Scary Stories From The Eek-conomy : Planet Money We ask economists what scares them about the US economy right now.
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Scary Stories From The Eek-conomy




Economics - sometimes it can seem like a lot of math and numbers - pretty dry. We know its reputation. It has the nickname of the dismal science, and there's things like spreadsheets and numbers and negative externalities and nominal GDP level targeting. Don't worry about it. We get it.


(Laughter) There's actually nothing dry about the economy at all. The economy is a living, breathing thing, and we are all a part of it.


COLIN CLIVE: (As Henry Frankenstein) It's alive. It's alive. It's alive.

GARCIA: Yes, the economy is alive. It's a living creature that we all kind of contribute to in our own ways. And much like Frankenstein's monster, the economy can be really amazing and strong and powerful and wonderful but also...


GARCIA: ...Really scary.

VANEK SMITH: Yes, because when the economy goes bad, it affects our jobs, our pay, our lives, where we can live, how we live, whether we travel, whether we get an education. That is a powerful, life-shaping force. And when that force goes bad, it can feel like it is coming for us. And right now, there is a lot of fear going around about our economy.



GARCIA: And I'm Cardiff Garcia. Today on the show, fearonomics (ph) in honor of the upcoming Halloween season.


GARCIA: What scares you about the economy? We put that question to some of our favorite economists to see what monsters they see hiding in the economic shadows right now.

OK - economic monsters. First up, Sebnem Kalemli-Ozcan - she is a professor of economics and finance at the University of Maryland.

SEBNEM KALEMLI-OZCAN: This is something I think a lot of other people are also scared - is this global uncertainty.

VANEK SMITH: Monster number one...


VANEK SMITH: ...Global uncertainty. Sebnem says this is uncertainty about government policies that affect the economy - things like the trade war with China, which is still evolving. And that creates uncertainty because we don't know how it will resolve, and however it does resolve will have a huge impact on lots of different industries and businesses and the economy as a whole.

GARCIA: Yeah. And plus, Sebnem says, a lot of world leaders, including President Donald Trump, have made economic decisions that people in the markets didn't always expect. And so that perceived lack of predictability has created a lot of uncertainty about the future in people's minds.

VANEK SMITH: What's so bad about uncertainty?

KALEMLI-OZCAN: People don't want to invest. They don't want to hire workers. I mean, they don't want to invest in their future in terms of education. And people's decision at every level really kind of freezes like, well, OK, think I'll just wait and see.

VANEK SMITH: Sebnem says all of that waiting and seeing is really bad for economic growth because it tends to spread through the whole economy.

GARCIA: Yeah. People put off big purchases, like buying a home or a car or going back to school. They slow down their spending, so companies might put off hiring and expanding their operations. And so everything just kind of slows down.

VANEK SMITH: So Cardiff, I was trying to think of what monster this would be, and here's my idea for uncertainty. I was thinking, like, the crazed slasher.

GARCIA: The crazed slasher.

VANEK SMITH: Yeah, it's a classic. Yeah - right? - because it's unpredictable. It's erratic. And you know, when there's a crazed slasher on the loose, you don't want to go eat out at a restaurant or, like, go to a party or go to the movies or get a drink. You want to sit in your house with all the lights on and the doors locked.

GARCIA: Heavily armed.

VANEK SMITH: Heavily armed with a cellphone, yes. And you definitely don't want to go upstairs...

GARCIA: In the attic.

VANEK SMITH: ...And check out the weird noise coming from the attic. Yes.


VANEK SMITH: But everybody always does anyway.

GARCIA: Foolishly.

VANEK SMITH: Foolishly.

GARCIA: The other monster that Sebnem worries about...


KALEMLI-OZCAN: One of the things that scare me is the corporate debt.

GARCIA: Corporate debt. Sebnem points out that both in the U.S. and in many other countries, corporate debt has been on the rise. And in a lot of cases - again, including in the United States - the amount of money that companies have borrowed is at record levels. U.S. companies right now owe more than $9 trillion, which is nearly half the value of the U.S. economy.

VANEK SMITH: Now, corporate debt is not necessarily a bad thing. In fact, it can be a really good thing because it can mean companies are expanding; they're optimistic about the future; and they're investing in building new factories and hiring more workers. But Sebnem says, right now, even though companies are borrowing a lot of money, it's a little bit unclear what they're actually doing with it.

