INSIDE ECONOMICS

Mark Zandi:                      Welcome to Inside Economics. I'm Mark Zandi, the Chief Economist of Moody's Analytics. I'm joined by, as per usual, my two colleagues, Ryan Sweet, Ryan is the Director of Real-Time Economics, and Chris deRitis. Chris is the Deputy Chief Economist. I'm going to begin this podcast with a call out to my daughter. Happy birthday, Lily. She's my youngest. She's, I think, the hardest working person on the planet. I thought I was the hardest working person until she sheltered in place with us for a few months during the pandemic. Every morning I'd wake up, I'd go downstairs and she had already finished her second cup of coffee. So, Wawa coffee, I should say too. She's a little bit more eclectic, but she drinks Wawa coffee. So, happy birthday, Lily. The only complaint I have is that she's at Johns Hopkins working on cancer research. It feels like she's in the CIA, because it's hard to get information out of Lily. I'm not sure exactly what's going on, but happy birthday, Lily. We're also joined by Dan Rosen. Welcome, Dan. Thanks for joining the podcast. 

Dan Rosen:                        Hi, Mark. 

Mark Zandi:                      Dan is the founder of Rhodium Group. Tell us about us a little bit about yourself, Dan, and Rhodium. I'm really curious in a little bit of your history and how you founded the company and how things were going.

Dan Rosen:                        Sure, I spent the '90s at the Peterson Institute, which back then was just IIE, Institute for International Economics. I worked for people like Gary Hufbauer, Fred Burton a lot. Nobody did China in those days. So, they kept throwing the tires and China work to me. I had done Mandarin and economics. I was interested in that stuff from '92, '93, on. So, the '90s, doing that. I sharpened my pencils against China WTO accession as an issue at the end of that decade, caught President Clinton's attention. He asked me to join the Intercon team, the NSC, NEC team at the White House for the last year to get China into the WTO. So, people can blame me for that. That's a copy of HR 4444-

Mark Zandi:                      That's you. 

Dan Rosen:                        ... on the wall behind me, the House legislation that got them in. So, I came out of that, loved the think tank work but was unsatisfied just doing the usual think tank shuffle where you got to do private stuff one day a week. I want it to be two and a half, two and a half. So, came back to New York, where I'm from and started putting together what today is about 65 people at Rhodium, working on China, global climate, little bit of India work, and some other things too. So, it's an independent research company with a bunch of earnest folks working on some globally relevant questions. 

Mark Zandi:                      Yeah. I should have started by saying, of course, we're talking about China here. There's no better voice on what's going on in China... Clearly, there's a lot going on in China. ... and of course, US-China relationship as well than you. So, we're very happy and honored to have you join us. You told me in our conversation, we had a little bit of a prep call, that you think you're competing with us somehow. On the climate change side, we're a little bit of a competitor, because Moody's purchased RMS, which provides a lot of climate risk information. Now, we're competing. Is that right? 

Dan Rosen:                        Well, I'm sure it's more complimentary than anything else. I mean, like China and the United States, Mark, I'm sure, right? 

Mark Zandi:                      Exactly, I'm sure you're right. 

Dan Rosen:                        My colleagues on the other side of Rhodium, led by Trevor Houser, an extraordinary guy, have built some pretty powerful tools for looking at physical climate risk and assets against sea level, temperature changes, and other climate change factors out into the future. So, we have a few niches where we've gotten pretty good. See you in the marketplace. 

Mark Zandi:                      Yeah, I'm a little nervous now, the competition, but we thrive on competition, right? This is America. So, competition is good. I was going to say one other thing. What was it? In fact, we were on a three-hour call today with the National Committee on US-China Relations. Is it relations? 

Dan Rosen:                        Yeah, relations.

Mark Zandi:                      That's a really cool group. It's been around since the '60s. I don't know if this is right then, but they were involved with the Ping-Pong Mission under Nixon, the first foray into China. Is that right? Do I have that right? 

Dan Rosen:                        Yeah, Ping-Pong played this crucial role of showing civil society that they're not aliens over there with three heads and blood coming out of their eyes. Back then, we didn't have diplomatic relations with China, right? That didn't happen formally until the end of the '70s, 79 in fact. So, if you don't have diplomatic relations, how do you issue an invitation to a foreign Ping-Pong team to come to your country? So, it was left to a civil society organization, the National Committee, to be the host organization for this people to people exchange. The rest is history. 

Mark Zandi:                      Yeah, it's a great group, because it's businesspeople, accommodations, both on the American side, the US side, and on the Chinese side. It's a group of people that... I don't know. I've been doing this now or participating, almost probably going on a decade now. How long have you been participating? 

Dan Rosen:                        Oh, yeah. I mean, I've been involved there in one way or another really since the late '90s even. I'm on the board now. This dialogue, we've been doing it since 2010. So, the whole idea, so-called track II dialogue, is there might come a time when your government-to-government contacts are a little bit touchy, I think, you might say. It's good to have some unofficial people-to-people links to keep the conversation going during those patches. That's what we did three hours this morning, didn't we? 

Mark Zandi:                      Yeah, we did. You really mixed things up. So, we'll get back to that though. You have a strong view on China or views and want to tease that out a little bit. Before we do that, though, hear at Inside Economics, we have a tradition of first going over the economic statistics. We're a little bit nerdy admittedly. Ryan's more nerdy. Actually, Chris is the nerdiest one. He's back to wearing his Howdy Doody shirts.

Cris deRitis:                       Oh, come on, come on. It's a badge of honor. 

Mark Zandi:                      Badge of honor, anyway. So, we begin with the statistics and we play a little game here, because statistics can be a little dry, unless you are an economist and are into the data. So, we each have to single out a statistic or two that we think is particularly important in the past week or in the coming week. We tell the statistics, and we try to guess what that is. So, I hate to say this, but Ryan is probably the best at this. Would you say, Chris? 

Cris deRitis:                       Yes, admittedly.

Mark Zandi:                      I think he's the best at this. We'll begin with you, Ryan. So, what's your statistic of the week? 

Ryan Sweet:                      49%.

Mark Zandi:                      49%, 49%. That's a statistic that came out in this past week? 

Ryan Sweet:                      Yes, I sticked to this week. It's tied to the labor market. 

Mark Zandi:                      Oh, well, what came out this week? The JOLTS numbers came out this week. That's the Job Openings and Labor Turnover Survey. There was a record number of open job positions, over 10 million open, but that's not it. 

Ryan Sweet:                      I have a love-hate relationship with this release. 

Mark Zandi:                      Do you know, Chris? 

