Speaker 1: You're listening to the Bloomberg Opinion podcast. Catch us Saturdays
Speaker 1: at one in seven pm Eastern on Bloomberg dot com,
Speaker 1: the iHeartRadio app and the Bloomberg Business App, or listen
Speaker 1: on demand wherever you get your podcasts.
Speaker 2: Welcome to Bloomberg Opinion I Amy Morris. This week we
Speaker 2: focus on your wallet. Members of Generation Z and some
Speaker 2: millennials are feeling some intense economic anxiety. How is that
Speaker 2: different than any other generation that came before. Also, holiday
Speaker 2: shopping is upon us, and you might not be happy
Speaker 2: about the rising prices, but you're spending like you don't care.
Speaker 2: And you might have also noticed how the dining industry
Speaker 2: is going through a sweeping overhaul. But we begin with
Speaker 2: a look at small businesses and how America's smallest companies
Speaker 2: can tell us a lot about the health of the
Speaker 2: US economy and where the vulnerabilities are. Earlier this year,
Speaker 2: President Biden rebranded his economic policy with a plan that
Speaker 2: includes an investment in small business.
Speaker 3: First, making smart investments in America, Second, educated and empowering
Speaker 3: American workers to grow the middle class, and third promoting
Speaker 3: competition to lower cost to help small businesses.
Speaker 2: Let's bring in Bloomberg opinion columnists Jonathan Levin, who covers
Speaker 2: US markets and economics, and Jonathan, what are you seeing
Speaker 2: in America's small businesses that's giving you a read on
Speaker 2: the economy and where there might be weaknesses.
Speaker 4: So basically cautious optimism. I always think it is important
Speaker 4: to look at the small business space because they can
Speaker 4: be sort of a Canara in the coal mine, especially
Speaker 4: in an environment like this of contracting credit and higher
Speaker 4: interest rates. Of course, you know, small businesses are more
Speaker 4: sensitive to something like this because they have fewer financing
Speaker 4: options to start with. Right, They're basically dependent on what
Speaker 4: their bank will give them. They can't go out to
Speaker 4: the bond market, for instance, and they are extremely extremely
Speaker 4: exposed to those floating or variable rate loans.
Speaker 1: Right.
Speaker 4: So you like, when we think about housing markets, like,
Speaker 4: you know, why is the United States housing market feeling
Speaker 4: so much more resilient than say, say Canada. It's it's
Speaker 4: that variable rate effect, right, Like you know, when you
Speaker 4: have a variable rate, as soon as the Fed goes
Speaker 4: out and tightens, everybody feels it. It's not just the
Speaker 4: people going out and getting getting new loans. So I
Speaker 4: did think it was very important to look at small businesses,
Speaker 4: but the big picture is a picture of resiliency, and
Speaker 4: to sort of give everybody the tld R at the
Speaker 4: at the top, I don't want to say that they
Speaker 4: can hang in there forever. I don't think that small
Speaker 4: businesses are going to be able to hold up if
Speaker 4: the FED stays this tight for the foreseeable future. But
Speaker 4: at the moment, there's no reason to think that the
Speaker 4: small business sector is at imminent risk of some sort
Speaker 4: of collapse.
Speaker 5: Far from it.
Speaker 2: Actually, you actually made a really good point in your
Speaker 2: column on the Bloomberg terminal about how federal support during
Speaker 2: the pandemic may have impacted. This may have sort of
Speaker 2: skewed the numbers a little bit artificially supporting these businesses,
Speaker 2: so that you know, even had they not had that
Speaker 2: federal support, they might not have been here anyway.
Speaker 4: So you know, one of the reasons I like to
Speaker 4: dip into the bankruptcy space from time to time is
Speaker 4: to do a little bit of myth busting, right, and
Speaker 4: so tourists in the bankruptcy space well, from time to
Speaker 4: time on Twitter things like that or act I should say,
Speaker 4: they will pull up the chart of the trend in
Speaker 4: bankruptcy is. You know, maybe you'll take like a one
Speaker 4: year rolling average and you'll say, oh, my goodness, bankruptcies
Speaker 4: are trending up. And that is indeed true of small
Speaker 4: businesses as as well. But it's important to think about
Speaker 4: level as well as trend and buy in law. Large
Speaker 4: bankruptcies are still pretty low in the United States of
Speaker 4: America relative to what they average, say from like twenty
Speaker 4: fifteen to twenty nineteen, to give you a like a
Speaker 4: pre pandemic snapshot. And the reason for that is because
Speaker 4: you know, the federal government came out with these extraordinary
Speaker 4: relief programs during the pandemic that kept some firms afloat
Speaker 4: that might have organically gone under in the absence of
Speaker 4: the pandemic and that extraordinary support. Right, So there's a
Speaker 4: sense that we're really just sort of playing some catch
Speaker 4: up here, or in the jargon, doing a bit of normalizing,
Speaker 4: and that until we really you see the bankruptcy trends
Speaker 4: break out ahead of something that we would consider normal,
Speaker 4: it does feel early to be worrying about what's going
Speaker 4: on here.
