Moody's Talks - Inside Economics - Sahm on the Soft Landing

Episode Date: July 8, 2022

Claudia Sahm, founder of Stay-at-Home Macro Consulting, joins Mark and Ryan to discuss the June employment report. They also talk about inflation, monetary policy, and the odds of a recession.Full episode transcript.Follow Mark Zandi @MarkZandi, Ryan Sweet @RealTime_Econ and Cris deRitis on LinkedIn for additional insight. 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 by my trusty co-host, Ryan Sweet. Ryan, you've been trolling me again. I noticed on- The highlight on my week, Mark. You know, I just can't keep up with you. I mean, this was particularly biting, is it trolling or trash talking?

Did we figure that out? I think we've settled on trolling. We settled on trolling because trolling is social media. related to social media. Okay. So this was the infamous, well, you want to describe your troll? I'm just trying to keep you in check, you know. Keep me in check.

We don't want your head getting too big. I get too big. So, yeah, this one was the famous Bill Buckner play. And so in the 1986 World Series, the Red Sox are on the verge of winning their first World Series. And then the ball goes through the first basement select. Yeah. were you born in 1986? 1980, so six years old.

So you don't remember that game. You didn't see it real time. I didn't see it live. Yeah, I remember that game very well, actually. It was like, what just happened? It was unbelievable. It was unbelievable. So the first base coach for the Mets would eventually teach me how to hit baseball.

So he gave me a signed Bill Buckner play. That was like the ultimate troll. So, you know, before he went back to the majors, he signed it, gave it to me and was like put this on your wall. So I had that memory of Bill Buckner. Did you have plans to go on to play major league baseball, professional baseball? I was that. No, I was never that. It was not that good. You were not that good. But you were you played for Washington and Lee, right? I mean, Washington College. I'm sorry, Washington College. Yeah, Washington College. Very cool. And we have another guest, Claudia.

Claudia, Sam. How are you, Claudia? Good to have you on board. board. Thank you for joining us on Inside Economics. Yep. Good to be here. Great to have you. And you are now at, well, this is your firm. Stay at home macro. And that's a play on your last name, which I admit I did not get until you told me. I'm sorry about that. Yeah. And do you do a lot of consulting works, Claudia? What kind of consulting work do you do? Yeah, I do a lot of policy work that is more of the pro bono type of work.

And then I do a lot of talks on Federal Reserve, you know, macro conditions for more of a Wall Street crowd. And I write a substack now by the same name, stay-at-home macro. And there I do a lot of both more technical Fed writing, but a lot of writing about inflation, the economy, fiscal policy to a more general audience to kind of pull back the curtain, make sure we're all, I mean, it affects everybody. So that's a big, you know, part of my work. And I do research, too. Yeah, perfect. I mean, exactly who we need for this podcast, right? Because this is Jobs Friday. We've got the employment report for June. And you also, you got your chops at the Federal Reserve. You were at the Federal Reserve for quite some time. Right. So I was at the Federal Reserve for over a decade. I worked on the

staff's macro forecast. At the end, I worked in a group that oversees one of the household surveys that the Fed does, low and moderate income families and communities. And during my time at the Fed, I also spent a year at the Council of Economic Advisors. So I've had a lot of opportunities to do policy work. And since I left the Fed in 2019, I've had a chance to work with a lot of members of Congress on fiscal policy. And who was CEA Council of Economic Advisors Chief at that time when you were there? Jason Furman. Oh, Jason.

He was the chair. So I was right towards actually right at the end of the Obama administration that last year. Oh, yeah. Yeah. Jason and I have been kind of going at it a little bit in, you know, kind of an economist way around inflation and the causes of inflation. Can we come back to that?

Oh, yeah, because I'm on, I'm with you on that one. Oh, you're on my side. Oh, then we're definitely coming back to this. Okay. All right. Demand versus supply. You know, the bane of economists. You know, is it demand or is it?

It's always boils down. Is it demand or supply? Oh, and you're obviously famous for the Sam rule, but we're going to come back to that in the context of recessions. And, you know, what we should be looking at to gauge whether we are in recession, because that's a very prescient indicator that you came up with. But before we do all of that, let's come. right back to the employment report for the month of June, which came out this morning, July 8th. And as we typically do, Ryan, can I turn to you and can you give us a sense of that report? Yeah, no problem.

So overall, I think it was a solid report. It just wasn't good across the board like we've seen in past months. There's many more blemishes in this report than what we saw last month in the month before that. But overall, the economy added a net 372,000 jobs better than what we anticipated. the consensus. Job growth was fairly broad base. There's big increases in leisure and hospitality, health care. So overall, we're still below where we were pre-pendemic, but that gap is closing pretty, pretty quickly. So we should close that completely in the next couple of months. So job growth remains solid, doesn't show any signs of recession concerns. But then the household

survey, there was a lot of blemishes in that thing. So household employment fell when you adjust it to make it an apple staff. Just step back a little bit. So you've focused on the establishment survey, survey of businesses, and that came in at 300 weeks. Job creation in the month of June of 370,000. And now you're saying, okay, let's look at the survey of households, the household. Correct. I think it's roughly 60,000 households. So it's a much smaller sample.

But household employment fell. But when you adjust household employment to be comparable to that 372,000 that surveyed businesses, it rose around a little more than 100,000. on net. So household You mean there's conceptual differences between these two surveys

and if you correct for that you go from a decline to a small increase 100K or so. And then the unemployment rate was unchanged. Unrounded it slipped a little bit but I think I was more concerned

about the labor force participation. That fell. And also when you look across men versus women, men's dropped noticeably over the last several months prime age employment to population ratio. My favorite metric dropped back below 80%.

That's concerning. So I'm wondering if that's starting to show some signs of weakness in the labor market. So overall, nothing to be overly concerned about, but there are more blemishes in this report. Okay. Is that your take on it, Claudia? Would you characterize it the same way? So I think at this point, we've gotten so used to big numbers and low unemployment rates that we're kind of numb to the goodness, right?

There were times in the recovery from the Great Recession. We would have been doing cartwheels down the street with this report, regardless of the blemishes. Right. So big picture, I think we have, like, this recovery has been so fast and so full of jobs, right? The recovery from the 2001 recession and the Great Recession, these were the jobless recoveries. Like it took years and years to get things back on track. That is a huge difference. with like long-term consequences.

