The economy is in the news.
Big time. Inflation has been a big headline, with news breaking August 10 indicating that it rapid price growth might be slowing down. On August 5, news broke that the US economy created over a half-million jobs in July—and unemployment ticked down to an almost unimaginable 3.5%. And before that, we learned that gas prices had fallen for 50 consecutive days, down from their peak in mid-June.
Economic news can be a lot to parse as a small business owner or independent worker. That’s especially true if haven’t been trained in all the percentages, acronyms, and jargon that rise to the surface whenever the economy is in the news.
I didn’t take any economics classes in college. I didn’t take a business class or even a communications class. Neither did Stacey Vanek Smith, from NPR’s Planet Money and The Indicator. I focused on religion and music at a small liberal arts college. Stacey studied comparative literature and creative writing at Princeton.
And yet, here we are.
It’s easy to dismiss economics or economic news as something for the more math-inclined amongst us. It’s equally easy to dismiss it as only important for rich CEOs in suits or day traders thinking about how to game the stock market. After all, economics news is largely driven by those markets—at least until reporters start asking people on the street what they think about gas prices.
But the reason Stacey and I—two writers and podcasters with humanities degrees—love learning about and reporting on the economy is because the economy is profoundly human.
While The Economy seems like a monolith—something we should be able to examine, measure, and manage objectively, it’s not. Stacey says that once you look beyond the numbers that make headlines, things get “squishy.” They get squishy because all the ways we measure the economy are based on choices that were made about what counts and what doesn’t. Economics gets squishy because the way we manage the economy is often about managing emotions and expectations.
It’s squishy because it’s human.
And perhaps, there has been no other economic period that’s earned the description “squishy” like the one we’re currently in. Inflation is up—but so is the stock market. Unemployment is way down—but so are supplies of key products. GDP is slowing—but consumer spending continues to plow ahead. As I’ve said before: the economy just doesn’t make sense right now.
At least, it doesn’t make sense as long as you expect it to work out like a math formula that gives you a definitive answer. The economy does make quite a bit of sense if you imagine that it’s just a particular way of talking about how value is moving around and how decisions are getting made by humans.
I’m a regular Planet Money listener. So when I got an email from someone at NPR asking whether I’d like to talk with Stacey about the weird and wild world of the economy, I said, “absolutely!” I knew I wanted to ask her about how she and the Planet Money team make economics more accessible to listeners, what is happening with economic indicators right now, and how she thinks differently about her own decisions in light of what she’s learned over the years.
Listen to the podcast version of this article.
Stacey told me that she never imagined working in business and economic news.
But after graduating from Columbia Journalism School, she knew she wanted to work in radio. That was before radio jobs really turned into podcast jobs—so it was a much tighter job market than it is today. The only job offer she received was at Marketplace—a nationally syndicated public radio show about business and the economy. She was tapped to be a production assistant on the morning show, which at that time was hosted by Kai Ryssdal.
“I remember the first night I was there. [Kai] turned to me on my first day around 2:30am. He asked me to write up a little piece on an IPO that was happening,” Stacey told me with a smirk on her face. She tried to Google what an “IPO” was but wasn’t having much luck. The reason? Stacey was googling “Eye P O” which is just not the same thing. She continued:
“I finally asked Kai what he meant—and the look on his face! He said, “It’s an initial public offering.” And I was so tired and stressed out that I just sat there. He said, “it’s when a company goes public.” I kept sitting there, and he said, “it’s when a company sells stock.”
“Okay. Yes. I know what that means.”
So there she was, just her, Kai, and the engineer in the middle of the night—trying to produce a national radio show about the economy without knowing the first thing about it. “It was an inausipicious start,” she admitted. “I remember thinking that I might get fired.”
Spoiler alert: Stacey learned a lot about business and the economy. Enough that she went on to have a great working relationship with Kai and the Marketplace team. “I fell in love with business,” she said. “I actually think that the reason I fell in love with business was that it wasn’t what I thought it was.” When business and economic news is reduced to stock tickers and rates of this or that, it’s no wonder so many of us believe, like Stacey, that the economy is a complicated, technical mess.
“But business and economics are not technical,” Stacey explained. Sure, there are a lot of numbers and theories. But when it comes down to it, it’s not that different from religion or literature. “It’s very human. It’s very personal.” Since money influences almost all of the decisions we make in one way or another, economics is profoundly personal.
