What to expect next in an uncertain economy with Ernie Goss

Zach Wojtowicz:

Hello everybody. It’s “The Building Code.” I’m Zach Wojtowicz.

Charley Burtwistle:

And I’m Charley Burtwistle.

Zach Wojtowicz:

Charley had a problem with that intro apparently.

Charley Burtwistle:

Well, I didn’t know we were recording the intro right now.

Zach Wojtowicz:

Classic. Didn’t know we were on hot mic.

Charley Burtwistle:

No, I thought we were going to record the out.

Zach Wojtowicz:

This is the level of professionalism that you’ve come to expect here on “The Building Code.” Charley, tell our listeners what’s going on? Great start for Charley.

Charley Burtwistle:

Gosh, what an awful day on “The Building Code.” I’ll tell the listeners. Today we have a very exciting guest Ernie Goss, who is an economist. He’s going to tell us a little bit about his take on what’s happening in the economy and in the world right now. He’s located right here in Omaha at Creighton University.

Zach Wojtowicz:

Right in our backyard.

Charley Burtwistle:

Right in our backyard.

Zach Wojtowicz:

We just went and found the first economist that we could get.

Charley Burtwistle:

Well, the thing is we, that may be the case, but it’s really a blessing that we have someone like him so close to home, because he really is world renowned. He does a ton of different speaking appointments and podcasts and webinars. And luckily he made time in his schedule for us. So very, very lucky to have him. And I think our builders will be very, very lucky to listen to him.

Zach Wojtowicz:

Yeah. And why we thought it’d be a great opportunity to bring an economist on is obviously with the state of the construction industry and in the last two years, it’s kind of been through some ups and downs and interest rates are rising. Inflation’s up, it’s everywhere you go. And so, we’re excited to just kind of ask some questions and learn about what does it look like and kind of how do economists fit into the greater reporting on what’s happening with our industry?

Charley Burtwistle:

Yeah, it’s been cool. Zach and I took over this podcast late 2020, early 2021. And we’ve seen just a roller coaster of guests on here. We’ve talked to how people have to set up their contracts from a legal standpoint, how you need to adjust for the supply chain, how you need to deal with the labor shortage. Just an absolute roller coaster of ups and downs of things that in the past you haven’t really had to pay a lot of attention to. They’ve been pretty steady. So, hopefully Ernie can shed some insight on where he thinks this is going to turn around where we’re heading next, and we can start kind of forward looking and being proactive as opposed to just kind of reacting to everything that continues to change.

Zach Wojtowicz:

Love it. Let’s get Ernie on. Hey Ernie, welcome to “The Building Code.” We’re so excited to actually have you back. You were on episode 62, which would’ve been a couple years from now. We’d love to get a little refresh. A little bit about yourself, your background, for the people that maybe have started listening more recently. Tell us about yourself.

Ernie Goss:

Okay. I’m Ernie Goss. I’m a MacAllister Chair here at Creighton University in beautiful downtown Omaha, Nebraska. Had to shout-out for the city that we all live in, or I think most of us live in. So, I came here from NASA. I was with the National Aeronautics Space Administration. Before I came here, I’ve worked with the congressional budget office as well while I was here at Creighton. And then I worked as a faculty member at California State University in Fresno also. I got my PhD in economics from the University of Tennessee many years ago. So, I do two monthly surveys of businesses, primarily in this part of the country. There are 12 states that we survey here at Creighton University. So, I talk a lot about that and maybe I talk too much, but I talk about that survey a lot. It’s in the press, hopefully. And glad to be on with both of you. And thanks Nicole for setting this up. So, good to be with you.

Charley Burtwistle:

Yeah, absolutely. This is one that I’ve been looking forward to ever since we had it scheduled.

Zach Wojtowicz:

It was your recommendation actually, I believe.

Ernie Goss:

Really? Oh my.

Zach Wojtowicz:

You were like, “Let’s get an economist on ‘The Building Code.’”

Charley Burtwistle:

Absolutely.

Ernie Goss:

The pressure’s on.

Charley Burtwistle:

And timely for sure. Ernie, you were telling us a little bit before we started recording here that you’ve kind of been on a bit of a press tour and if you just do a quick Google for Ernie Goss, one of, kind of the premier speakers in the Midwest, in the country for that matter. So, very lucky to have you here on “The Building Code.” So, you mentioned the survey that you guys do and the speaking, obviously, could you tell us a little bit more about Goss & Associates and some of the work you do at Creighton University?

