Deep Dive
Shownotes Transcript
Welcome to Inside Economics. I'm Mark Zandi, the Chief Economist of Moody's Analytics, and I'm joined by my two trusty co-hosts, Chris Dorides and Marissa DiNatale. Hi, guys. Hey, Mark. Happy Friday. What's that? I said, happy Friday. Happy Friday. Happy Friday. You know, I like these podcasts where it's just the three of us, you know, sometimes.
Me too. You're right. It's a little freer. Is it? You feel freer? I feel freer. I do. Yeah, I don't feel constrained. You must wonder what happens when I'm unconstrained then. Yeah, I would love to see that. That would be a podcast with just you. Pretty ugly, pretty ugly. Just talking. Yeah, yeah. So how are you guys doing? Everyone okay? A good week?
Yeah, we had our webinar earlier. What's going on? Yeah, we had the webinar on Tuesday. Oh, yeah. You know, months ago. It does feel like that was like a week ago, but it was a few days ago. Great title too, which you came up with, Marissa, Trump Tariffs and Tail Risk. I thought that was a pretty cool. I think that explains all the people who, I think we had 1600 people on the webinar, didn't we? Something like that. Something like that, yeah. Yeah, I haven't seen the feedback yet.
Nor have I. No. Me neither. Yeah. You know, I take that feedback very personally. I know. If someone's unhappy, we actually call them up and say, well, what the hell? You know, why are you unhappy? Yeah. Yeah. You ignore the 99 people who said, you know, it was great. I loved it. That one person, I wanted to know. Could have been better. Well, here's the thing. I've been doing webinars since the beginning of time. I don't think I've ever had a webinar where,
where I've had perfect feedback. There's always somebody. There's always somebody. Right? Absolutely. Especially in this day and age, because given the political environment, hard not to get someone upset about something. We did get a comment during the webinar. Did we? That someone was, yeah, about we were being...
biased one-sided yeah yeah well i want to talk to that person did you get the name exactly exactly um yeah yeah we'll have the name okay all right you have that person mark you know where you could get a great summary of that webinar chat gpt well i was thinking your newsletter oh my newsletter on linkedin
Yes. Yeah. It's called Inside Economics. Way to tee that up, Chris. Thank you. I tried. Nicely done, Chris. I tried, but you know. The two of you are like LinkedIn mavens. You've been doing this. I'm not. No, I'm definitely not. No. Oh, I thought you were, you're on LinkedIn though? I'm on it, but I don't, I'm not very active. Oh, you're not very active. No. Because you're active. Yeah.
Not as active as you. Oh, really? You are on there and posting right away. Well, that's because I have Sarah. Sarah is a godsend. But what was I going to ask? Oh, explain the whole newsletter thing. What's the newsletter thing on LinkedIn? So there's a option on LinkedIn where you can create newsletters, a weekly newsletter that goes out to subscribers. So
People who are linked to you, certainly they should be already getting a notification that, hey, there's this newsletter out there if you want to subscribe. And otherwise, if you do a search on Inside Economics, you should be able to pull that up. Oh, so this is more like the content is pushed to you as opposed to you going to it. Is that how you think about it? You still have to subscribe, but yeah. The thing about the newsletter is the posts are...
not limited as a normal post or a regular post is. So you can have multiple charts, you have a more in-depth type of article, you can have video, you can have pictures, right? So it's just like a newsletter. It's a richer form. So your first newsletter post is,
It includes a full summary, really, of the webinar. All the explanations for all the different parts that we went through in terms of the tariffs and their impact. And you have multiple charts in there. It's the same article that we posted on our Inside Economics website. No, our Economic View. Economic View, right. I'm getting lost in all the different ways we get content out there. You know the thing I like most about that newsletter? What's that? I like the Ben Franklin article.
logo. Yeah. Well, that's our podcast logo. I know. I love that logo. Okay. Is it just a love of Philadelphia or- No, what I like about most about it, it doesn't have that big M on it. You know, the big Moody's M. What do you guys think of that big Moody's M? We'll have to edit this part out of the podcast. No, no, no, no. I want people to hear this.
This is authentic. I like the M. And I'm on record liking the M. Oh my gosh. Yeah, I do. I do. See, she's sucking up to the powers that be. That's not true. That is absolutely not true. I don't know who those powers are, but you're sucking up to them. I can feel it in my bones. In fact, I started signing my own name as M apostrophe A-R-I-S-A. What? What?
You could do it too, Mark. Oh, I actually, now I, now I have a different view on that whole big M thing. Now that you say that I could do that. I could do a big M with a positive ARK. Oh man. Okay. I'll have to think about that. Yeah. Think about it. My view might change on the whole M thing. What's your view on the M thing, Chris?
Since you don't have a strong view on the M thing. You don't have a strong view on the M thing. It is a nice shade of blue. I think they chose a nice shade of blue. Right. Do you think the folks out there understand what we're talking about when we're talking about- Nope, not at all. Oh, really? Okay. Nope.
Probably not. Just think Moody's, big M. Moody's, right. So when did this happen? I guess last year, Moody's changed its branding and Moody's changed its logo and color and it was a big to-do, internally at least. And very expensive, I'm sure. And obviously it was very divisive here, whether people like that new logo or not. That's right. Yeah.
Okay, well, we all have a view on the M, that's for sure.
All right, but we better move on. Even though I love the chit-chat. I could just chit-chat all day with you guys. But we better move on to the economic data. Plethora of data. I haven't used that word in a while, plethora. It's a good word, don't you think? It applies. It applies. I mean, lots of data. Almost too much data. Yeah, almost. So maybe, I don't know where to start. Maybe, Marissa, I'll turn to you. What's the...
data statistic of the week that you would point to? Well, I think it would be what came out this morning, which is the data on spending and income and the personal consumption expenditures deflator. That would be my highlight of the week. We can talk about some of the other stuff, but yeah. So just kind of to sum it all up, personal income came in very strong. It rose 0.8% over the month.
which was the fastest rate of income growth since January of last year. And it was up 4.6% year over year. I'm going to stop you right there. I take umbrage with the way you, that's another good word, by the way. Umbrage. Yeah. I'm not sure I'm using it properly, but umbrage. You said, I'm going to focus on the income spending and inflation data. And you began with the income data, which was, which,
It was strong, but it kind of belies the weakness. I mean, the whole report was, in my view, weak. I would have led with the weak real consumer spending number, no? Or the high inflation number. But you started with the income number. I'm just very curious. Why did you do this? I'm just trying to start on a positive note. Okay. Okay. Fair enough. Everything else I'm going to say is next. Proceed then. Proceed. I thought you were going in order of the release. Right.
