Two colleagues and regulars on Inside Economics, Marisa DiNatale and Dante DeAntonio, join Mark, Cris, and Ryan to breakdown the August U.S. Employment Report and what it means for the Federal Reserve. Due to a bad wifi connection, Mark is forced to participate all episode by cell phone.
Two colleagues and regulars on Inside Economics, Marisa DiNatale and Dante DeAntonio, join Mark, Cris, and Ryan to breakdown the August U.S. Employment Report and what it means for the Federal Reserve. Due to a bad wifi connection, Mark is forced to participate all episode by cell phone.
Follow Mark Zandi @MarkZandi, Ryan Sweet @RealTime_Econ and Cris deRitis @MiddleWayEcon for additional insight.
Mark Zandi: Welcome to Inside Economics. I'm Mark Zandi, the chief economist of Moody's Analytics and today is Jobs Day for the month of August 2022. We've got our normal crew here of Moody's Analytics economists. We got my cohost, Ryan Sweet, and Cris deRitis. Hi, guys.
Cris deRitis: Hey, Mark.
Ryan Sweet: Hey, Mark. Where are you?
Mark Zandi: Good to see you. I am in Boston. I'm moving my daughter into an apartment, and she's starting graduate school on... Well, next week sometime after Labor Day. Right now my wife and daughter... Well, let's not even go there. A lot of stuff going on here. But anyway.
Ryan Sweet: Well, I guess the most...
Mark Zandi: I see...
Ryan Sweet: Wait, are you going to a Red Sox game?
Mark Zandi: Oh, you know what? I didn't even think about that. I mean, I'm like literally just around the corner from Fenway Park. I could go there and boo, you know? I could do that.
Marisa DiNatale: Where is she going to school, Mark?
Mark Zandi: She's going to Boston U. She's getting a masters in bioinformatics, which is kind of interesting. Yeah. On her way to med school.
Ryan Sweet: That's Marisa's alma mater.
Marisa DiNatale: Yep.
Mark Zandi: Oh, it is? Here's the weirdest thing. I had never run along the Charles River. Never.
Marisa DiNatale: Really?
Mark Zandi: I've always wanted to do that. Yeah. I did it yesterday, a gorgeous day here in Boston and ran along the Charles River. Really had a lot of fun. Felt my age though. Really, all these young women passing right by me and I'm going, "What the hell? I can't even hang."
Marisa DiNatale: Well, they are in college, Mark.
Mark Zandi: I know, but still. Anyway. I see Ryan's back. Oh, by the way, it's Marisa. Marisa DiNatale.
Marisa DiNatale: Hi.
Mark Zandi: Good to have you on. You're one of the key contributors to Jobs Friday. I should, just to round it all out, introduce Dante. Dante DeAntonio. Sorry, Dante. Good to see you.
Dante DeAntonio: Good to see you, Mark.
Mark Zandi: Very good. We got Ryan back. Ryan was away for two weeks at the beach, and you definitely look like you were on the beach, Ryan. Looks like you had a great time.
Ryan Sweet: Yeah. We had a wonderful time. I'm jealous. Dante's still down there.
Mark Zandi: Oh, is that right? Yeah. Where are you guys? I know...
Dante DeAntonio: Ocean City, New Jersey. I was right down the street from Ryan.
Mark Zandi: Did you see each other on the beach? Make sand castles together and that kind of stuff?
Ryan Sweet: Yeah, our kids were playing together.
Mark Zandi: Did corporate bonding?
Ryan Sweet: Yeah.
Mark Zandi: Oh really? Your kids were playing together? Oh, cool.
Ryan Sweet: Yeah, in the ocean.
Dante DeAntonio: You'll see the expense report come through. Yeah. We were having a meeting on the beach. So...
Mark Zandi: All's fair. You guys work all the time, so that's definitely fair. Anyway. Okay.
Jobs Friday. Well, I'm really curious what people think, so we'll dive right in. I've got a view, but I won't tell you what that is until you give us a sense of the lay of land here.
So, Ryan, I think you volunteered to give us your first take on the report. What's your view on the numbers?
Ryan Sweet: All right. So overall the economy created 315,000 jobs on net between July and August. A little bit better than what we and the consensus anticipated, but it's a step down from what we've seen over the last few months trend wise.
Basically the takeaway is that the Fed is getting what they want. They want job growth to slow. They want wage growth to slow, which we saw with average hourly earnings. They want the labor force to increase which it did. The reason the unemployment increased from 3.5% to 3.7% is that we got a pretty good increase in the labor force participation rate. My favorite indicator, the prime age employment to population ratio, went from 80 to 80.3%. That's another good indication. So all in all, I think it was a really good report. I mean, there's not a lot of blemishes. I mean, people may point to the unemployment rate, but it rose for the right reason more people came into the labor force.
If you look at the labor force flows data, the number of people are going from out of the labor force to unemployed increased. So people are coming back in. I think that's a good indication. I guess, if you have to dig and try to nitpick, the duration of unemployment increased. So there was more people that were unemployed five to 12 weeks or 27 weeks and over, but again, that's kind of what the Fed wants. They want the labor demand to soften and that's going to keep people unemployed for a little bit longer. But getting back to that 315,000, the breadth of job growth was still very, very strong. So all in all, I think it was a pretty good report.
Mark Zandi: Yeah. Let me ask you, and maybe this is not the best thing to do right immediately, but getting down into the DNA of the numbers. August tends to be a soft month. I mean, if you look historically, the BLS generally comes out with a number for August that looks a little on the soft side.
In fact, I can remember, I think it was coming out of the financial crisis, and we were all waiting for the job numbers to improve and they had been improving. Then I think it was August of 2011, maybe or 2010. No, it was August of 2010. We came in with actually zero jobs in that month and everyone went into panic mode, but it just feels like every August we get surprised on the downside. And why is that? It didn't really seem to happen this month or maybe it did. Maybe the numbers were actually stronger. I'm not sure.
Ryan Sweet: That's a great point. I mean the thing I was going to point out is that over the last five years, the average revision between the government's first estimate and the third estimate. So just to be clear, our first look at employment, that number gets revised. We know it's wrong. It's going to get revised the second time and the third time, and then eventually with the benchmark revisions. But that average revision between the first estimate and the third estimate for just August over the last five years is a positive 120,000.