So it's good. The other thing I'd say with participation, as soon as I started hearing the commentary and truly, right, you're not the only one like that was talking about the blemishes. I think back to Steve Braun, who's the macro forecast director at the Council of Economic Advisors, and whenever monthly data would come in and we get all excited about labor force, he's like, stop.

He's like that number, like it bounces around. So I think that's where, You know, we've had a trend of improvement. It has been very slow, right? That was a surprise how slow it's been. So it hasn't picked up. I don't think I'm particularly concerned about one month, but it would be real nice if it started to speed up.

And we definitely didn't get that. So I think, but I agree. There's not, you know, there are things you can point to in this report and be like, that could have been better. but I mean, I was holding my breath for the payrolls and the unemployment rate. Oh, and I'd also say with the household survey, there are people who've really looked at it. And basically, you should put almost no weight on household employment versus payroll. Like if you kind of put them together as a signal where things are going.

But, you know, like it's important to take in all the data, pay attention to it. So you're saying when trying to weight the employment. importance or the informational value of the payroll survey, the $370,000 gain versus the household survey, the decline or on a payroll basis and small gain. You'd say don't put weight on the household survey. Just focus on the payroll survey. Yeah, really low weight. You should put a little weight on the employment, the first prints of, you know, the establishment survey as well. They're subject to bigger revisions. On net, we saw a downward revision of 74,000. And I think when we get the annual benchmark revisions,

can you just explain that, Brian? So you're saying in the previous, going back and looking at the payroll survey results from May and April, those gains, which were quite sizable, they're still sizable, but they were revised down. Yep. Yeah. So employment gets revised three times. And then once a year, they do an annual benchmark revision. And if you look at the response rate, so what's the percent of people who are responding to the household serve or the establishment survey they've been pretty low June was actually above average but the last since the beginning of the year they've been really really love so just I agree with Claudius point we don't want to make too much out of one month but the trend in the Lalearber force is just

moving sideways and I think that's something that you know that you can't argue against the trend I thought on that I'll push back a little bit I didn't I haven't had a chance to look at the June data but through May even though participation has slowly risen only slowly. Labor force growth has really picked up, right? I mean, the level isn't just sideways. No, no, the year-over-year growth, as I recall, for May was over 2%. Yeah, but the year-over-year comparisons, you get these odd quirks.

This recovery has been really, really fast, but it's had some ups and down. So if you look at the level, and levels don't lie, it's moving sideways. I like that. Levels don't lie. Okay. Very good. Okay. But it feels like we're nitpicking.

here a little bit, right? Doesn't it? I mean, I mean, broadly speaking, the labor market's pretty good, right? We're pretty close to full employment. You know, we can debate it. Unemployment's at three six. The employment to population ratio for prime age workers are around 80. That's kind of our benchmark for full employment. We're creating a lot of jobs, but then that's slowing, and that's a feature, not a bug, right? Because we are at full employment. We can't continue to create jobs at 300, or 400K per month without going past full employment and exacerbating wage and price pressure. So we need it to slow. You know, labor force growth isn't quite where we want it, but it feels like it's, you know,

more or less steadily, slowly coming back. Pandemic is still playing a role, right? My character is that fair to characterize it that way? Yeah, I'd agree. And I think the other thing is we know there's a lot of demand for workers still. you know the job openings relative to unemployed workers is hanging out right around two right and at very like high levels so there's you know there are jobs to bring people back into i mean they get to decide if they want to come back or not but like i mean this is this is a really strong labor market

And that's important as we try to cool off the economy. Like if you start from a position of strength, that makes it a lot, you're going to have to create a lot less hardship to get things cooled off some because they're really hot right now. Yeah, no, that makes a lot of sense to me. Two statistics that I often look at in the report you didn't mention, or we haven't talked about, is ours worked? And that was stable. So that's a good sign.

If that hour started to tick down, that might suggest some further significant weaking in a labor market and jocryph. But didn't see that in the report. And wage growth, that seemed to be pretty good as well. I mean, still a little on the hot side, you know, compared to where you might want to see it long run, because it's not consistent with current rates of productivity growth. But it was up three-tenths of a percent right in the month. it's up 5%-ish over the past year. So it feels like wage growth is kind of going where you'd want it to see.

Right, Ryan? Would you agree with that? Yeah, I just don't put a lot of emphasis in average average revenue earnings. Yeah. But yeah, you're right. I mean, if you look at the employment cost index, Atlanta Fed wage tracker, wage growth was going where it would want to be. Right.

I mean, I don't either on average average average average earnings because it's affected by the mix of jobs, the occupation industries, but it's so consistent. it's 5%. That's very consistent with everything else, right? I mean, it feels like everything is, all the wage measures seem to be coalescing. It's 5% growth, feels like to me. No?

Okay. Claudia, would you agree with that characterization around wage growth as well? Or do you have a different take on that? Yeah, I think that's one, wage growth is really hard to piece out of the data, right? So I'm a little wary of like a pinpoint. that it moderates some, like from its, you know, and this, to me, like, across all of these data series where you're starting to see wage growth flatten out at a pace that is above

where they were before, like regardless of exactly what number it was. It's clear they're still elevated relative to before COVID, but they have moderated. And I think the wage growth is probably the only thing the Fed really looked at in case. I mean, they looked at everything, But the wage growth was probably the only piece of these payroll or the jobs report that the Fed could possibly react to, right? Because it fits into the inflation space. And they've told us it's like unconditional. We're not stopping until the inflation rates come down. So I think we're seeing it moderating.

And that should ease the fears of a wage price spiral. Right. That was the big concern as if they started stepping up or stayed at these really high. levels and that's not what we're seeing right and it feels like and i know rhinston's work in in this area that the causality is inflation high inflation the jump in inflation we've seen over the last year is driving the increase in wage growth it's not that the wage growth is driving the inflation it doesn't feel like we've got into that kind of dreaded wage price spiral that you know certainly the fed would fear. Yeah, we don't. I think there's a pretty strong disconnect between what's happening with

wage growth and what's happening with inflation. There is some pass-through between the two. But I mean, the wage growth, workers were in high demand. Low-wage workers were able to get higher pay to like come back. And, you know, they were moving around in different jobs. So, I mean, that's, in my opinion, what's really drove the wage gains. but you'd have to have an inflationary mindset set in where people are like, oh, inflation is going up, and so they get the wage increases. And there's really no evidence of that, like inflationary mindset. And that's what you'd need to tie the two together, the price inflation and the wage growth.

