Home Sales Have Never Been Slower & No One Wants to be an Accountant

0:28This episode is brought to you by White Claw Surge. Good morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. On today's pod, the housing situation in the U.S. has not been this bleak since coming out of the 2008 global financial crisis. Then LinkedIn conducted another round of layoffs, which is always a little awkward if you then have to post about it on LinkedIn. It's Tuesday, October 17th. Let's try.

0:55okay i just want to apologize for our audio quality yesterday i know it wasn't the best and we sounded a bit like the voice on the subway announcing the next stop it was a tech issue that has been resolved so hopefully my exceptionally resonant voice is coming across crystal clear right now toby apparently it was at its worst when you were talking about taylor swift listen it happens i get excited okay but i also just want to give a shout out to our listeners you guys are low-key audio experts people were talking about bitrate and overdriven audio and turning down the gain i certainly learned a lot yesterday from you guys so shout out to you all for being on top of your game and ensuring that we are always on top of ours before we jump into the show today's episode is brought to you by yahoo finance neil i use yahoo for my fantasy football team, but yesterday as I went to type in Yahoo Fantasy Sports into my search bar, Yahoo Finance autofilled there instead.

1:50If that's not a sign of how much I use it, then I don't know what is. Okay, but how is your fantasy football team doing? Not great. Not great, which is why I'm sticking with Yahoo Finance going forwards. If your fantasy football team is already doomed like Toby's, check out the number one place on the internet for financial news and data instead. Head to finance.yahoo.com to learn more, or download the Yahoo Finance mobile app to get it directly on your phone. Does it ever feel like you're a marketing professional just speaking into the void? But with LinkedIn ads, you can know you're reaching the right decision makers, a network of 130 million of them, in fact.

2:28You can even target buyers by job title, industry, company, seniority, skills, and did I say job title? See how you can avoid the void and reach the right buyers with LinkedIn ads. Spend$250 on your first campaign and get a free$250 credit for the next one. Get started at linkedin.com slash campaign. Terms and conditions apply. Let's start today's show with the housing market, which has officially entered its Ice Age era. New estimates from Redfin predict that 4.1 million existing homes will be sold in the U.S. this year, which would be the fewest number since 2011, which, if you might recall, was when we were recovering from the housing crisis and the population of the country was much smaller.

3:08And if this turns out to be a highball estimate and the number of home sales ends up lower than 4 million, it'd be the fewest since 1995. This is a deep freeze of historic proportions. And by now you know why no one is buying a home. Mortgage rates have climbed to their highest levels in 23 years as the Fed has jacked up interest rates. Combine that with elevated prices and you get the least affordable home buying environment since 1985. A record low 16 % of consumers surveyed by Fannie Mae said it was a good time to buy a home in September. An activity is not likely going to be picking up anytime soon since the fall and winter are typically the slowest seasons for home buying.

3:48No one wants to move during the school year and you probably have allocated your disposable income to buying gifts for the holidays. So the reality right now is even if you make a solid middle class income, even middle to upper class, you're probably thinking to yourself, I just can't afford this right now. I'm sticking with what I've got. You have to be remarkably committed in order to buy a house and remarkably wealthy to buy a house right now. And it's kind of crazy to see houses are getting marked down right now. Almost 18 % of homes listed in September had price reductions, which is something you just don't see.

4:20And it's the highest level since November of 2022. But affordability is still a massive, massive problem because most of the homeowners who purchased during that kind of golden age when mortgage rates were low are unwilling to move. So not only is the new supply of homes a little low, but the existing supply of people selling their homes is also extremely low. So right now, big affordability crunch, and we're seeing some price knockdowns as well. There's also – I want to talk about the economic ripple effects because we know in 2008 the housing bubble pop caused a global recession. And while that hasn't happened now because it has been kind of a slowdown rather than a cratering, there are a lot of economic implications here.

5:01First of all, inflation. If you're not buying a home, you're renting. And I think a couple days ago, we talked about the inflation report and you mentioned how rents were half of all inflation last month. So that is it is impacting inflation and maybe even forcing the Fed to hike interest rates even more. And then you could also impede economic growth by hurting the sectors that count on people buying homes, moving, construction, the home depots of the world. There are so many economic sectors and industries that rely on people buying homes. And if they're not doing that now, it could definitely ripple through the economy.

