Speaker 1: You're listening to the Bloomberg Opinion podcast counts Saturdays at
Speaker 1: one and seven pm Eastern on Bloomberg dot Com, the
Speaker 1: iHeartRadio app, and the Bloomberg Business App, or listen on
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Speaker 2: Welcome to Bloomberg Opinion. I'm Amy Morris. This week we
Speaker 2: look at why so many smaller airlines are looking to
Speaker 2: make big deals as M and A is turning into
Speaker 2: a survival tool and then something a bit closer to
Speaker 2: home home ownership. It's getting harder for gen z, so
Speaker 2: where will that leave them? And if you like going
Speaker 2: to a bar or a restaurant where everybody knows your
Speaker 2: name and you receive service that's tailored to you, well,
Speaker 2: you might be interested in a new trend customer loyalty programs.
Speaker 2: But we begin with COVID boosters. They've over promised and
Speaker 2: under delivered. We're learning more that parents would like to
Speaker 2: give their kids RSV vaccines, but not COVID boosters. And
Speaker 2: as for adult it's only eighteen percent of adults in
Speaker 2: the US got the latest COVID shot that says of
Speaker 2: mid December. Let's find out what's going on. Bloomberg Opinion
Speaker 2: columnist Faith Lamb covers science and his host of the
Speaker 2: follow the Science podcast, and she joins me, Now, Fay,
Speaker 2: let's start with the headline of your column. Will want
Speaker 2: to clarify something. It says boosters over promised and underdelivered.
Speaker 2: But your column really is more about the work being
Speaker 2: done to improve these boosters. Yeah.
Speaker 3: Yeah, I mean, I think that that people have become
Speaker 3: sort of resigned to the situation that we have where
Speaker 3: people are getting COVID you know, right and left, even
Speaker 3: though a lot of people are getting boosted. And I
Speaker 3: think that there is actually a lot of research out
Speaker 3: there to try to figure out what's you know, why
Speaker 3: the boosters and the COVID shots aren't protecting us better,
Speaker 3: and even research on better ways to boost people or
Speaker 3: vacciny people so that maybe it won't always be like this.
Speaker 2: So one of the big challenges is the lack of
Speaker 2: a seasonal pattern. You explain this in your column, But
Speaker 2: I wonder is the lack of a seasonal pattern with
Speaker 2: covid like with the flu. Is it because COVID is
Speaker 2: so mercurial and it keeps changing, or is it because
Speaker 2: it hasn't really been around long enough to establish a
Speaker 2: regular pattern. For us to pick up on.
Speaker 4: Yeah, I think it could be some of both. You know.
Speaker 3: One of the things I remember being surprised by covering
Speaker 3: another story a long time ago on flu is that
Speaker 3: scientists don't completely understand why flu the flu season is
Speaker 3: when it is, you know, they sort of have some guesses. Well,
Speaker 3: is because people gather more, they're inside more people are
Speaker 3: inside most of the time in most places anyway, something
Speaker 3: to do with humidity changes, something to do with sunlight
Speaker 3: and the immune system. So scientists don't completely understand the
Speaker 3: seasonal patterns that other viruses seem to have, and so
Speaker 3: it may take a while before it's understood whether this
Speaker 3: one will have a seasonal pattern eventually or not.
Speaker 2: And there's another issue that you brought up in your column,
Speaker 2: and that is that there's a question about the quality
Speaker 2: of the new boosters. They're not going to hurt you,
Speaker 2: it's just perhaps they're not as strong as we had expected.
Speaker 3: What's the issue there, Well, one of the things is
Speaker 3: just the vaccine. I mean, the virus keeps evolving really
Speaker 3: quite fast. So this one was geared to fight a
Speaker 3: version that's now pretty much extinct, and it's been replaced
Speaker 3: by something else. It's a moving target. And so the
Speaker 3: other problem is something called imprinting, by which the immune
Speaker 3: system kind of gets stuck creating antibodies to what it
Speaker 3: was originally vaccinated against, which is the original version. And
Speaker 3: so people are creating antibodies to the parts of the
Speaker 3: virus that the current version and the original version that
Speaker 3: we were vaccinated against have in common. And when you
Speaker 3: boost people, it seems to mostly increase the antibodies to
Speaker 3: the original virus, not the you know, or this sort
Speaker 3: of small cross section that they have in common. And
Speaker 3: so that's that that imprinting problem is something that scientists
Speaker 3: are still trying to understand. There was some sort of
Speaker 3: good news out of China that if people had repeated
Speaker 3: exposures to these newer omicron family of variants that we're
Speaker 3: still seeing, the imprinting became less strong and they were
Speaker 3: actually getting an immune response that was better matched to
Speaker 3: what we're seeing.
Speaker 2: So wait to be exposed to the omicron variants. Then
Speaker 2: would you actually have to get sick or can we
Speaker 2: do that through a vaccine?
