INSIDE ECONOMICS

Mark Zandi:                      Welcome to Inside Economics. I'm Mark Zandi, the chief economist of Moody's Analytics, and I'm joined by my co-host Cris, Cris deRitis, the deputy chief economist. And, we're missing Ryan, Cris. Where's Ryan?

Cris deRitis:                       We are. Ryan went up to Boston, went to the baseball game with his family.

Mark Zandi:                      Ah. Is it a road trip?

Cris deRitis:                       That's what I hear. Unless he made a last minute decision, but he was planning to drive.

Mark Zandi:                      I think going to Fenway Park is like a religious experience for Ryan. I'm pretty sure.

Cris deRitis:                       Yeah, I'm sure. I'm sure. I've never been.

Mark Zandi:                      You've never been to Fenway Park?

Cris deRitis:                       Nope.

Mark Zandi:                      Oh my gosh. You've got to go.

Cris deRitis:                       I've got to go?

Mark Zandi:                      The Green Monster. The bleachers. It's really an experience. Not that I'm a Red Sox fan. I can't stand them but ...

Cris deRitis:                       But still.

Mark Zandi:                      But still, but still.

Mark Zandi:                      And, we've got Alan Blinder. Professor Blinder, good to see you.

Alan Blinder:                     Good to see you. I'm very far from a Red Sox fan, but I have been to Fenway Park, so you're right.

Mark Zandi:                      You're not a Yankees fan, are you?

Alan Blinder:                     Of course I am.

Mark Zandi:                      Of course you are.

Alan Blinder:                     Who else is there?

Mark Zandi:                      Well, if there's one team I hate more than the Red Sox, it may in fact be the Yankees.

Alan Blinder:                     Oh my. I'm sorry. Maybe we should cut this interview right here.

Mark Zandi:                      I knew you'd say that. I knew you'd say that. Well, it's such an honor and pleasure to have you. I've gotten to know you over the years. I was trying to remember back. I know we wrote one paper together. Did we write more than one? I can't quite recall.

Alan Blinder:                     We did. We did. They both came out as Moody's papers on the financial crisis.

Mark Zandi:                      Financial crisis, right. Alan, it's funny. I talk about you all the time on the podcast and different venues, and in fact, I just gave a speech in South Carolina to the Housing Finance Agency heads, and there was a woman who jus took over the HFA for Pennsylvania. And, she knows you. I wish I could remember her name. But, she was talking, she goes, "Every time Alan says something or I read something from Alan, I agree with him." That's exactly my experience.

Alan Blinder:                     Well, good.

Mark Zandi:                      Yeah. It's weird. I don't think you've ever said something that I disagree with, which might make this for a very boring podcast.

Alan Blinder:                     Yeah, it's a little worrisome. Maybe we can find something. Well, we just did. The Red Sox-

Mark Zandi:                      There you go, there you go.

Alan Blinder:                     You're pulling for the Phillies, I guess.

Mark Zandi:                      Yeah. Well, I do.

Alan Blinder:                     All right. I'm fine about the Phillies, I just hate the Red Sox.

Mark Zandi:                      That's because we always lose against the Yankees. Not a threat, not a threat. But before we dive into the matter at hand, obviously top of mind here is recession and inflation, monitoring fiscal policy and all of the subject matter that everyone's talking about, maybe we can talk a little bit about your career. I've known you for many years, but I never actually went and looked at your Wikipedia page to get a better sense of your bio. And, it's incredible. You've been at Princeton since the early 70s. In fact, you were an undergrad at Princeton.

Alan Blinder:                     I was.

Mark Zandi:                      And then, got your PhD at MIT, and I didn't realize that Bob Solo was your advisor.

Alan Blinder:                     Oh yes, he was. He was a wonderful one, a wonderful man. What I'm doing right now, if I wasn't on this podcast with you, and I will go back to shortly is writing a bio of Bob, who's still alive and kicking at age 98. He's amazing.

Mark Zandi:                      Oh, I didn't realize that. Is that right? Yeah, he's just a force, really an amazing intellect and has driven a lot of economic thought over his career. And then, the cool thing about your career is you've been able to move gracefully back and forth between academia and government working in policy circles. And at one point, you were in the Council of Economic Advisors and then you went off to be vice chair of the Fed back in the Bill Clinton era in the 1990s. I'm just curious, so how does one do that so gracefully?

Alan Blinder:                     I don't know if it was graceful. I'm not sure Alan Greenspan thought it was so graceful.

Mark Zandi:                      Ah, there's a point.

Alan Blinder:                     But on the way in, it was natural since I was involved in the original Clinton campaign in 1992, and a lot of people that were so involved wound up ... that happens in every presidential race, the winning team winds up with White House and other positions, so that seemed natural. Though I must say, I'm glad you said gracefully but from my point of view, and I'm sure this is true of most people that enter the White House from academia, it's a different world.

Alan Blinder:                     Young people as Fed staffers, very good young people. I used to give them, as part of their introductory briefing, I said, "We've got three run over here. The short run means I needed it yesterday. The medium run means you've got an hour to do this because I've got a meeting and I need the paper. The long run means you've got til Friday."

Mark Zandi:                      Right?

Alan Blinder:                     That is not the tempo of life in academia, so that was a gigantic adjustment. Moving back to the Fed was a little bit like moving back to academia in terms of the pace, except in times of crisis, which you'll probably want to talk about. Rare, blissfully. The Fed moves at a stately pace and doesn't release papers until they're ready, and doesn't opine on things until it's ready and thinks about it and does research. This one hour timeframe is an unknown thing to the Fed most of the time.

Alan Blinder:                     And then for me, then it was back to academia where ... What's the right way to put this? I think the thing that was the hardest adjustment to me, though it had been a little bit hard prior to my government service, was going back to Never Never Land. Academics get embroiled and interested in things that you wonder why are they doing this sometimes? What does this have to do ... I more than written, talking about a particular paper that the only contact with the real world this paper makes is the title. They usually have titles that sound like, "Oh, this is about something."

Mark Zandi:                      This is going to be interesting. Although, I think-

Alan Blinder:                     I just lost patience with that after three years in government.

Mark Zandi:                      Although, I get the sense some academic departments are becoming more focused on more practical issues. They seem more topical and relevant.

Alan Blinder:                     Yeah, I think that's right. I think there's more. And even in macroeconomics, which was probably the worst offender of this, you'll remember the various and sundry intellectual wars we had in academic.

Mark Zandi:                      Oh, yeah.