Of course, the Fed, when they raised rate 75 basis, points three quarters of a point to last mean, they called out the University of Michigan sentiment or inflation expectations. What did you think of that move? I was not happy about this. It seemed a little odd. Yeah. Well, it, okay, so on the one hand, and you know all these models well, like in the type of macroeconomic models that are central to monetary policy, inflation expectations are absolutely crucial.

Like you can have them shift like three tenths of a percentage point and people totally change their behavior, right? And then it like starts to spiral off this is anchoring. And we really like don't have a good sense of how these expectations are formed. And frankly, the measurement, that particular data series, I've done a lot of research on the Michigan survey, largely with fiscal policy. One time I had the opportunity to sit and listen to the tapes because we were trying to figure out, you know, some problems in our section on the stimulus checks. I listened to the tapes and the section that just blew me away is when people were trying to answer these questions. By what percent do you think prices will increase in the next year?

And it was so clear that a lot of people really struggle with percents. They're like, what do you mean prices? Do you mean gas? Do you mean? Right. So this is a question that I do think has information. But like the tenths, I mean, they were reacting to a what, three-tenth increase. in a preliminary reading, which isn't even representative of the U.S. popular.

Like, you got to have the full survey. And so there were like basically 300 people selected, but not representative because it's not the full. And a little, like the probably the hardest question in this whole survey was one of the reasons that we kicked from 50 to 75 basis points. Yeah. I was just, but CPI was really bad. So like they could have, if they just said the CPI, I would. would have like consumer price index yeah i would have been calm but as soon as they brought that in

and and then it revised is this your non-calm state or am i looking at your is the i don't know it's hard to tell anymore i when you're mad do you get really mad doesn't seem to me yeah i likely yeah oh oh i haven't seen it then no i i internalize the macro data like this is this is this is this is just the way I am, it is a professional hazard as a forecaster, but it's, it's been really rough. Right. I does that too. I do. I don't.

The listener doesn't know this, but if the number comes in off compared to his expectation, he cries like a baby, you know, just cries like a baby. I don't know about that. I had to calm him down. It affects me. Yeah. Well, I mean, there are. That's called a trash talk because it's not social media.

That's trash talk. Yeah. I mean, there are people under the numbers, right? And a lot of times that Macs. economic discourse, we make them sound like widgets. I mean, the idea that wage growth moderating is a good thing. Yeah, I know. It's weird to say.

I choke every time I say it's like that is weird. Yeah, so weird. Hey, I've got a couple of other questions around the jobs numbers. I'm just curious your perspective. One is you're, you know, we're creating a lot of jobs. You know, we're at 500,000 per month for a while. now we're down to say, okay, let's say we're at 350 to 400. That's still a lot of jobs. Is that consistent with a full employment economy? How can we be at full employment if we're creating that many jobs? Does that make, does that, how do you think, how do you reconcile those things?

Yeah, it's as with every aspect of the economy, the labor market is very tough. Like, we had such a massive drop in the labor force participation. I mean, people just walked away from jobs, right? So even, and they, and they, and they, haven't come back as we were talking about this very slow progress that means that the unemployment rate like what is that like now we're at an unemployment rate very close to where we were before the pandemic but we've lost all of these people who and it's clear it's not just age i mean it was so abrupt and so what is that unemployment rate telling us like is this because it could be telling us the labor market's even tighter right if these people would come back or Or it could be if they come back and it's unemployed. So it's what, how do we really interpret that?

And the question, and this has come up in multiple recoveries. It's more extreme right now is whether you write those people off, you know, or not. Like after the Great Recession, there was a belief around 2015 that we were at full employment because the labor force had been dropping and they're not coming back. And it turned out that strong enough economy, you know, that we had years down the road, they did come back. Yeah. Right. So that's part of why it's really hard to judge. And we're still in terms of jobs, we still haven't made up the, you know, pre-pandemic levels.

Now, one thing, something that I look in the report, and this isn't just showed up today, is if you look at the, full-time jobs, they are back to pre-pandemic. What's missing are these part-time jobs. And frankly, you know, we talk about numbers, but there's an aspect of job quality that is really important. And there are groups of workers, particularly at the bottom, who have had to some extent more of an upper hand. Right. And so they've been able to be choosier. And frankly, a lot of those part-time jobs, They're just bad jobs. Right? So it's, I don't know.

There's a lot going on in the labor market and more than we would have an irregular recovery. Hey, I've got one more question for Ryan around the report. And I just, before I ask it, just want to say that we're going to play the statistics game. And it seems like you're on board with the statistics game, right, where we each come forward with a number and the rest of us try to figure that out. Okay. And I say this before I ask the question, Ron, because I don't want to take anyone's statistic. And if I am, then stop me. But the question is, what about the pandemic?

Do you see any effects of the pandemic still in the data in the report? Did you notice any of that in the numbers? Yeah, that's one of the first things I looked at this morning, because if you look at the number of COVID cases, they increase between the May and June payroll reference week, which includes the week of the 12th. But the number of people that were out of work because of their own illness, you know, it didn't jump. It did not. No. Okay. So, because I think quarantine rules have changed.

It's down to, I forget what it is now, five days versus 10 before. So the odds of people not working at least one hour during the reference period is much lower now. So I don't think the pandemic is really causing any big effects on the employment data. One thing you also looked at was the number of getting back to the idea of, or should we forget about these people. There's 700,000 more people today that are. not in the labor force, but want a job versus pre-pandemic. So those people are going to come back. They're out because of child care issues or family responsibilities or own illness.

So I think as the pandemic continues to wind down, I think one encouraging thing was daycare worker. Employment at daycare's increased more than 10,000. We need further improvement. We mean more workers to go back and work at the daycare centers. That should be able to pull more women back into the labor force. did I maybe I didn't read this right but did I read in the report that there are roughly 600,000 respond people that said that they weren't looking for work because of the pandemic

did I read that right did you see that you didn't see that okay no but it doesn't mean it wasn't there yeah I don't know where I got but I don't know how that number compares to what it was in January of this year yeah no it's just very consistent with the number you said we were for Folks that are out of the workforce that say they want a job, it's about 700K higher than it was pre-pandemic. That could be pandemic related. Yes. No, I think a lot of it's pandemic-related. Pandemic-related.

Because it's in child care, family responsibilities, own illness. Right. Okay. Okay. Let's play the statistics game. And I know people who've heard who are regular listeners get annoyed at me repeating this, but there are people out there who have never listened to this before. The game is we each come up with statistics.

