WEBVTT - Rising Economic Pressure Around US Retail 0:00:01.360 --> 0:00:05.680 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.000 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:19.880 --> 0:00:22.239 All right, so let's talk about retail if we may, 0:00:22.280 --> 0:00:24.479 because investors like in some of the results, not so 0:00:24.600 --> 0:00:27.560 much Macy cutting its outlook, demand trends worsening, but the 0:00:27.560 --> 0:00:31.639 stock rallying after initial drop. This morning, we've got Nordstrum 0:00:32.159 --> 0:00:34.680 shares jumping better than expected quarterly results, and Matt we 0:00:34.680 --> 0:00:38.879 have Dollars General stock plunging. It slashed its annual profit forecast, 0:00:38.880 --> 0:00:41.600 citing rising economic pressures on its shoppers, which always gets 0:00:41.600 --> 0:00:44.400 me worried because that's the low end of retail. 0:00:44.440 --> 0:00:46.080 Right, I mean, I was just going to say, that's 0:00:46.080 --> 0:00:49.520 a wide range, right, completely different shoppers I would imagine 0:00:49.640 --> 0:00:52.760 completely at Macy's or Nordstrums than Dollar General. On the 0:00:52.760 --> 0:00:57.800 other hand, Nordstrum is seemingly doing better because of their discount, 0:00:58.320 --> 0:01:00.520 and I don't know how cheap it is actually at 0:01:00.560 --> 0:01:03.360 the I imagine Nords from RACA is still pretty expensive, right. 0:01:03.320 --> 0:01:05.240 Yeah, it's so cheaper, and but I will say that 0:01:05.280 --> 0:01:06.880 they've been going through a lot of stuff, right, They've 0:01:06.880 --> 0:01:10.720 been having some difficulties, so you know they've they've been 0:01:10.760 --> 0:01:13.720 beaten up for a while. But yes, it's not inexpensive, 0:01:13.720 --> 0:01:16.280 but that's where you go for bargains anyway. Someone who 0:01:16.319 --> 0:01:19.160 really knows what's going on is Mary Ross Gilbert. She's 0:01:19.200 --> 0:01:21.920 senior retail analyst at Bloomberg Intelligence and she joins us 0:01:21.920 --> 0:01:25.600 on Zoom from Los Angeles. Hey, Mary, nice to check 0:01:25.600 --> 0:01:29.520 in with you. So a bunch of you know, retailers 0:01:29.520 --> 0:01:31.920 reporting kind of wrapping up the retail earning season or 0:01:31.959 --> 0:01:35.120 getting close to it. Let's start with Macy's, which I 0:01:35.120 --> 0:01:37.440 still feel like Lisa Bromwooz hit it right on the 0:01:37.480 --> 0:01:39.760 nose earlier today. I think Macy's is still trying to 0:01:39.760 --> 0:01:40.720 figure out what they want to be. 0:01:42.520 --> 0:01:44.959 Well, you know, that's interesting that you say that, because 0:01:45.040 --> 0:01:48.760 when I think about what's happening at Macy's, I'm really 0:01:48.800 --> 0:01:51.800 seeing an improvement in the overall execution of the business. 0:01:51.920 --> 0:01:55.160 But I think as you started to talk about the 0:01:55.200 --> 0:01:59.200 differences in the consumer, you spoke about dollar General, where 0:01:59.240 --> 0:02:01.200 the consumer there's getting really hit and there at the 0:02:01.200 --> 0:02:04.560 low end. So if you look at Macy's, their core 0:02:04.760 --> 0:02:08.320 customer is earning somewhere around under seventy five thousand a year. 0:02:08.919 --> 0:02:11.480 And so that's where you're seeing the real hit on 0:02:11.560 --> 0:02:14.880 the Macy's side. Now on the Nordstrom side, and you 0:02:14.880 --> 0:02:17.200 brought up Nordstrom and then Nordstrom rack and you sort 0:02:17.200 --> 0:02:19.680 of wondered, well, hey, are they a little bit higher end? 0:02:19.680 --> 0:02:23.320 And the answer is yes. So the average consumer household 0:02:23.360 --> 0:02:25.280 income for the rack is one hundred thousand. 