In this episode we have special treat for you. We know that many of our listeners work in finance, so we went out and found a great interview.
Dr. Elliot Eisenberg, Ph.D. is a nationally acclaimed economist, syndicated columnist and prolific public speaker. He aims to make economics fun. His Econ70 blog and email newsletter goes out daily to thousands of eager readers who enjoy getting his insight on Economics in 70 words or less.
Elliot took time out of his busy schedule to sit down with us and gives us his take on the economy and markets today and moving forward.
Grab a pen and paper because Elliot gives us the info you need to sell better in today’s economy.
Sit back and enjoy our 7 Minute-ish interview w/ Dr. Elliot Eisenberg.
You can find Elliot’s blog at www.Econ70.com
Read the transcript
Thank you for joining us for another episode of The Seven Minute Sales Minute podcast, your pint-sized and easy-to-digest guide to jump-starting your sales career, and putting you on the road to gaining more prospects, more clients, more business and, ultimately, more income.
In this episode, we have a special treat for you. We know that many of our listeners work in finance, so we went out and found a great interview. Doctor Elliot Eisenburg, PhD, is a nationally acclaimed economist, syndicated columnist, and prolific public speaker. He aims to make economics fun. His Econ 70 blog, and email newsletter, goes out daily to thousands of eager readers who enjoy getting his insight on economics, in 70 words or less. Elliot took the time out of his busy schedule to sit down with us, and give us his take on the economy and markets today, and moving forward. Grab a pen and paper because Elliot gives us the info you need to sell better in today’s economy. Sit back, and enjoy our seven-minute-ish interview with Doctor Elliot Eisenburg.
Jon Dwoskin: I’m Jon, and Scott is right there.
Scott Fishman: How are you doing, Elliot? Nice to meet you.
Elliott: Nice to meet you, too. Thank you.
Jon Dwoskin: We have a podcast that targets salespeople, but salespeople are always looking at the economy, and economics, as far as, I think, high-level salespeople, and how they can speak to their prospects, their current clients, so they can make strong assumption sets. I used to be in real estate. Scott’s in mortgages. Now I grow businesses for a living, but what I find is that all of these people do their best to look at all these economic indicators, to create an assumption set so that they can guide their clients. As an economist, what type of advice do you give people? I think one of the hot topics right now is what’s going to happen to the economy whether a Democrat or Republican gets in the marketplace. What’s Elliot’s glance at the world, from an economic standpoint?
Elliott: Okay, if you want to talk about the election for a few minutes, we’ll do that. All the candidates, essentially, are crummy. They’re varying degrees of bad. I think already business investments has already hit the skidder, based on the platforms of the various candidates.
Bernie Sanders, of course, is really bad for business, I think; high taxes, more regulation, so on. Hillary wouldn’t be any worse than Obama, who’s already quite bad, but she’s being pulled to the left, making her worse. On the Democratic side, it’s worse than we’ve got or much worse than we’ve got. On the Republican side, you’ve got Trump, who nobody really knows what he is for, but he’s certainly against trade, which is very bad; and, were he to pursue this to his promise, tax of 35% on Chinese-imported goods, it would, without doubt, throw us into a recession quite quickly because of retaliatory trade tariffs, and so on, so forth. Cruz is equally opposed to trade, not quite as profoundly, but also very internal-looking, and he’d be bad. Kasich would be good, but Kasich’s not going to win. You’ve got really a set of candidates who are unusually bad for business on the Democratic side, and exceptionally bad, relatively speaking, on the Republican side, which has already cut, as I said, corporate investments, already; and this will have increasingly deleterious effects on our economy going forward unless the Republicans somehow manage to pick a decent candidate in Cleveland, which is not inconceivable, but unlikely.
Jon Dwoskin: That was happy news.
Scott Fishman: What does that mean to a salesperson sitting face to face with a client? How to advise them, and how to hunker down and get ready for 2017?
