The Boomcession: Booming on Paper. Brutal in Real Life. (with Matt Stoller)

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory. The last five decades of trickle-down economics haven't worked. But what's the alternative? Middle-out economics is the answer. Because the middle class is the source of growth, not its consequence. That's right. This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show. How you doing, Nick? You feeling good about the economy? Things going well for you or are you struggling? Things are fine. Things are fine. Yeah. Your consumer sentiment is up. I wouldn't say it's up. It's not down. Are you? I'm joking, of course, because you're pretty much totally insulated from the economy at this point in your life. Correct. It's not going to change your standard of living one way or another. And somewhat, thanks to you, Nick, I'm relatively insulated, certainly much more insulated than I used to be, especially now that I have a heat pump and an electric car and my electricity is provided by municipally-owned socialist Seattle City Light, which is not out there trying to ream every cent out of us and instead is providing some of the cheapest greenest energy in the country. So I'm not feeling the oil shock these days. But you can't say the same thing, apparently, about a majority of Americans out there. Yeah. And one of the really interesting things that's happening and the subject that we want to talk about on the podcast is the disconnect between what the statistics say about the economy and what's actually happening in the lives of the majority of citizens. And our old friend, Matt Stoller, wrote a very smart piece entitled The Boom Session, which is his way of describing an economy which is a boom for some and a recession for others. And this has long been true. It's not just this first year of the Trump administration. It was something that the Biden administration struggled through. And I remember us talking to people in the administration as they were struggling how to talk about the fact that, in fact, inflation was coming down and dramatically. And wages were going up and unemployment was at near record low levels. And yet there was all this dissatisfaction with the economy that ultimately led to Kamala Harris losing and Trump winning. Yep, absolutely. And I think our old friend, Matt Stoller, has deconstructed this in a pretty fantastic way. He's a very analytical guy. And as the research director at the American Liberties Project, he's a lot to say about these dynamics. Today, Matt's going to kind of take us through the data and his arguments from this recent Subtech newsletter. And I think it'll be really interesting as he always is. Yeah. So let's talk to Matt about the boom session. My name is Matt Stoller. I am a writer. I write for a newsletter called The Big Newsletter about monopoly power. I also host a podcast called Organized Money. And I work for a think tank called the American Economic Liberties Project. We study antitrust law and regulatory policy. And basically why it is that Americans feel less free in our economy. And we trace that to big corporations being coercive. Well, Matt, mostly today we wanted to talk to you about this really fantastic piece you wrote called the boom session. Why Americans hate what looks like an economic boom. I thought it was incredibly well written and really interesting and pointed to some things which are non-obvious but probably should be. Right. Those things that become obvious after they're pointed out. Yeah. So just sort of briefly take us through your argument and the evidence that you marshaled to substantiate it. So there's this dilemma that I think a lot of people have today in elite circles where the economy looks like it's doing fine. OK. Or at least it was let's put the Iran thing aside for a second. Since the COVID crisis, the economy like GDP growth, which is the way that policymakers measure how the economy is doing. It's an aggregate of all transactions in the economy. You know, when that goes up, typically people are happy. It means there's more economic activity going on. People are richer. They have more stuff. They have more cars, whatever. This weird thing happened in really in 2021 where the economic growth, like GDP growth and consumer sentiment diverged. So people were less and less happy even though the economy was doing well. Typically people are unhappy when there's a recession, which is like the economy is the amount of stuff that we're creating is going down, but they're happy when we're in a growth period. The weird thing is we've been in a growth period, but people are unhappy. And so this was a dilemma for Biden because Biden was like trying to figure out what do I do? All of the buttons I'm pushing to improve the economy are working. You know, yes, inflation was high in 2022, according to this other index called the Consumer Price Index, but it's coming down, right? 