Moody's Talks - Inside Economics - Surprises, Scenarios, and Spirals

Episode Date: February 4, 2022

Mark, Ryan, and Cris welcome back Marisa DiNatale, Senior Director at Moody's Analytics, to discuss the latest employment report.Full episode transcript. Questions or Comments, please email us at [e-mail]. We would love to hear from you.  To stay informed and follow the insights of Moody's Analytics economists, visit Economic View. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Inside Economics. I'm Mark Zandi, the chief economist of Moody's Analytics, and I'm joined by three of my colleagues, my two co-host, Chris, Chris DeReedy's, the Deputy Chief Economist, and Ryan Sweet, the director of real-time economics, and Marissa, Marissa Dina Talley, Marissa has been with us a few times, a couple times at least on Inside Economics. Welcome, everybody. Good to see everybody. How's everyone doing on this Jobs Friday? Good. Thank you. Everyone's good. Yeah. Yeah. You know, I've I've been up since like 5 a.m. I did a, believe it or not, CNN interview at 545. So I feel like I'm in the Marines. I have done so much since 5 a.m. in the morning. You will not believe. And so I'm ready for bed, actually. So no, only kidding. Welcome to my world. Yeah. Yeah, that's right. You do this every day. Yeah. Because you're out on the West Coast. Yeah. When did you get up typically, Marissa?

Between usually like 5.30. Unless there's an earlier meeting. Yeah. Yeah. Oh, and this is why your picture is never on Zoom in these early East Coast meetings. Sometimes if I have to host the meeting, then I make an effort to look presentable. Yeah. But if it's 5 o'clock in the morning and it's pitch dark outside, I'm still in my pajamas, not Zoom, Zoom ready.

Yeah. Chris, what's your excuse? I never see your face either at like 9 a.m. But you're on the East Coast. What's going on? I'm dropping off my son at school. Oh, that's what's going on. Right.

Got it. Got it. All right. Well, very good. Well, this is Jobs Friday. I feel like we should just get right down to business. And we have two things we need to accomplish. One is our game, the statistics game.

We all put forward a statistic. The rest of us try to figure that out. And the best statistics is one that is not too hard, not too easy. It has something to do with what's going on in the last week. And is relevant to the topic at hand. And this is Jobs Friday. So the second thing we need to do is talk about jobs. So how should we approach this?

Should we just dive into the game or should we talk a little bit about the employment report first and then dive into the game? What's your vote? We suspect the game may lead to conversation. about aspects of the report. Okay. Although Chris only talks about housing, so I don't know. Are you going to talk about jobs too, Chris? I'll try.

I'll try. Okay. All right. Okay. All right. So I didn't need to start off with a disclaimer, right? What's that? We should talk about the report.

Lots of asterisks here, right? Are there a lot of asterisks? Okay. Well, what do you think? Right. Should we dive right into the game? I think that's Marissa's vote. No, we can do that.

We can dive right in. Okay. All right. I like to get it over with. Chris, your V-code. All right. Okay. So you're just closing out of my outlook so we don't keep hearing that ring.

Okay. Let's play the game. Should we go with, let's go with, because Chris didn't want to play it. Let's go with Chris first. I like that. All right. All right. All right.

Fire away. I'll give you 6.3%. 6.3% is it have to do with the jobs numbers? It does. Okay. So I met the first criteria. Yes, you did right off the bat. And it's not obvious, right? And just because we all assume everyone knows what we're talking about, this is the job numbers for the month of January that came out today, Friday, February 4th. So we're talking about the employment report for the month of January.

And your statistic is 6.3%. It's in an unemployment rate? It is. Is it an unemployment rate? Is it the U6? It is not the U6.S. U6. U6 is a good guess. Yeah.

What is the U6? So that everyone knows? It was 7.1%. It fell from 7.3%. And U6 is exactly, what is that exactly? Oh, it's a broader, it's an alternative measure of unemployment. It's a broader measure that counts unemployed people as well as people who are marginally attached to the labor market, those that are working part-time but they want a full-time job.

So it's a, yeah, it's a broad. measure of a labor market slack in that felt a would you say 7-1 7-1 7-1 7-1% and what was that pre-pandemic you know the what was you 6 it was oh um that's okay I don't recall Ryan will figure that out uh look it up 6.3 is it is it the unemployment rate for black Americans nope Hispanic Americans nope no it's not a okay it's not a a racial ethnic demographic group. It is a demographic group. Women?

Nope. As you, Spy, did you something with high school graduates? Not quite. Less than high school. Less than high school. Got it. There you go.

Oh, hey, where's the bell? No, no, no, no. What do you mean? No, no, no, no. Come on. That is not. Hold on. Wait, wait, wait, wait, wait.

You don't think I should get the bell for that? I'd guide you like a missile here. Okay. Fair enough. All right. You had such a great time last week. Yeah, that's true. All right.

So 6.3% is the unemployment rate for people with less than a high school degree? Yes. And that rose from 5.2% in December. All right. So an increase of 1.1%. I found this interesting because the other group that saw a, the other educational group that saw an increase in unemployment rate was the college graduates. So it's the two ends, the lesson high school and the college graduates.

College graduates went from 2.1 to 2.3%. Right. But what I find interesting is I think it's for different reasons, right? The less than high school, you saw that their participation fell, presumably because of Omicron. But for the college graduates, their participation actually rose. So you have increases, but one because of the virus, the other because perhaps strength of the labor market, there's more demand people rejoining. the labor force. Got it.

Hey, this feels somehow unsatisfying to me. We were talking about the jobs numbers without any context. I think Chris was right. You know, we got to say something about the job numbers. Just to put some context here. I mean, like we, we, we, we, we, we guys, everyone's been pouring over the data, but the folks out there don't, they're saying, what are you guys talking about? So.

I, I mean, yeah, you're right. I think you're right. So Ryan, can you just give us a thumbnail description of the report? What did we get and what did it say? So overall, there's not a lot you can complain about in this report. So Job Grove was north of $400,000 in January. We expected it to fall because of Omicron. So this came out noticely better than anticipated.

I think one thing that really stood out, and I'm not going to use numbers, was there was a big upper revision. until the last couple months because remember last podcast we were talking about the December jobs number. We're puzzled why it was so weak. That's not the case anymore. We've got revised up from around 200,000 to a little bit north of 500,000 in net gain. So strong job growth, wage growth picked up, prime age employment to population ratio improved. The increase the unemployment rate isn't concerning because it rose for the right reason

because more people came into the labor force to the participation rate, edge tire. across the board, I was expecting us to explain why it was really, really weak. Now with a really strong job number, there's no, there's no cause for concern. So we got 467K in the month of January. That's the payroll employment gain. And we had been, well, I think that's higher than most folks' expectations. It was outside the range. Yeah, it was outside the range.

