Moody's Talks - Inside Economics - The State of the American Consumer

Episode Date: November 27, 2024

Moody’s Analytics own Scott Hoyt joins the Inside Economics team to discuss the state of the American consumer, as the critical Christmas buying season is set to begin. Consumers have been powering the broader economy, and the team expects that to continue.  But there are a number of consumer-related puzzles, which the team works to solve.Guest: Scott Hoyt, Senior Director of Economic Research, Moody's AnalyticsHosts: 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' @MarkZandi, Cris deRitis on LinkedIn, and Marisa DiNatale on LinkedIn Questions or Comments, please email us at [e-mail]. We would love to hear from you.  To stay informed and follow the insights of Moody's Analytics economists, visit Economic View. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Inside Economics. I'm Mark Sandy, the chief economist of Moody's Analytics, and I'm joined by a bevy of my colleagues, my two trusty co-host, Merceda Dean Italian, Chris Dorettes. Hi, guys. Hey, Mark. Mark, happy pre- Thanksgiving. Indeed. We're taping this a little early, aren't we? Yep. A lot early.

Right? It's Tuesday. Tuesday before Thanksgiving. So we're well in advance of when we typically tape. I think we're going to put this out tomorrow morning, too. before Black Friday, and that gets to the topic at hand. We're going to talk about the American consumer, and to help us with that, we've got Scott Hoyt. Hey, Scott. Hey, how are you doing, Mark? You know, that was pretty, pretty weak, I thought.

Go ahead. Do you try again? Whatever. Okay. I don't know. Mercer, what, did you think that was going to be here? Are you excited to be here or what? Of course I'm excited to be here.

Okay. All right. Well, let's pound the table. I'm excited to be here. Good to be with you, Mark. All right. All right. Very good.

Now I rubbed up. What are you guys doing for Thanksgiving? Are you in Florida, Marissa, visiting your mom or? No, no, no. I'm back. You're back. Okay. I have friends coming into town today and they're staying Friday.

Oh, very good. Yeah. Cook turkey or I think we had this discussion. Yeah, no, no, no, no, no, You called me weird for making shellfish stew instead of a turkey. I called you weird last week. You did promptly. But that's perfectly course.

It's nothing new. What did I call her weird? Yeah. Yeah. Or that she is weird. I mean. Wow. Wow.

Wow. I haven't been working Chris's mouth. God, this is what happens when you come on the podcast. I don't know why. Yes. Well, Scott, do you eat turkey on Thanksgiving? I mean? We usually do, yes. Yeah, who cooks? You or your...

My wife or in this case, actually, my daughter-in-law is going to be cooking the turkey. Very cool, very cool. Just roast it, you know, bake it. Yeah, nothing super fancy. No deep frying or... No, no, no. Although she spices it up really nicely. Well, that sounds good. Actually, I'm getting hungry already. Can't wait. Can't wait to my Persian food.

Yeah, so we have the Thanksgiving. Although my new son-in-law, who's a very good cook, is going to actually cook the turkey. And I think we're having that tomorrow the day before Thanksgiving. So I'm looking forward to that. Yeah, I'm looking forward to that. Yeah. Anyway, we thought this would be, you know, I thought this would be a good time to talk about the American consumer, you know, given we're getting into the teeth of the Christmas buying season.

And a lot of things to talk about there, but maybe we start with kind of an open-ended conversation around the state of the American consumer. What do you think, Scott? How would you characterize the state of the American consumer? I think in aggregate, it's very good. Consumer spending has been contributing powerfully to GDP growth. Consumers are spending, you know, fairly aggressively, but manageably, I think the overall state of consumers is good. I mean, clearly there are pockets of weakness as I'm sure we'll get

into. It's not 100% uniform, but in aggregate, I think it's very good. So, you know, there's a bit of a parlor game to kind of predict, forecast the increase or, I guess, decrease in bad times. of Christmas sales, nominal Christmas sales, you know, not stripping out inflation, but overall Christmas sales, that used to be a big deal, as I recall. Maybe it seems like it's gotten to be less of a deal. Is that just me? I'm not paying attention or is it less of a deal? I mean, it certainly gets discussed a fair bit. I mean, I think part of the problem is that nearly everybody who puts out a number measures it differently. So it's very difficult to compare and I think that makes it harder to track and follow.

I guess the other thing is that Christmas sales are a smaller share of overall sales during the year. I mean, it used to be, am I wrong about that? I think that's right, right? Maybe a little bit. I don't know that it's, I mean, it's still the make or break season for retailers for sure. Isn't this spread out more, though? I think it's like it starts in July.

Well, I mean, clearly retailers are trying to do that. I mean, that was the whole point of the, you know, when Amazon introduced Prime Day and stuff like that was to try and spread. And clearly, it's less centered on individual days. I mean, Black Friday is now a week or more. It's not a day. But that doesn't mean that holiday spending in aggregate isn't a big part of the year for consumers. I mean, December is their biggest month. In January is their smallest month.

I mean, that's certainly still true. still true okay so i'm sure you have a an estimate of forecast for christmas sales depending on how you measure it we're in the two and a half to three percent range okay meaning meaning two and a half if you measure one way three if you measure it the other way um yeah it depends on what you include i mean you're looking at overall retail or are you looking at specific you know quote unquote holiday segments right does that mean does that mean real retail sales after Christmas sales after inflation is zero because inflation's two and a half, right? Or retail good prices, they're flat to down or something? Yeah, goods prices right now

are flat to down. So no, we're talking nominal and real are very similar this year. Got it. From a retail perspective. So that's strong. Two and a half percent, three percent. nominal, two and a half to three percent real after inflation are the same thing, two and a half to three. That's solid. That's a good Christmas. Oh, absolutely. Okay. Well, again, you have to be careful of your perspective. I mean, there have been a lot of years recently where nominal sales growth has been higher than that as we've come out of the pandemic. So it depends a little bit on your perspective. From an economist's perspective, yes, I would definitely call it strong. From our retailers perspective who saw, you know, two or three years that were in the high single digits,

even double digits as we came out of the pandemic. It doesn't look that strong. Yeah, yeah, I guess. I mean, of course, sales fell during the pandemic. So, you know, you expect some catch up after, you know, came back. But two and a three percent, that feels like from, as you say, for an economist perspective, from a macroeconomic perspective, right down the strike zone, doesn't it? I mean, that's, that's solid growth. That means the economy will because consumers are so key to the broader economy that the economy will continue to move forward, but it's not so strong that it would raise fears that the economy is going to overheat inflation, remain persistent if they'd have to stop cutting rates, right?

