Scott Fulford

February 7, 2024

[Ep. 387] Pandemic Paradox: Why Some People’s Finances Improved During COVID with Scott Fulford

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Hello!
I’m Jessica and I’m a money expert, speaker, Accredited Financial Counsellor Canada®, host of the More Money Podcast, and am currently writing my first book with HarperCollins Canada (2025).
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Globe and Mail

This episode of the More Money Podcast is sponsored by The Globe and Mail. Visit TGAM.ca/Jessica to get unrestricted access to globeandmail.com for only $1.99/week for 52 weeks (plus tax).

And we’re back with Season 18 of the More Money Podcast! As I shared at the top of the episode, during the break between seasons I finally finished my book’s manuscript (now onto the editing stage!) and I’m so ready to get back into the podcast and share another great season filled with stellar guests for you.

And the first one, I know you’re going to love. I think it’s finally not “too soon” to talk about the pandemic and what the heck happened. That’s why I invited Scott Fulford on the show, a senior economist at the Consumer Financial Protection Bureau and the author of the newly released book The Pandemic Paradox: How the COVID Crisis Made Americans More Financially Secure. I know, that sounds a bit odd doesn’t it? How could people have become more financially secure when all the news headlines talked about were layoffs and people struggling to pay their bills? Well, as Scott discovered in his research and interviews with Americans across the country, although many people did have a tough time riding out the COVID wave, the majority actually thrived financially. But why was this? That’s what you’ll learn by listening to the full episode.

I’m also giving away a copy of Scott’s book, so make sure to visit jessicamoorhouse.com/contest to enter to win!

Timestamps

  • 04:37 – Introduction and Setting
  • 05:37 – Introducing Scott Fulford and the Book
  • 07:43 – The Impact of the Pandemic on Individuals
  • 10:37 – The Importance of Financial Cushion
  • 13:05 – Differences Between the 2008 Crisis and the Pandemic
  • 17:17 – The Shift to Remote Work and its Impact
  • 23:55 – The Case for Universal Basic Income
  • 27:53 – The Importance of Essential Workers
  • 30:12 – The Impact on Child Poverty
  • 33:11 – Wealth Disparities and the Middle Class
  • 35:23 – The Role of Financial News and Narratives
  • 37:32 – The Current State and Future Outlook
  • 42:23 – Adapting to COVID Restrictions and Reverting to Old Behaviors
  • 42:40 – Revenge Spending and Vacations
  • 43:26 – Financial Challenges for High-Income Individuals
  • 43:51 – The Importance of Building Financial Cushions
  • 44:21 – Lessons from the Pandemic and the Value of Preparation
  • 44:43 – The Pandemic Paradox Book and Where to Find It
  • 45:16 – Appreciation for the Economist’s Perspective

Takeaways

  • Having a financial cushion is crucial for individuals to absorb economic shocks and avoid long-term negative outcomes.
  • The shift to remote work during the pandemic opened up new possibilities for work and highlighted the need for better work-life balance.
  • Policies such as universal basic income and improved unemployment systems can help mitigate the impact of economic crises and provide stability for individuals and families.
  • The pandemic exposed wealth disparities and the importance of essential workers, raising questions about fair compensation and support for those in low-income positions.
  • The future outlook is uncertain, with the need for stabilization and potential challenges in areas such as housing costs and inflation. People quickly adapted to COVID restrictions but reverted to old behaviours once the restrictions were lifted.
  • Revenge spending and vacations became popular as people sought to make up for missed opportunities during the pandemic.
  • Even high-income individuals faced financial challenges and lacked sufficient financial buffers.
  • Building a financial cushion is crucial for financial security.
  • Lessons from the pandemic include the importance of preparation and having emergency funds.
  • The book The Pandemic Paradox by Scott Fulford explores how the COVID crisis made Americans more financially secure.

Things I Mentioned in the Episode

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Transcript

Jessica 

Welcome Scott to the morning podcast. Thank you so much for coming on the show.

Scott 

Thanks for having me.

