The U.S. economy that just keeps on chugging
There's been a lot of worry about the U.S. economy for months, but things really haven’t fallen apart, at least not yet. We get a reality check on the state of the economy.
- Plus, why some states are banning Chinese homebuyers.
- And, more than a million people are being pushed off Medicaid rolls.
Guests: Axios' Han Chen, Neil Irwin, and Adriel Bettelheim.
Credits: Axios Today is produced by Niala Boodhoo, Alexandra Botti, Fonda Mwangi, Robin Linn and Alex Sugiura. Music is composed by Evan Viola. You can reach us at [email protected]. You can text questions, comments and story ideas to Niala as a text or voice memo to 202-918-4893.
NIALA BOODHOO: Good morning! Welcome to Axios Today! It’s Tuesday, June 13th. I’m Niala Boodhoo. Today on the show: more than a million people are pushed off Medicaid rolls. Plus, why some states are banning Chinese homebuyers. But first, the U.S. economy that just keeps on chugging. That’s…today’s One Big Thing.
The Timex economy keeps on ticking
NIALA: There's been a lot of worry around the U.S. economy for months, but things haven't really fallen apart…yet. Axios’ Neil Irwin is here to give us a reality check on how the economy is doing. Hi Neil.
NEIL IRWIN: Hi, Niala.
NIALA: Neil, since the start of this year, mortgage rates have more than doubled, some banks have failed, tech company evaluations have plunged. What's your temperature check though on the current state of our economy?
NEIL: Look, we've been talking about these recession fears, these risks that are looming out there for really a year and a half now, this really started in the beginning of 2022 and we're now almost halfway through 2023. And it just hasn't happened. This economy has been a freight train. It's just been chugging along at a steady pace. It's been, not the kind of collapse you have seen in a recession, not the kind of job market distress. And it is true that in certain parts of the economy there are real problems. It's true that major tech companies have been laying off tens of thousands of people. It's true that the housing market went through a really rough patch last year. None of this is to dismiss that. But ultimately this is kind of the Timex watch of, of economies. It takes a licking, it keeps on ticking. We keep seeing these bad things happen, and yet we cut out the other side with continued job growth, a continued very low unemployment rate.
NIALA: Are those the gauges you use when determining how the economy's doing? Because we hear a lot about the stock market, about fed policy, but you are right. That's not the economy.
NEIL: It's not, and jobs aren't the only thing. We also look at, you know, output and production measures and business surveys, all kinds of things across the economy. But if you look at those also you see overall GDP growth. You see overall income growth. You see a tight job market, and you see evidence that most of the economy outside some of these sectors having real problems are continuing to chug along reasonably well.
NIALA: We did see the unemployment rate tick up to 3.7% in May, but do you think that's something to be concerned about?
NEIL: No, you know, in fact that's actually historically a pretty low rate. it never got that low in the 1980s expansion, in the 1990s expansion, in the mid-2000 expansion. That's a really striking fact. We're lower even after this rebound in the unemployment rate last month. We're seeing a lower rate than we saw for a very long time. And we're seeing wage gains too. We're seeing job gains. Uh, we're seeing businesses report, you know, steady revenues, not a collapse in revenues. So, again, none of this is to say that there won't be a recession. There couldn't be a downturn in the future. What it is saying is that through 18 months of all these warning signs and, and scare stories, it hasn't happened yet.
NIALA: So is it fair to say we can feel good about how powerful the U.S. economy is right now?
NEIL: I mean, I think the question is whether it's too good, right? Can we get to a place where inflation really comes down in a durable way without having more economic pain than we've had so far? You know, we get some data this week saying, here's what inflation is in, in May. Is that gonna come down as the months progress, or will we need to see more pain out there for inflation to really calm down? That's the open question. That's what the Federal Reserve is debating this week, and that's what will determine what the economy looks like at the end of ‘23 and going into ‘24.
NIALA: Neil Irwin is Axios’ chief economic correspondent. Thanks, Neil.
NEIL: Thanks, Niala.
More than a million people are being pushed off Medicaid rolls
NIALA: More than a million people in 20 states have been removed from Medicaid rolls since April, because of the end of a pandemic-era policy, writes Axios senior healthcare editor Adriel Bettelheim. I asked him to catch us up quick.
ADRIEL BETTELHEIM: What we're seeing is the end of a policy created during the pandemic that ensured that low income people would have continuous coverage on Medicaid without having to reapply to the program or go through other bureaucratic hoop jumps. Now, states are unwinding that and they're re determining whether people actually qualify for this safety net program.
