Pile of Scrap Ep. 9: Economically Impacted with Jason Schenker
When it comes to getting down to the hard questions of understanding the impacts of the economy and the future it holds, Jason Schenker breaks it down for us. John Sacco invites Mr. Schenker, President of Prestige Economics and one of the most accurate financial forecasters and futurists in the world, on the show to talk on how the recycling industry and the U.S. economy has been impacted by tariffs as well as the net effect of the economy in terms of taxes on both the state and national levels.
Watch this episode of Pile of Scrap here.
Jason Schenker and John Sacco
Intro: The following is an original audio series from Sierra International Machinery, Pile of Scrap, with your host John Sacco.
John Sacco: Well, I'm here today in Chicago. ISRI 2019 Round Tables. I'm here with Jason Schenker. Big Jay.
Jason Schenker: Good to see you, John. No worries.
John Sacco: Good to have you here. Jason is, um, why don't you tell us who you are. You're — you know it better than me because you're just Superman, super economist, but you're everywhere. But Jay, give — give us a little bit of a background who you are to our listeners.
Jason Schenker: Yeah, so I — I do a couple of things. So, um, I run a company called Prestige Economics. It's a financial market research firm. We forecast different, uh, things like metals prices, energy prices, currency rates, macroeconomic indicators. And, uh, we've been consistently top ranked by Bloomberg, uh, since I founded the firm. And, I also run an organization called the Futurist Institute. We're focused on helping, uh, consultants, analysts, executives incorporate new and emerging technology risk and opportunity into their strategic planning. So, those are kind of the two hats I wear. But, I also write columns for Bloomberg and do some tedious —
John Sacco: And you also write books.
Jason Schenker: And I write books, yeah.
John Sacco: I mean, dude, you are prolific. This is, what, your 12th book? How many books have you written in the last year?
Jason Schenker: Uh, so I've written 12 books in 12 months. So, that is book 12 in 12 months.
John Sacco: The Reading the Economic Tea Leaves coming out. Is it coming out? Is it out now?
Jason Schenker: It's out now. It’s out now.
John Sacco: Right — right on.
Jason Schenker: It came out in August. There's another book coming out this month. But, I, you know, I kind of set myself a goal to do a book a month and it — it's kinda gone. But, uh —but in total, that's my 20th book. So, I had done eight books before I started the one book a month. And so, here we are.
John Sacco: Do you sleep?
Jason Schenker: I — I sleep well. I sleep like a baby.
John Sacco: But do you sleep? Yeah. One hour, I don’t know.
Jason Schenker: No, no, no. I sleep just fine. I actually find writing to be really relaxing for me. It's what I love to do more than almost anything, is just sit there and, like, problem solve and, uh, research stuff and then share information that I've kind of digested in theories I’ve got.
John Sacco: Alright, well let's get started here on some questions ‘cause I've had a couple of listeners to our podcast asked me to ask this question. And because of your, you know, you’re a economist and you know what the hell is going on in this world. They want to know about the tariffs.
Jason Schenker: Yup.
John Sacco: What's it done to the U.S. economy and specifically how's it driving the recycling industry with the metals and, for that matter, plastic and paper to — to what extent you can tell us.
Jason Schenker: Sure, sure. So, let's take the global macroeconomic piece first. There was a report that the IMF, the International Monetary Fund, put out in May, looking at what were the impacts of the tariffs. Few big things, right? The big loser, no surprise: China. The big winner: Mexico. Um, U.S.: a little bit winning. Uh, benefiting from the trade war with China and other countries seeing kind of mixed results, but the big loser: China. Big winner: Mexico. Uh, what we're seeing on a global basis — what we're also likely to see are displacements of manufacturing. So, the longer this goes on and we don't necessarily see an imminent improvement in the situation because I fundamentally do not believe that the trade war is just about tariffs. I think it's about bigger things like Chinese economic and political hegemony over Asia and…
John Sacco: The world.
