How is Boeing Okay?

Summary

Slate Money Podcast Summary

Episode Title: How is Boeing Okay?

Date: May 2, 2020
Host: Felix Salmon (A), with Anna Shymansky (B) and Emily Peck (C)

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Overview

In this episode, the Slate Money team tackles the surprising resilience of Boeing amid colossal challenges, discusses the reopening of parts of the U.S. economy after COVID-19 lockdowns, examines why big businesses seem to be surviving while small businesses are struggling, and critiques the relevance and limitations of GDP as an economic measure during the pandemic. The hosts engage in a lively, insightful conversation—with notable moments of humor and skepticism about both policy and economic fundamentals.

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Key Discussion Points and Insights

1. The Challenge and Reality of Reopening America

• State-By-State Reopenings:
  • The U.S. is roughly half reopened, with states like Texas allowing limited in-person dining and theater attendance, but major systemic questions remain.
    • Felix (A): "You can go to a restaurant and sit down and have a meal under certain restrictions... We will start seeing a bounce back in the beginning of the summer. And now I guess it's the beginning of the summer in Texas." (01:16)
  • Ongoing issues: Insufficient testing, inadequate consideration for employees’ safety and childcare, and a fragmented state-level approach due to federalism.
• Employee Safety and Childcare Concerns:
  • Workers are pressured to return (risking unemployment benefits otherwise), often without support for childcare or health safety.
    • Emily (C): "If you're ordered back to work but you have no one to watch your children, like, what are you supposed to do?" (02:23–02:35)
  • “Reopening” is not simply economic—it’s deeply social and infrastructural.
• Federal vs. State Policy Dysfunction:
  • U.S. federalism complicates coordinated responses; states have neither the resources nor clear federal support for worker protections.
    • Felix (A): "Every other country can make these decisions at a national level. And in the United States, the shutdown were all done at the state level, which means the reopening is all going to be done at the state level." (06:03)
  • Political in-fighting and lack of strong federal guidance fuel uncertainty and inefficiency.

2. The Strange Strength of Big Business (and Boeing in Particular)

• Boeing’s Surprising Market Access:
  • Despite multiple crises—737 MAX disasters, plummeting demand due to halted air travel—Boeing raised $25 billion in new debt from private capital markets.
    • Felix (A): "You can't imagine, really, a company that is in worse straits than Boeing. And it just went out to the market and raised like $25 billion in new debt finance. So it has all the money it needs." (14:06)
• The Federal Reserve’s Indirect Bailout:
  • The Fed provides market liquidity, making investors more willing to finance companies like Boeing and major airlines.
    • Anna (B): "I would say that what we are seeing here is fundamentally a Fed bailout...you want the private capital markets to function." (15:50)
  • Low interest rates and corporate bond-buying programs (like the Main Street Lending Facility) lower default risk and incentivize lending to big firms, reinforcing a “too big to fail” environment.
    • Felix (A): "It kind of doesn't matter whether they are profitable or not, because they'll always just be able to borrow what they need to service their debts." (18:23)
• Why Are Investors Lining Up to Lend?
  • Implicit guarantee that the Fed will not let big corporate borrowers default, reducing risk perceptions and driving demand for their bonds, sometimes even before Fed buying ("front-running").
    • Anna (B): "...We now have this enormous buyer that's going to be coming into the market. So I want to front run that and buy some of these bonds..." (19:39)
• Small and Medium Businesses Still Suffer:
  • Fed’s programs are less effective for smaller firms, leaving them dependent on inconsistent or inadequate government help.
    • Emily (C): "It’s so interesting that the biggest businesses with sort of the most money get the most money and get to survive, and everyone else is like, to the wolves." (21:04)
• Inequality Deepens:
  • The hosts argue that the structure of stabilizing big business first, with little for small business or workers, accelerates inequality—mirroring post-2008 dynamics.
    • Anna (B): “…After the 2008 crisis…we were exacerbating inequality because we only use monetary policy…We did very little in terms of fiscal policy.” (23:57)

Memorable Exchange:

• Felix (A):
  • "Boeing this week turned around and said, actually, you know what? We have so much money from the bond market, we don't want anything from the government at all. You're like, what?" (22:04)

