 All right, thank you so much everyone for attending this talk. I would like to thank Murray and Florence Sebrin for sponsoring this event in Fort Myers. I lived here several years ago and it's great to be back. I also just want to thank the Mises Institute for hosting this event and inviting me to speak. So as Jonathan mentioned, there are two Newman's at this talk. No, we are not related. So you had one Newman before lunch, and now you have another Newman after lunch. So I apologize for that. But as Thou mentioned, I do a lot of work in economic history, but I also do some forecasting. I do forecasting for some wealth management companies and other individuals. So I look at the past, but I also look at the future and given the theme of this event, I wanted to title my talk, are we headed for a recession in 2024? So I'm a professor. I give grades. It's what I do. So when I last gave a talk on the Federal Reserve at the Supporter Summit in 2022, I gave a report card for the Federal Reserve. You look at real GDP, the quarterly growth. Most recent data was 0.7 percent. It was very weak. The unemployment rate was 3.5 percent. That was admittedly strong. But that CPI inflation, that consumer price index inflation, the last reading was 8.2 percent year over year. That was not good. All right. Fast forward to now, at least the most recent data that we've gotten. I'll talk about the most recent unemployment numbers at the very end of the talk. But GDP growth, real GDP growth was very strong. 1.2 percent growth in this quarter. At least year over year. Unemployment has gone up a little bit. 3.8 percent. It's technically 3.9 percent now. Inflation is 3.7 percent. It went from 8.2 to 3.7 percent. Now that's what I call a midterm progress or progress report improvement, right? You see this huge improvement. At least inflation's fall in unemployment has barely gone up and real GDP's gone up. So when I spoke about the Fed in September 2022, it seemed likely that we were going to enter a recession, at least in sometime in 2023. We haven't seen that yet, at least announced yet. So what's going on? So let's continue to look at the data. So there's really been no real scars in terms of real GDP. This is real GDP starting in, say, 2017. Goes to 2019. We all know what happened in March of 2020. It fell off a cliff. And then it's rebounded. A little bit of difficulty going on in 2021, 2022. But now we're actually growing above what the Congressional Budget Office had predicted we would be in December of 2019. We're growing above what's known as potential real GDP. Okay. We can continue on. And this is a tweet from a economist, the University of Michigan economist saying, this is extraordinary. The US economy is in a better place than the IMF was predicting back in 2019, despite a global pandemic intervening. This is the difference between the country's 2023 real GDP and the IMF's pre-pandemic prediction. So you've got the United States, we're doing slightly better, and everyone else is very, very behind. The advanced economies, the Euro area, the world, you've got China, the emerging economies, especially I've been really suffering. So it seems that we're doing fairly good. I would also just like to point out that during the pandemic, everyone was criticizing our COVID policies and celebrating these countries' COVID policies. And now it seems as though we were so backwards and letting all these people die and not having these very strict lockdowns. And well, maybe we're just coming out ahead, right? That's not the whole story, but it deserves to be mentioned at least. This is a great graph. So we saw some stock market, Dow Jones and S&P 500 pictures in our last presentation. This is the inflation-adjusted S&P 500. And you can go back all the way really until the 20s. And this is just looking at, so adjusting for the inflation, the CPI inflation. This is the trend, huge increase. But December 2021 is, we all know if you put money in there, you really took a nosedive. Even now, even though the market's recovered a little bit, it'd still be down. But the important thing is the trend. You see it, it's basically, it's still on its trajectory, right? Okay, there's been some volatility, but again, if you put your money in the market in 2024, you're roughly where it would be expected, right? It did not look like this inflation-adjusted in the 1970s, but that's a story maybe for later. Okay, and then there's this famous tweet by Paul Krugman. The war on inflation is over, we won at very little cost. Of course, it would be at very little cost because you're excluding everything that people buy. Food, energy, shelter, and used cars. If you take away those payments, yeah, everybody's monthly. Little cost, pun intended. But if you take those items away, okay, right? I'll just only the things people need, which I thought this was funny. Twitter said, well, readers added context. They thought people might want to know the exclusion of food, shelter, energy, and used cars is misleading, which is true. I mean, it's kind of unfair to exclude things that people need, but his argument, I mean, he's trying to be very incendiary and incites him, gets some people angry, but he's basically saying, well, looking at inflation, it's not spreading, it's in fewer and fewer goods. Okay, so from this, we might think that the Fed has really managed to lower inflation. Inflation was 8%, it had peaked at 9% in June of 2022, and now we're at 3.5%, 3.7%. The next number that's gonna come out, I believe next week, will probably be lower, simply because gas prices have been falling over the past month. You track those on a daily basis, pretty much. And you say, well, look, in inflations, it's not nearly as bad as it was in the spring and summer of 2022, and the Fed's done a great job at conducting monetary policy. We can see, as we've already been discussing, that the Fed has raised the federal funds rate to about 5.25%, 5.5%. They recently announced