 All right, well I'm going to introduce myself. So we will start. Good evening everyone and welcome for those of you whom I've not yet met. I'm Pat Parisini, Director of Alumni Engagement, Regional Chapter Development for Fairfield University, and I am so thrilled to be able to bring this event to you via Zoom. In my position here in the university, I have the pleasure of working with alumni from across the country, coordinating with chapter leaders and volunteers to host events that keep alumni and parents connected to and engage with Fairfield. We have nine regional chapters from Boston to Washington, D.C. alphabetically and from Boston to San Francisco geographically. A little bit of housekeeping first. Please make sure your audio capabilities are turned off. Video is fine. We always like to see faces. We have a lot of folks on this event this evening, which is outstanding. And we welcome your questions. We have time at the end of the presentation for Q&A. You can use the chat function on Zoom to ask your questions anytime during the presentation. And I will monitor the chat and relay those questions to our presenter. So now on to the main event. This presentation was the idea of the Washington, D.C. alumni chapter and specifically chapter leader Tom Vitlow, class of 2009, an economics and international studies double major and a former student of our presenter. So I am passing the baton to Tom to introduce our special best instructor. Tom, take it away. Thanks, Pat. Appreciate everyone being here. I contacted Pat about a month ago and said, I think we need an update from Dr. Lane. So this would kind of got this going. So for those of you who don't know, Dr. Lane is an associate professor of economics and a mentor in the Ignatian residential college at Fairfield. He has been advisor to Fairfield University's Federal Reserve College Challenge Team for more than 15 years. He was awarded one of two 2019 Magist Metals by the National Jesuit Honor Society, Alpha Sigma Nu. This highly competitive honor, rarely awarded to a faculty member, is presented annually to two Alpha Sigma Nu members who exemplify the honors society's core values, scholarship, loyalty, and service in their work to better the world. Dr. Lane has also received other honors and awards, including teacher of the year from Alpha Sigma Nu, advisor of the year from TUSA, and the Father Thomas McGrath Society of Jesus Faculty Award from the National School of Banking. And, last but not least, he is a proud grandfather of future stags, Shannon, Colin, Molly, and Max. So without further ado, Dr. Lane. Thomas, that was extremely kind and gentle. You could have said a lot of things that were a little more direct, but that was wonderful. You were very kind. A couple things. I'm going to talk at a relatively, well, as some of you know, and I have to be polite, I'm only going to ask questions of people I already know. So it's not that I'm trying to neglect you, but if I don't haven't had you in class, I don't think it's fair to harass you. So Ms. Hurley Harrington, excuse me, you have to know I was told by Thomas to start at the bottom of the list, but that doesn't mean I'm going to pay any attention to what I'd like to do is talk for a little bit about what's been going on, compare what's been going on to what happened during the Great Recession that some of you had the misfortune of having me in class, that we sort of made it up as we went along, and then talk a little bit about the current chaos. So I'm going to sort of talk about a little bit of the differences and a little bit of what's going on. I'm not going to spend too much time on policy because I've got some, Pat, I'm assuming these people have access to these slides if they have nothing else in their life to do, but clearly make them available. I have no copyright or give a dang about it. I'd really like to focus on is for several of you who've been at the Fed Challenge and how that has been a really different story. The last crew that was live was the class of 2019 and so, I mean, 2020, and so 2021 was a whole different year, and I'll talk a lot a little bit about that. It was a funky experience to say the least. All right, so most of you know the Great Recession. Some of you have had the pleasure of being in Fairfield when it happened, and this is when Phil Land would read the Wall Street Journal and everything else he could before he showed up in class, could be able to learn a whole bunch of new things. And as you know, Sarah, housing prices never fall. That's a bunch of Milwaukee too, but the housing market was one of the big players, plus the financial sector. But what gets lost, and most of you know, if you had money and junk with me, is it wasn't our normal banks that did all the chaos. It was the non-banks or the non-depositories, and obviously our agencies did some funky stuff. I've got a whole history of that if you want to read it. The housing bubble definitely happened, and we had the whole subprime challenge. Some of that's still going on now. There's a real question. I'll play out for you later. The financial fragility stuff, one of the places is the subprime use-carmor. There's some real funky stuff going on there. Mr. Mulligan, if you're on the call, I'll be picking on you later to help me with that. Just to let you know it's coming. On the insurance side, Mr. Smith, I'll be expecting Murdo to help us on that. Joe, I expect you to answer everything, so don't worry about it. Oh, and by the way, Mr. Siebrek, should you be here, I believe you may be the veteran on the call. Just for the record, I know I'm older than everybody else on this call, so I probably have forgotten working with you so far anyway. We're in a low interest rate environment. Now we were in it before the Great Recession. We've got some stuff to talk about that. Obviously, some of you know what I think about better reserve. Chairman Ben Bernanke was one special guy. He did a great job of fiscal policy, sort of dealt with the challenges. It's a very interesting time. I'll talk a lot more about it as we go along. Now, here's your assignment. Now, if my list is correct and I stand corrected on everything, as some of you know. So it would seem, Thomas, that I'm going to have to go to Ms. Paul. Her name is Tierney now, but it used to be Matt. Michelle, are you with us? Okay, move right along. Yeah, think about me doing this for teaching class. It's a bloody hell. All right, so Joe, I'm going to go to Murdo Smith. Murdo, we got you? Yep, I'm right here. Oh, good to see you, my friend. Life is good, I hope. It is. All right, wicked awesome. So you're in class now. You know, this is Lane. You've got to deal with this crazy guy. So we got our toolbox. So what the Havels CD? And don't tell me it's what I put in my computer. Oh gosh. I'm going to go back and change guys. Call the registrar right now. Let's get her done. All right? You should. Oh, no, no, no. You're a wicked awesome. Don't put yourself down. There's enough other people to do it for you. It's consumable, okay? How did that do during the pandemic? Did everybody run out and buy cars? No, that's automobiles, by the