התמלול המלא של Warsh's Jackson Hole Debut; Harvard's Rogoff Says US Needs 'Shock' To Fix Debt

00:05:09 Speaker 4: The way we built Bloomberg Economics and our Federal Reserve coverage foundationally around Rich Martin and Craig Torres and others, and now you take over the mantle as well. Do we have a clue how the presidents and governors voting and non-voting reacted to this speech? 00:05:24 Speaker 6: What will be the character of dissent forward? 00:05:27 Speaker 7: Well, I think the view certainly upstairs, Tom, after the speech was broadly speaking, well-received. That's from officials and academics and the like. The speech has gone down well because it's kind of course-corrected after what happened in that July press conference in the bottom-up reaction. But going forward, as I say, that's now done. Now it's all about the next set of inflation data for the month of August. And let's just say if that comes in on the hot side. How are policymakers going to respond? I think it seems to be setting up September for, I think, a very important meeting for the Fed. 00:05:55 Speaker 4: Quickly, Bloomberg Money, personal finance, retirement, wealth management. Can retirees succeed. 00:06:01 Speaker 7: With a higher interest rate? Well, obviously, higher interest rates are good for savings. So if you're on that side of the ledger, it's better. If you're trying to get on the housing ladder, get a mortgage, it's tougher for you. 00:06:10 Speaker 6: Enda Curran, thank you so much for leading our coverage here today. 00:06:13 Speaker 4: Scarlett, a rainy day here, but Enda's used to that because, you know, the whole English-British thing, you know, rain is normal. 00:06:20 Speaker 1: Rain is normal. 00:06:21 Speaker 5: All right, Tom, we're going to check in with you a little bit later on. Tom Keene in Jackson Hole with our Enda Curran. Let's bring the conversation back here to New York because joining us at the Bloomberg Money Desk this afternoon is Nikki Waller, who heads up our money coverage for Bloomberg News, and Stacey Vanek-Smith, host of the Everybody's... business podcast. 00:06:39 Speaker 1: That's a weekly podcast, right? It is, yes. 00:06:41 Speaker 2: Okay. 00:06:41 Speaker 1: And we look forward to it every Thursday? Well, we record Thursday and it airs Friday. It airs Friday. 00:06:47 Speaker 3: All right. 00:06:47 Speaker 5: Nikki, I want to start where Tom and Enda left off, which is the big theme of this week, this month, really, is the drama in the U.S. 00:06:54 Speaker 1: Bond market. It's late August. 00:06:56 Speaker 5: Typically, this market doesn't move a whole lot at this time of the year, but a lot of fallout from Treasury Secretary Scott Besson's intervention in which is introducing volatility to the rates market. Talk to us about how your team is looking at what that means for your personal finance. 00:07:09 Speaker 1: That's for sure about the volatility. 00:07:12 Speaker 9: And there's a lot of skepticism as well about Besant's moves to try to calm this market. I'll go back to what Enda was talking about, mortgages. The single biggest thing we look at here is the mortgage rate. And we saw this week that it kind of held steady, kind of surprisingly around 6.66, make of. 00:07:31 Speaker 1: That what you will. 00:07:32 Speaker 9: But we also saw data this week showing that these mortgage rates that are now elevated over last year are really having an effect on the housing market, which has slowed to a crawl. I think July new home sales, the slowest in six months. 00:07:46 Speaker 10: Yeah. 00:07:46 Speaker 5: So mortgage rates staying elevated is an affordability concern. Another affordability concern, Stacey, is the fact that the trade war is back on, at least with Canada. 00:07:55 Speaker 6: The U.S. 00:07:56 Speaker 5: Now slapping 50 percent tariffs on certain Canadian goods, Canada retaliating as well. I keep joking that my hockey sticks and maple syrup are going to get a lot more expensive as a result. 00:08:05 Speaker 11: They will actually probably get a lot more expensive. Yeah, the trade war really escalated, I think, in a way that nobody expected. And it will affect both sides of the border, of course. Obviously, it's going to affect Canada's economy a lot more. But for American consumers, they can expect auto parts. This is really going to hit the auto industry. Auto parts haven't been tariffed at all. Now they're threatening to bring in 50% tariffs. So that's going to be It's going to be more expensive to get your car repaired, more expensive to get a car. And also like other things that we get from Canada, lumber, which is going to hit the housing industry along with mortgages and things like paper also expected to get a lot more expensive. 00:08:44 Speaker 5: I mean, this just contributes to this souring sentiment that everyone seems to feel. 00:08:49 Speaker 1: People say they don't feel great. They're spending money. 00:08:51 Speaker 5: But they're spending it in more selective ways. Nikki, how are you thinking about, or what are people telling you about how they're retiring? Tom mentioned retiring in Wyoming. Delaware seems to be a new favorite place for people to retire. 00:09:04 Speaker 3: Yes. 00:09:05 Speaker 9: Move over Florida. God's waiting room has moved to Delaware. That's sort of what we've been saying among the team as we've been reporting. 00:09:12 Speaker 1: Out this story. 00:09:12 Speaker 9: We spotted that Delaware has seen, according to the IRS migration data, this pretty big influx of retirees. I think it's tens of thousands of retirees moving into Delaware in the last few years, which is. 00:09:25 Speaker 1: A huge number. 00:09:26 Speaker 9: And it's happening at the same time that, as we've reported, costs are going up in Florida. It's becoming less of a haven for retirees. And then you have Delaware, which has some of the last affordable for right now. beach land on the East Coast. These are really cute towns and people are moving in. 00:09:43 Speaker 5: But of course, this has an effect on Delaware as well because it's