Speaker 3: It was both either either by getting by getting omicron right,
Speaker 3: either way by getting a booster that was geared to omicron,
Speaker 3: or by getting omicron, either would be considered an exposure,
Speaker 3: So the more your immune system saw omicron, the more
Speaker 3: it actually did start to mount an immune response, breakthrough
Speaker 3: or override this imprinting effect. It's not clear that that's
Speaker 3: working the same way. There's some papers showing it doesn't
Speaker 3: seem to work as well with the mRNA vaccines as
Speaker 3: it does with the vaccines they're using in China, which
Speaker 3: are a whole different kind of vaccine called an activated virus.
Speaker 2: And we are talking with Bloomberg opinion columnist Faith Lamb
Speaker 2: about the promise of COVID boosters and why perhaps they're
Speaker 2: not gaining the traction that we would have expected. We
Speaker 2: also pointed out in your column that Pfizer is seeing
Speaker 2: the immediate results and effects of this, that people aren't
Speaker 2: getting the boosters as they expected, and they're struggling.
Speaker 3: Some of it is that the main thing that the
Speaker 3: booster shots do is protect people against getting severe disease,
Speaker 3: and so the people who really should take them are
Speaker 3: older people, people with the kinds of health problems that
Speaker 3: put them at risk for severe disease. So one of
Speaker 3: the questions that doesn't get asked enough is, well, eighteen
Speaker 3: percent that actually could be really good if the people
Speaker 3: that need it most are the ones getting it.
Speaker 4: But if there are people who.
Speaker 3: Are elderly and at risk and are not getting it,
Speaker 3: then we have a bigger problem. But I think that
Speaker 3: they may have counted on this being more like a
Speaker 3: flu shot, and there are a couple of reasons why
Speaker 3: it's never going to be like a flu shot. You know,
Speaker 3: you can't the boosting effect apparently only last for about
Speaker 3: four months, and so you'd need to time it to
Speaker 3: when the season was and we don't really have this
Speaker 3: well defined season, so it may be a challenge to
Speaker 3: make it as effective. And people just know they you know,
Speaker 3: they look around, their friends are getting it. Everybody's getting it,
Speaker 3: people who got boosted or getting it, people who got
Speaker 3: the last booster got it. So I think there's this
Speaker 3: sort of feeling from experience that well, I'm not going
Speaker 3: to get protection against getting COVID. I think there'd be
Speaker 3: a lot more motivation to go get a booster if
Speaker 3: you thought it was going to give you a, you know,
Speaker 3: a really strong protection against just getting infected in the
Speaker 3: first place, because people would still rather not get COVID
Speaker 3: than get it, even if the disease is mild in them.
Speaker 2: Let me ask you this. I've always understood the boosters
Speaker 2: from the very beginning weren't necessarily going to keep you
Speaker 2: from getting COVID, but will keep you out of the hospital.
Speaker 2: There's sort of like a seat belt. You're not going
Speaker 2: to avoid the crash, but you're not necessarily going to
Speaker 2: be terribly injured or killed because of it. Right, So
Speaker 2: they're like a seat.
Speaker 3: Belt, Well, yes, a little likeacy belt, except that we
Speaker 3: know that whereas it in your car. You know, anyone
Speaker 3: could get killed in an auto accident. But it really
Speaker 3: is certain high risk groups are likely to go to
Speaker 3: the hospital, and other people are much less likely, especially
Speaker 3: if they've already been vaccinated and exposed to the virus
Speaker 3: have some immunity. That we're not seeing the hospital fill
Speaker 3: up with twenty five year olds who have already had
Speaker 3: two boosters and just didn't get a third one. You know,
Speaker 3: it's really the elderly that need to be targeted.
Speaker 2: Do from your research, have you found if there is
Speaker 2: a better booster coming. They're still working on this, they're
Speaker 2: not done yet. Yeah.
Speaker 3: I mean I talked to Dan Barouche at Harvard and
Speaker 3: he just has a paper out in the journal Nature
Speaker 3: showing that in animal studies they can actually completely protect
Speaker 3: against infection with an inhaled version of the vaccine. Whether
Speaker 3: that's practical or not, I don't know, but it worked,
Speaker 3: and so it is possible that sort of getting the
Speaker 3: protection where people, you know, first, where the human body
Speaker 3: first encounters the virus, seems to offer a pretty strong protection.
Speaker 3: And people are looking at nasal that, you know, they're
Speaker 3: looking at these as something that might actually just prevent
Speaker 3: people from getting infected in the first place, and in
Speaker 3: animals at least, it seems to work.
Speaker 2: So an inhaled version then would target specifically the lungs
Speaker 2: and protect the lungs exclusively or especially yeah, or just.
Speaker 3: The upper respiratory tract. You know, it would sort of
Speaker 3: get around your upper respiratory tract, which is where people
Speaker 3: you know, are accumulating the viral particles. So, you know,
Speaker 3: I don't know exactly why that worked so much better
Speaker 3: than the nasal one. So the nasal one seemed to
Speaker 3: work pretty well, but the inhaled one worked really well
Speaker 3: in the animals, and I think they're still still working
Speaker 3: out why that is and how this might be translated
Speaker 3: into a human trial. There are already some apparently there
Speaker 3: is a trial with an inhaled vaccine going on, So
Speaker 3: there are human studies that have gotten started already.