So this kind of- Absolutely. I completely agree with that. Okay. Is there more upside or downside risk to that number? If you're wrong. Yeah, I don't know. I think it's fairly balanced in the near term.

I mean, I have negative risks, I think, further out. I think for the holiday season, it's fairly mixed because consumers still do have a lot of cash. They could do more, you know, or given their negative attitudes and stuff that we'll be talking about, you know, maybe they stay conservative. So I think the risks for the holiday season are fairly balanced. And if you're talking next year, I probably skew them to the downside, but not in the next couple of months. Well, what would be the biggest? downside threat to your kind of baseline outlook for the consumer, your kind of sanguine view for the consumer. What would upset that? Don't tell me jobs because I want reduced form. Give me

something meaty. Are you talking the next two months or are you talking for next year? You want to define it. However you want to define it. I mean, I think if you're looking out longer term, I think energy prices. That's always a big threat, I guess. Yeah. Yeah. I mean, we, to get a spike in energy prices. That hits, it hits spending power and it hits confidence. And that definitely can have a negative impact, particularly on real spending, maybe less so on nominal. But the thing about that is you would say that if I asked you that question a year ago, 10 years

ago, 30 years ago, you would give me that same answer, right? Mm-hmm. Okay. So like, I'm raising the bar here a little bit. So give me something that is more idiosyncrank. to the current period? Like, is something out there, and maybe there is nothing, but is there something out there that makes you a little uncomfortable,

disquiet? There's some disquiet there, you know, anything? I guess the availability of credit. Really? I mean, lending standards have been tightened, borrowing, pulled in. You know, the low end is suffering. And if they keep...

They keep pulling back. Maybe it spreads. I don't know. It's a hard. I'm struggling. I'm reaching for straws because I don't think, I think things are pretty good. And it is hard to come up with an answer to your question. Okay.

Let me ask it this way. You know, and I just follow this in a cursory way. I assume you follow it more carefully. But, you know, Target, the big retailer reported earnings and it was, they weren't good. And their stock price fell very sharply. And that's in the context of Walmart, I think, correct me if I'm wrong, reporting very strong earnings and sales. So these retailers seem to be going in different directions.

Is that signaling anything broadly about the consumer or is that just idiosyncratic to those two retailers? I honestly think that's mostly idiosyncratic. I think Walmart is doing a good job of appealing to a wide variety of customers. I mean, they were talking in their earnings release about how a lot of their growth is coming from higher-end customers. So I think they're managing to pull everybody in right now. Whereas Target, I think, is losing some of its cachet and having more trouble, you know, hitting the sweet spot with its target customers. Okay.

All right. Okay. So this feels like you're very sanguine, which makes it. me very nervous that you're so saying. But, yeah, yeah, Marissa, what about what about you? You heard his characterization about the consumer broadly. Any pushback there, or is that sounds like? So the juxtaposition between Walmart and Target, do you think, you don't think that that

represents consumers sort of trading down on price point? Or do you think there's any evidence of that? I actually got this question from a client the other day. that maybe, you know, we always say the consumers, they're out there, they're spending, they're not acting the way they're saying they feel about the economy, but is there any evidence that people are kind of trading down on quality and price point? And just to make this, because I don't follow this very carefully, but what you're saying is Target is kind of higher end, a little bit higher income than the typical Walmart customer.

So if the high end is under a little bit of pressure, maybe you're saying they're trading down, They're going to market. Yeah. Okay. Yeah. I mean, I think there's some of that going on, but I also think some of it is because consumers are still emphasizing service spending. What about the luxury segment?

Is there a weakness in that side of it? That seems to be doing pretty well. Okay. I mean, the high-end consumers are still doing well. The stock prices as high as they are, house prices as high as they are. So I think the very high end is doing well. I think there's some trading from the middle and middle high down, but I think some of that is to make room for service spending, both because service price inflation is still a big

issue and just because, you know, the trend is towards more service spending. So are you saying Target is more sensitive to the shift in the composition of spending towards services than Walmart is? Is that what you're suggesting? That the kind of the consumer that typically goes to Target is a little higher end and therefore more likely to be traveling because they're traveling, they're not spending. Is that what you're saying? Some of it.

As I said at the start, I think a lot of it, though, is just that Walmart's hitting what their customers are looking for better than Target is. I think a chunk of it is idiosyncratic. And I don't want to try and read too much into it. Okay. All right. Okay. Mercer, back to my question, anything on the consumer that's bugging you writ large?

I mean, do you feel like Scott does that, you know, the consumer is on pretty solid ground here, will continue to do their thing and keep the economy moving forward? Yeah. I mean, there's certainly evidence if you look across different lines of credit, delinquency rates are high, right, for credit cards, consumer finance, loans, I guess the good news there is they've stopped rising probably, like they've kind of flattened out, but delinquency rates on credit cards are higher than they've been since 2012, I think. This is from data that we get from Equifax, right? So there's clearly

some stress there. Some of that may be more recently originated lines of credit on cards. So cards that were opened during the pandemic or shortly after the pandemic, we know, are going bad faster than older vintages. And that's kind of an idiosyncrasy of the lending that happened during the pandemic. But clearly there's some pockets of stress, right? And it's likely at the low end where those consumers have been hit harder from inflation. And we don't see a lot of evidence of interest rates coming down, despite the Fed lowering rates by 75 basis points, right? We've been looking at mortgage rates. We've been looking

at the 10-year yields. These things are not much changed or maybe even a bit higher in the past month than they were prior to the Fed's last rate cut. So there's not a ton of relief on the interest rate front coming there for those consumers. So I think there's pockets of stress, but I would agree with Scott's overall take that, I mean, when you look at it in the aggregate, it looks pretty good. Right. I was, go ahead. No, no, go ahead. I was just going to say on the upside of things, I wonder if consumers feel, they're obviously feeling a little bit better as a result of the election, right? We now have two readings on confidence post-election. But I do do wonder, and we talked about this, I think on the last podcast, if any spending will be pulled forward in anticipation that

inflation might be higher, say next year, just given what we know about the incoming administration's plans to put significant tariffs on imports. So, you know, there's been some talk of should you buy big ticket items now? Should you make purchases on things like cars and appliances and that kind of stuff? So I wonder if that spending on that kind of stuff might be front-loaded. Are you doing that? Have you changed your behavior at all? in the anticipation of tariffs? No. No.