Cris deRitis:                       No, it's not-

Mark Zandi:                      49%. Can you give us one more hint before we give up? 

Ryan Sweet:                      Pre-pandemic, the highest was 38%. 

Cris deRitis:                       Small business trouble hiring. 

Ryan Sweet:                      Yup. So, 49% of small business say they have at least one open position that's hard to fill. 

Mark Zandi:                      Really? That's a record high. 49% say they have at least one open job position. That ties in with the JOLTS number.

Ryan Sweet:                      Correct. It also argues that the ending of the UI benefits really didn't ease labor supply constraints right away at least. 

Mark Zandi:                      Right, good point. You'd expect that to ease off a little bit. We haven't seen that. Right. Okay. Good one. That's a good one. Chris, you have a statistic? 

Cris deRitis:                       I sure do. 2.3%. 

Ryan Sweet:                      Wait, what was that? 

Cris deRitis:                       2.3.

Mark Zandi:                      2.3.

Cris deRitis:                       Positive 2.3%. 

Ryan Sweet:                      Productivity?

Cris deRitis:                       You got it. You wrote the release, I believe. 

Mark Zandi:                      2.3 was-

Cris deRitis:                       Second quarter analyzed productivity growth.

Mark Zandi:                      Non-farm business?

Cris deRitis:                       Correct.

Mark Zandi:                      All right. We'll see how good Ryan really is. Ryan, what was the increase in productivity Q on Q analyzed for non-financial corporate- 

Ryan Sweet:                      Oh, I didn't look at that one. 

Mark Zandi:                      All right. Well, I'm a little disappointed. Dan, are you disappointed in that? No, Dan's saying-

Dan Rosen:                        I'm on the sidelines, warmup. 

Mark Zandi:                      It's a warmup. Okay, that's a good one. That's a good one. All right. I'm going to go next. Dan, we'll turn to you if you have a statistic you want to... Actually, I have a good one for you, Dan. We'll come back to that, but here. This is a two-part question. I'm going to give you four numbers and you got to tell me what I'm trying to measure. Ready? Are you ready, guys? 

Ryan Sweet:                      I'm ready. 

Mark Zandi:                      They were all this week, right? Yeah. All right. Ready? Four numbers, 2.2%.

Ryan Sweet:                      Inflation expectations. I know where you're going. 

Mark Zandi:                      I didn't say it. Wait, okay. 

Cris deRitis:                       7.2.

Mark Zandi:                      All right. Hold on, hold on, hold on, hold on. Okay, that's the easy part. Okay, I'm going to give you the four statistics. And then you got to tell me what measure of inflation expectations each one corresponds to. All right, ready? 2.2%, what does that correspond to? 

Ryan Sweet:                      5-Year, 5-Year Forward. 

Mark Zandi:                      Very good. That's good. 5-Year, 5-Year Forwards are teased out of the bond market, go to the 10-year treasury yield. We can tease out of that when inflation expectations are in the long run. That's 5-Year, 5-Year Forwards. They're saying 2.2%. Okay, ready? 3%? 

Ryan Sweet:                      UMICH, one year ahead.

Mark Zandi:                      No, not one year.

Cris deRitis:                       No, no, no. 

Ryan Sweet:                      Oh, is that 5 to 10? 

Mark Zandi:                      Yeah, 5 to 10 years. 

Ryan Sweet:                      Five to 10.

Mark Zandi:                      Yeah. Okay, that was a slip up actually. Ready? Ready? 2.2%? 

Ryan Sweet:                      Is that R? 

Mark Zandi:                      No.

Ryan Sweet:                      Inflation expectations? 

Mark Zandi:                      No, no. I knew this was going to trip you up. 2.2%. It came out today. 

Ryan Sweet:                      Is this one of the Philly Fed survey official forecasts?

Mark Zandi:                      It is indeed the Philly Fed professional survey. By the way, I think I've said this before. I'll say it again. I think that is the best measure of inflation expectations, at least if you're trying to focus on whether the inflation is becoming an issue or not, because economists tend not to change their forecasts no matter what's happening. So, if they start changing their forecasts like me, because I participate in the survey as an example, that means inflation expectations are definitively changing. 2.2% is the highest it's been in a decade, though. That has pushed up. It's been closer to 2%. Now, it's at 2.2%, which is the highest. This is core consumer expenditure deflator inflation. So, this is what the Fed looks at. Through the business cycle, they target 2% inflation. So, 2.2%, I think that's where the Fed would want it, but that's on the high side of where the Fed want it. Okay, one more, 2.4%, 2.4%. No, all right. You said it before, though. That is our inflation expectation polls measure. So, we take 20 different measures of inflation expectations, 5-Year, 5-Year Forwards, TIPS, Philly Fed, UMICH, a bunch of other stuff, mishmash that all together using some statistical techniques to get to the underlying trend or cut through the noise. It's at 2.4%. To be precise, it's 2.37%, but I thought that would be a little too precise. That's inflation expectations by that measure. That has rolled over. That is still high, but it's coming back in and seeing again, that inflation expectations remain very well contained. So, very good. Okay. Dan, I got one for you. I have to admit, I'm not sure exactly what this is. If I agreed to do this.

Dan Rosen:                        Great. I love it. Bring it on then.

Mark Zandi:                      I think I got it roughly right. I read it quickly and then I forgot it, but I thought this would be perfect for you. $15,000. 

Ryan Sweet:                      I was going to use this one.

Mark Zandi:                      Were you? 

Ryan Sweet:                      Yeah.

Dan Rosen:                        $15,000.

Mark Zandi:                      Yeah, $15,000. 

Dan Rosen:                        I mean it's arguably Chinese PPP per capita income level. 

Mark Zandi:                      You're overthinking things, Dan. You're overthinking. 

Dan Rosen:                        Okay.

Mark Zandi:                      But it is China related. 

Dan Rosen:                        Well, I figured it was China related if you're tossing it my way. Cost per household of the tariffs over the past 12 months. 

Mark Zandi:                      No, but it's a cost measure. Ryan, you want to help him out? 

Ryan Sweet:                      You want me to give him a clue? 

Mark Zandi:                      Yeah, give him a clue. 

Ryan Sweet:                      It's going to go higher because they closed down a terminal at one of the busiest ports. 

Dan Rosen:                        It sounds low to me, but it's cost per shipping container. Trans-Pacific, I guess the Port of Los Angeles or something like that. I've heard numbers as high as $20,000, but yeah. 

Mark Zandi:                      Well, maybe it's headed higher. I think this was Shanghai... Was it to New York?

