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Ever wonder how artificial intelligence or 3D printing is used to solve medical problems? Or how research is discovering new ways to slow or even stop medical conditions we used to think of as untreatable? I'm Kathy Worzer. Listen to Tomorrow's Cure, a podcast where I interview experts from Mayo Clinic and other renowned organizations. What they describe may sound futuristic, but listen and you'll find out Tomorrow's Cure is already here. Find it now wherever you get your podcasts.
Unemployment ticking up, consumers pulling back on spending. Is it enough for a rate cut? From American Public Media, this is Marketplace. In Washington, D.C., I'm Kimberly Adams, in for Kai Risdahl. It's Thursday, July 18th. Good to have you along. Because it is Thursday, regular listeners to this program will know it's the day when the Department of Labor tells us how many Americans made claims for unemployment insurance last week. The
The number of folks who filed for the first time came in at 243,000, up 20,000 from the week before, a bit more than economists were expecting. And it's the most in nearly a year since August of 2023. Also in that report, the number of continuing claims for unemployment. That's how many people claimed unemployment insurance last week and also claimed it the week before.
That number rose to just shy of 1.9 million people, the most since November of 2021. Marketplace's Daniel Ackerman looked into what that latter number might mean for the economy and for the Federal Reserve's interest rate policy. The uptick in continuing claims means it's taking job seekers longer to find the right match.
That can be stressful if you're out of work, says Tuan Nguyen, an economist with RSM. But overall, he says it's a good sign for a labor market that's been dealing with a worker shortage for years.
We are having a labor market that is cooling down toward normalizations and balance, not a labor market that will hit a cliff anytime soon. One possible contributor to last week's rising claims? Hurricane Beryl. The storm disrupted life for millions on the Gulf Coast. That includes job seekers and employers, says Elizabeth Davis, an economist at the University of Minnesota. They've got other things to deal with in the immediate aftermath of a big storm like that.
Hurricane aside, Davis says the unemployment data tells us something about the effect of the elevated interest rates we've seen for the past two years. It suggests that the Fed policies to bring down inflation are working without causing a recession. There's no recession on the horizon, but the labor market is slowing down a little bit.
Which is exactly what the Fed wants to see, says Scott Wren of the Wells Fargo Investment Institute. The Federal Reserve is never going to tell you they want a higher unemployment rate. They will never specifically state that, but that's what they want, to take some pressure off of wages. Because rising wages can fuel inflation.
And the continuing claims numbers add to a growing stack of data that might convince the Fed it's finally time to cut interest rates. That's according to Kevin Lang, an economist at Boston University. He says if he were at the Fed...
I would look at this and say, well, it's one more piece of evidence that we're moving towards the kind of economy that we want with 2% inflation and relatively low unemployment. Which means, Lang says, it could be time to let up on the economic breaks. I'm Daniel Ackerman for Marketplace. Wall Street today, the sell-off continues. We'll have the details when we do the numbers. ♪
Another set of economic data points came out this week, the Fed's Beige Book, which we talked a bit about yesterday. In it, most Federal Reserve Bank districts noted retailers offering discounts and price-sensitive consumers. People are bargain hunting or buying fewer or lower quality items. This is happening even though inflation continues to cool. Prices have been coming down, according to the latest Consumer Price Index.
So why exactly is price sensitivity lingering? Marketplace's Elizabeth Troval has the story. Pretty much anyone who eats can be price sensitive. Even economists who track inflation, like Kayla Bruin with Morning Consult, who used to grab a bite at a cafe close to her. And they used to have a $5 grilled cheese.
And I love grilled cheese. First, they bumped it up to $6. And then like a month ago, they raised it to $7. And I was like, I just can't pay this. Bruhn is very aware of the baseline price of the sandwich, five bucks, and how much it's gone up. She says consumers feel the same thing when they go to the store.
And their baseline isn't necessarily from a year ago. It might be from 2019 or, you know, 2021. Economists measure inflation year to year and month to month, while consumers may think about the change in prices from three years ago or longer. That makes visits to the supermarket painful. I go and see a large container of detergent costing $25 and I just, I can't get used to it.
