2024 Economic Pulse: Legislative, Industry and Business Trends

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Wednesdays with Woodward (registered trademark) Webinar Series. James Woulfe appears in a video call tile, next to the image of a laptop and a red mug with the Travelers umbrella logo in white. 

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JAMES WOULFE: Good afternoon and thank you for joining us. I'm James Woulfe, Assistant Vice President at the Travelers Institute, filling in for Joan Woodward, and I'm thrilled to be here with you today. 

Welcome to Wednesdays with Woodward, a webinar series where we convene leading experts for conversations about some of today's biggest challenges. Before we get started, let's briefly review our disclaimer for today's webinar.

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About Travelers Institute (registered trademark) Webinars. The Wednesdays with Woodward (registered trademark) educational webinar series is presented by the Travelers Institute, the public policy division of Travelers. This program is offered for informational and educational purposes only. You should consult with your financial, legal, insurance or other advisors about any practices suggested by this program. Please note that this session is being recorded and may be used as Travelers deems appropriate. Travelers Institute registered trademark). Travelers. 

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All right. 

And I want to give a huge thanks to our co-hosting organizations: the National Association of Professional Insurance Agents, the Connecticut Business and Industry Association, the Master's in FinTech Program at the University of Connecticut School of Business, the Insurance Association of Connecticut, the MetroHartford Alliance, and of course TrustedChoice.com.

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2024 Economic Pulse: Legislative, Industry and Business Trends. Logos for the Travelers Institute (registered trademark), Travelers, MetroHartford Alliance, C.B.I.A., Trusted Choice dot-com, Professional Insurance Agents, Insurance Association of Connecticut, and UCONN School of Business, M.S. in Financial Technology appear.

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All right. So for the next hour, we're going to take a deep dive into the latest trends in the U.S. economy and the impacts that interest rate cuts, consumer spending and GDP growth will have on your business. 

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Text, Speakers. James Woulfe, Assistant Vice President, Public Policy Initiatives, Travelers Institute, Travelers. Curtis Dubay, Chief Economist, U.S. Chamber of Commerce. The two speakers smile wearing suits and ties in headshot photos. 

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We're also going to explore the impacts of critical legislation like the CHIPS Act, the Inflation Reduction Act and the Bipartisan Infrastructure Law, and get in-depth insights into the auto, real estate and construction sectors to help you navigate the economic landscape. 

And I'm thrilled today to welcome our special guest, Curtis Dubay, who's going to offer his insights and expertise for this conversation. Curtis is the Chief Economist at the U.S. Chamber of Commerce. Prior to joining the U.S. Chamber, he was Senior Economist at the American Bankers Association, where he worked on tax issues and followed the economic trends affecting the banking industry.

His insights are published frequently on a wide range of economic and tax issues, and he’s frequently quoted in the media and has testified before Congress several times. He'll kick us off with an opening presentation, and then I will rejoin to keep the conversation rolling and take your questions.

So, Curtis, the floor is yours. Thanks for joining us.

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Curtis appears in a video call tile. 

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CURTIS DUBAY: Thanks, James. And thanks for having me. It's a pleasure to be here. 

If you can't tell because the resolution isn't enough, I have my UConn Huskies tie on, I have my UConn Huskies cuff links on. I actually have UConn Huskies socks on as well.

I'm a native of Connecticut. I grew up in Ellington. And as a matter of fact, I worked as a summer temp for Travelers in the Tower in the summer of 2000. And there's my ID card to prove it.

JAMES WOULFE: Wow.

CURTIS DUBAY: It says on the back, Summer Student, with my signature. That's me at 19 years old.

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Curtis holds up his ID card. A young Curtis poses unsmiling in the ID photo. 

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And my mom dug this out of my sock drawer, which is still in my bedroom in Ellington. So it's a real thrill to be here to talk to you today about the economy. 

It's a tricky economy to talk about. And the reason why is that no one wants to accept the fact that the economy is in pretty darn good shape. There's a lot of reasons for that, and we'll get into that as we go forward. But it's taken me a long time-- it's taken a lot of us a long time-- just to accept the fact that the economy is doing really well. And it has been for several years.

Now, of course, there are things like inflation and higher interest rates that are causing people to feel the economy isn't doing so well. But at this point, we really have to just acknowledge that the economy is doing-- is going very strongly and, probably most importantly, is that it will continue to do so until something happens. Economies don't shift down. They don't decelerate into a recession or a slower growth period. This is going to continue-- the economy is going to continue in really strong shape until some kind of outside factor like a pandemic or something internally like a financial crisis occurs to stop it from growing as strongly as it has been growing.

So here, I'm going-- I'm going to share my screen. I'll go back and forth so that it's not up the whole time, but I just want to show you where the economy stands right now and where it has been the last few months. So let me get this up.

Now you should be seeing a-- yeah, I think you are. OK. So here's a slide of where the economy has been the last few quarters and where we anticipate it going for the next few.

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Curtis flips through slides to get to a bar chart. A graph is titled, Economy Grew Well Above Expectations in 2023 - Still Growing Strongly to Start 2024. U.S. Chamber of Commerce. The y-axis extends from 0% to past 3%. The chart has six green bars, corresponding to 2023 Q4 at 3.4%, 2024 Q1 (Forecast) at 2.1%, 2024 Q2 (Forecast) at 1.3%, 2024 Q3 (Forecast) at 1.3%, 2024 Q4 (Forecast) at 1.6%, and 2024 Annual (Forecast) at 2.3% 

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The economy grew really strongly in 2023. It grew well above where anyone thought it would be. We thought it would grow-- we thought there would be a recession last year. And there was no recession. There wasn't even a slowdown. The economy grew about 3%. It depends how you measure it-- between 2 1/2% and 3% in 2023. At the end of 2023, in the fourth quarter, it grew at 3.4%. It's really an astonishing amount of growth.

Going into 2024, you do see a slowdown, but it's still really strong. It's still really good to be growing over 2%. That's where we're tracking right now for the first quarter. The first quarter is over now, but data is still coming in. We'll get the number for the first quarter in a couple weeks, but it should be between 2%-2 1/2%. Again, really strong. 

Now, it might slow some more throughout the year, but it's still going to be growing really strongly, above where most people thought we'd be in 2023 and in 2024. Because again, we've been waiting for this other shoe to drop, that we were-- that the economy just won't be able to continue growing at a strong clip. And it is growing at a strong clip. It's growing at such a strong clip and-- as is normally the case-- the rest of the world would gladly trade places with us. We are the strongest growing economy in the developed world, and we are, as always, the envy of the world when it comes to economic growth. So we're in a really good standpoint-- or it's at a really good point right now.