Speaker 2: So with these smaller firms, they are hiring and they
Speaker 2: are spending money. It's just slowed but it is stable.
Speaker 2: To your point, it's the stabilization you need to watch,
Speaker 2: not so much the trend toward fast hiring or a
Speaker 2: lot of money versus the slowdown.
Speaker 4: So, like I said, nobody's pretending that they aren't facing headwinds.
Speaker 4: This has got to be a difficult environment for them.
Speaker 4: When when an extremely interest rate sensitive group of businesses
Speaker 4: is suddenly is suddenly faced with the velocity and the
Speaker 4: levels of interest rates that we're facing across the country.
Speaker 4: Nobody's saying that that isn't heart But the empirical evidence suggests,
Speaker 4: as you point it to, that they are still spending money, right,
Speaker 4: So Bank of America uses their own internal data to
Speaker 4: track spending from small businesses. The headline on the NFIB
Speaker 4: is that small business optimism looks to be very weak.
Speaker 4: But my interpret rotation of that is, okay, is that
Speaker 4: literally telling us something about the economy or is it
Speaker 4: telling us more about the partisan nature of the world
Speaker 4: we live in today. I think there's some of the former,
Speaker 4: but there's also a good chunk of the latter. So
Speaker 4: we have to take this weak small business confidence with
Speaker 4: sort of a grain of salt. Having said all of that,
Speaker 4: you know, to your point, I do think that there's
Speaker 4: a self fulfilling aspect to all confidence, So it doesn't
Speaker 4: really matter at the end of the day why people
Speaker 4: feel bad. They might feel bad because their candidate, you know,
Speaker 4: isn't doing well in the polls, or they're chosen president
Speaker 4: isn't in the White House. If they feel bad, they
Speaker 4: feel bad, and eventually that can actually be reflected in
Speaker 4: the amount of investing that they do, the number of
Speaker 4: people that they hire, and so on and so forth.
Speaker 4: So I say, take the NFIB small business sentiment survey
Speaker 4: with a grain of salt. But if it stays a
Speaker 4: negative territory for the foreseeable future, could it start to matter? Yeah,
Speaker 4: for sure.
Speaker 2: Well let's get into that a little bit. You had
Speaker 2: referred to small businesses as acting as something of a
Speaker 2: canary in the coal mine when it comes to the
Speaker 2: health of the US economy. So over the next quarter,
Speaker 2: let's say, what are you going to be looking for?
Speaker 2: What should we all be watching for when that canary
Speaker 2: goes down into the coal mine.
Speaker 4: So I would, in terms of watching the bankruptcy data itself,
Speaker 4: this stuff could get really noisy, So I would not
Speaker 4: get excited about small business bankruptcies unless you saw a
Speaker 4: really meaningful breakout sort of to the upside. And the
Speaker 4: reason for that is it's sort of multi foil. As
Speaker 4: I said, we're still at really modest levels of bankruptcy,
Speaker 4: so like you would sort of want to wait for
Speaker 4: the normalization to take place and see if the trend
Speaker 4: keeps going A and number two there is there's something
Speaker 4: else going on in the bankruptcy code at the same time,
Speaker 4: and it's hard to disaggregate that from the macroeconomic trends.
Speaker 6: Right.
Speaker 4: So basically we often forget this. But in twenty nineteen,
Speaker 4: an Act of Congress created this thing called sub Chapter
Speaker 4: five in the Chapter eleven code, and it gave a
Speaker 4: lot of small businesses access to sort of a form
Speaker 4: of reorganization that they probably wouldn't have been able to
Speaker 4: access in the past, both because of the complexity of
Speaker 4: the code and the inherent costs and all of that.
Speaker 4: And so this for the first time, starting when this
Speaker 4: became effective in twenty twenty, brought a lot of small
Speaker 4: businesses into the bankruptcy data for the first time. And
Speaker 4: a lot of proponents of this change would say, this
Speaker 4: is actually a good thing, right. This means that more
Speaker 4: small businesses are availing themselves of this new structure to
Speaker 4: try and survive. Not it's not a bad thing at all,
Speaker 4: potentially right, So as sub Chapter five becomes more popular,
Speaker 4: we need to be aware of the fact that the
Speaker 4: numbers of small business bankruptcies maybe going up, and it
Speaker 4: may not necessarily be telling us anything about macroeconomic cycles.
