If you have been anywhere around the news this week, you have heard about the bond market. We have talked about it, and so has everyone. But what’s happening in the bond market has finally crept into the stock market, and now everyone is feeling it.

Here is the TLDR

Bessent intervened to support bond prices and push yields down. That action signaled to the market that the government is now worried about long-term interest rates; they thought everything was under control, but the government stepping in signals this is now a problem we should all be worried about.

Bond yields shot up again, and the stock market fell because of the signal Bessent sent. I am sure that is not what he intended, but that’s how the market reacted.

How we got here.

The 30-year Treasury has been rising since Covid, but the recent upward pressure started in February, when the U.S. started the War with Iran.

On August 13th, yields moved higher in a trend that spooked the administration. The market was telling us it was worried about the U.S. deficit (expected to be $2 trillion), total debt (hit $40 trillion this week), and the lack of a clear policy strategy to cut spending or raise taxes.

Rather than signal that they are working hard to improve the fiscal position of the U.S. budget, Treasury Secretary Bessent announced on Wednesday that they decided to buy back U.S. Treasuries to prop up demand for U.S. debt.

Yields eased briefly before rising again on Thursday, erasing any effect of the intervention; soon after, the stock market followed.

On Thursday, the Dow dropped 700 points. The reason? The stock market has been, up to now, unconcerned about the risk of higher long-term rates because it didn’t think it was a problem, but the government intervention signaled that it was, in fact, a problem. So much so that it required the government to “prop up” the market.

In trying to quiet the markets, the government intervention created fear.

Dr. A’s Take

This was a self-inflicted wound. The market fundamentals around the deficit, the debt, and the absence of a real spending or tax plan were already known before Wednesday. Nothing in the market changed this week except that the government confirmed, through its actions, that it's now worried too.

What It Means for You

If you’re shopping for a mortgage, have a HELOC, or are carrying any variable-rate debt, you are about to experience higher rates.

If you peeked at your 401(k) Thursday afternoon, as I did, the 700-point drop probably caused you to rethink some of your spending. For those of you nearing retirement, you are probably thinking, does this mean I might have to work a little longer?

Plan for a little more volatility in your financial lives.

We will have to see what happens on Friday, but every action taken and every word spoken will be scrutinized by the markets. Economists are watching how this plays out.

I sat down with Elon University’s Dr. Brandon Sheridan to discuss the U.S. economy and back-to-school preparation. If you are preparing for a semester in economics, either as a teacher or student, this one is for you. We end our conversation with some tips for educators starting classes soon. Are you a high school economics educator? I have an offer for you at the end of this post.

In this episode:

• 01:12 — The economy is “moving sideways,” and it could be worse

• 02:04 — Consumers continue to spend (recorded before retail sales data confirmed that spending is down)

• 06:29 — The jobs report: Is -23K real?

• 09:40 — Labor force participation is a concern

• 19:53 — Inflation’s hidden secret

• 31:10 — “You can’t reduce revenue and increase spending simultaneously when you’re already in debt.”

• 33:00 — Tips for new and “old” educators

Watch the full episode to see why the markets have been forgiving.

Econ Ed Professional Development with Econiful

Hey econ educators!
Are you putting together your first units for the semester?

I am joining Econiful on September 3 to talk more about the Six “secret” econ resources, and the session is built specifically for high school econ teachers. Dr. of will be there too. It is free and an hour long. Come join us!

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U.S. Borrows $14 Billion a Day!

Does anyone care about fiscal responsibility? The U.S. budget deficit soared to its highest monthly level in more than five years, driven by a surge in Medicare costs, as interest on the federal debt continued to weigh on the nation’s fiscal picture, the Treasury Department reported Wednesday.

In addition to the big single-month jump, the deficit has hit $1.8 trillion across the first 10 months of the government’s fiscal year, surpassing the same period in 2025.

What got us here:

Tax cuts that haven't yielded more economic activity (the trickle-down effect), and government spending that hasn’t slowed down and is picking up with the War on Iran.

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The chart below breaks down year-over-year changes in categories of the CPI. Headline inflation was 3.4%. Core inflation, which excludes energy and food, is at 2.5%. While gas and oil prices have dipped in the past couple of months, gasoline is still 24.6% higher than it was this time last year. Fuel oil tops the chart with an annual inflation rate of 39.1%.

If you drive for work or use energy to cool your home, you are feeling the cost-of-living pinch. Reading the headlines that inflation is cooling won’t match your lived experience, and that can be frustrating.

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We are still working through last week’s job report. The softer-than-expected jobs data is requiring us to dig deeper into the findings to understand what is happening and why. In today’s graph, we share the monthly changes in jobs by category and industry. For ease, we sorted the graph by jobs created.

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This data can be found in Table B of the Establishment Situation Summary provided by the BLS.

In July, nonfarm payroll employment decreased by -23,000, and the unemployment rate fell slightly to 4.1 percent. Market expectations were for an increase of 88,000 jobs.

LFPR

The LFPR is the total percentage of US residents in the labor force. It represents the relative amount of labor available to produce goods and services in our country. The rate includes civilian, non-institutional people age 16 and over who are currently working or are unemployed and actively looking for a job. It does not include those who are unemployed and not actively looking for a job.

The Labor Force Participation Rate continues to fall. Fewer Americans relative to the working-age population are either employed or are looking for a job.

We have discussed the drastic fall in LFPR for those 55+ and how a stronger stock market has made it easier to retire. However, for the overall population, the LFPR continues to fall for other reasons.

1. Youth disengagement: Labor market attachment is declining for those 16-24. There are two factors at play here. Teens are emphasizing education and training, and the outlook for entry-level jobs has been declining, forcing younger workers not to participate in the labor market.

2. Immigration: Immigrants tend to be more attached to the labor market compared to domestically born individuals. The administration’s crackdown on immigration has caused talented and educated immigrants to find opportunities in more welcoming countries.

3. The Gig Economy: While being a gig worker is technically employed, many active gig workers list themselves as "not in the labor force" on standard government questionnaires, causing measurement error.

The Bottom Line

The labor market is shifting as we speak. It is important to keep in mind that labor market data is usually considered a lagging indicator. By the time we see changes in the data, the economic environment has already changed. Also, one month’s data does not make a trend. We will continue to keep an eye on the data and report back to you to help make sense of the economy and your place in it.

Kevin Warsh has started to shift the behavior of the Federal Reserve. From limiting forward guidance to a proposed reduction in the frequency of meetings.

I sat down with Jack Marx, research assistant at Decode Econ, to discuss this topic. We have divergent views on whether this is good or bad for the economy. We work through our views, and we hope you can chime in with yours.

Thanks Jack

We also say goodbye to Jack. This is his last week at Decode Econ. He starts at Chase Law School this fall. I am grateful for all he has done to help this platform and podcast grow.

We will be onboarding the Fall 2026 team here soon. Stay tuned for the announcement.

Check out the YouTube conversation or find us on the podcast platform of your choice.

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The labor force participation rate for workers 55 and up keeps declining. Most of the shift is due to demographics, as the group is getting older, but a strong stock market has also given many boomers the cushion to walk away.

This is good news for younger workers trying to move up. Fewer people staying in leadership roles into their 70s means more room to climb up the professional ladder.

Planet Money’s latest episode digs into the pros and cons of mandatory retirement.

https://www.npr.org/2026/08/07/nx-s1-5918646/forced-mandatory-retirement-baby-boomers-mid-career-workers

We want to hear from you. Have you been passed up for promotion or held back in favor of a more senior and experienced colleague?

