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- [00:01]
Kai Ryssdal
On the program today, the economic news you might have missed, given you know everything from American public media. This is Marketplace in Los Angeles. I'm Kai Rysdal. It is Friday today. This one is the 15th of November. Good as always to have you along, everybody. The headlines are all politics, all the time. Yes, sure, fine. But there is, nonetheless economic news aplenty, which is why we are here. Amara Mokwe is at Bloomberg. Rachel Siegel is at the Washington Post. Hey, you two.
- [00:46]
Rachel Siegel
Hi, Kai.
- [00:47]
Kai Ryssdal
Kai So, Amara, let me start with you. And it will be, let's see, Yes, I will go with inflation. First of all, CPI came out this week 2.6% year over year, obviously just above where the Fed wants it to be. But the question is, does it seem to you like disinflation, that is a reduction in the rate of inflation seems to be stalling out? It seems to be sort of leveling off?
- [01:11]
Amara Mokwe
Yeah, I think people would have liked to see a little bit more progress in the recent inflation numbers. We've got CPI and PPI this week, and I think you saw Fed officials kind of acknowledging that. We had a chorus of Fed officials speaking this week, and you heard a lot of them talking about this need to cut rates gradually, carefully, kind of, you know, Chair Powell said yesterday that, you know, the committee is not in any kind of hurry to cut rates. And I think that just reflects the fact that, you know, they feel like they have inflation more, more work to do on inflation. And also there's a lot of consideration about sort of uncertainty around this, this idea of the neutral rate and how far the Fed has to, to cut to get there. And Chair Powell and others have said they kind of don't know where the neutral rate is. So that that sort of injects some uncertainty into what the path of policy might look like going forward.
- [02:04]
Kai Ryssdal
Since you said the words neutral rate, explain in something less than 20 seconds what the neutral rate is.
- [02:09]
Amara Mokwe
I think I can do it. So the neutral rate is a Fed policy stance that neither sort of promotes economic growth or inhibits it. And right now, Fed officials feel like their policy rate is above that neutral stance. So it's having a restraining effect on the economy. And because we've made progress on bringing inflation down to their 2% target, they don't feel like they need to be in this restrictive stance, which is why they're cutting rates. But they also don't want to cut too much and risk reigniting inflation inflationary pressures. And so since there's some uncertainty around where the neutral rate is, some of them believe that it's probably higher now than it was pre pandemic. There's uncertainty about how much they need to cut and how fast they kind of need to go.
- [02:50]
Kai Ryssdal
And if the neutral rate is indeed higher, Rachel, it suggests that whatever the Fed is doing now is not restraining the economy as much as they might have thought. Let me ask you this, though, Rachel Siegel. Powell said yesterday to Catherine Pell, one of our Friday regulars here, as we all know, and your colleague at the Washington Post, he said, look, we know what the factors are that are, that are inhibiting inflation from coming down even more than where we want it to be, right? Housing, insurance. And so really, Powell basically said, look, we just got to sit on our hands a little bit here. Right?
- [03:20]
Amara Mokwe
Yeah.
- [03:21]
Rachel Siegel
And in some ways that is a familiar message that we're used to hearing from. Right. Like he's actually quite, he's quite committed to this idea of leaving lots of options open, not, you know, prescribing what they're going to do in the next meeting or the meeting after that. Just in the last couple of months, we've seen them shift quite, you know, dramatically, relatively speaking, from needing to cut a lot to saying that they can slow down a little bit. They have a lot of uncertainty flying their way, especially with this new election, with so much unknown about Trump's incoming policies that, you know, even as they're trying to figure out what that final destination of neutral is, there's a lot that they're juggling in the meantime that is going to make him very unlikely to commit to something really firm.
