The housing sector droops under a labor shortage and price hikes

Summary

Marketplace Podcast Summary: "The housing sector droops under a labor shortage and price hikes" Release Date: November 26, 2024

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1. Housing Market Challenges: Labor Shortages and Price Hikes

Overview: The housing market continues to experience growth in home prices, albeit at a slower pace. However, the sector faces significant challenges, including labor shortages and escalating construction costs, which are hampering new home sales.

Key Points:

• Home Price Growth: According to the S&P CoreLogic Case-Shiller Home Price Index, national home prices rose by 3.9% year-over-year in September. Despite this growth, sales of new homes saw a sharp decline in October, partly due to lingering effects from Hurricanes Helene and Milton in the South ([00:27]).

• Labor Shortages: Danushka Nanyakara from the National Association of Homebuilders highlights a critical labor shortage, with over 250,000 open positions. The aging workforce exacerbates the issue, emphasizing the need for young people and women to enter the trades ([01:36] - [01:57]).

  Nanyakara (01:36): "The industry has more than 250,000 open positions it's trying to fill."

  Charlie Dougherty (01:54): "We need to attract women to come into the trades."

• Rising Construction Costs: The labor shortage drives up construction costs, and there is also a scarcity of materials like electrical transformers. Amy Scott notes that domestic production hasn't kept pace, leading to record-high price growth in recent years ([02:06]).

  Amy Scott (02:06): "We have seen record high price growth in the last few years because we don't produce enough domestically."

• Mitigation Strategies: Charlie Dougherty, Senior Economist at Wells Fargo, discusses strategies homebuilders are using to manage costs, such as mortgage rate buy-downs and incentives. However, elevated mortgage rates continue to deter potential buyers ([02:13] - [02:42]).

  Charlie Dougherty (02:26): "Mortgage rates are elevated and I think that just discourages the home buying process."

• Material Costs: Greg Kuda, CEO of Westline Capital Strategies, points out that while lumber prices have decreased by over 70% since their peak, potential tariff increases on Canadian lumber could reverse these gains, adversely affecting homebuilders ([02:56] - [03:36]).

  Greg Kuda (02:56): "Prices are down more than 70% since their recent peak... if the new Trump administration raises tariffs on imported Canadian lumber, prices rise."

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2. Brewing Trade War Impacting the Economy

Overview: President-elect Trump's announcement to impose substantial tariffs on imports from Canada, Mexico, and China has raised concerns about potential trade conflicts and economic repercussions.

Key Points:

• Tariff Proposals: Trump proposed a 25% tariff on goods from Canada and Mexico, and an additional 10% on imports from China, threatening to disrupt long-standing trade agreements ([03:36] - [04:35]).

• International Response: Ana Swanson from the New York Times explains that Canada and Mexico are preparing to retaliate with their own tariffs. Mexico's President emphasized the negative impact of tariffs on industries, while Canada seeks to mitigate tensions through dialogue ([05:50] - [07:11]).

  Ana Swanson (04:35): "The three countries have had a free trade agreement for more than three decades... these tariffs would definitely violate the terms of that agreement."

• Economic Consequences: Estimates suggest that the proposed tariffs could cost the average American family $1,300 annually, reduce GDP by 0.4%, and cut 350,000 jobs. Additionally, inflation could rise by 0.9%, impacting consumer prices ([07:11] - [08:20]).

  Ana Swanson (07:11): "Tariffs could reduce GDP by 0.4%, cut employment by 350,000 jobs."

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3. Consumer Spending Trends and Data Analytics

Overview: As the holiday season approaches, analysts are leveraging diverse data sources to understand and predict consumer spending behaviors.

Key Points:

• Data Evolution: Kayleigh Wells from Marketplace discusses the evolution of consumer data analysis, moving beyond credit card transactions to include foot traffic, satellite imagery, and social media interactions ([09:38] - [10:13]).

  Joshua Spokes (09:52): "That is really something that's been used since the early 2000s by hedge funds and asset managers."

