The data dogs

Summary

Marketplace Podcast Episode Summary: "The Data Dogs"

Release Date: October 10, 2024
Host: Kai Ryssdal
Guest: Austan Goolsbee, President of the Federal Reserve Bank of Chicago

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Economic Data and Federal Reserve Insights

In the episode titled "The Data Dogs," host Kai Ryssdal engages in a comprehensive discussion with Austan Goolsbee, President of the Federal Reserve Bank of Chicago, focusing on recent economic indicators and the Federal Reserve's approach to monetary policy.

Strong Labor Market Performance

Goolsbee expresses optimism about the latest employment figures, highlighting the addition of 254,000 jobs in the previous month—a figure that surpassed expectations. "I thought it was superb. You cannot complain with big jobs numbers and the unemployment rate coming down a little and staying in a spot that we basically think of as full employment," Goolsbee states at [02:14]. This robust job growth, coupled with a decrease in the unemployment rate, signals a strengthening labor market.

Inflation Trends and Monetary Policy

Discussing inflation, Ryssdal notes that the Consumer Price Index (CPI) has decreased to 2.4% in September, the lowest in over three years. Goolsbee emphasizes the Federal Reserve's commitment to a data-driven approach, cautioning against overreacting to short-term fluctuations. At [02:43], he remarks, "Taking the long view is the right thing to do... the through line so far is pretty clear. Inflation way down... full employment means we just want it to stop right there."

He further elaborates on the transition from prioritizing inflation to balancing it with employment considerations, acknowledging the complexities introduced by the pandemic-era economic shifts. "We just got to keep revisiting this," Goolsbee adds, underscoring the necessity of continuous assessment in monetary policy decisions.

Housing Market Moderation

Addressing the housing sector, Goolsbee acknowledges a recent moderation in housing price inflation. "That was a good month for housing inflation, but it followed last month was a bad month for housing inflation," he explains at [04:11]. He cautions that a single month's data is insufficient to determine a definitive trend, advocating for patience in interpreting these signals.

Fed Communication and Market Reactions

Ryssdal raises concerns about the multitude of Federal Reserve speakers contributing to a "cacophony" of information. Goolsbee defends the transparency of having multiple voices within the Fed, stating, "I think that's the kind of transparency that people should want" at [08:55]. He believes that diverse perspectives within the committee foster a more robust and informed decision-making process, despite the potential for market confusion.

Surging Sports Ticket Prices

Stephanie Hughes delves into the dramatic rise in admission prices for sporting events in the United States, which have increased by 10.3% over the past year. Several factors contribute to this surge:

• Premium Seating and Dynamic Pricing: David Berry, an economics professor, notes, "A sports stadium only has so many seats, and those seats have been getting nicer" ([11:31]). The shift towards premium seating options allows teams to maximize revenue from high-paying fans.

• Secondary Market and Technology: Nola Aga, a sports management professor, highlights the role of dynamic pricing and secondary markets in driving up prices. "There's an entire industry... focused on dynamic pricing," Aga explains ([12:34]).

• Expansion of the Fan Base: The growing popularity of women's sports leagues, such as the WNBA and the National Women's Soccer League, has expanded the overall fan base, increasing demand for tickets across various events.

Hughes concludes that these factors ensure that live sports maintain a competitive edge over other entertainment forms, as fans prioritize in-person experiences despite higher costs.

Arctic Security and the U.S. Coast Guard

The episode shifts focus to the escalating strategic competition in the Arctic, particularly between the United States, China, and Russia. Host Kai Ryssdal reports on the U.S. Coast Guard's challenges in adapting to the region's changing dynamics due to climate change.

Increased Naval Activity and Climate Impact

Lieutenant Lexi Chaveria Aguilar of the Coast Guard discusses the uptick in Chinese and Russian naval activities near Alaska. "There are less ice up there, there's going to be more opportunities for traffic to go through," Aguilar explains ([19:55]). The reduction in sea ice has opened new navigational routes, increasing maritime traffic and, consequently, the Coast Guard's operational demands.

