that is correct. Where's the cowbell, Ryan? I'll get it. Get the cowbell, Ryan. Diane, you got to admit that's an amazing feed I just did.

That was really good, Mark. I'm, I was like, it's good. I know you got it. Did it good. That was quick. I did. Where's the cowbell? It's right here.

Okay. More co-head. Good Lord. One of my favorite Saturday at Lives ever. Oh, yeah. That's a great Saturn Live. I missed that one. What?

Yeah. What are you talking about? We worked on this. Really? Google more cowbell. You have to. Really? Okay.

Oh, my gosh. Like from 2001 or something or 2002? It's Will Ferrell. It's great. Classic. Oh, my gosh. It is phenomenal. He makes me laugh out loud.

Yeah. Okay. So what's the deal on the UI claims? You know, why did you pick that one, Ryan, initial claims from employment insurance? Well, the labor market's picking back up. I mean, we remember we talked about October. It was a good job number, but November should be even better. So if you plug that into our employment, you know, our real time, our high frequency

employment models, 650,000 to 700,000 job growth in November. And remember, we're going to get some seasonal issues because they're pulled forward, hiring because of the early holiday shopping. So it could be a really good number. Yep. You know, you said there's 10,000 deer workers in manufacturing, but that's pretty small. Yep. It's funny. Two weeks ago, I would have said, oh, that's so great, fantastic. And now I say, oh, that's great and fantastic. Then I go, oh, now people are going to worry about inflation. You know, what's the inflationary implications of all that growth, which will come back to. We should come back to that. Yeah. Yeah. That's a good one.

what you had the other one was does that continuing claims the one that was down uh so he only got you get you get 50% credit uh the other one was the four week moving average in initial flames so both are important so because of weekly you can get a lot of volatility smooth it out and it still was a really good number in and the number was 268 i think right 268 000 for the week on the week on the week and chris you always point to this the what's the kind of the steak in the ground for the economy back, you know, kind of in full swing? What would be U.R claims? If we're below 250.

Below 250. Although there's, you know, there's some, it's interesting, because some of the labor economists that I meet up with, we do this at NAEP, which we're both members of, with the labor, labor economists meet up. They actually are thinking that we won't get back down to the same levels, even as the economy is better because more people now know how to actually file and get through the process of getting into claims.

The systems still aren't completely fixed and there isn't money to completely fix them, but a lot of states have more money and have fixed some of the problems. So the processing of claims, there won't be as many turned out. So it won't mean that we have necessarily higher claims. It's just that the equilibrium level could have been a lot of people didn't get claims that should have gotten claims before. Right. In pre-pandemic in the height of the strength of the labor market, we were what, what, 210, 220?

Oh, it's below 200. Was it more 200? Do we get below that? No, we did. Okay. All right. So we're not there yet, but we're definitely moving in the right direction. So the economy feels like it's strong, solid, producing jobs.

You're saying $6.50, $700 so far. Obviously, that can change, given other data. That can be a good number. That's the employment number for the month of November. Yeah. It comes out two weeks from a week. A couple weeks. December 3rd.

December 3rd. Okay. Okay, good. Employment days, I know. Chris, you're up, man. Got a good one? All right. I got a good one.

I don't know if you get it. There you go. Housing. Guys are always complaining that I make it too simple. So. No, well, last week you went with a coffee CPI. I mean, come on.

Yeah. Oh, that's true. That was a good one. That was a good one. That one told the story. He wanted to guess the cost of his Wawa cup of coffee. That's what you're right.

Okay. That's a bit of a hint. All right. So my numbers are 14% and 4. 14% 14% in 4.4%. Either retail sales were up close to 14% from

a year ago. Kind of on the right track, but that would be too obvious. So it's not Is it a restaurant? Component of retail sales. Yeah, really.

Which component was up 14%? What do you mean? Kind of sorted? It's a restaurants or not restaurants? Are you looking at, it's a very topical. It's a very topical, statistical.

No, he's like, he's like, you know, like Taco Bell is up 14. You want, I'll give you one more hit, $53 and $31. Oh, that sounds like that should really be helpful, but for some reason that doesn't really be. I'm completely lost on that one. Say that again, $53. $53 at $31. $31.

What's going for $53 and $51? sense. Something's got to be going for that. What was it per ounce per pound? Bagu beef, for the holidays, holidays. Oh, Christmas tree.

Christmas tree. Christmas tree. Thanksgiving meal is a, $53.31 cents, according to American Farm Bureau. Up 14% year of a year. Oh, now you're going to mess up what I wanted to do.

Oh, sorry. I thought Turkey is a, I thought Turkey's way up. haven't, no, but I thought. Turkey price. So that's what I was going to do is turkey prices upon 0.1% in October from the month before, and they're up 1.7% from Yorga. So Turkey's routine.

How come, Diane, there's no problem with supply? I mean, I don't get it. People hate turkey. Yeah. Oh. Turkey is so overrated. And my husband's any indicator. He's like, stop buying turkey.

I don't want to eat more turkey sandwich. I'm like, Thanksgiving's coming. We've got turkey. No, turkey's way overrated. Oh, well, hold on. So here's, well, I'm a little confused. Lots of food prices are up. And all the protein prices are up.

Yeah. But not turkey. And so the narrative in my mind was a lot of that transportation costs, right? Right. Right. But why not, if that were the case, why wouldn't turkey prices be up? I have a big. Yeah. It's, it fell in October and it's up only 1.7% from a year ago in October, which is, you know, really low.

