November Jobs: Back on Track
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Welcomed inside economics, i'm mark andy, the chief economist of moody analytics, and i'm joined by one of my trusty khost. Chris, Chris.

old faithful, I am here.

Have you ever have you ever missed, uh, a podcast?

I think I missed one on vacation. I usually have, I usually dalian on vacation, but I think I had missed one or two.

one or two. Okay, I i've not missed any .

cause I just in the schedule. Uh, dirty little secret.

they go. yeah. But we've been doing in this podcast now for is IT coming up on five years. Could that possibly be right? I mean, in the spring, it'll be five years.

I think I don't think we started then. We started twenty one was during the pandemic era, but right? I don't think I was.

Well.

don't have either four.

five. Well.

what number is this? Maybe franco knows.

Yeah, maybe franco knows. Anyway, let's put in this way is a long time, a long time. It's a long time.

I used to have more hair. yeah. Was good, happy. And we ve got a donte doctor. The anti .

I mark, I know it's Christian comment .

on the last hair I I heard a little stifle life that's what no no no himself quite .

you here I get more great hair .

um you but I .

say you look distinguished you know see how that is done Chris nice nice. exactly. Thank you. How are you don't take?

I'm doing well. thanks.

Yeah, your family been able to navigate through all the codes and all the things going on and not on.

What if it's been okay? I start to the late fall here. So far.

we'll say i've been pretty lucky. My wife got pretty sick with flu like symptoms, and I somehow navigated through without catching IT. So peculya now may not on wood.

yes. So i'm sure when to get nailed here pretty soon, but I could. Good to have you on its jobs. Friday, we got the report for the bial's culver statistic report for the month of november.

And before we dive into that, any other chit chat you guys want to bring IT worth more up, by the way. But you know that's other cohoes. Uh, seems like he has a lot of vacation. There's something going on and I don't know about well.

well, you should .

know about I should as her manager, I guess I should know that yeah, he maybe I am just to prove I approve whatever IT comes across my transmit here. Maybe I no, no, she's a hard work.

absolutely. That's all deserve to all the service i'm sure to doing some track uh economic research uh on her travels.

wherever he is on the globe, in the globe uh what he needs vacation after dealing with me on a regular basis that for sure I I wear people out yeah um but anyway 11i see okay learning he learned you see gott .

he learned so so also .

practice that right course of course that uh okay well this time right and do IT um uh don't tell you when to give some run down on the november jobs numbers sure.

the headline for november, uh, a return to Normal. I think after the the sort of mess that we had in october with strikes and hurricanes, we got a headline job growth at two hundred and twenty seven thousand in november.

Uh your private sector growth just below two hundred thousand uh positive revisions to the prior months as well brought the the three months average pretty drastically IT had fall into just north of a hundred thousand last month um and now it's back up to one seventy three ah which I think is your sort of roughly in line with with trend job growth. And I think the underline trend somewhere in the hundred and fifty thousand and hundred and seventy five thousand neighborhoods. We're sort of more consistent with that again um on an industry basis.

So we got more broad based growth again after the the sort of mess in october. Uh, the same industry are leading the way has been the case over the last year or two. Health care, regional hospitality, the public sector, uh, to a lesser degree, construction had a little bit of a week, month or in november.

Manufacturing bounced back, although not very strongly. If you sort of uh, subtract the the striking the returning striking workers is manufacturing would have been negative again. IT was only up twenty two thousand and we got more than thirty thousand workers coming back from strike.

So not a great month for manufacturing, still some some weakness at the industry level. Retail was downed, uh, information was flat. A tem help is is basically flat still, which is weighing on professional business services. So say the industry story hasn't really changed the whole lots uh, over the last couple of months. You the same industries that have been leading the way or are leading the way again 嗯 um on the earnings front， another strong .

man happened with government.

H is up again, another thirty three thousand which has been sort of consistently thirty forty thousand jobs a month in the public sector, right?

And explain the news recently. But federal government employment that is that that or the job growth is coming from its state local yeah I mean most .

of I mean by side sort the base of employment state local observed much larger and that's where most of the monthly job gains compromise well as state local government well.

also their government employ has been changed in fifty, sixty years, right? It's like million people work in. But I mean, I guess, uh, outsourcing potentially that might have be affecting the numbers but but the actual number of federal government employees that that that hasn't changed in decades.

