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- [00:00]
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Siemens/PayPal/Metronome Advertiser
Bloomberg Audio Studios podcasts Radio.
- [01:07]
Max Chafkin
News.
- [01:12]
Stacey Vanek Smith
This is everybody's business from Bloomberg Business Week. I'm Stacey Vanek Smith.
- [01:17]
Max Chafkin
I'm Max Chavkin.
- [01:18]
Stacey Vanek Smith
And this week, Max, I would argue that the theme of the week is should I stay or should I go?
- [01:25]
Max Chafkin
Yeah, you got President Trump pondering whether Jerome Powell should stay or go. We also have people potentially going just because it's travel season.
- [01:34]
Stacey Vanek Smith
Yes, exactly. And maybe not going because the economy's feeling a little iffy right now. And also our underrated story should I Stay or Should I Go? Astral Travel edition. That will make sense later. So Max, we got inflation numbers out this week. These are the numbers everyone's been watching, especially since tariffs have been in place for some months now. Are prices going up? Are they not going up? And the inflation report wasn't super extreme, but we are starting to see prices tick up for some of the more kind of tariff sensitive items, things like furniture and toys, which are very, very much, you know, from overseas.
- [02:16]
Max Chafkin
Yeah, I don't want to delight in the struggles or potential struggles of the US Economy, but I do feel like, Stacey, we got to say, like, this is vindication for you, Stacey Vanek Smith, and for anyone else who's been saying, which is pretty much every economist, that the tariffs were going to lead to this. And we've talked before on this show about how, you know, why isn't it happening? Is it because inventories were pulled forward? Is it because of Taco? And you know, lo and behold, it does Appear like it's starting.
- [02:47]
Stacey Vanek Smith
Although, like a lot of the stuff that had the biggest price increases are not affected by tariffs. Like beef. Like most of the beef that we eat is domestic. Like those prices are up, like barbecue season.
- [02:58]
Max Chafkin
That's the worst time for beef to go up.
- [03:00]
Stacey Vanek Smith
I know this is exactly. Also, car rental prices ticked up and Max, you were talking about this like yesterday.
- [03:06]
Max Chafkin
Yeah, I'm planning a trip in the Midwest with a heavy road trip component. Going to see some family on my wife's side, my mom, and renting a car and oh man, it's like twice as expensive for this like basically week long rental as I've ever paid and kind of staggering. One of many things I'd say in the economy that's kind of working against people taking trips and spending as much money on travel as they used to.
- [03:32]
Stacey Vanek Smith
Yeah, I mean, because there are a lot of versions of this. Right? I mean, even if you do have to take the vacation or you know, you're going to see family or something, you might scale back or, you know, you might splurge at this moment thinking things are going to get more expensive. So I thought I would go and see what other people were doing, how if they're splurging, if they're cutting back, how they're kind of feeling about the economy right now. So I went down to Union Square here in New York. It's a crossroads of source that we've got a lot of tourists but a lot of locals. A lot of trains come and go from there. And I asked people what their travel plans are. Do you have any plans this summer? Yes, I will be heading to North.
- [04:07]
Siemens/PayPal/Metronome Advertiser
Carolina for my mom's birthday.
- [04:09]
Stacey Vanek Smith
The economy's kind of in a weird place right now. Is the that factoring into your plans at all?
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Siemens/PayPal/Metronome Advertiser
Money does factor in.
- [04:14]
Stacey Vanek Smith
All the travel I've done recently has been a little bit more local. Like a beach day with friends that's like a two hour drive away and not like a plane ride away.
- [04:23]
Max Chafkin
I travel a little bit for work.
- [04:24]
Martha Gimbel
I work on film sets.
- [04:25]
Max Chafkin
But no, in general. I have no plans to get on a plane for quite some time and it is because of money.
- [04:33]
Stacey Vanek Smith
Do you guys have travel plans this summer? I don't like to travel during the summer because.
- [04:38]
Max Chafkin
Because it's too expensive, too hot and there are children everywhere.
- [04:42]
Martha Gimbel
October is the best time to travel.
- [04:44]
Stacey Vanek Smith
Do you have any plans to travel this October? I think I'm going to either go.
- [04:48]
Max Chafkin
To Croatia or Costa Rica. A lot of it is if I can get days off. Part of it is, do I find a good deal? Also, where's the dollar strong?
- [04:57]
Stacey Vanek Smith
Where's the dollar strong? Right now?
- [04:58]
Max Chafkin
Japan still seems like a pretty good deal.
- [05:01]
Stacey Vanek Smith
Do you like, track this?
- [05:02]
Max Chafkin
Oh, I. Yeah. New York is full of some really interesting people. That guy is, like, up to date on the yen to dollar conversion rate. That's amazing.