Jessica 

You’re so welcome. So you have a brand new book out called the pandemic paradox. I was just, it’s so funny that we’re now I mean, I mean, yeah, it’s several years after when the pandemic started. But it is kind of crazy that that we’re writing books about what happened, it still feels so sometimes fresh, or maybe, I don’t know, it’s still like, you know, chills, I can’t believe we survived that. But I’m so excited to have you on the show to really have a great discussion about what happened but through, you know, an economic lens, a financial lens, because now we have more data. And we have we do have a little bit more space from what originally happened to really recount what happened, what worked, what didn’t. And what were some of the outcomes, because that was so interesting, your premise of the book was, you know, really, especially looking back at, say the, you know, the 2008 financial crisis, things were very different this time around for the better. Overall, people did better coming out of this crisis compared to 2008. Thank goodness, because I’m a millennial, and that had a big effect on me and my trajectory. So I was really, when the pandemic started. I’m like, oh, gosh, not again. I was just getting my bearings. And I think a lot of people felt the exact same way. So I’m really excited to dive in. But before we do want to share a little bit more about you know, who you are, what you do, and also what gave you the inspiration to write this very important book.

Scott 

Sure. Hi. So I’m an economist at the US Consumer Financial Protection Bureau. So that’s a agency that started after the 2008 financial crisis, to really to address some of the problems that we’ve seen then. And I should say, I’m not here today representing the bureau. So these are my opinions. Not necessary, though the bureau. But, and in some ways, sort of going back that March 2020, was a really traumatic time for a lot of people. And it was certainly for me included, I had a four and six month old at the time, and suddenly they were home from school, and there was this new virus, and we weren’t sure it was going on. Lots of people lost their jobs. For me professionally, it was also sort of a scary time, because one of the things that I do with the CFPB and I do professionally as an economist is study how people react to bad economic shocks, and how prepared they are for those shocks. And one of the things that I do really carefully is we do a lot of surveying. And it was just one of one of the things that we found out that we found really sort of surprising, but also just very much in the data was that before the pandemic, people really weren’t prepared for a big financial crisis. So some of the surveys that I ran, I think 40% of households in the United States could wouldn’t would have to cut back on expenses after no more than a month if they lost their main source of income. So in March 2020, I was trying to deal with all of those personal fears, but also the big professional ones have is this going to turn out to be another guy, another great recession, another depression event. So I, as a good economist, does was staring at the data trying to find out okay, when, when is the shoe going to drop what who’s gonna be having the biggest problems. And through that summer, it became clear eventually, that the story, at least in the United States was that the shoe wasn’t going to drop that people actually were better off financially in many ways than they had been a year earlier. And I shouldn’t say that’s not true for everyone. But it’s true for on average, it was true for many people. And that was a big surprise to me anyway. And so trying to understand what caused these, what caused that surprise, was something that I the CFPB. And then I spent a lot of time on trying to advise policymakers. And then I thought we really important to help other people understand the story of what was going on traumatic time, but maybe there’s some silver lining.

Jessica 

Now, just to touch on something you mentioned, you know, most people and I think this is the same was for Canadians as well, even though we’re different countries, there was a lot of parallels, basically, the same thing happened over here. And what I thought was interesting is, you mentioned that most people were not prepared for a crisis Do you think people should because even though when people really look at history is like, yeah, this kind of happens in the cycle every 10 years, something really bad happens. We don’t know when we don’t know exactly to what extent or what will cause it. But something bad always happens every decade or so. Do you think it’s a matter of people not realizing that and not being prepared for it? Or is it just that there was no room to be prepared, they’re just literally, you know, paycheck to paycheck just trying to survive. And so you know, what a luxury and privilege it would be to have so much money to actually be prepared?

