Latest / Market Pulse / How the Fed’s Interest Rate Cuts are Impacting Consumers and Lenders
Transcript
- Equifax Market Pulse Podcast Ep. 47 Transcript Speaker 2 (00:01): Welcome to the Market Pulse podcast from Equifax, where we break down the latest economic and credit insights to help you navigate today's business landscape. Dave Sojka (00:15): Welcome to the Market Pulse Podcast. I'm your host, Dave Sojka, member of the Equifax Risk Advisors team. This group identifies economic considerations and leverages data and analytics to translate into industry insights and recommendations. Ultimately, to support our clients during economic uncertainty, while uncovering growth opportunities in consumer credit risk. I'm pleased to welcome back our panel of experts in the Risk Advisors group, Jesse Hardin, Tom O'Neill, Thomas Aliff, and Maria Urtubey. Welcome all. Tom O'Neil (00:46): Hey there, David. Hey, Dave. Tom Aliff (00:47): Hey, David. Dave Sojka (00:48): How's it going? I'm doing well, thanks a lot. We've officially moved in the fall. Chicago temperatures are, are cooling off. And I think the, the pressing question for our audience is, have you started putting up your Halloween decorations yet? Tom Aliff (01:00): The, earlier this week, I was celebrating my birthday with my kids, and we were driving and, you know, driving past some houses and they were getting excited about all the decorations going up, and they said, we need to decorate our house for the holidays. And I said, do you need Halloween? We've got all the stuff we can go to Halloween stores, whatever. And they said, no, we want to decorate our house as a holiday house for Halloween . So they want to put up all the outdoor decorations, like Christmas lights and, and whatnot for Halloween, but then take them down after Halloween and then reset them up again later this year. Tom O'Neil (01:33): So, Tom, when they say a holiday house, does that mean like a little bit of every holiday? So you've got every holiday represented for one day? Tom Aliff (01:42): I think they were just going very meta with the costuming. Tom O'Neil (01:45): Sounds like a lot of work. Tom Aliff (01:47): , Tom O'Neil (01:49): But Dave here, here in dc you know, there's, there's enough scary things wandering around the streets and in, I don't have to, I don't have to do anything. You know, people are, are worried enough. Dave Sojka (01:58): Some of them may even be weird. Yeah. Tom O'Neil (02:01): , Dave Sojka (02:01): Some of them Tom Aliff (02:03): . Dave Sojka (02:06): Yeah. We just left our decorations up, Dave, from last year. We're we're, we put ours up out last weekend. We've got a bunch of inflatable ghosts and skeletons and stuff. So we are very festive for Halloween. Now it's just time to buy the candy. Before we begin, let's hear from Moody's Analytics for a quick economic update. Shandor Whitcher (02:28): Hi, I am Shandor Whitcher, an economist with Moody's Analytics. Lemme give you a quick outlook on the US economy. So in September, the US labor market showed unexpected strength with payroll gains of 254,000, about a hundred thousand more than expected, and the largest increase since March, revisions to the past two months, also boosted growth raising the three month average to 186,000, up from 116,000 in August. Unemployment rate edged down the second consecutive monthly decline. Job gains have outpaced labor force growth, which is contributing to this drop. Healthcare and leisure and hospitality led the way contributing 150,000 jobs while manufacturing and transportation lost 16,000 jobs. Relatively strong wage gains of 4% year over year have been offset by robust productivity growth. So this mitigates some of those concerns about wages accelerating inflation. This will allow the Federal Reserve to continue easing monetary policy without fear of overheating the economy. Shandor Whitcher (03:30): Now, credit growth is slowing with the expansion in balances expected to drop from 4.5% in 2023 to 1.9% in 2024. Delinquency rates are rising, but should stabilize just north of pre pandemic levels by 2025. Consumer credit balances dip slightly from August to September and year over year growth slow to 20.5%. Auto delinquencies are one weak spot. They've reached their highest rate since 2010. Now, risk of the outlook have balanced out. So on the downside, prolonged high rates still threaten to soften the labor market too much, while the upside includes faster productivity growth and stronger population grains boosting labor supply. So the Federal Reserve is expected to cut rates gradually, likely reducing the November rate cut from 50 to 25 basis points. And we expect 25 basis point cut in December and in each quarter of 2025. Thank you so much. Dave Sojka (04:30): Thank you. Dave Sojka (04:32): Today's topic will be the impact of the Fed rate cut in September. The US economy has been dealing with relatively high interest rates for the better part of two years. Inflation uncertainty and an upcoming presidential election have been weighing on the minds of the average American. With the recent 50 basis point cut to the federal funds rate announced on September 18th, we will look into the impact this will have across the US financial system, starting off with the economy and then the Fed next over to US households, lenders, and then finally ending with the US government. This 50 basis point cut lowers the FMOC