Speaker 1: You're listening to the Bloomberg Opinion podcast count US Saturdays
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Speaker 2: Welcome to Bloomberg Opinion. I'm Amy Morris. This week we
Speaker 2: look at why the American public doesn't hold a lot
Speaker 2: of faith in scientists and researchers, as well as other
Speaker 2: traditional institutions in the US. What could have happened to
Speaker 2: damage that trust on such a profound level. We'll also
Speaker 2: look at how the US economy needed a second wind
Speaker 2: and got one from Barbie Oppenheimer and Taylor Swift. And
Speaker 2: then we'll explore a new trend in restaurants, laboratory kitchens
Speaker 2: and how they can help you help the world be
Speaker 2: a better place. But we begin with the American consumer
Speaker 2: who seems unhappy. But why inflation is down? Consumers are
Speaker 2: spending in spite of rising interest rates, and we could
Speaker 2: get more of a market boon with rate cuts that
Speaker 2: may be coming next year. Federal Reserve chair J Powell
Speaker 2: said last month that the US economy is still growing.
Speaker 3: Recent indicators suggests that economic activity has been expanding at
Speaker 3: a strong pace and well above earlier expectations. In the
Speaker 3: third quarter, real GDP is estimated to have risen an
Speaker 3: outsized annual rate of four point nine percent, boosted by
Speaker 3: a surge and consumer spending.
Speaker 2: So where is the disconnect and why the discontent? Well,
Speaker 2: let's find out. Bloomberg Opinion colonist Connor Sen joins us now.
Speaker 2: He is the founder of Peachtree Creek Investments and Connor,
Speaker 2: we've seen rapid job and economic growth, but the American
Speaker 2: consumer is reportedly unhappy. Where's all this coming from.
Speaker 4: Well, I think it's a puzzle we've all been trying
Speaker 4: to figure out because you would say, we've added millions
Speaker 4: of jobs since the pandemic, the unemployment rates below four percent.
Speaker 5: GDP growth has been robot.
Speaker 4: Consumer spending has recovered a lot, like people should be happy,
Speaker 4: and they're not. And so it's a questionable why is that?
Speaker 4: And you know, I think inflations, certainly in twenty twenty
Speaker 4: one and twenty twenty two were big factors. And even
Speaker 4: though inflation has come down a lot this year, it's
Speaker 4: fair to say, well, maybe prices are still up a
Speaker 4: lot versus two three years ago, so they're still.
Speaker 6: Mad about that.
Speaker 4: And I think the fact that even though inflation has
Speaker 4: come down, interest rates have mostly risen this year, and
Speaker 4: so mortgage rates ticked up to eight percent in October.
Speaker 4: And even if not everybody is buying a house or
Speaker 4: buying a car all the time, it's just annoying when consumers,
Speaker 4: American consumers in particular, can't borrow the way they like to.
Speaker 5: And so that's why I wrote this column.
Speaker 4: And I think there's reasons to think a lot of
Speaker 4: these things that have annoyed people, that are persisted for
Speaker 4: two or three years could be reversing. And it'll be
Speaker 4: a good test to see if lower mortgage rates, cheap energy,
Speaker 4: and sort of consistently lower inflation are enough to turn
Speaker 4: the vibes around.
Speaker 2: Okay, that's interesting. You believe consumers would be more welcoming
Speaker 2: of a slow growth environment, not a fast growth, and
Speaker 2: that that would make them more satisfied. But it does
Speaker 2: sound on the surface kind of the opposite of what
Speaker 2: you might.
Speaker 4: Expect, and maybe there's something to be said for, you know,
Speaker 4: growth being too fast versus just right. And it's the
Speaker 4: kind of thing where an econos might say, well, even
Speaker 4: though your costs are up twenty percent, your wages are
Speaker 4: up twenty three percent, so you're somewhat better off. But
Speaker 4: no one really thinks that way. They think, well, I
Speaker 4: earned the rays I got, and then this inflation is
Speaker 4: just something annoying I have to deal with. They don't
Speaker 4: think about the two being linked. And so, you know,
Speaker 4: people might be happy in the late twenty tens. They
Speaker 4: were happier when wage growth was three percent, but inflation
Speaker 4: was two and so maybe that kind of environment in
Speaker 4: twenty twenty four, with lower interest rates could put people
Speaker 4: at a better mood.
Speaker 2: So now you are saying that that an economic slowdown
Speaker 2: is likely coming. So let's see how these consumers respawn
Speaker 2: in a different environment.
Speaker 4: Yeah, and I think right now, I don't think we're
Speaker 4: going to have a recession, but growth looks to be slower.
