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On the program today, how this economy really works. From American public media, this is Marketplace. In Los Angeles, I'm Colin Risdell. It is Thursday today, the 27th of June. Good as always to have you along, everybody. Two words as a way to get going today. Administrative state. And now, just for the heck of it, a handful of more words. Securities and Exchange Commission versus Jarquez.
The logjam of pending decisions from the United States Supreme Court broke up a little bit more today, the last couple of days of their term, with of interest to us in particular, a ruling in SEC versus Jarkesee about the power of federal agencies to make policy and then, most importantly, enforce it. Blake Emerson is a professor of law and political science at UCLA. He's our go-to on matters of administrative law. Professor Emerson, good to have you back on the program. Great to be here. First blush, what did you make of this decision?
So this opinion is of a piece with a number of cases that the Supreme Court has recently laid down that significantly limit the powers of Congress to regulate the economy, to promote public health and public safety. And this opinion on the Securities and Exchange Commission's authority to impose penalties in its in-house courts furthers that overall project.
This is not just about the Securities and Exchange Commission, though. That's kind of the point. Yes, very much so. So the powers that the court said the SEC unconstitutionally exercised are powers that other agencies also hold. And if we look beyond the narrow ruling of the case about penalties to this broader question about penalties,
regulatory agencies powers to regulate private rights like rights to property and contract. There's a much larger swath of agencies like the National Labor Relations Board and the Federal Trade Commission that could come under threat now that the court has made this significant change in law. Am I going too far if I say that these regulatory agencies and the powers they exercise are how this economy works?
I think they're certainly central to the way in which the economy has operated, at least since the New Deal. The theory of the administrative state in the United States is that we want to have a free market economy, but there are many cases where the market doesn't
function properly or where there are values other than maximizing profit that the people through Congress want to recognize. So the Securities and Exchange Commission, for instance, was created in
in response to the Great Depression, in order to counter widespread fraud and abuse in the sale and marketing of securities. And this opinion takes away one of the tools, one of the key tools in the arsenal that these kinds of agencies have to limit those kinds of abuses. Does it then follow that there may be more financial fraud and abuse if the Securities and Exchange Commission doesn't have these powers?
Yes, well, in a very straightforward way, you can think of this kind of ruling as increasing the costs to agencies like the SEC of enforcing the law and at the same time decreasing the cost for people who want to break the law of doing so because this will make it harder for the SEC to enforce the various securities laws that Congress has given it responsibility to administer. The phrase that comes to mind here, Professor, is chilling effect, right?
Absolutely. And that's consistent with a number of a number of other rulings the Supreme Court has laid down that send a very strong signal both to other courts, to lower courts in the in the federal judiciary, as well as to to Congress and to administrative agencies that.
that they are under very close scrutiny by the Supreme Court, and the court will look skeptically at their exercise of significant powers. Well, so let's play this forward a little bit, because either tomorrow or Monday now, I understand, are going to be more decision days. And we've still got a case coming about the Chevron deference, or deference, depending on how you want to pronounce it,
about whether we ought to defer to regulatory agencies in interpretation of law. What does today's decision in the body of work that you've just cited lead you to believe about what might happen with the understanding that trying to spitball what the court's going to do is a fool's errand?
That's right. It's always hard to make predictions, but I think it is very likely that the court will either overrule or significantly limit what's called Chevron deference. And Chevron deference is a principle going back to the 1980s that when a statute is unclear, when it could mean more than one thing, the courts are supposed to accept the executive agency's interpretation of the statute if it's reasonable.
agencies both have scientific and technical expertise that the courts lack. And they're also more democratically accountable than the courts because the president exercises a lot of control over the people who are in charge of agencies. The court has given, I'd say, a lot of notice that Chevron is on the chopping block. And so I expect to see that doctrine either overruled or severely limited.
Do you ever sit back? Here comes the free response question. Do you ever sit back as a guy whose job it is to figure out administrative law and teach it to new lawyers? Do you ever sit back and wonder how the administrative state and how this economy runs became so vilified?
Yeah, it's a good question. I think what has happened is that we have really profound, not only legal, but also political disagreements about the proper role of the federal government in regulating the economy, in trying to prevent unfair practices, in trying to avoid harmful pollution, things of that nature.