Ernie Goss:

Well, in addition to the surveys, I’m doing a study right now. A General Motors case, I do legal work also. I did teach in the law school, a joint teaching assignment in the law school at Creighton University. I’m doing studies on primarily renewable energy, believe it or not. Right now, the study in Iowa of renewable energy, that would be wind and solar. Also, CO2 sequestration project with a Canadian firm working on right now. So, those are consulting projects that I’m undertaking. I have a small consulting team, Goss & Associates. So, I work on that. Principally, it involves a lot to do with energy. I worked on the Keystone XL pipeline with TransCanada corporation until our new president came on board, which that project ended quite abruptly. So, anyway, we do a little bit of that. Legal work. I do legal work also, helping defendants as well as plaintiffs.

Zach Wojtowicz:

Yeah, a man of many talents. That seems kind of unique for an economist by trade, right? So, I think I’d like to start there. This isn’t necessarily a question on the script, but what is the work of an economist? Really kind of getting into …

Ernie Goss:

Well, we’re into everything.

Zach Wojtowicz:

Right.

Ernie Goss:

My undergraduate degree, I went to school, my undergraduate in South Florida. Extreme south Florida, if I can say that. In mathematics and accounting. And then I got my MBA at Georgia State. I grew up in Georgia, my first 18 years. Then I went to University of Minnesota. Now this is … I’ve counted them to see, I’ve either taught or I’ve been a student at 14 different universities. I won’t name them off, I’m not sure I could, but I’ve been at Creighton a long time. But even since I’ve been here … I was, as I said, Cal State Fresno, I worked with them as a research faculty member.

So, what do economists do? We dabble in almost everything. A lot of interest is in macro, meaning study of the total economy, if you want to look at it that way, the U.S. economy, in this case. But most of my work early work was in regional, meaning looking at states, looking at regions. And we … I mean, can you imagine this? I’m an economist, of course, I couldn’t have landed in a better place, in a better region, in a better nation than the U.S. Right here is … Why is that? Because agriculture is front and center here. And if there’s any place, we all … We economists, we talk. We say two things. Supply. Demand. Supply. Demand.

Well, that’s where it works, in agriculture. If it doesn’t work in agriculture, it works nowhere else. So, farmers out there have to live it. I study it, they live it. So, when somebody says, do those farmers really …? They know it better than I do. They just live it. I teach it. But hopefully I do a pretty good job doing that. And you have to excuse this, now, this is not mine. This is not original to me, but I loved it when I heard it from Paul Samuelson, Nobel prize winning economist from MIT, he said, “Well, economists, we’re sort of like your five-year-old kid. The first time he tries to spell bananas. You just don’t know when to stop.” B-A-N-A-N-A-N-A. Well, please, when does this stop?

Charley Burtwistle:

That’s pretty good. We might have to put that on a t-shirt.

Zach Wojtowicz:

You got it. We kind of have a running joke, Ernie, that there’s always a t-shirt moment in the episode.

Ernie Goss:

Yeah, a t-shirt moment.

Zach Wojtowicz:

You opened with it, usually we find it a little later in the episode. So, it’s all downhill from here, Charley.

Charley Burtwistle:

Yeah, we peaked early. That’s funny that you mention it. So, I grew up on a small cattle ranch in northeast Nebraska, and you never really, at least growing up, I didn’t realize how much my dad and the other farmers do know about the economy. They’re constantly watching cattle futures and understanding foreign prices.

Zach Wojtowicz:

Yeah. They literally do read the futures market.

Charley Burtwistle:

And most people here at Buildertrend with MBAs probably don’t understand how to read futures and things like that. So, that’s a cool kind of analogy or way of looking through things.

Ernie Goss:

Well, the Iowa Press, I think … No. Iowa Market to Market, they open up by an ad showing what is the most complex industry on the face of the earth. And they come down to, it’s farming. In other words, you have to know the finances of it. Obviously, have to know the production, but the finances that go along with it. Forward contracting, puts and options calls, so on. Obviously, if you want to know what’s going on there, you better consult a farmer, not an economist.

Zach Wojtowicz:

Well, it’s interesting, too. Obviously, we’re a construction focused podcast, so I hear that a lot, too. I think the perception of construction in general is that you just build stuff. And then you get into the minutiae of like … Well, they actually do it. They have to pay attention to the materials market. And we know in 2020 that really started to change. And the last two years have been really, really dynamic, is one word to one way to put it, in the construction economy. Let’s kind of go there, there’s been a lot of change in the economy since 2020. What have we seeing as a result of the pandemic?

