8/19/25 Jackson Hole, Tariffs, and Tax Changes: Economic Insights with Dr. Richard Gearhart

The Moneywise Radio Show and Podcast Tuesday, August 19th BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Guys" podcast call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com facebook: Moneywise_Wealth_Management LinkedIn: Moneywise_Wealth_Management Guest: Dr. Richard Gearhart, Professor of Economics at CSU-Bakersfield website

• 0:00Speaker 00

  From the Garo Ellis padded radio room off Stockdale Highway, here is Money Wise. Call or text into the show 24/7 at 396-1000.

• 0:39Speaker 00

  Here is Money Wise. Money, money, money, money.

• 0:43Speaker 01

  Welcome to the Money Wise Show. We are live from the Garo Ellis padded radio room off Stockdale Highway on ESPN Bakersfield, 1230 a.m., 101.1 FM, and always streaming at MoneyWiseGuys.com. You can call or text into the show 24 hours a day at 661-396-1000. Today, we are your hosts. I'm Sharad Waite and...

• 1:02Speaker 02

  Frank Lee.

• 1:03Speaker 01

  Frank Lee. How you doing, man?

• 1:04Speaker 02

  I'm doing great.

• 1:05Speaker 01

  You said you're sleeping more.

• 1:06Speaker 02

  I am sleeping more, yeah.

• 1:07Speaker 01

  Thank you. That's good news.

• 1:08Speaker 02

  Yeah.

• 1:09Speaker 01

  That's a good sign. You got a seven, eight-month-old baby now.

• 1:13Speaker 02

  Almost eight months.

• 1:13Speaker 01

  Almost eight months.

• 1:14Speaker 02

  It's crazy. It's so crazy. He's standing up? Well, not really, but we're just propping him.

• 1:18Speaker 01

  Sitting up, standing up.

• 1:20Speaker 02

  And he's just like, he's just like a little mini, mini-human, you know?

• 1:23Speaker 01

  Yeah, when they, it's all over, you know, and they start walking.

• 1:26Speaker 02

  Yeah, yeah, yeah. But it's funny because like, you know, his arms aren't as long and his head is still like...

• 1:32Speaker 01

  Oh, yeah.

• 1:33Speaker 02

  So when we do the little heart sign, his hands, his fingers can't touch you.

• 1:37Speaker 01

  Can't reach above his head.

• 1:38Speaker 02

  It's just like, it's funny.

• 1:40Speaker 01

  It's a little side note, you know, one reason why humans are, have been so successful as a species is because we're born with enormous brains.

• 1:51Speaker 02

  Oh, yeah.

• 1:52Speaker 01

  But it's also, you know, very, you know, with these big heads, the big skulls, like disproportionately, especially when they're young and developing. And, but it also has that, that consequence of make it very hard to deliver a baby. Number one killer of females like 100 years ago was childbirth.

• 2:13Speaker 02

  Oh, yeah. Yeah, I couldn't imagine.

• 2:15Speaker 01

  Oh, yeah.

• 2:16Speaker 00

  That's why my grandpa always called me Mr. Magoo when I was little.

• 2:19Speaker 01

  What?

• 2:19Speaker 00

  Because I had a big head and I ran into everything.

• 2:24Speaker 01

  You still need some glasses, Mr. Mugu.

• 2:25Speaker 00

  What?

• 2:26Speaker 01

  That's why I'm gonna call you Mr. Mugu. Yeah. Mr.

• 2:29Speaker 00

  I can't pull them off like you do, so.

• 2:31Speaker 01

  Well, yes, you can. Yes, you can. And it will be better than your size 40 font that you have on your phone. I can read your phone from here and you're 20 feet away.

• 2:42Speaker 00

  I'm not hiding anything.

• 2:43Speaker 02

  Size 40 font. Oh, my God.

• 2:45Speaker 01

  Have you seen his font?

• 2:46Speaker 02

  No, I haven't.

• 2:47Speaker 01

  It's, it's, he needs glasses.

• 2:49Speaker 02

  Yeah.

• 2:50Speaker 01

  Let's just say that.

• 2:50Speaker 00

  I'm sure I do.

• 2:51Speaker 01

  Well, we got a couple messages. Do you have them, Frank?

• 2:54Speaker 02

  Yeah, yeah, I got them.

• 2:55Speaker 01

  Let's go for it.

• 2:56Speaker 02

  Let's go. First one, okay, first message is, when can I go into the Woolworths to get my steak burger and fries? Me too, man, me too.

• 3:04Speaker 01

  Honestly, we get, we get a few of these a week, asking about the Woolworths and when the luncheonette is gonna open. We're really close to opening up. It'll be, oh, mid-September.

• 3:17Speaker 02

  Mm-hmm.

• 3:17Speaker 01

  About a month. We're about a month away from, from opening up. Construction is very close to being done, but you know, with construction and with permitting and occupancy, you can't open up a business until it's pretty much done.

• 3:34Speaker 02

  Yeah.

• 3:35Speaker 01

  Like, there's too many codes and things involved.

• 3:39Speaker 02

  Cause any, any one thing can just set it back.

• 3:41Speaker 01

  That's right.

• 3:42Speaker 02

  And it's like, it's, that's, that's the main issue with a lot of these major constructions and, and commercial. It's like, you have everything up to code, but then just that one small thing, you gotta...

• 3:52Speaker 01

  And you're like, but everything else is working, everything else is good, let's just go. Yeah, who cares about that? You know, whatever that thing is. But we're working on it, really excited. So, yeah, come get your burger and fries. It's gonna be amazing. It's gonna be a really, really good... You got to taste one of the, did you give him one of the tastings?

• 4:06Speaker 02

  Yeah, two, two, one of them, yeah.

• 4:08Speaker 01

  Yeah, or like our, our secret menu tasting session?

• 4:11Speaker 02

  Yeah. I'm excited. I just, I just request, uh, protein burgers, you know?

• 4:15Speaker 01

  Oh.

• 4:15Speaker 02

  Protein style burgers.

• 4:16Speaker 01

  Oh, yeah. No bun?

• 4:18Speaker 02

  No bun.

• 4:18Speaker 01

  Wrapped in a lettuce?

• 4:19Speaker 02

  Yeah.

• 4:20Speaker 01

  Well, that's easy to do.

• 4:23Speaker 02

  Yeah. No, it is. I can't, I can't wait.

• 4:26Speaker 01

  We've got another message here, a little, little bit different than Woolworth, but let's, let's read the next question.

• 4:32Speaker 02

  All right. With the new tax legislation reinstating 100% bonus depreciation for qualified assets starting January 20th, 2025, let me ask you this. For local business owners who've been holding off on purchasing that new truck or equipment, is now the smart time to move forward? And what's the most common mistake you see people make when trying to take advantage of this incentive? Thank you, guys.

