No “stag” no “flation”

Make Me Smart May 2, 2024 Transcript

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Kai Ryssdal 

All right. Everybody ready? Everybody here? Let’s go. Places to go. People to see. Things to do. Hey everybody, I’m Kai Ryssdal. Welcome back to Make Me Smart, where we make today make sense.

Kimberly Adams 

And I’m Kimberly Adams. Thank you everyone for joining us on this Thursday, May the second.

Kai Ryssdal 

We will do what we do on Thursdays. Listen to some tape from the week, discuss, and then send you along your merry way. Here we go.

Jerome Powell

“First of all, most forecasters, including our forecasting, was that that last year’s level of growth was very high. 3.4% in, I guess, the fourth quarter, you know, and probably not going to be sustained and would come down. But that would be our forecasts. That wouldn’t be stagflation. That would still be to a very healthy level of growth. And of course, with inflation, you know, we will return inflation to 2%. So, I don’t see the stag or the flation actually,

Kai Ryssdal 

I don’t see the stag. Am I taking this one? Sorry, I just kind of jumped.

Kimberly Adams

Yes, you are. Go ahead.

Kai Ryssdal

Okay, I don’t see the stag or the flation, which is, of course, stagflation. That is a stagnant economy and inflation, which would be bad. The speaker there, Jerome Powell, chairman of the board of the Federal Reserve Bank of the United States of America speaking yesterday’s press conference, at which he said, “No, we’re not going to change interest rates.” He was asked about the current economic conditions and whether what he saw was a stagnant economy with inflation still higher than where he wants it to be. And Powell said in the beginning of that answer, which we didn’t play, “I was here the last time we had stagflation, and this is not that.” And look, economic growth is slowing. It’s not 3.4%. It’s one point something percent. Inflation is three and a half-ish percent, which is higher than anybody wants it to be. But we do not have stagflation right now, and we should stop talking about that because it’s not real. That was me, not him at the end there. Just saying.

Kimberly Adams 

For folks who were not around for that, what did that look like in the economy?

Kai Ryssdal 

Well, look, it’s miserable because you have prices going up with an economy that’s stuck. Unemployment is high, much higher than it is now, which is sub 4%, where it’s been for a very long time. And if people are stuck in a stagnant economy that means they’re not getting hired, right? They don’t have the money to spend, and yet prices are going up. One of the reasons that inflation now, while it sucks, is not as big a problem as it could be is that wages, the last 12 months, and especially at the bottom end of the income spectrum, have been outpacing the rise in prices. And that’s why the economy, generally speaking, is good. Prices are high and people hate that, but this is not an economy where people are stuck for finding jobs, right?

Kimberly Adams 

Right. And the other component of that is that growth part that you talked about at the beginning. Companies are still investing. They are still hiring in most industries. And, you know, there is still growth in this economy. And so, that’s where the stag part is missing. And yeah. Cool. All right. Then on to the next clip.

Walmart customer

“I’ll bring my kids here. It’s so convenient, you know. It’s close to the house. It’s cheap. And they have some great doctors in there.”

Kimberly Adams 

Okay, so that was a woman named Hasana Hampton talking to a reporter for Atlanta News First in Marietta, Georgia talking about how important the local Walmart health clinic has been to her family. And I flagged this story because Walmart has announced it will close all 51 of its health care centers that it’s opened up since 2019 and shut down its virtual health care service because it said it was “not a sustainable business model.” And this is after last year, Walmart said it planned to double the number of these health care systems, but rising costs and issues with reimbursement have made them decide to reverse course. I think this is a harbinger of larger things. It was a low-cost health care option in places where the people who needed it most was, right? And say whatever you want about not wanting to get your health care from Walmart. You could walk in there, I think, and get a virtual appointment, you know, for $49 or something like that I saw on their website. And one of the other folks they interviewed in the story, which they did outside in the parking lot outside this healthcare clinic. The people were saying, yeah, you know, in other doctors’ offices, you have to pay hundreds of dollars to come in, and this is much cheaper. I bring my kids here. You can always get an appointment. And Walmart was trying to leverage scale to make this work. And if Walmart cannot do it, that does not bode well for other entrants into this market. And the need to profit off of healthcare is making it more and more challenging to provide access for people at the lower end of the income scale. And that reimbursement rates thing is crucial. Health care providers for profit and non for profit have been complaining for a really long time that the Medicare reimbursement rates, and the Medicaid reimbursement rates are entirely too low to cover the rising cost of care. Now, some of that rising cost of care is due to profit seeking and in the for-profit health care industry. But what does that mean, it means that more of the care keep skewing towards the people who can pay. And I just think this is a space to watch because demanding profits in health care is going to continue to squeeze out people at the bottom. And as we have an aging population that shifts to more and more folks on Medicare, whether or not those reimbursement rates keep up is going to start becoming an issue for a larger segment of the population.