Speaker 4: Job growth has come down limit rate, it's closer to
Speaker 4: four than in the low threes.
Speaker 5: We see.
Speaker 4: Inflation has certainly come down. And so let's see how
Speaker 4: people like this environment. And we saw this month that
Speaker 4: consumer confidence rose this month for the first time in
Speaker 4: four months, even though growth is slower in the fourth
Speaker 4: quarter than it wasn't the third.
Speaker 2: So is that the consumer reaction you've been watching for.
Speaker 2: What does all this tell you, Well.
Speaker 5: I think it's sort of again suggests that people.
Speaker 4: I mean, it's great that we got the unemployment rate
Speaker 4: back to pre pandemic levels, but the way in which
Speaker 4: we got there still wasn't the best ride for people.
Speaker 4: And going forward, since I do think we are going
Speaker 4: to have slower growth and hopefully lower energy prices, I believe,
Speaker 4: lower interest rates, I think it's reasonable to think that
Speaker 4: that confidence will tick up. And that's sort of the
Speaker 4: test to see, you know, is it really bit about
Speaker 4: that that people didn't like the inflation, didn't like a
Speaker 4: lot of the pressures we've had over the past few years,
Speaker 4: and a more normalized environment with cheaper energy and lower
Speaker 4: cost to credit is what they've been waiting for.
Speaker 2: And we are talking with Bloomberg opinion columnist connorson about
Speaker 2: consumer sentiment and what it will take to satisfy the
Speaker 2: consumer and Connor, you just mentioned lower energy prices, lower
Speaker 2: prices at the pump, lower prices to make your home
Speaker 2: warm in these winter months, and you mentioned the lower
Speaker 2: cost of credit. Are there other benefits that come along
Speaker 2: with it that the consumer would be looking for?
Speaker 4: I think it will help the own freeze in the
Speaker 4: housing market. And it's sort of the housing market, it's like,
Speaker 4: how is it doing? And I think there are a
Speaker 4: lot of ways you can in which you could say
Speaker 4: it's really strong because inventory is still very low, prices
Speaker 4: are very high. If you're a homeowner and you locked
Speaker 4: in your mortgage rate a few years ago, you're sitting pretty.
Speaker 4: But it's also very dysfunctional. We have the lowest existing
Speaker 4: home sales in twenty or twenty five years on some measures,
Speaker 4: fewer home sales now than at the worst period of
Speaker 4: the financial crisis, which is kind of ridiculous. Affordability is
Speaker 4: the worst it's been in forty years, and so if
Speaker 4: you're trying to buy a home, it's been terrible. And
Speaker 4: I think that lower mortgage rates and could sort of
Speaker 4: get people to first help supportability, but also if you
Speaker 4: are looking, if you have a low mortgage rate or
Speaker 4: looking to move, well, maybe mortgage rates in the sixes,
Speaker 4: even though it'ld be a higher mortgage rate, maybe that's
Speaker 4: enough to get you out of your home, willing to
Speaker 4: make that move for a better job, for family reasons,
Speaker 4: what have you, and just sort of make the market
Speaker 4: more functional again, and I think that would sort of
Speaker 4: make people feel better. Even if it's you know, maybe
Speaker 4: not as hot of a housing market as it was
Speaker 4: in the past, you call it dysfunctional.
Speaker 2: Does that lead then to volatility or unpredictability? Is that
Speaker 2: what makes this so hard?
Speaker 5: Definitely?
Speaker 4: I mean, because you had when COVID hit, sort of
Speaker 4: looked like the housing market might crash again, and then
Speaker 4: by the end of twenty twenty into twenty twenty one,
Speaker 4: we had six million existing home sales, which is about
Speaker 4: as high as it ever gets. And then right now
Speaker 4: we have existing home sales a little bit below four million,
Speaker 4: So it's a thirty thirty five percent decline and that's
Speaker 4: really tough if you're just a homeowner or someone looking
Speaker 4: to buy a home. But it's also terrible if you're
Speaker 4: a realtor or someone who's a home decorator or a
Speaker 4: mover or a loan originator. It just you went from
Speaker 4: a boom to a bust. People are losing jobs and
Speaker 4: it's just very uncertain about what the next three months
Speaker 4: looks like, let alone the next year, because there has
Speaker 4: been so much volatility in the housing market and mortgage rates.
Speaker 5: So I think a.
Speaker 4: Period of stability with maybe mortgage rates in the sixes
Speaker 4: would feel great compared to what has been like the
Speaker 4: past few years of the roller coaster.
Speaker 2: But what are the signs that tell you a slow
Speaker 2: growth environment or at least a stable a more stable
Speaker 2: environment is on the way.
