1 00:00:05,040 --> 00:00:08,960 Speaker 1: Well as we begin the fourth quarter of the year, 2 00:00:09,200 --> 00:00:11,160 Speaker 1: if you want to look at it in quarters, and 3 00:00:11,280 --> 00:00:12,959 Speaker 1: of course it's supposed to be the first quarter of 4 00:00:13,000 --> 00:00:16,120 Speaker 1: America's fiscal year, but we have a government shutdown since 5 00:00:16,160 --> 00:00:19,200 Speaker 1: we can't agree on those things. I always want to 6 00:00:19,200 --> 00:00:22,160 Speaker 1: bring back somebody who makes I think makes the most 7 00:00:22,160 --> 00:00:25,520 Speaker 1: amount of sense about what's happening in this economy and 8 00:00:26,520 --> 00:00:29,880 Speaker 1: how much of this uncertainty can feel certain down the road. 9 00:00:29,920 --> 00:00:33,520 Speaker 1: It's of course Mark Zandi from Moody's Analytics. Mark, good 10 00:00:33,520 --> 00:00:35,159 Speaker 1: to see you, Chuck, good to be with you. 11 00:00:35,280 --> 00:00:36,360 Speaker 2: Thanks for the opportunity. 12 00:00:37,080 --> 00:00:42,479 Speaker 1: So I have been describing the economy this way. If 13 00:00:42,520 --> 00:00:46,839 Speaker 1: you have money, have some savings, and have the ability 14 00:00:46,960 --> 00:00:50,120 Speaker 1: to invest, it got to be is going okay for you. 15 00:00:51,720 --> 00:00:57,040 Speaker 1: But if you don't, this is a scary economy. I 16 00:00:58,720 --> 00:01:02,160 Speaker 1: confess that's a simple, simplified way of putting it. But 17 00:01:02,280 --> 00:01:04,880 Speaker 1: that's what it looks like to me as a lay person. 18 00:01:05,120 --> 00:01:07,880 Speaker 1: What kind of is that too simplified of a description 19 00:01:08,000 --> 00:01:08,560 Speaker 1: or how would you do? 20 00:01:08,720 --> 00:01:11,479 Speaker 3: No, I think that's pretty apt. I think if you're 21 00:01:11,520 --> 00:01:13,560 Speaker 3: in the top part of the income and wealth distribution, 22 00:01:13,680 --> 00:01:17,800 Speaker 3: let's say, the top third of the distribution, you're doing fine. 23 00:01:17,840 --> 00:01:20,920 Speaker 3: You got a job, you're getting a pay increase, get 24 00:01:20,959 --> 00:01:26,319 Speaker 3: a bonus, you own your own home, you own some stocks, 25 00:01:26,360 --> 00:01:29,800 Speaker 3: and of course stocks are on a tear, and you 26 00:01:30,080 --> 00:01:32,800 Speaker 3: you don't really owe anything. You might I might have 27 00:01:32,800 --> 00:01:36,720 Speaker 3: a mortgage, but you probably locked in back during the pandemic, 28 00:01:36,840 --> 00:01:39,360 Speaker 3: so you've got a three three and a half four 29 00:01:39,400 --> 00:01:42,000 Speaker 3: percent mortgage rate. So you're making more on your money 30 00:01:42,040 --> 00:01:44,400 Speaker 3: market account than on your you're paying on your mortgage. 31 00:01:44,440 --> 00:01:47,520 Speaker 3: So yeah, you're sitting pretty If you're in the bottom 32 00:01:47,800 --> 00:01:51,240 Speaker 3: two thirds of the distribution of income, certainly the bottom third, 33 00:01:51,720 --> 00:01:55,920 Speaker 3: it's a struggle. You know, you probably have a job, 34 00:01:56,000 --> 00:01:58,560 Speaker 3: but unemployment is starting to not hire her, and you 35 00:01:58,560 --> 00:02:01,600 Speaker 3: don't want to lose your job because it's getting increasingly 36 00:02:01,800 --> 00:02:04,400 Speaker 3: hard to find another one. Hiring rates are very low. 37 00:02:05,560 --> 00:02:08,600 Speaker 3: You don't you know, you really don't own very much. 38 00:02:08,840 --> 00:02:10,680 Speaker 3: If you're in the middle part of the distribution, probably 39 00:02:10,720 --> 00:02:12,160 Speaker 3: own a home, but if you're in the bottom part, 40 00:02:12,200 --> 00:02:15,840 Speaker 3: you don't, and you owe on credit cards auto. If 41 00:02:15,840 --> 00:02:19,040 Speaker 3: you're in the bottom third, you're probably on student loan debt, 42 00:02:19,600 --> 00:02:21,800 Speaker 3: so so it is more of a struggle. So I 43 00:02:21,800 --> 00:02:24,919 Speaker 3: think that way thinking about the economy and whether it's 44 00:02:24,919 --> 00:02:28,359 Speaker 3: working for people works is very apt. Yes, I agree. 45 00:02:28,639 --> 00:02:31,440 Speaker 1: So you know it's interesting because this creates sort of 46 00:02:31,919 --> 00:02:35,040 Speaker 1: I think political challenges more now for the Trump administration. 47 00:02:35,160 --> 00:02:38,320 Speaker 1: You know, you know the Biden administration, and it was Biden, 48 00:02:38,360 --> 00:02:40,440 Speaker 1: and I've always thought it was a bit almost because 49 00:02:40,440 --> 00:02:43,760 Speaker 1: he spent most of his professional life where the economy 50 00:02:44,080 --> 00:02:46,880 Speaker 1: was judged. A good economy was based on whether there 51 00:02:46,919 --> 00:02:49,600 Speaker 1: were jobs being created. A bad economy is when there weren't. 52 00:02:50,120 --> 00:02:52,520 Speaker 1: And I do think Donald Trump looks at a good 53 00:02:52,520 --> 00:02:54,519 Speaker 1: economy is when the stock market does well. A bad 54 00:02:54,560 --> 00:03:00,240 Speaker 1: economy is when it doesn't. And like, ultimately both ideas 55 00:03:00,320 --> 00:03:03,760 Speaker 1: the hey can I afford this economy? Right? Can I 56 00:03:03,840 --> 00:03:06,200 Speaker 1: live in this economy? You know, it's one thing to 57 00:03:06,240 --> 00:03:09,320 Speaker 1: have a job. Can you afford participating in the economy 58 00:03:09,360 --> 00:03:11,760 Speaker 1: with your job? It's one thing if the stock market's 59 00:03:11,760 --> 00:03:13,320 Speaker 1: doing well, but do you have the money to actually 60 00:03:13,400 --> 00:03:17,120 Speaker 1: benefit from that? So I do see that as political. 61 00:03:17,200 --> 00:03:19,200 Speaker 1: But let's start with what you have to do, which 62 00:03:19,240 --> 00:03:21,600 Speaker 1: is trying to forecast, trying to understand what the economy is. 63 00:03:23,720 --> 00:03:25,560 Speaker 1: There's all these little tea leaves. I was reading about 64 00:03:25,560 --> 00:03:32,080 Speaker 1: the other day that people are pulling back on big 65 00:03:32,080 --> 00:03:35,200 Speaker 1: home renovations and they're now doing smaller ones. People are 66 00:03:35,240 --> 00:03:39,440 Speaker 1: pulling back on big trips, so they're doing maybe road 67 00:03:39,480 --> 00:03:43,760 Speaker 1: trips that while you're starting to see these little signs 68 00:03:43,920 --> 00:03:49,240 Speaker 1: of a pullback consumer pullback, and it's not yet reflective 69 00:03:49,280 --> 00:03:53,600 Speaker 1: anywhere else, not quite reflected in GDP. Yet, how important 70 00:03:53,640 --> 00:03:56,720 Speaker 1: are those little indicators to you? And what ones do 71 00:03:56,800 --> 00:03:59,720 Speaker 1: you look at, especially now that government data has been paused. 72 00:04:00,880 --> 00:04:04,080 Speaker 3: Well, yeah, I mean I pay attention to the anecdotal 73 00:04:04,120 --> 00:04:08,880 Speaker 3: information in the kind of the little pieces of information 74 00:04:08,960 --> 00:04:12,720 Speaker 3: here and there that you get from different sources, but 75 00:04:12,840 --> 00:04:17,960 Speaker 3: I ultimately rely on the the data, the aggregate data. 76 00:04:18,080 --> 00:04:19,840 Speaker 3: I mean, you can get fooled by you know, the 77 00:04:19,880 --> 00:04:22,760 Speaker 3: economy is a big elephant, right, and depending on which 78 00:04:22,800 --> 00:04:24,400 Speaker 3: part of the elephant you touch, you get a very 79 00:04:24,400 --> 00:04:26,960 Speaker 3: different picture. So that you know, if I'm in one 80 00:04:27,000 --> 00:04:30,360 Speaker 3: part of the country or another, that will influence people's thinking. 81 00:04:30,400 --> 00:04:32,599 Speaker 3: If I'm in one talking to one industry or another 82 00:04:33,120 --> 00:04:35,520 Speaker 3: that influences people thinking. If I'm at the top part 83 00:04:35,560 --> 00:04:38,200 Speaker 3: of the distribution of income or the bottom, that influences 84 00:04:38,200 --> 00:04:41,320 Speaker 3: people thinking. So I try to be careful not to 85 00:04:41,360 --> 00:04:44,960 Speaker 3: get caught up too much in the anecdotes in those 86 00:04:45,000 --> 00:04:47,920 Speaker 3: little straws as you as you put it, look at 87 00:04:47,920 --> 00:04:51,640 Speaker 3: the aggregate data and you know, there and for me, 88 00:04:52,520 --> 00:04:55,080 Speaker 3: at the end of the day, it's still about jobs. 89 00:04:55,120 --> 00:04:56,839 Speaker 3: And you know, are we creating jobs or they good 90 00:04:56,839 --> 00:04:59,840 Speaker 3: paying jobs as a pay enough that people can have 91 00:05:00,120 --> 00:05:02,800 Speaker 3: forward to you know, purchase the things that they need 92 00:05:02,880 --> 00:05:06,440 Speaker 3: and that they want. And there it feels like the 93 00:05:06,480 --> 00:05:08,800 Speaker 3: economy is kind of a struggle, a bit of a 94 00:05:08,839 --> 00:05:12,480 Speaker 3: struggle of you know, in aggregate we're not creating many 95 00:05:12,560 --> 00:05:15,440 Speaker 3: jobs at all, but jobs we are being created are 96 00:05:15,839 --> 00:05:20,200 Speaker 3: you know, in a very few industries like healthcare. It 97 00:05:20,279 --> 00:05:22,359 Speaker 3: just doesn't feel like it's working for you know, a 98 00:05:22,360 --> 00:05:25,520 Speaker 3: lot of Americans. So we're not in recession. We're growing. 99 00:05:25,839 --> 00:05:30,719 Speaker 2: GDP is positive, but it just feels kind of punk. 100 00:05:31,000 --> 00:05:32,120 Speaker 2: That might be the word to use. 101 00:05:32,560 --> 00:05:37,800 Speaker 1: So if we see the general consensus apparently is a 102 00:05:37,839 --> 00:05:41,760 Speaker 1: thirty to forty chance of a recession next year, Yeah, 103 00:05:41,480 --> 00:05:44,800 Speaker 1: how should folks interpret a prediction like that? 104 00:05:45,440 --> 00:05:49,400 Speaker 3: Well, the most likely scenarios we kind of navigate through 105 00:05:49,560 --> 00:05:54,800 Speaker 3: without an actual downturn, so the economy produces enough job 106 00:05:54,920 --> 00:05:58,560 Speaker 3: so that unemployment really doesn't take off. Here, We're okay, 107 00:05:58,800 --> 00:06:00,760 Speaker 3: it's not it may not be, but we're okay. 108 00:06:00,800 --> 00:06:03,160 Speaker 1: But so kind of like the first I felt like 109 00:06:03,200 --> 00:06:05,839 Speaker 1: the economy in twenty oh one to twenty oh two 110 00:06:06,040 --> 00:06:08,919 Speaker 1: where it was a mild recession but we kind of 111 00:06:08,960 --> 00:06:09,480 Speaker 1: got through it. 112 00:06:09,720 --> 00:06:13,000 Speaker 3: Yeah, that that's that's right. But you know the risks 113 00:06:13,000 --> 00:06:16,600 Speaker 3: are to the downside, right, I mean, you know, if 114 00:06:16,200 --> 00:06:20,599 Speaker 3: if things turn out different than that kind of that 115 00:06:20,720 --> 00:06:23,719 Speaker 3: economy we just described, it's going to turn out worse, 116 00:06:23,839 --> 00:06:26,640 Speaker 3: not better. You know, just to give a little bit 117 00:06:26,640 --> 00:06:29,560 Speaker 3: more context, kind of in a typical economy, the probability 118 00:06:29,600 --> 00:06:31,120 Speaker 3: recession would be fifteen percent. 