Odds are job growth this August is stronger than the 315,000 that we got to see today, but August is always quirky. Usually it's safe to take the under on August employment because of a low response rate. I checked and the response rate this August was actually the lowest since I think 2006. It was a pretty low response rate. We were also going from a July reference period that had five weeks between them to one that only had four. Usually when that happens, it biases job growth lower because you pull some of the jobs that would've been added in August into July. So I think bottom line, I think my gut is that you're going to see upper revisions to August over the next couple of months. Hopefully that offsets some of the downward revisions that we saw to the prior two months, which were a 107,000.
Mark Zandi: Great. Anything else you want to bring up before we get the rest of the gang's perspective on the numbers?
Ryan Sweet: No, I think we should let everybody else chime in.
Mark Zandi: Okay. Lots to digest. So Dante, you want to go next? Want to fill any gaps there in the job numbers?
Dante DeAntonio: I think Ryan mentioned participation. I think labor supply is the biggest positive news out of the report. I mean that had been the thing that we've been of waiting for it to improve over the last six months that have been just hanging there, not really doing a whole lot in a positive way. So we got a big increase in participation rates across lots of different demographic groups.
It certainly looks like people are coming back into the labor force more strongly than they had been over the last, at least six months. That should make the Fed feel better. That'll take some of the pressure off of wages, hopefully in the near term, satisfy some of that outstanding labor demand. I think that the increases in labor supply and participation are the biggest positive.
Ryan Sweet: I mean the one thing I would add to Don's comment is that what's driving job growth from a month to month basis is labor supply. The labor demand we saw in the job openings of labor turnover survey is still really, really strong. I don't know how the exact number is. Dante, is it more than 11 million or Marisa, it's 11 million job openings, right?
Dante DeAntonio: It's in that ballpark still three, right?
Cris deRitis: 11.2 11.3.
Ryan Sweet: Right.
Dante DeAntonio: It's been there for a year. Basically. Labor demand has a change is strong and it's been strong. So supply is the big issue.
Cris deRitis: It actually improved in this.
Marisa DiNatale: Yeah. In July.
Ryan Sweet: Yeah.
Mark Zandi: Well, let me ask you a question on the labor supply since we're on it. If you look at the growth in the labor force, so that's working age population times labor force participation. Labor force can be affected by both, and both are lifting labor force growth. So if you look at year over year, well over 3 million people were added to the labor force. So you divide by 12. That's not quite 300,000 per month, but that would be consistent if we were able to maintain that rate of labor force, that would be consistent with 300K in jobs and employment. So feels like labor force has really come on here quite significantly. That obviously is very important.
Ryan Sweet: No, I would agree. It's probably a function of a few things: inflation, because that's adding a lot to everyone's monthly costs to purchase the same goods and services this year as they did last year and within inflation gasoline prices, I think the past increases may have pulled more people back in.
Mark Zandi: If they just don't have the income sort of lower income households just don't have the income to pay their gas, fill their gas tank and pay their rent and everything else. So they need to come back to work. That's what you're suggesting.
Ryan Sweet: In the establishment survey. Because there's two surveys of employment, the establishment in the household and in the establishment you can have double counting. So Dante and I are double counted. So we are employed at Moody's, but we also work at a university. We teach economics. So we're counted twice in the establishment survey. So there could be some multiple job holders in the establishment survey.
Mark Zandi: Oh yeah. I never thought about that, right? Yeah. You're kind of moonlighting.
Ryan Sweet: Dante more so than I am.
Mark Zandi: Oh is that right?
Ryan Sweet: Yeah. Dante's teaching two or three classes.
Dante DeAntonio: Two now. Yeah.
Mark Zandi: Is that right? I had no idea. Well we certainly need good professors at university, so it's good that you're...
Ryan Sweet: We also need Dante in the office. He leaves at four o'clock on Monday, Wednesday, and Friday.
Dante DeAntonio: Now you're just making stuff up.
Mark Zandi: Aren't you his boss, Ryan?
Dante DeAntonio: That is true.
Ryan Sweet: Yeah.
Cris deRitis: This is the annual review.
Dante DeAntonio: Yeah, this is it right here.
Mark Zandi: Annual review. Yeah, exactly. Okay. So Dante, from your perspective, any blemishes, I mean Ryan had to go pretty deep to find the blemish. What was your blemish again? I can't remember. Oh, duration of unemployed. That's going pretty down there to find a blemish. What about you, Dante? Anything?
Dante DeAntonio: Yeah, I mean mine, mine's pretty nitpicky too, I think. The diffusion index. So you're looking at how broad job growth was the lowest that's been since January 2021 and the second lowest since the pandemic started. It's still over 62. So 62% of industry is adding to jobs, but it's definitely weakened over the last few months. It signals that job growth is not quite as broad as it's been recently.
Mark Zandi: Right. Okay. But that's still pressing pretty hard to find a blemish too. Right? Wouldn't you say? Yeah.
Dante DeAntonio: Agreed. Yeah.
Mark Zandi: Yeah. Okay. All right. Next up, Marisa, what do you think? What's your sense of the report?
Marisa DiNatale: I think it's good. I don't really see blemishes in it. I think the increase in the labor force participation rate was quite large compared to what we've seen over the past year or so. I was looking at the unemployment flows data too. It seems like that is a big part of the uptick. Unemployment is just people coming into the labor force, coming back into the labor force, more specifically to look for work. A lot of those people found jobs too. I mean actually the people coming from out of the labor force directly into a job was quite large as well.
It just looks a little softer, the downward revisions, I guess, to the June and July data, make everything look a touch softer. But again, this is kind of what we've wanted. I mean, a gain of over 300,000 by normal standards is still quite a large month on month employment gain. We've gotten used to half a million jobs a month. But yeah, I mean the breadth of job growth as Dante said, the diffusion index was down a little bit. But when you look at the detail across industries, it's hard to find anything that looks really weak. I think it's good. I can't really find anything bad in it.
Mark Zandi: Yeah.
Marisa DiNatale: Or concerning.
Mark Zandi: The flows data is pretty interesting. So you're able to see the folks exactly what their status is currently with regard to the labor market and compare that to the last month. You're saying that if you look at that data that we're seeing a lot of people that who weren't in the labor force at all last month in the month of July came back in the labor force in the month of August. Those folks who did many of them went right to jobs is what they didn't go to unemployment. They went right to jobs.
Marisa DiNatale: That's right. I mean, one interesting thing. Again, if we have to nitpick and find something negative is the number of people that stayed unemployed over the month rose and that's consistent with what somebody said. I don't remember if it was Dante or Ryan that the duration of unemployment has ticked up a little bit. People seem to be staying unemployed for a little bit longer. So that does suggest maybe some, just a little bit more friction in the labor market, which again is what we want, what the Fed wants. So it's all good. It's just a touch softer, which I don't think is a bad thing.
