Why the U.S. Economy Gets a “B-Minus” Grade with Dr. Elliot Eisenberg

speaker-1 (00:12.878)
Well hey everybody This is the podcast by Bankers for Bankers. I’m Caleb Stevens with SouthState Bank’s Capital Markets Division and welcome back to the Community Bank Podcast, the podcast by bankers for bankers. And as I mentioned on last few weeks, some backstage interviews from two of our conferences. The first this past week in Charleston, South Carolina, the Elevate Banking Forum. So thanks to everyone who came out for that.

And if you were there, you’ll know that one of our keynote speakers was Mr. Elliot Eisenberg, Dr. Elliot Eisenberg, I should say, chief economist with his company Graphs and Laughs, which implied in the name is he shows you a lot of graphs and he makes you laugh along the way. He’s super and we caught up with Elliot backstage. Our own Tom Fitzgerald, who’s our director of strategy and research here at the bank, caught up with Elliot to talk about the latest on the economy.

speaker-1 (00:50.808)
Who is the company

speaker-1 (00:58.37)
Well super funny.

speaker-1 (01:09.324)
So let’s go to that.

speaker-0 (01:22.294)
Well hello everybody and I’d like to welcome Elliot Eisenberg to the podcast this morning. Elliot, how are you doing? I’m doing well. Well, this is the second year that we’re able to do this, so I’m glad to be you could accommodate your schedule to to our timeline. Elliot, just for everybody listening, Elliot just got done with the presentation to our Elevate conference here Charleston. and obviously as sort of the

speaker-1 (01:28.608)
Thank you for asking.

speaker-1 (01:37.143)
A pleasure.

speaker-0 (01:50.958)
Economist for the for the bank and you’re, you know, but much higher stature on that But there was a lot of your points I thought were some of the points that I made in an earlier presentation, which which which made me feel good because it’s like I wasn’t totally off base. Now you in your reliefs as well. In your commentary, you did give the the economy a B minus.

speaker-1 (01:56.141)
We could argue.

speaker-0 (02:13.134)
Right. And I thought I I could agree with that grade as well. And it to me is like I know you’re from Montreal, so you can you can you can appreciate this metaphor. I kind of started thinking as you were talking, I started thinking of of somebody skating on a frozen pond. And that and that the ice was frozen, but perhaps it was thinning and that there was some sort of possible dangers lurking, but right now everything was okay. Right. is that it

Just kinda it you know, my little metaphor there is that sort of an appropriate

speaker-1 (02:44.91)
It’s a great metaphor. I’m actually gonna steal it because it it it really works. Yeah, you you look at the 30,000 foot level, the ice is totally fur fine. You put skates on, it’s okay, but there are some places you might want to think it’s little thin there. Yeah. Nothing’s cracking, it’s not cracking, but it’s it’s a little concern. Yeah. So you have these areas, and that that’s why it’s a B minus. Yeah. If it were solidly thick and good, we’d be happy it’d be an A. Right. But it’s not.

speaker-0 (03:11.375)
Yeah, and like you said, you know, we’ve got four point one percent unemployment. That historically is a good place to and people aren’t being fired.

speaker-1 (03:16.93)
GDP growth is okay. No one’s getting fired. Corporate profits are terrific.

speaker-0 (03:23.372)
Yeah. But when you look at the job growth, there’s what, fifty thousand like you said before, where before it was two hundred, two hundred and fifty thousand a month and but but there’s been a slowdown. But for the

speaker-1 (03:28.211)
Year and a half, two years average, yeah, three thousand.

speaker-1 (03:37.336)
This economy yet and this population growth and with the i with the immigration policies that the administration’s following, this is an okay outcome. This is as good as it gets. This is the new normal. Right.

speaker-0 (03:49.74)
Now let me ask you this. Now I I would say part of my concern that that you did not share this morning was on the inflation front. Now you now we were talking you were talking about how you know we obviously the Fed has raised rates twenty-five basis points, and it looks like there’s gonna be

speaker-1 (04:09.918)
another this year.

