Speaker 1: I was just saying to Joe, I'm annoyed that we
Speaker 1: didn't go to the Freight Rate Waves conference this year
Speaker 1: because they had a puppy playpen just like a bunch
Speaker 1: of puppies at this conference. And we went last year
Speaker 1: and they did not have puppies.
Speaker 2: Yeah, we had some like work thing, the one there's
Speaker 2: a board build or board group that's over an international square,
Speaker 2: which is not like in the FED complex. And they did.
Speaker 2: They had a day where they had all this stuff
Speaker 2: for the people in the building, and when was a
Speaker 2: puppy play pen.
Speaker 3: So this is a new thing adult to need, like
Speaker 3: puppy play pens at events.
Speaker 1: To be sorry, why not wait the food trucks and
Speaker 1: puppies preferably ones that are up for adoption, you know,
Speaker 1: from animal shelters, and you have the complete the ideal conference,
Speaker 1: in my opinion.
Speaker 3: I did a deadlift one, two, three, Jimmy Okay, up barges.
Speaker 3: This isn't after school special except.
Speaker 1: I've decided I'm going to base my entire personality going
Speaker 1: forward on painting for a strategic pork reserve in the US.
Speaker 3: Where's the best with imposta?
Speaker 1: These are the important question.
Speaker 2: Is it robots taking over the world.
Speaker 3: No, I think that like in a couple of years,
Speaker 3: the AI will do a really good job of making
Speaker 3: the out launch podcast.
Speaker 2: And people say, I don't really need to listen to
Speaker 2: Joe and Tracy anymore. We do have the perfect.
Speaker 1: Well in the meantime, this is lots more.
Speaker 3: A weekly chat about whatever is on our minds.
Speaker 1: We are speaking with Claudia Palm, the former Fed economist
Speaker 1: who now has her own consultancy, Psalm Consulting. Claudia, it's
Speaker 1: good to talk again. It's been a while.
Speaker 2: Yeah, no, it's great to be on. I really appreciate it.
Speaker 1: I have a really important question, which is do you
Speaker 1: get tired of having to convince people that you do,
Speaker 1: in fact know how the Psalm rule actually works, the
Speaker 1: rule that's named after you.
Speaker 2: Yeah. No, men are fascinating. I agree. It's it's interesting.
Speaker 2: I have people that ask me like they can't quite
Speaker 2: you know, match it, so they email me very politely,
Speaker 2: we you know, because it like details matter, right, exactly
Speaker 2: what average you're taking and stuff. But the people who
Speaker 2: try to explain to me that I've calculated it wrong,
Speaker 2: it's like, and then get really not happy with me
Speaker 2: when I don't agree with them and just anyways, So
Speaker 2: that's I guess just part of I mean, I'm glad
Speaker 2: they're touching data. They clearly don't know what to do
Speaker 2: with it, but it's good.
Speaker 3: Can we run a Bloomberg headline some call and men
Speaker 3: are fascinating?
Speaker 1: I think that that could be one.
Speaker 3: Of those Bloomberg red headlines. I think that goes across
Speaker 3: the wire when this comes out.
Speaker 2: Yeah, you should ask my editor Bob Burgess a Bloomberg
Speaker 2: opinion if I can write that piece. I'm not sure
Speaker 2: how green light that one.
Speaker 1: I thought we could get that commission.
Speaker 3: Maybe you know, a lot of our listeners started listening
Speaker 3: to us in sort of like twenty twenty, the pandemic era.
Speaker 3: But we've we had called it you on I think
Speaker 3: in January or February twenty twenty before COVID hit, just
Speaker 3: sort of talking theoretically about this idea of okay, what
Speaker 3: are these indicators of recession, et cetera. And then it
Speaker 3: was literally six weeks later and we're like, oh, well,
Speaker 3: we were talking about theoretically six weeks ago, and now
Speaker 3: we have to talk about real So here we are.
Speaker 3: I don't think we've had you I don't think we've
Speaker 3: chatted with you since then, though.