• Holiday Spending Insights: Jonathan Chin, co-founder of Factious, observes that while people are making more expensive individual purchases, overall spending remains flat. There's also a notable rise in sales from Chinese companies like Temu, Shein, and TikTokshop ([10:40] - [11:05]).

  Danushka Nanyakara (10:57): "People are spending more on each transaction, but the total amount they're spending is flat."

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4. Best Buy's Mixed Earnings and Laptop Sales Surge

Overview: Best Buy reported a decline in most comparable sales for the third quarter, except for a significant increase in laptop sales, reflecting changing consumer needs.

Key Points:

• Sales Performance: Best Buy's comparable sales fell by approximately 3% year-over-year, with laptop sales rising by 7%, the largest increase since April 2021 ([11:05] - [12:08]).

• Consumer Upgrade Cycle: Joshua Spokes discusses the trend of consumers replacing outdated laptops, driven by the need for better performance and AI capabilities. The typical replacement cycle is every three to four years, a trend supported by market analysts like Seth Basham from Wedbush Securities ([12:19] - [13:39]).

  Seth Basham (12:25): "Consumers who bought laptops during the pandemic now are sitting there with laptops that are outdated..."

• Repair and Longevity: Kyle Wiens, CEO of iFixit, advocates for extending the lifecycle of gadgets through easy repairs and component upgrades, highlighting that many laptop issues, such as battery wear, are manageable ([13:05] - [13:46]).

  Kyle Wiens (13:21): "There are pouches of chemicals and they wear out just like the battery in your car wears out."

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5. Yelp Celebrates 20th Anniversary Amid Review Authenticity Concerns

Overview: Yelp marks its 20th anniversary, reflecting on its impact on businesses and the challenges of maintaining review authenticity in the digital age.

Key Points:

• User Engagement: Richard Probst, a prolific Yelp reviewer, emphasizes the platform's role in promoting businesses and providing detailed, accessible reviews, including accessibility insights that aren't typically covered in traditional media ([22:36] - [23:05]).

  Richard Probst (22:36): "Platforms like Yelp also help to elevate businesses that are off the beaten track."

• Impact on Businesses: Small businesses like Futuro Pizza have benefited significantly from Yelp reviews, with the restaurant being named the second-best pizza place in the Midwest, thanks to authentic and detailed customer feedback ([23:05] - [24:07]).

• Challenges with Fake Reviews: Dina Maislen from USC highlights that about 10% of online reviews are fake, a problem exacerbated by AI tools. While Yelp employs algorithms and user reports to mitigate this, the reliability of star ratings remains a concern ([24:19] - [25:09]).

  Dina Maislen (24:23): "About 10% of online reviews are fake, and AI tools have made forgeries easier."

• Consumer Trust: YouTube star Freddie Wong advises consumers to look for specific star ratings that reflect genuine experiences, questioning the reliability of average star scores ([24:54] - [25:09]).

  Charlie Dougherty (24:54): "You're being lied to by the Five Star System."

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6. Federal Reserve's Interest Rate Decisions and Inflation Outlook

Overview: The Federal Open Market Committee (FOMC) minutes reveal unanimous support for a quarter-point interest rate cut, with confidence in achieving the 2% inflation target, though some officials acknowledge the process may take longer than anticipated.

Key Points:

• Rate Cuts and Inflation: All 19 FOMC participants approved the rate cut, maintaining confidence that inflation is moving sustainably towards the 2% goal, albeit with some reservations about the timeline ([26:23] - [27:36]).

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7. Insights from Baltimore International Warehousing and Transportation

Overview: Sue Monahan, CEO of Baltimore International Warehousing and Transportation, discusses the port's recovery post the Francis Scott Key Bridge collapse and the potential impacts of impending trade tariffs.

Key Points:

• Port Recovery: Since the bridge collapse eight months prior, the Port of Baltimore has recovered to about 85% of typical vessel traffic. However, challenges like port strikes and vessel delays have intermittently disrupted operations ([17:30] - [19:00]).

