Keep on truckin'

This episode examines key economic indicators and how they influence Federal Reserve decisions, focusing on interest rates, employment data, and retail credit practices.

1. Upcoming economic reports could heavily influence the Federal Reserve's decisions on interest rates.
2. The dual mandate of the Federal Reserve focuses on controlling inflation and maximizing employment.
3. Retailers heavily rely on credit card fees, and new caps on these fees could impact their profits.
4. The episode provides expert analyses on potential economic scenarios based on upcoming data.
5. Insights into how economic policies trickle down to affect everyday consumer and business practices.

1: Introduction

Kai Ryssdal sets the stage for the episode, emphasizing the importance of economic data for the week. Kai Ryssdal: "Data is the lifeblood of the Federal Reserve of late."

2: Federal Reserve's Focus

Discussion on the Federal Reserve's expectations and reactions to economic data. Jay Bryson: "Keeping price increases low and steady is only half of the Federal Reserve's famous dual mandate."

3: Retail and Credit

Exploration of the impact of potential new regulations on credit card late fees on retailers. Kristen Schwab: "Store cards encourage spending and generate another line of income."

1. Stay Informed: Regularly follow updates on economic reports to better understand market trends.
2. Financial Planning: Consider how changes in interest rates could affect loans and savings.
3. Consumer Awareness: Be mindful of credit card agreements, especially with potential new fee caps.
4. Invest Wisely: Adjust investment strategies based on economic indicators and Federal Reserve actions.
5. Budget Management: Anticipate changes in employment trends and prepare financially.

Warehouses and cargo-moving companies spent a few weeks in limbo after the Baltimore bridge collapse. Now, they’re working hard to reroute goods that usually went through the city’s port, with some truckers driving far and wide to pick up freight redirected to other cities. In this episode, how one cargo transportation company is adjusting. Plus, who will hurt the most from a cap on credit card fees, what economic data the Fed is keeping an eye on this week, and why desk phones are disappearing.

People

Kai Ryssdal, Jay Bryson, Kristen Schwab

Companies

Federal Reserve, Wells Fargo, Consumer Financial Protection Bureau

Books

None

Guest Name(s):

None

Content Warnings:

None

Kai Ryssdal
Data or datum? We're good either way. From American Public Media, this is Marketplace in Los Angeles. I'm Kai Rysdal. It is Monday today, the 29 April.

Good as always to have you along, everybody. We try to shy away from hyperbole on this program, but sometimes the news is what the news is, and this is a big news week for this economy. Data is the word to the wise in the plural, by the way, and it's coming from everywhere. Reports from the private sector will include the consumer confidence index from the conference board and a key index on manufacturing from the Institute for Supply Management. There is federal data coming as well.

The Labor Department will give us the employment cost index, literally how much labor is costing employers. We'll get the jolts data as well. Open jobs in this economy. And then the biggie on Friday, the April unemployment report. Now, you do not have to be a too terribly regular listener to this program to know that data is the lifeblood of the Federal Reserve of late.

The central bank wants to see more of it over more time. And the cornucopia of data coming this week is very read completely unlikely to change the Fed's mind on interest rates. Right now. The federal funds rate is going to stay where it is. But all the same, we thought it would be a good idea for marketplaces, Justin Ho to get a read on how chair Powell and the gang are thinking about things.

Justin Ho
Let's get one type of data out of the way. When it comes to prices, we know exactly what the Fed is looking for. You know, very, very low rates of price increases. That's Jay Bryson, chief economist at Wells Fargo. Thing is, keeping price increases low and steady is only half of the Federal Reserve's famous dual mandate.

The other half is maximizing employment. If the unemployment rate rises when the jobs report comes out this week, Bryson says, that could actually be good news because it could mean more people joined the labor force and started looking for. Jobs that would help keep wage gains in check. And that's also a very important critical component of inflation. Previous jobs reports have shown that wage gains have been slowing down.

Winnie Caesar, global head of strategy at credit sites, says if wages stagnate, that would begin to tell the Fed that there's maybe a little bit more slack in the labor market than they are currently viewing, and maybe the Fed will start thinking it's time to cut interest rates. On the other hand, Caesar says wage gains could pick up again, and that would be yet another data point to kind of confirm that the Fed should probably stay a little bit more restrictive for longer than most people are expecting, at least at the beginning of the year. There's also the Institute for Supply Management's manufacturing index, another private sector reports out this week. That'll give us a sense of how the economy is doing more generally. Tim Dewey, chief US economist at SGH Macro Advisors, says the Fed will be watching for whether those come in stronger than expected.