119 00:06:31,160 --> 00:06:33,840 Speaker 2: We tend to have a recession once every six seven, eight. 120 00:06:33,839 --> 00:06:37,119 Speaker 1: Years, so every year, if there was no you would 121 00:06:37,160 --> 00:06:38,520 Speaker 1: you would say, well, you have to put it at 122 00:06:38,520 --> 00:06:41,240 Speaker 1: fifteen percent. But that's just because that's the way it 123 00:06:41,279 --> 00:06:41,960 Speaker 1: is all the time. 124 00:06:42,360 --> 00:06:46,520 Speaker 3: That's just it's so called unconditional probability. I mean, on average, 125 00:06:46,520 --> 00:06:49,279 Speaker 3: you get a recession every seven years there for fifteen percent. 126 00:06:49,320 --> 00:06:52,440 Speaker 3: So if you're a thirty percent forty percent, well, you. 127 00:06:52,320 --> 00:06:55,520 Speaker 2: Know that's on the high side. It's not over fifty that. 128 00:06:55,560 --> 00:06:59,799 Speaker 3: I'll take it, but you know, thirty forty is uncomfortably high. 129 00:07:00,279 --> 00:07:00,479 Speaker 1: You know. 130 00:07:00,520 --> 00:07:02,520 Speaker 3: The other way to think about. It might be nothing 131 00:07:02,520 --> 00:07:06,120 Speaker 3: else can go wrong, right, the economy is punk, It's 132 00:07:06,960 --> 00:07:12,120 Speaker 3: it's vulnerable to anything that might go off the rails here. 133 00:07:12,160 --> 00:07:13,280 Speaker 2: And it doesn't have to be a big thing. 134 00:07:13,320 --> 00:07:15,160 Speaker 3: It could be a small thing because the economy as 135 00:07:15,160 --> 00:07:16,280 Speaker 3: as vonible as it is. 136 00:07:17,520 --> 00:07:22,320 Speaker 1: What has been the impact of what feels because you know, look, 137 00:07:22,640 --> 00:07:26,960 Speaker 1: the DOGE cuts get a lot of attention, but there's 138 00:07:27,000 --> 00:07:29,840 Speaker 1: a real pullback on government jobs on the state and 139 00:07:29,880 --> 00:07:32,320 Speaker 1: local level because there's a lot of federal money is 140 00:07:32,360 --> 00:07:34,560 Speaker 1: no longer going to state and local, right, A lot 141 00:07:34,600 --> 00:07:36,440 Speaker 1: of we had a lot of COVID. You know, it's funny, 142 00:07:36,440 --> 00:07:40,160 Speaker 1: we lived almost a decade, decade, decade and a half. 143 00:07:40,200 --> 00:07:43,960 Speaker 1: First the Great Recession sort of triggered federal help for 144 00:07:44,040 --> 00:07:48,120 Speaker 1: state and local, and then COVID created more help for 145 00:07:48,160 --> 00:07:50,640 Speaker 1: state and local. And you know, I look at a 146 00:07:50,720 --> 00:07:53,280 Speaker 1: California which is going to struggle for the first time 147 00:07:53,320 --> 00:07:55,120 Speaker 1: with a budget deficit that they got to figure out, 148 00:07:55,160 --> 00:07:57,320 Speaker 1: they got to do. They're going to do something really hard. 149 00:07:57,360 --> 00:07:59,720 Speaker 1: I think a lot of states, I think there's going 150 00:07:59,760 --> 00:08:01,480 Speaker 1: to be a a lot of sort of chickens coming 151 00:08:01,520 --> 00:08:03,760 Speaker 1: home to roost in a lot of states who have 152 00:08:03,840 --> 00:08:08,280 Speaker 1: these constitutional amendments that actually have to balance our budget. 153 00:08:09,120 --> 00:08:11,920 Speaker 1: What is that risk factor of contraction of government workers 154 00:08:11,920 --> 00:08:14,640 Speaker 1: and how much could that trigger a recession. 155 00:08:15,240 --> 00:08:17,040 Speaker 2: Well, we're certainly seeing a lot of job loss at 156 00:08:17,040 --> 00:08:17,680 Speaker 2: the federal level. 157 00:08:17,720 --> 00:08:21,400 Speaker 3: I mean, the number of federal government employees down about 158 00:08:21,400 --> 00:08:23,560 Speaker 3: one hundred thousand since the beginning of the year. So 159 00:08:23,600 --> 00:08:25,960 Speaker 3: we are making the numbers up, but you know, rough 160 00:08:26,000 --> 00:08:29,800 Speaker 3: word magnitude, we had three million federal government workers at 161 00:08:29,800 --> 00:08:31,640 Speaker 3: the start of the year. We're now at two nine 162 00:08:32,200 --> 00:08:34,439 Speaker 3: and we've probably got another one hundred k to go. 163 00:08:35,000 --> 00:08:36,920 Speaker 1: Now, some people will hear that, say that doesn't seem 164 00:08:36,960 --> 00:08:38,559 Speaker 1: like much two point eight to three. I mean, you 165 00:08:38,720 --> 00:08:40,600 Speaker 1: round it up. It's still three million, right, Like, I mean, 166 00:08:41,360 --> 00:08:44,040 Speaker 1: you know what I mean, Like, why is that a lot? 167 00:08:45,360 --> 00:08:48,559 Speaker 3: Well, in the context of federal government never relays off. 168 00:08:48,600 --> 00:08:51,480 Speaker 2: It's always in the reliable source of jobs. 169 00:08:51,520 --> 00:08:54,960 Speaker 3: And historically, you know, it's been around three million for 170 00:08:55,360 --> 00:08:57,839 Speaker 3: as long as I can remember. So losing one hundred 171 00:08:57,920 --> 00:09:00,680 Speaker 3: k and losing another one hundred k in a short 172 00:09:00,720 --> 00:09:04,840 Speaker 3: period of time six twelve months, you know, that's meaningful. Certainly. 173 00:09:05,000 --> 00:09:08,680 Speaker 2: You know, obviously for the broad DC area. 174 00:09:08,520 --> 00:09:11,520 Speaker 1: And regional economy, you can feel it right, Yeah. 175 00:09:12,080 --> 00:09:15,439 Speaker 3: That broad metropolitan area is in a recession. 176 00:09:15,440 --> 00:09:16,800 Speaker 2: There's no doubt about that. 177 00:09:17,480 --> 00:09:20,480 Speaker 3: Now if if you're right, and I think you know, 178 00:09:20,520 --> 00:09:22,760 Speaker 3: you make a good point that you know, federal government 179 00:09:22,840 --> 00:09:25,240 Speaker 3: support the state in local first states and then local 180 00:09:25,280 --> 00:09:28,320 Speaker 3: governments is now starting to wane. And you saw a 181 00:09:28,400 --> 00:09:31,920 Speaker 3: tremendous amount of support in the in the pandemic. 182 00:09:33,320 --> 00:09:35,880 Speaker 1: A lot of teachers got raises from that money, right, 183 00:09:35,960 --> 00:09:40,319 Speaker 1: Like it was just a lot of public officials with cops, firefighters, teachers, 184 00:09:40,360 --> 00:09:43,840 Speaker 1: you know, the stuff politicians feel good about. Hey, look 185 00:09:43,880 --> 00:09:45,720 Speaker 1: we gave our teachers a raise, we gave our cops 186 00:09:45,720 --> 00:09:46,840 Speaker 1: and firefighters are raised. 187 00:09:46,840 --> 00:09:49,280 Speaker 3: Well. A bunch of other states they cut taxes, right, 188 00:09:49,400 --> 00:09:52,920 Speaker 3: but you know they now that that's that's an issue 189 00:09:53,000 --> 00:09:55,240 Speaker 3: because they're not getting that support from the federal government 190 00:09:55,320 --> 00:09:57,240 Speaker 3: and likely not to going far and now they have 191 00:09:57,280 --> 00:10:00,959 Speaker 3: a diminished tax base and so that's complicating things for them. 192 00:10:01,000 --> 00:10:03,600 Speaker 3: So yeah, the state local then there are a lot 193 00:10:03,640 --> 00:10:06,000 Speaker 3: more folks working in state and local government then and 194 00:10:06,040 --> 00:10:09,120 Speaker 3: then in the federal government, and that if that sector 195 00:10:09,200 --> 00:10:12,280 Speaker 3: is now not adding to payrolls and ultimately starting to 196 00:10:12,400 --> 00:10:15,480 Speaker 3: reduce payrolls, and that becomes an even bigger deal. So yeah, 197 00:10:15,520 --> 00:10:18,280 Speaker 3: it's a it's just uh, you know, the labor market 198 00:10:19,679 --> 00:10:23,280 Speaker 3: has gone flat here. It's not creating any jobs. The 199 00:10:23,320 --> 00:10:26,520 Speaker 3: only sectors that's creating jobs is healthcare, and everything else 200 00:10:26,640 --> 00:10:28,559 Speaker 3: is a little bit adding a little bit, or hurt 201 00:10:29,120 --> 00:10:30,079 Speaker 3: reducing a little bit. 202 00:10:30,440 --> 00:10:31,800 Speaker 2: Government is reducing a little bit. 203 00:10:31,840 --> 00:10:34,920 Speaker 1: At this point, all right, let's talk about AI. Yeah, 204 00:10:35,000 --> 00:10:38,280 Speaker 1: how is A How are is AI having an impact 205 00:10:38,280 --> 00:10:39,480 Speaker 1: on the job market yet? 206 00:10:40,520 --> 00:10:40,679 Speaker 3: Uh? 207 00:10:41,360 --> 00:10:42,640 Speaker 2: Yeah, there's some evidence. 208 00:10:42,840 --> 00:10:45,320 Speaker 3: You know, I mentioned the hiring rate, the fact that 209 00:10:46,000 --> 00:10:47,760 Speaker 3: if you look at the number of people getting hired 210 00:10:47,800 --> 00:10:51,000 Speaker 3: relatives of the workforce, it's about as low as it 211 00:10:51,000 --> 00:10:53,079 Speaker 3: gets when you're in the middle of a recession. We're 212 00:10:53,080 --> 00:10:55,160 Speaker 3: not in recession because businesses aren't laying off, but they're 213 00:10:55,160 --> 00:10:58,400 Speaker 3: not hiring. And one reason they may not be hiring 214 00:10:58,520 --> 00:11:01,760 Speaker 3: is related to AI. You know, businesses are thinking, oh, 215 00:11:02,160 --> 00:11:03,640 Speaker 3: you know, do I really need to go out and 216 00:11:03,720 --> 00:11:06,680 Speaker 3: hire those folks because artificial intelligence will be able to 217 00:11:06,720 --> 00:11:09,520 Speaker 3: empower my existing workforce to do those do that work, 218 00:11:09,520 --> 00:11:09,840 Speaker 3: and I don't. 219 00:11:09,960 --> 00:11:13,600 Speaker 1: Is this an experiment? Like my sense is businesses are 220 00:11:13,640 --> 00:11:16,600 Speaker 1: trying to see if they can use AI to replace 221 00:11:16,679 --> 00:11:18,640 Speaker 1: humans and then they're good and then if they don't, 222 00:11:18,679 --> 00:11:21,920 Speaker 1: they'll go and hire. But if they can, then just 223 00:11:22,280 --> 00:11:23,600 Speaker 1: then exponentially grow. 224 00:11:23,760 --> 00:11:29,120 Speaker 3: Yeah. Absolutely, Yeah, I think you know, AI has captured 225 00:11:29,160 --> 00:11:33,440 Speaker 3: the imagination, you know, particularly of the senior leaders management 226 00:11:33,480 --> 00:11:37,400 Speaker 3: of many large multinational corporations around the country. In fact, 227 00:11:37,400 --> 00:11:41,920 Speaker 3: they're selling themselves as AI companies increasingly because stock prices 228 00:11:41,960 --> 00:11:45,480 Speaker 3: are as high as they are juiced by the promise 229 00:11:45,559 --> 00:11:51,439 Speaker 3: of artificial intelligence creating all this wealth and genering a 230 00:11:51,480 --> 00:11:55,360 Speaker 3: lot of economic growth that they are now saying, we 231 00:11:55,480 --> 00:11:58,640 Speaker 3: are AI. Therefore we have to make AI work for 232 00:11:58,880 --> 00:12:02,600 Speaker 3: our businesses, and so they're asking their existing workforce to 233 00:12:02,760 --> 00:12:05,440 Speaker 3: figure that out. And you're right, I mean, so far, 234 00:12:06,320 --> 00:12:08,360 Speaker 3: you know, there's some success stories, but there's a lot 235 00:12:08,400 --> 00:12:11,560 Speaker 3: of failures as well, and must have to see how 236 00:12:11,600 --> 00:12:13,600 Speaker 3: this plays out, and some companies will have to backtrack 237 00:12:13,640 --> 00:12:14,199 Speaker 3: at some point. 