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See, I told you the sky wasn't falling. From American Public Media, this is Marketplace. In New York, I'm Kristen Schwab in for Kai Risdahl. It's Tuesday, August 6th. Good to have you with us.
I hate to be so smug, especially since we can't predict where markets will go from here. But we can tell you where they went today. They went up. Some international ones bounced back, too. Japan's Nikkei rose 10% today, making up for a big chunk of yesterday's losses.
And like I said, we don't know if the freakout is over, but this morning at our editorial meeting, we did wonder if one big dip, just one, can affect how consumers feel about and interact with the economy.
Marketplace's Samantha Fields starts us off again today. Want to get a sense of how people are feeling about the economy? Take a look at how often they're Googling recession. That's one of Justin Wolford's favorite gauges anyway. He's a professor of economics and public policy at the University of Michigan. It used to be that that would only spike during really bad times, like really deep recessions.
But in the last couple of years, with inflation high and the Fed cutting rates to try to slow the economy, he says people were Googling recession a lot, even though there wasn't one. And in the last couple of days, with the big dip in the stock market, people are back to Googling the word recession like crazy. To Wolfers, that says more about media coverage of the market than it does about the market itself. And it says a lot about psychology.
Sian Bonneau, an economics professor at Swarthmore College, says humans tend to feel losses more acutely than gains. So if the stock market goes down by 2% in a day, that's much more likely to trigger an emotional reaction than the stock market going up by 2% in a day. Even if the drop is short-lived.
So imagine you go to a casino, you know, you win a million dollars with your first hand, you lose a million dollars with your second hand. Do you feel the same as when you walked in? I suspect you won't. He says people react similarly to swings in the stock market, and that can affect how we behave. Perception is everything right in the economy. Wendy Edelberg at the Brookings Institution says even though the stock market is, of course, not the economy, it does have a big effect on people's perceptions of the economy.
Generally speaking, volatility in the stock market is bad for consumer spending because it just makes people worried about what the future holds. Even if the market bounces back quickly, she says big drops can make people less likely to trust the gains. I'm Samantha Fields for Marketplace. Wall Street today, we know we'll hear some version of the happy music. We'll have the details when we do the numbers.
One of the things that helped spark the stock market chaos on Monday was some data we got on Friday. Unemployment. Just to refresh your memory, the number ticked up from 4.1% in June to 4.3% in July. And I want to be clear that unemployment numbers, they represent real people and their real lives and livelihoods.
But sometimes there are perhaps some not-so-disappointing explanations behind a disappointing jobs report. Marketplace's Sabree Beneshour explains.
There are two ways unemployment can go up. One is the bad way, and one is the not-so-bad way. Katie Nixon is chief investment officer for wealth management at Northern Trust. The bad way is people get laid off. That is not quite what happened this time around. There was a jump in temporary layoffs, possibly due to Hurricane Beryl, but those aren't expected to be permanent. The other way the unemployment rate can rise is you have just more people entering the workforce.
Unemployment technically is not just people without jobs. It's people without jobs who are looking for jobs. So if you have more people starting to look, technically you have more unemployment. That did happen in July, says Dana Peterson, chief economist at the conference board. You had a lot of people who reentered the labor market or they were new to the labor market. That can happen for a lot of reasons.
Most recently, it may have happened because wages have been going up. Susan Hausman is a senior economist at the Upjohn Institute. It might pull in some retirees or people who feel the jobs available to them are attractive.
Another reason, though not the main reason, there are more people looking for work, is that some of them are new immigrants. And that's not a bad reason, says Northern Trust's Katie Nixon. They have filled a really important gap for us, and that's allowed labor inflation to fall. It's helped ease worker shortages, and that is different from bidding down wages by competing against U.S. workers, says Wharton professor Zeke Hernandez.
When businesses don't have enough people to hire, that is, there's not enough labor supply, they have to pay higher wages and they pass on those wage increases to customers. So if the unemployment rate had to go up, immigration and higher wages aren't the worst reasons. In New York, I'm Sabri Beneshour for Marketplace.
Let's turn now from labor supply to housing supply. As we've talked about many times on this show, there is simply not enough housing to go around, especially when it comes to starter homes. One option that could bring some relief is mobile homes. In Colorado, there are about 53,000 occupied mobile home lots, according to government data, and there have been a number of efforts to keep residents living there.
Marketplace's Elizabeth Troval has this story from Boulder, which is one of the most expensive housing markets in the state. At the Boulder Meadows Mobile Home Park near the edge of town, Medium de Santiago and Bernardo Padilla invite me inside their two-bedroom home and offer me a cold drink.