0:02:25.320 --> 0:02:25.880 Where is it. 0:02:27.320 --> 0:02:30.480 At Nordstrom the banner It's actually over one hundred and 0:02:30.520 --> 0:02:32.640 fifty thousand, So you can see that there is a 0:02:32.680 --> 0:02:36.160 difference there the higher end. 0:02:36.360 --> 0:02:40.200 So they're in Nordstrom the head the headlines door, it's 0:02:40.240 --> 0:02:43.000 one hundred and fifty thousand. That's the average household in 0:02:43.040 --> 0:02:45.400 for and had the rack, it's one hundred grand, and 0:02:45.440 --> 0:02:46.880 at Macy's it's seventy five. 0:02:47.080 --> 0:02:47.520 Is that right? 0:02:48.480 --> 0:02:50.840 Yeah, that's for their for their core customers. 0:02:50.960 --> 0:02:54.520 I always think of Macy's as really fancier because Bloomingdale's 0:02:54.520 --> 0:02:58.679 is across the street from us, right, and Bloomingdale's is Bloomingdale's. 0:02:58.919 --> 0:03:02.520 Because I was speaking specifically about the Macy's banner, So 0:03:02.720 --> 0:03:07.480 Bloomingdale's the banner is going to be akin to Nordstrum, 0:03:07.560 --> 0:03:10.120 and in some cases, I feel like it's higher end 0:03:10.919 --> 0:03:16.560 because they have that designer element within Nordstrom that really 0:03:16.680 --> 0:03:19.080 crosses over well with Bloomingdale. So I would say that 0:03:19.080 --> 0:03:20.960 their customer base is very similar. 0:03:21.200 --> 0:03:23.600 So why do you think Macy's sold off? I know 0:03:23.639 --> 0:03:25.239 why they sold off initially, and then why do you 0:03:25.240 --> 0:03:27.679 think they rallied? Is it just the market bounce? I 0:03:27.720 --> 0:03:29.880 found that hard to believe because it was a pretty 0:03:29.880 --> 0:03:31.680 substantial low. I think it was down about five six 0:03:31.760 --> 0:03:32.959 percent at its lows today. 0:03:34.040 --> 0:03:36.040 Yeah, it really was. I mean, it's hard for me 0:03:36.160 --> 0:03:39.560 to know exactly what's going and you know, going on 0:03:39.680 --> 0:03:42.360 in terms of the stock movement. If I had to 0:03:42.440 --> 0:03:44.320 venture a guest, I'd say part of it could be 0:03:44.400 --> 0:03:47.480 shortcovering thinking that, you know, maybe this is the end 0:03:47.480 --> 0:03:51.480 of the bad news, especially since Macy's came out dramatically 0:03:51.520 --> 0:03:54.560 cut their guidance for the year, and I think they 0:03:54.560 --> 0:03:57.880 did it to really leave room for upside, especially in 0:03:57.920 --> 0:04:01.080 the second half, to outperform in the second half. So 0:04:01.560 --> 0:04:04.080 I really think that that was sort of the key 0:04:04.160 --> 0:04:04.920 element there. 0:04:05.600 --> 0:04:05.920 It was. 0:04:06.160 --> 0:04:10.160 I mean, to me, a little bit concerning to read 0:04:10.200 --> 0:04:13.720 what Jeannette said, and I think I wrote it down 0:04:13.760 --> 0:04:16.080 to myself somewhere around here. 0:04:16.720 --> 0:04:19.360 He said, you know, last year. 0:04:19.360 --> 0:04:23.520 They had even expected a downturn in twenty twenty three, 0:04:23.640 --> 0:04:27.200 but this year it was worse than or this month 0:04:27.480 --> 0:04:29.440 they realized it was even worse than expected. 0:04:29.520 --> 0:04:30.760 Let me get the direct quote. 0:04:30.800 --> 0:04:33.760 We planned the year assuming that the economic health of 0:04:33.800 --> 0:04:36.480 the consumer would be challenged. But starting in late March, 0:04:36.800 --> 0:04:40.360 demand trends weakened further in our discretionary categories. 0:04:40.400 --> 0:04:42.400 So it's even worse than they thought. 0:04:43.320 --> 0:04:44.920 Yes, it was even worse than they thought. 