this week that they're not raising rates, at least at the current meeting, though future rate hikes may be on the table, but we'll have to see if they'll do that again. So if we look at this chart, it seems as though the Fed's tightened, they've brought rates really up to where they were before the housing bubble, and then kind of right where they were in the late 90s. So it's okay, we've raised rates to high levels, especially high levels over the past 15 years. And we can see that here at the dotted line. This is the federal funds rate inflation adjusted. Tells a little bit of a different story. So adjusting for the CPI, okay, the federal funds rate, which is the rate, the federal reserve technically doesn't set, but it tries to influence heavily. And okay, adjusted for inflation, all right. So really interest rates, the federal funds rate was quite negative after 2020, and it's gone up, but it's only barely been positive very briefly. And it's actually not as high as it was during the, right before the housing bubble, the mid 2000s. And it's not even as high as it was in the late 90s. Interest rates are still relatively low, all right. Once you're taking consideration, the inflation that we've had, and even 3.7% inflation, that's still very high inflation, too high for the Fed and too high for your average person. Okay, let's look at some other monetary indicators. Okay, this is the money supply. Austrians are very fond of showing this. I am as well. This is a statistic that has really fallen out of use. The Federal Reserve does not even track the money supply anymore. Financial markets really not move on that. It was very different in the 80s, but we can see the trend line, and then we all know what happened. There was this huge increase. The government, the Federal Reserve is basically printing a bunch of money to finance a lot of the government's borrowing costs during COVID, the STEMI checks, as they were so lovingly known. And then we say, all right, well, the Fed's increased the money supply tremendously, and now it's actually gone down. The Fed has been sucking money out of the economy. So we would expect that this is significant monetary tightening and this is reducing spending in the economy. More money, people are gonna spend that money. If you take money out of people's bank accounts, people aren't going to spend as much money. But what's fascinating is if you look at the velocity of money, now we're all Austrians here, so I got some mainstream statistics here, but we think of velocity as a rough approximation as the demand for money, the demand to hold money. It's really the inverse of the demand to hold money. So it explains how much, how many times $1 is spent in an economy. So at least for the past several years, velocity was falling, right? Means people weren't, the demand for money was going up, then the demand for money really went up. Velocity fell off a cliff basically during COVID, but now, despite the monetary tightening, the demand for money is falling. There's still a lot of excess COVID money that's basically been slashing around in the economy. People are spending that. You hear this a lot, it's known as savings, right? These are the excess savings of COVID and certainly some of it's savings, but a lot of it is basically just money that the Fed printed that we're only now starting to see spent. So as the money supply's fallen, velocity has gone up or the demand for money is declining. People are spending away those COVID balances, right? And so what that's done is that's kept up nominal spending. And this is basically a rough approximation of how much money is being spent in an economy each year. This is nominal gross domestic product. This is not real gross domestic product. So it doesn't take into consideration inflation. There's a lot of problems with nominal GDP. It's not a perfect statistic, as Austrians correctly point out, but it can tell us at least some information about what's going on in the economy. And we're able to see that it fell off a cliff, velocity fell, right? Decline in 2020 and then it's shot back up, right? And we've overshot the trend line and we're still overshooting the trend line. In fact, most recently, I think I have a little arrow there, right? It's nominal spending has accelerated, which I'll talk about, but we're growing much higher that the total amount spent in the economy is much higher than what was expected where we would be in 2019, right? So the Fed's tightening, it started to raise interest rates, but those aren't that high adjusted for inflation. It started to contract the money supply, but the demand for money is also falling and spending is still up. Spending is still quite strong, okay? So what's going on here, right? So we can think about this in terms of inflation because if spending, let me go back here for a second, if spending is still up, then the Fed hasn't really tightened that much, right? So the Fed hasn't really tightened that much, it hasn't really started to actually decrease the demand and cause people to decrease their demand for goods and services or to take out less loans to such an extent that they're gonna spend less and so on to lower the monetary induced inflation, right? But inflation has gone down, right? Gas prices, we saw how gas prices skyrocketed in 2022 and then they've gone down and it's pretty much been at best flat since then. So gas prices heavily gone down. So some of the inflation was not due to the Fed. In fact, the good amount of the inflation was so-called supply shocks. These were the supply shocks related to oil, supply chain bottlenecks related to reopening of the economy. There was a shortage of computer chips, so that caused people to buy more new cars, that raised the price of new cars and then that's causing people to buy cheaper substitutes like used cars, that's causing those prices to go up. There was a lot of so-called supply shocks, okay? Now, how we got rid of some of the