Limited Icebreaking Capabilities

A critical issue highlighted is the Coast Guard's insufficient icebreaker fleet. "We only have two [icebreakers], which is not super adequate for the space that we're operating in," Aguilar notes ([21:06]). This limitation hampers the U.S.'s ability to ensure safe passage and respond effectively to emergencies in the Arctic.

Strategic Preparedness and Military Readiness

The discussion underscores the necessity for enhanced military presence and infrastructure to counterbalance the advancements of other nations in the Arctic. Ryssdal references recent aggressive maneuvers by Russian fighter jets near American military aircraft, illustrating the heightened tensions in the region.

Textile Waste and California’s Recycling Initiative

Kelly Wells presents an in-depth look into California's new legislation aimed at addressing the state's substantial textile waste problem. Annually, approximately 100 million tons of textiles are discarded in the United States, with the majority being clothing items.

Challenges in Textile Recycling

Joanne Brash of the California Product Stewardship Council outlines the complexities in recycling textiles:

1. Inadequate Recycling Infrastructure: Current recycling plants struggle to process textiles effectively. "Recycling plants can't handle them," Brash observes ([23:40]).

2. High Costs of Sorting: Manual sorting is expensive and inefficient. However, advancements in technology, such as automated sorting machines, are being introduced to streamline the process ([24:35]).

3. Mixed Material Garments: Many garments are made from blends of materials, complicating the recycling process. "They tangle, they absorb, and they combust," Brash explains ([23:53]).

Legislative Measures and Future Impact

California's new law mandates manufacturers to develop recycling solutions, fostering innovation in recyclable clothing production. Senator Josh Newman emphasizes that this legislation not only aims to reduce landfill waste but also encourages the creation of more sustainable apparel. The law's ripple effect is expected to influence national and global manufacturing practices, although full implementation will take several years, with compliance required by 2030.

Inflation and Social Security Adjustments

In the concluding segment, Ryssdal touches upon the latest Social Security cost-of-living adjustment (COLA), set at 2.5% for the upcoming year—the smallest increase in three years. He explains the distinction between inflation rates and actual price levels, noting that while inflation has decreased, many prices remain elevated compared to pre-pandemic levels. This nuanced understanding is crucial for comprehending the broader economic landscape and its impact on consumers.

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Key Takeaways:

• Robust Economic Indicators: Strong job growth and declining inflation rates suggest a resilient economy, yet the Federal Reserve remains cautious and data-driven in its policy decisions.

• Rising Live Event Costs: The spike in sports ticket prices is driven by premium seating, dynamic pricing strategies, and an expanding fan base, reflecting broader trends in consumer behavior and market economics.

• Strategic Arctic Concerns: Climate change is transforming the Arctic into a focal point of international competition, necessitating enhanced U.S. military readiness and infrastructure, particularly within the Coast Guard.

• Sustainable Fashion Initiatives: California's pioneering recycling legislation addresses critical challenges in textile waste management, promoting sustainability in the apparel industry through regulatory measures and technological advancements.

• Inflation vs. Cost Adjustments: Understanding the relationship between inflation rates and price levels is essential for assessing economic policies' effectiveness, especially concerning social welfare programs like Social Security.

This episode of "Marketplace" offers listeners a deep dive into current economic trends, strategic geopolitical shifts, and innovative approaches to sustainability, all framed within accessible and insightful discussions.

Transcript

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[Kai Rysdal]

One word, four letters. Critical to this economy. I know you think I'm going to say jobs right now. J O B S. I'm not from American Public Media. This is Marketplace in Los Angeles. I'm Kai Rysdal. It is Thursday today, the 10th of October. Good as always to have you along. Everybody consider if you would, the data on which analysis of this economy depends. There is a lot of it and that data of late has been pretty good. Gross domestic product is growing 3% a year. The much in the news labor market app added more than a quarter of a million new jobs last month, more than most anybody had been guessing. And we learned just this morning that year over year, inflation's the lowest it's been in better than three years. 2.4% in September. So let's say just for argument's sake, that it's your job to gather all that data, analyze it and figure out which way to point this economy. Whatcha gonna do? Well, who better to ask than a guy who takes a backseat to no one in his data affinities? Austan Goolsbee is the president of the Federal Reserve bank of Chicago. Awesome. Welcome back to the program, Kai.

