Marketplace Podcast: "Uncertainty, Bumpy, Resilient-ish" – December 31, 2024

Host: Kai Ryssdal
Reporter: Kristen Schwab
Release Date: December 31, 2024

1. Housing Market Dynamics

Overview:
As 2024 draws to a close, the housing market remains a focal point of economic discussions. The latest S&P CoreLogic Case-Shiller Index indicates a national home price increase of 3.6% in October year-over-year (00:11), signaling a slowdown in annual growth from September. Despite this, home prices continue to soar to all-time highs, compounded by rising mortgage rates.

Key Insights:

• Stephanie Hughes on Market Stability:
  "The housing market right now is like a roller coaster. But not one of those crazy fun roller coasters, more like one for really little kids where not a lot happens." (01:59)

• Economist Oren Klatchian's Perspective:
  Klatchian suggests that mortgage rates are pivotal to the housing market's trajectory. A dip into the 5% range next year could invigorate the market, but the Federal Reserve's anticipated slower pace in cutting rates might hinder this potential boost (02:08).

• Joel Berner on Inflation and Policy Impacts:
  Berner highlights that mass deportations could diminish the construction labor force, escalating building costs and exacerbating inflation within the housing sector (02:44). Additionally, potential new tariffs on materials like lumber could further inflate home prices (03:15).

• Cheryl Merritt’s Optimism:
  Despite high interest rates, Merritt remains hopeful, noting that individuals turning 65 are seeking to downsize homes, presenting opportunities for market movement (03:24).

Quotes:

• "We're expecting interest rates to stay relatively high because the economy is going to stay relatively solid." – Kai Ryssdal (02:31)

2. New York City's Congestion Pricing Initiative

Overview:
New York City is set to implement congestion pricing, charging drivers to enter Midtown and Lower Manhattan during peak hours. This measure aims to alleviate traffic congestion, enhance air quality, and fund mass transit improvements.

Key Insights:

• Benefits Highlighted by Experts:
  Sarah Kaufman from NYU emphasizes the dual goals of improving traffic flow and air quality (04:57). Eric Goldstein from the Natural Resources Defense Council (NRDC) points out that toll revenues will finance essential subway upgrades, including a modern signal system and new subway cars (05:26).

• Opposition from the Trucking Industry:
  Zach Miller of the Trucking Association of New York voices concerns about the financial strain on small trucking businesses, which operate on slim margins and must now absorb additional toll costs (05:57).

• Economic Counterarguments:
  Tom Wright from the Regional Plan Association argues that reduced traffic congestion could lead to more efficient delivery operations, benefiting businesses in the long run (06:32).

Quotes:

• "Deterring at least some people from driving into the city to improve traffic flow and air quality is one of the main goals of congestion pricing." – Sarah Kaufman (05:01)

• "They're discounting completely the benefit from less traffic, the ability to make more deliveries in the same period of time." – Tom Wright (06:22)

3. Battling Counterfeit Products: Deborah Hochlog’s Success Story

Overview:
Deborah Hochlog, owner of Plant Traps in Pittsburgh, shares her journey combating counterfeit products in the online marketplace. The rise of third-party retailers has intensified challenges for small businesses in protecting their brands.

Key Insights:

• Strategic Legal Actions:
  Hochlog has successfully sued hundreds of counterfeit sellers, securing judgments and settlements that significantly reduced fake listings from over 200 in April to just two in November (07:48).

• Expansion into Physical Retail:
  With national distribution secured through partnerships with gardening supply stores and plans to feature in major retailers like Lowe's, Hochlog anticipates further brand control and visibility (08:13).

• Personal Empowerment and Challenges:
  While feeling empowered by her victories, Hochlog acknowledges the ongoing battle against counterfeiters and the continuous effort required to monitor and remove infringing listings (09:05).

Quotes:

• "We've managed to take back control of the brand. We've sued hundreds of sellers and gotten judgments and cash settlements, and it shows in the numbers." – Deborah Hochlog (08:19)

• "It is an unfortunate part of doing business. We are now experts. So when we find listings, we get them taken down pretty quickly." – Deborah Hochlog (09:43)

4. Economic Reflections: Words to Describe 2024

Overview:
Kristen Schwab and Kai Ryssdal engage with five economists to distill the essence of 2024's economy through single-word descriptions. The chosen words encapsulate the diverse perspectives on economic performance and challenges.

Economists and Their Words:

1. Professor Sasha Indarte (Wharton School, University of Pennsylvania)
   Word: Uncertainty (13:54)
   Focus Areas: Election outcomes, policy changes, and Federal Reserve decisions contributed to pervasive economic ambiguity.

2. Menzie Chin (University of Wisconsin)
   Word: Underappreciated (14:49)
   Insight: Despite strong macroeconomic indicators, public sentiment often underestimates the economy's resilience and performance.

3. Ethan Strube (Carleton College)
   Word: Resilient-ish (15:15)
   Perspective: The economy has withstood recession predictions, demonstrating robustness, albeit with lingering uncertainties.

