Fred Hochberg, Fmr. Chairman & President of the Export–Import Bank of the United States and author of Trade Is Not a Four-Letter Word: How Six Everyday Products Make the Case for Trade, joins the Inside Economics team to discuss all things related to global trade. The discussion takes up the U.S.-China relationship, the future of globalization, and how trade policy may change after the 2024 election. Marisa’s visit to Disneyland is a (largely irrelevant but entertaining) theme throughout.
Fred Hochberg, Fmr. Chairman & President of the Export–Import Bank of the United States and author of Trade Is Not a Four-Letter Word: How Six Everyday Products Make the Case for Trade, joins the Inside Economics team to discuss all things related to global trade. The discussion takes up the U.S.-China relationship, the future of globalization, and how trade policy may change after the 2024 election. Marisa’s visit to Disneyland is a (largely irrelevant but entertaining) theme throughout.
For more information on Fred Hochberg and his book click here
Follow Mark Zandi @MarkZandi, Cris deRitis @MiddleWayEcon, and Marisa DiNatale on LinkedIn for additional insight.
Mark Zandi: Welcome to Inside Economics. I'm Mark Zandi, the Chief Economist of Moody's Analytics, and I'm joined by my two trusted co-hosts, Marisa DiNatale, and Cris deRitis. Hi, guys.
Marisa DiNatale: Mark.
Cris deRitis: Mark.
Mark Zandi: How's everyone doing? I understand Marisa, you're not feeling so well today?
Marisa DiNatale: I hit Disneyland a little hard yesterday.
Mark Zandi: Ugh. Really?
Cris deRitis: Or maybe Disneyland hit you hard?
Marisa DiNatale: Yeah, that's right.
Mark Zandi: Now, do you just go to Disneyland?
Marisa DiNatale: I went with two children.
Mark Zandi: Okay, that makes sense.
Marisa DiNatale: Yes.
Mark Zandi: Okay. All right. I thought maybe you went on your own. I didn't know.
Marisa DiNatale: No. I have done that, I admit. But no, I went with a three-year-old and a seven-year-old.
Mark Zandi: Oh, that must have been so fun.
Cris deRitis: Hiccups.
Marisa DiNatale: Three-year-old's first time.
Mark Zandi: Oh, that must have been so fun.
Marisa DiNatale: I think her mind was blown. Yeah.
Mark Zandi: Yeah. Mine was blown. Mine was blown. Yeah.
Cris deRitis: Mr. Toad's Wild Ride? Did they still have that?
Marisa DiNatale: It was so crowded. It was more crowded yesterday than I've ever seen it in my life, and we didn't actually go on a lot. And she was scared of everything. She was scared of any ride that was dark and inside. So we went on limited amount of rides, yeah.
Mark Zandi: This is the three-year-old?
Marisa DiNatale: This is the three-year-old, yeah.
Cris deRitis: So no haunted mansion?
Marisa DiNatale: No. She actually, we were getting on and she had to be taken off. She had to be removed from haunted Mansion.
Mark Zandi: I'll have to tell you, I'm so burned out by theme parks. My wife grew up in Daytona Beach, Florida, and so every chance we'd get, we'd be in Daytona Beach. And of course, Daytona Beach is an hour and 15 minutes from every theme park on the planet. And I went to so many theme parks for so many years. I even had my favorite lunch place at the Islands of Adventure. It was my favorite chicken nuggets. I'm not kidding. I wonder if it's still there. Now here's the weird thing. I haven't been in, my kids are older. I haven't been there in 20 years. I can't wait to go again with my grandkid. I want grandkids. Give me some grandkids, please. But I can't wait to do that. Well, I'm-
Cris deRitis: You've been mentioning that a lot lately.
Fred Hochberg: It was at Disneyland that the Taco Bowl was sort of invented.
Mark Zandi: No, this is Fred Hochberg. He's like an interloper. I don't know. Fred, who invited you to this thing?
Fred Hochberg: I just crashed.
Mark Zandi: You just crashed. You couldn't resist. Okay, this goes to your book, right?
Fred Hochberg: Yes, it goes to the book but I figured I could.
Mark Zandi: Yeah, go fire away. Fire away.
Fred Hochberg: Well, one of the things... My book is called Trade Is Not a Four-Letter Word because frankly, particularly under President Trump and just generally trade, we got a bad rap in this country. And so I wrote a book about it, but one of the things I did discover was the Taco Bowl, which President Trump made famously...
Mark Zandi: Oh, that's right. I forgot that.
Fred Hochberg: ... during his campaign about the Trump Grill. But anyway, the Taco Bowl, like many things we eat, was not invented in Mexico. It was actually invented at Disneyland. And a lot of things that we eat may appear to be foreign, but they're not. Like corn, beef and cabbage was actually invented here in America from Irish immigrants who wanted to feel like they were home. And so they came up with corn, beef and cabbage. So the Taco Bowl's one, but that's actually a Disneyland, so that's why I butted into the conversation.
Mark Zandi: Not at all. I knew you couldn't resist, but I should have introduced you earlier on. But it's wonderful to have you on inside economics, Fred. We keep running into each other, it feels like. I think the last time we were in New York at a New York Economics club and Lael Brainard was there and had a conversation with her. And I think before that we were in San Diego at a policy/political function.
Fred Hochberg: Exactly.
Mark Zandi: Right. And we're going to talk about trade, we're going to talk about globalization, we're going to talk about China, obviously, a Biden Trump policy, in your book of course. But maybe before we move in that direction, maybe you can give us a sense of your background, sense of your career.
Fred Hochberg: Well, sure. Well, anyway, it's wonderful to be here and to find another way to see you Mark and to meet Marisa and Cris. So I was in business for about 20 years, a company called Lillian Vernon, which was a direct marketing, a catalog company founded by my mother named Lillian. And after the third marriage, she just changed her last name to Vernon and decided, "Enough of these changes and revisions to my name. I'm going to just go with the name of my company."
And it's named after the town where the business was started in Mount Vernon, New York. And this is a little personal aside, she started the business on our kitchen table, and I made the comment recently that men start businesses in their garage because the car is kind of a locus of a boy's life, as in Silicon Valley. And many businesses started by women, started on the kitchen table. And just recently my brother and I donated that table to the Smithsonian Museum of American History.
Mark Zandi: Oh, that is so cool.
Fred Hochberg: So it'll be up till 2040, so you have plenty of time to catch it if you haven't seen it yet.
Mark Zandi: What happens after that?
Fred Hochberg: But it's an American Enterprise exhibit.
Mark Zandi: What happens after 2040? Why 2040?
Fred Hochberg: Well, the exhibit's up for like 30 years, I think.
Mark Zandi: Oh, I see.
Fred Hochberg: They'll probably do a real refresh after 30 years.
Mark Zandi: I got it.
