Latest / Words & Numbers / Episode 448: Schrödinger’s Economy

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Episode 448: Schrödinger’s Economy · Words & Numbers

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Today I'm Words and Numbers, I've got some interesting public
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opinion polling on presidential. Approval New York ATM machines
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are spitting out free money. The foolishness of the week is a
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real Corker. This weekend we've got a United
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States Congressman who has apparently not read the the
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United States Constitution. For the main episode, is the
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economy in recession or is it doing well?
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And the answer is yes. Words and Numbers is a civil
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original podcast. Check it out at civil.com.
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That's civl.com. Hi, I'm James and I'm Anthony.
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And this is words and numbers. So what's new and exciting in
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your world this weekend? I've got some news from New York
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City. Apparently for several days, New
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York City's ATMs were spitting out free money.
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It took about 3 days for people to figure out what was going on
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and shut them down. By By the time they had, the
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ATMs had spit out a total of about $17 million and in.
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Cash. This isn't like last time when
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people were depositing fake checks and taking money out.
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Oh, no, no. You think that?
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I mean, that just happened not that long ago.
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You think that people would have figured out something, right?
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Oh, no, no, no. This is this is something.
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Different A malfunction that causes money to fly out of that
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magic slot. Well, it there's there's a
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malfunction somewhere, I'm not entirely sure it's the ATM.
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And what's what's noteworthy here is that the article which
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this comes from the New York Times keeps reporting, keeps
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referring to this as fraudulent use, fraudulent use of the of
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the ATM. How?
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How on earth is it fraudulent if the ATM just spits out money?
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Well, you could see you could make the argument in the case of
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the checks. People were kiting checks,
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right? And clearly I know.
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And that's. Illegal unto itself?
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That's clearly fraud. But this is this has a twist to
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it. What happened here is New York
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City has a summer youth employment program.
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It's actually the, I believe it's the 6th largest employ
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program of its type in the country where they employ, you
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know, youth and to do various things, but they pay them.
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They pay them with what would amount to debit cards.
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So you take this card to the ATM and you can pull the money out
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and whoever it is back in the Home Office in New York City
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Hall refreshes it every couple weeks with whatever your pay is.
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Well, what happened was there was some foul up somewhere.
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And this is where I kind of questioned the use of the term
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fraudulent because the foul up had to be, if not at the ATM
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bank level, might it would have occurred back at the whoever it
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was that was recharging the cards.
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But it was set up so that you could take your ATM card and
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pull out as much as you want. And there were, there were
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limits like $200 per transaction, but you could do as
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many transactions as you want. And there were reports of people
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like staying there for hours, just putting the card in, take
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$200 out, put the card back in, take $200 out, kept going on and
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on and on. And I would never have left the
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machine until it was literally out of money and and as soon as
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they put money back into it, I'd be right back there doing the
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same thing. Yeah, yeah.
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And I'm saying, you know, I'm saying $200.00, but it says here
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that in a lot of cases people are walking away with 40
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thousand $20,000 in cash. It's.
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Pretty solid money. Some some people, dare I say it,
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think of that kind of money as a year's salary.
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Right. Yeah, yeah, yeah.
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Anyway, this this is actually making me angry.
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We have to move on. Well, what's what kind of made
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me angry is the repeated use of this word fraudulent?
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Now, I'm not advocating, you know, I'm clearly when you know
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that there's something wrong with it, the honest person would
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stop taking the money out. But look, this doesn't seem to
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be if there's a fault here, it seems to me it's on the end of
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the people who are recharging the cards.
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You would actually stop taking money out, Yeah.
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I would, I'm really risk averse and I, I, and don't think, you
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know, I would like to say, well, I would stop taking money out
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because it's the right thing to do.
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No, I would stop taking out because there's a camera on
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there and I know that he's going to come back and get me.
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I'd take that money home and bury it in my backyard.