Speaker 2: So they're trying to improve it to better match the variants,
Speaker 2: and they're trying to improve it to better target the
Speaker 2: upper respiratory tract. And they're trying to improve it. So
Speaker 2: it's not necessarily always a needle.
Speaker 3: Yeah, And I think just to write so that people
Speaker 3: don't keep getting mild infections, which then would mean that
Speaker 3: they're less likely to infect spread the virus to more
Speaker 3: vulnerable people, so that we would see a real end
Speaker 3: to the deaths and the hospitalizations. That it's not necessarily
Speaker 3: something that we would have to live with wherever that,
Speaker 3: I think scientists are still trying to, you know, trying
Speaker 3: to improve the tools we have, the vaccines we have,
Speaker 3: so that we're not resigned to dealing with this situation
Speaker 3: for all eternity.
Speaker 2: So what's your take home message from all of this? Wow?
Speaker 3: I mean, I guess just that I think that this
Speaker 3: people haven't I don't think people have lost interest in COVID.
Speaker 3: I think there's still a lot of interest. And I
Speaker 3: think that that scientists who are doing this kind of
Speaker 3: work should continue to get support, and I think it's
Speaker 3: it's what they learn is going to be useful for
Speaker 3: dealing with the next pandemic and other viruses as well.
Speaker 3: So I think having this this you know, surge in
Speaker 3: new research is really important and that we might see
Speaker 3: some new things coming down the pipe. It's not all
Speaker 3: doom and gloom.
Speaker 2: Faith Lamb is a Bloomberg Opinion columnist. She covers science
Speaker 2: and his host of the Follow the Science podcast. Now
Speaker 2: coming up will take a look at consolidations in the
Speaker 2: airline industry and what is that ten you're listening to
Speaker 2: Bloomberg Opinion.
Speaker 1: You're listening to the Bloomberg Opinion Podcast Contest Saturdays at
Speaker 1: one and seven pm Eastern on Bloomberg dot Com, the
Speaker 1: iHeartRadio app, and the Bloomberg Business App, or listen on
Speaker 1: demand wherever you get your podcasts.
Speaker 2: You're listening to Bloomberg Opinion. I m Amy Morris. Antitrust
Speaker 2: regulators have made no secret of their skepticism toward further
Speaker 2: consolidation in the airline industry mergers at acquisitions, though, like
Speaker 2: Alaska Air's nearly two billion dollar acquisition of Hawaiian holdings
Speaker 2: didn't happen in a vacuum. And throughout the aerospace supply chain,
Speaker 2: power is concentrated in the hands of just a few players.
Speaker 2: So really the only way for companies to hold their
Speaker 2: own is to get bigger. Let's learn more about this.
Speaker 2: Bloomberg opinion columnist Brooks Sutherland covers deals in industrial companies.
Speaker 2: She's been following this from the very beginning. She also
Speaker 2: writes the Industrial Strength newsletter, and she joins me, now,
Speaker 2: brook as always, thank you so much for taking the
Speaker 2: time with me, And I want to start with what
Speaker 2: you describe as a concentration of power up and down
Speaker 2: the supply chain in the aerospace industry.
Speaker 5: What do you mean?
Speaker 4: Sure?
Speaker 5: And so I always think it's fascinating that these airline
Speaker 5: deals tend to get so much public attention and so
Speaker 5: much antitrust scrutiny. But there's been a number of combinations
Speaker 5: that have happened elsewhere in the aerospace ecosystem that they
Speaker 5: just don't attract the same level of scrutiny. And so,
Speaker 5: for example, the former United Technologies Corp. Merged with Raytheon
Speaker 5: to build up this aerospace and defense giant. They also
Speaker 5: acquired Rockwell Collins, which itself had been on an acquisition spree.
Speaker 5: You know, in terms of the airplanes themselves, you really
Speaker 5: have Boeing an airbus and that's it as far as
Speaker 5: you know, major commercial jetliners. And then there was a
Speaker 5: consolidalidation that happened in the aircraft leasing space where ge
Speaker 5: sold its aviation leasing business. And so I just think
Speaker 5: it's interesting that, you know, there's so much fixation on
Speaker 5: the airlines, and perhaps that's because we as consumers tend
Speaker 5: to interact with them more than we do the aerospace
Speaker 5: manufacturing side or the aircraft leasing side. But these deals
Speaker 5: are part of that broader ecosystem. When we have so
Speaker 5: much consolidation, it changes the negotiating dynamics because airlines they
Speaker 5: lease planes, they buy planes, they have engines, they need
Speaker 5: engine maintenance, and all of that sort of adds to
Speaker 5: these pressures that airlines are facing.
Speaker 2: So how did we get here.