- [05:12]
Stacey Vanek Smith
For a while, it was not just the yen. Apparently the UK is quite a good deal. The yuan. Taiwan is a good place to go right now. He said so. Yeah. He has a spreadsheet.
- [05:22]
Max Chafkin
I just want to say also, all these winners who are staying in New York in the summer, great move. That's the best thing you can do. This is the greatest city in the world. Why would you travel someplace else?
- [05:32]
Stacey Vanek Smith
I mean, possibly because it's like a little bit gross in New York. Right. Right now, it's kind of like walking around inside of a gym bag.
- [05:39]
Max Chafkin
Well, Stacey, point taken. Yeah, it may be a little humid. It may feel a little gym bag esque. But there was somebody in the Bloomberg building this week who happens to agree with me on the issue of summers in New York.
- [05:56]
Metronome/Oracle Advertiser
How's this summer shaping up this summer from tourism perspective, not the levels we have. I think some of the conversation around tariffs, some of the conversations impacted our tourism, particularly some of our domestic tourists. But we're gonna. We're gonna bounce back.
- [06:11]
Max Chafkin
We had it.
- [06:11]
Metronome/Oracle Advertiser
We had a hit during COVID and we were able to recover after Covid. And this is still a good product. You know, people want to come.
- [06:18]
Amanda Mull
It's a great product. I love it here.
- [06:19]
Martha Gimbel
Yes.
- [06:19]
Max Chafkin
And we.
- [06:19]
Stacey Vanek Smith
The product be New York.
- [06:21]
Max Chafkin
Look a little bit of bias there. That's. That's. Mayor Eric Adams obviously has a vested interest in the product of New York.
- [06:28]
Stacey Vanek Smith
That's true. And he's speaking with our colleague Joe Wiesenthal for the upcoming episode of Odd Lots, which is great.
- [06:34]
Max Chafkin
Shout out to Odd Lots.
- [06:35]
Stacey Vanek Smith
Shout out to the great.
- [06:38]
Max Chafkin
If you don't already.
- [06:39]
Stacey Vanek Smith
So, yeah. The mayor apparently thinks that all is well in New York, although he did.
- [06:43]
Max Chafkin
Say tourism's acknowledging some challenges. I will say, you know, Mayor Adams locked in a very difficult election fight. So it's.
- [06:52]
Stacey Vanek Smith
But yes, he is.
- [06:53]
Max Chafkin
I'm glad that whatever happens, we can call him a friend of the show.
- [07:02]
Stacey Vanek Smith
So, Max, there has been a lot of Federal Reserve drama this week, namely Fed Chair Jerome Powell. We've had Trump kind of questioning if Powell should go.
- [07:14]
Max Chafkin
Yeah, it's like a episode of the Apprentice. It's like he's going to fire him one minute, then he's Going to keep him the next minute and, and on and on.
- [07:21]
Stacey Vanek Smith
I mean, just to paint a small picture, on Wednesday, we're recording this on Thursday. So yesterday here at Bloomberg, at about 11 in the morning, there was this headline that read, Trump likely to fire Powell soon. White House officials says. And an hour later, an hour later, hour later, there was a headline that said, trump now says firing Powell Unlikely whipsawing markets.
- [07:42]
Max Chafkin
He's a terrible. He's a terrible Fed chair. I was surprised he was appointed. I was surprised, frankly, that Biden put him in and extended him.
- [07:52]
Stacey Vanek Smith
So that was a clip of Trump from earlier this week. And, you know, we should say, clearly, Max, you know, Trump appointed Powell to his first term in 2017. Powell was nominated to a second term during the Biden presidency. So Biden was in the mix, too. But also, Trump does not technically have the power to fire Powell. Right.
- [08:10]
Max Chafkin
Yeah, A lot going on here. And I think the way that this would happen if Powell were to get fired would be around. There's this investigation going on into a renovation and alleged overspending by the Fed in, in renovating its headquarters. Feels really like a pretextual thing, like they're trying to gin something up. But that is how it would happen. And Trump has indicated, you know, later in the day he said, I wouldn't fire him unless there were some kind of fraud. That seems like a reference to this investigation.
- [08:40]
Stacey Vanek Smith
Right. But, but the sort of, the immediate issue I think that Trump is really upset about is interest rates. He wants Jerome Powell to lower interest rates.
- [08:49]
Max Chafkin
Yeah. And, you know, when this original headline happened where, where a White House official told us, told Bloomberg that they were going to fire Powell quickly. Like, I heard like a gasp in the newsroom. I mean, people, people reacted to that just because it's, it's so it is such a break from precedent. And also, I think everyone knows, because all of us kind of are living with the financial markets that would affect the markets, that the markets were going to take a dive when that happened.
