Moody's Talks - Inside Economics - Jobs Jobs Jobs

Episode Date: August 6, 2021

Mark, Ryan, and Cris welcome back their first repeat appearance guest - Dante DeAntonio, Senior Economist at Moodys Analytics. They breakdown the numbers in the July Employment Report and discuss the labor force and productivity in great detail. They also touch on the Delta Variant and its impact on the economy. Slides talked about in today's episode can be found here. Full episode transcript. 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, and I'm joined with a few of my colleagues. First up, Ryan Sweet, Director of Real Time Economics. Okay, Ryan, go ahead, gloat. Go ahead. Feel free. I'm not one to gloat. I'm just saying, you doubted me. You questioned the strength of the employment number. Yeah, that's true. Well, so everyone knows Ryan does deserve more than a pat on the back. Maybe a few kudos. I'm not sure, you know, what else we should. There we go. I see a happy clapping sign here. Oh, by the way, I should mention we're on YouTube now. So if you're interested, go to YouTube, search for Inside Economics. And you'll see the happy sign that Chris put up.

And you'll also see his red Speedo shirt. You know, he's finally gotten broken free from the howdy-d-d-duty speedo. What is that? Oh, swished. What is that? That's the recovery right there. Oh, there's a. Yeah, that's right.

So just so everyone knows, today's job Friday. We got the employment numbers for the month of July, and we're going to be talking pretty much about that the whole time today. A very strong number. And Ryan, you nailed it. You got it exactly right, I think. So what was the number and what was 943? And I was a little bit above $1 million.

You're a little bit above one million. The consensus was 850, 860. So it came in a lot better than many people were expecting. But wait for the revisions, right? Yeah, we can talk about that later. The revisions to June were really good. They were good. A million might be right.

And I think, you know, Chris, what was your fore? You were close too. Chris was really close. I said 860. That's close too. Yeah. See, he always goes with the consensus. You never really, no, no, that's above consensus.

It was above consensus. 10,000. 10,000. That's how he does it. He's very, you know, he just, he plays the odds. You know, I'm going to go right a little bit of the consensus, a little bit below the price is right, you know. Yeah, that's right.

The price is right. So, but anyway, Ryan, good job. Very good. Thanks. Is this fair? I think I guided you a little bit lower. You were talking more. Yeah, I was above.

And then you talked me down a little bit. You put a little sense it to me. Okay, there you go. And of course, we have Dante. Dante is our first repeat participant in the podcast. Way to go, Dante. honored to be here as always. You deserve a pat on the back or kudos or something too. I'm not sure what, but, you know, yeah. And there you go. What is that? That is a thumbs up. Thumbs up. Thumbs up. But Dante, what the hell, man? You are so far off. What is going on? I'm not sure a forecast you're talking about.

800,000. That was my forecast. You can't have two forecasts. That doesn't work that way. Ryan, explain Dante's mishap here. What did it happen? Dante helps create the ADP estimate that we work with, ADP on.

And he puts it out the Wednesday morning before the jobs number. And he created a lot of unnecessary stress for me this month because what was the ADP number, Dante? It was 330. Yeah, and this measures private employment. And what was the actual number? 700. It was around 700, yeah. Yeah.

I'd like to say that the ADP number helped guide you lower also, Ryan. So, you know, you can thank the ADP number for bringing you down a little bit from your cloud of 1.3 million or wherever you were originally. Yeah, I was too high. He was talking one six at one point. I was not talking one six. I heard one six somewhere. I don't know where that was. I said it wouldn't be surprised.

Oh, okay. There you go. All right. Well, you know, Dante, it's not fair that you're taking the blame. Hey, in all fairness, though, I mean, your estimate, Ryan, is after all the data is in, you can adjust your models and pick which models we think are more relevant given the circumstances that we're in. Dante, and it's not fair to say Dante.

We can keep saying Dante as well. We are going to keep saying Dante, but just what everyone knows, I'm part of that team as well. That estimate is actually made a week, almost a week before the actual report, the BLS report. So ADP is a human resource company. They process payrolls. We get data for roughly, I don't know what, Dante, 24 million employees, something like that, which is huge, large, about as big as the Bureau Labor Statistics sample for its estimate of jobs. And we take the ADP 24 million and then do a number of things to make it comparable to the BLS and then try to predict the BLS with the ADP. But we do that a week before the BLS actually comes out.

So we don't have the benefit of all the other data that comes in in the week leading up to BLS. And also our model, you know, doesn't change. I mean, like Ryan, I'm sure you're saying, I'm not using unemployment insurance claims this month because they're bogus for lots of different measurement issues. So I'm not going to use that. Whereas, you know, ADP, because of the model is using that information. The other thing I was going to point out is, I mean, Dante said like the underlying data was soft. And if you look at the unadjusted BLS number for private was, it was still strong, it was strong, but it was, you know, or total was weak. It actually fell.

It normally falls in July. So maybe there's something going on with the way that a seasonal adjustment, which is very, very difficult to do accurately. And if you look at ADP's big misses, it comes in months where you get these like seasonal or calendar quirks. Yeah, and I'm sure we're talking over a lot of people's heads right now. We just kind of dove right into the week, dove deep into the rabbit hole immediately. But just a level set. That BLS number we got this morning, Friday morning, what is this? Friday, August, what, six?

This is the data for July. I would characterize that report as being about as good as it gets. Would you say that is the case? Would anyone disagree with that statement? No. You would have to really dig to find something to wobble about. It was strong across the board. Yeah.

So just what were the most impressive statistics to you in the report? Dante, once you list what you think rank ordered, because there's a boatload of statistics in this report, what was the most impressive statistic in the report for you? Do you want me to give away my statutes? a week because that was my most impressive. Oh, okay, let's do that right now. Go ahead.

All right, well, I'll give you the number then. It's minus 560,000. Oh, that was mine. I guess you know what it is, then. That's the long-term unemployed, right? 27 weeks or more. Yep. The decline in.

The decline in. That's right. But we're still... I got a backup. I got a backup for them. Me too. 2.3 million. Related.

2.3 million. that's the increase no 2.3 million is from the from the start of the pandemic oh yeah that's right you're right yes sorry yeah there's 2.3 million more long-term unemployed unemployed by more than 27 weeks in july than pre-pandemic so even though it came down by 560,000 which is you're saying dante that's the biggest decline ever no the biggest decline so far in this cycle There was a big decline a few months ago, but this is by far the biggest that we've had since recovery started. But we're still got ways to go here.

