Deep Dive: Inflation, Interest Rates, & Real Estate with Doug Duncan | Part 1 #882

Douglas G. Duncan is Senior Vice President and Chief Economist at Fannie Mae where he is responsible for forecasts and analyses of the economy and the housing and mortgage markets. Duncan also oversees strategic research regarding the potential impact of external factors on the housing industry. He leads the House Price Forecast Working Group reporting to the Finance Committee.

 Named one of Bloomberg/BusinessWeek's 50 Most Powerful People in Real Estate, Duncan is Fannie Mae's source for information and analyses on demographics and the external business and economic environment; the implications of changes in economic activity on the company's strategy and execution; and for forecasting overall housing, economic, and mortgage market activity.

Prior to joining Fannie Mae, Duncan was Senior Vice President and Chief Economist at the Mortgage Bankers Association. 

In this episode:

• Fannie Mae's role as an insurance company for mortgages
• What are the housing market drivers?
• Housing market trends and consumer sentiment
• Federal Reserve's role in regulating banks and controlling inflation
• Fed's inflation target, debt, and monetary policy

The Norris Group originates and services loans in California and Florida under California DRE License 01219911, Florida Mortgage Lender License 1577, and NMLS License 1623669.  For more information on hard money lending, go www.thenorrisgroup.com and click the Hard Money tab.


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Narrator: 0:01

Welcome to The Norris Group real estate podcast, a show committed to bringing you insights from thought leaders shaping the real estate industry. In each episode, we'll dive into conversations with industry experts and local insiders, all aimed at helping you thrive in an ever-changing real estate market. continuing the legacy that Bruce Norris created, sharing valuable knowledge, and empowering you on your real estate journey. Whether you're a seasoned pro or a newcomer, this is your go-to source for insider tips, market trends and success strategies. Here's your host, Craig Evans.

Craig Evans: 0:43

Hey guys, thanks for joining us this week. While we were recording, we had some technical difficulties, but man, did it turn out to be a blessing in disguise. Joey was able to work his magic and was able to get Doug Duncan to come in the studio with us at one of my sales centers, and we were able to interview him in person. It has been a long time since The Norris Group has been able to have people in studio. Let's get to it. Douglas G. Duncan is Senior Vice President and Chief Economist at Fannie Mae where he is responsible for forecasts and analyses of the economy and the housing and mortgage markets. Duncan also oversees strategic research regarding the potential impact of external factors on the housing industry. He leads the House Price Forecast Working Group reporting to the Finance Committee. Named one of Bloomberg/BusinessWeek's 50 Most Powerful People in Real Estate, Duncan is Fannie Mae's source for information and analyses on demographics and the external business and economic environment; the implications of changes in economic activity on the company's strategy and execution; and for forecasting overall housing, economic, and mortgage market activity. Prior to joining Fannie Mae, Duncan was Senior Vice President and Chief Economist at the Mortgage Bankers Association. His experience also includes work on the Financial Institutions Project at the U.S. Department of Agriculture and service as a LEGIS Fellow and staff member with the Committee on Banking, Finance, and Urban Affairs for Congressman Bill McCollum in the U.S. House of Representatives. Duncan received his Ph.D. in Agricultural Economics from Texas A&M University and his B.S. and M.S. in Agricultural Economics from North Dakota State University. Doug, it is so good to have you on the show.

Doug Duncan: 2:38

Great to be here.

Craig Evans: 2:39

I'm going to tell you when I met you last year, you know, I knew this was coming with me taking to Norris Group, and I told Joey as we were leaving, I said you were the first person that I wanted to get scheduled. You know, I knew retirement was coming up, so I thank you for taking time out to do it before you, before you retired.

Doug Duncan: 2:57

Looking forward to.

Craig Evans: 2:58

I guess the question is, retirement still coming, or is have they drug you back in and what's godfather?

Doug Duncan: 3:04

Well, it's still coming. It's maybe a little further out than the original plan, but okay, we reached a compromise on the end of this year.

