INSIDE ECONOMICS

Mark Zandi:                       Welcome to Inside Economics. I'm Mark Zandi, the Chief Economist of Moody's Analytics, and this is Jobs Friday, the day we got the job numbers for the month of March 2024, and as per the tradition, we've got three of my colleagues, two co-hosts, Cris deRitis and Marisa DiNatale. Hi, guys.

Cris deRitis:                        Hi, Mark.

Marisa DiNatale:              Good morning.

Mark Zandi:                       Good morning, good morning. And Dante, Dr. DeAntonio.

Dante DeAntonio:           Hi, Mark.

Mark Zandi:                       That just kind of rolls off the tongue, Dr. Dante DeAntonio.

Cris deRitis:                        It's the triple D.

Dante DeAntonio:           There you go.

Mark Zandi:                       The triple D, yeah. And the big news-

Cris deRitis:                        And you know we all have the Ds in our last name here.

Mark Zandi:                       Oh, yeah. All the Ds here.

Cris deRitis:                        We got all the Italians here today.

Mark Zandi:                       All the Italians and everyone thinks I'm Italian, but I'm not.

Dante DeAntonio:           Ah. Everybody wants to be Italian.

Marisa DiNatale:              Take that as a compliment.

Mark Zandi:                       I should be, but I'm not. Yeah.

                                                But the big news though is the earthquake. We just had a bit of an earthquake over here on the East Coast and Dante-

Dante DeAntonio:           Marisa does not think it's news.

Mark Zandi:                       You don't think it's news?

Dante DeAntonio:           Marisa doesn't think it's news.

Mark Zandi:                       Oh, yeah. Being on the West Coast.

Dante DeAntonio:           Yeah.

Marisa DiNatale:              No, I'm happy for you guys. That's great.

Mark Zandi:                       Well, can I ask, Marisa, what's the biggest earthquake you've been in?

Marisa DiNatale:              I don't know what the magnitude was. I think it was like five something.

Mark Zandi:                       Five something?

Marisa DiNatale:              Which doesn't sound big, right?

Mark Zandi:                       I don't know.

Marisa DiNatale:              But it was quite scary. It was at night. I was at my sister's house. I was babysitting my nephew who I just put him to sleep. He was like two years old. The whole house just started shaking and the floor was... I remember I stood up and it felt like I was on water.

Mark Zandi:                       Really?

Marisa DiNatale:              It was like going like that, and he started screaming, like, "What's going on? My room's shaking!" And I ran upstairs and his bedroom was shaking. He had the ceiling fan over his crib that was swaying back and forth. I was terrified it was going to fall. I mean, and that wasn't even that big of an earthquake in the grand scheme of things, I think. It was five-point-something and the epicenter was way, way far north of me.

Mark Zandi:                       Huh. How long do earthquakes typically last? Is there a typical length of time?

Marisa DiNatale:              I mean, it's seconds, but it feels, when it's like that, it feels really long. It was probably 10 seconds or something like that, but it felt like a minute.

Mark Zandi:                       Right. Do you know-

Marisa DiNatale:              That was years. That was probably six years ago and that's the last time I felt an earthquake here.

Mark Zandi:                       Oh. What's the average length of time for an earthquake? I've never even asked myself that question. Is that a reasonable question?

Marisa DiNatale:              Let's ask ChatGPT.

Mark Zandi:                       Yeah. I mean, really curious. Yeah. Anyway, so-

Marisa DiNatale:              So you guys didn't feel it?

Mark Zandi:                       I didn't feel a thing.

Dante DeAntonio:           I didn't.

Mark Zandi:                       But Dante's wife did apparently.

Dante DeAntonio:           She did, yeah, but...

Mark Zandi:                       Is she prone to drama, Dante?

Dante DeAntonio:           I guess maybe I have to start questioning that, right? I mean, maybe it didn't really happen. I don't know.

Mark Zandi:                       Okay, fair enough.

Marisa DiNatale:              The average earthquake lasts between 10 and 30 seconds, which is a wide range.

Mark Zandi:                       Oh, wow. That is a wide range. Man, 30 seconds sounds pretty awful. Yeah, 10 sounds bad. 30? Okay.

                                                Anyway, well, it feels like we're getting one calamity a week here. So let's talk about the jobs numbers, and per tradition, Dante, I think you lead the way here. You want to give us a sense of the numbers?

Dante DeAntonio:           Sure. So I guess we should stop being surprised at this point by strong jobs numbers. It seems like the last few months, we keep being surprised and maybe now we shouldn't be. We got 303,000 jobs added in March. That brings the first quarter average to 276,000. A pretty impressive first quarter in terms of job growth. That's coming off the heels of what looked like a decelerating job market towards the end of last year. If you go back to November of 2023, the three-month average was just below 200,000 and looked like it was headed south, and that's turned around here in the first quarter of the year.

                                                Broad-based job growth. No major industry had a decline in jobs in March. Still concentrated in the same three industries that we've seen over the last six months or so; healthcare, leisure and hospitality, and governments accounting for about two-thirds of that headline gain.

                                                I would say it's much more solidly good news this time. I mean, because we got strong job growth again, but we also got some of the other signs of some weakness reversing. So we got average weekly hours picking back up again and they look like they've normalized over the last few months. Average hourly earnings still look like they're moderating and coming into a slow landing point here around 4%. The unemployment rate actually ticked back down after it jumped up a little bit last month, which was a little bit concerning. The household survey in general was more upbeat in March after we got some sort of funky readings over the last couple of months.

                                                We have strong gains in the labor force, strong gains in household survey employment. Unemployment rate edged a little bit lower. Participation rates, employment population ratio, all sort of edging higher and moving back to what we would expect them to look like in a solid, strong job market.

                                                So I'd say by and large, it's hard to find a problem. I think, again, if we reset our expectations, that job growth at 250,000 or even 300,000 might be okay, I think it's hard to find a problem with the report this month. I think we might have to just adjust expectations around what sustainable job growth looks like for 2024 a little bit.

Mark Zandi:                       Yeah, okay. So I always ask you this, and given the numbers and the revisions and everything else, what's underlying monthly job growth? Abstracting from the vagaries of the data and seasonal adjustment, other measurement issues, what do you think it is?

Dante DeAntonio:           Yeah, I honestly think my answer might be different this time. I think for the last several months, my answer was I think around 200,000, and I'm not convinced it's that low anymore. I think it might be closer to 250 at this point.

Mark Zandi:                       Right. I think that's average monthly job growth over the past six months and past year, just a little bit south of 250K. That's what it feels like, yeah.

                                                A year ago or maybe two years ago, if you said 250, maybe a year ago, 250K, it would be almost like hair on fire because the thinking would be that's well above the growth in labor supply and the labor market is going to tighten further, unemployment flow is going to go lower, and that's going to fan wage pressures, inflation, force the Fed to jack up interest rates even more, and ultimately, recession.