Well, that is actually what I was doing. And it happens that that order was positive to negative. Yeah. Positive. Okay. Yeah. Yeah. It goes income, deflator, spending. Okay. Follow along. I think she's getting annoyed at me. Don't you think, Chris? I can feel it. No? No.
all right go ahead now she's really annoyed no i'm not annoyed take control marissa okay i'll stop i've come to expect this is this is uncontrolled mark you now you're observing oh no unconstrained mark unconstrained mark yeah this isn't this isn't news mark okay dark mark what's that is that dark mark uh well that's a little extreme like dark maga
All right. There's no reason why we should be punchy, but I feel punchy for some reason. I'm not sure why. But go ahead, Marissa. I'll stop. I'll stop. I'll stop. Okay. So personal income was good, right? And it was up by...
0.8%, as I said, month over month. Savings rate rose. Disposable income rose by a pretty strong amount. Now, all the components of personal income were up over the month. Part of this strength in this release, and I don't know, maybe you guys know more detail about this than I do. I've searched for this, but I don't have a lot of insight, is that there was a big legal settlement payment. Yeah.
I don't know if it was the Facebook, was it the Facebook settlement?
You know, I chat GPT did and she was, she didn't know. Yeah. And I did mention meta. She mentioned the Twitter settlement, but they seem too small. Maybe if you analyze it, maybe. Yeah. I'm not sure. And also, I'm also wondering why I didn't get part of the Facebook settlement too. That's my main question, but if that's what it is, I don't know. It said there was a legal settlement paid that shows up in transfer payments for
from a social media settlement and a medical device settlement, but it didn't say what the companies were. So I didn't know if it was the meta settlement or not, but that boosted transfer payments 2.2% over the month, which was really big. So a lot of this strength is sort of
artificial because of this one-time settlement. But if you take that away, I mean, even if you just look at compensation was up half a percentage point over the month led by wages and salaries and supplements to wages and salaries, there was a social security adjustment back in January that's now baked into the data. So this was a good report, right? The, on the income side of things. Now, if we go to the other stuff, it wasn't so great. So, um,
spending growth was weak. So spending rose only 0.1% over the month. And for the first time in three years, spending on services fell. So all that spending was led by spending on goods and it was led by spending on autos, which could suggest that perhaps people were buying ahead of the imposition of the tariffs.
Yeah, so the decline in services is weird. There was a big decline in spending on food services and accommodations, so restaurants, hotels, that sort of thing, travel. And we've looked at other data that shows that there may be weakening in consumer spending on travel-related things and entertainment-related spending. So that kind of jives with this too. So the spending data here, quite weak.
Anything you want to say about that, Mark? Yeah. Well, I think it was just a really weak report. I mean, forget about the income. I think that was just messed up by this couple of payments made for settling court cases, which we don't quite know what that is. Also, I think there was ACA, Affordable Care Act tax subsidies that- That's right. There was. Yeah, that's right. ... picked things up. So
and i don't think the problem right now is with the job market or income that's okay you know that's but the real issue is spending that's really gone soft here i mean real consumer spending after inflation is no higher today than it was back at the end you know you go you go all the way back to november last year it's basically flat it goes up a little bit goes down a little bit it's basically flat
That's a pretty significant shift. If it continues, maybe it's just temporary, but it doesn't feel that way because the softness is in things that feel like are being affected by the uncertainty created by the chaos out there in terms of economic policy, the tariffs and the trade war and that kind of thing. So it just feels like a pretty...
I wouldn't say disconcerting, but in that direction report. The other thing is inflation was hot. You didn't get there and I know you're going to go there next, but inflation was hot. It was pretty strong. Do you want to fill us in on that on the consumer expenditure deflator? Yeah. The consumer expenditure deflator rose 0.3% over the month. This was the same as it rose in the prior month. It's up 2.5% year over year.
But core PCE came in pretty... Actually, both of these were above expectations, right? But core PCE rose 0.4% over the month, which puts the year-over-year rate of core inflation at 2.8% year-over-year. So...
This was definitely a lot of those durable goods. Yeah. And that core was an acceleration a year on a year over year basis, that core. So in January it was up 2.7. Now it's up 2.8. So we're going in the wrong direction.
there on core inflation. Yeah, durable goods, inflation rose 0.4%, which is the strongest increase it's been in months and months and months. Yeah. And that maybe, it just feels like the tariffs and the trade war, the fingerprints are all over this. And it's doing what economists like
like us, have been saying, this hurts growth. Consumer spending has gone flat now since last November, and it lifts inflation. And you can already feel it. I mean, businesses are already starting to push up prices in anticipation of the tariffs, maybe because it's
demand is being, like you mentioned, vehicle demand pulled forward. It just feels like this is the leading edge of a real problem in the economy, and that the next thing to go, really, the only thing keeping us now from going into recession is jobs and income. That has to hold firm. If that doesn't hold firm, that feels like the fodder for an economic downturn. We're right at the cusp of
determining which direction the economy is going. And this report, in my mind, just puts everything, all that into relief, into clear relief. The income, I think that's backward looking, that doesn't say very much. It's really the real spending in the inflation statistics that really are the point here. Chris, what do you think?
What's your interpretation? Yeah, I'd agree. And the markets would agree with that assessment as well. The stock market plummeted this morning. Oh, is it? Is the market down? Down 600 plus points. Wow. Oh, okay. 10 years down, 10 basis points. I mean, that's- Oh, wait, wait. So the stock market's down and bond yields are down? Yes. Okay. So what's the message in that? Inflation. I think it's gross, right? It's probably both. Or both. Well, if it was inflation, wouldn't that mean interest rates go up?
Not down? Yeah, that's right. Right? I mean, if you get both a, if you see red stock price, red on your screen for stock prices, and you see lower yields, it's saying the market is, investors are saying, oh, I'm worried about the economy's growth.
No? Are, but I think they're reacting off of the PCE report. PCE. Maybe because the link is, that means the Fed's not going to ease. Yeah. Yeah. So that just exacerbates the growth concerns. Right. Yeah. Okay. Wow. Okay. I also noticed the saving rate, you mentioned this, the saving rate is pushing up, right? Yeah.
