Discover more from Econ Weekly
Gloom Amid the Boom
Plus: This Week's Featured Place: Navajo Nation
Issue 64: April 18, 2022
Inside this Issue:
Uneasy Prosperity: Gloom in the Time of Boom
Q1 Earnings Season Underway: What do Companies Have to Say?
The Shopping’s Not Stopping: But Americans Paying More for Less
Inflation Starting to Cool? Some Positive Signs ex Food and Fuel
Morgan’s Menaces: Largest U.S. Bank Sees Strength but Volatility
Higher Fare? We Don’t Care: Delta Seeing Record Sales
Alarm on the Farm: Ag Sector Thriving but Ag Counties Dying
Andrew Jackson’s Thriller: An Epic 19th Century Bank Battle
And This Week’s Featured Place: Navajo Nation, Where are the Walmarts?
Quick Note: The Econ Weekly podcast is now available on iTunes, Stitcher and Spotify. Just search for Econ Weekly and please leave a review to help spread the word.
Quote of the Week
“I cannot foresee any scenario at all where you’re not going to have a lot of volatility in markets going forward [but]… I can't forecast the future any more than anyone else. And, you know, the Fed forecasted and everyone forecasted, and everyone’s wrong all the time.”
-JPMorgan Chase CEO Jamie Dimon
Consumers are still spending. Banks are still lending. Corporate profits are unbending. Job growth seems never-ending. In many ways, 2022 feels like a time of great prosperity for the U.S. economy. Yet it’s a highly uneasy prosperity. Globalization, it seems, may be ending. Supply chains, it seems, aren’t much mending. Risks from all directions—from the Federal Reserve to the battlefields of Ukraine—are unmistakably ascending. Is a recession impending?
Consider the mixed signals from America’s consumers. Resting on a concrete foundation of strong employment, elevated savings and a lengthy run of soaring real estate and equity markets, households are sure enough keeping their wallets open. Americans spent nearly $666b on retail goods and food services last month, up a half-point from February, and up more than a full point if you ignore vehicles, where people surely would be spending more if the semicon shortage hadn’t decimated inventories. That said, much of this spending growth stems from a 9% increase in outlays at gas stations—put another way, people are spending more because gasoline has become so much more expensive. That’s true for most other things too—Americans continue to spend but are getting less for their money.
The March report on retail and foodservice spending, to be clear, ignores the larger bucket of spending on services—on health care, for example, or housing, utilities, education and travel. There’s in fact mounting evidence of a post-pandemic shift from goods spending to service spending, reversing an earlier trend. It’s something several banks said they’ve seen in their credit card business. Delta, for one, made it perfectly clear that Americans are eagerly buying airline tickets.
That’s true despite surveys showing dismal levels of consumer confidence. It’s true despite wage gains not keeping up with price gains. It’s true despite what’s now a slumping stock market. It’s true despite a clearly slowing housing market, chilled by a sharp and sudden spike in mortgage rates. Rates are up, of course, because the Federal Reserve wants it that way. The Fed wants it that way, of course, to wrest control of inflation.
Inflation now stands at a still-alarming 8.5%, according to the annual change in the March consumer price index (CPI), published by the Bureau of Labor Statistics last week. In just the one month from February to March, the index jumped by 1.2%. Much of that jump, to be clear, reflected the shock to food and energy markets triggered by the Ukraine conflict. Remove food and energy, and consumer inflation rose just 0.3% from February to March, and just 6.5% y/y. Used car prices, though still up 35% from last spring, dropped nearly 4% last month. Perhaps a sign that inflation ex commodities has peaked.
First quarter earnings season, now underway, will offer more clues on whether inflation and other headwinds herald a drop in consumer spending. There’s little evidence of pessimism so far. Albertsons, the grocery chain, said simply: “We are not seeing a change in behavior… We are still seeing the consumers very strong.” CEO Vivek Sankaran said not even high gas prices are causing any “material change.” Nor, he added, are consumers trading down to cheaper items—purchases of pricier organic foods are actually up.
So why is there so much talk of a looming recession, or even a repeat of 1970s-style stagflation? Again, as reporting banks explained last week, conditions remain strong right now but many headwinds swirl. The economy’s firm foundation, you might say, is increasingly tested by an infestation of termites—the inflation pest, spiking interest rates, cooling asset markets, wildly volatile food and energy markets, and so on. Keep an eye on China as well, where key U.S. suppliers face more Covid-disruptions. Shanghai is in the headlines, but also affected are cities like Zhengzhou, where many iPhones are produced.