2023, 2024, it's returning to normal and GDP growth is up and wage growth is up. And why are people so mad? And the political consultants were saying, well, you got to tell people that they're actually getting a bad impression from the media. Or so you have to tell them that things are good. Or you have to sympathize with them or all of these sort of pieces of advice that were resting on this fundamental thing we haven't seen since, you know, before we started measuring economic statistics, which is that the economic statistics and the public sentiment are just have diverged. And that did not change when Trump came into office. So in the first term, in Trump's first term, people were happy with the economy. They didn't necessarily like him. They thought he told dirty jokes, but they're like, whatever, everything's funny when I'm making money, right? That was the general vibe. But they reelected him because they thought, well, at least I was richer when this guy was in office. But in his second term, not only did he not, quote, unquote, improve the economy, a consumer sentiment was actually lower than it was under Biden. It is actually at a, I think probably, let's see here. I have a chart. Public satisfaction with the economy by president was on, since we started measuring it, it was the lowest ever under Biden, right? And Trump in his first term was the third highest ever. You can go back to JFK. He was the third highest ever. In his second term, he's actually lower than Biden, right? So this is this phenomenon I call a boom session, which is traditional stats look like they're doing well, but people are really unhappy. They feel like it's a recession. There we go. That's the argument. It's interesting. So decompose it a little bit more. I mean, you said a couple of really interesting things in that piece. They're related but separate. One of them in 1934, when we cooked up the idea of GDP, right, it was it's just worth noting parenthetically that the people who did cook it up, Kuznets and others, insisted that we not use this as a measure of welfare at the time. It's to be clear. They said, this is not a measure of welfare. Never use it as a measure of welfare. We ignored their pleas and now we use it as a measure of welfare. But in 1934, it was almost certainly true that when the economy produced more, the majority of that was useful to people, ordinary people, right? That there was a connection between GDP going up and your lives getting better. That connection has become more and more tenuous for a variety of reasons. And the second point you made, which I think is really important, is that consumer spending may be going up for middle and working class people, but all of it is devoted to shit they don't want to buy in the first place, right? Paying more interest, paying higher health care to whatever it is, right? So they may be spending more, but their lives are getting crappier at the same time. So, I mean, to me, those were kind of two things that you said in that essay. I thought that we're pretty, pretty cool. I mean, there's a number of reasons that explain the sort of sentiment that people don't like what's going on. And the first one that you pointed out is the idea that just kind of the production of more transactions, the more stock goods and services that are sold in the US is that necessarily something that people like, right? It more of the GDP in 2025 is that translating into what makes people happy. Well, sort of to give you a sense of the kinds of things we were making in the 1930s and 40s and 50s, those things like toilets, like a lot of people didn't have toilets. And then they got toilets. That's pretty awesome. Yeah, that's a big change. It's a big deal. You know, and and like electricity. That's pretty solid. You don't have electricity. And then you have electricity. A OK, right? I mean, I was sort of struck by this stat, which I can't totally remember now, but it was like, you know, in in Mississippi in the 1930s, like very few people had toilets. And by 1960, like most of them did. And it's just like a huge change for people's welfare. Things like washing machines and refrigerators and stuff that like that's that's a really big deal. And a dollar spent on that is a really high return in terms of people's welfare. But not it wasn't just that like there was more kind of basic stuff that people didn't have that we could create. It was also that, you know, we ban things like gambling. Yes. Right. So so we and we regulated markets in a much more aggressive way. So we just like the financial sector was not a significant part of the economy. It's only two percent of the economy today. It's nine percent of the economy. I don't think that having more options for credit cards makes people happier, but it might increase the amount of GDP. That's a regular like what we what we've done is we've essentially said, we're going to stop trying to regulate for a moral economy, a moral economy being that kind of things that people want more of. Or even a useful economy, a useful economy might be might be one way to put it. Moral economy, however you want to characterize it. But the second largest segment, the second fastest growing segment in the economy from 2019 to 2024 was is actually gambling. Right. Right. So GDP growth in gambling is going up. And you pop some part of that, you know, 2.3 percent or whatever the GDP growth last year in the US economy as a result of more people clicking on like draft kings