Reading the Auto & Housing Markets: Inflation & Deflation Trends

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You're listening to Leaders and Lending from
Upstart, a podcast dedicated to helping consumer

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lenders grow their programs and improve their
product offerings. Each week, here decision

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makers in the finance industry offer insights
into the future of the lending industry,

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best practices around digital transformation, and
more. Let's get into the show.

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Welcome to Leaders in Lending. I'm
your host, Jeff Keltner. This week's

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episode features my conversation with Kurt Long, the chief economist for NAPHEW, the

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National Association of Federal Credit Unions.
This is a great conversation for reference.

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We recorded it on July eighteenth,
because this is a little bit more timely

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content than many of our many of
our podcasts. We really talked about the

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state of the economy. A recent
CPI print actually a little surprising to the

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positive generally, as we talked through
the implications of that for interest rates,

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for auto markets, for housing markets, where we think the economy is going,

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and how financial institutions can adapt to
the world as we're finding it.

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So it's really interesting conversation. I
always love diving into data on the economy

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and details. It's not an area
I follow sometimes as closely as I feel

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like I should, and so getting
to talk to an expert always fun and

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I think really insightful for anybody thinking
about how the state of the economy and

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the response of the FED maybe impacts
the decisions they're making as a financial institution.

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I think it's a great set of
information for that. So please enjoy

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this conversation with Kurt Long. Kurt, thanks for joining us today on the

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podcast. I appreciate your making the
time. Yeah, excited to join you,

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Jeff. Now we should give the
date we're recording this on July teenth,

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because I feel like some of the
podcasts are kind of evergreen and ones

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where we talk about economics are maybe
a little less so. So maybe i'll

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start with that caveat and then ask
you a version of my standard opening question,

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which is, like, I think
most people didn't grow up dreaming of

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being in the banking industry when they
were kids, and probably not economists at

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you know, Credit Union Association.
So tell me a little bit about your

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path to where you're at today.
Yeah, sure, it's uh, you

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know, definitely wasn't a straight line
to get here. I actually grew up

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in Texas and uh, first first
got my first degree in accounting, So

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I gave that a shot for a
few years and eventually learned what most people

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learn much earlier than I did,
which is that accounting is a fine profession,

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but not really for me. And
so for some reason, I got

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it in my head that KON was
a more might be a more interesting path,

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and so I went back to school, got a degree in that,

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and then moved out to the Washington, DC area after school, and that's

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where I hooked up with the credit
union credit union movement. Love it.

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And how long have you been in
the credit union movement? Then, yeah,

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it's been about ten years, so
join NAFQ. Yeah, right after

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the financial crisis. So it's been
a you know, interesting, uh kind

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of an interest interesting business cycle to
follow over that over that span. Yeah.

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So this is I find like in
somebody's the most fun kind of interview,

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and Someone's the hardest for me to
prepare for because you never really know

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what you want to talk about until
the day off, because the ground keeps

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shifting underneath your feet. And I
think the thing on most people's minds right

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now. The latest bit of data
was the latest CPI print, which came

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out recently and was you know,
I think pretty positive over all. What

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can you give me your take on
what we learned from that and how people

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are reacting to the kind of the
latest set of inflation data. Yeah,

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I think it was a really positive
report. Positive in the sense that it

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seemed like the inflation number was nice
and nice and low, right where we

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want it. And in particular,
when you got under the hood, we

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saw some real deflationary trends kind of
developing in areas where we've been expecting them.

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So two in particular, one being
automobiles, and so you know,

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autos were obviously a big source of
inflation the rite up, and then now

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we've sort of been waiting, knowing
that at some point that would probably reverse

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course. We've gotten I think just
today actually we got new data on auto

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production. And now we've had three
months in a row of much better numbers

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on the production side than what we've
been getting. I think actually June,

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the June number was down a little
bit, but still roughly in line with

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where we were pre COVID. So
you know, there's still a pretty big

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deficit in terms of the number of
autos that are still missing from you know,

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what didn't get produced in the last
couple of years, but I think

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production is improving. As that happens, you're going to start to see some

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of the air taken out of,
you know, some of these car prices,

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both on the new and the used
side. The use side actually is

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where we've seen a ton of inflation
just because there haven't been any new vehicles

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to new vehicles to buy. So
so that's that's one area where we saw

