Loading summary
Transcript37 lines
- [00:00]
Kristen Schwab
This Marketplace podcast is supported by Remarkable. Are you still taking notes on paper? Change the way you work with Remarkable Paper Pro, a premium digital notebook with the feel of paper for taking notes, reviewing documents and getting organized. Get the digital tools you need for your workday without any distractions and stay focused with a unique color display that reflects natural light. It's portable, practical and professional. Get yours today@remarkable.com this Marketplace podcast is supported by Justin Vineyards and Winery. Since 1981, Justin has been producing world class Bordeaux style wines from Paso Robles on California's Central Coast. As the pioneer of Paso, Justin wines are what put Paso Robles on the winemaking map. With a rich history of accolades, Justin produces exceptional wines and is proud to be America's number one luxury Cabernet. Whether you're a first time wine drinker or a wine aficionado, Justin has a wine for every celebration and occasion. Looking for special wine to serve at your holiday table? Visit justinwine.com I mean, the calendar is.
- [01:06]
Kai Rysdal
Kind of a construct, right? Especially at this time of year. From American Public Media, this is Marketplace in Los Angeles. I'm Kai rysdal. It is the 4th of December today. Good as always to have you along everybody. It is technically Wednesday, but some degree of day of the week confusion will be forgiven seeing as how there are still Cyber Monday branded sales floating around out there two days on and I'm pretty sure I saw a Black Friday ad yesterday. I don't know about you, but this onslaught of deals, deals and more deals I personally find kind of tiring. But what does that matter for retailers, I suppose, as long as it gets us to keep on spending. Marketplace's Kristen Schwab looks at the pervasive message of get it before it's gone.
- [02:05]
Kristen Schwab
I got an email from a clothing brand this morning. Last call up to 50% off really ends tonight, but I wouldn't be surprised if the deal doesn't really end tonight. The whole buy now or else thing feels like the boy who cried wolf. Sucharita Kadali, a retail analyst at Forrester, says this increasingly anxious messaging comes from an anxious place retailers this year. If anything, I think they felt more pressure. Pressure because consumers are still feeling shaky about the economy. And this year it's an unusual Christmas because Thanksgiving was so late. In any case, the urgent messaging is working. Between Thanksgiving and Cyber Monday, Americans spent more than $41 billion online, up 8.2% from last last year, according to Adobe Analytics Record sales. Even though Black Friday deals started like a month ago, the words are taking on new meanings. Ji Jung, a marketing professor at the University of Maryland, says Black Friday is now just a proxy for big sale. Thing is, that message could begin to water down the effectiveness of the sales season itself and train consumers to hunt so shoppers are becoming smarter and that they have more options to exercise their spending power. More options because stuff is on sale all the time and that raises the bar for good deals, says Erin Wilson, who leads retail practice at Boston Consulting Group. What we're seeing is kind of a magical number, around 30% discount, less than that and shoppers might not splurge, which has fed into this frenzy of Black Friday and Cyber Monday all season long, making the actual occasions less precious. Here's such a Rita Cadali again. That's essentially what I've discovered is I was like holding off on like buying like placemats and I'm like these prices are no better than they were three weeks ago. And even if you do miss a sale, there's always one around the corner as close as New Year's Day. I'm Kristen Schwab for Marketplace.
- [04:06]
Kai Rysdal
On the general theme of economic activity, the Fed's Beige Book was out today. It's eight times a year. Anecdotal and often quirky look at what's happening out there. Two items of note from the Cleveland Fed quote several restaurateur reported higher sales which one attributed to workers return to the office. So that Also from the Federal Reserve bank of St. Louis this a holiday decorator noted that their wealthy clients were opting to decorate without using their services and were not purchasing new decor as they usually do. Wall street today there was actually a little bit of holiday cheer. We'll have the details when we do the numbers. There's a theme of sorts that's been coming up in a lot of our coverage lately, a corollary to our rule that even if the economic headlines are robust, it just doesn't matter if people aren't feeling it in their day to day. And economic growth is pretty robust thanks in large part to strong consumer spending and related a strong labor market. Still, though, things feel off. You talk to small business owners and they're likely to list some familiar symptoms of the pandemic hangover, right? Higher costs, high interest rates, lower profit margins and some degree of uncertainty about where the economy is headed. That said, some small business owners do have advantages that can help them mitigate that uncertainty. One of those advantages? Owning their own shops. Marketplace's Justin Ho has that one.
