Donald Trump, Manhattan Real Estate, and Taylor Swift

Published Aug 4, 2023, 9:58 AM

Bloomberg Opinion's Jonathan Bernstein joins to talk about the GOP and Donald Trump in the wake of his latest indictment. We also discuss the nation's hottest real estate market: Manhattan. Columnist Justin Fox has the details on that story. Erin Lowry and Jonathan Levin join, talking about the value of a college education and Taylor Swift. Amy Morris hosts.

You're listening to the Bloomberg Opinion podcast count US Saturdays at one in seven pm Eastern on Bloomberg dot Com, the iHeartRadio app, and the Bloomberg Business App, or listen on demand wherever you get your podcasts.

Welcome to Bloomberg Opinion I Amy Morris. This week we look at the impact of artificial intelligence AI on our jobs and how young people are already strategizing. We'll also take a look at the state of commercial real estate, where is it making a comeback and why there? And while spectator activities are booming across the United States, is it enough to make an economic impact or are we just finding our way back to pre pandemic activity levels. But first, we take a look at the latest federal indictment of Donald Trump. The legal pressure continues to build around the former president, even as he remains the front runner in his race for the one House. Special counsel Jack Smith says Trump knowingly spread false claims about the twenty twenty election in a conspiracy to defraud the US and American voters.

Since the attack on our capital, the Department of Justice has remained committed to ensuring accountability for those criminally responsible for what happened that day. This case has brought consistent with that commitment.

Special Counsel Jack Smith spoke after the indictment was unsealed this week in Washington. Let's bring in Bloomberg opinion columnist Jonathan Bernstein. Jonathan, just, first and foremost, how much of this forty five page indictment was surprising to you?

Not very much. I mean, this was all pretty much signal going along. Most of this was covered by the January sixth Committee last year. You know, the specific legal stuff, you know, I understand the politics. I'll leave to the lawyers do that. But basically we've known this story. A lot of this, of course, was public as it was going on, so not very much was surprising.

Okay, So Special Counsel Jack Smith said that part of their mission is to protect democracy. I'm wondering, though about what this does to the country's psyche. Is there a message sent when you indict a former president?

Well, you know, the story is always there's this idea that there's some sort of norm against indicting former presidents. There's no such norm. There's never been any such norm. We haven't had as a president who engaged in this sort of behavior. We've never had a president who refused, not only refused to accept the results of the election, but actively plotted to overturn it. So, you know, I'm not sure the countries have psyches, but I do think that this is something that helps protect democracy by saying no, presidents are not above the law. You know, you can't. If a president breaks the law, they're accountable to you know, to the all the same as anybody else is.

Does it put President Biden in a bad position. I'm curious about the flip side of the coin. If President Trump is found guilty, and if he does go to jail or does some sort of time, some sort of sentencing, President Biden could be crafted as the guy who put his political opponent in jail.

You know, I think that the evidence that this is not that what Trump did was not normal behavior is so strong that of course partisans are going to believe whatever partisans want to believe. But I don't think any stare of minded people will will believe both the process has been good. You know, this was a special counsel. This was not Biden being particularly you know, personally involved in any of this, and the evidence, if you know, assuming that it ends up the way it looks from the indictment, and you can never tell in a trial. You perhaps there's a defense that we don't know of, but uh, you know, I don't think that there's that. It looks like that at all. I think it looks like president, you know, former President Trump did some things that were blatantly illegal that he tried to undermine DEMPSI tried to undermine the rule of law and the Constitution, and he's being health accountable for it.

And this isn't the only indictment. It's not even the only federal indictment. There are three indictments, uh, three criminal indictments, I believe, two federals so far. Another may be on the way from from Georgia. But that's that may or may not be happening anytime soon. I'm wondering about the legal woes that the former president is facing now and whether this particular indictment that Jack Smith announced somehow is different, it has a different feel to it, or am I just overlaying my own personal feelings on it.