                                                But here we are today, we're getting 250K consistent and there's no hair on fire because it feels like the supply side of the labor market is kicked into higher gear here, meaning we're getting a lot more labor force growth, even though we're not... It's hard to measure and we should talk about that, but we're getting a lot more labor force growth, and the evidence that we are getting enough labor supply to meet the increase in jobs, labor and demand, is the unemployment rate is rock solid, stable. It's going up. Even this number we got today, 3.8 down from 3.9, that was only because instead of being revised up, it was revised down. I think if you go to the second significant digit, it went from 3.86 to 3.83, so it's not moving, and that's consistent with therefore 250K is what we're getting on the supply side, a lot of growth on the supply side of the economy.

                                                Is that, Dante, a fair characterization?

Dante DeAntonio:           Yeah, I think that feels right. If you sat here a year ago and told me that we were going to average 250K, I would've thought there was a problem and it doesn't appear that there's any major problems.

Mark Zandi:                       An overheating problem.

Dante DeAntonio:           Right.

Mark Zandi:                       Yeah. And right now, perfectly saying when no drama... Oh, no drama, Dante.

Dante DeAntonio:           There you go.

Mark Zandi:                       Oh, there you go.

Dante DeAntonio:           Yeah, it doesn't feel like there's any drama.

Mark Zandi:                       It's like we're formulating a title for this podcast, everyone. Okay. All right.

                                                So maybe I'll turn to Marisa next. Everything I just said isn't actually borne out in some of the data because there's this disconnect between what we're seeing in the payroll survey, the 2, 300K last month and the 250K average per month that we've been getting for the past year, and what's going on in the household survey. It's not like it's saying we're getting all this labor supply. The unemployment rate's stable, but we're not getting all this labor supply. There's this seeming disconnect between these two surveys. Marisa, do I have that right?

Marisa DiNatale:              Except for this month. So this month there was a-

Mark Zandi:                       We'll just close the gap a little bit, right?

Marisa DiNatale:              Yeah, this month we did get a very big gain in the labor force, almost half a million people, and same with household employment. If you adjust the household survey to match the payroll survey concepts, which means you take out the self-employed, you add in the multiple job holders, you do these other adjustments to make them comparable, that brings the game down, but it's still over 300,000 on the household survey.

                                                But you're right, if you look back over the last several months, the household survey's been much, much weaker than what the payroll survey has shown, and we've thought, "Well, maybe the payroll survey gets revised. Maybe we'll see these big downward revisions to the payroll numbers," and we really haven't even seen much of that. If you look at the, I don't know if you said this, Dante, but the revisions over the past two months to January and February, one was up a bit, one was down a bit, but the net result was it was both months were combined revised up again.

                                                So something is amiss, I think, here. Right? There is this disconnect, and I think you were alluding to the labor supply issue being measured perhaps by a lot more immigration that we're getting that isn't being picked up in some of these government surveys yet.

Mark Zandi:                       Yeah. You want to explain that in more detail? Exactly-

Marisa DiNatale:              Yeah, so we got obvious-

Mark Zandi:                       I think that's the thing that squares the circle here, right?

Marisa DiNatale:              Right. Yeah, but...

Mark Zandi:                       No?

Marisa DiNatale:              Yes, but it's still not 100% clear to me where these people are showing up or aren't showing up and why they're not in some instances.

                                                So the official population numbers come from the US Census Bureau. The Census Bureau does obviously the decennial census every 10 years, but then every July, they kind of fill in the gaps. They have updated information on immigration, births and deaths. They have a model that they use to predict inter-year population growth. That has typically shown that immigration into the US has averaged about a million people a year over the past several years.

                                                The Congressional Budget Office, however, came out with estimates because they also have to have accurate readings on population growth so that they can update their estimates of potential growth of the economy when have to predict budget shortfalls or surpluses years and years out and what potential GDP growth is, they think that immigration based on data that they have is more like 3 million instead of 1 million over the past several years, that it's ramped up from 2020 through 2023. So that is significantly different from what the Census Bureau has said.

                                                And so if we're getting in excess of 2 million more immigrants into the country than we're officially counting, that could help to explain why there is so much labor supply out there and the unemployment rate has been low but steady for the past several years. So somehow we're able to pull in 500,000 people into the labor force every month. Where are these people coming from when the unemployment rate is so low? It could be that we're getting a lot more immigration into the country and that's accounting for some of the strong payroll survey growth that we're seeing.

                                                Then I guess the question is why isn't it showing up in the household survey? That's kind of the process.

Mark Zandi:                       It's going up in the payroll survey, but the payroll survey is a survey of establishments, businesses. It's showing up there, but it's not showing up in the household survey.

Marisa DiNatale:              Right.

Mark Zandi:                       The survey of households.

Marisa DiNatale:              Yeah. I mean, the answer that most people put forward is in the household survey, the Census Bureau is actually calling up households and interviewing people. Somebody who's in the country who's undocumented may be very hesitant to talk to somebody on the phone and answer questions about their employment status. Even though this survey does not ask any questions about either legal status, either citizenship status, legal status being in the country, or employment status in that way, it's easy to see why people wouldn't want to talk to a Census Bureau official if they weren't in this country in a documented way.

                                                On the other hand, on the payroll survey, they're asking employers, "How many people are on your payroll?" Leave it at that. So you could be capturing those people in the payroll survey and not in the household survey.

Mark Zandi:                       Right, right. Cris, and I asked you this question, or maybe I asked Dante. I ask everyone the same question until I get the answer, and I think we got the answer yesterday in our email exchange.

                                                I was perplexed by how an undocumented immigrant could show up on the payroll of a company. I mean, I know there's going to be some below-board kind of hiring of undocumented workers, but could a lot of American companies be hiring undocumented immigrants and bringing them on payroll? Presumably they don't have a social security number, they don't have a lot of the standard information that people have when they're employed here. How could that happen? And I think we got an explanation, right, Cris?

Cris deRitis:                        Yeah. At least one that seems plausible.

Mark Zandi:                       It seems plausible.

Cris deRitis:                        It says suggesting that many of the undocumented workers, that population we're talking about here over the last few years, have entered the country seeking asylum. So they get to the border, they seek asylum, and they are released or paroled into the country so that they can await their trial date or whenever the court proceedings are scheduled. And that could, certainly given the backlogs, it's years now. So in the meantime, these individuals are allowed to get employment authorization and so they can legally work while they're awaiting that process of the asylum claim.

                                                And like I said, it's a very large increase that we've experienced over the last couple of years, so that certainly could explain a lot of what we're seeing here.

Mark Zandi:                       Yeah, I didn't know that you can get a so-called Employment Authorization Document, EAD. You're undocumented. You can get that and you can start working. There's different statuses depending on your circumstance, but you can start working pretty quickly in many cases, and in other cases, it takes a few months. But this surge of immigration that we're seeing has been in play now for more than several years. So just trying to show it.

                                                So businesses, the HR department is reporting to the BLS saying, "I've got these many people on the payroll." Some of them are going to be undocumented. Well, that's at least what we're observing. But if the BLS calls up that undocumented worker and says, "Are you working?" that person's probably not even going to answer the phone because they're going to be fearful that, "I don't want to talk to anybody I don't need to talk to from the US government until I have to actually talk to somebody." That's kind of what feels like what's going on. Right?