Ernie Goss:

Well, now first off, I didn’t give you part of my background. I grew up in a construction family.

Zach Wojtowicz:

Yeah?

Ernie Goss:

I’m the only one that got off track.

Charley Burtwistle:

And became an economist?

Ernie Goss:

Everybody else stayed on track. They’re still … My father was a contractor. My brothers remain builders there in the Atlanta area. And what’s happened, this was a shock to everybody. This is a shocker. The pandemic, we all sort of saw it coming. It sort of was sneaking. We saw it coming this way. And February it began, 2020, and we were all expecting this huge dip in the economy. Principally, construction’s always procyclical, meaning it goes along with the economy. It’s hard for construction to grow when the rest of the economy’s not growing. So, what happened is we had a Trump stimulus program that was very timely. Then we had a federal reserve that flooded the economy with money. The money supply, what we call M2, increased by 35% to 40% between 2020 and today. So, what that did was, this economy just took a dive. A dive. A heavy dive. Not anything we’ve seen, perhaps, even including The Great Depression of the 1930s, have we ever seen anything like this.

Well, it rebounded quickly. I mean, our surveys, national surveys, all of them said, “Hey, this thing’s rebounding.” And construction can print, now commercial, not so much. Commercial has been under pressure today. It remains under pressure. Residential have been doing real well. Apartments, multi-family, still doing reasonably well. If you look at the … We Economists, sometimes we call ourselves … Well, I call myself a soothsayer. Look in your crystal ball, what’s ahead? I don’t mean to be the downer here, but that’s another characteristic of economists. I think you asked about economists. We typically are on the negative side, the pessimist, the gloom and doom. I have a colleague, he and I used to speak together, and he was gloom, and I was doom.

So, looking ahead right now, it’s definitely higher interest rates. Anybody who doesn’t see this one, my gosh, I hope you’re a cloistered nun or a monk, because everybody else is keeping in tune to this. And higher interest rates, at least 1.5 percentage points, 150 basis points on the short end, by October 1.

But construction rebounded and look at what happened. Look at what happened to residential prices, not construction. We’re talking about between that date and today, well even … No, let me go over the last year, 2021 to ’22. Year-over-year, the median price of a home in the U.S. has gone up by 18% to 19%. And mortgage rates have gone up of course, as well, 1.5 to 2 percentage points. When you put that together, the median home, not necessarily in this part of the country, but the U.S., the monthly payment is approximately $700 more per month. That can’t happen without some serious pullbacks. And that’s what we’re going to see.

Now, talking about residential construction. Now, multifamily construction, not so much. We’re going to see people who are not going into housing, going into their own house, who can’t afford it now, are going to be turning to multifamily. Unfortunately for them, rents also continue to move upward, even as housing prices, the price of houses softens, and even comes down a bit.

Zach Wojtowicz:

And is that kind of your expectations of what we’ll see? Will it not only reduce the volume due to interest rates, new contracts coming in for builders? Will the pricing of the homes need to adjust as a result to keep the demand of the construction market a little bit higher? I have friends who, they want to get into homes, they’ve looked at building and they’re like, well, the new builder is charging the same as if I were just to go buy a new house. And so, it’s kind of like, what can I get? It’s a hard decision for them. And so, a lot of them are like, let’s wait for the housing markets to get less hot, higher interest rates. Which will then hopefully correct the pricing to get people into new homes. Will that make building more affordable too, as a result?

Ernie Goss:

Well, I’ll just tell you what I told my niece. She lives in Atlanta. She said she’s been having a difficult time, she’s in her thirties, about buying a house. And I just told her availability’s going to be higher, there going, there will be more choices. Supply will increase. Now, as far as the price, we’re going to see a moving sideways, but a significant down, like we saw in 2008 and ’09, not going to see it this time. Now, back in 2008 and ’09, I have to say my own experience, I bought, I think, 12 houses during that period. We’re talking about foreclosures, those homes went on the market, and I was buying them sight unseen. I still have, I wish I could bring up the sign I get every day, I got calls on my cell phone, trying to buy those houses now. And I haven’t sold. I’ve sold a couple of them, but nonetheless I have property managers that manage it. But the prices aren’t going to come down like that this time.

