Speaker 1: Hello, Odlots listeners producer Carmen here. This episode was recorded
Speaker 1: on October twelfth at the screen Time Conference in California,
Speaker 1: and before that UAW reached a tentative agreement with Ford
Speaker 1: to end their strike. Thanks for listening.
Speaker 2: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 3: I'm Joe Wisenthal and I'm Tracy Alloway.
Speaker 2: You are going to be listening to a special episode
Speaker 2: of the Odd Lots Podcast that we recorded live at
Speaker 2: the Bloomberg screen Time Conference in Los Angeles in early October.
Speaker 4: That's right, Oddlots Takes Hollywood. We are speaking to one
Speaker 4: of our favorites, Omeor Shereef of Inflation Insights, and we
Speaker 4: are talking to him about the macro impact of some
Speaker 4: of the recent strikes we've seen this summer from the
Speaker 4: Screenwriters Guild, from the Actors Guild, as well as the
Speaker 4: United Autoworkers. Take a listen.
Speaker 2: Omaya is one of our favorite economists that we speak
Speaker 2: to regularly on our podcast, where we typically cover like markets, finance,
Speaker 2: and economic stuff.
Speaker 3: That's right, and.
Speaker 4: Today we're going to try to join the two worlds
Speaker 4: of entertainment and Hollywood with more of the macroeconomic stuff
Speaker 4: that we do on a day to day basis.
Speaker 2: Right, So obviously one of the big macro stories here
Speaker 2: is the ongoing strikes. We got the news last night
Speaker 2: the actors are continuing the strikes despite the fact that
Speaker 2: you know, maybe it was expected to wrap up sooner.
Speaker 2: There's also more strike activity nationally. We also found out
Speaker 2: yesterday Forward expanding its strikes. So we're going to try
Speaker 2: to balance out the two stories. Talk about what we've
Speaker 2: learned so far from the economic impact here locally in
Speaker 2: LA and southern California, and what that might say for
Speaker 2: the rest of the country.
Speaker 3: Yeah, let's do it.
Speaker 2: Right, Omere, thank you so much for coming here and
Speaker 2: making the time and chatting with us.
Speaker 5: Yeah. Nice to be back again. So let's just.
Speaker 2: Start with like a basic question, which is, you know,
Speaker 2: the two strikes one just wrapped up.
Speaker 5: Is it going up yet in economic data?
Speaker 6: Yeah, so, I mean, we have some national reports we
Speaker 6: can look at that show some of the impact of
Speaker 6: at least the writer's strike. There's some data out there
Speaker 6: right now in terms of work stoppages. So any strike
Speaker 6: that's more than a thousand people gets recorded by the government,
Speaker 6: and some of that data started to show that about
Speaker 6: eleven thousan five hundred writers were on strike beginning in
Speaker 6: the June number. So we have seen it over the months,
Speaker 6: and we've now started to see that impact in the
Speaker 6: same Work Stoppages report, for example, showing one hundred and
Speaker 6: sixty thousand actors on strike as well, and of course
Speaker 6: it records a whole lot of other strikes as well,
Speaker 6: so that's probably the main place where we see it.
Speaker 6: We haven't really seen it quite as much in terms
Speaker 6: of unemployment just yet, and there's a few reasons for that.
Speaker 6: I mean, you can imagine, especially with the actors strike.
Speaker 6: You know, actors also tend to work other jobs, right,
Speaker 6: There's very few full time actors, and so if they're
Speaker 6: working other jobs and they're making money, they won't be
Speaker 6: counted as unemployed. And in fact, in one of the surveys,
Speaker 6: the Household Survey, depending on how you answer the question
Speaker 6: of out you know, whether you have a job, where
Speaker 6: you at your job, are you available to work? There's
Speaker 6: sort of a list of questions you have to answer
Speaker 6: and in order to be counted as unemployed, you sort
Speaker 6: of have to hit all three of these questions perfectly.
Speaker 6: So unless people answer it in a certain manner, they
Speaker 6: will not be counted as being unemployed. The one area
Speaker 6: also within the household survey where you do see the
Speaker 6: impact is, you know, the number of people who have
Speaker 6: a job but who are not.
Speaker 5: At work due to a labor dispute.
Speaker 6: So that is a very very specific category that they
Speaker 6: do capture in the BLS, and that is starting to
Speaker 6: show some of the impact right now. But you know,
Speaker 6: more broadly, we haven't really seen a big increase, for example,
Speaker 6: in jobless claims. We haven't seen a huge move higher
Speaker 6: in the unemployment rate data itself, whether that's nationally or
Speaker 6: even really within LA or California.
Speaker 4: Wait, can I ask a very basic question, Maybe it's
Speaker 4: a stupid question, but what does the literature tell us
Speaker 4: about whether strike action is inflationary or deflationary? Because I
Speaker 4: could see you you could possibly argue it both ways.
Speaker 4: So if it impacts output, then maybe prices go up
Speaker 4: because supply of a given thing is in shortage. And
Speaker 4: of course if it's successful, then presumably wages for some
Speaker 4: workers go up. But on the other hand, if things
Speaker 4: aren't getting done, if things aren't getting made, then you
Speaker 4: would assume that's a hit to economic activity. Maybe people
Speaker 4: aren't getting paid, so maybe it's deflationary in that way.
Speaker 5: Yeah.
Speaker 6: So one of the interesting things about the strike activity
Speaker 6: is it typically tends to follow inflationary periods. So it's
Speaker 6: not that you know, the strike itself isn't causing prices
Speaker 6: to move higher. It's that there may have been shocks
Speaker 6: like so for example, the well shock now the last
Speaker 6: couple of years with COVID that cause prices to shoot up,
Speaker 6: workers fall behind, and then eventually that leads to more
Speaker 6: and more strike activity. So that's the first thing I
Speaker 6: would say that it really tends to follow big price increases.
Speaker 5: The question of whether then eventually the.
