Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisnthal and I'm Tracy Alloway. Tracy, I was
Speaker 1: thinking outside of like crisis, like outside of like you know,
Speaker 1: spring of and obviously the sort of like year year
Speaker 1: and a half like surrounding the Great Financial Crisis. I
Speaker 1: think right now is probably maybe the most interesting time
Speaker 1: we've seen in a long time for the Fed and
Speaker 1: central banking. Yeah. Absolutely, I would agree with that. I mean,
Speaker 1: we spent um, you know, immediately after two thousand eight,
Speaker 1: there was obviously a lot to digest, but then it
Speaker 1: was just years and years of basically the same thing,
Speaker 1: really low inflation, uh, and the central banks kind of
Speaker 1: arguing whether or not to why down various stimulus programs,
Speaker 1: um what exits we're going to look like. But now
Speaker 1: it feels like that conversation has just been ramped up,
Speaker 1: you know, times a hundred, because you actually do have inflation.
Speaker 1: You still have a lot of emergency liquidity lingering in
Speaker 1: the system, and the question is what are central banks
Speaker 1: going to do about it? And can they actually navigate
Speaker 1: clamping down on price pressures without destabilizing the entire economic recovery.
Speaker 1: You know, we paid a lot of attention to the
Speaker 1: FED and other big central banks like you know, for
Speaker 1: the last ten years. But in retrospect, like it's kind
Speaker 1: of always the same story. It's like, inflation is mild,
Speaker 1: so not quite a target. Maybe it will be how
Speaker 1: local employment go. Oh it turns out it can go lower.
Speaker 1: Maybe they'll try to hike a bit, maybe they use
Speaker 1: a little premature way to It's like it was like
Speaker 1: pretty repetitive and right now. And I think is interesting
Speaker 1: is beyond just the price pressure, like an extreme only
Speaker 1: wide disagreement, and some people think, oh, it's gonna fade
Speaker 1: because things are going to normalize. People worry about some
Speaker 1: sort of wage price inflationary spiral, like lots of legitimate
Speaker 1: economists and people sort of like coming out the problem
Speaker 1: or the question and good faith can arrive at extremely
Speaker 1: different views for the next couple of years. I would
Speaker 1: say from this starting point, absolutely, And I think we've
Speaker 1: spoken about this before. But the thing that complicates everything
Speaker 1: is that we don't really have a historical framework or
Speaker 1: parallel to look at because we didn't experience anything like
Speaker 1: the pandemic. Um well, I guess we had Spanish flu,
Speaker 1: but the crisis response wasn't quite the same, and so
Speaker 1: everyone is sort of trying to figure out what exactly
Speaker 1: is going on. And to be honest, I don't think
Speaker 1: anyone has a fool proof or bulletproof playbook just yet.
Speaker 1: Right And also, and of course, in addition to the
Speaker 1: pandemic itself, we had an extortiny amount of fiscal stimulus
Speaker 1: this time around. We had the FED at the summer
Speaker 1: of sort of adopting a new framework where they would
Speaker 1: intentionally allow of things to overshoot. So there is a
Speaker 1: lot to unpack. It's very new. Everything is different, and uh,
Speaker 1: we're going to uh, we're going to talk about how
Speaker 1: to make headser tails of this and what's going on.
Speaker 1: Excellent looking forward to So our guest has actually been
Speaker 1: on the podcast before, but very long time ago, way
Speaker 1: back in and we just talked to him back then
Speaker 1: about the sort of the art of FED watching. Well,
Speaker 1: now fed watching is actually was really putting it into
Speaker 1: practice these days. We're gonna be speaking to Tim Dewey.
Speaker 1: He is the chief US economist at s G H. Macro.
Speaker 1: He is also a professor of economics at the University
Speaker 1: of Oregon, and I think he's had a very good
Speaker 1: feel for both inflationary pressures and how the FED would
Speaker 1: likely respond to them over the last year in his
Speaker 1: writings on Twitter and so forth. So, uh, Tim, thank
Speaker 1: you so much for coming back on odd lots. Well,
Speaker 1: thank you for having me. I appreciate the opportunity. Yeah,
Speaker 1: absotlutely so in retrospect or we right there, like six
Speaker 1: pretty boring from a FED perspective, at least compared to
Speaker 1: what we're doing with now. Yeah, the never ending expansion
Speaker 1: was going to get old there pretty soon from a
Speaker 1: FED watching perspective, that's for sure. Of course, you didn't
Speaker 1: want it to end the way it ended, unfortunately. So
Speaker 1: what is it about the current period that makes it
Speaker 1: so unusual or so interesting for central bank watchers such
Speaker 1: as yourself, Well, it's it's the uncertainty. We had gone
Speaker 1: into the pandemic with a with a sense that we
Speaker 1: knew a right, we knew the basic economic framework that
Speaker 1: we're going to be working with you for the foreseeable future.
Speaker 1: And that basic framework assumed that to me and was
Speaker 1: really always an everywhere problem in the sense of being
Speaker 1: too low. And we also thought that inflation was very,
Speaker 1: very sticky around two percent and these were reasonable things
Speaker 1: to believe, you know, in the pre pandemic period, because
Speaker 1: that's that's the story that actually worked out well and
Speaker 1: seemed to be proved by the evidence, and especially the
Speaker 1: sticky inflation part. We've seen sticky inflation for twenty five
Speaker 1: years around two percent. You know, we went into the
Speaker 1: pandemic with really established consensus framework on how the economy worked,
Speaker 1: and the pandemic has really blown that apart, at least
Speaker 1: in the near term, because a lot of those predictions
Speaker 1: of persistently weak demand, persistently slow job growth, persistently low
Speaker 1: inflation near two percent, all of those uh predictions just
Speaker 1: did not work out as expected in the in the
Speaker 1: post pandemic era. This gets to sort of bigger picture
Speaker 1: question that I've been asking myself a lot over the
Speaker 1: last six months or a year, which is like, we
Speaker 1: can list all the ways this current moment is extraordinary, right,
Speaker 1: So we're still in a public health emergency by many measures.
