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In today's economy? with Kyla Scanlon

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What does financial literacy look like in the digital age? This week on What's at Stake, Bryan DeAngelis hosts author and content creator Kyla Scanlon for a live discussion of her new book, “In This Economy” with the Penta team in our Washington, D.C. office. Kyla is known for making complex economic concepts accessible – she uses her unique platform to bridge the knowledge gap from the academic world to the real world. 

In this episode, Kyla sheds light on the significant disconnect between positive economic indicators and the often-negative public sentiment. She dives into the structural issues that contribute to this disparity, from housing affordability to the rising costs of elder and childcare. Don't miss Kyla's insightful analysis and practical solutions to some of today's most pressing economic challenges.

Bryan DeAngelis:

Welcome to this week's episode of what's at Stake. I'm your host, brian DeAngelis, a partner here at Penta, and I'm bringing you something a little bit different with this episode. Earlier this week, we had the honor of hosting Kyla Scanlon in our DC office for a discussion about her new book In this Economy how Money and Markets Really Work. A lot of you probably know Kyla from her work on TikTok, linkedin, instagram and Substack, where she does really a wonderful job of breaking down the walls between the technical side of economics and the human side, and her book is an extension of that and a wonderful read. We had a great conversation. We hope you all enjoy it and we'll be back next week with another new episode of what's at Stake.

Bryan DeAngelis:

Kyla, thank you for joining us. I want to start kind of just where you got started. So you sort of started down a traditional kind of finance career path and now you're an author, content creator, doing a lot of great work kind of breaking down the economy for folks. How did you get from where you started to where you are today?

Kyla Scanlon:

Yeah, so I grew up in Kentucky, outside of Louisville if anybody's ever been there and I went to Western Kentucky University and I didn't even know that you could major in economics until I got to school. And so once I took my first econ class I was like, oh, this is super fun. And I ended up switching my major over to econ, finance and data analytics and all throughout school I was pretty passionate about education. You know, I was tutoring, I was doing research, but I ended up moving out to Los Angeles to work for a company called Capital Group they're on the buy side in the financial world and so I did equity portfolio management, sat on a fixed income desk, but then the pandemic happened and like six months after I graduated and I think for a lot of people, myself included, it was very much like what do I want to do with my life?

Kyla Scanlon:

And for me it wasn't what I was doing at that firm, it was economics education. And so I ended up leaving them and I joined a startup called On Deck, which is Eric Tornberg's startup, and built out their investment education arm. And then I started making videos around GameStop. Who remembers GameStop? And yeah, that was crazy. And so I started making videos around that and, yeah, now I'm here. So it's kind of. I think a lot of people had a similar path during the pandemic, where it's like you know what do you want to do, and social media is what a lot of people ended up choosing, myself included.

Bryan DeAngelis:

Yeah, talk to us a little bit about that moment, maybe during GameStop, where it kind of clicked like, wow, I could do this as a permanent thing and I want to do more of this. And what did that look like? Was it the audience reaction? Was it something else?

Kyla Scanlon:

I think it was mostly the audience reaction. One of the reasons that I wrote this book is that, for whatever reason, we pretend that people don't need to know about the economy. We're like we just send people out into the world even if they don't know what an interest rate is or if they don't know how to budget. And so I think the response to the GameStop videos were like oh, is there more to the stock market than just GameStop? And I was like wow, like people really are curious and they really want to know what's going on, and so I think that was pretty informative to that decision.

Kyla Scanlon:

But I also sold cars for a summer two summers in college, and that's a really tough job because it's like one of the most vulnerable financial experiences that people have. Like you're coming and you're spending tens of thousands of dollars and you're talking about interest rates and you just saw like people sign up for 84 month car loans and not know what they were signing up for, and so I think for me like that was really informative. That was outside of the question that you asked.

Kyla Scanlon:

But, I think that just also contributed to the people's desire for economics education and we just have not made it very accessible for whatever reason.

Bryan DeAngelis:

I mean, I would say that's why you've been so successful and why probably a lot of us follow you. Is it's so disarming the way you approach it and break it down? And I think a lot of us follow you is? Is it so disarming the way you approach it and break it down? And I think a lot of our clients, and maybe even, honestly, some of us, think you're talking to a younger audience, an audience that's not informed. But what have you found about your audience? Is it? Is it truly everyone? Is that a particular niche that is coming to you for this information?