- [05:53]
Kristen Schwab
Jason Nagar's first restaurant opened in a rented space in Southern Maryland back in 2007. In 2015, when he decided to open a new place, he had a different plan in mind. The intent all along was to just prove the concept and know that we're going to get in and be successful and then one day purchase the doing. It's called Brick Wood Fired Bistro and it focuses on modern American food, craft beer, bourbon and Neapolitan style pizza. And after a couple years of leasing its space, he did purchase the building. Nagar says he was excited to start building up equity instead of paying a landlord. He also felt more emboldened to invest in upgrades. We did a full kitchen overhaul. We've done significant upgrades to our bar area. We put in a different entry exit for our carryout. Nagar says those upgrades were crucial during the pandemic, especially since carryout became a big part of the business. And when he opened the third restaurant a couple years ago, no lease. Owning it from day one gave us the confidence to perform the necessary upgrades and do the build out that we wanted. Not every business can afford hundreds of thousands, if not millions of dollars to buy a building. But Laurelin Wilson, the owner of an accounting and wealth management company called Look Ahead Advisory, says if business owners can make it work, they should. Every time a client's come to me and been like, hey, I'm looking at buying a building to host my business in, the first thing I say is, okay, let's run these numbers, let's run this cash flow and see how we can make that happen. Wilson says businesses get more tax advantages from owning property than even homeowners do. Like, you're going to be able to deduct, you know, the carrying costs of the property, such as your property taxes, your mortgage interest, utilities you incur. And Wilson says property can be valuable. You know, if you ever want to sell your business or whatnot, like down the road, just because you're selling, you know, your business, which is an asset, doesn't mean you necessarily have to sell your building, which is the asset too. But one of the biggest advantages that comes with owning a space, especially right now, is that it can help a business owner avoid any surprises that can come at the end of a lease, says Nathan Raggy, CEO of First Pacific bank in Southern California. You know, you're a construction company and you lease an office slash warehouse space that has a yard for your trucks and your lease comes up in three years and let's say rents have shot up by then, whatever the market is is really going to kind of dictate what your new expenses are going to be, right? You're, you're kind of beholden to what's going on at that time when your lease comes up. And commercial rents have been rising for retail space, industrial space and even office buildings. According to the real estate data company Costar Raggy says that means when a lease is up for renewal, business owners might have to make some tough decisions. Using my contractor as an example may have to drive farther, look into other markets because they can't get the space for the price they want. That kind of uncertainty helped to push Lesundra Everett to buy a new office building for the company she owns in Chesterfield, Virginia, called Everet Tax Solutions. I'm not going to have to worry about somebody either selling the property or raising the rent. I get to decide those things, everett says. As a property owner, she knows her monthly payments will be stable for the long run. She says that's a big deal given how volatile her other expenses have been. Whether it is, you know, your general liability insurance, the cost of what you're paying your employees, the software that you use to facilitate paying the employees. So you have to try to control those costs where you can. Everett says she's hoping to hold onto the property for as long as she can so that one day her kids can decide what to do with it. I'm Justin Ho for Marketplace.
- [10:04]
Kai Rysdal
Justin was telling us about how owning their own space has been a boon for some businesses. There's also been a whole technological revolution that's been a huge help for a growing number of business owners. Generative AI and while big companies tend to lead the pack in AI adoption, very small businesses think one to four employees have been using AI at relatively high rates as well. That's according to some new analysis from the Census Bureau. Marketplace's Elizabeth Troval has more now on how those businesses are supercharging their small staffs with AI.