238 00:12:14,480 --> 00:12:17,680 Speaker 2: But I think ultimately, you know, businesses will figure it out. 239 00:12:18,320 --> 00:12:21,600 Speaker 3: In new companies when they form, they're going to optimize 240 00:12:21,600 --> 00:12:24,280 Speaker 3: around the AI technology, just like they did the Internet, 241 00:12:24,400 --> 00:12:26,679 Speaker 3: and so it will diffuse throughout the economy and it 242 00:12:26,760 --> 00:12:29,160 Speaker 3: will have more of an impact on the labor market 243 00:12:29,160 --> 00:12:32,200 Speaker 3: going forward, particularly certain occupations in certain industries that are 244 00:12:32,559 --> 00:12:36,240 Speaker 3: more likely to be affected by the use of AI. 245 00:12:36,600 --> 00:12:39,440 Speaker 1: Yeah, politically, I think AI job the fear of AI 246 00:12:39,559 --> 00:12:41,800 Speaker 1: job displacement, I think is going to be a big 247 00:12:41,840 --> 00:12:44,600 Speaker 1: issue in twenty eight, But not until twenty eight, right, 248 00:12:44,679 --> 00:12:47,200 Speaker 1: Like I think we're I don't think we're there yet 249 00:12:47,559 --> 00:12:48,080 Speaker 1: on that. 250 00:12:49,000 --> 00:12:49,840 Speaker 3: But when. 251 00:12:51,720 --> 00:12:55,000 Speaker 1: Is there? You know, all these data center investments, all 252 00:12:55,040 --> 00:12:59,719 Speaker 1: this money that's going into this AI expansion is there. 253 00:12:59,760 --> 00:13:03,600 Speaker 1: It's not creating new jobs. It's just computer power. 254 00:13:03,960 --> 00:13:08,679 Speaker 3: No, no, so far, it's more about it's not about jobs. 255 00:13:08,800 --> 00:13:13,080 Speaker 2: It's not creating jobs. It's more about GDP and. 256 00:13:12,960 --> 00:13:18,800 Speaker 1: It's creating wealth, creating revenue. It's creating wealth. It's we're 257 00:13:18,840 --> 00:13:21,679 Speaker 1: really good at manufacturing money right now. 258 00:13:22,000 --> 00:13:23,959 Speaker 3: Well, here is an amazing thing. And this goes back 259 00:13:23,960 --> 00:13:25,560 Speaker 3: to where we started when we're talking about the folks 260 00:13:25,600 --> 00:13:27,120 Speaker 3: in the top part of the distribution of the wealth 261 00:13:27,120 --> 00:13:31,240 Speaker 3: distribution and wealth. The value of all US publicly traded 262 00:13:31,280 --> 00:13:35,520 Speaker 3: stocks is up ten trillion dollars in one year, so. 263 00:13:35,679 --> 00:13:39,480 Speaker 2: It's sixty seven trillion dollars today. It was fifty seven 264 00:13:39,559 --> 00:13:43,480 Speaker 2: trillion dollars a year ago. Trillion dollars. 265 00:13:43,520 --> 00:13:45,840 Speaker 3: And of course, if you own stocks, and particularly the 266 00:13:45,880 --> 00:13:49,319 Speaker 3: AI stocks, you're feeling pretty good, and that's what's kind 267 00:13:49,320 --> 00:13:51,360 Speaker 3: of driving the economic training. So the real impact of 268 00:13:51,400 --> 00:13:55,000 Speaker 3: AI so far, it's not about jobs. It's more about 269 00:13:55,400 --> 00:14:01,760 Speaker 3: wealth and GDP and not the more. In fact, if anything, 270 00:14:01,760 --> 00:14:04,960 Speaker 3: it's reduced to employment and the tech sector and some 271 00:14:05,000 --> 00:14:07,440 Speaker 3: of the other sectors that are that we just talked about. 272 00:14:07,760 --> 00:14:10,079 Speaker 1: So give me some historical parallels. We had this kind 273 00:14:10,160 --> 00:14:14,200 Speaker 1: of investment in tech in the nineties, turn of the century. 274 00:14:14,520 --> 00:14:17,320 Speaker 1: We had this kind of investment in the industrial Age. 275 00:14:17,360 --> 00:14:19,520 Speaker 1: We had this kind of investment in the build out 276 00:14:19,520 --> 00:14:24,920 Speaker 1: of the suburbs after the after World War Two? Is 277 00:14:24,960 --> 00:14:30,560 Speaker 1: this a bubble? And it certainly looks bubblish, and yet 278 00:14:30,600 --> 00:14:33,040 Speaker 1: it's amazing to me only Jamie Diamond seems to be 279 00:14:33,080 --> 00:14:36,360 Speaker 1: the the only one in that world that seems to 280 00:14:36,400 --> 00:14:38,760 Speaker 1: be concerned that this could could all be a bubble. 281 00:14:39,520 --> 00:14:41,960 Speaker 1: How would you you know? Is this something you can 282 00:14:42,040 --> 00:14:44,120 Speaker 1: forecast or you don't know if it's a bubble until 283 00:14:44,120 --> 00:14:44,800 Speaker 1: after it pops? 284 00:14:45,000 --> 00:14:49,800 Speaker 3: Well, uh, And I'm hearing more voices kind of variations 285 00:14:49,840 --> 00:14:52,480 Speaker 3: on that theme. And I think it's appropriate that the 286 00:14:52,760 --> 00:14:57,360 Speaker 3: you know, the stock market, stock investors uh in aar 287 00:14:57,560 --> 00:14:59,960 Speaker 3: kind of getting over their skis. You know, they they're 288 00:15:00,240 --> 00:15:04,400 Speaker 3: there's this is real. These companies are joggernauts. They're you know, 289 00:15:04,560 --> 00:15:08,359 Speaker 3: they're they're they're making massive investments and they're generating. 290 00:15:07,960 --> 00:15:09,440 Speaker 2: A lot of revenue. 291 00:15:09,640 --> 00:15:13,640 Speaker 3: Uh. But uh that is also generating a lot of 292 00:15:13,680 --> 00:15:17,600 Speaker 3: euphoria around the prospects uh that these companies, uh, you know, 293 00:15:17,960 --> 00:15:20,640 Speaker 3: are are generating and it's driving up their stock price. 294 00:15:20,680 --> 00:15:22,160 Speaker 3: So you can have a situation and I think we 295 00:15:22,200 --> 00:15:24,240 Speaker 3: do very similar to what happened back in Y two 296 00:15:24,280 --> 00:15:28,560 Speaker 3: K and the Internet bubble and in previous huge technology 297 00:15:28,760 --> 00:15:32,480 Speaker 3: periods of technological advance, where investors kind of get ahead 298 00:15:32,480 --> 00:15:35,080 Speaker 3: of the story. You know, they they discount all the 299 00:15:35,120 --> 00:15:38,160 Speaker 3: good news and then some and then some, and then 300 00:15:38,240 --> 00:15:43,600 Speaker 3: once that happens, uh, you get speculation. That's when investors 301 00:15:43,600 --> 00:15:46,960 Speaker 3: in stocks and other assets buy that stock or that 302 00:15:47,040 --> 00:15:49,280 Speaker 3: asset simply because they think they can sell it at 303 00:15:49,280 --> 00:15:51,040 Speaker 3: a higher price down the road. That's it. They're not 304 00:15:51,120 --> 00:15:54,080 Speaker 3: they're not doing they're not thinking about, you know, what's 305 00:15:54,680 --> 00:15:56,800 Speaker 3: where the value comes from. You know, will this be 306 00:15:56,840 --> 00:16:01,160 Speaker 3: more valuable in the future, simply the euphoria speculation And 307 00:16:01,560 --> 00:16:03,240 Speaker 3: you know, I don't know that we're quite there yet, 308 00:16:03,320 --> 00:16:05,200 Speaker 3: Chuck that I that's what I would call a bubble 309 00:16:05,240 --> 00:16:06,960 Speaker 3: when you get that kind of speculative fervor. 310 00:16:07,480 --> 00:16:10,440 Speaker 2: But it feels like that's the direction of travel here, right. 311 00:16:10,520 --> 00:16:13,400 Speaker 3: And in fact that you know, when I look, I love, 312 00:16:13,680 --> 00:16:17,280 Speaker 3: like most economists and people in the markets, I'm looking 313 00:16:17,280 --> 00:16:20,520 Speaker 3: at the stock market four or five six times a day, 314 00:16:20,600 --> 00:16:23,240 Speaker 3: you know, I go see what's going on. And usually 315 00:16:23,240 --> 00:16:25,360 Speaker 3: when I see green on the screen, that's mean stock 316 00:16:25,400 --> 00:16:28,800 Speaker 3: prices are up. I feel good now I'm feeling when 317 00:16:29,080 --> 00:16:31,360 Speaker 3: I see green, I'm getting more nervous about it. 318 00:16:35,120 --> 00:16:38,160 Speaker 1: There's a reason results matter more than promises, just like 319 00:16:38,240 --> 00:16:41,320 Speaker 1: there's a reason Morgan and Morgan is America's largest injury 320 00:16:41,400 --> 00:16:44,160 Speaker 1: law firm. For the last thirty five years, they've recovered 321 00:16:44,280 --> 00:16:47,400 Speaker 1: twenty five billion dollars for more than half a million clients. 322 00:16:47,960 --> 00:16:51,560 Speaker 1: It includes cases where insurance companies offered next to nothing, 323 00:16:51,840 --> 00:16:54,640 Speaker 1: just hoping to get away with paying as little as possible. 324 00:16:54,720 --> 00:16:57,800 Speaker 1: Morgan and Morgan fought back ended up winning millions. In fact, 325 00:16:57,880 --> 00:17:01,000 Speaker 1: in Pennsylvania, one client was awarded twenty six million dollars, 326 00:17:01,480 --> 00:17:04,520 Speaker 1: which was a staggering forty times the amount that the 327 00:17:04,520 --> 00:17:07,840 Speaker 1: insurance company originally offered. That original offer six hundred and 328 00:17:07,840 --> 00:17:10,840 Speaker 1: fifty thousand dollars twenty six million, six hundred and fifty 329 00:17:10,880 --> 00:17:13,080 Speaker 1: thousand dollars. So with more than one thousand lawyers across 330 00:17:13,080 --> 00:17:15,560 Speaker 1: the country, they know how to deliver for everyday people. 