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Honestly, what's a Wednesday without a detour into the bond market, huh? From American Public Media, this is Market Class. In Los Angeles, I'm Kyle Rizdahl. It is Wednesday today, the third day of July. Good as always to have you along, everybody.
We are in this economy right now at something of an inflection point, a tipping point, perhaps, as we digest the latest data and, yes, vibes out there. By we, of course, I don't mean us. I mean the Federal Reserve, which is looking at a labor market that is slowing slowly and an economy that is actually doing the same thing. If the central bank decides soon-ish to cut interest rates, that could help the cooling job market and the cooling economy.
Would not really do much, though, to help them get inflation down to the 2% that they have been aiming for these past few years. That has been the tradeoff for decades now, actually. The tension in the two things the Fed is required by law to do. Maximum employment is thing one. Keep prices stable. That is control inflation is thing two. Thing is that the relationship between inflation and unemployment just isn't as black and white as it used to be. Marketplace's Kelly Wells gets us going.
Let's think back to 2022. The economy was recovering from the COVID pandemic. Companies were posting new jobs left and right, and job seekers had their pick of the litter. It felt like a good time to be a worker. It was also when inflation peaked over 9%. The labor market was very frothy. We had high inflation, and there was just a lot of churn. San Francisco's labor market was very frothy.
San Francisco Fed President Mary Daly said last week the two are related. As inflation goes up, unemployment goes down. This trend has a name, by the way. It's called the Phillips curve. Economists have used it to study and predict this relationship since the 50s. And it tells us that as the Fed tries to cool inflation, it cools the job market, too.
We're almost to the point where we've taken away all the vacancies that were posted in that very frenzied time in the labor market. And fewer job postings? Not necessarily a huge deal. It gets dicier when employers run out of vacancies and start resorting to layoffs. It's why unemployment has slowly started to creep up. That's the inflection point that the Fed is at right now.
We have two mandated goals, price stability, full employment. For the longest time, inflation's been the focus of our hiking campaign. Now, as we monitor the economy, we have to look at both sides of our mandate. By the rules of the Phillips curve, we've got higher unemployment rates ahead of us. But...
Over time, the relationship has kind of deteriorated. UC Irvine economics professor Brian Jenkins says that fate isn't set in stone. In recent years, there's been very little relationship between movements in the unemployment rate and movements in the inflation rate. There are two big reasons for that. Number one,
Current inflation depends on expectations about the future. Once upon a time in the 1950s, companies would guess where the inflation rate was headed and set prices and job postings based on those guesses. Sometimes they would exacerbate whatever trend those companies thought they were seeing. Now, Jenkins says, one of the biggest improvements since then is an increase in the Fed's transparency.
It's just that now we have a better idea of what to expect from the future because the Fed is doing a better job of, one, having a goal and then telling us what they're trying to do. Number two, we just have different kinds of jobs now than we did in the 50s, says senior economist Peter C. Earle with the American Institute of Economic Research.
In that time period, we had, you know, a very manufacturing-based economy, and now we have a highly service-based, financialized economy. When inflation would decrease, we'd manufacture less stuff, and we'd need fewer people to make the stuff. Service economies and the causes of unemployment in those economies are different.
There's more and more at times a mismatch between the skills that workers have and what employers need. Unemployment isn't based on supply and demand, but more on shifts in structure or technology. Think AI or self-checkout aisles replacing grocery cashiers. Falling inflation isn't the cause of those jobs going away.
Earle says all of this makes cooling inflation without sacrificing lots of jobs easier than it used to be. Just look at 2019. Inflation and unemployment were lower than they are now. Whether that will happen now that we've reached this inflection point? We're not exactly sure where things are going to go. Earle's not ready to say whether the recent unemployment increase is a stutter step or a sign of a gloomy end to the year.
I'm Kaylee Wells for Marketplace. Wall Street on this Wednesday, traders only worked about a half a day. Still found time, though, to digest the minutes from the most recent Fed meeting. Powell et al. still are not wild about a rate cut. Also, there was news of a slowdown in the service sector of this economy and a jobs report from ADP, the payroll processing people, that was lukewarm-ish. Today was, though, one of those bad news is good news days for equities. We will have the details when we do the numbers.
You don't have to follow the 24-hour cable news networks to know that we're an inflection point in our politics, too, after last Thursday.
And as we have said, a time or two politics does translate into economics and the economy. That is a cue for a detour into the bond market, where the yield on the benchmark 10-year Treasury note has spiked on the improved political prospects of Donald Trump and Republicans in general this fall. Marketplace's Sabri Beneshour reads the bond market tea leaves for us.
