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Speaker 1: Good news in the US economy.

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Speaker 2: It grew by an annual rate of nearly five percent

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Speaker 2: in the third quarter, beating expectations.

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Speaker 1: Well, that's a short clip.

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Speaker 2: Five percent is a high number, and that's why we

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Speaker 2: need to talk to a senior economic analyst, not a

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Speaker 2: junior economconomic analyst who wouldn't know a prime interest rate

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Speaker 2: if we walked in the room and slapped him in

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Speaker 2: the face. We're talking a senior economic analysts like Mark

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Speaker 2: Hamrick with who is the Washington Borough chief with bankrate

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Speaker 2: dot com. Mark, Welcome to the Armstrong in Getty Shaw.

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Speaker 1: Are you good to be with you, gentlemen?

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Speaker 3: Thanks for having me.

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Speaker 1: What are you dressing as for Halloween?

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Speaker 3: Oh? I can just go as myself. That scares plenty

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Speaker 3: of upol and it really saves money.

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Speaker 1: Right, So five percent quarterly growth is huge, isn't it?

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Speaker 3: For sure? This is annualized, So what we do is

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Speaker 3: take the number and multiply it by four to get

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Speaker 3: what it would be for the full year. But you know,

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Speaker 3: the long term trend is about one point eight or

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Speaker 3: two percent, So we were twice the growth rate of

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Speaker 3: the previous quarter and above the long term trend. But

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Speaker 3: you know, as I wrote in the note that I

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Speaker 3: shared with our friends sort of across the spectrum and

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Speaker 3: then LinkedIn and elsewhere, take a good look at that,

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Speaker 3: because you won't be seeing a number that high again

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Speaker 3: for a good while more likely.

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Speaker 2: Okay, so why is that? And I know the whole

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Speaker 2: raisin interest rates thing. The point to that is to

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Speaker 2: slow down the economy, to try to you know, stop inflation.

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Speaker 2: And then we're growing this fast. So yeah, what's going

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Speaker 2: on there?

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Speaker 3: Sure? Well, first of all, let's acknowledge and if we're

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Speaker 3: in a mood to celebrate the fact the economy has

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Speaker 3: proven more resilient and ultimately robust than most of would

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Speaker 3: have given that credit. And in our quarterly economy surveys

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Speaker 3: that we've been doing for many years, we go back

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Speaker 3: to the first quarter of last year twenty twenty two,

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Speaker 3: when they were starting to say collectively that the risk

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Speaker 3: of imminent recession we're elevated. And here we are in

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Speaker 3: the fourth quarter of twenty three and we don't have

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Speaker 3: a recession that is quantifiable occurring right now. So a

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Speaker 3: lot of things have been done to sort of get

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Speaker 3: us where we are, and there are a lot of

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Speaker 3: things being done to sort of unwind the parts of

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Speaker 3: that that can be unwound. As you know, there was

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Speaker 3: a lot of fiscal stimulus put into the system by

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Speaker 3: two congresses and two presidents in response to the pandemic.

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Speaker 3: We had interest rates at record low levels, not only

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Speaker 3: during the pandemic but for the broader part of the

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Speaker 3: previous fifteen years, sort of barely deviating from that in

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Speaker 3: between the pandemic and the Great Financial Crisis. And there

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Speaker 3: is some long term federal spending related to infrastructure, etc.

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Speaker 3: That are not making a huge difference, but do make

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Speaker 3: a difference on the margin. The other part is that

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Speaker 3: consumers really did accumulate more savings than they would have

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Speaker 3: had a tendency to do during the pandemic. Part of

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Speaker 3: that was forced, part of that was physical assistance in

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Speaker 3: the form of things like the child tax credit. And

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Speaker 3: as we've seen, there has been some component of revenge spending,

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Speaker 3: as witnessed by the would be fistfights that are occurring

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Speaker 3: on airlines at an airport, so.

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Speaker 1: All revenge spending.

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Speaker 2: So a lot of economics is you know, you're an

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Speaker 2: expert on this, but is you know, pretty hard numbers,

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Speaker 2: nuts and bolts, you get them. This many bushels of

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Speaker 2: corner this many, you know whatever, But a lot of

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Speaker 2: it is an emotion, especially when you get to the

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Speaker 2: consumer spending, which is two thirds of our economy. That's

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Speaker 2: just a motion, and so you think we had money

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Speaker 2: burning a hole in our pocket. My concern is what

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Speaker 2: the way these numbers don't fit together. Of course, on

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Speaker 2: the consumer spending is I'm not feeling wealthy, and nobody

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Speaker 2: I know is. And every time you go to the

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Speaker 2: grocery store, or go through a drive through at McDonald's,

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Speaker 2: or get gas or whatever, you're shocked by the price.