Alan Blinder:                     The economics of, many of which blissfully left no trace in the real policy world. The policy didn't exist or they just didn't pay any attention. No, they were watching Moody's Analytics, not the Journal of Political Economy.

Mark Zandi:                      Well, when you were vice chair, you actually pulled off a unicorn, I think, a soft landing for the economy.

Alan Blinder:                     I did.

Mark Zandi:                      Am I right? Is that the only time the Fed pulled off-

Alan Blinder:                     No, and I've just written a paper. It started with a webinar and now it's a paper that's going to come out in the Journal of Economic Perspectives. The short answer to your question is it's probably the only "perfect" soft landing, but there have been a number of other landings that are soft-ish ... the word I use. I noticed Jay Powell picked up that word. By soft-ish I mean either led to no recession at all, just a slow down or a very small recession. You'll remember the recession that followed in 2000. I'm forgetting the NBR dates.

Mark Zandi:                      2001.

Alan Blinder:                     Almost nothing. I mean, it disappeared in the annual data. You don't even see it. So, there have been a number of episodes like that, but I think the mid-90s was the one perfect soft landing.

Mark Zandi:                      And, just for the listeners who don't follow this as carefully as we do, the soft landing being ...

Alan Blinder:                     Oh, sorry. Yeah, that you pull down the economy. You take the steam out, either to bring inflation down or to stop what you think is incipiently higher inflation in its tracks without doing much damage to the real economy.

Mark Zandi:                      Yeah. In '94, '96 when you were vice chair, that was a period when the economy felt like it might be overheating, inflationary pressures are developing, and you calibrated policy just right to bring the economy and slowed it down, quell the inflation, but not pushed the economy into recession.

Alan Blinder:                     I think we do. I think that's right.

Mark Zandi:                      Yeah, very good. Which obviously is apropos to the current environment.

Alan Blinder:                     Oh, sure. I get asked about it a lot.

Mark Zandi:                      I'm sure you do. And I saw your op-ed in the Wall Street Journal too about that, about navigating ... We'll come back to that, but I do want to just round out your background and your history. You were also a business person. You started a company. Is that company still operating? The Promontory Financial?

Alan Blinder:                     They both are. I'm out of both for years now.

Mark Zandi:                      I see.

Alan Blinder:                     So, there were two companies, and each one was sold in one case to a bigger company and one case to private equity.

Mark Zandi:                      Got it, got it. Well, that's a good way to end.

Alan Blinder:                     Oh, I feel like I was two for two. They were both-

Mark Zandi:                      That's right. That's really good. And here's the other thing that struck me about your career. You're just incredibly energetic and prolific. I was going to try to figure out how many books you wrote, but I lost count how man.

Alan Blinder:                     It's hard to count because there are edited books. I'll give you an example, which makes it most difficult to account. My textbook, which was originally with Will Baumol, who's now deceased, is now in its 14th edition. So, you want to count that as one or 14?

Mark Zandi:                      There you go. I count it as 14 just personally.

Alan Blinder:                     Well, if you count it as 14, you're probably in the 35-ish.

Mark Zandi:                      Oh my gosh.

Alan Blinder:                     Because there are 20 others, but some of them are edited volumes and some regular books just by me.

Mark Zandi:                      And, you have another book coming out.

Alan Blinder:                     I do.

Mark Zandi:                      Yeah, in October. Do you want to talk a little bit about that? That sounds fascinating.

Alan Blinder:                     I think the title is self-explanatory, especially to professional economists. It's called A Monetary and Fiscal History of the United States from 1961 to 2021. Friedman and Schwartz wrote this very, very famous book called A Monetary History of the United States. It ends in 1960, so I didn't want to take issue with them. I picked up after. But other than the dates, the two most important words in the title are and fiscal. You don't find discussion of fiscal policy in Friedman and Schwartz. You find a lot of it in this book of mine that's coming out in October, and that much more than monetary policy pulls you into the political media, because as I don't have to tell you or your listeners fiscal policy is made in the political world.

Mark Zandi:                      Absolutely.

Alan Blinder:                     Not in a technocratic world.

Mark Zandi:                      Is there one anecdote that's in the book that you would call out? Something that's particularly interesting that people don't really know about?

Alan Blinder:                     Yeah. Well, I guess so. That's a hard question. If I had been able to see the pages before you asked it, I might do better. One thing I thought of, and I've quoted this elsewhere, I came upon a passage ... This goes back to the 60s. You were born then, right, Mark?

Mark Zandi:                      Oh yes, indeed. I was.

Alan Blinder:                     Back in the late 60s when the government was fighting the Vietnam inflation, there's a passage in the 1968, I think ... so that would've been in February of '68 ... Economic Report of the President in which it says ... get this ... that battling inflation is mainly the job of fiscal policy.

Mark Zandi:                      Oh, really?

Alan Blinder:                     Can you imagine anybody entertaining that thought now?

Mark Zandi:                      Wasn't that modern monetary theory, sort of?

Alan Blinder:                     Well, maybe. I don't know what that is. But, I was shocked. I was looking for something, and when I came upon this, I blinked and read it three times.

Mark Zandi:                      That is interesting.

Alan Blinder:                     Did it really say that?

Mark Zandi:                      Wow.

Alan Blinder:                     It did.

Mark Zandi:                      What a change in thinking around that.

Alan Blinder:                     Absolutely. But here's another one that I thought of back in the early 70s. This you may know. Both Milton Friedman and James Tobin, who agreed on basically nothing ever, were opposed to the independence of the federal reserve.

Mark Zandi:                      Really?

Alan Blinder:                     Both for very different reasons thought it should be under political control. There's another thought that you don't hear from economists.

Mark Zandi:                      That is really surprising. Milton Friedman? Wow. Do you recall his logic?

Alan Blinder:                     Milton's was he didn't think unelected bureaucrat, technocrat should ever have that much power in the democracy.

Mark Zandi:                      I see.

Alan Blinder:                     And Jim Tobin's was more that these unelected bureaucrats were not representative of what the society really wanted. They were much tighter on monetary policy and more inflation-phobic, and so on than he was, and he thought the body politic.

Mark Zandi:                      Wow. It's amazing how the general thinking around that has changed. Wow.

Alan Blinder:                     Yeah. Has it ever.

Alan Blinder:                     I think you would have a hard time finding more than two members of the American Economic Association, which has what? 20,0000 members, that would be against the independence of the federal reserve now.

Mark Zandi:                      Maybe former President Trump. Maybe.

Alan Blinder:                     He's not a member.

Mark Zandi:                      Okay, that's good to know. That's good to know.

Cris deRitis:                       Maybe Peter Navarro. I don't know.

