Moody’s Analytics colleague Dante DeAntonio joins the podcast to recap the April jobs report, along with the potpourri of other economic data released this week. Marisa dives into other labor market data, Cris tackles GDP, and Mark discusses consumer confidence. All along the way, Mark points out the thorns in recent data. The team also provides an update on their recession probabilities.
Moody’s Analytics colleague Dante DeAntonio joins the podcast to recap the April jobs report, along with the potpourri of other economic data released this week. Marisa dives into other labor market data, Cris tackles GDP, and Mark discusses consumer confidence. All along the way, Mark points out the thorns in recent data. The team also provides an update on their recession probabilities.
Hosts: Mark Zandi – Chief Economist, Moody’s Analytics, Cris deRitis – Deputy Chief Economist, Moody’s Analytics, Marisa DiNatale – Senior Director - Head of Global Forecasting, Moody’s Analytics
Guest: Dante DeAntonio - Senior Director of Economic Research
Follow Mark Zandi on 'X', BlueSky or LinkedIn @MarkZandi, Cris deRitis on LinkedIn, and Marisa DiNatale on LinkedIn
Mark Zandi: Welcome to Inside Economics. I'm Mark Zandi, the chief Economist of Moody's Analytics. I'm joined with my trusty co-host, Marisa DiNatale. Cris deRitis. Hi, guys.
Cris deRitis: Hi, Mark.
Marisa DiNatale: Hi, Mark.
Mark Zandi: And it's Jobs Friday. This is May 2nd, Friday, May 2nd, and we got jobs for the month of April. And so we have Dr. DeAntonio. Hey, Dante.
Dante DeAntonio: Hi, Mark. How are you?
Mark Zandi: Good. Good. It feels like everyone was traveling this week. No? Marisa was just recounting a very long EV trek through Southern California. And you said your EV... I asked, but I didn't hear the answer. Did you have to re-juice at some point?
Marisa DiNatale: No.
Mark Zandi: Oh, cool.
Marisa DiNatale: No, I drove like seven hours on Wednesday.
Mark Zandi: Now were you sweating it out the whole time?
Marisa DiNatale: No, I wasn't. I figured it would be okay, but it would probably be close, which it was. But no, I did it. It was fine.
Mark Zandi: You didn't use your air conditioner and you didn't turn your tunes up?
Marisa DiNatale: I have the AC on blasting the whole time.
Mark Zandi: Okay. Very, very cool.
Marisa DiNatale: It can be done, folks.
Mark Zandi: It can be done.
Marisa DiNatale: With a little planning. It can be done.
Mark Zandi: Oh, you actually planned. You said, "If I need juice, I'll stop here."
Marisa DiNatale: Yeah, but I had mapped out the mileage and I figured I would be okay. Yeah.
Dante DeAntonio: It's California though, right? There's like a charger on every corner.
Cris deRitis: Great point.
Marisa DiNatale: Not in Los Angeles.
Dante DeAntonio: No? All right.
Marisa DiNatale: Right. I mean there's Chargers, but there's eight chargers per million people or something, so it's not very, it's not great.
Mark Zandi: I didn't know that. Yeah.
Marisa DiNatale: There's not enough chargers at all in la.
Dante DeAntonio: Maybe a little better than Carbon County, Pennsylvania
Marisa DiNatale: Probably.
Mark Zandi: Well, I don't understand the reference.
Dante DeAntonio: County Pennsylvania fossil fuels is big still. I don't think there are many EV chargers.
Mark Zandi: Oh, are there any EV chargers?
Marisa DiNatale: It's in the name of the county.
Mark Zandi: Yeah, the name of the county. Yeah. I didn't even know. Pennsylvania has a county named Carbon.
Dante DeAntonio: Yep.
Mark Zandi: Really?
Cris deRitis: Dante knows it well.
Dante DeAntonio: I don't know if I know it well, but I've heard of it. Probably been there at some point.
Marisa DiNatale: And where is that? Is that Western PA?
Mark Zandi: It's got to be.
Cris deRitis: It's Jim Thorpe.
Dante DeAntonio: It's more northern than western.
Mark Zandi: Yeah. Yeah. Pretty country for sure.
Dante DeAntonio: Beautiful.
Mark Zandi: Yeah. So Cris, are you traveling this week as well?
Cris deRitis: I was not.
Mark Zandi: Ah, okay. Look at That's why you look so rested.
Cris deRitis: Yeah, exactly. Yeah.
Mark Zandi: Was taking it all in.
Marisa DiNatale: You guys are all off to Miami next week, right?
Mark Zandi: Yeah. We have the big Moody's banking conference in Miami. Dante, were you traveling at all or were you looking-
Dante DeAntonio: Last week and next week, but nothing this week.
Mark Zandi: Okay. Anywhere exciting or just...
Dante DeAntonio: I'm swooping into Miami right after you to do something on the tail end of the summit, so I'll be there after you're there.
Mark Zandi: Oh, cool. Oh, good. Maybe I'll come and heckle you then.
Dante DeAntonio: That's fine.
Mark Zandi: Yeah. Okay. Really? It's fine?
Cris deRitis: [inaudible 00:03:18]
Marisa DiNatale: It would be par for the course.
Dante DeAntonio: I can't really tell you not to. I mean, is that a...
Mark Zandi: Yeah, good point. Good point. Yeah, I had a busy travel week. I'm so glad to be home. Yeah, I was in Chicago for a bit and was in Boston. A lot of asset managers meeting all kinds of asset managers, equity, fixed income, real estate, kind of interesting.
Cris deRitis: They're all very calm at the moment?
Mark Zandi: Well, asset managers are always pretty no matter what's going on. In fact, some of them kind like the chaos, right?
Cris deRitis: Volatility.
Mark Zandi: They like the volatility. So I was at a couple of shops where they were kind of happy about all the ups and downs and all the rounds. I think generally people are confused, but I'd say their mind is exactly where our mind is and we'll talk about that in the podcast. So what, I thought this was a big week for economic data. Have you ever seen a week like this past week? We don't typically have. I mean, it felt like everything came out in the same week. That's very rare, isn't it? For that?
Marisa DiNatale: It happens twice a year where we get GDP unemployment in the same week. It'll happen again in August.
Mark Zandi: So it wasn't just my imagination, but it felt like a-
Marisa DiNatale: No. It was rare to get all that added.
Mark Zandi: Blizzard of data. And I thought what we would do, we'd each go around and pick the data release that you're most focused on or interested in or you think is most telling, and then we bring it all together, talk about what it means for the economy in aggregate. Maybe we do these same summary as we've done in the past, the probability of recession, and then play the game. Although I say that with some trepidation because if we're talking about the data, we might take everybody's statistics for the game, but there was a lot of statistics, so I think we'll be fine. I think we'll be fine. Does that sound like a good game plan?
Marisa DiNatale: Great.
Mark Zandi: Great. Okay, good. All right, so Dante, you're the guest and I'm guessing I know what data release you're going to pick.