Mark Zandi: Right. Okay. Good. So really you had to nitpick too, to find a blemish.
Marisa DiNatale: Yeah. Yeah.
Mark Zandi: Okay. Cris, same with you. Same kind of assessment as the rest of the gang.
Cris deRitis: You have to go deep to find anything that's really concerning. So if you look at some of the demographic cuts, you can find some blemishes, but they're not major in that data does tend to be more volatile once you start to cut. So if you look at, for example, less than high school educated individuals, their participation rate did fall a bit this month, but again, things move around there or black men and women, same thing. Maybe something you put on your radar stream, but not something that screams that there's necessarily a problem right now.
I think my biggest observation may be just the, what Ryan said early on, is that August data tends to be quirky. I don't know that we want to read too much into anything. Things can, may very well get revised. So want to take this data certainly with a grain of salt. Overall I think is good report, but pay attention and be aware that things might change. We saw that June got revised down by what a hundred thousand. So there's potential here for things to move around as well.
Mark Zandi: Oh yeah. Okay. Sorry.
It's hard to disagree with anything you guys said, it felt like a great report. I'd say just a great report. I mean, job growth is moderating, but that's the script clearly need job growth to continue to moderate. We'll come back to that in a minute when we start discussing what this all means for the conduct of monetary policy and what the Fed has in mind.
Certainly moving in the right direction there. Maybe maybe I'll just, before I go on, just ask maybe you, Ryan, what do you think underlying job growth is? When I say underlying, abstracting from the vagaries of the data, abstracting from these measurement issues that we get caught up in every month. What do you think fundamentally job growth, monthly job growth is right now?
Ryan Sweet: Right close to 400.
Mark Zandi: Really?
Cris deRitis: Wow.
Ryan Sweet: 350 to 400.
Mark Zandi: I'd say lower.
Ryan Sweet: I don't know about that.
Mark Zandi: What would you say, Cris? What would you say, Cris?
Cris deRitis: I was thinking the 250 to 300 range.
Mark Zandi: Yeah.
Ryan Sweet: What the current trend is or what is sustainable? Current trend,
Mark Zandi: No.
Ryan Sweet: ... We're close to 350.
Mark Zandi: Current trend.
Ryan Sweet: 350 to 400. If you look at jobless claims that would argue that 350 to 400.
Mark Zandi: Yeah, I think that's true. I that's true. I think if you look at the six month average of monthly job growth, which is kind of what I look at to get to underlying trend, feels like it's closer to 300K than 350, but okay. We're splitting here. So let's just say in the 300,000 range.
Ryan Sweet: Three to five.
Mark Zandi: I don't know. Or maybe to settle it, Dante? Marisa, do you have a view on the underlying monthly job trend?
Dante DeAntonio: I think I'm more in Ryan's camp than I am yours Mark.
Mark Zandi: Okay.
Marisa DiNatale: You think it's higher?
Mark Zandi: Turn to Marisa. Let's turn to Marisa.
Marisa DiNatale: Yeah, I would say hopefully she agrees with you. Yeah. I think it's more like 300K. I mean again, if you look at jobless claims they're really low and even they fell last week and they're kind of hovering in a very, very low range, which suggests there isn't isn't job destruction really going on.
Ryan Sweet: I mean, over the last three months, the three month moving average is 378,000 and we know August is going to get revised. August is going to get revised higher. So I think.
Mark Zandi: Okay.
Ryan Sweet: Yeah. I mean 300, 400. I don't know where Cris's pessimism came from.
Mark Zandi: He said 250.
Cris deRitis: I'm banking on some revisions here.
Ryan Sweet: In the other direction.
Marisa DiNatale: Maybe, could you Ryan, explain why August is weird? Is it the back to school seasonal stuff or why is it always off in August?
Ryan Sweet: Yeah. So you have a bunch of quirks. You have, like you mentioned, the timing of when school years start across the country, some start mid August, late August. Some start in September. That can change from year to year. Typically, August has a low response rate. So the share of establishments that are surveyed that actually respond is pretty low. That's mainly because of vacations and people forget.
Those are the key and just these seasonal adjustment issues with timing layoffs around the summer. August peak, summer season, except for Dante and I, that's the peak. You start to see layoffs and things like that. But the timing can get thrown off from year to year. There's always some little quirks of August. Some of it I can't explain.
Mark Zandi: Okay. So just to get a number out there, given my sense of the distribution of responses to that question, let's say 350. 350K is kind of underlying monthly job growth. Just for context, and correct me if I'm wrong, and I'm sure you will, if you go back say towards the beginning of this year, it was pretty clear that the underlying rate of monthly job growth was north of 500K. Would you agree with that? Okay, so we've gone from 500K plus to say 350 and taking this one step further, what is, let's call it, break even employment growth? What monthly job growth would be consistent with stable unemployment. Ryan, I'll go back to you first. Do you have a view on that? Oh, this is...
Ryan Sweet: I think just, no, no. I was thinking, I thought I calculated this recently. I think it's closer to 150 to 200.
Mark Zandi: Really? It's that high.
Dante DeAntonio: So that's population, you're saying population growth, right? That's the underlying. That's the number you're talking about.
Ryan Sweet: Maybe that's the break. Wait. Because I did both. I did break even job. Maybe it's closer to 100 to 150.
Mark Zandi: Yeah. I mean the simple rule some I use is labor force growth of 1%, let's say. That's probably on the high side of what you can expect. The labor force is 165 million, 1% of that's 1.65 million. So, you know, divide by 12. I guess that's in the ballpark of 100-150K somewhere in there. That would be consistent with that.
So we were at 500K plus. We're now at 350K and to get to something consistent with stable unemployment, it'd have to be something 100, 150K. Everyone kind of agree with that?
Ryan Sweet: Sure.
Mark Zandi: Okay. All right. Just to complete the assessment of the August jobs numbers, as I said, I agree with everything folks said. I guess no one, I don't think anyone mentioned this, but the one blemish I saw was the decline in average weekly hours. They declined in the month by 0.1, which not a lot. That bounces around a lot, but that's that I guess is if you had to find a blemish, that would be the blemish.
Maybe did anyone mention wage growth? Ryan, did you mention wage growth? I mean, wage growth, I guess is also kind of a blemish in that it's moderating. It feels like it's moderating, but it's still well north of 5% year over year, which...
Ryan Sweet: It's 5.2% year over year.
Mark Zandi: 5.2. So that would not be consistent with the Fed's inflation target, right?
Ryan Sweet: It's slower growth though.