0:04:45.240 --> 0:04:47.960 So it was more Remember it was more dramatic at 0:04:47.960 --> 0:04:53.760 the Macy's banner, less so at Bloomingdale's, right, because the 0:04:53.800 --> 0:04:57.240 Macy's banner was down like seven point eight percent something 0:04:57.320 --> 0:05:00.840 like that on a comp sales basis, whereas the Bloomingdale's 0:05:00.880 --> 0:05:03.800 banner was down four point three. And then their beauty, 0:05:04.360 --> 0:05:07.200 their high end beauty banner, which is called Blue Mercury, 0:05:07.360 --> 0:05:09.599 was actually at four point three in the quarter. But 0:05:09.640 --> 0:05:12.960 I think there's another key point here, and that is 0:05:13.000 --> 0:05:17.200 they definitely saw an effect with weather and really where 0:05:17.240 --> 0:05:20.640 they saw the weakness in the categories was around sort 0:05:20.680 --> 0:05:25.960 of spring and summer merchandise, and what happened is is 0:05:25.960 --> 0:05:28.680 they've had to take a hit on that discount that 0:05:28.760 --> 0:05:30.800 and move it out, and they're very good at doing that. 0:05:31.360 --> 0:05:34.680 So Q two is really going to have the negative 0:05:34.720 --> 0:05:39.599 effect of that markdown Act activity. But when I walked 0:05:39.640 --> 0:05:42.400 through the stores, I was just there on Tuesday, walking 0:05:42.440 --> 0:05:45.839 through the stores, and they look very clean, meaning a 0:05:45.839 --> 0:05:47.520 lot of fresh merchandise in there. 0:05:47.720 --> 0:05:48.440 They're beautiful. 0:05:48.440 --> 0:05:53.600 They're continuing to upgrade their flagship stores. So when you 0:05:53.640 --> 0:05:55.880 start to walk into a Macy's now, it's starting to 0:05:55.920 --> 0:05:59.640 look more and more elevated, almost like especially the beauty department, 0:05:59.680 --> 0:06:03.880 almost like walking into a Bloomingdale's or a Nordstrum type environment. 0:06:04.320 --> 0:06:06.440 That's where they missing an idea of what are you doing? 0:06:06.560 --> 0:06:08.920 That's where they're making money. I feel like perfumes and 0:06:08.960 --> 0:06:11.360 makeup right in terms of margins, what I'm just the one. 0:06:11.600 --> 0:06:13.360 I try and get through and out of that floor 0:06:13.400 --> 0:06:16.640 as quickly as I can. Everybody's spraying you. They all 0:06:16.720 --> 0:06:18.760 want to talk. It's like a stop and chat thing. 0:06:18.839 --> 0:06:19.560 Get away from me. 0:06:20.600 --> 0:06:22.800 It really is, So let's talk. 0:06:23.040 --> 0:06:23.719 Go ahead. 0:06:23.880 --> 0:06:25.040 It's an important category. 0:06:25.160 --> 0:06:27.880 You mentioned, it's thirty percent of their sales you know 0:06:27.920 --> 0:06:29.960 around this time of year, but come in the holidays 0:06:30.000 --> 0:06:32.719 it's forty percent. So it is it is big. 0:06:32.640 --> 0:06:32.960 All right? 0:06:33.000 --> 0:06:37.279 Dollar General. Oh, their spectrum stocks down about nineteen percent, 0:06:37.320 --> 0:06:39.719 so it's pretty much hovering near its lows the session. 0:06:39.760 --> 0:06:43.360 It's down a lot this year. I'm just looking at 0:06:43.360 --> 0:06:45.680 what it is. It's down almost thirty four percent here 0:06:45.680 --> 0:06:48.680 in twenty twenty three. So, Mary, how do you see that. 0:06:48.839 --> 0:06:51.200 Is it a case that people are trading up so 0:06:51.240 --> 0:06:54.120 they're not shopping there, or is it something more substantial 0:06:54.200 --> 0:06:57.359 and not a good sign, certainly for shoppers at the 0:06:57.360 --> 0:06:59.520 lower end of the economic spectrum. 0:07:00.000 --> 0:07:03.960 Okay, well, not to talk over our expert on Dollar General, 0:07:04.000 --> 0:07:07.520 which is Jen Bartashus, but just knowing what's going on 0:07:07.560 --> 0:07:10.200 with the lower end consumer, you know, they're having to 0:07:10.240 --> 0:07:13.120 cut back on discretionary and that's really what you're seeing 0:07:13.160 --> 0:07:15.640 there on the Dollar General channel. 0:07:16.440 --> 0:07:17.160 Yeah. 0:07:17.240 --> 0:07:19.600 I just was looking at a chart from Torsten Slock 0:07:19.680 --> 0:07:23.120 also who's the chief economist at Apollo Global Management, and 0:07:23.160 --> 0:07:26.320 it shows that credit card delinquency rates are moving higher. 