Moody's Talks - Inside Economics - Speaking From All Hands Day

Episode Date: September 17, 2025

The Inside Economics team gets together in person at All Hands Day. It is a short podcast, with more than the typical amount of chit-chat (as we are in person). But it is an action-packed conversation on the Fed’s rate decision (see if we got it right), our proposal to unlock the housing market, and, of course, the statistics game!Explore the risks and realities shaping the economy in our new webinar, now streaming for free: U.S. Economic Outlook: Under Unprecedented UncertaintyWatch here: https://events.moodys.com/mc68453-wbn-2025-mau25777-us-macro-outlook-precipice-recession?mkt_tok=OT…Hosts: Mark Zandi – Chief Economist, Moody’s Analytics, Cris deRitis – Deputy Chief Economist, Moody’s Analytics, and Marisa DiNatale – Senior Director - Head of Global Forecasting, Moody’s AnalyticsFollow Mark Zandi on 'X' and BlueSky @MarkZandi, Cris deRitis on LinkedIn, and Marisa DiNatale on LinkedInQuestions or Comments, please email us at [e-mail]. We would love to hear from you.  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, New Zealand, alert, and I have the great pleasure of being in the same people with my two trusty co-host, Marissa D. Natali and Chris Trees. Hi, guys. Hi. You're sitting very close. Very close. Yeah. And I don't know watching on YouTube, I think I look like a pipsqueak relative to Chris. And in real life, I am pipsqueak. No, no, no, that's not true. But I think mercy even looks taller than me. No, no. It's a camera distortion. Camera distortion?

Okay. Okay. Like that day. Yeah. Well, it's good to be, yeah, we're all together here in suburban Philly. We have an all hands day. So that means all of us from, I think, mostly from North America. We've got a few folks from what we're seeing.

But most of the team is here from North America. We got Jesse from Mexico here. Stefan from Japan. Yeah. Here's a question for you. How many miles is it from here to Tokyo, Japan? Well, I got this right this morning, so I'm not going to answer. You're not going to answer.

6,700. There you go. You forgot. Yes. No way. You were thinking it's over 6,000, something in that range. I'm talking about this, the first thing this morning when it was convened. But it's good as you got.

Really? Yeah. Much better in person. Wow. Yeah. Thanks. Question mark. You're looking great.

It's looking good. It's the light. Is it the lighting? Yeah. Yeah, that must be. When we record these, usually, you don't have the right thing. Well, let me ask you this. So I've been pretty busy hold up doing stuff,

and I've had a chance to go to many of the sessions. Yeah, we missed you. Really? You knew I was. Yeah, it's obvious. Really? Of course. Are people upset?

Your presence. No. It's a glaring omission. All these sessions. Oh, sorry. I'm missing a lot of the day. I meant to ask, what is the, did you learn anything come out of this for you, Chris, so far? I was just reminded of how inspirational speaker Carl Zandi is. Wow.

I feel energized. He won't come on the podcast. He really should. He really should. Yeah. But he's speaking at our conference in New York. Yeah, that's true. Yeah. So see how that comes.

Yeah. Yeah. So, yeah. Excellent. I agree with that. No, interesting. I'm waxing a little philosophical, but. the thing that makes Carl special

for many things, I'm actually deducted that scene because I've worked with it for 35 years and of course he's my brother. But the thing about Carl is he just is so too bad he's doing.

And it's so infection. He could be you know, building black group forecasts. For example. For example. How many people I'm like, wow, I'm living to do that.

It's pretty cool. I think it's infectious. You know, when people really are interested in what they're doing, they're committed. It's inspirational. How do people come along? I've heard people say that today. Like, they have nothing to do with the block group forecasting, but listening to him this morning, they're really inspired and excited about it.

Yeah. Well, here's the question. How many block groups in the United States are there? Oh, God. I don't know. That's the smallest level. I think the geography. In terms of economic.

That the census collects. Yes. Yes. $250,000. Can you imagine that? Yeah. That's wild. That's wild.