[Austan Goolsbee]

Thank you for having me back.

[Kai Rysdal]

So we will of course talk data with a data dog. I want to talk, though not about this morning's cpi. I want to talk about the jobs number that came out last Friday, 254,000 First, I want your gut reaction when you saw that number.

[Austan Goolsbee]

I thought it was superb. You cannot complain with big jobs numbers and the unemployment rate coming down a little and staying in a spot that we basically think of as full employment.

[Kai Rysdal]

Yes, to all that. But is there nothing in you that says, oh man, we're cutting rates and the unemployment, the jobs numbers are going up and it's looking better and no.

[Austan Goolsbee]

Yeah, some. But you know, I'm in the data dogs.

[Kai Rysdal]

I know.

[Austan Goolsbee]

And the thing about the data dogs that don't respond to one month, you know, that it was literally 60 days previous that we got a disappointing jobs number. And then a bunch of people in the market ran out and said, oh, this means that we need to cut 150 basis points. And then you get one number that's better than expected. And then people say it's an emergency, you need to raise rates. Taking the long view is the right thing to do. There's a market timetable and I understand why the market timetable is what it is. They're going to glean market gyrations from every little zig and zag. But the central bank, I don't think can do that. We got to take the through line. And I think the through line so far is pretty clear. Inflation way down the job market overall has been cooling from overly heated to something like full employment. And we just want it to stop right there.

[Kai Rysdal]

All right, let's talk about some of the longer trend items. Last time we had you on the program, which was March, we talked about housing as being a particular thing. You were looking at inflation being sticky there. The report this morning, it's not like housing prices broke, but they certainly moderated that. You must take heart from that.

[Austan Goolsbee]

Yeah, but again, it's just one month. If we got several months, is there.

[Kai Rysdal]

Is there anything that's going to make you say yes? Oh, my goodness, yes.

[Austan Goolsbee]

Look, that was a good month for housing inflation, what we got today, but it followed last month was a bad month for housing inflation. So we just gotta take several months before making these averages. It hasn't been as fast as I wanted it back in March, but we have made progress overall, definitely.

[Kai Rysdal]

This is gonna sound flip, and I do not mean it to be you. No, truly, I don't. You, you are data dependent. You call yourself a data dog. I call you a data dog. Now in this program, which I've never done with anybo, Powell talks about more data all the time. It does seem like there's. And I truly, I don't mean to be flipped, but it seems like there's nothing that's going to satisfy you guys. It's always more data, more data, more data.

[Austan Goolsbee]

What's wrong with us, you know? Yes, it is always more data, but we have to make the decisions, as you say, so we get the data. It's not just backward looking. We also got to make forecasts and think about where things are headed. And part of that we supplement with a bunch of interaction with business leaders and CEOs and civic leaders and everything that goes into the Beige Book. At the end of the day, that's also why we meet every six weeks is so that we hopefully don't get too far out over the skis or get too far behind the curve or however you want to think of it. We just got to keep revisiting this. And I always say the hardest thing that a central bank has to do is get the timing right. When there are moments of transition. And we're in a moment of transition from an environment where we had overwhelming focus on getting down the inflation part of the mandate to a more normal balanced environment where we got to think about inflation and we got to think about employment and how the real economy is doing and we got to think about the trade offs and balance those things out. And that's going to mean a lot of close calls. So we're going to have meetings where it's should it be zero or should it be 25? Should it be 25? Should it be 50? So the thing is in an environment like that, we go with the data we have and then we meet again in six weeks and we try to figure out and keep ourselves on the path. And that's the way it should be. That's how it should be.

[Kai Rysdal]

Let me ask you about the moment of transition. Yes, we are in a moment of transition with the labor market and inflation and all of that. I wonder how much you think we're still in a moment of transition out of the pandemic and how much that's still affecting this economy.

