Hiring Freeze Accelerates, Social Security Risks Insolvency | Mark Hamrick
Summary
Market Outlook: Fed expected to continue rate cuts despite 3% CPI, with energy-driven volatility keeping inflation above the 2% target near term.
US Housing: Structural shortage persists but lower mortgage rates (~6.3% now; 5.5% could unlock demand) and cooling in some hot markets suggest incremental affordability improvements.
Homebuilding: Executives anticipate more millennial/Gen Z participation, while constraints include land access, labor shortages, and building material costs (e.g., lumber, tariffs).
AI and Data Centers: AI-driven capex and data center demand may pressure urban land availability and sustain real estate demand, though sustainability and bubble risks were noted.
Social Security Risk: Trust funds face potential 20–25% benefit cuts by ~2033, with high public reliance increasing political and financial risk for households.
United States: The guest remains optimistic on long-term US growth due to innovation, dynamic markets, and the benefits of legal immigration, noting the economy’s resilience.
Key Companies/Tickers: No specific public company tickers were pitched or highlighted for investment in this discussion.
Transcript
of people's feelings not being well aligned with the official economic data. And I'd say we're still there in a way. The Fed will cut interest rates for the second time in a row by one quarter of 1% 25 basis points. There will be continued strong demand for homes. If we see mortgage rates come down even into let's say the 5 1.5% range for the 30-year fixed rate mortgage in the US, that will bring more people into the market. The the US economy has proven more resilient than would have been expected for a number of years now. I wouldn't want to but bet against it. >> We're going to comment on the latest CPI report. Where is inflation headed from here? What is the Fed going to do in response to today's data and what is going to happen with economic growth, job growth, wage growth in the US? Mark Ham joins us today. He is the uh senior economic analyst at Bankrate in the chief of the Washington bureau. Welcome to the show, Mark. It's good to host you. Thank you for being here. >> Good to be with you, David. Thank you. 3% headline CPI is the highest number on an annualized basis since January 2025. It just it's just been it's been creeping up steadily since the summer mark and there doesn't seem to be anything stopping it. What's your interpretation of the 3% mark? Is it going to be enough to dissuade the Fed from cutting rates next month or at least yeah later later this month? Well, >> we're just a number of days away from the Federal Reserve announcement, Dave. And the way these things work is that if the markets have an expectation, the Fed is going to do a particular thing, uh those officials are very well aware of that and they would take steps to essentially correct the market expectation. So the expectation as we speak is the Fed will cut interest rates for the second time in a row by one quarter of 1% 25 basis points is the insider way of uh sort of referencing that. uh and the expectation is still that the Fed will cut again uh with their last remaining meeting of the year in December. So to your question uh the perception is that the reading on the consumer price index does not uh dissuade the Fed from cutting interest rates. Uh there are two ways to look at this. There's sort of the way to look at it from a economic analyst, economist, central banker vantage point and that is that on a month-over-month basis there has been some relief uh with respect to uh the progression of the CPI. Uh the latest major contributors were energy which we know can be quite volatile, gasoline being part of that, airfares and clothing. Airfares are a function of strong demand primarily from uh middle inome uh and up uh consumers and clothing volatile. There could be some tariff impacts there. But uh for the time being the Fed is primarily concerned about uh the weakness in the job market. Remember it has a dual mandate that is prescribed by law and that is to be attentive to uh maximum employment a stable job market as well as stable prices. uh and uh I know to the um to the let's say average participant or viewer in this situation they may say wait a minute you know uh the CPI was up 3% year-over-year both on headline and the core which excludes food and energy the Fed's target is an annualized increase of 2% but they are really more concerned about the fact that the progression of the job market has been essentially non-existent in the sense of hiring being uh essentially flat uh for you know going back to I would say June I want to come back to the Fed and inflation in just a minute but I want to jump to this important article that bank rate published earlier this week mark uh social security marks his 90th birthday many Americans appear to be losing confidence in the landmark US institution Americans have the right to be worried recent federal reports suggest that the social security and Medicare trust funds are nearing insolveny beneficial iciaries could face a 23% cut to their payments in about 8 years according to the program's annual trustees report. Importantly, we know that the social security program or the rate of growth tracks the CPI and so the lower the CPI, the lower the rate of growth presumably. So with the 3% number, is that enough to provide Americans with sufficient social security benefits in the coming year? >> The quick answer is likely not. uh we know that the cost of living increase that is attached to one subset of the headline CPI which is for what it's worth a measure of uh wage growth for uh or let's say inflation I should say for uh wage earners and clerical workers that ends up to be a gain of 2.8%. So the uh cost of living increase for 2026 will be 2.8%. uh embedded in that article there is our survey results which note that uh essentially number one 52% of people who aren't yet retired in the United States expect to be reliant on social security to pay their uh necessary expenses once they do retire. Uh and by the way about four or five current retirees say they are current currently reliant on that. Uh and then we have about threearters of US adults who are concerned that promise benefits will not be paid to them once they retire and that's very much consistent with the notion that the trust fund will be depleted uh by 2033 and as you mentioned there the uh outcome of that is that there would be a mandatory reduction in those benefits. So the fact that there's such number one substantial reliance on the social security program, the fact that the math doesn't add up uh given the um unwillingness andor inability of elected officials in Washington to address the trust fund uh problems. Uh we'll see whether the political uh outcry uh continues to escalate or does escalate uh in the coming years given the fact that the longer these folks wait to do anything, the harder it gets to resolve the issue. >> How many people roughly in the US rely on their 401ks for retirement as opposed to social security? Do you know? uh I don't have a number there but what I would say is that um you know to maybe take a broader view of this issue that includes sort of the employee employer dynamic um you know we've had sort of structural and cyclical uh issues that have sort of made this dynamic as uh challenging as it is and cyclical and structural uh are other ways of referring to basically short-term and long-term uh changes and you know the cyclical issues are well known. Those are uh essentially the fact that we've had historically high inflation uh going back to the pandemic. The prices remain escalated. uh we have uh we have uh long-term issues where uh there's really no there there's an insubstantial number of individuals who are in the workforce in the United States who uh are given pensions. Uh those are primarily in the public unionized sector. uh and uh and so there has been this phenomenon which we can characterize broadly as a risk shift where individuals and households have been increasingly on their own to solve problems that might have been uh resolved to some degree by government in the past. And so social security is sort of a vestage of that concept in the sense that yes, it is a government solution, but it's also one where people pay into the system through their own payroll. Uh and so we're really talking about the government being a good uh trustee of these funds to make sure the promised benefits are paid. Uh and so when we're when I'm asked, as I have been with this survey, what can people do aside from uh the obvious political engagement that might be to try to foster a superior political outcome, which isn't our ball of wax at at bank rate, meaning that's for someone else to advocate. Uh what I would say is you control what you can can control, and that is to uh fully fund your own retirement. and and the greatest uh opportunity for that obviously is for younger workers who can take advantage of compounded returns over the course of many decades. It becomes more challenging for people who are staring uh retirement uh right over the hood of the car so to speak. >> Wait a minute. Let's back up for a minute here. This is the annual trustees report that uh the bank rate report is citing. Why is this a concern? Why are the funds depleting? And it says here in bold letters, words, the uh Medicare hospital insurance and social security retirement trust fund uh these funds are just 8 years from insolveny. How how do we get here, Mark? >> It's pretty simple actually, David. And that is that number one, the people paying into the program uh are outnumbered by those who are taking the benefits. And that has to do with population growth. uh and it's further damage is done with the lack of uh let's say legal immigration coming into the United States. That's more of a recent phenomenon obviously, but