Craig Evans: 3:12

Good, good. So is Mark still taking over?

Doug Duncan: 3:15

Well, yeah, he'll be promoted to Chief the 22nd of September, and I'll step down from that, and then I'll leave the company december 27 I think it is.

Craig Evans: 3:25

Good for him.

Doug Duncan: 3:26

Yeah, he's well deserving. Yeah, absolutely.

Craig Evans: 3:29

It will be in good hands. He is a brilliant man, brilliant man. So definitely, listen, I've got a lot that I want to get to our audience today. So if you don't mind, I'm gonna jump right in with some stuff.

Doug Duncan: 3:37

Let's do it.

Craig Evans: 3:38

So Alright, so we've got a lot. You know, we just did our first event two weeks ago in Riverside, and it's, I love the fact that we've got a lot of people in our audience and that follow The Norris Group that are new in the industry of investing and real estate and that whole process. So, can you do me a favor? Just start out, kind of walk our audience through what Fannie Mae does, what's the the whole principle basis for?

Doug Duncan: 4:00

Sure, the easiest way to think about Fannie Mae is as a big insurance company. So if your company sells a house to somebody, and a bank finances that, and they don't want to hold that loan in their portfolio, they can bring it to us, or else they can package it with a bunch of other loans and bring them to us, and we'll issue a security, or guarantee, a security they want issued backed by those mortgages. And what we tell the investor is, you buy this security, we'll charge you a little insurance premium, and we will guarantee you whether the borrowers pay their mortgages or not, will forward to you the principal and interest as promised to you on a schedule. So basically insuring the loans. We don't actually talk to any consumers, unless at maybe the end of a foreclosure process that there's a problem.

Craig Evans: 4:57

So are you selling that back to institutional or what is the...

Doug Duncan: 5:01

Can be institutions, banks hold mortgage backed securities. Can be private investors. You could actually buy one if you if you wanted to. They're sold in the capital markets.

Craig Evans: 5:12

Okay, okay, very good. Well, so I've heard you talk many times, you know, other than just at I Survived and done a lot of research with hearing you speak. I want to ask the question, but I think I know, what factors do you monitor from the, that are driving the housing market? I guess that's

Doug Duncan: 5:38

Well, people have asked me why I've been in real the best way to ask it. estate all my life. And I said, Well, it's because every human on the planet puts their head down on a piece of real estate every night, and always will so always be part of the human story. So from that perspective, it's interesting. Second thing is, there's a need for different kinds of housing for different people, some apartment buildings, some single family rental homes, some own your own home, some college dormitories. There's a whole range of real estate. I didn't even mention any of the commercial kinds of things.

Joey Romero: 6:29

Right.

Doug Duncan: 6:29

But there's lots of different places that you can that you can make a career that is really adding value, socially and personally to people, to me, that's attractive.

Craig Evans: 6:42

Right.

Doug Duncan: 6:42

I grew up in a house without plumbing, until I was I forget eight or nine years old. That was in western Minnesota, and in January, you generate an appreciation for indoor plumbing. Let me just say it that way.

Craig Evans: 7:00

So as a forecaster, what are the what are some of the biggest things that you look at, though, that are drivers of housing market?

Doug Duncan: 7:08

Obviously, the demographics, how many people there are, what kind of households they're forming? That's the basis of it. The second thing is, then, do they have jobs? Because you're going to have to have an income. If you're going to borrow money to buy a house, you have to have an income. So you have to watch employment. Then you have to watch how do people manage credit? If they get their first auto loan, did they pay it back on time? When they get their first credit card? Do they pay it off? All those kind of things. How do they manage credit? The those are probably the key things that we look at, is employment, income, credit. And they there an interesting way to think about it is we make 30 year fixed rate loans to people. The average turnover of the entire US workforce is 18 months. Really, on average, entire workforce turns over in 18 months. Now, lots of people work on their job for 30 years. Sure, there's some that are seasonal. They change every year, that kind of thing. There's an assumption here that in this economy, incomes will grow over time. So if you take out a 30 year fixed rate mortgage and you make payments for the first three or four years, chances are your income will significantly grow away from the size of that payment. And it's it's really not the risk that it might seem to be at the outset. Sure. So those are things we watch. We obviously watch the performance of the overall economy. We watch what interest rates are doing. We right today. Inflation is the item number one. I just gave a presentation that showed that affordability today is at the lowest level. It's been since the period of 1980 to 85 so this is what 45 years later we've gotten to this level of lack of affordability.