331 00:17:15,640 --> 00:17:18,359 Speaker 1: If you're injured, you need a lawyer, you need somebody 332 00:17:18,359 --> 00:17:20,920 Speaker 1: to get your back. Check out for the People dot com, 333 00:17:20,920 --> 00:17:26,119 Speaker 1: Slash podcast, or Dow Pound Law Pound five to nine 334 00:17:26,320 --> 00:17:29,800 Speaker 1: law on your cell phone. And remember all law firms 335 00:17:29,840 --> 00:17:31,680 Speaker 1: are not the same, So check out Morgan and Morgan. 336 00:17:31,800 --> 00:17:38,200 Speaker 1: Their fee is free unless they win. I'm not quite 337 00:17:38,200 --> 00:17:41,080 Speaker 1: at retirement thinking about retirement, but you know so I'm 338 00:17:41,119 --> 00:17:45,080 Speaker 1: still kind of and at the same time, yeah, you're like, geez, 339 00:17:45,240 --> 00:17:48,320 Speaker 1: I know, I know there's going to be a correction. 340 00:17:48,560 --> 00:17:49,639 Speaker 1: How massive is it? 341 00:17:49,760 --> 00:17:49,920 Speaker 3: Right? 342 00:17:50,000 --> 00:17:53,000 Speaker 1: You just talked about ten trillion dollars. That means we 343 00:17:53,080 --> 00:17:57,040 Speaker 1: could lose five trillion dollars of wealth and still be 344 00:17:57,240 --> 00:18:00,560 Speaker 1: up five trillion dollars. But if we lose ive trillion 345 00:18:00,600 --> 00:18:02,639 Speaker 1: dollars in wealth in the next six months, people are 346 00:18:02,640 --> 00:18:03,240 Speaker 1: going to panic. 347 00:18:03,480 --> 00:18:05,840 Speaker 3: Yeah exactly, you got it just right. So, I you know, 348 00:18:06,320 --> 00:18:08,640 Speaker 3: this might be a little nerdy, but you know, to 349 00:18:08,680 --> 00:18:10,960 Speaker 3: measure this to your question, are we in a bubble? 350 00:18:12,560 --> 00:18:14,360 Speaker 3: The tried and true way of kind of looking at 351 00:18:14,359 --> 00:18:17,000 Speaker 3: that is the so called price earnings multiple. Take take 352 00:18:17,359 --> 00:18:20,919 Speaker 3: take the stock prices, look at it relative to the 353 00:18:20,960 --> 00:18:22,920 Speaker 3: earnings of the companies that you know. 354 00:18:24,080 --> 00:18:26,439 Speaker 1: I love doing that. Pallidteer is like one hundred and 355 00:18:26,520 --> 00:18:29,960 Speaker 1: fifty times earning, but like Google is still only nineteen 356 00:18:30,000 --> 00:18:30,680 Speaker 1: times earnings. 357 00:18:31,200 --> 00:18:33,200 Speaker 3: You know, you're a pee wow, that's impressive. 358 00:18:34,600 --> 00:18:37,600 Speaker 1: You know, I'm not an economist, but too yeah. 359 00:18:37,680 --> 00:18:40,040 Speaker 3: Yeah, Well anyway, so if I look at I have 360 00:18:40,040 --> 00:18:42,680 Speaker 3: an what I call the economy wide price earnings multiple. 361 00:18:42,720 --> 00:18:44,000 Speaker 2: That's the Wilsher five thousand. 362 00:18:44,040 --> 00:18:47,080 Speaker 3: It's the value of all stocks, all stocks, divided by 363 00:18:48,119 --> 00:18:51,320 Speaker 3: economy wide after tax corporate earnings. So that's the Ice 364 00:18:51,640 --> 00:18:54,720 Speaker 3: Mobile on average since nineteen sixteen. That's as far back 365 00:18:54,760 --> 00:18:58,040 Speaker 3: as I can calculate it. And I'm making this up roughly, 366 00:18:58,600 --> 00:19:01,920 Speaker 3: so it's I'm rounding it's ten. That's the multiples. Ten 367 00:19:02,040 --> 00:19:06,200 Speaker 3: ten times stock prices are ten times earnings. Right now 368 00:19:06,640 --> 00:19:12,480 Speaker 3: today it's almost twenty twenty. There's one other time in 369 00:19:12,520 --> 00:19:15,440 Speaker 3: that historical period when it's been higher y two k. 370 00:19:15,720 --> 00:19:18,480 Speaker 2: It was twenty four so and of course we're still 371 00:19:18,480 --> 00:19:19,240 Speaker 2: going higher here. 372 00:19:19,280 --> 00:19:23,840 Speaker 3: So I don't know this so called mean reversion. You know, 373 00:19:24,000 --> 00:19:28,000 Speaker 3: it feels like to me, we're getting we're overvalued, we're 374 00:19:28,040 --> 00:19:32,560 Speaker 3: bordering on frothy and speculative. If stock prices continue to rise, 375 00:19:32,600 --> 00:19:33,520 Speaker 3: then you know. 376 00:19:33,480 --> 00:19:35,520 Speaker 2: I ring some alarm bells. I do think we're going 377 00:19:35,560 --> 00:19:36,880 Speaker 2: to see a correction at some point here. 378 00:19:37,520 --> 00:19:41,120 Speaker 1: I think what's odd about this is that a lot 379 00:19:41,359 --> 00:19:44,800 Speaker 1: of folks assume tariffs would slow down the growth of 380 00:19:44,840 --> 00:19:48,960 Speaker 1: our economy, right, would certainly hurt traditional companies because of 381 00:19:49,320 --> 00:19:52,679 Speaker 1: rising costs, you know, and all of those things. And 382 00:19:52,720 --> 00:19:55,920 Speaker 1: so here we are in this weird environment where tariffs 383 00:19:55,960 --> 00:20:01,119 Speaker 1: are having some impact, certainly on the consumer and certainly 384 00:20:01,160 --> 00:20:05,480 Speaker 1: on some businesses. But because this AI part is an 385 00:20:05,520 --> 00:20:09,960 Speaker 1: investment type of thing, it is it tied to the tariff. 386 00:20:10,000 --> 00:20:13,720 Speaker 1: And in some ways Trump is has sort of compartment, 387 00:20:13,760 --> 00:20:19,639 Speaker 1: you know, has protected that space from his protectionist policies. 388 00:20:20,119 --> 00:20:22,760 Speaker 1: So how would you view that the impact of the 389 00:20:22,760 --> 00:20:27,560 Speaker 1: tariffs it? You know, every time I've noticed this with 390 00:20:27,640 --> 00:20:30,320 Speaker 1: a lot, every time we look at it, it's like, yeah, 391 00:20:30,320 --> 00:20:32,959 Speaker 1: it's coming, but it's not here yet. Yeah it's coming, 392 00:20:33,200 --> 00:20:35,359 Speaker 1: but it's not here yet. Where are we now? 393 00:20:36,000 --> 00:20:37,959 Speaker 2: The thing is, there's a lot of cross cards here, right. 394 00:20:37,960 --> 00:20:40,919 Speaker 3: We just talked about the tailwind, and that's AI, and 395 00:20:40,920 --> 00:20:43,760 Speaker 3: that's a powerful tailwind. You know, all the data centers, 396 00:20:43,800 --> 00:20:45,560 Speaker 3: all the investment in. 397 00:20:46,320 --> 00:20:49,360 Speaker 2: The electric electrical power, electric. 398 00:20:49,080 --> 00:20:53,080 Speaker 3: Power, all the wealth that's being generated, that's driving consumer 399 00:20:53,119 --> 00:20:55,600 Speaker 3: spending of those folks that own the stocks, the you know, 400 00:20:55,640 --> 00:21:00,000 Speaker 3: the high end network, the individuals. About half the growth 401 00:21:00,080 --> 00:21:04,480 Speaker 3: in the economy is just AI. Right, So I'll give 402 00:21:04,480 --> 00:21:07,520 Speaker 3: you to give you a number GDP growth that's the 403 00:21:07,600 --> 00:21:09,719 Speaker 3: value all the things that we produce is two percent 404 00:21:09,840 --> 00:21:13,560 Speaker 3: year over year two percent. If not for AI, it 405 00:21:13,600 --> 00:21:17,679 Speaker 3: would be growing one percent. And that that's that's terraces. 406 00:21:17,680 --> 00:21:20,719 Speaker 3: If you're growing one percent, that's not a recession. But 407 00:21:20,760 --> 00:21:23,080 Speaker 3: if that's really uncomfortable. 408 00:21:22,880 --> 00:21:25,399 Speaker 1: Keep it up with your inflation at that point. 409 00:21:25,480 --> 00:21:29,720 Speaker 3: Yeah, So the terriffts are doing damage to the economy. 410 00:21:29,760 --> 00:21:33,120 Speaker 3: It's just that, you know, the the fallout is being 411 00:21:33,160 --> 00:21:36,600 Speaker 3: masked to a significant degory by this powerful tail end 412 00:21:36,640 --> 00:21:39,639 Speaker 3: of AI that's really come into its own over the 413 00:21:39,760 --> 00:21:41,359 Speaker 3: last six, nine, twelve months. 414 00:21:41,840 --> 00:21:45,400 Speaker 1: So this is it's so look at some point AI 415 00:21:45,480 --> 00:21:52,040 Speaker 1: investment plateaus, right, and the terror stick So that that's 416 00:21:52,080 --> 00:21:52,920 Speaker 1: where this is headed. 417 00:21:53,000 --> 00:21:57,040 Speaker 3: Right, Well, I mean if the terraces rise and level 418 00:21:57,080 --> 00:21:59,520 Speaker 3: off and stop rising at some point where you know, 419 00:21:59,680 --> 00:22:00,880 Speaker 3: the me just to that. 420 00:22:01,080 --> 00:22:03,080 Speaker 2: So you know, both those things could iron you know, 421 00:22:03,200 --> 00:22:04,439 Speaker 2: kind of offset each. 422 00:22:04,280 --> 00:22:07,760 Speaker 3: Other, so we could increasingly. This is the consensus view 423 00:22:07,800 --> 00:22:10,159 Speaker 3: in my view that we you know, it's going to 424 00:22:10,200 --> 00:22:12,480 Speaker 3: feel uncomfortable at times, but we're going to be able 425 00:22:12,520 --> 00:22:17,040 Speaker 3: to avoid recession because of that AI tailwind that we're enjoying. 426 00:22:17,240 --> 00:22:21,760 Speaker 3: But having said that, you know, the economy is soft, 427 00:22:21,800 --> 00:22:24,160 Speaker 3: the job market is punk. You know, we're not seeing 428 00:22:24,160 --> 00:22:28,480 Speaker 3: any job growth whatsoever. We are vulnerable to you know, again, 429 00:22:28,600 --> 00:22:32,080 Speaker 3: whatever else might not stick to script, and there's certainly 430 00:22:32,119 --> 00:22:34,560 Speaker 3: a lot of things that might not sticks stick to script. 431 00:22:34,560 --> 00:22:38,560 Speaker 1: Here a few, a few. I want to hit two 432 00:22:38,600 --> 00:22:43,679 Speaker 1: other topics here to sort of understand gold. Yeah, whenever gold, 433 00:22:44,119 --> 00:22:46,800 Speaker 1: I've sort of in my head, you know, when I 434 00:22:46,800 --> 00:22:49,760 Speaker 1: see gold go higher, that's bad news for the American economy. 435 00:22:50,160 --> 00:22:53,000 Speaker 1: It always gets me nervous. Yet this is a case 436 00:22:53,040 --> 00:22:57,879 Speaker 1: where everything's going up gold too. Yeah, that's unusual. 437 00:22:57,960 --> 00:23:01,960 Speaker 3: No, it is as I mean, uh, And this goes 438 00:23:02,000 --> 00:23:03,760 Speaker 3: back to the question of are we in a bubble 439 00:23:03,840 --> 00:23:07,680 Speaker 3: and speculation in the fact that we're seeing prices rise 440 00:23:07,800 --> 00:23:11,439 Speaker 3: for all kinds of assets at the same time adds 441 00:23:11,480 --> 00:23:13,760 Speaker 3: to the concern that this is you know broader that 442 00:23:13,960 --> 00:23:16,679 Speaker 3: you know, a bubble is developing, and gold prices are 443 00:23:16,720 --> 00:23:19,119 Speaker 3: at record highs where we're four thousand dollars an ounce 444 00:23:20,040 --> 00:23:23,879 Speaker 3: for the first time, silver prices, obviously, crypto prices. Actually, 445 00:23:23,880 --> 00:23:26,719 Speaker 3: interestingly enough, the only asset for which that's not this 446 00:23:26,800 --> 00:23:28,040 Speaker 3: is not the case is real estate. 