Chris, have you? No, but I've heard folks say, you know, they're planning to buy a refrigerator sometime next year, and they're going to do it now. You're going to push it forward. Yeah. I don't know that that's widespread, and I think it's only for someone

who already had that kind of plan in place, and they're just kind of moving it ahead a few months, but I don't know that it suddenly triggers a consumer to say, hey, I better do this now. Right. I had no intention to buy it Riverdrenner, but I'm going to do it now because I have because the price might go away. I think I think that's a lot more likely when there's something concrete. I mean, you know, what was it? Washers in the first Trump administration when they announced they were going to put tariffs and yeah, people moved. I think when it's just nebulous, there, you know, there may be higher tariffs and it may push up prices, but, you know, how much on what, when, are all unanswered questions. I don't think you're going to see a big. big shift until it becomes more concrete. Right, right.

Chris, what about you? I mean, in terms of the general story here about consumer, anything, I mean, are you on board with Scott's perspective? Yeah, if anything, in the short term, I'm actually more optimistic. I think we have seen that confidence jump up. I think this will be a good holiday season. Yeah. So I think consumers are.

going to go out there and spell, they'll go crazy because of the interest rate environment, as Mercer mentioned. But I think, if anything, they'll push things ahead here. Maybe, you know, maybe it's not, I think the tariff talk may actually condition their psychology a little bit. You know, maybe not the, maybe it doesn't cause them to get a refrigerator, but at least people are talking about it. So it might be something that they think about. So on the margin, you might see some of that spending hold for it. Right. Right.

Same question to you. Anything on the downside that is out there that, Mercia mentioned delinquency rates. Scott, Scott, what did you mention? What was your concern? I was concerned about delinquency rates as well. Yeah. Yeah. Anything, Chris, you can't say delinquency rates.

I can't say gas prices. Oh, that was what Scott said. Yeah. That's what I said. Yeah. It wasn't the liquid rates. It was sky as oil prices. A big spike in oil prices, certainly.

Same deal? Yeah, I think so. The other thing, of course, is just still the geopolitics, right? Right. Ukraine situation in China. So what do you think that does to spending? Well, if you did see it in the context of energy prices, you mean? That would be the most direct route.

But then even if things are, you know, heating up, let's say, I think you will see folks getting a little bit more concerned, perhaps being a little bit more conservative in their spending, right? You know, I don't think so. Marissa thinks the American consumer has a dollar in their pocket, they're going to spend it. I mean, unless it has direct implications on the supply chain, my availability to get something or prices, I'm not going to change my spending patterns because of what's going on in Ukraine.

Right. I'll have to say the thing that worries me the most about the consumer is high asset values. They feel like stock prices, lesser degree housing values, crypto prices, which you know all about Chris, gold prices. They're all really very high, going from richly valued to meaningfully overvalued, bordering on frothy in a rising interest rate environment. 10-year yields are up quite a bit, you know, over the last couple of months, it just feels like we could see a meaningful correction in asset prices that, and it's been the high-end consumer

powered by the so-called wealth effects that have really been critical to keeping spending moving forward here, which we're going to talk about in just a second. So in my mind, that stands out as a, you know, right now it's all nothing but a tailwind with prices, equity prices, housing values as high as they are, but it feels like, you know, that, that's a vulnerable, significant vulnerability here going forward. How much of a decline do you need to take people off their path, though, right? It's got to be significant. You know, I don't think, you know, like people, you would say a typical correction in the

stock market is 10%. I mean, that's nothing. The stock market was, the stock market's up, you know, but if it goes down 20 or 30, 30% and then it has to stay down. It can't be one of those things that goes down and then you get people coming in buying again and it goes right back up. I'm not saying that. It goes down 20%, 25, 30%.

That's a deal, I think. If it stays down for a while. So a real Black Friday. Yeah, exactly. A big, a big, I get, would that be a Black Friday or a Red Friday? Blood on the street kind of Friday. Yeah. Black Friday, right?

Black Friday? I think they, I think the same. word applies to both. Oh, does it? Retail and then in another context, it's a... It was a 1928 crash. I forgot. Is that a Black Friday?

Yeah, I think it was Black Friday. Yeah, you're right. I forgot about that. Very confusing. Yeah, very confusing. Yeah. Because in the research context, it's a good thing. It's a good thing.

It's a good thing. Right. Yeah, I never thought of it. What about? What about? What about? Well, we're kind of at the coming up on the time of year here, when people get bonuses paid to them often.

And does that have any bearing on consumer spending or the outlook and spending over the next few months? Well, I suppose if they're different than typical, I mean, if they're much smaller or much bigger, but why would that, why would you expect that to be different in the current context? I don't. Oh, you don't. Okay.

He's asking. If anyone has an opinion on that or there's been any chatter of, that. Now, I mean, at the employment cost index, that's the key, probably the best measure of wages for lots of different reasons that we've talked about in the past. That includes benefits and you don't get any, you know, bonuses and I don't get a sense that there's anything, feels like everything's on track there, you know, get the sense that things are coming off, coming off the rails.

No reason to expect that. And certainly with the stock market as high as it is, you'd think Wall Street bonuses would be pretty good. Right. Right. Right. Right. Okay. So we're all pretty much in agreement here. Christmas is going to be good. The fundamentals for the consumer are solid and everything, all the trend lines here going into next year look fine. No problem, right? Anyone disagree? No. Okay. All right. Well, there's a few things around the consumer that, you know, kind of bug me. You know, I'm trying to find the right word to describe it. anomalies, I don't think that's the right word, observations, you know, things that are just a little weird and, you know, just I want to throw them out there and for sake of

conversation and get people's sense of it. The first is around the saving rate. We've kind of talked about this in a more roundabout way. The personal saving rate in the U.S. is consumer saving rate is down from where it was pre-pandemic. Still, what is is, what is, it's got four or five percent something like that roughly speaking. It's over five.