3. GDP: What It Reveals (and Conceals) During the Pandemic

• Historic Drop, Limited Relevance:
  • U.S. GDP shrank at an annualized 4.8% in Q1—and far worse numbers loom—but these figures, the hosts argue, miss the dramatic changes in unpaid labor and well-being during lockdown.
    • Felix (A): “The number is minus 4.8, which I think conceals much more than it reveals. It doesn't mean a huge amount.” (24:59)
• Unmeasured Home Production:
  • Examples abound of “hidden” productivity: home baking, homeschooling, and caregiving don’t appear in GDP, though their value may even exceed what’s lost in formal transactions.
    • Emily (C): “…All this uncounted productivity happening right now. And that's not even talking about the well being of Americans. That doesn't really show up in GDP because we're all staying home and not getting sick ideally. Right?" (26:18–26:38)
  • Felix (A): “On some level the thing that GDP measures is there's a huge amount of value added to a bag of flour when you turn it into a loaf of bread...but only one of those two types of value shows up in GDP figures." (27:03)
• GDP as a Flawed Proxy:
  • The hosts reflect on the limits of GDP as shorthand for social progress—suggesting alternatives (e.g., “gross domestic happiness,” as pursued by New Zealand under Jacinda Ardern (30:10–30:30)).
    • Anna (B): “We use GDP to represent so much more than it actually is... We could have some other means..." (29:35)

Memorable Moment:

• Emily (C), joking about the surge in home baking:
  • "My bread was terrible. The loaf I made, I just want you guys to know it was everyone's… Disgusting. I need not to do that again. I'm not into the bread." (32:12)

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Notable Quotes and Moments

• On Inadequacy of U.S. Federal Response:

  • "It's not that we have a federal system, it's that we currently have an incompetent federal system in the sense that our states are at war with our executive because our executive is insane." – Anna (B), (08:58)

• On the Uncertainties of Reopening:

  • "You can open the doors, but will the people even come? Like, I don't know about you guys, but I'm not going to the movies for a long time." – Emily (C), (11:12)

• On Structural Inequality:

  • "Every piece of this crisis is reinforcing and widening inequality…big companies being able to…the Fed helping them get as much money as they need versus small companies who have not been served by any new policies really very well." – Emily (C), (23:08)

• On GDP’s Shortcomings:

  • “GDP is measuring expenditures, but we're going to count something where there's no monetary transaction involved because that's simply not what it's measuring…We could have some other means…” – Anna (B), (29:35)
  • “New Zealand has come out and said—or Jacinda Ardern, the Prime Minister—came out when she was elected and said, I am not going to be trying to maximize GDP. I’m going to be trying to maximize some other thing…” – Felix (A), (30:10)

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Important Timestamps

• Reopening realities and issues: 01:16 – 11:12
• Boeing, big business, and the Fed: 14:06 – 24:59
• GDP critique and what’s missed by statistics: 24:59 – 33:09
• Numbers Round (fun segment): 33:09 – 39:25

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Numbers Round – Fun & Noteworthy Stats

• 40%: Increase in sweatpants sales at Net-a-Porter during the lockdown.

  • Emily (C): "That was the percentage uptick in sweatpants sales at Net A Porter." (32:36)

• $24 billion: Quarterly loss posted by Mexican state oil company Pemex—double its total revenues.

  • Felix (A): "...how much money Pemex contrived to lose in one quarter... it's actually twice as large as its total revenues." (33:53)

• 55 million: Total viewers of the virtual NFL draft over three days.

  • Anna (B): "It was actually the total number of viewers over three days of the NFL draft..." (36:03)

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Closing Tone

The episode blends sharp analysis with wit and exasperation—critiquing systems and statistics, marveling at corporate resilience, and poking fun at quarantine life. The hosts reflect on the lessons of past crises, the present state of American economic policy, and how both markets and measurements remain imperfect vehicles for resilience and recovery.

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For anyone who missed the episode, this summary provides a substantive walkthrough of the hosts' arguments, relevant data, and the spirit of their exchange, skipping ads and keeping to the heart of the discussion.

Transcript

[A]

Foreign. Hello, and welcome to the How Is Boeing okay? Edition of Slate Money, your guide to the business and finance news of a pretty big week. This week we've had a bunch of corporate earnings. We've had news about capital markets, Main street lending facilities, gdp. In any case, I am Felix Salmon of Axios. I'm here with Anna Shymansky of Breakingviews.

[B]

Hello.

[A]

I'm here with Emily Peck of HuffPost.

[C]

Hello.

[A]

We are going to talk about Boeing this week and how on earth is it still even a company not in bankruptcy? Also the airlines, also the meat packers. We are going to talk about GDP and what it reveals and more importantly, what it conceals. But first, half the country is now reopening. We're going to talk about what that means in terms of supply and demand and the whole American economy. All that coming up on Slate Money. It's May, people. Happy May.

[B]

Hi. Happy May.

[C]

Happy May.

[A]

Happy May. And if you are in Texas, that means that your state is now not entirely reopened, but the reopening has officially begun. You can go to a restaurant and sit down and have a meal under certain restrictions. You can go to a movie theater and go and watch a movie under certain restrictions. This is what we all hoped for, right. When, when the coronavirus first hit, we were like, we will start seeing a bounce back in the beginning of the summer. And now I guess it's the beginning of the summer in Texas. And so it's beginning to bounce back.