Dante DeAntonio: Yeah, I'll kick us off with the employment report, although I will say-
Mark Zandi: Oh yeah, the employment report.
Dante DeAntonio: I don't know that it's actually the most important labor data because even though it's pretty timely, it still feels pretty out of date already. So the reference week was pretty early in April, and given everything that happened in early April, it feels like this maybe is a little bit better than what reality currently is today.
Mark Zandi: Oh, explain that for a second. For the listener. Oh, I'm sorry, Cris, go ahead.
Cris deRitis: I was going to say it was right after Liberation Day, right?
Dante DeAntonio: Yeah, right. The reference week is the week that includes the 12th of the month. The 12th was on a Saturday in April, so that means that was the end of the reference week. So it actually went from the 6th to 12th. Liberation day was obviously only a couple days before that, so it's unlikely that companies were reacting to and making employment decisions that quickly in April that you would see the impact in this employment report. So it sort of looked like it. You would've expected it to look without the tariff news that came up, and that's largely because I don't think it reflects any of that tariff news that we saw about a month ago.
Mark Zandi: Good point.
Dante DeAntonio: Job growth was 177,000 in line with where it was after revisions in March, roughly still in that 150,000 trend job growth ballpark over the last three or four months, there weren't a whole lot of changes. Industry composition was largely the same as it's been. Healthcare leading the way, leisure and hospitality, transportation, warehousing, picking up some support, government holding up, I think still a little bit better than we would expect. Overall government was still positive. Federal government was down just a little bit, but still we haven't seen any of the big doge cut related layoffs in the federal government, at least not in this data.
Mark Zandi: Just a sidebar there. I think the BLS called this out. They said federal government, if the employee's on paid leave or on, I guess it's a deferral, then it's just not going to show up in the data.
Dante DeAntonio: That's right. Yeah. They continue to know if you're on any sort of paid leave or you're receiving severance, right? You're not-
Mark Zandi: Severance, right.
Dante DeAntonio: As losing your job yet. So that's not surprising, I don't think, but over the next couple months, I would expect to see a bigger impact start to show up in terms of federal government layoffs.
Mark Zandi: Right.
Dante DeAntonio: Negative revisions to the prior months, which seems like the same story we've had lately. So over the last two months, it was a combined negative revision of 58,000. So even though growth was a little strong this month, the three-month average basically stayed the same compared to last month. You had sort of offsetting negative revisions. Wage growth was-
Mark Zandi: Just a sidebar there. Sorry, I'm doing these quick sidebars.
Dante DeAntonio: You're fine.
Mark Zandi: On that one, at least my sense is that when the economy is throttling back or accelerating, then you get the revisions moving in one direction or the opposite. So if the economy's accelerating, you tend to get upward revisions to previous months, and if the economy's throttling back slowing, you tend to get downward revisions and getting downward. Last month we got down, I believe last month we got downward revisions. This month we got that pretty sizable done revisions. Is that fair?
Dante DeAntonio: Yeah, that's right. And I think, yeah, and over the last six or nine months, you've seen many more negative revisions and you've seen positive revisions.
Mark Zandi: Positive.
Dante DeAntonio: Yeah. I would agree with that. Wage growth, there wasn't really any new story there. It did decelerate slightly in April to 0.2% growth in April, but the year-over-year rate stayed the same at 3.8%. It's still been sort of at or near 4% for the last two years at least. Average weekly hours technically stayed the same, although there was a slight upward revision to March, so it stayed the same at a higher level than what we thought last month. But again, that was a pretty minor impact.
Mark Zandi: Sidebar there, is that the right word to use? Sidebar? I guess. Interruption, third... I'm interruption you. Manufacturing hours fell though, pretty sharply.
Dante DeAntonio: It's a good question. I actually-
Mark Zandi: You didn't look?
Dante DeAntonio: ... did not see it.
Mark Zandi: Oh, I shouldn't trust you.
Dante DeAntonio: You could add your stat right there.
Mark Zandi: That was my stat. Yeah. Yeah, I think it fell back.
Dante DeAntonio: It's maybe not surprising given what's going on, but.
Mark Zandi: Right.
Marisa DiNatale: Fell by over an hour. No, that's wrong.
Mark Zandi: Two-tenths.
Dante DeAntonio: Two-tenths.
Mark Zandi: 40 hours a week.
Marisa DiNatale: I was looking at the diffusion index.
Mark Zandi: Yep. Anyway, sorry about the interruption.
Dante DeAntonio: No, you're fine. Household survey again was strong, I think stronger, stronger than we think probably is currently true today. Unemployment rate was unchanged to 4.2% and that was actually, even though we had a huge increase in the labor force, labor force participation ticked up slightly. There was a big household survey employment gain over 400,000, but other than that, things were most prime labor force participation ticked up a little bit.
Mark Zandi: Can I say on the sidebar interruption, whatever the right thing is, that to your second, third significant digit? I don't want to take your stat, but-
Dante DeAntonio: I was not going to use that, but yeah, so remember last month we talked about it went from 4.14 to 4.15. It went to 4.19 this month. I mean, it's basically been unchanged even to two digits over the last three months now. So it still has not moved much at all. Employment population ratio, both overall and prime E pop, were both up again. Again, there had been a little bit of weakness in recent months on participation in an E pop, and we've seen that sort of reverse here over the last couple months. So things were on that I think pretty strong. But again, I think it's pretty strong with a big sort of, but at the end that we haven't yet really seen what the impact of the trade war will be, and it's certainly not showing up here yet, and we'll have to wait for the May data to see what impact there is.
Mark Zandi: That's it?
Dante DeAntonio: I think, yeah, we got a lot of data to talk about, right? So I was trying to keep that down short for you.
Mark Zandi: Yeah, there was a couple of things in there that made me a bit more cautious about the report. I mean, you take the top line, the 177, 177 case, say, no big deal. We talked about the revisions that shows some weakening and the consistency of the downward revision suggests the economy's kind of throttling back the hours worked in manufacturing, which goes to obviously the trade war and the impact, the disruptions that's having on the manufacturing base. The other kind of cautionary note, I think, and just want to ask you is if you look at job growth in the transportation distribution and warehousing sector, that was pretty big. And I'm wondering, and it's actually been rising strongly since last October, November, so that feels like that's consistent with the surge in imports that we've seen in anticipation of the tariffs. So there's been a lot of front loading of imports and you need to move that stuff around, therefore you need people to do it. If that's the appropriate explanation, then that would suggest there's an air pocket on the other side of this in coming months.
Dante DeAntonio: Yeah, I would agree. I mean, yeah, I think the growth is certainly not sustainable, and I think you'll likely to see a pullback, and not to steal any of Marisa's thunder, but I think in the Challenger report, transportation was up there amongst the top private industries for announced job cuts in April. So I think you will start to see some pullback here moving forward.
Mark Zandi: And then of course, the other thing was the federal government employment that's declining, but likely it's declined more than is in the data because of the severance packages and everything else just delaying when that shows up in the data. Is that fair?