getting really congested there and they don't necessarily have the infrastructure to support this influx of people. 00:09:52 Speaker 9: Yes, the number one hobby right now in Delaware is complaining about everybody who's moving to Delaware or the traffic that's caused in Sirius, as we've seen, the health system is also really strained. It's hard for these retirees to get doctor's appointments, dentist appointments. We're also just seeing infrastructure being strained in a lot of ways. On the other hand, we may see an influx of younger people moving into Delaware because the retirees are creating jobs. 00:10:19 Speaker 5: Oh, but they have to find housing then. They have to find affordable housing, and all the retirees are buying up the best. 00:10:25 Speaker 1: Spots in Delaware. And the cycle continues. And the cycle continues. 00:10:28 Speaker 5: All right, speaking of infrastructure, I feel like this week we really saw break out into the open the public opposition to data centers, and it's kind of across blue states and red states. 00:10:38 Speaker 2: Oh, yeah. 00:10:38 Speaker 11: I think this is clearly becoming one of the big, it may be one of the few things that everybody agrees on in the country right now. 00:10:45 Speaker 1: Except President Trump. 00:10:46 Speaker 11: Except President Trump, right? We really need data centers to power this sort of future AI and our economy and all the growth that we're excited about. At the same time, people don't want them in their backyards. In Virginia, where there's the biggest concentration of data centers, they call it data center alley, right? Electricity costs have gone up by 267% in the last five years. And just to give you an example of how emotional things can get, there was a couple in Kentucky, a farming couple, and they were offered $ 26 million by a data center to buy their 1,200 acre farm. And they responded with, kick rocks and don't come back. 00:11:24 Speaker 1: So that was a polite no. That was a yes. 00:11:28 Speaker 11: But I mean, it just shows you turning down $ 26 million is, I mean, that is really powerful sentiment. 00:11:33 Speaker 1: That is some kind of NIMBY, I can just say. All right. Thank you so much, ladies. 00:11:38 Speaker 5: Nikki Waller, of course, she heads up our money coverage here at Bloomberg News. Stacey Vanek-Smith as well. She is host, co-host of the Everybody's Business podcast, which comes out every Friday. Coming up, we're back in Jackson Hole with Ken Rogoff, Harvard professor of economics, the former chief economist at the IMF. And later on, 72% of Americans say that they feel guilty spending money on joy. We've got that and other details from a new report. This is Bloomberg Money. Welcome back to Bloomberg Money. I'm Scarlett Fu, my partner in crime, Tom Keen, not here in New York, but in Jackson Hole, Wyoming, where he's standing by with Ken Rogoff, Harvard professor of economics and former chief economist over at the IMF. 00:12:23 Speaker 1: Tom, I'll hand it over to you. 00:12:27 Speaker 6: Thank you. 00:12:27 Speaker 4: This is my conversation of this Jackson Hole without questions. Professor Rogoff will be speaking to the assembled at lunch here in about an hour. Of course, the book last year is a required read. Brammo's son actually even read the book, Moving Royalties Up, Our Dollar, Your Problem. And the new edition of Our Dollar, Your Problem is there's a Rogoff wedding coming up here as well. Is it Our Dollar, Your Problem? How are you and Mrs. Rogoff holding up? 00:12:55 Speaker 12: We're holding up so far. It's just a week away. Our daughter's getting married. But trying to control the budget, just like the U.S. 00:13:02 Speaker 3: Government. 00:13:03 Speaker 4: Trying to control the budget. Let's do that right now here at Jackson Hole. Ken, I think what's so important here is there was another time and place. You have an op-ed in the FT from a couple years ago. Here's the photo, folks. Bill Clinton, Al Gore. There was a time where this is a photo right from Ken Rogoff's op-ed. 00:13:21 Speaker 6: How did we screw this up? How did we get to. 00:13:23 Speaker 2: The will to do this? 00:13:24 Speaker 4: Of 1999 to the irresponsibility of 2026? 00:13:28 Speaker 2: Super short answer. 00:13:31 Speaker 12: We've had a couple of catastrophes, the global financial crisis and the pandemic. But I think a larger issue, which has been a big topic at this symposium for years and years, was a near religious conviction among academic economists in the journal's that interest rates were going to go down and down and down. So who cares how much debt you owe? You'll never have to pay interest on it. And I think that's dominated the political landscape. The interest rates have reversed, but Washington hasn't, and a lot of academics hasn't. 00:14:07 Speaker 4: The Besson angle, and in your Project Syndicate essay in the last 72 hours, I'll say you go right after Secretary Besson. Glenn Hubbard at Columbia has a respect for the idea, you can do supply-side, but you may not grow with it. There's a certitude that we will grow our way out of this predicament with a pseudo-supply-side exercise. 