Speaker 5: Through a number of deals over the years. I mean,
Speaker 5: you know, Boeing was created through a series of acquisitions,
Speaker 5: and you know some of the deals that it just
Speaker 5: described happened a lot more recently as well, and regulators
Speaker 5: allowed those to go through. And so I think there
Speaker 5: just needs to be a bigger conversation about what is
Speaker 5: the actual competitive operating environment for these airlines.
Speaker 2: Transformative deals have a poor track record, and you talk
Speaker 2: about that in your column on the Bloomberg terminal. So
Speaker 2: would this then really be the only recourse that airlines
Speaker 2: would have to hold their own or even grow a
Speaker 2: little bit?
Speaker 5: I think it is. I mean, just when you think about,
Speaker 5: you know, takeoff slots at airports, those are also restricted,
Speaker 5: and so the only way that you can get more
Speaker 5: is often by buying another company's positions at those airports
Speaker 5: and so, and you know that labor is uh, there's
Speaker 5: not a lot of labor to go around. There's long
Speaker 5: waiting lists for airplanes, and so if you want to
Speaker 5: go ahead and you know, get a bigger fleet very quickly,
Speaker 5: one of the better ways to do it is by
Speaker 5: buying somebody. And I just think that that needs to
Speaker 5: be part of the conversation. It's not just the airlines
Speaker 5: want to go in and consolidate in order to be
Speaker 5: able to jack prices up for consumers. They have all
Speaker 5: of these other pushes and pulls on their finances and
Speaker 5: their ability to compete.
Speaker 2: Well, that's a good question. Then how does this impact
Speaker 2: the consumer, the guy who's holding the ticket.
Speaker 5: Sure, I mean so right now. Actually, there are arguably
Speaker 5: too many seats available domestically in the US, and you've
Speaker 5: seen a number of carriers actually have to lower fares
Speaker 5: in order to be able to fill those seats, and
Speaker 5: they're often not doing so profitably because they're also, you know,
Speaker 5: dealing with rising cost pressures, not just from labor and fuel,
Speaker 5: but infrastructure constraints, supply chain, logjams, weather disruptions cost the
Speaker 5: airlines money too, not just the flyer, their time and
Speaker 5: their patients, and you know, it's it will be interesting
Speaker 5: to see, you know. Jet Blue makes the argument that
Speaker 5: buying Spirit will actually allow them to be more competitive
Speaker 5: with the big four airlines, and that their goal is
Speaker 5: not necessarily to raise prices. Now, part of their business
Speaker 5: plan is to make the Spirit jets look more like
Speaker 5: Jet Blue planes, and what that means is taking seats
Speaker 5: out and making them a little bit more comfortable. But
Speaker 5: when you have seats fewer seats, obviously that means, you know,
Speaker 5: there's a little bit of a change in the price
Speaker 5: dynamic and the fairs. So I mean it's difficult to
Speaker 5: say exactly what would happen with the prices. But I
Speaker 5: just think it's also important to think about, you know, han,
Speaker 5: these airlines continue to survive and compete in a world
Speaker 5: where they're sort of the odd man out on a
Speaker 5: series of oligopolies.
Speaker 2: And we are talking with Bloomberg opinion columnist Brooks Sutherland
Speaker 2: about the only real route for airlines to grow, and
Speaker 2: that just might be M and A brooke. What has
Speaker 2: to change then to give these smaller airlines a fighting chance?
Speaker 5: You know, I think it's difficult to really change anything
Speaker 5: because a lot of this is structural. I mean, you
Speaker 5: can't go back and unwind the deals that created Boeing.
Speaker 5: And at this point, you know, we're not going to
Speaker 5: go back and undo the takeovers that created what's now
Speaker 5: known as RTX or any of the other consolidation that's
Speaker 5: happened up and down the supply chain. And so I
Speaker 5: think then that begs the question of Okay, well, then
Speaker 5: do you have to allow the airline deals and so
Speaker 5: that it's more of a level playing field. It's interesting
Speaker 5: because there was also consolidation that happened in the railroad
Speaker 5: industry were the two smallest players combined, and that is
Speaker 5: a different regulator that's a specialized regulator that looks at
Speaker 5: railroad deals. But they allowed that deal to go through
Speaker 5: along the same argument as Jet Blue is making for
Speaker 5: its Spirit deal, that basically, the market is what it
Speaker 5: is and the only we can't go back and rewrite history,
Speaker 5: and so the only way to introduce more competition now
Speaker 5: is by letting these smaller players combine.
Speaker 2: So where is the government in all of this? Where
Speaker 2: do the regulators come in? Are they turning a blind
Speaker 2: eye to some but not others?
Speaker 5: So the dj has sued to block Jet blues combination
Speaker 5: with Spirit. They just wrapped up closing arguments. We don't
Speaker 5: have our ruling yet from the judge in that case,
Speaker 5: and it's not exactly clear what the timing of that
Speaker 5: decision will be. And then they also the DOJ did
Speaker 5: successfully block Jet Blue's marketing alliance with American Airlines. But
Speaker 5: I guess that gets back to my original point of
Speaker 5: the regulators have taken a very tough stance on these
Speaker 5: airline deals. That is just not happening to the same
Speaker 5: degree in these other corners of the aerospace ecosystem, and
Speaker 5: those deals have unique characteristics and unique qualities that need
Speaker 5: to be assessed under by antitrust regulators, and they certainly
Speaker 5: did look at those deals, but there's just not the
Speaker 5: same amount of public uproar or scrutiny, And I just
Speaker 5: wonder if that sort of shifts how these deals are
Speaker 5: analyzed and they do matter.