Speaker 2: Yeah, no, I show up when the world is creening
Speaker 2: towards the cliff, so I you know, I'm happy to
Speaker 2: be helpful, and you know we can do good policy,
Speaker 2: we can do it better. And yet it is not
Speaker 2: cheerful when I start getting press calls, lots of press calls.
Speaker 1: I remember, though, that was actually an incredibly prescient conversation
Speaker 1: in many ways because we did talk about the Psalm rule,
Speaker 1: and we should maybe mention on this podcast what exactly
Speaker 1: it is. But the whole idea of the Psalm rule
Speaker 1: was that it would be an early indicator of recession,
Speaker 1: so that policy makers would be able to actually start
Speaker 1: doing something about, you know, impending a contraction. And I
Speaker 1: think people kind of forget about that now.
Speaker 2: Right, Like you said, this is a recession indicator, so
Speaker 2: it doesn't forecast a recession, but very early in a recession,
Speaker 2: way before like the NBER would call the recession, way
Speaker 2: before we'd even have a lot of information on GDP.
Speaker 2: This unemployment rate should tell us we're in a recession.
Speaker 2: Let's get going, right, And there are certain things that
Speaker 2: Congress does in almost every recession, though, I'm not holding
Speaker 2: my breath if one comes soon with sending out stimulus checks,
Speaker 2: enhancing unemployment benefits, maybe getting money to communities. So just
Speaker 2: tie it to an economic indicator. I think the other
Speaker 2: thing that's important with the stimulus checks, which should be
Speaker 2: a lesson from this last cycle, is you can ahead
Speaker 2: of time determine how big should they be, who should
Speaker 2: they go to, and if we should repeat them, right,
Speaker 2: and how big they should be if you repeated them,
Speaker 2: because you can absolutely see the politics that got wrapped
Speaker 2: into the stimulus checks and not a lot of guidance
Speaker 2: right in terms of exactly when should we do it,
Speaker 2: how much should we do it after the initial response.
Speaker 2: So yes, I think taking the politics out of the
Speaker 2: things we are always do and then let Congress focus
Speaker 2: on what's new in that recession.
Speaker 1: Yeah, so speaking of what's new and kind of going
Speaker 1: back to the men are fascinating topic. But I think
Speaker 1: one of the controversies with the discussion around the SAM
Speaker 1: rule right now is you've said that you know, in
Speaker 1: some respects this is kind of a backward looking empirical measure.
Speaker 1: So the Sam rule has happened for previous recessions, but
Speaker 1: that doesn't necessarily mean that it's going to happen this
Speaker 1: time around. And I saw one guy on Twitter slash
Speaker 1: x who just was furious that you were sort of
Speaker 1: like doubting your own rule. And it was just hilarious
Speaker 1: to me because you know, who knows better about the
Speaker 1: limitations or the possibilities of this particular theory than its
Speaker 1: actual creator. And yet this guy was like, I don't
Speaker 1: understand why you're not into your own rule? Why would
Speaker 1: you doubt it?
Speaker 2: Yeah? No, I had someone last night told me I
Speaker 2: was having an identity crisis and someone else, I mean,
Speaker 2: And I've gotten emails, I think well intentioned ones of
Speaker 2: like you're being too self deprecating and you're you know,
Speaker 2: and it's like, no, no, no, see, I'm just I'm
Speaker 2: being honest here, right. This is an empirical regularity. It's
Speaker 2: a pattern that's true of every single model, every single
Speaker 2: indicator forecast that we have in macroeconomics. They're all trained
Speaker 2: on the past, and this present has been really unlike
Speaker 2: the past.
Speaker 3: Oh yeah, it's a I mean that makes a ton
Speaker 3: of sense, right, All these different models have broken apart
Speaker 3: this current cycle almost like nothing else that we've seen.