The rest of us try to figure that out through guesswork, questioning, deductive reasoning. We want a statistic that's not so easy. It's a slam dunk. We all get it, but not too hard that we'll never get it. And you get a bonus if it's something related to the topic at hand, labor market, or a statistic that came out recently. So with that, Claudia, I'm going to let you off the hook first. So you can see how this is done.

And Ryan is quite good at this. Oh, and by the way, we're missing our other co-host. I didn't bring up Chris. See how fast we forgot about him, Ryan? I know. I wasn't going to say anything. I assume he's on, you know. He's still in that wine cellar somewhere.

That's what I was going to do. Now he's in South Italy. You know, he was in North Italy, then Central Italy. I'm sure he's in Sicily somewhere eating a grape or something. I don't know. You see his dedication. You know, we take the back seat to Italy. I know.

But Claudia, in time Ryan goes away on vacation. I never go on vacation, by the way. But, you know, if Ryan goes on vacation, I'm just saying. Ryan goes on vacation. He takes his microphone with him. But Chris, you know, we don't know what, you know, we're not sure about Chris. It's all those crypto winnings. You know, he cashed out. He's getting lazy. But anyway, where was I? Oh, the game. Ryan, what's the statistic? I swear, you repeat the rules of the game. Just remind yourself. You can strike them all the time.

It's taken me a year to get that down roughly. Yeah, exactly. I'll give you three numbers. 6.4%, 1.2% and 11.9%. They're all related, and they were all in the employment report. Oh, they were all in their report? I was going to ask in the employment report. So repeat them one more time, 6.4. 1.2 and 11.9.

These are percentages. I'll even give you their year-over-year percentage. changes. Are they, are you looking at industries, employment growth across industries? They are industries. Okay. And this is year over year growth.

It is. So which industry has seen employment grow by 6.4% over the past year? It's the question. It's not employment. Oh, it's not employment. Oh, well, geez, by industry. Is it ours? It is not ours.

That's been a good one, though. Wages. It's wages. I'm kind of going against my trash. I was going to say, I think you liked average hourly earn. Yeah, yeah. This just stood out to me. Okay, so 6.4, that's got to be what industry is kind of in the kind of the middle of the

I'd say, well, Leisure Hospitality's got to be the high one, right? Very good. Yeah, 11.9. The low one, that's probably... If you get this one. Is it retail? No. Is it manufacturing? It is not.

You're just going to go down all the NACTSCRAs until you hit it. Professional services? No, that's not. Maybe financial services. Professional services, 6.8. Oh, 6.8. Well, so 6.4 is health care. No.

Oh, I know. I know what's one point. It can't be government is one point. No, it's not one point two. So the 6.4, I'll still let you struggle. Oh, yeah, this is like, yeah, go ahead. The 6.4 is total private, non-supervisory average average average average. 6.4.

Okay. Oh, so the five, so overall, the top line wage numbers, I believe, 5.1 year. Correct. And that's across all workers. Right. This is looking at just non-supervisory workers. Non-supervisory workers. All right.

So what's 1.2? We tried everything. Mining, you know. Information. Oh, information. Oh, I should have known. Yeah. Information.

Which is kind of a hodgepodge of things. It is, yeah. Yeah. But it just shows you like the, I mean, 1.2 to 11.9, just the distribution of wage groups. Right. Just for your information. that that was a you know a pretty poor statistic i'm just saying you know well the the 6.4 wasn't an industry oh see see she's trashed us oh see there we go now you're going to miss it's into it now too

this is what happens you did zandi call you last night you guys are in too all right okay very good claudio you want to go next okay mine is 2.8 percent Is this an unemployment rate? I think it's not necessarily one from today. Ooh. So what did you say, Ryan? I missed what you said. I said if it was one of them.

Because I was thinking demographic unemployment rates or. Oh, I see. One of the unemployment rates. Are we going to the joltz report? Yeah. Look at that smirk. Yeah, 2.8%. I can't be, that can't be,

it can't be quits, right? Because maybe quits or I keep it level, I think of levels. So four. No, it's quits. Oh, it is quits. Okay. So it's back to my theme of better job quality. Right.

Like it's down from November, December, but it was flat. And it is like notably higher than before COVID. And COVID was a really. go to like labor market. So all right. So I pick two easy of a one. No, that's okay. No, no, no. We'll have you back. You know, you, you know, there's, well, that many cracks at this, there bites at this apple. But, you know, quits are, that's a great resignation. So I kind of think of it in the level. So there's anything over four million people quitting a job in a month. And that's what we've been getting pretty consistent here. That's a lot of people leaving their job.

And that remained the case in May. The last, or no, was it May. Yeah, May, the last data point that Yeah. And we can see they're going to other jobs. Like that was kind of my problem with the framing of great resignation. It sounded like people were throwing in the towel. Yeah, good point. And going home to sit on the couch, you know, but. Yeah. Yeah. Yeah. Good. I use the quits rate when clients say kind of pushback saying that we're already in a recession. I was like, you can't be in a recession when people are quitting their jobs at this rate. Like it's just unheard of. Well, I mean, do you get a lot of pushback from clients or? people, a lot of people saying we're in recession?

They want to know why recession is in our baseline because a lot of them pointing to the survey of economists that said, 70% of economists said the economy will be in a recession by first half of next year. First half of 23. Yeah, but when you look at the questions, it was if a recession was to occur, when would the timing be? It wasn't 70% of the economy saying we're in a recession. We're going to be a way.

So this is actually a good time to ask another. before I give you my statistic, is to you, Claudia, to this debate, I guess it's a debate. I don't know why it's a debate, but I guess it is a debate. Are we already in recession? I mean, I guess it's a debate because GDP fell in the first quarter and it looks like it's tracking, given the monthly data, it's going to fall again in the second quarter. So the rule of thumb is, it's just a rule of thumb, but the rule of thumb is two consecutive quarters of negative GDP is a recession.

So the question, Claudia, are we? we in recession? No. Okay. I mean, if a recession with strong job growth, I can't have. Yeah. And the GDP, and we can talk a lot about recession, it's inventories and net exports. I mean, how you, the NBR doesn't even have GDP in its set of indicators it looks at for recession.

for this very reason, the only one that's in there is consumer spending, and that look great in the first quarter. You can't have this kind of job gains and unemployment and be in a recession. That's just not. Not consistent. And, of course, people should know that at least in the U.S., we've all kind of collared us around the business cycle dating committee, a group of academics, at the National Bureau of Economic Research.