Dante DeAntonio: Yeah, I think we think there's been over a hundred thousand cuts, at least that have been announced and we're pretty sure are coming. And we've only seen a very small decline in federal government employment that's been reported so far. So I think it's certainly more declines to come.
Mark Zandi: So I look at the report and it's good in that it suggests that the job market, oh, the other kind of negative was the one you pointed out early reference week. So it didn't really pick up a lot of what happened after liberation day, so-called liberation day. But I look at the report and the top line number's fine. It's good. Suggests that the labor market continue to hold firm in April through early April, and that's a critical firewall between a continued broader economic growth than a recession. Once the market, once that firewall comes down, your toast, you're in recession. So that firewall is up there, but in my mind it feels like that firewall is just getting fragile. There's a lot of cracks in the firewall and very vulnerable if the trade war, for example, were to continue on without any de-escalation. Is that fair? What I'm just saying, you come to this from the same perspective?
Dante DeAntonio: Yeah, I think that's fair. I mean, this looked fine if you sort of ignore the fact that it doesn't account for everything that's happened over the last month. So I think that's a big caveat, obviously that it looks okay. I'd be more worried if it looked very negative knowing that it doesn't really pick up what happened in April. But I think we still have reason to be concerned that things are going to get much weaker moving forward.
Mark Zandi: Yeah, I guess what I'm saying is if you look at the top line number, you come away, okay, fine. No problem. And that's how the stock market's taking it. Investors last I looked, stock market was up quite a bit, but if you look into the bowels of the report like you do, that doesn't give you as much. I don't feel quite a saying one about the number.
Dante DeAntonio: Yeah, agree. I mean, you think about if transportation warehousing starts to pull back, if government starts to pull back, you start to have fewer and fewer industries that are adding to jobs and it makes it harder to get a top line number that's strongly positive.
Mark Zandi: Right. Okay. Before we move on, Marisa, Cris, anything on the jobs numbers report that we missed? I mean, am I looking at this... Obviously I'm looking at it with dark colored glasses. Is that appropriate? How do you see it, Cris?
Cris deRitis: Yeah, I'd agree with that. It's still somewhat I, all the data I'll be talking about, it's looking in the back or the rearview mirror, so need to take it with a grain of salt. It's not incorporating all the policy changes that we know of.
Mark Zandi: Right. Marisa, any different view there?
Marisa DiNatale: I mean, I'm glad we're entering this period on this level of strength, right? Because it means it's going to be harder to knock down. But yeah, I just think we haven't seen the impact of this yet. And you can find things that look weak. If you look in the data, the number of multiple job holders has been rising for a while. The number of people working part-time for economic reasons, the number of discouraged workers, and that's all consistent with some of the other labor market data that show people aren't being laid off necessarily masse yet. But hiring has fallen to lows that we haven't seen in years and years and years. So it seems like employers aren't necessarily laying people off yet, but they're not hiring either. And I think you can find some evidence in the jobs report for that.
Mark Zandi: The other thing from a broader perspective, if you look at the unemployment rate, it hasn't really budged in about a year. It's kind of flattish, and that's after, if you go back the year prior to that, it had risen quite a bit. It had risen almost a point. We were at three and a half, well, I guess not a point, maybe six, seven, eight tenths of a percent. We're three, five, three, four, now we're at four two. And that all happened kind of late '23 going into '24. And since mid '24 it's kind of been just flat. And that seems to suggest that and growth has slowed, growth has slowed and the unemployment rate hasn't pushed up. It feels like the potential growth of the economy is starting to throttle back. Doesn't it? I mean...
Marisa DiNatale: Yeah, and I think some of that is the immigration story too. I mean, it was part of the reason for that rise in the unemployment rate had been just this massive influx of immigrants into the labor force. So that has slowed down significantly. So I think that's helped keep a ceiling on the unemployment rate.
Mark Zandi: So that suggests that the immigration effects are starting to, it feels like maybe a bit premature, but it feels like it's starting to show up in the numbers and it suggests that the economy's potential, that rate at which it can grow without unemployment changing is now throttling back here. So slowing down quite a bit. Anyway. Dante, do you agree with that kind of observation?
Dante DeAntonio: Yeah, I agree. I mean, I think that makes sense to me that there's just less room for growth.
Mark Zandi: Yeah, less room for growth. Okay. Okay. Marisa, you're up. What do you want to focus on? What data do you want to focus on?
Marisa DiNatale: I'll look at the other labor market data that we got this past week. We got a lot. So we got as we always The
Mark Zandi: Potpourri. The potpourri?
Marisa DiNatale: Yep. It's potpourri. So we got unemployment insurance claims as we do every week. There was a pop in unemployment insurance claims, so they rose 18,000 over the previous week. They're at 241,000 on the week ending April. That's still not high, but it's significantly higher than we've seen since I think February maybe even... So that does suggest that maybe layoffs are rising a little bit. You don't see it yet in the JOLTS data. You don't see it in the employment report, but you would see it here first. So that's why we focus on UI claims.
So I don't think it's flashing red, but it's certainly something to watch. It's not heading in the right direction and it's not unexpected, frankly. I think maybe one of the more concerning things in the UI claims, the UI claims report is the continuing claims. So these are people that are still unemployed. So they've already filed the initial claim for unemployment and they're still collecting unemployment insurance. This is high and this is the highest it's been since 2021. And so that again, is consistent with this story that it's just becoming harder for people to find a job. The people that are being laid off or unemployed are finding it more difficult to find a job.
Mark Zandi: Well, someone told me, and because I was traveling, I couldn't look deeply into the UI claims data that it was a few states or maybe one or two states where you saw the big jump in initial claims like New Jersey or maybe it was New York.
Marisa DiNatale: Yeah.
Mark Zandi: Is that right?
Marisa DiNatale: And Rhode Island, yeah.
Mark Zandi: Oh, okay. So it was broader than that. So it was kind of the Northeast in general.
Marisa DiNatale: Yeah, yeah.
Mark Zandi: Oh, interesting.
Marisa DiNatale: But those are pretty volatile when you look at the state level data. I was again, looking at Washington, DC, Virginia, Maryland, because that's been sort of trending up where you would see those Doge layoffs and that didn't really do anything over the month when I look at DC. I mean, it's higher than it was at the start of the year. You're certainly seeing some of that impact. But yeah, this looks like it was led by the Northeast.
Mark Zandi: So in general, kind of like the employment report, the top line number 241 initial claims, that's still pretty low.
Marisa DiNatale: Yes.
Mark Zandi: It has no alarm bells on. It's just one week. But it's clearly moving in the wrong direction. And you're saying the continuing claims also signal some stress, so kind in the bowels of the numbers you come away with looking at it with dark-colored glasses as opposed to rose colored glasses?
Marisa DiNatale: Yeah, I mean, I think right employers, and we've been talking about the impact of tariffs. I wouldn't expect all these mass layoffs immediately during this tariff announcement. I think employers are going to do what they can to avoid laying people off. The first thing they're going to do is stop hiring people. And so I think that's the impact that we're seeing is just to sort of freeze up in the rates of hiring and people leaving. People aren't going to leave their jobs when they don't feel great about labor market prospects. So that's the first thing you'll see. The layoffs will come later.