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Where nobody would ever find it. But anyway, we move on to Donald
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J Trump, who I I was cruising around Facebook and Twitter
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yesterday as I am won't to do a lot more on Twitter lately than
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Facebook. But so it goes at James R
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Harrigan. If you're out there and, and
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somebody asserted that Donald Trump had like a 58% approval
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rating. And I thought to myself, that
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can't, that can't be right. So I, I headed over to Pew, the
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Pew Research because their, their data is pretty good and,
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and, and generally presidential opinion data, regardless of the
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source, is all going to be in about the same ballpark, right?
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They, they all get it. They all get it pretty much the
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same. And the correct answer right now
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for President Trump is 38%. Yeah, he has a 38% approval
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rating, which is dreadful. Now, Congress is is in the 20s
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and the Democratic Party writ large is at 20.
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So we've got a, a, a bigger problem than this would first
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appear to be. I just want to point out that
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there are so many people who are fact resistant that I don't know
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what to tell them. What?
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What kind of moron would you have to be to assert, even for a
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second, that the president's approval rating is 20 points
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higher than it actually is without going and looking it up?
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It's easy to find. It takes one second to look it
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up. I knew that it was wrong, not
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because of anything to do with Donald Trump, but because I
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don't think any president has had an approval rating that high
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apart from maybe the day after he was elected.
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George W Bush right after 911. Right after 911, yes, right.
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Yeah. And that's probably the last
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time we ever saw something that high prior to that on for either
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party. Prior to that, it was Reagan.
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Yep, Yep. Right.
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So we're looking at unicorns here.
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You don't get that high in American politics.
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We are. We are Sears on one corner,
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Macy's on the other, fighting over that last little bit,
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right? It's This is why McDonald's and
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Burger King are always in the same neighborhood.
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It explains a lot of human behavior, right?
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Everybody trends toward the middle, regardless of what we're
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talking about. Mattress stores are right next
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door to each other. How, how ridiculous is that?
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But they have learned that that that's how you make money.
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And it's all for the same reason.
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I mean, you know, why are Burger King and McDonald's in the same
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place? Because that's where the
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customers are. Why are the Democratic and
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Republican parties the way they are?
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Because that's who. Votes that's and that's the
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voters. Those are the voters they need.
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Yeah, right. The heart, the hardcore voters,
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they stick around no matter what.
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They have to fight over that last 15% or so.
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It might even be 10 or 12 to see how things will swing.
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But you know, there are outlets like Pew where you can go and
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look things up before you make fool yourself online and you
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should really do that. Now.
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The sad thing is, is that anybody listening to this
7:48
podcast already knows that. Get words and numbers on
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Regular episodes are free. Sign up for an annual membership
8:00
to support our show and for access to member exclusive
8:03
content. But I'm not.
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Going to make a big dent here, but I did get to vet my spleen.
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Speaking of which, we're on to the foolishness of the week.
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And there is a a gentleman, a representative named Andy Ogles,
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which is really an unfortunate name in a lot of ways.
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Andy I, I can't remember his, his name is one of Tennessee.
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He's from Tennessee's fifth District, and his name is a
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sentence. Andy Ogle's a particularly
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pleasant sentence, but what, what the hell?
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He tweeted a couple of days ago in all seriousness.
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And I, I want you to remember, this is in all seriousness, give
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Trump a third term, he says. Give him a Peace Prize and let
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him run DC as long as he wants. God A.
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A. United States Congressman
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decided that the two term women to uphold.
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An oath to uphold the Constitution.
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He clearly didn't read the thing.
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Or he didn't, didn't care either.
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Either way, it's completely unacceptable.
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And you know, I've got two things to say about this.
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The people in Tennessee's Fifth District should be up in arms,
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right? This is their representative.
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They should be out with pitchforks.
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And I haven't heard that they are because there are
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Republicans and he's a Republican, so the hell with it.
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And that's how you lose a Republic, right there.
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That's how you lose a Republic. And why are his fellow
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representatives not expelling him from the body?
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They could do that. The House of Representatives can
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expel any member for any reason it wants.
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Do you know the details? Does it take a super majority to
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do that? Yeah, I, I don't know the
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details off the top of my head. It, it, it's not, I don't think
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it's a simple minority, but because the house, the house
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makes its own rules and that's a rule that they have made over
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time. So no, I, I, I don't know.
