The Indicator from Planet Money - Hope Vs. Despair

Should we feel hope or despair about the future of the American economy? Cardiff and Stacey debate.

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everyone station car to hear this is the indicator from Planet Money and it has been a while since Stacy and I have put on her holsters there across from each other for a good old-fashioned gun-slinging shoot out. Right we know card if I was worried that you know, these things are very hard on you so frequently, you know what I'm talkin like, I'm Sergio Leone flake. So yeah, we can all always be talking like we're in a Sergio Leone movie. We need some music the Fistful of Dollars that do do do do do do do dodo. The US economy is in this very uncertain place right now. There's the election coming up Congress and the White House have not agreed on a new bill to provide Aiden stimulus and the economic indicators are putting in all kinds of different directions yet. So based on those indicators is the case for Hope stronger or weaker and the

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Histoire Des Pere michaux State chant Hyde debate, we take sides and to decide which side we're flipping a coin flip out at the okay Corral dang, right I make the case for Hope and Stacey you are despairing and if its tails you get to be helpful, so I'm hoping for hope.

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Its Tail's which means you get to be helpful and I bring the despair. Oh, I'm so excited. I'm excited to be the voice of Hope card. If I feel like I feel like there's a part of you that's excited to be the voice of Am I Wrong little bit a little bit. So yeah the good and the bad and the taste of smugly. Oh nice prepared fresh Garcia prepare to Crashed. It's happening.

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Okay, folks. I will be arguing the case for

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bear about the USA

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He's arguing the case for Hope Stacy you get to draw first. OK Cardiff here. It is the case for hope the US economy is coming back Economist or forecasting that the economy rebounded very strongly in the third quarter of this year after a very terrible second-quarter the official numbers for the third quarter have not been released yet to come out next week, but it is possible that the economy was up to 8% bigger than it was in the second quarter that is just enormous but definitely for sure would be a really strong number. But let's remember that the third quarter included the month of July when the economy was still running on the stimulus provided by the cares at that was the big government spending Bill to provided an extra $600 a week in unemployment benefits to people who are out of work those extra benefits expired at the end of July to the stimulus by now is probably wearing off and also we still have almost 7 million more unemployed people.

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Country then back in February before the pandemic started and I'm really worried about them. Now that they're not getting that extra help that the high unemployment rate has been absolutely crushing. But the reason for Hope is the Cardiff this very unemployment rate that you refer to has actually been falling. So remember it's the worst economic damage from the pandemic was in the early month March and April since then the unemployment rate has fallen from about 15% repeat down to about 8% as the economy has recovered that is a huge recovery in a pretty short amount of time. That's true for sure and a hopeful sign but we have to recall that not all unemployment is the same most of the people who have already gotten their jobs back only lost those jobs fairly recently. But the number of long-term unemployed people is actually still going up each month. These are people who lost their jobs more than half a year ago, and they have not been rehired and the longer they go without a job the more likely it is that they're going to lose their

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Lose their skill sets and really struggle to find work again later. You make some Fair points Cardiff and I would respond but if the economy keeps growing though, eventually those jobs will come back and there is a really good reason for hope that the economy will in fact keep growing and that is consumer confidence in September consumer confidence shot of by the most it has in 17 years, which means the people in the US are planning to keep spending money because they are optimistic about the economy. For example, the share of people who are planning to buy a major appliance like a refrigerator or stove or something like that is the highest it's been in 7 months and all that spending is going to keep the economy growing. There we go. Kart of Garcia mic drop, I think we should just call it right now. I have one Summer's can be wrong. I mean just because you're planning to buy the latest oxxo coffee maker with that Sleek thermal carafe. Does that mean you actually will if suddenly the economy goes bad?

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But I would also point you a big split in precisely what people are spending money on those specifically. Yes, people are spending more and more money on Goods for the home like furniture and electronics consumers are still not spending much money on services on things like eating at restaurants run traveling that's a problem because for example restaurants and hotels or a huge source of employment for low-income workers. I'm just worried about people who rely on those jobs coming back, especially since remember again those extra benefits for the unemployed already expired almost three months ago card. If I think you should go ahead and splurge and buy yourself at fancy coffee carafe and here is why don't you keep mentioning that the benefits for unemployed workers have expired and that is true. But it is also true that not all of the money from those benefits with spit right away. A lot of that money was saved plus people who kept their jobs have also saved more money since the pandemic started because all the business lockdowns meant there were fewer opportunities to spend their

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And you know people were maybe hunkering down a little bit too and what this means is that a lot of household out there still have money saved up money that they can start spending in the economy on things like fancy coffee carafes indeed then we also do know that a lot of the unemployed workers have already spent down a lot of their savings according to the JPMorgan Chase Institute. The unemployed spent about two-thirds of their added Savings in August. That was the first month after the benefits expired which means it by now their finances could be getting really tight. And so they may have to cut back on some of their spending card you have now perfectly set up my final argument in the case for Hope hate it when I do that that is policy. It is not too late for the president and Congress to make another deal before the election in order to stimulate the economy. Those negotiations are still happening and also the Federal Reserve has been using monetary policy to help boost the economy. For example, low interest rates have given a

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Big Boost to the housing market and historically the housing market has been a good sign of where the rest of the economy is headed and how the market is doing quite well the point about the fed and housing market, but the Federal Reserve itself has also said that would be really useful for the economy is another bill like the cares act from the president and Congress had all I'm saying to you is it at the case for Hope relies on politicians striking a deal agreeing on something that might be the most despairing thing of all and of course, I would be an excellent judge if he wants to be part of had issues with it. So we would love to hear from you if you thought the case for Hope or despair was the strongest you can email us in Decatur at NPR. Org. I think the loser by the winner at that fancy copy to write pretty expensive my consumer confidence. Isn't that

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