Latest / The Chuck ToddCast / Interview Only w/ Mark Zandi - Trump’s Policies Have Been Disastrous For The American Economy

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Interview Only w/ Mark Zandi - Trump’s Policies Have Been Disastrous For The American Economy · The Chuck ToddCast

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  Speaker 1: I've got the cheap Economists for Moodies with me today.
• 1:46
  Speaker 1: Mark Sandy and Mark we are taping. It is Wednesday
• 1:50
  Speaker 1: in the am East Coast time. I always like to
• 1:53
  Speaker 1: timestamp this. The President of the United States about to
• 1:56
  Speaker 1: land in China, about to start a three day visit
• 1:59
  Speaker 1: in China. Would be a huge impact on the economy.
• 2:02
  Speaker 1: But uh, look, I invited you on before the big
• 2:05
  Speaker 1: inflation report, and then I'm like, wow, thank god, I
• 2:08
  Speaker 1: invited Mark Sany on this week after this big inflation report.
• 2:10
  Speaker 1: So let's start there. Yeah, any sugarcoating this.
• 2:16
  Speaker 2: No, you're you're talking about the producer price index. Yeah,
• 2:19
  Speaker 2: we went API yesterday, which was pretty ugly. This was
• 2:23
  Speaker 2: this PPI is hold.
• 2:25
  Speaker 1: Which is which matters more to you?
• 2:28
  Speaker 2: Well, I'm an economists.
• 2:29
  Speaker 1: It all matters to right, all of it's in a
• 2:31
  Speaker 1: data point.
• 2:32
  Speaker 2: But I think, you know, most people are focused on
• 2:35
  Speaker 2: the CPI, the consumer price indecks, because that's what uh
• 2:39
  Speaker 2: inflex prices for goods and services that they're paying for
• 2:41
  Speaker 2: out of pocket, you know, so that that's what they feel.
• 2:44
  Speaker 2: PPI is one step, big step back. That's what businesses
• 2:47
  Speaker 2: are charging each other effectively that ultimately get passed through
• 2:51
  Speaker 2: to consumers in the CPI. But people fill the CPI
• 2:55
  Speaker 2: more than the PPI. But the CPI yesterday that was ugly.
• 3:00
  Speaker 2: The PPI is uglier. I mean, it was just really bad.
• 3:04
  Speaker 2: I mean, we knew it was going to be up
• 3:05
  Speaker 2: a lot because of you know, the energy prices, the
• 3:08
  Speaker 2: war and everything else, tariffs, but it was out more
• 3:13
  Speaker 2: than double when I what I thought the increase would be.
• 3:16
  Speaker 1: And everything I've read says that this stuff's lagging.
• 3:20
  Speaker 2: Indicator lagging in what sense, meaning that it's.
• 3:24
  Speaker 1: Only getting it's you know that this is if you're
• 3:27
  Speaker 1: looking backwards, things are probably still still headed in the
• 3:31
  Speaker 1: wrong direction.
• 3:31
  Speaker 2: Oh oh yeah, absolutely. The trend lines here look well
• 3:34
  Speaker 2: it's ugly, and the trend lines look really ugly. Yeah,
• 3:36
  Speaker 2: good word forward. Yeah, I mean, it's got a lot
• 3:40
  Speaker 2: of pass through that's still happen related to the energy
• 3:43
  Speaker 2: price effects. You know, so far, all we've observed or
• 3:46
  Speaker 2: seen or felt is kind of the direct effects of
• 3:49
  Speaker 2: the higher oil prices. You know that we're paying more
• 3:52
  Speaker 2: at the gas pump, we're paying starting to pay more
• 3:55
  Speaker 2: for airfares. But now it's flowing through and you can
• 3:59
  Speaker 2: start you're starting to feel it in grocery prices, right,
• 4:01
  Speaker 2: simply because it costs a big part of food costs
• 4:05
  Speaker 2: is transporting the product from the far dieselport, yeah, diesel,
• 4:11
  Speaker 2: and then you're seeing it in transportation costs. And so yeah,
• 4:14
  Speaker 2: the pastor here is going to continue. Even if it
• 4:17
  Speaker 2: were ended today and oil prices started to come in,
• 4:19
  Speaker 2: We're going to be feeling this for quite some time,
• 4:21
  Speaker 2: at least to the summer months into the rest of
• 4:23
  Speaker 2: the year.
• 4:24
  Speaker 1: At one point on Tuesday before the President left, he
• 4:27
  Speaker 1: claimed before the war started that the inflation rate had
• 4:30
  Speaker 1: gone down below two I heard that, Yeah, had it?
• 4:34
  Speaker 1: I mean, did I miss something? I don't think. I mean,
• 4:37
  Speaker 1: we had been pushing it down and then tariffs sort
• 4:41
  Speaker 1: of instead of me saying it, you tell me, since
• 4:44
  Speaker 1: he took office, what's the inflation rate been doing accelerating?
• 4:50
  Speaker 2: I mean, when we came into his presidency a little
• 4:54
  Speaker 2: over a year ago, inflation was still on the high side.
• 4:58
  Speaker 2: It was above the federers two percent target, but it
• 5:02
  Speaker 2: was it was in the low two's uh, and it
• 5:05
  Speaker 2: was clearly headed to the that target of two percent.
• 5:08
  Speaker 2: We were on track to be there by spring summer of
• 5:11
  Speaker 2: twenty twenty five. First Liberation Day was That's the the
• 5:17
  Speaker 2: when the president announced the big terrifyights of recipical reciprocal tariffs.
• 5:21
  Speaker 2: Since then, inflation has more or less accelerated. Uh. And
• 5:26
  Speaker 2: then you throw into the mix the war in Iran,
• 5:28
  Speaker 2: which began, you know a little over a couple of
• 5:30
  Speaker 2: months ago, almost three months ago. Now that's just adding
• 5:33
  Speaker 2: more juice to inflation. And now instead of being at
• 5:37
  Speaker 2: two percent, we're well over three and you know, probably
• 5:41
  Speaker 2: closer to four. You know, by some measures of inflation.
• 5:44
  Speaker 1: What was the peak in the COVID supply chain joke
• 5:49
  Speaker 1: after that started much higher peak?
• 5:51
  Speaker 2: You know, yeah, it was eight if I'm speaking for memories,
• 5:54
  Speaker 2: so I don't have a quote. We're probably double what
• 5:57
  Speaker 2: it is now. We were, we were three and a
• 5:59
  Speaker 2: half to four percent now on the CPI. It was
• 6:01
  Speaker 2: like eight percent at the worst of it in the
• 6:03
  Speaker 2: summer of twenty twenty two. Of course, that was more
• 6:06
  Speaker 2: than COVID. That was the thing that really juiced up
• 6:08
  Speaker 2: inflation during that period was the Russian War. Remember that's
• 6:12
  Speaker 2: when oil prices got OILPI they were even prices were
• 6:15
  Speaker 2: even higher then than they are now, you know, for
• 6:17
  Speaker 2: a brief period, and we got you know, we're paying
• 6:19
  Speaker 2: five bucks for a gallon of regular unletted back in
• 6:22
  Speaker 2: June of twenty twenty two. We're now paying four buck fifty.
• 6:24
  Speaker 2: So we're not quite there yet.
• 6:27
  Speaker 1: Has it been since the teens that we've had inflation
• 6:31
  Speaker 1: the inflation rate at two or less.
• 6:35
  Speaker 2: Well, we were in the middle of the pandemic, you know,
• 6:37
  Speaker 2: when the pandemic hit up, of course people were cutting prices. Sure,
• 6:41
  Speaker 2: tracting from that, Yeah, you have to go back before
• 6:43
  Speaker 2: the pandemic. I mean, you know, between the global financial crisis,
• 6:47
  Speaker 2: which was you know, two thousand and eight, two thousand
• 6:49
  Speaker 2: and nine up until the pandemic a decade later, or
• 6:52
  Speaker 2: lot over a decade later, inflation was consistently below two
• 6:56
  Speaker 2: percent defence target. And in fact, the Fed all the
• 6:59
  Speaker 2: hand ringing was about inflation is too low. You know,
• 7:02
  Speaker 2: why can't you get inflation up back hup to target.
• 7:05
  Speaker 2: This was a period of so called secular stagnation when
• 7:07
  Speaker 2: the economy was kind of struggling.
• 7:09
  Speaker 1: In the banking We weren't growing, we were not shrinking.
• 7:14
  Speaker 1: It was right, staggering, Yeah, it was. It was.
• 7:16
  Speaker 2: It just felt uncomfortable, right, uncomfortable. We were growing, but
• 7:20
  Speaker 2: it was an uncomfortable growth. That was the budget battles.
• 7:24
  Speaker 2: Remember Obama was fighting with the Republican Congress about, hey,
• 7:29
  Speaker 2: we need a little bit more physical stimulus here. Pretty
• 7:31
  Speaker 2: quaint when you think about the amount of dollars we
• 7:33
  Speaker 2: were talking about back then. But that never happened. You know,
• 7:36
  Speaker 2: we had government shutdowns, we had bringmanship over debt limits,
• 7:39
  Speaker 2: and that just weighed on the economy and we could
• 7:43
  Speaker 2: never really kick into gear. And so inflation in that
• 7:45
  Speaker 2: period was below two percent consistently.
• 7:49
  Speaker 1: I know that you when you're when you're getting your
• 7:52
  Speaker 1: credentials to be an economist, especially of a certain generation,
• 7:56
  Speaker 1: you're you study the sixties and seventies very carefully, and
• 8:03
  Speaker 1: it took years to get out of this inflationary spiral
• 8:08
  Speaker 1: that we were in the seventies, and suddenly now it
• 8:11
  Speaker 1: feels like we're in year five of this. Now. I
• 8:14
  Speaker 1: know some of this is artificial, right, because it's literally
• 8:17
  Speaker 1: the Trump's policies have done this. This is sort of
• 8:24
  Speaker 1: man made, not sort of done from the outside right
• 8:27
  Speaker 1: in this. But is there any lessons to take away
• 8:32
  Speaker 1: from the seventies that you're looking to to sort of
• 8:36
  Speaker 1: understand the trajectory of this and when we get to
• 8:40
  Speaker 1: a stable pricing environment.