Speaker 4: So my point on the bankruptcy's data is I would
Speaker 4: be very cautious with getting carried away about small ticks
Speaker 4: up or small ticks in the other direction. I would
Speaker 4: tend to watch other indicators more clo including what's going
Speaker 4: on with the payments data. Bank of America is a
Speaker 4: great resource fairly real time, and of course I would
Speaker 4: be watching what's going on with jobs. I think, you know,
Speaker 4: people often tell you that the labor market is a
Speaker 4: lagging indicator. I think it's more complicated than that. I
Speaker 4: think hiring is a great way to express your relative
Speaker 4: confidence in the economy. It is sort of a medium
Speaker 4: term commitment that you, as business owner make with a
Speaker 4: potential employee, and it tells us a great deal about
Speaker 4: where the proprietor of that business sees the economy and
Speaker 4: their business prospects. In three months or six months or
Speaker 4: twelve months down the line, and so far it looks like,
Speaker 4: you know, they think things are going to be okay
Speaker 4: in that horizon.
Speaker 2: Jonathan Levin is a Bloomberg Opinion columnist who covers US
Speaker 2: markets and economics. Bloomberg Opinion continues with a look at
Speaker 2: holiday shopping and even with the higher prices, that's not
Speaker 2: slowing you down. This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Opinion podcast count US Saturdays
Speaker 1: at one and seven pm Eastern on Bloomberg dot com,
Speaker 1: the iHeartRadio app, and the Bloomberg Business App, or listen
Speaker 1: on demand wherever you get your podcasts.
Speaker 2: This is Bloomberg Opinion. I'm Amy Morris. We are well
Speaker 2: into the annual ritual of shopping, baking and planning for
Speaker 2: the holiday season, the food and the gifts and the travel.
Speaker 2: And in fact, this holiday season is bound to be
Speaker 2: a blockbuster. The National Retail Federation expects shopping to hit
Speaker 2: record levels this month and in December. Kristin McGrath is
Speaker 2: an editor with Retail Me Not, which finds consumers are
Speaker 2: spending twenty nine percent more than last year.
Speaker 6: Retailers are starving extra early because they want shoppers to
Speaker 6: do multiple rounds of shopping.
Speaker 2: And even though consumers are not happy with these higher prices,
Speaker 2: that's not slowing them down. Let's talk about this with
Speaker 2: Bloomberg Opinion columnist and author of the Bloomberg Opinion Today newsletter,
Speaker 2: Jessica Carl And Jessica, how are things different from last year?
Speaker 2: Economists had predicted that the US was going to enter
Speaker 2: a recession.
Speaker 7: Yeah, so last year's predictions did not work out this year,
Speaker 7: hopefully we won't enter a recession, but people still have
Speaker 7: mixed feelings about whether that will happen. But really, what
Speaker 7: happened this year was the disconnect between the consumer and
Speaker 7: what economists saw. So consumers weren't happy about the economy
Speaker 7: all year long, and that was the big economic story.
Speaker 2: Of last year, right right, the big disconnect between consumer
Speaker 2: sentiment and consumer behavior. What's causing that disconnect.
Speaker 7: It has to do with the thing called money illusion.
Speaker 7: So people love to hate on the economy and they'll say, oh,
Speaker 7: everything was cheaper years and years ago, but they don't
Speaker 7: recognize that their wages have gone up and things have
Speaker 7: just gotten more expensive across the board. But they wouldn't
Speaker 7: be like happy about. You know, they're not talking about
Speaker 7: their wages. They're talking about this price sticker on the
Speaker 7: bag of oreos that they're buying at the store, which,
Speaker 7: by the way, it's interesting there's this big theory about
Speaker 7: how oreos are also a stagflationary trend, where like the
Speaker 7: cream inside of them, the ratio that to the cookie
Speaker 7: is going down. So there's these visible, tangible signs that
Speaker 7: people start to worry about the economy, and that's like
Speaker 7: an interesting thing, and it's totally It says a lot
Speaker 7: that they're saying a lot of different things versus what
Speaker 7: they're actually spending their money on. So people are still
Speaker 7: spending and spending and spending. So economists are very confused
Speaker 7: by the sentiment being very negative, but yet they're spending
Speaker 7: and the credit card debt's going up and stuff like that.
Speaker 7: So it's just interesting.
Speaker 2: When you talk about like shrink flation, like the example
Speaker 2: that you just gave with the oreos, many people do
Speaker 2: tend to see the economy through the lens of their purchases,
Speaker 2: how much they're paying for items and the impact of
Speaker 2: I guess shrink flation for lack of a better word,
Speaker 2: what are you seeing among consumers is that the going
Speaker 2: trend at this point.