5:37Yeah, you'd never want the words deep freeze to be applied to any part of the economy. But also just digging deeper into the buying versus renting kind of debate. Just using one city, let's go to California's San Jose metro area. The typical home costs$1.4 million. So if a buyer puts 10 % down and faces a monthly mortgage rate of around 7%, that comes out to an$8 ,771 per month payment, which is more than$5 ,000 higher than the monthly rent. So again, if you're weighing the pros and cons of renting versus buying, obviously buying, it helps build your net worth, and it's a major asset. But then if it's$5 ,000 more expensive per month, then you can see why rents, more people are renting and which is driving rental prices higher as well.

6:23I saw this firsthand at the sweating I was at on Sunday. I had a lot of conversations with people, you know, mid-30s, mid-20s, 25 to 35 range. They were all renting and they're all looking to buy a house. You know, they're starting families, want to move to the suburbs. And I would say four out of five of those conversations involved, I have to stay where I'm at. I just need to continue renting in the city because I'm looking for houses for the last couple months. And it's just absurd. They're like, I make a decent living. I work hard. And I just can't afford a house right now. So it's just very real for people who are looking for houses where they just can't do it right now.

6:57To quote Olivia Rodrigo, it's brutal out here. All right, let's move on to our next story. In a cruel twist, LinkedIn, a platform meant to help people get jobs, is conducting a round of layoffs. Yesterday, it announced it is cutting 668 employees, with the majority of those coming from the R &D department. As ironic as it is whenever LinkedIn makes job cuts, it's not the first announcement of the year. It also laid off 716 people five months ago as it phased its app out of China, bringing the total number of job cuts to 1 ,384. Now, as you might expect, AI has something to do with this. These latest cuts are a chance to refocus on hiring more AI talent as LinkedIn leans into rolling out the new AI-powered tools it announced earlier this month, like a LinkedIn learning coach.

7:45Neil, I feel like this is also a perfect moment to zoom out and take stock of the broader tech sector, which has seen more than 242 ,000 people laid off so far in 2023. It's interesting to see that number be so large, especially as the overall unemployment rate has remained relatively low and the job market has stayed high. This does seem like more of a reorientation than a slimming down because LinkedIn is owned by Microsoft. Microsoft has invested$13 billion into OpenAI, and it wants to infuse generative AI into all of its products. LinkedIn seems like a great place to start. I hate filling out my LinkedIn profile.

8:20I think my LinkedIn was last updated in 2015. I don't even know if it has Morning Brew on it. I probably should get that on it. But if it could write my profile, I would love that, and that's one of the AI tools it's rolling out. recruiters have used automation and AI for a couple years now. So I can see LinkedIn being very fertile ground for a lot of AI use cases to just make this process of recruiting and hiring go so much smoother and more efficient. Yeah, let's just dig into a couple of the tools and their ideas around AI. You have the AI-assisted candidate discovery for recruiters, as you mentioned.

8:55And then there's also AI-powered coaching for some of LinkedIn's premium subscribers. That one I'm not too bullish on. And then there's the tool for generating profile and job descriptions. We've talked a lot about dating profiles. Yeah, it do remind me of that. It does seem like we'll see a similar technology for LinkedIn. And then there's also AI-powered conversation starters, which I am so not bullish about because anyone who's spent any time on LinkedIn has definitely seen those auto – they're already automated like inbound messaging from someone who can – Oh, yeah. That's so spammy. It's so spammy.

9:24And now I feel like with AI, it's going to just 10x. So I hope they're putting some safeguards in place. So all of this to say that, of course, LinkedIn is kind of reorienting and reallocating resources towards AI. But we'll see if these micro bets that they're making pay off. Meanwhile, LinkedIn is doing really well, right? Revenue has grown so much. It just surpassed$15 billion for the first time in the last fiscal year. Compare that to other social media companies. It's so much more. Twitter, we know, whatever. Twitter generated$4.4 billion in revenue in 2022. It's just so much better a business than Twitter.