[C]

Yeah. I mean, states are, I think it's about half the states in the country starting to reopen or lift stay at home orders now. And I mean, all the usual caveats and arguments are going to apply. There's still not enough testing to really do it safely. So it seems like some of these states maybe jumping the gun. And then the other problem I think is some of these governors are threatening that if people don't go back to work when ordered to, they'll lose their unemployment benefits. That's happening in Iowa and I think one other state which is obviously not great if you're someone who's at high risk for contracting coronavirus and schools and childcare centers aren't open yet. So it raises questions. If you're ordered back to work but you have no one to watch your children, like, what are you supposed to do? It seems like these, the opening up procedures haven't been as well thought through as they should be, is my impression.

[A]

So what you're saying, the big thing that you're saying hasn't been thought through is what does this mean for employees? That if you're an employee of this company that is now reopening, even if it's only reopening at a fraction of its former capacity, then at that point you need to try and work out how do you go to work while also having your kids be homeschooled, or how do you go to work if you are immunocompromised and you're not and you don't want to go out into the world? Or how do you go back to work in the face of a virus that has clearly not been vanquished yet? And I do think this is going to be a much bigger question than like, state by state reopening. This is going to be a big question. Overhanging the reopening or the recovery of basically every economy in the world, or certainly in the Western world, regardless of where we are on testing that there are, like, until we get some kind of hugely reliable vaccine, there's going to be a large number of people who feel unwilling or unable to go back into their former role in the economy.

[B]

Yeah, I mean, I think that, you know, we've had kind of this first phase of this crisis, and I think now we're getting to a point where it's very clear that this is going to last for a very long time. I mean, even if we get a vaccine at some point, then the ability to create enough of that vaccine, you know, that's a separate issue. So we have to try to figure out how we can get the economy going in some way while also keeping people safe. Because it can't simply be. We stay inside for the next year. However, it can't also be, well, we put people in tremendous amount of harm and we don't think through, as you said, the childcare implications. So I think it's this moment of saying, okay, we need to figure out how we can move forward from this.

[A]

I think the solution here is to just be a little bit more specific than talking about we, that there are, I think, broadly two different sets of people in America. There's, you know, set A, which is I am bursting to get out of this house that I've been stuck in. And I really want to go back to some semblance of my former life. And then there's set B, saying, I am, as I say, unwilling or unable to go back out into the world right now for any number of different reasons. And however the reopening works, it kind of needs to accommodate both sets.

[C]

The policymakers really need to take A look at the infrastructure underpinning the reopening. Like, you're not reopening into the United States of February, you're reopening into like the COVID United States. So what does that mean? Like, what kind of supports are in place for the workers who can't go back to work, or the ones with kids at home, or the ones who just don't want to die from having to work? Like, what are you going to do to keep people safe economically and, you know, physically as you reopen? And it doesn't really seem like there's a lot of thought going into that.

[A]

And I think the reason why this is so difficult in the United States in particular is federalism, that every other country can make these decisions at a national level. And in the United States, the shutdown were all done at the state level, which means the reopening is all going to be done at the state level. And these kind of infrastructural policies about giving people the ability to stay at home if they need to, I don't think states can do that. I don't think they have the resources to do that. They're already facing massive budget crunches and these things cost money, like being able to support people if they need to be able to stay at home. That's something that I think only the federal government can do. And I don't see the federal government really grappling with this issue.

[B]

Yeah, I agree. I think that it's not. I don't necessarily think it's an issue of wanting to have one top down option that applies to every state because every state is different. Even different parts of the state are different. That's something Andrew Cuomo has said about New York. However, I think you're right that when it comes to the funding mechanism, that 100% is something that we need from the federal government. And so ideally what we would have is kind of this mix of allowing some of these states to somewhat figure out what makes the most sense for their state while also having support, more support from the federal government where they're not battling for that support, it's just simply being given.

[C]

And I think, I mean, you could blame it on federalism, but it's not hard to imagine a stronger federal government, not run by a lunatic, that would put out appropriate guidance and put a structure in place that sort of balances the needs of, like Anna was saying, balancing the needs of the states with some kind of like overarching federal guidelines. Like you have to have this percentage of people you have to have this decline in your curve. You have to have this capacity in your hospitals in order to open this or that. And you have to. You know, I think.

[A]

I mean, I think that's happening to some degree. I mean, it does vary from state to state, as it always will. But if you look at what's happening in Texas, they're very explicitly saying there are two. Texas is now. There's urban Texas and rural Texas, and urban Texas is reopening to 25% capacity and rural Texas is reopening to 50% capacity. And you're like, okay, that does kind of reflect reality in some way. I don't think that what we're seeing is a problem that there aren't strict enough federal guidelines on reopening so much as we're seeing the problem that when states do decide that they want to reopen, the. They don't have federal support to make it workable, as you say, for a bunch of employees who might feel left behind.