Speaker 3: So it's good to have some humility about whether things
Speaker 3: that empirically seem to be true in the past. Well,
Speaker 3: what do you since you said, you know, when your
Speaker 3: phone is ringing off the hook, that's usually a sign
Speaker 3: of maybe things are going wrong. And it does happen
Speaker 3: to be true that the unemployment rate has ticked up
Speaker 3: two three point nine percent. Earlier in the year it
Speaker 3: was three point four percent. Three point nine percent happens
Speaker 3: to be the highest since January twenty twenty two. So
Speaker 3: it's obviously called people's attention. It's not necessarily recession indicate
Speaker 3: recession sign yet, but it's real. What don't you, just
Speaker 3: for the sake of listeners, et cetera, situate the current
Speaker 3: unemployment trajectory within the context of your rule.
Speaker 2: Okay, so I guess, just so we don't dance around,
Speaker 2: what is this rule? Yeah?
Speaker 3: Yeah, what's the oil and where are we right now?
Speaker 2: Yeah? So we take the monthly unemployment rate. We take
Speaker 2: a three month moving average. I mean, if you look
Speaker 2: at the data, things bounce around. Even the unemployment rate,
Speaker 2: it's pretty well measured, it bounces around. So you take
Speaker 2: three month average, you compare in that series, you compare
Speaker 2: the current data point with the lowest over the prior
Speaker 2: twelve months. If you see an increase of a half
Speaker 2: a percentage point or more, we are in the early
Speaker 2: months of a recession. That indicator, the Samb rule, has
Speaker 2: been highly accurate since the nineteen seventies. It's triggered in
Speaker 2: every recession. It is not triggered outside of any recession.
Speaker 2: You go back to World War Two. It's really pretty good.
Speaker 2: There are some places where it does trigger outside of
Speaker 2: a recession. And as you said, the unemployment rate has
Speaker 2: been rising. If you look, you do not need my
Speaker 2: rule to tell you it has been rising. You know,
Speaker 2: since the middle of the year. The Psalm rule is
Speaker 2: currently at three tenths, so it is short of its trigger.
Speaker 2: That three tenths is not It is not a good sign,
Speaker 2: right like, there are more people out of jobs that
Speaker 2: are looking for jobs, and it's often it does go
Speaker 2: into a recession once the unemployment but not always, right like,
Speaker 2: this is not we're not in the we're over the
Speaker 2: cliff stage of this. But if you look just at
Speaker 2: the monthly unemployment rates, they're up a half a percentage point.
Speaker 2: So I do a lot of education about the Psalm rule,
Speaker 2: right like, people get the half a percentage point trigger
Speaker 2: in their head, but like that's not for this rule, right,
Speaker 2: Like and it is, like I said, this is not
Speaker 2: a good sign. One of the things that has frustrated
Speaker 2: me both with the inflation debate and now what I'm
Speaker 2: seeing with unemployment is we got to look under the
Speaker 2: hood here, like why are things moving around the way
Speaker 2: they are? And it's the case that we finally in
Speaker 2: the labor market, have really seen the supply of workers,
Speaker 2: you know, the people that want jobs coming back. And
Speaker 2: at the same time, we've seen the pace of hiring
Speaker 2: slow down. The job games we're seeing every month slow down.
Speaker 2: They're still good, but we're in this space of now
Speaker 2: we've got more workers and the jobs have to catch
Speaker 2: up with them, Whereas when we were in labor shortage world,
Speaker 2: it was turned around. We had all these jobs and
Speaker 2: the workers had to catch up. So to me, it's
Speaker 2: like that's the story because otherwise, like if this were
Speaker 2: a demand driven recession, a demand or a demand driven recovery,
Speaker 2: a demand driven inflation, then the logic of once the
Speaker 2: unemployment rate gets going, it keeps going, right, You've got
Speaker 2: to have you got to have a story here, and
Speaker 2: one that is grounded in reality. Those are the best stories,
Speaker 2: at least if you do macro.
Speaker 3: Speaking of macro, Tracy, you and I we went to
Speaker 3: separate parties last night. We went to separate events.
Speaker 1: Yes, you abandoned me again the second you're supposed to
Speaker 1: come with me, and then you're like, oh oops, I
Speaker 1: r s VP for something else.
Speaker 3: I double book.
Speaker 1: I'm sensing a pattern here of ditching Tracy.