way, in case you didn't know what I said. Murdo, I'm talking to you. Oh, I'm still on the, I didn't realize that. You're on the hotspot till I get an answer. Please, my friend. Come on. Yes, people did. They ran out and do it. So in April, people went out and bought cars during the pandemic? Yep. Really? Did they go to restaurants? No. Okay. So we had consumer savings, consumer spending dropped kind of precipitously. And obviously state and local governments had no challenges at all. Did they? They had lots of challenges. Yeah. So did that cause a lot more expenditures? Absolutely. Oh, okay. So I have a question. Could you explain to this casual observer what stagflation is? You do remember, Murdo, that there are three options when I ask you a question. Say something. Pass to someone or else or ask for a medical exemption. You should have remembered the rules of engagement, sir. Stagflation, stagnant inflation, I guess, if, is that a simpler? Stag up? Or? So is that a simultaneous rise in inflation and unemployment? Yes. Okay. So do we have that right now? No. Okay. What do we got? We have rising inflation and right now, relatively steady unemployment. Well, you think 5-8 is steady compared to where it was? Pre-pandemic. Pre-pandemic or at the peak of the pandemic? Right there. How's 17.6 hit you? That's brutal. I mean, that's what happened after spring break, right? All right. We had a slight economy. It kind of was not too hot, as we might say. All right. Kind of a problem. All right. So this is sort of what we saw, Murdo. It had a little rise in unemployment. All right. We had to actually redo the graph. It went up so high. Fortunately, it's come back down to 5-8. Now, that's the red line. Hopefully, that's going to be like my EKG, run a nice and normal. Now, see, back before. I like it there. Okay. And we have a little drop in GDP. You may have noticed. Kind of fell off the chart. So Murdo, if you don't mind, I'm going to go see if Mr. Sheridan's with us. Is that all right? Go for it. I don't want you to feel neglected. I don't want you to feel neglected. Oh, should I just go to the professor? Murdo, it's up to you. Should I go bother Joe? Or should I bother Mr. Sheridan? Go bother Joe. Do you know Joe? He's a really nice guy. I don't think I do. Oh, he's a form of a challenger, by the way. So that's why we pick on him. So Joe, how are you doing? I'm not doing too bad. Are you an Arkansas? No. Right now, I'm actually in Connecticut visiting some family. Oh, good for you. Good for you. Good for you, Joe. Yeah, absolutely. All right. So you and I, we can play a little tag team here. Sarah, don't worry. I'm getting to you. All right. I never forget the people from Massachusetts. All right. Don't shake your head. You're wicked awesome. Okay? Anybody who deals with hockey players is wicked awesome. So we have a little slight downturn in GDP. Now, here's what the Fed did. Now, Joe, you got to explain this to me. What the Havel is this blue line? I mean, I know what the blue line is in hockey. I'm sorry, Sarah, that the ruins lost, by the way. I was very sad. All right. I'm going to hear it from Professor Lee, by the way, because she's an Islander fan. She actually has Islander junk in her office at the Dolan School of Business. All right. So, Joe, this is the Fed took out the toolbox, right? Yep. All right. And if you actually calculated adjusting for inflation, it's negative. So not a great, great shakes. By the way, Joe, I'm going to leave you for a minute. I got to go talk to John Seberg if he's here. John, are you with us? I'm here, Phil. I'm ready. I'm at the altar. I'm ready. You're at the altar. Wait a minute. Do you have the boss with you? Yeah. Well, I'll hide you. We have the smart one, and then we have John. Exactly. We have the smart one, and we have Phil. Okay. I understand the place. You know, John, some things don't change. So, John, I think you might be the leasty. Oh, no, you're not, Kathleen. All right. See, these are two, I think they're the class of like 95 or something like that. Add about, subtract about 12. I was trying to be nice herself. All right. Trying to be nice. But as you know, the Federal Reserve took out the toolbox, and I have to say, as much as Powell is an interesting guy, I think the interesting thing about Powell is he's not an economist, but he sure does think like one. And that's pretty good. So he took out the toolbox and said, let's not repeat what happened in the last recession. And I think they did a pretty good job there. Now, this is the one that's in the background that I'm kind of worried about going forward. And that's oil. And oil prices are up again. We got spoiled at the bottom of this recession because, as you know, demand fell off the scale. Just for the record, for those of you who don't know, I live in Salisbury, Massachusetts, which is the last town of Massachusetts before the New Hampshire border. So I would come down to Fairfield on Sunday night, stay at my cousin's house in Westport, and then play school on Monday, drive home, come back Wednesday night, play school on Thursday, stay over Friday, and go to a rotary meeting, and then come home. So my car was used to having a lot of mileage. But during the pandemic, I had a little reduction in the amount of mileage I had. As a matter of fact, almost zero. So other than having to move it for shoveling and snowblowing, it really didn't go anywhere. So that's clearly why a lot of the oil demand fell like a rock. And that's kind of a problem. Now, here's the conundrum. And this is why John and Kathleen are going to help me, because they were in the housing market not too long ago. And as you know, the housing prices have continued to rise. Now, John, I know as a very astute, well, Kathleen can get back here to help you if you need it. Don't worry, Kathleen, you can get even later and I know you will. So here's my question. Why in heaven's name of housing prices gone through the roof? Now, John, you got to talk, you know, that's part of the thing. Hard assets, hard assets will do well during inflation. Okay, so John, I need Kathleen to explain the five L's of housing. What? I'm thinking, I'm thinking. Who's on second? I don't know who's on third. Okay, let's go. Leverage, I don't know. Oh, come on, John. You took money and junk with Joan. You should all be either of you, you know? Oh, by the way, most of the folks in the department are doing well. I got to talk to Ed Dieck two weeks ago. He's doing great. Last report, Larry Miners is doing fine too. He's out in North Carolina somewhere, up in the hills somewhere. Last report on Robert Ellis, which is Kelly, he's doing fine. Jay Bus, we never hear from, he's out looking at birds somewhere. All right, but everybody else is doing okay. All the young bucks. See, I'm the old guy now. So all the young bucks are doing really well. We've got a great crew, by the way. They tolerate me. We'll have more to say about that later. So Kathleen, for your edification, it's lending, lots, labor, local regulation, and lumber. Those are the now the five L's of housing. And I got to learn that last year, because I couldn't figure out