target rate to between 475 and 500 basis points. So, Jesse, looking at the economy, the loan to center from the fed board worries that we are spiking the football before we cross the goal line. Then yesterday, October 3rd, federal Reserve Bank of Chicago President Austan Goolsby emphasized the need for substantial interest rate reductions during the next year. Isn't this confusing? Jesse Hardin (05:31): Confusing? Yes, I would say so. I would say though that, you know, there's always confusion in our economic direction, and I think that has a lot to do with the amount of data that gets reported and then the interpretation of that data. So I think everybody has insight and everybody has experiences that kind of dictate what they feel like the data tells them. I've heard some doubters talk this week about whether we're spiking the ball too soon. It seems like some of those worries have died down as we've seen better inflation data, but then also some of the data that we get outta out of the labor market. Honestly, you know, I feel like we always need something to worry about. So we've, we've got no shortage there. Your football metaphor made me think of a something though. I was watching Forrest Gump the other day, and if you recall, he was a running back at, at Alabama and basically started running down the field, and he is running down the field, and then we run sideways and then maybe backwards, then forwards. It almost feels like that's a little bit like our economy right now as he runs through the end zone. And by that I mean, we're heading in the right direction. We see the coaches kind of pushing us, you know, different ways but I think we're moving ultimately in the right direction. And I think the Fed's clearly signaling that with the cuts they're focusing on the dual mandate, not just keeping inflation in check, but now watching the labor market and the stability in the labor market as well. Great. Dave Sojka (06:53): Thanks, Jesse. On that point, and obviously the, the big goal for the Fed has always been that 2% target rate. So have we reached it yet? Jesse Hardin (07:00): Yeah, I think so. I think we have, and I think the Fed is, is indicating that as well. So the Fed looks at the personal consumption expenditures index. It's called the PCE. The markets tend to watch the CPI, which is the consumer price index. In both of those calculations, we see a two in front of that number. So I think materially we're there. The PCE's probably probably been closer to the fed's target for the last couple of quarters now. And and if you look at CPI we see that economists kind of take things out of the CPI. And if you take for example, if you take owner's equivalent rent out of the CPI, you really get to that 2% number that they're looking for. I mentioned that the Fed is clearly focused on this dual mandate, this idea that they want labor markets at equilibrium and also inflation and equilibrium. Jesse Hardin (07:48): And so I think the Fed's guidance is telling us that they're shifting focus away from inflation and really focusing more on the labor market stability and some of the longer term rate implications of, of policy. They're also saying that I think in the, if you read kind of between the lines, they're saying that the longer rate policy for longer is probably not the direction that we're gonna be headed into. And so I think you can see that, you can certainly see that in some of the, the comments that Chairman Powell has made recently. So really we're, we're seeing that the Fed is signaling and the, and the economy, I think is expecting that inflation is probably cooled enough where we're not gonna be you know, we're not gonna be materially talking about inflation moving forward. Dave Sojka (08:29): Thanks a lot for that insight, Jesse. Kinda shifting over now to the US consumer, and there are several areas where that rate cut should have an impact. And Maria, we'll start off with you looking at households. So we recently got the consumer confidence index release, and that fell from 105.6 in August down to 98.7 in September. As we start digging into the impact let's focus on consumer sentiment. So what is it and why should our audience be interested in how households are feeling Maria Urtubey (09:02): This index? Dave is produced monthly by the conference board and measures how optimistic or pessimistic consumers are about the overall economy. And it is based on their personal financial situation, the labor market conditions, and the general economic expectations. It's a numerical value, value where a hundred is the baseline representing that sentiment. In 1985, when consumer confidence was considered stable, an index above that 100 indicates consumers are more optimistic than that. Baseline year below signals that consumers are less so, and this matters because consumer sentiment drives spending, which accounts for about 70% of the GDP in the us. The drop we experienced the largest since August of 21, indicates a significant decline in consumer confidence attributed to concerns about the labor market and the job security. And as you've been noting, Dave, there is cautious optimism. So even with the rate cuts, consumers may hold back on major financial decisions. Dave Sojka (10:07): And on that obviously one of those financial decisions is, is the budgeting, the, you know, kind of where they're spending and or what they're, what they're, you