• 4:57Speaker 01

  I, I love this question. It might sound really technical, but I'll, I'll break down how I read the question.

• 5:02Speaker 02

  Yeah.

• 5:02Speaker 01

  Which is the big, beautiful bill. I can't, every time I say that, I kept a chuckle and said, it's so dumb. Such a terrible name. But the, the most recent bill that, that was passed and went into effect, a lot of these things went into effect the beginning of the year, but it was signed on July 4th of this year. And part of that bill was making permanent or permanently restoring 100% bonus depreciation. So think of this in terms of as a business owner, when you, it's just because you buy something, you buy whatever it is, doesn't mean that you can expense it or depreciate it

• 5:43Speaker 01

  or, or categorize it as a business expense and, and deduct it from your income taxes. It depends on what you're buying. And it also depends on how much that, that thing was. And it was already as part of the Tax Cuts and Jobs Act in 2017. They, this was, this allowed businesses to deduct 100% of the cost of these qualifying assets.

• 6:11Speaker 01

  And but it was set to change and sort of reduce and it was going to phase down the amount of money that a business could depreciate or write off. And it was going to go down by 20% a year and started, basically started phasing out. And so, and it was going to vanish by 2027. But this one big beautiful bill act and part of it that was signed into law is eliminating that planned phase out so that a business can essentially, as long as it's a qualified expense, can deduct 100% of that, of that thing. So let's, let's use, for example, just, just as an example, let's say a business is looking

• 6:56Speaker 01

  to buy a car, like, you know, for delivery, like a delivery car.

• 7:01Speaker 02

  I could use a new truck.

• 7:02Speaker 01

  There you go, you can use a truck. And so, right now, if you bought, the business bought it, you could depreciate, do 100% bonus depreciation, you could write off the entire cost of that truck. Whereas if this wasn't passed, then you would only be allowed to write off a certain amount of the, of the cost of the, of the truck over a period of time. So, the question then is, you know, what, how do, how do business owners maybe misuse this, or what are the mistakes that they make with this depreciation? One that comes right to the top of my mind is somebody taking that bonus depreciation, I mean, they're going to deduct the whole thing, but they don't have really an income tax situation.

• 7:44Speaker 01

  Maybe they're, maybe they're already in a scenario where they have, have had expenses or lost income and so they, they don't, they wouldn't benefit from depreciating all of it. They, they would want to just go to like, just the standard sort of.

• 8:05Speaker 02

  Deduction.

• 8:06Speaker 01

  Deduction, yeah. And not, not, you know, bonus depreciate it, but just, you know, take it out over time. And then they can use that depreciation in future years where they're anticipating making more money. So I can, I can see that potentially being one of the mistakes.

• 8:21Speaker 02

  So you can, technically, if this, this person, this individual were to buy the truck this year, they don't have to depreciate it this year, they can hold it off until next year.

• 8:31Speaker 01

  That's right. Yeah, they can, they can kind of, they can wait and, you know, do a smaller.

• 8:39Speaker 01

  Kind of, you know, more phased or

• 8:42Speaker 00

  Right.

• 8:43Speaker 01

  Scheduled depreciation rather than just that, you know, that bonus one time.

• 8:48Speaker 00

  Yeah.

• 8:48Speaker 01

  So, but the other thing that I see, business owners, not just business owners, but consumers in general will make this mistake. It's a common, like, logical fallacy. And that is, they will, they will spend money to get a savings. They will spend money to get a deduction. You might have heard this, as a financial advisor, you might have heard somebody say something like, well, I want to buy the house because I want to be able to write off my mortgage interest. You know, and it's like, well, buy a house because you need to buy a house. Don't buy the house because you want to get a tax deduction.

• 9:24Speaker 00

  Yeah.

• 9:24Speaker 01

  You know, you buy a house because you need a house, you know, you're not, you're not buying it because you need to, you know, you need, you need the write-off.

• 9:33Speaker 01

  And that's a very common thing that businesses will do. They'll essentially, they'll essentially spend money on something that they don't need to get that. Because in their mind, they think that they're getting a tax refund. Instead of thinking about whether you need it at all, and then if it happens to be a tax deduction or, you know, benefit from it, then okay, you know, then, then do that.

• 9:59Speaker 00

  Yeah.

• 10:00Speaker 01

  But don't like, just spend money so that you can get a discount. You see it with consumers where they'll, they'll, they'll say, oh, you know, I went and bought this TV that was on sale because it was on sale and look, I saved 30% on it.

• 10:16Speaker 00

  It's like what I had to explain to my son when we went to Vons the other night to get one 12-pack. But they said, if you buy three 12-packs, you get the fourth one for free.

• 10:24Speaker 01

  Uh huh.

• 10:25Speaker 00

  Well, we don't need three more 12-packs.

• 10:28Speaker 01

  Yeah.

• 10:29Speaker 00

  But you can get the X one free.

• 10:30Speaker 01

  Yeah. That, that's a perfect example. Now, you'd probably drink that eventually. Is it soda? No?

• 10:37Speaker 00

  Yeah, not me.

• 10:38Speaker 01

  No, somebody would. But if you're not, you're right, if you're not going to use it, don't like, why you spend just a little bit more to get that discount? Well, you wouldn't, this happens in grocery stores all the time. You just spend a little bit more and then you get it. Well, if you don't ever end up eating or you're spending money where you wouldn't spend money, you're not saving anything.

• 10:57Speaker 00

  That's true. You guys, you guys ever seen that?

• 11:00Speaker 02

  Netflix series, I think, I think it's Netflix or who the Schitt's Creek.

• 11:06Speaker 01

  Oh, yeah.

• 11:07Speaker 02

  Yeah. It's a write off. It's like, who writes it off? It's like, I don't know. It's a write off. You write it off. And like, he's trying to teach us something. Yeah, but who writes it off?

• 11:17Speaker 01

  That's funny. Yeah. Like, who really understands what that means anyways? Yeah. Well, it's a, it's a, it's a write off. So I'm gonna, I'm gonna spend, I've actually used that as a joke if somebody like, we're arguing about who's gonna pay for the meal. And I'll be, I'll pay for it. Well, no, no, let me pay. No, that's it. Let me pay for it. I can write it off. And almost always like, oh, oh, really?

• 11:38Speaker 01

  Who understands what that means?

• 11:39Speaker 02

  Yeah.

• 11:40Speaker 01

  Who's gonna write it off?

• 11:41Speaker 02

  It's, it's, it's complicated for a reason, but you know, that's why there's people like us.

• 11:46Speaker 01

  Yeah, that's right. That's right. So don't take a tax to Dushkin for an unneeded expense. It would be like, it would be like lighting a $10 bill on fire because someone's gonna promise you $3 afterwards. You know, don't, don't do that.

• 12:01Speaker 02

  That's a good one.

• 12:02Speaker 01

  So I don't know. Do you have any other, any thoughts about that question, Frank?