Speaker 7: I think they're definitely more observant of when the quality
Speaker 7: of their products goes down. There's also you know, and
Speaker 7: they're usually lower ticket items. They're you know, bag of chips,
Speaker 7: cake mix, which is interesting. People observe that Betty Crocker's
Speaker 7: cake mix, the weight of the dry ingredients went down,
Speaker 7: so they actually just are putting less cake mix in
Speaker 7: the box and telling you to use the same amount
Speaker 7: of wet ingredients. So people are picking up on these
Speaker 7: little things that are happening in their day to day lives,
Speaker 7: and that's causing them to believe that the economy is
Speaker 7: really bad. And there's probably a lag right if we're
Speaker 7: seeing really great disinflationary data right now, that will take
Speaker 7: time for consumers to kind of realize that, oh, things
Speaker 7: aren't getting more expensive. But the reality is that those
Speaker 7: prices that went up in our inflationary times are going
Speaker 7: to kind of stay at that level. So that's not
Speaker 7: making people happy.
Speaker 2: I understand the anger or the discontent with the inflation
Speaker 2: and with the prices. However, could that disconnect between the
Speaker 2: consumer spending and the consumer sentiment be politically motivated?
Speaker 7: It can certainly be politically motivated. I think if you
Speaker 7: look at who's president during the different times, everyone blames
Speaker 7: the bad economy on that current president if they don't
Speaker 7: agree with their political belief Sure. So yeah, I mean
Speaker 7: during Trump, Democrats said the economy is awful, and during Biden,
Speaker 7: Republicans will say the economy is awful. And the reality
Speaker 7: is that Biden's economy is actually really good. He just
Speaker 7: has like a messaging problem and he needs to kind
Speaker 7: of appeal to more moderate voters in that respect, which
Speaker 7: we've also written about. But it's a challenge definitely from
Speaker 7: a messaging standpoint, especially when you're seeing little scigns that
Speaker 7: make you believe that the economy is bad. And we
Speaker 7: also talked about this in terms of the vibe session
Speaker 7: all throughout last year, which basically just says people are
Speaker 7: saying the vibes are off, the vibes are off, but
Speaker 7: what does that really mean. They're still spending, They're still
Speaker 7: propping up the economy, and that's hopeful we'll stay true
Speaker 7: next year as well.
Speaker 2: And were you You mentioned a few baking items as
Speaker 2: far as shrinkflation is concerned. But let's get into it
Speaker 2: a little bit because we are entering the holiday season.
Speaker 2: This is when we travel, we shop, we give gifts,
Speaker 2: we bake. What are we anticipating then, if the consumer
Speaker 2: sentiment is down, but the consumer spending of late has
Speaker 2: been higher, could this be a big boom for the
Speaker 2: holidays shopping season.
Speaker 7: The holiday shopping season has definitely been pushed forward, and
Speaker 7: you can already see this week if you go into
Speaker 7: your browser, this is the week. You know, we're talking
Speaker 7: leading up to Thanksgiving, but we're not Black Friday yet.
Speaker 7: You can see that people are already putting things on sales.
Speaker 7: Sites are having these big sales even before Black Friday.
Speaker 7: I think part of that is because the retailers are
Speaker 7: kind are confused about what consumers are willing to spend.
Speaker 7: They you know, people say they're on a budget, blah
Speaker 7: blah blah, but like all signs point to them spending
Speaker 7: a crazy amount of money. There's there's I think that
Speaker 7: TSA said they're expected to be a record travel season.
Speaker 7: They always say that, but it should be a record
Speaker 7: travel season this year. So people are spending on flights,
Speaker 7: they're spending on gifts, they're spending on food. So I mean,
Speaker 7: I think it could be a blockbuster but nobody really
Speaker 7: knows yet, obviously.
Speaker 2: And we are talking with Bloomberg opinion columnist Jessica Carl
Speaker 2: about consumer sentiment during the holiday season. Also, Jessica, another
Speaker 2: indicator are people saving? Could this spending all of our
Speaker 2: money come back to haunt us?
Speaker 7: Yes, I don't know if people are saving as much
Speaker 7: as we would hope. During COVID we did have this big,
Speaker 7: big build up of consumer saving. So that is good
Speaker 7: in respects In that way, our coffers are still pretty strong.
Speaker 7: But people are spending money on entertainment. There's just spending
Speaker 7: and spending and spending. Bloomberg actually ran a big graphics
Speaker 7: piece yesterday about auto loans and how those our auto
Speaker 7: loan delinquencies are up. A lot of people take out
Speaker 7: these auto loans and they have no ability to pay
Speaker 7: them back and credit card that is also, you know, troubling.
Speaker 7: So I think there are these signs that going to
Speaker 7: the American consumer be weakening a bit, but also the
Speaker 7: job market hopefully will stay strong and will continue to
Speaker 7: see people spend. But if there are signs that cause
Speaker 7: people to pull back, that would not be a good thing.