why in heaven's name, lumber prices were going through the roof. And I would have asked Joe, because down in Arkansas, the price at the source of the lumber is relatively low. But the problem is milling it is a challenge. So clearly, and by the way, and you know, John, as well as everybody else, all those people who used to live in New York during the pandemic moved out and they all came somewhere. And if clearly put an excess demand on housing prices, Sarah would know that from Massachusetts. They all moved out of Boston, and they've driven the suburbs crazy. I don't know, Tom, how bad it's been in DC. But it's, I don't know, Joe, you haven't had a, have you had a flight to Arkansas? I don't know. But clearly it's happened up here. They're all moving around. It's been interesting to watch. All right. So we had a little drop in little drop in employment. Some big sectors, and most of you know this, the leisure sector got whacked, retail, sales, education, kind of interesting. GDP, big deal. Now, this is sort of what happened initially, but I'd like to gear it up a little bit just so I can have a conversation. Mr. Romano, are you with us? Francis. All right. So this is some stuff to actually go to the web and get this. This is from the Kerry School of Public Policy at the University of New Hampshire. And Joe, it's an interactive thing, easy to download, and they update it every month. It's really great. So this is the job losses between the Great Depression, Great Recession, and COVID, as well as what has happened since then, okay? And this is actually, Joe, for you and everybody else, you can do it for the whole country, or you can do it by the state, or you can do it by separate industries. They really did a nice job making this interactive. I literally stumbled across it. But this is the whole country. And you can see that we have lost more jobs in this COVID than we did during the Great Recession on the financial crisis. And this is the key. Last April, just everything went to heck in a handbasket. But we've made some very, we're on, as long as we get these lines above zero, it's a good day. But this is the sectors that took the biggest beating, all right? And again, this is nationwide. If you look at it state by state, it's not always equal like Connecticut. There was a lot more jobs lost in arts, entertainment, and recreation. That was the biggest hitter in Connecticut. But this is the country as a whole. So you will notice that there is some that did relatively, didn't do as bad, primarily the federal government and finance and insurance. One of the curious things that I love, I really like this diagram, is it shows you the connection between the jobs lost and the wages earned. And you'll see that the people placed at the largest number of jobs were lost is in a relatively low income sector. And that makes sense if you know anything about accommodations and food service. All right, so that sort of gives you how this was a very unequal chaos. And that's not anything you guys don't know. And one of the pieces that I don't know what to do with, but I'm putting it on the table, is this pandemic, this recession has had a very different impact on gender. The participation rate on the pot of men and women both dropped. But we are seeing a slower rebound in the participation rate on the pot of women. And that is a serious ongoing concern. And as anybody above the age of probably 20 knows, a lot of this has to do with childcare. And there's a lot going on there. And that's a whole bunch of issues. Now, I've got a whole bunch of detailed stuff that if you don't have a life, you can probably read, like all of the different things that have been done to enact. And if you really need to get out more often, God bless you. John, just take him to, take him to the Gaelic American Club, they'd be better off. All right. And then this is now, this is where I go back and bother Joe. So Joe, this is the toolbox. Now, again, you and Bo, I should go, I'm sorry, Joe, I shouldn't just pick on you. Hums, are you with us? No, okay. Jack Keneally, we got you. Who'd I just hear from? All right, Julian, you with me? I sure am. All right. So Julian, let's go. You know, not just picking on Joe, it's time to pick on some of the other motley crew. Now, I assume you can explain all of these. No odds and nobs. Come on, you know me. I'm going to harass you for that. You know how this goes. All right. This is the full blown toolbox that you and I, that John and I never saw before. All right. This is, if you go start with interest on excess reserves and keep going down, all of that is new either from the Great Recession or because of this chaos. But that's the full toolbox that the Fed took out. I mean, they basically went to Home Depot and said, pour it all in. All right, then we're going to go. All right. They have done everything with the commercial paper market, the dealers. They've tried this whole new game called overnight reverse repos. And as you know, Julian, that's to try to enforce or try to stop the leaky floor. Right, Murdo? That was the final response there. All right. See, John, you can stay off the hook. You didn't do this chaos. All right. So clearly the Fed took out everything. And if you really want to get bored, go look at their balance sheet. Now, here's the question for John because John should know this. Before the Great Recession, the Fed reserves balance sheet was under a trillion dollars, correct? Mr. Sieberg, I need you to answer. Just shake up and down. Kathleen should be helping you here, you know? All right. We'll give her grief later. All right. Oh, by the way, you remember you only pick on people you really like. The others, you know, what the heck? And I can't get to everybody. Hey, Dave, Emma, you on the call? Well, we're doing okay. Canelia, you here yet? Wait a minute. Francesca. Okay. You were dead in the middle. That's where I was going to start till I was told to do otherwise. All right. So I'm going to go back. The Fed's balance sheet before the Great Recession was a trillion dollars, or more or less. Now it's over seven trillion. That's a little bit of an expansion. All right. They've done a little crazy things. Now, here's what I'd like to talk to you. Now, by the way, Pat, if I go beyond quarter of eight, shut me off. Yes, sir. Here's my conundrum. Now, most of a lot of you know me, and you know I'm basically crazy. And the sign is in my office. Welcome to the chaos. The sign is in my house. Welcome to the chaos. And oh, by the way, for you, John, as you know, and some of you don't know, I actually have a new desk. I'm in a new office. I'm in the new SOB, new school of business, building. It's beautiful. Only one thing I have to complain about. None of the windows open. The heck, you got a pandemic. You can't open a window. What were they thinking? It's umatically sealed. Are they doing cigars in their store? And I don't know. But anyway, you know, I'm a chalk guy. If I had my choice, I'd be on a chalkboard and I'd be harassing you just like I'm doing right now, except I'd be up. I'd be walking around and I'd be checking what you're doing, Myrtle. All