In a rare Saturday morning taping of the podcast, Dante and Matt join Mark (where’s Cris and Marisa?) to disentangle the considerable crosscurrents in the May jobs report. Surging immigration is complicating interpretation of the numbers. Next week’s all-important report on consumer price inflation was also the fodder of discussion, as was Mark’s Washington Post op-ed arguing the Fed should cut rates.
In a rare Saturday morning taping of the podcast, Dante and Matt join Mark (where’s Cris and Marisa?) to disentangle the considerable crosscurrents in the May jobs report. Surging immigration is complicating interpretation of the numbers. Next week’s all-important report on consumer price inflation was also the fodder of discussion, as was Mark’s Washington Post op-ed arguing the Fed should cut rates.
Guest Hosts: Matt Colyar - Assistant Director, Moody's Analytics, Dante DeAntonio - Senior Director, Moody's Analytics
Hosts: Mark Zandi – Chief Economist, Moody’s Analytics, Cris deRitis – Deputy Chief Economist, Moody’s Analytics, and Marisa DiNatale – Senior Director - Head of Global Forecasting, Moody’s Analytics
Follow Mark Zandi on 'X' @MarkZandi, Cris deRitis on LinkedIn, and Marisa DiNatale on LinkedIn
Mark Zandi: Welcome to Inside Economics. I'm Mark Zandi, the Chief Economist of Moody's Analytics, and I'm joined by two of my colleagues, but not the two you might expect. Cris deRitis and Marisa DiNatale, my typical cohosts, are AWOL. And I've got, though, two other colleagues. Thank you for joining Dante DeAntonio and Matt Colyar. Good to see.
Dante DeAntonio: Colyar. Colyar.
Matt Colyar: Hi, Mark.
Mark Zandi: Got that right, Matt?
Matt Colyar: I would say so, yeah. That was above average.
Mark Zandi: Above average. Above average. Not quite there yet, but a little bit better than average. That's good. It's good to see you guys.
Matt Colyar: [Inaudible 00:00:50].
Dante DeAntonio: Good to see you too.
Mark Zandi: Thanks for stepping in. We had to do this. This is Saturday morning, June the eighth, so the day after jobs Friday. We typically record this on the Friday, but I was at the CBO Congressional Budget Office yesterday, my favorite day of the year.
Dante DeAntonio: How did that go?
Mark Zandi: It's really cool. There's a panel of advisors, economic advisors that provide advice to CBO, and actually this happens twice a year. The economists and CBO staff get together and discuss issues that are critical to the CBO work and forecast. And so very interesting topics, all very practical. The CBO, because they're forecasting the economy and the budget... Just for everybody who doesn't know, the CBO is the nonpartisan group that does the budget forecast for the US and they have to do an economic forecast. So they have the same issues, problems that we have in our work. And so it's very, very relevant and very much enjoy. And the other economists there are pretty cool. They're a lot of very high-powered academicians and practitioners, and it's really a really cool day, but it's an all-encompassing day. I couldn't break away and do the Inside Economics podcast, so that's why we're here-
Dante DeAntonio: That's why we're here.
Mark Zandi: ... Saturday morning. Last week was also, we had our conference, right, Dante? You were there.
Dante DeAntonio: I was, yeah. I thought it went really good.
Mark Zandi: You were mano a mano with Cris deRitis on productivity.
Dante DeAntonio: That's right.
Mark Zandi: I missed the session. Well, who won?
Dante DeAntonio: I think we both tried to claim victory at the end, so I'm not really sure that there was a clear consensus on who won. I think we both felt pretty good about our arguments,
Mark Zandi: And that's the problem with productivity. You can argue both sides of that one pretty easily, right?
Dante DeAntonio: That's right.
Mark Zandi: Strong, weak, so forth and so on. But you were the skeptic?
Dante DeAntonio: I am the productivity skeptic of the group, yeah.
Mark Zandi: Yeah, right. And Cris is the optimist. So I'm sorry I missed that, but you're going to do it again.
Dante DeAntonio: Are we?
Mark Zandi: Yeah. Oh, you didn't know? Yeah, we've got two more conferences, one in Southern California, I think Irvine, and Chicago later in the year. I'm not sure exactly when, but we're going to reprise the DC conference this past week.
Dante DeAntonio: Gives me a chance to refine my argument.
Mark Zandi: Exactly. Exactly. Get another data point or two.
Dante DeAntonio: There we go.
Mark Zandi: And those productivity numbers have been on your side most recently, right?
Dante DeAntonio: Yeah, they haven't looked great recently, so we'll see what Q2 looks like when it comes out.
Mark Zandi: Yeah. Okay. All right. Very good. Okay, well, the big news obviously is the jobs report, right?
Dante DeAntonio: Yeah.
Mark Zandi: And Dante, do you want to just start us off here? What do you think of the report?
Dante DeAntonio: Sure. I think it's a good report in terms of top line job growth, obviously very strong, stronger than expectations. We're back in that pattern that we had in the first quarter of the year where job growth is coming in a little bit hotter than people expect. Certainly there are some holes in the report that we can talk about and discuss.
But in terms of job growth, broad based, more so than it has been in recent months. Still healthcare leading the way in terms of job gains, but you've got leisure and hospitality that picked back up again. Public sector hiring picked back up again. Professional business services had its strongest month of job growth in a while, so all those contributed to the 272,000 headline job number. Still averaging right around 250,000 over the last three months, which has been pretty stable. Even if you go back a year ago, that three-month average is basically the same as it was a year ago. So we've had some ups and downs over the last 12 months, but trend drive growth looks like it really has not moved a whole lot over the last year. Revisions were pretty small, not anything to really be concerned about this month.
Wage growth maybe is one thing that gets people a little bit concerned, I think. We had a good month last month. Wages were only up 0.2% over the month. In May, that doubled, they were up 0.4%. Brings year-over-year wage growth back just above 4%, 4.1% on a year-over-year basis. Again, I don't know that that's anything to be super concerned about at this moment, but certainly a little bit stronger than I think we'd like to see. Weekly hours held steady, which I think is probably good in this context. We've seen it deteriorate a little bit over the last six to 12 months, and so I think holding steady or improving slightly is good at this point. The big unknown again comes from the household survey where it looks like you're-
Mark Zandi: Before we move on to the household survey. So you've been focused on the establishment survey, the survey businesses and lots of jobs, surprising number of jobs. And it sounded like you said underlying job growth, abstracting from the monthly vagaries of the data, is about 250K. Is that right?