Harvard economist Kenneth Rogoff says macroeconomic data isn't calming to consumers when they're walking down the grocery aisle. They don't want to have to think about if prices are going down. Should I be happy that they're not going up as fast? It's no wonder they're shopping for discounts or lower quality products and are emotional about it. This generation, especially young,
You know, younger people have just never seen inflation before, much less inflation like this. And they're more sensitive to it today versus coming out of the pandemic when people took a more seize-the-day approach to spending.
Michael Gapin is with Bank of America. The rate of inflation has come down, but the price level's high. So consumer sentiment is still saying, great, inflation slowed, but I'm still adjusting to this higher price level. Maybe we're half to two-thirds of the way through that story. He thinks consumers will adjust, but it might take a while. I'm Elizabeth Troval for Marketplace.
On the flip side to Americans' price sensitivity, there's a group of people who just don't seem to be that bothered. Baby boomers. According to data from Moody's Analytics, the 55 and older demographic is responsible for 45 percent of personal spending in the U.S., up from 29 percent three decades ago. And with retirement communities still a popular option for Americans later in life, it makes sense that the spending follows them there.
Heather Gillers is a reporter for The Wall Street Journal, where she wrote about how this demographic and their communities are driving some local economies. Heather, welcome to the program. Thanks for having me. You start us off in a Sun City community in Texas. What are these and what's it like to live in one?
So these are planned communities. Sun City, Texas has about 17,000 people. There are swimming pools, golf courses, pickleball courts, fitness centers. There's a ballroom where events are held. There's a Mardi Gras ball. It's inside the city of Georgetown, Texas, but it really in some ways functions as a city where most people are retired and the median age is 73.
What do these kind of communities, especially this with an influx of older people, do for the local economy? For Georgetown, it's been great. There, as you might imagine, are a lot of health care jobs. There are a lot of service jobs. You know, like when you're retired, you can go out for breakfast and lunch. The mayor said to me, you know, it's like having constituents who are in college except for they have $3 million in the bank. Tell me more about the kind of things people are spending on in these communities. Sure.
Sure. They remodel their homes a fair amount. A local business that does flooring told me that they're out in Sun City almost every day. They buy things at estate sales. They're not like going out on yachts particularly, like it's not extremely high priced stuff.
living or exorbitant spending. The guy who runs the local bar and restaurant in Sun City told me that he tries to keep his prices lower than Olive Garden and Chili's. But it's just sort of like a steady stream of spending by people who mostly are at the end of their working lives and want to enjoy themselves.
Not to be morbid, but the baby boomer population that is filling out a lot of these communities is getting up there in years. How long are people expecting this outsized impact on the economy to last? The youngest baby boomers are now turning 60. So they probably have a lot of years of living and spending. But, you know, another interesting thing that we found in our reporting was that
Even as Sun City residents were getting older and aging out of a period of life where they might want to have like a single family home that they have to be responsible for with a lawn and all that, developers are catering to that too. So there was a development like within golf cart driving distance development.
That was more of an assisted type living. And most of the people there were from Sun City and they were sort of like visiting with their old neighbors and just kind of keeping it going. I love that you said in golf cart driving distance. Golf carts are a very popular mode of transportation in Sun City.
When states are trying to attract people, do you think, is there a sense it's better for them economically to be focusing on supporting services and investments that, you know, encourage younger folks and people with families to come in or these older, wealthier retirees?
another really interesting thing about working on this story is that often you think about economic development as trying to attract young families or maybe like remote workers, but what's really helped Georgetown thrive is this huge cohort of
boomers because many of them bought their homes outright with cash, a far larger percentage than average for America. So they're sort of mortgage rate agnostic, which makes them much more mobile, much more flexible, and for many different reasons, often less student loans.
flush retirement portfolios or investment portfolios that built up, you know, over a 10-year bull market, they have this cash that makes them much less likely to be deterred by higher mortgage rates. Talk about the reaction you've gotten to this story.
It's been really interesting. Everything from like, like those people are spending my inheritance to like you go 80 year old skydiving person like goals, you know, hashtag goals. Heather Gillers is a reporter for The Wall Street Journal. Thank you so much. Thank you. Thank you.
