🖤 Donations of all sizes power our public service journalism Give Now
Recession? What recession?
Jun 28, 2023
Episode 955

Recession? What recession?

HTML EMBED:
COPY
Plus, an "Oh snap!" tweet from President Biden.

Some economists have been warning of an imminent recession in the United States for over a year now. But so far, it has yet to strike. We’ll get into the different ways economists are thinking about how a so-called recession might play out. Also, humans are having a profound, literally axis-shifting impact on Planet Earth. And, how company crackdowns on sharing memberships hurt single people.

Here’s everything we talked about today:

Become a new Investor or rejoin today and your donation will be matched! https://support.marketplace.org/smart-sn

 

Make Me Smart June 28, 2023

Kai Ryssdal 

Well, let’s start there. Let us go. Hey, everybody, I’m Kai Ryssdal. Welcome back to Make Me Smart. Where we make today make sense. It is the 28th of June. It is a Wednesday.

Kimberly Adams 

It is indeed. And I’m Kimberly Adams, thank you for joining us. We are going to do a simple show today. We’re gonna get some news and some make me smiles and then let you be on your merry Wednesday. Kai, why don’t you go first. Yours is super fascinating,

Kai Ryssdal 

Fascinating and terrifying. So there I am this morning, having breakfast, as I usually do. This morning, it was a piece of avocado toast. And when I have breakfast, for whatever reason, I usually stand over the kitchen sink and I read the news on my phone just because that’s the way I am. Anyway, I’m there flipping through my phone and I go to the New York Times and I flip on this article. The headline of which is: “Something Was Messing With Earth’s Axis. The Answer Has To Do With Us.” And then I read the article.

Kimberly Adams

That’s quiet a lot.

Kai Ryssdal

And I’ll tell you what, it is a rare, rare article in a newspaper that makes me go holy. But this one made me go holy. So here’s the skinny and then I’ll get to the to the to the kicker quote. “Around the turn of the millennium,” the first paragraph reads, “Earth’s spin started going off kilter, and nobody could say why.” Apparently for decades, scientists have been watching the rotational axis of the planet wobble around a little bit away from the geographic North Pole toward Canada. And then suddenly, one point made a sharp turn and heading east. And researchers looked into this. And researchers came up with the realization that what had happened was that the speed of glaciers and ice caps melting had changed the way mass is distributed around the planet enough to influence its spin. Let me say that again, the entire planet had been affected physically, like the shape of the planet in space, the orbit of the planet, not the orbit, the rotation of the planet in space had been changed by global warming. And then the next paragraph says, “Now some of the same scientists have identified another factor that’s had the same kind of effect, colossal quantities of water pumped out of the ground for crops and households.” Oh my God.

Kimberly Adams 

We are literally changing the structure of the planet.

Kai Ryssdal 

It blew me away. It blew me away. It’s it’s oh my god.

Kimberly Adams 

So first of all, so impressed with the science. They’re like, wow.

Kai Ryssdal

For sure. For sure.

Kimberly Adams

But that’s frightening. That’s so bad. That’s so bad.

Kai Ryssdal 

So we’re melting polar icecaps, and that’s changing things. And then we’re using up so much groundwater, pumping it out. Look as we do here in California, and agriculture does everywhere, right? You use groundwater you pump it out, but oh my god, it absolutely freaked me out. It was wild. And I don’t know why I made that my news item, other than it was really impactful. It’s like, climate change is physically altering this planet. I mean, we knew that. But you know what I mean?

Kimberly Adams 

Yeah, it’s one thing to know it. It’s another thing to know specifically, like you see the video of like the glaciers falling into the ocean. And you talk about often when we talk about global warming, we talk about rising sea levels. We talk about weather. I have never heard anyone mentioned changing the rotation of the planet. That’s a new one for me. I do think that that’s worthy of a wow moment. Okay,

Kai Ryssdal 

So there you go.

Kimberly Adams 

Hoo, boy. Well, mine is just economics. But okay. The AP did this really nice piece, answering or attempting to answer some of the questions that we’ve posed here on the podcast. It’s like: where’s this recession that everyone has been predicting for like the last year or so? Why hasn’t it come yet when all the economic models are like, interest rates are going up, we’re gonna have a recession, people are gonna lose their jobs, the economy’s gonna like, eventually have problems because of this extraordinarily rapid increase in rates, like there’s no way we’re going to come out of this unscathed. And yet, as the AP says, the economy keeps managing to grow. I mean, they’re pointing to let’s see, gas prices have dropped, employers keep hiring, consumers keep spending, grocery prices have leveled off. So Americans have more spending power. So where is this recession? And they’ve talked to a bunch of economists, listened to Jay Powell and a bunch of other folks. And they’ve come up with sort of like three scenarios. One is that it’s a rolling recession. The other one is that it’s a “richcession.” And then the third is that there’s just like, maybe we’re not going to have a recession after all. Right, so the rolling recession is very interesting, which is this idea that since different sectors of the economy are getting hit at different times, the recession is hitting different places. And by the time one sector recovers, another sector is getting hit. And they balance each other out. So the recession is happening, but it’s happening, it’s happening in different places at different times. And so we don’t feel it across the whole economy because they end up balancing each other out, which I think is a really fascinating idea.