right. That'd be that's how I roll. Think about this guy. All right. In Salisbury, Massachusetts, in the place you see me. Oh, by the way, when the pandemic started, we decided to rebuild this house so we could make it comfortable to live in. So that was another interesting phenomenon. So I'm in my new office. I'm very happy. It's basically wonderful. I have computers. I have light. What else do you need? So but me zoom PowerPoint, the web. Oh, that's clearly where I'm best at. As I am right now, you know, I'm trying to pick out the people I know and harass them. Thank God I had some great students. I mean, they were wonderful. They were patient and they've been all they've been since last March. They really tolerated me. When we go back to the chaos last year, we're trying to find out what toilet paper was. And I got to watch max born through a window, you know, outside was kind of comical. But we've had a lot of fun. And but here's the challenge. This year. Now, Murdo, just put this in context for you, Julian, the whole rest of you crouched in. Can you let anybody who did the Fed challenge think about this? One, I am not physically there. Okay. Two, Professor Shagmani, who is absolutely brilliant and wonderful. But she's relatively kind and gentle. She's a lot smarter than I am. But she's not going to grab you by the throat. All right. And go, what the heck is going on? So I'm in Salisbury. She's in Fairfield and they're meeting once a week. And the rest is on this crazy stuff. We've got to get a presentation done on video to the Federal Reserve two weeks ahead of time. Okay, on video, on zoom, what we do. Okay. All right. And we got to do the standard drill. Where's the economy? Where's it going? You know, what are the positive and negatives? All that great stuff and make a recommendation. Okay. And then we wait to find out how we did. And on November 9th, we get to do a video. And well, by the way, we had to go to WebEx. Think about that. What a piece of junk. Okay. That's what the Fed uses. That's what the government uses pieces junk. Thank goodness we had a wonderful senior who became a tech guru. He actually contacted WebEx by phone and got to talk to somebody who helped actually fix us. So we weren't terrible. I mean, yes, Murdo. It was that good. He got through. I don't know what. I think he was running the beads or something. I think he called in a saint or something to get us there. But it made a world of difference. All right. We actually did. Okay. Yes, I am timing myself, Murdo. All right. Now, here's the good news. All right, we got to do this presentation early. We got actually, we got three economists from the one from the board, one from New York and one from Richmond is who they did. Before they did the presentation electronically, shipped a puppy out. It went through the department. You know how many times they did it in front of me. So that's not a news flash. I don't think Shadmani, God bless her was like, you really get in their face. I said, I got it. Because as you know, some of you know, no one's going to be worse than me. All right. Because I want you totally prepared. All right. Then I'm going to be the Russian judge. And the department jumped in all hands on deck. They went through it more than four times. I just put four up there because not everybody was there all the time and was great. And on November 1st, all Saints Day, so obviously we got some divine intervention. We had more than 20 alums show up on Zoom to go harass these kids. It was phenomenal. Great, great time was had by all. We made it to the top 18 in the country. You know, out of about 70 schools, we made it to the top 18 and we finished third in New York, which is phenomenal. We really did really, really well. I'm very, very proud of the team. Now again, in the middle of this, they got quarantined twice at the beach. So they can't even leave the beach. All right. So, you know, this was, that was an interesting, interesting time to teach. I would say that Professor Shadmadi was really the guidance of the team and I just was quiet in the background. And if any of you believe that, I have some land to sell you 22 miles, 20 miles dewy's of New report, Massachusetts. Now, where are we? So Joe, make sure I'm getting wrong. You're my editor here. Right now we got a GDP grown at about 6.4%. So I got to tee these guys up for this year. Okay. And I got to team up that what have we got? Have we got this crazy jump up in economic activity that's going to fizzle out next year? Do I have inflation that's popped up and going to fizzle out next year? Or do I have a change in the weather? All right. I'm betting I'm praying that we have a pump up and it fizzles away. But right now we got a very strong GDP in the outlook. And I'll show you some of those from other people. Very strong labor markets coming back. We just had the lowest claims data today. Housing market is completely nuts in any urban area in the country. I mean, it's not affecting a lot of the what I'll be polite the mid part of the country as much, but it's flying investment and plant equipment and everything is going through the roof. And by the way, Jim Mulligan, if you're there, thank you very much for keeping the market doing well. You and Mr. Romano and the rest of the crew that works on Wall Street, I can get it to retire someday. Thank you very much. All right. Anytime. You know, I'm like commodities guys. So we welcome inflation. Thank you, James. You welcome inflation. It's always nice to know I have someone who's thinking about the greater good. All right. I'm very good to see you, James. And I'm thanks for keeping me in line. Jim is another Fed Reserve Fed Challenge veteran who I had the misfortune of giving a hard time to. But thank you, James. And let's keep those markets going in the right direction. And a lot of commodities you paint on the next. All right. Consumption spending is growing like when we used to talk about the pent up demanding class after World War II, nobody knew what it was. We see it now. Okay, it's back. It's back with the vengeance at inflation numbers. I'm a PCE guy because that's what the Fed guys look at it. But you know, any measure, any which way but Sunday will help Mulligan and he can keep commodity prices up. Just keep oil down please. I still got to drive once in a while. Now you can have copper go up and all that other stuff. But you know, get rid of that. The financial markets for you there, it's most depressing market in the world. It's just flat as all get out. All right. Here's the set of challenges. We think we're on the other side of of COVID-19 please. I hope it's in the back mirror in the back mirror. But we still have people who aren't getting vaccinated. And it's a I just leave that alone. That's a hot button that will get me in trouble. But I've been there enough. I know housing market, we know it's a demand and supply both of both sides of this equation screwed up. The man just flying out the door. So you bought a house check, Jim, by the way, you know, making all this money on Wall Street. Are you still living, you know, too much inflation. Oh, too much inflation. Okay. Given