The Inside Economics crew gathers in Southern California for an early morning reaction to the August jobs report, which they all concur is “pretty good”. They discuss the implications of slowing job growth for the Fed’s upcoming meetings as well as the presidential election. Finally, they all give their odds for a recession occurring in the next year—Cris remains the bear of the group.
The Inside Economics crew gathers in Southern California for an early morning reaction to the August jobs report, which they all concur is “pretty good”. They discuss the implications of slowing job growth for the Fed’s upcoming meetings as well as the presidential election. Finally, they all give their odds for a recession occurring in the next year—Cris remains the bear of the group.
Guest: Dante DeAntonio - Senior Director, Economic Research
Hosts: Mark Zandi – Chief Economist, Moody’s Analytics, Cris deRitis – Deputy Chief Economist, Moody’s Analytics, and Marisa DiNatale – Senior Director - Head of Global Forecasting, Moody’s Analytics
Follow Mark Zandi on 'X' @MarkZandi, Cris deRitis on LinkedIn, and Marisa DiNatale on LinkedIn
Mark Zandi: Welcome to Inside Economics. I'm Mark Zandi, the Chief Economist on Moody's Analytics. I'm joined by a few of my trusty friends, co-hosts, colleagues. I see Cris out there, Cris deRitis. Hi, Cris.
Cris deRitis: Hey, Mark.
Mark Zandi: I see Marisa, Marisa DiNatale. Hi, Marisa.
Marisa DiNatale: Hi, Mark.
Mark Zandi: And Dr. DeAntonio, Dante DeAntonio. Good to see you.
Dante DeAntonio: Good to see you too, Mark.
Mark Zandi: Are we all in southern California, in one part of California or another? We're all down here, right? You guys [inaudible 00:00:45]. Well, we were here for our conference, our LA conference, which I don't know, I'd say thumbs up, right?
Cris deRitis: Double thumbs up.
Marisa DiNatale: Yeah, it was great.
Mark Zandi: Double thumbs up, yeah. How'd Dante do in that debate with him, Cris? Because you had that productivity debate. You're the bull, he's the bear.
Cris deRitis: He drew the short straw, so it was tough.
Dante DeAntonio: I keep losing because your forecast is too optimistic, so I lose by design.
Mark Zandi: Well, the numbers are getting pretty tough to deny, the productivity growth numbers. Speaking of which, the jobs numbers, this is Friday, early Friday morning, at least early here on the West Coast. Not early for you, Marisa. This is like-
Marisa DiNatale: This is the norm. How do you guys like this?
Cris deRitis: It's not bad. It's not bad.
Marisa DiNatale: Okay. Right, Cris.
Dante DeAntonio: I bet once a year.
Cris deRitis: Once a year it's fine.
Mark Zandi: Once a year it's fine. All right. Well, we got the job numbers and Dante, I'm going to turn to you. You want to give us a rundown?
Dante DeAntonio: Sure. I would say things were pretty good. I think top line job growth number, maybe not quite as strong as some people were hoping for. 142,000 jobs added in August. I think on the more plus side of things, unemployment rate did tick back down a little bit, which I think hopefully should alleviate some concerns amongst people that we were going to just see the unemployment rate continue to creep higher. In terms of industry employment, not a whole lot of surprises. Maybe manufacturing, the biggest surprise was down 24,000 in August. It's surprising in that that's a big loss relative to what it's been doing, although it's not all that surprising, given all the other weak data around manufacturing that we've had over the last two years.
Other declines, retail had a small decline. Temp health services continues to decline, but no real big surprise there. Healthcare grew but was a bit weaker than it's been in recent months. So curious if that's the start of a new trend or just a one-month sort of anomaly. Leisure hospitality added 46,000 jobs, strongest growing industry in August, which was good to see. The public sector still had a nice job gain at 24,000. So I would say job growth was still fairly well-distributed. I don't know, it made me feel okay. I don't feel great about it, but I don't feel bad about it. It's kind of down the middle for me.
