Moody's Talks - Inside Economics - Ukrainian Conflict and U.S. Confidence

Episode Date: February 18, 2022

John Leer, Chief Economist of Morning Consult, joins Mark, Cris, and Ryan to discuss consumers perception of the geopolitical tensions in Eastern Europe and also the state of U.S. consumer sentiment. Cris sneaks his statistic in at the last minute.Recommended Read: Morning Consult - Economic Outlook 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've got an action-packed podcast for you. I'm joined my two co-hosts and colleagues, Ryan Sweet. Ryan, good to see you. Good to see you, Mark. How are you? Good.

You sound good. And, of course, Ryan is the director of real-time economics. And then we've got the deputy chief economist, Chris Deerees. Hey, Chris, how are you? Doing well. Good. Are you doing Mark? I see.

Yep. Good. I'm alone here, but are you all alone, really? No one's there? No, maybe there's one other person, but we'll see. We're getting a lot of work done, I assume. Yep. Good.

It's the way it should be. And John Lear, John, welcome. Hi, Mark. Yeah, great to be here. John is the, you're the chief economist. Chief economist and morning console. Morning console. Yeah, it's fantastic.

We're very excited to have you. We gotten to know each other during the pandemic. we did some work together, survey-based work back in the beginning of the pandemic. Yep. Yeah, I was looking through that recently, actually. That holds up pretty well. Does it? I can't remember.

What did we say? Well, we highlighted a lot of the really dramatic income differences that the pandemic was disproportionately affecting low-income people, that women and women parents in particular were disproportionately affected. They were dropping out of the labor force at higher rates. And then we, I think the surprising result was how robust entrepreneurism remained in the face of rising cases that, you know, we saw a lot of people still wanting to start businesses and a lot of that has borne out over the last year.

And as I recall, we were surprised by that when we saw a survey. Correct. Actually, I was in question, is that something wrong with their survey? But no, you're right. That's right. That came out in the survey results. But it's wonderful to have you. Great to have you.

Maybe you could take a minute and just give the listener a sense of morning consult because that might be new to folks. Sure. And I'd love to hear your path to how did you become chief economist of morning consult? How did that happen? Yeah, sure. So I'll start with morning consult. Morning consult is a global data intelligence company. So every day we're conducting 35,000 interviews across, I think we're in 45 countries now every day.

and the surveys cover a range of topics. So I focus on our economic surveys, confidence, employment, personal finances, inflation. But then a lot of our business focuses on brand intelligence. So what do consumers think about different brands, different issues, and how is that likely to impact their spending activities? So it's a really exciting company because we're sort of pairing this real-time data analysis. Sorry, I should say we're pairing this real-time data with sort of cutting-edge engineering. analysis. So bringing on a team of machine learning experts and econometricians and artificial intelligence to try to pair the two together. Great. And you guys, are you, you're a privately

held company? I can't remember. Did you go public or something? We are a privately held company. We raised our series B last year at a billion dollar valuation. So that was really exciting. And we continue to grow. We started the pandemic with 120 employees and we just passed 500 recently. So it's been this sort of crazy, crazy growth, and there's a lot of room to expand. So folks are interested. We still have a lot of job openings. Yeah. Well, you know what?

I remember John called me when the series B was going out because he knew he was going to be expanding and basically he said, I need to hire people. And I said to him, John, don't hire my people. That's right. I remember that. I remember that, John. I'll help you out here, but buddy, but don't hire my people. Thank you, John. You've been very gracious in that regard.

But it's great. No, it's been great. Yeah, we hired, we just recently hired Scott Brave, who was at the Chicago Fed for a long time doing now. He does a lot of now casting work, real-time now-casting. And then we brought on Lori Helwink from point 72 to do a lot of our sort of Wall Street analysis and financial service analysis. Oh, point 72. That's the hedge fund Cohen, Steve Cohen, right? Yeah, right. Interesting. Yeah, I visited them once. And it was, I call, tell you, it was high intensity. Yes. Yes. Yes. High intensity. Yeah, interesting place. Oh, that's fantastic. And so how did you find your way to to a morning consult? Yeah, I think there is somewhat circuitous route, as is the case with a lot of people when they find a startup. So I was before working on morning consult, I was living in Germany. I lived in Berlin for four years and I studied economics there. I was getting my master's. It's kind of on the fence about coming back to the U.S. I previously worked for a company called

Promitory, doing a lot of credit risk analysis. Great company. Yeah, it's a great company, 2009, 2010. Banks were failing. It's not that long ago when, you know, we had all those troubles in the financial services sector. And I was thinking about it is now a good time to come back to the U.S. And I happen to know the CEO of Morning Consult. And he reached out and said, we've got some data. We've been running the exact same five questions as the University of Michigan, except for instead of doing it 600 per month, we're doing $6,000 a day across, I think at that time it's 15 countries. what do you think? Is there something here? Is there there there basically? And so I said, okay, this seems like a good enough reason for me to pack my bags and come back over to the U.S. And I'll spend a few months diving in and figuring out what the data looks like. And so I started, I think somewhat skeptically thinking, well, I don't know what, you know, this is a, at the time, the company really wasn't doing a lot of economic research. So it was, for me, it was sort of a change of

pace, change of tone. And the data that I saw just helped us predict a couple really important events, particularly in the late 2018 and 19. I don't know if we remember, but the Fed sort of had this start and stop approach where they totally changed gears. And I think there was an instance where they had seen maybe some of that data right before their meeting, you know, maybe they would have seen things a little differently. And so it's like, okay, this could be really valuable. And I think that high frequency cross-country macro data is going to be more valuable over time. And I think probably some of this volatility that we see now with the pandemic. I think that that's probably more a feature than it has been historically. And so I thought,

yeah, let me attach myself to this rising star. Cool. And how long, when was that? How long ago was I started, so I did this sort of initial data analysis work in the summer of 2019 and I joined full time in the fall of 2018. So not that long ago. That's great. Not that long ago. That's right. Yeah. Yeah. The thing I find that kind of attracted me quickly, the morning. consult was the fact that you take the University of Michigan survey that did that does it twice a month, I believe 500 respondents, you know, people than I. And you do it every single day and you have 5,000 respondents. And I go, and then you can break down the results into all kinds of demographics. Yeah, so we dive in deep income geography generation and there are certain points, political affiliation.

there are points in time where different demographics matter more than others, and you just have to have the large sample sizes and that demographic depth to be able to do that work. One of the things that's been really exciting for us is just, you know, starting to use the features of the high-frequency data to start doing more and more forecasting and now casting. Now, it's great to have you. Well, here's the game plan, John.

So I want to talk about Russia, Ukraine, because that's top of mind. And I know you guys, we just saw, Chris, you passed around a survey, that your survey of different attitudes towards, I think, Russia across the world. And I'd like to dive into that a little bit. And then we're going to play our statistics game. And I'll describe that when we get to it. Always a lot of fun. I'm usually the winner of this game, John.