Speaker 6: Pay raises you get afterwards, you know, typically you don't
Speaker 6: that as much in the inflation data. I think this
Speaker 6: time certainly could be different, given you know, we've got
Speaker 6: strikes on multiple fronts, and I think the auto sector
Speaker 6: is the most obvious answer. But that's partly because we're
Speaker 6: still recovering from a lot of the supply chain issues
Speaker 6: that you know, you guys have talked about on the
Speaker 6: show many many times. So when you think about autos,
Speaker 6: for example, you know, auto production is only just in
Speaker 6: the last six seven months gotten back to where it
Speaker 6: used to be before COVID. So to get a hit
Speaker 6: now to production is potentially someplace where you could see
Speaker 6: inflation pop up for new cars, for used cars, and
Speaker 6: other places, but typically you don't see as much of
Speaker 6: that happen post the resolution of the strike.
Speaker 4: Right, Okay, well on this note, you know, I realized
Speaker 4: we are at an industry conference, so I won't ask
Speaker 4: you to opine on whether or not the writers and
Speaker 4: the actors' strikes are justified, but walk us through what
Speaker 4: the actual data tells us about wages for this particular
Speaker 4: sub sector of worker.
Speaker 6: When I started digging into this, I was actually very
Speaker 6: surprised to find out some of these numbers. And I
Speaker 6: think in because when you know, I remember hearing about
Speaker 6: the actors strike initially, and I just remember thinking, well,
Speaker 6: you know what, I think, Tom Cruise is gonna be
Speaker 6: fine about a few months of pay, right, But what
Speaker 6: you generally don't tend to think about is all the
Speaker 6: other thousands upon thousands of actors who are not you know,
Speaker 6: the A list, celebrities who are in the magazines and
Speaker 6: so on. And so I started to look through the
Speaker 6: wage datum, and I said, you know how much do
Speaker 6: actors actually make. So, for those of you who can
Speaker 6: see this chart, the top chart is just showing you
Speaker 6: a very specific industry, right, So this is the motion
Speaker 6: picture and video industry. This is where you'll find actors,
Speaker 6: but also everything from you know, folks who work in
Speaker 6: lighting to editing and so on.
Speaker 2: And actors are way down there, way down that lawyers are.
Speaker 5: They are.
Speaker 6: Yeah, they're just below data entry and amusement park workers
Speaker 6: and so on. And they make about and you know,
Speaker 6: sixteen dollars and seventy cents, and that's the median. So
Speaker 6: half of them make more than that, half make less
Speaker 6: than that, but sixteen seventy is where they fit in. Yeah,
Speaker 6: number one, you would not be surprised, you know, you're
Speaker 6: not gonna be surprised, is lawyers.
Speaker 5: In the motion picture industry. But actors are way down.
Speaker 6: They're in the bottom twenty percent of all workers when
Speaker 6: it comes to wages in the motion picture and video industry.
Speaker 6: And you know, another chart I wanted to look at
Speaker 6: was to say, okay, well, if this is the median,
Speaker 6: how much do people at the bottom end make versus
Speaker 6: the top end? And you know, the second chart down
Speaker 6: there shows you actually the green bars of the US
Speaker 6: as a whole, so all actors across the United States,
Speaker 6: and the red is specifically for the LA Long Beach
Speaker 6: Annaheim area, so that's a local look, and you can
Speaker 6: see locally, the median is actually only about fifteen dollars
Speaker 6: and seventy cents for the LA area, so below the
Speaker 6: sixteen seventy we see for the industry as a whole.
Speaker 6: But look at how little variation there is at the
Speaker 6: bottom end, right like you, if you go towards the
Speaker 6: bottom ten percent, you're still only at about fifteen dollars
Speaker 6: and sixty cents, so only about a ten cent difference
Speaker 6: between the bottom ten percent and the middle. Even at
Speaker 6: the seventy fifth percentile, you only move up to about
Speaker 6: sixteen dollars and seventy cents, only about a buck more
Speaker 6: per hour.
Speaker 5: Fast forwards to the ninetieth percent.
Speaker 6: Tell now you're up into the seventies and for the
Speaker 6: US as a whole, you up to over one hundred
Speaker 6: and ten bucks. So you really you know, if you're
Speaker 6: an actor, essentially, unless you are in that top ten percent,
Speaker 6: and quite honestly probably that top one percent, your median
Speaker 6: wage is probably going to be around that fifteen to
Speaker 6: sixteen dollars range, whether that's a local number or whether
Speaker 6: it's it's national for as a whole.
Speaker 2: One of the reasons we love talking to Omer is
Speaker 2: the level of data that he.
Speaker 3: Becomes in clips with the numbers.
Speaker 2: Tracy once wrote an amazing article about mayonnaise inflation and
Speaker 2: omaar like, do all the different like categories within He's like, well,
Speaker 2: you might want to look at like the fats and
Speaker 2: oils section of the Producer Price Index and then the PCE.
Speaker 2: It's you know, mayonnaise is captured here one of the things.
Speaker 2: And you mentioned it that many actors have other jobs,
Speaker 2: so even if they're striking, they're not necessarily going to
Speaker 2: be counted as unemployed. And looking at these wages, I imagine
Speaker 2: that these other jobs that they could pick up, service
Speaker 2: industry jobs pay pretty close like they're take you a
Speaker 2: big economic hit.
Speaker 5: Yeah, that's right.
Speaker 6: So you know, here I wanted to take a look
Speaker 6: at some of these other areas where you would see,
Speaker 6: you know, again, as I mentioned, very few actors are
Speaker 6: full time actress, right, it's part time. You're taking other jobs,
Speaker 6: and so I took a look at sort of some
Speaker 6: of you know, just picked out randomly. Some of the
Speaker 6: areas where you see actors tend to work, and so
Speaker 6: you'll find places like you know, occupations like you know, bartender, servers,
Speaker 6: real estate agents is a very popular one in La
Speaker 6: at least, and so here you can see this is local.
