Potential Rate Cuts and the Path to Sustainable Growth (With Joe Brusuelas)

LIZ ANN SONDERS: I'm Liz Ann Sonders.

KATHY JONES: And I'm Kathy Jones.

LIZ ANN: And this is On Investing, an original podcast from Charles Schwab. Each week, we analyze what's happening in the markets and discuss how it might affect your investments.

Well, hi, Kathy. We are at the lead-in to the July Fourth weekend. It's a shorter week for the markets. And once again, the jobs report comes out on Friday, which is after we are recording this episode. But in advance of that, what is your take, Kathy, on the expectations around those numbers and how that might influence the Fed?

KATHY: Well, consensus expectation seems to be job increase of about 190,000, but we've been on both sides of the consensus pretty widely recently. So I don't know how much importance we put on that.

In terms of the jobs numbers, though, and the influence on the Fed, I think that it's really important as always, but really increasing in importance. So now that inflation seems to be coming back down to a more comfortable level for the Fed, I think they're refocusing on the other half of that dual mandate, which is full employment. For quite a while now, Fed Chair Powell's been talking about the need for the job market to, air quotes, "rebalance," which is code for supply and demand coming back to a level where wage growth isn't so fast. It's currently running just about 4%. I think something closer to 3% is a lot more comfortable for the Fed. Overall, it looks like that's happening, but maybe not that quickly. So now the Fed's worry is the job market cooling off too fast. So as you know, it's often been the case that when unemployment starts to move up, it does so fairly quickly.

And with the Fed keeping rates high for so long, there is a growing risk that it could trigger a faster increase. So wage growth, the balance between job openings and job seekers, and the unemployment rate are all really important metrics now, increasingly so, I think, as we go forward. How about you, Liz Ann? What do you think of the overall landscape as we sit here today?

LIZ ANN: Yeah, and in advance of the jobs report, you pointed out all the important headline numbers. I think also some of the innards of that report will be important. The differential between the establishment survey of payrolls and the household survey, obviously the average hourly earnings, the wage numbers are important too. The Fed's thinking metrics like long-term unemployment, part-time versus full-time in terms of payrolls. Hours worked, I think, is important. And added to that is data, as we record this, has already been reported this week, which is a pretty significant miss relative to consensus expectations for ISM Services. And it was a miss across the board. The overall index went into contraction territory below 50. Those are diffusion indexes, so below 50 suggests contraction. And the employment component of ISM Services went down as well, and that adds to the weakness that we saw with the ISM Manufacturing, inclusive of employment. And then we saw another pretty meaningful tick up in initial unemployment claims. You and I were both on X, or Twitter, this morning talking about the rise in continuing claims, so far, that is supportive of the Fed having their eye on the easing door, maybe not as soon as the July meeting, but I think it reinforces what the market is expecting, which is a September start to whatever the cutting cycle looks like this time.

So Kathy, tell us a little bit about our guest this week.

KATHY: Our guest this week is Joseph Brusuelas. Joe is principal and chief economist for RSM. He's an award-winning economist with more than 20 years of experience analyzing U.S. monetary policy, labor markets, fiscal policy, international finance, economic indicators, and the condition of the U.S. consumer. A member of The Wall Street Journal's forecasting panel, Joe regularly briefs members of Congress and other senior officials on the effects of federal policy. And he is a frequent guest on CNBC, NPR's Marketplace, Yahoo! Finance, and contributes to the Financial Times, New York Times, The Wall Street Journal, The Washington Post, Axios, and Politico. Before joining RSM in 2014, Joe spent four years as a senior economist at Bloomberg LP and the Bloomberg Briefs newsletter group, where he co-founded the award-winning Bloomberg Economics Brief. Earlier in his career, he was a director at Moody's Analytics covering the U.S. and global economies for the Dismal Scientist website. He's also served as chief economist at Merck Investments LLC and chief U.S. economist at IDEAglobal.

KATHY: So Joe, thanks for being here today. Really looking forward to our conversation.

JOE BRUSUELAS: Thank you for having me on. It's always good to join you guys.

KATHY: So I'm going to jump right in and just say, can you tell me what your take is—how the economy is looking for 2024, second half, and how it looks going into next year?

JOE: Well, the economy is cooling back towards a more sustainable pace with respect to growth, hiring, and inflation. You know, this is what you want to see. If you're a portfolio manager, you're just in the trading community, you're a policymaker, or hell, you're a CFO at a mid-sized to large company, right? The economy was very strong in 2023. In fact, the risks were skewed to the upside, that it would overheat, and inflation would move higher again. We're just not there.