- [09:19]
Stacey Vanek Smith
Oh, yeah. I mean, I think, you know, the independence of the Federal Reserve, the central bank, and the ability for that entity to make decisions that are kind of independent of politics or popularity, at least traditionally, that has been looked at as quite sacrosanct and quite crucially important. And now I do feel like that is kind of being thrown into question. But we wanted to bring an expert on to talk about this issue, why it's important, why it's being questioned right now. And so we've got economist Martha Gimbel here she is the executive director of the Budget Lab at Yale. Hey, Martha.
- [09:53]
Martha Gimbel
Thank you for having me.
- [09:54]
Stacey Vanek Smith
So there's all this back and forth, all this drama about, you know, Trump wanting to potentially fire Jerome Powell. Will you talk to us a little bit just about why, like, what's going on here on the surface?
- [10:07]
Martha Gimbel
So I think one thing to keep in mind is that President Trump likes lower interest rates. In fairness to him, lower interest rates are really fun. You get to borrow money more cheaply that flows through to mortgages and consumer.
- [10:21]
Stacey Vanek Smith
Credit and businesses, businesses they hire. That's good. Yeah, everybody wants that.
- [10:27]
Martha Gimbel
The fact that it's fun when interest rates are low is exactly why we have an independent central bank. Because if it were just up to politicians, generally, what you see is they try to keep interest rates low because people like that, and then inflation can get out of control. And so historically, policymakers have kind of tied their own hands and pre committed to say, hey, we won't be touching the interest rate regime because we basically know that we are not trustworthy. We know that we will do something that in the short run makes voters happy, but in the long run can create economic instability and more inflation.
- [11:06]
Max Chafkin
There seem like two questions here. One is about the independence of the Fed, which is like a big structural question. But then there's also, like, should Jerome Powell lower interest rates right now? And it seems like there's room for disagreement there. Stacey and I. Martha, you were not here, but last week, Stacey and I did an episode about consumer sentiment, talking about how there are these warning signs is the story that Trump's telling about the economy and, like, the desire for lower interest rates, apart from the kind of, like, badness of, like, the president publicly feuding with the chair of the Federal Reserve, like, is there anything to the argument that, like, he is being too slow to react, maybe, like, too concerned about inflation, not concerned enough about the economy?
- [11:48]
Martha Gimbel
So I do want to distinguish between the question of, like, should the Fed be cutting more versus what President Trump has been talking about, which is, like, interest rates at 1%. That would be a really, really substantial cut. And no economist is talking about cutting interest rates that much at this particular point in time.
- [12:04]
Stacey Vanek Smith
What are interest rates right now?
- [12:06]
Martha Gimbel
About 4%. There's all of these things that the Fed is kind of trying to keep an eye on. It's trying to see if the labor market is starting to deteriorate. It's trying to see, you know, what is happening with the impact of tariffs on prices. And it's a really uncertain time. And I Think it is legitimately unclear. You know, should the Fed cut rates by 25 basis points this year? Should it hold? Should it do 50? I mean, you could get an economist on here to defend each of those options. You could not get someone on here, I don't think, to defend cutting interest rates by 3 percentage points.
- [12:44]
Max Chafkin
Can I ask, like, people have argued that the Fed should be more responsive to the concerns of normal people. And, and I do wonder, Martha, like.
- [12:53]
Stacey Vanek Smith
Is there or accountable, too?
- [12:55]
Max Chafkin
Yeah. We've just lived through this period where there's been, like, a massive growth in wealth inequality, where, like, there are aspects of the economy that are not working for a lot of people. It's why Trump keeps getting elected president. And even if you leave aside, like, the mechanism by which this is happening, is there anything to the argument that, like, it would be better if the Fed had less independence than it does today?
- [13:19]
Stacey Vanek Smith
No, I think there's a couple of.
- [13:22]
Martha Gimbel
Things to address there. One is the Federal Reserve has really blunt instruments, and they've talked about this before. Right. The Fed is not there to address inequality. That's for a couple of reasons. One is they work best when they have really clear mandates. They're there to address unemployment. They are there to address inflation. You start inserting more things into that, it really complicates the picture for them. And it means that people will trust less. Right. That they're going to address inflation or unemployment. The second thing is they. It's a really blunt instrument, interest rates. Right. And so, you know, you saw people talking about this with the housing market where, you know, oh, if the Fed raises interest rates, it'll impact the housing market. It's like, yeah, but they need to address inflation, and that's the tool they have. You need Congress, you need fiscal policy to address a lot of these other issues. And I think part of the reason why you've seen this focus on the Fed is, is because Congress is so dysfunctional. And so people have gone like, oh, well, we can have the Fed do things, but then that undermines the very existence and point of the Fed, which is to be isolated and insulated from a lot of these conversations so that they can do their job.