Mark Zandi: Okay. That's one part of the potpourri. What is it? One element of the potpourri? What is that one piece of the potpourri?
Dante DeAntonio: A piece? Yeah, I think a piece probably.
Marisa DiNatale: A flower petal in the potpourri.
Mark Zandi: Yeah. Okay. I like that one. Dry flower in the potpourri. What's the other dry flower?
Marisa DiNatale: So there's a bunch. I mean, there was the challenger report, as you like to point out, that I love. So this is announced job cuts by employers. So this isn't necessarily actual layoffs. It's announced layoffs. That fell quite a bit over the month, fell by 60%, but it's UPS over 60% over the year. You see that announced layoffs came, this is sort of interesting. Over the year came mostly in tech and in warehousing. So back to the whole warehousing story about tariffs and imports. It looked good in the jobs report, but here we see layoff, planned layoffs increasing in this industry in the challenger report. So they're up over the year. I mean certainly you would see some indication of that. They also cite reasons for layoffs and the people, the employers that said explicitly that the reason for layoffs as tariffs was low so far over a thousand out of all of these announced layoffs. So over a hundred thousand announced layoffs and only about a thousand of them cited tariffs directly for the reason for layoffs. Mostly it's this uncertainty souring job market conditions reason that's being given.
Mark Zandi: Oh, interesting.
Marisa DiNatale: Yeah.
Mark Zandi: Okay. That's the second dried flower. Is there a third?
Marisa DiNatale: Two other things I would point out. Maybe one is we got the ISM manufacturing survey and that has an employment index component to it that once again is below 50 indicating that manufacturers are shedding workers instead of adding them on net. And it actually rose A little bit over the month, but I mean it's been below 50 for really since the pandemic began. I mean there's been a couple months where it's popped up above 50 here and there, but you have to go all the way back to before the pandemic, before it was solidly at or above 50. So manufacturing's been quite weak for years and it continues to do nothing on the hiring front. Then the other thing I'd point out was back to the wage piece that we were talking about. The employment cost index came out, and this is a quarterly measure of wages and benefits, total compensation in the private sector and in the public sector. So private wages were up 3.4% over the year and they were up 0.8% quarter over quarter. So that's a slowdown and we haven't seen a pace that slow since 2021, I believe.
Mark Zandi: Is that good or bad?
Marisa DiNatale: They're both slowing.
Mark Zandi: Slowing. In the current context, you consider that to be an issue or, because if you go back not long ago, we were worried about inflation. We were rooting for wage growth to kind of cool off and here we are. It's cooled off now we Is that a good thing?
Marisa DiNatale: Yeah, I mean well below the 4% year over year where we kind of wanted it to be below. So I think given the prospect of higher inflation due to tariff policy over the next couple years, it's probably good that especially if you're sitting at the Fed, it's probably good that we're starting for a lower pace. It gives you more leeway here on wages and I would expect other policy to potentially push wages higher, including immigration policy. So the fact that it's slowing now is probably a good thing.
Mark Zandi: Okay. Any other dried flowers on the labor market front?
Marisa DiNatale: Well, we got jolt data.
Mark Zandi: Jolts. Yeah, you didn't mention jolts.
Marisa DiNatale: Yeah, yeah, we got the job opening and labor turnover survey data that there wasn't... Dante, I mean, maybe I'm missing something, but not much doing there really. I mean actually quits Rose A. Little bit. Layoffs fell a little bit. The hiring and the job openings rate. Hiring rate I think was kind of flat and the job openings rate continued to fall. So small changes, but nothing dramatic, I don't think.
Dante DeAntonio: And the key, I mean that's even more out of date. It's through the full month of March, so it's not into April at all. So it's not surprising that nothing really showed up there in terms of weakness.
Mark Zandi: One thing I've wondered about is when businesses respond to things like uncertainty or even weakening in sales and try to think about their payrolls in the labor market needs they have, it feels like the first thing they would cut back on if there's some concern about sales or their business is hours worked, right? And we've seen that kind of, sort of happened. They grow, at least historically. A lot of other things are going on now, but historically they cut back on temp jobs, temporary help, and that's kind of happened. I know there's a lot of dynamics there that are also involved. And then I think the next step is they pull back on open positions in hiring.
And we've seen that the hiring rate, as you pointed out last month was kind of stable, but compared to the previous month, but it's down quite a bit from where it was and it's actually feels like it's on the low side of where you'd want it to be if you look at historical kind of norms. So that then leaves you with the layoffs. So it is almost like the businesses have done everything they can to avoid layoffs, but here we are. So if anything doesn't stick roughly to script and their sales start to weaken, or business starts to start to underperform, they will start to lay off. That's kind of how I think about the progression here in the labor market. Is that fair, Marisa? Do you think about it the same way?
Marisa DiNatale: That's the way I think about it. I think layoffs are sort of the last resort, right?
Mark Zandi: Last resort.
Marisa DiNatale: It's obviously employers don't want to lay people off and it's expensive to lay people off because if you do that and then conditions change, you have to go through the process of recruiting and rehiring and training and all of that stuff. So yeah, the first thing you would do is just cut back on how much people are working. If you have hourly workers or part-time workers or workers, you can shift to part-time and then you would just not fill open positions.
Mark Zandi: Yeah. Okay. All right. Cris, you're up. What's your data release?
Cris deRitis: It's the GDP.
Mark Zandi: GDP, yeah. Q one, GDP.
Cris deRitis: Not quite a potpourri, maybe a thorny rose. Let's see.
Mark Zandi: Thorny rose. A rose. Really? A rose? There's a rose in there.
Cris deRitis: There's some rose. I don't know if it smells sweet, but-
Mark Zandi: I think you got to come up with a better metaphor. Is it a metaphor? Yeah, I think it's a metaphor. Yeah.
Cris deRitis: But anyway.
Mark Zandi: Go ahead.
Cris deRitis: It's tough to follow Potpourri.
Mark Zandi: Potpourri is pretty good.
Cris deRitis: So the big news on GDP is that we had the first decline in the first quarter since the first quarter of 2022. So that made the headlines, down 0.3% on a real inflation adjusted basis, largely due to the surge in imports that we observed in anticipation of the tariffs. So that's the new story. Tariffs grew a lot, I'm sorry, imports grew a lot because of the tariffs over 40%. And that subtracted about 4.8% from GDP. So that's a significant drag. I believe it's actually the largest drag on record, so it's a big deal.
But you did have some compensating effect here, but also due to tariffs where you had business investment actually rise about 20% with over 20%. So again, I see that as anticipatory. You had businesses who were maybe buying their computer equipment or other equipment ahead of the tariffs, and that led to some of that increased investment activity we noted. So if you look at domestic demand, which is just consumption plus investment, so you ignore the tariff of the same tariffs, you ignore the imports and net exports component here, you ignore the inventories, which again tend to be volatile but difficult to measure. Underlying domestic demand actually still looked pretty good, about 3%. Right?