uh you know when you have an aging population and that's an issue for pretty much all of the western democracies uh you have programs and sort of uh demographic issues that work against sort of superior outcomes for for your economy and ultimately your your f fiscal outlook for for your government. >> Over the next 75 years, Social Security faces a shortfall of 3.82% of taxable payroll. Um, correct me if I'm wrong, but I believe Medicare and Medicaid are on the um uh the uh on the budget for things that may not be cut under Trump's administration. So, what is the government going to do about the shortfall is my question. >> Yeah. Well, let let me just try to segregate this a little bit just so it's easier for people to understand. And that is that essentially there are two trust funds and one is uh a trust fund for social security payments for retirees and the other is essentially uh the medical piece. uh and these are not necessarily really covered by uh the annual budgets per se because the trust funds are their own animals and and so obviously Congress has authority to do something about it but this is not really tangential or or directly related to for example as we speak you know we're in day I think 24 the federal government shutdown it's not really directly related to uh the dysfunctionality that's evident there although there you you can draw a relationship but but you know let's not get into that for the moment. What was so before we close off on this particular topic, what is the broader social ramification of these trust funds drying up over the next >> let's draw a delineation between drying up which would be you know sort of the multiple decades out issue as opposed to having mandatory benefit cuts. And so you know the number is that you know you'll get something between a 20 and 25% benefit cut around 2033. uh and you know we've established with our survey and what we discussed earlier is that people are heavily reliant on this and so uh you know if while we live in very politically divisive times one of the things that I think is useful in trying to frame this discussion and I'm speaking about it more broadly as well as you know with everyone else who I'm discussing the survey results with is that essentially this is a a nonpartisan issue. I mean there, you know, the you you can look at any number of different issues uh in the United States or in North America or abroad and say, "Okay, here's where how this political dividing line uh aligns." And I mean, I suppose on the margin, you can probably find some people uh within either the Congress or in the in the population that, you know, would not make uh shoring up the Social Security trust funds a priority, but they're really kind of on the margin. And so um you know I think there probably will be greater political pressure brought to bear in the coming years as the problem becomes more urgent mathematically. And then as you said the ramifications are that if you have a substantial part of uh the public which is not getting uh sufficient retirement funding that adds to income and wealth inequality and probably leads itself to more polarization uh which is you know not an outcome any of us want to see given where we are as we speak. >> Okay. Well this leads back to the inflation uh issue because the 23% cut I presume is not inflation adjusted. That's just a nominal number. So inflation adjusted that may even be less on a real basis. Uh let's talk about inflation. First of all, the government said that there may not even be an inflation print next month due to the government shutdown. The White House said on Friday there likely will not be a release of inflation data next month. We'll see what happens. Mark, it's still a little bit early, but what do you think is going to happen to inflation the next month? Will this trend of rising inflation continue? Well, in so far as energy was sort of the the main dynamic on the month-over-month issue, I I think that there are enough um let's say uh price participants in this measure uh to continue keeping it above the 2% Federal Reserve target. Uh the Federal Reserve looks essentially for uh inflation in 2026 to have an annualized increase of let's just call it about 2.5%. uh and even the year after that they don't necessarily look for it to get down to their 2% target. Having said that uh as you know uh David predicting these things is quite precarious and so we need to see how the performance of the US North American and global economies unfold. Uh and think about the fact for example that you know we just had uh essentially the uh the US government uh prioritize uh sanctions against Russia which have led to a recent increase in in uh gasoline prices. We'll see how sustainable that is. The trend on gasoline prices more broadly recently has actually been more favorable for consumers. But um you know all it takes is sort of one major pop in in gasoline prices to sort of upset the inflation. Apple card because you know it energy prices end up sort of affirming or uh informing uh other prices because transportation so important >> and of the components that I guess affect most people the most shelter food and energy which of these components do you think will be stickiest on the upside going into the end of the year? One of the things that helped for let's say the better than expected uh print on uh the CPI overall was some relenting of shelter costs and that was really in the rent side. Uh we also saw uh better showings for uh new cars, but a rise in used cars. And and uh one of the things that's causing the used car price to go up is the fact that new car prices have been so high, really close to an average of $50,000 for a new car in the United States. Uh food, medical care also showed uh less price pressure there. Uh but as I mentioned, energy, airfares, and clothing uh were adding to the upside pressure. So, um, where energy prices head from here, maybe we'll see, you know, less sustainability of the recent pop there, but that's not really, uh, you know, the realm that that I consider myself very knowledgeable about in terms of long-term energy prices. But I think that as long as the macroeconomy in the US holds up, and that's really been kind of the surprising story now for many years, and we don't we don't necessarily know how sustainable that performance is, but, you know, you might say so far so good. Um I I would think that there continues to be some continued price pressures but not to the level that we've seen over the last 12 24 36 48 months. A big factor contributing to the higher cost of living is as if as if as you know of course the higher cost of home ownership or even just rent in a lot of towns and major cities across the US. This is an article published by your colleagues at bank rate survey. One in six aspiring homeowners have given up in the last 5 years. And um a major quote here um poll quote US home affordability is at its worst level in decades. Nearly 3 and 10 28% of aspiring homeowners said the price of a home in their area was the most important issue when deciding whether or not to purchase a home. Well, that makes sense. And the affordability at uh the current situation is pretty bad. Do you think the affordability issue, which by the way the administration has highlighted as a crisis right now or is petitioning to highlight this as a crisis, can ever get back to prepandemic levels? In other words, home affordability, can we get back to preandemic levels of affordability anytime soon? >> Well, never and ever are both a long time. And actually, in recent months, we've seen some incremental improvement in affordability. As we speak, uh, the average 30-year fixed rate mortgage has, uh, fallen to the lowest level in a year, about 6.3%. Uh, and we've actually seen, I would say, some slower movement of home prices, uh, in recent months as well. But, um, the housing affordability issue is really more of a long-term issue. There's been a housing shortage really in the United States going on 20 years. And while the administration, you know, I would say talks a good game quote unquote on the notion of trying to bolster the supply of housing, there are only so many levers the administration has to pull or has pulled on that. And so uh I think some of the dynamics there are uh greater than what the administration has the ability to control. But um you know if you hear uh executives in the home building space talk they will say that they do see further progress on the horizon with participation in home purchases by millennials and by extension from that members of generation Z those age 18 to 28. And so there probably is going to be some incremental improvement there. But, you know, given the fact that, you know, we talk very often in our country about home ownership being part of the American dream, there's no doubt that many people have had to, I would say, either forego or delay that uh because of these affordability challenges, which are significant. >> 16% of homeowners have given up. So, what about the other um you know, 80%, 84%, what are they doing right now? Have you had surveys or done surveys about um what uh homeowners are planning to do currently? Are they waiting for rates to come down a bit more or are they getting into the market right now on the cusp of a Fed pivot? >> One of my former colleagues had a great line that people don't buy u wedding dresses when they go on sale. And I think kind of a correlary there to the housing market. There's a fair amount of housing market activity or home purchases that are dictated by life changes. needing to move for uh a job, you know, getting married, raising children. Though there's also the downsizing component for people who are more senior. And so, yeah, I think the majority of homeowners who intend to buy a home do end up buying a home, but they may have to adjust their expectations or their plans. And so, you know, as you know, David, there's