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- [00:01]
Kai Rysdal
This Marketplace podcast is supported by Ascensus, helping people dream bigger, aim higher and save more with financial confidence. Unleash the power of your organization's retirement savings plan with innovative technology that makes things easier, top notch service from experts who care, and flexible solutions that can grow with your business. For more than 40 years, Asensus has been helping employers and savers achieve their goals. We can help you achieve yours too. Learn more@ascensus.com that's a s c e n s u s.com hey, if you're.
- [00:39]
Rachel Siegel
Listening to this, I will assume you're at least interested in money, understanding the economy and finances as well. And some of us now want to get the next generation interested as well. So check out Million Bazillion, Marketplace's award winning kids podcast that breaks down money to help dollars make more sense. Tune into Million Bazillion wherever you find your favorite podcasts. A whole new season is out. Million Bazillion is presented in partnership with Greenlight, the debit card and money app for kids and teens. Greenlight helps kids and teens learn to earn, save, spend wisely and invest. When you sign up for a Greenlight account@greenlight.com million 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 Ky 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 Mokway is at Bloomberg. Rachel Siegel is at the Washington Post. Hey you two.
- [01:59]
Amara Mokway
Hi Kai.
- [02:00]
Rachel Siegel
Kai.
- [02:00]
So, Amir, 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.
- [02:24]
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. Chair Powell said yesterday that the committee is not in any kind of hurry to cut rates. And I think that just reflects the fact that they. They feel like they have more work to do on inflation. And also, there's a lot of consideration about sort of uncertainty around this idea of the neutral rate and how far the Fed has 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 sort of injects some uncertainty into what the path of policy might look like going forward.
- [03:16]
Since you said the words neutral rate, you now have to explain in something less than 20 seconds what the neutral rate is.
- [03:22]
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 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.
- [04:03]
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 Kathryn Rampel, 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?
- [04:33]
Yeah.
- [04:34]
Amara Mokway
And in some ways, that is a familiar message that we're used to hearing from him. 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, 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.
- [05:13]
Rachel Siegel
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 will be tariffs put into place in this economy, varying percentages and varying applications. Katherine Rampel did asked Chair Powell yesterday about his tariff actions 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 got to wait and see. I wonder what that's all about.
- [05:44]
Yeah, I mean, I think first, I think Powell doesn't want to wade too far into politics, right? So he's saying, look, 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 was, was high, and the Fed is still trying to get inflation down to its 2% target. So I think Powell 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 change, 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.
- [06:51]
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 17 freaking months or years, how long can the consumers last? I. It just, it continues to astound me.
- [07:12]
Amara Mokway
No, it's incredible. And it's also incredible that, you know, 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, you know, the strong, 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, you know, 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 the economy still continues to forge back.
- [08:07]
Rachel Siegel
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.
- [08:15]
Amara Mokway
Yeah, it is weird out there. And if I had an answer, maybe I would be in line for Nobel Prize. And instead I want to flip the question right back to you because I think it's one that continues to stump even people like Powell. Right. And I don't think that you would hear top policymakers say that they're even assured that it, 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 amazing sort of the data that you have in any given moment that you can make.
- [08:42]
Rachel Siegel
A decision off of it is kind of amazing. Rachel Siegel at the Washington Post and Mary Mokway at Bloomberg on this Friday finally thanks you to have a nice weekend.
- [08:52]
Thanks, Kai.
- [08:53]
Wall street today, the post election bounce gang seems to be over. We will have the details when we do the numbers. Numbers. 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.
- [09:57]
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.
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Chandra Turner
I think it was like green streamers on there with red ornaments.
- [10:12]
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.
- [10:35]
Chandra Turner
In stores, you have to set the store right.
- [10:38]
Amara Mokway
You have to tell a story with.
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Chandra Turner
Your merchandising, but you have the ability in these online spaces to start that holiday shopping earlier.
- [10:47]
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.
- [11:13]
Amara Mokway
A lot of that kind of advertising.
- [11:15]
Rachel Siegel
Gets crowded out by a lot of the political advertising. So we're just seeing retailers do what they can to signal value.
- [11:24]
Matt Levin
And for inflation weary consumers, it's often easier to bargain hunt online. Gregory Daco is an economist with ey. In a high price 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.
- [12:21]
Rachel Siegel
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.
- [13:08]
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 we would.
- [13:23]
Matt Levin
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.
- [13:34]
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.
- [13:46]
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.
- [13:56]
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.
- [14:12]
Matt Levin
To make sure 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 around as much.
- [14:19]
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 and.
- [14:37]
Matt Levin
It'S only going to continue to become easier for them because technology is making customer service easier.