and Calci, right, which doesn't which makes their lives worse. It's not like introducing a toilet. It's introducing a guy that steals their time and money and attention. Right. Yeah. So on a broad macro level, and this doesn't explain that the post COVID thing, but on a broad macro level, we do have this problem where in the 1930s, even though Simon, because it's didn't he said, don't use this as a measure of welfare. You could use it as a measure of welfare and it was not unreasonable to do that. It wasn't terrible. No, no, because because we regulated on a micro level, you know, to make sure that products got better and were more useful over time. Right. Yeah. First, it was cars, then it was better cars, then it was cars with seatbelts, you know, and so on and so forth. So like now, you know, it's sort of like whatever, man, that if you can make money doing it, you could make it. It's by definition good and righteous. Right. So so Calci and Polymarket being canonical examples. Yeah. And that's right. And so like Live Nation Ticketmaster sells a ticket for more. It's like a higher GDP. Is that really like making your life better? Is that better? Right. So yeah, you used to you used to meet your boyfriend or girlfriend at church. Now you have to pay an app to. Right. Right. Right. Yeah. It's a macro trend. It's an important trend. It's easy to talk about and understand and it has important implications. But on a sort of a more micro level, just to distinguish between the first Trump term and the second Trump term, you also have what what happened was a little bit was was your point. People are spending on things that don't make their lives better more directly. So in 2019 and 2025, in per hourly wage increases were one point one percent. It was the same wage increase. Right. And that that consumer spending was which is by the personal consumption expenditure metric was roughly the same amount, except that in the first Trump term, people were spending more on things like boats and recreational stuff, things they wanted. Right. But in the second Trump term in 2025, they were spending more consumer spending on health care. Right. And this one particular category, financial services furnished without payment. Right. Which went from which was about six hundred billion dollars this year or about two or from twenty five or about two thousand dollars per person. Now, what is financial services furnished without payment? Well, it's your bank account and your app, which you probably get for a low cost or free if you keep a certain amount of money or if you keep less than that. Maybe it's a it's a fee five, ten bucks a month, something like that. People don't think they spend two thousand dollars a year on it, but they do because that money that they keep in their bank account, you know, they get a small interest rate on it, if anything. And but the bank that keeps it there gets for five percent. Correct. And that differential is about in aggregate is about two thousand dollars per person. And that's what pays for the free banking app and the services, what not. And then when the people and the government, the BLS, look at this, they say, oh, look, there's more consumer spending on better banking apps based on financial services furnished without payment. And it's this huge change from the first Trump term to the second Trump term. But no one is saying, oh, my God, have you seen the latest banking app? That is just awesome. That's exactly like what happened when my grandfather got a toilet, right? It's just like so. So there's there's just been this sharp shift in kind of things, non-discretionary things you have to pay for. Health care is another one. People don't want to pay more for health care. It's not like you're getting more awesome stuff when you're paying more for health care. You're just paying more for, you know, to be able to see the same doctor or get the same medicine or whatnot. So I mean, there's a there's a little bit of shifts there, you know, here and there, like, you know, the fat shot as as Trump calls it. Like there are advances, but it's not, you know, these are largely non-discretionary things that people are paying for. So that's one of the other reasons is like consumer spending doesn't tell you much about consumers anymore. Yeah. So the other thing, and this is important for progressives. And I didn't really understand this until the Michael Tomaski event that you I think were part of. And I was thinking about how do I explain the dynamic of of really dramatic changes in pricing, which we've seen over the last 10 years. What some people call surveillance pricing or dynamic pricing. You know, it started with unmasked with Uber when you would look at your, you know, you look at your Uber app and it would say, oh, it's raining. So we're going to have surge pricing. Like pricing changes based on the circumstances around which you're buying that good or service. And now we've seen more and more and more dynamic pricing or even personalized pricing based on kind of who you are. And what that means, you know, when we measure the economy, like these statistics, the inflation statistics, they are assuming that we all effectively pay the same