 Okay, good afternoon, everybody. And thanks for showing up with such a good audience here late at the growth summit 2023. I'm John Defteris. I'm a professor of business for NYU Abu Dhabi. I'm an energy fellow for the World Economic Forum and served as the emerging markets editor for CNN for 23 years. It's a delight to be here. I think this is actually, and I've heard Professor Schwab and others suggest this. This is the right panel at the right time. I think it's very true because there's so much uncertainty out there. In fact, we're waiting to find out what the US Federal Reserve thinks about the inflationary threat or the threat of recession at this time. We have a group which puts out a publication. And I think if we can bring that up now, it's the chief economist outlook for 2023. We're gonna get a sense of that debate today, but you can download it both on the website with the QR code or as we put it on your screen throughout the session today as well. It's a delight to digest it because of this level of uncertainty that we see today to have an outlook at this window of time when there's so much disruption in the banking sector. And I spend a lot of time in the Middle East, particularly in the Gulf States. When you go there and there's growth of six and a half to eight and a half percent depending on the country you're in where you're sitting in Europe or in the United States or if you go to Southeast Asia or India right now, a completely different outlook. It's almost parallel worlds that we're living today. Let me introduce our panel. Sitting right to my direct right is Fenya Gudowski, the chief economist of Indeed. We have Paul Donovan, the global chief economist for UBS wealth management asset and joining us, despite the fact she was struggling with the flu or glad that she made it out of bed today. Sandra Philpins is the chief economist for ABN Amro and it's great to have Greg Dock or the chief economist of EY Parthenon. Let's give a nice welcome to them for our session. I want to because I know who's in the audience and some said they were quite willing to ask questions. I want to allow at least 15 minutes for us to take questions from the floor. So I'm going to ask the panel to be very direct with the answers as in 90 seconds or less. We're not going into professorial mode, which I can do now as a professor, but to be really direct to foster the debate. I'm going to ask the same of those in the audience as well. Identify who you are because we're live streaming here at the World Economic Forum because it's very open dialogue but keep the questions super direct so we can get direct answers as well. One of the things that stood out for me out of this report, and these are members who help author the report, that it is almost a 50-50 split whether it's going to be a recession this year or we kind of struggle above the line, not going into recession. But the common theme is there is no extreme position that does not a grand shock that we're not expecting but I think it's a little bit ironic because we're living through a mini banking crisis if I can put it that way. If you're in the United States, we saw what happened to Credit Suisse. In fact, I was at the Financial Sector Conference in Saudi Arabia as that story started to unfold. Is it contained and what is the role of government which are key questions today because the government played such an outsized role during the global financial crisis and yet again during the pandemic it was the lender of last resort ready to put money on the table when needed but have we set up a trap for everybody thinking that the consumer can always rely on the government to kind of rescue the day. I'd like to start there Paul. Is it going to be a recession or not in your view and has the government kind of boxed itself in governments in the plural thinking they will rescue everybody all the time? I think it's a good place to start. So I don't like the word recession because there's a proper definition of it and two quarters negative GDP needs to be retired like five years ago. We've got half the global economy with declining populations. You can't talk about negative GDP as being recession indicator. Do we get a significant economic downturn? I don't think we do because the middle class still has cash and that's going to help. I think the problem is actually a lot more granular that lower income groups I think are already suffering certainly in the States if we look at survey evidence in the Pulse survey and so on more and more US low income households are reliant on credit card to pay the bill at Walmart. That's going to be a challenge. So I think that for some people it is going to feel like a recession if you want to use that word but I don't think we're going to get a significant downturn in the major economies because the middle class will keep us going through. Yeah, it's interesting Senator that stood out for you as well, right? That there's cash in the savings accounts. It was that product of the pandemic and people were trying to save for a rainy day and this will buffer a downturn in 2023? Well, indeed we looked in detail at the cash buffers of households and firms in Europe and in the US and we did that to basically get a better handle on the question is there more resilience in the economy than we thought given the super high inflation and the decade high falling real incomes that was going on during the energy crisis because if there's more resilience basically that also means that spending capacity stays high and prices will stay high and that could mean that the central banks will have to do more and that is not, I mean, I don't see any way this can end super