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Speaker 1: Lindsay big is our next guest. She's a chief economist.

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Speaker 1: It's stifle and she is a breeving. The US Jobs

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Speaker 1: report out later Friday as well, Lindsay, thank you so

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Speaker 1: much for joining us. It does it come to the

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Speaker 1: jobs report of the second but it does remind us

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Speaker 1: a little. It reminds me a little bit of what

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Speaker 1: happened to some eighty years ago, what the FED is

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Speaker 1: doing right now. And the statement made by j. Powell

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Speaker 1: the other day that it was perhaps as the Battle

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Speaker 1: of Alamain mark the first major victory of the Allies

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Speaker 1: of the Second World War, Churchill famous remark, Now this

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Speaker 1: is not the end, it's not the beginning of the end,

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Speaker 1: but it is perhaps the end of the beginning. It

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Speaker 1: seems to have to be the FED that way. Somehow,

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Speaker 1: it does. The Federal Reserve came out and said, look,

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Speaker 1: there is more work to be done, and the ultimate

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Speaker 1: level of FED funds in terms of the terminal rate

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Speaker 1: is going to be markedly higher than what the Fed

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Speaker 1: and the market is currently anticipating. And so this is

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Speaker 1: really setting the stage not for a FED pivot, but

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Speaker 1: for a continued aggressive approach to raining in inflation. Does

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Speaker 1: it seem like recession is inevitable now, well, whether we're

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Speaker 1: in a technical recession really seems to be more of

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Speaker 1: an academic debate and arguably inconsequential for the average American

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Speaker 1: and the average business struggling to stay afloat. What we

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Speaker 1: see is that rising costs are becoming an increasingly unbearable

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Speaker 1: burden for most sectors of the economy, and that's resulting

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Speaker 1: in a downturn, a recession, a cumulative on winding of

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Speaker 1: economic activity, whatever you want to label it. Hardship is hardship,

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Speaker 1: and what we are seeing is that as the Fed

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Speaker 1: continues to raise rates, that hardship is going to intensify. Well,

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Speaker 1: tell me something here. You know, one thing which perhaps

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Speaker 1: is not being discussed is the combination of rising interest

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Speaker 1: rate costs on the federal budget combined with the midterms

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Speaker 1: arguably you know, also a Republican House and the dead

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Speaker 1: ceiling in the early part of an next year. What

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Speaker 1: are your thoughts on that, Well, it certainly is a concern,

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Speaker 1: particularly when we talk about servicing the debt going from

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Speaker 1: nearly four billion to potentially a trillion dollars according to

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Speaker 1: the CBO by the end of the next decade and

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Speaker 1: a massively growth, a massive growth in the federal federal

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Speaker 1: government's balance sheet. But we do have to remember that

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Speaker 1: ahead of next week's election, neither party is assuming the

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Speaker 1: position of fiscal responsibility, and so that really has taken

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Speaker 1: a back seat. When we look at what voters are

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Speaker 1: concerned about, it's not about growth in terms of fiscal

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Speaker 1: expansion or the balance sheet. It's about their own individual finances.

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Speaker 1: It's about inflation, it's about the economy, jobs, and even immigration.

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Speaker 1: But when we talk about the position of the government

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Speaker 1: and the level of debt, that falls to the wayside,

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Speaker 1: that falls to the bottom of the list of priorities

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Speaker 1: for voters. Lindsay productivity has has fallen of late, and

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Speaker 1: it's a little surprising to some economists. So I mean

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Speaker 1: interested in getting your take and the impact on that

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Speaker 1: in terms of risk assets going forward. Well, it's interesting

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Speaker 1: because productivity has been the missing components arguably for the U.

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Speaker 1: S economy for more than a decade, averaging it just

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Speaker 1: about a half a percentage point. But as we moved

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Speaker 1: out of the COVID recession with a lack of labor participation,

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Speaker 1: many companies were increasing their investment in technology not to

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Speaker 1: mention the COVID crisis itself allowed businesses to find some

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Speaker 1: of these inefficiencies and replace them, and so there was

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Speaker 1: an expectation that productivity was going to jump higher and

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Speaker 1: drive the domestic economy back towards potential. We haven't seen

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Speaker 1: that yet, and this is one of the conundrums that

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Speaker 1: the FETE is dealing with. But I think this points

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Speaker 1: to the longer, harder pathway that the U. S economy

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Speaker 1: will face struggling to get back to a sustainable level

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Speaker 1: anywhere near above two percent. And it doesn't mean to

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Speaker 1: be a heart that's in any way, but it does

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Speaker 1: the echino we need a fairly deep recession because there

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Speaker 1: hasn't been one fight a few years. Well, if you

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Speaker 1: ask the Federal Reserve, no, the Federal Reserve has has

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Speaker 1: almost taken it upon themselves to mitigate the downturns of

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Speaker 1: traditional business cycles. But at the same time they've also

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Speaker 1: limited the upside. And so if the feeder Reserve is

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Speaker 1: seeking to smooth out these fluctuations in the U. S economy,

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Speaker 1: they would argue that, no, there is no need for

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Speaker 1: a severe recessionary period. That being said, we have heard

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Speaker 1: from the Chairman that at least some pain for consumers

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Speaker 1: and businesses is necessary to reinstance stability. Lindsey, just quickly,

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Speaker 1: what is quiet quitting all about? Well, I think right

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Speaker 1: now what we're seeing is just more and more individuals

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Speaker 1: leaving the labor market. There's more and more incentive to

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Speaker 1: just return to work from anywhere non traditional labor market environment,

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Speaker 1: and this is contributing to either that wiet quitting or

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Speaker 1: the great resignation. Yeah. Great to have you on, Lindsay.

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Speaker 1: Thanks so much for joining us, Lindsay. Pigs chief economist

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Speaker 1: Dad Steeple