• 8:43
  Speaker 2: Well, this period feels really bad, but the seventies feels
• 8:49
  Speaker 2: was much much worse, right, I mean, that was a
• 8:52
  Speaker 2: period of inflation that was almost double digits at points,
• 8:56
  Speaker 2: and we had unemployment double digits. And the difference between
• 9:00
  Speaker 2: now and then, at least so far, is then the
• 9:06
  Speaker 2: Federal Reserve, whose responsibilities to keep inflation low, really wasn't
• 9:12
  Speaker 2: focused on the right things. You know, inflation expectations, you know,
• 9:15
  Speaker 2: people think inflation is going to be is really important,
• 9:17
  Speaker 2: and that had taken off during that period and you
• 9:20
  Speaker 2: got into this kind of self reinforcing wage price so
• 9:23
  Speaker 2: called wage price bi where prices rose, workers said, hey,
• 9:27
  Speaker 2: you got to pay me more, mister employer. Mister employer said, final,
• 9:31
  Speaker 2: I'll do it. Because they knew they could pass along
• 9:32
  Speaker 2: the higher price increases and you got into this kind
• 9:34
  Speaker 2: of self reinforcement cycle. And that goes back to a
• 9:38
  Speaker 2: lot of different things, some misunderstanding about the dynamics of
• 9:42
  Speaker 2: inflation expectations, how to measure them, what are they? But
• 9:45
  Speaker 2: also it goes to FED independence. You remember the Nixon
• 9:48
  Speaker 2: tapes show that because connection had captured the FED when
• 9:52
  Speaker 2: Arthur Burns foot buddy was the chair of the FED,
• 9:54
  Speaker 2: and they based monetary policy on politics. You know, I
• 9:58
  Speaker 2: got to win the election as a to what's the
• 10:00
  Speaker 2: right policy. So inflation expectations took off, and that's how
• 10:04
  Speaker 2: inflation became more entrenched and metastasized more broadly. And the
• 10:09
  Speaker 2: only way out of that was a very severe recession.
• 10:11
  Speaker 2: That's when Paul Volker came in in the late seventies
• 10:14
  Speaker 2: early eighties and he said, you know, we got to
• 10:17
  Speaker 2: squash this, and I'm going to tolerate as much economic
• 10:20
  Speaker 2: pain as highs and employments go. We'll take it. We
• 10:23
  Speaker 2: have to get rid of this inflation and we benefited.
• 10:25
  Speaker 2: You know, that was painful, double digitalunemployment, but we got
• 10:29
  Speaker 2: through it, and we've benefited through for that up till
• 10:33
  Speaker 2: this point in time. Now here we are. And the
• 10:36
  Speaker 2: lesson is, don't do what we did back in the
• 10:38
  Speaker 2: nineteen seventies. That's the lesson. Focus on inflation expectations and
• 10:42
  Speaker 2: don't let the FED be politicized and maintain FED independence.
• 10:46
  Speaker 1: Well, we're about to have a new FED chair. In fact,
• 10:49
  Speaker 1: by the time some people listen to this, we may
• 10:51
  Speaker 1: already have a new FED chair. It's the vote maybe Wednesday.
• 10:56
  Speaker 2: That's right, Yeah, in May fifteenth.
• 10:58
  Speaker 1: Yeah, So Kevin Worsh's is is going to be and
• 11:01
  Speaker 1: he was he was nominated to do one thing as
• 11:04
  Speaker 1: far as President Trump was concerned, and he couldn't be
• 11:07
  Speaker 1: in a worse situation if you just look at his
• 11:11
  Speaker 1: at his what his chief employer, as far as he's concerned. Right,
• 11:16
  Speaker 1: the only reason he got this job was because the
• 11:19
  Speaker 1: President was frustrated that Japow wouldn't lower interest rates. How
• 11:23
  Speaker 1: catastrophic would lowering interest rates be if he does it
• 11:26
  Speaker 1: in the next you know, if somehow this bad Now
• 11:29
  Speaker 1: I don't it certainly looks to me this is a
• 11:31
  Speaker 1: very divided fed and it's not probably not going to happen. Yeah,
• 11:33
  Speaker 1: let's say he strong armed it through. What are the
• 11:37
  Speaker 1: risks of that? What are the risks to the economy
• 11:39
  Speaker 1: and inflation on that?
• 11:40
  Speaker 2: Well, then you're you're risking what happened in the seventies, right,
• 11:43
  Speaker 2: because I mean, here we are, inflation is raging, inflation expectations.
• 11:48
  Speaker 2: We've got a pretty good grip on how to measure
• 11:50
  Speaker 2: that now, and that's saying, you know, yellow flares are
• 11:55
  Speaker 2: going off, it's not red. But the inflation expectations are
• 11:58
  Speaker 2: on the high side of where we've been comfortable in
• 12:01
  Speaker 2: the past. So if that starts to migrating any higher,
• 12:04
  Speaker 2: then we got a problem. So policy would say, you know,
• 12:09
  Speaker 2: what's best for the economy clearly would say sit on
• 12:15
  Speaker 2: your hands, do nothing. Start thinking about what would happen
• 12:18
  Speaker 2: if inflation expectations come untethered. Then you have to start
• 12:21
  Speaker 2: raising interstrates, but certainly not cut interest rates. That would
• 12:23
  Speaker 2: be you know, I don't catastrophic is too strong a word,
• 12:26
  Speaker 2: because you can maybe you'd assume these guys would figure
• 12:29
  Speaker 2: that out and pull back. But if they pursued that
• 12:32
  Speaker 2: policy of just low rates at any cost. Yeah, that
• 12:34
  Speaker 2: would be ultimately catastrophical. We get in back and we
• 12:37
  Speaker 2: learned nothing from the nineteen seventies and we're back, you know,
• 12:39
  Speaker 2: back into that kind of environment. So that would be
• 12:43
  Speaker 2: a huge error. But as you point out, I don't,
• 12:45
  Speaker 2: that doesn't that's not going to happen, right because monetary
• 12:48
  Speaker 2: policies set by committee. Each person on the committee has
• 12:51
  Speaker 2: a vote, The chair has a vote. He's more he
• 12:55
  Speaker 2: or she is going to be more influential because they
• 12:57
  Speaker 2: go out and explain to the world, you know, the
• 12:59
  Speaker 2: thinking behind, you know, the rate decision. So they have influence,
• 13:02
  Speaker 2: of course, but they're just one vote, and nobody has
• 13:07
  Speaker 2: enough votes to cut interest rates at this point. That's
• 13:08
  Speaker 2: just not going to happen in the current environment.
• 13:11
  Speaker 1: One thing about a political calendar and an economic calendar
• 13:14
  Speaker 1: is they don't always they don't always align as far
• 13:18
  Speaker 1: as certain political parties are concerned. If you are a
• 13:21
  Speaker 1: Republican incumbent, is there any time for this economy to
• 13:27
  Speaker 1: recover by November at this point? Or is this are
• 13:31
  Speaker 1: you looking at like at best the best you can
• 13:33
  Speaker 1: hope for if you're an incumbent Republican is the economy
• 13:38
  Speaker 1: we're experiencing right now.
• 13:40
  Speaker 2: Yeah, it's going to be tough to turn this around
• 13:42
  Speaker 2: by early November. And I guess you know better than I,
• 13:45
  Speaker 2: But I think the electric electorate makes up their mind about,
• 13:48
  Speaker 2: you know, who they're going to vote.
• 13:49
  Speaker 1: Usually right about now, I mean Memorial Day June. You know,
• 13:52
  Speaker 1: that's been tradition. Now, I do think I've I'm always
• 13:56
  Speaker 1: careful to presume how it has worked versus because they
• 14:00
  Speaker 1: think people get information faster. And I do think, you know,
• 14:03
  Speaker 1: there's always been this running debate among a few of us.
• 14:08
  Speaker 1: And I even just had this conversation the other day
• 14:10
  Speaker 1: with somebody who worked in the Clinton White House who
• 14:13
  Speaker 1: was giving a bunch of credit to the nineteen ninety
• 14:16
  Speaker 1: Bush tax cut, Bush tax height deal with George Mitchell,
• 14:19
  Speaker 1: which allowed Clinton to do his deficit reduction thing and
• 14:23
  Speaker 1: really did sort of it was and the and this
• 14:26
  Speaker 1: person admitted, you know, it's possible if people at the
• 14:31
  Speaker 1: public followed the economy then as closely as the general
• 14:36
  Speaker 1: public does follow it now, right, there just is more
• 14:40
  Speaker 1: more people would have known the economy was recovering before
• 14:43
  Speaker 1: election day.
• 14:43
  Speaker 2: I did, Yeah, I remember that, that narrative. Yeah, yeah,
• 14:46
  Speaker 2: I remember that. Yeah, Bush got reen because didn't the
• 14:50
  Speaker 2: economy wasn't proving you could see, at least in hindsight.
• 14:53
  Speaker 1: But we weren't covering right like CNBC was not. Sort
• 14:57
  Speaker 1: of it existed, but none of us, I mean just
• 15:00
  Speaker 1: the political media world, right, you know, the economy was
• 15:05
  Speaker 1: always over here, right, the business section, you know, the
• 15:08
  Speaker 1: business section of the political sections usually didn't align right,
• 15:11
  Speaker 1: tollide that well.
• 15:13
  Speaker 2: And also you don't have the same spin, right, I mean,
• 15:15
  Speaker 2: now you've got a whole infrastructure on all sides spinning
• 15:19
  Speaker 2: the numbers and getting it out there for people to digest.
