The Economy Deconstructed, One TikTok at a Time

Podcast
Do not call Kyla Scanlon a social media influencer. She is a social media educator.

Through a swelling number of followers on YouTube, Instagram, and TikTok, Kyla has built a reputation as someone who can accessibly explain complex economic and financial concepts to a primarily Gen Z audience hungry to better understand the complex world around them.

That sounds like the kind of person we want on the New Home Insights podcast. Kyla thought so too, so tune into the latest episode.

Featured guest

Kyla Scanlon, Founder, Bread

 

Transcript

Dean Wehrli:

Hi everyone and welcome to the New Home Insights podcast. I’m your host, Dean Wehrli. We have something a bit different today from the usual fair. We’re going to be a little more wide-ranging than usual, I think today. We’re going to talk, not just about housing, we’ll get to housing, but we’re talk about the economy and kind of financial literacy and stocks and economic policies and things like that as well.

We’re going to do that with someone whose presence is mostly known through social media platforms, and that person is Kyla Scanlon. Kyla, how are you doing today?

Kyla Scanlon:

I’m good. I’m well, I’m well. I’m doing well. Thanks for asking.

Dean Wehrli:

I’m glad you’re here. I’m glad you’re doing well. Okay, you’re not a social media influencer. You are a social media educator.

Kyla Scanlon:

Yes.

Dean Wehrli:

Correct? I saw that.

Kyla Scanlon:

Yes, that’s the term I prefer, yes.

Dean Wehrli:

But really, you’re also a content creator, you’re a podcaster, you’re a writer. Your content focuses on financial literacy and then… The economics, I guess economic questions more generally, and it’s very wide ranging, by the way. I’m going to applaud you on that. You’re very, very, very well-read. I mean, everything.

Kyla Scanlon:

Oh, thanks.

Dean Wehrli:

Anything to do with the economy and finance, you’re talking about it a lot. And I don’t want to unfairly pigeonhole you, but you’re mainly talking to a Gen Z, a relatively younger audience. Is that fair to say? Am I being unfair?

Kyla Scanlon:

I mean, the statistics of my audience are 25 to 40ish, so a little bit older, but yeah, a lot of Gen Z tunes in as well.

Dean Wehrli:

Did you just say 25 to 40 is a little bit older? That’s painful to hear.

Kyla Scanlon:

Well, older… Well, I guess Gen Z. I’m technically Gen Z and I’m 26, right? So I think it’s just-

Dean Wehrli:

Okay.

Kyla Scanlon:

Hopefully everybody everywhere tunes into the content.

Dean Wehrli:

I’m loving it. I’m a fan now. I’ve rated and subscribed. I haven’t reviewed yet. I’ll get to that, I promise. But you have a huge following on YouTube. You’re on Instagram, you’re on TikTok, and you’re also on the other brand new social media platform that just arose between when we’re recording this now and when it gets uploaded, because I’m assuming that’s going to happen here any day now. I’m thinking… I’m kidding, I’m joking.

Kyla Scanlon:

I was like, “Oh my gosh, there’s another one?”

Dean Wehrli:

Things change. Things change.

Kyla Scanlon:

Oh, man. Because when X, the thing with Twitter being on Threads and then Bluesky and then Mastodon. Is there really another one? Okay. Good to know.

Dean Wehrli:

Threads came and went pretty quick, didn’t it? It seems like.

Kyla Scanlon:

I think people are trying to go back to it now, it seems.

Dean Wehrli:

Are they? Okay.

Dean Wehrli:

So I was covering my base. I was covering my bases there. Who knows when people are listening to this, if they’ll listen to it a year from now, there probably is a new social media platform that everybody’s on.

Kyla Scanlon:

There probably is. Absolutely. Yeah.

Dean Wehrli:

So let’s get started with what you do. First, I mean, you have a company, we’ll talk in a minute, called Bread, but let’s start with how did you get started? Just thinking, “Okay, I am going to… Every day, I’m going to talk about the economy or finance, with it pitching toward folks that are my age.” What’s the germination of that?

Kyla Scanlon:

Yeah, I mean, I had this blog all throughout college called Scanlon on Stock. So I talked about my options trading journey and then I started tutoring econ when I was in college, too. Moved out to LA, worked for an asset manager, and then just sort of realized that financial education was super important to me and wanted other people to tune into the economy.

And then I left that asset manager and around that same time, GameStop started happening, and all my friends were texting me and like, “Kyla, what is this? What’s going on?” They started making TikToks about it and it just sort of took off from there because following GameStop, a bunch of weird stuff happened. It’s just kind of been really weird since then. So yeah. That’s kind of how it-

Dean Wehrli:

So it was really that organic. It was folks saying, “I don’t understand this. I think you probably do. Tell me.”

Kyla Scanlon:

Yeah.

Dean Wehrli:

And it just grew from there?

Kyla Scanlon:

Yeah. I mean, I’ve always been that annoying friend that talked about stocks at the dinner table. So they’re like, “Be annoying online now.” And so I just went and did that. Yeah.

Dean Wehrli:

But it kind of grew into what you’ve, I think, you’ve called, financial literacy… Folks, a lot of folks, again, a lot of folks of every generation, let’s be honest, but a lot of folks of younger generation don’t really fully understand finance. Do you focus a lot on just making sure those people understand core fundamentals about finance?

Kyla Scanlon:

Yeah, I mean, my whole theory with the work is, there’s two goals, right? So number one is there’s a cognitive dissonance that happens when people feel like they’re not tuned in to the system that they exist in. So a lot of people, when they hear that the Federal Reserve is raising interest rates that is meaningless to them.

They don’t really understand what that means. And I feel like if you actually help people understand like, “This is what it means when the Fed raises interest rates, and this is how it impacts you, and this is what you can do,” that’s going to create a better decision-making tree for those people as well.

