December 19, 2023 • 35 mins
We dig into economic sentiment and consumer spending in the US, reliance on science during the pandemic, and experimenting with food. Columnists Conor Sen, Faye Flam, Jonathan Levin, and Howard Chua-Eoan join. Amy Morris hosts.
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Speaker 1 (00:01):
You're listening to the Bloomberg Opinion podcast count US Saturdays
at one and seven pm Eastern on Bloomberg dot Com,
the iHeartRadio app, and the Bloomberg Business App, or listen
on demand wherever you get your podcasts.
Speaker 2 (00:15):
Welcome to Bloomberg Opinion. I'm Amy Morris. This week we
look at why the American public doesn't hold a lot
of faith in scientists and researchers, as well as other
traditional institutions in the US. What could have happened to
damage that trust on such a profound level. We'll also
look at how the US economy needed a second wind
(00:38):
and got one from Barbie Oppenheimer and Taylor Swift. And
then we'll explore a new trend in restaurants, laboratory kitchens
and how they can help you help the world be
a better place. But we begin with the American consumer
who seems unhappy. But why inflation is down? Consumers are
(01:00):
spending in spite of rising interest rates, and we could
get more of a market boon with rate cuts that
may be coming next year. Federal Reserve chair J Powell
said last month that the US economy is still growing.
Speaker 3 (01:13):
Recent indicators suggests that economic activity has been expanding at
a strong pace and well above earlier expectations. In the
third quarter, real GDP is estimated to have risen an
outsized annual rate of four point nine percent, boosted by
a surge and consumer spending.
Speaker 2 (01:31):
So where is the disconnect and why the discontent? Well,
let's find out. Bloomberg Opinion colonist Connor Sen joins us now.
He is the founder of Peachtree Creek Investments and Connor,
we've seen rapid job and economic growth, but the American
consumer is reportedly unhappy. Where's all this coming from.
Speaker 4 (01:50):
Well, I think it's a puzzle we've all been trying
to figure out because you would say, we've added millions
of jobs since the pandemic, the unemployment rates below four percent.
Speaker 5 (01:58):
GDP growth has been robot.
Speaker 4 (02:00):
Consumer spending has recovered a lot, like people should be happy,
and they're not. And so it's a questionable why is that?
And you know, I think inflations, certainly in twenty twenty
one and twenty twenty two were big factors. And even
though inflation has come down a lot this year, it's
fair to say, well, maybe prices are still up a
lot versus two three years ago, so they're still.
Speaker 6 (02:17):
Mad about that.
Speaker 4 (02:18):
And I think the fact that even though inflation has
come down, interest rates have mostly risen this year, and
so mortgage rates ticked up to eight percent in October.
And even if not everybody is buying a house or
buying a car all the time, it's just annoying when consumers,
American consumers in particular, can't borrow the way they like to.
Speaker 5 (02:36):
And so that's why I wrote this column.
Speaker 4 (02:38):
And I think there's reasons to think a lot of
these things that have annoyed people, that are persisted for
two or three years could be reversing. And it'll be
a good test to see if lower mortgage rates, cheap energy,
and sort of consistently lower inflation are enough to turn
the vibes around.
Speaker 2 (02:53):
Okay, that's interesting. You believe consumers would be more welcoming
of a slow growth environment, not a fast growth, and
that that would make them more satisfied. But it does
sound on the surface kind of the opposite of what
you might.
Speaker 4 (03:08):
Expect, and maybe there's something to be said for, you know,
growth being too fast versus just right. And it's the
kind of thing where an econos might say, well, even
though your costs are up twenty percent, your wages are
up twenty three percent, so you're somewhat better off. But
no one really thinks that way. They think, well, I
earned the rays I got, and then this inflation is
just something annoying I have to deal with. They don't
think about the two being linked. And so, you know,
(03:31):
people might be happy in the late twenty tens. They
were happier when wage growth was three percent, but inflation
was two and so maybe that kind of environment in
twenty twenty four, with lower interest rates could put people
at a better mood.
Speaker 2 (03:43):
So now you are saying that that an economic slowdown
is likely coming. So let's see how these consumers respawn
in a different environment.
Speaker 4 (03:53):
Yeah, and I think right now, I don't think we're
going to have a recession, but growth looks to be slower.
Job growth has come down limit rate, it's closer to
four than in the low threes.
Speaker 5 (04:03):
We see.
Speaker 4 (04:04):
Inflation has certainly come down. And so let's see how
people like this environment. And we saw this month that
consumer confidence rose this month for the first time in
four months, even though growth is slower in the fourth
quarter than it wasn't the third.
Speaker 2 (04:16):
So is that the consumer reaction you've been watching for.
What does all this tell you, Well.
Speaker 5 (04:21):
I think it's sort of again suggests that people.
Speaker 4 (04:24):
I mean, it's great that we got the unemployment rate
back to pre pandemic levels, but the way in which
we got there still wasn't the best ride for people.
And going forward, since I do think we are going
to have slower growth and hopefully lower energy prices, I believe,
lower interest rates, I think it's reasonable to think that
that confidence will tick up. And that's sort of the
test to see, you know, is it really bit about
(04:46):
that that people didn't like the inflation, didn't like a
lot of the pressures we've had over the past few years,
and a more normalized environment with cheaper energy and lower
cost to credit is what they've been waiting for.
Speaker 2 (04:57):
And we are talking with Bloomberg opinion columnist connorson about
consumer sentiment and what it will take to satisfy the
consumer and Connor, you just mentioned lower energy prices, lower
prices at the pump, lower prices to make your home
warm in these winter months, and you mentioned the lower
cost of credit. Are there other benefits that come along
(05:18):
with it that the consumer would be looking for?
Speaker 4 (05:20):
I think it will help the own freeze in the
housing market. And it's sort of the housing market, it's like,
how is it doing? And I think there are a
lot of ways you can in which you could say
it's really strong because inventory is still very low, prices
are very high. If you're a homeowner and you locked
in your mortgage rate a few years ago, you're sitting pretty.
But it's also very dysfunctional. We have the lowest existing
home sales in twenty or twenty five years on some measures,
(05:43):
fewer home sales now than at the worst period of
the financial crisis, which is kind of ridiculous. Affordability is
the worst it's been in forty years, and so if
you're trying to buy a home, it's been terrible. And
I think that lower mortgage rates and could sort of
get people to first help supportability, but also if you
are looking, if you have a low mortgage rate or
looking to move, well, maybe mortgage rates in the sixes,
(06:06):
even though it'ld be a higher mortgage rate, maybe that's
enough to get you out of your home, willing to
make that move for a better job, for family reasons,
what have you, and just sort of make the market
more functional again, and I think that would sort of
make people feel better. Even if it's you know, maybe
not as hot of a housing market as it was
in the past, you call it dysfunctional.
Speaker 2 (06:23):
Does that lead then to volatility or unpredictability? Is that
what makes this so hard?
Speaker 5 (06:30):
Definitely?
Speaker 4 (06:31):
I mean, because you had when COVID hit, sort of
looked like the housing market might crash again, and then
by the end of twenty twenty into twenty twenty one,
we had six million existing home sales, which is about
as high as it ever gets. And then right now
we have existing home sales a little bit below four million,
So it's a thirty thirty five percent decline and that's
really tough if you're just a homeowner or someone looking
to buy a home. But it's also terrible if you're
(06:53):
a realtor or someone who's a home decorator or a
mover or a loan originator. It just you went from
a boom to a bust. People are losing jobs and
it's just very uncertain about what the next three months
looks like, let alone the next year, because there has
been so much volatility in the housing market and mortgage rates.