Ryan Sweet:                      Yeah, Shanghai to New York.

Mark Zandi:                      Shanghai to New York for $15,000. Typical was half that, wasn't it? 

Dan Rosen:                        Oh, yeah, yeah. It should be. It's double what it normally would be. Yeah. I think folks would grab it at 15K right now with the Christmas season starting to be at its... Well, really at its peak right now, right? So, for shipping for late year Christmas inventories. So, it's a problem. 

Mark Zandi:                      Yeah. What happened was they found one dock worker who had COVID.

Dan Rosen:                        Correct.

Mark Zandi:                      They shut the whole terminal down. 

Ryan Sweet:                      They have a no tolerance policy now. 

Dan Rosen:                        That is correct. Well, they declared one stevedore who was testing positive, which there's a certain multiplier to be considered. Should I throw one of you guys to then? 

Mark Zandi:                      Yeah, fire away. Are you going to be easy on us? Are you going to be hard on us?

Dan Rosen:                        Well, I don't think there's any chance you'll get it at all. I wouldn't have.

Mark Zandi:                      It's a competition. Competitive juices are already kicking in. 

Dan Rosen:                        Just as a pivot, though, toward the China topic maybe, 81%.

Mark Zandi:                      81%, 81%. Okay, I think I will need a hint. 

Dan Rosen:                        I'll give you one clue. It's out of the US-China Business Council's members survey of sentiment on key issues released this week. 

Mark Zandi:                      Okay, something that came out this week, 81%. I want to say 81% of the respondents say, because Chinese inflation statistics came out this week, Chinese inflation is going to accelerate from here, something to that effect. 

Dan Rosen:                        No, these companies don't talk about serious stuff with the US-China Business Council, but it is somewhat or very concerned about China's information flow and technology security policies. 

Mark Zandi:                      Yeah. Okay. Yeah, you're right, that's so much better. 

Ryan Sweet:                      We're never going to get that one. 

Mark Zandi:                      Yeah, although that makes a lot of sense. That makes a lot of sense. 

Cris deRitis:                       It sounds low to me. 

Mark Zandi:                      Yes, sounds low, right? Show me the 19% of people who aren't concerned, right? Yeah. So, are you concerned, Dan? Are you concerned? How would you answer that question? 

Dan Rosen:                        Am I concerned? I mean, I'm not concerned, because that was my expectation that people would be freaked out by the things that are happening. I've been arguing for some time now that the direction things were taking was problematic from the perspective of private firms trying to run their businesses. So, I'm not concerned to the extent that my perspective looks prescient at present. But if I were hoping for strong, sustainable, predictable Chinese growth and its relationship to global conditions too, yeah, I'd be very concerned about what we've seen over the past month. 

Mark Zandi:                      Yeah. We'll come back to that in just a minute or just a few minutes, because that's an important subject to tackle. I do want to say that we do pull listeners to the podcast. You can go to, for example... Where do they go, Ryan? ... economy.com. If you go to economy.com, you see a button-

Ryan Sweet:                      It's right there. 

Mark Zandi:                      You'll see it right there at economy.com. We asked to the listener, "What do you want us to talk about on the podcast?" China is far and away the number one topic that people want us to talk about. So, it's definitely top of mind. So, we're now moving into part two of the podcast and the big topic being China. Thanks again for participating here. 

Ryan Sweet:                      Should we do the disclaimer? 

Mark Zandi:                      Oh, go ahead. You do the disclaimer. 

Ryan Sweet:                      This is your show. I forgot it. 

Mark Zandi:                      Ryan is being very cautious. He suggested that we just let everyone know, but I'm sure everyone does know, but just to make sure. We're part of Moody's Analytics, which is independent from the Moody's rating agency. So, these are the views. This has nothing to do with the rating agency. So, this is Moody's Analytics, but I think that's wise to do here, given the sensitivities. But I wanted to begin the discussion by framing it this way. I think it's fair to say that China has been vilified during the Trump administration certainly. Even before the Trump administration, there was a lot of hand-wringing about China going back to the WTO and the fact of China's entry into the world marketplace and the impact that had on US manufacturing. A lot of really good academic research connecting the dots between the hollowing out of big parts of US manufacturing and China. So, there was a lot of angst about China, even coming into the Trump administration, but obviously, President Trump took that to a whole another level, tit-for-tat trade war, which, by the way, I think did a lot of damage to the entire global economy, but also to the US economy. It was struggling in 2019, coming into 2020. Even prior to the pandemic, I think we're having some trouble. The efforts to restrict American company's ability to do business with Chinese companies, Huawei is the name that comes to mind, but there was many others. And then, of course, the thing that really vilified China was over the pandemic, just point blank blaming China for the pandemic. So, China in the minds of Americans, I think, certainly, its stature has been significantly diminished. It's been vilified. Let me ask, Dan, this question. Do you think I've characterized things correctly? Do I have that right? Is it fair? Should we think of China in that light? How do you think about it? 

Dan Rosen:                        This has gone back and forth through five cycles since the American Revolution, actually. I mean, just think of the 20th century, you have both the vision of the Yellow Peril of millions of people in Mao suits poring over the berm and the Korean War thing versus Pearl Buck's Good Earth, this vision of the noble agrarian Chinese farmer who just wants to be left alone to ponder Christianity and consider their place in the world and all. So, there is this thing about the other that keeps swinging back and forth. It's not just an American phenomenon. There's a corresponding idealization of the United States in the Chinese mind. Meiguo, the Mandarin for America means beautiful country, beautiful place. That's very much the mythology that is laden in the Chinese 20th century experience as well. And then it swings into this phase that we're in right now, where not just Chinese propagandists and wolf-warrior diplomats that are saying very nasty things, even nastier than you think of Trump saying, frankly. But among the people too, there's a real sense of grievance right now of what they perceive the American position to China to be. Now, of course, they're not getting a free flow of information, are they? They're getting a government curated, Chinese government curated package of ideas about what the US is and isn't doing, but we haven't actually comported ourselves beautifully in the past 15 years. So, there's plenty of wards to look at. So, I think it's a two-way weird marriage that's gone back actually a couple 100 years with these odd swings. 

Mark Zandi:                      That's interesting way to think. Yeah, I didn't put into that broad historical context. So, you think it's just a dynamic that the future is consistent with the past that this will swing back at some point? 

Dan Rosen:                        I certainly hope so, right? I certainly don't think that the present gestalt of seeing each other through such dark lenses is sustainable. I don't think it's rational on either of our parts to so quickly go to such a partial, selective, pessimistic view of the other. I don't think that's merited at all by either of our behaviors. Although we have a lot of structural competition and even some conflicts taking place, right? So, it's going to take some real leadership to steer through this period into what will hopefully be a more thoughtful view of one another going forward. 