And if that's the case, then they're going to say, well, wait a second here, why should we cut rates anytime soon? But since inflation has been pretty stubborn this year, Dewey says the Fed just isn't as concerned with those private sector data points, or even the labor market for that matter. It would have to take some big moves, big negative moves in the rest of the economy in order to divert your focus from the inflation ending, Dewey says. Once the Fed feels confident enough that it's tamed inflation, then it can focus on the job market. I'm Justin Ho for Marketplace no big.

Kai Ryssdal
Negative moves on Wall street this Monday, up moderately. We'll have the details when we do the numbers.

The average late fee on a credit card bill right now, and this is from the Consumer Financial Protection Bureau, is $32. And that, says the CFPB, which is to say the Biden administration, is a junk fee. And the White House is trying to crack down on them by capping that late fee that banks charge credit card users at dollar eight per transaction. Good for consumers, right? Not great if you're a bank.

Also, it's safe to say that retailers like Nordstrom and Macy's and Kohl's aren't wild about it either, especially given the hardish times that those chains now find themselves in. Because as marketplaces, Kristen Schwab reports, those credit cards have become an important part of department stores bottom lines. When you think of credit cards, you might think of one of the big issuers, like Visa or Mastercard, or maybe you think of banks. But credit cards were actually invented by retailers. In the beginning, this was just done as a bookkeeping thing, you know, in a notebook behind the counter, essentially.

Justin Ho
Bill Maurer is a professor of anthropology and law at the University of California, Irvine. He says these less formal lines of credit were the standard for a while, but eventually stores started offering physical cards. They were these small metal plates kind. Of look the same size and shape as a military dog tag that would have the customer's information on it. The point was to create customer loyalty.

It was the early 20th century, and new stores were opening left and right. Retailers and merchants really sought a way to get customers to keep coming back to their shop instead of going to their competitors, to the point where, you know, some merchants almost functioned like bankers. Retailers eventually realized they are better at selling stuff than lending money, and actual banks took over the logistics. But store cards are still an important piece of their business today. They help retailers gather data on what people are buying and promote targeted discounts.

And Moody's retail analyst Christina Boney says these credit cards connect customers to the brand. I do remember that I was really excited to have a Bloomingdale's credit card, she says. Store cards encourage spending. They also generate another line of income because they have steeper interest rates than bank issued cards. Those rates recently hit record highs of nearly 29%.

One analyst estimates that Macy's makes nearly half of its operating profits from its credit card program. Boney says the consumer Financial Protection Bureau's move to limit late fees will hurt department stores the most. It's one more thing that they're going to have to contend with and going to have to pivot. If you think about those lost dollars, just flow directly right to the bottom line now. There will always be some demand for store cards, says Ted Rossman, a credit card analyst@bankrate.com.

Dot it's often easier to get approved for, say, a gap card than an American Express. So it's many people's first line of credit. And sometimes store cards are the only solution to a financial emergency. Point of sale, easy financing, like somebody who really needs credit now, because otherwise. They'Re not going to be able to.

Buy that new refrigerator or that new set of tires. But Rossman says those customers are increasingly moving away from credit cards and instead are choosing buy now, pay later options like Affirm and Klarna to lure them back. He says more retailers might move towards co branded cards. Those are cards issued by the store that can be used anywhere, not just at the one brand, a retailer like Costco, that's a really popular card, not just for Costco, but for gas and travel and other things. And retailers will need to push their cards even harder.

So we might experience that familiar moment at checkout even more when the sales associate motions toward that little pamphlet by the cash register. They tempt you, right? Like, do you want to save 10% off today's purchase or 20% off today's purchase? Sounds pretty good until you compare it to that 30% apron. I'm Kristen Schwab for Marketplace.

Kai Ryssdal
We don't have, as far as I know, a marketplace credit card. But, you know, we do have a podcast check it out marketplace.org or obviously follow us on the platform of your choice.