  Sue Monahan (17:43): "A lot of the business didn't return right away... we kind of lost that transportation piece of the business."

• Diversification Efforts: To mitigate disruptions, the company is diversifying its logistics operations, handling direct customer deliveries apart from port operations ([19:00] - [20:08]).

• Impact of Tariffs: The impending tariffs are expected to cause an initial surge in cargo as businesses attempt to import before new costs take effect, followed by a potential normalization ([20:30] - [21:02]).

  Sue Monahan (21:00): "We suspect that people will try to bring in cargo prior to any tariffs that could go into effect."

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Notable Quotes with Speaker Attribution and Timestamps

• Danushka Nanyakara (01:36): "The industry has more than 250,000 open positions it's trying to fill."
• Charlie Dougherty (01:54): "We need to attract women to come into the trades."
• Danushka Nanyakara (02:13): "Mortgage rates are elevated and I think that just discourages the home buying process."
• Ana Swanson (04:35): "These tariffs would definitely violate the terms of that agreement."
• Ana Swanson (07:11): "Tariffs could reduce GDP by 0.4%, cut employment by 350,000 jobs."
• Joshua Spokes (09:52): "That is really something that's been used since the early 2000s by hedge funds and asset managers."
• Kyle Wiens (13:21): "There are pouches of chemicals and they wear out just like the battery in your car wears out."
• Dina Maislen (24:23): "About 10% of online reviews are fake, and AI tools have made forgeries easier."
• Charlie Dougherty (24:54): "You're being lied to by the Five Star System."
• Sue Monahan (21:00): "We suspect that people will try to bring in cargo prior to any tariffs that could go into effect."

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Conclusion

Today's episode of Marketplace delved into the multifaceted challenges facing the housing sector, exacerbated by labor shortages and rising construction costs. The potential trade wars introduced by new tariffs threaten to further strain the economy, impacting everything from consumer prices to international trade relationships. Additionally, insights into consumer spending behaviors, technological upgrade cycles, and the evolving landscape of online reviews provided a comprehensive overview of the current economic climate. Finally, the Federal Reserve's cautious optimism regarding inflation and interest rates adds another layer to the economic narrative. As always, Marketplace offers valuable context to navigate these complex issues.

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For more detailed discussions and analyses, consider listening to the full episode on Marketplace.

Transcript

[Richard Probst]

VantageScore is the fastest growing and most predictive credit score used by 8 out of the 10 largest banks and over 34 banks, fintechs and other companies nationwide. VantageScore is mandated for use for mortgages funded by Fannie Mae and Freddie Mac. Vantage Score drives financial inclusions by scoring approximately 33 million more consumers than competitive credit scores. VantageScore Good for credit Crit Credit for Good.

[Amy Scott]

Learn [e-mail] Weakness in the housing market, a brewing trade war with our closest neighbors, and a look at 20 years of Yelp. Stick around from American Public Media. This is Marketplace in Baltimore. I'm Amy Scott, in for Kai RYSSDAL. It's Tuesday, November 26th. Good to have you along. We'll start with some housing news first. Home prices nationally kept growing in September, though more slowly than the month before. That's from the s&P CoreLogic Case Shiller Home Price Index, which rose 3.9% from a year before. Number two from the US Census Bureau. Sales of new homes fell sharply in October. Some of that weakness was expected as parts of the south are still recovering from Hurricanes Helene and Milton. But as Marketplace's Justin Ho reports, other issues are weighing on the market for new homes and the companies that build them.

[Danushka Nanyakara]

A big challenge that homebuilders are dealing with is the amount of available labor. Danushka Nanyakara with the national association of Homebuilders says the industry has more than 250,000 open positions it's trying to fill.

[Amy Scott]

We have an aging labor force. We need young people to go into trade schools.

[Charlie Dougherty]

We need to attract women to come into the trades.

[Danushka Nanyakara]

Nanyakara says that shortage pushes up construction costs. Construction materials, including electrical transformers, are also in short supply.

