From WXXI news.

This is Connections.

I'm Evan Dawson.

Our connection this hour was made in 2011, when Donald Trump said in an interview that it was catastrophic that the United States national debt had hit $15 trillion in 2016, he was running for president.

Trump said that the $19 trillion in debt was a time bomb, and he urged Americans to vote for leaders who would stop the debt, increase, and even pay down the debt.

In 2018, in year two of his presidency, Trump acknowledged that the debt had grown another $2 trillion.

But he said that Americans would soon see the debt go down very quickly by 2023.

Running for president again, Trump said that the $34 trillion in debt had to be controlled and would be a priority of his and paying it off.

Now, nearly two years into the second Trump term, the national debt has crossed $40 trillion.

Annual debt interest now exceeds the entire U.S.

defense budget, and economists are debating just how urgent the debt situation is.

Meanwhile, the bond market has been in a bit of chaos.

Two weeks ago, the Federal Reserve raised interest rates by a quarter percentage point, and Americans are wondering if the high prices they've seen on just about everything are going to stick, or if there's a way to bring them down.

Recently, we heard from a regular Connections listener who found an old grocery bill from five years ago.

She did a little comparison and we thought that'd be an interesting place to start the show.

Comparing food prices from the recent past to our trips to the grocery store.

Now.

And that listener was Arielle Rosenfeld is a Monroe County resident and home cook.

Found that Bill and is here to talk about it.

Arielle, welcome to the program.

Thanks for being with us.

Thanks for having me.

And I mentioned to Arielle, I said, you know, you got to come on.

And there's an economist who comes on semi-regularly.

And Arielle said, oh, I know that guy.

You guys go way back, don't you?

Yeah.

So we went to high school together and probably before that, I don't think we had any classes in elementary school together.

But you know, Brighton kids tend to stick together.

What a small world.

Doctor Eric Morris is back with us, portfolio manager and staff economist for Invesco Advisors.

Eric, I'm glad to give you a little school reunion on the show today, and I am happy to see you and very happy to see Arielle.

Arielle's, an excellent human being and, always has great insights whenever I see her.

So it's great to be together today.

We're going to get to the grocery bills in just a second.

Let's do just a quick overview, because we're going to go throughout the program.

We're going to talk about a number of things that are related to the economy.

And we're going to talk about whether they're related to what people are paying, for example, not just at the grocery store, but in other places.

That's been a common theme we've talked about with Eric.

We're going to talk about how the debt affects us, what we should know in general if we're not, you know, if you're not thinking about the bond market every day, what should we know about that?

Things like that in general, though, Eric, what is the how would you characterize sort of the state of the economy?

Does it feel stable, volatile?

I mean, is there a way that you would characterize it?

And we continue to be in this really funny place where, survey data, based on, self-reported consumers saying how they feel about the economy is coming through and saying that people feel really lousy about the economy.

But hard data, when we look at, you know, economic indicators that get broadly, you know, in aggregate how things are doing, the market is actually pretty good.

The economy is growing.

And what that means is that people are spending spending supports hiring.

The job market is not wildly strong, but it's tight and certainly not weak.

It definitely favors, employees wages are growing.

If there's one sort of negative spot in the economy right now, broadly speaking, it is inflation inflation's too high.

The the headline measure of inflation is, CPI is growing at about 3.4% at an annual rate year over year.

That that's too fast.

We'd like to see that closer to 2%, which is why the fed moved and increased the short term interest rates that you mentioned at the at the top of the show here.

But it's certainly that 3.4% year over year growth in the price level isn't nearly as high as we saw back in 2022, where we were in a real inflation crisis, with inflation going at 9% year over year, that is too fast.

So broadly speaking, the economy in in by many measures is in just fine shape.

Pretty good.

Of course there's problems here and there, but it's nowhere near, as lousy as people are reporting, which I think is a really interesting phenomenon.

Well, and, you know, every time you come on and you talk in the sort of the these calm, dulcet tones that we're hearing now, someone is going to email the program today and we'll take emails, as we always do.

I this is your public square Connections.

And I talk to email the program if you want to do that.

If you want to call it 844295 talk (844) 295-8255.

You know someone is going to reach out, understandably, Eric, and say, look, he's talking about this big picture, average.

But there's a lot of inequality and there's a lot of people who are not enjoying, you know, the benefits of this economy.

And you talked about that the last time you on you want to hit that briefly here.

Absolutely.

So the first level set is that from an economist perspective we are often talking about broad aggregates.

Right.

The economy on average as a whole.

That is messy because what you're talking about is you get 330 million people living in a in America.

They all have different experiences.

And most of the economic indicators we're looking at lump all of those experiences together, and we look at them on average in aggregate.

I was actually having a conversation over text this morning with, with a friend of mine, and he was talking about an individual experiences.

I kind of we were kind of missing each other, I think, because he was talking about individual experiences and I kept firing back, talking about aggregates, and we were missing each other that way.

So I can appreciate it if a listener comes in and says, wait a second, you know, you said this about grocery prices.

That's not what I'm seeing when I go to Tops or Wegmans.

Right?

And that's true.

It might not be that individual experience for you, but we're going to talk a lot about aggregates here.

That's really when we think about the overall economy.

That's how we measure it.

When it comes to different experiences in terms of inequality, that might be one of the big pockets in today's, current state as well, is that people at the bottom, the very bottom of the spectrum, are being hit by today's issues a little bit harder than those at the top for a couple reasons.

One is that when we think of inflation being the primary issue, that the goods that are experiencing inflation right now tend to make up a larger proportion of people's incomes.