Mark Zandi:                      Oh yeah, Peter Navarro. His advisor. His former advisor. Anyway. Hey, we should get down to business. I didn't ask you the most important question, but maybe you don't want to give the secret sauce. Where does all that energy come from? My goodness. I mean, what is that all about?

Alan Blinder:                     I don't know. It's inherited. My mother always told me I should work hard. But I think actually, Mark, if there's a secret sauce, it's efficiency, minimizing the wasted time, trying to get things right the first time, or at least the second time and not let yourself get distracted on a whole lot of things that are potential distractions. Keep your nose to the grindstone. I don't want to exaggerate. It's not like I spend all my waking hours working. I watch Yankee games for example, but I must say I didn't when I was a young man and trying to do all of this. I didn't have time to watch Yankee games. I'm an old guy now. I feel I've earned the right to watch some Yankee games.

Mark Zandi:                      Well, you certainly have, and what a career. But let's get down to business. The economy recession, and before we dive in, GDP obviously came out this past week and it declined in the second quarter.

Mark Zandi:                      Hey Chris, can you give us a rundown on the GDP report? What's your view of it? What's your sense of it?

Cris deRitis:                       Sure. So, the GDP came out yesterday on Thursday. Wall, if I had to classify or use a single word, I would say it was lousy. A lousy report. The economy did contract by -9% in the second quarter. Probably the best thing we can say about the report is that was better than the first quarter, which was down -1.6%. The biggest drag in the second quarter was inventories. So, that subtracted 2% from the GDP figure. You might discount that. We've talked about that in the past on the podcast, given the volatility and the swings in the inventory cycle, especially now as we transition from goods to services. You might not read too much into that, but there were other parts of the report that were equally just troubling. Consumption growth is slowing. It's not negative, but spending is slowing relative to the first quarter.

Cris deRitis:                       Investment was actually negative. It did contract, so fixed investment, residential investment in particular, down about 0.7%. And of course, this was the second quarter report through June. We already know in July that housing construction and sales are down, so that doesn't bode well. And then, government spending also subtracted a bit as well. It's a bit of a drag as we move from the fiscal stimulus that we had last year to this year where there isn't that additional support. Net exports was actually positive this quarter. We had, again, talked about this in the past. In the first quarter, we had a big drag from net exports. This time we actually got a bit of a boost. Again, lots of volatility in this number, but perhaps subject to some revision, so you don't want to read too much into that, but still it is part of the overall GDP calculation. So, let me stop there.

Mark Zandi:                      Okay. Well, lousy. That's a pretty good word. Is there anything redeeming in the report? Any silver lining? Anything positive?

Cris deRitis:                       It could have been worse.

Mark Zandi:                      It could have been worse. Okay, I hear you.

Alan Blinder:                     Let me answer that. Chris's answer is right. It's lousy and it could have been worse. The one redeeming factor I thought was the continued movement in the consumer away from goods and towards services, because that initial move and the slowness to get out of it is a good share of what people are calling supply problems. Consumers stopped buying services and only wanted stuff that came in boxes.

Mark Zandi:                      Yeah, that makes sense. So during the teeth of the pandemic, we were all sheltering in place and buying a lot of stuff. Now that things have reopened, we're traveling. We're going to restaurants, we're going to the Yankee games. Some of us are. And, not spending as much on stuff. And so this pivot in terms of what people are spending this money on was evident in the report, and you're saying that's a very positive thing because a lot of the inflationary pressures we're observing now is on the good side of the economy because of the strong demand and the supply chain disruptions, and this may ease some of those pressures?

Alan Blinder:                     Yes. A lot of people, including myself who have often been sloppy in saying there are these supply constrictions. And, there were some in China when factories shut down and things like that, but for the most part, it's not that the supply went to hell. It's the shift from services to goods. There weren't fewer ships. There were fewer containers. There weren't fewer trucks. There weren't fewer boxes. But, the demand for all those things just soared. There wasn't enough to go around.

Mark Zandi:                      Well, let me ask you, Alan-

Alan Blinder:                     Getting out of that will help us.

Mark Zandi:                      That makes a lot of sense. Let me ask you, and we'll come back to inflation in just a second but before we do, just to complete the conversation around GDP, because we had two consecutive quarters of negative GDP and historically that's pegged recessions I think pretty well. I think it's got it exactly right since World War II. And, it's a rule of thumb. It's not the arbiter is the business cycle dating committee, a group of academic economists at the National Bureau of Economic Research that look a lot of data, but nonetheless ... So, you want to weigh in on this debate we've been having collectively around did we experience a recession?

Alan Blinder:                     I think it's a close call. I think the way things look now, I wouldn't call this a recession, although it does meet the media immediate definition of the two negatives in a row. When you have an unemployment rate that's 3.6% and hasn't budged up and jobs are being created well above the replacement rate, I don't know what you guys recommend the replacement rate is-

Mark Zandi:                      100K.

Alan Blinder:                     Yeah, that's about what I think of it. And instead, we're getting 300+K. It's hard to think of that as a recession. Having said all that, and this leads into your next question, I think a recession in let's just say the early part of next year ... I don't know the exact timing ... is more likely than not. Let me give you some hypothetical numbers. Suppose Q3 comes in positive two, which is a Wall Street forecast that just popped into my-

Mark Zandi:                      That's our forecast, too, for Q3.

Alan Blinder:                     But then we go negative in Q4 and Q1. I believe the National Bureau will look back to the two negative quarters and date it back there. Now, will that happen? I don't know. So, that's what I meant by it's very iffy, but right now the tone and feel of the economy is certainly not like a recession.

Mark Zandi:                      Yeah. I think in the first half of the year on average, we created close to a half a million jobs per month. And as you pointed out, 100K is what's consistent with stable unemployment. Layoffs at record lows, or pretty close. Unfilled open positions at record highs. Hard to square that with the idea that we're in recession, right?

Alan Blinder:                     Absolutely.

Mark Zandi:                      Yeah, okay. But, you make a great point. You're saying, "Look, maybe we weren't exactly in recession but if six, nine months down the road we get some negative numbers again, maybe the NBR dates it all the way back.

Alan Blinder:                     I'll give you a concrete example that you're very familiar with. Lehman Brothers collapse came in September 2000 and the whole economy fell off the table. The National Bureau then looked back and dated the recession as starting in December of 2007, which I frankly think is a mistake. My Blinder dating, which nobody pays attention to, September '08. But the National-

Mark Zandi:                      Oh, is that right?

Alan Blinder:                     Yeah.

Mark Zandi:                      Okay.

