It’s tough to identify if the economy is in a recession. Economists toil over economic data to try to find the most accurate indicators. Gross domestic product and unemployment numbers are great data points, but what does the state of pop music tell us about economic conditions?
Traditionally, two consecutive quarters of negative growth is the preferred method to tell a recession took place. When it comes to unemployment, the Sahm Rule is triggered when the three-month moving average of the unemployment rate is half a percentage point above the 12-month low. The McKelvey Rule is essentially the same but is triggered when the unemployment rate is 0.3 percentage points above the 12-month low. The inverted yield curve, when short-term Treasury yields exceed long-term yields, is also a recession indicator.
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There are less-scientific recession indicators as well. If men’s underwear sales decline, it can point to an economic downturn. The same can be said for an uptick in unclaimed corpses at morgues. And then there is the idea of a “vibecession,” a term coined by Kyla Scanlon. That is when economic conditions feel bad even though indicators point to stability.
But then there is the notion that “pop music is brilliant” when the economy is about to face serious problems. That is where the idea of “recession pop” comes into play.
What is recession pop?
In short, recession pop is seen as the Top 40 hits that are released during an economic downturn. The most clear example was during the Great Recession.
“I would define recession pop from the years just leading up to the recession, so the end of 2007 probably at least through 2012,” Charlie Harding, an NYU Professor and co-host of the podcast “Switched on Pop,” said.
Meanwhile, Joe Bennett, a musicologist and professor at Berklee College of Music, said it’s a label that applies “to a particular body of work, which I would broadly describe as super cheerful dance floor bangers that came out sometime between 2008 and 2011.”
Super cheerful dance floor bangers that came out sometime between 2008 and 2011.
Musicologist Joe Bennett describing recession pop
Since it is not a particularly scientific indicator, Harding said the recession pop label could even go all the way into 2014 because “lots of people were still really feeling that recession well into the early 2010s.”
Is recession pop a real thing?
It’s hard to officially quantify whether pop music really reflects the economic times, but both Harding and Bennett said the interpretation is often up to the listener.
“You can find what we might say are reflective songs, where the dark times people are experiencing are indeed dealt with within the song lyric,” Bennett said. “And we might also find what you might call escapist songs. ‘What the heck, let’s party.'”
“So songwriters are not necessarily social commenters, but like all of us, everyone who creates popular culture, they are living in that culture at the time they are making the object and the market that is the pop music fans who are buying or streaming the single are also in that social context and liking what they like in the context that they’re in,” he continued.
“As much intention as a songwriter might have, whatever they might intend, the listener is going to take it and do what they want with it,” Harding added. “A great example of listeners completely misusing a song would be ‘Hey Ya’ by OutKast, which is one of the most requested songs at weddings, and yet the song is about relationships that never last.”
“The recession affected different people very differently,” Harding said. “If you lost your home, you’re gonna remember what that song is on the radio when you had to pack up and leave. It’s really different than maybe someone for whom their family got through it okay, and they’re just like, ‘I just love my recession pop bops.'”
The history of popular music is littered with songs known as “party anthems.” But the recession pop era may have had less economic-based reasons for those hits.
“I think there’s ways in which the music was great, and I think there’s other ways in which it feels a little bit reductive,” Harding told Straight Arrow News. “We’re talking about a period in which the digitization of music was fully taking over.”
Despite the idea that recession pop is specific to the Great Recession, Bennett points to music that came out amid the Great Depression to illustrate how music reflects the times.
“Bing Crosby’s ‘Brother Can You Spare a Dime?’: it was a big hit in the early ’30s, and that’s a song about a returning war veteran who’s homeless and looking for money,” he said. “In 1933, Ginger Rogers has a hit with ‘We’re in the Money.’ Is that sort of an ironic title? It’s certainly a very cheerful lyric. Maybe it’s a fantasy about having money, because a lot of people wouldn’t have in the U.S. in the early 30s.”
Nostalgia effect
With all the evidence to support the idea of recession pop, it’s hard to say one era’s music is better than another, which can make it a particularly difficult economic indicator to nail down.
“If recession pop is a nostalgic way of looking back and trying to make sense of this period of total dislocation and fragmentation, all the power to listeners to call this stuff recession pop, even if it just happened to be the upbeat, fun thing that was occurring at that time,” Harding said. “People are trying to make this connection to music that happened 10 to 15 years ago.”
There is good reason for music dubbed recession pop to be resonating with people in their 30s that may have nothing to do with the quality of the tunes or state of the economy.
“It fits with the general cycle of popular music nostalgia,” Bennett said.
Bennet added most people believe the best music was released when they were 17 years old.
“A lot of the psychology research into nostalgia suggests that it works on something like a 15-year cycle,” Bennet continued.
There is a ton of research on nostalgia and when it really kicks in. Some say it takes 12-15 years; others suggest it is a 20-year cycle; some call it the golden 40-year rule.
“It’s more of an after-the-fact analysis, which is a fun and useful way of creating playlists: being nostalgic, digging into our memory, perhaps making sense of an era that was really dark and challenging for people and making light of it after the fact,” Harding said.
Pop music today
While recession pop is likely just a label put on music after the fact, it gives us an opportunity to look at what makes a hit song and how that has changed in the last 15 years.
“I think what makes a great pop song is accessibility,” Bennett said. “Particularly if you’re releasing a single, you want it to appeal to millions of people.”
“It has to have an amazing concept,” Harding added. “[It] has to have a memorable hook, and it has to capture the zeitgeist.”
Harding likens making a great pop song to winning the lottery. Many wonder how some artists have been able to hit the jackpot over and over again. But what makes a great pop song has changed over time. Today, more and more records are being discovered on short-form video apps like TikTok and Instagram.
“TikTok is a much faster-moving medium so people need to grab their audience’s attention to stop them from vertically scrolling onto the next thing,” Bennett said of the app that broke artists like Lil’ Nas X. “As we know from TikTok, that sort of meme community will often seize on a particular part of the song, a particular audio excerpt, and use that to make its meme, its dance routine, whatever it is.”
But even though artists need to get to the hook quicker than ever before, Harding said they have more to say than ever before.
“There is this expectation that we are more giving of ourselves in our lyrics today,” Harding said. “And so I think of an artist like Charlie XCX, who, on ‘Brat,’ talked about how she wanted to write lyrics that were as if she was just texting a friend. And this is the album that has broken through for her, because some of these lyrics, they don’t have these perfect rhymes. They have the perfect imperfections.”
And there’s no bigger artist giving themselves to their music than Taylor Swift.
“I think on a lot of metrics, Taylor Swift is the biggest artist to have ever lived, in terms of the longevity of her career; the fact that she is what should be a late-stage career artist, and yet she is at her peak,” Harding said. “She has had multiple peaks that just keep getting bigger and bigger and bigger.”
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Meanwhile, Bennett pointed out that Swift herself was not immune to the recession pop movement.
“Her two significant albums at that time would have been ‘Fearless,’ which came out in 2008 and then ‘Speak Now,’ which originally came out in 2010,” Bennett said. “And of course, both of those contain a whole bunch of songs in that vein: ‘Love Story,’ ‘You Belong with Me,’ ‘White Horse,’ ‘The Story of Us.'”
In the end, while there may not be a deliberate intention to make music that makes listeners feel good or sad during tough economic times, it’s clear music resonates with people and reminds them of those snapshots in time.