Elliott: It depends what the story is here. If these people are owners of corporations or companies, they’re already a little nervous on the corporate investment side. I would say hold off on corporate investment. We don’t know what tax policy will be. We don’t know what trade policy will be. We don’t know what immigration policy will be, and so on, and so forth. Hold off.
On the buying side, what this ends up meaning is that our economy is growing a little bit more slowly than it otherwise would, and part of the reason GDP is not doing that well, and I’m not saying it’s a major reason, it’s a part of the reason, is that everyone is holding back, and nervous. If you add to this, not so much here, in the US, but globally, the possibility that the United Kingdom will leave the Euro zone, that’s causing added angst, so global growth is going to do particularly poorly this year. Part of it clearly is the US election. It doesn’t mean don’t do things; it doesn’t meant don’t buy a house. It just means things are not quite as good as they otherwise might be.
It’s not tragic. It’s not wow. It’s two-tenths of a point, the GDP, down, three-tenths of a point down; but when you’re only growing at 1%, this is unfortunately a large percentage of the growth you’re not getting. Don’t go crazy, but keep it in the back of your mind. Rates are low. It depends where you live, too.
Scott Fishman: Elliot, what prompted you to start the blog to begin with?
Elliott: I remember what it was. We were back in terrible economic times, and Obama, if I’m not mistaken, proposed reducing or eliminating some Social Security tax on employees, or something, that for a year or two there would be a vacation, and employees wouldn’t have to contribute their part of it, so that they’d have more themselves; it would be like a tax cut, if you will. People, a bunch of folks, asked me do you think this is a good idea, is this good fiscal policy, and rather than answering them all one-by-one, I put it on Facebook, and there it began. It was a short snippet, it was 70-words long, and I just kept going with it, and now it’s five-and-a-half years later, and I’m still doing it. It’s a way to get out there, and tell people what’s going on, tell people what’s on my mind, tell people what’s important, what I think is relevant. And, it’s worked.
Jon Dwoskin: How many people do you distribute information to on a daily or weekly basis?
Jon Dwoskin: That’s great.
Scott Fishman: Unbelievable, yes. That’s great, for sure.
Elliott: I don’t really know. I don’t talk to anybody else. I don’t know how many people other people have on their blogs. I have no idea. Maybe 100,000 people is normal. I don’t know.
Jon Dwoskin: Are we the first people to reach out to you, and ask you to be on our podcast?
Elliott: There have been other guys. I get asked periodically.
Jon Dwoskin: I have a question for you. It’s 2016 right now. What’s the rest of the year look like, economic-wise?
Elliott: The rest of the year looks, in a word, I’d say “meh”. Meh, as in it’ll work. Look, GDP growth is not going to go anywhere. GDP growth is going to hit 2% this year. It’s just we don’t have mojo. We don’t have population growth, we don’t have labor productivity growth; we don’t have global demand, questioned demand for US products; we have a strong dollar, the oil price is low; corporate investment, weak corporate profits. Within this framework, you’re not going to get something good.
We’re going to avoid a recession. I think that’s probably the most important message for your listeners, is that barring some unforeseen disaster, some terrible terrorist attack, or Zika virus attacks the US, and there’s all sorts of damage, or something, barring some unforeseen thing like that, we should be okay, and avoid a recession, but we’re not going to have great global growth. That’s not going to happen, so if your business model depends on whoosh, wow, and excitement, try a new business model.
Jon Dwoskin: With the world being so cyclical, and we’ve all been through a couple cycles, where are we in the cycle, right now? I hear what you’re saying, and I’m following what you’re saying, but there still seems to be this frothy market feel, even though what you’re saying I know, I hear you. When’s the market going to fully adjust, and normalize?
Elliott: Not for a good long time. The structural problems that our economy faces are pretty serious. Europe’s population is shrinking, and they have very low growth. Japan’s population is shrinking, and they have very bad growth. Emerging markets are in recession; many of them are barely hanging on; and our dollar has gotten very strong again so our major trading partners are Canada and Mexico. The globe isn’t going to pull us out. What’s going to turn it around, probably, is higher oil prices, which leads to increased corporate investment, but not too high an oil price; not $100, maybe $65 or $70, that would probably do enough good; and if interest rates could rise, banks could make more profit, they’d start to lend a little bit more. But, we’re unfortunately now in a situation where 2% or 2.5% GDP growth is clearly the norm for a while, and this is causing lots of problems.