For those that have less income, so that that becomes more significant, those price increases.

And the second thing is that those who are at the top ten that rely on more than just their income, they have wealth.

So they own homes, they have investments, maybe a 401 K that's that's accumulated.

And asset prices of homes and stocks have really gone higher lately.

So that gives a little bit more of a buffer when they're thinking about how to use their income.

So that that's sort of a k-shaped economy.

We've seen and that's very real.

But but but I do want to say that on the whole, on average, you know, even those towards the bottom are better off than they were ten years ago.

15 years ago.

It, it that that k-shaped thing doesn't explain, doesn't say that they're worse off.

It's just maybe that that the experiences are diverging from those at the top and those at the bottom.

All right.

So let's talk about food prices.

And we're going to get Arielle's bill in a second.

A little bit of background on this.

You've talked about the stickiness of inflation.

It doesn't hit everything the same way.

What should we be thinking about when we think about stickiness of food prices.

So food prices are known to be pretty volatile, which means that they go up and they go down.

That and that's on the whole, and a lot of that is because a lot of food prices are driven by commodity prices.

So food, foods that you buy packaged on the shelf, start as a commodity somewhere.

And those commodity prices can go up and down based on a number of global, and national and regional impacts.

And so those prices go up.

They do go down as well.

Stickier prices tend to go up and stay up, you know, the prices of things, that, that are more durable tend to be like that food can go down.

And so, like, you know, the price of eggs, you remember, was going up like gangbusters.

Not crazy.

Well, the price of eggs right now is about the same price that eggs were in 2015, right?

Kind of crazy.

But the price of bananas by way of bananas per pound is about the same as it was back in 2008.

And they've gone up and down since then.

Right.

So so, food is interesting this way that it can fluctuate.

Some of the stickier food, food prices out there would be maybe some more of the price.

Highly processed things, packaged foods in that way.

But the raw material foods are going to be more, more volatile.

Okay.

So is it okay?

Sometimes I put my student hat on, and I. Failure class, so never, I don't know, I don't know.

So I'll give you an example of what comes to mind here.

We're going to take a look at a grocery bill comparison.

When you talk about the fact that groceries are not always sticky, that those prices can go up, but they can come down, what goes through my mind is, well, then if we've got inflation really under control, then we should see prices.

Nothing should cost exactly what it cost five years ago, which is what we're going to compare.

But it should be closer to what, you know, the effect of the dollar was if you compare a dollar in 2026 to 2021, you should be able to get roughly the same for a loaf of bread, a can of soup, a pound of ground beef.

I've got those comparisons coming up here.

If we've got inflation under control.

Am I wrong?

No, you're not wrong.

I do want to remind you that over the past five years, we have not had inflation under control.

Okay?

So the expectation that that should be the case, it should not.

So I would expect that Aldi's grocery bill is going to have some interesting things.

And then but on the whole I would imagine the grocery bill is much higher today than it was five years ago.

And that's because we haven't had inflation under control.

We've been the past five years include an inflation crisis from about four years ago, which was the highest inflation we had seen in 40 years.

It was, not good.

Very not good.

People were getting poorer.

And then most recently in the past couple months, we've seen inflation spike up again.

Definitely not crisis levels.

But certainly unwelcome.

So I would expect that bill to be higher.

All right.

So Arielle, I'm going to let you talk about your bill.

And then I grabbed six items from my recent grocery bill that I don't think are on yours.

And we're going to do our own little comparison.

So the floor is yours.

What came to mind when you found that bill from five years ago?

First of all, sure.

My my first thought was, why do I have this?

But then after a good one, I found it and I was I just had a moment of, oh, this was the first time I had gone back into a grocery store in person, you know, after lockdowns.

And so I had kept it, I think, in the back of my mind for I wonder if this will be an interesting comparison.

And when I did happen to find it, cleaning out my office, I said, Yes, it was And I immediately pulled up the the Wegmans app because I had to go through and do a comparison.

This was just for my own curiosity.

At the point at that point.

But then once I, once I, you know, realized the differences, I said, okay, I think, maybe the Connections audience might like to hear something about this.

If if they're interested in, you know, a real life example of inflation since, you know, just over the last five years.

Absolutely.

I will say la if I were thinking better today, I would have pulled the a clip from the great late Mitch Hedberg, who once said he bought a donut and he was asked if he wanted a receipt, and he said, nah, I'm just going to give you the money and you give me the donut end of transaction.

You know, I don't need I can't imagine where someone's going to say, in the future, you better prove that you bought that donut.

But Arielle Rosenfeld can prove that you bought those groceries.

So let's do a comparison.

You want to take us through.

What did you found?

Sure.

I got to pull it up here.

So, It was it was pretty evident to me that there was, you know, a normal increase in prices.

So for for the majority of the items, your conventional store brand, everyday items, your milk, your pasta, etc., those only went up by about 50 to, $0.99, and I feel like that's probably expected.

What I do find interesting is that I like to shop at different stores based on, you know, what they have in their prices.

And, so I know what something should cost at one store versus another.

And, so I know that the, the price that I'm paying at, let's say, an Aldi versus a Wegmans, the price I'm paying at an Aldi now is how much I was paying at Wegmans then.

And that's just for your basic your basic, you know, staple items.

What I did find really interesting was the, the specialty items, you know, I for for special diets, you know, lactose free or specific organic products, those comparatively skyrocketed.

So, you know, going up by, I don't know, the, the amount, the math percentage, they went up, but it was significant enough that it would keep me from buying it in the future.

Okay.