KALEMLI-OZCAN: So it's really not clear. The trends are getting little bit scary that there are not that many profitable investment projects, but corporates are still building.

VANEK SMITH: So here's the problem with that. If companies are just borrowing money because the interest rates on loans are super low, and if they're not using that money to expand and build new buildings and hire new workers, it could mean they're using the money for stuff that's not adding a lot of value to the company or to the economy.

GARCIA: And if companies are tying up all that money and taking on all that debt and not really growing or making anything new, that could slow down productivity growth because it's not making the economy more efficient from year to year.

VANEK SMITH: So it's like someone borrowing money to buy a house versus borrowing money, like, to buy shoes.

KALEMLI-OZCAN: Exact, exact - that's a very good way of putting it.

GARCIA: Yeah, let's call those zombie loans.


VANEK SMITH: Another classic.

GARCIA: Yeah. And not every loan is a zombie loan, but they're there, and they are gobbling up money because they're not really contributing much to the life of the economy.

VANEK SMITH: So now for our third economic monster.


VANEK SMITH: And this comes to us courtesy of Heidi Shierholz, senior economist at the Economic Policy Institute in Washington, D.C.

HEIDI SHIERHOLZ: So for me, the scariest thing that has happened this year in the economy was the - this is going to sound so wonky, but it was the preliminary benchmark revisions that BLS put out to their employment numbers. I know. I know. But it actually is a scary thing.

GARCIA: Yeah, we actually did a whole Jobs Friday about this...


GARCIA: ...With Ben Casselman about these benchmark revisions. So that's monster number three - the preliminary benchmark revisions to the BLS employment numbers. Stacey, I think we're going to have to explain this.

VANEK SMITH: Yes. Let's break this down. So the BLS is the Bureau of Labor Statistics. And every month, they put out a jobs report - the unemployment numbers - and these numbers come out. But you know, they are a guess. They are a really, really sophisticated, educated guess.

GARCIA: We call them estimates when (laughter)...

VANEK SMITH: Estimates, yes. I - forgive me. It's not a guess. It's an estimate.

GARCIA: Yeah, it was based - it's based on a survey. And these numbers are really good, but once a year, the BLS also revises the numbers to be more accurate based on new data. And so earlier this year, there was a big revision, and that revision was way down.

SHIERHOLZ: About half a million fewer jobs were added in 2018 and 2019 than were previously thought. The scary thing is this - those benchmark revisions are typically really small when the economy is just humming along. The monthly methodology is really good when the economy is just moving forward, going steady. When the methodology is bad, when it misses, it tends to be when the economy is shifting.


SHIERHOLZ: And that it missed in this big, negative way concerns me a lot.

GARCIA: So we should point out that we're only looking at the monsters in this episode. There are, like, monster-slayers out there in the economy, too, right?

VANEK SMITH: Oh, yes - calling all Buffys.

GARCIA: You know, and for example, one that Heidi points to is that the economy right now is still creating 100,000-plus jobs a month. So the labor market is still going. It's OK, right? She just worries that the growth in monthly jobs seems to be slowing down.

VANEK SMITH: OK. So Cardiff, what kind of monster would the preliminary benchmark revision to employment numbers be?

GARCIA: I don't know, but maybe if there was an evil version of the air horn, would that be it?

VANEK SMITH: Air horn of evil.

GARCIA: Air horn of evil maybe.



VANEK SMITH: The air horn of evil.


VANEK SMITH: And you know, Cardiff, our economic monster chat gave me this idea that for Halloween, THE INDICATOR team should dress up, each of us, as an economic monster. Like, you, for instance, could be Cardiff Collateralized Debt Crisis Garcia.

GARCIA: OK. And then you would be Stacey Spiraling Inflation Vanek Smith.

VANEK SMITH: Exactly. Exactly.

GARCIA: And also, if you, our listeners, have an idea for an economic monster costume, send it to us, or better yet, actually put the costume together, dress up in it and send us a picture.

VANEK SMITH: Send us a photo.

GARCIA: Yeah. Exactly. You can do that at, or you can tweet it at us at @TheIndicator.

VANEK SMITH: This episode of THE INDICATOR was produced by Leena Sanzgiri. Our intern is Nadia Lewis. Our editor is Paddy Hirsch. And THE INDICATOR is a production of NPR.


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