Dante DeAntonio: That's right, yep.
Mark Zandi: Yeah. If you had asked me a year ago, five years ago, 10 years ago, what sustainable job growth, underlying job growth would be today, I might've said 50K or 100K, not 250K.
Dante DeAntonio: Agreed. And I think obviously there's a different dynamic at play on the supply side of the market I think than we would've expected those years ago, where certainly I think immigration is helping fuel the supply side of the labor market more so than we would've thought and allowing for job growth to stay this strong with the unemployment rate holding steady and actually edging a little bit higher here over the last couple months.
Mark Zandi: So what you're saying is that we can sustain this pace of job growth, at least for as long as immigration remains as strong as it is. So we've got all these folks streaming across the border, they're getting authorization to work, they're going to work. That's showing up on the payrolls of businesses in the numbers we're seeing. So the fact that we're creating this many jobs, it's a good thing and it's not a problem because we've got plenty of labor supply because of the immigration that we're experiencing?
Dante DeAntonio: Yeah, I think so. Again, we're seeing that level of job growth without seeing the unemployment rate move lower without wage growth-
Mark Zandi: Actually moving up, right?
Dante DeAntonio: Right. Actually moving up. Wage growth was a little bit hot this month, but that's not a trend at this point. So it seems like we're able to generate that level of job growth without pushing wage growth higher without the labor market getting tighter essentially. So that's a good sign.
Mark Zandi: Before we move on to the household survey, Matt, maybe I'll bring you into the conversation. What do you think of that diagnosis or description of the payroll survey and what's going on there?
Matt Colyar: I think that's all the main points. I think the 250K underlying job growth, surprising we can sustain that and see the unemployment rate tick up, but like we're mentioning, just surprising is the level of immigration that's pulled that whole level up.
Mark Zandi: Right, right. Okay. But the report is schizophrenic. The jobs report is schizophrenic, right, because as you were just about to say about the... So there's the establishment survey and then there's this survey of households, which is the basis for the unemployment rate. And as part of that, the Bureau of labor statistics estimates jobs and labor force. And that's telling a very different story, right? Dante?
Dante DeAntonio: It is, yeah. I mean the size of the labor force fell, the number of people employed as measured by the household survey fell by just over 400,000 compared to a gain 272,000 in the payroll survey. The result of that dynamic is that the unemployment rate ticked slightly higher to 4%. That's the first time we've hit that 4% threshold since January of 2022, I believe. So we'd been sub 4% for more than two years at this point. And again, it feels like you're reading a different report when you look at the household survey compared to the payroll survey. Again, it's not, I don't think flashing that a recession is dead ahead with unemployment at 4%, but it's certainly weaker than the payroll survey in terms of what it's signaling about the labor market.
Mark Zandi: So why? I mean the payroll survey's saying great guns, we're creating a boatload of jobs, a household survey saying not so much, that's not happening. Where's the immigration effects in the household survey?
Dante DeAntonio: Yeah, I mean I think we've touched on it a little bit before, but yeah, I mean I think the immigration effects are harder to pick up in the household survey. The household survey is benchmarked to or the population controls that are used are based on Census Bureau estimates of the population at that time. We know that the Census Bureau estimates of population are severely undercounting immigration today. And so we're controlling that survey to a level of population that's probably not accurate, which is essentially pulling down those estimates from what they could be.
Again, the effect of that probably has minimal impact on the unemployment rate because if you're misrepresenting the size of the labor force and the number of people employed and the unemployment rate all to a similar degree, it shouldn't have a huge effect on the calculated rates that we get. And I think that's part of why we haven't seen the unemployment rate drastically start around as a result of this. But it gives you these wacky looking results in terms of how are we adding 272,000 jobs, but the labor force is actually getting smaller and the employment that we're measuring in the household survey is falling by more than 400,000. You get some of those strange results in level terms, but the unemployment rate still looks pretty good.
Mark Zandi: So just to reinforce what you're saying, you're saying the household survey actually isn't picking up the immigration because ultimately that survey is, let's call it benchmarked to population estimates. Those population estimates are coming from the Census. And the Census hasn't incorporated the surge in immigration that we've seen over the last couple three years into their numbers, therefore they're understating population labor force and therefore what's going on with jobs based on the household survey? There may be other things going on in terms of survey responses by immigrants, although I've heard that argued on both sides. I mean, one argument is these immigrants, they're asylum seekers, are going to be nervous about talking to government survey takers. They don't want to participate. Although I've also heard the other argument that they do have a court date. They're in the country, and they don't want to run afoul of the government, therefore if a government statistician knocks on the door, so to speak, that they're going to respond because they don't want to run askew to a government statistical... You know what I mean?
Dante DeAntonio: Right.
Mark Zandi: It's Saturday morning, I'm having a hard time getting my words out. I have had my coffee, but I haven't had my cereal yet. But you get my drift. So it feels like the real problem here is the population counts, not the survey responses?
Dante DeAntonio: Yeah, I would agree. And I mean I think if anything, it's probably, they're less likely to be picked up in the survey in the first place. So whether or not they would answer the questions or not, I don't know that it matters a whole lot. I think they're less likely to be picked up just because they're just recently into the country. Until you work your way through that process and can be sampled into the survey, you're just less likely to get talked to in the first place. And so we know that the immigrants coming in have a strong proclivity to work, and so if you're not capturing that dynamic of them going to work pretty quickly, it's going to weigh on some of those labor force and employment numbers as well.
Mark Zandi: Yeah. Okay. Matt, anything to add on the household survey?
Matt Colyar: Dante, I think you've looked at it, the 16 to 24 year olds, they're just getting out of college, and there was a really wacky number there that I think explains a lot of that decline. Do you-
Mark Zandi: Decline in what?
Matt Colyar: The household employment number? So the -458. I guess that's the adjusted to CES measure. But-
Mark Zandi: Hold on. Now you're saying a lot of things that no one understands.
Matt Colyar: You're right.
Mark Zandi: So you're saying household employment fell and you're saying one thing we have to consider is that the household employment definition is not the same as the payroll. And if you make a correction to put it to apples to apples, did the household employment number also fall if I put it on a payroll survey-based definition?
Matt Colyar: It did.
Mark Zandi: Okay. And you're saying that fell largely because of a decline in the number of young people working?