Same deal. If I asked you, am I asking you, you know, what did I learn? What did I learn? It was nice to hear from Andrew Backelman. That was nice. He's our new executive director. I learned about a lot of the pull-a- AI tools that a few

was on my head yet. So I saw the scenario studio one. That's really great. That's pretty cool. Yeah. That's our global model

creating these AI agents to help the model. What does it do? Basically, you can have it explain equations to you. You can have it customize some sort of shock to a variable.

You can have it go find variables in the model. Really interesting things. Separate agency. There's an agent that allows to decompose changes in the forecast. So if you change the forecast from this month compared to the last month, you know, why, what happened?

Is it because of historical data changes, model changes, the changes in assumptions due to just changing the overlays of the forecaster themselves? And so, you know, very cool, very handy. We use that. So big deal. Yeah. Yeah. So is that a complimentary or a substituting technology?

I don't know. What do you think, Mercer? Is that going to enhance the need for more people or more or less people? I think it frees us up to do other work, right? So I think it's, I think it's complimentary. If we can, we spend a lot of time answering these client questions, right? They get routed to our client service people. Some of them are answered by them. Some of them get routed back to economists. So it allows us to do other things like enhance the quality. of the models or build new models or go in different directions, cover more countries, whatever it is. So I don't think it reduces the number of people that are needed. I think it allows us to just do more. To do more. Yeah. What do you? Yeah, it's what is it, Jevin's paradox, right? You have a technology that allows you just to do more and the human capacity to come up with new ideas is infinite, right? So yeah, you have this new technology. Now we'll do 10,000 scenarios a month. of 10, right? Or we'll cover more countries. So I agree with you. I think it's more complimentary

than substituting. Yeah, it kind of opens up all kinds of possibilities that you just didn't even contemplate before. Yeah. Okay. All right. Well, enough to chit-chat. And this is going to be a short podcast because, well, we've got to go back to all hands day and engage. But this is the, this is, I believe Tuesday, September 16th. So the day before the Federal Reserve releases, it's, its decision around interest rates. They're meeting now and they'll make that decision tomorrow. Widespread expectation is that the reserve are going to cut interest rates, the thorough fund rate target by a quarter percentage point, 25 basis points from right now

the rate four and a quarter, four and a half, it will come back down to four, four and a quarter. What do you think? Is that what they should do, is that? Or should they be doing something different? Gosh, that's a tough question. I'd say probably. it's the It's the widespread expectation

I think you tell me but the markets 96% Yeah And if they didn't do it I think we'll see a huge shock in the stock market tomorrow Right

So I think that's That's what they will do Should they be doing? I think you can make the case that they shouldn't Based on the inflation That we're seeing Right So it's really this debate between

The impacts that we're seeing The labor market Are they one time? are they temporary, but things are going to right themselves? Or versus the inflation that we're observing, is that just a one-time shock, kind of level shift because of tariffs? Or is this the start of something that is going to proceed? So you can make a pretty convincing case, either way, that they should hold or cut. I think they will cut just because they've now telegraphed.

It would be more damaging if they didn't. Right. What about you, Marissa? What do you think? Yeah, I think at this point, they should cut? 25 basis points. They have two more meetings this year, right? They have a meeting in October and they have one in December.

They can see how this 25 cut goes, how the data plays out. But I agree, you could argue that they shouldn't, given the latest CPI data. We really are seeing inflation pick back up because of the tariffs. So you could argue maybe the job market isn't as weak as, you know, would be warranted to actually cut. and you see more evidence in inflation, maybe? You know, we've talked a lot about the job data and the revisions and where is it actually what is underlying job growth. So I think you can make the argument, but I think 96% probability the market is expecting

a cut and it would be, I guess, bad if they didn't, right? Let me ask you a more provocative question. Reverse to July of this year. If the Fed knew what had known all the labor market and inflation data that we have now, given all the revisions, do you think they would have changed their policy at that point? Would they have cut back in July based on weakening in the labor market, do you think? I think so, because at that point, I think there was more evidence of labor market weakening, and we hadn't had this last CPI reading, right? So if they knew how weak the labor market has been since April, which is basically that it's gone nowhere, Yeah, I think they would have cut back then.