- [04:01]
Kai Ryssdal
So, all right, so Mara, let's, let's talk about the new administration, the new old administration. And one of the things we can be reasonably sure that is going to happen is that there be tariffs put into place in this economy, varying percentages and varying applications. Katherine Rampel did, though, ask Chair Powell yesterday about his tariff actions on 2000 in 2018 when Powell said, listen, this is going to have a really big impact versus now when he's asked. Powell has said, yeah, we don't quite know. We gotta wait and see. I wonder what that's all about.
- [04:31]
Amara Mokwe
Yeah, I mean, I think first, I think Powell doesn't want to wade too far into into politics, right. So he's saying, look, we're going to, we're going to wait until we have more clarity on what the policies are before we talk about how it might influence our policy decisions. But I think also the inflation picture now is just quite different than it was during the first Trump administration. So back in the first Trump administration, you know, we had had low inflation for, for a long time. And the concern back then was actually that inflation was sort of consistently undershooting the Fed's 2% target. And now we've had, you know, recent years where inflation. The Fed is still trying to get inflation down to its 2% target. So I think Al is just acknowledging that we're just like in a fundamentally different world when it comes to inflation. And I think a big part of their inflation fight is inflation expectations. And those have changed a lot, too, because we did go through this inflationary period. Whereas back in the first Trump administration, Americans weren't thinking a lot about inflation. Now they are. Now they do. And so the question of keeping people's inflation expectations anchored and making sure that people believe that the Fed can get inflation under control, all of that is much more relevant now than it was back, back then.
- [05:38]
Kai Ryssdal
Inflation expectations aside, Rachel, we saw again today that the American consumer continues to do their bit in this economy. Retail sales up way more than anybody expected. One does have to wonder, and I know I've said this, like, for the last umpteen freaking months or years.
- [05:54]
Rachel Siegel
Say it again.
- [05:55]
Kai Ryssdal
How long can the consumers last? I. It just, it continues to astound me.
- [05:59]
Rachel Siegel
No, it's incredible. And it's also incredible that you can have these continued strong metrics that are still set against the way people feel about the economy. I mean, we saw the election, I think, as a real, one of the strongest markers yet of real discontent around the ongoing lingering effects of inflation. People feeling that their pocketbooks weren't going very far, even though, as you just said, they're continuing to spend. We're going into the holidays. It's expected to be another strong season. I think this is just still part of this constellation that we've been talking about for a long time of things that seem like they could be at odds with each other, but clearly are not in a way that continues to challenge policymakers understanding of where the economy is headed even without big shocks or these big policy changes that, you know, they're going to know they have to steer through anyway. It's just amazing that the picture doesn't really seem to get all that much clearer even as the months tick by. And, you know, the economy still continues to forge.
- [06:54]
Kai Ryssdal
But, but, Rachel, why we're now. Well, post pandemic, but the things that are happening, people keep going. Yeah, it's just weird out there, man.
- [07:03]
Rachel Siegel
It is weird out there. And, you know, if I had an answer, maybe I would be in line for Nobel Prize. And instead I want to put the question right back to you because I think it's one that continues to stump even people like Powell. Right. I mean, and I don't think that you would hear top policymakers say that they're even assured that it will, you know, absolutely always continue this way. So I don't know that it is so weird out there and possibly only going to get weirder, but the data that you have in any given moment that you can make a decision, it.
- [07:31]
Kai Ryssdal
Is kind of amazing. Rachel Siegel at the Washington Post, Amera Mokwe at Bloomberg on this Friday. Finally. Thanks you two have a nice weekend.
- [07:39]
Amara Mokwe
Thanks, Kai.
- [07:40]
Kai Ryssdal
Wall street today, the post election bounce gang seems to be over. We will have the details when we do the number. All right, a teeny little bit more now on retail sales, specifically what the Census Bureau calls non store retailers, which is a very not online term for online shopping. We spent 7% more on non store retail last month. That's compared to a year ago and it is the biggest year on year jump of any of the spending categories that the Census Bureau tracks. Marketplace's Matt Levin breaks down what's been happening of late in the e commerce economy.
