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--:-- Host (Jonquilyn Hill): Hey there, I'm John Glyn Hill, and this is Explain It To Me, where we answer the questions that matter most to you. Your call has been forwarded to an automatic voice message system.
--:-- Host (Jonquilyn Hill): Hi, my name is John Ribeiro. I live in Boston, Massachusetts. I work at a liquor store, and one of the things that my colleagues and I talk about is how we notice more people are using cash. And we always notice that when there's sort of uncertainty in the economy, it seems like maybe more people are managing to use their money by having it physically, so they can sort of keep track of how much they're spending instead of potentially overspending and treating their debit card like a gift card.
--:-- Host (Jonquilyn Hill): I wanted to know, what are the real recession indicators outside of, like, the things that you see on TikTok?
--:-- Guest (Hannah Aaron Lang): That's a great question, John. And to find out, I reached out to journalist Hannah Aaron Lang. I am a reporter on the markets team at The Wall Street Journal. I've covered the economy and business for most of my journalism career. And basically what I do now is watch the stock market every day and write about what it means for real people.
--:-- Guest (Hannah Aaron Lang): So when you log on to your social media of choice, you know, you see all these people calling things recession indicators, you know, low rise jeans, cutting down on manicures. What's fueling these online recession indicators?
--:-- Guest (Hannah Aaron Lang): I would say there's been some kind of bad vibes floating around the economy for a while now, probably in some shape or form since the start of the pandemic.
--:-- Guest (Hannah Aaron Lang): Can somebody explain to me in crayon eating terms why I make over three times the federal minimum wage and I cannot afford to live? This economy is so bad. $33 for toilet paper. We can't even afford to shit.
--:-- Guest (Hannah Aaron Lang): I know the economy is getting worse and worse because more and more of my Uber drivers have been white. And this is terrifying.
--:-- Guest (Hannah Aaron Lang): I think a lot of that has come from the inflation we saw kind of coming out of COVID. Everything that we need, coffee cups, coffee, sugar, milk, everything is a lot more expensive. Everything is inflated. When I go into the grocery store, it's sticker shock. It's not like it used to be.
--:-- Guest (Hannah Aaron Lang): I used to try to buy one month's worth of groceries, but not anymore. Prices climbed quite quickly. And the inflation rate has come down a lot since then, but we're still looking at a higher cost of rent, eating out, other goods and services. And I think that's difficult for everyday people to navigate.
--:-- Guest (Hannah Aaron Lang): Things have also just gotten more chaotic this year in general when we think about markets and the economy. In early April, President Donald Trump announced this plan for sweeping tariffs on much of the United States' trade partners across the globe.
--:-- Guest (Hannah Aaron Lang): You see the numbers. The numbers are so disproportionate, they're so unfair. At the same time, we will establish a minimum baseline tariff of 10 percent. Basically saying we were going to impose these huge charges on imported goods that really spooked investors and financial markets and stocks fell sharply.
--:-- Guest (Hannah Aaron Lang): And as those major stock indexes tumbled and investors tried to make sense of what this was going to mean for the United States, We started to hear people on Wall Street talk about the potential of a recession again as a result of the kind of economic turmoil caused by this trade policy plan.
--:-- Guest (Hannah Aaron Lang): I think it's more likely than not we're going to have a recession. And in the context of a recession, we'll see an extra two million people be unemployed. We'll see losses in household income.
--:-- Guest (Hannah Aaron Lang): What are some of the top so-called recession indicators being talked about right now?
--:-- Guest (Hannah Aaron Lang): There is a super wide range of so-called recession indicators online right now. This can be everything from a skincare company selling eggs. The prices of eggs have dramatically gone up. So The Ordinary, a skincare company, said we're going to take this problem on and give you an ordinary price of $3.37 for eggs.
--:-- Guest (Hannah Aaron Lang): To press on nails coming back. Recession indicator. Princess nails. I haven't seen one person in long acrylic stiletto coffin nails in a very long time. Everybody got some short nails on.
--:-- Guest (Hannah Aaron Lang): To certain fashion trends like women in menswear and women in office wear. If no money, we can't have two outfits for work and play. When the business gets casual, the money goes out the door.