10:00And TikTok generated$9.4 billion of revenue in 2022. So LinkedIn is this behemoth. It's one of the oldest social media platforms. It's been around since 2002. And you just kind of get a sense that its best days are still ahead of it once they work out some kinks. Maybe do some, you know, make the interface a little more pleasing and you want to be into it. But it does seem like a lot of creators, and I know you're more in this space than I am, are kind of moving to LinkedIn. because your reach is greater than it is on Twitter and other social media platforms. And especially for executives, they can really reach their audience and build their brands on LinkedIn more so than any other platform.

10:38Yeah, there's a content gulf. A lot more people consume content than produce content on LinkedIn. So there's an asymmetric upside to devoting time and resources to creating. There's a little social media strategy for you. LinkedIn, fertile ground. Toby is pretty bullish on posting on LinkedIn. But I don't see you posting on LinkedIn, I gotta say. I know, I gotta. Okay, moving on. A lot has been written about the decline of the humanities, how degrees like history and English and philosophy are on extinction watch. Well, there's another college major that's seen a major drop in students too, and it might surprise some listeners.

11:10That degree is accounting. The number of students that earned a bachelor's degree in accounting plunged 7.8 % from the 2021 to the 2022 academic year, while the number of students receiving a master's degree in accounting fell 6.4%. Collectively, they represent the single largest annual drop in accounting degrees since 1995. And this is not what the industry needed since there is already a dire shortage of accountants. From 2019 to 2021, more than 300 ,000 accountants quit their jobs for other careers, citing low pay, long hours, repetitive work, and the threat of being replaced by AI. Hi. Toby, accounting was super popular coming out of the recession since firms like KPMG, Ernst & Young offered job security, solid income, and stability.

11:58Now it's facing a bit of a reckoning. Yeah. I mean, when you look at the major complaints, pay has stagnated. The average starting salary for recent grads is$56 ,000. That number hasn't moved at all since 2008 when you adjust for inflation. So whenever there's low pay, of course, you're going to have trouble attracting jobs, but also requires more education. you have to do that extra fifth year. Sometimes those costs are prohibitive as well. And then also outsourcing, not just AI, but outsourcing is becoming more common. So you have places like Malaysia, Argentina, China, India, Mexico, while Deloitte's U.S.

12:31business actually employs as many people outside the U.S. as it does overseas. So you're seeing kind of this disbursement of talent, which is driving the average starting salary down as well. So it's, I mean, I don't know if we're going to put it on an extinction watch because we always need accounting, But it's a major problem right now. They do need to – it seems like these firms do need to boost pay. I didn't know accounting income was at that level. And it didn't grow. And so if you're a business-minded person, you're looking at all of the possible suite of opportunities in management or sales or any sort of those professional services.

13:06And you're looking at accounting and you're probably like, and I have to get 150 hours of college credit just to become a CPA. So you can see why a lot of students are maybe opting for other roles in more techie things. And they're also looking at what's happening in AI. And you see that accountants complain about doing a lot of repetitive tasks. And that seems like something that AI could possibly do. This also reminded me a little bit. Remember when we talked about how no one's taking petroleum engineering jobs anymore? And that was because a lot of students are looking forward and saying, all right, the world is moving towards green energy.

13:42I don't know if there's a future in this field. I wonder if they're feeling the same vibe of they're looking at accounting. They're seeing the outsourcing that's occurring. They're seeing how AI could potentially offload some of the work. And they're saying there's just not a great future for growth in this industry. So I wonder if we're going to eventually enter a world where it's all outsourced and it's all AI and there's just very little actual accounting happening domestically. I don't know. I mean, I don't know enough about the industry to say, like, how much is automatable or not. But I feel like not all of it will be.

14:11And there will always be demand for accountants. They just have to get the branding a little bit better. So you see a lot of these colleges changing the course descriptions for accounting courses. And instead of, you know, starting with debits and credits, they're talking about blockchain and crypto and titling their courses. Is your personal data safe to just talk about more of the applications of accounting rather than the nuts and bolts of it? And maybe that will get more students in their pipeline. And it does seem like next year, the number of students in accounting has picked up a little bit.

14:43So you're right. I don't think this is an extinction watch. But it is an interesting trend to see how many people have left the profession and the pipeline has been drying up. I know, Neil, we could talk about accounting for the rest of the show, it sounds like. But before we jump into the next half of the show, we're going to take a quick break.