Kyla Scanlon:

Yeah, I mean, I think that it's. You know, a lot of people who are young professionals like all of you, I think and they're just curious about this world that seems so gated off, and so it is definitely a younger audience. That comes just to the platforms that I'm on, like I'm on social media, and that does cater to a younger demographic, but I think it applies to all sorts of people. You know, one statistic that I think is really alarming is that 43 percent of baby boomers don't have retirement savings, and so ideally, like they would come to my content and they would learn a little bit about the economy, and then we can kind of like put people back on the right track. So that's the goal is that it doesn't, you know, rabbit hole itself into just one type of person, but rather is broad based and accessible. But yeah, it is younger people that consume it.

Bryan DeAngelis:

You mentioned social media platforms and I did want to ask because I heard you talking on a podcast, so you've got a lot of choices of platforms there, whether it's TikTok X, instagram. Where are you focused? Where do you maybe see this, if I can say, industry of folks like yourself kind of gravitating towards?

Kyla Scanlon:

Yeah, I think the content creator industry is interesting because there's all sorts of talk about TikTok being shut down. Whether or not that will happen I don't know, but I think it might, because geopolitically things are getting quite tense and that is an app that's owned by China. I think a lot of people go to Instagram for their content now, when they normally would have gone to TikTok. I think Twitter is it was one of my favorite apps, but it's no longer what it was, unfortunately, so I think people are still trying to figure out where they land. A lot of people are spending a lot of time on LinkedIn. That seems to be kind of a cohesive place for people to grow their careers, because now people are realizing that you can kind of post through it and like post about the ideas that you have, and that can actually lead to a lot of career growth, and so I think people are going to Instagram to consume content that is more about hobbies, but going to LinkedIn to consume content that is career oriented.

Bryan DeAngelis:

Yeah, more about education. There's a little more trust there. Yeah Well, let's jump into the book. I mean, like a lot of what you're doing on your content creation, it feels like the main idea of the book was to take kind of the technical side with a little bit of the emotional side. Or you talk about the people being the economy and I think the author of your foreword talks about you doing an excellent job, which I agree bringing the chalkboard in the real world together. So a lot of this started, I think but correct me if I'm wrong with some of your initial work around kind of what you called the vibe session and what was happening. As you know, the economy looked to be performing pretty well, but people weren't feeling pretty well. So explain that concept to us a little bit more and how the emotional side plays into this yeah.

Kyla Scanlon:

So morgan housel wrote my forward and if you haven't read the psychology of money and he has a new book, the same as ever, both are just excellent books he's he's like the michael jordan of finance, um, but I'm curious. So I you know, raise your hand. Do you think that we're in a recession? Does anybody think that you do? Okay? So I ask that at a lot of talks that I give, because it is quite informative to how people are feeling about the economy. We're not in a recession, but a lot of people feel that way. Right, and that was kind of the idea of the vibe session is that consumer sentiment so how people are feeling about the economy was completely disconnected from economic metrics. So like one of the main ways that feeling about the economy was completely disconnected from economic metrics, so like one of the main ways that we measure the economy is through something called gdp gross domestic product. That was like flying, like that was doing so well, but you had consumer sentiment metrics absolutely tanking, like people were feeling disastrous even though everything seemed to be okay, and so that piece was written two years ago now. It ended up becoming a New York Times opinion piece that I wrote, but the whole idea was like why is there this gap between how people feel and the economic data? And the two reasons I think that it exists is because structural affordability Like you all probably all live in Washington DC or the surrounding area it's very hard to afford a home.

Kyla Scanlon:

I'm'm in Los Angeles right now. I don't think I'll ever afford a home there, and that is a big part of how people are going to feel about their economic circumstances. There's also issues with elder care. On average, elder care costs five thousand dollars a month. Child care has risen 32 percent since 2019, and those three things really aren't captured in economic metrics, right?