know, what they're saving. So does this make them feel better about their current financial situation enough to have them spend and even kind of what they spend on? And is it enough? Yes, Maria Urtubey (10:25): This 0.5% rate cut generally benefits household budgets by reducing debt costs and freeing up disposable income. However, the extent to which it improves the finances per household will depend on factors like the type of loans that are held, the debt levels, and whether inflation remains under control room. Back to what Jesse was making reference. And the biggest impact of the rate cuts will be felt by borrowers with variable rate credit, such as variable rate credit cards, adjustable rate mortgages, and home equity lines of credit. Those with fixed rate loans will only be affected when new loans are issued or when they refinance. And on the other hand, the rate cuts lower the return on savings products. So making them or makes them of course, less attractive, and households that rely on interest from savings accounts or CDs will see returns shrink as a result of these lower interest rates. Dave Sojka (11:26): Tom building on Maria's comments is household sentiments move, what might the impact be to the housing market? You know, rates have been significantly higher than they were before the pandemic, and we're still dealing with the shortage of available houses for sale. We'll break this question on housing down into first mortgages and then kind of look at home equity and HELOC loans. So on the housing side, does this move the needle enough to see the mortgage market move in a consistent direction? Tom O'Neil (11:54): Well, it certainly helps whether or not it, it actually moves the needle or not, that's a different question. But, but keep in mind that unlike other types of lending mortgage rates aren't, aren't necessarily, well, they aren't directly tied to the rates that the Fed just cut. And in fact, the, the mortgage market had already priced in some expectation of rates coming down and, and we've been seeing the mortgage rates come down even before the Fed took took their action recently. And so while, while any decrease in, in mortgage rates will help there are also several other factors that, that play into this as well. Obviously the, the price of housing itself still remains, you know, well out of reach of, of many, even before factoring the, the cost of borrowing. And, and, and another factor is that, you know, a lot of homeowners who are currently locked into some very low rates that they locked in when, when rates were super low a few years ago they're still probably gonna need to see current rates come down significantly. Yeah. Before they're willing to, to give those low rates up and, and go back out on the, the market for a new home. So again, any decrease in in the cost of borrowing and, and the overall price of, of home ownership will certainly help. But it may be more of a trickle, you know, than a flood for a little while unless unless we make progress and, and, and see, you know, reach some threshold that no one, you know, really knows, you know, what that threshold would be yet. Dave Sojka (13:21): Yeah. That's some great insight on the on the purchase market. Tom, so what about the refi market? Tom O'Neil (13:27): Yeah, now that's something that we, we may actually see, you know, some more immediate movement in or, I, I think that's, that we may see it you know, for that matter. We, we all know that the, the housing market's been slow the past few years, but it hasn't been at a standstill. There have, you know, people have still needed to buy houses and obviously they've had to take the, the mortgage rates that are out there, which, you know, obviously have been high. So there's probably gonna be some excitement to take advantage of, of some of the, the lower rates that, that we hope to see over the, the coming months. But the interesting thing's gonna be to, to see how people balance that immediate need for relief with with playing out the, the market. If consumers feel that rates are gonna continue to, to move downwards through 2025 they may be willing to hold off on, on that refi until, until they, you know, see rates come down even further. And, and of course, you're gonna have people who either want to or need to, to get that immediate relief to their monthly expenses as soon as possible. So, so I, I think we will see some similar trends, you know, in the, the refi and the mortgage, you know, first mortgage, you know, markets as we go through 2025 in terms of both of them picking up. But we may see the refi market running a bit earlier in, in those upward trends than the, the mortgage. Dave Sojka (14:48): Great. So we've covered people purchasing a new home. We've covered people refinancing their debt. What are those about those people who are in their homes today and then are looking to take either, you know, a HELOC or home equity loan? Tom O'Neil (15:01): Yeah. Borrowing on home equity, that's, that's been interesting over the last few years. And, and this one is a, a bit different from from the other two that we just covered. Yeah. Because e even what we've seen over the last few years, even as, as rates have risen in, in home equity borrowing it still remained a, a pretty popular borrowing option compared to other options, you know, that, that consumers have had, you know, for the types of things that, that people