00:14:28 Speaker 6: Is there any evidence we can do that? 00:14:31 Speaker 12: We might, but let's start with the fact we're infinitely rich at the moment. Even if we grew really slowly, we ought to be able to pay our bills. So telling us we're going to get much richer in the future, that will bring in some further tax revenues, but demands on expenditures, old age expenditures. And then there are a lot of technical issues around that. Interest rates will probably go up if there's fast growth. Labor share is falling, that's all over the place. Capital is harder to tax than labor. So I think there are many other reasons interest rates are going up. How about the war in Iran? How about populism, not just in the US, all over the world? 00:15:13 Speaker 6: Have you been asked to be in a task force? 00:15:15 Speaker

2: No, I wasn't. Nick, you got those short straws. 00:15:19 Speaker 12: No, I think the world of Kevin Warsh, but I'm just as grateful that I'm not on one of the task forces. 00:15:24 Speaker 6: Oh, that was so smooth, folks. Did you see how Ken Rogoff did that? Ken, let's talk seriously. 00:15:31 Speaker 4: We had Jack Lew on Bloomberg monies about retirement, Social Security, and all that. And the former Treasury Secretary said day one, After the presidential election, we need a panel. We need to get something done about Social Security. You've got to be a natural selection for that panel. What's the first task to get our entitlement program straightened around? 00:15:53 Speaker 12: Honestly, I think it's going to be very difficult to do till we have a crisis that convinces voters something has to happen. 00:16:01 Speaker 2: They're not convinced. 00:16:04 Speaker 12: Now, some economists are finally coming around to the view that maybe it wasn't the free lunch they said it was, that maybe someday we'll get inflation, financial repression, but it's not the dominant political position. I think if you try to run in 2028, on I'm going to fix Social Security in any more than. 00:16:23 Speaker 2: A passing phrase. 00:16:24 Speaker 6: Silence in the rooms. 00:16:25 Speaker 2: Yeah, people's eyes glaze over. I think it's going to take. 00:16:28 Speaker 12: That's why my book, at the end of it, predicts at some point this will end in a crisis of some sort to catalyze the change, which will be painful. 00:16:39 Speaker 4: God, the rain here is killing my glasses. I'm fogging up like no tomorrow. We're going to fog up with higher yields. You've nailed the vector towards higher yields. What 10-year yield or even 30-year bond do you perceive to be that point of crisis for the American public? 00:16:57 Speaker 12: Well, I mean, it's the debt level, the level we're at already is difficult. The crisis comes when a shock happens and you're not resilient. The Iran war was a mini shock, really, compared to what could happen. But over the next five years, it could be a. 00:17:13 Speaker 12: Cyber war, it could be some kind of artificial intelligence thing, most likely China and Taiwan. But a war kind of shock, that's the scenario that pushes up interest rates. And that makes it hard to, the Fed can't just cut interest rates if the market's pushing them up. The government can't just print money if the market's pushing them up. And I think in our environment, that's a big risk. 00:17:38 Speaker 4: The charm of This Time is Different, Reinhart and Rogoff, is you combine, you conflate together responsibly public and private investment. So right now, if we conflate together $ 40 trillion plus private this, private that, with Wall Street's new addiction, private equity and private credit, are we doing a This Time is Different path right now? 00:17:59 Speaker 12: Well, look, I mean, of course there's going to be some kind of spectacular collapse in AI at some point, which doesn't mean you should take your money out of AI. Schiller and Greenspan famously predicted the collapse of the stock market when I was at around $ 4, 000. 00:18:16 Speaker 2: Then it went to 8,000. And they were right. And then it went to 6,000. It collapsed. But timing was terrible. And I think that's difficult. But the U.S. 00:18:24 Speaker 12: Government needs to take steps. They'll be much smaller and easier steps if you do it sooner. I don't see any signs of that happening. 00:18:33 Speaker 6: You and I grew up under the shadow of Barbara B. Conable. 00:18:35 Speaker 4: He's the one folks who told Nixon, here's the door, what's your hurry? There used to be a normal process here of, say, Barbara Conable, House Ways and Means. Where does Congress fit in to the crisis that you see coming? 00:18:49 Speaker 12: Well, you know, at the moment, they're kind of sidelined and paralyzed. But there are many people in Congress on both sides of the aisle who are. 00:18:57 Speaker 2: Aware of this. 00:18:59 Speaker 12: But again, you know, it's hard to catalyze action. By the way, we're talking about the United States. We could go to the UK. We could go to France. Look what happened to Macron. when he tried to raise the retirement age. And the French election is coming up right now. It's going to get murdered. And so it's the same thing all over the world. 00:19:15 Speaker 4: Jason from Cambridge emails in and says, Tom, you trashed me with Act 10. To Ken Rogoff, the question of the afternoon here, Scarlett, is there great inflation at Harvard Economics? 00:19:28 Speaker 12: Well, we have a new policy coming in place to try to deal with it. 00:19:32 Speaker 2: But, you know, absolutely there was. 00:19:35 Speaker 12: I will say when I came to Harvard, I learned from complaints from the dean that I was one of the easiest graders. 