Maybe that skimp flation, the skimplation. These are smaller turkeys. I remember when I worked with Jamie Diamond, I had him introduced the head of Walmart. And it was at a name meeting. And he was talking about how they used to count. They would have everyone come in from their places to report every week and how business was doing. and their lead indicator was whether or not, because there's a lot of, in Arkansas, there was a lot of chickens that they would transport in trucks. And sometimes the chickens would fall off the trucks.

And if there was a lot of chickens on the side of the road, that meant it was a really good economy. And if there wasn't a lot of chickens on the side of the road, it meant it was a really bad economy because people picked up the chickens because they wanted to eat them. That makes a well, there you go. Now, that's an interesting economic. Yeah. That one you've done. Have you investigated that one? You've done a study here?

I haven't done a study. I heard it from the former CEO of Walmart. The last thing you want to do is be driving behind a chicken truck. Really? There's other trucks that are worse. That's true. But in my experience. Yeah.

Well, how do you know all this, Ryan? Are you like? Delaware. It's got a lot of chickens. So I was at the University of Delaware. Oh, you would drive home. and I get stuck behind these chicken trucks. Yeah.

You don't want to pass a chicken processing plant for sure. Oh, no, no. Really? I don't, I see, I'm sheltered. I don't know this stuff. I need to get out. Yeah. Yeah.

Yeah. Well, that's a good one, though. So, so Diane, we got yours then. Yeah, sort of because I was. No, that's good. I have another one, though. I have another. Oh, you do?

Okay. Okay. Fire away. It's, um, down one million since February 2020. Down one million. Would that be since February of 2020? Well, the labor force is down three million.

Would that be the number of from sector? Women that are out of the workforce compared to pre? No. Is it labor market related? Is it a labor market oriented? Oh, it is. Are we on track here?

First, I would do a labor market one. Are we in the right ball in the same? Are we thinking of this is right way? Sort of. It's sort of. It could be. Yeah. It's okay.

You don't have to tell us anymore. Okay. What about it? Is it a million people in leisure and hospitality? It's not a million people. It's down a million. Oh. Is this daycare workers?

That's a clue. No, that's 100K. But it's not people, retail. It's not people. Retail workers. Well, it's people doing something. Yes.

In the late homework? No. No. I don't know. This is a good one. Multiple job holders. That's a great one. That is a great one.

Cowbell. That's a Caldome. That's a Caldell. I think that's what was good about that, that statistic is to me that's an encouraging statistic because it means, well, one is a testimony to how low wages were at the peak of the last economic cycle that people had so many multiple jobs and there were so many multiple job holders. I hope, and I don't know, but I hope it's in part because wages at the lowest end have gone up enough that people don't have to have multiple jobs. I don't know that yet. We'll have to test that and see how that holds going forward. But

you know, that people had to have multiple jobs. And that also means there's fewer people working, you know, all these staggered shifts and stuff like that. It's really nuts to have to have all these jobs. But that's a reduction in labor force too. That is. Yeah, that may be one reason why non-farm employment, which counts in jobs, not people, may not actually return to full strength or right. Exactly. Right. Kind of interesting, isn't it? That's very, that's a great statistic. I had not. I thought it was. Yeah, that's a fantastic one. Very good. Okay, are you ready for mine? This should be, you know, I'm worried this might be a little, too easy.

Back to normal index. That's Mark's go to. We have a, that's my go-to index. This index we put together called the back-to-normal index, which is actually pretty cool. Oh, but I'm not going to go into it. I'm not going to go into it. Chris and Ryan would know it.

I would. Yeah, I'm not going to go into it. 94.5, by the way, just said, 94.94.5% of normal. Actually, Illinois for your, Diane is the, I know. I can't help myself. This is the lowest state in the country.

I think it's like 88% of normal or something, 87% of normal. Oh, gosh. Or the New York? I thought New York was the level. I think I was looking. I think New York just rose above Illinois for the first time, I think. But I may have that wrong. So don't, you know, don't hold me to that.

All right. We have a lot of convention business that isn't happening. Yeah, I know. And a lot of, yep. 66.8. 66.8. Are NAHB? No, that's the national social home builders.

That's 83%. No, I'm thinking like the details. I'm thinking of potential buyer traffic. ISM, no, no, it's not NHB. It's not ISM. You guys, it's relevant to the topic of du jour, you know, the consumer. It's actually a bit perplexing that this doesn't feel consistent with. They come out this week?

So it's something in the comment. Confidence numbers? Yeah. Yes, it is. Are you doing you Mish Confidence? Yeah, you miss confidence. I was last week. You're about a week's late, but that's all right.

No, no, wait. Was it last week? Yes, it came out last week. Oh, okay. Well, you said in my rules, did I state it had to be the last week? I didn't. Diane, did I say that? No, I used October employment.

There you go. See? They already. Come on, guys. The CPI, my turkey CPI, though. That's for the guest. That's the guest. Right.

Okay, fair enough. Mark sets its own rules. Oh, no, wait, wait. 66.8, that, that, that, here, this is actually a question to the group. Okay. 66.8 for you, Michigan, that's the Michigan, University of Michigan survey. This is an honor of Diane, because I know Diane is from Ann Arbor and Ann Arbor's home to the Wolverines. You know, not that I like the Wolverines very much, but, you know, they're, you know, I get it.