Speaker 2: Like they'd pay more attention to those deals that we
Speaker 2: you and I might pay more attention to because we're
Speaker 2: the ones buying the ticket.
Speaker 5: Sure well, they certainly didn't try to block any of
Speaker 5: those other deals, and they're blocking the airlineses deals, which
Speaker 5: I just think is interesting. And you know, it's always
Speaker 5: fascinating me, even taking a step beyond the aerospace sector,
Speaker 5: that there's so much consternation about big tech and the
Speaker 5: amount of power that the technology companies have, which is
Speaker 5: certainly a very valid debate and one that we should
Speaker 5: be having, but nobody talks as much about the consolidation
Speaker 5: that's happening on the aerospace side. And so I do
Speaker 5: think public perception and the things that we as consumers
Speaker 5: pay attention to does sort of affect these conversations. But
Speaker 5: it has to be because everything is interconnected. This is
Speaker 5: all as we learn going through the supplis chain crisis
Speaker 5: of the post pandemic period. Everything is interconnected and depends
Speaker 5: on companies up and down the splashchaing.
Speaker 2: Right, And as you explained that there's no real way
Speaker 2: to undo it. It's all been done, it's all intertwined.
Speaker 2: So then how does this end? Because the way it's
Speaker 2: described doesn't really seem sustainable, at least for some of
Speaker 2: these airlines.
Speaker 5: Sure, and I think that's why you're seeing so many
Speaker 5: of them try to do deals. I mean, if you
Speaker 5: look at it just on face value, and you consider
Speaker 5: the amount of scrutiny that Jet Blue has gotten for
Speaker 5: its two endeavors, you would ask why in the world
Speaker 5: would an airline try to do a deal right now?
Speaker 5: And the fact that Alaska is going ahead with one
Speaker 5: and trying to buy Hawaiian clearly they see somewhat of
Speaker 5: a financial opportunity there as well, just given how beaten
Speaker 5: down Hawaiian shares have been. But I think the fact
Speaker 5: that they're going ahead with this deal at a time
Speaker 5: when Jet Blue Spirit deal is still tied up in
Speaker 5: the courts tells you how important you know, this industry
Speaker 5: views consolidations.
Speaker 2: All right, Brook, thank you so much. We're going to
Speaker 2: leave it there, and we're going to continue to watch
Speaker 2: it with you. Now that we know a little bit
Speaker 2: more about what we should be watching when we look
Speaker 2: at these deals. Thanks so much for your time.
Speaker 5: Thank you.
Speaker 2: Brook Sutherland is a Bloomberg Opinion columnist who covers deals
Speaker 2: in industrial companies. She is also the author of the
Speaker 2: Industrial Strength newsletter. Don't forget. We're available as a podcast
Speaker 2: on Apple, Spotify or your favorite podcast platform. This is
Speaker 2: Bloomberg Opinion.
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 Ami Morris. It is true
Speaker 2: for every generation that becoming a financially secure adult is hard. Now.
Speaker 2: A big part of that is home ownership, and last year,
Speaker 2: Vice President Kamala Harris told Bowie State University students that
Speaker 2: home ownership is good for the economy and that the
Speaker 2: government is trying to make it easier for you to
Speaker 2: own your own home.
Speaker 4: When we increase home ownership, it strengthens communities and it
Speaker 4: strengthens our economy. Homeowners are more likely to put down.
Speaker 2: Roots, but establishing yourself in your career, securing a home,
Speaker 2: starting a family, these are not easy things to do,
Speaker 2: and maybe it's harder for some generations than others. Let's
Speaker 2: talk about this. Bloomberg opinion columnist Alison Schrager joins me now,
Speaker 2: and she covers economics. Alison, is it harder for some generations?
Speaker 4: I used to say no. I used to think, you know,
Speaker 4: I think it's always hard. I think establishing yourself as
Speaker 4: an adult is always a challenge, and everyone thinks it's
Speaker 4: harder for them than anyone else. Anyway, I kind of
Speaker 4: always thought it actually was getting a little bit easier
Speaker 4: for everyone else. But millennials really did make a fine
Speaker 4: point of it, and they did have a point when
Speaker 4: it came to buying a house that it was more
Speaker 4: expensive than it was for their parents, like the price,
Speaker 4: but they also had way cheaper mortgages and also wanted
Speaker 4: to buy bigger houses. So these things, I guess, you know,
Speaker 4: even doubt and I always thought, you know, it's not
Speaker 4: so bad, guys, but I think gen z might have
Speaker 4: a legitimately harder time getting their first home.