Mark Zandi:                      Hopefully, a day sooner rather than later. I think one of the reasons for the American angst over China is that the Chinese economy actually has performed so well over the last really quarter since the WTO really come on incredibly rapidly and performed very, very well. I think that gives people angst. They're the second largest economy on the planet. If you do the arithmetic, do a little bit of forecasting, it looks like, at least in our forecast, China's economy will overtake the US economy in terms of sheer size, GDP, the valuable things that we produce, sometime in the late 2030s, something like that. Do you guys do at Rhodium explicit forecasting? Do you have a projection for Chinese growth next quarter, next year, over the next 10 to 15 years?

Dan Rosen:                        We're not competing on that one. We don't have a professional grade forecast product. We don't think of ourselves as offering a forecast service per se, but we do a huge amount of analysis around the outlook for China's growth that we bundle into the broader contextualized views of the future. We spent a lot of time looking at China's trend potential growth outlook. In several studies, we've written that up. Let's just start there, I guess. A few things, first of all, you're right. I think China's extraordinary growth is one of the factors that drives some anxiety, economic, strategic, and otherwise in the United States and elsewhere. But China started this journey in 1978, in today's terms, at about $300 per capita income for every man, woman and child in the country, about one quarter of what Nicaragua was at the time. So, if they had only been at Nicaragua levels of welfare, which was terrible, in 1978, then their GDP growth average to today would have been about 4% on average annual, rather than the fable double digit juggernaut that China delivered. So, if you start so immiserated as China did, you can't help as long as you just stop shooting yourself in the foot twice a day, but turn in an extraordinary performance for a long time. That has brought them to the 17 or so trillion dollar status that are out today, but looking ahead, beyond the medium term, we want to use a growth accounting framework, I guess, right? There's just three channels. There's demographic, there's capital formation, and there's total factor productivity. I think folks have really come to appreciate how serious the demographic outlook is this year. It's just released, China 2022 cardinal census. Data showed rapidly declining birth rates, nowhere near the replacement rate. By 2060, those numbers suggest that Nigeria will have a higher population than China in real terms. So, demographics is contributing zero, let's say, to China's GDP growth potential out over the next decade. 

Mark Zandi:                      Won't you even say it could be even negative, right? 

Dan Rosen:                        It would be negative if it weren't for H, the education enhancement of the human capital potential, right? So, when you consider that 900 million of those 1.4 billion Chinese are still deeply inadequately educated, there is a lot of catch up potential on the demographic channel to do better than zero, but not much better than zero, I would say, right? So, then you turn to capital formation, right? Capital stock build out. We get into big debates with people like my colleague, Logan Wright, who works on China credit dynamics from Hong Kong. He and I have written about this quite a lot. But China pulled a lot of investment forward in the long arc cycle and prematurely built out its property sector, over built its infrastructure and whatnot. So, it's pretty hard to explain why capital stock annual value should grow from the level it's at right now, which is already $8 or $9 trillion a year of annual investment. How do you grow that number, while fixing the horrendous incremental capital output ratio that they're grappling with? Which a decade ago was five or so, five renminbi investment generated one renminbi of sustainable GDP growth activity. Today, it's 10, right? It just takes way too much. So, that means that already they're throwing capital at everything they can and not getting as much return as they used to. So, I find it hard to scrape more than one point of annual GDP growth out of capital stock growth going forward. That leaves the entire burden on total factor productivity, right? Look, if you believe as I do that China today is horribly over deploying capital to state-related industries, sunset industries, not offering enough access to that lending, that credit to private sector firms, then the silver lining is that you should be able to get some amazing TFP growth if you permit a different kind of intermediation of capital in the system. I do believe that, but now, we got to look at the politics and ask ourselves whether this government's comfortable democratizing access to capital. What do you think? 

Mark Zandi:                      Well, they've not shown an inclination to move-

Dan Rosen:                        Apparently, Moody's thinks that it's going to go swimmingly, because you think they're going to pass the US in a couple years. So, I guess you already answered that, come to think of it.

Mark Zandi:                      No. Well, I'd say, to put numbers to it, that underlying potential growth and the growth accounting you just did adds up to the underlying potential growth rate of the economy. Probably it's 6%, 7%-ish. And then over the next 10 years, that moderates down to 3.5% to 4%. And then if you look out 25 years or so, Moody's, we forecast that 100 years, because of climate risk.

Dan Rosen:                        How'd you get the 10? Because I got zero from demographics, one from capital stock. You're lucky if you can scrape out two or three from TFP right now. 

Mark Zandi:                      Yeah, I think it's not an argument around demographics. It's not an argument around capital stock. It's really a question of TFP. There's a lot of uncertainty around that. Of course, China seems to be laser focused on expanding out activities that are highly productive. There's a lot of room to grow there. But we have it moderating as well. If you look out 15, 20 years from now, I think more 25 years, if I remember the forecast correctly, US and Chinese potential GDP growth are about the same. They're about the same out there. In fact, if you look at our long run forecasts, the two economies are roughly the same size in terms of GDP going out into the future, because the growth rates are about the same. 

Dan Rosen:                        So, this is right into the heart of the present moment, right? So, there's these unanticipated regulatory interventions taking place. Most of which are coming with a message, Mark, like the one I mentioned during our meetings this morning, which is, of course, off the record. But I'll say it again on the record, telling entrepreneurs, that they can be as entrepreneurial as they want to be consistent with patriotism and taking the country's interest into consideration first when they get up in the morning and thinking about their bottom line second. I am not familiar with another country that's managed to have that dual mandate on businesspeople and see it work productively. 

Mark Zandi:                      No, no, I hear you. I hear you. I think there's a lot of risk around that. That gets to the current crackdown, well, if that's the right word, on the country's tech industry and on its private, educational, what's called services industry, which confuses me to no end. Maybe you can describe what they're doing, and then probably, more importantly, why they're doing it. I don't quite get it. What is your take on what's going on here? 

Dan Rosen:                        Yeah, let's try. 

Mark Zandi:                      There's two schools of thought. Well, there's many schools of thought, I guess. Well, one is that it's around redirect energy resources, investment from more frivolous types of technology, like TikTok or Alibaba, to more productive types of technology. So, it's redirecting where the resources are going to more productive activities. The other argument is, well, no, the Chinese authorities view the tech sector as a threat to their ability to manage things politically. Therefore, they're basically suppressing that sector so that it doesn't become a problem for them in terms of their political goals. Is that right? Do I characterize that correctly or there's more than that? 