• 15:21
  Speaker 1: Right. But so even assuming you can, you know that
• 15:25
  Speaker 1: maybe recovery beginning in September or October would penetrate the electorate.
• 15:31
  Speaker 1: I mean, you tell me, I mean what it doesn't.
• 15:33
  Speaker 1: It don't look like it. You know, let's assume something
• 15:37
  Speaker 1: that's not going to happen. The Iran and the United States,
• 15:40
  Speaker 1: you know, reach a reach a framework agreement, the strait
• 15:44
  Speaker 1: is opened up by May twenty fifth, everything is flowing.
• 15:50
  Speaker 1: We're still three months before energy the energy markets get
• 15:55
  Speaker 1: right sized.
• 15:56
  Speaker 2: Yeah, yeah, and we're not going back to where we
• 15:58
  Speaker 2: were prior to the word you know, in the foreseeable future,
• 16:01
  Speaker 2: not this year, probably not next year. So we're not
• 16:04
  Speaker 2: going back to three dollars a gallon.
• 16:05
  Speaker 1: Let's say, you know, we're looking at a twenty twenty
• 16:08
  Speaker 1: seven recovery from this search, and.
• 16:11
  Speaker 2: I say, at best that's optimistic. Then that's optimistic. Yeah.
• 16:16
  Speaker 2: Here's the other thing, Chuck. You know, I think that's
• 16:18
  Speaker 2: not well recognized, but the economy in the last couple
• 16:23
  Speaker 2: three months has been really juiced up by the tax cuts,
• 16:28
  Speaker 2: the deficit finance tax cuts that were a.
• 16:31
  Speaker 1: Little artificial hot air into a balloon with holes in it.
• 16:35
  Speaker 2: Yeah, I mean because the you know, you can that's
• 16:37
  Speaker 2: manifested most obviously with big refund checks. Right, people, The
• 16:40
  Speaker 2: average American taxpayer got a refund checked this year that
• 16:43
  Speaker 2: was three hundred and fifty dollars more than last year. Now,
• 16:46
  Speaker 2: I don't know, that doesn't sound like a lot to
• 16:47
  Speaker 2: a lot of people, but for lower millenco Americans that's
• 16:50
  Speaker 2: a that's a big deal.
• 16:51
  Speaker 1: How about time is that by like one hundred million? Right?
• 16:53
  Speaker 1: I mean, that's a lot of people that I probably
• 16:55
  Speaker 1: got that yeaheah.
• 16:56
  Speaker 2: So that's fading right because they're on the other side
• 16:59
  Speaker 2: of that. You know, with April fifteenth tax filing deadline,
• 17:02
  Speaker 2: so that benefit is fading, while at the same time
• 17:05
  Speaker 2: we're still paying four buck fifty for a gallon rigo
• 17:07
  Speaker 2: and let it in the pass through to other prices
• 17:10
  Speaker 2: that are staples, groceries, apparel, you know, things that we
• 17:14
  Speaker 2: need and have to buy continue to rise. So the
• 17:18
  Speaker 2: you know, actually kind of just look at something called
• 17:22
  Speaker 2: real disposable income. So I take you all the income
• 17:24
  Speaker 2: out there that people are earning, do it, you know,
• 17:27
  Speaker 2: acount for taxes because you know, you have to pay
• 17:30
  Speaker 2: your taxes, and then count for inflation. That's the real part.
• 17:33
  Speaker 2: So real after tax or disposable income today is no
• 17:38
  Speaker 2: higher than it was on April of twenty twenty five.
• 17:41
  Speaker 2: It has gone nowhere. And that's the average for the
• 17:45
  Speaker 2: average American. That means that there's a big chuck of
• 17:47
  Speaker 2: Americans where that's actually falling. It's actually falling.
• 17:50
  Speaker 1: Hey, look what is the stat and I want to
• 17:53
  Speaker 1: get it right? Is it? Twenty percent of Americans account
• 17:57
  Speaker 1: for over fifty percent of spending.
• 18:00
  Speaker 2: We're sixty percent of spending.
• 18:01
  Speaker 1: Sixty percent of spending of out lace. How hard is
• 18:06
  Speaker 1: it for you to extract out the twenty percent that
• 18:08
  Speaker 1: is accounting for the sixty percent of spending and looking
• 18:12
  Speaker 1: at this other eighty percent of the population and isolating that, Like,
• 18:16
  Speaker 1: if you looked at that other eighty percent of the population,
• 18:19
  Speaker 1: what would this economic environment look like to them?
• 18:23
  Speaker 2: Yeah, I think that eighty percent and a cut in
• 18:25
  Speaker 2: half the bottom forty percent, it's a real struggle. I
• 18:30
  Speaker 2: mean they're living paycheck, literally, paycheck to paycheck, and if
• 18:33
  Speaker 2: your gas bill is going up, you got to make
• 18:35
  Speaker 2: a tough choice. I mean, you got something's not going
• 18:38
  Speaker 2: to happen. You know, you're not going to buy groceries.
• 18:41
  Speaker 2: You're going to delay, you know, purchase of clothing, household furnishings.
• 18:44
  Speaker 2: You might not make your rent payment, you might not
• 18:47
  Speaker 2: make your credit card payment, you know, delay things. So
• 18:49
  Speaker 2: you got a tough, very very difficult, you know choice
• 18:53
  Speaker 2: to make.
• 18:55
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• 20:41
  Speaker 1: Shipstation dot com use the code toodcast. How are you
• 20:50
  Speaker 1: measuring that? Are you looking at? Are we starting to
• 20:52
  Speaker 1: see a spike in car Loan defaults? Right? Is that
• 20:57
  Speaker 1: the first thing you would look at for that group
• 20:59
  Speaker 1: of of Americans?
• 21:01
  Speaker 2: Yeah, that's where you see. So for example, if I
• 21:03
  Speaker 2: look at the delinquency rate on FACHA mortgages, an FAH
• 21:08
  Speaker 2: mortgage is made by the government of very first time
• 21:12
  Speaker 2: home buyers or little down payment credit levels.
• 21:15
  Speaker 1: Right, Yeah, you have could be within a certain rate.
• 21:17
  Speaker 2: They're not the lowest, you know, they're if you've got
• 21:20
  Speaker 2: to buy a home, You're not in the bottom forty percent,
• 21:22
  Speaker 2: you're in the middle forty percent. But if you look
• 21:24
  Speaker 2: at the delinquency rates there, they're on the rise, and
• 21:27
  Speaker 2: you know, signaling stress. So if you and if you
• 21:29
  Speaker 2: look at the delinquency rate, and I base this on
• 21:32
  Speaker 2: I get all the credit file data in the country
• 21:34
  Speaker 2: every single month from Credit bureau effect, so I have
• 21:36
  Speaker 2: a census of exactly. It's anonymous, So I don't I
• 21:39
  Speaker 2: don't know you chuck, what your credit score is, but
• 21:42
  Speaker 2: you're in my data set. Got so I see this
• 21:44
  Speaker 2: data and I see it roll time. And if you
• 21:46
  Speaker 2: look at folks with credit scores that are below six sixties,
• 21:50
  Speaker 2: just the number, but six sixty is kind of the
• 21:52
  Speaker 2: threshold for so called subprime borrower. Okay, their delinquency rates
• 21:57
  Speaker 2: are now when I say delinquency, what per scent of
• 22:01
  Speaker 2: the people with uh that with the subprime credit score
• 22:05
  Speaker 2: are delinquent or not paying on their on their debt.
• 22:08
  Speaker 2: It's now over ten percent. And that's the highest it's
• 22:11
  Speaker 2: been since coming out of the global financial crisis, you know,
• 22:14
  Speaker 2: back in you know, twenty eleven, twenty twelve, something like that.
• 22:17
  Speaker 2: And it's on the rise. So that's, in my mind
• 22:21
  Speaker 2: a clear tell that they're stressed. And all the all
• 22:24
  Speaker 2: this is this is now with the refund checks, right
• 22:27
  Speaker 2: because what because they tell those refund checks people got real.
• 22:30
  Speaker 1: And they probably paid off some Yeah, they probably paid bills.
• 22:33
  Speaker 1: They weren't doing luxury at them.
• 22:34
  Speaker 2: Yeah yeah. Yeah. So now here we are and the
• 22:36
  Speaker 2: refund checks are gone, and they're still paying higher gas
• 22:40
  Speaker 2: and food crisis. So I would expect and this is
• 22:43
  Speaker 2: the point I was going to make to you leading
• 22:44
  Speaker 2: up to the election, that things are actually going to
• 22:46
  Speaker 2: feel softer. They're not getting better, They're going to feel
• 22:48
  Speaker 2: softer in the economy.
• 22:49
  Speaker 1: They're they're you know, it's because you've lost whatever stimulus
• 22:52
  Speaker 1: that was the only other the only other stimulus that's
• 22:56
  Speaker 1: sitting in the economy is stimulus that benefits people like
• 22:58
  Speaker 1: you and me, right, which is the amount of AI.
• 23:03
  Speaker 1: I mean, do you believe we would already be in
• 23:06
  Speaker 1: a recession if? I mean, there was that earnings report
• 23:10
  Speaker 1: where Microsoft, Google, and I think it was Meta combined
• 23:17
  Speaker 1: reported seven hundred billion dollars in AI sort of infrastructure spending.