And, you know, you know, if you were a Penn State fan, you can't be. I arbitrage when I was in college. Oh, is that right? Okay. Yeah. My father never forgave me, but I made a lot of money. I can imagine. Yeah. But that's the lowest reading in the entire pandemic. You have to go all the way back to just coming out of the great recession, the financial crisis to find that low. The sentiment survey is more sensitive to inflation.

Yeah, so it's gas prices. Is that it? Is it totally gas prices? A good chunk of it is. And then you can throw on top of it COVID because, I mean, sentiment is tracking COVID. But, you know, we've got a big jump in gas prices after Hurricane Ida. And sentiment usually craters after hurricanes in the Gulf Coast because of the energy effect. Okay. And the sentiment survey is more sensitive to inflation and this confidence survey is more sensitive

to employment. Okay. And you're going to say the conference board, consumer conference board, yeah. And that was 113.8. So that's, they're kind of diverging. And if you look, I just looked the gap between the two. Yeah. Yeah.

It's about as wise it's ever been. Yeah. Because one is worried about inflation and one is unemployment. So I guess that makes sense, I guess. You're saying that goes back. The job market's good. We're creating jobs. Unemployment's coming in.

Wages are up. But inflation's up and nobody likes inflation. And people are particularly sensitive to gas prices. Got it. So they see it every day. That actually I should write about that. That's a good thing to write about that. You didn't know that they were. It's a good. I didn't know they were as wide as that. I knew they had gone in different directions, but there, I think this is, I don't know if it's as wide as it's ever been, but it's pretty, pretty darn close.

It's got to be close. Here's the other thing. Interesting. I looked in the conference board survey because they break it, I think they all do, but they break it down into different demographics. And by age, always the people that are younger are more optimistic than the people who are older. So they, like, Less than 35 is more optimistic than 35 to 54, which is more optimistic than 55 plus. But in the current, in the last month, the people who are in the middle, the 35 to 54, are actually most depressed. It's because the older people are actually almost going to, in recent months have been more optimistic than they are. It's very, very interesting.

Well, they can retire. They got network. That's what it is. Yeah. They can retire. And the ones in the middle are working like crazy and not too happy, even though they're getting wages. They're not too happy. And they also, you know, I mean, millennials are, I have, I assume my kids debate whether they're millennials or their Gen Z. And I can, one is a millennial,

one's a Gen Z, but they don't like that breakup. But, um, because why don't, why? Because, well, my son, he, he doesn't want to be a Gen Z. He wants to be a Gen Z. He wants to be a millennial. But, um, uh, but I, you know, it's there, they're, they're, the anxiety levels. I looked at the household pulse survey. And the. anxiety levels of the youngest in our population. And it goes, it diminishes by age are the highest in my young. It's like 40% have anxiety or depression right now, which is, it's not great. Not great.

So they've never seen, they have never seen inflation. The millennials or even some of the. Oh, no. Yeah. So this is like a shock to them. It's like, I have to tell them stories about what it was like. Yeah. Right.

So the boomers, the guys over 55, women over 55, they're good because they're stocks and housing and asset values and everything's good. The young people, they're benefiting from the surge in wages and the tight labor market. But the guys in the middle, they're feeling, oh, of course, they have the kids too, and they're taking care of the kids. And they also, they have more inflation. And they have more inflation, right. Their wages aren't going up as rapidly. And they got the kids and they can't afford. There's no child.

There's no childcare employment. Education employment's down. Yeah, Chris and I maybe both of us are probably pulling down the University of Michigan and conference board because we're taking care of our three little kids. Don't give me that, Ryan. You love it. It's a joke. Yes, I love it.

Yes, I love my children. You know, my kids. Everybody has those days, though. I, well, my kids always go back to, because I was in the World Trade Center, I was responsible for Nate being in the World Trade Center. And actually, my cancers this year were because of the World Trade Center. But my kids always go back to that age. They were three and six in 9-11.

And my son said to me, as he came back from school and went online, he said, you know, mom, if we had been three and six, we wouldn't have made it to five. for and so locked. Yeah. Yeah, you wrote a great book after. I think everyone should, you wrote a really very good book, great book people should read

after your experience of nine long because people don't know this, but Nabe, the National Association, some business economics, the time was business economists, I think, had their conference.

No, we had just changed the name. Oh, you just changed the name? Yeah. Were you president then? I was, I was on my way to presidency.

Yeah. I was asked to be president of name, when I was to do the annual meeting, which was on my route to presidency when I was eight and a half months pregnant with my son. Is that right? Wow. Wow. Yeah. Yeah.

Yeah. Yeah. Yeah. Yeah. Well, anyway, so this is the Marriott Hotel in the bottom of the world trade. And I actually had four people there. I think four or five had a booth there. We were a young company, really.

And we were just, and boy, that was harrowing. And you, of course, you described your experiences, which were very harrowing at the time. So very, very good book for people to read. get a sense of just how scary that time was. Very scary. Anyway, big topic, consumer. So let's begin this way. How do you think the consumer is doing?

American consumer is doing. How would you characterize things? Well, you know, it's interesting because, I mean, you laid it out well and primed it up, Mark, with the dissonance between the consumer confidence survey, employment doing well, and they're angry about inflation. They're angry, but they're spending anyways. I mean, they're spending like panties right now. I mean, you know, they may be angry, but it's not stopping them from spending.