Dan Rosen:                        It's partially right, I think. There are multiple impulses here. It's open season on going after companies for any number of reasons. As long as you argue that it's what Xi Jinping told you to do, you can do it. Later, we'll clean up which of those things was actually merited. But consider that going after Didi, Uber's frenemy, a big investor in Didi, but also a competitor around the world, was motivated by anxiety around data. Somebody told me that a next generation vehicle is basically processing about 100 gigabits of data an hour for all the sensors and all the chips. It is a moving information collection device. If you think that somebody can see too much about you, because you have an iPhone in your pocket, imagine having 30 iPhones in your pocket. That's what you're doing when you're driving a Tesla, I guess. So, it occurred to somebody that letting Didi run unleashed is opening up a lot of national security peril around data stuff. So, there's data. Alibaba and going after fintech platform companies was not... Well, it is also about data, because those companies know... Whenever I take anybody out for a drink, they know who it is pretty much, can put it all together. But I think that the best explanation for what was so compelling about pushing the pause button on fintech was that the systemic risk tied up in unregulated, not bank licensed regulated financial players, non-banks, with massive role at the margin and flows and solvency and counterparty risk and all sorts of stuff going on there in that sector. So, you can say that that was in no small part driven by systemic financial risk concerns actually, which given the state of liabilities in China, I think, is merited to be concerned about that. So, that's two things. Education technology is not really about technology or systemic risks. It's about the exposure to non-state approved ideas. These are private education entities. Authorities are intensely worried about their ability to control and influence the flow of ideas and how people will react if they get heterodox views on what to think about minorities within China or about how to interpret the American behavior abroad or something like that. So, that's a very different, even more worrisome in a way motive to want to put a leash on those kinds of companies. So, that's three totally different impulses explaining these extraordinary regulatory intrusions. Yes, they all contain political considerations. There's almost always some national security, next generation national security worry about how companies can affect the national security interest. We haven't even gotten yet to competitiveness concerns about how Beijing tries to keep the scales, tip the right way to make sure that Chinese companies have a shot at being dominant in emerging and foundational industries, like new energy vehicles. 

Mark Zandi:                      I guess some of those reasons are perfectly understandable and they're motivating policymakers here in United States and in Europe. So, it's not like this is just a Chinese phenomenon. This is a global phenomenon where governments are nervous about tech companies and the power they have over lots of different dimensions of our lives. In terms of fintech, we've got here in United States, the SEC Commissioner saying, crypto is the wild west. It's a problem. We got to do something here. 

Dan Rosen:                        Crypto was on the list, one of the first chickens that was killed in China too, arguably because it was so energy intensive, because it wasn't productive activity, had no benefit for the common man, that stuff. So, there are anti-trust motives out of Beijing. There are energy and carbon intensity motivations as well. There's all those things and you're right. Many of them are present in Washington or Brussels or Berlin or somewhere else as well, not the information control ones in order to keep everybody orthodox in terms of communist ideology, that one is not present. But for the others, it's not so much the concern among regulators, but the manner in which it's being done that is so worrisome, right? 

Mark Zandi:                      Meaning, it feels capricious, it seems personal. What do you mean by that? 

Dan Rosen:                        It's not being done in a predictable rule of law based manner. Chinese institutions, even in the US, the ability of our regulators to separate... We debated this all through the Trump administration, right? He was very much taking liberties with traditional due process in America and the ability of businesses to have a chance to weigh in with the regulatory bodies before the government just announced that everything was going to be hit by a massive tariff or that the businesses they were doing were now on an entity's list. You weren't allowed to do business with anybody in the world. Sometimes in the middle of contracts as such as when President Trump ordered GE to stop shipping aircraft engine the last 9 out of a 39-engine contract to China, just pointless, pointless. So, I think, at the end of the day, our greatest asset is the predictability in the marketplace for businesses that if government doesn't like this, they're going to have to take the necessary steps and measures to talk to me about it to some extent. If they don't, I can challenge it in a court of law. I can get an appeal. I can get the law turned around. Even Chinese companies in America have managed to get themselves off some of these entity's list, get some US federal government decisions overturned, because we are so enamored of rule of law. It's a lot of lawyers slowing thing down in the short term, but in the medium term, it's so much more productive than the Chinese government saying the entire education services industry is now nonprofit overnight. A trillion dollars of equity wiped out and for what? With what impact assessment to back that decision up? 

Mark Zandi:                      Yeah, these are all great points. We don't have a whole lot of time with you and there's a number of different things I want to get your views on, including US-China relationships, the Biden administration. I know you at Rhodium have been developing a product called the China Pathfinder. I want to talk about that. And then I want to push back a little bit. But before I get to all of that, China seems to have a litany of economic issues. I want to list them and then I'm going to ask you to complete the list and then rank order them in terms of what you think is most significantly prompt to least significant? Does that make any sense whatsoever? 

Dan Rosen:                        Let's try. 

Mark Zandi:                      Okay, great. So, first up, high and rising leverage. So, before the pandemic, the-hand wringing was around the rapid increase in debt accumulation that was occurring, particularly in the household sector, but also to some degree in the corporate sector, a little less so at the federal government level, but local governments are also leveraging up. So, leverage is one. Second, asset bubbles. We have a problem with housing values here in United States now, but in China over the last 10, 15, 20 years, they've been battling high in surging asset prices, speculation in housing markets. There's been a cycle there. So, that's been an issue. Of course, the equity market and valuation in the equity market. Third is inefficient state-owned enterprises, which the thought there was well, they're being diminished over time, being replaced by more productive, higher return private companies. Given what's going on recently, that may not be the case. It seems like state-owned enterprises are coming and flexing their muscles. Climate in the environment, we've got a global problem with climate change, obviously, here in the US, but Chinese problems with the environment are notable. And then, of course, the political issues, the political crackdown, Jack Ma to Hong Kong to Taiwan to the Uyghurs, all those kinds of things. So, it just feels like there's this a whole slew of things to worry about. Did I miss anything? Are any of those things, things I shouldn't be worried about in terms of long run Chinese growth? How would you rank order those? 

