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Moody's Talks - Inside Economics
CPI, Consumers, and Cosmo
Michael McNamara, Senior Principal for MasterCard, joins Mark, Ryan, and Cris to discuss the state of the American consumer and the impact of Omicron on spending.
Full episode transcript
Mark Zandi: Welcome to Inside Economics. I'm Mark Zandi, the Chief Economist of Moody's Analytics, and I'm joined by my two co-hosts, Cris deRitis. Cris is, of course, the Deputy Chief Economist. Hello, Chris.
Cris deRitis: Hey, Mark.
Mark Zandi: You look like... You're in an atypical venue. You got a bunch of doors behind you. Is that typical? I usually see like your child's pictures and paintings. Not today.
Cris deRitis: I'm at home in the-
Mark Zandi: Yeah.
Cris deRitis: ... attic, but the boys-
Mark Zandi: So in the attic?
Cris deRitis: ... are home today because of a COVID outbreak at his school, so-
Mark Zandi: Oh, I see [crosstalk 00:00:52]. He's safe and sound, though?
Cris deRitis: He's safe and... Yeah, yeah. One of his-
Mark Zandi: Yeah.
Cris deRitis: ... classmates, but-
Mark Zandi: Yeah.
Cris deRitis: ... significant ripple effects. All the parents got a notice early this morning that-
Mark Zandi: Yeah.
Cris deRitis: ... class is canceled for today, so...
Mark Zandi: They shut down the school? They shut down the [crosstalk 00:01:09]-
Cris deRitis: Not the entire... No, no, his classroom.
Mark Zandi: Okay.
Cris deRitis: Only his classroom.
Mark Zandi: Oh, that's interesting.
Cris deRitis: That's their protocol.
Mark Zandi: COVID response?
Cris deRitis: Yeah.
Mark Zandi: Yeah, interesting, and [crosstalk 00:01:18] he'll go back to school tomorrow? Or...
Cris deRitis: We don't know.
Mark Zandi: Okay.
Cris deRitis: Well, tomorrow's Saturday, so-
Mark Zandi: Oh, that's right. Well, you know-
Cris deRitis: Monday's a holiday.
Mark Zandi: ... I work every single day, Cris, so it's all Friday-
Cris deRitis: I know.
Mark Zandi: ... yeah.
Cris deRitis: ... but the preschools don't, so-
Mark Zandi: Yeah, I mean, that's a good point, a good point. Very good. Very good.
Cris deRitis: Monday's [crosstalk 00:01:38] a holiday, Tuesday we'll see.
Mark Zandi: That's right. Monday's Martin Luther King Day, right? Correct?
Cris deRitis: Yeah, that's right.
Mark Zandi: Yep, and we got Ryan, Ryan Sweet. Ryan's Director of Real-Time Economics, and I was chatting with you earlier this week. You're... No, it was Dante whose child was at home. Did you have a disruption, too, due to COVID, Ryan? Did your kid-
Ryan Sweet: No, so far so good.
Mark Zandi: Yeah?
Ryan Sweet: Yeah [crosstalk 00:02:04] we've been good.
Mark Zandi: You are safe and sound? Oh, no, your wife got [crosstalk 00:02:08] sick with COVID?
Ryan Sweet: My wife got it from her office. It's a very small but near a hospital, so it spread like wildfire, so-
Mark Zandi: Uh-huh.
Ryan Sweet: ... we had to go through quarantining and everything, so...
Mark Zandi: But everyone's good now?
Ryan Sweet: No one else in the house got it. Everyone's-
Mark Zandi: Wow.
Ryan Sweet: ... good.
Mark Zandi: That's great. Good. We have [crosstalk 00:02:24] special [crosstalk 00:02:24]-
Ryan Sweet: Venues.
Mark Zandi: Pardon me?
Ryan Sweet: Speaking of these-
Mark Zandi: Yeah.
Ryan Sweet: ...venues-
Mark Zandi: Yeah.
Ryan Sweet: ... somebody decided to flee-
Mark Zandi: Oh.
Ryan Sweet: ... Philadelphia because they can't handle the cold.
Mark Zandi: Yeah, I know, I know.
Ryan Sweet: So-
Mark Zandi: On Saturday this past week ago now, it's almost hard to believe, but my wife and I and our two dogs got into our car 3:30 in the morning and drove all the way to Florida, 16-hour drive, and you'll be proud of me. I did it by myself, by myself. You know, not that my wife isn't a good driver, I just get very tense, though, when she's driving, and we made it all the way down. I tell you, Ryan, I could be... If I wasn't an economist, I could be a trucker, no problem. Really.
Ryan Sweet: Mm-hmm (affirmative).
Mark Zandi: I love it. I love it. I love the tunes. I listened to three of our podcasts on the way. My [crosstalk 00:03:14]-
Michael McNamara: You'd make more money.
Mark Zandi: ... of course, I'm with my [crosstalk 00:03:15] and-
Michael McNamara: You might make more money trucking. No.
Mark Zandi: Exactly. Yeah. Yeah, and that's Michael McNamara. Mike is our guest today, and welcome, Michael.
Michael McNamara: Well, thank you very much.
Mark Zandi: Should I call you Mike or Michael? Or doesn't matter? Or are you good with both? Or...
Michael McNamara: No, I'm good either way. A lot of folks just call me Mac.
Mark Zandi: Mac, oh-
Michael McNamara: Just Mac.
Mark Zandi: ... I love that.
Michael McNamara: Yeah-
Mark Zandi: I'm going to call you Mac.
Michael McNamara: ... so yeah.
Mark Zandi: Mac comes to us from MasterCard, and Mac and I... I've never called you Mac, but you and I have known each other for probably a decade or so, maybe even longer than that.
Michael McNamara: That's probably a little longer than that at this point.
Mark Zandi: Yeah.
Michael McNamara: Or, I'm going to join you in the shuffleboard courts down there pretty soon.
Mark Zandi: Yeah. I get it why people come down here in the winter though. I tell you, it's pretty nice and, of course, I'm able to do... I did it last winter and this winter because of we're all kind of sheltering in place. All of my... I had a whole set of travel. I don't know about you, Mac, but I had a set a travel plan for January and February and everything has gotten canceled except for events in Florida. Go figure [inaudible 00:04:31].
Michael McNamara: I've got a couple of data points that might be interesting about that. We can talk about that a little later about how retail sales are performing north versus south.
Mark Zandi: Oh, that would be interesting. That would be very interesting [crosstalk 00:04:42]-
Michael McNamara: Interesting, but-
Mark Zandi: Yeah.
Michael McNamara: ... I think I get the Iron Man Award because I moved from New York. It wasn't cold enough there, so I moved up to Boston, so-
Mark Zandi: You're going the opposite direction.
Michael McNamara: Yeah. Where I'm going away from you right now. It's going to be -10 wind chill tomorrow and-
Mark Zandi: Oh my goodness.
Michael McNamara: ... I'm looking forward to it.
Mark Zandi: My, yeah, goodness. Well, so it's so good to have you with us and it's a perfect day for it. We got retail sales today from census and so that's for the month of December. We've got now a read on Christmas sales and, of course, you've been managing the SpendingPulse data for MasterCard for over a decade. That-
Michael McNamara: Actually-
Mark Zandi: ... provides a lot of-
Michael McNamara: ... it's almost 20 years.
Mark Zandi: ... insight, a lot of insight. Can you just give us a sense of that data, that data set, this-
Michael McNamara: Sure.
Mark Zandi: ... the SpendingPulse? I'd be very curious and just anything you can tell us about it.
Michael McNamara: Sure, so I've actually been doing... I started at about 20 years ago.
Mark Zandi: Oh, 20? Okay. Mm-hmm (affirmative).
Michael McNamara: This'll be... Yeah, this is my anniversary this year. What we do is we take the aggregate data that runs across MasterCard. We filter out the noise in the data that's due to MasterCard activity that can skew the results, and then so you end up with a nice sample of retail sales activity that's occurring in the United States and then in any other markets we decide to analyze. We pipe in third-party data on other payment forms, so other non-MasterCard transaction types of information. The aggregate is what we report, so anything that's a SpendingPulse number is our estimate for total sales across what we say all payment forms. It's not a credit card number, it's not a MasterCard number. It's actually our estimate for total retail sales.
Mark Zandi: Got it. Oh, I got it. Oh, so you're using the MasterCard data, but other data sources, you bring it together and you come up with an estimate of what you think the total pie is, right?
Michael McNamara: Exactly, and then-
Mark Zandi: Yeah.
Michael McNamara: ... and we're able to id, so we're able to slice and dice it a whole bunch of different ways, so that's what I was talking about, North, South, and different markets and channels and sectors, so we can dig into that if you want throughout the call.
Mark Zandi: Oh, no, absolutely. We're going to because, of course, we're going to talk about retail sales and other statistics and play our statistics game, which I'll describe in a minute, but then we want to dig deep into the consumer. How are things going? Again, apropo because of the holiday sales, and, of course-
Michael McNamara: Yep.
Mark Zandi: ... a lot of debate about Omicron and what kind of impact that's having. How timely is your data? Do you get data weekly? Daily? Are you looking at [crosstalk 00:07:12] it real time?
Michael McNamara: If... Yeah, we're able to see every day, and then there are rolling updates that occur. Typically, it's been many of our systems, we have a major update once a week. I'm able to see things behind the scenes, so I'm able to see things a little bit more frequently than that, but it's typically a weekly update. You can see daily detail and it's actually pretty cool. If we get a graphics kind of thing, maybe at some point I could show you.