Is there a specific item on there that jumped to the most, I believe?

Well, it was a very specialty item, but so it was a lactose free, organic kefir drink, you know, a fermented yogurt drink that is very healthy.

But it is, I would definitely call it a more specialty high end item.

But one thing I was really surprised about was, you know, the the family pack of the of the Wegmans chicken dumplings.

So those are kind of a staple in a lot of people's houses.

They've got veggies, they've got protein, you know, they're they're quick and easy frozen item, to feed your kids.

And those went up significantly.

And I, I'm guessing it has something more to do with maybe some imported ingredients.

Given that they are, an Asian product or, or if it has to do with a chicken, I don't know, but it was enough to make me go, okay, this is a lot of money for a convenience item that I don't think I need.

I can get my protein and veggies a different way.

Okay, so let me turn to Erica for a little analysis here.

And I'm going to add my list now.

So Arielle's has some specialty items.

She's kind of looking at where the smaller increases and where the bigger increases are.

I did the same thing.

So a pound of chicken breast, it was one of the lowest increases.

It was only 1,718% more today than five years ago.

And I think just based on the way the dollar changes and what your dollar can get, I think that's probably what it should be.

That's pretty close to parity.

A loaf of bread, 18% more today than five years ago.

So, you know, not nothing.

Nothing.

Jaw dropping there.

A box of Cheerios, 22% more today than five years ago, a bag of chicken nuggets.

So Arielle talked about the dumplings.

I have the bag of chicken nuggets up 31% in five years.

A can of soup, 31% increase in five years, a box of pasta, 34% increase in five years.

And a pound of ground beef, 62% higher than five five years.

So I don't know what the difference between beef and chicken is.

It's a huge difference in terms of the percentage increases.

What do you make of some of the numbers that you're hearing here?

Eric.

Yeah, it's really interesting.

So the the price the overall price level is up over 25% for the past five years.

So it's interesting to hear those items that have lagged that.

Right.

That means that based on the overall price level that they haven't kept up the same piece.

I technically that's I guess, you know, it's really cheaper, right?

I mean, I'm getting pushback from that.

But in an economist sense it is.

And I'll explain a little bit more on that.

The ground beef one that's a really interesting one.

And, and that's pretty, I don't call it idiosyncratic, but with ground beef, that's really the beef, the global beef market.

Right, right.

And what's, what's going on with that.

It gets back to that commodity piece.

It was kind of like the egg market.

Why eggs were skyrocketing.

Eggs were skyrocketing in price.

Not because there was some global egg cabal, but because there was a global, avian flu that required the calling of chicken crop, the chicken crop, and that they were laying fewer eggs.

I feel like I'm back in the classroom when I used to teach economics and use this as an example, we'd snip this headline and say, okay, all of a sudden there's a big flu and all the, you know, half the chickens of the world, you know, come down with it.

You either have to call them or you can't eat their eggs.

So then what happens to the eggs?

Well, there's a big reduction in supply.

Supply and demand.

Work price goes up.

That stinks for consumers, right?

For for producer like producers, that's going to incentivize farmers to go out and get a lot more chickens, because they know they can get a high price for the eggs.

They get more chickens, the chickens lay more eggs, and then ultimately the market settles back down.

Right.

So this is going on in a sort of maybe slow motion with the with the beef market.

I don't know the exact idiosyncrasies of that.

But I'm not surprised to hear that there are individual goods that have outpaced the overall price level.

But a couple more things I want to weigh in on here.

One is Arielle's talk about those chicken dumplings.

Got me thinking.

Now the chicken dumplings are higher in price and maybe than the chicken breast.

Well, why is that?

Well, maybe it's a specialty item, but also there's going to be some other inputs to that.

Those chicken dumplings.

And I'm not talking about the dumpling wrapper or any preservatives.

I'm talking about the manufacturing of it and labor, and that labor cost is going to eventually get passed on.

Now, the interesting thing is that labor costs have gone up quite a bit.

Well, I flip that around.

What's labor cost?

Wages.

So all of this whole discussion really needs to sit in the context of wages, right.

Because prices go up.

We know that I you've heard me say this in the show happen many times in listeners have before a Coca-Cola.

It doesn't cost a nickel anymore.

It's it's it's not alarming.

It's not shocking that it doesn't cost a nickel anymore.

It's gone up.

But wages have gone up too.

So what has happened to earnings over the past five years?

On average, on average, by several different measures, earnings have either kept track or maybe just outpaced the overall price level, not 62%.

With beef, right?

But somewhere in the 25 to 30% range.

When we look at disposable personal income and we look at average hourly earnings, when we look at the median household income level, all keeping up with inflation in that sense.

Now, that's not to say that every household has kept up right.

But it's interesting when I think about that chicken dumpling and the input of labor, that there was a worker that got paid as part of that process, and they went off and they bought something else.

Maybe it was the organic kaffir, right.

But they're using those wages to purchase something else.

And so this whole context of prices needs to sit within.

Or actually the conversation needs to sit within the context of wages as well.

Okay.

And so you know, Ella, you mentioned that there are some items that had gone up enough that you'd reconsider buying them.

And for me, that brings back the conversation we had recently of all things, with a new university.

We talked to both the new presidents of Suny Brockport and Nazareth University on this program.

We talked about the way that the sticker price of a year of education, higher education is, has dramatically increased way, way beyond the value of the dollar.

I mean, way, way, way beyond that.

And I understand I'm not going to reopen that can of worms.

I know a lot of students don't pay the full sticker price, but the bottom line is what I was asking the university presidents was eventually the prices will get to a point where even that sticker price turns enough people off in the market will turn away from it.