Speaker 3: No, but this came up, and so I was at
Speaker 3: this sort of cocktail thing that Rick Plosius and previous
Speaker 3: lots more guests, Neil Dunna read, and some of this
Speaker 3: question came up about Okay, the rise in the unemployment rate,
Speaker 3: how much how much is this due to weakening demand
Speaker 3: for labor versus how much is this due to increase
Speaker 3: supply of labor people coming off the sideline. The one
Speaker 3: thing that seems to be true, as he pointed out,
Speaker 3: and I thought this was sort of a good thing
Speaker 3: to think about, is that either one of the stories,
Speaker 3: whether it's about slowing demand for labor increased supply, probably
Speaker 3: going to depress the state of wage growth, which is,
Speaker 3: if you're the fed, probably something you want to see.
Speaker 3: Regardless in part of feeling confident that the inflation problem
Speaker 3: is getting close to being solved.
Speaker 1: Wait, just going back to reality. I actually have a
Speaker 1: personal anecdote on this, which is my mother retired during
Speaker 1: COVID and she is now unretired really and she's back
Speaker 1: in the workforce as of about a month ago.
Speaker 3: When is she coming out that lot? Why did she? Yeah,
Speaker 3: we gotta get this story then.
Speaker 1: Wait, Claudia, can I ask did you see this morning?
Speaker 1: So Brent Donnelly, another All Thoughts guest, he published a
Speaker 1: sort of modified PSALM rule that was based on initial
Speaker 1: claims instead of the unemployment rate, and it looked kind
Speaker 1: of interesting. I don't know if you've had a chance
Speaker 1: to look at it yet.
Speaker 2: Yeah. Branda actually sent me his piece ahead of time
Speaker 2: to make sure he was characterizing this SAM rule correctly.
Speaker 2: Oh night, So some men are smart about how they
Speaker 2: do this. So yeah, so I got a preview of
Speaker 2: the piece. It's really interesting. This the context of the
Speaker 2: same rules. It was designed as we were talking about
Speaker 2: for the automatic stablers and the fiscal policy. It needed
Speaker 2: to be simple like this. It's supposed to be like
Speaker 2: in legislation. It's something everyone follows, and it's a well
Speaker 2: measured kind of stable creature. Right, So I never thought
Speaker 2: I was gonna get in the business of are we
Speaker 2: in a recession? I was supposed to be about now
Speaker 2: we help people, right, So in any case, I'm happy
Speaker 2: to be useful as I can. So I've always said
Speaker 2: it's it's entirely possible that you end up with there
Speaker 2: are better indicators of recessions, and better in the sense
Speaker 2: that I mean, mine is highly accurate, but it better
Speaker 2: would be like signaling, and even sooner. The SAM usually triggers,
Speaker 2: you know, two to three months inside of a recession.
Speaker 2: You could nail it right on day one. Be super claims.
Speaker 2: We get claims weekly. It's faster moving. I never looked
Speaker 2: at claims I have, I mean, having been at the
Speaker 2: FED and following data all these kind of data before
Speaker 2: I left claims. I just don't feel comfortable using a
Speaker 2: data series where actually deer season can cause strange aberrations
Speaker 2: and the data to the point Department of Labor has
Speaker 2: to publish that like in the little header.
Speaker 3: Oh my god, so this is people what taking off
Speaker 3: time from I did not.
Speaker 2: Yeah, you're more often you'll see like plant closures like
Speaker 2: regular like in the auto industry. There's regular closures at
Speaker 2: certain times the year to do maintenance. So that's a
Speaker 2: more typical one to show in the headline. But years
Speaker 2: ago when I was at the FED, there was one
Speaker 2: on deer season in Michigan because it you know, these
Speaker 2: are monthly things, but it's extremely timely. It's something absolutely
Speaker 2: to Faull like, I keep an eye on. I mean,
Speaker 2: came out today, right, you know, and it does tell
Speaker 2: us something, so I wasn't. And I've had other friends
Speaker 2: who have, you know, push claims as a way to
Speaker 2: do this. I think that's fine. It makes a lot
Speaker 2: of sense to me, you know, in the forecasting. I mean, heck,
Speaker 2: if we still use the yield curve to say anything
Speaker 2: about a recession coming, I would feel much more comfortable
Speaker 2: at having something claims in, you know, in the labor
Speaker 2: market space, just because you know, I said, like, the
Speaker 2: labor market is so central to this recovery, any recovery.