You can actually watch the retail economy almost like a weather map now where you can see a storm move across the country. I call it animating the economy and it really opens up some interesting analytic doors that really we weren't able to do before because we didn't either have the data or the technology, but now that you have the combination of both, a whole new world of analysis that we're able to do.
Mark Zandi: Cool. When you say kind of like tracking weather, is it because of the virus, because of the pandemic? You can see the pandemic effects in different parts of the country? Or is it broader [crosstalk 00:08:21] than that? Oh, okay.
Michael McNamara: Well, we can actually see what... We have this new capability that we've been developing that allows us to study different types of events. We have what we call scheduled structured events, things like the football games this weekend or the NCAA tournament, that kind of stuff or a concert. Then, we have what we call unscheduled unstructured events, weather, COVID. To some extent some of the stimulus activity would probably be more unscheduled unstructured because you didn't anticipate it ahead of time. It really opens up doors and you can quantify the impact of things, so if a hurricane comes up the coast, we can actually put a dollar value on retail sales on what they did.
Mark Zandi: Oh, wow.
Michael McNamara: It was kind of some fun stuff. I was looking at some concerts, Taylor swift versus BTS. Does anybody know who BTS is?
Mark Zandi: I do not.
Ryan Sweet: No.
Mark Zandi: Is that [crosstalk 00:09:17] a rapper? Or a-
Cris deRitis: No. Mark is actually [crosstalk 00:09:19] probably not-
Michael McNamara: K-pop, K-pop.
Cris deRitis: ... because-
Michael McNamara: Come on.
Cris deRitis: ... he's not telling the truth. It's K-pop. Yes [crosstalk 00:09:22]-
Mark Zandi: Oh, K-pop [crosstalk 00:09:24]-
Cris deRitis: ... probably-
Mark Zandi: ... K-pop, I've heard that.
Cris deRitis: ... the most famous band in the world, but-
Mark Zandi: Oh, is this the [crosstalk 00:09:28] Korean band? The Korean band?
Michael McNamara: Yeah.
Cris deRitis: Yes.
Mark Zandi: Yeah, yeah, right. Yeah.
Michael McNamara: Yeah. That was a good [crosstalk 00:09:32]-
Mark Zandi: I don't have any [crosstalk 00:09:32]-
Michael McNamara: ... plan [crosstalk 00:09:33]-
Mark Zandi: .... kids in my [crosstalk 00:09:34] house, so I'm cut off [crosstalk 00:09:36]-
Ryan Sweet: Online also. You listen to it all the way down to Florida.
Michael McNamara: Oh yeah. He probably [crosstalk 00:09:41] pulled over [crosstalk 00:09:42]-
Mark Zandi: That's definitely [crosstalk 00:09:42] true.
Michael McNamara: ... and danced there, but it's cool. You can actually contrast and compare like, What is a Red Sox game worth to the immediate local economy around Fenway on a Wednesday versus a Saturday? Or like I was saying, you can compare what does a Pearl jam concert bring in versus a Taylor Swift, you know?
Mark Zandi: That is so cool.
Michael McNamara: It's really just scratching the surface of kind of new things that we can do.
Mark Zandi: I tell you, Mac, if I had that data, I don't think I'd get any work done. I'd be looking at it all day long.
Michael McNamara: Yeah.
Mark Zandi: It's sounds so cool.
Michael McNamara: Yeah , I know. You can tell I didn't shave today, so-
Mark Zandi: Yeah, so there it is. You know, there you go.
Ryan Sweet: Yeah, that is really very cool.
Mark Zandi: Okay. Well, we'll come back to that. Well, we got two big economic releases this week. We had Retail Sales Today. We're talking on Friday, and the other was CPI, Consumer Price Inflation. There's a lot of other stuff that came out, too, but those were the two biggies, Maybe, Ryan, you want to give us a sense of both those surveys? I know you... I'm guessing some of us may have picked statistics from those surveys to the game. I won't ask you to go too deep, but you want to just give us a general sense of what your take is on both those surveys?
Ryan Sweet: Yeah, and I'll do it without giving you any numbers because I don't want to take anybody's number for the game-
Mark Zandi: Okay.
Ryan Sweet: ... but starting with the CPI-
Mark Zandi: Okay.
Ryan Sweet: ... I think that the takeaway is it was another takeaway is it was another hot month of inflation, but the worst is likely ahead us. I think in our forecast we have inflation peaking right about only, and it's going to start to deaccelerate because supply chain issues should start getting resolved a little bit over time. Energy prices, they're bouncing around again, but overall, just between supply chain-
Mark Zandi: Correct, yeah.
Ryan Sweet: ... stress and energy, that's adding about 4% points to... Correct. Well, I said I wasn't going to use numbers, but I used a number.
Mark Zandi: Well, that's a good number.
Ryan Sweet: Yeah, so more than half of the inflation that we're seeing is because of those two areas, supply chains and energy.
Mark Zandi: CPI [crosstalk 00:11:42] inflation, just to make that clearer, I'm using another number, CPI inflation year-over-year, and CPI is consumer price index, inflation-
Ryan Sweet: Correct.
Mark Zandi: ... 7% on the nose year-over-year through December, and you're saying of that 7%, four percentage points is related to energy, higher oil prices, natural gas prices, and higher prices for goods that have been disrupted because of supply chain issues?
Ryan Sweet: Yeah, so think of vehicles [crosstalk 00:12:13]-
Mark Zandi: As opposed to [inaudible 00:12:13] yeah. Right.
Ryan Sweet: Used car prices in particular, but audio equipment, other things like that that are being... Electronics are being disrupted by the supply chains. That's adding a lot to inflation.
Mark Zandi: Got it, so if I... Well, another way of thinking, no energy effects, which led to the pandemic, no supply chain effects, obviously related to the pandemic. Inflation would be 3%-
Ryan Sweet: Right. Mm-hmm (affirmative).
Mark Zandi: ... so we wouldn't even be probably talking about it-
Ryan Sweet: Talking about [crosstalk 00:12:40] nope.
Mark Zandi: Yeah, okay.
Ryan Sweet: Right, and that's probably where we're headed by the end-
Mark Zandi: Yeah.
Ryan Sweet: ... end of the year is probably closer to 3% than-
Mark Zandi: Closer to 3-
Ryan Sweet: ... we are now. Yep.
Mark Zandi: Okay, okay. Anything else on the CPI that you want to bring up?
Ryan Sweet: No, I think we [crosstalk 00:12:53]-
Mark Zandi: Okay. Well, the one thing on the CPI that is, I'm a... Well, there's a bunch of things that are making me nervous. One is around rents, and we talked a little bit about that on the last podcast. What happened with rank growth rents, the rent of shelter CPI? You know? What was-
Ryan Sweet: Yeah.
Mark Zandi: ... what did that look like?
Ryan Sweet: From month to month, they're really sticky. When you forecast the CPI and you do the bottom-up approach, rents are usually what they were in the prior month, and it was, again, ,4%, whether you're looking at tenants or owner's equivalent rent, that's going to pick back up. I think we talked about it last week that there's this lag defect between some of the alternative data on rents. If you look at Zillow, they've been growing really quickly. That's going to show in the CCPI this summer.
Mark Zandi: Got it. Hey [crosstalk 00:13:40]-
Ryan Sweet: We'll have goods -inflation coming inflation coming down and then we have some services inflation accelerating, but on-
Mark Zandi: So-
Ryan Sweet: ... on net, we're going to see overall inflation when begin to moderate.
Mark Zandi: Hey, Mac, I know you look at all this data really closely, too, on the CPI. Is there anything that kind of stood out for you on that release?
Michael McNamara: Yeah. There are a couple things there. One is some of the food-related increases. I think there was about a 12.5% increase in meat and those types of goods and...I had a steak last night and I can say it was expensive, and-
Mark Zandi: Hopefully that was no one statistic for the game, 12.5%. No, we're good.
Michael McNamara: I'm sorry about that.
Mark Zandi: Okay. No, no, that's okay. That's good.
Michael McNamara: Oh, okay.
Mark Zandi: Yeah, good [crosstalk 00:14:23] yeah.
Michael McNamara: What's going to happen to the food sector as we move through the next year or so because some of those inflation pressures... I'm trying to remember some of my information about meats, but I want to say if you're talking about like chicken or poultry, you're talking about two to three months to get some kind of a flock adjustment. For pork, I want to say it's like nine months. For beef, I think it's like 18 months or something like that to get the herd kind of in line with demand. Those could be sticky and those could be with us for a while.
The other thing about that sector, just to go a little bit on a slight tangent, is that we're going to have to look at how the comps where SNAP and the different assistant programs as we move through 2022. In the Q2 and in Q4, there different government assistant programs that help elevate some of the numbers in the grocery sector, and we're going to have to just pay attention to that in 2022 when you're looking at year-over-years. Q2 and Q4 might have some pressure because of that. You're going to be lapping the assistance programs that started last year.
Mark Zandi: Oh, I... Oh, that's interesting, so the SNAP is the Supplemental Nutritional Assistance Program? That's kind of-
Michael McNamara: Yeah.
Mark Zandi: ... the old food stamps and-
Michael McNamara: Yeah. If you talk to... Yeah. If you talk to any of the grocery folks or anybody that produces food, that's usually top of mind is they want to know what's going on with those assistance programs.
Mark Zandi: You're saying there was big subsidies provided during as part of the American Rescue Plan, for example, and that lowered [crosstalk 00:16:04] measure price?
Michael McNamara: Well, what it actually... I think it amplified demand to a degree.