Outside the range of consensus expectations, right? And I think we had our own poll that we were doing via email and we were all negative, I think. We thought employment would decline in January because of Omicron and the impact it would have. But that did not happen at all in the report. I mean, this is really a little bit puzzling. But I mean, I'm not going to bash a 400,000 gain in employment, but jobless claims rose, consumers assessment of the labor market weakened a little bit. So all in all, I was a little, I was really surprised when I saw it. all that number at the bus stop.

Well, it also doesn't, it's not consistent with the historical kind of performance during the pandemic. We, we know that in the pandemic, that the ups and downs in the monthly employment gains have been very closely tied to the pandemic, the number of infections, number of people that are out sick. And, you know, if that relationship continued to hold because of Ammocrine, you would have expected a really weak number probably decline, ADP, which we can come back to, show to decline. So this was surprised, particularly surprising because just does not consistent with

Omicron, which was raging at, you know, the time the BLS, the Bureau of Labor Statistics, the guys who put this data together, we're putting it together in mid-January. Yeah, during the reference week, that's when the seven-day moving average for daily confirmed cases peaked and it peaked at 800,000. So I think everyone was anticipating Omicron was going to really bite into the job market in January. Yeah. Right. I was going to say, we've got some other asterisks here, though, too, right? We have the seasonal still, that seasonal issue.

I think, Ryan, you confirm that that's still feeding in here. But then we have revisions, benchmark revisions, population estimates. So there's a lot baked into this report as well. As usually, we don't, I don't think we want to obsess about a single number here. Oh, yeah. It's likely to get revised next. I'm starting to think that the monthly jobs data is becoming. increasingly unreliable to first print because of these massive revisions. So we really need to

wait until February, March, to really know what happened in January. So I agree with you, Chris. There's some asterisk. So there's a few asteris. Did you want to explain those or should we come back to those? I mean, they're kind of in the weeds, but sounds like they're important. Seasonal adjustment, benchmark revisions, you know, should we talk about that now? I mean, do you want to explain that? Let's get into the stats. have a feeling they might come up here. Okay. We'll come back to that. These are all different kind of wonky technical issues, but particularly important. Yeah. Okay, Marissa, big picture, anything that Ryan or Chris missed on the big picture in terms of the report? I think, you know, we all thought it was going to be

a negative print because we knew what Omicron was doing during this time. And if you dig into the numbers, you do see that there were millions more people out of work because of COVID or because they were sick, right? So there were 3.6 million people who said they had a job, but they weren't at work because of their own illness. How is my number? I'll come up with a new one. That's why he didn't want to go. He didn't want to do this. To get a cowbell for that.

By the way, Ryan, if you said that, I would have nailed it immediately. You would have been embarrassed by that statistic. You would have been embarrassed. That was a huge number. That was 6 million people. Well, and even before we got that number, you know, the reason I thought it was going to be a big negative is I was looking at the, the Census Bureau has been doing this household pulse survey, right, since the start of the pandemic. And although it doesn't line up exactly with the reference, the payroll and household survey reference weeks, it's like a day before, day after in each case, the number of people who said they were. sick from COVID or caring for someone with COVID and therefore couldn't work went from

3 million in mid-December to 8 million in mid-January when they did this survey. So just confirms everything that we already know about case counts, right? But you can really see the impact on employment. And then BLS has also been asking these questions, these supplemental questions in the, with the CPS, with the employment report. about COVID. And half of the people who said that they weren't working because of the pandemic, actually more than half, like 75% were not paid for not being at work because of the pandemic. Right. And so the key is that in order to not be counted in the payroll survey, you had to have been not paid for any of that survey period. So perhaps that's what we were missing, right?

Like, depending on what a pay period is, it could be a week, it could be half a month, it could be the entire month. You would have to be out of work for that whole period and not paid in order to fall off the payroll. I have a question on that. I mean, I was, Marissa, so I went back, and this was a couple of few days ago, kind of looked at how the BLS determines whether to count someone as a employed or not. And there seems to be an out. If it's temporary illness, if you're not working and you don't get paid and it's temporary illness, you're still counted as employed. So, you know, it depends on how the employers who are responding to the survey, think about that, you know, interpret that. So if they said, oh, this is temporary, I know these guys are coming back

next week, they're still employed, then, you know, wouldn't show up as, as, it would show, show up as an employed person, not as, wouldn't add to the unemployed. Even if they weren't getting paid. I think so. I think, Ryan, can you back me up on that? Do you know? I mean, I, that was my interpretation of what I read. So maybe you guys can go dig.

Yeah, let me look at the question. Go look at that again, because I think, in fact, I think one of the problems, the numbers that we've been having and measuring things is that employers early on in the pandemic didn't know that right so they were just saying you know you're not here you're not employed i'm not paying you're you're not on my payroll but they're getting better at understanding this nuance to the data and that may be in what went on here and why we saw more jobs than we thought we were going to see but anyway if you're right if you're right that would be nice to know a couple days ago yeah right That's true. I looked at that and I well my thought was the bias that's a bias right that that bias would be the same why why would you think businesses would be so it feels like a tenuous explanation but nonetheless it might be worth you know exploring and hours fell right so you can see it in the hours data too almost all across the board and you see big declines in hours in like service industries like retail

had a very big decline in hours over the month. But the one thing I was looking at is Chris mentioned that on the household survey side, they updated the population controls, which they do every January, which basically means they just take the last census and they re-benchmark all of the data in the household survey to those census numbers. So when you look at the data that's presented by BLS, you can't compare. December to January every year because there's a break in the series and they don't go back and revise it. But there is an interesting table in the press release where BLS for a select number of top line measures does that adjustment for you and says, okay, if we didn't have the population controls,

what would these changes be over the month? And there was an almost 300,000 decline in household employment over the month between December and January after they take out that population control. I didn't. So maybe this number will get revite. I mean, and then you mentioned ADP was down 300,000 over the month, right? So I don't know. I mean, there was, you can see some weakness in the report if you look for it. It just either job growth and hiring ramped up significantly in January beyond what it had

been the past few months or because of these technical factors that you're saying, there were a lot of people out sick, but they were counted. anyway. They didn't come off the payrolls like we expected them to, or there might be a revision. Right. A quick question. The 3.6 million people that weren't working because they were sick, this is from the household survey. What was it in the month of December? Do you know, Ryan? 1.6.1.6 million. Okay. So is 3.6 million kind of a high for the pandemic? Is that a high point? It's really high. Yeah. If it is consistent. consistent with that census pulse survey.

