STACEY VANEK SMITH, HOST:
Hey, everyone. It's Cardiff and Stacey. And this is THE INDICATOR FROM PLANET MONEY. Here at the show, we get a lot of questions from listeners, and we love this. We love getting questions from listeners. It's, like...
CARDIFF GARCIA, HOST:
One of the best parts of the job.
VANEK SMITH: It's true. It really is. And so, you know, every once in a while, we try to devote an episode to answering and addressing these questions.
GARCIA: Well, today we are answering two listener questions. One is about the kind of stuff that the U.S. economy produces and how it breaks down between goods versus services. The other question is about those meatless burgers that are suddenly so popular right now. And I am even going to make Stacey try one.
VANEK SMITH: The sacrifices one must make for one's job...
GARCIA: That's right.
VANEK SMITH: (Laughter) And so that's it. We will see you on the other side of the ad break, burgers in hand.
(SOUNDBITE OF MUSIC)
GARCIA: OK, two listener questions on today's episode - the first question comes from Jake Rita (ph). Jake is from Annville, Pa.
JAKE RITA: As we all know, our national GDP is the value of all the goods and services produced within the U.S. during a particular period. I would like to know what percentage of his overall metric is goods versus services? How has this balance changed over the years, and are there any theories as to the reasons for the change?
GARCIA: This is a great question because it gets it one of the big ways that the U.S. economy has been evolving for some time. And Jake is right. When we are talking about the U.S. economy, we are just talking about all the goods and services it produces.
VANEK SMITH: So we should do a quick definition of terms here. Now, goods are physical products that companies make and then sell to us. These are things you can touch - cars, furniture, smartphones, food, houses, medicines, rubber duckies...
VANEK SMITH: ...Bottles of shampoo. You get the picture. Services are everything else - not just routine things like haircuts and dry cleaning but also things like banking, law, teaching, medical services.
GARCIA: And Jake asks, how much of the economy is goods, and how much is services? Well, if we just look at the private sector - so for a minute, ignore the government - the industries that produce goods in the private sector make up only about 18 percent of the U.S. economy. These are industries like manufacturing and construction - again, industries that make stuff.
VANEK SMITH: Industries that provide services, on the other hand, are about 70% of the economy. That is almost four times bigger than the industries that produce goods. Services are huge. And service industries include health care, education, arts and entertainment, finance and a ton of others.
GARCIA: So if 18 percent of the economy makes goods and 70% of the economy provide services...
VANEK SMITH: That's not a hundred percent.
GARCIA: No, it's not.
VANEK SMITH: (Laughter).
GARCIA: There's still 12% percent left over, and that 12% is government. That includes all government, federal and state and local governments added up. And this includes services like military defense, public schools, the court system, your local DMV.
VANEK SMITH: That feels like it takes up a lot of it maybe.
GARCIA: (Laughter) It's still only 12 percent.
VANEK SMITH: Or maybe that's just how it feels when you're there. But in his question, Jake also asked how the mix between goods and services has changed over time. Now, this part of the question is easy. More and more of the U.S. economy is becoming services. And in fact, that applies to the global economy as well, not just the U.S. economy.
GARCIA: And as for what explains the trend towards services, there are a few reasons, but we would focus on one really important cause, which is that over time, the economy has become more efficient at making goods, including a lot of goods that most people use in their daily lives, goods like food and refrigerators and washing machines and televisions and smartphones.
VANEK SMITH: And rubber duckies and bottles of shampoo.
GARCIA: Hey, whatever floats your rubber ducky, OK?
VANEK SMITH: (Laughter).
GARCIA: And because those goods are made more and more efficiently every year, companies can also sell them for cheaper, and therefore, people spend less money on goods as a share of their overall budgets. So they end up having more money left over to buy services.
VANEK SMITH: But overall, providing services has not become more efficient at the same pace that making goods has become more efficient. So people ended up spending more money on services, and more people got hired to work in the services sector. So the result is that services have become a bigger share of the economy.
GARCIA: Think about it this way. If a nice television costs half as much today as it did a few years ago but you're still making the same amount of money, then it means you have more money left over to go out for dinner more often or to see the doctor or to get your teeth cleaned. So you end up spending more on services with the money that you saved on goods. That's a really simplified way to explain what's happening to the whole economy, but it's the basic idea.
VANEK SMITH: Now, question number two comes to us from Jenny Owens (ph) of Washington state.
JENNY OWENS: And I was just wondering with all the excitement over the recent IPO of Beyond Meat, what exactly is the economic impact of artificial meat both plant-based and vat-grown? Thanks.
VANEK SMITH: I like the term vat-grown.
VANEK SMITH: Is that what we're going to be talking about when it comes to, like, meat moving forward?
GARCIA: Works for me.
VANEK SMITH: Jenny is talking about the company Beyond Meat. Beyond Meat has been in the news a lot in the last few weeks because its stock price has gone through the roof since it started trading on the stock market last month. But there are other companies that also offer alternative meat products, and they are having quite a moment. Right now these meat alternatives are estimated to be about 5% of the overall market for meat, and people who analyze the food industry think that number will keep growing in the next decade.