Scott 

Well, that’s a hard, I think it’s some of both. And so the joke among economists is that you wish for one handed economist, who doesn’t say on the one hand, on the other hand, so two pieces one is that having some having a liquid cushion, having something that can help you absorb shocks, is just really important. And we see that just repeatedly that people who have that kind of cushion, are just able to avoid really costly things that happened to them. And so don’t sort of end up in bad cycles. At the same point, that’s really hard. So this is true both in the United States and Canada, housing is really expensive. And that’s the big part of most people’s budget is just going to housing yourself and your family. And you don’t have a lot of control over that. It’s not as if you can sort of cut this cut spending on housing by a huge amount, in easy ways. You You need to be someplace close to your job. And maybe that changes a little bit more than rote work, but it’s not. So the ability of many people to cut spending. And to have that big financial cushion is limited. But I think one of the things that we’ve learned over the years of the pandemic is that for lots of other people, there is actually a lot of room for cushion. So just to give an example. Spending went really went substantially down starting in March 2020. This is true across the world. The best date I know is is in the United States about that, but for many places as much as 50% for several months. Now, there’s lots of costs and not spending. There’s lots of just not doing the fun things like going out to bars and restaurants or visiting your grandparents or grandkids or whichever generation you are But what it does justice, but for many people, there is room in their budget to do some cutting. And the data suggests that if you were able to do that, and if you’re able to have a buffer of savings, you can really sort of avoid a lot of bad outcomes.

Jessica 

I’m also curious what you think so, you know, there’s that saying that, you know, this time is different, and it never actually is. But this kind of time was, I mean, yeah, there’s lots of similarities to other crisises. But this time really was different in lots of respects in that, you know, you kind of give the example you share lots of personal or not personal stories, but stories of real people thinking that, gosh, this is going to be just as bad as 2008, I’m gonna have to cut back, I’m not going to be able to pay all my bills. And then a bunch of policies are made and benefits were handed out. Same thing happened in Canada with oh, we have served, and it was able to keep people afloat, so they can keep on, you know, paying their bills and and survive. And so that was a big, I think, difference between 2008 Do you think that was consciously done, because we didn’t want to see the big after effects that we saw in 2008, where it took, I think you gave an example in the in the intro that some people it took them that decade, just to get back to the pre 2008 crisis level. And then here we go another pandemic. And, you know, I’m feel like I can’t move forward. What was surprising to you, when you were going through the data and looking at the differences between these two crisis that had a bigger effect on people, what were some of the biggest surprises that you saw?

Scott 

I think the big one is, of course, that just on average financial well being financial credit card, however, you want to measure it sort of financial status, financial health, went way up, or went up pretty substantially during the pandemic, which was a big surprise, because by all the same measures, it would have gone way down during 2008. And going back to kind of like there were two real really important differences that in 2008, just the policy response was just not sufficient to the, to the problem. So one of the big things that happened, was even after things bottomed out, and for at least the United States started growing again, very slowly, in 2009, long term unemployment, people who were unemployed for a year or more, just continued, and continued and continued. And I know I keep on saying, but if you are looking for a job, and you haven’t found one, that’s just a really, it’s a really hard thing to navigate. Whereas in 2020, there was a really big and really important spike in unemployment. And that was hard for many people. But at least the United States, unemployment insurance, partly from policy really kind of helped keep people more or less whole. I think Canada has a somewhat better overall unemployment system. So sort of we didn’t, it didn’t require a huge change in policy to make that happen. But what that meant was that sort of this change in unemployment wasn’t a huge, huge problem. And then things just rebounded really quickly. And they were bounded in ways that were kind of complicated, because it’s not as if the virus went away after June 2020. But the restaurants were able to start reopening, and people were able to start coming back and actually doing work again. And so the recovery from the pandemic was just much quicker in unemployment. And in fact, really excitedly, at least the United States, we are now back on trend for GDP kind of that. So the economy looks as if pandemic never happened. Whereas there was a permanent reduction in the United States of about 10%. And that’s 10% every year. So I was doing a calculation that that’s something like $28 trillion worth of lost output from the Great Recession.

Jessica 

Yeah, it was, it was wild, for me to live through and see how quickly the rebound was because I really did think I’m like, here we go. Again, it’s gonna be a very similar situation. But then, as we saw, especially to, you know, looking at the stock market, and Emirates, like, oh, gosh, this is gonna be terrible. I lost all my money. And I was telling people do not touch it. And what did we see, like quickly, like 2020 2021 were great years to invest, which is not exactly something that we can say for 2008 You had to wait a long time to get those kinds of rebounds.

Scott 

I will admit, I wish I’d been able to call that as well.