a notion that all real estate is local. and you know within the dynamics of you know home price movements within the inventory realms within uh the ability to purchase a home all of those are highly uh dependent on the way that the local market is performing and so if you talk about some of the previously redhot markets like let's say Austin Texas or South Florida those have been cooling off and that's a function of you can only have so many price increases over time that's outpacing uh the rate of wage growth but at the same time we have higher uh division or wealth and income inequality in our country that seems to only be growing more significant. And so you sort of have for example consumer spending right now 50% of that is powered by 10% uh of the population because so many people have substantial wealth. So those are not the kind of dynamics that are affirming the strength of the middle class. But if we do continue to see progress on inflation, if we see mortgage rates come down even into, let's say, the 5 1/2% range with a 30-year fixed rate mortgage in the US, that will bring more people into the market. And then if you have more supply, more homes available for sale. Uh presumably, we won't see as much stickiness with home prices and and that will lend to at least some improvement on affordability. But this is a structural issue. It's not one that's going to be solved in 12 months. There is uh or there are two mega trends right now that I'd like to comment on that people have said may contribute to another housing boom or at least continue the momentum of housing being unaffordable. One is the AI boom which has boosted real estate prices in tech heavy centers like San Francisco and Seattle. Uh the other is the ongoing rise of demand for land from data centers that may put an additional shortage of land on um on urban centers. And the second issue, Mark, is the wealth transfer that's happening, I believe, and the number varies by various sources, but nearly $124 trillion in assets, I'm reading, will be transferred from baby boomers into the next generation over the coming years. And that is going to be the largest wealth transfer in history. that may portend uh more demand for housing as this wealth gets transferred. How would you respond to both of these trends? >> Right. Well, so wealth transfer is transferred by whom? Those who have wealth, right? And and so uh that'll be important for those who are beneficiaries of that. Uh but uh if we don't have solutions for uh essentially middle income, middle wealth uh perspective home buyers, I think that's where the tension lies. And you know, we'll see how sustainable the the ongoing boom in uh the uh data centers and the AI um capital expenditures uh can be. You know, some people have been waiting for that proverbial bubble to burst. Uh I'm not ready to predict anything along those lines simply because I think it's impossible to predict. But uh it's it's it is absolutely the case that uh you know we have remarkable innovation continuing in the world in which we live uh and and will all be to some degrees beneficiaries and casualties of that and uh you know if you talk to home builders I would even say going back any number of years they've talked about uh the things that keep them from building more homes and among those is you know insufficient access to land. You need access to land around major and even medium and small markets to to build. Obviously easier in small markets than in large markets. Lack of labor, the immigration pressures uh that we have in the United States are uh adding further tension in that uh respect. uh and then the cost of raw materials and you know when we have essentially a trade fight between the US and Canada where we need access to reasonably priced lumber and other building materials to build homes uh that doesn't make the affordability quotient uh any more palatable. So um we'll be following these dynamics and there will continuing there will be continued strong demand for homes because as much as some years ago and even during the pandemic where people thought about uh the attraction of being in urban centers uh aside from the transmissibility of of CO 19 that you know there was some attractiveness of of being able to stay in an urban area and not have it have to have a um the cost of transportation bear down on you or even owning a car. But it seems to be one of the u one of the sustainable uh values in our society that people who are uh either, you know, have long-term relationships, getting married, raise children, want to have a single family home with more space and obviously to be where there's public education in an area that has, you know, higher quality schools. And so that's why some of these uh let's say baby boomerowned homes not unlike the one in which I'm speaking to you here uh are highly valued by people who who sort of want to do you know the the American dream thing. >> Well that's the other issue. The fertility rate in a lot of developing or sorry developed countries including the United States is going down. Has bank rate done any surveys for uh people on whether or not they're planning to get married and start a home in the coming years? I'd come at that from another angle. Uh the fertility rate is a little outside our subject realm, but it's obviously incredibly relevant when we're talking about, for example, funding social security, right? Because we're talking about the dynamic of fewer people essentially being born and then participating in the economy as a wage earner and therefore funding social security. Where we have found that there is a significant dynamic is when we look at the impact of student loan debt. And what uh one of the impacts of that and that's related to the housing market as well that uh this dynamic which by the way uh is sort of the other side of the proverbial coin of failure to fund higher education uh by taxpayers and you know by extension elected officials and states essentially uh moving funding away from uh public universities and colleges toward other causes. Uh that that this is part of the risk shift that we talked about earlier. the risk of funding higher education, the burden of funding that has fallen more and more to the person opting to take advantage of those services. And so, uh, when you have people who are sort of getting out over their skis on student loan debt, and that's a significant, uh, quotient, uh, that, um, that they have to delay major life decisions and behaviors. And some of those are buying a home, getting married, having children, buying a car, uh and even funding their retirement. And so there are quite negative consequences associated with what perhaps some thought would be inconsequential and that is uh opting not to fund uh colleges and universities at the levels they were previously. Um that that is essentially a tax on a certain number of individuals. Uh this leads to the final segment which is the future of income growth in the US. I want to play for you this uh somewhat humorous clip from a talk show. It's called the morning shift show. Uh I'll just play for you 30 seconds and then we can respond to this. >> Guys, you went rich. >> So I work for a public assistance program here in the United States. We provide financial assistant once a month for people living under the poverty level. And it wasn't until I saw the requirements to be on the program that I realized that I also fall within that that dynamic. So I feel like it kind of shows that I should be more of a participant than an employee. Life is awesome. Yeah, that that's just one personal anecdote, but it does seem to echo the sentiment of a lot of Americans right now. They can't keep up with inflation. Why is it that we've had housing unaffordability? I mean the notion of housing unaffordability stems from the issue that the real income growth has lagged behind the growth of real adjusted home prices. Why has that happened? >> Well, primarily let's let's level set with what happened with prices is essentially on a national basis our home prices in the US are up 50% since the pandemic and that's quite extraordinary. that's also probably unsustainable over over the long term or intermediate term. But I would say that this is, you know, part and parcel of a number of different changes that have occurred in our uh society where the interests of shareholders have taken priority over stakeholders and everybody who's in the economy is a stakeholder. Uh, and so, uh, you know, I was watching some local TV coverage here in the Washington DC area where I live with the federal government shutdown, very much related to that clip, which can at some level be viewed as humorous and another level be viewed as tragic, that we have federal government employees affected by the shutdown who are going to food banks. Uh, and you know, that's an unacceptable outcome at the end of the day. And so the question is you know what happens politically, what happens at a societal basis with all that. Uh and you know you can make observations about the way that politics have unfolded in the United States as well as with other developed economies where you know a good number of voters say you know enough already. the the solutions for that are more complicated than the observation. And maybe sometimes the medicine is worse than the disease, so to speak. But uh there are a number of different ways that people have been railing against globalization and essentially wealth and income inequality. Uh and there are real consequences to that. is an article written by Bankrate on the labor market where the state of the labor market highlighting potentially discrepancies between government data on the surface level and what's actually happening on the ground. Andy Challenger is a person business call businesses call when it's time to let workers go and for the past year and a half his phone hasn't stopped ringing. Economic data in