that you can do your job anywhere in the world, just see what the poor people in Maine are complaining about with all of these. I've been in the office since July, Dr. Lane. Oh my gosh. So you're just having a good life, huh? So did you join Ridgewood yet? Not yet. We're almost there. Well, I just just giving you a hard time. As you know, I got to play there and not almost hit it almost hit a deer. That's how close I was to the fairway. But we'll leave that alone. We know we've got some so we've got demand sky problems, we got supply side problems. It's just crazy. The global economy. I'll talk a little bit about that. It's worse than we are trade challenges. God knows the consumer, but we do have financial fragility. I talked about the student, we can talk about the auto, the used car market, we can talk about the student loan market, talk about the leverage loan market. There's a lot of places that we've got some potential, as we would say in the vernacular, Ajada. All right. So let's do the good news bad news. Let's sort of do the Saturday night live version. Corporate earnings. Awesome, baby. Keep it going. Job market. It's keep coming back. And as you already told you, Jimmy, going to take care of the market for me. All right. Consumer confidence. Well, it's down the last one, but it's, it's, it's on the right leg. Vaccine. I don't know how any somebody said, will you get a vaccine? I said, just give it to me. And they said, which one? I don't care. Just put it in my mouth. But that that actually led to my wife and I, when we were eligible for here in Massachusetts, the day that we were eligible, I had two computers going down here. She had one upstairs and nothing was happening. So she picked up the phone. She called the local hospital, got through in 10 minutes, had an appointment. That was on a Thursday. We had an appointment Saturday morning. So, you know, they can't beat it with a stick. It was great. We were in and out in less than, less than an hour. The Fed has done everything they can. The real question is how long can they keep interest rates down? And since James wants to talk about inflation, you are the ones that are going to cause them to shift it up. And I hopefully they don't do it as Mark for that. They sort of do it, you know, but it's, it's, it's an interesting question. So, so we'll see the rest of the world. Now, let me say Europe is, you know, what the heck can I tell you? The bricks, Brazil is still a disaster. Russia, as much as they make all kinds of noise, their economy stinks. India is in chaos. China will leave them alone. They're doing relatively well economically, but they got some real internal challenges economically that they're going to have to figure out. And I'm not sure I trust most of the data coming out of there, but that's a long story for another day. The emerging markets, you know, there's some real stuff going on there. Now, Mr. Mulligan, since you're my inflation guy now, we got this issue of debts and deficit that I have to deal with now. I assume that now that you as a person from the garden state, as a firm believer in modern monetary theory. No, sir, neither am I. So just so you know, I haven't changed, but it does raise a lot of issues. I'm Mr. Morrow. I'm going to, I'm going to assume you're not Dr. Morrow. Thank you. I mean, we maybe I'm told we're living it, but I don't buy it. So we'll move right along. Energy prices, that's, that's a wild card. That's a potential challenge. Now, I don't know whether you have seen this one yet, Joe. So this is probably you're most believe it or not, this guy actually was reading the Journal of the American Medical Association, which tells you, I need to get out more often. And this is basically the cutler is a real big dog in the health economics. Larry Summers, most of you know, he was the president of Harvard for a while. And I may have said some things that were not. But they did this thing on trying to analyze the impact of the COVID on the United States economy. And it's over 16 trillion dollars. And they break it down into the pieces of not only the value of a life and all of that stuff, but not only a lost GDP, which is over seven and a half trillion, but also the social cost, trying to put everything on the table. Interesting way to look at it. And so, Joe, that might be helpful for you in playing school. I'll be using that next year to talk to the derelicts now. Outlook. Now, as many of you know, I am not a guru without forecasting, but I take, I look at what the pros from Dover are saying. And I said, I mean, right, are they crazy? Well, anyway, GDP this year is going to grow about just a shade under 7%. Next year, we're looking at a little under six, which would be, I mean, by historical standards, holy McGillicuddy, it's crazy. Labor market is going to keep going well. I mean, if you think about where we were when we started, the unemployment rate was at 3.5. So it's, we still had that, which was probably hit by historical standards too low. The housing market isn't going to let up. We are going to see, and Jim, this is what I would say to you, the Fed's going to have to get off the dime next year. And it may not be on the Fed funds target, but it will be on the asset portfolio. That's what we're going to start seeing. Actually, I think it's going to happen by the third quarter. But again, I'm some argue, I'm a pessimist. Inflation, you know, that's, that's going to be the issue. Based on the Jackson Hole meeting last year, they believed, I believe they went to two five is the new target, which will make you happy and Mr. Commodities. But for the rest of us, you know, the two is probably gone by the wayside. I don't think we're going to see two for a couple of years now. But I hopefully, again, there's nobody on this call who's really seen that number. I remember when it was 10. So I hopefully don't ever go back there. The key player in all of this is, is Powell. Powell is got to figure out, Powell in the Fed, I always give the chairman more as much credit as possible, but they got to figure out where the neutral rate is, and when they're going to go there. And the guy that said, New York now Williams is a big match, a big R star guy, as is the guy out at St. Louis and the lady that's at San Francisco. So they've got some real good players there. The Fed's going to have to start putting some of its toolbox back and probably hold the yard sale. I hope they're not have to use them for a while. Fiscal policy is going to face some real challenges. And that's going to be trying to get this, they're going to probably, and this is just me, they're going to have to pull something like Ronald Reagan, slow the rate of government spending and let taxes catch up because this can't happen overnight. It's going to be a long run. Going to have to see what the other central banks do. Financial reform, I don't, I don't, given the politics and this is not, I'm not a pro at that, most of you know, I'm a little concerned that it is not much is going to happen. And that's really because of the dynamics. Now I got a whole bunch of graphs here to drive most of you crazy. So