Mark Zandi: Okay. Two statistics, one positive, one more negative, get your take. The first is the negative statistic and that's the revisions. There were downward revisions to the estimated payroll employment gains in the previous two months. They were consequential, right? I think in total, I mean, I looked at it quickly, I think in total close to what, 60,000 in total?
Dante DeAntonio: Yeah.
Mark Zandi: Something like that. And it looks like over the past three months through August, we're now seeing average monthly job growth of closer to 100K, right? Something like that, not too far off.
Dante DeAntonio: 115, yeah.
Mark Zandi: 115. Okay, what do you make of that, the revisions? Should we be worried, not worried?
Dante DeAntonio: I'm not particularly worried. I think if you look back six months ago, we sort of expected the job growth would be at or even below 100,000 by now. And that sort of got delayed a little bit by stronger labor force growth. So I mean, the fact that we're seemingly headed towards job growth of 100,000 doesn't seem to worry me all that much, knowing that we've got rate cuts coming here quickly and I think things should hopefully stabilize where they are. But curious if anyone else is feeling more pessimistic about it.
Mark Zandi: I'll go around the horn. I'm still working on you, Dante.
Dante DeAntonio: All right, that's fine.
Mark Zandi: I need to flesh out your views on this thing. It's pretty good. It's a little wishy-washy in my mind, the whole pretty good thing.
Dante DeAntonio: Okay.
Mark Zandi: I thought you were going to mention, and maybe I got this wrong, but I thought the payroll numbers in August always tend to come in, at least first print, which is what we got today, on the soft side. Kind of in my thinking about this, that the response rates, they tend to be lower, at least initially because maybe people are on vacation in a way. And as the response rates... As people respond later, we get upward revision. So if history's a guide, next month or the month after and we take a look at the data, we might see an upward revision to August. Do I have that right?
Dante DeAntonio: Yeah, I've got some stats for you if you want. Since 2019 of the 24 years, the August number has been revised higher, which is obviously unusual. Normally, low response rate should generate a more even pattern of revisions up and down, but for some reason in August we tend to always get these upward revisions. The average upward revision between the first print and the third print is just over 60,000 in that period, so it's not an insignificant revision. I will say the last two years have actually been small downward revisions in August. So maybe there's some chance that that pattern is shifting a little bit, but if you look over a longer time period, it definitely would expect to see an upward revision over the next couple of months.
Mark Zandi: Okay, all right. So adding to the pretty good narrative. On the upside, the statistic you didn't mention or I might've missed it, was hours worked per week, which has been weak. I don't know where we are today, but last month I think we were at a level that was below pre-pandemic and hours work have been steadily coming down. And just to make this clear, hours tend to be a leading indicator of jobs. So businesses will cut back hours or add to hours of their existing workforce before they actually add or cut labor force. And the fact that that ticked up, that was a positive. A big positive? Small positive? Something we should-
Dante DeAntonio: I think small positive. I didn't read too much. It did tick down last month and sort of reverse that decline this month. I mean, I didn't read too much. It's been relatively low here in recent months and I think the one-tenth movement in either direction shouldn't get us too concerned at any given point. I mean, it's good to see that it came back up. I think that's a positive sign, but I wasn't too concerned anyway.
Mark Zandi: Okay. All right, so pretty good?
Dante DeAntonio: Pretty good.
Mark Zandi: Pretty good. Okay. Marisa, what do you think?
Marisa DiNatale: Pretty good, yeah. I mean, it seems like there was perhaps some bounce back from the hurricane effect we saw in the report for July. That could partially explain the big increase in construction employment perhaps over the month. And we did see that the number of people that were on temporary layoff fell on the household survey side, which explains some of the downward movement in the unemployment rate. I mean, you definitely see some weakness in here. For example, the number of people working part-time for economic reasons was up and it's up pretty significantly over the year and mostly because people said their employers are cutting back hours because of slack in the business. It's okay. I think underlying job growth is somewhere probably between the July and August read. So I would say it's a bit over 100,000 a month, maybe 120,000 a month if you account for the weakness in July due to the hurricane and then some bounce back in August.