447 00:23:28,160 --> 00:23:29,800 Speaker 1: Right if you've looked, well, that was going to be 448 00:23:29,840 --> 00:23:33,880 Speaker 1: my next topic, which is sort of it is that's 449 00:23:33,920 --> 00:23:36,639 Speaker 1: a strange aspect that people that that real estate is 450 00:23:36,680 --> 00:23:39,760 Speaker 1: not seen as a safe harbor, but gold still is. 451 00:23:40,040 --> 00:23:42,360 Speaker 3: Yeah, And I think the thing about gold is it's 452 00:23:42,400 --> 00:23:45,400 Speaker 3: got in these one of these asset classes that were stocks, 453 00:23:45,960 --> 00:23:49,159 Speaker 3: commodities like gold and crypto have its own kind of 454 00:23:49,240 --> 00:23:51,359 Speaker 3: idiosyncratic aspects to. 455 00:23:51,400 --> 00:23:51,760 Speaker 2: It as well. 456 00:23:51,800 --> 00:23:54,359 Speaker 3: In the case of gold, you know, it really has 457 00:23:54,440 --> 00:23:58,320 Speaker 3: got to boost when Russia invaded Ukraine in the US 458 00:23:58,880 --> 00:24:03,280 Speaker 3: froze Russians. Those are dollar reserves or dollar assets sitting 459 00:24:03,400 --> 00:24:06,479 Speaker 3: in bank accounts around the world, and the US froze 460 00:24:06,520 --> 00:24:10,920 Speaker 3: those assets, those dollar assets, and so countries around the 461 00:24:11,000 --> 00:24:14,640 Speaker 3: world with those dollars assets begin to wonder, well, maybe 462 00:24:14,680 --> 00:24:16,680 Speaker 3: they'll do that to me if they don't like something 463 00:24:16,720 --> 00:24:21,000 Speaker 3: I'm doing. Therefore, I'm going to diversify away from dollars 464 00:24:21,119 --> 00:24:24,920 Speaker 3: into let's say gold. So central banks around the world 465 00:24:24,960 --> 00:24:29,120 Speaker 3: are now, you know, big investors in gold. The other 466 00:24:29,160 --> 00:24:32,600 Speaker 3: thing is there's some you know, concerns about the safe 467 00:24:32,640 --> 00:24:35,240 Speaker 3: haven status of the US right in the context of 468 00:24:35,320 --> 00:24:38,320 Speaker 3: the trade and teriff wars and kind of the repositioning 469 00:24:38,359 --> 00:24:40,159 Speaker 3: in the US and the global economy and the financial 470 00:24:40,200 --> 00:24:43,480 Speaker 3: system by the Trump administration. I think global investors are 471 00:24:43,520 --> 00:24:46,400 Speaker 3: asking themselves, is the US really the place you want 472 00:24:46,440 --> 00:24:48,280 Speaker 3: to go to put your money when times are tough? 473 00:24:48,880 --> 00:24:51,280 Speaker 3: And if that, if you question that, then you know, 474 00:24:51,440 --> 00:24:55,480 Speaker 3: you buy something like gold, you know, as a hedge. 475 00:24:55,760 --> 00:24:59,359 Speaker 3: And then the final potential reason for what's going on 476 00:24:59,440 --> 00:25:02,800 Speaker 3: in the gold mark is inflation. So you know, there's 477 00:25:03,000 --> 00:25:05,760 Speaker 3: inflation has been a problem since the pandemic, the Russian 478 00:25:05,840 --> 00:25:08,960 Speaker 3: War and the impact that head on energy and command 479 00:25:09,040 --> 00:25:11,920 Speaker 3: prices push up inflation even more. And there's a lot 480 00:25:12,000 --> 00:25:15,600 Speaker 3: of discussion. Concern about FED independence is that theors are 481 00:25:15,680 --> 00:25:18,200 Speaker 3: going to remain an independent going forward, and if not, 482 00:25:18,520 --> 00:25:20,280 Speaker 3: does that mean the Fed's going to keep breaks too 483 00:25:20,359 --> 00:25:22,960 Speaker 3: low for too long? And juice up inflation. And if so, 484 00:25:23,040 --> 00:25:27,359 Speaker 3: if you're worried about inflation here, going down the road here, 485 00:25:27,800 --> 00:25:30,320 Speaker 3: you're going to buy something like gold. So you know, 486 00:25:30,400 --> 00:25:32,280 Speaker 3: there's a lot of things coming together there, I think, 487 00:25:32,440 --> 00:25:35,480 Speaker 3: pushing up demand for that commodity. 488 00:25:35,800 --> 00:25:37,600 Speaker 1: What is the risk to our economy if we're not 489 00:25:37,680 --> 00:25:38,520 Speaker 1: a safe haven. 490 00:25:39,680 --> 00:25:41,960 Speaker 3: Well, it means it means higher interest rates, all else 491 00:25:42,000 --> 00:25:46,080 Speaker 3: being equal. I mean, you know, especially in most times, 492 00:25:46,160 --> 00:25:48,679 Speaker 3: that that's not that big. It's a deal. I mean, 493 00:25:48,760 --> 00:25:51,160 Speaker 3: we benefit from that, but it's really a big deal 494 00:25:51,200 --> 00:25:54,600 Speaker 3: when things aren't going well, when the world has a crisis, 495 00:25:54,680 --> 00:25:58,600 Speaker 3: when we have a pandemic or a global financial crisis, 496 00:25:58,760 --> 00:26:04,160 Speaker 3: or something goes off the rail somewhere, money comes from 497 00:26:04,200 --> 00:26:06,560 Speaker 3: all over the world comes flowing into the United States, 498 00:26:07,080 --> 00:26:10,159 Speaker 3: and it really cushions the blow of that shock on 499 00:26:10,280 --> 00:26:12,520 Speaker 3: our economy and it helps us navigate through and we 500 00:26:12,640 --> 00:26:14,920 Speaker 3: kind of lead the way for the rest of the world. 501 00:26:15,440 --> 00:26:18,960 Speaker 3: That's going to be harder to do if, in fact, 502 00:26:19,080 --> 00:26:21,480 Speaker 3: investors don't view us as that safe harbor or is 503 00:26:21,520 --> 00:26:23,520 Speaker 3: that safe haven, and the money doesn't come flowing in 504 00:26:24,240 --> 00:26:27,000 Speaker 3: in the next crisis, and we have to pay more 505 00:26:27,440 --> 00:26:30,840 Speaker 3: for capital, higher interest rates and that's certainly a corrosive 506 00:26:30,880 --> 00:26:33,159 Speaker 3: on our ability to invest and to do all the 507 00:26:33,200 --> 00:26:33,960 Speaker 3: things that we want to do. 508 00:26:34,320 --> 00:26:36,400 Speaker 1: Yeah, I just sort of like to how to connected 509 00:26:36,440 --> 00:26:38,280 Speaker 1: to the average person, Why should I care for not 510 00:26:38,400 --> 00:26:40,879 Speaker 1: a safe haven? What you're saying is, well, if you 511 00:26:41,000 --> 00:26:43,239 Speaker 1: like lower interest rates on your credit card debt, if 512 00:26:43,280 --> 00:26:45,440 Speaker 1: you like a lower interest rate on your mortgage, this 513 00:26:45,640 --> 00:26:48,760 Speaker 1: is why you want the rest of the world feeling 514 00:26:48,920 --> 00:26:50,280 Speaker 1: America is a safe harbor. 515 00:26:50,560 --> 00:26:52,600 Speaker 3: Or your small business and you need to borrow money 516 00:26:52,640 --> 00:26:55,160 Speaker 3: to expand your business or hire, or even if you're 517 00:26:55,160 --> 00:26:56,879 Speaker 3: a large multinational and you need to go out and 518 00:26:56,920 --> 00:26:59,240 Speaker 3: borrow money to invest in let's say, those data centers. 519 00:26:59,320 --> 00:27:00,479 Speaker 3: I mean, it's just going to be a lot more 520 00:27:00,760 --> 00:27:05,000 Speaker 3: costly to do it. And most times this generally going 521 00:27:05,040 --> 00:27:07,280 Speaker 3: to be more of a corrosive on the economy. It's 522 00:27:07,320 --> 00:27:09,560 Speaker 3: not a cliff of that. It's not like all of 523 00:27:09,600 --> 00:27:11,680 Speaker 3: a sudden you go off a cliff because the safe 524 00:27:11,720 --> 00:27:15,400 Speaker 3: haven status is under question. It's more of a weight 525 00:27:15,520 --> 00:27:18,880 Speaker 3: on the economy that over time diminishes the economy's ability 526 00:27:19,359 --> 00:27:22,359 Speaker 3: to do what we've done historically, and that's kind of 527 00:27:22,440 --> 00:27:23,520 Speaker 3: lead the global economy. 528 00:27:23,760 --> 00:27:25,760 Speaker 1: I don't know if this is sort of outside your field. 529 00:27:25,800 --> 00:27:29,919 Speaker 1: But how do you assess energy costs because it does 530 00:27:30,040 --> 00:27:33,840 Speaker 1: seem as if that's becoming a right. We're seeing rising 531 00:27:34,080 --> 00:27:37,600 Speaker 1: electricity bills all over the country. Is this you know, 532 00:27:37,960 --> 00:27:41,920 Speaker 1: how much of this is we haven't diversified our grid enough. 533 00:27:42,040 --> 00:27:45,240 Speaker 1: How much of this is there's more of these AI companies, 534 00:27:45,320 --> 00:27:48,760 Speaker 1: more demand on the grid itself, and we're having to 535 00:27:48,840 --> 00:27:52,159 Speaker 1: do it. And is that easy to assess? And how 536 00:27:52,200 --> 00:27:54,880 Speaker 1: do you factor that? Because you know, when when when 537 00:27:55,520 --> 00:27:59,320 Speaker 1: energy costs rise, that impacts everybody. Right, that's just a 538 00:27:59,520 --> 00:28:03,840 Speaker 1: giant sort of slow down on the economy, and that 539 00:28:04,280 --> 00:28:08,639 Speaker 1: feels like something that that we're not really it's happening, 540 00:28:08,720 --> 00:28:12,560 Speaker 1: and we haven't really focused on on how that could 541 00:28:12,600 --> 00:28:15,240 Speaker 1: be a real sort of governor on our economic growth. 542 00:28:15,680 --> 00:28:20,320 Speaker 3: Yeah, well, if you're talking about electricity, the cost of electricity, 543 00:28:20,440 --> 00:28:23,680 Speaker 3: and that's going up just like everything else, demand and supply. 544 00:28:23,800 --> 00:28:26,000 Speaker 3: On the demand side, you know, all these data centers 545 00:28:26,119 --> 00:28:29,000 Speaker 3: scarf up a lot of electricity to be able to 546 00:28:29,800 --> 00:28:33,880 Speaker 3: run the servers and do the AI calculations, So that's 547 00:28:34,359 --> 00:28:36,760 Speaker 3: juicing up demand. And on the supply side of the 548 00:28:36,800 --> 00:28:40,920 Speaker 3: electric power market, it's slow to respond, particularly in the 549 00:28:41,000 --> 00:28:44,160 Speaker 3: context of you know, policy changes under President Trump, where 550 00:28:44,160 --> 00:28:46,480 Speaker 3: he's moved away from clean energy, you know, moved away 551 00:28:46,520 --> 00:28:46,960 Speaker 3: from soular. 552 00:28:47,120 --> 00:28:50,040 Speaker 1: Just the shift itself slows us down. It doesn't like, 553 00:28:50,240 --> 00:28:52,840 Speaker 1: you know, I'm not we're not weighing in on whether 554 00:28:53,560 --> 00:28:57,360 Speaker 1: Biden's right or Trump's right. The transition itself slows us down. 555 00:28:57,640 --> 00:28:58,240 Speaker 2: Absolutely. 