Speaker 2: Now, let's get into that before we get to the
Speaker 2: gen Z part. You had said that millennials have said
Speaker 2: for years that they were priced out of the housing
Speaker 2: market in part because of their student debt.
Speaker 4: That's true, but way more people go to college. And
Speaker 4: also there's actually a positive correlation between your student debt
Speaker 4: balance and the odds of home ownership. And that's because
Speaker 4: the more student that you have, the more likely you
Speaker 4: are to have like a graduate degree or something like
Speaker 4: that that makes you get paid a lot more. So, actually,
Speaker 4: the more student that you have, the more likely you
Speaker 4: are to be a homeowner. And in fact, I was
Speaker 4: digging into the data looking at home ownership rates with
Speaker 4: different generations, and you know, Millennials did buy homes a
Speaker 4: little later, and just the way that millennials grew up
Speaker 4: a little bit later for a lot of reasons, some
Speaker 4: of which were positive. But in the last say several years,
Speaker 4: as they started to approach middle age, like other generations,
Speaker 4: they bought homes a lot, and particularly their prime home
Speaker 4: buying years were when interest rates really hit those record lows,
Speaker 4: particularly mortgage rates, so they actually got a really good deal.
Speaker 4: There is still lower home ownership for millennials than for
Speaker 4: say baby boomers at their age, but I found that
Speaker 4: was largely driven by mostly men who still live with
Speaker 4: their parents, and most of them didn't go to a
Speaker 4: college at all. So I think we know that population
Speaker 4: is struggling, and I don't know if it's for home prices,
Speaker 4: but I think we can agree it's for a lot
Speaker 4: of reasons beyond that.
Speaker 2: And you had said in your column on the Bloomberg
Speaker 2: Terminal that the last several years saw one of the
Speaker 2: biggest increases in home ownership of any generation. Now does
Speaker 2: that apply to millennials, gen Z, gen X? Who where
Speaker 2: does that apply?
Speaker 4: I mean, and really for millennials because Gen X and
Speaker 4: millennials already like roughly if you look at a generation,
Speaker 4: like when they're like top out at home buying, it's
Speaker 4: usually like maybe sixty five seventy percent, And you know,
Speaker 4: not everyone is destined to buy a home. So Gen
Speaker 4: X and boomers are pretty much already there. Like this
Speaker 4: is like if you're gonna buy a home, you're gonna
Speaker 4: buy a home. I mean, I guess it's rare to
Speaker 4: buy your first home at sixty. I mean, I'm sure
Speaker 4: it happens, but it's like if you're yeah, so so
Speaker 4: I said, like there's just an age where people start
Speaker 4: buying homes, and that tends to be as a little
Speaker 4: later for millennials and other generations, but because they also
Speaker 4: got married later and things like that. But it is
Speaker 4: like your thirties and for them maybe a couple of
Speaker 4: years later into their fir thirties, but that was also
Speaker 4: the best time to buy a home, arguably because they've
Speaker 4: now locked in cheap mortgage for as long as they want.
Speaker 2: We are talking with Bloomberg Opinion colonist Alison Schrager about
Speaker 2: Generation Z getting a bad deal on housing, and Allison,
Speaker 2: so far we've talked a lot about millennials and what
Speaker 2: this leaves for gen Z. Where does this leave them
Speaker 2: when it comes to home ownership.
Speaker 4: Well, legitimately hard spot because I said, like millennials did
Speaker 4: to face higher prices but also super cheap mortgages, so
Speaker 4: it kind of was a wash. But for gen Z
Speaker 4: is facing both and not only that, because mortgage rates
Speaker 4: were so low and then went up so fast, and
Speaker 4: you know, while they might come down a little if
Speaker 4: the Fed starts cutting, they're probably not going back to
Speaker 4: those nice three sub three percent rates we used to
Speaker 4: see unless there's some major policy push. So that means
Speaker 4: millennials who maybe have their first starter home are probably
Speaker 4: going to sit in that home unless they have to move,
Speaker 4: because you know, who can afford to move now. And
Speaker 4: that pretty much leaves gen z or shut out of
Speaker 4: like the sort of buying housing market because they have
Speaker 4: high prices and high mortgage rates.
Speaker 2: So because millennials were able to lock in those low rates,
Speaker 2: they're not inclined to move. Nobody can afford to move
Speaker 2: because they don't need to get a new mortgage with
Speaker 2: a much higher rate.
Speaker 4: Yeah, and as I said, millennials are probably going to
Speaker 4: sit on those for like a decade. I mean, I
Speaker 4: bought during the pandemic for the first time, and like
Speaker 4: I can, I can don't see how I can ever
Speaker 4: afford to move.
Speaker 2: So when are gen z looking to buy these starter homes?
Speaker 2: Are they already out there in the market. Are they
Speaker 2: already starting to experience this issue or are they just
Speaker 2: looking down the road?