Jessica 

Yeah, that was a surprise of like, oh, gosh, this is it. And then I’m like, Oh, this was a this was a shock. So I’m curious to I think the another really key difference and we haven’t really touched on it too is for the lucky people who weren’t able who didn’t lose their jobs that weren’t laid off or anything like that. And then they were forced to start working from home and kind of an A lot of people figure that out really quickly. Which is funny because I’ve talked to so many people including myself and you know, worked at different organizations are like we just don’t have the capacity. We don’t have the resources. We don’t have the tools, the systems to figure that out. So we’re just not going to and, and then people figure it out in a couple of weeks via zoom right and that crazy and then and that’s still a thing that We’re kind of dealing with do you think that had a really big impact?

Scott 

Of course, it had a large impact. And let me kind of break that up in if the same thing had happened in, say, let’s say 2000, but maybe even 1990, to go all the way back before, where the way you would have had to communicate would have been picking up a telephone. I’m not sure. I mean, I, I lead a team that we do a lot of really complex surveying, we had a survey that was going into the field in May 2020. And then we had another one that we rushed out to wet brush to be able to get out in February 2021. These are complex things, I don’t know that we would have been able to do that just through telephones with us all at home. I just. And so in some ways, kind of the technology was there was it there, 10 years ago, maybe I was using Skype calls 10 years ago, it probably wasn’t there 20 years ago. And so in some ways, kind of this pandemic really didn’t change, because suddenly, there was a large portion of us of the workforce that could go, they could just go home, and it turns out could just go home and be more or less, as productive as they were before. And that’s really in some ways, just exciting because it opens up so many opportunities of what work can look like in the future, in the sense of that sort of work doesn’t have to be done all the time in the office. People can live in different places don’t have to live in where the housing is most expensive, don’t have to they maybe when your wife or husband or partner gets a job someplace else, maybe you don’t have to quit to follow them, or the reverse. It just opens up somebody really exciting possibilities. And all of those were sort of opened up partly because we had this forced experiment. Everybody was going home. And we were all making the best of it. And it turned out we were able to do it pretty well. In fact, really surprisingly well.

Jessica 

I’d say like the the silver lining of the pandemic was it forced these companies to have to address the work from home issue that that I think a lot of employees really wanted. But I know also, I know you’ve probably been seeing this a lot, too. There’s still especially like the big corporations are really hammering home, please come back to the office. Why do you think that is like in my mind, it’s literally because they are holding on to leases of buildings, and they don’t want to waste money. But I’m like, I don’t know sublease it I don’t know.

Scott 

Well, yeah. So I think I think a lot of it is that. And this is partly I think generational, that when you grew up as a manager, managing by walking around and seeing whether people were doing work, and that’s how you manage. And that’s how you think that, yeah, that in that. So in some senses for them, kind of seeing people in the office is the way that you say you can tell whether people are productive. And so I think that there’s a little bit of just a management that a lack of management insight that’s happening. To be fair, I think there is something that is lost when we don’t ever see each other in person. And so just building trust, building kind of communication is harder when you’re doing it in a sort of a small screen than if you are able to get together. But honestly, you can probably do that by quarterly get togethers that’s probably sufficient. And all the rest of it, people are probably more productive when they aren’t being bothered and don’t have an hour commute, which is really dead time. And I think that’s one thing that that sort of that gets missed in the sort of return to office, that what effectively is going on is that employers are saying, we deserve another hour of your day, but it’s not going to be a productive hour of your day, you’re just gonna have to spend it driving in or on the subway. And workers are saying, Well, but wait, I want that hour. And in fact, I’ll even use that hour, some of that hour to work for you. But that’s just that’s dead time to both of us. And so it’s sort of how to negotiate over that hour of time is I think the really key thing that employers seem to be missing, that they’re actually asking for a lot more than they seem to be for no obvious return to the employee.

Jessica 

Yeah. And I guess that’s probably why we have seen a lot of like those trends of the, you know, the lazy girl, I don’t know if you’ve seen this, but there’s like, like, lazy girl worker or whatever it’s called or like the you know, quiet quitting, and all that kind of stuff is a little bit of a push back to some of these, you know, why are we doing things just because we’ve always done them. That’s not a really good enough excuse. And you know, there’s a now we actually have data and proof that this does work. And like you said, there’s so many different alternatives if it’s really about like team building. Well, you know, I think it’d be better to do quarterly actual like day of team building, instead of just come to the office where then you’re at your cubicle alone, and then maybe you’ll talk to some people at the watercooler a little bit you know, so There’s definitely definitely some options. I know, we also touched on the different policies that were put in place and helped people, a lot of people, especially who, you know, are, you know, low income people in general that were kind of ignored and, you know, not taking care of during past crises. I’m curious, it was kind of one of the perspectives you had, you know, bringing some of this data and and writing your book, kind of making a case for universal basic income, or at least just getting people to think about maybe we shouldn’t just create these policies, when there’s a crisis, maybe these policies should always be in place.