Particularly on a new house. What we’re going to see in new construction is just, we’re not going to see as much of it. Builders can’t afford to build in this market except on perhaps the high end, very high end. And you’re probably going to see that, Toll Brothers, or whatever, those that build on the high end. But those on the short end, no, it’s going to be higher. But the availability will be much greater as we move out of houses into multi-family, as we die, as we move into nursing homes, whatever. We’ve got a lot of folks that are baby boomers, like myself who are going to be moving out of the labor market, moving into other circumstances.

So, I expect availability to increase. Prices, not as much of an adjustment. Nothing like 2008 and ’09. Thank goodness. That would be just gut wrenching for a lot of people to see that decline in prices. I mean, building materials prices are down significantly from what they were a year ago. However, they’re still pretty rich there. To build a house today, price per square foot, I don’t know the price myself, but it’s still pretty high. And so, that’s what we’re going to see. I see multi-family being a big issue. Here in Omaha, we’ve seen a lot of increase in multi-family, lot of multi-family coming on board. Rents are growing. Rents are going to be higher. And so, renters are going to take it on the chin as they have over the last year.

Zach Wojtowicz:

Yeah. I’m kind of interested to explore some of the survey work you do, to an extent. I actually, before this interview, I just … I subscribe to building blogs and posts and I got an article about the NHB’s sentiment data from builders about how they feel about the direction of the economy and where things are kind of going and the direction. And they’re seeing dramatic drops in how builders feel about the near future and into the next year. Is your surveys also reflecting a similar sentiment? And I know your focus is more on the agricultural side, but it kind of spans across multiple industries, obviously. Just curious how it lines up.

Ernie Goss:

Well, we survey manufacturers in nine states, and we survey bank CEOs in rural areas at 10 states. When you add those together, it’s not 19 states, many states are in both surveys. Sentiment is lousy. We’re talking about some of the worst sentiment numbers since the pandemic, and you can imagine how bad it was in the pandemic. But we economists, sometimes we want to know, not how you feel, we want to know what you do. And I don’t care if you’re down … Well, I do care if you’re down and out, but more important, you get up in the morning and build a house? That’s what I’m concerned about. You get up in the morning and go to work and still … That’s the key. But sentiment, of course, ultimately, has impacts on consumer spending.

Consumer spending, even through last month, it was pretty strong. If you subtract out inflation, wasn’t that strong. But, I mean, I looked at the stock market before we began this webinar, and it’s like whistling past the graveyard. I’m like, are you out of your mind? What is going on here? But believe me, you’re much better off taking Warren Buffet’s investment advice. Ernie Goss has maybe a little edge in economic advice over Mr. Buffet. But as I have sometimes said, if he’ll quit giving economic advice, I’ll quit giving economic advice. I mean, he’s talking about raising taxes a lot. Now, he’s not so much there anymore, but he was doing that. And I’m like, no, no, no. Taxes are not what we need. And again, I know you got many viewers outside of Nebraska, but what you’re talking about is Iowa responded. Nebraska’s not responded in terms of taxes. Nebraska’s taxes are outside the norm where it should be right now.

So, we need see some action from the unicameral, the legislature in the next session. Governor Reynolds in Iowa and the Iowa legislature, they acted. They reduced their top rate from 8%, to about 3% to 4%, and they’re going to reduce it even more. Nebraska is getting uncompetitive in terms of taxes. But back to your point, though, sentiment is not good. And the question is, will the economy match the sentiment? If it does, then we’re in one hell of an economic downturn. I, for one, don’t think it will match that level of the sentiment. But what we’re seeing of course is in investment decisions.

I mean, think about this, everybody says, well, President Biden … And I worked on the Keystone Excel pipeline as a consultant. Well, that was not going to increase production significantly, but it sent a message. For goodness sakes, you have to be an idiot to see … I mean, if you’re a decision maker in the oil industry, fossil fuel industry, and you don’t know what … That signal, that changes your expectations. If you’re going out and … Am I going to build a pipeline? I don’t think so. Or are you going to have more drilling? I don’t think so. The president said, “I’m on the side of a renewable energy.” Okay. The American people elected him to do that. He’s doing it. Well, here will be the outcome, you’ll get higher oil prices. Now, that’s not all what we’re seeing right now, admittedly, but it does change the outlook for those in the oil industry. And they respond accordingly.