Speaker 1: We had a very intense O macron wave, we had
Speaker 1: Dealta wave before that. That's not over. There are still
Speaker 1: many disruptions. They seem to be winding down, but they're
Speaker 1: going away, but they but there's still many, um, sort
Speaker 1: of interventions and masks and school issues. Then of course
Speaker 1: we had the massively expansion, the aggressive fiscal stimulus, and
Speaker 1: of course the FED which made a decision in that
Speaker 1: they did not want to make the same mistakes they
Speaker 1: did in the past, and they said, Okay, we're going
Speaker 1: to let it overshoot this time. Well, my question is,
Speaker 1: why wouldn't things return to normal, Why after the sort
Speaker 1: of pandemic ends. Why wouldn't it necessarily be safe to say, Okay,
Speaker 1: we're just gonna go back to the sort of like
Speaker 1: the medium economy that we had pre crisis. I think
Speaker 1: that's uh an excellent question. Um, you know, I think,
Speaker 1: you know, particularly with respect to the inflation story, that
Speaker 1: inflation trend, the pre pandemic, you know, trend of two
Speaker 1: percent inflation that we've seen for twenty five years, that
Speaker 1: was presumably a very sticky trend, and there's a good
Speaker 1: reason to think that that you don't want to just
Speaker 1: sort of turn your back on a deeply established trend
Speaker 1: like that. Now. On the other hand, one idea that
Speaker 1: I play around with quite a bit is that the
Speaker 1: pre pandemic economy was more finely balanced than we appreciated.
Speaker 1: That we essentially had just enough labor market pressure to
Speaker 1: keep downward pressure on unemployment, keep pulling people into the
Speaker 1: labor market, keep wages rising in nominal and real terms. Uh.
Speaker 1: And also you're not not having an overheat in the
Speaker 1: sense that there were any real threats to that two
Speaker 1: inflation trend that though might have been a more unique
Speaker 1: economy then we realized by how we got nine. How
Speaker 1: much of the inflation pressures do you see as down
Speaker 1: to supply issues, um, such as the various logistics problems
Speaker 1: that we've been talking about on the show over the
Speaker 1: past year or so, versus demand coming from consumers, many
Speaker 1: of whom you know, in terms of household balance sheets,
Speaker 1: seem to be in better positions than they were going
Speaker 1: into the crisis. You know, I get concerned when we
Speaker 1: try to say that that, you know, things are either
Speaker 1: demand or supply related, because I'm not sure that we
Speaker 1: can really tease out those factors as easily as as
Speaker 1: we think we can. You know, demand and supply are
Speaker 1: like two sides of let's like compair of scissors, right,
Speaker 1: and so both both are cutting the papers. So which
Speaker 1: which which which blade is doing the job is hard
Speaker 1: to In many cases determined. I've thought that demand was
Speaker 1: a large factor here, that if we look at factors
Speaker 1: like nominal spending power on the part of consumers, that
Speaker 1: they really were spending more nominal terms and basically stretching
Speaker 1: the ability to the economy to produce those goods and services.
Speaker 1: So I thought that that the supply angle has been
Speaker 1: overplayed and the demand angle underplayed. So that's that's where
Speaker 1: I sit on the subject we look forward into the future.
Speaker 1: I do think it still relies depends a lot about
Speaker 1: how much consumers are able to and um willing to accept.
Speaker 1: And it looks right now that they have the capacity
Speaker 1: to continue to absorb price increases, and I suspect will
Speaker 1: continue to do so, although maybe not at a you know,
Speaker 1: six or seven or eight percent analyzed rate as we've
Speaker 1: been as we've kind of been seeing. So we're like
Speaker 1: ten minutes into this conversation already, and I think it's
Speaker 1: really interesting that inflation dominates the story right now, but
Speaker 1: the labor market and the sort of the other half
Speaker 1: of the fedual mandate, it's just been incredibly strong, and
Speaker 1: no one I think would have predicted some four percent unemployment.
Speaker 1: Uh So, you know, early or I guess we're at
Speaker 1: four percent right now. My question is, in your view,
Speaker 1: was there a way to have this fast of a
Speaker 1: labor market recovery without the inflationary pressures that we've seen,
Speaker 1: or are these inflationary pressures the inevitable byproduct of an
Speaker 1: economy that moved so fast back to normal. The rapid
Speaker 1: recovery of the labor market was certainly unexpected, and you know,
Speaker 1: the Federal Reserve and the the U. S. Government dumped
Speaker 1: enormous amounts of resources uh in the economy on the
Speaker 1: assumption that that it would not recover very quickly, and
Speaker 1: it did. Had we known really that COVID, you know,
Speaker 1: the COVID shock in twenty funny was going to be
Speaker 1: more like a snowstorm than a persistent source of demand
Speaker 1: lost demand, I'm not sure that we would have dumped
Speaker 1: that much policy stimulus into it. We'd be at a
Speaker 1: situation where where the labor market did recover quickly. It's
Speaker 1: very much true that going into the pandemic, we would
Speaker 1: not have expected labor demand to rebound quite as quickly
Speaker 1: as it did, and that was really our experience in
Speaker 1: the last last couple of processions. The fact that that
Speaker 1: recovery did happen very quickly, probably helped contribute to inflationary
Speaker 1: pressures when you take into account the additional stimulus that
Speaker 1: we added onto the um UH system. In some ways,
Speaker 1: it comes down to me, for there's a question of,
Speaker 1: you know, what was the original COVID shock, like a
Speaker 1: big demand shock like the financial crisis in two thousand
Speaker 1: and seven two nine era, or was it more like
Speaker 1: a snowstorm? And you would expect fairly rapid recovery after
Speaker 1: a snowstorm, and and that's that's kind of what what
Speaker 1: we've seen. UH. And I do think you know that
Speaker 1: that the additional stimulas we put on top of that
Speaker 1: then helped contribute to to the the inflationary pressures we
Speaker 1: see now, how do you disaggregate the speed of that
Speaker 1: recovery from the policy response? Though, right, I think that's
Speaker 1: a that's a great question that would be the subject
Speaker 1: of a thousand PhD dissertations in the future. I don't
Speaker 1: I don't. I don't know that that I'm able to
Speaker 1: take a stand on that at this point. I really
Speaker 1: this comes down to some sense, really what kind of
Speaker 1: framework you had going into the crisis, or we're adjusting
Speaker 1: that framework. I think where we started seeing the economy
Speaker 1: bounced back in the middle of it really started to
Speaker 1: strike me that there's a lot of underlying structural there's
Speaker 1: a lot of underlying structural very going on here, and
Speaker 1: we probably don't need quite the amount of stimulus as
Speaker 1: well as we're putting into the system. But but in
Speaker 1: some sense that was that was a hunch feel for
Speaker 1: the data more than anything else. So, Tim, you mentioned
Speaker 1: um frameworks going into this, and one of the criticisms
Speaker 1: now that we've seen the return of inflation or this
Speaker 1: new inflation, is that either traditional economics failed to predict
Speaker 1: this or heterodox economics like modern monetary theory failed to
Speaker 1: predict this. And it kind of feels like everyone everyone
Speaker 1: is criticizing everything at at the moment. But do you
Speaker 1: think that's fair. Did economists, you know, fail to see
Speaker 1: this coming? So forecasting is hard, and the underlying structure
Speaker 1: the economy could shift, and so you know, this is
Speaker 1: something that could hammer an economist no matter what they're worth,
Speaker 1: their initial framework is. And so I try to be
Speaker 1: fairly humble in thinking about these kinds of economic developments,
Speaker 1: because I really do believe you have to be flexible
Speaker 1: to you know, basically react in real time to you know,
Speaker 1: what the what the data is telling you. And I
Speaker 1: don't know if there's really a failure of anyone given
Speaker 1: sort of strand of economic thought or macroeconomic framework. It's
Speaker 1: more of um, what I see just a willingness to
Speaker 1: evolve from whatever your fixed position is as that incoming
Speaker 1: data arrives. Well, let's talk a little bit more about
Speaker 1: that data, because I do think that you know, even
Speaker 1: I think winter late, the COVID numbers were picking up again,
Speaker 1: we didn't have a vaccine. There was a lot of
Speaker 1: reason to think that if we didn't get like another
Speaker 1: round of substantial physical expansion, we could like have another downturn.