Tags: Berklee College of Music, Black Eyed Peas, Carly Rae Jepsen, Charlie Harding, Charlie XCX, claudia Sahm, Economy, GDP, Great Depression, Great Recession, inverted yield curve, Jobs, Jobs Report, joe bennett, Katy Perry, Kyla Scanlon, McKelvey Rule, Music, Outkast, Pop Music, Recession, recession pop, Reels, Sahm Rule, Shop Boyz, Taylor Swift, TikTok, Unemployment, Unemployment rate
SIMONE DEL ROSARIO:
Are we headed toward a recession or already in one? Well, there are a lot of ways to tell…
Traditionally two consecutive quarters of negative growth say we’re in it.
You can look at unemployment. The Sahm Rule triggers when the three-month moving average of the unemployment rate is half a percentage point above the 12-month low. Or the McKelvey Rule, which says basically the same thing but with 0.3 percentage points.
There’s also the dreaded inverted yield curve when short-term Treasury yields exceed long-term Treasury yields.
Still with me?
Here’s where it gets interesting. The less scientific indicators.
Like when the vibes are all wrong even though economic indicators are doing alright. That’s what Kyla Scanlon calls a Vibecession.
Slowing men’s underwear sales can also point to economic concerns, apparently, you guys wear tattered boxers when times are tough? And, more morbidly, the number of unclaimed corpses at morgues goes up in tough times.
I promise, I’m not going to count that today. We’re going to go in a more “lively” direction.
JOE E FOSTER:
“A wise man once told me that two signs that we are headed into financial ruin is No. 1, all of the strip clubs are empty No. 2, the pop music is brilliant.”
SIMONE DEL ROSARIO:
So, we should start getting familiar with the Perry rule, the Gaga rule or even the Peas rule?
BLACK EYED PEAS:
“Gotta get that-that-that-that boom boom boom.”
SIMONE DEL ROSARIO:
This is where “recession pop” comes in. Can music tell us where the country’s economy is headed?
CHARLIE HARDING:
I would define recession pop probably from, like, the years just leading up to the recession. So, like, you know, end of 2007 probably at least through 2012
JOE BENNETT:
so it’s a retrospective label that we’re using today in 2024 to apply to a particular body of work, which I would broadly describe as super cheerful dance floor bangers that came out some time between 2008 and 2011.
CHARLIE HARDING:
if not all the way to like 2014 because I think of the euro crisis that was happening in 2012 as part of that recession era, and lots of people were still really feeling that recession well into the early 2010s.
SIMONE DEL ROSARIO:
OK so in short, “recession pop” is Top 40 bangers that come out during an economic downturn. The most clear example happened leading into the Great Recession: a pop music soundtrack that stands out above the rest.
So is it really a thing? And more importantly, do today’s hits slap enough that you have to worry about another financial crisis?
To dig into whether there is any credence to the phenomenon, we didn’t interview some economists, we went to the real experts.
CHARLIE HARDING:
I’m Charlie Harding. I’m the co-host of the podcast, switched on pop and a professor of music at NYU.
JOE BENNETT:
My name is Joe Bennett. I’m a forensic musicologist and a professor at Berklee College of Music, and my particular area of specialism is popular song analysis.
SIMONE DEL ROSARIO:
Every music fan can identify the songs that scored their core memories.
I can feel it. Summer of ‘07, windows down, diesel truck purring, open road, and RiRi on the radio.
RIHANNA:
“You can stand under my Umbrella. Ella Ella eh eh.”
CHARLIE HARDING:
The recession affected different people very differently, like if you lost your home, you’re gonna remember what that song is on the radio when you had to pack up and leave is really different than maybe someone for whom their family got through it okay, and they’re just like, I just love my recession pop bops.
JOE BENNETT:
You can find what we might say are reflective songs where the dark times people are experiencing are indeed dealt within the song lyric. And we might also find what you might call escapist songs. What the heck, let’s party.
SHOP BOYZ:
“Party like a rock, party like a rockstar”
SIMONE DEL ROSARIO:
While recession pop is generally seen as exclusive to the Great Recession, music often reflects the times.
JOE BENNETT:
Bing Crosby’s brother. Can you spare a dime? It was a big hit in the early 30s, and that’s a song about a returning war veteran who’s homeless and looking for money.
In 1933 Ginger Rogers has a hit with we’re in the money. Is that a sort of an ironic title?
It’s certainly a very cheerful lyric. Maybe it’s a fantasy about having money, because a lot of people wouldn’t have in the US in the early 30s.
SIMONE DEL ROSARIO:
So, there could be something here…
CHARLIE HARDING:
If recession Pop is a nostalgic way of looking back and trying to make sense of this period of total dislocation and fragmentation, like all the power to listeners to call this stuff recession pop, even if it just happened to be the upbeat, fun thing that was occurring at that time.
LADY GAGA:
“Can’t read my… Can’t read my, no you can’t read my Poker Face.”
CHARLIE HARDING:
People are trying to make this connection to music that happened 10 to 15 years ago as a almost like detective with their red wire behind the board. And they’re trying to, like, make all of these connections that are probably a little bit forced, right?
SIMONE DEL ROSARIO:
And you know what… There are a lot of good reasons the term recession pop is resonating with 30-somethings today that may have less to do with the quality of the music or economic conditions.
JOE BENNETT:
it fits with the general cycle of popular music, nostalgia. A lot of the psychology research into nostalgia suggests that it works on something like a 15-year cycle.
there’s a phenomenon in pop music that suggests that all the best pop music was released in the same year, and it was the year you were 17.
SIMONE DEL ROSARIO:
It’s not just Bennett’s opinion. There is a ton of research on nostalgia and when it really kicks in. Some say it takes 12-15 years, others suggest it is a 20-year cycle. Some call it the golden 40-year rule.
The only thing you can be sure of is that eventually, at some point, you will think fondly of your younger days. Did we really know at the time how good the pop was in 2007?
CHARLIE HARDING:
It’s more of an after-the-fact analysis, which is a fun and useful way of creating playlists, being nostalgic, digging into our memory, perhaps making sense of an era that was really dark and challenging for people, and making light of it after the fact.
JOE BENNETT:
So songwriters are not necessarily social commenters, but like all of us, everyone who creates popular culture, they are living in that culture at the time they are making the object and the market that is the pop music fans who are buying or streaming the single are also in that social context and liking what they like in the context that they’re in.
CHARLIE HARDING:
As much intention as a songwriter might have, whatever they might intend the listener is going to take it and do what they want with it.
Like, a great example of listeners completely misusing a song would be like, hey, ya, by OutKast,
OUTKAST:
“Thank god for mom and dad for sticking two together cause we don’t know how. Hey ya!”
CHARLIE HARDING:
which is one of the most requested songs at weddings, and yet the song is about relationships that never last.
SIMONE DEL ROSARIO:
In many ways, the look back at so-called recession pop allows us to look at what makes a great pop song and why it sticks with us.
JOE BENNETT:
I think what makes a great pop song is accessibility. You know, particularly if you’re releasing a single, you want it to appeal to millions of people.
CHARLIE HARDING:
Well, It has to have an amazing concept. Has to have a memorable hook, and it has to capture the zeitgeist.
CARLY RAE JEPSEN:
“Hey, I just met you. And this is crazy. But here’s my number. Call me maybe.
JOE BENNETT:
people talk about songs, as, you know, being instantly exciting.
Immediacy in a song is one of the most important characteristics.
CHARLIE HARDING:
A pop song, [a] great pop song is elusive, right? It’s like trying to play the Powerball
SIMONE DEL ROSARIO:
And what makes a great song has changed over the years. Today, more and more tracks are being discovered on short-form video apps like TikTok and Instagram.