Alan Blinder:                     But the National Bureau dating is December 2007.

Mark Zandi:                      I think that's based on jobs, though. Did we start losing jobs, I think it was January-

Alan Blinder:                     Maybe. But, it was little and on the GDP, there were small positive growth numbers in those quarters. It was weak.

Mark Zandi:                      No, that's a good point.

Alan Blinder:                     It looked like what we used to call in the old days a growth recession. Slow growth but not an actually recession. And then Lehman Brothers came in and boom. But, they looked back to December so I can imagine something like that happening if we have a real recession.

Mark Zandi:                      It's like the 2001 recession similarly, right? We had the collapse in the equity market. The bubble burst and things really slowed-

Alan Blinder:                     It was a little negative, then a positive, then a negative.

Mark Zandi:                      Yeah, and I think if we had not had 9/11, which obviously crushed the economy in that period, they might not have even called it a recession.

Alan Blinder:                     Yeah, it's possible.

Mark Zandi:                      It's possible. Yeah. Well, in terms of recession risks, the most obvious reason why we're in this predicament is this very uncomfortably high inflation that we're suffering from, and to avoid recession, that inflation has to come in here pretty quickly, I think. Otherwise, the Federal Reserve is going to continue to jack up interest rates quickly and ultimately push us in. I'm really curious where you think inflation is headed, but before we do that, I'd really like to get your diagnosis on why this high inflation and should we have predicted this high inflation a year ago, which most people did not. I certainly did not.

Alan Blinder:                     I certainly did not. I was a prominent member of team transitory, as you may remember. We're burning our uniforms now.

Mark Zandi:                      I've done a mea culpa. I think you've done a mea culpa.

Alan Blinder:                     I have. Several.

Mark Zandi:                      Several mea culpa's.

Alan Blinder:                     But, here's the irony, Mark, and this leads to answer your question. The reasoning that team transitory had was correct, and it's still correct. The unfortunate thing was picking transitory, the word transitory, thinking that these things would dissipate quickly. They have not dissipated quickly. So, here are the four reasons for high inflation, and this is familiar to you. One is excessive demand, which I think is way overrated as a cause, but it needs to be on the list. So, that's-

Mark Zandi:                      Say that again. Way, way?

Alan Blinder:                     Over.

Mark Zandi:                      Overrated. Okay, got it.

Alan Blinder:                     But, I wouldn't put it at zero. So, that's part of the fiscal stimulus that we had continuing into '01 and monetary policy being laid off the mark, letting it zip along too fast. The Feds admitted that. So, that's one.

Alan Blinder:                     Second is what we were just talking about before about post-pandemic adjustments, frequently called supply chain disruptions, which as I just said, is mostly a misnomer but we all know the basic idea. Third, the oil shock, which was moderate until the war in Ukraine, and then got very severe and now looks to be dissipating a bit. I'll come back to that.

Alan Blinder:                     And then again, associated with the war in Ukraine, the food shock. You were mentioning my book on economic history, this of course, evokes the 70s and 80s where we had these oil and food shocks. Oil and food shocks lead to stagflation, and that's what we're having now. Now, why do I say team transitory had it "right"? The supply problems will naturally, and with some help of businesses adjusting, dissipate, and I think that's happening now. But it wasn't happening six months ago. The oil shock looks already, knock on wood, to be dissipating, but who knows what's going to happen-

Mark Zandi:                      Fingers crossed.

Alan Blinder:                     ... in the Ukraine. And, ditto with the food shocks. We've got these nice sounding straws in the wind about opening the ports in the Ukraine to grain shipments and some good reports about good harvest elsewhere in the world that they bring down grain prices. So, I think the reasoning behind team transitory was correct, and I think it will be proven so hopefully soon. I watch every CPI report hoping, "Okay, this is the worst." So far, it's just been a hope, which is why team transitory has been so, so wrong.

Mark Zandi:                      I think my rank ordering of the causes for this high inflation are similar. I'd put, though, excess demand for the current inflation, not the inflation we were experiencing a year ago, but the current inflation. Excess demand at pretty minor, modest.

Alan Blinder:                     Minor. That's what I said.

Mark Zandi:                      Oh, okay. Okay, I just wanted to ... Okay, then we still agree. We still agree.

Alan Blinder:                     You're looking for a disagreement.

Mark Zandi:                      Oh, darn. Okay.

Alan Blinder:                     It was the word I choose. I think in the popular discussion, it's being overrated.

Mark Zandi:                      Overrated. Yeah, I'd say pretty close to not really important at this point.

Alan Blinder:                     I use as evidence for that, and you probably do too, we have the same unemployment right now we had before the pandemic and we lived for about two years with unemployment rates like that with not the slightest hint of inflation. If this was being driven by excess demand like in the Vietnam episode, I think you would see the unemployment going down, down, down.

Mark Zandi:                      Well, and the other thing is if you're going to blame it on fiscal policy, exit that, and that's what most of these folks blame it on, the American Rescue Plan, the $2 trillion legislation that was passed in March of 2021, how can you connect the dots to all the very high rates of inflation all across certainly the developed world? How do you explain that? That's got to be Russian invasion, oil prices, ag prices. That's got to be supply chain issues, "I can't produce vehicles because I can't get ships, therefore, vehicle prices are going to go skyward all over the planet." These are supply shocks.

Alan Blinder:                     Yep, it's going to be global. Now, convince the republican party of that.

Mark Zandi:                      Yeah, exactly. Good point. Okay, so therefore if those are mostly Russian invasion ... Oh, here's the other thing I just want to pass by you and see what you think. And, this is the thing that really surprised me ... and by the way, I don't think the high inflation we're suffering now is a surprise. What is a surprise was the pandemic and the Russian invasion, and ultimately that created this high inflation which ... So, it's not that we were wrong about inflation abating at this point, but we were wrong about the pandemic going away and we were wrong about ... Well, the Russian invasion wasn't even on the radar screen.

Alan Blinder:                     Correct.

Mark Zandi:                      But here's the thing I want to pass by you. The thing that I think really sent this to DEFCON 1 for the Fed was the fact that the Russian invasion, the spike in oil prices caused inflation expectation to become seemingly unanchored and tethered, and that's when the Feds said, "Oh my gosh. I was going to raise rates, but I was going to do it in a more steady way. Now I got to go and jack up rates very quickly." And, that really is what brought the things to where we are today and why recession risks are so high. Does that resonate?