We still have two points. Absolutely. Yeah. Yeah. Okay. So that, so, so did you have a backup, Chris? No backup? I got a backup.

Oh, you got a backup. Okay. We'll come back to you. Hey, you know what? My wife, who listens to the podcast, she really likes the podcast. We kind of listened to it Friday night after dinner or during dinner. Class of wine. Yeah.

Actually, glass of wine, more than one, usually. Actually, well, I was going to say something else, but I'm not going to. It's a long podcast. Right. We have a glass of wine. She sits there and dissects it. And now she's really into this game. So she wanted me to give you a statistic.

You ready? Oh, okay. And this is a non-sequitur compared to what we've been talking about. So it has nothing to do with anything. But it does have something to do with Wawa. Wawa. We talk a lot about Wawa on this podcast. which for people that are listening in the UK,

they go, what the hell are they talking about? Wawa is a, you would say a convenience store, right? Chain convenience. Would you say that? I think that's why I would describe it. And here's the statistic, see if you can figure it out. $195 million. $195 million.

Cups of coffee served per year. Damn right. Excellent. Chris got that. He beat you, Ryan. Did you see that? He beat you. He was fast.

Did he get it too? You got it too, Ryan? I was in the process and then you'd come right in. You have to raise your hand. You have to raise your hand, Ryan. Come on. What percent of those sales are from the Zandi household? Oh, I could calculate that.

Oh, you didn't give me that's over a year, right? You know, 195 million cups over a year. So I would do, let's say, 16, what's it, 16 ounces? No, no, 32 ounces a day. This is boring. I'm going to stop right there. You kind of get the end. This is pretty boring.

Anyway, that was her statistic. Okay. Ryan, what was your top statistic, most upbeat statistic in the report? 13% year over year. Ooh. 13%. 13%. 13%.

You know, Chris? Same report? Telework. Yeah. not Wawa. We're going back to the employment report. A percentage that teleworked. That would have been good, but no. Actually, do you know that statistic?

Ryan, I didn't look this. I didn't look at it. I forgot. 13. I tied up all the good things to the report. Huh. I would want to know that one. So it's not 13% is not the percentage of people who work from home.

Another hint is that it's the largest on record. And I think we have data back into the early 1970s. Oh my gosh. And that's in the employment report. It is. Wow. I don't know. It's a segue into like we can talk more about it. It's to do with wages. It's wages. So it's it's least hospitality. Oh. Exactly. In leisure and hospitality. Oh, I see. It was weight, average hour learnings growth for leisure and hospitality. Correct. Year over year. Year over year. So it was very depressed a year ago. So there's some so-called basic effects.

Yeah, there's some base effects. But you hear all these anecdotes that restaurants, bars can't find people to work. Yeah. Raising their pay, but they're still struggling to find workers. So I think getting lost in the shuffles, maybe the debate that, you know, people don't want to go back and work at restaurants and bars. It's a tough job. And they may be career switching.

So, you know, we could have some labor matching issues down the road. Yeah, got it. Okay. My favorite statistic. And I'm rounding here, but just to know, because to be frank, I can't quite remember the third significant digit, but two thirds, two thirds. Is that the share of leisure and hospitality for total employment or the change in total employment? Do they account for two thirds of the game? No, it's more like one third, right?

Because leisure in hospitality is up 380 and total was up 940, what? So that's not two thirds, no. Oh, I was thinking private. Because you don't want to strip out the – See how he does that? Like, yeah. Obviously, you should know that, Mark. You're stripping out.

Yeah, obviously, I should have known that, right? Okay. Well, okay, 348 divided by 700. Pretty close, actually. But that's not what I had in mind. But that's not bad. It's not bad. It is the diffusion index, you know,

the percent of industries in the report. that increased employment during the month. And I think there's like 250 industries in the report, 250, 260 industries. And that goes to another pretty impressive aspect of July's numbers. The job gains were very broad-based across. You know, they were obviously leisure hospitality and government, education, some of that seasonal adjustment. But it was manufacturing.

It was construction. It was professional services. It was financial services, information services. information services. There's really only one sector that was soft. You wouldn't catch that. Retail. Retail.

And that probably reflects some give back because retailers were hiring aggressively during the pandemic, particularly like Home Depot and Lowe's. And then that may also, you know, we're going back to online having a big impact on brick and mortar. That was a case before the pandemic,

but obviously after the pandemic as well. Okay. Other than the retail, the softness in retail employment, were there any other blemishes in the report? We are economists. We tend to focus on the downside. So focus on the downside. What in that report would shade it for you?

Anything in particular? How about anybody to go first? No? I think we're still not seeing a lot of improvement for the female prime age employment to population ratio. So when you look at it by demographic, it's really African-Americans, Hispanic, and Latino women are just not re-entering the labor force. Yeah, yeah. Yeah, I think along with, yeah, there's broadly participation in labor force. It's just still almost flat from a year ago.

I mean, and we, I think, expected that to be slower to come back than anything else, but it has not moved much. Yeah, it's still, the labor force participation is still 61.7%. And it was 63%-ish before the pre-pendix. About a point and a half, one-and-a-half percentage points below. And that has not budge. That's not really increased. Hey, one thing I did notice, I was curious, and maybe this is just mix effects, average weekly hours.

So the number of hours worked per week is jumped in the pandemic and has not come back at all. Is that just mix? Is that just because you got leisure and hospitality and retail? kind of still down and those are they tend to have fewer hours per week than say manufacturing or construction. Is there anything else going on there? I mean, so I think the initial jump was probably mixed issues, but I think the fact that it hasn't come down at all is probably at least something to do with, you know, employers leaning on existing workers more. If you look at this, you know, the number of workers who are working part-time involuntarily, that's come in a lot.

So it certainly seems like, you know, they're putting their existing workers to work more hours because they're having trouble filling those open positions. And so that's probably preventing that from coming in a little bit as you get that rehiring happening. So that's a good sign. I mean, a good sign in the sense that at some point you would expect employers to hire when they can hire more people. And it's kind of a leading indicator for future jobs, you know, presumably. Yeah.

Because they're actually sweating, right? Yeah. Have you noticed there's this kind of conversation going on or at least I've noticed tangentially. I was in the car driving. and I heard an NPR story about people wanting to work four days a week as opposed to five days a week. Have you been listening to this? Yeah. Yeah.

Yeah. There are some companies, right, that have said they're going to adopt a four-day-a-week schedule. Yeah. And the thinking is that it actually will result in greater productivity, even though people are working fewer hours, they're happier and they're more productive. I mean, is that resonate at all? I'm just waiting for the email from you telling me to take Fridays off. That's waiting. Not that email.