JOE BENNETT:
TikTok is a much faster-moving medium, so people need to grab their audience’s attention to stop them from vertically scrolling onto the next thing.
LIL NAS X:
“I’m gonna take my horse to the old town road. I’m gonna ride (Kio, Kio) ’til I can’t no more. I got the horses in the back. Horse tack is attached.”
JOE BENNETT:
As we know from TikTok, that sort of meme community will often seize on a particular part of the song, a particular audio excerpt, and use that to make its meme, its dance routine, whatever it did, whatever it is.
SIMONE DEL ROSARIO:
While TikTok users need musicians to get to the meat early, pop songs have more to say in 2024 than ever before.
CHARLIE HARDING:
there is this expectation that we are more giving of ourselves in our lyrics today. And so I think of an artist like Charlie XCX, who, on brat, talked about how she wanted to write lyrics that were as if she was just texting a friend
CHARLIE XCX:
Yeah, 360. When you’re in the mirror, do you like what you see? When you’re in the mirror, you’re just looking at me.
CHARLIE HARDING:
and this is the album that has broken through for her. Because some of these lyrics, they don’t have these perfect rhymes. They have the perfect imperfections.
JOE BENNETT:
So it’s an introspective form a lot of the time, but still, a lot of singer-songwriter material deals with the classic themes of songwriting that is romantic relationships and dancing. Most pop songs are about one of those two things.
ED SHEERAN:
Well, come on now, follow my lead. Come, come on now, follow my lead, mm. I’m in love with the shape of you
[JOE BENNETT:
Singer-songwriters in contemporary pop are having big mainstream hits, often with similar themes. You know, a lot of Ed Sheeran song themes are simply about getting together romantically or dancing.
SIMONE DEL ROSARIO:
Look… I know you didn’t see a story about recession indicators turning into a commentary on the state of pop music but here we are. And we can’t end the conversation without the biggest name in music, let alone pop culture today.
JOE BENNETT:
Of course, even the great Taylor Swift was not immune to the cheerfulness of recession pop. Her two significant albums at that time would have been Fearless, which came out in 2008 and then Speak Now, which originally came out in 2010 and of course, both of those contain a whole bunch of songs in that vein, Love Story, you belong with me, white horse, the story of us.
TAYLOR SWIFT:
“You’ll be the prince and I’ll be the princess. It’s a love story, baby, just say, “Yes”
CHARLIE HARDING:
I think on a lot of metrics, Taylor Swift is the biggest artist to have ever lived, in terms of the longevity of her career, the fact that she is what should be a late-stage career artist, and yet she is at her peak. She has had multiple peaks that just keep getting bigger and bigger and bigger.
SIMONE DEL ROSARIO:
Will we look back on The Tortured Poets Department as a recession anthem?
TAYLOR SWIFT:
“I’m so depressed I act like it’s my birthday every day.”
SIMONE DEL ROSARIO:
For Straight Arrow News, I’m Simone Del Rosario. If you liked this story, search the Straight Arrow News app for our story on the death of music journalism.
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Both President Joe Biden and former President Donald Trump are piqued by the idea of a sovereign wealth fund for the United States. It’s a strategy largely employed by oil-rich nations and may seem more out of place for a country with more than $35 trillion in national debt, a trade deficit and Social Security deficits.
“This wealth fund will return a gigantic profit, which will help pay down national debt,” Trump said. “We’re going to work on national debt very strongly, by the way. We’re going to have so much money coming in. We’re going to work on national debt.”
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Trump first proposed the idea Thursday, Sept. 5, during an economic policy speech in New York. The next day, Bloomberg reported that top aides to Biden have been crafting a similar proposal.
“We will be so successful, we’ll create America’s own sovereign wealth fund to invest in great national endeavors for the benefit of all of the American people. Why don’t we have a wealth fund? Other countries have wealth funds. We have nothing,” Trump said.
Trump admitted the concept might need a name change.
“Perhaps ‘sovereign wealth fund’ wouldn’t be appropriate, but it’s going to be the same thing,” he said.
What is a sovereign wealth fund?
Sovereign wealth funds are investment funds owned and controlled by governments. These funds manage more than $12 trillion in assets worldwide, and the vast majority comes from oil-rich nations.
Countries like Saudi Arabia use surpluses from oil revenues to fund projects that play to a national strategy. Saudi Arabia’s Public Investment Fund manages nearly a trillion dollars in assets. A big part of their “Saudi Vision 2030” plan is investing in sports to play on a global stage.
“They won’t cop to sports washing, but they will admit that sports is of great appeal. It’s really where they want to park a lot of this discretionary Saudi sovereign wealth fund money,” Sports Illustrated senior writer Jon Wertheim explained, calling sports investments a “pillar of their economy.”
But Saudi Arabia has money to play. The country’s sovereign wealth fund is worth more than three times what it owes in national debt.
Not every country that has a sovereign wealth fund is in the black. Perhaps these are best called “sovereign leveraged funds,” as Zongyuan Zoe Liu coined in her book, “Sovereign Funds: How the Communist Party of China Finances its Global Ambitions.”
Where does the U.S. want to invest?
What do Trump and Biden have in mind for America’s global ambitions? Trump offered some thoughts during his speech last week.
“We will build extraordinary national development projects and everything from highways to airports to transportation infrastructure, all of the future,” Trump said. “We’ll be able to invest in state-of-the-art manufacturing hubs, advanced defense capabilities, cutting-edge medical research, and help save billions of dollars in preventing disease in the first place.”
As far as the White House plan is concerned, Bloomberg reports, “Proponents of the idea believe the fund could be tapped to support emerging technologies where there are high barriers of entry — including shipbuilding, emerging geothermal and nuclear fusion projects, and quantum cryptography.”
These proposed investments do not sound much different from what the U.S. already does; infrastructure investments, the CHIPS Act, solar subsidies and more come to mind.
Of course, there’s the question of how this fund will be funded. Trump said his tariffs will pay for it, though tariffs are also supposed to pay for his proposed tax cuts. It isn’t clear where funds would come from with the White House plan.
While the idea of a U.S. sovereign wealth fund is new, state funds are not. The Alaska Permanent Fund is the largest, managing $78 billion. It takes state proceeds from oil sales and invests in income-producing financial assets.
Tags: Alaska, China, Deficit, Donald Trump, Economy, investment fund, Joe Biden, Jon Wertheim, LIV Golf, National Debt, Norway, Oil, Public Investment Fund, saudi arabia, sovereign wealth fund, sports washing, surplus, Trade, U.S. Economy
Simone Del Rosario
It’s a page straight out of Saudi Arabia’s playbook.
Both President Biden and former President Trump are piqued by the idea of a sovereign wealth fund for the United States.
It may seem like an odd proposition for a country with more than $35 trillion in national debt, a trade deficit, and Social Security deficits.
Donald Trump: This wealth fund will return a gigantic profit, which will help pay down national debt. We’re going to work on national debt very strongly, by the way. We’re going to have so much money coming in. We’re going to work on national debt.
Simone Del Rosario: Trump first proposed the idea last Thursday during an economic policy speech in New York. The next day, Bloomberg reported that top aides to Biden have been crafting a similar proposal.
Donald Trump: We will be so successful, we’ll create America’s own sovereign wealth fund to invest in great national endeavors for the benefit of all of the American people. Why don’t we have a wealth fund? Other countries have wealth funds. We have nothing. We have nothing.