And then they would have got a CPI report that said, oh, yeah, we shouldn't have done that. Is that your view, Chris? I don't know. They would have been, I think, on the edge in terms of the second. So then the question is, well, this, would they have cut now? Would this be 50 basis point tomorrow relative to July or would they have held? Because I believe, didn't employment fall in June? Didn't fall?

It did. It did. Yeah. So when they met, they had a meeting at July. So if they knew in July that June employment had declined, you're saying, given everything else, would they have cut interest rates? That's a tough. Remember, in August, there was an upward revision to the July number. Right.

That actually looked better. They would have known that. But they would have seen the weakness and job growth through July, I guess. July would have looked even weaker. Well, the other argument for them not moving is just the uncertainty around policy. I mean, that was the early on when they stopped cutting, because they were cutting rates right into 2024. Then early 25, they said, okay, we're going to stop because of the policy uncertainty. We don't know where the tariffs are going to land.

We don't know what immigration is going to do. We don't know about the doge cuts and fiscal policy and everything else. They could still make that argument in June, right, that there's still a lot of uncertainty. So I don't know, but it would have been tough. If you have an actual right to decline in employment, I mean, then, of course, people do the forecast. and immediately that means we're going to lose a lot of jobs. We're going to lose a lot of jobs. But I think at this point, they've got to cut rates. Even, you know, abstracting from that argument that, you know, the market's expected, if they don't do it, then the market's going to be disrupted.

Just forget about that for second, just on the merits of that, you know, I do think the economy is struggling. You know, job growth has come to a standstill. It feels like we're going to lose some jobs here. That's just not a place you want to be. And here, the other thing I throw into the next is, Fed independence. I mean, what happens if we actually go into a recession? That's not our baseline forecast, but it's, you know, certainly plausible. What if they went in? They would clearly get blamed for the recessions. You idiot. Waited too long. Therefore, you know, you need more supervision. You need oversight from the executive branch, whatever that is. Whatever it means is, though, however you want to cut it, it's going to be less fed independent. So it almost be existential

for Fed independent. It was already under a lot of pressure. So from that prism, I think that also argues, I got a cut. I got a cut. Yeah. And if inflation takes off from here, did they get the same blame or after they cut?

I think, I think the deciding fact, the other factor that probably plays in the role I should cut is inflation expectations, right? I mean, because that goes to your question. You know, will the inflation that we're observing become more persistent?

and more entrenched, and for that to happen, you need inflation expectations to come on tether. Now, certainly, bond market inflation expectations are well anchored, and as a result, that would argue this is going to be one-time hit-to-inflation. It's going to moderate once a terrorist will level off. Therefore, so I think that would also argue for, you know, a cut. Right. Okay, well, let's look forward. In our current baseline forecast, we don't have a cut in October. at the October meeting of the Fed.

We have one in December. This has been on a long-standing forecast. We have a series of rate cuts, one quarter-point cut each quarter until we get the fund rate back down to 3%. Remember, at 4 and a quarter, after tomorrow we're going to be at 4. Another 4 more rate cuts, we get down to 3.

That's our estimate of the long-run equilibrium rate or neutral rate or R. Star, where policies neither supporting or restraining economic growth. And that's where we land, you know, kind of middle of next year. How does that feel in the context of everything else that's going on? I think I would keep it like that for now. Yeah, yeah.

I think they're certainly going to cut tomorrow. And then we'll get more data points on the job market and on inflation. And I think they're going to take it, I think they're going to take it month by month. So I don't know. I think it's going to be dependent on the data that we get. Yeah, but you have to forecast now. and given our forecast, you're saying it feels reasonable to me. It feels reasonable because our forecast does not have outright job losses in it, right?

