Latest / Bloomberg Intelligence / Warsh's Jackson Hole Debut; Harvard's Rogoff Says US Needs 'Shock' To Fix Debt

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Warsh's Jackson Hole Debut; Harvard's Rogoff Says US Needs 'Shock' To Fix Debt · Bloomberg Intelligence

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  Speaker 1: Good noon, everyone.
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  Speaker 5: It is Friday, which means this is Bloomberg Money. We
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  Speaker 5: cover personal finance, retirement and wealth management. I'm Scarlett Fu.
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  Speaker 5: Tom Keene is out in Jackson Hole, Wyoming, where Federal
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  Speaker 5: Reserve Chair Kevin Warsh delivered his first speech as a U.S.
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  Speaker 1: Central banker.
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  Speaker 5: So let's head straight out to Tom out in Wyoming. Tom,
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  Speaker 5: I know you've been out there sitting in the cold
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  Speaker 5: for a while. Did Warsh silence the critics and provide clarity?
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  Speaker 6: A little bit.
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  Speaker 4: The clear tone here is a more restrictive Fed. We'll
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  Speaker 4: talk to Enda Kern about that. I have to say
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  Speaker 4: that in terms of Bloomberg money, this is the land
• 1:32
  Speaker 4: of Bloomberg money, Scarlett. It's about personal finance, retirement, wealth management.
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  Speaker 4: I'm the youngest person in Jackson Hall. Everybody else is
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  Speaker 4: 80 years old and retired. So it's perfect for Bloomberg
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  Speaker 4: money this morning. Coming up, Scarlett, Kenneth Rogoff, Harvard University.
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  Speaker 3: All right.
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  Speaker 5: Looking forward to that conversation. Also, later in the hour,
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  Speaker 5: Neil Richardson, chief economist at ADP, will be here with
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  Speaker 5: us to talk about Bloomberg Money's dual mandate, how we
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  Speaker 5: make money and how we save and spend money. So first,
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  Speaker 5: let's get a check on where things stand in the
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  Speaker 5: markets and how markets have responded to that speech from
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  Speaker 5: Kevin Warsh. We saw the short end of the bond
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  Speaker 5: market react immediately, price down, yield up, up eight basis
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  Speaker 5: points right now. This is the tenor most sensitive to
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  Speaker 5: Fed policy, traders pricing at higher odds of a rate
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  Speaker 5: hike in September. We saw the 10-year yield make some
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  Speaker 5: big moves, but right now not doing a whole lot.
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  Speaker 5: The dollar moving higher with short-term rates and oil prices
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  Speaker 5: down about three-quarters of 1%. But here's the big mover
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  Speaker 5: of the morning. You could see the two-year yield shooting
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  Speaker 5: up after the text of Warsh's speech was released at
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  Speaker 5: 10 a.m. ET, That was a 10 basis point move
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  Speaker 5: from trough to peak. Warsh making clear that recent CPI
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  Speaker 5: and PPI data were not entirely encouraging.
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  Speaker 1: All right, let's move on to equities here.
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  Speaker 5: Stocks getting a little bit of a lift initially, but
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  Speaker 5: have now settled down into mixed territory. What gets my
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  Speaker 5: attention is the VIX, slightly elevated, but still high. in
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  Speaker 5: the 14 and a half range below 15. All right,
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  Speaker 5: let's go back to Tom and Jackson Cole. He is
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  Speaker 5: with one of our reporters there in Wyoming, Enda Curran.
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  Speaker 3: Tom.
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  Speaker 4: Scarlett, thanks so much. I needed that data check, Scarlett,
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  Speaker 4: because I spent the last 30 minutes in the Pioneer
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  Speaker 4: Grill just getting breakfast done the way it can only
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  Speaker 4: be done at Jackson Hole.
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  Speaker 6: There's been a lot of feedback.
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  Speaker 4: You see the two-year yield move higher here, and there
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  Speaker 4: has been an international response. We are so fortunate at
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  Speaker 4: Bloomberg to have driving all of our Federal Reserve coverage.
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  Speaker 4: and to Curran, who spent the pandemic holed up in
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  Speaker 4: Hong Kong. He knows international economics better than anyone here
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  Speaker 4: at Bloomberg. How did the international community, how would you
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  Speaker 4: guess they did or they will respond to the war speech?
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  Speaker 7: I think the speech is being well received, Tom. It's
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  Speaker 7: been seen as clear on some critical points. The chairman's
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  Speaker 7: views on inflation, which is that he's obviously concerned. He
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  Speaker 7: made that clear. The chairman made clear that if they
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  Speaker 7: don't see prices going back to the target at speed,
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  Speaker 7: then they have work to do. That's code for obviously
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  Speaker 7: raising interest rates. And he made clear the tool, the
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  Speaker 7: near-term tool they have to control inflation is short-term interest rates. So,
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  Speaker 7: It was a hawkish message. Of course, it sets it
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  Speaker 7: up for how he now delivers on that.
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  Speaker 4: Just as an aside, when New Zealand raises rates, do
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  Speaker 4: they raise rates to get out in front of a
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  Speaker 4: raising rates.
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  Speaker 6: Chairman, Warsh? Sometimes.
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  Speaker 7: It depends on the cycle. Sometimes central banks try to
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  Speaker 7: get ahead of the Fed. You could argue this time
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  Speaker 7: around maybe the Fed has been accused of being behind
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  Speaker 7: the curve because other central banks have hiked during the
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  Speaker 7: past year since we've had the energy crisis, for example.
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  Speaker 7: But the Fed, not there yet, but certainly nudging towards
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  Speaker 7: that direction. You've got the cushy job here.
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  Speaker 4: Chris Anstey is actually working for a living with our
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  Speaker 4: Federal Reserve coverage, paragraph by paragraph.
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  Speaker 6: Which paragraph caught your attention?
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  Speaker 7: I think the most important one was where he said
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  Speaker 7: if inflation doesn't slow down quickly enough to their liking
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  Speaker 7: than they.
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  Speaker 2: Have work to do. So he's making it clear.
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  Speaker 6: He actually mentioned some calculus, a second derivative.
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  Speaker 8: He did.
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  Speaker 6: It was a long speech.
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  Speaker 7: It's something of a roadmap, but I think it's probably
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  Speaker 7: his most clearest explanation yet of how he's seeing the economy,
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  Speaker 7: how he's thinking about monetary policy, how he's thinking about inflation.
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  Speaker 7: But again, Tom, the point is, all of that's fine.
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  Speaker 7: It undoes some of the fallout from his press conference
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  Speaker 7: in July. The question now is, okay, Just what are
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  Speaker 7: you going to do about it? How will you deliver
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  Speaker 7: in the months ahead?
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  Speaker 4: The way we built Bloomberg Economics and our Federal Reserve
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  Speaker 4: coverage foundationally around Rich Martin and Craig Torres and others,
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  Speaker 4: and now you take over the mantle as well. Do
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  Speaker 4: we have a clue how the presidents and governors voting
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  Speaker 4: and non-voting reacted to this speech?
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  Speaker 6: What will be the character of dissent forward?
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  Speaker 7: Well, I think the view certainly upstairs, Tom, after the
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  Speaker 7: speech was broadly speaking, well-received. That's from officials and academics
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  Speaker 7: and the like. The speech has gone down well because
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  Speaker 7: it's kind of course-corrected after what happened in that July
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  Speaker 7: press conference in the bottom-up reaction. But going forward, as
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  Speaker 7: I say, that's now done. Now it's all about the
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  Speaker 7: next set of inflation data for the month of August.
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  Speaker 7: And let's just say if that comes in on the
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  Speaker 7: hot side. How are policymakers going to respond? I think
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  Speaker 7: it seems to be setting up September for, I think,
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  Speaker 7: a very important meeting for the Fed.
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  Speaker 4: Quickly, Bloomberg Money, personal finance, retirement, wealth management. Can retirees succeed.
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  Speaker 7: With a higher interest rate? Well, obviously, higher interest rates
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  Speaker 7: are good for savings. So if you're on that side
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  Speaker 7: of the ledger, it's better. If you're trying to get
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  Speaker 7: on the housing ladder, get a mortgage, it's tougher for you.
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  Speaker 6: Enda Curran, thank you so much for leading our coverage
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  Speaker 6: here today.