You should know. And there's a special cowbell for me, Mark. But we'll play that game. And then I do want to dive into more of your survey. work, you know, obviously consumer sentiment is very dour. Yes. At least by the University of Michigan survey, it's very dower. And I assume you're showing the same results.

But I want to talk about that and why and what's going on and what does mean? And there's, I know you're doing lots of other surveys and we can dive into that. I think we could talk for three days, but we'll keep it to an hour, hour, or hour, 15 minutes, something like that. So, so with that, let's talk about Russia, Ukraine. And, you know, maybe I'll turn to Chris first. Chris, what is your sense of this? You know, we're doing economic forecasting.

We have to make assumptions around events like this and what it means. What should be in our baseline scenario? By the way, we had a podcast a couple days ago with Garab Ganguly, the guy who runs our operations in Europe around this issue. I thought it was very informative. But Chris, do you want to just give people a sense of, you know, how we're thinking about things and how this might play out and what it might mean for the economy, we can then turn to John's survey results?

Sure. So I guess first and foremost, the situation continues to evolve, right? So our views continue all those as well. But from a baseline view, I believe I'd sum up the view as status quo, that there will continue to be this tension, certainly between Russia, Ukraine, Europe, and the rest of the world, around the status of Ukraine. The troop buildups and movements will continue for a while. But we fall short of an actual full-scale invasion by Russia of Ukraine as a whole.

A good chance that they do take over the eastern part of the country, the Dumbos regions, which are already under their influence to a large degree, but unlikely that they would go much beyond that. That's at least our baseline working assumption. So there is an invasion or encourage you, and pick your word. Conflict, yes. But it's limited to the eastern provinces where the Russian-speaking population is large, and they do not go all the way to Kiev, the capital of Ukraine.

Correct, at least in terms of military force, right? There will continue to be provocations. Russia is very likely to continue to insert itself in Ukrainian politics, winning the information campaign, if you will. But in terms of a military effort, our baseline suggests that they will not go beyond that region. And in the baseline, what's the macro impact of that on the Russian economy, on the European economy, our U.S. economy? So then we get into the question of the European response, or what?

response. Do we expect sanctions if this does occur. The only way there would be no sanctions or a retreat of sanctions at this point would be some type of peace agreement or if Russian troops back off entirely. So there will be some response. But under this scenario, it's likely to be somewhat targeted, certain individuals, certain banks perhaps, certain parts of the financial system, but nothing full-scale in terms of a strong response unless there was a full-scale incursion. So we expect the Russian will continue to be, the Russian banks, for example, will continue to be members of the SWIFT network. They will continue to be able to conduct financial transactions across borders. there, but certain individuals are likely to be sanctioned, much as was done after the Crimean

conflict. The price of oil, price of gas is likely to remain quite volatile, elevated, especially if there is this initial incursion, as I have to describe, there's undoubtedly oil and gas prices will rise. If it stops, though, again, if Russia doesn't go beyond that region, then it's likely that we will see things stabilize and calm over time, but unlikely that oil prices would retreat to levels that we had prior to the last couple of months, unless we have other supplies coming online.

So there might be supply responses from the U.S., Middle East that could increase and lower the price of oil, but in terms of the conflict itself, the impact on prices is likely to remain high. We expect that the Nord Stream 2 project will continue to move forward. Very important, of course, for European nations. It's a pipeline from Russia to Europe that is... Correct. I think it's been built.

It just hasn't been actually opened yet. Turned out, yeah. Turned on. So, again, because of the importance to Europe and how vulnerable Europe is from an energy standpoint, They really can't afford not to import that gas. So that's likely to move ahead. And as I said, in terms of financial markets, there's likely to be this risk premium. The Russian economy will continue to remain under stress.

But over time, that impact should be lessened. So it sounds pretty modest. I mean, obviously on Europe, it'll be more of a deal because of the higher natural gas prices. and one third of their natural gas comes from Russia. But for the U.S., the rest of the global economy, kind of not a big, not that big a deal in this scenario. Correct. In this very specific case line scenario, we could certainly paint a darker picture.

And we have. Yeah. My sense is that, and I'm curious, Ryan, what you think of this, that the conflict is already embedded in oil price to some degree. To some degree, yes. Yeah, we're sitting at $90 a barrel, let's say on WTI, West Texas Intermediate. If this had not had happened, and the timing also matters because there was inventories of oil already very low because of the demand supply dynamics and the energy, the oil market.

So we have no inventory. Then you get an event like this. It amplifies the price effects. My guess is about $10 a barrel. We'd be closer to 80 maybe if we had not seen this. And translate that, Ryan, does that sound right about right? to you. Can you translate that into, you know, what it means for gasoline prices and what it means for, you know, how much Americans are paying at the gas pump? I mean, I know you, I've got some

heuristics in my mind. You have heuristics rules of thumb that can help you with that answer that question. You want me to take a crack at that? Or do you have a view on that? Have you thought about that? Yeah, I mean, the thing that I pay really close attention to is wholesale gasoline prices. They lead prices that you and I pay at the pump by two weeks. And they point towards, you know, higher gasoline prices over the next, you know, a couple of weeks. So I don't have, I mean, do you have a, what's your rule of thumb? Well, for every 10 bucks, it's about 30 cents a gallon of gasoline, sustained. Sounds about right.

Yeah. And then 30, every penny is about rounding, you know, 1.5 billion in additional consumer spending over a year. So you do the arithmetic. Reduction. Reduction. Oh, yeah. Reduction in consumer spending. So that gets you to no more than 50 billion.

50 billion is, you know, 20. 0.2% 0.25 percentage points of GDP, a quarter point of GDP. How about that for... I'll throw some stuff on top of that. So the impact might be muted by the $2.6 trillion

that we have in excess savings. True. Which is the additional savings that, you know, occurred, you know, if we had kept pre-pandemic saving trends. And then also, oil could be a net positive for other parts of the economy.

So you're going to see mining in, or investment in, mining shafts and wells, which is about 10% of non-residential structures investment, that's going to pop. So you could see, you know, that part offset the drag from consumer spending. So the bottom line here is that under the scenario where Russia invades and stops in the eastern provinces, that this is no big deal in the grand scheme of things. I mean, it's not helpful, obviously.

Inflation is already high. We're just adding to it. But it's not like a game-changing event in any respect. No, I think one thing that you, Chris and I would probably have to sit down. If this thing does escalate, we get a supply shock for oil. Typically, the Fed eases into supply shocks. This time around, they won't. So that could magnify the impact on financial market conditions and then spill over into the economy.