And they've got, you know, I mean, I do worry about, you know, disaggregating the data. And as we get into the end of the year, how much savings there is left among those households who are still unemployed. But, you know, they've got a tailwind in terms of their balance sheets. They got a lot of net worth. And they're getting their net worth, what's so different now, as opposed to 2008, is their house rich as well. Yeah. And that is something that, you know,

spreads across a lot more households than just equities. And of course, you know, we don't want them cashing in their houses, but they also pay down their credit card bills. And so they've got, they've got some wiggle room in cushion to spend pretty aggressively, even though they're not too happy about the inflation situation. Do you do like a forecast, a lot of like a lot of other economists for holiday sales, like what a Christmas?

So if the Wall Street Journal calls up and say, hey, Diane, what are Christmas sales going to be this year? What do you say? Yeah, I did one every single year for many years. And I did look at the data this year since we were going to talk about it because I did it annually for like 20 smart years. So it's not something I have done a lot of. But the comps, even after adjusting for inflation, are the strongest I've ever seen. Even if we were to deteriorate from here on out from where we were in. October. Could be double digit, right? Double digit. Oh, he's a double digit. And after adjusting for

inflation, depending on which category, could be high single digits with a lot of inflation. So that's just stunning to see the kinds of gains. And even the online spending, the comps get harder because we spent so much online last year. But even that, you would have to really crater it like crazy to not have still a really good year. Yeah. It's the, numbers are really, really good. And it's not just base effects, meaning last Christmas wasn't great, but it wasn't bad. It was, no, no. I mean, it was, we did slow down as we went into the end of the year. I remember we almost in, and I think you, you and I were sort of on the same page on that because we had a negative in print unemployment. We really needed that extra. That's right. That's right. December was

negative. December. Yeah, December was a contraction in employment. And people were running out of their money and the food bank lines were getting longer. And it was crazy. It was, it was a hard time. And we were going into the, you know, we didn't have, we had just gotten vaccines in November. But they started and they started giving them out, I think, in late November. But, you know, that it was a hard. It was, it was hard, but it wasn't contracting. But we could have, we could have gone into another recession if we had not gotten that, in December 27th, the 600 billion. Yeah, that was that, uh, the kind of the quiet package that got through because I think because of the Senate.

It actually lapsed a day. Oh, is that right? Yeah. The previous president didn't sign it on time. We did a day to sign it. Right. But then they decided not to let all the benefits lapse anyways. They grandfathered everyone in.

So is that what you say, the previous president? So that's how you handle that then. I have not said a president's name in a very long time. That's interesting. That's great. That's good to hear. My house administration president. Yeah.

Got it. Got it. Now, if you look at, correct me if I'm wrong, but if you look at overall consumers, so holiday sales, that's basically stuff. You know, that's clothing and clients. Except for restaurants and bars. Except for restaurants and bars. So it's kind of good stuff. You know, that's all been juiced up by the pandemic. We've been at home. Obviously, travel and other health care and other kinds of services we've been not spending us. If you take the total consumer spending and you look at it, it still doesn't feel like it's quite back to where it would be if there had not been a pandemic. Is that the fair characterization? Yeah, absolutely. Because we have unpivoted. I mean,

and I wonder too, I mean, this is interesting because as, you know, a firm that's professional services, consulting firm, you know, tax audit advisory, we used to have people on the road all the time traveling, but we have to reduce our carbon footprint. And one of the biggest ways to do that is to reduce your office footprint and to reduce air travel. And of course, we discovered things that you don't need to do because of this world you can do, you know, virtually. Right. And so, and every other major professional services firms in the same place we are. And so some of these things, you wonder what they're going to become instead. But, you know, it does, it's accelerated digitization, but it's also because of

climate change and concerns about the climate. And how do we, until we can figure out, until my, my son's best friend can figure out how to cool the planet back down again. So we don't have so many extreme weather events, you know. Tell me how we invest in that. I'd love the same of check. It's cool stuff. But yeah, that's what we, I mean, because, you know, even if you, I mean, the extreme weather events have, you know, accelerated so much. So that those are things. that I'm looking at that and saying, you know, even though we'll eventually get to another level, but it's, we've made some structural changes here. Yeah, I think Moody's now charges a fee for our travel because, you know, we have a like a net

zero goal, I think by 2030. Correct me if I'm wrong guys. Yeah, we do too. Everybody does. Yeah. Yeah. So when you travel, you have to pay a fee for the carbon that you create. So it's added to your travel expense. And you have, of course, have a travel budget. So it's like a carbon tax on your. It's like a carbon is effectively a carbon tax, right? Yeah. And which makes a lot of sense. Yeah. Yeah. And I suspect they're going to be raising that every year. Like they should, right? You know, it's a slow temperature. You know, I'm going to raise this temperature on you. Right. Right. Yeah. So when you think about the things that drive spending, consumer spending broadly, okay, jobs, check.

you know, still not quite back to where we were pre-pandemic, but definitely headed in that direction. We talked about 600, 700 jobs per month, you know, now agreeing. Unemployment's falling pretty quickly, not quite back, but it's getting there pretty fast. Wage growth is picking up, particularly for low-wage workers. The bottom 70 percent. Bottom 70 percent? Yeah. I saw some grading now.

I know all these labor economists that do much better work than I did. Bottom 70 percent of workers have seen their wages improve. You mean the rate of growth in the wages. Real wages. And real wages. Really? Have improved. Okay.