you can look at where this comes from a advisor perspective. It's the only reason I use them is the graphs of free gel. So that's a good reason. Okay, little bit of GDP per capita. This looks like GDP per capita at compound rates just to drive you crazy. Now this is the outlook from the Fed of Atlanta. This is the GDP now outlook and they've got the blue chips forecast in the brackets. So there's a pretty wide range for that. And then they've got their what their forecast is saying. So they're looking at GDP big numbers 10% for the next quarter. So that's sort of where we are. Got a couple slides in here for you guys to look at if you want. And it sort of looks at the sectors that are leading and lagging when I, but you know, moving the labor market has, you know, participation is still still a challenge. And that's going to be an issue going forward. I know there's some politics involved with the unemployment stuff and all that, but this is a long-term trend that I think we'll have to deal with. And that's clearly a challenge. Energy prices is still there. And I did flip this one in because I want to look at gas prices and look at oil. I tend to use West Texas intermediate. I don't know why. That's just to wind up like Brett, but that's all right. Lumber prices, there's not a news flash for anybody. And that's when we go back to the 4Ls for Kathleen, which you will never forget now needed more numbers. When in doubt, you can always go to the Fed or Richmond and they give you more numbers than anybody in his right mind needs. You have all your ISM indices and please get a life fill. All right. GDP is the summary of the GDP data up to date. Retail sales. I have, I mean, all you have to do is look at that number for April 51%. I mean, that is just wonderful news, but oh my golly, it's not sustainable. The equity markets again, Jim, and just so you know, I never forget the VIX. And that's interesting to see that how much the VIX is returning back to normal. I don't know of a VIX in commodity markets, but you'll have to make sure I learn about one, Mr. Mulligan. Optional utility. There you go. You can find it. Oh, okay. I'll find it. Thank you, Mr. Mulligan. I can always rely on somebody from the GAD and state. All right. Then you got inflation every which way, but Sunday. Okay. And then the Fed's been all in. There's the basically emptied your toolbox out. And there's the balance sheet. They kind of blew it up. So if you look what I talked about before, before 208, it was below a trillion and now it's well over five. And then, you know, here's what we should have seen coming. And this is sort of to go back to Mr. Seberg. So, John, we know that in the last 10 times that the yield curve has gone negative or had a recession relatively shortly thereafter. And so when it dipped down, you know, before the pandemic, everybody said, oh, don't worry about it, Phil. It'll be fine. And they were right. There was no financial reason for it to happen. But then we got a pandemic. So, you know, just in case you were sure about, weren't sure about the batting average, Phil, it came back to verify for you. So Fred Mishkin and Arturo Lasek are happy that their paper still holds true. Again, more numbers to drive you nuts. So this tells you how much was spent to try to fight COVID. This comes from the Peterson Institute in DC, probably a place that Tom knows. This is the challenge. And this is why we have a conundrum. Budget deficit is going to be continuing. And it's not just COVID. COVID's the red stuff. The green is the extended tax cut. And the blue is some people not doing math. Okay, and that's I think what I told you in class that some people have a challenge doing mathematics. And you would argue, no, Lane, it's they don't know how to do arithmetic. But that's okay. So clearly he's just giving you an estimate of going forward for the 2020 budget. And again, look at what it stacks up to relative to the ones that preceded it, kind of raises some real questions. And, you know, when in doubt, take out another picture. So Jim Mulligan has a lot to see. And Joe has stuff for class. I gave you a relatively long group of people that I have big borrowed and use stuff from. I will tell you that this is not an ad for Wells Fargo, please. But they give their economic stuff away. And so that's one reason to use it as does PNC. One of the things that most of the Fed Challenge guys and gals know you go get the free stuff, because the other stuff gets really expensive really fast. Just in case no one could read, I wanted to make sure I had a slide up to get your attention. This is from the IMF that tells you everything that's been done in monetary and fiscal policy in the United States during the pandemic. So if you really don't have a life Mulligan, and you need to work on your your short game, you can read that. And when in doubt, you have more stuff. All right, Pat, right on time, time for questions. All right, I hope that was at least entertaining, if not informative. Oh, it always is, Phil. It always is. But I do, there are a couple of questions in the chat. So. Oh my goodness, can I fire away? You can do whatever you want within. By the way, you don't say fire away to somebody from Lawrence. That's not a good idea. All right. All right, I'm just out of a firefighter. So from Shannon, does the Fed make an I O E R R R P adjustment next week? If the Fed money funds what? Yeah, do we get the money funds what they're looking for? If you I, I, I, I think they're going to have to do something because the liquid, the slippery floor of the non non bank players in the Fed funds market is really causing a challenge. That leaky flow is a problem. And I wouldn't be shocked, Shannon, if they crank it up by 25 basis points, I would not think they take it that much. Well, part of it is because of Jim, they got to do something about inflation. They got to, they got to send a signal that they're not ignoring it. Now I granted, is this because of the bounce back in aggregate demand? There's no debate about that. And as we got all that, you know, I haven't talked about all the supply channel issues with the chips and everything else and lumber. I mean, the supply side is a disaster in terms of efficiency right now, because nobody had the inventory. I mean, you know, you went through this pandemic and we learned quickly that there were certain things that weren't being demanded and weren't being bought, and then all of a sudden you need them. I would not be shocked if they do something. Now I always, the reason I said 25, Shannon, is that has been the rules for the last 30 years is you do things in 25 basis increments. Now granted that you were in a one-time please lot, one-time event, they may change the rules. And if they did that and the markets don't like it, you know what my response is? They're trying to do the best they can. I would, I do think they're going to have to do something, but they're going to have to be, this is going to sound crazy. They don't have time to do the forward guidance they need to do to get the market, basically say to the market, we're coming back and we're not sure how much. And