this article um continued to suggest a shockingly resilient labor market. his workload told a different story. Well, Jerome Pal uh chair of the Fed Federal Reserve has openly stated the labor market is deteriorating. So, I don't know to what extent that uh data showing strong resilience, but uh nonetheless uh we do have data from the ground from surveys like the ones conducted by Bankrate. What are these on the ground realtime surveys and polls showing? Mark? >> Yeah. Uh it's a good question and first of all kudos to my colleague Sarah Foster who did the work on that particular piece. I'd urge people to read it. Uh this gets back to the notion of a year uh ago and and beyond of the so-called vibe session which I wasn't always a huge fan of the characterization but this had the idea of people's feelings not being well aligned with the official economic data. And I'd say we're still there in a way because for example just today we had another kind of miserable University of Michigan consumer sentiment survey. But you know as of last report the US economy has continued to grow. Uh the the unemployment rate while we missed the most recent snapshot because of the shutdown was at 4.3%. And most expectations don't really see the unemployment rate going uh substantially higher from here. So it falls under the broadly of the category of your results may vary. And let's think about the fact that there's a range of data out there that can tell a variety of different stories. And it's essentially my job and the job of others is to tell the ultimate story. In other words, how do we view this all of it taken together? And so, you know, we look at it within the context of the official data showing that for example, there's about 5 million people hired in the United States in a given month. But in recent months, we've had either a contraction in the number of jobs added. In other words, we've actually seen the number of jobs uh on on the part of establishments going down. Uh that's part of the official unemployment data. But yet, the unemployment rate uh has remained stable at 4.3%. So we've gone from what was previously characterized as a red hot job market and with that greater prospect for wage gains, job changers making substantially more than job stayers, but sort of everybody as it's broadly measured getting uh you know reasonable wage gains. But now that we're in a situation where the job market is not redot, but is just sort of um not too hot, not too cold, there's essentially one job open for every unemployed job seeker. It was 2:1 when the job market was so strong. Ultimately, you know, we need the economy to work well for everybody or at least as well as it can for everybody. And so it wasn't optimal that the job market was so hot because we got inflation out of that, right? and that wasn't great for employers. So, uh we're always going to have these essentially disconnects in the economy where it's not working well for everybody. But ultimately I think the question for the US and developed economies around the world is does it work for most people and and can you leverage or do you get essentially stability in the in the politics uh to the point that um you don't go from you don't go lurching from one potentially radical solution to the other. And that's kind of where I'm worried about things going in the United States is what happens after this, right? We don't we don't know what's going to happen with our politics with the either the midterm elections in 2026 or the general election in 2028. But you can see some dynamics emerging where we might be lurching from one extreme solution to the other. And that's not really been born out to work well in countries over history and really has not been uh the tradition in the United States. So uh these issues are very important. David, >> to your point that the University of Michigan consumer survey is deteriorating or has been, uh, what in your experience is the relevance of consumer sentiment from either the University of Michigan data or perhaps Bank Rates own surveys? Um, are they leading indicators for hiring, firing, or job growth? >> Yeah. And there's another substantial one done by the conference board which is a major research group measuring so-called consumer confidence. And uh you know they are relevant and sometimes they're somewhat disconnected and and so what I mean by that is uh I think some of the major uh contributors to University of Michigan of late really has been you know high prices concern about the outlook for uh prices relative to tariffs and then concern about the outlook for the job market. Um but uh we've had relatively stable consumer spending and retail sales in the United States. Some of that is uh is affirmed by u the rise in inflation. So if we think about for example retail sales or consumer spending being measured on a dollar adjusted basis well higher inflation helps to get you better numbers. So uh there is a bit of a disconnect between spending and and attitudes and sentiment. But what I would say is that we go back to the tariffs issue that undermines confidence for business and consumers alike. Uh and we've seen that also in our bank rate survey that we did a couple of months ago where uh a large number of Americans said that tariffs would be negative for their personal finances. We'll soon be surveying on their outlook for 2026. And so we can talk about that down the road. Be interesting to see how that uh affects all of that. But, you know, um, uh, volat volatility and uncertainty undermine confidence for consumers and businesses, and we've had plenty of both of those of late. >> All right. What is your outlook on the labor market? >> Well, first of all, I don't make individual forecasts about that. So, what I'll tell you is what my view of that possibility is, let's say, in in the coming year. And that is I'll associate myself with our quarterly economist survey where uh they continue to look for further softening in hiring but not falling out of bed over the coming uh 12 months or so and they look for a modest increase in the unemployment rate. They also have recently acknowledged collectively that there is an increased risk of recession in the United States. And so when we talk about what the Federal Reserve may be doing in the coming months, I would say that's somewhat related to that in the sense that the Fed wants to take out a bit of an insurance policy by reducing some of the restriction on the US economy and therefore perhaps making a marginal u uh improvement in obviously borrowing costs and and uh lending to more um uh let's just say more financial uh a more positive financial environment that that should benefit both consumers and businesses. But you have these other dynamics that we've been talking about all through this conversation, David, where this decline in the federal funds rate just doesn't affect enough things to forestall some of these larger dynamics, meaning, you know, a reduction in short-term interest rates may or may not affect mortgage rates. Sometimes it doesn't affect it at all. when the Fed started cutting um more recently, we actually saw an increase in mortgage rates with long-term rates going up. So, uh obviously a lot of dynamics there. I would say, you know, the the US economy has proven more resilient than would have been expected for a number of years now. I wouldn't want to bet bet against it. uh and to the degree that the Trump administration can be responsive to changes in financial markets as we saw in April where uh the worst of the uh tariffs were essentially relaxed once we saw uh a huge fallout in financial markets. So it might be that the administration is attentive to all that but you know we'll see what happens. Finally, uh Mark, what would make you optimistic on the growth of the US economy despite all the economic headwinds that we have discussed today? >> Well, and that's a long-term question that I I feel uh strongly about and that is that um the US economy is quite dynamic, has remarkable financial markets uh and innovation uh continues to be a hallmark of the US economy. Think about all the things that have originated from it uh for many decades. Technology uh AI being part of that. Uh but also on the creative side, you know, we still create remarkable content that people want to consume around the world. Uh and you know, David, one thing that gives me great hope is as I make my rounds, whether it's in the United States or uh traveling as I might outside the United States, it's still seen as a beacon for immigrants coming into our country. Unfortunately, despite the fact that uh the administration has been hostile to the notion of both legal and illegal immigration, we need to be open to legal immigration in the United States for the all the reasons that are consistent with our history. And for as long as people will be willing to make those journeys and to work and to innovate in the US economy, that will ultimately be uh what we need for superior outcomes. And I'm still optimistic and uh hopeful that that that uh can be the outcome in the intermediate uh and long term. >> Okay, good. Thank you very much, Mark. Where can we follow you and your work? >> Well, uh all over the place. uh bankrate.com is one is the major uh place to see the work of me and my colleagues more broadly, but I'm in social media. I have a strong presence on LinkedIn. Uh so uh wherever you want to connect via social, that's that's where I'll be. >> Follow Mark and Bankrate links down below. He uh he and his colleagues are a fantastic resource. So check out their articles and their data. Uh tons of good information for personal finance there as well. Mark, good to have you on the show. Welcome to the program and I look forward to seeing you again. Thank you for being here. >> Thanks so much. A pleasure to be with you. Thanks for having me, David. >> Yeah. Thank you for watching. Don't forget to like and subscribe.