take out. He loans and HELOCs four in, in fact, you know, with while we've been seeing the the rise in, in values of homes over the last few years, a lot of people have equity that, that make this possible that they didn't have before. So, so it's continued to be a, a pretty attractive option over the last few years even, even as rates have gone up there. Tom O'Neil (15:52): And in fact, you know, while, you know, while we've seen the, the first mortgage dollar originations, you know, totals fall to about two thirds of what they had been over the last few years in that same time period, home equity loans have have doubled in terms of their dollar originations. So I could see this market continue to to sort of chug along, you know, if, if decreasing rates, you know, continue to make it an even more attractive option, but we probably won't see the, the kind of proportional growth that we hope to see in the mortgage market overall. Dave Sojka (16:22): Maria, back to you. Another thing households worry about when they're spending is how do I pay for those purchases, which oftentimes is on a credit card. So what impact will the rate card have on credit card users? Maria Urtubey (16:35): Well, most credit card interest rates are tied to benchmark rates, such as the prime rate, which closely follows the central bank's rates. So when the central bank cuts rates, the primary rate typically falls by the same amount. The primary beneficiaries of the 0.5 rate card among credit card users are those who carry high balance, particularly those with variable rate credit cards. Those who carry a balance month over month. The revolvers, the subprime borrowers who often face higher interest rates, and of course, users of higher interest cards like private label or retail cards. Borrowers that pay their balances in full transactors are, and any borrowers, card card holders with fixed rate cards. We'll see Little to no direct benefit from this. Rate. Cut. Dave Sojka (17:25): Thank you, Maria. Tom Aiff, I'd like to turn over to the auto market and ask about the impact here. You know, the industry has been dealing with constraints for better part of a year, coming outta the pandemic. We, we've seen in the news about rising prices, you know, significantly over the last three years or so. You know, there's been the incentives from the captives to grease to grease the wheels of purchasing. But since auto loans are installment, is there any expected relief here? Tom Aliff (17:55): Yeah, so I think there's, there's a number of factors that tie into you know, the ability for a person to obtain a vehicle, you know, the lending associated with that as well as the, you know, the, you know, I guess car manufacturers or lenders to be able to offer that opportunity to people. I guess, you know, for me, I would bucket into a few categories. I know you mentioned like, you know, things about incentives and, and whatnot, but the four categories that I would bucket it into are gonna be things around economic conditions. And, and a lot of those things are gonna be stuff that we talk about on a monthly basis, you know, around consumer confidence things that are, you know, leading into that around like, you know, what are the sentiments associated with these things are, how does affordability look and interest rates directly do tie into the affordability. Tom Aliff (18:39): 'Cause In the auto space you know, the key, you know, categories for lending are going to be the credit score to income and loan to value. And payment to income is going to be the, what's the monthly payment that's needed for that, that, you know, that person. And then affordability ties in, did they make a down payment or not, according to the, you know, various levels of loan to value. So it, it all really depends on that, that person's individual profile on, on how directly correlated it will be to any, you know, change in interest rates. The second thing is around supply chain and things like that that we've seen, or you, you know, what, what's, what's currently available, which they're both impacts the new, and then subsequently used auto market in the in the 2023 timeframe, we saw about 15 and a half million new vehicle sales and 35.9 million used. Tom Aliff (19:26): And so those numbers vary depending on what becomes available, how much how much your vehicle's costing. And then, you know, ultimately, you know, can people afford them. And, and so then that then moves into, you know, some of the things that, like, what's, what's occurring and what do people want and do they have that, you know, people in the United States, they love their cars. You know, it seems our our infrastructure and culture is very tightly, you know you know, bound to that in, in many regards. So, you know, things like electric, electric vehicles, autonomous features, all, all the stuff that, you know, starting, like what are the new things that come out and is it enough for someone to, you know, to continue to want that new vehicle along with the affordability that's that, that comes with a, a, you know, some of the the, the new vehicle costs and then, you know, ultimately come coming down into some form of you know, people's preferences and preferences are becoming more and more you know, important. Like, you know, are, are we gonna shift, you know, more or less towards SUV trucks? And you know, what about and then, and, you know, some of