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Soft, slowing, not stagnant, though. Pick your own word to describe the labor market, would you? From American Public Media, this is Market Play. In Los Angeles, I'm Kai Rizdala. It is Friday today. This one is the 5th of July. Good as always to have you along, everybody. Too much to talk about, too little time, so we are going to get right to it. Heather Long is at The Washington Post. Courtney Brown is at Axios. Hey, you two.
All right, Heather. So 206,000 new jobs, 4.1% is the unemployment rate or was, I suppose, last month. I would like you to pick your word for the American labor market and tell us why. Okay.
I will go with cooling off. Can we pick two words? We can take two. Yeah, go ahead. All right. You know, overall, you read those numbers out loud. And if we were just looking at those in a vacuum, we'd say, hey, that was a pretty good month. You know, people are still getting hired. The unemployment rate is still very low. We just hit another 20-year high in the prime age labor force participation rate. These are all good things.
But if you look at them relative to where we were a year ago, the picture is very clearly cooling off. Then it isn't easily waved off as just one month that maybe was a little weaker than expected. We do have close to 800,000 more people unemployed today than a year ago. And that's starting to bite a little bit.
Courtney, with the stipulation that the Federal Reserve has said many times it does not want to get ahead of itself on cutting rates and thus letting inflation sort of come back out of the bag, nor does it want to be behind. And I wonder where this number puts them or these, you know, this report. I cannot wait for the July Fed meeting for this very reason, because it's a very have my calendar marked. Yeah.
Yeah. So I think you can think about the Fed's job in recent months as having been not easy, but easier than what it looks like it will be ahead. They were really focused on getting inflation down, fighting inflation, and the labor market was just chugging along. Now we're getting some signs that there is some weakness in the labor market, but
The Fed minutes sneakily came out Wednesday afternoon before everyone was on holiday. And one thing that stood out to me was that officials had pointed out that they're pretty concerned that there's starting to be some strain on lower income households. And that's something worth watching. And it poses a risk to the economy. Hadn't seen that language before. So there are all these variables that are starting to add up that the economy is not what it used to be.
So, Heather, where does this put us? I mean, that's a real question, right? And it's not just me. It's everybody out there. I think the best way to think about it is now we would all be pretty happy if we could just freeze the economy and we'd all be pretty happy.
a month job growth, about 2% GDP growth, inflation around 3%, hopefully going a little lower. The problem is what we've got going on with a 5.5% federal funds rate is a really tight squeeze on the economy. And that's why you see people starting to talk about the recession risk rising and things like the SAM rule,
one of our best recession indicators. It's not flashing red, but man, we're getting close. And why would we risk? Why would we risk it? Now you need to tell people what the Psalm rule is in lay people's terms, please.
All right, really quickly, I'll try. So it's our best recession indicator. And basically, it means that the unemployment rate has gone up at least half a percentage point in the past year. And it makes intuitive sense, right? When you start to see people losing their jobs, even just a few, they pull back on spending. And then usually more people start losing their jobs.
and more pullback on spending. And so that's why the SAM rule has been so effective over time at predicting and codifying recessions, because at the end of the day, all these crazy indicators, it comes down to do people have jobs and are they spending money? Right. Claudia Assam, occasional guest on this program and source for many of our reporters. Courtney, let me ask you this, though, and it's you wrote about this in Axios earlier.
I think the strain that is now becoming clear on low and middle income people in this economy after all these years of inflation, higher price levels now, and the federal funds rate of 5.5%. Yeah. I mean, I think for a long time we were being really annoying and saying like, oh, the Fed funds rate is so high. Why aren't we seeing it in the economy? And then, you know, Fed officials would say, well, there's a lag. I think we're at the point where we can almost
almost comfortably say that the higher interest rates is starting to weigh on the economy. And one place where you can really see it is that, you know, lower income to middle income people are falling behind on
on credit cards. They're falling behind on auto loans. And these things are getting more difficult to get because the interest rates are so high. I guess the big question I have is if there was a delay when you raise interest rates, is there a delay when you cut interest rates? What I mean by that is has the economy already slowed? And if the Fed cuts rates, is it enough to
Allow the economy to pick up steam again. I don't know. Right. So, Heather, what she's saying is long and variable lag works both ways. Right. Powell says all the time monetary policy works with a long and variable lag, usually intuited to mean raising rates takes a while to grind through the economy. Cutting rates might as well. And therein lies the peril.