speaker-0 (04:12.635)
You know, those those horrible dot plots that you mentioned. Looks like they’ve got one already penciled in for the end of this year. But you think that that’s a mistake. You think that the war shouldn’t even be thinking about another race.

speaker-1 (04:23.606)
I yes, that’s what I said. I’m glad that that came through loud and clear. And the reason is the inflation that’s being generated is not domestic. So the question you have to ask as a policymaker is why are we experiencing the inflation? Is it that we’re running out of domestic resources? We’re hiring so much, our plants and factories are being utilized so much that there’s no excess capacity, and therefore prices are going up. Wages are going up, inflation’s going up, the cost of inputs are going up, and so on. Domestic stuff. But that’s not what’s driving this inflation. What’s generally driving

This inflation is exogenous external factors over which we have no control. So we’re looking at oil prices and gasoline prices and diesel prices that are substantially higher, food prices that are higher in part because the Russians and the Ukrainians can’t get their wheat out of the Black Sea, and they’re huge exporters of grains and cereals and wheat and corn.

And so on, mostly wheat. So these are factors that a quarter point is not going to help solve the war, the Russian war, the Middle East war, and so on. Tariffs, these are non- So the only thing that the interest rate hike is gonna do is to some extent slow economic growth. So we’ll have less domestic inflation, but not in an overheating economy, in a weak, normal, regular to weak economy. And that’s gonna hurt, you think, on

Employment will go up a little bit, there’ll be some weakening corporate investment outside of AI. So you’re weakening the economy, likely mild weakening, but not solving the real problem. Right. You’re solving it by hurting the domestic economy, but that’s not the source of the problem. So I’m I’m frustrated, I think, would be the best way to describe my feelings.

speaker-0 (06:03.295)
Now the the concern that I would have there is and when you look at the last like CPI report, food was up only one tenth for the month. That yeah, that’s that’s fine. You can’t really expect it not to go up some

speaker-1 (06:17.984)
No, two percent of years.

speaker-0 (06:19.25)
Yeah, it was under three percent year over year. So you’re like, okay, the food issue, but then I worry that like you said, you talked about like the crack spreads where you know prices oil prices are a hundred, but that crack spread that used to be twenty dollars on that barrel is now a hundred. Right. And so you’ve got decent six fifty a gallon. Right. And so that to me is that’s not just gonna go away overnight. No real

speaker-1 (06:27.243)
oil price.

speaker-1 (06:43.212)
That that’ll that’ll s you’re right, that will seep in. It’ll seep into airplane tickets, the cost of a head of lettuce ’cause there’s in a truck, everything that use energy, which is everything, will go up a little bit.

speaker-0 (06:52.278)
And I and I think on that front, I think companies have tried to alleviate that cost pressure in other ways. Maybe they’re not hiring.

speaker-1 (06:59.66)
Not hiring, right? Some places are pulling prices back. Walmart and Target, they’re advertising cuts on ten thousand, nine thousand items, whatever it is. ‘Cause with the with the refunds, the tariff money or whatever.

speaker-0 (07:09.814)
Right. And I I was listening the Campbell CEO on on the I guess on his earnings call and talked about that they have gone through all of the other cost containment areas that they could other than price increases. And he said we’ve kind of come to the end of the road. And so I think that they probably speak for a lot of other companies. And so my worry is that companies have held the line, held the line, held the line, and they’re gonna eventually have to sort of we we’re tired of

you know, crimping our margin and we’re gonna have to pass this through. And y you know, you you you tend to think, okay, January tends to be a a spot.

speaker-1 (07:44.91)
That’s a popular month for for for rent for increases. Rents go up, insurance goes up, car insurance, home insurance, yeah, lots of things. And everyone’s raising, so I’ll raise two. If you do it at the same time, no it it gets caught in the wash.

speaker-0 (07:56.022)
Right. So I think that you know, I i you know, you see, you know, right now CPI inflation overall is what, three a little over three percent

speaker-1 (08:03.598)
headline and two closer to two and a half core.

speaker-0 (08:06.208)
Right. And then y you know, we can pick measures and you know, the trimmed mean and all this stuff. So but I you know, I just I see that cost pressure that you know the companies are eventually gonna have to just say, okay, this is what the new price is.

speaker-1 (08:08.364)
Pick measures, yeah.