Yeah, it's a little over five. And pre-pandemic it was seven-ish, seven. A little over six. Well, for the five-year average leading into the pandemic was a little over six. Okay. And so we've seen this kind of, it's not a big step down, but it's a step down in saving. And if you go, and I just got back from Europe, and they were hand-wringing about the saving rates rising, in Europe. And if you look across the globe, it does feel like consumers are kind of on their

back heels. I mean, take a look at the Chinese consumer, for example. You know, the saving rates are up. And you don't see that here in the U.S. They're at least an aggregate, at least an aggregate. So that feels like a bit of an anomaly, right? How would you explain? Did I characterize that, right, Scott? Yes. Yeah, I did. Okay. And how do you explain that? What's going on? I attribute it to wealth effects, the fact that house prices are up so much, that the stock markets up so much that, you know, consumers are spending some of that newfound wealth, and that shows up with the aggregate statistics as less savings. Right. But, you know, why not, I mean, stock markets, they're not up in the rest of the world. What, you know, why, why aren't we seeing wealth? Yeah, I guess I don't have as good an explanation for the U.S. versus the rest of the world. I tend to focus more on the U.S.

But I just see it as the consumers, they have the cash, especially at the high end, because they accumulated it during the pandemic. And so they can easily, without even having to sell anything, take advantage of the newfound wealth, and they're just doing that.

And in a measured way. I mean, it's not like the saving rates drop three or four points. It's just down, you know, a point or so. Right, right. And I guess you're basing this on our calculation of saving rates across different demographics, including income. And you can see that the saving rate for folks that are higher income has come down. And that's what's driving the overall saving rate to claim because actually the bulk of saving is done by people in the top part of the, very top part of the distribution. Yeah. High income folks are the dominant savers as well as being the

dominant spenders. They're more important for the aggregate statistics. Right. And I think you were referring to so-called excess saving, were you in that previous comment? Does the remember excess saving? I do. I don't like that term anymore, but you don't. Well, but you kind of refer to that to help explain why high in consumers are still spending and drawing down their saving rate. Right. Right. Why? Well, basically, they still have cash left over that they accumulated during the pandemic, the so called excess savings and in liquid forms. And so therefore, you know, they're sitting in their money market account and their checking account, liquid form.

Correct. So they see their stock portfolio go up. They're thinking, oh, maybe, you know, that means I should spend a little more. They don't even have to go and sell one of their assets to do it. They can just draw down that cash and makes it incredibly easy. to spend. And so they're doing it. Right. Okay. What's going on with the low income consumer then with regard to saving? Well, they appear to have burned through the extra cash that they accumulated during the pandemic. And so they're the ones that are, you know, taking on credit card

debt or trying to take on credit card debt and then having trouble paying it back. So they're, you know, their packet at zero or negative. Well, because I look at this data very carefully. So I was quizzing you when I knew the answer. The answer. Yeah. Well, what's going on is the saving rate for folks in the top, say, third of the distribution of income, really the top 10, 20%.

That saving rate is still very high compared to everyone else. But it has come down meaningfully over the last year or two. And that's powering the overall spending. Whereas the saving rate for the folks in the bottom part of the income distribution, that was very negative. If you go back two, three years ago, because that's when they were borrowing against their cards to supplement their income to maintain their purchasing power in the face of the high inflation. But they're not doing that now. In fact, the saving rate for those group has gone from big time negative to three years ago to close to zero. So they have actually become more cautious in their spending, you know, more circumspect than their spending.

Right. Right. Or basically they've just stopped spending accumulated cash because they don't have it anymore. I'm not following that. Well, at one point, they had they accumulated cash during the pandemic. Well, that was long gone. That was gone many, many moons ago, right? Oh, okay. Yeah.

Yeah. Yeah. Right. And so for, for a season, they tried to keep maintaining their standard of living despite the high inflation and by borrowing. and then after a while they couldn't do that anymore. And so saving comes back up to zero. Right. So, Chris, what do you think is going on here across the world?

I mean, why do you think, I mean, I think Scott kind of nailed it in terms of, you know, asset prices are high. And I think one big distinctions between the U.S. and other countries is stock ownership is just much more important here in the U.S. than, you know, maybe it's important in the U.K., but it's not important, certainly not in China, certainly not in the rest of the EU in other places. So you don't see the same kind of stock wealth effects that you see here in the U.S. So I think that's right.

But is there something else going on? Why would American consumers be much more willing to draw down saving compared to the consumers in the rest of the world? Yeah, I think it's wealth plus the economic growth in the U.S. and prospects for growth next year and they were after that relative to other parts of the world. You have to have that strong growth or expectation for continued growth in order to be willing to go ahead and do a little less saving, do a little more spending. And the U.S. is just exceptional, right?

GDP growth rate has been far surpassing what we see in Europe, other countries around the globe. So I think that's a big part of it as well. They have the capacity because of the wealth, and then they have the willingness to do it because of the confidence. You know, labor market may be a little bit weaker, but it's going to continue to power through. Growth looks pretty good. So you're saying people are nervous here, but they're, they're downright gloomy overseas.

And the precautionary savings, so-called precautionary savings is a lot higher. They feel like there's going to be more, it's more like, they feel like it's highly likely there's going to be a rainy day and they're going to need that saving and therefore they're saving. Whereas in the U.S., you know, no one says I feel great, but they're not feeling gloomy, and they're not saving for that rainy day. That's right. That's right. That makes sense to me. That's certainly the case in China, I think, for sure. You know, you can see that in the cinnamon surveys. I mean, but that's what I heard in Europe, too, same kind of deal. Yeah. Anything to add on this conversation around saving rates, this particular kind of development that we're focused on,

Marissa? Do you want to call out? Yeah, I think. I think labor market in the U.S. is stronger than it is, too. And I mean, you certainly, Europe and China are good examples, but I mean, even look at Canada. You know, the Canadian economy is weaker. Confidence seems shakier there. I mean, I just think the fundamentals of our economy here are better than almost anywhere else you look around the world. So that has to be, you know, a plus for, consumer spending here. Yep. Okay.

Good. Okay. That's anomaly. Do you guys have a better word for what I'm doing here? It's not really an anomaly. It's what? Observation. I don't know.

Point of interest. What is it? Point of interest. It's a point of interest. That's a good one. Yeah. Point of interest. Okay.

The second point of interest, which we also kind of danced around a bit, is around confidence. And this kind of dovetails back into the discussion. around saving rate, you know, sentiment, consumer sentiment is, at least by some measures, has been pretty dark. I mean, the University of Michigan survey, which has been around since the beginning of time, has been incredibly low, consistent with kind of recession-like conditions. You know, there's a kind of a clear consensus that the reason why former President

Trump won re-election is because of angst or. around the economy created by the previously high inflation than the higher prices people are paying for groceries and rent and gasoline and other staples. Yet consumers keep on spending, you know, two and a half to three percent Christmas sales growth, nominal real. I mean, what's the deal? It feels like that's an anomaly.