Scott 

I think that’s it. So that’s a really important in sort of thinking through the various policy options. So in many ways, kind of when you have a big crisis, you should really think through what should we be doing differently. And I think there’s several different pieces we can think about, for me, at least, the obvious low hanging piece of this is for the United States just have a better unemployment system. So every time we have a crisis of a certain financial aura, we tend to increase by unemployment in some ways. This time, we did it a lot more extensively. And it turns out to have really big important impacts. And there’s no reason why that has to be kind of limited to older, something big, we can make that sort of more or less permanent. And what’s really good about that, as it means that it’s what in the economic speak, is what’s called an automatic stabilizer. What it means is that that is that there’s money that goes into people’s pockets, and people who need it, because they aren’t employed, when there’s a recession, or when they’re having problems. And so it sort of helps to kind of keep everything kind of fairly even. So that’s kind of a really basic, that’s just sort of basic social insurance. Going to the next step of whether we want to have a kind of a universal basic income, that’s a little harder, because in some sense, it’s a universal basic income, especially one where you would actually be able to live on it, in the sense of sort of like this would actually be a basic income that you could live on. That’s a lot of money. And it will require a real change in the way we tax. And one way that we think about benefits. But effectively, it would mean that lots of people would get a lot more would need to be taxed somewhat more. And whether that’s something that the United States wants to do, or is a little bit stronger, but sort of I think the case for not making kind of the ups and downs of income, be as big, the is really important. Just to be clear, I’m not arguing against universal basic income. But I think it’s a it’s a complex, it’s a more complex and more and more complex political problem. Yes, yeah. But in some ways, what the pandemic do show is that when you have people who are financially secure, they’re going to do good things with it, you know, so the example I love is that businesses, that new business creation just boomed, starting the pandemic, and it’s still hot. And a lot of that comes down, you can kind of trace it to sort of new business registrations in the United States increased right after there were big money, sort of economic impact payments, the stimulus payments, that were part of US policy, then people started new businesses. And that kind of economic dynamism is really exciting. And it really does show that maybe kind of having a better, having more people just be better off financially and with access to capital can lead to big and exciting economic growth things. And it makes, it makes the people who have access to money and have a better financial better off. And so kind of those things don’t have to be opposed to each other.

Jessica 

Yeah. And like we saw to a lot of jobs and roles, we kind of saw them in a different light, like, Oh, these are essential, these essential workers, nurses, you know, people who worked at restaurants and grocery stores, and you know, there was a little, sometimes a little boost sometimes to grocery stores, you know, okay, we’re upping our hours, because we’re trying to get people in because they are literally risking their lives just to serve you, you know, food or to help you at the hospital. And then once things kind of started getting a little safer, a pandemic was over, we kind of forgot about all of that. I mean, I am seeing definitely increased our tipping percentages here in Canada, everything used to be like starting at 15% and 1820. Those were kind of the options. Now everything almost starts at 18%. And lots of other, you know, businesses are putting that tipping option when they didn’t previously. So that’s like, I guess one way they’re trying to, you know, increase the incomes of some of those workers. But, I mean, yeah, it’s just one of those crazy things you’re like, did we all forget how important these people were and that we’re not trying to find another way to support them by maybe, you know, making the the minimum wage higher or creating some sort of benefits or something like that, but like you said, the money has to come from somewhere and a lot of the people that we’d have to tax are, you know, they’re, you know, varia they’re out there and they have their influence with the politicians. So it’s gonna be a long road. I don’t think they want to let go that money.