Mark Zandi: But that goes about the forward buying though, right?
Cris deRitis: Oh, that's with the forward buying. Yeah. So again-
Mark Zandi: And there's a forward buying and consumption too. Consumer spending, right?
Cris deRitis: There is presumably, but consumption, and although consumption growth was positive, it was lower than it was in the fourth quarter. So there's some pullback in that consumption as well.
Mark Zandi: But despite the pull forward, you got a pretty soft consumption number.
Cris deRitis: That's what I'm saying. That's what I'm saying.
Mark Zandi: Okay, fine. Right. Okay. Yeah.
Cris deRitis: And then of course government also.
Mark Zandi: So where's the rose? Where's the rose?
Cris deRitis: Well, for now, the rose looks pretty good. It might be wilting, but...
Mark Zandi: Okay, a thorny, wilting rose. Okay, that's better. That makes more sense to me. Okay, so-
Cris deRitis: Largely looking in the rearview mirror here, that's the issue with this report.
Mark Zandi: Right. But I mean, it was a negative number, negative 0.3. And it feels like, yeah, it's related to just the anticipation of the tariffs. Also, Doge was in there too, wasn't it? Because federal government spending fell.
Cris deRitis: Yeah, point cuts.
Mark Zandi: Quarter point.
Cris deRitis: Boston and government.
Mark Zandi: So the tariffs, the trade war, and the Doge, their fingerprints all over the report. Right? I, and it was a week, no matter how you slice it feels like a week quarter, right?
Cris deRitis: Yeah, definitely weak. I suspect there'll be some revisions.
Mark Zandi: Some revisions, okay.
Cris deRitis: Maybe it comes in a little, but it's not going to swing the swing the numbers dramatically, right? Clearly.
Mark Zandi: I could see it does feel like the inventory. So what you would thought of would happen is there's a surge in imports to get ahead of the tariffs. If they're not consumed, and we know consumption was very weak, then it has to go into inventory presumably. And inventory investment did increase, but it didn't increase all that much. Not as much as you would've thought. Right? And so what you're saying is maybe because that number always gets revised because measuring inventories is tough and it's always lagged. We might see more inventory accumulation in subsequent GDP releases, and so we might go from a negative to a positive, although it's still going to be soft, it's not going to be negative, is kind what you're saying.
Cris deRitis: That's my expectation. It's just very difficult. There's estimation, there are lags in how you estimate these things, how you time them both on the inventories and on the exports, imports. It's just a difficult exercise.
Mark Zandi: So in theory, the inventory should have captured the imports, but in practice you're saying it perhaps didn't, probably didn't.
Cris deRitis: Yeah, it looks like something's missing.
Mark Zandi: Something's missing. Right. So what does that suggest for the second quarter then? Does that suggest the current quarter for GDP? Presumably another soft quarter? It could be negative, but you might see some reversal of these measurement things and you'd see kind of a pop to grow because imports will come down.
Cris deRitis: That's right. That's right. So I think we should be kind of blending these quarters together. Full picture. So again, I think Q2 will also have some quirkiness in it in terms of reversing some of these issues. But I'd expect overall softness across the board.
Mark Zandi: What other, kind of a more technical point question, and I don't know if we've talked about it in the past, but Marisa maybe, or Dante, you guys may know this. The way that bureau of this now goes to the Doge cuts and it impact on federal government spending, which declined in the quarter. The way the government calculates the government GDP or what's in the GDP report is by looking at the number of federal government employees and their compensation. And they use that as a basis for coming up with that estimate. So if you actually cut people, which was what Doge was doing, then that would show up in a decline in government GDP. And that's what we're saying. Do I have that right? Do you know, Dante or Marisa?
Marisa DiNatale: Yes.
Mark Zandi: Dante?
Marisa DiNatale: I think that reflects government wages paid.
Mark Zandi: Wages Paid, right?
Marisa DiNatale: Yeah. Right, Dante?
Dante DeAntonio: Yeah, I mean it's included in there. I'm not sure exactly how they estimate it every quarter, but I mean it's definitely there as part of government spending.
Mark Zandi: When they calculate GDP, they collect data from all kinds of sources for consumption investment, net exports, they got a blizzard of data sources. And in the case of government, I think the way they do it to make it tractable is they actually look at how many people are working in the federal government, what their comp is, and they use that as a basis for calculating government GDP, which is government spending or expenditures or outlays that are in the report. I think someone out there will correct me if I'm wrong, but I think that's the case because it's more of an accounting, almost an accounting. If you cut government jobs, you're going to hit federal government spending or GDP, and it's going to, and you get the kind of effect you saw in the first quarter. Okay. Anything else on the GDP number? The corollary to that is the personal income and consumption, consumer spending data that kind of comes out the monthly data, I guess. No surprise there. It looked like that was, it showed pull forward spending in the consumption data. But anything stand out there, Cris?
Cris deRitis: No, I didn't.
Mark Zandi: Okay. Okay. All right. Okay. All right. I'm going to go and you'll know what it is. It's the conference board survey of consumer Confidence, my favorite leading indicator of recession when that declines, typically confidence reflects, sentiment reflects the economy, what's going on with jobs, what's going on with inflation, the stock market, those kinds of things. But at points in time, the causality shifts in confidence caves declines, consumers lose faith that they're going to be able to hold into their job and their financial situation is going to erode and they pull back on spending. And that's the basis for recession typically. And the conference board survey of consumer confidence, which is a monthly survey done back many decades, I think does a really good job, particularly in recent years, a very good job of giving us a sense of what consumers are actually thinking and what they're doing. It doesn't feel as biased by political overlays as some of the other surveys do.
It just feels like it's more consistent with what consumers are actually doing and that continues to fall very sharp. We got the data point for April and it fell again more than anticipated. And a good rule of thumb historically is that if the consumer confidence index falls by more than 20 points in a three-month period, we're going in consumers to recession, consumers have lost faith, they're packing it in, and that's the start of an economic downturn a few months later. I think the average length of time between when you get that 20 point plus decline and you get recession is about six months. In the month of April, the index is down 19.3 points compared to its three... So not quite there. That kind is sort of like our forecast. I mean, it's kind of like our forecast, not quite recession, but it feels like we're awfully close and things have to start going right here. But otherwise we'll go into an economic downturn.
The other indicator in there is the job that we watch very carefully, or at least I do, the jobs easy to how easy are jobs to get and how hard are they to get? And you look at the differential and that tends to be a very good measure of unemployment. It does a pretty good job of predicting unemployment and it is consistent with stable to slightly rising unemployment here. So that's what we're saying. So all in all, that's a pretty downbeat report as well, guys, I know you look at that data too. Anything else to add on the conference board survey? Dante?
Dante DeAntonio: I'm sort of more curious what you think. Obviously if you just look over the last three months, it's not down 20 points, but it's been declining ever since November. If you look, the total decline since November is much higher than 20 points. So it's not a sharp three-month decline, but it's a sort of prolonged five-month decline at this point. So I'm not sure how you read that.