Simone Del Rosario: Sovereign wealth funds are investment funds owned and controlled by governments. These funds manage more than $12 trillion in assets worldwide, and the vast majority comes from oil-rich nations. Countries like Saudi Arabia use surpluses from oil revenues to fund projects that play to a national strategy. Saudi’s Public Investment Fund manages nearly a trillion dollars in assets. And a big part of their “Saudi Vision 2030” plan is investing in sports to play on a global stage.
Jon Wertheim: They won’t cop to sports washing, but they will admit that sports is of great appeal. It’s really where they want to park a lot of this discretionary Saudi sovereign wealth fund money. It’s part of this Vision 2030. They own an EPL team. They’ve owned, I mean, the WWE and the soccer and the golf, and becoming this real kind of this pillar of their economy.
Simone Del Rosario: But Saudi Arabia has money to play. Its sovereign wealth fund is worth more than three times what it owes in national debt.
Not every country that has a sovereign wealth fund is in the black. Perhaps these are best called “sovereign leveraged funds,” as Zongyuan Zoe Liu coined in her book, Sovereign Funds: How the Communist Party of China finances its global ambitions.
So what do Trump and Biden have in mind for America’s global ambitions? Trump offered some thoughts during his speech last week.
Donald Trump: We will build extraordinary national development projects and everything from highways to airports and to transportation infrastructure, all of the future we’ll be able to invest in state-of-the-art manufacturing hubs, advanced defense capabilities, cutting-edge medical research, and help save billions of dollars in preventing disease in the first place.
Simone Del Rosario: While Bloomberg reports that proponents believe the fund could be used to support emerging technologies where there are high barriers of entry, like shipbuilding, geothermal and nuclear fusion projects, and more.
These proposed investments do not sound much different from what the U.S. already does; think about the infrastructure bill, the CHIPS Act, solar subsidies and more.
And of course, there’s the question of how this fund will be funded. Trump says his tariffs will pay for it, though tariffs are also supposed to offset his tax cuts. It isn’t clear where funds would come from with the White House plan.
While the idea of a U.S. sovereign wealth fund is new, state funds are not. The Alaska Permanent Fund is the largest and best known, managing $78 billion. It takes state proceeds from oil sales and invests in income-producing financial assets.
To learn more about other economic policies proposed by former President Trump, search “Trump admin” for this story at SAN.com or the Straight Arrow News app.
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Jackson Hole, Wyoming, is known for its temperate summers, but Federal Reserve Chair Jerome Powell is probably feeling the heat turn up a bit ahead of his most-anticipated speech of the year. Powell will speak Friday, Aug. 23, at the Kansas City Fed’s annual economic symposium at Grand Teton National Park.
Central bankers, policymakers and investors around the world will be glued in for Powell to signal he thinks inflation has come down enough for a rate cut next month.
The elusive soft landing is on the line, especially in light of news the labor market is taking a turn.
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“This is his opportunity to send us a clear message on some aspect of what the Fed is thinking about,” Kathleen Hays, editor-in-chief of Central Bank Central, said. “I don’t think it’s going to be just looking at the economy and inflation. He’ll probably put this in a bigger context. At the same time, I think people are going to be waiting for him to just give us a little more guidance on where you’re leaning now.”
On Wednesday, the Fed released minutes from the latest Open Market Committee meeting in July. It decided to keep rates the same two days before a disappointing jobs report rocked people’s views of the labor market.
According to the minutes, the vast majority of people in that meeting expressed that it would likely be appropriate to cut rates in September. That said, several made comments that they could have also gotten behind a cut in July, which didn’t happen.
But here’s the kicker: Many participants noted that reported payroll gains might be overstated, and some noted the easing labor market faced a higher risk of more serious deterioration.
The July jobs report showed the unemployment rate spiked up to 4.3% from 4.1%, roiling stock markets around the world. A recession indicator called the Sahm Rule triggered. Some people called for the Fed to step in and make an emergency rate cut, an idea that others smacked down as ridiculous.
Now, it is confirmed that payroll gains have been overstated, just as many of those Fed members suspected.
“Since January of 2023, we’ve seen one downward revision after another to the data — it’s become systematic,” QI Research CEO Danielle DiMartino Booth told Straight Arrow News in August.
The latest Labor Department revision shows the U.S. economy added 818,000 fewer jobs than previously reported over 12 months ending March 2024. That’s about a 30% hit to what the Bureau of Labor Statistics initially released. It doesn’t mean those jobs were lost, it means they were never there in the first place. Therefore, while the labor market was still strong over those 12 months, it wasn’t on quite the tear the initial data indicated. These estimates will not be finalized until February 2025.
“And it takes a lot of time for the Bureau of Labor Statistics data to work its way into subsequent revisions for the Bureau of Economic Analysis data for GDP,” DiMartino Booth noted of revisions.
All of these moving parts are putting the Fed’s soft landing scenario at risk. A soft landing is being able to come down from too-high inflation without triggering a recession.
Inflation has come down quite a bit. The Fed’s preferred inflation measurement (core PCE) is at 2.6%, close to its 2% target. And the softening labor market is all the more reason to act.
In Powell’s speech Friday listeners will hope to hear from him that a soft landing is still in sight.
“We know the Fed’s going to be cutting rates,” Hays said. “We know they’re going to normalize. So it’s more of a question of when and how much and how fast.”
Complicating matters is the upcoming election. The Federal Reserve is a politically independent body and it would never want to be seen as carrying water for one party or another.
There is only one meeting before the election, on Sept. 17-18. Taking politics out of it, most economic signs point to the need to cut rates in September. But that will likely give the economy a boost, and that’s why in an interview with Bloomberg, Donald Trump said cutting before the election is “something that they know they shouldn’t be doing.”
The next Fed meeting starts the day after Election Day, but the Fed may not wait that long with the labor market showing these cracks.
Tags: 2024 Elections, Bureau of Economic Analysis, Bureau of Labor Statistics, claudia Sahm, Danielle DiMartino Booth, Donald Trump, Economy, Election, Federal Reserve, GDP, Grand Teton, Inflation, Interest rates, Jackson Hole, Jerome Powell, Jobs, Jobs Report, Kansas City Fed, Kathleen Hays, Labor Department, presidential election, rate cut, Recession, Sahm Rule, U.S. Economy, Unemployment, Unemployment rate
Simone Del Rosario: Jackson Hole, Wyoming, is known for its temperate summers, but Federal Reserve Chair Jerome Powell is probably feeling the heat turn up a bit ahead of his most-anticipated speech of the year.
Powell will speak Friday at the Kansas City Fed’s annual economic symposium at Grand Teton National Park.
Central bankers, policymakers, and investors around the world will be glued in for Powell to signal he thinks inflation has come down enough for a rate cut next month.
The elusive soft landing is on the line, especially in light of news the labor market is taking a turn.
Kathleen Hays: This is his opportunity to send us a clear message on some aspect of what the Fed is thinking about. He doesn’t have to do that. I don’t think it’s going to be just looking at the economy and inflation. He’ll probably put this in a bigger context. At the same time I think people are going to be waiting for him to just give us a little more guidance on where you’re leaning now.
Simone Del Rosario: On Wednesday, we did get the minutes from the Fed’s last meeting in July, where the Fed decided to keep rates the same two days before a disappointing jobs report rocked people’s views of the labor market.
The vast majority of people in that meeting expressed that it would likely be appropriate to cut rates in September. That said, several made comments that they could have also gotten behind a cut in July, which didn’t happen.
And here’s the kicker: Many participants noted that reported payroll gains might be overstated, and some noted the easing labor market faced a higher risk of more serious deterioration.