[Austan Goolsbee]

I still think it's affecting some. And of course that was the thing that made all of our historical monetary policy lessons at least not super helpful to understand the business cycle. We had a downturn that wasn't driven by cyclical industries at all. It was driven by people who couldn't spend money on services. As we've come out of that, the service sector rebound is not even especially monetary policy and interest rate sensitive. So we've had to think through these issues of is monetary policy less effective than it is at normal times or is it just more delayed than it is at normal times? You got a much higher share of mortgage holders have a 30 year fixed mortgage than they did in the past. So when we change the interest rates and it flows through into mortgages, the direct impact in the here and now is not as big as as it was before. I still think there's some of COVID coming through. But I feel like in most of these areas, the supply chain, some of the labor force participation and the healing of many of the supply shocks that were as damaging, I feel like we're mostly back to normal and the fact that inflation's around the 2% target of coming in and unemployment's at the level that we always said was kind of steady state, full employment makes me think our job now is to try to hold the picture where it is.

[Kai Rysdal]

Speaking of which, there are, you know, holding the picture and you know, communication and all the stuff that the Fed does other than actually run the economy. There are I think 20 fed speakers this week, whether it's members of the board of governors, regional Fed presidents, whatever you're doing. 3. I think this is your second hit of the day. You were on CNBC this morning. Do you ever, well, do you ever get sick and tired of it and do you ever watch anybody else from the Fed and see what they're doing?

[Austan Goolsbee]

I watch everyone from the Fed. I put a lot of weight on the views of the other members of the committee because we're coming from different regions and we got a lot of different worldviews. To the question of, is this a cacophony? There are too many people talking. Wouldn't it be easier for markets if there were just one voice and one opinion? Yes, I'm sure it would be easier, but it's a committee. It's a committee. And so when you have committees that vote on things, people have different views. And so I don't think it's a problem that everybody expresses what their view is. I think that's the kind of transparency that people should want. If you know that the actual decision is being made by 19 different people following and talking to each other, you kind of would like to know that. I'm sure in other voting things in the, whatever, the U.S. senate, if all 100 senators had the same view and they could just say, here's what the Senate thinks, that would be easier too. But that's, that's not how it's structured.

[Kai Rysdal]

Austin Goolsbee at the Chicago Fed. Austin, thanks for your time. It's always good to talk to you guys.

[Austan Goolsbee]

It's always fun.

[Kai Rysdal]

As Austin was talking about, the inflation trend is good. Some of the specific data points today though gave traders pause. Core cpi, that's inflation minus the always volatile food and energy sectors. That was up 3.3% year on year. That is a tick higher than core a month earlier. So you know something to keep an eye on elsewise in market based American capitalism. Well, we'll have the details when we do the numbers. You gotta scroll a good ways down in today's inflation report to get to this little Nugget the price of admission to sporting events here in the US of A. Went up 10.3% in the past year. That includes single and season tickets to everything from pro football to college basketball to amateur dog shows. It also takes into account tickets sold by the team as well as those sold on the secondary market. Marketplace's Stephanie Hughes looks at why prices have been shooting up like that.

[Stephanie Hughes]

A sports stadium only has so many seats, and those seats have been getting nicer, says David Berry, a professor of economics at Southern Utah University.

[Austan Goolsbee]

So the image that we used to have of stadiums that were really large and had cheap bleacher seats, that's going away. The seats are increasingly premium seats, and they are priced to people who have lots of money.

[Stephanie Hughes]

And among sports fans with plenty of money, demand for those seats remains high, says economist and sports consultant Andrew Zimbalist. Plus, some fans aren't there just to watch. They're also there to gamble, and they don't want to deal with any kind of television delay.

[Austan Goolsbee]

They're betting on plays.

[Kai Rysdal]

They're betting on is the next play.

[Austan Goolsbee]

Going to be a pitch out to.

[Kai Rysdal]

The halfback, or is it going to be a pass down the left side of the field?

