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

Summary

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

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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.

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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).

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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.

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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).

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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.

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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.

Transcript

[Adrian Ma]

Npr.

[Darian Woods]

This is the indicator from Planet Money. I'm Darian woods here with Waylon Wong.

[Waylon Wong]

Howdy.

[Darian Woods]

And Adrian Ma.

[Adrian Ma]

Hey.

[Darian Woods]

And you know, there is a lot of economic news we're expecting this week, so we wanted to give you an idea of what we're watching.

[Adrian Ma]

This is the part, I guess, where we ask questions like, what's happening with the economy now? How does the past inform the present? Where will the future take us?

[Waylon Wong]

Or, you know, at the very least, where will the next several business days take us? Today on the show, we look ahead to the week's economic news. Like countries coughing up money for climate change.

[Adrian Ma]

How confident are home builders right now?

[Darian Woods]

And we ask whether US Manufacturing really is in decline. That's all after the break. Okay. We're looking at what's coming up this week in economic indicators. Weyland Wong, take us away.

[Waylon Wong]

What I am watching this week is COP 29. This is the United Nations Annual Climate Change Conference. It's being held in Azerbaijan. And we are headed into the second and final week. And I will say 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.

[Darian Woods]

Yeah.

[Adrian Ma]

For the sake of Cannes.

[Waylon Wong]

Yeah. I mean, we have seen this film before. This time around, Argentina might do the same, though. President Javier Milei pulled the argentine negotiators from COP 29 after just three days, and then he flew to Mar a Lago for a conservative summit.

[Adrian Ma]

So the countries that are still at COP 29, like, what are going to be the hot topics they're talking about this year?

[Waylon Wong]

Well, this is a perennial hot topic, but climate finance, basically, how much money should rich countries pony up to help lower income countries reduce their emissions and adapt to climate change? Back in 2009, wealthy countries said they would provide $100 billion a year by 2020.

[Darian Woods]

And that didn't happen in time.

[Waylon Wong]

Right, Right. They missed their timeline. So they're expected to come up with a new goal now. And as you might expect, there's a lot of disagreement over what the new number should be. I mean, it could be higher, but how much higher, who knows? And of course, where is the money going to come from? Now, one buzzword from this year's COP 29 is Solidarity Levies. Have you guys heard of this?

[Darian Woods]

Time for me.

[Adrian Ma]

Yeah. What is, what is that?

[Waylon Wong]

A solidary levy is a tax that raises money for a particular cause that a government wants to fund. These are actually already in use in dozens of countries. One example is France. It has a special tax on airline tickets that goes towards public health. So in the case of climate, the Solidarity Levy crowd wants to tax industries, shipping or fossil fuels and then channel that money to these lower income countries.

[Darian Woods]

Isn't that the basic job of government, to tax some things and pay for others?

[Waylon Wong]

Put a name on it called Solidarity Levy and then you earmark it for a special.

[Darian Woods]

A rose would be just as sweet by any other name. Waylon.

[Waylon Wong]

Well, I think you should just be happy you learned some new vocab today.

[Darian Woods]

It sounds like a levy, but they're giving it a nice new name.

[Waylon Wong]

Yeah, it's just a tax.

[Adrian Ma]

So what are we expecting is going to happen with the the U.S. paris Agreement? I mean, will we find out this week?

[Waylon Wong]

Who knows? I mean, interestingly enough, the CEO of Exxon said publicly last week that the US should not pull out. He said it would create too much uncertainty.

[Adrian Ma]

Wow. Plot twist, plot, plot twist. Okay, so my indicator that I'm watching actually has to do with uncertainty. Slash certainty. Anyway, it's called the Home Builders Confidence Index. It's this index which actually comes out this morning, and it's a measure put together each month by the national association of Home Builders. And 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? And the index itself is on a scale from 0 to 100. And the closer you get to 100, the more positive the feelings are. Right. So for example, back in 2020, the Home Builder Confidence Index actually reached 90.

[Waylon Wong]

Oh, so they're like feeling great.

[Darian Woods]

Yeah, Like I remember in 2020, there was a lot of demand for single family homes because of lower interest rates and work from home, among other things.