Speaker 4: Probably the really keen ones are, but because I mean,
Speaker 4: how old are gen z ers now, Like maybe mid twenties,
Speaker 4: so it's a little early. But people are saying that
Speaker 4: the housing market is going to be sort of really
Speaker 4: inaccessible for maybe like another decade. So as they approached
Speaker 4: that time, bar some like extraordinary things happening to mortgage
Speaker 4: rates or a housing crash, which you know, I don't
Speaker 4: know if it is that likely. Again, they're going to
Speaker 4: face a tough time.
Speaker 2: Are they experiencing some similar inflationary pressures when it comes
Speaker 2: to renting?
Speaker 4: Yeah, I mean that's the other thing. They are definitely
Speaker 4: facing high rents. I mean, I live in New York,
Speaker 4: and you know, every generation moves to New York is like,
Speaker 4: it's so much more expensive, and it's it is always
Speaker 4: more expensive. But oh my god, I mean I don't
Speaker 4: even know how young people moving to New York now
Speaker 4: afford it. I mean I was just reading the median
Speaker 4: rent is like between four and five thousand dollars. I
Speaker 4: mean that's I mean, if you're on a starting salary,
Speaker 4: I mean, I don't know how you cope with that.
Speaker 4: So the higher mortgage rates are creeping into higher rents too.
Speaker 4: So it's just I think everyone complains every generation, and
Speaker 4: I don't want to minimize that. I think it is
Speaker 4: always hard making your way in the world, and I
Speaker 4: think that's the bottom line. But I think it is
Speaker 4: actually maybe harder for them. I mean, there are other
Speaker 4: things that are legit hard about. Know, if they're harder
Speaker 4: than they were for other generations.
Speaker 2: They're timing is just lousy timing.
Speaker 4: Is and well, I mean also they also had their
Speaker 4: schooling disrupted by COVID, which probably also has social effects
Speaker 4: and you know, I mean and a lot of social
Speaker 4: unrest that certainly other generations didn't. But also to compound
Speaker 4: their misery, now they're like, all right, world's back to normal.
Speaker 4: I'm going to do that thing that young people do,
Speaker 4: move to a big city, start my life. And they're
Speaker 4: facing these just astronomical rents, and I think that's just
Speaker 4: a function of the fact that you know, rates have
Speaker 4: gone up before. They're not even that high by a
Speaker 4: historical reasons, but what they did do is they were
Speaker 4: very low and then now like something like more normal
Speaker 4: historically normal, and that just happens like almost overnight for them.
Speaker 4: So that just has all these weird knock on effects
Speaker 4: for the economy on rent and housing prices. That makes
Speaker 4: life harder for.
Speaker 2: Them now when you have those higher rates, though that
Speaker 2: usually would mean less expensive homes, but that doesn't help
Speaker 2: them in this case.
Speaker 4: Because there is that huge chump jump up that happened,
Speaker 4: so suddenly I see and they were just I mean,
Speaker 4: we've seen, certainly have seen mortgage rates higher than this,
Speaker 4: and that brought down prices.
Speaker 6: But in the.
Speaker 4: Past, you weren't, like a year ago, at like historically
Speaker 4: low rates that you know, the Fed engineered and the
Speaker 4: government and just the market, all these forces came together
Speaker 4: to bring rates like mortgage rates that just like, I mean,
Speaker 4: a two and a half percent thirty year fixed mortgage
Speaker 4: just shouldn't exist, but it did, and everyone like you know,
Speaker 4: refinanced or bought a home.
Speaker 3: Then.
Speaker 4: So now we have this weird situation where no one
Speaker 4: wants to move, and in the past it didn't really happen,
Speaker 4: so that keeps prices high. You know, I said, gen
Speaker 4: Z's had it rough. They never complained about the COVID thing.
Speaker 4: In fact, they took having their college experience stolen from
Speaker 4: them with actually quite quite graciously. So I feel like, yeah,
Speaker 4: maybe they won't we won't be subjected to a million
Speaker 4: think pieces of like my generations as it so are.
Speaker 4: They'll just be like, yeah, this is our cross to
Speaker 4: bear and we take it.
Speaker 2: Looking ahead with this, where does this wind up? I mean,
Speaker 2: are they just going to be late homeowners. Are they
Speaker 2: just going to be considered renters? Do we have a
Speaker 2: crystal ball where we can see what happens next.
Speaker 4: There is a trend generally of people going becoming like
Speaker 4: stable adults later, and that has nothing to do with housing.
Speaker 4: It's the sociological things, like you know, Jane BIG's slower
Speaker 4: lives this whole hypothesis, So probably they'll reverse some of
Speaker 4: the trends we've seen. One of the reasons housing felt
Speaker 4: so expensive to millennials is they also wanted to live
Speaker 4: in bigger urban areas and have bigger houses. So maybe
Speaker 4: they'll be a swing back to smaller houses and more
Speaker 4: rural areas where they're cheaper.
Speaker 2: Bloomberg Opinion columnist Alison Schreger covers economics. You're listening to
Speaker 2: Bloomberg Opinion. I'm Amy Morris. Restaurant tours have been struggling
Speaker 2: with inflation and labor shortages, labor costs and consumer complaints,
Speaker 2: and now there's a new push to help maintain customer loyalty.
