On Consider This NPR's Afternoon News Podcast, we cover everything from politics to the economy to the world, but every story starts with a question. And NPR, we stand for your right to be curious, to make sense of the biggest story of the day and what it means for you. Follow Consider This, wherever you get your podcasts. This is Planet Money, from NPR.
They came from all across North America. I'm Alexei from Santa Fe, New Mexico. I'm Amanda from Toronto, Canada. America means New York.
Three Planet Money Reporters, with one shared goal. I'm here to see if I can rise to the challenge. I move to you to America to win. I actually am here to make friends.
Welcome to another episode of Econ Battle Zone, where today, Alexei, Amanda, and Erica will put all their storytelling savvy and reporting moxie to the test, as they battle it out with the title of Econ Battle Zone Champion and the coveted Econ Battle Zone Belt. Let's have today's contestants join us in Econ Battle Zone Stadium. Alexei, Amanda, Erica, you all know the rules. You'll each be assigned at random your own Econ Challenge phrase that you will need to report out in a way that explains that phrase and the lights our judges.
Ooh, sounds good. Right, Alain. I'm going to put some smiles on some faces, Keith. As you know, the inflation rate has come down a lot, but economists are still debating why that has happened.
So today's challenge phrases all have something to do with that debate. It's up to you to teach us what the connection is. Computer, please shuffle today's phrases. Alexei, you're first.
Supply chain healing sounds like a Marvin Gaye song. Alright Amanda, now it is your turn. Our star. Ooh, yeah, our star.
Our star, also known as the natural rate of interest. Erica, you're up. Labor hoarding. I'll take it.
Contestants, you now have just 48 hours to become experts in supply chain healing, our star and labor hoarding. Locate and interview your guests and explain everything to us in just three minutes. Do that well enough to wow our judges and your name will be marked in history as Econ Battle Zone Champion. But first, as you know, there is one more twist to Econ Battle Zone, your mystery ingredients.
The extra little challenge you each must include in your story. Erica, you went last in the last round. This time you will go first. Explain it to a child.
Oh boy. I would be like, oh my God, where do I get access to a child? Erica, you will need to explain your Econ Challenge phrase to a child. Amanda, it's now your turn.
In the public eye. Amanda, your entire story will need to take place and be recorded in a public place. How do you define public? Don't answer that.
Oh, we're already nitpicking. Alexei, we will now reveal the final mystery ingredient. Metaphor. It's my middle name.
Most include as much metaphor as possible in your story. Sweet. Contestants, you have 48 hours. The clock starts now.
I'm your host, Keith Romer, and this is Econ Battle Zone. Yeah, got it. Got it, got it, got it. Our star in public.
No worries at all. So I got this. Does anyone have a child I can borrow? Welcome back to Econ Battle Zone.
I'm joined now by our two guest judges who will be helping me select which of our three contestants will take home the title of Econ Battle Zone Champion and the coveted Econ Battle Zone Belt. First up, Luigi Zingales. He's an economics professor at the University of Chicago and a host of the podcast, Capital Isn't. Luigi, what are some of the things you'll be looking for as our contestants try to explain their Econ Challenge Raises?
It's well and easy to be sick for an entertainment, but screw up the economics victim. And it's well and easy to be good with the economics, but be bold backhand. And so try to do the three things at the same time. That's where the bottom zone is.
Our second judge is one of the hosts of the podcast today explained and a former host of Planet Money, Noelle King. Noelle, what about those mystery ingredients? What are you keeping your eye on as our three contestants try to incorporate them into their stories? Alright, I'm going to say right off of that, Erica got very lucky.
One of the mandates you get from the time you're a rookie reporter onward is you need to be able to explain this to a child. Amanda, I don't know. This is a real curveball here because is she going to be walking out into the street and doing this in public? Is she in Central Park?
And then Alexi, I mean, it better be a darn good metaphor, right? This better be a metaphor for the ages as far as I'm concerned. So yeah, this should be a good contest, but ooh, Amanda. Our judges will have to wait to see how our three reporters rise to the challenge.
Meanwhile, for Erica, Amanda and Alexi, the clock has started and they are already discovering just how difficult life in the battle zone can be. So I thought I had a kid because I've got two nieces. I was like, oh, they're perfect, but they both have the flu right now. Erica's challenge raise is labor hoarding.