And are we at that point?

Are we nearing that point?

How do you know when you get to that point?

So that comes to mind for me when you say, look, I looked at those bills and there's certain things that, you know, there's a lot that's close to parity or up a little bit, and then there's a few items that are sky high and I'm reconsidering.

Does it change the way you shop?

In some ways, Ella.

Oh, absolutely.

I you know, I think about I think about the big picture when I'm shopping.

You know, I could be buying a loaf of bread and, or I could be buying, you know, the flour, the yeast, etc.

to be able to make my own.

And, you know, sure, there's my time and my energy that that goes into that.

But in the bigger picture, convenience costs a lot more.

And so I have I've made personal decisions and with my family to, to be able to, you know, manage a budget better by making adjustments and sacrifices.

Sure.

Sometimes, there there's some things of course, I will not sacrifice on because, you know, we all need our little treats, but it's really important to be thinking of the bigger picture.

And instead of just, you know, okay, what's on the shelves?

It is the cost of it.

Not necessarily I in my head, no.

Okay.

I can get a better price for that at a different store, and I'll wait until my next trip to get that particular item.

I'm not set on the right now.

I have to have this.

I'm always thinking about the bigger picture.

And before I let you go, let you know as a home cook yourself.

I do think it's interesting that you say that you know, you obviously enjoy cooking, but there might even be an extra incentive now if you want to keep.

I think what you're saying is, in most cases, if you can make it at home, you're going to spend less.

Or is that not what you were saying?

Is that accurate?

Oh, that is totally accurate.

If I can make it at home and make it better and cheaper, I'm absolutely going to do that.

It's mostly about convenience at this point, to be buying it from a store already made life.

Thanks for sharing your grocery bills and for coming on the program.

And let's talk again sometime.

With that home cook perspective, I love that.

Thank you very much.

Sounds great.

Thank you.

And yeah, we brought Arielle and Eric back together, former classmates back in the day in Brighton.

Eric Morris, our guest, Doctor Morris, is an economist who, is a regular guest on this program, breaking down what we are seeing in the economy.

So.

So let me close the whole stickiness of price with a couple of things.

And then we're going to move on.

We're going to talk about the national debt.

We're going to talk about the bond market.

We'll talk about interest rates and and what we're paying in different ways here.

But what are the stickiest prices in the economy, Eric, if it's not typically groceries, where do we see the the stickiest prices at durable goods are really pretty sticky.

And goods that have a have labor is a is a high, proportion of their inputs because labor tends to be a sticky price.

We don't see wages go down often.

So where labor is a is a pretty intense input.

Those prices tend to be sticky.

And so again, durable goods.

So like washing machines, dryers, new cars often I mean, those prices can go down.

But but also, things with the word labor is a high input.

Those types of things.

Okay.

I do want yeah.

I, I'm, I think this idea of alternatives is so, so, so interesting.

And that really gets to, markets.

And I think it's a really interesting, think, you know, these prices only stay high when people continue to pay.

But if somebody would stop paying the price, then producers would no longer be able to to stay in business if they continue charging that price.

So they either have to go off and make something else or lower the price.

Right.

So right now people are continue to pay these prices and people might feel like it's, against their, their will.

But I think the ultimate power here is to find an alternative.

Right.

Now, you can't say that to the diabetic who's looking at the cost of insulin, right?

There is no alternative but when you're when you're looking at buying the chicken dumplings, well, there's certainly an alternative, you know, and Arielle's talking about cooking at home.

I mean, that might be inconvenient and, not the best option for some people.

But if that's true, if these prices are truly too high, you know, exercising your your freedom as a consumer, I mean, it's sort of like voting with your feet here, right?

Like just stop buying.

And that will, that will solve the problem.

And can I get your take as well.

That conversation with the university presidents on the sticker price of higher ed I, it's more nuanced than just what the sticker prices because at a lot of these schools and Nazareth, the, the new president of NAS, says there's not a single student on campus paying the full sticker.

Yeah.

And the full sticker is I mean, I don't if it was 60, 60, something like that.

Most students are paying around on average, the average students paying around 40 to 42.

So it's pretty big discount.

But what you look at over time is, you know, we just talked about food prices over time and effectively what bananas cost.

Now compared to ten, 20 years ago.

Effectively what bread costs now.

College is nowhere close even if you factor in inflation.

You know, when I was at Ohio University as an in-state student, it was $9,000 a year.

And it wasn't the 1950s.

Everybody.

It was.

Yeah, it was in the 90s into the OTS.

And if you just look at the way the dollar works, I mean, it's well over double almost in some cases triple the price in three decades.

On the sticker.

And my question to you is, isn't there a point where the market will reject higher ed just for where that sticker has gone?

Now?

I think higher ed is really wrestling with this because, when we think about the, what would what would keep people in the market paying higher prices, there's a couple of things.

One is urgency, like importance, right?

I mentioned like, you know, insulin for the diabetic.

Like, you know, that that that's a super important thing in their life.

Right?

So how important is something to is the available, substitutes.

Right.

So what's what's out there.

And the three I won't go into number three.

But that has to do with relative price compared to your income.

But actually that's relevant for colleges.

But we think about that urgency and the available alternatives piece.

I think it's really relevant for colleges because colleges are trying to, maybe restate or re articulate their value proposition.

And I'm hearing this from, from small colleges and universities, that, that I work with, as a, as an advisor and portfolio manager for endowments and foundations.

So we do some, college foundations and endowments.