- [14:32]
Stacey Vanek Smith
One argument that, that I read that I did find kind of compelling was this idea that, like, you know, inflation got really, I mean, not quite out of control, but it was almost in the double digits at one point. And I heard, you know, somebody say, like, well, President Biden lost his job. Jerome Powell didn't. And I do think there is an interesting idea I mean, the trade off of independence is that you're not necessarily held accountable for your actions. And maybe there's just not enough of a consequence if a body is independent. I mean, there are definitely advantages, but it does seem like there are real disadvantages. Like, you could make an argument for maybe a less independent Fed. Yeah.
- [15:12]
Martha Gimbel
I mean, I think one thing that is hard is that consumers don't understand the way the Fed works. And so the thing that people often want in these situations is they want the means that will not achieve the end that they want. So, as an example, if you polled voters, one of the number one things that they thought should be done to address inflation was to lower interest rates. Totally understand why people think that. Right. Like, things are too expensive.
- [15:42]
Stacey Vanek Smith
Yeah. If you're trying to get a home loan, I mean, that's super expensive. Right.
- [15:47]
Martha Gimbel
And, like, inflation makes things more expensive. If I pay lower interest, that's less expensive. So that will fight inflation. Right.
- [15:54]
Stacey Vanek Smith
Like, it make. You can cut.
- [15:55]
Martha Gimbel
You see how people get there. But of course, if you lower interest rate, you get exactly the opposite effect. And so I think this is one of the things that is really hard about the Fed, and I understand why it is frustrating, is it does feel like this kind of, you know, group of technocrats, bureaucrats, just kind of looking at their charts and doing their thing. The problem is that we now have decades of experience that tells us that a group of unelected bureaucrats looking at charts and doing their thing is actually the thing that gets you the best economic outcome. And that is very frustrating. And I'm very happy that I'm the person that doesn't have to sell that concept to voters. But, you know, it's pretty clear from the economic literature that that is, in fact, what you want.
- [16:34]
Max Chafkin
You know, there's a chance, right? Like, we wake up tomorrow or even before this podcast comes out, and Trump has tried to fire Jerome Powell, what would happen? Like, what would be. What would our world look like?
- [16:48]
Martha Gimbel
So, first of all, you know, one, it would take time to get a new person confirmed. And that's even assuming there isn't legal action first. It would almost certainly be counterproductive. Right. Because it's not the case that the Federal Reserve just, you know, is a hand that sets the interest rates in every part of the market. It lends money to banks, for instance. But, you know, the mortgage companies figure out what makes sense for them to set interest rates at. And in a situation where you fire the Fed chair, it is almost certainly the case that people are going to raise interest rates because they are going to feel more uncertain about the U.S. economy and the direction of interest rate policy in the United States. And so, in fact, what you would probably end up with is higher interest rates.
- [17:34]
Stacey Vanek Smith
Really?
- [17:35]
Martha Gimbel
Yeah. It would actually almost certainly be counterproductive.
- [17:38]
Stacey Vanek Smith
Because people would just be so worried about lending money because they're like, what is happening in this country? This doesn't seem like a great time. So I will lend the money, but yikes, you're gonna have to pay a lot to borrow.
- [17:50]
Martha Gimbel
Yeah, we want some extra money because your risk just went up, basically.
- [17:53]
Stacey Vanek Smith
Interesting.
- [17:54]
Martha Gimbel
And so, you know, people who've been listening to this conversation who are thinking, like, okay, I get that inflation might go up, but I really want to take out a mortgage. So, like, I'm willing to risk it. Like, let's fire Pal and see what happens. It would be highly unlikely that mortgage rates would go down in this instance. The other thing to keep in mind is that we talk about the Federal Reserve Chair a lot. The Federal Reserve Chair does not have unilateral authority to raise or lower interest rates. They are the face of the Fed. But interest rates are set by a committee, and there's a wide range of views on that committee. It is not the case that if even someone was appointed tomorrow who was much more dovish on interest rates than Chair Powell, is that you would see a huge change in interest rate policy. And in fact, you might see the committee going in the other direction because they might feel that in order to maintain their credibility on interest rates and to keep inflation expectations down, that they have to be even slower to cut. So there's a bunch of ways in which this could very, very well be counterproductive.
- [19:03]
Stacey Vanek Smith
As an economist looking at this, like the prospect or basically the independence of the Fed being challenged and talked about in this way, how do you feel about this conversation and this issue coming up in this way? Is it, like, scary? Is it interesting? Is it? How do you feel?
- [19:19]
Martha Gimbel
I mean, this is the thing that stresses me out the most about the direction of the US Economy. I think people should keep in mind when we talk about the stagflation of the 1970s and how hard that was. One of the things that people think played a really big difference there was that Arthur Burns, who was the head of the Fed, was not really independent and was susceptible to a lot of pressure from President Nixon, and that that made the situation worse.