Alan Blinder:                     Yeah, I think there's a lot of truth to that, especially if you include in that the corollary that it started showing up in wage increases. They're way below inflation but they're well above let's call it the steady state. If we think we're going to eventually go back to 2% or so inflation and 1% or so productivity increments ... Let's say one and a half and two ... then you want wage settlements at three and a half and not five and a half. And, that probably has to do with those expectations.

Alan Blinder:                     Blissfully, and coming back to my theme that team transitory will eventually be proven right, those inflationary expectations peaked and have come down.

Mark Zandi:                      Exactly, exactly. They're right where the Fed would ... at least the bond market measures of expectations, the ones that I think are most important. They're back in.

Alan Blinder:                     They're right where the Fed wants them to be. Something everybody on earth almost, except you, forget is that the TIPS are based on CPI inflation and-

Mark Zandi:                      [inaudible 00:35:42] Yeah, exactly. TIPS being inflation protected security, so we can calculate break even inflation and expectations based on TIPS comparing it to treasury yields. I was going to ask you one other thing about that. Shoot. Oh, here. I know you don't do explicit forecasts.

Alan Blinder:                     No, I leave that to you.

Mark Zandi:                      I know, but I'm sure you'd be fantastic at it. But just generally speaking, let's say we're 9%-ish CPI, consumer price inflation year over year through June. When do we get back, do you think, to something that's in the Fed target range. And for CPI, that probably is as high as 2 1/2% but when do you think that would ... If everything sticks to script here.

Alan Blinder:                     Yeah, that's the clinker of course. Things are not sticking to a script. I can imagine getting ... Well, let me put a footnote to that and change your question a little. There is, as you know, a humongous way out of historical experience spread between CPI inflation and PCE inflation right now. So, I'd like to change your question to PCE inflation, which is what the Fed is after.

Mark Zandi:                      Fair enough.

Alan Blinder:                     I could easily see us getting back to where the Fed would like that to be in the second half of next year.

Mark Zandi:                      Oh, really? That fast? Okay.

Alan Blinder:                     Yeah.

Mark Zandi:                      Is it also a core consumer expenditure deflate or just the top line PCE?

Alan Blinder:                     The top line but that's-

Mark Zandi:                      Top line? Okay.

Alan Blinder:                     That's where your things going according to script is crucial. So, the script there to do that is oil prices either flat-lining or going down and ditto for food prices.

Mark Zandi:                      Great.

Alan Blinder:                     If they soaring, that's not going to happen to headline.

Mark Zandi:                      Hey, Chris? You heard Alan's forecast.

Cris deRitis:                       I did.

Mark Zandi:                      How would you answer that question? When do you think the consumer expenditure inflation will be back to something consistent with the Fed target, around 2%?

Cris deRitis:                       So, given my recession odds, I probably would agree with him.

Mark Zandi:                      Oh, there you go. Alan, I should have asked, and we have to come back to it, but that's not based on a recession, right? That forecast?

Alan Blinder:                     It's probably based on a ... It's basically a recession or a weak-

Mark Zandi:                      Slowed. Yeah, growth recession.

Alan Blinder:                     I think the odds of a recession are certainly above 50%.

Mark Zandi:                      Oh, okay. Okay, all right. I want to come back to that in just a minute because we're going to get recession-

Cris deRitis:                       We're aligned. We're perfectly aligned. Finally, finally.

Mark Zandi:                      Yeah, I want to come back to that. We'll see if you're perfectly aligned. Yeah, we'll see. We'll see, but before we go there, I want to go back to the Federal Reserve, and the op-ed you wrote in the Journal. Do you think at this point, the Federal Reserve is getting monetary policy right? So, they raised interest rates last week 75 basis points, three-quarters of a point. Chair Powell indicated that maybe we're going to get more rate increases, but the size of those rate increases won't be 75 basis points in all likelihood. So maybe we'll get another 50 basis points. And if you look at market expectations and their interpretation, what Powell said and what the Fed's been saying, we get the funds rate target, which is now at 2 1/2%, the top end of the range, to something like 3 1/2% maybe by early next year. That's where monetary policy has guided things and where we are today.

Mark Zandi:                      Does that make sense to you? Does that feel appropriate to you in the current context?

Alan Blinder:                     It does. It does. And by the way, journalists have been asking me for I don't know, six months, eight months, where do I think the Fed is going to top out on this? And I've been saying 3 1/2%.

Mark Zandi:                      I told you're a forecaster. You are a natural forecaster.

Alan Blinder:                     Lately, I've said three and a half to four. I think it's a little bit more, but that's not a very big difference as these things go. This is what I think they're going to do. Again, with the proviso of things go according to script, because there have been nothing by surprises for the last few years. I think 50 more basis points in September is very, very likely and I think there'll be strong forward guidance on that between then and now so on the day, everybody will be expecting 50. After that, I think the committee is going to scratch their heads and have a strong debate over whether they should just hang there for a while or do another 25 at the next meeting and watch developments.

Alan Blinder:                     So that would put it at three, three and a quarter, and then they're always data dependent, but there are times when you're extremely data dependent. Like this last meeting, 75, that was really not data dependent. Unless something really strange happened, they were doing 75. But there are times when they really are data dependent where the chairman of the Fed comes in for the last few days before the meeting and makes up his mind then, and not before, depending on how the data flow looks. We could be in a position like that at the end of this year.

Mark Zandi:                      Right, right. And, you'd think probably that path would be the best path to potentially achieve that soft-ish landing?

Alan Blinder:                     Yeah, given that they started late.

Mark Zandi:                      Yeah, given that they started late.

Alan Blinder:                     It's not an accident that they shot in two 75's, which by Fed standards is shooting the moon. They were late. They were late and they had to catch up.

Mark Zandi:                      Okay, given that let's talk about recession odds, and maybe I'll couch it this way, because we've been obviously talking about this on all these podcasts and with everybody. Everybody wants to know what your probability of recession is starting sometime in the next year? So between now and mid-next year, and let's say over the next two years, because interestingly enough ... and I'm curious in your thinking about this ... most economists, when they talk about recessions, they're not thinking next quarter, next two quarters, even next year. They're even thinking now two years, and that feels really weird to me given the current environment. If we're going into recession, it feels like that's at year end early next year or something like that.

Alan Blinder:                     Yes, it feels weird to me, too, Mark, for that reason and also because you're in this business, you know that two year ahead forecasts are worthless. Nobody can see. You may be able-

Mark Zandi:                      Except for Chris's, Alan. Except for Chris's. In all fairness.

Alan Blinder:                     You guys are pretty good at looking three, six, nine months ahead, but 18, 24 months ahead? I don't even try. So, the answer to the question is I think probably a recession starting in the fourth quarter of this year or the first quarter of next year is the most likely scenario with a lot of variance around that forecast. Really a lot of variance. A 60% of an NBR recession.