No, absolutely, I mean, the the underlying behavior is different. What he's in charge in trouble for in New York he's been indicted for uh, you know, payoffs to silence somebody had affair with that's certainly you know, let's assume that it's true that and it's against the law. That's a that's a bad thing for a politician to do it, you know, if it if it turns out to be, it would be illegal. And you know that's but it's not, it's not system breaking. The same thing with the document case. Document case, I think everybody agrees is more serious, and that he's under federal indictments for the idea that he mishandled government secrets, that he had blatant disregard for the law. You know, that's again very serious. I don't want to minimize it in any way, but it's not entirely you know, and it could have we for all we know, he compromised you know, agents, government agents working abroad. We don't know exactly what he did. It may have been very, very dangerous, but it's not what he's been charged with here and what he probably will soon be charged with in Georgia, which is directly trying to undermine the constitution and democracy. So yes, I mean, this is something that is just about a major as you can imagine a president doing. And you know something that that you know, every president tries to every politician tries to win elections, try is frustrated when they don't get the votes go their way, maybe attempt lawsuits to try to make things come out better. But what Trump did was well beyond any of that. And you know it. It goes to the whole idea of the rule of law and respecting the basic concept of democracy, which it's pretty clear he does not.

Can you compare this, Jonathan, to Watergate at all?

Watergate is underrated Historically, people think the greatest spin of all time was when Nixon's press secretary came and said this was a third rate burglary. Well it wasn't. They weren't stealing anything. They were actively plotting to undermine the other party. And that was very, very serious and a huge big deal. But this is worse. This is considerably worse. You know, among other things, this was invoking violence to try to overturn an election. Now wasn't directly, you know, but Trump caused people to think that the election was stolen by lying about it, called them to come to Washington, called them and you know, encourage them to act violently, and then when they were acting violently, refused to shut the thing down. So and yeah, on top of that, still, after he finally was convinced to tell people to go home, he still lobbied members of Congress to continue trying to stop the counting of the electoral votes. So Nixon did things that were absolutely beyond the pale. This is ten times worse.

Has the GOP re examined itself and its relationship with Donald Trump?

I mean, should they yes, easy questions, easy answer. We should be careful about this. Mike Pence said no. The state legislators in state after state said no, we're not going to do what Trump is asking us to do. The Secretary of State of Georgia said no, I'm not going to find you the votes that you need. Election officials, a lot of Republican election officials, a lot of Republican judges, some of them appointed by Donald Trump, said no, we're not going to go along with this. We're going to follow the rule of law. So there's a lot of Republicans who acted responsibly when push came and stuff. Some of them have mixed records about democracy overtime, but when it was really clear, Oh yeah, we're just going to toss the rule along, you know, in the garbage. They said no, no, no, that's not what we meant. And they were heroes atmocracy. So it's not all Republicans. However, enough Republicans and Republican important parts of the Party of Republican aligned media have been all in on this, and Republican presidential candidates, Republican members of the House especially have been all in on this, and you know, are now giving completely bogused defenses and completely ridiculous comparisons comparing what Trump did to things that you know that just aren't comparable that Democrats either have done or are accues of having done in the past. This is this is you know, so the party as a whole is prepared to nominate him for another term. They're they're not prepared to stand up to him, you know, because they're afraid that they would cost them a presidential election, or because in some cases they simply believe that this is proper behavior that the Republicans should govern. And then democracy is sort of a stilly, you know, exercise that if it doesn't go their way, shouldn't exist.

Bloomberg Opinion columnist Jonathan Bernstein. Always a pleasure. Thank you so much for joining me.

Thank you.

Coming up, we're going to take a look at artificial intelligence and its impact on white collar jobs and help college students. May already be getting ready for this. You're listening to Bloomberg Opinion.

You're listening to the Bloomberg Opinion podcast. Catch us Saturdays at one and seven pm Eastern on Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app, or listen on demand wherever you get your podcasts.

You're listening to Bloomberg Opinion. I'm Amy Morris. A lot of the conversation around the rise of artificial intelligence has often focused on the threat to white collar jobs and knowledge workers, and that's part of what prompted a White House meeting with tech companies to hammer out a deal on the emerging technology.

These commitments, which the companies will implement immediately, underscore three fundamental principles safety, security, and trust.

That was President Biden last month. But this is a non binding agreement with Amazon, Google and other tech companies. Does it provide much solace for those who see their jobs changing or completely disappearing. Let's bring in Bloomberg opinion columnist Aaron Lowery, who covers personal finance. Aaron, you look at this from the perspective of the college student, which is really interesting, or even the high school student who may be planning to go to college. They're already it seems, factoring AI into their course and career decisions.