[B]

Yeah. So it's not that we have a federal system, it's that we currently have an incompetent federal system in the sense that our states are at war with our executive because our executive is insane. But I think that's fundamentally the problem here, is that if you just had a normal federal government that was not trying to win battles with individual states, it seems like this would be not easy, but at least a little bit more manageable.

[A]

Although it's not. I mean, I think Congress has a huge role to play in this one. It's not really the executive that could say, listen, here's a bunch of worker protections, and if you have to stay at home because you have a kid or because you're immunocompromised, then we have a bunch of money for you. Like, the executive can't do that. Only Congress can do that. And I don't see Congress even thinking about that right now.

[B]

Well, they definitely are thinking about, in the sense of they have discussed more money for the states. So, I mean, you're right. Obviously money is going to be coming, you know, approved by Congress. But I think the relationship we've seen between the executive branch and the states has also influenced what Republicans are doing in Congress.

[A]

And there is this weird mistrust of bailing out the states that you see, especially among Republicans in Congress, but also among Republicans in the White House. And that is making the whole thing much more complicated because they have this feeling that if they send money to the states, then the states are just going to use that money to throw it into the public sector unions and their pension plans. And that's not where they want the money to go and therefore they want to sort of not give the money to the states. And Mitch McConnell's out there on the radio saying maybe the states should file for bankruptcy, which they're not even allowed to do under the US Constitution. But there's a bunch of very messy federal issues which I just don't see in any other country. I mean, it's not happening in Germany, which also has a strong federal system, but somehow the Germans have worked this out.

[C]

The other thing I should we touch on if we're talking about reopening is like, yeah, you can open the doors, but will the people even come? Like, I don't know about you guys, but like I'm not going to the movies for a long time. Right.

[A]

I mean, I think that, I think that solves itself. Right. I mean, I think that like we will. I mean, Texas will be one of the first places that we look to to see whether that's happening. But if you're restricted to 25% capacity, some businesses just don't work. They're not economical at 25% capacity, so they're not going to open at all. Yeah, I think you're seeing that already in Georgia that a bunch of businesses that were allowed to open, especially in Atlanta and the more urban areas have not opened because they just think it's insane. So there will be businesses which technically can be open but aren't open. And you're seeing that even in New York with things like laundromats that counted as essential services and they're allowed to be open, but they're closed. So that will reduce the supply of services. And then the demand might be enough to fill 25% of the capacity of the ones that are open. We'll see. There's always a dance of supply and demand. Right now, I think this sort of theoretical problem of there won't be enough demand to fill supply, I haven't seen that yet, but we haven't really started reopening yet. It will probably happen in certain sectors, but we'll see.

[C]

What a mess.

[B]

Yeah. And I would just say maybe last thing I do also. Wonderful. You know, when we're looking at other countries in terms of the how much that, how quickly that demand has come back, I mean, I do also Wonder if the U.S. because we probably also resisted, a lot of the country resisted the lockdown in a way. If you could also have a sharper jump back because of that in demand than you might have had in other countries.

[C]

I don't know, the polls, real support for the lockdowns. Right. I mean, really overwhelming support for staying at home right now, even in Michigan, where those lunatics.

[A]

But with 300 million Americans, Emily, like, you know, you can have 70% support for the lockdown, but 30% of 300 million, there's still a lot of people to get back out into the world. That's fair consumer demand.

[C]

Okay.

[B]

Right. I mean, I'm not saying exactly. I'm not saying that, oh, it's just going to go back to normal. I just wonder if America's kind of libertarian ethos or whatever could in a way get people to increase that demand more than you might see in other countries.

[A]

And of course, we will begin to see now over the coming weeks the degree to which reopening causes the number of cases to rise. And right now that's just a huge, huge unknown.

[B]

Yeah, and I agree, because I feel like if they don't, then obviously that's going to incentivize people. However, if they do, much different story.

[A]

So let's talk about big business, and I have a couple of data points that I want to throw out here. One is that Boeing, which, you know, famously built an airplane that didn't work and crashed and killed hundreds of people and, you know, really suffered from that. And then it's in the airplane business, and every single airline in the world is basically not flying right now and not making any money. And you can't imagine, really, a company that is in worse straits than Boeing. And it just went out to the market and raised like $25 billion in new debt finance. So it has all the money it needs. Delta Airlines, United Airlines, they're issuing debt, they're issuing stock. If they need money, they can find it privately. It's almost as if they don't even need the government bailout because the markets are happy to give them whatever they need. And when you have other parts of the economy which are doing really badly, like the big Midwestern meat processing plants which supply most of the meat for the country, they come down with COVID and look like they might need to be shut down. And the whole meat supply chain is in danger, you know, in comes Donald Trump with his Defense Production act authority, saying, I'm going to force you guys to stay open and continue to produce meat. It seems to me that one thing we're not seeing here, which I was expecting to see, was major pain among big business. And it seems that the Big businesses are being able to access the markets and keep on going kind of whether they like it or not.