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  Speaker 4: Scarlett, a rainy day here, but Enda's used to that because,
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  Speaker 4: you know, the whole English-British thing, you know, rain is normal.
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  Speaker 1: Rain is normal.
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  Speaker 5: All right, Tom, we're going to check in with you
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  Speaker 5: a little bit later on. Tom Keene in Jackson Hole
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  Speaker 5: with our Enda Curran. Let's bring the conversation back here
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  Speaker 5: to New York because joining us at the Bloomberg Money
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  Speaker 5: Desk this afternoon is Nikki Waller, who heads up our
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  Speaker 5: money coverage for Bloomberg News, and Stacey Vanek-Smith, host of
• 6:37
  Speaker 5: the Everybody's... business podcast.
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  Speaker 1: That's a weekly podcast, right? It is, yes.
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  Speaker 2: Okay.
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  Speaker 1: And we look forward to it every Thursday? Well, we
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  Speaker 1: record Thursday and it airs Friday. It airs Friday.
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  Speaker 3: All right.
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  Speaker 5: Nikki, I want to start where Tom and Enda left off,
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  Speaker 5: which is the big theme of this week, this month, really,
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  Speaker 5: is the drama in the U.S.
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  Speaker 1: Bond market. It's late August.
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  Speaker 5: Typically, this market doesn't move a whole lot at this
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  Speaker 5: time of the year, but a lot of fallout from
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  Speaker 5: Treasury Secretary Scott Besson's intervention in which is introducing volatility
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  Speaker 5: to the rates market. Talk to us about how your
• 7:07
  Speaker 5: team is looking at what that means for your personal finance.
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  Speaker 1: That's for sure about the volatility.
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  Speaker 9: And there's a lot of skepticism as well about Besant's
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  Speaker 9: moves to try to calm this market. I'll go back
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  Speaker 9: to what Enda was talking about, mortgages. The single biggest
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  Speaker 9: thing we look at here is the mortgage rate. And
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  Speaker 9: we saw this week that it kind of held steady,
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  Speaker 9: kind of surprisingly around 6.66, make of.
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  Speaker 1: That what you will.
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  Speaker 9: But we also saw data this week showing that these
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  Speaker 9: mortgage rates that are now elevated over last year are
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  Speaker 9: really having an effect on the housing market, which has
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  Speaker 9: slowed to a crawl. I think July new home sales,
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  Speaker 9: the slowest in six months.
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  Speaker 10: Yeah.
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  Speaker 5: So mortgage rates staying elevated is an affordability concern. Another
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  Speaker 5: affordability concern, Stacey, is the fact that the trade war
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  Speaker 5: is back on, at least with Canada.
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  Speaker 6: The U.S.
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  Speaker 5: Now slapping 50 percent tariffs on certain Canadian goods, Canada
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  Speaker 5: retaliating as well. I keep joking that my hockey sticks
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  Speaker 5: and maple syrup are going to get a lot more
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  Speaker 5: expensive as a result.
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  Speaker 11: They will actually probably get a lot more expensive. Yeah,
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  Speaker 11: the trade war really escalated, I think, in a way
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  Speaker 11: that nobody expected. And it will affect both sides of
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  Speaker 11: the border, of course. Obviously, it's going to affect Canada's
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  Speaker 11: economy a lot more. But for American consumers, they can
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  Speaker 11: expect auto parts. This is really going to hit the
• 8:23
  Speaker 11: auto industry. Auto parts haven't been tariffed at all. Now
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  Speaker 11: they're threatening to bring in 50% tariffs. So that's going
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  Speaker 11: to be It's going to be more expensive to get
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  Speaker 11: your car repaired, more expensive to get a car. And
• 8:34
  Speaker 11: also like other things that we get from Canada, lumber,
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  Speaker 11: which is going to hit the housing industry along with
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  Speaker 11: mortgages and things like paper also expected to get a
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  Speaker 11: lot more expensive.
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  Speaker 5: I mean, this just contributes to this souring sentiment that
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  Speaker 5: everyone seems to feel.
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  Speaker 1: People say they don't feel great. They're spending money.
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  Speaker 5: But they're spending it in more selective ways. Nikki, how
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  Speaker 5: are you thinking about, or what are people telling you
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  Speaker 5: about how they're retiring? Tom mentioned retiring in Wyoming. Delaware
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  Speaker 5: seems to be a new favorite place for people to retire.
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  Speaker 3: Yes.
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  Speaker 9: Move over Florida. God's waiting room has moved to Delaware.
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  Speaker 9: That's sort of what we've been saying among the team
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  Speaker 9: as we've been reporting.
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  Speaker 1: Out this story.
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  Speaker 9: We spotted that Delaware has seen, according to the IRS
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  Speaker 9: migration data, this pretty big influx of retirees. I think
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  Speaker 9: it's tens of thousands of retirees moving into Delaware in
• 9:24
  Speaker 9: the last few years, which is.
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  Speaker 1: A huge number.
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  Speaker 9: And it's happening at the same time that, as we've reported,
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  Speaker 9: costs are going up in Florida. It's becoming less of
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  Speaker 9: a haven for retirees. And then you have Delaware, which
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  Speaker 9: has some of the last affordable for right now. beach
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  Speaker 9: land on the East Coast. These are really cute towns
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  Speaker 9: and people are moving in.
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  Speaker 5: But of course, this has an effect on Delaware as
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  Speaker 5: well because it's getting really congested there and they don't
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  Speaker 5: necessarily have the infrastructure to support this influx of people.
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  Speaker 9: Yes, the number one hobby right now in Delaware is
• 9:54
  Speaker 9: complaining about everybody who's moving to Delaware or the traffic
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  Speaker 9: that's caused in Sirius, as we've seen, the health system
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  Speaker 9: is also really strained. It's hard for these retirees to
• 10:05
  Speaker 9: get doctor's appointments, dentist appointments. We're also just seeing infrastructure
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  Speaker 9: being strained in a lot of ways. On the other hand,
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  Speaker 9: we may see an influx of younger people moving into
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  Speaker 9: Delaware because the retirees are creating jobs.
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  Speaker 5: Oh, but they have to find housing then. They have
• 10:21
  Speaker 5: to find affordable housing, and all the retirees are buying
• 10:23
  Speaker 5: up the best.
• 10:25
  Speaker 1: Spots in Delaware. And the cycle continues. And the cycle continues.
• 10:28
  Speaker 5: All right, speaking of infrastructure, I feel like this week
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  Speaker 5: we really saw break out into the open the public
• 10:33
  Speaker 5: opposition to data centers, and it's kind of across blue
• 10:36
  Speaker 5: states and red states.
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  Speaker 2: Oh, yeah.
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  Speaker 11: I think this is clearly becoming one of the big,
• 10:42
  Speaker 11: it may be one of the few things that everybody
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  Speaker 11: agrees on in the country right now.
• 10:45
  Speaker 1: Except President Trump.
• 10:46
  Speaker 11: Except President Trump, right? We really need data centers to
• 10:49
  Speaker 11: power this sort of future AI and our economy and
• 10:53
  Speaker 11: all the growth that we're excited about. At the same time,
• 10:56
  Speaker 11: people don't want them in their backyards. In Virginia, where
• 10:58
  Speaker 11: there's the biggest concentration of data centers, they call it
• 11:01
  Speaker 11: data center alley, right? Electricity costs have gone up by 267%
• 11:06
  Speaker 11: in the last five years. And just to give you
• 11:10
  Speaker 11: an example of how emotional things can get, there was
• 11:12
  Speaker 11: a couple in Kentucky, a farming couple, and they were
• 11:15
  Speaker 11: offered $ 26 million by a data center to buy their
• 11:19
  Speaker 11: 1,200 acre farm. And they responded with, kick rocks and
• 11:23
  Speaker 11: don't come back.
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  Speaker 1: So that was a polite no. That was a yes.
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  Speaker 11: But I mean, it just shows you turning down $ 26
• 11:30
  Speaker 11: million is, I mean, that is really powerful sentiment.
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  Speaker 1: That is some kind of NIMBY, I can just say.
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  Speaker 1: All right. Thank you so much, ladies.
• 11:38
  Speaker 5: Nikki Waller, of course, she heads up our money coverage
• 11:40
  Speaker 5: here at Bloomberg News. Stacey Vanek-Smith as well. She is host,
• 11:43
  Speaker 5: co-host of the Everybody's Business podcast, which comes out every Friday.