Craig Evans: 9:20

So do you think affordability is one of the key driver or do you think it's number four or five down the line for you?

Doug Duncan: 9:28

It certainly is. If I think back to when I bought my first house, I was 40 years old, interest rates were eight and a half percent at that time, but they'd come down from 15. I got it from Sears Mortgage, if you remember. So it's key for the household that's going to borrow money, it has to be within a range, obviously, Fannie Mae re underwrites those loans. To see are the is the risk acceptable? We look at things like loan to value, look at the credit scores, those kinds of, those kind of metrics to see.

Craig Evans: 10:09

So do you think the the the metrics that we're talking about, you know, we've got, like, you say, demographics, employment, credit ratings, affordability, things, do you think that in today's time, do you think with the economy where it's at now? Do you think those are becoming constraints on the market?

Doug Duncan: 10:24

Oh, unquestionably, this is the most affordability constrained market we've seen, like I say, in almost 45 years. It's two things. One is the interest rates, and that was driven by the rise in inflation and the Fed's attempts to get inflation back under control. But during the pandemic, you saw a huge appreciation in house prices two years in a row, something like 15 to 20% depreciation, depending on where you are in the country. So when you put much higher house prices combined with much higher interest rates, obviously that's going to put a lot of people on on the edge or off the edge in terms of affordability.

Craig Evans: 11:04

Yeah, the last two years of that has been super, super interesting it's what's happened with that, and there's been so many people buying and making decisions based off what they thought appreciation would be kind of harkens back to another time, a few decades. Yeah.

Doug Duncan: 11:20

Yeah. The interesting thing comparing this to say the great financial crisis, is that the underwriting criteria weren't nearly as stretched this time as it were in that time. Yeah? Fog a mirror. Get a mortgage, right?

Craig Evans: 11:36

You could sit on the curb and your feet touch the ground. You could buy 5000 right?

Doug Duncan: 11:40

Yeah.

Craig Evans: 11:41

...you could maybe buy 10.

Doug Duncan: 11:43

I will never forget a ride in a town car in San Francisco. It was 2006 and the driver is like, what do you do? And I told him, I wasn't. He's like, Wow, are you got a bunch of investment homes? And I said, No. He said, Well, what do you think about the Las Vegas market? And I said, Why would you ask? He said, Well, I own some properties I'm intending to flip in Las Vegas. I'm like, so if a San Francisco Town Car driver has got speculative homes in Vegas, we're probably coming to some trouble. That's right, we certainly did

Craig Evans: 12:24

Well. So let me ask you this, one of the pillars, if you want to talk about that you mentioned, was employment. You know, obviously, in the housing market, that that's a key, people have to have a job to be able to afford. In 2024 with the amount of non traditional jobs that are out there, you got so many people that have either added second or third, you know, they're driving Uber and just doing different things. How do you see that affecting what the metrics looks like for you guys, when you were doing forecasting?