Speaker 6: These numbers are for local for LA County, and so
Speaker 6: again the actors fifteen seventy an hour. Servers are about
Speaker 6: fifteen dollars and fifteen cents an hour roughly, bartenders you
Speaker 6: know a little bit above that, about fifteen thirty five,
Speaker 6: substitute teachers twenty three bucks an hour, real estate agents
Speaker 6: around thirty one dollars. So you know, that's why kind
Speaker 6: of the medium is as low as it is, because
Speaker 6: some of the other occupations here are you know, whether
Speaker 6: it's bartending or working as at a resta, also tend
Speaker 6: to be on that lower end of the overall spectrum.
Speaker 6: So that's partly why you're seeing that number be so low.
Speaker 6: But again, I think when you look at that distribution,
Speaker 6: unless you are in that top ten percent, the bottom
Speaker 6: ninety is is going to be about fifteen to sixteen
Speaker 6: bucks an hour, which tells you just yea, how tough
Speaker 6: it is to kind of make it in that industry
Speaker 6: because there is not like if you're in the middle,
Speaker 6: you're making fifteen twenty bucks more than if you were
Speaker 6: at the bottom, and it's there's basically no difference.
Speaker 2: There's the bottom in the top, and most people are
Speaker 2: in the bottom.
Speaker 7: Yes, that's my takeaway from your charge.
Speaker 3: You knew I used to be a substitute teacher, right, Yes,
Speaker 3: I was aware of this. Just were you also a
Speaker 3: struggling actor?
Speaker 2: I was actually kind of but no, just see I
Speaker 2: give a shout out to the substitut teachers as a
Speaker 2: former soaker.
Speaker 3: Okay, fair enough.
Speaker 4: So one thing, actually, going to Joe's point about mayonnaise
Speaker 4: and all the different data sets that you can look up,
Speaker 4: one of the things I learned about inflation statistics doing
Speaker 4: that article was that there are these qualitative adjustments that
Speaker 4: the Bureau of Labor Statistics does on these numbers where
Speaker 4: they will look at probably not mayonnaise, but they'll look
Speaker 4: at something like a refrigerator and say, well, a modern
Speaker 4: refrigerator is so much better than a fridge from nineteen
Speaker 4: eighty five that can do so many more things, and
Speaker 4: so we have to adjust the inflation calculation. I always wondered,
Speaker 4: for something like movies or TV, can they do the
Speaker 4: same type of qualitative adjustment? How would you actually measure that?
Speaker 6: Yeah, to the best of my knowledge, they don't do anything.
Speaker 6: Services in general tend to be very, very difficult to
Speaker 6: quality adjust you know. Some exceptions can be things like
Speaker 6: your cell phone service, where you know your wireless plan,
Speaker 6: you get a certain amount of data through it. If
Speaker 6: that data increases or decreases, they can sort of measure
Speaker 6: what that would quote unquote cost. For movies, though I
Speaker 6: think it's it's as far as I know, they don't
Speaker 6: do anything with that, And in general, services activities are
Speaker 6: are very tough to do, so they really try to
Speaker 6: stick with with goods as you mentioned, like you know, televisions, refrigerators, cars.
Speaker 6: You know, the new model your car comes out, it's
Speaker 6: got more bells and whistles, and the last one. They
Speaker 6: can look at how much the manufacturers spent on adding
Speaker 6: you know, better technology to that vehicle and sort of
Speaker 6: remove that from the price to say, hey, this is
Speaker 6: the quality adjustment services though it is it's very difficult
Speaker 6: to do.
Speaker 4: Okay, So the BLS isn't watching all the new movies
Speaker 4: and going wow, these special effects are so much better.
Speaker 3: We need to adjust our inflation methody.
Speaker 6: No, it's a good question. I will ask them when
Speaker 6: I get back to work tomorrow.
Speaker 2: But it's just the other thing we've learned, by the way,
Speaker 2: is that the BLSA is great. They'll just you could
Speaker 2: call them up and just ask a question about the
Speaker 2: economic data.
Speaker 5: They'll walking through. They're happy to chat about it all
Speaker 5: the time. You mentioned.
Speaker 2: Okay, so unemployment not really showing up in the data.
Speaker 2: Are there any other sort of like statistics in the
Speaker 2: regional economy where you can see some effect from work
Speaker 2: stoppages or certain types of sectors. I mean, I have
Speaker 2: to imagine, you know, obviously the not shooting effects more
Speaker 2: than actors effects, makeup people, affects, other production people, are
Speaker 2: other other areas or other data sets you can look
Speaker 2: at to see how the strike is having an impact
Speaker 2: or percolating up there.
Speaker 5: Yeah.
Speaker 6: So actually, you know, if you look at industry employment numbers, right,
Speaker 6: so specifically here for California, and you can look at,
Speaker 6: for example, sort of the film and TV industry, and
Speaker 6: you can tack on also there's another industry that captures
Speaker 6: independent writers and performers.
Speaker 5: So if you kind of combine.
Speaker 6: Those two big industries and say what's going on to
Speaker 6: the job growth in those two sectors in California since April,
Speaker 6: So the strike started early May, the writers strike at
Speaker 6: least since April combined, the lost about seventeen thousand jobs,
Speaker 6: and most of that has been in you know, the
Speaker 6: motion picture industry, less so on the independent writer side,
Speaker 6: but it is clear there that you're seeing some impact
Speaker 6: in terms of layoffs that are happening.
Speaker 5: So that's one area.
Speaker 6: But the second area also is that activity in general
Speaker 6: in the industry has been contracting probably for the last
Speaker 6: year and a half. So you know, I'm not gonna
Speaker 6: you know, you mentioned earlier about are the strikes justified
Speaker 6: or not. I don't know if I want to go
Speaker 6: down into that rabbit hole, but what I will say
Speaker 6: is that in general, I really like the way Ellen Stetsman,
Speaker 6: who is the chief negotiator for the Writer's Guild. You know,
Speaker 6: their criticiding is the writers about striking at a time
Speaker 6: when things are tough for the streaming services and so on,
Speaker 6: and she said, look, our job is to ensure that
Speaker 6: our guild members have good jobs and share in, you know,
Speaker 6: the value that we create. As writers regardless of whatever
Speaker 6: it is that the industry is doing and what the
Speaker 6: industry has been doing in terms of film and TV
Speaker 6: is and this you mentioned shoot days earlier, so this
Speaker 6: is a good number to look at. From twenty fifteen
Speaker 6: to twenty nineteen, before COVID hit, the average number of
Speaker 6: shoot days in California every quarter was about nine five
Speaker 6: hundred shoot days. So this is ever real quick question.