Here are some recent trends we have been keeping an eye on in this economy

1. Cryptic Fed Chair Warsh

2. Slow Growth and Cool Labor Market

3. Yen, AI, and The Stock Market

The Fed Decision

The Fed met last week. While most talked about the split in the decision to hold interest rates steady — three dissents wanted higher rates — I walked away more frustrated with the lack of forward guidance from Fed Chair Warsh.

After the last meeting, I talked about how positively surprised I was by Warsh’s commitment to stable prices. I thought he would give in to the pressure to reduce interest rates but was happy to see his hawkish approach.

Since then, Warsh’s communication strategy has raised concerns. The lack of forward guidance troubles me. Warsh argues that it’s better to leave it out and let markets decide for themselves. , my go-to expert on the Fed, said in May that she “almost fell out of my chair” at the definiteness of Warsh’s statement: “I don’t believe in forward guidance.”

Since then, in a conversation with Marketplace last week, she suggested that she wasn’t as concerned with the lack of forward guidance but is concerned about transparency in how the decisions are being made.

Then this week, Fed Chair Kevin Warsh raised the possibility of changing the frequency of the central bank’s regular policy meetings. His proposal would cut the meetings from eight to six a year.

There are several concerns here. First, I’m a big believer that more data is better than less. I see forward guidance as more data to share with the market, which the market can then process as it wishes. Eliminating the guidance reduces information clarity and creates more opportunities for market mispricing.

Similarly, reducing the number of meetings reduces how often the Fed shares information with the market. It also makes it harder for the Fed to react to changes in the global economy. And the Fed’s ability to respond to market dynamics is critical to minimizing volatility.

The Fed is scheduled to meet Sept. 15-16. Warsh remains cryptic about which way he wants to move forward and what data he relies on to make his decisions.

As we navigate Q3 and Q4, I am expecting more market volatility. Not just because of the global political environment, but because of the market being forced to anticipate the Federal Reserve's actions and thoughts.

Slow Growth and Cool Labor Market

Based on second quarter data, Real GDP growth came in at an annualized rate of 1.5%. That is a slowdown from the 2.1% growth rate in Q1. Growth in consumer spending went from 0.5% to 3.2%, with durable goods up 6.8%. The headline number is telling you the opposite of what's actually happening at the register. Consumers continue to keep the U.S. economy going.

Federal government spending decreased by 4.1%, with most of that decline coming from nondefense spending. Finally, nominal GDP increased by 7.9%, meaning that inflation has taken a bite out of the economic growth.

It’s jobs report week. We have several data points to read through this week.

• Job openings and Labor Turnover Survey on Tuesday

• ADP employment report on Wednesday

• Weekly Jobless Claims on Thursday

• and, the Employment Situation Report on Friday

Yen, AI, and The Stock Market

Markets have created some news lately. News has ranged from Korea’s stock market collapse, the depreciation of the Yen, to SpaceX’s revenue beating expectations (the company is still losing money).

Here is a video explainer on what happened with the Yen and why the U.S bailed out Japan. I would love it if you followed me and Decode Econ us on Instagram.

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How We Use AI at Decode Econ

First, I believe in transparency, so let’s get to that first.

Substack now lets writers post a “How I make this” statement. But it is limited in length. So here’s a more detailed Decode Econ AI policy.

• We believe our ideas and our ability to connect dots are what we do best. Every idea is ours. The way we connect topics and help you understand the economy is ours too. We lean heavily on economic models and research to shape those ideas; it is all original content.

• We always write our own drafts. We love writing and putting our thoughts on paper. The writing process is how we shape our understanding and form our arguments.

• We do use AI, Claude and Grammarly, for editing and flow. We ask what to cut for clarity, and how to make our writing land for a non-academic audience, because our first drafts tend to read at too high a reading level. We lean on Claude for headings and titles too, but we consider that a search-optimization choice, not an authenticity one. We also try to use it for formatting consistency between posts, though honestly, that’s one of our bigger weaknesses.

• Every word we publish is written, read, and evaluated by us, and we stand by it.

Writing Confidence

Here’s the personal side of this statement.

I’ve been told my whole life that I’m a good writer and communicator, but I never quite believed it. Something about growing up between Oman and the U.S., and missing some of the basics of writing through those transitions, made me feel less confident about my skills. My writing is heavily influenced by what I read, and less by the rules of writing. I often feel like I am an imposter.

My wife, parents, friends, and my colleagues used to proofread my writing before it went out, because I didn’t trust my own drafts. Sometimes I hire editors to help me feel more confident about what I have written. The introduction of AI didn’t replace my judgment, but it gave me the confidence to trust my writing and allowed me to reduce the burden of proofreading I imposed on my family and friends.

Substack's investment in AI detection

Now, why is Substack doing this? In their announcement, they said:

“Many people complain their feeds are filled with soulless slop. Others don’t yet realize when they are reading something written by no one.”

As I read it, they’re attempting to solve for two problems: the rise of AI slop, and reader trust. Both are real concerns. However, there is a big difference between AI slop and AI-enhanced posts, and Substack AI score does not make a distinction between those two.

With that said, Substack is upfront that Pangram isn’t perfect, just that “independent research suggests it detects AI-generated text with a high degree of accuracy.” Fine.

But they also admit the actual limitation:

“Pangram can only detect whether AI was used to make the text, not whether great human care went into creating it, nor whether AI tools were used as a source.”

Anyone who’s spent time in higher education already knows this. Detection tools flag patterns, not quality, and not authorship in any meaningful sense. Moreover, there are good and bad uses of AI, and that nuance is lost in the Substack AI score.

The problem I have with this is that the score measures how much AI touched the writing and editing, not how much AI shaped the thinking, whether it was used for research, or whether a human sat with the final draft and meant every word.

The Substack measure doesn’t capture when AI is used for the following

• Ideation

• Research and sources

• Images and visuals

It strictly captures the use of AI in text.

Is This a Good Move for Substack?

So here’s where I land on the bigger picture. This feature isn’t happening in isolation. It’s the latest step in Substack moving away from what it originally promised. I joined because it offered a clean way to write a newsletter, distribute it without fighting contact management, and, most importantly, actually own my email list. Over the past several years, Substack has pushed hard toward social media mechanics: feeds, follows, discovery, and now a badge system for “real” writing.

Until recently, I considered Substack a newsletter distribution and monetization tool. If I evaluate its AI policy based on that premise, the introduction of the AI score is a horrible policy. Why should Substack care about what I distribute to my contacts? This has been Substack’s position too, as they have come under attack for hosting Nazi newsletters.

To be clear, I’m not defending Substack’s decision to host Nazi content, and I’m not equating AI-assisted writing with it. I’m pointing out an inconsistency: Substack has chosen not to police one and is now choosing to flag the other, and that choice tells you what the company actually cares about.

Substack’s co-founder, Hamish McKenzie, addressed its decision to host Nazi newsletters by saying

So if harmful and extreme positions aren't something Substack manages, why is AI use getting a badge? Both are business decisions dressed up as principle. Substack is worried that readers and users care more about AI use than the writer's views. Substack has been clear that it is shifting from newsletter distribution to a social media platform with the goal of keeping you on the platform and attracting more people onto its pages. Readers have stated they have a problem with AI slop (not AI use), and Substack has responded by giving you a signal. They do not want you to associate Substack with AI use because people say they do not like it.

Do Readers Care About AI Use?

AI hate is real. The purists argue that AI lacks authenticity. A recent study examined how AI disclosure impacts reader perceptions. They analyzed 990 text evaluations and found that disclosing AI use erodes perceived trustworthiness, caring, competence, and likability of the writing and author. They attribute these negative shifts to a “perceived loss of human sincerity, diminished authorial effort, and the contextual inappropriateness of AI”.