Fred Hochberg: But it traces American enterprise and how it's shaped our country and how we become such an economic powerhouse. And anyway, I did donate the kitchen table, and it's there right now if anybody sees it. But so I was in business for 20 years. After that I did a lot of work on LGBTQ, civil Rights, and then ultimately joined the Clinton administration. I was the deputy, the number two at the Small Business Administration and for a short time the acting Administrator. And then I was a dean at the New School, School of Public Policy. And then I spent eight years with President Obama as Chair of the Export Input Bank.
And the Export Import Bank briefly was started by FDR, by Franklin Delta Roosevelt in the '30s, 1934 to be exact, with the realization that if we want to put more people to work, exports are one way to do that. Exports create jobs, and they also bring revenue in. So I was fortunate to be selected to chair the bank, and I did it for two terms for the first and second term. So I am the longest serving. There were certain days I was the long-suffering chair of the EXIM Bank, but I was the longest serving chair of the EXIM Bank.
And the Export Import Bank, basically, as I said, we help finance exports when conventional or standard banking isn't available. And we have the best banking system in the world, but its best is not always. Doesn't do everything. So like two thirds of the loans and guarantees that we made at the Export Import Bank were to developing countries that have a less sophisticated taxation system, less sophisticated banking system, and therefore often needed external financing and banking in order to import power systems, aircraft, locomotives.
Most of our goods were more heavy capital goods, would be the preponderance. Some services, but capital goods is sort of the quote, 'bread and butter' of the kind of work the Export Info Bank does. And just to finish, there are now about a hundred Export Import banks around the world. And even when I was just there over a decade ago, there were maybe 60. So it has grown enormously as country after countries realized, "We want to get our goods on the world stage, and if we need to help finance it, we'll do so."
Mark Zandi: I'm sure you don't remember, but our first point of contact is when you were at the EXIM Bank, you reached out.
Fred Hochberg: I remember vividly.
Mark Zandi: Do you really? Oh, I'm so surprised.
Fred Hochberg: I know that's how we met. That's the reason you answered my phone call.
Mark Zandi: No, no, no, no, no. I would've answered your phone call regardless, but I remember that conversation very well. And eight years, that's a long tenure, right? Would you say that's the longest?
Fred Hochberg: Yes, because it's a term job, so I had to be confirmed actually twice by the Senate for the job. For the first four years and then confirmed again for another four years, and that is the longest serving.
Mark Zandi: Right. Well, there's a lot to unpack there, and we're going to definitely come back, but since we have Marisa, and I'm not sure how long we have her, and the big economic news of the week was the consumer price report. And I'm not going to tell anyone how I feel about that, but I'm pretty sure you know how I feel about that report anyway. Marisa, maybe you can give us a sense of the numbers and what you think they mean.
Marisa DiNatale: Sure. I'm sure you feel wonderful about this report. First of all, let me say at the top,
Mark Zandi: Slam dunk, wonderful.
Marisa DiNatale: I think we know exactly how you feel. It was a very good report. So this was the consumer price index for October. Prices overall were flat over the month. By that I mean they were unchanged between September and October. This was even better than ours and Consensus' forecast, which was expecting a slight increase. And just as a reminder, in August and September, prices were up 0.6%, 0.4%, so this is a marked deceleration from previous months.
Over the year, prices, total prices are up 3.2%. That's down from 3.7% in September. And as a reminder, we peaked at 9% back in June of 2022, so we're down by two thirds basically. Energy prices drove the decline over the month for sure. So the CPI for energy fell 2.5% over the month. It had risen one and a half percent in September and was up 5.6% in August. Gas prices were down 5%. All energy commodities were down just about 5% as well.
Domestic oil production has been responding to higher prices, and that's helped to bring prices down. Let's see, food prices sticking with top line CPI, food prices rose 0.3% over the month. They are up 3.3% over the year. They had peaked around 11% year over year in August of 2022. Food prices at home were up 0.3. That's actually an acceleration from the previous month. And food away from home rose 0.4% over the month, which was the same that they did in September.
Mark Zandi: Actually, scouring report, the only part of the report that might've been a little bit of a blemish would've been food prices. But other than that, it felt like everything else was moving in the right direction, meaning less inflation.
Marisa DiNatale: The only other thing major category I saw that was an acceleration over the month was auto insurance.
Mark Zandi: Oh, yeah, vehicle insurance. Right. But you saw the new vehicle prices did fall.
Marisa DiNatale: Right. Both new and used vehicle prices fell over the month. That's right. Core CPI, let's talk about core, rose 0.2% over the month. And that is a deceleration from the prior month when core rose 0.3%. Core is up 4% year over year. So we're talking 3.2% on total inflation year over year. Core is up 4%. This, again, just to put it into some context, core was up 6.6%, which was sort of the post pandemic peak in September of 2022. Goods prices within core are basically not contributing to core. It's really all coming from core services.
The inflation in core, shelter, which we have been keeping an eye on, we know that shelter prices are about 40% of core inflation, and they were up 0.3% month over month. That follows a 0.6% increase in September. Prices for owners equivalent rent, which we've had some discussion about in the past few podcasts, that was up 0.4% down, deceleration from 0.6% increase in September. And then rents, the CPI for rents rose 0.5%, and that was the same as they had risen in the prior month. So we're looking at 7.2% was the peak of year over year rents in September. We're down to 6.7% year over year as of October. So still very high inflation coming from shelter, but it appears to be moving in the right direction at least.
Mark Zandi: Yeah, correct me if I'm wrong, but if I take the CPI, the total index and I exclude the shelter piece, we're back to target. We're back to 2% ish on inflation.
Marisa DiNatale: I think that's right.
Cris deRitis: That's if you take out food, energy and shelter, right?
Mark Zandi: No. Oh, no, no. Just take the CPI-
Cris deRitis: Just shelter as well? Oh.
Mark Zandi: Yeah, just take the CPI and of course the energy price declines are helping here get CPI down, but the CPIX shelter I think is 2%.
Cris deRitis: It's 1.5.
Marisa DiNatale: Even better.
Cris deRitis: Even better.
Mark Zandi: Even better.
Cris deRitis: Now I have to find another statistic by the way.
Mark Zandi: Oh, sorry. Okay. So Marisa, what's your sense of it? I mean, take a step back and what do you think?
Marisa DiNatale: I mean, obviously if we're talking about headline CPI, energy is moving this thing all over the place from month to month since August. So we have this big run-up as energy prices rose, and now we're on the backside of that with energy prices falling and detracting. But you strip away that, you look at core, it's coming down. And mean shelter is going to be stubborn to move just given the way the BLS measures shelter inflation, we know.
But everything looks like it is moving in the right direction. The core services inflation and shelter are just going to take a bit longer to move down. And as we've said before, it may not be a linear movement. We might have some months where things pop up a little bit and then come down, but it's a really good report all around. I think it's hard to find something bad in it.