Speaker 5 (07:08):
So I think a.
Speaker 4 (07:09):
Period of stability with maybe mortgage rates in the sixes
would feel great compared to what has been like the
past few years of the roller coaster.
Speaker 2 (07:16):
But what are the signs that tell you a slow
growth environment or at least a stable a more stable
environment is on the way.
Speaker 4 (07:24):
Well, So growth is looking right now in the fourth
quarter about two percent, which is down from five and
Q three, So that's two sort of normal that the
kind of growth we had in the twenty tens. Again,
energy prices have already come down. Oil prices are probably
as low as they're going to get outside of recession,
just because we see that producers tend to want to
cut back when prices get much lower. And now with
(07:45):
the inflation data we've gotten in recent months and some
tea leaves from the Federal Reserve, it looks like they're
going to be cutting rates as early, potentially as March
or next year. And you're seeing that the bond markets
are responding to that. Mortgage rates have dropped from eight
percent down to seven point two percent or so. So
there's reason I think we're finally going to make some
progress on the interest rates side, which we haven't done,
you know, since this recovery.
Speaker 2 (08:08):
So going forward, let's look toward the first quarter of
twenty twenty four. You are saying that we are expecting
an economic slow down, that is something that is going
to give the consumer more confidence or will they just
be more satisfied with a more stable environment.
Speaker 4 (08:25):
I think they want both right now. I think just
stability is what people want. Lower prices. Stable prices are
what people want, lower interest rates. The inflation's in bad,
the unpredictability's been bad, the volatility has been bad. People
just don't want to have to think about this stuff.
I might because I like, you know, to talk to
you about it and write about it, to look at markets,
but the average person just wants to know gas is
(08:46):
going to be affordable and not move around too much.
When I'm looking to buyer sell my home, I get
a reasonable rate. They don't want to have to think
about changes in all of this stuff all the time.
And I think just to the extent that all of
this volatility can be on the back burner, people can
focus on their lives and other things that would be
a relief to consumers.
Speaker 2 (09:01):
And just as an aside, we've been talking here on
Bloomberg about the disconnect between the consumer sentiment and the
actual economy itself. The economy is not bad right now,
but the consumer sentiment doesn't reflect that. They feel like
the economy is rough right now and making things harder
for them.
Speaker 4 (09:20):
Yeah, people feel like they deserve the wages they have
and the job they have today, but they want the
prices they had in twenty nineteen, and that's fair. You know,
people want loss of government services and low taxes.
Speaker 5 (09:29):
We all want to have our.
Speaker 4 (09:30):
Cake and eat it too, sure, And I think when
the pandemic hit, a lot of disruption occurred, and there's
a lot of uncertainty about what it would mean. We
didn't know if we'd get vaccines or how things would
shake out. And policy makers responded the way they did.
And you could argue about the choices we made or
the path we took to get here.
Speaker 5 (09:47):
But I think all things considered, it's not bad.
Speaker 4 (09:50):
But we want to put that volatility and uncertainty behind
us and just get back to normalcy. And I think
we're getting there.
Speaker 2 (09:56):
So just before we go Connor, the volatility and the
uncertainty is still sort of a residual effect then from
the pandemic, which was by the way years ago, but
we're still feeling that.
Speaker 4 (10:08):
Yeah, it's sort of even you know, Autobal prices are
still higher than I think they will be a year
from now because we still have a lack of inventory,
producers trying to catch up supply chain things that are
in the pipeline. The housing market is still digesting everything
that's happened. And then even if you know, maybe this
month versus last month is stable, people don't adjust that quickly,
(10:30):
and they're thinking about all the change that's occurred over
the past three or four years, and it just takes
a little longer to shake off all of the change
that's happened.
Speaker 2 (10:37):
Connor, thank you so much for taking the time with us.
Speaker 5 (10:41):
Thanks.
Speaker 2 (10:41):
Amy Connorson is a Bloomberg Opinion colonist and founder of
Peachtree Creek Investments. And coming up, we'll look at a
new poll. It's gauging Americans trust or lack of it
in science, research and other traditional institutions. Stay with us,
much more still to come. You're listening to Bloomberg Opinion.
Speaker 1 (11:12):
You're listening to the Bloomberg Opinion podcast counts Saturdays at
one and seven pm Eastern on Bloomberg dot Com. The
iHeartRadio app and the Bloomberg Business app, or listen on
demand wherever you get your podcasts.
Speaker 2 (11:26):
You're listening to Bloomberg Opinion i Amy Morris. A recent
Pew poll showed Americans trust and scientists fell during the
pandemic years. More than a quarter of American surveyed say
they are distrustful enough of scientists that they don't believe
they'll act in the public's best interests. Want to get
more on this now, Bloomberg Opinion columnist Faith Lamb, host
of the Follow the Science podcast, joins me now and Fay.
(11:49):
We talked about this before, but let's get into it
a little bit deeper. How did this come to fruition
during the pandemic?
Speaker 7 (11:56):
Well, I think that it has to do with the
type of science that people were paying attention to during
the pandemic, and that was science medical science that was
really done on the fly, as well as public health,
which mixes a lot of judgment, calls and values into
scientific ideas.
Speaker 2 (12:16):
And is that what we experienced? Then there were more
suppositions and more hypotheses than actual scientific facts.
Speaker 7 (12:24):
I think that was part of it. I think scientists
and people in public health weren't always clear on what
was a judgment call or a decision to say, do
everything possible for a period of time to avoid spreading COVID.
That was just a decision that was made in a
lot of places that we would do everything possible, including
(12:46):
locking down our cities. But it wasn't purely scientific decision.
Science can tell you how to achieve that, but it
can't necessarily tell you that that's the goal we should
have set for ourselves.
Speaker 2 (12:58):
Yeah, there was a lot of debate I remember, between
wearing masks don't wear masks. At the very beginning in
March of twenty twenty, there was a whole thing about
don't wear masks, it's not going to help.
Speaker 7 (13:09):
And then well and it was Yeah, it was worse
than that, because I think that what the real flip
flop that was really damaging to public opinion was the
flip flop on whether we should even worry about this
at all. You know, there was a period of time
when it was coming from the public health community, not
from Donald Trump. You know, the don't panic, don't worry,
(13:31):
the flu is worse. We were hearing that all through
January and February from the public health community. And now
they say, oh, no, that was Donald Trump. But if
you look back what people were saying, it wasn't they
flip flop from telling us not to worry to very
quickly turning around saying, yes, worry and stay home and
wear a mask.
Speaker 2 (13:50):
Now, were there any indications before the pandemic that trust
in scientists and science was starting to falter, starting to wane?
Speaker 7 (14:00):
Maybe? I mean, I don't consider that necessarily a problem,
because I have interactions with scientists almost every day, and
I don't think that as individuals they're any more or
less trustworthy than anybody else. They're just human. They're people
that have a job to do, and some people are
extremely honest and some people are less so. But what
(14:22):
makes science trustworthy is the methods of science that create
a reliable body of knowledge. It's not that the individual
scientists are necessarily without conflicts of interest, or that they
don't get things wrong, or that they don't get sometimes
stuck on their own wrong ideas.
Speaker 2 (14:39):
So how can the trust be rebuilt?
Speaker 7 (14:43):
I think that the big problem isn't necessary that people
don't have a kind of a blanket blind trust in scientists.