Speaker 6: Who tracks the shoot Yeah, so this is a film LA.
Speaker 6: You can you know, google them, you can find these
Speaker 6: numbers are all available publicly, and so you if you
Speaker 6: want to get a permit to shoot a commercial, a
Speaker 6: TV show, whatever, you go through film LA so they
Speaker 6: can track who's shooting, how often, you know, how many days.
Speaker 4: And all that.
Speaker 6: So typically, on average in a quarter prior to COVID,
Speaker 6: it was about nine thousand, five hundred days. Obviously COVID
Speaker 6: nothing happened, it went to zero, but by the middle
Speaker 6: of twenty twenty one we were back to about ten
Speaker 6: thousand days of shooting. Since the end of twenty twenty one,
Speaker 6: so this is about the last five quarters before the
Speaker 6: strike began. Shoot days of fall in every single quarter.
Speaker 6: As of Q one of this year, shoot days were
Speaker 6: twenty percent below the five year average from twenty fifteen
Speaker 6: to twenty nineteen. So you know, even before the actress
Speaker 6: strike started in July and the writer strikes started in May,
Speaker 6: activity had been sort of on a pretty steady down
Speaker 6: trend for almost you know, just over a year really,
Speaker 6: So there you can see that, you know, things were
Speaker 6: already kind of difficult for the industry as a whole
Speaker 6: for the strikes again, and so that's one area we
Speaker 6: can see it clearly. You can see the employment numbers
Speaker 6: as well. But interestingly, you know, as we've talked about,
Speaker 6: because writers can work other jobs, you don't see it,
Speaker 6: for example, in the jobless claims data, you haven't seen
Speaker 6: such a big spike overall.
Speaker 5: You don't see the unemployment rate in California moving.
Speaker 6: So in April it was four and a half percent,
Speaker 6: now it's four point six percent. The one thing I
Speaker 6: would caution is we only have data for California through
Speaker 6: the month of August, so it's only been about a
Speaker 6: month since, you know, the actors strikes started, so it
Speaker 6: might just be a matter of time before we start
Speaker 6: to see it over the next couple of months. But
Speaker 6: on the right, on the actor's side, it might just
Speaker 6: be a little too early to really.
Speaker 3: Say this was going to be my next question.
Speaker 4: I'm getting the sense that there is a lag involved here,
Speaker 4: partly because people do have more than one job, or
Speaker 4: actors typically have more than one job. How do you
Speaker 4: kind of gauge how how long that lag might take
Speaker 4: until you start seeing more of a stark impact on
Speaker 4: the numbers.
Speaker 6: So I don't know exactly what that lag would be,
Speaker 6: but I think if I wanted to try to track,
Speaker 6: you know, when is the starting to show up, I
Speaker 6: would be most closely watching the weekly data on unemployment claims,
Speaker 6: especially you know, granular or divicting down into LA what's
Speaker 6: happening in La County, partly because the workforce here in
Speaker 6: that industry is roughly I think about three and a
Speaker 6: half percent of all jobs in LA are either in
Speaker 6: that industry or you know, in that independent performers. So
Speaker 6: those two areas you want to watch, and if you
Speaker 6: start to see it happening in LA, you know, I
Speaker 6: think it'll be obvious with the job as claims data
Speaker 6: when that starts to show up. It's tough to say,
Speaker 6: because people can transition from acting into other areas, right well,
Speaker 6: in terms of those part time jobs that we talked about.
Speaker 4: So you mentioned earlier that you have to answer three
Speaker 4: questions in order to be counted as unemployed. Do you
Speaker 4: know what those questions are?
Speaker 5: Out of curiosity, I knew this was going to come up.
Speaker 5: I should have memorized.
Speaker 6: So one of them is you know, do you currently
Speaker 6: have a job? Yes, er, it would have to be no,
Speaker 6: are you available? And looking for work would also have
Speaker 6: to be now? And the third one I'm blanking on
Speaker 6: right now, but I will get back to.
Speaker 5: You on it.
Speaker 3: Okay, two out of three is pretty good.
Speaker 2: I want to go back to a bigger picture thing
Speaker 2: you said, which I think is really important, which is
Speaker 2: that historically strikes are not the catalyst for the inflationary period,
Speaker 2: but come after them. And of course that makes sense.
Speaker 2: People feel that they're like falling behind. People want to
Speaker 2: like get their share, and there's this whole idea of
Speaker 2: like you know, inflation in general is often like a
Speaker 2: battle over a result of different competing claims on money.
Speaker 2: Can you talk a little bit about the big picture,
Speaker 2: like historical trends of what we see. I know that
Speaker 2: like strike activity is picked up a little bit, but
Speaker 2: it's nothing like what it used to be. Like, talk
Speaker 2: to us a little bit more about that theory of
Speaker 2: labor tension strikes as a sort of post inflation phenomenon.
Speaker 6: Yeah, So obviously there's been a ton of attention on unions,
Speaker 6: yeah and strikes the last year or so.
Speaker 5: What's interesting is if you.
Speaker 6: Actually look at the percentage of workers in the private
Speaker 6: sector who are part of a union. In twenty twelve,
Speaker 6: it was around six and a half percent. It's actually
Speaker 6: down to six percent now, which is not something you
Speaker 6: would necessarily know.
Speaker 5: Sorry, what was the So these are people who are
Speaker 5: in a union, employees who are in a union.
Speaker 6: In terms of all private sector employment, so out of
Speaker 6: everyone who's working in the private sector, only about six
Speaker 6: and a half percent of people were part of a
Speaker 6: union got it ten years ago, and now that that
Speaker 6: share has gone down to six percent.
Speaker 5: So even though they're getting a lot more attention.
