Speaker 1: This is Bloomberg Business Week with Carol Masser and Jason
Speaker 1: Kelly from Bloomberg Radio. Jason Kelly and I'm Carol Masser.
Speaker 1: Welcome to the Bloomberg Business Week Extra. It's our weekly podcast,
Speaker 1: bring you an end depth interview you will not hear
Speaker 1: anywhere else, and we're excited to bring you this week
Speaker 1: our conversation with Peter Atwater. He teaches down at William
Speaker 1: and Mary and he's an economist that you found and man,
Speaker 1: he is fascinating. Yeah, he's an adject lecturer, as you said, Jason,
Speaker 1: in the economics department at William and Mary. And he's
Speaker 1: identified um the letter that kind of describes our economic recovery.
Speaker 1: He calls it a K shaped recovery. Some are doing well,
Speaker 1: some are not checking out. So I watched the world
Speaker 1: through the lens of confidence, and beginning in March, I
Speaker 1: noticed something really interesting. We all panicked together. You could
Speaker 1: see the collapse in confidence being spread across the entire economy.
Speaker 1: Everybody felt it the same way. But the migration of people,
Speaker 1: professionals to the work from home environment, it put them
Speaker 1: very quickly on stable ground and then you could see
Speaker 1: their confidence start to rebound. We're out into the real economy,
Speaker 1: you know, small businesses, people working in the travel industry.
Speaker 1: It was very clear that there they were not on
Speaker 1: solid ground. In fact, for many of them, you could
Speaker 1: start to see conditions getting worse. And at some point
Speaker 1: in April I started writing about it, and on Twitter
Speaker 1: somebody was talking about all the different letters and mentioned
Speaker 1: the letter K, and I thought, this is perfect. This
Speaker 1: is exactly what we're seeing, is that for some of
Speaker 1: the economy things are improving, and for others the deterioration
Speaker 1: has just been this very painful decline. And so, Peter,
Speaker 1: how much of this is new and how much of
Speaker 1: it is exacerbating things that were already there. So I
Speaker 1: think if you were to step back and look at
Speaker 1: the recovery from the banking crisis, that itself was very
Speaker 1: much a case shaped recovery. You know, the financial markets
Speaker 1: took off very quickly as the FED went into overdrive.
Speaker 1: But you know, one of the things that came out
Speaker 1: earlier today and the statements from from Chairman Powell and others,
Speaker 1: is that it took until very late in the cycle
Speaker 1: for the benefits of all of that trickle down to
Speaker 1: reach low income Americans and so I think we we've
Speaker 1: had this prolonged ten year case shaped recovery that has
Speaker 1: now been compounded by a very sharp rebound for some
Speaker 1: and it's just others are left hanging. So is this
Speaker 1: our world, our new world economic reality Peter in that
Speaker 1: we're just going to have k recoveries or can we
Speaker 1: You know, as you said, the trickle down, the benefits
Speaker 1: trickled down very late, you know, coming off the financial crisis.
Speaker 1: How do we get it so that the benefit get
Speaker 1: to everybody sooner on? So I think one of the
Speaker 1: things that we need to recognize is that from an
Speaker 1: economic perspective, we have to ensure that there is support
Speaker 1: for those at the low end, because we know that
Speaker 1: this condition lasted, it takes a long period of time.
Speaker 1: And in that process, I think Congress made a valiant effort.
Speaker 1: But this the attention to the relief efforts for the pandemic.
Speaker 1: They were really oriented around a mindset that this was
Speaker 1: temporary and so unfortunately those that were, you know, the
Speaker 1: beneficiaries of that there, they started as early as late
Speaker 1: May beginning to wonder is this coming to an end?
Speaker 1: And from a confidence perspective, we need certainty. They need
Speaker 1: to know that these support mechanisms are going to be
Speaker 1: in place until employment comes back. So Peter, as we
Speaker 1: think about a case shaped recovery going forward, what's the
Speaker 1: difference the inflection point or the chances I'm giving you
Speaker 1: so many scenarios here that it becomes just a shaped economy. Um,
Speaker 1: I think we're reaching a point where it has become
Speaker 1: so obvious that that almost prevents it from happening. Um.
Speaker 1: You know, if I look around in the financial markets,
Speaker 1: you see an extraordinary divide between big business and small business.
Speaker 1: You see it in individuals, You see it in so
Speaker 1: many levels that you have stacked inequity on one end
Speaker 1: and stacked privilege on the other. And my my sense
Speaker 1: is that much of this is we're already seeing manifest
Speaker 1: in the social unrest around the country. Um. There's clear
Speaker 1: resonance to that sense of inequity. And you know, even
Speaker 1: people who can't articulate it feel that there is something
Speaker 1: unjust about the system as it exists today. And so
Speaker 1: I think this is even much more of a social
Speaker 1: key issue as it is an economic one. And I think,
Speaker 1: you know, policy makers and leaders of business need to
Speaker 1: recognize that, Um, that lack of confidence that sense of
Speaker 1: hopelessness that many on the leg of the k are
Speaker 1: feeling is now motivating people to to to respond. So, Peter,
Speaker 1: you know, it's interesting that you say that. I have
Speaker 1: conversations with my young nieces who are in their twenties.