They should ask if a scientist says something you should
ask why, what's your evidence, what makes you say that,
and why do scientists other scientists agree with you. I
think that's legitimate. I think what we're seeing, though, is
(15:03):
the growth of econom an irrational paranoia where people have
a sort of knee your distrust of the whole thing
of everything that scientists have learned. And so I think
there is a kind of a knee jerk reaction in
the opposite way that people are feeling so disillusioned that
they assume that if there was a clinical trial that
(15:24):
showed a vaccine worked well, then they just don't believe it.
That there's no amount of evidence that will convince them.
Speaker 2 (15:31):
And we are talking to Blueberg opinion columnist Faith Lamb
about Americans trust in science and what scientists can do
to regain that trust. I was thinking, also, Fey, about
the issue of vaccines. You just mentioned it, particularly the
COVID vaccine. There are a lot of people to this
day who will not get it, but that's not new.
There have been debates over vaccinating kids for decades. Does
(15:57):
this distrust of science date back to that or is
that something else? Is that embedded somewhere else.
Speaker 7 (16:03):
It's connected I mean there's trust in science, and then
there's trust in doctors to recommend the right medications. I mean,
you're talking about getting an injection, and and it does
take a certain amount of trust when you're healthy to say, okay,
im I let my doctor inject me with this. And
so I think a lot of people have also been
(16:25):
swayed by the fact that there are people who call
themselves scientists and who even have scientific degrees who are
on the anti vaxer side. And so it may not
be a matter of just getting people to trust science,
but getting people to think critically about what to trust
and why.
Speaker 2 (16:41):
Okay, so when we go back and review what scientists
were saying during the pandemic, and when we ask why
they weren't more clear or why they were flip flopping,
their reply is often that they simply didn't know at
the time. This was all very new, So how can
they give us proper guidance if they didn't know.
Speaker 7 (17:02):
I think that you just have to play the long
game in any area of science, and that means if
you don't know, you have to admit you don't know,
and then you have to say why you're making an
educated guess on one side or the other, and why
you think things are going to go a certain way
or why you think you should err on the side
of caution when.
Speaker 2 (17:20):
You don't know.
Speaker 7 (17:21):
But I think public health has a history of sometimes
not being totally honest about their uncertainty because there's a
sense of, you know, we have to get people to
do this, and say, you know, the ends justify the means,
So we have to lie a little bit to get
people to do the right thing, We'll do it. And
I think that's a real difference between public health and
just about any other area of science where part of
(17:43):
the game is to recognize where you don't know things
and measure your uncertainty, make sure that you understand your
margin of error.
Speaker 2 (17:52):
I just want to go back to something you just said.
You're not accusing them of lying, You're not saying that
they lied. Well, you know.
Speaker 7 (17:58):
I did a podcast episode with Peter Sandman, who is
an expert in risk communication, and the title was why
I public health officials sometimes lie? And Peter Sandman talked
about what he calls the noble lie, the idea that well,
you sometimes, you know, people think they're lying for the
greater good, and he had some very good examples of
(18:22):
places where it looked like that's what was happening, that
people in public health were actually bending the truth or
telling half truths as a way to try to push
people or nudge people to do what they thought was
the right thing.
Speaker 2 (18:35):
That how could they ever rebuild trust if they lied?
Speaker 7 (18:39):
That's a good question, I mean, Sandman his point was
that this is a bad strategy. It's a bad strategy.
That these problems tend to be long term, and you
wear out your trust in a really bad way when
you do try to tell half truths or pretend you
know what you're talking about when you don't. That that
(19:01):
is a problem. And so the other thing is, of
course that scientists often just get things wrong because they're human,
and that things get hashed out. So it's okay to
be distrustful of individual scientific claims. We should be, But
when you have this you know, body of evidence and
clinical trials and you know, I guess expert opinion that's
(19:26):
informed by a lot of evidence, then at some point
you kind of have to It's paranoid to think that
that's all been somehow manufactured. It becomes crazy not to
believe it.
Speaker 2 (19:38):
Well, to that end, it's not just science, right, Trust
in many institutions has fallen.
Speaker 7 (19:44):
Yes, that's true. That's true. And I think scientists actually
got higher marks for trusts than other institutions, whether they
you know, whether they are more trustworthy. I think there
is a little more emphasis in the press on exposing
conflicts of interest among science and I think that's not
a bad thing. I think it's that when people hear
about a new study, it's good to inform people that
(20:07):
there might be some conflicts of interest among the scientists
making that claim.
Speaker 2 (20:11):
All right, thank you, Faye for your time to appreciate it.
Thank you. Bloomberg Opinion columnist Faith Lam host of Follow
the Science podcast and Don't Forget. We're available as a
podcast on Apples Spotify are your favorite podcast platform. This
is Bloomberg Opinion.
Speaker 1 (20:35):
You're listening to the Bloomberg Opinion podcast. Catch us Saturdays
at one and seven pm Eastern on Bloomberg dot Com,
the iHeartRadio app and the Bloomberg Business app, or listen
on demand wherever you get your podcasts.
Speaker 2 (20:50):
This is Bloomberg Opinion. I'm Amy Morris. For the past
couple of years, the US economy has shown resilience revolving
around demand for services that started to off this year.
Then came Barbie and Oppenheimer and Taylor Swift. Welcome to
the EARS tool. But even Taylor Swift and Barbie combined
(21:14):
can't maintain that momentum, and spending on recreation services is
dropping again. Let's talk about it with Bloomberg opinion columnist
Jonathan Levin, who focuses on markets and economics. John, let's
start with the past two years in the demand for services.
Was that the result of a pandemic shutdown? Or is
that an oversimplification, Yeah.
Speaker 6 (21:34):
Kind of, sort of. I mean, I think the story
of the resilience of the economy over the past two years,
even in the face of these extraordinary said hikes, was
really about that pent up demand to a certain extent
for services and really the mean reversion of demand for services. Right, So,
you know, even after we stopped buying new refrigerators and
(21:56):
washing machines and all this stuff, we had this word
trajectory in the economy overall, because the services economy is
such a big part of what we do here in
the United States, and it was steadily mean reverting, meaning
going up. As little by little we started going back
(22:17):
to concerts, we started going back to movie theaters, and
in a big way, we started going back to live sports,
and so, yeah, I think that it was a confluence
of factors. But what we really need to understand is
it's true that the services economy did a lot of
(22:38):
the work in keeping us out of a recession over
the past two years.
Speaker 2 (22:44):
Why is the demand for services waiting now? Is it
just balancing it out?
Speaker 6 (22:48):
Yeah, So I sort of think that what we saw
was a little bit of a double dip, right, So
we had this big recovery, you might call it a
mean reversion, and then a sort of early twenty twenty three,
demand for these services, especially recreation services, did start to wane.
(23:09):
But in around summertime, we had this kind of special
confluence of factors that gave us a little bit of
a sugar high. We had the incredible marketing phenomenon that
was the Barbie movie. We had Taylor Swift on tour,
(23:30):
and remember Beyonce was also on tour earlier in the year,
and we had this, you know, in the backdrop was
this continuing moderation, this continuing mean reversion. But now in
terms of like the quantities of recreation services that we're consuming,
(23:51):
Like adjusting for inflation, we have returned to twenty nineteen levels,
So there is nowhere to go just in terms of
like pure mean reversion. We can't expect that to you know,
be like an automatic boost to the numbers going forward.
And Taylor's tour moved on from the United States of America.
(24:16):
The Barbie phenomenon is over, and so you know, we're
back into this sort of services, maybe not double dip,
but double normal normalization as it were.
Speaker 2 (24:29):
So how much of an impact was it? Are you
able to measure that? I mean, you call it a
sugar high, but it was a sugar high that was
needed at the.