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It's, it's been used. It's been used from time to
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time. Let.
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Me underline here, this has, I think this is appalling.
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It doesn't have anything to do with with President Trump and my
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desire for him to have or not to have a third term.
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It has everything to do with the fact that this is not permitted
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by the plain words of the Constitution.
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Now, if you want to change it, let's talk about a
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constitutional amendment. That that's right and this is
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settled. I I don't know why morons like
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Steve Bannon keep at it right saying oh, we because the his
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terms are non consecutive for some reason they don't count.
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What the hell is that? That's just ridiculous.
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Yeah, the the plain words on the page are obvious and that we've
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got a representative spouting this nonsense is horrific to me
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and. And I would, I would call out a
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warning to his constituents. And, and I can understand the, I
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can understand where you're coming from that if you're, you
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know, you are particularly enamored of Donald Trump and you
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wanted to have a third term, your tendency would be to let
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this pass. But, but I warn you, when we
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ignore the plain words on the page of the Constitution to
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serve our ends, the next guy who comes along is going to be
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ignoring the plain words to serve his.
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And that would take the form, for example, for our friends in
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Tennessee, which I know is a right leaning state, the next
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administration just deciding to plain words of the Second
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Amendment don't apply. Well, they decide that all the
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time. But yeah, unfortunately there's
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a lot of pushback, right? But this is how this starts.
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You you let something small like this slip and before you know it
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other things are slipping and then you don't have.
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A constitution and you don't have a Republic.
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Yeah. And and that's we are at a point
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in our history where that's a very real possibility if we
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haven't. I, I know our, our friend and,
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and frequent guest, Clark Neely thinks we've already crossed
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that line. And, you know, I think he may be
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right, but we there may still be time to save it.
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But this kind of nonsense coming from on high has just got to
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stop. And the reason?
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The reason you want a Republic, specifically a constitutional
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Republic, is to protect the minority.
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That's right. Because if you don't have that,
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then it's whatever 51% of the people want.
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That's what we're going to get, wall to wall.
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And that is a prescription for disaster.
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The Founders knew it, we both know it, and everybody who
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thinks about these things knows it.
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And, and if you, if you are tempted to say, well, that
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doesn't apply to me, I'm not in the minority.
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Stop and think about today. Well, not today, but also think
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about all the groups of which you are a member.
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So I'm obviously a white male in that sense.
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I'm not in a minority, but I'm a Catholic.
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In that sense, I am. You may find this hard to
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believe. Aunt, you have just made James
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Madison's argument from 1787. Really.
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See how? Smart.
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I am James. Right down to the point, no,
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this is how smart James Madison was.
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But you can show off how smart you are by talking about this
13:27
recession business that we're probably overdue to get to.
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annual subscription. Yeah.
14:45
So the question is. Can you start with with a
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question from the rabble? What the hell is a recession
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anyway? Let's that's probably a good
14:55
place to start because the thing that people keep repeating, it's
14:59
not correct, but it's not too bad either, is that a recession
15:03
is 2 consecutive quarters of negative real GDP growth.
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Geez, I'm sorry I even said those words.
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Here's what that means. 2 consecutive quarters of the
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economy producing less than it produced in the previous
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quarter. Well, that is negative GDP
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growth, isn't it? Yeah, I know.
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But you know, people get squirrely when you start saying
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stuff like that. All right, fair enough.
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So there is a technical definition.
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Yeah, there's technical definition now.
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Now, that isn't it, right? Because that's the thing that
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people say, oh, that's what a recession is.
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It turns out that the National Bureau of Economic Research has
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a whole bunch of criteria that they look at, and they're the
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official ones that say, verily, this is or is not a recession.
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They've got a whole bunch of things they look at and if you
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look at all those things and all the times that NBER has said,
15:54
yes, this is a recession and no, that isn't a recession.
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What they have said tends to match up with this rule of thumb
16:02
of two consecutive quarters of declining economic activity.