But of course, that leads to the question of, how can this occur? How can this continue to be the case when we do still have high inflation? And we've had really high inflation going back a couple years. It's come down, but it's still above target. We have much higher interest rates than we've had in the past. So we have a lot of headwinds that we're dealing with.

And the answer for the last-- going back to COVID; so over four years now-- is that consumers continue to spend at a really astonishing clip.

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A graph is titled, Consumption Up Big in February - Above Inflation. U.S. Chamber of Commerce. The graph below has 12 bars, identified as measuring Consumption (Annualized) in a key, for each month from March 2023 to February 2024. A jagged line on the graph, identified as measuring Percent Change from Previous Month, overlays the bars. The lefthand y-axis is labeled Dollars in Billions and goes from $17,700 to above $19,100. The righthand y-axis goes from negative 0.2% to above 0.9%. A horizontal dashed line extends across the graph at 0%. The bars show a consistently upward trend, each one taller than the one before it, while the line has a jagged, up-and-down pattern. The first bar on the graph reaches just below $18,300 and 0.3%, while the last bar reaches above $19,100 and 0.9%. 

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So this is all spending. So it's goods and services, businesses, individuals, everyone-- spending. So you can look at the line that jumps around. But just look at the bars. Up month after month after month. It keeps getting bigger and bigger and bigger. And that means consumers are continuing to spend at a really, really high clip. 

Again, so it leads to another question. How could that be the case when we do have the big headwinds of inflation and higher interest rates? And the answer really comes down to one simple thing. So I should have said at the top that there's one thing that I think really helps square a lot of circles. It really helps us understand why we can have such pessimism about the economy on one hand, but really top-line numbers being very, very strong on the other. When I say top-line numbers, I mean things like GDP growth is strong, job creation is strong, wage growth is strong. The things that people care most about are really, really high.

But how can they continue to keep spending? It comes back to one simple fact, which is that we do not have enough workers in the economy. We have a worker shortage. I can and will dig deep into that. But when it comes to consumer spending, they can continue to spend at this very high clip because if you want a job in the United States of America today, you can have one. And it pays pretty well.

Wages are growing very strongly. They are growing above inflation, and they have been for a long time now. That wasn't the case in the aftermath of COVID and then higher inflation rates, but it is now. So if you want a-- and here's the chart to show it. There are 2.3 million more job openings than there are unemployed workers to fill them. This data is as of yesterday.

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A graph is titled, There are 2.3 Million More Job Openings than Unemployed Workers. U.S. Chamber of Commerce. The graph has a light blue line, labeled Unemployed in a key, and a dark blue line, labeled Job Openings in the key. The x-axis goes from March 2020 to January 2024, with every other month marked along the axis. The Unemployed line spikes sharply around spring of 2020, then slopes downward, leveling off near the bottom of the graph around the beginning of 2020. The Job Openings line rises slowly from spring 2020, intersecting and passing above the Unemployed line around spring 2021, before sloping slightly downward, remaining above the Unemployed line for the remainder of the graph. 

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So workers-- businesses are really stretched when it comes to finding workers. They can't get enough. 

I give presentations like this frequently all around the country to-- so different industries, different size businesses, different-- all different regions. So all types of businesses you can imagine. And I ask them all if they have enough workers presently. And no one says yes. They're all still searching for more workers.

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A graph is titled, Wages are Growing Faster than Inflation. U.S. Chamber of Commerce. The graph has a dark blue, identified as Wage Growth in a key, and a light blue line, identified as Inflation. The x-axis goes from January 2021 to January 2024 with every other month marked along the axis. The y-axis goes from 0.0% to 9.0%. Wage growth plummets as inflation rises, with the two lines intersecting around early spring 2021. Inflation continues to grow as wage growth picks back up and levels off. Inflation begins sloping down around summer 2022, finally intersecting and dropping below the plateauing wage growth line around spring 2023. At the beginning of the graph, wage growth sits just above 5% while inflation sits between 1 and 2%. At the end of the graph, wage growth sits just above 4% while inflation sits just above 3%. 

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So if you have a job-- and if you want a job, you can get it, and it pays pretty well. The dark blue line is wage growth. It's been above inflation since the middle of last year. So it's been paying pretty well. And you can get it. 

And if you-- in that period when you couldn't-- when wages were falling behind inflation, consumers had two things to fall back on. They had savings.

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A graph is entitled, Savings Coming Down After Pandemic Explosion. U.S. Chamber of Commerce. A bar graph has a blue bar for each month from February 2020 to February 2024. The y-axis, in billions of dollars, goes from $0 to $500. A horizontal line extends across the graph at $100. Bars for April 2020 and March 2021 spike up above the rest, nearing $500. The bars show a downward trend until about November 2021, after which point, the bars remain below the $100 line for the remainder of the graph. 

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Every bar above that dotted line was savings in excess of the pre-COVID trend. That added up to almost $3 trillion in excess savings over the course of COVID. So consumers had a lot of extra money to spend, and that helped buttress spending in the aftermath and with COVID. 

And by the way, I got a lot of pushback on this when it initially started to occur, and I started pointing it out. People would say, well, that's just really rich people who are saving. And yes, Elon Musk and Bill Gates and Warren Buffett, they saved a lot of money during COVID. But $3 trillion is such a gargantuan sum of money that it had to have been widely distributed. And it was. We got some data. It's hard to get data on savings accounts, but we did get some that showed that savings was broadly distributed.

So consumers had savings, which they've largely spent down now. So that's not there to help keep spending up, which is probably the main reason why we see a decline in future forecasts for economic growth. Consumers continue to spend and keep the economy growing at a good clip, but they don't have the savings to help grow-- spend even higher and above pace and above trend. So savings has come down-- probably largely gone for those who need it-- as is credit card capacity.

So during COVID, we as an economy spent our-- paid our credit card debt down enormously. We've spent it back up really rapidly. So those who need their credit cards to help make ends meet probably have exhausted that resource. So that's not there to help, again, keep spending up above trend.

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A bar graph is entitled, Credit Card Balances Jumped in January After Leveling off in December. U.S. Chamber of Commerce. The graph has bars for each month from January 2020 to January 2024. The y-axis, in billions of dollars, goes from $950 to $1,300. The bars show a downward trend, from around $1,100 to below $1,000 from the beginning of 2020 to 2021. Then the bars show a steady upward trend, growing consistently for the remainder of the graph. The last bar, for January 2024, reaches around $1,300 on the y-axis. 

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The important thing to note about this is that-- a couple of things. Credit card debt is not a systemically risky thing right now. We're not that concerned about it because, as a percentage of income, it's still well below the average over the last 20 years. So it's not a systemic problem. It's a problem for some of those who need it to make ends meet. But when it comes to a systemic risk issue, it's not there yet. 