And then the second idea is that people need some sort of economics education, and it isn’t necessarily provided, right? Something that’s kind of left out of the curricula if you’re not in econ and college. And so that’s the goal, is just to help people make better decisions by giving them access to a toolkit.

Dean Wehrli:

Do you find, I mean, how wide-ranging is that? Is it other people… Is it mostly your audience to the degree you know the answer to this question? Is it folks who are already somewhat, at least borderline interested in finance or economics? Or is it folks coming to you that just have a start as a kind of a blank slate? They have no idea.

Kyla Scanlon:

I mean, I would say my content tends to be a little bit more technical, so it tends to be those sorts of people who kind of already know a little bit. But I was out walking my dog the other day and this woman came up to me and she was like, “Wait, do you do TikTok?” And I was like, “Yeah.” Because I get recognized sometimes. It’s really neat. But she was way outside of my demographic that I normally deal with.

I think she was in her 70s, and she was like, “I’ve spent 40 years trying to understand the economy and you’re the only person that has helped me make sense of it.” And so there’s people like that too, that have… They just need little nudges in the right direction and then they go and learn on their own or whatever. So it’s a little bit of both, which is neat. I’m really happy to be able to do that.

Dean Wehrli:

Let’s talk about Bread in one second, but one more question. How do you find the discipline and just the drive, the energy to do this? I mean, you’re literally posting something almost every single day. How?

Kyla Scanlon:

And writing a book, too.

Dean Wehrli:

And writing. That’s right. That’s right. You know what? Let’s do that now, by the way. I have that on my notes here. You’re writing a book right now. It’s going to be published by, I believe, Random House?

Kyla Scanlon:

Penguin Random House. Yeah.

Dean Wehrli:

And that’s called?

Kyla Scanlon:

It’s called, In This Economy. Yeah.

Dean Wehrli:

And that’s coming out next year, I think?

Kyla Scanlon:

April 2024. Yeah. We just decided on the cover and I have it back from copy to make final edits. I have about two weeks to edit the whole thing, which is really fast. But yeah.

Dean Wehrli:

And it covers, I think you have sort of discreet chapters, but do you have sort of an overarching… Is this an overarching sense, an overarching message that you want to convey as the, kind of the sum of the whole or the whole?

Kyla Scanlon:

Yeah, I mean, it’s really meant to be a non-biased guide to the economy. So talking about inflation, talking about the labor market, talking about the Federal Reserve, everything that I talk about in my videos, but it’s something that you can sort of refer back to a little bit easier and use in a classroom setting, if you choose. So the book is just this guide to the economy. The final three chapters, I kind of go off the rails and give my opinion on public policy and others opinions as well, right? So it’s a melting pot. But yeah, how do we improve the current state of affairs?

Dean Wehrli:

Okay, okay. I’ll look for that. Next April 2024. I’ll have to get it on ebook because I haven’t read a physical book in literally 15 years. Tell us about Bread.

Kyla Scanlon:

Yeah, so Bread is kind of funny. When I first started doing content two years ago, as of September, which is crazy, I was like, “I want to do a Duolingo, but for finance.” I really think financial education software would be really pertinent to build. Bread has not become a financial education software because software is so difficult to build. I’m a team of one, still, sort of. So yeah, Bread is just the media house that houses all the content that I do and the companies that I work with and am able to work with. Yeah.

Dean Wehrli:

So when you’re working with a company, just tease that out just a little bit. What are you helping them with?

Kyla Scanlon:

I mean, it depends. I’ll teach people, I’ll go into institutions and teach about crypto. I’ll help people edit videos. I’ll create videos for people. I mean, the main thing that I try to brand myself as, is an explainer. So if you need something complicated explained, like payment for order flow or monetary policy and the mechanics of quantitative easing, I hope to be the person that people are like, “Yeah. Kyla seems like she explains stuff in an accessible way with her whiteboard also.” So yeah, that’s kind of what I try to do for the brands.

Dean Wehrli:

Okay. Now let’s go, I promised you, let’s talk mostly about substance. So what I wanted to first talk about was Vibecession. You have written in podcasts said about a Vibecession lately that particularly, I love that word by the way, that particularly is sort of this idea that a lot of folks feel worse about the economy than those top line measures and metrics of the economy actually indicate. Can you just tell us about your concept of the Vibecession?

Kyla Scanlon:

Yeah, so the Vibecession came to fruition in June of 2022, and it was really when things were, people were feeling bad. Things were bad, but the economy was recovering. We were starting to see inflation go down. The labor market was still stable. The Federal Reserve was sort of like, “Okay, maybe we’re going to chill out soonish.” But people were feeling really, really bad. If you looked at Sentiment Metrics or if you looked at Anecdotes, no one was feeling that good. And so the Vibecession is this idea that there’s a gap between sentiment and the underlying economic data that the vibes are bad, but the economy is fine.

Dean Wehrli:

How much of this do you think is generational? How much do you think of this, is there a media impact from this? In other words, what folks see in the media? Because remember, most folks about the economy are just seeing things at a very superficial level. And again, that’s not because I’m not condemning their intelligence, just because that’s not their world. That’s not the center of their universe. They don’t care about it that much. But so they see it at a relatively superficial level and they don’t… So that media can really impact how they feel about the economy regardless of how the economy is actually performing.

Kyla Scanlon:

Yeah, totally. I mean, media sentiment has trended negative, real negative because headlines are ads. So you want people to click, you want the clickability. So I think that is a big part of it. But I also think, and this is something, I wrote a follow-up to the Vibecession piece. There is hard economic data that points to things being kind of sucky for people. Real wages have been stagnant, student loan payments are starting back up. We’re seeing all this labor market movement with auto strikes, with the writer   strikes where workers are like, “Oh, my gosh. Things have kind of not been great and we need you to recognize that for us.”