And then I hear people talking about this, like, really trying to articulate the value of a college education and make it, articulate why it's important and why there might not be viable alternatives.

But there's also these big changes in society right now where there are opportunities popping up in the world, where a college education isn't maybe as necessary or perceived to be as necessary as it's been in the past.

There's a lot of things that are that are, leading to that one is sort of a broad pendulum shift and this idea of where, opportunities are as a worker for a long time, there's a cultural, bent that kind of look down on manual labor and trades.

You know, I think that was unfair, but it really led people who were making decisions about their career toward more, you know, careers where they thought a college education was more necessary.

Well, there's there's been a huge vacuum and there's a lot of void there where there's, an opportunity for people to enter into trades and, and more, physical work and make a really good wedding where they don't need a college education.

That's one thing that wrestling with another is alternative.

Excuse me?

Artificial intelligence, the access to information that AI provides beyond just an internet browser, but, like, really some serious access to information that if if people think that the only value of account education is to get information in your head, well, then AI is going to make that, kind of a moot point, right?

You don't really need, college education to get information, right.

It's it's going to be at your fingertips or at the spoken word right in your voice.

So, colleges, I think all know that there is a reason for them to exist beyond these things, right?

Beyond just simply job training, beyond simply just information access.

And they're working on articulating that.

Now, whether that's going to be worth their sticker price is a different consideration.

That's one for the market.

And I think the colleges and universities, that's what they're struggling with right now.

And I can't tell you, Evan, you know, you said like, is it is it worth the sticker price?

I can't tell you.

That's that's up to the market's up to everyone exercising their own free will and how they want to use their, their capital.

But, you know, I'm proud that I went to college.

I'm proud of the degrees that are hanging over my shoulder right now.

But if, you know, with my kids, I have a three year old and a one year old, and when they get to be the age where they're eligible to college, I wonder what the world looks like in that way.

Yeah, I totally understand.

All right, so after we take our only break, we're going to come back and we're going to talk about some other issues related to the economy.

The national debt just hit $40 trillion, 40 trillion.

And a lot of politicians talk about paying down the debt.

I want to get an economist perspective on what the debt actually means, means to us.

We're going to talk about how to understand this volatile bond market, and we're going to talk about the fact that, interest rates just went up a quarter point.

What does it mean for your ability to maybe buy a house and other things in the future?

So a lot more with Eric Morris will take some of your feedback as well.

On the other side.

Coming up in our second hour, the story of a girls trip where everyone canceled, but one woman decided to keep her plane tickets and go even if she was going solo.

That instilled in her a desire to travel even more and see the world.

She created a business helping other people travel, especially first timers.

It's a remarkable story, talking about the value of the experience of travel, and we'll talk about it next hour.

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This is Connections.

I'm Evan Dawson.

All right.

Let me get a couple of emails.

Dallas says anything the government supplies aid to gets more expensive faster than everything else.

Fair.

Eric Morris.

Yeah, and that's just classic economics.

When you have more money chasing the same amount of stuff, the price goes up.

And that's.

That's just how it works.

So, you know, this is why, we've talked in the past even about, like, housing, and the housing issue.

And this is why giving people more money to buy houses is not going to solve housing affordability.

It's just going to drive drive prices up further.

It's a really supply issue.

So similar concept there where you just simply throwing more money at it.

It's not going to solve prices.

It's going to drive prices up.

Okay.

And and going back to housing, we need more housing supply.

We need more houses.

We need more units.

Right?

I mean, that's the baseline baseline.

And it's just as simple as that.

Okay.

When it comes to higher ed, I think what you're saying is if the government throws money to help students afford higher ed, the institutions are just going to raise tuition and rates knowing that there's more money in circulation.

Can the government put guardrails on that to say, hey, we're going to supply money for students to be able to afford you, and you cannot raise rates past a certain amount.

And it, I guess.

Is that a good idea?

No, that's a lousy idea.

You're taking you're you're having government intervene to stop its own problems from intervening.

Like, this is like, you know, this is the the snakes and the mongoose, like, it's just you got one thing after the next.

There's a Simpsons episode about this, I think, where they just keep bringing they just keep bringing in the next predator animal to solve the problem from having introduced the initial predator animal.

Like, it's just a it's just a lousy idea.

I'm pretty sure that was a 1990s Simpsons episode, wasn't it?

That.

Well, I'm dating myself.

That's when The Simpsons were the 1990 Simpsons.

Some of the peak of of comedic writing on television.

Damn.

Okay.

Thank you.

There.

Greg says that Republicans only care about the debt when they are not in power.

All right, so teams got a fact.

Check me, producer Megan Mac.

I think it was Dick Cheney who said deficits don't matter.

After railing against deficits, though, again, a deficit is what you're doing on an annual basis.

Is that correct?

He did.

Okay.

So Dick Cheney did famously say deficits don't matter once they got into power.

Deficit is what you're running on a year to year basis.

The debt is the accumulated underwater.

Eric, we'll talk about that in a second.

And I think the last time the US government did not run a deficit was during the Clinton administration in the 90s, I think.

But anyway, the last, the last the last year of the Clinton administration.

That's right.

Okay.

So that's the little history.

But Greg is saying, hey, Republicans only care, you know, when when they're not in power.

I do have a sound clip from Vice President Vance.

So I mentioned off the top here that if you go back over the last couple of decades before Donald Trump even became a presidential candidate, he railed against the debt.

He said the debt is a national scandal.

The debt needs to be paid down.

And and then when he was running for president, he said, if I'm elected, you're going to see the debt go down very quickly.

The debt went up.