So, you would ask earlier, Mark, about whether or not financial markets had baked in sort of this risk premium. And I can tell you that consumers definitely are baking it in already. So we're starting to see pretty dramatic changes from November through January with a growing share of Germans, Italians, saying that they expect prices to continue to rise, that they think that they're going to have a hard time meeting their energy and utility bills. And as it so happens, those are also the countries that are more dependent on Russian gas than, let's say, France, which has gone a different direction and maintained a lot of this nuclear energy. So I think, you know, one of the things is it just exposes how volatile the energy situation in Europe, even prior to this escalation. Oh, that's interesting. So in your surveys across the world, you're seeing in those places that are more dependent on Russian oil gas, that people know this and that their expectation is that I'm going to be paying a lot more than compared to a place like the United States or you mentioned France where they're not quite as reliant. Right. Yeah, even like, I mean, you could use that as a simple test, you know, compared Germany and France as some sort of a shock and see how two different countries respond differently to the shock.

Yeah. You know something that we should do? We should look at the share of consumer spending that goes towards natural gas gasoline in European countries versus, you know, in the U.S. because in the U.S., it's about 1%. We spend 1% of our spending on gasoline, roughly the same for natural gas. So it's really, really low. Oh, is that right? I thought it was a bigger share of the pie than that. It's dropped a lot. You know, since 2008 when we had the last, you know, big jump in oil prices, the share of consumer spending going towards gasoline has dropped, you know, quite significantly. I think, Ryan, I think it's got to be more than that, right? Yeah.

It's got to be 3, 4%. No. Because energy, yeah, CPI is 6, 7%. Okay, this is where we bet. Yeah. I'm going to pull up right now. Yep, CPI, it's 6, 7% of CPI. Total energy, though.

Yeah, but that includes a bunch of other things. I'm talking about just gasoline. Fair, fair. Gasoline is a share of nominal spending, all right? Discuss. I will look this on. Okay, we'll discuss it. Hey, John, I know you also, Morning Consult did a survey of attitudes towards Russia

in different parts of the world, U.S. and different parts of the world. Can you give us a sense of what that told you or is telling us? Yeah, certainly. So my colleague, Jason McMahon, who runs our geopolitical risk team, has been sort of leading the charge on this front, looking not only at how people view Russia, but also how Americans are thinking about military intervention, what share of Americans want to go in under what conditions would they be more willing to go in. I think what's surprising to me is like, you know, we live in this hyper polarized world right now where seemingly Democrats and Republicans can't agree on anything. And yet in this particular case, they all agree they don't want to go in. They would much rather prefer sanctions to any sort of real direct military dimension. And I think the only scenario where that changes is where Russia not only, you know, takes control of the eastern provinces, but actually invades all of Ukraine.

And then Americans start saying, yeah, actually, we should go in. Okay. So that's the line for most Americans. That's right. If they're in Kiev, if they occupy all. If they occupy all Ukraine, then it warrants U.S. troop intervention. Okay. That's a pretty high bar.

Yeah. If I recall correctly, more Democrats. That's right. I mean in that direction than Republicans, which I found interesting, right? It's not typically what we would think. The other thing I took away from the survey was you did also ask Russians what they thought of whole is. And the Russians were pretty supportive, I thought.

Weren't they, the whole thing? Yeah. I mean, I think that's one of the challenges of, or not with the challenges, the insights that you get from doing surveys here is that you don't really know how people in Russia, China, India, Turkey, some of these countries that are a little bit more closed to outside media influences feel about the world. And so I think we continue to see that, yeah, that Russians are generally supportive of Putin. I think they're less aware of how close we are to,

a real pending military invasion than I think folks in the U.S. are, and that might be clouding their view of supporting the current path that Putin's taking. Yeah, it made me think that this is another reason why Putin might invade, because politically, internally, it's playing pretty well. So he doesn't have like the population saying, I don't like this idea. They're saying, okay, I'm okay with this idea. Right. At least right now. He's got a strong track record for what it's worth. I mean, I think the Crimea invasion built a lot of credibility. He showed that there's a way of doing it. Yeah. Yeah, interesting. The other thing that I found, and I'm just, you may not have any idea of why. I just came out, I found it bizarre. The folks in India, the population of India,

is very pro-Russian. At least in the context of this survey, did you see, did you notice that? or does that any insight there? Not that you should. I just, I just found that very surprising. You see, I pour over your data. I'm all in your data. I'm down into the DNA.

We love power use of our data and there are a lot of insights in there. I think, you know, what's shocking to me is that if not, it's not the case, you know, that everyone blindly assumes that the U.S. and the policy approach that the U.S. is going to take is the right one. I think doing these global surveys really reveals to you how much, you know, the U.S. doesn't, there are people out there that really don't trust U.S. policy intervention. Yeah. Hey, Ryan, are you going to tell us I told you so or what?

I got the numbers. So this time last year, it was a little bit less than 1.5%. But now it's up to 2% for gasoline as a share of total consumption. I think you're more right than I was. I thought it was three. This is total gasoline consumption? Yeah, as a share of nominal consumer spending. Okay.

All right. And then electricity is 1.5%. And this is for the U.S. And natural gas is a half a percent. Okay. So that gas is up to 3 or 4%. Yeah, you add it up. Yeah.

But if you look at just gasoline, that share was 3.5, 4% 2012, 2013. So we come down quite a bit. Good. No, that's an interesting point. So you're saying, yeah. this isn't great for consumers, but it's not as bad as it used to be. And on top of that, we produce a lot of oil and natural gas. So those folks obviously benefit from the higher prices.

So the net of all that is, you know, this may not be as big a hit than that were, than some fear, you know, at least through that link between what's going on. There's many others, financial markets. You can see what's happening in the stock market. Right. It's down 10%. I don't think that's all Russia, Ukraine. but, you know, say if it's only 5%, you know, you do the arithmetic there, that's, you know, what is that?

That's probably 5% of 50 trillion. That's, you know, that's 1.25. John, you see how good I am at this? 1.25 trillion down in household wealth, you know, because of the stock market. What I was going to say is, you know, while gas is a share of total expenditures is not what it used to be, you know, there's never a good time for a military intervention, but this is probably one of the worst times. where households are already facing so many of these price pressures that this is just, you know, exacerbating a lot of those underlying concerns. And actually gasoline prices, no worse thing to jack the price up and really undermine

consumer sentiment, which I will come back to. But, you know, really. And also inflation expectations, I would assume, right? Because people really form their expectations based on what they see at the pump. You know, they're paying more at the pump than immediately think inflation is going to be higher. That's why UMish University of Michigan, consumer confidence has gotten crushed recently. It's because the stock market, which it's very sensitive to, is down a lot and gasoline prices are up. That's like the worst recipe for UMIS.