Jason Schenker: Right. So, that's kind of what it's about. Even the section 3-0-1 tariffs. So, there's two tariffs: there's the 2-3-2, which means a whole lot for this industry. And there's the section 3-0-1 which is based on some intellectual property and these sorts of things. And that's really, uh, a tariff that was implemented. And, that's the one we hear the most about in the news now ramping up and going back and forth.
John Sacco: These are the ones where Trump says we're going to add another X-billion to this, this…
Jason Schenker: So, that's the section 3-0-1 and that's designed to counter Chinese — the threat of Chinese technological supremacy on a global basis. The section 2-3-2s are designed to foster more production of aluminum and steel domestically, so that the U.S. could be prepared and would not be at further risk in the future of being unable to produce material — to producing a weapon.
John Sacco: And is the effect that we are able to do this? What's the net effect on those aluminum and steel right now in the U.S.?
Jason Schenker: Well, what we're seeing in the IMF report kind of shows for all of these tariffs is that prices of things have gone up, right? So, domestically we see this has had an inflationary impact for a number of things in terms of steel and aluminum and alike. We've seen it with the HRC, the hot rolled coil Midwest delivered NYMEX contract that had seen a really big spike. Although, the price has fallen over the past number of months and the reason for that is slowing and anticipated additional slowing in U.S. steel demand. But, that steel benchmark in particular saw a big spike because that's Midwest delivered, which means, obviously, steel in the U.S. is going to see much higher prices because not only were there tariffs, but there were also quotas. So, some countries like Brazil have import quotas. That means, uh, once you hit a certain volume, no más steal from Brazil, right? So, there's a couple of countries that have quotas. You've got the tariffs in place, which makes it more expensive to bring material in. And so, what you've seen as an inflationary impact, but also a protectionary, uh, set of policies designed to protect U.S. interests in production of steel and aluminum. And so, over time, if these remain in place, you're likely to see some more production of U.S. aluminum and steel. But, these dynamics and the ability to protect those industries have also come up against, uh, the downward price pressure on aluminum and steel globally.
John Sacco: Well, that's what I was — That's what I'm going to ask you. Okay. Prices — commodity prices right now, other than copper scrap and aluminum…
Jason Schenker: Yep.
John Sacco: Scrap.
Jason Schenker: Yep.
John Sacco: HMS is really on the downward trend.
Jason Schenker: Yup.
John Sacco: We gonna continue this? Is this a tariff? If tariffs were eliminated tomorrow like some candidates want, what — change anything? Or is it just a cycle of what we're going through?
Jason Schenker: Yeah, so I think there's a couple pieces. So, if there's this economic term that academic economists use… I'm not an academic economist, but there's this concept of “ceteris paribus.” In other words, if everything else didn't matter, this is what the world would be. And so, we get to play this kind of fairytale game as economists. And so, um, if you didn't have a global decline right now, uh, those aluminum and steel prices would be much higher, especially Midwest Premium and, uh, for — for aluminum Midwest delivered steel — that NYMEX contract. Those would be even higher —much higher than they are now. The global slow down though has had these ripples and so we, —we can't play this fairytale game of saying, “well, you know, let's exclude the rest of the world.” When we think about the whole world, um, even copper has been on a downtrend. Nickel’s really been one of the big exceptions and that's because of an, uh, an Indonesian export ban. So, but almost every other metal has been trending downward and over the past number of months, really, uh, since the beginning of 2018, a lot of the metals have been full.
John Sacco: Okay. So, that segues into… Quickly, if you would: the China economy, Asian economy, and then let's go to Europe.
Jason Schenker: Sure.
John Sacco: Quickly say where they are and — and when you forecast where they're going between now and the end of the year. You know, wherever you can just know what's going, you know, we don't want to get too far out there because nobody really knows the future.
Jason Schenker: Yeah. So, uh, I — I don't know. I — some of us do, but you know…
John Sacco: Alright, so you do. I don’t. Can I have your crystal ball?
Jason Schenker: Oh no, that’s alright, that’s alright. Well, that’s why there's the book about reading the Tea Leaves, right? So, uh, what I'd say is a couple things. So, one, first of all, U.S. economy is doing pretty good and it's doing excellent compared to other economies globally. Right? So, U.S. GDP 2019 likely to be between two and two and a half percent. Next year, we see it, maybe, closer to one to one and a half percent.