Doug Duncan: 12:56

Well, we actually experiment with different kinds of information to understand if there is sustainable value in measuring things. So we would, you know, part of our mandate as a company is to support affordable housing. So take, for example, the fact that rent payments are not included in under have not in the past been included, but if you've paid your rent on time and rent has gone up, and you continue to pay your rent on time for three or four years, it's a pretty good indicator that you're capable of taking care of your finances. So we've started an initiative to try to capture rent payments to add that to the underwriting process. You mentioned gig economy income. So is it sustainable? Is it? Is it sort of like just casual spending money so that you're I've talked to a couple drivers Well, on the way, taking the kids to school, on the way back, I'll see if I can pick up a ride and add $30 or something, because I'm going to do it anyway. That may or may not make it into underwriting for income. But if, if you have that and can establish an earnings record document that earnings record, it can possibly become part of the underwriting for for your qualification for that loan, we do have rules and permissions related to other household members making contributions to the household, or to the income that qualifies for underwriting. If you think about this accessory dwelling unit, move to add a little place, maybe for your mother in law, in the backyard, but there's income off of that that can qualify under some conditions. So we're always trying to figure out what other ways we can validate that are sustainable, that add the ability to qualify.

Craig Evans: 14:57

You're making some stuff written. Are talking about some things that now it's bringing more questions to my mind. So your national housing survey just came out. Headline was, 86% of consumers say it's a bad time to buy a home. Did that survey encompass the whole country? Talk a little about how you share that. You know, how long does it take? And I guess the second question that is, if that's the case, how long from your experience of studying data and forecasting, have you seen that it takes that sentiment to kind of spin and flip?

Doug Duncan: 15:38

So we started this survey in June of 2010 because we saw headlines saying that the millennials have learned the lessons of their parents. If you buy a house leveraged, you're going to lose the house in all your wealth, and they want 300 square foot apartments with amenities. We were like, really one, so we had one financial crisis, and the whole culture of the country changed. We just don't see that. So we started the survey using all the federal science bind, all the federal surveys. So it's to replicate this, the reliability of it. 1000 households a month, every month, since June of 2010 so the first month 90 or 92% of millennials, we can sort by age and various demographic characteristics, said we eventually own our home, but we need a job, and we need an income, and we need to manage credit, and then, you know, we might get partnered up, or, as my mother would say, well, cohabit with benefit of clergy and so, and then we're going to buy a house. And so we watched them in, I think it was November of 2014 we said, Now, the problems are going to be supply because here come the millennials. Because for three and a half years we had in the crisis, we had fallen from 1.6 million single family homes constructed to 400,000 and we stayed at 400,000 for three and a half years, the whole supply chain went away, or 75% of it, right? So the builders have been fighting against that ever since then, because the millennials did show up, just like we thought they would. And we've been talking about supply for a decade now, and it's still the case.

Craig Evans: 17:38

It was funny. My mother was in real estate sales for over three decades, and towards the end of her, her run of selling, you know, she ended up having cancer, survived, still with us, but we went through a process that we started getting things to where, you know, people were coming in and saying, Hey, we want to buy, we want to buy homes. I want something, you know, I want to buy a resale. That's two years old. Well, again, this was 2011, 2012 was like, There's nothing here.

Doug Duncan: 18:12

Yeah.

Craig Evans: 18:12

Nobody's built anything since late, right? So, exactly, and, and so I started watching that, studying that. It started becoming interesting, which I'm sure you guys are doing a lot of the same, probably on a much more macro level, to be able to see that, you know, here are, I mean, here are houses that, literally, they just stopped, yep. And now you've created a situation to where, on a resale market, typically, people are buying homes that are, you know, four to six years old. Listen, there's been nothing created.

Doug Duncan: 18:41

Right.

Craig Evans: 18:42

And it took so long for even a modicum of that to speed up. Now you got a 10 year lapse on it, and they're like, Well, okay, so now I've got to look at a 10 or 15 year old house?

Doug Duncan: 18:51

Right.

Craig Evans: 18:51

Well, forget it. I'll just buy a new house and, well, okay, but get in line, because now there's...

Doug Duncan: 18:56

Right, exactly, yeah, the share of first time buyers who are buying new homes is the highest it's been for many, many years. Again, decades, right? So you asked about how we could tell in the survey how fast things were going to change? So that June of 2010 at that time, you would see something happen in the market, and maybe three to four months later, it would register in the survey. Today. It happens today. It registers in the survey tomorrow. People have an iPhone.