You will see and hear stories about defaults rising. And that is true. Defaults are rising for credit cards, autos-- yeah, credit cards and autos. But that is for very subprime borrowers, people with-- that are poor credit risks. And it's occurring from very, very low levels-- historically low levels. So it's really not that much of a concern.

The auto one is probably the most interesting story. And that's because of the-- certainly the creditworthiness of the borrower, but it also goes back to the huge spike in car prices we had during COVID. If you needed a car and you had to pay an exorbitant, outrageous price for it, it might have been beyond your capacity to pay for it when things normalized. And that will lead to higher delinquencies in the future. And I think that's what we're seeing at this point.

So even if we had a downturn, you can see why-- and again, I'm not predicting a recession or anything like that-- but even if we had a downturn, I think it would be really muted because consumers are-- I mean, businesses are not going to let go of workers. They're going to hold on to them as long as they possibly can and by all means because they just went through a period where they couldn't get enough workers, where they were substantially understaffed-- during COVID and the aftermath. Now they're still understaffed, and they've learned that it's really hard to make their good, provide their service, when they don't have enough workers. So they'll probably keep them on even if the economy slows a little bit, whereas in previous periods they didn't do that because they could easily let go of people and then bring in a new worker later on.

So I think that this worker shortage really, really puts a floor under how far the economy can fall in the current time frame. So yeah, they're going to continue to hire. They're going to hoard their workers. And that's beneficial for consumers and that's good news.

But again, I think spending continues strong. So I think 2024 is good. 2025 is probably better because we'll probably-- inflation-- we're going to talk a lot about inflation as we go forward-- probably slow-- decline more. And I think the economy gains steam as long as nothing else pops up. There's always the unknown unknowns.

Real quick, I want to mention about the worker shortages before we go forward. This situation where we have too few workers is going to remain for the rest of our lifetimes. Everyone on this call, all of us, we are now in a period where we will have too few workers across the economy. And it comes back to a demographic problem that was always on the horizon. COVID accelerated it, got it here faster than we thought it was going to get here, but it was always coming because we have a demographic inversion.

The baby boomers were an enormous generation. Generation X coming after them was smaller. Usually, generations get bigger so you get an inverse pyramid. So every succeeding generation is bigger than the one before it. Generation X was smaller than the baby boomers. Millennials are bigger than the baby boomers, but not by much and not enough to make up for the smaller size of Generation X. And then-- I always get this wrong-- Generation Y-- whatever comes after millennials-- is smaller than the millennial generation. So it has really big implications for workers. So what we have is an aging population. Older workers work less than younger workers.

So the labor force will grow. But as a share of the population, it will shrink because, again, older people work less hours and work less than younger people. So that is a big implication. That's why we'll have the worker shortage for as long as we'll all be around. But it has big implications for things like the educational system. There are going to be fewer students coming through K through 12 and in secondary education. And so I talk to a lot of community colleges. You can imagine, they are big parts of their communities where they exist. Other educational institutions-- and they know this. They see this coming-- that there's going to be fewer and fewer students going through the system as they go forward.

So a lot of interesting implications that come out of that, particularly when it comes to-- and I'll talk about this at the end-- that businesses are going to have to figure out ways to operate with fewer workers than they've become accustomed to. That's going to mean investment in things like AI, automation and mechanization. And we're seeing that in a really big way right now, which is one of the major stories in the economy right now is that productivity growth is through the roof.

That's really the thing that we as economists care the most about. Because if productivity is rising, that means businesses are becoming more profitable. That means that they can-- and they can pay much higher wages. We've seen wages are growing really strongly-- over 4%. So how can they continue to do that? Well, it's because of productivity. Their workers are earning those raises and more, which means that businesses can continue to pay those higher wages. This is really good news. But I think a lot of it comes back to the investment in the things I mentioned. We'll circle back to that near the end.

So I talk about this, though-- I get a lot of-- again, there's a lot of people who just don't think the economy is doing really well. They need to be like me and accept-- they don't have to love it, but they have to accept it-- that the economy is doing pretty well. But because of that, I did put together some data points that point to the economy not doing so well-- because it always exists-- but try to explain that there are reasons why people would feel this way. And, again, the reason-- the big numbers that point to are the ones we care most about-- basically, our bottom lines. GDP is growing really fast. And I said this already-- jobs are growing really fast, and wages are growing really fast, and productivity is through the roof. So those four major things that we really care about, really, the headline numbers are really, really strong. 

Other things, though-- there are data points out there that aren't so strong. One is manufacturing has been really, really sluggish. It just this last month moved out of recession territory when it comes to the way that we measure the optimism of manufacturers. So manufacturing has been down. I think that has a lot to do with coming out of COVID. They did really well during COVID. And coming out, there's been a reversion.

Small businesses-- small businesses are really pessimistic about the economy. They're really down. I'd say they're the group that's the most pessimistic about the economy. They're at like 50-year lows when it comes to their optimism.

Consumer confidence has been fairly real low. In fact, it's been really low. Consumers don't feel good about the economy. And there's a few other ones as well. But I think what it really comes down to-- and the explanations for why businesses and families and consumers would say that they don't think the economy is doing really well-- it is inflation. So we'll move into that now. But when it comes to inflation for families, I think the thing that really hits hard-- the reason why they think the economy isn't doing well and they're still really concerned about inflation-- which is still high-- is the way inflation is hitting right now. It's hitting the most for necessities-- food, energy and housing-- particularly food.

So I'll give you a couple examples that I like to give from my own life. So I've got three boys. We live here in Washington, D.C. So when my wife goes grocery shopping, she's shopping for five of us. Pre-COVID-- and my kids are 10, 7, and-- 12, 10, and 7. When she goes grocery shopping-- prior to COVID, the bill would be like 225-250. Now it regularly runs close to $400 a week. So we're seeing that week after week after week. And so are families across the country. So of course, we're all going to say that inflation remains a big problem.

And just going to lunch on a daily basis, you can't get a sandwich and a bag of chips at Potbelly's for under $15 now. It's a real big shock to the system. And I'll get into this-- those prices aren't going down. That's not how inflation ends.

So I think there's a real good reason why consumers tell us the economy is not doing well. And their key problem prior to COVID-- when you do focus grouping and talk to them and say, well, why don't you think the economy is doing great-- or what is your biggest concern about the economy-- they'd always say that they couldn't get ahead. They couldn't save for their kids' education. They couldn't save for their own retirement. That's happening now.

So they have a job. It's paying really well. But it's really just helping them tread water because they're having to pay the higher prices for necessities. There's nowhere to escape paying for food, energy and housing. And so they're not-- again, they're still not getting ahead. They're treading water, but they're not getting ahead. And I think that translates back to the consumer-- their confidence and their sentiment.