Mark Zandi: Oh, amplified... Oh, demand. Okay.
Michael McNamara: Yeah.
Mark Zandi: Okay.
Michael McNamara: When you're going through this year, you're going to start to lap those programs. Some of your year-over-year growth rates in sales could be impacted by some of those-
Mark Zandi: Lower, they'll be lower?
Michael McNamara: Yeah.
Mark Zandi: Lower. Oh, okay.
Michael McNamara: Q2 and... Q2 and Q4.
Mark Zandi: Q4? Got it. Yeah, for sure. Yeah, and that's another point about inflation when Ryan says it is going to be 3% at the ene of this year. More than half of what it is now, part of that is also just these so-called "base effects" because you're comparing against... Well, right now 7% is being compared against December of 2020 when we were in a very different world and businesses were cutting prices in many industries. In December of 2022, we're going to be on the back side of these base effects and that will allow inflation to come down as well-
Michael McNamara: Yeah.
Mark Zandi: ... is kind of what you're saying? Okay.
Michael McNamara: Mm-hmm (affirmative).
Mark Zandi: Ryan, back to you. Retail sales, that gives a sense of those numbers. They were... well, no, sir, actually I should hand it to you because we were going back and forth last night, the three of us on email and Ryan was saying, "It's going to be down 1.9%. Retail sales are going be down one there." I see the clapping hand from Cris. You nailed it I think. It was down 1.9%, the [crosstalk 00:17:31]-
Ryan Sweet: Yeah, I was thinking [crosstalk 00:17:31]-
Mark Zandi: ... the overall retail sales?
Ryan Sweet: ... it was going to be a little... Yeah, I was down 1%, but-
Mark Zandi: Oh-
Ryan Sweet: Correction [crosstalk 00:17:35]-
Mark Zandi: ... I gave you too much credit.
Ryan Sweet: Too much credit.
Mark Zandi: I thought you [crosstalk 00:17:38]-
Ryan Sweet: Too much credit [crosstalk 00:17:38] yeah.
Mark Zandi: ... yeah, it would. Okay, so give us a sense of that report.
Ryan Sweet: You can ignore it. I mean, the decline is... See, Mark hates it when I say ignore things, but it's [crosstalk 00:17:50] misleading.
Mark Zandi: Mac, if you-
Ryan Sweet: Is it fair?
Mark Zandi: ... just ignore-
Michael McNamara: I was [crosstalk 00:17:53]-
Mark Zandi: ... everything Ryan tells you ignore, I'm not sure what I should be paying attention to at this point.
Michael McNamara: I was [crosstalk 00:17:58] still laughing... I was laughing because you were giving him kudos for hitting it or doing... He did a great job, way better than consensus predicting that number, and then he said, "Don't pay attention to that."
Ryan Sweet: I mean, why I [crosstalk 00:18:12] say that is that it's not a correct view of the consumer right now. The consumer is in much better shape than retail sales would otherwise imply-
Mark Zandi: Oh, I see, yeah.
Ryan Sweet: ... and the reason is that
Michael McNamara: Yeah.
Mark Zandi: Yep.
Michael McNamara: ... in December, the seasonal adjustment factors are just brutal and we pull forward some spending for the holidays into October and November, so we're getting set up for a dud of a December report. This isn't going to be the norm. I think spending will bounce back in the first quarter, particularly as the Omicron variant starts to subside. You're going to see spending firm.
Cris deRitis: I completely agree with what Ryan was just... his evaluation is. You do kind of want to throw this seasonally adjusted month-to-month number out. It's not... It'll give you a head fake, if anything. The overall consumer spending environment has been good through the holiday season. Overall, we did have a front-loaded season this year that pulled some sales forward, but if you look at the SpendingPulse data, our retail contacts, everyone would be in harmony saying that it was a good holiday season, if not a very good holiday season anyway.
Ryan Sweet: I'm sure no one's going to use this number, but if you remove the seasonal adjustment so the non-seasonally-adjusteddata, so the month-to-month change in December was 10% up, so-
Mark Zandi: Positive 10%?
Ryan Sweet: Yep.
Mark Zandi: Yeah.
Ryan Sweet: Last December was 12%, and the year-
Mark Zandi: I see.
Ryan Sweet: ... before that it was 10.4%, so we're not, you know-
Mark Zandi: Yeah.
Ryan Sweet: ... noticeably out of line. I think that seasonally-adjusted 1.9% decline, most of it was just these seasonal adjustment factors crushed it.
Mark Zandi: Yeah. Now, when people talk about holiday sales growth, the different ways of defining that, I typically define it as take November and December for retail sales, exclude purchases of cars, exclude purchases of gasoline, and I think most people... so exclude restaurant sales because they're not the holiday, and then you look at the year-over-year growth in that. Do you know what that is, Ryan, off the top of our head? What that number was?
Ryan Sweet: I don't. It was [crosstalk 00:20:20] I think it was a record number.
Mark Zandi: Record number [crosstalk 00:20:22]-
Ryan Sweet: Yeah [crosstalk 00:20:23]-
Mark Zandi: ... well into the double-digit kind of [crosstalk 00:20:24]-
Ryan Sweet: Oh, it was definitely [crosstalk 00:20:25] double-digit, yep.
Mark Zandi: Yeah.
Cris deRitis: Yeah.
Mark Zandi: Mac [crosstalk 00:20:27] you know that number by any chance?
Michael McNamara: I don't know the exact number that census came out with, but I want it wasn't it was double-digits I want to say, like low teens.
Mark Zandi: Low teens, 13 [crosstalk 00:20:37] 14%-
Michael McNamara: Yeah.
Mark Zandi: ... something like that [crosstalk 00:20:37]-
Michael McNamara: And if you look at some of the holiday related sectors like, say, clothing, you're looking at, you know... I think census had about 29%. Sorry, I'm using numbers that you guys... I don't think I'm stealing any numbers [crosstalk 00:20:49]-
Ryan Sweet: No, you're [crosstalk 00:20:50] all right.
Mark Zandi: No, no-
Michael McNamara: I'm glad [crosstalk 00:20:51]-
Mark Zandi: ... by the way.
Michael McNamara: ... but some of the holiday sectors used to take like clothing with something like 29%. We headed up even higher than that, so depending on how you define your sectors, you can get very different numbers for how the holiday season performed based on your definition on sectors and time. If you're only... I think when we first report in the media, we usually do it right at Christmas so that we'll do a 54-day period from November 1st through December 24, but now that you have full month of December, look at November and December, combine the two, and that'll be a better read for how the holiday season performed.
Mark Zandi: Now, of course, some of that strong growth is inflation, right? So we had-
Michael McNamara: Mm-hmm (affirmative).
Mark Zandi: ... 7% consumer price inflation. I suspect for retail goods, which is what mostly is in holiday sales, that could be even higher than that or [inaudible 00:21:41] so if I look at kind of real holiday sales growth, meaning after inflation, it's not double digit, but it's still strong-
Michael McNamara: Strong. Mm-hmm (affirmative).
Mark Zandi: ... 3, 4, 5%, something like that. Yeah.
Michael McNamara: Yeah. I want to say National Retail Federation said about half of the growth came from inflation-
Mark Zandi: Inflation.
Michael McNamara: ... in terms of how they're defining it in their estimates.
Mark Zandi: Right, and my sense of it is that if this end... Even on a real basis, this may end up being the best holiday season on record in terms of growth compared to the previous holiday season.
Michael McNamara: In the 20 years-
Mark Zandi: Would that be-
Michael McNamara: .... I've been doing it, this would be the highest growth rate season we've ever had. I want to go back. We had a couple of seasons that were normally... They were bouncing off of low bases, though.
Mark Zandi: Yeah.
Michael McNamara: I want to say like maybe 2009 or '10, maybe [crosstalk 00:22:44]-
Mark Zandi: You know the Financial Crisis [crosstalk 00:22:45]-
Michael McNamara: ...yeah, like coming out of the Financial Crisis, then coming out-
Mark Zandi: Yeah.
Michael McNamara: ... of the internet kind of bubble. You had a couple of years that got above seven, but we've never had anything above that.
Mark Zandi: That's an important point because the base affects here are not that significant because last Christmas sales weren't too bad, actually. They were okay. They weren't great, they weren't fantastic, but they were kind of typical as I recall most [crosstalk 00:23:08]-
Michael McNamara: Low single-digits.
Mark Zandi: Yeah, low [crosstalk 00:23:09] single-digit.
Michael McNamara: We had a lot of-
Mark Zandi: Yeah.
Michael McNamara: ... single-digits, which was shocking. If you had asked us in the spring of 2020, we were expecting-
Mark Zandi: Yeah.
Michael McNamara: ... Armageddon at that point and we didn't-
Mark Zandi: Mm-hmm (affirmative). Right.
Michael McNamara: ... get it.
Mark Zandi: Right, so bottom line, despite the really bad number for December retail sales, consumers seem to be... They're in the game. They're doing their part, feeling pretty good. Going back to CPI, inflation is up, but the general consensus of the group is we're if not at the precise peak, we're pretty darn close.
Ryan Sweet: Close to it, yep.
Mark Zandi: Yep. Pretty darn close to it. Okay, okay. Very good. Okay, Cris, did you want to add anything to that discussion? I kind of was looking over at Ryan and Mac. Anything you want to add on those numbers?
Ryan Sweet: Not really.
Mark Zandi: Okay.
Ryan Sweet: I think I covered.
Mark Zandi: You covered it.
Ryan Sweet: I agree.
Mark Zandi: Okay.
Ryan Sweet: Take it with a big grain of salt, right?