That's right. Yeah, it went from 4.3% to 4.6% over the month. And if my memory serves, if you go back a few months ago, like in the last year, it was pretty solidly in the three. So we've pushed up here in a meaningful way, I think almost a percentage point from the bottom on the saving rate. And that also is very consistent with
with the worries about spending, the saving rate's gone up because stock market is down, wealth effects would suggest that consumers turn more cautious.
high-end, well-to-do consumers from more cautious, that means a higher saving rate and it means less spending. Another reason for some nervousness about where the economy is headed here. Yeah, absolutely. I mean, I think that's what we're seeing is this pullback in spending, particularly among discretionary type spending. Yeah. And you said on services, it was restaurants, on restaurants, you saw a real weakness. Yeah. So it all kind of fits the narrative that, look, this economy's
really beginning to struggle. It's not in recession, but it feels like it's headed in that direction that things don't change here. Anyone disagree with that? No. Okay. All right, Chris, what's in all the plethora of data statistics that came out this week, what would you point to other than what Marissa did? I mean, those are the main ones. Those are the key? Yeah.
yeah do you want me to reveal my statistic no no no no we're gonna play the stats game today all right i mean we can wait yeah oh i should just say one one other thing was that we got the final read on gdp we got the third print on fourth quarter gdp which was came in at 2.4 that was actually revised up a tenth of a percentage point from 2.3 so that's the final final for q4 and the
One-tenth of a percentage point revision came because imports were revised lower, so net exports were actually a little bit higher in the calculation. Right. I noticed inventories were not quite as... They didn't build quite as much as either, which... That's right. That's more of a positive for current quarter growth, but...
But we'll come back to that in a second. Didn't we get the consumer confidence measure from the conference board this week? We got both of them. We got both of them. The University of Michigan came. I didn't look at what happened with the university. There's two surveys. Take a guess. Take a guess. Well, I think this was the second print though, wasn't it? The first print was, wasn't this an update for the month? I mean, I think they previously released a couple of weeks ago and it was down a
quite a bit. I assume it remained down week 55, 60, something like that on the, on the university of Michigan. 57, 57, 7.7 points. Yeah. Okay. Yeah. When that's on top of the conference, there's two measures of,
Well, consistently followed measures of consumer confidence or sentiment. One's the University of Michigan survey I've done every month, and we got that data point today. And the other is the conference board survey, and I think we got that on Tuesday for the month of March. Both of them fell very sharply. And that's also consistent with the concerns about the economy, right? That consumers are...
Really on edge here. Really on edge. In fact, I think I put this up on LinkedIn. My favorite statistic leading indicator of recession is the Conference Board Survey of Consumer Confidence. If it falls more than, good rule of thumb, falls more than 20 points in a three-month period, we're going into recession. Consumers are running for the bunker, going to stop spending. And if history is a guide, recession begins six months later. And I think...
Because of the decline in March, that's the read we got on Tuesday, the index is now down 17 points over the last three months. I think something like that, 16.8. Is that what it is? So not quite recessionary, but certainly- Darn close. Pretty darn close. Pretty darn close. Okay. Okay.
Okay. I guess the other big news of the week, economic news of the week, was more on tariffs on trade. This time it was on autos. Chris, any thoughts on the announcement? This was yesterday on 25% tariffs on auto imports and auto parts imports, with some exceptions. Yeah, certainly another inflationary issue.
Type of effect here, right? The estimates are for an increase in prices of autos. Somewhere between 5 and even 15,000 dollars. Right? So. Clearly, that's going to have some impact. There's some, um, there's some complications in terms of the, uh, imposition of the tariff on.
what is it, the imported parts with foreign content from Canada and Mexico. So for the time being, those USMCA parts are excluded, but just to buy time to figure out a mechanism to charge. So the impact could even be higher than the initial estimates here once they figured things out. So yeah, another reason for some concern, I would say, in terms of both the consumer and the economy.
Marissa, any perspective on the auto tariffs? They're big. I think they are still a little confusing from what I've read. It's complicated because of what Chris just said.
Parts that are made in the U.S. but assembled somewhere else, for example, if parts come from Mexico but it's assembled in the U.S. or vice versa, tariffs will only be levied on the parts that are manufactured outside and not assembled. So some automakers have said they – or actually I think the government has said they have to figure this out, have to figure out this calculation of how much of a car is actually –
So I think it's not 100% clear, but a 25% tariff on imported vehicles is very large. I will note that I saw there was an announcement from Hyundai saying,
that they're going to invest billions of dollars in producing more vehicles in the U.S. as a result of these auto tariffs. So they already produce some vehicles in the South, and they're, I think, putting $10 billion or $20 billion or something into making more of their vehicles in the U.S. to get around the tariffs, that they'll actually do it. I mean, do you remember Foxconn?
Does anyone remember Foxconn? No. Yes. They said, I'm going to invest $10 billion. It's kind of the same number, $10 billion in a facility in Wisconsin. That was back under President Trump's first term with those tariffs, when those tariffs were imposed. Yeah. What happened to that? What happened to that? Nothing. Nothing happened to that. Nothing.
In fact, the state of Wisconsin, they ended up a billion dollars in other tax incentives that they paid out. And I think there's some Foxconn facility there, but I think it's like- It's a fraction of what it was. It's a fraction of what it was. So I don't know. You don't believe it? No. Well, you have to be careful. Some of this might already have been in train. Yeah. They're already planning to- That's true. Right? Right. What was it? Apple, I think, had an announcement recently about-
Yeah, I don't believe the tariffs are a reason why they're investing in a facility. Is it South Carolina, I believe? By the way, I think they get Inflation Reduction Act tax credits. I think that's- Oh, I'm sure they still do, right? Yeah. Because that hasn't been repealed yet. Yeah. At least so far, maybe it gets repealed. I don't know. Here's the thing that makes me nervous. And maybe this is why the market's kind of having a real indigestion. This feels like-
these tariffs are real they're that you know there are not some negotiating ploy that's going to go away
When you do this, this is a big deal. And it's not just one country. It's not like I'm or two countries. This is a lot of countries. This is Canada, Mexico. It's Japan, Korea. It's Germany. You know, this is going to affect. And that's just the folks that assemble. There's a lot of parts suppliers all over the planet. So it just feels like the signal in this move is.
Of course, it can all be taken away. I'm not saying that. It's still a reasonably high – and that's still our baseline. There's a high probability that this all goes away at some point. The president will pivot on all this. But I don't know. I say that with much less confidence today as a result. This feels like a more permanent kind of – this is the world that we're going to face going forward, higher tariffs. Now, we'll get a better sense of that next week.
because I think that's when the so-called reciprocal tariffs are going to be unveiled. But we'll see. I don't know. I'm getting more of the mind that we got to build in tariffs here for an extended period of time. I don't believe they're going to remain forever. I don't believe that at all, because they're going to do so much damage to the economy and to the stock market and everything else.
