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Recession in 2023 Should Be Benign With Ample Job Growth: Alex Chausovsky (Szn 4, Ep. 35)

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Alex Chausovsky, vice president of analytics and consulting at Miller Resource Group, rejoins the podcast to discuss his surprisingly upbeat economic outlook for 2023, driven by a healthy labor market in the US.

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Nathaniel E. Baker
Alex Chausovski, Vice President of Analytics and Consulting at Miller Resource Group, I forgot to ask where Miller resource group is where if you are now one of these fully remote people?

Alex Chausovsky
We’re one of these fully remote people, Nathaniel yet Miller resource group is in Chicago, a suburb called Naperville, and I am still working and living in New Hampshire. But as you know, I travel the country delivering speaking engagements, so I can be anywhere at any point in time.

Nathaniel E. Baker
Very cool. And this is your second visit to the podcast. You were here in late 2020. Well, maybe third quarter 2020. At a time, he had a different role. We’ll talk about that a little bit later. But to jump off here, I want to get your views on the economy for 2023. And you they aren’t contrarian in that you are not expecting all that much pain for the economy, even though you think we’re heading into a recession, albeit non too late 2023. Tell me about that.

Alex Chausovsky
Yeah, the basic premise that guides that contrarian view, Nathaniel is the fact that unlike previous recessions, so if you look at 2020, or 2008 2009, or 2000 2001, they are usually accompanied by fairly significant job losses and the rise in unemployment to levels that are markedly higher than typical full employment, health, economic growth kind of environments. We just don’t see that happening right now, we remain in a position where there are still two jobs available for every person that wants them. And it’s interesting to see that although the number of job openings is coming down the delta or the the difference between job openings, and the number of people looking forward to steal almost 5 million. And so while that delta might close over the next 12 to 18 months, as the economic landscape softens, we don’t see the pendulum swinging from a candidate driven market into an employer driven market, which means that people will still have job security, and both the willingness and the ability to continue spending money to maintain a standard of living, which should soften or mitigate any kind of the downside pressure that we see from some of the more effective segments of the economy, like housing and banking, those things that are tied to the interest rate environment.

Nathaniel E. Baker
Well, I don’t know if Jay Powell was listening to this, but if he has, he will not be very happy about that, because employment is one of the things that the Fed keeps talking about. But before we talk about that, I should we should add here to qualify your statements that you know, very well firsthand about employment because of the work that your firm does. So you’re not just simply throwing this out there, right? That’s correct. Yeah.

Alex Chausovsky
So Miller Resource Group is a recruiting organization, we typically focus on two key segments of the economy, which is industrial, so manufacturing, automation, things of that nature, and the food and beverage sector, our focus is usually on white collar positions. So everything from sales and marketing, to engineering, HR, all the way up through the C suite. And we do play some blue collar folks, but it’s typically field service technicians, kind of material handling warehouse workers, that that type of thing. So what we’re seeing is our clients that this is now almost the beginning of 2023, this is late 2022 that we’re talking through, our clients are not slowing down in their hiring, they continue to look for that talent. In fact, I would say that most of our smaller and medium sized players are now benefiting from some of the layoffs and pauses in hiring that is happening at the publicly traded company size. You hear about these layoffs of Ford, Facebook and Amazon. And the small and medium sized businesses which represent the vast majority of us industry are now actually in the game to hire those people. And they were struggling mightily to do so in 2021 and early 2022. So there’s a shift going on, for sure. But we do not see any significant evidence of a slowing hiring process. In fact, I just ran a LinkedIn poll last week, I had over 100 companies respond. Two thirds said that they will continue to hire in 2023, despite what me may be going on in the economy, despite the fact that you know, there’s some headwinds developing and so that’s a very optimistic take on the job market as we look at the next 12 months.

Nathaniel E. Baker
Yeah, I’ll say to what do you Oh, you think the continued strength of employment now food and beverage is a pretty sensitive part of the economy? It is the most sensitive, I would think.

Alex Chausovsky
Yeah, it is. But at the same time, it’s prone to more shifts rather than outright contractions. I mean, it’s obviously a very mature, established industry, people still have to eat. And so the behavior shifts, you might not go out to restaurants as much you might shift to cooking at home more, you might buy more processed foods rather than fresh foods to try to save a little bit of money. You know, the the product mix might go from high end to lower end type of products. But the consumption and the production of food doesn’t really vacillate all that much, even during macroeconomic difficulties, including during those of the recessions. So food tends to be one of the stable kind of industries in the US economy, particularly during the various oscillations of the economic cycle.