It does. And so that's why we're seeing a lot of predictions for a September rate cut. And I'll just I had a chance to speak with the Claudia Sam earlier today. Let me just say two great quotes that stuck with me. She said, we are in yellow flag category now. And she said, we should be having a recession risk discussion. And that is right into your point and Courtney's. You got to be sorry, super quickly to both of you, Heather, you got to believe they are having this conversation or will during the July meeting, right?
It's crazy if they're not. And we'll look for it in the language. Is it still a strong labor market or is it solid now? Oh, my goodness. Courtney, you're right. They're going to have a conversation.
Definitely going to have the conversation. And we got a little hint of it from Fed Chair Powell this week when he was speaking in Portugal. He admitted that the risk of inflation and the risk of a weakening labor market, these two things are coming more into balance. And he said more so than a year ago. We get a nice consumer price index report next week. We get the latest read on inflation. And if that
comes in soft as Wall Street expects it will, then yeah, it kind of looks like they have to have a really tough discussion about what to do next. Courtney Brown and Axios and Heather Long at the Washington Post on a Friday of July the 4th. Thanks, you two. Thanks, Guy. Wall Street today, Jobs Day Friday. Traders were, you know, pleased with the state of play. We'll have the details when we do the numbers. ...
It's been a very long four years, four years and almost four months, actually, since the job market and the economy, regular life, were turned upside down by the pandemic. We were thinking about that and this morning's jobs report and how things look, as Courtney and Heather and I were talking about. They look pretty OK. In fact, this job market is looking a lot more like it did in the before times. Marketplace's Mitchell Hartman reports now on the return to, dare we say it, normal jobs.
Take your mind back to February 2020. COVID-19 was barely a thing yet. The job market was humming along. Then all hell broke loose. But now, finally... The June jobs report reflects the normalization of the U.S. economy back to its pre-pandemic trend.
Joe Brusuelas is chief economist at consulting firm RSM. This is what an economy full employment looks like. It's pretty easy to get a job. Wage growth, albeit cooling, is still fairly solid. And moving above the inflation rate, we have an unemployment rate 4.1%. That's constructive and encouraging.
In 2021 and 2022, the rate at which workers were quitting and switching to new jobs to get higher wages hit levels never seen before. Now, the quits rate is back below its pre-pandemic level, and employers have more clout in hiring again, says Frank Fiorelli at Payroll Processor Paychecks. Okay.
A couple of years ago, they were hiring anybody they could just to fill the job. And now they're being a little bit more selective. It has been a long slog back for some industries. Leisure and hospitality jobs only just recovered to pre-pandemic levels. But Robert Frick at Navy Federal Credit Union says what's most important is... Not just reaching the pre-pandemic level, but hitting the pre-pandemic trend. That's when we've truly healed.
Things like health care, teachers and government work, we're finally in the ballpark for all of those jobs. The crisis period is over. And even as job creation slows, it's still growing more than fast enough to absorb new entrants to the workforce. I'm Mitchell Hartman for Marketplace. Every city has its iconic piece of infrastructure. Paris has the Eiffel Tower, San Francisco the Golden Gate Bridge, and Houston...
Well, Houston has the muddy brown waters of the Houston Ship Channel. You'd be hard-pressed to find visiting the Houston Ship Channel on anybody's bucket list. Yet, this 110-year-old dredging masterpiece is critical to U.S. oil and gas exports. And without it, it was built soon after the discovery of oil in the area, by the way. Houston just would not be Houston. Marketplace's Elizabeth Troval takes us along this very industrial artery on a decades-old free public tour.
As the white 95-foot Sam Houston tour boat pulls off to make its way through the Houston Ship Channel, dozens of elementary school students sit in the air-conditioned cabin to hear the ground rules from boat mechanic Jennifer Williams-Alcia. No playing or leaning over the rails inside or outside. We chug along at around 10 miles an hour. Over the loudspeaker, the automated tour begins. We
We're 52 miles from the Gulf of Mexico and the open sea. Just a few short hours, these large cargo ships make their journey to the end of the channel. We're not going the whole 52 miles down the channel, Lisa Ashley Daniels with Port Houston tells me. We step outside onto the dock and pass aging warehouses and city docks.
We're just now disembarking and getting on the way on the upper part of the Houston Ship Channel where the Bayou Tributaries come together and where the channel was actually dredged from there, seven miles shy of downtown Houston to Galveston Bay.
She tells me how the ship channel was built soon after the 1900 Galveston hurricane. It was the deadliest natural disaster in U.S. history and sent a warning to build trade further inland.
