Episode 9: Kadee Russ on Supply Chain Bottlenecks and Inflation

From restaurants and grocery stores to construction companies and car manufacturers, the pandemic’s widespread effects on global supply chains have caused shortages, price hikes and layoffs. And with the holidays coming up, companies are warning people to shop early or risk not finding the gifts they want to buy.

The pandemic has exposed just how fragile these critical systems are — and they’re also vulnerable to other risks, including climate change, terrorist attacks and geopolitical rivalries.

In this episode of The Backdrop, Kadee Russ, professor of Economics at UC Davis, discusses how supply chains got backed-up, and how these critical systems that produce and deliver products to consumers can be made more resilient. Russ, a former Senior Economist for International Trade and Finance for the White House Council of Economic Advisors under President Obama, specializes in open-economy macroeconomics and international trade policy.

 

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Transcript

[00:00:00] Kadee Russ: Can we think about security of supply chains, not just domestically, but can we think about it within the broader realm of our alliances and countries that are not geostrategic rivals? [00:00:12][12.1]

[00:00:17] Soterios Johnson: From restaurants and grocery stores to construction companies and car manufacturers, the pandemic's widespread effects on global supply chains have caused shortages, price hikes and layoffs. And with the holidays coming up, companies are warning people to shop early or risk not finding the gifts they want to buy. The pandemic has exposed just how fragile these critical systems are, and they're also vulnerable to other risks, including climate change, terrorist attacks and geopolitical rivalries. How did we get here and what can we do to make supply chains more resilient? This is The Backdrop, a UC Davis podcast exploring the world of ideas. I'm Soterios Johnson. Kadee Russ is a professor of economics at UC Davis, a research associate at the National Bureau of Economic Research and a former senior economist for international trade and finance for the White House Council of Economic Advisers under President Obama. She specializes in open economy macroeconomics and international trade policy. Welcome to The Backdrop, Kadee. [00:01:13][55.4]

[00:01:14] Kadee Russ: Thank you, Soterios. I'm glad to be here. [00:01:16][2.0]

[00:01:17] Soterios Johnson: To get the lay of the land, would you give us a quick overview of what the supply chain is, kind of like the major elements from beginning to end? [00:01:25][7.7]

[00:01:26] Kadee Russ: Sure. The supply chain is basically the systems that are involved in supplying components to manufacturers and then final goods to end users. So you can think of the plants that are producing parts, the plants that they send them to, to assemble and put into final goods form and then whatever channels are used to actually sell those to the end users. And this, also in between those different points, includes a lot of transportation, distribution wholesalers, et cetera. [00:01:57][31.1]

[00:01:57] Soterios Johnson: Right. So everything from like container ships between countries to getting the products from like the port to distribution centers by truck or train and things like that? [00:02:07][9.2]

[00:02:07] Kadee Russ: Absolutely. And also air cargo. [00:02:09][1.9]

[00:02:10] Soterios Johnson: So there are so many interrelated parts. It seems like the pandemic caused almost kind of like a domino effect or a vicious circle like increase in demand, causing shortages and an inability to get parts causing layoffs and price hikes and layoffs putting stress on people and prompting governments to increase benefits, putting stress on budgets. It almost seems like it's so interrelated -- you know, companies not being able to get workers because of people fearing the virus. So how is all that coming together to get us where we are right now? [00:02:38][28.5]

[00:02:39] Kadee Russ: Yes. And you're so right to mention demand as a provocateur of some of these issues. So there was a huge and sudden increase in demand, a shift away from services during the pandemic and towards goods because we weren't able to congregate and meet in person at restaurants and theaters and so forth. And so we started purchasing more electronics, more goods to make our home cozier or more entertaining for our kids. All of these kinds of things to stay in touch with each other as well. So that shift in demand occurred toward goods and away from services, and that really changed things, started putting some strains on transport. And then after the reopening, you see a huge and sudden increase in demand for goods like cars that had fallen during the pandemic before the demand for those electronics, exercise equipment and other kinds of pandemic goods had faded. So there's really this double whammy in demand, and all of this is buoyed by a lot of cash flowing through U.S. consumer bank accounts from the federal government rescue packages. So you've got this kind of trifecta of, you know, demand shocks happening that all you know, we're demanding more and more goods right now. But like you said, there are also these supply issues. So we can unpack those as well. [00:04:03][83.6]

[00:04:03] Soterios Johnson: There have been many instances where people go to buy, you know, an appliance or to go buy a couch or something, and they just the stores can't produce the products they're out. They're put on waiting lists or on back order. So talk about that a little bit. [00:04:17][14.0]