[Amy Scott]

We have seen record high price growth in the last few years because we don't produce enough domestically.

[Danushka Nanyakara]

And then there's the sheer price of new homes. Charlie Dougherty, senior economist with Wells Fargo, says homebuilders do have some tricks they can pull to take the edge off sticker prices, including mortgage rate, buy downs and other incentives.

[Charlie Dougherty]

But at the end of the day, mortgage rates are elevated and I think that just discourages the home buying process. Overall.

[Danushka Nanyakara]

Some of these issues have gotten a little better recently. Mortgage rates are lower than they were this time last year, and Dougherty says material prices have started to calm down.

[Charlie Dougherty]

Right, they're still very elevated compared to where they were, say, back in 2019. But the pace of growth has been fairly steady and to the benefit of home builders, more predictable.

[Danushka Nanyakara]

One input that's actually gotten cheaper recently is lumber. Greg Kuda, CEO of Westline Capital Strategies, says prices are down more than 70% since their recent peak about two and a half years ago. But Kuda says, remember, we get a lot of our lumber from Canada. And if the new Trump administration raises tariffs on imported Canadian lumber, guess what prices rise from an industry that needs demand. That's, you know, the home builder industry.

[Charlie Dougherty]

The softwood lumber industry. It's definitely tough to say that an increase in tariffs is going to benefit.

[Danushka Nanyakara]

The consumer, especially since right now, Kuda says homebuyers can't really stomach any more price increases.

[Amy Scott]

I'm Justin Ho for Marketplace Wall street today unfazed. We'll have the details when we do. The number coming back to those tariffs Justin was talking about yesterday, President elect Trump made international waves when he announced plans to impose tariffs of 25% on all goods coming into this country from Canada and Mexico, plus an extra 10% on all imports from China. Here to talk us through what that might mean for us international trade agreements and consumer prices is one of our weekly RAP regulars, Ana Swanson at the New York Times. Ana, good to have you back.

[Ana Swanson]

Thanks so much for having me.

[Amy Scott]

So we have had a free trade agreement with Canada and Mexico in place, what, for three decades now, the last agreement signed by Trump himself in 2020, would this basically tear up that deal?

[Ana Swanson]

So it would definitely put a lot of pressure on it. And that's kind of one of the ironies of what the President Trump, what President elect Trump was talking about last night. The three countries, Canada, Mexico and the United States, have had a free trade agreement for more than three decades. That's led our economies to be very tightly knit together. In his first term. President Trump criticized that agreement, nafta, as the worst trade deal ever negotiated. And he replaced it with something called the United States, Canada, Mexico agreement. Now, what he's proposing, a 25% tariff on both of those countries, would definitely violate the terms of that agreement, which insists that, you know, for certain products, tariffs should be zero and that if you have a trade dispute, you should handle it through certain channels. So it remains to be seen, you know, what would happen to President Trump, President elect Trump's own trade deal, if those tariffs do go through.

[Amy Scott]

How are those countries, Canada and Mexico, responding to this announcement?

[Ana Swanson]

So there was a lot of activity immediately from officials in both of those capitals, a lot of concern, of course, about what this could do. The Mexican president put out a statement today saying that she had already been working with the United States on migration and that tariffs weren't the answer, that they would hurt industries that go across the US Mexican border. But still Mexico is prepared to respond with tariffs of its own. Canada has, you know, similarly talked about drawing up its own tariffs. And officials there today, you know, said that they would work with President elect Trump to try to diffuse the tensions. There was also one opposition leader who suggested if we need to, we could just jettison Mexico entirely from the US Mexico Canada agreement. Not sure that will be too popular down in Mexico.

[Amy Scott]

Wow. Yeah. I mean, so we know that tariffs are paid by companies that import products and then passed on to their customers. Justin was just talking about the potential effect of higher lumber tariffs on housing. So what would the consequences be for other industries and their customers?