State local government is much more closely tied to populations and education and public services and everything being run by state local government. So right, they've been trending higher over the long term.

okay. So the only real weakness was in across industry. Broad industry was retail.

Yeah retail was down twenty eight thousand um kind of surprising big .

decline yeah yeah IT is surprising, right?

And some of that is likely. I didn't look at the seasonal, but you obviously retail usually ramping up this time of year. So it's likely just that the ramp up in november was a little bit smaller. I'm assuming adJusting basis .

little weird kind of the number days in Christmas, Christmas is in shorter, right? No, I think I messed with the seasonal and therefore, i'm not sure I .

read too much to .

IT yeah agreed yeah OK um OK uh l you're going to average ary earnings, the wage measure in the report.

Yeah another strong month up uh point four percent, which was the same miss october ah so on a monthly basis, you are a little bit stronger than and IT had been in recent months. The year over year measures is still at four percent, which is where IT was last month. It's up a little bit from is low.

You go back your prior to october IT was at three point eight percent for a couple of month. I am it's up a little bit, but I don't think, uh, it's anything to be concerned about at this point. Um weekly hours again, sort of recovering a little bit from the the weird and october you had A A slight tick up in average weekly hours and the aggregate measure of over all hours also ticked up a little bit, sort of reversing the the decline from october.

Um I think the the harder part to reconcile here what happened in the household survey. So the housework survey was weak. Again, we can october for for obvious reasons.

But week again in november, uh, declines and household survey employment declines in labor force uptake in the number of unemployed workers push the unemptied rate a little bit higher, four point two percent. The participation rates down again in november. Uh, so just a little bit hard to square the sort of continued weakness in the households survey. And november, given the rebound and the payable survey.

I having a chance of good look at the report. Um so the unit notes to little higher four point one, four point two at the same time that the participation rate not a little lower, sixty two point seven and sixty two point five to have that right.

Uh, so sixty two point seven, two months ago, I dipped one last.

So does that mean usually when participation ents declining, that helps bring down unemployment, use of fear, people in the world force? So I mean, the household employment declined.

There was a big, big declined household employed, over three hundred and fifty thousand decline. H.

okay. And this is on a payroll basis, obviously the different uh measuring different things. If you take the household survey and put in on the same basis as the perl survey was IT .

down was a more positive story actually, plus one hundred thousand.

So I probable took probably took .

your side was he was in the, he was in the running. But yeah, so IT wipe out the decline in november.

adjust to the pay OK. So you don't read that mitigates any message and the negative .

message in the number I think I am reading into any of the all time too, because you've got this difference in the adJusting measure as well.

So right.

Was any issue with the survey response rate? I didn't get a chance look uh .

so I didn't look at the household server, responded the payroll survey response response back.

They're actually quite high um for the first print in november back above sixty seven percent, which is actually on the the high side recently for sort of the first print response rates and actually for october, you I think we had talked about last month, response ory for the first was very, very low obviously given all the issues with with and that fully rebounded up for the second prints for the first revision. The response or rate is back to what I Normally looks like. So they got much more data in at this point.

Great, good. Uh and and I guess the other data micro data point, I look at reporters weekly hours, average weekly hours. Any change there?

Ah so I had tick down by a tenth in october and a tick back up by a tenth. So it's back of a thirty four point three. I mean, it's basically stable.

K right? So take a step back. Look at the entire picture of labor.

I mean, I think it's good. I think there's just read confirms that the labor market hasn't really changed october, obviously left to sort of wondering if something has changed, if IT was just those one of effects. And I think this sort of reconfirms that IT was just those one of effects and nothing has really changed terms of the health, the market.

right? okay. Chris, is any different perspective or same?

I agreed with that overall. I think the analysts calling out the four percent job way growth average out on the earnings, is that no. Is that the start of a inflationary spiral? Or any concerns there .

you do net .

A I heard IT on A A, A, A business new show this morning.

