The Economic Theory That Explains Why Americans Are So Mad

There’s something weird happening with the economy. On a personal level, most Americans say they’re doing pretty well right now. And according to the data, that’s true. Wages have gone up faster than inflation. Unemployment is low, the stock market is generally up so far this year, and people are buying more stuff. And yet in surveys, people keep saying the economy is bad. A recent Harris poll for The Guardian found that around half of Americans think the S. & P. 500 is down this year, and that unemployment is at a 50-year high. Fifty-six percent think we’re in a recession. There are many theories about why this gap exists. Maybe political polarization is warping how people see the economy or it’s a failure of President Biden’s messaging, or there’s just something uniquely painful about inflation. And while there’s truth in all of these, it felt like a piece of the story was missing. And for me, that missing piece was an article I read right before the pandemic. An Atlantic story from February 2020 called “The Great Affordability Crisis Breaking America.” It described how some of Americans’ biggest-ticket expenses — housing, health care, higher education and child care — which were already pricey, had been getting steadily pricier for decades. At the time, prices weren’t the big topic in the economy; the focus was more on jobs and wages. So it was easier for this trend to slip notice, like a frog boiling in water, quietly, putting more and more strain on American budgets. But today, after years of high inflation, prices are the biggest topic in the economy. And I think that explains the anger people feel: They’re noticing the price of things all the time, and getting hammered with the reality of how expensive these things have become. The author of that Atlantic piece is Annie Lowrey. She’s an economics reporter, the author of Give People Money, and also my wife. In this conversation, we discuss how the affordability crisis has collided with our post-pandemic inflationary world, the forces that shape our economic perceptions, why people keep spending as if prices aren’t a strain and what this might mean for the presidential election. Mentioned: “It Will Never Be a Good Time to Buy a House” by Annie Lowrey Book Recommendations: Franchise by Marcia Chatelain A Place of Greater Safety by Hilary Mantel Nickel and Dimed by Barbara Ehrenreich Thoughts? Guest suggestions? Email us at [email protected]. You can find transcripts (posted midday) and more episodes of “The Ezra Klein Show” at nytimes.com/ezra-klein-podcast. Book recommendations from all our guests are listed at https://www.nytimes.com/article/ezra-klein-show-book-recs. This episode of “The Ezra Klein Show” was produced by Rollin Hu. Fact-checking by Michelle Harris. Our senior engineer is Jeff Geld, with additional mixing by Efim Shapiro and Aman Sahota. Our senior editor is Claire Gordon. The show’s production team also includes Annie Galvin, Elias Isquith and Kristin Lin. Original music by Isaac Jones and Aman Sahota. Audience strategy by Kristina Samulewski and Shannon Busta. The executive producer of New York Times Opinion Audio is Annie-Rose Strasser. Special thanks to Sonia Herrero.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:03Ezra Klein?

  From New York Times Opinion, this is the Ezra Klein Show.

• 0:24Ezra Klein?

  I've been thinking about this episode for a bit, so I'm going to spend a couple of minutes here setting it up.

• 0:32Ezra Klein?

  Back in September, The Economist put out this interesting model that pulled in a bunch of different bits of economic data, so things like the unemployment rate, inflation, gas prices, the S&P 500. And they used all that to predict how people would feel about the economy. And they show that from 1980 to 2019, all these bits of data, they do predict how people feel about the economy. And then the pandemic hits and the model completely falls apart.

• 1:04Ezra Klein?

  By late 2023, the model's looking at low unemployment, it's looking at falling inflation, it's looking at a great stock market, and it predicts consumer sentiment is going to be 98 out of 100, 98 out of 100. That is, Joe Biden gets his face on a coin territory. Here in reality, the actual consumer sentiment was 69. That is, Joe Biden might lose reelection territory.

• 1:32Ezra Klein?

  There's been this debate for a year or two now about whether the economy is good or it is bad. And the language of that, the binariness bothers me. It's like asking if the 19th century was good or bad. I mean, good or bad for whom compared to what? The economy is like this vast, multi-dimensional, hyper-object. It's a little too big for good or bad. I think we need to be more precise.

• 1:57Ezra Klein?

  This debate is not about whether the economy is good or bad. The debate is about our expectations. Given what we've seen before, we would expect, we did expect, people to be happier with the economy than they are right now. A lot happier. One way you can try to reconcile that is you could say the public is misinformed or misled. There's this Guardian Harris Poll that came out a few weeks ago. It found 56% of Americans, 56, think we're in a recession. 49% think the S and P 500 is down this year. And 49% think that unemployment is at a 50-year-high. For the record, we are not in a recession. The S and P 500 is at a record high, and unemployment is at 3.9%,

• 2:42Ezra Klein?

  which is extremely low. So factually, people are wrong about the economy. But it gets weirder than that, because when you ask people how they're doing, they say they're doing pretty well. The Federal Reserve collects this data. In 2016, 70% of Americans said they were doing at least okay financially. In 2018, 75% said they were doing at least okay. And in 2023, 72% said they were doing at least okay. So that doesn't look like an economy that people are experiencing in a way where they should think we're in a recession or at a 50-year-high in unemployment. And yet, people are unhappy about something. So go back to that Federal Reserve report.

• 3:27Ezra Klein?

  By the way, if you're a nerd who wants to read along here, I'm looking at the economic well-being of US households in 2023. On page 10, they have this chart which shows the main financial challenges people said they were facing in 2016 and in 2023. Inflation, living expenses, debt, retirement costs, medical costs, educational costs, employment. But in 2016, none of those get above 10%. And 53% of people say they're facing no real financial challenges at all. So that's 2016. In 2023, they ask the same question but get a very different response. 35% say inflation is their main financial challenge. 21% say basic living expenses.

• 4:11Ezra Klein?

  Only 31% say they're not facing any challenges at all. So yeah, people say their financial situation is at least okay. But they also say they're facing much more financial challenge than they were eight years ago. And they're very clear about what those challenges are.

• 4:27Ezra Klein?

  So I've been working around this big theory of the economy right now. And it's based on something that got published in The Atlantic in February of 2020, that cursed month right before everything shuts down. In February of 2020, there was this big piece on what they call the Great Affordability Crisis. And the point the piece makes is that a lot is looking good in the economy. Unemployment is down, wages are rising, people are feeling good. But if you look at the things people really need, housing, healthcare, education, childcare, costs have just exploded. Quote, "The spiraling cost of living has become a central facet of American economic life." That piece read a little counterintuitively at the time.

• 5:12Ezra Klein?

  People felt the economy was great. How could you save us a crisis? And people hadn't been paying much attention to costs for a while. The big problems after the Great Recession had been unemployment, consumer demand, financial fragility. This affordability problem, it was building in the background, but it wasn't the thing we were looking at. But then the pandemic hit, and then came inflation. And it was like this portal of salience for prices. Suddenly, all anybody was focused on was prices. The monthly inflation report got the attention that the monthly jobs report used to get. Gas prices, food prices, car prices. Then the Federal Reserve begins raising interest rates.

• 5:53Ezra Klein?

  That makes it much harder to borrow money, much harder to finance buying a home. And so the economy reorders itself to piss you off about how expensive everything is all of the time. The price of a cup of coffee is a reminder of the cost of a house, of childcare, of a car, of a movie ticket. Maybe you can pay it. Maybe your financial situation is even OK after you pay it. But it doesn't mean you like it and you're reminded of it constantly. What happened is not that the economy is terrible now and it was great in 2019. It's that an affordability problem was building in 2019, a cost of living problem. Then inflation hit, and it made prices much worse, and it made the cost of living problem much worse.

• 6:36Ezra Klein?

  And now prices and affordability are the part of the economy that people are seeing. And they hate it.

• 6:44Ezra Klein?

  That 2020 Atlantic piece, which has done so much to shape my thinking, is written by Annie Lowry. She's a staff writer at The Atlantic and an economics correspondent. She's the author of the book, Give People Money. And a little awkwardly for this podcast, she's also my wife, or I'm her husband. So you can kind of imagine what pillow talk is like in my home, but there's really no one for me better to talk about this with. As always, my email is [email protected].

• 7:15Ezra Klein?

  Annie Lowry, welcome to the show.

• 7:17Speaker 01

  Thank you for having me.

• 7:18Ezra Klein?

  It's a little bit of an odd.

• 7:20Speaker 01

  It's a really weird. It's a really weird. It's also, one of the strange things about it is that we are in a really nice podcasting studio, but we're sitting like five feet apart from one another. So it has a little like, are we in a legal dispute?

• 7:33Ezra Klein?

  Yeah, let's take a rich person's Thanksgiving.

• 7:38Speaker 01

  Exactly.

• 7:38Ezra Klein?

  But I'm fortunate to have you here because, as you know better than other people do, like this piece you wrote years ago has like warmed its way into my brain. And I bring it up every six months and it's sort of become like the way I see the economy. So 2020, right before the entire world shuts down, you write the great affordability crisis.

• 7:59Ezra Klein?

  What led to writing the piece?

• 8:02Speaker 01

  Both you and I became reporters during the George W. Bush administration.

• 8:10Speaker 01

  And I was doing a lot of intense beat reporting during the Obama administration. And throughout this entire period, and this is what people are experiencing in the economy, the economy is defined by low growth, low interest rates, low inflation, high inequality. And the primary problem that policymakers are trying and failing to solve has to do with consumer demand, with demand in the economy. The issue is that people aren't making enough money to buy things. This entire time, this cost of living crisis is also brewing. And you

• 8:50Speaker 01

  can even date it somewhat earlier, but I think probably the aughts are a good place to start it, where the costs of, I identify four things, but there are probably five. These are costs that are big and are kind of sticky and that you are not transacting frequently. And the four things are healthcare.

