Navigating the Economy in 2021

[MUSIC PLAYING] EMILY BIGHAM: Hi. And welcome to the podcast, MakingCents, brought to you by Navy Federal Credit Union. I'm your host, Emily Bigham and each week I'll be taking your questions to the experts to help you make sense of your money, pun intended. 

Hi, and welcome back to MakingCents. Today on the show we have Robert Frick. He is our corporate economist here at Navy Federal. Bob, how are you? 

ROBERT FRICK: I'm having a good day. How about you? 

EMILY BIGHAM: Oh, I'm having a good day as well. The sun is shining. Weather's turning around. I feel like people's attitudes are turning around. And feeling good. 

ROBERT FRICK: Yeah, good. We just had our driveway topped. It's nice and black and perfect and smooth. And when you live in upstate New York as long as I do it, that's like the epitome of home remodeling is having a nice driveway. So I am unnaturally happy about my new driveway. 

EMILY BIGHAM: Nice. That's awesome. Yeah and I wonder how long it's going to take until the pollen starts to coat it because I was feeling really good about my very crisp clean new car and then two days later it was covered in pollen. But I did just get it washed so it was kind of like you just feel so good about having something just redone or washed or taken away and you can start fresh, I kind of feel like that's the attitude of the United States right now. 

ROBERT FRICK: Now you totally ruined my good feeling because I realize I'm going to have a yellowish green driveway now probably for the next three years. So thanks. 

EMILY BIGHAM: Well, you know what, I mean, hey. We also have those afternoon thunderstorms. It is the spring on the East Coast. So every day it'll clear it up. But so I do have a little bit of an agenda for us today. Typically Bob I like to just kind of chat with you because I feel like you and I just have so much to talk about and I love all of the topics that you cover here at Navy Federal. And before I kind of go over the agenda, do you want to for the listeners who are maybe first time listeners or we haven't spoken in a very long time, do you want to talk a little bit about what your role is at Navy Federal? 

ROBERT FRICK: Sure. So I mean corporate economist. And I talk a lot to the media about our view of all things that we do. Auto loans, mortgages, interest rates, all that stuff. I also do a lot of internal reporting and I speak to people around the company about the one specific to their particular businesses. I was a business journalists for 30 years and that's my background. And kind of how I got into this role is I used to cover all of these things that we do home, auto, credit cards. 

EMILY BIGHAM: I was thinking about why I have so many topics that I want to cover when I talk to you and I think it's because you take on so many different perspectives when you're pulling together the various reports or just the different things that you do. Because not only are you covering what's going on in the economy at a high level so we can make sure that our lending products are gauged in the right direction, but also you think about the consumer. And in the past year consumer sentiment has probably been all over the place a little bit. Can you talk a little bit about what you've seen there on the consumer side? 

ROBERT FRICK: Oh yeah. 

EMILY BIGHAM: Economics? 

ROBERT FRICK: Yeah. Well, consumers were very depressed for a long time. We actually never hit the bottom that we did right after the housing bubble because that crash actually affected many more Americans it just wasn't as steep as the COVID crash. But just in the last month and I'm sure we're going to get back to this theme over and over again, consumer sentiment is way up. It isn't back quite to pre-COVID levels, but it's going to get there in the next couple of months I feel sure. Because vaccines are out, the weather's warmer, people have an incredible amount of money. Not everyone, but most Americans are in good financial shape right now because of all the stimulus. 

EMILY BIGHAM: I've done a lot of research on this lately and I've been listening to other economists as well talk about this and it's a little bit confusing to me the consumer sentiment. I mean, it makes sense that given all of the cash that the government's been handing out consumers are happy. They do have a lot of money like you said. But is that almost a false sense of security because that is money that is just being printed by the government? 

ROBERT FRICK: Well, that gets into the whole idea of deficit spending. All this is going to come out to bite us that we're another $5 trillion in debt. And I actually just did a very short position paper, white paper, on that. And it is true that our level of debt has only been this high right after World War II when we went into debt to pay for the war. But there's a huge difference because interest rates are so low now the US government is actually paying less on its debt than it was five years ago even though we've added trillions. So you have to balance those two things. 

Yeah, our actual level of debt is higher, but what really counts is how much do we have to pay in interest? And that's relatively low. So the future is uncertain. So I'm not going to say it's never going to be a concern, it probably will be a concern, but not in the next few years at least. 