their, you know, personal things around environmental impacts and sustainability and climate change and, and what are the impacts that that people are wanting to, you know, have according to that. Dave Sojka (20:27): So do you think the biggest impact will be you know, is is it really gonna divide between new and used? Or is it, you think it's more on the, the, you know, the captives versus everybody else? Where do you think that impact might be the biggest Tom Aliff (20:39): Fill? I, I think, I think that's gonna be hard to, you know, it's gonna be hard to say. There's, you know, there's definitely, depending on where vehicle prices go, like if prices are higher, you know, you know, oftentimes the, the used market can, can have, like, you know, like we saw in the last few years because supply wasn't there, you know, but that drove used prices up . And so really, really just, you know, depends on how things are, are moving through that. And then you know, depending on the total price of the vehicles going to be directly correlated to the loan amounts. And, and then if we, you know, loan amount then is gonna be directly tied to interest rates. So I, I think that's you know, all of those things tied together with affordability consumer confidence is going to drive, like what's gonna have the, the highest or lowest you know, increase and, you know, but there's, there's also an opportunity now with the interest rate changes to size and understand like what's, what's, what's potentially going to happen with refinances, for example. And, and we have seen, you know, just, you know, interestingly enough that, you know, large number of, you know you know people just, you know, choosing to walk away from parts of their, their auto loans. And now it's a very small sector that's doing that, but there are people who are unable to make those payments in, in, in ways that we've, we've not fully seen in the past before as well. Great. Dave Sojka (21:48): That's an interesting note. I think that we may have to revisit in a future podcast people walking away from autos. Mm-Hmm. Tom O'Neill back to you on this one. The next group we wanna look at is the lending community, you know, from banks and credit unions to finance companies and fintechs. What does the rate cut change in the mind of a financial institution? And we'll break this into a few parts, access to funding and credit lending standards. So in terms of lending and access to funding, have lenders been constrained in who they lend to and how much they're able to lend out due to the higher interest rates? And then does that suddenly change Tom O'Neil (22:25): ? I love these two parters, but but to the first part, well, yeah. Is the short answer. A, anytime that you have a product the product that you offer increases in price, which is the, the case that we're talking about when, when we're talking about lenders offering different forms of, of borrowing options to consumers, you know, in a period when, when rates are going up, you know, anytime we have that there, there's gonna be a negative impact on, on the demand for that product. But on the flip side, as, as we all know, you know, price isn't the, the only factor when it comes to consumption. So, so for example, while high interest rates, you know, as Tom Aiff was just talking about, while, you know, high interest rates and overall affordability have, have impacted areas like the auto market card originations, credit card originations hit a hit a new high recently, and in fact they, they hit in terms of new lines being opened, they hit a high in the fall of 2023, just about when, when rates were at their all time high point, or at their recent all time high high point. Tom O'Neil (23:28): So, so yes they, they've been constrained, but not as a blanket statement covering all lending activity in terms of whether this suddenly changes, you know everything no, not necessarily. I think Maria touched on a few items where, you know, we will see immediate impact to some of those revolving rates. But, but as I mentioned before, other things like, you know, rates for mortgages and other products, those are gonna be slower to change. And so when we look at this and, and we think about what's the impact on, on all of these different lending markets in terms of growth opportunities we have to realize that this, this is going to be, you know, longer term impact and, and the changes in rates, you know, are only one factor in those market dynamics. Mind you, it's, it's an important factor, but it's just one factor. Dave Sojka (24:22): Yeah. You, you touched on originations, and so obviously that's the next question is what's the impact on application volume as well as the number of new loans booked as a result of the rate cut? Might certain lending institutions handle things differently? Tom O'Neil (24:36): Oh, absolutely. Yeah. Just because it, different institutions always do things differently. When we are in a, a, a period of change and, and we are in a period of, of changing changing interest rates environment different lenders are gonna take different approaches on how they handle that that, that change. They may differ based upon, you know, the, the consumer segments that they focus on, the, the local markets that they compete in the different lending, you know, products that they offer. There's a lot of variables in terms of how different, you know, institutions