Speaker 6 (24:37):
Time, right, Yeah, exactly some of this was expected and
and some of it some of it was not to
be expected. So how much of this was a meaningful change?
So recreation services really plunged it during the during the pandemic,
(24:59):
and little little they they returned to baseline adjusting for inflation.
Movie theater consumption is still like way way way below
where it was a pre pandemic in twenty nineteen, and
we sort of got back to pre pandemic levels for
(25:22):
like a month or two during the Barbie and Oppenheimer phenomenon,
but that is now just out out of the equation.
That really shows us that, like it was just a
special thing about those particular films. If you look at
live entertainment excluding sports, that's the Taylor Swift phenomenon. You know,
(25:44):
like we never really got above the pre pandemic norms.
So you know, like a tailor and Beyonce helped us
get back to what you would have expected in twenty nineteen,
but we never really got beyond there. Adjusting for inflation, right,
(26:05):
of course, there were people were paying these extraordinary prices
to go to these events, and so that is a
little bit of what you see in the headline figures.
And then the last thing that I like to underscore
here is there is only one area that has seen
a meaningful kind of structural change in the past two years,
(26:27):
and that is live sports. For whatever reason, even adjusting
for inflation, we Americans are just like way more into
live sports right now than we were before the pandemic.
And like the example that I tend to go to
is just baseball. Baseball has made some really meaningful changes
(26:49):
to speed up the game and things like that and
bring people back into those stadiums. So like that's an
example of you know, accessful strategy. I think in college sports,
specifically college football, they also did some strategic things like
you know, introducing more alcohol into the stadiums, and that
(27:12):
has and that has really really helped. But yeah, I
want to come back to what I said before, like
spectator sports aside, we've normalized and we're back to where
we were before the pandemic, and there just isn't a
lot of impulse left in that recreation services.
Speaker 2 (27:35):
And we are talking with Bloomberg opinion columnist Jonathan Levin
about how Taylor Swift helped give the US economy a
second win when it was needed. But you also say
in your column, John, now spending on recreation services is
ebbing and new and central bankers should be thrilled.
Speaker 6 (27:51):
Why right, Well, so the idea is that fed charge
Rome pal has been very focused on the service sector
as a goal that he saw as necessary to tame
inflation the way he saw it. You know, like to
a certain extent. Central banks can't really control goods prices,
a lot of them are imported, and there's only so
(28:14):
much that a central bank can do. But services prices
in particular are set domestically, they're heavily sensitive to wages
and so forth, and so there was a belief that
if you were going to put the inflation genie back
in the bottle, you, as fed chair Jerome Pal needed
(28:35):
to cool off some of this heat in the service sector.
What he was looking for was a cooling in this space,
not a collapse. And right now, that's what he's getting.
As services companies start to worry a little bit more
about their bottom line, that they might start to lay
off a few workers, and that that could become a
(28:58):
vicious cycle in the economy. But for now, it feels
like good news and it doesn't feel like like we're
in that sort of vicious cycle.
Speaker 2 (29:06):
And before we let you go, John, there was an
argument that spending habits were changed forever because of and
after the pandemic shutdown. And you make the argument that
these numbers show a shift closer to the norm and
that spending habits have not been changed forever. They may
have been tweaked a bit, but it's not a complete
and whole change.
Speaker 6 (29:27):
Yeah, exactly. Yeah. There was this argument that people's attitudes
towards spending had sort of changed coming out of the
pandemic that you know, we'd bought all the refrigerators that
we needed for the for the foreseeable future, and what
we desperately needed were experiences, and it was like, no,
(29:50):
not really, if you adjust for inflation, our habits never
really changed that much. It's just that the the the
ticket price had changed so much, so the quantity is
in which we're consuming these things haven't really moved versus
(30:10):
twenty nineteen. We've normalized. We're back to what you would expect,
and hopefully we stay there. I think that's what fedchair
Jerome Pal hopes, and I think that's what we should
expect going forward.
Speaker 2 (30:25):
Jonathan Levin is a Bloomberg Opinion columnist with a focus
on markets and economics. You're listening to Bloomberg Opinion. I'm
Amy Morris. You should expect to be pampered when you
dine at high end restaurants, but now some restaurants are
taking that luxury step beyond a culinary destination or a
gastronomic delight. You could actually make the world better through
(30:46):
the intersection of science and cuisine. Let's talk about this.
Bloomberg Opinion columnist Howard Chueywan covers culture and business and
joins me. Now, so how does this work? What's the concept?
Speaker 8 (30:58):
This particular expansion that I'm writing about was this really
spectacular restaurant in Copenhagen called Alchemists, and they already have
very sort of space age food and all of that
and and and uh uh and as well as a
huge visual theater where you walk into the several dining
(31:20):
rooms and the and the entire whole foresters are projected
onto the walls and you have this amazing experience already.
So what the chef is doing is starting a little
side project which is going to explore how to make
turn seaweed into new proteins and things like that. So
there's an entire participation of the client tele and like, oh,
(31:44):
the chef is going off this new adventure and trying
to create new kinds of food for the world. So
uh And it's not exactly a fresh approach, because these
things have been done. One of the one of his mentors,
was the Spanish chef Ferron Audria, who had very murdered
what they called molecular gastronomy several years back, and they
(32:08):
were sort of it was all very strange, strangely shaped
things that were explosively delicious once you put them in
your mouth, but they were all sort of scientifically crafted
and they thought, oh, this chemistry is going to be wonderful.
So all of these come together as a business, so.
Speaker 2 (32:24):
They're not necessarily working to just become niche and stand
out from the crowd, although that's part of it. They're
actually looking to make a difference in the industry.
Speaker 8 (32:33):
Yes, exactly, and that's true for Alchemists and its rival
across Copenhagen is a much more famous restaurant because it's
more established, named Noma. They've had this fermentation lab for
several years now and they've created several products out of it,
so they're expanding the range of the restaurant beyond just
(32:57):
the food they serve during dinner time.
Speaker 2 (33:00):
Owning and running a restaurant is already very expensive, it's
very exhausting. A lot of places don't make it. But
you add a laboratory layer to that approach and it
seems near impossible. Are they setting themselves up for a
challenge that might be hard to match.
Speaker 8 (33:17):
What's interesting is that there are investors who are interested
in this. Alchemist has a couple of very well to
do Danish investors. Noma has a very very quiet but
very activist sort of you know investor that helps along
(33:37):
with all their projects. So people see this as investment opportunities,
as a way of sort of expanding the range of
restaurants and perhaps making a difference as well.
Speaker 2 (33:51):
So where do you see this trend going or is
it even fair to call it a trend?
Speaker 8 (33:55):
It's it's it's been a sort of trend for several
years now. I think, you know, the higher end restaurants
with lots of investors who want to see this, to
see that there's this interesting concept that a restaurant starts
with whether or not it can be expanded and what
are another commercial possibilities for what they're doing. I think
(34:18):
because there there are there's prestige and a name attached
to it, there is so much potential for more business
in the future. So I think people are watching, especially
the high end restaurants who don't want to go and
sort of franchise themselves in Vegas or something like that,
but instead to go and do something different that will
that will actually make a real statement about how they
(34:42):
see the world and maybe even you know, make some money.