Kyla Scanlon:

Like housing, the crisis of housing is not captured in GDP. It's you know. Elder care is not captured in GDP. Like these things being very expensive, structural affordability is not captured in GDP, and so that's one reason why there would be a divergence between how people are feeling and the metrics is because the metrics are not doing a good job at talking about the economy. The other thing which I'm sure you all probably interface quite a bit with is media headlines. Media has become extraordinarily negative. Like this is a well-documented thing, and if you're reading things that are designed to make you feel bad. You're probably going to feel bad, right, and so I think those are the two things like why people might feel like we're in a recession, even though the data says otherwise.

Bryan DeAngelis:

Yeah, I wanted to ask you about the media part, because you talk about manifesting the right vibes versus the wrong vibes and the media has been for years heading towards more quicks, and more quicks come from more controversy, more doom and gloom, so not to put you on the spot. But how do we get back to a place where we can manifest the right vibes? Is it a change in media? Is it more of our political leaders and how they talk about the economy?

Kyla Scanlon:

Yeah, if somebody has an idea on how to do that, please contact me later. But that's been something I've thought a lot about because it is the business model of media. It's really unfortunate, but I ran into this with my work. Like, if you make people really scared, they're more likely to click on your stuff. Like, at the end of the day, we are animals and we have animal brains and we're always trying to protect ourselves and so we're going to click on the scary thing versus the positive thing. That's just like how we're designed. But I think there does need to be some sort of mechanism in place that gut checks these scarier pieces with fact checking. Make sure that, like citations are correct, because right now it can.

Bryan DeAngelis:

A lot of things are exacerbated when they don't need to be yeah but it's uh, the whole business model will have to change and I don't know how that will happen do you see um economic data and kind of consumers, especially kind of some of the consumer sentiment metrics changing to accommodate this or well, so it's interesting.

Kyla Scanlon:

So university of michigan, which is one of the key groups that collects consumer sentiment data, they were calling everybody up and being like hey, how do you feel about the economy? And like the numbers were normal, whatever. Only a few people answer their phones, so their response rate like was very low. And so the university of michigan was like we'll go web-based. And once they went web-based they got more responses, but their responses were crazy. Like people were like I think inflation is going to be 17, and so that's kind of the issue with the sentiment metrics is that they're survey-based and I feel like you all might run.

Kyla Scanlon:

I don't know the specifics, but like you might run into this with your work too.

Bryan DeAngelis:

We actually even run one ourselves. We try to look six months in advance to kind of get past some of that. But even then, you know, depending on the headlines of that week, you could get a pretty big skyrocket.

Kyla Scanlon:

Yeah, people are pretty bad at forecasting.

Bryan DeAngelis:

Yes.

Kyla Scanlon:

And that's really tough to capture. And so you kind of have these issues with measurement and survey data, which I'm sure you all run into, with maybe your survey as well, where it's very hard to like paint a broader picture with survey data. And so that's, you know what I'm talking about. I'm sort of going around your question on if sentiment will change with regards to measuring GDP is that what you asked?

Bryan DeAngelis:

Or measuring just even how we think about some of the economic data, to talk about how consumers are feeling or how the economy is actually doing.

Kyla Scanlon:

Yeah, I went on. Who knows Barry Ritzholdt from Masters in Business? It's a Bloomberg podcast, so I was on his show yesterday and we were talking about the same problem because it comes up a lot in economic conversations. And he was like if anybody called me and asked me what I thought inflation would be in five years, I would tell them, I would hang up the phone on them. Essentially and I think that's kind of the problem is like, we have to have better collection methods for survey data and I also think, like most people are going to be like, why are you asking me about inflation? Like, come on Right, and that's a big issue? Because there's issues with funding for most of the data collection parts of the government. I can't remember specifically what certain data group it is, but their funding was cut basically in half, and so if we want better economic data, we have to allocate more money towards it, but that's hard to do sometimes, so I'm again not answering your question.

Bryan DeAngelis:

No, no, that's. That's. That's helpful it's. It's leading towards some of what you covered in the book. But both in the book and the response to it in your work, what, what are kind of the most common things people are getting wrong about the economy, or that they don't understand as well that you're finding with them.

Kyla Scanlon:

So I think economics is kind of its own language, like when you toss around words like GDP and inflation, if you haven't had exposure to those words it can feel sort of confusing. Like what is this person talking about? And a big thing right now is inflation going down doesn't mean that prices are going down. So inflation going down just means that things are getting expensive less fast. Prices are still rising. Usually Deflation would be prices going down.

