Marketplace: “Raising the Roof” Episode Summary
Released on January 16, 2025
In the “Raising the Roof” episode of Marketplace, host Kai Ryssdal delves into the persistent issue of inflation, the dynamics of the housing market, the robust performance of major banks, trends in the labor market, retail pricing, stock market movements, immigration policies, the expansion of electric vehicle infrastructure, and insights from the Federal Reserve’s Beige Book. Through expert interviews and real-world anecdotes, the episode provides a comprehensive overview of current economic conditions and their broader implications.
1. Inflation and the Core Consumer Price Index (CPI)
The episode opens with a discussion on the latest inflation data, highlighting a "downside surprise" where the core CPI slightly underperformed expectations. Core CPI, which excludes volatile food and energy prices, increased by 3.2% year-over-year. A significant driver of this rise is the cost of shelter—comprising rent and owner's equivalent rent—which saw a 4.6% year-over-year increase in December.
Samantha Fields, Marketplace Reporter, introduces the topic:
[00:01] “Core was up 3.2% year on year over. Among the biggest drivers of that core number and a key reason that inflation is proving so sticky, shelter rent and owner's equivalent rent.”
Steve Reed, Senior Economist at the Bureau of Labor Statistics, emphasizes the weight of housing in CPI:
[01:29] “Over 36% of the whole CPI is sheltered.”
Susan Wachter from the University of Pennsylvania’s Wharton School offers a cautiously optimistic view:
[01:58] “Shelter inflation has come down and it is coming down and it will come down.”
Despite the decline from a peak of 8.2% in March 2023, shelter costs remain high, posing challenges to achieving the Federal Reserve’s 2% inflation target. Wachter attributes the slow decline to homeowners' reluctance to give up low mortgage rates and ongoing supply constraints in the housing market.
2. Housing Market Dynamics
The episode explores regional variations in the housing market. Logan Motashami, Lead Analyst at Housing Wire, notes that increased housing supply in cities like Austin is helping to drive rents down, whereas markets like New York remain tight. Los Angeles faces unique challenges with thousands of recent homelessness cases escalating demand for temporary housing.
Anecdote from a Los Angeles real estate agent highlights local inflationary pressures:
[03:12] “There was 167 people applying for one rental and that's inflationary.”
Despite severe local impacts, Samantha Fields assures that these regional issues are unlikely to significantly influence national shelter costs: [03:23] “But as huge as these losses are in Los Angeles, he says they're unlikely to raise shelter costs or inflation at the national level.”
3. Big Banks' Q4 Earnings Performance
Major financial institutions reported strong fourth-quarter earnings, outperforming investor expectations. Kelly Wells of Marketplace discusses factors contributing to this success:
[06:16] “A lot of factors came together in the fourth quarter that spelled good news for big banks.”
Susan Wachter identifies market volatility as a key factor benefiting banks:
[06:21] “There was a lot of market volatility, and banks traditionally do very well when markets are volatile.”
The shift of deposits from regional to larger banks following the Silicon Valley Bank collapse in 2023 has bolstered big banks' financial positions, providing them with more capital to extend loans. Mike Stovall, Chief Investment Strategist at CFRA Research, links this to broader economic growth potential:
[07:40] “Good news for banks is good news for the overall economy because that means the companies borrowing from those banks have more money to invest.”
4. Labor Market Trends and Employment Intensity
The labor market exhibits intriguing trends, with overall unemployment steady at 4.1%. However, there has been a notable decrease in average weekly hours worked, from 34.3 hours, down 45 minutes from its 2021 peak.
Daniel Ackerman highlights personal stories like Colin Bergman’s reduced work hours to pursue creative endeavors:
[09:06] “Instead of business as usual working behind my computer screen, Bergman started making more art.”
Susan Wachter explains the shift from a previously tight labor market:
[09:51] “We were in the beginnings of a really exceptionally tight labor market. There was talk of a labor shortage.”
Martha Gimble from Yale suggests that employers are adjusting by reducing hours instead of layoffs:
[10:19] “Workers don't seem upset about that adjustment because if you look at the share of part-time workers who would rather be full-time, those percentages are still quite low.”
Economist Ari Schwader provides historical context, indicating a return to pre-pandemic norms:
[10:47] “The overall reduction in hours worked is really just a return to how things used to be... we could finally be past the pandemic shock to the labor market.”
Looking ahead, Schwader warns of potential future disruptions from automation and AI, which could further alter work patterns.
5. Retail Pricing and Business Insights
Retail sectors present a mixed picture. The sweets category saw a 7.10% monthly increase but only 3.1% annually.
Kristen Thullheimer Bingham, co-owner of Dean's Suites in Portland, Maine, shares her business experience during peak months:
[03:48] “November and December were record months for us... we probably could have used one more person.”
Eric Vaughn, owner of Eric's I've Been Framed in Detroit, discusses holiday season challenges and business expansions:
[12:21] “I was really shocked. I'm in the process of trying to add another division where I sell black memorabilia.”
Kalina Bruce of Noir Luxe Candle Bar in Seattle comments on holiday staffing and post-holiday business strategies:
[24:54] “Now that things have gotten a bit quieter, this is really our time to take a look at our inventory... focusing on some of our business goals for the year so that we can hope to see some more growth.”
These narratives illustrate how businesses navigate seasonal fluctuations and inflationary pressures while planning for future growth.
6. Stock Market Movements and Wall Street Reactions
The episode details significant stock market gains, buoyed by better-than-expected inflation data and strong bank earnings.