I think they've got to do at least 10. I'm again, I'm doing the 25 because that's what's been done for the last 30 years. Now it's history. Just so you know, we think, we think RRP is going to hit probably close to a trillion by September. We'll, we'll cross 500 billion today. We're going to, today we crossed 500 at an all-time high. B of A's calling for getting up to a trillion, 750 from JP Morgan and CSFB is 850. Utilization of the RRP. Which basically was a non-player five years before. It's pay zero. Pay zero. That's what our money's worth. Paying zero. Thank you. Oh, you're welcome, Shannon. Good to see you, by the way. I have a two-part question here, Phil, from Clair. Who parts? Why, two parts. One to you and one to Jim. So good. Good. I'm glad Mulligan's put it on. So first to you, do you see a potential recession given the inflation and potential impending budget deficit coming from the unbridled spending? What about a depression? Okay. First of all, if I used the D word, somebody had hit me in the back of the head. That's the first thing. My name would be Ed Deak, by the way. The second is given how much pent up demand there is, how much saving there is, and given that, unless something funky happens in either health or energy. Again, again, one end out, economists make assumptions for reasons, because when you subdivide the word, you figure out what's going on. But there is nothing right now that I have seen or read that would indicate that we are looking for a double dip. Something that is off the Richter scale would have to happen. I take depression. I mean, what we just went through is the closest thing you and I are going to see to a depression. Okay. I mean, they don't use that word anymore. But if you look at the size of the drop in economic activity and the size of the rise in unemployment, yes. For me and most of my family, we did not feel the economic impacts. But I know a whole lot of people that did. And so that's why I think the comeback, and I'm hoping the comeback, I'm going to probably use the wrong word, but a surprise, is going to be calm towards the end of the year. And I'm not saying negative. I'm just saying sort of we take a breath and stop going. I think the summer is going to be nuts. I mean, I would not want to be anywhere near a resort area, because it's going to be completely nuts. Everybody wants to get out. I mean, I don't blame them. I mean, I haven't been in a restaurant since March before that. I mean, everything's takeout. And I didn't then, the way some of these guys and gals pivoted to do takeout is amazing. I do not see it rebounded to a recession. I do not see a double dip. Doesn't mean I could be wrong. I've been running more than I want to admit, but I don't see a double dip. What do you got for James? Well, for Jim, I tune from the Garden State, Jim. So nice to meet you. So please clarify why inflation is good for commodities. Wouldn't the farmers be able to overcome the extra costs of fuel and supplies with commodities prices being so high? He's a trader. Wow. Yeah, I mean, it's just, there's usually this inverse relationship, right, Dr. Lane, of increased inflation, increased prices in real goods. And I mean, if you look at your input costs, whether it be crude oil or soybeans, that's sort of what drives increased prices. So that's a little bit circular. But as a commodity salesperson, you get more interested in the market when prices rise. And that's, we've been looking for this for about 10 years now, and we've finally got it. And a lot of people are interested in it. And we're in the news all the time. But yeah, that's kind of it. Input costs, right, Dr. Lane? Yep, it's all about input costs. You were right, Jim. All right, well, thank you. There's another question from Dale, back to you, Dr. Lane. Will inflation go down after businesses make up for last year's losses? Well, I'd start with the first thing. Is they're never going to make up for last year's losses? And if they're trying to do it in a year, they're going to pay the price. Then I bring that up because there's a couple of places up here that significantly jacked up their prices for the summer. And people are going out of places. What a novel thought. Yeah, Jim, to put it in context, one of the golf courses doubled their rates for the summer. And, you know, they're not the only game in town. So people are going out of places. I do think that some of them are going to try to get back a little. And I don't blame them. I mean, they got beat up pretty bad, particularly in the service sector. But I think my hope is, again, I've got to have oil prices stabilized. I'm going to see some, I mean, wages is a challenge right now. And that's go back the old days. That's cost-push inflation. And that is a concern because as many of you now know, trying to find people right now is a challenge. And it's a real issue. And so that could be, we could get some wage-push inflation, which could have some impact into next year. I do know that the labor market is very tight right now. And but we still have room to go. It's five, eight now. But it's, and there's some, as I brought up the one about women, we also have some issues with teenagers and others. So there's some structural, I'd call them structural, necessarily business cycle issues going on that are raised some issues. It's like, how many, how many people do you know who go to Fairfield University, who actually do manual labor in the summer? All right. I don't think I see too many of them building stone walls or taking down trees or unloading trucks, what I did in college. I believe that. All right. Thank you. So another question from Joe. How confident are you in the current Fed's ability to combat inflation if it arises? People like Yellen are pretty confident, whereas Summers has been pretty pessimistic. All right. So let me answer that as directly as I can, Joe. There's two people that I think have their finger on this one besides Paul. One of them is well-brained. And that is one very, very smart person. The other one is much as sometimes I don't agree with them is Jim Bullard from St. Louis. He's a hawk. He's a hawk. And you've got most, more of the presidents are hawks than doves. The board is very doves. But I think you've got a few people there. And there's still this interesting guy out at Stanford, John Taylor. And he is not quite. And you know, John is one of those classic guys that I may not agree with is our head. But I never disagree with his heart. He's in it for the right reason. It isn't about him. Larry Summers, I will just say Larry Summers. That's all I have to say. I do think, remember, Yellen is probably one of the smartest people who's ever been the chairman of the federation. The probably the best is the guy that has the honorary degree from Fairfield, but we'll leave that alone. And you know who that is, Joe. Paul Anthony Volker. Next question. Okay, from Dolores. Do we think that even if consumer demand drops in the U.S. and shipping issues return to a pre-pandemic level, that a lag in foreign GDP will continue to cause inflation and lengthen the recovery? Whoa. Okay. Just got me. I'm