[Ana Swanson]

Well, the estimates are still coming out, but I did see that there were some estimates today by for example, the center for American Progress, which is the left leaning think tank, that a 25% tariff on Canada and Mexico and a 10% tariff on China would cost the typical American family $1,300 a year. There were also other estimates, for example, from the Tax foundation that the tariffs could reduce GDP by 0.4%, cut employment by 350,000 jobs. Another estimate, Goldman Sachs talked about pushing up a core inflation index closely watched by central bankers by 0.9%. So definitely some economic impact because after all, these are America's three largest trading partners. Trade with Canada, Mexico and China accounts for more than a third of U.S. imports and U.S. exports, and it supports tens of millions of jobs. So there's a lot on the line with these trade relationships.

[Amy Scott]

All right, well, we hope to have you back to talk more about this as it becomes more clear. Again, this was just a social media post. It's hard to know what exactly is going to happen with these proposed tariffs. Ana Swanson, writing about trade at the New York Times, thanks so much. Thank you. I'm sure you haven't noticed, but the holiday shopping season is already upon us. And while many of us are busy making lists and hunting for Black Friday bargains, retail analysts and investors and consultants will be watching us closely to see how people are spending more and more. Those analysts are looking at real time data, credit card swipes and mobile app clicks, and basically anything that might give a glimmer of insight into why consumers do the things they do. Marketplace's Kayleigh Wells has more.

[Kayleigh Wells]

This whole industry of different data types is older than you might think. Daryl Smith is head of research at the firm New Data, and he says it all started with analyzing the details of where people were using credit cards and what they were buying.

[Joshua Spokes]

That is really something that's been used for what since the early 2000s by hedge funds and asset managers.

[Kayleigh Wells]

Now the data includes footfalls like where you're physically shopping, satellite images of store parking lots, delivery app orders, social media clicks. The list goes on.

[Joshua Spokes]

It's kind of another plane of information.

[Charlie Dougherty]

That an investor might be accessing.

[Kayleigh Wells]

There are two main selling points here. One is how specific the data can be. Matthias Vernengo is an economics professor at Bucknell University who says unlike traditional data sets like quarterly earnings and company filings.

[Charlie Dougherty]

They get much faster and localized and, you know, sectoral.

[Kayleigh Wells]

And in addition to specificity, Vernango says the data provides insights in real time much faster than, say, the consumer confidence index.

[Charlie Dougherty]

When people ask me about, oh, but consumer confidence is low.

[Amy Scott]

Yeah, well, who cares?

[Charlie Dougherty]

I mean it's really, it's lagging data.

[Kayleigh Wells]

As for this holiday season, Jonathan Chin says he's already seeing signs of price pressure. He is co founder of a data company called Factious that analyzes credit card use.

[Danushka Nanyakara]

Things are just expensive and people's wallets are a lot tighter and I'm seeing some of that in the data. People are spending more, but they're getting.

[Kayleigh Wells]

Less stuff, he says. People are spending more on each transaction, but the total amount they're spending is flat. Also, it's a big, big year for Chinese companies selling affordable products. Temu Shein and TikTokshop have all seen spikes in sales this year. I'm Kaylee Wells for Marketplace.

[Amy Scott]

Sticking with how consumers are spending money, the electronics retailer Best Buy did not have its best quarter today. The company said its comparable sales for the third quarter fell about 3% from the same time a year ago. One exception, though, sales of laptops grew 7% year over year. The biggest increase Best Buy said today in its earnings call. Since April 2021. Marketplace's Stephanie Hughes has more.

[Joshua Spokes]

This fall, Joshua Spokes is taking a graduate level course in geospatial analysis. His computer needs to be able to wrangle some hefty data sets. And his old laptop just wasn't cutting it.

[Charlie Dougherty]

Even when I closed other applications, it was still struggling to the point that basically like it wasn't able to run what I needed it to run.

[Joshua Spokes]

So about 10 days ago, spokes bought a new laptop. It cost just under $2,000.

[Charlie Dougherty]

It's really nice to have something that's just a lot snappier.