- [19:46]
Stacey Vanek Smith
He kept cutting interest rates and inflation got pretty out of control into the double digits.
- [19:50]
Martha Gimbel
Yeah, he was taking calls from Nixon who was saying, you know, don't do this, you need to, you know, keep money cheap basically. And so I really do worry that we could end up in a situation like that. Again, I think you could end up with a real slowdown in economic growth. And again, at the end of this, I don't think that your mortgage or your credit card bill would be cheaper.
- [20:16]
Stacey Vanek Smith
Martha Gimbel is an economist and the executive director of the Budget Lab at Yale.
- [20:27]
Metronome/Oracle Advertiser
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- [22:04]
Stacey Vanek Smith
You can get the news whenever you want it with Bloomberg News Now. I'm Amy Morris.
- [22:09]
Martha Gimbel
And I'm Karen Moscow, here to tell you about our new On Demand News report delivered right to your podcast feed. Bloomberg News now is a short 5 minute audio report on the day's top stories. Episodes are published throughout the day with the latest information and data to keep you informed.
- [22:25]
Stacey Vanek Smith
Yes, there are other products like this from a variety of news organizations, but they usually rerun their radio newscasts throughout the day. That's not what we do. We create customized episodes that can only be heard on Bloomberg News now.
- [22:40]
Martha Gimbel
And we don't wait an hour to publish breaking news when news Breaks. We'll have an episode up in your podcast feed within minutes. So you're always getting the latest stories and developments.
- [22:50]
Stacey Vanek Smith
Get the reporting and the context from Bloomberg's 3,000 journalists and analysts. We're all over the world. Listen to the latest from Bloomberg News now on Apple, Spotify, or anywhere you listen.
- [23:02]
Max Chafkin
All right, Stacey, as we heard at the top of the show, it's the middle of the summer, it is travel season, and there's some amazing news in addition to all those plans we heard about earlier.
- [23:14]
Stacey Vanek Smith
Amazing news.
- [23:15]
Max Chafkin
Yeah, you don't have to take your shoes off when you go through the TSA line anymore.
- [23:18]
Stacey Vanek Smith
Donald Trump, does that count as amazing news?
- [23:21]
Max Chafkin
Achieved something.
- [23:22]
Stacey Vanek Smith
That's my low bar for amazing. You don't have to take your shoes off. I am a TSA Precheck member. I never have to take off my shoes.
- [23:31]
Max Chafkin
All right, well, for those of us who are not TSA PreCheck members, the hoi polloi, you would think this would be great. And, you know, I've often heard people from other countries kind of complaining about our security measures, kind of like sort of snorting at them. And you think as we move away from COVID that, you know, the tourist industry might be booming, but it is not, Unfortunately. In the U.S. yeah, in the U.S. so we got the latest data from the U.S. national Tourism and Travel Office, which tracks this, reported that in June, the overseas international travel was actually down 3% from a year ago. And which, okay, it doesn't sound that bad, but when you look at the big picture, we are still a long way from where we were during COVID And given this, also given the way that the sort of political landscape is affecting travel, you know, of course, people in other countries are maybe not as inclined to go to the US as they were before. I thought it'd be great if we brought in our friend Amanda Mull, Bloomberg Businessweek columnist. She is here. She's written a lot about travel and the decisions consumers make. Amanda, how you doing?
- [24:37]
Amanda Mull
I'm doing great.
- [24:38]
Stacey Vanek Smith
So, Amanda, the data that Max just laid out, I feel like you could look at it in a couple ways. One way is like, you know, wow, there have been a lot of rule changes for traveling from other countries. A lot of people might be kind of mad at us right now, and only 3% maybe seems not as big of a change as I might've expected. Or this could mean something else. What do you actually see in these visitor numbers?
- [25:01]
Amanda Mull
This is one of those things where it's a lies, damn lies and statistics type of thing because, like, what matters is, like, the context you put those numbers in. So, like, a 3% decline from last year doesn't feel apocalyptic, for sure. But when you compare that to the pre pandemic benchmark, and when you look at travel, you sort of have to look at how things were going in 2019, because the pandemic reordered travel plans for so many people in such a durable way. We're still Only about at 80% of the international tourist arrivals that we were at in 2019. So overall, like, this is a market that has already shrunk, and for it to continue to decline is bad. It means a lot of bad things for US Tourism jobs. It means bad things for New York City, where we all are. And when you start breaking those numbers down further, you see some, like, worrying indicators. The current projections are that tourist arrivals for the US are going to be down overall in 2025, up to 9%. So when you stack that on top of the existing decline post pandemic, it's a industry that's taken a huge hit.