• 11:47
  Speaker 5: Coming up, we're back in Jackson Hole with Ken Rogoff,
• 11:50
  Speaker 5: Harvard professor of economics, the former chief economist at the IMF.
• 11:54
  Speaker 5: And later on, 72% of Americans say that they feel
• 11:57
  Speaker 5: guilty spending money on joy. We've got that and other
• 12:01
  Speaker 5: details from a new report. This is Bloomberg Money. Welcome
• 12:12
  Speaker 5: back to Bloomberg Money. I'm Scarlett Fu, my partner in crime,
• 12:14
  Speaker 5: Tom Keen, not here in New York, but in Jackson Hole, Wyoming,
• 12:17
  Speaker 5: where he's standing by with Ken Rogoff, Harvard professor of
• 12:20
  Speaker 5: economics and former chief economist over at the IMF.
• 12:23
  Speaker 1: Tom, I'll hand it over to you.
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  Speaker 6: Thank you.
• 12:27
  Speaker 4: This is my conversation of this Jackson Hole without questions.
• 12:31
  Speaker 4: Professor Rogoff will be speaking to the assembled at lunch
• 12:34
  Speaker 4: here in about an hour. Of course, the book last
• 12:38
  Speaker 4: year is a required read. Brammo's son actually even read
• 12:42
  Speaker 4: the book, Moving Royalties Up, Our Dollar, Your Problem. And
• 12:45
  Speaker 4: the new edition of Our Dollar, Your Problem is there's
• 12:48
  Speaker 4: a Rogoff wedding coming up here as well. Is it
• 12:51
  Speaker 4: Our Dollar, Your Problem? How are you and Mrs. Rogoff
• 12:54
  Speaker 4: holding up?
• 12:55
  Speaker 12: We're holding up so far. It's just a week away.
• 12:58
  Speaker 12: Our daughter's getting married. But trying to control the budget,
• 13:02
  Speaker 12: just like the U.S.
• 13:02
  Speaker 3: Government.
• 13:03
  Speaker 4: Trying to control the budget. Let's do that right now
• 13:06
  Speaker 4: here at Jackson Hole. Ken, I think what's so important
• 13:09
  Speaker 4: here is there was another time and place. You have
• 13:11
  Speaker 4: an op-ed in the FT from a couple years ago.
• 13:13
  Speaker 4: Here's the photo, folks. Bill Clinton, Al Gore. There was
• 13:17
  Speaker 4: a time where this is a photo right from Ken
• 13:20
  Speaker 4: Rogoff's op-ed.
• 13:21
  Speaker 6: How did we screw this up? How did we get to.
• 13:23
  Speaker 2: The will to do this?
• 13:24
  Speaker 4: Of 1999 to the irresponsibility of 2026?
• 13:28
  Speaker 2: Super short answer.
• 13:31
  Speaker 12: We've had a couple of catastrophes, the global financial crisis
• 13:35
  Speaker 12: and the pandemic. But I think a larger issue, which
• 13:39
  Speaker 12: has been a big topic at this symposium for years
• 13:43
  Speaker 12: and years, was a near religious conviction among academic economists
• 13:49
  Speaker 12: in the journal's that interest rates were going to go
• 13:51
  Speaker 12: down and down and down. So who cares how much
• 13:55
  Speaker 12: debt you owe? You'll never have to pay interest on it.
• 13:58
  Speaker 12: And I think that's dominated the political landscape. The interest
• 14:03
  Speaker 12: rates have reversed, but Washington hasn't, and a lot of
• 14:06
  Speaker 12: academics hasn't.
• 14:07
  Speaker 4: The Besson angle, and in your Project Syndicate essay in
• 14:10
  Speaker 4: the last 72 hours, I'll say you go right after
• 14:13
  Speaker 4: Secretary Besson. Glenn Hubbard at Columbia has a respect for
• 14:17
  Speaker 4: the idea, you can do supply-side, but you may not
• 14:20
  Speaker 4: grow with it. There's a certitude that we will grow
• 14:23
  Speaker 4: our way out of this predicament with a pseudo-supply-side exercise.
• 14:28
  Speaker 6: Is there any evidence we can do that?
• 14:31
  Speaker 12: We might, but let's start with the fact we're infinitely
• 14:35
  Speaker 12: rich at the moment. Even if we grew really slowly,
• 14:39
  Speaker 12: we ought to be able to pay our bills. So
• 14:42
  Speaker 12: telling us we're going to get much richer in the future,
• 14:44
  Speaker 12: that will bring in some further tax revenues, but demands
• 14:48
  Speaker 12: on expenditures, old age expenditures. And then there are a
• 14:52
  Speaker 12: lot of technical issues around that. Interest rates will probably
• 14:55
  Speaker 12: go up if there's fast growth. Labor share is falling,
• 14:59
  Speaker 12: that's all over the place. Capital is harder to tax
• 15:02
  Speaker 12: than labor. So I think there are many other reasons
• 15:06
  Speaker 12: interest rates are going up. How about the war in Iran?
• 15:09
  Speaker 12: How about populism, not just in the US, all over
• 15:12
  Speaker 12: the world?
• 15:13
  Speaker 6: Have you been asked to be in a task force?
• 15:15
  Speaker 2: No, I wasn't. Nick, you got those short straws.
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  Speaker 12: No, I think the world of Kevin Warsh, but I'm
• 15:22
  Speaker 12: just as grateful that I'm not on one of the
• 15:24
  Speaker 12: task forces.
• 15:24
  Speaker 6: Oh, that was so smooth, folks. Did you see how
• 15:27
  Speaker 6: Ken Rogoff did that? Ken, let's talk seriously.
• 15:31
  Speaker 4: We had Jack Lew on Bloomberg monies about retirement, Social Security,
• 15:34
  Speaker 4: and all that. And the former Treasury Secretary said day one,
• 15:38
  Speaker 4: After the presidential election, we need a panel. We need
• 15:41
  Speaker 4: to get something done about Social Security. You've got to
• 15:45
  Speaker 4: be a natural selection for that panel. What's the first
• 15:48
  Speaker 4: task to get our entitlement program straightened around?
• 15:53
  Speaker 12: Honestly, I think it's going to be very difficult to
• 15:55
  Speaker 12: do till we have a crisis that convinces voters something
• 16:00
  Speaker 12: has to happen.
• 16:01
  Speaker 2: They're not convinced.
• 16:04
  Speaker 12: Now, some economists are finally coming around to the view
• 16:07
  Speaker 12: that maybe it wasn't the free lunch they said it was,
• 16:10
  Speaker 12: that maybe someday we'll get inflation, financial repression, but it's
• 16:14
  Speaker 12: not the dominant political position. I think if you try
• 16:18
  Speaker 12: to run in 2028, on I'm going to fix Social
• 16:21
  Speaker 12: Security in any more than.
• 16:23
  Speaker 2: A passing phrase.
• 16:24
  Speaker 6: Silence in the rooms.
• 16:25
  Speaker 2: Yeah, people's eyes glaze over. I think it's going to take.
• 16:28
  Speaker 12: That's why my book, at the end of it, predicts
• 16:33
  Speaker 12: at some point this will end in a crisis of
• 16:35
  Speaker 12: some sort to catalyze the change, which will be painful.
• 16:39
  Speaker 4: God, the rain here is killing my glasses. I'm fogging
• 16:42
  Speaker 4: up like no tomorrow. We're going to fog up with
• 16:45
  Speaker 4: higher yields. You've nailed the vector towards higher yields. What
• 16:49
  Speaker 4: 10-year yield or even 30-year bond do you perceive to
• 16:53
  Speaker 4: be that point of crisis for the American public?
• 16:57
  Speaker 12: Well, I mean, it's the debt level, the level we're
• 17:00
  Speaker 12: at already is difficult. The crisis comes when a shock
• 17:03
  Speaker 12: happens and you're not resilient. The Iran war was a
• 17:06
  Speaker 12: mini shock, really, compared to what could happen. But over
• 17:10
  Speaker 12: the next five years, it could be a.