- [08:44]
Matt Levin
Olivia Johnson noticed a new aesthetic on Dick's Sporting Goods website when she was recently doing some online shopping for a pair of Air Jordans.
- [08:53]
Chandra Turner
I think it was like green streamers on there with red ornaments.
- [08:59]
Matt Levin
Johnson researches retail and consumer science at the University of Houston. She says for online retail, the all important holiday season now basically starts October 1st. That's partly because putting a Santa gif on your website is a lot easier than finding an employee willing to let 5 year olds tug on their fake beard all day, not to mention clearing the showroom for that tree and chair.
- [09:22]
Chandra Turner
In stores, you have to set the store right. You have to tell a story with your merchandising, but you have the ability in these online spaces to start that holiday shopping earlier.
- [09:34]
Matt Levin
Plus, online retailers have all kinds of personalized data to target holiday early birds. Hey, we notice you're one of those bizarre people who bought an Advent calendar before Halloween last year. You want another one? Declan Gargan at S and P Global Ratings says many retailers doubled down on online promotions in October as a way to grab attention this fall. Those commercials enticing you to come to the store had competition.
- [10:00]
Rachel Siegel
A lot of that kind of advertising.
- [10:02]
Kai Ryssdal
Gets crowded out by a lot of the political advertising. So we're just seeing retailers do what.
- [10:09]
Matt Levin
They can to the signal value and for inflation weary consumers, it's often easier to bargain hunt online. Gregory Dacko is an economist with ey. In a high priced environment where consumers have more financial difficulties, they're going to want to compare different prices for similar goods. And doing that online is of course much easier. Although no matter how cheap they might be or jolly the advertisements, some of us are just not going to buy holiday gifts before November. I'm Matt Levin for Marketplace.
- [11:08]
Kai Ryssdal
Your mileage may vary on this one, but consumers generally don't seem to be enjoying themselves as they go about their banking. A report from Forrester Research not too long ago showed bank customers opinions of the banking customer experience have been declining for three years in a row now. And that's got a lot to do. It turns out, with the kinds of technology that banking is all about today, some banks make it really easy to transfer money or pay off a credit card. Others very much not so much. The report from Forrester also found customers opinions of their banking experience is going to keep on declining if banks don't invest in upgraded technology. As Marketplace's Justin Ho reports, small banks in particular see those upgrades as something of a business imperative.
- [11:55]
Ryan Hildebrand
Over the last year, a community bank in New Canaan, Connecticut called Bankwell set itself the goal of making more loans to small businesses. But Ryan Hildebrand, the bank's chief innovation officer, says the loan approval process was taking way too much time.
- [12:09]
Matt Levin
We would have to have a conversation with them, you know, trade emails, texts, phone calls, visits in person, and then be able to pull together a paper application to be able to say if a business can be loaned to or not.
- [12:22]
Ryan Hildebrand
So last spring, the bank started partnering with a tech company to speed up its loan application process by using artificial intelligence. Now, after an applicant enters a few details on the bank's website, we connect.
- [12:34]
Matt Levin
To their bank account. We are able to understand what their tax returns look like, what industry they're in to be able to make a quick, high level pre qualification decision.
- [12:43]
Ryan Hildebrand
As a result, Hildebrand says the bank achieved its goal. It's been making more loans because the whole process is just smoother. David Schiff with FTI Consulting says AI tools can also help banks price their loans more competitively so they can turn applicants into actual borrowers to make sure.
- [13:00]
Matt Levin
That you get all the way through underwriting and through close with customers. Because the rate doesn't feel too high, they're not shopping it around as much.
- [13:07]
Ryan Hildebrand
Schiff says small banks are starting to use AI in a bunch of other ways too. Deposits loan collection but so are big banks Christian Roop, chief innovation officer at Colony Bank, a community lender based in Georgia, says his big national competitors have invested a lot in customer service technology.
- [13:24]
Matt Levin
And it's only going to continue to become easier for them because technology is making customer service easier.