- [26:08]
Max Chafkin
You know, it's interesting because you think about people coming to the US In a lot of ways, it says more about the economies of other countries than about our economy, although, I guess, you know, the cost of the dollar or whatever does affect it. On the other hand, when you start digging into these numbers, you see some signs that, like, the Trump factor may be playing a role. Canada. So in the June numbers that I just gave you, we don't have the information for land crossings or for Canadian and Mexican travel. But when you go back and look at the data we do have, which is as recently as April, it's down like 20%. So way, way more down. Yeah. And Amanda's talking about these kind of, like, small communities. So you have the hotels, you have airlines, you have these big industries that are kind of heard across the board. But then there are a lot of towns in Maine and also upstate New York where you get a lot of Canadian tourism. Also Florida, for some reason, I guess Canadians love to go Florida. The other thing is, it's probably worth mentioning, and you see this in some of the analysis of this data, is that it's kind of too early to know for sure where the international tourism's going because people plan vacations, like, way in advance.
- [27:16]
Amanda Mull
That's true.
- [27:17]
Max Chafkin
I have a trip to Italy planned for next year that I don't know, honestly, if I would have booked if I were booking it now, partly because the dollar's gotten weaker and some other stuff and so this may be a case where, just like the tariff data that we talked about at the top of the show, where, like, we didn't see it at first, you could see it down the road as people are planning vacations of the future.
- [27:39]
Amanda Mull
Yes. Especially with tourist arrivals, you get this sort of lagging indicator thing that makes the numbers really frustrating for people to look at and understand. Even smart people who understand how this works and understand that sometimes effects take a while to show up in data have a really hard time looking at numbers three months or six months after an event that was supposed to change everything and thinking it still looks normal. Was this wrong? And because of the lag between when you plan and book a vacation for pleasure travel and when you actually go, I think that we will be seeing fallout from this for quite a while.
- [28:13]
Max Chafkin
Okay, I have a question for the both of you. So we're talking about the sort of post Covid recovery. I want to get into that, but I was curious to ask you, how long do you think it took for travel to recover after 9 11? Amanda, what do you think?
- [28:28]
Amanda Mull
I used to know this number. This number came up in some reporting I did for a story a couple years ago, and I think it was pretty short from my memory. I think it was like a couple of years, maybe less.
- [28:39]
Stacey Vanek Smith
Stacey, I know our economy took, like, 10 years to recover, so I'm gonna guess, even though Amanda knows all these things off top of her head, I'm gonna guess a little bit longer. Like maybe seven years.
- [28:52]
Max Chafkin
Okay. So it was kind of in the middle July 2005 is when we hit the numbers we'd hit in August 2001. So basically four years, which is kind of interesting because that's less time than it's taken us to recover from COVID And it sort of made me wonder, because on one hand, you would think, like, 9 11, and especially for people who were adults at that point. Right. Just such a defining moment in history and culture and everything. And it was one where, like, air travel in particular, was implicated. International travel. There were all these stories written about, oh, the world will never be the same. And yet, you know, we kind of return to sort of the pre 911 travel norms pretty quickly. And it's taken us longer now, like, we are further out from COVID than we were from 9 11, which seems interesting and different. And I'm not sure I would have necessarily intuited that.
- [29:47]
Amanda Mull
Yeah, I think behaviorally, the sort of durable nature of COVID habit changes. People really took a break from flying for, like, A year or more. I think that that is like a big enough interruption to people's habits that, like, you're going to end up with more durable change even at the margins. Some people who just, like, don't want to fly anymore because they got out of the habit. And then you also have changes in business travel. And business travel has never gotten quite back up to the rates it was before.
- [30:17]
Stacey Vanek Smith
That was very lucrative too, because they didn't really look at prices as much as the rest of us.
- [30:21]
Amanda Mull
Yes, they don't look at prices and they fly all the time.
- [30:23]
Max Chafkin
Yeah. And not all of this is about fear or about, hey, we don't live in a globalized world. It's about people getting on zoom calls for some percentage of meetings that they would have flown for. There is an underappreciated factor which is related to this that Amanda has written a lot about, which is that flying sucks.
- [30:39]
Amanda Mull
Now it's so bad.
- [30:41]
Stacey Vanek Smith
Is it worse than it was? Like, is it worse than it was before the pandemic?
- [30:46]
Amanda Mull
It depends who you are and how much you're paying to fly. If you are a person who post pandemic has decided to treat yourself and get a fancy credit card that gives you rewards, miles and puts you in line for upgrades and maybe incentivizes you to buy more expensive plane tickets to accrue those rewards faster then flying for you might be better now. You might spend more time in the airport lounges. A bunch of them have opened up since the pandemic. You might be sitting in nicer seats. For most people, I think it is worse. I think that travel has gotten a little bit more like riding the bus for a lot of people. For most people, for everybody in the back of the plane, I think that temperatures run a little bit hotter. As far as people's behavior, I think that we there was like this real spate of like post pandemic, like sort of antisociality that I think has maintained its momentum in some cases in airplanes.