• 17:13
  Speaker 12: Cyber war, it could be some kind of artificial intelligence thing,
• 17:18
  Speaker 12: most likely China and Taiwan. But a war kind of shock,
• 17:23
  Speaker 12: that's the scenario that pushes up interest rates. And that
• 17:27
  Speaker 12: makes it hard to, the Fed can't just cut interest
• 17:30
  Speaker 12: rates if the market's pushing them up. The government can't
• 17:33
  Speaker 12: just print money if the market's pushing them up. And
• 17:35
  Speaker 12: I think in our environment, that's a big risk.
• 17:38
  Speaker 4: The charm of This Time is Different, Reinhart and Rogoff,
• 17:41
  Speaker 4: is you combine, you conflate together responsibly public and private investment.
• 17:46
  Speaker 4: So right now, if we conflate together $ 40 trillion plus
• 17:50
  Speaker 4: private this, private that, with Wall Street's new addiction, private
• 17:53
  Speaker 4: equity and private credit, are we doing a This Time
• 17:56
  Speaker 4: is Different path right now?
• 17:59
  Speaker 12: Well, look, I mean, of course there's going to be
• 18:01
  Speaker 12: some kind of spectacular collapse in AI at some point,
• 18:05
  Speaker 12: which doesn't mean you should take your money out of AI.
• 18:08
  Speaker 12: Schiller and Greenspan famously predicted the collapse of the stock
• 18:13
  Speaker 12: market when I was at around $ 4, 000.
• 18:16
  Speaker 2: Then it went to 8,000. And they were right. And
• 18:18
  Speaker 2: then it went to 6,000. It collapsed. But timing was terrible.
• 18:22
  Speaker 2: And I think that's difficult. But the U.S.
• 18:24
  Speaker 12: Government needs to take steps. They'll be much smaller and
• 18:29
  Speaker 12: easier steps if you do it sooner. I don't see
• 18:32
  Speaker 12: any signs of that happening.
• 18:33
  Speaker 6: You and I grew up under the shadow of Barbara B. Conable.
• 18:35
  Speaker 4: He's the one folks who told Nixon, here's the door,
• 18:38
  Speaker 4: what's your hurry? There used to be a normal process
• 18:40
  Speaker 4: here of, say, Barbara Conable, House Ways and Means. Where
• 18:44
  Speaker 4: does Congress fit in to the crisis that you see coming?
• 18:49
  Speaker 12: Well, you know, at the moment, they're kind of sidelined
• 18:52
  Speaker 12: and paralyzed. But there are many people in Congress on
• 18:56
  Speaker 12: both sides of the aisle who are.
• 18:57
  Speaker 2: Aware of this.
• 18:59
  Speaker 12: But again, you know, it's hard to catalyze action. By
• 19:02
  Speaker 12: the way, we're talking about the United States. We could
• 19:04
  Speaker 12: go to the UK. We could go to France. Look
• 19:06
  Speaker 12: what happened to Macron. when he tried to raise the
• 19:09
  Speaker 12: retirement age. And the French election is coming up right now.
• 19:11
  Speaker 12: It's going to get murdered. And so it's the same
• 19:14
  Speaker 12: thing all over the world.
• 19:15
  Speaker 4: Jason from Cambridge emails in and says, Tom, you trashed
• 19:18
  Speaker 4: me with Act 10. To Ken Rogoff, the question of
• 19:22
  Speaker 4: the afternoon here, Scarlett, is there great inflation at Harvard Economics?
• 19:28
  Speaker 12: Well, we have a new policy coming in place to
• 19:30
  Speaker 12: try to deal with it.
• 19:32
  Speaker 2: But, you know, absolutely there was.
• 19:35
  Speaker 12: I will say when I came to Harvard, I learned
• 19:38
  Speaker 12: from complaints from the dean that I was one of
• 19:40
  Speaker 12: the easiest graders.
• 19:42
  Speaker 2: I didn't change a thing.
• 19:44
  Speaker 12: And then over 20 years, I find out from some
• 19:47
  Speaker 12: of the kids, you're the hardest grader at Harvard.
• 19:49
  Speaker 2: So that tells you. I've been told you're brutal. You're ruthless.
• 19:53
  Speaker 12: I'm not trying to be. I'm trying to be fair and,
• 19:56
  Speaker 12: you know, reasonably generous.
• 19:57
  Speaker 4: Brutal and ruthless, Ken Rogoff. Thank you so much. My
• 20:01
  Speaker 4: high point here at Jackson Hole today. Scarlet Fu in
• 20:04
  Speaker 4: New York.
• 20:05
  Speaker 1: Thank you, Tom, for that conversation.
• 20:06
  Speaker 5: And by the way, if you listen carefully, you can
• 20:08
  Speaker 5: hear the raindrops falling, certainly as you were talking to Ken.
• 20:11
  Speaker 5: And we saw earlier that you were holding an umbrella
• 20:14
  Speaker 5: for Lisa Bromowitz, who you're hosting the surveillance special with.
• 20:18
  Speaker 5: Quite the gentleman there. Tom, as you wrap up your
• 20:20
  Speaker 5: time in Jackson Hole, what are your final thoughts?
• 20:24
  Speaker 4: My final thoughts are Ken Rogoff's not the most important
• 20:27
  Speaker 4: person here.
• 20:28
  Speaker 6: Neither is Chairman Warsh.
• 20:30
  Speaker 4: The most important people here are the media and the
• 20:33
  Speaker 4: current just on with us. The grind that Michael McKee
• 20:36
  Speaker 4: goes through each and every day. The simple distinction here
• 20:40
  Speaker 4: is the press's coverage of this huge public institution. It's
• 20:45
  Speaker 4: vital that the press keep the message going in this
• 20:48
  Speaker 4: time of distraction and tumult.
• 20:51
  Speaker 12: All right.
• 20:51
  Speaker 5: Well, you and Lisa and Michael McKee are doing your parts.
• 20:54
  Speaker 1: Thank you so much, Tom.
• 20:55
  Speaker 5: We're going to check in with you when you come
• 20:56
  Speaker 5: back to New York. Bloomberg Money is your destination for
• 21:04
  Speaker 5: personal finance. It's a cross-platform effort that goes beyond your
• 21:07
  Speaker 5: TV screens because it includes our new digital hub at
• 21:09
  Speaker 5: Bloomberg.com slash money.
• 21:11
  Speaker 1: And this story got my attention. More and more U.S.
• 21:15
  Speaker 5: Employers are opting out of group health insurance plans as
• 21:17
  Speaker 5: they brace for large price hikes.
• 21:19
  Speaker 1: Instead.
• 21:20
  Speaker 5: they're going to provide stipends for employees to buy health
• 21:22
  Speaker 5: insurance for themselves. Bloomberg's Taylor Nicole Rogers joins us now
• 21:27
  Speaker 5: with more on this. I didn't even know that this
• 21:29
  Speaker 5: was an option for employers.
• 21:31
  Speaker 1: It's a pretty new option.
• 21:32
  Speaker 13: It's only been around since 2020, but it's something that
• 21:35
  Speaker 13: people have been looking into because health insurance has just
• 21:38
  Speaker 13: gotten so expensive. Companies are spending almost $ 19, 000 per employee
• 21:42
  Speaker 13: these days.
• 21:42
  Speaker 3: Okay.
• 21:44
  Speaker 5: So can employees pocket the money or do they actually
• 21:47
  Speaker 5: have to go to a marketplace to buy.
• 21:50
  Speaker 1: Their own insurance? And is there even a thriving marketplace?
• 21:52
  Speaker 13: Well, there are the Affordable Care Act marketplaces.
• 21:55
  Speaker 1: I meant thriving, though.
• 21:57
  Speaker 13: Whether they're thriving or not is in the eye of
• 21:58
  Speaker 13: the beholder for sure. But employees are required to spend
• 22:02
  Speaker 13: the money on insurance. Depending on the plan, if they
• 22:05
  Speaker 13: have anything left over, they can use that for whatever
• 22:07
  Speaker 13: they want or just take that home.
• 22:09
  Speaker 5: Don't the economics of health insurance argue for big groups
• 22:12
  Speaker 5: to get insurance coverage so that the young and healthy
• 22:14
  Speaker 5: help subsidize the older and more fragile?
• 22:17
  Speaker 2: Exactly.
• 22:18
  Speaker 13: But another trend employers have been seeing is that those healthy,
• 22:21
  Speaker 13: more profitable workers have been jumping off of plans altogether.