Mark Zandi: Yep, okay. All right, let's play the game. Just to remind the listener, the game is we each have a statistic. The rest of us try to figure out what that statistic is. The best statistic is one that's not too easy that is a slam dunk for everyone. Not too hard that there's no possibility of getting it. It has to be... It doesn't have to be, nothing has to be, but we prefer, or certainly Ryan does, that it was in the past week, give or take, came out in the last week, and it would be nice if it were related to the topic at hand, which is the American consumer, but again, that might be too limiting. We traditionally began with because he's really pretty good at this game. Ryan, you want to give us your statistic?
Ryan Sweet: All right. I got three of them for you, all related to the same thing, but the-
Mark Zandi: Okay.
Ryan Sweet: ... three numbers, so it's different ways of looking at it. The last one I think is pretty telling. The first one is minus 3.1%, the second one is positive 12.9%, and then the final one is plus positive 8.4%.
Mark Zandi: Well I'm guessing this goes to seasonal adjustment/unseasonally-adjusted data.
Ryan Sweet: Well, that've been good, but no.
Mark Zandi: Oh, geez.
Ryan Sweet: I should [crosstalk 00:25:27] I should have [crosstalk 00:25:29]-
Mark Zandi: That really... Darn, I thought I was being pretty clever there. Wow. That is a tough one, and this three different ways of looking at the same thing.
Ryan Sweet: Correct.
Mark Zandi: Three different ways of looking at the pricing power, the willingness or ability of business to raise prices.
Ryan Sweet: No.
Mark Zandi: Hmm.
Ryan Sweet: I'll give you a hint. When I bring this number up, you hate it.
Mark Zandi: Yeah.
Ryan Sweet: ... When Cris brings it up, you think it's the greatest number ever.
Mark Zandi: What? Is that right?
Ryan Sweet: It's true.
Mark Zandi: I'm unaware of that.
Ryan Sweet: Oh, it's been [crosstalk 00:26:09] the podcast from... We can go back.
Cris deRitis: Master production?
Mark Zandi: It's something like [crosstalk 00:26:15]-
Ryan Sweet: It's related [crosstalk 00:26:15] to the consumer.
Mark Zandi: That's usually the case, though.
Mark Zandi: Production is something really it's related to the consumer. That's usually the case though. It's related to the consumer. Yeah. That is this. This is I'm sure this is a really good one. And we're going to kick ourselves for not getting it.
Ryan Sweet: You should get two of them the third one. That's that's really hard.
Mark Zandi: Okay. Let me, this isn't exactly fair. But just to see if we can get narrow this down related to the retail sales report. Correct. Okay. And there's three different you're you're picking off the three different sales for three different types of, of products.
Ryan Sweet: No, it's really the, the only number I look at in
Mark Zandi: Retail sales. Say that again?
Ryan Sweet: It's the key number in the retail sales number in that,
Mark Zandi: Oh, it's a control retail sales. So
Ryan Sweet: That's total retail sales, excluding those gasoline building materials and restaurants. And that's what feeds into the be economic analysis estimate. Real.
Mark Zandi: I got it. I got it. So
Ryan Sweet: It was down 3.1% in December. Right. But again, that's seasonal adjustment factor. It's up 12.9% year-over-year. And then it is 8.4% higher than its pre pandemic trend. So if you just send, oh that's you know what the trend spending was? That's a good one before the pandemic. I mean, this is, you know, light years ahead of where we were.
Mark Zandi: Yeah. That's a good one. What, what, what, what, what would I say that I didn't like? And I would like for, I didn't like if you said it, Chris I'd Chris said it. What was what's I know you
Ryan Sweet: Don't like control retail sales.
Mark Zandi: Oh, I don't like control retail sales?
Ryan Sweet: Well, think about... Cris, remember that discussion?
Mark Zandi: What's he talking about?
Cris deRitis: I don't remember this one. I remember industrial-
Mark Zandi: Oh.
Cris deRitis: ... production.
Mark Zandi: Yeah, I remember industrial [crosstalk 00:27:55]-
Ryan Sweet: I remember [crosstalk 00:27:55]-
Mark Zandi: ... like control [crosstalk 00:27:56] Yeah. Control retail sales, just for the listener, that is what goes... Did you say this or am I just repeating it?
Ryan Sweet: Mm-hmm (affirmative). Interview [crosstalk 00:28:04]-
Mark Zandi: It's what goes into consumer spending that drives GDP, because the building materials, which is excluded, goes into residential investment, another component. It doesn't affect consumer spending, which goes into [inaudible 00:28:21] GDP. By the way, Ryan, with this, I don' know if you run it, but with this release, the retail sales releases, what is our tracking estimate for GDP growth in the fourth quarter in this year, oh, a score of, excuse me, of 2021. Do you know?
Ryan Sweet: I haven't run it yet because right after retail, we got industrial production and then at 10 we got business inventory, so it's just going to run it all at once.
Mark Zandi: Okay, but we were like between 6 and 7% annualized growth in Q4, really strong.
Ryan Sweet: Yeah. My gut is that is going to come down a little bit.
Mark Zandi: Come down because of the retail sales, industrial production and the inventory data?
Ryan Sweet: Mm-hmm (affirmative). Yep.
Mark Zandi: Yeah, okay, which would be closer to our actual forecast for the quarter, which was something like six-four or something like That. Okay-
Ryan Sweet: Yeah. I think probably, yeah, down there.
Mark Zandi: Okay, very good. I have to say those are good. We were bad. We just weren't really good at [crosstalk 00:29:12]-
Ryan Sweet: No, that was tough. Those are-
Mark Zandi: Yeah, yeah.
Ryan Sweet: ... are tough numbers.
Mark Zandi: Oh yeah. We should have known better than that. Hey, Mac, you want to go next? Are you up for this?
Michael McNamara: Yeah, sure.
Mark Zandi: Yeah, all right.
Michael McNamara: ... I'll give it a shot. All right, I'll just have one number. I might have to give you some hints because it's kind of... it could be anything.
Mark Zandi: In the weeds? In the weeds-
Michael McNamara: Yeah.
Mark Zandi: ... kind of thing?
Michael McNamara: Well, it's not too much in the weeds, but-
Mark Zandi: Okay.
Michael McNamara: ... the number is 6%.
Mark Zandi: 6%?
Michael McNamara: And I'm -
Ryan Sweet: Is that an inflation number?
Michael McNamara: Yes.
Ryan Sweet: Okay.
Mark Zandi: Well, you were talking about food prices, but that was up like 6.3%, I think, year-over- year. Or is it a component of CPI? Or is it...
Michael McNamara: It's... No, it's part of CPI. It's a subordinate number that they break out.
Mark Zandi: Oh, Okay, so it's [crosstalk 00:30:01] goods prices?
Michael McNamara: It's the highest number-
Mark Zandi: Goods prices? Inflation-
Michael McNamara: It is.
Mark Zandi: ... for goods?
Michael McNamara: It's the largest increase since 1982.
Ryan Sweet: Is this the CPIX energy?
Michael McNamara: Again, well, you're in the ballpark [crosstalk 00:30:18]. Just go down a little bit further and-
Mark Zandi: Exit energy. It would be-
Ryan Sweet: It's not the core. It wasn't core.
Mark Zandi: Yeah, core was five [crosstalk 00:30:26] and half, wasn't it?
Ryan Sweet: Yeah, Five and a half, yeah.
Mark Zandi: Yeah..
Michael McNamara: I'll give you a hint.
Mark Zandi: Yeah.
Michael McNamara: I consumed it last night and it was delicious.
Cris deRitis: Steak prices?
Michael McNamara: Very, very close. It's a food away from home.
Cris deRitis: Oh, okay.
Mark Zandi: Oh, food away from-
Cris deRitis: Oh, restaurants.
Mark Zandi: ... restaurants [crosstalk 00:30:44]
Michael McNamara: Okay, restaurants.
Cris deRitis: Okay.
Mark Zandi: They were up 6%.
Michael McNamara: Largest increase... largest increase since 1982, and they had a couple things here that were kind of interesting. Limited service meals up 8% versus a year ago, full service up 6.6. Then, the thing that's kind of messing it up, though, in aggregate is that employee sites and schools were down 49.3% because there are so many free lunch programs going on.
Mark Zandi: Oh, interesting. That is interesting.
Michael McNamara: So...
Mark Zandi: Yeah.
Michael McNamara: I don't know why. We're not at lunchtime yet, but I guess I have food on my head-
Mark Zandi: Yeah.
Michael McNamara: ... right now, so-
Mark Zandi: Of course, when you say the fastest pace of increase since 1982, that applies to almost everything.
Ryan Sweet: Everything at once, yeah [crosstalk 00:31:36]
Mark Zandi: That's no big deal, you know?
Michael McNamara: Yeah, you know-
Mark Zandi: Yeah.
Michael McNamara: ... it's very 1980s.
Mark Zandi: It is pretty amazing, though. Yeah.
Michael McNamara: Yeah.
Mark Zandi: All right. Okay, very good. That was good. That was-
Ryan Sweet: That was a good one.
Mark Zandi: That was a good one.
Ryan Sweet: That was a good one.
Mark Zandi: Again, we fell down on the job here. We should have done better with that. Hey, Cris, you're up.
Cris deRitis: All right. I'll give you a softball. Play softball [crosstalk 00:31:57]-
Mark Zandi: Now-
Cris deRitis: ... he knows-
Mark Zandi: ... Mac, you should know this. It's all about housing for Cris-
Ryan Sweet: Yes.