What did you learn, Well, we can hope that maybe that's what they're doing. One thing that we have certainly noticed is that there's been a steep drop off in the number of people who are matriculating directly from high school to college. And what I found so interesting about this is, yeah, sure we can chalk some of it up to the pandemic, but colleges have been back for two years in person learning at this point and the numbers still haven't gone up. But as a proud millennial at thirty four, when eight happened, the Great Recession was making everything feel shaky for us, the inverse happened, and we flocks to college over seventy point one percent, highest stats ever people going to college for security. And it seems like gen Z might be like, you know what, guys, we think you got sold a bill of bad goods, and perhaps we're going to reevaluate things.

So we've seen this before then, just the flip side of the coin, it really was.

I mean, certainly millennials and everyone brier, we're really told that the way to get ahead was to go get a four year degree, at least get a bachelor's that was going to be what it took to make it now. I will also say it's important to point out that jobs that previously only required perhaps a GED or a little bit of technical skill or a high school diploma do require a bachelor's degree.

Now.

There has been that change, but we also are seeing there are plenty of jobs, particularly with labor shortages coming, where people could go to a vocational school, certificate trade, get an associate's degree with a technical skill that's significantly shorter, not only in time, but much more cost effective than a bachelor's and you're going to come out without the potential six figure student loan debt.

For some it's interesting that you mentioned the generations gen Z millennial. I'm gen X, and it was also beaten into my head that you had to have a four year degree. But it seems like there's this pendulum that's swinging now we are bound to create a nation of blue collar trade workers. How far can we extrapolate this out if this trend continues.

Well, I think it's a little early to extrapolate too far. But one of the things that I find interesting to consider is, you know, as a creative myself and somebody who writes, I thought I was pretty safe from AI for a period of time, and we might have been wrong. There might be more humanity that can get infused into words and language than we thought by a nonsentient machine. So white collar workers maybe are a bit more under threat than we thought, particularly knowledge workers, And we should really consider what are the jobs that it will take longer for AI and robotics to be doing, and how much safety and security and also potential income could be earned from those jobs.

Erin We still need college though, right We need people who can write code and paint pictures and cure cancer and teach drama. College is not going the way at the DODO.

This is absolutely not an anti college take at all. More importantly, it's say, let's reevaluate if that is the narrative we should be telling, especially younger Gen Z and then the forthcoming Gen Alpha, that that is the only way that you can earn a stable living. Of course, college degrees still carry a lot of weight. The top nine or all of the top twenty highest paying jobs require at least a bachelor's most of them require a master's or more in addition to potentially additional training. So yes, of course there is still value in college. It's not an anti college stance, but more let's think more critically about telling everyone carte blanche you need to go get a bachelor's degree, because that is just inherently bad advice, particularly if you're going to take on a significant amount of student loans in order to do it, and then the ROI on that degree and the salary you're earning might not be as high as it could have been if you pivoted to a different industry and a different skill set.

Yeah, I think the student loans is a really interesting factor. It's something that as a gen xer, again generationally, I didn't have that much of a debt burden to deal with when I was going into college, whereas my little brother, who's only eight years younger than me, tremendous debt that he's still having to pay off. So it seemed to balloon over the course of just a few years. That's got to be a factor in this decision making.

It is, and I feel like gen Z really had the advantage of seeing the student loan crisis play out for millennials, seeing that maybe the forgiveness and cancelation that people thought might be coming perhaps is not coming, and it made them think more critically about their choices. And the other thing is I would encourage any parents who are listening to really factor that in too. Don't just push your kid into the best college that they get into by name, look at what makes the most sense for your kid. What can they do to be minimizing the cost of college for themselves, Or maybe it's going to learn a skill or a technical trade, or going into the workforce first to see what they like, explore apprenticeships. Those went the way of the DODO, it felt like for a long period of time, and I do feel like they're making a comeback, and that is a huge skill and advantage that people could take as well.

Is there a way to know yet how to best prepare our college students for AI as it is coming in and it is becoming part of our regular fabric of our lives.