Kyla Scanlon:

But when people see a headline that says inflation is going down and they're like, oh my gosh, my box of cereal is still $7. Like I feel really bad about that. What's happening? Like that's kind of a gap in knowledge. Yeah, and I think also there is a lot of talk about a recession being two quarters of negative GDP growth. That's also not true. The National Bureau of Economic Research is a group that determines if we're in a recession and they look at a variety of indicators outside of just GDP growth. So I think those are some of the main things. And then two, like we have a weakening labor market right now. So I think those are some of the main things. And then, two, we have a weakening labor market right now. So we just got a labor market print yesterday that did confirm that things are slowing down. If you're looking for a job right now, it's quite hard to find one and the unemployment rate is going up. But part of the reason that the unemployment rate is going up is because more people are looking for jobs.

Kyla Scanlon:

It's not that people are losing their jobs, it's just that that denominator has increased in terms of how we measure unemployment, and so I think those are all, like you know inflation, gdp, inflation, recessions, labor market measuring, like those are all things that you have to be a little bit deeper into the data to understand and it's kind of like boring sometimes.

Bryan DeAngelis:

Um I can see everyone. This group loves it.

Kyla Scanlon:

Oh, I hope so yeah, because I do too.

Bryan DeAngelis:

But um, yeah, that that's definitely some things that can trip people up, and rightly so yeah, and that you know tips into, in my opinion, the elections and you start to get candidates with, you know, pretty big megaphones talking about issues that maybe aren't solving the actual problems in the economy or can't. I mean, we've seen both Harris and Trump talk about grocery prices and what they're going to do in the White House to get companies to bring them down, which you know I think is more campaign promise than economic policy. So I'm curious kind of your thoughts on that. But also, what you see is what really needs to be fixed in the economy, or maybe the most attention in the economy. Where should we be focused?

Kyla Scanlon:

So what do you think about price gouging?

Bryan DeAngelis:

More of the campaign rhetoric, but curious your thoughts on price gouging too.

Kyla Scanlon:

The campaign, as you all know, as comms people. It's a lot of messaging, it's a lot of sentiment, it's a lot of promises. Kamala Harris said that we have to go after the grocery stores because they're price gouging people, and a lot of economists came out and they're like she means that she's going to instate price caps and that means that you would set the price of a box of cereal at like $5. And so the worry there would be that there are shortages Because the grocery store is like well, it cost me $6 to sell this cereal, I'm not going to sell it for $5. So you don't get cereal anymore people of the United States.

Kyla Scanlon:

And so I think that's what a lot of people worry about when we talk about price gouging and grocery stores. Is price caps being the solution? A lot of people will point to profit margins as a sign that grocery stores don't really make that much money and we shouldn't be going after them. But what's interesting about this is that Kroger and Albertsons two of the biggest grocery stores they're trying to merge, and Kroger was like hey, we'll cut prices by like a billion dollars across the board if you let us merge with this guy, and so it's kind of like there's some room for prices and maybe they were doing a little bit of gouging.

Kyla Scanlon:

Price caps are probably not the right solution. But when the campaign talks about different things, like, there is usually some sort of sentiment behind it. Like people have complained about grocery prices, and rightly so. It's expensive, and so I think there's never really solutions in place. It's just like she never really said what she's going to do to fix it. But when you look at the other side, so like Donald Trump has talked a lot about tariffs Tariffs are a tax on consumers. At the end of the day, they're not good because that cost is going to get passed off to you, and so there's economic consequences to everything that they're talking about. But actually instating the different policies is difficult.

Kyla Scanlon:

There's been a lot of talk about the unrealized capital gains tax so taxing how much money you made on your stock going up or your home going up, but only if you make over $100 million a year, which is not me. That does not apply to me, and so that would never probably pass. So there's a lot of campaign promises, but actually instating them is very difficult.

Bryan DeAngelis:

But it does further the vibes of the economy. Yeah, totally.

Kyla Scanlon:

And like what people are worried about and it's always useful to hear what people are talking about the two candidates but in terms of what I'm worried about home insurance, I think, is something that's quite concerning. So we have a housing crisis. I've done a lot of work around how do we build more housing? How do we address this problem? But you can't have a mortgage if you don't have home insurance.