[00:04:18] Kadee Russ: Absolutely. Well, Gallup had a really interesting poll recently. More than half of consumers, so roughly 60 percent of consumers have experienced an item that they wanted or needed not being present at the store. So empty-shelf issues. And then also delays in procuring an item. And then I think more than 80 percent of consumers had actually experienced price hikes as well. So these shortages are being accompanied by increases in prices. [00:04:50][31.9]

[00:04:51] Soterios Johnson: So all of this is kind of happened. I mean, the pandemic really, you know, brought this to bear in many ways -- where are we right now as far as getting things back to where we were before the pandemic? I mean, it looks like things have eased up since they've been, you know, really bad. So where are we now? [00:05:09][18.3]

[00:05:10] Kadee Russ: So so we see these increases in demand. So these demand shocks and then the shortages that we're seeing in places like the Gallup poll, those tell us that, OK, those those that increase in demand has not been met immediately anyway by commensurate increases in supply. And so we can look at what's happening on the supply side right now. And basically, the rest of the world has not had the opportunity for widespread vaccination like the U.S. has. And so what we're seeing are COVID-related closures in factories and ports in places like Asia that supply a lot of critical components or consumer goods to the United States. We also see that overseas shipping costs have risen and they've quintupled in many places. So along with this increase in demand, I mean, as you mentioned, you need the shipping containers to bring bring those goods over or you have to get airplanes and their cargo, their cargo bins to to bring them over. And so there's a huge backlog in goods needing to come over. And on the U.S. side, there was actually a huge backlog of empty shipping containers that piled up because so many goods were being requested to come over. And so, you know, they just kept shipping and shipping and shipping goods over and couldn't get the containers over fast enough. And so on the supply side, it's a really uncertain time for retailers or buyers in the United States because there's actually been a move to a bidding system for shipping services. So in the past, retailers might have a longstanding relationship with a shipping company. But right now, the market for shipping services, it's just become so cutthroat. I mean, everybody really wants to get their goods in. So, you know, it's it's not uncommon for someone to bid a little bit more and then, you know, take over that vessel space that you might have reserved. So it's almost impossible to get long-term contracts in many places to be assured that you're going to be able to get your goods on a particular ship. It's more of this auction type environment. And in addition, there are a lot of backups at major ports. So the time for ocean shipment of goods from China to the United States, it has doubled from 40 days to almost 80 days. And it takes more than a week for ships just to unload at the Los Angeles Harbor right now. So a lot of times they have to anchor and there's a backup of dozens of ships in the harbor just waiting to unload their goods, [00:07:51][161.5]

[00:07:52] Soterios Johnson: And that backup is caused by a labor shortage at the docks. Is that right? [00:07:55][3.2]

[00:07:56] Kadee Russ: Well, there are labor shortages everywhere, but at the same time, some of this is just there's more being demanded. So there's just more stuff coming, and it just takes longer to get it to get it all in. And then also the unloading, I mean, they have to unload the containers to someplace, right? So they have to unload it to trucks or to rail or something. And what we see is not just this, this backup, these these bottlenecks in international shipping, but we see them domestically. So there's a shortage of labor in the United States, putting pressure on that domestic distribution system [00:08:30][34.1]

[00:08:31] Soterios Johnson: Like truck drivers and things like that. [00:08:32][1.1]

[00:08:33] Kadee Russ: Exactly. We've got a shortage of truck drivers, shortage of trucks since we don't have drivers to drive them. And then the same type of uncertainty is afflicting trucking contracts now that I just described for the shipping vessels. So it's hard to arrange really far in advance. You know, you're you're trucking shipping just due to the increased likelihood of somebody outbidding your contract price at the last moment because they really want to move their own goods. [00:09:01][28.6]

[00:09:02] Soterios Johnson: So, you know, you're lucky if you can get a, you know, a shipping contract. The price, though, is going to be a lot higher to do it. And then you have to pass that on to the consumer. So, you know, if you can get something, it's probably going to be more expensive anyway. [00:09:14][11.6]

[00:09:14] Kadee Russ: You are right. So if we look at shipping prices, they have, you know, they've at least doubled. And I've seen a lot for, say, the ocean shipping quintupled. So it's the prices for shipping have really increased really quickly. [00:09:30][15.9]