You know, one of the things as I look out on the landscape—too often, especially when you're attached to the investment community, we end up getting these false dichotomies. Things get very binary, zero, one—there's cracks in hiring, there's cracks in the economy. No, there's not. It's just slowing to a much more sustainable pace. As a matter of fact, if it slows back towards trend, the road's going to be open for pretty significant rate cuts over a couple of years. That, from my point of view, is a very good thing for not just the domestic U.S. economy, but the global economy.

KATHY: Yeah, it sounds like you're very much in the soft-landing camp. Is there anything you're kind of watching to see if it changes that kind of outlook?

JOE: All right, well, you know, the risks around the outlook are clearly anytime you have a price shock like we've just gone through, you're going to be concerned. See, my sense here is, is that the pandemic—the size of the shock was so large that it leveled the playing field. That world of 2000 to 2020 that we all knew and loved—that low-interest-rate, low-inflation world—that's now an artifact of history. The economy is now becoming far less fragile. But in order to do that, the cost is going to be higher rates and higher inflation. So in many ways, the economy is going to be begin to look like what it did in the late 1990s, right? Creation of the possibility for better growth, lower unemployment. But in return, you're going to have to have a fed funds terminal rate that's probably 3%, right? This is a very different world than the one which we all became accustomed to over the past 20 years.

KATHY: It sounds like you're looking for the Fed to cut, say, September, you think—the door is open to a couple of rate cuts this year?

JOE: Well, I think that it's likely that the disinflation at that point will create the conditions whereby the Fed's within a stone's throw of their target, and they're going to feel comfortable enough to take the first step, again, on what I think is going to be a multi-year reduction in the policy rate.

Now, I want to be careful here because we're talking to a real pro in Kathy. A lot of the people out there in the audience are investors. Simply because the rate moves from 5.25 to 5%, to 25 basis points or 50 basis points less, that just means it's less restrictive. We're not moving from restrictive to accommodation in one move, right? Now, Kathy and I, we're going to have a lot of fun over the next couple of years explaining this to everybody, right? But from the point of view of a central banker, it's just less restrictive. There's a lot of heavy lift left to do in terms of getting inflation back towards either target or what we're going to consider to be a tolerable range in the post-pandemic era.

KATHY: So that tolerable range would be 2.5 to 3-ish. Is that kind of your thought?

JOE: Yeah, my sense is that the 2% target was appropriate for that economy that we used to have. That it's likely we're going to slowly evolve towards a new target—somewhere between 2.5 to 3%. And given the demographic dynamics of an aging set of industrial economies, it may be 2.5 to 3.5%, but we have a ways to go before we get there.

KATHY: So the Fed has been sort of edging up its terminal rate a little bit in its forecast. I mean, 10 basis points at a time, which is, you know, ridiculous. But, you know, it sounds like you're thinking 3.5-ish, maybe 3, 3.5 …

JOE: Yeah, 3 to 3.5.

KATHY: OK.

JOE: Yeah, exactly. And the thing is we've been there for a very long time. Once we're able to ascertain the true impact of the price shock, right? It became clear to us the terminal rate on the fed funds was going to move higher. And so we think 3 to 3.5% is about right.

Now, what's also happening simultaneously is we've got a budding productivity boom that started, really, in summer of 2021, and we can see it in our internal data. We can see it in the economy. And the coolest thing for those of you out there who are a little bit more optimistic—that doesn't involve all of the investment going on in artificial intelligence and quantum. That's not going to hit the productivity statistics in the economy for a couple of years yet.

Now, our friends who work in the systemically important financial institutions—where they've got research institutes that have integrated machine learning and now artificial intelligence into their portfolio optimization process—we know we can see this happening in real time, but only in a select number of companies, right? I'm an alumni of Bloomberg. I used to be chief economist there. We dealt with just the big trading firms, the hedgies, all the big institutions. I mean, they started optimization back in 2014, right? What they're doing with the digital mists and tokenization at that elite company is nothing short of purely impressive, right? But it will take time for that to transition or even be usable to, say, your median firm out there. Even the large firms are going to have problems integrating some of this, much less your mid-market firms, right?

But I'm optimistic about that. I think that we're going to see an increase in productivity. And that means we can grow faster, have a lower unemployment rate, and a tolerable inflation rate. And that's why it's always good to never bet against the United States of America.