Actually, you're still working right now, but I think of the rest of Moody's is actually. Are they working now? I think on Friday afternoons, right? In the summer, don't we have off?

I haven't been following closely. You're not supposed to schedule meetings. I don't know if it's technically vacation, but you're not supposed to schedule meetings and things. Oh, I see. It's like Zoom free Fridays. You can take Friday afternoons off. I think so.

Say that again? I think if you work an extra hour Monday through Thursday, you take part of Friday off. I think that's how. Oh, I see. I see. Kind of what that does. You can bank hours. Right.

I see. I got it. All right. Okay. I, Mark, I got your statistic. So the percent of employee workers that teleworked in July, yeah, 13.2 percent down from a lot. Hey, Chris got that actually.

Didn't he say 13? He nailed that. He said 13. No. I had 13 percent. This is 13.2, different. But it's down from 14.4. But remember, this is asking you, are you teleworking because of the pandemic?

So there's more people working from home, I think, in general. Yeah. And I would expect that might start to go back up, right, because of the Delta. The Delta, yeah. Start watching that. Because there has been a lot of announcements by large corporations. operations that they're not going back to work or they're not asking their people to come back to work as quickly as they thought they would because of the variant. So we might see that start to rise.

Okay. You know, so one thing I think is always useful is to let people know what, because there's a lot of ups and downs in the data. And there's a lot of, as you can, as a listener can tell, there's a lot of measurement issues, technical issues that affect the numbers from month a month. So, you know, this month was a good month, but, you know, probably overstated the seasonal adjustment issues that Ryan mentioned are affecting government, education, leisure hospitality. And that, that's temporary. You know, that's going to come out of the data next month and the month after that kind of thing. So what do you think underlying job growth is? And when I say underlying, I mean, abstracting from these monthly vagaries of the data.

I suspect it's not 940,000, but do you have a sense of that? Do you have a view on that? Just curious. I mean, just to give people kind of a benchmark or some context. So I'll give an nod to you, Mark. I think our forecast for a little while has been for about six million jobs to be out of this year. And I think that, you know, five, six hundred thousand a month is probably about where it is underlying. I think that makes sense to me.

You know, that's fine thinking. I'm thinking Ryan, Ryan disagrees based on his smirk. I don't know. Oh, no, I was smirking about something else. Okay. All right. Yeah. So you're thinking 500, 600K per month, give or take.

So some months you're going to be higher like July, so much you're going to be maybe August, going to be a little lower because you're on the backside of these seasonal adjustment factors and you still have the Delta. And we'll come back to the Delta variant shortly. Since we're on YouTube, we have some charts. So your point about like the volatility and the employment numbers, Blue bars show you the change between months, and then the green line is the cumulative

increase since February 2020. Okay. Or cumulative change, yeah. And it looks like to my mind's eye, if I do a average of months over the past, say, six, seven months, almost since the beginning of the year, that feels like that would come in somewhere around 600K. Yeah. Yeah.

Okay. So you would say that that's kind of sort of underlying. job growth in the current economy. Yeah, I think that's about right. That sounds right. And I guess if that's the case and everything sticks to script and we can, the economy continues to generate that and I suspect that it will more or less, that would mean we would recover all of the jobs we lost in the pandemic recession because

we're still down despite everything. We're still down like five and a half, six million jobs, I believe. So we'll get all those. Yeah, we'll get all those back a year from now. And then, uh, it feels like with that kind of job growth, unemployment should be south of 4% kind of getting back into the mid-3s by early 2023.

So that would be probably consistent with full employment, right? Something like that. So that feels like the track we're on at this point. Anybody disagree with that kind of perspective? I think that's our baseline forecast, roughly speaking. I mean, the caveat there is obviously what happens with participation, right? I mean, if you get to three and a half percent unemployment, but participation is still very low.

What does that really mean? Yeah. And that brings up a great question. So how do you think about full employment? You know, when you're, so that's obviously the bogey here. We want an economy, we want our economy to get back to something we would consider to be full employment, which I think most people would say we were prior to the pandemic. So what's, oh, there you go. So Ryan put up his favor.

I don't want to influence anybody. but so I'll go first. This is my metric for reaching full employment, which is the prime age employment to population ratio. And I think Mark pointed out at least historically, if you get to 80%, you're, that's an economy at full employment. Yeah.

So, so this is, what about people who are listening to our podcast but aren't on YouTube? What happens to them when we're talking about? I guess they're out of luck. They got to get on YouTube. I think we're allowed to, are we able to, we're going to have to get Ben and.

to chime in, but I think you can post slides on podcasts. You can? Okay. I think so. Okay. So your point is, is that historically, at least through the last few business cycles, a good benchmark for a full employment economy is a prime age employment to population ratio. And prime age is, you said 25 to 54?

Correct. That is at or above 80%. So if the number of prime age employed relative to prime age population is over 80, that would be consistent with low unemployment, high labor force participation of full employment economy. Wage growth is accelerating, that kind of thing. Yeah. Correct. Right. Right.

But still generally, when people think about, you know, how to evaluate where the economy is relative to full employment, they're still focused, at least, most people are still focused on the unemployment rate as their benchmark. So that, you would think that would be what? About three and a half percent would be full employment in that ballpark kind of mid-threes. Something like that. Chris. You're closer to four. Whoa. Whoa. Three and a half four. You're going to go the other way? I was going to say, we don't know until we get there. But I would say my gut is below three and a half. And when you say until we get there, what are you looking at when, to make a judgment that were full employment? So, I mean, looking at using the unemployment rate to gauge full employment, because, you know,

economists did the same thing in the 1990s. They did it right before, or during the last expansion, that the employer rate's coming down, where full employment, you know, labor supply issues are going to build, and they never did. So, yeah, I think that's why I kind of, I don't know what Dante thinks, but I lean towards the prime age employment to population ratio. Yeah, I mean, I think you just have to be careful if you're just looking at the unemployment rate. I mean, it can be misleading, especially, I think, coming out of this recession, I mean, if we get below 4% and the participation rate comes back somewhere close to where it was, then I think we're saying to you, hey, unemployment is 3.5% and participation is still where it is today, then I don't think that's something to celebrate. Yeah. Yeah, no, absolutely.