Speaker 6: That that share of folks who are in the union
Speaker 6: has actually gone down. The number of people who are
Speaker 6: currently on strike is about two hundred and ten thousand roughly.
Speaker 6: That's not even as high as it was several years back.
Speaker 6: It's nowhere near the several you know, five six seven
Speaker 6: hundred thousand in the eighties. We could potentially, by the way,
Speaker 6: get there. There's you know, the possibility that these seventy
Speaker 6: five thousand healthcare workers might strike.
Speaker 5: Obviously, the uaw IS is not completely striking.
Speaker 6: That's one hundred and forty thousand people right now that
Speaker 6: you know, I think only about fifteen twenty thousand of
Speaker 6: them are on strike, So we could potentially get to
Speaker 6: a number that's been the highest since the early eighties.
Speaker 6: But I think part of you know, what's going on
Speaker 6: there is one I think given what's gone on through
Speaker 6: the pandemic. Obviously there have been a lot of changes
Speaker 6: in the labor market in general, everything from work from home,
Speaker 6: but also during that period, a lot of workers, frontline
Speaker 6: workers especially, continue to work, and you know, companies did
Speaker 6: extremely well in terms of profits, and so a lot
Speaker 6: of these folks are coming back now and saying, like,
Speaker 6: you know, we ought to be sharing in some of
Speaker 6: that record profit growth that we've seen over the last
Speaker 6: several years. And you can sort of see this in
Speaker 6: terms of opinions about unions used to be much more negative.
Speaker 6: They're enjoying, you know, some of the best support they've
Speaker 6: had in decades from the general public, if you will.
Speaker 5: So that's that's one part of it.
Speaker 6: Also, I think the other element here is that when
Speaker 6: you think about some of the industries where we're seeing
Speaker 6: strike activity, they are undergoing, you know, transformational changes. Right
Speaker 6: when you think about writers and actors. Yes, of course
Speaker 6: it's about better pay and about you know, residuals, and
Speaker 6: it's also about the use of AI and people want
Speaker 6: to figure out how is that going to impact me
Speaker 6: down the road in the in the auto workers strike, yes,
Speaker 6: about better pay and pensions and benefits, also about evs,
Speaker 6: you know, how is how are the elect change electric
Speaker 6: vehicle is going to impact workers? So a lot of
Speaker 6: these places are seeing transformational changes that are coming, and
Speaker 6: you know, workers are trying to figure out how exactly
Speaker 6: they can sort of protect themselves in that sort of environment.
Speaker 5: So, yes, there's been a lot of activity. I think
Speaker 5: the profit story is big.
Speaker 6: I think obviously inflation is a huge, huge part of
Speaker 6: that story. For a couple of years, real wages we're
Speaker 6: declining very, very sharply. If you actually look at autoworkers,
Speaker 6: for example, you go back to two thousand and eight,
Speaker 6: they they took a lot of cuts to help the
Speaker 6: industry survive after a wait, and if you look at
Speaker 6: their real wages since then, they're still down about ten percent.
Speaker 6: So they're asking to sort of, you know, be made
Speaker 6: whole and then some at this point, given profits that
Speaker 6: we've seen at the autoworkers.
Speaker 4: Yeah, they also created that sort of tiered system for
Speaker 4: auto workers. Okay, So some common themes running through the
Speaker 4: Hollywood strikes and the auto workers strikes, such as you know,
Speaker 4: obviously inflation has been picking up, real wages going down,
Speaker 4: transformational change that is this big question mark for the
Speaker 4: respective industries as a whole. But how much of a
Speaker 4: read through can we get from the actor and writers'
Speaker 4: strikes and the economic impact so far to the UAW, because,
Speaker 4: as you point out, it feels like the situation of
Speaker 4: someone who's making cars versus someone who's writing scripts or
Speaker 4: is a part time actor.
Speaker 3: It feels different.
Speaker 6: Yeah, So look, I think you can't even get a
Speaker 6: read through from the writer's strike to the actor's strike,
Speaker 6: let alone to the UAW. I think what I was
Speaker 6: say in general, the underlying theme has been so far
Speaker 6: this year and parts of last year, you've seen some
Speaker 6: unions even if they didn't necessarily strike win some really
Speaker 6: big concessions, right, So think about ups and the team starves.
Speaker 6: They threatened to strike, ended up not striking, but they
Speaker 6: won some really big gains for their workers.
Speaker 5: The pilots didn't strike, but.
Speaker 6: United Delta ended up with forty percent races over the
Speaker 6: next four years. So you've seen these unions sort of
Speaker 6: rack up win after a win after win.
Speaker 5: Really big unions rack up these wins.
Speaker 6: The Writers is one element where you know, five months
Speaker 6: ago people were wondering what could they actually get out
Speaker 6: of this, and they got a fair bit of what
Speaker 6: they wanted.
Speaker 5: Out of it.
Speaker 6: But it's tough because now you know, as you know
Speaker 6: from yesterday, the negotiations are off right now on the
Speaker 6: actor side of things, so it's tough to get a
Speaker 6: real read through, even within the same industry. But I
Speaker 6: would say so far, I think union after unions inspiring
Speaker 6: the next union to take on the challenge because they
Speaker 6: have racked up a lot of wins this year. UAW
Speaker 6: is also so a little bit different in the sense
Speaker 6: that the way their striking is targeted, right, So it's
Speaker 6: a very different approach than what the Writers did, a
Speaker 6: different approach and what the actors are doing as well.
Speaker 6: So it's hard to say if we can really take
Speaker 6: what happened with the writers and the resolution on the
Speaker 6: writer's tride and say that there's something there to to
Speaker 6: learn respect to the UAW other than hey, these guys
Speaker 6: also got to win, you know, we should keep continue
Speaker 6: to kind of kind of fight.
Speaker 2: So there's an audience question. You know, you mentioned that
Speaker 2: even prior to the strike that the number of shoot
Speaker 2: days in the area had been trending down. I think
Speaker 2: you said for five straight quarters. How is significant? Just
Speaker 2: is like the health of the entertainment industry for California.