Speaker 2 (34:45):
Bloomberg opinion columnist Howard chue Wan, and that does it
for this week's Bloomberg Opinion. We're produced by Eric Mullow,
and you can find all of these columns on the
Bloomberg Terminal. We're also available as a podcast on Apple,
Spotify or your favorite podcast platform. Stay with us. Today's
top stories and global business headlines are just ahead. I'm
Amy Morris, and this is Bloomberg
You're listening to the Bloomberg Opinion podcast count US Saturdays
at one and seven pm Eastern on Bloomberg dot Com,
the iHeartRadio app, and the Bloomberg Business App, or listen
on demand wherever you get your podcasts.
Speaker 2 (00:15):
Welcome to Bloomberg Opinion. I'm Amy Morris. This week we
look at why the American public doesn't hold a lot
of faith in scientists and researchers, as well as other
traditional institutions in the US. What could have happened to
damage that trust on such a profound level. We'll also
look at how the US economy needed a second wind
(00:38):
and got one from Barbie Oppenheimer and Taylor Swift. And
then we'll explore a new trend in restaurants, laboratory kitchens
and how they can help you help the world be
a better place. But we begin with the American consumer
who seems unhappy. But why inflation is down? Consumers are
(01:00):
spending in spite of rising interest rates, and we could
get more of a market boon with rate cuts that
may be coming next year. Federal Reserve chair J Powell
said last month that the US economy is still growing.
Speaker 3 (01:13):
Recent indicators suggests that economic activity has been expanding at
a strong pace and well above earlier expectations. In the
third quarter, real GDP is estimated to have risen an
outsized annual rate of four point nine percent, boosted by
a surge and consumer spending.
Speaker 2 (01:31):
So where is the disconnect and why the discontent? Well,
let's find out. Bloomberg Opinion colonist Connor Sen joins us now.
He is the founder of Peachtree Creek Investments and Connor,
we've seen rapid job and economic growth, but the American
consumer is reportedly unhappy. Where's all this coming from.
Speaker 4 (01:50):
Well, I think it's a puzzle we've all been trying
to figure out because you would say, we've added millions
of jobs since the pandemic, the unemployment rates below four percent.
Speaker 5 (01:58):
GDP growth has been robot.
Speaker 4 (02:00):
Consumer spending has recovered a lot, like people should be happy,
and they're not. And so it's a questionable why is that?
And you know, I think inflations, certainly in twenty twenty
one and twenty twenty two were big factors. And even
though inflation has come down a lot this year, it's
fair to say, well, maybe prices are still up a
lot versus two three years ago, so they're still.
Speaker 6 (02:17):
Mad about that.
Speaker 4 (02:18):
And I think the fact that even though inflation has
come down, interest rates have mostly risen this year, and
so mortgage rates ticked up to eight percent in October.
And even if not everybody is buying a house or
buying a car all the time, it's just annoying when consumers,
American consumers in particular, can't borrow the way they like to.
Speaker 5 (02:36):
And so that's why I wrote this column.
Speaker 4 (02:38):
And I think there's reasons to think a lot of
these things that have annoyed people, that are persisted for
two or three years could be reversing. And it'll be
a good test to see if lower mortgage rates, cheap energy,
and sort of consistently lower inflation are enough to turn
the vibes around.
Speaker 2 (02:53):
Okay, that's interesting. You believe consumers would be more welcoming
of a slow growth environment, not a fast growth, and
that that would make them more satisfied. But it does
sound on the surface kind of the opposite of what
you might.
Speaker 4 (03:08):
Expect, and maybe there's something to be said for, you know,
growth being too fast versus just right. And it's the
kind of thing where an econos might say, well, even
though your costs are up twenty percent, your wages are
up twenty three percent, so you're somewhat better off. But
no one really thinks that way. They think, well, I
earned the rays I got, and then this inflation is
just something annoying I have to deal with. They don't
think about the two being linked. And so, you know,
(03:31):
people might be happy in the late twenty tens. They
were happier when wage growth was three percent, but inflation
was two and so maybe that kind of environment in
twenty twenty four, with lower interest rates could put people
at a better mood.
Speaker 2 (03:43):
So now you are saying that that an economic slowdown
is likely coming. So let's see how these consumers respawn
in a different environment.
Speaker 4 (03:53):
Yeah, and I think right now, I don't think we're
going to have a recession, but growth looks to be slower.
Job growth has come down limit rate, it's closer to
four than in the low threes.
Speaker 5 (04:03):
We see.
Speaker 4 (04:04):
Inflation has certainly come down. And so let's see how
people like this environment. And we saw this month that
consumer confidence rose this month for the first time in
four months, even though growth is slower in the fourth
quarter than it wasn't the third.
Speaker 2 (04:16):
So is that the consumer reaction you've been watching for.
What does all this tell you, Well.
Speaker 5 (04:21):
I think it's sort of again suggests that people.
Speaker 4 (04:24):
I mean, it's great that we got the unemployment rate
back to pre pandemic levels, but the way in which
we got there still wasn't the best ride for people.
And going forward, since I do think we are going
to have slower growth and hopefully lower energy prices, I believe,
lower interest rates, I think it's reasonable to think that
that confidence will tick up. And that's sort of the
test to see, you know, is it really bit about
(04:46):
that that people didn't like the inflation, didn't like a
lot of the pressures we've had over the past few years,
and a more normalized environment with cheaper energy and lower
cost to credit is what they've been waiting for.
Speaker 2 (04:57):
And we are talking with Bloomberg opinion columnist connorson about
consumer sentiment and what it will take to satisfy the
consumer and Connor, you just mentioned lower energy prices, lower
prices at the pump, lower prices to make your home
warm in these winter months, and you mentioned the lower
cost of credit. Are there other benefits that come along
(05:18):
with it that the consumer would be looking for?
Speaker 4 (05:20):
I think it will help the own freeze in the
housing market. And it's sort of the housing market, it's like,
how is it doing? And I think there are a
lot of ways you can in which you could say
it's really strong because inventory is still very low, prices
are very high. If you're a homeowner and you locked
in your mortgage rate a few years ago, you're sitting pretty.
But it's also very dysfunctional. We have the lowest existing
home sales in twenty or twenty five years on some measures,
(05:43):
fewer home sales now than at the worst period of
the financial crisis, which is kind of ridiculous. Affordability is
the worst it's been in forty years, and so if
you're trying to buy a home, it's been terrible. And
I think that lower mortgage rates and could sort of
get people to first help supportability, but also if you
are looking, if you have a low mortgage rate or
looking to move, well, maybe mortgage rates in the sixes,
(06:06):
even though it'ld be a higher mortgage rate, maybe that's
enough to get you out of your home, willing to
make that move for a better job, for family reasons,
what have you, and just sort of make the market
more functional again, and I think that would sort of
make people feel better. Even if it's you know, maybe
not as hot of a housing market as it was
in the past, you call it dysfunctional.
Speaker 2 (06:23):
Does that lead then to volatility or unpredictability? Is that
what makes this so hard?
Speaker 5 (06:30):
Definitely?
Speaker 4 (06:31):
I mean, because you had when COVID hit, sort of
looked like the housing market might crash again, and then
by the end of twenty twenty into twenty twenty one,
we had six million existing home sales, which is about
as high as it ever gets. And then right now
we have existing home sales a little bit below four million,
So it's a thirty thirty five percent decline and that's
really tough if you're just a homeowner or someone looking
to buy a home. But it's also terrible if you're
(06:53):
a realtor or someone who's a home decorator or a
mover or a loan originator. It just you went from
a boom to a bust. People are losing jobs and
it's just very uncertain about what the next three months
looks like, let alone the next year, because there has
been so much volatility in the housing market and mortgage rates.
Speaker 5 (07:08):
So I think a.