Okay. So if I said to you, hey, unemployment is 3.5%, labor force participation is 63%, back to where. it was pre-pandemic, and the prime age employment to population ratio is 80%. And I guess wage growth is strong. It's certainly not decelerating, looks like it is perhaps accelerating. You would say, and real wage growth is accelerating. So nominal wage growth, less inflation is accelerating. You'd say, okay, we're at full employment.

That sounds about right to you. Yeah. Okay. And today... The tell tell sign, right? I think so. I mean, ultimately at the end of the day, right? Although right now, wage growth is pretty solid.

Fair enough. Yeah. You can't just use one. Right. So, but today, the unemployment rate, despite the great jobs numbers, was 5.4%. Labor force participation rate was 61. 1.7%. And what was the prime age employment to population ratio? It was 77.8.

0.8. So it was up a lot. Again, good news about July. But taking all of that, it still says we are, we got a ways to go here until we're back to full employment. And I don't know about using the labor force participation rate. Shouldn't we use the prime age labor force participation rate? Because demographics are going to continue to continue. need to put downward pressure on the overall labor force participation rate. I think that's fair. I guess in a short period of time, it doesn't, that's not going to really affect things. I mean,

so a poor man's way of doing it or, you know, uh, easier way to do it. It's not, you don't need to account for that. But over, over five,

10, 15 year period, I, that demographics matter a lot, obviously in terms of participation. Because you, because of the aging of the population. Yeah.

Okay. So, so we're, we're on our way, but we, I think it's important for everyone to realize that we got a ways to go. But people are starting to worry about, before I go there, I wanted to ask about, you know, labor supply. You know, if you go back a couple months ago when we were having our podcast, when we did another labor market podcast, I think the subject at that time that was at the top of the discussion was around labor supply,

that, you know, the economy was opening really very quickly coming out of the pandemic. We had a lot of open job positions. But job growth was still very weak. Well, it wasn't very weak. It was not what we expected. It was three, four, or five hundred thousand per month. It wasn't the $900,000 or a million that we're getting right now. And labor supply was constraining the ability of the economy to create more jobs, to fill more jobs.

Does anyone think labor supply? is still an issue in terms of job creation? I mean, is that playing a role here at all in terms of our ability to add to payrolls? I mean, I think the pace is pretty good already. I mean, I think it's going to become an issue, you know, getting those millions of jobs back that are still missing. You know, we need to get those people back in the labor force eventually. But, you know, would we have seen one and a half million this month if labor supply wasn't

a problem? I don't think so. Yeah. I mean, it feels like to me that there's kind of a cap on how many jobs can be created in a given month because just simply business operational issues, HR issues, human resource issues. If you think about the hiring process, maybe not in small companies, but in midsize and larger companies, there's a process, right? I mean, you get resumes, you interview people, you bring them, well, now we do it over Zoom. And then there's a negotiation, and then they say, okay, I'll, I have to leave my current

employer and I'm going to come to you. I could take some time. So the whole thing takes time, you know, not days or weeks. It can even be months. And I think if you look at the kind of the change in employment month, month not seasonally adjusted, feels like the cap is about a million per month, that there's just very difficult for business to hire more aggressively, at the payrolls more aggressively than that. And if that's the case, it feels like we're there, right? We're kind of at the cap. I mean,

no matter, you know, what else is going on, it's going to be pretty hard to get monthly job gains that are much stronger than what we're getting right now. Does that resonate with anybody? Does that make sense to people? The kind of way you're thinking about things? To some extent, I would say so. And businesses do indicate that quality of workers, hiring qualified workers, is their biggest issue. So from that standpoint, I think businesses are still being picky, want to ensure that they have a good match before they just hire anyone to fill a role. So I think there's some truth to that. Don't you think it also varies by industry?

I mean, business and professional service, of course, that's going to be really. going to take your time, but you see these restaurants, they're trying to mass and large, or hiring mass quantities. Same thing with Amazon. Didn't they recently have a big hiring event and they're going to try to fill thousands of positions in a very short period of time? Yeah, that was going to be my caveat. I think if you're talking about leadership hospitality, I think those frictions that you described

Mark probably aren't quite so important. I think restaurants are more willing to hire people on the spot or very quickly and, you know, maybe the labor supply issues are actually holding back, you know, overall hiring there. but I think in a lot of particularly white collar industries and even, you know, manufacturing, the hiring process just takes a little bit more time. Yeah, that makes sense. Well, even in some non-professional occupations, you've got things that just slow down the process, right?

I mean, if I'm getting hired in the transportation industry, I probably have to take a drug test, right? You've got to wait to the drug test comes back and so forth and so on. Right. Background checks, drug tests, all those things, take time. Yeah. It takes some time. that to, you know, really kick in.

There, of course, the debate, sticking to the labor supply issue, there's been a lot of debate about supplemental unemployment insurance. So as part of the American Rescue Plan, that's the relief package that was passed into law last March. That tacked on $300 a week in additional support to people receiving unemployment insurance. and the concern was that still is, I guess, that that extra money makes it, reduces the incentives for the unemployed to go back to work, at least go back to work quickly. And so we have had a number of states.

I think it's up to 26 states that ended that supplemental, that $300 supplemental unemployment insurance early. Under the American Rescue Plan, it was supposed to expire in early September. in a number of states ended in June, some in July. Any, any, I know all of us has been kind of sort of looking at this issue. Is there any evidence out there in the data or circumstantial or anything anecdotal that seems to suggest that that supplemental UI has had a meaningful impact on labor supply and job creation and economic growth?

Has anyone seen anything? Nothing definitive. I think it was indeed that did a study looking at jobs. search activity in states around when those benefits were ending. And in some states where they ended, it looked like maybe there was a little bit of an increase in search activity right afterwards. But in other states where it ended, it didn't look like there's anything or even a decline. And that doesn't signal, you know, completed job applications and you're actually hiring and employment. It's just signaling sort of the first step of the process.

Yeah. I saw Chris, I don't know if you've noticed, but Chris and Ryan have been kind of smiling, smirking. I don't know what the hell's going on. I'll let Chris explain. They're texting. I have three little texting. I can't get in any more trouble. Me neither. All right.

Back to your point about labor supply in the UI. I have a chart for you. Oh, okay, good. Great. I like this whole YouTube thing. This is that comes from the labor force flows data. So it tracks people, you know, when they're not in the labor market or not the labor force, you know, how are they transition from employed to unemployed,

etc. It's just to showing the people that are not in the labor force that move to employed. So they jumped from being out to having a job. And it jumped pretty noticeably, I think, in July. And that's towards the end. It was about $500,000, maybe a little bit more than that. But if you look at the number of people that went from unemployed to employed, there wasn't this big surge that you would think would be the UI benefits.