And so I think the vibes were off for valid reasons, but the vibes were also exacerbated, as you said, by media, by maybe a misunderstanding of what’s actually going on. And then also, this is something I’ve only explored kind of recently. The American mindset is very individualistic and very perfectionist, right? And so if you don’t have this perfect world, it’s really difficult to get a house. A lot of people feel stuck in their jobs, and that’s going to, of course, impact how you feel about the overall economy as well.

Dean Wehrli:

Yeah. And it does probably impact younger cohorts more so because by definition, usually they are at the beginning of their income ladder, their earnings ladder, let’s say. And I think, tell me if I’m wrong, but I think these stagnant wages are most impacting folks in those income brackets that are middle class and lower middle class.

Kyla Scanlon:

Oh, yeah. Well, so actually, for the first time ever, lower income workers saw their wages increase actually, more so than the higher income consumers. And part of that reason was because we had a recession in tech and a recession in finance, right? But in healthcare and other jobs like that, booming, absolutely stellar.

But in terms of the generational discrepancies, I think that when I first joined the workforce, six months later, COVID happened, right? And so when that happens, your whole world is turned upside down. So I think for younger people, not only have they had a tough shake with the pandemic, but also, they had a tough shake with the labor market and just the bumpiness of maybe whatever direction that they wanted to go, whether it’d be tech or finance, not hiring when they were trying to get a job.

Dean Wehrli:

And you do talk about sort of this, folks are very individual, very individual focused. I mean, if people focused more – I mean, how are you going to get people to say, “Stop thinking so much about yourself, think about the community?” Is that possible in the US, at least?

Kyla Scanlon:

I don’t know. There’s this thing called, the little favor economy that I really like, and it’s this idea that nobody really goes and asks their neighbor for a cup of sugar anymore. You don’t really go and ask for an egg. We don’t have these little favors going along. You could text your friend and be like, “Hey, I need…” This was a video I actually saw on TikTok, this girl talking about this.

And she was like, “You could text your friend and ask for a camping bed, but you would worry about that.” You’d be like, “I’m asking too much.” And then you just go buy a camping bed instead. So there’s the little favor economy, it has flatlined partially because of consumerism, whatever. But I also think that we’re just sort of afraid to lean on an overarching community, partially because it’s not baked into society as we know it.

 Dean Wehrli:

In terms of real estate though, I know you’ve talked about also, that this does kind of play into real estate as well. Tell me if I understand your idea right. A lot of folks are struggling economically. Again, we have a more stagnant real wages and things are a little worse on the ground than maybe some of the top line metrics indicate.

And does this explain to you that housing and flippers and housing investment, which seems relatively doable to a lot of folks of relatively modest means, is that part of why we have so many flippers out there. And not just on bad cable TV shows, but a lot of people out there trying to get rich through housing, which seems weird if you think about it.

Kyla Scanlon:

Oh, yeah. Yeah, so I love this. There’s a chart from the Federal Reserve and it’s one of my favorite charts because it shows the breakdown of wealth across the percentiles, right? So top 1%, all of their wealth is in businesses and equity ownership. Top 10%, same situation. But the bottom 50%, all of their wealth is in their home.

And so I think a lot of people who are trying to climb that ladder to wealth, don’t see business ownership or stock ownership as a natural path. Although, if you look at who’s doing it well, clearly it is. They see homeownership as the natural path because homes-

Dean Wehrli:

Okay.

Kyla Scanlon:

Always go up in price, it seems, but until they don’t. And so I think that’s the thing with flippers. And I know so many people who flipped houses during COVID, and it’s to make an easy $100,000 in the short run. It’s very short-term focus. Yeah.

Dean Wehrli:

It is very short-term focus, but it also… Not everyone could do that. And it seems like for a while there, everyone was doing that.

Kyla Scanlon:

Not everyone should do it.

Dean Wehrli:

Or should do it, okay.

Kyla Scanlon:

A bunch of houses are terribly flipped. I keep on talking about TikTok. I don’t watch TikTok that much, I guess, but there’s these home inspectors that’ll show flipped houses and how everything is built really bad. And then of course, we have a housing crisis. And so you have people who are like, “I really just want a house and I want a yard, and I want to have a place where my baby can lay out in the sun,” and they’ll buy these flipped homes. And yeah, it’s a nightmare.

Dean Wehrli:

Yeah, if you know what you’re doing-

Kyla Scanlon:

You know all this, yeah.

Dean Wehrli:

I do. But if you know what you’re doing in that, I think you’re a net positive because you’re making more habitable houses for people. I think that’s fantastic. If you don’t know what you’re doing or if you’re taking shortcuts, you’re hurting folks.

Dean Wehrli:

There’s another thing you’ve been writing about and talking about on YouTube, which is called, doomerism? What do you mean when you talk about doomerism?

Kyla Scanlon:

Yeah, I mean, it’s sort of like your friend, right? There’s a narrative that people want to see in the world and a lot of times, it’s the downfall of the world. And so they’ll perpetuate that narrative, have a paid subscription newsletter business where they are like, “You better subscribe to save yourself from the end of the world buddies.” So everybody goes and subscribes and it’s just like… It’s super toxic, but it’s very profitable for a numerous amount of reasons.

Dean Wehrli:

Are these the people hoarding gold in a cave with a lot of meals ready to eat, kind of a thing? Is that what you mean?

Kyla Scanlon:

Yeah.

Kyla Scanlon:

There’s also this idea that if you’re not portraying anxiety about the world, it shows that you don’t care about the world. And so I think there’s a mix of doomerism where people are like, “Well, I kind of have to feel bad because if I don’t feel bad, then it doesn’t seem like I care about what’s going on.” But then there’s the more extreme version of doomerism, which is the guys who buy canned dog food, and they’re like, “I’m going to live on this in my cave in Bermuda and I’ll be fine.”

Dean Wehrli:

Wait, dog food?

Kyla Scanlon:

You know?

Dean Wehrli:

Did you say dog food?

Kyla Scanlon:

Yeah.