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Speaker 2: Yet we continue to spend. What's the psychology going on there?

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Speaker 3: Sure well you weren't alone in any of those places,

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Speaker 3: I'm guessing, so you have plenty of company. That's one thing.

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Speaker 3: The other part is inflation elevates the dollar adjusted or

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Speaker 3: measured amounts of spending just a loan. So if we

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Speaker 3: have inflation that's close to a four percent annual increase,

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Speaker 3: that helps to get you some of the increase. But

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Speaker 3: the pointing has been up on an inflation adjusted basis

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Speaker 3: as well. So what I would say is, and I

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Speaker 3: think that's a very good point you're making that you

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Speaker 3: know we are not all go sort of an ancient

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Speaker 3: cultural reference or pop culture reference here. We're not all

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Speaker 3: mister Spock, right, We're not all acting only with logic

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Speaker 3: and so, and you know, the experts in psychology would

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Speaker 3: tell us that most of the decisions we make are

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Speaker 3: actually sort of emotionally based and not sort of you know,

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Speaker 3: using the avacus to figure it out. So I do

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Speaker 3: think that there's a big part of that absolutely, and

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Speaker 3: it's not sustainable at its current pace. I think that's

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Speaker 3: the most important part of it.

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Speaker 2: Well, and in the economy, can't count on a Taylor

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Speaker 2: Swift concert every summer.

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Speaker 3: Either, That's right. Absolutely.

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Speaker 2: I'm a out of concern is with the consumer spending

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Speaker 2: because I just had this thing in front of me,

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Speaker 2: the number of people, it's a high number of people

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Speaker 2: that are dipping into their four to one k's for

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Speaker 2: emergency spending or putting it on credit cards. How much

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Speaker 2: of the consumer spending is stuff we really shouldn't be spending.

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Speaker 3: Well, what I would I would sort of reverse engineer

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Speaker 3: that and say that, you know, we survey on these

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Speaker 3: sorts of issues at bank rate over the years all

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Speaker 3: the time, and the reality is that most Americans are

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Speaker 3: living paycheck to paycheck, if they were not spending on

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Speaker 3: all those things and they had some cushion and their finances,

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Speaker 3: which you believe a good number of people do, they

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Speaker 3: could be channeling that money to not only emergency savings,

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Speaker 3: but two retirement savings. And one of the more recent

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Speaker 3: surveys we did indicated that the majority of Americans feel

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Speaker 3: that they are behind on their retirement savings and perhaps

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Speaker 3: no surprise, those who are more senior ie realizing they

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Speaker 3: might actually get to a retirement phase or the risk

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Speaker 3: is there, are feeling that more acutely. So what you know,

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Speaker 3: the other part is, you know, we've been talking lately

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Speaker 3: and I don't know if you guys have heard this phrase,

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Speaker 3: but it's come up in some of the discussions that

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Speaker 3: people have sort of come to us about. And we'll

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Speaker 3: see whether it has any stickiness or residence. And that

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Speaker 3: is a concept that's being referred to as soft saving

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Speaker 3: or savings, and this is an idea that it's being

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Speaker 3: associated with sort of the youngest cohort er age group

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Speaker 3: that sort of adults and that is eighteen to twenty

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Speaker 3: six gen z. And what they're sort of being associated

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Speaker 3: with is an idea that essentially, you should try to

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Speaker 3: live for today and not think the career is the

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Speaker 3: be all end all.

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Speaker 1: Yeah, thanks thanks hire late News.

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Speaker 2: Yeah, well, I think there are ancient fables about that

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Speaker 2: attitude and how well it works out.

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Speaker 3: Well. I mean, you know, ballance is important, right, and

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Speaker 3: I think many of us were reminded about the importance

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Speaker 3: of that when we were sort of grappling with life

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Speaker 3: death issues during the pandemic. And it's also relevant in

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Speaker 3: the discussion of people demanding more from their employers. That

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Speaker 3: isn't just about compensation. That it's about, you know, can

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Speaker 3: there be some flexibility if that kind of work allows it,

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Speaker 3: and you know, four day work weeks and remote work,

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Speaker 3: hybrid work. But you know what I would say is

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Speaker 3: that to bring it back around to the GDP question,

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Speaker 3: we are fortunate that we're still looking at at unemployment

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Speaker 3: rate of three point eight percent, and we'll get an

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Speaker 3: update on this next Friday. That is remarkably close to

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Speaker 3: the historical low three point four percent we had in April,

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Speaker 3: that was a fifty three year low. People can logically

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Speaker 3: or appropriately debate, you know, the quality of all those

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Speaker 3: jobs and the statistics that also point out that there

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Speaker 3: are millions of Americans working part time that would like

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Speaker 3: to have full time work, millions of Americans who would

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Speaker 3: like to have a job but are not looking for one.