• 9:12Speaker 01

  Childcare, higher ed, so, you know, higher ed debt, and then housing. And the cost of all four of those things becomes really, really brutal, not just for low-income Americans, but middle-income, and in some cases, even upper-middle-income Americans. And it really changes our relationship to the economy, and it kind of sneaks up on us, again, because we're in this circumstance in which, you know, the primary issue is wages and low demand.

• 9:43Ezra Klein?

  You said there was a fifth that you would have included if you'd gone back. What was the number five?

• 9:47Speaker 01

  Elder care, which is a really, really big issue and has some of the same pressures as childcare in terms of wages and accessibility. This is actually becoming a bigger issue as the American population ages.

• 9:59Ezra Klein?

  Why is inflation low? Because housing is going up, childcare is going up, the education is going up. So how, how do prices seem low to people, even as the affordability of basic, the basic items of both middle-class life and upward mobility are skyrocketing?

• 10:16Speaker 01

  There's two things that I think are quite important here. So one is that you can have inflation increasing just a little bit more for these items than the overall rate of inflation. And over time, that's going to lead you to a big problem, because if these are large parts of family budgets and large parts of the economy overall, right? If you have inflation in healthcare that's one percentage point higher than the overall rate of inflation, you're going to develop a problem really quickly. The second thing is that our consumer expenditure statistics and our inflationist statistics do not take into account the trade-offs that people make in order to keep their personal

• 11:00Speaker 01

  budgets reasonable. So let's say, as an example, that you would like to live with your partner in a high-cost city like DC. And you'd like to rent an apartment together, but you can't. So instead, you're living together in a group house. You probably don't have a consumer expenditure problem on paper in terms of the amount of money that you're spending on rent. But you really don't like the feeling of that. So I think especially when it comes to housing, folks, you know, for instance, maybe you'd really like to, you got a great job in L.A. and you'd really like to live there. But you have three kids and you're like, I can't afford that. So you stay where you are. And so you're, by being pushed out to a different urban area

• 11:44Speaker 01

  or an exurb or a suburb, you are probably keeping your spending in line, but you're probably pretty upset. And cost pressures are still defining your life in some sense. And so that's why I think that these kind of, you know, sort of snuck up on people.

• 12:00Ezra Klein?

  There are two things during this period that are really cheap, or maybe two baskets of things. One is things you do buy a lot of. You don't buy your house very often. You pay your mortgage monthly, but you don't buy a lot of houses if you're a normal person. But you do buy a lot of food. You do go to the gas station a lot. And in this period, consumer purchasing is pretty cheap, right? Like, things are cheap. You can get a flat-screen television for very little money, laptops, smartphones, right? You know, all these kind of electronics famously come way down. And money is cheap. Interest rates are low.

• 12:35Speaker 01

  Yep.

• 12:36Ezra Klein?

  How much was the cheapness of other things, right? The cheapness of money, the cheapness of debt, the cheapness of consumer electronics, the cheapness of food, creating a sense that prices were under control that allowed some of these other things to kind of go nuts?

• 12:52Speaker 01

  Absolutely. So the consumer expenditure that people notice the most, I would say it's probably the two that they notice the most are gas and food. Gas is really important because it's a throughput. So if the price of gas goes up, the price of other things goes up. But also, people, it's a pretty large, single purchase that a lot of folks make every couple days or, you know, maybe once a week. And it'll be like 100 bucks to fill up your tank or $50 to fill up your tank. And food, folks trans- to transact really, really frequently with that. So if you have the cost of stuff that you are purchasing like in a store frequently is really pretty low, I think the perception of inflation can be somewhat lower.

• 13:33Speaker 01

  I think people don't really think of healthcare and rent as being really important parts of inflation, but they are because they're a big part of the overall consumer basket.

• 13:43Ezra Klein?

  So then what connected these four or five categories? Healthcare, housing, childcare, eldercare, higher ed? Give me a sense of how much prices had gone up, but why in those five, right? If other things are cheaper, if money is cheap, why is that set of things expensive?

• 14:04Speaker 01

  It's slightly different for each of them. So let's take housing first because this is the biggest one and in some ways, I think the worst one. So housing starts currently are about 1.4 million. It's a 1.4 million annual pace.

• 14:20Ezra Klein?

  That's how many new houses were?

• 14:22Speaker 01

  Yeah, exactly. How many new houses are getting permitted and are going to get built? We had more housing starts in 1959 than we do now. The population has doubled. And so after the housing crisis, housing starts go as low as like 500,000 and we have a whole decade of depressed residential construction. So we have decades of underproduction and especially underproduction in the high-cost areas, high-wage areas where most people want to work. So San Francisco and New York are two really, really great examples of this. But we end up having a housing shortage everywhere and it means people aren't living where they want to be living and it means that people are paying a tremendous amount for housing.

• 15:07Speaker 01

  So right now, the median sales price for a single-family home is six times higher than the median household income. That's the highest ratio of any statistic that we have. That's from the Harvard Joint Center on Housing Studies. The number of cost burden renters, so folks who are spending more than 30% of their income on housing, has gone up to a record 22 million households. 12 million American households are spending more than 50% of their income on housing. And so this is a problem that again you get over the course of decades. And the cost of housing increases the cost of everything else because businesses pay rent also. And folks need to have wages that cover the cost of housing, right? So there's that.

• 15:51Speaker 01

  Healthcare is somewhat different. So the health expenditure to GDP ratio in the United States is 17%. It's a little bit less than double the OECD.

• 16:04Ezra Klein?

  So that's the percentage of our economy that goes to healthcare.

• 16:08Speaker 01

  Exactly. And we don't have better health outcomes than other countries in the OECD. We just literally pay more. And so in 1990, the health share of GDP is 12% and it starts just this long so climb. And so there's actually some good news in healthcare, which is that the share of GDP that is spent on healthcare has actually been somewhat flat since the Obama administration. This is great news. The problem here isn't really inflation, it's the level. We're just paying an extraordinary amount for healthcare. One of the ways that this is burdening folks is that out of pocket costs, controlled for inflation, have just gone up and up and up and up and up slowly.

• 16:53Speaker 01

  So the average person is now paying about $1,400 a year on out of pocket health costs. And that's despite the fact that we have a large share of our population on Medicaid, where out of pocket costs are seriously, seriously controlled.

• 17:06Ezra Klein?

  Yeah, I think of this as like the paradox of healthcare spending, where one way we got overall costs down was we shifted costs onto people. So on the one hand, if you look at healthcare spending as a percent of GDP, it looks like it is not going up as fast as it was before. And that's actually true for a bunch of different reasons.

• 17:21Speaker 01

  It is, yeah.

• 17:22Ezra Klein?

  But one way we also got healthcare cost increases down is to just make people pay more out of pocket. And that does have an effect of getting people to forego both some unnecessary care and some necessary care. But to people, it doesn't feel like they're spending less. They are noticing themselves spending more. So like, they're pissed about it. This was always a problem with the Obamacare banning the cost curve idea in the end. Like, what people wanted was to spend less on healthcare themselves, not for the entire country to spend less on healthcare. But the way we got the entire country to not see healthcare costs grow so much was to make people pay more out of pocket. And like, that, that makes them mad, not happy.

• 18:05Speaker 01

  Absolutely. And the costs are just really high. The costs for surgical procedures, the cost for prescription medication. I'm a type 1 diabetic. I take insulin. Insulin is nine times as expensive in the United States as it is in most of our peers. It is a 100-year-old drug. It is not a new drug. It's literally 100 years old. Why is it nine times the cost? And I think that we are starting to see some movement towards cost control, but it's just been really hard in the United States. So then childcare. So childcare for 0 to 5, this is a cost that families are paying for a relatively short time in their lives, and it is absolutely, absolutely crushing.

• 18:49Speaker 01

  Average childcare costs for a year are between $18,000 and $24,000 a year. And the problem is not just with how much people are paying, it's that people don't pay. A lot of folks cannot afford that, and we do not have enough coverage through programs like Head Start. Head Start is severely underfunded. One in five kids who would qualify for Head Start gets Head Start. And so folks drop out of the labor force, they rearrange their work schedules, they get family members to help. And the issue is that we have basically maxed out what people can afford to pay, and that still doesn't mean that childcare workers who are among the lowest paid in American life have a living wage.

• 19:34Speaker 01

  Most childcare workers are still making $14 or $15 an hour. It's just not enough. And so we just, as a country, don't spend enough on this. U.S. devotes about 0.3% of GDP to early childhood education. That's less than other OECD countries. Another way to think about this is that we have about a 20 to 1 ratio of children under the age of 4 to childcare workers, who are aimed at that set. Canada, for instance, it's 6 to 1. So the issue is that we are not spending enough public money on this to make it affordable. And folks are just paying absolutely obscene amounts.

• 20:12Ezra Klein?

  I had a sociologist on a couple of months ago, Caitlin Collins, who did this great book looking at parenting and work in a bunch of different countries. And the thing that is seared into my mind is her saying that in Sweden, the cost of childcare is capped at well under $200 a month. Capped, like you just, you can't pay more than that. And everybody can get it for that.

• 20:35Speaker 01

  It's absolutely wild. Whereas here, we've said that affordability should be at 7% or less per month. Just nobody pays that.

• 20:47Ezra Klein?

  So then there's higher ed.