Mark Zandi:                      60? You said 6-0?

Alan Blinder:                     60, 6-0.

Mark Zandi:                      6-0.

Alan Blinder:                     Something like that. Chris, what's your assessment of the probability of a recession over the next year?

Cris deRitis:                       One year? I'm at 60%.

Mark Zandi:                      Oh, okay.

Cris deRitis:                       And two years, I'm at 65%.

Mark Zandi:                      65%?

Alan Blinder:                     I'm going to ignore that other five, Chris. That's just too far ahead.

Mark Zandi:                      Well, here's why he does that, Alan. Because we have this forecast philosophy that we don't make major changes in our forecast unless we have a high level of confidence in that change, and that subjectively is a probability of over two-thirds. So, he's going right up to the line.

Alan Blinder:                     I see.

Mark Zandi:                      See? Very strategic in his probability assessment. Well, I'd put them at even odds. I'm a little bit more optimistic than you guys, but I'll have to say that varies day by day, hour by hour. The risks here are obvious-

Alan Blinder:                     I'll tell you what I did when Chris was going over those second quarter GDP numbers, the one that this was going to be our ... I'm going to initiate the number guessing game since I was-

Mark Zandi:                      Okay, all right. Very good. So, we're playing the game, are we? Right now?

Cris deRitis:                       Yes.

Alan Blinder:                     Yeah. I was about to blurt it out on this point.

Mark Zandi:                      Oh, can I just pause for a second? Hey guys, listeners, you remember the game? I'm sure you do. That we each provide a statistic, the rest of the group tries to figure out what that is based on questions and clues and deductive reasoning, and the best statistic is one that's not so easy we all get it and not so hard that we'll never get it. But, fire away, Alan. Go ahead, what's your-

Alan Blinder:                     All right, so mine was, which I wanted to talk about, was domestic final sales in the second quarter-

Mark Zandi:                      Oh, you gave it away. We're not even playing the game.

Cris deRitis:                       0.02.

Mark Zandi:                      Oh, I see. I see.

Cris deRitis:                       He's going the other way.

Mark Zandi:                      This is a great innovation of the game.

Alan Blinder:                     I have you guys guess.

Mark Zandi:                      You have us? You tell us what it is.

Alan Blinder:                     No, I thought I copied down from the BEA -.3.

Cris deRitis:                       That's [inaudible 00:46:14] inventories and government or?

Alan Blinder:                     Domestic final sales.

Mark Zandi:                      Oh, domestic final sales. Down .3% in-

Alan Blinder:                     That was the thing that I found most worrisome in that report. So, that's all sources of domestic spending, consumption, investment, government.

Mark Zandi:                      And, government.

Alan Blinder:                     Spending. And, it's not very negative, but it's negative and in the previous quarter, Chris has probably got this in his head, it was well positive.

Mark Zandi:                      I just want to go a little geeky just for a second, get your view on it. But, this goes to the quality of the GDP numbers, and they get revised. You mentioned this. They get revised a lot over the years.

Alan Blinder:                     Yes, but the biggest revisions are not in that hunk. They're in inventories and the net exports.

Mark Zandi:                      Okay, good point.

Alan Blinder:                     Those also get revised. They will get revised.

Mark Zandi:                      Good point. But here's the thing I wanted to mention. If you look at gross domestic income, which conceptually is the same as gross domestic product, but added up from the income side of the accounts, people's incomes and corporate profits, that's been twice as strong, I believe, as GDP in the pandemic, and in Q1, it was up meaningfully. It was up one point ... real GDI, gross domestic income, was up 1.8%. Do you put any weight on that?

Alan Blinder:                     I do. I do, but we don't have the Q2 on that.

Mark Zandi:                      No, we don't.

Alan Blinder:                     That comes in late.

Mark Zandi:                      Yeah, and that's one of the reasons why we don't pay any attention to it because it's a month late.

Alan Blinder:                     Yeah, I was taught by Alan Greenspan in the 90s to watch that one, too.

Cris deRitis:                       You average them?

Mark Zandi:                      Oh sorry, Chris. Go ahead?

Cris deRitis:                       I suppose you average them?

Mark Zandi:                      Well, that's what the-

Alan Blinder:                     The GBA is doing that now, publishing the average of the two.

Mark Zandi:                      Yeah. I think the CEA under Jason Furman, they wrote a nice paper saying, "Hey, the best way of looking at this is just a simple average of GDP plus GDI." It gets you closer to reality. And subsequent revisions, I believe, in GDP. So, Alan, do you have an go-to indicator or indicators that you have to gauge which path we're going down? The growth recession or the actual outright NBER recession?

Alan Blinder:                     Yes and no. I'll tell you the two things ... This is going to be obvious from what I said before. The two things that I'm watching like a hawk, so to speak ... I don't watch like a hawk. I'm not a day-to-day forecaster, but it's oil prices and food prices.

Mark Zandi:                      Yeah, I hear you.

Alan Blinder:                     My view is that we got hit by a stagflationary shock, two barrel stagflationary shock as happened in the 70s and 80s. They look like they're dissipating now, and I hope they will, but if they take a turn for the worst, we're in big trouble.

Mark Zandi:                      Yeah, I hear you. Just to do another stanza of the game, Chris, do you want to give us your statistic?

Cris deRitis:                       Sure. Well, my number was-

Alan Blinder:                     I misunderstood the game. I thought I was supposed to come up with something?

Mark Zandi:                      Oh no, we all play the game.

Alan Blinder:                     Okay.

Mark Zandi:                      Actually, Alan, if you get the answer right, we have a cowbell for you. Honorary cowbell. These are big stakes here. Actually, we have listeners sending us cowbells. I'm not kidding.

Alan Blinder:                     Is that so you don't run out?

Mark Zandi:                      We don't run out. Apparently, cowbells, you go to Europe, every hill, every hamlet has its own cowbell.

Alan Blinder:                     I've got one up on a shelf over there.

Mark Zandi:                      Oh, okay. Well, you'll have to pull that out.

Alan Blinder:                     From the Jackson Hole conference.

Mark Zandi:                      There you go. I'm sure they have cowbells. So Chris, what's your statistic?

Cris deRitis:                       So, there were lots of numbers that came out this week, so lots to choose from but I think one of the most important is 2.61%.

Mark Zandi:                      2.61%. Is it from the GDP report?

Cris deRitis:                       No.

Mark Zandi:                      Is it from the-

Alan Blinder:                     Give hints here.

