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Speaker 1: This is Bloomberg Business Week with Carol Masser and Jason

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Speaker 1: Kelly from Bloomberg Radio. Jason Kelly and I'm Carol Masser.

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Speaker 1: Welcome to the Bloomberg Business Week Extra. It's our weekly podcast,

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Speaker 1: bring you an end depth interview you will not hear

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Speaker 1: anywhere else, and we're excited to bring you this week

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Speaker 1: our conversation with Peter Atwater. He teaches down at William

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Speaker 1: and Mary and he's an economist that you found and man,

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Speaker 1: he is fascinating. Yeah, he's an adject lecturer, as you said, Jason,

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Speaker 1: in the economics department at William and Mary. And he's

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Speaker 1: identified um the letter that kind of describes our economic recovery.

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Speaker 1: He calls it a K shaped recovery. Some are doing well,

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Speaker 1: some are not checking out. So I watched the world

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Speaker 1: through the lens of confidence, and beginning in March, I

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Speaker 1: noticed something really interesting. We all panicked together. You could

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Speaker 1: see the collapse in confidence being spread across the entire economy.

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Speaker 1: Everybody felt it the same way. But the migration of people,

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Speaker 1: professionals to the work from home environment, it put them

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Speaker 1: very quickly on stable ground and then you could see

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Speaker 1: their confidence start to rebound. We're out into the real economy,

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Speaker 1: you know, small businesses, people working in the travel industry.

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Speaker 1: It was very clear that there they were not on

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Speaker 1: solid ground. In fact, for many of them, you could

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Speaker 1: start to see conditions getting worse. And at some point

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Speaker 1: in April I started writing about it, and on Twitter

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Speaker 1: somebody was talking about all the different letters and mentioned

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Speaker 1: the letter K, and I thought, this is perfect. This

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Speaker 1: is exactly what we're seeing, is that for some of

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Speaker 1: the economy things are improving, and for others the deterioration

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Speaker 1: has just been this very painful decline. And so, Peter,

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Speaker 1: how much of this is new and how much of

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Speaker 1: it is exacerbating things that were already there. So I

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Speaker 1: think if you were to step back and look at

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Speaker 1: the recovery from the banking crisis, that itself was very

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Speaker 1: much a case shaped recovery. You know, the financial markets

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Speaker 1: took off very quickly as the FED went into overdrive.

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Speaker 1: But you know, one of the things that came out

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Speaker 1: earlier today and the statements from from Chairman Powell and others,

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Speaker 1: is that it took until very late in the cycle

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Speaker 1: for the benefits of all of that trickle down to

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Speaker 1: reach low income Americans and so I think we we've

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Speaker 1: had this prolonged ten year case shaped recovery that has

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Speaker 1: now been compounded by a very sharp rebound for some

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Speaker 1: and it's just others are left hanging. So is this

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Speaker 1: our world, our new world economic reality Peter in that

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Speaker 1: we're just going to have k recoveries or can we

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Speaker 1: You know, as you said, the trickle down, the benefits

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Speaker 1: trickled down very late, you know, coming off the financial crisis.

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Speaker 1: How do we get it so that the benefit get

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Speaker 1: to everybody sooner on? So I think one of the

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Speaker 1: things that we need to recognize is that from an

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Speaker 1: economic perspective, we have to ensure that there is support

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Speaker 1: for those at the low end, because we know that

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Speaker 1: this condition lasted, it takes a long period of time.

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Speaker 1: And in that process, I think Congress made a valiant effort.

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Speaker 1: But this the attention to the relief efforts for the pandemic.

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Speaker 1: They were really oriented around a mindset that this was

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Speaker 1: temporary and so unfortunately those that were, you know, the

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Speaker 1: beneficiaries of that there, they started as early as late

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Speaker 1: May beginning to wonder is this coming to an end?

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Speaker 1: And from a confidence perspective, we need certainty. They need

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Speaker 1: to know that these support mechanisms are going to be

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Speaker 1: in place until employment comes back. So Peter, as we

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Speaker 1: think about a case shaped recovery going forward, what's the

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Speaker 1: difference the inflection point or the chances I'm giving you

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Speaker 1: so many scenarios here that it becomes just a shaped economy. Um,

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Speaker 1: I think we're reaching a point where it has become

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Speaker 1: so obvious that that almost prevents it from happening. Um.

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Speaker 1: You know, if I look around in the financial markets,

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Speaker 1: you see an extraordinary divide between big business and small business.

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Speaker 1: You see it in individuals, You see it in so

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Speaker 1: many levels that you have stacked inequity on one end

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Speaker 1: and stacked privilege on the other. And my my sense

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Speaker 1: is that much of this is we're already seeing manifest

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Speaker 1: in the social unrest around the country. Um. There's clear

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Speaker 1: resonance to that sense of inequity. And you know, even

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Speaker 1: people who can't articulate it feel that there is something

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Speaker 1: unjust about the system as it exists today. And so

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Speaker 1: I think this is even much more of a social

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Speaker 1: key issue as it is an economic one. And I think,

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Speaker 1: you know, policy makers and leaders of business need to

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Speaker 1: recognize that, Um, that lack of confidence that sense of

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Speaker 1: hopelessness that many on the leg of the k are

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Speaker 1: feeling is now motivating people to to to respond. So, Peter,

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Speaker 1: you know, it's interesting that you say that. I have

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Speaker 1: conversations with my young nieces who are in their twenties.