Speaker 4: Well, So growth is looking right now in the fourth
Speaker 4: quarter about two percent, which is down from five and
Speaker 4: Q three, So that's two sort of normal that the
Speaker 4: kind of growth we had in the twenty tens. Again,
Speaker 4: energy prices have already come down. Oil prices are probably
Speaker 4: as low as they're going to get outside of recession,
Speaker 4: just because we see that producers tend to want to
Speaker 4: cut back when prices get much lower. And now with
Speaker 4: the inflation data we've gotten in recent months and some
Speaker 4: tea leaves from the Federal Reserve, it looks like they're
Speaker 4: going to be cutting rates as early, potentially as March
Speaker 4: or next year. And you're seeing that the bond markets
Speaker 4: are responding to that. Mortgage rates have dropped from eight
Speaker 4: percent down to seven point two percent or so. So
Speaker 4: there's reason I think we're finally going to make some
Speaker 4: progress on the interest rates side, which we haven't done,
Speaker 4: you know, since this recovery.
Speaker 2: So going forward, let's look toward the first quarter of
Speaker 2: twenty twenty four. You are saying that we are expecting
Speaker 2: an economic slow down, that is something that is going
Speaker 2: to give the consumer more confidence or will they just
Speaker 2: be more satisfied with a more stable environment.
Speaker 4: I think they want both right now. I think just
Speaker 4: stability is what people want. Lower prices. Stable prices are
Speaker 4: what people want, lower interest rates. The inflation's in bad,
Speaker 4: the unpredictability's been bad, the volatility has been bad. People
Speaker 4: just don't want to have to think about this stuff.
Speaker 4: I might because I like, you know, to talk to
Speaker 4: you about it and write about it, to look at markets,
Speaker 4: but the average person just wants to know gas is
Speaker 4: going to be affordable and not move around too much.
Speaker 4: When I'm looking to buyer sell my home, I get
Speaker 4: a reasonable rate. They don't want to have to think
Speaker 4: about changes in all of this stuff all the time.
Speaker 4: And I think just to the extent that all of
Speaker 4: this volatility can be on the back burner, people can
Speaker 4: focus on their lives and other things that would be
Speaker 4: a relief to consumers.
Speaker 2: And just as an aside, we've been talking here on
Speaker 2: Bloomberg about the disconnect between the consumer sentiment and the
Speaker 2: actual economy itself. The economy is not bad right now,
Speaker 2: but the consumer sentiment doesn't reflect that. They feel like
Speaker 2: the economy is rough right now and making things harder
Speaker 2: for them.
Speaker 4: Yeah, people feel like they deserve the wages they have
Speaker 4: and the job they have today, but they want the
Speaker 4: prices they had in twenty nineteen, and that's fair. You know,
Speaker 4: people want loss of government services and low taxes.
Speaker 5: We all want to have our.
Speaker 4: Cake and eat it too, sure, And I think when
Speaker 4: the pandemic hit, a lot of disruption occurred, and there's
Speaker 4: a lot of uncertainty about what it would mean. We
Speaker 4: didn't know if we'd get vaccines or how things would
Speaker 4: shake out. And policy makers responded the way they did.
Speaker 4: And you could argue about the choices we made or
Speaker 4: the path we took to get here.
Speaker 5: But I think all things considered, it's not bad.
Speaker 4: But we want to put that volatility and uncertainty behind
Speaker 4: us and just get back to normalcy. And I think
Speaker 4: we're getting there.
Speaker 2: So just before we go Connor, the volatility and the
Speaker 2: uncertainty is still sort of a residual effect then from
Speaker 2: the pandemic, which was by the way years ago, but
Speaker 2: we're still feeling that.
Speaker 4: Yeah, it's sort of even you know, Autobal prices are
Speaker 4: still higher than I think they will be a year
Speaker 4: from now because we still have a lack of inventory,
Speaker 4: producers trying to catch up supply chain things that are
Speaker 4: in the pipeline. The housing market is still digesting everything
Speaker 4: that's happened. And then even if you know, maybe this
Speaker 4: month versus last month is stable, people don't adjust that quickly,
Speaker 4: and they're thinking about all the change that's occurred over
Speaker 4: the past three or four years, and it just takes
Speaker 4: a little longer to shake off all of the change
Speaker 4: that's happened.
Speaker 2: Connor, thank you so much for taking the time with us.
Speaker 5: Thanks.
Speaker 2: Amy Connorson is a Bloomberg Opinion colonist and founder of
Speaker 2: Peachtree Creek Investments. And coming up, we'll look at a
Speaker 2: new poll. It's gauging Americans trust or lack of it
Speaker 2: in science, research and other traditional institutions. Stay with us,
Speaker 2: much more still to come. You're listening to Bloomberg Opinion.