On businesses, I think it's also a straightforward calculation. It's that-- those higher wages. Businesses have to pay higher wages to get workers in the door. They still need workers, so they have to pay. And what happens-- particularly for smaller businesses-- every time they hire a new worker, their entire wage bill is going up. So imagine that you hire a new worker today and you have to pay them $20 an hour. You pay them $20 an hour. But maybe you hired somebody in December, and you paid them $18 an hour.

Well, you can't pay them 18 and the new guy 20. So you've got to pay the guy you hired in December $21 an hour. But you can't pay the person that you hired pre-COVID, in 2019, $22 an hour. Now you've got to pay them 30. So their wage bill is constantly getting pushed up, and their margins are getting squeezed.

I think the story is as simple as that or as straightforward as that. I'm open to a lot more interpretations, but we've done a lot of talking to businesses, and I think that's what it boils down to.

So now on to the big elephant in the room, which is, of course, inflation. And I think we got to start by saying it's gotten better. There's no doubt about that. At one point, inflation was running 9% on an annual basis. It's now down closer to 3%. 

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A graph is entitled, Consumer Prices Rose 3.2% Annually in February - Inflation is Better, but Not Over Yet. U.S. Chamber of Commerce. The graph has months from January 2020 to January 2024 on the x-axis and a y-axis that goes from 0.0% to 9.0%. A horizontal dashed line stretches across the graph at 2.0%. The line on the graph dips below 2.0% near 0 around April 2020, then climbs steadily, reaching almost 9.0% around July 2022. It slopes down, leveling off just above 3.0% around June 2023. 

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But-- and this is key-- 3%-- OK, there's a very well-known economist-- a very famous one who has a Nobel Prize-- I don't have a Nobel Prize-- but he says that inflation is over. We got to get over it and move past it. 

Again, he has a Nobel Prize. I don't. But the Fed, their target is 2%. And the last time I checked, 3.2% is more than 2%. And it's 50% more-- more than 50% more. So it's still a problem. And it's been stuck, too. And you can see from the chart, it's not like it's continued to go down. It's plateaued for several months now-- going back to almost the middle of last year. So we're talking over six months now, where inflation has been bumping around in a very narrow band around 3%.

So it still remains a problem. Again, much better-- getting better. But-- and this is key to remember-- prices are still rising. It's not that they're falling. Prices will not fall. And this is what I was alluding to with the food prices. Inflation doesn't get better because prices decline. We're never going back to the price level we had pre-COVID. We will just have to adjust to a higher price level.

The way inflation is solved is that prices stop rising at a higher rate. They're still rising at 2%. They're just not rising at 3.2% or 9%. They're rising more slowly. And we adjust to the new higher price level. Some economists crunched some numbers and said that, usually, it takes two to three years for consumers to adjust to that new higher price level. Which makes sense. We all-- intuitively, we want a lower price level. We want to go back to what it was before. But that won't happen. And that's OK. We don't want price deflation. Deflation is as destructive as inflation. We want the price levels-- the price rises to moderate. But that's not a satisfying answer. No one wants that. They want lower prices. But that will not happen.

So price level has moderated. It's not growing as fast as it was. And it's coming down. 

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A graph is entitled, Core PCE Inflation Still Above Fed's 2% Target - Creeping Down Slowly. U.S. Chamber of Commerce. It has months from January 2021 to January 2024 on the x-axis and a y-axis that goes from 1.5% to 5.5%. A horizontal dashed line at 2.0% stretches across the graph. The blue line of the graph rises from below 2.0% around January 2021 to near 5.5% around March of 2022, where it levels off, then begins sloping downward around October 2022, reaching about 3.0% at the end of the graph in January 2024. 

(SPEECH)
But here's another key one to look at. So that one I just showed you is a broad measure of inflation. It's called the Consumer Price Index. It's the broadest measure we look at. It's the one that gets the headline numbers. But that's not the one that the Fed really focuses in on. They focus in on something called Core-- slightly set-- different measure-- core PCE. It's still well above 2%. I think it's about 2.8% now. So again, we still have a ways to go. 

Now, if you follow financial markets at all, you'll know that they've been pushing really, really hard for a rate cut now-- like, immediately. And earlier this year-- I think it was probably the January meeting-- the markets had convinced themselves that the Fed was going to cut rates in March. And the Fed put out its communications and said, we're going to cut rates later this year, in-- all the kind of standard jargon that they put out-- inflation is still a problem, so we're going to continue to fight it.

And the market tanked hundreds of points in a day because-- and afterwards, somebody asked the chair of the Federal Reserve, Chair Powell, if rates were going to be cut in March. And he said, I don't know where you got that. We never said that. But the market had convinced itself that that's when rate cuts were coming. They had jumped the gun. These charts are to show you that inflation is better, but it's not quite there yet.

So that's a long way of saying I don't think the Fed cuts rates anytime soon. I take them at their word. I'm not one of these people who tries to reinterpret what they say. They are very plain in their language. They don't change it a whole lot. It's right there in black and white in the materials they put out every time they meet. They're going to keep rates steady for a while, until inflation comes down more. And when it does come down more, they'll cut rates-- one or two times, maybe three times-- and that would be later this year.

The problem that they run into at this point, though, is that they're now firmly in the election cycle. There's a lot of pressure on them-- usually from the Democratic side of the aisle-- to cut rates. That would be good for President Biden. It would help the economy grow faster. So if they do that, they're going to be-- if they do it prematurely-- or perceived to be prematurely-- it's going to be looked at as though they are not-- they are putting their thumb on the scale in favor of President Biden.

On the flip side of that coin is that, if they wait, they're going to be seen as putting their thumb on the scale in favor of former President Trump. So they're in a bit of a bind when it comes to what they do with rates and when they cut. But again, I take them at their word that they will be data dependent. And when the inflation data warrants it, they will go ahead and cut rates. I just, again, take them at their word that it will be later this year. And it might be after the November election.

And keep in mind-- so the Fed has done a lot-- so they're not going to raise rates. That's definitely not going to happen.

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A graph is titled, Money Supply Below Pre-Covid Trend. U.S. Chamber of Commerce. The graph has an x-axis that goes from January 2010 to January 2024 and a y-axis in billions of dollars that goes from $3,700 to $7,700. A dark blue line on the graph, identified as Real M2, rises steadily. Around spring 2020, it rises sharply in a hump, going from below $6,200 on the y-axis to just below $7,700. It then slopes down from around the beginning of 2022 to the beginning of 2024, ending around $6,700. A dashed line, identified as Real M2 (Pre-Covid Growth Rate), carries on the steady upward trend from pre-Covid, cutting under the hump and intersecting the Real M2 line near the end of the graph. The dashed line ends just under $7,200. 