Speaker 2: It's been really strong. Most Americans spend their paychecks as
Speaker 2: long as they still have jobs, they're still out there spending.
Speaker 2: If they're unable to spend, like we're done, right, there's
Speaker 2: seventy percent of the economy, so you have this change.
Speaker 2: So to me, thinking about anything tied to the labor
Speaker 2: market as an early indicator, it makes so much sense.
Speaker 3: The other thing that I find to be very powerful
Speaker 3: about this idea and the importance of trying to capture
Speaker 3: something that happens early in the recession is that one
Speaker 3: thing that you just see and Alex Williams over at
Speaker 3: Employee America has talked about the as well, and obviously
Speaker 3: it informs some of the core logic of what we're
Speaker 3: working on. Is once it gets going, the rise and
Speaker 3: the unemployment rate, it really gets moving. And so maybe
Speaker 3: three in the three point three, three point nine percent,
Speaker 3: it's a you know, it's still a blow four percent
Speaker 3: that's really good, but historically, like once it gets going,
Speaker 3: you know, you'd expect it to seriously, if the recession
Speaker 3: starts to snowball, it could go to six or seven
Speaker 3: percent very fast or in a fairly short period of time.
Speaker 3: And so the idea, I guess, you know, in the
Speaker 3: dream world of rules based fiscal automatic stabilizers, that seems
Speaker 3: like the process that you really want a short circuit.
Speaker 2: Yeah no, and I mean over in the monetary policy
Speaker 2: side too, yeah right, and they I mean they you know,
Speaker 2: at the FED, getting ahead of it would be more
Speaker 2: would be ideal, not waiting until we're in it. And
Speaker 2: to your point, the you know, looking at the kind
Speaker 2: of recent set, like since the seventies of recessions, the
Speaker 2: mildest one for two thousand and one, you saw two
Speaker 2: percentage point increase in the unemployment or two percentage point
Speaker 2: increase the unmployment rates. That would put us well above
Speaker 2: five and the typical increase is more like four percentage
Speaker 2: points or close to four. So yeah, I mean, if
Speaker 2: anything you can do to show well, if you can
Speaker 2: short circuit the cycle, that's amazing. If you can tamp
Speaker 2: it down right, and the sooner you get out relief,
Speaker 2: whether it's from the FED or from Congress, the better
Speaker 2: chance you have at softening the blow, decreasing the hardship,
Speaker 2: and like making this not one of the bad ones.
Speaker 1: Can I get your view on something as an economist
Speaker 1: and someone who is sort of dealing with data on
Speaker 1: a day to data basis, I have this pet theory
Speaker 1: and I'm kind of in early stages of actually seeing
Speaker 1: if it's true or not. This is the way journalism works,
Speaker 1: but it's intuitively attractive to me, but the idea is
Speaker 1: that a lot of the economic data that we have now,
Speaker 1: which is you know, de facto aggregate, isn't as informative
Speaker 1: because the sort of distribution within those indices is a
Speaker 1: lot more extreme, maybe than it used to be. So
Speaker 1: a classic example would be if you look at the
Speaker 1: Michigan Survey of Consumer sentiment, you look at the aggregate number,
Speaker 1: but of course if you break it down by Republicans
Speaker 1: or Democrats, they're going in almost completely opposite directions. And
Speaker 1: I have a feeling that that might be the case
Speaker 1: for a lot of different things right now, but I
Speaker 1: haven't actually started breaking down the data to see if
Speaker 1: it's true or not. So I guess my question is, like,
Speaker 1: how reliable are a lot of these aggregate figures at
Speaker 1: the moment or is there really a diff difference in
Speaker 1: the way we're measuring the economy or the suitability of
Speaker 1: economic data for the post COVID economy versus how we
Speaker 1: were doing things before.