That's surprising. Well, if you're better on Twitter, I'll send it to you. I'll tweet it too. I know. I got to get, by the way, wait, wait. I'm going to advertise at Mark Zandi. I'm at Diane's walk. There you go.

I just re-engage. I mean, Diane, I got this Twitter handle 10 years ago and never used it. Like three weeks ago, I said, okay, I better start using it. So I'm having one of the phone. And I retreated some of the stuff when you put it out, too. Yeah, thank you so much for doing that. I noticed. I appreciate that.

It gets amplified. Yeah. Chris, when did you say, Chris? No, Chris and I had a side bet. I took the under on 28 minutes until Mark Touts' Twitter handle. So Chris went. I took the over. Good job, Chris.

What do we bet? I don't think we bet anything. Oh. Well, okay. I think we forgot. You get a mug. We'll get you a mug. I got plenty of mugs.

Moodies. Dismal scientists, whatever you want. I got it for you. All right. Yeah. Anyway. Okay, but there's one new, oh, there's stock prices, there's housing values, everything kind of feels like, wow, there's one negative.

And we're going to come to that in a minute. That's inflation. I really want to talk about that. Yeah. Before we get there, there's this one other big kind of tailwind. the so-called excess saving, right? And did you want to talk about that? How do you feel about that?

I mean, in my mind, that's a big wildcard in terms of spending going forward. Yeah, you know, I mean, so the saving rate dropped to what 7.5%, which is almost pre-crisis levels in September, of course, the fact that we lost a lot of income support from the unemployment insurance lapsing that brought it down. We actually, you know, the question is, is there going to be some kind of discussionary savings or is there going to be dis-savings going forward? and we think there's a period of more dis-savings because of the wealth effects

and because of the ability to tap into home equity lines of credit and credit cards and all that and go back into debt for better or worse, that gives us even more of a tailwind. But then the question is, you know, we don't have saving rate going as low as like we saw during the peak of the, you know, home equity lines of credit becoming almost ATMs in 2005, 2006. So just to level set for the listener. So what happened is the pandemic hit and our saving rates got jacked up. You know, for lower middle income households because of government support, stimulus checks,

you unemployment insurance, rental assistance. For middle high income households, it was I'm sheltering in place. I can't spend my money. Even though I'm buying a lot more stuff, that's not going to spend all my money. I save a lot more. So the saving. All those vacations you didn't go on. on and committing costs.

So the saving above which would have happened if there was no pandemic is called excess saving. And by most calculations, including ours through September, it was about, you've added it all a lot, two and a half trillion bucks. That's 10% of GDP, a lot of money. Yeah. And so what you're saying is you think going forward, you know, because people are now traveling and spending, their saving rate has now come back in, it's closer to where it was pre-pandemic. They're not going to build any more excess saving.

and in fact, they're actually going to spend down some of that excess saving going forward. Yeah. Yeah. Okay. And do you have a sense? Now, if $2.5 trillion was spent in 2022, boom, right? 10% of GDP.

Yeah, no, yeah. And that would be, okay, inflation's got a, it's going to be a big problem because it's not going to be that much, yeah. It's not going to be that much. So you're saying, I mean, unfortunately, I mean, there's also, that's where the distributional issues get in, right? Because all that savings is in places. like high income households where they might spend their income. And it turns out they do spend

a lot of their income. But they don't spend much of their savings. Yeah. So the way I would characterize what you just said was for higher income households, they view this as it's wealth. I mean, it's my nest day. Yeah. It's our nest egg. Yeah. It's the boomer who me, who sat on my back deck, didn't spend the money saved, sitting in my checking account now. Maybe it's moving into stocks or whatever, crypto for, by the way, Diane. And James Bond over here is a crypto. Oh, God. You and my daughter.

Yeah. Look at how wealthy he looks. I'm surprised he's even still working. I mean, you know, my daughter is like, yeah. And then my daughter is telling me about being a long, long-term investor in crypto. Day and a half, I guess. I love that. What does that mean?

Like next week or something? Yeah. Yeah. Yeah. Gosh. That's why Chris is dressed like Zoolander. Is that what? He's getting into the crypto world. Zoolander. I do that as a diss. Chris. It's a diss. I called you James Bond. He called you Zoolander. Which would you prefer? So I didn't know anything about the Cal Bell. I didn't know Zoolander either. So you didn't know Cal Bell? I'll have to look up. I didn't know that. I didn't know Chris. Oh, Ryan. Right. So on my screen, I can see everyone. And Ryan and I are on one side because we know the cowbell. Right. And I know Zoolander. All right. So I think, you know, you guys are just lagging over there. They don't find me funny because I don't know. I got to hang out with you. Jesus. I'm sorry, Ryan. I find you quite funny. Oh, thank you. Where was I? Oh, so. Let's talk about, I was just digest.

investing that conversation, but let's just, it's all, all is a happy talk now. But, okay, let's get to the brass tax here. And this, the surge in inflation. Yeah. Two things. One, how big a deal is that to the consumer outlook? And that gets to the second question, how long is this high inflation going to be around? What, and, you know, what is your thinking around that? There's, you know, we obviously I read your up bed piece. So I have an advantage. Okay, fire away. I'm really, really curious.

So, okay, I just wrote a piece, you appreciate this. I just wrote a piece called One Way or Another, based on Blondie's 1979 hit. I'm going to get you, get you, get you one way or another. That I do know. That's great. That's great song. And it's because Jay Paul, we don't know who the next foot chairman's going to be, if it's going to be Jay or if it's going to be Leo Briner.