Speaker 1: You were like pretty I think, pretty optimistic then, and
Speaker 1: I think, you know, starting in the summer or maybe
Speaker 1: the spring of I think you're pretty concerned that maybe
Speaker 1: the the accelerating inflation wasn't just a temporary thing, it
Speaker 1: wasn't just going to be base effects, that there was
Speaker 1: something more sustained here, and that the FED at some
Speaker 1: point would attempt to play catch up and ramp up
Speaker 1: the number of hikes sooner and faster. So what was
Speaker 1: it that you were seeing in the data, and how
Speaker 1: did you then sort of like synthesize that through some
Speaker 1: sort of macro framework that I think, at least so
Speaker 1: far has proven to be a good read on the
Speaker 1: inflationary pressure. I think the first thing said even with that,
Speaker 1: that that wave and the late twenty one early you
Speaker 1: know that that wave excu I think even at that
Speaker 1: point we started to recognize that the subsequent waves of
Speaker 1: the virus we're going to have less and less of
Speaker 1: an economic impact. And so that that became a critical
Speaker 1: sort of element to my thinking going forward, is that
Speaker 1: we're going to continue to have COVID, that it was
Speaker 1: going to be more endemic than than certainly zero COVID
Speaker 1: at that point was was not really a possibility, and
Speaker 1: that we would learn to to live around the pandemic.
Speaker 1: So that was what was one element. The other element
Speaker 1: that I just couldn't shake was how type job markets
Speaker 1: were getting. Uh and this really speaks to the perhaps
Speaker 1: finally balanced economy prior to the pandemic. When I saw
Speaker 1: how quickly job opening surged, you know, the fairly slow
Speaker 1: response of labor supply, and I'd say the fairly sol
Speaker 1: responsive labor supply is pretty typical that we see in
Speaker 1: post recession a periods. It really started to say to
Speaker 1: me that there's there's a lot more pressure in this
Speaker 1: economy than than I think of the FED at the
Speaker 1: point was thinking about and was probably, um, you know,
Speaker 1: the FED at that point, I think, had had estimates
Speaker 1: of wear full employment was going to to be that.
Speaker 1: We're optimistic relative to what I was seeing in the
Speaker 1: labor market. So that sort of said to me, Look,
Speaker 1: there's gonna be a lot of pressure in this labor market.
Speaker 1: It's going to be cult a lot of pressure and
Speaker 1: upward uppropression wages. That's going to be that the kind
Speaker 1: of thing that can really sustain inflationary pressures over time.
Speaker 1: And I felt eventually that was something that was going
Speaker 1: to catch up to the FED. It does feel like
Speaker 1: the FED was very focused on this idea of yes,
Speaker 1: jobs have rebounded, Um, you know, the employment recovery has
Speaker 1: been stronger than expected, but we're still digging ourselves out
Speaker 1: of a COVID related whole. I guess, um, and we
Speaker 1: still have further to go. Were they wrong to do that?
Speaker 1: In retrospect? I think the FED did not basically adjust
Speaker 1: their their you know models as as quickly as the
Speaker 1: data would suggest that they should. I think that they
Speaker 1: became although the although the FED says that they think,
Speaker 1: you know, full employments a moving target, they became very
Speaker 1: much attached to the pre pandemic economy. We all liked
Speaker 1: the pre pandemic economy. I think would have been you know,
Speaker 1: we would have thought was a great year if we'd
Speaker 1: been able to enjoy it, because came down on it's
Speaker 1: so hard. So there was really good reason to look
Speaker 1: at that period and think that's where we need to
Speaker 1: get back to. And I think the FED just did
Speaker 1: not just held onto that vision for too long and
Speaker 1: and as a consequence sort of missed the development of
Speaker 1: what I think are still substantial inflation impressures. Even even
Speaker 1: if you know, even if they ease off, do they
Speaker 1: ease off enough to get us back to two percent
Speaker 1: is still an open question. I want to press you
Speaker 1: on this a little bit further because I remember, like
Speaker 1: post Great Financial Crisis, one of the criticisms then is like, oh,
Speaker 1: we can't get back to two thousand six, two seven,
Speaker 1: and that maybe there's something structural, And it turned out
Speaker 1: it was kind of just a matter of time, and
Speaker 1: the FED back then I would say, and grossly sort
Speaker 1: of like underestimated for a long time, like how low
Speaker 1: the unemployment rate could get without spurring labor market pressure,
Speaker 1: which I guess again bring me to the question is
Speaker 1: the error of like, oh, we want to get back
Speaker 1: to some four percent unemployment or is the err in
Speaker 1: thinking that it can happen that fast because we are
Speaker 1: still I mean, we just had a uh jobs number
Speaker 1: in January. We are still bring a lot of people
Speaker 1: back into the labor market. You know, I think we
Speaker 1: could argue that in the post financial crisis era, the
Speaker 1: FED did make an error, and I think again for
Speaker 1: for the same reason. We became enamored with a pre
Speaker 1: you know, a pre financial market sort of framework, financial
Speaker 1: crisis sort of framework. And you know, we saw right
Speaker 1: in the in the post era, post um crisis era,
Speaker 1: estimates of the short run natural rate of unemployment rights right,
Speaker 1: and we all now think we all look back at
Speaker 1: that and say, no, that was that was crazy, right,
Speaker 1: that that never happened. And so we sort of took
Speaker 1: that same framework and applied it to this crisis, and
Speaker 1: we didn't raise our estimates of the short term rate
Speaker 1: of of of a natural unemployment and maybe we should
Speaker 1: have right, And so you know, it's sort of a
Speaker 1: question do you always get caught fighting the last war?