But I do think this is going to go further than I think we have built into our kind of baseline thinking. Another reason to be a little bit more, significantly more nervous about the economy's prospects here going forward. Here's the other thing. I think people, well, maybe it's just me. This hadn't crystallized in my thinking before.
But the tariffs, you know, the automakers may decide not to pass through all of the tariffs onto consumers because they're
They want to preserve sales. I mean, the other thing that's going to happen here is they're going to jack up price on the vehicle. Say it's 10%. The tariff is 25%. Let's say they jack it up 10%. That means the new vehicle price goes from, on average right now, it's 50K, almost on the nose, to 55K.
50K is already unaffordable for most American families. 55K, now you're making it really tough. So that's going to hit sales. So that also has all kinds of ramifications, right? I mean-
Think about the auto dealers. Think about transportation and distribution. Think about insurance. Think about maintenance. I don't know. I haven't even thought about it in the context of lending, auto lending. I don't know what kind of impact it will have on auto lenders. I'm not sure. But the knock-on effects are significant. So it's not only just about raising price.
and hitting real income, we're going to sell a lot fewer cars. Now, more of the hit's going to be on imports, but it's also going to – the domestic automakers are also going to raise prices, and it's going to affect their sales. Now, they'll get a higher market share, so the net of all that might be a wash, but that means fewer sales, and that has implications. The dealer's probably employing more people. The auto dealer's – I'm making this up. Maybe somebody can chat GPT it.
They employ more people than the automakers employ in the country, I'm guessing. Yeah, I think I saw like 2 million or something. Yeah, 2 million. Something like that. Yeah, I think vehicle manufacturers is more like a million. Yeah. Something like that. A million people working. So it just goes back to the point. Tariffs are inflationary and they hurt growth. And then, again, I keep coming back to this.
Who in their right mind is going to invest in the United States based on these tariffs? Are you kidding me? Hyundai. Oh, yeah. Hyundai. Hyundai. But come on. That's why I don't believe it. I just don't believe it. But if you want to build a vehicle manufacturing plant, how long do you think that takes? Oh, it takes a year. Quarter? Years. Year? It takes years. Right. It takes years. And then how long is the life of that plant?
Decades. Decades. So are you telling me I can count on those terrorists for decades? No, no, this is not happening. So, you know.
i don't know i just that that announcement on autos i i you know i what really wasn't expecting that i really didn't think i think didn't think that was going to come before the reciprocal tariffs i guess maybe they had they thought they had legal the administration thought they have they think they have legal authority to do it and therefore went forward with it but i think that that that that may be a game changer in terms of you know how this all plays out
any thoughts on a irreparable damage here in terms of you know foreign consumers or even yeah foreign consumers just turning their backs and saying you know I don't want anything to do with uh American products or you know well I think that's more that I don't think is irreparable I mean that's that's more temporary I mean because ultimately I'm gonna buy what I want to buy you know I may
forego for you know to make a statement for a month two or three but i i don't know that that will last but i more irreparable and nothing's totally ever always you know completely irreparable but more irreparable is what it does to supply chains you know what other countries if i'm not going to locate in the us that means i gotta i'm gonna change my focus and invest somewhere else
That's going to happen. And once that happens, how do you turn that around anytime soon? I mean, that may be the definition of irreparable. Yeah, I don't have to believe any Canadian manufacturers looking for other markets, right? They were so tied at the hip with the United States. Now they have to diversify, right? Right. Even if we...
called the whole thing off right i think there's something well be some fallout of course you know it's going to happen de facto if those tariffs go in place because sales are going to collapse right and they have to look for it it's a trade between the us and china and canada the trade between mexico and the us is going to fall sharply between germany and the united states is going to fall sharply between japan korea and the united states is going to shop so those companies are they're going to they're going to direct some someplace else
someplace they're going to want to sell their product. I don't know. I've read there's already talks between the Canadians and the Europeans to try to come up with a trade agreement between the two of them to, yeah, to offset this. Yeah. Anyway, I don't know. You can tell I'm getting more nervous. It just feels like we're headed down a, we're definitely headed down a dark path. I thought, you know, we would pivot here and start
going in the other direction, but it doesn't feel like it. And the economic data is, I guess we're going to get another read next Friday. The jobs numbers for March, it might be too premature to expect a big hit there, but I don't know. It feels like we should buckle in here or buckle up or whatever it is. Anyway. Still no movement on UI claims.
Yeah. I've been a little perplexed by unemployment insurance claims. I think it may be most of the layoffs are federal government related suppliers. And people are getting severance packages. They're not going to file right away. It's going to take some time. Some of it is tied up in court, right? So we may be waiting to see what happens there. Yeah.
uh i'm a little skeptical of the ui claims but that does suggest you know it hasn't hit the labor market yet and that's the reason to think we're not going into recession the labor market holds if we don't see the layoffs and ui claims remain down we should be okay but that that's uh let's watch that very carefully um you mentioned gdp uh and i want to the we got the gdp number for the fourth quarter of 2024
And I want to pivot the conversation to economic data. This is something, I'm on the board of the Coleridge Initiative. The Coleridge Initiative is a nonprofit organization that helps facilitate the use of data, economic data, demographic data within the government, federal, state, and local. And obviously, I was just spoke at their convening this week in DC. And
And there's a lot of concerns about data, data quality, data availability. And kind of the hook back into our conversation is GDP. Did you hear Commerce Secretary Lutnick's comment on GDP and GDP in the government? Marissa, did you hear that? Yeah, to remove government spending from the calculation of GDP? Is that what you're referring to? That's what I'm referring to. Yeah, what do you think of that? Yeah.
- I don't get it. I don't understand why you would do that. It is separated out in the report. You can clearly see what government spending is contributing.
separate from everything else, right? If you want to calculate GDP minus that, it's very easy to do. If you want to see all the other components, I don't know why. I mean, the implication in what he said was that we shouldn't be counting government spending because there's a lot of
waste in that number that I think the quote was something like, if the government purchases a tank or a fighter plane, then that should be spending. But paying all the people to decide whether to purchase that tank or fighter plane is wasteful and shouldn't be counted, right? Wasn't that his rationale? Yeah, that's right.