• 12:05Speaker 02

  No, I mean.

• 12:06Speaker 01

  Bonus depreciation?

• 12:07Speaker 02

  Yeah, no, I, I think you've, you've touched on it pretty well. This isn't something I'm pretty familiar in. So it's like all new, taking it in, learning, but it's just like, yeah, it, it, if it doesn't make sense, if it doesn't play into your cards, it's like, why take the, the depreciation, you know?

• 12:24Speaker 01

  Yeah.

• 12:25Speaker 02

  So yeah, don't just put it off and say it's a write off.

• 12:28Speaker 01

  Right. The other thing in the state of California, people might forget is that the California does not conform to the federal bonus depreciation. And so you, you might get the federal tax deduction, but you, it's still gonna account towards your, your state in some cases.

• 12:44Speaker 02

  Yeah, that's always a good one. Cause I think people tend to forget that there's federal and state and some apply only for federal and some are only states.

• 12:52Speaker 01

  Yeah.

• 12:53Speaker 02

  So you'll have to, you know, consider both.

• 12:55Speaker 01

  Yep. Yep. Especially in California where we've got a lot of tax stuff, a lot of tax rules. Oh, yeah. It's a blast.

• 13:01Speaker 02

  Yeah.

• 13:01Speaker 01

  It's super fun. Well, I want to do this. I want to take our first break of the day and we have with us Dr. Richard Gearhart, economist from Cal State Bakersfield. There's a bunch of items that we have to talk to Dr. Gearhart, a lot of economic news that's coming out and that is coming out towards the end of the week. So we're going to pick Dr. Gearhart's brain on that. We're Money Wise. Don't go anywhere.

• 13:29Speaker 01

  Welcome to Money Wise. Well, your host today, I'm Sherrod, that's Frank. We're joined now by Dr. Richard Gearhart, economist from Cal State Bakersfield, professor over there, and friend of the show and regular guest, Dr. Gearhart, welcome.

• 13:42Speaker 03

  Thank you for having me.

• 13:43Speaker 01

  It's great having you. There is a lot happening this week in terms of the economic news. On Friday, there is the annual Jackson Hole Summit. What do they, it's the, what do they call that? It's Economic Summit, I guess. It's put on by the Fed, and we talked about this yesterday a little bit, Paul Volcker. This, this started back in like the late 70s or the early 30s, early, early 80s, and they started having it at Jackson Hole. Have you heard this before? Because Paul Volcker was a fly fishing fictionator. They wanted to bring him over?

• 14:25Speaker 03

  Yeah, one of my professors in grad school would go to the Jackson Hole meeting every year, and that was one of the main like highlights is just the nature and going out to do all these things. And that was the urban legend back then, too, was that Volcker loved fly fishing and...

• 14:45Speaker 01

  So they wanted to entice him to come?

• 14:47Speaker 03

  Absolutely.

• 14:47Speaker 01

  I was, yesterday, just doing a little research on that, I was surprised to hear how much economic policy has sort of been unveiled at the, at Jackson Hole. And it surprised me to learn that, oh, this, this could be, this could be significant, especially since this is Jerome Powell's last, probably his last year, probably his last time coming here. And also, every five years, the Fed

• 15:13Speaker 01

  kind of revamps and upgrades their mandates, or at least their, I don't know, I guess their mandates. I think they basically adjust their mandates. So the last time that this happened was just before COVID?

• 15:27Speaker 03

  Yes.

• 15:27Speaker 01

  Or around that time, I guess? And they, they did adjust it. They adjusted, they, they made it so that the... The 2% target inflation was a little more flexible, you know, like, oh, it's give or take. I don't know what the exact words that they used, but they were like, okay, it's roughly 2%. And so, have you, you have any thoughts about what could happen in Jackson Hole?

• 15:50Speaker 03

  Yeah, so this is kind of the premier economic event for monetary policy in the world. So leaders from around the world, you know, head of the European Central Bank.

• 16:01Speaker 01

  Right.

• 16:02Speaker 03

  Usually shows up and.

• 16:03Speaker 01

  Bank of England, Bank of Japan, like the central bankers show up.

• 16:06Speaker 03

  Yeah, this is like monetary policy 101. It's one of the most fun events if you can get an invite to it. But yeah, they do try to outline the next several years of where they think monetary policy is headed, where they think the economy is headed, all sorts of projections and forecasts. And that's when, you know, the heads of the central bank get together and figure out, well, why are you lowering rates or why are you keeping rates constant? So it really is one of the premier economic events that's held annually.

• 16:45Speaker 01

  Yeah. What does it take, do you know what it takes to get invited? I mean, you gotta be.

• 16:51Speaker 03

  I think you've got to have a lot of money, which I don't have.

• 16:55Speaker 01

  Or power.

• 16:56Speaker 03

  Or be at like the top of, you know, the economics field, which I'm not. So, you know, I just keep telling people my invitation just continuously gets lost in the mail.

• 17:06Speaker 01

  It would be, I would get a kick out of going. I mean, just to, I don't care about what, just to be able to see any like central bankers walking around.

• 17:15Speaker 03

  I wouldn't say a word. I just wouldn't say a word. I'd just listen the whole time.

• 17:18Speaker 01

  Totally. I mean, it would be, it would be so fascinating.

• 17:20Speaker 03

  I could nerd out for several days on that.

• 17:23Speaker 01

  Oh, yeah, you know, and then get out and go fly fish or whatever, but it would be, it would be amazing. So Jerome Powell, you know, it, I'm, you were not a fan of Jerome Powell when he started.

• 17:36Speaker 03

  Hated him.

• 17:36Speaker 01

  And, but he kind of won you over?

• 17:38Speaker 03

  He, you know.

• 17:41Speaker 03

  I don't necessarily think he's been the greatest Fed Chair ever. I think he's probably going to be considered above average.

• 17:49Speaker 01

  Oh, really?

• 17:49Speaker 03

  Fed Chair. But what I do think he did is, I think he tackled the COVID inflation phenomenally well.

• 17:58Speaker 01

  Yeah.

• 17:58Speaker 03

  I mean, that had the chance to quickly spiral out of control with how much money governments were pumping into the system, with the supply chain shocks we were seeing, with various social lockdowns, and he tamped that down pretty quick. And you have to give kudos because inflation is sticky. Once you see an inflationary period, it's really hard to get out of because it just becomes the expectation that, well, if, you know, inflation was 5% this year, well, I'm going to ask for a 5% raise to make sure I'm not worse off. Well, businesses know that, and then they bake into account 5% raise, raise their

• 18:38Speaker 03

  prices 5%, and so it's, you know, recently, I think that there are good faith discussions we can have on whether Jerome not cutting rates the past few months is the correct move, but I think everything he does is data-driven, and really can't fault a person for looking at the data and...