That's a point of interest, but that's also an anomaly, isn't it? Or, you know, how do you square that circle? Marcelle, start with you. How do you square that circle? Well, I can't, okay, we talked a lot about Michigan last podcast, right, on Friday because it had just come out and I used that as my statistic. And we think the responses to that survey are very partisan, depending on which political party you affiliate with.

They ask you what political party you affiliate with. So it kind of gets people in that partisan mind. that when they answer, and you certainly saw that, this enormous increase in confidence among Republicans in the first post-election survey. So, you know, is it just that? Or is there something more fundamental going on about the way people feel about the economy? I mean, I think that people don't like higher prices and like talking about it and it really bothers them. But, but at the end of the day, they're still paying them. And so these prices are still high because there hasn't been a revolt.

And I think maybe there are some circumstances where there has been. But, I mean, for the most part, people are complaining about it, but they're still paying it. And so companies are still going to charge what they can and get away with it until consumers actually pull back and stop spending. And that's why, you know, this previous conversation we had about the wall. Mart versus Target, you know, one of the hypotheses was where people are people stopping spending on higher price goods and trading down to lower price goods. And that was a question that I had and a question a client asked me a week ago. I didn't know the answer to it. But it sounds like you're saying, no, that there's not a ton of evidence out there that that's happening.

Is that, do I have that right, Scott? Yeah. I mean, I think I agree with what you're saying. I think I might put it in different terminology in that from to use an economist lingo, consumers don't understand the difference between nominal and real. I mean, they hate the fact that prices are up, whatever it is, 25% or something. In reality, their income is up 25%, so they can still spend and they still are spending and they're seeing that in their budget and doing it. but they're still horrified at the fact that prices are up 25%. Right.

So if you ask somebody how they're feeling about the economy, they're going to say terrible, but then they look at their budgets and they can still buy what they were buying for and a little bit more. And so they are. What you're saying is they can hold two things in their minds at the same time. One, I really hate having to pay a higher price for these groceries and for the this rent, but at the same time I've got income, I can spend and I'm going to spend it. You keep doing it.

Exactly. Yeah. Chris, does that resonate that explanation? It does. I blame social media. Social media. Yeah. That's a good point.

Right. Social media. Well, we're being. Right. Yeah. And we know the political fracturing has played a role, right? I mean, given what was that? You were telling us, Mercer, about the last podcast about.

University of Michigan, Republican, Democrat, Independent? Yeah. All of a sudden, the expectations for the future among Republicans shot up by, I forget, now I don't remember, oh, I haven't actually still written right in front of me by almost three points. Yeah, which is one of the biggest, if not the biggest increase we've seen in a post-election survey, as far back as I could look at the data. Right. Right. I guess the other thing, and you mentioned this, Marissa, but just to put a pin in it,

it's measurement, right? Because if I look at the conference board, we've been focused on the University of Michigan survey of consumer sentiment, but there's also another tried and true measure of confidence called to put up with the conference board that's been around forever. And that shows no kind of, it's kind of typical, right? It's right around where confidence has been on average historical. And we got a, I think we got a data point today, didn't we? Yeah. And it rose. And so now confidence is kind of the highest it's been in three years, but it's still not. It doesn't show the same. It's not bad wings. It's above average. It's above average. It's been in an okay place for quite a while, whereas Michigan, people have been saying, I feel worse about the economy than I felt in April of 2020 when we were. at the start of a pandemic, right? Which seemed just like a wild response.

But yeah, the conference board's been like chugging along. It's still below 2019, right? Yeah, I was going to say it's chugging along, but it's certainly not consistent with the way Mark, you, for example, have been describing this economy as one of the best ever or anything like that. Oh, that's true. It's okay with muddling through, you know,

very weak growth kind of economy. It's not consistent with, you know, with this, the economy's booming. Everything's great and wonderful, you know, the way, you know, Mark, for example, have been describing it. So, so, I mean, even there, I think the anomaly stands just to a lesser degree. Yeah. Okay. Anything else on this point of interest, this anomaly on confidence?

No. I think we've got to formulating a title for this podcast, I think. But go ahead. Go ahead, Scott. I was going to say the one thing I would point out, I think, is getting overlooked. I mean, we've been talking about confidence rising post-election. And clearly the conference board did. And Michigan is interesting.

A little bit, right? I mean, come on. A little bit. Yeah. But Michigan, it was up a little bit in November compared to October. Yeah. But the preliminary report had a bigger increase. And actually, the way the timing worked, the preliminary report was nearly entirely respondents pre the election.

And virtually all of the additional respondents were post-election. So the fact that it was revised down by, was it a little over a point, actually suggests that it fell a little bit post-election. Well, you know, guys, this is like we're really in the weeds now. I thought you guys like to go into the weeds at least occasionally. Pre-imposed revision. I mean, okay. Okay. What do you, what do you?

Why are you making that? Why are you bringing that up? Because I'm bringing that up because I'm not sure we can state as definitively as has been the confidence rose in aggregate post-election. Oh, okay. I mean, conference board was up a couple of points, but Michigan was revised down, you know, a point over a point. And so I think, and neither of the moves are probably statistically significant. So, you know, I would somewhat disagree with the point that confidence rose after the election. I think it rose a lot for Republicans fell for Democrats, but on net, it seems like it was pretty glad.

That is true. I mean, I think what I was talking about with this, this different. between political party affiliation. It wrote, regardless of revisions, right? Yeah. Oh, yeah. No, I'm not contradicting your point about parties. But you're right.

On balance on net, it didn't do much over the month because the two balanced each other out because confidence fell for Democrats, too. Right. Right. We all agree. We shouldn't be paying attention to this confidence measure. Unless you want to predict. Which one?

University of Michigan. Any of them? Just let's, you know. Thank you. No, no, well, I personally like the conference board when it moves in a big way. You know, if it's moving down in a big way, for me, that's a good, I hesitate to say foolproof, but a very good leading indicator of recession. Because if you see the conference board survey coming down five, 10, 15 points in a given month for two or three months,

that signals, at least from my perspective, consumers are running for the bunkers, they're going to stop spending recession is at hand, you know, within a few months. You're probably seeing UI claims rising during that time. Oh, true, true, true. Spending week, right? So I don't know that that's. Oh, no, no, no, there's more than that. It's more, you know, in my humble opinion, a recession is a, is a psychological event.