This is really credible, credible person on the business. Ver.

that's right. Even that inflation isn't all the way back down to two percent. yeah. So you think the wage uh in kind referred to the a to .

the fact that if you most economists two three years ago, if you ask them what's the ideal rate of wage growth, they'd say three in hand because that would be two percent inflation plus one point five percent of protectively growth. If you get three and eight percent, that's non in inflationary. There's no pressure on grouper profit margins and therefore no pressure on businesses raise Prices more quickly. Now we're sitting at four. So is that a problem?

That's what's right. That's the that's the conjecture given .

that all that overall .

inflation has not fully recovered as is no a risk that we will accelerate terms of if inflation yet another factor that could lead to inflation taking off again.

Yeah what you how would you respond to that?

I don't think so because i'm livable. Yeah .

right are setting up I yeah um because you think underlying productivity growth now is public. What closer to two they wanted to have therefore, two percent inflation plus two percent point to the growth is four percent that be consistent with what we're getting. That's not inflationary. Don't know what you think I can argue .

sort backside looking mean, over the last four, five years, partition ity growth has average close closer to two percent and one and a half percent. I don't think wage growth today is a problem. I'm a little more sceptical that you can we sustain that four percent wage growth moving if productivity growth does slow a little bit, that IT becomes more problematic. But I as of today, i'm not worried about wage growth because growth has come in a bit stronger.

okay. So you you're go with the four percent at the moment. No big deal.

Okay yeah okay. Um uh so so broadly you feel pretty good about this Grace. Any any bombs in the report that you can see that are consequence?

You know there was black unemployment that jumped up.

I was seven yeah .

big but know it's it's from the more about to portion of the survey, right right? Household survey tends to be and it's a small demographer, right? So I don't know the sand that's also, I ask kind of about the survey response is no certainty to watch. But and I know we I don't know that .

we should get .

over excited at this moment. I can see the .

other problem of the households survey. In addition to with such a small survey, I think sixty thousand households each month. So and are a one hundred twenty, I want to say, hundred and twenty five known households across the county, that's a pretty small sample in response status or low.

You've got the other issue that the number the household survey numbers, like a number of employed or labor or force are benchmark to census estimate population investments that don't incorporate, listen a meaningful way, the surge in immigration and now the more recent desAlination and immigration that were observing. So IT is increasing. Hard to interpret the certainly the levels in the household employment. A survey means the ratio, maybe that which is the a one to may be no .

sampling an issue, right? What's that? But sampling definitely .

is an issue. Definitely issue. Yeah, definitely issue. okay. Uh, well, I say picture perfect, right? I mean, I probably use that description now more than once, so the last few years. But you know, right down the strike zone, I mean, oh, did you guys mention the job visions to previous months? They did you mention that don't day yeah.

I don't give a specific number were positive, I mean, which is so of expected october to get at least bump ed a little bit up in september also get revised higher.

So so so we added some jobs in the revisions. Um yeah, I thought it's a underlying job growth, meaning abstracting. From the vagaries of the data we've been talking about, there's lot of vagaries, boeing strike and storms and response rates and seasonal and all that stuff.

Feels like it's around one hundred fifty k to me per month, hundred fifty thousand per month, you know, in that ball park and that you enough jobs to keep consumers in the game spending on keeping on important low at four percent or close to which is full employment, keep wage growth strong, started IT you know four percent which means real wage growth of you know uh almost two percent um uh which which means economy continues to move far. But it's not so many jobs that IT caused unemptied decline, caused wage pressures to develop, cause stationary pressures to uh take off again. So IT feels like it's like exactly where you would want you to be um and we went there for a while.

I mean, the point rate, the four percent is unemployed ate. I was just looking at a quick chart. You know it's been there for three years, three years and I say, so good in right talk this in you guys you don't you don't realize how may how unusual this is, you know because you're too Young yes, you know you don't know that definitely doesn't right if he has no idea.

Yeah, yeah. I think this is like common. This happens all the time. No, no, this is very unusual. A A typical increasingly on precedent that I would say is IT unprecedented. Now that I say that is we're getting a non president, a territory, I think you have to go back into the sixties.

maybe the fifties or something.