Speaker 4 (07:09):
Period of stability with maybe mortgage rates in the sixes
would feel great compared to what has been like the
past few years of the roller coaster.
Speaker 2 (07:16):
But what are the signs that tell you a slow
growth environment or at least a stable a more stable
environment is on the way.
Speaker 4 (07:24):
Well, So growth is looking right now in the fourth
quarter about two percent, which is down from five and
Q three, So that's two sort of normal that the
kind of growth we had in the twenty tens. Again,
energy prices have already come down. Oil prices are probably
as low as they're going to get outside of recession,
just because we see that producers tend to want to
cut back when prices get much lower. And now with
(07:45):
the inflation data we've gotten in recent months and some
tea leaves from the Federal Reserve, it looks like they're
going to be cutting rates as early, potentially as March
or next year. And you're seeing that the bond markets
are responding to that. Mortgage rates have dropped from eight
percent down to seven point two percent or so. So
there's reason I think we're finally going to make some
progress on the interest rates side, which we haven't done,
you know, since this recovery.
Speaker 2 (08:08):
So going forward, let's look toward the first quarter of
twenty twenty four. You are saying that we are expecting
an economic slow down, that is something that is going
to give the consumer more confidence or will they just
be more satisfied with a more stable environment.
Speaker 4 (08:25):
I think they want both right now. I think just
stability is what people want. Lower prices. Stable prices are
what people want, lower interest rates. The inflation's in bad,
the unpredictability's been bad, the volatility has been bad. People
just don't want to have to think about this stuff.
I might because I like, you know, to talk to
you about it and write about it, to look at markets,
but the average person just wants to know gas is
(08:46):
going to be affordable and not move around too much.
When I'm looking to buyer sell my home, I get
a reasonable rate. They don't want to have to think
about changes in all of this stuff all the time.
And I think just to the extent that all of
this volatility can be on the back burner, people can
focus on their lives and other things that would be
a relief to consumers.
Speaker 2 (09:01):
And just as an aside, we've been talking here on
Bloomberg about the disconnect between the consumer sentiment and the
actual economy itself. The economy is not bad right now,
but the consumer sentiment doesn't reflect that. They feel like
the economy is rough right now and making things harder
for them.
Speaker 4 (09:20):
Yeah, people feel like they deserve the wages they have
and the job they have today, but they want the
prices they had in twenty nineteen, and that's fair. You know,
people want loss of government services and low taxes.
Speaker 5 (09:29):
We all want to have our.
Speaker 4 (09:30):
Cake and eat it too, sure, And I think when
the pandemic hit, a lot of disruption occurred, and there's
a lot of uncertainty about what it would mean. We
didn't know if we'd get vaccines or how things would
shake out. And policy makers responded the way they did.
And you could argue about the choices we made or
the path we took to get here.
Speaker 5 (09:47):
But I think all things considered, it's not bad.
Speaker 4 (09:50):
But we want to put that volatility and uncertainty behind
us and just get back to normalcy. And I think
we're getting there.
Speaker 2 (09:56):
So just before we go Connor, the volatility and the
uncertainty is still sort of a residual effect then from
the pandemic, which was by the way years ago, but
we're still feeling that.
Speaker 4 (10:08):
Yeah, it's sort of even you know, Autobal prices are
still higher than I think they will be a year
from now because we still have a lack of inventory,
producers trying to catch up supply chain things that are
in the pipeline. The housing market is still digesting everything
that's happened. And then even if you know, maybe this
month versus last month is stable, people don't adjust that quickly,
(10:30):
and they're thinking about all the change that's occurred over
the past three or four years, and it just takes
a little longer to shake off all of the change
that's happened.
Speaker 2 (10:37):
Connor, thank you so much for taking the time with us.
Speaker 5 (10:41):
Thanks.
Speaker 2 (10:41):
Amy Connorson is a Bloomberg Opinion colonist and founder of
Peachtree Creek Investments. And coming up, we'll look at a
new poll. It's gauging Americans trust or lack of it
in science, research and other traditional institutions. Stay with us,
much more still to come. You're listening to Bloomberg Opinion.
Speaker 1 (11:12):
You're listening to the Bloomberg Opinion podcast counts Saturdays at
one and seven pm Eastern on Bloomberg dot Com. The
iHeartRadio app and the Bloomberg Business app, or listen on
demand wherever you get your podcasts.
Speaker 2 (11:26):
You're listening to Bloomberg Opinion i Amy Morris. A recent
Pew poll showed Americans trust and scientists fell during the
pandemic years. More than a quarter of American surveyed say
they are distrustful enough of scientists that they don't believe
they'll act in the public's best interests. Want to get
more on this now, Bloomberg Opinion columnist Faith Lamb, host
of the Follow the Science podcast, joins me now and Fay.
(11:49):
We talked about this before, but let's get into it
a little bit deeper. How did this come to fruition
during the pandemic?
Speaker 7 (11:56):
Well, I think that it has to do with the
type of science that people were paying attention to during
the pandemic, and that was science medical science that was
really done on the fly, as well as public health,
which mixes a lot of judgment, calls and values into
scientific ideas.
Speaker 2 (12:16):
And is that what we experienced? Then there were more
suppositions and more hypotheses than actual scientific facts.
Speaker 7 (12:24):
I think that was part of it. I think scientists
and people in public health weren't always clear on what
was a judgment call or a decision to say, do
everything possible for a period of time to avoid spreading COVID.
That was just a decision that was made in a
lot of places that we would do everything possible, including
(12:46):
locking down our cities. But it wasn't purely scientific decision.
Science can tell you how to achieve that, but it
can't necessarily tell you that that's the goal we should
have set for ourselves.
Speaker 2 (12:58):
Yeah, there was a lot of debate I remember, between
wearing masks don't wear masks. At the very beginning in
March of twenty twenty, there was a whole thing about
don't wear masks, it's not going to help.
Speaker 7 (13:09):
And then well and it was Yeah, it was worse
than that, because I think that what the real flip
flop that was really damaging to public opinion was the
flip flop on whether we should even worry about this
at all. You know, there was a period of time
when it was coming from the public health community, not
from Donald Trump. You know, the don't panic, don't worry,
(13:31):
the flu is worse. We were hearing that all through
January and February from the public health community. And now
they say, oh, no, that was Donald Trump. But if
you look back what people were saying, it wasn't they
flip flop from telling us not to worry to very
quickly turning around saying, yes, worry and stay home and
wear a mask.
Speaker 2 (13:50):
Now, were there any indications before the pandemic that trust
in scientists and science was starting to falter, starting to wane?
Speaker 7 (14:00):
Maybe? I mean, I don't consider that necessarily a problem,
because I have interactions with scientists almost every day, and
I don't think that as individuals they're any more or
less trustworthy than anybody else. They're just human. They're people
that have a job to do, and some people are
extremely honest and some people are less so. But what
(14:22):
makes science trustworthy is the methods of science that create
a reliable body of knowledge. It's not that the individual
scientists are necessarily without conflicts of interest, or that they
don't get things wrong, or that they don't get sometimes
stuck on their own wrong ideas.
Speaker 2 (14:39):
So how can the trust be rebuilt?
Speaker 7 (14:43):
I think that the big problem isn't necessary that people
don't have a kind of a blanket blind trust in scientists.
They should ask if a scientist says something you should
ask why, what's your evidence, what makes you say that,
and why do scientists other scientists agree with you. I
think that's legitimate. I think what we're seeing, though, is
(15:03):
the growth of econom an irrational paranoia where people have
a sort of knee your distrust of the whole thing
of everything that scientists have learned. And so I think
there is a kind of a knee jerk reaction in
the opposite way that people are feeling so disillusioned that
they assume that if there was a clinical trial that
(15:24):
showed a vaccine worked well, then they just don't believe it.