[00:09:31] Soterios Johnson: Wow. It really sounds like a dire situation. I know the Biden administration has some plans on how to make U.S. supply chains more resilient. They just started working with ports to have them operate 24-7 to try to catch up with the backlog. Can you talk to us a little bit about what else they're proposing and what do you think of the plans? [00:09:48][17.4]

[00:09:49] Kadee Russ: Yeah. So just in terms of these immediate issues. So some people say that maybe there's been some consolidation in the shipping industry and that has maybe enabled large shipping companies to take advantage. A little bit of these, these bottlenecks, this increase in demand for shipping services and that that might be contributing to some of this real skyrocketing in the prices of shipping services and to some of the delays, I mean, actually right now, less than half of the shipments are coming through on-time, so there's a 40 percent chance that your vessel will come on-time now, if you're getting an overseas shipment. And in 2019, it was 80 percent. So the on-time rate has fallen quite a bit. And so there's a question as to, well, how much has the consolidation in the industry, the alliances across large carriers -- how much might that be contributing? Sort of like we end up with bottlenecks in our cable service, you know, because there's only one supplier in our area. So is that part of what's happening? So the Biden administration is taking some pains now to look into anti-competitive practices in the shipping industry, and they've also formed a new task force. So this summer, the president announced a task force to address the supply chain bottlenecks focusing on critical goods. We might think of critical goods as, say, COVID tests or something like that, construction and auto manufacturing in particular. [00:11:24][94.8]

[00:11:25] Soterios Johnson: So what exactly can they do? I mean, it almost seems like this issue, there are just so many moving parts. The COVID threat. There's the labor shortage. There's the supply increase. I mean, the demand increase. So how are they thinking they can help to solve or at least mitigate some of these issues? [00:11:43][18.0]

[00:11:44] Kadee Russ: Short term, it's going to be hard for the administration to do too much. I mean, they might be able to use the Defense Production Act if certain critical goods are in short supply as that, say, hospitals need or something along those lines. But most of this is going to be longer term, and this really fits in with their longer term agenda to evaluate supply chain vulnerabilities. This actually started under the Trump administration. They issued an interagency report in October 2018. It was issued by the Department of Defense, but they were the lead agency on this broad interagency effort. And the Biden administration has really been building on that, and they they've been looking at a little bit different set of industries, in particular semiconductors, rare earth minerals, pharmaceuticals and pharmaceutical ingredients say ingredients for drugs and then also large capacity batteries like those that are used in electric vehicles. So they have a specific set of supply chains. Now, semiconductors are among the goods that have been really heavily impacted by this confluence of factors that we just talked about during the pandemic. So even though that's been on the table since the Trump administration and perhaps before, this has really become acute during the pandemic due to closures of plants, natural disasters that had forced suspension of production like the freeze in Texas. So so there's this big shortage of semiconductors due to those supply things that really coincided badly with everybody's interest in buying new electronics and computers and exercise bikes. And all of those use semiconductors right? [00:13:28][104.0]

[00:13:29] Soterios Johnson: And the semiconductor shortage, you know, impacting the auto industry as well. So manufacturers really at a loss to find the parts they need. [00:13:37][8.5]

[00:13:37] Kadee Russ: Yes. Yeah. So this task force announced in the summer, I believe, will kind of step up these efforts that already were underway to figure out, OK, where are the vulnerabilities? How can we diversify our supply chains? How can we do that in a way that's consistent with national security and will make our supply chains more resilient for the next crisis that might come along? [00:13:58][20.9]

[00:13:59] Soterios Johnson: You know, you mentioned the global nature of the problem. I mean that, you know, a lot of other countries around the world are not nearly as vaccinated as we are here in the U.S. and you know, our economy has been globalized so much over the past few decades that it almost, it seems difficult to extricate ourselves from the rest of the world, I don't know if we want to do that. But it might seem like to stabilize our supply chains, it looks like there have been some ideas about trying to bring some of these industries back to the U.S. so that we don't have to depend on the rest of the world, whether for political reasons or for other reasons. Is this getting around these supply chain issues, does it mean that we may have to move away from from global free trade as much as you know as it has been these last few decades? [00:14:49][50.1]