This, you know, the jump from not in the labor force to employed is probably reopening because you have to be actively looking to receive UI benefits, so they wouldn't be counted as not the labor force. Okay. So just to reiterate for the folks that don't have the benefit of the chart, what we're saying is that in the month of July, there was a relatively large increase in the number of people that went from being not in the labor force at all. So that means they're not unemployed.

They weren't looking for work. Obviously, if that's the case, they weren't receiving unemployment insurance. to being employed. So that feels like could be parents who are staying home with kids, taking care of them while schools were online.

Now they have summer school in person or camp in person. They're going to work. So that might be an example of that. But if the supplemental UI was having a meaningful impact on these decisions, then you would expect to see

a large increase in the number of people who went from being unemployed because they were getting unemployment insurance to employ, to taking a job. And you're saying, no, we're not observing that. We did not see that. Yeah. Okay. Okay.

So bottom line, the circumstantial, it's still circumstantial, right? Because the jury's out here. We need more data, a lot more data and more time to collect the data. But at least so far, are any impact of supplemental UI on decisions made by unemployed workers to work or not work. Is that fair?

I mean, we're all kind of on board with that. Okay. Chris, that's right. That's right. Okay. Dante, you're not, you're being stoic over there. I would agree with that, yeah. You would agree with that.

Okay. All right. Okay, fair enough. But, well, again, this is a script being written. We'll see. We'll get more data points. I guess the next set of data that we get will be helpful here. is the state employment data, right, for the month of July. I did look at the state employment

data for June because there were some states that ended the supplemental UI pretty early on in June. Not a lot. I think there were four or five states. And then a number of states that ended in July. And you would think if you're going to end in July, then people might start going back to work. If this was going to have an effect, it'd start showing up in June. People start getting taken jobs. but you can't see it. It's not in the state employment data. I couldn't discern it. But we'll see.

What do you think about, I mean, I know we need more data points, but we're running out of time. Like we'll get the August employment report. And then September is when they were going to expire anyway. So it's going to be very, very difficult to discern early versus just regular scheduled.

Yeah. Yeah, right. Yeah. I think that just goes to the, there was a lot of hand wringing about something that probably didn't matter all the much, because we were talking about a couple of months of benefits. You were talking about benefits that were going to go on for another year.

You were talking about a few months. So wasn't really going to make that much of a difference anyway. Yeah. In the belly of this report, you have, look at the number of people that are not in the labor force but want a job by reason why they're not in the labor force. And in July, the number of people that are not in the labor force but want a job or not looking is because they're sick.

or disabled, that jumped. So that's COVID most likely. And then people are out of the labor force because of child or family responsibilities. Oh, that's interesting. So I think those are much more significant for the labor supply problem than UI benefits.

Yeah. Okay. Chris is going to have to drop out of the labor force soon because summer camps are over. Are you dropping out of the labor force, Chris? This isn't used to me. I found a camp for next week, so at least one more week. We're good.

We're good. Okay, so another issue that's come up that I'm just curious, you know, what your perspective on is on this is, you know, of course, wage growth has been very strong. And a lot of concern about inflation. So, you know, you've got now the economy doing well, lots of job growth, unemployment, starting to come in very rapidly. we're talking about full employment by early 2023, and wage growth is already pretty strong. I mean, if you look at the average hourly earnings that are in the BLS report, I think it's four and a half to five percent year over year, which is obviously overstayed because of mix effects, but nonetheless, the employment cost index, which is a kind of a better measure of wage growth

because it controls for the mix of jobs across industries and occupations. that's kind of sort of in the mid-threes, which is pretty strong and really didn't show any weakening during the pandemic. Inflation is kind of a worry, a concern. Is that, you know, what do you guys think? I mean, are we headed to an inflationary problem here because of what's going on in the labor market? How are you thinking about that?

Do you think that's a people who are just too much drama around this, or is there a real reason to be concerned? I'm curious to hear what your perspectives are. are. Dante? I think it's wait and see right now. I think the labor supply issues obviously play hand in hand with what's going on with wage growth. Wage growth isn't strong right now because the labor market is super tight.

It's strong because firms are competing for a limited pool of workers. So I think if we can get to September, October, and you get some of those workers coming back, that should take some of the pressure off of wage growth, at least temporarily until you get to an actual tight labor market. So I think, you know, I'd sort of wait and see. I'm not concerned yet. But if you don't see that sort of slow at all the next few months and you see it continue to accelerate, then I think that that could be signaling a problem. Yeah. Chris, any concerns about inflation?

Yeah, I'd agree with that. Certainly on the, inflation's on the risk matrix, but it's not the cause for red flag just yet, I would say. I'm still a believer in the productivity story. So I think some of the productivity gains stick and that supports a higher wages without leading to inflationary pressure. But wait and see. It's probably the best strategy right now. So your point you're making is, okay, we've got strong wage growth. Maybe it is going to accelerate, but look, we've got also stronger productivity growth. So that offsets the impact of the stronger wage growth on businesses' profitability and the pressure on them to actually raise prices more aggressively.

That's not going to the same inflationary pressure. That's right. Yeah. And you guys, I know you you, when I say you guys, I mean, Dante and Chris, you guys have been working on a paper, which I haven't seen, by the way, you've been threatening to show me this paper. It must be a masterpiece or something at this point in time, but on productivity growth, right? Is that right? You guys are working on this paper? We are. You guys are a preview?

What's the preview? I think there was a bit of a, I heard there was a bit of a disagreement on the, maybe that's why I haven't seen it yet. You guys haven't come to a consensus. Is that what's going on? We're not trying to come to a consensus. We're arguing with each other in the paper on purpose. Chris is taking the upside on productivity, and I'm arguing the downside on productivity and see who wins.

Okay. So let me ask you that let me put it. Let me frame it. So productivity growth between World War II and the financial crisis was 2% per annum. This is non-farm business productivity growth, 2% per annum. You know, obviously some years higher, some years lower, but on average 2%. And actually, I think it was pretty close to 2% on the nose. since the financial crisis through the pen up until the pandemic so that 10-year economic recovery or expansion

it was it was closer to 1% you know early on it was below one later above one but one so that's that's a pretty large step down in productivity growth that's a big deal if sustained and the question is oh and i should say in the pandemic since the pandemic it has increased significantly Now, some of that is definitely measurement issues related to the pandemic, but it feels like it's more than that because it seems to be going on for longer than you would expect if it was simply measurement issue. So the key question is, the key question is, is where are we going? Are we going from the 1% back to the 2? Or are we going to something less than that, something more than that? What's your, what's your opinion on that? What's your, where are you landing on that question?

