Marketplace Podcast Summary: The Renter-Homeowner Wealth Gap Hosted by Marketplace, Episode Released on November 28, 2024

In this comprehensive episode of "Marketplace," host Amy Scott delves into several pivotal topics shaping today's economic landscape, with a particular focus on the significant wealth disparity between homeowners and renters. The episode intertwines discussions on business spending, housing market dynamics, demographic shifts, and cultural trends, offering listeners a multifaceted understanding of the current economic climate.

1. Business Spending and GDP Updates

The episode begins with an analysis of recent data released by the Commerce Department. Amy Scott highlights that new orders for durable goods—a category encompassing products expected to last at least three years—increased modestly by 2.10% in October. Additionally, the Bureau of Economic Analysis (BEA) provided a revised estimate for third-quarter GDP, maintaining the headline growth rate at 2.8% annually. Notably, the BEA adjusted the non-residential fixed investment component upwards, indicating a rise in business spending.

Stephanie Hughes from Marketplace elaborates on these findings, emphasizing the nuanced growth within different economic sectors.

2. Durable Goods and AI Investments

Ethan Struby, an economics professor at Carleton College, discusses the surge in businesses investing in artificial intelligence (AI). He remarks, “The only way to know how it fits into your process is to try it and to see if it actually is successful” (03:04). This sentiment underscores the experimental nature of AI integration in business operations.

The episode also touches on the increased expenditure in transportation equipment, with new orders rising by 0.5% in October. Ryan Young, a senior economist with the Competitive Enterprise Institute, interprets this as automakers and other industries stocking up on equipment in anticipation of future economic policies and potential tariff changes (03:26).

3. Inflation and Housing Market Insights

Amy Scott provides an update on the inflation landscape, noting that the Personal Consumption Expenditures (PCE) price index—the Federal Reserve's preferred measure of inflation—rose at an annual rate of 2.3% in October, slightly above the Fed's 2% target (03:51). Concurrently, the National Association of Realtors reported a 2% increase in pending sales of existing homes last month, signaling a robust housing market despite rising home prices.

4. The Renter-Homeowner Wealth Gap

A central segment of the episode examines the stark wealth disparity between homeowners and renters. Samantha Fields discusses findings from the Aspen Institute, which reveal that the median net worth of homeowners is approximately $400,000, compared to just about $10,000 for renters (05:10).

Key Insights:

• Homeownership as Wealth Building: Chris Herbert from Harvard's Joint Center for Housing Studies emphasizes the long-term financial benefits of homeownership, stating, “If you can buy a house in your 20s or early 30s and pay off that 30-year mortgage over time, you're going to build wealth much earlier and accumulate more over your lifetime” (05:24).

• Investment Disparities: Kristen Talheimer Bingham from Bingham highlights that higher-income individuals are not only more likely to own homes but also possess other investments such as stocks, bonds, and 401(k)s. “Nearly 80% of homeowners have at least some of those [investments], but less than half of renters do” (05:51).

• Economic Stability for Homeowners: Ethan Struby adds, “The opportunity to stabilize your housing expenses affords a household more opportunities to gain more wealth by paying down debt and putting money into savings or retirement” (06:08).

The discussion underscores the formidable barriers renters face in accumulating wealth, exacerbated by the recent surge in home prices, making homeownership increasingly unattainable without significant financial backing or familial support.

5. Baby Boomers Moving South: The "Baby Chasers" Trend

Transitioning to demographic trends, Heather Gillers from the Wall Street Journal explores the phenomenon of baby boomers relocating to the southern United States, a trend she refers to as "baby chasing." These older Americans are moving closer to their grandchildren, leveraging their accumulated wealth to purchase homes without the burden of high-interest rates.

Notable Points:

• Population Shifts: Gillers notes a decade-long growth in young families in southern states like Texas, Florida, and the Carolinas, intersecting with the traditional retirement destinations (07:56).