[Austan Goolsbee]

And in order to do that, you want to be there, zimbalist says.

[Stephanie Hughes]

Another factor is that the fan market is growing, thanks in part to the popularity of women's sports. Think the WNBA and the National Women's Soccer League. And for events across the board, fans can increasingly turn to the secondary market.

[Kai Rysdal]

And resale ticket prices usually are a good deal higher.

[Stephanie Hughes]

Teams have also gotten really good at figuring out how much fans are willing to pay for particular seats, sun or shade, afternoon or evening, playing against a big rival or someone you've never heard of. Nola Aga is a professor of sport management at the University of San Francisco.

[Nola Aga]

There's an entire industry, let's say, of.

[Stephanie Hughes]

Companies that are focused on dynamic pricing.

[Kai Rysdal]

Which helps any live event extract the highest value from every single person.

[Stephanie Hughes]

Aga says it's a myth that ticket prices are driven up by the team's payroll. In reality, she says, pricing goes the other way.

[Nola Aga]

So they're going to pay a player.

[Stephanie Hughes]

What they're worth, but they're happy to charge you more first. Even so, for many people, supporting their team in person is a must have. In that way, live sports have an edge over other kinds of business. Fans may go away disappointed, but will still pay to come back for more. I'm Stephanie Hughes for Marketplace.

[Lieutenant Lexi Chaveria Aguilar]

Coming up, if you even think about China, which is not an arctic nation, has icebreaking capability and we are behind.

[Kai Rysdal]

But first, let's do the numbers. Dow Industrial is off 57 points today, a 10% 42,004 54. The Nasdaq dipped 9 points less than a 10% 18,282. The S&P 500 gave up 11 points, 2/10% 57 and 80 Delta Airlines said in its earnings report today that the effects of the crowd strike outage. Remember that well. It cost the company $380 million in lost revenue. The airline had to cancel thousands of flights during that July incident. CEO Ed Bastian says Delta is seeking compensation from Both Microsoft and CrowdStrike. Delta descended 1 and 110 of 1%. United Airlines rose 1.4%. American Airlines fell about 1.4. PVH Corporation, which is the parent company of brands including Tommy Hilfiger and Calvin Klein, decreased 1% today. VF Corporation, which owns the Dickies and the North Face brands, racked up 1.4% today. Levi Strauss and Co. Blue jeans, right? Come on, you knew that. 9 10% Gildan Activewear, maker of T shirts and sweatshirts, slumped 1.6% today. Bond prices went down. Yield on the 10 year T note now sits at 4.06%. You're listening to Marketplace.

[Nola Aga]

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[Kai Rysdal]

I'm Kai Rysdal. A couple of weeks ago, the Coast Guard said it's been seeing an uptick in Chinese and Russian naval activities up near Alaska. As it happens, we were up in Alaska this spring for our climate podcast, How We Survive, and we spent some time with the Coast Guard.

[Lieutenant Lexi Chaveria Aguilar]

All right, your controls starting. Ready for takeoff.

[Kai Rysdal]

We're in a Coast Guard MH60 helicopter. Lieutenant Lexi Chaveria Aguilar and Lieutenant Commander Ted Borney at the controls. We're all in matching flight suits. Think Ghostbusters, but bright orange. Also helmets. Weather's not great. Low clouds. It's been raining on and off since we got here. The ride's a little bumpy, which is par for the course in a helicopter. You should know we're about 300ft above the water just below the cloud Lake.

[Lieutenant Lexi Chaveria Aguilar]

We are actually headed toward Narrow Strait, which is between Spruce island and the Tampa Kodiak island. And it's kind of a shortcut. We have the good weather and visibility.

[Kai Rysdal]

Right now in their log books. This is going to go down as a standard proficiency hop for Lexi and Ted. Regular training just with a couple of journalists in the back. But the very nature of what the Coast Guard does, search and rescue, maritime interdiction, and lots else, means every flight could turn operational on a moment's notice. Kodiak island, where we are, is kind of stunning mountains right up against the water, thick clouds sitting on top of them, deep blue green water and wildlife.