Dan Rosen:                        Well, I'm sure I could add another 15 if you want to do that, but let's work with the five that you've got, because those are good ones. I'm going to start by putting your first one, high leverage, high and rising leverage issues at the top of the list. I'll explain why in a second, especially if you put the denominator of GDP underneath it, right? As growth slows, as we were talking before, ostensibly, we're running at a normal annualized rate of about 5.5% GDP growth right now, right? I say ostensibly, because nobody can be sure that that is really the best number to have in mind, because there's too many data points missing presently for us to be super confident about that. But I think it's probably less than that. We should think of it as somewhere between three and five maybe right now. It's half of what it was a few years ago. So, whatever the leverage is, there's less GDP growth. That's natural, right? It's a sign of their upper middle income status that that's going to be inexorably lower looking ahead. Yet, the amount of leverage that needs to be service, the debt service is no less high all the time. Chinese household debt-to-income ratios today are worse than Las Vegas in 2006 now. That was utterly not the case in 2009 after the financial crisis. Chinese households were not under a lot of debt. Also, on the corporate side, people often point to the comparison of overall national debt levels in China and the US. The big difference between us and them, of course, right now is it all of ours is on government balance sheet at zero to zero point something percent. Most of China's is on corporate and household balance sheets at 5 to 10% effectively. Depending on if you're a small business, you're effectively paying 10% for credit in China today, right? So, I think that's number one. Most concerning about it is that it has handcuffed them to continuing to hold rates down. Because as soon as rates go up, the whole country's loan book automatically ratchets up. Most of their debt is not fixed. It's adjusting, especially household. As soon as it goes up even a little bit, the number of bankruptcies start to go through the roof. They're terrified of that. So, they're trying to find a way to keep it down without the misallocation in the property even more that comes along with holding it down. So, they're in the trap. They are in that trap, and there's no easy way out of it. So, that's at the top. Asset bubbles, equity bottom, I'm concerned about the property sector. My colleagues seem to think that we're looking at a 10 to 25% correction in property prices nationwide. It is the singular store of savings in China, right? China's 97% home biased. Nobody has a diversified portfolio. Within China, folks have massively more of their wealth tied up in property than anywhere else in the world really just about for all practical purposes. So, a correction in property is really going to be quite painful for the household sector for 400 or 500 million urbanites anyway. So, very concerning. The SOEs, yeah, state-owned enterprises, big problem. Biggest part of the problem is that they are taking up market space that dynamic private Chinese companies could grow into and would be super attractive. A lot of TFP, a lot of productivity gain is possible for the private sector if it were allowed to grow into that space. Tragedy here, Xi Jinping, early in his tenure, 2013 to 2015, was committed to shrinking the role of the SOEs, rationalizing it, getting the state out of the tourism sector, places where there was just no credible reason why the state should be the one taking up space there. That process was very much put on hold, because the state wants to control the demand function. It's easier to do that if you've got such a big state sector. So, look, as long as government gets back to telling folks... We have a 15-year timetable to start to move the SOEs out and let private in. People will be tolerant of that if it has credibility, if they believe. Because China had a great track record of gradually growing out of its [inaudible 00:49:59], didn't shock therapy, unlike other parts of the world. So, I'm willing to believe it, but they got to prove it to me again, that they're really willing to do that. So, climate, we're on the same boat. Political issues, also, if China offers me a credible transition plan of where it's going to start rationalizing the role of government, I'm willing to be patient. So, it all comes down to credibility, but that first one on your list, Mark, the leverage problems, there's just no way out of it. It's not a long term or even a medium term issue anymore. Evergrande, biggest property developer in the country, is halfway to going belly up. They have as much liability as Grease, close to it, one company.

Mark Zandi:                      If you could add one more to the list, what would it be, one more concern? If there's none, that's okay. I'm just wondering if there was something that immediately came to mind.

Dan Rosen:                        Yeah, the other gargantuan one is their relationship to the rest of the world economy. So much of China's dynamism resulted from foreign investment, atypical of any developing country to open your door so wide, let all these global companies in the door, let them really establish businesses for many years, terrific talent coming over. All those companies were willing to share a lot, because this wasn't the Venezuelan economy. This was China. People were willing to believe that China's going to keep doing the right stuff and this market's going to keep growing. I'm willing to share a lot to be part of it. Beijing is undervaluing how much more it has to gain from being globally engaged, both with companies coming in and allowing its own firms and individuals to go abroad. Of course, we're all talking about beyond the pandemic here, because that's a giant problem that the China and everybody else is dealing with. 

Mark Zandi:                      This is a perfect segue into policy US-China relationships. My simplistic way of thinking about the geopolitical relationship between the US and China was that between WTO 2001 and let's say, President Trump 2016, the strategy was foster Chinese growth, help them develop, embrace them tightly. Yeah, they're not playing by the rules exactly, but that's okay. They'll see the light. They'll see the benefits of cooperation and collaboration and multinational coordination and this will all work out and everyone's going to be better for it. The US going to suffer to some degree, but that's okay. I mean the hollowing out of US manufacturing, that was probably more than policymakers thought was going to happen, but okay, that's the cost of getting China up to speed because that's a billion plus people. We need them engaged, fully engaged. Then Trump comes along. He grabs on to the angst created by WTO and the hollowing out of the Middle America and says, "Hey, this is not right." By the way, they're cheating in lots of other ways, cyber and so forth and so on. We get into a trade war. Now, then we get to the Biden administration and crickets. What's going on? So let me ask it this way. First, did I get that rough history right? Second, the normative and the positive, what should the Biden administration be doing here? And then the positive, what do you think they will do?