But first, she needs to find a child, any child, to explain it to. I did text a friend and was like, your kid is pretty good. And she was like, yeah, but he thinks the car costs like $10 or something. So I don't know if he's a right kid, but he might be the right kid.
I don't know. So you're going for availability over hard economics knowledge from your eight-year-olds. Yes, I'm going for like, will your mom say it's OK for you to talk to me on Zoom for an hour? I am about to do my co-hosting with my eight-year-old co-host, Paul.
His mom just sent me a message saying that he is willing, but cranky. I am just hopeful that it works out. Ooh, here we go. Were there any things that your parents said, do not, no matter what you do, do not say those words?
Like poop, poop, fart, butt. OK, I think we can get through it without saying those words. Do you want to get it out of your system and just say them really quickly? What do I really need to say right now?
OK, fair enough. While Erica had her key interview locked down, Amanda was still scrambling to find the perfect guest. This is Amanda from NPR from Planet Money. We spoke a long time ago.
She's not that long. To help her explain R-Star, the natural rate of interest, she was hoping to land a very big fish, the president of the New York Federal Reserve Bank. We have 48 hours to explain something, and I was given R-Star. Yeah, so the hope is to interview someone today or the latest tomorrow.
Without Affirm commitment from the New York Fed, Amanda looked for a backup plan. I'm on Event Bright, my favorite place to go find Rando Events, and I'm trying to figure out if I could show up at somebody else's event. Speed dating does awkward. Life-drying.
Huh. Sushi rolling class. That could just be like, hey, oh, you're rolling a tuna roll? Would you like to hear about R-Star?
Like that transition could work. Alexi had no trouble finding experts who could explain the healing of America's supply chain. His challenge was getting them to play along with all his economic metaphors. Do you think of the global supply chain as kind of like thick iron chain?
You might see tether to a ship's anchor. Or do you see it more like a delicate gold chain that somebody like the rock might wear over a turtleneck? Is this a sprain? Or is it kind of like a hernia?
I feel like... Is it a heart attack? What are we talking here? It was a heart attack, right?
Okay. Okay. I feel like I'm swimming in an alpha-that-soup of confused metaphors. That's a nice metaphor itself.
Well, there's one, at least. That sound, of course, means we are onto our second and final day of Econ Battlezone. Now, if Battlezone Day 1 is about dreaming big, Day 2 is when our contestants have to turn those dreams into reality. And our competitors start to reveal who they really are.
I made a little bit of a pivot. I was going to just do like a traditional regular thing. And then I was like, wait, shouldn't I make a three-minute prototype podcast called Planet Money is for the Kids? Ambitious, but it was a risk.
Children's programming is a whole different kind of art form. It's a thing they say, like, don't make like a new dish for like a dinner party. That's essentially what I'm doing. And I don't really have a backup plan.
Like, if this doesn't work, I am just kind of done. At the same time, Amanda's big dreams were coming true. Um, I am going to an event this afternoon where the CEO and president of the Federal Reserve Bank of New York will be speaking. And it looks like, if I'm lucky, I'll get a couple of minutes with him on his own one-to-one.
So that appears to be the plan. That is exciting news. I am really excited. Amanda's exciting plan put her on a collision course with one of her competitors, Alex.
I was trying to figure out if I could try to get the folks from the New York Fed who put together the supply chain pressure index. Alexei was happy for Amanda, but he also wanted to secure his own interview. So he decided to plead his case. There you are.
I've been looking for you all morning. I understand that you have heard about my interview. Yeah, that's right. It turns out the New York Fed is also in charge of keeping their fingers on the pulse of the global supply chain.
So I thought it might be nice to try to, you know, go directly to the, to the gurgling source itself. We have a lot of Fed contacts. But New York's the one that makes the index. Amanda, remember, was not here to make friends.
She had moved to America to win. Her interview with the New York Fed would be the only interview with the New York Fed. It turns out the New York Fed is a scarce resource. Today it is.
For you it is. I was a very, very competitive person. I used to play a lot of sports and I put that part of me away. So it's not hurt anybody anymore.
And now it's back. Sorry. I'm sorry I've gotten this competitive, but I'm going to win. Erica, Alexei and Amanda worked late into the night, writing their scripts and hunting for one last piece of interview tape that might help them earn the title of Econ Battle Zone Champion.
As the competition reached its final hours, nerves began to fray. Hey everybody, it's Alexei. It's 7am on Thursday, which means we are about four hours from the end of the competition. I didn't sleep a lot tired.