EMILY BIGHAM: Right. So I was thinking about that as well because it seems like short term things seem really good. But when you are a consumer or a small business owner and you're trying to plan strategically maybe five years, 10 years, is that a cause for concern? Like how are you supposed to make large financial decisions like a mortgage that's going to be a 30 year mortgage, how can you feel secure in those big financial decisions? Or for instance my parents are thinking about selling their small business. My dad's a physician and they've been going back and forth on this. And I think they're just a little bit reluctant to make a big decision either way because they're not sure again what's going to happen in the next three years, five years. Do you have any advice for people in that topic? 

ROBERT FRICK: Well, we are at a time right now in which there's a lot of uncertainty because we've never been in a time like this. We've never had to recover from such a deep depression. We've never been coming back from a pandemic and we're not out of that yet, although we're making good progress. So there's a lot of uncertainty. I get that. What does the next three years look like? In the next three years looks good. For one thing, we're going to be getting jobs back although it's probably going to take a couple of years until we get back to pre-pandemic levels. 

For another thing, yeah, we went into a lot of debt. But that's not going to bite us in the next few years. And that means that people are going to have a lot of money. The things I worry about is how is the economy going to restructure? So if I, for example, own commercial real estate that wasn't retail at least I'd be pretty concerned right now because a lot of people have left their offices never to return. On the other hand, there's a lot of great opportunities right now. You mention small business. There have been more small business filings, filings to open small businesses, in the last six months than at any time in recorded history. So a lot of people see that they're going to be able to rebuild. And that's America, right? That's the entrepreneurial spirit. 

A lot of people see that they're going to either be able to restart their own business, start a slightly different business, or start a new business to take advantage of all this money and all the boom times. Which are certainly going to be this year where we're going to have at least a 6% GDP, which is historically high, and into next year. So if I were making decisions right now I would wait two years and then after that who knows. But we never know what's going to be three years out. I mean, a year and a half ago we had no idea there's was going to be a pandemic. So good things can happen, bad things can happen. But we know the next few years are going to be good. 

EMILY BIGHAM: So back to the topic of new businesses. The amount of new businesses that were started I guess during the pandemic, was that a direct reaction to the PPP loans? 

ROBERT FRICK: No actually that was something different. Really what it was was people recognizing-- now this is America's entrepreneurial spirit that businesses have to change. They're going to be new business opportunities. I may have closed my business, but I'm going to reopen it again in a different guise. Yes, there are certain segments of small business which are really been hammered. Restaurants, for example. But there are other aspects of small business. I mean, internet commerce which are absolutely booming. And if you're in one of those businesses or if you're starting one of those businesses, the next few years are going to be a great time to launch a new venture. 

EMILY BIGHAM: Is that kind of what you mean when you say economic restructuring? So for example, if you have a small business that you started 20 years ago and maybe now is a good time or the opportunity to pivot into something that's a little bit more relevant. 

ROBERT FRICK: You should at least retool. I have a couple of friends who are small business consultants, small to medium sized business consultants. And what they've been counseling their people to do is take a breather. Get your PPP loans if you need them just so you can kind of tread water for a while. But think about what the new economy is going to look like. And for a lot of them that means their whole sales function is going to change. It's going to move to the internet. So they're going to be hiring a lot of programmers. 

A lot of them, if they can, are thinking about if they make a product which is used in the home or might be used in the home really play that up because people not only have been nesting while they've been at home during COVID, there is going to be I think and a lot of people think it's going to be much more focused on the home, where you live, how your home is. I have a cousin who owns a hot tub business. And they are booming right now. They can't be doing more business. And you'd think that would be letting up now, but it's not. 

EMILY BIGHAM: I wish I had space for a hot tub. Let me tell you. 

ROBERT FRICK: I wish I had a wife who wanted a hot tub. 

EMILY BIGHAM: [LAUGHS] 

ROBERT FRICK: We have the space. 

EMILY BIGHAM: That's funny. 

ROBERT FRICK: But not the will. 

EMILY BIGHAM: Well, I think people just spend so much time at home. Like I'm sitting we're at home right now and I'm recording this podcast. And I'm kind of looking around like, god, I've been looking at that couch for like 13 months now. And it's a nice couch, I'm kind of sick of looking at it. So I wonder if that's part of it. But then also what's going to happen when people start going back to work? How is that going to impact the economy? The price of oil is going up. There's a lot of things that I want to be really positive about, but at the same time there are some concerning reports that are coming out. I mean, first of all, we have the rising cost of goods. But then also if it's transitory and it's coronavirus and we're kind of a global economy at this point imports, exports, the rising cost of oil. If there are other countries who are impacted by a second wave or if they take stricter measures than the United States, doesn't that impact us also? So how much control do we even have over inflation and rates at that point? 