Is that the right way to frame it? That's right. I think it's framed around our forecast, right? Our forecast is for it to settle at about one and a half percent. And so we're basically arguing, you know, is it sure our forecast be higher, lower, should stay the same? That's for framing it around a one and a half percent target, you know, as where we might land. And so Chris is taking the high side, something north of one and a half percent per annum. So, Chris, what would you say?

Back to two? Back to two. Yeah. Back to two. Are we back to two? We're already back to two? We're actually above two right now, right? Based on the latest measure.

The underlying. Underlying, I think we're back to two. Back to two. And Dante, you're thinking, and Dante, you're not just doing this to disagree, are you? Or you actually believe that we're not going back? You know, I'm not doing it just to disagree. I think, yeah, I think we're, I'm not saying we're back to one, but I think we fall somewhere below one and a half percent.

I certainly don't think we're at two. I think we're at one and a half for maybe a little bit. below that when this is all said and done. The listeners should know, Dante, he's not ADP real fiasco. And he's very, you know,

he's very argumentative. Oh, yeah, yeah. He's taken the other side. Always taking the other side. And I'm generally not a pessimist. So,

you know, this is an unusual take for me. I think I'm usually more optimistic than this. Okay, this is a little bit of a tangent, but it's not that much of a tangent. So, Chris, quickly,

why are you thinking, we're going to be back closer to two. What's the logic behind that, the economic rationale? It's the technological investments that we've made and the fact that during the pandemic, there's been widespread adoption of these technologies, right? The cloud, machine learning or work from home, it's not just within the technology industry, but now it's every industry adopting those technologies. And I see that as a real game changer in terms of additional productivity growth going forward. Okay.

There are other reasons, but that's the main one. That's the main reason. It's technology. The pandemic has incentive. Jump started. Yeah. Jump started. Yeah.

Business A, businesses have been kind of investing in these things, but not fully incorporating them into their business practices because if it ain't broke, why fix it? Kind of logic, you know. But in the pandemic, crisis mode, I'm going to do something. I'm going to make big changes. And they made these changes. and the productivity gains are starting to go flow through as a result. Something like that.

Yep, that's the argument. And Dante, you're on the other side because why? What's the economic logic? So I'll give you two quick ones. One is to sort of argue against the tech argument. Like you just said, people are making fast decisions, sort of throwing money at a problem in the middle of a pandemic. And so there's clear evidence that firms are spending more money on IT and things.

The question is, are they making the right investments, you know, if they had time and planning, with those investments have been made better. Instead of saying, hey, we're in the middle of a pandemic. Everyone's at home. I need to figure out a way to make this work. Is that the best way to be investing for the future? I don't know.

Sure, there's evidence that we're spending more on what could be productivity enhancing technology, but are we getting the most bang for our buck? Is that money going to get wasted? Is some of that going to go by the wayside because we're making these decisions too quickly and sort of off the cuff? So that would be one. I'd argue against the benefit of the tech part a little bit. And then, you know, the paper we did a few years ago, I think still stands.

You know, the aging of the workforce isn't going away. Demographics are still a factor. You know, the share of, you know, when we did work with ADP's data, looking at the share of workers over 65, that share is still rising. That still is going to be a weight on productivity growth. Again, that weight will start to reduce a little bit, but it's still a headwind for at least the next decade. And so I think those two things combined get us.

Yeah, so I still think we're going from one to something higher than one, but I don't think there's all that much reason to be optimistic that we're going to get back to two. Okay. Ryan, which argument convinced you? I'm with Chris. You're with Chris. Because you are also a, you also think inflation is going to be low. Right.

Right. So that would be, that I see the thumbs up. There's a thumbs up. Chris and I are usually on the same page. Is that right? Pretty close. Pretty close. I didn't notice that.

Contag. I have to say, I'm sympathetic to the alternative view here that's being expressed. Yeah. I appreciate the non-consensus view that you're expressing. I'm just glad this is on video. That way, you know, a couple years ago now I can come back to it in case that I'm right. If not, I'll make sure it'll ever sees us again. By the way, by the way, that paper we did on productivity and related that to aging,

that's a classic. That is a classic piece we did with Adam. who's now the chief economists of Indeed, who we've had on the podcast on remote work. And my interpretation of that was, though, that the headwind, due to the aging, the boomer, the increase in the workforce that's boomers, is it's still a headwind. It's just starting to blow less hard. Is that fair? I think that's right. No?

Right. We basically showed, yeah, the headwind peaked or is about at peak right before the pandemic. and then it starts to subside. And that's part of my logic for, you're not saying we're going to go back down to 1% again. I think we're going to see some improvement from where we were pre-pandemic because that headwind is starting to lift a little bit. But it's still there at least over the next decade.

Okay. So with the logical conclusion of what you're saying be that you are more concerned about inflation, because wage growth is accelerating. And if we don't have the productivity gains, that that would be more inflationary. Is that fair? I think that's fair.

I might also, I don't know that I think wage growth is going to continue to accelerate. I think I think wage growth is going to come back in once we fix those labor supply problems. So I don't think wage growth is going to continue to accelerate from here on out. And so I don't think that's going to contribute to as many inflationary concerns as maybe other people might. Yeah. Hey, one other thought I had was around productivity was that a lot depends on the cost of labor. If the cost of labor is rising quickly, then businesses say, hey, I got to figure out how to improve productivity. And therefore, I'm going to invest more, either I'm going to shift investment or I'm going to increase my investment dollars for figuring out how I'm going to do what I'm doing with less fewer labor hours or at least cheaper labor hours.

And so it's kind of endogenous, right? It's not it's not an exogenous, completely an exogenous thing. and my sense is it feels like to me businesses are increasingly focused on their labor costs because they know this is going to be an issue. By the way, the tight labor market was business's number one problem before the pandemic. And it feels like all it was happening is we're going back to the same problem we had before the pandemic or the tight labor market. Does that resonate? I see Chris saying. Absolutely.

Yeah, absolutely. That's why I think the natural rate of unemployment is actually a bit higher than what you were stating earlier. because of the productivity gains. That is interesting. That's very interesting. At least it's internally consistent. And interesting. Yeah.

Okay. All right. So the bottom line, though, we feel pretty good about despite the strong job market, despite the economy coming into full employment quickly, wage growth strong, not overly concerned about inflation at this point.