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Speaker 1: You know, like God, capitalism is terrible and like no,

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Speaker 1: it builds things. It also provides you know, this is

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Speaker 1: you know, where people can have opportunities to build a

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Speaker 1: company from nothing and then give back, you know. So

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Speaker 1: there are a lot of pluses to it, but yes,

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Speaker 1: it has created some massive inequalities in our systems. I

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Speaker 1: am curious about some of the conversations you're having at

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Speaker 1: William and Mary and what are the policies from your

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Speaker 1: perspective as you studied, is that you think will make

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Speaker 1: a difference, will reduce those gaps that currently exist in

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Speaker 1: our society and have for a while and have just

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Speaker 1: been building and getting wider and wider. I think one

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Speaker 1: of the things that has to be looked at is,

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Speaker 1: you know, at the root of this in many ways

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Speaker 1: goes back to the early nineteen eighties with that notion

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Speaker 1: of shareholder um primacy. Then the shareholder came first, and

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Speaker 1: as much as we want to enjoy the benefits of capitalism.

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Speaker 1: I think that that that pendulum has shifted to such

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Speaker 1: an extreme. And you saw it in news reports yesterday.

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Speaker 1: You know, Salesforce announces record earnings stock price stores and

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Speaker 1: at the same time ten thou employees to be laid off.

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Speaker 1: That's a very mixed message from capitalism, right, Well, so

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Speaker 1: so what is it? You know, Business Roundtable has come

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Speaker 1: out and said, Okay, there's multiple parties, matter constituents that

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Speaker 1: we have to think about. But I don't know, it's

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Speaker 1: a lot of talk, and I want to see whether

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Speaker 1: or not takes change. What do I want to then

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Speaker 1: change start to happen. I mean, if you if you

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Speaker 1: were to just look at you know, look at the

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Speaker 1: NBA last night being forced to respond to you know,

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Speaker 1: the social issues as they're manifesting around us. Yeah, I wonder,

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Speaker 1: and I'm glad you said that. I wondered what you

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Speaker 1: made of that, because there are, as you well know,

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Speaker 1: a lot of economics underneath the big business of sports,

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Speaker 1: the NBA and beyond, and you have seen those issues

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Speaker 1: collide in a really big way. Yeah. And and you know,

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Speaker 1: if we go back to to the outbreak, you know,

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Speaker 1: we we forget that the NBA, that the Jutah Jazz

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Speaker 1: being infected with the virus. That was a critical tipping

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Speaker 1: point in sentiment, and I and I looked to what's

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Speaker 1: happened this week in much the same way that suddenly

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Speaker 1: this feels very real to people, this this collective sense

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Speaker 1: of inequity. Yeah, March eleventh, I mean that will be that.

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Speaker 1: It's interesting you say that because March eleventh was the

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Speaker 1: day that the NBA shut down, also the day that

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Speaker 1: we learned that Tom Hanks and Rita Wilson had the coronavirus.

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Speaker 1: It all happened on the same day, I believe. I'm

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Speaker 1: pretty sure I have that right. That changed everything. It

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Speaker 1: was a game changer, right as a game changer. Um,

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Speaker 1: But that speaks too, sorry, that speaks to this whole

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Speaker 1: notion of confidence that you're talking about, and and perception

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Speaker 1: plays into that, Peter. It's entirely perception based, and it

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Speaker 1: relates to our perceptions of certainty and control. And if

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Speaker 1: you think about those that are on this leg of

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Speaker 1: this K shaped recovery, they feel as if they have neither.

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Speaker 1: They are voiceless, powerless, and the future feels very unclear.

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Speaker 1: And that's that's such a difference to those on the arm. Hey, Peter,

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Speaker 1: just have thirty seconds. Do you have hope that we

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Speaker 1: can change, especially when a lot of these folks don't

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Speaker 1: have a place at the table. I I do have hope. UM.

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Speaker 1: I think that that there are ways for us to

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Speaker 1: bring back a greater sense of equity. Um. But it's

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Speaker 1: going to require collective sacrifice. But remember, these are these

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Speaker 1: are many of these are essential workers. You know, these

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Speaker 1: are food providers, help there providers. They're critical to the

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Speaker 1: system overall. And that's Peter Atwater. He's an adjunct lecturer

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Speaker 1: in the economics department at William and Mary and talking

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Speaker 1: about the k shape recovery. That really describes so well

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Speaker 1: our economic environment right now. Jason absolutely really enjoyed catching

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Speaker 1: up with him, and also cool to know he listens

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Speaker 1: to our show. You've been listening to Bloomberg Business Week

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Speaker 1: Extra if you started tuning into Bloomberg Business Week Radio

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Speaker 1: Live Monday through Friday at two pm Wall Street Time

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Speaker 1: on Bloomberg Radio. I'm Carol Masser and I'm Jason Kelly.

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Speaker 1: This is Bloomberg