556 00:28:58,360 --> 00:29:01,000 Speaker 3: Now there's a lot of discussion going to nuclear and 557 00:29:01,400 --> 00:29:03,600 Speaker 3: that's the direction we're going to head here, but that 558 00:29:03,720 --> 00:29:06,000 Speaker 3: takes time. It's a lot of time, a lot of time. 559 00:29:06,160 --> 00:29:08,800 Speaker 3: There's these smaller nuclear facilities that you can get online 560 00:29:08,800 --> 00:29:12,280 Speaker 3: more quickly, but they're small. You need big nuclear plants 561 00:29:12,320 --> 00:29:13,880 Speaker 3: to be able to generate the power that we need, 562 00:29:14,440 --> 00:29:16,120 Speaker 3: and that's just going to take time. So I would 563 00:29:16,320 --> 00:29:18,200 Speaker 3: I would buckle in here on the like that we're 564 00:29:18,200 --> 00:29:19,160 Speaker 3: going to be paid. 565 00:29:18,960 --> 00:29:19,640 Speaker 2: More for electricity. 566 00:29:19,920 --> 00:29:23,320 Speaker 3: The fortunate thing though, is oil prices, which obviously you know, 567 00:29:23,360 --> 00:29:29,080 Speaker 3: we still draw many people still drive of gas powered cars. 568 00:29:29,480 --> 00:29:32,800 Speaker 2: That's down, right, that's sixty sixty five bucks of barrowl that. 569 00:29:32,920 --> 00:29:35,840 Speaker 1: But why if that's down, why isn't that having some 570 00:29:36,320 --> 00:29:38,840 Speaker 1: impact on our electric bills? Because usually when the price 571 00:29:38,880 --> 00:29:40,720 Speaker 1: of oil goes up, the price of every all energy 572 00:29:40,760 --> 00:29:41,120 Speaker 1: goes up. 573 00:29:41,200 --> 00:29:45,920 Speaker 3: Well, I mean, no, electric electric power is very little 574 00:29:45,920 --> 00:29:48,200 Speaker 3: of it's oil powered. You know, there's natural gas, but 575 00:29:48,440 --> 00:29:49,600 Speaker 3: natural gas prices. 576 00:29:49,360 --> 00:29:50,080 Speaker 2: Are relatively low. 577 00:29:50,120 --> 00:29:53,040 Speaker 3: It's still relatively low because we we produce a lot 578 00:29:53,080 --> 00:29:55,080 Speaker 3: of natural gas here and it's hard to export to 579 00:29:55,120 --> 00:29:58,040 Speaker 3: the rest of the world, although we're trying. But most 580 00:29:58,080 --> 00:30:02,400 Speaker 3: of it is natural gas or you know, renewable solar 581 00:30:02,600 --> 00:30:06,680 Speaker 3: wind and to a lesser degree nuclear and calls becoming 582 00:30:06,760 --> 00:30:08,880 Speaker 3: less of an issue. But oil is a very very 583 00:30:08,920 --> 00:30:12,440 Speaker 3: small piece of the gotcha, of the what's used to 584 00:30:12,520 --> 00:30:13,920 Speaker 3: power electric power plants? 585 00:30:14,080 --> 00:30:17,440 Speaker 1: Gotcha? So let's talk about real estate. There was an 586 00:30:17,480 --> 00:30:21,320 Speaker 1: interesting little one of the million newsletters I read every morning. 587 00:30:21,400 --> 00:30:25,080 Speaker 1: So I'm not going to sit here talking at right, 588 00:30:25,160 --> 00:30:29,120 Speaker 1: there's so many of them, but one notice that it's like, 589 00:30:29,560 --> 00:30:32,400 Speaker 1: so the the talking point of why real estate investment 590 00:30:32,440 --> 00:30:36,920 Speaker 1: has been slow as well, inventory is low, but it's 591 00:30:37,000 --> 00:30:40,120 Speaker 1: still one would assume if you're if if there are 592 00:30:40,200 --> 00:30:43,360 Speaker 1: investors looking for safe havens, why are they only going 593 00:30:43,400 --> 00:30:46,320 Speaker 1: to crypto and gold. Why aren't they going to real estate, 594 00:30:46,360 --> 00:30:49,800 Speaker 1: which has traditionally been a pretty good inflation buffer. 595 00:30:50,600 --> 00:30:54,520 Speaker 3: Well, there's the there's the residential side, which you mentioned 596 00:30:54,600 --> 00:30:57,880 Speaker 3: the single family housing. And then there's the commercial real estate, 597 00:30:57,960 --> 00:31:03,400 Speaker 3: and that's where generally have gone. It'so cre commercial office properties, 598 00:31:04,240 --> 00:31:07,160 Speaker 3: you know, retail malls some of the time. 599 00:31:07,280 --> 00:31:10,200 Speaker 1: Amazing what the price of some of these beautiful office 600 00:31:10,200 --> 00:31:12,560 Speaker 1: buildings are going for it at the oh. I mean, 601 00:31:12,840 --> 00:31:16,040 Speaker 1: if you ever want to own an office building, right, 602 00:31:16,480 --> 00:31:17,440 Speaker 1: do they have a deal for you. 603 00:31:18,040 --> 00:31:20,440 Speaker 3: Yeah. And I think a couple of things happened to 604 00:31:20,600 --> 00:31:24,760 Speaker 3: commercial real estate. One is interest rates. When interest rates, 605 00:31:25,720 --> 00:31:28,320 Speaker 3: real estate is very interest rate sensitive, much more than 606 00:31:28,320 --> 00:31:32,360 Speaker 3: any other asset. And so when interest rates rose, when 607 00:31:32,400 --> 00:31:35,040 Speaker 3: the FED jacked up interest rates to cool things off 608 00:31:35,160 --> 00:31:37,120 Speaker 3: back you know a few years ago in twenty two 609 00:31:37,200 --> 00:31:41,000 Speaker 3: and twenty three going into twenty four, that caused the 610 00:31:41,160 --> 00:31:44,560 Speaker 3: prices to come down for almost all CRI. And then 611 00:31:44,640 --> 00:31:47,760 Speaker 3: each property type had its own kind of story. And 612 00:31:47,840 --> 00:31:50,600 Speaker 3: you mentioned office Obviously there it's remote work, and the 613 00:31:50,680 --> 00:31:53,640 Speaker 3: demand for office space, you know, got crushed. But you know, 614 00:31:53,840 --> 00:31:57,440 Speaker 3: other property types also got have their own stories. Like 615 00:31:57,560 --> 00:32:00,840 Speaker 3: in the multi family sector, that's not about demand, that's 616 00:32:00,880 --> 00:32:04,800 Speaker 3: more about supply. That's where builders were got ahead of 617 00:32:04,800 --> 00:32:07,160 Speaker 3: themselves and put up a lot of these huge luxury 618 00:32:07,880 --> 00:32:12,600 Speaker 3: apartment towers. While there's a lot of demand. There was 619 00:32:12,680 --> 00:32:16,160 Speaker 3: just too much supply, and that's that's caused rents and 620 00:32:16,200 --> 00:32:19,760 Speaker 3: prices to come in. So commercial real estate has kind 621 00:32:19,760 --> 00:32:22,640 Speaker 3: of operated on its own independent dynamic, and it's been 622 00:32:22,800 --> 00:32:24,640 Speaker 3: much more affected by the run up in interest rates 623 00:32:24,640 --> 00:32:28,120 Speaker 3: than the other asset classes. On housing, you know that 624 00:32:28,600 --> 00:32:32,360 Speaker 3: that's generally there's some investment in single family rental, but 625 00:32:32,480 --> 00:32:36,360 Speaker 3: mostly that's you and I, you know, Merrick households buying 626 00:32:36,440 --> 00:32:41,200 Speaker 3: those homes and there the market has struggled in terms 627 00:32:41,240 --> 00:32:44,000 Speaker 3: of sales because of the so called interest rate lock 628 00:32:44,120 --> 00:32:46,680 Speaker 3: you know, ways for very low back in the pandemic, 629 00:32:46,720 --> 00:32:49,200 Speaker 3: people got mortgages at you know, three three, two and 630 00:32:49,200 --> 00:32:49,640 Speaker 3: a half three. 631 00:32:49,760 --> 00:32:51,240 Speaker 1: I'd love to sell my house, but I don't know 632 00:32:51,280 --> 00:32:52,920 Speaker 1: what I get into. Yeah, exactly, I mean, you know, 633 00:32:53,040 --> 00:32:54,600 Speaker 1: I mean that's a real thing. It's like you will 634 00:32:54,640 --> 00:32:57,320 Speaker 1: make Yeah, It's like, boy, I don't want to pay 635 00:32:57,440 --> 00:32:59,480 Speaker 1: that high interest rate in my mortgage. I've got this 636 00:32:59,520 --> 00:33:00,760 Speaker 1: great low interest rate, right. 637 00:33:00,880 --> 00:33:02,800 Speaker 3: Yeah, So if you have a three percent mortgage in 638 00:33:02,880 --> 00:33:05,760 Speaker 3: existing mortgage rates now over six percent, are you really 639 00:33:05,800 --> 00:33:07,160 Speaker 3: going to make that trade? 640 00:33:07,240 --> 00:33:09,320 Speaker 2: And the insurance most people are, you. 641 00:33:09,320 --> 00:33:10,280 Speaker 3: Know, at least not yet. 642 00:33:23,160 --> 00:33:26,320 Speaker 1: So what could let's stick with housing, what what could 643 00:33:28,560 --> 00:33:31,440 Speaker 1: what could government do besides lowering interest rates? So let's 644 00:33:31,480 --> 00:33:34,400 Speaker 1: set interest rates aside? What else could government be doing 645 00:33:35,040 --> 00:33:38,040 Speaker 1: to just improve the affordability of the housing market. 646 00:33:38,440 --> 00:33:40,320 Speaker 3: Yeah, it's done a little bit of work here, I've 647 00:33:40,320 --> 00:33:43,560 Speaker 3: got the paper out was a few colleagues. You could 648 00:33:43,560 --> 00:33:48,200 Speaker 3: google Zandy affordable housing crisis, and this. 649 00:33:48,320 --> 00:33:50,840 Speaker 1: Is a This is for what it's worth. When you 650 00:33:50,920 --> 00:33:52,880 Speaker 1: talk to members of Congress and they say, what issue 651 00:33:53,440 --> 00:33:55,160 Speaker 1: do we and the press not bring up enough? But 652 00:33:55,240 --> 00:33:59,280 Speaker 1: your constituents talk about all the time, it's this issue one, right, Yeah. 653 00:33:59,360 --> 00:34:01,440 Speaker 3: Yeah. In this paper, what we did we tried to 654 00:34:01,640 --> 00:34:05,400 Speaker 3: estimate the balance between supply and demand for housing, both 655 00:34:05,480 --> 00:34:08,040 Speaker 3: on the rental side and on the home ownership side, 656 00:34:08,200 --> 00:34:11,320 Speaker 3: at a census tract level, so at a very detailed 657 00:34:11,360 --> 00:34:15,200 Speaker 3: little geography so you can and it's very interesting, you see. 658 00:34:15,360 --> 00:34:17,439 Speaker 3: And then we cut the data in lots of different ways, 659 00:34:17,480 --> 00:34:20,160 Speaker 3: one of which is around price points, you know, different, 660 00:34:20,760 --> 00:34:23,640 Speaker 3: just different is it for the for high end consumers 661 00:34:24,160 --> 00:34:27,560 Speaker 3: kind of workforce or low income And what we found 662 00:34:27,760 --> 00:34:30,399 Speaker 3: is no surprise. I just mentioned it. At the high 663 00:34:30,480 --> 00:34:32,640 Speaker 3: end of the rental market, it's oversupplied. You got too 664 00:34:32,680 --> 00:34:36,560 Speaker 3: many big luxury condo towers in d C and Philly. 