Some of those have found other health coverage arrangements like through work, or through the Affordable Care Act marketplaces, but many of them still qualify for Medicaid and don't know that they have to reapply or they don't complete the renewal packets in time, or the state has outdated contact information.
22 more states begin their disenrollment processes this month, and experts at KFF predict that when this is all over, as many as 17 million people may fall off Medicaid's roles that would nearly undo the coverage gains that Medicaid made between early 2020 and this March when the program grew by about 20 million people.
Some states have taken steps to promote continued coverage among those who remain eligible and have automated systems to process renewals. But there's really big variation in the disenrollment rate between states ranging from 12% in Nebraska to 73% in Idaho according to KFF.
NIALA: That’s Axios’ Adriel Bettelheim. Coming up: some states make it harder for Chinese citizens to buy U.S. homes.
States seek to bar Chinese citizens from buying homes
NIALA: Welcome back to Axios Today, I'm Niala Boodhoo. After a long lull, Chinese buyers are back to buying houses in the U.S. But several states are trying to restrict certain purchases, making it harder for Chinese citizens to become American homeowners. Axios’ Han Chen has been reporting on this. Hi Han.
HAN CHEN: Hi, Niala.
NIALA: So for many years, Chinese buyers accounted for a pretty big chunk of the residential real estate market. What's changed here?
HAN: So, Chinese citizens accounted for roughly 15% of the total number of foreign buyer purchases in 2015 to 2020. But the Chinese buyers actually dropped off in the last two years, 2021, 2022 – they only had 6%. And experts have been telling me that it's mostly because of the pandemic, and with that, the travel restrictions that the Chinese authorities have put in place. So we have super rich Chinese who are actually still snapping up these multimillion dollar properties. We also have a potentially much bigger number of Chinese middle class people who are buying in cheaper markets.
NIALA: And are they buying these properties as investments?
HAN: Seven out of 10 people wanted for their own use. That's compared to less than 20% in 2015. So you can see a huge jump there.
NIALA: As we said at the beginning, some states are now responding to this influx of Chinese ownership with bans. Why is that? And can you tell us about this legislation?
HAN: What really caught the most attention was the Florida Governor Ron DeSantis bill last month. He signed a bill into, uh, law last month, barring most Chinese people who are not U.S. citizens or green card holders from owning property altogether in the state. You cannot buy anywhere in the state, along with narrow restrictions for six other nationalities like Iran, Russia, or Cuba.
And so far, Florida's the only state that has singled out Chinese fires in this very broad scope. Montana, Texas, Alabama, Louisiana are also considering some other similar bills, but are much narrower in scope than Florida's law, which is basically targeting, um, singling out a single nationality here.
The Florida bills and the Texas bill, in particular, have faced a lot of backlash from local Chinese communities and legal experts who think that these laws are discriminatory and they think they echo xenophobic alien land laws of the 19th and 20th centuries. Those laws barred many Asian immigrants, particularly Chinese and Japanese, from owning land. And, and people are arguing that this is really kind of a history repeating itself.
NIALA: Han, is Florida's law legal?
HAN: I've talked to certain experts and they've told me that they mentioned two acts. First is the Fair Housing Act, the federal law that makes it illegal to discriminate home buyers based on their national origin.
And a group of Chinese citizens living in Florida have sued the state, arguing that the new law is unconstitutional because it violates their rights to equal protection, which is protected under the 14th Amendment.
So we're looking at the, uh, federal law. We're also looking at the constitution here.
NIALA: What else are you hearing about this law, especially from Chinese homeowners or potential Chinese homeowners that you spoke with?
HAN: So I was fortunate enough to talk to a 40-year-old Chinese citizen, um, who came from Northern China, and he actually bought, uh, multiple properties here in Orlando over the past decade. And he told me about something important. The law seems to be, um, targeting, you know, the Chinese CCP influence in, in Florida – basically the, the Communist Party's influence and people who are connected to the party. So he told me that, you know, a lot of people who are. trying to buy houses here in the U.S. are no longer your wealthy Chinese business people, or the governmental officials, but they're really your average Chinese, middle class people who wanted to have a better life, to breathe a cleaner air, you know, to have to, to raise family in a much better educational system to, you know, to really enjoy the political freedom they have here in the U.S. So I think that really hits home because, with a lot of these bills, they're really trying to target foreign adversaries. So they're targeting like the Chinese Communist Party. and its malign influence here in many places, uh, across the U.S.
But it seems like a lot of people who are here to buy houses aren't what the bills intended to target.
NIALA: Axios’ Han Chen. Thanks Han.
HAN: Thank you so much, Niala.
NIALA: That’s all we’ve got for you today! I’m Niala Boodhoo - thanks for listening - stay safe and we’ll see you back here tomorrow morning.