--:-- Guest (Hannah Aaron Lang): Okay, the second bitches start putting on blazers and a collared shirt, it's over.
--:-- Guest (Hannah Aaron Lang): Keep a lookout and they can range from the reasonable so I'm a curbside chopper at heb and honestly guys the number one recession indicator should be that everyone is getting spaghetti to what I would call the more ridiculous like sightings of snooki from jersey shore is snooki falling backwards out of her seat at a club a true recession indicator let's talk about it or later leaving new york a recession indicator or the fact that gweneth paltrow said on a podcast If I'm honest and getting back into eating some sourdough bread and some cheese, there, I said it.
--:-- Guest (Hannah Aaron Lang): There's a super wide variety of what qualifies as a so-called recession indicator on the Internet.
--:-- Guest (Hannah Aaron Lang): OK, some of these indicators admittedly feel kind of extra. Do you think any of them are real signs of economic troubles?
--:-- Guest (Hannah Aaron Lang): Well, I think that some of them could definitely be considered a more realistic piece of evidence about the economy, right? So I think of one particular example.
--:-- Guest (Hannah Aaron Lang): One of these posts about our so-called recession indicator was about the partnership between Klarna and DoorDash. So the idea that people might be in a financial place where they want to pay for delivery or takeout in installments as opposed to paying for that upfront.
--:-- Guest (Hannah Aaron Lang): So that could be a sign that maybe some folks, their budgets are tight, they're having to cut back on spending, or maybe can't afford to eat out as much as they used to.
--:-- Guest (Hannah Aaron Lang): When we talking about something like that what we really talking about is consumer spending right It the engine of the U economy And if people stop spending money that really bad news
--:-- Guest (Hannah Aaron Lang): Other times these so recession indicators are more just trends from the 2008, 2012 era that have worked their way back around. I'm thinking of, you know, maybe low-rise jeans or like those knee-high Converse sneakers that you can lace up to the knee that were super popular when I was in grade school or big dancey pop songs by Lady Gaga.
--:-- Guest (Hannah Aaron Lang): Just damn. Or Kesha. Everybody get your trunk, trunk.
--:-- Guest (Hannah Aaron Lang): These are more trends from maybe the Great Recession era that folks spot working their way back into pop culture and see as a recession indicator in that way.
--:-- Host (Jonquilyn Hill): Yeah. OK. Most of these alleged recession indicators we're talking about, you know, they're coming from social media users and influencers.
--:-- Guest (Hannah Aaron Lang): But what about the experts? You know, y'all look at economic data, but do economists look at trends too?
--:-- Guest (Hannah Aaron Lang): So this habit of searching for economic clues like this in unusual places is not a new one.
--:-- Guest (Hannah Aaron Lang): And I would say that experts do it all the time. Of course, we have these really reliable, robust economic data sets like the jobs report, the inflation report, the PCE, something called the Personal Consumption Expenditures Index, that, you know, investors and economists are looking at on a regular basis, right?
--:-- Guest (Hannah Aaron Lang): But those reports can be lagging in that way. So economists and investors are often looking at these kind of offbeat sources of data or offbeat trends.
--:-- Guest (Hannah Aaron Lang): And former Federal Reserve Chair Alan Greenspan famously looked at sales of men's underwear, right? Greenspan looked at men's underwear sales as a key indicator of whether we're heading into a recession.
--:-- Guest (Hannah Aaron Lang): With the idea being that if you have to cut back, this might be a place where nobody else is going to know but yourself.
--:-- Guest (Hannah Aaron Lang): Now, Greenspan paid close attention to this because, according to him, men's underwear sales would stay pretty steady year after year. Didn't matter boxers or briefs, but any time there was a dip, that would tell Greenspan that guys are pinching their pennies, not replacing old underwear.
--:-- Guest (Hannah Aaron Lang): And to him, that would signal an economic downturn.
--:-- Guest (Hannah Aaron Lang): Then there are also these urban legends of the hemline index. This phenomenon was first observed during the 1920s or the roaring 20s when the economy was great. The hemlines got a lot shorter.
--:-- Guest (Hannah Aaron Lang): And then the further they moved towards the Great Depression, the longer the skirts got.