• 23:23
  Speaker 1: And I thought, and you put that number together, right,
• 23:27
  Speaker 1: and you say, well, if Congress were doing I remember
• 23:30
  Speaker 1: all those stimulus when we were trying to juice the economy,
• 23:34
  Speaker 1: well eight, it usually would start somewhere between five hundred
• 23:38
  Speaker 1: billion and eight hundred billion, right, So seven hundred billion
• 23:41
  Speaker 1: is a is a pretty good cushion. But it's in
• 23:44
  Speaker 1: it's in a certain part of the economy. It's it's
• 23:48
  Speaker 1: certainly I think insulated Wall Street from the energy shocks
• 23:54
  Speaker 1: so far, we'll see if that that continues to hold
• 24:00
  Speaker 1: and it has served as some stimula. Like so, without
• 24:02
  Speaker 1: that AI spend this capital expenditures that a lot of
• 24:06
  Speaker 1: big cap companies are spending, is it likely we'd already
• 24:11
  Speaker 1: be in a tech a as far as economists are,
• 24:15
  Speaker 1: probably be in a recession.
• 24:16
  Speaker 2: It would have been very close. I mean, just to
• 24:18
  Speaker 2: give you a number, the economy grew and this is GDP,
• 24:23
  Speaker 2: the value of all the things we produced. Real GDP
• 24:26
  Speaker 2: grew two percent last year in twenty twenty five. AI,
• 24:30
  Speaker 2: by my calculation, in all the different ways that AI
• 24:33
  Speaker 2: has helped lift the economy has added about a half
• 24:36
  Speaker 2: a point to growth last year. So we would have
• 24:37
  Speaker 2: grown one and a half. When you're growing one and
• 24:40
  Speaker 2: a half, that you're not creating enough. We weren't creating
• 24:44
  Speaker 2: any jobs anyway, too, we would be losing jobs. Layouts
• 24:47
  Speaker 2: were probably kicked in. And if that had happened, yes,
• 24:49
  Speaker 2: the answer is there would have been a very high
• 24:51
  Speaker 2: probability that the economy would have suffered a recession in
• 24:55
  Speaker 2: twenty twenty five. So we effectively got bailed out by AI.
• 24:59
  Speaker 2: Now you knew AR was coming, You know that was
• 25:02
  Speaker 2: well understood coming into twenty twenty five, but the degree
• 25:07
  Speaker 2: to which it added to growth was very surprising, at
• 25:09
  Speaker 2: least at least to me and I think to most economics.
• 25:11
  Speaker 2: We did not expect the investment that seven hundred billion.
• 25:14
  Speaker 2: You were mentioning that that was a surprise, you know
• 25:17
  Speaker 2: that it went from nothing to seven hundred billion. By
• 25:21
  Speaker 2: the way, seven hundred billion. I don't know if this
• 25:22
  Speaker 2: is just some historical quinki dank, but that's the amount
• 25:25
  Speaker 2: of tarp that was cost of tarp to get out.
• 25:28
  Speaker 2: I know.
• 25:29
  Speaker 1: It's probably why the number is so sticky to me,
• 25:32
  Speaker 1: like just three companies, and I'm sure if you threw
• 25:34
  Speaker 1: in a few other companies you probably have over a
• 25:36
  Speaker 1: billion in cap X.
• 25:38
  Speaker 2: Oh it's funny. Nancy Pelosi tells this really great story
• 25:42
  Speaker 2: about settling on that seven hundred billion dollar number, and
• 25:46
  Speaker 2: you know, they were sitting around the table, all the
• 25:49
  Speaker 2: players were sitting around that. You may have heard the
• 25:50
  Speaker 2: story too, because I think she enjoys the story. And
• 25:55
  Speaker 2: the seven hundred billion is they were asking BERNANKI how
• 25:59
  Speaker 2: much money this was going to cost to bail out
• 26:02
  Speaker 2: you know, the banks and the economy, and you go,
• 26:04
  Speaker 2: was it three hundred billion, and Branky says, no more,
• 26:07
  Speaker 2: is it four hundred billion? No, it's more. He got
• 26:11
  Speaker 2: the seven hundred billion. That's the right number. And but
• 26:13
  Speaker 2: no one knows how he got the seven hundred billion,
• 26:15
  Speaker 2: but it was seven hundred billion. And now that's what
• 26:18
  Speaker 2: these five tech companies are investing. That gives you a
• 26:20
  Speaker 2: sense of magnitude.
• 26:21
  Speaker 1: Yeah, these last two job reports were better than expected.
• 26:25
  Speaker 1: What'd you learn from them?
• 26:27
  Speaker 2: Uh? I think that this goes back to the stimulus.
• 26:31
  Speaker 2: The stimulus has really helped stabilize the labor market.
• 26:34
  Speaker 1: So the labor market, what do you say, the stimulus,
• 26:36
  Speaker 1: the AI stimulus?
• 26:37
  Speaker 2: No, no, no, well that too, but I was thinking
• 26:39
  Speaker 2: more of the fiscal stimulus. The because the tax thats
• 26:43
  Speaker 2: were not only for individuals, they were also for businesses, right,
• 26:47
  Speaker 2: and that goes to investment because it was the biggest
• 26:50
  Speaker 2: tax break for business was expensing of investment, which is
• 26:54
  Speaker 2: a big tax break. And so that really has uh
• 26:58
  Speaker 2: you know, supported uh growth here in the spring, and
• 27:01
  Speaker 2: I think that's reflected in more stable job numbers. I
• 27:05
  Speaker 2: think the job market's still very weak. I think, you know,
• 27:08
  Speaker 2: stracting from the ups and downs in all the rounds
• 27:09
  Speaker 2: and the data underlying job growth. Monthly job growth is
• 27:12
  Speaker 2: probably twenty five to fifty thousand, so that's that's really
• 27:16
  Speaker 2: very very weak and still not enough to absorb the
• 27:19
  Speaker 2: people coming into the workforce. So you know, on unemployment
• 27:22
  Speaker 2: is still drifting higher and participation rates for drifting lower.
• 27:26
  Speaker 2: But I think it's it kind of stabilized for the last
• 27:28
  Speaker 2: couple of months, and I think it goes right back
• 27:29
  Speaker 2: to that stimulus, which highlights the point that that's once
• 27:32
  Speaker 2: that stimulus goes away, which it will, then you know,
• 27:36
  Speaker 2: we're left with a weaker economy and a weaker job market.
• 27:40
  Speaker 1: Do you have enough data to measure how much the
• 27:43
  Speaker 1: deportation the deportation agenda has shrunk our GDP?
• 27:54
  Speaker 2: Yes, in the sense that you know, if you have
• 27:57
  Speaker 2: typical immigrate and that immigration not the three four million
• 28:02
  Speaker 2: were coming across the southern border that was atypical.
• 28:05
  Speaker 1: But we're not like below our normal levels.
• 28:08
  Speaker 2: Well, we're actually you see the data that we have
• 28:11
  Speaker 2: suggests that we're actually not losing. We're not losing at
• 28:14
  Speaker 2: this point. But typical is a million per annum, so
• 28:18
  Speaker 2: you get about a million immigrants every year. Before you know,
• 28:21
  Speaker 2: President Trump would go back in previous decades get about
• 28:24
  Speaker 2: a million permum. Let's say that's our baseline, that's what
• 28:27
  Speaker 2: you would expect. We're now zero below zero. That that
• 28:31
  Speaker 2: shaves about half a point six tens of a percent
• 28:34
  Speaker 2: of point off of the economy's potential. So you know,
• 28:37
  Speaker 2: if we had normal immigration, we could be growing half
• 28:41
  Speaker 2: a point to six seven tens of percent more than
• 28:43
  Speaker 2: we are now without generating inflation of inflationary pressures.
• 28:49
  Speaker 1: And do we have enough evidence to you know, there's
• 28:51
  Speaker 1: been this debate we're immigrants taking jobs that Americans would
• 28:56
  Speaker 1: do or not? No, I and now it's pretty isn't
• 28:59
  Speaker 1: it now. I mean I saw that Kevin Hassett was
• 29:02
  Speaker 1: trying to spin why there was fewer jobs, and he says, well,
• 29:06
  Speaker 1: you know, basically the spin always was, well, you know,
• 29:10
  Speaker 1: they there'll be jobs that Americans will take, and it
• 29:13
  Speaker 1: turns out that's not the case.
• 29:15
  Speaker 2: No, you don't see it. I mean you can. You can.
• 29:17
  Speaker 2: There's the data. You can see the employment and the
• 29:21
  Speaker 2: labor force of the foreign born worker and the native born.
• 29:24
  Speaker 2: You see the collapse in the born born. You know,
• 29:29
  Speaker 2: as they deportations have increased, but you have not seen
• 29:32
  Speaker 2: a pick up in the native born, So it hasn't.
• 29:36
  Speaker 2: They have not come in and stepped in and filled
• 29:38
  Speaker 2: the void. And that means that's why labor force growth
• 29:41
  Speaker 2: has come to a virtual standstill, and that's why we're
• 29:44
  Speaker 2: losing that half point six ten seven ten percent every
• 29:47
  Speaker 2: param because that that that has not attracted workers into
• 29:49
  Speaker 2: the workforce.
• 29:50
  Speaker 1: Will that show up in our Social Security Trust Fund?
• 29:54
  Speaker 1: For sure?
• 29:54
  Speaker 2: Because those folks, you know, they pay taxes, right, I
• 29:57
  Speaker 2: mean that, and they're young, typically immigrant are young, so uh,
• 30:01
  Speaker 2: and they don't get the same kind of social services,
• 30:04
  Speaker 2: and so they are a net benefit to our.
• 30:07
  Speaker 1: Contributor, more to our social safety net really than they
• 30:10
  Speaker 1: do for themselves right now.
• 30:12
  Speaker 2: You know, there's one nuance there. It does put more
• 30:14
  Speaker 2: pressure on state and local governments, right because they don't
• 30:17
  Speaker 2: have the It doesn't the federal government actually benefits the
• 30:20
  Speaker 2: state and local governments. Actually at least early on, there's
• 30:23
  Speaker 2: more of a cost. But for the for the for
• 30:26
  Speaker 2: the Social Security Trust Fund or for the fiscal situation. Generally,
• 30:30
  Speaker 2: we need immigrants otherwise we have a harder time you
• 30:33
  Speaker 2: know writing that ship.