Two things to start this next segment. First, high housing costs and low inventory. The through line of the american housing market for a good long while now are a global issue as well, including over in the UK. According to the most recent, in an annual dataset from the british government in 2023, full time workers over there would have to have spent 8.3 times their annual earnings to be able to buy a home that is double what it was in 2000. So that's item one.

Item two is the computer game the Sims, originally released in 2000. The game where you create and control digital people and among other things, build houses for them free of costs and other reality based constraints. Here's today's installment of our series, adventures in housing. My name's Elle Hunt. I live in Norwich, England, and a few months after I put in an offer on my first flat, I started paying the Sims.

Elle Hunt
I hadn't played it since 2000, when I was eight years old, and it was a real kind of sight of nostalgia for me. I was always very focused on the home ownership aspect of it. I would use cheat codes to give me limitless funds and create sort of gargantuan palaces. And there's a lot of attention paid to the interior design, the decor, and if I couldn't afford it, I'd just give myself more money.

The Sims had really kind of seeded that desire for home ownership in me at a young age, and what it represented, the stability, the sense of that you could create a dwelling that really reflected your whole being. And I'd spent the interim 20 plus years walking away from that dream a bit. And here I was, back again. I felt quite wistful for the hopes and feelings that I had as a child of what adulthood would be like. I also was reflecting on how different it had been and how much harder it was.

Only when I was in university, I think, or about to graduate, that I realized how bad the housing market was headed. And since then, it's pretty steadily gotten worse, no matter where I've lived. Returning to the sims, being kind of reminded of all of that childhood optimism I had, or just not even optimism. The sense that if I worked hard, by 30, I would be able to have a house where I could knock down a wall. That has not been a guarantee.

I moved in about six weeks ago. When I got the keys, it sort of hit me how with that freedom also comes a lot of choices and a lot of bills, and you do have to afford it within the reality of your income. It is not as easy as the Sims made it out to be by clicking a wall. Don't like that color? Click again.

Oh, you're out of money. We can fix that. There are no cheat codes in real life.

Looking back on my past eight year old self playing the sims, making her kind of McMansions in the suburbs, I think she would have anticipated that I would have maybe had a bigger house and maybe in London, to be honest, at the age of 33 and where I'm at in my career. But I can also see looking back like I made choices that I were within reach, that I could afford. And I'm very happy with where I've ended up.

Kai Ryssdal
Elle hunt happy in her flat in Norwich, England. Housing is indeed a global story. So tell us your adventure, would you? Wherever you live, you can do it@marketplace.org. Dot.

Justin Ho
Coming up, there's nothing about the desk phone that I miss, literally have. Not used the one in my office in better than four years. Now, first, though, let's do the numbers. Dow industrials up 146 points, about four tenths percent, 38,386. The Nasdaq advanced 55 points.

Kai Ryssdal
Three tenths percent finished at 15,983. The S and P 500 added 16 points. Also three tenths percent, 51 and 16. We get first quarter results from Amazon tomorrow. Can't wait that long.

All right, fine. Here's one morsel to take the edge off. The company says more customers are waiting less time. Time for their orders. Nearly 60% of prime orders in the top 60 metro areas in this economy arrived the same day or next day.

That's up from 50% about a year ago. Amazon delivered three quarters of 1% to investors today. Tesla surged 15%. That's after Beijing apparently nodded yes to the question, hey, can we bring our controversial advanced self driving service thingy to your massive market? You're listening marketplace.

With access to so much information, it's hard to feel like an informed, discerning citizen. That's why on make me smart, which is a podcast from Marketplace, we make it easy for you to stay in the know. Hi, I'm Kai Rysdal. Every weekday, Kimberly Adams and I unpack the latest from Washington, DC. The Senate minority leader has announced that he will step down as the republican leader.

What's happening in AI? I mean, don't buy at the top, but holy cow, artificial intelligence and all the companies related to it are the hot new thing. And we do the numbers so as a refresher. Inflation is the rate of increase in the prices of things. It's not just sort of things getting more expensive.

Justin Ho
It's a speed at which things get more expensive. Because in a world that's constantly changing, we all need to stay smart. Listen to make me smart. Wherever you get your podcasts, this is Marketplace. I'm Kai Risdahl.