Matt Colyar: Yes, and to an unusual degree, I mean, there's a lot of seasonal stuff going on, as you could probably guess. It's May, kids are graduating college, high school, picking up jobs, and it was a strength in March and April, almost as if those jobs started earlier. So now in May when you're expecting a lot, there was not. So there's this huge adjustment negatively to smooth things out over the course of a year, and that explains most of the decline in the household survey. I don't know if you have a difference of opinion there, Dante, but that's how I saw it?
Dante DeAntonio: No, yeah. If you look at just prime age workers, if you look at just 25 to 54 year olds, employment in the household survey actually rose, labor force actually grew slightly for that group. So if you take out the more volatile 16 to 24 group, and then you take out the more volatile and over group in terms of movements in the labor force, that prime age group looks much better. They're working more, they're more likely to be in the labor force than they were a month ago. So I think that negative number on the labor force and employment is a little bit skewed by what's going on in the youngest and older workers this month.
Mark Zandi: Okay. Okay. All right. But let's take a step back because we've been in the weeds down into the bowels of these numbers. Let's just take a step back. If I look more broadly at the labor market data, I'm not really sure what to make of it. I mean, the top line is that monthly payroll employment gain, the 250,000 per month. Okay, you look at that, you go, everything feels fine. The economy's resilient, strong, creating a lot of jobs, as you pointed out, it's broad-based across industry. That all feels pretty good. And then one other point, if you take the job growth and the growth in wages, average hourly earnings, that does suggest a lot of income being generated and that income obviously is the fodder for consumers to continue to spend, which has been the key engine of growth. So the fuel for that growth seems to be in place, no problem there.
But then if I look at other labor market indicators, I don't feel quite as sanguine. Hiring rates are way off from where they were a year or two ago, and just anecdotally talking to people in my world, young people in my world looking for work, it's not easy. It feels like they're struggling a little bit to find jobs. And that goes to unfilled positions, they're elevated, but they've come down a lot and they seem to be falling pretty fast here. Quit rates are down, temp jobs are down, hours worked are down. Everything you look at, except for the job creation, which goes back to the low... I guess the positive is layoffs are still low, but the other dynamics in the labor market looking under the hood don't feel particularly good. So how do you add that all up, Dante, in your thinking?
Dante DeAntonio: Yeah, I saw somebody with a similar sentiment I think yesterday when I was reading that said it's a great labor market if you're already in it, but it's not a great labor market if you're trying to get into it. So if you're looking for a job, it's not particularly good because as you alluded to, there's definitely some softening in terms of the demand side of the market. We've seen job openings whether we believe the job opening is a level or not. There's a pretty clear trend there that job openings have come in a lot over the last 18 months or so. I think it's pretty clear that firms are less interested in hiring today than they were 12, 18 months ago. And so I think the dynamics there are not great. I think it's a question of whether hiring continues to slow, whether this is sustainable. It depends on whether hiring sort of holds at where it is.
And it's been roughly stable now for about six months. There's a little bit of volatility month to month, but the big decline in hiring looks like it's over. And so if that holds up, we can maintain current level of job growth. The level of layoffs is still very, very low. Again, a little bit of volatility week to week, month to month, but I don't think anyone has any major concerns on the layoff side of the equation. So it's really a question of is there enough appetite among firms to keep hiring given this decreasing level of job openings? And, excuse me, will that continue to hold up? I still think so. I think to me, the risk is still stronger that the labor market starts overheating again, then it falls off the rails here,
Mark Zandi: Really?
Dante DeAntonio: Yeah, I think marginally, at least based on this last report, has me a little bit more concerned. I'd rather see job growth at 200,000 and be sure that wage growth is settling in. And I think it's pretty clear that job growth right now is stronger than that and doesn't look like it's slowing down anytime soon.
Mark Zandi: I'm curious, Matt, do you have a similar sentiment? The concern being, so right now the job market is doing what we need it to do, it's creating a lot of jobs and it's creating a lot of income. Concern is, well, is it weakening from here like I was articulating? Or to Dante's view, the risk is that it re-accelerates and reignites inflationary pressures? Do you have a perspective on that, Matt?
Matt Colyar: I think the number of data points in your bucket there that are looking soft is growing. I don't think I'd panic until I see weekly unemployment claims for unemployment insurance start to hover around 230, 240 on an average.
Mark Zandi: They were 229 last week, Matt.
Matt Colyar: I saw it, but hasn't been consecutive weeks, Dante, as an astute writer.
Mark Zandi: Okay. Right. One week doesn't a trend make.
Matt Colyar: I need trend closer to 240, in that range to say, okay, that is a plateau that we weren't at for a long time. So I wouldn't say I'm afraid of a re-acceleration as Dante said, but I'm not totally confident that we're on a downward slope as much as a plateau for the time being. And that also means wage growth isn't going to slow. So maybe that puts me in the middle between you two.
Mark Zandi: Okay. Yeah. The other thing on layoffs, and I think it really does boil down to layoffs. I mean, you're right, if we maintain hiring rates where they are and layoffs where they are, we're going to continue to create a lot of jobs. But on the layoffs, it's confusing to me or it's not satisfying to me, the explanation for why layoffs are so low. We're saying, at least the prevailing theory I've heard, and I haven't heard a better one, is that because businesses have struggled with a very tight labor market, more or less for a long time, pre-pandemic, during the pandemic, post-pandemic, they're loathe to layoff because if they layoff and get wrong-footed, demand improves and they need to hire people again, they're going to scramble, they're not going to find the workers they need. So therefore they're not going to layoff at this point in time.
That's the so-called labor hoarding kind of argument. That feels okay, maybe, but that feels like a pretty tenuous explanation. And even if it's true, it feels pretty tenuous that businesses are going to hold on to that for very long if demand starts to weaken. No, Dante?
Dante DeAntonio: Yeah, I agree. I mean, I think to me it seems like a strange... That can't be everything that's happening right now. It's not like every firm would start laying people off if they weren't worried about being able to rehire workers. I mean, the economy is still strong today. I mean, we're still adding jobs at a pretty good pace, so firms are still looking to bring more people on. So I think that there are some segment of firms out there that likely would reduce headcount today if it weren't for concerns about being able to rehire people. But I don't think that's the prevailing reason why layoffs are low. I think layoffs are low because the economy is still strong and firms still need workers.
Mark Zandi: You're saying demand's strong enough to-
Dante DeAntonio: Yeah, I think that labor hoarding is a part of it. I think it's a small part right now. Yeah, to your point, if that was-
Mark Zandi: But the layoffs are extraordinarily low, or they have been extraordinary... I mean lower than you would expect in a typical well-functioning economy, right?