well. I mean, I do agree it won't be a really deep recession but in any way this can't end really well because if firms and households are more resilient it just means that central banks will have to do more tightening and if they do more tightening that may delay the pain for a while on the economy but it will just be a harder landing if there's more tightening ahead. So, well, our finding basically is that like to put it really short, households have better cash buffers than firms and the US is in a better shape than Europe. That's the basic outcome. Good, I think I'd like to use the first round to get the pulse of everybody here, Greg, in terms of both of the report and then your outlook and I think we should add to this dialogue what external shock could change what you're thinking. Go ahead. Yeah, well, I think we are in an environment where there is an undeniable slowdown in global activity but we are in a multi-speed global economy and I think that's part of the reason why it's difficult to get a definite answer as to whether we will see a recession or not. So the 50-50 split is not the old economist joke of having on the one hand and on the other hand. It's actually that it's very difficult to decipher the unique conditions that we're in as we're coming out of the pandemic. We're still in this unbalanced world on a number of fronts. And the other thing that I would note when it comes to a recession is that oftentimes recessions are a reflection of economic imbalances that are large and significant that correct themselves and to join the earlier point made about cash buffers, I think one of the key elements to underline when it comes to the US economy in particular is not only the fact that there are a lot of excess savings is that even if you look at credit conditions in the US, the amount of debt that has backed spending is not historically high, actually it's historically low and add to that wealth and you have relatively healthy consumer fundamentals. There are starting to see some cracks in the foundation of household finances, but as of right now, they're still relatively healthy. So I would tend to think that in that type of environment, you see a mild recession, but you also have to remember that there are a lot of non-linearities in economics. It's not like people slow their spending. Oftentimes they stop spending, consumers and businesses alike. Okay, Svenja, you focus on the labor market and I know you wanted to underscore that in different parts of the world and we've been talking about it here for the last two days in Geneva about the disparity of this global growth outlook and the widening of the wealth gap which has been a common theme. How does this outlook that's been put together by you on the panel here and others that are part of the community of the World Economic Forum? I think, and I agree with what all the other panels have said before, it's really, it's a picture of mixed signals at this point and that's what's making this incredibly hard and take with that a still very strong labor market in a lot of different countries and it's hard to cover it with blanket statements because you really have to dig deep to actually see the different trends and I think that's also part of the problem. Coming out of the pandemic, during the pandemic, we moved largely in one direction. Now coming out of the pandemic, we're at an inflection point and we're moving a lot of different directions and different sectors are doing different things and impacting the economy differently and we're moving away, for example, from goods consumptions to more service consumption again on the labor side and that transition has different impacts and we're coming off of, in some countries, still very high inflation having impacted a lot of sentiment measures and I fully agree that consumers are feeling inflation very differently depending on where you are on the income distribution and so for some people, they already feel like they're in a recession when they're trying to pump up their car or when they're buying eggs or milk or whatever it may be and for others, it doesn't really impact them quite as much and take with that how much wages have accelerated and they're starting to come back down now but nominally, they've gone up quite a bit, shockingly so, making up for a period of time where we didn't see that much wage growth but it's nothing compared to inflation so real incomes are not looking as rosy so you see this competition in the labor market where people are churning quite a bit although that data is starting to change as well particularly in the US, we just got data and that the quits rate is starting to come back down and I think for the first time I'd say in many months we're starting to get signals that are pointing more in the same direction because I think if you had this panel probably two months ago, we would have all said well, the labor market still is really, really strong but we're seeing some signs, there probably would have been more debate now I think we're starting to get more signals all pointing in the direction that there's a distinct slow-wit down you can't really argue with that anymore but having said that, it's still a strong labor market and that goes for the US as well as many other countries and that's where it gets interesting for the future and I'm past my 90 seconds, I'm sorry but where you start to look at long-term worse the skills mismatch, right? I think in a country like Germany where you're worried about a certain skills not being available anymore but too much too many business administrative type jobs being or workers being available but not enough jobs and so you have all these