Coming up... Yeah, so self-publishing has really been booming, for better or worse, in a lot of ways. So which one is it? But first, let's do the numbers. ♪
The Dow Jones Industrial Average fell 533 points, 1 3⁄10%, to finish at 40,665. The Nasdaq subtracted 125 points, 7⁄10%, to close at 17,871. And the S&P 500 lost 43 points, just shy of 8⁄10%, to end at 5544. Investors seem to be trying to capture some profits ahead of a potential rate cut,
with the sell-off that started in the tech sector expanding into the broader market. United Airlines reported profits that beat Wall Street's estimates yesterday after the bell, but its shares still descended 1.2%. Netflix reported quarterly earnings today after the bell. Along with news, its advertising-supported memberships were up 34% compared to last year.
Before the market closed, the streaming platform stock was down almost seven-tenths of a percent. Bonds fell, the yield on the 10-year T-note rose to 4.2 percent, and you're listening to Marketplace.
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This is Marketplace. I'm Kimberly Adams. We were talking about consumer spending a bit earlier and consumers being sensitive to prices. Well, part of what's contributing to higher prices is the cost of shipping, not just from the warehouse to your house, but also around the world.
On that note, Egypt's Suez Canal Authority announced today that its revenue fell by almost a quarter this past year as shippers switched to alternative routes. The cost of shipping goods around the globe is surging. And what's causing this is a perfect storm of conditions, including worries about actual storms and a lot more. Marketplace's Sabri Beneshour has that one.
This is the gate to the Red Hook Terminal in Brooklyn, New York. There are two giant cranes towering over it, one red, one blue. Behind them is the New York City skyline. Everything from seafood to lumber comes here on ships from the Caribbean and South America. Empty trucks drive into the terminal, and they come out full of that cargo headed to the city and beyond. Getting those goods here has become very expensive.
The cost of shipping a container from Shanghai to New York, for example, has tripled this year. Tim DeNoyer is a senior analyst at ACT Research. A container that cost $3,000 to ship at the beginning of the year now costs $7,800, about half the level of the dystopian prices of the pandemic, but
But still. Significant, for sure. The most obvious cause is in the Red Sea. The Houthis are firing missiles at basically every Western commercial vessel that tries to go into the Red Sea right now to transit the Suez Canal. Ships that would go through the Suez now go around South Africa. Bill Baelish is a shipping consultant with ShipWithBill.com. He's had to explain to customers why ocean freight has gotten so expensive.
The boat has to be rerouted. It's going to take a longer time. Now you're talking additional fuel costs, additional labor costs. Those workers are stuck on the ship now for a longer period of time. But a boat going from Shanghai to New York does not need to go through the Suez Canal. Neither do a lot of other trade routes. And yet ocean shipping prices nearly everywhere have surged. Ryan Peterson is CEO of Flexport.
That's because it's a global market for shipping. And so they're taking some ships that would normally be going across the Pacific and routing them to support the extra capacity needed for the longer journey around Africa. That's actually reducing the supply of shipping effectively.
But the Red Sea troubles were only the start. A drought in Panama this year lowered water levels in the Panama Canal. There were storms in Asia. And on top of everything else, retailers in many places have decided to bring their goods in early. Seasonal front-loading. Bethann Rooney is director of the Port Department for the Port Authority of New York and New Jersey. Retailers are looking at a predicted nastier-than-normal hurricane season and upcoming labor negotiations at East and Gulf Coast ports
It has them thinking about Christmas. So typically in U.S. ports, Christmas is happening in July and August, maybe the first two weeks of September. So it appears as if shippers are trying to get ahead of that Christmas rush. That has just made the imbalance of supply and demand worse.
worse. And so, with one hit after another, the sprawling network of global trade has been knocked off balance. While U.S. ports have not become congested, other key ports have. Singapore, Sri Lanka. It's showing up not just in prices, but in the very containers in which goods move.
containers being in the wrong place at the wrong time. Eric Oak is a supply chain analyst with S&P Global Market Intelligence. Just as goods move around the world, empty containers have to move too. With ships being diverted, the empty containers aren't always getting to where they need to go. Without those containers to load with goods to ship and then unload, obviously the wheels of global trade grind to the halt. So far, ocean trade has not ground to a halt. It's just gotten a lot more expensive.
In New York, I'm Sabree Beneshour for Marketplace.
Last September, the Authors Guild, along with 17 authors, filed a class action lawsuit against OpenAI. They accused the company of copyright infringement, claiming that their writing was used to train AI models without their consent or compensation. They've since filed an amendment to add Microsoft to the list of defendants. Why?