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you know, much better numbers last
month, and hopefully that's a sign of

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things to come. The other is
housing, and housing UM is sort of

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a similar story we've been waiting and
it's sort of by construction. The way

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that the government statisticians UM develop their
estimates of housing inflation, it sort of

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operates at a lag. So what
you see happening in the market, you

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know, when you see rents starting, you know, rents starting to cool

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down. We've seen that for several
months now, but it takes time for

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that to work its way into the
official official stats, and so UM it

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seemed like we we started to get
some of that last month. And the

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good news is that because it happens
on a lag, there's a lot of

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certainty about what the path forward is
on on the housing inflation piece at least,

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and so I think things are things
are looking looking good from that standpoint

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as well. Interesting. Yeah,
certainly, it's always interesting to dive.

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I always get these takes from our
CFO on the very detailed sets of numbers

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inside of the gross inflation number,
and I think there's a lot of a

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lot of important information and insight in
there. I want to dive into each

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of these areas. You talk about
autos and housing and a little bit more

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depth. What do you think to
how sorry the autios will start? There?

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Says to lenders, because one of
the things I've heard some concern about

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it is as prices come down,
what does that mean for loan to value

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in terms of what I underwrote to
where I'm going to stand and do I

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need to be? I mean a
lot of people are nervous about lending on

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autos when prices were high going I
mean, the value of that collateral it's

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probably not going to stay where it's
at compared to the prices things we're selling

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out a year ago. How do
you see that playing out and impacting lenders

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moving forward? Yeah, I think
that's a valid concern. I think you

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here, you've heard a lot about
you know, worries about residual values for

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a while now, and I think
especially on the on the lender side,

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we started to see that maybe middle
of last year, starting to sort of

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pull pull back a little bit.
We saw some of that evidence come through

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from the you know, the FED
does this core release survey of senior loan

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officers, and I think that we
saw some evidence of that there. Credit

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unions too, I think are starting
to us starting to get a little bit

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more conservative in terms of, you
know, the amount of lending they're willing

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to do on the auto side.
And I think to the you know,

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the the inflation numbers kind of feed
into this in a sort of a different

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way as well, which is,
you know, in terms of what this

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means for the rate outlook, a
lot of you know, I think a

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lot of concern when inflation was running
really hot. I mean, it's still

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running pretty hot, but maybe when
recessionary concerns were higher that rates could come

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down because of because we were entering
a recession, right, so the FED

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might have to cut rates because growth
is negative and so um, maybe there

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was a rush to the door to
get those loans in while while rates were

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higher. But now as I think
some of the uh, some of those

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inflationary worries have subsided a bit.
I think with that, some of the

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recessionary concerns have subsided to And so
I expect, you know, I think

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the rate outlook, I expect the
rates to remain sort of elevated for for

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for maybe a longer period than maybe
some some we're concerned about because I don't

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think we're gonna I don't think recession
is right on our doorstep. Interesting,

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and the market seems to agree with
you, at least judging by the color

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and the stocks app when I opened
my phone. It feels like people are

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more optimistic about the possibility of a
soft landing or avoiding a recession, and

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they've been historically. Is that?
Is that the sense you get from the

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from the markets generally, that people
are optimistic about not only the rate environment,

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but what, you know, what
the economy holds for us for the

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next period of time. Oh yeah, I think so. I think You've

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seen this among a lot of economists
too, not just the markets. A

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lot of economists are revising their slushing
probabilities too. And yeah, I think

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you see that play out in both
senses. So you know, it'll be

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interesting from where I sit to see
how the Federal Reserve deals with that.

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Um, you know that they have
they have a meeting upcoming at the end

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of July where they're probably going to
raise rates again. But now I think

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the narrative has shifted a bit to
where we expected that to be maybe the

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first amongst several more rate heights,
maybe not in succession, but we would

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still have to get several more on
Yeah, But now I think with clear

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signs that that inflation has started to
cool just a bit, maybe the Fed

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can take it, can be a
little bit more patient. They're probably going

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to raise rates in July, but
I suspect, um, the Doves are

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going to push for you know,
they're gonna say, Okay, we'll give

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you the rate hike for July,
but you get a you know, we're

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gonna hold rate steady in September and
then we'll circle back in October and uh