[00:14:51] Kadee Russ: That's a big debate right now. I think a lot of people argue convincingly that, no, we can't go it alone. At the same time, you see in the administration's 100 day assessment -- so that was that was something that was going to happen, no, not necessarily related to the pandemic, but just something on the agenda when the Biden administration took office. So in that 100 day assessment there they were talking about investing in research and development and capacity building for semiconductors. They've already undertaken some capacity building in domestic mining of rare earth metals, which right now we're heavily dependent on China for a variety of rare earths. So they are actually looking towards some industrial policies in this respect. Industrial policies, what we call it when we start, you know, trying to influence how much might be produced domestically. But they're also trying to look outward, so they're trying to think, OK, well, can we think about security of supply chains, not just domestically, but can we think about it within the broader realm of our alliances and countries that are not geostrategic rivals? And so they're definitely reaching out to other countries like Europe, Canada, Japan, Mexico to try to see, you know, to what degree can we work together to make supply chains resilient without necessarily having to bring everything home? [00:16:23][92.0]

[00:16:23] Soterios Johnson: Right. So trade deals like NAFTA or the more recent iteration of that, they may start taking into account things like vaccinations and public health and, you know, cybersecurity, things like that, in order to make these systems more resilient. [00:16:38][14.9]

[00:16:39] Kadee Russ: So certainly, they're going to have to take cybersecurity into account. How they do that, when they'll do that, it is unclear. But with the increasing incidence of cyber attacks that have had severe impacts on supply chains, I mean, we saw the stoppages of fuel on the East Coast this year. So, you know, that has really certainly that has to come to the forefront in securing supply chains against shocks. [00:17:08][28.8]

[00:17:09] Soterios Johnson: Are there any other ideas that might be better or maybe should be added to what the White House wants to do as far as supply chains go? [00:17:17][8.4]

[00:17:18] Kadee Russ: So I think it's important to bear in mind when thinking about industrial policy. So starting to monkey around with, you know, what we produce in the U.S. versus what we're going to import and possibly using tariffs or these kinds of things. The supply chains ended up where they are right now for a reason. And the reason why is because, you know, this is how costs were lowest for companies to get the goods they need to produce and deliver stuff to U.S. firms and consumers. And so once we start intervening in that, once you start kind of building a culture of state intervention, costs can go up really quickly. It can squash innovation. It need not squash innovation, but it can. And it creates a lot of uncertainty for companies. So Chad Bown at the Peterson Institute has a fascinating overview of a COVID 19 vaccine supply chains, and you see that state intervention at times really made things uncertain for the company. So state intervention could be used to reduce uncertainty, like when we use the Defense Production Act to make sure that, say, Pfizer or Moderna had the inputs they needed to produce their vaccine doses. Or it could increase uncertainty, like when governments would intervene to redirect the supply of COVID doses away from customers that might have contracts with the company and toward other countries. This happened in India or the way that AstraZeneca was treated in the United States. There was state intervention there that really introduced a lot of uncertainty for those companies' sales. So I think we have to bear in mind, you know, just tread carefully because the the the degree of state intervention, I mean, certainly it can help resolve market failures or information problems and and all of these things and can be really positive. It can also make sure that, you know, our supply chains are protected against geo strategic rivalries for crucial goods or things like this. At the same time, it can introduce a lot of unnecessary increases in costs. It can squash innovation and entry. So we have to be very careful and be respectful of that. [00:19:41][143.4]

[00:19:42] Soterios Johnson: Mm-Hmm. You know, we talked about the rare earth minerals China has gone into Africa and really bought up rights to a lot of these mines where some of these minerals, that's the only place on Earth that we know of, that they exist and we need them for to make batteries and other things like that. So how can we work against those kind of risks and threats? [00:20:01][18.6]

[00:20:02] Kadee Russ: It's true China does even have a record of withholding those rare earths that it would normally export to Japan over geopolitical disputes. So, they are willing to play hardball with those. It makes a lot of sense and what the what the administration's been talking about and this is bipartisan. I mean, the Trump administration talked about this. The Biden administration is following through on this and also expanding their own plans to really support the supply of rare earths so that that doesn't become a big bottleneck in production. So, certainly there are some critical areas like that. A lot of people argue persuasively that maybe semiconductors is another area of primary national security concern and that that we need to to focus on that too. I think that's a little bit more debatable, but there is there are a lot of persuasive arguments that that it's a really a good thing that the Biden administration is addressing semiconductor supply as well. [00:21:02][59.8]

[00:21:02] Soterios Johnson: Right. So so what do you think the chances are any of these, you know, White House proposals will actually become reality. Is it something that the president can do on his own. Or do they need Congressional approval? [00:21:13][10.8]