Nathaniel E. Baker
And is part of this perhaps we you mentioned, manufacturing, do you see any effects of this on shoring that we hear about of moving manufacturing out of overseas hubs, specifically trying to come back to the US is that something that you say,

Alex Chausovsky
we do, we see a lot of it, particularly in sectors that have been deemed high risk and very susceptible to disruption in the supply chain as a result of the pandemic. So the semiconductor industry is a great example of that, you know, high tech in general. But we see also another trend, where foreign entities are increasingly looking to the US market to offset weakness overseas. And so they’re looking to establish locations here and physical presence here in the US, we’re actually engaged with a company out of China right now that makes automation components that are is asking us to find a new general manager for them to sell their products through distribution to the US marketplace. And I see that quite a bit these days, not only American companies pulling back and establishing more of a footprint here domestically, but foreign entities, whether it’s in Europe, and Asia and South America, coming to the US recognizing that, you know, with all the craziness going on in the world, the US still remains a very vibrant, healthy, stable market and wanting to have a piece of our pie. And so it’s a double edged, kind of front in terms of the jobs that that facilitates.

Nathaniel E. Baker
Interesting. So let’s move on to the Fed here. Now, you said that the employment picture is still pretty constructive. The Fed has talked about it, we’re near full employment here in the US. But they have raised interest rates in pretty dramatic increments this year, and R do to continue with that in 2023. And, as you probably know, it takes a while for interest rates to work their way through the economy, sometimes up to a year. It does none of that present a concern with you with you at all. Do you? Do you think that there’s no chance that the there’s another kind of shoe to drop here in the economy that could hurt employment?

Alex Chausovsky
Well, I think there are different angles to take to this question. Certainly some segments of the economy are already feeling the pain quite significantly, housing being a prime example of that, right, we see new home sales and new home construction, both down double digit percentages, any industries, like banking, or loans or mortgages, really suffering from that, and the fact that the market has shifted quite dramatically on the back of these very aggressive rate hikes that the Fed has instituted. But I think that the immediate goal of those rate hikes is to affect inflation, right. That’s why the Fed is doing this at the end of the day. And we have not seen that effect play out yet. What will we see is the fact that the inflationary numbers are now starting to come down is really more representative of the loosening of supply chain issues, particularly because that that inflation pressures easing mainly in the goods sector, we’re not seeing any effect on the services sector, those prices are still going up, including rents and things of that nature. That’s the kind of data that takes, you know, anywhere between 12 and 18 months to filter through after the Fed hikes interest rates. And we’re not seeing that movement yet. So it’s encouraging to some degree that interest rates have perceptually have have coincided with some of the callback inflation. But the real work that those interest rates are designed to do is still coming and there is an expectation that inflation will continue to decline. I don’t believe that the Fed is going to be able to get back to its 2% Mark in 2023. It would take a monumental effort on their part to make that happen. They will really have to destroy the economy for that to take place, but certainly somewhere in the four to 6% range, you know, perhaps longer term closer to three, three and a half percent on the federal Well, funds rate is tenable. And I think that the US economy can thrive with a slightly higher than historic norms kind of interest rate environment. So I think that we’re still going to see some of that pain. And that’s why I’m increasingly convinced that there is, you know, a recession in certain segments of the US economy, I don’t necessarily think we’ll see it in GDP, but things like industrial production, you know, non defense capital goods, new orders, which is business to business spending, we’ll see some of that play out. And I imagine it’s going to be mostly concentrated in the second half of next year, as a result of increased borrowing costs for businesses, there’s going to be some pullback and capital investments, there’s going to be some some pullback in the amount of risk companies are willing to take. But, you know, you look at the balance sheets, and businesses are still fairly flush with cash, consumers are also still fairly able to continue spending, I mean, we did have, you know, a slightly downside pressure on the retail sales environment, but nothing of the kind of panic and, and fear that that we could have expected, given that we’ve now raised the federal funds rate by, you know, 4%, in less than 12 months. So I’m optimistic in that regard.