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
Speaker 1: demand wherever you get your podcasts.
Speaker 2: You're listening to Bloomberg Opinion i Amy Morris. A recent
Speaker 2: Pew poll showed Americans trust and scientists fell during the
Speaker 2: pandemic years. More than a quarter of American surveyed say
Speaker 2: they are distrustful enough of scientists that they don't believe
Speaker 2: they'll act in the public's best interests. Want to get
Speaker 2: more on this now, Bloomberg Opinion columnist Faith Lamb, host
Speaker 2: of the Follow the Science podcast, joins me now and Fay.
Speaker 2: We talked about this before, but let's get into it
Speaker 2: a little bit deeper. How did this come to fruition
Speaker 2: during the pandemic?
Speaker 7: Well, I think that it has to do with the
Speaker 7: type of science that people were paying attention to during
Speaker 7: the pandemic, and that was science medical science that was
Speaker 7: really done on the fly, as well as public health,
Speaker 7: which mixes a lot of judgment, calls and values into
Speaker 7: scientific ideas.
Speaker 2: And is that what we experienced? Then there were more
Speaker 2: suppositions and more hypotheses than actual scientific facts.
Speaker 7: I think that was part of it. I think scientists
Speaker 7: and people in public health weren't always clear on what
Speaker 7: was a judgment call or a decision to say, do
Speaker 7: everything possible for a period of time to avoid spreading COVID.
Speaker 7: That was just a decision that was made in a
Speaker 7: lot of places that we would do everything possible, including
Speaker 7: locking down our cities. But it wasn't purely scientific decision.
Speaker 7: Science can tell you how to achieve that, but it
Speaker 7: can't necessarily tell you that that's the goal we should
Speaker 7: have set for ourselves.
Speaker 2: Yeah, there was a lot of debate I remember, between
Speaker 2: wearing masks don't wear masks. At the very beginning in
Speaker 2: March of twenty twenty, there was a whole thing about
Speaker 2: don't wear masks, it's not going to help.
Speaker 7: And then well and it was Yeah, it was worse
Speaker 7: than that, because I think that what the real flip
Speaker 7: flop that was really damaging to public opinion was the
Speaker 7: flip flop on whether we should even worry about this
Speaker 7: at all. You know, there was a period of time
Speaker 7: when it was coming from the public health community, not
Speaker 7: from Donald Trump. You know, the don't panic, don't worry,
Speaker 7: the flu is worse. We were hearing that all through
Speaker 7: January and February from the public health community. And now
Speaker 7: they say, oh, no, that was Donald Trump. But if
Speaker 7: you look back what people were saying, it wasn't they
Speaker 7: flip flop from telling us not to worry to very
Speaker 7: quickly turning around saying, yes, worry and stay home and
Speaker 7: wear a mask.
Speaker 2: Now, were there any indications before the pandemic that trust
Speaker 2: in scientists and science was starting to falter, starting to wane?
Speaker 7: Maybe? I mean, I don't consider that necessarily a problem,
Speaker 7: because I have interactions with scientists almost every day, and
Speaker 7: I don't think that as individuals they're any more or
Speaker 7: less trustworthy than anybody else. They're just human. They're people
Speaker 7: that have a job to do, and some people are
Speaker 7: extremely honest and some people are less so. But what
Speaker 7: makes science trustworthy is the methods of science that create
Speaker 7: a reliable body of knowledge. It's not that the individual
Speaker 7: scientists are necessarily without conflicts of interest, or that they
Speaker 7: don't get things wrong, or that they don't get sometimes
Speaker 7: stuck on their own wrong ideas.
Speaker 2: So how can the trust be rebuilt?
Speaker 7: I think that the big problem isn't necessary that people
Speaker 7: don't have a kind of a blanket blind trust in scientists.
Speaker 7: They should ask if a scientist says something you should
Speaker 7: ask why, what's your evidence, what makes you say that,
Speaker 7: and why do scientists other scientists agree with you. I
Speaker 7: think that's legitimate. I think what we're seeing, though, is
Speaker 7: the growth of econom an irrational paranoia where people have
Speaker 7: a sort of knee your distrust of the whole thing
Speaker 7: of everything that scientists have learned. And so I think
Speaker 7: there is a kind of a knee jerk reaction in
Speaker 7: the opposite way that people are feeling so disillusioned that
Speaker 7: they assume that if there was a clinical trial that
Speaker 7: showed a vaccine worked well, then they just don't believe it.
Speaker 7: That there's no amount of evidence that will convince them.