The biggest problem it’s causing is Donald Trump on the right, and Bernie Sanders on the left. These voters of these two candidates are unhappy people who feel that they’re missing something out in the world, and want to rabble rouse, a little bit. Hopefully, GDP will go a little faster; more importantly, hopefully, wages for the lower classes will rise as unemployment falls. That will kick up household spending, which will lead to increased corporate investment, and we get a little faster growth.
Jon Dwoskin: I think for our listeners, my thought is that a lot of people, I don’t think, really can connect or understand, really, what GDP is, and how it relates to their daily life, and the economy. They hear things like 2% this, and da da da; you do such a great job in your blog to breaking things down into such layman terms. What’s the most fundamental way that you would describe GDP, and how it effects someone’s life, and or business?
Elliott: GDP is the total of goods and services produced in the country, and it’s composed of four different terms. It’s composed of household spending, total consumption, C; corporate investment, I; government spending, G; and net exports. Right now our economy is running pretty much purely … not quite, but largely because households are spending. Rich households are spending, middle-class households are spending, household wealth is up, household balance sheets are better, job growth is pretty good, wage growth is fair to middling; we can borrow more money, we have more cash flow because interest rates are low, and because gas prices are low, and households are spending stuff. They’re buying cars, they’re going on vacation, they’re going to movie theaters, they’re buying furniture, blenders, and whatever. That’s good. That part is good.
The problem is corporate investment stinks because profits aren’t any good; the dollar is strong, exports are bad; oil prices are low. Manufacturing is bad because we cannot sell our stuff to foreign countries, so we’re relying primarily on household spending, which is occurring because job growth is good. That’s where we’re going.
The reason GDP is so important is faster GDP growth would probably manifest itself, at this point, in higher wage growth, and better wages would mean higher standards of living, or faster increases in our standard of living. We’re not getting these increases in our standard of living. At a GDP growth of say 1%, it takes something like 50 years to double your standard of living, or 60 years. If GDP growth is 2%, it takes half as much time, roughly. This is a big difference over a long period of time, and if we don’t get GDP growth faster, at some point, we’re going to have real problems. We’re going to have to cut government spending; we’re going to have to raise taxes; our children won’t live as we would like them to live, and so on, and so forth. We’re okay, for the time being, but slow GDP growth will cause us inordinate amounts of trouble down the road.
In the short run, house prices are going up, and this is okay, and job growth is okay, and this is good for the next four or five years. Then, who knows?
I wish I were more cheery. I’m sorry.
Where are you calling from? Where are you?
Jon Dwoskin: We’re in Detroit.
Elliott: Oh, Detroit, okay; so you know downtown Detroit is okay, and you know the ‘burbs outside Detroit …
Jon Dwoskin: We’re in the ‘burbs.
Elliott: Gross Pointe, or whatever, something Point, suburbs are good. Detroit automobile sales are pretty good. Auto sales aren’t what they were last year, but they’re very good; they’re going to continue to be okay. They’re not going to get better, but they’re good, so that’s a big plus. The parts, all the companies that make parts in the upper Midwest, in Ohio, Michigan, Wisconsin, Minnesota, they’re doing okay, too; so autos are doing their part, and done their part. They rebounded really quickly. Detroit’s not doing badly, actually.
Jon Dwoskin: Right.
Scott Fishman: Elliot, after about 20 years in the mortgage industry, I notice you talk about rates a lot in the blog, and I’m drawn like a moth to a flame. When it says rate, I always want to find something out about that. I’m reading the very last post that you have, it talks about rates possibly going lower. In my job, if rates go down on a daily basis it’s great; if rates go up on a daily basis it’s great; we just spin it to make it worth our while for the client. I want to ask you a question. If I have a client who says, “Hey, did you see the Econ 70 blog today? He says rates are going down,” what can I say to a client that is telling me that they’re going to hold off and sit on the fence until rates do drop, when we don’t know for sure they’re going to drop?