• 20:48Speaker 01

  Then there's higher ed. So a really important note here is that folks with a college degree have seen really important gains in the labor market. They've had higher wage and earnings growth, higher wealth growth than people without a college degree. And so there's been this long debate about like, is it worth it? And the answer broadly is yes. That said, we have about $1.7 trillion worth of outstanding student loan debt, not all of which will get paid back, but a lot will get paid back. 43 million Americans currently have student loan debt. Prior to the pandemic, the typical payment was $200 to $400 a month,

• 21:31Speaker 01

  which might not sound like that much, but is a lot. Add that to rent, add that to whatever you're paying out of pocket for healthcare, add that to childcare if you have children, it really, really adds up. So folks making student loan payments, for instance, they have a lower savings rate for retirement. They have smaller balances in their 401ks. They're likely to delay homeownership because they're paying their student loan debt. And I think that we've started to see a tremendous amount of movement on this. So the Biden administration has given forgiveness to roughly 4 million borrowers. It's about $140 billion worth of student loan forgiveness. Nevertheless, this remains a really, really big problem. So these are the four things that I identify, that they've just created this

• 22:16Speaker 01

  cost crisis where folks feel like they're just sprinting to stay in place.

• 22:22Ezra Klein?

  So one of the ways you had framed that piece that was part of why it struck me at the time was that everybody was really happy about the economy in early 2020, right? You have this line up top where it's like, you know, in some of the best years the economy's ever recorded, right? People are getting blood dry on all these, on all these dimensions. Why, if all of that was as bad as you're saying, and it was, why aren't people more upset in February of 2020?

• 22:47Speaker 01

  There's a few things. So one is that directionality matters quite a bit. If things are rapidly improving or are falling apart, deteriorating really quickly, that's going to matter more than a kind of, you know, sort of steady state. And here, I think that you are seeing a reversal of some of the trends in wage inequality that we had for a long time that's changing. And I think that people react to that. The other thing is that the cost of living crisis that I had laid out, it built very slowly over decades. It's a boiling the frog thing where just extremely, extremely slowly, you start to

• 23:29Speaker 01

  see all of these things ratchet up. And again, it's a crisis not of inflation, not of change, it's a crisis of level at that point. And so I think that people, it's less front of mind. The salient things about the economy or the wage gains, these kind of longstanding problems are not quite front of mind for people. And things are getting better in a really noticeable way for folks.

• 23:49Ezra Klein?

  I want to pick up on a word you just used, which is salient. Because like, this has been my motivation in this conversation a bit is trying to think about the economy and the politics of it, of it this year, which we'll, we'll get to. And the thing that keeps coming to mind is this question of salience, which is, we can't hold the whole economy in our head. Even in periods when we say there's a really good economy, it's bad for a lot of people, right? Millions of people are in poverty, millions of people are losing their jobs. Periods where there's a bad economy, lots of people are starting businesses, people are still getting rich. In a very complicated way, we have to choose what to pay attention to. And part of my theory of this, kind of having been an economics reporter during that period, is we just weren't paying much attention to prices. We were paying so much attention to unemployment, we were paying so much attention to wages, we were paying

• 24:33Ezra Klein?

  so much attention to inequality, and prices had been really stable in most things for a very long time. Like, interest rates were low, most consumer goods were low, and like, yeah, there were some problems building in housing. We did pay a fair amount of attention, actually, to healthcare prices, right? That was a lot of the Affordable Care Act debate. And you would hear people debate, kind of, higher education prices. And then the pandemic hits, and like, everything scrambles for a while, and then inflation comes. And inflation makes prices salient. And even now, as inflation eases, that doesn't stop. Tell me a bit about how, actually, at this point, you understand, like, the inflationary period we just went

• 25:14Ezra Klein?

  through, but also how you understand the debate about whether or not it is over?

• 25:21Speaker 01

  So to give a little bit of historical perspective on inflation, inflation is really high when Ronald Reagan comes into office. It's like 13.5%. Then it goes on this long, slow, whoosh down through the George H. W. Bush administration. And, you know, it's in a kind of 2% to 4% range from George W. Bush, Obama, it's really low, it's less than 2%. So you have this long period of, kind of, quietude, in which consumer prices overall are not changing that much. And the cost of some really important consumer goods, right, things that people are transacting for on a day-to-day basis, actually go down. Electronics are the most notable example of this. But as a general point, you have

• 26:06Speaker 01

  this extremely long period of time in which stuff and basic services, right, things like haircuts or whatever, it's all really cheap. It's really, really cheap. And what happens is, you know, in the first half of 2021, we see price increases concentrated among a relatively small set of items in the basket of things that the government looks at to determine the inflation rate. So, energy and car prices go up. You start to see really spiking commodity prices. Then you have this two-year period in which there's giant spikes in almost everything. Food at home spikes. Food away from home, it spikes. Gas prices go up, natural gas prices, electricity prices.

• 26:50Speaker 01

  Shelter prices don't increase in the way that food prices do, but they increase a lot, and they're so expensive that that really matters. Commodities outside of food and energy go up. So, it's really, really unbelievably broad-based. And so, now we've seen inflation overall come down from a 9% annual rate to a 3% annual rate. But basically, what it did, it was big enough to create this phase shift in prices. And prices don't really go down. It's really bad when prices overall go down because it means that people stop spending because why would you pay for something now if you could wait two weeks and the price would drop? I think that there was almost just no muscle memory of it. And folks got really, really, really mad.

• 27:33Speaker 01

  And the fact that wage gains were enough to cover it, you know, people just didn't believe it.

• 27:40Ezra Klein?

  How good is our measurement here? How sure are we that the median American or the median working-class American has more money after all their bills and spending today than five years ago?

• 27:53Speaker 01

  I wouldn't say that statistics are perfect because what an individual family is purchasing and the trade-offs that they're making to keep themselves in budget, it's really hard to account for all of that. But I would say that generally, our inflation statistics are pretty good. What happens is that we collect prices on a set of items from all around the economy, and then we kind of tabulate them, we put them into this basket of goods, and then we note the changes. In that over time, and we have many alternative measures of inflation.

• 28:32Speaker 01

  One thing that I would note is that there's evidence that the inflation experienced by lower income families has actually increased faster than higher income families because goods have gotten so much better and there's been so much more production aimed at high income families than low income families. So I just want to caveat that. But no, our data is quite reliable, showing that accounting for inflation, families have come out ahead and real consumption has gone up. So the amount of stuff, leaving aside prices, has gone up. Inflation is just one statistic and consumption is just one statistic. And I think that you need to look at a more holistic understanding of what people are spending money on, what they're getting for their money,

• 29:17Speaker 01

  and the trade offs they're making to keep themselves in budget.

• 29:20Ezra Klein?

  I remember talking to the Biden economists when they came in. This is 2021. And they were thinking a lot about how to get to full employment, how to run the economy hot, how to accept the trade offs of running the economy hot, how to get wage gains up, how to make sure you were running at full employment for long enough that wage gains got to the poorest workers, wage gains got to black workers, wage gains got to Hispanic workers, right? It's fairly, fairly easy to get wages up for rich people, but it takes longer in a hot economy to get them up for poorer people. And they actually do a great job in a way on full employment. I mean, it's amazing that unemployment is still under 4%. It's amazing that wage gains

• 30:00Ezra Klein?

  have grown so quickly for the poorest workers. But they don't really have like a genuine basket of ideas early on to say nothing of political rhetoric for what to do about costs. Like they rename Build Back Better, the Inflation Reduction Act. But it's not really an Inflation Reduction Act, right? It's a green energy spending act with like some Medicare drug pricing and Obamacare subsidies thrown in. And this, I think, like actually is a fairly big problem. Like it takes a political system time to adjust to a new set of problems. The player that does adjust is the Fed and begins raising rates, but people don't enjoy having interest rates go up. And this gets,

• 30:42Ezra Klein?

  I think, to something that Larry Summers and others have been pointing out, which is that our measure of inflation has come down, right? Inflation tracks how much prices in these different things are going up. But the prices of the things have not come down and our measure of inflation doesn't track interest rates. So what people are paying now, if they want to get a mortgage, which is much more expensive, if they want to be, you know, paying off credit card debt, education debt, any kind of new debt, like the price of money is meaningful. Summers and his team estimated that if you put that into inflation, it goes from roughly some months ago, three to 9% for people. Do you think there's something to the idea that actually the inflation problem isn't

• 31:24Ezra Klein?

  over, that if you're a family, that because of what you're paying now for money, you're paying the high prices of inflation, now you're paying the prices of higher money? And so actually to you, it hasn't really changed that much?

• 31:35Speaker 01

  So it's really important to note, as you did, the cost of borrowing is not included in common price indices. And so in, you know, 30-year mortgage rates, they're close to 7% now. The country's median mortgage rate is just a little bit more than 3%. So if you're trying to get a mortgage now, it's just blankly unaffordable. You have to buy less house in order to get your monthly price to, you know, be the same. Purchasing a car, about half of folks who purchase a car use financing and the rates for that are above 8%. And so I think that this explains a lot. I want to go back to something you said, which is that we actually have a tremendous policy toolkit for increasing demand. We can send out stimulus checks.

• 32:19Speaker 01

  We can do things like sending out child tax credit payments. We can expand the unemployment insurance system. All of these things are things that we did during the COVID recession. And just in general, right? Like we can increase the value of the earned income tax credit. There's a million things that you can do. On prices, we have a very anemic toolbox. And the problem is that if you have high prices caused by shortages, by things like underbuilding, a lot of the solutions for that are A, long-term and B, themselves temporarily inflationary. So if we were going to build a ton more housing in order to bring down rents, right?