(SPEECH)
They've done an awful lot when it comes to raising rates. So we're not going to raise rates, but there's an awful lot of tightening that will happen for them. They don't have to do a whole lot. If you follow Treasury markets at all, those rates were going up for a long time. That was doing the work for them. But the two big things that really still continue to tighten financial conditions are, one, business loans are generally five years. 

So if you are now having to refinance a loan you totally took in 2019 when rates were pretty low-- and for another year, we're still going to be-- a couple of years, people-- you're going to have businesses that are refinancing loans that were taken out when interest rates were at record lows-- they're going to go from, say, a loan that was maybe 4% to now one that's over 8%. That will do a lot of tightening for the Fed without them having to do any additional rate increases. And they still-- if you know anything about the Fed, they have a very large balance sheet. They own a lot of Treasurys and mortgage-backed securities-- they're selling that off as well.

So they are doing stuff to continue to drive inflation down. Some of it's on autopilot. Some of it is their actions. And you can see the result of this. This is the money supply. The big hump is during COVID. So that's all that money that the Fed pushed out. Prices rose in the aftermath. Inflation came. There were three causes. One was supply-side constraints-- supply constraints. We had the big problems with the supply chain during COVID.

The second was all the money being pumped out from Congress-- all the multiple rounds of checks and all the income support that occurred-- and then this, the Feds increasing the money supply. As they've shrunk the money supply, it's come way down. It's now below trend-- below where it would have been on its pre-COVID trend. And that's why you'll continue to see the price level fall.

It's interesting to point out, though-- you see how smooth that line was for a very long time. You could take that line back to 1982 and it would be just as smooth. It's a period known as the Great Moderation, when monetary policy got very, very good. And we had a period from 1982 until March of 2021 when we had very low inflation, on average. And it was marked by the money supply growing at about the same rate as the economy. And it had very good effects. We got away from that during COVID.

It's not a way to criticize the Fed. They had to stop a financial crisis-- an ensuing economic crisis on the heels of a pandemic. They did everything right, and they did what they needed to, but this was the inevitable result, especially when you had those supply chain issues and the huge amount of spendable money that was sent out from the federal government.

The last thing I'll say about inflation is that I think it comes down. I think we get closer to 2% by this year. But if you look at the Fed's own materials, they show the inflation rate getting back to 2% in 2026. So still two more years until we get all the way back down to 2%. So we have a ways to go before inflation is finally well behind us.

So with that, let me touch on a few risks. And we'll get into this in Q&A. And James has some questions teed up on this as well. But all the things I've talked about have a lot of assumptions baked in, but a lot of things that we can't bake in. So geopolitical risks-- Russia-Ukraine intensifying, Israel and Gaza intensifying. And both of them-- either/or-- spilling over, China invading Taiwan. Geopolitical-- or an unknown unknown. Geopolitical risks are something we always have to be aware of. We have domestic political risk.

This current Congress, believe it or not, still has three must-pass pieces of legislation to do this year, in 2024. It has to pass a budget for fiscal year 2024, which started in October of 2023. So it hasn't done that. It has to pass a budget for next fiscal year because this fiscal year ends on September 30. And they have to pass a debt limit increase. The debt limit expires-- or the-- we hit the cap-- no matter how you want to say it-- January 1, which is in this Congress. They have to raise the debt limit as well. And we have an impending debt crisis. We're accumulating way too much debt. Those are major-- so if they don't pass budgets and they don't raise the debt limit, it's going to have an impact on the economy.

The other risk that's kind of out there-- it's been kind of kicking around for a little bit but hasn’t really-- hasn't risen to the level that I think a lot of us feared-- was office space. I'm going to talk about how interest rates-- businesses are turning them over. That really impacts office space because the value of office space has declined markedly in the aftermath of COVID. So imagine-- let's just look at big cities. It really matters for urban centers. And the reason why is that return to work-- so Kastle, the office security place, puts out a-- office security company-- puts out a index of return to work. And it's just for 10 major cities. But even cities that you would anticipate being the most back-- so Houston, Dallas-- it's still about 60%. So you're looking at 50% occupancy in some places. D.C. was under 50 for a long time.

And so these high, tall office space complexes are now facing two pressures. One is they're 50% occupied. So their value is going to decline a whole lot. And then the interest rates-- they might have been built or financed with a 4 1/2% interest rate and now it's 8 1/2. So the value of buildings is cut in half. So you might have had a $500 million building pre-COVID or even a few years ago, and now it's worth $250 million. And a lot of the owners of those buildings can't make those economics and those finances work so they're handing the keys in to their lenders.

This is really for buildings that are not modern, that don't have the modern amenities that employers and employees demand and would like and that aren't in the most desirable location. So outside the hottest spots in New York City or San Francisco or any of the major cities. So this could be a big strain. And it turns out that-- the Wall Street Journal has done a really good job covering this-- it turns out that it's regional banks, the same banks that got nailed in the aftermath of SVB. They're the big lenders for these type of office spaces. Would have thought it would be the biggest banks, but it's the regional banks that do a lot of the lending. Whether they own the loan outright or they syndicate them, they have a lot of exposure to these buildings.

So it's something to watch. I don't think it's a systemic problem. We've been told since 2010 and the passage of the Dodd-Frank Act that banks are well capitalized and can handle losses. So, again, I take the regulators at their word that they can do that. But banks might have to absorb some of those losses if the owners of the buildings start turning the keys in and defaulting.

I'm going to stop. Yeah, I'll stop there. James, I have a lot of other things I can talk on, but I think they'll come up in Q&A. I thank you for your attention, and I'll hand it back to James for now.

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James reappears in his video call tile alongside Curtis. 

(SPEECH)
JAMES WOULFE: Curtis, thank you so much. That was fascinating. Let's move on to the broad economic insights that we're going to talk about today. And you talked about where you anticipate Fed rate cuts coming and when that might happen. Do you foresee any scenario where the Fed doesn't cut rates or takes much longer for that to happen? And what would need to happen for that to be the case? Because, as you said, it seems like we're getting close to rate cuts. 

CURTIS DUBAY: Yeah, it's a good question. And yeah, I do. And I think if you follow-- I have CNBC on usually throughout the day, and I usually only pay attention when somebody from the Fed is on. And if you pay close attention to what they say, there is a scenario where that happens. And that is if inflation doesn't come down; if it remains stubbornly high. That could mean it rises again. It could also mean that it just sticks where it is. So if it just stays at 3% by the end of the year, they're not going to cut. They won't be able to. They don't have the ability.

So much of what the Fed does-- their ability-- their effectiveness-- comes back to their credibility. And if they cut rates before inflation comes down to a satisfactory level, then they lose their credibility, and they really lose their power. So they're going to have to absolutely wait to cut rates until it's very clear that inflation is on a glide path to 2%.