Craig Evans: 19:36

Oh yeah.

Doug Duncan: 19:36

That goes 365, days a year, 24 hours a day, and the information flows constantly across that iPhone. It's a contemporaneous check of attitude is what it is. It's a dramatic change in information availability and management. So consumers are very savvy. If it's of interest to them, the data are available to them on that all in real time.

Craig Evans: 20:01

Yeah, I hadn't thought about that because you think about it, especially from a governmental standpoint, you're waiting on surveys to come out, and we're getting them in the mail, and you check stuff, or you don't, you throw them, and somebody doesn't fill it out. And I had not thought about the amount of data that really would be available just because of what's on our smartphones or iPads, whatever it is.

Doug Duncan: 20:20

Yeah, it's real time. It's so it's a today. What are they thinking? And the reason we did the survey was we like to match attitude and action. The lesson there was in the great financial crisis. You remember the cash for clunkers?

Craig Evans: 20:35

Oh yes, yeah.

Doug Duncan: 20:36

So if you looked at consumer attitudes, they were terrible, because it was this recession on unemployment had gotten to 12% or something like that. But if you're going to give somebody $4,500 to buy a car they were going to buy anyway, they are opportunistic, right? So you have to be careful with the attitudinal surveys, because consumers are opportunistic, as they should be, right? So what we like to match to see is there a mismatch, and can we explain the reason for the mismatch, if there is between attitude and action?

Craig Evans: 21:10

So I want to get into one thing I know is probably on everybody's mind, inflation. Um, before we do, I was, it was interesting. I was asked this question three times to, you know, when I was out in California, I was asked three times as to, really, what does the Fed do, right? You know, Craig, talk to us about this. So I thought it was interesting that there's still kind of the unknown about what that is. So, can you walk through, for our audience, of like, what's the nuts and bolts really? What the Fed's job is? And then what do they really do?

Doug Duncan: 21:45

Yeah, they have a couple of responsibilities. One, they're a regulator. So they regulate national banks and holding companies from a performance perspective. So you will have heard of the stress tests. That's something. So they'll require bank management to to estimate what their behavior would be under different difficult economic circumstances, to determine the safety and capitalization level of the banking system. So that's so they have a regulatory hat, then they have a monetary policy hat, and that is, they have a dual mandate. They are charged with the stability of the price level. That's the inflation mandate and the maximization of employment. So their tools are really crude. They can manage interest rates. It's a stretch. It's difficult for them. They're they've given, been given this mandate. It's a difficult mandate. The the way that they go after inflation is by raising the federal funds. Target rate. That's the rate at which banks lend to each other overnight, right? So they'll when they want to slow economic activity, they raise the fed funds target. So in this most recent episode, when inflation ran up to 9% or something like that, in an annualized basis, they raised that fed funds target up to where it is today, which is between five and a quarter and five and a half percent, right for so they're going to keep it there for a while, because they haven't gotten inflation back to their target. Now, they set a 2% target. Usually I give a homeowner a homework assignment, so I'll give you a homework and Simon the to and the reason is to give you some insight into this 2% target. Okay, so the Fed releases the minutes of its meetings three three weeks after the minutes or after the meeting, right? But they release a transcript five years after. So that's who said what that it's by name, right? So there, there's a little window there for of time. If you go back to July of 1996 you will, you can find that on the Fed's website. You will hear a really interesting discussion between Alan Greenspan and Janet Yellen on whether they should name a target rate of inflation. And it's a very vigorous discussion I would I don't think Mr Greenspan would be upset if I said that. You could truncate his view in the words You will rue the day you pick a percent, but that's where they are. The Fed is, and, you know, there's various arguments for and against, but that's their target, and they're not there yet. Yep, and we've I produced. A table I just delivered it to the board of directors that shows all the different ways that you can calibrate either CPI or PCE, which is actually the Fed's preferred is core PCE, any way you measure that, it's still above their 2% target. So it's a tough job, and I would say it's being made tougher today by the size of deficits and outstanding debt that we are running, which is going to put upward pressure on interest rates for a substantial period of time. We're in a new environment now.