Speaker 2: And we are talking to Blueberg opinion columnist Faith Lamb
Speaker 2: about Americans trust in science and what scientists can do
Speaker 2: to regain that trust. I was thinking, also, Fey, about
Speaker 2: the issue of vaccines. You just mentioned it, particularly the
Speaker 2: COVID vaccine. There are a lot of people to this
Speaker 2: day who will not get it, but that's not new.
Speaker 2: There have been debates over vaccinating kids for decades. Does
Speaker 2: this distrust of science date back to that or is
Speaker 2: that something else? Is that embedded somewhere else.
Speaker 7: It's connected I mean there's trust in science, and then
Speaker 7: there's trust in doctors to recommend the right medications. I mean,
Speaker 7: you're talking about getting an injection, and and it does
Speaker 7: take a certain amount of trust when you're healthy to say, okay,
Speaker 7: im I let my doctor inject me with this. And
Speaker 7: so I think a lot of people have also been
Speaker 7: swayed by the fact that there are people who call
Speaker 7: themselves scientists and who even have scientific degrees who are
Speaker 7: on the anti vaxer side. And so it may not
Speaker 7: be a matter of just getting people to trust science,
Speaker 7: but getting people to think critically about what to trust
Speaker 7: and why.
Speaker 2: Okay, so when we go back and review what scientists
Speaker 2: were saying during the pandemic, and when we ask why
Speaker 2: they weren't more clear or why they were flip flopping,
Speaker 2: their reply is often that they simply didn't know at
Speaker 2: the time. This was all very new, So how can
Speaker 2: they give us proper guidance if they didn't know.
Speaker 7: I think that you just have to play the long
Speaker 7: game in any area of science, and that means if
Speaker 7: you don't know, you have to admit you don't know,
Speaker 7: and then you have to say why you're making an
Speaker 7: educated guess on one side or the other, and why
Speaker 7: you think things are going to go a certain way
Speaker 7: or why you think you should err on the side
Speaker 7: of caution when.
Speaker 2: You don't know.
Speaker 7: But I think public health has a history of sometimes
Speaker 7: not being totally honest about their uncertainty because there's a
Speaker 7: sense of, you know, we have to get people to
Speaker 7: do this, and say, you know, the ends justify the means,
Speaker 7: So we have to lie a little bit to get
Speaker 7: people to do the right thing, We'll do it. And
Speaker 7: I think that's a real difference between public health and
Speaker 7: just about any other area of science where part of
Speaker 7: the game is to recognize where you don't know things
Speaker 7: and measure your uncertainty, make sure that you understand your
Speaker 7: margin of error.
Speaker 2: I just want to go back to something you just said.
Speaker 2: You're not accusing them of lying, You're not saying that
Speaker 2: they lied. Well, you know.
Speaker 7: I did a podcast episode with Peter Sandman, who is
Speaker 7: an expert in risk communication, and the title was why
Speaker 7: I public health officials sometimes lie? And Peter Sandman talked
Speaker 7: about what he calls the noble lie, the idea that well,
Speaker 7: you sometimes, you know, people think they're lying for the
Speaker 7: greater good, and he had some very good examples of
Speaker 7: places where it looked like that's what was happening, that
Speaker 7: people in public health were actually bending the truth or
Speaker 7: telling half truths as a way to try to push
Speaker 7: people or nudge people to do what they thought was
Speaker 7: the right thing.
Speaker 2: That how could they ever rebuild trust if they lied?
Speaker 7: That's a good question, I mean, Sandman his point was
Speaker 7: that this is a bad strategy. It's a bad strategy.
Speaker 7: That these problems tend to be long term, and you
Speaker 7: wear out your trust in a really bad way when
Speaker 7: you do try to tell half truths or pretend you
Speaker 7: know what you're talking about when you don't. That that
Speaker 7: is a problem. And so the other thing is, of
Speaker 7: course that scientists often just get things wrong because they're human,
Speaker 7: and that things get hashed out. So it's okay to
Speaker 7: be distrustful of individual scientific claims. We should be, But
Speaker 7: when you have this you know, body of evidence and
Speaker 7: clinical trials and you know, I guess expert opinion that's
Speaker 7: informed by a lot of evidence, then at some point
Speaker 7: you kind of have to It's paranoid to think that
Speaker 7: that's all been somehow manufactured. It becomes crazy not to
Speaker 7: believe it.
Speaker 2: Well, to that end, it's not just science, right, Trust
Speaker 2: in many institutions has fallen.