Dante DeAntonio: I mean, I think more recently jobless claims have risen, but claims had been at say 210,000.
Mark Zandi: 200, yeah.
Dante DeAntonio: That's very low. So maybe labor hoarding explains why they were at 210 instead of 230 over the last couple of months. So to me it's like, okay, well if firms stop doing that, if they stop hoarding, labor, layoffs pick up a little bit. But I don't think the labor market falls apart if they all of a sudden decide to stop doing that. I don't think that's enough to derail the whole thing at this point. It doesn't feel like it.
Mark Zandi: Yeah. The other thing I worry about is being part of a large multinational organization that does a lot of hiring, it feels like businesses are looking to each other for signals as to what they should be doing or around payrolls. If one company decides to start laying off, then it feels like others follow suit pretty quickly. They're all looking at each other. And it just feels like we can go from low number of layoffs to somewhat higher and then high layoffs pretty quickly. Just feels pretty tenuous to me.
Dante DeAntonio: Yeah, I mean, I think we saw an example of that in tech early last year when you had a wave of tech layoffs.
Mark Zandi: That's a great example.
Dante DeAntonio: It was contained within tech, so it didn't have a huge impact, but if that starts to broaden out across industries, then it could create a problem.
Mark Zandi: Yeah, okay.
Matt Colyar: I think if you square that with consumer business sentiment, how negative everything has pretty consistently been, I think that aligns nicely too of, okay, the sky is falling as we expected it to, and I think everybody runs at the same time in a brittle way. So I'm curious how we ever respond to a negative jobs report, say, even if it gets revised away. I've always thought about that, but-
Mark Zandi: Well, here's the other thing that adds to the angst, the rise in the unemployment rate. There's that old kind of rule of thumb if it rises by what, more than a half-
Matt Colyar: A half?
Mark Zandi: ... a percentage point from its low in a period of a year. So you could go back over the past year and the unemployment rate's up a half a point or more in that period, and I might be butchering that a little bit, but that's roughly right, that you get into this very, to Matt's point, self-reinforcing negative cycle. The higher unemployment causes people to lose some confidence, they start to pull back on their spending. That causes a weakening in demand. Then businesses start to lay off a little bit more and you can see how you can get into this self-reinforcing cycle. And historically, when the unemployment rate rises by more than a half a point within a year from the low you go into recession. And we're at four, I think the low was three and a half, wasn't it, about a year ago? So I haven't looked, but on a year-over-year basis, we might be up about a half a point. No?
Matt Colyar: Sahm Rule you're referring to. But it's the three-month moving average-
Mark Zandi: Oh three-month moving average. Yeah.
Matt Colyar: ... so we're close. I think we're .37 up from the three-month moving average low of about a year ago.
Mark Zandi: So we get this monthly data on unemployment. You take a three-month moving average of it. Then you look at the unemployment rate today compared to its low point and you're saying it's up .37?
Matt Colyar: That's right.
Mark Zandi: Not 0.5?
Matt Colyar: Close-
Mark Zandi: Close.
Matt Colyar: ... and it starts to rise. So we can afford and a little bit more slow increases in the unemployment rate without hitting that threshold. But Claudia Sahm, who invented the rule, has also stepped back from it as in like, hey, it's not sure fire. It's just been historically true. So there's some reasons to be a little bit [inaudible 00:27:38].
Mark Zandi: Yeah. It's like, okay, fair enough. That's, by definition true.
Matt Colyar: Sure.
Mark Zandi: Yeah. But Dante, any reason we should be worried about that? Or that just goes back to your point about squirrely numbers related to young people going from school ending and going to work, that kind of thing?
Dante DeAntonio: Yeah, I mean, I wouldn't say we should be totally unconcerned if only because the average consumer, the unemployment rate might be the only thing they see in terms of labor market performance, and they're not thinking about the technicalities behind why it's going up. So if I'm sitting there and I'm seeing the unemployment rate creep higher month over month, and I'm just the average consumer out there, that might start to concern me if I'm not consuming other information about the economy, I would say offsetting that is that I would have to go back and check. But historically, I would think when we're starting to trigger that half a percentage point increase, we're not typically doing it when we're also creating 250,000 jobs a month. So if you're at least consuming two data points, you see the unemployment rate going up, but you also see that lots of people are still getting jobs every month. I think that takes away some of the sting and some of the concern that creates.
So if you're talking about me sitting here, I'm not concerned about it at all. I would say I'm a little concerned just from the psychology of it of if that's the only thing consumers see, like gas prices, right? Consumers are digesting a couple of data points that just sort of matter to them about the economy and if the unemployment rate's a big thing they see about the labor market and it continues to creep a little bit higher here over the second half of the year as we, I think expect it to, I think that might create a little bit of concern amongst people. And again, I think we're in a fragile enough state where any other bad news is not going to help in terms of consumer spending and consumer confidence.
Mark Zandi: Yeah. Well, of course, I'm thinking of all this in the context of the 5.5% federal funds rate target with the Federal Reserve. Putting its foot flat on the brakes here just feels like to me, and I wrote an op-ed in The Washington Post this past week with Jim Parrott, a good friend and good researcher at the Urban Institute, arguing that the Fed has achieved its targets of full employment and inflation at the 2%. You have to read the piece. I won't go into detail, but one of the arguments I was making or one of the points I made was that we made was that the labor market feels a little fragile, and if the funds rate target was closer to its equilibrium, meaning it's not restraining economic growth, I'd be less concerned. But when you have a 5.5% funds rate target, that's a pretty high interest rate. Yield curve is still inverted, short rates are still higher than long rates. And in that kind of world, given all the other things that are going on in the labor market, it just feels like this is the time to start cutting interest rates, at least start slowly and see what's going on.
Dante DeAntonio: Yeah, if you don't want to get into it now, we can wait, but do you think the Bank of Canada and ECB cut it now that we're starting to see some cuts globally? Do you think that lays into the Fed's decision making at all? Or do you think they completely ignore it?
Mark Zandi: I think it's on the periphery. They have a so-called reaction function where they're looking at lots of stuff, inflation relative to target, unemployment relative full employment, financial conditions, so forth and so on. But going back to businesses look at other businesses when making decisions about their payrolls, I think central banks look at other central banks, in part because they have to, particularly if you're not the United States, because if you're falling out of step with each other, then currency markets start to get more volatile and problematic and you have other kinds of balance of payment issues. But in this case, the differences are it might be a matter of months before the Fed starts cutting interest rates. So I don't think so.