Yes, correct. By the way, in the census pulse survey, the other reason people give for not working is I'm fearful of getting sick. So if you add that to the people who are sick and taking care of sick people, it was 12 million in January. And that was a new high during the pandemic. So another reason. And then there's another question where they say,

I didn't go to work because I had to stay home. with my children who couldn't go to daycare or school. And that was like up by half a million between December and January as well. Very interesting. Okay. So I'll just make one comment. I mean, just to take it even higher, I mean, 30,000 foot level, looking at all the data and the revisions to the data.

We'll get back to the benchmark revisions. but it looks like the economy was incredibly consistent in creating jobs last year and through January. That, you know, we thought it was much more volatile, some months near a million, some months near 100, 200,000. But now with these revisions, it looks like it's 500K, pretty much, maybe give or take a little bit, you know, month the month. But it was incredibly consistent, which it's almost as if the economy, When I say that, I mean, businesses have kind of a ceiling on how many people they can actually hire, right? They can only add the payrolls. So we were kind of every month hitting that ceiling.

They just physically, businesses in aggregate physically couldn't hire, you know, more people, you know, to fill those open positions, particularly given the high quit rate that we, you know, we've been experiencing. But bottom line, it feels like the, this shows you how with all the caveats and all the asteris is, yeah, I get it. But at 30,000 foot level, it feels like this, it just shows you how resilient the economy is, you know, and just navigating through the pandemic. We're only down 2.9 million jobs now from the pre-pandemic peak, I believe, we're, you know, within spinning distance. Sorry, Ryan, you were going to say something. So if you average it, monthly joggerow last year was 550,000. Okay. Right, there you got.

Yeah, right. Very good. Okay. So I think that, now I feel better where, you know, we give some kind of context. text before we go back. Sorry, Chris, you were, you were dead on. I don't know what Ryan was thinking, although Marissa was, you know. I was there too. There was there too. Yeah. All right. Okay. So let's go to Ryan and Ryan, what is, oh, maybe I should go to Mercer, give you more time to come up with your statistic, Ryan. Yeah. Yeah. I appreciate that since. I was, I was really

teasing you, but okay. You gave a Mercer another chance to take it away. Yeah. All right, Marissa, you're up. What's your statistic? Okay. My statistic is 1.7. Oh. That is the number of job openings per unemployed. He got it. Wow.

1.7.3, I believe. That's a cowbell. That's a cowbell. That is a cowbell. I thought that cowboy was reserved for me somehow. But no. Risk gets that too. Sorry, what was it again?

Yeah, what was that again? 1.7 jobs per unemployed person. Okay, do the reverse. What's the reverse? Quick, because I know that answer. Point six. Okay, there, that's right. That's the way you should be looking at it. Yeah. Yeah, I know. That's the way it's reported. She's mixing it up. She's mixing up. But that's more, I mean, when we're in this situation, it's more intuitive to me to flip it around.

Oh, how did it? Half a person per job. Oh, that's weird. How did Chris get that? Yeah, that's not. That was my meeting next. That was my backup statistic. Which he's like as wacko as Marissa is and like reversing the statistics. I remember, Marissa has a pension for this, positive, negative. Oh, boy. Inside joke, inside joke.

Just go listen to the previous podcast. It's not really an inside joke. It was, yeah. Oh, really? The whole world knows about it. Broadcasts too, right? Millions of people. If you go back and listen to podcast number, whatever, 23 or something.

Okay. Okay, well, okay, so explain that to put it into some kind of context. Well, so this combines two reports. It combines the job openings and labor turnover survey, which came out this past week for the month of December. So it's a month behind the jobs report. And that shows the number of job openings at a record high. Like everything's at a record high. Layoffs were at a record low.

Job openings were at a record high. Quitzer at a record. high. So that shows us the composition of job growth. And then combine that with a number of unemployed people in today's report. And you get 1.7 jobs per unemployed person, which is up from the previous month and far higher than anything in the history of this series, which goes back to 2000. Yeah, I mean, I kind of have a rule sum in my mind, you know, a really good labor market's like One for one, right? Something like that, like around one. One opening per per unemployed person. But yeah, it's pretty amazing. Good. That's a good one. Very good.

Ryan, you ready? Do you have your statistic? Yeah. I got one. 50%. What? 50% on the nose? On the nose. Okay. Highest in 48 years. Oh, boy. And this is coming from the jobs numbers or not? It is not. But it's only market related. Okay, okay. That was a head fake. Okay, 50%. But it was a statistic that came out this week. It did.

Came out yesterday. Okay. Interesting. Is it from the ISM non-manufacturing survey? Nope. It is not. In the U.I. Employment insurance claims came out yesterday.

No. I can't think of what that would be. It's a survey. A survey. 50%. I don't know what that would be. We get the entire survey next Tuesday. So they release part of it ahead of the job number,

and then the full survey comes out on Tuesday. And we do cover it on economic view. We do. And you said it comes out before the jobs number. So is it labor market related? It is. Oh. Is it from ADP?

It is not ADP, but that comes out Wednesday. So this came out Thursday. Huh. I'm really confused. So the NFIB Small Business Association releases like an employment survey ahead of the jobs number. I did not know that. And in that, 50% of small businesses said that they are raising compensation, a 48-year-high. So just getting back to the idea of how tight the job market's getting small.

businesses are getting, are starting to raise wages. So basically the solution for high wages is high wages because as waste growth accelerates, we'll start pulling more and more people back into the labor force, which we saw in today's employment numbers. Right. Right. Interesting. So it's 50% on the nose. So half of all small businesses that responded to the National Federation of Independent Business Survey, the trade group for small businesses, so they were raising compensation for their employees. And that is, and that survey has been done for a while back into the 70s, I believe. Late 70s, early 80s, yeah.

Yeah, right. And that's the highest that's ever been. In 48 years. I think it was higher. Okay. Okay. Yeah. Okay.

Wow. That's pretty incredible. And I didn't look. The average hourly earnings, what is that growing year over year? That also came out with today's jobs numbers. Do you know, anyone know of a fan? Yeah, 5.7. 5.7.

Okay. All right, very good. That's not keeping pace with inflation. No, no. Although, you know, it's interesting. Someone pointed out, one of our colleagues yesterday in a conversation we were having pointed out that if you go back to the start of the pandemic and calculate the percent increase in wages, and he used the employment cost index because that controls for mixed issues that the average error earnings does not. mix of industries, mix of occupations within industry. And you look at inflation, the increase in prices, you know, since the pandemic, they are roughly the same. They're about the same.