• 19:01Speaker 01

  Yeah, and following that.

• 19:03Speaker 03

  And following the data.

• 19:04Speaker 01

  There is a CEO, his name is James Fishback, he's a CEO of a hedge fund, and I read a quote in an article that said, basically saying that it's a mistake of the Fed to use average inflation targeting, and he likened it to rushing into the emergency room with 110-degree fever and being told the doctors won't treat you because for the past two weeks, your average body temperature was a healthy 98 degrees. You know, so the argument is, and this is, this is the problem with inflation with the general public, they don't recognize how the inflation numbers is telling, like, the

• 19:45Speaker 01

  current inflation number is called 3%. It doesn't, it doesn't tell you anything about what inflation was, you know, a few years ago.

• 19:54Speaker 03

  Yes.

• 19:54Speaker 01

  What tells you that is how much you're paying for those groceries and how much you're buying things for, and you're like, why is everything still expensive? So it gives you this impression that inflation is still high, even though it's not. It's like, we're down to, like, where it should be.

• 20:07Speaker 03

  Yes.

• 20:08Speaker 01

  But it doesn't feel that way, which is just like fodder for politicians.

• 20:12Speaker 03

  Yeah, yeah, it's, um, yeah, you, part of the problem is just with the data collection process. Inflation's a messy statistic to capture, because what happens is the Bureau of Labor Statistics actually hires people to go out to stores and look at price changes.

• 20:33Speaker 01

  Oh, really? Yeah, look at retail prices.

• 20:35Speaker 03

  Look at retail prices.

• 20:36Speaker 01

  Yeah.

• 20:37Speaker 03

  And so, the problem is, is that over time, the Bureau of Labor Statistics, their budget hasn't changed in real terms, so they've had to hire fewer people. So now, about a third of the BLS inflation numbers are estimated from other areas or historical data.

• 20:56Speaker 01

  Yeah.

• 20:56Speaker 03

  So, there's an issue with how timely we can get out inflation data, but yeah, looking back at the past and going, yeah, 3% is a little bit on the high side of where we're comfortable with, but yeah, 3% is nothing historically.

• 21:15Speaker 01

  Right.

• 21:15Speaker 03

  3% would be considered, pretty much before World War II, if you had 3% inflation, people would be celebrating.

• 21:23Speaker 01

  Yeah, yeah, it seems like, you know, we've just been spoiled with such low interest rate environment for decades, that now it's like, well, so the Fed, you know, it would be nice if the Fed could adjust that policy, be a little bit more loose on that 2% mandate that they have.

• 21:38Speaker 03

  Yeah, and especially, yeah, I think they are a little bit worried about what we saw from kind of the end of the financial, the great financial, what's the name of the 2007?

• 21:50Speaker 01

  Yeah, the Great Recession.

• 21:52Speaker 03

  Yeah, whatever.

• 21:52Speaker 01

  Financial crisis. Financial crisis.

• 21:54Speaker 03

  Whatever they, whatever term they call it now, where they were... Really loose with rates and then you saw you saw mild if any inflation, you saw inflation less than 1% for several years.

• 22:07Speaker 01

  Right.

• 22:08Speaker 03

  And I think they're probably a little bit worried about going significantly under target because then people, you know, oh, there's no inflation and then when you get these little blips, the 3%, which isn't bad.

• 22:23Speaker 01

  Yeah.

• 22:24Speaker 03

  People panic.

• 22:25Speaker 01

  I see. You mentioned the estimate, estimate, estimated numbers that the Bureau of.

• 22:33Speaker 03

  BLS.

• 22:35Speaker 01

  BLS has to come up with and they've been in the news lately. President Trump has talked about firing or maybe he did fire.

• 22:42Speaker 03

  He did, he did stupidly fire her.

• 22:46Speaker 01

  I know as an economist, that's got to be nails on a chalkboard. I was just like, why, like, don't meddle, like monetary policy and fiscal policy should be kind of like separate.

• 22:57Speaker 03

  Well, the thing is, the head of the BLS doesn't get the job reports numbers until the Wednesday of the week it's released. She has, she has no part in calculating the numbers. She's just reporting them and just signing off on the final document. Like whoever you put in there can't fudge the numbers.

• 23:13Speaker 01

  Right.

• 23:13Speaker 03

  Otherwise, you're going to get the Sharpie of the hurricane again.

• 23:16Speaker 01

  Right. Well, is it, is it, why are the numbers, the numbers do get revised?

• 23:22Speaker 03

  So, yeah, the numbers get revised and so really the key thing is you should never look at the labor market numbers when they first come out. It's, it's something called a selection issue where basically the BLS gives businesses about three months to return the survey. They ask for it within a month, but they know that people are going to turn it in late. Well, within a month, the only businesses that are really filling out these business surveys are the ones that are doing really well. Because they're the ones who aren't, don't have to worry about, am I going to be closed next week? Do I really need to do this? So the best businesses, the businesses in the best shape are the ones who fill out the initial surveys. Second month, you get businesses that are like, yeah, now I have a little bit of time

• 24:07Speaker 03

  because I finally caught up on everything. It gets revised downwards usually. By the third month, you're getting the businesses that are failing like, no, I didn't hire people, I fired nine billion. Individuals and so the third month after the initial numbers come out is when most policymakers use those numbers.

• 24:30Speaker 01

  Yeah.

• 24:30Speaker 03

  But everyone jumps on those initial estimates that get revised downwards.

• 24:34Speaker 01

  Right.

• 24:34Speaker 03

  But even then, let's take a look at the most recent month. They were, they basically downward revised two months by 238,000 jobs. There are 170 million people in the US in the labor force. That is a 0.1% error rate. That's great.

• 24:55Speaker 01

  Wow.

• 24:56Speaker 03

  That's phenomenal.

• 24:57Speaker 01

  Right.

• 24:57Speaker 03

  And so, yeah, it looks bad in absolute values, but again, you're comparing it to 170 million people.

• 25:04Speaker 01

  Right.

• 25:04Speaker 03

  So it really isn't this issue. It's just general economic illiteracy and the EJ Antoni guy is basically the crackhead of the economics discipline, along with Peter Navarro, so.

• 25:16Speaker 01

  Oh, yeah. Yeah, I know you're not a fan of Peter Navarro. Look at Stevens cracking up in there.

• 25:21Speaker 03

  I guess I should have asked if I could say that before I said it.

• 25:23Speaker 01

  The, so the, um, obviously politicians would prefer interest rates to be low while they're in power because it can spur economic activity before it hits the fan, right? Before you, before you're pouring too much fuel into the fire. You know, I can see why politicians, they're in office four years, let's call it. Why, why not, right? Why not put pressure on the Fed to lower rates? But that's why I think the administration was upset about it was because it wasn't favorable towards, the data was not favorable towards reducing rates sooner than later.