And here’s what happened after that meeting: Two days later, the latest jobs report showed the unemployment rate spiked up to 4.3% from 4.1%. Stock markets around the world had a bit of a field day with that one. A recession indicator called the Sahm Rule triggered. Some people called for the Fed to step in and make an emergency rate cut, an idea that others smacked down as ridiculous.
And then, this week, we got confirmation that payroll gains have been drastically overstated, just as many of those Fed members suspected.
Danielle DiMartino Booth: Since January of 2023, we’ve seen one downward revision after another to the data. It’s become systematic.
Simone Del Rosario: The latest Labor Department revision shows the U.S. economy added 818,000 fewer jobs than previously reported over 12 months ending March 2024.
That’s about a 30% hit to what we thought the economy added. It doesn’t mean those jobs were lost, it means they were never there in the first place. Therefore, while the labor market was still strong over those 12 months, it wasn’t on quite the tear we were told it was.
It’s worth noting, these estimates will not be finalized until February 2025.
Danielle DiMartino Booth: And it takes a lot of time for the Bureau of Labor Statistics data to work its way into subsequent revisions for the Bureau of Economic Analysis data for GDP.
Simone Del Rosario: All of these moving parts are putting the Fed’s soft landing scenario at risk. A soft landing is being able to come down from too-high inflation without triggering a recession.
Inflation has come down quite a bit. The Fed’s preferred inflation measurement is at 2.6%, pretty close to its 2% target. And the softening labor market is all the more reason to act.
In Powell’s speech Friday, listeners will hope to hear from him that a soft landing is still in sight.
Kathleen Hays: We know the Fed’s going to be cutting rates. We know they’re going to normalize. So it’s more of a question of when and how much and how fast.
Simone Del Rosario: Complicating matters is the upcoming election. The Federal Reserve is a politically independent body and they would never want to be seen as carrying water for one party or another.
There is only one meeting before the election, that’s the September meeting. Taking politics out of it, most economic signs point to the need to cut rates in September. But that will likely give the economy a boost, and that’s why in an interview with Bloomberg, Donald Trump says cutting before the election is “something that they know they shouldn’t be doing.”
The next Fed meeting starts the day after Election Day, but don’t expect the Fed to wait that long with the labor market showing these cracks.
We’ll bring you the biggest takeaways from Powell’s speech Friday, so download the Straight Arrow News app and enable notifications so you don’t miss it.
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Mortgage rates hit the lowest level in more than a year, which is a little like putting the cart before the horse, but lenders know the horse is coming. That horse is the Federal Reserve cutting interest rates, which experts believe will happen in September.
What will all of this mean for housing affordability? Watch the video above to see the data behind the story.
Why mortgage rates are falling
Mortgage rates are falling in anticipation that the Fed will lower the Fed funds rate, the interest rate banks are charged for overnight lending. It basically acts like a benchmark for all other consumer borrowing.
When the Fed went on this rate hike campaign to make borrowing more expensive and slow down inflation, mortgage rates jacked up and the dream of buying a home quickly got out of reach for many Americans.
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Peak mortgage rates are coming off the cliff but don’t expect those historically low interest rates from the height of the pandemic. When analyzing decades of data, today’s mortgage rates aren’t that high historically. Before 2000, these rates would have been a steal. Today, they’re uncomfortably high thanks to another factor: Home prices.
Home prices off peak but by how much?
If only we’d all had the foresight and means to buy a home when it felt like the world was coming to an end in the spring of 2020. Back then, the median sales price of a home in the U.S. was $317,000.
After setting record highs in 2022 at around $443,000, home prices are going back down, but at $412,000, can that be considered affordable? It depends on how short your memory is.
The median sales price is nearly $100,000 more than it was five years ago, and it’s double what it was 15 years ago during the depths of the Great Recession.
Rising inventory could help
Since there are no credible signs the housing market is about to crash, lowering interest rates and lower prices are good enough signs for more movement in the housing market, and we’re seeing that with rising inventory.
The active listings are back up to levels not seen since early COVID-19 days. More houses on the market means more competition on the selling side, which could be the first win for buyers in a while. But experts don’t expect prices to decrease all that much, because inventory is still so much lower than what’s needed.
The typical family still can’t afford the typical home
That brings us to housing affordability and whether the typical family earns enough to qualify for a mortgage on a typical loan. For most of the past year, that answer has been no.
The National Association of Realtors measures this using price, income and mortgage data, assuming a 20% down payment. An index amount above 100 means the typical family can afford the typical home loan. A value below 100 means the typical family with the median household income will not qualify for a loan on the median-priced home.
From April-June 2024, the index has been below 100, meaning it’s unaffordable. At last measurement, the index sits at 93.3, which means the median family income is 93.3% of what’s needed to qualify for the loan.
Where in the country houses are still affordable
The Midwest is the only place in the country today where the typical family can afford the typical home. In the Midwest, the qualifying income for the typical loan is around $84,000 while the median family income exceeds $100,000.
But the secret is getting out. Realtor.com says Columbus, Ohio, is the most popular housing market in the country this year. And there’s not a single housing market on the list west of the Mississippi River.
In the West, the qualifying income is nearly double that of the Midwest at $164,208. The median family income is $112,609. In the West, the affordability index is a staggering 68.6.
Tags: Columbus, Economy, Federal Funds Target Rate, Federal Reserve, Home sales, Housing Market, Interest rates, Midwest, Mortgage, Mortgage rate, National Association of Realtors, Real estate
Simone Del Rosario: Mortgage rates hit their lowest level in more than a year, which is a little like putting the cart before the horse but we know the horse is coming.
That horse is the Federal Reserve cutting interest rates. What will all this mean for housing affordability? We’re going to tell you the story in five charts.
Mortgage rates are falling in anticipation the Fed will lower the fed funds rate, the interest rate banks are charged for overnight lending. It basically acts like a benchmark for all other consumer borrowing.
When the Fed went on this rate hike campaign to make borrowing more expensive and slow down inflation, mortgage rates jacked up and the dream of buying a home quickly got out of reach for many Americans.
We’re coming off the cliff now but don’t expect those historically low interest rates from pandemic past.
And when you really zoom out, mortgage rates aren’t that high compared to decades past. Before 2000, these rates would have been a steal. Today, they’re uncomfortably high thanks to another factor: Home prices.
If only we’d all had the foresight and means to buy a home when it felt like the world was coming to an end the spring of 2020.
After setting record highs in 2022, home prices are going back down, but “affordable?” It depends on how short your memory is.
The median sales price is nearly $100,000 more than 5 years ago, and it’s double what it was 15 years ago, during the depths of the Great Recession.
Since there are no credible signs the housing market is about to crash, lowering interest rates and lowering prices are a good enough sign for more movement in the housing market, and we’re seeing that with rising inventory.
The active listings are back up to levels not seen since early COVID days. More houses on the market means more competition on the selling side, which could be the first win for buyers in a while. But experts don’t expect prices to decrease all that much, because inventory is still so much lower than what’s needed.
That brings us to housing affordability, and whether the typical family earns enough to qualify for a mortgage on a typical loan. For most of the past year, that answer has been no.
The National Association of Realtors measures this using price, income and mortgage data, assuming a 20% down payment. Anything above 100 means the typical family can do it! Everything below 100 means they won’t qualify.
The Midwest is the only place in the country today where the typical family can afford the typical home. In the Midwest, the qualifying income is around $84,000. In the West, it’s nearly double.
But the secret is getting out! Realtor.com says Columbus, Ohio, is the most popular housing market in the country this year. And there’s not a single housing market on this list west of the Mississippi.