Scott 

But I think you bring up a really excellent point, that sort of there were some real unfairnesses during people who We’re not earning a great deal of money. And we’re suddenly exposed to a huge amount of more risk in the United States that actually showed up for a while, many of them would have been better off financially. But you know, at least in the short term, if they’d been fired, because the way the unemployment sort of worked was that they actually would have had slightly higher incomes, and wouldn’t have had all the risk. That’s a that’s a really unfair situation. And we it’s not one that you want to sort of create, if you’re not doing something in a crisis, to sort of think through how do we make things so that people are, who are taking risks are compensated for it. And people who are employed, I don’t know you if you’re going into boot to help to do groceries, that you’re not that that’s not sort of an imposition, that that’s not being unfair

Jessica 

to you? Yeah, absolutely. I know, one stat that there was that I found shocking was child poverty, specifically. So it has doubled in 2022. But it declined in 2021. What was the what shift happened for us to see some progress with the decline of child poverty, and then to see the reverse happened in 2022?

Scott 

Well, in the United States, and this is very specifically United States, because it’s very directly a specific policy in the American rescue plan act. What it did is it first it increased overall Earned income tax credits for dependents. And it also meant that they were also prepaid. That’s not quite the right word. They were, they were sent out monthly, rather than simply when you file your taxes, you get the full amount back. And that money directly, just the way that child the child poverty is measured, meant that the families with children who are not earning a lot of money had a substantial amount more money. And so child poverty just went down almost directly because of that. And then that policy ended. So it was only funded for sort of six months, and it ended. And so child poverty went right went right back up. It’s a little bit more complicated than that, because those families were also benefiting from previous policies. So child poverty was also being driven down from that. But the the up and down was directly the rise and the directly from the American rescue plan, act, starting and then stopping. And it’s really sad.

Jessica 

The data is clearly showing, it’s like this works. Why did we stop it? Because now that we stopped it, we can see the negative consequences of getting rid of that policy?

Scott 

I think the evidence is fairly clear that particularly for children kind of poverty is just it causes long term problems. Yep. I think and I mean, I, that’s not to say that poverty is pleasant for anyone. But for children who were sort of forming their education, who are four who are, maybe they aren’t getting enough to eat, and that can have long term consequences. Just it really affects kind of their approach to lots of things.

Jessica 

100%. Like the psychology of it, like it affects them at a really granular level, like, you know, obviously, it’s like, affects them in that they’re not getting their needs met. But I mean, talking to adults who, you know, had scarcity growing up, it comes with you, and it’s hard to shake. It’s really hard to shake. Oh, gosh, I’m curious, because, you know, we’ve talked about how there’s some big differences, you know, like this, this time was a bit different than the last crisis. Some people you know, weren’t at that, especially really low income did a better compared to that time, but I was kind of just looking at, you know, some of what I’ve been seeing online and in the financial news, was it still though the situation where it the rich still got richer, and the poor did better than last time, but they still aren’t great. I mean, they’re still at where they’re at. And then maybe the middle class still did better than than expected.

Scott 

Well, I think it’s it depends a little bit on how you look at it is, I think, kind of always the so the, partly because the stock market came right back. It’s had not such a great year, the last year, but sort of the data has been pretty clear that just overall, the wealthy got a lot wealthier. Which, okay, I mean, but what’s really exciting is that the poorest half of the population also got somewhat more wealthy. And in some senses that that matters more in the sense that sort of the people who are hurting, we’re hurting a whole lot less on average. And I want to keep on saying the on average, but I think that it really doesn’t matter. In in any economy, they’re going to people who are not doing as well, that’s true, even when sort of all boats are floating, some are going to be being hit by waves. And so just acknowledging that it isn’t necessarily true that everybody’s doing well. So recent data that came out from the United States did suggest that wealth at the top end increased by a huge amount of wealth at the bottom and also increase in the dollar value didn’t increase a huge amount. But in percentage terms, it increased by a huge proportion, largely because at least in 2019, many people in the bottom 50% of the distribution didn’t really have much net wealth. They, I think the the average was about $400 in 2019, in terms of median wealth, which is not a lot of money. And so when that increased to about 3600, that’s a big, that’s a big increase. And it’s a big increase in the cushion that allows you to sort of just absorb some bad things, your car breaking down.