[Lieutenant Lexi Chaveria Aguilar]

There's a couple bears down there. Oh, that looks like a cow. Dude, you gotta be excited. I got excited.

[Kai Rysdal]

Is that not a bear?

[Lieutenant Lexi Chaveria Aguilar]

Oh, dude, that's a cow.

[Kai Rysdal]

That's a cow.

[Lieutenant Lexi Chaveria Aguilar]

There's a couple cows on Woody.

[Kai Rysdal]

They tricked me. Well, then forget it.

[Lieutenant Lexi Chaveria Aguilar]

I think Alaska is an interesting place to be as the global climate is shifting. I think that the physical, tangible changes are more poignant here than maybe we.

[Kai Rysdal]

Saw some of those changes firsthand. Before we went out to Kodiak, we'd Been a thousand miles farther north in Utqiagvi to see the Point Barrow radar, a key piece of military infrastructure that is being threatened by climate change. And the changes happening there and all over Alaska are only going to make the Coast Guard's job more difficult.

[Lieutenant Lexi Chaveria Aguilar]

You talk about you went up to Barrow. As there's less ice up there, there's going to be more opportunities for traffic to go through there. You'll need a greater Coast Guard presence to make sure that the maritime traffic going through there able to do that safely and then in the event of emergency, where they respond. So you see commercial traffic as well as, you know, things like cruise ships, things like that, where you have the potential for now for a mass casualty event somewhere remote and north.

[Kai Rysdal]

As maritime and aviation traffic increases up there, more traffic means more people. More people means more chances for things to go wrong. A stranded cruise ship, unidentified vessels, things the Coast Guard deals with all the time.

[Lieutenant Lexi Chaveria Aguilar]

But we don't have a permanent presence up there now, so, you know, we're not in a great position to respond. We'd be responding out of Kodiak. It just takes a lot of time to get there.

[Kai Rysdal]

There is kind of an infrastructure challenge, too. Maybe equipment challenge is a better way to put it. As Ted Borney explained to us once we got back on the ground, right.

[Lieutenant Lexi Chaveria Aguilar]

Now we have the Coast Guard has the only icebreakers, you know, out of any military service. We only have two of them, which is, you know, not super adequate for, you know, the space that we're operating in.

[Kai Rysdal]

You want to operate in the Arctic, you kind of got to have icebreakers. And as maritime traffic and strategic competition increases, the Coast Guard is going to.

[Lieutenant Lexi Chaveria Aguilar]

Need more than 2 compared to comparable countries. You don't think about Russia, and then if you even think about China, which is not an Arctic nation, has icebreaking capability. So we're behind in that right now. And the Coast Guard is working to catch up.

[Kai Rysdal]

We should say the Coast Guard is just one part of the military presence up there. And every branch of the service is aware that climate change is changing the threat environment. On September 23, there was another incident near the coast of Alaska. NORAD, which is north American Aerospace Defense Command, released footage of a Russian fighter flying aggressively close to an American military jet. It's happening a lot. One of the ways the American military looks out for future threats like that, increased activity up in the Arctic and plans for them is with war games. This week on our podcast, How We Survive, we're going to play our own climate war game.

[Lieutenant Lexi Chaveria Aguilar]

Yeah.

[Austan Goolsbee]

You're going to be playing the president.

[Lieutenant Lexi Chaveria Aguilar]

So you get to take the political responsibility for everything that happens.

[Kai Rysdal]

Oh, good. Oh, now see, this is much harder in real life than it actually is in my pregaming of this game. So look, it goes like this. It is a. Huh. This is really interesting, actually. It turns out I talk a good game, but when the decision comes to me, wish me luck. You can check it out wherever you get your podcasts. Just search for how we survive. We generate. That is we the population of planet Earth. We generate about 100 million tons of textile waste every single year. Put in more simple terms, we throw away almost 100 million tons of textiles a year. The biggest slice of that textile trash piece is clothes. And if I might guess where you're headed now, recycling them is really, really tough. Here in the United states, only about 15% of old clothes get recycled. But that rate is likely to improve because California has just passed a law that requires manufacturers figure out how to do it. Marketplace's Kelly Wells has that one.