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But but it's partially coincidental that it lines up.
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That's not the official definition.
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Yeah, I would expect it to line up more often than not.
16:18
Oh, it does. It does.
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I think it's like 85% of the time or something, right.
16:21
So it's good enough. I, I would say, you know, for,
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for the, for the common person, think of a recession as the
16:29
economy shrinking. That's that's the best way to
16:32
think of it. All right, so now I've got a
16:33
follow up question. Is the economy shrinking?
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Yeah, and don't know. The reason we don't know goes
16:44
back. Aren't you helpful, Pumpkin?
16:48
Aren't you helpful? It goes back to an episode we
16:51
did a couple of weeks ago on on the Bureau of Labor Statistics
16:57
and them revising their numbers. And we said at the time that the
17:01
revisions are occurring because all the data doesn't come in at
17:05
once. It comes in overtime.
17:07
By overtime I mean months to sometimes up to a year.
17:11
And so it can take 6 months to a year before we're able to look
17:16
back and say definitively, Oh yeah, we were in recession 6
17:20
months ago. SO and NBER suffers the same
17:24
problem with reality that the BLS suffers.
17:28
Yeah, I wouldn't say it's a. It's the problem isn't theirs in
17:31
the sense that they're doing anything wrong.
17:33
It's a problem of it's the problem.
17:35
Time to collect data. It's literally the problem of
17:38
reality. Yeah, it is.
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And this is probably a good time to to say to the side those who
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would, those who would put their faith in policy makers, well,
17:50
let's increase government spending to pull us out of
17:52
recession, or let's mess with the money supply to do whatever
17:56
it is we want to do. Keep in mind that all of those
18:00
policy makers suffer from the same problem.
18:03
Even if even if they're brilliant and they can make
18:06
perfect policy decisions, they're looking through a
18:09
rearview mirror. They're seeing the economy as it
18:11
was six months ago at best. And that's always the problem of
18:15
politics right there. They're always and, and this
18:17
isn't just true of economic data, this is true of of social
18:22
movements as well. By the time by the time people
18:25
in Congress become aware of them, it's already happened.
18:30
Right. Yeah.
18:31
Right. So, you know, they're always
18:32
legislating something that's been definitively decided by the
18:36
people. Oh, I'd love that.
18:37
You talked about this some time ago.
18:39
We were talking about the civil rights movement and legalization
18:42
of marijuana, and you pointed out that the politicians jump in
18:46
front of the bandwagon and say look at what I did.
18:49
Ain't I something? My favorite example of this is
18:53
the see if I can get the initials right FS if it S FSLB 5
19:01
federal standards, Federal Labor Standards.
19:04
I can't remember what it is. Yeah, with the child, the child
19:06
labor business with the child. Labor back in the 1930s and
19:10
people, the government passed this, the federal government
19:13
passed these fair labor, the Fair Labor Standards Act, FLSA
19:18
passed the Fair Labor Standards Act that said, you know that you
19:21
get paid that there's a 40 hour work week and you get paid time
19:24
and a half. It's more than that.
19:25
And they outlawed child labor and all of that.
19:28
And every, everybody points to that.
19:30
I shouldn't say everybody, people who are proponents of, of
19:33
policy intervention point to that and say, look, the
19:36
government put finally put an end to the 60 hour workweek.
19:40
If the government finally put an end to child labor.
19:43
And if you look at the numbers, the markets had done away with
19:47
all of that a decade before the law ever came about.
19:51
You get the exact same thing if you read up on the history of
19:55
the civil rights movement and oddly enough, the the history of
20:01
the abortion rights movement. Things were long settled.
20:04
There's a great book author named O'Brien called The Hollow
20:08
Hope. I recommend it.
20:10
Universally, it's about people who try to get their cases to
20:14
the Supreme Court, and he refers to that as a hollow hope right.
20:19
They it by the time the Supreme Court puts its imprimatur on
20:22
something. It's already definitively
20:25
decided, right? They're they're not going out
20:27
into the wilderness saying, Oh yeah, let's let's integrate.