Dean Wehrli:

Is that real? Are you serious?

Kyla Scanlon:

Yeah. Some of them buy dog food. Yeah, because it’s a good calorie ratio, apparently.

Dean Wehrli:

Okay, okay. I’m now more scared of those people, but okay.

Dean Wehrli:

How do you or how do we, or is it possible to change that… A Vibecession thing or a doomerism thing, is there a way to change that? Do you want to change that? When you’re talking, are you trying to kind of erode that a bit?

Kyla Scanlon:

Yeah. I mean, when I wrote the Vibecession piece, I got death threats because-

Dean Wehrli:

Did you really?

Kyla Scanlon:

Yeah, because I was out there saying… You know, some of it was valid, but none of it really was valid. I was like, “Hey, things are okay. You just feel kind of bad.” And that’s not a great thing to hear, especially if you’re not happy with your economic circumstances, a lot of which is outside of your personal control.

And so I think that it’s really important to shift the vibes, to shift perception, right? Because inflation expectations are a large driver of realized inflation, of actual inflation. And what people end up feeling, ends up being how they act. If everyone’s like, “Oh, dang it, I can’t go get a job. I’m going to stop applying.” Right? Then job applications will decline and then we have a situation in the labor market that we have to address. And so I do think it’s important to address the vibes. How we do that, I don’t know. I wish I did.

Dean Wehrli:

Yeah. The how part’s the tough part, and I’m probably being unfair. There is a lot of pain out there and there’s a lot of frustration with the economy, because it’s not just that. Because we have a lot of jobs. Unemployment’s very, very low, but there’s tons of folks out there who don’t have the job that they want to have.

Kyla Scanlon:

Yeah.

Dean Wehrli:

And that’s extremely frustrating.

Kyla Scanlon:

Yeah, and it’s tough because there’s an element of truth to all of that, right? I took an Uber home from the airport and my Uber driver was telling me he worked in tech and then he’s been unable to get a job since he was let go from his current firm. And so there’s a lot of stories like that, where people are just kind of stuck and they don’t know how to go forward. And it’s important to recognize those stories when you talk about the broader economy because people are the economy, and I think we oftentimes forget that.

Dean Wehrli:

You’ve also talked about, this is a little bit related. Tell me if I’m wrong. You’ve talked about Gen Z and how Gen Z has just a little bit different motivations and a little bit different outlook on work to older cohorts. What do you mean by that? And then I’m going to ask the follow-up, is going to be, how do we meet in the middle for that? But go ahead. Tell me what you mean by that argument.

Kyla Scanlon:

Yeah, yeah. I wrote this article for a Fast Company talking about Gen Z and the future of work. And in the article I was just talking about… It’s kind of backwards, like chicken and the egg. So work has lost a lot of the promise for the younger cohort. You can’t really go work for the same firm for 40 years and get a pension, and you can’t afford a lot of stuff on the nine to five salary, how you used to be able to afford.

And so you see the younger generations, beginning with millennials, sort of begin to pull back, do side hustles, figure out their passions, and go off and create their own jobs, right? And so I think that’s what we see with Gen Z, is it’s really important that they do work that they care about in terms of how employers meet them in the middle. You got to give them work that they care about or give them opportunities to explore passions on the side.

Dean Wehrli:

I mean, I’m glad you said that. So something they feel invested in, something they feel passionate about. Let’s be honest though. A lot of us don’t have jobs that were never our dream job. That’s common throughout the economy. Is there also the potential to motivate those folks, the Gen Z, through profit sharing, ownership, just money. I mean, those classic things, if that’s the right word.

Kyla Scanlon:

I mean, this is where I get stuck with my own thesis, which probably isn’t great, and I’ll get to the ownership point because I think it’s super important. But there is a passion crisis going on and it’s not necessarily that people aren’t working jobs that they’re passionate about. It’s people don’t know what they’re passionate about. And a lot of that comes to the education system and standardized testing, et cetera, and blah, blah, blah.

But in terms of motivation, I think ownership is huge. So when I was talking about stocks and businesses being part of the top 10%, the only way that you’re going to do that is if you own a business and you get some stocks. And so I’m a huge fan of the idea of ESOPs, so employee stock option programs, like how Starbucks has, as a way for people to benefit in the upside of the corporation that they’re working for. And then of course, how do we give more people access to the stock market? Whether that be through a centralized investing app or some alternate tool, I think is really important to get a handle on.

Dean Wehrli:

I mean, if you think about it, there’s no better way to make people feel invested than to have them be actual investors in your company, even if it’s on a very small scale.

Kyla Scanlon:

Yeah, totally. And it seems like nobody wants to do that. Well, which makes sense. Equity is expensive. But yeah. I think that that would be just so ideal because all the tech companies do it. And then you got people who stay there because of the equity, right?

Dean Wehrli:

Yeah. They stay there because of the equity, but they also unfortunately, go and sleep in a van for six hours at the forest side of the parking lot too because they’re working 18 hours a day. I mean, you’ve written about how… Is it fair to say, Gen Z doesn’t want to work 60, 70 hours a week? They have other passions in life and they want to be able to, that classic work-life balance actually means something to them.

Kyla Scanlon:

Yeah. People get kind of mad when we talk about Gen Z and work. They’re like, “Oh, they’re just whining.” But I do think the promise of traditional corporation has dissipated. The nine to five salary is not what it used to be for anybody in any age group. And so I think for Gen Z, they’re looking at this. They’re looking at what happened to millennials, where millennials are stuck in the hamster wheel to a certain extent, and they’re like, “I don’t think that is the way that I want to do it.” So they reinvent the hamster wheel. So they’re…

Dean Wehrli:

Yeah. I don’t know. There has to be some kind of an agreement, some kind of a consensus, eventually. I mean, I want to be fair. Companies have to make money and companies need people to work hard for them and to work when they’re supposed to be working. But at the same time, the expectations are probably going to have to change from what they were in decades past.