just got about six graphs going right now. The answer to the question is yes. She's right on target because there's a lot of dynamics there. That whole shipping supply chain thing, that's a, I mean, when you can't even find a container to put stuff in this, tell you something's wrong. You can't even buy them. You can't, nobody's making enough. But what's going on in the rest of the world? You know, 20 years ago, we didn't worry too much about the ROW. Now we worry a whole lot more about it, not only because of what we sell to them, but what we buy from. And then we can see that's what's happened on lumber because most of our lumber is being milled in Canada. So there's a whole lot of dynamics going on. This could definitely slow the recovery next year. Actually, I wouldn't say slow the recovery as not get as much growth next year. I don't, I do believe, I think, if you look at the long-term numbers, we're probably going to convert back to something about somewhere between two and a half and 3% of the long-term trend, which is what we should be anyway. Sort of what we are. Okay. From Julian, yep, from Julian, would love to hear your thoughts on Bitcoin and its role as a digital currency. So, Julian, a couple years ago, Pat's office had me do a panel in New York. Yeah, it was me. Bitcoin expert for the Wall Street Journal. He is, he's a Fairfield alum, English major by training, and he's the, nobody at the Wall Street Journal wanted to take up Bitcoin about a decade ago. And he decided, you know, what the heck, what do I get to lose? It was a free lunch, so he went and he learned about it. He's written, I think, two books on it so far. I think so. And so he did this talk and he, guys, guy was awesome, absolutely awesome speaker, really funny, really engaging. And so we finished and he says, you know, we finished and they take the mics off and he goes, okay, you didn't ask me any questions. No, I mean, so do you have any questions to me? It's easy. Yeah. How much Bitcoin do you want? It's not a dime. Onze, Ski, Bill. I said, okay, I'm done. Now, Julian, some people have made a lot of money in this. It's, it's been, it's been a casino. We have one country I just went out of my brain, which it is just to say it's going to accept Bitcoin as a medium of exchange. Salvador. That's it. Now, a very stable nation stuff. Now, the question, Julian, is always one in doubt answer a question or question. How do you have a medium of exchange that's price value changes every day or actually changes every minute? How do you write contracts? I mean, I thought it was a good way to hide illegal money, but obviously they figured out how to break into that. Courtesy of a little ransomware. So other than, you know, illegal activities, I do think it brings up a different or an alternative investment strategy. The other one I would think about is, God rest his soul, Bernie Madoff had an alternative strategy too. But, you know, it's, I think the no offense, Julian, you're young, you're under the age of definitely 30. So you can, your beta may be a little bit different than mine. So I'm not going to be investing in, I'm not going to be investing in Bitcoin. I will tell you, Julian, though you're right to raise it, because the central banks, not only the Fed, but all of the Federal Reserve banks have been charged with looking at it. The major G7, G10, whatever you want to do it, have been charged with figuring it out. What do we do with this crazy stuff? I would say it's an interesting experiment and then say, have a nice day. When in doubt, go back and read about the Wildcat banking era in the United States, and that's what it reminds me of. But, you know, again, maybe I'm just pessimistic. I'd leave it to the younger scholars to do that. So you're up, Dr. Morrow. I have two more questions still. Thank you. This one from Clara. When do you sense we'll see improvement in the semiconductor industry to relieve the supply constraint? First of all, let me go to the commodity guy, so he can help. Because, I mean, if you think about where the, where semiconductor is made, that's where you've got to stop. Because there are grades. Again, this is me. I'm not an expert on this by any stretch of anybody's imagination. But I was always told that there were at least four different places that you've got semiconductors from. And only the high-end ones came out of the United States because those were designed for the supercomputers. They weren't meant for the regular stuff like my phone or my computer or anything else, like my car. But clearly, there's been a, the demand is now, the demand is already huge. And the pandemic killed the labor force and killed the commodities. One of the issues from my commodity guy is going to be how, how copper is going to screw this up? Because most of those chips have a copper component. And I don't believe the price of copper has been going down. This is not, and you know the average time to get a copper mine online? I have no clue. Seven years. Oh, great. Now how long does it take to get a lithium mine online? Probably longer. Oh, I don't know, that's why I'm asking because I'm going to go. You know how much, you know how much more copper a electric vehicle uses compared to an internal combustion vehicle? I'm afraid to ask. Five times. Well, that's why Tesla's so high priced, I guess. So that, yeah. So that, that, that's my answer to the question. The best I can do. It's really about my pay grade. All right. And the file question is from Stephanie. I see Stephanie here. I see herself. I see her. How are the socks going to do this season? Now we're dealing with the important things. And as Shannon has already indicated, they are going to do wicked awesome. I just want them to be competitive and be at least a no offense jank above the evil empire. That's my team too, Jim. I'm sorry. It's like, you know, it's going to be, it'll be interesting. There'll actually be people in Fenway. Yes. I know. That's exciting. That is exciting. A little different. A little different world. Yeah. So. Yeah. It should be interesting. Well, sir, thank you. Thank you very much. And this comes from the heart, my friends. Well, first of all, I need you. Oh, go ahead. I was going to say working with you was always a joy. I need to thank the people who were here. Okay. I need time to listen to this crazy guy. Most of you, many of you, I had in class and I still think fondly of the chaos we had. And I just want you to all be safe. And don't be shocked if some of you here get an email from me in October asking for your presence to help the Fed Challenge team this year. Because apparently we're doing it virtually again. Oh, and by the way, Shad, money is on maternity leave. Because she had twins mid-April. So guess who's running the Fed Challenge? Yeah. Well, good. Good. I'm sure you have a following, my friend. You have a following. So as I said, working with you is always such a joy. I said this to you the last time we spoke. I leave these events with a big smile on my face. So thank you. I always learn so much. I will say to you, I wish I had you as a professor. That would have been a lot of fun.