Speaker 1: And I think, again, I have no problem. It was
Speaker 1: the right thing to think of in in the spring
Speaker 1: of That was our framework, and that was a reasonable framework.
Speaker 1: It was kind of just a slow adjustment to to
Speaker 1: maybe that framework is not quite the right right way
Speaker 1: we should be thinking about the economy and the post
Speaker 1: pandemic era. Is there something about the FEDS structure or
Speaker 1: culture that makes it hard for them to be flexible
Speaker 1: or to pivot as the data changes. I think that
Speaker 1: institutions in general can be slow to pivot. And you
Speaker 1: see this, I think in in any kind of bureaucratic structures.
Speaker 1: Uh so, once you've spent ten years developing your models
Speaker 1: in your framework, you're gonna have a hard time breaking
Speaker 1: from that framework. So I think that's just a national
Speaker 1: consequence of of of what happens. You know within institutions
Speaker 1: that you know the FED could not adjust as quickly
Speaker 1: as as maybe they should have. Would you say, just
Speaker 1: as they should have? Was there a could we currently
Speaker 1: in February two have less inflation than we have right now?
Speaker 1: Had they done something different like what what was the
Speaker 1: moment in your view in which if they had taken
Speaker 1: a different tag, maybe started hiking earlier, etcetera, may have
Speaker 1: allowed us to be in a better situation than we
Speaker 1: are right now. Like, what does that alternate scenario look
Speaker 1: like to you? Right? And given the lags in these processes,
Speaker 1: how you know was was by the time we did,
Speaker 1: you know, the fiscal stimulus and the monetary stimulus, and
Speaker 1: by the time we got to the end one or
Speaker 1: excuse me, at the end of the beginning one, was
Speaker 1: this pretty much already baked in the cake. Really, what
Speaker 1: we're thinking about is how persistent these inflationary pressures will
Speaker 1: be going forward. So for me, a couple of things
Speaker 1: that I think that that the Vetch probably should have
Speaker 1: thought of differently. UM One is basically the asset purchases QUEI.
Speaker 1: Those were really initially UM put in place to deal
Speaker 1: with financial market functioning. Right, if you remember the spring
Speaker 1: of it's not clear that that such emergency measures were
Speaker 1: necessary really even even past the middle of twenty twenty
Speaker 1: that the financial markets had rebounded and we're functioning quite
Speaker 1: well by that point, So you know, we did, we
Speaker 1: did years of que that I don't wasn't probably necessary
Speaker 1: to support the economy, and now we have to sort
Speaker 1: of think, how is the FED going on? Wine that
Speaker 1: The other thing that that I think that a critical
Speaker 1: space here was the FED, you know, from my perception,
Speaker 1: was cheerleading fiscal policy, and I think that they really
Speaker 1: pushed back or couldn't do any sort of fiscal or
Speaker 1: monetary offset even after that last last of fiscal stimulus
Speaker 1: we had that really gave the economy a good push
Speaker 1: and and I think that might have been a real
Speaker 1: real air on on the Fed's power. Is by not
Speaker 1: sort of writing off any any hope of of any
Speaker 1: fiscal push or any monetary offset pretty early in the
Speaker 1: process also kind of set the stage in motion for
Speaker 1: you know, the possible persistence of these inflationary pressures. I
Speaker 1: want to jump to. I guess what the FED should
Speaker 1: be doing now, because you know, on the one hand,
Speaker 1: as we've been discussing, we have inflation that's been higher
Speaker 1: than expected. We've had a pretty strong recovery in the
Speaker 1: jobs market, although you know, there are some people who
Speaker 1: say it can get even better. The recovery overall has
Speaker 1: been quite strong. But again there are those who argue
Speaker 1: that in some ways, the economy is still quite fragile.
Speaker 1: There's still a lot going on in the global economy
Speaker 1: with covid um and various economic pressures that could come
Speaker 1: back and impact the US. So taking all of that together,
Speaker 1: you know, if you were in the Fed's place right now,
Speaker 1: what would you be doing. That's a that that's a
Speaker 1: great question, um, because we'ren't very I think this is
Speaker 1: potentially really challenging time for monetary policy because if these
Speaker 1: inflationary pressures have become embedded deeper than the Fed FED
Speaker 1: really believes, then you're you're really coming to the party
Speaker 1: too late, and you're going to have a hard time
Speaker 1: really really containing these inflationary pressures without creating a recession. So,
Speaker 1: you know, I think the FEDS should should do a
Speaker 1: little bit more clearly what I think they're they're kind
Speaker 1: of positioned to do, and that's to try to get
Speaker 1: rates up to something closer to neutral as as quickly
Speaker 1: as they can. Uh So I would probably define that
Speaker 1: objective at least right now, so that you'd be better
Speaker 1: prepared in the to find objective more clearly, so you'd
Speaker 1: be pre prepared to prepared to adjust policy in the
Speaker 1: second half of this year as necessary, and that would mean,
Speaker 1: you know, I think you're starting out with there's always
Speaker 1: a question should you start out with fifty basis points? Um,
Speaker 1: you know, I think uximately you'd like to be you know,
Speaker 1: at HUD and fifty basis points by the second half
Speaker 1: of this year. And the Fed's not not positioned to
Speaker 1: do that and hasn't hasn't really primed markets to expect
Speaker 1: that kind of grate hike. That's what I would be
Speaker 1: thinking about pretty pretty aggressively if if I was the FED. Yeah,
Speaker 1: I wanna talk about this more and maybe the idea Okay,
Speaker 1: they got there too late. You wrote something in one
Speaker 1: of your notes a couple of weeks ago that I
Speaker 1: thought was pretty provocative, and you said, you know, look, historically,
Speaker 1: when inflation is like this, the answer ends up being
Speaker 1: it took a recession to bring it down. And so
Speaker 1: of course everyone hopes that you can have sort of
Speaker 1: like you know, the so called smooth landing where just
Speaker 1: the relation side goes down but employment keeps chugging along. Fine,
Speaker 1: that'd be great, but talk to us about, you know,
Speaker 1: the historical analogies of like, yeah, this is what it
Speaker 1: actually took to get inflation done. Yeah, this is something
Speaker 1: that struck me just looking at the charts of wage
Speaker 1: growth and particularly inflation in the sort of the the
Speaker 1: era not associated with with two percent inflation, that really
Speaker 1: once you sort of shifted your equilibrium, it was it
Speaker 1: was pretty sticky. Wage growth really stayed at you know