- [10:36]
Kristen Schwab
Ant Nevanisek runs a small insurance agency in Chico, California. It's her two employees and AI crafting emails. I can get them out quicker. When people have specific questions, I can give them almost like a treatise within the email about very specific things. She's also created chat bots to field questions about health insurance. Instead of asking HR for that, the bot could answer that as well. Specific to the company's group health plan, like co pays deductibles. You know, how much does it cost to see a specialist? She's gotten so good at AI, her insurance clients are asking her to help them create AI tools. And in Kansas City. Vanessa Juby says her business Leva uses AI to support new mothers at work. All of our content within our platform is delivered via AI. She says. AI helps her offer more personalized content at a larger scale. So if you're going to be formula feeding, breastfeeding, if you're going back to work, all of the content is really personalized to you. Roughly one in four small businesses are implementing generative AI as a business tool, according to payroll firm Gusto. Nick Tremper is an economist there. Everybody has parts of their job that just have to happen right, but might not be the thing that they were like actually hired to do. And Gen AI allows more time for doing the thing that the employee was hired to do. And Amy Reed with the Texas Gulf Coast Small Business Development center says she's expecting to see more use of AI, especially for really small firms. I think we're just going to see them finding that they're creating better prompts so that they're getting better outputs and using AI on a more regular basis instead of like an oh yeah, I can use AI. She says. As business owners get more educated on AI, they're getting past their skepticism and are closer to embracing these tools. I'm Elizabeth Troval for Marketplace. Coming up, turning the lights on in that place required like full attention and full explanation.
- [13:07]
Kai Rysdal
Sounds complicated. First though, let's do the numbers. Dow industrial is up 308 points on this Wednesday, seven tenths percent, 45,014 for the blue chips. The Nasdaq grew 254 points. That's 1.3%.19735s and P 500 up 36.6%. 6086 executives from a handful of airlines testified before the Senate today about ceding fees after a Senate subcommittee found that such fees had earned American at Delta, United, Spirit and frontier. It combined 12.4 billion American Somalians between 2018 and 2023. No turbulence in the stock market for them. American airlines rose 2.8%. Delta lifted 2 and 7. 10% today. This one's bad news for my daughter. Chipotle says it's raising prices 2% across the board to offset inflation. That comes after the company tried to keep its menu affordable even as ingredients cost more. Chipotle gained four and eight tenths percent today. You're listening to Marketplace.
- [14:17]
Kristen Schwab
When you think about businesses growing their sales beyond forecasts, sure you think about a product with demand, a focused brand and influence driven marketing. But an often overlooked secret is the businesses behind the business making selling and for shoppers buying simple for millions of businesses. That business is Shopify. Nobody does selling better than Shopify, home of the number one checkout on the planet and the not so secret secret with Shop Pay that boosts conversions up to 50%, meaning way less carts going abandoned and way more sales going. So if you're into growing your business, your commerce platform better be ready to sell wherever your customers are scrolling or strolling on the web, in your store, in their feed, and everywhere in between. Businesses that sell more sell on Shopify. Sign up for your $1 per month trial period at shopify.com marketplace. All lowercase go to shopify.com marketplace to upgrade your selling today. Shopify.com marketplace There are over 1.5 million nonprofit organizations in the US and millions more around the world. How do you know which ones can make the biggest impact with your donation? GiveWell was founded to help donors with that exact question. They pour over independent studies and charity data to help donors direct their funds to evidence backed organizations that are saving and improving lives. GiveWell wants as many donors as possible to make informed decisions about high impact giving. You can find all their research and recommendations on their site for free. You can make tax deductible donations to their recommended funds and charities. And GiveWell doesn't take a cut. If you've never used GiveWell to donate, you can have your donation match up to $100 before the end of the year or as long as matching funds last. To claim your match, go to givewell.org and pick podcast and enter Marketplace at the checkout. Make sure they know that you heard about GiveWell from Marketplace to get your donation matched again. That's givewell.org to donate or find out more.
- [16:23]
Kai Rysdal
This is Marketplace. I'm Kai Rysdal. It feels I know a little early to be talking taxes. The Internal Revenue Service isn't even going to tell us when it's going to start accepting our 1040s until sometime in January. But really, is it ever too early to talk taxes? Especially this year, because the Internal Revenue Code's going to be at or near the top of the GOP agenda come the change in administration. A whole bunch of provisions in the 2017 Tax Cuts and Jobs act, one of, if not the signal achievements of the first Trump term. They are set to expire in the coming year and Republicans are oh so keen to set tax policy for the second term. But even with unified Republican control in Washington, as Marketplace's Kimberly Adams reports, there's going to be plenty for lawmakers to argue about.