Therefore, this platform signal will cause a shift in the perception of authors who use AI.

But without the signal, can people tell when something is AI-Assisted, AI-generated, or fully human-generated? This is where it gets complicated: most people can’t tell if something is written by AI, but they can identify overused AI words and phrases, and the structure of sentences and flow that sound repetitive or mechanical. Just look at how we have treated the em dash, which, by the way, is a great punctuation mark we now all avoid to seem more authentic. Otherwise, most people aren’t great at detecting AI-generated text. According to Russell, Karpinska, and Iyyer (2025), how good you are at detecting AI is correlated with how much you yourself use AI.

Dr. A’s Take

If you’re a writer, don’t let a purity score decide how you use AI. Decide that yourself, publish your own “how I make this,” and let readers judge the work. But know that some readers will judge you for the score, even if they had not noticed AI use in the past. If you’re a reader, don’t treat a low AI score as a proxy for quality; read the piece and decide if the person behind it actually has something to say. Do recognize that we are making a value judgment that writing with AI deserves a signal but using AI in other ways is not worthy of identification.

And if you’re on Substack because you want to distribute a newsletter, Substack has made it clear that this is no longer their goal. They are now a social media platform like Facebook, LinkedIn, or X.

To Our Readers

We are happy to share our AI policy and use with you. I hope you continue to read our work and support it the way you always have. We invest a lot of time to bring you economic news, policy changes, and help you make sense of what it means to you. We will continue to invest in pursuing that mission of helping you see the economy clearly— and your place in it.

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Update

This weekend, LinkedIn introduced a new feature that lets users flag content that “seems like AI slop.” As the number of low-quality posts floods the platform, LinkedIn is stepping in to control some of the content.

This one is a must-watch for every economic and business educator!

Decode Econ is a startup. Our goal is simple: to help you see the economy clearly — and your place in it.

Every organization deals with scarcity. We have limited resources, but have unlimited wants. That means every organization, especially startups, has to answer three equations: What to produce, how to produce it and for who to produce it for.

Here is how we’re answering them.

• What: educational and entertaining economics content.

• How: newsletter, video, and graphic media.

• Who: honestly, that’s still an open questions. We are still figuring it out in real time.

It is fun building it and seeing its impact, but the biggest joy is in working with the team that makes this work possible. I love working with young professionals and current students. They bring energy and creativity, and in return I mentor them on public engagement and translating research into impact. It is a win-win situation.

This week, we sat down with and to talk about experiential learning through on-the-job work at Decode Econ.

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They shared how working at Decode Econ has taught them so much about economics and business, but also about teamwork, creativity, and understanding your audience. Most importantly, they discuss how they grew their adaptability muscle, a necessary skill in today’s labor market.

If you teach economics or business, this conversation is worth 33 minutes of your time.

Here’s why:

• The classroom only gets you halfway.

  Claire told me she joined Decode Econ because of my macro class. She learned to love the content, but she appreciated my class more for the energy I brought to a silent classroom on day one, which made her feel comfortable speaking up.

  Frannie said something similar about her marketing classes: the value wasn’t the frameworks; it was “being able to be applicable and actually figure it out for myself” before getting thrown into a real job.

  This tells me that the actual value of what we do is to help our students transfer knowledge and skills into action.

• Confidence isn’t taught. It’s built in reps.

  Claire shares with us that her turning point in college was showing up to observe the Haile research lab, staying silent for a while, then finally speaking up. Each exposure helped her open up new doors to new opportunities. This is a good reminder that success compounds.

• Opportunity rewards students who are already in the room.

  My favorite moment from the podcast: Frannie was on campus working on Decode Econ content when Dr. Raska (Chair of Marketing, Sports Business, and Construction Management) passed by and, invited her, on the spot, to tour a market research firm partnering with our college. There was no calendar invite and no time for her to prepare. She said yes anyway. Being present helped her open a new door and expand her network.

  The lesson here is to be present and open for new opportunities.

• Adaptability is the actual labor market skill, and startups teach it for free.

  Both students described Decode Econ’s early days as constant pivoting. The daily changes in direction that, at first, felt like personal failure. Frannie said she used to wonder, “Did I do something wrong?” every time we changed course. It wasn’t her. It was a small team figuring out its audience in real time, which is exactly what most of their future employers will also be doing.

  This is the argument I’d make directly to other business and econ educators: if you want to teach adaptability, you cannot lecture it into existence. You have to put students inside genuine ambiguity — a live project, a startup, a research team— and let them feel the discomfort of the pivot. That discomfort is the curriculum; do not shy away from it.

• Pick the manager and team over the salary

  That was a big takeaway from this conversation.

Watch the entire podcast; I would love to hear your thoughts. Your comments and engagement help us grow our work and reach new people. If you know an economics or business educator that would benefit from this, share this post with them.

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JET SET

This week I present at the with from Monday Morning Economist and from Paper Robots on building public-facing research. I am excited to share with the audience how Decode Econ runs and what our value proposition is across Instagram, the newsletter, LinkedIn, and the podcast.

Timestamps

• 02:18 — Frannie’s background: marketing coursework meets real-world application

• 07:05 — Claire’s origin story: how one macro class built her classroom confidence

• 09:31 — Building confidence through low-stakes reps

• 14:17 — Purpose and impact: why Gen Z engagement is the point, not a side effect

• 19:09 — FOMO at work

• 21:25 — Career advice: pick the manager and team over the salary

• 23:54 — Naming and working through perfectionism and imposter syndrome

• 28:44 — Pivots are the name of the game

• 31:05 — What community inside a startup actually provides

The most common question I get from students who find me on social media isn’t about inflation, or what the Fed is doing, or what my favorite economic model is. It’s this:

I used to take so much time answering that question and adding a lot of nuance. Now, it just makes me feel frustrated. It is not a bad question, but it tells me about the person asking it and the environment they were exposed to before they’ve ever set foot into my classroom. By the time someone sends me that question, they’ve usually already made the decision that economics isn’t for them.

Here’s what I learned through my research, even though I’d been watching it happen in my classroom for years. For a huge share of students, especially women, whether they’re “good at math” was never actually what mattered.

Whether they believe they’re good at math is the determinant. The gap between perception and reality is costing people money, careers, and confidence they never needed to lose in the first place.

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What the data actually says

My co-authors Whitney Buser, Darshak Patel, and I set out to test something that is almost too simple: does believing you’re good at math predict your financial literacy separately from actually being good at math?

We surveyed 529 college students across three very different schools. We sampled students from a large state university, a regional university, and a small liberal arts college. We gave them two things:

• an objective 10-question math assessment built from SAT/ACT-style content,

• five-question financial literacy test

Then we also asked them to self-rate their math confidence on a simple scale, using strongly agree to strongly disagree.

Then we examined the differences by gender, because the research had already established that men tend to outscore women on financial literacy tests, and our goal was to understand why.

If you want the full methodology and regression tables, the study is:

Math Confidence and Gender

For men, the answer was as expected: actual math ability predicted financial literacy. Their confidence didn’t change the outcome once we controlled for real ability. A man who thought he was great at math but tested below average scored no better than a man who correctly rated himself as below average.

For women, the relationship flipped.

Actual math ability, the objective test score, dropped out as a predictor entirely. What predicted a woman’s financial literacy score was whether she believed she was good at math, regardless of whether the test backed that belief up.