But the Fed has said, we're going to get inflation. one way or another. It would be transitory one way or another. And, you know, either it will be of its own accord, as demand normalizes and supply chain disruptions are worked out and labor comes back. Or the Fed will forcefully stock it. Debra Harry actually wrote that about a stocker that was stalking her going after her. You guys didn't know that, did you? I did not know. And so this makes the Fed, the stocker. She knows everything. That makes the Fed the stocker. And the Fed chasing inflation down because, you know, we know the math on inflation gets easier. That means inflation looks lower as we get into 2022. I actually do think that there's,

I'm a little more worried than you are about the residual shelter cost inflation and medical cost inflation that we're going to get underlying inflation in 2022 in the second half. And I'm afraid, I'm worried that the Fed in reaction, inflation is going to get worse before it gets better, first of all. We know that. And then I do think it will start to abate, but will it abate enough to not burn or to not panic the Fed? And one, I think the Fed was too slow on tapering because they bought a bunch of assets to stabilize financial markets in March of 2020, which needed to be done because we didn't want to have a financial crisis and a pandemic together. other, which would have made it doubly worse and hard to get out of it. But that was a long time ago,

and financial conditions have eased a lot since then. And so they'll accelerate their tapering, and I think they're going to be raising rates three times next year. My worry is that instead of being Powell has said, the chair Paul Jay has said, he will be patient but not hesitate to raise rates and that the Fed will be patient but not hesitant. I worry that the Fed will not be prudent. I worry that the Fed will not be prudent and will panic. And central bankers are hardwired to fight inflation. They've been raising rates on and preempting a non-existent inflation for 30 years. And they haven't chased inflation down since the 1980s. And my concern is be careful what you wish for on low inflation because the Fed may overshoot and get us into a boom-bust situation.

So you're saying, okay, my sense is that inflation, may not have peaked yet, but next month, two or three, we're going to peak. It will moderate. Moderate, yes. And supply chain bottlenecks. I mean, one of the big uncertainties, and you're right with me, I mean, the course of the virus, determines, of course, the economy. And Delta wave exacerbated inflation pressures, even as it slowed down consumer spending

because of the supply chain disruptions. And we've got another wave out there, and Europe's going into mitigation efforts right now. Germany is and the UK are hitting Austria. Austria, just yeah, a big one in Austria. And, you know, I hope that, I mean, we're not as vaccinated as we need to be, although kids are getting vaccinated really rapidly. That's good. But, you know, I do worry about what is this next wave? Even when we don't mitigate, we pull back on those services that we've not fully recovered on.

And so there's also disruptions. And so I think, you know, the computer chips are back on. line. So, and cars are being produced again. That's great. So there's some signs that there's uncoiling in those supply chain, even though they're still really long. And, you know, by the second half of next year, you shouldn't have as much of a problem, but we don't know. And then I have a lot of questions about, even though there's no precedence for what we're doing, it's not the 1970s, it's not stagnation, it's not that. But the wage price situation, I'm not sure about, I'm actually, when I look at the imbalance between employer demand and the supply of labor, I don't know why wages

aren't going up faster because it really is huge, the gap right now. And I don't know exactly how that gets resolved, but I do worry that in the midst of all this, some higher interest rates will be justified. The question is, will it be a situation where the Fed actually achieves a soft landing. I sort of liken this environment too. I remember during the financial crisis, it felt like I was forecasting standing on fault lines trying to get my footing. This is like quicksand. Every time you think you have a tether to pull yourself out, you get back in again because something changes with the pandemic. And, you know, that's, it's humbling. And I don't, you know, I mean, a lot of people that are my friends. And I admire them and I'm glad they have to

make the decisions and I don't. But I also know they're hardwired to worry about inflation. That's their job at the end of the day. And even though they want a full and inclusive recovering employment, as we talked about earlier, it may not be that in the overall level of numbers. If people don't have multiple jobs, the payroll numbers could be distorted by that. And the other issue is that they could go too far. So in my mind, the five, the five. And I'm obviously overstating the case, but, you know, just to make a case. Yeah. The firewall between inflation moderating.

And yeah, there's a lot of variables that will determine how fast it moderates, you know, will the pandemic come back, you know, so forth and so on. I get all that. But the firewall between moderation and something more persistent where wage price dynamics go in the wrong direction. You kind of get into that negative kind of wage price spiral is inflation expectations. and, you know, people and investors. Yeah, there's someone at the Fed that actually wrote a paper saying inflation expectations aren't the best. We don't really know how they work. Right.

So that's my question to you. I mean, do you, that's how I think about it. You know, I take great solace in the fact that, you know, investors still seem to think that inflation is not going to accelerate in a persistent way. Economist, you and I, we contribute. I think you contribute to the Philly Fed survey, which is probably the, probably the, best measure of what economists think. And by the way, this sounds self-serving, but I think that's actually a pretty good measure of expectations because the economists are the last to change their minds. So they change their minds. We're done. We're done. But so far so good. And we're also working

in our mouth. We don't look at gas prices. Yeah. And that's true. That's true. So do you agree with that Or not? So a lot of the way, so I was mentored, you know, Jim Annable, we mentioned him earlier, my former boss for 20 years. He mentored me. And he was an expert on inflation and the labor market at the Fed. Actually, wrote a couple of books on it when he was first starting as an academic after his academics in the 1970s. And what his work suggested was 80% of wages in the 1970s were tied to a cost of living, a colonel. adjustment. And I remember my dad coming home from work and he was a white collar worker at General Motors.