Yeah.

speaker-1 (08:21.346)
that will generate a round of inflation of some kind. We don’t know how much, we don’t know exactly when, but

speaker-0 (08:25.174)
So you don’t I guess you think that well that’s again something that a a rate hike is not going to leave.

speaker-1 (08:31.106)
Yeah. It’s it’s passed, it’s done, it’s for other reasons, these exogenous reasons that are the tariffs, the wars, COVID, Russia, whatever these these myriad things are. And look, warf does have a problem. Yeah. Inflation has been above the two percent target for

Since 21 when inflation began to go crazy and hit hit a peak of 9%. And we are as a society, as a result, much more sensitized to inflation. They’ve done some, I’m sure you’ve seen the same research I have, that way back when, in 16 or 17 or whenever, when they had a bit blip of inflation, we had had 30 years of declining inflation, low inflation, no one cared. Now we’re all hypersensitive based on the 21, 22, 9.3% peak in inflation. We’re all terrified and we’re all upset about the

the price level. So you and I as economists, well you’re talking like trimmed mean and core and CPI and PC and there’s a thousand measures of sticky inflation and whatever, trended and detrended. But you go and buy a box of Kleenex

It’s a lot more money. And that’s what galls people too. Right. And and and pa and and the war is trying to convince them that, hey, we’ve got your back. We care about inflation. I think the solution may be worse than the meta than than than the problem. But there is a sincere problem, no sincere sincere desire to get inflation down to a trend of two percent growth.

speaker-0 (09:51.502)
And I would I would say we’re both old enough to remember the the Volcker years when when inflation was double digits and he was having to raise rates double digits to combat that. And then this morning I I’ve just, you know, get as we were getting ready for the the the morning presentations, I was watching CNBC, Howard Marks was on, he’s an old Wall Street veteran, and they were talking talking to him his you know about high rates, and he was like saying, Well, historically

You know, a five percent tenure is not a high rate. So do you think there’s like the the population is sort of expecting that the recency bias is that well inflation has been running at two per less than two percent. It should always be less than two per that there’s sort of unreal expectations right now, or is that is that going to adjust?

speaker-1 (10:36.204)
Some level there are unreal. So many of us have lived, we’re old enough, but you look at the 30-year-olds, they have no experience with inflation of any kind. Right. They don’t know what it is. They look at 5% on a 10-year treasury, not literally, but sort of philosophical, and go, whoa, that’s a high it’ll come down to two again, I’m sure. And you and I both hope it never goes back that low again. God forbid we have a terrible recession or a pandemic or something awful. But there is but the other thing is way back when growth was better, GDP growth was stronger. Right. Because population

Growth was really good. We’d have 2%, 1.5% population growth. That’s now that’s that’s ship sailed a long time ago. We’re in a much older country. Right, right. So inflation slower growth should lead to lower rates, all else equal, right? There’s a correlation between GDP growth and interest rates.

speaker-0 (11:23.814)
But let me ask you this though, what you know, like you said, we’ve got an election coming up in November. Looks like there’s gonna be a s a change in the House. Maybe a change in the Senate. That’s up and Democrats will, you know, they’ll do their best to blow it. Of course try to shoot themselves in the foot, so to speak. But you know, so the policies will still though emanating from the White House will be essentially the same that we’ve seen the last two years will be the same the next two years.

speaker-1 (11:32.406)
It’s a flip of a coin. Yeah.

speaker-1 (11:36.99)
They’re both parties do it their banner.