Mark Zandi: ... so just [crosstalk 00:32:02]-
Cris deRitis: Housing.
Mark Zandi: ... it's going to be... Unless he's going to give us a head fake this week.
Cris deRitis: Nah, he's got a smile on his face, so I don't know.
Mark Zandi: Okay.
Michael McNamara: 23.4.
Mark Zandi: 23.4-
Cris deRitis: 23.4.
Michael McNamara: 23.4%.
Cris deRitis: year-over-year?
Michael McNamara: year-over-year. No, annualized.
Cris deRitis: Oh. Oh, annual.
Mark Zandi: Annualized month to month? Annualized quarter to quarter?
Michael McNamara: Annualized month to month.
Mark Zandi: And-
Michael McNamara: October to November.
Mark Zandi: Oh, October to November.
Michael McNamara: October to November.
Mark Zandi: Ooh, October-
Michael McNamara: That was-
Mark Zandi: ... to November. That's an interesting hit.
Michael McNamara: That was, yeah.
Cris deRitis: Are you going with consumer credit to November?
Michael McNamara: Yes I am.
Mark Zandi: Oh.
Cris deRitis: Are you going evolving [crosstalk 00:32:37] consumer credit?
Michael McNamara: Yes, revolving [crosstalk 00:32:38] that's what I did. There you go [crosstalk 00:32:42]-
Mark Zandi: But he violated a rule. That came out-
Michael McNamara: Which one?
Mark Zandi: Well, I thought-
Ryan Sweet: A week ago.
Mark Zandi: ... that came... Friday a week ago.
Ryan Sweet: Friday, 3 PM, 3 PM.
Michael McNamara: Oh.
Ryan Sweet: Oh.
Mark Zandi: Ooh. See [crosstalk 00:32:56] he's [crosstalk 00:32:56] that's tricky.
Cris deRitis: Our last podcast came out before that, right? So-
Mark Zandi: That's true. No, that's a good point.
Cris deRitis: ... so, you know.
Mark Zandi: That's a good point. Okay, explain to the listener what this... We're acting like everyone knows what this is, but no. They go, "What the heck [crosstalk 00:33:08]-
Ryan Sweet: No one [crosstalk 00:33:08]-
Mark Zandi: ... are they talking about?" Yeah. Go ahead [crosstalk 00:33:10] tell them what I'm talking about.
Cris deRitis: It's revolving credit, so credit cards, retail cards, other revolving accounts. It's Federal Reserve number. It comes in their G.19 release. It's measuring the change in those balances from the month of October to November. It was a $20 billion gain, which is significant, large, and then on a percentage basis, 23.4% is also the largest one-month annualized gain since 1998. Consumers are taking out more credit card debt.
Certainly, the pace of growth is there. However, one caveat is that the level of credit card balances is actually still below what they were prior to the pandemic. Things are growing. Consumers are coming back maybe because of gasoline price prices or travel is opening up [crosstalk 00:34:02] again, but the levels of debt aren't quite back up to those pre-pandemic levels.
Michael McNamara: Chris, I'm kind of curious what you think about... It's basically how consumers are funding their purchases going forward. Are they burning down savings and now starting to relever? Is that kind of a hypothesis that you have there?
Cris deRitis: I think it depends on the demographic, right?
Michael McNamara: Yeah.
Cris deRitis: We know that excess savings, and we might get into this later on, their excess savings are up certainly, but those tend to be concentrated in the higher income households. I think, though, that higher income group is increasing balances because they're traveling more, they're commuting more, driving more, so they're taking out... They're driving to Florida, so they have to buy more gas and tend to do that on their cards.
Then, on the other end of the spectrum, you have the lowering, which to your point, I think are funding their purchases. Their savings cushions are actually whittling down here, so they maybe are accessing that credit in order to fund purchases that they otherwise can't.
Michael McNamara: Oh, is it... There was that study that the Chicago Fed did. Oh, this is back in 2020 when the stimulus payments were coming out. How long did it take for the consumer to allocate those funds? This is a year and a half ago, so I'm going back in time, but I want to say it was within about four to five weeks they basically had allocated almost all of the funds that they had received between savings, paying down bills, and actual spending, retail sales. I want to say about 30% of it-
Mark Zandi: Yeah.
Michael McNamara: ... is what they estimated. They went back into retail immediately, so there's still [crosstalk 00:35:52]-
Mark Zandi: I recall. Yeah, about a third.
Michael McNamara: ... a lot of powder. Yeah.
Mark Zandi: Yeah. Hey, guys. That's just my dog somewhere in the background, so just ignore, and if he starts losing his mind, I'll let you guys talk and I'll go solve that problem. I'm on my own. My wife has gone somewhere, so apologize for that. Hey Cris, we, though, get data from Equifax, the credit bureau. We have another month of data and, of course, I'm sure you do, too, Mac. You have another month of data, so this Fed data goes through November. What happened in December? Have you happened to look at that the December data? Did it show another big increase in credit or-
Michael McNamara: In the Equifax data it did.
Mark Zandi: It did? Okay.
Michael McNamara: Quite substantially, yeah, so I think that continues to point at some of these trends I just mentioned, but yeah, we're not... Again, levels of debt aren't back up to pre-pandemic levels levels, but we're moving in that direction.
Mark Zandi: Yeah, so consumers, households are now going back to their cards and borrowing, or using their cards, going back to your point about transactions. Demand is [inaudible 00:37:06] there's more transactions, so there's going to be more that ends up on the card in a given month, but it's coming back fast, but it's still, as of December, it's still below it's pre-pandemic level, so-
Michael McNamara: That's right.
Mark Zandi: ... we... Okay, so debt levels are still very, very low.
Michael McNamara: Yeah, that's right.
Mark Zandi: Yeah.
Michael McNamara: That's right-
Mark Zandi: Yeah.
Michael McNamara: ... but if this trend continues, it won't take long. It's kind a return to normal. How long will it take to get there?
Mark Zandi: Yeah, yeah. I mean, if you look at overall household credit growth, and you can do that with the Equifax data, too, the credit bureau data, that still feels like... I think year-over-year through December, I was looking at through December, it's still 5, 6%, right? So it's-
Michael McNamara: Right.
Mark Zandi: ... a little bit above income, not much about income. It's still... You don't... No alarm bells would go off for any of this. I mean, it's more of a good thing than a bad thing. It means consumers are in the game and they're spending and they're doing their part. They're driving growth.
Michael McNamara: Yeah. That's the total including mortgage as well, right? That-
Mark Zandi: Yeah, that includes mortgage-
Michael McNamara: Yeah-
Mark Zandi: ... where we've seen a lot of credit cards.
Michael McNamara: ... and we know mortgage has been growing rapidly, so that, you know, I think mortgage was like 9%, so... Yeah, the other part is growing, but it's not at the alarm bell level quite yet, I would say.
Mark Zandi: Yeah. Guys, is this dog a real nuisance? Should I go?
Michael McNamara: No.
Cris deRitis: No.
Mark Zandi: No? You're good?
Michael McNamara: Yeah.
Mark Zandi: You're all good with this?
Michael McNamara: What's the dog's name?
Mark Zandi: That's Cosmo. That's Cosmo.
Michael McNamara: Cosmo.
Mark Zandi: Cosmo's-
Michael McNamara: Cosmo's [crosstalk 00:38:33]-
Mark Zandi: ... 15 years old and he can barely see and I don't know what's going on.
Ryan Sweet: Did you name the dog after Kramer in Seinfeld?
Mark Zandi: Yeah. Well, my son did. My surgeon. Yeah, my son did. He's a huge Seinfeld fan.
Ryan Sweet: Yeah. That's a great name. That's good.
Mark Zandi: Yeah.
Michael McNamara: The other [crosstalk 00:38:47] one's George?
Ryan Sweet: Yeah.
Mark Zandi: The other one's Gigi. Gigi.
Ryan Sweet: Oh, Gigi.
Mark Zandi: Gigi. I named her. I came up with that one, Gigi. I like that one [crosstalk 00:38:55]-
Ryan Sweet: All right.
Mark Zandi: Anyway, I'll take [inaudible 00:38:57] for that. Okay, I'm going to give you mine. Ready? 88.6-
Ryan Sweet: Back to normal index-
Mark Zandi: I knew it.
Ryan Sweet: ... from Florida.
Michael McNamara: I was going to guess the average speed on your way to Florida, but-
Ryan Sweet: Yeah, that was a good one.
Mark Zandi: Pretty damn close. Yeah. Actually, I was like hovering around 81, 82 the whole way down.
Michael McNamara: Right.
Mark Zandi: Yeah, so I thought because the speed limit's 70. I go, "Okay, 81, 82, I should be pretty right on the edge."
Michael McNamara: Yeah, right on it.
Mark Zandi: Yeah, right. Yeah.
Michael McNamara: It's not worth it. It's not worth it to pull you over.
Mark Zandi: Not worth it to pull me over, right. 88.6. Hey, this is a telling statistic. Well, by the way, back to normal index, back to normal index, we're all laughing because that's my go-to index. If like I don't know what to pick. I pick the back to normal index, and that, we construct it. It's based on government data and third-party data, you know, Google Mobility, TSA, number people who go through TSA checkpoints, OpenTable, just a whole range of data and statistics.
We do it at the state level and we do it daily, and it's back to normal because it's equal to 100 on February 20th, 20... Yeah, February 29th-
Cris deRitis: 2020.