We have a no recession baseline, just extremely weak labor market slowing, very gradual rise in the unemployment rate. It's not getting out of control. We do have higher inflation through this time next year. So I think, I think erring on the side of slower is more consistent with what we expect in the job. market in inflation than putting another cut in. What is it for us? I agree with Mercer. I think that the weight of evidence still suggests that things are moving in a slowing but

relatively positive direction. My bias, though, is towards more weakness in the labor market. So, you know, I think the probability of an October cut is rising, certainly, but I'm not quite ready to put that in just yet. Is Stephen Maren the chair of the Council of Economic Advisors under President Trump? Is he on the committee? Is he going to be part of the-yes. Yes, he's going to be there. He was fast-tracked last night.

So talk about Fed Independence. Isn't that like gone? I mean, isn't that a breach of Fed Independence? You've got an official of the Trump administration sitting on the board of the FMC weighing in on an interest rate decision? Yeah, but he's one of several people. right now. He's not the chair, right? But yeah, he gets a vote. That's a frontal assault on that independence, is it not?

Well, he was recommended by the president, appointed by the Senate. But is he keeping his job? No, I thought he was temporary on leave, no? Yes, but he's keeping the job. Yes, he's on temporary leave. Because his chair, or he's not the chair. But he's not resigned the CEA job. But the FOMC position is also temporary, right? Until February.

So he's keeping the CA job on hold, right? Okay, so you're saying this does preserve technicality. It's technicality. But in a sense, it preserves it independence. Yeah. Yeah. But that's never been done before. We've never had somebody working in the White House and sitting on the Fed.

In Lisa Cook, the official has come under fire. She's going to vote. Yeah. Because she won the court, the most recent, round of the court battle. Yeah. Yes. Fascinating times.

Right, right. Well, I'm wondering whether we should also have a, because again, the baseline is a cut tomorrow, a cut in December and then series of cuts next year, down to three. I'm wondering if we should have an October cut, a December cut, a series of rate cuts and bring the funds right down. The low would be somewhere between two and a half and three, going to Fed Independence. No? So for next year, I'd certainly see that.

I'd agree with that. Because that's speeding up the declines that we have. October is on the fence, but I'm pretty confident. But in the context of Fed independence and preserving what little independence we have here remaining, it feels to me like they've got to work really hard not to go into recession. Otherwise, it's existential. Feels it. No?

I mean, I think lawmakers would be all over. I don't think they're going to be all over them anyway? Well, the economy kind of navigates. It's different than if you're actually in recession. I don't know. It feels like you definitely want it. The pressure is differently more. You want to err on the side of I don't want that to happen.

Yeah. I mean, you could also, you could make an argument for an October cut as well. And look what's going on with like jobless claims are ticking up, right? now, right? So we get that reading every week. But it was Texas, right? But it was Texas effect. There's potential fraud there. I mean, feels that's because of the flood, right? They were able to allow more time for people to file for. Is that what it is? I think so. I thought it was several states.

There was, I think Texas was there were more than one state. I know Texas wasn't involved. Yeah. Okay. But anyway, I mean, you're right. We should have to watch that very closely. Yeah, very closely. Let's talk about another policy that we're working on. Chris and I, which Impaired at the Urban Institute, are writing a paper on how to help the housing market's in their life. They've been locked up and affordability is a real problem, and homeownership is now declining a pretty steady way. The question is, you know, what should policymakers do about it?

And I guess the first question is, is there anything Fed could do here on? housing? I mean, a key lock-in effect of the housing market is the mortgage rate. Potentially, the Fed could QE again, start buying up MBS mortgage-backed securities to bring the rates down. That's unlikely, though, and it has all sorts of other knock on the box. Oh, in the very short term, I think it's unlikely. In the longer term, if we're talking 26, it's on the table, I would say. Right. Again, in the context of the dependence. Right.