0:07:27.520 --> 0:07:29.480 This has got to be a concern, especially at the 0:07:29.520 --> 0:07:32.520 lower end, if they don't have money packed away like 0:07:32.840 --> 0:07:34.960 you know, wealthier consumers. 0:07:36.520 --> 0:07:37.440 That's exactly right. 0:07:37.760 --> 0:07:42.040 One interesting point and that is that employment still remain strong, 0:07:42.400 --> 0:07:44.520 so I think there is going to be some resilience there. 0:07:44.600 --> 0:07:47.680 It's just that there's not a lot left with inflation 0:07:47.800 --> 0:07:50.800 and food and energy and so you know, that's where 0:07:50.800 --> 0:07:52.600 they have to be very careful in their spend. So 0:07:52.680 --> 0:07:54.960 I think we're going to continue to see some choppiness, 0:07:55.280 --> 0:07:57.600 you know, across the board with retail, which is what 0:07:57.680 --> 0:08:00.400 we'll see where we might have a strong weak month 0:08:00.440 --> 0:08:02.640 here or there, and then all of a sudden, you know, 0:08:02.720 --> 0:08:05.600 after that, we'll see some weakness. So yeah, I think 0:08:05.600 --> 0:08:07.960 there's going to continue to be some choppiness, but there 0:08:08.080 --> 0:08:11.040 is to a certain extent some resilience. But also remember 0:08:11.040 --> 0:08:13.560 that in the first quarter we're going against some very 0:08:15.080 --> 0:08:18.440 you know, strong figures last year, so the comparisons are 0:08:18.760 --> 0:08:21.840 are really tough right now. They get so much easier 0:08:21.880 --> 0:08:24.080 in the second half, and that's where things could look 0:08:24.120 --> 0:08:24.840 a little bit better. 0:08:25.000 --> 0:08:26.680 All right, we got to run Hey, Mary, thank you 0:08:26.760 --> 0:08:29.320 so much. Mary Ross Gilbert, Senior Retail Alice at Bloomberg 0:08:29.360 --> 0:08:32.120 Intelligence on Zoom from LA you know, Victoria's secret. 0:08:33.040 --> 0:08:33.800 How did we miss that? 0:08:33.840 --> 0:08:36.320 With you in the studio, Carol. 0:08:37.040 --> 0:08:39.720 There used to be a Victoria Secret right across the street. 0:08:39.840 --> 0:08:41.880 I remember I went over there and got you some 0:08:41.880 --> 0:08:42.960 stuff at one point. 0:08:43.040 --> 0:08:45.240 It's a little it's a little Santa hat. I remember, 0:08:45.280 --> 0:08:50.080 it's a Santa Claus hat. Stockstown nine percent was down 0:08:50.120 --> 0:08:53.480 about fifteen percent, some disappointment over their results. So how 0:08:53.520 --> 0:08:54.600 did we miss this one? 0:08:55.040 --> 0:08:57.480 I don't know. I kind of ignore that kind of stuff. 0:08:57.520 --> 0:09:01.360 Ever since Cant canceled Culture Pop, I've stayed away from 0:09:01.440 --> 0:09:02.199 Victoria's Secrets. 0:09:02.240 --> 0:09:03.720 I never go to the fashion show anymore. 0:09:03.760 --> 0:09:06.240 He's a little nervous. I do remember that piece as well. 0:09:06.480 --> 0:09:10.040 You're listening to the Bloomberg Business Week podcast. Catch us 0:09:10.040 --> 0:09:13.400 Live weekday afternoons from three to six Eastern Listen on 0:09:13.480 --> 0:09:17.520 Bloomberg dot com, the iHeartRadio app and the Bloomberg Business App, 0:09:17.800 --> 0:09:20.040 or watch us live on YouTube. 0:09:20.920 --> 0:09:23.000 You remember, well, maybe you don't, but we know. We 0:09:23.080 --> 0:09:24.760 talk about the cost of healthcare a lot. We talked 0:09:24.760 --> 0:09:27.960 about inflation generally. Healthcare certainly plays into it. What I know, 0:09:28.480 --> 0:09:30.160 I'll tell you yesterday. 0:09:30.720 --> 0:09:33.120 Was hit by a truck one time in New York 0:09:33.679 --> 0:09:35.680 and I had to go to the hospital for like 0:09:35.760 --> 0:09:40.160 a month and had five surgeries, and I was messed 0:09:40.240 --> 0:09:42.679 up the whole time, and I had to deal with 0:09:42.720 --> 0:09:46.440 these bills. I had no idea you know what, I 0:09:46.520 --> 0:09:48.240 had to pay, and I didn't have to pay. I 0:09:48.240 --> 0:09:49.920 had to deal with the insurance company. They didn't really 0:09:49.920 --> 0:09:51.120 like voluntarily help me. 0:09:51.280 --> 0:09:53.959 So it's like, did you don't have did it just 0:09:54.000 --> 0:09:54.640 pay for everything? 