Speaker 1: You know, like God, capitalism is terrible and like no,
Speaker 1: it builds things. It also provides you know, this is
Speaker 1: you know, where people can have opportunities to build a
Speaker 1: company from nothing and then give back, you know. So
Speaker 1: there are a lot of pluses to it, but yes,
Speaker 1: it has created some massive inequalities in our systems. I
Speaker 1: am curious about some of the conversations you're having at
Speaker 1: William and Mary and what are the policies from your
Speaker 1: perspective as you studied, is that you think will make
Speaker 1: a difference, will reduce those gaps that currently exist in
Speaker 1: our society and have for a while and have just
Speaker 1: been building and getting wider and wider. I think one
Speaker 1: of the things that has to be looked at is,
Speaker 1: you know, at the root of this in many ways
Speaker 1: goes back to the early nineteen eighties with that notion
Speaker 1: of shareholder um primacy. Then the shareholder came first, and
Speaker 1: as much as we want to enjoy the benefits of capitalism.
Speaker 1: I think that that that pendulum has shifted to such
Speaker 1: an extreme. And you saw it in news reports yesterday.
Speaker 1: You know, Salesforce announces record earnings stock price stores and
Speaker 1: at the same time ten thou employees to be laid off.
Speaker 1: That's a very mixed message from capitalism, right, Well, so
Speaker 1: so what is it? You know, Business Roundtable has come
Speaker 1: out and said, Okay, there's multiple parties, matter constituents that
Speaker 1: we have to think about. But I don't know, it's
Speaker 1: a lot of talk, and I want to see whether
Speaker 1: or not takes change. What do I want to then
Speaker 1: change start to happen. I mean, if you if you
Speaker 1: were to just look at you know, look at the
Speaker 1: NBA last night being forced to respond to you know,
Speaker 1: the social issues as they're manifesting around us. Yeah, I wonder,
Speaker 1: and I'm glad you said that. I wondered what you
Speaker 1: made of that, because there are, as you well know,
Speaker 1: a lot of economics underneath the big business of sports,
Speaker 1: the NBA and beyond, and you have seen those issues
Speaker 1: collide in a really big way. Yeah. And and you know,
Speaker 1: if we go back to to the outbreak, you know,
Speaker 1: we we forget that the NBA, that the Jutah Jazz
Speaker 1: being infected with the virus. That was a critical tipping
Speaker 1: point in sentiment, and I and I looked to what's
Speaker 1: happened this week in much the same way that suddenly
Speaker 1: this feels very real to people, this this collective sense
Speaker 1: of inequity. Yeah, March eleventh, I mean that will be that.
Speaker 1: It's interesting you say that because March eleventh was the
Speaker 1: day that the NBA shut down, also the day that
Speaker 1: we learned that Tom Hanks and Rita Wilson had the coronavirus.
Speaker 1: It all happened on the same day, I believe. I'm
Speaker 1: pretty sure I have that right. That changed everything. It
Speaker 1: was a game changer, right as a game changer. Um,
Speaker 1: But that speaks too, sorry, that speaks to this whole
Speaker 1: notion of confidence that you're talking about, and and perception
Speaker 1: plays into that, Peter. It's entirely perception based, and it
Speaker 1: relates to our perceptions of certainty and control. And if
Speaker 1: you think about those that are on this leg of
Speaker 1: this K shaped recovery, they feel as if they have neither.
Speaker 1: They are voiceless, powerless, and the future feels very unclear.
Speaker 1: And that's that's such a difference to those on the arm. Hey, Peter,
Speaker 1: just have thirty seconds. Do you have hope that we
Speaker 1: can change, especially when a lot of these folks don't
Speaker 1: have a place at the table. I I do have hope. UM.
Speaker 1: I think that that there are ways for us to
Speaker 1: bring back a greater sense of equity. Um. But it's
Speaker 1: going to require collective sacrifice. But remember, these are these
Speaker 1: are many of these are essential workers. You know, these
Speaker 1: are food providers, help there providers. They're critical to the
Speaker 1: system overall. And that's Peter Atwater. He's an adjunct lecturer
Speaker 1: in the economics department at William and Mary and talking
Speaker 1: about the k shape recovery. That really describes so well
Speaker 1: our economic environment right now. Jason absolutely really enjoyed catching
Speaker 1: up with him, and also cool to know he listens
Speaker 1: to our show. You've been listening to Bloomberg Business Week
Speaker 1: Extra if you started tuning into Bloomberg Business Week Radio
Speaker 1: Live Monday through Friday at two pm Wall Street Time
Speaker 1: on Bloomberg Radio. I'm Carol Masser and I'm Jason Kelly.
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