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and if we don't get a massive
you know change from where things seem to

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be headed right now, I think
I think July could be the last rate

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hike. Wow, I'll put that
as your bold prediction for the episode because

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that's um, that would be interesting
certainly not where we thought we would be

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just a couple of months or even
a couple of weeks ago in terms of

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what the expectations were for the for
the rate environment moving forward. Um,

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how do you see that impacting the
housing sector? Because it's interesting there's you

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know, when when rates go up, all of a sudden, the refi

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business that a lot of people had
been living on from a from a banking

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point of view, from a lending
point of view, with like, wow,

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we can't really refly when as rates
go up, there's not a lot

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of refive business to be had.
Um, But it seems like often buyers

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are waiting for rates to go down
to go out and make larger purchases.

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Do we expect to see that?
What do you How do you think the

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kind of rate environment and the shifts
in that impact that the housing sector,

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both in terms of sales and in
terms of the loans that maybe credit unions

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banks are looking to make and are
able to find in the market. Yeah,

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I think in terms of housing,
you know, on the buyer side,

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I'm not sure mortgage rates have much
room to come down here. In

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the near term, just because you
know, one of the things at least

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weighing modestly on the longer rain at
the curve was the idea that a recession

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might be in the works. And
so as those recession probabilities have been sort

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of reined in, some of those
downside concerns are abating. So, you

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know, here just in the last
few weeks, you know, even though

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I think expectations for the short end
of the curve have changed a little bit,

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we haven't seen that really play out
on the long long end as much.

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So um, you know, unfortunately
for you know, a lot of

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credit unions rely heavily on refi activity, but I'm not sure I see a

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lot of refi originations here, and
at least in the near term. Yeah,

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it didn't feel like we're going to
be down to a world where lower

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rates are driving refined and it's always
important to remind people about the longer sweep

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of history. I talked to.
We have some many young people that I

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talked to, and they they find
these rates of you know, they're going,

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oh my god, rates are so
high, and I go, well,

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I mean two percent and at two
and a half percent mortgages. It's

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not exactly the standard across the sweep
of history, and even where we're at

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now is not really compared to the
eighties or not exactly super high interest rates.

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I mean, certainly we've we've experienced
much higher rate environments than we're in

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today, even as the Fed's been
raising for a while. Yeah. Talk

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to your parents, right, they
they'll have some good stories about the first

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mortgage alone they got. Yeah,
mortgages that sound more like credit card rates

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to us these days than than mortgage
rights. Um. All right, So

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that's second. So one other thing
I wanted to ask about was how has

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the environment I think the you know, as we've seen inflationary pressures, the

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fear of recession, the question was
like, how is this going to play

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out in the performance of credit,
particularly consumer credit? Are we going to

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see deteriorations and credit performance. We've
seen bits and pieces of that, but

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not I don't think a broad sweep
of like massive deterioration broadly. How do

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you think what we're seeing now changes
the outlook for what people are expecting from

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credit performance for existing portfolios over the
next period of time. Yeah, I

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think, you know, at least
on the credit union side, we have

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seen some some you know a bit
of an increase in delinquencies, and I

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think that's consistent with what other lenders
are seeing as well. It isn't clear

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to me, though, that things
are going to continue that way. I

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mean, what we've seen so far
is, you know, delinquency and charge

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off rates sort of come back to
where we were entering entering the pandemic more

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or less. Obviously there was the
big drop, uh, you know in

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the first couple of years after after
the onset of the pandemic and things of

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sort of reverse course. But you
know, is that just sort of coming

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back to to equilibrium or is it
going to just continue continue to rise.

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I think, um, you know, my my leaning this is more my

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gut is I think we're okay.
Um. Part of that is just because

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I've I think I've had a more
optimistic view that we can get the soft

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landing and the economy that maybe others
have had um and that that does seem

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to be the more and more the
prevailing view. And so if we can

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avoid a recession, I mean,
you know, unemployment rate is still below

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four percent, and it's just hard
to it's hard to squeeze a lot of

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you know, credit problems out of
economy where so many people are are working

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and still getting reasonably good, good
wage growth. Yeah, I think that

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makes sense, and I think people
also underestimate when they see the kind of

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rapid deterioration I mean, not massive, but it came pretty quick, and

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just how big the government stimulus was
and how quickly it stopped, and the

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kind of that was a that was
not a sloping curve, that was a

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big discontinuity in terms of what people
had available, and it did kind of

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push us back to what the world
looked like when there wasn't government stimulus or

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a depressed economy due to a pandemic
that was keeping people in their houses and

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stopping production and stopping services from being
delivered and all that. So it feels

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like something more pre pandemic normal is
what we should be looking for. But

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you know, figures crossed because it's
always people always like to connect the dots

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and draw a line, and it
certainly points in one direction right now.