KATHY: Well, it's interesting. I think it was Bill Gates who said, you know, "We always overestimate technology in the short run, and we underestimate it in the long run." And that's always resonated with me thinking, "Yeah, all this stuff that's going on with AI is very exciting on sort of the headline level." It's kind of messy from what we can see so far. But in the long run, all these investments should boost our productivity, should keep it going. And that is a reason for optimism.

JOE: I'm going to go all economist on everybody out there right now. So I have an economist who works with me, Dr. Tuan Nguyen, and he's fluent in Python. And what we figured out is that if we create just a very small program that interacts with AI, we can reduce the time it takes to do things like create data visualizations and risk scenarios by 50%. Now, this is very state of the art. You have to have real contemporary skill sets to do this, right? But the fact that we're able to increase our own productivity, decrease the time that we would have devoted to this by half, we're able to allocate it to other things that are revenue-enhancing, right? You just think about that in those small terms and then multiply it out over the economy. In five years you won't need Python to be able to do that. Yeah, and that's why Bill Gates was absolutely spot on, Kathy.

And that's why, you know, when you talk to many economists, who are a sour bunch usually … 

KATHY: Haha.

JOE: … who tend to be lone wolves, a lot of them are becoming eternal optimists around this because we can see it in our own work. And again, that's a real positive and constructive dialogue and discourse to be employing. And it's good to be able to go out and say something good. After many years of, "Well, everything was skewed to risks to the downside," right?

KATHY: Right. Now it is good. It is something I think a lot of investors have lost sight of is that the overall economic impact of this is really positive for people's lives, everyday lives, right? More growth, more jobs, not inflationary, able to do things that we couldn't do before quickly and efficiently. I think so much of the public discourse has been about the jobs it will replace or the problems or whatever, and when you get productivity growth in a mature economy, that's a fantastic thing to look forward to.

Let me just ask you—you know, you focus a lot of your work at the middle-market companies, and that's kind of a unique perspective. You know, we spend … as investors, we kind of focus on the big companies all the time, or we hear about them all the time, but what are you seeing there? Like, what are the biggest issues they're facing? It seems like they might be more susceptible to the rising financing costs, inflation, you know, finding workers. What is it those businesses are grappling with right now?

JOE: The two major problems is—first is the elevated cost of finance. But we did a pretty big survey last year where what we found out was that the firm that operates in the middle-market space that needed financing were paying 15 to 20%. And that was always going to be the risks around the Fed reaction function to the price level shock. It's why we're all talking about possible policy errors now of too high for too long. OK, so yeah, that clearly is now beginning to bite. We can see that cooling in the economy.

Second, and this is where it becomes more of a problem—is that outside of finance, the number one problem is finding enough people who are qualified and willing to do the jobs. Because we are just short workers in this economy. It's got to do with the native-born population and the demographic changes. It's why, you know, the administration chose to increase H-1B visas over the past couple of years, right? I think the numbers out of the CBO are, for the last three years, we've had 7 million people come into the workforce externally. 2 million of them documented, 5 million of them undocumented. That's undeniably part of the economic narrative. It's why we're going faster. It's why the job creation is better. Disinflation is really the issue here.

So that's the risk. The response, though, in our own internal data—so like starting literally in June 2021—we saw a shift in forward-looking, productivity-enhancing investment that outweighs on software equipment and intellectual property. Now, historically, this is something the middle market has always been behind the curve on. Here, they were the tip of the spear. We could see it happening in real time.

KATHY: So they were driven by that need. Yeah.

JOE: That need, and what was that need? What triggered that? It wasn't long-term demographics. It was the casualties we took during the pandemic. Not just the people who unfortunately perished, but those who have long COVID, the 2.5 to 3 million who just are never going to work traditionally in the same way. There was a true worker shortage, and the only way that you can deal with that—and it gets back to our old Cobb-Douglas production function—capital and labor. You had less labor, you had to increase more money and capital, right? And it's one of those things they taught me when I was a teenager. Now in middle age, I'm watching it happen in real time. And it did. And that's why we're having that productivity boom we are.