Well, maybe this is a good time to just take a dive there, John? Is your survey saying the same thing? We're saying largely the same thing. I think one of the interesting footnotes from the University of Michigan survey was that that decrease that they experienced most recently was entirely driven by people making over $100,000 per year. And so I think you know, inflation stock prices certainly drive consumers, but they do tend to drive more well-off consumers than the average person. You know, you think about people who make over $100,000 a year or more, it's about 30% of the U.S. population. So I think it, you know, it sort of overstates the case, but certainly what we're seeing is over the last five or six months that if you were to

go try to run a regression, which we're doing, and explain the drivers of daily consumer confidence, that things like gas prices, tips, you know, inflation expectations, the market's inflation expectations, the stock prices matter more now than they have over the past, you know, since the start of the pandemic. And that those things like COVID cases have essentially left consumers' calculation. Yeah, I can attest to that. I was in Atlanta, I took a trip for the first time in, well, since Amacron hit in Atlanta. And I didn't see a map. I mean, there was masks. in the airport and on the plane, but outside of that, I didn't see a mask. I didn't see one mask. Yeah, we saw really strong, you know, negative correlations for the first two years, basically,

where every time cases rose, confidence fell dramatically. I mean, it was like clockwork. And then slowly but surely over time, it took more and more cases to get a same level of decrease. You know, there's a diminishing impact of cases essentially on consumer confidence. And it was always asymmetric. So falling cases never drove confidence higher. It just allowed consumers to go focus on other things, you know, the employment situation, inflation, personal finance, and stuff like that. And so for me, it's great that COVID cases are in the past, but now we got to go focus on the actual underlying economy. And it's not clear that that's so positive that you're going to see some bounce back in consumer sentiment this year.

On the UMISS survey, it's currently at the lowest level since the pandemic. You have to go all the way back to the early recovery after the financial crisis to find sentiment by that measure as low as it is today. Is that the same with the morning console? It's not the same. We're not as far down as we were at the depths of COVID. And again, I think a lot of that has to do with the fact that a lot of people, we saw this in the January jobs report, you know, for a lot of people, they're working and wage gains have done a reasonably good job of keeping up with inflation. So if you're talking to, you know, people on the phone who tend to be a little bit older, tend to be a little bit wealthier, all of those inflation concerns are going to matter a lot more for them.

Yeah. Well, since we're on the subject, you know, the one thing that I have found a bit perplexing, and maybe you can make sure I got the facts right here. is that despite the weaker sentiment, pick your measure, more morning consult, you miss, conference boards all weaker, doesn't seem to affect the consumer spending. Consumers like Christmas, you know, we saw the retail sales for January come out,

and by the way, we'll get to the game and just, this game in just a second. But the, they were boom, boom-like, and consumer spending year over, I mean, retail sales year every year are like double digits. Some of that's price inflation, but even abstracting from that, That's pretty heady gross.

So how do you square that circle, John, between the soft sentiment and the strong spending? You know, is that I've never seen a disconnect like that. Yeah. But I think part of it is, you know, the premise. So I'll start you by fighting the premise and then I'll fight the conclusions. Yeah. The premise is that consumer sentiment is, you know, at record lows. I'd say that's true.

But the level is down. and actually what we have seen over the course of January and through February is that the change has not been so dramatic. In fact, it's been relatively constant. So I think that's one thing where I just push back that, you know, I don't think we're on a tailspin where every day is worse than the day before. And then the other side is just on the, it's on the jobs growth. I mean, I think that we really are seeing a lot of, in particular what we're seeing is a lot of lower income people looking for work, starting to work. I think that that's fueling a little bit more money in people's pockets.

And some of that, like I said, or you said earlier, is driven by inflation, right? Those are nominal values. Got it. Okay. Okay. But it sounds like that you think the consumer sentiment numbers will start to improve, become more consistent with the consumer spending numbers here going forward? This gap is widened out for a range of reasons,

but that gap will close going forward. Okay. Yeah, I would expect, I mean, what we see is that in general, consumer sentiment tends to be highly responsive to downside risk, and then it takes a long time to recover. And so my sort of baseline is that we're going to need another six months of pretty steady economic improvements. And then I would say also on the policy front, you know, we need, you know, the Ukraine, Russia stuff is not doing us any favors.

Any of that sort of uncertainty is what makes it harder and harder for consumers to upgrade their assessment of the economy. Great. I did want to ask one kind of methodological question. And I promise we're going to get to the game soon, guys. I know. Ryan is. The suspense is killing me. Yes, Spence is killing them because I've got a great statistic.

But the surveys you run, they're online, correct? their online surveys. Entirely online. That's correct. And the other surveys, I think they're moving obviously more to online, but it can be a mix, online phones. I don't think there's anyone doing paper anymore. Is there or actual phone calls? So the conference board for a while was doing mail-in surveys. And they changed in March to doing online surveys. And I know that Richard Curtin at the University of Michigan has a few proposals out there where they're thinking about moving online. but I think, you know, maintaining the continuity of that time see. They're trying to figure out a way to do that while maintaining the continuity of the times.

Oh, so they're still calling. They're still calling people, right? So you've got to think about a lot of, you know, response rates. I mean, that was basically the premise of morning counsel was the future of survey reaches is going to be driven by addressing this really significant problem with decreasing response rates. If you go look at 25 to 34 year old women, they do not pick up the phone from random numbers. And so you've got to find a way to deal with that. And I think one way is to talk to 6,000 people every day. Well, either do 60-year-old white men either. They don't pick up the phone. That's right.

Yeah. There's certain populations that are, that disproportionately don't answer unknown, unknown numbers. So is there any difference? They might not go online, right? What's that? They might not go online. They might not go online. I think one of the, one of the premises, particularly in the U.S.,

is that the online population will be, is growing. Online penetration is pretty high and growing. And then as we think about the developing economies, the similar sort of thing is going on there, particularly as people are on their phones more and more. Do you think of any advice? Sorry. Sorry. Coming back to the Russia, the Russian opinion poll, statistics, especially, right? How much confidence do you have in that number, for example, Russians saying that, yeah, they support the efforts, but it's all online.

And we know they're cyber attacks and people watching, right? I mean, so if I were in Russia, it would be very hard for me to say that I didn't support something that Putin was doing. And I think that's probably true online or over the phone. And the same is true in Turkey or China or some of these other more authoritarian regimes. I, you know, in the case of the U.S., where we're fortunate enough to live in a fairly free liberal democracy, what we tend to see is that people, particularly in things that are really sensitive, so things like somebody's personal finances or the health of their marriage or even their voting history, they tend to be a little bit more willing to tell the computer what they're

thinking or what they're planning on doing as opposed to online, sorry, as opposed to phone surveys. So you don't think there's any systematic bias. There's biases in every survey. There's biases in every economic measurement. I take a step back. Every economic measurement has air. Sure, sure. But you're saying, you know, the biases here are no. No worse than and probably better than the kind of the traditional way of calling people are taking mail mail and survey results. That's right. And it's just the frequency and timeliness. Yeah.

That's intuitive to me. Okay. Let's play the game. Okay. Can I go first? Yes, of course. Yes. So here's the game, John.

The game is we each lay out a statistic and the rest of the group tries to figure out what it is through deductive reasoning. for the non-guess, that's us, the statistic has to be from the, this past week. So anything that happened this past week. The best statistic is one that's not so easy that it's a slam dunk, but not so hard that there's no possibility that the person will get it. But you, John, free reign, you can do whatever you want. You're a guest. The bar is.