mismatches going on in different countries and how that's gonna evolve long-term is gonna be interesting and then how is that gonna impact the economy? I definitely wanna circle back on those topics you were talking about there and the influence of AI which has been a pretty big week on that subject as well but I wanted to kind of take a pulse of what the Federal Reserve should be doing today, right? And is it chasing the inflationary threat or is it overreacting to it? I remember reading the headlines when the inflation rate had spiked up and they said it's the highest inflation since 1980 and I had started university then and that was 18% so we've conditioned everybody to very low inflation and very low interest rates and this is a new era as this central bank prepared Paul to deal with it and I'd love to just get everybody to jump in on this go ahead. So we were in our closed session yesterday we were having a full and frank exchange of views on this very topic. So my view is- I was wondering what that Shiner was on your screen. Yeah, Greg just didn't agree. I think we've had three phases of inflation we had the transitory inflation which was transitory which was demand led durable goods all over it's now in deflation in the States outright deflation of durable goods. You had the supply shock which was the energy shock now in disinflation another big drop in the oil price yesterday. We now have a profit margin led inflation episode which is unusual. So as we just heard I mean the real wages are have been falling i.e. prices have been rising faster than the labour costs. That's a pretty good hint that you've got a profit margin led inflation episode. Starbucks and their results yesterday for selling something they call coffee are saying well we've had big increase in margin on pricing and this has only been partially offset by higher wages. And that I think is the problem because all throughout this period we've had a Fed chair who is knows in the economics 101 textbook when inflation is high raise rates and don't stop. And that's not how you do it. This is not how Bernanke or Yellen or Greenspan would have done it. This is how Arthur Burns did it. And that I think is the problem. I don't know I'm not a big fan of where the Fed is at the moment. Good, do they stop Sandra? I thought there was an interesting statement from one of your counterparts of this panel the chief economist of the Bank of England who's at Hugh Pill who's saying that consumers and workers cannot be demanding higher wages because you're just setting up a vicious cycle of very high inflation. But I thought there was pretty out there. To be fair to Hugh he was taken slightly out of context. He also said and companies need to stop ramping up profits. So he did also mention the company. He did balance it out. But it's unusual wouldn't you say Sandra for the central bank to get into that conversation? That is unusual. But well maybe a few arguments in the other direction of Paul to just keep it a bit lively here. But so there are few things to kind of push back on here I think. So the first is that if you look at the profit margins and how they have unfolded during the last episode like the energy crisis or the second episode of Paul. That is indeed that has indeed been a lot if you compare to historical profit margins but it's very sector based. So it's mainly construction and retail. So not in all these sectors and also in the medium term this is not sustainable. But what I think matters more is that something that the Fed and the ECB also worry about is the fact that the impact that all of this has had so the pandemic and the energy crisis. The impact that that is having on individuals and firms is very heterogeneous. So we always think I even just said it myself that we have a decade historical fall in real incomes. But actually if you look at granular data so we look at financial transaction data of millions of households on a daily basis. And what you actually see is that like in September 22 in Europe when the energy crisis was at its hottest around two thirds of the households which we looked at had basically not yet a higher energy bill. And that is really weird because one third has a crazy energy bill and it's basically going bankrupt. That leads to headlines around those one thirds of the population that have a crazy energy bill. And that leads to politicians providing generic subsidies and lump sums and all kinds of transfers because they want to save everybody from that situation. But if the impact is so heterogeneous and you keep spending generically what you get is really inflation. And that is something that goes with that went with the pandemic but that was more sexually concentrated because we knew where the support had to be going. With the energy crisis it's much more difficult and so there's all that misalignment of government spending that goes directly into inflation. So for example we did one specific study where we looked at a really scientific impact effect study on a lump sum transfer of 1,300 euros to poor households and we basically saw that around half of that money is spent within three weeks and not on energy. And basically all of that is inflationary and I think that the FAD and also the ECB they're worried about this because the inflation headlines that are picked up on also drive wage negotiations. Of course it doesn't, I mean 14% wage demands are not really what is going down the line. But it is a starting point that is extreme. And I think that is something that central banks are keeping in the back of their minds. And then if I were central banker I would rather caution be a little bit more cautious because once