Elliott: Yes, I’m not a big believer in that game. If you like the house, and you can make the monthly payments, make the mortgage. You can always re-fi later if things go lower. Rates are really, really low by historic standards, right now. Taking the risk of waiting to get a better rate to save an eighth of a point, I’m not really sure that’s a great deal. You’re getting a mortgage for your own house, this isn’t a business investment, per se. This is a life decision, do you want to live in this house? Do you want to buy the house? You saved the money, you have a down payment, get on with your life. You don’t make other decisions the same way. You don’t think, “Oh, I’ll buy a car, now; no, I’ll wait six months because cars are going to get cheaper.” Cars often do get cheaper. Cars also get more expensive. What, I go to the store, I don’t buy milk today because I’ll get cheaper milk tomorrow? This is one area where we have … it’s expensive, it’s a big purchase, it’s hundreds of dollars, or it’s $50 a month. I get it. But, if that’s the case you shouldn’t be buying the house in the first place.
Scott Fishman: I love it. You sound like someone who I sit right next to at the office. That’s great. Elliot, that was wonderful. Thank you.
Jon Dwoskin: Let me ask you a question. You have a pretty specific outlook on the next couple years, but it’s 2016. What does 2020 look like? What does four years? We’re in a world right now where …
Elliott: It’s hard to know. I’d say that between now and 2020, there’s probably a 50/50 chance we have a recession because 2020 is a long time away. If this recovery continues unimpeded by recession between now and then, it will be the longest recovery in the history of the US, which is entirely possible, but that’s already getting to be a lower-probability event. I think rates will stay low for the foreseeable future. We can argue how low they’ll stay, but, again, there’s nothing driving fast GDP growth, so absent fast GDP growth you’re not going to get the high interest rates. Rates are going to stay relatively low. The housing market will, if we’re lucky, continue to improve over the next several years, while construction activity grows by 10% a year, something like that. That’s a reasonable number. Existing sales improve a little bit, and we continue to eke along.
The recession likelihoods are higher because commodity prices are low, world economic growth is low, wage growth is low, all these things that usually are high when you get to a recession aren’t there yet, so that’s why I think we’re not in the 8th inning of the game, here, we’re probably in the 6th inning of the game. We’ve got a ways to go, and recessions don’t necessarily die because of old age. You could argue they do, but they don’t necessarily die because of old age. This could be a long one as we skirt a recession, and we hit 2020, and we’re really doing well; or we have a recession in ’18, which is two years away, and by 2020 we’ve recovered because the recession is going to be relatively shallow.
In four years, four years from now, the Iranians could nuke us, too. We could all be nuclear waste.
Jon Dwoskin: That is great. Let me ask you a question, before we get nuked. How are the Millennials, in your opinion, going to change the world.
Scott Fishman: Slowly.
Elliott: Not much happens fast. They’ve made virtue of necessity of being poor, they have lots of student debt, they have a hard time getting credit, so they live in apartments; wow, that’s shocking. They’re going to get older, and the big group of Millennials in four or five years will be 30 years old, and they’ll do all kinds of interesting things. They’ll probably start buying houses more and more. Some will live downtown more; some will buy condos more; some don’t own a car, yet, those people are unlikely to move to the ‘burbs, but they’ll want to buy houses, they’ll want the American Dream, just a little later than everybody else. They’ll get there a little later than everybody else.
Our generation got there later than our parents’ generation; our parents’ generation got there a little later than the great generation, the greatest generation, but these kids are also going to live longer, and they’re going to work longer than we will, too. There’ll be differences, but less profound than we think. Think back, look back at the Boomers. At the end, they weren’t all that different than their parents. There was certainly some differences, many of them, yes, but I think it’s to a large extent overblown.
We’ll see if I’m right. Call me back in a year. Tell me how I did.
You got anything else?