We split students into four groups:

• high ability/high confidence

• high ability/low confidence

• low ability/high confidence

• low ability/low confidence

A woman with high ability but low confidence performed statistically the same as a woman with low ability and low confidence. Her actual math skills did not help if she didn’t believe in them. Meanwhile, a woman with low ability but high confidence outperformed her low-confidence but equally-skilled peers.

We left thinking ability, without belief, was worth almost nothing for the women in our sample. But why?

The mechanism: you’re not bad at math, you’re mispricing it

The economic model is built on investment theory: people invest in financial knowledge up to the point where the expected benefit equals the expected cost. But nobody actually knows their true cost of learning something before they try. They have to estimate it using whatever reference point is closest at hand.

For most people studying economics and finance, math is that reference point. It’s the thing they were graded on for twelve straight years. So when you ask yourself, unconsciously, “how hard would it be for me to learn about compound interest, or bond prices, or how mortgages actually work,” you’re referencing your math ability as a proxy of your ability to learn economics and finance.

You’re pricing that cost using your sense of “am I a math person.” If that internal price tag is set too high, because you were told at 14 that you weren’t a numbers kid, you will rationally underinvest in learning the financial concepts that price tag is attached to. Sadly, even though the true cost of learning them was never actually that high. You’re not bad at math; you were convinced that you aren't good at math.

Math is for Boys

For girls, that belief has been set before they even reach middle school.

Meltzoff and Greenwald (2011) tested American children as young as six and found that by second grade, kids had already absorbed the cultural stereotype that math is “for boys” and that boys identified with math more strongly than girls did.

Once again, this wasn’t a finding about actual ability. They found no accompanying performance gap to justify it. It was a belief, installed early. By the time a 14-year-old girl is told, or simply absorbs, that she “isn’t a numbers kid,” the groundwork for that message was laid in elementary school, in classrooms, dinner tables, and offhand comments that had nothing to do with her actual aptitude. The 14- year-old isn’t pricing her cost of learning finance off her own track record. She’s pricing it off a stereotype she inherited before she was old enough to test it.

We ran our study on college students specifically because we wanted to catch people before real financial life started. Before mortgages, before retirement accounts, before anyone had specialized into “the one who handles the money” in a relationship. The gap was already fully formed. That means we can exclude the learning-by-doing hypothesis of why men usually manage household finance. This gap is coming from something that happened earlier — in school, at home, in culture — long before anyone opened a checking account.

Why math confidence matters for the study of economics and personal finance

Here’s why I get frustrated. If confidence only predicted how someone scores on a quiz, I’d file it under “interesting” and get back to teaching supply and demand. But a separate, much larger study suggests the effect doesn’t stop at the test; it follows people into real financial decisions they make for the rest of their lives.

Allgood and Walstad (2016) built a combined measure of financial literacy that included an actual test score plus a self-rating of overall financial literacy, and tested it against a national sample of 28,146 U.S. adults and households. They tracked 22 real financial behaviors across five topics: credit cards, investments, loans, insurance, and financial advice. Do you carry a revolving balance? Do you shop around before buying insurance? Do you seek out financial advice, or avoid the conversation entirely?

They found that perceived financial literacy predicts real-world behaviors about as strongly as actual financial literacy did. Confidence in your own financial knowledge shaped what you actually did with your money almost as much as your knowledge itself did.

Put that next to what my co-authors and I found in college students, and you get a full confidence-and-behavior pipeline. The confidence gap forms early. It impacts what you major in and what you invest in learning. You carry that into adulthood, and it shapes whether you negotiate your loan terms, whether you diversify your investments, whether you ask a professional for help instead of guessing. It turns out that how you feel about your own competence matters.

This is also, I’d argue, the real reason the “do I have to be good at math to study economics” question matters so much to me. It’s the first data point in a pattern that, if the research holds, will keep repeating for that student’s entire economic and financial life. Keeping someone out of an economics classroom over a mispriced belief about their own math ability will cost society access to that student and the impact they will have on policy and research.

The student in my inbox

Every time I get the “do I have to be good at math” message, I think about the student. She wants to study economics because she likes the news, likes understanding why things cost what they cost, likes arguing about policy at the dinner table. And she is about to talk herself out of the field before her first class, because somewhere along the way she became convinced that she isn’t good at math.

This is why I spend as much time on confidence-building in my classroom as I do on actual content. We call it the “figeroutable” muscle and the audacity to believe you can do it.

Dr. A’s take

I think we have the entire financial literacy conversation backward. We treat it as an information problem. We think that not enough people know what a bond is, so let’s teach more personal finance classes. That’s not wrong, but it’s not the bottleneck for a huge share of people, especially women. The bottleneck is a mispriced belief about their own ability, usually formed years before they make it to an economics or personal finance course.

You cannot fix a belief problem with more information. And based on our data, college might already be too late to fix it for a meaningful share of students. This needs to start in middle and high school, in how we talk to kids, especially girls, about math.

Next time you walk into an economics or finance class and see that it is mostly young men, remember that this trend was developed culturally many years ago when women were told that math is for boys.

What to do with this

If you’ve ever avoided a financial decision, a class, or a career path because you decided years ago you’re “not a numbers person,” I want you to treat that sentence as a hypothesis, not a fact. The reality is that an offhand comment from a teacher or parents calling a sibling “ the mathy” and the other “the artsy” one is shaping your decision today.

If you’re a parent or an educator, the actionable takeaway from this research is that the confidence conversation needs to happen years before the financial literacy conversation does. By the time a student is filling out a college application, the gap I study is usually already locked in.

And if a version of “do I have to be good at math to study economics” is running through your own head about your own money right now, the honest answer is the same one I wish I could give every student who messages me: you don’t need to already be good at it. You need to stop deciding, on someone else’s evidence, that you can’t be.

Math can be learned, and you can be good at it.

Today’s episode is a special one. It’s a cross-collaboration with Beyond the Degree, the podcast from — so if you like hearing how executives and researchers actually make decisions, that show belongs in your feed too. Make sure to subscribe to their newsletter.

On the Pod

My guest is Dr. Jose Saavedra Torres, my next-door neighbor at Haile College of Business and one of my closest collaborators on campus. Dr. Saavedra is an Associate Professor of Sales at Northern Kentucky University’s Haile College of Business. His research examines why we trust the people who sell to us online. Every time you buy something because someone on your phone told you to, you’re making an economic decision without realizing it.

Listen in to the conversation to learn more about parasocial relationships, trust, credibility, and authenticity. If you are building a relationship with your customers online, which you should, this episode is for you.

Credibility Is Not Authenticity

Here’s the distinction Dr. Saavedra kept coming back to, and it’s the one most people get wrong. Credibility is about knowledge — can I trust this person’s expertise? Authenticity is about honesty — is this person being true to their own values?

Those two things sound similar. They’re not. Marketers have been optimizing for credibility for years. Jose’s research says authenticity is the bigger lever and one that many companies miss.

The Parasocial Relationship Is Doing the Work

The reason authenticity moves people is something called a parasocial relationship — a one-sided bond where you feel like you know someone who has no idea you exist. Jose put it well: Cristiano Ronaldo has 900 million followers who feel like his buddies. He doesn’t know a single one of them. If you are on socials, I am sure there is at least one person or account you just thought of— we all have those connections.

This parasocial relationship changes the actual mechanics of a purchase. Normally, you search, compare, and then decide. When an influencer you trust recommends something, you skip straight to the decision — your brain already did the research for you, because it thinks that person is your friend. I’ve done this myself. I’ve bought books from a single video, no research, because I trusted the person recommending it. Sometimes it’s great. Sometimes it’s a total miss for my taste. That’s the trade-off of buying on trust instead of evidence.