Bryan DeAngelis:

Right.

Kyla Scanlon:

And 70% of homebuyers need a mortgage, like people don't have that much cash, and so now we have a situation where insurers are entirely pulling out of places like California, louisiana, florida, and so those homeowners are now like, oh my gosh, like my American dream is an American nightmare and I don't know what to do about that. So I think that's a very concerning thing is that we have this huge issue of housing and we have to address the insurance as well as the supply side, and that's pretty tricky because it's going to probably require the government to take on the risk of these homes and that's going to be very expensive. Um, and I think the other thing is like demographics. I feel like you all probably run into that like just like talking about that in terms of the work you do, but, uh, we have an aging population and the fertility rate is below the replacement rate, we're not having enough babies and we have a bunch of people who are 65 plus and those people need help with like Medicare, medicaid, social Security. It's quite expensive to fund those things and we need an expansion in the labor force in order to do that, and so the way that we would address that is by doing more legal immigration or having more babies, and both of those are tough.

Kyla Scanlon:

Um, well, one is like number one should be way easier than it is, but number two is hard, and so I think those are like the two things, the two most pressing things that I've seen in my work is like we have to figure out housing. There's this thing called the housing theory of everything, where, like, basically, if you don't feel secure in your housing, you're not going to be able to really move forward in life. If you don't have a stable foundation, it's going to be really hard to build, and so I think we have to figure that out so more people have the flexibility to move forward in the decisions that they want to make. But then we also have to figure out how we stabilize the population and have support for our older members.

Bryan DeAngelis:

I want to dig into both of those. Maybe first on housing, can you also talk about homeownership? Talk about homeownership you talk a little bit about in the book and I've heard you on some podcasts of it was the idea of like, that's how I get out of the middle class, that's how I create wealth, and that's there's. There's some myth to that.

Kyla Scanlon:

Yeah, totally yeah.

Kyla Scanlon:

No, I talk a lot about housing.

Kyla Scanlon:

So like there's this graph from the federal reserve and it's called the distribution of financial assets and it's basically wealth by deciles, and so you can see that the bottom 50% of Americans all of their wealth is in their house, and when you look at the top 10% of Americans, their wealth is in business ownership and stocks, and so it's kind of like there's something here that has to change. And then in the United States we have assigned a home to be both a speculative asset and a place to live, like a place to raise your kids, and then also a retirement fund, and those two things are really hard to reconcile, especially when there just aren't enough homes for people, and so there's a lot of pushback against building more homes because of the aging population. Older people are staying in their homes. I think boomers own more of the three and four bedroom houses than millennials do, and millennials should be aging into those homes so they can have children, and so like there's all these issues with housing and we have seen it as the American dream.

Bryan DeAngelis:

Right.

Kyla Scanlon:

But now it's kind of like should it be this thing that continuously increases in value, now that two generations are basically entirely priced?

Kyla Scanlon:

out um, is that sustainable like a home? The median home went up more than the median wage between 2020 and 2021. The median home went up by like 56 000 dollars. I think. The median wage is like 55. That's not something that can happen every year, and so I think we just have to address the issues of not enough housing supply, but then also the way that we think about housing in the United States, and that's really really difficult to do.

Bryan DeAngelis:

And think about to your point, kind of long-term financial security, Maybe it is more. You may have have some ideas, but probably more investment in stocks or different ways to think about business ownership.

Kyla Scanlon:

It's not all tight in your house no, I mean, I think that like getting people I love baby bonds, like give every baby a bond in my opinion, like set the babies up up, and I think that would be great. It's like we get people this stake in the US when they're born and then that also hopefully like appreciates in value over time. And then I also think like we should talk a lot more about stock ownership. You know, 62% of Americans own stocks, but most of that's in their 401k. It's pretty passive, they're not actively investing, which is okay, but I think we need to.

Kyla Scanlon:

You know, robinhood has tried its best to like democratize investing, but they've turned it into a gambling site, and so we have to kind of shift the way that we think about stock ownership and what it means to own stocks. And then I think we have to shift how we think about business ownership too. Employee stock option plans are one thing that some companies use. Starbucks uses it, it's called Beanstock and basically if you work there, you get a little bit of ownership in that company, and I think that could be an interesting way to number one, incentivize people to work for a company for longer, which is kind of an issue that we have right now as people, there's a lot of turnover and then number two, they get to to.