Scott Fishman: We kind of just jumped in, and started peppering you with questions, and we didn’t really ask much about you. We want our listeners to know a little bit about Doctor Elliot Eisenburg. Tell us about you, what you do.
Elliott: My name is Elliot Eisenburg, yes. I worked at the National Association of Home Builders for 13 years, and left there a senior economist. And then about three-and-a-half years ago I realized that I had lots of things to say, and lots of ideas to share with people, and I decided that the best way to do it was to go into business for myself. That way, I could say exactly what I want, and scandalize whomever I wanted to, and make interesting comments that you cannot necessarily make otherwise, and it’s been a tremendous experience. People enjoy my comments, and it’s been a wonderful ride. I do a lot of public speaking, I write a syndicated column, and I do a daily 70-word blog, and I hope you subscribe.
Jon Dwoskin: I can tell you I subscribe, Scott subscribes. The blog is Econ70.com, and you can join 12,000 other people, plus, that give you 70 words or less that really I don’t know how you wrap it all into the concise paragraph that you do, Elliot, but I love getting your emails on a regular basis.
Elliott: The secret really is all I know is what I write down. That’s the key. If you don’t know anything, then it’s easy to share. Don’t over think it. I’m kidding, obviously.
The key is to make it useful. That’s really the key. It’s all about customer service, it’s all about making it easy to absorb, it’s making it quick, and simple, and fun, and if you can do that even economics, the dismal science, is palatable.
Jon Dwoskin: You bring up a really good point because a lot of salespeople listen to this podcast, and what you just said is you write down what you know, and you don’t try to be something that you’re not, and I think that’s the number one secret sauce of a salesperson: Is just be yourself, and speak to what you know, and don’t try to be a master of everything. And, enjoy the ride.
Elliott: Right, and you go and seek out help when you don’t know something. That’s the key. There’s tons of information out there. There’s no shortage of information; there’s a shortage of thinking about it consistently, and thinking about it thoughtfully, and so on.
It’s fun. I love what I do. I’m a lucky guy. I’m a lucky SOB, and I know it.
Jon Dwoskin: That’s great. Where can people find your column?
Elliott: They can go to my website, www.econ70.com, and they can sign up for my website … they can either read my stuff there, or they can sign up to get it in their email inbox, every day, five days a week, rain or shine, 70 words or less. No graphs, no ads, no charts, no links, and no photos.
Scott Fishman: That’s great. We’ll put a link in the show notes for you, as well.
Elliott: That’d be great. Send me a link, while you’re at it, too. Send me a link to the show.
Scott Fishman: Of course. Absolutely.
Jon Dwoskin: We will. Sounds good. Any last thoughts you want to share, Elliot?
Elliott: I mean the key thing is the economy is okay. You can go to college, you can graduate with a C-minus, and still have a wonderful career, and no one will ever ask you what your GPA was. In 5 years, or 10 years, we won’t remember this time, and it won’t matter. The economy is okay, and we’re very unlikely to go into a recession. Those are the key things, and rates are going to stay low for a good long time because the economy is not growing that fast; so, we’re okay, don’t worry. Don’t read the USA Today, don’t read all this fear about China Hard Landing, Brazil in Recession. It doesn’t matter. We’re a large enough economy, and we can withstand the recessionary wolves. We can keep them at bay, because our economy is decent enough.
Jon Dwoskin: I love your blogs. I love your energy. I love your directness. I love the whole moxie that you bring to the table, so thank you for sharing it with us, and every day in your blogs.
Scott Fishman: Thank you very much, and, Jon, I want to know why Elliot knew my GPA.
Jon Dwoskin: Very funny.
Scott Fishman: Great. Thank you very much. It’s nice to meet you.
Jon Dwoskin: Cool guys. Let’s do it again someday.
Elliott: Thanks, I appreciate it. Bye.
Scott Fishman: Thank you for listening to this episode of The Seven Minute Sales Minute. For show notes, and worksheets pertaining to this week’s show, check us out at thesevenminuteSalesMinute.com. Take today’s strategies, and run with them. Increase your sales, and increase your income.