Jessica 

So obviously, you’ve done a ton of research for this book. I’m curious, while you were, you know, doing some of those surveys, especially during 2020 and 2021. And seeing some of the data come in, were you surprised by some of the kind of narratives that were being promoted by the financial news? Because, you know, sometimes it’s the financial news, does it get it wrong? And they also, you know, they’re kind of just doing their best in terms of trying to report on real time. But looking back, was there anything that they got substantially wrong that you want to correct? Or you’re like, oh, gosh, I can’t believe it’s not quite the full story there.

Scott 

Oh, that’s an interesting. So first, just to admit that, we were all trying to figure it out. And one of the things that was both interesting about being somebody who was studying these things, but also just that everything was real time, it everything was changing, you couldn’t depend on what you sort of looked at last quarter still being true. And so trying to figure out what was going on, I think was a really was really important. And I think there were a lot of financial journalists who were paying a lot of attention. And we’re thinking very carefully. And we all got it wrong in the real in real time on occasion, and some, some got it more, some got it better than others eventually, and some didn’t. So So kind of maybe a several pieces of this. One is I think in this was an emphasis of the writing the book, that I think just missing that the general just the general improvement in people’s financial lives. And that’s that that’s the fundamental story. And then everything else is understanding who wasn’t benefiting and understanding kind of, maybe he was benefiting more who was benefiting less and inequality increase. But overall financial lives were a lot better is, I think, really important.

Jessica 

Yeah, that’s certainly not something that I’m seeing in the headlines that say things are better now. Because I mean, that’s not really an exciting headline. But I’m curious, even to your perspective on now that we’re almost at the end of 2023. As we record this, I mean, things have changed, taken a turn definitely the past year, year and a half since kind of the high highs of 2020 and 2021. Where things are, you know, we’ve got, you know, cross cost of living crisis, high inflation, have things kind of, you know, rolled back a little bit since we saw some of those improvements in people’s lives. Are they now kind of overcorrected. Now, those people are actually worse off than before.

Scott 

So things have definitely rolled back. And I think I think the hard question that I think we’re all trying to ask ourselves at the end of 2023, is, are we looking at something where people are going to be worse off than they were? Or is this just a return to kind of normal, and normal might look a little different than it did before. In particular, I think housing costs have just high incredible, our housing has just gotten much more expensive. And housing is the biggest thing that people spend on and so when housing gets more expensive, that just affects everything else. And the big question, I think, right now is are we going to go back to where things were or even get, are things going to even get worse for a little while? Or are we going to just sort of stabilize? And maybe to give a little bit of context? If so just to be clear, I’m speaking at the end it early November 2023. Because I think that the timing of that matters, as we were just saying real time things change. I credit card delinquencies, which were a good way of measuring things are about where they were or even or even higher than they were in 2019. And that’s a good way of saying, okay, there are some people who are having some problems there. Is this widespread Well, maybe not, but unemployment, at least in the United States on unemployment is still quite low. It’s been increasing a little bit lately, but it’s still quite low. I think my hope is that sort of things are just going to stabilize now. I actually, I would hope that things are going to be much better for much longer. I know that that’s not where the data is right now. So I think that things are going to say what my hope is the things aren’t going to get worse. But unemployment is still low. And so if unemployment starts spiking, maybe things will go get a lot worse. And that’s really scary, because it really does suggest that the overall increase in prices, particularly for housing, are going to impact people a lot. And all of those pandemic policies, those events did, for a long time, people had a lot of savings built up, that’s kind of gone. It’s not entirely gone. It depends on who but I think that the bottom end of sort of the wealth distribution has less than they did not Nestle less than 2019. But so trying to predict kind of where, where the economy and where individuals are going to go, it’s become a lot harder than it was.

Jessica 

A lot of the people who were able to stay at home and save their money. I think they spent a lot of it the next year when things started opening up. And so why we’re in this situation with high inflation, and we need to raise interest rates to kind of incentivize people to stop spending money. It’s just a, it’s funny, just going back to kind of what we talked about at the beginning of this episode, the idea of having that buffer, do you think even though like, it’s so fresh in our minds, the pandemic 2020 wasn’t that long ago? But do you think that people again, we’re kind of like, you know, goldfish, we have a really short term memory that a lot of people aren’t thinking like, well, we got out of this kind of unscathed, but maybe that was a lucky, lucky situation, I should do my best to put those protections in place, get that emergency fund all that stuff? Do you think people are thinking like that? Or do you think that people are people and they’re just going to do what they want to do? And it’s, you know, kind of on repeat, they will or they won’t?