So it says wage growth has been consistent with inflation. I just looked at that, actually. But if you index it to, if you index the CPI and you index the ECI wage component of the ECI to the fourth quarter of 2019, you know, wages were outpacing inflation, obviously, through the first part of the pandemic when we had deflation, right? When the pandemic first started and got ahead of it, but that gap has been narrowing and narrowing and just as of December, now they're both right there. So actually, CPI growth is since the end of 2019 is now slightly above. even ECI growth over that whole pandemic period.

So a couple more months and even by that measure, it'll be wiped out. Although it feels like to me wage growth is going to continue, is going to remain stronger for longer than inflation. I wouldn't. That's true. Yeah. Yeah. So, you know, but what we're saying right now is that, you know, through the pandemic,

since the pandemic hit, wage growth has been more or less roughly consistent with inflation. So that's not great. That still means so-called real wage growth after inflation wage growth is zero. And that's, you know, okay. But, you know, workers should be getting inflation plus the growth in their productivity and they've not, which, by the way, someone benefits from that. And that's obviously businesses. And that's one reason why businesses are doing fabulously well. I mean, if you look at corporate profit margins or corporate profits, they are extraordinary. So, you know, businesses' costs are up, but they've done a pretty good job here. I mean, an excellent job of passing it through and, you know, maintaining their margins and maintaining corporate earnings. Although I guess Facebook would be the exception to that, you know. Sorry, I shouldn't have brought that up. So anyway, I got a question for, I got an easy one and a hard one for you, my statistic.

Okay, I'm going to give you the easy one, just kind of, well, I'm going to say anything because it make it easier. But then I'm going to give you the hard one and make you work. Okay, 62.2. Labor force participation rate? Yeah, that was the easy one. No one should be paying attention to, but obviously you do. Just for you. Oh, can I ask though, Marissa, would that number, that number wouldn't be affected by the population controls, would it? Yeah, it is. It would. It is. Oh, it is. Okay. So did it rise as much as it looks like it rose or not? No, I think when you subtract the population controls, it was unchanged from the previous month. Oh, really? Oh, yeah. Okay. I got it. I was head faked by that. I thought there were some improvement there.

So what about unemployment? Would that be affected? It would be, wouldn't it? Yeah. Anything Anything in the household survey, to some degree. So the participation rate, if you remove the population control, had no, you know, no change over the month. The unemployment rate, would be the same, exactly what it was, up 0.1 over the month. Okay. All right. Okay. Okay, very good. Well, that's fair.

I mean, I know your favorite statistic Ryan for measuring where we are relative to so-called full employment is prime age employment to population. Have you had a chance to take a look at that? Yeah, increase from 79% to 79.1%. Okay. So we're barely. towards that 80% threshold, which is historically consistent with a full employment economy. Right.

Prime age 25 to 54. Correct. Yep. And we bottomed during the pandemic about 10 points below that, I think. We're like something like 70 or something. And then we're now 79.79.1. And it becomes a rule of thumb, obviously, give or take. It's about 80%.

So we're headed towards full employment. And of course, Labor Force participation is just one element of the employment to population ratio. I think what's also encouraging is the female prime age employment to population ratio has been climbing pretty quickly. It kind of coincides with schools reopening. So that's that's an encouraging sign. It's rising twice as quickly than men. Oh, is that right? Oh, interesting.

I mean, is it just because it got nailed more during the pandemic? Yeah. Yeah, that's part of it. And then when your schools reopened, we're able to pull more women back into labor force. All right. Okay. All right. Here's the hard one.

And I'll just give you a hint right up top. I'm switching things up a little bit because it's an important statistic. And I thought, we'll see how you do here. It is, but it's a statistic that came out this week. 0.83.8. 0.826, to be precise. 0.826. And let me give you a hint.

It has nothing to do with the job numbers. I'm so violating one of the rules. Yeah. No, no, no. Wait, why am I violating the rule? Oh, because it's not the topic at hand. It's not topical. It's okay.

No, I guess that was a preference. That was a preference. That wasn't like a rule. Yeah. Yeah. Is that a growth rate, Mark? It is not a growth rate. Is it a financial market?

No, it is not a financial market measure. No. Think, you know, kind of think what Chris, where Chris mind, Chris's mind is generally. Housing? Yes, it's housing related. Housing. What statistics came out this week on housing? The CoreLogic came out this week.

CoreLogic HPI House President. Oh, and, oh, is it the, the home of the vacancy. Is it a vacancy rate? It is a vacancy rate? It is the vacancy rate, but you have to explain a little bit more than just that. Is it? She's really good at this game. Yeah, she is.

This is impressive. Yeah. Putting us to shame. Well, is it the rental vacancy rate or the homeowner? Okay. I take it back. She's not that good. She's okay.

Well, I got the report, though. No, I'm only kidding. It's not the rental vacancy rate. So that leaves you with one other key rate vacancy rate. The homeowner vacancy rate. Yeah. Yeah. She mentioned that.

I said that. Oh, you did? Oh, I missed it. Sorry. I, I, oh, I, forgive me. Oh, so I said no to your homeowner. You said the homeowner vacancy rate? And I said no.

Well, after I said it, you said, you're not that good at this. Oh. Oh. So I took that as a no. No, no, wait, wait, wait, wait. You said the rental vacancy rate. And then I said, I said it or the homeowner. Oh, okay.

Yeah, the homeowner vacancy rate. I'm humbled. I apologize, Marissa. That was. Do I get a cowbell? I think so. She definitely is a cowbell. A guest cowbell.

Yeah. Right. Well, you know that homeowner vacancy rate? That's, you know, that's for homes for sale. That 0.83% is the lowest has been in the data. You know, we have data from the census back to 1956. And that's the lowest it has ever been. Just for context, it was a high of 3%, you know, at the peak back, you know, in the housing bust, you know, coming out of the financial crisis. So that's pretty amazing. And, you know, it was a pretty amazing. And, you know, it went at the peak back, you know, you know, in the housing bust, you know, coming out of the financial crisis. So that's pretty amazing. And a rental vacancy rate also kind of fell in the quarter. It's low 5.6% according to census. It's been lower, but I think only once back. You have to go back into the 70s or early 80s or something like that. So vacancy is, you know, excruciatingly low.

And while supply is picking up, you're getting more housing construction, new single, multifamily starts and manufactured housing. it's still not quite keeping, you know, buying to this, the decline in the vacancy rate, it's still not keeping up with demand, right? So vacancy, and that goes back to, you mentioned CoreLogic, the house price index, that's up 18 and a half percent year over a year. I think that data was through, was that through December, Chris, that HBI data? Or was that through November?