But our kind of general thinking is that the way to address the problem around housing is a more fiscal policy. You know, how should we, what should lawmakers do Congress and administration to help address these issues, the clogging up with the log jam that exists in the housing market? We wrote this paper. Do you want to describe it? Yeah, sure. So I mentioned the interest rate lock-in. I think people are familiar with that. terms of people having mortgages that are very low relative to the mortgage rate, and that's

keeping people in their homes. But there's another population out there of folks who may be locked into their homes because of the capital gains tax exclusion. That is, in the U.S., if you are single, you are allowed a capital gains tax exclusion of $250,000 when you sell your primary home. If you're a couple, you're allowed an exclusion of $500,000. Those were levels that were set by Congress in 1990. and they haven't changed since. So given all the house price appreciation, given all of the inflation we've had over the last 30 years, those exclusions are becoming much more biting.

So for many longtime homeowners, particularly seniors who have been in their homes, say, for the last 20, 30 years, right, they've got a lot of capital gains potentially. And they would face fairly substantial capital gains taxes if they were to sell. So rather than doing that in the interest of passing on as much money to the next generation, as they can, they'll stay in their homes and die in their homes and their heirs will inherit their home on a stepped up basis. So by our analysis, you have a fair number of these types of households that are locked into their homes. They'd like to move. They'd actually like to downsize. They're living in spaces that are much larger than what they need. Maybe it's a single widower,

or maybe it's a couple, someone who's, again, been in their house a long time with a three, four bedroom capacity. And so that capital gains may be really restricting them from going ahead and so. So what we're proposing is to actually index the capital gains tax exclusion to inflation. So that would bump it up to $500,000 for a single, a million dollars for a couple. And that would be certainly consistent with what the Congress originally intended. And it would start to get the housing market moving again. Well, one issue we have with the housing market today is you do have these folks who are kind of stuck in their homes, they're not moving on, and that has a domino effect, right? If these folks don't move from, say, their family homes, then folks who are in their

starter homes, who are looking to move because maybe their families are expanding, aren't able to find adequate housing. And that's then locking out the folks who are renters looking to buy a starter home. I have a question, because I don't know this as well as you guys do. So I always thought that if you turned around and bought another home with that, capital gain, there was some exclusion. Is that not true? No, so that's that's the old law. So under this law, they cut, they brought it out. There are other, so this is a great point, because there are other vehicles in the tax code that one could use to avoid capital gains taxes. Those tend to be used by people who are

wealthier because they have more incentive to shelter some of their capital gains. Or they have the resources to make all these moves. They're not all, they're not all that direct have to set up certain protocols and different procedures. So if you think about it, the wealthiest individuals, they pay some capital gains tax, but they have other ways to actually avoid it. Where this capital gains exclusion really hits is a lot of widowers, for example, right? So you were married, your spouse died, and now all of a sudden your capital gains tax exclusion is cut in half, right? So you're having this, and you may be having to sell your home now at a time where it's not very advantageous, right? It's those types of folks. It's really folks in kind of that middle

upper income category, not the folks at the very top that pay most of the capital gains taxes. This is bipartisan issue, right? I mean, it's not just Democrat, not Republican. It's both sides of the aisle. Absolutely, absolutely. I think both sides want to get the housing market moving. Yeah. Right. I understand that this is a real issue. That's right. There's some debate maybe on how much of an index we should. Right. So some might. argue we should be indexing these exclusions to house prices, which have grown much faster than inflation. Others say it should be inflation. So there's room for some debate, but I think it's fairly bipartisan that, yeah, it would make sense to get the housing market moving again so that we

can unlock some of this inventory and get it better allocated, right? Because it ends up distorting things in a way where you have some families that are having to live in very cramped or smaller spaces that has some negative social consequences. At the same time, you have seniors living in these larger homes that they don't only need, and they're paying a lot more for property taxes and utility. Let me ask you, though, do you think this by itself unlocks the housing market? No, it's not the only factor here. Clearly, we still need to build more homes.

There's a lot of things that need to happen here. Mortgage rates do have to come down. Incomes have to grow. There are a number of things have to go on, just given the state of the mortgage rate lock in effect. but this is helpful, right? And in some markets where you do have a concentration maybe of seniors, it could actually be pretty material in terms of the turnover in that housing inventory. And we've got an op-ed coming out in the Washington Post, I think, on this issue.