While that case is ongoing, authors are worried about the future of the industry and their own livelihoods. Rebecca Ackerman wrote about what AI means for authors and the book publishing industry in Esquire the other day. Rebecca, welcome to the program. Thank you. What are some of the concerns that authors have around AI?
I think there are a few different ones. And I think the first one is really about confusion. AI as a whole doesn't feel like it makes a lot of sense to people who are outside of the tech industry because it can mean a lot of different things. So I think first off, authors aren't really sure what the threat is from AI because they aren't really sure what AI is or what the companies who build it are trying to do.
And then I think the other major concern is this replacement concern that we hear in other industries as well, that AI is going to replace authors. AI will be writing all the books. AI will be getting all the money. And authors who are already really squeezed financially are going to be out of luck. Speaking of finances, what's it like trying to make a living as an author these days?
It's very challenging. And for writers as well, like myself. And so the Authors Guild, which is the oldest organization for writers in the United States, did a recent survey and they found that the median author income in 2022 was only $20,000. And only half of that was from book sales.
So it's pretty rough right now for authors and writers financially to make a living from the work that they do. You also get into how AI has affected the self-publishing industry. What's going on there?
Yeah. So self-publishing has really been booming for better or worse. In a lot of ways, a lot of authors feel that now they have access to putting books and work out there in a way that they haven't before, which is very exciting. And I think on the other hand, there's now a huge flood of content that's out there for readers to pick and choose from and for, you know, them to spend their money on in different ways. In 2023,
Two and a half million books were self-published in the United States alone. And that's a lot of books. And one of the biggest accelerators for self-publishing has been Amazon, the Kindle direct publishing platform that Amazon has that supports authors in publishing their own works directly online to a distribution network that Amazon has set up.
Obviously, there are lawsuits ongoing by authors who feel like their work was inappropriately scraped to train AI models. And a lot of authors are worried about this. Is there anything that authors can do to protect their work from being used to train AI models at this point? So the Authors Guild recommends including AI clauses in book contracts.
for their work itself. So that is to say, this book cannot be used to train models, but also for the work that's surrounding the publication of their books. So if there's an audio book, you can include a clause that says, I want a human actor to record my audio book. So you can have protections both on how
how your content is used to go into AI and what content comes out of AI too. It's sort of, this was sort of complicated about this conversation is that AI is both, it's both about what content is used to train AI. And then it's about the content that AI creates and how that content is used in place of human artists or in collaboration with human artists. Yeah.
You are a writer yourself, and I wonder, doing this story, how all this makes you feel? It's a great question. So I have a background in tech. I worked in UX at a number of different tech companies before I moved to be a full-time writer. Yes, user interface. Sorry for the lingo. And the part for me that's the most
frustrating is the different languages that the tech world and the culture worlds are speaking and how it's very hard to get the two to agree on terminology and values. So that disconnect between the two worlds I find to be the most frustrating because I want us to be able to find a way to
to incorporate technology in a way that also valorizes labor and humanity that goes into it. Rebecca Ackerman, her piece in Esquire is, Is AI the Bitter End or the Lucrative Future of Book Publishing? Thank you so much. Thank you for having me.
This final note on the way out today, another loss in the courts for the Biden administration. A federal appeals court has temporarily blocked the entirety of the SAVE plan, which was the latest attempt by the Department of Education to lower costs for student loan borrowers. Parts of the plan, which would have also made it easier to cancel some student loan debt, were already on hold. Like Biden's previous attempts at student loan forgiveness, this effort has faced multiple legal challenges.
Even so, the White House said in May that at least 8 million people have already signed up for the program. John Buckley, John Gordon, Noya Carr, Diantha Parker, Amanda Peacher and Stephanie Seek are the Marketplace editing staff. Amir Babawi is the managing editor. And I'm Kimberly Adams. We'll be back tomorrow. This is APM. Understanding personal finance can feel like an impossible task, but it doesn't have to be that way.
I'm Janelia Espinal, and on Financially Inclined, I'll guide you through simple money lessons that will change your financial future. Learn about credit scores, how to avoid scams, and why you need a savings account. Plus, we explore the brain science behind FOMO and what you can do to make smarter money decisions. Listen to Financially Inclined wherever you get your podcasts.