are going to approach these changes on top of just the natural, what is the culture and what is the risk and, and growth appetite of these institutions. And that's what a lot of it comes down to. There's, there's always differences in terms of how they they approach that, that dual mantra of, of growing, you know, but managing risk at the same time. Tom O'Neil (25:33): And, and obviously those are, are generally polar opposites of each other. And, and I find it interesting that even, you know, that when we do find ourselves in periods of change, like as we're, we've seen in, you know, recently when interest rates were coming up and, and as we, you know, head into this period of what we assume will be declining interest rates there's, there's always differences in the way that that institutions, you know approach that a lot of them want to be the first, you know, the ones in front of, of taking advantages of the, the changing environments and, and getting a, a competitive foothold. And others are much more conservative. And, and as the pendulum swings, they, they prefer to take a, a wait and see approach and see how, how things play out. So, so yes, there will be differences in terms of, of how how they approach, approach these changes. But but they will change that, that part I'm, I'm pretty sure of. Dave Sojka (26:32): Great point. So obviously now we've, we've just covered the outflow of money from mm-hmm. financial institutions, but now let's focus on the inflow, the deposits question. Sure. With lower rates, do financial institutions you know, what do those financial institutions do in regards to maintaining their targeted deposit levels? Tom O'Neil (26:51): Yeah. This, this is a very interesting area that's, that I'm, I'm particularly interested to see how it plays out over the coming months and, and quarters. And it, and it also, it's another factor in, in the answer I just gave around how different lenders approach things differently. So typically, you know, we've seen lenders be quick to, to raise rates on their lending products when rates go up, and they're generally slower to raise their rates on savings and CDs and other, other you know, functions like that, you know, which makes sense. You know, one is, one is revenue and, and the other one is, is an expense. And of course, when, when rates are coming down, you know, the opposite tends to be true. They're lenders are typically quicker to, to lower those rates on, on savings accounts, CDs, and, and, and so forth. Tom O'Neil (27:42): Now, however, we're, we're in an interesting period where there is still a very competitive environment for savings, for having the reserves that lenders need to, to put whatever growth opportunities, you know, or growth strategies they have in place. I wouldn't be surprised if there's, you know, more of a lag than historically we see in terms of lowering those, those interest rates. We saw recently when, when rates went up that consumers showed very little hesitancy to shop around and move their money to where they get got the highest return that they could find. So I wouldn't be surprised if we saw something similar on the backside of this as, as rates start coming down. So instead of you know, lenders reaping the rewards of, of getting more depositors by being the first one to raise rates you know, it may be the opposite where maybe they, they reap the rewards of being the last one to lower their rates and, and, and see people, you know, moving over to, to their deposits, you know, to to take advantage of this. So it'll be an interesting thing to, to see play out over the next couple quarters. Dave Sojka (28:48): So let's put a pin stopping point on our consumer side and let's talk to Jesse, our def facto economic expert. I wanna ask you some questions about how the US government, is it gonna continue to navigate the path to a soft landing? The rate cuts have started, inflation seems to be plateauing. We got good job numbers this morning. So you know, even as the average American is, you know, being concerned as Maria had pointed out around, you know, how sentiment moves things, the fed's also aware of that. So they gave us a larger rate cut than expected. So what's next in terms of the economy? And let's start off with everybody's favorite subject, the federal deficit. Jesse Hardin (29:34): Yeah, that's a, that's a, a big topic to start with, Dave. I was trying to find a good joke about the federal deficit, and I couldn't find one. So maybe that's the joke in and of itself. The, you know, obviously the deficit's concerning it's continuing to grow in the fiscal year of 2024. We're gonna spend more on interest in def, more on interest in more on payments on interest in the government debt than we will on defense spending and, and some of the big non-discretionary categories. So certainly concerning, and I think we've kicked the can down the road for so long that it seems like, you know, we just continue this you know, kind of this escalation of the impact that the debt has. It's gonna take time. I think it's also going to take some pretty draconian austerity measures to, to pull us back. Jesse Hardin (30:25): The commonality they say between the rich and the poor is that nobody likes taxes. So, you know, it almost feels like you know, there's, there's something to kind of you know, find fault with, with whatever happens. And I'd say probably more pressing