• 22:25
  Speaker 13: So the economics are breaking to the point where some
• 22:28
  Speaker 13: employers are saying, you know what, I'd rather be out
• 22:30
  Speaker 13: of this business altogether.
• 22:32
  Speaker 5: I think clearly employers are doing this out of necessity.
• 22:35
  Speaker 5: What does your reporting show whether employees like this change?
• 22:38
  Speaker 13: Some employees do like it because it gives them more
• 22:40
  Speaker 13: control over the benefits they get. For example, if they
• 22:44
  Speaker 13: would like to be using a GLP-1, they can choose
• 22:46
  Speaker 13: a plan that uses that. But from the vast majority
• 22:49
  Speaker 13: I've heard from, they're annoyed that they have to go
• 22:52
  Speaker 13: through the administrative hassle of sorting through a marketplace. Marketplace
• 22:55
  Speaker 13: plans are more expensive sometimes. They have smaller networks of
• 22:58
  Speaker 13: doctors and hospitals. And they tend to have higher deductibles.
• 23:02
  Speaker 13: So it doesn't work out for everyone.
• 23:04
  Speaker 5: Yeah, you take on the risk. You take on the
• 23:05
  Speaker 5: responsibility of everything related to health care. It's kind of
• 23:08
  Speaker 5: the same way that we transition from traditional pensions to 401ks.
• 23:12
  Speaker 2: Exactly.
• 23:12
  Speaker 1: All right.
• 23:13
  Speaker 5: Taylor Nicole Rogers, thank you so much for bringing us
• 23:15
  Speaker 5: this story. It's a fantastic read. You should check it
• 23:18
  Speaker 5: out on Bloomberg.com slash money. Joining us now is Neela Richardson.
• 23:22
  Speaker 5: Neela is chief economist and ESG officer at ADP. She
• 23:25
  Speaker 5: is also a contributor to Bloomberg. Great to see you here.
• 23:28
  Speaker 5: Welcome to Bloomberg Money.
• 23:29
  Speaker 2: Hello.
• 23:30
  Speaker 14: It's great to be here with you, Scarlett.
• 23:32
  Speaker 1: We know ADP is a payrolls company.
• 23:33
  Speaker 5: That's kind of like what everyone knows it as, automatic
• 23:36
  Speaker 5: data processing. But you do also manage workplace benefits like
• 23:40
  Speaker 5: retirement accounts and health insurance.
• 23:41
  Speaker 1: Is that right?
• 23:42
  Speaker 2: We do.
• 23:42
  Speaker 1: We do.
• 23:42
  Speaker 14: We offer a lot of solutions for small businesses who
• 23:45
  Speaker 14: are looking to offset health care costs. And that is
• 23:49
  Speaker 14: where we are right now. This health care is climbing.
• 23:52
  Speaker 14: And whether you shift it to the work or you
• 23:56
  Speaker 14: assume it as a small business, it's they still.
• 23:58
  Speaker 1: Have to be dealt with.
• 23:59
  Speaker 14: And a lot of people work just for benefits.
• 24:01
  Speaker 1: It's not just about the paycheck.
• 24:04
  Speaker 14: And so we do offer a variety of solutions for
• 24:06
  Speaker 14: small businesses for just that reason.
• 24:09
  Speaker 5: Yeah, a lot of people go work at Trader Joe's
• 24:10
  Speaker 5: because they can get health insurance. When employers tell employees,
• 24:14
  Speaker 5: go figure out your own health insurance because costs are
• 24:16
  Speaker 5: rising too much for us, is that just exposing individual
• 24:18
  Speaker 5: households to inflation in a more direct way?
• 24:21
  Speaker 1: I think so. I think so.
• 24:23
  Speaker 14: I mean, there is something about combined care and having
• 24:28
  Speaker 14: a managed service. And I think there are solutions. ADP
• 24:31
  Speaker 14: has a variety of them, but there are others in
• 24:34
  Speaker 14: the marketplace that serve as an alternative. But no one
• 24:39
  Speaker 14: is really escaping the elephant in the market, which is
• 24:42
  Speaker 14: health care costs are climbing. And a lot of these drugs,
• 24:46
  Speaker 14: whether it's GLP-1s and obesity, or if it's even cancer
• 24:50
  Speaker 14: treatments that are really revolutionary, they.
• 24:53
  Speaker 1: All come with a price tag.
• 24:55
  Speaker 14: Pharmaceuticals have a seven to eight year span in which
• 24:58
  Speaker 14: they can recoup costs. And that is what employers and
• 25:02
  Speaker 14: employees are facing to take advantage of these next level care.
• 25:05
  Speaker 14: You really have to pay up. And that's what's really
• 25:09
  Speaker 14: challenging in this moment.
• 25:10
  Speaker 5: Also challenging is the overall affordability picture. Consumers say that
• 25:15
  Speaker 5: they're feeling lousy. We know that they're seeking value. Walmart,
• 25:18
  Speaker 5: McDonald's have certainly benefited from that. But there is new
• 25:20
  Speaker 5: data showing a rise in fast food restaurant bankruptcies, including
• 25:24
  Speaker 5: some Popeye and Subway franchisees.
• 25:27
  Speaker 14: How do you read into this kind of development? You know,
• 25:30
  Speaker 14: first of all, the restaurant industry is a hard industry.
• 25:35
  Speaker 14: And not every restaurant, even a franchise, is a successful franchise.
• 25:40
  Speaker 14: But when I talk to restaurant owners, it seems to
• 25:42
  Speaker 14: be that fast casual segment that's doing better. But one
• 25:46
  Speaker 14: of the things that surprised me when I talked to
• 25:50
  Speaker 14: these real restaurant conglomerates at the fast food level is
• 25:53
  Speaker 14: that they're really concerned about affordable housing. Now, you think
• 25:56
  Speaker 14: about where these restaurants are located. Location drives the consumer experience.
• 26:01
  Speaker 14: you know, consumer demand. If they're not well located, they're
• 26:05
  Speaker 14: not going to get the traffic. If you're not seeing
• 26:07
  Speaker 14: the Popeyes on the way home, you may not think
• 26:09
  Speaker 14: Popeyes on a Saturday evening. But so they need workers
• 26:13
  Speaker 14: to live where their customer base is. And if there
• 26:15
  Speaker 14: is a disconnect because it's too pricey in San Francisco
• 26:18
  Speaker 14: or Los Angeles or New York City, it's going to
• 26:21
  Speaker 14: be hard to get the workers inside that door.
• 26:23
  Speaker 5: I think that's a really important point because franchisees say
• 26:26
  Speaker 5: that they're seeing elevated costs for rent, for wages, for
• 26:28
  Speaker 5: food as well. The question I have for you is
• 26:31
  Speaker 5: that owning and operating these businesses has been one of
• 26:34
  Speaker 5: the tried and true ways for Americans to build wealth,
• 26:37
  Speaker 5: isn't it? I mean, when people say they're business owners,
• 26:39
  Speaker 5: small business owners, a lot of them own franchises.
• 26:43
  Speaker 14: You know, historically, there's only been two real ways to
• 26:46
  Speaker 14: create wealth in the United States. And incidentally, it's the
• 26:50
  Speaker 14: reason why millions and millions and millions of people come
• 26:53
  Speaker 14: to the United States. The first is through entrepreneurship. The
• 26:57
  Speaker 14: second is through housing. Most of us choose the housing
• 27:00
  Speaker 14: option that forced savings. And that used to be the
• 27:03
  Speaker 14: old school way of building wealth. Well, now look at
• 27:06
  Speaker 14: new business formations. They have not receded. They have stepped
• 27:10
  Speaker 14: up since the pandemic. They keep growing. AI has enabled
• 27:14
  Speaker 14: a lot of small businesses. I think the silver economy
• 27:17
  Speaker 14: and the aging workforce and now taking that talent and
• 27:20
  Speaker 14: opening a business.
• 27:21
  Speaker 1: Is part of it.
• 27:22
  Speaker 14: And so, yes, having that small business is a way
• 27:25
  Speaker 14: of wealth creation and we're seeing it becoming more popular,
• 27:29
  Speaker 14: maybe tapping into some of that home equity for boomers
• 27:31
  Speaker 14: who have it.
• 27:32
  Speaker 6: Absolutely.