Nathaniel E. Baker
And you don’t think there’s a risk of the Fed comes in and does and does break stuff in the economy, because they’ve basically said they’re willing to do that.

Alex Chausovsky
I think that as the interest or the inflation numbers continue to come down, there’s less and less impetus for them to truly break things right, there’s less pain that they’d be willing to endure. I think stock market pain is different than true macroeconomic paint, right? If we start to see, I mean, for example, you look at their projections for unemployment, they’re expecting it to go from the current 3.7% to somewhere in the four and a half to 5% range by this time next year. That’s not a monumental difference, and still reflects a relatively healthy labor market, right, even by Fed standards. Now, would they be willing to push unemployment to seven, eight 10%? I don’t think so I really don’t think that they would go that far. Again, that notion that inflation is already starting to show some improvement, and that’s even before the interest rate policy has been given full time to be effective. That, to me stands out as a reason why they would, you know, pump the brakes. First of all, in terms of the severity of the rate hikes, I mean, the latest Fed meeting said they’re looking to do another maybe three quarters of a percent in 2023. So, you know, much softer pressure than what we saw over the course of this year. And they are adopting, let’s wait and see how the data comes in kind of approach. So their willingness to break stuff today, when inflation core inflation, that CPI is at 7.1%, is nowhere near as hawkish, as was when we were at, you know, over 9%. On the annual reading,

Nathaniel E. Baker
you mentioned supply chains before and is there still some overhang us to be cleared up there that could help inflation?

Alex Chausovsky
I think that there is but it’s becoming less and less dramatic in terms of the contribution it’s going to make on easing of inflation. I mean, you look at ports, for example, right? There’s essentially no backlog on the West Coast boards. Now, much of the goods transport transfer has shifted to the East Coast ports. And I think that that that’s an illustration of at least some of the logistics related supply chain issues being mitigated. I think if you look at automotive, they’re clearly starting to up production, because the constraints on the semiconductor side are easing, we’ve got a lot of investment happening in semiconductor capacity in the United States. So that’s going to alleviate some of that pressure in the future. One area where I do still think that there is constraints where hopefully, we’re going to see some easing based on what we were talking about before, is on the labor side, I mean, I talk to businesses all the time, and they still say, we would be producing much more, and we would clearing our backlogs much quicker if we had the necessary people particularly on the blue collar side of things, right, the dock workers, the warehouse loaders and unloaders those kinds of individuals. So there is some constraint there. But as again, the economy cools, as demand weakens over time, those constraints should ease a little bit, you’re not going to have nearly as much job hopping in 2023, as you did in 2022. Most people prefer to have a little bit more stability and safety in their jobs, right? You don’t ever want to be the first guy hired because you know who’s going to be first on the chopping block if things go south. So people will say, alright, you know, I’ll ask my boss for a raise, but I’m not going to jump ship to go take another position somewhere in the face of a potential recession. So I think that those things will continue to ease up. But in the meantime, we are seeing, you know, supply chain pressures ease quite dramatically, particularly on the good side, maybe not so much on the services side.

Nathaniel E. Baker
Yeah. Wow. That’s all really interesting and yet quite encouraging, if I dare say so. Now, what would you say as far as I know, you’re not a investment officer, or anything like that. But are there certain sectors of the club Do you think are poised to benefit more from these trends that you’re seeing next year?

Alex Chausovsky
I would say that anything having to do with automation, the area that really addresses the shortage of people, is going to be critical. So one of the areas that, you know, Miller research group, as I mentioned earlier, is focused in is automation. Our automation clients are increasing hiring plans for next year, because automation is no longer a nice to have, it’s a necessity for most businesses, whether it’s issues related to the pandemic itself, and they’re seeing the vulnerability in terms of human workers. And the disruption that something like that can cause the shortages of particularly skilled talent. And they can’t keep folks, even the ones that have been working for them for several years because of crazy offers from competitors, both within their industry and outside. So companies are now starting to look at automation with a much bigger focus on ROI. And it’s holistic, not just $1 investment, but how much risk can we take off the table, if we streamline at least one of our production runs needs to be automated to give us that buffer, if you will, in case things go sideways with human beings, right? So it’s, its throughput, its productivity, the cost for investment, because it’s a technology driven sector continues to decline. If you look at robotics costs, on average, every year, they continue to get cheaper and cheaper scale of production, and the volumes continue to increase. So it’s a very promising area, in my opinion, and I think it will remain that way for the foreseeable future. So if you look at the companies that are engaged with that, whether it’s on the hardware, or on the software side of things, I think that that represents a really good long term investment thesis for individuals that have a runway of you know, three to five years or more.