Did not go down.

And then he when he was running for president a second time, he said, it's an even bigger national crisis, and he's going to pay it down.

And the debt only gone up.

So now it's over $40 trillion.

And the average annual interest on the debt is more than the defense budget of $4 trillion.

And Vice President Vance addressed this.

He basically said, look, it's a problem, but we're going to grow the economy so explosively that, you know, we don't have to cut spending or we don't have to stop in Iran war.

We don't have to make any changes.

We're just going to see the economy take off like a rocket, and we're going to bring the debt down.

Listen to what he said.

Scott sent the amazing Treasury secretary.

He has had a very discrete plan, of course, supported by the president of the United States, to get the United States to a point where our economy is growing faster than our debt.

And if you look, we are on track.

So even though the debt is too high, even though we inherited this debt bomb from the Biden administration, we actually do have a plan to get the economy growing faster than the debt.

And that's the most important thing.

I'm I'm sorry that me again, we don't bring Doctor Morrison to talk Partizan politics.

I just think it's funny that, you know, they inherited this debt bomb from the Biden administration.

No man, you inherited a debt bomb that goes back multiple administrations, including the guy who is the president now.

So yeah, it's not one administration and it's not one party.

The debt has exploded.

And in recent decades, Doctor Morse, what do you hear there?

I hate to be so cynical.

I always try to encourage people not to be.

And I get to be, people call me the joyful economist.

Right?

So I'm like the the anti cynical.

But when it comes to politics, having, you know, because we've talked on the show and because we've talked in private, about this, I'm not sure what people expect from these politicians.

So like this is I don't care whether you're Republican or Democrat or left handed vegetarian or whatever your party is.

Right?

Like you don't want to own these problems.

Of course not.

Right.

And you want to blame the other people for the problem?

Of course.

Right.

And the purse strings are how you win votes.

And then the incentives are such that, you know, every two years you got to run these elections where you're you're running a popularity contest.

I mean, like there's a reason why they give out, awards for political courage.

And only one person wins it a year.

You know, it's all gets a huge field of people.

Yeah, that's.

The incentives are just so off.

Right.

And I'm sorry.

Right.

I get I hate to be so cynical about it, but, you know, I, I that's, that's kind of my thing.

Now, I'm not going to talk about Partizan politics here.

This is a blanket and I understand.

So so let me because, what I want you to actually analyze forget that it was JD Vance who said it, because what J.D.

Vance said in that clip could have been said in a previous Democratic administration, which is we're going to make this economy grow.

So much that it's going to outpace the deficit or debt, or that's how we're going to get it under control.

And the current dynamics, is that possible?

Yeah.

So here so here's the I don't want to work on this at a privately.

And I've I've never I write a lot I've never written about this I'd love to I just don't know what the right outlet is.

But you know, there have been times in the past where we've seen some really significant debt levels and deficits ramping up, and and the country's come out of it.

And my curiosity was, how have we come out of it?

Right.

What have been the measures that have happened?

What are the things that that have happened measured?

We've taken to get out of it.

And almost every time growth is like one of the main things, economic growth.

And you got to think about why economic growth helps with this, right?

The reason why is that much like a person, it's not a it's very, very much not an equal comparison.

Comparing the US federal government to a person.

But I will kind of use this analogy because I think it's helpful for us to wrap my mind around it, much like a person who is carrying debt, right?

If that debt is growing, how are you going to address that?

Well, you've got your you're obviously spending more than you're bringing in, right?

Which is which is tough, right?

That's how that debt is accumulating.

You know, your credit card bills are going up, and maybe you've bought a car and you've got a you've got payments on that and such a house.

So how are you going to get that that we have to pay it down.

Well how do you do that.

Well your debt is a liability.

But you also have assets, right.

And one of your primary assets is your own ability to generate income.

And if you can generate more income, that means that you can pay your debts off faster.

Well, how does the US government generate income?

It's tax revenue.

And what does the US government tax it taxes income.

That's the vast majority of the US government's revenues come from income tax.

How do people make income when the economy grows and the economy is growing?

That means people are spending one person spending is another's income, and that income gets taxed by the government.

So if the economy can grow faster, that means the government can take in more revenues without even without increasing the tax rate.

You can have a flat tax.

And if you have more income as an economy, you're taking in more revenue.

And that's helping you with your being able to pay down your debt.

So the idea is that in the past, growth has been a really important component of reducing deficits and debt.

And so that can't be discounted.

So what they're saying actually is has a degree of value in it.

The question is are we on par on the path for that to occur now in the past, what's explained that growth has been two things.

One has been productivity.

So being able to do more with your resources as a country, as a nation, as an economy, and two, is population growth and population growth.

Growth helps because you're increasing the labor stuff.

More people are going to be more productive.

More productivity is going to lead to more earnings, more earnings.

There's more spending.

One person spending is another income that gets taxed.

And so on and so forth.

Right now the population outlook for demographics doesn't look so great.

You know, our, our natural replacement rate.

We're not keeping up with it as a, as a nation.

So our, our, our native born population is sort of leveling off, and, immigration had been, supporting that.

Our growth rate over time.

But our immigration story right now, both illegal and legal, is one of of, where it's not helping.

It's they're not we're not adding the population.

So you got to take that out of it.

The other side of the coin is productivity.

Can we get more productive and grow faster?

Maybe.

Maybe not.

There's a lot of uncertainty there.

Okay.

And, but let me just jump in and say I've been going.

Well, that's a long like, no no no no no no, this is exactly why you're here.

But the vice president says we're actually on track to do it right now.