Hiring Freeze Accelerates, Social Security Risks Insolvency | Mark Hamrick
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of people's feelings not being well aligned with the official economic data. And I'd say we're still there in a way. The Fed will cut interest rates for the second time in a row by one quarter of 1% 25 basis points. There will be continued strong demand for homes. If we see mortgage rates come down even into let's say the 5 1.5% range for the 30-year fixed rate mortgage in the US, that will bring more people into the market. The the US economy has proven more resilient than would have been expected for a number of years now. I wouldn't want to but bet against it. >> We're going to comment on the latest CPI report. Where is inflation headed from here? What is the Fed going to do in response to today's data and what is going to happen with economic growth, job growth, wage growth in the US? Mark Ham joins us today. He is the uh senior economic analyst at Bankrate in the chief of the Washington bureau. Welcome to the show, Mark. It's good to host you. Thank you for being here. >> Good to be with you, David. Thank you. 3% headline CPI is the highest number on an annualized basis since January 2025. It just it's just been it's been creeping up steadily since the summer mark and there doesn't seem to be anything stopping it. What's your interpretation of the 3% mark? Is it going to be enough to dissuade the Fed from cutting rates next month or at least yeah later later this month? Well, >> we're just a number of days away from the Federal Reserve announcement, Dave. And the way these things work is that if the markets have an expectation, the Fed is going to do a particular thing, uh those officials are very well aware of that and they would take steps to essentially correct the market expectation. So the expectation as we speak is the Fed will cut interest rates for the second time in a row by one quarter of 1% 25 basis points is the insider way of uh sort of referencing that. uh and the expectation is still that the Fed will cut again uh with their last remaining meeting of the year in December. So to your question uh the perception is that the reading on the consumer price index does not uh dissuade the Fed from cutting interest rates. Uh there are two ways to look at this. There's sort of the way to look at it from a economic analyst, economist, central banker vantage point and that is that on a month-over-month basis there has been some relief uh with respect to uh the progression of the CPI. Uh the latest major contributors were energy which we know can be quite volatile, gasoline being part of that, airfares and clothing. Airfares are a function of strong demand primarily from uh middle inome uh and up uh consumers and clothing volatile. There could be some tariff impacts there. But uh for the time being the Fed is primarily concerned about uh the weakness in the job market. Remember it has a dual mandate that is prescribed by law and that is to be attentive to uh maximum employment a stable job market as well as stable prices. uh and uh I know to the um to the let's say average participant or viewer in this situation they may say wait a minute you know uh the CPI was up 3% year-over-year both on headline and the core which excludes food and energy the Fed's target is an annualized increase of 2% but they are really more concerned about the fact that the progression of the job market has been essentially non-existent in the sense of hiring being uh essentially flat uh for you know going back to I would say June I want to come back to the Fed and inflation in just a minute but I want to jump to this important article that bank rate published earlier this week mark uh social security marks his 90th birthday many Americans appear to be losing confidence in the landmark US institution Americans have the right to be worried recent federal reports suggest that the social security and Medicare trust funds are nearing insolveny beneficial iciaries could face a 23% cut to their payments in about 8 years according to the program's annual trustees report. Importantly, we know that the social security program or the rate of growth tracks the CPI and so the lower the CPI, the lower the rate of growth presumably. So with the 3% number, is that enough to provide Americans with sufficient social security benefits in the coming year? >> The quick answer is likely not. uh we know that the cost of living increase that is attached to one subset of the headline CPI which is for what it's worth a measure of uh wage growth for uh or let's say inflation I should say for uh wage earners and clerical workers that ends up to be a gain of 2.8%. So the uh cost of living increase for 2026 will be 2.8%. uh embedded in that article there is our survey results which note that uh essentially number one 52% of people who aren't yet retired in the United States expect to be reliant on social security to pay their uh necessary expenses once they do retire. Uh and by the way about four or five current retirees say they are current currently reliant on that. Uh and then we have about threearters of US adults who are concerned that promise benefits will not be paid to them once they retire and that's very much consistent with the notion that the trust fund will be depleted uh by 2033 and as you mentioned there the uh outcome of that is that there would be a mandatory reduction in those benefits. So the fact that there's such number one substantial reliance on the social security program, the fact that the math doesn't add up uh given the um unwillingness andor inability of elected officials in Washington to address the trust fund uh problems. Uh we'll see whether the political uh outcry uh continues to escalate or does escalate uh in the coming years given the fact that the longer these folks wait to do anything, the harder it gets to resolve the issue. >> How many people roughly in the US rely on their 401ks for retirement as opposed to social security? Do you know? uh I don't have a number there but what I would say is that um you know to maybe take a broader view of this issue that includes sort of the employee employer dynamic um you know we've had sort of structural and cyclical uh issues that have sort of made this dynamic as uh challenging as it is and cyclical and structural uh are other ways of referring to basically short-term and long-term uh changes and you know the cyclical issues are well known. Those are uh essentially the fact that we've had historically high inflation uh going back to the pandemic. The prices remain escalated. uh we have uh we have uh long-term issues where uh there's really no there there's an insubstantial number of individuals who are in the workforce in the United States who uh are given pensions. Uh those are primarily in the public unionized sector. uh and uh and so there has been this phenomenon which we can characterize broadly as a risk shift where individuals and households have been increasingly on their own to solve problems that might have been uh resolved to some degree by government in the past. And so social security is sort of a vestage of that concept in the sense that yes, it is a government solution, but it's also one where people pay into the system through their own payroll. Uh and so we're really talking about the government being a good uh trustee of these funds to make sure the promised benefits are paid. Uh and so when we're when I'm asked, as I have been with this survey, what can people do aside from uh the obvious political engagement that might be to try to foster a superior political outcome, which isn't our ball of wax at at bank rate, meaning that's for someone else to advocate. Uh what I would say is you control what you can can control, and that is to uh fully fund your own retirement. and and the greatest uh opportunity for that obviously is for younger workers who can take advantage of compounded returns over the course of many decades. It becomes more challenging for people who are staring uh retirement uh right over the hood of the car so to speak. >> Wait a minute. Let's back up for a minute here. This is the annual trustees report that uh the bank rate report is citing. Why is this a concern? Why are the funds depleting? And it says here in bold letters, words, the uh Medicare hospital insurance and social security retirement trust fund uh these funds are just 8 years from insolveny. How how do we get here, Mark? >> It's pretty simple actually, David. And that is that number one, the people paying into the program uh are outnumbered by those who are taking the benefits. And that has to do with population growth. uh and it's further damage is done with the lack of uh let's say legal immigration coming into the United States. That's more of a recent phenomenon obviously, but uh you know when you have an aging population and that's an issue for pretty much all of the western democracies uh you have programs and sort of uh demographic issues that work against sort of superior outcomes for for your economy and ultimately your your f fiscal outlook for for your government. >> Over the next 75 years, Social Security faces a shortfall of 3.82% of taxable payroll. Um, correct me if I'm wrong, but I believe Medicare and Medicaid are on the um uh the uh on the budget for things that may not be cut under Trump's administration. So, what is the government going to do about the shortfall is my question. >> Yeah. Well, let let me just try to segregate this a little bit just so it's easier for people to understand. And that is that essentially there are two trust funds and one is uh a trust fund for social