John Sacco: Still growth.
Jason Schenker: Still growth. Still positive. Uh, China has been in a manufacturing recession for more than half a year now. The Eurozone has been in a manufacturing recession for more than half a year now. Uh, those are now manufacturing. So, the majority of those economies, it's not even for China. Uh, and it's certainly not for the Eurozone and it's not for the U.S., but those are really good proxies for how investment is going in those economies, how capital intense industries are performing. What that means is China's in trouble right now. Those tariffs have had a material impact and right now companies are looking at moving their supply chains around. So, this is actually, if it can jump back to the question of ‘how are the tariffs affecting this industry?’
John Sacco: Okay.
Jason Schenker: Um, there's a keyword here and I think it's ‘displacement.’ And so, what you're seeing is the potential for companies to completely rework their supply chains on a global basis and that's creating displacement in terms of where scrap flows are going to go…
John Sacco: And where is it flowing now?
Jason Schenker: Where the demand is going to be.
John Sacco: Okay. So, where's it going to flow different? The different flows, where do you see it?
Jason Schenker: Yeah, I think you're going to see more into Taiwan. I think you'll see more into Korea. I think you'll see more into China adjacent Asia.
John Sacco: Okay.
Jason Schenker: Uh, and that's for goods overall. I think for high tech goods you could see more in Taiwan than in other places in the short term. But, I think you're going to see a lot more coming to Mexico as well, which is why Mexico has been the big winner because if you're going to go to the trouble of moving your manufacturing anyway, why not put it in what's probably very soon going to be the USMCA region?
John Sacco: That's — okay. I would've never thought Mexico was the winner.
Jason Schenker: Mexico is the winner.
John Sacco: That's very — that's a very interesting thing. And, lastly on the tariffs. Last question I have for you on this: you don't think there's going to be — there's no deal eminent with a trade deal. Is that because China's waiting and they pretty much are thinking there's going to be a change in our President in the next year or are they just not — are the — who — who can hold out the longest?
Jason Schenker: I think that the reason there's unlikely to be a deal is because I do not believe that the U.S. government — and I think this is a bipartisan issue — uh, does not fundamentally want a deal. And, Peter Navarro, the U.S. trade SAR’s written several books about China. Some of these are a decade or more old. The Coming China Wars: where there'll be in how to win them. Uh, Crouching Tiger: what China's militarism means for the world and, my personal, favorite: Death by China. Right? These are three books written by the person in the position to influence what happens with trade. None of those books are really completely about trade. It's about other geopolitical stuff and the fact that there are certain economic things that China does that they're not going to change. Right? Uh, the fact their central bank is an independent. The fact that the environmental, uh, the way — the way they treat the environment, then their manufacturing processes, uh, export subsidies, that they're not going to change those things. And, the U.S. trade SARs taking a very hard line on this. And again, there is a multi-year track record of him writing multiple books about the subject. Uh, the second thing is Lighthizer, who's the U.S. trade representative, so, different from Navarro as the traits are, uh, you know, he's the one behind the section 3-0-1 and the 2-3-2 tariffs. These are national security. To that point, I would argue if we think back to that first debate at the end of June of the Democratic candidates… On the second night, there were 10 Democrats on the stage and they were asked what is the biggest national security threat to the country? One person said Iran, one person said Russia, three people said nuclear weapons, four people said climate change. And four people said China. Just yesterday there was an op-ed, I think it was in the Wall Street Journal, where George Soros, who is — is hated by the alt-right and by a lot of conservative, um, pundits and like, wrote a praising op-ed of Trump's policies on China regarding trade.
John Sacco: All right. Hold on, let me ask you this.
Jason Schenker: Sure.
John Sacco: Okay, you have a known Trump hater in Soros… It's not even close. We know he's the anti-Trumper. Um, is the President, in your opinion, without being political, being from economics, is he on the right track?