I'm not trying to be Partizan.

I'm trying to just look at the fundamentals.

And I don't necessarily see it, to reduce a $40 trillion debt.

That's a massive undertaking.

How are we on track to do that right now?

Yeah.

So, I would say that we're probably not on track to do that.

Our path is one that is on of unsustainability.

It's spending far more than we're bringing in the economy, even if the economy is growing at a robust rate.

You know, most recently the the numbers came out yesterday for quarter two.

The second quarter of, of 2026, that's the period from, April 1st to June 30th.

The economy grew at a 2.2% annualized rate.

That's nice economic growth.

It's supporting a good labor market.

Wages are going up.

It's not gangbusters.

I think that what they're portraying there is gangbusters growth.

And so I would say I disagree.

I don't think that that we are on track for that at all.

All right.

Let me wedge in some listener questions and comments because, I don't want to lose the hour here.

And there's some really interesting ones.

Dennis in Pittsford writes in the vice presidential debates years ago.

This is in the 1980s.

Senator Lloyd Bentsen, Benton's, Bentsen said, if you let me write $250 billion in bad checks, I'll show you the illusion of prosperity.

Isn't today's economy with $2 trillion deficits just the illusion of prosperity?

No, no, we are we are a very, very prosperous economy.

Our you know, the difference here is you're talking about 250.

What you say billion dollars.

That's what that's a Bentsen said back in the in the air.

Yeah, sure.

Okay.

So we just had 100% debt to GDP ratio, right.

And what's interesting about that is your debt is a stock variable.

The GDP is a flow variable, right?

The GDP is an annual thing that happens.

Right?

Your debt is a stock thing that happens.

It's it's it's a one.

It's it's it's exists statically.

It changes.

But it's, it's a it's a stockpile of something.

So, you know, it's not a fraud of an economy.

If were, if, if the federal government is, is, spending more than it takes in, certainly it's juicing the economy.

Yo, it's, it's adding extra capital out there for, for, for, people to spend and again, one person's spending, another income and so on and so forth.

But our economy is the envy of the world and the NBA history.

But let me take let me take a crack at what I think Dennis is saying.

And then you might be missing it.

Well, no, but I want you to evaluate it based on what I think he's saying, which is we could be doing well in so many ways, but now our debt is $40 trillion, and we're adding 2 trillion a year, and that will get us eventually.

It doesn't matter if we're doing great now, because we have what Donald Trump once described as a ticking time bomb.

It's going to come due and we're in real trouble.

Eventually.

That should be the priority, yes or no.

And and this is I think this is why I was hoping to talk about coming on the show is like, what is the ticking time bomb look like?

Because yes.

Right.

This is a problem.

This is why we're talking about it.

So so Dennis is right.

There's this is a problem.

Right?

But what is the what is the problem.

Right.

Because this is something that people are having trouble wrapping their minds around.

A lot of people think that the problem is that the US is going to get to a point where it can't make payments.

Aren't that right?

Or China calls one day and it's like, guess what?

Where it's all come and do and what you don't got the money.

So we own you.

I mean, I don't know what people think.

I don't I don't even know what it looks like.

I just doesn't have that much of our debt that that would be that an issue like, I mean, the number one holder of U.S.

debt outside is the US itself.

Outside of the US, it would be, Japan and then the UK.

So, I mean, and that's not to discount your point.

I mean, I hear what you're saying, it's not a point.

I think a lot of times I'm actually trying to understand what the lay here and it's like, it's not.

Yeah.

No, I'm trying to get in the head of the lay people who like me, who see $40 trillion, and I don't know what that means.

I don't know if that means my grandchildren are in real trouble, or if that's sort of an ephemeral number that's actually quite malleable.

I don't know.

Yeah.

So.

So okay, so what's the problem?

The problem will be right.

It won't be the US government not paying its debts.

Okay.

The US government is constitutionally obligated to pay it.

So that's that's something people can forget.

And I just put my chair down.

It article one, section eight, 14th amendment.

Not to get an I'm not an attorney here, folks.

But like, these are like the government's got to pay its debts, but there's nothing in the Constitution that says that the US government can't inflate away the value of the payments that it's got to make in the future.

Right.

And but by that, I just mean that the US government can, can, can print more money.

Essentially.

It's not how it works, really, but like they can print more money so that like, oh, wouldn't it be nice if you like, if you pay for your next house payment, you could be like if your mortgage payment be like, oh, well, I can just run my computer printer, print off some funny money and give it to the bank.

They can accept that, right?

Well, that's kind of what the US government can do.

The problem with doing that is that it creates inflation.

Yeah, yeah.

And that's really what the problem, the perceived problem, the future is right.

It's not.

The US government will miss a debt payment.

That would be, that's that's crazy talk.

Right.

It's that the US government will use, money that it doesn't have to print more.

And then the money that it's paying will be worthless.

And that means all of our money will be worthless.

So go back to our initial discussion about inflation.

That would get worse and worse and worse and worse.

In addition to that, the US government, if they want to solve the problem, if they keep running up the bill, the problem gets bigger and bigger and bigger.

And when they do want to address the problem without it being inflationary, that could cause the government to use its funds from other places to pay off the debt.

So maybe you're going to have less for the military, less for veterans affairs, less for job security, less for the housing authority, less for all those things.

And so it crowds out the ability to spend in those areas.

If you really want to solve the problem.

And the bigger the problem gets, the more that that becomes an issue.

If you really want to solve it.

So there's it's kind of a damned if you do, damned if you don't situation here.

The longer you wait, the worse that gets.