speaker-0 (11:51.424)
And during your speech you did talk about well the economy’s okay, like you said, the B minus. And and I I I kind of hit on as pretty obvious what the two factors to me are really driving that growth is AI, the the CapEx expenditures, and that’s not gonna go away with rate hikes. No. And the healthcare, the the the boomers aging out, the healthcare demand is gonna continue regardless of what rate.

speaker-1 (12:13.41)
It may it may even go a little faster. It’s it’s the growth has slowed, but GD percent of GDP on healthcare has dec has the growth has declined. It’s still growing, but now it’s growing much less than it did before. No one’s quite sure why, is it Obamacare? People wonder, but there’s something going on hap but it’s still going up.

speaker-0 (12:30.604)
But you know, as much as you know the US is is is committing its own own goals on certain policy areas, that it’s not enough to where we’ll be going into a recession in the next couple of years.

speaker-1 (12:41.3)
It it no, I I I don’t see any domestic policies in and of themselves. I see the domestic policies being this this some it’s a it’s an odd, unusual mix of policies. Yeah. And I think it’s done some damage to growth. And I think it’s probably caused, I’m gonna use a fancy term here, the term premium. Interest rates have probably gotten higher because of the uncertainty. Right. But

But as long as AI continues to do its thing and they spend a trillion dollars on stuff and they hire and whatever we should that should be more than enough. And the other thing is hopefully the earnings of these firms like Anthropic and Open AI, yeah, they begin to justify the expenditures that they’ve done. They need to raise a lot of revenue to justify the trillions of dollars of spending on these data centers. Is the expected revenue gonna show up for for these various large language models that we’re using, claw or whatever.

speaker-0 (13:33.39)
Right, and y and you mentioned i you know you know that the early two thousands where that was you saw that boast in boost in productivity that was driven by the internet right and that you know the AI that better have a similar type of productivity boost, right? To to

speaker-1 (13:46.796)
We desperately need it. Now we need it more than then because now we’re population growth is very meager for a whole bunch of again immigration policies. And then plus we’re aging and we’re families aren’t having as many children as they did before because kids are so expensive. Higher education and healthcare and so on. So we need and we’re the older people need like a a humanoid robot to to to to vacuum their house and cook the kitchen and and and clean the dishwasher and and do dusting and so on. So this would be a miraculous, the fabulous

thing to see AI blossom and do great productivity growth and hopefully not affect negatively labor markets, which in the past has never happened. Technological innovation has never destroyed jobs in the long run, ever in the past.

speaker-0 (14:29.132)
Yeah. And and you know, part of what you’re you you’ve talked about in in this in your presentation, and we’ve you know, Elliot was talking to a room full of bankers. Most of our listeners are are bankers. So you talked about how credit quality is still pretty fine. There’s you can pick on like student loans you picked on, but generally speaking for a typical bank, you know, they don’t do student loans too much. That’s more the federal government and some specialized listen. Yeah, and so

You know, they’re looking at it as like, okay, we don’t have the credit losses or credit, you know, delinquencies that we had back in the great financial crisis. God forbid. and that’s probably gonna continue, I would think, as long as that unemployment rate stays right. Stays low. Yeah. Right.

speaker-1 (15:11.25)
but but you it wouldn’t shock me to see some mild continued deterioration at the low end among the low FICO low FICO world. As interest rates go up and wage growth doesn’t quite keep up with inflation, you’re gonna it’s gonna be a little harder. Everything that the monthly your monthly mortgage payment, you know your your your credit card payment is gonna be a little higher because the rate in the credit card is gonna a little higher. Wages are down by half a percent, a half a percent, there’s nothing huge. But you know, you make 40,000 a year and you’re down by a thousand bucks.