Speaker 2: What is then the conventional wisdom for twenty twenty four.
Speaker 2: We all seem to get twenty twenty three a little
Speaker 2: bit wrong, a little off. What about twenty twenty four?
Speaker 7: I think the recession stories hopefully behind us. If those
Speaker 7: disinflationary trends continue, that will be probably the big story,
Speaker 7: and hopefully the economy will improve and strengthen. I think
Speaker 7: the job market is also something to keep an eye on.
Speaker 7: If people start to feel as though they're stuck in
Speaker 7: their jobs whereas though they can't get hired elsewhere, that's
Speaker 7: definitely going to cause the economy to weaken. So there's
Speaker 7: just some certain things to keep an eye on, like boys.
Speaker 7: But the good news is that the CPI numbers are
Speaker 7: very positive and hopefully will continue to see those come
Speaker 7: down in the future.
Speaker 2: And what are you watching for over the next few months.
Speaker 2: We only have a few more weeks before the end
Speaker 2: of twenty twenty three.
Speaker 7: I always love to see the holiday shopping trends. I
Speaker 7: After Christmas, it's always interesting to look at the returns
Speaker 7: and see how many people are returning things and stuff
Speaker 7: like that. But yeah, I think hopefully we will see
Speaker 7: the consumer sentiment index improve, like ideally that would they
Speaker 7: follow the inflation data that we're seeing now. But like
Speaker 7: I said, there could be a lag, and I mean
Speaker 7: that whole money illusion could continue, but in an ideal
Speaker 7: world that would stop.
Speaker 2: Does that create problems for anything more than our ability
Speaker 2: to predict what consumers are going to be doing when
Speaker 2: there's that disconnect between the sentiment and the actual action.
Speaker 7: And sometimes people talk about it being a self fulfilling prophecy,
Speaker 7: which we did hear a lot about last year. If
Speaker 7: you say the economy is bad, bad, bad, but it's
Speaker 7: actually okay, then you'll start to believe it at some
Speaker 7: point and you just will rein back your own spending.
Speaker 7: And if everybody's doing that, then that will cause the
Speaker 7: econ to enter some type of recession, which is not good.
Speaker 7: But if people continue to spend, then that illusion is
Speaker 7: kind of a nine. It doesn't really impact as much.
Speaker 7: But if people really start to pull back, then that's
Speaker 7: where you'll see a problem.
Speaker 2: Jessica Carl is a Bloomberg Opinion columnist and author of
Speaker 2: the Bloomberg Opinion Today newsletter, and coming up, we'll look
Speaker 2: at generational financial anxiety and how it's impacting millennials in
Speaker 2: gen Z. You're listening to Bloomberg.
Speaker 1: You're listening to the Bloomberg Opinion podcast. Catch us Saturdays
Speaker 1: at one and seven pm Eastern on Bloomberg dot Com,
Speaker 1: the iHeartRadio app and the Bloomberg Business App, or listen
Speaker 1: on demand wherever you get your podcasts.
Speaker 2: You're listening to Bloomberg Opinion. I'm Amy Morris. Less than
Speaker 2: one third of Generation Z feels financially secure. In more
Speaker 2: than half say they're worried about not having enough money,
Speaker 2: and not just a little worried either. After years of
Speaker 2: being told that everything's going to be just fine, millennials
Speaker 2: are treading water. Seventy three percent living paycheck to paycheck. Okay,
Speaker 2: let's learn more about this generational financial anxiety with Bloomberg
Speaker 2: Opinion columnist Aaron Lowry, who covers personal finance Arin. Why
Speaker 2: can't we just tell millennials and Gen z ers simmer down,
Speaker 2: It'll be all right, take control of your financial financial
Speaker 2: lives like the rest of us had to do.
Speaker 6: This is different, It's never too because again, I just
Speaker 6: always feel the need to assert this up top with
Speaker 6: millennial conversations. Oldest millennials are forty two years old. We
Speaker 6: are no longer children, right, we are.
Speaker 8: No longer in our twenties.
Speaker 6: The very youngest of the millennial generation is very close
Speaker 6: to thirty. And I think that that contextually is so important,
Speaker 6: because you can't tell a forty two year old just wait,
Speaker 6: just wait your turn.
Speaker 8: It's gonna come. Everything's going to even out. We're starting
Speaker 8: to feel.