We were able to draw business. At that time in 1914, that was when we dredged it. That was also the same time the Panama Canal was also created. The building of the Ship Channel also followed the Spindletop Oil Discovery about 80 miles east of Houston, paving the way for the city to become an energy capital. Today, roughly 70% of what is imported and exported through the Ship Channel is petroleum products.
Ashley Williams introduces me to the two captains of the Sam Houston, Genaro Ambriz and Greg Penton. Penton, who is steering, uses the radio to talk with an approaching barge. Good morning. One was too good for you? Yeah, I don't want one. One was...
So you see this barge coming around the corner? I just called for passing agreement. The barge looks like a flat floating rectangle with garbage cans. They're deepening the Houston ship channel. It's a $1.6 billion infrastructure improvement project funded by the federal government and Port Houston. So they're using large, they're called clam buckets,
And they're grabbing mud from the bottom and they're putting it into these barges. Mud and gunk and we keep waiting for them to pick up a car or something. We voyage further through Houston's industrial underbelly. Captain Genaro Ambriz points to a petroleum product storage facility. Well, there's actually a refinery here on this side. We pass several very large ships, including one called the Seaways Hercules.
You see all these pipelines that run across the top. Whenever you see a ship like that, it's called a tanker. Tankers filled with petroleum products. Sometimes foreign workers on these massive tankers wave to the tour boat. Penton says he'll look to see what country they're from and wonder. What their lives are, where they've come from, how they got into the maritime business. They'll work six months straight on that ship without ever getting off that ship.
After 90 minutes or so, as the tour wraps up, I check in with incoming third grader Penelope Basulda to see what she thought. I saw water. I saw trash inside the water and ships around us. She got a free air-conditioned yacht ride through one of the most important ports in the United States. They can do a good adventure around this area.
A nice little adventure on a hot summer day. In Houston, I'm Elizabeth Troval for Marketplace. Coming up, Californian minimum wage. So it's like it's higher than what I make, but also it doesn't translate well. West Coast, best coast, I guess. First, though, let's do the numbers.
Dow Industrials up 67 points on this Friday, 0.2%, 39,375. The Nasdaq picked up 164 points, about 0.9%, 18,352. The S&P 500 added 30, that's 0.5%. Yet another record close, 55,67. For the five days going by, the Dow increased about 0.5%. The Nasdaq climbed 2.8%. The S&P 500 up 1.5%.
Gold hit a six-week high today after that jobs report that Mitchell was telling us about. The precious metal topped $2,400 an ounce. That's about $500 more per ounce than the price of gold this same day last year. Bonds rose yield on the 10-year T-note down 4.28%. You're listening to Marketplace.
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This is Marketplace. I'm Kai Risdahl. The Office of Management and Budget released new guidelines earlier this year about collecting race and ethnicity data on federal forms and surveys. The headline was that there's a new checkbox for Middle Eastern and North African Americans. A separate question about Hispanic ethnicity is going to go away. Hispanic or Latino will be an option in a new combined race and ethnicity question.
But the changes are also going to affect the way American Indians and Alaska Natives show up in federal data, which could further obscure our understanding of what the economy is really like for Native people. Marketplace's Savannah Marr has more on how that picture got so cloudy to begin with. Native people are a small group relative to the population. That's just one reason it's hard to capture good data about that group, says Robert Maxim.
Soon after he started working as a research fellow at the Brookings Institution, Maxim remembers getting a note from a higher-up about the think tank's employee demographic questionnaire. Hey Rob, I don't see any Native Americans on our demographic data. Did you forget to fill out the form or something? Maxim is Mashpee Wampanoag, and he hadn't forgotten.
In response to the survey's race question, he had checked two boxes. American Indian and white. So he had been counted under the two or more races category, which meant the survey's results showed exactly zero Native employees working for Brookings. And that was when I kind of had the aha moment. That Native people were probably being erased from other data sets this way.
Maxim looked into it, and yeah, turns out 60% of people who check the American Indian Alaska Native box on federal forms also check another box. And when they do, federal agencies lump them together with all the people who check more than one box, which renders a huge number of Native people invisible. And at the same time, aren't providing enough resources to truly understand how they view their own identities.
And lots of Native people view our identities as political, not strictly racial. Maxim says new federal data collection rules won't help.
When it was a separate question, he says many Native people were checking the Hispanic ethnicity box in addition to American Indian and Alaska Native. Now that they're captured by the same question, the answers are grouped together too. It's going to disproportionately affect us. Maxim says even more data about Native people, everywhere from the U.S. Census to the monthly jobs report, will get buried in that catch-all two or more races category.