- [13:30]
Ryan Hildebrand
Roop says that's making it harder for him and other smaller lenders to compete. That's because they have traditionally relied on personal relationships to bring in clients. The idea that a community banker will pick up the phone when a customer calls, or that it might lend to a local business with unique needs. But Roope says as better technology has helped big banks get better at serving customers, those small bank advantages have started to wane more and more.
- [13:55]
Matt Levin
You're hearing from customers, look, we really.
- [13:57]
Ryan Hildebrand
Want to work with you guys, but.
- [13:58]
Matt Levin
Just so you know, it is really hard for us to do what we.
- [14:02]
Ryan Hildebrand
Need to do when your app won't let us do xyz. That means that many smaller banks feel like they don't have a choice but to upgrade.
- [14:10]
Kai Ryssdal
If we don't make this investment, we.
- [14:12]
Amara Mokwe
Will cease to be relevant.
- [14:14]
Ryan Hildebrand
Robert James II is the CEO of Carver Financial Corporation, a company with two community banks in Georgia and Alabama. He's in the middle of upgrading their entire digital platform. Everything from making it easier for customers to transfer money between accounts to letting them use the bank's debit cards in Apple Pay and Google Pay. James says a big motivating factor is that his current customer base is aging.
- [14:37]
Kai Ryssdal
And we want to make sure that.
- [14:38]
Amara Mokwe
We have the ability to serve those customers, kids who may not have accounts with us.
- [14:44]
Ryan Hildebrand
James says his bank has a responsibility to stay relevant because it predominantly serves black customers in Georgia and Alabama who have historically had a much harder time gaining access to credit and other banking services. There's only 23 black controlled banks in.
- [15:00]
Amara Mokwe
The United States, and two of them are a part of Carver Financial Corporation.
- [15:04]
Kai Ryssdal
If we don't exist, then there are.
- [15:07]
Amara Mokwe
Customers that otherwise would not have access to these critical financial services.
- [15:13]
Ryan Hildebrand
James says the hope is that the new technology will help the banks get bigger, letting them invest in even more tech upgrades in the future. I'm Justin Ho from Marketplace.
- [15:44]
Chandra Turner
Coming up, I heard a saying where it says how you start is not necessarily how you finish.
- [15:49]
Kai Ryssdal
You gotta believe. But first, let's do the numbers. Yeah, the Wawa is down. Industrials off 305 points today, about 7. 10%. Closed at 43,444. That, however, is not why we got the WAWAS. This is the NASDAQ off 427 points. 2.25% 18,680s and P 500 down 78 points. One and a third percent landed at 58.70 for the five days gone by, the Dow off 7. 10%, the NASDAQ down 2 1/10 of 1%s and P 500 contracted 1.3% today. Palantir Technologies surged more than 11% today. The analytics and data mining firm is expected to begin trading on the Nasdaq next week. That's a change. Applied materials slumped 9.2% today. Yesterday, the chipmaking equipment company forecast quarterly revenue below estimates, that is weak demand. Aside from AI powered chips, rival KLA dipped about 4 and 3 quarters quarters of 1%. The Chinese e commerce giant Alibaba dropped 2 and 2. 10% today after posting worse than expected quarterly revenue. Yes, that is sluggishness in the Chinese economy that you see happening. Bond prices went down, thus the Yield on the 10 year treasury went up 4.44%. You're listening to Marketplace. You turn to Marketplace for up to the minute news for stories that show you the connections between global events and your personal economy. And you're not alone. Marketplace is the most widely consumed business and economic news program in the country. We're proud to make fact based journalism freely accessible and Marketplace investors make it all possible. Your year end donation today will make a real difference in our nonprofit newsroom and in the lives of millions of Marketplace listeners every single day. So please contribute what you can today@Marketplace.org.