00:19:42 Speaker 2: I didn't change a thing. 00:19:44 Speaker 12: And then over 20 years, I find out from some of the kids, you're the hardest grader at Harvard. 00:19:49 Speaker 2: So that tells you. I've been told you're brutal. You're ruthless. 00:19:53 Speaker 12: I'm not trying to be. I'm trying to be fair and, you know, reasonably generous. 00:19:57 Speaker 4: Brutal and ruthless, Ken Rogoff. Thank you so much. My high point here at Jackson Hole today. Scarlet Fu in New York. 00:20:05 Speaker 1: Thank you, Tom, for that conversation. 00:20:06 Speaker 5: And by the way, if you listen carefully, you can hear the raindrops falling, certainly as you were talking to Ken. And we saw earlier that you were holding an umbrella for Lisa Bromowitz, who you're hosting the surveillance special with. Quite the gentleman there. Tom, as you wrap up your time in Jackson Hole, what are your final thoughts? 00:20:24 Speaker 4: My final thoughts are Ken Rogoff's not the most important person here. 00:20:28 Speaker 6: Neither is Chairman Warsh. 00:20:30 Speaker 4: The most important people here are the media and the current just on with

us. The grind that Michael McKee goes through each and every day. The simple distinction here is the press's coverage of this huge public institution. It's vital that the press keep the message going in this time of distraction and tumult. 00:20:51 Speaker 12: All right. 00:20:51 Speaker 5: Well, you and Lisa and Michael McKee are doing your parts. 00:20:54 Speaker 1: Thank you so much, Tom. 00:20:55 Speaker 5: We're going to check in with you when you come back to New York. Bloomberg Money is your destination for personal finance. It's a cross-platform effort that goes beyond your TV screens because it includes our new digital hub at Bloomberg.com slash money. 00:21:11 Speaker 1: And this story got my attention. More and more U.S. 00:21:15 Speaker 5: Employers are opting out of group health insurance plans as they brace for large price hikes. 00:21:19 Speaker 1: Instead. 00:21:20 Speaker 5: they're going to provide stipends for employees to buy health insurance for themselves. Bloomberg's Taylor Nicole Rogers joins us now with more on this. I didn't even know that this was an option for employers. 00:21:31 Speaker 1: It's a pretty new option. 00:21:32 Speaker 13: It's only been around since 2020, but it's something that people have been looking into because health insurance has just gotten so expensive. Companies are spending almost $ 19, 000 per employee these days. 00:21:42 Speaker 3: Okay. 00:21:44 Speaker 5: So can employees pocket the money or do they actually have to go to a marketplace to buy. 00:21:50 Speaker 1: Their own insurance? And is there even a thriving marketplace? 00:21:52 Speaker 13: Well, there are the Affordable Care Act marketplaces. 00:21:55 Speaker 1: I meant thriving, though. 00:21:57 Speaker 13: Whether they're thriving or not is in the eye of the beholder for sure. But employees are required to spend the money on insurance. Depending on the plan, if they have anything left over, they can use that for whatever they want or just take that home. 00:22:09 Speaker 5: Don't the economics of health insurance argue for big groups to get insurance coverage so that the young and healthy help subsidize the older and more fragile? 00:22:17 Speaker 2: Exactly. 00:22:18 Speaker 13: But another trend employers have been seeing is that those healthy, more profitable workers have been jumping off of plans altogether. So the economics are breaking to the point where some employers are saying, you know what, I'd rather be out of this business altogether. 00:22:32 Speaker 5: I think clearly employers are doing this out of necessity. What does your reporting show whether employees like this change? 00:22:38 Speaker 13: Some employees do like it because it gives them more control over the benefits they get. For example, if they would like to be using a GLP-1, they can choose a plan that uses that. But from the vast majority I've heard from, they're annoyed that they have to go through the administrative hassle of sorting through a marketplace. Marketplace plans are more expensive sometimes. They have smaller networks of doctors and hospitals. And they tend to have higher deductibles. So it doesn't work out for everyone. 00:23:04 Speaker 5: Yeah, you take on the risk. You take on the responsibility of everything related to health care. It's kind of the same way that we transition from traditional pensions to 401ks. 00:23:12 Speaker 2: Exactly. 00:23:12 Speaker 1: All right. 00:23:13 Speaker 5: Taylor Nicole Rogers, thank you so much for bringing us this story. It's a fantastic read. You should check it out on Bloomberg.com slash money. Joining us now is Neela Richardson. Neela is chief economist and ESG officer at ADP. She is also a contributor to Bloomberg. Great to see you here. Welcome to Bloomberg Money. 00:23:29 Speaker 2: Hello. 00:23:30 Speaker 14: It's great to be here with you, Scarlett. 00:23:32 Speaker 1: We know ADP is a payrolls company. 00:23:33 Speaker 5: That's kind of like what everyone knows it as, automatic data processing. But you do also manage workplace benefits like retirement accounts and health insurance. 00:23:41 Speaker 1: Is that right? 00:23:42 Speaker 2: We do. 00:23:42 Speaker 1: We do. 00:23:42 Speaker 14: We offer a lot of solutions for small businesses who are looking to offset health care costs. And that is where we are right now. This health care is climbing. And whether you shift it to the work or you assume it as a small business, it's they still. 