Speaker 1: whatever it's it's it's prerecession level was until until you
Speaker 1: came to a recession. And the same was was really
Speaker 1: true of inflation. So it really started to look in
Speaker 1: the data like to me that changing these dynamics was
Speaker 1: was actually very hard once once they had become established,
Speaker 1: and it was probably going to be harder than we anticipated,
Speaker 1: especially since all of the models I think right now
Speaker 1: are are calibrated on the pre pandemic period. So you know,
Speaker 1: when inflation never really deviates more than say, your core
Speaker 1: inflation never deviates more than basis points away from the
Speaker 1: two percent target, in that case, you're fairly fairly easy
Speaker 1: to see how you could guide the economy back to
Speaker 1: target without a recession. If you're to two d four
Speaker 1: hundred basis points away from target, the historical data suggests
Speaker 1: you you you guide it back towards a lower number
Speaker 1: by by inducing a recession. So that's that's something that's
Speaker 1: been just sticking in the back of my mind as
Speaker 1: a as a real risk. Going into particular just tells
Speaker 1: me how much we're all leveraged on the idea that
Speaker 1: inflation is going to ease by the end of this
Speaker 1: year sort of on its on its own accord. This
Speaker 1: might just be a question about semantics, but I'd still
Speaker 1: be curious to get your your response. But if if
Speaker 1: the only way historically UM to end inflation or avert
Speaker 1: price pressures is to have a recession and the FED
Speaker 1: raises rates and induces a recession, can we still call
Speaker 1: that a policy error? That's a um, you know, that's
Speaker 1: a that's a good question. Um, the policy here would
Speaker 1: have been made prior to you, prior to that point, right.
Speaker 1: You know, one thing I think about is in retrospect,
Speaker 1: the FED actually did a pretty good job in the
Speaker 1: post Greed financial crisis era. And uh, you know, at
Speaker 1: the time, you know, myself included criticize the FED for
Speaker 1: maybe moving to aggressively, but but we still ended up
Speaker 1: in the economy, which I think we can all agree
Speaker 1: was really an excellent economy. We'd like to be back there,
Speaker 1: and that was managed by essentially, you know, guidance, loose
Speaker 1: guidance on a Philips curve. And then I would argue,
Speaker 1: you know, later in the crisis and later later in
Speaker 1: the expansion, some loose guidance on the basis of not
Speaker 1: letting the yield curve invert, and that sort of slow
Speaker 1: and steady return brought us to a good outcome. And
Speaker 1: we all ended up complaining because inflation was twenty basis
Speaker 1: points below two percent, And maybe you know that that
Speaker 1: you know that we should have appreciated that that response
Speaker 1: more than we did at the time. So I have
Speaker 1: a really basic question, but you know, uh, two percent
Speaker 1: inflation target in retrospect, maybe it wasn't that bad having
Speaker 1: years of subpar below target inflation. Like should we should
Speaker 1: we be trying to I mean, I know they change
Speaker 1: the inflation framework um to something more flexible, the flexible
Speaker 1: average targeting stuff, But should we be aiming for something
Speaker 1: other than two percent inflation at this point in time?
Speaker 1: You know, there's a a big view that we shouldn't
Speaker 1: be aiming for inflation greater than two percent. We should
Speaker 1: have picked a three percent four percent target given our
Speaker 1: proximity to the lower bound. That maybe that would raise
Speaker 1: what we consider the neutral rate of nominal interest rates.
Speaker 1: And I do think there's some truth to that story. Certainly,
Speaker 1: given the current circumstances, I don't know that it's really
Speaker 1: politically possible for the FED to target something other than
Speaker 1: two percent. I think they'd have a hard time basically
Speaker 1: creating support within Congress for for a higher inflation target,
Speaker 1: even though you know, there's the reason to think the
Speaker 1: economy could operate at at three percent now. At the
Speaker 1: same time, I think if right now monetary policy almost
Speaker 1: has to have an inflationary bias because of the proximity
Speaker 1: to the lower bound, you can't really target something less
Speaker 1: than two percent because you can't. You can't take the
Speaker 1: chance of of tipping yourself into recession when you're this
Speaker 1: close to the zero bound. So, you know, this is
Speaker 1: kind of one interesting thing I don't know if has
Speaker 1: been properly or completely recognized, is the FED really can't
Speaker 1: sort of do average inflation targeting at two percent right now.
Speaker 1: Right they can't sort of go into the future and
Speaker 1: say we want, we want, we want average two percent
Speaker 1: over the next five years, average inflation of two percent
Speaker 1: over the next five years, because that's going to imply
Speaker 1: some period of less than two percent inflation and they
Speaker 1: can't do that. You know, you mentioned that the nineteen
Speaker 1: economy was pretty good, and I agree, but two was
Speaker 1: eight years no, like, you know, yeah, eight years after
Speaker 1: the crisis. And so when I think back to those years,
Speaker 1: I don't think like, oh, it's so bad that we
Speaker 1: only had one point eight percent unappointment or sorry inflation.
Speaker 1: I think like, oh, we had like a pretty big
Speaker 1: um employment shortfall for a very long time post GFC.
Speaker 1: So what we're talking about, how good of a job
Speaker 1: the Fed in retrospect did? Do you think, like, does
Speaker 1: that apply applied to the labor side of the mandate
Speaker 1: as well? I think again that's a that's a good question.
Speaker 1: Is you know, in that post in that post Greek
Speaker 1: financial crisis period, that was certainly a slow period of
Speaker 1: of of recovery relative to you know, what we would
Speaker 1: have optially expected. And I do think that sometimes gets
Speaker 1: you the question of what can you expect out of
Speaker 1: monetary policy? Uh? And I think again, if we go
Speaker 1: back to that period of time, we all, I think
Speaker 1: basically universally agree that we should have had more fiscal
Speaker 1: policy and maybe that would have been the thing that
Speaker 1: would have boosted job growth. Now, it may be that
Speaker 1: neither of those things would have been as important as
Speaker 1: we we we'd like to think it was that, you know,
Speaker 1: for whatever structural reasons, the economy was just in a
Speaker 1: low real growth mode as we had to you know, recover,
Speaker 1: rebuild the financial system from the from the Great Financial Crisis,
Speaker 1: and sort of rebuild the economy from the housing bubble.