Mark Zandi: Well, actually I don't know if you look at it, as wage growth has measured by average hourly earnings, which is what comes from this jobs report. That's been hanging between five and five and a half percent since last fall. It really is quite stable. The growth rate's been quite stable. So I guess good news it's not accelerating, if you're looking at this from the prism of what it means for inflation, but bad news in that a blemish in that it's not moderating more significantly.
Ryan Sweet: Yeah. I'd agree with you.
Mark Zandi: Okay. Yeah. But other than that, I thought it was pretty good news. Here's the other kind of thing I'd say. I mean, broadly speaking from a labor perspective, I mean this is Labor Day weekend coming up here and just doing an assessment of the labor market more broadly. It's good. Right?
I mean, we've recovered all the jobs we lost during the pandemic recession and then some. Unemployment is low, back pretty close to pre pandemic levels. Employment of the population, another measure of the slack and labor market is back to consistent with full employment. Everything feels like, from a labor market perspective, pretty good if you're doing a broad assessment. Would anyone disagree with that kind perspective?
Ryan Sweet: No.
Dante DeAntonio: No.
Ryan Sweet: We just need more labor supply.
Mark Zandi: Yeah. You're right. Although on that front, if we're going to get more labor supply, it feels like it's got to come from working age populations, which means immigration. Right?
Ryan Sweet: Correct.
Mark Zandi: I mean, labor force participation it's down from pre pandemic, but that would've been expected even if there was no pandemic. Right? Because of the aging out of the workforce by the baby boom generation.
All right. Before we turn to the question of what all what this means for monetary policy in the Fed. Why don't we play the game, the statistics game? Is that okay with everybody? Everyone on board?
Dante DeAntonio: Sounds good.
Cris deRitis: Sure.
Mark Zandi: I don't know who I'm going to go to first.
Ryan Sweet: Cris, you have a cow bell? Do you need a cow bell?
Cris deRitis: Always.
Mark Zandi: I don't have my cow bell, unfortunately.
Ryan Sweet: You never do.
Mark Zandi: I'll let you guys lead the way.
Ryan Sweet: You can't leave home without it.
Mark Zandi: Everyone. Yeah, actually I've got a couple now. One in the office, one at home. So I'm prepared. Okay. So the game.
We each put forward a statistic, the rest of the group tries to figure that out through questions and clues and deductive reasoning. The best statistic is one where it's not too easy. So we all get it quickly. One that's not too hard where we never get it. One that's apropos to the topic at hand or recent release. Okay. Who wants to go first? Marisa. Why don't you go first?
Marisa DiNatale: Sure. Okay. 10.1%. Ryan, why are you laughing?
Ryan Sweet: Because I know what the first question Mark's going to ask if the sign is correct, but when you go with 10.1%, I think we're safe.
Mark Zandi: Is the sign correct?
Ryan Sweet: Oh.
Marisa DiNatale: Yes.
Ryan Sweet: Did it come out today?
Mark Zandi: What did you say?
Marisa DiNatale: 10.1%. This is a statistic that I derived out of today's employment report. Okay. So it doesn't appear as 10.1% in the report because I want to make it a little challenging.
Ryan Sweet: You might have stole my number. Is it a change?
Marisa DiNatale: I didn't steal anything from you. No, it's a proportion.
Ryan Sweet: Proportion.
Dante DeAntonio: Does it have to do with unemployment duration?
Marisa DiNatale: No.
Dante DeAntonio: No.
Ryan Sweet: It's not remote work related? No. Did you have to use the household survey or the establishment survey?
Marisa DiNatale: The establishment survey. It's from the establishment survey.
Mark Zandi: 10.1%. It's a ratio of something to something. It's in the establishment survey.
Ryan Sweet: This is good. This is a good one. Yeah. Just a share. Are you looking at the share of job creation by a certain industry?
Marisa DiNatale: Mm-hmm.
Ryan Sweet: All right. Now we can just start guessing.
Marisa DiNatale: Let's go down the list of industry.
Dante DeAntonio: Leisure and hospitality.
Ryan Sweet: Leisure and hospitality.
Marisa DiNatale: Yes, yes. That's what it is.
Dante DeAntonio: Was it ever. Probably.
Marisa DiNatale: That's right. So it's the proportion of the change in private sector employment made up by leisure hospitality last month. That was 10.1%. That's the lowest that it's been. I mean, this has been around almost a third of jobs on average, since the start of the pandemic each month has come from leisure hospitality. This is the lowest it's been in quite some time, since the end of 2020.
Mark Zandi: Well, that's a good one.
Marisa DiNatale: The reason I picked it is because this has been such a contributor to job growth through this entire recovery. It's still added a lot of jobs last month. It was over 30,000 jobs on net, but that isn't even statistically significant in the establishment survey. That's really kind of the first time since the labor market has gotten going after the pandemic that leisure hospitality kind of contributed much lower than average share than it has been.
Kind of going back to the diffusion index and the breadth of job growth and the labor supply question. This was maybe the poster child industry for an industry that was hurting from a lack of labor and a lack of labor supply. Apparently the people that entered the labor force last month didn't necessarily take leisure hospitality jobs, but this is kind of in the juggernaut of job growth through the pandemic. So it'll be interesting to see if this is just kind of a one month thing, because we know this is seasonal, especially what Ryan was saying the end of the summer and kind of summer type jobs coming off. But I think it bears watching.
Cris deRitis: And leisure hospitality is still the employment level is still below pre pandemic.
Marisa DiNatale: That's right. That's one of the only industries where that's the case still in the private sector. Yeah.
Mark Zandi: So do you think this is the beginning of a slowdown? Or do you think a quirk or are we going to...
Marisa DiNatale: I don't know.
Mark Zandi: See a continuation of these?
Marisa DiNatale: I don't know. Right. Because I do think that unless we see sustained continued increases in the participation rate, then it could be a slowdown. I mean, eventually this industry's going to, with the unemployment rate so low, going to start running out of people to hire and with job openings so high. So we got a nice bump in the participation rate last month. We just have to see if that's sustained, and if it is then perhaps it can keep going at the rate it has been. At some point this is going to slow just because supply has been drawn down so much.
Mark Zandi: Just from my own parochial perspective, I hope they're not finished hiring in the leisure and hospitality industry. Every hotel I go to there's an issue like...
Marisa DiNatale: Understaffed.
Mark Zandi: Well I won't even go there. Yeah. I feel so bad for the staff because you could tell they're really scrambling. I'm actually at a hotel now that people are great, but you could just tell they're stretched or running to do the valet. They're running to do this over here, doing that over there. They're doing their best they can. But that feels like they're pretty stretched.