[Joshua Spokes]

People typically replace their laptops every three to four years, says Seth Basham, with Wedbush securities. And remember what a lot of us were doing four years ago, hunkering down and buying computers.

[Charlie Dougherty]

Consumers who bought laptops during the pandemic now are sitting there with laptops that are outdated in terms of battery life, processor speed, et cetera.

[Joshua Spokes]

Basham says that desire to upgrade is driving laptop sales at Best Buy and across the electronics industry. He says there's a similar replacement cycle for tablets where sales have also been popping up.

[Charlie Dougherty]

There's a life cycle to every gadget that you buy.

[Joshua Spokes]

Some argue for extending that life cycle, like Kyle Wiens. He's the CEO of the online repair guide iFixit. It also sells parts and tools, some of them through Best Buy. And he says the first thing that peters out in a laptop is the battery.

[Charlie Dougherty]

There are pouches of chemicals and they wear out just like the battery in your car wears out. You have to replace it every so often. And it's actually really straightforward to replace the battery in most laptops.

[Joshua Spokes]

Wein says he's also a fan of buying a laptop where it's easy to add new memory or storage to it or take it out if need be.

[Charlie Dougherty]

My wife spilled wine on her laptop the other day and we just pulled her memory module out, stuck it in another laptop and she was good to go.

[Joshua Spokes]

Another thing that could drive sales in the future, laptops with AI capabilities. Wedbush's Seth Basham says as those computers become more advanced, more people will be willing to buy one. Stephanie Hughes for Marketplace.

[Amy Scott]

Coming up, you're.

[Charlie Dougherty]

Being lied to by the five star system.

[Amy Scott]

I knew that place was overrated. But first, let's do the numbers. The Dow Jones Industrial Average rose 123 points, 3. 10% to finish at 44,860. The NASDAQ added 119 points, a little over 6. 10% to close at 19,174. And the S&P 500 gained 34 points. 6. 10%. And at 60:21. Today, a U.S. district Court judge in Missouri granted final approval to that big national association of Realtors settlement over broker commissions checking in on some housing stocks. Redfin fell 2. 10%. Zillow deposited 0.6% and Compass Inc. Traded up 1.4%. Bonds fell. The yield on the 10 year T note rose to 4.29%. You're listening to Marketplace.

[Charlie Dougherty]

This podcast is supported by GoFundMe. Millions of people turn to GoFundMe in times of need to support themselves, friends and strangers. In early January, catastrophic wildfires spread across the greater Los Angeles area destroying homes and businesses and forcing tens of thousands of people to evacuate, causing unimaginable destruction. Residents were forced to flee at a moment's notice. GoFundMe.org, a 501c3 public nonprofit that works closely with GoFundMe Inc. Is actively sending relief grants to victims in the affected areas. A tax deductible donation to GoFundMe.org's wildfire relief fund supports these emergency grants for people who have lost homes, loved ones and property in these devastating fires. These donations help survivors get food, temporary shelter and other essential supplies. Donations can even be made from donor advised funds, funds you've already set aside that are ready to go to work right when the world needs them the most. To make an impact and help LA rebuild, visit gofundme.orgwildfires that's gofundme.orgwildfires hey everybody, it's Kai. Listen, is it time to upgrade your car? Give it new life by donating it to Marketplace? We'll use the proceeds to bring you more news about finance and the economy and how they affect you. Let us turn your old car into a donation to power the journalism you rely on. Go to marketplace.orgvehicle to donate your car today.

[Amy Scott]

This is Marketplace. I'm Amy Scott. It was eight months ago that the Francis Scott Key Bridge in Baltimore collapsed, killing six workers and closing the port for weeks. During that time, I met Sue Monahan, president and CEO of Baltimore International Warehousing and Transportation. She'd had to lay off truck drivers and then send them long distances to pick up goods from other ports. Today, the Maryland Port Administration figures the Port of Baltimore is back to about 85% of its typical vessel traffic. So we called up sue to check in. Good to talk with you again.