- [14:43]
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 Roop says as better technology has helped big banks get better at serving customers, those small bank advantages have started to wane more and more. You're hearing from customers, look, we really want to work with you guys, but just so you know, it is really hard for us to do what we 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.
- [15:23]
Rachel Siegel
If we don't make this investment, we.
- [15:25]
Will cease to be relevant.
- [15:26]
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.
- [15:50]
Rachel Siegel
And we want to make sure that.
- [15:51]
We have the ability to serve those customers, kids who may not have accounts with us.
- [15:57]
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.
- [16:13]
Rachel Siegel
The United States and two of them are a part of Carver Financial Corporation.
- [16:17]
If we don't exist, then there are.
- [16:19]
Customers that otherwise would not have access to these critical financial services.
- [16:26]
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 for Marketplace.
- [16:56]
Chandra Turner
Coming up, I heard a saying where it says how you start is not necessarily how you think you gotta believe.
- [17:03]
Rachel Siegel
But first let's do the numbers. Yeah. The Wawa is down. Industrial is 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. Two and a quarter percent. 18,680 SP 500 down 78 points one and a third percent landed at 58.7 for the five days gone by. The Dow off seven tenths percent. The NASDAQ down two and two tenths of one percent S&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 of 1%. The Chinese e commerce giant Alibaba dropped 2.2% 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.
- [18:36]
Matt Levin
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- [19:38]
Kai Rysdal
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- [20:49]
Rachel Siegel
This is Marketplace. I'm Kai Rysdal. 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 their 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 Marketplace's Kaylee Wells found out.
- [21:40]
Chandra Turner
A.
- [21:40]
Mark Samuel
Shabbat service is the typical soundtrack of a Friday afternoon at Temple Bethan. 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.
- [21:56]
Ryan Hildebrand
Whatever space we had, they put panels.
- [21:59]
Mark Samuel
Art Mercado is director of facilities, the guy in charge of the keys and the doors that led up here.
- [22:04]
Ryan Hildebrand
I think the goal was be environmentally.
- [22:08]
Matt Levin
Green, cost effective, and obviously in the.
- [22:11]
Ryan Hildebrand
Long run is have more money for.
- [22:13]
Matt Levin
The school, the temple, and everything else.
- [22:16]
Mark Samuel
Just about every sun bathed 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 Beth OM is part of a solar trend that Daniel McIntyre sees as a business opportunity. He runs a company called Tenco solar that installs panels.
- [22:39]
Matt Levin
We had never done a job with a nonprofit prior to the inflation reduction act being passed.
- [22:46]
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.
- [22:58]
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.
- [23:06]
Mark Samuel
So temple bethaum had a financial incentive from the inflation reduction act, an environmental incentive, and it turns out a moral incentive, too.
- [23:14]
Rachel Siegel
In judaism, you know, there's this whole concept of repairing the world and there's a responsibility to the world, right?
- [23:21]
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.
- [23:30]
Rachel Siegel
You know, the kids are saying, hey, you know what, mom, dad, I learned about composting, and this is what I did today. Why don't we do this at our home as well?
- [23:37]
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.
- [23:46]
Rachel Siegel
I get phone calls about it. How'd you do it? What are you doing? Is it difficult? Is it worth it?
- [23:52]
Matt Levin
Does it really work?
- [23:54]
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 OMB solar panels extends far beyond the temple's own energy use.
- [24:06]
Ryan Hildebrand
How many solar adoptions there are around you is one of the most impactful factors that influence whether you install solar.
- [24:16]
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.
- [24:31]
Ryan Hildebrand
To your close neighbor, find out the financials for the system, find out that they're seeing the solar panel as a good deal.
- [24:37]
Mark Samuel
A community center like Beth AM, where 1,000 families come to learn and shape their beliefs on what's right and wrong, magnifies that effect.
- [24:46]
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.
- [24:56]
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.
- [25:31]
Rachel Siegel
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.
- [25:50]
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 form. 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 has been interesting because I've never had to continuously have payroll. It was always just one off of 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 resign 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.
- [28:05]
Rachel Siegel
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 gonna 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 Fargollin. Donna Tam is the executive editor, Neal Scarbros the vice president and general manager and I'm Kai Rysdal. Have yourselves a great weekend, everybody. We will see you again on Monday. All right. This is APM at Capella University.
- [29:12]
Learning the right skills could make a difference.
- [29:14]
Kai Rysdal
That's why our business programs teach you relevant skills you can take from the.
- [29:18]
Rachel Siegel
Course room to the workplace. A different future is closer than you think with Capella University. Learn more@capella.edu.