The 10-year treasury is called a 10-year treasury for a reason. It has to give investors a return on their money that looks good both now and 10 years from now. It has to be competitive with the interest rates and inflation of the present and the future. So if the 10-year yield goes higher today, it means investors think the interest rates or inflation of tomorrow might be higher than expected. David Kelly is Chief Global Strategist at J.P. Morgan Asset Management.
If you think about the policies that you might get from a new Republican administration, those things would tend to add a little bit to inflation and to government debt. For starters, take tariffs. Both parties have become more comfortable with them, but a Trump administration could bring more of them, Kelly says, and with them, higher prices and disrupted supply chains. If you have higher tariffs, chances are you will end up with higher inflation.
Higher future inflation that must be fought with higher future interest rates, which are partly reflected in the 10-year bonds of today. A Trump administration would also try to extend more of the 2017 tax cuts than a Biden administration would, pushing up government debt. Rajiv Sharma is managing director of fixed income investments at Key Private Bank. You could see the fiscal deficit continue to expand. With that, you will see more treasuries come to market.
How do you convince the market to soak up more treasuries in the future? Make the yield higher. Again, reflected in the 10-year bonds of today. But Democrats can overspend too, says Brian Rayling, head of global fixed income strategy at Wells Fargo Investment Institute. Democrats, of course, tend to have a higher propensity to spend on social programs, and Republicans have a higher propensity to cut taxes. But in both cases, they lead to continued deficit concerns.
So in that sense, the bond market's reaction was not only a response to the increased chances of a Trump victory, but also the increased chances of one party controlling Congress and the White House. Because the way both parties spend, if either of them gets its way completely, we're looking at higher debt. You can see it in the bond market. In New York, I'm Sabri Benashour for Marketplace.
We talk a lot here about important economic indexes, as you know. The Consumer Price Index, the Case-Shiller Home Price Index, the Index of Leading Economic Indicators, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer Price Index, the Consumer price,
We don't talk enough, though, in my humble opinion, about the Beer Purchasers Index, BPI for short. It hit a three-year high last month. That's according to the National Beer Wholesalers Association, whence that index comes. The trade group says July the 4th is generally the top beer-consuming holiday in these United States, and it looks like the industry...
has a bit more to celebrate this year after a tough 2023 when beer sales slumped last year and they hit lows not seen since the 1990s. Marketplace's Megan McCarty Carino has more on what's brewing. There's not really one beer industry anymore, says Bernardo Silva, a beverage industry consultant at Alex Partners. The general theme, not only in beer, but across other food and beverage categories, has been what I call the fragmentation of demand. That
That fragmentation started with the craft beer revolution more than a decade ago and continued with the rise of flavored hard seltzers and canned cocktails. Consumers have become a little bit more interested in
Things that are unique. And consumers are open to trying different products. A beer drinker in college is no longer a beer drinker for life, says Matt Gaciok, staff economist with the Brewers Association. Beverage alcohol consumers are starting to spread their dollars across alcohol types and categories more than they have in the past.
Beer has been losing market share to spirits in recent years as the price gap between the two has narrowed. The craft beer explosion in the 2010s has matured. Gacyox says many breweries are now trying to differentiate themselves by offering in-person experiences like food and music or novel flavor profiles. Free.
fruity flavors or, you know, botanical flavors or pushing on hop flavors. The low and no alcohol segment is also getting frothy, says David Steinman at Beer Marketers Insights. Everyone's kind of following this trend and a lot of companies are seeing growth from it.
Near beer sales make up a single digit share of total beer sales, but the segment is growing fast with entries from Blue Moon, Corona, Heineken and Budweiser. Speaking of the king of beers, Bud Light has been dethroned as the top selling beer by dollar value after a culture war boycott last year. That title now belongs to Modelo Especial. I'm Megan McCarty Carino for Marketplace.
In retail, they call it shrinkage. In Hollywood, they call it piracy. And if you're a streaming company or a studio in an industry where consumers are fickle, competition is cutthroat, and content is expensive, that unlicensed distribution of TV shows and movies to get all the legalese on you just ain't so good for the bottom line. And while the digital world is what has made their profitability possible, it's not the
It's also making piracy especially hard to take on. Brooks Barnes covers Hollywood for The New York Times, wrote the other day about the crackdown on piracy on the other part of town. Welcome to the program. Thank you. Give us a sense of scale here. You write in this piece that there is some evidence the audience for piracy has actually grown the past five years. What's going on?