Consistency Is What Keeps It Real

Jose’s advice for anyone building an audience or any brand hiring one: authenticity lives or dies on consistency. Pick almost any big influencer — Mr. Beast is his go-to example. If Mr. Beast showed up tomorrow promoting anti-aging skincare, you’d feel the mismatch immediately. There’s no story connecting who he is to what he’s selling, and that gap is exactly what triggers skepticism.

The Research Behind It

This isn’t just a hunch Jose has from watching his daughters trust an influencer he was skeptical of — though that’s literally how the research started. It’s now a peer-reviewed finding. Jose and his co-authors surveyed 504 consumers and found that influencer authenticity significantly predicts both brand engagement and parasocial relationships, and that the fit between an influencer and the product they’re pushing measurably strengthens that effect.

Dr. A’s Take

I think we’ve been asking the wrong question about influencer marketing. Everyone wants to know if an influencer is credible. The better question is whether they’re authentic — because credibility gets you a sale; authenticity gets you a customer for life. Brands chasing follower counts are optimizing for reach and not connection.

Key Takeaways

• Credibility vs. authenticity: credibility is expertise; authenticity is honesty — they’re not the same thing, and authenticity is the stronger driver of trust.

• Parasocial relationships change the decision process: consumers skip the research phase entirely when they trust the person recommending the product.

• Consistency protects authenticity: the moment an influencer’s endorsement doesn’t match who they are, skepticism kicks in.

• The data backs it up: read the full study — Beyond the Facade: Exploring the Authenticity of Social Media Influencers, Journal of Promotion Management (2025).

Listen to the full conversation in this collaboration between Decode Econ and Beyond the Degree — .

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Timestamps

2:47 – What influencer marketing actually is
5:05 – Credibility vs. authenticity
9:49 – Advertising vs. influence (Trevor Noah example)
12:17 – Parasocial relationships explained
17:05 – What’s the Haile Research Lab?
24:03 – Marketing vs. sales, defined
26:29 – Why everyone should learn to sell
35:52 – Jose's next project
38:10 – Career advice: build value, not just credentials

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Zoom out to the last month, and you see the same shape three times in miniature — small bumps around June 15, June 21, June 26 — before the line goes vertical on July 3.

Cabo Verde stole our attention, and our Google search behavior tells us we wanted to learn more. Does this attention matter? Attention is not revenue after all. So what, specifically, has to happen between “the world just searched your name” and “money actually shows up” for a 40-year-old goalkeeper or a country of 525,000 people?

As we watched the game on Friday, that question was on our minds. What does Cabo Verde’s recent success on the world stage mean moving forward? How do we turn a viral moment into something sustainable?

SO WHAT IS CABO VERDE, ACTUALLY

Before this month, if I’d asked you to place Cabo Verde on a map, could you have done it? No shame if not; that’s the point. It’s a cluster of ten volcanic islands off the coast of West Africa, a former Portuguese colony that’s been independent since 1975. Roughly 525,000 people live there. More Cabo Verdeans live outside Cabo Verde than inside it. The diaspora, spread mostly across the U.S., Portugal, and France, is larger than the country itself.

Only 10% of its land is arable, and it imports 80–90% of its food; this is not a country that can fall back on natural resources or agriculture. What it has built instead is an economy that depends almost entirely on outside visitors: tourism drives about 25% of GDP directly and closer to 40% of all economic activity when you count everything downstream. In 2024, 1.18 million tourists visited.

The other pillar is remittances: money sent home by Cabo Verdeans living abroad, worth more than 10% of GDP. Because more Cabo Verdeans live outside the country than in it, money flows into the country to help family and friends.

Put those two pillars together and you get an economy that grew 5.3% in 2025, one of the fastest rates in the region, on a base of about $3 billion. For scale, Argentina, the team that eliminated Cabo Verde on Friday, runs a $660 billion economy. GDP per capita sits around $6,000. Poverty has been falling, down to roughly 14.4% in the most recent estimate, and the government’s stated goal is to eliminate extreme poverty by 2026.

Regarding the names, “Cabo Verde” and “Cape Verde” refer to the same country. Cabo Verde is the official Portuguese name (meaning "Green Cape"), while Cape Verde is the anglicized version. The country officially requested that the international community use Cabo Verde in 2013

THE VIRAL GOALKEEPER

Josimar José Évora Dias, known to us as Vozinha, was the star of the game. He should have been named player of the game, but the award went to Messi. His story is being celebrated as an overnight success, but it’s a story about working hard when no one sees you and shining bright when the spotlight finds you.

His Instagram went from about 50,000 followers to more than 20 million after his performance against Spain. Marketing analysts at Apex Marketing estimated he generated roughly $17.7 million in brand value in the first eight days.

Advertising Value Equivalent, or AVE, is a standard marketing metric that asks, “What would it cost a company to buy this much media exposure through paid advertising?” It is not $17.7 million sitting in Vozinha’s bank account. It’s an estimate of what his exposure is worth to someone else if they decide to buy it.

THE ATTENTION ECONOMY

We live in the attention economy. Everyone is vying for your time, eyeballs, and interest. But attention alone does not turn into money; there has to be a strategic approach to turning that attention into transactions. Vozinha needs to turn this into a brand that pays him to wear their gear, a sponsor pays for his name in a campaign, and his club renegotiates his contract because he now sells jerseys he didn’t sell in May. Every one of those requires someone on the other side to actually sign something. Until that happens, 20 million followers are only a vanity metric.

CABO VERDE’S CHALLENGE

The country-level version of this question has actually been studied. A 2020 economics paper examined national teams that overperformed expectations in past World Cups — Costa Rica’s 2014 run is the closest comparison to Cabo Verde this year — using panel cointegration regressions to trace the effects on tourist arrivals afterward.

The result: a significant increase in tourist arrivals followed. But it showed up roughly one to two years later, not in the weeks after the tournament.

A search spike reflects curiosity, and curiosity has to travel through trip planning, flight availability, and a tourism board’s marketing campaign before it becomes a booked vacation. None of those steps is automatic. If nobody in Praia spends a marketing budget at the moment, interest reverts to baseline exactly as the 24-hour graph is already starting to show, and two years from now, there’s no bump to measure.

Specifically on foreign direct investment, I want to be honest: I don’t have solid evidence that a single tournament run moves FDI numbers on its own. What the tourism data supports is that sustained demand, if it materializes, can eventually justify hotel and infrastructure investment, but that channel runs through the lag above, not straight from a Google Trends chart to a wire transfer.

There’s a second point worth investigating, and it comes from Usamah Alfarhan, who is a colleague, coauthor, and friend of mine at the Haile College of Business at Northern Kentucky University. He and his co-authors just published a paper examining how digital information affects what tourists actually spend, using survey data from the U.S. and Chinese tourism sectors.

Their finding: when digital platforms shift what travelers know and expect, the additional economic surplus tends to improve the profitability of hotels, platforms, and tour operators through higher prices.

What’s the actual pricing lever doing that work? Usamah has a second paper that names it, and it’s a term worth knowing: third-degree price discrimination. That’s the practice of charging different groups different prices for the same thing, based on what each group is willing and able to pay — the reason a movie ticket costs less for a student than for a working adult in the same seat.

The paper shows tourists can be sorted along two lines: how prosperous their home country is, and how much they personally aspire to the trip. And here’s the part that matters for Cabo Verde: those two things predict how much a traveler will spend, which means a hotel or tour operator that reads them correctly can charge the eager, well-off visitor more than the budget backpacker for the identical room. A viral moment doesn’t just bring more tourists. It brings a wave of high-aspiration ones, people like you and me, who just Googled Cabo Verde and discovered we wanted to go. High-aspiration travelers are exactly the segment a smart operator marks up.