price for the same good. But that is no longer the case. And there are there is some evidence that the less power you have, the poorer you are, the more you pay for things. I mean, we've seen, I think the Atlanta Fed did a study showing that in poor areas, there is less competition in gross for grocery stores. There's fewer grocery stores and in richer areas, there are more grocery stores. And so prices for food are cheaper in richer areas. And over the course of 2006 to 2020, it was a point four, six percent difference in food inflation, which works out to roughly nine percent over that period of time. Now, 2020 is exactly when COVID hits. So starting in 2021 onward, you're going to see you'd probably see a lot more food inflation in poorer areas. So it's probably much more than that now. But one way to understand the problem is you're actually looking at several countries, you're looking at it because because a dollar that you earn buys more or less, depending on whether you're poor, middle class or rich. And that was not the case even, you know, 20 years ago, 30 years ago. So we're actually living in kind of three different countries, depending on who you are. Now, the way that I kind of figured out, I think how to explain to progressives is it's just it's just the analog of income inequality. You know, progressives don't like dramatic income and wealth inequality, but that's kind of the the asset income side. The other side of the ledger is spending and spending inequality is the same thing. It's just that it happens to take place through businesses and through pricing games, and we just don't pay as much attention to that side of the ledger. And because we don't pay as much attention to that side of the ledger, we're not measuring it and studying it and understanding it. And that's probably why it's a much bigger deal than we really than we realize. But if the market's able to extract this type of discretionary pricing, charging poor people more than rich people, that's just the invisible hand. Finding efficiencies, right? That's right. It's it's good. Right. I mean, like it's just we got to be more like let's just be more nuanced. And everything's really complex and nuanced. Let's work a little bit. Let's go rob the poor. Right. That's the that's the that's the deal. I'm curious just a briefly going back. You know, we've talked a lot about what a shit measured GDP is. Do you have an idea how much of GDP over the past year or so is basically AI and data centers in terms of counting up those transactions? You know, I don't know the answer that I've seen that all of it, all of GDP growth is is related to AI investment. But I've also seen that virtually none of it is. And I think the reason I don't know is because a lot of the data center, obviously, the data center installation is actual GDP. But then a lot of the stuff that we're installing is imported, which doesn't add to GDP because it's come it's that adds to like Taiwan's GDP. And if you look at Taiwan's trade surplus, it's just like it's insane. It's massive. So clearly, a lot of the AI investment that our companies are putting into this new technology is actually not generating GDP here. But, you know, you build a data center the size of Manhattan. Clearly, that's going to have some impact. So the answer is I don't really know. But it clearly is does not reflect welfare. I mean, I don't my my satisfaction with the the economy is not increased by the number of data centers being built. Well, so here this is the interesting thing about AI. And I agree with that, obviously, like AI is a general purpose technology, and there's there's all sorts of ways to kind of understand how general purpose technologies work and whether they're good or not. But but fundamentally, general purpose technologies get developed and deployed in the context of the political rules that exist at the time. And so right now, where they're kind of deploying AI in a very top down manner in the US to try to engage in forms of extraction and price fixing. And replacing people's jobs. That's what people on Wall Street. I mean, you guys know this. This is what this is why they're investing in AI. In other countries, they're investing in AI for different reasons. Like you could invest in AI and say, OK, well, we don't want. We want to build models that are more efficient, that don't use copyrighted material or that that licensed copyrighted material. We want to use AI to instead of laying people off, we would like to reduce prices. That's going to be the main focus of how we're going to deploy this technology. Whatever it is, there's lots of ways that you can take this technology and deploy it. But and I think if it genuinely were curing cancer, everyone would be like, fuck man, build more data centers, right? But the point is that the way that these technologies are being deployed are predatory and extractive. So even though they might be adding to GDP, again, you have this phenomenon of the boom session where people are like, well, this is either an extractive technology or it's just even worse, maybe not even worse, but it's just a mechanism for financiers to sort of blow another bubble around what could otherwise be a