They sit down and they look at a range of data. data and they define a downturn, and I'm paraphrasing as a broad-based, persistent decline in economic activity. So if one indicator is down GDP, that doesn't necessarily mean you're in recession. In fact, this doesn't feel like we're even close to recession, you know, in the current Yeah, well, inventories aren't economic activity. Yeah. Like that was a big part of GDP declining. But yeah, it's been a weird conversation. Like people are cheering on a recession or something.

Talking ourselves into one. Yeah, but people are still spending and businesses are still hiring. So it's like, don't care what you call this. I just want people to keep their jobs. Well, maybe this is a good place for you to tell us about the Sam's rule, which is, you know, the regularity that you uncovered and is there's a, I'm going to mispronounce this. Eponemius. Is it eponemias?

Oh, you know what I'm saying? I'll butcher it too. Yeah, it ended up. getting named after me. Yeah, that's great. I always wanted a zandi something, but, you know, I never had anything like this. That's wonderful. Yeah, I was, explain to folks what that is. Right. So I was working on a proposal to send out checks automatically, stimulus checks and a recession. Like that was the whole point. It was a volume that Hamilton Project did about all the ways that we could put the types of things we do in recessions on autopilot. Time to economic conditions,

get the politics out, figure them out ahead of time, and just hit go when a recession happens. Okay, so as part of the proposal, I've got to have something to say, when do we hit go? And I figured if you're going to send out hundreds of billions of dollars, it would be a good idea for this thing to be accurate. The government would mind, maybe not people, get some extra money. And so I knew, I mean, the unemployment is why we hate, recessions why we fight them, right? Like people, millions and millions of people losing jobs, that's the problem with a recession. Every recession has an increase in the unemployment rate. That's just like a feature of recessions. But unemployment, very slowly increases. So what I had,

I spent a lot of time, many weekends, looking at patterns of changes in the unemployment rate. See that Ryan? She snuck in that on weekends. Did you notice that? I did notice that. I'm a hardworking economist. Yeah, why I was managing a team at the Fed? I had no time during the week. So like what and mine is an indicator. Right. It says we are in the first few months of a recession. It's not a forecast. Like people use changes in the unemployment rate as a forecasting tool, but this is about we're in one. And the, So it's really simple. You take the three-month moving average of the unemployment rate, as we talk today, don't get excited about monthly wiggles. So you take the three months moving average, you compare the current value to the lowest value over the prior 12 months. If that difference is a half a percentage point or more, which is small, like a half a percentage

point isn't that much, then we are in a recession. Somewhere it's, and it is like there are no false positive. It is triggered in every single recession since the 1970s. It's highly accurate going all the way back to World War II. There's a couple times where it turns on before a recession. But yeah. And right now, the SOM rule after we saw unemployment today is zero. Yeah.

So no sign. No sign. But things can, you know, there's a difference between saying we're not in a recession. And I feel confident about that. and we aren't going into one. Like those are two very separate, but I've been really surprised at how firmly people have latched on to this idea. Everywhere from, you know,

people like Danny Blancheflower, who's an economist, we had a lot of back and forth on this, all the way to Cardi B. I mean, like, it's, you know, really span the set here. Who's Cardi B?

She's a singer, like a, Oh, no, he's, he's, no, I have no idea who part of, I know who that is and you don't. You do not know who that is. Are you kidding? He just discovered guns and roses in the last year. That's true. That's true. They're, they're pretty good, actually. Yeah. Yeah. I've got three little kids. I'm not listening to popular. I'm listening to Wiggles. Frank Sinatra. Yeah. Well, it's good. He's good, too, though, I'm to say. Well, yeah, that's, uh, so right now, uh, uh, so right now, uh, uh, I, If I've been mispronouncing your last name, I'd call you SOM. It's Sam.

Sam, okay. I've been Sam. I've been saying Sam. Okay. I'm dyslexic. Not really. It's not really okay. Thank you for letting me off the hook.

Sam, I apologize for that, is saying, no, this is not a recession, not even close, at least at this point. Yeah. Right. Okay. Yeah, very good. Okay. Let me give you my statistic. Ready?

Okay. negative 1.6 and positive 1.8. Two numbers. Related from the employment report? Not from the employment report. Okay. Related to jobs. It is not, no, it's not related to jobs. I was going to say directly related, but that would be.

There he does. He violates one of the rules. No, no, no, come on. You'll appreciate this when you hear it. Is it financial market related? Not financial market related. Down 1.6, up 1.8. Well, wholesale inventories are up 1.8.

Oh, you're really digging. I wouldn't go down that rabbit hole wholesale. Never know. We're talking about inventory. Yeah, that would be rude for me to do that wholesale. You know, the inventories of, you know, canned beans or something. think. I wouldn't do that to you. Is it U.S. related?

It is U.S. related. Okay. Do you want a hint? It might give it away. Is it trade related? Not trade. Okay. Although, you know, it includes trade.

That's a big, big, big hint. Maybe not. Maybe that. Not monthly GDP. Not monthly GDP. Quarterly? Down 1.6. What was down 1.6?

Oh, first quarter of GDP. The first quarter of GDP. Oh, my gosh. That's like you guys. Come on. When was that released? That was last Thursday. Yeah, last Thursday.

Okay. Today is relevant. But here's what here. Okay. Now this is what's the one to deal with. What's the one eight? That's important. That's private.

That's when you struck out inventories and trade. Is it the PDFP? The consumption and business investment. No. No. All right, you guys are hoping. Private domestic sales? GDI, gross domestic.

Oh, oh, GDI. Yeah. Which really the average of the two, after revisions is a much better signal. But, I mean, it'll take a while to get those revisions. Yeah, that's my point. That's my point. That goes back to this old discussion we've been having about, you know, GDP signaling recession.

GDP declined in the first quarter, but gross domestic income, which is another way, of calculating, you know, the output of the economy from the income side of the economy, looking at personal income people, what people are making and corporate profits and adding it all up. It should be exactly, conceptually exactly equal to GDP, but they're based on different source data, so they're not exactly the same. And GDI, gross domestic income rose one real, grew 1.8% in the first quarter. And that difference between gross domestic income and gross domestic product, that measurement issue, called a statistical discrepancy, is the largest it's ever been in the data as a percent of GDP. So that suggests something is off the mark here,

right? And I would proffer, my guess is it's GDP. Back to your point, Claudia, you know, it's inventories and trade and government spending, you know, things that are very difficult to measure, you know, in real time, or at least in a timely way. So my guess is, my sense is that when we get all of the data in and all the GDP revisions and there's a lot of GDP revisions, we're going to get another annual benchmark revision here and I think at the end of this month or next month, I suspect that number is going to get significantly revised. I wouldn't be surprised it gets completely revised away.