supply shocks, this is another, it's a great, great graph. Some of you all might remember the strategic petroleum reserve, hopefully remember this, so when Russia invaded Ukraine, we were going to sanction Russia, a lot of countries were gonna buy oil from Russia and in order to control the price of gas, we are going to tap into these so-called strategic petroleum reserve and we've got our strategic petroleum reserve for national emergencies and just totally fell. Huge decline and we basically flooded the market with the perils upon barrels of gasoline, of oil, excuse me, and this helped keep gas prices suppressed and Biden administration said that they would be replenishing this strategic petroleum reserve when oil has dipped below, I believe $75 a barrel. We haven't gotten there and I don't really know if they will ever replenish the strategic petroleum reserve by basically buying oil on the market, increasing the demand. I can tell you with a high degree of certainty, they will especially not be doing this in 2024 because why would you inflict higher gas prices on voters in an election year? That's just, you're not gonna do it, you'll push it off till later or one explanation is they might never replenish this because especially if we're moving to a green economy, so to speak and all of that, they might say, well, we just wanna get rid of all. But this is how some of the inflation was lowered and this didn't have to do anything with the Federal Reserve, right? So, I think it's an open question and this is what a lot of people have done, Austrians, mainstream economists, I've tried to do this, to try to figure out how much of the inflation that we saw over the past several years was the fault of the Federal Reserve's monetary expansion. The Federal Reserve certainly tremendously increased its assets to about $9 trillion, then it increased the money supply in two years, 2020 and 2021 by about 40%, extremely high, but that's only gonna increase prices if nominal spending goes up, right? You have to actually increase the demand for goods and nominal spending has gone up and we can try and have some rough estimate of what actually occurred, right? So, some economists such as Jason Furman, he was a former economist for Obama, has tried to sort of look beneath the hood of the data, so to speak and strip out all sorts of stuff to figure out, okay, what is the underlying inflation rate? You've got the overall inflation numbers and these are all annualized, so in the past month it was going at about if the same monthly rate was going for 12 months, it would be at a 4.9% rate. You could look at core inflation, which is stripping out food in gas. Well, then you could look at core inflation with actual apartment rents and not what's known as owner equivalent rent, which is something that we will discuss. Then you could take out core, excluding shelter altogether, then you could take out core, excluding shelter and use cars, then you could take out core and exclude just the services, like personal training, doctor services, et cetera, taking out shelter and so on. I see what's going, what economists are trying to do, I think it's a little bit imperfect because it would just be an odd coincidence as all this newly printed Fed money is not spent on all these goods that people buy, right? It's like apparently when the Fed prints money, no one ever spends it on food or oil or places to live or use cars, so it's sort of like, well, what are they spending the money on, right? I think we can at least try to look at it from a different perspective, which is let's look at the nominal spending aggregates. Now, as I've mentioned, these nominal spending aggregates are imperfect. There's certainly lots of conceptual problems, but they at least tell us something that gives us an idea of how much money was being spent and we can compare these to the 1970s when these nominal spending aggregates were very high and inflation was also very high. So we're looking at the annualized nominal spending per year from say in 2018 and 2019 or from the fourth quarter of 2017 to the fourth quarter of 2019. It was about 4.5%, right? So this is when things were, quote, normal and CPI each year was about 2%, right? Which is roughly where the Fed once said maybe a tad above target, right? Okay, so then let's look at it from, basically from the fourth quarter of 2019, including the massive collapse in spending in 2020 and then the increase afterwards, it was growing at about 6.4% each year. Certainly high given our population growth, not that much higher, basically about two full percentage points higher than it was pre-COVID and inflation was about 5%, 5.3% each year if you're to average it, okay? So with 2% higher inflation, excuse me, 2% higher nominal spending, we bumped up the CPI by about 3% points each year. At least this is what the relationship is, okay? All right, well, let's look at it after the Fed has tightened. All right, the Fed started raising rates in March of 2022 and they've kept raising rates. So let's look at it over the next year, basically until the second quarter about the summer of 2023. Nominal spending has slightly fallen. Went from about 6.4% to 5.9%. So that means the demand for some goods are not increasing at the same rate as they were previously. This is some of the Fed, this is the Fed sucking some of the money out. But the CPI is a lot lower, right? It's about 3% each year. So there's a huge decrease in prices even though there wasn't a huge decrease in spending, okay? The Fed's tightening hasn't really started to affect the economy yet, right? I'll talk about it, we might just be starting to see this but it takes time and especially this makes sense given that real interest rates aren't actually that high, right, once you adjust for inflation as I explained. So as a rough approximation, this could be subject to a wide degree of error but I think it's, I'm fairly confident in this that the Fed caused inflation