• 33:00Speaker 01

  If we were like, we are going to solve the housing shortage, we're estimating at 5 million units, we're building 5 million units. You would create a lot of inflation because that would be just so much additional building, right? The price of materials would go up, the price of wages would go up. And so I think that we're in a really tough spot. So if you're in the White House, what can you do about inflation? You can release gas from the Strategic Reserve, which they did do in response to the Russia-Ukraine conflict. You can do more negotiating on prescription drug prices, which they've done.

• 33:40Speaker 01

  You can do some stuff on antitrust to make companies compete more and to lead to lower prices, but that's not a really quick fix. And a lot of that is instead going to prevent price increases in the future rather than bringing prices down now. You just don't have a lot of great options. And it's why I think that you've seen the Biden administration doing things like tackling junk fees, which are, right? Like there are costs that people pay, and at least you can get a little bit more traction there. And it's not, this is not a complete list of ideas and a complete set of things that they've been doing. The point is that it's pretty easy to juice demand, and it's kind of hard to affect supply

• 34:21Speaker 01

  and hard to affect prices with the economic tools that we have that are readily there.

• 34:26Ezra Klein?

  Yeah, one thing that's really striking in the housing market, and you wrote this slightly devastatingly titled piece, "It'll Never Be a Good Time to Buy a Home." One thing that is striking about the housing market is we turned up the dial on interest rates really quite high by recent historical experience, and prices of homes kept going up. It really shows how bad the supply crunch is, that prices are up, what, like 50% over the course of the, since before the pandemic? So now the borrowing cost is much higher, but also the price of a home is much higher. And yeah, like a lot of people have a mortgage from before, but that means they can't sell because like to sell would mean that you have to then,

• 35:08Ezra Klein?

  you know, buy your new home at this higher price with this higher interest rate. And so also you have all this supply being kept off the market, right? The housing market seems really quite broken to me. And housing, I think, is a pretty outsized effect on how people feel about the future. Young people who are not trying to buy a house right now, but want to in the next five to 10 years, think about housing, right? It affects how they feel about the economy, even if they're not in the market for it right now. Parents who see their kids not being able to buy a house, like that matters to how they feel about the economy. Like, housing does sometimes feel like this master price to me that like affects everything. And the level of brokenness there feels quite profound.

• 35:49Speaker 01

  Absolutely, because what's going to happen when interest rates go down is a bunch of people who have their down payments ready are going to flood back into the housing market and they're going to hold prices at the same level or maybe even push them higher. Unless you're in a world where there's more supply over a long period of time, I don't see the fundamentals changing, even if prices and levels might go up and down a little bit. We have a very big hole to dig ourselves out of. The only good thing I can say about it is that you have a lot of political figures who really care about this now, and you have both blue state and red state governors who are really starting to take this seriously. For the first time since I've been a policy reporter, you have folks starting to say

• 36:34Speaker 01

  something like, how can we get everybody on the same building code? What can we do to create carrots and sticks so that places will allow dense construction? And, you know, we didn't have that for a really, really long time. I actually remember after the housing crisis, when housing economists started to say, we're underconstructing. And I remember at the time that they started to say that, being like, what is wrong with you? Like, what are you talking about? How could this possibly be an issue? But they were completely correct because the problem actually started before the housing crisis, right? In some cities, we start underconstructing in the 1970s.

• 37:33Ezra Klein?

  So you have prices way up, basically on everything now.

• 37:35Speaker 01

  Yeah.

• 37:36Ezra Klein?

  So prices went up for kind of every good. The affordability crisis set of prices has been up and went even higher post pandemic. The price of money is way up. And at the same time, you have this debate about whether or not the economy is like really great or something is missing, right? You have these measures, these predictions of what consumer sentiment will be like, given an inflation rate and given an unemployment rate. And they show consumer sentiment should be really high if it's tracking historical trends. You have this endless back and forth about, well, on the one hand, people say their own personal financial situation is pretty good. On the other hand, they say that the national economy is really bad. People seem to think we're in a recession, but they don't look financially like they're

• 38:21Ezra Klein?

  in a recession. Why has there been this sense of confusion, right? We're laying out this whole theory of prices. It just looks really bad. And on the other hand, a lot of economists have been like scratching their heads over why people are so upset. So what accounts for the head scratching response?

• 38:35Speaker 01

  We've sort of talked about this, but I think it's important to stress. Wages have gone up more than prices, and that is particularly true for lower income folks. So if you are in the bottom decile of earners, your real wages, so wages adjusted for inflation have gone up 12% since 2019. If you're in the highest decile of folks, it's just about 1%. So real consumption, meaning consumption, holding prices constant, has increased about 10% over the past four years. We are buying more stuff. And if you look at levels of, measures of material hardship. Those have been going down. And that's not to say that there aren't problems.

• 39:19Speaker 01

  I also believe that inflation, A, it was kind of a surprising change for folks. And B, there are some economic facets and behavioral economic facets of it that make people particularly angry about it. So one is that unemployment is absolutely devastating for the folks who experience it. But even in an enormous, terrible recession, perhaps 1 in 10 folks who wants a job will be unemployed, whereas inflation affects literally everybody in an economy. And when I talk to people, inflation is much more pernicious for lower income folks because they're really spending every dollar that they have on basics, necessities. And for higher income folks, that's not true.

• 40:01Speaker 01

  But you can talk to really rich people and they will be mad about inflation. They are like mad about how much they are paying for things. It's just universally enraging to people. And there's this perceptual problem. So the economist Stephanie Stantcheva, who is at Harvard, who has found that Americans believe that their purchasing power is falling in a world in which there's a lot of inflation. About 4 in 5 respondents to this survey that she conducted said that prices systematically increase faster than wages. That means nobody's really getting ahead. This is not true, but this is what people think, right? Real consumption and real wages are up. And her polling also shows that folks blame corporate greed.

• 40:44Speaker 01

  They blame Washington for inflation. They don't see it as a function of input prices, energy costs, supply shortages, rising wages. And they also don't see inflation as part of any kind of an economic trend that's positive, including their own wage gains, even though their own wage gains are, you know, partially a product of inflation.

• 41:06Ezra Klein?

  I want to hold on that. How does somebody experience a wage gain? Your boss calls you into the office and says, we're giving you a 6%, a 5%, a 7% raise. You've done great work. Like, thank you for, for everything you've done. Or... You go look for a job and are able to bargain, you know, a higher salary than you were able to do before. That feels like something you did. I got a good raise. And inflation feels like something happening to you. Like, I got this raise. I'm making two bucks more an hour than I was. And inflation is eating 80% of that. Like, inflation is a bad thing happening to you, and wage gains are a good thing you did. And the fact, frankly, that any of your wage gain is getting eaten by faster-than-normal inflation

• 41:50Ezra Klein?

  or prices that you have not in any way adjusted to, like, it's really maddening.

• 41:55Speaker 01

  Absolutely. And, look, the reason that interest rates are so high right now is to get inflation down, because inflation is economically destabilizing when it's too high, and it's socially destabilizing. This is really well-known. And again, you can tell people over and over and over again that they're better off. But if you have inflation rates at 9%, people aren't going to listen to you. They don't like it. They don't want to have to do mental math every time they go to the grocery store. And when I talk to people about why they think the economy is bad, like, the first thing that people say to me often is, lunch at Chick-fil-A is 15 bucks. And like, lunch at Chick-fil-A being $15

• 42:39Speaker 01

  is kind of neither here nor there in the grand universe of what people are earning and paying for. But it's a price that people notice, and it really kind of ticks them off. The other thing is, inflation has come down. It's going to take a while for people to believe that. And one thing that I do think is changing now is that you are starting to see companies really start to compete for consumers on price. So both Burger King and McDonald's have set out these, like, $5 value meals. And Target said that it's cutting prices for 5,000 frequently purchased items, things like diapers and cat food and dog food. And we've been in this milieu

• 43:22Speaker 01

  in which prices just feel like they go up and up and up and feel that people feel like they're not getting a break. And already, you've seen consumer sentiments start to kind of tick up. And I think that companies engaging in price wars will actually have a pretty profound effect for as long as it sticks around for.

• 43:39Ezra Klein?

  How much do you think the high prices of the small things act as a constant reminder of the high prices of the big things? Which is to say, in a world where you know that healthcare and housing and education are incredibly expensive, how much does the fact that Chick-fil-A is 15 bucks, that a cup of coffee is seven bucks, act as this kind of constant salience portal to keep you thinking about this thing that is making you mad all through the economy?

• 44:10Speaker 01

  I think this is really important. So let's say, as an example, the average American adult makes a purchase two or three times a day. And some people make purchases way more frequently than that, and a lot of families make purchases less often, right? They get gas once a week, they get groceries once a week, and maybe a few other little things. And so if two or three times a day, you're being reminded of the fact that your money is going less far than it used to be, I think that you're going to be pretty angry about that. So one in three Americans eats something from a fast food restaurant every day, and about two in three Americans eat something from a fast food place once a week. It's just really, really, really common.

• 44:54Speaker 01

  And the prices for fast food went up a lot. And I think that that contributed quite a lot also. Americans are currently spending more than 11% of their income on meals. That's the largest share since the 1990s. So I think a lot of this is about food and restaurant costs going up quite sharply. Between the summer of 2021 and the summer of 2022, grocery store prices go up nearly 14%. And the cost of some grocery store staples, so dairy products, things like sugar and oil, cereals, it's more than 16%. And so I think that for high-frequency items, all of a sudden, you just get this blasted in your face again and again and again. And even if you're not spending that much overall on these things,

• 45:36Speaker 01

  I think it's basically just tapping your shoulder over and over and over again and saying your money is going less far. Whereas even something like rent, which people complain about and talk about all the time, but it usually gets set once a year and you pay it monthly. So you're reminded of it less frequently, even though that's a much bigger line item on the budgets and fundamentally, I think, a much more problematic part of the economy. And notably, rent goes up a tremendous amount during the pandemic. It's a nightmare. It was really expensive. It's even more expensive now.