Craig Evans: 25:37

Well, that was one of my questions, the match the metrics that they're using to calculate where they see inflation need to be, and what they're shooting for, how they're going to judge, I shouldn't say judge, but how they're evaluating where their Fed rate should be. Do those metrics still hold water today, or do they need to be in your eyes? Do they need to be looking at other things? Because I've been questioning, hey, when you've got this much debt, tacking on, there's a certain aspect that has to come into play on that at some point in time.

Doug Duncan: 26:07

Well, they're, you know, they're careful to delineate their responsibility for monetary policy from fiscal policy, and the debt and deficits aren't function fiscal policy. And that's the responsibility that people that we vote for, right? So we can blame ourselves on that front legitimately. We're the ones that fall so I certainly don't blame the Fed for that, and it is a distinct function of our system to keep those things separate in that way. That doesn't mean that the Fed isn't cognizant of the impact of fiscal policy, and in their deliberations, they certainly have to think about, what does it mean that we are running these levels of deficits and accumulating this level of debt. So one of the things that you see in the markets is now more attention, much more attention than in the past, is being paid to the announcements that Treasury makes about what they intend to issue in terms of debt, because that will impact where what the yield curve looks like, right? Not just the level of it, but also the shape of the yield curve. And there that the size of that debt is very influential in that so the Fed has to think about that and understand what the implications of that are as they are making policy.

Craig Evans: 27:40

So if you were chairman, would there be any other metrics that you would want to look at?

Doug Duncan: 27:45

You don't want me to be the Chairman. First of all.

Craig Evans: 27:51

Would new metrics get? Do you think new metrics would get more accurate results? Maybe that's a better way to look at it.

Doug Duncan: 27:57

Well, I, I don't know all the metrics that they look at. Okay, so I I don't know that there would be anything new. You know, most of them have degrees in economics, just like I do, so I would think that they would look across the spectrum of things that are measurable, that it would have cause and effect characteristics, and think about them. Obviously, the they're always thinking about, are there better ways to more accurately measure inflation, for example? So how the PCE and the CPI came into existence? There were several questions in the press. Most recent press conference about the contribution of housing to the measure of CPI, and the chair may rightly made this statement that Europeans have a different system, and they don't capture the housing piece the way that we do in the US, but he thinks we capture it correctly in the US. So I think that the proper answer for me is probably there are different theories on how macroeconomics works and some people believe primarily in one theory, Keynesianism or monetarism or a couple. There's, I think, five theories overall. So you can be an adherent to one. My observation is that if anyone was always completely correct, there wouldn't be the other four right. So I think to some degree, it's situational. So in some circumstances, Kansas, right, it's. Helpful to stimulate demand by running deficits, but Keynes also said the deficit should be retired as fast as possible during recovery. That part's not getting handled very well on the fiscal policy side. So situationally, I think things, things matter. The was monetarism, right? Well, clearly, if you keep pumping money into the system, and supply isn't growing as fast as the stock of money that people have to spend, the price is going to go up, right? The demand pressure will push prices up. So they each have something to offer. And I think their deliberations, I would guess their deliberations include all of those things.

Craig Evans: 30:45

So you know, the the Federal Open Market Committee met last week, Sharon Powell, indicated that the Fed likes where the balance of the labor market and stabilization of prices is at, but that the monetary policy needs to is, I'm sorry, likes where it's going and needs to remain unchanged. Everyone, throughout this whole year has really said, Hey, and a lot of this goes back to what you said about naming, you know, kind of what Greenspan says, Not naming a point of drop off, so to speak, everyone's expected kind of that three, three plus rate cuts this year. You know, it's been all over the news, all over the market, everybody's everybody's talking about it. Now it looks like we may be lucky if we get one. How much does what the Fed does in that process affect how Fannie Mae conducts business?