--:-- Host (Jonquilyn Hill): OK, so I want to play a game with you. It's the recession indicator game. I'm going to toss out some of these, you know, supposed recession indicators at you. And you tell me whether it's right to consider them like a plausible sign of impending economic doom.
--:-- Guest (Hannah Aaron Lang): OK. Press on nails. I would go with plausible. It could be that times are tough, you need to cut back, maybe you're cutting manicures out of your budget.
--:-- Guest (Hannah Aaron Lang): Returning to your natural hair color. Plausible for the same argument.
--:-- Guest (Hannah Aaron Lang): Statement necklaces. I would go with not so plausible. I'm not quite sure how that one could connect back to spending.
--:-- Guest (Hannah Aaron Lang): Bad news for fashion, maybe, depending on your opinion, but maybe not the economy.
--:-- Guest (Hannah Aaron Lang): Declining to tip at the strip club. Plausible. Maybe folks have less discretionary income and they just can't afford it.
--:-- Guest (Hannah Aaron Lang): Also, you guys, don't go to the strip club if you can't tip. That's the whole point. Right, right. It's kind of like going out to eat. Like the tip has to, I think, be factored in. Pay those ladies.
--:-- Guest (Hannah Aaron Lang): Fewer meals out. Definitely plausible. I know economists and other experts that actually watch for this type of data.
--:-- Guest (Hannah Aaron Lang): Whole body deodorant. I would say that's debatable. I think it depends. Are we buying it because the hot water bill is getting too expensive or are we buying it because we're too lazy to shower?
--:-- Guest (Hannah Aaron Lang): I think like that's the key.
--:-- Guest (Hannah Aaron Lang): And finally, paying in cash for your liquor. This one, I feel like I would need to see more data on, especially because we pay it in cash maybe for a potential discount, like to avoid a credit card fee.
--:-- Guest (Hannah Aaron Lang): Are we buying less liquor? I feel like I would need a little more context on that.
--:-- Host (Jonquilyn Hill): Thanks for playing the recession indicator game. Don't forget to have your cats and dogs spayed and neutered.
--:-- Host (Jonquilyn Hill): We're going to come back to you in just a few for some more realistic advice on what to keep in mind when you're trying to spot an economic decline.
--:-- Host (Jonquilyn Hill): But first, we're going to investigate the indicator that's making Kesha cool again. That's after this break.
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--:-- Host (Jonquilyn Hill): It's Explained It To Me, and we are so back. Today, we're talking recession indicators.
--:-- Host (Jonquilyn Hill): The recession indicator I've been wondering about is this idea of recession pop.
--:-- Host (Jonquilyn Hill): I asked Switched On Pop co Charlie Harding if our music tastes really do shift with the economy.
--:-- Guest (Charlie Harding): Oh we so are all looking for a crystal ball and music feels like it gotta be it because that where we go to get into our feelings
--:-- Guest (Charlie Harding): So are our playlists indicating larger economic trends? I don't think so.
--:-- Guest (Charlie Harding): Okay, that's interesting because lately there's been all this talk of recession pop.
--:-- Guest (Charlie Harding): What is recession pop referring to? Recession pop is a made up after the fact genre referring to upbeat bubblegum pop music from the time of the Great Recession, 2007, you know, sort of lasting 18 months or so, but music that continues after that because the economic vibes were pretty iffy for a few years.
--:-- Guest (Charlie Harding): So we're talking about Black Eyed Peas. I got a feeling. Ooh, ooh, ooh. Lady Gaga. Ra, ra, ah, ah, ah. Ra, ma, ra, ma, ma, gaga. Ooh, la, la.
--:-- Guest (Charlie Harding): Kesha. I mean, I really do think that Katy Perry's whole oeuvre represents that era better than any other.
--:-- Guest (Charlie Harding): We're talking about songs like Teenage Dream, a song which has this ongoing chord progression that never resolves, that makes you have the feeling of the teenage life that will just never end.
--:-- Guest (Charlie Harding): You're never going to grow up. And it has this wonderful nostalgic quality to it. or Last Friday Night, the party that is the rager that you're going to go all out in.
--:-- Guest (Charlie Harding): Those songs had a sort of light, effervescent, sort of post-disco, very poppy, programmed music kind of vibe.