• 46:08Ezra Klein?

  One of the things that economists will say when they're pushing back on the idea that how people feel about the economy is merited, I think that's actually the right word for this pushback, is, look, if it was so bad, people would be changing their behavior more than they are. That people are still going out to eat a lot, they're still buying a lot of food out of the house, that we see what it looks like when people are under very high levels of financial stress. And they make different decisions. Their consumption patterns change really radically, right? If you lose your job, you don't keep spending in the same way. But my sense from them is the consumption data has been pretty stable. And like, that has been a confusing thing to economists in this period, right? Like, inflation should lead to a lot of changes in how people act. It's

• 46:53Ezra Klein?

  not led to very many changes in how people act, but it's led to a lot of anger from those same people. First, is that true? And second, how do you read the sort of, both like, reality and politics of that consumption data?

• 47:06Speaker 01

  So if you have price increases and just cost pressures within families, folks tend to make some pretty predictable responses. So one is that they purchase fewer items per shopping trip, or they might reduce the number of shopping trips. So folks have not really cut the number of shopping trips much, but they have reduced the number of items that they are purchasing when they go get kind of consumer packaged goods. The second is that they'll trade down. So, you know, you'll go for Kirkland rather than Pampers, you will go for like Aldi rather than Wegmans, you know, you'll go camping instead of going to Disney. And folks are doing that. But the main way that consumers have responded is just by paying higher prices. And you can actually go back and look at company

• 47:50Speaker 01

  earnings calls. The corporate executives themselves are like, well, we kind of keep on testing the water and we're not seeing much effect, so we're going to keep on pushing prices upward. We've not seen a dramatic pullback in like, luxury goods shopping, or travel, or jewelry, all of those things that you would expect to be kind of the first to go, because people give those up and then keep on purchasing food. People are just sort of mad about it, but they kept on paying. I do think that that has changed a fair bit recently. So one is that we've started to see a really big increase in credit card balances and an increase in delinquencies. And so that's some evidence that lower income consumers are starting to get stressed

• 48:35Speaker 01

  and they're putting things on their credit card rather than being able to pay for them themselves. And again, we've also seen these companies be like, OK, we've tapped out, like, we're going for the value meal. We're going to try to get consumers and increase foot traffic by competing on price. And so it's important to note that the costs for kind of big box stores, for fast food restaurants, you've had a really big increase in labor costs. You had a lot of big increases in input costs, and both of those things have calmed down. But I do think that we're in this period where, you know, probably this is kind of as much as folks can safely spend.

• 49:09Ezra Klein?

  You mentioned a minute ago, those corporate earnings calls where CEOs would be like, look, we're raising prices, people are still paying it, we're going to raise prices again. One of the more popular explanations among more left-leaning people for inflation was what got called greedflation, which is like, there wasn't really a problem here, except that corporations were taking advantage of like, a weird moment in the economy to do huge markups. Was the greedflation theory correct, or how do you understand that part of it?

• 49:38Speaker 01

  I certainly don't think it was the only thing going on, if it was part of what was going on. The cost of labor really went up. It started going up when you started to have increases in local and state minimum wages, which begins during the Obama administration. Then you have like, a really big increase in wages for lower income workers that starts around 2018, and the pandemic actually intensifies it quite a bit. So there's that. And then input costs go up, too. And so the way that companies are going to respond to that is by passing that on to consumers. I do think that there was a moment where companies basically thought that because

• 50:18Speaker 01

  of inflation, they could increase prices even more, and in this sort of miasma, people would pay it. But I don't think that it was exclusively corporate greed. I would note that corporate bottom lines are looking pretty good right now, despite the fact that you have really high interest costs and these increases in costs more generally. So I don't think it was the only thing.

• 50:38Ezra Klein?

  Sometimes I think the problem with like the greedflation thesis was simply the name. Greed made it sound like they were doing something evil, when what corporations do naturally is try to find the price at which they can kind of balance market demand and like the highest profits they can possibly make. But it was true that there was more room for them to raise prices than I think they had thought in 2020. And things that you might have thought would happen, like really intense comparison shopping or intense use of coupons, didn't happen. It does seem to me that one thing that occurred was a kind of step change reshuffling of prices. And like now, consumers are stressed enough that you're beginning to have price wars bringing things down in certain areas. You

• 51:21Ezra Klein?

  mentioned Burger King, for instance, and Target, trying to think about how to how to bring in more more budget conscious consumers. But there was this sort of period where they're pretty open about this on earnings calls. And I don't think the right way to understand it is greed, like corporations trying to earn profits is what corporations do. But it turned out that there was a zone of price increases you could inflict on people, where instead of them changing their behavior, they would get really mad. And that sort of feels to me like the economic zone we've been in for a little while. Like, the person paying the cost on this is Joe Biden, not like Target or Walmart or McDonald's. But people are mad about it. It's just like the corporations actually did this adroitly

• 52:06Ezra Klein?

  enough that they didn't lose a lot of demand, that they just pissed people off.

• 52:10Speaker 01

  There is a really interesting raft of studies that has come out in like the last five years from economists that show that American consumers consumers have gotten less price sensitive. So when prices shift, consumption doesn't shift like we would expect. It doesn't shift like it would used to. And these studies are mostly looking at consumer packaged goods, just consumer goods. So other ways that we think that households have become less price sensitive, people are using fewer coupons, they're spending less time shopping and comparison shopping. So why might this be true? One is just that stuff is kind of cheaper thanks to globalized trade and manufacturing advances.

• 52:54Speaker 01

  The second is that people are wealthier. So you're just less price sensitive when you're richer. Third is women in the workforce. So it used to be much more common for one partner to work and the other to, you know, spend the money. And so you would probably have like that time. It would be sort of part of your job as a household worker to comparison shop. But now, given that so many prime age women are in the workforce, there's less time for them to do that. Consumers seem to have gotten more brand loyal is part of this. That's one theory. And another theory is that it's just inertia. People have gotten older and they tend to have this sort of inertia that they will be less likely to sort of try new things, buy new things as they get older.

• 53:38Speaker 01

  And so you just always buy the Starbucks coffee. So you're going to keep on getting the Starbucks coffee. I also think there's some chance that targeted advertising and dynamic pricing has something to do with this, but I don't know. It's just a really interesting shift that I I'm not sure that we completely understand and completely understand the implications of yet.

• 54:24Ezra Klein?

  I want to shift then into the macro politics of this. And I kind of want to separate two pieces of it, which is how people feel about the economy and how those feelings about the economy translate into politics. But one thing that you've been doing pieces on for many years now is the rising way in which partisanship shapes perceptions of the economy. Tell me a bit about that and how it might be playing into this period.

• 54:49Speaker 01

  So there's something called the partisan economic expectations gap. And basically what this shows is that if you are a Democrat and there's a Republican in the White House, you're much more likely to think that the economy is bad.

• 55:09Speaker 01

  And that's true even kind of holding economic conditions constant. And the flip is also true. This happens for both sides. It's not an asymmetric thing. If you're a Republican and Joe Biden is in the White House, you're like, this is a terrible economy. We need that guy Donald Trump back. And this has had the effect of somewhat divorcing folks' opinions about the state of economy from the real state of the economy because it's become so political. It has also sort of narrowed the band of consumer expectations because people are not changing their minds about anything anymore. You just have way more strong Democrats who say

• 55:52Speaker 01

  Ghanemi is good right now and way more strong Republicans who say that it's bad. This is happening at the same time that we have growing evidence that real economic data might be less predictive in elections than it used to.

• 56:08Ezra Klein?

  But one thing happening to Joe Biden right now is that you do see this huge partisan economic expectations gap, but also Democratic views on the economy are not as positive as you might think if you were taking that model from a couple of years ago.

• 56:24Speaker 01

  Totally.

• 56:24Ezra Klein?

  There's something weird happening among the Democrats. They're not giving Joe Biden like the economic pass that you might expect from, you know, what we've seen in that data before. Why do you think that is?

• 56:34Speaker 01

  There's two answers, and I don't know which one it is. One is that they don't really like him. Joe Biden is a somewhat less compelling politician for Democratic partisans than some other folks are in terms of his ability to stir the electorate and increase things like turnout. I think he's a somewhat less vigorous campaigner than we've seen, and I think that he has somewhat lower favorability ratings and higher unfavorability ratings among his own partisans than we've seen in the past.

• 57:09Speaker 01

  The second is that inflation is hitting them and they're just subject to the same forces that everybody else is in the economy. So Democrats are somewhat clustered more in the Northeast and on the Western coast, where you've seen really large increases in specifically housing costs. But then you've seen urban housing costs go up everywhere. And so to the extent that we have all of these blue islands, that's exactly where the prices have gone up. And it's been really, really, really pretty bad. That said, I do think that over the past, you know, call it 10 years, you've started to see the housing crisis spread to communities that we would never think of as having one before.