useful technology. How do you think this emerging fact, which is that most of the consumption in the in the economy now is the top 20 percent? That's also playing into the into the way in which these statistics are not connected to what's happening on the ground. Right. I mean, traditionally, when we looked at is consumer spending going up, we would say, well, let's take all the consumer spending in the economy. And if it's going up, then that generally means that consumers are getting more. But what if it's the case that only a small percentage of consumers are getting more, but they just happen to consume so much more than everyone else that it overwhelms the aggregate, a.k.a. inequality on the consumption side? That's what's happening. And it is scoring up our ability to even understand the economy. I don't know. I mean, as as as recently as the late 90s, early 2000s, the top 20 percent consumed about the same amount as the bottom 80 percent, which was still ridiculous and crazy. But now the top 20 percent is consuming close to 60 percent. And the bottom percent is 80 percent is consuming 40. I mean, that delta is huge. Again, GDP does not pick this up, right? Yeah. And there's another piece that I wrote about how wages are the wrong way to understand what's going on in the economy, because the people that 20 percent, right, and I'm guessing it's kind of fractal. So if you go to the top one percent, they're probably over consuming. Yeah, yeah. And then support. Power law. Yeah. Yeah. Power. Right. Yeah. Yeah. And in 1980, if you went back and you look at the national balance sheet, what you would find is stocks were like a pretty small part of that balance sheet. It was mostly, you know, some housing, real estate, and then small businesses that people owned, right? And then it was primarily assets were held by the wealthy. The back then they're held by the wealthy today. But today it's it's mostly stocks, right? It's mostly equities and financial instruments. And, you know, if you go back to when in the 90s, 20 percent of population at 20 percent or had a as much spending as the bottom 80 percent, but not more than that, you know, wage growth really mattered, right? Wage growth was the way that you'd have more spending. But today it's actually the increase in equities. It's the stock market that gives people the important people, quote, unquote, in the economy raises. So if the stock market does well, then the people who consume in the economy, that is the top 20 percent, they consume more versus if the stock market goes down, then effectively you have only a certain percentage of people get wages, get raises, and that's the super rich or that's the rich. And this is how financialization fits into it, right? Which is just that the stock market is now the way that we determine whether you get a raise or not effectively. So it's like it's really bad to do that. It's really bad to have a stock, you know, to have the whole economy dependent on a value of consumer spending, dependent on the value of the stock market. I mean, you can see right now that Trump is doing everything he can to keep the stock market from falling. And that is a very, very bad way to run a society. I don't know, worked out well in the early aughts when we relied on housing wealth to drive consumer spending. And then there's the whole element of, you know, monopoly driven inflation too, right? Which is your that's your specialty. I mean, I think that that's just a way. I mean, I think that's just a way to understand that pricing is not is just extractive these days, right? So what I was talking about before, which is, you know, your banking app, right, and the and how that's gone from a thousand dollars to two thousand dollars in the last, I don't know, five, ten years. It's not that the apps have gotten better. It's just that there's no competition. Banks don't have any competition because it's a pain in the ass to move your bank account to a different bank. And, you know, I did that. I moved my bank account to a different bank to get a higher interest rate. And then a few years later, I noticed, oh, they're not giving me a higher interest rate. It turns out that they like they were just cheating me. I was capital one. And then they got investigated by the CFPB for doing it. And then, of course, the Trump administration dropped the charge. But the but the point is that because there's a lack of competition, it makes it hard to actually reduce that most of that two thousand dollars, which is going to profits. And there was actually something called the open banking rule, which is the CFPB was trying to, you know, as Dodd Frank said, you have to have an open banking rule that lets you easily transfer your bank account to a different institution. The Consumer Financial Protection Bureau was the entity that was supposed to put out that rule. And, you know, that rule has gotten delayed and blocked. And so bank accounts, you know, since Dodd Frank, which is, I guess, in 2010 looks crazy at 16 years later. So, you know, the net effect of this lack of competition is that, you know, there's more consumer spending on awesome banking apps. Right. There we go. And because we didn't used to