I will tell you that's my, the statistic that I had is not for the most recent week, but it is the most recently published statistic into series. Yeah, that works. That works. Hey, why don't we go with you first then? That sounds pretty intriguing. All right. Yeah, let's do that.

So here's the number. And I, you know, this is no reference. I'm fresh to all of this. It's going to be, it's 1,691,000. And I'll say U.S. adults. Sorry, so it's from the employment numbers. What are the rules for confirming people's, guesses. You say yes. Yes. Yes. Correct. Exactly right. So it's in the employment report?

Right. Oh, 1,691,000. Is it a change? It's not a change. It's a level. Okay. So it's a level. All right. Something to do with, it's in the household statistics, not in the, it's in the household service. It's in the household service. Correct. The household survey is the basis for the unemployment rate and labor force as opposed to the payroll survey, the survey of businesses. Okay, that makes sense. Does that have anything to do with long-term versus short-term unemployment? It does.

I got to figure out which one it is. Yeah, that's the number of long-term. It is. Wow, I am really, really impressed. That was more rapid than I could have guessed. Very good. So when you say long-term, that's the number of people that have been unemployed for more than...

27 weeks or longer. 27 weeks. And I think, yeah. Is that down? Oh, that's got to be down. It's down. I mean, the reason I picked it was just I thought, you know, going back to March, February, March of 2020, I was going to anticipate some sort of prolonged period of long-term unemployment.

And we have seen this just snap back in a way that is so different than what we saw in 2008 and 2009, where you had such persistently elevated levels on point. I think part of that is on the labor force front, right? So that number sort of skews things because people just dropped out and stopped looking for work. But nonetheless, I think it's a sign of just taking a step back and remembering how robust this jobs recovery has been relative to some of the others. Yeah, good point. Here we are two years after the pandemic hit and the labor markets come. Not all the way back.

It's getting there. I mean, that's a good step. Do you know what it was roughly before the pandemic, the number of long-term unemployed? I think it was closer to like, I want to say one three, one-four or something like that. So we're ballpark. Yeah, we're closing in. closing in. And that's not accounting for population growth too. So there's something there. Yeah, true. Yeah, good point. Yeah. I mean, I think if you add up, you know, we're still at a

4% unemployment rate. We were three and a half before the pandemic. And you consider all the folks that have stepped out of the workforce, even accounting for retirees that, you know, let's assume they don't come back. And then you consider the growth in the working age or the population, working age population since the pandemic hit. We're still down probably, I think, I think four or five million jobs. So, but if you do the arithmetic, we're creating 500,000 jobs per month, if we stay there for very long,

certainly by the end of the year, we're there. You know, we're at full employment. So it feels like we're getting there pretty fast. Okay, that was a good one. Okay, I got mine. You're ready? Ready? It's 760,000 and 760,000.

This is an amazing quinky-deme. amazing quinky dink in the data this week. So it came out this week? It did indeed. Is it housing related? It is indeed. So you're stealing from Chris. Well, I let's want to go first.

If I let him go, I might not be able to use this statistic. Yeah. We had starts and existing homesales. Okay, which is it? I'm thinking starts. Starts. Very good. Yeah.

$360,000. Yeah. Multifamily start. No. No, no, that's That was actually a little weak, I think. Yeah. $450,000, something like that, annualized.

Like, how deep are you going? Are we going down into like permits? We're going pretty deep, but not deep enough that you should not be able to. You should know this. You should know. Regional split. Okay, add the two together and you get 1.554 million. Maybe that start ringing a bill, a bell.

1.54 million. I think it's 1.54 million. Does that add up? We'll start to like 1.6.5. Yeah. Yeah, that starts. All right. Permits?

No, that was higher. No, no. We've got to go deeper. Completions. Completions. Oh, you guys. This is pathetic. Under construction.

Under construction. We're going to get there. There's always so many things. There we go. Under construction. That's right. So this 1.54 million homes are under construction, 760,000 of which are single family, 760,000 of which are multifamily.

That's the first time. It's unbelievable. It's uncanny. It's uncanny. And neither the all-time record high 50 years ago, briefly in the early 70s, you find a time when there were so many homes under construction. And I may have this wrong. Someone in the listener world will correct me if I'm wrong. but I don't think that actually includes the homes that have been permitted but permitted but not have actually begun construction. Correct. That's correct. It so happens I was speaking with the chief economist of the Morse Bankers Association today

and that was the big divide there. You're talking to Fratt and Tony? Yeah. Yeah. And that's the big, I mean, it's a record high. You're trying to hire him, are you, John? No, no, no, no. Mike and Tony from MBA.

Just trying to learn. Oh, my gosh. trying to learn and understand what's going on. You can't get your drawing. Drawn fast. It's a big issue. Housing is a big issue. There's a lot of homes out there and people just flat out aren't starting them

because they know that they don't have all the, they don't have all the supplies they need. They don't have the lumber. They don't have the people and it doesn't pay for them to start. And so it's a garage door. Yeah, exactly. There's lumber. It's expensive.

Really expensive. Yeah. Well, actually, I think the backlog is even more than that I was talking to. I don't know if I mentioned this on the podcast, but I was talking to a multifamily developer, a pretty good-sized developer in California. And he was telling me he's not even starting projects because he's fearful that he starts

and then he can't get to the finish line on, you know, with the schedule because he can't get whatever it is, you know, a plumbing fixture or something. So he's not even going to start projects until, you know, he has a clear line of sight to the end of the project. So the backlog may be more. But I think that's an important statistic.

I mean, I think we obviously, 1.54 million, just for context, I think the underlying rate of single-family, multifamily starts is about 1.7 million. So that's almost a million, that's almost one year's worth of supply sitting in the pipeline that will come. And I think, you know, once the desire, these pipe, the supply chain issues start to iron themselves out, and I expect that to happen over the course of the year, we're going to see a lot of supply, you know, a lot of, and which we need, obviously. And that should help the, it should help with house prices. in affordability. It should also help with the rent growth, which is key to inflation, obviously, the CPI inflation. Won't help for this year. Probably won't help for 2023, but by mid-decade, I think, we're going to see a lot more housing. Chris, I just said a lot there, and you have strong views, I think, on this issue. We want to push back on any of what I just

said? It's a good story. By the way, that was your statistic, right? It was not my statistic. I know. I stuck to the rules. I've made it survey related. How was that survey related? Morning Consul. Ryan, does it have to be survey related? No, no. To the big topic. Housing's still consumer.

All right. You can make that link. It's a survey of permitting, issuing places. Fair enough. They changed some methodology there. That was important. Yeah. You should take a look.

Okay. Hey, did you see before, sorry, Chris, in the housing starts data for December, permits jumped in the northeast. I saw that. It was because of Philadelphia. I know that. We have a huge... I was like, Philadelphia gets a big shout out.

Okay, Chris. I think it's a good story. A good story. Oh, you do? Okay. Yeah, I think, you know, it all fits. I just don't think we have the capacity to build that much. Yeah, I agree.