It's a loss of faith. So something has to trigger that loss of faith, and that's the UI claims. People are businesses, are starting a way off. But then it takes on a life of its own, and people go, oh, my God, this thing's going down the tubes. I'm going to stop spending because, you know, I'm not going to have a job or my, I'm not going to get that bonus or my wages are going to be, you know, I'm not getting a wage increase. And that's a recession. That's what you go from a tough economy to a recessionary one. And I use that conference board survey as a kind of a barometer of that loss of faith.

So, you know, I think in typical times, I totally agree with you. You can explain the ups and downs and consumer confidence with UI, inflation, gas prices, maybe the stock market. But in those times when things are going south, I think that's when it becomes more valuable. At least that's the way I view it. You're smiling, Chris. I agree with the construct. I agree with the whole construct. I just don't think we're measuring.

Well, that worked for me quite well in this recent. Or fuffle around in recessions. I mean, people were screaming recession a year or two ago. And one reason why it was more sanguine was because the conference board survey hung in there, right? Never broke South and never, never took a dive, right? So. All right. Well, I need one more data point to convince me.

To convince you. Probably probably a couple more data points, which will take two decades for that to happen, by the way. But anyway, I hope so. Yeah, I hope so. I hope so. I hope you're right. Let's do one more point of interest, anomaly, observation, and then we'll play the game, the stats game. Scott, did you come prepared to play the stats game? I did. Okay, very good. And this observation is around the composition of spending. And if you, let me just describe it for the listener. If you look at overall consumer spending, the growth in pre-pandemic. You just go back pre-pandemic, three, five years before the pandemic, take a look at the growth rates of that spending were, and extrapolate out what spending should be today. Spending today in aggregate across goods, services, the whole shoot matches is almost

precisely where you would expect it to be. It's very consistent with that pre-pandemic trend. Does that make sense the way I just described that? Nominal. No. No. Real. Real.

Real. Okay. Real. Yeah. It's higher nominal because of all the price increases. Yeah. Real. After inflation.

If I do the same thing for goods, spending on goods, you know, everything from food, clothing, furniture, electronics, and take a look at the pre-pandemic trend, extrapolate that out. The current level of spending is higher than it was pre-pandemic. And Chris is actually bringing up a chart to show the point. So for folks on YouTube, you can see this. For services, you know, it's everything from health care to financial services to travel. Again, you take the pre-pandemic trend in service spending, consumer spending on services, extrapolate that out.

The current level spending on services is not quite back to where it needs to be or should be compared to its pre-pandemic trend. So the question is, or the anomaly, the observation is, you know, what's going on? Why is this the case? How do you explain this? And I know, Scott, I asked you this question a couple months ago and you've done some work around this. I can't remember what you've figured out, but what did you figure out? I'm actually not convinced that it's that much of an anomaly because I think going into the pandemic, I think real service spending growth, not nominal, but real,

was a bit weaker than average, and real good spending growth was a bit stronger. And that if you, your chart basically assumes a two and a half percent trend for both components. I think if you take the separate pre-pandemic trends for each of the components, no, no, no, no, no.

I took the trend in good spending, good spending pre-pandemic? I didn't, yeah. And services. Yeah. No. Because when I did it, they came out about in line. About in line recently. Maybe it based the period over which you calculated the trend. Trend. Yeah, that's probably the difference. So I don't think there's a huge. There's no anomaly. There's no problem. I don't think, yeah, I don't think there's a big point of interest here. In fact, to me, the point of interest is that we are basically back to where we were before. that, you know, and therefore we don't need, there's no more sort of returning to normal from the pandemic that we're basically done with that at this point.

We've normalized. We've normalized. Yes. Oh, okay. Okay. Okay. Were there, I know you broke this, did this calculation by different components of good spending and service spending.

Anything that stands out there, is anything higher than it was pre-pent, based on pre-pandemnemic trend or lower than it was due to compared to pre-pandemic trend? Anything that stands out? Let me just take a quick look. That's okay. I mean, if nothing, you don't remember, probably not that big a deal. Yeah, I mean, one thing I did notice was that real medical spending, spending on medical goods is high. Oh, really?

Yeah. Isn't that pharmaceuticals and like medical equipment and that kind of thing? Yeah, pharmaceuticals, durable medical equipment, that type of stuff. Oh, that's probably Ozempic. I mean, I'm half joking. Yeah, no, that's interesting. That could be if I hadn't thought about that, but yeah, that could be a piece of it. Yeah.

Yeah. Yeah, actually, we should do a podcast in Ozempic, you know, one of these. Because that's a big deal. That's a really big deal. And transportation related, particularly transportation service spending. Is lower than it was. It's lower. Right.

What is that? Is that like people aren't taking cabs or, you know, what is that? Well, in commuting. I mean. Oh, commuting. Commuting. Of course. We're all, we're all home.

We're not in the office. Yeah, yeah. No, that makes perfect sense. That makes perfect. So remote work. Yep. Playing a role. Exactly.

So. Yeah. Yeah. And accommodations as well. I mean, it's still. Yeah. Okay. Which I think is probably much more, I mean, in theory,

it should be measuring leisure spending more than business spending, but I'm sure they have trouble separating them. So I'll bet it's as much business travel as leisure travel if it's getting picked up. Okay. Well, I've got a couple more points of interest, anomalies, things to consider. I still don't think I've got the right word for it. Gripes. Gripes, you know, things that are bugging me around the consumer. But I'll bring them up after we play the game. Let's play the game. the stats game we each put forward a stat the rest of the group tries to figure it out with questions, clues, deductive reasoning,

the best stat, this one that's not so easy we never get it, one that's not so hard that we, what, no, one that's so easy that we get it immediately, one that's done. I've said this so many times, how can I screw this up? That's not so hard that we never get it, and if it's apropos to the topic at hand,

all the better. Marissa, tradition has it, that you go first, so you're up. Okay, there's two statistics, 4.9% and inflation expectations. Yes. Jeez, Louise. How rude is that? Sorry, sorry.