Ryan Sweet: It's going to be more self-service mark. Yeah. Got to make your own bed.
Mark Zandi: Yeah. Make your own bed, right. That's already obviously happening to some degree. Right. But anyway. Okay. That was a good one, Marisa. Very good. I shouldn't sound too surprised. You always come up with good statistics.
Marisa DiNatale: Thanks.
Mark Zandi: You're maven. Not as good as Ryan, but you're very good at this. Okay. Dante, you're up? What's your statistic?
Dante DeAntonio: 77.2%.
Ryan Sweet: Everybody's going with percents. All right.
Mark Zandi: Yeah. Yeah. Is this...
Cris deRitis: Out today?
Mark Zandi: Obviously employment came out today.
Dante DeAntonio: Came out today, yes.
Ryan Sweet: Did you have to derive this?
Dante DeAntonio: I did not derive this.
Ryan Sweet: As reported.
Marisa DiNatale: Is it an employment population ratio of a particular group?
Dante DeAntonio: It's not.
Mark Zandi: Did it go back to your diffusion indices?
Dante DeAntonio: No, it is a household survey, which I don't usually dive into, but it's household survey.
Mark Zandi: Interesting.
Marisa DiNatale: Participation rate?
Dante DeAntonio: It is a participation rate.
Ryan Sweet: For a cohort?
Dante DeAntonio: For a cohort, yes.
Ryan Sweet: All right, I'm just asking.
Mark Zandi: So that would be people between the ages of 35 and 44.
Cris deRitis: I got it.
Ryan Sweet: Oh, Cris has got it.
Dante DeAntonio: Cris thinks he has it.
Cris deRitis: This was one of my backups. I was going to say you go,
Ryan Sweet: I thought you Googled it.
Cris deRitis: Labor. Nope. No hands on the keyboard. 25 to 54 year old women. Labor force participation.
Dante DeAntonio: That's right. Prime age women. It eclipsed its pre pandemic high, and it's actually the second highest reading ever. It's just shy of its high all time.
Marisa DiNatale: Wow.
Ryan Sweet: That's a good one.
Marisa DiNatale: Wow.
Mark Zandi: This is something that we've talked about in the past and that is the pandemic seemed to hit women harder than men in part because they work in industries that got hit hard during the pandemic, healthcare and educational services, and retailing, and leisure and hospitality. It feels like, correct me if I'm wrong, but it feels like by all these statistics, women have made it all the way back and then some. That there's no real distinction between how men and women have done since the pandemic hit. Is that fair?
Dante DeAntonio: Yeah. I think early on, right it was the industry issue was also the childcare, school issue early on in the pandemic. That has mostly subsided at this point. Now if you look at participation for prime aged men, it's been pretty flat to doing nothing and it's still below its pre pandemic level, and women are now back above. So it's a good sign.
Mark Zandi: This is from my mind's eye. So I may have it wrong, but I think I'm right. I think women, female per unemployment is now lower than male unemployment. Does anyone know if I'm right or wrong? I think I saw that in the report. No?
Dante DeAntonio: I don't know for sure.
Marisa DiNatale: I'll look.
Mark Zandi: Yeah. Okay. Yeah. Marisa, do you have a sense of that? Would you say that women have made it, that their labor market status is no different than men at this point, that they've fully recovered from the pandemic to the degree that men have?
Marisa DiNatale: Yeah. I mean, I think the recovery has been stronger among women than it has been among men, but that's also because they got hit harder. Right. So kind of like everything during the pandemic, the things that went down the fastest have kind of come up the fastest. I think we started to see that last summer when kids started going back to school and normal school years started returning to in person learning and vaccinations were widespread. So you had people start traveling again and getting out there. So you had a lot of the industries that women had been laid off in start to come roaring back. Yeah. You're right. The unemployment rate for women is now below the unemployment for men. Right.
Mark Zandi: Below men. They got that right.
Ryan Sweet: It's 3.5% for women. 3.8% for men.
Mark Zandi: Is that the first time since the pandemic hit, that's been the case? The female unemployment rate's been below the male?
Marisa DiNatale: No. No. No.
Mark Zandi: No. Okay. Here's the other thing. Dante, remember all that work we did early on measuring labor force participation by different demographic. We looked at the participation rate of parents, young parents, male and female. Correct me if I'm wrong, but I think this goes to the point about childcare. We found that the male participation rate of young parents fell just as much as or pretty close to that of women. Am I wrong? Or right. As I recall, that was the case.
Dante DeAntonio: I think it was more even than, I think a lot of the sort popular narrative was that it wasn't quite as a disparate outcome as you might think. But I think when I haven't updated that data in a while, but I think last I had looked, female, mothers had recovered pretty strongly. They had gotten hit pretty hard, but they'd recovered pretty strongly as of probably six months ago. The last time I looked at it, which signaled that I think a lot of the educational childcare impact had gotten much better as of earlier this year compared to 2021 certainly.
Marisa DiNatale: Wasn't the timing of that also a bit different? I think if I recall, I might be off Dante. Initially when the pandemic started, it was more women, it was more mothers that left the labor force or stayed home. Then you saw that sort of a delayed effect that happened it was either much later in 2020 or even 2021, where you started to see fathers leaving the labor force more almost as if there was a switch or trade off.
Dante DeAntonio: I think that's right. I think the immediate impact in April and May of 2020 was a much bigger impact to women and then that recovered a bit and then men started to come down a little bit, sort of later on. So yeah, it might have been some sort of switching effect or something else going on there.
Mark Zandi: Yeah. Okay. Hey Cris, you're up. What's your statistic?
Cris deRitis: 48%.
Mark Zandi: That comes from the job numbers, I assume.
Cris deRitis: Nope.
Mark Zandi: Oh, okay.
Dante DeAntonio: Housing.
Mark Zandi: Okay. This
Marisa DiNatale: Not housing.
Ryan Sweet: It's not housing.
Cris deRitis: It is jobs related.
Dante DeAntonio: Is it jolts?
Mark Zandi: Oh, I think I know what it is. I think I know what it is.
Cris deRitis: All right.
Dante DeAntonio: I think I know what it is.
Mark Zandi: It comes from the ISM manufacturing survey?
Cris deRitis: Nope.
Mark Zandi: Employment?
Cris deRitis: Nope.
Ryan Sweet: We're going conference board.
Cris deRitis: Yes.
Ryan Sweet: It's not the... The labor market differential was 38%, right?