Cris deRitis:                        Yeah. I also wonder, maybe this is a question for Marisa, about the sampling that is done. If you have new entrant, how likely is it that they even are in the sample?

Marisa DiNatale:              Right, show up in the sample?

Cris deRitis:                        Yeah.

Marisa DiNatale:              Yeah. And those samples are redrawn yearly. They're model-based samples that try to capture the population at large, but we're still only talking about a sample of 60,000 households across the whole US. And we also don't know what the living situations a lot of these people are, where they're living. So yeah, it may not be accurately sampling this population.

Mark Zandi:                       So Cris, do you buy into this explanation for what's going on? That we are... The economy is creating a lot of jobs. It's on track. It created 3 million last year. It's on track to create 3 million this year if it keeps up the current pace. That would never have happened if not for this significant increase in immigration from a million per annum, which is what we were getting before the pandemic typically, to something CBO now estimates, I think last year they estimated in 2023, 3.3 million, and that's not slowing down. I mean, you can see what's happening at the border, and also legal immigration is also up, right?

Cris deRitis:                        Right. In 20-

Marisa DiNatale:              Yeah. It's not just illegal.

Mark Zandi:                       It's not just illegal. I mean, the number of visas that are being... Because the labor market's tight and businesses need help, and so the economy is able to support reasonably well the strong growth in jobs in employment without experiencing wage and price pressures. I mean, you buy into that?

Cris deRitis:                        I do.

Mark Zandi:                       You do?

Cris deRitis:                        I mean, I think we've certainly pulled in some people off of the sidelines as well, given the strength of labor market. So some additional supply from people who may have been more discouraged, but it's not sufficient. I think that the immigration piece of this, to me, is what squares the circle.

Mark Zandi:                       Right. Okay, okay. Anything else on that that we should... I mean, I guess the other point is, maybe I said it a minute ago, there's no reason to expect this is going to change anytime soon, right? I mean, given what's going on at the border, it feels like we're going to continue to get a large number of immigrants into the country.

                                                And it goes without saying. The surge in immigration creates a lot of challenges for communities across the country. You can see it in the border states, you can see it in big cities across the country. They're trying to figure out how to house all these immigrants in a time when we have a very severe shortage of housing, affordable housing. There's other issues with just a whole slew of issues that we need to be dealing with.

                                                But the upside here, and I say that with a question mark, it feels like an upside, the upside here is we can grow more quickly. We can create more jobs without wage and price pressures and it kind of is all happening at a very opportune time. Because, again, if you go back a year ago, two years ago, we were hair on fire. The labor market's excruciatingly tight. "I can't find workers." Wage growth was accelerating, price pressures were developing, the Fed was jacking up interest rates. It just felt like we were going down a dark hole into recession, and this all came together. The immigration, this labor supply came together.

                                                You couldn't ask for a better timing, right? I mean, in a sense. In a sense. It was abstracting from the challenges. From a pure labor market perspective in terms of trying to avoid an economic downturn, this feels like this was critical to being able to navigate 2023 without a recession. Cris?

Marisa DiNatale:              But to your comment, Mark, about this not ending, I mean, I think if we get a President Trump next year, this could put a big damper on immigration. You know?

Mark Zandi:                       Oh, yeah, good point. I was really focused on 2024, but you don't have to look too far into the future. Yeah.

Marisa DiNatale:              Right.

Dante DeAntonio:           I do think though, I saw an interesting... I think Cris actually sent the Brookings research, which looked at the shape of labor force participation from immigrants and how it changes over time once they're in the US, and I think it lends some support that we've got some runway here where labor supply likely has a boost because what typically happens is that labor force participation is only about 50% in the first year when someone immigrates and then it rises over the next several years and lands in the 70 to 75% range after several years.

                                                So they estimate that the cohort that immigrated in 2022, labor force participation is only about 50% for that group, but it's likely to continue to rise, and the same will be true for people that immigrated in 2023. So I think there's still lots of new entrants that are likely to come into the labor force from people who are already here. So even if you saw immigration get cut back in '24, early 2025, I think you still have this sort of influx of workers into the labor force that are likely to come from previous cohorts of immigrants.

Mark Zandi:                       That's a great point. Although I suppose if former President Trump does win reelection and does follow through on what he's proposing, and that is not only shut down the border but deport a lot of undocumented immigrants, that may not help.

Dante DeAntonio:           That would change the story a bit, yeah.

Mark Zandi:                       That would change the story.

Dante DeAntonio:           If you're just stopping the flow versus reversing.

Mark Zandi:                       Yeah, exactly. Right, exactly.

                                                Okay. Cris, I didn't give you a chance to kind of talk more broadly about the jobs numbers. What do you think?

Cris deRitis:                        Again, solid report.

Mark Zandi:                       Solid report?

Cris deRitis:                        Gains to show that we are able to create jobs, that there is an ample supply of whatever the source of workers shows up, so it's quite strong.

                                                There were, again, as usual, you can always find something in the report to debate. I did notice that much, actually all the job creation, if you take the numbers at face value, was in part-time. The full-time work actually fell, the number full-time workers fell. The part-time-

Mark Zandi:                       Do you buy that at all?

Cris deRitis:                        I don't know. I don't know.

Mark Zandi:                       That's the household survey number, right? I mean, come on. Does that make any sense?

Cris deRitis:                        Maybe not the degree, but the direction perhaps. Also, a number of multiple job holders, so that's also something to consider here. A big jump

Mark Zandi:                       Can I ask a technical question, maybe to Dante and Marisa? If I look in the payroll survey and look at average weekly hours, that's kind of bounced back in the last couple of months, and I think it's sitting exactly where it was a year ago. If all the job growth in the past year was part-time, would that be the case? Wouldn't it also... I mean, not necessarily the case, but wouldn't it be more likely that we'd see some weakening in the hours worked in the payroll survey as well, or is that too disconnected? Dante?

Dante DeAntonio:           No, I think that's fair. I think if you're really seeing almost all job growth in part-time employment, I think you'd see some downward pressure, which could have contributed to the fall in hours that we saw over the last 12 to 18 months. But that looks like it's stabilized and like you said, it's a little change over the last year at this point, so I'm not sure that that holds a whole lot of water to think that all job creation is part-time at this point. It just doesn't seem to fit.

Mark Zandi:                       I guess it fits in the sense that a lot of the job growth is industries that tend to have more part-time workers, right? I think.

Marisa DiNatale:              Yeah.

Mark Zandi:                       Healthcare, leisure hospitality, meaning restaurants. Government? No, that's not part-time. I don't know. I'm stretching. But that's the best you could do, Cris? That's the blemish? Any other blemishes that you can think of?

Cris deRitis:                        No, not really. I guess you could point to the, not a blemish but just an observation, that the over-65 cohort remains out. Their labor force participation rate is still depressed relative, well, to 2019.

Mark Zandi:                       Am I right when I say the participation rate is at pre-pandemic levels or higher for every age group except for 65-plus? Is that roughly right?

Cris deRitis:                        That's roughly right. Actually, I looked at this morning.

Mark Zandi:                       Oh, you did?

Cris deRitis:                        The 35 to 44 is actually above.

Mark Zandi:                       Above?