allow that kind of thing, we didn't use to allow all of this monopolization. I mean, if banking is one area, it's 75 percent of industries have gotten more concentrated. We can go just take it on faith for the purposes of this thought experiment. There's a lot more monopolization in the economy than there used to be. Yeah. And so, you know, the consumer spending, you're buying, you know, your dollar, you're still maybe spending more, but you're not getting more. You're getting less. Yeah. Right. So we've, again, we've talked a lot about how GDP is a terrible metric. And now you're telling me that consumer spending is a terrible metric because it's not actually making a distinction between discretionary spending and things which essentially behave like a tax, something you have to pay whether you want to or not. What should we be measuring? I think we should start with consumer sentiment. I actually really like, you know, there's this whole weird thing where for years, people have said, well, the public is unhappy, but, but, you know, we need real hard data, not soft data and like soft data being consumer sentiment numbers. And I think we should start with the soft data. So if people are unhappy, we should try to figure out why they're unhappy. Instead of starting with like harder data, which is just pricing and stuff like that, right? Where because the pricing can be all, can be gained, right? But if you just ask people, how are you feeling? I mean, you can obviously it's like it's feelings and that's all soft. But if they're mad, they're mad, right? So that's where I think we should start. And I don't think that consumer spending is a terrible metric or GDP is a terrible metric. I just think it's limited and the interpretation that we're using doesn't work anymore. So, you know, I wouldn't necessarily stop collecting that data, but I might, I might start trying to understand how do we measure consumer spending that for things that people want to get? Like how do we start to measure things that don't increase people's happiness? Like, you know, I don't know exactly how you would do that, but you could presumably find, take things like gambling and, you know, figure out what people value and what they don't value and create different metrics based on what they value, what they don't value. I think just studying, you know, changing the way we collect pricing information could be really useful. I know that the BLS sends the Bureau of Labor Statistics sends people out to just go and look at price tags, you know, and it's like a lot of companies now, they will show you one price in the aisle. They'll say, oh, this drink is a dollar and then you go to check out and it turns out it's a dollar 20. And a lot of people don't notice. Well, if the BLS person is and that's fraud, but a lot of companies do it shockingly. But the BLS looks at it and says, oh, it's a dollar and then they say it's a dollar. But then the actual thing that people pay is a dollar 20. There's also all sorts of reward programs and, you know, pricing games and rebates and all this other stuff that it's hard to put in there. So I would I think I would just try to understand, like try to collect pricing data differently and then try to divide up consumer pricing into things that people that make people happy and things that that are at our nondiscretary that are sort of tax like we don't include taxes in CPI. Yeah, like health care and right. Yeah. Right. So do you know in I would also just I would I would ban price discrimination. I would just say, yeah, it was better in the 30s when people pay the same thing for the same item, right? I'm curious, Matt, do you know in other countries where, you know, a lot of the things that we talk about that are essentially like taxes, like health care, right, college education, yeah, child care, day care. You have to pay it whether you want to you want it or not. In a lot of other countries, those are provided by the state. So in those countries, those things are not counted as part of consumer spending. You know, I don't know the answer to that. You know, if you look at the OECD's AIC index, which is actual income consumption or something like that, which nets out public goods, you know, how how the US ranks changes, for example, changes radically. Because, well, you know, USA is, I don't know, top three or four in GDP per capita. If you if you normalize for all the things that other societies provide for free, they don't go that therefore don't go into GDP. The picture changes dramatically, dramatically. And, you know, I think that's a big part of the problem in the United States is that, you know, there, yeah, I mean, people earn higher wages and stuff like that. But it all goes to pay for this stuff that is escalating in price faster than the wages are going up because those are private markets where the objective is to make the prices go up. Right. Where the whole point is to charge people more money every year. Right. I mean, I just I told, you know, Nick, I just had surgery two hours, less than two hours in the operating room one night in the hospital. They billed my insurance company $82,000. There is no way that if I was in Germany or France