Yeah, that's what I heard. Yeah, we'll see how that goes. Should be a good one, yeah. Okay, well, we're going to keep this short. We don't have a whole lot of time. What do you want to do? What's your pleasure? Do you want to play the game or do you want to take a few questions from listeners?

What would you like to do? Do you guys have good stats? I, to be frank, I don't have a stat. I'm sorry, I'm so busy. We can do too. You got a stat? I do have a stat. I think it's okay.

All right? I got a stat. I got a stat. I got a set. I know, it's played a game. The stats game. We each put forward, not me, but we each put forward a statistic. The rest of the group tries to figure it out with clues, deductive reasoning.

and questions. And that is one that isn't so easy to get it right away, one that's not so hard that we never get it. And if it's apropos of the topic at hand, which I'm not sure what that is, but whatever it is, that would be good. Okay, Marcia, you're out. It's a pot-pery of topics. Okay. I feel like you guys are going to get this pretty easily. You're hiding your... Yes. She's got a lot cheating. $3,704. $3,740. $3,740. $44. Is that, I'm going to take a while guess here. That's the increase in consumer spending necessary to buy the same goods and services that you did last year because of inflation.

No. She's laughing at me. I'm not even close. Yeah. Okay. I think that's a pretty good guess, though. But say that again. Is that an actual statistic? Okay. Let's say say, say, let's do some of the back of what they call it back of the envelope. Say it's average household spent 75K a year. I think that's right. Right. Okay. Consumer expenditure survey. Let's say inflation is up 3%. Mm-hmm. So three percent of $7,500 is, you know, in that ballpark, right? Yeah. In that ballpark? But no, that's completely wrong. So now are you still laughing at me? You still having? No, that was impressive. Yeah, there you go. Okay. Okay, so it says it related to any economic statistic that has come out? No. Uh, is there some reason why we should know,

Was this not fair? Not directly, but it is. The cost of something. It is the price of something. And this price has moved a lot with everything going on in the economy, a lot of the uncertainty in the economy. That's right. Gold prices.

It's the spot price for gold. Yeah. Yeah. All time high. It is. I thought it was higher than that. I thought it was like 30, maybe, come back in a little bit. Well, the futures price is a little bit higher. A little bit higher.

Okay, spot price. Yeah, so this is as of, I don't know, I looked at the start of the start. See, that's why it fooled me. I could thought it couldn't be 3,07. Yeah, that is. It is. Yeah, and gold prices are up 40% since the start of the year. Do you own any goal? Is that crazy? The only goal? Not to speak, nothing to speak of. Nothing. Nothing to speak up. Not anything. Does this run up in gold prices make you want to run out and buy? It doesn't. No. No. Okay. It doesn't. Do you have gold bullion stashed under I don't. Floor boards? I don't.

You would like to reveal to the world? Yeah, exactly. And what's floorboards? Exactly where do you live? Which is it under? Yeah. It's like crypto. You can't announce if you own any crypto because stuff happens.

You'll be hacked? No, more than that. Yeah. Yeah, stuff happens. You've got to be very careful. And by the way, I don't own any crypto. I don't own any crypto. Or gold bullion.

No gold bullion. What do you do with gold bullion? I don't really know. So it's a hedge, right? It's a hedge against economic uncertainty. It's a hedge against, it's a sign that a lot of uncertainty, market uncertainty, the weakening in the dollar, right? People are running out and they're buying not only gold, actually. I mean, it's silver, too.

It's a lot of precious metals. Price is up a lot. Yeah. What do you think, Chris? What does it mean? You have central banks also buying gold. kind of worried about sanctions and whatnot. So, yeah.

Reserve currency status of the U.S. under pressure. So where do you go? You know, gold, silver, crypto, all those things. Yeah. It also feels like symptomatic of just broader, I think, frost. Yeah. You know, in markets. I think so.