- [17:12]
Kristen Schwab
The 2017 tax law changed what most American people and businesses owe the IRS every year. It increased the standard deduction so fewer people itemize it cut the tax rate for corporations and most private businesses. But there was a catch. To lower the overall cost of the law, at least on paper, Congress used some gimmicks. Owen Zadar is a professor of economics at Princeton. The way that the original 2017 bill got passed was they made some of the things expire, particularly the things that they thought might be hard to have people stop, like tax cuts for a broad group of people. Most of the tax cuts for individuals and some of the provisions for businesses expire at the end of 2025. The new Congress will have to decide which tax changes to extend, plus whether to add some new ones and, of course, how to pay for them. A lot of attention will be about different groups within the Republican Party, some of whom care a lot more about economic growth, some of whom care about a range of other things, for example, says Samantha Jacoby, deputy director of federal tax policy at the center on Budget and Policy Prior, probably the one that might be the most contentious, especially on the House side, is the salt cap. That's the limit on how much of your state and local taxes you can deduct from what you owe the irs. You used to be able to pretty much write off everything you paid, but the 2017 law capped that write off at $10,000, which effectively raised taxes for people in several mostly Democratic states. A number of Republicans, particularly those in higher tax states like New Jersey, New York, California the states that were most affected by the salt cap, want to raise the salt cap or lift it. Either option would increase the total cost of any new tax legislation. Then there are all the tax related changes President Elect Trump promised on the campaign trail, says Garrett Watson, a senior policy analyst at the Tax Foundation. Exempting tipped income from income tax. Exempting Social Security benefits from income tax, providing a special deduction for auto loan interest on your tax return that you pay. All of those, of course, are going to have revenue effects. The cost of all these changes together could run into trillions of dollars over 10 years. Just renewing the expiring provisions of the 2017 law alone, most of which benefited wealthier Americans, would cost an estimated 4 to 5 trillion dollars over a decade to cover the final bill, whatever it turns out to be. Republicans in Congress are reportedly considering cutting Medicaid and food assistance. Plus there's President Elect Trump's favorite word. He's also considering tariffs as one potential offset or revenue raiser for some of these other tax cuts. Although Watson and many other economists say it's not clear how or if that would even work. The big picture debate that's already percolating among Republicans in Congress, just how much are they willing to add to the deficit to get all this done? Are we going to have a deficit increase? How much will that be? And then what can we fit into it if that's the number that we're okay with? Complaining about the growing deficit was one thing when Republicans were in the minority or in divided government. It's another thing entirely now that they have all the control, but also a whole bunch of the affected constituencies and their lobbyists clamoring for their own special tax breaks. In Washington, I'm Kimberly Adams for Marketplace.
- [21:04]
Kai Rysdal
College completion rates are up. They are, in point of fact, the highest they've been in 12 years. There's new data out today from the National Student Clearinghouse Research center that shows more than 60% of students who started working toward a degree in 2018 have finished. And the real success story here is community colleges offering two year degrees. Marketplace's Kelly Wells spent the day looking at what's going on there.
- [21:29]
Kristen Schwab
When Rebecca Hansen graduated high school, college wasn't in the cards. She became a cosmetologist instead. My dad was like, this is great. When are you starting college? And I was like, this is it, dad. I'm never going to college. Like, this is my career. But when the youngest of her four kids started school five years ago, she headed to community college to start studying to become a therapist. It just developed me into a much stronger mother, wife and community member. Hansen is part of a wave of people heading to community colleges and earning their degrees. Doug Shapiro with the National Student Clearinghouse Research center cites two things behind the trend. Number one, the sharp decline in enrollment after the pandemic was a wake up call for community colleges. They needed to focus a lot more on supporting the students that remained and helping them stay on track to graduation. And number two, there has been major growth in something called dual enrollment. That means high school students who are taking college classes while still in high school and their completion rates were much higher. Shapiro expects both of those things to continue, so he expects completion rates to keep rising. Bill Debaun at the advocacy group the National College Attainment Network says that is promising news, but there's context to consider here. At four year institutions, an average of more than 60% of students graduate within six years, whereas community college sector here is still at 43% completion, there's still a lot more room to grow. And even though completion rates are up, enrollments have fallen from their peak in 2010. We do need to think about whether we are getting enough students to start in the first place so that they can benefit from the increased completion outcomes we observe in this data. Debaun Sundays enrollment of 18 year olds is down, too. And when high school graduates don't start college immediately, there's a much lower chance that they ever will. I'm Kaylee Wells for Marketplace.
- [23:43]
Kai Rysdal
We've been exploring some history on this show lately, housing history specifically. We've done the origins of the ranch house, the college dorm, the mobile home, as well as some of the styles and trends you see all over the housing industry in this economy. But just as our housing has history, so too do we all have history with our housing. Here with today's installment of our series, Adventures in Housing.