to rise from about 2% each year to about 3.5 to 4%. Maybe at one point it was 4.5%. So that 9% inflation, and I had said this in earlier presentations, about that 9% inflation, large part of that was supply shocks, about half of it was, okay? But this is still a significant increase, right? And this is the real problematic in inflation that's tough to get rid of. And really the Fed's tightening hasn't started to cool the economy. We can just see this from, again just look, 6.4% increase in spending each year to 5.9% increase in spending each year. And I don't think the nominal spending should be stabilized or it's a problem when it goes down, none of that. But this is at least, I think one of the best measures of overall inflationary or spending induced price increases. It's only barely started to actually impact spending, right? So I think a lot of people are celebrating, they're doing their victory laps a little too soon because we really haven't started to go through the tightening yet, right? And in fact, nominal spending and inflation both picked up in the third quarter, right? That little green arrow I showed, the monetary spigots, we keep spending money, the demand for money keeps falling, people are spending way their excess COVID cash bounces, going on big vacations, so on and so forth, right? So to answer my question, like, are we headed for a recession, right? So option one is to stop raising rates, which seems to be what the Fed has done right now that's at least where they're posturing themselves to be. So I think that the boom sort of will end or it will kind of really, really continue. I think it's at least the lower likelihood that a recession hits in 2024 and that inflation will drop. So we're really gonna see, it might be more accurate to say that the boom will kind of continue, maybe not as fast of a pace, but it will keep going on, which I think could be likely next year for a variety of reasons. Option two is to keep raising rates. Here, I think the boom will definitely end. I do think the Fed needs to actually raise rates and if they kept raising rates vigorously with those jumbo rate hikes of three quarters of a percent, half a percent percentage point, et cetera, instead of the small 25 basis point increases that we've seen, they've been able to keep the monetary inflation running. I think if they keep raising rates, there's a higher likelihood that the recession hits in 2024 and that inflation will drop. I think it's likely that the Fed's gonna probably not keep raising rates. This is a great article from Barron's that recently came out. The stock market hinges on Fed Chair Jay Powell's every word and now the presidential election could too. Let's not forget that the Federal Reserve did not start to raise rates until March of 2022, just coincidentally around the time that Biden reappointed our the Fed Chair, right? Like it seems unlikely that the Fed's gonna raise rates and cause a recession when it's guardian, so to speak, is up for reelection or the government. It seems unlikely. So I would put my greater weight, at least on saying that we're gonna see continued inflation above target, but we could start to see some significant difficulties, problems brewing, right? This is the housing prices, all transaction housing price index in the United States divided by what's known as owner equivalent rent, which is really how the CPI measures inflation. They ask people how much they think they could rent their apartment out first. All right, so huge increase during the housing bubble and then home prices fell. And then we started to see it increase a bit for a variety of reasons, but then another huge spike up. And what this really says is only one of two things, either home prices have to fall or that owner equivalent rent will continue to increase and keep up inflation, right? And right now it seems as though more and more people, a lot of people don't wanna sell homes or interest rates are high, so people don't wanna sell their home and buy another home. I could see the owner equivalent rent continue to increase and that would keep up inflation, but this does signify to us that home prices are out of whack, so to speak, right? This is commercial real estate. This is definitely some sector that I think if we do enter a recession, this will be a troubling sector. Much more than say houses will be, at least my prediction, housing was much more serious during the financial crisis, okay? We could talk about commercial real estate. Loans are going down. This could affect, is it really starting to affect regional banks? I think this will be a difficult, troubling area. And then we've got car loans. Auto delinquencies are up. The percentage of borrowers at least 60 days late on their car loans is the highest on record, right? This is gonna be a troubling area. The unemployment rate has started to actually go up and once it starts to go up a little bit more, then it says an indicator of recession could be on the horizon, okay? So we're at 3.9% and we'll start to trickle up gradually and that's something to look out for. So inflation's fallen, but I think most of the decreasing inflation was supply shock related. The Fed's hikes haven't raised real interest rates or cooled monetary inflation enough, so I could see the spending keep on going on at least through most of 2024 and then maybe start to go downhill, really start to go downhill in late 2024. And if the Fed stops hiking, I think inflation's gonna remain above target. And if the Fed hikes more, there's gonna be a higher likelihood of recession. I just don't think that's likely. So I think we're gonna start to see more and more difficulties emerge maybe next year, but we're really gonna start to see the pain probably come later on, right? So those are at least my predictions, at least what I think is going on with the macro economy. I appreciate everyone listening and I would now like to introduce the next speaker, Bob Murphy.