--:-- Guest (Charlie Harding): They were not serious, very tongue-in-cheek, and I just think that Katy Perry is the queen of that recession pop sound.
--:-- Guest (Charlie Harding): You and I will be young forever You make me feel like I'm living a teenage dream. It has to sound a little overpolished, really well-made, programmed music.
--:-- Guest (Charlie Harding): Meaning like drum machines, synthesizers, guitars in the line of like Nile Rodgers from Chic, but not nearly as well done.
--:-- Guest (Charlie Harding): So like sort of funk style, disco style guitars. Cheesy programmed strings in the background.
--:-- Guest (Charlie Harding): And then the lyric has to be about some kind of, either it's like party, party, party, all night forever, this night, that night, this night's never going to end.
--:-- Guest (Charlie Harding): Or larger platitudes about like being a girl boss.
--:-- Guest (Charlie Harding): You said this is sort of a genre that people have named it after the fact.
--:-- Guest (Charlie Harding): Yes. And, you know, it's called recession pop because there was a recession.
--:-- Guest (Charlie Harding): What else was going on in music during that time other than these, you know, fun, poppy, we're going to party all night long songs?
--:-- Guest (Charlie Harding): Well, music was in a really difficult place. Music had been going through a recession for, you know, half a decade at that point.
--:-- Guest (Charlie Harding): Ever since the turn of the millennia and Napster, the illegal downloading market basically had eviscerated the music industry.
--:-- Guest (Charlie Harding): The world has changed for the goliaths of the record industry, Sony, Universal, and others.
--:-- Guest (Charlie Harding): The record companies say they will lose billions in sales because fans are getting their music for free.
--:-- Guest (Charlie Harding): You know, it saw its revenue as a cut in half. And so that business was in free fall to the degree that they thought that their future was in downloadable ringtones.
--:-- Guest (Charlie Harding): Oh my gosh. So the whole music industry was struggling and was going through a lot of changes.
--:-- Guest (Charlie Harding): I mean, indie music was really big as the mainstream labels were struggling to figure out how to make sales anyways.
--:-- Guest (Charlie Harding): So there was a huge indie boom. hip-hop was going through a sort of bling and party hip-hop era.
--:-- Guest (Charlie Harding): There was a lot of upbeat music during these uncertain times.
--:-- Guest (Charlie Harding): That's certainly true.
--:-- Guest (Charlie Harding): I think it's important to note as well that during the Great Recession, there was plenty of music which didn't reflect an upbeat attitude.
--:-- Guest (Charlie Harding): One of the biggest songs of 2007 was What Goes Around Comes Around by Justin Timberlake.
--:-- Guest (Charlie Harding): What goes around, goes around, goes around Come on, come on, come on, come on
--:-- Guest (Charlie Harding): Or Umbrella by Rihanna. I don't think of those as upbeat, happy songs.
--:-- Guest (Charlie Harding): If you have to protect yourself from the rain on an umbrella, this is more acknowledging maybe our deep upset of the national condition.
--:-- Guest (Charlie Harding): So I think that even in the recession pop era, there's music of all kinds, upbeat, downbeat, sad, happy.
--:-- Guest (Charlie Harding): And so I actually think that the genre is a very slippery one that represents a lot of different kinds of music.
--:-- Guest (Charlie Harding): Are we hearing that sound pop up with any new artists now?
--:-- Guest (Charlie Harding): Some people have said that supposedly like Chapel Roan and Charlie XCX are digging into that recession era in their new music.
--:-- Guest (Charlie Harding): I'm a little more skeptical. if recession pop were doing really well right now Katy Perry's Woman's World would have been a huge hit and if anyone has followed it has been a real stinker for her unfortunately a album full of kind of empty anthemic songs that have really underperformed, leading to really poor album sales, ticket sales, and sort of a question of, is her entire career on the rocks?
--:-- Guest (Charlie Harding): And so if she, for me, is the indicator of the original recession sound and recession pop were an indicator right now that we're leading into a recession, I would think that Katy Perry's new music would be doing phenomenally well.
--:-- Guest (Charlie Harding): And it's not.
--:-- Guest (Charlie Harding): Why are we talking about recession pop right now? Why is that happening?