or any European country without insurance and I went and did the same thing that my bill would be $82,000. It would be a fraction of that just as somebody who was uninsured. Yeah. So, you know, it was $3,000, something like that. And just to be clear, the US does have a lot of public goods, you know, like we high school, you know, we have public schools, right, which we didn't used to have public schools. People, we pay taxes and you can, you know, there's a lot of, you know, there's roads and there's lots of stuff that we that we do that where we don't think about election infrastructure. You know, we talk about, oh, my gosh, there's so much money and politics. That's terrible, right? Which, yes, it is terrible. But like we don't expect donors to pay for like voting machines, right? So there's all sorts of infrastructure that we just don't think about that is public and paid for with taxes. That is not the case in a bunch of other countries. It's just a matter of how we choose to characterize these things as taxes or not. And it has significant political impacts because there are a lot of Democrats and Republicans who just absolutely would never raise taxes, but they don't think it's a tax when your health care premium goes up by 7% or 8% or 9%. They just think that's sad. And yeah, it's crazy to think about the world that way. But it does feel like our economic statistics point us to that framework. When that price goes up, 7% GDP goes up. Which is good. Right. And yeah, versus when your taxes go up, like there's all sorts of deadweight loss. I mean, but like. That's bad by definition. Yeah, no, it's bad. It's the other thing that I think I wanted to sort of, I'll put in here about the consumer price index. This is the one time Larry Summers has quoted me, which is kind of funny. Not sure if it's good or bad, but go on. Well, since it's virtuous to me, I'll say that he at that five minute period when he decided to quote me, he was brilliant other than that monster. Right. No. The consumer price index, right, Reagan made a couple of changes to the consumer price index. They effectively said that the price of money, the interest rate does not, does, has nothing to do, is not included in the inflation rate. Right. So what that means is if you, is if you buy a car, I remember seeing 2023, I was like, why is this, why are people so mad about inflation when, when the CPI is low? And then I saw people striking the UAW had a strike about the auto industry went on strike. You remember that? And, and there were people saying, I can't buy the cars that I make. Right. And I was like, huh, that's interesting. And I looked at the price of cars and the price of cars was flat from 2022 to 2023. They increased dramatically in 2022, but it was flat. And I thought that's interesting. It didn't actually get more expensive. But then I realized, oh, people don't buy a car sticker price. They buy the elicit or they, or they pay with, with auto financing and financing costs increased dramatically. You know, the Fed raised rates from whatever was to 0% to 4% that year or 3%. And that, that increased the cash amount that people pay massively. So people, you know, the CPI looks at it and says, oh, cars did not increase in price, but actual normal people, the amount they have to shell out for cars is much higher from 2050 to 2023. And that's true for in somewhat similar for housing. And so if you look at it and you're like, wait, the cost of credit cards, student debt, housing and cars are not included in the CPI. That's kind of weird. If they always do CPI, they call it like core inflation, which is like the inflation without food and energy. So if you don't buy, have a car or a home or eat anything or use energy, then the CPI is perfect. Right. But other than that, it doesn't actually reflect the lived experience of normal people. And I think there's kind of a moment for Congress and the Bureau of Labor Statistics to go in and start to say, okay, how are we going to actually create an inflation metric that reflects the lived experience of normal people? You could do it in a lot of different ways. You could just get rid of price discrimination and then measure. You could also just measure what it's like to be, you know, for different baskets of people. They do have urban consumers. They do have a CPI for elderly people. You could look at a CPI for poor, CPI for rural if you wanted. That gets kind of complicated. But there are ways to go in and look at this. Basic things though, like the price of money, that should be in there. Food and energy, like that should be these things we need to stop with these games. It's kind of absurd. Matt, why do you do this work? I just find it really fun. And I think it's really interesting to look at business and justice and the intersection. It just kind of, you know, I could say, oh, I'm very virtuous and whatnot. But I just find it interesting and fun and meaningful. So that's why I do it. And people find different things fun and meaningful. And I encourage everybody to pursue their own, you know, what they love. Well, thank you so much for being with us, as always, amazing. Thanks a lot, guys. That conversation leads me to so many