But all else being equal, yeah, I mean they must be looking at what the ECB did, the European Central Bank and the Bank of Canada, they cut rates and I think that very good policy, I think that's the appropriate policy that they should follow that here. So I worry about the labor... The labor market's resilient, it's done a great job navigating things so far, but the longer you keep rates as high as they are, at some point things start to break and just feels like the labor market's a lot more wobbly than the 250,000 in underlying monthly job growth would suggest. Just a view. But I highly recommend the Washington Post op-ed. Folks should go read that.
Okay, we're going to come back and talk about the inflation numbers that are coming out in this coming week, and of course the Fed meets this week, so we can talk a little bit about that. But before we do that, we're going to play the game, you guys up for that? We don't have Marissa, so maybe someone else is going to be able to win here. And the game is we each pick a stat. The rest of the group tries to figure it out through cues and questions. Deductive reasoning, the best stat is one that we don't get quickly. It's so easy, we get it quickly. One that's not so hard, we never get it. And if it's apropos to the topic at hand, that's all the better. So Matt, you want to go first?
Matt Colyar: Let's do it. 2.3%
Mark Zandi: In the jobs numbers?
Matt Colyar: No.
Mark Zandi: Is it an economic release?
Matt Colyar: Yes.
Mark Zandi: This week. This past week?
Matt Colyar: Yes.
Dante DeAntonio: Is it our current estimate of GDP for the second quarter?
Matt Colyar: No.
Dante DeAntonio: No? Okay.
Matt Colyar: That's 1.9-
Mark Zandi: Yeah, it's 1.9.
Dante DeAntonio: Pretty close to that-
Matt Colyar: ... for the record. Yeah, you're close. But just for.
Dante DeAntonio: 2.3?
Mark Zandi: 2.3%? What else came out this week? I've been so busy with conferences and CBO. Is it inflation related? Is it jobs related?
Matt Colyar: Both in an ancillary way, tertiary relationship.
Dante DeAntonio: So neither.
Matt Colyar: Neither.
Mark Zandi: Is it a growth rate?
Matt Colyar: Yes.
Mark Zandi: Is it a year-over-year growth rate?
Matt Colyar: Yes.
Mark Zandi: Is it productivity related?
Matt Colyar: Yes.
Dante DeAntonio: Productivity growth-
Mark Zandi: Productivity growth.
Dante DeAntonio: ... over the last year.
Matt Colyar: Over the last year. I used a four quarter moving average, but if you guys got this close. So I know Dante's the long term-
Mark Zandi: Well, I think I got that. He snuck in there in a slightly rudish way. See, how he did that.
Dante DeAntonio: I'm going to take whatever I can get, yo. Getting outside of the jobs report, I'm struggling here.
Mark Zandi: I took him all the way to the finish line and he put his nose in front of me.
Dante DeAntonio: That's right.
Mark Zandi: Did you see that.
Dante DeAntonio: Yes, Marissa's not here, so I got to make sure I sneak in there and do right by her.
Mark Zandi: Oh, gosh. That's rude. Okay. All right. Sorry Matt, go ahead and explain.
Matt Colyar: Dante's the doomsayer when it comes to productivity, I know, but the 2.3% growth that's over four quarters. It's a volatile series. It changes quite a bit, but if we could sustain 2% productivity growth, I think that's important of an economic indicator as you can get, but apropos to right now, the Fed says that wages can grow 3.5% and-
Mark Zandi: No, the Fed doesn't say that, do they?
Matt Colyar: They estimate.
Mark Zandi: That's what everyone else says.
Matt Colyar: No, I've always attributed it to the Fed. Is this slander?
Mark Zandi: I don't think they've actually said that, have they, Dante? I don't know. That's the conventional wisdom.
Matt Colyar: I feel like I can picture Powell saying that. So if I'm wrong, you'll have to forgive me.
Mark Zandi: I don't know.
Matt Colyar: He could be parroting-
Mark Zandi: It doesn't sound like something the Fed would say though.
Matt Colyar: ... he could be parroting what everybody else says. But the 3.5% rule of thumb wage growth is compatible with 2% inflation because the difference is made up in productivity growth. So not all of that 3.5% wage increase would be passed through to consumers, so goes the thinking. So one way I think that... If wage growth does plateau, it's a little over 4% right now, one way that that could become compatible with 2% inflation, the Fed's inflation target is if productivity growth picked up. I'm more optimistic than Dante. I'm more in Cris's camp. I think there's more reasons to be optimistic than there is pessimistic when it comes pressure.
Mark Zandi: He's picking a fight, Dante. This is the second time he's picked a fight.
Matt Colyar: Yeah.
Dante DeAntonio: Cris isn't here, so he feels like he's got to defend his honor, I guess.
Matt Colyar: And I look for any chance I can to go at Dante. So I think it's a really important figure. I think long-term that that could be sustained for a lot of reasons. And I'm also less optimistic about wage growth. I think there's a chance that it does plateau where it is today. I think it's moved sideways for a bit. And-
Mark Zandi: When you say less optimistic, what does that mean?
Matt Colyar: That the labor market's going to continue to loosen and pay growth is going to slow further and further like we expect inflation to. I think we're structurally tight and I think 4% annual wage growth is reasonable to me. So for that reason, I watched the productivity statistics closely and I'm relatively encouraged in the long run.
Mark Zandi: Right. Dante, any retort there or anything you want to say?
Dante DeAntonio: No, I mean I agree. I think given current productivity growth, I think wage growth is fine. I don't think there's any issue with wage growth today given what we know about productivity growth recently. I think I have a question about whether that's sustainable and whether wage growth can stay at 4% permanently or whether productivity growth is going to loosen here a little bit over the next couple of years and wage growth would have to come in a bit. But I don't think that matters so much for the current concerns around inflation. I don't think wage growth is inflationary right now. I don't think in the span of time between now and when the Fed decides to start cutting rates. I don't think wage growth is the thing that matters, right? And I think even they've made that, I think pretty clear where their focus has turned almost exclusively to inflation of late. They're certainly still watching the labor market, but their level of concern around the labor market is very small relative to how they view inflation on a month-to-month basis.
So I don't any issue with wage growth. I don't disagree with Matt's take that I think we're in a good place in terms of how wage growth and productivity growth fit together right now.
Mark Zandi: And that productivity and cost report, which is the basis for the number you're putting forward, there's also a compensation measure, it's another measure of labor costs. And also unit labor costs, which is compensation per unit of output. So it accounts for compensation and productivity and unit labor cost is most critical to businesses' profit margins, which ultimately goes to their decisions around pricing. So if unit labor costs are rising, compensation's rising relative to productivity growth, then their profit margins are coming under pressure, they're much more likely to raise prices more aggressively. Inflation picks up.