• 26:01Speaker 03

  Yeah. Well, so interestingly enough, if, if Trump had said, no, we believe in these BLS numbers, these massive downward revisions, so that in May and June, there's basically been no employment growth, that puts more pressure on Powell to lower rates.

• 26:19Speaker 01

  Right.

• 26:19Speaker 03

  That I just didn't get why he was attacking those numbers. The revisions worked in his favor for monetary policy.

• 26:26Speaker 01

  Oh, I see. Yeah, it's more about maybe just trying to make an issue out of it. Most, most people aren't going to understand monetary policy, you know.

• 26:33Speaker 03

  Yeah.

• 26:34Speaker 01

  What, what, you know, why decision, what, why are there, what make, what goes into the decision of lowering rates?

• 26:40Speaker 03

  Yeah, and you know, again, there's lots of data points. So just like if anyone's ever taken one of those intro to economics courses and you're taking intro to macro. The common rule of thumb for a recession is two consecutive quarters of negative real GDP growth. That is not the rule.

• 27:00Speaker 01

  Right.

• 27:00Speaker 03

  For a recession, a recession's based on the National Bureau of Economic Research dating a recession after the fact. But they look at GDP, they look at labor force, they look at inflation, they look at a whole host of numbers.

• 27:13Speaker 01

  Yeah.

• 27:14Speaker 03

  And so I think that's where politicians get it a little bit wrong is they're looking at one number as this indicator.

• 27:21Speaker 01

  Right.

• 27:21Speaker 03

  When there's a lot that the Fed and that all these agencies look at.

• 27:27Speaker 01

  So one, one issue that's, that's, you know, hot right now are tariffs and the impact of tariffs on the economy. And it seems to be an enormous amount of confusion there. A lot of people still don't really understand who pays for the tariff. But we're starting to get some of the money that's coming in. The government is now starting to collect some of this tariff money. It might sound like a lot, but so far since April, there's been about a hundred billion dollars of tariff revenue that's come in. I haven't looked into it, but I can almost guarantee there's been a lot more than that lost in economic activity. Like a hundred billion seems like nothing.

• 28:08Speaker 03

  Yeah.

• 28:08Speaker 01

  In the, in the global market.

• 28:11Speaker 03

  This is what I don't get. If you went to any person and said taxes increase economic growth, pretty much everyone would say no.

• 28:18Speaker 01

  No, right.

• 28:19Speaker 03

  That's incorrect.

• 28:20Speaker 01

  Yeah.

• 28:21Speaker 03

  That's what the tariff is. A tariff is a tax.

• 28:24Speaker 01

  Yeah.

• 28:24Speaker 03

  And so, we're expecting it to incre... That's the one thing. Taxes, in any and every form, reduce economic growth.

• 28:33Speaker 01

  Right.

• 28:33Speaker 03

  And it's just called the inefficiency of a tax. We know we have to have it to fund the government. So yeah, we are reducing economic output and, you know, yeah, $300 billion in additional tariff revenue annually is nice.

• 28:48Speaker 01

  Yeah.

• 28:50Speaker 03

  You know?

• 28:51Speaker 01

  But it's not much.

• 28:52Speaker 03

  It's not much.

• 28:53Speaker 01

  I mean, we have...

• 28:54Speaker 03

  Six trillion a year in revenues?

• 28:57Speaker 01

  Apple alone is worth more than 300 billion, right? Like, what is... You know, what is... I don't get it. Part of the argument was President Trump saying that the American citizens are going to get tariff rebate checks. They're going to come, you know, we're going to send out money to taxpayers. And what was thrown out was $600 per adult and dependent child. So a family of four would end up with $2,400 bucks from the federal government. Today, Treasury Secretary Scott Bessant says that they're actually going to take this money and use it to pay off national debt. Go towards national debt.

• 29:39Speaker 03

  You mean the $5 trillion we've increased it?

• 29:42Speaker 01

  That's what I'm getting at. It's like, okay, so if you're going to get $300 billion this year in tariff revenue, how is that... What... That's not going to do anything to the national debt.

• 29:52Speaker 03

  It makes no dent. It's basically a rounding error for the defense budget.

• 29:57Speaker 01

  It's a rounding error. Yeah, that's exactly what it is. But it again, comes back to, I think, the misunderstanding of the general population of the difference between a billion and a million.

• 30:08Speaker 03

  Yeah.

• 30:09Speaker 01

  Or a billion and a trillion. It's like, what is the difference? I don't know, the way it sounds. But really, conceptually, I don't... I just know there's a... It's a big difference.

• 30:18Speaker 03

  There's a lot of zeros.

• 30:19Speaker 01

  A lot of zeros. My mind can't comprehend how many more... What that means because of those extra zeros. But it's enormous. It's just... It's a huge difference. There's a big difference between a million and a billion.

• 30:30Speaker 03

  Yeah, a billion dollars would be if someone gave you $1,000 a day for the next three years. That would be just a billion.

• 30:37Speaker 01

  Wow.

• 30:37Speaker 03

  A trillion is, I think, for the next 300 years.

• 30:40Speaker 01

  Yeah, yeah, something crazy.

• 30:42Speaker 03

  Yeah, it's... Yeah, it's just... My calculator doesn't even go that far.

• 30:47Speaker 01

  Oh, it's just so crazy, all of these, these numbers and, um, you know, it's, it's so frustrating because it, I don't know, we're not fans, we're not fans of tariffs.

• 30:58Speaker 03

  No, well, I saw, um, I saw a business this weekend, uh, doing a Labor Day sale and was like, this is the last time to get tariff-free products.

• 31:08Speaker 01

  What?

• 31:09Speaker 03

  And I was just sitting there, I was like, but I thought we don't pay it.

• 31:12Speaker 01

  Right.

• 31:13Speaker 03

  It's just one of those where, you know, it's starting to show up in wholesale price indices. The wholesale price index spiked this past month.

• 31:23Speaker 01

  Oh, boy.

• 31:23Speaker 03

  That was 3.3 or 3.4% increase.

• 31:27Speaker 01

  Right.

• 31:27Speaker 03

  Which means that businesses right now are absorbing it because there's a lot of uncertainty as to where tariffs will actually end up, since we gave China another 90 days.

• 31:38Speaker 01

  Yeah, so many have been extended and some have been reduced and, and yet it seems prime for the businesses to just take advantage of the consumer and be like, oh, it's a tariff.

• 31:48Speaker 03

  And that's what I think is probably going to end up happening. Um, if you look, there's something called Harvard Pricing Lab, and what they do is they do like a real-time estimate of how retail prices at major retailers are changing, um.

• 32:04Speaker 01

  Oh, interesting.

• 32:05Speaker 03

  Almost daily from all these different changing tariff rates.

• 32:08Speaker 01

  Oh, wow.

• 32:09Speaker 03

  And, uh, basically clothing's up 10%, uh, furniture's up 10%, uh, flooring's up 40%.