That’s a lot of money.

speaker-0 (15:42.538)
Right. Well let me ask you this. you know, you w you talked about obviously you the K shaped economy and that the wealth effect of what the stock market’s doing and that has driven a lot of the consumer consumption at that higher end. And that’s still in until we have a big stock market correction, that’s probably gonna continue, do you think? Yeah. I mean you talked about the s the savings rate going down, but again

speaker-1 (16:01.238)
I don’t see any reason why not. Right.

speaker-1 (16:06.542)
Yeah. And and we had a bit of a test run on this back in 22 when Powell began to raise rates. He raised them aggressively. He raised them by a total of about three or four hundred basis points. I can’t remember exactly. And the market fell into a correction, so ten percent decline, but not twenty, not a bear market. And consumer spending was unaffected. Right. So we’ve had a dry run then. So you know, again, a ten percent, fifteen percent decline in the market, I don’t think, based on history, is not enough to to to

whack things badly. It may prevent some MA activity and may have other impacts, but overall consumer spending probably not that much. But twenty twenty five per in a normal bear market you get down thirty, thirty five percent, right? Right, right. So that that would I would imagine have some serious implications for the economy in the short run at least. Right.

speaker-0 (16:53.359)
Now g going back to kind of the analogy with the you know skating on the pond and and you know with the the the potential danger of that ice thinning, you know, the issues in the economy right now like you said we’re going okay, you know, we’re two and a half percent, three percent GDP, unemployment’s four.

Are there a couple indicators that you’re kind of following that you sort of like the canary in the coal mine that you could you kind of give to the listeners to sort of be keep your eyes on

speaker-1 (17:22.166)
Yeah, I mentioned them generally in the in the in the in the presentation is labor markets. I’d like to see wage growth in labor markets begin to go up and at least match or exceed the inflation. that’s a bit of a worry. I mean for a lot of people, older people they have a portfolio, richer people have other sources of income. But if you’re a purely a wage earner earning fifty, sixty thousand a year with a wife and kids or a husband and wi a husband and kids, I mean, that’s not a lot of money. These people are it’s tough.

speaker-0 (17:31.629)
I should rate.

speaker-0 (17:48.576)
Right, like you said, you showed the the w wage growth going from say six percent a year to three to three. And you’ve got three and a half percent inflation, that’s obviously not a good yeah.

speaker-1 (17:58.898)
So that’s one thing. And the other thing I mentioned is a good harbinger of things is our discretionary spending. And discretionary spending is generally on goods, not on services. You have to go to healthcare. You need your kid to get their French lessons. you want to learn how to do ikibana flower, Japanese flower arranging. You’re not gonna stop that. Probably it’s 50 bucks or for a lesson or something. But you may not buy a car. I’ll keep a car an extra year. I’m not gonna do some big thing renovation to my house. I’m not gonna buy a big

break front for my living room. I can pass on those things. So it’s if we see those deteriorate, those durable goods, big durable, big ticket durable good items go, that would be a sign of of real stress.

speaker-0 (18:41.548)
Yeah. And y you mentioned the car sales in your presentation where it was what sixteen. Yeah. So it’s not great, but it’s not wh

speaker-1 (18:45.922)
Male versus 17 essentially before horrible easier. But it’s also population, the younger number of younger kids is also down a bit. Yeah. The qu while the cars is better. So it’s not the one and a half, it’s not from 17 and a half 16. So it’s not a the decline is real, but it’s not necessarily nearly as bad as it looks. I’d like it to be higher. My daughter can’t drive, she’s almost 28. And I think she speaks to

a segment, a meaningfully large minority of kids her age. She’s not a kid, 28 almost, she’s an adult, she’s a full adult. But they don’t want to drive. Yeah. They don’t want a car. They don’t want the insurance, the gas, the problems, the maintenance, the parking, it’s all expensive. If you live in a city, having a car is expensive. Yeah. And you know, she’s a grad student for one, but she just doesn’t want to have car. And she has friends. They have their phone. They can Uber and they can they can have delivery on their phone.

speaker-0 (19:36.206)
That’s right. And I have I’ve got an 18-year-old daughter as well. She just got her driver’s license. We were getting that license. And like you said, and sh a lot of her friends still don’t have a license.