Back onshore, a separate risk concerns the “plumbing” of the financial system, and how it will react as Fed policy radically shifts from quantitative easing (buying bonds) to quantitative tightening (reducing bond holdings). This plumbing involves the mechanics of how money moves through the economy, ensuring that payments can be made, and that companies and governments can access the daily cash they need to operate. Boring but essential stuff. Why the worry? Because America’s financial plumbing has systemic vulnerabilities made clear during multiple periods of distress since breaking down catastrophically in 2008. A meltdown in March 2020, for example, was narrowly averted only with massive Fed intervention.
Oil prices, by the way, raced back above the $100-mark last week. Bond yields spiked again, making investors think twice about lending money (why lend today when you can lend at higher interest rates tomorrow?). Stock prices fell again. There’s growing talk of a trucking slowdown. Don’t forget too that springtime spending is momentarily getting a boost from large tax refunds this year—the IRS has issued $240b worth as of April 1, according to Jonathan Smoke of Cox Automotive, appearing on the Moody’s Inside Economics podcast. SNAP payments, better known as food stamps for lower-income Americans, are decreasing as well, with Covid-era fiscal relief now winding down. Same for emergency farm subsidies and other aid.
Did we get this far without mentioning Elon Musk? America’s most iconic business figure since Steve Jobs wants to buy Twitter, the social media firm. Twitter, in turn, is resisting. Elsewhere in tech-land, Amazon’s new CEO Andy Jassy penned a Jeff Bezos-like letter to shareholders, highlighting some remarkable facts. The company, for one, hired 300,000 people last year. And it made $100b in capital investments during the last 15 years. Amazon is indeed bringing jobs and investment to communities big and small across America, on a scale arguably unmatched by any other company. But not without controversy, specifically over how it competes, how much tax it pays and how it treats employees. Musk, incidentally, will report Tesla’s Q1 results this week. Amazon and its Big Tech peers will go next week.
A few other notes from last week’s earnings presentations: Citigroup’s Jane Fraser said she’s “positive around the U.S. economy and the U.S. consumer,” supported by “momentum in the labor market.” Fastenal, which literally sells nuts and bolts (and lots of other industrial and construction supplies), sees U.S. companies still facing supply and cost pressures, but are increasingly learning to deal with them. Goldman Sachs and Blackrock both appear convinced that the era of globalized commerce is reversing. Blackrock also noted a growing investor appetite to protect against inflation with real assets like infrastructure, commodities and real estate. PNC, a large Pittsburgh-based bank, expects 3.7% U.S. GDP growth this year, and a Fed Funds rate of around 2% to 2.25%. Like everything else about the economy right now though, forecasts are all over the map.
JPMorgan Chase: Bankers used to bank. Now the big ones do that and much more. JPMorgan Chase, the biggest U.S. bank, certainly does a lot of traditional banking, as in lending money to households and companies. Last year in fact, it provided $1.3 trillion in loans to corporations, $331b to consumers (including mortgages and credit cards) and $22b to small businesses. But it’s also a big investment bank that helps firms raise money, arrange mergers and formulate strategy. It’s an asset manager, helping people protect their wealth and invest for retirement. It’s involved in payments, risk management, market-making and many other financial services as well. Even when in lending, much of JPMorgan’s profit these days takes comes from fees rather than charging interest. Altogether, this collection of activities produced $31b in revenue last quarter, more than $8b of which was profit. In some respects, business has slowed from last year’s extraordinary strength. A corporate frenzy to raise new funds—via issuance of stocks and bonds—has quieted, meaning lower fee income. Home loan origination is down as interest rates rise. The company suffered substantial losses, furthermore, linked to turbulence in commodity markets (nickel most notably) and exposure to derivative counterparties associated with Russia. None of this, however, dilutes JPMorgan’s near-term optimism. Demand for commercial loans is growing and households continue to spend. “The consumer has money… they’re spending their money,” said CEO Jamie Dimon. Other aspects of the economy likewise indicate strength, including housing prices which remain high, and the $2 trillion Americans have in their savings and checking accounts. That said, Dimon sees “significant geopolitical and economic challenges ahead due to high inflation, supply chain issues and the war in Ukraine.” The oil market is another “cloud on the horizon,” albeit one that’s highly unpredictable. The Fed’s fight against inflation too, will have hard-to-predict consequences. JPMorgan sees its job as not trying to guess what’s going to happen, but to prepare for anything that could happen, helping clients manage the associated risks. Today’s JPMorgan, by the way, was born from Chase Manhattan’s 2000 takeover of the old JPMorgan, followed four years later by the takeover of Chicago’s Bank One, which Dimon ran at the time. (For a more detailed history, see the Nov. 15th, 2021, issue of Econ Weekly).