00:23:58 Speaker 1: Have to be dealt with. 00:23:59 Speaker 14: And a lot of people work just for benefits. 00:24:01 Speaker 1: It's not just about the paycheck. 00:24:04 Speaker 14: And so we do offer a variety of solutions for small businesses for just that reason. 00:24:09 Speaker 5: Yeah, a lot of people go work at Trader Joe's because they can get health insurance. When employers tell employees, go figure out your own health insurance because costs are rising too much for us, is that just exposing individual households to inflation in a more direct way? 00:24:21 Speaker 1: I think so. I think so. 00:24:23 Speaker 14: I mean, there is something about combined care and having a managed service. And I think there are solutions. ADP has a variety of them, but there are others in the marketplace that serve as an alternative. But no one is really escaping the elephant in the market, which is health care costs are climbing. And a lot of these drugs, whether it's GLP-1s and obesity, or if it's even cancer treatments that are really revolutionary, they. 00:24:53 Speaker 1: All come with a price tag. 00:24:55 Speaker 14: Pharmaceuticals have a seven to eight year span in which they can recoup costs. And that is what employers and employees are facing to take advantage of these next level care. You really have to pay up. And that's what's really challenging in this moment. 00:25:10 Speaker 5: Also challenging is the overall affordability picture. Consumers say that they're feeling lousy. We know

that they're seeking value. Walmart, McDonald's have certainly benefited from that. But there is new data showing a rise in fast food restaurant bankruptcies, including some Popeye and Subway franchisees. 00:25:27 Speaker 14: How do you read into this kind of development? You know, first of all, the restaurant industry is a hard industry. And not every restaurant, even a franchise, is a successful franchise. But when I talk to restaurant owners, it seems to be that fast casual segment that's doing better. But one of the things that surprised me when I talked to these real restaurant conglomerates at the fast food level is that they're really concerned about affordable housing. Now, you think about where these restaurants are located. Location drives the consumer experience. you know, consumer demand. If they're not well located, they're not going to get the traffic. If you're not seeing the Popeyes on the way home, you may not think Popeyes on a Saturday evening. But so they need workers to live where their customer base is. And if there is a disconnect because it's too pricey in San Francisco or Los Angeles or New York City, it's going to be hard to get the workers inside that door. 00:26:23 Speaker 5: I think that's a really important point because franchisees say that they're seeing elevated costs for rent, for wages, for food as well. The question I have for you is that owning and operating these businesses has been one of the tried and true ways for Americans to build wealth, isn't it? I mean, when people say they're business owners, small business owners, a lot of them own franchises. 00:26:43 Speaker 14: You know, historically, there's only been two real ways to create wealth in the United States. And incidentally, it's the reason why millions and millions and millions of people come to the United States. The first is through entrepreneurship. The second is through housing. Most of us choose the housing option that forced savings. And that used to be the old school way of building wealth. Well, now look at new business formations. They have not receded. They have stepped up since the pandemic. They keep growing. AI has enabled a lot of small businesses. I think the silver economy and the aging workforce and now taking that talent and opening a business. 00:27:21 Speaker 1: Is part of it. 00:27:22 Speaker 14: And so, yes, having that small business is a way of wealth creation and we're seeing it becoming more popular, maybe tapping into some of that home equity for boomers who have it. 00:27:32 Speaker 6: Absolutely. 00:27:33 Speaker 5: For those who do get a paycheck and have to get a W-2, inflation is proving to be pretty sticky and a lot of people get wage increases, jump condition wage increases by changing jobs. Does changing jobs still produce a pay bump? What are you guys seeing in ADP on that? 00:27:48 Speaker 14: Yes, it does still produce a pay bump, but the premium. for that pay bump has narrowed significantly. 00:27:55 Speaker 3: How much? 00:27:56 Speaker 14: We're looking at about 2% between switching and just changing for the average worker. Now, it matters a lot what kind of industry you're in. If you're a construction worker, expect almost 14% increase from your old job to your new job. 00:28:09 Speaker 5: Really? 00:28:10 Speaker 14: If you're in retail or leisure and hospitality, the restaurant business that we were just talking about, you'll actually see negative earnings for the typical worker, negative growth. from switching jobs because that is an industry that rewards loyalty and service over fast switching. So it really depends where you are. Older workers don't switch jobs as much. And this is really an important issue because if you look at the cumulative inflation that we've seen over the last five years, My colleagues at ADP Research and University of Chicago just put out a paper. 