Kai Ryssdal 

I definitely don’t doubt that for sure. Yeah.

Kimberly Adams 

And they point to all this evidence, you know, about manufacturing, you know, let’s see. So, “the housing industry was the first to suffer a tailspin after the Fed began sending interest rates up… as mortgage rates doubled, home sales plunged.” They’re now 20% lower. Manufacturing followed, and while “it hasn’t fared as badly as housing, factory production is down 0.3% from a year earlier… This spring, the technology industry suffered a slump…At the same time, consumers ramped up their spending on travel and entertainment venues, buoying the economy’s vast service sector and offsetting the difficulties in other sectors…housing has started to rebound and might help pick up the baton of economic growth,” and other sectors are continuing to expand. We’re getting all the stimulus in the manufacturing sector. So like, they can kind of balance each other out, even if certain sectors feel the recession. The “richcession” is also an interesting idea, which is that a lot of the layoffs we’ve seen have been in white collar or higher-paid jobs, where people tend to have a lot of skills, they often have a cushion, they may have a severance package that carries them for a while until they get another job. It’s relatively easy for these folks to get another job. So if you’re a low wage worker, and your sector is hit with mass layoffs, you’re probably going to immediately end up on food assistance or some other kind of government support, because you’re immediately effectively destitute, right? But if you’re a tech worker who’s been making six figures for the last decade, ideally, you’re gonna have some sort of cushion, or you can pull out from your retirement, or you can take out a home equity loan on the home that you own, because you’ve been rich for a while, you know. So therefore, it doesn’t have as much of a hit on the economy, when wealthier folks lose their jobs than it would if lower income folks lose their jobs, especially if it’s not all happening across the entire economy at once. So that’s the “richcession”. And then there’s, you know, maybe no recession that, you know, super optimistic folks are like, maybe we are gonna get that soft landing because of all those other things. And the fact that hiring has really stayed resilient. I, I wish they had said more about immigration here. I think the immigration crackdown that really started under Trump and has persisted through the Biden administration is playing a huge factor and why why we still have such strong jobs numbers because of you know, the ongoing labor shortages. But anyway, it’s a really interesting piece that gets into a lot of details about the economy. super fascinating. So that’s item number one, I went on longer about that than I planned to because I really wanted to

Kai Ryssdal 

No I’m glad. Yeah, it makes total sense to me. I know, I just really liked that. And then consumers stay strong through it all, right, because it doesn’t really show up as this rolling recession goes. That’s really interesting. Totally.

Kimberly Adams 

Yeah. Yeah. So the other story that I want to talk about, just briefly, I’m sure I’ll come back to it another day. But in Axios and a bunch of other places today, there was a story about how Costco is going to start more strenuously enforcing its checking of people’s membership cards so that they can make sure it’s actually your card that you’re using when you checkout because I guess they’re having an increase in non-member shoppers using membership cards that do not belong to them. Since expanding its self-service checkout. You know, following on the heels of Netflix, and I’m sure most of the other streaming services, and not wanting people to sort of, you know, share accounts. And I get it from an economic perspective. But it’s a little frustrating, because one of the reasons that these accounts, that this account sharing happens is yes, people trying to like live off of their parents largess, and people wanting to be cheap. But it’s also single people trying to get some of the economic benefits that couples and families get. So if you are a family living in the same household, you can be six people with a bunch of different accounts and ideas and preferences, and still get, you know, the cost of something distributed across those people. But if you’re six friends, even if you all want the same thing, if you’re not living in the same place, you each have to pay individually for that thing. And it’s sort of like the single’s tax. And so like, it’s, I get the economic argument, but it’s a little bit frustrating, because it’s like, why would why should I have to pay fully for a Costco membership by myself that I’m going to use less than probably a family, but I can’t share it with a friend who’s in a different household, even though our combined usage of it is going to be probably less than a married couple with kids, simply because we’re not in different households, we are going to effectively pay a single tax. I don’t love it. But I also get the economic argument on behalf of these companies. It’s just a little frustrating. Sometimes it’s expensive to be single.

Kai Ryssdal 

Yeah, yeah. And look, you don’t have need for a five gallon jar mayonnaise, you just don’t, right.