Speaker 2: Right You're you're absolutely onto something, and it goes in
Speaker 2: the category of know thy data, like who is in
Speaker 2: this and how are we measuring? So something like the
Speaker 2: unemployment rate or the Michigan Survey Sentiment which I'm a
Speaker 2: huge fan of too. Every single person counts the same, right,
Speaker 2: Like these are take all of the people that are surveyed,
Speaker 2: take an average, and you get more. You can get
Speaker 2: more detail, whether it's in the household survey that goes
Speaker 2: into the unemployment rate or the Michigan survey that's got
Speaker 2: individual respondents, right, so you can do a lot and
Speaker 2: they're everybody, everybody is equal. If you go into something
Speaker 2: like GDP inflation consumer spending, there, we don't all count
Speaker 2: the same, right, Like even with inflation, which I think
Speaker 2: that's one where people kind of miss this one more.
Speaker 2: Inflation is like what is the price of the shopping
Speaker 2: cart this month versus last month? Some people put a
Speaker 2: lot more into the US shopping cart than others. Right.
Speaker 2: So they're represented now, thankfully. And this has been because
Speaker 2: the concern that you raised is one that's out there, right,
Speaker 2: Like for years when I was at the FED, because
Speaker 2: I worked on consumer spending, it's like, okay, let's think
Speaker 2: about the distributions. And there were times where some patterns
Speaker 2: were not holding up, and inequality on what looked like
Speaker 2: it could have been doing something like the wealth effect
Speaker 2: has really moved around in strange ways, not strange necessarily,
Speaker 2: but so there's an awareness of this, and I give
Speaker 2: huge kudos to some of the official statistical agencies and
Speaker 2: that we have so much more data on the distribution.
Speaker 2: All of my academic style research is using household micro data,
Speaker 2: but I'm always using it to answer macro questions. So
Speaker 2: I'm a big fan of taking the micro up to
Speaker 2: the macro and the macro down to the micro like
Speaker 2: in terms of conversations, and there's a lot more data
Speaker 2: like that. I'll give you a shout out to the
Speaker 2: FED because it's one of my favorite data says to
Speaker 2: go look at. For a long time, they've published the
Speaker 2: financial Accounts or what was called the Flow of funds
Speaker 2: before that had all these different pieces of wealth in
Speaker 2: the economy quarterly, and now they also published the distributional
Speaker 2: financial accounts. They use the Survey of Consumer Finances, which
Speaker 2: is the household survey to split apart, quarter by quarter
Speaker 2: on the household side, who's got this wealth, And it's
Speaker 2: absolutely fascinating and it's one where you can see these
Speaker 2: distributions and how much they've expanded. I mean, the reality
Speaker 2: is the United States has been a very unequal country
Speaker 2: for quite some time, but you do have to think
Speaker 2: about when you're doing the macro, how things could be
Speaker 2: spreading out and leading you astray. And yet you can
Speaker 2: look out at the recovery. Now I've had a lot
Speaker 2: of people will be like, oh, this is just the
Speaker 2: rich and the poor. It's like, no, no, no, See
Speaker 2: this has been good, not for every single person, but
Speaker 2: up and down the distributed, like this is not normal
Speaker 2: for a recovery in terms of how much people you know,
Speaker 2: bottom half of the income distribution, like they're in a
Speaker 2: better place than they were going into COVID. Yeah.
Speaker 1: Actually, just on that note, and this kind of goes
Speaker 1: against my very half formed thesis at the moment, but
Speaker 1: I think there was a paper from the Boston Fed
Speaker 1: that looked at excess savings or just personal savings post
Speaker 1: COVID to see whether or not a, you know, savings
Speaker 1: were coming down, but b whether or not lower income
Speaker 1: households were burning through their savings faster than wealthier households.
Speaker 1: And they found that I think it was pretty much
Speaker 1: even keel like everyone was kind of reducing their savings
Speaker 1: at the same rate, which was somewhat surprising to me
Speaker 1: but kind of speaks to your point about how kind
Speaker 1: of unusual this recovery has been in that it has
Speaker 1: benefited lower income households. I don't want to say as
Speaker 1: much as wealthier households, but like you have seen that.