Bryan DeAngelis:

Actually they have a diversification with that company outside of just their wage right like they have actual stake in their growth, and so I think those two things could be useful yeah yeah, uh, I want to go back to labor force because I I agree with um, with what you're laying out in terms of the challenges, but I'm curious where, both internally and even what, our clients investing heavily in AI and we think of AI, as you know, a big productivity boost Are you starting to think about AI in terms of, like, the future of the workforce and where?

Kyla Scanlon:

I mean I think it's early, but maybe you know something- you have thoughts, but how do you factor that in a kind of your?

Bryan DeAngelis:

thoughts around the labor force early, but maybe you know something. You have thoughts. Do I have secrets about AI, but how?

Kyla Scanlon:

do you factor that in your thoughts around the labor force? Yeah, ai is really, really interesting. I use it in my work as a research assistant for Plexity and Claude. I think my hope and I think a lot of people agree is that AI is more of a complement than a replacement, like it would be really great if it just helped us all do our jobs a bit better than replacing people entirely. Um, I've been trying to return my wi-fi box for three months now to my wi-fi company and I can't talk to a real person and it's like driving me nuts because I'm like if there's just a real person, this could help me a lot more than the AI would be able to.

Kyla Scanlon:

So I think there's still value in human worth, obviously, but I think the big like in NVIDIA had a big sell-off yesterday. Like there's kind of um worries about the AI bubble popping, and Sequoia wrote this really interesting piece talking about the 500 billion dollar gap in AI, and so the AI companies have spent like $600 billion. They've spent a lot of money. People have been like, yes, go AI, we love it, and they've only made about $100 billion in total, and so there's a $500 billion hole between what these companies are able to offer right now and what they've spent. So there's this $500 billion gap that has to close. I think, before we can figure out how AI can be useful Because right now we're just spending a lot of money we have to figure out the energy part of it too, like data centers are not cheap, and if we're knocking people off the grid so AI can live long and prosper, I don't think that's maybe a good strategy.

Kyla Scanlon:

So I think there's more questions and answers around AI, but my hope for it, and applying to the labor force, is that it's a compliment. But I think there's going to be these real world problems that we're going to run into, like energy, like the usefulness of it, and we'll have to figure out the answers to those as they come up.

Bryan DeAngelis:

Yeah, yeah, that's great. Let me ask one more question then we'll open it up. You end the book on a very optimistic note, kind of talking through what you call the abundance agenda. It struck me that a lot of that agenda is also like the big political debates we're seeing every day right Healthcare, housing, immigration, energy but these are the things that also touch people every day in their lives, in the economy. So where do you see that agenda going? How are you kind of thinking about that?

Kyla Scanlon:

So Derek Thompson is the one who coined the term abundance agenda.

Kyla Scanlon:

He's an amazing, unreal reporter at the Atlantic, and the whole idea behind the abundance agenda is that we can spend money on these productive things.

Kyla Scanlon:

We can address green energy, we can address immigration, we can address housing and we can kind of build for the future. There's this quote from Keynes that I've been meaning to look up, so I stopped paraphrasing it, but basically it's if the government can spend on it, the government can do it, and of course, you know, fiscal austerity is important as well. But I think the abundance agenda is like hey, there's these really big issues, we don't have to have this scarcity mindset anymore, like we really can go out and do these things because they're going to pay themselves back in the future. And so I think that's the idea behind the abundance agenda is that the US has underinvested in so many things for so long because we've been afraid of spending money, and then we end up having to spend more money to fix the problems that were created by not spending enough money. And so it's kind of like just, you know, to be a little more direct, let's get ahead of it a little bit.

Bryan DeAngelis:

Yeah, great. Well, kyla, thank you for coming. This is great. We appreciate it. Thank you To all our listeners. Remember to like and subscribe wherever you listen to your podcasts. Remember to like and subscribe wherever you listen to your podcasts. Follow us on Twitter X at PentaGRP and on LinkedIn at PentaGroup. I'm your host, brian, as always. Thanks for listening to what's at Stake.