You know, the middle market's an interesting place, right? It's not a place where it's going to be subjected to the vicissitudes of high finance, right? It's very blocking and tackling. It's production of goods, provision of services. It's about people. But 40% of the $27 trillion U.S. economy—it's non-trivial—it employs over one-third of the entire 160 million person workforce. So you know, after many years of just dealing with large companies, large trading entities—over the last decade as I've done this, it's been a real revelation, Kathy, to deal with people who've got a longer time horizon than the end of the day, the end of the week, or the end of the quarter. They're thinking in five and 10-year increments. And it felt good, you know, escaping the glass tower from Midtown Manhattan 10 years ago was the best thing for me as an economist. I know more about the U.S. economy because not only do I have that expertise in high-finance trading, right? I used to tell people my superpower is I can make people silly amounts of money. But going out and listening to people who made long-term investments, learning how they operate their firms, I think it helped smooth out some of the serrated edges that you have to have if you work in that milieu of trading and investment.

KATHY: Yeah. I mean, I grew up in a family with a small business, and talk about blocking and tackling every single solitary … seven days a week, 24 hours a day, you know …

JOE: You're always on, right?

KATHY: You're always on, and there's always something, whether it's financing some piece of equipment, finding workers, you know, how many hours can you work to produce revenue in what conditions, what comes at you from out of the blue—I mean, it's a really big job. I think that people don't appreciate how much of the economy runs that way.

JOE: You know, because I have the privilege of interacting with senior policymakers in the government, I'm always careful to remind them especially about when you're in a situation where firms have to pay 15 to 20% to expand and we're short labor—that's why it's important the Fed hit the mark on when it's time to cut rates. And I think that we're coming up to that point where it's now appropriate to reduce the restrictive rate. And we map out what the next couple of years are going to look like because that will create certainty that will trigger the return of risk appetite. And we'll not only see growth, we'll see a better quality of growth.

And this is in addition to the risks out there, you know, whether it's the maturity wall with respect to commercial real estate or corporate debt—the 2020 vintage is going to need to be rolled, right? We should talk about that. That's also part of the risk matrix going forward. And of course, the policymakers at the central bank know that.

KATHY: So we're in the camp that looks for a September rate cut and another one before the end of the year. But the question I get all the time is, "Well, can the Fed move right ahead of an election? Are they making a policy mistake by moving too soon, too late?" What's your take on that?

JOE: The Fed cares less about politics than you think. Yeah, they will act in the best interest of the economy. It's why they've been given instrumental independence, right? Which means they are the ones who can set the rate. It's not the Congress. It's not the executive branch. And if they think it's appropriate that a rate cut be put in place—whether it be July, that's not going to happen—whether it be November, maybe, right—or September, yeah, I mean, I'm in the September and December camp. But I very well could be underestimating. It could be September, November, December, right? They could roll right through it. And if they think it's appropriate, they will, right? I just don't think this election is going to get in the way of what the Fed's going to do.

KATHY: I'm in that camp as well.

Now, speaking of elections and certainties and uncertainties, big question marks around the budget deficit. It's apparent that both parties are not particularly interested in fiscal discipline. Let's put it that way. How worried …

JOE: That's about right.

KATHY: Yeah, how worried are you about the rising deficit and debt levels in the U.S.?

JOE: Well, in the near term I'm not. But over the medium and long term, deficits do matter. Clearly, if we keep spending—even though spending's coming down—at the current rate, it's not sustainable. Now, because we're pros, we have to look at what happens. Each week, we issue billions of dollars. The debt auctions, there's no fails. The U.S. currency is a global reserve, it's about 60%. 90% of all transactions in the $7.5 trillion per day Forex market are in dollars. Moreover, before the pandemic, I think it was about 18% of global capital flows were in the United States. It's closer to one third now. And you can see that in terms of price action across asset classes. So no, I'm not worried about the deficit as an economic issue or a major risk in '24 –'25. 

Out along the horizon, if we don't reconcile spending with taxes, we're going to have a problem. Now, honestly, we would have thought it would be in a few years that we'd run into this, but the shocks of the pandemic, the casualties, the loss of workforce has pulled a lot of this forward. I'm sure, Kathy, you've seen the 55-plus prime age population decline. Well, you can't deny that. That happened. This really is something that no one had planned for. So we're going to have to have that discussion sooner rather than later. And there's going to have to be a resolution on that in the next several years, or we will create the conditions where the budget deficit is going to matter quite a bit more.

KATHY: Yeah, I think the centrality of Social Security in people's lives and Medicare is going to force that conversation. You know, one thing I've said all along is we can raise the cap on contributions too for high-income folks. I think most people on higher income would hardly even notice a slight, you know, 2% increase in their contribution rate. And that would go a long way, I think, to solving that problem as well.

But yeah, we know the numbers. Demographics are destiny, right? We know those numbers and how they play out. And it's just a math problem of balancing this. And it's frustrating that you don't see more happening.