I think fifty are a pretty vital decade. Know a lot of recessions in the Green war. Strike is that's why to steal. Strike meant something right back in the fifties. And I think some someone we should lock.

I thought I jumped a bit, but I thought .

was because everyone was off war in korea, struck from .

that a downing.

Now he are right stories hiding over there now, because he doesn't really doesn't the answer. He know the answer to this.

Now I remember what we talked about a the only way was at or below four percent for I think about twenty four months. Obviously, it's it's gone a little above that lately and I think that that was the longest stretch that had had been four percent since I think the six I remember correctly. Um so we have been on a good run.

Yeah, I guess we should say how long have been conney full imployment that that's a squshy concept but you know reasonably estimated. I I would bet this period about it's pretty very close to being longer, if not if not the longest, we should check that a good tweet or blue sky you know i'm on blue. I tell you guys i'm on blue sky.

He did h what's going uh .

you know so what we're going than twitter um but um you know I think I think IT has legs. You got some really interesting focus like paul romans, I think moved over entirely the blue sky I don't think he's doing twitter anymore can be mistaken, but I think that's the case.

I am already taxed out with this whole blue sky twitter thing x thing uh because right now i'm i'm putting different tweet or post, I should say, on each so i'm doing double duty at the most but I think I can keep that up forever. So see how that goes. Uh anyway, back to the labor market. Uh, I think it's come on already the script. Yeah okay, we've got all the.

let me just say.

just to put a pin in IT. Is that that the right phrase? Put a pin? Yeah, yes, yeah.

Put a, uh, uh, present trump. Uh, the incoming present trump is inheriting a fabulous economy. There is like no ambiguity here.

This isn't a bad economy. This is an even just a good economy. This is a fabulous economy. So let's just put a pin in IT.

You know anyone disagree with that, that statement in aggregate? I mean, i'm sure you clearly there are differences across groups within the economy. No doubt about IT high commerce are doing a lot Better than those are doing a lot Better.

Some reasons of the country are doing Better than other regions of country. No, no, it's not it's not you know a great across the board, but in in its totality in aggregate, i'm it's hard i'm hard pressed to say there's been a Better income. This this is this is a bill economy. Any disagreement ment with that statement? Not no, I think it's our .

our human top eline growth is obviously stronger than what i've expected. And like you said, we've been full employment now for the Better part of three years, and that's a pretty Brown right.

Chris, and push back on that. no. Well.

I guess you'd still have the folks should are comparing Prices right back to twenty, twenty.

What not, you know yeah okay, but you know objectively .

very strong, very strong.

okay. I know anything else about oh uh, you know course a lot of labor market data came out. We've got the job opening turn over surveyed data a few days ago.

We ve got the unemptied insurance claims. We ve got chAllenger lay off announcements. Uh, parly missing something. Don't say anything in those other releases, economic releases, data reports on the market that would suggest anything different than what we saw the day.

Uh, no, I don't think so. I mean, your chAllenger jobless claims jokes on on the layoffs, things all sort of consistently low. Uh the dual state I think is a little bit murky because it's it's for the full month of october, which we know obviously there were uh issues there with with hurricanes.

Um so you had to a downtick in the hiring rate again, but the biggest movement in the hiring rate was in the south region and was in legion hospitality. So believe that most of that movement was probably the hurricane related. So aside from some of those movements that I think likely reverse next month, that I don't think there is really anything there to suggest a different story than what we've seen in the employment to report today.

Yeah take up in openings, right? That was yeah.

i'm taking downturn, hiring the which three pick back up again to agenting. Some people read obviously so positive that maybe workers are feeling a little bit Better about outside prospects of lately. We been on a pretty long downport trajectory for the quiet. So if that holds up over the next couple months, I think that could be a positive for some uh, increase in activity in the lab market.

Yeah talk about response rates though, right? Mean, in the job opening Turner survey, response rates have been even worse and fAllen even more than for the payable surveyor or the household. I think I say that, but I think that's the case.

Yeah, they have always been quite low and I didn't look for this month, but I would assume for october, they were probably even lower than .

Normal given everything that was going on. yeah. So yeah, always caught up in the monthly up and downs and vehicles on the data.