Cris deRitis:                        That group is, and maybe that goes to that immigration, or I don't know.

Mark Zandi:                       Right, right. Why do you think the 65-plus participation rate is so depressed compared to certainly pre-pandemic? Because pre-pandemic, it had been steadily rising. The pandemic hits and it fell and it's flat as a pancake. It's shown no improvement at all since falling in the teeth of the pandemic.

Cris deRitis:                        I think you have that booming stock market.

Mark Zandi:                       Is that what it is? Yeah.

Cris deRitis:                        And booming housing prices and the need for-

Marisa DiNatale:              It has risen for women 65 and over since it bottomed out.

Mark Zandi:                       Has it?

Marisa DiNatale:              Yeah, but not men.

Mark Zandi:                       Not men. Yeah, okay. Yeah, you just think it's the wealth, kind of a-

Cris deRitis:                        Wealth effect.

Mark Zandi:                       A wealth effect, yeah.

Cris deRitis:                        Maybe on this gender dimension, maybe the composition is shifting.

Mark Zandi:                       Right, okay. Well, Marisa, anything else you wanted to add in terms of broad strokes? How you feel about it?

Marisa DiNatale:              It is pouring rain here, so I don't know if you can hear that, but-

Mark Zandi:                       Oh, no.

Marisa DiNatale:              It's hard to hear you, it's actually pouring so hard. So I was going to put on my headphones.

Mark Zandi:                       We got weird events everywhere.

Marisa DiNatale:              Can you hear me okay?

Mark Zandi:                       Earthquakes, floods.

Cris deRitis:                        Yeah, we do.

Marisa DiNatale:              I know. It's...

Mark Zandi:                       I'm looking out the window. I see frogs everywhere.

Marisa DiNatale:              And we have a solar eclipse on Monday.

Cris deRitis:                        Solar eclipse Monday.

Marisa DiNatale:              Yeah.

Mark Zandi:                       Solar eclipse? Oh, that must be-

Cris deRitis:                        The locusts are coming, the frogs.

Mark Zandi:                       The frogs. Yeah, Gee. Oh.

Marisa DiNatale:              Well, just that leisure hospitality now, for the first month since the pandemic, is back to where it was prior to the pandemic. Remember, this was the big industry that hadn't recouped all the jobs. So with this month's job game, it's back.

                                                So now there's only one major industry that's not back, and that's other services. This other personal services group, which is about 6 million people, it's smallish, but significant. That's still about 40,000 jobs below its pre-pandemic level. That's the only one. Every other industry is back.

Mark Zandi:                       Government?

Marisa DiNatale:              Government is back.

Mark Zandi:                       Government is back.

Marisa DiNatale:              And all three levels of government are back. The only other one you could point to is mining, but I don't count that because that's up and down with oil prices and drilling and that kind of thing. But yeah, everything else is back.

                                                There was a big gain in construction-

Mark Zandi:                       Yeah, I saw that.

Marisa DiNatale:              ... also last month. So I mean, what we've been seeing is very strong service sector growth and the goods-producing sector, manufacturing has been sort of languishing, but there was a big uptick in construction mostly among contractors, residential contractors. So people are remodeling those houses because they can't buy new ones.

Mark Zandi:                       Yeah. Well, and you speak from experience.

Marisa DiNatale:              I do.

Mark Zandi:                       That's why you're smiling.

Marisa DiNatale:              I love remodeling houses. That's what I do.

Mark Zandi:                       Yep, yep. Well, I think I've used this before. I'll just use it again. This is picture perfect. I mean, there's nothing wrong. I mean, the job market is... We need to put a pin in this data, March of 2024, because how can it get any better really, when you think about it? Amazing-

Marisa DiNatale:              Oh, the other-

Mark Zandi:                       Oh, go ahead.

Marisa DiNatale:              The other good thing is that average hourly earnings, I mean, while they accelerated over the month, they're up 4.1% over the year, which is the lowest we've seen since the pandemic. It's still about a percentage point above the pre-pandemic year-over-year growth rate, but I mean, that's steadily come down too.

Mark Zandi:                       That's a feature, not a bug.

Marisa DiNatale:              So there's not much evidence that all this job growth is pushing wages higher, right?

Mark Zandi:                       That's a feature, 4%, not a bug.

Marisa DiNatale:              Exactly, right.

Cris deRitis:                        So January was a fluke once when we got that confirmed-

Marisa DiNatale:              That's what it looks like.

Mark Zandi:                       Yeah. I mean, 4% is exactly... I think that's where it should be. I mean, that's consistent with the Fed's inflation target of 2, plus current productivity growth, right? It is. At least 2. Is that right, Dante? Is that right?

Dante DeAntonio:           Current productivity growth? Yeah, I might buy that as a 2. Is that where we're going to land two years from now? I'm not so sure.

Mark Zandi:                       Here's the other thing. I mean, businesses' profit margins have not come in at all. They surged during the pandemic. They've not come in, so it's not like they have a lot of pressure from labor costs to jack up price. Even at this point, it's the opposite as competition kicks in and people start shopping more carefully for things.

                                                Everything looked... Strong job growth. Dante pointed out reasonably broad-based job growth. I mean, you've mentioned construction. That never happens when interest rates are high. It just doesn't happen, and there's a lot of reasons for that, but nonetheless. Hours worked, I was worried about that a couple of months ago. Not so much anymore. I was worried about hiring, but that feels like that's okay. Looking at the Job Openings and Labor Turnover Survey data. Quits have normalized.

                                                Unfilled positions are still elevated compared to pre-pandemic, but I don't think that means anything. It's just the way businesses are using unfilled positions. There's been a change in that. There's no cost to maintaining unfilled positions or very low cost.

                                                Average hourly earnings, unemployment. I mean, that unemployment number, 3.8 and it's over two years now it's been below 4% or below. It's just... Am I wrong? It's just unbelievable. The labor market is just picture perfect about as good... I mean, it is as good as it gets, I think. No? Anyone disagree with that? No?

Dante DeAntonio:           No, I agree. I think it's been more about resetting expectations for what job growth should be. I think for a while, last year we kept expecting this steady deceleration in job growth, and now with this new insight on immigration, I don't think that should be the expectation. And so if you go into it assuming that we should be adding to 200, 250, 275,000 jobs a month, and that's what we've been getting and everything else looks good like you mentioned, then yeah, I think it's hard to find fault.

Mark Zandi:                       Yeah. Okay. All right.

Marisa DiNatale:              One more thing?

Mark Zandi:                       Yeah, one more.

Marisa DiNatale:              Just back to the immigration story, if you look at the breakdown in the household survey of foreign-born versus native-born, over the past year, the foreign-born civilian non-institutional population is up almost 3 million, whereas it fell for native-born, and pretty much all the labor force of growth in the past year has been among the foreign-born.

Mark Zandi:                       I think actually, I was looking at that data. I think all of the labor force growth since the pandemic hit is foreign-born, all of it. I think native-born is no change whatsoever.

Marisa DiNatale:              Yeah. So do you think the Fed is now just ignoring the labor market data and they're just solely focused on inflation?