JOE: Right? That may require non-economic actions that we should all be very critical of in terms of being scientifically critical about it to make sure this is what we want and that we balance the social responsibilities to the elderly and who's going to come with the fiscal prudence of all of it.

And just to come full circle, you know, we're going through a political realignment now.

KATHY: Yeah, it's something I think you and I are really focused on, and people worry about the deficit. But they don't really have, a lot of times, kind of context around what the levers are, what can be done, what can't be done, and who does it? It's not the White House as much as it is Congress that has to figure this out. So it is kind of keeping us all on pins and needles.

The good news is the bond market doesn't seem to care.

JOE: No.

KATHY: Bond market, at this point in time, says, "You know, we're good. We're fine."

JOE: And demand, global demand, for U.S. Treasury instruments is very strong.

KATHY: Yeah, despite all the talk about the demise of the U.S. dollar, the Treasury market gets growing demand all the time, and dollar dominance, and the Treasury market is, you know, the place to be.

JOE: You know, I'm glad you brought that up because I knew you and I were going to have a good robust conversation this morning. I took a look at the currency rankings of the major trading currencies—basically all of them, but China's because it's not convertible, right? OK, the U.S. dollar is up against 15 of the 16 majors this year. It's up just under 11% against the yen, 10.5% against the real. Very big increases against the looney and the peso, which are our major trading partners. You know, it's one of these stories that's being under discussed, just how strong the dollar is. And I am of the ilk that thinks strong dollar's in the interest of the United States economy, and it's in the interest of the United States strategically. And that this is something that we ought to be talking more about.

Moreover, just on the backside of a significant price shock, this is what you want. You want a stronger dollar. On the margin, it damps inflation. It helps with our purchasing power and the things we need to buy and we should be buying from abroad. They're cheaper in real terms. Again, this is a good story.

KATHY: Yeah, it's been a really good story. And one I think I agree with you, it's been underplayed. Really, I think the perception is not that the dollar has been strong or not that that's been a real help to us. But as a huge net importer, having a strong currency has really helped us out on the inflation front.

JOE: That's right. I mean, we are the global economy. We may be moving away from hyper-globalization to a different form of it, but it's not going away. So a strong dollar is in the interest of the U.S. economy. I firmly believe that, and I'm glad we have people at the Treasury and Fed that understand that.

KATHY: Yeah, and speaking of Treasury—you know, we've been issuing a lot of T-bills to fund the deficit out of, I think, necessity, because that's where the strong demand has been. And I think one of the misperceptions out there—you'll hear people say, "Well, they should have just issued a bunch of 30-year bonds when rates were low." Well, they did issue some, but the fact is they have to issue what is in demand in the marketplace, and plus the bills don't wait 30 years. The bills have to be paid all the time. So it's not possible to just term out your debt entirely. But do you think this is going to be an issue that backfires at some stage of the game with all the short-term financing, or will the Fed rate cuts kind of take care of that?

JOE: Well, I think the combination of Fed rate cuts and just the slowing of Treasury issuance after 2025 take care of it. It's always a good idea to speak directly to the risks around the outlook and the risks around financial stability. And this is something we should understand. We should be able to accurately measure and talk about. Does it keep me up at night? It does not. This is one of the last things I'm worried about. In fact, I think it's one of the smarter things I've seen the U.S. Treasury do in a number of years was front-load this because as rates come down, the curve normalizes. The two- and the five-year come back to earth. That's the recipe for more risk taking. That's what we need to see, and it's frank, it's what we want to see.

KATHY: Yeah, I think Treasury's actually doing a really good job in a very tough situation.

JOE: I spent a lot of time talking to Treasury officials over the past 20 years. Let me tell you, we got some real competent people up there right now. It's a little different than what we had in the near past, let's put it that way.

KATHY: Yeah, I will let it sit there, but yes, I agree with you. My interactions have been pretty positive recently.

So I'm going to wrap this up by just asking you—you mentioned the thing that doesn't keep you up at night. Tell me what does keep you up at night.

JOE: Well, when I was young, we used to do duck-and-cover drills because we had a geopolitical framework. There was a long Cold War. First half of my life was part of that. And I see some of the geopolitical changes now that we're going to have different risks, risks that are difficult to quantify. Political risk is the Achilles heel of financial markets and Wall Street. And I worry that some of these things, like what's going on in the Middle East, will have an adverse effect on oil and energy prices in a way that we're not quite prepared to adjust to in a timely fashion. So it's the reawakening of geopolitical risk going forward, in addition to some of the things that we see around climate.