That there's no amount of evidence that will convince them.
Speaker 2 (15:31):
And we are talking to Blueberg opinion columnist Faith Lamb
about Americans trust in science and what scientists can do
to regain that trust. I was thinking, also, Fey, about
the issue of vaccines. You just mentioned it, particularly the
COVID vaccine. There are a lot of people to this
day who will not get it, but that's not new.
There have been debates over vaccinating kids for decades. Does
(15:57):
this distrust of science date back to that or is
that something else? Is that embedded somewhere else.
Speaker 7 (16:03):
It's connected I mean there's trust in science, and then
there's trust in doctors to recommend the right medications. I mean,
you're talking about getting an injection, and and it does
take a certain amount of trust when you're healthy to say, okay,
im I let my doctor inject me with this. And
so I think a lot of people have also been
(16:25):
swayed by the fact that there are people who call
themselves scientists and who even have scientific degrees who are
on the anti vaxer side. And so it may not
be a matter of just getting people to trust science,
but getting people to think critically about what to trust
and why.
Speaker 2 (16:41):
Okay, so when we go back and review what scientists
were saying during the pandemic, and when we ask why
they weren't more clear or why they were flip flopping,
their reply is often that they simply didn't know at
the time. This was all very new, So how can
they give us proper guidance if they didn't know.
Speaker 7 (17:02):
I think that you just have to play the long
game in any area of science, and that means if
you don't know, you have to admit you don't know,
and then you have to say why you're making an
educated guess on one side or the other, and why
you think things are going to go a certain way
or why you think you should err on the side
of caution when.
Speaker 2 (17:20):
You don't know.
Speaker 7 (17:21):
But I think public health has a history of sometimes
not being totally honest about their uncertainty because there's a
sense of, you know, we have to get people to
do this, and say, you know, the ends justify the means,
So we have to lie a little bit to get
people to do the right thing, We'll do it. And
I think that's a real difference between public health and
just about any other area of science where part of
(17:43):
the game is to recognize where you don't know things
and measure your uncertainty, make sure that you understand your
margin of error.
Speaker 2 (17:52):
I just want to go back to something you just said.
You're not accusing them of lying, You're not saying that
they lied. Well, you know.
Speaker 7 (17:58):
I did a podcast episode with Peter Sandman, who is
an expert in risk communication, and the title was why
I public health officials sometimes lie? And Peter Sandman talked
about what he calls the noble lie, the idea that well,
you sometimes, you know, people think they're lying for the
greater good, and he had some very good examples of
(18:22):
places where it looked like that's what was happening, that
people in public health were actually bending the truth or
telling half truths as a way to try to push
people or nudge people to do what they thought was
the right thing.
Speaker 2 (18:35):
That how could they ever rebuild trust if they lied?
Speaker 7 (18:39):
That's a good question, I mean, Sandman his point was
that this is a bad strategy. It's a bad strategy.
That these problems tend to be long term, and you
wear out your trust in a really bad way when
you do try to tell half truths or pretend you
know what you're talking about when you don't. That that
(19:01):
is a problem. And so the other thing is, of
course that scientists often just get things wrong because they're human,
and that things get hashed out. So it's okay to
be distrustful of individual scientific claims. We should be, But
when you have this you know, body of evidence and
clinical trials and you know, I guess expert opinion that's
(19:26):
informed by a lot of evidence, then at some point
you kind of have to It's paranoid to think that
that's all been somehow manufactured. It becomes crazy not to
believe it.
Speaker 2 (19:38):
Well, to that end, it's not just science, right, Trust
in many institutions has fallen.
Speaker 7 (19:44):
Yes, that's true. That's true. And I think scientists actually
got higher marks for trusts than other institutions, whether they
you know, whether they are more trustworthy. I think there
is a little more emphasis in the press on exposing
conflicts of interest among science and I think that's not
a bad thing. I think it's that when people hear
about a new study, it's good to inform people that
(20:07):
there might be some conflicts of interest among the scientists
making that claim.
Speaker 2 (20:11):
All right, thank you, Faye for your time to appreciate it.
Thank you. Bloomberg Opinion columnist Faith Lam host of Follow
the Science podcast and Don't Forget. We're available as a
podcast on Apples Spotify are your favorite podcast platform. This
is Bloomberg Opinion.
Speaker 1 (20:35):
You're listening to the Bloomberg Opinion podcast. Catch us Saturdays
at one and seven pm Eastern on Bloomberg dot Com,
the iHeartRadio app and the Bloomberg Business app, or listen
on demand wherever you get your podcasts.
Speaker 2 (20:50):
This is Bloomberg Opinion. I'm Amy Morris. For the past
couple of years, the US economy has shown resilience revolving
around demand for services that started to off this year.
Then came Barbie and Oppenheimer and Taylor Swift. Welcome to
the EARS tool. But even Taylor Swift and Barbie combined
(21:14):
can't maintain that momentum, and spending on recreation services is
dropping again. Let's talk about it with Bloomberg opinion columnist
Jonathan Levin, who focuses on markets and economics. John, let's
start with the past two years in the demand for services.
Was that the result of a pandemic shutdown? Or is
that an oversimplification, Yeah.
Speaker 6 (21:34):
Kind of, sort of. I mean, I think the story
of the resilience of the economy over the past two years,
even in the face of these extraordinary said hikes, was
really about that pent up demand to a certain extent
for services and really the mean reversion of demand for services. Right, So,
you know, even after we stopped buying new refrigerators and
(21:56):
washing machines and all this stuff, we had this word
trajectory in the economy overall, because the services economy is
such a big part of what we do here in
the United States, and it was steadily mean reverting, meaning
going up. As little by little we started going back
(22:17):
to concerts, we started going back to movie theaters, and
in a big way, we started going back to live sports,
and so, yeah, I think that it was a confluence
of factors. But what we really need to understand is
it's true that the services economy did a lot of
(22:38):
the work in keeping us out of a recession over
the past two years.
Speaker 2 (22:44):
Why is the demand for services waiting now? Is it
just balancing it out?
Speaker 6 (22:48):
Yeah, So I sort of think that what we saw
was a little bit of a double dip, right, So
we had this big recovery, you might call it a
mean reversion, and then a sort of early twenty twenty three,
demand for these services, especially recreation services, did start to wane.
(23:09):
But in around summertime, we had this kind of special
confluence of factors that gave us a little bit of
a sugar high. We had the incredible marketing phenomenon that
was the Barbie movie. We had Taylor Swift on tour,
(23:30):
and remember Beyonce was also on tour earlier in the year,
and we had this, you know, in the backdrop was
this continuing moderation, this continuing mean reversion. But now in
terms of like the quantities of recreation services that we're consuming,
(23:51):
Like adjusting for inflation, we have returned to twenty nineteen levels,
So there is nowhere to go just in terms of
like pure mean reversion. We can't expect that to you know,
be like an automatic boost to the numbers going forward.
And Taylor's tour moved on from the United States of America.
(24:16):
The Barbie phenomenon is over, and so you know, we're
back into this sort of services, maybe not double dip,
but double normal normalization as it were.
Speaker 2 (24:29):
So how much of an impact was it? Are you
able to measure that? I mean, you call it a
sugar high, but it was a sugar high that was
needed at the.
Speaker 6 (24:37):
Time, right, Yeah, exactly some of this was expected and
and some of it some of it was not to
be expected. So how much of this was a meaningful change?