• 57:54Speaker 01

  Rural areas, you've seen really dramatic increases in housing costs. Exurban areas, you've seen dramatic increases in housing costs. It's kind of everywhere now. I would note that the mediating influence of the news media probably matters here quite a bit. So we know that holding economic conditions constant, media coverage of the economy has gotten more negative. And it's especially more negative in social media, where a lot of folks are now getting their news. And I don't think that that's entirely the fault of journalists. People seek out bad stories, right? Like, that's what people kind of want to read. So these are all headlines that have come out recently about household financial health and consumer spending.

• 58:38Speaker 01

  Americans Keep On Spending But Big Retailers Doubt It'll Last. Slump in Big Purchases Clashes With Government's Strong Consumer Data. Americans Are Still Spending Like There's No Tomorrow. Americans Plan Vacations Even As They Sour On The Economy. These are all great stories. I'm not picking. These are all great. They're really, really sensitive and really well-reported.

• 59:02Ezra Klein?

  Does this media explanation actually feel true to you? Because here's what I've experienced. As a person who writes about the economy, is married to a person who writes about the economy, and works in a place full of people who write about the economy. What I noticed happening was there was all this very sunny coverage of the economy and everybody doing it was getting yelled at.

• 59:23Speaker 01

  Yeah.

• 59:23Ezra Klein?

  You write something about how like the economy is actually looking really strong or we're like avoiding that recession or something. And people just got slammed by their audiences. It got slammed as out of touch. I don't want to like blow up your spot here, but you've written some pieces saying like, this economy is actually pretty good. My sense is like the reader feedback on that can be spicy sometimes.

• 59:44Speaker 01

  Yeah.

• 59:45Ezra Klein?

  And I feel like the media got like whipped by its audience a little bit into taking the, at least some portion of the audience's economic experience more seriously, which I'm not saying is a good or a bad thing. I think it's a complicated thing, but it isn't my impression that like the economics reporting profession wanted to be negative on the economy. It's that when they started covering the economy positively, what they heard from their readers or viewers or whatever, and then what they saw in the polling data, right? How people actually felt about the economy was that people were not experiencing the economy positively at all. I've seen the media in periods when we want to cover the economy negatively because the data is really negative.

• 1:00:29Ezra Klein?

  And that has not been what I've noticed happening here. In fact, I see a lot of stories about why aren't people happier given all this good economic data? And then like all these people yelling at the author of those stories, explaining why it is that they're not happy.

• 1:00:44Speaker 01

  I think that people's understanding of inflation is not economists' understanding of inflation, which is something you were gesturing to. I think it is real that people feel extraordinarily taxed by high prices and the fact that the prices have only gone up 3%, like they just went up 10%. I really credit that because I think that people are experts in their own experience. And I think what people are experiencing is really, really important. Nevertheless, it feels to me important to point out that like inequality dropping? That's amazing. Declines in child poverty? That's amazing. This is going to sound perhaps simplistic,

• 1:01:28Speaker 01

  but we have a gigantic economy. We're not like Germany. We're like the entirety of the EU. And so there's just always a lot happening. And it can be kind of hard when you're doing these big gestural stories about the big headline statistics. You're constantly missing things that are happening in this really vast, really, really, really diverse, really politically diverse, racially diverse, ethnically diverse country in which there's, you know, there's really, really big problems. People are allowed to be mad at stories. And I think you just have to hew to the complicated economic truth of any situation. It's why I actually think that a lot of those headlines are correct. But I think that that leaves a lot of space for people to read in their partisan priors

• 1:02:13Speaker 01

  or read in, you know, their view of things.

• 1:02:16Ezra Klein?

  I want to go back to another explanation you offered a second ago, which is that the question of whether Democrats like Joe Biden enough to sort of look at the economy through their, their feelings about Joe Biden. So I've been thinking a lot about 2012 and like going back and looking a lot at the 2012 data. And I think just inarguably, the economy was just much worse in 2012. I mean, unemployment in May of 2012 was 8.2%.

• 1:02:41Speaker 01

  Awful.

• 1:02:42Ezra Klein?

  8.2%, really bad.

• 1:02:43Speaker 01

  Miserable.

• 1:02:44Ezra Klein?

  When I remember covering the monthly jobs report in 2012, and just like, I assure you that economic coverage in the media was much more negative then. And Barack Obama was leading Mitt Romney by two points in the Real Clear polling average. So you have a much worse economy and you have the Democratic incumbent leading. And the way that the economy figures into politics is not a one to one, like, I like the economy, so I like the incumbent. That's not how people think about it. You often have incumbents governing in an economy that is recovering from something bad happening to it. That was, you know, Reagan in 1984. There'd been this big recession, the Volcker recession in 81.

• 1:03:24Speaker 01

  Yep.

• 1:03:25Ezra Klein?

  Reagan and Republicans have a really bad midterm election in 1982. But by 84, things are kind of getting better. I mean, they're worse than they are now. Unemployment is higher. Inflation is higher. The interest rate is higher. But Reagan makes a sort of morning in America argument, and people credit him with a comeback that they feel is happening. In 2012, the economy is quite bad. But Obama is making this argument, it's made very aggressively at the convention that year, that the entirety of the financial crisis wasn't on him, obviously. And like, he's a smart, thoughtful guy who cares about people like you, and he's got like the best economic people around him, and Mitt Romney's a plutocrat, and like, you should trust Obama to manage a comeback. And that's ultimately a winning economic message.

• 1:04:10Ezra Klein?

  And the thing you've been seeing this year, I think, is people not, as of yet, at least, being willing to extend that trust to Joe Biden. Like, when you ask them, they say they trust Donald Trump on the economy more. But just in general, I don't think that the argument the administration or Biden himself has been able to make, at least in enough forums that people are seeing or hearing it, is giving people a sense of like, yeah, this guy has it under control. I'm not even sure liking or disliking is like the right way to think about it. It's the has it under control dynamic. Donald Trump's kind of pitch is the economy was good when I was president until the pandemic

• 1:04:52Ezra Klein?

  hit, and I'm a strong man who will like jawbone the prices down and, you know, cut good deals for you and something, something, something. And Joe Biden's pitch, I think, has been a little bit more complicated, but also just the impression he gives off due to age and maybe the way they're campaigning is a little less energetic. And that feels to me like it is mattering here.

• 1:05:15Speaker 01

  Obama wins at a time that you have a housing crisis that creates a global financial crisis. And I think that we sometimes sort of forget that the first domino, the first big thing that happens is you have these dramatically elevated property seizures between 2007, 2010.

• 1:05:31Ezra Klein?

  Yeah, so you're saying he wins in '08 this way?

• 1:05:33Speaker 01

  Yeah, exactly. 10 million families lose their home. 10 million families. He comes in, and George W. Bush and his administration kind of own that. Obviously, you know, the American Reinvestment and Recovery Act is way too small. There's some questions about whether he should have pivoted to the ACA or not, and, you know, I don't know about the counterfactual there. But by 2012, things are getting better, pretty significantly.

• 1:06:02Speaker 01

  And Mitt Romney, notably, he's like a fancy finance guy at a time that inequality is really, really high. And inequality is a problem, and rich families are rebounding and low-income families aren't. And so Obama is able to make this pretty compelling case, right? Do you want the Bain guy who laid a bunch of you off? Do you want him running in the White House? And that economic argument makes sense. I think that personalities matter here a lot, right? Obama was like a once-in-a-generation political talent who was extraordinarily good at campaigning. For folks who didn't get to see him, he was like magnetic up there. And Joe Biden, right now, is just a last-vigorous campaigner.

• 1:06:43Speaker 01

  Donald Trump, I think, just has, he's unusual in running to unseat an incumbent in the sense that he was president himself. It's just a strange election in that way. And he's also pretty good on TV, right? Like, he's a celebrity. And I think that he's been capable of making this argument of, yeah, it was better back then, even though I'm not even sure that it was.

• 1:07:04Ezra Klein?

  So Biden gave an interview to CNN a couple of weeks, a month ago, something like that. And it was very much an economics interview. So why don't we play the way he's messaging this?

• 1:07:14Speaker 02

  Economic growth last week, far short of expectations. Consumer confidence, maybe no surprise, is near a two-year low. With less than six months to go to Election Day, are you worried that you're running out of time to turn that around?

• 1:07:30Speaker 03

  We've already turned around. Look, look at the Michigan survey. For 65% of American people, think they're in good shape economically. They think the nation's not in good shape, but they're personally in good shape. The polling data has been wrong all along. You know, how many, you guys do a poll with CNN, how many folks you have to call to get one response? The idea that we're in a situation where things are so bad, the folks that, I mean, we've created more jobs, we may be in a situation where people have access to good Bain jobs. And the last I saw, the combination of the inflation, the cost of inflation, all those things, that's really worsening the people with good reason.

• 1:08:12Speaker 03

  That's why I'm working very hard to bring the cost of rentals down, to increase the number of homes that are available. Let me say it this way. When I started this administration, people were saying there's going to be a collapse in the economy. We have the strongest economy in the world. Let me say it again, in the world.

• 1:08:34Ezra Klein?

  What do you think of that?

• 1:08:35Speaker 01

  As a reporter, I don't argue with people's perceptions of how things are. But I think it's a political problem that he and other Democrats have run into. They feel like they're being gaslit if you say, well, you're coming out ahead. That's just not how people feel. I am not a person who thinks a lot about political messaging, but I'm not sure that the Biden campaign has hit on the economic message about how it's going to be better tomorrow that is really resonating with folks.

• 1:09:08Ezra Klein?