ROBERT FRICK: That's a really good question. And the answer is not much. And the Fed for years was trying to get inflation up to 2% and they just couldn't do it. They kept rates low. They kept shoveling money in. And they couldn't get inflation up to their target. And 2% is kind of like a really good pulse. That's like 60 beats a minute, right? It's not too high, it's not too low. It shows the economy is on an even keel. 

So the Fed really can't control inflation that much. They can use kind of these rules like inflation goes up, they jack up interest rates and that slows down the economy. And that's kind of like giving medicine to a patient. The medicine works but the patient dies. It's just not a good strategy. So the Fed is changing that strategy. 

But you mentioned just speaking about inflation. It's not high yet. We just had an inflation rat this month or this week rather. It's not up. It's low. It's not even 2% yet on an annualized basis. So the inflation barons are saying all this bad hyperinflation is coming. There's no evidence that's going to happen. And you mentioned international. Globalization keeps our prices low. Think about this. When we import goods from India, China, Mexico, Vietnam, those are cheap goods. And that essentially means we're importing deflation. 

Above and beyond that, we're exporting jobs which is not good. Right? We're exporting jobs to places like India. I happen to know someone who is in charge of essentially collapsing a back office unit of 40 people in Virginia and opening a unit of 40 people in India working at 1/10 of salary. So not only are we importing cheap goods which keeps inflation low, we're exporting higher wages which keeps inflation low. Again, that's not good for the people lose their jobs. 

But if we're just talking about inflation, I'm not worried about inflation. It may spike. It may go up to 3% for a couple of quarters. Fed's going to hold firm. And then when the economy boots up, there's always inflation because there's shortages and prices get bid up. Rental car prices are going through the roof. When airlines really start flying again, airline tickets are going to be fabulously expensive. 

EMILY BIGHAM: Oh, they already are. Let me tell you. 

ROBERT FRICK: Are they? OK. 

EMILY BIGHAM: I just flew back from San Diego and the price of my ticket, I was like, I am upset. The last time I came here it was so cheap and there was no one on my flight. 

ROBERT FRICK: Right. 

EMILY BIGHAM: This time it was way more expensive and there were people on my flight. Which, you know, it's a good sign that people are out and about and like you said spending money. But it was just so funny. I was like, yeah, people probably forgot what normal life was like and now you're going to be seeing-- I mean, the line at Trader Joe's the other day was like wrapped around. It was shocking. 

ROBERT FRICK: Well, if you drive south as often as we do we have two of our three daughters now live in Wilmington, North Carolina. And my wife just took a trip down to see our daughters because she's vaccinated. I am not so I had to stay home. And she got caught up in an hour and a half gridlock. And she was complaining about it and I said, yeah, but you know that means the economy's coming back. So it's a double edged sword. 

EMILY BIGHAM: It is. It is a double edged sword. But it is really nice to see that people are out and about and spending money and going to restaurants. And that's how it's supposed to be. That kind of environment and atmosphere is what makes people happy. 

ROBERT FRICK: And there's so much pent up demand for that stuff. They call it revenge spending. And I'm not sure that's a good term, but the idea is people who are so hungry for services travel, restaurants, et cetera, et cetera, in-person commerce basically face-to-face commerce and travel, they're just ready to spend. The issue is they're not going to be able to spend because a lot of those services aren't going to be quickly available. Or as with airfares, when they do come back they're going to be so high that people aren't going to want to spend on them. And obviously they'll come down in time. So there's a lot of things that are going to keep-- this gets back to your inflation question. There's a lot of things that are going to keep people from spending as much as they want and that's also going to keep inflation low. 

EMILY BIGHAM: So I understand the part about different services not coming back. And I mean, that makes sense to take time to hire. And I think I saw that the job openings number is at a record level as well. So to me that means that businesses are coming back and they're posting jobs. But people are not taking those jobs. I do think that that's going to become a competitive market. 

ROBERT FRICK: I think people look at the the JOLTS number, those job openings numbers and read them wrong. And you can have crazy high and crazy low job openings numbers and they don't really mean much of anything. You have to really parse those numbers. So the fact that there's a lot of openings out there and people say, oh well, there's no one there to get them. There's no one there to take them. Well, by in large that's not true. A lot of times people just post a job and they're just fishing for someone to hire. And they don't even expect to hire them or they have to post it because HR says they have to post it. 