[Sue Monahan]

Nice to talk to you too.

[Amy Scott]

We last talked, I guess in July when the Port of Baltimore was just opening back up. And at the time you said business felt touchy. How has it been since then?

[Sue Monahan]

Well, it's definitely picked up in November, but it still was pretty spotty through August and September. A lot of the business didn't return right away. We still had cargo coming into Norfolk, so we kind of lost that transportation piece of the business that we would have had out of Baltimore.

[Amy Scott]

And then there was that three day port strike that affected Baltimore. How did that affect your business?

[Sue Monahan]

That affected our business. It really shut down the port for a week. And then because the vessels were delayed, we didn't have everything coming in for a couple weeks. So we were really slow. A couple weeks after that, and I think that had to do with vessel scheduling.

[Amy Scott]

Is this a busy time for you, or is the holiday rush already over?

[Sue Monahan]

Because we have so many different kinds of products that we store, we experience it differently. We don't always handle a lot of retail, but we suspect that we might have a lot more cargo coming in to try and beat a potential strike for January. Because they haven't settled this, the negotiations yet, Right?

[Amy Scott]

It was a tentative deal, so you could be facing that all over again.

[Sue Monahan]

Yes.

[Amy Scott]

And how do you gear up for something like that?

[Sue Monahan]

Well, we do have someone that's handling business development, and so we are looking to diversify so that not everything is coming from the port so that we can handle deliveries that are coming, you know, a direct customer to another customer, instead of port to customer, port to warehouse. So we have been successful, you know, picking up some cargo that way.

[Amy Scott]

What are you hearing from your clients as they return to Baltimore and start using your port again? Have things gotten somewhat back to normal since the bridge collapsed?

[Sue Monahan]

I would say that they have. I think that, you know, most of the clients are happy to be back in Baltimore. We did lose a small amount of business to New York and Norfolk, where people were able to make some kind of concession that made it more attractive for them to move through those ports. It wasn't significant, but it was there.

[Amy Scott]

And some of those customers have stayed with those ports.

[Sue Monahan]

Yes.

[Amy Scott]

How do you win them back? Do you have a pitch that you give?

[Sue Monahan]

It's pretty much time if they can get the same service. A lot of people are really driven by pricing right now. So it's cheaper to go into New York and Norfolk ocean freight wise, but we are inland, so the inland freight is less expensive. So it depends on where exactly those customers are going from.

[Amy Scott]

As you know, the incoming Trump administration has promised to raise tariffs on many imports. Does that worry you at all in terms of the potential impact on the customers that you serve?

[Sue Monahan]

We suspect that people will try to bring in cargo prior to any tariffs that could go into effect. So that might be another driver. It might have an increase in traffic coming in to any port, actually.

[Amy Scott]

So you might see an initial boost.

[Sue Monahan]

Yes, I suspect it'll be somewhat like Covid was, that everybody was bringing in a lot of product, and then it'll fall off again as there's some level of, if you can call it normalizing after that.

[Amy Scott]

Were there lessons that you learned as a business owner from all this and the recovery?

[Sue Monahan]

We didn't give up. We just shifted and did what we needed to do to keep the drivers running, to keep the warehouses operating. And we did. We were successful.

[Amy Scott]

All right, Sue Monahan running Baltimore International Warehousing and Transportation. Thank you so much.

[Sue Monahan]

Thank you.

[Amy Scott]

This next piece is one of those anniversary stories that can make you think, wow, has it been that long? And also, was there ever a time this thing didn't exist? That thing in this case is Yelp, which this fall is celebrating its 20th birthday. The user review platform launched in late 2004 and has now accumulated almost 300 million reviews worldwide. Marketplace's Megan McCarty Carino has this review.

[Richard Probst]

Reviews are everywhere, but only a small share of customers actually take the time to write them. Richard Probst has written more than 1700.

[Charlie Dougherty]

I think I'm one of the first Yelpers who figured out there was a word limit.