I don't think we can get up there. Oh, in the next year. In the next year, two years even. Okay. And then you have interest rates rising. I think that's going to take a bite out of some of this activity as well. So I think it will remain. strong. I think the building's going to remain strong for next five, ten years easily

just because of all the tailwinds from the demographics. But I don't think the industry has that capacity. Who's going to build these homes? You know why he's saying this, John? Because I think we have a bet. Don't we have a bet? Is that right? We do have a bet. What's the over under? 1.7 million average. I just looked this up. That's how I know. Is it this year? 1.7 million average over 21 and 22. Oh, and I need 1.8 million for that to work. Yeah. And what did you say?

I took the under. Yeah, the under is a good one. Yeah, he took the under. Yeah, well, how rude. So. All right. I hear you. Okay.

Okay. Who hasn't gone yet? Ryan, you're up. All right. These numbers are perfect, right? Because it ties in what we're talking about in the big topic. And then also everything else for the most part that we talked about, supply chains, inflation.

and these are good. Mark, I said John, Mark's been on a hot run, so we've got to bring them back down to Earth. We do have a cowbell. If you get these right, I'll give you the doubled cowbell.

We have two cowbells. Oh, all right. So the first one is positive 12.5%. Oh, so you're not going to give us the second one? And the second one is minus 21.3 or 22.3. So the first,

are they, these are related, obviously. Different reports, but they are tied together. One is causing the other. And one is causing the other. Is it inflation related? It's not from the CPA. Retail sale?

Not this week. I'm sorry? Retail sales? It's retail sales. It's not month to month. It's not year over year. It's a different way to looking at it. But it hammers from the point.

It's not month over month. It's not year over year. and a change. And it's overall, total retail sales is not some component of retail sales. No,

it's what goes into GDP. Oh, control retail sales. Okay, now what's the 12. 5%? The control retail sales, by the way,

is total retail sales X auto, X gasoline, X building materials because the building materials go into residential investment. So that control, what they call

control retail sales, drives consumer spending. And it takes out restaurants. Oh, yeah, it takes out restaurants. So 12.5% That's not year over year, control retail sales? No, think about when you go to the mall, you go to the map and it says you are here, there's your head. Boy, does that help you, Chris?

And what's the last time? All you guys are suffering. Anyway, I've been in a long time. Yeah. We wrote about this on the site. So 12.5%. That's the level of control retail sales above its. pre-pendemic trend.

So that's, it's enormous. It's a shift. And it's a permanent shift? No, I don't think it's permanent. I think it's going to come back because, you know, we're going to get services spending picking up over the next couple of years. So you'll see goods. There's only so much stuff we can buy.

It will come back down. But that gap is 21% is that on the, that can't be on the service side, is it? No. It's not. We're buying a lot of stuff. Is it in the retail sales numbers, too? It's not. Oh, okay.

I got a different survey. But the 12 and a half, you're saying, look, that's the, we've got, because people are sheltering in place, they spend a lot of their money on stuff. But they spent a lot, oh, is it like spending on movie tickets? It's not a spending on Broadway plays, spending on all the games. We get two regional manufacturing service. Oh, we did. Philly Fed. Very good.

Yeah. And I don't know what the other one. Richmond Fed maybe? I'm not sure. Empire State. So the New York. Empire State. That's right.

But it's in the Philly Fed. You're getting close. Oh. Down 21.5. I don't know. What is it? It is the expectations six months ahead of supply chain deliveries or supplier delivery. So when it's negative, it means purchasing manufacturers are expecting faster deliveries.

This is the lowest it's been since 2008. So even though we're buying a lot of stuff, you know, expectations are supply chain problems are going to start to ease. So tied in spending. with supply chains, which means inflation is going to begin to decelerate. Hey, hey, Ron, here's, this is something that's bothering me, related. Inventory accumulation is booming because the other, one of the other statistics that came out this week was business inventory, manufacturing, retail, wholesale, skyward. And I think the inventory to sales ratio, which is a kind of a good measure of your level

of inventory, it's actually moving up and pretty, pretty high. So what's going on? I mean, why are we having shortages or are we having shortages? I mean, I can't square the circle that people are saying, I can't get this stuff, but it's like we got enormous inventory build, you know, going on. Well, the inventory bill, like the IS ratios are going up for wholesalers and retailers. It's pretty flat for manufacturers. So it's okay. It differs.

Yeah, okay. But. Are you saying shortages are in manufacturing? They're not in. Which stuff? Yeah. Okay. Like vehicles, you've got a shortage, but that's in manufacturing.

Okay, that's a manufacturing. That's a manufacturing problem. Building materials. But it feels like all the data is accumulating, suggesting strongly, and this is, you goes to your supply chain stress index, which is a compilation of a lot of these statistics, that things are starting to move in the right direction around the supply chains. They are. And I think it's a good sign that businesses are increasing their inventories because that's going

to take additional stress off supply chain because they're not going to have the book as many orders in a few months to replenish their shelves or their manufacturing plans. Hey, John. Yeah, I can speak to that directly. On the U.S. side, I mean, that's exactly what we're seeing across all the major spending categories that, you know, when consumers go to make these purchases, it's not that they've actually, you know, the supply, the prevalence of supply chain issues has fallen, but rather that the growth rate is essentially gone to zero.

So we've sort of, it looks like we've kind of reached some, you know, you know, peak supply chain disruption essentially. And that's, you know, groceries, new and used cars, clothing and apparel. The only area, and this is maybe, you know, I guess we're a U.S. focused here, and then we can scrap this, Ben, but the only area where we're seeing dramatic supply chain issues is at Australia, of all places. I don't know if you guys have been following this, but they've got extreme labor shortages, a flood that wiped out a lot of their transportation and the grocery shelves are just essentially bare there. So we saw a 26 percentage point increase in the share of Australians who said in January that they couldn't go buy the food

that they were looking for in grocery stores. I had not heard that. That's fascinating. So in the surveys you've been doing, you ask consumers about what shortages they're facing. That's right. So what you're finding is that people are increasingly not, experiencing shortages? Is that what you're saying? Well, I wouldn't go that far quite yet. I would say the growth rate has essentially slowed. So we saw, you know, September to October, things got worse. October and November, things were worse. And then all of a sudden, like December to January, we've seen it essentially hold constant, particularly for some of these goods that early on in the pandemic were like, you know, driving a lot of a supply sheet shortage. I think about used cars.

And I, you know, it's unclear to me if that's because there are more used cars or if there's just fewer where people, you know, consumers are essentially internalized that there's such a, you know, supply constraint that they're not going out and trying to make those purchases. Oh, I see. And so your sense is, of course, we'll have to see what happens here, but your sense is that this might be an inflection point. That's right. Okay.