You know, Stacey and I live here in Austin, Texas, these days. I spend still a lot of time back home in New York City, but we're here because she's a professor now. We have to leave in the summer. It's too hot. That wasn't something I priced in 15 years ago. I just didn't. There's different types of risks out there that are more challenging to quantify. And as an economist, well, I'm going to have to adapt and evolve. And as human beings and as Americans, I think we're all going to have to do the same.

KATHY: Yeah, to bring that home—so I spend time in Miami with my son and his wife and my grandson. And one of the big issues here, of course, is insurance. Largely due to climate change, many homes are just uninsurable. And if you can get insurance, it's horribly expensive and out of reach for people. And that is a building crisis in much of the country right now, and it doesn't seem like we're addressing it very directly.

JOE: Yeah, I tell everybody who talks about climate change as something that's not really occurring—I go, "Don't talk about it until you've been in Miami during King Tide."

KATHY: Yes.

JOE: There's a hotel on Brickell I can go tell you to stay. You can stay on the fifth floor, and you can watch it happen. It's no joke.

KATHY: Yeah, they are addressing it. You know, they're doing the best they can, but it's a long-term expensive project. And not everywhere in the country is able to address it or is taking the steps. And I say the consequence for consumers is it's flowing through the insurance side of things and making housing less affordable. You know, it is working its way into the economy beyond just the edges. So good to know that we have similar things that worry us.

But I really appreciate your time today. Thank you. And I look forward to talking to you again.

JOE: Anytime. Thank you so much.

LIZ ANN: So at this point, Kathy, let's look ahead to next week. What do you think investors should be watching?

KATHY: Well, the inflation numbers first and foremost, we're going to get PPI and CPI. So that's going to be what everyone's got their eyes on. We're looking for some pretty tame numbers, which should help the bond market and presumably the stock market. But I also have to add that the bond market is starting to get a little bit worried about fiscal policy now. The yield curve briefly bear steepened, meaning short-term rates stayed and long-term rates moved up, but long-term rates moved up faster.

And the culprit seems to be the potential for policies after the election that could increase the deficit. The various proposals for tax cuts and spending increases coming from the candidates are getting the market a little bit worried. You know, we always say that you should ignore politics, and I would still say that at this stage of the game. Candidates can say a lot of things on the campaign trail, but actually getting those proposals into legislation and through Congress is another thing altogether.

But I think it does look like the market is getting nervous about some of these proposals. And we could be looking at a tug of war between expectations for monetary policy, which are easing, and expectations for fiscal policy, which could throw a wrench into that. What about you, Liz Ann? What's top of mind for you heading into next week?

LIZ ANN: Well, Kathy, on that note, we also get next week the monthly budget statement, and that's a report that often just flies under the radar, but in light of everything that you said and the recent announcement of the bit of a whiff on the part of the Congressional Budget Office of, oops, the deficit in fiscal year 2024 is going to be about $400 billion higher, pushing it close to $2 trillion. So I think those monthly budget statements might garner a little bit more attention. We also get the NFIB, National Federation of Independent Business. It's the kind of think tank around small businesses, and they release monthly data that has a headlined index just representing overall confidence, but there's a lot of always really interesting questions underneath about outlook, and what's your single biggest problem, and what are your plans around compensation and labor, so very important. And then I think toward the end of the week we top it off with the University of Michigan data, which gives us consumer sentiment, but also inflation expectations. So that's what's on my radar.

KATHY: So as always, thanks for listening. That's it for us this week, but you can always keep up with us in real time on social media. I'm @KathyJones. That's Kathy with a K on X and LinkedIn.

LIZ ANN: And I'm @LizAnnSonders, only on X and LinkedIn. Importantly, not on Facebook, not on Instagram, not pitching any investing clubs on social media. So don't get duped. 

Well, if you've enjoyed the show, we'd be really grateful if you'd leave us a review on Apple Podcasts, a rating on Spotify, or feedback wherever you listen. You can also follow us for free in your favorite podcasting app. 

And next week, I will be speaking with someone I've known for, gosh, more than 35 years, Ned Davis, who is the founder and senior investment strategist of the Ned Davis Research Group. Ned has been involved in the stock market for more than five decades, and he refers to himself as a self-proclaimed risk manager who is dedicated to avoiding major mistakes. So stay tuned for that one next week.

For important disclosures, see the show notes, or visit schwab.com/OnInvesting, where you can also find the transcript.