speaker-1 (19:49.418)
It’s a different world. So a whole bunch of factors lead to this outcome. It’s not necessarily one acne decline on the same basis. It’s the world has changed.

speaker-0 (19:58.55)
Now I talked a little bit yesterday about sort of the global macro you know, w we coming out of World War Two, right? The US was instrumental in kind of laying out the institutions that have really driven global trade, glob the global economy, right? Gats

speaker-1 (20:15.751)
General agreement on trades and tariffs, Bretton Woods on currencies.

speaker-0 (20:19.702)
Right. And that just you know, so you know, the economies followed suit. You’ve got global supply chains. Now we’ve kind of learned the downside of that through COVID. but now even the policies now are going forward seem to be sort of walking that back. do you see that as a a continuing headwind to growth and inflation as well? Or

speaker-1 (20:40.96)
I I think I do. Yeah. Certainly the growth. Inflation likely, because we’re all gonna be doing things we didn’t. The reason the system worked as well as it did up until COVID was we all did the thing we were best in. Yeah. Now we’re all being forced to do things we’re not best in. Right. So we’re the US is now gonna have to start manufacturing or not processing rare earths, for example, to reduce our dependency on China. Right. But they’re better at it than we are for whatever reason. Well let them do it and we’ll do something else. But now no, we have to do that and take away resources from something we’re better at.

At to make the rare earths to reduce our dependence. That’s gonna slow growth and be mildly inflationary at the same time. So this reduction in global confidence in each other, it’s almost like we now have these choke points: straight of hormues, rare earths, computer chips for the US. And we we weaponize these to some extent. Or there’s a fear of weaponization that there isn’t weapon. The Europeans don’t want to trust Microsoft because the Americans may deprive the Europeans of our software. They did with Anthropic for a month.

that that had that that that model broke free and went to hug and face or whatever and all that. And I’ve read a bunch about it, but I’m not sure what it means exactly. I’m I’m not an expert and so on. But there’s if the Europeans decide that they’re gonna build new software, they they’re gonna have to take resources away from building, I’m making up a joke here, fancy leather bags, which they’re much more efficient on than we are at. Right. So we’re all gonna be losers from this. Not big losers, but there’ll be a global loss. Yeah, sure.

speaker-0 (22:06.594)
Yeah. And i you know, Scott, you were mentioning that, you know, like Taiwan to Taiwan and the manufacturing there of semiconductors and so forth. And when I looked at the CPI report, or not the CPI, the import export report, the import prices from China were up I think the largest in in I is

Two thousand four, I I could be wrong on that number, but it’s been it’s it was over a decade that the price change in that month was the greatest that we’ve seen. And when you duck drill down into it, it was computer peripherals, modems, network. It was all that gear that again is being pushed up by the AI demand. Right. And that like you said, that’s not gonna go away with a rate hike here, a rate hike.

speaker-1 (22:46.366)
They can raise so much money. I mean Anthropics gonna go public, they say now, maybe late year, not not soon that but maybe November. And they’re talking two trillion dollars and the there is a hundred billion dollars. Right. And some of that money is gonna they’re gonna they’re gonna mint a whole bunch of multimillionaires and billionaires off the b right off the bat. Right. That’s gonna raise home prices in Silicon Valley and San Francisco and Aspen and Vale and and Telluride and all these fancy places in Wyoming, you know, these nice these nice vacation areas. And that’ll boost the economy too.