Speaker 6: A little panicked at this point, and I think a
Speaker 6: big part of that too is there have been so
Speaker 6: many quote unquote once in a lifetime experiences that it
Speaker 6: feels like happens every time millennials have almost gotten that
Speaker 6: financial foothold. You know, the Great Recession happened as the
Speaker 6: eldest of millennials are coming into the workforce. Don't worry,
Speaker 6: it's a recession. It'll pass, You'll be fine. Okay, Great,
Speaker 6: we started to get control, then the housing market goes
Speaker 6: crazy and it's so hard to buy a house, and
Speaker 6: then all of a sudden, a pandemic comes. And it
Speaker 6: just feels like any time we get the slightest bit
Speaker 6: of advancement, something comes to punch us in the mouth
Speaker 6: and it's so frustrating.
Speaker 2: Is that why the baseline of financial comfort is more
Speaker 2: elusive for this generation. It's just rotten timing.
Speaker 6: Part of its rotten timing, and let's also be honest,
Speaker 6: part of it is systemic issues, wage stagnation. It is
Speaker 6: not app to apples right now when we're looking at
Speaker 6: trying to get into the housing market.
Speaker 8: I wrote a column a while.
Speaker 6: Back about you know, boomers, if you're comping the average
Speaker 6: salary that a boomer made to the average salary a
Speaker 6: millennials making, and the cost of houses, our homes are
Speaker 6: almost four times as expensive for a similar salary. So
Speaker 6: we don't have the same level of access that a
Speaker 6: lot of our parents had. And so this notion of
Speaker 6: we figured it out, you will too is just not
Speaker 6: helpful advice.
Speaker 8: And to bring gen Z into this, I think part.
Speaker 6: Of it is, yeah, they are younger and maybe things
Speaker 6: will be okay, but they're also watching us.
Speaker 8: Just to be clear, I'm thirty four, im a millennial.
Speaker 6: They're watching us and feeling like maybe it won't be
Speaker 6: okay because it doesn't look like it's going to be
Speaker 6: okay for those guys.
Speaker 2: Let's dig into that a little bit. What is it?
Speaker 2: What else is it that millennials and gen Z may
Speaker 2: be facing that the rest of us gen X here
Speaker 2: and then there's a boomer in my house as well.
Speaker 2: The rest of us didn't have to face as b
Speaker 2: and Gen xers. It is different, and you mentioned housing.
Speaker 2: What else is out there that's different that we didn't
Speaker 2: have to deal with?
Speaker 6: You know? I also want to acknowledge gen x and
Speaker 6: boomers had their own things. There have been once in
Speaker 6: a lifetime experiences for every generation and it hasn't just
Speaker 6: been a fleet a flat straight road for absolutely everybody.
Speaker 6: I do feel like what is feeling like a big
Speaker 6: gap here? Life is just more expensive. Even when we
Speaker 6: compare for inflation, wages have not gone up in the
Speaker 6: same way to comp for that. There's a stat flying
Speaker 6: around that someone fact checked me on it, but it
Speaker 6: basically was like, Hey, if your parents were making one
Speaker 6: hundred thousand dollars in their thirties in the eighties, you
Speaker 6: have to be making close to three hundred thousand dollars
Speaker 6: for that to be the same amount of money.
Speaker 8: And that's heavy to us. For one.
Speaker 6: For two, student loans aren't even comparable, you know, I
Speaker 6: know that there are plenty of Gen xers who had
Speaker 6: student loan debt. The price of college is not even
Speaker 6: remotely the same. It does feel like millennials were sold
Speaker 6: this bill of goods.
Speaker 8: Of Hey, if you just go get a four year degree, the.
Speaker 6: World is your oyster. You will be able to go
Speaker 6: have job security. Again, that hasn't really proven to be true.
Speaker 6: And I do see a little bit of an advantage
Speaker 6: for gen Z here where it feels like they have
Speaker 6: kind of learned from our example. They are a little
Speaker 6: bit more skeptical of college. They are looking at alternative
Speaker 6: options that still yield a good salary.
Speaker 8: Technology is really changing the game here. AI is opening
Speaker 8: up a lot.
Speaker 6: Of questions, so perhaps things will be different for them.
Speaker 6: But it does feel for millennials, and again maybe this
Speaker 6: is just a feeling. Maybe factually we are wildly off base.
Speaker 6: I don't think so, but that everything feels way more
Speaker 6: expensive and that we aren't being given the same kind
Speaker 6: of economic opportunities the generations before us had.
Speaker 2: And we are talking with Bloomberg opinion columnist Aaron Lowry
Speaker 2: about generational financial anxiety pacifically with millennials and gen Z.
Speaker 2: You talked a little bit about housing. You talked about
Speaker 2: the cost of an education, which you're absolutely right, gone
Speaker 2: it's skyrocketed since I was in school. So let's look
Speaker 2: also at healthcare that is often linked with employment. Why
Speaker 2: is that so risky for these up and coming generations.