--:-- Guest (Charlie Harding): Well, one is that everyone's looking for vibes of what's going on in the larger economy.
--:-- Guest (Charlie Harding): But I think more largely millennials are aging out of being cool.
--:-- Guest (Charlie Harding): Oh, no. You stop listening to new music, usually between 25 and 30 years old.
--:-- Guest (Charlie Harding): And then when you get into a position of power where you become a curator of culture, now it's your time to assert the thing that was good when I was young is still good.
--:-- Guest (Charlie Harding): So this could be less about the economy and more about like those of us born in the 80s and early 90s kind of having a midlife crisis a little bit.
--:-- Guest (Charlie Harding): Absolutely. I think there was a huge cultural midlife crisis and a claiming of power.
--:-- Host (Jonquilyn Hill): Okay. But Charlie, I will say I've seen tons of bars and clubs during these recession pop dance parties.
--:-- Host (Jonquilyn Hill): And I'm hearing like all these samples in music from current artists from that era.
--:-- Guest (Charlie Harding): Oh, recession pop is very much a real thing, and it's completely made up, which is to say that there was no such thing as recession pop during the recession.
--:-- Guest (Charlie Harding): It's a term that was made up only very recently. Maybe someone used it on Twitter, but it's only become part of the culture recently.
--:-- Guest (Charlie Harding): And it's absolutely a nostalgia-driven way of getting maybe those millennials who've got more disposable income than at any other point in their life, certainly since the recession, and maybe you want to get them back going out to clubs again.
--:-- Guest (Charlie Harding): Well, if you play their favorite music, you're going to get them out and dancing again.
--:-- Guest (Charlie Harding): So I think the way that recession pop is being invoked is not trying to dig into the darkest moments of the recession, but rather remembering what it's like to be 19 years old.
--:-- Host (Jonquilyn Hill): Why do you think people turn to music in particular in these moments? Like, what is it about music?
--:-- Guest (Charlie Harding): I never quite understand these nostalgia cycles There like 10 ones 15 ones 20 ones
--:-- Guest (Charlie Harding): I do think that a lot of what happens is that the people who are producing music and distributing music and the people who are promoting music again they are millennials
--:-- Guest (Charlie Harding): And so the producers behind artists who usually are a little bit younger than the producers and the songwriters, I'm not surprised that they're imbuing some of their influence.
--:-- Guest (Charlie Harding): So I think some of it is just, I think People are just trying to relive their youth.
--:-- Host (Jonquilyn Hill): Okay, so our listening habits may not be the greatest economic indicator, but what can we rely on to tell us if we're actually hitting the R word?
--:-- Host (Jonquilyn Hill): We'll find out after this break.
--:-- Host (Jonquilyn Hill): Support for the show today comes from LifeKit, the podcast from NPR.
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--:-- Host (Jonquilyn Hill): and the newest trends. If you like to save, but also like to stay in style, Burlington is your answer.
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--:-- Host (Jonquilyn Hill): Okay, we're back with the Wall Street Journal's markets reporter, Hannah Aaron Lange.
--:-- Guest (Hannah Aaron Lange): Okay, Hannah, I'm pretty sure I know the answer to this question, but I will ask it anyway. Are we in a recession?
--:-- Guest (Hannah Aaron Lange): I would say no. It's pretty safe to say we're not in a recession right now.
--:-- Guest (Hannah Aaron Lange): There are many pieces of the economy that are still healthy by historical standards.
--:-- Guest (Hannah Aaron Lange): Yeah, I think if you asked anybody on Wall Street or in the economics community, the answer would be no.
--:-- Host (Jonquilyn Hill): Okay, this brings me to a question posed by our listener, John, who we heard from earlier.
--:-- Host (Jonquilyn Hill): I wanted to know, what are the real recession indicators outside of, like, the things that you see on TikTok?
--:-- Host (Jonquilyn Hill): Another listener named Isaac called in with a similar question.
--:-- Guest (Hannah Aaron Lange): I have a question about the recession indicators. There's all this talk about like the stock market and the GDP. There's all sorts of different indicators. So among all of the indicators, like what is the most significant at getting at like the daily everyday person's quality of life?