[00:21:14] Kadee Russ: It will be a mixture of things. So they're -- if you look at the findings from the 100 day assessment. It's hard to pull out a lot of concrete policy implications for those or concrete policy proposals from those. There's just such a huge constellation of them in there that it's hard to sort of gather them into, you know, specific themes that you can imagine them running ahead on right away. But I do believe that that will be occurring. So the 100 day assessment that was released in June, that was released with a directive for different agencies to go ahead and start designing concrete plans to protect and support supply chain resilience in the United States and between the United States and its its allies. So I do think that we'll be seeing things soon over the next year, probably, you know, concrete policy proposals. [00:22:17][62.5]

[00:22:18] Soterios Johnson: And just to wrap up, what's your outlook on when things might get back to, well, at least closer to normal? [00:22:25][6.9]

[00:22:27] Kadee Russ: So it will take at least six months. Some people say it might take a couple of years, but I think six to 12 months right now is a pretty reasonable horizon to expect that there will be continued disruptions. Yeah, it'll it'll be around for definitely for the short term, possibly into the medium term. But this is a transitory issue. It's not a permanent issue. There may be additional shocks that pile onto this that make it more persistent. But this by itself, what we're seeing right now is not in itself a permanent shock. This is this is highly transitory and largely pandemic-induced [00:23:02][35.4]

[00:23:04] Soterios Johnson: And the pandemic, I guess the course of the pandemic, will affect that timeline. [00:23:09][4.8]

[00:23:09] Kadee Russ: Well, it certainly will if the vaccines are not made available to the rest of the world quickly. So that is going to influence how long we see factories shut down during lockdowns abroad. In Vietnam, some factories were trying to encourage workers to sleep in the factory so that they have less likelihood of going outside the factory and getting infected. I mean, that's they're still dealing with things like we were prior to the winter of this year, 2021. You know, they're still in that world because vaccines are just not widespread yet. So hopefully that is one supply chain issue that the U.S. really takes seriously and soon and fast and and very heavily with the full force of the US government is trying to get vaccines to the rest of the world because it's not just about foreigners, it's really about our own welfare as well. [00:24:06][56.3]

[00:24:07] Soterios Johnson: So getting back to price hikes, I mean, how how are all of these supply chain issues and problems factoring into inflation? I mean, prices seem to be going up. Will they stay up? People are worried about, you know, I went to the store and I had to pay twice as much for this item that I always get. And is that going to be the new reality from now on? [00:24:27][20.3]

[00:24:27] Kadee Russ: Sure. Well, on the supply side, certainly major manufacturers and retailers have said that they would have to pass on some of the increase in transport costs and inputs to consumers. Many countries have been afflicted by these supply chain issues. So we see that inflation is rising across many countries, including -- I mean, before the pandemic hit, advanced economies were having a really hard time hitting 2 percent inflation. So 2 percent inflation is a really common target for monetary policy authorities to use as kind of a baseline of where they think is kind of a healthy rate of inflation. And it was hard to get up to that 2 percent threshold. Now, it's it's not a problem, like they're getting past that, that 2 percent threshold. But what we can see is, you know, in the in the coinciding rise across countries, that gives us a sort of baseline to look at what might be driven by supply chain issues. And there's a professor at Harvard, Jason Furman, and he used to be the chair of the White House Council of Economic Advisers under President Obama. And he computed inflation in the U.S., Europe and Canada, all using a similar methodology so that you could compare them more easily. And if you look at his numbers, so the E.U. and Canadian, inflation is a little more than half of U.S. inflation, depending which measures you look at, it might look like less than half of U.S. inflation, but I like this because he tried to compute it with a more comparable methodology. And so that's really an upper bound for the role of supply chain issues. So suppose that we imagine that most of the inflation in the E.U. or Canada is driven by these supply chain issues. I don't actually think that's quite true because, you know, prices had fallen during the pandemic. So now they're rising, you know, just kind of back up to their normal levels and they're overshooting because of these supply chain issues, demand issues. But you know, it's really -- we expected inflation to be high for a little while because, you know, prices had fallen during the worst of the the slowdown. But if that's the case, then we could consider, you know, roughly half of the inflation that we're seeing now is an upper bound for what's driven by supply chain issues. I think it's probably less than that. I think it's probably more like a quarter of the inflation that we're seeing now is driven by supply chain issues, but that would be a very transitory component. So a very temporary component of inflation that we would expect to dissipate pretty quickly. [00:27:10][162.9]