Mark Zandi: I wanted you to start that way. It's a really good report.
Marisa DiNatale: I did start that way. I started by saying that you thought it was a really good report.
Mark Zandi: Yeah, that's right. Okay. Cris, you're the...
Cris deRitis: It's a solid record unless you care about tobacco prices.
Mark Zandi: Oh, really?
Cris deRitis: Which did shoot up, but...
Mark Zandi: I didn't follow that. They up a lot?
Cris deRitis: I didn't think you would.
Mark Zandi: Oh, okay. Is cannabis in the CPI report anywhere?
Cris deRitis: In the basket?
Mark Zandi: I don't know. It should be, shouldn't it? It's not in the basket? That's an interesting question.
Marisa DiNatale: Probably not.
Mark Zandi: Probably not? Okay.
Marisa DiNatale: Well, it's still illegal federally so probably not.
Mark Zandi: Oh, that's right. It's illegal federally. Okay. All right. Hey Fred, maybe I'll bring you in here. Marisa mentioned goods prices, and correct me if I'm wrong, Marissa, they're now falling pretty consistently, right?
Marisa DiNatale: Yeah. There's almost no contribution coming from goods really to overall inflation. It's really all services.
Mark Zandi: And I think this kind of goes to one of your themes, right, Fred? About trade and prices. I mean because of globalization and the benefits of globalization, it brought down costs and translated into lower inflation. And here we are again. Of course there was the pandemic and that messed things up. But on the other side of the pandemic, it feels like we are still seeing the benefits of globalization in terms of prices on goods.
Fred Hochberg: The fact is between automation, which is also a big factor, and the fact that... And since we've talked a little bit about vehicles, we don't really have lemons anymore. And even generally in products, if closer to a 100% of products produced are not flawed, even dropping that by a 10th of a point makes a difference in cost. Because if a product has to get recalled or is malfunctioning, that actually adds to cost. So between quality, automation, and globalization.
We're going to talk a little later about China, but China's been a big driver in keeping our inflation at bay for the last 20 years and has been a source of low cost of goods and also a lot of substitution. So that imports have really helped us for many, many years, sort of keep inflation at bay. And the amount that individuals, homeowners spend on sort of food and shelter, which Marisa was just talking about, has been steadily declining.
And then a lot of it has to do with imports and the fact that there is some globalization, certainly with food, fruits, vegetables coming from Mexico. And just recently it turned out that our largest trading partner today is Mexico, not China, which is also a big shift. And part of that is also agriculture.
Mark Zandi: As I recall before the relationship with China went off the rails, went sideways under the Trump administration. And of course we had the pandemic. If you go back into the 2000s and 2010s, we estimated that the trade with primarily China, but globalization more generally reduced overall CPI inflation by about a quarter point per annum. So that would be instead of growing two and a quarter percent per annum would grow 2% because of the weight on goods prices caused by or as a result of the globalization that was occurring. So very powerful.
And I'm going to state this, but maybe ask if this resonates. It feels like the goods price weakness we're seeing now is less related to globalization effect. We might be going a bit backwards here on globalization. We will talk about that. This is more about the strong value of the dollar. The dollar is very strong and that's translating through. Yeah, you agree with that? Okay.
Fred Hochberg: I agree with that. Yeah.
Mark Zandi: So Cris, anything else you wanted to add on the CPI report? Any blemishes that... Marisa mentioned motor vehicle insurance, I mentioned maybe a blemish on food, which probably temporary, but anything else in there you saw that caused you any concern whatsoever?
Cris deRitis: Not really.
Mark Zandi: No?
Cris deRitis: The shelter, the rents, obviously we'd like to see those come in a bit more quickly, but we know that's a process. But other than that, no. It was, like I said, I think a very solid report. Market reaction interpreted it as a solid report moving in the right direction.
Mark Zandi: Yeah, I think I've said this before. We forecast lots of things. Some things we forecast we've confidence in, some not so much. The forecast that inflation's going to come back to the fed's target in a reasonably timely way, let's say by this time next year, I feel very confident in that. If inflation X shelter is already there and all we need to do is get shelter back, inflation back down to something that's more typical, it feels like that's what's going to happen because market rents are down and that's what drives the measured inflation for housing.
Cris deRitis: Right.
Mark Zandi: Okay, you would agree with that that?
Cris deRitis: Yep.
Mark Zandi: Okay. All right. Good. And can I say before we move on, all the things we were nervous about with regard to the economy coming into the fourth quarter feel a lot less ominous all of a sudden, to me UAW strikes over, no government shutdown. The student loan repayment doesn't feel like it's even been a blip. Oil prices are back down to $75 a barrel, $75 a barrel.
Cris deRitis: Or even less, right?
Mark Zandi: Well, I took the average of WTI and Brent, 75. And the 10-year treasury yield, it's still a little elevated, but 4.45. It feels like all those headwinds we were worried about, they just dissipated. So it feels really good. And that's the stock market and that's all the grain. Anyway. Okay, let's move on. Let's play the game. In the statistics game, we each put forward a statistic. The rest of the group tries to figure that out through questions and clues, deductive reasoning. The best statistic is one that Marisa never gets. No, just kidding. One that is not so easy. We all get it quickly, not so hard that we never get it. And if it's apropos to the topic at hand, bonus. And Fred's said he's going to play, but I'm going to go to Marisa first because that's tradition. So Marisa, what's your statistic?
Marisa DiNatale: My statistic is 13,000.
Mark Zandi: 13,000 statistic that came out this week?
Marisa DiNatale: Yeah.
Mark Zandi: Government statistic?
Marisa DiNatale: Yes.
Mark Zandi: Related to inflation in any way?
Marisa DiNatale: Not directly.
Mark Zandi: Not directly?
Cris deRitis: Related to trade?
Marisa DiNatale: No.
Cris deRitis: No.
Mark Zandi: Is it a price?
Marisa DiNatale: No.
Mark Zandi: Is it a number of people?
Marisa DiNatale: It is.
Mark Zandi: Oh, geez. What the heck is that?
Cris deRitis: Number of people that were at Disneyland yesterday.
Mark Zandi: Right. On that ride.
Marisa DiNatale: I think it was more than 13,000. Well, more.
Mark Zandi: Talking about inflation. How much is a ticket to Disneyland these days?
Marisa DiNatale: Yeah, it's really out of control. And it's not just the ticket. I mean it's like probably $200 a person and that includes for a three-year-old. Then you pay $35 for parking, then you buy all the food and all the things. And it's astronomical.
Mark Zandi: Yeah, it's crazy. Okay, back to the number. 13,000. Is this, we're never going to get one of those, this number?
Marisa DiNatale: No, you should-
Mark Zandi: Are we going to be embarrassed if we don't get it?
Marisa DiNatale: So I'm taking a transformation of something because I think if I gave you kind of the headline, you'd get it right away.