He really wanted to win this. I did. Is this from the University of Michigan? So it's the Conference Board and the University of Michigan. Oh, the Conference Board expectations for inflation for 12 months ahead. is 4.9% and the Michigan, 12 months ahead, inflation expectations is 2.6%. And there's always this very large gap between the two that I don't quite understand. So I bring it up kind of as an anomaly of why are inflation expectations in the two surveys

so different? And they've always been. There's always this big gap. between the two. You know, I didn't even, you know, this might be surprising, but I didn't even know that conference board asked a question around. They ask a lot of sort of interesting questions that don't get a ton of coverage. They also ask people like what their expectation, what their odds of a recession are in the next year. Wow. That's new.

They've only been doing that the last couple of years. Yeah, but it's at an all-time low. Stald and all time low. All time low. Wow. And all time, yes, as Scott said. Since 2020. Oh, okay. Okay. But, you know, it sounds better when you say all time low. That's why I said it that way. But economists do. They characterize things to their advantage. So how long has the question around inflation expectations been around a long time? Yes. It has. It's always been meaningfully higher than, And the University of Michigan obviously makes more sense.

I mean, because inflation is about in the mid-toos, you know, depending on how you measure it. I don't know. That's bizarre. That's really weird. Chris, you have any exactly? Or Scott? I was going to say, I assume it has to do with the way they ask the questions, and I haven't researched it. So I don't know.

That always matters a lot. Yeah. Yeah. The wording of the question and what questions come before and after it can, can influence things a lot. So that would be my, I'm not answering it, but I'm suggesting probably where to look for, or a good place to look for the answer. Should we chat GPT it? I did. I did. Chat GPT didn't know. The answer and I didn't. But I think Scott's point is probably correct, that it is probably the way

in which they're asking the question, even though the two statistics are reported to be the same, you know, what are your inflation expectations over the next 12 months? It might vary depending on how they ask. Like, for example, if maybe perhaps in one survey, they tell you what inflation has been. You know, like inflation has been. Oh, right. Yeah, like 2.8%. What do you think it'll be the next 12 months? And maybe they don't do that in another survey. And so people have no idea. So they're picking a wild number. I don't know. I don't know if that's the case, but yeah, we should find what the survey questions are. Another reason not to rely on these surveys, right? Yeah. Good point. But both are 12 months ahead surveys? Yes. Yeah, they ask about inflation of 12 months, yep. Right. Okay. Oh, interesting.

Okay. Scott, you want to go next? Yes. I'm trying to decide what to do here because Marissa stole half of my statistic. But the inflation expectations? You had the same one? I had the same one, although I was going to do it differently. I had I had two numbers. I had her 26, but then I also had 3.2. Oh, what's the three?

Was that three, two, three years ahead or something? Yeah, that's because the Michigan asks one year ahead and they ask five years ahead. Oh, five years ahead, right. And what's interesting, what I found interesting about that is that the, um, the, um, um, the, um, um, One year ahead, the 2.6, is the lowest in nearly four years. But the five year ahead jumped up to 3.2, which is the highest in over a year, and I think in exactly the year. I think to Chris's point, I think this is a bunch of noise.

Well, actually, I think it, but I think it may play into the tariff argument, that consumers are seeing tariffs down the road, but they're not worried about it in the short term. Oh, really? I don't know. You're really in the weed, Scott, man. I'm just telling you. You got to get out of the, you got to stop smoking that weed, you know? Okay. Well, anyway, since she stole my primary statistic, I'll go, I'll go to my backup. You didn't think that was funny, Scott? I thought that was great. You know, I'm like, you know, everyone's, you didn't think that was funny. I thought that was so good the way I did that, no? All right. Absolutely. I just thought you guys like to be in the weeds.

Oh, you don't smoke weed. You do the gummies. That's what's going on. Oh, now he laughs. Okay, now he laughs. Not Scott. No, that's got. Definitely not.

Just joking. Of course. Okay. One more. Oh, did you have another stat? I do. I do. I do.

I do. I'm my back up. Sorry. Okay. 3.9%. A stat that came out this week? A little over a week ago. I had to reach a little bit for my backup.

Inflation related? No, consumer-related. Consumer-related. Retail sales related? Yes. Probably retail sales. That's not your control retail sales. It's core.

Core retail sales. Okay. Core. Yep. year over year. Core being auto, X gas? Correct. Okay. Okay. It's 3.9% year over year through the month of October.

Yes? No? Yep. Why are you delaying? Oh, actually, I misread it on the chart. It's 3.8. Oh, oh. That makes a whole lot. Come on. I know. A whole difference in the world. I still get it for getting it right. Oh, yeah. You still get credit.

But my point was where we started out that with no inflation, we're talking about something close to 4% in real core retail sales growth. That's a lot. That's good. Through October. Yeah. And that just testifies to the strength of consumer spending that we're seeing right now. And that it's in goods. It's not just in services.

Well, there's a so-called concept of control retail sales, which exclude spending in building, spending in building. materials, right? Because that goes into, that controls what goes into consumer spending in the GDP report. So when trying to calculate consumer spending for GDP, what do you know what that is by any chance? I don't have that in my fingertips. They don't have that in the release. And I was just pulling this from the release. Okay, no worries. Okay. All right. Well, let's do one more. Chris, what's your stat? All right. This one is about me, because it's always about me. $3.12. It's not gas prices? The cost of a gallon of regular unleaded? I don't.

Pretty sure it's three bucks, 12 cents. I think it's under three now, right? Is it under three? I haven't looked recently. Is it under three? I saw under three recently. I don't know if that's the average. Well, that's not like a cup of your weird coffee, is it?

Oh, I'm going to give it to you. That's your kombucha tea. No, no, it's the price of what? Go ahead. It's the price of coffee. Oh, well, $3.12. $0.12 a pound.

Oh, okay. I think I was close. That's close enough. It's a record high going back to the 70s. It's up 75% over the last year. Weather related? Weather related in Brazil, there's drought. In Costa Rica, there's blood.

Oh, boy. But I'm a big coffee consumer, so this is personal. Yeah, well, just cash in one Bitcoin, you'll be fine. I'm not worried about you. It's not worried at all. Isn't a Bitcoin like $100,000? dollars or something now got close and then it backed off oh so you feel poor now now he feels poor less than 100 k on that bitcoin yeah that's a good one good good okay well i've got a couple

other points of interest anomalies uh maybe we'll do those and we'll call it a podcast does that sound like a good idea what's that you don't have that i think we you know i think we should move on Yeah. It's not very good. Yeah. Yeah. I had one, but it's not that good. And, you know, I think we got our, I got my fill of the game.