Speaker 7: Yes, that's true. That's true. And I think scientists actually
Speaker 7: got higher marks for trusts than other institutions, whether they
Speaker 7: you know, whether they are more trustworthy. I think there
Speaker 7: is a little more emphasis in the press on exposing
Speaker 7: conflicts of interest among science and I think that's not
Speaker 7: a bad thing. I think it's that when people hear
Speaker 7: about a new study, it's good to inform people that
Speaker 7: there might be some conflicts of interest among the scientists
Speaker 7: making that claim.
Speaker 2: All right, thank you, Faye for your time to appreciate it.
Speaker 2: Thank you. Bloomberg Opinion columnist Faith Lam host of Follow
Speaker 2: the Science podcast and Don't Forget. We're available as a
Speaker 2: podcast on Apples Spotify are your favorite podcast platform. This
Speaker 2: is Bloomberg Opinion.
Speaker 1: You're listening to the Bloomberg Opinion podcast. Catch us Saturdays
Speaker 1: at one and seven pm Eastern on Bloomberg dot Com,
Speaker 1: the iHeartRadio app and the Bloomberg Business app, or listen
Speaker 1: on demand wherever you get your podcasts.
Speaker 2: This is Bloomberg Opinion. I'm Amy Morris. For the past
Speaker 2: couple of years, the US economy has shown resilience revolving
Speaker 2: around demand for services that started to off this year.
Speaker 2: Then came Barbie and Oppenheimer and Taylor Swift. Welcome to
Speaker 2: the EARS tool. But even Taylor Swift and Barbie combined
Speaker 2: can't maintain that momentum, and spending on recreation services is
Speaker 2: dropping again. Let's talk about it with Bloomberg opinion columnist
Speaker 2: Jonathan Levin, who focuses on markets and economics. John, let's
Speaker 2: start with the past two years in the demand for services.
Speaker 2: Was that the result of a pandemic shutdown? Or is
Speaker 2: that an oversimplification, Yeah.
Speaker 6: Kind of, sort of. I mean, I think the story
Speaker 6: of the resilience of the economy over the past two years,
Speaker 6: even in the face of these extraordinary said hikes, was
Speaker 6: really about that pent up demand to a certain extent
Speaker 6: for services and really the mean reversion of demand for services. Right, So,
Speaker 6: you know, even after we stopped buying new refrigerators and
Speaker 6: washing machines and all this stuff, we had this word
Speaker 6: trajectory in the economy overall, because the services economy is
Speaker 6: such a big part of what we do here in
Speaker 6: the United States, and it was steadily mean reverting, meaning
Speaker 6: going up. As little by little we started going back
Speaker 6: to concerts, we started going back to movie theaters, and
Speaker 6: in a big way, we started going back to live sports,
Speaker 6: and so, yeah, I think that it was a confluence
Speaker 6: of factors. But what we really need to understand is
Speaker 6: it's true that the services economy did a lot of
Speaker 6: the work in keeping us out of a recession over
Speaker 6: the past two years.
Speaker 2: Why is the demand for services waiting now? Is it
Speaker 2: just balancing it out?
Speaker 6: Yeah, So I sort of think that what we saw
Speaker 6: was a little bit of a double dip, right, So
Speaker 6: we had this big recovery, you might call it a
Speaker 6: mean reversion, and then a sort of early twenty twenty three,
Speaker 6: demand for these services, especially recreation services, did start to wane.
Speaker 6: But in around summertime, we had this kind of special
Speaker 6: confluence of factors that gave us a little bit of
Speaker 6: a sugar high. We had the incredible marketing phenomenon that
Speaker 6: was the Barbie movie. We had Taylor Swift on tour,
Speaker 6: and remember Beyonce was also on tour earlier in the year,
Speaker 6: and we had this, you know, in the backdrop was
Speaker 6: this continuing moderation, this continuing mean reversion. But now in
Speaker 6: terms of like the quantities of recreation services that we're consuming,
Speaker 6: Like adjusting for inflation, we have returned to twenty nineteen levels,
Speaker 6: So there is nowhere to go just in terms of
Speaker 6: like pure mean reversion. We can't expect that to you know,
Speaker 6: be like an automatic boost to the numbers going forward.
Speaker 6: And Taylor's tour moved on from the United States of America.
Speaker 6: The Barbie phenomenon is over, and so you know, we're
Speaker 6: back into this sort of services, maybe not double dip,
Speaker 6: but double normal normalization as it were.
Speaker 2: So how much of an impact was it? Are you
Speaker 2: able to measure that? I mean, you call it a
Speaker 2: sugar high, but it was a sugar high that was
Speaker 2: needed at the.
Speaker 6: Time, right, Yeah, exactly some of this was expected and
Speaker 6: and some of it some of it was not to
Speaker 6: be expected. So how much of this was a meaningful change?
Speaker 6: So recreation services really plunged it during the during the pandemic,
Speaker 6: and little little they they returned to baseline adjusting for inflation.