0:09:54.800 --> 0:09:57.360 No, it ended up costing me a ton, I mean 0:09:57.440 --> 0:10:00.559 tens of thousands of dollars. And by the way, what 0:10:00.640 --> 0:10:02.880 insurance paid for like was over a quarter of a 0:10:02.920 --> 0:10:05.960 million bucks for that, it is so expensive in this country. 0:10:06.480 --> 0:10:08.280 Having lived in Germany for the past. 0:10:08.160 --> 0:10:11.319 Few years, very different stories, it's. 0:10:10.920 --> 0:10:12.320 A very different story. 0:10:12.400 --> 0:10:14.080 Well, what's interesting we hear a lot of stories we 0:10:14.080 --> 0:10:15.480 want to bring in our guests because we talk a 0:10:15.520 --> 0:10:17.440 lot about the spending that we do here in the 0:10:17.520 --> 0:10:20.960 United States on medical care healthcare, and yet sometimes the 0:10:21.000 --> 0:10:25.000 outcomes are not on par in a positive way when 0:10:25.040 --> 0:10:27.480 you compare the spending and other developed countries. So let's 0:10:27.520 --> 0:10:30.160 get to it with Gbi. She is Professor of Health 0:10:30.160 --> 0:10:32.720 Policy and Management at the Johns Hopkins Bloomberg School of 0:10:32.720 --> 0:10:35.520 Public Health, supported by Michael Ura Bloomberg, founder of Bloomberg 0:10:35.600 --> 0:10:40.040 LP and Bloomberg Philanthropy. She's on Zoom in Washington, DZ. Gee, 0:10:40.040 --> 0:10:41.800 it is nice to have you here with us. Matt's 0:10:41.800 --> 0:10:43.839 not wrong. I mean sometimes I look at a bill 0:10:43.880 --> 0:10:46.840 and I'm like, oh my god, it was emergency visit, 0:10:47.000 --> 0:10:50.040 you know, and didn't have any other choice but to 0:10:50.040 --> 0:10:51.240 go there because it was midnight. 0:10:52.960 --> 0:10:55.400 It's outrageously expensive. Why is outrageous? 0:10:55.520 --> 0:10:58.479 Why is it so expensive in the United States? 0:10:58.920 --> 0:11:00.000 Yes, thank you. 0:11:00.080 --> 0:11:03.280 My reason for the high price is that there's no 0:11:03.480 --> 0:11:08.920 price information available to patient consumers, so they're plandfolded and 0:11:09.120 --> 0:11:12.640 can now do comparison shopping. The providers have no price 0:11:12.679 --> 0:11:15.600 competition and no incentive to lower their price. 0:11:15.720 --> 0:11:19.000 But how do you do price competition in medical care? 0:11:19.040 --> 0:11:22.240 Like is there is there like a travelocity or something. 0:11:22.320 --> 0:11:24.920 Yeah, because I have to say, Gee, as I said, 0:11:24.920 --> 0:11:28.400 I lived in Germany for the past six years. There 0:11:28.440 --> 0:11:30.680 no one, No one showed me a price before I 0:11:30.760 --> 0:11:34.400 had any kind of treatment. There was no price comparison there, 0:11:34.440 --> 0:11:40.000 but prices were significantly lower for care that was, if 0:11:40.040 --> 0:11:42.640 not as good, better than in the US. 0:11:43.760 --> 0:11:46.880 Unfortunately, you know, we have a very different system in 0:11:47.440 --> 0:11:51.400 Germany's more public funded healthcare system. Here is more private funded. 0:11:52.120 --> 0:11:55.520 So if we don't have price competent competition, probably we're 0:11:55.520 --> 0:11:57.600 going to pay even much higher price. 0:11:58.880 --> 0:12:01.880 Well wait, so so what kind of price competition we 0:12:02.040 --> 0:12:05.400 do we have here? We don't right we right now? 0:12:06.600 --> 0:12:06.800 Yeah? 0:12:06.800 --> 0:12:07.520 Go ahead. 