--:-- Guest (Hannah Aaron Lange): What are the indicators Normie should be on the lookout for?
--:-- Guest (Hannah Aaron Lange): Well, I think a big one that I've mentioned already is reduced consumer spending.
--:-- Guest (Hannah Aaron Lange): And some of these internet recession indicators kind of get at this, right? When uncertainty is high, most of us cut back on the extras in our budget and look for maybe cheaper ways to cover the necessities.
--:-- Guest (Hannah Aaron Lange): If that happens on a large scale across income brackets, that will absolutely slow the economy.
--:-- Guest (Hannah Aaron Lange): And I think the big one for everyday people is the job market, right?
--:-- Guest (Hannah Aaron Lange): When sales start to slow at companies, when the economy contracts, employers start making layoffs.
--:-- Guest (Hannah Aaron Lange): And that obviously has a huge impact on somebody's life and would spur even more households to have to rein in their spending, right?
--:-- Guest (Hannah Aaron Lange): So I think signs of what I would call the labor market getting weaker, right, which is more job cuts, the unemployment rate going up, hiring slowing even more significantly than it already has.
--:-- Guest (Hannah Aaron Lange): And I should mention that an official recession can actually only be declared retroactively.
--:-- Guest (Hannah Aaron Lange): So it can be hard to say if we're in a recession right now.
--:-- Guest (Hannah Aaron Lange): What would you recommend people do to prepare for a potential recession?
--:-- Guest (Hannah Aaron Lange): I think that's the real question, you know?
--:-- Guest (Hannah Aaron Lange): I think if I had to give one tip, the biggest thing I would say is probably an emergency fund.
--:-- Guest (Hannah Aaron Lange): Anything from 3 to 12 months of living expenses saved.
--:-- Guest (Hannah Aaron Lange): You really just want to have a cushion should something happen, like a job loss, right?
--:-- Guest (Hannah Aaron Lange): I understand that might be really challenging for folks to prepare or build up right now, given the affordability challenges we've faced over the past few years.
--:-- Guest (Hannah Aaron Lange): But I think being prepared in the event of an unfortunate situation like that, I think, could be really beneficial.
--:-- Guest (Hannah Aaron Lange): Are folks right to be worried about the economy now or are we actually in a better place than we collectively feel like we are?
--:-- Guest (Hannah Aaron Lange): I think both of those things are true.
--:-- Guest (Hannah Aaron Lange): Again, the economic data is relatively reassuring right now.
--:-- Guest (Hannah Aaron Lange): The inflation rate has come down so much from where it was in 2022, right?
--:-- Guest (Hannah Aaron Lange): And the job market, as I've mentioned, is still healthy.
--:-- Guest (Hannah Aaron Lange): Unemployment is still low. The layoff rates is still low. The stock market has rebounded, right? It's back to where we were prior to the worst of the tariff turmoil kind of starting, right?
--:-- Guest (Hannah Aaron Lange): On the other hand, I think it's absolutely true that this has been a very difficult economy to navigate for many people, particularly young people, right?
--:-- Guest (Hannah Aaron Lange): I think that, you know, if folks are sensing that this is a difficult economy to kind of get started in as an adult, like I think that there are very real phenomena to point to that backs up that case.
--:-- Guest (Hannah Aaron Lange): Right. So I think it's both.
--:-- Guest (Hannah Aaron Lange): And though not every recession indicator that we're labeling online is necessarily real by academic standards, I think the sentiment at the core of it is.
--:-- Host (Jonquilyn Hill): That's it for this week.
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--:-- Host (Jonquilyn Hill): If you're one of those people who uses the buttons to try to communicate with your pup, or if you have another story that illustrates your cosmic connection with your dog, send it in.
--:-- Host (Jonquilyn Hill): Call 1-800-618-8545.
--:-- Host (Jonquilyn Hill): This episode was produced by Hottie Milwaukee.
--:-- Host (Jonquilyn Hill): It was edited by our executive producer, Miranda Kennedy.
--:-- Host (Jonquilyn Hill): Fact-checking by Melissa Hirsch.
--:-- Host (Jonquilyn Hill): And engineering by Matthew Billy.
--:-- Host (Jonquilyn Hill): I'm your host, Jonquilyn Hill.
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