Delta Air Lines: The January-to-March quarter was another bloody one for U.S. airlines, with even Delta—a profit leader pre-Covid—spilling nearly $1b in red ink. Keep in mind, however, that January and February are slow months for air travel even in good times. It’s the spring and summer when airlines typically earn an outsized portion of their profits, and demand this spring and summer (based on bookings) looks exceedingly strong. Delta in fact earned a solid profit during just the month of March, which happens to coincide with Florida’s peak season. Indeed, it’s pretty hard to find an American who isn’t flying to Florida or Arizona or the Caribbean or somewhere warm and relaxing this spring. The raging pent-up demand shows few signs of cooling, even in the face of rising ticket prices as airlines respond to rising fuel prices. Overseas travel too is picking up as most countries relax entry restrictions (China and Japan are notable exceptions). Delta expects a 12% to 14% operating margin for the current April-to-June quarter. And yes, that’s really good in the dismal airline business (for the record, Delta’s operating margin in the same quarter of 2019 was 17%, but with fuel just $2.08 per gallon; the forecast for this year’s Q2 is $3.30). A few facts about Delta: Its largest market by far is its hometown Atlanta, the busiest airport in the world. Its workforce is much less unionized than those of its rivals. It has important alliances with overseas airlines like Air France/KLM, Virgin Atlantic and Korean Air. And it’s been among the more conservative airlines with respect to capacity restoration from pre-Covid levels.
Tweet of the Week
Agriculture: There’s an odd paradox present in American agriculture. On the one hand, farmers are prospering, thanks to high crop prices and a large increase in already generous federal support during the pandemic. On the other hand, as The Economist describes, “rural America is in deep decline.” Farmers, it writes, saw their incomes rise 25% last year, to their highest level since 2013. And soaring commodity prices should make 2022 almost as good as 2021, despite the expiration of some Covid relief programs. Farming real estate, meanwhile, is selling for record prices. Yet parts of the country where farming is prevalent—rural America—saw population decline during the 2010s. It was the first decade ever to see a decline. School enrollment throughout rural America is shrinking. Churches and other community institutions are closing. Young people often leave to find jobs. Some two-thirds of rural counties lost people last decade, and those that didn’t were mostly “pretty places where people go to retire, near mountains or the ocean, or those with lots of oil.” If farming is such a good business, why isn’t rural America thriving and growing? In some ways, rural America is a victim of farming’s success, specifically, it’s remarkable ability to produce more output with fewer people. Farms, simply put, don’t need much labor these days thanks to extremely advanced machinery. This is especially true for the crops that Washington heavily subsidizes like corn, wheat and soybeans (growing fruit and vegetables is more labor intensive but mostly unsubsidized). And so, The Economist concludes: “Even if farmers are getting wealthier, the communities they live in are not.”
Agriculture: Keep in mind that when the United States was first founded in the late 1700s, a large majority of its residents were farmers. Today, the figure is just 1.4%, according to UDSA. Yet agriculture remains economically important, especially in states like Iowa. Montana and the Dakotas—in these states, according to USAFacts, more like a tenth of all workers are farmers. Agriculture also of course supports the broader food industry, including food processing, food retail and away-from-home dining. All of that accounts for about 10% of the U.S. labor market.