Mark Zandi:                       Well, I was going to come back to the Fed and the markets. Why don't we play the game, just to break things up a little bit, and then come back and talk about it in the context of monetary policy, if you don't mind? Is that okay?

Marisa DiNatale:              I don't mind.

Mark Zandi:                       Okay. I know because you always-

Marisa DiNatale:              It's your show.

Mark Zandi:                       ... want to get right to that game to show off like you typically do. See how she does that? Yeah.

                                                All right. So let's play the game, the stats game. We each pick a statistic. The rest of the group tries to figure that out through cues and deductive reasoning clues, and then the best one is one that's not so easy. We get it immediately. One that's not so hard, we never get it. And if it's apropos to the topic at hand, all the better.

                                                So Marisa, you're up. What's your stat?

Marisa DiNatale:              My stat is 17.7%

Mark Zandi:                       Labor market-related?

Marisa DiNatale:              Yeah.

Mark Zandi:                       In the Jobs Report?

Marisa DiNatale:              Yes.

Mark Zandi:                       Payroll survey?

Marisa DiNatale:              No.

Mark Zandi:                       Household survey?

Marisa DiNatale:              That's the one.

Mark Zandi:                       Okay. See, guys, I got you so far now.

Dante DeAntonio:           Yeah, you look at that.

Mark Zandi:                       I got you really far into this. Now take it from here.

Dante DeAntonio:           Is that an unemployment rate of some kind?

Marisa DiNatale:              No.

Cris deRitis:                        Is it a share?

Marisa DiNatale:              It is a share.

Cris deRitis:                        Okay.

Mark Zandi:                       Is it the share of the labor force?

Marisa DiNatale:              No.

Mark Zandi:                       No. Share of the unemployed?

Marisa DiNatale:              No.

Mark Zandi:                       Oh, goodness.

Cris deRitis:                        Share of the population?

Marisa DiNatale:              No.

Mark Zandi:                       Really?

Marisa DiNatale:              What's left?

Mark Zandi:                       What is left?

Dante DeAntonio:           Share of employment?

Marisa DiNatale:              Yes.

Dante DeAntonio:           Part-time share of employment?

Marisa DiNatale:              Yes!

Dante DeAntonio:           Oh, okay.

Mark Zandi:                       Oh, part-time.

Marisa DiNatale:              Ding, ding, ding.

Mark Zandi:                       Part-time?

Marisa DiNatale:              Yeah, this is the share of workers that are part-time according to the household survey, 17.7%. This is the highest that it's been since early 2018, since March of 2018. So you obviously had this spike during the pandemic when all the jobs that people could find in early 2020 were part-time, and then it fell very quickly when the economy reopened and it's been steadily rising. But if you look at a longer time horizon, Cris brought up this statistic, so if you look at a longer time horizon, this isn't alarming. I mean, this has kind of been falling structurally over time, the share of people working part-time, but this is nevertheless the highest it's been since early 2018.

                                                I looked at... Because there's two types of part-time employment. There's people that are working part-time because they want to be part-time, they choose to work a part-time job, and then there's people that that's all they can find or their employer's cutting back their hours. People that are working part-time for economic reasons, this is the bad part-time, this is the part-time, the involuntary part-time, that's only 15% of part-time work, and that is near an all-time low. So it suggests that though we have more people working part-time, the vast majority of them are doing it because they want to be working part-time jobs, not because that's all they can find or because their employer is cutting back their hours.

Mark Zandi:                       Oh, that's fascinating. That's fascinating. Don't we, Dante, in the payroll survey have data showing the number of dual-job holders? Isn't that data in there?

Dante DeAntonio:           In the household survey, there's multiple job holders. There's nothing in the payroll-

Mark Zandi:                       It's not in the payroll survey? Oh no, it couldn't be in the payroll survey. It would be in the household survey. And Marisa, did anyone look at that?

Marisa DiNatale:              Yeah, that's low.

Mark Zandi:                       It's low?

Marisa DiNatale:              Yeah.

Cris deRitis:                        But it rose this month, right?

Marisa DiNatale:              This month, yeah. But it's like-

Cris deRitis:                        It's 5.2%.

Marisa DiNatale:              ... 5 or 6%. Is it 5%?

Cris deRitis:                        5.2.

Marisa DiNatale:              Okay.

Mark Zandi:                       Put some context to that, Cris.

Cris deRitis:                        That's a little bit higher, but it's not unusual.

Mark Zandi:                       So people who are taking part-time jobs are taking part-time, it's not like they're taking a second job. They're taking a... They want a part-time job. It sounds like they want a part-time job. No?

Cris deRitis:                        The vast majority, it sounds like that's the case. Some are-

Mark Zandi:                       That's the case.

Marisa DiNatale:              But I mean, that doesn't necessarily... If they're taking a second job that's part-time, that could still be a choice they're making, right? I mean...

Mark Zandi:                       Yeah. Oh, yeah. Yeah, yeah. I'm just saying though, it feels like most of-

Marisa DiNatale:              They're not mutually exclusive.

Mark Zandi:                       ... the part-time jobs are not dual-job holders. These are people who want a part-time job, just one part-time job.

Marisa DiNatale:              Right. I mean, just given the low share of people that have more than one job, it suggests that most of the people that are working part-time, it's their sole job.

Dante DeAntonio:           Right.

Mark Zandi:                       Could this be remote work dynamics playing a role here? I mean, it makes it easier to do part-time remotely, I would think. Right?

Cris deRitis:                        Well, that's the glass half-full version. Right?

Mark Zandi:                       Okay.

Cris deRitis:                        It's just more flexible, also it might mean-

Mark Zandi:                       That's me, Cris. Glass half-full is me.

Cris deRitis:                        I know, I know.

Mark Zandi:                       Okay.

Cris deRitis:                        It could be the older worker as well who previously, it would've been difficult to contribute a few hours. You wanted to work, but the labor market was rigid. Now you have some flexibility to contribute. Now, that's the positive spin. The labor market is just more dynamic now. You can accommodate-

Mark Zandi:                       Yeah, different work.

Cris deRitis:                        ... a lot of different lifestyles, a lot of different people with different needs.

Mark Zandi:                       Yeah. Oh, that's interesting.

Marisa DiNatale:              What's the glass half-empty?

Cris deRitis:                        Well, that you would have to... That you're forced. That this is all you could get and you have to work multiple jobs to make ends meet.

Mark Zandi:                       That was sort of the basis for my question around dual-job holders because that would be... It feels like that, "I have to work two jobs to make ends meet, make my rent payment," that kind of thing.

                                                The other thing is, as we pointed out, participation rates for older workers is down, so that wouldn't be consistent with older workers needing to work. I mean, it could be, but-

Cris deRitis:                        It's not needing, but wanting to because, "I want to work"-

Marisa DiNatale:              Does anybody want more than one job?

Mark Zandi:                       Yeah, right.

Cris deRitis:                        Yeah.

Mark Zandi:                       I don't know. We're searching our minds if we know anyone.

Marisa DiNatale:              That's right.