I can't remember. December, I think it was December, yeah. I mean, that just gives you a sense of, you know, how, and then, of course, rank growth is, you know, is double digit as well. So this gives you a sense of that. And by the way, all of that, you know, obviously goes back to inflation because inflation is, a lot of that is around the cost of housing. And with such low vacancy rates that continue to fall, we're going to continue to get strong rent growth, which means, you know, that's going to add to the inflationary pressures. Okay.

If you want to connect that back to jobs, construction employment actually fell a little bit. I did it. I did it. So a little bit of a puzzle there. Huh. Is that? It could be weather. It could be building materials.

Yeah. They don't have the supplies. Yeah. Well, before we kind of go big picture here on the labor market, maybe we should go a little picture on the labor market. Do we want to fill any in any of the blanks on some of the wonky stuff you brought up earlier around the benchmark revisions or seasonal adjustment or any of that kind of thing? stuff. Did, did, did you want to go into that at all? I mean, maybe you should explain the

benchmark revisions. I mean, because they're not, they're important. Do you want to, Mercer, you want to do that? Sure. Yeah. You can fill in what I miss. Okay. So every year, the BLS, the payroll survey is a sample that covers about a third of all establishments in the country that have employment. And every year they benchmark their count, the counts of employment that they're getting out of the sample to actual unemployment insurance records. So almost every single employer,

with the exception of a few industries are required to pay unemployment insurance taxes or to report their payrolls into the UI system. So the BLS takes these counts and they benchmark the payroll numbers to this every single year. And when they do that, they go back and they revise data. So what's being benchmark, what was released this morning is a benchmark of the March 2021 level of payroll employment to actual unemployment insurance counts. And then they go and they take those revisions back a year. And then they come forward as well and do revisions from April all the way through to December,

where they take the benchmark revision and they basically distribute it over the months, the intervening months. I don't know if that's clear. Oh, my gosh. That was fantastic. Yeah. Okay. You should be, they should take this and put it up on the BLS website. That was fantastic.

Well, I did work for the BLS. Oh, there you go. There's that. Right. But very well done. Yeah. So then we see all the data over the past year gets revised and we see, okay, if you were to actually benchmark this to the actual unemployment insurance counts, what would payroll employment look like? And we saw that for most months over last year, there were upward revisions to most of the months over 2021, including in the fourth quarter, as you both mentioned, as you all mentioned, there was an upward revision.

And that data would have been revised anyway, right? Because we get a couple of revisions on each month. But combined, it was over 700,000 in upward uncounted, previously uncounted jobs to November and December. To my eye, though, I mean, and I didn't do the calculation, but looking month to month, the revisions, it looked like it kind of netted out so that we still got about the same amount of job creation in 2021. Yeah, what we added in November, December, got taken away from June and July. Yeah, exactly. I think it was all revisions. I think it was 200,000 positive.

Yeah. I think it was all upper revision. So that's what? 50,000 a month? It was not, nothing big. Although my guess is, and we've been saying this for a while, when we get next year's revision, when we're doing this podcast next year, I would expect some upward revisions for the entire year because, you know, we've been getting a lot of businesses formed. And I'd be surprised if the BLS is capturing the job creation that's going on in the small businesses that are being created. So I wouldn't be surprised if that, you know, we saw some upper revisions for next year.

But we'll see. I thought that that would happen this year. I mean, I've been really wondering about that. You know, they do this. They have this birth, death model where they try to impute the number of new business formations based on the number of businesses that are leaving the sample because they're going out of business. And I just would think that that would be incredibly difficult and off during something like the pandemic. over the past couple years.

And yet these revisions aren't that big. Yeah, but this is through historically speaking. But the benchmark is March of 2021. A lot of the formation was, you know, post that. So you wouldn't, I'd expect to see that with the March 2020 benchmark. That'd be my guess. Yeah. Mm-hmm.

Not to beat up to BLS too much. I mean, what they're doing is extremely difficult. Oh, yeah. I would not want to try to estimate these seasonal jobs. some of factors. Hey, you know, talking about difficulty measuring things,

maybe we should talk about ADP for just a second. Where's Dante? Actually, Dante is hiding. It's hiding. He shouldn't be on this podcast, because he's usually on when the ADP misses the BLS

by a significant amount. Dante does a lot of work on ADP. Poor guy. You know, this miss was pretty large. But the reality is, as you pointed out, when we get all the visions in, it may be actually a lot closer to reality.

Ryan, did you want to talk about seasonal adjustment at all? I mean, that feels like that could be a big deal here, too. The seasonal factors that are BELS is using or seem to be all over the map, or at least hard to figure, hard to figure out. They had a big write-up in the report today explaining the changes to the seasonal adjustment. So I thought, you know, they're being very, very transparent. But what the BLS does is they try to adjust the non-seasonally adjusted data for these seasonal fluctuations that we know that's coming. So January, for example, unadjusted for seasonal fluctuations, employment usually falls.

And it was down $2.8 million between December and January. That's the average over the last 20 years. So nothing out of line there. But going forward to the next few months, we've got to pay close attention to these seasonal make things look a lot better than they really are or much worse than what the underlying data is saying. Yeah. Okay. All right. Let's go big picture. And, you know, the one thing that immediately comes to mind is, and you can feel it in financial markets. Like, I thought this is where you're going. Chris, you didn't bring it up yet. 1.93% the tenure. Oh, I didn't see that.

Oh, is it? It's up 10.9.3. Wow. About 10 basis points. 10 basis points this morning since the employment report. So explain that. What's going on? What are investors, you know, what are they contemplating here? That the Fed's going to go 50 basis points. They're starting to pencil in, you know, a more aggressive Fed in March.

I mean, it's a slam dunk that they're raising rates in March. I think we're assuming 25 basis points. But we are. If you got marked their pricing, they're starting to price in maybe 50 basis point move, which I think would be too much. So, okay, the job numbers are good. The economy is obviously creating a lot of jobs every month, pretty consistently, 500K. By the way, you know, in a well-functioning economy pre-pandemic, if we were creating, you know, anything north of 150, certainly over 200, that meant unemployment was going to be declining.