I mean, I think it's still very useful to take a step back and look at the broader trencher. The brother trends are that the number of openings continues to moderate, quit quitters remain very low, hiring that has softened. Uh, is is okay consistent with prepare delic.

A labour market trends, but you know they they've softened. Uh, like I think the one constant and we can this is across everything. There are no laos. Lai OS remain very, very low. Uh okay， okay, oh, good. So um I have I have been zoom in the home more and I have not looked at markets um was gone on the equity market, the bond market. What what the investors are thinking about the the fed meeting here coming up is the fed meeting next week, I think is that next week .

but eighteen yeah in two weeks .

uh with the with the probability of friends going to cut rates because there has been wide uh, spread expected that they would cut rates again. So Chris, have you even been following the markets? What are they? What work?

What's going on there? Yeah so expectations are that that that will cut twenty five basis points when they meet probabilities. Morning is around ninety .

percent ninety nine zero.

Oh, okay. So it's it's been um it's been a majority for a lot, but it's been ticked up pire over the last a week or so. So pretty confident of at least markets are prety confident that is gna make that move the stock market bomb market pretty, pretty tame reaction. Yeah I think stock market up a little bit, but ten year treasury yields, I think a plus or minus one two basis points or not, not a huge reaction to these reports.

Okay, okay, so so the markets investors fully antia most fully anticipate a corner point cut in the federal funding target. And when the fed meets on to somewhere eighth, bigger the funds rate from four and three quarters to four and f and of course, a peaked at five and eight percent earlier this year. Um and any expectations about what happens early next year? Yeah any sense .

of that think the little more more spread out, little more uncertain. But that march seems to be another .

markets call a last .

around a go next right cut in march.

Yeah, the one the one thing about the fed that is increasingly an open question in my mind is you know what's going on in markets, asset markets, you know financial markets in stock stock market, the corporate bond market, what's going on in the cypher market, gold uh, and then you go into real states. Commercial state values are down, but housing values continue to power higher. Europe a lot, and I think fifty sixty percent from the pandemics.

Stock Prices of double think since the demise course, big coins at one hundred k plus, uh, gold is close, close to anything, is a record high. Look, twenty seven, twenty hundred dollars. And now so if you're sitting at the federal reserve in your watching what's going on with asset markets, that would argue for, maybe pausing here， right, right, even though, right, still seemingly still high, you got a lot going on was a guard, the asset Prices.

that the right financial conditions pretty loose.

right? Well, I guess that's the question, right? Because financial conditions also include the value of the dollar, the value of dollars up, that is that, that works in the opposite direction, right? Then higher stock Prices.

Mortgage rates are pretty close to seven percent. That's pretty high. A bank lending standards would also read the financial conditions there 太 they are relatively tight， right? I mean, got really tighten up after the last year's banking crisis.

And I don't think banks of these dup since stand, if anything, they continue to least you look at the scene or loan officer survey from the fed feels like they continue time. So if you take the net of all these different financial measures and ask what what you have been into, conditions changed. I guess it's still you would still argue theyve eased. I guess you just.

you know, I look at the band spread .

the bone spread the corp.

Bunch for the bond spread, right, right.

right, right. So right.

evaluations that you mentioned, right? This certainly right .

would .

be of concerned.

So you you're think the financial conditions have eased to a degree where maybe I don't want put words in your White mouth, but maybe this is a time the fed cuts in december and maybe they kind of stop and and just .

a we take a look. thanks. So I I I even say december not is I mean, as clear cut is what the market might such that I could truly make a case that you could pause here, right?

The the market still pretty robust. The inflation again, still not quite where your right direction. So and with the financial markets like think that would be a rising concern. So I don't think I think they will take the cup, but I think they will yeah pause and certainly take a culser look at things next .

year right right. Um what do you think that day? Yes, I was surprised.

I mean, I don't try through too much into the one day swing expectations, but I was surprised that expectations were cut swan as dramatically as they did today after the employment of anything yet. To me. It's a little fy that the wheel aren't falling off the labor market.