Doug Duncan: 31:42

Well, obviously we we try to undertake hedging in such a way that we're neutral to what happens in the capital market. In our forecast at the outset of the year, we had three cuts. If you recall, after the December press conference, the market put in seven, we're like, yeah, that's going to get walked back. And sure enough, it quickly got walked back. So the market is arguing with the Fed. We want rates to come down. The Fed, measuring inflation, recognizes it's not at their target, is still above their target. So we had three cuts in at that time, but then the first three months of the year showed a reversal of inflation, so we took that out, and we let in the past month, we moved to one cut in December. Now, if they get three more that the most recent data on CPI was pretty good at CPI. We'll see what PCE right says. But if they get three solid months moving in the right direction, it's not unreasonable to think they could actually move, excuse me, move that cut up to September previously, when we had two cuts in it was December and September, right? But we kind of felt they'll need to see it moving strongly in the right direction, so that in August, when they have the meeting at Jackson Hole, which they typically have, they could condition the market for a cut in September. I don't know they're going to get there.

Craig Evans: 33:22

Well, and I guess that was my question, is, if we see another good, a few good months with it, with the PCI reports and things coming out of that, do you think that it's realistic that we can see some in September, or...

Doug Duncan: 33:34

My forecast is what I believe is true, yeah, which we see the cut in December.

Craig Evans: 33:39

Okay.

Doug Duncan: 33:42

So it's funny, people ask him, what's your real forecast like? So I'm lying to the public? And then...

Craig Evans: 33:52

Oh, so Chairman Powell, when he was talking last week, he was talking about the Fed funds rate staying at five and a quarter, five and a half, he said something I thought was interesting. He mentioned that the economic outlook is uncertain and that yet they remain highly attentive to inflation risks. What do you think the risks are that he's talking about? Maybe an unfair question, because I'm asking you to read his mind, but...

Doug Duncan: 34:22

Well, you know, he talked at length about the labor market, so one of the questions is there wage pressure in the labor market that would be a contributing factor in inflation? Answer is probably not there. He was pleased with the direction that the labor market is going. It's the unemployment rate has gone up, ticket at a time, up to 4% which, if you went back 20 years and asked any macroeconomic forecaster, what do you think of 4% unemployment? They'd be like, well, full employment. Are you getting an inflation?

Craig Evans: 35:01

Right. Exactly.

Doug Duncan: 35:02

So rightfully. The Fed can be pleased in the progress that's been made there. I think they they have been clearly focused on the supply side of the economy. At the outset of the of the the run up in inflation. They got pilloried because they used the word transitory in describing it. I actually, I kind of make a joke pulling your leg a little bit. I keep the Oxford, I actually do keep the Oxford English Dictionary, which is two volumes sitting next to my computer. So I looked up transitory and the first definition is not permanent. I was like, well, that's a I can drive my Ford f1, 50 through that whole. So life by that definition, is transitory, right? But, you know, obviously it turns out there was an element of it which was transitory, and that was the part that was the temporary bottlenecks that emerged when businesses had to figure out how to keep their supply chains going, when their employees might be at risk from a disease that we didn't really understand, right? So that part did turn out to be transitory once we got a hold of understanding the disease and how to manage in that environment, all that lineup of ships off of Long Beach disappeared, right, right? So that was right. They were right about that. The piece that was not transitory was the restructuring of supply chains globally, and that's still underway, and that's time consuming and expensive. So that's another element of things that they've had to think through.

Craig Evans: 36:46

All right, everyone, be sure and tune in next week as we continue our conversation on inflation.

Narrator: 36:52

For more information on hard money loans, trust deed investing, and upcoming events with The Norris group. Check out thenorrisgroup.com. For more information on passive investing through the DBL Capital Real Estate Investment Fund, please visit dblapital.com.

Joey Romero: 37:11

The Norris group originates and services loans in California and Florida under California DRE license 01219911. Florida mortgage lender license 1577 and NMLS license 1623669. For more information on hard money lending go to thenorrisgroup.com and click the hard money tab.