So we're going along here at a pretty heady clip. It means unemployment is going to keep coming in, means labor force participation. Employment population is going to keep. to rise, it means we're already within spinning distance of full employment. We're going to be on top of full employment here in the not too distant future. And we're coming in at the same time that inflation is high. It has more to do with the pandemic. But nonetheless, it's still very high. So bond investors are saying, oh, my goodness, this is a hot economy. And so now the 10-year yields at 1.93%, which is the high since the pandemic hit. Yeah, we're in that period

where good news, good economic news is bad news for financial markets. So good job numbers, you know, the labor market's healing, but that to the bond market is signaling and the stock market that the Fed's going to start pressing on the brakes. Right. And so you're saying that the market expectations, investors are now saying, what is being priced in? Is it now a 50 basis point, a 0.5 percentage point increase in the federal fund rate target, which is close to zero right now in March. And how many rate hikes for the year? You know, is it now five or six rate hikes for the year? Five. Five rate hikes for the year. Yeah, 50 basis points isn't fully priced in the March yet. It could be by the end of the day. I don't know. But it's 25 in March so far. Okay. And you just, you said

you, you, markets are starting to expect 50. Do you think, let me ask you this, do you think that's what the, and then you said the Fed shouldn't do that? And are you also saying the Fed, won't do that? Do you think they will actually raise it 25 basis points? Yeah, I think they'll raise it 25. Okay. And why shouldn't they do 50 basis points? Well, it all depends on expectations. I mean, if the market's betting on 50, then they'll go 50. Oh, really? If the market's not fully pricing in 50 basis points, they're not going to go surprise markets. They usually try to avoid surprises when they start a tightening cycle. Why don't they're going to be data dependent? I mean, that's been the message, right? They say that, but. Well, they guide expectations.

expectations, don't they? I mean, if they're doing their job, right, they should be guiding expectations to where they want the expectations to be. You made it sound like the feds being led by the nose of the bond market. Right. Well, they have in the past sometimes. Well, but they're not, you know, here they're, presumably, they're going to lead the market, you know, where they want it to go. Right. Yeah, we have plenty of time until a March meeting. So they'll come out and jawbone expectations of where they want them to be. Right. I, you know, I think a lot, I mean, As Chris says, is data dependent. But I think the other thing that has to matter is got to be financial conditions,

you know, more broadly. When I say financial conditions, I mean stock prices, I mean the bond market credit spreads in the bond market. That's the extra interest rate bond investors get for buying corporate debt that has risk. It has real estate prices, you know, particularly housing values. you know, the link between what the Federal Reserve is doing, interest rates, and the economy and economic growth runs through these financial conditions. Oh, the other thing I'd throw in there is lending terms, underwriting standards by financial institutions. Right now, you know,

the stock market is down a little bit. You know, I think, I don't know what it is today, but maybe it's down, you know, six, seven, eight percent from its all-time high. Credit spreads, do you tell me, Ryan, have they increased it all? Yeah, they're wide, but there's still not a lot. I think 25 basis points. I haven't checked today, but as of yesterday. Right. We just talked about housing values. They haven't, they haven't slowed a bit, at least not. Now, it takes a while for that to happen, but, you know, for it to show up in the data, but I don't see anything either. And underwriting standards are easing, right? We've got the senior loan. officer survey, the Fed survey that they go to banks and say, hey, are you easing or tightening your

underwriting standards for cards, credit cards, auto loans, commercial loans, and everybody's easing. So it feels like financial conditions, you know, they're a little tighter than they were a few weeks ago, but they're anything but tight, right? I mean, so it feels like to me the Fed's got to keep pushing here until they get some so-called tightening in financial conditions, meaning lower stock prices, wider credit spreads, some weakening in the housing market house prices, some tightening down on underwriting or at least no further easing. Does that make sense? Yeah, I agree. So the idea of the Fed put, I think it got coined under Greenspan. So any the time there was a big hiccup in the stock market that kind of threatened the economy. The Fed would,

you know, step in, ride in and save the day. There isn't a Fed put this time around. I think inflation and the strength of the economy killed the Fed book. Yeah, I guess, yeah, okay, fair enough. But that hasn't sunk in, apparently, to investors. I mean, again, you know, stock prices are down, but they're not, again, I haven't looked today. I don't know what's going on, but, you know, uh, down a little bit, down a little bit. So they, we have plenty more room to fall before. Right. Right. Do you have any perspective on this, Chris? Yeah, I was going to say, so you expect more hawkish speeches and more job. Yeah, my take is if they went 50 in March, that could be interpreted as a sign of panic, right? Yeah. That they really are behind them. So I think there, I think the more

effective route here is, is to talk down the market and make people aware. Remember the Powell Press conference from December, right, that kind of shocked people a little bit. I think there's going to, there's going to be more of that type of talk that they're, they stand prepared. you know, everyone's got to cool it here. It's starting to appreciating the risks that are out there. They can let the market do some of the work for them. Exactly. Like Mark was saying, like financial conditions tighten,

that's on top of a 25 basis point rate rate in March. I guess, of course, financial conditions also means long-term interest rates, a 10-year treasury yield. So there's been some tightening there as well, I guess. Yeah. Yeah, okay. It just feels like to me that, for the there's there's this relationship between what the fed's going to do and what financial

conditions are doing so if the the fed has going to is going to have to raise rates by more more quickly if financial markets don't respond if the financial markets of equity prices hang tough if credit spreads remain thin if the housing market doesn't start to weaken the bed that's going to have to push on the brakes even harder they're going to have to keep pushing and pushing and pushing, which means that if I were an investor, it just feels like this isn't a particularly good environment, you know, to be holding onto assets, right? And it feels like the prices ultimately have to come down for these assets, particularly because they're so richly valued. I mean, valuations are so high in a lot of these markets, even with the correction that we've seen

so far. I mean, like, what's fair value for a 10-year treasury yield, according to your capital? Right now, what should the tenure and treasure yield be? 2.1 to 2.2. So not that much higher for more than this day. Okay. All right. Okay. Here I have another related question, kind of big picture question,

is, is the, and this goes to the appropriate conduct of monetary policy as well in financial market conditions. Is the acceleration and wage growth that we're observing. is that inflationary? Do you think that's a key, let me put it this way. Do you think that's a key part of the inflation that we've, an acceleration and inflation we've observed this so far this past year? And do you think that we run the risk of it becoming an issue going forward?

So maybe I'll turn to you, Marissa. Do you think consumer price inflation through December was 7%? A lot of reasons for that. Is the acceleration in wage growth a big part of that, a part of that, or is that just more a reflection of the higher rates of inflation? How do you think about that? I tend to think of it the latter so that it's more of a reaction and a reflection to higher inflation. I mean, we've broken down the growth in inflation by all of the factors causing it, So there's still supply chain issues.