Mark Zandi: I stick to my rule of thumb because I think if you do, you're saying go look back four months or look back five months. If I look back five months since the peak, the peak was November, the election, the peak, and then since then it's been sliding, it's down. I think I did the calculation this morning, 26 or 27 points, something like that.
Dante DeAntonio: Yep, that's right.
Mark Zandi: It's not quite consistent with the rule of thumb. And I think if I go look back historically, there are periods when you might see a kind of more attenuated decline and it doesn't result in recession. So I'm sticking to my rule of thumb, but just reinforces the point. This is not something that just happened. It is been happening. People are getting nervous.
Dante DeAntonio: Makes sense.
Mark Zandi: Okay, Cris, Marisa, anything on that? No? Okay.
Cris deRitis: No. Sounds good.
Mark Zandi: All right. I guess I'm just trying to think there any other, I think we got all the data, a lot of housing data. We even put out our house price data. Oh, that declined too, right? Cris? The house price data declined for the month of April, I believe. Or March. Excuse me. It'd be March.
Cris deRitis: Right.
Mark Zandi: So that's some weakness. Anything else out there that week? That's enough, but just asking. Okay. All right. So I don't know, let's bring it all together. And what does it all mean in terms of your thinking about the economy and the way we've been kind of summarizing our perspective on that is we've been doing this for quite some time. What is the probability of recession beginning at some point this year? Let's go around the group here and get what your current probability is and how that's changed if it has at all. Marisa, what's your probability?
Marisa DiNatale: I'll go with 55%, which is down 5% from where I was a week ago.
Mark Zandi: Okay. And despite all this data, you brought it down by five points.
Marisa DiNatale: I did. Yeah.
Mark Zandi: Why?
Marisa DiNatale: I just see the administration backing off a lot of this. And I think if they continue to do that, and if they do that soon enough, then this might be salvageable. I think if this vacillation continues for a lot longer, then I think it's going to be very hard to avoid a recession. But they seem to be getting spooked by some of the data that's coming in. And I think you have a lot of CEOs whispering in the ears of administration officials warning them about the effect of the tariff policy. So I think perhaps we have a serious pullback coming soon.
Mark Zandi: Okay. So what you're saying is the key to whether we go into recession or not are the tariffs and the trade war. And if the administration is able to take on off ramp here and de-escalate, bring down the tariffs with China and others, that, and they do it soon in the next few weeks, month or so, that would be potentially sufficient to avoid recession. Even though you're over 50%, you feel less nervous about this because the folks in the administration are, and I guess overseas, the Chinese today, for example, have been saying that they want to talk about this, and so that gives you more confidence that they'll come to terms.
Marisa DiNatale: Yes, yes, but I think it has to happen soon because I think there's a real risk that even if there is a pullback, maybe the damage is already done and then it just becomes this sort of negative momentum that's building on itself. But I think if they can hammer this out in the next couple weeks month, then we might be able to salvage things.
Mark Zandi: I know this is impossible, but I'll ask it anyway. How much time? Are we saying Memorial Day? Are we saying July 4th? Are we saying Labor Day? What do you think?
Marisa DiNatale: I think in the next two to three weeks we have to have-
Mark Zandi: Memorial Day-
Marisa DiNatale: ... Have some real clarity. When is Memorial Day? Yeah, yeah, sure. Memorial Day.
Mark Zandi: Yeah. Yeah. End of May, right? Yeah, I think so. Okay. Okay. Fair enough. So you're 55 down from 60, because you're feeling a little bit better that the tariffs are going to come down here.
Marisa DiNatale: Yeah.
Mark Zandi: Trade is going to de-escalate. Dante?
Dante DeAntonio: I always struggle to remember where I was last month when we talked. I think I was at 50% and I'm going to stay at 50%. I don't feel any better than I did a month ago, but I don't feel worse yet. I think, Marisa, this time next month, I think we'll have a better sense of which direction things are headed. One, because we'll have data that's starting to show some of the initial impact of the initial announcement of tariffs. And then two, we'll have a better sense of is the administration going to walk any of this back in a meaningful way? And I think a month from now, if they have not done that, I think that there's more serious damage to come. So I'm going to hold at 50 for now and see what happens a month from now.
Mark Zandi: So kind of a similar story to Marisa, you're looking at the tariffs and the trade war, and are you saying if we don't get a de-escalation, say by Memorial Day, then your recession odds will rise?
Cris deRitis: Yeah, I say I'm saying at 50, but I think I'm going to go one direction or the other next month. They're either going to rise if nothing has happened or they're going to come in, they'll come in if there's [inaudible 00:45:52]
Mark Zandi: Got it. Makes sense. Makes sense. Cris?
Cris deRitis: I was at 55. I'm going to drop it to 50.
Mark Zandi: Okay.
Cris deRitis: Joining Dante's party. Some very similar reasons. I do see some hints at least of progress on the share front in terms of Memorial Day. I think we need something by Memorial Day, but not necessarily a finished trade deal. It's enough just to have an announcement that we're getting close or identify some specific country. I think that would certainly take some of the pressure off.
Mark Zandi: Doesn't it almost have to be China, with China?
Marisa DiNatale: Yeah.
Mark Zandi: Doesn't it? I mean-
Marisa DiNatale: I think so.
Mark Zandi: The tariffs have to come. They can be some kind of deal or an arrangement with the Japanese or the South Koreans or the Indians. It sounds like those are the Vietnam, those are the countries that might be first up in terms of getting the tariffs back in. But that seems all like a sideshow compared to China at 145. We have tariffs on their product of 145. They have tariffs on our product of 125, and that means there's no trade. Trade is collapsing, and we're the two largest economies on the planet. And if our trade's collapsing between us, it feels like that's recessionary by itself. So doesn't it have to be with China.
Cris deRitis: You certainly have to get down from 145 with China within this year to avoid recession. But in terms of the staging here, my assumption is we'll probably announce some deals whether they're finalized or not, prior to that. China's also the toughest nut to crack. And with China, I think already some indication that yeah, we're at least starting to think about talking to each other. Even today was viewed as a very positive sign. So I think we'll move in that direction. Maybe there'll be some pause or some extension, if you will. That could be a very positive sign to help rebuild some of the confidence. But you're right, if we don't deal with these very high tariffs on China, that is going to be fodder for recession. And I'd say we have a month or two maybe before it really sinks in.
Mark Zandi: Yeah, I guess just to make a more concrete, what I'm saying is it doesn't, all these other deals, all these other arrangements outside of China don't really matter in terms of what it means for whether we go into recession or not, if we continue to maintain the same tariffs on China, and they can maintain the same tariffs on us here going forward. So that's what I'm asking. That's kind of my view. I'm asking is that consistent with your view? If we don't get any movement on China, do you still think there's a chance we're going to be able to avoid going into a recession?
Cris deRitis: Extremely unlikely.
Mark Zandi: Okay.
Cris deRitis: Let's put it that way.
Mark Zandi: Fair enough. Yeah, right. It feels like it's all about China, doesn't it? To me.