But the good news here is that on a year-over-year basis through the first quarter, and that's the data you're using, Matt, for productivity, unit labor costs were only up 1% on a year-over-year basis. Now, I hesitate to put too much weight on even the year-over-year numbers because they bounce around a lot and they get revised too. So I don't want to put too much weight on it, but that gives me some solace, right, that unit labor costs are under control, therefore profit margins are going to be maintained and the profit margins are maintained, the less pressure on businesses to raise prices more aggressively. Does that all fit together for you, Dante?
Dante DeAntonio: Yeah, I think so.
Mark Zandi: Do you know, I haven't looked at this in a while, but that compensation measure that's in the productivity and cost report, how is that different from the employment cost index or the average hourly earnings or the other wage measures that we use? Have you looked at that at all?
Dante DeAntonio: I have not looked at it closely enough to know what the specific difference is.
Mark Zandi: Matt, have you?
Matt Colyar: No, me neither.
Mark Zandi: Okay.
Dante DeAntonio: Might be something good to take a look at though.
Matt Colyar: Yeah.
Mark Zandi: I think it's a broader measure, it includes other forms of compensation other than obviously average hourly earnings and wages and salaries. ECI does as well, employment cost index, but I think they try to account for stock options and that kind of thing, all kinds of stuff. So it might be worth taking a look at that. Okay. That was a good one, Matt. Dante, what's your statistic?
Dante DeAntonio: Let's go with... which one should we use? Let's go with 83.6%
Mark Zandi: Labor market related?
Dante DeAntonio: It's labor market related
Mark Zandi: Household survey?
Dante DeAntonio: It is household survey.
Mark Zandi: Is it a participation rate? No?
Dante DeAntonio: It is a participation rate.
Mark Zandi: Oh, it is? Wow. That's a high participation rate. So it's a participation rate for some demographic group?
Dante DeAntonio: Correct.
Mark Zandi: And I'm right, that's a pretty high participation rate.
Dante DeAntonio: That's why I picked it.
Mark Zandi: Yeah, yeah, yeah, because I think the overall fell a little bit to 62.5, which I'd like to talk about maybe after this. Matt, who has that kind of participation? I mean white males between the ages of 45 and 46?
Dante DeAntonio: It's a little broader than that.
Matt Colyar: Is it-
Mark Zandi: But it's kind of in that ballpark.
Matt Colyar: Prime age EPOP?
Dante DeAntonio: There you go. It's prime age. Prime age labor force participation. That's the only cut you need to make. Just prime age workers.
Mark Zandi: Oh, really?
Dante DeAntonio: 83.6%.
Mark Zandi: Oh, I didn't know it was that high.
Matt Colyar: For prime age.
Mark Zandi: Yeah.
Dante DeAntonio: It actually ticked up a little bit this month. It's the highest of this cycle. It's the highest actually going back to I think either 2001 or 2002. And so the household survey looks weak on its surface, but there are parts of it that look very strong, right? I mean, we're talking about an overwhelming amount of prime age workers that are wanting to work and at work, if you look at the prime age employment to population ratio, it's similarly high, right? It held steady this month. It's I think slightly off of its cycle high, but it's still-
Mark Zandi: Do you know what it was?
Dante DeAntonio: I think it was 80.8 maybe.
Mark Zandi: Yep, exactly.
Dante DeAntonio: So it's a tick of its-
Mark Zandi: You know your stuff, man. Dante knows his stuff, Matt.
Matt Colyar: He does.
Dante DeAntonio: I had an extra 12 hours to review this.
Matt Colyar: He hasn't slept.
Mark Zandi: Okay. What was the EPOP for prime age a year ago?
Dante DeAntonio: Oh, a year ago. That I don't know, slightly below that, I would assume .80.5 maybe.
Mark Zandi: I think it was 80.6, I think
Dante DeAntonio: I'll take that, close enough.
Mark Zandi: You should be impressed by me.
Dante DeAntonio: I'm always-
Mark Zandi: I was impressed by you, but I'm even more impressed by me.
Dante DeAntonio: Do I have to say it? Do I have to admit to it?
Mark Zandi: No but Matt knows it. Matt. Come on, Matt, wouldn't you agree?
Matt Colyar: I'm scrambling to verify this all. Thank you. Let's fact check to make sure those numbers are right.
Mark Zandi: Good point. Better verify. He better verify, right? What is it?
Matt Colyar: You said 80.6?
Mark Zandi: 80.6. May of 2023.
Matt Colyar: I'm looking [inaudible 00:43:50].
Mark Zandi: Well, the reason distracting from the exact number, it's just been amazingly stable at a level that's historically consistent with full employment. Not more, not less. Right on the button. Pretty amazing.
Dante DeAntonio: It's actually 80.7 in-
Mark Zandi: Oh, okay.
Dante DeAntonio: So it really hasn't moved much at all.
Mark Zandi: It really hasn't moved that much at all. Right? Yeah. Yeah, very interesting. But I digress. What were we talking about?
Matt Colyar: Full employment.
Mark Zandi: Oh, yeah, right, prime age-
Dante DeAntonio: So despite some of the weakness in the household survey, a lot of it I think is just, it's on the peripheral, right? It's young workers, it's older workers that are creating a lot of this noise and volatility month to month where if you look at prime age workers' participation, employment population rate, all of those are very strong and have been that way for a long time and not really signaling weakness at all. So I think it just adds to that story around the labor market being strong.
Mark Zandi: That's actually a good way of looking at it, really, because the prime age is the core of the labor market, that gives you a real sense of what's going on fundamentally. And then you've got all this stuff going on for young people and older people, and that moves around month to month because smaller groups, so forth and so on.
Dante DeAntonio: Not to say that those groups don't matter, but they're smaller and they're much more seasonal in a lot of cases. So it's harder to get an accurate read month to month. And so yeah, I think just honing in on prime age makes things look a little bit better.
Mark Zandi: Okay. All right. All right, I've got one. And here you go. Two numbers. 2,756,000 and 216,000. I'll repeat 2,756,000, I'm being obviously very precise, and the other is 216,000.
Dante DeAntonio: I'm going to write them down just so I don't forget.
Mark Zandi: Yeah, right.
Matt Colyar: So one is 2.76, the other is just 0.216.