Debt: Bill Gross has been getting lots of attention recently. He’s the subject of a new biography by journalist Mary Childs called “The Bond King,” a reference to his influence as founder of Pimco, a leading bond investment firm. Gross almost single-handedly “turned the sleepy bond market into a destabilized game of high risk, high reward.” Before Pimco’s founding in 1971, trading was indeed a mostly sleepy affair—investors would lend money to governments or companies and hold the bond until maturity, earning interest along the way. Gross helped create an active secondary market for trading bonds before they matured, just as people trade stocks after they’ve been initially offered. The bond market today, in fact, is much larger than the stock market. Gross himself, a mercurial figure eventually fired from Pimco, recently appeared on Bloomberg’s “Masters in Business” podcast to share his side of the story. He attributed part of Pimco’s success to timing—its launch in the early 1970s coincided with the U.S. abandoning the gold standard for international transactions, meaning credit could more freely be created (no need for every new dollar created to be backed by gold reserves). This opened the door to a lot of new borrowing by governments and corporations, sometimes via traditional bank loans but increasingly by issuing bonds. In 1971, Gross said, America’s total credit—including government borrowing, mortgages, credit card debt and everything else—amounted to about $1 trillion. “Today that number is $87 trillion.” Gross firmed his trading reputation by anticipating the housing crisis of the late 2000s but then incorrectly bet that Treasury bond prices would drop after the final crisis. They in fact rose… and continued rising, in tandem with ever-declining interest rates. Finally, in 2022, interest rates are rising again, sending bond prices down and triggering a debate about whether the decline is a new longterm trend—or just a momentary aberration.
Health Care Workers: Here’s more data highlighting the immensity of America’s health care sector. It currently employs nearly 9m Americans, according to the Bureau of Labor Statistics. That’s about 6% of all jobs in America. This 6%, of course, pales in comparison to the roughly 20% of U.S. spending allocated to health (or put another way, the sector accounts for 20% of GDP). Unfortunately, the economics of health care are tough to get right, and—as every American has surely experienced—the U.S. system is riddled with bureaucracy, complexity, non-transparency and epic cost inefficiency… to a degree that threatens U.S. fiscal health. It does provide many good jobs though, with the mean wage across all healthcare practitioners reaching $91,100 in May 2021. The mean for all U.S. workers? Just $58,260. In many communities across America, health care along with education and government form the backbone of the labor market, accounting for an outsized percentage of all jobs. Health care jobs, of course, can range from highly-paid surgeons to minimum wage hospital clerks and custodial staff.
Financial Market Reform: In the old days, a financial crisis usually meant a “run” on banks: everyone withdrawing their deposits at once. Federal insurance of bank deposits, implemented during the 1930s Great Depression, largely ended that. More recent financial calamities have instead involved runs on non-bank institutions and markets, sometimes called the shadow financial system. These days, with banks largely paying zero interest on checking and savings accounts, many households and companies park a portion of their cash in money market funds, or MMFs. These are designed to be just as safe and readily retrievable as bank deposits, aside from the fact they’re not federally insured like bank deposits. Fidelity, JPMorgan, Vanguard and Blackrock are among the largest providers of such funds. To stay safe, they typically invest in ultra-safe securities like short-term U.S. Treasuries, municipal bonds or short-term bonds issued by blue-chip companies (sometimes called commercial paper). In that sense, MMFs are not just useful for households and companies looking for a safe place for their cash. They’re also useful for governments and companies that need to raise cash. MMFs, in other words, are an important source of short-term financing for governments and companies, including financial companies like banks. The more money people put in, the more money that’s available to borrow. But what happens when everyone panics—like they did in 2008 and 2020—and withdraws funds at the same time? That’s the modern equivalent of a bank run (which incidentally is a risk for blockchain-based stablecoins as well, serving as they do as places to park and easily withdraw cash). With all of this in mind, the Securities and Exchange Commission (SEC) recently proposed reforms to protect against an MMF run. Many are rather technical but seek to ensure, for example, that a certain percentage of an MMF’s assets be highly liquid, as in accessible within one day or one week. The SEC wants to increase data reporting requirements as well, and limit the ability of funds to block withdrawals in times of distress (the fact that they can do can scare investors, encouraging them to withdraw when times get tough).