inflation expectations gets de-anchored you can't just put them back anymore. And so I feel some understanding for their decisions. Oh, core inflation, let's take the European example Greg then, 8.5% in February down to 6.9% but the core is at 5.7% so is it peaked and the ECB's job is nearly done? Well, I think in general inflation has peaked but we economists tend to think about inflation. Most people tend to think about price levels, right? That's what really matters for businesses, for business leaders, for consumers. And there's that massive confusion between inflation having peaked but still rising. If it's rising at 5% core inflation or even headline inflation that means that prices are rising 5% every single year. That's still too high. So I think we have to distinguish the cyclical momentum from the structural momentum. The cyclical momentum I very much agree with Paul. I think we are in an environment where in the midst of the slowdown in economic activity we're seeing a number of signs that inflation is cooling. Whether it's consumer prices or producer prices in the US would generally reflect profit margins. So to the very point about moderating profit margins going forward, import prices, all those prices are growing at a slower pace. That's disinflationary and I wouldn't be surprised that we enter an environment where the disinflationary trend carries on a little bit longer and overshoots the target. There's not gonna be that smooth landing to 2%. The other trend that is important to monitor is the structural trend. We're in a world where we are seeing increased deficiencies on the supply side. Demographics and aging population, reduced immigration, de-globalization or slower globalization is another example of where an environment with increased fragmentation will lead to higher cost of goods and services going forward and then the decarbonization, the greening of the economy, that's a massive potential to increase inflation. So we have probably higher inflation over the structural medium term but lower inflation as we navigate through that cycle. What that means for central bankers is they need firmer anchors. They cannot proceed just by looking at the data and being excessively data dependent. That's a big risk. We've seen it for the Fed. We've seen it for the ECB. We've seen it for other central banks where they focus too much on one specific data read. A payrolls report, a CPI report, an inflation expectations report. We know that inflation expectations are still well anchored. We know the economy, at least in the US, is slowing. So that's the type of environment where I would think the Fed should pause and start to wait to see the effect of prior tightening. Will it pause? Probably not this time. It'll probably proceed with one more rate hike but I think it's going to maintain that flexibility for potentially still raising rates in June because it does not wanna close the door to any further rate hikes and importantly, it wants to maintain these rates at an elevated level for it. You bring up an excellent point because I remember the stimulus package when President Biden was coming into office. I was saying with my coverage then, I'm not sure what the Fed is looking at that they thought they needed another trillion dollars of stimulus and then it was a knock on effect because the stimulus continued in Europe in this post-pandemic phase. Did they really get it wrong? Senya, do you wanna drop into this debate? I didn't understand it and it seems to be feeding the inflation today and they're trying to put the genie back in the bottle. That's the reality? I'll take perhaps an out there stance for a second. I think the Fed has a pretty difficult job and I also believe that while you run the risk of having recency bias, just looking at like a three or four or five or six, whatever, how many it is, data points along the way, I think the data quality overall has certainly deteriorated. We're talking a whole lot about that. It's been really difficult to get a good angle on what is actually happening. Because of the post-pandemic recovery? The labor market? Well, definitely what's going on in the labor market, but data in general. I think looking at, I actually, Sandra and I were talking about this, I think it was really good that during the pandemic we started looking at higher frequency data because the world was moving much faster than our data was moving. And while we still look at some high frequency data, there's not as much available anymore. We're not investing as heavily anymore. We're moving back to the old targets, but the data is still pretty crappy. And so it'd be great to see some better data, but in the absence of such, it's fairly hard to make these decisions. And then leaning on what Greg was saying, there are these long-term structural shifts. I think it's certainly really important to take a look at, for example, on the labor market side. We have an aging economy in the US and many other industrialized countries, and the labor force will be shrinking. And that's gonna have an effect on how we produce and how much gonna cost to produce and wages, and therefore inflation at some point as well. And I think those are things that will stay with us and are important to keep in mind, even though, sure, you're looking at slightly outdated data that's from the last month or so. Good, I don't want to have just a Western perspective on this panel, so I want to bring in some of the growth trends as well. Sorry, John, may I just, because something that kind of sticks into the air here is the idea that, you know, the de-globalization and, I don't know, climate change and all kinds of things, it's all inflationary. But