[B]

So I think it's interesting, if you look, last month actually had the highest, I believe the highest amount of investment grade new issuance in the US this month is looking to perhaps top that in the midst of this crisis. I would say that what we are seeing here is fundamentally a Fed bailout. And I'm not necessarily saying that in a negative way, because this is kind of the ideal solution for the Fed and even for the government to a certain extent, is that you want the private capital markets to function. You want them to be taking this risk of Boeing and Delta and whatever. You don't necessarily want it to have to be the treasury coming in and basically bailing out these firms. So by the Fed coming in and propping up these markets, it is enabling them to do that.

[A]

But the Fed can't take risk. And this is the thing that is surprising me is that the people lending money to Boeing and Delta and United are taking that risk on themselves. And yes, for sure, the Fed has made sure that those markets are liquid and clearing. And that's great. And I think the Fed has done a magnificent job in this crisis. But I'm still wondering, who are these people lending billions of dollars to Boeing right now and why are they doing it?

[B]

Because what we've seen in the last crisis and what we've seen in this crisis, not just in the United States, but globally, is that central banks are going to step in to prop up the credit markets. So if I'm an investor, and especially for the foreseeable future, it's pretty clear to me that the Fed is going to be making sure that these markets are not falling below a certain level. Even if that's not what they're saying, that's clearly what the result will be. Well, then I'm actually taking on less risk.

[A]

Can you just expand on that a little bit? Because prop up the credit markets is something which people can say, and it's not necessarily easy to understand. The credit market says if I lend money to Boeing, I'm taking the risk that Boeing won't be able to pay that money back. That's called credit risk. And what is the Fed doing to reduce that credit risk?

[B]

So a few things. One, because the Fed has essentially brought rates to zero, and because the Fed is doing all of this bond buying, it is going to make it much easier for firms to roll over their debt. It's going to be far less expensive to roll over their debt. So the default risk then is going to be less.

[A]

So just to just turn it down, just to make this absolutely clear, when I lend money to Boeing, Boeing then needs to pay it back in like, you know, let's say three years time. And the big risk for me is that Boeing won't have the money to pay it back in three years time. But what you're saying is that it doesn't matter if Boeing doesn't have the money to play it back in three years time because Boeing will just be able to to issue a new set of bonds in three years and use the money from the new bonds to pay me back. And so long as there's a bunch of liquidity sloshing around the money and people can borrow as much money as they need, it kind of doesn't matter whether they are profitable or not, because they'll always just be able to borrow what they need to service their debts. And that's why people in the bond markets aren't so worried about default risk.

[B]

Exactly. By the Fed coming in, they are literally lowering default risk. So it's not surprising that the risk that you're being paid for is going to come down. And then just one other thing, what we are also seeing in this crisis, which we obviously didn't see, is the Fed saying it's actually going to buy corporate debt. So that's the other reason you're seeing a lot of these firms coming in, because it's this idea, we now have this enormous buyer that's going to be coming into the market. So I want to front run that and buy some of these bonds because I know once the Fed really starts buying in theory, that the prices will go up. So that's another reason why you'll have private creditors coming in.

[A]

So that's the other big piece of news that we saw this week was the Main street lending program. The Fed is working hard on its Main street lending program, which means that big companies, which aren't quite big enough to have capital markets access, but are still bigger than the small businesses, going to get a Fed program of their own where the Fed will buy loans from banks who are lending money to these businesses on an order of a few million dollars at a time. If this worked for big businesses with access to the bond market, is it going to work for medium sized businesses too?

[B]

I would probably assume not as well. Just to be perfectly honest. I just feel like the problem is that the Fed, what the Fed is designed to do is to essentially make sure that credit these capital Markets are functioning and yes, by keeping rates low, that will help firms. But the Fed is not designed to be essentially like giving out these loans to these smaller firms. So I'm hoping it works out, but I question whether it will.

[C]

It's crazy to me that we have now, and this makes so clear, we have only one system in the United States that seems to function pretty well, and it's the system that props up the biggest companies. And everyone else is kind of at the mercy of policymakers and Congress. And companies like Boeing are doing okay thanks to the Fed. But small businesses everywhere are, are going under. The restaurant industry is in dire straits, filled with small businesses. People aren't getting, you know, their unemployment checks. Still, it's, it's so interesting that the biggest businesses with sort of the most money get the most money and get to survive and everyone else is like, to the wolves. Like this crisis just makes that so clear.