There's still some kind of demand being unleashed from the pandemic, particularly on the services side. We got a ton of stimulus, direct stimulus to households over the past couple of years that is still there and being spent down and allowing for spending that maybe wouldn't have taken place. So there's a lot that's juicing inflation, I think, that kind of came before the wage increases. And as we were talking about earlier, you know, if we were talking about tracking, right, wages like the ECI over the past couple of years relative to inflation. I mean, wage growth had been pretty steady during 2020 and most of 2021. You just had a deflation in early 2020 when the pandemic began, and then it kind of started picking up.

And now we're in a situation where wage growth isn't keeping pace with inflation anymore. Now that could become a spiral, right? That's the fear is that you kind of keep chasing inflation and wages around. But I tend to think of it as more reactionary to inflation than causing it. Right. What do you think? That's how I view it. I mean, at least so far that, you know, the acceleration in wage growth that we've observed this year is more a reflection of the higher inflation.

than driving the higher inflation. Because most of the inflation has been on the good side of the economy anyway, right? Not on the service side, which is where wage growth would lead to higher inflationary pressures. And it's the goods price inflation that's kind of driven the train here. You know, vehicle prices have gone skyward. Energy prices have gone skyward. Food prices have gone skyward. But not, you know, the price for, you know, most services.

You know, they are picking up. And, you know, like rent growth, you know, that has nothing to do. with wages, right? That has everything to do with what we were talking about earlier in terms of vacancy rates. So no. And so that gives me some solace about, you know, monetary policy and the course of monetary policy going forward and therefore the course of interest rates and monetary policy going forward. That, you know, it really becomes an issue, a problem for the economy and thus requires the Fed to get very aggressive in raising rates if, in fact, the causality of reverses. And, you know, the wage growth starts to drive, you know, inflation, drives pricing decisions, that kind of

thing. I don't think we're there yet. The other thing that gives me a little bit of solace is, you know, most of the wage growth acceleration is really in the bottom parts of the wage distribution, right? That's the Lanof Fed Wage tracker data, which tracks individuals and their wages. So it corrects, there are some biases, which I know, Mercer, I'd like to hear about a little bit about, but it does control for, you know, mixed issues in a very effective way. So it gives you a really clear read on wages. And you can see wage growth by different demographic cuts. And if you look at it by part of the wage distribution across the wage distribution, it's really the acceleration is really among those that are in the bottom quartile of the distribution, maybe in the bottom half, but mostly

in the bottom quartile. And really very young workers, teenagers, folks in their 20s, and, And people with lesser education, you know, high school or less education, which again goes back to, you know, what's driving that. It's a pandemic. You know, the pandemic is making in leisure hospitality, in retail, recreational activities, you know, personal services. That's where those folks are employed. They're not, they're not at work because they're sick or they're taking care of sick. People are feel for real good of six. They can't are sick or they can't get child care for their kids. And that's where the labor shortages are most intense. And that's where you'd expect the wage growth be. So if that diagnosis is correct, as the pandemic recedes, those labor shortages abate and wage growth will moderate.

And again, you know, wage growth won't be driving inflation, you know, that won't get into that kind of wage price dynamic that's been a problem in the past. So I concur with your view. Ryan or Chris, do you have a different perspective on that or a different take on that or want to add to it? Sure. So I guess you're assuming then that we won't transition from goods-driven demand to services-driven demand. Is that the crux of it? If most of the inflation so far has been goods-driven, but you see, given the labor report, there's lots of demand for leisure hospitality and other services,

you could make the argument that wages will now start to drive inflation. But it sounds like you're not seeing that demand picking up sufficiently to try that. No, well, I'm assuming a couple, why I'm thinking a couple things. One, there's a rebalancing in the economy. So we actually see some goods price deflation. Right. You know, energy prices come down, vehicle prices come down. And that offset some acceleration in service price inflation. So the net of all of that is still deceleration and overall inflation. So, you know, I think, you know, that's a key, you know, key aspect of that, of, of, that. And second, I'm also assuming that the growth rates in the economy are going to slow, that, you know, we're creating 500K a month, but I'm not, you know, I'm expecting by the end of the year, we're going to be back, you know, close to 200K a month, 150K, K, closer to that rate of growth that's consistent with stable unemployment. So we're at 500K, unemployment's 4%. We stay there. Unemployment comes into the mid-3s, low 3s. E-pop, you know, Ryan's

favorite measure of full employment goes from 79.1 to 80%. And by that, when all that is coming together, because of the tightening and monetary policy, higher interest rates, because the lack of additional fiscal support, in fact, it's becoming a drag on the economy because, you know, we're not going to get any boost from inventories. We can talk about all the reasons why, but there's enough reasons out there that I think the economy's growth rate slows to a point where, you know, labor market is at full employment, but we don't go barreling past it. If we do, if, you know, growth remains strong and we barrel past it, then we got a world to hurt. You know, then, then the, then the causality shifts, right? And that's when wage growth starts to drive inflation.

And when that happens, you're a whole different kind of scenario. The world's going to look very different. In that scenario, I think the Fed goes on the war path, steps on the brakes really hard, and the probability that the economy goes into recession is awfully high as you go into 2023. three. That's not my most likely. That's not the most likely scenario. That's definitely a scenario that we have to worry about it. But I'm assuming those two things are rebalancing in the economy from good side to service side that allows inflation to moderate. And secondly, that we, you know, growth moderates, you know, as we move forward. Does that make sense? Got it. It does. I guess a counter argument out there is the excess savings, right, that remain.

that are still no trillions of dollars on household balance sheets that could come in. But again, I guess it sounds like you're saying, you're assuming that the prices themselves and the broader slowdown in the economy is going to prevent people spending with abandoned, right? Well, here, this is, that's a really good point because we've got a boatload of excess saving, saving that people did above which they would typically have done if there had been no pandemic. I mean, we calculate 2.6 trillion. That's, you know, that's a lot of cash sitting out there.

But the whole, the vast, vast majority of that's sitting with, you know, very high income households. And they don't, I don't think they view that as, you know, income I'm going to spend. They view that as part of my nest egg. That's my wealth, right? I don't think they're going to take that and spend it. For folks in the bottom half of the distribution, they're, I think, going to start, especially as they have been working, you're going to blow through that, particularly with high rates of inflation, they're going to blow through that. And they're going to become much more

sensitive. Now they're going to become much more sensitive to price, right? So far, they haven't been too sensitive because they have cash in the bank. But once you run out of cash in your deposit accounts, you know, then you start saying, oh, I got to be more careful about what I'm buying. If that price for that thing is up, I'm going to go buy something else or buy less of it, you know, that kind of thing, more price sensitive, which should help to moderate inflation as well. But that's a good point. That's an assumption I'm making, right? I'm assuming that that that that's, that's what's going to happen here and we'll have to see. If it does, if a high income household keep on spending aggressively and start to start to spend down some of that excess saving,

then, you know, growth, it's going to take more work by the Fed. It's going to, you know, they're going to have to really press to get stock prices down and housing values to moderate and, you know, to get the people to, you know, pull back on their spending. Otherwise, we'll, we'll get into that alternative scenario where we, where we overheat. I know, Ryan, what do you think of all that? In fact, I laid out two scenarios, right? Going forward. And we're going to end pretty soon.