Yeah, paraphrasing, obviously. But like, I mean, then you could say that about the private sector too, right? I mean, when a company purchases an office building or hires someone or purchases software equipment, do we count that? But we don't count all the people that work for the company that make those decisions. I mean, it just doesn't, I don't know. I don't understand the, I mean, I understand that, I think the motivation is,
is because all of these cuts to government spending that's happening under Doge is going to have a downward, right? Going to put downward pressure on GDP because you're going to have government spending falling, presumably. And they want to remove that from the calculation. But-
That's just sort of semantics, right? I mean, you can go into the report and easily see the different components and remove whatever you want if you'd like to calculate it that way. There's no reason to fundamentally change the definition of GDP. Right. Chris, any perspective on that? Okay, what she said. Well, that's absolutely right. I mean, you mentioned GDP grew 2.4% annualized in the fourth quarter of 2024. Right.
By the way, it grew 2.8% calendar year 2024, which was a good year. That's a really good year. Our tracking estimate for Q1, real GDP growth. So we take all the economic data, including like today's consumer spending data and all the monthly information that's coming in. And we translate that through a model into what it means for the current quarter growth. It's 0.8%, 0.8%. And-
I think the concern that's coming through in Commerce Secretary Lutnick's argument that we should exclude government from GDP is,
is that we could easily get a negative number in Q2. Easily. Because correct me if I'm wrong, I think I've got the GDP accounting correct. This is from the Bureau of Economic Analysis. The way the BEA calculates government spend in the NIPA accounts is by looking at, in part, compensation of government employees. So if you're cutting...
If you're cutting jobs, you're cutting comp, that's a direct hit to...
government expenditures, and you can see how the arithmetic comes out here, you could easily get a negative number. If our underlying growth rate is close to one, and that's in the first quarter before the cuts really took effect, if they start taking effect in Q2, Q3, that's the fodder for outright GDP declines. So you can see why there's a level of concern there.
But more broadly, what does that raise concerns about in your mind, Chris, about the data we get from the government in general? Should we be nervous about that? I mean, we rely, like everyone else does, on government statistics, you know, employment, unemployment, inflation, wages, investment, you know, it goes on and on and on.
And we trust that data. Obviously, it has its problems. It's based on samples, and samples are imperfect, and there's all kinds of measurement issues and seasonal adjustment and quality correction, on and on and on. But we trust the underlying data. Should we be nervous about that in the context of these kinds of comments?
Yeah, absolutely. And we were nervous about government data even before this, right? We've been talking about the decline in survey response rates, right? So not even cuts by the government necessarily, but just the fact that you can't get people to answer a survey at the same rate as you could in the past. And so what does that imply for the quality of the data? And I think those are really important.
discussions to have. And if you wanted to have a discussion about GDP, how it's flawed, how it's estimated, there's lots of things not to like about GDP. We can have that debate and discussion and we should have it and put all that data into context. That's important. But this just continues to throw more doubt into that data and it also suggests that hey,
Maybe we don't need to fund the collection of this data as we used to, or maybe there are private sources that can replace it and be equally as effective. So that also makes me nervous. There are lots of companies, of course, that rely on this data to make their own decisions. If we didn't have a good data on
on the consumption, the spending and the unemployment, what have you, that certainly would diminish the quality of their decision making. And then obviously we do have the Federal Reserve, we have other policymakers that rely heavily
on this, uh, on this information. So if we're not getting the highest quality we can get, even understanding that it's never perfect, right? At least let's, let's do our best, right? Uh, to help those lawmaker policymakers make the right decision. Otherwise they're in, they're in a fog, right? We didn't always have GDP to guide central banks or even the government's relatively modern
I think post-depression, right? Post-depression. I think it was Kuznets, right? Kuznets, yeah. No, like the 40 or something. So, yeah, you can guide your economy without it, but not very well if you look at the historical record, right? We're much better off having higher quality data than not. Yeah, there's a lot to unpack there. I mean, you did, you know, putting aside any concerns about
government continued funding of government statistical agencies, which I think is a reasonable concern in the context of all the things that are going on and all the cutting that's being done. And also abstracting from kind of the comments from the commerce secretary that, you know, makes me queasy, you know, that, you know, implying that you shouldn't trust the data or what the data is purported to measure.
Even as you pointed out before any of that, the quality of data is increasingly of some concern because of declining response rates. Because all these, or at least most of these data series that we look at are based on samples of different parts of the economy, whether that be consumers or households or
businesses or whatever it is. And those response rates are way down. So I'll give you an example. And I, cause I, I know this cause I presented this at that convening for the Coleridge initiative, the JOLTS report, the job opening labor turnover survey report, which we all really pay a lot of attention to because it goes to hiring. It goes to layoffs. It goes to quits. You know, you get under the hood as to what's going on with job growth and unemployment and
You know what the response rate to that was 10 years ago in 2015? You want to take a crack at it? What was the response rate? Chris, you want to take a crack? 80%. It was two-thirds. Two-thirds. Two-thirds. Okay. You know what it is today, 10 years later? A third. A third. It's in the 30s. A third. A third. Obviously, I'm rounding. A third. But pick your statistic. See Consumer Price Index, Employment Cost Index, etc.
The CES, the CPS, that's the current population survey, the basis for the unemployment rate data.
all have fallen very sharply. And the problems are quite pernicious. What's behind the decline in survey responses? It could go to survey fatigue. We're always filling out surveys to tell people how we like their product or whether we enjoyed the hotel room or the
Or the air ride. Yeah. It goes to cyber. I'm always nervous about interfacing with anything that comes over my computer screen. Even if it's purported to come from the government, I'm not sure. And privacy. Now, particularly given all the things that are going on, I mean, do I really...
If I'm not compelled to, do I really want to hand over any information whatsoever? I'm not so sure, but all those things are happening. And it's not just in the United States. I mean, I think if you go over to the UK, the survey responses for the data to calculate the unemployment rate have fallen so sharply, they can't even calculate an unemployment rate now. Right? Can you imagine that? Bizarre. Yeah. Bizarre. It's bizarre. Yeah.
And it's also reduced funding for these surveys. I mean, this has been a long battle. This isn't new. I remember when I worked at the BLS 20 years ago, we were talking about funding for the current population survey. And that's always been a battle in every administration is to give these statistical agencies more funding. So if you don't support the collection of this data, it's going to be harder and harder to do.
You recall, just one more, if you recall last year, there was talk of reducing the sample size of the current population survey, which is only 60,000 households. Yeah, because they didn't have enough funding to keep the sample at 60,000. They were going to actually reduce the sample size, which means poor quality data, right? There's already pretty big...
margins of error around some of these estimates. And the smaller that sample gets, the more error prone the data gets. And fortunately they got the funding. They were able to keep the sample in place. - Viewable statistics.