Mark Zandi: Oh, is it UI claims?
Marisa DiNatale: Yes, it is.
Mark Zandi: The increase in UI claims?
Marisa DiNatale: Yeah, it's the increase in UI claims last week.
Mark Zandi: Fred, Fred. I'm just saying Fred.
Cris deRitis: Nicely done.
Mark Zandi: You see how that's done? You see how it's done? That's got to be impressive, right? No?
Fred Hochberg: That's an impressive number.
Mark Zandi: Okay. There.
Fred Hochberg: Very impressive.
Marisa DiNatale: The number was impressive.
Mark Zandi: That's funny. It feels like weak tea to me, Marisa. I don't know. Go ahead. Tell me why.
Marisa DiNatale: I picked it because they popped up pretty significantly than we've seen in the past few months, right? I mean it's not a crazy number. So UI claims last week came in at 231,000, but that's significantly above. They've been moving higher since the mid, beginning of October when they had fallen to about 200,000. So they're still low. There's still not really any reason to worry, but they do appear to be moving up a bit. So it's something to keep an eye on. It's something I keep an eye on very closely to see if we're seeing any real signs of major weakening in the labor market.
So far we've seen job openings come down, hiring come down, job growth weaken, but we really haven't seen layoffs pick up to any significant degree. So this is just something to watch. We think if we get to around about 270,000 a week, that would be time to worry. That would probably be the point at which you would see the unemployment rate rising due to layoffs.
Mark Zandi: Yeah, I think we've just talked about in the past, but just to state it again, I mean UI claims are a really good barometer. Weekly data, very good barometer of the state of the labor market, but you got to be really careful, week to week or even over a period of time, particularly post pandemic, because of seasonal adjustment issues. The pandemic really messed up the seasonal patterns and claims and there is a great deal of seasonality in what's going on in the labor market. So you got to be really, really careful. So I don't get overly exercised if it's below 200K efforts closer to 250. Really, we have to see a definitive breakout here to north of 250, 275, something like that.
Marisa DiNatale: Yeah. And the four-week moving average, if you smooth it out with a four-week moving average, it's 220.
Mark Zandi: 220? Okay. Still very low. Okay. Hey Fred, you saw how it was done? You want to go next?
Fred Hochberg: Yes, I can go next. Does it have to be a statistic of this week or one or another?
Mark Zandi: No, no, no. You can fire away.
Fred Hochberg: Okay. My statistic in the spirit of Marissa is 995 billion.
Mark Zandi: Is that the increase? Well, that sounds like an-
Marisa DiNatale: Is that how much Disneyland made yesterday?
Fred Hochberg: On you?
Mark Zandi: That has to do something with a trade deficit, right?
Fred Hochberg: No.
Mark Zandi: No? Okay.
Cris deRitis: No.
Mark Zandi: Okay. Not the trade deficit.
Cris deRitis: Is it dollars or...
Marisa DiNatale: Yeah.
Mark Zandi: It's a billion, $995 billion. That's close to a trillion dollars, right?
Marisa DiNatale: That's a lot of money.
Fred Hochberg: Very close, yes. Very, very close to a trillion dollars.
Mark Zandi: And it's not anything to do with trade. It's got to do with trade.
Fred Hochberg: It has to do with trade, yes.
Mark Zandi: Oh, okay.
Cris deRitis: Okay. It's just not the deficit.
Mark Zandi: It's just not the deficit. Is it trade with one country? Is it trade with China? No, is it?
Fred Hochberg: No.
Mark Zandi: No, it can't be. Maybe it is. Exports plus imports maybe.
Fred Hochberg: I'll give a clue. It's exports from one country.
Mark Zandi: Oh, it has to be China, right?
Cris deRitis: No, it's U.S. exports were 900-
Mark Zandi: No.
Fred Hochberg: Nope.
Cris deRitis: U.S...
Marisa DiNatale: Total exports, global exports from one country.
Fred Hochberg: Right.
Mark Zandi: Germany?
Fred Hochberg: No.
Marisa DiNatale: Mexico?
Fred Hochberg: No.
Mark Zandi: It's not China. It's not the U.S. It's one country, not Germany. It sounds like a lot of exports. Saudi Arabia.
Fred Hochberg: No, Saudi Arabia is about half of that.
Mark Zandi: Oh, Saudi's half of that? 500 billion. Oh, this has got to be good. It's going to be something like Singapore or something. Hong Kong or something like that, no?
Fred Hochberg: It's the Netherlands.
Mark Zandi: The Netherlands.
Cris deRitis: [inaudible 00:29:03].
Fred Hochberg: Which shocked me because-
Mark Zandi: Oh, that's so cool.
Fred Hochberg: ... we do our exports at 2.1 trillion, so they're almost half and they're a lot, lot, lot smaller than we are.
Mark Zandi: Yeah, I guess that's Rotterdam and...
Marisa DiNatale: Oh, okay. So it's trade coming through.
Mark Zandi: Coming through.
Cris deRitis: Yeah, it's in and out.
Fred Hochberg: I was shocked by that number because Germany's 1.7 trillion and I think tiny Netherlands is 60% of what Germany exports, so...
Mark Zandi: That's right. Right.
Fred Hochberg: It needs a little more digging, but it was like a number that just popped out of nowhere for a country that's very, very, very small.
Mark Zandi: Yeah, I think it must have to do with the port of Rotterdam and just all the goods from Europe travel through and somehow it gets determined as it's in the Netherlands. That's a great statistic.
Fred Hochberg: Which is one of the problems with trade data in general is if you don't dig down on how we keep score, it can be very misleading.
Mark Zandi: Yeah, absolutely. Yeah, absolutely. That was a good one. Cris, you're up.
Cris deRitis: All right, so I have to switch up here. So this is a fun one. $61.17.
Marisa DiNatale: Aren't they all fun?
Mark Zandi: They are all fun.
Cris deRitis: Absolutely.
Mark Zandi: $61 and what?
Cris deRitis: 17 cents.
Mark Zandi: The price of chicken McNuggets, coke and fries at Disney World?
Cris deRitis: Nope.
Mark Zandi: No? Okay.
Cris deRitis: It is a price.
Mark Zandi: It is a price of something.
Cris deRitis: Something.
Mark Zandi: Is it a product, a good?
Cris deRitis: It is a set of products.
Mark Zandi: A set of products. Is it food related?
Cris deRitis: It is definitely food related.
Mark Zandi: Okay. Is it something to do with Thanksgiving?
Cris deRitis: Oh, yes. Yes, indeed.
Mark Zandi: It's the cost of a Thanksgiving dinner.
Cris deRitis: It is. It is.
Mark Zandi: Oh, ding, ding, ding, ding, ding. We haven't done that in a while.
Fred Hochberg: That was fast. Wow.
Cris deRitis: Traditional holiday meal for 10.