Speaker 6: Movie theater consumption is still like way way way below
Speaker 6: where it was a pre pandemic in twenty nineteen, and
Speaker 6: we sort of got back to pre pandemic levels for
Speaker 6: like a month or two during the Barbie and Oppenheimer phenomenon,
Speaker 6: but that is now just out out of the equation.
Speaker 6: That really shows us that, like it was just a
Speaker 6: special thing about those particular films. If you look at
Speaker 6: live entertainment excluding sports, that's the Taylor Swift phenomenon. You know,
Speaker 6: like we never really got above the pre pandemic norms.
Speaker 6: So you know, like a tailor and Beyonce helped us
Speaker 6: get back to what you would have expected in twenty nineteen,
Speaker 6: but we never really got beyond there. Adjusting for inflation, right,
Speaker 6: of course, there were people were paying these extraordinary prices
Speaker 6: to go to these events, and so that is a
Speaker 6: little bit of what you see in the headline figures.
Speaker 6: And then the last thing that I like to underscore
Speaker 6: here is there is only one area that has seen
Speaker 6: a meaningful kind of structural change in the past two years,
Speaker 6: and that is live sports. For whatever reason, even adjusting
Speaker 6: for inflation, we Americans are just like way more into
Speaker 6: live sports right now than we were before the pandemic.
Speaker 6: And like the example that I tend to go to
Speaker 6: is just baseball. Baseball has made some really meaningful changes
Speaker 6: to speed up the game and things like that and
Speaker 6: bring people back into those stadiums. So like that's an
Speaker 6: example of you know, accessful strategy. I think in college sports,
Speaker 6: specifically college football, they also did some strategic things like
Speaker 6: you know, introducing more alcohol into the stadiums, and that
Speaker 6: has and that has really really helped. But yeah, I
Speaker 6: want to come back to what I said before, like
Speaker 6: spectator sports aside, we've normalized and we're back to where
Speaker 6: we were before the pandemic, and there just isn't a
Speaker 6: lot of impulse left in that recreation services.
Speaker 2: And we are talking with Bloomberg opinion columnist Jonathan Levin
Speaker 2: about how Taylor Swift helped give the US economy a
Speaker 2: second win when it was needed. But you also say
Speaker 2: in your column, John, now spending on recreation services is
Speaker 2: ebbing and new and central bankers should be thrilled.
Speaker 6: Why right, Well, so the idea is that fed charge
Speaker 6: Rome pal has been very focused on the service sector
Speaker 6: as a goal that he saw as necessary to tame
Speaker 6: inflation the way he saw it. You know, like to
Speaker 6: a certain extent. Central banks can't really control goods prices,
Speaker 6: a lot of them are imported, and there's only so
Speaker 6: much that a central bank can do. But services prices
Speaker 6: in particular are set domestically, they're heavily sensitive to wages
Speaker 6: and so forth, and so there was a belief that
Speaker 6: if you were going to put the inflation genie back
Speaker 6: in the bottle, you, as fed chair Jerome Pal needed
Speaker 6: to cool off some of this heat in the service sector.
Speaker 6: What he was looking for was a cooling in this space,
Speaker 6: not a collapse. And right now, that's what he's getting.
Speaker 6: As services companies start to worry a little bit more
Speaker 6: about their bottom line, that they might start to lay
Speaker 6: off a few workers, and that that could become a
Speaker 6: vicious cycle in the economy. But for now, it feels
Speaker 6: like good news and it doesn't feel like like we're
Speaker 6: in that sort of vicious cycle.
Speaker 2: And before we let you go, John, there was an
Speaker 2: argument that spending habits were changed forever because of and
Speaker 2: after the pandemic shutdown. And you make the argument that
Speaker 2: these numbers show a shift closer to the norm and
Speaker 2: that spending habits have not been changed forever. They may
Speaker 2: have been tweaked a bit, but it's not a complete
Speaker 2: and whole change.
Speaker 6: Yeah, exactly. Yeah. There was this argument that people's attitudes
Speaker 6: towards spending had sort of changed coming out of the
Speaker 6: pandemic that you know, we'd bought all the refrigerators that
Speaker 6: we needed for the for the foreseeable future, and what
Speaker 6: we desperately needed were experiences, and it was like, no,
Speaker 6: not really, if you adjust for inflation, our habits never
Speaker 6: really changed that much. It's just that the the the
Speaker 6: ticket price had changed so much, so the quantity is
Speaker 6: in which we're consuming these things haven't really moved versus
Speaker 6: twenty nineteen. We've normalized. We're back to what you would expect,
Speaker 6: and hopefully we stay there. I think that's what fedchair
Speaker 6: Jerome Pal hopes, and I think that's what we should
Speaker 6: expect going forward.