Kyla Scanlon:

Yeah. And I think that we’re starting to see that begin to happen in the labor market movements. So the autoworkers being like, “Dude, just pay us a little bit more.” Your GM, CEO made 300% more money because the company made more money. I think profit sharing is really important. So companies do exist to make money, but I do think it’s important…

The other thing. This is a tough one. Talking about the autoworkers stikes, there was, I think of FT article that was like, “Shareholders are okay with them paying the workers a little bit more, so the companies don’t have to do as many buybacks.” Or, the shareholders are okay with the companies not doing as many buybacks so they can pay the workers a little bit more.

And it’s like, why is this being compared, right? Why are buybacks taking precedent over us not paying people, maybe enough money to live on? And so I think that’s the other thing too is, the stock market just really can be blinding to CEOs because they have to respond to it. If your stock is not doing good, that’s not great for you and your job. And so it is all sorts of incentives and misalignments going on.

Dean Wehrli:

Let’s talk about housing. Can we switch to housing now?

Kyla Scanlon:

Sure, yeah, totally.

Dean Wehrli:

You’ve talked and you’ve written and you’ve spoken about interest rates and mortgage rates and about supply and housing, and how critical supply is in the equation of the housing market right now. I mean, the lack of supply is the main buttress of certainly the new home market right now. And even the resale market in maintaining prices, have actually been going up this year in the face of extraordinarily high, compared to recent years, mortgage rates.

I’m going to ask you, what do you see happening to mortgage rates? And how do, especially younger households, feel about… Is it just such a hurdle right now that they just can’t imagine owning a home right now because of prices and mortgage rates?

Kyla Scanlon:

Yeah, I mean, mortgage rates have skyrocketed, right? And so if you’re locked in at 2%, you’re golden. And people who got in during that time, they’re locked in, whether or not they want to be, right? And so I think for the current generation, not only are home prices really high, but also, you have these really high mortgage rates. And so I think a lot of people do feel that frustration.

And this also gets into the conversation about ownership too, because when you’re a homeowner, you get tax breaks and you get equity, right? And so I think there’s a conversation that could be had about how do we make it so renters get some sort of tax break or get some sort of equity in the property that they’re renting, too. So it might not just be how do we fix the housing market, but how do we fix the rental market alongside of it?

Dean Wehrli:

In terms of back, for the for sale part of it though, you’ve talked about the golden handcuffs, right? The people at 2% or 3, more likely 3%, 3.5% mortgage rates, those people aren’t going to free up… That house is not going to free up anytime soon, keeping inventory down. How do we increase supply? You’ve had some thoughts about that in some of your past post, haven’t you?

Kyla Scanlon:

Yeah, I mean it’s just… Well, it’s not just, but reforming zoning, I think, is a big part of it. Just being able to build more homes is part of the issue. And there’s such strict zoning laws in so many areas. Like Minneapolis has done, I think, a good job at reforming their zoning, built up a bunch of new housing, have subsidized certain parts of that as well. So a lot of it is just making sure that policy is in place that enables new homes to be built, which you know as well.

Dean Wehrli:

A big part of the COVID reaction was, of course, folks moving out from their kind of city center kind of location, out to the suburbs or the exurbs, or even in some cases, completely out of their MSA or completely out of their region entirely. A lot of those Bay Area tech folks who were living in Phoenix or Boise or Salt Lake City or something like that, mostly they went to Sacramento or someplace, but still, a lot of them even went to, whatever, Austin. So as we see the big employers start to claw back those folks or start to desire to claw back those folks in the office, I mean, could you see that exacerbating home prices, especially in closer-in urban areas?

Kyla Scanlon:

Yeah, I mean, I think there’s forced selling going on in those areas now. Like Denver, Colorado, which is a very hot housing market, has been a little cool, partially because people are kind of leaving. Right? And so I think you’re going to see that in those areas, the cooling off. And then of course, New York rent has skyrocketed, partially because people have to be back in the office. And so I think that’s just a trend and it’s kind of sad. It’s so expensive to live in those really big cities and it makes it really difficult for young people. Yeah. And anyway-

Dean Wehrli:

I mean, they were able to go live in that suburb and get three times the house for half the price, literally. And so to the extent those folks are supposed to sell back and move closer in, I don’t know, we’ll see. Who do you think is going to win that arm… It’s going to be an arm wrestle between essentially, employees and employers right now. It seems to be pretty close. The employees have held out, I think, longer than some of these employers thought they would. Do you see that continuing or do you see if the economy slows down, do you see that leverage just sort of crumble for the employees?

Kyla Scanlon:

Yeah. I mean, if the economy crumbles and your job is on the line, you’re probably going to go back into the office. But I do think that… I don’t know, we kind of uncovered a lot of… Even the fact that we’re doing this podcast via Zoom or whatever this app is, that’s really impressive. It’s really impressive technology and I think that there’s a way to take advantage of it more.

I know a lot of hybrid workplaces, but I think people worry about productivity and also, a lot of jobs are not necessarily about productivity, but about control and just making sure you’re doing your emails or whatever. And so I think that’s the big thing for the white collar group is going back, so that is reassured.

Dean Wehrli:

So I’m going to bring in something that you and I might disagree on. I think in the past, you’ve talked about density and how density and increased densities are a potential solution to the supply. And of course, they are. My thoughts are that, a lot of folks don’t want to live in relatively dense urban center environment. So how do we accommodate those housing preferences and environmental preferences versus, I’ll totally acknowledge the need to have more dense, urban, higher to raise supply. How do we do that?

Kyla Scanlon:

Mixed-use residential zoning, I think is a good step. So having it be where there’s coffee shops and gyms in a certain area. I think the suburbanization has created a lot of issues in terms of sprawl. And I think that we could contain some of that by just moving certain parts of business closer to said suburbs. Yeah.

Dean Wehrli:

Yeah.