Mark Zandi: That sounds too cheap to me.
Marisa DiNatale: Say that again Cris. Did you say a meal for 10?
Cris deRitis: Yes. According to the American Farm Bureau Federation, they've been calculating this for decades, I think. They have a basket of the Turkey and all the sides, right? So they calculated and that is down 5%.
Mark Zandi: Oh, really?
Cris deRitis: From last year, right. So that's significant news. Price of Turkey is down significantly because of the avian flu that we had last year. And then here's my link to trade. Cranberry sauce is down 18%. Most of our cranberries come from Canada, so...
Mark Zandi: There you go. Oh, okay.
Cris deRitis: Just strong facts here.
Mark Zandi: Is that the strong dollar against the Canadian dollar?
Cris deRitis: Possibly. They also had a record harvest.
Mark Zandi: They did? Oh.
Cris deRitis: Strong harvest. I don't don't know if it was a record.
Fred Hochberg: Thank you Canada for a better Thanksgiving.
Mark Zandi: Yeah. Thank you Canada. Thank you Canada.
Cris deRitis: There you go. There you go.
Fred Hochberg: The funny thing about food prices when they go down, all people think is I'm a smart shopper.
Cris deRitis: Yeah, that's right.
Fred Hochberg: I did a great job. I outfoxed everybody.
Mark Zandi: That's right.
Fred Hochberg: As though trade and the fact there are more turkeys has nothing to do with it.
Mark Zandi: It's right. That's right.
Fred Hochberg: "I'm really smart."
Mark Zandi: "I'm a good shopper. Look at this." Yeah, so maybe we'll get a boost in consumer confidence.
Cris deRitis: There, that's a good one.
Mark Zandi: But can I ask you? No, you probably don't. What was the increase last year in the cost of a Thanksgiving dinner?
Cris deRitis: Oh, it was significant.
Mark Zandi: This goes to what's going on out there. Inflation is moderating, but everyone's focused on what they're paying today compared to two or three years ago and they're still pretty upset. And I'm guessing-
Fred Hochberg: Exactly. If it's going up a modest even 2%, but it still feels it's up 10% from what you remember, it feels high.
Mark Zandi: Yeah. And I think that's President Biden's problem. Big problem.
Cris deRitis: I don't have that specific, I do have this statistic that it costs 25% more still than it did in 2019.
Mark Zandi: Okay, there you go.
Marisa DiNatale: Do you remember last year having this conversation around Thanksgiving? I remember us having this conversation on the podcast because I bought a Turkey for $90.
Mark Zandi: Oh, that's right.
Cris deRitis: That's right.
Mark Zandi: That's right. Yeah, Fred, she's not a good shopper. She definitely got ripped off.
Marisa DiNatale: Actually, I returned it.
Mark Zandi: You returned it?
Cris deRitis: You returned it.
Marisa DiNatale: I did, yeah.
Mark Zandi: Well, I thought you would put it up on eBay or something. You'd probably get it on $110.
Marisa DiNatale: I remember how insane Turkey prices were last year, and I remember that everybody was up in arms with it and it was getting so much press. And exactly, people were making it political, not realizing there was this avian flu reducing the bird population and that's why Turkey prices were up so much last year. But I remember we had this conversation around the same time.
Mark Zandi: That's interesting. Okay, one more statistic very quickly. It's actually, I'll give you three numbers. They're all related and I hope it's not too hard. Usually when I think it's hard, it's easy. 150, 1.24, 1.08. I'll give you one more. 0.73. And no one ChatGPT this. Yeah, no ChatGPT.
Cris deRitis: 150...
Marisa DiNatale: It wouldn't know anyway.
Mark Zandi: Yeah, it's related to the topic at hand, trade. We've been talking about it.
Marisa DiNatale: The first number was 150?
Mark Zandi: Yeah. To even more precise, as of today, 149.5. That's a big hint. That's big.
Marisa DiNatale: So it's a price.
Mark Zandi: It is.
Cris deRitis: An exchange rate.
Mark Zandi: Yeah, it's exchange rates. Yeah, very good. Yeah, the Yen dollar, 150. The pound $1.24, the Euro dollar 1.08, I think the Canadian, U.S.-Canadian is 73 cents.
Cris deRitis: 73 cents.
Mark Zandi: So the dollar is about as strong as it's been ever. There are times when it has been stronger, but rarely. It's really, really strong. Obviously going to monetary policy here compared to the rest of the world, the U.S. economy has led the way in terms of growth. And the fed's led the way in terms of increasing interest rates and higher for longer and thus the strong dollar. But it's helping us in terms of inflation for sure, is those good prices?
Fred Hochberg: So Mark, can I push back a little bit? Should we put-
Mark Zandi: Yeah, yeah. Yeah, fire away.
Fred Hochberg: ... the dollar being strong or weak because no one can be for something weak as opposed to the dollar's high or low.
Mark Zandi: Okay, fair enough.
Fred Hochberg: You're adding a value judgment to where it is.
Mark Zandi: That's reasonable pushback. I should say it's high. It's high relative to other currencies. Yeah, you're right. Yeah, absolutely. Good point. All right. Fred, let's turn back to your book. And I noticed, I think it was published in January of 2020. Good timing, I'd say.
Fred Hochberg: Well, actually the day before the impeachment trial.
Mark Zandi: That's even better.
Fred Hochberg: It was not the easiest week to get television coverage.
Mark Zandi: But I have to say I was really impressed by the notes of praise you got. Jamie Diamond, Fred Smith of FedEx. You had Daniel Rubinstein.
Fred Hochberg: Daniel Rubinstein, Christine Legarde.
Mark Zandi: Oh, I didn't see that. Christine Legarde. That's wonderful. You must've been very happy to get those kinds of words of praise.
Fred Hochberg: And Navarro as well, I got, so it was great. Yes, I was very fortunate.
Mark Zandi: And I haven't gotten through all of it, but I've gotten through a big chunk of it. And I love the history. There's so much history there that I go, "Oh, I didn't know that." And I find that history provides a great deal of context. So you walk through your thinking around trade through the prism of six different products and services. And you mentioned the taco as one of them, but maybe it would be interesting, of all those six, which one was your favorite one to do?
Fred Hochberg: Oh my God. There's-
Mark Zandi: Is that like asking which is my favorite kid, is that?
Fred Hochberg: By the way, people do have favorite kids. I do know that they say they don't.
Mark Zandi: Oh, it's okay. Is that right?
Fred Hochberg: For different reasons. I looked at the iPhone for example, as just because it illustrated so much. The iPhone, it takes 43 countries to sort of produce the iPhone, so it's sort of a perfect example of why trade actually adds value to all of our lives. Without trade I don't know that you could have created the iPhone, frankly. You could not produce it all in the United States. So it's 43 different countries, almost 750 suppliers. So I mean it is massive. And I often would tell people, if you like to count your steps, well you can thank the Netherlands because they make the thing that goes in the iPhone that counts your steps. And if you can turn it either upright or landscape, you should thank the Swiss because they make the gyroscope that does that. So all these different things go into the iPhone.