• 32:18Speaker 01

  This is retail prices?

• 32:20Speaker 03

  This is retail prices.

• 32:21Speaker 01

  Again, it seems like, how is that, like, I don't know, it doesn't seem possible that the tariffs alone can account for that.

• 32:29Speaker 03

  It's.

• 32:29Speaker 01

  Seems like an excuse for the corporations to just increase their prices.

• 32:32Speaker 03

  I think so, but I think there's just, like, I don't, like, I know we tariffed the penguins on an uninhabited island 10% initially.

• 32:42Speaker 01

  Oh, that'll, that'll work.

• 32:44Speaker 03

  One of the islands we tariffed, like, literally has zero people.

• 32:47Speaker 01

  Oh, my gosh.

• 32:48Speaker 03

  On, on the, um, the little.

• 32:50Speaker 01

  The chart?

• 32:50Speaker 03

  Yeah, the chart that he brought out, that Liberation Day chart, one of the islands has zero people, only penguins. It was like a 15% tariff.

• 32:59Speaker 01

  Hey, pay, pay, pay, they've got to pay taxes.

• 33:01Speaker 02

  Yeah, their pillows are worth something.

• 33:03Speaker 03

  Yeah, no, it's like, it's like taxing the movie of Madagascar.

• 33:07Speaker 01

  Right.

• 33:08Speaker 03

  But it's just, it changes every day and I, I don't know how anyone can plan in this economic environment.

• 33:16Speaker 01

  Right.

• 33:17Speaker 03

  And...

• 33:18Speaker 01

  It's, the uncertainty is frustrating and that's the hardest, that's the hardest part.

• 33:23Speaker 02

  So it, it almost seems like companies are taking advantage of this by increasing their prices.

• 33:28Speaker 03

  Absolutely.

• 33:29Speaker 02

  Yet we don't know what the final say is in all this.

• 33:32Speaker 03

  What the final numbers will be and if you actually look, what they find is that goods that are domestically produced have also increased their prices.

• 33:41Speaker 01

  Sure.

• 33:42Speaker 02

  Yeah, yeah.

• 33:43Speaker 01

  Right on that train.

• 33:44Speaker 03

  Yes.

• 33:45Speaker 02

  If they're doing it, why can't I do it?

• 33:46Speaker 03

  Yeah, and so it's, it's problematic and it's starting to hit. Go to a local Home Depot and Home Depot finally admitted today, yeah, we raised prices. Yeah, I know every time I go in there, screws have increased by about three bucks.

• 33:58Speaker 01

  That's right. I'm, I'm real fascinated and we're joined by Dr. Richard Gearhart, economist from Cal State Bakersfield. There are a lot of these unofficial unconventional economic indicators. I read an article today in Bloomberg about cardboard boxes. And the, the, you know, unconventional economic indicator of cardboard box, that cardboard box in, you know, industry or globally. Roughly 80% of all durable goods are shipped inside a cardboard box. So if you, and the theory is if you can track the, the, the, the supplier demand of cardboard boxes, you can kind of get an indication of which direction the economy might be going.

• 34:43Speaker 03

  Yes.

• 34:43Speaker 01

  Have you heard this before?

• 34:44Speaker 03

  So, uh, there are two other fun ones.

• 34:46Speaker 01

  Oh, good.

• 34:47Speaker 03

  There's a strip club and brothel index.

• 34:49Speaker 01

  That's what Frank was talking about.

• 34:52Speaker 03

  Absolutely. There is a strip club and brothel index that you can use. There's also a male underwear index.

• 34:58Speaker 01

  Oh, I've heard of that. That's interesting.

• 35:00Speaker 03

  Yeah.

• 35:01Speaker 02

  Male underwear.

• 35:01Speaker 03

  Yeah, because, you know, we replace our clothes when our wives throw it out.

• 35:06Speaker 01

  Yes.

• 35:07Speaker 03

  And so during bad economic times, wives, wives tend to throw stuff out less and so then the price of underwear falls.

• 35:15Speaker 01

  Yeah, you hang on to those clothes a little bit longer. There's also a lipstick index.

• 35:20Speaker 03

  Yes.

• 35:20Speaker 01

  So apparently sales of lipstick go, um, tend to rise during downturns.

• 35:26Speaker 01

  And trade down to more affordable like things. You mentioned the men's underwear index. The strip club index. This is Frank was saying it's like.

• 35:39Speaker 02

  In the beginning.

• 35:39Speaker 01

  Yeah. How did you describe it?

• 35:41Speaker 02

  It's like strip clubs. It's a main indicator because finance bros aren't going to strip clubs.

• 35:46Speaker 01

  Absolutely. Tracking finance bros that are walking in a strip club.

• 35:50Speaker 02

  Yeah, yeah. All the, all the strippers know it's like, oh, it must be a recession. Cause they're not getting many clients.

• 35:55Speaker 03

  Yeah, they stop coming in suits and they start coming in sweatpants. That's when you know you've hit the rock bottom of the clientele.

• 36:03Speaker 01

  So there's some legitimacy to some of these unofficial.

• 36:06Speaker 03

  Oh, absolutely. Yeah. Oh, yeah. I mean, every, every economist has their favorite little indicator. Railroad bearings are one. So the little wheel bearings on railroads, the more freight traffic there is, the more frequent they're replacing.

• 36:25Speaker 01

  The bearing.

• 36:25Speaker 03

  The bearings. And so some people use that.

• 36:28Speaker 01

  Uh huh.

• 36:28Speaker 03

  That's, um, that's what actually a lot of economists are using to look at Russia. The economic impact of sanctions in Russia.

• 36:36Speaker 01

  Right.

• 36:36Speaker 03

  Because most of their country is connected via rail from World War II. And so that's why a lot of people are saying, no, these Russian statistics are way over inflated because rail traffic's down 45, 50%.

• 36:49Speaker 01

  Yeah. And the governments may be, and some of those, those governments, they're, they're hiding. Like they're hiding data.

• 36:55Speaker 03

  Oh, absolutely.

• 36:56Speaker 01

  To get out.

• 36:57Speaker 03

  Oh, yeah. Oh, no. Yeah.

• 37:00Speaker 01

  And but they've got these interesting way workarounds. I remember during COVID, there were so many people that weren't working. So they were having trouble coming up with some of the normal economic data. And so they were using, um, cell, cell phone activity, basically. They can track where cell phone activity was happening, like on a map to determine how much economic activity may have been happening.

• 37:23Speaker 03

  Oh, yeah. We, like, um, there are data sets out there that are available for purchase from private companies where you can track individual cell phone users within a three meter by three meter square. Tracks them throughout the entire day and at night. So you know their home look, it's.

• 37:37Speaker 01

  That's wild.

• 37:38Speaker 03

  It's wild. It's a little scary.