So I don't look at those JOLTS numbers now and think people don't want to work or people don't have the skills. It's not an epidemic of problem. It's not an epidemic kind of problem. It's just what happens when an economy boots up again. It solves itself in time, it always does. The thing I worry about as far as jobs goes is there's a certain number of people, 70% of workers, who have good jobs. Remember my example people work in back office operations. This is for a big consulting accounting firm. Those are gone. Office worker jobs are gone and [AUDIO OUT] because only a portion of the people who don't work in offices anymore are going to go back. People are going to need to be retrained, education and training. And that takes time. 

Also, there's a lag between when people realize their job is gone for good and when they really get on their horse and start looking for a different job and get new training. That takes time. So that's why it's going to take at least a couple of years for us to get the jobs back that we lost. Not because the economy isn't reopening fast enough, it's because the nature of work has changed for many Americans. 

EMILY BIGHAM: Well, you bring up a really good point. Well, first of all, I would like to say that you are definitely calming my nerves because a lot of the things I've asked you about you don't seem to be very worried about so that makes me really happy. And I need to find similar I guess resources or sources to read. I need to read what you're reading so I can sleep at night. But as far as the different jobs that are coming back, have we seen a rise in automation in the past year just because of the fact that human beings weren't necessarily able to do certain jobs because of the restrictions? Have they found ways to use technology instead? And is that replacing human beings in that? 

ROBERT FRICK: That's common. And you go to CVS or even a lot of grocery stores and there's self checkout. 

EMILY BIGHAM: It's good too. I mean, the self checkout has really improved. 

ROBERT FRICK: Yeah. I have to agree. Self checkout and Apple Pay, man, that is wonderful. And there's a lot of automation. And industrial automation, that started years ago. And that's going to continue. It's not going to accelerate particularly. I have a lot of contacts all across the country in different forms of commerce. And I talk to people in manufacturing. One of them is my old roommate from college. And I asked him about how's their automation going? And they're pretty much fully automated by now. And the people they hire have computer skills to set up the machinery that's going to do the work. And they have quality control experts. So you have statisticians. 

So the days of them hiring someone to slap a weld on a pipe or bend a pipe or fabricate something, those days are gone. But the employment level is gone. But the people who work there now have high skills which are transferable and they're constantly getting upgraded. And that's a much better job. I mean, I used to work in Rochester, New York and there was two big automotive parts manufacturing plants there. And I'd go there and I'd interview guys and women there and they just were miserable. And their jobs seemed miserable to me. And when their jobs started changing and becoming more technical and a lot of them would get say associate engineering degrees, two year engineering degrees, which allowed them to do higher skilled technical work within manufacturing plants, much happier. Much more money. And those who didn't want to do that, they had to go on to other jobs. Sometimes lesser jobs, sometimes different jobs. 

So I'm not worried about automation so much as I am just these huge changes in how people are going to be working. Again, office workers going to be way down. Big shifts in health care workers. You can pretty much go down the line and you can see which occupations are going to be most affected by COVID. And my back of the envelope calculation is probably about three or four million Americans up the back who aren't going to have those jobs. I mean, restaurant workers. There aren't going to be as many restaurants because we've gotten used to take out. 

I don't know about you, but now that we've spent a lot of time and money in our house, I'd much rather get good take it out and sit out on our deck and have a couple of friends over than go through the restaurant experience which is hit or miss. Right? I mean, I love a good restaurant. 

EMILY BIGHAM: Well, I mean for me it's less about my wanting to stay at my house it's so nice, it's more about my not so great cooking skills and the fact that I'm sick of cooking for myself to be honest. I've tried. I've tried to make that one of the things that I improve while I'm at home and spending all this time at home, but I just have the same things that I go to. And it is really nice to have different cuisine. So I mean, that is good news about the jobs. But if I were in someone's shoes who lost their job due to COVID and then let's say I'm not going to get it back because of technological advances, but what should I be doing? I mean, yeah, you can say, oh, well, just go and learn some new skills or up your skill sets. Well, how? How do you do that and where do you start? And do you have to go through formal training? 

ROBERT FRICK: The first thing and this is a behavior problem, especially if you have a passion for certain kind of work, you have to get over the fact that you love your job but your job or your industry no longer loves you. And so you've got to move on. You've got to do something different. I was in the newspaper business in the 1990s. And the newspaper business was collapsing as the internet was rising. And I got the best piece of advice I ever wanted to get I could ever have hoped for. Because an analyst said, look, you can get another job. You can go be a business editor somewhere else. But then that job's going to disappear unless you move up to the New York Times, which I didn't want to do. You're always going to be sitting on a shrinking iceberg. It's time for you to get out. 