15:03Tonight on NBC, Jimmy Fallon and Bozema St. John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On brand with Jimmy Fallon. Series premiere tonight on NBC.

15:36When did making plans get this complicated? It's time to streamline with WhatsApp. The secure messaging app that brings the whole group together. Use polls to settle dinner plans. Send event invites and pin messages so no one forgets mom's 60th. And never miss a meme or milestone. All protected with end-to-end encryption. It's time for WhatsApp. message privately with everyone learn more at whatsapp.com it's tuesday which means it's time for toby's trends where i a young gen z are full of riz educate you a suave millennial about a recent trend i've had my eye on and today's trend is one that i'm sure many of our listeners have encountered over the years and that is get ready with me get ready with me or hashtag grwm videos have become an absolute mainstay of internet culture dating all the way back to the mid-2000s.

16:31It features someone, usually an influencer, showcasing some part of their daily routine, often centered around getting dressed or putting on makeup. It gives a look into what products and practices an influencer is using, but it also gives that person a backdrop to share stories from their lives and really lean into the authenticity wave that is sweeping social media right now. Now again, this is not a new trend by any stretch, but it's evolved a little bit over time from primarily being a way to peek into celebrity skin and makeup habits to being a place for a new generation of influencers to relate to their audiences in a much more authentic way.

17:06It's been interesting to track it as the internet has grown and into the TikTok era as well. Neil, tell me, have you seen these Get Ready With Me videos? I have. They're not ones I typically linger on, I have to say, but it's been interesting watching the trend. Has there been any change? You said it's evolved over the time from its Instagram days in the early days to what it is now. But even in the past few years, have you seen it evolve from 2021, TikTok, to 2023? Well, absolutely. But I do just want to go back to kind of the beginning of the trend a little bit. Part of the reason we're talking about it right now is because Emily Weiss, who is the founder of Glossier, who probably invented the genre.

17:44know she used to have this section of the into the gloss blog that was called the top shelf which popularized and i can't believe i'm gonna say this the hashtag shelfy which is where celebrities kind of opened up their makeup cabinets and explain the routines for the first time but now that was all the way back when instagram right around when instagram was founded like the 2010 era but now you look in the alex earl area of the uh get ready with me trend and she just basically turned it into almost like an open venting session a therapy session where she is getting ready and is like looking fabulous but also sharing these really personal and intimate details from her life and it's just been interesting to see how it used to be something that for the normal person to look into celebrities and now it's normal people kind of behaving like celebrities and just talking about their the mundanities of their life and it's just be hit a nerve with people in the authentic tiktok era and the beauty brands are probably salivating because this does seem like there's a lot of synergy and it's probably been propelled by a lot of brand deals and the fact that a lot of makeup companies are saying, get ready with my products.

18:50Yeah, absolutely. And Glossier is kind of struggling a little bit because they kind of popularize that way. But now there's so much compositions from the Kylie Jenners of the world, these influencer-tied makeup brands. So you're totally right on that. Makeup brands are an integral part of this as well. Toby, you're so articulate about get ready with me in makeup. I want to make one. Let's do one. Mine is not very exciting. What is your get ready with me? It's make my bed, wash my face with just water, get in the Uber and go to work. So that's about it. No confessionals? No confessionals. Okay, moving on.

19:20We've heard for years about the promise of robots making your fast food, flipping burgers, making salads, frying up french fries. But recently, at some chains, there's been serious momentum. And I don't think I'm wrong in saying that by early next year, at least some of our listeners will have their order, at least in part prepared by a machine. The push is being led by the fast casual chain Sweetgreen, which deployed an automated assembly line in Naperville, Illinois in May. These bots can prepare up to 100 salads in 15 minutes, less than half the time than humans require, and with greater accuracy, too.

19:53No more opening up your kale season wondering where your roasted chicken is. In an interview with The Wall Street Journal, Sweetgreen CEO Jonathan Neiman said while other companies have tiptoed around investing in robots for food prep, his push is not a gimmick. He said, I'm willing to blow the whole thing up. So at some point, he expects all sweet green locations to have salad making robots. There are numerous pressures driving this automation push. One is the historically tight margins restaurants have dealt with. So they're always looking for ways to reduce costs. Another factor is the rise of online ordering.