That's right. Your survey should start to show fewer and fewer people reporting. I'm experiencing shortages for whatever it is going. As a share of total people looking to make that purchase. Yeah. So if you go look at, yeah. Can you give me a sense? of magnitude. So like what percent of your survey saying I'm suffering, you know, some, some sort

form of shortage? So I think like on the, you know, on the high end, we're seeing like grocery sales, grocery and food items, which in January was really high, 47 percent of adults who tried to go buy groceries that they encountered that the item wasn't stocked. That's up from 41% in November. But then if you go down to something like, you know, newer used cars, it's like 28% and that's essentially flat over the past six months. Well, you know, my wife, every time she comes back from the grocery store, she complains bitterly she can't find onion salt. Do you have any idea? I have no idea. Why she feels antiquated. I mean, one of the things that's interesting is we're tracking not only whether or not there's a supply

chain disruption, but also how are people responding to it. And we do see overwhelmingly that women are less likely to be willing to pay more for something that's, you know, where they're experiencing elevated prices than men. And the same is true with urban people. Urban adults are willing to go out there and pay the extra money to get the thing. And that's not true for suburban urban adults. What do you, what do you, what's the intuition behind that, do you think? Is you have an intuition about men, women and they're different. I think part of it has to come down to what they're, what they're out to purchase. Okay. And, you know, I think we see a lot of the, you know, that women still disproportionately go do a lot of the large grocery shopping. And so if they, yeah, so good.

It may be that at least now it's, it's all about me, John, as you know. So from my experience, I don't buy many things. So if I want to buy something, that's like a deal. Like I don't care, just give it to me as fast as you possibly can. I don't care if it's double the bruce. My wife's buying lots of stuff all the time. So that may be, maybe that's what partly was going. Is that by choice or decision? Because you go out when you buy stuff, you buy two of everything. So why do you have two power washers? Like that you're spending should be revoked right there. Yeah, that, you know, I have a hard time explaining that there's something going on there deep down. You have. You have two of everything. You have duplicates of everything in your house.

He's making that up. Oh, okay. But I do have two power washers. And I don't. There's some sort of inner fear there. Yeah. And I really don't know why. I really don't know why.

But I think Ryan joked or my, somebody joked it. I bought one to wash the other. The other. Hey, while we're on sort of on this subject, I think you've also done a fair amount of work on inflation expectations. That's right. Yeah. Can you describe?

Because I think you're doing those, you're working on a special measure or, That's right. Yeah. Yeah. So for the last year and a half, we've been partnering with researchers from the Cleveland Federal Reserve to try to think about a new way of measuring inflation expectations. And so really trying to understand basically how people think about inflation. So what we're doing is we're going out there and asking people how much their income would have to increase or decrease to make up for changes in prices of goods and services that they see. And so we're in the U.S., it's 20,000 people every week. So it's again, a high frequency inflation expectations. Looking at the 12-month time horizon, we see a really dramatic increase, but it looks to me like we've sort of plateaued starting in December and January. Again, there was some sort of inflection point that the rate of growth is slowed.

But globally, you know, we continue to see inflation expectations increase pretty dramatically in places like Turkey. I mean, the places where you would expect it to happen, places like Turkey, Russia and Argentina, they were all sort of month over month, they showed really large increases inflation expectations. You know, we have this, there's this debate been raging about, or at least it's raging in my own mind, about the source of inflation, whether it's demand or supply. And of course, it's both demand and supply.

It's both, right. Yeah, no one's arguing that. But, you know, predominantly this uncomfortably high inflation we're suffering through right now, whether that's supply driven. We talked about global supply chains and labor markets, you know, as opposed to demand-driven, you know, which I would argue this time last year when we got the vaccines and people started spending and we had the American Rescue Plan and that helped people spend, that that was more about demand, but now it feels more like supply.

In any of your survey or in your survey work or any of your own thoughts around that debate, I'm really curious what you think about that, if you have some views on that. You know, I think on the demand front, we continue to see that spending is sort of over allocated towards goods relative to services that I think a lot of us had expected by now that we would start seeing more and more people move away from these large sort of durable goods purchases and into the services sector. And that just flat out hasn't happened. And so it's not super surprising me that there's a concentrated amount of money chasing these relatively few goods. And it just so happens that they tend to be the ones that are also affected by these supply chain issues. I would expect, I mean, what we're starting to see is that consumers are growing more and more comfortable going out to, to, you know, in-person activities. I think, you know, in D.C. He, here they're removing the mask mandate. They're removing the vaccination mandate. I think the same is true in New York and some of the other large metro areas. So I'm expecting this summer to start seeing like a real boom in the services sector. And I think that's going to ease some of the supply.

Price pressures, yeah. Travel bookings are up, right? Where do you see it, yeah. It makes sense. Let me throw in my statistic here. Oh, yeah. I'm sorry, Chris. I nearly forgot.

No problem. This is going to be a overhanded softball. He really wanted to play. Wouldn't even, you know, wait, go ahead. 3.5%. 3.3.5%. Is it housing? Nope.

It's not housing. Not housing. 3.5%. And it's a statistic that came out this week. In the retail sales numbers? No. Industrial production? No, it is a survey.

Oh, okay. It's a survey. Very relevant to what John just. Yeah, he's laughing. Ha, ha. I did the right statistic. Is this the New York Fed inflation expectations? Oh, yeah.

Yeah, the three year ahead. That's right. Three year ahead, three and a half. It fell by half a percentage point. Yeah. Which is a little weird. It feels like it's rolled over too. If you look at a graph of it, it feels like it's all over.

It seems like it. Both the one year and the three year ahead. that rolled over. So, I mean, it's only one point, but they suggest that consumers are switching behavior or they don't expect this inflation to persist. Particularly in the context of higher gasoline prices, which you would have thought just the opposite, right? Because it feels near-term consumer expectations around inflation feels so dominated by the movements in gas prices, at least.

I mean, I think it's gas and groceries, though. I do, I think it's both. I mean, we saw that in the CPI, right? The grocery prices are, you know, skyrocketing contributions. to CBI as well. Yeah, good point. Okay, yeah. I found it interesting.

Yeah, very interesting. That is a good one. Yeah, very good. Hey, John, are there other sort of survey-based insights in what's going on in the I want to share? I'm just really curious. Yeah, so many. I would put at the top of list, yeah.

So I would put at the top of list our January measure of financial vulnerabilities. So we measure every month the share of adults who lack savings to cover their basic expenses for a full month. And it kind of hovered around 22, 21, 22 percent. Every time there was some stimulus injection, it fell. And then all of a sudden in January, it skyrocketed up to 29 percent, highest level since we've been collecting it over the past two years. And for me, it just sort of highlighted exactly what's at stake.

while we're moving beyond COVID, we just don't have the policy support in place to provide some of those folks who are still losing their job with additional financing. And when you pair that with elevated inflation, elevated costs, I think that there's a group of people out there that's really suffering. And that number, you know, the total savings rate or savings the income ratio, I think, doesn't really reflect the fact that there's a group of people out there who are not making a lot of money and they're really starting to eat into whatever savings they might have had. And that statistic is the percent of respondents that say they don't have enough to pay

for all their bills in that given month. Correct. Right. That feels like child tax credit, right? Because that expired in January. And that would not be surprising to me that you'd see five, six percent percentage points more of folks saying I can't pay my bills as a result. of that.