And I went into magazines after that. And that lasted for about 15 years and then that iceberg started to shrink. But if you can't find a job or the job you find doesn't pay as much as it did before COVID, don't expect that's going to get any better at least no time quickly. The thing to do is just get online and Google where the jobs are. And start at your local community college or see if there is a course you can take online and reskill. But make sure when you reskill that once you get that skill, there's going to be job ready for you when you get out in six months or a year or a few years. 

I've been giving that advice for many, many years. There comes a point in which you're basically in a situation that is not going to work for your personal prosperity. Sometimes it's where you live. Again, I was in upstate New York in Rochester. And tens of thousands of Kodak jobs disappeared and were never going to come back. And tens of thousands of Kodak workers wished they would and sat around and collected unemployment. And then finally either moved out took lesser service jobs or reskilled. And the ones who reskilled were definitely the happiest. I've had to move many of them and I know a lot of them. But they made that decision. 

Sometimes you can't make incremental changes and expect to have a big improvement in your life. Sometimes you have to make big improvements in your life to expect big changes. And a lot of Americans are going to be facing [AUDIO OUT]. In fact, I tweeted the other day, Robert Frick NFCU, that I wished journalists, again, I used to be one, I wish business journalists would start doing stories on people who have essentially been COVIDed out of a job and what they're doing to change professions. So I'm right there with you. That's a really good question. And that's the best answer I can give. And the answer, there's no easy solution. Play the lottery. Win the megamillions. But there's no easy solution. Sometimes you have to make a big change and even take some risk in order to improve your situation. 

EMILY BIGHAM: I think part of it too is that people are used to getting things immediately. 

ROBERT FRICK: Yes. 

EMILY BIGHAM: And that kind of goes back to automation, technology, take out. I mean, you can see where the driver is on the app delivering your food. So people are used to just immediacy. And I know I tend to be a little bit impatient. But I do know that when it comes to my job and skill sets and things like that, I'm always looking for ways to pivot. And I know small incremental changes or improvements will eventually get you to where you need to be. I think people expect immediacy. Even with things like the stimulus checks, that was a direct deposit into your bank account for most people. And it's passed and all of a sudden see a ton of money in your account. 

I mean, how are you supposed to go-- and that also goes back to the psychology behind it. Right? I mean, you get that immediate feeling and the dopamine and the serotonin and all of that. And then you have to think about, OK, well now I'm looking for a job. And I've had to do this many interviews and these people didn't call me back. And that's just something that you have to do. That everyone has to do. So I'm going to switch topics from that. I'm staring at this whiteboard that I have where I have all of these things I want to talk about. But I do want to pivot a little bit to housing because this whole renting versus buying, the housing market, the soaring price of houses, rates are still low. What's going on there? 

ROBERT FRICK: Well, the bottom line is after the housing crash 2008, 2009 a lot of home builders went out of business. In the decades of the 2010s, so basically the last 10 years, fewer houses were built in the US than were built during the worst decade to that point, which was the 1940s when everybody was building stuff for the war effort. So there's a tremendous dearth of homes in America right now. And people want homes. There's still millions of Americans who are really in tough shape. And we have done I think as an institution everything we can to help our members who are down on their luck financially. But there's still millions of Americans who are down on their luck, but most Americans aren't. 

And most Americans are making more money now than they did before the pandemic. So there are a lot of people with a lot of money. They're buying what houses there are. Those can't build them fast enough. They're restricted because lumber, land zoned for building, and labor, the three L's we call it, are all working against building houses more quickly. So we're not going to build ourselves out of this anytime soon. So the housing situation is not good. 

I saw an amazing statistic, which I should have known because I talked to our mortgage people, but it's something like a third of houses bought haven't even been built yet. People have bought the land and contracted with a builder. Like my oldest daughter, she and her husband essentially became their own general contractor. They bought a lot from someone who couldn't afford the payments anymore and they hired a builder and they built this beautiful house. That's getting harder and harder to do. 

So I don't have any good news when it comes to housing. There's been a lot of forbearance's, people don't have to pay the rents. That's going to end. If you want a house, you have to be incredibly aggressive. And the thing I tell people is if you can't afford the house you want, buy a house with potential. The house I'm standing in right now, it wasn't nearly as nice as the house we left in upstate New York because housing in the D.C. area is so expensive. There are a lot of things we looked at and cringed. 