- [31:39]
Stacey Vanek Smith
One thing that, that I keep thinking of just like sort of more holistically about international travel going down is I was on an earnings call once for the Empire State Building, like the people that own the Empire State Building. And they were saying that travel was way down since the pandemic. And their solution, they're like, oh, but we've made up for the revenue by raising ticket prices. So it's like eighty hundred bucks now.
- [31:58]
Max Chafkin
To same dynamic, I think.
- [32:00]
Stacey Vanek Smith
So I'm wondering if, if we see less travel, is that going to push prices up is that going to be contributing to?
- [32:07]
Amanda Mull
I think so, but it depends on what kind of travel destination or what kind of travel expense you're looking at. If nobody is buying airline tickets for pleasure travel, if nobody is renting cars to go on a fun road trip, then those will probably get less expensive to incentivize more people to start taking those up. That's what we saw during parts of the pandemic, which is, you know, come, come, take the flight, go on the vacation. We'll get you there cheap. What it costs when you get there is none of our business. But these sort of attraction tickets that are sort of limited, that like once you're there you don't want to skip it because it costs 20 more dollars than you thought it might. Those types of things I think are sort of ripe for inflation, ripe for price increases to make up for volume decreases.
- [32:47]
Max Chafkin
This is why the shoe thing is such a big deal, because Amanda's talking about how, you know, airline travel has become bad and everything, but maybe you.
- [32:55]
Stacey Vanek Smith
Do get kind of harassed like you.
- [32:56]
Max Chafkin
Maybe the shoe thing will save it.
- [32:58]
Stacey Vanek Smith
You think that is a move in the right direction? Yeah, I mean, I'm happy to keep my shoes on.
- [33:03]
Amanda Mull
Same.
- [33:10]
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- [33:40]
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- [34:11]
Stacey Vanek Smith
Now to the part of our show where we talk about a story that is underrated in the news, something that is very significant but isn't being talked about enough. And you brought today's story.
- [34:20]
Max Chafkin
Yeah, and I'm glad Amanda's here to stick around. Definitely need an expert in consumer behavior to explain this one, so. All right. Wall Street Journal reported on July 15 about a new trend in online commerce. I'm gonna read you the headline. Etsy Witches Charge for Jobs, Sunshine and Nicks wins. Business is booming. So this is a story about how witchcraft and other sort of magical spells are super hot on Etsy. And I can tell you, I went on Etsy and there are just like, it seems like thousands of magical spells for sale.
- [34:54]
Stacey Vanek Smith
What does this mean? Like, what do you do? How do you buy a spell?
- [34:56]
Max Chafkin
You pay a witch, an online witch or warlock, I suppose, or other spiritual figure. Like, 20 bucks, 10 bucks? As little as, like, couple of bucks, depending on the spell. I guess it depends on what you want exactly. And I think that from there they collect the money, but of course they die.
- [35:14]
Stacey Vanek Smith
And they cast a spell on your behalf.
- [35:16]
Max Chafkin
They cast a spell on your behalf? Yes. Now, what's funny here is this is, like, technically banned by Etsy. They ban metaphysical services.
- [35:24]
Amanda Mull
What an incredible category name. First of all, metaphysical services.
- [35:29]
Stacey Vanek Smith
Why did they ban metaphysical services?
- [35:32]
Max Chafkin
I have no idea. But I did notice that, like, all of these witches have disclaimers essentially saying.
- [35:37]
Stacey Vanek Smith
Like, also, do you want to mess with the witches and say that they can't sell their spells? Because that does not seem like a good idea.
- [35:42]
Amanda Mull
I mean, if the witches have cursed Etsy, that would explain some things about their.
- [35:47]
Stacey Vanek Smith
Maybe we should short Etsy. They've messed with the witches.
- [35:50]
Max Chafkin
Amanda, do you know why people are doing this? It can't be totally fake. Like, you look at the reviews. These sellers have thousands of reviews. Obviously, there are ways to juice your numbers and everything. I believer.
- [36:00]
Amanda Mull
Yeah.
- [36:00]
Max Chafkin
But it looks like there are people who are going for it. And there are some hilarious anecdotes in this Wall Street Journal story. The guy who paid to have the Knicks win, they won one game, but then they lost the next game. And he said that it was probably some Pacers fans doing some counterspells, you know?
- [36:18]
Amanda Mull
Right. You can't account for counterspells when you're paying. The Etsy witch is the thing. They may have contracted with a better Etsy witch.
- [36:24]
Max Chafkin
Well, initially I was thinking, like, Stacy, you and I. Because there are some spells that are relevant to everybody's business.
- [36:30]
Stacey Vanek Smith
Yes, we're.
- [36:31]
Max Chafkin
There are lots of spells.