If we only focus on the technical stuff when the economy is in the news, we miss out on the truth of what’s really going on.
For example, Planet Money is running its third Summer School series, and this year, the topic is macroeconomics. In the second episode of the series, former host Jacob Goldstein offers this caveat about GDP—gross domestic product:
“Maybe the most important thing to remember about GDP is that it’s not a thing. It’s an idea. And that idea keeps changing.”— Jacob Goldstein
It’s not a thing. It’s an idea. The reason for this, Stacey told me, is that GDP reflects a series of human choices about what gets counted as “product” in the economy and what doesn’t. She explained, “In the 1930s and 40s, when economists started to think about GDP, the economy was in a really different place. What do you count? What don’t you count? Should you subtract pollution? Should you factor in inequality?”
Of course, we don’t think about that when the quarterly GDP numbers come out. We see is a concrete, objective number–a measurement of the health of the economy. “We think of GDP like a report card for the country. How are we doing? 2% growth? A. 3% growth? A-plus!” But GDP is just as arbitrary as any other measurement in the economy. It’s useful, of course. But it only measures what we’ve decided it will measure.
How we choose to construct an idea like GDP reflects our values.
Human decisions, human values. In this case, the US GDP represents the values of a particular segment of people at a particular time in our economic and political history. The GDP then transfers those values onto all of us and guides the way we manage our economy.
The US GDP includes paid caregiving as productive labor. But unpaid caregiving? Not included. That means that if your kids attend daycare, the value created through the care your kids receive counts on our national balance sheet. But if you create that same value by caregiving as a parent for no pay, that value doesn’t count. In either scenario, value is being created. Labor is performed. A future generation of productive workers is being raised, but one matters more than the other, economically speaking.
Now, setting aside the exploitation of paid caregivers and the gender politics of taking reproductive labor for granted, you can see how arbitrary the decision is to include one type of product but not the other. The only difference is whether money changes hands. The way we calculate GDP means we value scenarios in which money trades hands more than scenarios in which money doesn’t. Even if the economic value created is the same.
Okay. So human decisions, human values. That’s one component of how very human the economy is. But. How about human feelings?
Can feelings change what happens in the economy?
It turns out the answer is absolutely yes. Stacey offered the example of the “taper tantrum” of 2013. Ben Bernanke announced that the Federal Reserve—America’s central bank—might begin reducing the amount of money it was pumping into the economy to counteract the Great Recession. He said, “If we see continued improvement and we have confidence that it is going to be sustained, and we’re convinced that it is sustainable, we will respond to that.” Seems harmless enough, right? He didn’t make any definitive statement about ending quantitative easing. He just said that maybe, if they feel good about things, and they keep feeling good about things, they might slowly taper their aggression monetary policy.
Well, it turns out that Bernanke’s equivocation had enormous economic consequences. “The whole global economy freaked out. The markets dropped off a cliff. They called it the taper tantrum because he said, ‘we’re gonna taper off.’ Not stop. Taper off,” Stacey explained.
Reporting on this event for The Indicator, Stacey spoke with journalist Sebastian Mallaby. He offered a very human explanation for this freakout. Since the US dollar is the world’s reserve currency, everyone looks to the Fed to get a sense for what’s happening with the economy. Since 2009, those onlookers had counted on the vast amount of money being pumped into the US economy. By 2013, this quantitative easing had become a “normal” part of how decisions were made. Bernanke’s lack of confidence in when or if the flow of money would slow down triggered fear and uncertainty among leaders of both nations and companies.
Think of it this way: it’s one thing to know how much your home renovation is going to cost. It’s another to discover that your contractors realized that the whole foundation of the house needs to be rebuilt and that they have no idea how much it’s going to cost. You’d freak out too, right?
“So much of what [the Fed does] is basically managing emotions, managing fear,” Stacey told me. It doesn’t get much more human than that.
Inflation is another economic indicator driven largely by feelings.
Spikes in inflation can occur just because people start expecting a spike to occur and change their own behavior accordingly.
So what is inflation? It’s pretty simple, really. It just means that prices are going up. For instance, my favorite coffee used to be $11 for 12 ounces. Now, it’s $14. Yes, I switched to a less expensive style. My favorite deli turkey used to be $12 per pound, now it’s $15. That means that I’m getting less at the grocery store for every dollar that I spend.