[Adrian Ma]

Absolutely. But over the next few years, that confidence was eroded by a number of factors. Supply chain issues, inflation, rising borrowing costs. All these things made the costs of building homes more expensive, which made it unaffordable for many would be buyers. This year, the index fell into the 40s. However, the last couple of months, we have seen a bit of an uptick in builder confidence. And that could be because of the Federal Reserve, which has gotten inflation down to almost its 2% target. It's also begun cutting interest rates, which should result in cheaper mortgages in time. So this week I'll be watching to see if that trend continues.

[Waylon Wong]

And what's your spidey sense telling you.

[Adrian Ma]

Adrian, my spidey sense is telling me that maybe we could expect to see like a slight uptick in the confidence of builders. And that could be because of the presidential election. Right. President elect Donald Trump has promised to cut regulations that he says make it harder to build housing. And so I think it's possible, if not this month, maybe next month we could see that factor in.

[Darian Woods]

From building homes to building everything else. I'm going to be looking at manufacturing, specifically the Philadelphia Fed's manufacturing survey, which comes out this Thursday.

[Adrian Ma]

Right. So this is like a big theme for the election. Democrats, Republicans are always talking about the health of U.S. manufacturing.

[Darian Woods]

Yeah. And in the short term, there's actually been some recent upticks in manufacturing activity after a fairly lackluster last two and a half years. We'll see if that continued into November.

[Waylon Wong]

Longer term, though, I mean, I feel like the bigger story is the decline of American manufacturing and whether it's possible to reverse that.

[Darian Woods]

Yeah, a lot of talk, but the reality is much more interesting. It's true that as a share of jobs, manufacturing is a lot less now than it was several decades ago. So in 1947, one in three jobs were manufacturing, and now it's about one in 10.

[Adrian Ma]

Not many of those. One in three jobs in 1947 was podcasters.

[Darian Woods]

I don't think we count as manufacturing, even though we do manufacture. Beautiful smiles.

[Adrian Ma]

We manufacture many listeners words, I guess.

[Waylon Wong]

Smiles.

[Darian Woods]

Anyway, going back to manufacturing, actual manufacturing.

[Waylon Wong]

Yes.

[Darian Woods]

On the actual output produced, the story's Murkier. In the US over the last 20 years, the country has produced more or less as much as it ever has. And that's thanks to automation and doing things better.

[Adrian Ma]

Fewer manufacturing jobs, same output. And what about that output as a share of the economy?

[Darian Woods]

Yeah, as a share of the economy, it's also fallen. Manufacturing was about 20 or 25% of economic output in the US in the 1950s, and now it's about 10%.

[Waylon Wong]

That's so interesting. So it's like if you took the number of cars and pianos and computer chips being made in, I don't know, like the year 2000, we still produce roughly the same amount of stuff with fewer workers. And also we've produced so much more of other things. Services like, I don't know, brewing coffee, making websites, teaching people how to skydive.

[Darian Woods]

That's important.

[Adrian Ma]

Where did that come from?

[Waylon Wong]

I don't know.

[Darian Woods]

I just Skydiving. Listen, it's a big part of my.

[Adrian Ma]

Personal basket, skewing the numbers here.

[Waylon Wong]

Darian's just jumping out of planes constantly. But that all this skydiving that Darian's doing means that manufacturing has become less and less important relatively.

[Darian Woods]

Yes. And there is of course, this human toll to those job losses which can economically hollow entire towns. So over the last 70 years or so, the US went through a manufacturing jobs decline. It has gone through a relative manufacturing stuff decline. But it's also worth keeping in mind we're still producing roughly as much stuff as we always have.

[Waylon Wong]

Okay, we will wait to see whether that stays true in November.

[Darian Woods]

Yeah, my eyes will be glued to the Philadelphia Feds website. And while I wait, I'm actually going to jump out of this airplane now. See you guys later.

[Adrian Ma]

Darian, don't forget your parachute.

[Darian Woods]

What?

[Waylon Wong]

Darian, are you okay?

[Darian Woods]

I'm okay. That was not a soft landing.

[Waylon Wong]

This episode was produced by Angel Carreras with engineering by Valentina Rodriguez Sanchez. It was fact checked by Sierra Juarez. Kate Kinchandon edits the show and the indicator is the production of npr.