- [36:32]
Stacey Vanek Smith
Does the stock market go up?
- [36:33]
Max Chafkin
Well, there's some wealth spells. There are also revenge spells, which are fun and seems dangerous.
- [36:37]
Amanda Mull
Yeah, you can have, like, an Etsy witch, like hex your friend's ex boyfriend who cheated on her or something like that. That's fun.
- [36:45]
Max Chafkin
I feel like if Etsy's gonna crack down on anything, that's where they should start. But then there are also these kind of general ones, like here's a good one, 270 bucks. Kind of pricey, but. Call to all 72 demons of the Gotia for a custom spell. So 72 demons all. And according to the description, they're all gonna work at once together.
- [37:03]
Stacey Vanek Smith
Demons. That feels dangerous.
- [37:06]
Amanda Mull
No, I've seen too many horror movies. Don't mess with the demons. You don't wanna talk to them.
- [37:09]
Stacey Vanek Smith
Buffy the Vampire Slayer.
- [37:11]
Max Chafkin
Yeah, well, I had the same feeling because like, you know, my kids are, you know, there are a lot of fairy tales and myths.
- [37:16]
Stacey Vanek Smith
Harry Potter.
- [37:17]
Max Chafkin
And there is a recurring theme which is that don't mess with magical spells. You mess with a magical spell like it's gonna, it's gonna blow back in a way you cannot appreciate. We cannot predict the nature of witchcraft. And as a result, I'm staying away.
- [37:32]
Amanda Mull
I am about to reveal myself as two online. But this is, this is a very long standing digital market. This goes back at least in the sort of current iteration to Tumblr as so many weird things online do. Tumblr witches that you could ask for a spell or you could like PayPal them or Venmo them for a spell have been going for a while and I suspect a lot of these witch entrepreneurs have just moved their services over to Etsy to, you know, it gives you a, a checkout layer, some seller protections.
- [38:03]
Stacey Vanek Smith
I do also feel like there's this moment happening, like kind of like a mystical moment. I just feel like astrology, witchcraft, like this stuff is kind of coming to the fore.
- [38:14]
Amanda Mull
Yes, it has definitely grown over time.
- [38:16]
Stacey Vanek Smith
I mean, witchcraft's been around for a minute.
- [38:18]
Amanda Mull
Yeah, Witchcraft is one of our oldest.
- [38:21]
Stacey Vanek Smith
Sciences, oldest business women owned, often one of the oldest women owned businesses.
- [38:26]
Amanda Mull
You know, the girl bosses of Etsy.
- [38:29]
Stacey Vanek Smith
Are simply, they've been leaning in for centuries.
- [38:33]
Max Chafkin
All right, Amanda, thank you for being here.
- [38:36]
Amanda Mull
Thank you so much for having me.
- [38:37]
Stacey Vanek Smith
Thanks, Amanda.
- [38:42]
Max Chafkin
All right, if you are a witch on Etsy, witches of Etsy and you have a suggestion for us or any thoughts on this story, please email us@everybody's bloomberg.net that's everybody's with an S@bloomberg.net also regular people can email us too.
- [38:59]
Martha Gimbel
Muggles.
- [39:00]
Stacey Vanek Smith
Also, welcome to email us.
- [39:01]
Max Chafkin
You're genuinely curious to hear from listeners about travel and like how this story's playing out in their lives. And I also want to say, Stacey, we still need reviews. We love reviews. We got another five star review and I am not going to read a haiku for this listener. Only because they offered a bit of constructive feedback in the review. Really taking slight issue with the haiku.
- [39:26]
Stacey Vanek Smith
So in honor of the review, we will not read a haiku. I feel like that's a reasonable way to honor this, this listener. Thank you for the review.
- [39:34]
Max Chafkin
GA Seattle, we are not promising to not do haikus in the future, but today for you we will assess, we will hold off.
- [39:41]
Stacey Vanek Smith
I think that's, I think that's classic.
- [39:43]
Max Chafkin
And let's see how it goes from there.
- [39:49]
Stacey Vanek Smith
This show is produced by Stacey Wong. Magnus Henriksen is our supervising producer, Amy Keen is our editor and Brendan Francis Newnham is our executive producer. We get engineering support from Blake Maples and date Dave Purcell. Fact Checks Sage Bauman heads Bloomberg Podcast and a very special thanks to Jeff Muskus, Julia Rubin and Maria Lang. Thank you very much for listening and we will see you next week.
- [40:18]
Bloomberg Green Announcer
On September 25, Bloomberg Green returns to New York to bring together leaders from business, finance and government during Climate Week. Join us for a half day of timely insights and high impact networking backed by Bloomberg's global journalism and data expertise. Together we'll explore strategies for future proofing business and communities from the planet's most pressing climate challenges. Supporting sponsor Susano learn more@BloombergLive.com greenny.