And unfortunately, that has broken down along partisan lines. The Republican Party tends to be opposed to such measures and the Democrats are broadly in favor of it. Another side to it that I would note is that Congress has not shown a lot of willingness or alacrity to get in the game and to write new statutes, to refine the powers of agencies, to
And so in the absence of that kind of legislative action, what we see increasingly is more and more unilateral presidential action. And so today we're seeing we're seeing the culmination of that process in what Justice Kagan has called, in another opinion, an existential threat to the administrative state. Blake Emerson is professor of law and political science as well at UCLA. Professor Emerson, thanks for your time, sir. I appreciate it. Thanks so much, Guy.
Wall Street today, traders at last check, still playing by the SEC's rules. Flat-ish were the major indices. Chevron shares, in case you're curious, they got some deference, up about a quarter percent. We'll have the details when we do the numbers. ♪
The setup for this next item began this morning at the Bureau of Economic Analysis, which gave us its third and final estimate of gross domestic product growth for the first quarter. That's January through March. It's of interest to all of us, but particularly to the Federal Reserve, which wants to know how GDP economic growth is another way to say that. Right. They want to know how GDP is changing.
And it's changing pretty substantially, actually. GDP growth fell from 3.4 percent in the last quarter of last year to 1.4 percent at the beginning of this year. The data out today does contain more than just overall GDP, though. There are various and sundry components, one of which Fed Chair Jay Powell said at his last press conference he is watching in particular. Private domestic final purchases, which Powell said, and this is a quote,
usually sends a clearer signal on underlying demand. Demand, of course, can drive prices, which can drive inflation. You see where this is going, right? Marketplace's Mitchell Hartman has our primer. GDP is the broadest measure of goods and services produced in the U.S. economy. It includes pretty much everything.
But the Fed needs to get a bead specifically on the level of demand from U.S. businesses and consumers for goods and services, says Kathy Bostjanczyk at Nationwide. They will prioritize the core readings, and one of the core is final sales to private domestic purchasers.
That's the one Fed Chair Powell is all set on right now. Essentially GDP, less exports, plus imports, less inventory investment. Dave Wasshausen is at the Bureau of Economic Analysis, which produces the GDP report. By removing that net export component, you're getting the purchases that are happening here in the United States, regardless of where they are produced.
Final sales also strips out businesses buying up inventory and sticking it in warehouses to sell later, says Mark Zandi at Moody's Analytics. Inventory changes, which go up, down, all around, but don't get to kind of the underlying growth rate in the economy. And note that this only counts sales in the private sector. Government spending is excluded, too, because it tends to be more stable over time and can obscure cyclical changes in the economy.
So right now, what is this Jay Powell-approved GDP measure telling us? Well, final sales growth fell from 3.3% at the end of last year to 2.6% early this year.
Ask two economists what that means, you get at least two answers. Kathy Bustjancic at Nationwide. That's still a really strong result for the core GDP. It shows that consumers continue to spend and also businesses are still investing. And Mark Zandi at Moody's Analytics. I think the economy, no matter how you measure it, is slowing. And he says in the second quarter, which is about to end, it looks to be slowing even more.
I'm Mitchell Hartman for Marketplace.
The American labor market is give or take 168 million people. So tracking it should be seen as a more of a trend thing than a single data point thing. There is the monthly unemployment reports, of course, again, trend. There's a weekly report as well called First Time Claims for Unemployment Benefits, again, trend.
Those weekly numbers bounce around quite a bit. They can be affected by one-off events like the federal holiday last week for Juneteenth, one less business day, which helps explain why those new applications for unemployment fell just a little bit. Here's the trend part, though. Continuing jobless benefits claims are tracked as well, and they rose last week to the highest they've been since November of 2021. Marketplace's Megan McCarty Carino explains what that might be telling us about this labor market.
It's hard for one data point from one week to say too much, but in this case, it seems to be harmonizing with a number of other recent signals, says Daniel Zhao, lead economist at Glassdoor. Jobless claims are telling us a similar story to what we're seeing in the unemployment rate or the hiring rate, where the job market is slowing.
Job openings have been on the decline, and so have quits. Assigned workers are losing confidence, even though layoffs are still relatively low by historic standards.
A weaker labor market doesn't just come from layoffs. It often does manifest as weaker hiring. So for those unlucky enough to lose a job, it's likely taking longer to find a new one, says Gregory Dacco, chief economist at EY. We are seeing signs that employers are being more cautious with who they hire, how much they hire. That wasn't always the case in the decades before the pandemic, he says.
You would often see business leaders, employers reacting very rapidly to the initial signs of an economic slowdown, and they would proceed with rapid layoffs in an effort to cut costs. It's led to a labor market that can feel vastly different depending on your circumstances, says Julia Pollack, chief economist at ZipRecruiter. If you have a job you love, this is a great economy. You have unprecedented job security.