Colin Rizdal reports:
[13:51] “The Dow industrials up 703 points, 1.6%, 43,221. The Nasdaq jumped 406, 66 points. That is 2.5% on that particular index finished at 19,511. The S&P 500 added 107 points. 1 and 8, 10%, 59 and 49 there.”
Strong earnings from major banks like JPMorgan Chase (+2%), Goldman Sachs (+6%), and Wells Fargo (+6.7%) contribute to positive market sentiment. Additionally, rising mortgage rates exceeding 7%, as reported by the Mortgage Bankers Association, indicate mixed signals for the real estate market.
7. Immigration Policy and Humanitarian Parole
Transitioning to immigration, the episode highlights the Biden administration’s use of humanitarian parole to provide work authorization to individuals fleeing violence, oppression, or natural disasters.
Elizabeth Trovall narrates the story of Marilyn and Jonathan from Nicaragua:
[16:34] “In Nicaragua, universities have been a target of the violent authoritarian government... their stepdad, a US citizen, sponsored them.”
Under humanitarian parole, they secured custodial jobs in Houston, earning significantly more than in Nicaragua. Joanne Pantaleon from YMCA International Services lists the variety of jobs filled through this program, emphasizing its role in quickly integrating migrants into the workforce.
Kathleen Bush Joseph of the Migration Policy Institute contrasts current parole usage with past congressional adjustment acts that offered pathways to permanent residency. With the Biden administration nearing its end, uncertainty looms:
[19:00] “Congress hasn’t had the political will to do that in recent years. And humanitarian parole is both fleeting and discretionary.”
The narrative underscores the precariousness of parole-dependent migrants’ futures amidst potential policy shifts under the next administration.
8. Electric Vehicles and Charging Infrastructure
The discussion shifts to the burgeoning electric vehicle (EV) market and the simultaneous expansion of charging infrastructure. Despite the incoming administration’s stance on federal EV programs, private sector investments have spurred a record number of high-speed charging stations in Q4 2024.
Steve Reed highlights barriers for EV adoption:
[21:59] “Barriers stand between many drivers and an electric vehicle. Higher prices and charging infrastructure, or the lack thereof.”
Gil Tal, Professor at UC Davis, discusses business opportunities arising from charging infrastructure:
[22:27] “More businesses are picking up on the revenue opportunity that comes with that charging anxiety.”
Jeff Allen, Executive Director of FOURTH, likens the symbiotic growth of EVs and charging stations to “chicken and waffles,” asserting that each drives the expansion of the other:
[23:09] “EVs and public charging are more like chicken and waffles. They both make the other better.”
The segment concludes with optimism about the continued growth of both EVs and charging infrastructure, bolstered by innovative business models that integrate charging with retail experiences.
9. Federal Reserve’s Beige Book Highlights
Concluding the episode, insights from the Federal Reserve’s Beige Book reveal regional economic variations. The Kansas City Fed reports a bustling ski season but notes that some visitors opt for more affordable pass options, reflecting economic sensitivities even in leisure sectors.
Colin Rizdal summarizes:
[27:34] “The Federal Reserve's beige book came out today... Kansas, if you're confused, is yes, very flat. But the Kansas City Feds district does include Colorado. Famously not flat.”
This anecdotal evidence underscores the diverse economic landscapes across different regions, informing broader economic policy considerations.
Conclusion
“Raising the Roof” offers a multifaceted examination of the current economic climate, from persistent inflation and housing challenges to the resilience of major banks and evolving labor market dynamics. Through expert analysis and personal stories, Marketplace elucidates the complex interplay of factors shaping today’s economy, providing listeners with a nuanced understanding of the forces at work.
Notable Quotes with Timestamps:
- Steve Reed: “Over 36% of the whole CPI is sheltered.” [01:29]
- Susan Wachter: “Shelter inflation has come down and it is coming down and it will come down.” [01:58]
- Kelly Wells: “A lot of factors came together in the fourth quarter that spelled good news for big banks.” [06:16]
- Sam Stovall: “Good news for banks is good news for the overall economy because that means the companies borrowing from those banks have more money to invest.” [07:40]
- Susan Wachter: “We were in the beginnings of a really exceptionally tight labor market. There was talk of a labor shortage.” [09:57]
- Ari Schwader: “We could finally be past the pandemic shock to the labor market.” [10:47]
- Jeff Allen: “EVs and public charging are more like chicken and waffles. They both make the other better.” [23:09]
Attributions:
- Colin Rizdal: Host and reporter discussing inflation, housing, stock market, Beige Book.
- Samantha Fields: Marketplace reporter covering inflation and housing.
- Steve Reed: Senior Economist at the Bureau of Labor Statistics.
- Susan Wachter: Economist at the University of Pennsylvania’s Wharton School.
- Logan Motashami: Lead Analyst at Housing Wire.
- Kelly Wells: Reporter covering big banks' earnings.
- Daniel Ackerman: Reporter discussing labor market trends.
- Martha Gimble: Director of the Budget Lab at Yale.
- Ari Schwader: Economist at the University of Michigan.
- Kristen Thullheimer Bingham: Co-owner of Dean's Suites, Portland, Maine.
- Eric Vaughn: Owner of Eric's I've Been Framed, Detroit.
- Kalina Bruce: Owner of Noir Luxe Candle Bar, Seattle.
- Elizabeth Trovall: Reporter covering immigration.
- Kathleen Bush Joseph: Migration Policy Institute.
- Gil Tal: Professor at UC Davis.
- Jeff Allen: Executive Director of FOURTH.
This comprehensive summary encapsulates the key discussions, insights, and conclusions presented in the “Raising the Roof” episode of Marketplace, offering a valuable resource for those seeking to understand the current economic landscape without listening to the full podcast.