It's one of those problems that has kind of faded from sort of the front, right? But piracy is only growing in part because of the growth in streaming. It's become much easier for the bad guys to steal TV shows and movies. And you have to remember that these streaming services, Disney+, Netflix, Netflix,
Amazon Prime are global. So it's not just people in the U.S. that are able to access those streams. Right. And we should be clear here. This is not my kids. Not that they would ever do this. This is not my kids using my Netflix password when they don't live with us anymore.
No, no, they don't like that. Hollywood doesn't like that either. But this is sort of as described by the Motion Picture Association, which is the lobbying group orchestrating the crackdown on piracy. This is...
what they call global organized crime. People also involved with sex trafficking, money laundering, pretty big operations. And we should be clear here, this is not people walking into a movie theater and like back in the old days, taking out the VHS recorder and videoing it and you'd see a guy's head in your way, right? This is different. Yes. There is still some of that, especially in Russia, for example, or countries where
Hollywood isn't operating at the moment, but this is really streaming is what this is centered on. And some of these sites, as it is described to me, I haven't been on them myself, but they look like Netflix. You pay a subscription price and all of this content is on there. There was one that was...
Some people were just convicted of operating a site called Jetflix, which was an illegal streaming site. And the lineup was just jaw dropping in terms of what was on there, larger than the combined catalogs of Netflix, Hulu, Prime Video. That's a lot of content. You alluded to this. What is Hollywood doing? They've got like a whole wing of the Motion Picture Association that's devoted to this.
Yes, it's called ACE, which is how they sort of coordinate it. And underneath that umbrella are 50 some plus companies around the world, all media companies. And then they kind of put together a case often. They do the initial steps first.
and then kind of partner with law enforcement in different countries. And most of this is overseas. In the United States, the number of pirated sites still hovers around 200, which is a lot, it seems to me, but that's down from 1,400, for example, when they started this.
Progress there, but it's continued to grow overseas. The top three English language pirate sites are based in Vietnam. So where does this go now? Because it's like any kind of computer hacking, right? The bad guys are always a step ahead. Yep, always a step ahead. So Charles Rifkin, who's the chairman of the MPA, he's given a couple of speeches about how the organization is...
renewing an effort on Capitol Hill to get legislation. They're looking at expanding into live sports, which has become more valuable. And they have a new chief, a new pirate hunter in chief from the FBI. Without being too defeatist about it, they got to play the long game, right? It's not going away, right? There's so much pressure on media companies to make
from streaming. And the more that you crack down on piracy, the more you direct people to paying customers and they're looking for every dime and nickel under the catch cushions. I was just going to say, right? They're counting their pennies for sure. Yeah. Yeah. Brooks Barnes, covers Hollywood for the New York Times. Brooks, thanks a lot. I appreciate your time. Thank you. I appreciate it. Thank you.
Coming up. Jane Fonda actually came into our office and walked around and observed. Was she there nine to five, perhaps? First, though, let's do the numbers. ♪
Dow Industrial slipped 23 points today, less than a tenth percent, 39,308. The Nasdaq added 159 points. That's about nine-tenths percent there, 18,188. The S&P 500 gained 28 points, half percent to end at 5537. Megan McCarty Carino was talking about the ups and downs of beer sales of late. So, the beverage industry, right?
Anheuser-Busch added 2.4%. Today, Constellation Brands, which brews beers like Corona and Modelo Especial, fizzled 3.3%. Over on the soft drink side, Coca-Cola added 3.3%. PepsiCo dipped 6.6%.
Shares of Paramount Global spiked 6.9%. Today, that's after news of the much-discussed deal between Paramount's biggest shareholder and Skydance, the film studio that produced Top Gun Maverick. That deal has been on again, off again, and now on again, I guess. Southwest Airlines has adopted a poison pill to thwart the efforts of a major shareholder. Elliott Investment Management has called for new leadership after the airline reported underwhelming financial results. Southwest rose 1%. Bonds up as well. Yield on the 10-year T-note, 4.36%.
You're listening to Marketplace.
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Restrictions apply. See website for full details and important safety information. This is Marketplace. I'm Kai Risdahl. Climate change in its various manifestations, wildfires out west, hurricanes and coastal flooding in the southeast and along the Gulf Coast, probably the most common. It is wreaking no small amount of havoc with the home insurance market. Premiums are skyrocketing and big insurance companies are pulling out of some markets, California and Louisiana, as just two examples.
That's hitting homeowners all along the wealth and income spectrum, but particularly hard in a vulnerable segment of the housing market, subsidized nonprofit housing for low-income people. Marketplace's Matt Levin has this one. The Nonprofit Gulf Coast Housing Partnership rents out 2,500 homes to low-income families throughout hurricane country, from Texas to Alabama.
