Podcast Summary
Economic Indicators vs Public Perception: Americans feel economy is in recession despite strong economic data, indicating deep-rooted unease and mistrust in recovery. Policymakers and economists must acknowledge and address these concerns to restore confidence.
Despite the strong economic indicators such as rising GDP and historically low unemployment rates, a significant number of Americans continue to feel that the economy is in a recession or that unemployment is at record highs. This disconnect between the numbers and public perception suggests a deep-rooted unease and mistrust in the economic recovery. While it's unclear what factors are contributing to this perception, it's important for policymakers and economists to acknowledge and address these concerns to help restore confidence in the economy. This disconnect also highlights the importance of communicating economic data effectively and in a way that resonates with the public.
Belief in recession and Red Lobster bankruptcy: Americans believe in recession despite inflation slowdown and high prices led Red Lobster to file for bankruptcy
Despite the technical slowdown in inflation, a large percentage of Americans from both political parties believe the economy is in a recession and are feeling the pinch of rising prices. This belief was underscored by the recent bankruptcy filing of Red Lobster, a major restaurant chain. While the chain will continue to operate, the bankruptcy highlights the financial struggles of Red Lobster, which has been facing stiff competition from both high-end and fast-casual dining options. The bankruptcy may have been the final straw for the company, which has been losing customers due to its high prices and outdated business model. The episode serves as a reminder of the economic pressures faced by many Americans, even as technical indicators suggest a slowdown in inflation.
Red Lobster's financial struggles caused by private equity buyout and cost-cutting measures, now in bankruptcy: Red Lobster's financial woes stemmed from a private equity buyout and subsequent cost-cutting measures, resulting in bankruptcy. Meanwhile, marijuana use surpassed daily alcohol use in the US for the first time.
Red Lobster's financial struggles can be traced back to a private equity buyout a decade ago which led to the chain having to pay rent and a series of cost-cutting measures from subsequent investors. Most recently, Thai Union Group, a seafood supplier, owned Red Lobster and implemented an all-you-can-eat shrimp promotion at a very low price, leading to significant losses. Now, Red Lobster is in bankruptcy and seeking a buyer to take over and revive the chain. Meanwhile, a significant milestone was reached in the National Survey on Drug Use and Health, with an estimated 17.7 million Americans using marijuana daily or near daily, surpassing the number of near daily alcohol users for the first time in the survey's history.
Marijuana Taxation: Less Revenue Than Anticipated: Despite the drop in marijuana prices due to increased availability, states still collected nearly $3 billion in marijuana tax revenue in 2022, but the trend may continue to impact tax revenues negatively.
The legalization of marijuana and the subsequent taxation of it, often referred to as a "sin tax," has both expected and unexpected consequences. While marijuana taxes are intended to generate revenue and address negative externalities associated with marijuana use, such as health issues and public safety concerns, the increasing availability and decreasing prices of marijuana have resulted in lower tax revenues than anticipated. An economist at Indiana University, Boyoung Sa, found that as marijuana has become more accessible, prices have dropped, leading to less tax revenue for states. Despite this, states still collected nearly $3 billion in marijuana tax revenue in 2022. However, the trend may continue as marijuana use and availability continue to grow. This counterintuitive finding highlights the complex relationship between marijuana taxation, supply and demand, and the potential implications for public finance.