Cris deRitis: At the moment.
Mark Zandi: To a large degree, to a large degree. Unless I guess you could drop tariffs on everybody across the globe and all you're left with is China and maybe, I guess, but-
Cris deRitis: Even there, I think it's going to be very difficult, right, because of the supply chain effects, in the short term, right?
Mark Zandi: Yeah. Yeah. All right. Well I was at 60. I'm still at 60 and I think it's all about China and that's why I'm still very nervous. All this other stuff seems like a sideshow to me. Any kind arrangement with Japan, it is meaningless in terms of what it means for global trade, the economy and everything else. But for China, that's massive. I and the Chinese feel like they're dug in. I mean, it doesn't feel like they're going to relent in any way. It feels tit-for-tat. So if the US raises tariffs by X, the Chinese are going to raise tariffs by X. We're now at a cap. It can't go any higher than this. These tariff rates were effectively shutting off trade.
And conversely, if the US cuts by Y, the Chinese will cut by Y. they'll just follow us down. But it's just tit-for-tat. And so if that's the case, if it's all about China and they're dug in and the dynamics are much more vexed, and it's not just quite clear how the administration is able to get those tariffs down in a way that they feel comfortable with. It just feels like the probability that they don't get a deal or they don't get an arrangement or they don't bring down the tariffs by, and I think Memorial Day's the day, kind of in the future, it feels like we go into recession. What do you think of that?
Cris deRitis: No deal with China by Memorial Day for you is the trigger.
Mark Zandi: I think that's the trigger. I think at that point we're going to see not only higher prices for a lot of things, we're going to see shortages of things. I saw this one statistic where I didn't realize this, but I believe 80 to 90% of all the ibuprofen that we consume in the United States comes from China. Comes from China.
Cris deRitis: Really?
Mark Zandi: Yeah. Acetaminophen, isn't that Tylenol? About, I don't know, I'm making this up, but 60, 70%. Can you imagine if you can't find Motrin on the store shelf, right? Advil? You can't find Advil.
Marisa DiNatale: I'm a daily Advil popper.
Mark Zandi: Oh, don't tell me that. I hear you though.
Cris deRitis: You don't see exemptions coming for those things though. I think...
Mark Zandi: The things that wear the shortages where you might see shortages? I don't.
Cris deRitis: So acute where it's so lopsided.
Mark Zandi: No. Okay, well then I think if they put on exemptions like that, then yeah, then you're moving in the right direction. That's a de-escalation. And it satisfies my, if they do that, if they do that.
Dante DeAntonio: But even then, I mean the time lags are long here. So if you wait until the shelves are empty to make a move, you're still talking about two months at least, right? I mean, it's usually like 60 to 90 days of transit, logistical time to get things from China to store shelves in the US. It's like if you wait until things are gone, you've already sort of waited too long. That seems to be the biggest concern. It's like, yeah, there's no impact right now, but if there's no flow happening, you're leading to an inevitable shortage of things at some point. And if you don't restart that flow quickly, you're going to get to that point. Even if you do make a deal in the interim. And then what does that do to consumer confidence and what impact does that have? Even if you've now made a deal, but you're still seeing the ramifications of it. I think what I'm concerned about.
Mark Zandi: Yeah, good point. Good point.
Dante DeAntonio: Oh, sorry, go ahead. Cris.
Cris deRitis: Stock up now, I think is Dante's advice.
Dante DeAntonio: I feel like that's the news back. It seems like COVID all over again where start hoarding what you need because you don't know if it's going to be there in a few months.
Mark Zandi: Yeah. The next thing I'd watch is if there's any runs on different products. People start hoarding stuff. Yeah, I mean, I know I still have toilet paper from the pandemic down in my basement. I actually have, what's that tape? Duct tape. I have duct tape from 9/11 down in my basement. I'm sure it'll come in handy at some point.
Marisa DiNatale: I don't want to know.
Mark Zandi: Yeah, you're too young. You're too young to remember. But back then they were telling everyone to have plastic sheathing and duct tape just in case there was some kind of nuclear fallout. You don't remember that, do you?
Marisa DiNatale: I'm not too young to remember, but I don't remember hoarding after 9/11. No, I don't...
Mark Zandi: Well, you were young and you thought, "Oh, nothing's going to happen to me." Yeah, yeah. I had my first child. I, were all, we were pretty nervous at that point. Cris, do you remember that? Am I making that up?
Cris deRitis: I was in DC and I don't remember.
Marisa DiNatale: So was I. I was in DC.
Mark Zandi: You don't remember the duct tape and the-
Cris deRitis: Duct tape hoarding. I must've missed out on that though.
Dante DeAntonio: I'm not going to say where I was because I don't want to make you feel bad. So I won't tell you where I was...
Marisa DiNatale: In utero?
Dante DeAntonio: I wasn't that young. I was in high school.
Mark Zandi: In high school. Yeah. That's funny.
Marisa DiNatale: Well, I'm certainly going to go out and buy Advil now. I had no idea.
Mark Zandi: There you go. There you go. Hey guys, do you want to play the game or, I mean, we've already, I'm not sure you want to play a couple rounds of the game and call it quits or what do you want to do? What's the mood of the group?
Marisa DiNatale: I'm always up for the game.
Mark Zandi: Okay, let's play-
Dante DeAntonio: Cris has got a good one. So let's go.
Mark Zandi: There's so many good ones. There's so many good ones, but, okay. Marisa, you're up.
Marisa DiNatale: Okay. 8.1-
Mark Zandi: I should say that... Can I say, I'm sorry. My fault. The stats game, we each pick a stat. The rest of the group tries to figure it out with clues, deductive reasoning and questions. The best stats one that, well, you know what I'm going to say. So go ahead, Marisa.
Marisa DiNatale: 8.1%.
Mark Zandi: 8.1%. Is it in the employment report?
Marisa DiNatale: No.
Mark Zandi: The GDP report?
Marisa DiNatale: It's a corollary of the GDP report.
Mark Zandi: Oh, in the income or consumption? Consumer spending or-
Marisa DiNatale: Yes.
Mark Zandi: Getting the consumer spending report.
Marisa DiNatale: Yeah.
Mark Zandi: Is that a growth rate?
Marisa DiNatale: Yep.
Mark Zandi: In a category. A category spending? One of the categories was up 8%, 8.1%. Yeah. Okay. Okay. Well, I think motor vehicles were up. It's got to be one of the hoarding.
Marisa DiNatale: You got it. It's motor vehicles parts.
Mark Zandi: Motor Vehicles. Oh, motor vehicles parts. Okay.
Marisa DiNatale: So real consumer spending on motor vehicles and parts was up 8.1% over the month and it was up 10.5% on a year-over-year basis, which is the strongest year-over-year growth we've seen since 2016. I think you have to go back to see a number like that. And this is just, it's the buying ahead of the tariffs. And as you two can attest to, people went out and bought cars thinking that cars are going to be a lot more expensive in a few months.