[A]

It's interesting that the, like, if you look at Boeing in particular, when the crisis hit, the first thing Boeing did was come out and say, we need a multi billion dollar federal bailout and we need a huge amount of money from the government. And then there was this huge back and forth between Boeing and the government and the government was like, okay, fine, how much do you need? Obviously there will be restrictions on how much your CEO can get paid and whether you can pay a dividend and those kind of things, but if you need the money, you need the money. Let's tell us what we should put on the check. And then Boeing this week turned around and said, actually, you know what? We have so much money from the bond market, we don't want anything from the government at all. You're like, what?

[B]

Well, no, but in theory, in a perfect world, then what would happen is then the government would actually be able to use more of that capacity not to be bailing out the large companies, but actually to be to focusing on the smaller firms and people, because that's where that's supposed to come from. And I think this is the problem. The problem is not that these large, in my personal opinion, the problem is not that the capital markets are functioning and these companies can raise money. The problem is that the other side of that, the actual federal government is not doing its job very well.

[C]

Right? And it's just reinforcing. Every, every piece of this crisis is reinforcing and widening inequality, you know, from the big companies being able to, the Fed helping them get as much money as they need versus small companies who have not been served by any New policies really very well. I fear, like, and from, like, who has to work right now versus who can stay at home. You see the president forcing the workers in meatpacking industries to go back into dangerous workplaces. I mean, it's just at every level, in terms of what neighborhoods are hit the hardest at every level, inequality is reinforced by this crisis. And this is really no different. And it seems like when we come out of this finally, you're not going to have a lot of options on Main street anymore.

[B]

Yeah, I mean, I would just say two things. One, I mean, you can argue that, you know, what we saw after the 2008 crisis was exactly that, that we were exacerbating inequality because we only use monetary policy, which helps the capital markets. It raises asset prices. That's great. We did nothing, essentially, or very nothing. We did very little in terms of fiscal policy. And so it's not surprising that then you had tremendous amount of inequality. I mean, I think the hope you would have, and I'm going to try to be somewhat optimistic, is that you come out of this and there is a significant push to have more fiscal spending directly on individuals, whether it's through a larger infrastructure program that would employ a lot of people while the economy is kind of getting back, because it's going to take a while, whether it's an actual health care plan for everyone. I mean, these kind of things. That would be the hope that you could then try to tax corporations that have been doing slightly better and then use that to actually fund these things. I realize this is probably not going to happen. However, that's my only optimistic scenario.

[A]

Okay, so let's talk about the big economic news of the week, which was the GDP report. It came out for the first quarter, and the number is minus 4.8, which I think conceals much more than it reveals. It doesn't mean a huge amount. And the one thing which I'm just going to come out and say very, very loudly right here is these numbers are annualized, and in the second quarter, the number is going to be much, much bigger. It's going to be like minus 40 or something enormous. Like, that does not mean that GDP has fallen by 40%. It means it is falling at a rate which, if it continued to fall at that rate over 12 months, at the end of the 12 months, GDP would be 40% lower than it was at the beginning. So we have minus 4.8, which is obviously just the beginning of this crisis. Emily, what does it mean? Does it mean anything?

[C]

It means a little bit of a thing, which is what we already knew, that people are staying home, they're not buying as much stuff, specialty services. But, and I think this isn't a new criticism of gdp. It conceals new areas of productivity that are going on in our houses all over the country, in our apartments all over the country that don't get counted. Like I think Betsey Stevenson, an economist at the University of Michigan, pointed out on Twitter, for example, like, maybe people are buying less bread, but they're making bread, but the bread making doesn't count as part of gdp. Or like all the schools are closed, but people are homeschooling, that doesn't count as part of gdp. Childcare centers are closed, no one's paying those people. But we're doing childcare at home now. No one's going to restaurants, so that's not getting counted. But we're all making more food at home, et cetera, et cetera. So there's all this uncounted productivity happening right now. And that's not even talking about the well being of Americans. That doesn't really show up in GDP because we're all staying home and not getting sick ideally. Right?

[A]

So I, I, I'm, I find this absolutely, really fascinating. It's that on some level the thing that GDP measures is there's a huge amount of value added to a bag of flour when you turn it into a loaf of bread. And people depends who made the place a dollar value on that transformation. And when you go to your local bakery and you buy a loaf of bread from them, when you, what you're doing is you're paying for the value of that transformation because you could easily just buy the flour yourself, you don't buy the flour, you buy the bread because they are very good at making that transformation. And there's similarly some kind of dollar value on doing it yourself. And if you are putzing around with a sourdough starter in your kitchen and you're feeding it every morning and you're getting your scrapers and you're making your bread and you're creating this delicious stuff in your oven and you're learning that, oh my God, I can actually bake and I never knew I could do that, you are making yourself happy, you are making your family happy. There's lots of fresh bread and there's value to that as well. But only one of those two types of value shows up in GDP figures. And if for anyone who thinks that there's more value to a home baked loaf of bread than there is to a store bought loaf of bread. You're probably right on any kind of common sense term, but just not in terms of economic statistics.