4. Sophia Beg (Morning Consult)
   Word: Moderating (15:53)
   Explanation: Transitioning from the high growth and inflation of previous years, the economy is stabilizing without significant downturns.

5. Julie Smith (Lafayette College)
   Word: Bumpy (16:26)
   Description: The return to desired economic conditions has been uneven, lacking the smooth "soft landing" anticipated by some analysts.

Quotes:

• "The economy was very hot in 2022 and 2023. This year we're just moderating from where we were before." – Sophia Beg (16:06)

• "There hasn't been this sort of smooth, soft landing that we might expect, and we've just sort of had a bumpy ride." – Julie Smith (16:26)

5. Navigating Financial Differences in Relationships

Overview:
Drawing from the "Uncomfortable" segment, the podcast recounts the financial dynamics between Jay Benedith and Ben Williams, highlighting how differing financial habits can strain relationships and how honest communication fosters compromise.

Key Insights:

• Divergent Spending Habits:
  Ben adopts a relaxed approach to spending, while Jay is meticulous, tracking every penny. This disparity led to tensions, such as Venmo disputes over small purchases like seltzer (18:50).

• Cultural Influences on Money Management:
  Jay’s frugality stems from her upbringing and experiences, emphasizing the importance of understanding each other's financial backgrounds to build mutual respect and strategies (20:10).

• Positive Outcomes Through Communication:
  Open discussions about money have led Ben to adopt more mindful spending habits, and Jay to consider broader perspectives beyond her stringent budgeting (22:16).

Quotes:

• "Do I want this, or can I afford this?" – Ben Williams (22:16)

• "I'm coming from a place of coming up to this middle place, and then it seems like you're coming to the middle from a more upper place." – Jay Benedith (21:03)

6. Holiday Shopping Season Performance

Overview:
The holiday shopping season of 2024 saw a robust increase in retail sales, with a notable surge in online transactions. However, individual business experiences varied based on regional factors like weather.

Key Insights:

• Overall Retail Growth:
  MasterCard data reveals a 4% increase in retail sales and a 6.5% surge in online sales between November 1st and December 24th (23:12).

• Local Impact Stories:
  Annie Lang Hartman, owner of Wild Leddy in Michigan, experienced strong online sales despite a temporary dip in in-store traffic due to significant snowfall. This led to balanced annual performance, highlighting the adaptability of small businesses to shifting sales channels (24:09).

• Strategic Focus Post-Holiday:
  With reduced foot traffic, businesses like Wild Leddy plan to concentrate on online sales and creative preparations for the upcoming year (25:16).

Quotes:

• "The week between Christmas and New Year's always feels like the Wild West." – Annie Lang Hartman (24:09)

• "My main focus for myself is to focus on online sales because for our physical location, our foot traffic goes down drastically." – Annie Lang Hartman (24:09)

7. Inflation Insights and Year-End Economic Highlights

Overview:
As 2024 concludes, the podcast offers a nuanced view of inflation and other economic indicators, presenting both challenges and areas of improvement.

Key Insights:

• Declining Prices in Certain Sectors:

  • Gasoline: Down 7.5% due to decreased global demand and increased U.S. production.
  • Consumer Technology: A reduction of 6.7%, reflecting typical industry fluctuations.
  • Used Cars: Prices fell 4.6% as chip shortages easing supply constrain new car prices, making used cars more attractive.

• Persistent Inflation Pressures:
  Although goods prices have moderated, services continue to drive inflation, signaling ongoing monetary policy concerns for 2025 (25:16).

• Market Performance:
  The Dow Jones dipped 28 points, Nasdaq fell 175 points, and the S&P 500 declined 25 points, ending the year with varied sector performances. Notably, technology shares like Tesla, CrowdStrike, and Palantir Technologies saw downturns (12:04).

Quotes:

• "Gas is down more than seven and a half percent because of weaker global demand and because the US is producing more of it." – Kristen Schwab (25:16)

• "Inflation in 2024 was driven less by goods and more by services." – Kristen Schwab (25:16)

Conclusion

As the podcast wraps up, the overarching theme of 2024's economy is one of uncertainty and resilience amid fluctuating markets and policy shifts. From the challenges in the housing sector to the strategic maneuvers of small businesses combating counterfeits, Marketplace provides a comprehensive analysis of the year's economic landscape. Looking forward, the hope is for stability and strength in 2025, tempered by the lessons and experiences of the past year.

Notable Quotes Recap:

• "We're expecting interest rates to stay relatively high because the economy is going to stay relatively solid." – Kai Ryssdal (02:31)

• "Deterring at least some people from driving into the city to improve traffic flow and air quality is one of the main goals of congestion pricing." – Sarah Kaufman (05:01)

• "Do I want this, or can I afford this?" – Ben Williams (22:16)

• "Inflation in 2024 was driven less by goods and more by services." – Kristen Schwab (25:16)

For more in-depth stories and analyses, visit Marketplace.org or tune into the latest episodes on your preferred podcast platform.