[Joanne Brash]

There are three big reasons why recycling clothes isn't as easy as just tossing them into a recycling bin. For one thing, the recycling plants we already have can't handle them, even in environmentally conscious California.

[Stephanie Hughes]

Textiles are a contaminant in our current.

[Joanne Brash]

System because they tangle, they absorb, and they combust. Joanne Brash works for the California Product Stewardship Council. It's a network focused on making producers responsible for the stuff they make after it's useful so it stays out of landfills. Part of Brash's job was getting clothing companies to support support the new law. It will create a new system overseen by a new nonprofit funded by textile and clothing companies. You'll be able to bring your old jeans or ripped curtains to more than a thousand textile collection sites up and down the state for those materials to.

[Austan Goolsbee]

Be sorted and then reused.

[Joanne Brash]

Whether that's upcycling recycling, California State Senator Josh Newman authored the law, or sorted.

[Austan Goolsbee]

And turned into additional feedstock for the next generation products.

[Joanne Brash]

A second reason clothing recycling is tricky. The sorting process can be prohibitively expensive because right now it requires human labor. But there's already technology that can help. A Norwegian clothes sorting machine recently made the trip to the city of Commerce, California, for a demonstration event. Louisa Hoyes with Tomer Textiles flew all the way here to demonstrate how it works.

[Lieutenant Lexi Chaveria Aguilar]

As the textiles are placed onto the.

[Kai Rysdal]

Belts, they will be detected by the sensor, and when it has identified the material type that we want to eject, it will use compressed air to eject it over the partition, therefore separating the identified material from the rest of the material.

[Joanne Brash]

So polyester gets put in one pile, cotton goes into another, and nylon goes into a third. It's more accurate and cheaper and faster than a person. The pressure from this law to recycle more clothes opens up a market for more machines like it. But sorting is not as simple as polyester versus cotton versus nylon because. And here comes challenge number three. A lot of the clothes in your closet are probably blends of multiple materials, which is a big puzzle for recyclers, Joanne Brash of the California Product Stewardship Council says, and they only can take.

[Stephanie Hughes]

Nylon at 85% or higher. If it's 81%, they can't take it.

[Joanne Brash]

The goal of the new law isn't just to stop clothes from going to the landfill. It could also incentivize clothing makers to make more clothes that will be recyclable once you're done wearing them. Here's the law's author, California State Senator Josh Newman, again.

[Lieutenant Lexi Chaveria Aguilar]

And if you can do that, you're.

[Austan Goolsbee]

Not only addressing the waste stream landfill question, you're really making a difference in the environmentalism.

[Joanne Brash]

And the law will have implications beyond California's borders, because if H and M, for example, makes more recyclable clothes, it's not going to make them just for Californians. It'll likely sell those clothes elsewhere. With big plans, though, come big lead times. The state has until July of 2028 to implement all the new regulations in this law, and the companies have until 2030 to comply. I'm Kaylee Wells for Marketplace.

[Kai Rysdal]

This final note on the way out today, in which inflation giveth death and inflation giveth less. Also a brief lesson in inflation versus prices. First of all, the news. The Social Security Administration said today the cost of living adjustment this year, it's actually next year, starts January 1st, is going to be two and a half percent. That is the smallest bump in three years. Three years in which, as we all know, inflation, lots of it. The Wall Street Journal did the math. Over the past three years, the Social Security cost of living adjustment has been a cumulative 18.8%. But here is the deal. As all of us know, inflation is down. Yes, by a lot. We talked about that. Up at the top of the program, inflation, of course, being the rate of price increases, but those prices themselves, most of them still higher than they were in the before times. John Buckley, John Gordon, Noya Carr, Diantha Parker, Amanda Peacher and Stephanie Seek are the Marketplace editing staff. Amir Babawi is the managing editor and I'm Kai Rysdal. We will see you tomorrow. Everybody. 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 [e-mail] donate.