00:28:42 Speaker 1: On this last week. 00:28:43 Speaker 14: 47% of Americans, according to our research, saw real wage declines over the last four years because of inflation. So this is why consumer sentiment is dismal. People's salaries are just not... So you may have gotten that raise, that 3% raise that most companies give, but it's not enough to compete with 7% inflation, even as inflation... was lowered through those subsequent years. 00:29:09 Speaker 5: Those are people who work at companies and are on the payroll. 00:29:13 Speaker 1: What about independent contractors? 00:29:15 Speaker 5: What can you tell us about the wage trends for these folks? 00:29:18 Speaker 1: Is that captured in the same way? 00:29:20 Speaker 14: You know, yeah. Well, at ADP, we see everybody. And we also see single-person proprietorships. And so what's happening with the contractor, what the vendor said, is that they're building in their contracts. So unlike workers, they can say, hey, please put in a. 00:29:35 Speaker 3: 3%, 6%. 00:29:35 Speaker 14: I actually have seen a 7% in the heart of our inflation peak, where contractors were asking for multi-year increases based on inflation. 00:29:48 Speaker 1: So contractors, the savvy ones, have been able to index. 00:29:53 Speaker 14: Their wages to inflation in a way that no worker would be able to do in a regular contract. 00:29:57 Speaker 2: Okay. 00:29:58 Speaker 5: So employees should be taking their cues from these contractors and these construction workers who seem to see outsized wage gains. 00:30:04 Speaker 14: We have to go back to our previous conversation. Those jobs come without health benefits, by and large. So Before we wrap up. 00:30:11 Speaker 5: Our conversation, Nila, we always ask our guests here on Bloomberg Money how you approach managing your personal finance. Are you kind of a set it and forget it investor or are you making adjustments on a regular basis, a quarterly basis or annual basis? 00:30:24 Speaker 1: How do you think about it? I do both. 00:30:27 Speaker 14: I'm a big believer in dollar cost averaging. And this is

where the housing moment is important. The importance of housing was not just the house and the appreciation, it was the fixed savings, the discipline of putting the same amount of money into equity eventually every single month. Well, even if you don't have a house, you can have that same discipline in the market. And that's called dollar cost averaging, where you're putting in a fixed amount of money into the market, whether it's an ETF or some other broad-based equity and bond portfolio every single month. And I'm going to speak an old book. It's not timing the market. It's time in the market. So if you can do that at a younger age, you can build wealth over time. 00:31:10 Speaker 1: But you know what? 00:31:11 Speaker 14: I'm all about selective bets. And we've seen some startups that are really appetizing in terms of an investor portfolio especially if you're young enough to see it pay off. 00:31:21 Speaker 3: All right. 00:31:22 Speaker 5: So disciplined investing is Neela Richardson's approach here. Neela Richardson of ADP. She's the chief economist there. She's also a Bloomberg contributor. Thank you so much for stopping by. It's great to be here, Scarlett. 00:31:33 Speaker 1: You're listening to Bloomberg Money. Stay with us for more to come after this. 00:31:44 Speaker 8: All right. 00:31:44 Speaker 5: Another story that caught my eye this week comes from. 00:31:46 Speaker 1: Bloomberg's Sarah Foster. 00:31:48 Speaker 5: Her article covers how after Congress tweaked the rules covering 529 plans in 2022, people without kids are now able to put money into those accounts after hitting the annual limits for contributing to their retirement plans. So in a way, they treat the 529 as a backdoor for funding a Roth IRA. Sarah joins us along with Bloomberg's Zijia Song. So Sarah, let's just back up a little bit. 529 accounts are for you to put money away for your child or unborn child's college tuition. savings or maybe even their high school savings if they're going to you know go to a private school but if you're an avid saver you could use it for something else as well yeah I think what's really interesting about the 529 is kind of this misconception that it's actually for your children actually anybody can have their own 529 right now you can open up one for yourself you can open up one for your children as well you know open one up for a niece or a nephew you And I think a lot of people are really discovering here that since Congress. 00:32:45 Speaker 1: Tweaked the rules, there's a new way. 00:32:47 Speaker 10: That they can kind of use it as like a wealth building strategy. So we spoke with people who are either opening these 529 accounts before they have children or before they even know they want them because they're using it as a way to maybe kind of put extra funds into a Roth IRA if they go unused. 00:33:04 Speaker 5: What are the limitations to using a 529 account to fund retirement? 00:33:08 Speaker 10: It's a very complicated process. And a lot of the financial advisors that we spoke with say that it should probably kind of come in at the end, you know, after you've maxed out these other accounts. But you have to have the funds in your 529 plan for five years. You can only move up to. 00:33:25 Speaker 1: $ 35, 000 over a lifetime. 00:33:26 Speaker 10: And you also have to hit the Roth IRA annual contribution limits, which this year at $ 7, 500. So you'd have to do it in increments. All right. 00:33:34 Speaker 5: So you have to keep a spreadsheet on this in order to really take advantage of it. But again, for people who are aggressive savers, and there are a lot of them out there, this is one way of doing it. 00:33:42 Speaker 2: All right. 