And the other thing it also, we were talking about, I threw out the idea of Netherlands having such a high trade number. Only less than $10 of the iPhone actually comes from China, and yet it's an import from China because that's the last stop and that's where everything is put together. So we import about 16 to $18 billion worth of iPhones a year from China. And that goes into the quote, unquote 'trade deficit' with China, but only $10 out of the 300 or so dollars per iPhone is Chinese. But yet they get tagged with all of it.
So it's one of those things where it's one of the reasons I think looking at the trade deficit is really not the most... It's like in politics, people look at how much money did you raise in the quarter? It's a data point, it doesn't tell all, and it has a lot of misleading characteristics to it. So I like the iPhone. I like the iPhone partly because it would not exist otherwise. The other thing I also think it was interesting was cars.
We still export a lot of cars, but the top 10 cars in the United States in terms of content, now six of them are actually what we would call American cars. And Tesla has four of those slots. But when I wrote the book, the Honda Odyssey was the number one car with U.S. content. And I actually went to the Honda Odyssey plant in Alabama to actually see how they put it together. But that for a long time had more U.S. content than anything. And the Ford 150 pickup truck was, last I looked, was about 50%. So pretty just turns around your ideas, what's American, what's not American, what's the value of an import?
And my favorite was, which they also just thankfully discontinued, the Chevrolet Spark, which comes from Korea, was 1% American. But people say, "Oh, buying a Chevrolet. It must be an American car. It feels better than... I want to buy American, I'll buy a Chevy Spark." Well actually you'd be better off buying almost any Honda or Toyota or Kia than the Chevy Spark, for example. So those are some of my sort of favorites I pulled out. The other thing, you got me started Mark.
Mark Zandi: No. Go, fire away.
Fred Hochberg: We always think about goods, whether the iPhone, a car. Services or we have way blessed... [inaudible 00:41:33] once said this, if you looked at an economy that's 70% services versus 70% manufacturing you'd say, "I want to be in the service economy." And that's our economy, but we don't think about entertainment, higher education as really important exports. When foreign students come to America and they study here, they leave with an education. That's a service export.
And we could handle probably another million foreign students coming to our country, which would both benefit a lot of private universities and public ones and would also spread American thinking and American values to the rest of the world in a pronounced way. Because if your parents send you to school for just college for four years, that's a big investment. That's a big vote of confidence in America. And I don't think we take enough advantage of that.
Mark Zandi: So you wrote the book because there was growing angst around trade and what it meant for Americans. And obviously President Trump ran from a very different prism and perspective. That's the four letter word came from. But there's some truth to it too, right? In the sense that China's entry and we pick on China because it's so massive and it came out of nowhere. I mean after it entered into the World Trade Organization in 2001, it just came on the scene incredibly quickly. And it did, I think the evidence does show, and I'm curious if you disagree or not, but the evidence does show that the trade, the imports from China did hollow out big parts of U.S. manufacturing and did knock the wind out of many communities across the country that depended on that manufacturing.
And one could argue, and here's more, a little bit more of a stretch, but I'm just going to state it and get your opinion, that it may also have contributed to the social political issues we're suffering right now. People felt, that lost their jobs as a result of trade, and to some degree immigration, that they became disenfranchised and thus upset, rightly upset and said, "Hey, I don't know what's the right way forward, but I don't like the way we're on so I'm going to vote for the person who's taken me in a different direction, whether that's good or bad." Does that all resonate with you?
Fred Hochberg: Without question. The benefits of trade are spread far and wide, including Marisa going shopping and saving money on her groceries. The pain or the deficits of trade are often felt very narrowly. As you said, when a factory closes not just the economic hardship but the social upheaval, the fact that a town all of a sudden or a city begins to not have the job generated that paid taxes, that paid for schooling, fire, police and so forth. And as I think as you said, Mark, where did this really be felt in places like Michigan, Wisconsin, Pennsylvania, Ohio. And what of those states all have in common come 2024? They're all battleground states.
So that's one of the reason that I think trade has been such a political issue because the places that really got hurt happened to be battleground states. Just to make another analogy, I'm here in Miami Beach today. The Cuban population has been highly concentrated in southern Florida and it's made Florida a battleground state, which is, I would use this word, is kept our Cuba policy somewhat hostage because no candidate wants to offend. If Florida goes one or two points in either direction... Trump won by three, which was a landslide in Florida thinking. Because normally the state's gone back...
Mark Zandi: So close, yeah.
Fred Hochberg: So close. And so our Cuba policy has been... If the Cuban population was more spread throughout the country, that would probably have a different impact on our politics. And same with trade. I think that trade has been such a part of presidential politics because it's concentrated in a number of states that really got hurt a little bit somewhat with NAFTA and certainly with China.
Mark Zandi: And the interesting thing is that now both political parties, Democrats and Republicans have a very jaundice view of trade. And of course China's the poster child for that angst. And it does feel like there's been a sea change in policy and it is having real implications. We've gone from globalization, increasing trade, increasing immigration, increasing capital flows, increasing foreign direct investment all the way the global economy links itself together in the 2000s and the 2010s to, we have a debate about what the right word is, but pick your word. De-risk, I heard the president say yesterday when he was talking to the folks in San Francisco, de-globalization, so forth and so on.
And you can see it in the trade statistics. So if I go and I add up U.S. exports imports, divide by GDP, that went from 10% of GDP kind of in the after World War II and the '60s and '70s, then it really took off and rose to about 25% by the financial crisis. And since then it's been basically sideways at best. And more recently started to come down. And actually trading patterns with China have shifted. We're trading less with China. And as you pointed out, we're now trading more with Mexico and Canada and Southeast Asia and so forth and so on. So it feels like this train has kind of left the station. We're going down the path of de-globalization. Is that fair?
Fred Hochberg: I think that is fair. I think that is fair. I remember over a decade ago I was with, at that time, Secretary Geithner, Tim Geithner. And I said, "I don't know why the Chinese don't just buy us off. If they just spent another a hundred billion dollars on U.S., they could buy Boeing airplanes and soybeans and hogs and become a great customer and take the pressure off the trade deficit," which I don't think is that important, but take the pressure off and I think it would've eased a lot of relations the way Japan did. But China in their own way didn't like some of our policies and therefore wouldn't... I think their politics gotten in the way of finding ways to smooth things with the United States. And they did nothing to fix that. So they very much have a lone warrior kind of view of things, and it should not shock us why, where we are right now with China.