• 30:35
  Speaker 1: Are you are where? What sector are you seeing in
• 30:37
  Speaker 1: the jobs report? That you could tell is it's an
• 30:41
  Speaker 1: industry's are really hurting from this deportation agenda.
• 30:45
  Speaker 2: Uh, you could see it's it's kind of broad based.
• 30:49
  Speaker 1: You know.
• 30:49
  Speaker 2: The industries that rely very heavily on immigrant workers would
• 30:53
  Speaker 2: be agriculture, of course, agricultures getting nailed by on all sides, right, terrorism.
• 30:59
  Speaker 1: And yeah, I mean my god like yeah, to be
• 31:02
  Speaker 1: to be a farmer right now. And I know it's
• 31:05
  Speaker 1: all big most you know, farmings obviously, even big corporate
• 31:08
  Speaker 1: front doesn't matter. They're just getting head everywhere, right, the
• 31:12
  Speaker 1: cost of transportation, fertilizer tariffs.
• 31:16
  Speaker 2: Yeah, yeah, I mean they're really under a lot of pressure.
• 31:19
  Speaker 2: Construction trades, you know, particularly in the South and the West,
• 31:22
  Speaker 2: because about a third of the workforce and the construction
• 31:25
  Speaker 2: trades are immigrant workers, both legal and undocumented. You can
• 31:30
  Speaker 2: kind of see it in you know, leisure hospitality, you know, hotels.
• 31:34
  Speaker 2: You can see it in a bit in retailing, some
• 31:37
  Speaker 2: services like childcare, elder care, you know, personal services, you know,
• 31:43
  Speaker 2: getting your nails done, that kind of thing. I know,
• 31:45
  Speaker 2: I know you don't get your nails done, chuck, but
• 31:48
  Speaker 2: my daughters do.
• 31:48
  Speaker 1: So, and so they're just there's a I take it,
• 31:53
  Speaker 1: a lot of vacancies that's what you're saying.
• 31:56
  Speaker 2: Yeah, I mean I think a lot of those employers
• 31:58
  Speaker 2: would you know, be able to do more business if
• 32:01
  Speaker 2: they had the workers to help them do the business.
• 32:04
  Speaker 2: And it's not like, you know, again the native born
• 32:06
  Speaker 2: brooker coming in and filling the wood.
• 32:08
  Speaker 1: That's just not happening here this summer. You know, this,
• 32:11
  Speaker 1: this tough economy is going to change vacation plans. So,
• 32:16
  Speaker 1: you know, how do you watch this as an economist
• 32:18
  Speaker 1: to see, you know, where you're just sort of following spending.
• 32:22
  Speaker 1: I assume air travel is going to collapse because of
• 32:25
  Speaker 1: the cost of air travel, But it's not like road
• 32:28
  Speaker 1: trips are that much cheaper. They'll be cheaper than air travel,
• 32:31
  Speaker 1: because it does feel like that search charge is even
• 32:33
  Speaker 1: bigger than road trips. But what do you what do
• 32:36
  Speaker 1: you what? What do you expect to see this summer
• 32:40
  Speaker 1: that could sort of just have a cascading effect on
• 32:44
  Speaker 1: the negative sentiment and the economy.
• 32:46
  Speaker 2: Yeah, I mean, sofore you haven't seen it in air travel.
• 32:48
  Speaker 1: Again.
• 32:48
  Speaker 2: I think it goes back to the stimulus, you know
• 32:51
  Speaker 2: that's helped to support things, and it's still new in
• 32:54
  Speaker 2: people's you know, they booked air travel well in advance June, July, August,
• 33:00
  Speaker 2: you'll probably see it there, you know, then we'll probly
• 33:03
  Speaker 2: you haven't seen it at the theme parks yet, but
• 33:05
  Speaker 2: I would expect to start seeing it there. Just general travel,
• 33:09
  Speaker 2: I mean, people have got to, you know, drive less
• 33:12
  Speaker 2: because the cost of driving is just so much higher,
• 33:15
  Speaker 2: so people are going to take less trips. The attendance
• 33:17
  Speaker 2: at you know, national parks. How many people are coming
• 33:20
  Speaker 2: to the national parks, that kind of thing. You know,
• 33:23
  Speaker 2: It's a little tricky because the high end consumers they're
• 33:27
  Speaker 2: fine right there. They can look through this and they
• 33:29
  Speaker 2: can keep on spending and they're spending more of their
• 33:32
  Speaker 2: dollars on experiences, going to Broadway, going to baseball games,
• 33:36
  Speaker 2: that kind of thing. So it may not show up
• 33:38
  Speaker 2: there would be you know more you know, things like
• 33:42
  Speaker 2: a to the national parks, that kind of thing where
• 33:44
  Speaker 2: people might not might not go. But that's where I
• 33:48
  Speaker 2: would expect to see it. In those kinds of things.
• 33:51
  Speaker 1: Politicians are going to want to respond with some short
• 33:54
  Speaker 1: term fixes, and one idea that has some bipartisan support
• 33:59
  Speaker 1: is capping credit card interest rates at ten percent. That's
• 34:04
  Speaker 1: something I think it was Josh Holly and Bernie Sanders
• 34:07
  Speaker 1: were open to or thinking about. I think Bernie is
• 34:10
  Speaker 1: more of a bigger advocate of it, but Holly was
• 34:13
  Speaker 1: sort of interested in it as well. And obviously credit
• 34:17
  Speaker 1: card balances are going up, and so what are the
• 34:23
  Speaker 1: hidden I'm skeptical that something like that works, but what
• 34:29
  Speaker 1: are the hidden costs to that? Is that a help
• 34:32
  Speaker 1: to people? Is it something that short term would help
• 34:36
  Speaker 1: people or is this not the not the antidote that
• 34:43
  Speaker 1: people think it is.
• 34:44
  Speaker 2: Yeah, I don't think it's going to help. I mean,
• 34:45
  Speaker 2: what does it really hurts? Lower middle incum households that
• 34:50
  Speaker 2: are have lower credit scores, that are greater credit risks
• 34:53
  Speaker 2: Because if you cap the interest rate that the credit
• 34:56
  Speaker 2: card company can charge, that's lowering the return that they
• 34:59
  Speaker 2: can and achieve, and they're therefore gonna do less lending
• 35:03
  Speaker 2: to risk, your bars are more likely to default and
• 35:05
  Speaker 2: not pay them back. So you're going to hurt the
• 35:08
  Speaker 2: very people you want to help. You're just not gonna
• 35:11
  Speaker 2: be able to get a credit card, or if you
• 35:12
  Speaker 2: get a credit card, the credit line is gonna be
• 35:14
  Speaker 2: a lot smaller, uh, or you know they're going to
• 35:19
  Speaker 2: charge higher fees, you know, depending on how the legislation
• 35:22
  Speaker 2: is is uh is written. So I don't see this
• 35:26
  Speaker 2: that that is an answer. I just don't think that
• 35:28
  Speaker 2: will work. And you're really mucking with a lot of
• 35:30
  Speaker 2: potential unintended consequences when you go down that path. I
• 35:33
  Speaker 2: don't I don't think that's gonna help. It might help, ironically,
• 35:36
  Speaker 2: you know, higher income households, you know, but because they're
• 35:40
  Speaker 2: still going to get the card, but you know, lower
• 35:42
  Speaker 2: income households, I think they get cut out altogether. So
• 35:44
  Speaker 2: I I really think that's a pretty bad idea.
• 35:48
  Speaker 1: The President was going to lower tariffs on beef and
• 35:50
  Speaker 1: then decided not to, and there's been this back and forth.
• 35:54
  Speaker 1: I mean, what are ways to it temporarily provide some
• 35:57
  Speaker 1: relief to work with people?
• 35:59
  Speaker 2: Oh, come on, just cut it to tariffs. I mean,
• 36:01
  Speaker 2: come on, I mean that's the number one, pretty obvious.
• 36:03
  Speaker 1: I mean, terriffs.
• 36:06
  Speaker 2: Just put them back down.
• 36:07
  Speaker 1: Basically, the president, perhaps I don't want to put words
• 36:10
  Speaker 1: in your amounts, but the president's stubbornness on his and
• 36:13
  Speaker 1: his chief you know, and his chief belief okay about
• 36:17
  Speaker 1: the economy and how something works, is standing in the
• 36:21
  Speaker 1: way of people having a lower cost of living.
• 36:25
  Speaker 2: Look, it's it's pretty obvious. I mean, just do a
• 36:27
  Speaker 2: chart of employment, go back twenty early starty twenty four
• 36:30
  Speaker 2: to give you a little bit of historical context. Coming
• 36:32
  Speaker 2: into twenty five and up to the current period. You
• 36:35
  Speaker 2: see this nice increasing line of employment right till guess
• 36:39
  Speaker 2: what month April it goes completely sideways, and you go, Okay,
• 36:45
  Speaker 2: there's a lot of stuff going on, you know, so
• 36:48
  Speaker 2: it's not just terriffs. I mean, you have doge cuts,
• 36:49
  Speaker 2: You've got a lot of other stuff going on. But
• 36:52
  Speaker 2: you know you can connect to us britty. Then go
• 36:54
  Speaker 2: take a look at a chart of inflation consumer expenditure deflator.
• 36:58
  Speaker 2: You know, got to look through some of the volatility,
• 37:01
  Speaker 2: and there's easy ways to do that, and you can
• 37:03
  Speaker 2: see inflation was coming in nicely as we were talking.
• 37:07
  Speaker 2: You get April twenty twenty five and it takes off. So,
• 37:10
  Speaker 2: I mean, it's pretty obvious that you know that the
• 37:12
  Speaker 2: broad based tariffs are hurting the economy, both in terms
• 37:15
  Speaker 2: of jobs and income and in terms of inflation.