Cris deRitis:                       You already alluded to it earlier.

Mark Zandi:                      It's not from the Employment Cost Index?

Cris deRitis:                       Nope.

Alan Blinder:                     [inaudible 00:50:42] that just came out today?

Cris deRitis:                       Nope.

Mark Zandi:                      It's a statistic that came out this week, though?

Cris deRitis:                       Yes, I pulled it last night.

Mark Zandi:                      Well, okay, that didn't really answer the question.

Cris deRitis:                       Well, it's a daily number.

Mark Zandi:                      Oh, it's a daily number?

Cris deRitis:                       That gives you a lot of hint.

Mark Zandi:                      Oh, yeah. Is it-

Alan Blinder:                     The TIPS break even rate or something like that.

Cris deRitis:                       It is. Very good.

Mark Zandi:                      Oh, see?

Cris deRitis:                       I think that deserves-

Mark Zandi:                      That's a cowbell.

Alan Blinder:                     Thanks. Daily, of course, eliminated all the things I was thinking about. I don't watch daily numbers.

Mark Zandi:                      What's that? The five year forward? No, no.

Cris deRitis:                       No, that's the five year break even.

Mark Zandi:                      The five year break evens? Is that five year break evens? Oh, okay.

Cris deRitis:                       Yup. And, we already mentioned the importance for Fed policy.

Mark Zandi:                      The other thing I would add is that it's down from 3.6 in late March, so it is moving in the right direction.

Alan Blinder:                     Right.

Mark Zandi:                      Well, the five year break evens-

Alan Blinder:                     And as you said, Mark, it's almost right where the Fed wants it to be. If you take .4 as the more historical gap between the two price indices, the Fed wants that to be 2.4.

Mark Zandi:                      Yeah, right. Okay, well that was a very good one, Chris, and Alan got it right away. Okay.

Alan Blinder:                     Well, after many hints.

Mark Zandi:                      I'll do mine, and this might be on the hard side.

Cris deRitis:                       Ugh.

Mark Zandi:                      Yeah, I'm sorry about that but-

Cris deRitis:                       Is it from this week?

Mark Zandi:                      Yeah. Yeah, it is. It is from this week. It's from two different reports, and the statistic is the same. 5.1%. 5.1%

Alan Blinder:                     ECI year over year?

Mark Zandi:                      Yep, that's very good. The Employment Cost Index is up 5.1% year over year. That came out this morning. That's the best measure of labor compensation and wage growth because it controls for the mix of industries and occupations, which can create havoc with the wage statistics. So, it feels like underlying wage growth now is about 5% ish. And Alan, as you pointed out, for that to be where we want it so it's really not adding to inflation or pressures, it's got to be something closer to three and a half. 2% inflation and throw in some productivity growth and you're around 3 1/2%.

Mark Zandi:                      Okay, what's the other 5.1 that came out today too? You should know this.

Cris deRitis:                       Savings rate. Is that right?

Mark Zandi:                      Oh my gosh. Oh, Chris way to go, man.

Cris deRitis:                       I don't have Ryan here today.

Mark Zandi:                      Yeah, that's exactly right. The saving rate fell, and this goes to all that excess savings that built up during the pandemic. Before the pandemic, the saving rate was consistently 7%. During the pandemic, as we all sheltered in place and there was a lot of government support, that obviously shot up and now we're starting to burn off that excess savings because saving rates have fallen below that 7% threshold, that 5.1, but we still have by our calculation two and a half trillion dollars of excess saving, saving above which would have occurred if not for the pandemic. And, that's a lot of saving. Hey, I wanted to ask you a question-

Alan Blinder:                     By the way, I just want to add to that. As you're totaling up the pluses and minuses, that's one of the reasons not to expect the recession.

Mark Zandi:                      Yeah, yeah. And let me ask you this question, which I'm just really curious if you are thinking about it the same way. It feels like consumers are not out spending with abandon. They have all this excess saving. It's sitting, a lot of it, in their deposit accounts because we can see exactly how much is sitting there in their deposits. So, it's cash that they could just use now, no problem. It's not like they have to sell an asset or go out and borrow any money, so they've got that cash. But, they don't seem to be using that to happy days are here again, obviously, but they're just using it just enough to supplement their purchasing power as it gets hit by the high inflation.

Mark Zandi:                      Does that characterization characterization of what's going on here sound right to you?

Alan Blinder:                     That's the way it looks. It's not the way I would have guessed six or nine months ago. I would have thought that more of that would be pulled out of the checking account, the savings account and spent, but if you ask me after the fact, not a forecast, to explain it, it's what you said. I think the incomes have held up quite well. We're not having layoffs and mass unemployment, wages in nominal terms are doing well, in real terms, not so.

Mark Zandi:                      Yeah, and I think to me-

Alan Blinder:                     So people don't feel they have to go to their savings account and yank out money.

Mark Zandi:                      Yeah. I mean, at the end of the day I think the firewall between a growth recession and an outright recession is probably the consumer, right? The American consumer. And, this is one reason to suspect that that firewall may actually hold and we don't go into recession.

Alan Blinder:                     Yeah. As I said, that's one of the arguments on the no recession side today.

Mark Zandi:                      Let's turn quickly to fiscal policy, and I should ask, Alan, do you have a hard stop here? Do you have a few more minutes?

Alan Blinder:                     No, I'm okay.

Mark Zandi:                      You're okay? Okay. We'll probably go on for another five, 10 minutes or so. So, we'll be done.

Alan Blinder:                     Okay, fine.

Mark Zandi:                      But let's turn back to fiscal policy. It does feel like a flurry of activity here more recently. It feels like we're getting some legislation through. It's not game changing legislation. We've got the CHIPS Act to help fund semiconductor development here in the United States primarily. And, it looks like we're going to get a piece of legislation, a very slimmed down version of the American Family's Plan, which was part of the Build Back Better agenda, more funding for climate related issues, for Affordable Care Act subsidies, a few other things. But, what do you think about the fiscal policy response now to what's going on? And, is there anything you think fiscal policy makers could be, should be doing to help with regard to what's going on with inflation? Or, is that really up to the Fed at this point?

Alan Blinder:                     It's mostly up to the Fed. This is why I brought up that 1968 quotation. There are a few things, if you want to call it fiscal policy, where the government can nibble around the edges. The most obvious of those is the strategic petroleum reserve. That's a real nibble around the edges. There's the gasoline tax, which is very small, at the federal level. The presumed diminution of prescription drug costs. So, there are a whole bunch of things you can nibble around the edges, but the main thing I hope fiscal policy won't do, and I think it won't, is what it did after the last crisis in 2011, '12, '13, which is turn strongly contractionary and try as hard as it could to kick the economy down the stairs again, leaving the Fed out there alone trying to prevent that from happening. I think that was a huge mistake. And about every third day, I worry that we're going to do that again, but I think partisan gridlock is probably going to stop that from happening.