665 00:34:36,360 --> 00:34:39,280 Speaker 2: Chicago, San Francisco. That kind of thing builders got ahead 666 00:34:39,280 --> 00:34:39,760 Speaker 2: of themselves. 667 00:34:41,200 --> 00:34:44,640 Speaker 3: Really interestingly, Chuck, you know, at the very lower end 668 00:34:45,040 --> 00:34:50,480 Speaker 3: of the of the market, it's it's not overly undersupplied, 669 00:34:50,640 --> 00:34:53,520 Speaker 3: it's kind of well balanced. And that's because there's a 670 00:34:53,600 --> 00:34:57,600 Speaker 3: lot of tax subsidy already provided for low income rental, 671 00:34:57,719 --> 00:35:00,759 Speaker 3: like light tech that's low income housing tax credit. The 672 00:35:00,880 --> 00:35:05,640 Speaker 3: real shortage is actually for what I call workforce housing 673 00:35:05,760 --> 00:35:08,120 Speaker 3: rental and for home ownerships. Those are for kind of 674 00:35:08,680 --> 00:35:13,600 Speaker 3: teachers and firemen and you know, kind of middle class 675 00:35:14,080 --> 00:35:17,360 Speaker 3: people are making seventy five eighty K a year on 676 00:35:17,480 --> 00:35:20,920 Speaker 3: a household basis, you know, nationwide, that's where the real 677 00:35:20,960 --> 00:35:24,800 Speaker 3: shortage is. And so that's where policymakers really have not focused. 678 00:35:26,280 --> 00:35:28,239 Speaker 3: They've been focused on the low end. They really need 679 00:35:28,320 --> 00:35:30,800 Speaker 3: to focus on the middle part of the market. And 680 00:35:31,160 --> 00:35:33,720 Speaker 3: there I would argue if we had some tax subsidy 681 00:35:33,840 --> 00:35:35,880 Speaker 3: like a light tech for workforce rental, that would be 682 00:35:36,040 --> 00:35:36,520 Speaker 3: very helpful. 683 00:35:37,080 --> 00:35:41,600 Speaker 1: Is this so how sensitive is that issue by wealth 684 00:35:41,640 --> 00:35:44,520 Speaker 1: of county? Right? So I take a look at like 685 00:35:44,680 --> 00:35:47,880 Speaker 1: you know, you go to around in and around San Jose. Frankly, 686 00:35:48,000 --> 00:35:51,040 Speaker 1: in and around d C. Right Montgomery County or Lincoln County, 687 00:35:51,080 --> 00:35:54,880 Speaker 1: where the service where the service industry folks, your teachers, 688 00:35:54,920 --> 00:35:59,160 Speaker 1: your firefighters, your police officers can't necessarily afford to live 689 00:35:59,200 --> 00:36:02,080 Speaker 1: in the county that they were right, because the cost 690 00:36:02,160 --> 00:36:06,000 Speaker 1: of single family homes are so high. This is true 691 00:36:06,080 --> 00:36:08,719 Speaker 1: in and around Silicon Valley, This is true in close 692 00:36:08,800 --> 00:36:11,600 Speaker 1: in parts of LA and New York, et cetera. It 693 00:36:11,680 --> 00:36:15,239 Speaker 1: seems like that's a unique that's a challenge that's very specific. 694 00:36:15,960 --> 00:36:18,880 Speaker 1: But is this Is this also an issue in and 695 00:36:18,960 --> 00:36:21,160 Speaker 1: around Louisville, right in and around Wichita. 696 00:36:21,840 --> 00:36:24,840 Speaker 3: Yeah, it's coast to coast, and it's market to market, 697 00:36:25,160 --> 00:36:29,160 Speaker 3: and even in those you know, very wealthy areas of 698 00:36:29,200 --> 00:36:32,480 Speaker 3: the country, there are you can see there are you know, 699 00:36:32,800 --> 00:36:37,880 Speaker 3: real pockets of problem of shortages in certain segments of 700 00:36:37,960 --> 00:36:40,640 Speaker 3: the market. So it is coast to coast and it's 701 00:36:40,800 --> 00:36:44,200 Speaker 3: very very local. Yet it's not That's one of the 702 00:36:44,200 --> 00:36:46,680 Speaker 3: reason why it's a hard thing for policymakers to address. 703 00:36:47,080 --> 00:36:49,879 Speaker 3: It's not like I can do something at a thorough 704 00:36:49,920 --> 00:36:52,600 Speaker 3: government level wave of magic wand and solve the problem. 705 00:36:52,760 --> 00:36:55,560 Speaker 3: It's really a lot of you know, trying to understand 706 00:36:55,640 --> 00:36:58,520 Speaker 3: individual markets at a local level and trying to figure 707 00:36:58,520 --> 00:37:01,000 Speaker 3: out what the best strategy is to restless and of 708 00:37:01,080 --> 00:37:04,600 Speaker 3: course underlying all of this is zoning and permitting. Chris. 709 00:37:04,719 --> 00:37:07,359 Speaker 3: Feral government has nothing to say about that and won't 710 00:37:07,400 --> 00:37:11,040 Speaker 3: because the political you know, ramifications trying to address that 711 00:37:11,239 --> 00:37:12,680 Speaker 3: would be you know, overwhelming. 712 00:37:13,239 --> 00:37:14,360 Speaker 2: It's something as possible. 713 00:37:14,480 --> 00:37:17,600 Speaker 3: So it makes it very difficult for government, federal government, 714 00:37:17,640 --> 00:37:20,279 Speaker 3: for the federal government to really address this head on 715 00:37:20,520 --> 00:37:23,840 Speaker 3: in a grand ways. It's got to be done, you know, 716 00:37:24,160 --> 00:37:26,800 Speaker 3: helping local governments try to figure out, you know, what 717 00:37:27,000 --> 00:37:28,920 Speaker 3: they need and where they need it and give them 718 00:37:28,960 --> 00:37:30,279 Speaker 3: the resources to help them do it. 719 00:37:30,520 --> 00:37:33,160 Speaker 1: So in some ways it's incentivizing local governments to change there. 720 00:37:33,280 --> 00:37:35,879 Speaker 3: Yeah, yeah, again, I'd go back to you know, there's 721 00:37:36,360 --> 00:37:40,200 Speaker 3: light tech is low income housing tax right, much maligned, 722 00:37:40,280 --> 00:37:42,560 Speaker 3: no one really likes it, but it's tried and true, 723 00:37:42,680 --> 00:37:44,800 Speaker 3: it's kind of works. 724 00:37:44,920 --> 00:37:47,080 Speaker 2: Let's I take that and run with that and to 725 00:37:47,320 --> 00:37:49,279 Speaker 2: just kind of tweak it and make it work for 726 00:37:49,360 --> 00:37:50,120 Speaker 2: workforce rental. 727 00:37:51,760 --> 00:37:53,840 Speaker 1: That gets me as something else that I think is 728 00:37:54,400 --> 00:37:58,040 Speaker 1: is and maybe this is just a hallmark of the 729 00:37:58,080 --> 00:38:02,040 Speaker 1: twenty first century, but how much would our economy benefit 730 00:38:02,120 --> 00:38:06,400 Speaker 1: from domestic migration? You know, we we and is that 731 00:38:06,760 --> 00:38:11,480 Speaker 1: it it seems as if we move less domestically and 732 00:38:11,640 --> 00:38:13,680 Speaker 1: we did. You know, hey, if I can't find a 733 00:38:13,800 --> 00:38:15,880 Speaker 1: job here, I'm going to travel to another state to 734 00:38:15,920 --> 00:38:18,200 Speaker 1: go get work, or I'm gonna I can't afford a 735 00:38:18,239 --> 00:38:20,759 Speaker 1: house here, I'm going to move somewhere else. And we've seen, 736 00:38:21,280 --> 00:38:23,880 Speaker 1: you know, there was a little COVID migration. Obviously Florida 737 00:38:23,920 --> 00:38:26,680 Speaker 1: experienced that Miami in particular, but that was kind of 738 00:38:26,760 --> 00:38:30,200 Speaker 1: high end and it really is messed with inflation in 739 00:38:30,280 --> 00:38:36,320 Speaker 1: Miami uniquely. But you know, I've always thought one of 740 00:38:36,360 --> 00:38:39,799 Speaker 1: our one of our problems is that we and why 741 00:38:39,880 --> 00:38:42,480 Speaker 1: we're we were so living in our silos, is that 742 00:38:42,840 --> 00:38:45,400 Speaker 1: we don't have the domestic migration that we actually did 743 00:38:45,520 --> 00:38:47,080 Speaker 1: have a lot of in the fifties or did have 744 00:38:47,160 --> 00:38:51,680 Speaker 1: a lot of in the thirties. Is that measurable? 745 00:38:52,400 --> 00:38:55,279 Speaker 3: Yeah, yeah, it's an excellent point. You know, we get 746 00:38:56,160 --> 00:38:59,560 Speaker 3: had Moodies all the credit files and country every month, 747 00:38:59,640 --> 00:39:02,760 Speaker 3: you know, on anonymized and we can see address changes, 748 00:39:02,840 --> 00:39:04,600 Speaker 3: so I can tell you exactly how many people are 749 00:39:04,640 --> 00:39:08,640 Speaker 3: moving from Chicago to Miami and back in a given month, 750 00:39:08,960 --> 00:39:11,359 Speaker 3: and you're absolutely right. 751 00:39:11,640 --> 00:39:14,680 Speaker 2: You know, over the last few decades we've become a 752 00:39:14,800 --> 00:39:15,800 Speaker 2: much less mobile. 753 00:39:15,960 --> 00:39:17,960 Speaker 1: I used the U haul thing. By the way you 754 00:39:18,080 --> 00:39:20,400 Speaker 1: haul light height always throws that out, and you know 755 00:39:20,480 --> 00:39:24,480 Speaker 1: that's a lay person like me, the U haul rental thing. 756 00:39:24,520 --> 00:39:27,120 Speaker 1: It's interesting to me, and it does seem I. 757 00:39:27,120 --> 00:39:28,440 Speaker 2: Should go look at that. I can't looked at that 758 00:39:28,480 --> 00:39:32,040 Speaker 2: in a while because I've been looking at this this crediphile. 759 00:39:32,120 --> 00:39:34,960 Speaker 1: Do you have better data please? Kind of it's really good. 760 00:39:35,160 --> 00:39:36,960 Speaker 3: You know, because I am kind of nerdy. I love 761 00:39:37,040 --> 00:39:40,279 Speaker 3: looking at that data. And you know, one of the 762 00:39:40,320 --> 00:39:43,279 Speaker 3: reasons why we're not moving as much is because just 763 00:39:43,560 --> 00:39:44,920 Speaker 3: raging when you get older. 764 00:39:44,960 --> 00:39:47,800 Speaker 2: You tend to move less when you're young, switching jobs. 765 00:39:47,600 --> 00:39:50,800 Speaker 1: And so we're just an aging population. That's one explanation. 766 00:39:51,080 --> 00:39:54,239 Speaker 3: Yeah, And the other is I think goes back to 767 00:39:54,239 --> 00:39:57,760 Speaker 3: the income and wealth distribution. If you're lower income, middle 768 00:39:57,840 --> 00:40:01,080 Speaker 3: income and you live in of the country that got 769 00:40:01,239 --> 00:40:05,080 Speaker 3: nailed with the loss of manufacturing, you know, the economy 770 00:40:05,160 --> 00:40:07,920 Speaker 3: is just not very dynamic. House prices have not risen 771 00:40:08,160 --> 00:40:11,279 Speaker 3: at all. They may have actually even declined in some 772 00:40:11,360 --> 00:40:14,160 Speaker 3: of those communities. You just can't you can't and then 773 00:40:14,200 --> 00:40:17,000 Speaker 3: you've seen the house prices rise. We're on the coast, and. 774 00:40:17,600 --> 00:40:18,879 Speaker 1: You can't afford to move. 775 00:40:19,040 --> 00:40:21,680 Speaker 2: You literally can't, literally can't afford to move. 776 00:40:21,800 --> 00:40:23,520 Speaker 3: There's just no possible way you're going to be able 777 00:40:23,560 --> 00:40:25,520 Speaker 3: to do that. So you're kind of stuck. Even if 778 00:40:25,520 --> 00:40:27,520 Speaker 3: you wanted to move to get that to that job 779 00:40:27,640 --> 00:40:28,959 Speaker 3: that's sitting in Miami. 