• 37:22
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  Speaker 1: the next president has, in theory, the easiest tool in
• 39:03
  Speaker 1: the toolbox to provide some relief.
• 39:06
  Speaker 2: Yeah, but here's the thing, Chuck. You know, once you
• 39:09
  Speaker 2: uh uh uh you you put terriffs in, then you
• 39:13
  Speaker 2: get all these constituencies that benefit from the terriffs. Right,
• 39:17
  Speaker 2: They're relying on the terriffs and they're going to fight
• 39:19
  Speaker 2: for those terroriffs. So politically, it's going to be very
• 39:23
  Speaker 2: very It's gonna be ground warfare.
• 39:25
  Speaker 1: To get I mean, I know some of benefit, but
• 39:28
  Speaker 1: who's who's a big enough constituency group that's benefited that
• 39:32
  Speaker 1: would fight the hardest. Well.
• 39:34
  Speaker 2: I think I may have this wrong, but take take
• 39:37
  Speaker 2: the beef to terriff beef.
• 39:38
  Speaker 1: People have been all over the map on this.
• 39:41
  Speaker 2: Well, I mean you got people saying I don't want
• 39:43
  Speaker 2: to don't I need protection lead, you know, leave the
• 39:45
  Speaker 2: terriffs and leaves in the terrifs in place. Steel and
• 39:48
  Speaker 2: iron those were the first terriffs. I mean, that hurts
• 39:51
  Speaker 2: everybody but the steel and iron guys. But they they're
• 39:54
  Speaker 2: going to fight tooth and nail for that. So I'm
• 39:56
  Speaker 2: just saying it's yes, you're right, and I just but
• 40:00
  Speaker 2: once the politics get involved, it's very, very difficult to
• 40:03
  Speaker 2: reverse that. Now. I suspect if you got into a
• 40:06
  Speaker 2: real recession, unemployments rising, and you're a president of the
• 40:09
  Speaker 2: United States, you'd say, oh, and these are still in
• 40:11
  Speaker 2: place because of executive order. I say, okay, maybe I
• 40:15
  Speaker 2: can't go from the current effective tariffrate of eight ten
• 40:18
  Speaker 2: percent back down to two where we were before all this,
• 40:20
  Speaker 2: back and cut it in half and really provide a
• 40:22
  Speaker 2: stimulus to the economy. So I think if you're saying,
• 40:25
  Speaker 2: what should we do to help the help things out immediately,
• 40:28
  Speaker 2: that would be it. Now there's there's also a discussion
• 40:30
  Speaker 2: on the gas tax, right.
• 40:31
  Speaker 1: Suspending that, What would that do? I mean, it feels
• 40:33
  Speaker 1: like every time you know, that always feels like campaign.
• 40:38
  Speaker 1: It's just sort of a campaign talking point. But you know,
• 40:42
  Speaker 1: what is it nineteen cents right now.
• 40:46
  Speaker 2: It's eighteen point four sense, yeah, I mean, and if
• 40:50
  Speaker 2: you cut it, you know, of course, not all that
• 40:52
  Speaker 2: will get passed through to consumers, right because everyone, all
• 40:55
  Speaker 2: the retailers and distributors are going to take a cut
• 40:57
  Speaker 2: of that, and so maybe you get ten fifteen cents
• 41:01
  Speaker 2: lower gas prices ultimately, But just for context, we're up
• 41:04
  Speaker 2: a buck fifty from where we were, So you know,
• 41:06
  Speaker 2: we go from we're below three on a gallon regular,
• 41:10
  Speaker 2: we're at four fifty. Maybe that lowers at the four
• 41:12
  Speaker 2: forty four thirty five, So you're right, I mean, does
• 41:15
  Speaker 2: that really you know, move the dial. And then the
• 41:18
  Speaker 2: other thing you're doing is that generates revenue for the
• 41:20
  Speaker 2: Highway Trust Fund, which we you know, I think everyone
• 41:23
  Speaker 2: who drives would really like to have roads that we
• 41:27
  Speaker 2: can travel on, you know, without having to go through potholes.
• 41:30
  Speaker 2: And you know, I don't know how many tires I've
• 41:32
  Speaker 2: destroyed over the years going through a pothole. So and they,
• 41:36
  Speaker 2: with the policymakers, replenish the Trust Fund, I'm not sure
• 41:39
  Speaker 2: so I do.
• 41:40
  Speaker 1: Ever, whenever we've we've done this a couple of times, I.
• 41:43
  Speaker 2: Don't think we ever have though, Actually, I don't think
• 41:45
  Speaker 2: they've ever.
• 41:45
  Speaker 1: Just only talked about it.
• 41:47
  Speaker 2: We've talked about it every single time. But I think
• 41:49
  Speaker 2: they just do it like Georgia did it quickly, Indiana
• 41:52
  Speaker 2: did it. Yeah, yeah, but the Feds, the Feds. I
• 41:55
  Speaker 2: don't think. I might have the history wrong, but I
• 41:57
  Speaker 2: think interesting.
• 41:58
  Speaker 1: It is one of those things you hear. I remember
• 42:01
  Speaker 1: it was during the two thousand and eight primaries and
• 42:07
  Speaker 1: we had hit A. We had hit A, and John
• 42:10
  Speaker 1: McCain and Hillary Clinton both jumped on the yeah, let's
• 42:13
  Speaker 1: do a federal gas tax holiday, and Obama said no,
• 42:16
  Speaker 1: and everybody thought Obama was making a mistake, and it
• 42:19
  Speaker 1: was sort of this first this sort of first time. Anyway,
• 42:24
  Speaker 1: it was a reminder that that maybe the public does
• 42:29
  Speaker 1: grasp nuance. Yeah, it was just an interesting moment because
• 42:33
  Speaker 1: it did seem like the nineties era Obama would have
• 42:37
  Speaker 1: made a mistake, but sort of in the way people
• 42:39
  Speaker 1: consumed information, even at starting in eight more.
• 42:44
  Speaker 2: Well, you know, here's the other cure about cutting it
• 42:46
  Speaker 2: from a political perspective, I think is it's hard to
• 42:48
  Speaker 2: connect the dods right because there's so many factors that
• 42:50
  Speaker 2: are influencing gas prices. So if you cut the gas tax,
• 42:53
  Speaker 2: you know, all else equal, Yeah, it will go down,
• 42:56
  Speaker 2: but not all those equals. I mean, you could be
• 43:00
  Speaker 2: the conflict and realist could rub up and you'd lose
• 43:02
  Speaker 2: fifteen cents in a day, and then the politicians have
• 43:05
  Speaker 2: just cut this in. They won't get any political capital
• 43:09
  Speaker 2: as a result because they can't connect the dots back
• 43:12
  Speaker 2: to lower prices. So I don't know, it's pretty vexed policy.
• 43:15
  Speaker 1: I think. I'm I always like to look at the
• 43:20
  Speaker 1: political map in first sort of with regional economies, in
• 43:26
  Speaker 1: geographic ways, what part of the country is hurting the
• 43:32
  Speaker 1: most right now? And I'm just because I'm and I'm
• 43:38
  Speaker 1: not asking you to politically handicap, but when you see
• 43:40
  Speaker 1: it's like what part of the I have a feeling
• 43:43
  Speaker 1: there are some red states that are suffering and more
• 43:47
  Speaker 1: so than some blue states. And it's one of those
• 43:51
  Speaker 1: things where if we're missing something as political handicappers, it's
• 43:55
  Speaker 1: going to be some headwinds in some of these red
• 43:57
  Speaker 1: states where we just don't believe that political competition any
• 44:01
  Speaker 1: You know that you make you make a great point, Yeah,
• 44:04
  Speaker 1: where do you see Yeah, where do you see the economy?
• 44:07
  Speaker 1: You know, which which region or states are really hurting
• 44:10
  Speaker 1: right now, regardless of their of their political leanings.
• 44:13
  Speaker 2: You know, most of the weakness is really in the South, uh,
• 44:17
  Speaker 2: in parts of the West, and uh, you know in
• 44:21
  Speaker 2: the South it goes to we just talked about immigration,
• 44:24
  Speaker 2: right the South and the West.
• 44:25
  Speaker 1: I was just going to say both the South and
• 44:26
  Speaker 1: the West. That's the first thing I thought of, Well,
• 44:28
  Speaker 1: who got who who was benefiting the most from immigration
• 44:31
  Speaker 1: and right now is hurting the most?
• 44:32
  Speaker 2: Okay, right? And the other thing is the housing markets
• 44:36
  Speaker 2: in you know, places like Florida and Texas, the Louisiana,
• 44:39
  Speaker 2: the Gulf Coast, parts of western US are getting hit
• 44:44
  Speaker 2: hard by a higher homeowner insurance costs because of climate change,
• 44:48
  Speaker 2: you know, all the all the storms, and that's calls
• 44:52
  Speaker 2: house prices to start declining in many of those areas.
• 44:55
  Speaker 1: Ye.
• 44:55
  Speaker 2: So uh, and they've been more or less declining now
• 44:58
  Speaker 2: since the interest rates rose back a couple three years ago.
• 45:01
  Speaker 2: So you got a lot of household that goes back
• 45:03
  Speaker 2: to the FCHA mortgage delinquencies. A lot of those homeowners
• 45:06
  Speaker 2: that got homes in twenty two, twenty three, twenty four,
• 45:09
  Speaker 2: twenty five don't have any equity or maybe even negative equity,
• 45:13
  Speaker 2: the value the home is less than their mortgage amount,
• 45:15
  Speaker 2: and that's putting a lot of pressure. The other thing is,
• 45:17
  Speaker 2: you know, during the pandemic, you saw these great outflows
• 45:20
  Speaker 2: of people from the big cities in the northeast, Chicago
• 45:23
  Speaker 2: and the west coast into the mountain West, into the South,
• 45:28
  Speaker 2: and that used to costs. So cost of living is
• 45:31
  Speaker 2: now a lot higher costing.