Well, yeah. I mean, I think the lesson or the message in declining survey response rates is not cut funding, it's decreased funding. I mean, if you don't have the data, your policymakers are flying by and how can the Federal Reserve
when it sets monetary policy, interest rates. It looks at inflation and it looks at unemployment. Those are the two things that it looks like. If you can't measure those two things, then how do you set? Well, you'll set it, but you won't set it well. It won't set interest rate policy very well. So it's just absolutely critical. But it doesn't feel like
We're moving in that direction at all. There's, if anything, wait, cause you, you sent me an email, I guess some advisory group, you know, economic advice too. Can you explain? Yeah. There's a group called the sack, which is the federal economic statistics advisory committee, which is made up of academics, economists, government officials, private sector people that volunteer their time to advise the
agencies like the BLS and the BEA on how they produce their statistics, kind of like a user group feedback type thing. And these committees talk about these issues like falling response rates and how can we turn this around or how can we improve the data, right? That was disbanded at the end of last month by the administration. And then there was another committee that focused strictly on the BEA data, which is the data where we get
This is the agency we get GDP and income and PCE deflator, all of these extremely important statistics. There was an advisory committee just for the BEA that was also disbanded by the administration. So that's not a good sign, right? It's sending a signal that this isn't important and this is not a priority for the administration, clearly, but I mean, just...
These aren't even committees where people were getting paid to participate on them. So you hear the argument that, well, okay, if the government isn't going to devote more resource or, in fact, devote less resource to collecting data and other information, then
uh, you should rely on them on private market sources on, uh, but in fact, private companies are increasingly collecting more data for their own business practices. Uh, what's wrong with that argument, Chris? Why, why shouldn't, why don't we, you know, just ante up and buy those, that data from the various private sources? Oh, we should use all the data, right? We should be using those private sources, but those sources are not perfect either, right? They're
The private sources are often collecting data that's really exhaust from another profit-making enterprise. A good example might be the payroll data, payroll survey data, or payroll data from a payroll processor like ADP. Their main business is processing these payrolls and as a byproduct they were able to see or get a lot of information about what's going on in the labor market.
But that's great, but that's also got its own biases and distinct issues, right? First and foremost, it's only their customers, right? They're not serving the broader community.
um market or the broader economy so smaller businesses that may not subscribe or use that type of service may be left out or there may be certain industries that that don't typically participate with that uh payroll processor so it's got some gaps uh to it as well so helpful but the broad-based survey that the government provides is really again that's the that's the gold standard only the government can provide it yeah right else is going to step in what's you know
What's the profit incentive that they can offer to collect this information? Right, right. Well, let's end this part of the conversation because I do want to play the stats game and maybe take a question or two from listeners. But before we do, I'm just going to ask you, what is your favorite –
uh, alternative private data source that you use? You mentioned ADP. Uh, is there one that, and I'll turn to Marissa first, maybe, is there a, uh, alternative data? So I think listeners always are very curious and you know, what, what we're looking at that you look at that, you know, you think is particularly valuable, Marissa, or are you, are you Chris?
Yeah, I think it depends on the topic. But one of, I do like the consumer credit report data, right? That's- From Equifax. From Equifax or Experian or TransUnion. Yeah. Again, it's got its flaws. Everybody knows that there are things that can crop up in a credit report, but-
It's very timely. It's not biased, right? It's just the numbers as reported in terms of delinquencies and credit formation and credit inquiries. It just gives you a lot of detail about actual observed consumer behavior. So that's always been a favorite of mine. Yeah. And that, I mean, the data we collect, we collect it from Equifax, but you're right, the other bureaus have the same kind of data. Yeah.
Correct me if I'm wrong, but that's a census, isn't it? It's based on all the credit files, not just a sample. So that makes it even more valuable because you don't know those survey issues that I described earlier.
That's right. That's right. It's a full census. So it's, it's, it's great. Again, there's a, you get a blind spot in terms of the unbanked, right? You're not going to know what's going on with them, but you know, again, no data is going to be perfect, but this one is really good to capture most or a broad swath of the, of the population in terms of what's going on with their population.
consumer credit cards, their credit cards, mortgages and whatnot. Right, right. Marissa, do you have one, particularly in the labor market that you look at? I mean, any alternative data there? Like anything from like Indeed or... Yeah, I mean, there are some. Chris mentioned ADP. I don't really look at that that much, but Indeed puts out a hiring metric and a job opening metric that...
often corresponds and moves in the same direction as JOLTS ultimately does. So I think it's pretty good. And it's very detailed too. So they have it by industry and occupation and region of the country, that kind of thing. So that's a pretty good measure. There's also, I mean, that is...
This isn't really data exhaust, but then there's surveys like Challenger Gray and Christmas that are private sector surveys of the job market that aggregate layoff announcements, that kind of scrapes the web and aggregates announcements for layoffs. I tend to look at that as well.
I really like the house price series and the commercial real estate value series that we construct because they're based on actual transactions. We get that data and we can see from deeds that are filed at county courthouses what those values are. And then we can construct so-called repeat sales price indices at a detailed geographical level and in the commercial real estate market across property type.
And I find that highly, it's very timely. We can track that monthly. Very, very valuable. So anyway, okay, let's play the stats game. We just put forward a stat. The rest of us try to figure that out through clues, questions, deducted reasoning. The best stat is one that's not so easy. We get it immediately. One that's not so hard. We never get it. And we always begin with Marissa. Marissa, what's your stat?
My stat is, where is it? 5%. Is that the inflation expectations in the University of Michigan survey? One year. One year. Virtual cowbell. Virtual cowbell, baby. Nice. Right out of the gate. Right out of the gate. I'm on fire. Okay. You want to explain? Yeah. I mean, this keeps...
popping up and up and up each month, right? From both consumer confidence surveys, both Conference Board and Michigan, they ask,
for what consumers think inflation will be next year. And this has been rising very quickly since the start of the year. So in the Michigan survey in January, we were at 3.3%. This is what consumers thought inflation rate would be a year from now in January. And we're at 5% now as of March. So this is actually, I didn't look to see how high this is. Like when was the last time it was 5%? I think it was...