You know, the GDI feels a lot more consistent with the reality of what's going on than GDP. Now, isn't that, that's a good indicator, right? It has a message. Did you also notice in the FOMC minutes from the June meeting, they called out GDI? It's the first time in a while I've seen them include GDI in the minutes. What did they say? They were just exactly what you just said. Like, oh, GDP fell, but looking at alternative measures.

Because now they're gearing up for if another decline in GDP, they can point to GDI. I was saying something really novel, but you're telling me no. No, no, that's a good one to bring up. I was a good one. But I think the truth likely lies between the two. Yeah, it probably does. Because I think GDI is getting overstated by corporate profits. And just the way the B.A calculates corporate profits could be problematic.

Well, in the fourth quarter was a monster print. Yeah. I mean, it was over four percent. You know, it was like the memory loss is just amazing during those crisis. You know, like these. Anyways. Yeah. Yeah.

Hey, let's talk about another debate. I know you have strong views on this, too, and this is the inflation debate. You know, obviously inflation is very high, and the question is why. And that's not simply an academic question, because that's critical to understanding where it might be headed and also what can be done about it. You know, what's the appropriate policy response, monetary or fiscal? And, you know, the debate is, is the high inflation we're observing now 8.6% seat consumer price inflation through the month of May?

We're going to get another read on that next week. for the month of June, what's behind that? Do you have a view of Claudia with regard to that? Right. And I will underscore your point that it matters, right? Being right for the wrong reason and having then a voice about what now to do or assess can have very bad consequences. right? So, well, to answer your question first, and then I'll back up with the fill it up. By the way, I'm just saying, amen, amen. To me, with inflation, a lot of the other problems, I mean, COVID is the root of all evil, right? Like, it caught, we shut a $25 trillion economy down in March of 2020.

much of the global economy was shut down. It turned out, and I mean, I was surprised by this, but in hindsight, shouldn't have. It actually is really hard to turn it back on, right? And so we have had disruptions that have taken a long time to work themselves through. COVID is a supply disruption, right? And it's not just the supply chains. It's, you know, the workers that had to stay home, the daycare is closed. People were afraid of dying and didn't want to go back up.

there was this shift in the U.S. economy that I as someone who was point on consumer spending, like I still can't wrap my head around it. People shifted so fast from buying like a lot of services because that's like most of what the U.S. economy is to buying a lot of goods. Like we just don't have systems that are resilient enough to deal with these like really massive shifts. Right. And so it's it's clear that COVID caused. the problems. And it's still causing problems, right? And, you know, as one example where it really led some people like myself astray in terms of thinking it was going to be more transitory or temporary is last summer around this time, we saw, you know, we'd seen a spike in inflation in,

you know, or in the spring of 2021, things were opening up. I mean, it made sense, but, you know, getting back to it, you know, it was going to be inflation. And then in the summer into the early, oh, we had inflation month over month stepping down. Right. It, you look at that number, like, again, if we could remember back to last year, like, it looked like that was happening. And then Delta came and then Omicron came and then Putin came. Like, you know, you had continual shocks. And Del jel and Omicron are yet another supply shock, right?

these waves and we didn't anticipate them. We weren't prepared for them. So it's clear that that was a big problem. There's really good research. Adam Shapiro at the San Francisco Fed has been like doing all kinds of really interesting work. Actually, San Francisco in general has done just a run of COVID work. And one of his latest studies is, you know, like half of this. I mean, a big chunk of the inflation is supply driven. A much smaller portion is demand. And then there's kind of this in between that's hard to tell. And so I do think that some of the demand that was put out there, you know, whether it's cares and rescue, all these things, demand also people getting back out, pent up spending, you know, whether you got stimulus checks or not, like that

contributed to inflation. I don't think it was the big contributor. I think it was supply. And then the other thing that I don't think we talk enough about is like the two, collided with each other, right? Like, we gave people a lot of checks, and I know from my own research, and then I was like, oh, my God. Well, there was a fair number that uses like down payments to buy a car. Well, it just so happened. One of the places that COVID really disrupted was in used cars. So we had demand going straight at some of the hardest hit sectors. And so that, you know, creates problems, but why it's important to have a sense of supply versus demand. And I mean, really, some of the people that push the demand angle, it's all the rescue plan.

Yeah. They don't even talk about COVID. They don't talk about Putin. It's all. If we could just get it's both, it would be a real step forward because the problem is if it's all demand, then it's like the feds got this. Yeah. And the government should just stop because they're like, they're just going to. to mess it up. But if it's supply, there's a lot the government could do. It might not fix things

right away, but it'll make us more resilient in the future. But if the Fed goes at supply-driven inflation, it's not going to end well. So that's why it matters. And that's why I think there should be a two-pronged approach right now. Yeah, totally agree. I mean, I think that's dead on. I mean, the way I would summarize what you just said, and just to make it clear in my own mind, is that there's a long list of reasons for high inflation, but at the top, tippity top of the list are the pandemic and the Russian aggression. And those are two massive supply side shocks. And by the way, evidence of that it's supply, not demand, is that the inflation.

that we're observing here is everywhere. It's, you know, the European, the EU inflation rate is now equal to the U.S. inflation rate. So that would argue that it's the global supply shock. It's not some idiosyncratic piece of fiscal policy or something else here that's driving, you know, demand higher and creating the higher rates of inflation. Is that a fair way to characterize it, a thumbnail way? Yeah, except if you take out a lot of Europe's. like the measured inflation is food or is energy right there quote unquote core is has risen has stepped up less than in the united states but to me that like the united states in europe are not

apples to apples yeah comparisons but yeah i mean people are living with high inflation now and we would have had the energy the gas prices regardless and honestly any interview you listen to people talking about inflation it's gas it's food it's housing it's housing right like that's what people get really angry about because the other stuff a lot of people can kind of switch around their spending and cut back or buy the cheaper stuff but like those they just got to have so yeah we were going to have high inflation from the fiscal relief there are a lot of people that have some extra padding like a little bit of a buffer they wouldn't have had otherwise that's the because since you've focused on fiscal policy and kind of from the

behavioral side of the fiscal policy. One thing I find really fascinating is that households did build up a lot of savings during the pandemic. High income households because they sheltered in place, lower middle income households because they got a lot of government support. And there was a great fear that that excess saving would find its way into spending and demand would really be and ultimately the inflationary problems we would have would be demand generated. That has not happened. What has happened seemingly is that people are taking that saving, that so-called excess saving, and supplementing their purchasing power. So you have this higher inflation, it's cutting into people's purchasing power, their real wages are down. It's an real income shock. But they're not

cutting their spending. They're using the savings to supplement. and continue to spend at the same rate. They're not, but they're not spending with abandon. It's not like they're going out and spending like crazy. They're just using that savings just enough to keep their spending where it would have been otherwise, which I find incredibly interesting and fascinating. Do you think about it the same way and do you have a sense as to why that's happening?