• 45:32
  Speaker 1: You don't have to tell me, I pay. I helped
• 45:35
  Speaker 1: subsidize some rent down in Miami. And let me tell you, Yeah, Miami,
• 45:39
  Speaker 1: I mean one of the worst place and it was
• 45:40
  Speaker 1: all because so much money came in. You know, so
• 45:43
  Speaker 1: many people were coming in and so much cash was
• 45:45
  Speaker 1: coming into the market.
• 45:46
  Speaker 2: And so now the South and West isn't nearly as attractive,
• 45:50
  Speaker 2: you know, as a place to move to. And so
• 45:52
  Speaker 2: that that's helping the Northeast and you know, Chicago. Here's
• 45:56
  Speaker 2: the other thing. You may appreciate this. Are you you
• 45:58
  Speaker 2: hav any links to Philadelphia? You do not, Okay, Yeah,
• 46:02
  Speaker 2: so if you look at the this is just an
• 46:04
  Speaker 2: interesting fact.
• 46:05
  Speaker 1: How Jake Tapper he's a Philly Oh yeah, that's right, Yes,
• 46:07
  Speaker 1: that's right guy.
• 46:08
  Speaker 2: Yeah, yeah, he's a Philly guy. So If you look
• 46:10
  Speaker 2: at the metropolitan areas across the country with over three
• 46:14
  Speaker 2: million in population, that's there's about twenty five of them
• 46:18
  Speaker 2: out there. Philly is one of them, you know. Then
• 46:19
  Speaker 2: you have Dallas and New York and so and so
• 46:21
  Speaker 2: on Philly. Of all those metropolitans, Philadelphia experiencing the strongest
• 46:27
  Speaker 2: job growth of any of the areas, you know, year
• 46:30
  Speaker 2: year through the most recent data. And the reason why healthcare.
• 46:35
  Speaker 2: Billy is a healthcare center, and that's the only sector
• 46:38
  Speaker 2: of the economy that's adding to growth. It's funny. I
• 46:41
  Speaker 2: was on a cross country air trip last week. We've
• 46:45
  Speaker 2: had a conference in San Diego, and I'm sitting in
• 46:48
  Speaker 2: the in the plane and I'm looking at around me
• 46:51
  Speaker 2: and everyone in the plane except me look like a physician.
• 46:54
  Speaker 2: They had, you know they or you know, in the
• 46:58
  Speaker 2: farming industry or in the biotic industry. It was really good,
• 47:01
  Speaker 2: you know.
• 47:01
  Speaker 1: I mean, so to extrapolate that out, I mean, let's see,
• 47:04
  Speaker 1: Nashville's got a big healthcare uh economy, right, are yeah
• 47:08
  Speaker 1: they doing? Are they doing pretty well?
• 47:10
  Speaker 2: Nashville is okay, yeah, I mean is doing well. New York,
• 47:15
  Speaker 2: New York is doing relatively well. There you also see
• 47:17
  Speaker 2: a lot of tech, you know, the a lot of tech, uh,
• 47:20
  Speaker 2: big tech uh in New York, Chicago, Uh, you know,
• 47:25
  Speaker 2: the West coast. So the one fortunate thing about about
• 47:30
  Speaker 2: the healthcare is that it's in every community across the country.
• 47:32
  Speaker 2: So every country, every part of the country's benefiting. But
• 47:34
  Speaker 2: those areas that have a higher share of their economy
• 47:37
  Speaker 2: in healthcare, they're benefiting more. And that's that's Philadelphia. So
• 47:40
  Speaker 2: we're going faster than Dallas, you know, so I can
• 47:43
  Speaker 2: point out.
• 47:44
  Speaker 1: And it's it's funny, you're right, you know, Philadelphia feels
• 47:46
  Speaker 1: like it's not fair to them. But right, we never
• 47:49
  Speaker 1: talk about growth in the Northeast anymore. No growth is
• 47:52
  Speaker 1: always oh it's the South. It's a sunbelt. So just
• 47:55
  Speaker 1: to hear that Billy's growing, you're like, really, you know.
• 47:58
  Speaker 2: There's another one political think about this for a second. Pennsylvania,
• 48:02
  Speaker 2: the state of Pennsylvania. It's going a lot faster than
• 48:05
  Speaker 2: the state of Florida or the state of Texas.
• 48:08
  Speaker 1: Yeah, it's death. That's an interesting I don't know that
• 48:11
  Speaker 1: there's some governors there thinking about the president. I mean,
• 48:14
  Speaker 1: you're just saying, yeah, I think that there maybe I
• 48:18
  Speaker 1: had to put Josh Shapare a little bit higher on
• 48:20
  Speaker 1: my list. Let me let me let me close with
• 48:26
  Speaker 1: the news of the America's debt surpassing our collective GDP.
• 48:35
  Speaker 1: What does that mean to you? And you know, look,
• 48:42
  Speaker 1: I feel like the debt, the fear of the of
• 48:44
  Speaker 1: a debt crisis is clearly the chicken little of American politics.
• 48:47
  Speaker 1: I mean, I've been in I've you know, my first
• 48:50
  Speaker 1: year was nineteen ninety two covering politics. So and that
• 48:53
  Speaker 1: was Ross Burow, you know, talking about the debt back
• 48:56
  Speaker 1: then when it was probably you know, a quarter of
• 48:59
  Speaker 1: what it is now. And this fear of the debt,
• 49:02
  Speaker 1: fear of the debt, fear of the debt, it hasn't happened.
• 49:06
  Speaker 1: And I think we're all numb to it, right, And
• 49:08
  Speaker 1: I think that headlined, Eh, what say you? How concerned
• 49:14
  Speaker 1: are you the economist about.
• 49:16
  Speaker 2: This, chuck? I'm concerned. I mean, I think the reason
• 49:20
  Speaker 2: why Ross Bros. Sounds like a chicken little is because
• 49:23
  Speaker 2: we actually listened to him and we made some pretty
• 49:26
  Speaker 2: substance of changes in the nineteen nineties that turned things around.
• 49:29
  Speaker 2: I mean, in the early nineties, you know, deficits and
• 49:32
  Speaker 2: debt and interest payments were a real issue, and then
• 49:35
  Speaker 2: then that generated and that's the ear of the bond
• 49:37
  Speaker 2: mark of vigilantes. Interest rates would rise every time it
• 49:41
  Speaker 2: looked like the deficit was rising. And that's when Clinton Rubin,
• 49:46
  Speaker 2: the Secretary of Treasury under President Clinton, and gangrig came
• 49:50
  Speaker 2: together and they actually made some substance of changes and
• 49:54
  Speaker 2: it led to the last surplus we had as a
• 49:56
  Speaker 2: nation was in the year two thousands. A lot of
• 49:58
  Speaker 2: other things going on, of course that helped out. That
• 50:00
  Speaker 2: was a big deal. We had a piece dividend. We
• 50:02
  Speaker 2: weren't increasing defense spending, We're reducing defense spending, so forth
• 50:05
  Speaker 2: and so on. But you know, I've been you're nineteen
• 50:08
  Speaker 2: ninety two. I in nineteen ninety I started a company
• 50:10
  Speaker 2: back in nineteen ninety that I sold the Moodies, you know,
• 50:13
  Speaker 2: fifteen years later. So I've been a professional commerce for
• 50:15
  Speaker 2: thirty six years. And I watched three measures of the
• 50:18
  Speaker 2: fiscal situation. I've been doing it for thirty six years.
• 50:21
  Speaker 2: One is the one you mentioned, how much debt is
• 50:23
  Speaker 2: that they're out there as a share of GDP. The
• 50:26
  Speaker 2: second is the deficit to GDP. And I also look
• 50:29
  Speaker 2: at the primary deficit that's exclusive interest payments on the debt.
• 50:33
  Speaker 2: And then I look at interest payments as a share
• 50:35
  Speaker 2: of GDP. You know, how much are we shelling out
• 50:36
  Speaker 2: as a nation to service our debt that we've already accumulated.
• 50:40
  Speaker 2: And I've in that thirty six years, I've never had
• 50:42
  Speaker 2: a time when all three of those measures screaming loudly
• 50:47
  Speaker 2: we got a problem, a massive problem. I mean, our debt,
• 50:50
  Speaker 2: debt is rising rapidly. Take a look at the CBO
• 50:52
  Speaker 2: Congressional Budget Office projections and they're pretty benign assumptions they're
• 50:56
  Speaker 2: making there. They're excuming a lot of terror revenue, which
• 50:59
  Speaker 2: I don't think, but'll just go with it. You know,
• 51:01
  Speaker 2: that looks very discouraged. Our deficit is six percent of GDP,
• 51:06
  Speaker 2: Our primary deficit is three percent of GDP. That's we're
• 51:10
  Speaker 2: at full employment, we should be at zero, we should
• 51:12
  Speaker 2: be in surplus on the primary devel and our interest
• 51:15
  Speaker 2: payments are now higher than they've ever been as a
• 51:17
  Speaker 2: share of GDP. So everything is screaming we got a problem.
• 51:20
  Speaker 2: And now you know, I you know.
• 51:22
  Speaker 1: The way the bond market isn't isn't reacting the way
• 51:26
  Speaker 1: it did in the nineties, isn't well.
• 51:29
  Speaker 2: You know, yes, but you can see cracks developing, you
• 51:33
  Speaker 2: know underneath. You know, if you look in the plumbing
• 51:36
  Speaker 2: of the bond market, it does feel like their bond
• 51:39
  Speaker 2: investags are saying, hey, you know this doesn't feel quite
• 51:42
  Speaker 2: right to me. You're gonna have to start paying. Well,
• 51:44
  Speaker 2: I'll give you one example. The uh the interest rate
• 51:48
  Speaker 2: on ten year debt issued by the European Investment Bank
• 51:53
  Speaker 2: EIB was only three four basis points above the tenure
• 51:56
  Speaker 2: treasure you'l that's saying, that is weird. You know, that's saying,
• 52:00
  Speaker 2: is the tenure treasury yield the safe haven that it
• 52:03
  Speaker 2: has been historically? And the answer is probably not. So
• 52:06
  Speaker 2: it's those kinds of things. It's kind of you know,
• 52:09
  Speaker 2: a little smoke over here over there that make me nervous.