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Speaker 3: Those are you know, those are issues that are worthy

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Speaker 3: of consideration as well. But the reality is the unemployment

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Speaker 3: rate is low. We are not in a recession as

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Speaker 3: it's as it's defined by those who define such things.

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Speaker 3: But that doesn't mean that just because the sun is

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Speaker 3: shining today that there won't be rain on down the road,

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Speaker 3: and so we should be trying to prioritize our emergency

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Speaker 3: savings paying down debt when credit card debt is at

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Speaker 3: the highest level we've ever seen it.

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Speaker 1: Hey, Rock Chuck Jayhawk. I see you went to the

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Speaker 1: University of Kansas.

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Speaker 3: Yeah, thank you, Kanson. Even though I'm in Maryland.

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Speaker 1: Where in Kansas are you from? I'm a native Kansas myself.

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Speaker 3: Well, my dad was a newspaper editor and took us

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Speaker 3: to a little town on the Camp Oklahoma border called Coffeeville.

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Speaker 1: I know it.

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Speaker 2: I'm from a little town in southwest Kansas called Scott City.

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Speaker 1: So I'm from the middle of nowhere Kansas myself.

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Speaker 3: I love it.

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Speaker 2: So the first thing you said before we let you go,

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Speaker 2: and we're talking with Omark Hamrick, who is a senior

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Speaker 2: economic analysis with analysts with bankrate dot Com. We're not

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Speaker 2: going to see these kind of numbers anytime again soon.

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Speaker 1: Why is that.

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Speaker 3: Just so many things in the transom here that are

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Speaker 3: arguing against it, not the least of which is the

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Speaker 3: Federal Reserve is vowing to keep interest rates high for longer,

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Speaker 3: having really had an unprecedented in our lifetime tightening cycle

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Speaker 3: going back to March of last year. We'll have a

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Speaker 3: FED meeting next Wednesday. I'll be attending and we'll hear

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Speaker 3: from Chairman Powell at that moment about the future direction.

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Speaker 3: But the Fed shows no intention of reducing interest rates

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Speaker 3: anytime soon. Now, if there were, you know, an absolute

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Speaker 3: slow down in the economy, they'd be looking at that.

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Speaker 3: But we just had a refresher today on the Fed's

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Speaker 3: own preferred gauge of inflation, and that's well above their

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Speaker 3: target of two percent. So they may feel that they

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Speaker 3: can leave rates where they are, and that's still having

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Speaker 3: a restrictive impact on the economy. And the other part is,

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Speaker 3: you know, rates are sort of determined two ways. One

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Speaker 3: is through the Federal Reserve and other central banks and

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Speaker 3: the other in the financial markets. And so we look

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Speaker 3: at things like treasury yields, which might seem very wonky

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Speaker 3: and maybe irrelevant, but actually they're incredibly relevant because they

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Speaker 3: help to determine the ability or the willingness on the

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Speaker 3: part of investors to send stock prices higher. And we

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Speaker 3: know that stocks have been under some pressure of late

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Speaker 3: because of those rising yields. And those rising yields also

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Speaker 3: are determinedive of what happens with mortgage rates, and we

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Speaker 3: see mortgage rates averaging a thirty year fixed about eight

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Speaker 3: percent right now, which is the highest sense two thousand.

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Speaker 3: So the housing market looks to be sort of headed

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Speaker 3: for another recession like experience here, because you're talking about

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Speaker 3: a monthly payment on a mortgage that would be essentially

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Speaker 3: one thousand dollars a month more than it would have

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Speaker 3: been just about two plus years ago.

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Speaker 1: That's a stunning statistic.

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Speaker 3: Yeah yeah, yeah yeah. And that's a four hundred thousand dollars.

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Speaker 3: So in terms of you know, a lot of places

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Speaker 3: in the country, you'd be lucky to find a.

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Speaker 2: Four hundred, right like the Bay area of California. Hey,

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Speaker 2: we appreciate your time. Enjoyed that and from from from

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Speaker 2: Cannes and to kNs and thank thanks for coming on today.

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Speaker 1: Appreciate it my great pleasure.

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Speaker 3: Enjoyed a great deal and we'll look forward to connecting

222
00:11:35,360 --> 00:11:36,160
Speaker 3: again down the road.

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Speaker 1: All about you bet thanks he getting