Mark Zandi: ... 2020. I just... I had a brain freezer. For February 29th, 2020, right before the pandemic, is a hundred. That's normal. You know what it fell to today on Friday today? 88.6. We're going backwards. We had almost gotten... We were like at 96%, 97. We're now back at 88.6. Now, some of it, again, seasonal adjustment issues, so forth and so on, but I think that kind of gives you the sense that we're backtracking here a bit. No surprise, the biggest declines are in states that have been nailed on Omicron, so New York, Pennsylvania, Illinois. It's down across the board. Every state's down, but it's really down in those states.
I think the broader point of which we have not talked about yet is Omicron does feel like it's doing damage to the economy. You can kind of feel it. Can you see... Mac, in your data, can you... I saw that J.P. Morgan also puts out their credit card data on a weekly basis and you could see holiday sales through the first week of December were pretty good, and then they seem to really come off towards the end of the year, particularly for travel-related spending, restaurants, things you would expect to be affected by the pandemic. Are you observing that in your data as well?
Michael McNamara: Yeah. There are a couple of things that when the Omicron spike started to pick up in the second half of December, there were some erosion of some of the growth rates. That was probably also amplified a little bit. It didn't damage the holiday season as much as it could have because retail strategies pulled sales forward and extended the season basically into November. Holiday season was actually pretty good, but we did see some weakness as you got closer to Christmas itself and then as you're moving through and into January.
One other data source that I like to look at besides just the retail spending growth rates are I like to look at commuting traffic coming into New York as an example. There's a good... MTA there actually does a pretty good job of tracking that, and you're looking at train ridership. It was back up to around 50% of pre-pandemic levels in the fall. In early January, it slipped back down to about 35%of pre-pandemic levels. Even the bridges and tunnels, which were basically flat with pre-pandemic are now down about 10% again, so the spike, I think, has pulled things down to a degree. Nothing like what we saw in spring of 2020, but it has kind of put a governor on the engine a little bit, I think, on some of the stats that we follow.
Mark Zandi: Yeah, and we could also see that in unemployment insurance claims, right? Initial-
Michael McNamara: Yeah.
Mark Zandi: ... claims for unemployment insurance came out on Thursday. They rose from below 200,000 per month, which is really, really low, to 230,000, which is still also low, but that's a big change and that was unexpected. Again, if you look at the increasing claims across states, it was in states that had been hit hardest by Omicron, around New York, you know, Pennsylvania, that kind of thing.
Michael McNamara: Yeah. From a geographic perspective, really throughout the pandemic, we've seen better numbers in the Southern regions. Basically if you're south and warm, that tended to be good. If you're big and cold, that tended to be bad, and that's pretty much held where... Here, I'll just... Let me just pull up a quick thing. I can... If you're looking at like some of the top performing cities, Tampa, Orlando, these are the top 25 markets of the country, so just isolate [crosstalk 00:44:15]
Mark Zandi: How do you [crosstalk 00:44:15] measure this [crosstalk 00:44:16] Mac? What are you measuring exactly?
Michael McNamara: Top 25 is by size-
Mark Zandi: Okay.
Michael McNamara: ... of spend and then-
Mark Zandi: Oh, size of-
Michael McNamara: ... I'm ranking them based on year-over-year growth.
Mark Zandi: Oh, got it. Okay.
Michael McNamara: The rankings here in terms of the cities that are showing the hottest year-over-year growth, Tampa, Orlando, Charlotte, Houston, Miami ranks one through five. If you're looking at the lower end, you're seeing Boston, L.A., Washington, New York, and San Francisco.
Mark Zandi: That's year-over-year [crosstalk 00:44:46] through the month of December? Or-
Michael McNamara: That's for Q4.
Mark Zandi: Oh, for Q4, for Q4.
Michael McNamara: Yeah.
Mark Zandi: Yeah, fourth quarter of last year.
Michael McNamara: Yeah, fourth quarter of 2021, so-
Mark Zandi: Yeah.
Michael McNamara: ... but that story has been pretty consistent where we've seen the larger cities, especially in the north, struggle more. I think it plays somewhat into those commuting numbers we were just talking about, how those ecosystems and those cities, so it's kind of economic ecosystems, rely on that consumer movement coming in and out. When you tap that down, some of those big markets are feeling it a lot more. The secondary markets and the markets that don't rely as much maybe on commuting traffic seems to be holding up a lot better.
Mark Zandi: You know, in our forecast for the first quarter of 2022, we mark that down, so before Omicron hit. If you go back to early December when we were forecasting, we expected growth in the first quarter of 2022 GDP growth to be just north of 5% annualized, so really another really strong quarter. We've marked that down to 2% growth, and the case study here is Delta, the Delta variant. That's kind of what Delta did to third quarter 2021 GDP growth and kind of shaved three, four percentage points annualized off of that growth. We're using that as a benchmark here.
Cris, Ryan, do you think that feels about right in the context of the data we're getting here? Or do you think it's going to be stronger, weaker than that? Does that make sense to you? Are we on track?
Cris deRitis: I think so.
Mark Zandi: Yeah. Okay.
Cris deRitis: Again, it's tough to look at that this recent data, make much of it, but yeah, I think Omicron certainly will have an effect. For me, one wild car might be utilities. I mean, [inaudible 00:46:38] spending with the energy prices and whatnot, but we'll have to see what next couple weeks hold.
Mark Zandi: Yeah.
Ryan Sweet: The trajectory for spending isn't great.
Mark Zandi: Right, so [crosstalk 00:46:49] I'm worried about [crosstalk 00:46:51] I'm wondering if it's going to... I guess we're really counting on the infections to really come off here, so January's-
Ryan Sweet: Mm-hmm (affirmative). Yeah.
Mark Zandi: ... going to be a washout. It's going to be bad. We could get employment declines, but that the infections come off quickly, and so by February, we're more than stabilizing. By March, we're back up and running again full tilt.
Michael McNamara: That would be pretty [crosstalk 00:47:11] similar to the spike in South Africa, about two and a half months-
Mark Zandi: Right.
Michael McNamara: ... so what's the burn-through rate [crosstalk 00:47:17]-
Ryan Sweet: In the UK. Very similar pattern in the UK.
Michael McNamara: Yeah.
Mark Zandi: Yeah. Europe seems to be... The infections there seem to have... It looks like they've rolled... South Africa, they definitely rolled over. They're way down-
Michael McNamara: Yeah.
Mark Zandi: ... but in the UK and Europe, it feels like we're now past peak. It feels like U.S. has been behind, particularly the UK, by three, four, five weeks in terms of infections, and so if that's the case, then I think we're moving in the right direction. Good.
Michael McNamara: A couple of [crosstalk 00:47:46] other things on the consumer spending front just to-
Mark Zandi: Yeah.
Michael McNamara: ... keep in the back of mind for when you're walking through, just when you're thinking of January, obviously, we just talked about the COVID variant, Omicron, impacting things, but you're also lapping the $600 stimulus payments from last year that impacted January. In February, you're going to be lapping the Texas freeze that actually should actually lift things a little bit-
Mark Zandi: Hmm.
Michael McNamara: ... in terms of a comp. Then, in March, you get two things coming up, the $1400 payments, then you're also going to have a late Easter. Easter was on the 4th last year. It's on the 17th this year, and that shopping period is about 10 days before the holiday, so some of those Easter sales are going to jump quarters and go from Q1 to Q2.
Mark Zandi: What's the net of all of that? I mean, there's a lot of crosscurrents there.
Michael McNamara: That's the thing. It's a lot of noise.
Mark Zandi: Okay.
Michael McNamara: In the net, I would actually say what you guys are doing in terms of tempering enthusiasm a little bit on Q1 numbers is probably-
Mark Zandi: Yeah.
Michael McNamara: ... yeah-
Mark Zandi: Correct.
Michael McNamara: ... on the right track.
Mark Zandi: Okay, okay, great. Good. Okay, so anything else on the statistics? I know we want to quickly move to the... and we've already done a fair share of this already, talk about the American consumers [crosstalk 00:49:01]-
Ryan Sweet: I'll give you one good employment number.
Mark Zandi: Okay.
Ryan Sweet: January's bad, but-
Mark Zandi: Yeah.
Ryan Sweet: ... UI benefits, unemployment insurance benefits, ticked up, but the insured unemployment rate, which is the number of people that receive unemployment compensation as a percent of the labor force, bit 1.1% last week, a record low.
Mark Zandi: Wow. Really?
Ryan Sweet: That tracks the unemployment rate over time.
Mark Zandi: Yeah.
Ryan Sweet: Not necessarily like, you know, exactly month to month, but it points towards an unemployment rate in the low rates.
Mark Zandi: I guess we're getting to a place where good now becomes less good, maybe even bad. I mean, it's like-
Ryan Sweet: Oh yeah. Remember this dynamic? Yeah, good data is bad because everyone's going to expect the Fed to, you know-
Mark Zandi: Yeah-
Ryan Sweet: ... slam-
Mark Zandi: ... I mean-
Ryan Sweet: ... on the brake [crosstalk 00:49:43]-
Mark Zandi: ... we're at... You're saying we're at 3.9% unemployment, which is pretty low, but maybe not full employment. It's gone lower here pretty quickly, which is a good thing. We want to get back to full employment, so we shouldn't discount that, but we are getting there pretty fast, faster than it feels like, you know, what I've been counting on. I've been thinking full employment by the end of this year, but you're saying maybe a little faster than that?
Ryan Sweet: Maybe the summer.
Mark Zandi: Yeah. Wow. Okay, all right. Okay. All right, let's talk about the consumer. There's a lot of different things we can talk about and the bottom line here, and correct me if I'm wrong, Mac, is that the American consumer is strong-
Michael McNamara: Yeah.