Dan Rosen:                        So, my advice when we talk to folks about this relates to that thing, Pathfinder, you mentioned a minute ago, right? I'll tell you what that means. But there is, right now, so much misinformation, so much conflicting interpretation of what's going on that now more than ever, this is a great time to look at the deep fundamentals and structural factors that will determine whether China has terrific growth going out into the future. If China finds its way back to a more or less liberal approach to the economic problem, which is to say that private parties discover prices by transacting together, rather than having political authorities decide how big this sector should be, how big that sector should be, then America has a smaller China problem in the future, because there's not as much government interference in the whole thing, right? China has a better economy that we should make compromises if we need to in order to keep our ability to access. So, what we're doing at Rhodium, we've got a partnership with Atlantic Council. We're putting this out at the end of September. We're looking at six fundamental areas of what it means to be a market economy, trade, cross-border portfolio, cross-border direct investment, China's financial system, innovation systems and market competition as state enterprises, that stuff. We're offering a reasonable data defined approximation of what the OECD leading economies look like when they say they're open to trade. And then we're using the same data to look at where China is in 2010, where China is today. We'll be updating that fundamental database annually and doing quarterly reports, interpreting the policy signals in between the annual updates. That really does tell us a lot, Mark. I mean, that's been where I've stood in order to try to get a sense of the direction and timing of macroeconomic challenges that China was going to have, which our guesses had been pretty good, not formal forecasting, but putting the pieces together using that kind of framework. It's been real effective. While Donald Trump didn't realize it and I don't think Joe Biden does either, this is what they're experiencing. What they're experiencing is this tectonic plate shift away from using liberal approaches to manage basic functioning of how the economy works, approaches which have been demonstrably shifting in a more liberal direction from 1978 until call it 2016. Well into the Xi Jinping year, well into China's present political year, there was still evidence of serious effort in Beijing to take the next step, to keep moving away from relying on just politics and let private motivations lead the way forward. That's all become terribly murky in the past three or four years, not because China didn't want to fix it, but because every time they tried to fix it, they realized that there's a few banking crises on the road to OECD status. They stopped halfway and decided whether they were really ready to go through that painful metamorphosis. So, that's where we are. I think folks in D.C. are, for starters, taking a precautionary principle approach here. They are, first and foremost, shoring up domestic cohesion in the United States, because after what we've just been through, the greatest risk to our own welfare is that we come part of the teams and can't manage to make productive expenditure choices and all that and work together as a team. Secondly, to be realistic about whether China's capable of bringing very much to the table right now in a big international negotiation. So, how do you have a strategy to negotiate with somebody when you're not sure whether they're closing their doors or opening their doors? I mean, I don't think most of our close Chinese friends, Mark, can be confident about where Xi Jinping is taking this thing. So, I think it's actually prudent for the Biden administration to hold back a little bit on putting its strategic cards on the table until we get a little more clarity out of Beijing in terms of what we're supposed to make out of all this. And then the third thing that Biden's doing that I give him high marks for is burden sharing with other open market economies that have the same underlying welfare problem we have given the fabric of our market approach to things, rather than doing unilaterally the way Trump thought he was doing it and never really did get anything done frankly. There's a lot of low hanging fruit on the plurilateral tree, if you will, to be picked. I think Team Biden's doing a pretty good job of starting in Cornwall, starting in Brussels, starting in Berlin, Tokyo, Canberra, you name it. I like the looks of that. They can't not have a China policy "forever," but so far, they're on a schedule that I think looks about right to me. 

Mark Zandi:                      Great. Good. I know you have to run Dan and the China Pathfinder sounds very cool. I'm a little nervous about what it means for our competition with each other, but it sounds really, really cool. I can't wait to see it. Hopefully, I get to take a good look at it. I did want to ask one last question. If you have to run, don't worry, don't answer. We'll have you back if you're willing. You're bearish on China, right? I mean, you're very... I don't want to say very pessimistic, but maybe that's what I should say. You're pessimistic about China. If you're wrong, why would you be wrong? 

Dan Rosen:                        Yeah, let me say I'm still bullish on China on a centennial basis. 

Mark Zandi:                      Okay. Okay, fair enough. 

Dan Rosen:                        I'm just a little concerned about the next-

Mark Zandi:                      Twenty years.

Dan Rosen:                        Yeah, yeah. If I'm wrong, there's three ways I could be wrong. Number one, we're not out of the woods in America yet. It hasn't been that long since January 6th. We have an awful lot of remedial work to do out here in the democratic world. I guess my best stump speech line is that market democracy is still the worst of systems except for all the others. Now, is that actually still true? We have a little bit of a burden to prove that as bad as these problems are in China, ours are not even worse. I think we're going to demonstrate that. I'm not a political scientist. I can't say for sure, number one. Number two, social capital, this ineffable thing, which cutting edge economics would like to put a better value on, to me, it means, "Are 1.4 billion people really willing to be patriotic while they're trying to be entrepreneurs?" As propaganda tells us over there, that the people of the People's Republic are happy to go through some fallow years if that's what it takes to sustain party leadership and the Chinese model, then we will be surprised by the resilience and tenacity and willingness to stay put and not try to get capital out of the country, all the sorts of things we expect out of Argentina, right? So, China might be special. This one might be different a little bit. And then the final point, before I take off, Mark, and it's been great to be with you. I am actually still betting and telling people that based on my experience of all Chinese leaders since 1978, I think that Beijing actually will make the necessary correction back in a liberal dynamic direction before they go over the cliff. I think they're making a lot of poor moves right now, but they've got a lot of assets. They've got $100 trillion of state enterprises they could sell down, et cetera in an emergency break glass. They are not entirely out of options yet. I do actually think that we will see a shift back to a more productive set of choices well within my career. Hopefully, that means they've got 10 years to work with or something like that. I am telling our clients that as well, that you need to be keeping your head well down in the foxhole at present. There's a lot of pretty weird stuff happening, but don't sell off all your beachfront property. Some of that stuff's going to be worth something if you can hang in there a while. 

Mark Zandi:                      Well, thanks, Dan. Yeah, you've been fantastic and what a great conversation. I really appreciate it. Thank you for coming on. I'm going to ask Ryan and Chris to hang on. Dan, you should listen to what they have to say sometime later tonight or over the weekend. I want to get their views on what you just said. So, we'll get those reviewed. 

Dan Rosen:                        Like your wife, Mark, mine is going to make me listen to this all over again and she's going to critique the whole thing. So, when we do that...

Mark Zandi:                      Okay.

Dan Rosen:                        Take care, guys. Thank you so much. 

Mark Zandi:                      Okay, that was, I thought, an amazing conversation, covered a boatload of ground. What do you guys think. Ryan, what's your thoughts? I mean, I'm really curious. Now, obviously, he's very pessimistic about China's growth prospects. I thought our forecast for China was on the conservative side.

Ryan Sweet:                      That's what I thought. 

Mark Zandi:                      Yeah, but he was challenging that, right? He was saying much slower growth. So, what is your perspective? What are your thoughts?

Ryan Sweet:                      Are we looking through the pandemic? 

Mark Zandi:                      Yeah, just whatever horizon. His horizon is next 5, next 10, 15, 20 years. Whatever horizon you want to take. 

Ryan Sweet:                      I mean, the next few years is going to be really rough on China. I mean, just look at now with the pandemic and everything. But beyond that, I was optimistic until I listened to everything he had to say. And then I turned much more concerned that my optimism is... I'm on the other side of the pendulum than Dan is. I mean, you hear all the reports and anecdotes that they're shifted the three child policy. It isn't working, because it's just too expensive to raise children. Rental prices are through the roof. So, I guess, maybe I was optimistic that the population wouldn't be as big of a headwind. 