security payments for retirees and the other is essentially uh the medical piece. uh and these are not necessarily really covered by uh the annual budgets per se because the trust funds are their own animals and and so obviously Congress has authority to do something about it but this is not really tangential or or directly related to for example as we speak you know we're in day I think 24 the federal government shutdown it's not really directly related to uh the dysfunctionality that's evident there although there you you can draw a relationship but but you know let's not get into that for the moment. What was so before we close off on this particular topic, what is the broader social ramification of these trust funds drying up over the next >> let's draw a delineation between drying up which would be you know sort of the multiple decades out issue as opposed to having mandatory benefit cuts. And so you know the number is that you know you'll get something between a 20 and 25% benefit cut around 2033. uh and you know we've established with our survey and what we discussed earlier is that people are heavily reliant on this and so uh you know if while we live in very politically divisive times one of the things that I think is useful in trying to frame this discussion and I'm speaking about it more broadly as well as you know with everyone else who I'm discussing the survey results with is that essentially this is a a nonpartisan issue. I mean there, you know, the you you can look at any number of different issues uh in the United States or in North America or abroad and say, "Okay, here's where how this political dividing line uh aligns." And I mean, I suppose on the margin, you can probably find some people uh within either the Congress or in the in the population that, you know, would not make uh shoring up the Social Security trust funds a priority, but they're really kind of on the margin. And so um you know I think there probably will be greater political pressure brought to bear in the coming years as the problem becomes more urgent mathematically. And then as you said the ramifications are that if you have a substantial part of uh the public which is not getting uh sufficient retirement funding that adds to income and wealth inequality and probably leads itself to more polarization uh which is you know not an outcome any of us want to see given where we are as we speak. >> Okay. Well this leads back to the inflation uh issue because the 23% cut I presume is not inflation adjusted. That's just a nominal number. So inflation adjusted that may even be less on a real basis. Uh let's talk about inflation. First of all, the government said that there may not even be an inflation print next month due to the government shutdown. The White House said on Friday there likely will not be a release of inflation data next month. We'll see what happens. Mark, it's still a little bit early, but what do you think is going to happen to inflation the next month? Will this trend of rising inflation continue? Well, in so far as energy was sort of the the main dynamic on the month-over-month issue, I I think that there are enough um let's say uh price participants in this measure uh to continue keeping it above the 2% Federal Reserve target. Uh the Federal Reserve looks essentially for uh inflation in 2026 to have an annualized increase of let's just call it about 2.5%. uh and even the year after that they don't necessarily look for it to get down to their 2% target. Having said that uh as you know uh David predicting these things is quite precarious and so we need to see how the performance of the US North American and global economies unfold. Uh and think about the fact for example that you know we just had uh essentially the uh the US government uh prioritize uh sanctions against Russia which have led to a recent increase in in uh gasoline prices. We'll see how sustainable that is. The trend on gasoline prices more broadly recently has actually been more favorable for consumers. But um you know all it takes is sort of one major pop in in gasoline prices to sort of upset the inflation. Apple card because you know it energy prices end up sort of affirming or uh informing uh other prices because transportation so important >> and of the components that I guess affect most people the most shelter food and energy which of these components do you think will be stickiest on the upside going into the end of the year? One of the things that helped for let's say the better than expected uh print on uh the CPI overall was some relenting of shelter costs and that was really in the rent side. Uh we also saw uh better showings for uh new cars, but a rise in used cars. And and uh one of the things that's causing the used car price to go up is the fact that new car prices have been so high, really close to an average of $50,000 for a new car in the United States. Uh food, medical care also showed uh less price pressure there. Uh but as I mentioned, energy, airfares, and clothing uh were adding to the upside pressure. So, um, where energy prices head from here, maybe we'll see, you know, less sustainability of the recent pop there, but that's not really, uh, you know, the realm that that I consider myself very knowledgeable about in terms of long-term energy prices. But I think that as long as the macroeconomy in the US holds up, and that's really been kind of the surprising story now for many years, and we don't we don't necessarily know how sustainable that performance is, but, you know, you might say so far so good. Um I I would think that there continues to be some continued price pressures but not to the level that we've seen over the last 12 24 36 48 months. A big factor contributing to the higher cost of living is as if as if as you know of course the higher cost of home ownership or even just rent in a lot of towns and major cities across the US. This is an article published by your colleagues at bank rate survey. One in six aspiring homeowners have given up in the last 5 years. And um a major quote here um poll quote US home affordability is at its worst level in decades. Nearly 3 and 10 28% of aspiring homeowners said the price of a home in their area was the most important issue when deciding whether or not to purchase a home. Well, that makes sense. And the affordability at uh the current situation is pretty bad. Do you think the affordability issue, which by the way the administration has highlighted as a crisis right now or is petitioning to highlight this as a crisis, can ever get back to prepandemic levels? In other words, home affordability, can we get back to preandemic levels of affordability anytime soon? >> Well, never and ever are both a long time. And actually, in recent months, we've seen some incremental improvement in affordability. As we speak, uh, the average 30-year fixed rate mortgage has, uh, fallen to the lowest level in a year, about 6.3%. Uh, and we've actually seen, I would say, some slower movement of home prices, uh, in recent months as well. But, um, the housing affordability issue is really more of a long-term issue. There's been a housing shortage really in the United States going on 20 years. And while the administration, you know, I would say talks a good game quote unquote on the notion of trying to bolster the supply of housing, there are only so many levers the administration has to pull or has pulled on that. And so uh I think some of the dynamics there are uh greater than what the administration has the ability to control. But um you know if you hear uh executives in the home building space talk they will say that they do see further progress on the horizon with participation in home purchases by millennials and by extension from that members of generation Z those age 18 to 28. And so there probably is going to be some incremental improvement there. But, you know, given the fact that, you know, we talk very often in our country about home ownership being part of the American dream, there's no doubt that many people have had to, I would say, either forego or delay that uh because of these affordability challenges, which are significant. >> 16% of homeowners have given up. So, what about the other um you know, 80%, 84%, what are they doing right now? Have you had surveys or done surveys about um what uh homeowners are planning to do currently? Are they waiting for rates to come down a bit more or are they getting into the market right now on the cusp of a Fed pivot? >> One of my former colleagues had a great line that people don't buy u wedding dresses when they go on sale. And I think kind of a correlary there to the housing market. There's a fair amount of housing market activity or home purchases that are dictated by life changes. needing to move for uh a job, you know, getting married, raising children. Though there's also the downsizing component for people who are more senior. And so, yeah, I think the majority of homeowners who intend to buy a home do end up buying a home, but they may have to adjust their expectations or their plans. And so, you know, as you know, David, there's a notion that all real estate is local. and you know within the dynamics of you know home price movements within the inventory realms within uh the ability to purchase a home all of those are highly uh dependent on the way that the local market is performing and so if you talk about some of the previously redhot markets like let's say Austin Texas or South Florida those have been cooling off and that's a function of you can only have so many price increases over time that's outpacing uh the rate of wage growth but at the same time we have higher