Mark Zandi: Hey, let me go next. Okay. Is it okay? Okay. I'm generally a gentleman and let everyone go and I don't dope, but I got a good one. 44. The number is 44.
Dante DeAntonio: Are there units on the 40 or...
Mark Zandi: It's an index.
Dante DeAntonio: An index?
Mark Zandi: I think of what...
Dante DeAntonio: From the conference board?
Mark Zandi: It's not from the conference board.
Marisa DiNatale: Is it from the ISM?
Mark Zandi: It is ISM manufacturing.
Marisa DiNatale: Is it? So it's something 44.
Dante DeAntonio: Is that new orders? I can not-
Mark Zandi: New orders.
Marisa DiNatale: Capital spending plans?
Mark Zandi: No.
Dante DeAntonio: Production.
Mark Zandi: Production. Production. So the production, the ISM survey, which we talked about earlier in aggregate was, I think I'm making it up, 48, I think. So below 50 threshold for contraction. But the components, if you look at the components, actual production, which by the way, if you look at the coincident economic indicators, the very best coincident indicator is jobs, employment. So the day, the month the employment goes from positive, negative is the month that the recession will be dated by the National Bureau of Research.
The second most significant coincident indicator is manufacturing, production, industrial production. So this is not that, but this is a window into that. So this is the production component of the ISM survey goes to production 44. 44 is incredibly weak. I think it got that low, barely that low in the teeth of the pandemic shutdown. And I think every recession going back, because this thing's been done for many years, decades. You get recession every time you're at this level. I mean, it's just screaming, I got a problem, in the manufacturing. But there's so much irony around that, right? Because the terrorists are supposed to be about helping the manufacturing base. It's just crushing the manufacturing base, just crushing it. So at least in the near term. So I thought that was a pretty telling statistic. Right? Dante, can I get a pat on the back for that one?
Dante DeAntonio: That was a great number.
Mark Zandi: Great numbers.
Marisa DiNatale: Congratulations.
Mark Zandi: Thank you. Yeah, very good. All right, Dante, you're up.
Dante DeAntonio: Let's go with 26,000.
Mark Zandi: Is that the number of jobs created in the transportation and distribution sector?
Dante DeAntonio: It's not. It's close to that. It's not that though. That was 29,000, but that was a good guess.
Mark Zandi: Oh, 29. Oh, man. Is it an increase in jobs in a sector?
Dante DeAntonio: It's not in a sector. It is an increase in jobs, I guess technically.
Mark Zandi: Oh. Oh, that's weird. Technically.
Dante DeAntonio: Technically.
Mark Zandi: What the hell does that mean? Technically? Was that-
Dante DeAntonio: It's technically an increase in the number of people employed, not in the number of jobs. So we're talking about the other survey here.
Mark Zandi: The household survey?
Dante DeAntonio: Yeah.
Mark Zandi: Yeah. And what's the number again? 26,000?
Dante DeAntonio: 26,000.
Marisa DiNatale: Is it like the number of... It's not an industry, is it a class of worker?
Dante DeAntonio: It's not an industry or class of worker? No.
Mark Zandi: I don't know. I give up. What is it?
Cris deRitis: Yeah, what is it?
Dante DeAntonio: So it's the adjusted household survey measure. So the household survey employment was up 436,000. But if you adjust the payroll survey concept, it's only up 26%.
Mark Zandi: He held out on me. I was looking for the dark side of the employment.
Dante DeAntonio: I almost said it in the-
Mark Zandi: Give it to me. That's a good one. That is a really good one.
Dante DeAntonio: Hold in my pocket. So yeah, if you look at the adjusted measure of household survey employment, it's only up by an average of, I think about 40,000 over the last three months. So it's quite a bit weaker than the payroll survey. Again, there can be some noise in the household survey, but it's certainly reflecting. Even it had been weak for the last couple of years because of the population control issue and they weren't capturing immigration effectively. But I think that story is harder to make now. So I think it's more likely that that's reflecting some true weakness in the labor market. So...
Marisa DiNatale: Do you know what was the big adjustment? Was it self-employed or?
Dante DeAntonio: I do not know off the top of my head. I didn't dive into it. I saw it right before we jumped on.
Mark Zandi: That's a good one. That's a really good one. Okay. Cris, you're up. You're last.
Cris deRitis: All right. This is a tough one. Widely covered in the media though. So this is, maybe our listeners will get this.
Mark Zandi: Okay.
Cris deRitis: Reported this week. 10.3% decline in the month of March compared to the previous year. I'll even...
Mark Zandi: Oh, 10.3%. Is it a price?
Cris deRitis: Nope.
Mark Zandi: Is it jobs related? Is it GDP related? No?
Cris deRitis: Nope, it's people.
Mark Zandi: Oh, it's people.
Cris deRitis: People.
Mark Zandi: Down 10.3%. People, they're reported widely covered in the media.
Cris deRitis: Yeah.
Mark Zandi: Is it Doge related?
Cris deRitis: Nope.
Marisa DiNatale: Is it immigration related?
Cris deRitis: No.
Mark Zandi: We're going to kick ourselves when we hear it, I know.
Marisa DiNatale: 10.3%
Mark Zandi: Down.
Marisa DiNatale: People.
Mark Zandi: All right, we give up. What is it, Cris?
Cris deRitis: It's international arrivals to the US. They were down 10.3% in March, which got a lot of headline play, but if you dig a little bit deeper, it's largely due to the timing of Easter this year. We had a late Easter.
Mark Zandi: Oh, I see.
Cris deRitis: I just want to highlight that. We got to be careful with some of this data that's coming out as well.
Mark Zandi: Right, right, right, right. Well, was it still weak? Even accounting for Easter? It's been weak?
Cris deRitis: It was extremely weak for Canadians. Canadians are not coming to the United States and have no plans to, but for Western Europeans it's a little bit down, but not...
Mark Zandi: Right. Right. Okay. Well that's a good one. Okay. I'm glad we did the game. Before we call it a podcast. Anything else anybody wants to bring up? Any other issues, concerns?
Cris deRitis: FOMC meeting coming up. What's your...
Mark Zandi: Next week?
Cris deRitis: Yep. What's your thought?
Mark Zandi: I can't imagine they'd do anything. Right? They're going to sit on their hands. They told us that that's what they're going to do until they get some clarity around all this tariff policy and other economic policy. So anyone disagree with that? I don't think so.
Cris deRitis: Markets wide-
Marisa DiNatale: I'm sure they're happy about this jobs report. Right. It gives them some more cover to just wait and see.
Mark Zandi: Wait and see. Oh, good point.
Marisa DiNatale: I think if this had been really more negative, then they would've had this, what do we do? Do we wait for more inflation data and see how that pans out? Or do we have to start cutting?
Mark Zandi: Yeah, that's a great point. I'm sure you're right. Certainly the pressure on the Fed would've been pretty intense if it was a soft number. Yeah. Okay. All right. Well we've got something to talk about next week for sure. Already on the docket. Very good. Okay, I think we're going to call it a podcast. I hope you guys, the listeners enjoyed it and we will talk to you next week. Take care now.