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00:15:50.679 --> 00:15:56.679
I'm Margie clip president and CEO of
Agricultural Federal Credit Union in Washington, DC.

222
00:15:58.840 --> 00:16:00.879
When we wanted to a quiet are
more members of personal loans. We

223
00:16:00.960 --> 00:16:06.600
knew we needed a partner that allow
us to scale quickly and easily. With

224
00:16:06.799 --> 00:16:11.360
Upstart, we were able to go
live in fifty four days without adding hoodcom

225
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and we were able to learn previously
under serve our hours with Upstart's model.

226
00:16:15.480 --> 00:16:19.519
If you'd like to learn more about
our partnership with Upstart, you can read

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00:16:19.639 --> 00:16:26.039
more at upstart dot com, Forward
slash Lenders. Thank you, and back

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00:16:26.080 --> 00:16:32.320
to the show. So what's your
advice when you're talking to your credit UNI

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members these days? Like? What
are you telling them now? I'm curious

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how that's changed over the last couple
of weeks, because, as I said,

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we kinda have had some good news
at a different time. What's your

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advice to them on how they're you
know, preparing for both? Sometimes it's

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like am I preparing battening down the
hatches for tough times? Or am I

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ready to start, you know,
lining up my opportunities to take advantage of,

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you know, good times. If
I think things are going to be

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more stable, I want to go
out fire. How do I grow?

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How do how do I drive growth? As opposed to how do I limit

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my exposure to loss? Where are
you at and what are you hearing from

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that in terms of what they're doing
to prepare and how you're advising them.

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Yeah, it's it's interesting. I
think as as conditions have changed, I've

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sort of had to tailor my message, even though you know, we get

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a lot of stuff wrong. I
think I think in general, we've we've

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sort of been right about how at
least the first half of the year would

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would develop. I think, um, you know, our position was,

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you know, despite all of the
problems and all of the risks, the

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labor market is so strong right now, and that's going to boothe the economy

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for long enough to get to the
point where we start to see some disinflation.

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And I think that's sort of what
played out. Um, so my

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you know, my message to our
our members has been, uh, don't

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be so pessimistic. You know,
I think a lot of times they're they're

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instinct, and what they're hearing from
from a lot of other folks is that,

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you know, recession is inevitable,
A reasonable position to take, by

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the way, given what the Fed
has done, you know, going from

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zero to five percent almost overnight.
I certainly sympathize with anyone who who had

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that view. You know, now
that we're at the position that we are

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where people are I think a bit
more optimistic about getting at this soft landing.

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Now I find myself starting to worry
a bit more. You know,

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maybe it's just a human human nature. We all need something to worry about,

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right, So you know, I
think the risks that maybe the number

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one risk that's out there that I
don't see people paying maybe enough attention to

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is okay. So, you know, the labor market is still really good,

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Inflation is starting to subside. That
means real incomes are going up now,

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right. I think actually the Wall
Street Journal just ran a big article

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on you know, real wages are
now positive again after being negative for quite

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a while. So with that comes
a little bit more spending power on the

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part of workers and consumers. And
so you know, it's certainly not out

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of the question that we could get
a re emergence of inflationary pressures. So

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I think that's actually is the bigger
risk than an immediate recession, is that

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we get inflation coming back to life
like sort of like the bad guy in

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a horror movie. Right, And
the FED actually does have to have to

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raise rates further to address that.
Interesting now you bring me to something that

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it's always been curious to me,
and we talked about this in the beginning,

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which is it seems like we have
this long term inflation target that the

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policy holders are trying to hit around
two. We often run below it,

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and then when we go above it, the sense is like, no,

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no, no, we're not allowed
to be above it. We must be

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below. And you know, I'm
sort of a numbers guy, and for

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something to average out, you have
to have equal time at least time weighted