But if you don't have a job, and if you've never had a job, finding one is proving tricky. She notes the increase in unemployment last month was driven by young workers, age 20 to 24. But comparing this moment to any time since March of 2020 doesn't really tell you much, says Robert Frick, corporate economist at Navy Federal Credit Union.
I think people are still remembering how easy it was to get a job a year or two ago. Well, it's not so easy anymore, but that just means it's getting back to normal. Continuing claims are now just a tad above where they were in 2019. I'm Megan McCarty Carino for Marketplace.
Coming up. Riding bikes, discovering the city through food, and hopefully opening a restaurant soon. Not so bad, right? Not so bad. First, though, let's do the numbers. ♪
Dow Industrials up 36 points today, a tenth percent, 39,164. The Nasdaq picked up 53 points, about three-tenths percent, 17,858. The S&P 500 pocketed four points, a tenth percent, 54,82. Walgreens plans to close, quote, a significant portion of its U.S. stores over the next three years. The drugstore chain reported disappointing earnings today and told investors that the current pharmacy model is challenging for business. What?
Walgreens plummeted to 22% today.
Competitors CVS dipped 3.7%. The country's biggest banks have passed the Federal Reserve's most recent stress test. That's an annual thing. The Fed subjects major lenders to a hypothetical disaster scenario. As the Fed found, the banks were well-resourced to withstand severe economic or market shakeups. JPMorgan Chase crept up 9.1%. Today, Citigroup added about 0.5%. U.S. Bank slid about 0.1%. Bond prices went up the yield on the 10-year Treasury note, thus down 4.28% as the yield on the 10-year. You're listening to Marketplace.
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This is Marketplace. I'm Kai Risdahl. It's been a while since I've been in a really crowded movie theater. Last summer, probably, in the one-two punch of blockbusters that we all heard way too much about at the time.
Now, though, theaters and a lot of the people who work in Hollywood are still recovering, kind of, from the pandemic and the strikes of last year. Stephanie Silverman, with whom we chat from time to time, runs a nonprofit movie house in Nashville, Tennessee. It's called The Bell Court, and we've caught up with her in Chicago, Illinois, where she's at a conference of independent exhibitors. Stephanie Silverman, great to talk to you again.
Kyra Isdahl, it's great to be in conversation with you right now. In conversation. That's why I like these interviews to go. So what is the vibe amongst independent exhibitors, of which obviously you are one at the Belcourt? You know, first of all, every time you say, how's it going? There's always a little sigh first. And then it is like, you know, it's OK.
We're definitely commiserating a little bit, but I'd say on the whole, the vibe is positive. Well, tell me about the optimism because, you know, there have been Hollywood strikes. There's a pipeline challenge. You know, people are getting laid off. I mean, and you're kind of on the receiving end. Yeah, we are definitely on the receiving end. I think, honestly, the optimism is because it feels like we're coming to the end of what is a profound impact from the strikes.
We are still seeing some really wonderful first run, like new release movies, but you know, it's just not Barbenheimer level awareness right now, but yeah,
The world of good moviemaking is still alive and well. Did you show either of those options, the Barman or the Heimer? We showed the Heimer. Did you? Yeah, well, we showed it on 35mm film, but yeah, Barbie didn't need the help of the bell court. She was doing fine on her own. Would have done some business for you, though.
Of course, but it's doing business for other people. And so we try and center filmmakers who maybe aren't Barbie, right? They're smaller filmmakers. They're foreign films. They're repertory films. That's where we feel like our place in the world lies. So I was obviously being flipped because I knew you weren't going to show Barbie, but it does get to the whole...
Your challenge is programming, right? You have to program things really carefully. Yeah, every day. We exist sort of showing two sectors of movies. First runs, the new released kind of content, and repertory.
And usually the first runs are the bigger revenue titles for us. So we make more money on the new shiny releases. And repertory is just part of our curatorial work and is core to who we are, but has traditionally been secondary. And frankly, this year, that has been fully flipped on its head. So right now, it's the repertory programming that is secondary.
really our bread and butter in terms of how we are paying our people. So the work requirements from our curators and from our programming staff are huge. All the marketing assets we put together, you know, it's just, it's exponentially increasing our work to do that, but it's also got great returns. So it's just a functional part of our reality right now. Hmm.
All right. A couple other things on my list here I need to tick through. Inflation. Obviously, the headline numbers are down, but price levels are still elevated. What are your input costs like? What's going on with you?