Three years ago, if I'm not wrong. Yeah, it was November 2022. You have to go back to when people thought inflation would be that high. And if you remember, 2022 was peak inflation coming out of the pandemic. So this just shows this expectation that I think that tariffs are going to have a real impact on inflation here. You're seeing it across all surveys, across all demographic groups think inflation is going to be significantly higher next year.
uh hey chris do you know are inflation expectations in the bond market equally as elevated do you know have they pushed up as much it doesn't feel like they have you know they they actually came back down if you look at the the five-year break-even rate i was looking at that just a few days ago and they had
they had risen. They're still high relative of course to where they were say a year ago, but they're actually backing down a bit. I don't know. I didn't check today. Maybe things have changed here, but. Right. Yeah. So concerned, but not quite as concerned as they were just a few weeks ago. A few weeks ago. The one thing that strikes me about the inflation expectations, particularly the consumer, but also in the bond market,
Usually it's higher oil prices, gasoline prices, the cost of regular unleaded that's kind of driving those expectations up or down. But I think cost of a gallon of regular unleaded is like three bucks, right? It hasn't budged at all. So it has nothing to do with what's going on here. And it's all about the tariffs and the trade war. And it's affecting people's thinking. And I think that's one reason why the Fed's going to be cautious here because they're fearful that if the tariffs –
Even though they're one time getting into inflation expectations, that could then infect wage demands and you get a more kind of self-reinforcing kind of persistent inflation. And they really don't want that to happen. That's stagflation. So that's a good one. Let's go on. Chris, what's your stat? Okay. It's two stats related, 69 and 71. They sound like index values. They are.
Are they from Michigan? - They are. - Is it current and future? - No. - No. - It's current. - Michigan survey of consumer sentiment, isn't that? - It is, it's too demographic. - Is it Republican? No. - No, I was gonna go with that. There's big news there as well. - Yeah, okay. - Democrats are. - You'll have to tell us. Is it income related?
No. Is it age? Yes. Okay. I'll tell you the two age groups. Oh, two age groups. Okay. 18 to 34 and 55 plus. Who do you think is 71 versus 69? Oh, that's interesting. 69 versus 71. So they're almost the same. They are almost the same, but one is lower than the other. Yes, indeed. Thank you. Thank you for that.
But insight, baby, that is- You know, that's what people come to insight economics for. Yeah, that's right. Which one is lower? My intuition is probably wrong, but my intuition would be that the folks that are older would have a lower, maybe the 69%.
And the younger would be 71. Is that right? So that's what typically is true. Historically, if you go back, the younger are always much more optimistic than the old. Not anymore. Interesting. Right now, it's the younger cohort is more pessimistic than the younger.
than the older. What was that age group? 18 to 34 versus 55 plus. Yeah, I would have thought older people just are more sensitive to the stock market and see their value of their 401 s plummeting. The wealth effect, I would have thought. Well, both indices have come down. It's just that the 18 to 34 has come down even faster.
Into what do you ascribe that, do you think? I think they're just nerd. They don't have that nest egg, right? Or they don't have that housing wealth or even the stock market wealth. So yeah, the older you have, the stock market goes down 10, 20%. You don't feel good, but-
you've got you that's after years of games right you got some cushion that 18 to 34 year old group yeah still looking to try to buy a house trying to save up but um really struggling but you're saying it it has fallen
More in the last few months. That's right. That's right. The problem with the house has always been a problem with the house. Yeah, but I think their outlook is even darker now. Even darker. You know, the one thing I think might be going on, and I have no basis for saying it, but I'm going to say it anyway, speculation, is going back to the jolts, hiring rates are very low. And it's not like...
These young people are getting laid off. The problem, and some of that's going on probably, but that's not the issue. The issue is they can't get a job. They can't get hired. And I can see it. I can see it in my own world. Highly educated, very talented, very eager. They're having a tough time breaking in. And that's got to be...
It's really debilitating psychologically. I mean, really debilitating. So I wonder if there's something like, maybe we can look at that region or regionally or something to get a better sense of that. But anyway, all right, I got one ready. 4.5%. That's the analytics house price index.
It is, but that's not the 4.5% I had in mind. And you were so proud of yourself. I was so smug. Look, I know this statistic. So it's not anything to do with house prices? No. It came out this week though. It's inflation related? No. What's the other big stat that came out this week? We talked about it. GDP. GDP. Okay. You should know this because you've used this stat on me before, Chris.
Oh, it's GDI. GDI, real gross domestic income, 4.5%. I couldn't believe it's that high. Yeah. Yeah. Yeah. Wow. Yeah. So, you know, the kind of the thinking is to get to reality, you should
Take the average of GDP growth and GDI growth, and that gets you to, well, one's say two and a half, the other is four and a half. That gets you to three and a half. See how I did that? Real insight, three and a half percent. That actually was a pretty good quarter. Fourth quarter of 2024 was a good quarter. And you know what?
Uh, if you look at GDI for calendar 2024, it was 3% on the nose, 3% on the nose. So that was a really good year, but we're coming off here pretty quickly, pretty quickly. Okay. Let's take a few listener questions. Hey, Marissa, I know you're, you've been inundated with questions. Uh, do you have any good ones there you want to post to, uh, to the group?
Yeah, I have one that kind of goes back to what we were talking about before with the trade war and the motivation for doing this. Do you think that...
Given that where I think you could say we're in a trade war at this point, right? Oh, yeah given this and given the alienation of other countries and Our largest trading partners. Do you think that there's some risk that foreigners stop buying in US Treasury debt? I got a view Chris you do you want to take that or you want me to go first? Go ahead. I
Well, to some degree, they already are. Not that they're selling the debt, but they're just not buying. Like the Chinese, the Chinese still are huge holders of US treasuries, but much less so than they were five, 10 years ago. And for obvious reasons, I mean, given the growing tensions between the US and China, they've decided to reduce their exposure to US treasury debt. So if you look at their holdings,
I'm making this up, but I think we're down to 700 billion, something like that. It was well over a trillion at one point in time. Again, that's from my mind's eye, so I might have that wrong, but that gives you kind of rough order of magnitude. So I think we've already seen that in the case of China, a very large holder of treasury debt. I sense also that other countries...
putting pressure on their institutions, their pension funds, insurance companies, other institutional investors to stay closer to home, buy my country's debt, your country's debt. It kind of sort of felt like that was happening during the pandemic. Historically, when you get a thing like a pandemic or another crisis, money comes flowing into the United States because it was always deemed to be AAA money.