  I was struck when I saw that interview because that interview took place in an economic setting. I forgot, it's like a factory or something. So they clearly had set it up to be an economic interview. And the question that Aaron Burnett asks there is extremely obvious, right? Put anybody in that interview chair, you're going to get a question like that about the economy. And I don't want to say Biden didn't seem ready for it, but he didn't seem to have like an answer ready. Like, there are a couple of different answers happening in that answer. And he's not really settled on one, right? There's like the, actually, we have the strongest economy in the world, which is true.

• 1:09:50Ezra Klein?

  I mean, in a lot of ways, like you look at America compared to other countries right now, and we look great. Like, we look way better than China, which, you know, was not true for a while. We look way better than the countries in the European Union. We look way better than the UK. You know, there's also the, actually, this is all turned around, and you all just haven't felt it yet. Very, very complicated case to make. He goes on to make some points about trying to crack down on junk fees, that kind of thing. What I heard there was, they haven't decided how to message this. The other thing is that they don't really have like a big policy package here.

• 1:10:26Speaker 01

  Yeah.

• 1:10:26Ezra Klein?

  It's a weird thing, right? You can imagine a world where the Inflation Reduction Act was actually an Inflation Reduction Act.

• 1:10:31Speaker 01

  Yeah.

• 1:10:31Ezra Klein?

  They just renamed something else the Inflation Reduction Act. And the stuff that got cut out of it by the guy who helped, I think, rename it that, Joe Manchin, was all the stuff that actually might have brought prices down for people, all the stuff that focused on things like childcare. And so- If you ask like, what is their big package? What is their headline policy on affordability? There are certain things they are touting that they've already done, right? Like Medicare prescription drug pricing, which actually did bring down the price some people pay for some drugs.

• 1:11:00Speaker 01

  Yep.

• 1:11:01Ezra Klein?

  Junk fees.

• 1:11:02Speaker 01

  The insulin price cap, really, really important.

• 1:11:04Ezra Klein?

  Really, really important. So they, you know, it's not an accident, I think, that the couple of policies they have that actually brought down the price of something for someone are very essential to the reelection campaign. But I don't think they have had a very clear set of like, here are the big things we intend to do on that in term two, right? If you're not happy with how things have turned out, you don't just have to wait. What you need to do is give us the house again. Like, this is like the big project here, and here's what I'm going to do to achieve it.

• 1:11:31Speaker 01

  Absolutely. So it's pretty hard for them to get prices down. You're just going to have to have subdued inflation for a while for people to feel good in the grocery store again, you know, feel good going out to Target or wherever they're shopping. There's a lot of room to really improve the fundamentals of the economy for people by attacking the cost of living crisis. Healthcare costs could go down quite a bit. It's really hard. It's really, really, really tough. But I think if you made an effort to get premiums and out-of-pocket costs down by instituting price controls, allowing the government to negotiate for prescription drugs, there's a million different ideas for how to do this.

• 1:12:12Speaker 01

  That could be super powerful. Getting rents down, increasing housing supply, that is going to have a lot of benefits for the economy. Again, it's going to mean more construction, which is going to be inflationary. There's tremendous space on childcare. It's really popular when states and cities do 3K and 4K, which a number of places have done now. If you had a comprehensive zero-to-five plan that, you know, had the government come in and basically stay, you know, you don't have to start at five, like, we're going to help you starting at six months. That would be great. And they've already had a lot of traction with student loan debt. And I know that there are concerns about the distributional effects of that, but it is quite popular because I think people see the whole system as being kind of screwed up.

• 1:12:53Ezra Klein?

  Although polling doesn't do that well.

• 1:12:55Speaker 01

  Yeah. I mean, it's popular for the people who do it, right? And I think that it was polling that led them to do so much on student debt, right? And again, I think people's perceptions of things are kind of wishy-washy, but I think that that can advantage politicians, right? Whether you can pass any of that through Congress, I don't know. It's really, really hard. A lot of what we're talking about would be expensive, but there's definitely space there.

• 1:13:17Ezra Klein?

  How about Donald Trump? So I've watched some of his rallies around this, and he talks a lot about how expensive everything is, talks a lot about how much it all costs. I wouldn't say he's got an articulated agenda that will bring price decreases, but to the extent you understand what the Donald Trump second-term economic agenda is, is it inflationary? Is it deflationary? Like, what are the big-ticket items? Like, how would you say he is saying he would handle this?

• 1:13:46Speaker 01

  It's pretty inflationary. So tariffs are inflationary. If you wanted to lower costs, you just eliminate tariffs. But tariffs are a big part of his economic package. Immigration is not necessarily an issue that I think people think of economically. But in a world where we have more folks who have immigrated here and wages are still going up and you don't have that sense of low wages being a function of, you know, people who got here and didn't stand in line like they should have, taking money away, you know, I don't know. I think agricultural communities have also stressed the importance of immigrants to our agricultural workforce.

• 1:14:30Ezra Klein?

  Mass deportation would be hugely price-increasing.

• 1:14:34Speaker 01

  Yes. We've had agricultural communities, we've had construction companies note that absent labor provided by immigrant workers, they wouldn't be able to do what they're doing. Costs would go up and we would throttle production there. I don't think it's the most important thing, but this would be inflationary, right? The cost of food is going to go up a lot if you're having tomatoes and berries dying on the vine in California because there's nobody there to pick it. Disrupting those parts of the economy would be really, really damaging. And again, I think it's important to note that that is, you know, in my mind, less important than the emotional and moral cost of trying to do something like this.

• 1:15:16Ezra Klein?

  I think sometimes the response you get from Republicans on this, or you did at least a couple of years ago, is, well, then they'll just pay American workers more.

• 1:15:25Speaker 01

  Unemployment rate is below 4%. What workers are you going to get to do agricultural work? This is why we have so many folks from other countries doing agricultural work here to begin with. Same thing with construction. Construction's really hard work and it takes a lot of skill. You're not going to snap your fingers and have millions of Americans start doing roofing work in Florida and Texas in the sun.

• 1:15:51Ezra Klein?

  What you just said about tariffs being inflationary, I think, is important. And it struck me that Biden just unveiled a huge set of new anti-China tariffs, right? Like, we're not going to allow these cheaper Chinese electric vehicles in here, but it's tariffs on a bunch of Chinese goods, which, on the one hand, I kind of get the politics of. You want to take an issue away from Donald Trump. Like, they do have genuine economic and national security concerns about kind of rebuilding certain kinds of supply chains and manufacturing capacities in the US. But at a time when you have like a lot of focus on prices on the one hand and climate change on the other, jacking up the price on Chinese-made electric vehicles

• 1:16:36Ezra Klein?

  and solar panels and things like that, from a policy perspective, you are making things more expensive, which struck me as surprising at the moment.

• 1:16:46Speaker 01

  I think that the issue here that I see is not even really exactly an economic one. It has to do with their own energy goals. If we are going to have a transition to green energy, it's going to be tough to do that with policies like these. In terms of increasing American manufacturing capacity, you know, I think there's now like a widespread understanding that it's good to make some things here and that not making them here leaves us really, really vulnerable. So in terms of the supply of some critical drugs, you know, we had some really bad issues with formula and formula importation. So, you know, I think that that is true. And again, manufacturing jobs have this nice spillover.

• 1:17:30Speaker 01

  But with China, yeah, it's tough. And I think that this is happening for national security reasons, perhaps more so than economic reasons. And I think the real question there is about how that would fit in with a broader energy policy.

• 1:17:43Ezra Klein?

  But isn't there some way in which if people could start buying, whatever these are, $15,000, $20,000 Chinese-made electric vehicles that are popular in the rest of the world here, they would experience that as nice, right? I mean, it would be nice to be able to get a good electric car for a lot less money than you can currently get an electric car. I kind of take some of the set of affordability crisis and price crisis problems as like the revenge of neoliberalism. I mean, the neoliberal trade was you kept prices really low. I mean, neoliberalism in many ways is a dominant economic orthodoxy emerges out of the inflationary crisis of the 70s. And you keep prices low, and it turned out that also kept wages pretty low, which is a real problem with it.

• 1:18:27Ezra Klein?

  The Biden administration has been extremely clear, like that they are the end of neoliberalism, right? Like, they are the Democratic administration making a turn on neoliberalism. It's really the break between them and the Obama administration economically. And so what are you getting? You're getting the other side of that bargain. You are getting higher wages, but you're also getting significantly higher prices. And, I mean, on one level, I just don't think they figured out the politics of that. I don't think they were prepared, not that their policies are the main thing that raised prices, but they definitely don't have an economic story of like, why paying higher prices is a good thing in some of these areas. And on things like the Chinese electric vehicles, I mean, I'm very uncomfortable with that policy.

• 1:19:11Ezra Klein?

  Like, I understand the reasons you might want to have a domestic electric vehicle manufacturing chain. I agree with them in many ways, but like, you can pull in Chinese manufacturing here, right? But if you want this EV transition to happen quickly, and you don't want people to hate you for it, you need really cheap electric vehicles. And China knows how to make them, and frankly, we don't. And like, you listen to Donald Trump at a rally, and he is going directly at this. He's like, you're gonna hate these electric vehicles, they're too expensive. Like, he sees this as like a coming problem. And, I don't know, I think Democrats are about to get caught really flat-footed here because on the one hand, they're cranking up the regulations on electric vehicles, and on the other hand, here's China willing to sell us a bunch of cheap ones.

• 1:19:54Ezra Klein?

  They're like, no, no, no, no, no, we'll take the expensive ones. And I'm not saying I don't hear the rationale, I do. But they're acting like there aren't trade offs here. And I think the trade off is going to be politics. I don't think the policy is going to be popular.