I wish I knew the answer to that. But other than explore it, play with it, understand it, learn it. No matter what field you're studying, that I feel is very important. It's easy if you're maybe in a humanities to kind of disregred and like, yeah, that's for the STEM folks, that's not my thing. You need to be learning and understanding it as well, and understand how maybe you can utilize it and incorporate it into the job that you're doing.

That's an interesting take. It's not just for the STEM folks, is it. It's for everyone. That's what's really interest. You've just put your finger on it. I had not thought of that for such a long time. You'd think you are sheltered if you are in more of arts and humanities. This is not just for the science, technology, engineering, and math folks.

It's not. We can use it too.

Do you foresee a stigma shift? And here's what I mean by that. For years, the trade vocational schools folks kind of look down their nose, a blue collar trade vocational education. But now maybe a future where AI is seen as more soulless and dark, and trade and vocational schools are more pure I don't.

Know about more pure, but I do think more stable and at the end of the day, that is what most of us want, is some level ofbility and security when it comes to our income. And that really could be a shift in terms of what college counselors may be also including trade and vocational into what they're recommending to students, what parents might be Also, it's important to think about proud to say that your child does. I think so much of this gets wrapped up into the stigma of weh I want my kid to be going to the best of the best and to be able to put the bumper sticker on my car and brag about it. And let's really consider what is actually the best interest of your child and not just what is the best sounding thing at a cocktail party.

Where do you see this going erin? Is there any way? Is it too young to figure out where it's going from here?

I don't think we can even predict yet the impact that AI is going to have. We all need to take it seriously and not think that just because we do X, Y Z jobs we're going to be inoculated from its impact and to keep learning and growing, particularly those of us who are further along into our careers. We really can can't just be resting on our laurels at this point. We really have to make sure that we are better than AI.

Aaron Lowie is a Bloomberg Opinion columnist and author of the three part Broke Millennial series. Check it out and don't forget. We're available as a podcast on Apple, Spotify or your favorite podcast platform. Now coming up, we're going to take a look at the commercial real estate market and which markets are making a comeback already. This is Bloomberg Opinion.

You're listening to the Bloomberg Opinion podcast. Catch us Saturdays at one and seven pm Eastern on Bloomberg dot Com, the iHeartRadio app, and the Bloomberg Business App, or listen on demand wherever you get your podcasts.

This is Bloomberg Opinion. I'm Amy Morris. We've been keeping a close eye on commercial real estate and one key metric of the health of the market is net absorption. That's how many square feet are occupied at the end of a particular timeframe compared to how many were occupied at the start of that timeframe, and currently that number is negative thanks to the rise of remote and hybrid work. But it also gives us a better picture of the hottest office market in the US, and we're learning more with Bloomberg opinion columnists Justin Fox, who covers business and economics. All right, Justin, tell us lay it on us. Where's the hottest office market in the US?

Well, yeah, by that measure over the last four quarters, it is Midtown Manhattan. If you do it in percentage terms, it's Savannah or Nashville, but it's still Midtown. Manhattan is so much bigger as a real estate market than those And yeah, this was just something I was This is from Cushman and Wakefield. And you know, there's lots of different people who gather commercial real estate market data in different ways. It doesn't always agree. But Cushman and Wakefield puts out these great quarterly reports from almost every significant market in the US. And I scraped all the data and was playing around with it in spreadsheets and was greatly surprised to see that that Midtown is so big.

I mean one thing.

Immediately, they split up Manhattan into Midtown, Midtown South, and Downtown, and both Midtown South and Downtown have negative that absorption over the past twelve month four quarters, and if you actually add the two together, it's pretty much a wash.

But that's still a lot better.

Like Manhattan over the last year has pretty much zero and that absorption, but that's a lot better than most.

Of the country.

Zero better than negative.

Yeah.

So you said though that it surprised you. Let's talk about that a little bit. Manhattan commercial real estate. The conventional wisdom is that it's on the downswing, empty in debt, and evidently you were on board with that too until you saw these numbers and thought, whoa, maybe there's a little life being breathed in here.

Yeah, And I.