you know, money good, you get your money back if you invest here. So in times of crisis, the money would flow, but it didn't flow during the, into the U S to the same degree that it did in the pandemic as it has historically. And I do think I don't have hard data, but my sense of it talking to different investors is that there's some, you know, more home bias invest here at home. Uh, you know, other foreign buyers are also more cautious. I don't know if it's because
of any geopolitical reason, just more economic, like the Japanese, they're now the largest foreign holders of U.S. Treasury debt. They become a little bit more circumspect in buying Treasury bonds only because they can now buy 10-year JGBs. That's the Japanese government bond bond.
at a positive interest rate. For many years, it was negative. Now, they can buy it at 1.5%, 2%, I think. And they can do that without any currency risk. They're very nervous about the fact that they could – because the yen is so cheap relative to the dollar that if they invest in dollars, it could get crushed if the yen were to appreciate the dollar with decline in value. So they've been more cautious. So there's lots of reasons why foreign holdings have
come down. But I do think one of the reasons is people are just not as anxious to invest in the United States for lots of different geopolitical reasons. Chris? Yeah, I'd add that probably the experience after the Russian invasion of Ukraine and the sanctions imposed on Russia and their capital availability to access capital, I also think that that has an impact- Ah, good point. ... on governments in terms of they want to ensure that they-
No. Things could change. They want to ensure that they have access to capital. So I could certainly see some of those sovereign governments and pension funds, as you mentioned, Mark, kind of focusing or out of a treasure, certainly looking to diversify to a greater degree. I'm not so sure about the more private investors or funds. I don't know that they
necessarily our impact. They're just looking at the total return here. But yeah, I think there's certainly something to be said from the sovereign government side. Well, not everyone is as rapacious as you are, Chris. I mean- Most are. Most are. Let's ask ChatGPT. I'm really curious about Chinese holdings, whether I got that right or not. Let's just see. ChatGPT is coming online. Can you tell me what the value is of Chinese holdings of US treasury debt? Here it's going.
January 2025, China's holdings of US Treasury securities were about $760.8 billion. Okay. What do you guys have to say? Something. I said $700 billion. Okay. Let me ask you this. Okay. Very good. One more. One more. What was the peak holdings of the Chinese of US Treasuries? What was the highest amount that they've owned throughout history?
The peak was around $1.3 trillion, which happened in late 2013. Thank you. Appreciate that. So it's down by almost half. Yeah, there you go. Right? Yeah. Very good. Okay. Let's take another one more question and we'll call it a podcast. I'm sure people are getting very tired out there. This is a good one. Yeah. Given all the doge cuts, right? To the firings in particular, right?
Do you think that all these people getting laid off and fired from the federal government will easily be absorbed into the private sector? Is the job market strong enough to absorb all these people without pushing the unemployment rate higher? Yeah, good question. Chris?
I think a lot of them will be hired. I think that one reason perhaps why we haven't seen unemployment insurance claims take off is that you do have some of that, but you also have folks who are taking retirement, early retirement instead. Right? So I don't think that there'll be a... I don't see that it's significant enough to really push the unemployment rate to a
up to a sufficient degree. But that said, you know, everything else we've discussed about weakening economy, perhaps weakening hiring, you are going to see perhaps some longer struggle for folks in certain occupations to find work.
Yeah, I, I, I agree with Chris. I think it puts upper pressure on unemployment, but it's, it's too small to push it up a lot. Right. I mean, I think in our baseline, we're assuming federal government employee employment comes down by three, 400,000 jobs from the peak. Uh, so let's say that happens over, you know, an 18 month period. What is that? That's, uh,
30, 35,000 per month, just for context, the economy creates 150 right now it's creating 150, 175,000 per month. So it's, it's consequential. And I do think that's one reason to be nervous about the labor market and the economy's prospects here going forward. But, you know, uh, you know, I, I think, you know, the more likely scenario is that those folks get reasonably absorbed. Unemployment will push up a little bit, but not a lot. The other thing that's going to keep unemployment down is,
is the slowing in the labor force, right? Because of the immigration policy. So we're just gonna see a lot, we already are seeing a lot more immigrants come into the country.
Pretty soon we're going to start seeing that show up in fewer applications among immigrants for work authorization and then ultimately less labor force. And that will tighten up the labor market so that'll limit any increase in the unemployment rate. Again, another reason to think that we should be able to – the labor market should kind of hang together reasonably so and we should be able to navigate through all this without suffering a recession. Right.
But again, given recent events and given it looks like we're going down the trade war path to a greater degree than I had previously thought, the risks here are a lot higher. So I don't know. Marissa, what do you think?
Yeah, I think on net, it isn't going to be a huge deal to the overall labor force when you look at the aggregate numbers. But I think if you were just to look at the Washington, D.C. area, there's real possibility that you could even have a recession there. Absolutely. And if you look at the industry mix, I think you'll see big changes in the composition of job growth. I mean, I think that the immigrants that aren't coming into the country, the
The jobs that they typically get, those aren't going to be filled by federal government employees, right? Those are two different types of profile of worker. So you're going to have federal government employees trying to go into the private sector and information and professional business services in industries like that.
The industries that are going to be hurt by lower immigration are going to be things like agriculture and construction. So I think you'll see a compositional mix difference there. But I think overall, when you just look at the unemployment rate, you just look at job growth, you know, you probably see minimal impact on the top line numbers. Yeah. Well, I've already gotten three resumes from people affected by those cuts. Yeah. Yeah.
I mean, I assume you have as well. Yeah. Yeah. I mean, I know people that have lost their job or know that they're losing their job that are now out there looking for, for work in the private sector. Very talented people. Yeah. Okay. Anything else before we call it a podcast? No. Which country is the third largest foreign holder of treasuries?
Ooh, I'd say the UK. Oh, very good. Excellent. I am on fire, baby. I am on fire. Why? You're the chief economist. The bar is high, you're saying? That's funny. I think that's because all that Middle Eastern money is sitting in the UK. You know, all the Saudi money, all the UAE money.
i think a lot of it is sitting there in the in london probably anyway because it goes to london and then the the financial houses in london or or switzerland by you know the u.s treasuries there you go yeah if you can guess number four then you know actually really yeah number four would it be a surprising yes really surprising to me in retrospect i can see why but
Oh, in retrospect, you can see why. You want to take a guess, Marissa? Can you tell me what continent this country is in? Europe. It's a European. Oh, it's probably like- Is it like Luxembourg or something? Yes. It's going to be Luxembourg. You got it. You got it, Marissa. Yeah. That same thing's happening, obviously. Yeah. All that Middle Eastern money. Anyway. Anyway. Okay. We're going to call this a podcast. I hope you-
Found it of some value and we'll talk to you next week. Take care now, dear listener.