• 27:33
  Speaker 5: For those who do get a paycheck and have to
• 27:34
  Speaker 5: get a W-2, inflation is proving to be pretty sticky
• 27:37
  Speaker 5: and a lot of people get wage increases, jump condition
• 27:41
  Speaker 5: wage increases by changing jobs. Does changing jobs still produce
• 27:45
  Speaker 5: a pay bump? What are you guys seeing in ADP
• 27:47
  Speaker 5: on that?
• 27:48
  Speaker 14: Yes, it does still produce a pay bump, but the premium.
• 27:52
  Speaker 14: for that pay bump has narrowed significantly.
• 27:55
  Speaker 3: How much?
• 27:56
  Speaker 14: We're looking at about 2% between switching and just changing
• 27:59
  Speaker 14: for the average worker. Now, it matters a lot what
• 28:02
  Speaker 14: kind of industry you're in. If you're a construction worker,
• 28:05
  Speaker 14: expect almost 14% increase from your old job to your
• 28:09
  Speaker 14: new job.
• 28:09
  Speaker 5: Really?
• 28:10
  Speaker 14: If you're in retail or leisure and hospitality, the restaurant
• 28:13
  Speaker 14: business that we were just talking about, you'll actually see
• 28:16
  Speaker 14: negative earnings for the typical worker, negative growth. from switching
• 28:21
  Speaker 14: jobs because that is an industry that rewards loyalty and
• 28:24
  Speaker 14: service over fast switching. So it really depends where you are.
• 28:29
  Speaker 14: Older workers don't switch jobs as much. And this is
• 28:31
  Speaker 14: really an important issue because if you look at the
• 28:34
  Speaker 14: cumulative inflation that we've seen over the last five years,
• 28:37
  Speaker 14: My colleagues at ADP Research and University of Chicago just
• 28:41
  Speaker 14: put out a paper.
• 28:42
  Speaker 1: On this last week.
• 28:43
  Speaker 14: 47% of Americans, according to our research, saw real wage
• 28:48
  Speaker 14: declines over the last four years because of inflation. So
• 28:53
  Speaker 14: this is why consumer sentiment is dismal. People's salaries are
• 28:57
  Speaker 14: just not... So you may have gotten that raise, that 3%
• 29:00
  Speaker 14: raise that most companies give, but it's not enough to
• 29:03
  Speaker 14: compete with 7% inflation, even as inflation... was lowered through
• 29:08
  Speaker 14: those subsequent years.
• 29:09
  Speaker 5: Those are people who work at companies and are on
• 29:12
  Speaker 5: the payroll.
• 29:13
  Speaker 1: What about independent contractors?
• 29:15
  Speaker 5: What can you tell us about the wage trends for
• 29:17
  Speaker 5: these folks?
• 29:18
  Speaker 1: Is that captured in the same way?
• 29:20
  Speaker 14: You know, yeah. Well, at ADP, we see everybody. And
• 29:23
  Speaker 14: we also see single-person proprietorships. And so what's happening with
• 29:28
  Speaker 14: the contractor, what the vendor said, is that they're building
• 29:31
  Speaker 14: in their contracts. So unlike workers, they can say, hey,
• 29:34
  Speaker 14: please put in a.
• 29:35
  Speaker 3: 3%, 6%.
• 29:35
  Speaker 14: I actually have seen a 7% in the heart of
• 29:39
  Speaker 14: our inflation peak, where contractors were asking for multi-year increases
• 29:47
  Speaker 14: based on inflation.
• 29:48
  Speaker 1: So contractors, the savvy ones, have been able to index.
• 29:53
  Speaker 14: Their wages to inflation in a way that no worker
• 29:56
  Speaker 14: would be able to do in a regular contract.
• 29:57
  Speaker 2: Okay.
• 29:58
  Speaker 5: So employees should be taking their cues from these contractors
• 30:01
  Speaker 5: and these construction workers who seem to see outsized wage gains.
• 30:04
  Speaker 14: We have to go back to our previous conversation. Those
• 30:07
  Speaker 14: jobs come without health benefits, by and large. So Before
• 30:10
  Speaker 14: we wrap up.
• 30:11
  Speaker 5: Our conversation, Nila, we always ask our guests here on
• 30:14
  Speaker 5: Bloomberg Money how you approach managing your personal finance. Are
• 30:17
  Speaker 5: you kind of a set it and forget it investor
• 30:20
  Speaker 5: or are you making adjustments on a regular basis, a
• 30:23
  Speaker 5: quarterly basis or annual basis?
• 30:24
  Speaker 1: How do you think about it? I do both.
• 30:27
  Speaker 14: I'm a big believer in dollar cost averaging. And this
• 30:31
  Speaker 14: is where the housing moment is important. The importance of
• 30:35
  Speaker 14: housing was not just the house and the appreciation, it
• 30:37
  Speaker 14: was the fixed savings, the discipline of putting the same
• 30:41
  Speaker 14: amount of money into equity eventually every single month. Well,
• 30:46
  Speaker 14: even if you don't have a house, you can have
• 30:48
  Speaker 14: that same discipline in the market. And that's called dollar
• 30:51
  Speaker 14: cost averaging, where you're putting in a fixed amount of
• 30:54
  Speaker 14: money into the market, whether it's an ETF or some
• 30:57
  Speaker 14: other broad-based equity and bond portfolio every single month. And
• 31:03
  Speaker 14: I'm going to speak an old book. It's not timing
• 31:06
  Speaker 14: the market. It's time in the market. So if you
• 31:08
  Speaker 14: can do that at a younger age, you can build
• 31:09
  Speaker 14: wealth over time.
• 31:10
  Speaker 1: But you know what?
• 31:11
  Speaker 14: I'm all about selective bets. And we've seen some startups
• 31:15
  Speaker 14: that are really appetizing in terms of an investor portfolio
• 31:19
  Speaker 14: especially if you're young enough to see it pay off.
• 31:21
  Speaker 3: All right.
• 31:22
  Speaker 5: So disciplined investing is Neela Richardson's approach here. Neela Richardson
• 31:27
  Speaker 5: of ADP. She's the chief economist there. She's also a
• 31:29
  Speaker 5: Bloomberg contributor. Thank you so much for stopping by. It's
• 31:32
  Speaker 5: great to be here, Scarlett.
• 31:33
  Speaker 1: You're listening to Bloomberg Money. Stay with us for more
• 31:36
  Speaker 1: to come after this.
• 31:44
  Speaker 8: All right.
• 31:44
  Speaker 5: Another story that caught my eye this week comes from.
• 31:46
  Speaker 1: Bloomberg's Sarah Foster.
• 31:48
  Speaker 5: Her article covers how after Congress tweaked the rules covering
• 31:51
  Speaker 5: 529 plans in 2022, people without kids are now able
• 31:56
  Speaker 5: to put money into those accounts after hitting the annual
• 31:58
  Speaker 5: limits for contributing to their retirement plans. So in a way,
• 32:02
  Speaker 5: they treat the 529 as a backdoor for funding a
• 32:05
  Speaker 5: Roth IRA. Sarah joins us along with Bloomberg's Zijia Song.
• 32:08
  Speaker 5: So Sarah, let's just back up a little bit. 529
• 32:11
  Speaker 5: accounts are for you to put money away for your
• 32:14
  Speaker 5: child or unborn child's college tuition. savings or maybe even
• 32:17
  Speaker 5: their high school savings if they're going to you know
• 32:19
  Speaker 5: go to a private school but if you're an avid
• 32:21
  Speaker 5: saver you could use it for something else as well
• 32:24
  Speaker 5: yeah I think what's really interesting about the 529 is
• 32:27
  Speaker 5: kind of this misconception that it's actually for your children
• 32:30
  Speaker 5: actually anybody can have their own 529 right now you
• 32:34
  Speaker 5: can open up one for yourself you can open up
• 32:37
  Speaker 5: one for your children as well you know open one
• 32:39
  Speaker 5: up for a niece or a nephew you And I
• 32:42
  Speaker 5: think a lot of people are really discovering here that
• 32:44
  Speaker 5: since Congress.
• 32:45
  Speaker 1: Tweaked the rules, there's a new way.
• 32:47
  Speaker 10: That they can kind of use it as like a
• 32:49
  Speaker 10: wealth building strategy. So we spoke with people who are
• 32:53
  Speaker 10: either opening these 529 accounts before they have children or
• 32:56
  Speaker 10: before they even know they want them because they're using
• 32:59
  Speaker 10: it as a way to maybe kind of put extra
• 33:02
  Speaker 10: funds into a Roth IRA if they go unused.