Mean part of it is it's like two, it's the same thing that's causing some of the distress and also some of the positive numbers, and it's that New York has just added tons of high end new office space over on the far west side of Manhattan. There's all of these new super high rise office buildings in Hudson Yards, Manhattan West, and there's this new one that's just opened up pretty recently right next to Hudson Yards called the Spiral, which has these like outdoor space spiraling around the building. And then there's one Vanderbilt next to Grand Central another really big one, And it seems like these brand new, super tall, high end buildings are not having much trouble signing up new tenants, but that they're probably just taking people from other buildings, older buildings, And so some of the distress you're seeing in the Manhattan market is because we've just added all this space at a time when a lot of people are downsizing.

But at the same time, it's sort.

Of evidence of Manhattan's continuing appeal as an office market for companies that want sort of marquee space.

You mentioned that there are other areas, depending on your metric and how you weigh these numbers that you are seeing, that are also on the rise as far as occupancy rates are concerned. You mentioned what Savannah, a couple of other areas nationwide. What's causing this? Like, what metric do you have to meet? What box do you need to check off as a community to start seeing a comeback in the retail office space?

Well, I mean, Savannah is a really tiny market, and so I don't know that I would read a whole lot into it. And I was looking at sort of the report from the local Crispin and Wakefield guy there, and it just seems like they haven't built much new space there. It's not like they're growing that fast, but just sort of so happens over the last year that there's been a lot of new occupancy. I mean, another interesting one with a lot of growth in net absorption over the past year is Brooklyn in New York, and I think a lot of that is because they just opened the I think the first new office high rise in Brooklyn in a generation is what they say. I don't know if that what generations they're talking about, it just since the millennials or what. And then in Nashville, I think is a full on boomtown. It's just lots of people have been moving there, lots of companies, some companies have moved even from New York to there. So I think that's pretty simple. But what's interesting is, like other boomtowns, Austin has had big negative net absorption over the past year. Phoenix too, And I think with Austin it's partly just that any place that's very heavy on tech workers is downsizing office space, it seems like. And so you look at the list of the places with the biggest declines in that absorption, it's san Francisco, Boston, Denver, Raleigh, Durham, Seattle, the other parts of the Bay Area, East Bay and South Bay and Austin. So, I mean New York has that too, but New York has more of a mix, and it's really the tech companies, partly because of the layoffs and it just also because they've had they've embraced remote work and hybrid work the most enthusiastic.

Have you seen this before historically or can we attribute all of this to that COVID pandemic gift that keeps on giving Every few months we see another wrinkle, another rippled of that stone that was tossed in our pond.

Well, I mean usually you see trouble in commercial real estate markets when there's trouble in the economy, and we've had this sort of weird period where the economy is not really been booming, but it's kind of you look at jobs, they keep going up, and yet because of hybrid work, their issues with how much office space people need. There's also the issue in commercial real estate is that a lot of it is financed with relatively short term loans, and interest rates just went up by a whole lot, so there's just a lot of people who are having to refinance now or soon, and it's just suddenly that that causes a lot of turmoil. I mean the other thing, And I'm no great I have no big background in commercial real est that I've just been looking at it more lately because it's clearly a very offices in particular are a very interesting area. And I mean, one of the things it's just so striking about it is how opaque it all is. Like Kushman, according to Cushman Awakefield, the Manhattan vacancy rate is higher than it's ever been and so the vacancy rate has been going up even as net absorption is going up. And again that's because of all of this new office space that's just been added. But also there are other providers who do vacancy rates and it's not any near a record in Manhattan and so and it's just because these are not like things traded on an exchange. It's all all these providers have to be digging around and asking questions and they're not catching everything. So I mean, at an uncertain time like this, it's even more uncertain. I wouldn't basically, I wouldn't be ultra confident in saying everything's fine in midtown Manhattan office real estate.

In fact, I wanted to ask if if other markets could learn from what's going on in Manhattan's market, or if this is unique to New York. But it sounds like there there might not be any best practices here. It sounds like the roll of the dice.

Yeah.

I mean, I don't know this, this whole thing with the attraction of the brand new, ultra high end offices. I mean, you wonder sometimes if it's something that it's like appealing to the CEO to get office space in the brand new building. It's not like Hudson Yards is super convenient to get to. And so I do wonder if over time the places that workers will actually be excited about coming back to are different from what the bosses think they will. And so New York is this interesting experiment where if you build a bunch of fancy office space, people will lease it from you, but I don't know if it'll make them come.