Navajo Nation: America’s largest Indian reservation is larger in fact than ten states—16m acres. But it doesn’t have a single Walmart. Not one. And the reason goes a long way toward explaining why the economies of Native American lands are so difficult to develop. Navajo Nation, whose reservation lies in the “Four Corners” region of the U.S. west, overlaps with four states: Arizona, Utah, New Mexico and Colorado. But not all Navajos (sometimes called Diné) live on the reservation. In fact, fewer than half do, owing to limited economic opportunities. The number is about 174,000, according to the Census. That’s roughly the size of Abilene, TX, or Bloomington, IL. Like many of America’s 300-plus Indian reservations, the one governed by Navajo Nation suffers from extreme poverty and underdevelopment. According to the Nation’s President, Jonathan Nez, writing in the Washington Post last year, 40% of the reservation’s residents lack running water while 27% of homes lack electricity, let alone broadband. Some 80% of the area’s roads are unpaved. Fewer than a tenth of residents have a college degree. The unemployment rate between 2013 and 2017 averaged close to 20%. Rates of alcoholism, suicide and domestic violence are high. Covid hit hard. Unlike the Cheyenne River Reservation, however (see the Econ Weekly issue from April 19th, 2021), Navajo Nation possesses valuable natural resources including oil, gas and coal. Revenues from these resources, combined with federal aid, help fund a tribal government that operates various business enterprises, including a power company, an energy exploration and production company, a network of gas stations, a casino operator, a power utility, and so on. Public employment, including jobs with the Federal Bureau of Indian Affairs (BIA) and the Indian Health Service, dominates the reservation’s labor market. Some residents earn a living as artisans or service workers. Local flea markets are popular places to buy and sell items. The reservation attracts some tourists, often driving through on road trips. There’s enough of an economy, no doubt, to support a Walmart. Sure enough, Navajo residents routinely shop at Walmart and other familiar retail establishments… but not in reservation towns—not even in the Navajo capital of Window Rock. Instead, they cross the border to shop, in towns like Gallup, NM, and Flagstaff, AZ. Albuquerque is a roughly three-hour drive from Window Rock. Phoenix is about seven hours. Walmart and other businesses, simply put, are averse to managing the legal complexities and liabilities associated with tribal law, which coexists with U.S. law. This in turn deprives the Navajo Nation of valuable tax income. Real estate law is one area of complexity that often proves a barrier to development. President Nez, for his part, lays some of the blame on Washington, specifically the (BIA), which is charged with delivering government funding and services to tribal areas. He said the BIA “strangles us in red tape anytime we attempt to improve conditions on our lands.” An example is the multiple layers of approval required for development projects and having to deal, more generally, with multiple overlapping government bodies. As Nez said in a recent address: “We are, by far, the most over-regulated population in this country.” Banks are certainly deterred, often unwilling to do home loans or construction loans because tribal land is held in trust by Washington and can’t be used as collateral. Most Navajo residents live on rented land or in government housing. Small businesses and Navajo entrepreneurs are further challenged by underdeveloped transportation, utility and communication infrastructure. With education achievement low, employers have to hire many non-Navajo workers for higher-skilled jobs. The Navajo tribal government itself, the reservation’s largest employer, says 70% of its contracted work goes to non-Navajo businesses, with much of the compensation spent off the reservation. In 2019, tribal revenues dropped sharply following the closure of a coal-fired power plant long operated by Peabody, the country’s largest coal company. A nearby mine was closed as well, reducing Navajo Nation’s revenues by an estimated $30m to $50m a year, according to President Nez. The Covid crisis naturally hurt casino and tourism revenue. On the other hand, Covid-related stimulus payments, as well as money from Washington’s infrastructure bill, offer a fiscal windfall. Nevertheless, Navajo Nation still depends greatly on taxes and royalties from natural resource development, prompting a push to diversify. Working with Four Corners Economic Development, it’s contemplating a freight railway that would connect the reservation to BNSF’s main east-west line running through the U.S. Southwest. Last year, the medical glove manufacturer Rhino Health expanded its production capacity in Navajo Nation. Interestingly, the tribal government came close to buying the bankrupt gun manufacturer Remington in 2020. It’s now investing in clean energy projects including solar and wind. Helium extraction is likewise viewed as an opportunity. Some think legalizing cannabis sales would provide a meaningful boost. As for the economy today, Derrick Watchman, formerly CEO of Navajo Nation Gaming Enterprise and currently president of the tribal advisory firm Sagebrush Hill, estimates the reservation’s total GDP to be something around $8b to $10b. Enough to support a Walmart? Absolutely. (Sources: Navajo Nation, Change Labs, Derrick Watchman, Four Corners Economic Development).
New York City’s economic might since the 1980s makes it easy to forget how troubled the city was in the 1960s and 1970s. It’s a story Thomas Dyja tells in his book “New York, New York, New York: Four Decades of Success, Excess, and Transformation.” When mayor Ed Koch took office in 1978, the city’s finances were largely under the control of a commission appointed by New York State—this was a condition the State imposed in exchange for a 1975 bailout (President Ford famously told New York City to ‘drop dead,’ or so read a famous newspaper headline from the time). According to Dyja, Koch had to cut taxes, cut debt and cut social spending, and also cut 20,000 additional government jobs to secure a Congressional loan. Since 1969, poverty in the city had increased more than 40%, while median family incomes had dropped 18%. Manufacturing jobs had left the city in droves. Mob families, Dyja writes, took control of key service sectors like waste haulage, which drove up costs. It didn’t help that longtime city planner Robert Moses (immortalized in Robert Caro’s famous biography) failed to invest in railways, favoring highways instead. The “gut punch” in Dyja’s assessment, was the death of New York City’s port, long the largest employer of its unskilled labor. With the advent of container shipping, port activity moved to New Jersey (you can read about that in Marc Levinson’s book “The Box.”).