Dante DeAntonio:           I have a question. Back to Cris's original point about what if the data's right and that all the jobs we added were part-time jobs this month, is that necessarily a bad thing given everything else that we just talked about? The fact that there's very few people working part-time because they're being forced to, the number of multiple job holders is pretty low, the unemployment rate is very low, and we're trying to pull people off the sidelines. So if what it takes to pull them off the sidelines is part-time jobs, maybe that's all they want. They don't really want to be working full-time.

                                                So in the current environment with everything else we know, do we even care if most of the jobs are part-time? Is that necessarily a bad thing or is that okay? We're meeting the supply that's out there?

Mark Zandi:                       Yeah, yeah. It's just flexibility, Cris said it, the flexibility of the labor market.

Dante DeAntonio:           Right.

Mark Zandi:                       Yeah, okay. Okay. Yeah, that was a really good one. 17.7% of job, what, of employment?

Marisa DiNatale:              Of employed people are working part-time.

Mark Zandi:                       And that's high by historical standards?

Marisa DiNatale:              The household survey. It's the highest since early 2018, yeah.

Mark Zandi:                       Oh, okay. Early 2018. Okay. All right. Okay.

                                                Okay. Dante, you're up. What's your stat?

Dante DeAntonio:           Hard to follow that one up. That was good.

Mark Zandi:                       That's a good one, yeah.

Dante DeAntonio:           I'm going to go 50.3.

Mark Zandi:                       Is that the one-month diffusion index?

Dante DeAntonio:           It's not.

Mark Zandi:                       Three-month diffusion index?

Dante DeAntonio:           No.

Marisa DiNatale:              Is it a share of the labor force?

Dante DeAntonio:           You guys really had me pigeonholed. It's not even labor market-related.

Marisa DiNatale:              Oh.

Mark Zandi:                       Oh! Oh.

Marisa DiNatale:              Oh, is it the-

Dante DeAntonio:           You just honed right in on me. I mean, that's par for the course.

Mark Zandi:                       Oh, I know what it is. ISM, Manufacturing Index-

Marisa DiNatale:              Is it the ISM Manufacturing Index?

Dante DeAntonio:           It is.

Mark Zandi:                       Hey, I think I said that first. I'm just saying.

Marisa DiNatale:              I said it louder though, and over you.

Mark Zandi:                       You did. You definitely said it louder.

Dante DeAntonio:           Yeah, she said it louder and got the whole thing out first, I think, so I don't know how that gets counted.

Mark Zandi:                       That's a good one though. Why did you pick that? That's a really good one though.

Dante DeAntonio:           So it's the first time it's above 50 and I think it had been below 50 for 16 straight months before it rose above the neutral threshold of 50 in March, signaling expansion in the manufacturing sector.

                                                To me, it's just another sign that things are going pretty good, right? I mean, we talked about construction employment still sort of chugging along despite high interest rates. Now it looks like manufacturing is turning a corner and I think there's some evidence that we've been talking about for months now that it seemed like there's this gap between the actual sentiment around manufacturing and the hard data that we have. And it looked like the hard data around manufacturing was a little more upbeat than the sentiment measures like ISM.

                                                And so I think this is just starting to bring that together a little bit. That manufacturing really is starting to improve. I think we've seen evidence of lots of investment around manufacturing now over the last six to 12 months, and it looks like the outlook is more positive over the next 12 months than it was looking back 12 months.

Mark Zandi:                       Yeah, I think it's a global phenomenon too. Aren't we seeing signs of life in manufacturing in different parts of the world? China's kind of kicking back into gear.

Dante DeAntonio:           Yeah.

Mark Zandi:                       Yeah. I think we had a podcast last week. Wasn't Korea doing well? That was Steve Cochran's...

Dante DeAntonio:           Yeah, right.

Mark Zandi:                       Yeah, right? Okay.

Dante DeAntonio:           I don't know about Europe.

Mark Zandi:                       Not about... Yeah.

Dante DeAntonio:           German, maybe.

Mark Zandi:                       Okay. Well, so that's also encouraging. And actually interestingly, like construction, which is very rate-sensitive, manufacturing typically, when rates rise, gets nailed, and that did not happen this go-around. I mean, it kind of slumped based on the ISM survey. Based on industrial production, which is actual output, that was just effectively flat. That wasn't even down.

Dante DeAntonio:           Right. And the same with payroll. I mean, payrolls have basically moved sideways for the last year. I mean, there's been some noise, but they haven't really declined to any meaningful degree.

Mark Zandi:                       Right. So manufacturing's actually held up really surprisingly well in the context of the higher rate environment. Okay. Well, that was a good one.

                                                Cris, what's your stat?

Cris deRitis:                        90,309.

Mark Zandi:                       Is it labor market?

Dante DeAntonio:           This was the other one I was going to use, so I know.

Mark Zandi:                       Oh, no, really?

Dante DeAntonio:           It's layoff announcements, Challenger.

Cris deRitis:                        Yeah. You got it, you got it.

Mark Zandi:                       Oh, right.

Dante DeAntonio:           I decided to go optimistic instead of pessimistic.

Marisa DiNatale:              Oh, yeah. That's high.

Cris deRitis:                        Oh, but there's an optimistic story in there. That's why I chose it.

Dante DeAntonio:           Yeah, I agree. 90,000-

Mark Zandi:                       Okay, so explain to everyone what the stat is and what it means.

Cris deRitis:                        What it means. It's the job cuts announced layoffs from Challenger, Gray & Christmas. 90,309 job cuts announced in the month of March. It's the most since January of 2023, so it's at a high level. It's a big jump this month, almost 7% higher than last month.

                                                So pessimistic, right? Very negative, right? Lots of layoffs being announced, but if you dig into the data, what you find is that 36,000 of those layoffs were announcements from the government. There are 10,000 jobs being eliminated at the VA, Veterans Administration, and 24,000 at the Army, and that's unusual. Last time that happened was back in September 2011. So it's a one-time type of effect. If you remove those, then the job cuts are actually down substantially, about 30% down. So more optimistic stories.

Mark Zandi:                       Yeah. Why is the Army laying off? Do you know?

Cris deRitis:                        I don't know. I was trying to figure that out, but I ran out of time.

Mark Zandi:                       It's probably news to them too. They're going, "It's probably a BLS seasonal adjustment factor or something."

Cris deRitis:                        Well, this is Challenger. This isn't BLS.

Mark Zandi:                       Oh, this is Challenger. Right. This is announced. Sorry.

Dante DeAntonio:           Announced.

Mark Zandi:                       You're right. This is announced, yeah. So the Army actually announced we're cutting-

Cris deRitis:                        24,000 positions.

Mark Zandi:                       Huh. That is very interesting. Hey, I mentioned the WARN notices. Marisa, did you have a chance to take a look at those?

Marisa DiNatale:              Yeah, there is a site that aggregates them all because they're all done by state at the state level. So a WARN notice is that if a large employer with over a certain number of employees... I'm not quite... I don't know what that is. Dante, maybe you do?

Dante DeAntonio:           It's actually, I think, different by state. I think it's usually at least 50 employees. Sometimes it's higher depending on the state.