Mark Zandi: See what Matt does? He divides by a thousand. Okay. All right. Fair enough.
Dante DeAntonio: Are they labor market related?
Mark Zandi: They're labor market related.
Dante DeAntonio: Are they from the jobs report?
Mark Zandi: They are from the jobs report.
Dante DeAntonio: Okay.
Matt Colyar: Immigration related?
Mark Zandi: No, not directly. No. No.
Dante DeAntonio: Household survey related or payroll survey?
Mark Zandi: Both
Dante DeAntonio: One from each. Does that work?
Mark Zandi: Yeah, there you go.
Matt Colyar: There you go.
Dante DeAntonio: So to the 2.756 million, that's got to be jobs added based on the payroll survey over the last year probably?
Mark Zandi: Yeah.
Dante DeAntonio: Okay. And then 216,000, is that jobs added in the household survey over the last year
Mark Zandi: Based on the payroll survey,
Dante DeAntonio: Adjusted concept.
Mark Zandi: Adjusted concept payroll survey,
Dante DeAntonio: Two and a half million apart, that's the-
Mark Zandi: Yeah, I mean that's pretty amazing. Pretty significant, right?
Dante DeAntonio: It's huge.
Mark Zandi: And if you go back last couple, three years, that gap has been steadily growing. It just reinforces the point about immigration, how significant the immigration effects have been. We think. There've been other times historically when there's been a big gap between the household survey and the payroll survey. I think if you go back into the 1990s, and I don't know why that happened back in the 1990s. There may be other things going on here, but it feels like the most likely explanation for why this gap between the payroll and household survey is the immigration that the household survey is just not picking that up because they're using the census population counts that don't include the surge in immigration.
By the way, the surge in immigration has been so significant and ultimately the question for us is as forecasters, what happens next? The Congressional Budget Office estimates immigration last year was 3.3 million, right? Typically, it's a million or so, a little over a million. That goes to the surge of immigrants coming across the border. And the question is, well, what's next? Are we going to stay at 3.3 million? Are we going to come back down to 1.1 million? Presumably we will at some point, but over what period of time? And that has enormous implications for everything. We've been talking about jobs, but think about what it means for everything, housing and so forth and so on. So really a pretty significant question and something we're grappling with in our forecasting.
Kay, very good. Why don't we turn back to... So the conversation so far has been about what happened over the past week. Now let's talk about what's coming up in the coming week, because this is Saturday. And we've got the next key inflation report coming up is the consumer price index for the month of May. And Matt, I know you've been doing a lot of work here trying to estimate what that report's going to say. You want to tell the group?
Matt Colyar: Yeah, CPI, the consumer price index is always our first read on a month's inflation data. So on Wednesday next week we'll get May's CPI report. We expect a 0.1% increase in headline inflation, which if it sounds low, it's because it is lower than recent months, and a lot of that is owed to moderating energy prices. So headline inflation includes energy and food where core CPI does not. So if we are right, that would cause the annual headline inflation number as measured by the CPI to fall from 3.4% to 3.3%, and then ignoring food and energy, which in this particular month is a negative contribution. So core CPI, we have rising by 0.3% currently. That would pull the annual growth rate down a touch from 3.6% to 3.5%, its lowest in the post-pandemic inflation cycle. So a moderating report, and we're right at the rounding between 0.3 and 0.2. I probably could be persuaded maybe, but that's maybe a different conversation.
Mark Zandi: You're saying, because you sent me an email and I'm very much focused on the second and third significant digit, for a core CPI, excluding food and energy, for the month of May, you have that increasing 0.26 something and therefore you rounded up to 0.3?
Matt Colyar: That's right.
Mark Zandi: But 0.26, if you analyze that, you're close to what, 3%? Something like that?
Matt Colyar: That feels right.
Mark Zandi: Is that right? Close to 3%. And that's pretty close to Fed's target, right? I mean, because the Fed is targeting the consumer expenditure deflator, the so-called PCE deflator, and the target is 2%. And because of definitional and other factors, there's about a percentage point gap between the CPI and the PCE. So if we're at 3% ish on the CPI, that would suggest we're close to the 2% ish on the PCE? Or am I reading too much into it?
Matt Colyar: Of course, it would need to be sustained, but the logic of course, yeah, I agree.
Mark Zandi: A 0.26 is a pretty good number, if we get 0.26.
Matt Colyar: Yeah, and I think that's the little consensus, other forecasts that we have, that's not out of range at all. I mean, I think that's the general expectation, so-
Mark Zandi: But the consensus is what? 0.3?
Matt Colyar: 0.3 as well, and you get less rounding data. So I don't know the second and third decimal points for a lot of stuff just yet, that stuff comes out closer to the report. But yeah, I mean in general, there's point twos out there, there's point threes. I talked with our car guru, Mike Brisson, who's on top of all things auto related about some of the stuff our model is spitting out. He is trying to talk me into used car prices being softer than we currently expect, but that's maybe a little too in the weeds.
Mark Zandi: He's trying to talk you into it being softer?
Matt Colyar: Soft. We have auction data from a couple months ago, used car prices, what they were going for two months ago. Now they're on lots. Those are the prices the consumers pay. So we look at this lagged effect, and then prices were flat a few months ago, so we're looking at pretty much flat growth in May where Brisson is saying, "No, used car prices are crashing. Go low. Go low." So I [inaudible 00:53:02].
Mark Zandi: Oh, really? Oh, interesting.
Matt Colyar: Yeah.
Mark Zandi: So you're saying the risk to your 0.26 is to the downside?
Matt Colyar: Yes.
Mark Zandi: Oh.
Matt Colyar: And especially since we're right there at 0.26.
Mark Zandi: And I've learned never to argue with Brisson.
Matt Colyar: I remember you said that.
Mark Zandi: Apparently you've not learned that lesson.
Matt Colyar: No, I trust everybody from Western New York, so he is making a good case.
Mark Zandi: What does that mean?
Matt Colyar: We have Justin Begley-
Mark Zandi: What the hell does that mean, I trust everyone from Western New York? What, not Eastern New York?
Matt Colyar: No, I cut them off. But Justin Begley and Mike Brisson are two colleagues of mine that are from that part of the state.
Mark Zandi: Begley's from Western New York?
Matt Colyar: He's from Buffalo. Yeah.
Mark Zandi: Oh, it all fits now.
Matt Colyar: Doesn't it? Yeah. So I say that any chance I get, I'd lump those two together in Western New York. So yeah, the bias is low. Could be 0.2. I think that would be very encouraging. I don't think it puts a July rate cut on the table, but I think in line with our forecast of the first rate cut in September, that would be consistent with that.