To stay up on what’s happening with the housing market and all things economy, download the Straight Arrow News app and enable notifications. Be sure to click business to get stories like this.
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A prototype of the iconic golden bikini worn by Carrie Fisher in 1983’s “Star Wars: Episode VI – Return of the Jedi” sold for $175,000 at auction. The sale was part of a $5.9 million Hollywood blockbuster for Heritage Auctions as the collectibles and memorabilia market continues its upward trend following a COVID-19 pandemic-inspired boom.
The bikini, sold by Heritage Auctions on Friday, July 26, was not even worn by the actress in Jabba the Hutt’s palace in the movie. Instead, the film’s costume designers made a more comfortable version for Fisher to wear, though she told NPR in 2016 that it still did not hit the comfort mark.
In the same auction, Heritage sold a Y-wing fighter model that was part of the trench run that eventually blew up the Death Star in “Star Wars: Episode IV – A New Hope.” The “hero” model is extremely detailed and was used for close-ups while filming the special effects sequences. That model sold for $1.55 million last week.
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“It’s another cultural phenomenon,” Heritage Auctions Executive Vice President Joe Maddalena told Straight Arrow News. “Because these movies and TV shows use practical effects, not CGI [computer-generated imagery]. They actually used miniatures. They’re so coveted because look at what we can do with CGI. But why do the movies with practical effects look so much better?”
Maddalena said interest in entertainment-related memorabilia has been growing steadily for decades.
“Collecting movie props in a serious way started in about 1970 and it’s been a pretty steady ride,” he said. “We haven’t had a giant escalation in price. It’s been pretty healthy.”
“You can go anywhere in the world and they know who Harry Potter is,” Maddalena added. “You can go anywhere in the world and you can say ‘Hasta la vista, baby,’ and they know that’s Arnold [Schwarzenegger]. Mickey Mantle, Joe DiMaggio, these are ‘American pastime.’ It’s different. It’s not that one’s better than the other.”
While entertainment collectibles may have more of a global appeal, they do not fetch the high dollars that sports memorabilia does. In fact, Heritage will auction off the jersey worn by baseball icon Babe Ruth when he “called his shot” in the 1932 World Series. That jersey is expected to fetch as much as $30 million when the gavel bangs at the end of August.
“Babe Ruth is bigger than baseball,” Maddalena told SAN. “Babe Ruth was a cultural phenomenon.”
The “called shot” happened in the fifth inning of Game 3 against the Chicago Cubs at Wrigley Field. It was a ruckus game and baseball historians are split on whether he was pointing to the opposing pitcher, the Cubs’ dugout or the fence.
“Whether this call shot is a myth or it actually was him pointing at the fence [where] he hit a home run, [it] doesn’t matter,” Maddalena said. “It’s the fact that you have probably the most important image in sports, in baseball history, for sure, of Ruth calling that shot. You have that tunic that you can match to that moment in time. It’s priceless.”
The last time the jersey sold was in 2005 for $940,000.
After the COVID-inspired boom in value for collectibles, the “King of Collectibles” Ken Goldin called the massive price increases an “irrational, unsustainable spike.” Since then, record values have fallen for collectible mainstays like trading cards, watches and even rare whiskeys and wines.
“A Charizard, which is the greatest Pokemon card, let’s just say you had a PSA 10 Charizard: perfect card, first edition,” Maddalena, who also handles Heritage’s trading card business, said. “That card, pre-COVID, was $15,000 to $18,000. [At] the height of COVID, it was $400,000, now the card is about $250,000. If you compare $250,000 to pre-COVID, it’s still really, really good.”
Heritage will list Dorothy’s ruby slippers from the “Wizard of Oz” in December, and while Maddalena has had the pleasure of listing items from major films, there are still items out there he would love to get his hands on.
“The only thing I’ve never seen is Maria, the robot from ‘Metropolis,'” he told SAN. “So in the movie, it gets destroyed in the fire. But I’m sure they made more than one. So if that existed, God knows what that would be worth.”
For context, a lot of nine rare and early movie posters, which included one for the 1927 film “Metropolis,” brought in $1.2 million at auction in 2012.
The overall collectibles market is still growing, according to research firm Market Decipher. They said it will cross $600 billion this year, gaining more than 9% over last year. They project the overall collectibles market will eclipse $1 trillion in the next decade.
While there is big money to be made in the world of collectibles, Maddalena said there is more to collecting than profit.
“Search out people who are knowledgeable,” he said. “Learn, and then the fun part about it is no matter what you spend, the joy you get from it, that’s what this is all about. This is your hobby. Hobbies are healthy. They give you personal enjoyment and sometimes they make money.”
“You meet amazing people you would never meet anywhere else,” he added. “You form lifelong friendships with people who are so unlike you because you have something in common. And I think that’s the value of collecting.”
Tags: A New Hope, Auction, Babe Ruth, baseball, Carrie Fisher, Collectibles, Collecting, COVID-19, film, Heritage Auctions, Hollywood, Memorabilia, metropolis, movies, Return of the Jedi, Sports, sports entertainment, sports memorabilia, Star Wars, Wizard of Oz
Simone Del Rosario:
How much is a piece of history worth? A lot, right?
What if that piece of history is a piece of one of the greatest legends in sports?
The jersey worn by Babe Ruth when he “called his shot” in the 1932 World Series is expected to fetch $30 Million when it the gavel pounds at Heritage Auctions the end of August.
Joe Maddalena:
“Babe Ruth is bigger than baseball. Babe Ruth was a cultural phenomenon, the way he lived his life, he died young.”
“My name is Joe Maddalena. I’m an executive vice president at heritage auctions here in Dallas. I’ve been doing this for 40 years.”
Simone Del Rosario:
The “called shot” happened in the fifth inning of Game 3 against the Chicago Cubs at Wrigley Field. While every kid has recreated the moment on the diamond, baseball historians are unclear whether he was pointing at the opposing pitcher, the Cubs’ dugout, or the fence.
Joe Maddalena:
“But I think, because he is baseball and whether this call shot is a myth or it actually was him pointing at the fence [where] he hit home run, [it] doesn’t matter. It’s the fact that you have probably the most important image in sports, in baseball history, for sure, of Ruth calling that shot. You have that tunic that you can match to that moment in time. It’s priceless.$10 million, $100 million.”
Simone Del Rosario:
The jersey last sold in 2005 for a paltry $940,000, by comparison.
Memorabilia and collectibles have been coveted items for decades, but it hit a fever pitch during the COVID-19 Pandemic.
Prices soared so much at the time, the “King of Collectibles” himself, Ken Goldin, called the rapid price increase an “irrational, unsustainable spike.”
He would know. Since then, we’ve seen those record values fall for collectibles like trading cards, watches, and even rare whiskeys and wines. But fall by how much?
Joe Maddalena:
“So pre-COVID, a Charizard, which is the greatest Pokemon card, let’s just say you had a PSA 10 Charizard. Perfect card, first Edition, that card, pre covid, was $15,000 to $18,000. [At] the height of covid, it was $400,000 now the card is about $250,000. If you compare $250,000 to pre-COVID, it’s still really, really good.”
“Actually trading cards is an area that I oversee, and we’re up 25% from last year. So I think it was just a Bounce for trading cards.”
Simone Del Rosario:
The overall collectibles market is still growing, according to research firm Market Decipher. They say it will cross $600 billion this year, gaining more than 9% over last year. They project the overall collectibles market will eclipse $1 trillion in the next decade.
Joe Maddalena:
“So many sports collectors are like, ‘gee, I’d like to diversify.’”