Marisa DiNatale:              So if they're planning a layoff, they have to report to the state's Department of Labor the layoff that they're planning, the number of people that will be affected by the layoff. And I think, Mark, you asked about it because somebody told you to look at this as a leading indicator of layoffs.

Mark Zandi:                       A chief economist from a very big company asked me, yeah.

Marisa DiNatale:              Okay. Well, they're actually down since last year. They don't look... They're not high relative to pre-pandemic. They're actually kind of low relative to pre-pandemic, and they've been falling since the middle of 2023. There was a spike in mid-2023, mostly coming from large tech companies. If you remember a year or so ago, we had all these big tech announcements, and so you do see that in the WARN notices, but since then, they've been kind of falling, so they're... Nothing doing there.

Mark Zandi:                       Okay. They're saying one picture there as well?

Marisa DiNatale:              Yeah.

Mark Zandi:                       Yeah, okay. All right. I mean, wow. Amazing.

                                                All right. I'll give you my stat. 80.7%.

Marisa DiNatale:              That sounds like a participation rate or something.

Mark Zandi:                       Not participation.

Cris deRitis:                        E-pop?

Marisa DiNatale:              E-pop?

Dante DeAntonio:           That's employment population, yeah. It's got to be prime age though. It's not overall.

Mark Zandi:                       Yeah. Prime age employment to population. Another really good measure of labor market slack. It's perfect. Just let me just say it again. It's perfect. It's perfect. Exactly consistent with a full employment economy, not too hot, not too cold. Exactly where you want it, and it's kind of been traveling around that level now for a while. Well over a year, probably a couple of years.

                                                It just shows how... It's almost like someone's sitting there drawing on a piece of paper what numbers they want, and we're getting them. I mean, it's just unbelievable. Now, someone's going to take that and say, "There's a conspiracy here."

Cris deRitis:                        There you go. I was going to give a warning. That's not what happens, by the way.

Mark Zandi:                       That's not what happens. I know.

Marisa DiNatale:              Oh, God.

Mark Zandi:                       Although apparently a lot of Americans think that probably is what's happening given their feelings about the economy. But my gosh, I mean, just unbelievable. It's just unbelievable. The numbers are... Again, put a pin in this month, March 2024. It may be the high watermark for decades to come. It's just unbelievably good. Unbelievably good.

                                                Okay. Let's end the conversation around what all the data mean for the Fed and markets, and maybe, Cris, I'll turn to you first. I don't know if you've had a chance, but I saw the stock market, lots of green. I saw the bond market long-term interest rates were up a little bit. What about the expectations around the Fed and the first rate cut? Any sense of that?

Cris deRitis:                        Yes. Fell a little bit. I'm sorry. In terms of June, looking at June as the first rate cut. May is off the table. Nobody expects May, or very few.

                                                For June, there was a little bit of a decline, but still a majority believe that the first cut will be in June at this point, and still as I looked out until December as well, and same thing for a small majority suggest three cuts this year.

Mark Zandi:                       Okay, so market participants are viewing this data just exactly the way we are. Yeah, really strong. Lots of job growth, but nothing to worry about because we've got all this labor supply and wage and price pressures continue to move in the right direction here.

Cris deRitis:                        Yeah, I suspect it was that average hourly earnings number, the 4.1%-

Mark Zandi:                       Oh, is that what it was?

Cris deRitis:                        ... Marisa, that mentioned. If you're not seeing that wage pressure there, that's-

Mark Zandi:                       Yeah, I think technically that could have come on the hot side, right? Because of calendar effects. I think there was some expectation it might come in even stronger than the 0.3 for the month.

Cris deRitis:                        Yeah.

Mark Zandi:                       Okay, yeah. So Marisa, you asked the question, it was a really good question. "Is the Fed paying," I'm paraphrasing, tell me if I got this wrong, but you asked, "Does the Fed even care about these job numbers anymore? It's all about the inflation numbers."

Marisa DiNatale:              Yeah.

Mark Zandi:                       Cris, how do you answer that question?

Cris deRitis:                        I think you're right. I don't think they're particularly concerned about the labor market at this point. It's all about next week, CPI report, and then the other inflation reports before the next meetings.

Mark Zandi:                       Right, yeah. I don't get the sense that the job numbers matter at this point. I mean, unless they really move in one direction in a big way up or down. But at this point, it's all about getting the inflation numbers that are consistent with the idea that we're at target or pretty close to target or headed back to target. And that the January, I think everybody knows who listens to the podcast, the January inflation numbers were hot. They came in strong. And February wasn't quite as strong, but they were still on the high side of, I think, what the Fed would feel comfortable with.

                                                The argument, I think, and it's a good argument, is that that's a measurement issue, a technical factor, a seasonal adjustment, that kind of stuff. If that's true, then we should see much better inflation statistics for the month of March, April, and May, and we're going to start getting the March number next week, I think, for CPI, so we'll get a better sense of it.

                                                And that's what, I think, the Fed, policymakers, everyone's focused on because that's the bar. We need to see 0.2, no higher than 0.3 on core, preferably closer to 0.2. Maybe it'd be nice to get a 0.1, a month-to-month increase, and if we do, we'll get a June rate cut, something like that. If we don't, if we keep getting 0.3s, then I don't think they're going to cut.

                                                Agree? Cris, do you agree with that?

Cris deRitis:                        Yeah, absolutely.

Mark Zandi:                       Yeah, okay. And as I said, the equity market, the stock market seemed to like it. Of course, it's coming off a few days of lots of red, so maybe it's just a-

Cris deRitis:                        Reaction.

Mark Zandi:                       ... bounce-back reaction, but okay.

                                                Anything else on the Fed or markets, Cris, that you want to bring up? Or Dante, Marisa, anything else? No?

Dante DeAntonio:           I think Powell basically came out and said as much this week, right? Strong job growth isn't enough to stop them from cutting rates. I mean, I think wage growth maybe still matters a little bit, but I don't see there's enough would happen between now and June on wage growth. Year-over-year and three-month annualized wage growth, we're at 4.1%. I don't see that changing enough over the next two months for that to matter or to move the needle in terms of what they do.

Mark Zandi:                       Yeah. Did you notice in that same speech, part one was about the economy, to your point, the second was around Fed independence? Did you catch that? I don't think many people caught it.

Cris deRitis:                        Oh, no, I didn't.

Mark Zandi:                       Oh, yeah, you should go read it. I mean, he was talking about how important Fed independence is to the well-functioning of the economy and how the Fed strives to ensure that it is independent by being so transparent about what it's looking at, how it's looking at things, how it's setting policy, but very clearly top of mind for Fed officials this presidential election and getting politicized. They really don't want to do that, so really don't want to get caught up in politics.

Marisa DiNatale:              I wonder if that means they're looking at a later-in-the-year rate move.

Mark Zandi:                       Well, if they're true-

Cris deRitis:                        If they want that option, right? Sorry. Go ahead.

Mark Zandi:                       No, no. I was just going to say, if they're true to their word, then that should have no influence, no impact, right? I guess.

Marisa DiNatale:              Right. But is he kind of setting the stage by saying, "Anything we do is totally independent. Even if our next rate cut isn't June, it's in the fall, right before the election, you should ignore that"?