And then I think on the industry side, if we look at the establishment survey, you definitely see... We saw another straight month of very weak numbers for professional business services, which is a very large white collar industry. And that was not only in temp help but kind of across the board in professional business services. So most of the gain has come from leisure hospitality and healthcare last month and everything else was very weak, but it's not particularly worrying to me. I mean, the diffusion index, if you remember we talked about that last month because it had fallen below 50, it's back up above 50, if you look at the private industry diffusion index.
Mark Zandi: And explain that. What's-
Marisa DiNatale: So that's the share of all of these industries on the payroll survey side, the share of industries that are either adding to payrolls or keeping them steady. And typically, when that falls below 50, that's been a pretty reliable indicator of recession, if it stays there for consecutive months. It had fallen below 50 in July, but it popped back up in August.
Mark Zandi: So pretty good. Let me ask you this, though. You said underlying job growth is between 100 and 150K per month. So when you say underlying, you mean abstracting from the vagaries of the data or events like the hurricane that blew through Texas and disrupted things for a bit.
Marisa DiNatale: Yep.
Mark Zandi: And historically, if you said 150K, you'd say pretty good, you would describe it. And that's the way you're describing it, but is that appropriate in the context of all the labor force growth we think we're getting? I know the labor force growth is 150K in the household survey, the survey of the households, but we know that that, or we think we know that that's understating the case because of all of the immigration that's happening and those immigrants are applying for work and they're getting work and adding to the labor force. So if that were the case, it would suggest that 100, 150K may not be pretty good. It's not good enough. You need something more than that to ensure that unemployment doesn't keep on moving higher here. So how do you think about that?
Marisa DiNatale: Yeah, I mean, I think that as we move through this... I think you're right, but I think as we move through the year now that the border has shut down basically since June, that immigration effect on the labor force will fade. So I think it's still happening, but I think it's less so than it was, say, a year ago when we had hundreds of thousands of people coming across the border every month. So now that is not the case, that entrance into the labor force should be trickling off here month after month.
Mark Zandi: Okay. So you're saying underlying job growth, payroll job growth is 100, 150K per month. That may be a little on the soft side compared to where you'd like to see it at the moment, given the strong immigration. But we do know that the number of immigrants coming across the border has slowed sharply since President Biden's executive order, and that's going to start showing up in much slower labor force growth, more consistent with the 100, 150K. So we're good. Good to pretty good.
Marisa DiNatale: Yep.
Mark Zandi: Okay. Yeah, we're good.
Marisa DiNatale: I think that summarizes it.
Mark Zandi: Okay. Good, good. Cris, what do you think?
Cris deRitis: I'd say that report was largely expected, but that doesn't mean it makes me feel comfortable. I think there are signs of weakness there that Marisa highlighted. I also looked at the number of people with multiple jobs that ticked up pretty substantial, about half a million or so. So all signs of weakening in the job market. So again, we're at that point in the landing where it seems to be going right, but a gust of wind and you're off course once again. I'm not saying you should be nervous, but it's not terribly comfortable either.
Mark Zandi: Yeah, so I haven't looked at the multiple job holders. Can you just give us a sense of what's been happening there? What is that and what's happening? What's the trend lines here on that?
Cris deRitis: Yeah, so it's an indication of people who hold more than one job. They have a full-time job and a part-time job or two part-time jobs. An indication, broadly speaking, of people trying to piece together a full work week or certainly trying to supplement their income with additional jobs because their primary job is insufficient. So I see that as a measure of weakness. If your primary job isn't doing enough for you or you can't get enough hours, you have to take a second job. So seeing that tick up, again, it's not falling off a cliff, it's not suggesting that everyone is rushing out to get another job, but it is a sign of some weakness. And when you combine it with the other ones that Marisa mentioned, like the broader measures of unemployment ticking up, it's an indication that things are not as robust as maybe they were a year or so ago.
Mark Zandi: Do you know as a sharer of jobs, what is multiple job holders? It's moving up, but is it high relative to historical standards?
Cris deRitis: It's about 5.1%. I think that actually is in line. I don't think that's-
Mark Zandi: In line, nothing unusual. It's just been moving up to your point.