Yeah, it very well could be. You know, when we looked at the, historically, there was a pretty big bump when the $600 federal unemployment insurance benefits expired last year. And then this year, we had the $300 benefit expire in September. And we didn't really see a move in the number. There was, it was just kind of plotting along at 22%. And then all of a sudden in January, it skyrocket. I think in February, it's likely to come back down a little bit.

We haven't had, you know, the week. weekly unemployment insurance numbers have not been as high as they were in January. So I don't think there are disruptions to the income like they were before. And then I think the other thing to note is maybe just we're tracking the share of part-time workers who want to work full-time. And that number continues to rise. It has risen every month since June. I think we're up now to something like 55 or 60%.

So it's been up from 30 or 35% in June. So there's a lot of these part-time workers want to work full-time and they can't quite figure out how to do it. They've got child care issues, healthcare. I mean, there are all these sort of binding constraints that are preventing them. But there's something to be said about the sort of intensive margin, that there are people who are working a little bit, they'd like to be contributing more hours. Well, do you know, is this because there aren't full-time jobs?

It doesn't feel like that would be the case. I don't think that's the case. Yeah, they just can't get their lives in a place where they can actually work full time. Correct. Yeah. Interesting. Yeah. What else?

Maybe the last thing that's interesting is the global recovering confidence. So we're tracking the largest 15 global economies. And since July of this past year, 2021, that was sort of the peak of the GDP-weighted recovery in consumer confidence. And every month since then, we've seen a gradual decline. So this idea that we're going to kind of continue to bounce back in perpetuity, I think, is behind us. And that's started with Delta and then move to Omicron and then inflation. We've just had this sort of litany of factors that have weighed on the global front,

I think, a lot more than we maybe appreciate here. In the U.S., we had Delta and Omicron, and those were separate things. In Europe, that was basically one big thing. Big thing, yeah. Yeah. Hey, just one last sort of broad question, because you joined Morning Console and started looking at the data prior to the pandemic. Do you get a sense generally that the pandemic is kind of weighing on the collective psyche? I mean, that people just inherently are just generally more pessimistic than they were pre-pendemic? Or can you tell that from your work?

I mean, certainly the levels remain well below what they were in 2019 and 18, that people, there's a, a smaller share of the population that believes that they'll be better off financially a year from now than they are currently. And so I think that's a lot of it. And then I think what we continue to see is just how differently people across this country have experienced the pandemic. We talk about the average American, but I just think that under $50,000 annual income group is not going to bounce back from this pandemic. Economically, I should say. Yeah, Ryan, Chris, any questions for John? Just on that last note, one thing I find interesting from the University of Michigan survey is the political divide, right?

So, yeah, we have confidence way down, but it's driven by the Republicans, right? There's a very vast chasm between the two. And I wonder how that figures into your thinking around the survey results. You know, we mentioned the difference being the soft data, people saying they're not confident, but then going out and spending anyway. Is that political divide, something you think is getting more intense in the survey results? Or any thoughts about that? There was a, so in general, there's a level difference.

So you can see that Democrats are on general, more confident in the economy than Republicans. And that's even after controlling for things like income. But if you do a rolling 30-day percent change or something like that, those trends are right on top of each other. And so what was really interesting is we started to see in that trend line, a divergence starting in August and September, you know, one could argue that that's driven by politics, but as it so happens, you know, older, you know, a higher share of older Americans are Republican and a higher share of Republicans live in the middle of the country. and both of those groups are groups that were disproportionately affected by rising prices.

And so I think, you know, it's hard for me to say, you know, conclusively that that's a political phenomenon and not driven by the reality of inflation affecting different groups of, you know, different population cohorts differently. Good point. I guess what gives me pause is if you go back historically, you look around elections, you know, it flips. Whoever's in the White House, suddenly my opinion has changed the next day, right, before any policies, before the person's actually in office, right?

I'm feeling more confident. I mean, it's like clockwork. It's like as soon as the election happens, there's this total reversal. Again, it's one of the reasons why I just almost exclusively look at some sort of change over time. That makes sense. And it's not just consumers. If you look at the small business confidence survey, and FIB, like, for sure,

Small businesses are very pessimistic about the economy's prospects with a Democrat in office. And then it flips if there's a Republican. So it's not just consumers. So one question I thought I had was around that financial vulnerability, we're in tax season. And the average tax refund so far is $800 less than what was the average last year. And again, to Mark's point about the child tax credit. So maybe it comes back down in February. but so far refunds are averaging a lot less than what we've seen in the last few years.

So that might keep it elevated for a period of time. What do you think is driving that? Is that just because incomes are down? I think it's the child child tax credit. Because people had, they can't deduct all of it. It can't deduct all of it. Yep. You know, that makes it.

You know, we looked at it. And what it looked like to us when we looked at people who received the child tax credit is that it tended to disproportionately go to higher income people because they have more kids. I know that's a super counterintuitive group, but if you thought process, but if you look at this like, you know, 100 to 150,000 annual income group, those are the people who tend to be married and they tend to have more kids. And so they get a large, their check was larger than lower income people. It's not to say that a smaller dollar value could be more valuable for lower income people

and helping them to pay their bills, but just in terms of the sheer dollar value, it looked to us like it was going towards slightly higher income. Although the percent of children that have been lifted out of poverty is pretty impressive. Correct. Correct. We're lifted out of poverty, I should say. Well, John, I want to thank you.

This was very thoughtful and insightful. So what's your mood like? How are you feeling? Thumbs up, thumbs down? You know? We spoke about this. I just went, I went into the office for the first time. this week. And so I'm feeling pretty good that we're going to get back and live some sort of

normal, new normal life. Yep. Fantastic. And Chris is already back in. You need some company, though. Ryan, are you going back in anytime soon? Going Friday. I'm going to see Chris on Friday. All right. Oh, okay. We might do the podcast in the conference from there. Live, wow. We could do it live. Okay. Very good. Well, you're going to have to wait a little bit longer for me. I'm still safely in Sconson, in Florida. So I'll be back soon, though. It's getting warmer here. Yeah, warming up.

I'm just saying it's like, Mark's threshold is what's. I'm out here right now. Sunny and I won't even show you. All right. What's your threshold, Mark? What's the temperature have to be to get you back up to Philly?

Kind of sort of like 70. I mean, geez. Yeah. That might do it. So we'll see you in April or May. Yeah, April or May. Yeah. Well, at Mark Zandi, just saying.

John, what's your Twitter? At John C. Lear. There you go. And Mr. Ryan? At real time underscore Econ. And Chris, Chris, which I know you have. I'm on LinkedIn. He's a LinkedIn Maven.

And any suggestions about future podcasts, you know, please let us know. You can go to economy.com and vote and let us know what you want us to chat about. And we will certainly do that. And with that, we'll call this a podcast. Take care, everyone.