00:33:43 Speaker 5: Tzu-Jia, you've been writing a story about how there's still a lot of consumer spending going on. I mean, this is a nation of consumers, but people are starting to feel bad. They're starting to feel guilty when they spend money on things that are fun. What happened to treat yourself? 00:33:56 Speaker 3: Yeah. So the new research by Allied Bank actually shows that 72% of Americans feel guilty about spending money on joy, things that bring them happiness, even when they can afford it. I think that disconnect is really interesting because being able to spend money on something doesn't mean that they have. 00:34:14 Speaker 1: To feel comfortable about doing it. 00:34:17 Speaker 3: And of course, there's this deeply ingrained money belief that if you're saving, you're being responsible about your future. And if you're spending, something needs to be really well justified. But it's also happening at a time of when we have a lot of anxiety about cost of living rising, about unaffordable housing, and uncertainty about economics in the economic future in America. 00:34:43 Speaker 5: Yeah, it's certainly a sharp turn from the YOLO days after the pandemic when everyone was going out and living their best lives and traveling everywhere. How does it break down in terms of demographics? Are young people more susceptible to this than, say, the retirees, the boomers? 00:34:58 Speaker 3: So older Americans, like baby boomers and older, they feel slightly more comfortable about spending, but they're still very conscious about spending. what they're spending money on. Especially right now, I feel like a lot of people, even the older Americans, they have anxiety about retiring with a regular paycheck, so they are maybe just slightly more comfortable, and the younger adults are definitely more conscious. 00:35:26 Speaker 5: So people will spend money, but they just go through a lot of internal debate and stress that goes along with it. 00:35:31 Speaker 1: Does travel get caught up in this? 00:35:33 Speaker 5: Because for so long, people were saying they will bypass the small treats, but they will put their. 00:35:37 Speaker 1: Money into experiences like travel. Actually, yeah. 00:35:41 Speaker 3: We talked to a few people in planning

their travels, planning their leisures, and they mentioned that traveling and having that experience that they think is really worth it It's probably better than maybe just spending money on a weekend out, on a night out, having dinner. I think people, the trick that they use is that they plan out a budget each month so that they have a designated money in their savings or in their portfolio that's for fun specifically so that they feel a bit less guilty about it. 00:36:14 Speaker 1: The fun bucket. 00:36:15 Speaker 5: It just depends how much money you put in that fun bucket. For some people, fun involves going to the bookstore and buying books. I think Tom is in that category. So we want to get to our book picks. And because Tom's not here, I'm going to introduce his pick. He's out in Jackson Hole, Wyoming. So he picked something that was appropriate for that. It is, get this, back of country bear basics. The Definitive Guide to Avoiding Unpleasant Encounters. No word from him on whether he encountered any grizzly and black bears, but nevertheless, that's Tom's book that he's reading this week. My pick for this week is Prairie Fires by Caroline Frazier. It's a biography of Laura Ingalls Wilder. I don't know if you guys know her, the author of the Little House. 00:36:53 Speaker 1: On the Prairie books. 00:36:54 Speaker 8: Anyone? 00:36:54 Speaker 3: Anyone? 00:36:54 Speaker 1: A little bit. A little bit. 00:36:57 Speaker 3: Okay. 00:36:58 Speaker 1: I was a big fan of the books. 00:36:59 Speaker 5: I watched the TV show portrayed by Michael Landon, produced by him. And so, of course, I watched the reboot on Netflix where an Aussie actor portrays Pa. Basically, this book tells the bigger story of what was happening in the country as Laura and her family were traveling from Wisconsin by wagon to Kansas, to Minnesota, and to the Dakotas. And it turns out in real life, when you look at the history behind it, which the author does, The Ingalls' life on the prairie was painfully hard. 00:37:24 Speaker 1: It was a constant struggle. The family was impoverished. 00:37:26 Speaker 5: They were perpetually in debt, perpetually hungry, and not at all like the books and the TV shows depicted. So there's very little good vibes going on there on the prairie. 00:37:34 Speaker 1: What was your book? 00:37:37 Speaker 10: I promised I would bring a summer-themed book, and this is going to be a little bit hard to make the connection, but I will explain. It's fixed, why personal finance is broken and how to fix it. 00:37:47 Speaker 1: This is what you're reading in the summer, Sarah. 00:37:49 Speaker 10: It's really, you know, I always feel kind of internal guilt because I take a lot of vacations in the summer, and I always use points and miles to pay for them. I haven't paid for a vacation in four years just because of my own spending on credit cards. I've got to see your spreadsheet on this. But it also kind of weighs on me because I know that a lot of the points