Jason Schenker: Yeah. So, this is — so, this is interesting. I think that when the history books look back at Trump, decades from now, they'll probably say two things. One is: that he did these really, you know, as of now, did these really big tax cuts and, uh, that he was the first president to really push back on — on the threat of Chinese technological, economic and political hegemony on a global basis. And so, the fact that you have folks as, uh, you know, as — as across the political spectrum as Soros and Navarro and Trump and others, uh, as well as the democratic candidates for president, all pointing at China as a potential threat, uh, this does indicate it is a bipartisan issue and probably not likely to go away because if everyone's on board, you know, maybe it is a real thing. And, uh, and — and that's kinda been our assumption. This is real. And — and I think this is, I mean, Soros said it in his op-ed that this is, you know, really one of the marquee pieces of Trump's foreign policy and, uh, and quite positive. So…
John Sacco: Well, you know, I will tell you a quick little note. I'm from Bakersfield, California as you know. And, in the Central Valley, we have a lot of farming and they're being hurt by the tariffs with the export into China, for the grapes — table grapes, big, another — other farming, you know, produce products. And, uh, I don't want to get into that, but there's pain and we were told we're going to have to suffer some short-term pain. How long is short term pain?
Jason Schenker: So, it's interesting. I was actually at a fed event back in May and I was at a table with a number of reporters and if I said their names, you would know who they were — from major media business media outlets. And, we were discussing the search for a farmer, just any farmer in Iowa who oppose Trump and was upset about the tariffs and they couldn't find a single one. Multiple major media outlets have scoured the Midwest to find one farmer who would change their political views on Trump because of the tariffs. They couldn't find a single one. They — they spent weeks out there looking people. So, you know, I think there's a couple things and one is that there are these agricultural subsidies that have been introduced to help buffer the downside for the farmers because they're taking the brunt of it. But all commodities, and food is a commodity, metals are a commodity. This is part of the displacement piece, right? Like on a global basis. What do we know? Well, we know the global economy is growing. We know that you're going to get 3% GDP growth for global — for planet Earth because more people are on planet Earth every year. We know that 30 years from now there will be 2.1 billion more people on planet Earth.
John Sacco: That's a lot of mouths to feed.
Jason Schenker: That’s a lot of mouths to feed.
John Sacco: And cows. Lot of cars, iPhones.
Jason Schenker: Lot of cars, I— Right. The whole thing, right? So, we know that there's going to be — if we look, you know, five, ten, twenty, thirty years out, we know demand for metals, demand for energy, demand for food. That's all going up. Whether the, you know, the table grapes and the scrap metal for the next 12, 18 months, you know, where does it go and it's a little influx, fine, but it's going to find a market because the rising demand is there on a global basis.
John Sacco: That's great. That's great insight. Alright, let's, let's — economically, what is the biggest driver of the U.S. economy? I had some — I had some things. Is it housing? Is it defense? Is it the actual government itself? Is it oil? Is it tech? What is the biggest driver of the U.S. economy?
Jason Schenker: Yeah, so this is a wonderful question and it explains why we're doing better than other economies on all developed economies we're doing better than. 70% of the U.S. economy is consumption. It is people buying stuff. So, durable goods like washing machines or refrigerators. Non-durable goods like food.
John Sacco: Consumer products.
Jason Schenker: Consumer products, CPG, the whole thing. But, it's people out there buying stuff. That means as long as people have jobs and their wages are up, that's 70% of the economy. Right now, we have the lowest unemployment rate in about 50 years. Uh, wages are up 3.2% year on year. They had been for a number of months. Uh, this is a very strong level of wage gains and that 70% of the economy. That's the lion's share.
John Sacco: You know, I think the people who listen to this — I mean, I think this is — for me, it's educational because you know, you hear, “Oh, housing starts, this,”
Jason Schenker: Yep.
John Sacco: “Non-farmer farm…”
Jason Schenker: Payrolls.
John Sacco: “Payrolls, whatever.” All these things. But, you know that's great insight. And I really, you know, for me, on a personal level, sitting here with you, I'm learning too.
Jason Schenker: Oh, great.
John Sacco: So, maybe I don't have to read all your books, Jay.