Cris deRitis: That's correct. You are correct. So it's not my number.
Ryan Sweet: Okay.
Cris deRitis: It's very closely related to that number though. [inaudible 00:40:30]
Mark Zandi: Oh, so you're saying this is from the conference board survey of consumer confidence and they ask a lot of questions, many of them labor market oriented. And this is coming from one of those questions?
Cris deRitis: Yes.
Mark Zandi: That they ask.
Ryan Sweet: And derive.
Mark Zandi: Derive it.
Cris deRitis: What's that?
Dante DeAntonio: It's the share the think jobs are plentiful. You said it's a component of the differential.
Cris deRitis: Yeah, correct. That's right. That's right. I'll give you a half.
Mark Zandi: So what is it?
Cris deRitis: I'll let you two share a cowbell.
Mark Zandi: Well, I'm still in the dust here. Catch me up. So what was that number?
Cris deRitis: So 48% of respondents indicated that jobs are plentiful.
Dante DeAntonio: Oh, that's lower than...
Marisa DiNatale: Is that...
Ryan Sweet: And that's been trending down?
Marisa DiNatale: That's down.
Cris deRitis: Yeah. It was 55% at the start of the year. That's been going down throughout there, which I found interesting because we also had the jolts number come out this week, which as we mentioned earlier, actually ticked up or 11.2 million job openings. It's been high all year. It isn't as though it's been falling. The perception, at least from consumers is that jobs aren't quite as plantable as they may have been before.
Mark Zandi: Yeah. Joel's big job opening, labor turnover, survey, another BLS survey, that's lagged a month that gives breaks things down in terms of job openings, hires, separations, layoffs, that kind of thing.
Cris deRitis: Right.
Mark Zandi: Well, that's interesting. The one thing I did notice in the open positions in the jolts numbers, the number of open that you mentioned that actually increased in the month of July, the last data point.
Cris deRitis: Yeah.
Mark Zandi: I don't know if anyone else noticed it, but a large part of that increase was in financial services. It just felt weird that that would be the case. Given all the layoffs going on in the mortgage industry, just didn't feel right to me. Felt like a data quirk.
You might be asking, why focus on that number? The answer is because the Fed is. The Fed is looking at those job opening numbers as a gauge as to whether the labor market is easing up enough to get wage growth down to something more consistent with their inflation target. The jolts number went in the wrong direction. They were hope... Everything, everyone, including us was expecting the number of open decisions to decline and it actually rose. But it looked weird. Would you agree, Ryan when you looked the data?
Ryan Sweet: Yes.
Mark Zandi: Yeah. Okay. All right. Okay. That was a good one. Mixed it up a little bit, Ryan, what's your statistic?
Ryan Sweet: 0.2% month over month. Like Marisa, I had to derive it. Yeah.
Marisa DiNatale: So it's a growth rate.
Ryan Sweet: This one's hard.
Marisa DiNatale: A month on month growth rate in something?
Ryan Sweet: This one is hard, but it's important.
Marisa DiNatale: Was it out of the jobs report?
Ryan Sweet: It is. Correct. It's an important number, but it's hard. Mark, you've looked at it. Cris, Marisa, Dante, you've all looked at it at some point.
Dante DeAntonio: Oh, interesting.
Mark Zandi: It's a month to month growth rate.
Ryan Sweet: Correct?
Mark Zandi: Out of the household or employment survey?
Ryan Sweet: Employment survey.
Mark Zandi: Really?
Dante DeAntonio: He had to stop.
Ryan Sweet: I had to think for a second.
Mark Zandi: Had to stop. Wow.
Ryan Sweet: I'm coming off two weeks of vacation.
Dante DeAntonio: All right.
Mark Zandi: Yeah. But still.
Marisa DiNatale: Is it something to do with earnings?
Ryan Sweet: Earnings is part of it.
Dante DeAntonio: Part of it.
Mark Zandi: But you said it was derived.
Ryan Sweet: Yeah. You have to calculate it.
Mark Zandi: You have to calculate. It's not coming out of the report.
Ryan Sweet: Not itself.
Mark Zandi: You have to construct it.
Marisa DiNatale: It's a growth rate in average, hourly earnings of something. Am I right?
Ryan Sweet: Well, I'll give you a hint. Yes. You average hour earnings is part that's one. Then you need the second part.
Marisa DiNatale: Oh.
Dante DeAntonio: About real growth or something?
Ryan Sweet: No.
Mark Zandi: Hmm. Second. Huh?
Ryan Sweet: I'll give you a hint.
Mark Zandi: Boy. Okay.
Ryan Sweet: It provides some light into the discrepancy between GDP and GDI.
Mark Zandi: Okay. GDP gross domestic product. GDI gross domestic income. Both conceptually measuring the same thing. But GDI is on the income side of the accounts GDP on the expenditure side. So personal income.
Ryan Sweet: You're getting there. You're working yourself.
Dante DeAntonio: He's taking employment and hourly earnings and coming up with total wages or something in one month?
Ryan Sweet: You're getting very, very close Dante.
Mark Zandi: Yeah, that's what it is.
Ryan Sweet: Mark's going to kick himself because he's already over so far today.
Marisa DiNatale: It's like something to do with unit labor costs or...
Ryan Sweet: Oh, you guys are so close. All right.
Mark Zandi: Now this is the proxy for labor income.
Ryan Sweet: Very good.
Mark Zandi: Or wage and salary income.
Ryan Sweet: Yep. It's a labor income proxy. It's average hour earnings times...
Marisa DiNatale: Employment.
Ryan Sweet: Hours worked or work week. Excuse me, the work week. So this closely tracks historically personal income for wages and salaries that feeds into GDI. So if you look at the growth in this proxy versus what actual personal income in wages and salaries is doing would argue that the data that's going into GDI is being grossly overstated. Before, we were thinking the revisions were going to be GDP closer to GDI, but it looks like it's going to be the other way around. I'll send you the chart. It's pretty compelling.
Mark Zandi: Oh know, I don't want to hear that at all.
Ryan Sweet: Yeah. I know you didn't want to hear that?
Mark Zandi: So you're saying that if I take this proxy, if you take this proxy for wage and salary income and you map that against gross domestic income, GDI, it looks like the GDI is overstated compared to historical norms in that relationship.
Ryan Sweet: Yeah. I didn't go proxy to GDI. I went proxy to the input or the source data that goes into GDI, which is personal income.
Mark Zandi: Oh, I see.
Ryan Sweet: Wages and salaries. They usually line up. I mean, they're always not perfect, but they're pretty darn close. Over the last couple of years, this proxy and the source data have really diverged.