Cris deRitis: That's right.
Mark Zandi: The trend line.
Cris deRitis: Yeah, that's the-
Mark Zandi: That's the issue. I mean, if you take the trend line and can extrapolate that forward, you go, "Oh, that could be a problem." The plane's not going to land because things are slowing and if they continue to slow, at some point, you got a problem. And that's what you're saying, you're worried that those trend lines don't start to level off here.
Cris deRitis: That's exactly right. It's that point of inflection that makes you nervous, right?
Mark Zandi: Yeah, but why would... I mean, what would be the fundamental reason why those trends lines won't stabilize? Why will they keep slowing? What's the logic or intuition behind why they would continue to slow?
Cris deRitis: That there's some momentum here or that there are some lags that were not fully capturing in the data or unable to see. I think that's some of the noise that we're seeing, the revisions that we mentioned. They're not inconsequential, so they are indicating, "Hey, things are not quite as rosy as the first print suggested." So the underlying fundamentals may be weaker. The consumer maybe is indicating some weakness going forward and that would translate into softer job growth in the future.
Mark Zandi: But of course if we are soft landing, this is exactly what you would see.
Cris deRitis: Exactly. That's the-
Mark Zandi: This is exactly a soft landing, right?
Cris deRitis: Well, that's the paradox, right? At this point, the soft landing and the hard landing kind of look the same.
Mark Zandi: Look the same.
Cris deRitis: And now is the curve going to hold or is it going to continue to trend downward quick or even accelerate, right? That's the uncomfortable feelings.
Mark Zandi: Right. But you'd say the odds are, we're soft landing, but nonetheless we're coming in and we'll see how this plays out.
Cris deRitis: That's right. That's right.
Mark Zandi: And that gust of wind, who knows? We could get a gust of wind, which means couldn't predict that. That was coming from someplace we had no idea.
Cris deRitis: That's right. And the instrumentation's a little faulty there.
Mark Zandi: Yeah, yeah, given all the revisions.
Cris deRitis: Right.
Mark Zandi: Yeah. Okay.
Cris deRitis: Well what about average hourly earnings? Do you have any reaction? That came in strong month to month.
Mark Zandi: I thought three... Was it 3.8%, I heard, year over year?
Cris deRitis: Yeah, year over year. That's right. It was 0.4 on the month, though.
Mark Zandi: Yeah. 3.8.
Cris deRitis: 3.8 is fine, right?
Mark Zandi: Yeah, I mean, that's exactly... Given you're the productivity bull, so if we've got all this productivity growth with 2% inflation, 3.8 seems perfectly reasonable to me.
Cris deRitis: Yeah, it's the 0.4. But again, it's a single month.
Mark Zandi: It's a single month, affected by hours worked and mix. So no, I'm not worried about it at all. I characterize it as pretty good, the report. I'm not sure what I would've wanted to see, maybe other than the revisions, I guess. If there were no revisions, downward revisions, I'd say picture perfect, kind of right where you'd want it. I mean, underlying job growth, 150 and 150K, unemployment, 4.2%, tick up an hour's work. The wage growth numbers were pretty good. The diffusion index, I don't know, that seems like you can't ask for much better than that. And these job reports, you never get a picture perfect job report. I mean, it's rare. You might get one every... You have a sighting once every three years or something where it's completely clear that this is a good jobs report, but it wasn't that, but I thought it was pretty good. Yeah, pretty good. How about the market reaction? Cris, have been following how the stock market and bond market are digesting all this?
Cris deRitis: Yeah, stock market I think was fairly tame. I don't know if there's any update in the last few minutes here. Yeah, it's kind of flattish. And then Fed futures, that bounced around a little bit. I think we had, last I checked, a little bit more weight on a 50 basis point cut for September now. But I think it's like a 60/40 split, so not, again, overly confident that the Fed is going 50. And you always have to be conscious of the initial reaction here. There's a lot of volatility once the number comes out. So I suspect that 25 is still in play and I think that is the route the Fed will take, but certainly the market is front running that. And I think if you look further out by the end of the year, market is predicting 100, 125 basis points in cuts. So whether that's whatever combination of 25 and 50 basis point cuts we get over the next three meetings, I'm still planning on a pretty significant reduction.