now is even just the immediate future of the economy with some of the funding, the budget funding gaps that we, that we have right now. So Congress is ultimately gonna need to vote on a spending measure, come, you know, December timeframe. We've passed, I think, five continuing resolutions now to continue spending in the in the economy. We've also got the Trump era tax cuts that are expected to be voted on in 2025, and those may look different than they look right now. So a lot of things kind of moving with respect to you know, where the, the government's going and the direction of policy, and we'll have to kind of continue to watch that. By the way, we've got an election in November, so certainly something to consider there that may or may not help this direction. So I'd say, you know, to, to answer your question about whether or not we hit that soft landing, it's probably whether or not you're a glass or half, half full or empty person. But, you know, in general, I'd say there's, there are some things that have to be overcome in order to, to kinda hit that that magic mark. Dave Sojka (31:40): And then my, my last question for you that, you know, is something that I think most Americans wouldn't consider having an impact directly on them is global conflict. And obviously we've heard a lot in the news, so kind of how does that impact us? Jesse Hardin (31:55): I mean, we heard a lot in the news, that's for sure. And so I think people probably are more aware of it now than they've ever been. I'll tell you a a funny story. I was actually listening to a podcast on Monday night, and it's a fellow fellow economic podcast Moody's Analytics. And after I listened to that podcast, I was so, I was so upbeat, you know, they kind of, they, they told me all the things that I was that I was kind of thinking myself, and I'm like, God, this feels great. And then Tuesday morning rolls around and I read about a strike dock worker strike, and I read about an attack between Iran and Israel really just kind of shows you that it's, it's so dependent upon what day you look at the news what matters. Jesse Hardin (32:39): And you know, so I, I hate to feel like you know Debbie Downer. Now, there are some things that we're watching right now. You mentioned global conflicts. I can talk about those, but also there's some domestic stuff as well. So from a global standpoint, I would say that, you know, we are watching what's happening between Iran and Israel and the Middle East in general. You know, outside of the political aspect of that, probably more looking at what happens with oil prices. So with oil we're at around three, let's call it three 20 a gallon right now or three 20 a gallon for gas. That, you know, has a direct bearing on where Americans are in their in their livelihoods. So if we see three 50, we start to see some pressure. If we get into the $4 range, we really start to see pressure and, you know, that's gonna have a pronounced impact on the economy. Jesse Hardin (33:25): So that's worth watching. Obviously, Russia, Ukraine, the the escalation there. And that's, that's a concern as well. I think some other things too, China, we're watching China, there's economic development there where we're seeing a slowdown in their economy. And obviously whether we like it or not, there's a, a tie there between the Chinese and American economies. And so kind of watching how China's pumping up their stimulus on on that side. And then I mentioned domestic. So the dock worker strike has, has fortunately kind of ebbed a little bit now where it was a, a bigger issue earlier in the week. It looks like the dock workers and the the docks themselves would kind of come into an agreement, at least to review this after the first of the year. So that's certainly a good thing. Jesse Hardin (34:09): We don't wanna see supply chain startled like they were. We've seen other strikes as well. Boeing has a strike ongoing. I think there's other strikes at and t may have won. So you know, certainly there's a movement there as well for for a balance between labor and and, and companies. And then you know, the all of that is, is I think just kind of churning and, and probably wait and see in terms of how it fully impacts the economy. I like to think though of of a quote by Jim Lovell, the astronaut that was on Apollo 13, and it's not the quote, Houston, we have a problem. It's actually one when they were trying to solve, I think a hundred different problems. He said, we're just gonna have to tackle these problems one, one at a time. And so I think it's really pertinent right now when we think of everything that's coming through. Dave Sojka (34:55): Great way to end the podcast, Jesse. Some, some comforting food for thought. So I'd like to thank Maria Thomas, Tom and Jesse for joining me today. To our listeners, I hope you enjoyed today's topic, and if you have questions or suggestions for FU future podcasts, please reach out to us at Risk advisors@equifax.com. Thank you. Speaker 9 (35:18): The information and opinions provided in this podcast are intended as general guidance only, and are subject to change without notice. The views presented during the podcast are those of the presenter as of the date this podcast has recorded and do not necessarily reflect official positions of Equifax, investor analysts should direct inquiries using the Contact us box on the investor relations section@equifax.com.