Kyla Scanlon:

I don’t know if that quite answers, but…

Dean Wehrli:

It does and that will be key. You can have denser stuff there. I think I told you, I live in, more or less, a suburb. And when you have things like a brewery and something a little more trendy, a little more fun… Oh, my God, they’ve been tremendously successful.

I know that’s been happening in other suburbs as well. We do need so much more of that. The problem is, it’s hard to retrofit into established environments, so you’re not kind of almost… Don’t have to, but it’s much easier to do on a blank slate. And sort of starting now, let’s do that all the time. But that’s going to take a while for those kind of environments to sort of catch up to the demand.

Kyla Scanlon:

Yeah, and that’s the thing with everything is, it always takes a while. But a while, one day, will be now. So I think that’s the important thing to remember is, sure, we might not see the benefit right away, but we got to at least try. Right?

Dean Wehrli:

No, I completely agree. And the degree you can do it and you can retrofit it into an existing suburbs, please do because it’s hugely… The problem is, it does take… It takes rezoning and even on the-

Kyla Scanlon:

New zoning. Yes.

Dean Wehrli:

Easements and things like that though, too. And all those established landowners are just… They’re going to fight it.

Kyla Scanlon:

Oh, the NIMBYs? Yeah. They’re fighting-

Dean Wehrli:

Yeah. Not only the NIMBYs, but the folks, like in this case, streets need to be widened and some old businesses are going to have to go to do that. That’s hard to do.

Kyla Scanlon:

That’s why you invest in public transit.

Dean Wehrli:

Public transit.

Kyla Scanlon:

Right? Yeah.

Dean Wehrli:

Okay, I want to talk about homeownership and specifically for Gen Z. We have a group here in my company called, New Home Trends Institute. It’s a part of John Burns Research and Consulting, and they do tons of surveys and they keep their finger on the pulse of trends and things like that in housing.

And they did a recent survey on desire to be a homeowner and they cut it off by life stages, by demographic and by age cohorts. And about two thirds of most of the older and middle-aged cohorts said, “Okay, yeah. It’s really important to be able to own a home.”

But about 59% of the younger singles and couples said the same. So it’s lower, but it’s still pretty close. Do you still see that in that Gen Z generation, they still want to own a home? It’s frustrating in getting there?

Kyla Scanlon:

Yeah, I mean, I think homeownership, we talk about the American dream. That’s a big part of it, having your own little spot to hang out. And it’s a big wealth generation opportunity, too. So I think that’s how people see it. It’s like, not only is this a place where I can go and hang stuff on my wall without worrying that I’m not going to get my deposit back, but also, it’s a way for me to generate wealth for myself and my family.

Dean Wehrli:

You’ve talked about that homeownership is kind of the key wealth generator and wealth escalator.

Kyla Scanlon:

It is… The wealth generator. Yeah.

Kyla Scanlon:

Yeah, it creates issues around speculation. And I think part of the reason that we have this situation with housing and NIMBYism that we kind of hit on, is that people are like, “But my house has to go up in price. I have to make money on this home. This is everything.” And that creates all sorts of misaligned incentives.

Dean Wehrli:

In fairness to the folks that we call NIMBYs, and I’m not a fan, is that to the degree they’re concern is, “Gosh, that might hurt my housing values.” I get that. You have to get that.

Kyla Scanlon:

Totally. Yeah. And that’s why I don’t like them either because sometimes I’m like, “Oh, my gosh.” But I do think that there’s a valid thread in there where they’re like, “I just want my house to be a bajillion dollars.” And it’s like, “I get that.” I’d want that too, honestly.

Dean Wehrli:

So what is your advice for younger people toward eventually being a homeowner?

Kyla Scanlon:

As I sit in my apartment? Yeah. I mean, I think that it’s all about saving money. And I’ve had friends who have purchased homes now and they’re like, “Okay, I’ll refinance when rates are lower,” which is a gamble at this point, perhaps. But I think that that’s the thing is, keeping an eye on the housing market, figuring out when a good time to get in would be. We are seeing a cooling in the housing market right now. But yeah, it’s just tough with the Fed and what they’ve done with rates for fighting inflation. It’s just made everything quite difficult.

Dean Wehrli:

Do you ever prognosticate about the Fed? Are they going to start lowering their interest rates in the near term?

Kyla Scanlon:

They don’t seem too intent on that path at the moment. I do think that they’ve realized that they’ve gone pretty quickly. They’ve raised rates so quickly and so fast, we haven’t really even seen the whole impact yet. But I do think the rise in oil prices, they’re concerned about that. And also, the tool is not hitting in the way that it needs to, in the way that it’s meant to as a monetary policy tool. People are still spending money. The labor market is still doing mostly fine. And so I think for them, they’re kind of like, “What do we do now? We just want inflation back down to 2%.”

Kyla Scanlon:

Yeah, and it becomes a worldwide mandate, too. Everybody’s sort of targeting that number. PCE has averaged, backed down to 2%, which is the inflation metric that the Fed looks at for personal consumption expenditures. So we’re making a lot of progress. But yeah, 2% is sort of arbitrary and there’s research papers that are like, maybe 3% is okay, but then the question is, what does happen to the labor market if inflation is trending above? What happens to growth? How do we make sure that our GE and all these economic things are very balanced, right?

Dean Wehrli:

Yeah. I mean, everybody wants low inflation and I don’t disagree that low inflation… It just may be this super, super hyper intensive focus on such a low number. It could do more harm than good because like you said, what they’ve been doing now may have already had enough effect, and it may have had enough effect five months ago, six months ago, and now, they’re going to go a little overboard. It’s really, really difficult to time, it seems like.

Kyla Scanlon:

Oh, yeah. I mean, it’s like an impossible job.

Dean Wehrli:

Yeah, it is.

Kyla Scanlon:

Right?