Speaker 1: And also, I think demographics were probably in play there.
Speaker 1: You know, the boomers were aging out of the the
Speaker 1: workforce and being replaced by the Gen xers, which is
Speaker 1: a demographic whole. And so we actually have the opposite
Speaker 1: right now, where now the millennials are going to be
Speaker 1: aging into their prime working years in their home buying years.
Speaker 1: There might have been a bit of a demographic weight
Speaker 1: on the economy and that that post grade financial crisis period. Again,
Speaker 1: it's it's easy to criticize after the fact, but I'm
Speaker 1: not sure the Fed could have done, you know, this
Speaker 1: magic job that we all sort of thought at the
Speaker 1: time that they should be doing. So you said, so
Speaker 1: the interesting and that is like what can we expect
Speaker 1: out of monetary policy? And I think that's like a
Speaker 1: very fair question in both directions. You mentioned, you know,
Speaker 1: a few minutes ago, Okay, if we really want to
Speaker 1: crush inflation, we could probably do it by engineering a recession,
Speaker 1: but we all don't. We don't want that to happen.
Speaker 1: When when you know, thinking from the Fed's perspective, and
Speaker 1: they hope, okay, maybe four hikes this year, maybe five,
Speaker 1: maybe three, something like that, what is the channel via
Speaker 1: which theoretically these rate hikes do bring down inflation? Like,
Speaker 1: how does it how does a rate hike or any
Speaker 1: number of rate hikes feed through to real activity and prices.
Speaker 1: There's this typical idea, right of a Philips curve, where
Speaker 1: the idea of the rate hike is to to raise unemployment.
Speaker 1: Essentially there should trade off between unemployment and inflation. And
Speaker 1: we didn't really see that, uh, you know, in the
Speaker 1: in the pre pandemic era, we thought that Philips curve
Speaker 1: was was fairly flat. So so that's you know, was
Speaker 1: a mechanism we weren't necessarily relying on as heavily u
Speaker 1: instead of we're relying on I think what would be
Speaker 1: more more vague idea that it's financial conditions you know,
Speaker 1: tightened that we'd see possibly monetary policy evolved through through
Speaker 1: a number of different channels, wor be you know, the
Speaker 1: the exchange way would would possibly be higher, and that
Speaker 1: would create you know, a slowing of of of demand
Speaker 1: where firms would find themselves facing higher interest costs and
Speaker 1: that would flow slow their their cash flow and you know,
Speaker 1: consequently that would cause them to you know, slow back,
Speaker 1: pull back on activity. You can also think about, you know,
Speaker 1: whether this is how this is operating through home mortgages.
Speaker 1: So there's a number of channels. But clearly, you know,
Speaker 1: one way that we've always thought of this is that
Speaker 1: you you're you're trying to find a mechanism by which
Speaker 1: to soften aggurate demand. And historically, you know, areas that
Speaker 1: that has really been prominent is in consumer durables and housing.
Speaker 1: This is the challenge is that can you sort of
Speaker 1: make fine tuning adjustments at the economy at this point
Speaker 1: like we became more accustomed to in the pre pandemic era,
Speaker 1: or are you you know, at the verge of of
Speaker 1: of more major changes in policy that then do have
Speaker 1: these these um pretty dramatic impact on economic activity. Thinking
Speaker 1: about financial markets and one of the things are one
Speaker 1: of the ideas that set in after the two crisis UM,
Speaker 1: and the FEDS policy response was this idea of a
Speaker 1: central bank put and that the FED would always come
Speaker 1: in UM when markets showed signs of wobbling and stabilize
Speaker 1: things because they didn't want to risk um a tightening
Speaker 1: of financial conditions and you know, potentially hitting the real economy.
Speaker 1: How are we thinking about that aspect of the FEDS
Speaker 1: policy workings, like its relationship with markets at the moment,
Speaker 1: because we have seen stocks fall quite a bit. But
Speaker 1: part of me feels like the FED doesn't necessarily care,
Speaker 1: you know, if big tech valuations come down UM to
Speaker 1: arguably more reasonable multiples. But where I think they might
Speaker 1: start to get concerned is when something like the credit
Speaker 1: market starts to show signs of strains. So I guess
Speaker 1: the question is like, how is the FED thinking of
Speaker 1: financial stability and is there still a possibility here that
Speaker 1: if markets really start to get pressured, that they might
Speaker 1: um sacrifice rate hikes, you know, in order to preserve them.
Speaker 1: I agree with you that it's it's not necessarily stock prices,
Speaker 1: are big tech prices, are bitcoin prices that that's going
Speaker 1: to be influencing monetary policy decisions you know, obviously if
Speaker 1: we had twenty drop in overnight, that would that would
Speaker 1: probably be something interesting. But no, it's it's not asset prices.
Speaker 1: I think you're right. It's it's it's a credit or
Speaker 1: market functioning. So you know, obviously the FED doesn't like
Speaker 1: the situations we've had um where where trenching markets don't
Speaker 1: seem to be functioning properly. So that would be certainly
Speaker 1: one issue and might apply to quantitative tightening um going forward,
Speaker 1: which which we really haven't talked about. The other thing
Speaker 1: is if you saw corporate debts but it's really wide,
Speaker 1: and that would be I think a red flag for
Speaker 1: the fact that something was was going wrong. They'd like,
Speaker 1: you know, they would like credit to be a bit tighter, right,
Speaker 1: that's you know, they want a slow activity, but they
Speaker 1: don't want those credits feds to blow out as you
Speaker 1: often see, you know, before or around a recession. And
Speaker 1: so that's where you know, that's where I think the
Speaker 1: FED would be much more worried that they needed to
Speaker 1: reassess what their what their expectations were. So you mentioned
Speaker 1: quantitative tightening, and of course the FED expanded its balance
Speaker 1: sheet quite a bit since March and you hear some members,
Speaker 1: some regional FED presidents sometimes talk about it's like, well,
Speaker 1: maybe we could do one or two less rate hikes
Speaker 1: in the short term, but sort of counteract that by
Speaker 1: a more rapid wind down of the balance sheet. It's
Speaker 1: a little unclear what effect that had. Highly sort of controversial.