[Richard Probst]

Probst has been a Yelp elite member in Indianapolis for 11 years. It's a designation for the most prolific and insightful Yelpers. He mostly writes about restaurants, but also doctors and medical services.

[Charlie Dougherty]

Because I am somebody who's a very active wheelchair user, I do kind of feel a responsibility to review as much as I can because, you know, obviously people in wheelchairs want to get out, too.

[Richard Probst]

Prop says including accessibility in his assessments is the kind of thing you might not find in your average newspaper restaurant review. He says platforms like Yelp also help to elevate businesses that are off the beaten track, like Futuro Pizza, a few miles away, which Luke Tobias started in his own Indianapolis home. During the pandemic, he says Yelp was instrumental in communicating with customers and getting their feedback. Once he moved the operation into an actual restaurant in early 2021, you couldn't.

[Charlie Dougherty]

Even go into a restaurant at that time.

[Richard Probst]

With a tiny staff and a new baby, Tobias kept limited hours and asked customers to order a day in advance. Still, online reviews helped grow the business.

[Charlie Dougherty]

People started finding out about it, and people started really talking about kind of the quality of the pizza.

[Richard Probst]

This year, Yelp named Futuro the number two pizza place in all of the Midwest. But as soon as online reviews became powerful, even years ago, it also was.

[Charlie Dougherty]

Very clear that they could be easily faked.

[Richard Probst]

Dina Maislen is a marketing professor at the University of Southern California. She says about 10% of online reviews are fake, and AI tools have made forgeries easier. Yelp, like many platforms, says it uses a combination of user reports and algorithms to detect fake or solicited reviews so they don't factor into a business's star rating. But even when reviews are genuine, they can be pretty noisy to interpret.

[Charlie Dougherty]

You're being lied to by the Five Star System.

[Richard Probst]

YouTube star Freddie Wong's advice for finding authentic Chinese food went viral a couple years ago.

[Charlie Dougherty]

Go on Yelp and look for restaurants with three and a half stars. Exactly. Three and a half. Not three, not four. Three and a half stars is the sweet spot for authentic Chinese food.

[Richard Probst]

The formula is based on Huang's theory that cultural differences and expectations can result in reviews being very polarized. A restaurant might have great food but lack the kind of touchy feely service many American consumers expect.

[Charlie Dougherty]

Some people think service is very important. For me, I don't care.

[Richard Probst]

The same goes for things like parking, ambience or portion sizes. Thus the sweet spot of three and a half stars. Lately though, Wong says he's given up on online reviews.

[Danushka Nanyakara]

I would rather have a human being tell me, go to this place.

[Charlie Dougherty]

This place is interesting. I trust that more.

[Richard Probst]

But to Richard Probst in Indianapolis, reviews are more than their star ratings.

[Charlie Dougherty]

It's about local. It's about good people figuring out how to make the community better.

[Richard Probst]

His latest five star review just posted. For Luke Tobias's Futuro Pizza, I'm Megan McCarty Carino for Marketplace.

[Amy Scott]

This final note on the way out today we got a peek into Fed deliberations on interest rates, with the release of minutes from the last FOMC meeting November 6th and 7th showing that all 19 participants approved the quarter point rate cut decided at the meeting and that officials, quote, remained confident that inflation was moving sustainably toward 2%, although a couple noted the possibility that the process could take longer than previously expected. Our Digital and On Demand team includes Kerry Barber, Jordan Manji, Dylan Mietanen, Janet Wynne, Olga Oxman, Ellen Rolfes, Virginia K. Smith, and Tony Wagner. Francesca Levy is the Executive Director of Digital and On Demand and I'm Amy Scott. We'll be back tomorrow. This is apn. Hi, this is Mayumi from Long Beach, California.

[Charlie Dougherty]

I love Marketplace and Kai.

[Amy Scott]

He really does a great job delivering important content that I benefit from. So I donated because it just seems like the natural thing to do. Join me by making a gift Marketplace [e-mail] donate.