“Collecting movie props in a serious way, started in about 1970 and it’s been a pretty steady ride. We haven’t had a giant escalation in price. It’s been pretty healthy.”
Simone Del Rosario:
Heritage had a prototype of Princess Leia’s iconic gold bikini worn in Jabba the Hutt’s palace in 1983’s Return of the Jedi.
They just sold the piece for $175,000 at auction last week.
Joe Maddalena:
“Film is a cultural currency. You can go anywhere in the world and they know who Harry Potter is. You can go anywhere in the world and you can say ‘hasta la vista, baby.’ And they know that’s Arnold [Schwarzenegger]. Mickey Mantle, Joe DiMaggio, these are American pastime. It’s different. It’s not that one’s better than the other.”
The bikini is nothing short of iconic, continuing pop culture relevance throughout the past 40 years.
“OK, Here we go, I’m Jabba’s prisoner, and you…”
Simone Del Rosario:
Costume designers made a different version of the bikini for screen to make it more comfortable for Carrie Fisher.
But still, they didn’t do enough as she told NPR in November of 2016.
Carrie Fisher:
“It wasn’t my choice. When he showed me the outfit, I didn’t – I thought he was kidding, and it made me very nervous. And, you know, they wouldn’t let me – I had to sit very straight ’cause I couldn’t have lines in the side of – on my sides, you know, like a little crease. No creases were allowed. So I had to sit very, very rigid straight.”
Simone Del Rosario:
While the bikini may have demanded the most attention, it wasn’t even the Star Wars item that brought in the most dough during last week’s auction…
That honor goes to a Y-wing fighter model that was part of the trench run that eventually blew up the Death Star in A New Hope. It fetched $1.55 million.
The model sold was one used for close up shots, meaning it’s incredibly detailed.
Joe Maddalena:
“It’s another cultural phenomenon. Because these movies and TV shows use practical effects, not CGI, they actually use miniatures. They’re so coveted, because look at what we can do with CGI. But why do the movies with practical effects look so much better?”
Simone Del Rosario:
While Maddalena has had the pleasure of listing items from Star Wars to Dorothy’s Ruby Slippers from the Wizard of Oz – those go up in December – there are still items out there he’d love to get his hands on.
Joe Maddalena:
“The only thing I’ve never seen is Maria, the robot from Metropolis.If that exists, it’s possible. So in the movie, it gets destroyed in the fire. But I’m sure they made more than one. So that would be like to me, if that existed, that God knows what that would be worth.”
Simone Del Rosario:
Some collectors are going to try and squeeze all the money they can out of these items. Investing in collectibles can draw in greater returns than some of the best bull markets. But Maddalena says what makes the collectibles market is community.
Joe Maddalena:
“Search out people who are knowledgeable. Learn,and then the fun part about it is, no matter what you spend, the joy you get from it… That’s what this is all about. This is your hobby. Hobbies are healthy. They give you personal enjoyment, and sometimes they make money.”
“You meet amazing people you would never meet anywhere else. You form lifelong friendships with people who are so unlike you because you have something in common. And I think that’s the value of collecting.”
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Years ago, OpenAI CEO Sam Altman set out to discover what would happen if people were given cash every month with no strings attached. This week, the results are in from the largest universal basic income study in the U.S., though how it went depends on how one interprets the findings.
Right-leaning Reason writes, “Bad News for Universal Basic Income: Researchers found that giving people $1,000 every month for three years resulted in decreased productivity and earnings, and more leisure time.”
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Center-rated The Register writes, “Sam Altman’s basic income experiment finds that money can indeed buy happiness: But not necessarily health.”
Keeping in tune with Straight Arrow News‘ mission of unbiased, straight facts, let’s take a look at the facts from the research paper itself.
The ground rules
Researchers randomly selected 1,000 low-income people to receive $1,000 per month with no conditions for three years. A separate control group of 2,000 people received $50 per month to participate in the research.
The people in this study had an average household income of $29,900 in 2019, so $1,000 a month translated to a 40% increase in household income.
In 2016, Sam Altman wrote about launching the Basic Income Project and his desire to answer some theoretical questions about it.
“Do people sit around and play video games, or do they create new things?” Altman asked. “Are people happy and fulfilled? Do people, without the fear of not being able to eat, accomplish far more and benefit society far more? And do recipients, on the whole, create more economic value than they receive?”
The results
Excluding the free money received, individual income fell by about $1,500 per year, or 5%. It led to a 2 percentage point decrease in labor market participation and people worked roughly 1.3-1.4 fewer hours per week.
So what did they do with that extra time? Researchers saw the largest increase in leisure time, followed by smaller increases in transportation – people are driving around doing more – and time spent on finances.
Researchers found no impact on the quality of employment. They did see hints that people were thinking about entrepreneurial endeavors and there were some signs younger participants were investing more in education.
Researcher Eva Vivalt wrote, “Overall, the negative effects on labor supply do not appear to be offset by other productive activities, and we do not observe people getting better jobs over the 3-year duration of the program.”
The study concluded, “While decreased labor market participation is generally characterized negatively, policymakers should take into account the fact that recipients have demonstrated–by their own choices–that time away from work is something they prize highly.”
Universal basic income is a hot topic in Silicon Valley. That’s because the tech world is actively developing AI that could make some jobs obsolete.
“There will be fewer and fewer jobs that a robot cannot do better,” Elon Musk said in 2017. “What to do about mass unemployment? This is gonna be a massive social challenge. And I think, ultimately, we will have to have some kind of universal basic income. I don’t think we’re gonna have a choice.”
“These are not things I wish would happen,” Musk continued. “These are simply things that probably will happen.”
Altman, who was behind this study, said that while UBI is not a full solution, it’s a component that should be pursued in the face of AI advancement.
“As a cushion through a dramatic [employment] transition,” he said of UBI. “And the world should eliminate poverty if able to do so. I think it’s a great thing to do as a small part of the bucket of solutions.”
The idea of paying people with no conditions is incredibly expensive – the Tax Foundation said Andrew Yang’s $1,000-per-month proposal would cost $2.8 trillion per year. And many believe it’s an affront to capitalism.
“This is straight out of the Karl Marx playbook. This is not out of the Adam Smith playbook,” radio host Dave Ramsey said during his show last year. “Karl Marx, Father of Communism. Adam Smith wrote the Tome that we were all required to read on capitalism if we took economics. My friend Art Laffer, one of the leading economists in the world, says, ‘If you pay people not to work, please expect them to not work.'”
Again, the people from this study did still work – try living off $12,000 a year – but they did take off a little more than an hour per week.
Tags: AI, Andrew Yang, Artificial Intelligence, Automation, ChatGPT, Dave Ramsey, Elon Musk, Generative AI, Media Bias, news media, OpenAI, Sam Altman, Unemployment, Universal Basic Income
Years ago, the founder of ChatGPT set out to discover what would happen if you give people cash every month, no strings attached.
The results are in from the largest Universal Basic Income study in the U.S., though how it went depends on how one interprets the findings.
Right-leaning Reason writes: Bad News for Universal Basic Income: Researchers found that giving people $1,000 every month for three years resulted in decreased productivity and earnings, and more leisure time.
While center-rated The Register writes: Sam Altman’s basic income experiment finds that money can indeed buy happiness: But not necessarily health.
Keeping in tune with Straight Arrow News’ mission of unbiased, straight facts, let’s look at the facts from the research paper itself.
First, the ground rules. Researchers randomly selected 1,000 low-income people to receive $1,000 a month, no conditions, for three years. A separate control group of 2,000 people received $50 a month to participate in the research.