Nathaniel E. Baker
Wow, the post human future of labor, I guess, although one could say that that trend started two or 300 years ago, with

Alex Chausovsky
Yeah, and it’s been accelerated, right. It’s been accelerated by the fact that we have severe constraints, our our immigration policy, you know, so much of the manual physical labor that goes into manufacturing production lines into the construction sector, into agriculture, all of that has been really curtailed. I think we’re down about two to 3 million people in terms of immigrants that would have come to the US since 2020. But that weren’t able to because of various reasons, COVID, or immigration policy or any of those things. So how do you deal with that? You’ve got to find a way to automate that. And increasingly, companies are turning to robotics and software to deal with.

Nathaniel E. Baker
Yeah, including the media industry, by the way that the robots can now write news articles.

Alex Chausovsky
I don’t know if that’s right, chat. GPT. Of course, yes. Very familiar.

Nathaniel E. Baker
I’ve seen that even before that. I’ve seen that in action. It’s not bad, actually. Yeah,

Alex Chausovsky
I mean, obviously, not perfect, either. But it can solve a lot of low hanging fruit type of challenges. So

Nathaniel E. Baker
yeah, very good question. Very cool. Alex Chausovsky of Miller resource group, I want to take a short break, let our sponsors have their say really quickly, and then come back and ask you some more questions about your background, what you’ve been doing these past couple of years and how you ended up there at Miller Resource Group. But let’s first take a quick break. If you are a premium subscriber, don’t touch the dial, you do not get the break. We’ll be right back. In fact, we already are.

Nathaniel E. Baker
Welcome back everyone here with Alex Chausovsky of Miller Resource Group. Alex, this is the segment of the show where we ask our guests to tell us a little bit more about themselves, how they started their career and investing or economics and ended up at this station in life. And I refer to it at the at the top that you are in a different role now than you were two years ago. So talk us through that. But maybe before tell us about remind us about your background and how you came to interested in this and all this stuff in the first place.

Alex Chausovsky
Yeah, my pleasure, Nathaniel. So I was born in key of Ukraine when it was still part of the Soviet Union. And I emigrated to the US when I was 10 years old. So we landed in Dallas, Texas in May of 1990. And I’ve received my education here. I went to the University of Texas at Austin for my undergrad, got my MBA at Texas State University, which most people outside of Texas don’t know the difference between those two. So it was a much cheaper, much more cost effective way to get my my graduate degree. And I started my career in market research, which eventually led me to investigating all sorts of different technologies, things like 3d printing, in particular additive manufacturing. And then I dove into the world of economics by joining an economic forecasting firm in the mid 20. Teens and having recently parted ways with them. Because I saw a really interesting opportunity. So part of that economic work involved having conversations, particularly with a C suite about all sorts of decisions that business leaders have to make, how much do we invest? What kind of capacity planning do we have? How much inventory do we hold, you know, what kind of assets are going to be worth the return on investment that we’re looking for how to maintain our profitability in times of inflationary pressure. And I found it really shocking that, although every company told me that people are their number one asset, nobody strategized on talent the way that they should, that was always left to the HR department head. And so I thought that there was a tremendous opportunity to help businesses develop a comprehensive talent strategy, I mean, truly strategic tactical initiatives that they can implement to get better at attracting talent, basically answering the question, why would somebody want to come and work for me to the hiring process and retention numbers, and everything that’s caught up in that compensation analysis, business cycle analysis for the for the company to tell when the next surge in hiring is likely to take place when they need to be pumping the breaks a little bit? So I reached out to the Miller resource group and the owner Gary Miller. And I had a very interesting discussion where at some point said, Wouldn’t it be nice if we could take all of the insights that you have as a 40 year recruiting organization, and apply that to the C suite and help them get better at talent strategy. And now, a year and a half later, later, here, we are huge demand for the service. Companies want something tactical and actionable that they can implement. So far, you know, it’s been I’ve delivered almost 50 presentations this year alone at various trade conferences and shows, and it’s been a terrific experience engaging with the business leadership community, and helping them refine and get better at the people side of their business, which by and large, many of them were not paying very close attention to.