Scott 

Let me divide up what I wish was happening and what I think what seems to be actually happening? Yeah, but there were some surveys kind of in 2021, and 2022, which suggested that people were more interested in having more savings around the behind the average behavior since then, has not suggested that, that that’s been the kind of the dominant behavior for kind of the average consumer, that just the increase in the combination of increase in prices, and just having more money in the bank or less credit card debt. People have been spending as if they sort of as if they just have more than they need. And we’re down to a point in URL in late 2023, we’re kind of that’s no longer true. And so they’re probably going to have to stop spending as much as they were the person who would have liked to have seen more savings and more kind of financial protection individually, would what might have hoped that sort of that that some change in behavior had kind of continued impute and more people had sort of realized, gosh, you know, I didn’t need all those trips to the bar to the restaurant, I can do things that are a little less expensive. You know, there are some benefits of meeting friends in the park, which was sort of COVID thing.

Jessica 

I missed those.

Scott 

Well, do we get in? It doesn’t have to be very costly.

Jessica 

Yeah, it’d be creative, you know, and I feel like we forgot, you know, it’s we just immediately like, it’s so crazy how we changed our behaviors pretty quickly to adapt to the new world that we were living living in COVID, all these restrictions. And then once the restrictions left, we were very quick to go back to our old behaviors.

Scott 

Yeah, well, and revenge spending, I think is that people were using it or sort of revenge vacations or that okay, I didn’t get to take that vacation for the last two years. Yeah, now I’m gonna do it, and I’m gonna splurge on it.

Jessica 

I’m gonna do it twice is good now. Yeah. Into the purpose of using God, you know?

Scott 

Yeah. And to be fair, I mean, kind of you didn’t get to take that vacation. So I don’t want to this is not to criticize people’s behavior. I but I think that one of the things that sort of stands out is that, say, going all the way back to 2018. Even very high income people sometimes have difficulty paying bills, even even high income people didn’t have a lot of kind of buffer or in their sort of work, you know, if they lost their job, didn’t necessarily have a lot of money in the money to kind of back that up. And I’m picking on high income, because sometimes is that helps sort of divide up is this. There’s just no margin, or is it a choice about how much you’re going to put into a financial cushion? And I going back to the two ended economists, it’s some of both, but I think it would have it, there might have been some benefit to having more five more savings around.

Jessica 

Yeah, there’s always a benefit to having more savings around. So if anyone can take that lesson, it’s like, don’t you know, just forget immediately what happened in the past. I always tell people, it’s like, if you feel like you don’t have a foundation, or you don’t know where to look, look at history, it will and you’ll see how often it repeats and some of the lessons of the past the really just basic ones, like have that emergency fund and put those protections in place, have that insurance, all that kind of stuff. They’ll you’ll never regret doing those things. So I’m sure I can talk your ear off. But you know what, you You did such a great job with your book. I’m really glad that you wrote it. I think it’s such an important book for people to read, especially again, to really hammer home some of those. Remember what we learned at the pandemic. Let’s not forget what we learned. So thank you so much for come coming on the show, where can people I guess grab a copy of your book and maybe find you online if they want to follow you? Sure.

Scott 

The book is the pandemic paradox how the COVID crisis made Americans more financially secure. And it’s available at all major booksellers, including Amazon and I’m bookshop.org. I’m on LinkedIn at Scott L. Fulford and at my website at scuffled, for.com.

Jessica 

Amazing. Well, thank you so much, Scott, for coming on the show love having an economist. I’m always like nervous, Mike, I hope I can, you know, have some good questions, but I think we had a really great chat. So I really appreciate you coming on here.

Scott 

Well, I will admit, I’m always a little bit nervous as well. Am I going to give the economist jargon answer can I remember? Oh, no, I need to actually give the answer that doesn’t involve Latin and Greek words.

Jessica 

I always appreciate that and my Latin is just not up to par. So thanks again for coming on the show.

Scott 

Thank you.

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