- [17:54]
Matt Levin
Donate this Marketplace podcast is supported by Remarkable what if Paper were given digital Powers? Introducing Remarkable Paper Pro the Ultimate Paper Tablet Remarkable Paper Pro is a premium digital notebook with the feel of paper for note taking, organizing and reviewing documents. Keep all your notes and documents on a slim and stylish device that thinner than your smartphone. One place for all your important work. Get the digital tools you need like cloud sync, undo, copy paste and handwriting conversion without the distractions found on other devices. Remarkable Paper Pro features a distraction free design and an intuitive interface built from the ground up around focus and thinking. Go for weeks on a single charge thanks to an upgraded battery made using recycled cobalt and keep working when the lights go out. With the new front light, it's the ultimate paper tablet. Get yours today@remarkable.com this is Marketplace.
- [18:49]
Kai Ryssdal
I'm Kai Ryssdal. If you wanted to put solar panels on your roof, there is federal money in the Inflation Reduction act to help you do that. The money's there for now. The President Elect has of course talked about repealing or reversing Many of the green energy programs that the Biden administration has put into place. That money, though, is not just for homeowners. It's for businesses too, also nonprofits. And one slice of nonprofits in particular is taking advantage. Houses of worship, churches and mosques and synagogues and temples are three times more likely to have solar on the roofs than the average non residential building. That is according to the US Department of Energy. And the impact those panels are having is way bigger than the power that they generate as marketplaces. Kaylie Wells found out.
- [19:38]
Mark Samuel
A Shabbat service is the typical soundtrack of a Friday afternoon at Temple Bethom. Above the heads of the worshiping congregants, the sun is about to set on dozens of solar panels that since last year have adorned the roof.
- [19:54]
Ryan Hildebrand
Whatever space we had, they put panels.
- [19:57]
Mark Samuel
Art Mercado is director of facilities, the guy in charge of the keys and the doors that led up here.
- [20:02]
Ryan Hildebrand
I think the goal was be environmentally.
- [20:06]
Matt Levin
Green, cost effective, and obviously in the.
- [20:09]
Ryan Hildebrand
Long run is have more money for.
- [20:11]
Kai Ryssdal
The school, the temple and everything else.
- [20:13]
Mark Samuel
Just about every sunbathed surface of this synagogue and the gymnasium of its school next door is covered in panels. They're designed to supply about half of the power used on this campus, which should slash about 4 grand off of its monthly electric bill. Temple Bethom is part of a solar Trend that Daniel McIntyre sees as a business opportunity. He runs a company called Tenco Solar that installs panels.
- [20:37]
Matt Levin
We had never done a job with a nonprofit prior to the inflation reduction act being passed.
- [20:44]
Mark Samuel
Now he's done four churches, a Sikh temple, an Islamic center. Solar is catching on in part because the Internal Revenue service gives money directly to nonprofits to make climate friendly changes to their buildings.
- [20:56]
Matt Levin
Instead of taking it as a deduction on your tax return, you actually receive that back in the form of a check from the Department of Treasury or irs.
- [21:04]
Mark Samuel
So Temple Betham had a financial incentive from the inflation reduction act, an environmental incentive, and it turns out, a moral incentive too.
- [21:12]
Kai Ryssdal
In Judaism, you know, there's this whole concept of repairing the world and there's a responsibility to the world, right?
- [21:19]
Mark Samuel
Mark Samuel served as president of the temple while the solar panels got installed. He says the community has gotten rid of styrofoam cups and started composting at the school.
- [21:28]
Kai Ryssdal
You know, the kids are saying, hey, you know what, mom, dad, I learned about composting. This is what I did today. Why don't we do this at our home as well?
- [21:35]
Mark Samuel
Samuel calls the composting program. And now the solar panels, appetizers, ways for Families to explore what they can be doing to help the planet too.
- [21:44]
Kai Ryssdal
I get phone calls about it.
- [21:46]
Matt Levin
How'd you do it? What are you doing? Is it difficult? Is it worth it? Does it really work?