0:12:08.040 --> 0:12:10.960 Think about the direct pay like classic surgery or over 0:12:11.000 --> 0:12:14.320 the counterdrugs. We have price competition, that's why those services 0:12:14.320 --> 0:12:17.200 are very cheap. But for other services, you know, covered 0:12:17.240 --> 0:12:20.760 by insurance, non elective, yet we don't have price competition 0:12:20.800 --> 0:12:21.920 because we don't know the price. 0:12:23.120 --> 0:12:25.160 So is there anything that can be done to change this? 0:12:25.360 --> 0:12:28.120 Or have Americans just decided that we want to have 0:12:28.160 --> 0:12:31.640 the most expensive and not the highest quality healthcare in 0:12:31.679 --> 0:12:32.080 the world. 0:12:32.640 --> 0:12:34.880 You love that common demand, you know now the all 0:12:34.920 --> 0:12:37.199 Americans are putting the bill right through high out of 0:12:37.240 --> 0:12:40.920 pocket costs and the high premiums. The press. Competition always 0:12:41.000 --> 0:12:43.720 bring the best value for consumers, so house care is 0:12:43.760 --> 0:12:46.760 no exception. So I think the first step is price transparency. 0:12:46.800 --> 0:12:48.840 How do you do that? How do you do that? 0:12:48.880 --> 0:12:51.200 So right now we have so what is it? 0:12:51.280 --> 0:12:52.640 Yeah? Go ahead? How would it work? 0:12:52.760 --> 0:12:56.959 We have true regulations right now asking hospitals to post 0:12:57.200 --> 0:13:00.280 the price for all their services, and insurance companies do 0:13:00.400 --> 0:13:00.880 the same. 0:13:01.440 --> 0:13:02.440 So it's just a start. 0:13:02.679 --> 0:13:06.560 But once the systems start running, hopefully patients be easily 0:13:06.840 --> 0:13:09.520 they'll get the information they need before they seek care. 0:13:10.520 --> 0:13:14.800 When we're looking at reasons for runaway prices here, how 0:13:14.840 --> 0:13:18.880 much of it is our towards system. I mean, you 0:13:18.920 --> 0:13:22.240 can sue a doctor for malpractice for millions of dollars, 0:13:22.280 --> 0:13:26.120 and that's why the doctor has to get incredibly expensive 0:13:26.120 --> 0:13:29.760 malpractice insurance that must drive it up a lot. And 0:13:29.800 --> 0:13:32.560 the other thing is on the on the drug side 0:13:32.600 --> 0:13:35.280 of it. I mean, don't we all know that drug 0:13:35.280 --> 0:13:39.480 makers are just in bed with politicians. I mean they 0:13:39.640 --> 0:13:43.800 charge for the pills that we have to buy exponentially 0:13:43.920 --> 0:13:46.559 higher prices than they charge in other parts of the world. 0:13:46.600 --> 0:13:49.000 So I feel like those two drivers are important to 0:13:49.000 --> 0:13:49.680 mention as well. 0:13:50.480 --> 0:13:55.640 Absolutely, the compliance costs and legal hosts imposed on providers, 0:13:55.640 --> 0:13:58.400 but the adventually go to us, go to our patients 0:13:58.640 --> 0:14:00.560 and to our company. You are right in fact that 0:14:00.600 --> 0:14:03.439 the Washington DC is controlled the buy industry. So if 0:14:03.480 --> 0:14:07.000 we depend on Washtern DC to do things through radios costs, 0:14:07.040 --> 0:14:09.640 probably we're not going to be successful. Eventually has to 0:14:09.679 --> 0:14:13.120 come from the market, from consumers, from the collective wisdom. 0:14:13.480 --> 0:14:15.320 That's why competition that will be important. 0:14:15.440 --> 0:14:17.160 You know what I find tricky. I almost feel like 0:14:17.440 --> 0:14:20.520 big hospital. You know, it's interesting. My family, a member 0:14:20.560 --> 0:14:23.560 of my family just went through surgery and an incredible 0:14:23.560 --> 0:14:26.000 hospital in New York City and it was just impeccable 0:14:26.120 --> 0:14:29.800 the care from start to finish, and luckily, you know, 0:14:29.920 --> 0:14:33.320 covered by this incredible insurance we have at Bloomberg. To 0:14:33.360 --> 0:14:36.320 be fair, but it was incredible the process. But at 0:14:36.320 --> 0:14:38.160 the same time, I look at these hospitals and they're 0:14:38.160 --> 0:14:42.120 building wings, and there's gorgeous cafes and there's place today, 0:14:42.320 --> 0:14:45.400 and I almost feel like it's like academia. It's such 0:14:45.400 --> 0:14:48.160 a competition to build out and be the best facilities, 0:14:48.200 --> 0:14:50.640 and I feel like how much gets away from it 0:14:50.680 --> 0:14:53.160 really just has to be about good care and how 0:14:53.160 --> 0:14:55.720 do we kind of get back to that focus. 