• 33:04
  Speaker 5: What are the limitations to using a 529 account to
• 33:07
  Speaker 5: fund retirement?
• 33:08
  Speaker 10: It's a very complicated process. And a lot of the
• 33:10
  Speaker 10: financial advisors that we spoke with say that it should
• 33:12
  Speaker 10: probably kind of come in at the end, you know,
• 33:15
  Speaker 10: after you've maxed out these other accounts. But you have
• 33:18
  Speaker 10: to have the funds in your 529 plan for five years.
• 33:21
  Speaker 10: You can only move up to.
• 33:25
  Speaker 1: $ 35, 000 over a lifetime.
• 33:26
  Speaker 10: And you also have to hit the Roth IRA annual
• 33:29
  Speaker 10: contribution limits, which this year at $ 7, 500. So you'd have
• 33:32
  Speaker 10: to do it in increments. All right.
• 33:34
  Speaker 5: So you have to keep a spreadsheet on this in
• 33:35
  Speaker 5: order to really take advantage of it. But again, for
• 33:38
  Speaker 5: people who are aggressive savers, and there are a lot
• 33:40
  Speaker 5: of them out there, this is one way of doing it.
• 33:42
  Speaker 2: All right.
• 33:43
  Speaker 5: Tzu-Jia, you've been writing a story about how there's still
• 33:46
  Speaker 5: a lot of consumer spending going on. I mean, this
• 33:48
  Speaker 5: is a nation of consumers, but people are starting to
• 33:51
  Speaker 5: feel bad. They're starting to feel guilty when they spend
• 33:53
  Speaker 5: money on things that are fun. What happened to treat yourself?
• 33:56
  Speaker 3: Yeah. So the new research by Allied Bank actually shows
• 33:59
  Speaker 3: that 72% of Americans feel guilty about spending money on joy,
• 34:05
  Speaker 3: things that bring them happiness, even when they can afford it.
• 34:08
  Speaker 3: I think that disconnect is really interesting because being able
• 34:12
  Speaker 3: to spend money on something doesn't mean that they have.
• 34:14
  Speaker 1: To feel comfortable about doing it.
• 34:17
  Speaker 3: And of course, there's this deeply ingrained money belief that
• 34:21
  Speaker 3: if you're saving, you're being responsible about your future. And
• 34:25
  Speaker 3: if you're spending, something needs to be really well justified.
• 34:29
  Speaker 3: But it's also happening at a time of when we
• 34:32
  Speaker 3: have a lot of anxiety about cost of living rising,
• 34:36
  Speaker 3: about unaffordable housing, and uncertainty about economics in the economic
• 34:42
  Speaker 3: future in America.
• 34:43
  Speaker 5: Yeah, it's certainly a sharp turn from the YOLO days
• 34:46
  Speaker 5: after the pandemic when everyone was going out and living
• 34:48
  Speaker 5: their best lives and traveling everywhere. How does it break
• 34:52
  Speaker 5: down in terms of demographics? Are young people more susceptible
• 34:55
  Speaker 5: to this than, say, the retirees, the boomers?
• 34:58
  Speaker 3: So older Americans, like baby boomers and older, they feel
• 35:03
  Speaker 3: slightly more comfortable about spending, but they're still very conscious
• 35:07
  Speaker 3: about spending. what they're spending money on. Especially right now,
• 35:11
  Speaker 3: I feel like a lot of people, even the older Americans,
• 35:13
  Speaker 3: they have anxiety about retiring with a regular paycheck, so
• 35:19
  Speaker 3: they are maybe just slightly more comfortable, and the younger
• 35:23
  Speaker 3: adults are definitely more conscious.
• 35:26
  Speaker 5: So people will spend money, but they just go through
• 35:28
  Speaker 5: a lot of internal debate and stress that goes along
• 35:30
  Speaker 5: with it.
• 35:31
  Speaker 1: Does travel get caught up in this?
• 35:33
  Speaker 5: Because for so long, people were saying they will bypass
• 35:35
  Speaker 5: the small treats, but they will put their.
• 35:37
  Speaker 1: Money into experiences like travel. Actually, yeah.
• 35:41
  Speaker 3: We talked to a few people in planning their travels,
• 35:45
  Speaker 3: planning their leisures, and they mentioned that traveling and having
• 35:48
  Speaker 3: that experience that they think is really worth it It's
• 35:51
  Speaker 3: probably better than maybe just spending money on a weekend out,
• 35:55
  Speaker 3: on a night out, having dinner. I think people, the
• 36:00
  Speaker 3: trick that they use is that they plan out a
• 36:02
  Speaker 3: budget each month so that they have a designated money
• 36:06
  Speaker 3: in their savings or in their portfolio that's for fun
• 36:11
  Speaker 3: specifically so that they feel a bit less guilty about it.
• 36:14
  Speaker 1: The fun bucket.
• 36:15
  Speaker 5: It just depends how much money you put in that
• 36:17
  Speaker 5: fun bucket. For some people, fun involves going to the
• 36:19
  Speaker 5: bookstore and buying books. I think Tom is in that category.
• 36:22
  Speaker 5: So we want to get to our book picks. And
• 36:24
  Speaker 5: because Tom's not here, I'm going to introduce his pick.
• 36:27
  Speaker 5: He's out in Jackson Hole, Wyoming. So he picked something
• 36:29
  Speaker 5: that was appropriate for that. It is, get this, back
• 36:32
  Speaker 5: of country bear basics. The Definitive Guide to Avoiding Unpleasant Encounters.
• 36:37
  Speaker 5: No word from him on whether he encountered any grizzly
• 36:40
  Speaker 5: and black bears, but nevertheless, that's Tom's book that he's
• 36:43
  Speaker 5: reading this week. My pick for this week is Prairie
• 36:46
  Speaker 5: Fires by Caroline Frazier. It's a biography of Laura Ingalls Wilder.
• 36:50
  Speaker 5: I don't know if you guys know her, the author
• 36:52
  Speaker 5: of the Little House.
• 36:53
  Speaker 1: On the Prairie books.
• 36:54
  Speaker 8: Anyone?
• 36:54
  Speaker 3: Anyone?
• 36:54
  Speaker 1: A little bit. A little bit.
• 36:57
  Speaker 3: Okay.
• 36:58
  Speaker 1: I was a big fan of the books.
• 36:59
  Speaker 5: I watched the TV show portrayed by Michael Landon, produced
• 37:02
  Speaker 5: by him. And so, of course, I watched the reboot
• 37:03
  Speaker 5: on Netflix where an Aussie actor portrays Pa. Basically, this
• 37:07
  Speaker 5: book tells the bigger story of what was happening in
• 37:09
  Speaker 5: the country as Laura and her family were traveling from
• 37:13
  Speaker 5: Wisconsin by wagon to Kansas, to Minnesota, and to the Dakotas.
• 37:17
  Speaker 5: And it turns out in real life, when you look
• 37:19
  Speaker 5: at the history behind it, which the author does, The Ingalls'
• 37:22
  Speaker 5: life on the prairie was painfully hard.
• 37:24
  Speaker 1: It was a constant struggle. The family was impoverished.
• 37:26
  Speaker 5: They were perpetually in debt, perpetually hungry, and not at
• 37:29
  Speaker 5: all like the books and the TV shows depicted. So
• 37:32
  Speaker 5: there's very little good vibes going on there on the prairie.
• 37:34
  Speaker 1: What was your book?
• 37:37
  Speaker 10: I promised I would bring a summer-themed book, and this
• 37:41
  Speaker 10: is going to be a little bit hard to make
• 37:42
  Speaker 10: the connection, but I will explain. It's fixed, why personal
• 37:45
  Speaker 10: finance is broken and how to fix it.
• 37:47
  Speaker 1: This is what you're reading in the summer, Sarah.
• 37:49
  Speaker 10: It's really, you know, I always feel kind of internal
• 37:52
  Speaker 10: guilt because I take a lot of vacations in the summer,
• 37:55
  Speaker 10: and I always use points and miles to pay for them.