Speaker 2: Let's learn more about how this works with Bloomberg Opinion
Speaker 2: columnists Bobby Gosh. He covers culture and Bobby, remember there
Speaker 2: was a time when you could have a favorite restaurant
Speaker 2: or a favorite bar cafe, and they'd know you. Like
Speaker 2: back in the eighties, there was successful TV series you've
Speaker 2: probably heard of it, cult Cheers. It was built on
Speaker 2: that whole premise of everybody knowing your name.
Speaker 6: So what happened, particularly since the pandemic, the restaurant industry
Speaker 6: as a whole has suffered acute shortages of people, particularly
Speaker 6: weight staff. The pandemic was a sort of wake up
Speaker 6: moment for a lot of people who worked in that
Speaker 6: industry who realized, you know what, this is a terrible job.
Speaker 6: They pay us very poorly. We had to depend on
Speaker 6: the kindness of strangers, so to speak, with tips. There
Speaker 6: are better jobs out there, and we're in an economy
Speaker 6: where unemployment is low, so there are a lot of
Speaker 6: other jobs out there. So the restaurant industry has been
Speaker 6: losing the exact kind of people who would remember your name,
Speaker 6: whould remember your favorite drink, remember the dishes you like,
Speaker 6: would ask after your friends, would ask after your health.
Speaker 6: All of that sort of human interaction that you could
Speaker 6: rely upon is becoming much harder to assure these days.
Speaker 2: So how does a loyalty program help accomplish this? How
Speaker 2: does this work well.
Speaker 6: So there's one loyalty program that's just been launched. It's
Speaker 6: called Blackbird. It comes from a guy called Ben Levinthal
Speaker 6: who also was responsible for Eater and for Rezi, the
Speaker 6: reservation app, so he has a good track record in
Speaker 6: using digital solutions. And the way it works is that
Speaker 6: you sign up. Restaurants sign up and that allows sort
Speaker 6: of restaurants to build a profile. Every time you go
Speaker 6: to a restaurant, you make an order, it is recorded
Speaker 6: and stored and that information is available to that restaurant
Speaker 6: to other restaurants, so that when you go back the
Speaker 6: moment you make the reservation, the maitre d at the
Speaker 6: restaurant gets a little mini profile of you and says, okay,
Speaker 6: this is Amy Morris. She's been coming here for a while.
Speaker 6: She likes you know, a cosmopolitan. She likes her steak
Speaker 6: medium rare. The last time she was here, you know,
Speaker 6: she was not happy with the dessert, but she didn't
Speaker 6: make a big fuss. And so he'll have he or
Speaker 6: she will have all of this information and can design
Speaker 6: and experience for you and they can act on this
Speaker 6: information and say, okay, when you walk in the door,
Speaker 6: there's the cosmopolitan waiting for you. They can say, you know,
Speaker 6: we were really sorry, we messed up the last time.
Speaker 6: This drink is on the house. These are the sort
Speaker 6: of things that a really good Matred could do back
Speaker 6: in the day.
Speaker 2: Would it cost more, No, it will.
Speaker 6: Cost you absolutely nothing, and in the trial stage it
Speaker 6: will cost the restaurant only a few cents per reservation. Eventually,
Speaker 6: if the system really takes off and restaurants respond to it, well,
Speaker 6: then they'll they will be charged more by Blackbird. But
Speaker 6: as a consumer, there's no expensity of it.
Speaker 2: Our customer's loyal Is this something that customers are kind
Speaker 2: of no, unintended hungry for?
Speaker 6: Well, that's the other thing to consider, and that's not
Speaker 6: a problem technology can solve. Lots of customers are not
Speaker 6: as loyal as they used to be because they're more choices.
Speaker 6: And after the pandemic, many of our favorite places closed down.
Speaker 6: New places have opened up, so there's an excitement about
Speaker 6: going and trying new things, and that is a challenge
Speaker 6: to our old favorites and I'm not sure that can
Speaker 6: be solved by technology. But ultimately we are, particularly those
Speaker 6: who like to eat out, would like to experiment and
Speaker 6: try new things. That's not something technology can solve.
Speaker 2: I don't think it's going to be interesting to see
Speaker 2: how this works out. Thank you so much, Bobby for
Speaker 2: filling us in.
Speaker 1: Thanks Amy, Thanks You want to go where everybody knows
Speaker 1: your name?
Speaker 2: Bloomberg Opinion columnist Bobby goes. That does it for this
Speaker 2: week's Bloomberg Opinion, and we're produced by Eric mollow You
Speaker 2: can find all of these columns on the Bloomberg terminal,
Speaker 2: and we're available as a podcast on Apple, Spotify, or
Speaker 2: your favorite podcast platform. Stay with us. Today's top stories
Speaker 2: and global business headlines are just ahead. I'm Amy Morris,
Speaker 2: and this is Bloomberg.
Speaker 4: You want to go where everybody knows me