New York City would have another extremely rough period between 1989 and 1992, when it lost 14% of its jobs and the unemployment rate was twice the national average. Median home prices in Manhattan, according to New York magazine, dropped by a quarter and overall construction dropped by a third. The pain was caused by overinvestment in commercial real estate, a crime wave that depressed tourism, the 1987 stock market crash and a national recession characterized by more lost manufacturing jobs and more clerical and back-office jobs being replaced by personal computers.
Andrew Jackson’s Bank War In 1816, the U.S. revived the idea of a national bank. Not extending the charter of its first national bank—Alexander Hamilton’s Bank of the United States—proved problematic when the country needed to finance the War of 1812 against Britain. Proponents also argued that a national bank was good for economic stability and investment. “What makes the economy go is access to credit,” said historian Paul Kahan on the “Age of Jackson” podcast. So the Second Bank of the United States was born, again functioning not quite like a modern central bank but with some central bank-like functions—it held the federal government’s money for example, and collected its taxes. It also issued its own currency, though other banks could do that as well. It was really a commercial bank, making money by making loans (typically to farmers buying land and slaves). It was, at the time, the country’s only bank operating across state lines, with branches in multiple cities. In fact, it was then the country’s only company with a nationwide footprint. The bank, indeed, was a private business—the federal government only owned 20% of its shares. So naturally, it was controversial, having many government-like privileges but earning money for private investors. Local banks hated the competition. Many farmers resented the bank for tightening credit standards and repossessing land after the Panic of 1819.
Enter Andrew Jackson of Tennessee. In 1829, he became the first U.S. president not from either Virginia or Massachusetts, states whose political influence was waning. The economy was changing rapidly as well during the 1820s, from one dominated by farmers importing a lot to one in which industry and small manufacturing had a greater role, often exporting what they made. The new economy required a lot more capital and by extension more banking. Paul Kahan writes in his book “The Bank War” that by the time Jackson came to power, the Second Bank of the U.S. “exercised an incredible amount of influence over the economy.” It originated a fifth of all U.S. loans, issued a fifth of its currency and held one-third of its gold and silver reserves. Early on in his presidency, Jackson’s disdain for the national bank was mostly rhetorical; he showed little indication of wanting to destroy it. Close advisors though, including Vice President Martin Van Buren, was unambiguously hostile—Van Buren knew banks in his home state of New York would benefit if the Philadelphia-based Bank of the U.S. was shut down. Bank president Nicolas Biddle, working behind the scenes with Jackson’s rival Henry Clay, angered the President by asking Congress to renew the bank’s charter early, which it did. But Jackson vetoed it. He then won reelection in 1832 and removed federal funds from the bank, reallocating them to “pet” banks across the country. The Second Bank of the U.S. went out of business in 1841, surviving for a while as a state-chartered bank. But not before the pet banks embarked on a lending boom that inflated cotton prices (cotton was like the oil of its time, underpinning the textile industry). This contributed to the Panic of 1837, one of the worst in U.S. history. In the wake of the Bank’s demise, financial power would shift from Philadelphia to New York City. The economy, meanwhile, would spend most of the next three-quarters of a century without a national or central bank. Only in 1913, responding to the Panic of 1907, did Congress create the Federal Reserve.
Health Care: Deloitte, a consultancy, published a report on “the future of health,” predicting the industry is poised for large-scale disruption. It highlights major changes in six key areas: data sharing, interoperability, equitable access, empowered consumers, behavior change, and scientific breakthrough. Deloitte says all six have the power to transform U.S. health care from being “treatment-based reactionary care to prevention and well-being.” There’s certainly lots of money directed toward health innovation, with venture funding for health tech reaching a record $14b in 2020. Some of that money is searching for new breakthroughs in treatment, but also prevalent are efforts to improve affordability and access. Deloitte is optimistic that coming changes will help reduce costs as well.