Mark Zandi: ... in good shape. Okay, so let's just break that down a little bit. I men, let's talk a little bit about, if you don't mind, so-called excess savings. This is the idea that people have saved a lot during the pandemic, much more than they would have been if there had not been a pandemic. Saving rates have been very high.
For some households, particularly lower middle income households, that's been related to a lot more government support. We talked about the stimulus checks, unemployment insurance, food assistance, that kind of thing. Then, for higher income households, that is largely related to, "I can't travel. I can't go to restaurants. I can't go to ball games. I can't do stuff. Therefore, I'm going to save." I might buy more things, and that's what we've been doing. We've been buying a lot of stuff, but we haven't been able to spend as much, and so saving rates are up.
One of the key... It's a lot, so if you do the arithmetic, by our calculation through the month of November, the last data point, there was $2.6 trillion in so-called "excess saving," and that's 12, 13% of GDP. That's a lot, and that's sitting in people's checking accounts, deposit accounts. Some of it's ended up in the stock market and the crypto market and driven housing purchases, that kind of thing, but a lot of it's still sitting in checking accounts. How do you think about kind of that consumer firepower sitting out there? If that was all spent, then we'd blow way past full employment. I think that's got a real problem, so how do you-
Michael McNamara: Yeah.
Mark Zandi: ... think about that? How much of that is going to be spent? How much of it's... What's your thinking about exactly how that plays out?
Michael McNamara: Well, I think it's kind of building on what Cris was talking about a little bit earlier where I think you are going to get some differences depending on your demographic group in terms of income segments where there's a journey that I think we do gown where we burned down the savings rate back to a more normal level. I think was it 6.9?
Mark Zandi: Yeah.
Michael McNamara: The last print I thought, and was it like... Well, March was crazy It was like 20 or something in March, but we're going to be... I think we're on the journey and we're going to continue that journey as we go forward where the way the consumers fund their activity will continue to burn down savings and then continue to relever and start to fund things through different credit vehicles again. That's going to take a while, I think, to get from here to there. I think it's more than 2022. I think you're getting into 2023, maybe even beyond that to actually get to a more normal level of the savings versus spending.
Also, for older demographics also, there could be some positive benefits there because they probably undersaved for retirement and now they were able to catch up a bit, so I think that's probably a good thing there in the long run. There's some good health things, I think, in the long run regarding how the consumer is today, but in terms of firepower, dry powder, or whatever you want to call it, there's plenty to fund consumer demand as we go through 2022.
I think from what we have been told by retailers, consumers have been willing and able to absorb inflation for now, and that seems like... I wouldn't say that's different today than it was when I first started hearing it in the summer. Eventually, I think, if inflation remains elevated, it will start to erode purchasing power. Again, probably showing up first at the lower income groups and then moving it's way up, but again, that's going to take a while. I think you're basically looking at a strong consumer story for at least the rest of this year, probably into next.
Mark Zandi: It sounds like you view the excess saving as a real... It's a pretty significant plus for the consumer, obviously. I mean, one clear way is it's helped people's retirement nest eggs, so a lot of Boomers in their 50, well, now they're in their 60s and 70s, they didn't save enough, but now they have. You know, this really-
Michael McNamara: I don't know if they-
Mark Zandi: ... helps.
Michael McNamara: I don't know if they [crosstalk 00:54:37] have, but it helps.
Mark Zandi: It definitely [crosstalk 00:54:40] helps. It definitely [crosstalk 00:54:40] helps, yeah. Of course, stock prices are pretty close to record highs. Housing values are at record highs.
Michael McNamara: Yeah.
Mark Zandi: People who invested in crypto, like Cris, are doing quite well, but that's a positive-
Michael McNamara: Behind that door, yeah. They're like-
Mark Zandi: Yeah.
Michael McNamara: ... a service-
Mark Zandi: Behind that door-
Michael McNamara: ... behind that door.
Mark Zandi: ... I see the crypto is sitting back behind that door... behind, sitting in front of. Then, it also cushioned the blow here, the financial blow from the higher inflation. Higher inflation hasn't done as much damage to consumer spending as it might have in another world, another time because you just got a cash cushion sitting out there that you can use.
Michael McNamara: Yeah. Another thing that I'm going to start looking at a little bit differently is some of the sentiment and confidence figures. I think [inaudible 00:55:26] sentiment came out this morning, I think, a little bit soft. It was right before we got on the [crosstalk 00:55:32]-
Mark Zandi: Did they grind? I know University of Michigan consumer sentiment came out? I haven't had a chance to look. Did you look at that today?
Michael McNamara: It's a little soft today.
Cris deRitis: I'm looking at it right now.
Michael McNamara: Yeah. I think it was soft. Yeah.
Mark Zandi: It was, okay.
Michael McNamara: Now-
Cris deRitis: Mm-hmm (affirmative).
Michael McNamara: ... that's been eroding a bit in the second half of 2021, but sometimes the way people answer those surveys aren't necessarily the way that they act.
Mark Zandi: Yeah.
Michael McNamara: It tends to be sensitive to gasoline. It tends to prices and there are different variables, Afghanistan, I think, last year, stuff like that, that might have impacted those surveys. There was a bit of a divergence, I think, between consumers kept so ending like they were confident, but they were answering those surveys like their confidence was eroding. As we get into this year, I'm going to pay more attention, though, because I think there's going to be a... Those are going to come back together again at some point here where as people can't afford to absorb the inflation the way that they have over the past couple of months, I think that erosion and confidence could end up showing up in behavior.
Any... Like right now we're talking about how strong the job market is. It's almost there's nowhere to go but down. We're almost there. When you start seeing chinks in that in any kind of a job sentiment number, I'm going to be looking closely for anything along those lines, too, because I think that could really trigger some behavior changes.
Mark Zandi: Yeah, so what you're saying is so far the higher inflation has not dinged spending, but over time here very possibly could. One way of gauging that is to watch those sentiment measures. If they continue to weaken, that would be an indication that the higher inflation is starting to do some damage to spending.
Michael McNamara: Yeah, I think so-
Mark Zandi: Yeah-
Michael McNamara: ... and-
Mark Zandi: ... okay.
Michael McNamara: ... that's just... It's something that, again, a little bit of a change... Some years I like certain metrics over others, and that's a metric that I'm going to start to watch more closely. I didn't really think it was-
Mark Zandi: That big a deal [crosstalk 00:57:34] yeah.
Michael McNamara: ... that big of a deal last year, but I think it's going to become a bigger deal as we move forward-
Mark Zandi: Okay.
Michael McNamara: ... and I start watching one of those [crosstalk 00:57:39]-
Mark Zandi: All right, so when I think of the consumer, okay, I go labor market, job market. Do I have a job? What's my pay increase?
Michael McNamara: Yep.
Mark Zandi: Check, check. It all looks good. I then go to the balance sheet and I say, "Okay, how much... What do I own?" I think stocks, I think housing, I think now crypto is-
Michael McNamara: Crypto.
Mark Zandi: ... is playing a role.
Michael McNamara: Yeah.
Mark Zandi: We joke about that, but it's showing up on the radar screen now. It's on the balance sheet, 3 trillion and outstanding. Check, check. I mean, asset prices are... Stock prices have gone a little fragile here, but they're still pretty close to record highs. Then, I go to the debt side of the balance sheet, you know, leverage, and we talked about that, and while-
Michael McNamara: It's down. Yeah.
Mark Zandi: ... credit growth is accelerating, leverage is low. Debt service, portion of income going to servicing debt is pretty close to record lows. Off bottom, but you know, for technical reasons, but very low. We talked about excess saving. It's kind of building assets and deposits and cash. Is there anything out there that makes you worried or nervous? We talked about inflation, so far not a big deal. Maybe it becomes a deal if inflation doesn't moderate, but anything else? Anything else that, you know-
Michael McNamara: Yeah, there-
Mark Zandi: ... on the radar screen?
Michael McNamara: ... are a couple of things. In terms of the consumer, I'm going to borrow a phrase back from the internet bubble days back in the late '90s. I don't think it was you as somebody else on CNBC had said this, that the beer-
Mark Zandi: I take credit-
Michael McNamara: ... doesn't much-
Mark Zandi: ... for it. I always-
Michael McNamara: All right-
Mark Zandi: ... do take credit. These guys-
Michael McNamara: ... but [crosstalk 00:59:25]-
Mark Zandi: ... it's definitely mine, yeah.
Michael McNamara: When things [crosstalk 00:59:27] you just did all of that checklist. You know, like, "The beer doesn't get much colder than this." You know, it's a good one in terms of where the consumer is right now. They're in a fortified position. They're in a good spot. That said, there are areas that I am concerned about, but it has to do with how COVID... I'm not going to say Omicron, I'm just going to say COVID more in general, has changed the economy. We kind of talked about that and touched on it a minute ago, is that there's pretty dramatic change that could have ripple effects into society in a couple of different ways.
One is the tax revenues for some of these big cities and for some of these big states, they rely a lot on whether it's retail sales, food services, hotels, commercial real estate, a whole bunch of different tax sources. I'm kind of wondering where those are going to go because I don't know if they're going to come back the way that they were pre-pandemic. Some of the economies and some of the budgets and what they're based on, some of the business models and what they're based on pre-pandemic, I do think there's quite a bit of change is going to happen there.
You can view that as risk. Sometimes it's opportunity. Sometimes you can view it as a risk, but it is change, and that's one of the things that I'm concerned about there. What are the echoes that kind of all of this change does? When you're talking about, as I mentioned, city or state budgets, when you're talking about commercial real estate, these leases go for 10 or 20 years, but every year you're going to probably have people wanting and needing a little bit less.