The best thing to do right now would be to, yes, hope that we are growing and invest in growth and make sure that we have a healthy, growing economy that's not just good for the government.

That's good for everybody, especially the people that that have the the most to lose those at the bottom of the spectrum, a healthy, growing economy is best for them for sure.

Right.

But the second thing to do would be that you need to start restricting, expenditures and in hopes that, like as the economy grows that big, that you don't have to spend as much on all these programs, that you can use it to pay down your your debts and therefore have less interest.

Right.

The nice thing is that there's a virtuous cycle here is that as you as you get more responsible with your finances, more people are going to be willing to lend you money.

And not only that, not just willing, but they're going to be happy to do it at lower interest rates.

So that's how we kind of get out of this, unsustainable path, is that you have a little bit of, you know, prudence, a little bit of responsibility.

That might be too much to ask right now in the current political environment, but but it's a really a virtuous cycle.

The opposite of that is a vicious cycle.

And the vicious cycle would be that the US government starts inflating away.

It's that and people say, boy, I don't want to be paid back in US dollars.

So then I don't want to loan to the U.S government because they pay me back in US dollar US dollars.

Well, if if no one wants to loan to you, right?

Think about that.

You're like a you're somebody that no one wants to loan to.

Or how do you actually get a loan?

Will you have to pay a higher rate of interest.

Right.

Think about that.

Like if you're not a very, creditworthy borrower, right?

A bank's going to say, I don't want to loan you.

Well, maybe I will want you, but I'm going to I'm going to I'm going to demand a higher rate of interest because you're risky.

And that's what's going on right now, is that that can turn into a vicious cycle.

And I don't like that.

It's not going to be a crisis where you just like, you know, things blow up, right?

It's not going to be like falling off a cliff.

It's more like wading into a swamp.

Right.

And that's tricky.

That's tricky.

And right now we've seen interest rates go higher.

So people are worried about that.

I don't believe that's the reason why interest rates are going higher right now.

We can talk more about that.

But I know we only have six minutes and we probably want to take more questions, but I hope that it illustrates the real problem here.

What's the problem?

It's not that the US government is not going to pay the debt back, it's that the US government loses its credibility.

It starts to print running the printing presses.

You know, getting more money in the economy.

Inflation gets a little bit higher.

The government can't spend on other important programs that it might otherwise be spending on.

And we're all a little bit worse off.

Right.

We actually down to our last minute here.

So I'm going to make you do this in 60s or less.

You ready?

Jeremy?

Jeremy from Rochester wants to guess to explain how the cost of bonds is important to the city of Rochester.

Well that's great.

So the city of Rochester, it also borrows just like the federal government.

The city of Rochester doesn't have its own printing presses to print money, but it also borrows.

And the cost of that capital that it's borrowing is that it's interest rates.

Now, the interest rates for all things in the economy are based off of the government's interest rates.

So like for mortgages, the ten year Treasury, the federal government treasury is the base rate that that mortgages sit on top of the city government's, interest rates are also based off of federal government rates so that, if federal government rates go higher, the city government is going to actually have to pay a little bit higher to for, for its borrowing.

So that could be detrimental.

That's not crisis level, but it could be, a little bit worse off for the city if those interest rates are higher that they have to pay when they borrow for important things that they're borrowing for.

Okay.

So you did that in less than a minute.

That was amazing.

Doctor Maurice, always good to have you.

And I know there will be a lot to talk about soon.

Our, our audience appreciates your expertise.

Thank you for making the time for the program today.

I'm always happy to.

Come on.

I was happy to be here.

And I love hearing from the listeners.

So thank you.

And thank you all.

Eric Morris, our guest today, is a portfolio manager and staff economist for a let's go advisors.

I got to close the show with just a little bit of business here.

So, and we're going to let Eric go.

And I just want to address something that our listeners may have been reading about that we've been talking about this week.

So here's the news starting on Monday, there is a change coming.

It's not this hour.

Connections at noon.

I hope we'll be here forever.

The 1:00 hour will be fresh air with Terry Gross.

And if you only are looking at noon to two, you might look at that and naturally think that is a a cut, a reduction.

Is that a penalty because of what happened with the federal government and the support of public broadcasting?

And the answer to that is no.

If you only look at noon to two, I can understand why you would think that.

And I don't blame you for thinking that.

But we are going to grow in different ways.

I'm going to be doing a little bit more of my roots here, more original reporting that I'm really excited about, more long form reporting, more investigative stuff.

I'm going to be working with people like Max Schulte and Visuals Department The Newsroom, and we're really excited about that.

This show is going to go on the road more.

We're going to do more live audience shows, and that takes a lot of work and planning, but it's worth it.

We love being with people in live audience settings.

There's a lot of energy there.

We'd love to be wherever you are and do that some more.

And the show is going on television on Sundays.

There's we're going to try to put the show and package show for social platforms, even if it's platforms I don't use all the time myself.

I know younger viewers and listeners have different habits, and the world is not the same as it was ten, 20 years ago.

So we want we want to grow where people are growing and we want to go where they're going.

But the one thing that will never change is this is the public square at noon every day.

This is the biggest part of the work of my day.

That will not change.

I promise you that.

I love doing the show and we're going to try to do it forever.

We're going to bring political leaders on.

We're going to bring members of Congress on.

We're going to bring everybody in the community together to have these hard and important conversations that will not change.

Where we grow will be everything else, everything else.

And it took me some time to kind of agree to that because I'm an old school or maybe like you are, but I'm excited about the changes.

We do have more Connections coming up in just a moment.

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