• 1:20:09Speaker 01

  I would isolate cars for a second. And I would think about the neoliberal trade that you are describing more in terms of domestic labor costs. So for a long time, the cost of like fast food and Walmart stuff, a part of the reason that prices were so low was that wages were so low. And now we've seen this shift to more European style pricing where the prices are up a little bit, but the wages are pretty good. And you can start to see families getting by, you know, with these jobs. And I would note that, you know, the wages are still way too low for a lot of these jobs. I really worry about like delivery drivers, folks who are, you know, doing Uber Eats and that kind of thing.

• 1:20:52Speaker 01

  But I think it is fundamentally a trade that would be better if kind of big box prices were higher, but all of the wages were higher. And again, we've seen really significant wage growth in those jobs. And I think that that's good. I think people might not like it fundamentally, but I think that that would be overall a good trade. On the electric vehicles issue, right? Cars are expensive. People don't buy them that often. The differential in cost between what we have here in the United States right now and between what China is producing is really, really significant. And so I would almost see it as its own little special issue. And I feel like I just don't understand the foreign policy implications and the national

• 1:21:34Speaker 01

  security implications enough, because it seems to me, again, that those are somewhat predominant.

• 1:21:39Ezra Klein?

  The reason I do connect these a bit is it feels to me like they reflect an unformed politics of prices. That the Democratic and Republican coalitions knew how to talk about the problems of demand, of jobs, of wages. They sort of knew what their policies were, right? Republicans wanted to handle all this through tax cuts. Democrats want to do more stimulus. They want to do minimum wage increases, et cetera. And I think neither side is very clear on what they want to do about affordability. It's harder, it splits your coalitions in weird ways. It has like all these cross cutting elements with other things like, you know, the energy transition.

• 1:22:19Ezra Klein?

  And the reason I think the Chinese tariffs and EV issue is like tricky for the Democrats is that on the one hand, like it shows the way some of their goals, right? Like, don't let manufacturing communities in the Midwest be hollowed out, don't be too reliant on China, conflicts with other goals, which is like, you need to have something to say to people about how you're going to get them cheap things again. And, you know, Donald Trump and the Republicans are not better, it's word salad. I think you see some governors who do, like Jared Polis in Colorado. You listen to that guy talk, it is just cost of living, cost of living, cost of living, cost of living. But I do think something you just really hear on both sides is that the economic problem

• 1:23:02Ezra Klein?

  they are facing and that is salient to the public has changed faster than they have changed. They've kind of left a lot of this up to the Fed, frankly. And in terms of really having a message on what we are going to do, and we are laser focused on this, and we have 50 ideas for what to do here, you don't hear that kind of talk, right? It's not being treated as a kind of policy amenable problem in the way that sort of low demand was 15 years ago.

• 1:23:31Speaker 01

  I think that you're going to see mean reversion on prices and consumer sentiment. I think that with inflation below 3.5% where it is right now, things will kind of normalize. Supply chains have readjusted, wage growth has come down to a level that I think is more normal. And so if I were a political consultant, I would worry about fighting the last war a little bit. I'm not sure that you need to do too much on consumer prices, given that the supply chain disruptions and everything else has evened out. I think there's tremendous space to do a lot on the cost of living crisis. And I think it would be pretty popular.

• 1:24:13Speaker 01

  And I think that you could focus on childcare, healthcare, housing. Right now, we really do not have a national housing policy. And in part, that's because housing policy is mostly left to state and local governments. HUD is teeny tiny. It's teeny tiny. And it hasn't gotten bigger as we've had this housing crisis.

• 1:24:34Ezra Klein?

  HUD being the Department of Housing and Urban Development.

• 1:24:36Speaker 01

  Housing and Urban Development. They do very little housing and very little urban development. It's almost exclusively the purview of state and local governments. But we're really just starting to think about how the federal government could start increasing housing supply. So I think that in the longer term, all of these things, these are still going to be problems for folks five years, 10 years from now. And I actually think that the fact that you've had this bending in the healthcare cost curve, there's space for, yeah, let's start getting drug prices down. Doctors and nurses, cover your ears. Let's allow more of them in and allow more competition. And in the long term, you could have lower wages for them. It's very, very, very unpopular, but that would probably be good.

• 1:25:20Speaker 01

  Let's increase healthcare supply, but let's just get the prices down for all of these things. Let's rationalize this completely irrational system. Is that good on a bumper sticker? Does that win elections? I'm not sure about that, but it's good policy.

• 1:25:32Ezra Klein?

  I sort of take your point about immunization, but I do think there's a thing in politics, like this is what people are worried about now, right? And they all have to run this year. And there's something about being caught trying and being caught worrying.

• 1:25:43Speaker 01

  Yeah.

• 1:25:44Ezra Klein?

  You want people to feel like you're upset about the thing they are upset about. And like, if you're the person in charge, you're working really hard on the thing they're upset about. I have a sort of slightly strange view on the politics of Israel Gaza, which is that I think the main way it is going to damage Joe Biden is not a revolt from the left on Gaza, but just a generalized sense among voters who actually don't care about it that much. If you look at like a list of issues I think are important, like Israel and Gaza are extremely far down there, is that the feeling that Biden and the Democrats are paying all this attention to sort of wars over there. And not doing anything about the cost of groceries over here.

• 1:26:24Ezra Klein?

  And to some degree, I think this is like one of Trump's stronger veins of political attack, which he's sort of leveraging a kind of isolationism, right? We just shouldn't be involved in Ukraine if it were me, like Hamas would have never done this and we wouldn't be thinking about it, right? He doesn't seem like he is interested. He's sort of arguing all these things are a distraction. Now, he also doesn't have a policy agenda, but I think that the sort of way these things are hurting Biden is a kind of perception that the focus is on these conflicts that most Americans just kind of find to be like an unwinnable morass. And they're not seeing the action and the progress on the thing that they're really worried about.

• 1:27:04Speaker 01

  So in surveys, when pollsters are asking voters what they care about the most, they say the economy. And I recognize that I said that you have to take people at their word. I think there's some chance that the economy is not going to be the decisive issue here. I think Joe Biden and Donald Trump personally, like what people personally think about them and how they see them personally campaigning is going to matter quite a bit. In 2022, we saw Dobbs and we saw immigration as really important and motivating issues for partisans on both sides. And so I think you need a strong economic message, but I think that there's this way

• 1:27:46Speaker 01

  in which we had some elections recently that were absolutely dominated by economic issues. But in 2016, that wasn't an economic election. 2020, it wasn't really an economic election exactly. It was very unusual because of where we were in COVID at that point. 2024, I'm not sure that this is an election where the economy is going to be the dominant issue. And I think that what happens with gas prices and with price competition from retailers is going to matter a lot in terms of folks' inflation perceptions and how they feel about their own capacity to spend. And so right now, I would say that those trends are going more positively and we've seen some consumer sentiment numbers that have gone up, which is exactly what you would expect.

• 1:28:29Speaker 01

  But, you know, we have the summer travel period and commodity prices are increasing in some cases, so I don't know how long that'll hold.

• 1:28:37Ezra Klein?

  Then always our final question. What are three books you'd recommend to the audience?

• 1:28:41Speaker 01

  I was trying to think about books about inflation and consumer prices that might be compelling for the audience.

• 1:28:50Ezra Klein?

  That feels like a small category.

• 1:28:52Speaker 01

  Yeah, it's a little bit tough, right?

• 1:28:56Speaker 01

  However, there's a really great book that came out a few years ago called Franchise: The Golden Arches in Black America by Marcia Shadling. And it's about McDonald's and franchising, specifically about the growth of McDonald's and its role in black communities and with black consumers. It's such a compelling book. It's so wonderful. I learned so much from it. I recently read the best political book that I've ever read, which is called A Place of Greater Safety. It is a novelization of the French Revolution. You're smirking at me.

• 1:29:31Ezra Klein?

  I've never been recommended a book as often in my own household as this book.

• 1:29:35Speaker 01

  We were supposed to go out to see friends for drinks. And I was like, I cannot come out because we are in the critical year of 1790 and I need to know what's happening. It's like an 800-page historical novel by Hilary Mantel. Price increases, price instability is a really important part of the French Revolution. I didn't know that much about the French Revolution. Like, I knew that it had happened. I knew that, you know, you have the French Republic. I knew that you execute a king and a queen and eventually, you know, you have this dramatic political transformation. It is so unbelievably good and so compelling.

• 1:30:17Speaker 01

  And then I was thinking about, of the best books about the kind of neoliberal economic deal that we make for a really long time in America that I think that we are just starting to upset and grow past. The best book, I think about it, and it's a classic, is Nickel and Dimed by Barbara Ehrenreich, which is a book about women in the workforce. It's about low wages. It's about tipping. It's about a million things and it's just fantastic.

• 1:30:55Ezra Klein?

  Annie, Larry, thank you very much.

• 1:30:56Speaker 01

  Thank you.

• 1:31:05Ezra Klein?

  This episode of The Ezra Klein Show is produced by Roland Hoop. Fact checking by Michelle Harris with Mary Marge Locker and Kate Sinclair. Our senior engineer is Jeff Geld with additional mixing by Aman Sahota. Our senior editor is Claire Gordon. The show's production team also includes Annie Galvin, Elias Isquith, and Kristen Lynn. Original music by Isaac Jones and Aman Sahota. Audience strategy by Christina Sami-Lusky and Shannon Busta. The executive producer of New York Times Opinion Audio is Annie Rose Strasser, and special thanks to Sonia Herrero.

• 1:31:35Speaker 03

  All right, we did it.

• 1:31:38Speaker 03

  We solved the economy.