20:26If you go into any fast casual chain, you realize they are essentially operating two restaurants in one. They have to serve the people who come in physically and fulfill orders that come in digitally. and their current operations aren't built for that and they hope robots can fill in the gaps. Yeah, I don't know if I'm blown away by this kind of sweet green push that we're doing because it's going to be so expensive to outfit all these restaurants with these new robotic systems. And I don't think that's the reason you go to sweet green is for the absolutely optimized experience where they're getting you through the line as quickly as possible.

20:57I feel like you go to sweet green because they got superior ingredients. And part of the reason why it feels superior is like they're chopping the lettuce. Actually, I think that's chopped. But they're manually putting the ingredients together. It feels like this luxury experience. So I wonder if it's going to backfire in such a way when you just see the robots spitting out chicken. It just doesn't feel the same. Okay, but here's the thing. You said people going to Sweetgreen. But a lot of people aren't going to Sweetgreen. They're ordering online. You could care less how that salad gets to you or how it's made, whether it's through a tube or somebody's chopping the salad themselves.

21:29I don't think anyone cares if they're ordering online. They just want to see that bar where it says order to delivery. They just want to make sure that moves as fast as possible. Yeah. Okay, fine. Well, then the other thing I'm going to hang my hat on, it's going to be very expensive and hard to scale. So maybe that's what I'll say. And also I will say, I wonder how the technology is actually going to fare because one of the big roadblocks to having this technology work is there's so many soft ingredients involved in salads. The one that they specifically called out was goat cheese. because goat cheese you want crumbled on your salad.

22:00So how the heck do you make it come out of a tube? It's going to be in this big blobby ball. How do you crumble it? So I'm intrigued. Goat cheese crumbled already. Give me the block and I'll crumble it myself. I think that's a fake issue. Chipotle is the other fast casual chain that's really leaning into this. They have an automated avocado slicer, which is called the autocado. And they also have a robot that's making tortilla chips. And they're also moving forward with a more automated assembly line. The whole idea is to fulfill orders as fast as possible. We saw Starbucks launch one of their biggest reinventions ever earlier this fall, which because they're leaving, if they serve five more customers a day, they'll make$900 million more in revenue.

22:43So all they want to do is just get more people through the line. What's interesting to me is the labor concerns in all of this because fast food workers are typically not paid so well, and they're pushing for higher wages and better working conditions. and they don't have any say over what technology is implemented in the restaurants. And I just think back to the Hollywood strike, the Hollywood writers' strike and the actors' strike that is going on. Because they're organized, they're able to push for how technology like AI is implemented in their industry. And the writers were successful at putting safeguards around AI.

23:14Fast food workers that are not organized don't have any say in how this happened. So they're just watching from afar kind of helpless as Sweetgreen and other chains put in these robots. And these companies are saying that we're going to have robots and workers work together to make salads. Eventually, it doesn't seem like that's going to be the case because I don't think robots are going to be as expensive as people. Yeah. Maybe in the short term, worker pay will go up because there's less workers that have to be there on a day. But, I mean, I guess it's a little bit of speculation at this point.

23:46But it is so interesting to see how, I mean, I wouldn't call it AI, but automation is affecting industries from, yeah, Hollywood all the way down to fast food. All right, Neil, for our final story of the day, I want to talk about the new Olympic sports coming our way in 2028. Yesterday, the International Olympic Committee said hello or welcome back to baseball, softball, lacrosse, squash, cricket, and yes, flag football for the 2028 games in Los Angeles. Now, the first one I want to focus on here is the return of cricket. who had a very short-lived debut over 100 years ago, but is officially coming back much to the delight of the Olympic Committee.

24:23Cricket is massive, especially in India, so adding it to the games will no doubt increase the value of India's Olympic broadcasting rights. Some are saying by as much as$100 million. And following similar logic, the NFL backed the addition of flag football, which should give the games a big sponsorship boost as well as raise the profile of American football on the global stage. Neil, I love the idea of expanding into new markets and testing out new sports. Which one of these are you most excited for? I was most interested in reading about squash. I played squash a few times. It's really hard. It's an amazing workout.