Mark Zandi:                      If you take our forecast going back to the numbers and let's say we're 6, 7% potential GDP growth in China today, we have that steadily trending lower. Let's say 20, 25 years from now, we're down to 2.5 to 3%, not far from the US potential growth rate. Would that forecast be consistent with your thinking or would you take the upside or the downside to that? 

Ryan Sweet:                      I'd probably be close to our forecast. 

Mark Zandi:                      You would be. Even after all the things that Dan was saying?

Ryan Sweet:                      Well, that was pre-Dan. 

Mark Zandi:                      Post-Dan, you're still digesting. 

Ryan Sweet:                      Yeah, we might be a little bit too optimistic. 

Mark Zandi:                      Yeah. Chris, what do you think? What's your reaction? 

Cris deRitis:                       So, I liked his framework, right? Breaking it down into the demographics, the capital and capital deepening and total factor productivity. I actually chose productivity, because I thought that would be the key statistic here. So, I am a believer of his forecast and the pessimism to a point, but I think he came around at the end when he said things won't go off the cliff, right? So, my expectation is things do slow down, productivity does decline, GDP growth declines as well, because you're not getting any growth from demographics or capital deepening. But then there will be a renaissance, there will be some loosening up, right? It's cyclical and we'll get a productivity boost at some point. That would make it consistent with our forecasts. So, I guess it's short term pessimism, longer term optimism or more optimism. 

Mark Zandi:                      So, Chris, you're saying your forecast, your outlook would be consistent with our baseline forecast. 

Cris deRitis:                       In the long run. I think in the short term, I think he's probably right. The productivity is going to slow down, presuming that this crackdown continues for a while. There could be some damage. I think cooler minds will prevail and we'll get a bit of a productivity boost consistent with our forecast. 

Mark Zandi:                      Right. So, it sounds like both of you would argue that our forecast for the next several years, 3, 5, 10 years, might be a little on the high side, given all of these headwinds that we were discussing throughout the podcast. All right. Yeah. Okay. He convinced you. Yeah. I mean, I think fundamentally, the thing that makes the US economy... This is reflecting home bias, because I am an American. So, it's hard not to cheer for the home team, but the thing that makes the US so exceptional is the rule of law. At the end of the day, if you disagree with something that the government is doing, there's a process, an adjudication process. It sometimes doesn't work as well as one would like. Take the rental eviction moratorium, right? So, as part of the pandemic response, the federal government has put a moratorium on rental eviction and is continue to extend that eviction moratorium. There's a lot of questions about the legality of that. It's been challenged in the courts and the Supreme Court is now ruling on it. That may not be perfect, but that's a process. It's a well-defined process that adjudicates on these kinds of questions that we have. That's what makes our economy, I think, such a good place to invest in, because you know that there are rules, there are laws, they're clearly articulated. If you get into an argument with somebody over something, including the US government, there's a process to figure that out. You can price that in, right? There's a cost of doing business in that adjudication process. You put it into your prices and you move forward. It leads to more stable kinds of environment. That's the environment that's necessary for good long term investment. Also, people wanting to come here and put their money here, because they know that it's money good. If I buy a house in Riverside, California or I pump down money into a checking account at JP Morgan in New York or buy a condo tower in Miami, that's mine and no one's going to take that away. I know the rules. So, I do think that makes us very special. I mean, there's other economies like that too. A lot of developed economies have the same kinds of rules of law, but the other thing that makes us special, I think, is that we're open to the rest of the world through immigration. This changed a little bit under President Trump, obviously, but there can't be too many countries in the world that allow so many immigrants to come into the country and become part of the fabric of the economy very quickly or allow investment, both external foreign investment coming here and investment by US companies overseas, or the capital flows into financial markets. That's different. Again, there's other countries in the world that have that, but not to the same degree that we do. 

Cris deRitis:                       Except for Canada.

Mark Zandi:                      Yeah, Canada is the best managed economy on the planet probably. And then there's the openness to views, alternative views. You can express your view and the freedom of thought. Now, all these things I just said, someone could say, "Well, they've been under siege in recent years." January 6th strikes that point very clearly. But I would say, even that is testimonial to our strength, because our system held. The fundamental strengths of our economy continue to hold forth. I judge other economies in their long run potential from that prism, from that context, from those strengths, those fundamental things that make our economy tick. From that prism, yeah, I think it's reasonable to worry about how the Chinese economy is going to unfold here and over the foreseeable future. I think that is a reasonable concern. 

Ryan Sweet:                      I'm surprised he didn't bring up supply chains, given everything that's going on with the Coronavirus and businesses reshuffling their supply chain. Rather than putting all their eggs in China's basket, they're going to Vietnam, Malaysia, things like that. 

Mark Zandi:                      I think he did. Yeah, he did, because remember, I said, "Well, what thing would you add to the list?" 

Ryan Sweet:                      Oh, yeah, yeah, you're right. 

Mark Zandi:                      I mean, it's a catch all for that kind of investment. He was talking about more than that, but I think that's a big part of what he was thinking. Okay, we covered a lot of ground. I thought that was very useful. Hopefully, the listeners thought it was useful. We'll come back and revisit. Great guy, really thoughtful fella, you can see why he's so successful. He really has a good grip on this and provides a lot of insight. Maybe what we should do, though, just to round things out, is get a China bull to the other side. We'll see if our views swing after that. There's not as many out there right now, China bulls, but I'm sure we can find someone who would fit that bill. Anyway, anything else guys? Anything else you want to talk about before we call it a podcast? No, you guys are good? 

Ryan Sweet:                      What did you get Lily for her birthday?

Mark Zandi:                      What did I get Lily for her birthday? I haven't consulted with my wife. 

Ryan Sweet:                      Oh, you're hesitating. 

Cris deRitis:                       A podcast.

Mark Zandi:                      No, wait, wait, wait. I know what it was. We were supposed to go down to Florida, because this is tradition. We go down to Florida. We have a home in Florida. She brings the same three, four friends that she's been bringing down for the last 15 years. They all come down. I was supposed to do this podcast rom my home in Florida, but we decided not to go because of the tropical storm. It's going to wash out the weekend. I've taken two business trips so far since we started up again, the post-pandemic period. Both times, my flights were canceled. It's a mess out there. So, I don't really feel like getting on a plane again. That was her present, to take everyone down to Florida, anyway. A present for me too, because I get to be with her on her birthday. That was all good. Okay, very good. So, thank you, listener. Again, reminder, go to economy.com. Go to Inside Economics. There's a little button there and vote. Let us know what you want us to talk about. You can see, we're listening very carefully to what you're asking us for. We will oblige. So, with that, thank you very much.