20:31
It was already happening. It was a move afoot across the
20:35
entire country. Was there resistance?
20:37
Who? Of course there was.
20:38
This wasn't a universal thing, but it was a thing that was
20:41
going to happen whether they put their foot on it or not.
20:45
And and there you go. But that makes that makes
20:49
perfect sense because if you're a member of the Supreme Court,
20:54
what's the worst thing that could happen is that you make a
20:57
decision that goes against the popular conception and everybody
21:03
ignores you. Ignores it.
21:05
That's right. Because that's the end of the
21:06
Supreme Court. Supreme Court has no enforcement
21:09
mechanism, none whatsoever. So careful, you know, they can
21:13
only go so far. And if it was designed that way
21:16
on purpose and was it Alexander Hamilton in Federalist 78 said
21:23
that the Supreme Court has neither force nor will.
21:26
That's that's a nice turn of the phrase right there.
21:29
Neither force nor turns out not to be entirely correct.
21:32
But yeah, close enough anyway. But you got to get back to this
21:35
recession business. Oh, you're going to get very
21:38
right. See, I'm trying to avoid talking
21:39
about it. All right, So here, here's the
21:44
the first thing is we don't know what what's going on now, but
21:47
what has evolved are a set of what we call now casts as
21:53
opposed to forecast. And it is his name would suggest
21:56
it's an attempt to use forecasting techniques to tell
22:00
us what's going on right now. That's pretty interesting.
22:04
Yeah, and a number of the feds that the Federal Reserve is
22:07
divided into districts. Each district has a, has a, I
22:11
don't know what you'd call it. Headquarters isn't the right
22:14
thing, but it's, you know, the central Bank of of that.
22:17
District the the Bat Cave. Right.
22:19
Yeah, the bat Cave, right. So there's a Chicago fed to
22:22
Philadelphia fed, the Dallas Fed.
22:24
It goes on and on, everybody. 'S favorite is the Saint Louis
22:27
Fed for some reason. The Saint Louis I love the Saint
22:30
Louis Fed. See, everybody says.
22:33
They provide all sorts of data. It's well arranged.
22:37
It's all free. Well, it's free.
22:39
It's paid for with my tax dollars.
22:41
It's wonderful stuff, but I digress.
22:44
Each, I shouldn't say each of these feds, but a number of them
22:47
maintain now casts the New York Fed has a forecast actually.
22:51
And so these are built on different things, right?
22:54
Because they're, they're econometric models, they're
22:56
forecasting models. So they're necessarily going to
22:58
be built differently and give different results.
23:01
So the idea here is let's look at the suite of them and see if
23:05
they're pointing in similar directions.
23:08
I'm going to look at for the now casts, I'll look at threes,
23:12
Chicago, Philadelphia and Dallas feds and each one of them look
23:15
at different things. Chicago Fed looks at a whole
23:18
bunch of things about they're going on the economy, income,
23:21
employment, consumption on and on.
23:23
Philadelphia Fed looks at unemployment and payroll and
23:26
GDP. Ellis Fed looks at sales,
23:29
consumer sentiment, taxes. So it's all kinds of different
23:32
things going on here. And if you look at those 3 for
23:37
now, cargo, Fed says for the for for the last, let's say four
23:44
months or so, the economy has been, how should I say, inching
23:52
toward recession, but still solidly in the expansion range.
23:57
So Chicago Fed would say things are beginning progressively
24:01
worse, but they aren't dire. Having its cake and eating it
24:05
too. Yeah, well, we're all going to
24:07
do that. We're economists, right?
24:09
I started off by saying, well, yes, we are in in the recession
24:13
and an expansion. The Philadelphia Fed, they're
24:16
now cast model in a way says the reverse in in a way says the
24:23
same thing. They say that the economy has
24:26
been getting weaker and weaker going back to January 2024, so
24:31
steadily weaker, but then started to turn around last
24:35
month. So kind of in this strange set
24:38
of circumstances where now people more so than the past are
24:42
talking about the possibility of recession, Philadelphia Fed is
24:46
they're not bullish on the economy, but they're it's
24:50
probably they're less bull, less bearish than they were a month
24:53
or two ago. Dallas Fed says the economy has
24:58
actually been strengthening over the past couple of months and
25:02
I'm trying to look at to see what this to compare this to.