So if that doesn't occur-- and again, I showed you the chart-- inflation has been caught in that range for several months now-- if that remains the case-- and it certainly could-- inflation is a very tricky thing to get under control once it gets out-- that they might have to delay rate cuts until 2025 or beyond-- or 2025. I think at that point-- they've been pretty clear they want to cut rates.

And not to get too political about it, but a lot of the board is now appointed by President Biden. They're much more dovish when it comes to monetary policy. They want to cut rates. So they would put a lot of pressure on-- so it's the chair who really dictates, but they can put a lot of pressure on-- they want to see lower rates. And I think at least by this time next year, they would have a stronger case for it. But it could be-- again, the data they put out shows rate cuts later this-- by the end of this year. But there is absolutely a scenario where it gets delayed to 2025.

JAMES WOULFE: OK. Wow. All right. So you touched on this briefly. We're in a time of intense geopolitical conflict on a number of fronts. What are some of the potential economic implications for the U.S. economy going forward from the conflicts that we have now and then these unknowns that are out there as well?

CURTIS DUBAY: So I think there's a couple-- three things to keep in mind. One is that, for the most part, any economic impact from Russia-Ukraine, Israel-Gaza is probably already in the system and probably already incorporated.

What we can't anticipate is the smaller-- like the Houthis blocking the shipping lanes in the Red Sea, those are very disruptive. And we can see just-- remember the Suez Canal got blocked for a couple of weeks-- we're going to see here in Baltimore, with having a fairly major port shut down for a while-- these things matter. And when ships have to get diverted and go much further courses, it increases prices, and it disrupts global commerce. So those are things that we just can't anticipate and seem to be happening with more frequency.

But really, the big risk-- and I mentioned it briefly-- is if China ever did anything that forced us to decouple from their economy in the same way we did with Russia in the aftermath of their invasion of Ukraine, I think what you'd see is a lot of countries, led by the U.S., running the same playbook, which is cutting off economically. And this would be really bad for the U.S. economy because we're much more integrated with the Chinese economy than we are the Russian economy. But it would be really bad for China as well.

So I think it does factor into China's calculations, knowing that that would be run against them and that they would suffer substantially economically because of our actions. Remember-- so Russia was largely saved by China and India continuing to engage with them, but China is the big actor-- the big economy. They don't have somebody that they can then lean on to help prop them up.

JAMES WOULFE: Great. All right. So moving on to domestic policy. It's been a few years since their passage, but I want to talk about the Inflation Reduction Act, the CHIPS Act, and the Bipartisan Infrastructure Law. Talk about the effect that those pieces of legislation have had on the economy. Just recently, in the short term, are they having the impact that we thought they were going to have? And what do you expect to see long term coming out of those pieces of legislation?

CURTIS DUBAY: Yeah. So I think you have to look at them all together. So it's the CHIPS Act, which is subsidizing the manufacturing of chips here in the U.S.-- superconductors and microchips; the infrastructure bill, which was a lot of-- had some of that as well, but it had a lot to do with keeping funding for infrastructure spending in the U.S. and then increasing the levels; and then the Inflation Reduction Act, which was a lot of subsidization for the production and manufacture-- the production of green energy, but the manufacture of green energy products. So if you look at them in total, I think a lot of it was inevitable, coming out of COVID, that we were going to try to incentivize the manufacturing of important things here in the U.S. And those three things together kind of get there. I think it's probably over. I don't think that that push will continue.

When you ask whether it was successful, the answer is it depends how you look at it. If you pay people and businesses to do things-- and all the different subsidies and all the provisions in those are very, very generous-- yeah, it's successful. We're building electric battery plants here. We're building chips factories here. We're building solar panel factories here. We're building windmills here. We're building the manufacturing capacity to do so because the subsidies are so lucrative.

So yes, it's been successful from that standpoint. Whether it's successful in growing the economy, I would say no. Because what the White House will point to-- and it shows up very clearly in the manufacturing data-- or I'm sorry, the construction data-- is that there's a huge amount of spending going on in manufacturing. But again, if you pay people to do it, they're going to do it. But that money would have gone elsewhere. And that's really what-- you have to account for the unaccountable.

Where would that investment money have been spent had it not been diverted to a new chips factory or a new solar panel factory? So at best, it's a one-for-one trade-off. And it could be-- it could be a negative trade-off if it's going to a less-valued use.

JAMES WOULFE: OK. All right. Moving on to industry-specific insights. What are you seeing in the auto market right now? We've heard some news about the EV market running into headwinds. So I want to get your sense of that and what that might mean for the industry.

CURTIS DUBAY: Yeah. So prices went way up during COVID. And those who-- I touched on this before-- if you really needed a car, you were going to have to pay exorbitant prices for a new car and then used cars. Some of that pressure has come down. I think that auto manufacturers have gotten back to a more normal cadence, although there are still disruptions every now and then-- but getting new models off the assembly line and getting them to consumers.

The big trend that I've noticed recently, though, is that prices are high. And I just think that this is going to be something that wears on consumers. Whether it's an electric vehicle or a old internal combustion engine, prices are really high. The example I use is-- so my in-laws, they live in Michigan. They're Ford execs-- retired Ford execs. And my mother-in-law got a new car last summer. And she was driving us around rural Michigan. And it's just a Ford-- Ford Focus-- not Ford-- anyway, it's a Ford sedan. And she's showing us all these bells and whistles, like this camera that watches her. If she takes her eyes off the road, the car will stop on its own.

And I said, what if I just want a car? And I really just want a car. I live in Washington, D.C., and I work in Washington, D.C. The Chamber of Commerce is on Connecticut Avenue right across the street from the White House. I live at the other end of Connecticut Avenue. But it is like demolition derby driving down here during the day. So I want-- the first day I had-- I got one of her old cars actually. The first day I had it, somebody hit me out in front of my son's school. And I was just like, I got to get to work. Have a good day. I want an old car because I had to deal with that every day.

You cannot get a normal car anymore. The average price is exorbitant. And I think consumers are going to eventually rebel against that-- that no, I don't want the camera that's watching me all the time. I don't want all the bells and whistles. I just want a car to get from A to B and costs a reasonable amount and I don't have to finance in a really big way. And I think the pressures with higher interest rates and just the higher prices in general will lead to a pushback on being forced to pay for the higher margin-- the higher-priced vehicles.

And I think that also plays in with the electric vehicles. I think that-- I assume that the auto manufacturers want to move to electric. They're getting a huge amount of pressure from the current administration to do away with the internal combustion engine and move to electric. But consumers are not quite there yet. But again, they're more expensive. That's why the manufacturers will want to go there because it's a higher margin price. The same thing happened with the light bulbs going to LED lights. But when it comes to cars, it's going to come back to basic market forces. Which is, do consumers-- are they willing to pay exorbitant prices? Or where are the most consumers? Are they willing to pay the higher prices? Or are they like me, they just want a car that if they get hit, they can just let it go and move on with their day?