Mark Zandi: You're-
Michael McNamara: Just [crosstalk 01:01:09]-
Mark Zandi: ... focused [crosstalk 01:01:10] on the fact that people have left big cities, big urban centers, particularly in the Northeast and on the West Coast, Chicago, and there might be some... There will be some of that coming back as we get on the other side of the pandemic and offices reopen, but there's no going back. We're not going to see... We're going to still see people on net continue to leave these big areas in a-
Michael McNamara: Yeah [crosstalk 01:01:36]-
Mark Zandi: ... significant way. I'm just kind of paraphrasing and asking if I got it right, and you're saying that that has all kinds of, as you said, ripple effects [crosstalk 01:01:47] and implications on the state... New York City's budget, on-
Michael McNamara: Yeah.
Mark Zandi: ... office towers in San Francisco, on the retailing that services all of the office works in Chicago. What happens as a result of it? That's what you're saying here?
Michael McNamara: Yeah, so it's like when you're asking me what am I concerned about-
Mark Zandi: Yeah.
Michael McNamara: ... it's like you go down the consumer checklist and you're like, "Okay, this is [crosstalk 01:02:10]-
Mark Zandi: No problem. Yeah [crosstalk 01:02:11]-
Michael McNamara: ... "This is pretty good over here."
Mark Zandi: Yeah.
Michael McNamara: If I'm thinking about things that I'm-
Mark Zandi: More broadly-
Michael McNamara: ... concerned about, I'm thinking a little bit more broadly and I'm thinking about those sources of change in terms of and the economic ripple effects that they might have would be the areas that I'm probably more concerned about today than I am about the U.S. consumer.
Mark Zandi: Got it. Now, of course, those folks are going somewhere, right? As you pointed out in your SpendingPulse data-
Michael McNamara: Oh yeah-
Mark Zandi: ... you know-
Michael McNamara: ... there's opportunity, yeah.
Mark Zandi: Tampa, Atlanta, Charlotte, you know-
Michael McNamara: Yeah.
Mark Zandi: ... you didn't mention Texas, but I assume Texas.
Michael McNamara: Houston, I think Houston's six, yeah.
Mark Zandi: Is number six? Okay [crosstalk 01:02:48] there you go. From a broad U.S. macro economic perspective, maybe there's a lot of crosscurrents, so maybe the losers pull back more than the winners pull forward and you get some net negative effect, but in a macro sense, is it a big a deal? Or are you [crosstalk 01:03:11]-
Michael McNamara: That's what I kind of saying is there's change which can be scary in some areas, but it can also be opportunities in others, like even-
Mark Zandi: Yeah.
Michael McNamara: ... within the big cities, there are opportunities around the cities that didn't exist before-
Mark Zandi: Yeah.
Michael McNamara: ... in terms of migration, and then there are bigger migrations like you're talking about in terms of people actually moving states, you know?
Mark Zandi: Yeah.
Michael McNamara: The migration South, that's kind of more of a bigger macro thing. There are lots of ripples and repercussions that could impact a lot of areas of the economy that are based on COVID that I think we'll start to get line of sight on as we get through these variants and things start to calm down and things start to migrate back to normal. There's going to be this new set of post-COVID issues that we're going to have to start to deal with.
Mark Zandi: Yeah, I agree with you. Here's some data for you. We get a 10% sample of all of the credit files in the country at a consumer level every month from credit bureau Equifax. It's anonymized, so we don't know who the folks are, but we know their address, so we can see address changes. In the 12 months through February of 2020, obviously the year ahead of the pandemic, I'm rounding, so roughly these are the numbers. Not quite 300,000 more people left urban centers for suburbs and exurbs than came into those urban centers, so even before the pandemic, these big urban cores were losing people on net to the suburbs and exurbs.
Michael McNamara: Yeah.
Mark Zandi: We have a definition for urban based on population density and that kind of thing, and as of June of last year, and this is the peak, close to... actually, a little over 600,000 net left urban cores for suburbs and [inaudible 01:05:07] so there was a doubling, more than a doubling. That's come back in a little bit. We just got data for December. We're now down to 560,000, so it's people are starting to come back, but they're not... We're way, way, way... It's way different than it was pre-pandemic. I expect that to come in further as offices ultimately reopen. I don't know about MasterCard, but Moody's still is virtual. People haven't gone back into the office-
Michael McNamara: Yeah, I-
Mark Zandi: ... but-
Michael McNamara: ... think a lot of offices are going to kind of settle in around that two to three days a week-
Mark Zandi: Kind of hybrid thing.
Michael McNamara: ... hybrid kind of thing, but even if you get that, you're still talking about 40% fewer trips. What does that do to MTA budgets? What does that do to the business models for the restaurants and for the small businesses that really relied on that mobility and that traffic coming in and out?
Mark Zandi: Yep.
Michael McNamara: I think there have been some band-aids that have kind of bridges that have kind of helped some folks, but in the long run, you're going to have to figure out a new business model based on potentially 30, 40% less traffic.
Mark Zandi: Right. Right. Cris, Ryan, anything you want to weigh in on with regard to this? I mean, this sort of fits with my kind of thinking around this as well and the work we've done, but any views on this particular issue?
Cris deRitis: I generally agree, right?
Mark Zandi: Yeah.
Cris deRitis: Consumers are in good shape today and COVID is certainly going to change some of the trends and outlook. One thing I think about, though, or I'd caution against getting overly excited about it when it comes to the excess savings are some changes in attitudes. I do think there will be more precautionary saving going... If there are future pandemic waves and we all know about it, we adjust to it, but that would suggest people should be saving up in anticipation of job losses or delays or whatnot. Just scarring in general. This is a pretty dramatic event we've all been living through, and certainly I think that will cause some of particularly the younger generation to be a little bit more cautious going forward. That would be my assumption-
Mark Zandi: Yeah, that makes sense.
Cris deRitis: ... but, you know-
Mark Zandi: Yeah.
Cris deRitis: ... who knows? Right?
Mark Zandi: Yep, makes sense.
Cris deRitis: American consumers seem pretty resilient, but... Again, 2.6 trillion sounds like a big number, but I don't expect all of that to come flying back anytime soon. I think that the savings rate is going to actually remain high for a while.
Mark Zandi: Yep. Right. Ryan, anything you want to add?
Ryan Sweet: No, I agree with everything.
Mark Zandi: Oh, that's a first. Okay. All right. Very good.
Michael McNamara: Basking in the glow of his-
Mark Zandi: Yeah.
Michael McNamara: ... getting it more right today.
Mark Zandi: Yeah [crosstalk 01:07:45] moving on to the yield curve.
Michael McNamara: Yeah.
Mark Zandi: Exactly [crosstalk 01:07:50]. Well, I think we've come to the kind of the good ending point for the podcast. Is there anything that I... Oh, I guess maybe the last open question I should have asked on the SpendingPulse data. Is there anything else in the data that you're observing that you just want to call out and say, "Hey, this is interesting?"
Michael McNamara: Well, I was going to end on a nice note-
Mark Zandi: Okay, good. I'm all for that. Absolutely.
Michael McNamara: ... a positive note. If you look at last year, jewelry sales were up about 63.8% year-over-year, and our economics crew here did some work. They estimated that about a million weddings were postponed or delayed due to COVID, so there's this huge backlog of weddings that is blowing up.
Mark Zandi: Aah.
Michael McNamara: The jewelry numbers and event apparel and all this kind of stuff that we're just seeing absolutely explode, so I expect weddings in 2022 and lots of babies in 2022, 2023, 2024.
Mark Zandi: Well, that's [crosstalk 01:08:55] bring that on. We need it because birth rates have been low. Death rates have been high. Immigration's been... W need folks, so that's good. That's a... I really like that. That's... A million, a million weddings in-
Michael McNamara: Yeah, I think-
Mark Zandi: ... pent-up weddings.
Michael McNamara: I might be getting this wrong. I think... Did they say that there are 3 million weddings a year or something like that and about a million of them are delayed? I could be getting that wrong, but it was something in that ballpark.
Mark Zandi: Well, that's a wonderful statistic. That's a great one to end on a very positive note. I want to thank you, Mac, for joining us today. It was really a pleasure-
Michael McNamara: Yeah.
Mark Zandi: ... and to the listener, Ryan, I know you've been waiting for this, @Markzandi, @Markzandi-
Ryan Sweet: There we go.
Mark Zandi: ... there's my Twitter handle. Hey, Mac, are you on Twitter?
Michael McNamara: I am not, but I'm getting heat from some of your guys saying I should be, so I got to get on.
Mark Zandi: There you go, and Ryan keeps threatening he's going to tell us what his handle is, but Ryan, is this the week?
Ryan Sweet: Oh, I forgot where it was. Oh, wait, I got it. No, I got it.
Mark Zandi: Okay.
Ryan Sweet: @realtime_econ.
Mark Zandi: That's your Twitter handle? That's [crosstalk 01:09:58]-
Ryan Sweet: Yeah.
Mark Zandi: That's pretty good. Say that again.
Ryan Sweet: @realtime_econ.
Mark Zandi: Econ, I love that.
Ryan Sweet: Mm-hmm (affirmative).
Mark Zandi: Yeah, very good. Okay, and I know, Cris, you have a handle, too, right?
Cris deRitis: I do, but I never check it, so-
Mark Zandi: You never check it? Okay. All righty. Well, very good. Thanks so much, and till next week, talk to you soon. Take care now. Bye-bye.