I do think that it's very important to note that it's only inflationary as long as growth is playing the game along, right? Because if people can't afford higher prices anymore, or if we're getting a negative growth, that is disinflationary. So I think maybe in the, well, medium term, it might be inflationary, but at the end of the day, if it's gonna erode growth, that is disinflationary. And I think that's a dominant, that's, I mean, in my view, I think it might be a dominant factor. I mean, I've said a number of times that really the key in this type of environment is productivity growth. I mean, that goes to your point, because if we are able to increase productivity at the business level, then what tends to occur is that that increases the supply for the overall economy and global economy, but it also alleviates the inflationary pressures. Because if you think about a business leader that's conducting business for which the cost of labor has increased, even though wages have not kept up with inflation, they've risen quite a bit. So that's a constraint on the cost front. And what businesses are doing is essentially pricing that out and passing that along. They were able to do that for the most part of 21 into 22, now much less, because there is less capacity to pass on those prices. But higher productivity growth, to me, is really the key to what you're saying. Because yes, if we have low growth in this type of environment of transition, then we have lower inflation. But if we have stronger productivity, that's really the key there. There's no magic wand to productivity, though, right? And this is the aging population quandary, is it not? And Paul, jump in as well, go ahead. I was gonna say, this is a, we can give Greg the 20th later on, a good bridge into AI, right? And what that will do to productivity. Because I think thinking about impacts long-term that AI could have, productivity is certain at the top of the list in terms of how we make a shrinking labor force more productive and do more for us. Okay, I wanna pick up on that, and Paul, you can jump in as well. But we had the head of AI for Google resign, and then he went on mainstream media saying, I had to resign because I see a real threat there. And you're taking the glass half-full approach saying that it'll boost productivity, but there's a lot of destruction along the way. I don't know how you- Not to say that there aren't a lot of problems and discussions worth having around that, absolutely. Yeah, are we starting to weigh the impact, Paul, as of AI? Well, I think that whenever you have a revolution, an industrial revolution, I mean, the point is these things are revolutionary, and you don't necessarily end up with mass job losses. I mean, we haven't through history. It's not that we're sitting here with one million people employed in the United Kingdom because that was who was employed before the first industrial revolution. We create jobs. The problem, of course, is that, if you were an artisan weaver and sort of lower middle class in 1750, you were the lowest of the low by 1800. So you still have a job. It's just no status and no pay. And that was because of technological change, but then other jobs come along with rates. And this is what we've got to reflect, I think. It's the disruption and the change which comes through. And I think perhaps to some of the earlier points around de-globalization and aging populations and so on, as with AI, what this does in terms of pricing is change relative prices, so I think more than it changes inflation. But I started my career as a Japanese economist, aging population, inflation, not a noted consequence. If you look at globalization, arguably globalization has raised inflation over the last 20 years. It just has lowered manufactured prices which we care about and raised commodity prices which emerging markets care about. And similarly with AI, I think we will see relative productivity shifts with associated relative price changes coming through. So I think it's more about relative change than is the aggregate level that we're talking about. Could you brought up emerging markets and I was an emerging markets editor and it seems like we're very complacent about some of the dislocation we're gonna have with higher interest rates, Greg, and the pressure, I see you nodding Sandra as well, that this could have, for example, in Egypt and Pakistan's a worry, we've seen three or four in Africa and Latin America go knocking on the door to the IMF and the World Bank, of course. Is this a surprise shock that we're not factoring in now? Do you have any thought, Greg? Well, I think we're in this environment where we've seen successive waves of shocks where essentially we've seen the pandemic as a supply shock, then we had the war in Ukraine as a supply shock and those shocks have lingering effects. The Suez Canal issue is another example and they have lingering effects. And I think for emerging markets, this is very important because they tend to be on the losing end of these supply shocks very directly in terms of the benefit of supply. You think about grain or you think about different types of commodities that are transacted, but also on the inflationary front because there is a tendency to have a larger basket that is concentrated on energy, consumption basket, on energy and food in these economies. So that is a big risk in this type of environment. So I think, yes, your question is right. We need to focus not just on advanced economies. It's not just a question of thinking about the growth prospects for the US and Europe, but really thinking about the inclusiveness of that growth and the distribution of that