Speaker 1: What is your view on this sort of like the
Speaker 1: I guess I don't know if it's a sequencing question
Speaker 1: or the the impact of quantitative tightening and how they
Speaker 1: sort of like translate to rate hikes, Like, how do
Speaker 1: you think about that question? Yeah, I think the FED
Speaker 1: has to be really careful about how they approached that
Speaker 1: that particular question, because you know, Paul said, you know
Speaker 1: in the Prosperous bull streets and press conference that there's
Speaker 1: you know, some some capacity to estimate some trade offs
Speaker 1: between QT and rate hikes, But but were they something
Speaker 1: you really wanted to count on? And that's that's you know,
Speaker 1: that's my opinion too. I'm not sure you want to
Speaker 1: start setting expectations about the path of rate hikes on
Speaker 1: the basis of what you're doing with the balance sheet.
Speaker 1: What the FED really should think about doing is Okay,
Speaker 1: here's here's what our objectives for the balance sheet are
Speaker 1: and I don't really know if that if we're clear
Speaker 1: on what those are yet, right? Is it about getting
Speaker 1: the size down? Is about getting NBS down? How quickly
Speaker 1: do you want to get this down? They need to
Speaker 1: set the objectives to the balance sheet and they should
Speaker 1: probably just let that run in the autopilot on the
Speaker 1: back until there's some kind of concern from financial market
Speaker 1: functioning that they need to adjust on that front, and
Speaker 1: then just say that's going on. Here's what we're doing
Speaker 1: with interest rates. That's really a separate thing, rather than
Speaker 1: trying to, you know, say at the front of this, well,
Speaker 1: if we do this much q QT, we're going to
Speaker 1: get you know, fifty basis points less of tightening going forward.
Speaker 1: I think that's you know, something that's just too unknown
Speaker 1: for the FED to really commit to. I want to
Speaker 1: just go back to inflation for a little bit, because
Speaker 1: I realized we didn't talk about this, and we are
Speaker 1: recording this on visit February nine, and I guess CPI
Speaker 1: is coming up relatively soon. Do inflation next? But stations matter?
Speaker 1: And further to that, should we be differentiating between consumer
Speaker 1: versus corporate inflation? Expectations, and I realized that might be
Speaker 1: maybe that's an odd question or a new question. But
Speaker 1: I've been thinking about it because I've been watching your
Speaker 1: tweets and you've been focused a lot on what companies
Speaker 1: are actually saying about price increases, and you made the
Speaker 1: point that shareholders seem to be rewarding companies who say
Speaker 1: that they're going to raise their prices in response to
Speaker 1: cost pressures, and so I guess the question is, most
Speaker 1: consumers seem to think that a lot of the inflation
Speaker 1: pressures are still transitory and that things like used car
Speaker 1: prices are going to get better. But on the other hand,
Speaker 1: companies seem to have entirely different motivations and therefore different
Speaker 1: ways of thinking about this. So how how are you
Speaker 1: thinking about expectations broadly? So, I'm not convinced that consumers
Speaker 1: right now have a good sense of really what what
Speaker 1: inflation is going to be out five years in the future,
Speaker 1: ten years in the future. It would be amazing if
Speaker 1: they did, wouldn't it. I Yeah, I think that would
Speaker 1: be really, really amazing. More likely to me is that
Speaker 1: does long term inflation expectations adjust as the short term
Speaker 1: inflation remains sticky? Above those those current long form inflation
Speaker 1: numbers you know. Right now, we know that short term
Speaker 1: inflation expectations are elevated um and consequently, if the continues
Speaker 1: to be matt right, if those expectations continue to matt
Speaker 1: then that will probably put expect upward pressure on inflation
Speaker 1: expectations over those long term So I think when the
Speaker 1: FED you know, looks at these long term inflation expectation
Speaker 1: numbers as if they're they're really signaling some some intense
Speaker 1: um attitudes about long term inflation on the part of
Speaker 1: consumers um, I think that's that's probably misleading, that those
Speaker 1: are almost certainly lagging indicators, so especially after a twenty
Speaker 1: five year period of very low inflation. Now, I do
Speaker 1: think that what firms are telling us right now, so
Speaker 1: they're telling us essentially they can raise prices and then
Speaker 1: not get any consumer push back. That tells me two
Speaker 1: things is that there's lots of nominal spending power. Also
Speaker 1: that that consumers are expecting higher prices and willing to
Speaker 1: pay it because they have that nominal spending power. That
Speaker 1: suggests to me again sort of more of an embedded
Speaker 1: inflation dynamic than then we would like to see you know,
Speaker 1: earlier in the conversation, we talked about this idea of
Speaker 1: like inevitably policymakers fight the last war, and we you know,
Speaker 1: it's obvious why that happens. But there are some elements
Speaker 1: of the current economy, even with elevated inflation, that strike
Speaker 1: me and potentially like are much better than they were
Speaker 1: pre crisis. And so we see the fastest wage of
Speaker 1: growth at least currently happening at lower income scales. It
Speaker 1: seems like there is a potential you know, for years
Speaker 1: Larry Summers great stagnation, like very mediocre productivity numbers for
Speaker 1: the ten years after the Great Financial Crisis, it seems
Speaker 1: like there's a potential here for capital expenditure to maybe
Speaker 1: kick into a higher gear. On the matter of you know,
Speaker 1: people bemoan for years inequality, well, you know, it's like
Speaker 1: in a in a tight labor market, obviously the powers
Speaker 1: shifts somewhat to workers. I mean that by definition almost
Speaker 1: is there a potential here for the jolt that we've
Speaker 1: seen to kick us into a superior equilibrium when all
Speaker 1: of Sadden done right, and I think about this um
Speaker 1: a lot, is you know, obviously you want to get
Speaker 1: back to at least as a good place, but maybe
Speaker 1: even a better place, right, because we'd like to see,
Speaker 1: you know, a productivity be higher, right, And maybe is
Speaker 1: that requires some investment? And is that investment something wrong?
Speaker 1: You're going to see if we if we run the
Speaker 1: economy high right? Right? And so is there a potential
Speaker 1: here to get to a better player? And I think
Speaker 1: you're the answers, Yes, there is that potential. And I
Speaker 1: just think it's how do you moderate the economy during
Speaker 1: that adjustment? Because I think you know, what what Sherman
Speaker 1: Paul has said has been I think generally correct in
Speaker 1: that if you want to you know, maintain and extend
Speaker 1: these benefits, you need to know basically have inflation under control.