[00:27:12] Soterios Johnson: So and when it comes to inflation, you know, the last several I want to say months, but probably close to a year, the Fed has been saying that this inflation is transitory. It will go away. What's your feeling on that right now? I mean, for somebody who went to the store and bought, say, a pound of cherries for, say, $4 a pound before the pandemic, when they go to the store now, maybe it's $6 a pound. Is that price rise? I guess there's there's a difference between inflation and price level. So like, is that is that going to stay at $6 a pound after the pandemic is over and after the supply chain issues are are fairfigured out? [00:27:49][37.5]

[00:27:50] Kadee Russ: Let me provide a little bit of perspective on how high prices are or are not right now on average. So if we look at the 24 month inflation measure, so the inflation measure, as you see in the news, like 5 percent, 8 percent over the last few months, and they're usually at an annualized rate. So that's, you know, if they were -- so we measure inflation monthly, but an annualized rate means OK, if that monthly rate happened for a year, then prices would rise by 5 percent or prices would rise by 8 percent. So we usually think about it at an annual rate. But if we actually compare prices now to what they were 24 months ago instead of 12 months ago, then what you see is an inflation rate of just over 3 percent. So, you know, it's higher than the 2 percent target, but it's still really, really moderate. And I think that gives us an idea that, OK, a lot of this is just rebounding from the slowdown. And then this extra bit, you know, over the 2 percent, OK, maybe that's some overheating. Maybe that's demand issues. Maybe that's sea supply chain issues. And so that's, that's going to be a problem for a while. So. So as you said, the Fed, the Fed chair, the chair of the Federal Reserve Board of Governors, Jay Powell. -- so his remarks have indicated that the Fed does expect this to moderate and dissipate in the pretty near future. And you know, so far, I'm not sure there's any reason to dispute that. [00:29:30][99.2]

[00:29:31] Soterios Johnson: So the expectation still is that once these supply chain issues are figured out, and once the pandemic kind of gets a little more under control, that prices will basically go back down to what they were, relatively speaking. [00:29:45][14.2]

[00:29:46] Kadee Russ: Yes, Now there is something on the horizon that could delay that happening. So there's another very large government spending bill on the table. And increased government spending will, of course, prolong these positive demand shocks. So if there's any kind of limit in capacity like we see in the shipping industry or we might see that in other industries, then you know, the only thing that can happen is that prices will rise until capacity expands or until the backlogs are worked out. So if there's another very large injection of government funds into the economy, then we might see the elevated inflation prolonged for for an extra year, say. [00:30:33][47.1]

[00:30:35] Soterios Johnson: Right. And you're talking about the big infrastructure package Congress is trying to pass and the social infrastructure bill. [00:30:40][5.7]

[00:30:41] Kadee Russ: Yes, we already see shortages in construction supplies. So, you know, adding an infrastructure package on that, of course, is going to going to increase demand for inputs into construction even more. Now, if they actually address, say, child care and so forth, I mean, this could possibly if it pours money into sectors that are facing labor shortages right now, it could alleviate some labor shortages if it ends up increasing wages for, say, child care workers or workers in other areas facing these shortages right now. But I haven't seen a lot of of discussion of that so far, so it's hard to say anything more than speculatively there. [00:31:22][41.5]

[00:31:23] Soterios Johnson: Wow. You know, these these economic issues, it just just shows you like just how much of a balancing act it is. I mean, it's a science, but it's also it almost seems like it's an art to you're kind of adjusting one thing and adjusting another thing to make up for it. So it's really quite complicated. [00:31:40][17.0]

[00:31:41] Kadee Russ: Absolutely. I mean, for an economist, our laboratory is the entire world economy. So we don't have controlled experiments very often, sometimes, but not often. [00:31:52][10.9]

[00:31:54] Soterios Johnson: Well, Katie, thanks so much. This has been really great! [00:31:55][1.4]

[00:31:56] Kadee Russ: Oh, thanks to you, Soterios. It's been a pleasure. [00:31:58][1.8]

[00:31:59] Soterios Johnson: Kadee Russ is Professor of Economics at UC Davis and former senior economist for International Trade and finance for the White House Council of Economic Advisers under President Obama. You can find out more about her work on our website, ucdavis.edu/podcast. And if you like The Backdrop, check out our other UC Davis podcast Unfold. It breaks down complicated problems and unfolds curiosity-driven research, like why songs get stuck in your head or what real-world engineering concepts you can learn from comic books. Join public radio veteran and host Amy Quinton and co-host Kat Kerlin for Unfold. Subscribe wherever you get your podcasts. I'm Soterios Johnson and this is The Backdrop a UC Davis podcast exploring the world of ideas. [00:31:59][0.0]

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