growth around the world, not just in some privileged economies. Okay, Sandra, do you want to weigh in? I'm going to open the floor to the audience here. I just wanted to add one thing and that is something that I heard at the beginning of this conference saying my Ricardo Hausmann. He said basically, I think it's a really relevant point that we need to be much more aware that the fiscal aid that has come from the US in an overdone way since the pandemic that has led to benefits and resilience on the ground locally in the US, but the costs have mainly been spilled over to the rest of the world. So the rest of the world doesn't face the benefits from all that fiscal stimulus, but they do face the cost of it. And I do think that's something to really keep in mind. Very good, thank you. I'd like to see any hands up for questions. We have the benefit of having the Minister of Economy and Planning from Saudi Arabia. This is nice to see you, your Excellency. Can we get a microphone to you? I'd love to have you share your perspective of what it feels like in Saudi Arabia because I'm going there about 10 times a year as you know. And last year was almost 9% growth and you're calculating four and a half, five. I'm not sure if you've recalculated since we heard from you at Davos. We don't have a lot of time, but can you share your concerns right now and is inflation a real challenge? But it's a phenomenal diversification of the economy with oil prices even this range of 75, 80. Thanks, John. I think inflation definitely, we're anticipating or we're actually waiting to see what the Fed will do. We have a concern that there will be more of a trickle-down effect on the US economy if the same pace continues, but I think most people expect something less than what we've seen in the previous hikes. We'll wait and see. That definitely has an impact on the global economy and of course it does, Saudi Arabia is more integrated in the global economy than before. It's always been a big player and now even more with its transformation. So yes, we do have, we pay attention to that. We expect next year to have a different growth, I'd say forecast for the kingdom because of the oil production profile, but our non-oil activities are projected to grow as fast as last year, maybe a little bit less, but that's what we're paying attention to the most. Good, so am I correct, four and a half, five this year which is still very good and back into that range of seven, eight, nine percent? This year a little less because of the production cuts, but on the non-oil activity side, similar to last year, which is in the fives, four is in the fives. Good, so it doesn't feel like a recession in Saudi Arabia, I don't think, right? Laura Tyson's here, I think you said you'd ask a question or weigh into this debate if we can get a microphone to her. If you can raise your hand, Laura would be great. Any other questions from the floor and one here as well afterwards? Please. I'm also gonna be talking about this at the closing session, so I will try not to be repetitive. On the issue of U.S. policy, I think it's important, a note made here that U.S. makes fiscal and monetary policy for itself, okay? But we're a very big part of the world economy. So if we stimulate fiscally to, and I think the general view, I think the general view of this session is that we went too far. I'm not sure I think we went too far. I know the decision makers sitting there trying to decide what to do when Biden became president. A number of them had been around during the 2008 recession and a number of them did not want a very slow recovery. They wanted a really fast recovery and they looked at the experience from, it took nearly a decade to fully recover from the great recession. The fiscal response was very weak and the monetary mechanism wasn't really working. So this time around, they said that's not gonna happen. We would rather make a mistake, the error on being too stimulative on the fiscal side. We know we're gonna do that because we'll get out of the recession fast. And of course, the U.S. did. The U.S. absolutely did. The recovery of employment, the recovery of the labor market, the recovery of the economy measured in a whole bunch of other indicators, really fast, really fast. So I think the policy- I'm gonna show the spot here a little bit then. So you were the chief economic advisor to President Clinton. Was that a mistake to step on the throttle as Biden came into office though? Would you have done the same? Would you recommend the same? I would have done the same. I would have done the same. I know a number of the people who were involved and I think they thought, not so much, they weren't thinking about Clinton but they were thinking about the slow recovery from the great recession and a number of them had been part of the Obama administration. So here they had the opportunity, which they didn't have under Obama, to have a massive fiscal stimulus and they did it and they did it. Not thinking about or perhaps with the benefit of hindsight, the benefit of hindsight, what are the implications of that for the inflation rate? And I think right now, look, there's a lot of research going on in the United States right now and around the world. What is the extent to which the unlocking of inflation was demand-driven because of that fiscal stimulus along with ongoing accommodative monetary policy? And to what extent was the supply chain disruptions and the kind of COVID effect which no one could really predict? Great. I need you to wrap it up. Okay. So I'm saying, I think there's gonna be an ongoing debate about this. I personally would have put my foot on the throttle. I think they did the