They’ll spend and buy a boat and do all these fancy things and juice the economy. We love, we on one hand, we love this, we need it. On one hand, it’s not sort of it’s not quite as dispersed wealth growth that we’d like. Right. And I think that’s what’s driving the hostility among the voting population. I think Trump tapped into that, the unhappiness of a lot of voters about things aren’t going well and jobs are being lost. And that led him to the White House. And I’m not a political pundit here so much, but there’s a

of frustration on the on the other side as well. well Jeff Bezos and Darren Amade and Jeff Alt Altman and all these guys. Not his first name Jeff but whatever. There’s this

speaker-0 (23:56.61)
Dario, I think.

speaker-1 (23:57.506)
Dario Amade or whatever it is. Pardon me? Sam Altman. Sam Altman, that’s right, thank you. there’s this, how come I’m not getting mine? So that’s leading to this this this this reappearance of socialism or communism of some sort on the left. Yeah. Yeah, I’m nervous a little bit about that too, but yet we need this income to go somewhere to be spent, and it is being spent by the rich. Taxes may follow. Right.

speaker-0 (24:23.007)
Right, and that’s what you were t i i in your presentation again, it was you know, y y y you kind of have concerns that the policies say, you know, from the Walsh Fed and and from the Treasury it beset in in the Treasury. Policies may not, you know, that maybe doing wor they may do more harm than good. I think it’s like it’s some

speaker-1 (24:42.53)
Unfortunately, yeah. I said to someone as I walked out, I said what Bacenta’s doing by issuing more T bills to pay off ten year and thirty year bonds is akin to essentially using your credit card to pay your mortgage. You’re not really changing anything meaningful. It’s a t it’s a it’s a bad tactic, but certainly not a good strategy. And Bernanke had to spend tr trillion dollars, half a trillion bucks on Operation Twist to do the same thing that this is ten, fifteen years ago. But you need a lot of money to convince money markets and to convince bond markets that are so big that you’re gonna actually it impact all

speaker-0 (25:16.518)
Well let me ask you this. I know we’re getting close to to to time. Yeah, we could go on for an hour and a half and then you know, I’m sure Caleb could edit it down into a a nice thirty minute presentation. But I kind of look at I there’s a couple

data points that I look at the econ business we talk about like you know real time you know you know fast data that you know like the the weekly job is clamps right we get that every week you know we don’t have to wait for that jobs number at the end of the month. No and that’s been like you said it’s been sort of a no it’s been a kind of a groundhog day. You know every every week it’s two hundred thousand. Right. I’m kind of watching though I’m like okay if that starts to creep up, you know, it has

speaker-1 (25:56.394)
a couple times over the last couple years and then it’s dropped down. And as I mentioned in my talk, the last six or eight months there’s been a mild downward trend to it. It’s been so good. It’s it’s it’s this dichotomous economy. Parts are really performing well and parts are not. Yeah. You can’t and you have to pay you have to look at the whole to really get get a feeling of what’s going on. That’s the hard that’s that’s what makes our job harder, more interesting but more difficult.

speaker-0 (26:19.458)
But it’s like you said, that we we’re maybe not hiring, but we’re not firing, so that is a good thing. Great thing. You know, if we start to see that tick up, I think, okay, wait a minute, we gotta be a little bit more concerned.

speaker-1 (26:28.878)
And you’ve got these companies like Ravellio that that do weekly job numbers, and there’s another one I look at that at the moment I can’t think of offhand. Yeah. But there’s one they come out with weekly, weekly job numbers too. And those are the those have generally tracked the census numbers. Yeah. At times they’re off, but generally speaking, they’re good. So those are weekly numbers. You look at those, all the weekly data’s telling you B minus. There’s there’s there’s nothing out there saying, my God, yeah, you know, start working.

speaker-0 (26:37.154)
The ADP report, the false report.

speaker-1 (27:00.386)
We’re still on we’re still on terra firma here.

speaker-0 (27:02.742)
Now the other data point that I look at is the TSA boardings. They but apparently they come out daily. They do. And so you can really get a feel for it. But they’ve been running two million, two and a half million. And so I’m thinking, okay, when that starts to dip, that means okay, that that that K shape, the the upper leg on that K is starting to draw back. That has not happened.

speaker-1 (27:25.118)
On the contrary, you read, I got an email about a month ago by now, personally, of course, from the CEO of American Airlines, along with 30 million other people on this on the American Airlines who get the app. And the the ad the the email was something like, hey, welcome subscribers and flyers. We’re making the better airplanes now. We’re gonna put screens in the back of the seats. Okay, who cares? We watch our phone. But now we’re gonna have more fancy seats. Yeah. Which means they’re gonna have less cheap seats in the back. So your daughter and my daughter, it’s gonna be more difficult.