[B]

Yeah, and I think this is less, I would argue less of an issue of GDP itself and more of an issue of how we use gdp. We use GDP to represent, you know, value, work, the economy. But you know, what is actually gdp? Well, depending on which side you measure it on, you're measuring expenditures or you're measuring income. So when you think of it, if that's all it's measuring, well then yes, there is a difference whether I'm cleaning my apartment to myself or whether I am paying someone to clean my apartment. In one of those, someone gains income that is counted and the other one they don't. Does that mean it's worth less in some metaphysical way, one way or the other? Of course not. In fact, the person who cleans my apartment does a much better job. So it's clearly better, but I guess I would just say that.

[A]

But think about the morals of it, Anna. Like it's morally elevating to be down on your knees trying to get behind the toilet. I've been doing this. This has been my job for the past seven weeks. I've been the toilet cleaner. I feel morally elevated in doing so.

[B]

No, but I mean, I guess it just goes back to this idea that I think we use. And everybody is guilty of this, I'm guilty of this. We all are. We use GDP to represent so much more than it actually is. And so it wouldn't make any sense to say, well, GDP is measuring, you know, expenditures, but we're going to count something where there's no monetary transaction involved because that's simply not what it's measuring. We could have some other means of. You had, what was it, some country that had gross domestic happiness, which I'm not going to lie, I think was the greatest. Yeah.

[A]

But New Zealand, some other problems. New Zealand has come out and said. Or Jacinda Ardern, the Prime Minister of New Zealand, came out when she was elected and said, I am not going to be trying to maximize gdp. I'm going to be trying to maximize some other thing that actually is harder to measure but is more reflective of the total value in the economy.

[B]

I think that's reasonable, actually. And to me that's a correct usage. You're saying this is what GDP represents and there are other things that are outside of that. I want to try to maximize all of those things, not try to somehow make GDP be something it isn't.

[C]

Yeah, And I feel like, right, currently we're learning a lesson in what we should value, like, to grow gdp, because lots more people are, like, cleaning our houses or, like, making our food for us. Maybe doesn't it discounts the value in, you know, all this stuff that no one thinks is worthy of measuring, like, caring for other people, cooking food and preparing food for other people, not for money, but just because, like, it's nice. Like, GDP doesn't measure. It's nice, but we use it that way. And that seems maybe not so great. It's kind of a nice lesson, which.

[A]

Doesn'T stop the fact that, you know, this time next year, when we're looking back on the GDP numbers for 2020, and we'll be like, this was the worst recession since the Great Depression and this is what happened to unemployment and this is what happened to gdp. You know, we're not going to have that asterisk in there of, like, but we were all baking our own bread. It wasn't that good.

[C]

We need a layout that looks.

[B]

Yeah, I would probably argue that the people who are not getting paid to serve us in restaurants or not getting paid to clean a house probably would argue that. Guess what? There's some value deducted there as well. Yes, absolutely. So, you know, yes, you want to grow gdp, you want more people to be gaining income and jobs, but you also need to recognize that there is more. There's.

[C]

My bread was terrible. The loaf I made, I just want you guys to know it was everyone's.

[B]

Is terrible.

[C]

Disgusting. I need not to do that again. I'm not into the bread.

[A]

Practice makes perfect, though.

[B]

That worked out well.

[C]

My matzo was good. My crackers were excellent. But like the rising and the kneading, it's not for me. It's just not for me.

[A]

Let's have a numbers round. Emily, what is your number?

[C]

It's kind of old, but it's 40%. That was the percentage uptick in sweatpants sales at Net A Porter.

[A]

Did people not have sweatpants? I feel like everyone has a pair of sweatpants lying around. They need new sweatpants, apparently.

[C]

No, I don't have enough soft pants to. To.

[B]

To.

[C]

To deal with the current situation. I have to. I'm one of the people not. I didn't go to Net a Porter, which is where I got the 40% number to buy the sweatpants. But, yeah, I did have to buy more.

[A]

Wait, this is sweatpants at Net A Porte.

[C]

Or it's sweatpants overall sweatpants at Net A Porter. At other places, the sales are up to arap.

[A]

I feel like net a porter. Sweatpants are all like $300 each. I know.

[C]

Can you believe that? Who goes there to buy sweatpants? I'm sorry. And if I've offended a listener, I'm sorry. But like, what kind of terrible person is buying sweatpants at that website for $300? That seems really wrong.

[A]

My number is. This is. This is just for Anna. My number is 562.13 billion or 562,130,000,000 Mexican pesos.

[B]

Ah.

[A]

Which works out if you convert it into US dollars at US$23.6 billion. And Anna is going to tell me what is 23 points. It's how much money Pemex contrived to lose in one quarter. Pemex is the state oil company in Mexico. I didn't know it was possible for an oil company to lose $24 billion. It loses money, but it normally loses like a billion or two, not 24 billion. And the interesting thing about the $24 billion loss is it's actually twice as large as its total revenues.