I mean, the equity market, the stock market, can see it in the corporate bond market. Spreads are pretty thin. Of course, all the crypto, we just talked about crypto. So everything is up in price. It just feels like things are really good. Yeah. Which is bizarre. It is bizarre.

It's really bizarre. Yeah. Okay. That was a good one. Yeah. Chris, what was your stat? Mine's tough. Oh, okay.

9%. Corporate bond. Be the high yield corporate bond yield. No. Is it an economic statistic? By the way, it could be the high yield. Right? No, couldn't it be?

Yeah. So that sounds a little high. I think that's our forecast. It's our forecast. Right. In a couple years. So it's not an economic statistic? I mean, it's not a government statistic.

Okay. Let's put it that way. It has some economic. Is it price related? No. Is it a share of something? No. Is it demographics?

It is a year-over-year growth rate of people doing something. Oh. So demographics, that very loose sense. So you said nine percent? Not housing, nine percent, you're over your growth. Spending? Any kind of spending? A type of spending. A type of spending. Yep.

9 percent. Electricity? No. Is it spending on a particular thing? Good or service? Yes. Oh, geez. Oh, you still got this from the retail sales numbers today?

No. No, you didn't? But it's also in the retail sales. It is in retail. So it's kind of a good. Dining out? Yes. It is the open table reservations of heated diners.

Really? Up 9% year over a year. That sounds good. That is good. It's still very robust, very strong. All right. And you mentioned retail sales. Retail sales came out today, also very strong every year.

I guess it's all in the eye of the beholder. For me, this is a signal of the K-shaped recovery or the K-shaped economy. We still have wealthy folks, people investing in gold who are able to and willing to go out to eat and they're doing so. So that part of the economy continues to perform really well. Okay. I got a stat. Okay. In that context. And I've just jog my memory.

I tweeted about it or X to today. Another picket. 49.2%. 49.2%. The share of spending done by the top 3% of income earners. 10%, top 10%. Okay. Very good.

I read your tweet. I shouldn't have said anything. That's a Cal Bell rating. Yeah, yeah. Yeah, so we calculate spending, really personal outlays. I won't go into the details of the difference, but personal outlays by different demographic. And one of the demographics is by income group. And it turns out that almost half, 49.2% of all spending personal outlays, to be precise,

are done by folks in the top 10% of the income distribution. Here's another fascinating thing. We've got data back. This is based on the Federal Reserve's financial accounts of flow funds. I won't go, we've got a whole methodological piece if people are interested in how we calculate this. But if you look at the, and we have the data back to 1989, if you look at the kind of the growth change in spending across income groups since the pandemic hit, go back to 2019 Q4, right before the pandemic yet. and take a look, the spending of the folks in the bottom 80% of distribution, and guess what the income level is for the folks, if you're at the bottom 80%, what's the top, the highest level

of income? 150, 175, something like that. She's good. 75, 175. You're spending. That's for a household? Household. Yeah.

Okay. You're spending, if you're in the bottom 80%, is growing exactly the same as the rate of inflation. So your real after inflation spending has not changed. Now, to me, that goes a long way to explain why people are pretty upset about, you know, their financial situation, despite everything that's going on. For folks that are in the top 20%, the top 10%, and really top 3%, by the way, the top 3%, I'm making this up, but it's roughly right. It account for almost 20, 25% of spending. That's crazy.

Just crazy. That's where you get, that's where you're getting the real consumer spending growth. That's where the economy is getting its lights. But I find that just fascinating and terrifying all at the same time. No, it's so a little trip up now in stock market or crypto or whatever these folks are invested in. And they're going to pull back, right? That's the risk. Well, another reason for the Fed to cut, I guess, right?

So I guess. Anyway, we're going to call this a podcast. I'm sorry, again, short. We don't have a whole lot of time. We've got a lot going on here all hands day. Got to get back to the festivities. Listen to my brother, Carl, and his inspirational speeches.

Jump around the stage. Jump around the stage, that kind of thing. And we're going to call us a podcast. With that, everyone, take care. Talk to you next week.