JAMES WOULFE: Right. OK. So we heard you talk a lot about the commercial real estate sector. I want to touch briefly on the residential real estate market. So we've got high interest rates. We've got low inventory. It's really putting a squeeze on folks, especially first-time homebuyers.

(DESCRIPTION)
The Money Supply Below Pre-Covid Trend graph reappears. 

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Do you see any relief on the horizon at all? Are we going to need to wait for rate cuts? Or what are you seeing there? 

CURTIS DUBAY: A really good question. Hopefully, you can see the-- can you see the mortgage rate chart?

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A graph is titled, Average 30 Year Fixed Mortgage Rate Below Recent Highs (6.7% as of 3/14/24). U.S. Chamber of Commerce. The graph has an x-axis that extends from January 2022 to March 2024 and a y-axis that goes from 3.2% to 7.7%. The line on the graph rises steadily from 3.2% in January 2022 to just under 7.2% in November 2022, taking a brief dip around August. It dips down slightly after November, then rises slowly and steadily, reaching 7.7% in November 2023, then sloping down and leveling off around 6.7% near January 2024. 

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JAMES WOULFE: Yes. 

CURTIS DUBAY: I've got really, really bad news for you if you're in the housing market. It’s not-- prices aren't coming down. So mortgage rates have gone up. These have already incorporated in all the rate increases and then the rate cuts coming in. That's where they're going to stay for the foreseeable future-- between 6 1/2% and 7%, average 30-year fixed-rate mortgage.

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A graph is titled, Home Prices are Rising Again. U.S Chamber of Commerce. The graph has an x-axis that extends from January 2021 to January 2024 and a y-axis that goes from negative 2% to above 18%. A horizontal dashed line stretches across the graph at 0%. The line on the graph is identified as Case-Shiller Annual Home Price Increase. It rises from below 13% to above 18% from January 2021 to around June 2021 before leveling off. It begins sloping back down, reaching 0% around May 2023. It rises again, ending around 6% in January 2024. 

(SPEECH)
But this is the more unsettling one-- which is that home prices are rising again. So they came down sharply in the aftermath of interest rates going up. Now they're rising again. And this all comes back to supply and demand, as everything does in economics. We have an imbalance. We have way more demand than we have supply. So we have a lot of demand because-- I talked about the millennial generation; they're aging into home-buying age-- they want to buy homes. They're having families. So demand is up, but supply is badly constrained.

It's constrained for two reasons. One is that we have just not built enough units. And this is, again, for every market around the country. It's 2 to 3 million units short across the country. We have not built enough in the aftermath of the financial and housing crisis in 2008. So now we're at year 16 of not building enough. And you can see it very clearly in the data. Building tails off, and it has not caught back up. So we're not building enough units. And that has a lot to do with, sure, the aftermath of the housing crisis, but it also has to do with really cumbersome permitting and zoning law-- permitting rules and zoning laws makes it really hard to build new units and very costly. 

And then the other thing is there's been a change in the preference for existing homeowners. This is partly driven by higher interest rates recently, but it predated that. This has been going on for a while. People are staying in their homes much longer than they used to. There is a hesitancy, a reticence to sell homes, where there wasn't before. So if you look back in the data, usually there's six months of supply on the market. Now there's regularly three months-- three months of supply. So people are just not selling their houses at the same rate they used to. And that has led to large shortages. And that will mean-- so if you're an existing homeowner, it's great because prices are continuing to rise. If you are a new homebuyer, you're going to be facing higher prices and higher interest rates for the foreseeable future.

JAMES WOULFE: Wow. OK. All right. Moving on. So you touched a little bit about generative AI. We've got a lot of questions on this. And I know we talked about this a little before this webinar. It's on the top of mind for folks in virtually every sector of the economy. And you mentioned automation and mechanization. What impacts are you seeing from AI now in the economy? Where do you see us in the next one to two years? Is it replacing jobs? Is it just helping businesses get more efficient and they're going to keep folks on-- as you mentioned before? How does that look with AI?

CURTIS DUBAY: Yeah, I think it is all those things. And AI, at least right now-- to me-- is like any other technology that's come along since the beginning of the Industrial Revolution. And what it means is it's going to make workers more productive. It makes us more efficient and more productive. It means that we'll all make a lot more in the long run. There'll be disruptions in the interim. That will certainly occur. But we've seen that the American workforce is incredibly adaptive in the aftermath of COVID. I think one of the reasons why wage growth has remained so strong is that a lot of people moved from jobs they didn't like necessarily or that weren't all that remunerative-- so service-type jobs, retail, leisure and accommodation. They took the time during COVID to upskill. And now they're in more higher-paid, better jobs, jobs that require more skills that they were able to acquire during COVID.

The same thing with AI. It frees people to do jobs that have more value-add that machines and computers cannot do. So it will make us all more productive. I think that's part of what's going on with the productivity data-- that workers are a lot more productive when you can have AI working off to the side. And, by the way, I have not tried to incorporate it yet. I really need to-- working off to the side, drafting memos, drafting emails, doing the type of stuff the AI is good at or assistants used to do, things like that.

I think it's really boosted the productivity of a lot of workers around the economy, which is feeding back into their pay because they're able to do the more highly valued tasks, which means their employers can continue to pay them more. So AI is one part of it. Automation-- just using software-- all these things that we're seeing. So the basic-- the one that we have the most interaction with is the kiosk-- order kiosks at fast food restaurants, but--

JAMES WOULFE: Right. 

CURTIS DUBAY: But a really good example is an Amazon warehouse-- that they're moving-- or it's not even just Amazon. All companies use these kind of-- they're not-- "warehouse" is not the right word. They call them distribution centers, but they're really kind of modern marvels of technology. Robots and mechanization does a lot of that work now, when it used to take a lot more people going from aisle to aisle, picking things and forklift operators and all that. A lot of that is done mechanically now. And we're going to continue to see that as we go forward.

We could see it-- I don't know that this is all that imminent-- the self-driving cars-- and that would mean a lot of truck drivers are put out of work. But if it's more efficient and less costly, that would be a good step.

So there are a lot of different ways, but I think this is evolving, and it's evolving faster. And it feeds into a lot of the reasons why we see such good economic data.

JAMES WOULFE: OK. All right. Let's go to audience Q&A now. We're getting a lot of questions about the public debt reaching 35 trillion recently. Is that sustainable? How much higher do you think this can go? I see you smiling. So I'm guessing you've gotten this question quite often, I'm sure.