Speaker 2: Effect absolutely, I mean in an unprecedented way, and it's
Speaker 2: very heartening right to see this now. I okay, so
Speaker 2: I understand the exercise. I have found excess savings to
Speaker 2: be somewhat defensive. But it's bothered me because, first of all,
Speaker 2: just the I'm very big on labels, which is not
Speaker 2: normal for a macro economist, but it's like excess savings,
Speaker 2: especially when talk about bottom It's like, you know what,
Speaker 2: if I had to pick who's got the excess, it
Speaker 2: would not be at the bottom, right, Like, what is
Speaker 2: the definition of excess savings?
Speaker 1: I've never actually thought about it, but like what determines
Speaker 1: the excess?
Speaker 3: I'm glad you say this, Claudia, I've I've never understood this,
Speaker 3: so I'm curious you're answer to this question.
Speaker 2: Yeah, So how people define the reference point? Very some
Speaker 2: across the research paper. It's usually something in the space
Speaker 2: of what was the wealth before the savings before COVID
Speaker 2: and here's savings is usually like what's in your checking account?
Speaker 2: What's a mutual fight? Like things you could get too quickly. Okay,
Speaker 2: So some people it's like more of a just before COVID.
Speaker 2: Most of the time it's like some trend, right, like
Speaker 2: how savings was growing, you know, because it was with
Speaker 2: income and whatever. Anyway, so they've got this kind of
Speaker 2: trend line and it's simply comparing, Okay, how much savings
Speaker 2: do these groups have relative to where we would have
Speaker 2: thought if COVID had never happened, right, And so what's
Speaker 2: been fascinating this Later everybody's got an estimate this thing
Speaker 2: that you know, oh there's more, there's more. And I
Speaker 2: can remember having a conversation this was twenty one or
Speaker 2: maybe early twenty two, where everybody, even the administration, was
Speaker 2: talking about, well, when the excess savings is gone, the
Speaker 2: inflation will come down. And I'm just like, this is
Speaker 2: not something to wish for here in terms of the savings.
Speaker 2: You want people to have a buffer. And I was
Speaker 2: talking with one macroeconomist and this just shows some of
Speaker 2: the biases of my tribe. Was just shocked that the
Speaker 2: savings was still there, because in most of our models,
Speaker 2: people who don't have wealth. The way we model that
Speaker 2: is they have no impulse control. They're not patient. And
Speaker 2: I was telling this person to say, you know, maybe
Speaker 2: they just don't have income to save like most people
Speaker 2: want to. It's hard to.
Speaker 1: Save if you don't actually have any money.
Speaker 2: Yeah, and so that's what because I think what comes
Speaker 2: what's missing a lot of these excess savings. It's not
Speaker 2: just those stimulus checks we got years ago. Isn't like
Speaker 2: the paychecks are bigger.
Speaker 3: Yeah. It's so interesting because I guess people moralize savings
Speaker 3: so much, right, this is what this idea of, Oh,
Speaker 3: it's lack of impulse control. If we're just better people,
Speaker 3: then we would have more savings. Of course, it makes
Speaker 3: no sense because if we saved more than that's less
Speaker 3: income from for someone else, theoretically crimps their ability to save.
Speaker 3: But it the moralization comes so clear when people start
Speaker 3: talking about saving two quick things. I really like your
Speaker 3: point about data. I guess because I'm getting old. Occasionally,
Speaker 3: people now more and more in my life reach out
Speaker 3: to me for career advice and financial journalism, which is
Speaker 3: something I've noticed in the last couple of years. I
Speaker 3: guess it's a sign that, like I'm a gray beard
Speaker 3: in this space. But I always say that just get
Speaker 3: to really know a data point. All the smartest people.