And so I think there's just a lot of confusion.

About what what what will work going forward, what kind of offices make sense.

I was curious if this would sort of nudge the industry into a new direction, a more stable business model, working out some way to avoid similar down swings. Although this seems like more than a down swing because this had the added benefit of a pandemic making everybody work from home. So I wonder if I look at that.

It was this sort of slow rise of totally remote work and percentage of time people spending doing their work at home, and this just accelerated at a time.

So it wasn't totally unheard of, but it was.

Yeah, it's a remarkable sudden shift that you're not going to have a repeat of it, you know, even if we have another pandemic, there are already so many people already working at home. And so one of the things that just strikes me is like, earlier in the pandemic, you would have thought, well, maybe this will make people actually have offices again where you can close the door and not be breathing out everybody all the time. And that just doesn't seem to be happening at all. But again, that may be because the decision makers don't value that, but they may eventually discover that two lower good employees they made need to I don't know.

Bloomberg Opinion column is justin Fox covers business and economics. For Bloomberg, this is Bloomberg, and we're all getting out and experiencing the world around us. Spectator activities are booming in America, movies like the double whammy of Barbie and Oppenheimer, driving weekend box office revenue to a four year high, baseball games, major League Soccer with the arrival of Leonel Messi. And then of course there's Taylor Swift. That's not a cruel summer for Taylor. She's packing stadiums night after night on her Arrows Tour, the hottest ticket in town. But with all of us getting out and about, what's the data really show? Bloomberg's Jonathan Levin is a Bloomberg opinion columnist and has covered finance, the markets, and M and A. And he joins us, now, Jonathan, is this a boom? Are we just getting back to normal?

Yeah?

And so that was the question that I was sort of grappling with when I started to look at the data. I was under the impression that this was somehow emblematic of something broad that was going on in the economy, Like you hear this term tossed around nihilism spending, and I got this sense that you know, we were collectively just spending a lot more on services than maybe we had before the pandemic, and I wanted to dig into the numbers, and what I found is, you know, when you add it all up and you look at the actual economic impact of things that entail like buying a ticket, like going to a sports game, going to a movie, like your Barbenheimer we're going to a concert, we're basically just barely back to the pre pandemic baseline. So effectively, what I think has gone on here is inflation itself has made us feel like we're being a little more profligate with these type of expenditures than we actually are. But the quantities themselves don't seem to be greater than what we were used to before the pandemic.

So we're doing just as much as we were doing before the pandemic, perhaps, but it just feels like more because it's more expensive now.

Yeah, there's that, and of course there has been a shift in mix. I thought that was interesting as well. Right, So the really big one, of course, is we cut back on movie theater expenditures in a big, big way, and the movie theater has never really came back. I should give the caveat that the official data from the Bureau of Economic Analysis is through June, so we don't really capture yet the Barbenheimer effect, and those have been some massive box offices enough to sort of catapult the movie theater industry back to where it was before twenty twenty hit. I don't know about that, but yeah, So the big picture is, aside from inflation, there's been this shift in emix whereby we were going to movie theaters a lot less. Live events excluding live sports are sort of just barely approaching their pre pandemic levels on a reals and the only real boom that we're seeing is in fact live sports, which surprised me a little bit.

Can we anticipate more growth in this area? Are we going to somehow fall back into the Saturday night Netflix, popcorn and wine mode.

The point that I.

Make in the in the column is I think that you know, growth is going to be that much harder going forward in this in this area, right, So you know, like I said, I think you can chock up a lot of what seemed like incredible growth over the past say eighteen months to basically a normalization. Not this kind of step change in our consumption patterns. But my baseline assumption is that most of the incredible growth again that we've seen over the past twelve to eighteen months has really been something like normalization, and now that we're there, it's probably going to be a lot more moderate going forward.

Jonathan Levin is a Bloomberg Opinion columnist, and that does it for this We Bloomberg Opinion. We are produced by Eric Mullow, and you can find all of these columns on the Bloomberg terminal. We are available as a podcast on Apple, Spotify or your favorite podcast platform.

Stay with us.

Today's top stories and global business headlines are coming up. I'm Amy Morris.

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