CURTIS DUBAY: No, it's not sustainable. But it hasn't been sustainable for a lot of years now. I used to work at The Heritage Foundation. And part of my job was to go around the country and talk about how debt was on an unsustainable trajectory, and we had to get it down, and here's our plan for doing that. And that was 2008 to 2016. No one cared. And it's only gotten worse since then.

They cared for a couple of years-- around 2010. Remember, we had the Tea Party wave. No one cared. That means politicians didn't care.

There was a brief period-- again, I said 2010-- but then, in 2016-- and by the way, I hate to get too partisan on this stuff, but there's only one party that ever cared about or indicated they cared about spending. Democrats, not their thing. They're not going to cut spending. It's not on their radar. It was on Republicans' radar. But in 2016, they had 19 options to choose for president. One of them didn't care about the spending and debt and deficits at all, and he won. So we've gone in one direction-- we've gone in the opposite direction. So Republicans don't care now either.

Yeah, no one cares. They're not going to do anything. There'll be absolutely nothing done on debt and deficits between now and January of 2029 because you have two major party candidates who don't care. It's not part of their agenda. It's not something they're going to talk about or touch. And if the president doesn't care, Congress will not take it on.

So we will continue to accumulate debt at an unsustainable level. And that's just the way it's going to be. I don't know what the end result of that all is-- whether that-- and at the end of the day, people around the world will continue to lend to us because we're the United States of America. Yeah, it's a lot of debt, but-- I'm not advocating this as a solution-- we have the taxing capacity to pay it off if we wanted. It would be painful. It would be awful. It would hurt the economy. But we have the income to back it up.

So maybe the impact doesn't come for a long time, but the bill will eventually come due. And I think it's going to really pick up in the next couple of years because interest, as a share of the budget, will continue to eat up a huge part-- a bigger part of the budget because interest rates are rising. So you add that to rising spending on Social Security because of the aging of the population-- the same with Medicare-- and there's going to be a real squeeze on the discretionary parts of the budget, which members of Congress really love to increase because it gives them ribbon cuttings and things to point to when it comes to reelection time.

So there will be a lot of talk over the next four years, but just really no action because there's just no appetite for it at the top of either party.

JAMES WOULFE: OK. All right. Another question coming in. So how concerned are you that economic growth has been concentrated in tech and this Magnificent Seven rather than spread broadly across other industries? Is that something you're concerned about or is that not so much a concern?

CURTIS DUBAY: I think that's kind of largely how it goes, that there are industries that lead the charge when it comes to growth. So it doesn't concern me too much. And then you kind of see-- what you want to see is that you have new businesses cropping up. If they're in one industry, that might be interesting. But just look at where we're going now. We're going away from necessarily the-- I forget the number, but-- so Amazon, Microsoft, Google, Facebook-- those were the group, and a few others, that were leading the growth. Now we're switching over to AI. And we see new companies emerging in that industry and in that field. And we see an incumbent-- an existing business, like Google, really struggling with AI and trying to keep up with the new entrants.

So it doesn't bother me because I think the economy still remains dynamic. And that won't remain the case forever. Those companies will be surpassed. Microsoft is a really good example of evolving, though. They've been a very good company to evolve from operating software to what they are today. Those companies will evolve and be very good companies, but the growth will be led by a new wave that might be more efficient with AI or whatever comes after that.

JAMES WOULFE: OK. All right. Well, it's hard to believe-- we're almost at the top of the hour. We're going to have one last question for you today, Curtis. Just what are some economic indicators that we haven't discussed today that you plan to keep a close eye on? Is there anything else out there that you're keeping a watchful eye on as we go into 2024-- or 2025, rather?

CURTIS DUBAY: I'm looking through-- that's a good question. I think there's two things that I will point to that I didn't talk about. One is we didn't talk about energy prices. We didn't talk about oil. Really hard to gauge. Oil prices remain high compared to where they were, say, a couple of years ago. But they'll continue to fluctuate. I don't have a good read on where they'll go in the next six months or anything.

But the other big one is the U.S. dollar as the reserve currency. I get this question all the time. Which is that-- will we be surpassed? Will there be a new reserve currency for the global economy? And my answer is, not in our lifetimes. Absolutely not. The U.S. dollar will remain the reserve currency for a lot of reasons. And the biggest ones being, we're the biggest economy, we're the strongest economy.

In addition to that, all evidence to the contrary, we have the most stable political system. But, more importantly, we have the deepest, most robust and most liquid financial system, backed up by a very strong legal system. There's just no other country, or group of countries, that can offer all those things to lenders around the world-- to people who just want to retain a store of value in their savings.

So they're going to continue to come here to-- say, if-- it wouldn't be a dollar, but their currency-- exchange it into a dollar. I put a dollar in there. I'm not even worried about return. Will I get a dollar back when I want to get it out? And if somebody says that it's not mine, can I get a fair shake in the legal system? There's nowhere else to go for that. And the same thing goes for a flight to safety. So when things go badly around the world, where do you put your money? You bring it to the United States. So we will remain the reserve currency, at the very least, for the rest of our lifetimes.

JAMES WOULFE: Right. Well, thank you, Curtis. This has been an incredible discussion. We hit on so many of the high points on this topic, and just really appreciate you coming on the webinar today.

CURTIS DUBAY: Happy to do it. Any time.

JAMES WOULFE: All right. And thank you to everyone in the offices and at home for joining us. We so appreciate you tuning in. There's a link to our survey about today's program in the chat. Please let us know what you thought about this session.

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Text, Wednesdays with Woodward (registered trademark) Webinar Series. Upcoming Webinars: Apr. 8th - How Technology Innovations are Improving Distracted Driving Data and Advancing Safety. Apr. 24th - Ripple Effect Leadership: Building High-Trust Teams in a Low-Trust World. Register: Travelers Institute dot-org. 

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And then we've also got a great lineup of webinars coming up as well. On April 8, we'll have a special Monday edition of Wednesdays with Woodward live from the Lifesavers Conference on Roadway Safety. We'll explore how technology can help assess crash rates caused by distraction, improve data collection and promote safer driving habits. 

Then, on April 24, we'll sit down with leadership expert Chris Rollins to talk about inclusive leadership and how leading with vulnerability and empathy can transform the workplace.

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A video icon sits above the text, Watch. Travelers Institute dot-org. Travelers. The LinkedIn logo sits above the text, Connect. Joan Kois Woodward. A microphone icon sits above the text, Listen. Wherever you get your pods.

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As always, visit us at travelersinstitute.org for registration, replays and more.

And if you haven't already, connect with Joan Woodward on LinkedIn for highlights about our web and in-person programming. Thank you again to Curtis, to the U.S. Chamber of Commerce and to everyone online for joining us today. For Wednesdays with Woodward, I'm James Woulfe, signing off. Thanks, everyone. 

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Text, Travelers Institute (registered trademark). Travelers. Travelers Institute dot-org.