The people in this study had an average household income of $29,900 in 2019, so $1,000 a month translated to a 40% increase in household income.
In 2016, Sam Altman wrote about launching the Basic Income Project and his desire to answer some theoretical questions about it.
“Do people sit around and play video games, or do they create new things? Are people happy and fulfilled? Do people, without the fear of not being able to eat, accomplish far more and benefit society far more? And do recipients, on the whole, create more economic value than they receive?”
So now that you know the rules and the lens of focused intention, here are the results.
Excluding the free money received, individual income fell by about $1,500 a year, or 5%.
It led to a 2 percentage point decrease in labor market participation.
And people worked roughly 80 fewer minutes per week.
So what did they do with that extra time? Researchers saw the largest increase in leisure time, followed by smaller increases in transportation – people are driving around doing more – and time spent on finances.
They found no impact on quality of employment. They did see hints that people were thinking about entrepreneurial endeavors, and there were some signs younger participants were investing more in education.
Researcher Eva Vivalt wrote: Overall, the negative effects on labor supply do not appear to be offset by other productive activities, and we do not observe people getting better jobs over the 3-year duration of the program.
But the study concludes: While decreased labor market participation is generally characterized negatively, policymakers should take into account the fact that recipients have demonstrated–by their own choices–that time away from work is something they prize highly.
Universal Basic Income, or UBI, is a hot topic in Silicon Valley. That’s because the tech world is actively developing AI that could make people’s jobs obsolete.
“There will be fewer and fewer jobs that a robot cannot do better. What to do about massive unemployment. This is gonna be a massive social challenge. And I think, ultimately, we will have to have some kind of universal basic income. I don’t think we’re gonna have a choice.”
“These are not things I wish would happen. These are simply things that probably will happen.”
OpenAI’s Sam Altman, who was behind this study, said that while UBI is not a full solution, it’s a component that should be pursued in the face of AI advancement.
“As cushion through a dramatic transition and just as like the world should eliminate poverty if able to do so. I think it’s a great thing to do as a small part of the bucket of solutions.”
Of course, the idea of paying people with no conditions is incredibly expensive – the Tax Foundation said Andrew Yang’s $1,000 per month proposal would cost $2.8 trillion per year. And many believe its an affront to capitalism.
“This is straight out of the Karl Marx playbook. This is not out of the Adam Smith playbook. Let me help you with that. Karl Marx, Father of Communism. Adam Smith wrote the Tome that we were all required to read on capitalism if we took Economics. So, my friend Art Laffer, one of the leading economists in the world says, ‘if you pay people not to work, please expect them to not work.”
Again, the people from this study did still work – try living off $12k a year – but they did take off a little more than an hour per week.
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The battle over the National Basketball Association’s broadcast rights looks like it is headed to court. On Wednesday, July 24, the league rejected TNT’s bid to match Amazon Prime Video’s $1.8 billion offer.
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It’s been quite a bit of back and forth over the last 10 days. On Tuesday, July 16, the NBA’s Board of Governors approved a massive 11-year, $76 billion deal for its media rights with Disney, Amazon and NBC.
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The following day, the league provided the details of the deal to its longtime partner TNT Sports and its parent company Warner Bros. Discovery. According to the previous broadcast deal, Warner had five days to match one of the offers.
On Monday, the network did just that and challenged Amazon’s bid, which offered hope for fans who love TNT’s NBA coverage and its studio show “Inside the NBA.” But the league rejected the offer on Wednesday.
“Warner Bros. Discovery’s most recent proposal did not match the terms of Amazon Prime Video’s offer and, therefore, we have entered into a long-term arrangement with Amazon,” the NBA said in a statement.
It appears the sticking point is the league’s move into streaming.
“Throughout these negotiations, our primary objective has been to maximize the reach and accessibility of our games for our fans,” NBA’s statement said. “Our new arrangement with Amazon supports this goal by complementing the broadcast, cable and streaming packages that are already part of our new Disney and NBCUniversal arrangements. All three partners have also committed substantial resources to promote the league and enhance the fan experience.”
Back in June, NBA Commissioner Adam Silver was adamant that streaming would be an important part of the next deal. While details of the Warner match weren’t made public, it’s been speculated that it included games streamed on Max. TNT Sports and Warner believe they have met the requirements.
“We have matched the Amazon offer, as we have a contractual right to do, and do not believe the NBA can reject it,” TNT Sports said in a press release Wednesday. “We think they have grossly misinterpreted our contractual rights with respect to the 2025-2026 season and beyond, and we will take appropriate action.”
“The NBA was obviously advised by their high-powered lawyers that TNT did not match, perhaps due to a cable company having no ability to match a streaming service,” Andrew Brandt, a former professional sports executive and executive director of the Jeffery S. Moorad Center for the Study of Sports Law, told Straight Arrow News in an email. “As with everything, it comes down to the contract: did it address that TNT would have no ability to match a streaming service? Or did it not? In this case, it is not about the lawyers in the dispute; it is about the lawyers who drafted the ‘match.'”
Tags: ABC, Adam Silver, Amazon Prime, Amazon Prime Video, Andrew Brandt, Charles Barkley, Disney, ESPN, Inside the NBA, NBA, NBC, Streaming, TNT, Warner Bros. Discovery
Simone Del Rosario:
Oh what a 10-day span it’s been for the NBA and its broadcast partners.
Last Tuesday the league’s board of governors approved an 11-year, $76 billion deal for media rights with Disney, Amazon and NBC.
The following day, the league provided its longtime partner TNT Sports and Warner Bros Discovery the details of the deal.
Just as it seemed TNT would be riding the bench starting with the 2025-2026 season, they threw up a prayer on Monday.
Or as the network said, they had executed their contractual option and “reviewed the offers and matched one of them.”
The “One of them” in question was Amazon’s $1.8 billion per year bid.
“Not so fast my friend.”
I know. I’m mixing my sports here.
Warner Bros. thought their offer was nothing but net. But the NBA blocked the shot. In a statement released Wednesday, they said “Warner Bros. Discovery’s most recent proposal did not match the terms of Amazon Prime Video’s offer and, therefore, we have entered into a long-term arrangement with Amazon.”
Time out.
According to the NBA, the deals they negotiated “maximize the reach and accessibility of our games for our fans. Our new arrangement with Amazon supports this goal by complementing the broadcast, cable and streaming packages that are already part of our new Disney and NBCUniversal arrangements.”
NBA Commissioner Adam Silver had been adamant streaming had to be a big part of the deal. And while it was speculated some of the Warner Bros. match included games streamed on MAX, apparently the league didn’t think it did enough to meet the promise of a full time streamer in Amazon Prime Video.
For their part, TNT Sports says they matched the Amazon offer, as was their right, and now they’re calling foul on the NBA.
Andrew Brandt, a former Professional Sports Executive told Straight Arrow News in an email:
“The NBA was obviously advised by their high-powered lawyers that TNT did not match, perhaps due to a cable company having no ability to match a streaming service. As with everything, it comes down to the contract: did it address that TNT would have no ability to match a streaming service? Or did it not? In this case, it is not about the lawyers in the dispute; it is about the lawyers who drafted the ‘match.’”
You can bet on this heading to court – the legal one, that is – as TNT Sports says its contractual rights have been “grossly misinterpreted” and they will take “appropriate action.”
The NBA’s decision continues to throw TNT’s famed studio show “Inside the NBA” in limbo, and, for now, Charles Barkley won’t have to think too hard about going back on his promise of retiring from TV after the next season.
Charles Barkley:
“No matter what happens, next year is going to be my last year on television.
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