• 37:40Speaker 01

  Yes. Yeah, definitely scary. You got economists watching you.

• 37:45Speaker 02

  Yeah.

• 37:46Speaker 03

  Yeah, you know, like.

• 37:48Speaker 02

  Dr. Gearhart's like, oh, sure, where have you been?

• 37:50Speaker 03

  We're the ones who are too stupid to monetize this. It's like, eh, we're gonna use it for research. It's like, no way, what could I use this money actually for?

• 37:57Speaker 02

  Yeah, yeah.

• 37:59Speaker 03

  It's why I'm an academic, I'm not smart enough to be an entrepreneur.

• 38:04Speaker 01

  Hey, we need academics. We need them, we need them for sure. Well, thank you so much, Dr. Gearhart, we really appreciate your time. Thank you for coming on the show. Good luck as the next semester starts up.

• 38:16Speaker 03

  Monday, Monday is my first class, so I get to terrorize a new batch of freshmen.

• 38:21Speaker 01

  Give them hell, give them hell out there. What are you teaching? What are you teaching this semester?

• 38:25Speaker 03

  I'm teaching an intro class, and then I'm teaching the economics of labor market discrimination.

• 38:30Speaker 01

  What? Oh, interesting.

• 38:31Speaker 03

  Yeah, and so, you know.

• 38:32Speaker 01

  Labor market discrimination?

• 38:34Speaker 03

  Yeah, so it can, so there's two types of discrimination. The first is kind of the biased discrimination, I don't like you because you have brown hair.

• 38:42Speaker 01

  Yeah.

• 38:43Speaker 03

  The second is statistical discrimination. Statistical discrimination is, I go to college because, on average, college people are paid more than high school educated people because, on average, businesses think we're more productive.

• 38:55Speaker 01

  Right.

• 38:56Speaker 03

  Well, is that bad discrimination? Is that good discrimination? Should we encourage it? There's a beauty premium.

• 39:03Speaker 01

  Oh, yeah. Oh, I've been paying that price forever.

• 39:06Speaker 03

  Yeah.

• 39:09Speaker 03

  I know, I have yet to see a beauty premium line item in my paycheck, and I'm offended.

• 39:15Speaker 01

  Right, I'm looking for that ugly discount.

• 39:17Speaker 03

  The ugly tax?

• 39:20Speaker 01

  Well, that's, so are you happy about?

• 39:22Speaker 03

  I love those classes.

• 39:23Speaker 01

  And the intro also, you like teaching the intro?

• 39:25Speaker 03

  Yeah, because I get to teach them like, hey, this is why, like, vote intelligently.

• 39:31Speaker 01

  Yeah, yeah.

• 39:32Speaker 03

  Yeah, just I give them tools so that, you know.

• 39:35Speaker 01

  They can understand what economically, at least if you're gonna vote based off of economic, hoping for economic results, understand what those are.

• 39:43Speaker 03

  Yeah, they're not voting based on who trolls other people better.

• 39:48Speaker 01

  See, there's hope. There's hope for our youth. Not that all your students are young, but most of them, I'm sure.

• 39:54Speaker 02

  Gee, I would attend his class.

• 39:55Speaker 01

  Yeah, me too. Me too. You streaming?

• 39:57Speaker 02

  That sounds like fun.

• 39:58Speaker 01

  Your class streams?

• 39:59Speaker 03

  I can barely figure out how to turn on my computer. I'm giving, I'm giving literally pop quizzes in pencil and paper because I can't figure out how to do the clickers.

• 40:07Speaker 01

  Oh, that's what I'm talking about.

• 40:08Speaker 02

  You can do slide-o. There's like apps, web apps.

• 40:11Speaker 03

  Yeah, it's like, yeah, it's one of those where like I've left it way too late. I started looking. I was like, nope, this is a future. This is a problem for future, Richard.

• 40:19Speaker 02

  Yeah. Have one of your students help you.

• 40:22Speaker 01

  You have?

• 40:22Speaker 03

  Ooh, extra credit. I like that.

• 40:23Speaker 02

  Yeah, yeah. See, there you go.

• 40:25Speaker 01

  Do you use the transparent overhead projector?

• 40:27Speaker 03

  No, they didn't have any of, any available, so I just have to write on the chalkboard.

• 40:31Speaker 01

  Oh, that's boring. Yeah, that's boring. Well, thank you again. Dr. Gearhart, really appreciate it. Good luck over there at Cal State. We're Money Wise. We'll be right back.

• 40:46Speaker 01

  Welcome to Money Wise. We're your hosts today. I'm Sherid Wait. That's Frank Lee. Is that Nate Dog? Happy birthday, Nate Dog. R.I.P.

• 40:56Speaker 01

  I hope there's a ghetto in heaven.

• 40:58Speaker 02

  I'm sure there is.

• 41:01Speaker 01

  We have a listener question and, uh, do you have it, Frank?

• 41:05Speaker 02

  Yeah, I got it right here.

• 41:06Speaker 01

  Let's go for it. I want to tackle this.

• 41:08Speaker 02

  Uh, great show, guys. I know there are always chances to invest locally, but with the stock market all over the place, how do you find the right opportunities without putting too much on the line? Money Wise has been around for a long time and figured it would be best to ask you. Almost forgot about the steak burgers.

• 41:25Speaker 01

  Oh, that's nice. Um, so this is an interesting question. A lot of people, which I really appreciate, are interested in helping their local economy. And, you know, one way I guess would be to investing in companies that are local. The easiest way to do that, I think, is by using their services, hiring them, buying their products, eating their burgers. That stuff. That's a great way to invest. Support local. There's a lot, a lot to be said about supporting local. And it doesn't make sense all the time. I'm not, I'm not a fan of just buying local just because it's local. If it's not, if it's not a good product, if it's, you know, the service isn't good.

• 42:10Speaker 01

  You know, I guess I can give an example of the Woolworths building. We really made an intention to hire local and hire local subcontractors and local vendors. We did our very, very best to do that, but there were a couple of cases. There were a few different cases where it's like, we just cannot do this locally. It's just not going to work out. One example would be our historic architect consultant. We didn't have an architect in town that had extensive experience in getting a building put on the National Historic Building Registration and working with the National Parks and having that. It's like, it hasn't happened in 40 years. Like, there's not going to be an architect in town that's going to be able to help us navigate that.

• 42:54Speaker 01

  So we had to go up to hire, through our local architect and designer, get in touch with a out-of-town architect firm that could help us with that process. So this is kind of one example. Like, you know, you want to try to buy local when you can, but you can't always, you can't always do that. But I think that is a great way to support local businesses and in a way to invest. I mean, I'm not talking about investing in like, but there are some publicly traded companies that are headquartered here in Bakersfield, quite a few, probably more than people realize. It used to be in the paper in the Bakersfield, California, there would be a section in the

• 43:37Speaker 01

  stock market section that would show local companies or local interests or something like CRC. On the market? On the market, yeah, ones that are on the market, ones that are trading publicly. Yeah. And, and so, you know, there are ways that you can, you know, look into what companies are located here, but a lot of the companies that are located here, it's like, well, I mean, they're doing business out. Yeah. You know? Yeah, yeah. And so what benefit does that have? But, you know, I think that...