No. So if you look at the June core PC deflator, it was up 0.4% between May and June, the reopening of the economy, all those very sensitive industries, plus use and new car prices accounted for three-tenths of that. So strip out those one-time events or temporary offense, even with strong,

labor or job growth accelerating very strong wage growth. Core inflation still only ticked up 0.1. Yeah. Okay. There's a couple of other topics I want to get to that are related to the labor market. And for the careful podcast, Inside Economics podcast listener, you have noticed that I didn't break apart the conversation between statistics. And by the way, we didn't actually go through all our economic statistics, didn't we?

I don't think Chris ever got his. Yeah, okay. That's a big day. We were all just so excited about the employment report. We were too excited. So we're going to table that for this week, but I kind of melded together the statistic and the big topic, which is obviously the labor market. So this is a little bit different, you know, for the, you know, the careful listener of the inside economics.

But we'll go back to the traditional way of doing things probably next week. And I'll have a little bit more to say about what's going to happen next week. We've got a really good guess for next week. Not as good as you, Dante, but good guys. Good safe. Yeah, good safe. So I do have a couple of other issues I want to tackle before we call out a podcast. And that is, okay, so it feels like the economy is really doing pretty well here.

That job number was about as good as it gets. You know, we're recovering quickly. What does it mean for monetary policy and maybe fiscal policy? I know, Ryan, you are advocating for a change. in our forecast around monetary policy. And this is a big deal because this would mean that Ryan was wrong. Wait, whoa. We have to separate our conversation about when they're going to raise interest rates

versus getting to taper their $120 billion in monthly asset. I don't see any distinction between these two things. Okay, fair enough. No, I'm only teasing you. So I was going to be wrong. I thought it was going to be January when they actually. begin to taper, but if August employment is just above trend that we talked about, I think they're going to start tapering in December of this year. Okay, so taper means reduce the size of their monthly

asset purchases. So right now it's $120 billion per month. They're likely cut it by $15 billion, and it's going to be on autopilot. So all the way down to zero, and then they're going to maintain and reinvest the proceeds to make sure their balance sheet doesn't contract for a little bit for a period of time. Yeah. So you're saying in our forecast, and it's been this way for since the beginning of the year, really, we've been assuming that the Fed would actually taper their quantitative easing, pull back on their bond buying as of the January, excuse me, the January FOMC meeting.

January 2020, correct. January 2020. And now you're saying we should pull that forward to the December. Is there a meeting? in December? Wait a second. Is there, I don't know.

Is there a, is there a meeting in December? I should know this. Yeah, I don't know. I'll look it up. You guys can talk amongst yourselves. Okay. And so you're advocating for us to bring that in and, you know, that makes sense to me.

So bring that in. But you're also saying, don't change. We should not change the date of the first increase in short-term interest rates, which we expect at this point January of 2023. Correct. No change there. Because it gets back to this broad and inclusive recovery, and it's not going to be just the unemployment rate that triggers them to tighten.

They want to see the unoply rates across all demographic cohorts come back to where they were pre-pandemic. Okay, got it. Okay, that makes sense. So I think we'll need to make that change. Do you see the tapering starting in mortgage or equally split between MBS and treasuries? It's not going to be equally split, but they've got $15 billion. Like most of it will be treasuries and then the rest will be in MBS. I mean, maybe you disagree.

I don't know why they would focus on MBS first. It's not like that's juicing the housing market. There's been a lot of chatter about it juicing the house. Yeah. In the last minutes, they kind of, I mean, Powell's. kind of pushed against that idea. I think the bond market agrees, agrees with your assessment, Ryan, because in the long-term, the 10-year treasury yield rose quite a bit today.

Correct. We're back up to 1.25% on the 10-year bond, I believe. So up 7-8 basis points. And there is a meeting December 14th and 15th. Oh, is there? Okay, fine. Okay. That would make sense.

Okay. What about fiscal policy? So, you know, Congress is in the middle of negotiations. over an infrastructure package, and next up would be that infrastructure package is $550 billion over 10 years. And then the next up would be the $3.5 trillion budget reconciliation package of social investments. Do you think this strong economy is going to affect that at all in terms of, you know, right now we're assuming that we're going to get that infrastructure package and a pretty good

sized reconciliation package later this year sometime in October. Do you think this changes the dynamics there? We get something different? Any change in terms of fiscal policy? So just on the infrastructure package has your view or your odds? Have they shifted it all after the CBO report? So the Congressional Budget Office, which is the score, they score all of the budget proposals.

So they determine what is the impact on the budget for these different tax and spending proposals. Came out and said yesterday, I believe Thursday, August 5th, that the $550 billion package will result in a budget deficit of $250 billion. Of course, this is over the 10-year budget horizon. So $5.50 billion in years. And that was, I think, more than people expected. I haven't, no, it probably makes a conversation more difficult, but I still think they pass it. What actually happened was they, the CBO said they could not use repurposed CARES Act or other relief money that wasn't going to be actually used. It was appropriated, but wasn't going to, was not going to be used as reducing the cost, using it for this.

So reducing the cost of the $550 billion package. And they said, no, you can't do that. And I don't know. That's a close call, whether that's appropriate or not. But no, I haven't changed my view. I think they're still going to pass it. As is. No changes.

I think so. Maybe they can come up with another pay for. I'm not sure. But I think they will. The train has moved too far down the track, I think, I think. It's in our forecast at this point. But any sense that these strong job numbers are going to change that dynamic in any way? I don't think so, but okay, all right, fair enough.

Not on the next to the other package, maybe, right? Maybe I think it might. Yeah, it might. Okay. I mean, you already have some Democrat senators asking the Fed to reassess monetary policies because they're worried about inflation. Democratic senators? Mm-hmm.

Oh, yeah, who's that? Can you recall who? No. Do you, I mean, do you want me to say? Yeah, I'm curious.