Kai Ryssdal 

I think the key line in this whole thing was you recounting Walmart saying it’s not a sustainable business model, and they were speaking there about virtual healthcare. You can make the case that healthcare in America, the way is structured today, which is by the way, one seven of the entire economy is not a sustainable business model.

Kimberly Adams 

Yeah. And they weren’t even just talking about the virtual part. They were talking about the whole clinic system. Although at the same time, I think it may have been United Healthcare, I think also pulled back its virtual healthcare, at least dialed it back a bit that they had been offering during the pandemic. And so, like you’re seeing this in a bunch of different ways.

Kai Ryssdal 

Yeah. Yep. All right. Next one, Jayk.

Heather Long

“Can you train enough workers? Can it be sustainable? I think that’s one of the deep questions economists are very skeptical that even with all this being built, can the United States of America be competitive in this landscape?”

Kai Ryssdal 

Heather Long, she’s columnist and a member of the editorial board of the Washington Post, and my colleague on a series we’ve been doing on the radio show called “Breaking Ground,” where we’re talking about the investment that the Biden administration is making in the economic infrastructure of this country, specifically the CHIPS industry, semiconductors, with the CHIPS Act, rather. Anyway, Heather and I were on the ground in Phoenix where they are like, I mean, there’s so much commercial activity happening there. A lot of it’s centered around semiconductors. We went to the pipefitters’ union. They’re bursting at the seams recruiting new people. Tens of thousands of new workers are going to be needed for the semiconductor plant. And the question that Heather rightly raises is can we do it? Right? And what Biden and you know, the Congress to some degree since they passed these laws are trying to do is restructure the American economy, and we’ll see if it works.

Kimberly Adams 

I love that story that you all had yesterday about saving the trees. Oh my gosh, that was so cool.

Kai Ryssdal 

10 million in revenue moving cactuses around Phoenix. Right? Think about that.

Kimberly Adams 

I went and looked at the website to see the photos and those giant boxes that the roots are in for these trees. It’s so cool looking. Yes, highly recommend folks go back and listen if you haven’t heard it already. Okay, last one for today. Let’s hear it.

FKA Twigs

“My spirit, my artist and my brand is my brand. And I’ve spent years developing it, and it’s mine. It doesn’t belong to anybody else to be used in a commercial sense or cultural sense or even just for a laugh. You know, I am me. I am a human being, and we have to protect that.”

Kimberly Adams 

That was artist FKA Twigs testifying before Congress about why the US needs regulation around deepfakes. Now Twigs said she’s not against AI in music. She’s actually created a deepfake of herself and is using it to translate her work into other languages or to do quick one-liners for press or whatever. But she said artists need to have control over when and how AI versions of themselves are used. And she testified pretty passionately about how, you know, she can go online and in her own work, she’s very careful with what collaboration she chooses, how she writes her work, how she presents her work, and she’s very, very precise with it was the word that she used. But then she can go online and see where people have used AI to do collaborations with artists she didn’t want to work with or artists that she wanted to work with but now the surprise is gone. Or they’re making songs in her voice that don’t align with her messaging or values or something like that. So, you know, this is an ongoing issue, obviously Congress’s talking about it because they’re thinking about legislating around it. I should also point out that Marketplace Tech’s “Decoding Democracy” series, which I’ve been lucky enough to work with them on has been getting into the deep into deepfakes and also how deepfakes and AI can be used to spread election disinformation, which is a big risk, and we’ll have a link to that series in our show notes as well.

Kai Ryssdal 

Yeah, it’s coming for of us all. It’s coming for us all in some way shape or form. You know? Truly

Kimberly Adams 

Yeah, and it’s like I don’t even want to search for what has already been done with like our voices because I’m sure it exists out there somewhere on someone’s you know, channel but I don’t even want to know.

Kai Ryssdal 

Don’t want to know. La la la la. Fingers in my ears. Alright, we are done for today. Tomorrow is Economics on Tap. It’s Friday. News, drinks, and we will play a game. The YouTube livestream, of course, at 3:30 Pacific, 6:30 in the Eastern time zone.

Kimberly Adams 

Make Me Smart is produced by Courtney Bergsieker. Audio engineering today by Jayk Cherry. Ellen Rolfes writes our newsletter. Thalia Menchaca is our intern.

Kai Ryssdal 

Marissa Cabrera is senior producer of this podcast. Bridget Bodnar is the director of podcasts. And Francesca Levy is the executive director of Digital.

Kimberly Adams 

Wait for it. Oh, no and On-Demand?

Kai Ryssdal 

No On-Demand. I just decided to leave it. I’m only going to read what’s in front of me.