Mark Zandi: Interesting. Yeah. Can you send that to me? I'm really curious about that.
Ryan Sweet: I was going to write it up for the site. Write it up for the site today, and I'll send you the chart.
Mark Zandi: Yeah. Very good. Okay.
Dante DeAntonio: So what would GDI go down to?
Ryan Sweet: I got to calculate that. That's question number two. Yeah. I got to figure out what the revision would be. But right now it looks like the gap is 4 to 5%.
Mark Zandi: Can I just say there's only a handful of people on the planet probably understand what the heck we're talking about.
Ryan Sweet: Yeah. We just lost half of...
Mark Zandi: Yeah. Yeah. So just to make it concrete and clear, as everyone knows, GDP has declined in the last couple of quarters and set off this whole debate about, are we in recession or not? One argument against the idea that we are in recession is gross domestic income growth has been much stronger GDI. That goes back to the conceptually measuring the same thing, output of all things that we produce, but looking at different source data.
We've been thinking that the GDP number is going to be revised higher. But here Ryan is suggesting based on this other data from the employment report that maybe no. GDI over revised lower. Having said that, historically the best measure of where the economy is and where things ultimately will land in the data after all revision is a average of the GDP and the GDI. So it feels likely that GDP might be revised up. GDI might be revised down.
Ryan Sweet: You just meet in the middle.
Mark Zandi: You meet in the middle, which by the way, meaning in the middle would be zero. At least in the first half of this year, no growth in GDP.
Ryan Sweet: But if you've noticed, that the Fed has been putting greater emphasis on GDI.
Mark Zandi: I had not noticed that.
Ryan Sweet: In the minutes, they have mentioned gross domestic income, numerous times.
Mark Zandi: Of course the GDI would... Well, I was going to say it's more consistent with the employment numbers, but now you're telling me no, it's not. Really? Okay. Send me the graph. That's fine.
Ryan Sweet: I will show you the graph.
Mark Zandi: Yeah.
Ryan Sweet: Graphs don't lie.
Mark Zandi: Yeah, that's right. Until they do.
Dante DeAntonio: Or they get revised.
Ryan Sweet: They get revised. Yeah.
Mark Zandi: Yeah. Okay. I'm not going to give my number because you took every single one of my numbers. In this conversation, I feel very inadequate, but we've done enough of the game. We've got to move on.
So let's talk about what all this means for the Fed in monetary policy. Ryan, I've been going back to you first, because you were away for a couple of these podcasts. So I'm putting the onus on you. What does this all mean for monetary policy? How is the Fed looking at this report and what does it mean for the conduct of policy going forward?
Ryan Sweet: Well, I think as we discussed earlier, this is what the Fed wants. I mean, they're seeing exactly what they were hoping for. The August employment report, I don't think shifts the Fed either towards a 50 basis point rate hike in September or a 75 basis point rate hike. I think still both are on the table and what's going to make or break or ultimately factor into what the Fed will do will be the August consumer price index that we get in a couple weeks.
A lot of Fed officials have said the labor market data is not going to change their opinion. It's the inflation data. They downplayed the July consumer price index and the personal consumption expenditure deflator, basically two ways of measuring the prices that you and I are paying. August should look really good. We should get a decline in the consumer price index. So the number of regional Fed presences have said, if we get another good data point on consumer prices that may justify going from 75 down to 50. So I don't think August employment port changes anything. I think it's still up in the air. That's what financial markets are saying. They're pricing in 60, 65 basis points of tightening in September. So they're kind of on the fence between 50 and 75.
Mark Zandi: Did that change with today's numbers at all?
Ryan Sweet: A little bit. Yeah. A small really, no.
Mark Zandi: Okay. I mean, at the end of the day though, the Fed does want to see job growth, continue to throttle back here. They want to get back to that break even job number we were talking about either earlier consistent with stable unemployment. We agree that's 100 to 150K somewhere in there. That's where they, at the very minimum we got to get there. Do you think they would actually want to see it go below that? Something closer to...
Ryan Sweet: Yes, for a period of time.
Mark Zandi: ...zero. For a while?
Ryan Sweet: To ensure that inflation gets back down? Basically their checklist is let's slow GDP growth, which they can check that off, slow job growth, which that are in the process. I mean they still have more work to do. Then they want wage growth to slow and that ultimately will feed into inflation down the road.
There's lags between each of these steps. That's why the Fed's got to be careful not to go too slow or too fast. It's a very, very narrow path to what we call soft landing where the Fed achieve their objective of return, keeping the economy at full employment and returning inflation back to 2%.
Mark Zandi: Okay. Hey Marisa, do you have anything to add on into this conversation on what this job number means for monetary policy? The contact of policy?
Marisa DiNatale: I think Powell was pretty hawkish and kind of said, we have to go hard and we can't let up. I don't think this changes anything. This is still a strong jobs report. I agree CPI is probably top of mind for them, but I mean, even if we get an expected slowdown in CPI, I don't know that necessarily means they don't go 75 basis points. I think they're worried about being behind the curve here, and the odds are they go harder.
Mark Zandi: Yeah. I mean, given all the data we've gotten and what we're going to get before the September meeting when they decide 50 or 75 basis points and where everyone knows the CPI is going to be soft. I mean, we're going to get in all likelihood a negative CPI number because of the decline in gasoline prices and oil prices. What would it take for the Fed to do 50 then? I mean all these numbers we've gotten and are getting would suggest 50, what would it take for them to go 50 and not 75?
Ryan Sweet: I don't think there's any economic data besides the CPI maybe [inaudible 00:54:06] but I think they got enough flack for overemphasizing that the first time that they're going to downplay that. [inaudible 00:54:14] be financial market conditions, if they continue to ease or improve, then I think the Fed, it's guaranteed they're going to go 75.
If they tighten and tighten enough, then maybe the Fed says, all right, job growth is slowing. We're moving in the right direction. Inflation is moving in the right direction. Financial market conditions are back to where we wanted them to be because they've improved since the Fed said that we have conditions where we want them to be. I think watching financial markets is important.
Mark Zandi: Yeah. Okay. The idea being that the link between what the Fed does and the economy runs through financial markets and financial conditions, stock prices, credit spreads in the bond market, mortgage rates, value of the dollar, those kinds of things. And you're saying depending on how markets respond and react will go a long way to determining whether they feel like they need to go 50 basis or 75.