[B]

Yes. So Pemex actually always loses a tremendous amount. So the thing with Pemex is a lot of Pemex's money goes to fund the state. So the reason, part of the reason Pemex actually this big loss had to do with the peso declining so much in value. But the reason that you see this oil company losing money is because it's these kind of. You can think of it as like fees or taxes that they're basically just funding the state.

[A]

And just to be clear, this is the thing which really confused me. People are like, the peso fell and so Pemex lost money. Pemex is an oil company. Oil companies export oil and get dollars for that oil. Shouldn't a weak local currency be good for them? Answer no, because Pemex is an importer of oil. It actually buys oil from abroad because Mexico produces like heavy, nasty crude oil which they can't do anything with domestically. And they have to import all of the gasoline and everything that they make, they use to make the country run. And all of that is done through Pemex. So Pemex is one of those oil companies that actually imports more than it exports, hence the losses. I don't know. The whole thing is a little bit hard to understand, but I'm just going to say $24 billion is a lot of money to lose for any company.

[B]

In one quarter, especially after you had already hedged price of oil. So, yeah, I mean, Pemex also has more debt than any other oil company in the world. So opmex, their bonds were just downgraded, unsurprisingly.

[A]

They're junk now.

[B]

Yes.

[A]

What's your number?

[B]

My number is 55 million. And so, Emily, this is somewhat of a number for you, and I will get to why it is. So it was actually the total number of viewers over three days of the NFL draft of this virtual draft, which, I'm not gonna lie, I watched the entire first day.

[A]

Wait, it took three days to do this?

[B]

Oh, they always do it. It's over. There are multiple rounds, so I won't go into all of that.

[A]

Because each round has its own day.

[B]

No. Cause some of the other days have multiple rounds, but, yeah, the first day you have the first round, so.

[A]

Wow.

[B]

The reason I say I thought this was so interesting is what actually came out after this was that all of these big, tough football managers and coaches and owners are all like, you know, this was way better. We got to spend time with our families. We didn't have to go out and visit all of these. That we had such a nicer work, life balance. Like, we really need more of this. And I thought that that was a nice thing that came out of the NFL draft.

[A]

The only. The only thing I know about the NFL is the Dallas Cowboys, because I wrote an article about their art collection once, and I hung out a bunch at their headquarters. And. And I was reading this thing, I was watching Twitter go by with a bunch of sportsball stuff, which I didn't understand at all. But the one thing that jumped out at me was that the owner of the Dallas Cowboys is this very, very tall, big guy called Jerry Jones. He was calling into the draft from an undisclosed location on his $250 million mega yacht. And I'm like, that is. You can see how he is not having a bad lockdown.

[B]

It was just funny because you had all. They were in all of these, like, players living rooms with their families. And then even, like, the owners and such were mostly in, like, oh, you know, normal places. And they go to Jerry Jones and he's so clearly in his yacht. That and Bill Belichick's dog were the.

[A]

So, yeah, you wanna, like, if anyone knows where Jerry Jones's yacht might be? Where in the world is Jerry Jones? Send. Send us an email slatemoneylate.com Emily, where would you park your yacht if you had a yacht and you could be anywhere right now?

[C]

I don't. In the water somewhere. Felix, I can't even imagine having a yacht.

[B]

Good choice. Yachts are actually horrible. Yachts are like just floating money pits. They're the worst idea in the world.

[A]

Side note, I mean they're bad if you don't want to lose money. But if you don't mind about losing money, I think that's true. You could just be on your yacht in the South Pacific somewhere and like what's not?

[B]

They're like Pemex, just keep losing money.

[C]

When they took their yacht trip on Succession, where where were they?

[A]

That was off the coast of Croatia.

[C]

It seems cold.

[A]

Very pretty. But I think I would be down more like New Zealandish or something where it was, you know, New Zealand is.

[C]

The place to be. Right. They're doing everything.

[B]

Oh, they've won.

[C]

I mean they've won every ye and they have a nice warmth.

[A]

I mean they are a tourism based economy and they are going to have no tourism for the foreseeable future. But yeah, they have now come off their extreme lockdown. I ordered some flowers in New Zealand this week and the florist is up and running again. So yeah, New Zealand is doing okay.

[C]

Yeah.

[A]

On which note, I think we will wrap up this episode of Slate Money for all of our listeners in New Zealand. Well done on doing this one right and congratulations on exiting the worst of the lockdown. Well done you. For everyone else if you're in Texas, let us know if you are out. If you are going to a restaurant or anything like that. Sleep Money slate.com Many thanks to Jessamine Molly for producing this show from her Brooklyn apartment and we we'll talk to you next week on Slate Money.