uh division or wealth and income inequality in our country that seems to only be growing more significant. And so you sort of have for example consumer spending right now 50% of that is powered by 10% uh of the population because so many people have substantial wealth. So those are not the kind of dynamics that are affirming the strength of the middle class. But if we do continue to see progress on inflation, if we see mortgage rates come down even into, let's say, the 5 1/2% range with a 30-year fixed rate mortgage in the US, that will bring more people into the market. And then if you have more supply, more homes available for sale. Uh presumably, we won't see as much stickiness with home prices and and that will lend to at least some improvement on affordability. But this is a structural issue. It's not one that's going to be solved in 12 months. There is uh or there are two mega trends right now that I'd like to comment on that people have said may contribute to another housing boom or at least continue the momentum of housing being unaffordable. One is the AI boom which has boosted real estate prices in tech heavy centers like San Francisco and Seattle. Uh the other is the ongoing rise of demand for land from data centers that may put an additional shortage of land on um on urban centers. And the second issue, Mark, is the wealth transfer that's happening, I believe, and the number varies by various sources, but nearly $124 trillion in assets, I'm reading, will be transferred from baby boomers into the next generation over the coming years. And that is going to be the largest wealth transfer in history. that may portend uh more demand for housing as this wealth gets transferred. How would you respond to both of these trends? >> Right. Well, so wealth transfer is transferred by whom? Those who have wealth, right? And and so uh that'll be important for those who are beneficiaries of that. Uh but uh if we don't have solutions for uh essentially middle income, middle wealth uh perspective home buyers, I think that's where the tension lies. And you know, we'll see how sustainable the the ongoing boom in uh the uh data centers and the AI um capital expenditures uh can be. You know, some people have been waiting for that proverbial bubble to burst. Uh I'm not ready to predict anything along those lines simply because I think it's impossible to predict. But uh it's it's it is absolutely the case that uh you know we have remarkable innovation continuing in the world in which we live uh and and will all be to some degrees beneficiaries and casualties of that and uh you know if you talk to home builders I would even say going back any number of years they've talked about uh the things that keep them from building more homes and among those is you know insufficient access to land. You need access to land around major and even medium and small markets to to build. Obviously easier in small markets than in large markets. Lack of labor, the immigration pressures uh that we have in the United States are uh adding further tension in that uh respect. uh and then the cost of raw materials and you know when we have essentially a trade fight between the US and Canada where we need access to reasonably priced lumber and other building materials to build homes uh that doesn't make the affordability quotient uh any more palatable. So um we'll be following these dynamics and there will continuing there will be continued strong demand for homes because as much as some years ago and even during the pandemic where people thought about uh the attraction of being in urban centers uh aside from the transmissibility of of CO 19 that you know there was some attractiveness of of being able to stay in an urban area and not have it have to have a um the cost of transportation bear down on you or even owning a car. But it seems to be one of the u one of the sustainable uh values in our society that people who are uh either, you know, have long-term relationships, getting married, raise children, want to have a single family home with more space and obviously to be where there's public education in an area that has, you know, higher quality schools. And so that's why some of these uh let's say baby boomerowned homes not unlike the one in which I'm speaking to you here uh are highly valued by people who who sort of want to do you know the the American dream thing. >> Well that's the other issue. The fertility rate in a lot of developing or sorry developed countries including the United States is going down. Has bank rate done any surveys for uh people on whether or not they're planning to get married and start a home in the coming years? I'd come at that from another angle. Uh the fertility rate is a little outside our subject realm, but it's obviously incredibly relevant when we're talking about, for example, funding social security, right? Because we're talking about the dynamic of fewer people essentially being born and then participating in the economy as a wage earner and therefore funding social security. Where we have found that there is a significant dynamic is when we look at the impact of student loan debt. And what uh one of the impacts of that and that's related to the housing market as well that uh this dynamic which by the way uh is sort of the other side of the proverbial coin of failure to fund higher education uh by taxpayers and you know by extension elected officials and states essentially uh moving funding away from uh public universities and colleges toward other causes. Uh that that this is part of the risk shift that we talked about earlier. the risk of funding higher education, the burden of funding that has fallen more and more to the person opting to take advantage of those services. And so, uh, when you have people who are sort of getting out over their skis on student loan debt, and that's a significant, uh, quotient, uh, that, um, that they have to delay major life decisions and behaviors. And some of those are buying a home, getting married, having children, buying a car, uh and even funding their retirement. And so there are quite negative consequences associated with what perhaps some thought would be inconsequential and that is uh opting not to fund uh colleges and universities at the levels they were previously. Um that that is essentially a tax on a certain number of individuals. Uh this leads to the final segment which is the future of income growth in the US. I want to play for you this uh somewhat humorous clip from a talk show. It's called the morning shift show. Uh I'll just play for you 30 seconds and then we can respond to this. >> Guys, you went rich. >> So I work for a public assistance program here in the United States. We provide financial assistant once a month for people living under the poverty level. And it wasn't until I saw the requirements to be on the program that I realized that I also fall within that that dynamic. So I feel like it kind of shows that I should be more of a participant than an employee. Life is awesome. Yeah, that that's just one personal anecdote, but it does seem to echo the sentiment of a lot of Americans right now. They can't keep up with inflation. Why is it that we've had housing unaffordability? I mean the notion of housing unaffordability stems from the issue that the real income growth has lagged behind the growth of real adjusted home prices. Why has that happened? >> Well, primarily let's let's level set with what happened with prices is essentially on a national basis our home prices in the US are up 50% since the pandemic and that's quite extraordinary. that's also probably unsustainable over over the long term or intermediate term. But I would say that this is, you know, part and parcel of a number of different changes that have occurred in our uh society where the interests of shareholders have taken priority over stakeholders and everybody who's in the economy is a stakeholder. Uh, and so, uh, you know, I was watching some local TV coverage here in the Washington DC area where I live with the federal government shutdown, very much related to that clip, which can at some level be viewed as humorous and another level be viewed as tragic, that we have federal government employees affected by the shutdown who are going to food banks. Uh, and you know, that's an unacceptable outcome at the end of the day. And so the question is you know what happens politically, what happens at a societal basis with all that. Uh and you know you can make observations about the way that politics have unfolded in the United States as well as with other developed economies where you know a good number of voters say you know enough already. the the solutions for that are more complicated than the observation. And maybe sometimes the medicine is worse than the disease, so to speak. But uh there are a number of different ways that people have been railing against globalization and essentially wealth and income inequality. Uh and there are real consequences to that. is an article written by Bankrate on the labor market where the state of the labor market highlighting potentially discrepancies between government data on the surface level and what's actually happening on the ground. Andy Challenger is a person business call businesses call when it's time to let workers go and for the past year and a half his phone hasn't stopped ringing. Economic data in this article um continued to suggest a shockingly resilient labor market. his workload told a different story. Well, Jerome Pal uh chair of the Fed Federal Reserve has openly stated the labor market is deteriorating. So, I don't know to what extent that uh data showing strong