• 52:11
  Speaker 2: And here's the thing about the bond market, like the
• 52:13
  Speaker 2: stock market, like any market, it's okay until it's not.
• 52:16
  Speaker 2: You know, you know, some there and you don't know
• 52:18
  Speaker 2: what the trigger is going to be. You don't know
• 52:19
  Speaker 2: exactly what it's going to be. But I'd say all
• 52:21
  Speaker 2: the fodder for a problem, you know, for a self
• 52:24
  Speaker 2: in the bond market or in place, So we have
• 52:26
  Speaker 2: to be very careful. We have to be very very
• 52:28
  Speaker 2: careful here. But I'll end on a positive note because
• 52:32
  Speaker 2: you said if you want to end here.
• 52:34
  Speaker 1: Yeah, yeah, So the.
• 52:36
  Speaker 2: Positive note is that, you know, I think we almost
• 52:41
  Speaker 2: have to have a crisis in the bond market to
• 52:43
  Speaker 2: degenerate the political will necessary to make the changes.
• 52:47
  Speaker 1: It's obvious that it's going to take a crisis. It's
• 52:49
  Speaker 1: going to take it. We have to be we have
• 52:51
  Speaker 1: to be at the brink. It's the only you know.
• 52:54
  Speaker 1: I mean, shoot, it's what Churchill said about Americans, you know,
• 52:57
  Speaker 1: the eventually do the right thing after they've exhausted every
• 52:59
  Speaker 1: other path. I mean, but I guess what you're saying
• 53:02
  Speaker 1: is the crisis doesn't get triggered until the bond market
• 53:06
  Speaker 1: until basically and what that means, I want to put
• 53:08
  Speaker 1: this in English. This means because I was at a
• 53:11
  Speaker 1: conference Chathamhouse Rules, so I don't want to name names,
• 53:15
  Speaker 1: but I was at a conference this week where there
• 53:20
  Speaker 1: is where there is a lot of advice going, hey, diversify,
• 53:24
  Speaker 1: you know, diversify out of the dollar right essentially, and
• 53:30
  Speaker 1: then you know, hedging with other currencies, whether it's gold,
• 53:33
  Speaker 1: whether it's other foreign currencies, you know, even crypto but
• 53:38
  Speaker 1: that this you're seeing more and more investment advice going
• 53:43
  Speaker 1: down that road, which seems that that's only going to
• 53:46
  Speaker 1: eventually put pressure on our bond market.
• 53:48
  Speaker 2: Right, well, I haven't gotten to the reason why I
• 53:51
  Speaker 2: was going to the hind.
• 53:52
  Speaker 1: Note, because you're right. I took you down just to.
• 53:56
  Speaker 2: Reinforce your point. You know, when you deglobalize your economy,
• 54:00
  Speaker 2: and that's what we're doing, right We're pulling away from
• 54:03
  Speaker 2: the rest of the world. Tariffs, immigration, visas, export restrictions,
• 54:08
  Speaker 2: investment controls, you know, on every dimension. You know what
• 54:11
  Speaker 2: we're doing with foreign policy. I mean, we're pulling away.
• 54:14
  Speaker 2: It's pretty obvious. And now the rest of the world's
• 54:15
  Speaker 2: pulling away from us. So one of the consequences obvious
• 54:18
  Speaker 2: consequences of that is our financial system is less central
• 54:22
  Speaker 2: to the world. It just matters less because the rest
• 54:24
  Speaker 2: of the world's going to start moving around us. Therefore,
• 54:27
  Speaker 2: the dollar is worth less, and therefore the risk that
• 54:30
  Speaker 2: investors are going to demand a higher interest rate to
• 54:32
  Speaker 2: compensate for any kind of risk to buy a US
• 54:34
  Speaker 2: Treasury bonding is going to rise. But here's the optimism,
• 54:37
  Speaker 2: and this goes to the guy the spirit of the
• 54:39
  Speaker 2: Winston Churchill you know, sentiment is that we will have
• 54:42
  Speaker 2: a crisis. But I do think we do act when
• 54:45
  Speaker 2: crisis occur. You know, that's when we can connect the
• 54:48
  Speaker 2: dots and we all we're all thinking about, you know,
• 54:50
  Speaker 2: how we should do this.
• 54:52
  Speaker 1: I was just gonna I've heard like one idea that
• 54:54
  Speaker 1: was that one person talked about it. I think pretty influential.
• 54:57
  Speaker 1: Now let's leave it at that. I basically, look, this
• 55:01
  Speaker 1: person said, we probably need three percent of more revenue,
• 55:05
  Speaker 1: which means three percent hike in taxes, three percent cut
• 55:08
  Speaker 1: and spending like that. That the responsible way to do
• 55:11
  Speaker 1: this if you feel the crisis coming, is that exactly,
• 55:15
  Speaker 1: that it will be essentially three and three and it's
• 55:17
  Speaker 1: a dollar for dollar, and that this could get us
• 55:20
  Speaker 1: and that right now three percent you know, spending cut
• 55:25
  Speaker 1: and tax hike. You can't do one or the other.
• 55:27
  Speaker 1: You have to do both could stabilize us. Now, I
• 55:30
  Speaker 1: don't know if you'd have the political will for that.
• 55:32
  Speaker 2: Yeah. The only the other thing I say is even
• 55:34
  Speaker 2: more hopeful. I'd like to meet who ever said that,
• 55:37
  Speaker 2: because I'm totally agree. More hopeful is that if we
• 55:40
  Speaker 2: had a rational immigration policy. It wouldn't have to be
• 55:43
  Speaker 2: six percent we have to close. It would be something
• 55:45
  Speaker 2: more like three or four percent.
• 55:46
  Speaker 1: Well, I mean, and this is what drives me crazy.
• 55:49
  Speaker 1: I mean, I guess the good news is we don't
• 55:51
  Speaker 1: have to We don't have to invent ideas. They're all
• 55:54
  Speaker 1: sitting on the shelf. Yes, that's right, yeah, exactly right, right,
• 55:56
  Speaker 1: Like if you lower some tariffs, let's bring in some immigrants,
• 56:00
  Speaker 1: let's do this, you know, dollar for dollars, spending cut
• 56:03
  Speaker 1: for tax high type of thing, you know, and we
• 56:06
  Speaker 1: could sort of bring some bring some sanity to our
• 56:09
  Speaker 1: fiscal situation, right exactly.
• 56:12
  Speaker 2: I do want to say that one thing with kind
• 56:13
  Speaker 2: of refreshing that you didn't bring up AI at all.
• 56:16
  Speaker 2: Maybe a little bit right with the investment, Yeah, the investment, right, yeah,
• 56:21
  Speaker 2: Well we're.
• 56:21
  Speaker 1: A little bit. I feel like we're still a little
• 56:24
  Speaker 1: bit ways away from getting to the productivity.
• 56:26
  Speaker 2: I agree with you, right, I mean.
• 56:28
  Speaker 1: I still see I'm let me, let me, let me
• 56:33
  Speaker 1: tell me if I'm wrong on this. Be my sort
• 56:35
  Speaker 1: of the economic advisor to the political side of things.
• 56:39
  Speaker 1: I think the fear of AI job displacement is still
• 56:43
  Speaker 1: a bigger cloud than the reality of AI job displacement?
• 56:48
  Speaker 1: Is that and that? I mean, look, I expect the
• 56:51
  Speaker 1: twenty eight campaign to be that this is a central issue,
• 56:55
  Speaker 1: you know, not maybe not be the central issue, but
• 56:57
  Speaker 1: a central issue. We'll be this and it's like, how
• 57:01
  Speaker 1: do we prepare? What are the ideas to help people?
• 57:04
  Speaker 1: You know, get through? This is going to be you know, like,
• 57:08
  Speaker 1: I don't think you can run for president and not
• 57:10
  Speaker 1: have a not have some plan, yeah or some answer.
• 57:14
  Speaker 2: Yeah, I totally agree. I don't. You know, you don't
• 57:16
  Speaker 2: see the big bump to productivity growth, at least not yet.
• 57:19
  Speaker 2: You can see circumstantial evidence of some effect. Maybe the
• 57:23
  Speaker 2: hiring rates, these participation rates by older workers is down.
• 57:27
  Speaker 2: They partly doday.
• 57:28
  Speaker 1: I you know, is this something that's going to feel
• 57:30
  Speaker 1: like a hockey stick when it hits though, Like, well
• 57:33
  Speaker 1: that's the we're going to see it, and then all
• 57:35
  Speaker 1: of a sudden you're going to like, oh my god,
• 57:37
  Speaker 1: we're going to have no job growth for a year. Yeah,
• 57:39
  Speaker 1: and productivity is through the roof, right like that.
• 57:41
  Speaker 2: When you're not creating any jobs as it is, right right,
• 57:44
  Speaker 2: So then you're right, exactly right. We need to be
• 57:46
  Speaker 2: thinking about if that's the scenario that actually comes to pass,
• 57:48
  Speaker 2: what do we do, you know, how do we address that?
• 57:50
  Speaker 2: And I think that's that's an important discussion.
• 57:53
  Speaker 1: Debate now, it's not in your data, right.
• 57:56
  Speaker 2: No, no, not my data?
• 57:58
  Speaker 1: Yeah, Mark sany great to talk with you.
• 58:01
  Speaker 2: As always, I learned a ton Appreciate it MHM