If there's any sort of concern after october, this should migrated any of those concerns. If anything, your job growth is back to where I was. If anything, wage growth maybe is creepy as a concern even if we're not concerned about IT. Uh, so to me, if anything, that would have made IT less likely that the fed cuts in december, not more likely. Um I still think they do cut in december, but I am a little bit confused by the market reaction to the empire report this morning and maybe that all responses by the end of the day or by next weekend yes, IT could .

all just be a temporary right be oud to say i'm i'm not sure um I mean I do think of right four point seven five percent the funding arb. I mean, I still feels like it's above the equal liberum rate and that means that monetary policy, the fed is still restraining growth. You know, policy is restrictive, not a lot restrictive.

You told me the equally rate was four percent. I say that sounds about that feels about right to me um but I don't say that with confidence because they can know we're seeing the job, mark, really strong uh, in the financial conditions have eased. Uh, I don't know they're easy given what I just said about the dollar and the mortgage rate and bank lending standard.

But they're easier they definitely easier than they were, you know, uh, not too long ago given the run up an equity Prices, the tightening and corporate credit spreads and the prick to Prices, not anything else. So I I think you can probably can you certainly should be starting to think about maybe I should pause, take a little steam out of these markets because right now, the markets are anticipating further rate cut, right of you if you if the vet came out. So okay, at the december meeting, let's say they cut rates in the signal that, that may be, but they are going to go on post here for a little bit.

I I suspect we would see these markets sell off to some degree, I don't know, would be a big correction, but that would be there would be some correction, right? As Marks are anticipating some further in easing and policy and not to do some future in twenty twenty five. And if they don't get that and presumably we would see stock Prices down create create spread s gap out a bit here.

Um so um but yeah I it's not clearing my mind at this point. What's the you know the most appropriate policy response but I guess the most appropriate policy responses, when you're confused, you kind of do nothing. You just you know you you you they got I think they gotta follow through on the december right cut, and then they see how things play out here a little.

But, uh, you know, before they start cutting rates, some further course. The other complicating factor, and all of this is economic policy, right? Under president, which grades about regards of what you think about the policy, you know, a before the policy actually occurs, were talking about terrors, talking about deportations, you know, were talking about tax cuts that could be unfunded tax cuts and bad to deficit IT.

Regards to how you think about those things, what I think is we can say what I was certainty is it's very uncertain. We don't know you know what these policies are gonna in, in exactly the timing of those policies. So if that's the case, that seems to argue, doesn't IT that the bed would more likely to sit on its hands for a while, just pause and take a look around and see how this plays out. What do you think course does .

that something right? They're really, really not gonna be disinflationary.

right? That clearly the other there is no way that all that .

stuff is this relation, right? So it's a how anything they are or maybe they're not stationary at all. But um yeah so I I I I agree with you that would suggest you should should wait and see um what actually transpires before making any moves here.

yeah. So we've actually changed our baseline forecast, right? So we had if you go back a month ago, we had the fed cutting rates december a quarter point, then a corner point each quarter going forward until the fund rate guide down to three percent, which is our estimate of the neutral rate, the equilibrium rate, they are star in the long run, sometime in really kind of spring twenty twenty six, something like that.

We're now we've got a december right cut. We also have a marti cut, although I say that was much less confidence and then nothing no change in in monitary polite until september. And then we're assuming that there's not evidence that things are moving in the right direction.

Uh, there will be change in economic policy, but they won't be a shattering changes and that allow the fed to start Normalizing rates. And we get back to that three percent of the librarian by the end of twenty twenty six. So instead of spring twenty twenty six or year and twenty twenty six like that, does that sound like a reasonably good forecast? Grace, in the context of everything we just discussed.

IT, does what you think you still think? Three percent.

The deal. Liberum, right? Long run. yeah. I, I, I, I, I we have to be humble here.

I mean, I got to be humble here. yes. Uh, i'm not sure, uh, a bills right to me. Um you know thus our forecast. But I I I have to admit I don't feel like I have a strong anchor to explain why that feels right to me.

I mean, I before the pandemic at I think the general consensus and we were consistent with that was a two percent funds rate target. Uh and now we're saying three and IT feels like directionally, that's right. You know one one reason that I we've talked about the past and you know think is very important is that U.