So layer that onto Cabo Verde. Even in the best case, where the tourism board spends the marketing budget and Gholipour’s tourism bump actually shows up in 2027, there’s a second question sitting underneath the first one: whose margins grow when it happens?

The wave of newly curious, high-aspiration travelers is exactly the segment that gets marked up, and a resort chain headquartered in Lisbon captures that markup differently from a family-run guesthouse in Mindelo. More information reaching more travelers doesn’t automatically mean more money staying on the islands. It means more money changing hands, and where it lands after that depends on who owns the property taking the booking and who’s sophisticated enough to price the moment.

DR. A’S TAKE

What I do believe is that Cabo Verde is structurally positioned to convert this into something real, because it already has the tourism infrastructure. Hotels, an airport, and a functioning marketing apparatus that has already attracted tourists. Whether they actually get the tourism bump the research would predict depends entirely on whether their tourism board treats this month as a marketing opportunity worth funding, right now, while the world is still looking. And even if they do, Alfarhan’s research is a reminder not to assume the money automatically benefits the islands themselves — that depends on who owns what gets booked. Vozinha faces the individual version of the same test: he has followers now, but whether this is a career-altering event or just a great month depends on which agent calls him back this week.

WHAT TO DO WITH THIS

If you or your organization ever gets an unplanned moment of visibility- the search spike, the mention, the viral post- don’t celebrate the number. Ask immediately: what is the specific action, this week, that turns this into a signed contract, a booked customer, or a committed dollar?

Most organizations seek attention, but they aren’t prepared to act on it when they do receive it.

MBA 600 at Haile College of Business

Dr. Aron Levin (Marketing) and I (Economics) are building a course on exactly this gap between brand, attention, and the economics behind it. Marketing is awareness, and brand is product differentiation. The mistake almost everyone makes with a moment of visibility, whether it’s a viral goalkeeper or a LinkedIn post an algorithm suddenly decides to push, is treating the attention itself as the win. It isn’t. It’s raw material. How do you turn this into a sustained brand and product differentiation?

Most viral moments generate less value than they could because nobody on the other end was ready to convert them into anything.

Inflation Expectations as Oil Prices Increase Again

What Happened

PCE inflation came in at 4.1% year-over-year in May, with core at 3.4%. The bump was mostly airfares and fuel — not a broad-based reacceleration. Inflationary pressure seemed to ease when the Strait of Hormuz reopened. Then, days after the report, oil prices started climbing again amid fears that a breakdown in Iran-US talks could disrupt supply from the Middle East. As of Wednesday morning, Brent futures rose 33 cents, or 0.45 percent, to $73.28 a barrel at 06:39 a.m. Saudi time, while US West Texas Intermediate crude climbed 34 cents, or 0.49 percent, to $69.84 a barrel.

The Economics

As we have said, the Federal Reserve can’t fix this inflationary problem. This is a risk premium, not a demand story. Oil traders aren’t pricing in more barrels getting used; they’re pricing in fewer barrels being available. That distinction matters because a demand-driven price increase tells you the economy is heating up. An increase in the risk premium signals that geopolitics is acting like a tax on all of us, increasing our costs without any associated growth.

The Supreme Court Just Ruled Two Different Ways on the Same Question — and Nobody’s Talking About It

What Happened

In the same term, the Supreme Court handed down three rulings that all touch the same underlying question — how much power does a president have to override an institution’s independence — and answered it three different ways.

First, in a 6-3 decision, the Court struck down Trump’s executive order attempting to limit birthright citizenship, upholding 150 years of precedent. The Constitution won in this fight.

Then, on Monday, the Court split its logic. In a 5-4 ruling, it sided with Federal Reserve Governor Lisa Cook, whom Trump had tried to fire in August 2025. Fed governors serve 14-year terms and can only be removed for cause, and the Court preserved that protection, for now. Cook’s term runs through 2038. Financial experts called it a win for consumers and the broader economy, since a Fed that can be fired at will is a Fed that can be pressured at will.

But in a companion ruling the same day, the Court went the other direction. It gave the president the power to fire members of other independent federal commissions — the FTC and, by extension, bodies like the SEC and the CFTC. These are agencies that have functioned for decades as independent, bipartisan regulators with consumer protection mandates, deliberately insulated from being an extension of whoever happens to be in the White House.

The Economics

Here’s the mechanism most coverage is missing: markets and businesses don’t price in what a rule says. They price in how confident they are that the rule will hold. Economists call this regime uncertainty. It’s the cost of not knowing which version of the rules you’re operating under. Here at Decode Econ, we strongly believe in the rule of law and its importance to a functioning economy.

The Fed ruling reduces that uncertainty. Businesses, investors, and foreign governments can still treat U.S. monetary policy as insulated from short-term political pressure; that’s what allows a 10-year bond to be priced without a political risk premium baked in.

The FTC ruling does the opposite. If the agency enforcing antitrust law, or the SEC deciding what counts as securities fraud, or the CFTC regulating derivatives can now flip its priorities every time the White House changes hands, every business operating under those rules has to build “regulatory whiplash” into its planning. Not because they know the rules will change but because they can no longer assume they won’t.

The Court didn’t rule against independence. It ruled against independence selectively — protecting it for the institution most closely tied to interest rates and inflation, and removing it for the institutions most closely tied to enforcement and competition. Two branches of the same tree.

Dr. A’s Take

Most coverage of this frames it as “Trump wins one, loses one.” That framing misses the actual economic consequence, which isn’t about who won. It’s that the predictability of independent agencies just became conditional. A rule that can be selectively applied isn’t really a rule in the economic sense; it’s a signal that the next fight over the next agency is still live. Businesses don’t get to relax just because the Fed held. They now have to ask, agency by agency, whether this one is protected or exposed.

A more important consequence of the current Supreme Court is that it has become a partisan body, voting along party lines most of the time. This, in itself, has consequences for the long-run stability of the U.S. economy. Remember, if rules can change frequently, you don’t have rules.

The throughline between these two stories is that risk premiums exist; most countries face them because of a lack of institutional stability. The U.S., through self-induced actions, is introducing more risk. Higher risk means higher interest rates in the long run.

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A Note From the Team

Our latest podcast has found traction in Oman — thanks to all our newest listeners; welcome to Decode Econ! If you haven’t listened to the latest episode yet, here’s the link:

We’re taking a couple of weeks off to prepare for the new academic year. is working on new course prep and AACSB accreditation reports; and are developing a new Instagram strategy; is building our podcast guest list; and Ben is developing our LinkedIn communication strategy. To keep up with the behind-the-scenes, make sure to follow Decode Econ on Instagram and Dr. A’s personal account, @EconwithDrA. We will continue to post there because the economy never stops!

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After the 2008 financial crisis, we spent 15 years telling people that the average American doesn’t understand personal finance. We weren’t wrong. But the lesson that we taught didn’t focus on understanding your options; it was to save every dollar, distrust Social Security, and never forgot a Roth IRA. Gen Z is doing just that.

“Gen Z isn’t saving optimally for the future. They’re responding to fears that they won’t have one.”

During this week’s podcast, we also discussed Oman’s budget and strategy, and Alan Greenspan’s legacy. We ended the podcast with an audience question from Claire.

Thank you for sharing your questions; it allows us to weave you all into the podcast. If you have more, leave them in the comments.