25:06
According to Dallas Fed's number, the economy is as strong
25:10
now or I should say as of last month, July as it was looks like
25:19
roughly February of February of this year and November of 2024.
25:26
Not bad. Yeah, neither of those times
25:29
were anything to write home about.
25:30
But they weren't recessions either.
25:32
They weren't they. Weren't terrible either.
25:33
Let me ask you a question though, and how idiosyncratic
25:38
are the measures? Do they, are they geographic
25:40
right? Does the Dallas Fed care more
25:43
about Dallas things or are they all looking at national things?
25:47
They're looking at national things.
25:48
All of them, all of y'all. So 111 would expect that they
25:53
would come up with incredibly similar conclusions, and that's
25:57
not exactly the case. Yeah, I would say that the
26:02
conclusions are they're not, they're not the same, but
26:05
there's a lot of similarity. For example, Chicago says things
26:10
are getting worse. Philadelphia and Dallas say
26:13
things are getting better, but Chicago says things are getting
26:16
worse, but from a pretty good standpoint.
26:18
Whereas Philadelphia says things are getting better, but from a
26:21
really bad standpoint. You've you've stumbled, shall I
26:28
say, witlessly, which is always how you stumble right right into
26:33
why people don't like or trust economists.
26:36
Yeah, and I I suppose the problem here is you people want
26:44
a definitive answer, and a lot of times there simply isn't a
26:48
definitive answer to be had. But you know who gives them
26:52
definitive answers? Politicians.
26:55
Oh yes? Oh, absolutely.
26:57
Always know and and now if you followed this argument from, you
27:02
know, A-Z, you realize that when politicians give you rock solid
27:08
economic answers, they're lying. Well, absolutely.
27:11
They're lying, Yeah. Imagine that politicians lie
27:17
right? What film at 11?
27:18
God, we're, we've really uncovered something here, Aunt.
27:21
And even even when you look backwards, because you would
27:23
think all right, at some time, at some point in time, the data
27:27
is set, we know what happened. We could point to it and say
27:30
historically this is what went on.
27:33
And even then, you're while we're much more sure than we are
27:37
now, it's not entirely clear. For example, so many people were
27:44
taught in high schools. I'm sure you were taught.
27:46
I was. That I already know what you're
27:47
going to say. Yeah, that Roosevelt brought us
27:51
out of the great. Depression.
27:52
Not true at all. No, it wasn't until I was into
27:56
PhD studies before I discovered that's absolutely the opposite.
28:02
Yeah, it's, it's a ridic. Not only is it a lie, it's a
28:05
fantastic lie. Yeah, it's because of
28:07
Roosevelt's policies that the Depression lasted for 10 years,
28:11
as opposed to six months in eight England.
28:16
Yeah, that's right. A year in Germany and and.
28:19
There you go. I mean, look, economists,
28:22
economic historians will still in all earnestness, debate the
28:26
cause of the 29 stock market crash, right?
28:29
They're, they're not settled on it.
28:31
They're mostly settled on it, but they're not absolutely
28:34
settled on it. And I kind of like that,
28:37
actually, the the people still want to dig up the past and try
28:41
to figure out exactly what happened and why, because that
28:44
information is incredibly valuable.
28:46
It really is it, it informs our policy moving forward.
28:51
But but I think as well people, some people expect a smoking gun
28:57
that you can point to this thing and that was the reason.
29:01
And it's not with an an economy as a system, there's never one
29:05
thing. You're lucky if it's only a
29:07
dozen things. How many trillions of dollars
29:10
change hands in the United States every year?
29:12
Good question. Because it's not GDP, it's more
29:15
than that I guess. I would guess, don't quote me,
29:19
but I would guess 40 trillion. That's how complicated it is.
29:23
Yeah, right. Yeah.