0:14:55.800 --> 0:14:58.800 Love that carell I think we have the best people, 0:14:59.200 --> 0:15:02.240 all the providers and households. They are well intentioned, but 0:15:02.360 --> 0:15:05.920 the problem incentive. Our system has a lot of bad incentives. 0:15:05.960 --> 0:15:09.680 That's why we're looking at bad outcomes and ineffresieness spending. 0:15:09.880 --> 0:15:12.320 Once we get the incentives right, I believe we have 0:15:12.400 --> 0:15:14.760 really the best people best to bring to bring the 0:15:14.800 --> 0:15:17.560 best value for our patients and for everybody involved in 0:15:17.560 --> 0:15:18.359 the system. 0:15:18.680 --> 0:15:19.840 So gee, are you. 0:15:21.360 --> 0:15:25.200 At Johns Hopkins working to change the system. Are you 0:15:25.320 --> 0:15:28.280 trying to do something about it? Have you got a plan? 0:15:29.360 --> 0:15:34.040 Yeah, we're becoming to improve the system. Last week, two 0:15:34.080 --> 0:15:37.880 days ago, I testified with the House Means House with 0:15:38.000 --> 0:15:41.120 the Means Committee, and also with the Senate Help Committee. 0:15:41.240 --> 0:15:44.920 So all about how Congress can help the market to 0:15:45.040 --> 0:15:49.160 remove the frictions and uh, let's all achieve the better outcome. 0:15:49.280 --> 0:15:51.320 But I do believe right now this is a hot 0:15:51.400 --> 0:15:54.320 button issue at the Capitol Hill. Now both parties if 0:15:54.320 --> 0:15:57.120 they really want to win an election, they must bring 0:15:57.160 --> 0:15:58.160 by the American people. 0:15:58.360 --> 0:16:00.400 And we're looking forward to your. 0:16:00.320 --> 0:16:04.359 New initentiontips between you know, Capitol and also all the stakeholders. 0:16:04.600 --> 0:16:05.840 All I would say is I think this is a 0:16:05.840 --> 0:16:07.400 big nut to crack. It's one of the things in 0:16:07.400 --> 0:16:09.520 our economy that costs so much. Is such a big 0:16:09.560 --> 0:16:11.920 part of it. And right now you do have you know, 0:16:11.960 --> 0:16:15.040 heads of companies, whether it's drug companies, whether it's healthcare companies. 0:16:15.200 --> 0:16:18.240 They certainly have the ear of Washington when it comes 0:16:18.280 --> 0:16:21.080 to policy. And I don't know how you get those 0:16:21.160 --> 0:16:24.400 changes through when that's happening exactly. 0:16:24.480 --> 0:16:27.080 So that's why I think popped out won't work, because 0:16:27.120 --> 0:16:29.640 all the policy eventually have to have support by those 0:16:29.880 --> 0:16:33.480 big industry interest right, so it has to be removed 0:16:33.480 --> 0:16:37.480 the company, remove the friction that prevent competition from happening. 0:16:37.760 --> 0:16:41.840 Then from grassroots bottom up, have the competition run down 0:16:41.840 --> 0:16:44.480 the price as is happening, and the other industry. 0:16:44.520 --> 0:16:46.160 All right, we're gonna leave it. On that note, certainly 0:16:46.200 --> 0:16:49.000 a lot to think about, and certainly, like I said, 0:16:49.040 --> 0:16:52.440 tough nut to crack, but certainly some possibilities of change 0:16:52.480 --> 0:16:54.840 based on or g had to say, Gibai, thank you 0:16:54.880 --> 0:16:57.360 so much, Professor of Health Policy and Management at the 0:16:57.440 --> 0:17:00.640 Johns Hopkins Bloomberg School of Public Health, supported by Michael Bloomberg, 0:17:00.800 --> 0:17:04.280 founder of Bloomberg ELP and Bloomberg Philanthropies on zoom in Washington. 