Well, over the years we've redone everything. And it's a nice house now. And we didn't have the money at first and we just had to save, but we got into a house and now our house has tripled in value as all houses around here have done in the last 20 years, 25 years. So mortgage rates are not going to get any lower, but mortgage rates aren't the biggest thing you need to be thinking about right now. You need to be thinking about a house you can afford and buying it before prices go up even more. Prices were up 15% in the last year. That's incredible. I mean, that is housing bubble rates. 

EMILY BIGHAM: Is it bubbled or is it demand? 

ROBERT FRICK: Well, yeah, that's a good question. And I was just going to say there's a scarcity and that's supply and demand. So the supply is low. And the demand is strong, but it's not crazy like people flipping houses and stuff in the 2002 through 2005. So it's not crazy bubble stuff. If there were more houses on the market, I'd say we were in a housing bubble right now. And there may be some contraction. 

EMILY BIGHAM: Well, so is it also potentially like a shift of-- and I have no idea there's even a way to measure this, but it could be there are people who are in their current home and they've also purchased a new home and they're waiting to move in. But then how do I even phrase this question? The percentage of I guess the rate of people who are looking to buy or have bought a new home and are moving, is that just really, really high abnormally high? 

ROBERT FRICK: That really isn't a factor. Americans are moving at the lowest rate in history right now. 

EMILY BIGHAM: OK, never mind. 

ROBERT FRICK: Yeah and there are a lot of reasons for that. A lot of baby boomers are retiring, they'd like to move but they can't because the place where they wanted to move, the housing prices have gone up. But also COVID has had a real-- I believe, and there's scant evidence to support this point of view, but I just have some anecdotal evidence. People around my age, I'm in my 60s so, have been super paranoid about COVID and rightfully so. And so they've been sheltering in place and not even thinking about moving. 

We have neighbors across the street two doors down good friends of ours who've been planning their move forever and they're moving to North Carolina the Raleigh area and they are finally moving in a couple of months. But what they had to go through, they bought a house that was still under construction. They sold their house here. There going to be kind of living I think in one of their sisters homes for a while. But they've had to jump through all these hoops just to make this work because they've delayed because of COVID. And both of them are older than I am in their later 60s. So they got their shots and now they feel safe to move. 

I have a feeling and we'll see if it's true or not that we're going to see a lot of existing homes come on the market this spring with vaccinations. I wish I could say that because COVID levels were so plummeting, but they're not unfortunately. COVID levels are actually up and COVID deaths are actually up. Obviously not at levels we've seen before, but that's worrisome. There are a lot of reasons for that but I think we'll get licked by the end of the year but COVID's still an issue. 

EMILY BIGHAM: Well, and that's another thing that is again, something I think that might be in the back of people's minds. Is like, OK, well, I want to take this big step to finding a new job and learning new skills. But that uncertainty part of it, I mean, that's just killer for a lot of people. 

ROBERT FRICK: I think COVID is an uncertainty for some people. I really think we're going to see, I know we're going to see a boom 2021 and I bet it extends into 2022. It depends on what industry you're in. It depends on if you have a job or not. It depends if you're one of those people with more savings as opposed to people who have exhausted their savings and have run up debt. It depends on your individual situation. But I would not let if you have a job and you're in a fairly stable industry, I wouldn't worry. If you don't have a job and are worried that your job is gone for good, I'd start looking for a new profession. 

EMILY BIGHAM: Well, Bob, you've made me feel a lot better today just let me tell you. So we should have these conversations more often. 

ROBERT FRICK: I can't believe it because usually the roles are reversed. I'm the doomsayer and you're saying, why are things so bad, Bob? But no, things are good. Six months ago I predicted that we'd have fewer jobs in December and everybody thought I was crazy. And we did it. And I predicted that along with the third COVID wave we were going to see a tremendous spike in people losing their jobs and we did. But now everything has changed. We've seen a real sea change in the economy. And that's going to continue for at least a year. 

EMILY BIGHAM: Another thing that you predicted on the last podcast was well, I think you did mention the fact that in 2021 we would see the economy bounce back and it has. We were talking about the third stimulus and we did get that. Do you think there's going to be another stimulus? Do you think it's going to be necessary to get us to whatever that next step is in this proposed economic boom? 

ROBERT FRICK: I don't think we need a third stimulus. Though I do think we need to probably extend unemployment benefits to millions of Americans who are going to run out of them in August and September. But I do hope that the parties get together and fund, not go into debt, but fund an infrastructure plan or plant because the US is a C minus country as far as infrastructure goes. And it really hurts us. Plus the jobs that we create that will be created are good trade jobs. We need carpenters, pipe fitters, we need our manufacturing companies to make heavy equipment get a big boost. All that's going to be terrific for the economy is going to build good blue collar, middle class jobs. And we need many more trades workers in the middle class. We've lost so many of them. And that isn't good for the economy in general. 