For them to get in the plane because the first 24 rows of the 30 row plane are gonna be first class, then two rows of first class adjacent, two more rows of coach plus, and then you’ll sit in the bathroom. Yeah. You’ll get no seat and no bag, and you won’t even build allowed to to to to get coach for extra money. You’ll have a standing room only. They’re catering the plane, they’re building the bigger, they’re building more on the front of the plane because that’s where the money is. Yeah.

speaker-0 (28:10.542)
But

speaker-0 (28:19.788)
Well yeah, we I live in Atlanta so we have to deal with Delta and their Delta’s like they’re you know, you know, subject number one in that that strategy.

speaker-1 (28:27.222)
so good at price discrimination. They’re getting every dollar from every single person. you want you want miles points on your trip? That’s $30 more. You want early entry to get on the plane? $20 more. Right.

speaker-0 (28:37.602)
Yeah. They th th they’ve they move from just miles to like how many dollars spend.

speaker-1 (28:42.85)
And and every access point to get into the airport, to get on the plane, to carry your bag on, and buy a credit card, get free this, they they figure out how to how to how to squeeze every nickel from us. And it’s mostly because the rich. That’s why Southwest had to ditch their whole business model. Yeah. Because they had no fancy seats. They were all coach. So they’re catering to our daughters, not to us.

speaker-0 (29:03.374)
Yeah. And that creates chaos.

speaker-1 (29:05.132)
We wind on the plane, we have to pretend to be sick. I hate to say that, but all these people get on the plane, they limp on the plane on Southwest, they all get off fine. Yeah. It’s a miracle. Two hours on Southwest and all your training pain goes away. So they have to change their model to now the same. First class, coach plus, coach, and and and bare bones.

speaker-0 (29:20.552)
Yeah. So any well Elliot, well thank you so much for for coming by and give giving us some of your time for this podcast. And and would you like to plug I would say to the listeners, if you ever see if you’re at a con a conference convention, I know you do a lot of banking conventions, but if you ever see Elliot on the agenda, definitely make time to because f you know, from an economic standpoint, you make economics about as entertaining as it can be. And I just wanted to say thank you for that.

speaker-1 (29:37.145)
my god.

speaker-1 (29:43.598)
Wow, thank you so much. And one last thing, if you want to, I put out every day 70 words on the economy. No graphs, no ads, no charts, no links, no photos. Just 70 words, literally. If you want if anybody wants to get it, the easiest way is to text the word bowtie, one word, to the five-digit number 66866. You’re prompted for an email address. And if you want to find out more about me, you can go to www.econ seven zero econ70.com.

speaker-0 (30:08.632)
Well great. Thanks Ellie. And I I do I I do subscribe to your your words of the day and I I don’t miss it because you know, number number one, it takes about ten seconds to read it. Right. And number two, it’s always thought provoking and and informative. So

speaker-1 (30:20.206)
Don’t miss it. Is that a compliment or an insult? You don’t miss it ’cause you look at it or you don’t miss it when you don’t mean it. I’m jumping, I’m jumping, I’m jumping.

speaker-0 (30:26.25)
I mean I don’t miss because it’s like you said, it’s only it it’s y you know, it’s not like one of these pieces of Wall Street research where you’re gonna have to devote like a weekend. It’s like quick and easy and t like I said, typically it’s it’s something that’s thought provoking and and and very you know topical and timely. So

speaker-1 (30:41.624)
Thank you. Thank you. Thank you. It’s been a pleasure being here. I’ll look forward to doing it again. All the best.

speaker-0 (30:44.578)
Well, thank you, Elliot.