Speaker 6: Well, if you look at shoot days, it's not going great, right,
Speaker 6: you know, those being down twenty percent versus what we
Speaker 6: were doing in you know, five years prior to COVID
Speaker 6: is a pretty significant And by the way, that that
Speaker 6: does not include the second quarter, which is when the
Speaker 6: writer's strike began.
Speaker 5: After that it's going to plunge. Yeah, it's gonna plunge.
Speaker 6: And we don't even have the data yet for after
Speaker 6: the after actor strike, right, that's going to essential plumbent.
Speaker 5: But even by the second quarter, after the writer's strike.
Speaker 6: Began in May, so you only really had one month
Speaker 6: April where you probably were shooting, we were down about
Speaker 6: six thousy five hundred days, which is the lowest since
Speaker 6: prior to twenty fifteen. So you're, you know, you're seeing
Speaker 6: in general a year and a half of an industry
Speaker 6: that's been struggling. And I know, you know, throughout the
Speaker 6: day people have talked about streaming and how the challenge
Speaker 6: is there. So you know, I would say that the
Speaker 6: industry has been especially think about showo days also, it's
Speaker 6: they've been losing shoe days, especially in commercials. Think about
Speaker 6: commercials for anything from like shooting you know, a car
Speaker 6: commercial or so on. They're losing business to places like Georgia.
Speaker 6: You know, Georgia's got something like about a billion dollars
Speaker 6: in tax credit that they gave out last year, and
Speaker 6: so that's you know, they're losing commercials to other parts
Speaker 6: of the country. Shows are also being shot elsewhere. So
Speaker 6: there's been a steady sort of I don't want to
Speaker 6: say exodus, but you know folks who are erosion. Yeah,
Speaker 6: erosions a better way to put it. So you know,
Speaker 6: it's there's definitely a struggle going on right now. I think,
Speaker 6: more broadly speaking for the industry.
Speaker 4: You know, you mentioned this idea of maybe some of
Speaker 4: the hot union summer that we've seen is being caused
Speaker 4: by people looking at the winds from other labor organizations
Speaker 4: and thinking like, well, you know, maybe now is our chance.
Speaker 4: And of course you also mentioned that a lot of
Speaker 4: strike activity tends to follow on after periods of high
Speaker 4: inflation for obvious reasons. What would be the catalyst for
Speaker 4: some of these wage pressures to die down? I guess
Speaker 4: like if we started to see a lot of pushback,
Speaker 4: if inflation started to come down and maybe real wages stabilized,
Speaker 4: would you expect to see some of this activity go
Speaker 4: away or what does history tell us about like the
Speaker 4: end of these surges in strike activity.
Speaker 6: Yeah, I don't know that inflation coming down would necessarily
Speaker 6: solve the problem, partly because a lot of these contracts,
Speaker 6: for example, tend to be three four years long, and
Speaker 6: so what you're negotiating for now is to try to
Speaker 6: get back what you've lost over the last three years.
Speaker 6: So inflation comes down from nine percent last year to
Speaker 6: three percent this year, that's great for hopefully locking in
Speaker 6: a win now over the next course of the next
Speaker 6: several years, But you're still trying to play catch up
Speaker 6: to the last few years. So I don't know that
Speaker 6: that would necessarily do it. I think, you know, the
Speaker 6: two things typically tend to be one if it's if
Speaker 6: it's an industry where public opinion will turn against.
Speaker 5: You very quickly.
Speaker 6: So I could see a situation, for example, if the
Speaker 6: auto stuff drags on for a long time, the inevitable
Speaker 6: thing that's going to happen as car prices will skyrocket
Speaker 6: much more so than they have even in the last
Speaker 6: year or two years, and that's going to cost I
Speaker 6: would suspect, you know, that's going to cause problems and
Speaker 6: tensions with the broader public.
Speaker 5: Right, So I think that's one potential day. This is
Speaker 5: another word.
Speaker 2: As you said earlier, we're in an era where surveys
Speaker 2: showed that unions enjoy relatively higher so versus say several
Speaker 2: years ago, and if car prices start to spike, that
Speaker 2: could start to shift.
Speaker 6: You know, it's all well and good when the enemy
Speaker 6: is like corporate greed, yes, right, when it starts to
Speaker 6: hit you at home, that becomes a different story. And
Speaker 6: people tend to change their tune pretty quickly. So that's
Speaker 6: one potential danger there is it's sort of the public
Speaker 6: turns against you. But the other issue also would be,
Speaker 6: you know, to some extent, there's a certain as you know,
Speaker 6: all these unions have a certain amount of money where
Speaker 6: they help to provide for people who are striking. So
Speaker 6: the UAW for example, is giving out you know, five
Speaker 6: hundred dollars a week. At some point, you know, to
Speaker 6: the extent those funds run dry and it really starts
Speaker 6: to become very painful for the.
Speaker 5: Workers at some point.
Speaker 6: That's another sort of element that could you know, lead
Speaker 6: to a quicker resolution, if you will.
Speaker 2: This seems like a distinct difference between the Hollywood strikes
Speaker 2: and the writer's strikes, where I can't imagine the auto
Speaker 2: workers are just like picking up shifts at restaurants in
Speaker 2: bars at the same wages they are the same way
Speaker 2: actors often can.
Speaker 6: Yeah, I think it's a very different dynamic. It's so
Speaker 6: another reason it's hard to get read through between yeah
Speaker 6: them yeah, actors. Like I said, it just hasn't shown
Speaker 6: up in the claims data because they're able to shift
Speaker 6: into these other sectors.
Speaker 2: You know, there's a question and I don't know, I
Speaker 2: wish I even knew that someone is asking other areas
Speaker 2: within entertainment that could strike. Do you know, like, are
Speaker 2: the other other risks of further contagion, Like I'm not
Speaker 2: I wish I had a better understanding of whether they're
Speaker 2: like other union guild contracts up, but is there still
Speaker 2: risk of contagion within the local economy.