Speaker 2: Jonathan Levin is a Bloomberg Opinion columnist with a focus
Speaker 2: on markets and economics. You're listening to Bloomberg Opinion. I'm
Speaker 2: Amy Morris. You should expect to be pampered when you
Speaker 2: dine at high end restaurants, but now some restaurants are
Speaker 2: taking that luxury step beyond a culinary destination or a
Speaker 2: gastronomic delight. You could actually make the world better through
Speaker 2: the intersection of science and cuisine. Let's talk about this.
Speaker 2: Bloomberg Opinion columnist Howard Chueywan covers culture and business and
Speaker 2: joins me. Now, so how does this work? What's the concept?
Speaker 8: This particular expansion that I'm writing about was this really
Speaker 8: spectacular restaurant in Copenhagen called Alchemists, and they already have
Speaker 8: very sort of space age food and all of that
Speaker 8: and and and uh uh and as well as a
Speaker 8: huge visual theater where you walk into the several dining
Speaker 8: rooms and the and the entire whole foresters are projected
Speaker 8: onto the walls and you have this amazing experience already.
Speaker 8: So what the chef is doing is starting a little
Speaker 8: side project which is going to explore how to make
Speaker 8: turn seaweed into new proteins and things like that. So
Speaker 8: there's an entire participation of the client tele and like, oh,
Speaker 8: the chef is going off this new adventure and trying
Speaker 8: to create new kinds of food for the world. So
Speaker 8: uh And it's not exactly a fresh approach, because these
Speaker 8: things have been done. One of the one of his mentors,
Speaker 8: was the Spanish chef Ferron Audria, who had very murdered
Speaker 8: what they called molecular gastronomy several years back, and they
Speaker 8: were sort of it was all very strange, strangely shaped
Speaker 8: things that were explosively delicious once you put them in
Speaker 8: your mouth, but they were all sort of scientifically crafted
Speaker 8: and they thought, oh, this chemistry is going to be wonderful.
Speaker 8: So all of these come together as a business, so.
Speaker 2: They're not necessarily working to just become niche and stand
Speaker 2: out from the crowd, although that's part of it. They're
Speaker 2: actually looking to make a difference in the industry.
Speaker 8: Yes, exactly, and that's true for Alchemists and its rival
Speaker 8: across Copenhagen is a much more famous restaurant because it's
Speaker 8: more established, named Noma. They've had this fermentation lab for
Speaker 8: several years now and they've created several products out of it,
Speaker 8: so they're expanding the range of the restaurant beyond just
Speaker 8: the food they serve during dinner time.
Speaker 2: Owning and running a restaurant is already very expensive, it's
Speaker 2: very exhausting. A lot of places don't make it. But
Speaker 2: you add a laboratory layer to that approach and it
Speaker 2: seems near impossible. Are they setting themselves up for a
Speaker 2: challenge that might be hard to match.
Speaker 8: What's interesting is that there are investors who are interested
Speaker 8: in this. Alchemist has a couple of very well to
Speaker 8: do Danish investors. Noma has a very very quiet but
Speaker 8: very activist sort of you know investor that helps along
Speaker 8: with all their projects. So people see this as investment opportunities,
Speaker 8: as a way of sort of expanding the range of
Speaker 8: restaurants and perhaps making a difference as well.
Speaker 2: So where do you see this trend going or is
Speaker 2: it even fair to call it a trend?
Speaker 8: It's it's it's been a sort of trend for several
Speaker 8: years now. I think, you know, the higher end restaurants
Speaker 8: with lots of investors who want to see this, to
Speaker 8: see that there's this interesting concept that a restaurant starts
Speaker 8: with whether or not it can be expanded and what
Speaker 8: are another commercial possibilities for what they're doing. I think
Speaker 8: because there there are there's prestige and a name attached
Speaker 8: to it, there is so much potential for more business
Speaker 8: in the future. So I think people are watching, especially
Speaker 8: the high end restaurants who don't want to go and
Speaker 8: sort of franchise themselves in Vegas or something like that,
Speaker 8: but instead to go and do something different that will
Speaker 8: that will actually make a real statement about how they
Speaker 8: see the world and maybe even you know, make some money.
Speaker 2: Bloomberg opinion columnist Howard chue Wan, and that does it
Speaker 2: for this week's Bloomberg Opinion. We're produced by Eric Mullow,
Speaker 2: and you can find all of these columns on the
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Speaker 2: top stories and global business headlines are just ahead. I'm
Speaker 2: Amy Morris, and this is Bloomberg