GARCIA: Yeah, meat alternatives have become a big hit lately, especially in the case of Beyond Meat and another company called Impossible Foods. And one reason is that the science has gotten better in recent years. These meatless products are getting closer to actually tasting like burgers or other real meats and also feeling like meat burgers in their texture.
VANEK SMITH: (Laughter).
GARCIA: It's true. That's what they're working on.
VANEK SMITH: The feeling of a burger - I - yeah, I mean, that is, I'm sure, a big part of the...
GARCIA: It's a part of it, yeah.
VANEK SMITH: ...Burger experience.
GARCIA: And now a lot of restaurants and fast food outlets are starting to offer these meat alternatives because people want them.
VANEK SMITH: And Jenny wants to know what the economic consequences of this might be, and that depends on a couple of things. One of them is whether the science keeps getting better so that these meat alternatives can be made more cheaply and actually compete with real meat in terms of price. Right now meat alternatives are more expensive both because the process of making them is still relatively new and is still evolving and also because right now there's just so much demand for them.
GARCIA: That brings us to the other uncertainty - whether meat alternatives are just a fad or whether people will continue to want more and more of them. There are all kinds of reasons that people give for wanting these meatless products. One is that they are made in a way that's more environmentally friendly than the way meat is produced. Or some people just want meatless products for dietary reasons. They want to eat less red meat, or they might be concerned with the way cows are treated by companies that produce meat.
VANEK SMITH: And so meatless products could end up being, like, the new almond milk or soy milk where people start trying them for dietary reasons, but then they become more popular because people just like the taste of them.
GARCIA: That's right. The economic consequences might end up coming down to taste. Speaking of which, Stacey...
VANEK SMITH: Yes.
GARCIA: You know, we asked Rachel Cohn, our producer, to go to TGI Fridays, which offers these meatless products. And she brought back for us both a real burger and a meatless burger. And now I'm going to see if you can tell the difference.
VANEK SMITH: Course I can tell the difference.
GARCIA: We'll see.
VANEK SMITH: My parents raised beef cattle. If I can't tell the difference, this is going to be...
GARCIA: The steaks are pretty high right now for you...
VANEK SMITH: This is going to be a rough...
VANEK SMITH: ...Rough holiday season...
GARCIA: That's right.
VANEK SMITH: ...At the Smith family.
GARCIA: Just in case you can tell what's real and what's fake by the look of it, I'm going to need you to put that scarf...
VANEK SMITH: Oh, OK.
GARCIA: ...Around your eyes like a blindfold. Yeah, that's OK.
VANEK SMITH: All right, here we go.
VANEK SMITH: Very excited - I feel like I've chosen the right job right now.
GARCIA: OK. I am going to hand you burger number one.
VANEK SMITH: (Laughter) Am I just eating blind-fold...
GARCIA: Sniffing it, right.
VANEK SMITH: This is quite a...
GARCIA: I know.
VANEK SMITH: OK. I think this isn't the real one.
GARCIA: OK. I'm going to take that back from you.
VANEK SMITH: OK.
GARCIA: And I'm going to give you burger number two.
VANEK SMITH: OK. Oh...
GARCIA: And that...
VANEK SMITH: Yeah, this is the not-meat one.
GARCIA: All right, you're saying...
VANEK SMITH: Yeah, this...
GARCIA: You're saying burger number two is the not-meat one.
VANEK SMITH: Mmm hmm.
VANEK SMITH: It doesn't have that beefy taste. It's not a bad taste, incidentally. It just doesn't have that much of a taste, you know? Beef just has that perfume, and it - you know, like, it's got the beef taste, the beef taste.
GARCIA: Stacey Vanek Smith, your Idaho reputation remains intact.
VANEK SMITH: Woo.
GARCIA: You are correct.
VANEK SMITH: Yay.
GARCIA: You got it right.
VANEK SMITH: Good.
VANEK SMITH: Excellent.
GARCIA: ...Correctly identified the real burger and the fake burger. You can now take off your blindfold and enjoy whichever Burger you'd like.
VANEK SMITH: And cows can continue to run in fear from me...
GARCIA: And I'm going to eat the other half of...
VANEK SMITH: ...As can the planet.
GARCIA: ...Both of these (laughter) myself, yeah. Wait. We got to do the credits.
VANEK SMITH: Yes, we do.
GARCIA: Do them while your mouth's still full, yes (laughter). Stacey just took a huge bite. See if you can do the credits.
VANEK SMITH: OK. I'll see if my - all my years of training...
GARCIA: Yeah. Do the...
VANEK SMITH: I've been preparing...
GARCIA: Do the credits.
VANEK SMITH: ...For this for 15 years.
VANEK SMITH: Today's episode of THE INDICATOR was produced by Rachel Cohn, edited by Paddy Hirsch. And THE INDICATOR is a production of...
VANEK SMITH: That's right.
GARCIA: Well done.
VANEK SMITH: (Laughter) Thank you. I already had lunch, by the way.
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