So recreation services really plunged it during the during the pandemic,
(24:59):
and little little they they returned to baseline adjusting for inflation.
Movie theater consumption is still like way way way below
where it was a pre pandemic in twenty nineteen, and
we sort of got back to pre pandemic levels for
(25:22):
like a month or two during the Barbie and Oppenheimer phenomenon,
but that is now just out out of the equation.
That really shows us that, like it was just a
special thing about those particular films. If you look at
live entertainment excluding sports, that's the Taylor Swift phenomenon. You know,
(25:44):
like we never really got above the pre pandemic norms.
So you know, like a tailor and Beyonce helped us
get back to what you would have expected in twenty nineteen,
but we never really got beyond there. Adjusting for inflation, right,
(26:05):
of course, there were people were paying these extraordinary prices
to go to these events, and so that is a
little bit of what you see in the headline figures.
And then the last thing that I like to underscore
here is there is only one area that has seen
a meaningful kind of structural change in the past two years,
(26:27):
and that is live sports. For whatever reason, even adjusting
for inflation, we Americans are just like way more into
live sports right now than we were before the pandemic.
And like the example that I tend to go to
is just baseball. Baseball has made some really meaningful changes
(26:49):
to speed up the game and things like that and
bring people back into those stadiums. So like that's an
example of you know, accessful strategy. I think in college sports,
specifically college football, they also did some strategic things like
you know, introducing more alcohol into the stadiums, and that
(27:12):
has and that has really really helped. But yeah, I
want to come back to what I said before, like
spectator sports aside, we've normalized and we're back to where
we were before the pandemic, and there just isn't a
lot of impulse left in that recreation services.
Speaker 2 (27:35):
And we are talking with Bloomberg opinion columnist Jonathan Levin
about how Taylor Swift helped give the US economy a
second win when it was needed. But you also say
in your column, John, now spending on recreation services is
ebbing and new and central bankers should be thrilled.
Speaker 6 (27:51):
Why right, Well, so the idea is that fed charge
Rome pal has been very focused on the service sector
as a goal that he saw as necessary to tame
inflation the way he saw it. You know, like to
a certain extent. Central banks can't really control goods prices,
a lot of them are imported, and there's only so
(28:14):
much that a central bank can do. But services prices
in particular are set domestically, they're heavily sensitive to wages
and so forth, and so there was a belief that
if you were going to put the inflation genie back
in the bottle, you, as fed chair Jerome Pal needed
(28:35):
to cool off some of this heat in the service sector.
What he was looking for was a cooling in this space,
not a collapse. And right now, that's what he's getting.
As services companies start to worry a little bit more
about their bottom line, that they might start to lay
off a few workers, and that that could become a
(28:58):
vicious cycle in the economy. But for now, it feels
like good news and it doesn't feel like like we're
in that sort of vicious cycle.
Speaker 2 (29:06):
And before we let you go, John, there was an
argument that spending habits were changed forever because of and
after the pandemic shutdown. And you make the argument that
these numbers show a shift closer to the norm and
that spending habits have not been changed forever. They may
have been tweaked a bit, but it's not a complete
and whole change.
Speaker 6 (29:27):
Yeah, exactly. Yeah. There was this argument that people's attitudes
towards spending had sort of changed coming out of the
pandemic that you know, we'd bought all the refrigerators that
we needed for the for the foreseeable future, and what
we desperately needed were experiences, and it was like, no,
(29:50):
not really, if you adjust for inflation, our habits never
really changed that much. It's just that the the the
ticket price had changed so much, so the quantity is
in which we're consuming these things haven't really moved versus
(30:10):
twenty nineteen. We've normalized. We're back to what you would expect,
and hopefully we stay there. I think that's what fedchair
Jerome Pal hopes, and I think that's what we should
expect going forward.
Speaker 2 (30:25):
Jonathan Levin is a Bloomberg Opinion columnist with a focus
on markets and economics. You're listening to Bloomberg Opinion. I'm
Amy Morris. You should expect to be pampered when you
dine at high end restaurants, but now some restaurants are
taking that luxury step beyond a culinary destination or a
gastronomic delight. You could actually make the world better through
(30:46):
the intersection of science and cuisine. Let's talk about this.
Bloomberg Opinion columnist Howard Chueywan covers culture and business and
joins me. Now, so how does this work? What's the concept?
Speaker 8 (30:58):
This particular expansion that I'm writing about was this really
spectacular restaurant in Copenhagen called Alchemists, and they already have
very sort of space age food and all of that
and and and uh uh and as well as a
huge visual theater where you walk into the several dining
(31:20):
rooms and the and the entire whole foresters are projected
onto the walls and you have this amazing experience already.
So what the chef is doing is starting a little
side project which is going to explore how to make
turn seaweed into new proteins and things like that. So
there's an entire participation of the client tele and like, oh,
(31:44):
the chef is going off this new adventure and trying
to create new kinds of food for the world. So
uh And it's not exactly a fresh approach, because these
things have been done. One of the one of his mentors,
was the Spanish chef Ferron Audria, who had very murdered
what they called molecular gastronomy several years back, and they
(32:08):
were sort of it was all very strange, strangely shaped
things that were explosively delicious once you put them in
your mouth, but they were all sort of scientifically crafted
and they thought, oh, this chemistry is going to be wonderful.
So all of these come together as a business, so.
Speaker 2 (32:24):
They're not necessarily working to just become niche and stand
out from the crowd, although that's part of it. They're
actually looking to make a difference in the industry.
Speaker 8 (32:33):
Yes, exactly, and that's true for Alchemists and its rival
across Copenhagen is a much more famous restaurant because it's
more established, named Noma. They've had this fermentation lab for
several years now and they've created several products out of it,
so they're expanding the range of the restaurant beyond just
(32:57):
the food they serve during dinner time.
Speaker 2 (33:00):
Owning and running a restaurant is already very expensive, it's
very exhausting. A lot of places don't make it. But
you add a laboratory layer to that approach and it
seems near impossible. Are they setting themselves up for a
challenge that might be hard to match.
Speaker 8 (33:17):
What's interesting is that there are investors who are interested
in this. Alchemist has a couple of very well to
do Danish investors. Noma has a very very quiet but
very activist sort of you know investor that helps along
(33:37):
with all their projects. So people see this as investment opportunities,
as a way of sort of expanding the range of
restaurants and perhaps making a difference as well.
Speaker 2 (33:51):
So where do you see this trend going or is
it even fair to call it a trend?
Speaker 8 (33:55):
It's it's it's been a sort of trend for several
years now. I think, you know, the higher end restaurants
with lots of investors who want to see this, to
see that there's this interesting concept that a restaurant starts
with whether or not it can be expanded and what
are another commercial possibilities for what they're doing. I think
(34:18):
because there there are there's prestige and a name attached
to it, there is so much potential for more business
in the future. So I think people are watching, especially
the high end restaurants who don't want to go and
sort of franchise themselves in Vegas or something like that,
but instead to go and do something different that will
that will actually make a real statement about how they
(34:42):
see the world and maybe even you know, make some money.
Speaker 2 (34:45):
Bloomberg opinion columnist Howard chue Wan, and that does it
for this week's Bloomberg Opinion. We're produced by Eric Mullow,
and you can find all of these columns on the
Bloomberg Terminal. We're also available as a podcast on Apple,
Spotify or your favorite podcast platform. Stay with us. Today's
top stories and global business headlines are just ahead. I'm
Amy Morris, and this is Bloomberg
Host
Vonnie Quinn
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