The Office of Management and Budget says it encourages federal agencies to present as many race and ethnicity combinations as possible. For example, one category for American Indian and Alaska Natives alone or in combination. But it doesn't require that, which is a problem here because of the federal government's constitutionally protected treaty obligations to tribal nations, says Eric Henson with the Harvard Project on Indigenous Governance and Development.
Hey, you promised all these people care in a number of different arenas going forward for all of health care, education. Housing, law enforcement, food assistance. Henson says tribes ceded millions of acres of land in exchange for those services. But the rollout of federal money and resources is based on flawed data that undercounts Native populations.
Well, if you don't know how many Native people there are, or if you don't know where they are, their educational attainment levels, their health care outcomes. Well, it can definitely make it difficult to fulfill those treaty and trust obligations. Casey Lozar is with the Minneapolis Fed's Center for Indian Country Development, which works to fill some of these data gaps. Well, it takes...
Frankly, it takes a lot of work. The center unearths raw, unpublished data on Native people and repackages it into something that's actually legible to decision makers, like the center's Native American labor market dashboard or its economic profiles of tribal communities. We are working to close the data gaps that really impair our
high-quality decision-making. But that's just one small team at the Minneapolis Fed, whose work doesn't immediately translate to federal resource allocation. And Eric Henson with the Harvard Project says this is a back-end solution to a problem that starts with poor data collection. There's no...
well-resourced central entity in the United States that's in charge of collecting information about Native people. Henson says that's what it would take for the government to actually meet its legal obligations to tribes.
Robert Maxim, the Brookings researcher, would first settle for a smaller change, a standalone question on federal forums about indigenous identity, sort of like the old question on Hispanic and Latino ethnicity. Are you Native regardless of your race? Maxim says that would better reflect how Native people see themselves. I'm Savannah Marr for Marketplace.
We spent plenty of time on the show today talking jobs and the labor economy writ large, but it's always a good idea, as I think we say all the time, to get a firsthand look at the labor market. We've talked with Troy Swinar a couple of times. Graduated from college last summer and was hoping to make a go of it in the entertainment industry. But last we heard, he was working part-time in Cleveland with a plan to eventually move to L.A. Here's the update.
I have finally made the move to Los Angeles. As of a couple months ago, I moved out here May 1st.
It came together really fast. I was trying to go out with a roommate. Nobody's timeline was moving up. I got stir crazy at home. So I just started looking at places by myself. Like, what can I afford just myself not splitting rent with everybody? And I found this one place in Silver Lake. And then like when I got it's like, yeah, you're accepted. You want to move in? It's like, oh, this is very real now. I'm moving May 1st. That's what I put down as my moving date. So I guess we're doing it.
I came out here being like, you know, I'm finding a job as fast as possible. The first thing that offered me a job was an escape room place, was an escape room in a mall. It's not allowed to pay for a lot of hours.
Yeah, it's a paycheck. It's this weird thing of it's more than I've ever made at a job, but it's also minimum wage because it's Californian minimum wage. So it's like it's higher than what I make, but also it doesn't translate well. But as it stands, you know, if I budget, you know, I'll survive.
The best part of being out here has been the improv class I've taken. So it's really fun to now be in that position of, oh, these are people with the same mindset who have those similar dreams and goals in mind. I definitely had a joke moving out in terms of what's, you know, what are the hopes for making the move? Is the bar is low. I told myself if I make friends that I can then room with, that's a success, right?
you know, a job, a position would be great, but I know how the industry works. I know there's a lot of gig work, especially this early on, but if I can just build up that foundation, that's a success. I feel like I've gotten a good standing in just two months, so I'm very, very excited to see what happens with even more months.
That's a good story. Troy Swinar, trying to build that foundation now out here in Los Angeles.
This final note on the way out today, saw this in the Wall Street Journal, a warning of sorts from Chase Bank, which is the consumer banking operation inside the J.P. Morgan conglomerate. It is the biggest consumer facing bank in this economy, 86 million accounts. Chase CEO Marianne Lake said that if the government does go ahead with its plans to cap certain fees that banks can charge, an $8 cap on credit card late fees and three bucks on overdrafts in particular, it's going to be a big deal.
Lake said she is going to start charging for things like heretofore free checking accounts. So be warned if you're a Chase customer. JP Morgan profits last year, should you be curious, $49.6 billion. Our theme music was composed by BJ Lederman. Marketplace's executive producer is Nancy Fargali. Donna Tam is the executive editor. Neil Scarborough is the vice president and general manager. I'm Kyle Rizdahl. Have yourselves a great weekend, everybody. We will see you again on Monday. All right?
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