0:17:04.400 --> 0:17:06.600 I had no idea that you had to pay so much. 0:17:07.280 --> 0:17:11.479 Yeah, yeah, that was Uh, don't ride motorcycles maybe if 0:17:11.480 --> 0:17:14.320 you're not, if you're not fully insured or you have 0:17:14.440 --> 0:17:16.040 prepared to deal with the consequences. 0:17:16.080 --> 0:17:17.800 There's a lot of injuries you're at for a while. 0:17:18.800 --> 0:17:21.119 I think this is one of those issues when you 0:17:21.200 --> 0:17:25.720 were talking about the cost of healthcare. Uh that, I'm 0:17:25.760 --> 0:17:28.840 just not optimistic we're ever gonna solve it until you know, 0:17:29.320 --> 0:17:32.080 the society is in flames. It's the same with social 0:17:32.119 --> 0:17:33.600 security or entitlement space. 0:17:33.680 --> 0:17:36.000 But what's the flames? What ultimately happens? I mean, we 0:17:36.000 --> 0:17:37.480 already have gaps in healthcare. 0:17:37.720 --> 0:17:38.840 Zombie apocalypse. 0:17:38.920 --> 0:17:43.159 Maybe I can't see anything short of zombie apocalypse changing this. 0:17:43.440 --> 0:17:44.639 Is that a global pandemic? 0:17:45.240 --> 0:17:46.639 No, that didn't do anything, I know. 0:17:46.800 --> 0:17:50.080 That's my point, Like, there's there's your apocalypse if you will. 0:17:50.840 --> 0:17:54.440 Uh well, no, I'm not calling for something worse than that. 0:17:54.480 --> 0:17:57.240 But I'm saying I'm just not optimistic that we can 0:17:57.280 --> 0:17:59.240 really change this, and I hope I'm wrong. 0:18:00.359 --> 0:18:03.919 You're listening to the Bloomberg Business Week podcast. Catch us 0:18:03.960 --> 0:18:08.080 live weekday afternoons from three to six Easter on Bloomberg Radio, 0:18:08.160 --> 0:18:11.440 the Bloomberg Business App, and YouTube. You can also listen 0:18:11.560 --> 0:18:14.680 live on Amazon Alexa from our flagship New York station, 0:18:15.119 --> 0:18:18.600 Just say Alexa play Bloomberg eleven thirty. 0:18:19.119 --> 0:18:21.560 Small firms are the bedrock of the US economy. We 0:18:21.560 --> 0:18:24.399 say it a lot, counting for about half of all employment. 0:18:24.520 --> 0:18:27.240 And so Matt I love talking about the small cap 0:18:27.280 --> 0:18:30.120 space or small business because it's such a great indicator 0:18:30.119 --> 0:18:31.640 on the economic Yeah. 0:18:31.680 --> 0:18:34.959 Absolutely, and I wonder about how worried they should be 0:18:35.119 --> 0:18:38.120 as credit titans, small businesses are probably going to get 0:18:38.160 --> 0:18:39.240 hit harder than the big ones. 0:18:39.280 --> 0:18:41.760 You're absolutely right. So let's get into it with Sharon Miller. 0:18:41.920 --> 0:18:44.159 She's managing director and head a small business over at 0:18:44.200 --> 0:18:47.520 Bank of America out with her latest update on small 0:18:47.520 --> 0:18:50.639 business owners. She joins us on Zoom from San Antonio, Texas. Sharon, 0:18:51.080 --> 0:18:51.720 how are you. 0:18:52.600 --> 0:18:54.919 I'm doing great, Carol, Thank you so much for having me. 0:18:54.960 --> 0:18:56.000 It's great to be here with you. 0:18:56.160 --> 0:18:58.480 Well, nice to have you with Matt and me. How's 0:18:58.480 --> 0:19:00.680 small business doing well? 0:19:00.720 --> 0:19:03.120 I mean, despite all of the headlines that we are 0:19:03.280 --> 0:19:06.840 hearing in the news, and and certainly there are struggles 0:19:06.880 --> 0:19:10.760 and there are certainly business owners that are concerned about 0:19:10.840 --> 0:19:14.040 inflation and the economy and the environment that we're in today. 0:19:14.800 --> 0:19:16.800 I will tell you, on the on the bright side 0:19:16.840 --> 0:19:20.320 that as we survey our clients and understand how they're feeling, 0:19:20.800 --> 0:19:23.800 you know, over half tell us that they believe that 0:19:23.840 --> 0:19:26.959