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delta between when you're below it and
when you're above it. Yeah, we

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don't seem to be comfortable being above
it as long as we are comfortable being

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below it from a target point of
view, from inflation, what's your sense

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of that? Is that just like
a political reality that can't change, is

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there, you know, any movement
to really, from a policy point of

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view, be be honest about the
desire for what the average should be and

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live till to a long term average, which might mean periods of higher inflation

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following periods of really low inflation over
time. Like, how do you think

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about that? Because it's always been
interesting to me that it feels like as

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soon as you clear the average,
you're in like the reds, and people

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are nervous and trying to fight it
back down, which which feels counterintuitive to

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the nature of an average, a
target for an average. Yeah, so

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that's that's a super interesting question.
And I'll try not to let myself go

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to too crazy here being a being
a nerdy economist on this question. But

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you know, the Federal Reserve has
also noticed this asymmetry that you've described,

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where you know, for the better
part of a decade prior to the pandemic,

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we were below the Fed's two percent
target, and yet no one seemed

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to be too bothered by that.
There wasn't too much effort made to try

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to get back up to the two
percent target. And yeah, things seem

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much different when you're when you're above
the target right then below it. The

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way that the Fed they did make
some measures to try to address this asymmetry,

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it was kind of interesting. I
think the if they had it to

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do over again, they might might
not have done. So. It was

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actually right before the onset of COVID
when they announced it a change in their

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framework, so they called it.
They called it fate FAI Flexible Average Inflation

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target, I think if I if
I still remember that acronym. But the

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idea was that they were going to
do just what you suggested an average the

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inflation over a period of time,
so that it was sort of the idea

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was there would be a payback period. If you spend some time below the

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target or above the target, then
you've got to shoot to go on the

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other side of it, so that
over time it averages out. Now,

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you know, as I said,
the timing of this couldn't have been worse

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because the better maybe, Yeah,
that's right, So you know, it

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seemed like the obvious motivation for this
was to convince people that they know that

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we're we're we're recognizing and dealing with
this asymmetry. So we're not gonna spend

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the next decade being below two percent, right, We're gonna we're gonna hit

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that target over time. And of
course we all know what happened. Things

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did not go according to plan.
And so now that we've spent quite a

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while well above the fed's two percent
target, I think the natural question is,

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does that mean we have to be
below target for who knows how long

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once we get inflation back under control? And I think the FED, not

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in so many words, has said, you know, I'll just forget all

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that. So I think once they
get back to two percent, they're just

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gonna say, hey, we're starting
from new right now. And who knows,

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maybe they'll you know, maybe they'll
sort of keep the flexible average inflation

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target model going forward. But I
don't think that's going to cause them to

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to feel like they have to spend
time under under the target. Well,

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I mean, theoretically could tell you
the opposite, which you should be allowed

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to come back down slowly because you
know you've got I mean, if you'd

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if you'd set that marker five years
ago, you have a lot of muff

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right now to average into where you're
happy. Yeah, we don't need to

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be back there tomorrow. We need
to you know, let it play out.

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Um, it'll be interesting to see
if that plays because it's always I

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do worry that too, that that's
it's a nice framework, but politically the

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pressure will always be there's very little
pressure to increase inflation, particularly when you're

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at super low rates. There's not
that many tools to drive inflation up.

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Um. And then you know,
but nobody likes to see inflation high.

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That it's everybody's pocketbooks, and there's
going to always be political pressure to do

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something to change that scenario. So
I don't know that the incentives for pressure

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are aligned equally on both sides of
that line. So I'm not sure you

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can really ever solve that problem with
with just a policy approach. So I'd

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love to believe that you could.
Yeah, I think that's probably the more

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parsimonious answer, right, is that
you know, no matter what the fence

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framework is, the political realities are
what they are, and we've seen that.

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We've certainly seen that as clearly as
as we could during the last few

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years, which is, you know, consumer centiment measures are in the tank.

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Business centimon industry is the same thing. People don't like inflation, And

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if you needed to be reminded of
that, then now you know, a

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couple of years of inflation will remind
you that people really really don't like it

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when inflation runs hot. YEA,
Well, Kurt has been a fascinating conversation.

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I appreciate your joining me today for
it. I do have three closing

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questions I ask everybody, and I'd
love to throw them at you right now.