thoughts. There's just so, there's so much that we talked about there. And it's daunting and a little depressing to think about how far away we are from, forget good economic policy, just a perspective that might naturally lead to good economic policy. Right. Like just trying to understand what's going on with the economy, using the current tools that are available to us. And I think, you know, Matt made this comment about focusing on soft data rather than hard data. And that must just be anathema to most trained economists, because this is what they do. They collect hard data as best they can, and they plug it into their models, making, well, what they think are the best assumptions they can, but they're, you know, we can argue about the assumptions. And then you try to get a picture of the economy based on that. And what they're trying to do is get this objective measure of the economy. But here's the thing. We as human beings don't experience the economy objectively. We experience it subjectively. And that is something that economics has long discounted, our subjective experience of the economy. If it can't be measured objectively, empirically, it's not really that important. And so you get things like that consumer sentiment index, which people have long rolled their eyes at, because what the hell, that's just people telling it's vibes. It's the vibe economy. That's just, and this was part of the problem during the Biden administration, they didn't know how to deal with these vibes, that the data was hard data was telling them one thing, and the soft data, the vibes was telling them something else. And I think Matt is right. That is, that what we should be focused on is the soft data, the subjective experience of the economy. And I think that that argument is made stronger by a context within which the hard data is getting shittier and more opaque and more, what's the word? It's just not telling as honest a story as it once did. And because I do think, I do think Matt's point is that 60, 80 years ago, GDP was probably, in many ways, a better measure of how people were doing. Well, it was a different economy. It was a different economy. It was a manufacturing economy where you could measure these inputs and outputs in a more accurate and objective measure. It was more useful in that context. I'll say one other thing about GDP, though, as a proxy for general welfare is that, and I've read a bunch of economists on this, including Amarcha Sen, who makes this argument that it is a reasonable proxy in a developing economy, that if you look at developing economies, where they are going from no toilet to toilet. That GDP growth is a reasonable, even if inequality is increasing and there's all the other problems, that generally living standards are improving with GDP, if not lockstep, they are improving. So you can look at increasing the GDP per capita of a developing country and get a rough estimate for how well the economy is doing. But once you're developed, it's just not clear that GDP is all that useful anymore. And so, for a lot of reasons, including, and it's things I hadn't thought of before, this idea of how fractured the economy is, that we now have not just income inequality, but spending inequality, as Matt said, that what you spend for basic things like groceries and gasoline at the pump depends on the income level of the neighborhood in which you live. And so, when you have this kind of fractured economy, the standard way that Orthodox economics builds its models are these representative agent models. They assume that you can create this fictional representative agent that somewhat reflects the everybody's experience in the economy. And there's an argument to make that, well, that was never true and never a good way of modeling the economy. It's even less true today than it was 60 years ago, because your representative agent cannot accurately represent what it's like to be poor or middle class or rich or urban or rural or black or white or college educated or non-college educated or male or female, etc. Because everybody's subjective experience is so different from each other in a way that it probably wasn't. For sure. Absolutely. Matt's piece on the boom session, it's a great decomposition of these problems and just reminds us how much work we have to do. And I would say, concluding thought, that it is possible to create hard data that would reflect these things. You could do a much better job. We just aren't. And that makes the soft data all the more important to take a look at. Right. If you want to read more from Matt, there are links in the show note to his piece, The Boom Session, Why Americans Hate What Looks Like an Economic Boom. And of course, we always recommend his book, Goliath, The 100 Year War Between Monopoly Power and Democracy. Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to follow, rate, and review us wherever you get your podcasts. Find us on other platforms like Twitter, Facebook, Instagram, and Threads at Pitchfork Economics. Nick's on Twitter and Facebook as well, at Nick Hanauer. For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more, visit our website, pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.