Timestamps

• 00:00 — Is Gen Z saving too much, too early? The opportunity cost nobody talks about

• 11:41 — The Roth IRA deep dive: tax advantages, income limits, and why personal finance is personal

• 13:30 — The Oman case study: logistics diversification, Dutch disease, and the easy dollar problem

• 23:35 — Alan Greenspan: moral hazard, irrational exuberance, and the AI parallel

• 32:30 — Audience question

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On Wednesday, we covered Gen Z’s surge into Roth IRAs. The numbers are real and striking. Today, we go deeper. Why is this happening now? What does it actually mean for retirement security in this country? And what should we do next?

This is a paid subscriber post. Thank you for making it possible.

Gen Z is now the leading contributor to IRA accounts in America. Not millennials, not Gen X, but the youngest generation. The generation that came of age during a pandemic, graduated into a brutal housing market, and watched the cost of everything outrun their paychecks- they’re saving for retirement at a rate no generation has matched at their age.

According to Fidelity data, Gen Z accounts for 34% of total IRA contributions so far this year. The share of IRA owners under 30 has nearly doubled since 2016, from 5% to 9.5%. Financial literacy advocates are calling it a win. They might be right. But the story underneath that number is more complicated and more urgent than the celebration suggests.

It sounds straightforward: financial literacy education is working. We taught young people about Roth IRAs, compound interest, and the magic of starting early. It is starting to pay off because Gen Z is listening. That narrative is not wrong, but it’s just incomplete. Because some of what’s driving Gen Z into retirement accounts isn’t confidence; it’s fear.

The Decode — What Is Actually Going On

The financial literacy effect is real. The 2008 financial crisis cracked something open in American public policy. When millions of people signed mortgage contracts they didn’t understand, and the economy nearly collapsed as a result, policymakers and educators reached a shared conclusion: we need to teach people how money works.

What followed was a sustained push to get financial literacy into high school classrooms. I was a big player in that movement. I worked with policymakers, educators, and organizations to help advocate for improved financial literacy.

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Gen Z Is Betting on the Future — And the Math Might Be Right

What Happened

Gen Z now accounts for 34% of IRA contributions so far this year, according to Fidelity data, and the share of IRA owners under 30 has nearly doubled since 2016. These aren’t trust fund kids parking windfalls; this is a generation that watched their parents navigate the 2008 crash, deciding early that waiting isn’t a strategy.

This is a shift, and it is worth discussing. More on this in Friday's post to our paid subscribers.

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The Economics of Roth IRAs

A Roth IRA is a tax-timing trade: you pay taxes on contributions now in exchange for tax-free growth later. The bet is that your future tax rate will be higher than your current one, which usually pays off most for young, lower-income earners who are almost certainly near the bottom of their lifetime earnings curve.

The opportunity cost is real (that money can’t be easily accessed before retirement without penalties), but compound growth over a 40-year horizon makes early contributions disproportionately valuable.

If you are looking to invest in a Roth IRA, here is what you need to know for 2026:

The contribution limit is $7,500 if you are under 50, and $8,600 if you are 50 or older. The extra $1,100 is a catch-up contribution designed for people who started late. You can make the full contribution if your Modified Adjusted Gross Income is under $153,000 (single) or $242,000 (married filing jointly). Above those thresholds, your contribution limit phases out and disappears entirely at $168,000 (single) or $252,000 (joint).

Watch out for this:

It turns out that a common mistake is opening an IRA account and funding it but never investing the funds. The funds must be invested; otherwise, you are just parking your cash in an IRA account.

Oman Quietly Builds a Second Economy

What Happened

Oman closed 2025 with a budget deficit of roughly $1.2 billion. That is 26% lower than projected, thanks to oil prices running above the $60/barrel assumption the budget was built on. More interesting than the deficit number: the transport and storage sector contributed $2.3 billion to GDP, and the government has set a formal target for logistics to become the country’s second-largest economic sector by 2040.

The Economics of Strategic Development

This is economic diversification as deliberate industrial policy. Oman is using geographic advantage (Oman sits at the mouth of the Persian Gulf, outside the Strait of Hormuz) to build infrastructure that generates revenue independent of oil prices. Port investment and free trade zones create agglomeration effects: once the infrastructure exists, the activity clusters around it. The goal isn’t to move containers; it’s to make Oman a structural node in global supply chains so that when oil revenue falls, something else holds the economy up.

Alan Greenspan, 1926–2026

What Happened

Alan Greenspan, who served as Federal Reserve Chair from 1987 to 2006, died Sunday at 100. His tenure was the second-longest in Fed history, second to William McChesney Martin. His leadership of the Fed spanned some of the most consequential moments in modern economic life. He presided over the long expansion of the 1990s, responded to crises in real time, and left office three years before a financial crisis that critics argue his regulatory philosophy helped create.

Five moments that defined his tenure:

• Black Monday (1987) — In his second month on the job, the Dow dropped more than 22% in a single day. Greenspan moved immediately to inject liquidity into the financial system. It worked. That response established the template for every Fed crisis intervention that followed.

• The “irrational exuberance” speech (1996) — Greenspan warned publicly that asset prices might be dangerously disconnected from fundamentals. Markets barely blinked. The dot-com bubble kept inflating for four more years, and then it didn’t.

• The dot-com crash (2000–2001) — When the bubble burst, Greenspan cut rates aggressively. The recession was short. The lesson policymakers walked away with was that the Fed could manage the downside of any asset bubble. That would come back to haunt them later on.

• Post-9/11 rate cuts (2001) — Rates fell to historic lows following the attacks. Combined with financial deregulation, cheap money flowed into housing. The seeds of the next crisis were planted here, though few saw it at the time.

• The 2008 reckoning — Greenspan testified before Congress in October 2008 and admitted he had found a “flaw” in his ideology — the belief that financial institutions would self-regulate in their own self-interest. It was a rare public acknowledgment from a central banker that a worldview, not just a policy, had failed.

The Economic Mechanism

The “Greenspan put” — the expectation that the Fed would intervene to support markets during downturns — became one of the most consequential implicit policies in modern financial history. When market participants believe a safety net exists, they price risk differently. They take more of it. Whether that moral hazard contributed to the leverage that made 2008 so destructive is still debated, but the mechanism is clear: expectations about central bank behavior change everyone's behavior. Greenspan personified the argument that central bank credibility is itself a policy tool — and the corollary that it can cut both ways.

I keep coming back to Greenspan’s phrase: irrational exuberance. He said it in 1996, four years before the dot-com bubble burst. He saw something, mentioned it but never did anything about it.

I think we are in a similar moment. The excitement around AI has lifted markets for three years running. That is not inherently bad, but asset price inflation driven by a single technology thesis looks a lot like 1999. And the contagion risk reminds me less of the dot-com crash and more of 2008, when Wall Street’s exposure to mortgage-backed securities was supposed to remain contained to the people holding them. We learned the hard way that our financial system does not contain risk; it distributes it across the market.

Here is what concerns me most: the AI-driven market rally has deepened the K-shaped economy. The top of the wealth and income distribution is where the assets that have appreciated are held. They are also the reason this economy continues to grow. That is a fragile foundation. When the engine of growth is concentrated at the top, the correction, when it comes, does not stay there.

Greenspan found a flaw in his ideology in 2008. I hope we are not building the conditions for someone to say the same thing about ours.

It’s no secret I love teaching economics. What I love even more is watching it click for someone else. That exact second a concept moves from “I don’t get it” to “wait, that explains everything,” that’s what keeps me in education.