I have a really big coffee. Oh God, I finished it. Oh, I had a really big coffee. Oh man.
I'm really now actually starting to panic because I have a really good little segment, but it is an entire minute too long. The pressure's on, the pressure's on. I feel like I need to go like that. And five, four, three, two, one.
Reporters, step away from your editing software. Hands in the air. Let me see your hands. Amanda, how are you feeling about your piece?
I'm feeling pretty good. You're going to end my three minutes and you will understand a concept you did not understand when it started. Erica, how are you feeling about your piece? My three minutes is a three minutes kids podcast and the child is my co-host.
And he did a pretty good job. And I feel like that's not good for the competition to have Erica just doing like extra things. I don't think it was necessary, but once I was in, I couldn't stop. Alexi, how are you feeling about your piece?
Keith, you know, every time I turn something in, I feel pretty terrible about it. I'm not sure if that's any bearing on the quality or reality of the piece. So I think it's fine. It's fine.
Coming up, our judges and our audience at home finally get to hear the stories our three contestants have been working so hard to make. And a new Econ Battlezone champion will be crowned. Welcome back to Econ Battlezone. We are back in Econ Battles on Stadium where tensions are running high.
As Erica, Amanda and Alexi wait to play their stories for our judges and see who will be named the next champion. I'm here with our two guest judges, Noel King, host of Today Explained. Hi, it's nice to see you. And from the University of Chicago and the podcast Capital Isn't Luigi Zingales.
Our pleasure. Luigi, Noel, your task is to decide which of our contestants did the best job explaining their challenge phrase and linking it to the debate about why inflation has been coming down, all while incorporating their mystery ingredient. Let's get right into it. Erica, you're up first.
What do you have for the judges today? My assignment was Define Labor Hoarding. And I had to explain this to a child. And my take on it was, well, let me explain it to a child by making a children's mini planet money podcast and host it with a child.
Alright, without further ado, Erica, when you're ready, please press play. Alright, here we go. You're listening to Planet Money is for the kids from N.P.R. Hello and welcome to Planet Money is for the kids.
I'm Paul. And I'm Erica Barris. I'm eight years old. I like to watch TV go outside, catch snakes.
And do you like economics? Well, no, not really. So the first thing we're going to talk about is something called labor hoarding. I know what hoarding means.
It's like taking a bunch of stuff and like keeping it. And I kind of know what labor means. Labor is work. And to help me explain labor hoarding, I call them economist Julia Pollack.
Labor hoarding is when an employer tries to hang on to all of their employees because they value them a lot. People usually value things when they're difficult to get. And in the past few years, it's actually been very difficult to find people to work in your ice cream store or to work in your school or at your toy factory. Imagine you run a very busy toy factory, but then there's an economic downturn.
Wow. And people aren't buying as many toys. If the factory doesn't need to make as many toys, it doesn't need as many workers. So you could just let those workers go or you could decide to hoard those jobs, hoard those workers.
What choice would you make? I would keep the workers I had because whatever things got better, there'd still be people who would want to buy stuff. And if you got rid of the workers you had, then you'd have to like go find new people that knew how to make those things. Which would be hard.
There might not be a lot of people who know how to make toys very well. And I don't know if they're hard, but there might not be a lot of people who know how to make toys good. Bingo! Last year was one of the best years for people having jobs.
Ever. Julie says if workers tried to leave jobs and players offered them more money to stay and there are hints of labor hoarding in jobs where things are slow right now, like in some financial services companies. A lot of them still have the same number of workers as they did when they were doing 10 times as much business. So the economy is good, even though we've been dealing with inflation.
Well, I don't like inflation. Inflation is like the prices of things going up. Right. Inflation is the rate at which the price of goods and services in the economy increase.
And disinflation is when that speed is getting slower. There is some anecdotal evidence that employers are hoarding workers. And they're competing, competing, competing, and paying more and more and more. That can lead to inflation and delay disinflation.
So all this supposed labor hoarding may be a reason inflation won't come down as fast as people would like. Are you into economics? Um, a little bit now. Cool.
I'm Erica Barris. Thanks for listening. Noelle, what'd you think? Erica, I thought you had the easiest assignment because as reporters were trained to be able to explain things to people as if they were children.
However, I was very impressed that you included a child in the explanation with you. Really well done. Thank you. Luigi, what'd you make of it?
I want to hire Paul as an assistant. Is Paul available to be a research assistant, Erica? He is free after 7pm and before 8pm every evening. Yes.