Yeah. I think for a long time we've misjudged people with lower income, right? Like there's a lot of, oh, people don't. save because they're irresponsible or they're just not even irrespect, but just like, I need it now and you know, that they can't wait and like rich people, you know, they're patient, they wait. And I've always thought, you know, the problem is these people don't get paid a living wage, right? Like, the cost of just getting by is pretty high. And if your income isn't that much, well, guess what? You don't end up with saving. So this is a time where people were able to put some money in the

bank. And it's like, gee, look at that. They want a financial buffer just like the rest of us. So I, yeah, so I'm not so, and frankly, given how bleak some of the consumer sentiment surveys are, like it makes sense to me that people are using it to supplement the spending that they would normally do as opposed to going out on a shopping spree. Because there is some caution. But a recession is demand declining, right? Like, to me, the consumers, they're, that money they have set aside could really be what gives us a soft landing or a hard landing. Exactly.

Exactly. Hey, so you've kind of laid out a case for the, if we want to address this inflation supply side inflation problem, there's a, Fed can only take us so far here. And if they try to take us too far, that's recession. They can't solve a supply problem without pushing us into recession. That's not good. We don't want that. So it would be nice if we could get Congress and the administration fiscal policymakers to kind of kick in here.

Do you have any perspectives or views on what they should be doing, what they should be focused on in this regard? Yeah. So I've had the opportunity. Actually, it was right after Putin invaded Ukraine to talk to a large group of members. of Congress. And, you know, they're asking about how should we tell the narrative. I'm like, don't worry about the narrative right now. We need to, you need to do something. But my point is you, Oh, the congressmen were saying, well, how do I frame this? Yeah, I was supposed to help with the narrative. Yeah, right. And I'm like, I think the rescue plan was great. You know, I was just talking about

how I think it's happening, but I said, not now. Like, people are about what have you done for me lately, right? Like, and we have a problem right now. You've got to get it to the, the finish line. And one of the things I said, in large part because the Fed can't do this, I was like, you need to move heaven and earth to get gas prices down. Relative to before COVID, gas prices have doubled. I mean, when they're at the $5, they've doubled. Since March, they had increased a buck 50, right? Like, nobody can adjust to that kind of change. And the Fed can't get those prices down. Like, there's so much thinking in D.C. outside of the Fed, the feds got this. They got it with inflation. Every time I hear that, I just like, I seize up,

right? Like, that's just, it's not true. And the things that people are really getting hurt with, like gas, but Fed cannot fix that. So there are things, there are limited things that the administration can do. There are a lot more things that Congress can do. But at the end of the day, it's not about yelling at oil and gas companies like on Twitter. You have to either, increased supply or decreased demand. There's no getting around this, right? And there are ways to increase supply. Skanda Arminoth, who's at Employe America's had this, you know, proposal and, you know,

talked to policymakers about basically writing contracts for refilling the strategic petroleum reserve, like kind of guaranteeing a base price to refill. because, you know, one year of high profits is not enough to get shareholders to give a green light on making capital investments that are going to be years into the future, right? Like they've got burned on this before. Like nobody cared about them in 2020 when the bottom fell out. Nobody cared about them when OPEC came after the fracking industry, you know, five years ago. Anyway, so that's one, that's just one idea that within the administration they could pursue the thing that Congress should be doing right now and doing, very publicly because it would help, I think, even knowing it's in train, is writing energy legislation, right, with other things they should be putting in the legislation. There are long-term investments, but something that really spells out the path forward with the fossil fuel industry. Like, this is not going away, right? You should train it down and the buildup with the renewables. Even just giving clarity could have some short-term effect. But the thing is, is we cycle with these

energy prices like every six years or so, this will come again. Like we can't be this dependent on global oil markets and on dictators around the world. Right. So I think that's one where we ought to be using a crisis to fix a very structural problem. And they really like they ought to be doing whatever they can. Right. Get supplies up to help people have the federal government work from home. Like there are things they can do.

But they're not. They're hard. Yeah, to get done. And they're just waiting. They're waiting for the supply to fix itself. And we've seen some progress. And honestly, that's given the inaction with Congress and administration, we're banking on the supply problems from COVID to unwind.

And unwind fast enough before the Fed gets to trigger happy with their rate increases. I apologize for my, everyone who will listen to this podcast knows my dog. He's 17 years old and is just losing his mind. So we make do. So we all make do. But I hear you on the energy. I mean, there's nothing that drives people crazier, makes them more down than having to pay $5 for a gallon or regular unleaded. I mean, that's just too much to bear.

And I think that's, in my view, the key. threat to the economy and continued expansion. I mean, it's not going to take a lot. I mean, a cat five hurricane blown through the Gulf takes out a refinery on the coast because refinerers are operating at, you know, 100 percent. Gasoline prices go north of five. It just feels like we're going in, you know, it's going to be pretty, pretty tough to avoid. So you're, I think you're absolutely right. That's got to be number one priority. You know, we are running out of time. And the way we been ending this podcast recently, just given that recession is top of mind, is we each give our odds of a recession beginning in the next 12 months, next 24 months. Now, we're forecasters,

so we do this for a living. So we're going to do this and talk about it a little bit, but more than welcome to join in this bit of a parlor game if you're so inclined. I'm very curious, you know, what your views are. And I'll start with Ryan. So Ryan, what are your odds? of recession over the next 12 and 24 months? So over the next 12 months, it's 65% because of the fit. 12 months, 65%. If they go 75, face this point again, then they're going to break something. So I think if we go in a recession, it's going to be in the next 12 months.

Oh, so 24 months is? That's coming down. Because I think if we get through the next 12 months, if we get through and, you hopefully the Fed pauses once they hit two and a half percent. If they pause, we got a better chance of engineering a softish landing, but if they keep going, something's going to break. So, you know, Claudia, the reason he goes up to 65 percent, because we have this forecast rule of thumb that if we are going to make a major change

to our outlook or major change to any assumption, fiscal policy, monetary policy, whatever it is, we have to have a very, strong level of confidence in that change and it has to be two-thirds probability or more. So he's gone right up to the line. He's right up to the line. So because he knows if he said 66, I'm saying, right. Are you saying we should put a recession into our baseline most likely scenario? You know what I'm saying.