And broadband is something that we should be ashamed about. The fact that we don't have broadband in a lot of rural areas when pretty much every other developed country does. Why do people who live in a rural area get second rate internet? That's really harmful to them in so many ways, including education. 

EMILY BIGHAM: You make a really good point. And I do look forward to seeing that type of stuff, the infrastructure. I was reading something about and I don't even know if this is relevant, but water shortages in California and Oregon. And I just couldn't believe it. I think there's a lot of things that have been overlooked that we haven't been taking care of necessarily and it looks like maybe we are now putting more of an emphasis on just doing the basics the correct way. 

ROBERT FRICK: Right. Well, in California the infrastructure would be to build snow machines because your folks don't have enough snow out there which is why water is so low. And I don't know the reason for that, climate change or whatever. But we have to build infrastructure that addresses that. How can we have the same cities, the same quality of life using fewer resources? Those are infrastructure questions. And water is one of those things where you have it or you don't. And the only thing you can do is just build more efficient systems. 

EMILY BIGHAM: And sometimes you have to pause in order to fix things. I think we're always like rush, rush, rush. And talking about the impatience of people because some things are automated and some things are so fast that the minute that you don't get a response right away or get what you want right away, everyone's in a tizzy. And I'm glad that we're looking towards doing those things those basics in the correct way. 

ROBERT FRICK: I hope the two sides get together and we can pull it off. I really do. I don't think people understand that for every dollar you spend on infrastructure and I mean traditional infrastructure, you're going to get at least a dollar and a half back in the economy. And people are critical of-- I won't put my thumbs up on every type of infrastructure. But Pre-K-- my wife is just leaving a multi-year job as director of a preschool. The kids get and so the benefits the economy gets through pre-K education is been documented over and over again. 

And we're one of the worst countries when it comes to having mandatory pre-K programs available. You don't have to send your kids, but most people do. And that means their kids start first grade just right out of the gate and become great learners. And don't we want that for our kids? And don't we want that for the economy? 

EMILY BIGHAM: That's a good point too. And then the impact, we won't know the impact of this past year on kids who have been schools. But I haven't heard of such wonderful things across the board. 

ROBERT FRICK: I know. And it really depends on your kid. I have a granddaughter and this kid is like up at dawn. She actually wears her school uniform to go in front of her computer and be in her virtual classroom all day. If I had to do that at her age, she's nine, I would have flunked out. I would have been selling newspapers or apples on the corner because I don't have the kind of discipline she has. I was a pretty lousy student in general at her age. But some kids are going to do fine, some kids are going to excel, but many, many kids have lost a year. And that's tragic. 

EMILY BIGHAM: Yeah. I guess it does depend on and also depends on your home environment. I can't imagine people who their mom and dad are both working from home and the kids are also trying to do online schooling. I just I really cannot imagine that scenario. And so I think that that's probably another reason why we're seeing such optimism is because we are heading into summer. It just feels like everyone's going to get a break. 

ROBERT FRICK: Yeah. One of the great things in the last jobs report was all the teacher jobs have come back. I mean, state, local teacher jobs. You know 50,000, 100,000, 150,000. And that's just the beginning. And so by certainly the fall all the teachers are going to be back and we'll be back at full staff. And both my parents were teachers so I have a soft spot for teaching, but man, we don't pay teachers enough. And the fact that so many of them have lost their jobs and have been on assistance for all these months I feel real badly. I'm grateful that they're going to be coming back. 

EMILY BIGHAM: Yeah. I think that everyone is going to be grateful come fall. I mean, it seems like the summer kids will get a break from school and then a lot of the larger companies have been saying that they're going to have workers coming back into the office. So that gives people a bit of time to plan which I think is good. I think announcing that early is probably a really smart move so people can get their home life situated. 

ROBERT FRICK: Yeah. Well at Navy Federal, many of us will be returning. Some of us will probably be only going in a couple, three days a week. And I think that's great because I think we found efficiencies. I know with what I do, I miss going into work but I also if I couldn't stay home two or three days a week, I'd miss kind of the efficiency of rolling out of bed and just working like 7 to 5. And just really crushing it. You can't do that when you're in the office. You really can't. 