Dean Wehrli:

Let’s be fair. You’re always fair to Jerome Powell, though, don’t you? You do your Jerome Powell imitation on TikTok every time the Fed meet. So when is that?

Kyla Scanlon:

Yeah, yeah. I mean, they meet every six weeks-ish. Every six weeks, I wear my blazer and my glasses. The goal is to explain the FOMC meeting because I think it’s really important that people know what they’re talking about, and the skit is kind of a fun way to do that. And I really like editing videos and I’ll do fun editing stuff. It’s nice. I like it.

Dean Wehrli:

Back to housing for a second, then we’ll end up with a few hot takes. A lot of our listeners are going to be builders and people in the new home building sector, any advice for how they should use social media? I mean, they all have Instagram, they all have Facebook, things like that. Any advice in the sense of how they should interact with relatively younger potential home buyers?

Kyla Scanlon:

Yeah, I mean, I think that for builders, it’s always really interesting to see the behind the scenes. So I know some builders on TikTok who will film what it looks like to build a house, what it looks like to install plumbing, all of the different parts and things that you have to do in order to build this structure. And then I think realtors talking about the housing market, giving people information, people just kind of want to learn, I think most of the time, from those sorts of people. That’s the big thing, is just giving people, either behind the scenes or giving them actionable insights. Yeah.

Dean Wehrli:

That’s interesting. So be as much educational as you are salesy, I guess, is that-

Kyla Scanlon:

Well, I’m biased. Yeah.

Dean Wehrli:

You’re biased, but-

Kyla Scanlon:

Yeah.

Dean Wehrli:

But you would be a typical 26-year old who might be looking at that. No one wants to be sold to, but a lot of people would love to learn about that world.

Kyla Scanlon:

And there’s a lot of resistance in younger generations to being sold to because you’re constantly, every time you turn around, there’s an ad. And so I think if you can just make yourself a human, people are going to really like that. Rather than just being like, “Buy my thing.” It’s like, “Here’s how my thing looks. How do you think it looks?”

Dean Wehrli:

Okay.

Kyla Scanlon:

It’s like opening up a conversation and treating consumers as people rather than just consumers, right?

Dean Wehrli:

Yeah. Rather than targets or something like that. Okay.

Kyla Scanlon:

Yeah, KPIs.

Dean Wehrli:

I like that. KPIs.

Kyla Scanlon:

Yeah.

Dean Wehrli:

So let’s do some hot takes, some hot topics. I was going to ask you a question about the government shutdown. We’re in day, whatever. We would be day five or something like that of the government shutdown. We, of course, averted a government shutdown last minute, last week recording this, by the way-

Kyla Scanlon:

This month.

Dean Wehrli:

Last month. Yeah, you’re right. Late last month. We’re recording this in the first week of October, by the way, for listeners. Though, we do have the potential for shutdown in another less than six weeks now, probably five weeks or so, that’s going to have another vote. How do you see that playing out and do you see that being something that would just really kick the economy’s butt?

Kyla Scanlon:

Yeah. I mean, it’s not great that Speaker Kevin McCarthy was booted out of there and that was unprecedented. And it’s mostly because nobody knows what they want, it seems. And I do think that is concerning because he was, at the last minute, pretty instrumental to making sure that everything got across the finish line. If the US government does shut down, I’m worried that Moody’s, which is one of the rating agencies will say, “US debt kind of… Don’t touch it. It’s gross. It’s bad.” And I think that could be really, really detrimental to the economy.

Dean Wehrli:

Yeah. Do you think it would be that bad? Do you think it’d be… Would it be just, I say, just a lowering, that could cost billions of dollars, or would it be something like, don’t buy it at all?

Kyla Scanlon:

No, I don’t think… It would be, it’s still a very, very good… The US debt, it’s still solid, but I do think-

Dean Wehrli:

It’s the best.

Kyla Scanlon:

Yeah, yeah. But the-

Dean Wehrli:

Long terms, safe investment it’s the best, but when you do have these threats, it has to be damaging.

Kyla Scanlon:

Yeah. And the Treasury is trying to issue a bunch of new stuff right now and so that could be harmful, it’s like they’re trying to do this and finance the government because you can either issue bonds or raise taxes, and only one of those are politically acceptable. And I think that’s the issue that we’re going to run into is, how do we finance the ever expanding deficit?

Dean Wehrli:

Sorry. We’re not going to end on a downer. I’m going to ask you a couple more questions. So how about, you also have talked about Chinese economic struggles. Do you see that having an impact on the US economy anytime in the near future?

Kyla Scanlon:

No. I mean, so it’s interesting, right? With industrial policy is, the US is like we’re bringing all manufacturing back here. We’re doing reshoring. That’s a big part of the CHIPS, IRA, IOGA, all the fiscal policy that has just been passed by Bidenomics. So I don’t necessarily think that the Chinese economy slowing down will be detrimental to the United States and it’ll be something to watch for because they are such big consumers. But I think because we’re going into this weird phase of deglobalization, it’s more insulated than it would’ve been, in my opinion.

Dean Wehrli:

Do you see demographics as a saving grace? We’re getting older. I mean, do you see growth in those things that boomers are doing now? I don’t know, nursing homes or assisted care. I don’t know. Is that a good thing to have a growth in that? Are those things that could actually bolster the economy?

Kyla Scanlon:

Nursing homes are about to lose federal funding, and there’s a huge labor shortage of workers in nursing homes and social security is massively underfunded. Medicare, Medicaid, all that stuff. I’m not excited about demographics because for every retiree, we need a worker to support them. But we could talk about childcare costs too forever because childcare is about to lose funding.

Dean Wehrli:

And that could potentially take a productive member out of the labor pool because they’ll have to be taking care of a child rather than… Yeah, that’s dangerous. Okay. Okay. We have to find something fun. Cranes. We see lots of cranes. That’s a good, A, it’s a good sign of growth. B, you are fascinated and maybe even obsessed by cranes.