Mark Zandi:                       Yeah, yeah. Well, fortunately, I think there's a meeting. There's June, kind July-ish, September-

Marisa DiNatale:              September.

Dante DeAntonio:           September.

Mark Zandi:                       Then November after the election, and then end of December-

Dante DeAntonio:           It's like the day after, yeah, the election.

Mark Zandi:                       Yeah, yeah. After the election, so it gives them a little... Maybe they did that on purpose. I'm pretty sure they did. Set the meeting after the election as opposed to before it. But anyway.

                                                Hey, I want to end with turning to you, Dante. Why are your forecasts so wrong on the job numbers?

Marisa DiNatale:              Ouch.

Dante DeAntonio:           Hey, I will say I did bump my-

Cris deRitis:                        He was better than Consensus.

Dante DeAntonio:           I bumped it up just the other day. I felt like I was in line with Consensus for the last four or five... I just felt like I got to break the mold a little.

Mark Zandi:                       I know I'm busting, I think the phrase is busting your chops, but it's a broader point. Everyone has been pretty wrong and everyone's been coming in low relative to the reality of what's going on. Is that just because it's only now it's sinking in what's going on with immigration and the labor force and that the sustainable level of job growth is a lot higher than we thought?

Dante DeAntonio:           Yeah, I think over the last couple of weeks, we've gotten some new research around it's putting a finer point on the impact of immigration and because I think up until recently, it seemed likely that that trend job growth was closer to 200,000 than 300,000. It seemed like we were headed back towards where we were late last year, not sustaining 250, 275, and now it feels like that is more realistic, that we could sustain higher levels of job growth. I think I'm guessing that tide's going to start to shift here over the next couple months in terms of what the consensus view is.

Mark Zandi:                       Yeah, the interesting thing is we have in our minds these models and we think we know where the trends are going, and therefore that influences our estimate.

                                                You do this other really, really cool thing. You take a look at the Job Openings and Labor Turnover Survey data, and because that extends further into the month... The BLS survey for the employment report is kind of mid-month. The JOLTS data that comes a little bit later takes information that goes through the entire month. So it gives you a bit of a fork, some insight into what's going to happen in the next month, and you use that, and I noticed that when you did it for the month of March, you were coming in at 260 or something, something close to that.

                                                But I mean, it's not foolproof, but nonetheless, it feels like we all are... This is a bias we all have. We've got kind of this prior sense of where the anchor is, and if we're going to err on the one side or the other, we err towards the anchor, even if we're getting other information that suggests otherwise.

Dante DeAntonio:           Yeah. When I was thinking about the forecasts, it's like there really wasn't anything out there that would suggest that job growth is going to slow in any meaningful way, right?

Mark Zandi:                       Yeah, exactly. Exactly.

Dante DeAntonio:           And that's why I finally, I'm like, "I don't see why. Why is it 200? It doesn't make sense."

Mark Zandi:                       Yeah, why is it 200?

Dante DeAntonio:           I don't know that it's going to slow at all, and it certainly doesn't seem like there's any evidence that it's going to slow that much. I mean, UI claims have been steady. The implied job growth from JOLTS through the end of February, like you mentioned, was rock solid compared to January. It was hard to find anything that would suggest it's going to slow at all, let alone slow from 275 down to 200.

Mark Zandi:                       Yeah, yeah. We have to have the courage of your what, your data, your models, your dollars?

Dante DeAntonio:           Yeah. That means I have to go back and start asking you what your forecast is beforehand so that we can have an actual comparison point. Right?

Mark Zandi:                       No, this bias, there's got to be a description for this bias.

Cris deRitis:                        Anchoring bias.

Mark Zandi:                       Anchoring bias! That's exactly... That's right, anchoring bias. This anchoring bias, I'm more guilty of that than most people, I think. That's my biggest bias. I got many biases, but this is my worst bias, the anchoring bias. I mean, I've got a model in my mind, and there has to be a fair amount of data saying that model is wrong before I move.

                                                I guess the other... Isn't that more like a hedgehog? Isn't that what? Remember the hedgehog and the fox in terms of forecasting prowess? Yeah. Dante is definitely... I don't know what he is. I can't figure him out.

Dante DeAntonio:           All this means is that for the forecast, I'm going to go 275 next month and it's going to come in at 125. That's all this means.

Mark Zandi:                       I know, I know!

Marisa DiNatale:              Yeah, everyone's going to raise their forecasts and then it's going to crater.

Mark Zandi:                       That's what's going to happen.

Dante DeAntonio:           I'll get that courage of my conviction, and then it's going to just go right the other way, so look for that.

Mark Zandi:                       Right, yeah. Actually, that would be a really cool thing to do, list all the biases that are out there, and then we have surveys and we each ask ourselves, rank-order these biases in terms of which you're most guilty of and which you're least guilty of. I'm sure someone's done something like this, but it'd be very interesting.

                                                No, you don't think so? You're looking at me like-

Dante DeAntonio:           I don't know if you'd get an honest answer.

Mark Zandi:                       Oh. I'd be honest. I tell you, my anchoring bias is my worst bias. Well, and this all from my own head. I could be dead wrong.

Cris deRitis:                        It could be a bias to your bias.

Mark Zandi:                       I could be biased.

Dante DeAntonio:           Yeah, I would say [inaudible 00:59:26].

Cris deRitis:                        Maybe? Nice. What'd you get in that-

Mark Zandi:                       Exactly. All right, we're going to call this a podcast. That's an interesting ending, I think. At least in my mind, it's an interesting ending. Any other last words, Marisa?

Marisa DiNatale:              Everybody should try to... Are you guys going to watch the eclipse on Monday? Are you in the path of totality?

Dante DeAntonio:           We are.

Cris deRitis:                        Not totality.

Mark Zandi:                       No, Erie is right-

Cris deRitis:                        We're slightly off the path, but we're like 90% or something.

Dante DeAntonio:           We're close.

Marisa DiNatale:              Oh, wow.

Mark Zandi:                       I'm too afraid to lose my eyesight. I'm not doing it.

Marisa DiNatale:              You have to order the glasses.

Mark Zandi:                       I'm not doing that either. I don't trust them. I don't trust them. I'm just saying. That's a bias, another bias.

Cris deRitis:                        I'm just going to stay in-

Marisa DiNatale:              Keeping your eyesight? That's a good one to have.

Mark Zandi:                       Keeping my eyesight. Well, I can't smell anything, so I got to preserve my eyesight.

Marisa DiNatale:              You're down to just three senses left.

Mark Zandi:                       I'm down a sense already. I can't afford another sense!

Cris deRitis:                        Ah, some risk aversion there.

Mark Zandi:                       Imagine a chief economist who can't see or smell? Oh, geez. I can barely hear.

Dante DeAntonio:           Maybe that's a benefit, right?

Mark Zandi:                       Oh, that's true.

Dante DeAntonio:           You're not clouded by the data. You stick with your morals.

Marisa DiNatale:              Just going on your gut.

Mark Zandi:                       Yeah, that's right. That's right. Yeah, definitely. Definitely. All right. We're going to call this a podcast, dear listener. Take care now. Talk to you next week.