If financial conditions look tighter, meaning stock prices are down, credit spreads are wider, that makes it more likely they'll just go 50. But if the side market is looking better, credit spreads are coming in, the value of dollars coming down, mortgage rates are coming down, then more likely they go 75. So they're going to calibrate 50, 75 based on those financial conditions, which again is the link between what they're doing and what is happening to the economy.
Ryan Sweet: Exactly.
Mark Zandi: Yeah. Okay. Cris, what do you think this all means? The jobs number means for monetary policy? Did we get it right? Are we missing anything?
Cris deRitis: No, I think you got it right. I think I agree with Ryan's assessment here. From the employment report today, I think they probably focus more on the wage component there. I mean the employment is, yeah, it's kind of where they want it to be. Maybe even a little too strong relative to what they ideally would want, but certainly within the range.
I think that 5.2% wage growth is still too high for them. I mean that certainly would favor more of the 75 basis point approach. I think Ryan's right. It's really about at this point, given what's left in terms of the data reporting before the meeting, it's more about financial markets and maybe expectations more broadly. That's going to drive their 50 versus 75 decision. Based on what we have today, personally I think they are going to favor the 75 still.
Mark Zandi: Really why?
Cris deRitis: So you can look at this labor report in kind of two ways, right? Well, it's right in the middle, right. It's right in that goalie locks position there, and you can say, oh, well the labor market is still strong enough. I'm not really breaking the economy. I can afford to go a bit harder or even be hawkish here early on just to really nail down the expectations. That's my interpretation. Still given that the wage growth is still too high, too hot for what they would like and why not err on that more aggressive side at this point.
Mark Zandi: Yeah. I guess the other thing I'd throw out there that maybe they're focused on would be inflation expectations.
I think you're right, Cris, that at the moment that would favor 75 over 50 because even after all that hawkish talk coming out of Jackson Hole and Powell's speech and subsequent speeches by other Fed bank presidents. They feel a little on the high side to me. I mean, if you look at one year five year forwards, that's inflation, it's coming out of the bond market, tips, treasury inflation, protected securities inflation swaps. It's inflation a year from now and the subsequent five year period, which I think we've talked in the past is at least my favorite measurement of expectations when it comes to trying to assess monetary policy. I look today it's a 2.7%. That's consumer price inflation. That's obviously high. The top end of the Fed's target is probably two and a half on CPI, consumer price inflation. So despite all that hawkish talk, it feels like it's still on the high side. So since you're right, that might be the case.
Dante, any perspective on this, any disagreements with what we're saying in terms of what it means for policy monetary policy?
Dante DeAntonio: Yeah. I think I probably side a little bit more with Cris. I think the jolts data popping up in July, even if it is a little bit quirky, certainly is probably unsettling that labor demand doesn't look like it's really come in much at all. Then on wage growth, I think the DCI is old at this point, but the last print you have from the DCI was actually in acceleration in growth in the second quarter, which obviously is unsettling to them and they won't have the third quarter data yet.
I think the labor demand issue, even though job growth seems like it's slowing, I think there's still enough signals out there that the job market is strong and running hotter than they want that could easily push them to 75, unless there's a much bigger than expected decline in CPI. I think that's the only thing they might save that.
Mark Zandi: Yeah, ECI being the employment cost index, which is probably the broadest and most consistent measure of wage growth. It's just lagged. We only have data through Q2 of 2022. As you're pointing out, that was a little disquieting on the wage front continued strong acceleration.
I think Ryan, correct me if I'm wrong, but I think in our baseline outlook, we do have 50 basis points at the September meeting and then two more quarter point rate hikes in the terminal rates. So it kind of where the Fed ultimately lands is 3.5%, and they keep the funds rate target there through the spring of '24. Is that right? Do I have that right?
Ryan Sweet: Yes. That's our current baseline, but I think we got to make a decision this weekend if we're going 75 in September or 50.
Mark Zandi: Yeah. Okay. Well, we'll talk about that. Hey, very quickly because I got to jump. What's the probability of recession? So I'm going to go around the horn here and get your sense of it over the next 12, 18 months. Marisa, what's your assessment of the probability of recession over the next year or so?
Marisa DiNatale: 49%.
Mark Zandi: Okay. Fair enough.
Dante DeAntonio: Can I get a decimal point.
Mark Zandi: Right at the end of the line.
Marisa DiNatale: Down from 50 last month.
Mark Zandi: Ooh. That's progress. Oh, very good. The reason it came down to basis point?
Marisa DiNatale: I don't know. I just think the...
Dante DeAntonio: Your mood.
Marisa DiNatale: The data. Yeah. My mood. I'm less concerned about... Things seem to be heading in the right direction. I mean, yeah, the job market is still too hot and the Fed could put the kibosh on all of this and that seems the most likely kind of path we go down if we do get a recession. External to that, I think things look pretty good.
Mark Zandi: Okay. Very good. And Dante, your probability?
Dante DeAntonio: Marisa actually stole my answer. I'd say just under 50%. I think I was probably 55% last month, and it's come down a little bit. I think we're on the right side of 50/50 now.
Mark Zandi: Oh, cool. Very cool. So can we say 49?
Dante DeAntonio: 49 works. Yeah.
Mark Zandi: Okay, good. Cris. Cris is definitely going to be higher than that. What's your probability?
Cris deRitis: I'm sticking with 60. This doesn't...
Mark Zandi: 6-0. No change.
Cris deRitis: No change.
Mark Zandi: Yeah. Yep. And Ryan?
Ryan Sweet: I'm down closer to Cris now. I was at 65, but now I'm at 60.
Mark Zandi: Ah, now that is fascinating.
Ryan Sweet: Even though we had a vulgar moment with Powell. I think they have a better chance of pulling... I don't think they're going to pull it off, but I think they have a little bit of a better chance now.
Mark Zandi: Well, that's measurably better. Because you were like at 65, weren't you?
Ryan Sweet: I was.
Mark Zandi: Came from 65 to yeah. You're 65/60. Cris is holding his number at 60. I'm still at 45%. I think I was a little higher than that. I think I would've said 49, 50 maybe a few weeks ago, but I'm back down to 45. So feels like we're moving kind of in the more optimistic direction. It's hard to say we're optimistic, but moving in the right direction.
All right. Well very good. We'll save those probabilities for posterity, and we'll come back to them and reevaluate next week. Anything else to add guys before we call it a podcast? Any other burning issues?
Dante DeAntonio: Happy Labor Day.
Mark Zandi: I hope not because I got to go.
Ryan Sweet: All right.
Mark Zandi: Yeah. Oh yeah. Happy Labor Day, everybody. We will talk to you next week. So with that we'll say goodbye. Thank you, everyone.