Jason Schenker: Well, it's in the books too. There's some graphs and charts and things like — whatever. It's pictures too. Like I hate books that don't have pictures in them. So, uh…
John Sacco: Me too.
Jason Schenker: And you know, right? Like, my books have plenty of pictures. So, uh, yeah.
John Sacco: That’s funny. Alright, let's talk about taxes for a second and the economic — California, New York; the highest tax states in the — in the union. Alright, we had the so-called, uh, largest tax cuts — blah, blah, blah. What is the net effect on the economy? And, I want to take it from the U.S. and then I want to take it to the states that have low tax — if no tax, and how their economies — are they really growing? Is it the taxes that are —what's driving it?
Jason Schenker: Yeah. So, I guess there's a couple of things. So, first of all, we take it at the national level. As an economist, I would say, “taxes: always bad. Tax cuts: always good,” right? Always.
John Sacco: Okay.
Jason Schenker: But I would also say, “more debt: always bad.”
John Sacco: We got a lot of debt in this country.
Jason Schenker: We got a lot of debt and the debt keeps going up. So, it doesn't seem as if these taxes were balanced and I don't know if they ever will be — the tax cuts. So, I'm really torn because tax cuts are good, almost no matter what kind they are. And, more debt is always bad, almost no matter what kind it is. So, this was a mixed bag. Similarly…
John Sacco: The yin to the yang.
Jason Schenker: Something like that, but in a less pleasant way. And, in a very similar fashion, if we think about what's the state level impact, we see something similar, right? So, some states benefit a lot. I'm in Texas, we have no state income tax. So, Texas benefited more. Uh, then say California did, or New York or Illinois. So, these places have much higher state taxes and now you can't deduct it. And, then the whole thing, right? So, um, you know, there are — there are some ways that there were benefits and it depends very much on what state you're in and whether they're state income tax or not. And, some of the tax cuts and the exclusions, the deductions, and the changes — you have — some of it was to simplify the tax code, which definitely, there is no question. Tax code is simplified. Uh, in a certain respect because now you have a lot more people taking the standard deduction. So, that means you have fewer itemized tax returns. So, it's easier for the average person to just take the standard deduction and go, “this is way bigger than, you know, whatever — my mortgage payment and, uh, interest is and, uh, what I'm even allowed to take on that mortgage interest. Or, the taxes on the home or, this and that and the other thing. Uh, charity donations in the light.” And you go, “well, you know what, the standard deduction is so big, I'm just going to take that. So, that was a simplified thing and that's positive. But for actual individuals and what it put in terms of people's pockets, I think it had a really mixed effect. And, some people were quite surprised that they got a lot more back than they were expecting and they had much lower taxes last year and they were surprised and other folks got hit with a massive tax bill at the end of the year and they were shocked because taxes they had previously, deducted were no longer deducted.
John Sacco: Thank you. I live in California. I'm — I got killed on that one.
Jason Schenker: Right, so…
John Sacco: 10-grand is all we get to deduct on and my property taxes for the property zone exceed that and just…
Jason Schenker: Yeah. So, it really depends on, uh, you know, where you live, how much you benefited and what assets —
John Sacco: So, are these states with the lower — So, going from, that's the fed — now going into these states with the — with the lower tax rate, are they actually growing because of that?
Jason Schenker: Well, I mean —
John Sacco: Is it — or is it just — people just move — what is it?
Jason Schenker: So, there's — so, there's not that many states that have no state income tax. There's a handful of them. Um, you know, Wyoming's one. Uh, Texas…
John Sacco: Where my brother lives.
Jason Schenker: Where your brother lives, Texas…
John Sacco: Lucky guy.
Jason Schenker: Texas is another. It's where I live.
John Sacco: I’m in the wrong state, dude.
Jason Schenker: Florida’s another one. Right? There's a handful of states. Those states benefited asymmetrically. But, I would also say that those states — well, Wyoming seeing a huge influx of folks leaving California. The same is true of Texas. I don't know if the same is true in Florida. But, I know in Texas, we're getting a lot of these sort of, uh, you know, folks kind of fleeing higher levels of taxation in other states.