Nathaniel E. Baker
Yeah. So what do you say when you mean, the people side of the business? Is it like HR type of stuff, mostly, or

Alex Chausovsky
so some of it is HR, but some of it is just simply understanding how the world around them has changed, and that the strategies and practices that they used to apply are no longer relevant. I’ll give you a great example. So one of the things that I did when I first joined Milla resource group is I sent set in on some calls with my recruiter colleagues, when they were talking to companies that are asking Him to fill positions. And every time that the conversation turned to well, how much should we be offering someone in order to have a decent shot of actually landing a top tier, you know, impact player in this industry? And my recruiter colleagues would say, Well, you know, I’m not sure exactly, but I can tell you what I’ve placed people in similar positions for, and I thought, well, that’s not good enough, because because it’s a different location, different industry, different years of experience. So I did a lot of research. And I found some great tools that allow us to get very granular and very specific with our recommendations. And it’s not only to fill existing positions, but to do risk assessment of who in your organization is getting underpaid relative to current market rates, so that you’re not faced with them coming to you and turning in their two week notice. Instead, you can turn it into a proactive conversation, say, Look, we want to help you get to where you want to be, we here’s what the market is saying you’re worth, let’s talk about some things that we can do, you know, that are maybe outside of the direct financial compensation that you care about, is if it’s additional to some flexible working arrangements of long term incentives. So it really opens up the conversation. And it turns the relationship between an employer and an employee into one of partnership. So no longer the traditional power down dynamic, where I’m the company, you’re the worker, we tell you what to do. It’s now mutually beneficial, right? As an organization, I tell you, what I need from you, in order for us to hit our goals and metrics and to be successful. But at the same time, I’m willing to give you the opportunity to do the same for me, tell me what you need from me to be successful. How can I help you get to where you want to be? And it’s so different for every individual, right? Salespeople really care about money, but engineers really care about the challenge of the work itself. Young people, they want the network and the ability to advance while mid to late career people want the lack of commute and they want job stability. So it’s this engagement that really most companies were missing pre pandemic and this you know, gives them the opportunity to do something different and that’s more effective

Nathaniel E. Baker
and more importantly the business is booming and people are looking to hire so like you said that.

Alex Chausovsky
Absolutely. Absolutely looking to hire you the projections for 2023 right now is there still going to be you know, more job gains than job losses right so yes, of course there will be some layoffs and and some some cutbacks, but I think by and large, you’re still going to be in this market that is hungry and starved for talent. And as some companies cut back, others will be looking to add to the ranks. So overall, I tend to think that the labor force environment, you know, keep in mind, our labor force participation rate right now is actually down, we’ve lost 100,000 workers from the labor force over the course of 2022. So the competition for talent is still much more intense than it used to be, because there’s the labor pool is smaller than it used to be. So I think that the labor market continues to remain vibrant and healthy, maybe not so vibrant, and healthy as it wasn’t 2022, when you had, you know, job offers that are 2030 50% over what the person is currently making. So it’s going to normalize a little bit in that regard, but the ability to add talent, it’s going to still be there. And companies are going to look to do that.

Nathaniel E. Baker
Hmm. All right. Very good news, indeed, I guess for the economy. So and for those expecting a hard landing, maybe it won’t happen in 2023. It sounds like what you’re saying? Well,

Alex Chausovsky
I think the devil is always in the details right there. When you talk about economics, there will be pockets of the economy that are going to feel that hard landing, certainly, especially sectors that experienced a super boom, as a result of the pandemic. And the kind of resurgence and reopening process that we went through the year over year comparisons are not going to be very pretty for some sectors, but other segments of the economy are going to continue to thrive. And I think that overall, if you look at the fact that, you know, two thirds of GDP is driven by consumer spending, and the fact that people are still going to have work and the ability to earn a living, we’re not going to see the same kind of pullback in expenditures, personal consumption expenditures, as we would typically during a recession. So I think GDP are likely to be flattish, maybe slightly up or slightly down, but certainly not what we think about when we look back at, for example, 2008 2009, when that was almost, you know, a mid to high single digit contraction in GDP. If we look at other recessions, it’s going to feel much milder than that. But as I said before, it depends on what industry you’re in some industries will still have growth, others will see a more acute contraction

Nathaniel E. Baker
The housing industry and the contraction that we are seeing there, that isn’t a concern that could that could bleed into other parts of the economy?