Speaker 6: So prior to all of this, there was a it's
Speaker 6: a resolve because I never went on strike, but there
Speaker 6: was a director's guild right issue, but that was resolved.
Speaker 5: The one that I have read about more recently is
Speaker 5: voice actors.
Speaker 6: Oh so voice actors, I mean they are are a
Speaker 6: part of zag aster, so they they can't work, for example,
Speaker 6: on a full length you know, animation feature, but they
Speaker 6: can still work on voiceovers for commercials and things like that.
Speaker 6: But there was some talk about, you know, some others
Speaker 6: who are not covered under these contracts to potentially also
Speaker 6: strike something similar with in terms of like the video
Speaker 6: game industry as well. So there's some elements there, you know,
Speaker 6: some spillover, but I don't think those areas.
Speaker 5: Are quite as large.
Speaker 8: So we're talking about with respect to the captures.
Speaker 5: Part of.
Speaker 4: This is slightly off topic perhaps but not really.
Speaker 5: So.
Speaker 3: The other event that happened last night.
Speaker 4: Obviously, the second tier event compared to the opening evening
Speaker 4: of Bloomberg screen time was Taylor Swift and her red
Speaker 4: carpet premiere for the Eras tour. And there's been so
Speaker 4: much discussion recently about this idea that Taylor Swift is
Speaker 4: propping up the US economy, injecting billions of dollars worth
Speaker 4: of demand at a time when we might otherwise see
Speaker 4: some softening.
Speaker 3: What do you think about the.
Speaker 4: Swift effect THEE.
Speaker 6: Yeah, I mean, I think it's pretty real when you
Speaker 6: look at the data. If you look, for example, where
Speaker 6: she has gone on tour at certain points, you will
Speaker 6: see a spike in hotel rates everywhere she goes. So
Speaker 6: a good example of this is a couple of months
Speaker 6: ago we saw data in she was i think in
Speaker 6: touring the Midwest and it was like June or July,
Speaker 6: and prices prior to that shot off fifty five percent
Speaker 6: for hotel rates. As soon as she left the next
Speaker 6: month they were down twenty percent.
Speaker 5: Wow.
Speaker 6: So you know, there's pretty clear that there's an impact happening.
Speaker 6: People are traveling from all over for the shows and
Speaker 6: Beyonce also, you know, right there's actually I think, you know,
Speaker 6: an along at Bloomberg has actually written a lot about this,
Speaker 6: and I think it's there's a lot of good interesting
Speaker 6: data she's put out about it. But yeah, I think
Speaker 6: it's it's it's very real. Even the Philadelphia Fed, I believe,
Speaker 6: at one point, said she impacted the local economy in
Speaker 6: the Beige Book. So yeah, I think it's pretty clear
Speaker 6: that there's a tailor effect happening.
Speaker 4: Is it at the level where you, as an inflation
Speaker 4: analyst have to pay attention to Taylor swift tour dates?
Speaker 6: I never thought I would have to, but yes, because,
Speaker 6: like I said, this hotel raids stuff was shocking, because
Speaker 6: this is one of those things within the inflation index
Speaker 6: that is extremely volatile, so month to month it can
Speaker 6: destroy your forecast, and it destroyed mine this morning. But
Speaker 6: it can move around five percent seven percent in a month.
Speaker 6: And like I said, you know, last month it was
Speaker 6: down massively and I couldn't figure out why, and I
Speaker 6: started digging into the weeds, and next thing I know,
Speaker 6: I see this massive decline in the Midwest. And sure enough,
Speaker 6: a few months prior to that, when she was touring
Speaker 6: around the region, you had just seen this huge search
Speaker 6: as soon as she was gone, you saw hotel rates
Speaker 6: come down, so there's some element of you know, her
Speaker 6: impact on different data sets includes being the inflation index
Speaker 6: for hotel rates that I think is pretty obvious. And again,
Speaker 6: I never thought I would have to worry about this
Speaker 6: kind of stuff, but it's it's in the data, so
Speaker 6: you know, you've got to kind of be aware of
Speaker 6: it well.
Speaker 2: As you mentioned, so we are what is today October twelfth,
Speaker 2: I think that's regardless. It's a is CPI Day, which
Speaker 2: is like a holiday for you, and so we really
Speaker 2: appreciate you spending your CPI Day with us talking about
Speaker 2: the entertainment industry. But since we have you on CPI
Speaker 2: Day and the numbers came in a little bit hot,
Speaker 2: but like, what's you at least on the headline? Others
Speaker 2: were saying, Oh, if you look at the course services
Speaker 2: X housing is actually kind of cool.
Speaker 5: What should we.
Speaker 2: Take from the inflation trajectory right now?
Speaker 6: We've had the summer of disinflation, right we had four
Speaker 6: or five months where the numbers were retreating and they
Speaker 6: would look like they used to look prior to COVID,
Speaker 6: and things were improving to the point where fed officials
Speaker 6: were saying, hey, maybe we don't need to raise rates
Speaker 6: as much anymore. The last two months we've had this
Speaker 6: a little bit of a pop here to slightly higher numbers.
Speaker 6: You know, we're not going back to those twenty twenty
Speaker 6: one type days, or to early twenty twenty two when
Speaker 6: every month we were getting numbers that we're running, you know,
Speaker 6: six to seven percent annualized, But right now we're around
Speaker 6: three and a half percent anualized, which is still too
Speaker 6: high for the Fed. Problem is, over the next quarter,
Speaker 6: three and a half is about where we're going to
Speaker 6: be sitting, I think. And so you know, the problem
Speaker 6: is going to be that you're hoping to get down
Speaker 6: to two percent on inflation. What looked like a trajectory
Speaker 6: that was going to get you there over the summer
Speaker 6: has now shifted higher. And I think we also have
Speaker 6: to be a little bit careful here because CPI is
Speaker 6: absolutely gonna shift higher over the next month or two.
Speaker 6: The core PCEE deflator is obviously what the FED prefers
Speaker 6: to watch. That looks like it will shift a little
Speaker 6: bit higher, but probably not as much as what's going
Speaker 6: to happen in the CPI. For some you know reasons
Speaker 6: in terms of how they're constructed differently, So we're gonna
Speaker 6: have to watch that one more closely. But the problem
Speaker 6: for the FED, I think is when they meet in December.