John Sacco: Deplorab—are you getting more deplorables?
Jason Schenker: No, no. Nothing. Nothing like this. Well, if, you know, if — I think we're getting people of all political persuasions because, you know, there was this discussion, “is Texas turning purple?” and the whole thing because we're getting people from California, we are getting people from New York, we’re getting people from the coast. Um, you know, does that make it less of a Republican state? So, um, and I don't necessarily know if that's true and I think time will tell. But, uh — but, even that thought indicates that we're not getting, uh, you know, kind of —one kind of person relocating. But, places like Texas or just growing because there's a lot of people moving there. The land is super cheap compared to California or New York or any other places.
John Sacco: Well, we built a factory in Georgia.
Jason Schenker: Yup.
John Sacco: Okay. The simple reason was A) the permit process was a day
Jason Schenker: Yup.
John Sacco: To get a permit to build a 46,000 square-foot facility and then our 24,000 a foot expansion that we did, you know, in Georgia for our balers because we get good demand on our products that we're innovating and making, there is no permit process. California, I still wouldn't — I still pry wouldn't have a permit.
Jason Schenker: Yeah. I mean, it sounds like the permitting process sounds better for scotch than starting a business just because you want it to age so long. But, yeah, I mean…
John Sacco: Do you like scotch?
Jason Schenker: I do. I do.
John Sacco: I’m drinking my Macallan 18 here and I’m liking it a lot. Alright, let's talk about your involvement with ISRI.
Jason Schenker: Sure.
John Sacco: You've been around ISRI for a long time.
Jason Schenker: Yup. Almost 15 years.
John Sacco: And we've had the best times over the years, but why do you love this trade association and being around all of them? What is it?
Jason Schenker: You know, I — it was a great group of people. You know, it's people who are really enthusiastic about their industry. They care a lot about what they do. It's a lot of entrepreneurs in the industry. Um, although, that dynamic has shifted over time. But, you know what, it's interesting. It's people who see an industry that's driven by the global economy. You know, there's not too many industries that are almost, like, raw, unadulterated, cut-to-the-bone macro-driven. And, the scrap industry is definitely one of those.
John Sacco: Well, I always tell people, “I can give you the state of the economy based on our industry.” So, we're a little — we're the little quiet powerhouse in respect to: we can tell you what the economy’s doing.
Jason Schenker: Yeah. But, yeah. I don't know how little, you know — what? A $100, $120 billion economy in the U.S., you know, for the scrap industry. It's a — I mean, that's not that little. There's much smaller industries.
John Sacco: Well, you know what, Jay? I’m always glad you're still part of coming to ISRI. For those who don't know what ISRI stands for, it’s the Institute of Scrap Recycling Industries. And, I had the honor of being the Chairman 2011, 2012. A lot of fun. Alright. I've always wanted to ask this question about the economy.
Jason Schenker: Okay. Here it comes. Let her rip.
John Sacco: The sports industry.
Jason Schenker: Okay.
John Sacco: I'm sitting there this weekend with my son. He's got his fantasy football team and I'm watching these games and these stadiums and these huge amount of people in these stadiums. These big, hundred-billion-dollar stadiums. Okay. All the people that work it, all the colleges, and all the sports industry, but the sports on a whole.
Jason Schenker: Yep.
John Sacco: What's its effect on the economy?