And you would get his CPI increase for the year. So you would automatically baked in all of the increases from OPEC cartel into wages. And the only way to cut your payrolls was to cut people. And, you know, we had a tripling of inflation from 1960 to 1970. And then we got this wage price spiral because we also had a high level of immunization. And white collar workers got the same thing that blue color workers are in their contracts. I mean, it was contractual. And that has broken down. So that, you know, so in that sense, I don't think that's going to happen.

But I'm just not sure how the gap in demand between will it be automation? I mean, we heard CVS say they're closing 300 stores this week. And, you know, that may be the way that we- Who said that? CBS. A CVS. Right. They're going to close 300 stores and go digital.

on those stores. And, you know, I do think that we're going to see more and more employment. It is actually happening that more and more employment is concentrated at large retail, tech savvy behemists that can take advantage of productivity. And that makes me sort of less worried about inflation that I also think they're fairly effective at not allowing unionization and people we can debate where that's good, better and different. But they have algorithms that they detect it to try to head it off. But, that concentration at the large phenopsonies, I think will eventually slow down and stop us from becoming anything like the 70s. So I'm not worried about that kind of wage price

spiral. I don't put it in the same form of expectations because if firms can't pay it, then they won't. And if they decide it's not worth it, then they won't. But I'm not sure, though, how long it's going to take us to get from here to there. And what that transition is going to look like. All right. Okay. Well, fair, fair enough. So my takeaway, though, is that, you know, there's obviously a lot of risk. We have a similar forecast. Yeah. That we're headed in the right direction. Yeah. We've got a problem with inflation, probably temporary, assuming the pandemic doesn't go off the rails again. And temporary economists is a year or two where. Well, yeah. Individual consumers, it's not.

No, of course. You know, today, tomorrow is, you know, that's no longer temporary if it's going to be like next week or next month. I'm paying these high, right. Right. Right. No doubt about it. It's just from a 30,000 foot level looking down. And you're saying the, there is a risk.

The Fed messes this up, which is always obviously risk at this point in the business cycle when. And I mean, I don't envy them. I mean, it's an easy. I mean, who knows? Yeah. And they've got it's a little bit more complicated than normal because you've got these very inflated asset values, stock prices, we talked about crypto, credit spreads in the biomark. I don't know if you've been noticing, but the housing market looks like it's getting a little

frothy and some speculations during. There's lots of, yeah. It wasn't the case six, 12 months ago for my eye, but now I'm seeing a lot flipping. Yeah, and the investors coming in flipping the rent. Yeah, exactly. Yeah, exactly. If you Google in Houston, it's such a huge thing in Houston. It's like, that's a huge business.

for some reason in Houston is a huge market for the flip to rent market. I don't buy it and flip it to rent. I mean, it's short term, like Aaron B, B, B&B? No, it's people running because they can't afford. Oh, is that what you're saying? Oh, yeah, for sure. Yeah, right, because the rents has gone skyward here. Yeah, yeah.

And, you know, the rents on, I mean, we've also seen the rents even in the urban areas because young people have returned. the office space hasn't but young people returned and that's pushed up rents again in urban areas as well on apartments but yeah so i guess the last just to close the loop because i want to respect your time it's late on a friday i don't want to keep you and you're headed to michigan i think you said yeah we have to go after the traffic so i've got some time believe me okay okay but i don't want to keep you but i do want to ask christ and i don't know we want to stay in a longer for this I'm sorry, I miss that. They're like, it's late.

Yeah, it's late on a Friday. Oh, those two guys. Oh, no. Yeah. Don't worry. Yeah. Are you kidding? Friday and holiday week.

We've got the post podcast. Chris doesn't respect boundaries. You know, he's like tweeting me, not tweeting, emailing me at all hours of the day, you know, and expects a response right away. Just replying to you. Chris is tough. I, I've been up every day. this week at three in the morning and I do send my people emails at three in the morning,

but I don't send them text because they get up for text. Well, that's good to know, but that's a little scary that you're up at three in the morning doing emails. I was actually, I write, I write whole 5,000 or 3,000 word documents on my iPhone. That is amazing. Google. That is amazing. Don't get any ideas, Mark.

No, no, I can't. If you start texting Chris and I at midnight. It's not going to end well. But Ryan answers emails at all time of the day no matter when it is. I mean, literally. For sure. I'm telling you, Diane, he's. Do you have a thing that goes off?

I turn, you can turn it off. Yeah, you can turn it off. I mean, Ryan responds no matter what. Yeah. I actually don't have the email on my phone. Oh, you don't? Wow. So you're on the PC all the time?

You're looking at the PC at, wow. Yeah, I want to stay married because if I had out of my phone, I would just constantly going to stop. But you're still responding all the time. Yeah, I know. I asked one last question around the consumer. Obviously, there's been this massive shift from services to durable goods. Do you think we're in store for a period when there's going to be a very significant weakening in durable goods spending? Because maybe not for autos, but for many others, because there I expect there's some pen up demand.

But for other stuff, I'd call it spent up demand. We have, I got three propane heater. Talk about carbon footprint. and three propane meters down on my back deck over here. I got two, you know, what do you call them? Water, what do you call this thing? So are you, power washer. Power washers, two power washers.