Oh, Manchin. Oh, Joe Manchin. Yeah, he was saying immediately reassess monetary policy. So to your point,

I think the conversation is going to get more difficult around the second package. Yeah. Okay. All right, I want to wrap up with, uh, the Delta variant,

um, and get your sense of how big a deal you think this is or, whether it is going to be a big deal. And maybe Chris will begin with you because you spent a lot of time looking at the epidemiology of this virus and how that's progressing. What is your sense of things? How significant is this going to become? Yeah, so the cases are rising and they will continue to rise under our baseline forecast. We have them rising over the next couple of weeks and then starting to gradually slow down and actually turn the corner.

as we get some immunity from infections versus just vaccination. The good news is vaccinations are up too. So that's driving that. However, in terms of the economic impact, I see very little. I see people still going about their lives, still wanting to eat at restaurants. You do have certain cities like New York City, putting in more restrictions. So that certainly will have some impact on economic activity, but I'm not seeing the type of widespread lockdown

certainly that we had last year. So I think it will be some bumps in the road here, but I don't see this as really changing our trajectory substantially at this point. The hospitalization, oh, sorry, go ahead. I was going to say, what would it take for you to say something different? Hospitalizations are the key. At least that's what the government officials have always identified

as the issue of why they have to impose lockdown. is to really protect the hospital system or hospital system. So you do have certain communities certainly be affected, but again, by and large, most hospitals have capacity. And we have better treatments at this point for people who do get infected with COVID. So for that reason, I don't see it as a major risk, but certainly if things were to deteriorate or if the Lambda variant that is now coming to the four should take off, then certainly that would be that would change things but yeah you know i have noticed we put together

this i've talked about it in the past on these podcasts the back to normal index which is a compilation of government statistics third party data more real time data like google mobility and open table and restaurant bookings and tsa another people go through tsa prechecks and home base hours data that kind of thing and we have it at a state level and that that does seem to have the variant some seems to being having some impact there that you know Florida southern states Midwest states are seeing some weakening in economic activity I don't know so far it doesn't risen to a level where it's starting to affect the aggregate macro economic statistics jobs I mean probably right but feels like it's having an impact yeah yeah I

definitely would agree with that a local level certainly. Certain areas are hard hit, but in terms of the aggregates, I don't see. Do you think it's going to show up in, I mean, I know this is an unfair question because a lot of uncertainty around this, but do you sense it's going to show up in the August employment data? Do you think it'll have an impact on jobs in August? Because that survey is coming up pretty fast here. I think if it's not next week, it's the week after. The BLS survey that, they use to construct the August employment data is not too far away. Yeah.

I think it might have some impact, but it's just going to be a somewhat slower growth, right? It's not, we're not going to see declines, certainly in leisure hospitality. It's just so it'll be hard to really parse out how much of this is just some of the other factors that we've talked about in terms of slowdown and perhaps in the rate of or the pace of hiring. I don't think we'll see a significant impact at the national level. Because there are also some substitution effects, right? So people won't go to the restaurant, but they'll continue to order takeout, right?

So there might be some of that going on. Yeah. Have you guys changed your behavior at all as a result of the Delta variant? Has it affected the way you're doing anything or thinking about anything? Are you wearing masks again when you walk into Wawa? I've always worn a mask since the pandemic again. Oh, really? Oh, you've never taken.

I still do. Because, I mean, small children. I mean, my situation, I got young kids and they're not vaccinated. They can't be vaccinated. So even though I'm vaccinated, I want to be extra careful. So any precaution I can take, that's what I do. Dante, you same? Yeah, we, I mean, haven't done much to date anyway.

So there hasn't happened to have been that much to change at this point. I think my point was going to be about labor shortages and schools. And I think those are the bigger potential issues from Delta, not so much the top line economic damage. But, you know, do we get schools that don't, fully reopened? Do we get those same people that are concerned about COVID? Do those same issues linger longer than they might have and create those labor supply issues for longer than we would have expected? You know, like I know, we're anticipating sending our kids back to school in

September and, you know, hopefully that still happens and goes well, but, you know, see how things turn out. So that would be my bigger concern is on the labor supply side. It's DeDante's point, my son's elementary school already sent out a survey about, you know, do you want to be remote because of Delta variant? Do you want all the kids to wear masks. So they're already starting to think about it. So I think Dante makes a very, very good point. The other thing that worries me is what's going on overseas, right?

I mean, is having an impact on production at the start of these large global supply chains. So the chip industry is a great example of that. You know, there's some southeastern, excuse me, Southeast Asian chip plants that just shut down because people are just sick. They can't go to work. And those chips are critical, right? I mean, I just saw GM. I think it was GM shut down or decided to close a number of light vehicle factories down for a longer period of time because they can't get the chips to produce the cars. So, you know, it could be the case that this Delta variant and other variants have reverberate back on us, not directly, but more indirectly.

And it disrupt the global supply chains and the supply. issues to make them much more severe than anticipated and last for longer. So bears close watching. Okay. Anything else that you guys want to talk about on the labor front before we call it a podcast? Anything I missed? We covered a lot of ground there. Anything you want to bring up?

Okay. Again, kudos to Ryan. Dante, you need to work a little harder. Chris, I have nothing to say for you. You're fine. No problem. It can all flip. You know, next month, Dante could be right and I could be very, very wrong.

That's what I like about Roman. He's always, he's humble. You know, Mark didn't call my number last month when ADP was right on the money. You know, I didn't get the call to the podcast then to celebrate. I just get called in to get, you know, drug out for the bad. It's very true. Someone has got to be picked on. Yeah.

Can't be a celebration for everybody. Somebody's got to be the scapegoat. And know how much we respect you, Dante? I know. Because you are the first guest that's been invited back. That is a, that is saying something. I don't know what it's saying, but it's something. I'll take it.

No, it's something I was saying. It's big. It's huge. It's like, oh, there we go. Personally, whatever they are, he's doing. Those two have been smirking the whole time. Have you noticed, Dante? It's like they've got something going on behind our backs.

I have, I think I, I think I've got to read on it. But, yeah. Oh, is that right? There's the three of you guys speak now. We can talk about it after the podcast, but I think we have a new game down the road that we can incorporate into our podcast. Oh, really? Okay, I got to hear more about this. Anyway, I did want to mention, I mentioned this earlier, but I want to reiterate.

We have a great guest next week, Dan Rosen. Dan founded a company called Rodium Group. Rodium is a consultancy. And they do a lot of work monitoring overseas. risks and particularly focused on China. And, you know, we do have this ability for all you listeners to give us your vote for what topics you want us to talk about. You can go to economy.com, click on inside economics, and vote. Tell us what topics you're interested in. And China's U.S. relationships are at the top of the list. That's what the majority of people want

to talk about. And so we've got Dan on next week. And I highly recommend this is a little bit of homework. He wrote a great essay in foreign affairs. So if you want to get a kind of a sense of what he's thinking and his preview and his perspective, I would highly recommend that piece very well written and articulated. And we're going to have a very good discussion next week. So with that, I want to thank everyone. Have a good week. And we'll talk soon. Take care now.