Kai Ryssdal
Sunday was a big day at the port of Baltimore, which welcomed its first container ship since the Francis Scott key bridge collapsed last month. The ship squeaked in through a temporary 35 foot deep channel that opened up at the end of last week. Mostly, it should be said, to let ships that had been stuck in port out. But even the relative trickle of incoming traffic is a bright spot for the thousands of workers and the dozens and dozens of small businesses that move cargo in, out and around the port of Baltimore marketplaces. Amy Scott spent some time on the ground to see how it's been going.

Justin Ho
Inside an 80,000 square foot warehouse in Baltimore, a young man unloads boxes of canned albacore tuna from the back of a truck and stacks them on a pallet. Next, the pallet will get wrapped in stretchy plastic and whisked away on a forklift to be stacked among food from China, Europe and South America. We have lemon juice. We have banana chips, a lot of olives. Sue Monahan founded Baltimore International Warehousing and Transportation in 1987.

Today she has four warehouses and 70 employees. And before the key bridge collapsed last month, she says most of this cargo would have come in on container ships through the port of Baltimore, just ten minutes away. Now it's arriving at the port of Norfolk, Virginia, several hours to the south or in New York to the north. So other truckers are bringing it to the warehouse, where normally we would take it in, our own trucks would pick it up, so we lose out on that revenue. After the bridge collapsed, Monahan still had some containers to pick up at the port.

But with no more coming in, she had to lay off most of her drivers. She left it to HR manager Kristen Perrin to have those conversations. They were difficult. A lot of them were understanding like they expected it. They knew it would be coming.

But it's probably the worst part of my job. But a few weeks later, Monahan says the state approved the company for a worker retention grant, which will allow us to keep the drivers employed even when we don't have a full day for them. They don't have to collect unemployment, which is not enough money for them to live on. So we'll be able to at least keep them employed, we think, until the cargo returns to Baltimore and in the meantime, they've done the paperwork and permitting so their own drivers can pick up and deliver at the ports of Norfolk and Philadelphia. Monahan was able to call all of her 16 staff drivers back in the dispatch office, a large screen shows each driver's location on a map.

A week earlier, it would have been mostly empty, but now several names with their truck numbers are moving throughout the region, tracked by GPS. And you can see there's some drivers in Norfolk, some coming back from Norfolk. We have drivers up in Pennsylvania, New Jersey. They don't like to be tracked, but I love it.

In the early afternoon, one of those drivers pulls into the yard. How's it going? How you doing? Laquan Jefferson has just returned from delivering an empty container to Norfolk. He's been driving with the company for eight years and says the last couple weeks were tough.

Laquan Jefferson
When you get that phone call saying, sorry, we're going to have to let you go, and you got children and bills and everything to pay, you get worried about certain things. But luckily, they called me back. He's still getting used to the long drive. He started his day at 03:00 a.m. And it took him four and a half hours going down to Virginia, coming back.

It depends on what time you leave. Friday, it took me six and a half hours to get home, and I like to drive, but I don't like to sit still. He'd rather sit in traffic than at home, not getting paid. There's really no choice. So, you know, if you want to work.

But it's a nice little ride, one. He probably won't have to do much longer. The Army Corps of Engineers plans to reopen the port's main shipping channel by the end of May. But Sue Monahan says that won't mean business as usual. Vessels still won't come to Baltimore because the steamship lines are not booking cargo to Baltimore until the channel opens.

Justin Ho
So I think it's going to be another month, month and a half before those ships come back to Baltimore. This has all been pretty instructive for her daughter Shannon, who wants to take over the business someday. She's getting quite an education. Yeah. You still want to take it over after this?

Shannon Monahan says, yeah, we're still here. We're still going. All of our trucks are here now and moving now. They're hoping their customers will stick with them until business does get back to normal in Baltimore. I'm Amy Scott.

For marketplace.

Kai Ryssdal
Technology has a way of just disappearing things. Sometimes, you know, payphones come to mind, and in that vein, old style landlines more generally. Turns out barely a quarter of adults in the United States still have them, and it may be getting harder to hang onto them at and t and the rest are looking to get out of the regular old copper wire landline business altogether and transition to fiber optics. Also, there's mobile, which is increasingly taking over in the business world, where once upon a time, the desk phone reigns supreme. Marketplace's Megan McCarty Corino has that one.