CEO Kathy Laborde says just a few years ago, she was paying insurance premiums of about $300 to $500 a unit. We're now looking at $1,800 to $2,400 a door. Because the housing is government subsidized, Laborde can't raise rents to offset those price hikes. Her poorest tenants couldn't afford it anyway. So the nonprofit is dipping into other parts of the budget to make up the difference, which she hopes is a temporary strategy.
We're in our strategic planning process, you know, and just coincidentally, that's one of the questions that we're asking ourselves. Can we continue to operate in this region?
That's a terrible question to ask. It's not just the Gulf Coast issue. A recent national survey of affordable housing providers found nearly a third saw premiums spike at least 25 percent year over year. That's a problem for creating new housing, too. David Dworkin is CEO of the National Housing Conference. The higher the insurance cost,
on a new development, the more subsidy needs to go into that deal. And that means there's less subsidy for more units and we end up with less affordable housing as a result. Affordable housing advocates are calling on Congress and state lawmakers to ease insurance costs. Holly Benson at Los Angeles-based Abode Community says she's exploring some group self-insurance options, which still aren't cheap,
But she needs to do something. This year, her premium shot up 300%. If we continue to go down this path, we are not going to be able to hold on to some of these projects. Which could mean some low-income tenants would have to find other affordable places to live somewhere in L.A. I'm Matt Levin for Marketplace.
Our summer series this year is called My Analog Life, about how technology has changed the work we do and how we do it. And yes, fine, sure, artificial intelligence and all of that newfangled stuff. Also, though, older tech like keyboards. Here you go.
My name is Stephanie Sharp. I'm 78 years old, and I live in Iowa City, Iowa. My first job was at the Rand Corporation as assistant reference librarian, and that was in 1968. However, I wanted to be a freelance writer. So after several years of librarian work, I started taking office jobs so I could do my freelance writing in my spare time.
Office jobs involved a lot of paperwork. You took phone messages on pink message pads. Remember, there were no answering machines or voicemail. So I went to something called Switchboard School, which was a two- or three-month course
And I completed that. And one of my office jobs was actually working in the office of a small hospital where I handled the switchboard there. The light wouldn't light up on the switchboard when a call came in and you would plug a cord in and you would greet the caller. They would tell you who they wanted to talk to and you would take another cord and plug that call into the correct extension.
So you would say, John Smith is on the phone from so-and-so company. The manager might tell you, tell him I'm out. I think the most traumatic change was around 1976 or 1977. I was working in a bank in downtown Los Angeles. It was the model for the movie 9 to 5. ♪
Jane Fonda actually came into our office and walked around and observed because she wanted to see what office workers do.
And we started out typing on Remington typewriters. They introduced something called word processing, where we would have, we're working off of computers with terminals, but we were typing on a keyboard. And of course, the system kept crashing because it was new.
But by around 79 or 1980, personal computers started to come in. So that was the big change in offices because before that, email was just inter-office. Working can not do the way to make a living.
We had a lot more time then, time to talk to coworkers, time to go out to lunch. Now I think it's a lot of time pressure because of 24-hour cycle with email and the internet and all of that. I think there's a lot more time pressure to get things done. And I am nostalgic for those going out to lunch days a little bit. Come on. How much do you love her?
We want to hear stories about how your jobs have changed. Young people, we are talking to you too, you know. Write to us at marketplace.org slash myanaloglife. This final note on the way out today as you fade into the holiday day or long weekend if you get or are taking Friday off.
If you're thinking about hanging at a neighbor's pool, as I am, here is a data point. I saw this in Axios, that only 60,000 residential swimming pools are going to be built this year. That's half of what were built in 2021. Yes, that is a lot of water, but it is going to be 103 degrees at my house on Friday. Okay.
Our media production team includes Brian Allison, Jake Cherry, Justin Duhler, Drew Jostad, Gary O'Keefe, Charlton Thorpe, Juan Carlos Torado, and Becca Weinman. Jeff Peters is the manager of media production. And I'm Kyle Risdell. We will see you tomorrow, everybody. This is APF.
Hello, I'm Simon Jack. And I'm Xing Xing. And together we host Good Bad Billionaire, the podcast exploring the minds, the motives and the money of some of the world's richest individuals. Every episode we pick a billionaire and we find out how they made their money. And then we judge them. Are they good, bad or just another billionaire? Good Bad Billionaire from the BBC World Service. Listen now wherever you get your BBC podcasts.