and miles that I'm rewarded with are financed through the credit card companies from people who are in debt. And it's just one of these ways that I think a lot of disproportionately lower income households sometimes don't reap the benefits of our personal finances. 00:38:21 Speaker 5: Yeah, it's a good way to understand how that whole ecosystem works. 00:38:24 Speaker 1: Zijia, you also have a book that you brought with you? 00:38:26 Speaker 3: Yes, I brought The Trolls of Wall Street. It's actually by our own editor, Nathaniel Popper. 00:38:32 Speaker 1: Shout out. 00:38:33 Speaker 3: It's because I spend so much time nowadays on Reddit, just sliding into people's DMs. And some of the most colorful stories for my stories came from Reddit. And this book is actually about the subreddit community, WallStreetBets, which kind of made a splash in 2021 during the GameStop trading frenzy. And it's been really interesting seeing kind of like the history and culture of it and the personalities and characters in this community. And also right now, as this community has evolved, how they are really savvy in trading now, they're using AI technology to inform their own trading. their relationship with Wall Street has also changed as well. No one's calling them the dumb money anymore. No. 00:39:15 Speaker 1: I think it's pretty safe to say. Zijia, thank you so much. 00:39:18 Speaker 5: Zijia Song and Sarah Foster from the Bloomberg Money team joining us with their book selections for the week as well. For the latest reviews and recommendations from Bloomberg, be sure to subscribe to the On Books newsletter. You can subscribe at Bloomberg.com slash newsletters. We're going to look ahead now to what you can spend your money on for the weekend. And joining us right now is Bloomberg This Weekend's Christina Ruffini. 00:39:39 Speaker 1: She works all weekend. 00:39:41 Speaker 5: Before we get to any of what's happening, you're going to show us what you. 00:39:44 Speaker 1: Spend your money on because Because that's what this show is about. 00:39:46 Speaker 2: Right. 00:39:46 Speaker 8: Your producing team was like, what do you spend money on? I was like, I am so cheap. I spend money on nothing. And then I was like, wait, this is not true. I have an extremely ridiculously expensive. 00:39:56 Speaker 1: Pair of cowboy boots. 00:39:57 Speaker 8: So I told them I would... I actually put pants on because I had a skirt on and we thought that would get us all fired. But here are my... Here are my Frye boots. I bought them 10 years ago. I think they were like on sale for $ 350. 00:40:11 Speaker 1: I Googled them before I came. 00:40:13 Speaker 8: They're now $ 500 for these Frye harness boots. They still make them, but they look the same as the day I bought them. I will never need another pair. And, you know, I've worn them to floods. I've worn them to Haiti. I've worn them to bars. 00:40:26 Speaker 1: You know, cowboy boots. 00:40:28 Speaker 5: Would these be boots that you would wear to Burning Man? Because Burning Man begins this weekend. 00:40:32 Speaker 8: Okay, I personally cannot think of something I would less rather do than go to like. 00:40:37 Speaker 1: But don't you feel appropriate to that? I think I could... Here, I'll put them up here like this. I think I could burn in these booths. I mean, have you been a Burning Man? No, I'm not a burner, which I just learned was a term. You could be a burner. 00:40:48 Speaker 8: I don't know if they're crazy enough, but they do work well in a desert climate. But I'm always surprised by the people who are like secretly. 00:40:55 Speaker 2: Going to Burning Man. 00:40:56 Speaker 1: And apparently. 00:40:57 Speaker 8: There's a big crew of them. There are now a lot of tech pros going to Burning Man. 00:41:00 Speaker 2: There are. Well, you know. 00:41:02 Speaker 5: The finance bros will be going to the US Open, which officially kicks off this weekend. Are you guys going to be doing anything with that on Bloomberg this weekend? 00:41:08 Speaker 8: I think we're working on it. We actually had the head of IBM, they've launched their new app. He was on last week talking about the app is now crazy for the US Open. You can like clock people's shots and it breaks it down with all this data. And so we also had a professional tennis player on who was saying the tennis players themselves don't really have the capacity to use it, but the coaches are using it to help guide the players, the serves, and things like that. 00:41:29 Speaker 1: And it helps audience engagement is what they're trying to drive. 00:41:31 Speaker 5: And final item, Coyote versus Acme hits the theaters. 00:41:35 Speaker 1: This sounds like a fun one. 00:41:37 Speaker 8: I think the drama about this is that they're making the executive of the studio the villain for this because they were going to shelf this movie and take the loss. And Will Forte has been giving interviews saying Zaslav is like the enemy for this movie because they had to fight to get it released. But it's getting good reviews and hopefully it'll be worth the push. 00:41:55 Speaker 2: All right. 00:41:56 Speaker 5: Look for that in your local movie theater. But it's not a big studio release. 00:41:59 Speaker 1: Christina, thank you so much. And make sure to watch. 00:42:01 Speaker 5: Bloomberg This Weekend, every Saturday and Sunday morning, starting at 7 a.m. That does it for Bloomberg Money This Week. 00:42:07 Speaker 1: Enjoy your weekend. This is Bloomberg. 00:42:19 Speaker 5: This is the Bloomberg Money Podcast, bringing you a smart look at the forces shaping your financial life. I'm Scarlett Fu with Tom Keen. You can watch the show live on Bloomberg Television every Friday at noon Wall Street time. Subscribe to the podcast on Apple, Spotify, or anywhere you listen. And as always, on the Bloomberg Terminal and the Bloomberg Business app.