Speaker 6: It's such an odd practice to be linking health insurance
Speaker 6: to employment because we know statistically people will lose their
Speaker 6: jobs at some point. Even if you are an exemplary employee,
Speaker 6: odds are at some point in your professional career you're
Speaker 6: going to get laid off. And the fact that somebody
Speaker 6: could get laid off, and if that coincides with a
Speaker 6: major medical issue, that could put them in an incredibly
Speaker 6: vulnerable position. Even if it doesn't, even if you are
Speaker 6: gainfully employed with health insurance, Let's be honest, a big
Speaker 6: medical issue could will put you in an incredibly financially
Speaker 6: vulnerable position. And it is unbelievable that we have created
Speaker 6: a system where it almost feels as if you're one
Speaker 6: huge health issue away from bankruptcy. And so much bankruptcy
Speaker 6: is tied to medical debt and medical situations. So the
Speaker 6: fact that a lot of every generation, but certainly a
Speaker 6: lot of Millennials and Gen Z have been experiencing layoffs
Speaker 6: and then either have to pay huge out of pocket
Speaker 6: premiums in order to gain access to mediocre health insurance
Speaker 6: while in between jobs, or just risk it, and then
Speaker 6: if something even kind of minor happens, that could be
Speaker 6: tens of thousands of.
Speaker 8: Dollars of medical debt that you're going to have to
Speaker 8: try to pay off.
Speaker 2: What is it that we can do as a country
Speaker 2: to help establish a safety net?
Speaker 6: Oh man, we're going to get right into all of
Speaker 6: the hot button, dog whistle type of topics.
Speaker 8: I feel for people. I wish that.
Speaker 6: There was an understanding that we could have a basic
Speaker 6: safety net and still be a deeply capitalist country. Sure,
Speaker 6: the idea of having baseline safety nets for your population
Speaker 6: to just make sure that folks can't easily fall through
Speaker 6: cracks does not have to be a tenant of policies
Speaker 6: that people feel is how dare you? I'm just going
Speaker 6: to say the S word socialist, and I think that
Speaker 6: that makes people really anxious for some reason. It doesn't
Speaker 6: necessarily have to mean that. It could be that we
Speaker 6: are one of the wealthiest nations in the world. Why
Speaker 6: are so many of our population incredibly vulnerable and living
Speaker 6: in a situation that if one thing goes wrong, one
Speaker 6: job layoff, and their one paycheck away from being unable
Speaker 6: to afford basic necessities, being unable to afford housing, being
Speaker 6: unable to afford transportation, being unable to go to the doctor.
Speaker 6: That's just it's not respectful, and it doesn't give our
Speaker 6: citizens dignity. And I've always been confused while we're allowing
Speaker 6: this to happen, and the fact that we think it's
Speaker 6: perfectly okay to have the employer be perterentialistic and provide
Speaker 6: retirement benefits and healthcare benefits, but the idea of the
Speaker 6: government and us looking after each other as citizens isn't
Speaker 6: the same.
Speaker 8: Just doesn't quite make sense to me.
Speaker 2: And briefly, Aerin, you had said in your column that
Speaker 2: one of America's strengths, so what is considered one of
Speaker 2: America's strengths, it's individualism, might also be very detrimental. How so, well, just.
Speaker 6: Kind of on that same topic, the idea of we
Speaker 6: do have this deeply entrenched, bootstrapped narrative belief, and part
Speaker 6: of it being true that you know, this is a
Speaker 6: country where you can rise up into a different socioeconomic
Speaker 6: class than the one that you were born into. That
Speaker 6: does certainly still exist. It's perhaps a bit harder than
Speaker 6: people pretend that it is, but it exists as an option. However,
Speaker 6: I don't know why we can't hold two truths. That
Speaker 6: we can both be a society that enables people to
Speaker 6: catapult into a different socioeconomic group, but also make sure
Speaker 6: that there is base level safety nets so that even
Speaker 6: our quote unquote bottom socioeconomic groups still have all of
Speaker 6: their basic necessities that and are living a life of
Speaker 6: some level of dignity.
Speaker 2: Aaron Lowry is a Bloomberg Opinion columnist. She covers personal
Speaker 2: finance and is the author of the three part Broke
Speaker 2: Millennial series. You're listening to Bloomberg Opinion. I'm Amy Morris.
Speaker 2: The dining industry is going through an overhaul of sorts.
Speaker 2: The economics of restaurants is changing. Let's find out more
Speaker 2: with Bloomberg Opinion columnists Justin Fox, who covers business. Tell
Speaker 2: me what's changing, what has already happened, what changes are coming.
Speaker 5: Basically, Americans are buying about as much food at restaurants
Speaker 5: as they were. They're on the same trend as before
Speaker 5: the pandemic. It just kept going up and up and up.
Speaker 5: And employment at restaurants is still way below that trend.
Speaker 5: So it's basically as much as being served with fewer servers.