It will happen in construction. Now construction’s not … You’ve got too many players in construction. By that I mean, you’ve got some guys and gals that’ll continue to build, until they’ve got an inventory they can’t sell. And again, this is my experience from the construction industry. My father was a contractor, a builder. As long as they were lending, he was building. That was it. And as soon as his inventory got too large, they weren’t lending, he wasn’t building. So, the sentiment, sometimes the builders continue to build even with very negative sentiments.

Zach Wojtowicz:

That’s kind of what I was wondering too, is like just, the houses even during the 2008. Yeah, it slowed down significantly, and there certainly will be businesses that don’t survive any economic recession, but generally there’s still plenty of new developments getting made. The people developing that land aren’t necessarily the ones who are the stakeholders and the ultimate delivery of those homes. And so, they’re still going to zone, they’re still going to coordinate, they’re going to still try and find builders who will build on that land. Is that typically what you’ve seen in the construction space? Like even in 2008?

Ernie Goss:

Absolutely. It’s sort of like … And Charley, you talked about earlier about farmers, as well. Farmers don’t quit farming because of low commodity prices, they just switch crops. And they try to buy land. They buy land even when prices are low. In other words, you can’t be a farmer, you can’t be a contractor, you can’t be a developer, if you don’t develop. So, you’re always, even with the sentiment down, who stops, it’s sort of like who pulls the chair out from the musical, chairs and there’s one chair missing. Five contractors and four chairs, somebody’s going to fall. And that’s what we see. It’s the lenders. The lenders have to pull out.

When your inventory of homes … And that’s what I’m more familiar with is residential, but even on large development projects, you’ve seen some of them just cease. You’re like, wow. And that’s shocking sometimes to see an entire development, just come under. Look at Intel in Ohio. That was a big pullback. I mean, that was unbelievable that Intel ceased that development that was going to go in there. Now, it may still come in there, but that’s a big turnaround. And what happens in construction, it’s not like in retail where it’s sort of, it does it in chunks. So, you get some big numbers. And having lived through it for 18 years of my life, while my father and brothers were doing it, when the economy turns down, construction ultimately will get hit and maybe early hit as well.

Charley Burtwistle:

Yeah. I think some really cool things that we’ve seen with some of our builders, to kind of try to stay above the water or keep things moving is just their ability to kind of shift upstream or downstream. So, we’ll have custom home builders that all of a sudden will move into the remodeling market because you’re not going to buy a new home, but you may fix up the one that you have. Or you mentioned the kind of high-end custom home, those are a little bit more stable and less influenced from some of the macro things than others. So, can you shift upstream and sell to some larger potential buyers there? So, I think that will be interesting to watch moving forward is the builder’s ability to adapt and go where the money is and go where the jobs are.

Ernie Goss:

And you’re right, Charley and Zach, before. The signals that I see, and I’m not always right in looking at signals, the builders are not necessarily seeing the same signals. And right now, before we end this podcast or webinar, watch what the federal governors or the Federal Reserves say. And whatever I say, I don’t vote on that committee. I don’t vote on interest rates. J Powell votes. The governors of the Federal Reserve Open Market Committee, watch them, listen to them, what they’re saying, because they’re telling you where they’re going. And one thing that really affects building that we haven’t heard any noise about, any talk about much, is the balance sheet of the Federal Reserve. It’s sort of like, that’s too arcane, that’s too complex. Well, you better make it un-complex, you better make it simple, because it’s going to result …

If they begin selling these bonds, letting them mature, your long-term interest rates are going to go, go, go, go, go, go, go. And how high could they go? Well, I don’t think they’re going to allow them to … Once they see the impacts, they’ll slow down the selling of those bonds. But right now, I’m saying you got to keep your ear to the ground. And by keeping your ear of the ground, watch the 10-year treasury, the yield on that bond. Also watch what the governors of the federal reserve are saying. Governors of the Federal Reserve Open Market Committee, listen to them and try not to listen to too many economists, because again, we don’t vote. They vote. We don’t.

Charley Burtwistle:

I do think, as good advice, and as we’re kind of getting towards time here, I think a good note to end on would be your sentiment of listen and pay attention and you know, how could you not see this coming? Well, because I wasn’t paying attention. That sort of thing. Do you have some good, maybe favorite, sites that you go out and look at that are maybe kind of one-stop shops for some of this high-level stuff that customers could go out and could get a pulse on what’s happening?