Alex Chausovsky
I think that we’ve already started to see the elements of the economy that are affected by that, right. So we see a pullback in the cost of lumber, for example, as builders, you know, have much smaller scale plans for 2023. Other building materials as well, I think, you know, the financial sector, anyone that finances home purchases is going to feel some pain in 2023. But keep in mind, housing sector actually leads the business cycle of the overall US economy by about a year. So the pain that we’re feeling now in housing is going to abate for that sector. And by end of next year, we should start to see that rise once again. One of the ways that I like to think about it is, you know, when you put it in context of interest rates, so when I bought my first home back in 2007, at the pre Great Recession peak, my interest rate for my first mortgage was seven and a quarter percent. And it was a market that was a relatively healthy people were buying homes at seven a quarter percent. Now, of course, I have to recognize that home values have increased tremendously, but what we’re dealing with right now is this entire generation, really two generations. So the millennials, and the Gen Zers that are now in the workforce that are looking to buy a home, they’ve never seen interest rates like this. So there is a period of kind of normalization that needs to happen when they have to realize that it is possible to take a mortgage at 7%, even though it’s not nearly as nice as it was at 3%. But you can work with it right, you can still find a way to to make it happen. So I think that the housing market will come back likely late 23 into 2024. Other segments of construction, non residential, for example, are doing well now. But they lag the economy. So they’re going to see that pain as we get into that late 23, early 24 timeframe. So it really again, depends on what segment you’re talking about.

Nathaniel E. Baker
Yeah, I guess the commercial segment. I mean, you talk about working from home, and that would one would think have really cramped a lot of demand for office space.

Alex Chausovsky
Well, it did. And there is lower occupancy rates for sure. But what we’re also finding is that most businesses are not switching to a fully remote workforce, right, you’re going to have some elements of that company that are going to have to be in person. Others can be remotely and there’s essentially a stratification that has happened within the labor market. So if we look at it about I would say 50% or so are going back to the office, another 20 or 30% are doing some sort of hybrid arrangement where they’re in the office a couple of days. A week and working from home Mondays and Fridays, let’s call it like that. And then there’s another layer that never really needed to be in the office in the first place. And these are the, obviously the gig economy workers. These are the tech professionals, engineers that can do all of their work remotely. And so that accounts for about 15 to 20% of the workforce as well. So companies have scaled down their offices, but I’m not aware of any business that’s gone completely 100% remote, people want to have some ability to interact with their colleagues. And so while occupancy rates are down, I don’t think it’s been nearly as catastrophic for the commercial real estate market, as people were thinking at the beginning of the pandemic.

Nathaniel E. Baker
Yeah, if you’ve ever been anywhere near New York or Manhattan over the last couple of months, you can attest to that.

Alex Chausovsky
It’s I can I, in fact, I was in New York this weekend, and it was absolutely packed and booming. Yep,

Nathaniel E. Baker
yep. Cool. All right. In closing, I’d like to ask people, this has all been very optimistic not to rain on all that parade. But what is there something that’s keeping not proverbially maybe keeping you up at night? And that you are concerned about if we look at worst case scenarios for the economy in 2023?