Alright, without further ado, then let's turn our attention to Amanda. Amanda, what did you bring us today? My assignment is R-Star, fairly esoteric economic concept, and my secret ingredient is explaining in public. So I decided that I was going to try to find exactly the right person to explain R-Star.
So that is what I would like to present to you today. Alright, Amanda, when you are ready, go ahead and press play. R-Star. This is usually written with a small R and then an asterisk.
The R pretty straightforward, it stands for interest rates, so the price of money, how much it costs to borrow money. Now it is the star in R-Star, that's the interesting part. And looking for that star is how I found myself at the 2024 Regional Economic Outlook event in White Plains, New York. There are trays of cheese and cubes, bottles of Saratoga sparkling water, and a lot of bankers and real estate brokers.
You know, members of the public who care a lot about interest rates. Would you consider this a public event? Yes, it is. Do you consider yourself someone who works for the public?
A long, super in public. I've been in the Federal Reserve almost over 29 years. Oh, and there's also this person, John C. Williams, President and CEO of the Federal Reserve Bank of New York, and Vice Chair of the Committee that sets interest rates for the country.
He's the invited speaker of this event, and to my quite great surprise afterwards, he agreed to sit down and talk R-Star. It was really in the late 90s we first started thinking about it. I get this emphasis of a passion project though as well. All economics is a passion project.
Now when John Williams was a younger economist, he encountered an interesting question that had been around for about 100 years. What's a normal interest rate? Like what's the interest rate that you would expect to see in the economy when the economy is doing well and inflation is low and stable? And for many years it was just that, an interesting question, with not much of an answer.
What is it? Is it number two? Is it three? And how do I know?
And does it change? There's this perfect amount of borrowing and lending. And in that economy, what would the hypothetical rate of interest be? So there's this idea of a neutral thing.
It's not too hot, not too cold, kind of Goldilocks. To try to find this Goldilocks number, John Williams and his colleague Thomas Laubach designed a kind of mathematical model, put in some GDP, account for inflation, look at real interest rates, add a little noise, and voila, a model for estimating a neutral interest rate, R-Star. And at moments like this, right now when the economy has gone through a bunch of shocks, pandemic, inflation, the Fed looks to models of R-Star, like the one that John Williams worked on. And I think that's why I said what it should do.
But it is a useful way of thinking about, well, what's normal look like once we get through the current situation we're in? What is it? What is it we're heading towards? That is the star in R-Star, a hypothetical interest rate.
One that isn't intended to heat up or cool down the economy. It's more of a guiding star for the Fed during the stark night of inflation. Thank you, Amanda. All right, judges.
Noelle, let's start with you. Amanda, you had the hardest job explaining this very complicated thing in public. I didn't think you nailed the public. I thought it was a nice effort, but I thought your explanation was magnificent.
I'm going to confess I came to this not knowing what R-Star was right now. I could tell you what R-Star is, and that is planet money. Well done. Nice job.
Luigi, your thoughts? I agree with my other touch. She did an excellent job explaining R-Star, but I think that there was a little bit short in the discussion of the back of inflation, meaning she was running out of time. There.
That's fair. All right. Thank you, judges. That leads us to our third and final contestant in Econ Battlezone.
Alexi, what have you got for us? I know Ellen Luigi, for my challenge, I had to explain the term supply chain healing using the power of metaphor. And so the dish that I cooked up for you, I think of it as kind of the fall and rise of the global supply chain in the style of a medical procedural with that kind of hefty serving of mixed metaphors. Alexi, when you're ready, go ahead and press play.
To figure out how a mixed metaphor like supply chain healing might help explain the disinflation we're seeing right now, I knew I needed to answer a couple of medical mysteries. First, what kind of injury did the supply chain actually sustain? And second, what does it mean for it to be healing? To get a diagnosis, I pitched Kevin Kettles, who teaches supply chain management at Wayne State University.
Supply chain academics have a name for themselves. You guys like the supply chain gang or something? Yeah, that's exactly right. We're the global supply chain gang.
Kevin says that until recently, most people barely knew they had a global supply chain, much less worried that it might be sick. That was kind of medically negligent, he says. Even how essential it is to the body of the global economy. In our economies is commerce and moving stuff around the supply chain.