Ernie Goss:

Charley, it’s so darn simple right now. And I’ll make it simple. Watch the yield on the 10-year treasury. It’s right now they’re on three percentage points. It was 1.5% a couple of years ago. Okay, when that moves up, that’s showing inflation’s in there, that’s a lot of positive sentiment. When it moves down, if it moves below 3% to 2.5% to 2%, that’s recession territory. It’s warning us, slow down is coming. Now, the Federal Reserve messes with it by that balance sheet. And that’s why you have to combine that with what the governors are saying. They buy and sell bonds that are selling right now. That influences that 10-year treasury, the short end, your prime interest rate, well, we know where that’s going. That funds rate, we’re going to have a prime interest rate will go to 6% by the end of the third quarter. So, keep an eye on the 10-year treasury.

Also, if you want to make 9%, and I probably shouldn’t give it away, it’s not a secret, it’s the least well-kept secret on earth, is by the I-Bonds. You can only buy $10,000 each year, but you and your partner, you and your spouse can buy $10,000 a year. So that’s $20,000 for two people. And of course, your kids, if you have kids, you can buy them $10,000 as well. Pays over 9% right now. It’s adjusted for inflation. That’s one suggestion, but that’s hindsight. That’s protecting yourself. Also, the 10-year treasury. But listen to those governors of the Federal Reserve.

Keep an eye on other … Bitcoin, now, there was this idea that Bitcoin was a safe haven. Who in the heck thought that it was a safe haven? It’s not a safe Haven. I mean, it’s not protection against anything. Anything. However, I’m not saying it’ a bad investment. What happened was, it went up with the money supply. The money supply was growing like crazy. Now, before I forget it, I should say, the value of the dollar. Keep an eye on the value of the dollar. It’s at some really, really strong levels right now. Too, too strong. So, if you’re importing anything, that’s going to make it cheaper. If you’re exporting, going to be tougher. So, if you’re in the import side, the export side, watch out for that. But if you’re importing, you’re going to see some bargains from Europe. You’re going to see some bargains from Japan. If that car is produced in Japan, buy here, it’s going to be cheaper. Europe, that Porsche, if it’s produced in Germany, will be cheaper.

So, the exports, going to be tougher. Also, I guess, to say what’s going on in China. China’s growth is now at some of the lowest numbers we’ve seen in decades. Now, they are a big buyer of Nebraska products, products coming out of this part of the country. Soybean, pork. Also, watch what goes on in Taiwan. What happens if tonight China invades Taiwan? I’m not suggesting that. If it did the yield on the 10-year treasury would go to … I don’t know where it would go, probably 2%, maybe even lower. And that of course is a negative signal. So, that’s the barometer, not Ernie Goss. And the governors of the Federal Reserve that actually have voting. Ernie Goss doesn’t have a voting. I don’t have a ballot in that interest rate decision.

Zach Wojtowicz:

Well, Ernie we’re right up against time, so we’re going to have to call it on this one, but we really enjoyed this conversation. Got a lot of different perspectives on all the things. And one major takeaway, turns out the economy’s kind of complex, in the grand scheme of things, right?

Ernie Goss:

But the solutions sometimes are very simple, Zach. So, I’m very happy to be with you, Zach, with you and Charley. Thanks for having me on. And again, what I would like to emphasize is, these economists have these models. Now there’s danger right there. Model. The head of the Federal Reserve of Atlanta said his model said negative growth for the second quarter. Growth of the first quarter was negative, this is second quarter. For a lot of folks, already we’re in a recession.

I don’t always believe models. Now, his model is showing a negative growth. I don’t think it’s going to be negative, but it’s not going to be very positive. Do I have a model? No, I don’t have a model. I have surveys. I put it all together in this feeble head of mine. And I think I get a pretty good beat on it. Economy’s definitely slowing down. Is the potential for a recession gone up? Absolutely gone up. And people say in the next two years, I’m like, what about this year? And I say the probability of recession this year is higher, but it’s still not what the Atlanta feds model says, though.

Charley Burtwistle:

Well, thank you very much. It’s an honor to get a talk with you, Ernie, and we’ll have to have you back for a third time sometime here in the not-too-distant future. Hopefully when things are a lot more positive, and we can celebrate.

Ernie Goss:

Yeah. Why didn’t you have me back last year in ’21? 2021?

Charley Burtwistle:

Yeah, no kidding. It would have been a great time to talk.