Justin Ho
Juliet Piet can still visualize the massive desk phone at her first job out of college in 2016. Like it was one of those big, like, serious phones, and it rang constantly. I want to say like, I was on that phone, like it was my job, but it literally was my job. So Pierre was the receptionist at a patent law office in Greenville, South Carolina, with about 100 employees. Doherty and Manning, this is Juliet.

How may I help you? That was her phone voice, and she had a big printout of office extensions, which she marked with asterisks who wanted calls sent to voicemail or transferred to an assistant? It was everything. It was absolutely everything and then nothing, Pa says. In subsequent jobs, she found herself suddenly without that bulky piece of equipment on her desk.

He now works in marketing at a real estate firm, which had kept a few desk phones for senior staffers. But even those people have recently been told they need to give them up. Barb Grothe is an independent communications technology consultant who's worked on corporate telephony systems since the 1980s. There's nothing about the desk phone that I miss. She first noticed companies getting rid of the curly corded hardware in the early 2010s, when Internet based phone systems became the norm.

Workers could make calls on their computers or route them to a smartphone. And then there was the rise of video calls and instant messaging apps now with hybrid work. And since COVID has happened, you know, give me my laptop and give me my cell phone and I'm a happy camper. Desk phones are still common in industries like government or healthcare, where security is a top concern. But she says many other businesses no longer want to shell out to upgrade equipment that now feels unnecessary.

Work has increasingly shifted off the desk, says Sharon Storch, an organizational communications professor at the University of Nebraska at Omaha. And it moves with us in every space and in any time. Not being tied to a hardwired device thats fixed to a particular location means its hard to step away, literally, when theres no turn off switch, then thats when things start to occur. As far as burnout, she says, smartphones contain worlds that can easily suck you in, like a work email when you're having dinner with your family. Or the reverse, you're in the middle of a really big meeting, you're trying to really focus and have some deep work time, right?

And then you pick up your phone if you're using it for both and you got a picture of your dog just finished being groomed, or you got a picture of the home security camera that dinged because your mailman came. And the costs are often more than psychological, says Kerry Stevens at UT Austin's Technology and Information Policy Institute. Organizations are asking their employees to use their personal devices, and quite often in the US, it's without additional compensation. Only a handful of states require employers to reimburse staff for using their cell phones for work. Not everybody does have unlimited plans, and not everybody wants their personal device to be used for work.

Juliet Pier at the real estate office in South Carolina says she tries not to give out her personal number for work and sticks to email and Zoom calls now that personal and business are completely together, like peanut butter and jelly. I do not want people having that much access to me, she says. One of her colleagues is even considering buying a cheap flip phone to leave at the office. I'm Megan McCarty, Corino for marketplace.

Kai Ryssdal
This final note on the way out today, see if this rings true for you. I saw in the Wall Street Journal today that high grocery prices mean the days of us taking one trip to one supermarket to get our groceries are changing. Grocery prices, as you may know but not be able to quantify, are up 21% in the past three years. And that data is from the Labor Department. What it means in practice is more stops at more different stores.

The market research firm Alex Partners says we are making 8% more trips to buy the groceries we want. Our daily production team includes Andy Corbin, Alize Hassen, Maria Hollenhorst, Sarah Leeson, Sean McHenry, and Sofia Terenzio. I'm Kai Rizdahl. We will see you tomorrow, everybody.

This is APM. With access to so much information, it's hard to feel like an informed, discerning citizen. That's why on make me smart, which is a podcast from Marketplace, we make it easy for you to stay in the know. Hi, I'm Kai Rhisdahl. Every weekday, Kimberly Adams and I unpack the latest from Washington, DC, the Senate.

Justin Ho
Minority leader has announced that he will step down as the republican leader. What's happening in AI? I mean, don't buy at the top, but holy cow, artificial intelligence and all the companies related to it are the hot new thing. And we do the numbers so as a refresher. Inflation is the rate of increase in the prices of things.

It's not just sort of things getting more expensive, it's a speed at which things get more expensive. Because in a world that's constantly changing, we all need to stay smart. Listen to make me smart wherever you get your podcasts.

Kai Ryssdal
Listen to make me smart wherever you get your podcasts.