- [21:52]
Mark Samuel
That is the part that is most exciting to Kenneth Gillingham. He's an environmental economics professor at Yale. He says the environmental effect of Beth Elm's solar panels extends far beyond the temple's own energy use.
- [22:04]
Ryan Hildebrand
How many solar adoptions there are around you is one of the most impactful factors that influence whether you install solar.
- [22:14]
Mark Samuel
The idea is called social contagion. In this case, a good contagion. Gillingham co wrote a study about it that said solar panels tend to cluster in neighborhoods. They're like quiet working ads for themselves because you're more likely to actually talk.
- [22:28]
Matt Levin
To your close neighbor, find out the.
- [22:30]
Ryan Hildebrand
Financials for the system, Find out that they're seeing the solar panel as a good deal.
- [22:34]
Mark Samuel
A community center like Beth AM where 1000 families come to learn and shape their beliefs on what's right and wrong, magnifies that effect.
- [22:44]
Ryan Hildebrand
So if your church or temple has a very large congregation, then you may actually reach many people you wouldn't have reached otherwise.
- [22:54]
Mark Samuel
The synagogue's reach extends far beyond la. Mark Samuel, the former president, says he got a call from a remote congregant in Texas asking about the solar panels. In Los Angeles, I'm Kaylee Wells for Marketplace.
- [23:29]
Kai Ryssdal
Matt Levin, up earlier in the program was telling us about how non store retailers, online shops, of course, is the translation there. He was telling us how they're doing these days. But what about those brick and mortar places, huh? We called one of them. Chandra Turner, owns the Bougie grazer in downtown Atlanta, Georgia.
- [23:47]
Chandra Turner
I heard a saying where it says how you start is not necessarily how you finish. So we started in charcuterie, but now we've gotten a lot of corporate grace tables and more, so box lunches and catering. So it's transformed into something a little bit different from just your standard charcuterie boutique. Right now I am only taking orders of 30 or more. And that is to eliminate some of the. The spoilage I was seeing last year that, you know a lot. I was probably wasting like 30% of fruits and vegetables that, you know, I couldn't use because they would either go bad or I didn't have an order for them. So now that I'm taking on the bigger orders, I'm able to use a lot of my products in that same day. So I right now I have five total team members taking on a payroll cost also is, is, you know, has been interesting because I've never, you know, had to continuously have like payroll. It was always just, just one off events. But now week over week I'm having to to steadily pay a payroll and I'm just like, okay, this is different. So at the end of the year my lease is up on my studio. This is my first brick and mortar. So it's bittersweet. I don't know if I'm going to transition out and go into a smaller space or I don't know if I am going to stay there and re sign the lease. So it's a really big decision. But I'm sure that my spirit will tell me exactly what to do with my first brick and mortar which has been definitely an interesting and fun and exciting ride for the last 15 months.
- [26:03]
Kai Ryssdal
Chandra Turner, the bougie Grazer is her shop. Atlanta, Georgia is her city. This final note on the way out today in which the road to electric vehicle adoption remains bumpy. CNBC reported and General Motors later confirmed that it's going to lay off another thousand people, both salaried and hourly workers, as it leans into making more but also money losing electric vehicles. GM has earlier said it's shooting for about $2 billion in cost cuts. Our theme music was composed by BJ Lederman. Marketplace's executive producer is Nancy Fargoli. Donna Tam is the executive editor, Neil Scarborough is the Vice president and general manager. And I'm Kyle Rysdal. Have yourselves a great weekend everybody. We will see you again on Monday. All right, this is apm. You turn to Marketplace for up to the minute news for stories that show you the connections between global events and your personal economy. And you're not alone. Marketplace is the most widely consumed business and economic news program in the country. We're proud to make fact based journalism freely accessible and Marketplace investors make it all possible. Your year end donation today will make a real difference in our nonprofit newsroom and in the lives of millions of Marketplace listeners every single day. So please contribute what you can today@marketplace.org donate.