Speaker 6: They're going to walk into that meeting a lot of
Speaker 6: people think we'd need to raise rates anymore they've were done.
Speaker 6: What they're going to confront is a August, September, very
Speaker 6: likely October and November CPI that are all running at
Speaker 6: about a three and a half percent annualized rate. And
Speaker 6: you know, you mentioned the super core, which is core
Speaker 6: services outside of housing, So these are you know a
Speaker 6: lot of different things. Hotel rates, airfares, what you pay
Speaker 6: to go to the movies, you know, what you might
Speaker 6: pay to go to a sporting event.
Speaker 5: Those sorts of prices were up.
Speaker 6: Today at a seven percent annualized rate. And the concern
Speaker 6: I think is in December it is going to be
Speaker 6: suddenly this path is shifted higher. So do they think
Speaker 6: that they need to do one you know, maybe do
Speaker 6: one more rate hike, which, by the way, twelve out
Speaker 6: of nineteen of them thought was the right move in September.
Speaker 6: It's going to be tough for them to I think,
Speaker 6: you know, if you're a data dependent and the data
Speaker 6: shifted higher, it's going to be tough to sort of
Speaker 6: forego another hike in December. So I think that's that's
Speaker 6: the concern for me, is you know, are they going
Speaker 6: to be able to sort of parse through this and say, hey,
Speaker 6: we should go one more time, or are they going
Speaker 6: to look at it and say, we know some of
Speaker 6: these things will cool off next year, so we can
Speaker 6: kind of hold our fire right now.
Speaker 4: Maybe they need to ask Taylor Swift if she's going
Speaker 4: to extend her tour or not.
Speaker 2: See, I always thought Taylor Swift tour would be deflationary
Speaker 2: because it's all these sort of like you know, people
Speaker 2: with like you know, middle class families transferring money to
Speaker 2: someone who has more money than God, who is not going.
Speaker 3: To spend it's not spending it.
Speaker 2: All transfer of money to someone with a much lower
Speaker 2: marginal propensity to consume. But uh again everyone but apparently in.
Speaker 6: The short spending it on airfares into the show, to
Speaker 6: the cab and right now.
Speaker 4: Everything except the ticket purchase, I guess would be in Yeah.
Speaker 6: And I was say one of the things about the
Speaker 6: strike too, By the way, there's going to be a
Speaker 6: lot of numbers that come out. You know, a recent
Speaker 6: one from the Milk Institute said the economy is going
Speaker 6: to take a five billion dollar hit from the actors
Speaker 6: and the writer's strike. They also said there was a
Speaker 6: two billion dollars hit in oh seven oh eight. The thing, though,
Speaker 6: is for a lot of people, it's like, let's say
Speaker 6: the movies don't come out, new shows are not coming out.
Speaker 6: If you're somebody, you know, you live in wherever in
Speaker 6: la and Manhattan, Brooklyn, and you go to the movies often,
Speaker 6: and these movies are delayed. Now, that money can get
Speaker 6: spent elsewhere, right, Like we know that from COVID. Right
Speaker 6: when people couldn't people were stuck at home, they couldn't
Speaker 6: go out to the restaurants and the bars.
Speaker 5: What do they do.
Speaker 6: They just bought every sofa and you know lamp they
Speaker 6: could buy, and they remodeled.
Speaker 5: Yeah, and they continue to do that for like two years.
Speaker 6: So it's not you know, if you're living in New
Speaker 6: York and you can't go see a movie because there
Speaker 6: the movie is out, you know, you go check out
Speaker 6: a new band at the Mercury Lounge. There's a lot
Speaker 6: of other things to do, so that money can get
Speaker 6: spent elsewhere and kind of limit the impact of the strike.
Speaker 6: And in fact, if you look at, you know, sort
Speaker 6: of some of the lost wages we've seen so far
Speaker 6: for actors, for writers, it's a it's a problem for
Speaker 6: the LA region. You're talking about potentially as much as
Speaker 6: a two percent hit to GDP I think from for
Speaker 6: annualized for LA if this goes on for the rest
Speaker 6: of the year. But when you broaden out to California,
Speaker 6: this is a three and a half three point seven
Speaker 6: trillion dollar economy right now, you're talking about a couple
Speaker 6: of maybe a tenth. You go out to the US,
Speaker 6: it's a twenty four trillion, twenty five trillion dollars economy.
Speaker 6: It's virtually close to zero. But like I said, you
Speaker 6: know you, even though they are people may not be
Speaker 6: able to spend as much on the movies and sort
Speaker 6: of associated things that spending we know can shift elsewhere
Speaker 6: and kind of limit that damage.
Speaker 3: I feel like I need to spell out for all thoughts.
Speaker 3: Listeners that go see a new.
Speaker 4: Band at the Mercury Lounge was in fact a reference
Speaker 4: to Joe's Band and their first show at the Mercury
Speaker 4: Lounge in December and in terms of inflation, I just
Speaker 4: want to add, Joe is making me buy my own tickets.
Speaker 4: I don't even get comped the twenty bucks for.
Speaker 2: Those we're trying to trying to do our part for
Speaker 2: the like. If you're in New York City December nineteen,
Speaker 2: come out to see a light sweet crew at the
Speaker 2: Mercury Lounge. Oh Mercerief, thank you so much for doing this.
Speaker 4: That was our conversation recorded live at the Bloomberg screen
Speaker 4: Time Conference in La with O Mayor Sharif. I'm Tracy Alloway.
Speaker 4: You can follow me at Tracy Alloway.
Speaker 2: And I'm Joe Wisenthal. You can follow me at the Stalwart,
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Speaker 2: Carmen Rodriguez at Carmen Arman and Dashel Bennett at Dashbot.
Speaker 2: And thank you to our producer Moses Ondam. From our
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Speaker 3: Thanks for listening.
Speaker 4: In eight