EMILY BIGHAM: Yeah. I think it's also the balance though. I find myself doing really crazy hour. I mean, I wanted to though. Everyone was working crazy hours to try to help everyone and help members. And then I think teams are really good at helping out when one team member couldn't necessarily be online certain hours and because of kids or whatever. I think everyone at Navy Federal really stepped up in that way. But it was hard to find a balance. It really was. Especially for someone like me where I really truly, I really do love my job and I learn something every day so I'm very engaged. And if something comes up and it's 6:00 PM, I don't care I want to work on it because I just I want to and it helps members. And it sound so cheesy but that's a really big deal. 

ROBERT FRICK: No. It doesn't sound cheesy to me at least, it doesn't sound cheesy at all. But if you're in a company that is always looking for new business and if your real estate has changed and if your client needs a change, it's been a real struggle. And I think that's something that has been hurting the economy in the last year. 

EMILY BIGHAM: Well, Bob, this has been a lovely conversation. I have kept you way too long. But I want to kind of end it on a positive note, not that this hasn't been truly positive, but I want to bring it back to your outlook for the next few years and some of the optimism that you had. The fact that existing home sales this spring is going to pop, some of those other, give me some of your natural optimism for the next few years. 

ROBERT FRICK: Well, I'm neither optimistic or pessimistic. I'm sarcastic. 

EMILY BIGHAM: So you're dramatic. 

ROBERT FRICK: Right. I'm dramatic. No, I'm realistic, Emily. I'm a realist. 

EMILY BIGHAM: OK. Well, that's what people say about me too, dramatic and I'm a realist. 

ROBERT FRICK: You say it better than I do. So I'm a realist. A year ago I was pointing at the economy and saying, man, things are really going to get bad. A lot of people were saying, oh, you're exaggerating. I wasn't exaggerating. And then last time we spoke I said, it's going to come back but we hadn't seen any signs of it yet. The first quarter is going to be the quarter in which we turn the quarter. And that's exactly what happened. 

Unfortunately, I wasn't the only person saying that. Many people were saying that. But we were all right. When you look at all the January numbers that are coming in, retail sales, jobs, even consumer price index, it's all up. It's all positive. It all shows that the service sector is coming back. And the service sector consumer spending on services is the biggest part of the economy. It's like 45% of the economy. Goods says another 25% that you have manufacturing, imports, exports. Blah, blah, blah. 

But all these things are what actually happens in the business cycle and people shouldn't be alarmed by it. People should be grateful that we're finally out of this quagmire that we've been in for so long. 

EMILY BIGHAM: Yeah. For a while it felt like phew, was it ever going to end? Well, Bob, it was so great talking to you today. And for listeners who want to find more about your insights, where can they read your stuff? Where can they find you? 

ROBERT FRICK: I've really got into Twitter. So Robert Frick NFCU. I generally tweet-- today I had five tweets. There's some of them about the economy, there's a lot of news today, some of them are just snarky. But all my snark has a purpose because for example I poked fun at people who are worried about high inflation today. And I got kind of a rise. I wasn't trying to troll anyone, but I got a rise out of it. So I would say please follow me on Twitter especially if you remember I guarantee I'll follow you back. I have a lot of great conversations with members in messaging on Twitter. That gives me a lot of great insights. And that would be my number one thing. And if you really want my feed, the best way to do it is through Twitter. 

EMILY BIGHAM: OK. So @RobertFrickNFCU. So it's R-O-B-E-R-T F-R-I-C-K N-F-C-U. Well, now you're probably going to be tweeting and trolling me because I was being so dramatic about inflation. But I was just confused. And I think the short term long term gives a lot of really good perspective. So Bob, thank you so much. Is there anything else that you would like to say before we wrap this up? 

ROBERT FRICK: I think you have completely vacated everything in my brain, Emily. 

EMILY BIGHAM: Me too. I'm exhausted. 

ROBERT FRICK: Yeah, I'm exhausted. So thank you very much. This has been great as always. 

EMILY BIGHAM: All right. Go drive down your driveway. 

ROBERT FRICK: OK. 

EMILY BIGHAM: All right. It was good to talk to you, Bob. 

ROBERT FRICK: Yeah, see you later. 

- Navy Federal Credit Union is federally insured by the National Credit Union Administration. This podcast is intended to provide general information and shouldn't be considered legal, tax, or financial advice. It's always a good idea to consult a tax or financial professional for specific information on how certain laws may apply to your individual financial situation. References to and participation with the military community does not constitute organizational endorsement. Navy Federal is an equal housing lender. Navy Federal Credit Union, our members are the mission. 

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