Some inflation is good. (I covered this more in this article.) The Fed targets annual inflation to about 2% year-over-year. But starting in 2021, inflation has been way up. In June, the rate was 9%. This is concerning because, as Stacey told me, if inflation “gets out of control, it can basically destroy a country’s economy.”
The Fed, the Treasury, and most economists have been expecting inflation to occur for quite some time. It wasn’t until just before the pandemic that inflation rates got back to their target after being stagnant for more than a decade. But after the US government pumped trillions of dollars into the economy in response to the pandemic, the concerns about inflation (not yet occurring) became louder and louder. Add to that concerns about workers asking for a living wage and persistent constraints on the supply chain, and there are going to be feelings about inflation.
Lo and behold, inflation occurs.
It’s a little more complicated than that—but not much. Inflation is natural to the monetary system we have. It’s good for growth in some ways. And, how we feel about inflation can cause it to accelerate.
Stacey was sure to note that while there has been some growth in wages during this period, those wages have not out-paced inflation. In fact, in July’s stellar jobs report, only 2 sectors (i.e., leisure & hospitality and retail trade) saw positive inflation-adjusted wage growth. And it’s arguable that wages in those sectors need to rise even more to give those workers a fair standard of living. So if you’re feeling squeezed about inflation, there’s a very good reason.
“The real worry is that the value of our currency—the value of the dollar—becomes eroded. So much of [the value of] money is how much people think it’s worth,” Stacey cautioned.
Rapid inflation is particularly tricky for business owners and independent workers, because we are both consumers and price-setters. On the one hand, your cost of living and your business expenses are likely going up. And so it makes sense to adjust prices, shift investments, and pay down debt. On the other hand, at scale, human decisions like those can increase inflation. “This is the big conundrum, right? And a lot of times, the things that are the best for us as individuals or business owners are not the things that are best for the overall economy,” Stacey told me.
Acknowledging that it is easier said than done, Stacey urged to “not get gripped by fear.” The current inflation rate is legitimately troubling. But so many other indicators are really positive. “Panicking can lead to a lot of bad decisions,” she said. “Hold steady as much as possible. That’s what I’m trying to do.”
To avoid panicking or acting rashly, I asked Stacey what economic news she’d be following—even if it wasn’t her job. She offered 3 indicators to keep an eye on: the inflation rate, the unemployment rate, and the quits rate. The first two are pretty obvious. But the third is more obscure.
The quits rate, or “JOLTS,” is the share of people who quit their jobs outright (i.e., without having another job to go to). The higher the quits rate is, the more confident workers are in the economy—or so the conventional wisdom goes. The quits rate has been at record highs from about March 2021 through now—without much slowing. Even amidst growing concerns about inflation and persistent uncertainty about the economy, people felt really confident that they could find another (maybe even better) job if they quit their current one. “I am very interested to see if the quits rate is affected by the more mixed news that we’ve heard about the economy,” said Stacey.
Economics really is for humans like us.
There is more than one way to lose your humanity in the 21st-century economy. I’ve covered sales, marketing, productivity, labor relations, and self-branding and how each of those components of our work can lead us to alienate ourselves and others. But even more than any of those individual components, the discourse around business and the economy can make us feel disconnected, even excluded.
Business and economic news often makes it seem like there are people who “get it” and the people who don’t. People who count, and people who don’t. But our human decisions—mine, Stacey’s, Jerome Powell’s, and yours—are part of this enormous, complicated ecosystem we call the economy. Economic news might seem jargony, technical, and confusing—because that’s how it’s reported—but it’s actually not that complicated. Stacey told me that one of her favorite definitions of economics is “the study of choices.”
Studying choices is what I do—whether we’re talking about marketing, theology, or epistemology. I’ve always been driven by a curiosity about why people make the choices they make. Nothing gets my nerd juices flowing like picking apart the underlying beliefs, values, and needs that guide a person’s decision-making. And that’s really what thinking about the economy is all about.
The next time you hear a bit of economic news, consider what human decisions might be behind that number. And then think about how those humans believe that led them to make the choice they made. It’s a good way to press pause on your own reactions, and it’s a good way to incorporate more critical thinking into how you manage your business or career in the 21st-century economy.
“Economics is a game you should know how to play.” For more economics for humans, check out Planet Money’s Summer School!