Summary of "A fraught climate change conference, how are US home builders doing, and more"

The Indicator from Planet Money
Release Date: November 18, 2024
Hosts: Darian Woods, Waylon Wong, and Adrian Ma
Producer: Angel Carreras
Engineering: Valentina Rodriguez Sanchez
Fact-Checked by: Sierra Juarez
Edited by: Kate Kinchandon

Introduction

In this episode of The Indicator from Planet Money, hosts Darian Woods, Waylon Wong, and Adrian Ma delve into pressing economic topics set to shape the week. The discussion centers around the highly anticipated COP 29 Climate Change Conference, the current state of the US Home Builders Confidence Index, and the ongoing narrative surrounding US manufacturing. The hosts aim to provide listeners with insightful analysis and expert perspectives to navigate the complex economic landscape.

COP 29 Climate Change Conference

Location: Baku, Azerbaijan
Duration: Second and final week of the conference

Waylon Wong opens the discussion by highlighting the tensions surrounding COP 29, noting the impact of recent political shifts in major countries. He states, “This COP has been a little fraught. I mean, maybe it's always a little fraught, but we just had the election in the US and Donald Trump is said he's going to pull out of the Paris agreement” (01:06).

Key Topics:

1. Climate Finance:
   The primary focus is on climate finance, specifically the financial commitments from wealthy nations to aid lower-income countries in mitigating and adapting to climate change. Historically, in 2009, wealthy nations pledged to provide $100 billion annually by 2020—a target they failed to meet.

2. Solidarity Levies:
   A significant buzzword at this year's conference is "Solidarity Levies." This concept involves levies or taxes earmarked specifically for climate-related funding. Waylon explains, “A solidarity levy is a tax that raises money for a particular cause that a government wants to fund” (02:29). He contrasts it with general taxation by emphasizing its targeted nature.

Notable Quotes:

• Darian Woods remarks, “Isn't that the basic job of government, to tax some things and pay for others?” (02:57), to which Waylon responds, “Put a name on it called Solidarity Levy and then you earmark it for a special [purpose]” (03:00).

Political Implications: The potential withdrawal of the US from the Paris Agreement creates uncertainty on the global stage. Waylon references Exxon’s CEO's stance: “The CEO of Exxon said publicly last week that the US should not pull out. He said it would create too much uncertainty” (03:23).

US Home Builders Confidence Index

Adrian Ma transitions the conversation to the Home Builders Confidence Index, a monthly measure by the National Association of Home Builders that gauges the sentiment among single-family home builders. The index ranges from 0 to 100, with higher numbers indicating greater confidence.

Current Status:

• Recent Trends: The index, which plummeted to the 40s due to factors like supply chain disruptions, inflation, and rising borrowing costs, has shown signs of recovery in recent months.
• Potential Drivers of Confidence: Federal Reserve policies aimed at reducing inflation to near the 2% target and the initiation of interest rate cuts could lead to cheaper mortgages, thereby boosting builder confidence.

Notable Quotes:

• Adrian explains the index's significance: “The way they calculate this index is they survey a bunch of companies that build single family homes and they ask them things like, how are sales going? How do you think they're going to be going in the near future” (04:00).

Future Outlook: Adrian anticipates a continued uptick in builder confidence, possibly influenced by the upcoming presidential administration. “President-elect Donald Trump has promised to cut regulations that he says make it harder to build housing” (05:13), suggests a favorable regulatory environment for home builders.

US Manufacturing Sector

Darian Woods shifts focus to the manufacturing sector, emphasizing its significance in the upcoming presidential election discourse.

Current Trends:

• Employment vs. Output: While manufacturing jobs have declined—from one in three jobs in 1947 to about one in ten today—the overall output remains consistent thanks to automation and efficiency improvements.
• Economic Share: Manufacturing's share of the US economy has also decreased from approximately 20-25% in the 1950s to around 10% currently.

Notable Quotes:

• Waylon Wong summarizes the situation: “Fewer manufacturing jobs, same output. And what about that output as a share of the economy?” (07:01).
• Darian adds context on historical job trends: “In 1947, one in three jobs were manufacturing, and now it's about one in 10” (06:30).

Human Impact: The decline in manufacturing jobs has had profound effects on communities reliant on these industries, leading to economic hollowing of entire towns. Darian poignantly notes, “There is of course, this human toll to those job losses which can economically hollow entire towns” (08:01).

Future Indicators: The hosts will be monitoring the Philadelphia Fed's manufacturing survey released on Thursday to gauge current manufacturing activity. Darian mentions, “There has been some recent upticks in manufacturing activity after a fairly lackluster last two and a half years” (05:48).

Conclusion

The episode wraps up with the hosts expressing anticipation for upcoming economic indicators that will shed light on the discussed topics. Darian humorously departs after a light-hearted exchange, leaving listeners eager for more in-depth analysis in future episodes. The production credits acknowledge the team behind the scenes, ensuring listeners are aware of the meticulous effort in delivering quality content.

Notable Quotes Recap:

• Waylon Wong: “This COP has been a little fraught...” (01:06)
• Darian Woods: “Isn't that the basic job of government, to tax some things and pay for others?” (02:57)
• Adrian Ma: “The way they calculate this index is...” (04:00)
• Waylon Wong: “Fewer manufacturing jobs, same output...” (07:01)
• Darian Woods: “There is of course, this human toll...” (08:01)

This comprehensive summary encapsulates the critical discussions and insights shared by the hosts, providing listeners with a clear understanding of the economic issues at hand without needing to listen to the full episode.