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They're totally different than the last twenty
twenty some odd minutes of conversation.

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UM, but I think equally interesting. So here they are. UM.

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The first is, what's the best
piece of career advice you've ever gotten?

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00:25:12.119 --> 00:25:17.799
The best piece of career advice I've
ever gotten is, uh, you know,

355
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I remember when I was seven years
old and my grandfather asked me what

356
00:25:21.640 --> 00:25:23.680
I wanted to do when I grow
up, and uh, he said,

357
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just do what you love and you'll
never have to work a day in your

358
00:25:26.079 --> 00:25:29.400
life. And uh, I feel
like that. You know, all the

359
00:25:29.440 --> 00:25:32.960
best decisions I've made with respect in
my career have been UM, when I

360
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sort of didn't worry too much about
where things were headed and just wanted to

361
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work on interesting, interesting subject matter
and interesting jobs. And uh you know

362
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that that's that's uh, that's served
me, served me well, all right.

363
00:25:45.440 --> 00:25:49.440
I like it Little Steve jobs from
your grandfather. Maybe maybe Steve your

364
00:25:49.440 --> 00:25:53.799
grandfather when he was writing a speech
and he'd heard that one before. UM.

365
00:25:55.519 --> 00:25:57.400
My second question, which is,
uh, it may be interesting given

366
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the last conversation, but what's the
best of ice you've gotten about the general

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00:26:00.720 --> 00:26:04.279
consumer banking segment? I hate saying
banking to credit unions, but I don't

368
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know. The credit unioning is like
a sector indu cy, so I use

369
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it. But what's the you know, what's the best advice you've got about

370
00:26:11.519 --> 00:26:18.240
that that industry in general? You
know, I think maybe just because when

371
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I started it was right after the
financial crisis, and so I think I

372
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think that the advice I got not
not in so many words, maybe about

373
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but when banking is good, it
means it's boring. When when banking is

374
00:26:33.839 --> 00:26:40.039
interesting, that means something's going wrong. And so uh you know, um,

375
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a lot of times I find this
in our own work, is we

376
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uh we sort of you always want, you know, consistent with my previous

377
00:26:45.799 --> 00:26:51.640
answer, you want to find the
most interesting corners of the of the of

378
00:26:51.680 --> 00:26:56.680
the market. And but but sometimes
that's where those are the most dangerous corners,

379
00:26:56.759 --> 00:27:02.200
right, so uh um, sometimes
boring is good. Sometimes boring that's

380
00:27:02.279 --> 00:27:04.119
that's actually really interesting advice. It
is. It is fascinating how many,

381
00:27:04.119 --> 00:27:08.359
how many problems in the banking industry
historically have come from trying to get away

382
00:27:08.359 --> 00:27:11.599
from the boring in good times,
like you know, the basic taking of

383
00:27:11.640 --> 00:27:15.079
deposits, lending of money, making
of net interest margin. Um, you

384
00:27:15.079 --> 00:27:18.079
can you feel a little bit boring
when you know things are stable and then

385
00:27:18.119 --> 00:27:22.039
we reach for something else, and
it's usually the something else that causes a

386
00:27:22.039 --> 00:27:26.799
problem. Um, when when the
when the next cycle turns interesting? Yeah,

387
00:27:26.039 --> 00:27:29.599
am my last found that out in
March, right, A few a

388
00:27:29.599 --> 00:27:32.559
few banks try to get a little
interesting and didn't work out. So well,

389
00:27:33.720 --> 00:27:37.680
yeah, when you yes, you
can sometimes what's the play phrase?

390
00:27:37.720 --> 00:27:41.440
Too clever by halfs? Bankings are
pretty straightforward industry, and when you're too

391
00:27:41.480 --> 00:27:44.279
clever by half sometimes I just go, I don't know that I see that.