I want to buy a power washer until, well, I'll be dead by then. So why do you have two power washers? To clean the other one. Well, I'll tell you, it's a long story. All right, all right. I just didn't understand why you have two power washers. That's right. Exactly.

Come on, Ryan. Actually, you know, there's, there's, I'm Craigs. There's a lot of boats and jet skis and... Really? Yeah, yeah, yeah. Everyone got boats when they got their second houses or they're going to Airbnb. Everyone got a dog. That's actually, it's really hard.

My daughter trains dog. She's in graduate school, but she's like, trained, you know, for blind up electics and stuff and PTSD dogs. Not our dog. The dog that she got when she was 18 and brought home, she didn't train him. He trained him. my husband. But his name is bear. But she's

really worried about all the people that are now returning animals to the shelters. Yeah, Ryan was telling you, Ryan's wife is a vet and she's saying the same thing. Yeah. There's not enough that's out there. She's busy. She's probably busier than you are.

She's very busy. She works way harder than I do. So do you think there's going to be a backside to all this where there's going to be pretty weak building materials? and supply. I mean, all these retailers that are reporting great earnings now. Yeah.

There's a backside. There is a backside. There is a backside. And that's, you know, again, it gets into, it gets into that bullwit effect, too, because people are double ordering. Yeah. And that means we could have an overhang. So what I'm also worried about is an overhang of inventories in 2023 that we have

to work through and we could see some real discounting then. So be careful what you wish for. Yeah, exactly. That's Ryan's been making that point. That's sort of the flip side of this, right? And that's what, you know, I think there's a, the signals on demand are being distorted by the fact that, you know, I know builders who've gone out to Home Depot to buy the appliances they were waiting for that won't come until January. Right. And they want to finish the house and sell it and, you know, give it to, it's presold and get it off their their balance sheet and get the cash and get on to the next one.

And so, but they're double order. When you double order like that, you've got an impulse through the retail sector and the wholesale side. and at some point in time, we're going to have too many inventors. And we got a lot of stuff that people won't want. Well, we've got a lot to talk about Diane. We're going to have you back to talk about that. About all our stuff and how we get rid of all our stuff.

Yeah. Hey, since we got Diane, last question to you, Chris or Ryan, there was anything you were wondering about that I didn't get to or didn't ask Diane about that you want? They're like, no, we already know way too much about her. there, Chris, go ahead. I can't think of anything. You covered the gam. It was great. It was a fantastic conversation.

You are so engaging and so lovely, and it's just a pleasure to chat with you. So thank you very much. It's fun to talk with you too much. I mean, you know, and we've known each other almost our whole career. A long time. Yeah, indeed. Well, hopefully many more years too, Diane. And now, you know, I have your, I have your Moody's,

your old mug. I'm going to hear a new one, by the way. That would be great. Yeah. I mean, definitely. It's going to have Mark's Twitter handle on it. You're right, Brian. I know.

I'm shameless. I'm shameless. I'm shameless. That's all right. You guys have to go look up Cal Bell, Sarant Live. Oh, definitely. You have to watch it immediately. Yeah.

Because I mean, my daughter at, she was the, for a while, she was the head biologist. Well, she is a biologist. She was head of a breweries, their entire quality control, and also testing all the beer and bacteria and all that kind of stuff. And they always would say more cowbell. And she didn't know where it came from. So I played it for it.

She's like, oh, my God, I'm never going to be able to listen to that song again without saying more cowbell. And Ryan knows exactly what I'm talking about. But it is. Oh, I got to go listen. Carl Kenton, yeah, who I just love on CNBC, he tweeted out the more Cal, he created it out on its anniversary. It's 20-year anniversary, I think. Oh, is that right?

Yeah, I definitely got it. I love Will Ferro. He makes me laugh out loud. Christopher walking. Who's in the, who's in the right? Yeah, Christopher Walking. Oh, this sounds a classic. It's amazing.

It's amazing. It's amazing. It ruins this song. Like, whenever you hear it, you're just forever. you're just going to think, go Cal Bell. You have to play it. You have to go and you have to put, get Google it. Chris, before you try to put this whole thing together, go Google that.

And any of your listeners should also just, it's just something, you know, if you need a moment of joy. Well, you know, Diane, the hardest part for us of this podcast is after we end, the three of us have to come up with the title for the podcast. And we have a Rupert for doing it. I somehow, I think Cal Bell is going to be in the, in the, in the, Calvert should be in it, yes. I already got the title. Oh, you already got the title. Fantastic.

All right. Well, I think we're going to call this a podcast. It was fantastic. Really, really good to have your voice. And the only thing I can say, Diane, since our outlooks are similar, we're both going to be wrong. Yeah, I know. I know. Well, at least we're in good company.

Yeah, we're in good company. Good company. And we can, you know, we can commiserate together. But it's been a humbling year. And all I can say is it's good to be on as hard as the pandemic is and it's still going on. I will never forget what a gut punch it was seeing the claims go up so quickly and the jobs go so quickly and just how devastating that was. And to at least be at a place where there's some hope on the horizon is a good thing to do.

And for me personally, having 11 surgical procedures and six major surgeries. and so far beating cancer through the pandemic. And it's just a good place to be right now. Well, you're strong and thank goodness for that. Amen. It was good to hear. Good to have you. Thank you so much.

And we'll call out a podcast. Take care now.