Kimberly Adams 

I mean, after I finished my slot today, I was downstairs. I do not but I was chopping up my Costco sized bag of onions and putting it in the freezer, freezer so that I could food prep, because that’s what I bought from Costco. I do buy a bunch of onions and then I like to prep them so that I can like make them for the next month. But anyway, I pay for my own Costco membership in case anybody’s listening. All right, we should probably do some smiles.

Kai Ryssdal 

Let’s go. All right, go ahead. Yeah, I’m hoping you’re gonna explain this one to me, because I saw it go by in the news. And I’m like, wait, what?

Kimberly Adams 

Yeah, it’s, uh, I had to read it a couple of times. So the headline and this is the Reuter’s story about it, “South Koreans become a year or two younger as the traditional way of counting age is scrapped.” How? Okay, so I’m just gonna read, so I don’t mess it up. “Under the age system most commonly used in South Koreans’ everyday life, people are deemed to be a year old at birth and a year is added every January 1.” Okay. So you know, you’re one year old and you’re born and then your two when we would say you turn one, whatever. But your year is added on January 1, not necessarily on your birthday. Now, “since the 1960s, the country has used the international norm of calculating birth from zero at birth and adding a year on the birthday for medical and legal documents.” But apparently, most people were still using the sort of traditional way to calculate age in their everyday lives. So you had two different ages one on like your documents, and one that everybody said you were. And so now they’re shifting everything over to the international norm, which is effectively making people a year or two younger, and there’s a video that goes along with this, where this woman’s like, yeah, I get to be, you know, now I’m not 30 anymore, and I can go back to being 28. And it’ll be nice to, you know, it makes me feel younger. Yeah, get to have your birthdays again. And so I just thought that was pretty fun. And I would love a year or two back. But, you know, why not? I thought that was interesting to

Kai Ryssdal 

A year or two, a decade or two. You know, whatever it takes. Okay, so here’s mine. And it has a couple of layers. So first of all, you probably saw in the news this week that President Biden rolled out a big broadband plan, I guess, Monday, Tuesday, whenever that was. Billions of dollars out to get broadband out into rural America, he points out and I echo this sentiment that broadband Internet access now really ought to be utility. It’s just necessary to daily life and so he’s going to spend a bunch of money on doing it. Of course, that money comes from the infrastructure bill from some time ago, which I will point out here that Alabama Republican senator Tommy Tuberville voted against. So Tommy Tuberville tweeted this morning or yesterday. Sorry, tweeted yesterday, “broadband is vital for the success of our rural communities and for our entire economy. Great to see Alabama receive such crucial funds to boost ongoing broadband efforts.” Now, there is nothing new about senators who vote against something, claiming credit for it when it finally runs out Republicans or Democrats. Fine, I get that that’s part of the game. But I want to give a shoutout to whatever 20 or 30 something is running President Biden’s social media platforms because on Twitter today, they took Tuberville’s tweet and retweeted it and said “see at the groundbreaking,” and I’m just like, kh snap, because you know he’s gonna be there. And I don’t know. It’ll be interesting to see whether or not Biden actually says something about it then, but but it was just literally, okay, I was at a traffic light. I was checking my phone. Don’t ask me. I was stopped. Right. And I laughed out loud. I know. I know. I know. But I was stopped. Okay, anyway, that’s me. That’s my smile. That is pretty cool. You’re gonna yell at me. People are gonna yell.

Kimberly Adams

Yes, they are.

Kai Ryssdal

They are and probably rightly so. We are done for today, back tomorrow till then, keep sending us your comments and your questions. I almost said we’re gonna have beer tomorrow on the show, but we’re not because tomorrow’s only Thursday.

Kimberly Adams 

It feels like it should be Friday tomorrow? It really does

Kai Ryssdal 

Doesn’t it though? I’ve been a day ahead all week. 508-U-B-SMART that’s how you get a hold of us. Write us at makemesmart@marketplace.org We’ll read them and maybe get them on there.

Kimberly Adams 

I feel like I should have made some kind of joke about like going back a day or two like a year or 2. I couldn’t do it. Make Me Smart is produced by Courtney Bergsieker. Ellen Rolfes writes our newsletter. Today’s program was engineered by Jayk Cherry. Our intern is Niloufar Shahbandi.

Kai Ryssdal

Ben Tolliday and Daniel Ramirez composed our theme music. Our senior producer is Marissa Cabrera. Bridget Bodnar is the director of podcasts. Francesca Levyis the executive director of Digital at Marketplace worldwide production or something.

Kimberly Adams

Or something.

None of us is as smart as all of us.

No matter how bananapants your day is, “Make Me Smart” is here to help you through it all— 5 days a week.

It’s never just a one-way conversation. Your questions, reactions, and donations are a vital part of the show. And we’re grateful for every single one.

Donate any amount to become a Marketplace Investor and help make us smarter (and make us smile!) every day.

The team

Marissa Cabrera Senior Producer
Marque Greene Associate Producer