Mark Zandi: So the stock market kind of no big change here.
Cris deRitis: Shook it off, yeah.
Mark Zandi: Okay. And the Fed futures are saying a little bit more weight on half a point cut in the funds rate when the Fed meets next week as opposed to a quarter point cut.
Cris deRitis: Correct.
Mark Zandi: And the 10-year treasury yield, anyone look at that? I kind of look at that as my bellwether.
Cris deRitis: Yeah, a bit flat.
Marisa DiNatale: It's down a little bit, right?
Mark Zandi: The yield is down a little bit?
Cris deRitis: It's pretty flat, right?
Mark Zandi: Pretty flat.
Cris deRitis: Yeah. I guess the news there is that the difference between the 10-year and the two-year is now positive.
Mark Zandi: Oh, is that right?
Cris deRitis: By two three basis points.
Mark Zandi: Oh, wow.
Cris deRitis: It is un-inverting, which makes it, again, that dangerous time, perhaps.
Mark Zandi: Dangerous because times pass when the curve... The curve becomes inverted, short rates rise above long, that's historically a leading indicator of recession. But what the next step is, the curve actually becomes positively slipped before you go into recession. That's what you mean.
Cris deRitis: That's right.
Mark Zandi: So here we are, it's actually now gone positive. So history would say boom, recession.
Cris deRitis: Yeah. Well, there's some exceptions there, but yeah, it's-
Mark Zandi: Oh, are there some exceptions?
Cris deRitis: There's a dangerous... Well, the other soft landing, right? I think in the '90s, we had a-
Mark Zandi: Same deal.
Cris deRitis: Same deal, but we soft landed.
Mark Zandi: We soft landed, yeah. Okay. So the one thing I'm having a hard time getting my mind around when it comes to the market expectations that investors thinking about the Fed is these very dramatic rate cuts. I mean, 50 basis points, majority of investors are saying, 50 basis points for the September meeting. And then very aggressive rate cutting after that, getting the funds rate down very quickly. What do you suppose is going on there? Do you have a view, Marisa, on that?
Marisa DiNatale: It seems like the bond market is more worried than we are about the pace of slowing in the job market. I don't know. I don't know why that is, but that's what I infer from these expectations of much bigger and faster cuts here. They assume the Fed is going to try to get back down to a neutral rate very quickly instead of taking their time. So maybe they're more spooked by these jobs reports and the upcoming revisions than we are.
Mark Zandi: Yeah. Is that, Dante, your interpretation as well? Is there any other explanation for why this is the case? Why ostensibly bond investors are more spooked about what's going on here?
Dante DeAntonio: Nothing that immediately comes to mind. I mean, it just seems like you've got to be more worried or you're anticipating that a recession is coming. We saw that earlier this cycle where there was a big expectation for rates to decline, but it was likely just that you had an increasing share of investors who thought a recession was dead ahead. And so they were expecting obviously huge cuts, and then you had another group that was expecting no cuts because they weren't expecting recession. So it could be some of that divergence in what the view is of the economy moving forward and how the Fed will obviously react in a different way if that's the case.
Mark Zandi: Yeah. Cris, any theories?
Cris deRitis: I think investors have bought into this idea that inflation is licked and that's no longer an issue and time to move on away from the restrictive policy.
Mark Zandi: Right, right. Could it be the case, I'm thinking out loud, that the distribution of possible outcomes here in the minds of bond investors isn't this normal distribution? They've got this fat tail where investors are attaching a unusually high probability that something can really go off the rails here. Something's going to come in and knock us off and push us into recession, some dark scenarios. And if you attach a much higher weight on those tail kind of scenarios, you could get this result in the futures market. Does that make sense? Is that a possibility, Cris?