392
00:27:45.200 --> 00:27:48.920
Um, all right. In my
last question, what's one bold prediction

393
00:27:48.960 --> 00:27:51.440
for the future, You've already said
the last rate height and should a lie,

394
00:27:51.480 --> 00:27:52.400
so you can stick with that when
that's a pretty that's a pretty good

395
00:27:52.400 --> 00:27:56.720
answer, um for that question.
But do you have any other bold predictions

396
00:27:56.720 --> 00:28:00.720
for the future you want to stick
with that on? I think I will

397
00:28:00.720 --> 00:28:03.799
stick with that one, but I
will ass as a sort of caveat,

398
00:28:03.839 --> 00:28:11.559
I will say you know a lot
hinges on of course, whether whether you

399
00:28:11.599 --> 00:28:14.759
know how the how the economy evolves
over the next twelve months. And so

400
00:28:14.799 --> 00:28:18.400
that's sort of what I've been sort
of thinking about in my own free time,

401
00:28:18.559 --> 00:28:22.039
is how this might all work out. We've seen the Biden administration really

402
00:28:23.039 --> 00:28:30.160
latch onto the idea that things are
looking better right now. They're throwing throwing

403
00:28:30.200 --> 00:28:33.839
around the word biden Omics quite a
bit lately with the with the hope and

404
00:28:33.920 --> 00:28:38.440
expectation that that things are going to
look pretty good a year from now,

405
00:28:38.920 --> 00:28:44.640
and so you know, my my
expectation is that they will. Um.

406
00:28:44.720 --> 00:28:48.440
But even you know, again,
even though I think the risk of recession

407
00:28:48.480 --> 00:28:52.759
has receded, I do think there's
a real risk of inflation coming back,

408
00:28:55.559 --> 00:28:59.720
maybe maybe next year. And so
if that happens, I suspect that's going

409
00:28:59.759 --> 00:29:03.680
to be uh, probably show up
in those consumer sentiment numbers that we've been

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00:29:03.680 --> 00:29:07.200
talking about, and that could be
a real problem for the for the current

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00:29:07.200 --> 00:29:11.640
administration. Yeah, that's uh,
it's interesting, you said. I'm always

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00:29:11.680 --> 00:29:15.880
reminded that I, you know,
was in a meeting with a board of

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00:29:15.680 --> 00:29:18.960
a of a financial institution right before
the pandemic hit, and they asked about,

414
00:29:19.039 --> 00:29:22.799
you know, AI models and credit
and how you think about different scenarios,

415
00:29:22.799 --> 00:29:25.559
and I go, well, you
know, barring any kind of global

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00:29:26.279 --> 00:29:30.680
macroeconomic event that's kind of unforeseen,
we take a lot of stuff into account

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00:29:30.680 --> 00:29:33.559
and then you know, a few
weeks later, I went, yeah,

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00:29:33.640 --> 00:29:34.839
so what I said, there were
some things we don't have in the model,

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00:29:34.880 --> 00:29:38.519
like this is definitely on the list. This is definitely on the list.

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00:29:40.079 --> 00:29:41.960
Um, so you know, you've
always got your what you think will

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00:29:41.960 --> 00:29:47.160
happen, and in the world sometimes
has different plans and throws you a curveball

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00:29:47.200 --> 00:29:51.599
for those predictions. But I like
that one. I for for ourhen's sake,

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00:29:51.640 --> 00:29:53.440
I hope you're right on both of
those. I like by like both

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00:29:53.480 --> 00:29:56.759
predictions. So well, we'll have
you back some time and see how you

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00:29:56.799 --> 00:30:00.440
see how they hold up. But
Kurt, thanks again for making the This

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00:30:00.480 --> 00:30:02.680
was a real pleasure and I learned
a lot and I appreciate you making the

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00:30:02.680 --> 00:30:07.680
time. Thanks so much, Cheff
enjoyed it. Upstart partners with banks and

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00:30:07.680 --> 00:30:11.240
credit unions to help grow their consumer
loan portfolios and deliver a modern, all

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00:30:11.359 --> 00:30:17.839
digital lending experience. As the average
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makes sense that their bank does too. Upstarts AI lending platform uses sophisticated machine

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learning models to more accurately identify risk
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With fraud rates near zero, upstarts
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banks and offers a simple and convenient
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grow and enhance your existing personal and
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started, upstart can help. Upstart
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help you find more credit worthy borrowers
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underwriting, onboarding, loan closing,
and servicing, it's all possible. Start

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in your corner. Learn more about
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process, and growing your business by
visiting upstart dot com slash foward dash Banks.

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00:31:10.799 --> 00:31:15.000
That's upstart dot com slash foward dash
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441
00:31:15.000 --> 00:31:19.160
and Lending from Upstart, make sure
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