Mark Zandi:                      Well, that goes back to our paper, right? I mean, we did that paper doing the counterfactual coming out of the financial crisis. What if, and really, I thought nicely showed ... Of course, it was our paper so it was nicely showed that very restrictive fiscal policy was really in the post-crisis period-

Alan Blinder:                     I went back to this in writing this book that you were asking me about.

Mark Zandi:                      Oh, is that right? Okay.

Alan Blinder:                     Yeah, and I talked about the episode. If I remember correctly now, unfortunately at my age, I rarely remember correctly, I think it was a fiscal contraction that averaged a percent and a half of GDP for three consecutive years.

Mark Zandi:                      Yeah, that sounds right.

Alan Blinder:                     In three years, that's 4 1/2% of GDP. That, with the sign reversed, is the same size as the 2009 stimulus.

Mark Zandi:                      Yeah, and in the context of the household de-leveraging that was occurring in that period and the recapitalization of the financial system as the-

Alan Blinder:                     Yeah, and an economy that was still weak. The unemployment rate was still high.

Mark Zandi:                      It was amazing we grew at all.

Alan Blinder:                     It is. Yeah, exactly. So as I say, about every third day, I worry we're going to do that again, but on the two out of three days, I think, "Nah, we won't do that again."

Mark Zandi:                      Yeah. If you were king for the day, and you didn't need to send this through the legislative process, is there something you could do on the fiscal side that could move the dial here more meaningfully on inflation over the next year or two?

Alan Blinder:                     Not much.

Mark Zandi:                      Okay.

Alan Blinder:                     I can't really think of ...

Mark Zandi:                      I say housing policy. What do you think? Clearly-

Alan Blinder:                     I tend to think of that as a much longer run. First of all, much longer run and not mainly federal. All kinds of cities and towns and counties have very restrictive zoning regulations, which as the demand for housing goes up, just comes into price more than into quantity. But almost zero of that is federal.

Mark Zandi:                      Yeah, I argue like a LIHTC, Low Income Housing Tax Credits. That really juices up returns to affordable rental construction. That's a program that's been in place, the infrastructure is there. You just turn a few dials and you juice that up, and you can build multifamily a little bit more quickly. You're right, it's not going to solve the problem in the next year but maybe over the next two, three, four years, it might add more supply, have some impact.

Alan Blinder:                     Yeah, all the things that have to do with that sector of the economy are going to be long run.

Mark Zandi:                      Yeah, right. There's no slam dunk "If I do this now, I'm going to get some relief by this time next year" on inflation, on the fiscal side.

Alan Blinder:                     I don't think so.

Mark Zandi:                      All right. Just checking. I didn't think so, but I was just checking.

Alan Blinder:                     If we have a way without really ridiculous agricultural subsidies to increase wheat and corn production in the United States quickly ... Now, you do have to plant and harvest. This is not going to-

Mark Zandi:                      You need some rain, and not too much rain.

Alan Blinder:                     Yeah, this is not about to happen in the next two months.

Mark Zandi:                      Yeah, okay. Hey, I want to end our conversation with discussion around let's suppose we go into recession. What do you think the nature of that recession is in terms of severity? Are we looking at typical garden variety? Something less severe, something more severe? Do you have any sense of that?

Alan Blinder:                     I would think garden variety is the upper limit, so less than a typical recession. And, the reasons are several things that we've discussed here already and one that we haven't. One is the large stock of liquid assets that consumers are holding, so as those income flows stop being so robust, they have some place else to turn. Secondly, I think it's likely, though not on a large scale, that Congress stops fretting about the deficit and even the republicans stop just thinking every minute what they can do to make the world worse for Joe Biden, you get a little fiscal cushion from that.

Alan Blinder:                     And, the thing we haven't talked about is that the current composition of the federal reserve doesn't look to me like a bunch of people that want to see the unemployment rate go to 10%. As and if things start to deteriorate, I think you'll get a rapid monetary policy reversal, if it's needed. On Chris's forecast, it may not be needed. Everything is mild and the Fed just needs to push the Fed funds right up and then flat line it for a while. But, if things look worse than that, I think they'll start cutting it.

Mark Zandi:                      Right. Very good. I think that you put it nicely. So, at worst, it would be a garden variety so that would be GDP down two and a half, 3%. We lose three, four million jobs, unemployment goes to maybe a high of 6% ish. Something like that. That would be garden variety. So, nothing worse that that.

Alan Blinder:                     That's the worst that I'm expecting from the next recession.

Mark Zandi:                      Yeah, because if we go into recession, your thinking is that inflation is coming in anyway if we don't get further surprises on the supply side of the economy, and with a recession, you'd get there just a lot faster obviously because you're killing demand and you'd get the inflation right back down quickly.

Mark Zandi:                      Yeah, okay. All right, very good. Well, it's been a pleasure. I'll have to say again, I agree with I think everything you said.

Alan Blinder:                     We haven't enough disagreements. We have to talk baseball.

Mark Zandi:                      Well, that's the only source of disagreement here is the Yankees and Phillies but I'll have to say I can see why you like your Yankees.

Alan Blinder:                     They're looking pretty good.

Mark Zandi:                      I get it, I get it. I understand it.

Alan Blinder:                     And, I'm not hostile to the Phillies. They rarely play the Yankees.

Mark Zandi:                      Yes, I know.

Alan Blinder:                     It's pretty rare.

Mark Zandi:                      You would be hostile if we actually won a few games, I think. Just saying.

Alan Blinder:                     Well, if the Yankees play the Phillies, I'll root for the Yankees, but it will never be like the Red Sox.

Mark Zandi:                      Well, I'm going to invite you down because you're in Princeton ... Do you live in Princeton? You're living in Princeton?

Alan Blinder:                     Yeah, I am right now.

Mark Zandi:                      So, you can easily get to a Phillies game. I'm going to have to have you come down.

Alan Blinder:                     I have historically been to Phillies games, but-

Mark Zandi:                      They're fun.

Alan Blinder:                     Since the pandemic, I haven't been to anything.

Mark Zandi:                      Yeah, that's true. Very good. Well, thanks so much, Alan, for spending time with us and really enjoyed it and appreciate the time. Thank you. And with that listeners, we're going to call this a podcast and we'll talk to you next week. Take care now.