• Economic Impact: Cities like Georgetown, Texas, exemplify the positive economic effects, with residents over 55 contributing significantly to local spending—“people 55 and over make up for 45% of personal spending in the US” (10:43).

• Future Considerations: Gillers speculates on the sustainability of this trend, suggesting that as grandparents age and seek more support, their proximity to family will continue to influence relocation patterns (11:45).

6. Market Updates and Holiday Sales

Amy Scott provides a snapshot of the stock market, reporting declines across major indices: the Dow Jones Industrial Average fell by 138.3 points (approximately 0.31%) to close at 44,000, the Nasdaq dropped 115.6 points (about 0.60%) to 19,060, and the S&P 500 decreased by 22 points (just under 0.37%) to end at 5,998 (12:52).

In anticipation of the holiday season, Scott cites a CBRE analysis expecting holiday sales in the US to surpass one trillion dollars, with returns projected to account for approximately 160 billion dollars or 16% of sales. She examines the performance of major online retailers, noting varied impacts from these returns:

• Amazon.com: Shares ascended by 1%.
• Walmart: Increased by 6.10%.
• Target: Rose by 2.8%.
• Etsy: Slid by 9.10%.

These figures illustrate the mixed fortunes of retailers grappling with holiday return volumes.

7. Memory Palace Podcast Discussion

In an engaging interlude, Ethan Struby converses with Nate DeMaio, the creator and host of the "Memory Palace" podcast, about his new book, Memory True: Short Stories of the Past. DeMaio articulates the inspiration behind the podcast and the book, drawing parallels to the "memory palace" technique—a mnemonic device used to organize and recall information by associating it with specific spatial environments.

Highlights:

• Storytelling Philosophy: DeMaio emphasizes the importance of capturing the "in-between moments" of history, where real life unfolds beyond the sanitized narratives often told (20:15).

• Personal Reflections: He shares a poignant anecdote about discovering contrasting photographs of his grandparents, illustrating how personal history can be more complex than family stories suggest (20:37).

• Sustainability of Creative Projects: DeMaio reflects on maintaining the podcast over 15 years by staying true to its unique, earnest storytelling approach, despite the challenging economics of the industry (22:15).

8. Chocolate Shops and Rising Costs

Kristen Talheimer Bingham of Dean's Sweets in Portland, Maine, discusses the challenges her business faces due to significant increases in the cost of chocolate. Over the past year and a half, the price of dark chocolate has surged by approximately 20%, while milk and white chocolate prices have jumped by 40% (25:14).

Key Points:

• Operational Challenges: Bingham describes the meticulous preparation her team undertakes for the holiday rush, emphasizing inventory management to handle unexpected spikes in demand (25:14).

• Customer Behavior: Despite rising costs, Bingham observes positive signs of consumer spending in her niche market, indicating resilience and sustained enthusiasm for quality chocolate (25:14).

9. Thanksgiving Food Waste

Concluding the episode, Amy Scott addresses the staggering amount of food waste associated with Thanksgiving. The nonprofit ReFED estimates that approximately 316 million pounds of food, valued at over half a billion dollars, will be discarded during the holiday season, including the equivalent of more than 8 million turkeys (27:40).

Notable Quote: Journalist Brian McManus from Vice poignantly describes turkey as, “almost without fail a dried out, depressing hunk of sun-baked papier mache, a jaw-tiringly chewy, unsatisfying and depressingly bland workout” (28:00).

This segment serves as a reflective commentary on consumer habits and the environmental impact of excessive food waste during festive periods.

Conclusion

This episode of "Marketplace" meticulously navigates through diverse economic topics, with a spotlight on the entrenched wealth gap between homeowners and renters. Through expert interviews, data-driven insights, and engaging storytelling, listeners gain a deeper appreciation of the multifaceted forces shaping personal finances and societal trends. Whether discussing the economic implications of business spending, the challenges of homeownership, or the cultural shifts driven by demographic changes, the episode delivers a wealth of information designed to inform and provoke thoughtful consideration.