Yeah. All right. So let's move forward. Here's the other, here's another point of interest anomaly. The retail space market. So, you know, this move to online spending has crushed the demand. or at least it had crushed the demand for space, retail space, particularly malls. And that appears to be over.

If you look at the price for retail space dollars per square foot, which we calculate based on actual transaction volume, it's held up really well, you know, in the last couple years. I mean, if you look at like prices for multifamily, that's down from the peak two years ago, a little over two years ago, now down to what, correct me if I'm wrong, Chris, but like 20, 25%. For office, it's down like 15, 20%, but for retail, it's basically flat, you know, over the last couple, three years. So, you know, that seems, just feels a little weird in the context of continued move to online retailing. So what do you think's going on? on there. Chris, what do you have a view on that? Yeah, I think you got a couple things going on. One is

just the lack of building or supply. So we haven't really built a lot of retail over this time period. So, you know, that's certainly a factor. And then demand, I think that there has been a resurgence in demand for in-person retail experiences. So I think that's, you know, part of it. You can also talk about some of the repurposing of the retail that's going to on some of these multi-purpose facilities. So you have kind of mixed-use properties cropping up between apartments with retail underneath. And those are certainly popular these days. So I think you have a number of things here.

And yeah, I think that's the reason why we keep seeing this market. Pretty just demand and supply. It always boils down the demand and supply. Pretty much. Pretty much. Yeah. Anything that there, Scott? No, I think I agree with Chris said with what Chris.

said, I mean, I think on the demand side, if you look at the Census Bureau's estimates of online retail, it's come back in from its pandemic peak, that's probably no surprise. But if you do the same thing that we were looking at with real spending and you look at the pre-pandemic trend and where it is now, it's above that, but it's actually, to me, surprisingly little above that. The gap is not that wide. So we really, you know, we had a bit of a level shift towards online spending as a result of the pandemic. But it really wasn't as big as at least I expected it to be. Based on the number of packages they're showing up at my door, that just doesn't resonate with me. You know, I tend to feel the same way. But if you look at the statistics, that's what I'm seeing. Okay. All right.

Okay, finally, last kind of thing that's bugging me observation, a little bit more forward-looking tariffs. How big a deal is this? You know, obviously it depends to significant degree on the tariffs, you know, how big, whom, what products, so forth and so on. But what do you think? Should we buckle in? Is this a real, is this going to be, is this going to derail the consumer, Marissa, or not?

I really don't. You don't think so? No. I don't. It's just, it's so unclear what the breadth and magnitude of these are going to be. We keep hearing numbers, right? But I don't think that that, I'm not putting a lot of stake in what we're hearing, because I think a lot of that might be just sort of negotiating tactics. And who knows what the final impact will be and on what kinds of goods. I mean, I think the fear is that it'll be much more targeted toward consumer goods, perhaps non-durable consumer goods than it was in the last

round where there was a lot of tariffs on durable goods and on intermediate, like, building materials and that sort of thing. And if it is more targeted toward end-use consumer goods, then that could have real implications for consumer spending. But I just, I have very little confidence in predicting what it's going to look like at this point. Right, right. Chris, Scott, Anything on that? Yeah, I feel the same way. I don't really know what to expect. I mean, I think there's a real risk because I think if we do get tariffs that move

the needle on prices materially, consumers have clearly demonstrated that they're sensitive to prices. And so it's going to have an effect, you know, not just on budgets, but on confidence. but whether that's going to be how things shake out at the end of the day, I'm highly uncertain. Chris? I think it's a deal particularly given the channel of the housing market, right? If building material costs go up at the same time that we have higher wages for construction workers, higher interest rates hanging around, I think we could see a sharp reduction in

housing starts. And we know that's a big driver of retail overall, right? Every house we build rates a lot of economic activity. So that would be one channel certainly I'd be worried about if those building material costs really go up significantly as a result of tariffs. Although, Chris, I don't know that it affects aggregate spending as much as it affects the composition of spending. I mean, do you really think consumers, if they're not relocating and fixing up, their new home that they're not going to take an extra vacation or spiff up the home they've got or buy something else. And I guess I'm not convinced. I definitely see the compositional effect,

but I'm less convinced of the effect on aggregate spending. Yeah, I think housing has a, I do think that there will be a pullback. I don't know that. I think if someone sees the price going up, they're going to say, okay, I got to save more now for the down payment or I have to delay that. I don't know that they're going to say, okay, forget the housing dream. I'm going to go travel, possibly, but I see it as having potentially a bigger impact. I'll tell you what. There's absolutely no upside to this. There's nothing but downside. I mean, you're right. How do we gauge the downside? Because we can't gauge what these tariffs are going to be, how much it's just bluster and how much is actually going to be implemented. But I don't see, this, this is all different shades of gray.

I mean, through lots, the obvious, it's a tax increase through higher prices. It's going to raise interest rates. Rates are already up based on the tariffs and some of the other policies that are likely to ensue here in the next six to 12 months. The confidence effects, you know, I think they're because of the uncertainty and the confidence effects, I think they could be quite significant. And then back to my original worry about the equity market. The equity market feels really like it's discounting nothing but good news, and tariffs are all to the downside. It just doesn't talk about something that's incongruous. It just feels increasingly incongruous to me.

So I don't know. I think these tariffs could turn out to do more damage than we think. Certainly, again, there's no upside here. It's nothing but downside. Anyone disagree with that? No, it sounds like you're thinking markets are assuming there's going to be a deal. Yeah, this is no big deal. They're assuming no big deal. And I don't know. That doesn't feel right to me. That doesn't feel right to me. Okay. I think we covered a lot of ground. Thanks, Scott. I appreciate that. I hope you enjoyed the conversation. So, hi, Scott. Very, very much so. Great. Happy to think. There you. There you go. Very good. Excellent. And looking forward to being back. And thank you. Thank you. We really enjoyed having you on. And I think the listeners should get a lot out of that. And anything else, guys, before we call it quits and happy Thanksgiving and all that stuff.

Happy Thanksgiving to all the travelers out there listening to our podcast. Yeah. Absolutely. If you get stuck in an airport, you know, you know exactly what to do inside economics. Yeah. There you go. Or you can, I'm on blue sky now, guys. I, you know, I'm on Twitter or X and now I'm on blue sky. You can see me, Mark.zandi, I don't know what the handle is, but it, you know, Mark. Dot Zandi will get there, I think. But anyway, with that, we're going to call it a podcast. Dear listener, thank you for tuning in and we'll talk to you next week. Take care.