• 44:06Speaker 01

  Small and private businesses make up a huge percentage of the economy.

• 44:12Speaker 02

  Yeah.

• 44:12Speaker 01

  And so, you know, one way of investing is, you know, starting up your business here and doing, doing business in Kern County.

• 44:20Speaker 02

  Yeah.

• 44:20Speaker 01

  I think is a great way to invest.

• 44:22Speaker 02

  Yeah, I mean, small businesses are the backbone of the economy, so you, you want to support them however you can.

• 44:28Speaker 01

  Right.

• 44:28Speaker 02

  Um, I, I was a little confused with the, the question as far as like, should they be investing locally? Or were they interested in putting in some in the stock market and, and how much? So I was, I, I thought that's where like,

• 44:43Speaker 01

  I see.

• 44:44Speaker 02

  The question was going, but I, yeah, it's, you, you want to be careful of not going all in, obviously. Uh, you know, you want to invest incrementally, uh, uh, for a certain percentage of your salary. Uh, and then, you know, go from there, grow your investments, grow your retirement plan. But it seems like, uh, he's asking, or they're asking for a different advice? I'm not sure.

• 45:12Speaker 01

  Yeah, that, that's a good point. Like if you, if your choice is to invest locally or invest, like you're, you're, say you're investing for the long term.

• 45:20Speaker 02

  Yeah, yeah.

• 45:21Speaker 01

  And, and you're looking for, you know, but, you know,

• 45:26Speaker 01

  some assurances, not, not total risk, but you want to, you want to make, take a measured risk in your investments. Then you want to, you want to look at, you want to look to the broader stock market and not just American stock market. You want to look globally.

• 45:40Speaker 02

  Yeah.

• 45:41Speaker 01

  And they're international and have that as a percentage of your portfolio. You want to be well diversified and spread out across different sectors and geographically and all of that stuff.

• 45:51Speaker 02

  Mm-hmm.

• 45:51Speaker 01

  And so it might make sense for you to not invest, you know, locally in terms of that. It's hard to know what the word, you know, what the listener means by invest.

• 46:00Speaker 02

  Yeah.

• 46:00Speaker 01

  If you've got discretion, you've got like your long-term savings, you've got your retirement, you've got everything kind of like saved up. You've just got a little cash on the side and you're like, huh, how could I, how could I invest in something, you know, locally?

• 46:11Speaker 02

  Yeah.

• 46:12Speaker 01

  Um, you know, there's, there's ways to do that.

• 46:14Speaker 02

  Yeah, as, as like. Average Joe myself, it's like just going to these businesses, buying their products, their services. Um, obviously if, if it's a great product or service, then yeah, that's how, that's how you can support them.

• 46:27Speaker 01

  Right.

• 46:28Speaker 02

  So I know, I know my wife and I like to go to those farmers market and then try to support those, those local businesses by buying those. Uh, pastries or the, the coffee or.

• 46:40Speaker 01

  Yeah.

• 46:40Speaker 02

  Whatever it is, whatever service that they're providing.

• 46:42Speaker 01

  Yeah.

• 46:43Speaker 02

  I mean, that's, that's a great way to, to in- invest in your local business.

• 46:48Speaker 01

  Yes. Yeah, I agree. I agree. So, um, Frank, there was a lottery winner, Michigan man here just recently within the last week.

• 46:57Speaker 02

  Was it the Powerball?

• 46:58Speaker 01

  Yes, it was. It was a lottery. It was, well, at first he used, he won three hundred dollars. On, uh, uh, to play a scratcher, you know, like the.

• 47:10Speaker 02

  Oh, okay, okay. Yeah, yeah.

• 47:12Speaker 01

  So he bought, um, uh, yeah, he won a scratcher and then he took that money. Uh, he spent thirty dollars on that and ended up winning three hundred dollars. He took twenty dollars from that win and put it into the, another lottery. Uh, the Michigan lottery and then won seven hundred and fourteen thousand dollars.

• 47:41Speaker 02

  Woo.

• 47:42Speaker 01

  So it's like, you won the lottery, you took the money, put it into the lottery and won again.

• 47:48Speaker 02

  Hey, keep it going.

• 47:49Speaker 01

  Time. I know, that's what you said, like, I'd go again.

• 47:51Speaker 02

  Yeah, yeah. Keep it going.

• 47:53Speaker 01

  Uh, one of my favorite subjects is talking about the similarities to winning a lottery and other chances that are equal. So, cause it's roughly one in three hundred million are your chances of, of winning, at least the mega millions.

• 48:06Speaker 02

  Yeah.

• 48:06Speaker 01

  So that would be like flipping heads twenty-eight times in a row.

• 48:12Speaker 01

  Imagine that, 28 times in a row. Or rolling a six on a single die 11 times in a row. That's a 1 in 360 million chance. How about being dealt a specific ordered five-card sequence in a 52-card deck? It's about the same. I mean, that'd be like getting, you know, ace, one, two, three, four, kind of thing. How about picking the exact second in a randomly chosen 10-year span? Can you imagine? Now, that's insane. You go 10 years, now you gotta go pick the date and down to the second. You have to nail that. That's about a 1 in a 300 million chance.

• 48:55Speaker 02

  Holy crap.

• 48:56Speaker 01

  And yet, you wouldn't think that the odds are that low by the headlines that you see of people winning and these numbers getting so big. So, it's like, ah, yeah, this is like, this happens all the time.

• 49:08Speaker 02

  Yeah, yeah. I mean, I guess the news, they make it up so big in a sense where like, oh, it can happen, right?

• 49:15Speaker 01

  Yes.

• 49:15Speaker 02

  And that's the thing that drives a lot of these consumers, the people, is like, it's hope.

• 49:20Speaker 01

  That's it. That's it. It's, which is so, I think, not fair to take advantage of people who don't understand the odds. If they really understood the odds, they wouldn't do it. Or as they call it, a dumb tax for a reason. You know, it's like, come on, it's so... But it doesn't mean that some people aren't gonna win. But they've also gotten, the lottery numbers have gotten bigger. The jackpots have gotten bigger by design because it brings more, it brings more attraction to the, to the whole process. So, yeah, I've got a beef with lottery, in case you can't know. Just a little. I wanted to thank all of our listeners for tuning in. We will be back tomorrow. Don't want to miss the show. If you missed us, go to MoneyWiseGuys.com, find out more about us there. In the meantime, be smart, be safe, and always be money wise.