Cris deRitis: I think so, yeah. You always have to be cautious when you look at those Fed futures because it's not just a bet, a single point bet in the distribution. To your point, it's used for risk management. So from that standpoint, there's a distribution of outcomes. And yeah, if the tail is a bit higher for recession risks, then that's going to push more weight on those lower rates.
Mark Zandi: Yeah. And it's hard for me to believe... I mean, that feels more right to me than the explanation that bond investors are just more pessimistic than we are. I don't know. I don't know why they would be more pessimistic, but I'm a little bit confused by why they think it's going to happen so fast here. Because my thinking is that... Two reasons why the Fed's going to go more slowly here. One is... And by the way, don't get me wrong, I would have no problem if they cut more quickly. That would be okay in my book. I think they've been obviously keeping rates too high for too long and they should get moving here and I'm all on board with them cutting rates quickly, but two reasons why they might go more slowly. One is, why should they? The economy is doing what they want it to do, inflation back in the bottle. No real pressure to go more quickly.
I mean, generally the Fed won't cut rates 50 basis points or more than a quarter point unless there's something really going off the rails somewhere and nothing's going off the rails anywhere. And the second reason is, the equilibrium rate is... That's the rate at which policy, monetary policies neither restraining or supporting growth feels... We don't ever know what it is. There's nothing etched in a stone somewhere saying that's what the equilibrium rate is. It's an empirical question. And the equilibrium rate will vary over time, given circumstances, and it's probably a lot higher right now than it has been historically. But there seems to be a lot more uncertainty with regard to what that equilibrium rate is. And if you're uncertain, in this case, I think you just go more slowly. You just kind of lower rates in a more systematic, consistent way and not dramatically. Because again, you don't know where equilibrium is. Does that resonate with you, Cris?
Cris deRitis: Yeah, I think it does.
Mark Zandi: All right. Okay, okay. All right, what does this all mean for the presidential election? I mean, that's the other question on my mind. Dante, do you have a view on that? What do you think? Is this going to favor one candidate over the other?
Dante DeAntonio: I mean, it feels to me at this point like if this status quo holds, that favors Harris, in my mind. It seems like if things start to go off the rails, that's more in Trump's wheelhouse to label him at the feet of the Biden administration and stake a claim that we need change and we need something else to happen. Whereas if the economy sort of holds up and gets through this, it sort of I think solidifies the Harris position a little bit more that things have been fine. We've dealt with inflation, the policies that have been in place have worked and not contributed to that. So it feels to me like if this holds out for another two months, that that's a positive for Harris.
Mark Zandi: Dante, your sense is that generally this is a plus for Harris over Trump because it shows the labor market is hanging tough, that we are soft landings. You can point to the low unemployment rate, the job growth, and that should favor her.
Dante DeAntonio: I think so, yeah.
Mark Zandi: Yeah. Marisa, what do you think?
Marisa DiNatale: Yeah, I mean, I'd be more worried about what the next couple of CPI reports look like. If the job market stays like this, I think it's fine. I think people are really focused on inflation, and that's been most of the talk around the economy with regard to the candidates. So I think as long as you don't see an uptick in inflation over the next few months, I think that favors her.
Mark Zandi: Yeah, okay. And Cris, what do you think?
Cris deRitis: Yeah, same. I think the focus is on prices more than labor market, as long as it remains positive. And even if it's slowing, I don't think that's a really fodder for a really aggressive political attack.
Mark Zandi: Yeah, I think all the data favor Harris. If you look at our presidential election model, we have a model that predicts who's going to be the next president based on a bunch of political and economic factors. That all increasingly points to Harris. There are three key economic variables in the model. One is gas prices, the cost of a gallon of regular unleaded, and according to our Pennsylvania Wawa... I was looking at California gas prices.
Dante DeAntonio: Don't.
Mark Zandi: Wow.
Marisa DiNatale: It's a whole other world out here.