Speaker 1: And if you don't get inflation under control, you know
Speaker 1: we're going to end up with these instabilities that eventually
Speaker 1: prompt us to create a recession. So even if you're
Speaker 1: getting a jolt, can you have too much of a
Speaker 1: good thing in a short run that you actually lose
Speaker 1: some of those long run benefits? And I think that's
Speaker 1: the concern that the FED should have at at this juncture. Well, Tim,
Speaker 1: I mean, I think that's like a that's a great
Speaker 1: spot to leave it. It does seem like, yeah, there
Speaker 1: is some reasons to be excited, but can they get
Speaker 1: it just right? It seems like an incredible chill for
Speaker 1: the FED in two So maybe maybe we'll have you
Speaker 1: on in December again of this year and we're like,
Speaker 1: we'll see how they did with the hikes. Assuming the
Speaker 1: h that's great, and we'll see, you know, it's inflation
Speaker 1: moderates back towards two percent, as many people expect, then
Speaker 1: the fan is gonna look brilliant because we'll be it
Speaker 1: will be near neutral with a you know, a pretty
Speaker 1: tight job market and inflation back to two percent, and
Speaker 1: that's that's, you know, the optimal outcome. All right, Well,
Speaker 1: knock on wood. I don't have any wood, but knock
Speaker 1: gonna lead that. That is the set of conditions at
Speaker 1: the end of this year. Tim Dooey, thank you so
Speaker 1: much for coming up. Thanks for having me appreciate it.
Speaker 1: Thanks Tim, I really enjoyed that tracing. I mean, I
Speaker 1: think it's clear regardless like this is going to be
Speaker 1: a tricky year for the FED because obviously it wants
Speaker 1: to consolidate its gains. It wants to is to mention
Speaker 1: the end, It wants to sort of preserve the potential
Speaker 1: for the benefits that you get from a hot economy
Speaker 1: while making the economy less hot, but also not so hot,
Speaker 1: so less hot that we're in a recession so hot
Speaker 1: something like that, less hot but not too less hot. Yeah,
Speaker 1: I think that's right. The other thing that stood out
Speaker 1: to me was, you know, Tim's point about how difficult
Speaker 1: it is to separate supply from demand issues at the moment,
Speaker 1: But I kind of I sort of follow that to
Speaker 1: a different conclusion, which is, I still think a lot
Speaker 1: of the demand that we're seeing is actually a result
Speaker 1: of the supply shortages, and people are you know, just
Speaker 1: getting things when they can and sort of stalking up
Speaker 1: and seeing a bunch of other people improve their houses
Speaker 1: and do this and that and jumping in so that
Speaker 1: they're not left behind. But I mean it does. It
Speaker 1: does just high how difficult it is at the moment
Speaker 1: for for policymakers. And I know it's their job and
Speaker 1: everyone likes to criticize them, but it does seem like
Speaker 1: a particularly challenging time. Yeah. No, I mean I do
Speaker 1: think like the the sort of like, oh, did the
Speaker 1: massive like boom in demand that we saw one turned
Speaker 1: into Glutch and three uh as you've written a lot
Speaker 1: about this sort of bull whip effect, is like is
Speaker 1: a underdiscussed scenario still like we don't really know, like
Speaker 1: you know how long it's going to go. But to
Speaker 1: your question, and you asked the important question, like and
Speaker 1: Tim has been pointing it out, It's like if companies
Speaker 1: are saying, like, well, shareholders, we a we can raise prices,
Speaker 1: like Chipotle is like, yeah, we can raise the price
Speaker 1: of a burrito without hitting demands, and be investors are
Speaker 1: rewarding us for raising the prices of a burrito without
Speaker 1: hitting demand, then that is like a sort of like
Speaker 1: level of corporate motivation that could sustain sustain priced in
Speaker 1: creases for some time totally. And this to me is,
Speaker 1: you know when people are saying, oh, inflation and expectations
Speaker 1: don't matter anymore, they're looking at consumers, and I kind
Speaker 1: of I agree with that, but I really do think
Speaker 1: company inflation expectations matter quite a lot because they have
Speaker 1: the pricing power, um, and those are eventually going to
Speaker 1: feed into consumer expectations. UM. So I think that's a
Speaker 1: really important point. Um. And possibly you know, one of
Speaker 1: the things that the FED might have gotten right in
Speaker 1: recent years. Is its point about MONOPSYNY and big companies
Speaker 1: and pricing power, and we might start to see that
Speaker 1: um or we might really start to see the impact
Speaker 1: of that over the next year or so. Yeah. I
Speaker 1: mean everyone is like criticizing Elizabeth Warren and the White
Speaker 1: House for pointing out the sort of like the corporate
Speaker 1: profitability driven inflation, But you know, you look, look, you
Speaker 1: know yesterday, um February a Chipotle earnings came out, and
Speaker 1: it's like they're doing very well, and they see more
Speaker 1: pricing power, and they're mares are holding up well and
Speaker 1: they're raising prices in part because they can make more
Speaker 1: money when they raise prices, and so the companies that
Speaker 1: can do that are in a position to dictate prices
Speaker 1: are obviously doing really well. There's just like so many, uh,
Speaker 1: there's so many moving parts to this, and I thought
Speaker 1: that was a very helpful conversation. Can I just say,
Speaker 1: I've been in New York about a week and I've
Speaker 1: had Chipotle like two times now. It is so good.
Speaker 1: I missed it so much. They didn't have to put
Speaker 1: there's Chippotle in Hong Kong. No, there's also just a
Speaker 1: broader shortage of good Mexican food. But yeah, I missed it.
Speaker 1: It's it's worth the price increase for me at least
Speaker 1: for now. You're one of the consumers, Yeah, fresh back
Speaker 1: out of American soil. Who's like really to absorb any
Speaker 1: price price price insensitive for for American Mexican food? All right, um,
Speaker 1: shall we leave it there. Let's leave it there. This
Speaker 1: has been another episode of the Odd Thoughts podcast. I'm
Speaker 1: Tracy Alloway. You can follow me on Twitter at Tracy
Speaker 1: Alloway and I'm Joe wi. Isn't thought you could follow
Speaker 1: me on Twitter at the Stalwart. Follow our guest Tim
Speaker 1: Dewey on Twitter He's at Tim Dewey. Follow our producer
Speaker 1: Laura Carlson at Laura M. Carlson. Follow the Bloomberg head
Speaker 1: of podcast, Francesco Leady at Francesca Today, and check out
Speaker 1: all of our podcasts at Bloomberg under the handle at podcasts.
Speaker 1: Thanks for listening.