resilience, but uh nonetheless uh we do have data from the ground from surveys like the ones conducted by Bankrate. What are these on the ground realtime surveys and polls showing? Mark? >> Yeah. Uh it's a good question and first of all kudos to my colleague Sarah Foster who did the work on that particular piece. I'd urge people to read it. Uh this gets back to the notion of a year uh ago and and beyond of the so-called vibe session which I wasn't always a huge fan of the characterization but this had the idea of people's feelings not being well aligned with the official economic data. And I'd say we're still there in a way because for example just today we had another kind of miserable University of Michigan consumer sentiment survey. But you know as of last report the US economy has continued to grow. Uh the the unemployment rate while we missed the most recent snapshot because of the shutdown was at 4.3%. And most expectations don't really see the unemployment rate going uh substantially higher from here. So it falls under the broadly of the category of your results may vary. And let's think about the fact that there's a range of data out there that can tell a variety of different stories. And it's essentially my job and the job of others is to tell the ultimate story. In other words, how do we view this all of it taken together? And so, you know, we look at it within the context of the official data showing that for example, there's about 5 million people hired in the United States in a given month. But in recent months, we've had either a contraction in the number of jobs added. In other words, we've actually seen the number of jobs uh on on the part of establishments going down. Uh that's part of the official unemployment data. But yet, the unemployment rate uh has remained stable at 4.3%. So we've gone from what was previously characterized as a red hot job market and with that greater prospect for wage gains, job changers making substantially more than job stayers, but sort of everybody as it's broadly measured getting uh you know reasonable wage gains. But now that we're in a situation where the job market is not redot, but is just sort of um not too hot, not too cold, there's essentially one job open for every unemployed job seeker. It was 2:1 when the job market was so strong. Ultimately, you know, we need the economy to work well for everybody or at least as well as it can for everybody. And so it wasn't optimal that the job market was so hot because we got inflation out of that, right? and that wasn't great for employers. So, uh we're always going to have these essentially disconnects in the economy where it's not working well for everybody. But ultimately I think the question for the US and developed economies around the world is does it work for most people and and can you leverage or do you get essentially stability in the in the politics uh to the point that um you don't go from you don't go lurching from one potentially radical solution to the other. And that's kind of where I'm worried about things going in the United States is what happens after this, right? We don't we don't know what's going to happen with our politics with the either the midterm elections in 2026 or the general election in 2028. But you can see some dynamics emerging where we might be lurching from one extreme solution to the other. And that's not really been born out to work well in countries over history and really has not been uh the tradition in the United States. So uh these issues are very important. David, >> to your point that the University of Michigan consumer survey is deteriorating or has been, uh, what in your experience is the relevance of consumer sentiment from either the University of Michigan data or perhaps Bank Rates own surveys? Um, are they leading indicators for hiring, firing, or job growth? >> Yeah. And there's another substantial one done by the conference board which is a major research group measuring so-called consumer confidence. And uh you know they are relevant and sometimes they're somewhat disconnected and and so what I mean by that is uh I think some of the major uh contributors to University of Michigan of late really has been you know high prices concern about the outlook for uh prices relative to tariffs and then concern about the outlook for the job market. Um but uh we've had relatively stable consumer spending and retail sales in the United States. Some of that is uh is affirmed by u the rise in inflation. So if we think about for example retail sales or consumer spending being measured on a dollar adjusted basis well higher inflation helps to get you better numbers. So uh there is a bit of a disconnect between spending and and attitudes and sentiment. But what I would say is that we go back to the tariffs issue that undermines confidence for business and consumers alike. Uh and we've seen that also in our bank rate survey that we did a couple of months ago where uh a large number of Americans said that tariffs would be negative for their personal finances. We'll soon be surveying on their outlook for 2026. And so we can talk about that down the road. Be interesting to see how that uh affects all of that. But, you know, um, uh, volat volatility and uncertainty undermine confidence for consumers and businesses, and we've had plenty of both of those of late. >> All right. What is your outlook on the labor market? >> Well, first of all, I don't make individual forecasts about that. So, what I'll tell you is what my view of that possibility is, let's say, in in the coming year. And that is I'll associate myself with our quarterly economist survey where uh they continue to look for further softening in hiring but not falling out of bed over the coming uh 12 months or so and they look for a modest increase in the unemployment rate. They also have recently acknowledged collectively that there is an increased risk of recession in the United States. And so when we talk about what the Federal Reserve may be doing in the coming months, I would say that's somewhat related to that in the sense that the Fed wants to take out a bit of an insurance policy by reducing some of the restriction on the US economy and therefore perhaps making a marginal u uh improvement in obviously borrowing costs and and uh lending to more um uh let's just say more financial uh a more positive financial environment that that should benefit both consumers and businesses. But you have these other dynamics that we've been talking about all through this conversation, David, where this decline in the federal funds rate just doesn't affect enough things to forestall some of these larger dynamics, meaning, you know, a reduction in short-term interest rates may or may not affect mortgage rates. Sometimes it doesn't affect it at all. when the Fed started cutting um more recently, we actually saw an increase in mortgage rates with long-term rates going up. So, uh obviously a lot of dynamics there. I would say, you know, the the US economy has proven more resilient than would have been expected for a number of years now. I wouldn't want to bet bet against it. uh and to the degree that the Trump administration can be responsive to changes in financial markets as we saw in April where uh the worst of the uh tariffs were essentially relaxed once we saw uh a huge fallout in financial markets. So it might be that the administration is attentive to all that but you know we'll see what happens. Finally, uh Mark, what would make you optimistic on the growth of the US economy despite all the economic headwinds that we have discussed today? >> Well, and that's a long-term question that I I feel uh strongly about and that is that um the US economy is quite dynamic, has remarkable financial markets uh and innovation uh continues to be a hallmark of the US economy. Think about all the things that have originated from it uh for many decades. Technology uh AI being part of that. Uh but also on the creative side, you know, we still create remarkable content that people want to consume around the world. Uh and you know, David, one thing that gives me great hope is as I make my rounds, whether it's in the United States or uh traveling as I might outside the United States, it's still seen as a beacon for immigrants coming into our country. Unfortunately, despite the fact that uh the administration has been hostile to the notion of both legal and illegal immigration, we need to be open to legal immigration in the United States for the all the reasons that are consistent with our history. And for as long as people will be willing to make those journeys and to work and to innovate in the US economy, that will ultimately be uh what we need for superior outcomes. And I'm still optimistic and uh hopeful that that that uh can be the outcome in the intermediate uh and long term. >> Okay, good. Thank you very much, Mark. Where can we follow you and your work? >> Well, uh all over the place. uh bankrate.com is one is the major uh place to see the work of me and my colleagues more broadly, but I'm in social media. I have a strong presence on LinkedIn. Uh so uh wherever you want to connect via social, that's that's where I'll be. >> Follow Mark and Bankrate links down below. He uh he and his colleagues are a fantastic resource. So check out their articles and their data. Uh tons of good information for personal finance there as well. Mark, good to have you on the show. Welcome to the program and I look forward to seeing you again. Thank you for being here. >> Thanks so much. A pleasure to be with you. Thanks for having me, David. >> Yeah. Thank you for watching. Don't forget to like and subscribe.