Alex Chausovsky
Well, I think that any economist or someone that follows data has to read the charts. And so there are leading indicators out there certainly, that paint a more pessimistic picture. PMI is a great example of that the Purchasing Managers Index, or typically leads the business cycle by 12 months. And it continues to decline on a month over month basis. And so that points in negativity all the way into the latter part of next year, it doesn’t talk to the degree or the amplitude of decline. But it does say that that negative pressure is going to persist all the way through the next 12 months. So that’s something tangible that I can point to that season. Commodity prices. Copper, as an example, is saying something similar. Copper also tends to lead the economy because of its prevailing usage across many sectors. So I think those are the tangible things, the more intangible things that I concern I’m concerned with is obviously on the geopolitical front, right, we’ve got tension and stress between Europe, US and Russia, to a lesser extent with China. But you know, the war in Ukraine can get out of control very, very quickly, if Belarus gets involved if for some reason, you know, the Russian leadership decides that tactical nukes are the way to go, that completely derailed any kind of economic forecast that you put together. On the Pacific front, I think it’s interesting to note that we are changing our policy as a country. So the United States is allowing countries other than the UK to buy advanced US military tech for the first time in history, Patriot missiles to Japan, advanced capabilities for missiles for Australia. So we’re trying to project a contagion type of, I should say, containment type of policy when it comes to China, right without being overly confrontational with it, as we are with with Russia. So those are the kinds of things that I say, present the biggest downside risks to the to the outlook, if they do get profoundly worse than where we are today.

Nathaniel E. Baker
Any views on how the whole situation in Ukraine between Korea and Russia may play out,

Alex Chausovsky
or when it’s very difficult to foresee an outcome that does not involve, you know, either regime change in Russia, whether that’s externally kind of a propagated or internal, someone from within the Russian government takes control. But certainly, it’s very, very difficult for me to envision the situation getting much better in the near term. They’ve clearly decided that this destruction of civilian property, particularly the power grid, is the way to wear down the Ukrainian resolve. There’s talk of a secondary kind of invasion from Belarus that targets key of as the attack starting next spring, we see a lot of troop movements and military hardware being moved into Belarus. So that would open up a totally different front in the war. The Ukrainians have been obviously remarkable in their persistence, persistence, perseverance, and the ability to do more with less. Right. So support for the Ukrainian position does not seem to be wavering from either the US or from the European side. But we did have obviously a shift in the political landscape here with the house now being, you know, majority Republican, and there is talk from several of the Republican leaders about, you know, kind of curtailing some of the support and not, as they say, not issuing a blank cheque, which is certainly not what we’ve done, but that’s the positioning, right. So those are the kinds of things that keep me up at night and I think that it’s going to be a pro long drawn out conflict that does not have a near term resolution, in my view.

Nathaniel E. Baker
Yeah, we’ve had a couple people on the program from that part of the world and they said the same thing. So we’re, that’s what it’s worth any thoughts on the potential balkanization of Russia? There’s been some talk about that, but I’ve been reading about how like the various parts could break apart or what have you.

Alex Chausovsky
I think that as long as the current political structure at the top of the system remains intact, that’s not likely to happen. I mean, you can certainly have Kazakhstan and Uzbekistan, you know, make public statements that are asserting of their independence. But at the end of the day, they rely so heavily on their cooperation with Russia. Certainly Belarus isn’t going anywhere. If you look at, you know, Chechnya, and other parts of the territories controlled by the Russian regime, they’re still very much under heel. So I think it would require a change in leadership before something like that can can take place. But I again, I’m not optimistic near term. You know, there’s there’s some rumor about the health of Putin. And I think that if he were to be removed from the picture, there is a potential for anyone really being willing to come in and say, essentially put all the blame on him and say, Look, we are interested in re engaging with the world in a more constructive means. So it’s possible. But as long as Putin is in power, I don’t think that’s going to happen.

Nathaniel E. Baker
Yeah, yeah. Okay. Well, that’s a rather grim, some grim talk here to balance things out, I guess.

Alex Chausovsky
I think so being realistic about it. Yeah, of course. Yeah.

Nathaniel E. Baker
Well, thank you so much for coming on the program. Again, Alex. And in closing, maybe tell if you can tell our listeners how they can find out more about you. I don’t think you’re on Twitter.

Alex Chausovsky
But I do have a Twitter presence. It’s minor, and I’ve really pulled back with the latest craziness on the platform, LinkedIn is probably the best way to connect with me, our website, Mila resource.com. A great way to learn more about the company. And certainly reach out to me if you’re interested in having a speaking engagement or anything along the lines on the economy, on talent and workforce issues, or, most importantly, on how to leverage data to make better quality decisions for your organization.

Nathaniel E. Baker
Very cool. Miller resource.com. I’ll put the links into the show notes as well so you can access them easily. Thanks again to Alex. Thank you all for listening. And with that, we look forward to speaking to you again next time. This is probably going to be the last podcast of the year. So we will speak to you in 2023. Bye.

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