You know, they're still up there, of course, you know, for things especially like cost of goods, concessions, items, things like that. We don't expect them to go down. We've had to increase pricing a little bit. I think we've done it in a way that hasn't been too stressful on our patrons. If I want to come on a Saturday date night with me and my wife, how much is it going to cost me at the bell court for two seats? Well, if you if you're a member of the bell court, of course, yes. OK, good. Well, then it's only going to cost you nine fifty. Oh, that's nothing. And your wife.
Yeah, exactly. That's like 1980s movie pricing, frankly. Right, right, right, right. Okay, business model question. I'm sure you saw the thing where Sony, big producer of movies, is going to buy Alamo Drafthouse.
Yeah. That's a very big deal in the whole movie producers owning theaters thing. It's, you know, there's history involved. What does that mean for you? Does it mean anything for you? How do you feel about it? Well, right now, the positive for me is that it is just like the rubber stamp of approval on theatrical matters. And it matters so much that we, this giant movie studio, are buying some of our own movie theaters. Yeah.
Now, of course, we don't want to get into the, you know, back return to the years of the Paramount consent decree where the studios owned every theater and there was a lot of confusion about who got to show what.
I don't think we're going to get there, but I am just thrilled that a major studio says this matters so much to us that we are putting our money in it and we're going to experiment around how we build audiences over time. So frankly, I'm glad to have Sony as a colleague in the theater exhibition business. That's pretty funny. You and Sony. I know, right? Stephanie Silverman, Belcourt Theater, Nashville, Tennessee. You should check it out. It's great.
Talk to you soon. Thanks, Kai. It's always great to talk to you.
I think we mentioned this the other day, that consumer confidence was down a bit in June. Not a lot, but down. Another sign that consumers are growing more hesitant about this economy. A more hesitant consumer often, although not always, indicates a slowdown in spending. So the data shows us. What, though, have small business owners been seeing? We called Jelana Hall-Johnson. She's the owner of the Sassy Biscuit Company in Billings, Montana, to find out.
So summer for us is typically a busier season in Billings. There's lots of tourism. There's lots of different events. People are out. It's not as cold. You know, the last snow is in April, sometimes May. Once that's over, people like to get out and eat good food. ♪
Beginning in April, we start to ramp up our staffing as we know business is getting ready to pick up. Our wages range from about $10.50 to $14 an hour. And we typically see about $7 to $9 additional in tips per hour for each employee. ♪
Wages have definitely increased since we've opened. Minimum wage has absolutely increased. And so the tip sharing and the team effort is so huge within our work environment because it's the only way we can really sustain, you know, paying a decent wage to our employees while also maintaining our costs. ♪♪
So our first location is in Billings, Montana, but I am currently in Richmond, Virginia, working on a new location. We have always struggled with financing and our last major project, we had to walk away because of financing. So our scaling up is looking a little different these days. Instead of leasing, we're looking to hoping to buy more.
One of the thoughts was, well, if we are able to purchase a building, then we have equity, then banks look at it differently, lenders look at it differently. The way I work is we're going to go for it and see if we can make it happen. And so that's what I've been working on. ♪
Part of how I decide on a new location is by exploring the city. And so I've been in Richmond for a little over a year now, and I have recently just bought a new bike. I tell you, with a bike, it's just, you can explore, but on a bike, it's just so magnificent. And so it just allows me to get out there and see what's going on in the city, understand more about the people and the places and the history. That's what I do.
That's what I'm focusing on, riding bikes, discovering the city through food, and hopefully opening a restaurant soon. Alana Hall-Johnson, owner of the Sassy Biscuit Company in Billings, Montana, and maybe soon, Richmond, Virginia.
This final note on the way out today, I direct your attention to the concurrence by Justice Gorsuch in today's decision in Securities and Exchange Commission versus Jargazy that I was talking to Professor Emerson about up at the top of the program. Everybody is entitled to a typo, I know, but this is the Supreme Court we're talking about. Here is Gorsuch's opening line in his concurrence.
The court decides a single issue, whether the Security and Exchange Commission's use of in-house hearings to seek civil penalties violates the Seventh Amendment right to a jury trial. Securities and Exchange Commission, Mr. Justice. Securities. John Buckley. I know I'm a stickler. John Buckley, John Gordon, Noya Kardai at the Parker. Amanda Petra and Stephanie Seek are the Marketplace editing staff. Amir Bibawi is the managing editor. I'm Kyle Rizdahl. We will see you tomorrow, everybody.
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