Kyla Scanlon:

Yeah.

Dean Wehrli:

I’m saying that. Okay. I said that because I just watched your, was it a YouTube? I can’t remember or something. Or maybe it’s TikTok. And I said that to my wife and my son was there and he goes, “Oh, cranes aren’t the thing we should worry about. It’s geese. Geese are dangerous. They’ll go…” And I go, “No, no, no, no. No, no. Not that kind of crane. Not the bird.” So you’re fascinated by the cranes that actually help build buildings and things like that.

Kyla Scanlon:

Mechanicals. Yeah. Yes. I try to take a picture of every crane that I see. People send me cranes that they run into. Yeah, I love them. I think I want to be up in one, one day. I think that’d be really cool, just sitting in a crane. But they’re also signs of economic activity. So I think it’s just neat to be in a city whereas a bunch of cranes are around because that means a bunch of stuff is happening, right?

Dean Wehrli:

It does. It’s good. There’s newspapers and business journals will have things like crane watch and things like that.

Kyla Scanlon:

Yeah, exactly.

Dean Wehrli:

It’s a sign. It’s what’s going on. And that’s good. The more cranes out there, the better. I’m with you. I’m going to be a big fan of cranes now.

Kyla Scanlon:

Yeah, they’re cool, too.

Dean Wehrli:

Okay. They are pretty cool.

Kyla Scanlon:

Different types.

Dean Wehrli:

I don’t know if I want to be in one of them though. I don’t know if I would. Maybe. I probably would. I’ve Bungee jumped. I think I can do a crane.

Kyla Scanlon:

Yeah. If somebody asked you, you’d do it.

Dean Wehrli:

I’ll Bungee jump off a crane.

Kyla Scanlon:

Oh, that’d be cool.

 Dean Wehrli:

So let’s end with something hopefully more positive. What else besides Taylor Swift can bolster the economy?

Kyla Scanlon:

Yeah-

Dean Wehrli:

You talked about Taylor Swift having a literally… Literally, Taylor Swift had a legit impact on, I think, the global economy, let alone the US economy. Is that fair?

Kyla Scanlon:

Yeah. I mean, she caused an earthquake in Seattle, so with all her fans stomping. So yeah, I mean, $5 billion is estimated for the global impact of her tour. Her and Beyonce, are just powerhouses. And she’s also reshaped the NFL, the National Football League in the United States by dating one of the quarterbacks.

Dean Wehrli:

Travis Kelce. She’s made Travis Kelce from a well-known football player to an international star among people who’ve never heard of football.

Kyla Scanlon:

The sales of his jerseys went up 300%. So she’s so fascinating because brands will attach themselves to her. So she was eating chicken nuggets and she had a chicken nugget with a ketchup and a little bit of ranch, and the Empire State Building lit up in that honor for this chicken nugget, like red and white. And then also, Heinz has now released ketchup with a little bit of ranch as a packaging product. And it’s like, her power is just… I don’t know. It’s wild. But she’s an economic force within her own realm. Yeah, she’s amazing.

Dean Wehrli:

Okay, so I don’t want to end on something super negative. Other than Taylor Swift, I’m being serious here, Kyla, what else do you see, sort of maybe bolstering, some kind of trend that might be bolstering the economy near term?

Kyla Scanlon:

I mean, I think that the labor market is still relatively strong. I’m actually very curious to see what the ultimate impact of the strikes end up being. Strikes used to be the main way that employers/employees interacted. During the early 1900s, that was kind what you did when you were like, “I need to be paid more.” You went on strike. And so I’m curious, I don’t know if it’ll bolster the economy, but I do think long run impacts of perhaps more equal employee/employer relations might be beneficial in the long run. So that’s something I’m keeping an eye on, is what does that actually look like from a long run perspective, considering we haven’t done strikes in a while?

Dean Wehrli:

Yeah. Well, I mean, what, 70% on most of our economy is based on consumer spending. So folks have more to spend. That can’t be bad. Okay, let’s go with that. Let’s go with that as our… Anything else for positive? You can tell I’m fishing.

Kyla Scanlon:

Oh, this is kind of what I want to say earlier. The unfortunate thing about the way that the economy is right now is it could have been a worse economy. So things are maybe not exactly where we want them to be, but it could have been worse, right? That’s kind of the worst thing to say to somebody you’ve… It’s like, “Oh, my sandwich falls on the ground. Could have been worse.” But that’s an important thing to remember is, somehow we’ve managed to evade a recession thus far, which is incredible, really. Yeah. Even though it doesn’t feel great.

Dean Wehrli:

I think that’s very fair.

Kyla Scanlon:

Yeah.

Dean Wehrli:

Everybody pretty much thought we’d be in a recession right now, or maybe later this year at the latest, or early next year at the latest-

Kyla Scanlon:

All the banks thought that, yeah.

Dean Wehrli:

So that’s happening. So that’s good. I’d also say that because we… Tell me if you agree. We have, we… The Fed has raised interest rates so high now. There’s now a lot of room to bring those down and to gin up the economy if we do start slowing down. So they have that tool of theirs, could be more efficacious than it would’ve been when they had rates very, very, very low, where they didn’t have that tool to use during a slowdown.

Kyla Scanlon:

Yeah. It’s important that they did what they did.

Dean Wehrli:

Yeah. Okay. All right. All right. Kyla, I’ve loved listening to you on your podcast. It’s called, Let’s Appreciate. I’ve seen you on YouTube now. I’m not on TikTok. I’m not going to lie to you.

Kyla Scanlon:

That’s okay.

Dean Wehrli:

But my daughter is, so that’s good. So thanks so much for coming on. I really appreciate it.

Kyla Scanlon:

Yeah, thanks for having me.

Dean Wehrli:

Absolutely. This has been the New Home Insights podcast with Dean Wehrli. Thanks again. We’ll see you in a couple of weeks.

 

 

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