Ernie Goss:

I know, I know. I would’ve been much more positive. We as economists, we’re the people as … Oh, what was name? Paul McCracken, I think it was, said we take the punch bowl away as the party gets going. In other words, everybody’s partying down, you turn around, where’s the punch bowl? The economist made off with it. They got it. They’re gone.

Charley Burtwistle:

The freaking economists.

Zach Wojtowicz:

That’s what the back of the t-shirt says.

Charley Burtwistle:

I like that. Who took the punch bowl?

Zach Wojtowicz:

The front’s got the what economist is, and the back is why you don’t invite them to the party.

Ernie Goss:

They take the punch ball away. That’s …

Zach Wojtowicz:

All right, Ernie. Thanks again. We’ll see you soon. Okay?

Ernie Goss:

Okay. Thanks Zach. Thanks Charley. And thanks to Nicole.

Charley Burtwistle:

See ya.

Zach Wojtowicz:

We just wrapped up with Ernie Goss of Creighton University, regional economist, where we got into a lot of different talking points about the state of the economic health of the United States. And I’d love my data scientist director to tell me what were your takeaways and what did you learn?

Charley Burtwistle:

Yeah, honestly, my biggest takeaway was I feel like I’m going to reach out to Ernie right after this and try to get in touch. I’d like to …

Zach Wojtowicz:

Slide into those DMs, huh?

Charley Burtwistle:

Exactly.

Zach Wojtowicz:

Little economic forecasting.

Charley Burtwistle:

Exactly.

Zach Wojtowicz:

He’s got some investment opportunities that you’re interested in expanding?

Charley Burtwistle:

No, no, no, no, no, no, not that necessarily. I think that we potentially have a really cool opportunity for a partnership with Buildertrend and his group over at Creighton, but I also just want to nerd out with him for a while, though. That half an hour there wasn’t nearly enough. But yeah, it is interesting. I think one thing that you have to keep in the back of your mind, and he said it from the offset is that economists are inherently pessimistic, but that’s what they get paid to, think about worst case scenario, think about risk.

Zach Wojtowicz:

Do you think it’s pessimism, if it’s realism? Ultimately, it’s happening. And so, how you deal with those situations … Whenever people say we seem doom and gloom, but it’s like, well, you don’t get out of these problems by just being like, you know, everything’s going to be okay.

Charley Burtwistle:

Right. But I think it’s case by case scenario on what the doom entails.

Zach Wojtowicz:

For sure.

Charley Burtwistle:

People need places to live, right. So, I think he was really focused on the macro, whole U.S. and world economy as a whole. I think our listeners are primarily focused on one specific market, which would be the housing market. And I think he made a couple really, really good optimistic points in there about people continue to need places to live. People continue to need places to move to. People continue to need updates on their house. So, I think it’s good to shift through everything that’s out there and focus on the things that really pertain to you and then think about how can I control the things that pertain to me.

Charley Burtwistle:

And I’d like to think that our customers and Buildertrend users have a unique advantage there of being able to track all this stuff really, really closely. How are your leads performing? How are your profit margins doing? How much are you having to pay your subcontractors? Why aren’t your bids winning? You can control those aspects and you can pivot where you need to and change things where you need to and continue to be a profitable money-making business.

Zach Wojtowicz:

All those consultants we’ve had on, all the experts in the construction industry, this is why you build processes. This is why you have systems. This is why scalability is a huge factor in a successful business. You’re really investing what you do for future proofing of if there is an economic downturn, which there will always be ebbs and flows, that you know you’ll be just fine because you have a brand, you have a team, you have a culture, you have a strategy, you have something you can anchor your business to. And ultimately, a lot of our builders, I think, they’d bet on themselves with those business principles. All this is reality, but it’s not inevitable that you aren’t successful.

Charley Burtwistle:

And I like the way he left things off too, of the biggest thing he can do is just pay attention. So, ironically enough, he actually has a newsletter that you can subscribe to that he didn’t mention there.

Zach Wojtowicz:

Dropped in the show notes.

Charley Burtwistle:

But that will be dropped in the show notes. It has like 10,000 subscribers and would do an awesome job of summarizing all those things that he kind of mentioned there at the end, so you can keep your pulse on it. But I think if you’re listening to what’s happening and looking around you and taking the time to plan how you’re going to adjust to that, you’ll continue to be a really, really strong business and houses will continue to get built.

Zach Wojtowicz:

That’s right. Well, I’m Zach Wojtowicz.

Charley Burtwistle:

And I’m Charley Burtwistle. We’ll see you next time.