Speaker 5: And that's something I wrote about it a year ago,
Speaker 5: and I was checking up on the data to see
Speaker 5: whether that had changed, and it hadn't. But then I
Speaker 5: looked at something else, which was wages for restaurant workers,
Speaker 5: and they actually started going up. I mean they jumped
Speaker 5: in early in the pandemic, but they'd been going up
Speaker 5: much faster than earnings for everybody else really since around
Speaker 5: twenty fourteen.
Speaker 2: And that was before the pandemic.
Speaker 5: You know, some of it might be that working age
Speaker 5: population growth was already slowing down, but the really obvious
Speaker 5: reason is that a lot of states and cities were
Speaker 5: passing minimum wage increases, and basically the restaurant industry is
Speaker 5: the most likely to pay minimum wage, and a lot
Speaker 5: of places they're allowed to pay something below it until
Speaker 5: you count in tips. Those have had a big effect
Speaker 5: on restaurants. The funny thing, though, is you look and
Speaker 5: you just can't see any effect on employment at restaurants
Speaker 5: before the pandemic. But I just get the sense that
Speaker 5: with this big shock of the pandemic, with initially this
Speaker 5: sort of fifty percent drop in business and employment and
Speaker 5: then a pretty quick recovery in how much business they
Speaker 5: were getting, but it was much harder to bring that
Speaker 5: many employees back. It's just led to this rethinking of
Speaker 5: how restaurants work. I mean, and you hear a lot
Speaker 5: of it from especially like high end restaurants, like saying
Speaker 5: that the business is really hard to make money and
Speaker 5: even harder than it was before, and lots of experiments
Speaker 5: with alternatives to standard table service.
Speaker 2: So is this then a permanent change? Are we seeing
Speaker 2: the evolution of a new way of the dining industry
Speaker 2: to survive?
Speaker 6: Yeah?
Speaker 5: I think so. I mean, I think it's combination of
Speaker 5: the higher pay for restaurant workers and then this sudden
Speaker 5: shock that gave everybody sort of forced everybody to rethink
Speaker 5: how they were going to do business, and also I
Speaker 5: think gave a lot of restaurant workers this thought that, wow,
Speaker 5: maybe I don't want to work in this business anymore.
Speaker 5: You can just see in the national economic data these
Speaker 5: super big changes, and I mean, one really dramatic one
Speaker 5: is that productivity at restaurants, at full service restaurants, which
Speaker 5: is just measured as output per hour worked, adjusted for inflation,
Speaker 5: it basically went nowhere for the first fifteen years of
Speaker 5: this century. You know, productivity growth hasn't been great anywhere,
Speaker 5: but it was more than that in the rest of
Speaker 5: the economy started to rise a bit after twenty fifteen,
Speaker 5: and then this huge jump in twenty twenty one, and
Speaker 5: it fell back a little bit last year, but it's
Speaker 5: still just much higher than it was before. That just
Speaker 5: means you're getting more output, which in this case is
Speaker 5: food served to people per hour work in restaurants.
Speaker 2: What's the next step in this readjustment, in this fix.
Speaker 5: Part of what's happened, especially during the pandemic, was that
Speaker 5: a lot of work that was done within the restaurant
Speaker 5: bringing a meal to you all got outsourced to contractors
Speaker 5: for grub Hub and Postmates and all of those kinds
Speaker 5: of places. So there, to some extent, what you might
Speaker 5: be seeing is not some amazing productivity revolution. It's just Okay,
Speaker 5: we don't have waiters anymore. We just make food for delivery.
Speaker 5: And so what's happening is those delivery workers tend not
Speaker 5: to do super well financially, and some play New York,
Speaker 5: where there especially big part of life here. The City
Speaker 5: of New York is imposing a minimum wage there too.
Speaker 5: It will be interesting to see. The impression from with
Speaker 5: restaurants is that initially you won't see that much effect
Speaker 5: on how many people are doing it, but over time
Speaker 5: it's going to change the choices that places are making.
Speaker 2: All right, justin, thank you for taking the time and
Speaker 2: explaining it all to us. We appreciate it.
Speaker 3: Thanks for having me.
Speaker 1: You can get anything you want at Alice's restaurant.
Speaker 8: Walk around.
Speaker 2: Justin Fox a Bloomberg Opinion columnist covering business, and that
Speaker 2: does it for this week's Bloomberg Opinion. We are produced
Speaker 2: by Eric Mullow and you can find all of these
Speaker 2: columns on the Bloomberg Terminal. We are available as a
Speaker 2: podcast on Apple, Spotify or your favorite podcast platform. Stay
Speaker 2: with us. Today's top stories and global business headlines are
Speaker 2: coming up. I'm Amy Morris, and this is Bloomberg.