Speaker 3: I feel that Tracy and I talked to you. Actually,
Speaker 3: I would say there's two categories of people that I'm
Speaker 3: always impressed by. People who really understand how banks work
Speaker 3: seriously are consistently a cut above. And people who have
Speaker 3: really spent time understanding what a data point is actually
Speaker 3: saying and how it's collected and what's underneath the guts
Speaker 3: is opposed to just sort of shooting from the hip
Speaker 3: from what the headline says. So I strongly agree that.
Speaker 3: One other thing, I just want to say, you know,
Speaker 3: we have this discord where we chat and I went
Speaker 3: in I said, does anyone have any questions for Claudia.
Speaker 3: We're having around lots more and there actually haven't been
Speaker 3: a lot of questions, but you are getting a lot
Speaker 3: of praise in there. Someone says Claudia is great. If
Speaker 3: you ever want to stare into the mouth of madness,
Speaker 3: check her replies on Twitter. Yes. Another person says you'll
Speaker 3: see enough man explaining to drive a person to drink.
Speaker 3: Another person says are over says you're in the arena
Speaker 3: trying stuff successfully. Another person says nothing but respect for
Speaker 3: real heroes, the people who EJ. M R hate, And
Speaker 3: I know that's an entire separate world. Of My understanding
Speaker 3: is it's sort of basically four Chan for economic students. Yeah, anyway,
Speaker 3: many big fans of yours in the discord and particularly
Speaker 3: the way you deal with people on Twitter.
Speaker 2: So I do that's good. And I've tried to pace
Speaker 2: myself some like you can't fight every battle, so I
Speaker 2: think I've been doing better.
Speaker 1: It takes so much patience and so much emotional energy.
Speaker 1: And I really don't think, Sorry, this is gonna be
Speaker 1: me ranting for a second. I don't think guys get it.
Speaker 1: Really And speaking of data, Joe, this is actually interesting.
Speaker 1: I once did a spreadsheet on Twitter replies to very
Speaker 1: similar tweets that we both put out. It was about
Speaker 1: bitcoin being an inflation hedge, so you can imagine what
Speaker 1: it was. And you said something that was like very
Speaker 1: similar to what I said, and I thought, because these
Speaker 1: tweets are quite similar, it's a really good test case
Speaker 1: to see and gauge the amount of abuse that each
Speaker 1: one gets from crypto bros on Twitter. And I can
Speaker 1: tell you, like sheer volume, I got multiples of what
Speaker 1: you did. But the other interesting thing was the insults
Speaker 1: themselves varied, So most of yours were calling you stupid,
Speaker 1: and most of mine were just ad hominem attacks either
Speaker 1: you know, like attacking my what I look like or
Speaker 1: just calling me names, which I also thought was interested anyway,
Speaker 1: So you know, data analysis, data analysis, yeah.
Speaker 2: No, and I will say too, I mean one of
Speaker 2: the things that I do a lot of macro and policy.
Speaker 2: I am very passionate about economics becoming more diverse, and
Speaker 2: especially in the policy world. That's my space, right is
Speaker 2: at the FED and White House and all that, and
Speaker 2: there's an aspect of me trying to be out there
Speaker 2: just as an example. Right, It's really hard to get
Speaker 2: that kind of abuse, and it can get in your
Speaker 2: head at least it gets in mind sometimes. But I
Speaker 2: do want people to see and not just other women,
Speaker 2: like you don't have to do this like the rest
Speaker 2: of the macro bros, right, Like we each have our style,
Speaker 2: but I try it, and I've had students come up
Speaker 2: to me like it's very encouraging, and you know, so
Speaker 2: hopefully those that come after us won't have to deal
Speaker 2: with that kind of abuse or at least less and
Speaker 2: less of it, but yeah go team here.
Speaker 3: Lots More is produced by Carmen Rodriguez and dash Ol Bennett,
Speaker 3: with help from Moses Anda.
Speaker 1: Our sound engineer is Blake Maple.
Speaker 3: Sage Bauman is our head of Podcasts.
Speaker 1: We'll catch you next time for lots more.
Speaker 3: Thanks for listening.
Speaker 2: That's it cool.
Speaker 1: Half an hour until the next one. Half an hour
Speaker 1: free time.
Speaker 2: Enjoy it.