29:24
Right, Yeah, right, right there. That's exactly how complicated
29:29
it is. And and I'll, I'll tell you this
29:31
as well, there is literally no way to know the answer to the
29:34
question that I asked. You can.
29:35
Yes, that is correct. You can just about know you
29:39
could be really close. You can study it for years and
29:42
and get very close and then there's a bunch of dollars
29:46
changing hands that you never saw.
29:47
Yeah. And I'm, I'm now going to
29:50
contradict myself a little bit because there are some things we
29:53
can know. And people who are people who
29:57
don't understand the economics or people who do understand the
30:00
economics but are disingenuous, will will play on this.
30:04
And they'll say things like, I'm thinking about the minimum wage.
30:08
They'll say things like you can raise the minimum wage and you
30:11
won't cause unemployment right now.
30:15
Yeah, right. For example, now I can tell you
30:18
that's patently false. It's in in the the reason I can
30:23
be so sure about that after being so unsure about all these
30:28
other things is because that phenomenon is based has a has a
30:34
basis. We understand people's behavior.
30:38
And given what we understand of people's behavior, if you force
30:41
employers to pay more, you're they're going to end up
30:44
unemploying some. Yeah, they will always hire
30:48
fewer people. Right.
30:50
So we understand how that mechanism works.
30:53
Now, having said that, if you go and collect data, as some people
30:57
have done, you could say, well, yes, but in this particular
31:00
instance, the minimum wage went up and unemployment didn't
31:05
follow, to which most economists would say, OK, that doesn't mean
31:10
that the principle doesn't apply.
31:12
It means that there were other things also at play that
31:16
counteracted what you're seeing. Something else was going on and,
31:20
and here's the thing with the economy, something else is
31:22
always going on. Right.
31:24
Yeah. Literally always.
31:26
So, you know, take everything you hear out of a politician's
31:30
mouth with a giant grain of salt.
31:33
That's good advice regardless, but it's especially good advice
31:36
when we talk about economics. Words and Numbers is a Civil
31:40
original podcast. We work with Civil to advance
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32:12
That's civl.com. Yeah.
32:17
And on that happy note, you got more.
32:20
Oh yeah, I'm not. I'm not at all done here.
32:24
I'm going to. I have not yet begun to
32:26
equivocate. You better hurry up.
32:32
The New York Fed maintains a forecast, so they're looking
32:37
into the future and they're showing their latest numbers.
32:41
They're estimating a 30% chance that the economy is in recession
32:47
pretty much at any given point for the next 6 months or so.
32:51
Great. And well, yeah, I that I, I'm
32:54
actually heartened by that. I'm actually somewhat surprised
32:57
that it, it's not a higher number.
33:00
There's 30% chance of unemployment is, excuse me, 30%
33:05
chance of recession is pretty decent.
33:08
I mean, it's not, I mean to write home about, right?
33:10
But it's not Armageddon either. Odds are it's not going to
33:13
happen. I mean in a in a casino, if I
33:16
have a 70% advantage on taking that bet literally every time.
33:19
Right, right. So what you're, what we're
33:21
saying here is there's a 70% chance that we're not going to
33:24
be in recession. Yeah, but we won't know for a
33:26
year anyway, so. Right.
33:29
See, and this is the beautiful thing about being an economist.
33:33
I say all this stuff. I say it's a, it's probably even
33:35
a better thing if you're a politician because you can say
33:37
all this stuff and three months from now nobody's going to
33:41
remember what you said. Yeah, except we're filming this
33:45
Ant we're all going to remember what you said.
33:50
Do you have more to say or are we finally done now?
33:53
So let me check my notes here. Yeah, there's, there's a,
33:57
there's an interesting disconnect that's been going on
34:01
for I'd say it's been going on for the past year, maybe more
34:06
than that, really. Yeah, it has to be more than
34:08
that, maybe the past three years.
34:09
And it's been caused, I think, by this sequence of events.
34:15
You remember we were both adults at 911 and 911 comes along.