But on the other hand, in a positive way, I would say if you look at U.S. China relations versus U.S. Soviet Union before the breakup of the Soviet Union, the advantage we have with China is we actually are more intertwined and have a lot more trade. And that has forced both sides to find some common ground from time to time. And frankly, I think the rest of the world is uncomfortable choosing between China and the U.S. on a number of things, certainly in places like Africa. And that may force us to find a path because they're not going to want to have to continually choose. And so, that's my optimism that, that might be a path towards less of a collision course and more competitive, certainly competitive and somewhat cooperative at times.
Mark Zandi: So just so I understand what you're saying is because Europe, because Africa, Southeast Asia, other parts of the world, they really don't want to get in the middle of this U.S. China thing. They don't want to pick sides because that doesn't make sense from their own economic perspective. And by so doing, that will put pressure on China and the U.S. to...
Fred Hochberg: ... play nice.
Mark Zandi: Come to terms may not be the right way to say it, but at least...
Fred Hochberg: No. But play nice.
Mark Zandi: Play nice with each other, don't hit each other over the head.
Fred Hochberg: Right. Because if you hit each other, you can't expect everybody else to fall in line.
Mark Zandi: Yeah, it feels like what you're saying, that does feel like it's kind of sort of what's happening here to some degree. Europeans are saying, "Hey guys, really can't you disfigure something out here?"
Fred Hochberg: And Europe is much more tied into their... They export a lot more to China than we do. So that's a trickier issue for them. Certainly for Germany.
Mark Zandi: The thing that makes it a little bit more complicated with China though, from a U.S. perspective and perhaps for the rest of the world too, is it doesn't feel like they play fair. And maybe that's just my American bias.
Fred Hochberg: No, they don't play fair and they are-
Mark Zandi: They don't play fair.
Fred Hochberg: ... a bad [inaudible 00:51:05]. The fact that the thing that President Biden, two of the deliverables or outcomes from that meeting with Xi was about fentanyl, finding a way to sort of reduce that and make sure we have some military communications so we don't have a near miss or an accident that causes a problem. China broke that off. That didn't have to happen. And on fentanyl, I don't know what the reasons are, but whether China could crack, could have cracked down before, maybe they like the fact that, "See the United States," they can tell their population, "The U.S. can't even control their own population. They're all drug addicted and shopping addicted."
And so they may have, in a certain way, looked the other way deliberately. But my point is they could have done more to stop it. And also, I mean look at trade, one of the things, Mark, is we're just coming out of the pandemic. Were it not for trade, companies like Pfizer would've had a much harder time. It was a German U.S. collaboration that created that spectacular vaccine. China, not wanting that, went their own way with a far inferior product and with real detrimental health and higher death rates because they did not have that. So there are ways we got... It's not so simple.
Mark Zandi: Yeah. And in the case of China, the fact that their vaccine didn't work was one reason why they shut down for much longer and why their economy came to the precipice, I think.
Fred Hochberg: As someone said, they went from a zero COVID to zero policy.
Mark Zandi: Like overnight.
Fred Hochberg: Overnight.
Mark Zandi: They saw the social unrest developing and they go, "Oh, okay, this can't stand." So just to be a bit forward-looking here, again, the history is rapid globalization in the 2000, 2010s, financial crisis and then President Trump and now President Biden's kind of following similar policies. Globalization has gone sideways at best. What does the future hold here? Is it continued sideways or are we going to be able to kick in again and enjoy the benefits of globalization or what's the future hold here, do you think?
Fred Hochberg: The challenge, I think you comment on there, Mark, is politically, if you look at Congress, for years, when Democrats wanted to get a trade bill passed, they relied on Republicans. And when we look at the Trans-Pacific Partnership or TPP, it lost votes. There were no votes on either side of the aisle, both Republicans and Democrats. So I think trade deals are really very hard going forward. And I think that's why one of the reasons the Biden administration and Secretary Raimondo and others have worked on, it's not a great, we don't have good acronyms in the government. IPEF, the Indo-Pacific Economic Framework. Clearly, we don't have marketing people working on these code names. But anyway, so that's why I try not to use too many acronyms. Actually in my book, I have about 20 pages of explaining what these acronyms mean.
Mark Zandi: I saw that, yeah.
Fred Hochberg: It's complicated. So I think the Indo-Pacific Economic Framework is a response to saying, "All right, we're not going to pass a trade deal, but we have to find a way to work better on logistics, on supply chains, on harmonizing those things." And that's still running into some difficulties right now, certainly on digital trade and the trade pillar of that. But I think that makes good sense. I think it's the best we can do right now. And if people don't think it's good enough, then we're going to have to reexamine where we stand on trade. But I don't think we're ready to do that.
Mark Zandi: My read on what you're saying is you're optimistic that we don't necessarily need to go down a darker path here. That the kind of tensions between the US and China don't need to unravel into something more serious. And there's good reasons to think that'd be the case, but you're also saying pretty difficult, at least in the foreseeable future to see any kind of trade deal or other effort to kickstart globalization again. We're kind of on a de-globalization, de-risking path here, at least for the foreseeable future?
Fred Hochberg: Yeah. Listen, we trade with a lot of countries that don't have a trade deal. You don't need to have a trade pact, a trade agreement in order to trade. We've been trading with Vietnam for years without a free trade agreement. That's not required. It adds some certainty, it reduces trade barriers and tariffs and it makes trade easier and more harmonizing. But we can trade, regardless. And I think one thing that really separates us from China is China has this China 2025 policy.
They would like to be almost an autarchy, not importing anything if they could. And the Covid vaccine's a good example. Thankfully, we are still the most open country in the world. And foreign goods, whether it's cranberries, back to Cris, or avocados, which I put in the book and so forth, come into our country and we live a better as result. We have more choices, lower prices, and I think we're now in a period, and it came with the inflation reduction act, of also balancing jobs and imports when it came to electric vehicles. There was a real tax preference if the electric vehicles were manufactured here with American components. So there are some trade-offs. And partly what I was hoping my book would do let people... There are always a trade-off. We can say, "Yes, we want those jobs." That may mean we have fewer electric vehicles immediately, but we've made that choice.
Mark Zandi: There's a lot of different things I want to go ask you about, but we are running short on time and I do want to turn the conversation back to Cris and Marisa. Cris maybe, is there anything you want to explore while we have Fred?
Cris deRitis: Maybe one thing. I think early on in your comments, Fred, you mentioned it's not just de-globalization that's going on, we also have a period of potentially enormous technological change. And I'm curious if you think those two trends are linked, right? So one theory could be, "Well, if we were going down the path of technological innovation, more 3D printing, maybe globalization was already going to be pulling back, independent of the politics here. We're going to just manufacture more things in the U.S. or locally because technology enables it." Do you see that as a factor in all of this or how is that a factor?
Fred Hochberg: Absolutely. I'll give you, since you guys like statistics... When I joined the Export Import Bank, we used to calculate how many jobs were generated by a billion dollars worth of exports. And it was like 7,400 jobs when I started. By the time I left eight years later, it was in the 5000s.