S. Households and businesses were able to ended a very good job of locking in. Uh, the record low interest strates have prevailed when the economy shut down during the pandemic. Cm, mortgage rates got down to sub three percent six more good. You get uh, household refinancing their mortgage and got you mortgage.

And three, I scream other problems now within straight lock and home sales, everything else, but does insulate households from the run up and interest rates, right? So if you look at people's interest expense and in aggress differences across income groups, whether you have credit card dead or not, so what and so on. But in aggregate, that payment says a sure of income of a rock solid stable and their low by, you know we ve got data back to one thousand hundred and eighty from the well.

Now the fed in our data, the back to one thousand hundred and eighty. And it's it's low by that historical the the standard of that long period of history and corporations the same way. You know surprisingly, you know the beer of economic analysis published data showing the share of corporate nonfinancial corporate cash flow that's going to interest expense that is very low.

I think I said a record law and we got did a back to world war two. I don't think I make that up. I think that in my mindset, ye and IT has not reason at all. So it's not only that households have locked in, but businesses have locked in. And so that's what makes the economy less rate sensitive races, not in rates, not had the same back that you typically have.

Uh in one reason why the yuko has a hasn't worked you know as a predict recession and you know therefore, uh argo, that would argue for uh you know a higher equally bram ray, you know at least for a while to liabilities are just a significant way. But that's going to take a while because households have revived into thirty year morning. As we can see, they're not moving.

There is not moving in businesses, you know there they locked into. I mean, a lot of businesses took on, you know, very long term. Remember back in the day, I think some of the tech companies were issuing fifty hundred year debt, right? Because I was like free money, I could borrow fifty basis points, so they locked in forever, you know, the the lower interest rates, the only people who the only entity that did not walk in the U.

S. Government, the U. S. Because, you know, because because the that limit bad, all you, they had ensure all these bonds, all that once back at twenty twenty three, the the bond market choked and so they had to start issuing short term debt.

And so the matter of the debt got shorter and we're the taxpayers because of the each expenses rising on the deal. Governments dead dollars. I think at this point, uh, I don't know that was a little uh, what do you think because I that resonate with .

you absolute? No, I always make that point during the dead selling battles that it's not it's not costless and IT. There's a big cost that we're paying now, right?

But my point about the the the logic behind why the ah rate is higher, yeah yes. Now whether it's two and a half or three or three and half, no, I don't say that confidence, but actually I feel pretty good about IT about a higher equery. I agree with the productivity.

No.

uh, higher productivity, yes. What do you think .

that I do you think the risks are once around three percent? You think the risk is with more one direction than the other? I mean, the depth from the fed seems to suggest that they think the risk is to the upside right. The equal and right might be above three percent IT seems like that the direction they're trending.

I'm curious if you think the same thing. Well, that depends on how you frame IT. So if you say in the long run, you know cutting through the business cycle, what is the is and how you confident are you I say three percent in the distribution of risks are equal higher or lower.

If you're saying uh um the equal brian rate in at the end of twenty twenty six, which is our forecast three percent, what's the baLance of risk? I say higher rather than lower because we're well above very percent. So you know I I think that's just uh you know where we are, uh, you know uh but in the long run through the business pycke think I could easily argue three in half or two and half at this point in a long time. You got a book. You ve got a book at what you're gona leave.

right?

Don't think where you client .

clients got.

it's always working. Yeah well, um um I think um we're going to keep this a short podcast because you know without down to just doesn't work on jobs friday that's a to boot, doesn't work any other so we running at time because that you have an elea M E T weather was was a good client. Um okay, any any parting words don't take now.

I think is a good month for the light market. Good to see uh, sort of things return to Normal after some uneasy as in october. So i'm happy moving into the end of the year here.

which forecast for .

next month one one fifty is an early forest consumption.

A good night.

what happy holidays I hope, uh, because we won't talk to until the other side, uh, the holidays so I hope you have A A great holidays and may everyone stay well in your in your householding and Chris, any parting words next week, see next week because we make our official holiday uh uh words at that point in time but um not nothing else to say here you are good. I think you're good OK all right there listener, this is a short one uh hopefully a sweet one um and we will talk you next week. Take care now.