It’s also why I went all in on social media. Not as a marketing channel, but as a classroom that never closes, one that reaches undergraduates, graduate students, and business leaders trying to make sense of the economics they’re actually living through, not just the version they got in a textbook.

This week, those two things collide. Decode Econ became less of a podcast and more of an apprenticeship: my research assistants, and , sat across from me, and we talked through what they’d actually learned. The economics, about business, about figuring out how the two connect once you’re out of a classroom. At one point Claire put it simply:

I am learning economics through my work with Decode Econ.

That’s the whole episode in one sentence. That’s experiential learning, and it’s the whole reason I love this community.

Here’s what I’ll admit: I never built Decode Econ to be a teaching tool. I built it to reach people who’d never set foot in one of my classes, to translate economics for a public audience. The classroom was always separate. But watching Claire and Jonathan learn economics by actually doing the work — writing it, researching it, defending their take on it — I realized I’d built a better classroom than the one with a syllabus. Nobody assigned this. They learned it because the work was real and public.

I am a huge believer in the power of building in public.

If you’ve ever wondered what it looks like when teaching and content actually merge into one thing, this episode is it.

More on today’s episode below.

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Our listener, an educational mentor, and previous guest pushed our team in a comment on last week’s podcast:

Thank you for her advice. It is helping encourage my students to make their voice heard. In this week’s episode, you hear more from Claire, and Jack doesn’t hold back in sharing his views.

That is what I love about teaching and sharing publicly: we get more input from the audience.

Here is what we cover this week!

• 00:30 – Welcome Back to Decode Econ (Claire’s 2nd Episode)

• 02:54 – How Levi’s Turned a Logo Ban Into a Viral Moment

• 07:40 – FIFA’s Hydration Breaks: Player Safety or Ad Revenue?

• 10:05 – For-Profit vs. Nonprofit: Why FIFA Still Maximizes Profit

• 14:50 – Kevin Warsh’s First Fed Press Conference

19:25 – Claire on Learning Economics Before Forming Opinions

Show Correction

We mistakenly refer to Alan Greenspan as Alan Greenberg in this show. Here is more on both Alans.

• Alan Courtney "Ace" Greenberg (September 3, 1927 – July 25, 2014) was an American businessman who was an executive at The Bear Stearns Companies, Inc., serving as its CEO from 1978 to 1993 and Chairman of the Board from 1985 to 2001.
  

• Alan Greenspan (born March 6, 1926- June 22nd 2026) was an American economist who served as the 13th chairman of the Federal Reserve from 1987 to 2006. He worked as a private adviser and provided consulting for firms through his company, Greenspan Associates LLC.

Update: A version of this post went out before the news of Alan Greenspan’s passing. I learned a lot of my central banking philosophy from Greenspan. His line about “irrational exuberance” is etched in my memories. It is a phrase I use often in different contexts.

Irrational Exuberance

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Consider a map of a neighborhood, with a house marked just past the corner of an intersection, and a line leading from that house down the street, heading to the left for a bit, and then picking up a street that forks to the right before ending at its destination. Now, consider another neighborhood map with the exact same house as the starting point. This time, the line leads down the street, past that first intersection and across a busy city street, until it intersects with another busy street. It turns right and continues down another busy city street, moving farther away from the first neighborhood, until it turns left and ends at its destination, in a completely different neighborhood area.

These are simple maps, lines drawn between two points. But what if you knew that these two lines defined a person’s life decades before they were born?

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Meet Antowan Batts

Ah, now I have your attention. Allow me to introduce Antowan Batts, a thirty-something Black author who writes about the intersection of sociopolitical topics and economics.

The first map, the one where the line begins and ends in the same neighborhood, traces the distance from Antowan’s mother’s childhood home to the nearest elementary school, a distance of no more than one-third of a mile one way. The second is the distance his mother had to walk to the elementary school she was allowed to attend being, as Antowan describes, a “colored” child in the South. When he went to walk that same distance, a road closure forced him to walk another five blocks, making his one-way journey two and a half miles one way.

In history and daily life, we learn about the shadow of the past and can never fully conceptualize what those facts mean to us. Growing up, his mother tried to shield Antowan and his brother from the hardships that were byproducts of being treated like an ‘other’ in society, but she did make sure to teach them history.

Segregation With a Bureaucratic Costume

Segregation is oftentimes seen as a benign blip in the American historical record. Separate but equal was treated as an obvious wrong in hindsight, but one that wasn’t too bad… at least, until you educate yourself. Today, we’re going to examine the economic effects of segregation and how policy changes shifted the entire foundation of America.

Antowan grew up in Virginia, the same state that organized legal architecture to make sure children like his mother kept walking those two and half miles each way to school. This wasn’t passive resistance. This was a coordinated, government-backed campaign to strangle integration before it could breathe.

In 1956, Senator Harry F. Byrd Sr. called it Massive Resistance. The name was honest, at least. Virginia didn’t drag its feet, it built a machine. The Stanley Plan cut state funding to any school that moved to integrate. The logic was simple: if you comply with Brown v. Board, we will defund you into oblivion. The federal government said to integrate. Virginia said watch us.

When that wasn’t enough, they went further. Pupil Placement Boards were established across the state. Race neutral on paper. Designed entirely to deny Black students’ entry to white schools in practice. The board evaluated students on criteria vague enough to justify any outcome they needed. It was segregation with a bureaucratic costume on.

When They Chose to Close the Schools

And then, there was Prince Edward County. In 1959, rather than integrate its schools, Prince Edward County closed them. All of them. For five years. The county funneled money through tuition grants so white families could send their children to newly created private segregation academies. Black children received nothing. No schools. No grants. No alternatives. Just five years of their education erased. Some of those children never recovered academically. Some never returned to school at all.

Think about what that means. A government did not simply fail to provide equal education. It actively dismantled public education rather than share it. When the cost of integration is apparently worth destroying the institution itself, you have told on yourself completely. Separate but equal was never about equality. It was about separation.

Economically Suicidal

Now here is what makes the resistance even more damning in hindsight. It was economically suicidal. Gavin Wright’s Sharing the Prize makes the case with the kind of rigor that doesn’t leave much room for argument. Wright documents what happened to the Southern economy after integration took hold. The short version is that it grew. Significantly. Black workers who had been locked out of skilled labor markets, professional positions, and decent wages entered them. Consumer markets expanded because the people who had been deliberately kept poor now had more money to spend. Business activity increased. The South began its long convergence toward national economic norms, a convergence that had stalled for decades under the weight of the system it was so committed to protecting.

What Wright identifies is not simply that Black Americans benefited, though they did, substantially and measurably. The broader point is that the Southern economy as a whole moved upward. The white families whose elected officials burned down public schools were also living in a region that was economically stunted by those same choices. Segregation was not just a moral catastrophe. It was a costly one. The South paid in capital, in talent, in wages, in growth that never happened because an entire population was deliberately excluded from contributing and consuming at full capacity.

The Prize That Was Always There

Prince Edward County closed its schools for five years. Virginia built a legal apparatus to make sure integration failed. And the economic argument for doing so was always weak. Wright’s data makes it look weaker still. The prize was always there to be shared. The resistance was a choice to refuse it.

That is the piece of the history that rarely makes it into the popular account. Segregation is taught as a moral failure, which it was. It is taught as a legal failure, which it was. What gets less attention is that it was also a profound act of economic self-sabotage, sustained by ideology so deeply embedded that the people enforcing it were willing to absorb real costs to keep it in place.

This Wasn’t Long Ago

This may all seem like a world long ago. But that was Antowan’s mother, and he is only 32. These lines defined a great deal of his life long before he was.

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