Mark Zandi: Whole other world. But in our local Wawa back in PA, it's three buck 30, and that's moving south. I mean, we saw oil prices, they're back down. I think I saw West Texas Intermediate down below $70 a barrel, which is pretty low and probably consistent with $3 a gallon for regular unleaded. And three buck 50 is kind of a threshold. Anything above $3.50, people start to take notice of that and gets into the media and probably would favor former President Trump. Anything south of $3.50, closer to three, which it seems like where we're headed here, that would definitively favor Harris. The other is the 30-year fixed mortgage rate goes to housing affordability. And right now, Cris, I think we're at 6.3, aren't we? Or something like that on the 30-year-
Marisa DiNatale: 6.35.
Mark Zandi: 6.35. The threshold there is something closer to 7% would favor Trump. Anything south of 6.5, headed towards six, which is what it feels like we're doing here, given what's going on in the bond market and Fed expectations, that favors Harris. And then the third is real household income, real meaning after inflation. And given today's jobs numbers, if you add up the jobs, add up the hours, because hours were up, if you add up the wage growth, that picked up a little bit, that means more income. And as you point out, if inflation remains tame, which it feels like it will, particularly given the gasoline prices, then that would argue... Because diesel prices are also down and diesel goes into food and grocery prices, and that's really key to how people are thinking about inflation.
So all that, if you do the calculation there in your mind, that comes up with real incomes that are growing pretty strongly, which favors Harris. So our model is now saying that she's going to win with, I think... I missed Brendan and Justin's presentation yesterday at the conference on this, but I think we're around 280, 285 electoral votes, and she needs 270 to win. And so the economic data seems to be a tailwind behind her. Agreed? Everyone on board with that?
Cris deRitis: Yeah.
Mark Zandi: Yeah, okay. Okay, so this is going to be a short podcast because we're all in LA and we all got to get somewhere, so we got to catch planes. So we're not going to go on, but I'm going to just end the conversation with probabilities of recession. We haven't done this in a while. So what's the probability economy is going to enter into a recession, let's say between now and the end of 2025? Give me the odds and let me know if it's changed from the last time we had... I can't quite remember what everyone's odds were, but if it changed, let me know. So let me begin with you, Dante. What are the odds of recession between now and the end of next year, starting between now and the end of next year?
Dante DeAntonio: I think this is unchanged. I think 25% is basically where I'm at right now. I think they're still slightly elevated, but I don't feel any worse today than I did a month or two ago.
Mark Zandi: Okay, 25. Marisa?
Marisa DiNatale: Yeah, 25 for me.
Mark Zandi: 25 for you?
Marisa DiNatale: Yeah.
Mark Zandi: Has that changed?
Marisa DiNatale: I don't remember what I said last time.
Cris deRitis: You went up.
Marisa DiNatale: I might've been higher. Yeah, I might've been a little more spooked by that benchmark revision. Yeah, 25.
Mark Zandi: 25, okay. And Cris?
Cris deRitis: I'm sticking with a third, 33%.
Mark Zandi: Really? Are you really that high?
Cris deRitis: Yeah, yeah. It's the most dangerous time in the economy, right? Again, back to the soft landing metaphor.
Mark Zandi: Yeah. I think I'm going to go down, 20%. I think I was at 20, I went to 25, and now I'm feeling pretty good. I'm going to go back down to 20.
Cris deRitis: That's that California weather.
Mark Zandi: Is that what it is?
Cris deRitis: Feeling good. And a great conference.
Mark Zandi: Pretty good. Yeah, it was a great conference. It was a great conference. Okay, anything else, guys, before we call it a podcast? This may be a record short podcast. I'm not sure. Typically, it's probably more... It's double this length.
Marisa DiNatale: I'll just say one more thing. I mean, I think some of the other labor market data that came out this week also makes me feel a little better. So jobless claims fell. We got the JOLTS data, hiring ticked up a little bit. So it kind of just shows this slower, but okay job market. Nothing is cratering here. So all of that together makes me feel better about it.
Mark Zandi: Yeah. And I guess it's the unemployment insurance claims that we're most focused on in terms of [inaudible 00:34:08] as to whether we're soft landing or not, whether the job market's holding together or not. Anything else Dante? Cris?
Dante DeAntonio: No.
Mark Zandi: Nothing? I think we're going to call this a podcast. Thanks, everyone. Talk to you next week. Take care now.