• 37:58
  Speaker 10: I haven't paid for a vacation in four years just
• 38:00
  Speaker 10: because of my own spending on credit cards. I've got
• 38:02
  Speaker 10: to see your spreadsheet on this. But it also kind
• 38:04
  Speaker 10: of weighs on me because I know that a lot
• 38:07
  Speaker 10: of the points and miles that I'm rewarded with are
• 38:10
  Speaker 10: financed through the credit card companies from people who are
• 38:13
  Speaker 10: in debt. And it's just one of these ways that
• 38:15
  Speaker 10: I think a lot of disproportionately lower income households sometimes
• 38:19
  Speaker 10: don't reap the benefits of our personal finances.
• 38:21
  Speaker 5: Yeah, it's a good way to understand how that whole
• 38:23
  Speaker 5: ecosystem works.
• 38:24
  Speaker 1: Zijia, you also have a book that you brought with you?
• 38:26
  Speaker 3: Yes, I brought The Trolls of Wall Street. It's actually
• 38:30
  Speaker 3: by our own editor, Nathaniel Popper.
• 38:32
  Speaker 1: Shout out.
• 38:33
  Speaker 3: It's because I spend so much time nowadays on Reddit,
• 38:36
  Speaker 3: just sliding into people's DMs. And some of the most
• 38:39
  Speaker 3: colorful stories for my stories came from Reddit. And this
• 38:42
  Speaker 3: book is actually about the subreddit community, WallStreetBets, which kind
• 38:47
  Speaker 3: of made a splash in 2021 during the GameStop trading frenzy.
• 38:52
  Speaker 3: And it's been really interesting seeing kind of like the
• 38:55
  Speaker 3: history and culture of it and the personalities and characters
• 38:58
  Speaker 3: in this community. And also right now, as this community
• 39:02
  Speaker 3: has evolved, how they are really savvy in trading now,
• 39:06
  Speaker 3: they're using AI technology to inform their own trading. their
• 39:10
  Speaker 3: relationship with Wall Street has also changed as well. No
• 39:13
  Speaker 3: one's calling them the dumb money anymore. No.
• 39:15
  Speaker 1: I think it's pretty safe to say. Zijia, thank you
• 39:17
  Speaker 1: so much.
• 39:18
  Speaker 5: Zijia Song and Sarah Foster from the Bloomberg Money team
• 39:21
  Speaker 5: joining us with their book selections for the week as well.
• 39:24
  Speaker 5: For the latest reviews and recommendations from Bloomberg, be sure
• 39:27
  Speaker 5: to subscribe to the On Books newsletter. You can subscribe
• 39:31
  Speaker 5: at Bloomberg.com slash newsletters. We're going to look ahead now
• 39:34
  Speaker 5: to what you can spend your money on for the weekend.
• 39:36
  Speaker 5: And joining us right now is Bloomberg This Weekend's Christina Ruffini.
• 39:39
  Speaker 1: She works all weekend.
• 39:41
  Speaker 5: Before we get to any of what's happening, you're going
• 39:43
  Speaker 5: to show us what you.
• 39:44
  Speaker 1: Spend your money on because Because that's what this show
• 39:45
  Speaker 1: is about.
• 39:46
  Speaker 2: Right.
• 39:46
  Speaker 8: Your producing team was like, what do you spend money on?
• 39:48
  Speaker 8: I was like, I am so cheap. I spend money
• 39:50
  Speaker 8: on nothing. And then I was like, wait, this is
• 39:52
  Speaker 8: not true. I have an extremely ridiculously expensive.
• 39:56
  Speaker 1: Pair of cowboy boots.
• 39:57
  Speaker 8: So I told them I would... I actually put pants
• 39:59
  Speaker 8: on because I had a skirt on and we thought
• 40:01
  Speaker 8: that would get us all fired. But here are my...
• 40:04
  Speaker 8: Here are my Frye boots. I bought them 10 years ago.
• 40:08
  Speaker 8: I think they were like on sale for $ 350.
• 40:11
  Speaker 1: I Googled them before I came.
• 40:13
  Speaker 8: They're now $ 500 for these Frye harness boots. They still
• 40:16
  Speaker 8: make them, but they look the same as the day
• 40:18
  Speaker 8: I bought them. I will never need another pair. And,
• 40:20
  Speaker 8: you know, I've worn them to floods. I've worn them
• 40:23
  Speaker 8: to Haiti. I've worn them to bars.
• 40:26
  Speaker 1: You know, cowboy boots.
• 40:28
  Speaker 5: Would these be boots that you would wear to Burning Man?
• 40:30
  Speaker 5: Because Burning Man begins this weekend.
• 40:32
  Speaker 8: Okay, I personally cannot think of something I would less
• 40:36
  Speaker 8: rather do than go to like.
• 40:37
  Speaker 1: But don't you feel appropriate to that? I think I could... Here,
• 40:40
  Speaker 1: I'll put them up here like this. I think I
• 40:41
  Speaker 1: could burn in these booths. I mean, have you been
• 40:44
  Speaker 1: a Burning Man? No, I'm not a burner, which I
• 40:46
  Speaker 1: just learned was a term. You could be a burner.
• 40:48
  Speaker 8: I don't know if they're crazy enough, but they do
• 40:51
  Speaker 8: work well in a desert climate. But I'm always surprised
• 40:53
  Speaker 8: by the people who are like secretly.
• 40:55
  Speaker 2: Going to Burning Man.
• 40:56
  Speaker 1: And apparently.
• 40:57
  Speaker 8: There's a big crew of them. There are now a
• 40:58
  Speaker 8: lot of tech pros going to Burning Man.
• 41:00
  Speaker 2: There are. Well, you know.
• 41:02
  Speaker 5: The finance bros will be going to the US Open,
• 41:04
  Speaker 5: which officially kicks off this weekend. Are you guys going
• 41:06
  Speaker 5: to be doing anything with that on Bloomberg this weekend?
• 41:08
  Speaker 8: I think we're working on it. We actually had the
• 41:10
  Speaker 8: head of IBM, they've launched their new app. He was
• 41:12
  Speaker 8: on last week talking about the app is now crazy
• 41:14
  Speaker 8: for the US Open. You can like clock people's shots
• 41:17
  Speaker 8: and it breaks it down with all this data. And
• 41:20
  Speaker 8: so we also had a professional tennis player on who
• 41:21
  Speaker 8: was saying the tennis players themselves don't really have the
• 41:24
  Speaker 8: capacity to use it, but the coaches are using it
• 41:27
  Speaker 8: to help guide the players, the serves, and things like that.
• 41:29
  Speaker 1: And it helps audience engagement is what they're trying to drive.
• 41:31
  Speaker 5: And final item, Coyote versus Acme hits the theaters.
• 41:35
  Speaker 1: This sounds like a fun one.
• 41:37
  Speaker 8: I think the drama about this is that they're making
• 41:40
  Speaker 8: the executive of the studio the villain for this because
• 41:43
  Speaker 8: they were going to shelf this movie and take the loss.
• 41:46
  Speaker 8: And Will Forte has been giving interviews saying Zaslav is
• 41:49
  Speaker 8: like the enemy for this movie because they had to
• 41:51
  Speaker 8: fight to get it released. But it's getting good reviews
• 41:54
  Speaker 8: and hopefully it'll be worth the push.
• 41:55
  Speaker 2: All right.
• 41:56
  Speaker 5: Look for that in your local movie theater. But it's
• 41:58
  Speaker 5: not a big studio release.
• 41:59
  Speaker 1: Christina, thank you so much. And make sure to watch.
• 42:01
  Speaker 5: Bloomberg This Weekend, every Saturday and Sunday morning, starting at
• 42:04
  Speaker 5: 7 a.m. That does it for Bloomberg Money This Week.
• 42:07
  Speaker 1: Enjoy your weekend. This is Bloomberg.
• 42:19
  Speaker 5: This is the Bloomberg Money Podcast, bringing you a smart
• 42:22
  Speaker 5: look at the forces shaping your financial life. I'm Scarlett
• 42:25
  Speaker 5: Fu with Tom Keen. You can watch the show live
• 42:27
  Speaker 5: on Bloomberg Television every Friday at noon Wall Street time.
• 42:31
  Speaker 5: Subscribe to the podcast on Apple, Spotify, or anywhere you listen.
• 42:34
  Speaker 5: And as always, on the Bloomberg Terminal and the Bloomberg
• 42:37
  Speaker 5: Business app.