It'd definitely be the circulatory system. Whisking rare earth minerals rich from the bowels of one country to the factories of another, to the box stores of a third, through blood vessel networks of rail lines and truck routes and chipping canals. But back in the spring of 2020, Kevin says when factories and stores started shutting down due to COVID, that circulatory supply chain? It was not working right.
We had computations or something and the blood wasn't flowing correctly. First there were the shortages. When consumers wiped themselves into a frenzy over the dwindling toilet paper supply or rung their hands over the lack of sanitizer. By the time the blood flow of supply adjusted, the government was already pumping huge IV infusions of stimulus money to keep things circulating.
And since consumers couldn't spend on services, they spent that money chasing goods that were already in short supply. Is there a word for when that happens? Inflation. The economists argued this was more of a transitory fever than a chronic condition.
New complications soon developed like Russia's invasion of Ukraine. That caused new arterial blockages for wheat and natural gas, pushing the economy's pressure to spike even higher. Soon after, Fed Chair and Chief Monetary Surgeon Jerome Powell prescribed an aggressive intervention, hoping to lower that inflationary swelling by submerging the economy in an ice bath of higher interest rates. In the months since, Kevin says the economic immune system of competition helped to heal that supply chain, reducing blockages and directing the blood flow of supply to more steadily and cheaply reach the tissues of demand.
But we are now starting to see the inflationary fever break without the feared side effects of massive unemployment or procession. Kevin says he's hopeful the Fed will be able to pull off what economists and airline professionals world over know as the soft landing. Do you think the plane that is the economy is a Boeing plane or more of an Airbus? I think it's a Boeing plane.
Alright, so they better check their screws. Yeah, that's right. Alexi Horwitz-Gazi, Planet Money Battle Zone. Thank you, Alexi.
Judges, what did you make of that, Noel? Alexi, you committed to the metaphor. You didn't even really mix, and I admire that. What I think of Planet Money is you've got to bring something else.
You've got to bring jush. You have to have blood and sweat out on the field. And I feel Erica kidnapping somebody's baby and Amanda kidnapping a Fed President. To me, that's blood and sweat.
Luigi? I actually think that it's very difficult to commit to a metaphor. And I think he did beautifully and all along until the end, which is not easy. I think that the circulation metaphor and the medicine metaphor is really a very useful one.
So I might steal it in some of my classes. I would be honored. Who will Noel and Luigi choose? Will they reward Amanda for illustrating the most difficult concept and securing the most prestigious interview guest?
Will the winner be Erica and her young co-host Paul for their creative approach to explaining labor hoarding? Or will Alexi and his extensive lecture worthy metaphor secure him the title of Econ Battle Zone Champion? Alexi, Erica, Amanda, you were each tasked with relating your challenge phrase to inflation coming down while including your mystery ingredients. So who did it best?
The time has come to name our next Econ Battle Zone Champion. Now comes the hard part. As much as we would love for you to all win the title, there can be only one winner. Luigi, Noel, who's taking on the belt?
The only thing more difficult than economics is children. And the only thing more difficult than children is children on tape. Erica, I thought by bringing Paul in and then doing a very compelling and very successful children's podcast in addition to explaining the concept. That to me is the best of planet money.
You are the winner. This is the... I don't have words. Oh my goodness.
I just don't have words. I can't believe I won one winner's say. I don't know. Anything is possible.
I'm so happy. Erica, it is now my esteemed privilege to present you with... Oh my goodness. The Econ Battle Zone Championship Belt.
I'm going to own that? Can I describe this? It looks like a wrestling belt. It's got like, it's an Econ Battle Zone billion dollar belt.
There's a lot of gold on this. I think this is my new price possession. I'm so happy. Will Erica successfully defend her Econ Battle Zone Belt?
Or will a new Champion arise? And out next time, on Econ Battle Zone. We've got an idea for a topic for our next Econ Battle Zone. You can email us.
We are planetmoney at NPR.org. Or if you want to see Erica with her Econ Battle Zone Belt, keep an eye on our Instagram feed. We are at Planet Money. James Need produced this episode with help from Emma Peasley.
The show was edited by Molly Messick, engineered by Cina Lefredo, and fact-jacked by Sierra Juarez. Helps Goldmark is our executive producer. Special thanks today to Heidi Sheerholtz, Yossi Cheffi, Omer Sharif and Patrick Penfield. I'm Keith Romer.
This is NPR. Thanks for listening. Anything else you want to share? It might not be a great time, but I think my cat is throwing up.
Oh no! Okay. Is your mom or dad around?