Jason Schenker: You know, entertainment is a significant part of keeping a populist happy and…
John Sacco: Julius Caesar, the policy…
Jason Schenker: You know, this — this is the thing, right? No, I mean this is like a real thing, right? If you've ever played one of these, uh, and I'm sure, you know, I might date myself here, but civilization, or one of these computer games where you build a society… At some point, you need to build things to entertain the people. Otherwise, they get unhappy, right? So, this goes back to, like, even in London, right? You know, Shakespeare wrote certain parts of his plays for what they call the Groundlings, who would, you know, like, be standing on the ground, right? So, you know, there’s — you always have to have some level of entertainment. So, I think that's important. But, what will really shock you is, I was on a Texas startup roadshow at the beginning of June this year. And, we went to a few different cities and we saw a bunch of different things going on. And, one of the things I saw was in Frisco, Texas. And, we went and visited where the Dallas Cowboys have their practice facility. It was beautiful. It was this mammoth building and they have a huge workout facility and they have doctors and medical staff and they had nutritionists. It was amazing. Across the street, uh, they have a new facility that isn't even opened yet for e-sports. And, uh, if I remember, I want to say it's Converge might be the team… Something like this. But, it's the Dallas Cowboys affiliated e-sports team, which is: kids playing video games. What will blow your mind is not only are some of these video gamers making seven figures, but they have certain workout rooms where they're trying to slightly improve by milliseconds their hand eye coordination and… Are you ready for this? As part of playing — as being a professional e-sports gamer, they have to maintain a healthy body and they have to work out regularly and see nutritionists and see medical professionals, make sure they're there taking care of themselves. And they share the exact same facilities with the Dallas Cowboys. Can you imagine being a linebacker and you walk in and there's a 17-year-old video gamer lifting weights and you have to, like, get in on a set, right? Like, can you imagine? Like, this is a real thing. I'm not even making this up. You can't make this up. This is crazy.
John Sacco: So, sports is entertainment, but…
Jason Schenker: Yep.
John Sacco: Overall seems to be a big factor in our — new factor or a new part of our economy that we've really haven't seen the final growth of it.
Jason Schenker: Yeah. And you know, I think we're going to see it in different permutations, right? I mean, all sports started as games, right? Like they're games people play. And so, we see the, you know, we've seen it, right? These are people throwing around balls and hitting balls and tossing balls and that's the whole thing, right? And now, what we're seeing is an evolution, uh, as a part of the economy. It's still a relatively small park. It performs an important function also in terms of helping people foster regional identities. We could get into a whole long philosophical thing about that. I don't feel like this is the venue, but what I will say is: the next level is the video game piece. And you might go, “but these are just kids playing games.” And a hundred years ago somebody would've said, “but they're just out there throwing a ball in a basket. How is that worth millions of dollars? It's guys hitting a ball with a stick. What?” Right? So, at the end of the day, this hasn't finished because sports is evolving to now include gaming.
John Sacco: Wow. Alright. Coming down to the end. Last questions. Last two questions. Simple answer.
Jason Schenker: Yep.
John Sacco: Your best economic call and your worst economic call.
Jason Schenker: So, probably one of the best economic costs we had, uh, I mean, I think it was recently. I think we said coming into this year we were worried about a Chinese manufacturer recession and a U.S. business investment recession. We are seeing both of those right now. Uh, one of my worst calls is a few years ago when we had a business investment recession. And, uh, 2015, 2016, U.S. business investment contracted industrial production was negative year on the year. Uh, the only time that's ever happened was when there was an overall recession. And, I thought we would see a spillover and we didn't. And, the reason was the consumer was just so darn strong, the economy kept going and we didn't even see them. A modest recession. GDP growth in 2015 was, like, 2:6 and in 2016 was 1:6. Positive numbers, but there was a recession and business investment. This industry remembers what happened in 2015, 2016.
John Sacco: Well, as an economist, you can't make it too well on bad calls, can you?
Jason Schenker: Right, right. But, you can learn from the bad calls. And so right now, everyone's talking about big U.S. recession coming, great recession coming, dadada. Well, wait a minute, we've seen this before. We've seen a business investment recession in the U.S. where the economy kept going and that happened in 2015, 2016 and by the way, the unemployment rate then was 5%-ish, not 3.7. So, we have an even better job market now than we had a couple of years ago.
John Sacco: All right. Yes/no question.
Jason Schenker: Sure.
John Sacco: Simple yes/no.
Jason Schenker: Sure.
John Sacco: 2020 recession?
Jason Schenker: Not for the overall economy.
John Sacco: Outstanding. Jason. Awesome. Thank you for spending the time with your — Brother, it's always good to be with you and I hope everybody that's listening to this and as — Oh, I get to sign off by saying: this was an episode of Pile of Scrap.
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