780 00:40:28,800 --> 00:40:32,200 Speaker 2: Or wherever it is, you just can't do it. And 781 00:40:32,400 --> 00:40:34,080 Speaker 2: and that's really cut down the mobility. 782 00:40:34,360 --> 00:40:36,799 Speaker 3: I will say though, that's one of that has historically 783 00:40:37,000 --> 00:40:40,400 Speaker 3: been one of the unique characteristics of the US economy 784 00:40:40,719 --> 00:40:43,200 Speaker 3: compared to anywhere else in the world. You know, very 785 00:40:43,280 --> 00:40:46,560 Speaker 3: few exceptions to that. And it's that mobility that has 786 00:40:46,600 --> 00:40:49,359 Speaker 3: allowed the US economy to adjust to shocks, because, as 787 00:40:49,400 --> 00:40:51,160 Speaker 3: you say, if you lose a job over here, you 788 00:40:51,200 --> 00:40:53,359 Speaker 3: can pick up and move to take a job over there. 789 00:40:53,920 --> 00:40:54,560 Speaker 1: But that that. 790 00:40:54,719 --> 00:40:58,400 Speaker 3: Flexibility, it's still there. We're still much more flexible mobile 791 00:40:58,480 --> 00:41:01,200 Speaker 3: than let's say Europe or right, you know, other parts 792 00:41:01,239 --> 00:41:03,719 Speaker 3: of the Asia, other parts of the world, but much 793 00:41:03,880 --> 00:41:06,560 Speaker 3: less so. So we're not you know, we don't benefit 794 00:41:06,640 --> 00:41:09,120 Speaker 3: to the same degrees we did thirty forty fifty years 795 00:41:09,160 --> 00:41:11,440 Speaker 3: ago from that from that mobility. 796 00:41:11,160 --> 00:41:12,680 Speaker 1: All right, let me get you out of here on 797 00:41:13,040 --> 00:41:17,880 Speaker 1: on this which is is our how much is our 798 00:41:18,320 --> 00:41:21,879 Speaker 1: economy at risk due to domestic politics and how much 799 00:41:21,920 --> 00:41:24,800 Speaker 1: of it is with more global forces? 800 00:41:27,160 --> 00:41:29,320 Speaker 3: I'd say follows the above. 801 00:41:30,840 --> 00:41:33,920 Speaker 1: But you know, you know, I think it's clear you 802 00:41:34,000 --> 00:41:35,120 Speaker 1: can't really disentangle. 803 00:41:35,480 --> 00:41:38,279 Speaker 3: Yeah, I mean, look, I think it's pretty clear that 804 00:41:38,480 --> 00:41:42,400 Speaker 3: our politics are fractured, and you know, probably goes back to. 805 00:41:42,760 --> 00:41:47,719 Speaker 1: Was that worth a point of GDP? Probably a better 806 00:41:47,840 --> 00:41:52,240 Speaker 1: politics or a more functional political system, we probably would 807 00:41:52,239 --> 00:41:54,360 Speaker 1: have a healthier overall economy. 808 00:41:54,600 --> 00:41:56,080 Speaker 3: How could it not be the case? I mean, just 809 00:41:56,080 --> 00:41:58,359 Speaker 3: take a look at what's happening now with the government shutdown, right, 810 00:41:58,440 --> 00:42:00,239 Speaker 3: I mean, yeah, there's no upside do that. 811 00:42:00,320 --> 00:42:02,840 Speaker 2: There's nothing but downside, and it diminishes our. 812 00:42:03,239 --> 00:42:05,520 Speaker 1: Large I have no, there's nothing in the constitution that 813 00:42:05,600 --> 00:42:08,120 Speaker 1: says government has to shut down if there's appropriations dispute. 814 00:42:08,120 --> 00:42:11,360 Speaker 1: It tries me crazy that we've just decided collectively this 815 00:42:11,480 --> 00:42:12,279 Speaker 1: is how we should function. 816 00:42:12,600 --> 00:42:15,560 Speaker 3: Yeah, there you go. And then you know, but of 817 00:42:15,640 --> 00:42:18,960 Speaker 3: course that this goes to our ability to respond to 818 00:42:20,160 --> 00:42:23,320 Speaker 3: the challenges that we face, and there are many challenges 819 00:42:23,360 --> 00:42:27,120 Speaker 3: both domestic and you know, globally that what's going on globally. 820 00:42:27,160 --> 00:42:31,000 Speaker 3: There's a tremendous challenges there, and we can't address them 821 00:42:31,680 --> 00:42:34,360 Speaker 3: if we're as politically fractured as we are. So I 822 00:42:35,000 --> 00:42:38,480 Speaker 3: think that's you know, again, I want to say, it's 823 00:42:38,520 --> 00:42:40,680 Speaker 3: not a cliff event. I kind of think of there 824 00:42:40,719 --> 00:42:43,440 Speaker 3: are corrosives and there's cliff events. This is not a 825 00:42:43,480 --> 00:42:45,200 Speaker 3: cliff event. It's not like we're going to go off 826 00:42:45,280 --> 00:42:47,400 Speaker 3: the cliff here. But it's one of those things that 827 00:42:47,680 --> 00:42:51,680 Speaker 3: kind of undermines the economy's ability to grow a longer run. 828 00:42:52,400 --> 00:42:54,480 Speaker 3: And you know, you don't really feel it in a 829 00:42:54,560 --> 00:42:56,480 Speaker 3: given year, but when you look back over a decade 830 00:42:56,560 --> 00:42:58,920 Speaker 3: or two, you go, oh my gosh, you can see it. 831 00:42:59,080 --> 00:43:00,480 Speaker 2: You can see it, and you can feel well. 832 00:43:00,520 --> 00:43:02,840 Speaker 1: The reason I asked about the international versus the domestic. 833 00:43:02,880 --> 00:43:05,040 Speaker 1: I mean, look, I think we all understand the domestic, 834 00:43:05,080 --> 00:43:08,200 Speaker 1: but I look out of China. Is that a healthy 835 00:43:08,239 --> 00:43:11,400 Speaker 1: economy or not? If you thought employment is near twenty percent, 836 00:43:12,400 --> 00:43:13,560 Speaker 1: how's that a healthy economy? 837 00:43:13,600 --> 00:43:15,280 Speaker 2: Now they got their we got their own problems. 838 00:43:15,320 --> 00:43:18,600 Speaker 1: I mean, could that lead to contagion globally? I mean, 839 00:43:18,719 --> 00:43:21,319 Speaker 1: there's such a big economy, how could it not well? 840 00:43:23,880 --> 00:43:25,839 Speaker 3: I mean I think it's one of those things where 841 00:43:25,840 --> 00:43:28,319 Speaker 3: they can keep it together for an extended period, right. 842 00:43:28,280 --> 00:43:30,480 Speaker 1: I mean because of their system of government. 843 00:43:30,560 --> 00:43:33,000 Speaker 3: Their system of government, I mean, it's very autocratic. I 844 00:43:33,080 --> 00:43:38,080 Speaker 3: don't think it works well in terms of in terms 845 00:43:38,120 --> 00:43:41,239 Speaker 3: of long term economic growth, but they can keep things 846 00:43:41,320 --> 00:43:44,440 Speaker 3: going for a long time and you. 847 00:43:44,480 --> 00:43:46,520 Speaker 2: Know, paper over a lot of a lot of mistakes, 848 00:43:46,600 --> 00:43:48,200 Speaker 2: and you know that's what they're doing right now. 849 00:43:48,400 --> 00:43:52,200 Speaker 3: So you know, I'm not bullish on China long run, 850 00:43:52,320 --> 00:43:54,000 Speaker 3: but I'm not bearish in the near term. 851 00:43:54,040 --> 00:43:55,879 Speaker 2: I don't think that's something that's going to fall apart 852 00:43:55,920 --> 00:43:56,520 Speaker 2: anytime soon. 853 00:43:56,800 --> 00:43:58,600 Speaker 1: All Right, So if I have you back here after 854 00:43:58,640 --> 00:44:01,400 Speaker 1: the first of January, you think we're probably going to 855 00:44:01,440 --> 00:44:04,520 Speaker 1: be in the same levels of risk, more likely than not, 856 00:44:04,840 --> 00:44:08,040 Speaker 1: just sort of sitting in this same sort of elevated 857 00:44:08,239 --> 00:44:09,840 Speaker 1: but not there in a recession. 858 00:44:10,280 --> 00:44:12,399 Speaker 2: Yeah, I think that'll be the case, junk. 859 00:44:12,480 --> 00:44:15,160 Speaker 3: I mean, I do think that if we look out 860 00:44:15,200 --> 00:44:17,920 Speaker 3: a year from now towards the second half of next year, 861 00:44:18,160 --> 00:44:19,919 Speaker 3: you know, we might start to see a lift because 862 00:44:19,920 --> 00:44:21,840 Speaker 3: at that point we're on the other side of the tariffs, 863 00:44:21,920 --> 00:44:25,360 Speaker 3: the immigration policy, and you've got lower interest rates. The 864 00:44:25,400 --> 00:44:27,239 Speaker 3: FED is going to be cutting interest rates. And you 865 00:44:27,320 --> 00:44:29,760 Speaker 3: know there's a lot of fiscal so called fiscal stimulus 866 00:44:29,800 --> 00:44:30,279 Speaker 3: in that one. 867 00:44:30,239 --> 00:44:31,840 Speaker 2: Big beautiful bill that got passed. 868 00:44:32,200 --> 00:44:34,000 Speaker 3: You know, there's a lot of cutting, but that comes later, 869 00:44:34,239 --> 00:44:36,880 Speaker 3: you know, next year, telling the tax cuts and so 870 00:44:36,920 --> 00:44:38,720 Speaker 3: people are going to get bigger refund checks. 871 00:44:39,320 --> 00:44:42,400 Speaker 1: Good, So you think there could be another that in 872 00:44:42,520 --> 00:44:44,920 Speaker 1: some ways we maybe we might have a leaky, hot 873 00:44:44,960 --> 00:44:47,120 Speaker 1: air balloon, but there's gonna be more more air pumped 874 00:44:47,160 --> 00:44:47,360 Speaker 1: into it. 875 00:44:47,480 --> 00:44:49,520 Speaker 2: That's great, I think of putting it. Yeah, that's a 876 00:44:49,520 --> 00:44:51,880 Speaker 2: great metaphor. It's exactly what's going to happen. So, you know, 877 00:44:52,080 --> 00:44:54,000 Speaker 2: I think the economy is going to be most vulnerable 878 00:44:54,000 --> 00:44:55,200 Speaker 2: in the next six to nine months. 879 00:44:55,280 --> 00:44:58,080 Speaker 3: On the other side of that, then I think it'll 880 00:44:58,120 --> 00:45:01,240 Speaker 3: get some juice from the fiscal monetary stimul sets in train. 881 00:45:01,160 --> 00:45:04,360 Speaker 1: Here, all right, Mark Sany Always great to hear from you. 882 00:45:04,480 --> 00:45:07,000 Speaker 3: Yeah, thanks, Chuck, Thanks, thanks for all the wide ranging questions. 883 00:45:07,040 --> 00:45:07,840 Speaker 3: Always appreciate it. 884 00:45:08,000 --> 00:45:10,680 Speaker 1: Well, I you know, you you humor me well and 885 00:45:10,920 --> 00:45:13,279 Speaker 1: at the same time, you're pretty good about putting this 886 00:45:13,600 --> 00:45:16,680 Speaker 1: stuff in English, and I do. I mean there you go. 887 00:45:16,840 --> 00:45:19,319 Speaker 2: Pretty good, pretty good, Chuck, pretty good. 888 00:45:21,120 --> 00:45:24,520 Speaker 1: Well, you know you can't ever say great, right, right, 889 00:45:25,440 --> 00:45:27,960 Speaker 1: I never give five stars. Right, I'm a four point 890 00:45:28,080 --> 00:45:28,520 Speaker 1: nine guy. 891 00:45:28,640 --> 00:45:30,960 Speaker 2: Now I hear you. Thanks Mar,