Mark Zandi: Okay. Okay. Any other wild cards in the data in the CPI number?
Matt Colyar: No. I mean auto insurance has been up and down.
Mark Zandi: Oh, mostly up.
Matt Colyar: It's mostly up. It's very hard to know where that's going to be exactly, but I think, as with shelter, there's this incremental rolling over that we're expecting, at least for auto insurance, that given what we know about vehicle prices, repairs. Auto repair prices were flat in April. We expect similar sideways movement now. And if that is the case, then that's a pretty strong source of relief for consumers. So probably one of the first two or three data points I'll be looking at when Wednesday's report comes out.
Mark Zandi: And of course there's all the owner's equivalent rent, and you're just assuming that that continues to throttle back slowly over time?
Matt Colyar: Right.
Mark Zandi: That's the cost of homeownership, the implicit cost of renting your own home if you were a homeowner, which is incredibly problematic, to my point in The Washington Post. Again, go read the op-ed in the Washington Post. Pretty good. Pretty good op-ed, I thought. Did you read it, Matt?
Matt Colyar: I did. At the risk of spoiling the op-ed, I think the most persuasive case you put forward is you highlight all the wackiness with OER, the way that the government measures shelter inflation, put that to the side, but the Fed is waiting on shelter inflation to come down, and until it does, they're going to keep interest rates high. But keeping interest rates high makes construction financing really hard, makes existing homeowners stay in their house. They have a 3% mortgage. If interest rates are really high, why move? So it's keeping supply really constrained, really constrained supply is keeping prices higher, which is flowing back into government through rental prices. They're certainly related. Flowing back through-
Mark Zandi: It's keeping rents up too. It's keeping rents up too. Because we built multifamily units.
Matt Colyar: So to me, that cyclical problem that you described I thought was persuasive and I hadn't seen it put so explicitly, and I think that's certainly the case, and I'm certainly a skeptic of OER. I think then my contention would be that you suggest, okay, we should probably weigh OER less and maybe the Fed should articulate why maybe-
Mark Zandi: I say throw it out altogether.
Matt Colyar: I think-
Mark Zandi: Zero weight.
Matt Colyar: You think it'll be a short-term credibility problem. I think that wouldn't be the case. I think they can't move the goalposts. I think they can't give anybody-
Mark Zandi: I'm not saying change the PCE deflator, I'm just saying like Chair Powell called out so-called super core service inflation, said, "Hey, I'm looking at this because this really helps me decide what monetary policy should be." He's not changing the consumer expenditure deflator as the target, and I'm not arguing that either, at least not at this point in time, because I do get the credibility argument. But I'm saying, "Hey, instead of calling out this wacko super core service inflation," which by the way has got all this imputed stuff that's meaningless anyway because financial services costs are tied to the S&P 500. Does that make any sense? No. So why are we looking at that? Look at the so-called harmonized inflation measure, which is keep everything in, exclude the owner's equivalent rent because we can't measure that and it's all messed up. And no one else does in the rest of the world anyway because they know it's all messed up. And therefore, if you do, it makes it a lot easier for them to start easing monetary policy and without losing any credibility. That's the argument. That's the argument.
Anyway, you got me riled up all over again. But the Fed meets this week, and of course we're not expecting, nobody's expecting them to cut rates now. I guess, is this the meeting where... I think this is the meeting where they released the new updated economic projections, so that'll be useful. Dante, are you expecting anything out of this? What do you expect? Any guidance here?
Dante DeAntonio: I mean, I don't expect anything to happen obviously in terms of rates. I am curious, I asked you earlier about whether other central banks moving will have any impact. So I'm curious to see if that enters into the conversation at all. I don't think they're going to explicitly call it out as a reason to start moving, but I'm curious to see if that shows up anywhere.
And to your point, I think it would be good if they at least started talking about a harmonized measure of inflation, excluding shelter. Even if they're not moving the goalpost, they're not talking about a different target. But if you start conversationalizing that hey, we're also looking at this measure without shelter because there are these known problems. So this gives us a better read on what we think is really underlying price growth is. So it'd be nice. I don't know that that's something I would expect to happen in the next couple of meetings, but it'd be nice if they at least started talking about it a little bit more to get it out there.
The thing to me is it feels like there's only downside risk here this week with the report, right? It feels like everyone's going to say, "Okay, great, that's what we want, but we need to see more, right? We had all these bad reports in the beginning of the year, so okay, that's one piece of good news, we need more good news." But if it's a bad report, the sky is falling, a rate cut in September might get thrown out the window. So it just feels like a good report isn't going to lock in that they're going to start cutting rates soon. A bad report could very easily push that conversation out. So it feels like we're not going to get much good news this week. Right? Best case things go according to script and we keep hoping for more good reports moving forward. Worst case it looks bad and they make explicit that we need more time and maybe rate cuts don't start until the end of this year or even next year.
Mark Zandi: Well, if Matt's right at 0.26, much more likely we hit a 0.2 than a 0.4. I mean, if it's a 0.3, that's consensus. But you're right. If we go to 0.4 on the core CPI, I think that, well, maybe with good reason.
Dante DeAntonio: Right. Yeah. And so it just feels like we're in a no-win situation where a good report is still good, but it's tied to this idea that we need to keep seeing good reports moving forward. It doesn't really get us anywhere today.
Mark Zandi: Right. Well hopefully Powell does bring up, or somebody brings up harmonized inflation and then I'll claim that I had some influence over the whole thing.
Dante DeAntonio: There you go.
Mark Zandi: There you go. The op-ed had some influence. Okay. Well, very good. I think we covered a lot of ground. I need to eat my cereal, so I'm starving. My blueberries and my cereal. Used to be on an oatmeal kick. Now I got so sick of oatmeal, now I found this really great cereal, Great Grains Cereal. Do you know what I'm talking about? I'm probably eating nothing but sugar and that's why I like it so much.
Dante DeAntonio: But there's blueberries, so you're fine.
Mark Zandi: Oh. Well, I always have blueberries.
Dante DeAntonio: You balance it out.
Mark Zandi: Yeah, blueberries and some raspberries. But anything else you guys want to add before we call it a podcast? No?
Dante DeAntonio: Covered a lot of ground.
Mark Zandi: Covered a lot of ground. Okay, very good. Well, we'll do this next week. Well, thank you dear listener. I really appreciate you listening in and yeah, we'll talk to you next week. Take care now.