right decision and I think that now we have to deal with the unexpected perhaps lingering effects of the inflation. I also want to say that I support what the Fed is doing. I don't think the Fed is saying, I think it's much more complicated than the view of, I think it was Paul, but so I support what the Fed is trying to do. Oh, interesting. Paul, Greg, I see you want to weigh in. Since you're appointed out there, you might as well jump into the debate. And I think Janet Yellen, by the way, would have done exactly the same thing. So somebody said that Powell was different. No, Janet would have done the same thing. So I think previous Fed chairs would have paused more frequently. And we had in June of last year, the policy errors in June, Powell comes out and says, we surprised the markets. We raised more than expected because inflation expectations are out of control. Less than two weeks later, they revised down the inflation expectations number because the data is not reliable. And so this relentless, maniacal, hike, hike, hike, I think has done damage. And I think we're seeing that in banking sector and the deregulation 2018 has done damage as well. Absolutely. It's not fair to blame the Fed for all of this, but they didn't help. And I think just stopping every once in a while to smell the roses, see what's going on in the world, wouldn't have been a bad idea, frankly. Leave it to the economist. Sandra is great. Maybe one thing that adds to Paul's argument is that I think today or yesterday, the bank lending survey came out in Europe. And it basically is really clearly showing that indeed, sometimes pausing might be a good idea because what you're seeing now is that the tightening on credit standards, loan demand for firms and households, it's really going down the drain quite fast. So basically that could be banking crisis related. So the banking crisis and the tightening coming from that is doing some of the work for the, at least for the ECB. And that combined with also the inflation figures that came out yesterday. I think that that is pointing into the direction that the cooling is really coming down. So no rush to do it yet again. Greg, do you want to weigh in quickly and then I'll go back to the floor? I think it's important to think of all of the fiscal and monetary policy stimulus that took place as a risk management approach, right? Because as Laura was saying, we were in an environment back then when there was tremendous uncertainty as to the pandemic, as to the economic outlook. And so what do you do in that environment? You stimulate a lot, especially after the lessons learned of 2008, 2009, when there was very slow stimulus on the monetary policy front, late reaction probably, but also reacting to an environment that was unusual on the fiscal stimulus front. Now I think is the time to pause. And the key question in my opinion comes back to the cost of capital going forward. There is not yet an adaptation from the private sector to a higher cost of capital environment. And the types of developments that we're seeing again and again throughout the world, unforeseen the pension funds issues last October, the SVB collapse, now First Republic, these are all examples of an environment where balance sheets are not adapted to a higher cost of capital environment. After four decades of generally low interest rates and moderate inflation, there is not that adaptation yet. That is, in my opinion, the big risk. And I think that's to some extent why Paul is saying this view of hike, hike, hike is probably not adapted to the world that we're going in. Very interesting, Svenja, go ahead. I just think we don't have enough time to discuss this, but I think it's worth a mention that in all of this, given my history, I think about housing a whole lot as well. And it's very important that we at least think about the impacts on housing on all of this as well because mortgage rates are incredibly high and have seen a tremendous hike up and housing prices were already very expensive in the US and now they're even more expensive and they haven't come down enough to actually make up for the increases in mortgage rates. And I think that's an important point to keep in mind particularly as we're dealing with affordability issues on for sale housing and that's a large part of the economy as well. Good. Is that gonna be the straw that breaks the camel's back here at the housing crunch? There's a couple of pieces out recently. You don't see a great shock coming, Paul, with your view. So the problem with housing, and I'm probably biased in the UK perspective where everybody wants to live in their own downtown Abbey and all the rest of it. But we have a cult of housing in the UK which certainly is not replicated in continental Europe. But there has been real disruption with the move to flexible working. 