And just to put your point, I think with technological changes and that labor is a smaller and smaller portion of manufactured goods, there's less of a reason that companies would be looking for a low cost labor environment. I'm not saying none, I'm just saying less as you pointed. And 3D printing and so forth, those things contribute to it. The other thing that's also contributes in the automation and technological is greater customization. The people are talking of a point in time where you could customize your own sneaker with colors and so forth.
Well, there's a real advantage of doing that right here because people want to order it and you're probably going to locate next to a UPS or a FedEx hub so that you can deliver within days. So those kind of trends will certainly be more onshoring and nearshoring as a result. And that plus, I think, China's under President Xi is seen as too unstable, both unstable internally because of XI is such a strong handed and strong man. And B, U.S.-China relations are so fraught that I think that has certainly contributed a lot of Chinese companies are opening in Mexico because it's deemed a more reliable trading partner with the U.S. than, say, China is right now.
Mark Zandi: Marisa, anything you wanted to bring up?
Marisa DiNatale: Well, Fred, you mentioned, at the top of our conversation, that Mexico is now our biggest trade partner. So I'm wondering also, we've spent so much time focused on China and the relationship with China, but how does the fact that we're trading more with other partners kind of change the geopolitical landscape and our priorities abroad, do you think?
Fred Hochberg: That's a great question also because one of the things I learned when I was Chair of the export import bank under President Obama, and that was, many said to me, "The U.S. has ignored Central and Latin America," and frankly, China made large inroads into those places. So hopefully, that does change that dynamic. And we share a long border with Mexico. There are large numbers of Mexican Americans and so forth. So I would think that begins to change that dynamic very much so. So that has a role on geopolitics and how those relationships.
Just the way I also said, the fact that I think we have a different working relationship, even as poor as it may be at the moment with China, but partly trade is one thing that has kept a little bit of that glue together and has created some way of, even if we de-risk, we're not going to be able to totally decouple. We had very little trade or other relations with the Soviet Union. You had Pepsi and Stolichnaya Vodka. There were not a lot of in those early days. And I think that made for a more brittle relationship.
Mark Zandi: For sure.
Fred Hochberg: I'll give you another example I discovered in my book. We don't do a lot of trade with Turkey. And as a result, it's often been a more brittle relationship. We don't have as much trade including education, tourism and so forth. So there's just less non-governmental interaction that would maybe keep both sides, sort of provide some guardrails.
Mark Zandi: That's an interesting point. I'm guessing there must be studies kind of looking deeply into that point. If you have deeper economic ties, you have more stable political ties too. That's interesting point. Makes sense.
Fred Hochberg: Of course, Russia and gas to Germany, that did not provide, that was not the case then. But it doesn't mean it's perfect, but it does have some value.
Mark Zandi: Well, I want to end the conversation this way. We got an election coming, big one. It feels like every election, I think it's the biggest one in my lifetime, but I think this is going to be the biggest one in our lifetime. It feels like it's going to be Biden v Trump. Let's just assume that it is for sake of conversation. What does trade policy in the world look like on the other side of the election if Biden wins reelection or Trump wins reelection? How are you thinking about that?
Fred Hochberg: Well, I think that if...
Mark Zandi: Or are you thinking about that? Is that on the radar screen?
Fred Hochberg: Say that again?
Mark Zandi: Is that on the radar screen? Is that something you've been thinking about?
Fred Hochberg: Somewhat. Let me say this. I guess I haven't really wanted to think too much about President Trump reentering the White House from a whole host of reasons, but including trade. I think that it exacerbated and made worse our relations with some of our closest allies like Canada. To say Canada poses a national security threat to the United States is somewhat laughable, and Germany as well. So if we want to find ways to improve things with China, for example, which is certainly the largest and most important relationship we have, finding ways to do that with other countries that we are close to is the best way of doing that. If China can't pit us against France and Germany, the EU, that's a good thing.
So I, president Biden has far, far, has changed the entire dynamic of our relations with those European partners and with developed world. One of the areas that we face a real problem, I think, is what everybody call it, the global south or developing nations. And I think the rift between the developed world and the developing world has gotten wider and wider. And COVID did not help. Immigration and migration policies were seen as part of that in terms of how the world had Ukrainian refugees versus refugees from say, Africa and the Middle East.
Those things are really fraught, and I don't see if President Trump is reelected, there's no way that gets better. That only gets worse. And it gets worse at our peril because countries like Russia and China are delighted at that rift between some of what we thought of as our natural allies and partners. And so President Biden is far better positioned to try and stitch that back together and to heal that, which would be far better for us in the long run. Africa's going to be one of the largest continents in population in, well maybe not my lifetime, but in our lifetime, before the mid-century. And we know what President Trump called African Nations. Not to be repeated because we don't want an R rating on this podcast going to press.
Mark Zandi: Right. Well, we're going to have you back because I had a lot of other directions I wanted to go, but we just don't have time to do that. Just out of courtesy, because I kind of led the discussion in a certain direction, that might be frustrating you a little bit. Is there something you wanted to say or focus on that we haven't done? This is an open-ended question. Did we miss anything you want to chat about?
Fred Hochberg: Yes. Trade Is Not a Four-Letter Word is a great Christmas gift and a [inaudible 01:06:36].
Mark Zandi: Should be on the list. Absolutely. And I concur with that.
Fred Hochberg: I'll tell you what George Will did say when the book came out in 2020. George Will of The Washington Post said, "This is the one book President Biden needs to read about trades." So I think that was pretty good endorsement.
Mark Zandi: That's a great one. Great one. Very good. Yeah, indeed a strong endorsement from me. So everyone should read it. And again, the thing I find really interesting about it is, it's well-written, but the history is so cool. You really learn a lot and lots of the historical background, very important.
Fred Hochberg: If you don't want to read, you could get the audible and you'll have to listen to my voice. That's all.
Mark Zandi: You got a mellifluous voice? Okay. A voice for radio, voice for podcast. Well, it was great to have you on, Fred. Thanks so much.
Fred Hochberg: Thank you. Thank you, Marisa. Thank you, Cris.
Marisa DiNatale: Thanks, Fred.
Fred Hochberg: Thank you, Mark for inviting me.
Cris deRitis: Thanks, Fred.
Fred Hochberg: It was a lot of fun.
Mark Zandi: And Marisa, thank you for toughing it out.
Marisa DiNatale: I hung on there.
Mark Zandi: You hung on, yeah. Thank you for doing that. I really appreciate it. The whole Disney thing was really critical to the conversation, so really appreciate that.
Fred Hochberg: Yes, thank you for the Disney plug. It helped me jump in the conversation early.
Mark Zandi: Exactly.
Marisa DiNatale: Talkable. That's right.
Mark Zandi: Exactly. Right, right. Well, with that, dear listener, we're going to call it a podcast. Talk to you next week.