I'm going to ask, what is the probability of those scenarios? I'm really curious. Scenario number one, the base, you know, it's kind of the sanguine view that everything kind of, the economic plane, guided by the Fed, some rate hikes, you know, kind of lands on the plane. Everything looks like we're back to normal, feels pretty good, you know, by, say, early mid-20203. The alternative is we keep barreling along here. coming into the tarmac at too high rate of the speed.

The Fed has to really kind of get the plane down, but crashes it. You get, you know, the kind of boom-buzz cycle. Is that a pretty good, do you think that's a good way of characterizing kind of the, I'll look going forward? Yeah, I think's good.

Yeah, good. Mercia, you think that's a good way of characterizing things? Okay. Yeah. Okay. All right.

Okay. So we're going to make this a shorter podcast, just because we've got a lot of things going on, but then typical, but we're going to end it this way. What is the probability of scenario number one, kind of the same one, land the economic plane on the tarmac scenario, and what's the probability of the alternative scenario

of a kind of more boom-bust crash landing or very hard landing for the economic plane? Ryan, you want to go first? And, you know, obviously there's a lot of other scenarios. Oh, yeah. But I'm just kind of broadly characterizing the distribution of possible outcomes in those two buckets to simplify things, right? Unless you feel strongly, that's why I asked you if you are okay with that character

results. I'm good with them. You're good. Okay, okay. So what's the probability? Probably the first scenario, how everything goes right is 40% and then 60% that we crash land.

So you have a different baseline? Yeah, we're crash landing, according to you. Yeah, the economy is just barreling to work. I'm worried. I'm worried about 2023. Okay. This is interesting.

Hold on. I got to catch my breath here. Hold on. Shocking. Shocked. This is what I like about Ryan. He mixes things up a little bit. This is really...

Because Chris is going to go 50-50. No, no. You shouldn't have said that. That's rude. I call it the March rate hike, by the way. Two podcasts ago. Yeah. The March rate hike?

Oh, yeah, he did. I think he did. Right. He did very, yeah. Exactly. Anyway, what was I going to say? Oh, here's what I was going to ask. Okay, 60-40, we crash.

It means recession, recession-like, something like that. Right. What indicator or indicators would you be looking at to gauge whether we're going down the crash landing route or the alternative laying the plane on the tarmac route? Well, I think you mentioned two of them, wages, inflation, prime, e-pop. And then another thing that we have to watch very closely this year is inventories. You know, if that inventory bill gets too big, that sets us up for a big hangover in 2020. So you're going to get an inventory drag in 2020.

You're going to have the Fed pushing on the break. Financial market conditions are going to be tightening. I just, I think this is going to be a rocky, rocky lane. Yeah. Okay. I was going to say the yield curve. You don't. Oh, God.

More about that in the next podcast. listener. But it is the yield curve. Just to hint. Not the yel curve. The shape between the difference between long and short-term interest rate. I'm just saying, listener. It's never wrong. Okay. Marissa, what's the probability of a soft landing? What's the probability of a hard landing? I go the inverse of Ryan. So I think it's 60, soft, 40 hard. And where do you push back on Ryan? Why do you think he's wrong? I don't know. I mean, I just, I think that a lot of the, I do believe that a lot of the inflation that we're seeing is hangover from supply chain, pen up demand. I expect it to soften, you know, this year. We're going to have to look at that very closely. I mean, if it, if the Fed starts raising and we're still seeing inflation above 5%, then.

And then I think that scenario where there's a hard landing and they're fighting to keep up with that, then I think there's a very real possibility that that happens that they could crash the plane and we get a recession next year or early 2024. But I'm not ready to say it's over 50% yet. Don't forget the saying they say expansions don't die of old age. The Fed kills them. Right. Right. Yeah. I think the fed's in a really, really tricky situation.

I think it's going to have to navigate this very carefully, and it's going to be difficult to do. And we're going to find out how much of this inflation is persistent, right, once they start raising. And if they don't go fast enough, then they're going to be chasing it. And I just think the probability of that happening is rising. I think I would have given this like a 25% probability a month or two ago. Now I think it's probably around 40%. Chris, what do you say? These guys are bringing me.

I was going to go at two-thirds, one-third. I'm going to stick with that. Baseline. That will be able to. Sanguine. Yeah. Yeah, that's where I'm reasonably well. I'm at two-thirds, one-third.

I see the risks really from the outside more than anything. There's going to be some international. Geopolitical. Yeah, geopolitical. or some other economies, experiencing troubles, right, China, of that. Yeah, there's a lot out there. But otherwise, I think the Fed has a lot of, they've got a lot of levers still. Well, it is ironic, isn't it?

You know, we had a good day on the jobs numbers. I mean, you know, just, I mean, there's caveats and asteris, but bottom line, it was a pretty good jobs number. And it's saying, look, this economy is resilient. We've come a long way back, you know, we got nailed by this awful pandemic. make, but look, we've done a pretty good job getting our way back here, but we're ending on such a tower note that it, you know, might not work out. But I think it will. I do. I think we'll be able to navigate and land that plane. But, you know, a lot of podcasts between now and then, I presume.

So, well, thank you, listener, for listening into this podcast. Please go to economy.com. You want to hear your views on what we should be talking about. So please let us know. Ryan, what's your Twitter handle? At real time underscore econ. And how's it going? It's going. The thing's actually kind of fun. Yeah.

I'm having a little, I'm having fun with it. I was skeptical going into this, but yeah, I was wrong. That was my feeling as well. At Mark Zandi. And I'm,

I'm going to start retweeting you, Ryan. So, you know, please reciprocate. No, only if you want to. Okay. Chris, come on, Chris. No, no, no. Yeah.

Come on. What about Marissa? She'd be great. No? All right. Okay. I'm on Twitter, but I don't tweet anything. I just follow a bunch of people. Yeah. Very good. All right. Well, thanks. Sorry, guys, we got to hustle, but it was a very good conversation. I appreciate it. And look forward to the conversation next week. Take care, everyone.