44% of the UK population work flexibly now. London house prices have underperformed the rest of the country for three years. This has not happened in history. So at least not since the bubonic plague. So we've now got real shifts going on and I think it's tricky. Now we were really hit by the trust of Arkel and that really shocked people with the housing market implications of that. Our mortgage rates have then calmed back down again but I think we are gonna be seeing a very fluid situation in housing. So I agree. I think particularly in the states where you've got a more direct impact with new buyers there's a more negative effect. In the UK it's a highly localized situation and almost district by district in London. You're getting the variations in house prices come through. Good. Sorry, thanks for your patience. Just identify yourself please. Thank you. JJ from Japan. It may be a bit odd question from the micro company point of views. I think these days companies are getting more and more pressure to include intangible values especially the social value so on and so on in their business activity. And then this is a bridging question from micro to macro. So from economic point of view how do you include this kind of the non-monetary values social activity so on in your evaluation? Go ahead, who wants to jump in on that, Sandra? Yeah, so I think it is an important aspect and it is on a very broad spectrum, right? So the whole SDG spectrum firms are kind of being held to account. I think if you just look at the kind of the narrow element of emissions at the end of the day you know, if you previously lived in a world where all the externalities from production were basically carried by the rest of the world and then in the new world all the externalities from production are carried by the firm itself. Yeah, that's a huge cost increase. And that is exactly what a carbon tax for example is looking to do. But I do think that it raises to a bigger point that we're talking about the growth summit here and what we economists typically do is that we have like one or two year ahead forecast horizon and we try to think about what is growth gonna look like and what can policy do to maximize that. But if you look at the climate scenarios it basically means that maximizing growth now in the short run assuming that we haven't found a way yet to decouple that from emissions. It basically means that it's gonna put us on a trajectory of a massive GDP decline in the future. And somehow I feel that when we talk about climate change and the future like humanitarian but also economic costs of that then we do that in separate rooms. And then when we go back to our kind of nice and neoclassical economics then we like to stay within the next two years. So I do think it's an important question is who's gonna pay that cost of that transition and how are we gonna do that in the most accurate way? It's interesting though what you're saying, Central. You're saying the cost of the climate crisis and I was thinking in the spirit of Ursula van der Leyen when she opened up Davos this year and she talked about the next security net zero boost. When do we get a kick from all this green tech investment and needing to accelerate the transition? Well that is, I mean, maybe- When does that factor into your models? There are all kinds of great green growth fairy tales out there but I think at the end of the day it is a matter of internalizing a cost that was previously externalized. So I think when we get to the fairy tale world really is when we have made the transition because in the world where we made the transition energy is basically gonna be abundant and for free and that is kind of the biggest source for the reason why we all need to be efficient in everything and I think there's massive growth potential once we get that done. But until we get there I don't think it's realistic to think that it's gonna be a growth story. Oh it's interesting, there's a lot of stimulus in the markets today, Paul, do you wanna weigh in? So I wanted to give a plug. We have to be careful with our time as we have a minute left, yeah, thanks. So UBS put out a white paper to coincide with the conference this morning on the impact economy. The idea being that what are economists for? Well, obviously economists are here to allocate finite resources amongst infinite desires. That is the raison d'etre of the economics profession, that's why we exist. And the problem is that ever since 1950 infinite desires equals GDP. Everybody has to have the latest smartphone, it's all measurable output, but that isn't the world today. The world today is actually we want air that we can breathe water that we can drink and diversity and inclusion would be nice too, thank you. So we now have a set of needs that the economics profession should fill and GDP does not cut it. So we need to evolve the economics profession as we've done in the past. Yeah, and the other things Fenya was saying, I'm surprised that the data is not really good in a world when information moves so quickly and people empty their bank accounts on their apps very fast when their bank's under threat. Greg, 15 seconds to wrap? Yeah, generally. No, I think there is a lot of optimism in terms of the potential that we have to address some of the challenges that we're currently facing, whether it's on the climate change front, on the gender front as the previous panel, on the diversity front, these are all opportunities for growth. Perhaps not growth in the way we measure it or we've measured it, but growth in the sense of welfare. And I think that's potentially as important if not more important for the global economy. Okay, you plugged up a report. I have to plug the chief economist outlook report one more time. If we can bring it on the screen, there's a QR code for those of us in the audience, but those importantly watching from different corners of the world. You can read the different debates they had about whether there's a recession or not. I think the consensus is there's no surprise shock. There's also a different way to look at things is that we're really resilient as a global population today, right? Which what's been thrown at us since the global financial crisis and Russia, Ukraine and an energy crisis and a pandemic and supply chain disruption. The fact we're having this conversation and nothing's burning at this stage, we're doing pretty damn well, I'd say, right? Can we give a nice round of applause to the audience? Thank you very much. Thank you.