34:19
It's a shock to the economy, but then it goes away and it's done
34:24
and and we go through life and there's not another major shock
34:27
for a while, maybe not till the housing crisis in. 2008, 2007,
34:31
That's right. We've had since COVID now they
34:36
haven't been of the maybe of the magnitude with the exception of
34:39
COVID haven't been in the magnitude of 911.
34:42
But it has been a non-stop sequence.
34:46
It was COVID, then it was the lockdowns in response, and then
34:50
it was this uncertainty of when the lockdowns would be released.
34:53
Then it was remote work, then it was the push to get people back
34:56
into the office. Then it was the inflation of 22,
35:01
and then it was a high interest rates.
35:04
And now it's the tariffs it's in in.
35:07
I don't mean to equate any of that to 911, but I do don't.
35:12
Don't don't forget the the the apartment slash housing crunch.
35:16
The the apartment housing. High interest rates captures
35:20
that. But you know, look, it deserves
35:21
its own category. Sure.
35:24
And so I think consumers, American consumers have been hit
35:27
with this non-stop kind of like a low level headache that
35:31
hasn't, you know, relieved over the course of years now one.
35:36
One might call it a cavalcade of bad news.
35:39
Yeah, yeah. And because of that, I, I refer
35:43
now to University of Michigan's consumer sentiment index.
35:47
They survey consumers, you know, every month and their consumer
35:51
sentiment index is just a number.
35:53
The higher the number is, the happier consumers are.
35:56
And it typically from roughly 2015 to 2020, hovered around the
36:01
95 range. Along comes COVID.
36:04
Ever since COVID, it's been hovering in the 60 range from 95
36:09
pretty constant down to 60 pretty constant.
36:12
Yeah, consumer and I, I say this is what's happened.
36:15
Consumers are are dealing with this non-stop business.
36:17
So on the one hand, we've got the consumers being really
36:21
bearish on the economy, I think more so than what the economy
36:25
deserves. The economy, I would say is
36:27
doing is doing better than what you would think given what you
36:31
see when you look at consumer sentiment.
36:33
So intuitions are probably incorrect.
36:36
Yeah, except when you look at the stock market.
36:40
The stock market's up 20% year over year, almost 30% over the
36:46
past three years. Could be a catastrophe in the
36:49
making right there. But this is the, the typical,
36:52
typical stock market's up 12 percent, 15% on a good time, 20%
36:57
up in in a market like this, it's as if it's as if the the
37:02
consumers have this have this biased negative view of the
37:07
economy, while the stock market has a biased positive view of
37:10
the economy. I have no idea.
37:12
Well, I do have an idea, but that what's going to require
37:14
another episode as to what's going on.
37:17
And we, we might well get to it, right?
37:19
It's interesting enough. And I, I just want to say before
37:23
we close up shop that I want to get back to government receipts.
37:28
You might remember we talked about how in, in June, I believe
37:33
it was, there was a surplus and it was a small surplus, but it
37:36
was a surplus nonetheless. And we promised that we would
37:40
get back to that when the July numbers were in.
37:43
And I'm sure they're in by now. So coming up soon on words and
37:48
numbers. We'll we'll get a look at that.
37:52
Let. Me throw out, let me throw out
37:53
one thing. When we talked about that, one
37:55
of our listeners contacted me and said, you know, a good
38:01
explanation for those July figures being up was quarterly
38:06
taxes being paid by businesses. Yeah, but that's every year.
38:10
No, but it they come once a quarter, yeah, but and it
38:14
happened. But that's every year.
38:16
And no, we we didn't have surpluses in those other years.
38:20
Oh, yeah. But the I don't.
38:21
Yeah, yeah, that that's true. I guess I will.
38:24
I will. Get to it.
38:26
We'll get to it when we when we talk about it.
38:28
Probably. Fair enough.
38:29
Fair enough. Probably next time.
38:31
Until then, live an interesting and varied life.
38:35
Take a minute to close your eyes and enjoy the silence.
38:38
And for the love of God, be nice to each other.
38:42
You can do it. It'll be all right.
38:45
See you soon, Aunt. See you next time, James.
38:47
Think Stu's phone.