I wonder, let me ask you this before I ask you your odds. When you were doing the macro forecast or contributing to that at the Fed, was there a similar kind of philosophy? What was the thinking around that? If you wanted to make a major change. So, I mean, the forecast is the modal outcome. Like it's the most likely. Most like an average.

Whatever we write down. In the middle of the distribution. Yeah, it's what we think is the most likely thing to happen. We see, the thing is they revise every time there's an, actually, we revise every data release. Right. So as things come in, the whole forecast. doesn't until like you get closer to the FMC meetings. So the revisions tend to be smallish.

There's no, but there's no like, particular rule. Okay. But yeah, big ones we talk more about. Talk more about it. Right, because you got to change the story then. Yeah, that's the point, right? I mean, like the American Rescue Plan at one point,

it looked like it was going to happen. It didn't look like it was going to happen. And what you assumed about that was massive to. Yeah, yeah. No, those obviously go in as soon as they're likely. Well, no, for us, it's got to be more than like, it's got to be more than 50%, right? Because if it's 50% or 51% or 52%, you get whipsaw it, right? You're going back and forth, right?

So that's our level of conviction. But anyway, that's kind of forecast philosophy. So do you, do you want me to give you my probabilities before you give your probabilities? Sure. Go ahead. What do you think, Ryan? Should I make her go first? No, I have a feeling I could probably guess her.

It's going to be like mine, you think? Yeah. Okay. I'm very curious. You can't change quality. Yeah, no, no, don't worry. I don't think she would. Yeah, I don't bend to peer pressure.

And you also don't want to be wrong. I should have known. I clearly could see that. All right, I'd say 40% probability of recession in the next 12 months. and even odds more or less over the next 24. So very high risk. And that has not changed, at least not in the recent past. That is, you know, obviously uncomfortably high and goes to my point.

If anything else goes wrong, even a small thing, given how dark pessimism in the mood is, it feels like we're going to go in. So a lot of risk around that. What about you, Claudia? Yeah, so I had been zipping along with my modal forecast of no recession. Okay. Right. But it was pretty close.

I think I had it like, you know, 50% or something. And then had like 30% a mild recession, like a 2001 recession. And I put very small odds. Actually, it must have been like 40%. I put really small outs on the severe recession. Like I don't think we need a 10% unemployment rate in one year. to get inflation down. That's not.

Last week, last week was rough. Every week feels rough. Because Jay Powell, in the event where there were a bunch like, you know, Lagarde and there was some like little event with these central bankers, he, okay, so inflation expectations came up again. And by this point, you know, that increase had revised away. So now it was just a 10th. It was totally in the range.

historically, the things looked really stable. And then just to let people know, the University of Michigan survey, which has inflation expectations, it was high when the Fed raised the rate. Right. And they, and then it got revised away. Yeah. Short term. Yeah.

No, that was the long term. Oh, was it the long term? It was long term. Didn't both get revised? I thought both. But maybe the short, but they don't care about that. Because that's like gas prices. But no, it had been early in the month, the inflation expectations, the

preliminary had been, went from 3 to 3.3, which again, in Fedland is a big increase. And then when they got the final numbers, it went to 3.1. So it'd only been a 10th. Totally nothing burger. But then in this speech, which now we'd had the final, right? Jay Powell was like, well, inflation expectations are stable, but we need to keep moving because they might become unanchored. And I was like, oh my gosh. So as soon as as I saw that, I was like, you know, anyways. And so that was the point where my odds went up above, like, maybe like to 60 percent, something like that. I still think, because it just, you're in good company. Yeah. I mean, to your point, like, they're going really hard, right? And they're going to get another bad CPI reading this month. They're going to do 75. And what is so strange to me, actually it's a little bit in their summary of economic projections. So what The FOMC writes down each of the participants. They released it before the last meeting.

You know, they get to write out their forecast, like if they were chair for the day, and they have like, you know, the appropriate policy under it. And what the typical participant was looking for was like a little over 4% core inflation in the fourth quarter. Since February, month over month, inflation has been running at like 4%. So it's like it's this weird, the risk are to the upside, but I'm like, what are you looking for? Like you keep going at it and you basically got what you want at the end of the year. So I'm just a little concerned they're pushing too hard and we're going to, it's all going to kind of start. How about this for a theory?

How about this for a theory though? That is a little more saying with perspective. And that is if I were in his position, I'd do the exact. same thing. I'd be talking really tough, really tough, because I want to keep absolutely sure that inflation expectations stay anchored. I am not going to let that go. And, you know, maybe I don't need to raise rates as much as I'm saying. And if I don't think that, that's great. You know, but if I say that, I'm going to do this and that gets inflation expectations where they are, and it's embedded in financial conditions, you know, the stock markets price to it, credit spreads are

price to this, you know, tough talk, the value of the dollars, price to this tough talk. And all I have to do is execute and give you what I'm saying. I'm going to give you financial conditions shouldn't tighten anymore. I should be okay. But, but I deep down think I don't need to get to 4% funds rate target to get what I want. But they could, they could pair the tough talk and do 50 basis points. They don't have to do 75. I think it's just, but I hear you.

And I absolutely agree with them. right now. I would just be raising 50, not 75. I don't, I don't mind 75 if it's kind of like, yes, it's 75. I didn't really appreciate or thought it was a tactical error, not strategic, but tactical to kind of do it on the fly, ad lib, you know, three days before put a leak in the Wall Street Journal that we're going to, that just didn't lend credit, you know, confidence. And, you know, you, again, they're, we didn't use the economic plane metaphor. I always used. that, but they're the pilot at the plane and they're saying, oh, we better turn the knob this way. Or we're going to crash. That doesn't make me feel good, you know, that they're doing that.

But anyway, anyway, this is a great conversation. And I really appreciate it. And, you know, there are some economists that no matter what they say, I just disagree with. Some economists, no matter what they say, I agree with you. I think you're in the latter. And I'm not sure that's good. What's going to be wrong? But anyway, I really enjoy. it and I hope you do come back even though I butchered your name next time I won't do it's really you're good all right now thank you is everybody's name I do indeed yeah thank you so much take care everybody have a nice spot have a nice week we'll talk to you next week take care