- [24:06]
Kristen Schwab
My name is Melissa Mescue. I'm a writer, among other things, and I lived in New York for 13 years. Everyone that I knew in New York had just nothing but like sob stories about all the, you know, apartments that they couldn't get, having to butter up people that, you know to try to get a guarantor, brokers fees, etc. But I was specifically looking for a sublet. The first one that I checked out was habited by an artist and she had all of her beautiful paintings all over the house. So it was kind of hard to walk around in. But then I went down the street and checked out a different sublet and it ended up being the one that I stayed in. The guy who lived there had lived there for 12, 13 years. I was very happy to keep his place exactly as it was because his weird style was perfect for mine. There was very unusual furnishings and also the place was tricked out with the most bizarre light fixtures. Every single room had a different combination of like a dial, a switch. Turning the lights on in that place required like full attention and full explanation. The guy I rented it from didn't tell me that it was a rent stabilized place. And probably the reason he didn't tell me it was rent stabilized is he fully intended to come back. So I would never actually get to see the lease myself, but sometimes I would cross paths with other people in the building who were also paying rent. So I got to hear what their rent was. And it was at least $1,300 more than mine. So that was a real shocker. I always planned to send a postcard to the place after I moved out as a hello to the people that moved in. I don't know its current status. I don't know if it's still a rent stabilized place or not. Maybe it got renovated, maybe the old parquet floor is gone, but the apartment was really special actually.
- [26:34]
Kai Rysdal
Melissa Mescue, writer and a former New Yorker Whether you are loving your current place or dreaming of some place you did once live, tell us about it. Marketplace.org AdventuresAndHousing.
- [27:03]
Kristen Schwab
SA.
- [27:33]
Kai Rysdal
This final note on the way out today, the New York Times does a thing every year. It's called the Dealbook Summit, a day long interview fest with Dealbook founder Andrew Ross Sorkin sitting down with various business and economic luminaries which today for the first time included Fed Chair Jay Powell. Here is just a taste.
- [27:51]
Kristen Schwab
There's a guy you probably know who.
- [27:54]
Kai Rysdal
Has a sense that your job, he.
- [27:56]
Kristen Schwab
Says it's the greatest job in government. You show up to the office once.
- [28:00]
Kai Rysdal
A month and you say, let's flip a coin.
- [28:03]
Kristen Schwab
And everybody talks about you like you're a God.
- [28:05]
Kai Rysdal
Yeah. That is President Elect Trump.
- [28:09]
Kristen Schwab
I know. Yeah.
- [28:12]
Kai Rysdal
So he's right. The part about it being the greatest job. It might well be right.
- [28:16]
Kristen Schwab
I have to say I do, as.
- [28:17]
Kai Rysdal
I mentioned, I do love the work.
- [28:19]
Kristen Schwab
And it's a special place, you know, to be surrounded by people who are so dedicated and to know that your.
- [28:25]
Kai Rysdal
Work really matters for people.
- [28:27]
Kristen Schwab
It's a very special honor to do that work. Did you laugh when you heard that?
- [28:32]
Kai Rysdal
I thought he's partly right there because. But he's not right. About to come to work, you know, once every month.
- [28:37]
Kristen Schwab
Just the flipping of the coin part. Yeah, that part is.
- [28:40]
Kai Rysdal
It's not quite.
- [28:40]
Kristen Schwab
It's not like that. Not like that.
- [28:42]
Kai Rysdal
Yeah. No. Love my job. I love my job. I love my job. Our media production team includes Brian Allison, Jake Cherry, Jesson Dooler, Drew Johnstadt, Gary O'Keefe, Charlton Thorpe, Juan Carlos Dorado and Becca Weinman. Jeff Peters is the manager of media production and I'm Kai Rysdal. We will see you tomorrow, Everybody.
- [29:09]
Kristen Schwab
This is 8:00pm Understanding Personal Finance can feel like an impossible task. But it doesn't have to be that way. I'm Janelias Final and on Financially Inclined, I'll guide you through simple money lessons that will change your financial future. Learn about credit scores, how to avoid scams, and why you need a savings account. Plus, we explore the brain science behind FOMO and what you can do to make smarter money decisions. Listen to Financially Inclined wherever you get your podcasts.