In their 17 years in this home, the couple have faced their fair share of challenges, working multiple jobs, lot rent hikes, and that time, De Santiago says, when the landlord threatened to evict them over a rent dispute.
But this mobile home has also allowed the couple to stay in Boulder as housing prices soared. They bought the place for just $28,000 and pay $900 a month to rent the lot, less than half the median rent for a one-bedroom apartment.
And while they've considered buying a bigger home outside Boulder, they've decided to stay because of the city's services available for their son, who has autism. They get a front row seat to Boulder's housing disparities. They run a business cleaning expensive homes and spend their free time volunteering with a nonprofit 9 to 5 Colorado, educating their mobile home park neighbors about their rights as tenants.
Many Coloradans, not just in Boulder, have been displaced from their homes over the years. They face increasing housing costs amid the rise of remote work, which has allowed wealthier families to move to the state. Some Boulder residents have been forced to move further away from their community and jobs. Kurt Fernhaber is the city's Housing and Human Services Director. He's been working with the city's housing and human services director
He says roughly 60,000 commute into the small city because so few people can afford to live there. Not only are more people commuting, but they're commuting longer distances. Mobile home parks can be a respite for those seeking affordable housing. But they haven't been immune to rent hikes, evictions and increasing land values.
to keep low- and middle-income residents living within city limits. In high-quality housing, the city is rolling out a new project, its own factory that will build manufactured homes.
If you come in here, you'll notice that we have three different cranes, these yellow cranes. Fern Hopper gives me a tour of the giant gray warehouse where roughly one home a month will be built starting later this year. This section here is where the floors are going to be built. The factory, in partnership with Habitat for Humanity, is meant to boost access to home ownership.
If we were to sell these on the market, free market in Boulder, you know, they'd be, you know, million-dollar homes. And they'll be sold for probably, depending on the household, between $280,000 and $380,000. New owners won't be able to resell the homes above a certain value, so they stay relatively affordable. And current mobile home park residents in old units can buy these new homes for even cheaper, thanks to city subsidies.
We're actually pricing them at a level which they can afford. It's a big investment. The factory alone cost $11 million. Still, it's cheaper to build homes this way, which is why they're one tool that policy analysts like Daniel Pang with the Urban Institute see as addressing the affordable housing crisis. You can sort of wholesale buy a lot of the material that you need online.
To build these homes and property and you have like a sort of standardized, almost like a car creation line where a lot of the parts are very similar in all the different builds that you're making definitely makes the cost a lot lower. The average cost per square foot of a new manufactured home is about half that of a site-built home, excluding land, according to the Census Bureau.
It's likely why manufactured housing shipments have increased nationally in the last decade. And there are more manufactured home factories today than just a few years ago. We think that additional 70,000 homes created per year, so another 700,000 over the next decade,
would certainly ease the shortage that we're seeing. It's not a silver bullet, but adding manufactured homes and protecting residents already living in mobile home parks is one way to address one of the country's biggest economic challenges. In Boulder, Colorado, I'm Elizabeth Troval for Marketplace. We gave you an update on TikTok yesterday and its murky future with less than six months to go before it's potentially banned in the U.S.,
Lots of businesses, of course, depend on platforms like TikTok for advertising. With a bit of creativity and luck, one video can turn into thousands of views, which can turn into real sales, a la Stanley Tumblers and Dash Mini waffle makers. But what happens when a small business goes viral and demand for its product explodes overnight?
That brings us to our latest installment of our series, My Economy. My name is Kelsey Campion. I own Fringe and Company, and we are located in New Orleans, Louisiana. Fringe and Company is a fashion and lifestyle brand that specialize in sequins and fringe and tinsel and anything that you could wear to make life a party. I would say definitely the product that we are most known for would be our sequin caftan product.
So our business went viral on June 30th, 2021. That date will be forever. I don't want to say burned because that sounds bad, but will be sparkled in my memory, I will say.
It was, I want to say, literally a seven-second video based around a trend that was happening on TikTok. And I had sort of posted in my sequin caftan saying, you know, when you're an adult and you can realize that you can wear whatever you want. And I transitioned into three different caftans.
Funny enough, I was heading into therapy at four. And before I went into therapy, I checked my phone and was like, oh, things are happening. What's going on here? And by the time I had gotten out of therapy, an hour later, I was like, oh, wow, something is really happening on the internet. There were thousands of comments. I mean, it was just coming in droves.
We went from having normal web visitors a day, I would say four to 500 for our small business, to we had 20,000 people visiting us a day. I was flying back and forth to Los Angeles probably every month and a half, ordering tons of fabric, shipping it back, making it. And then the first, I would say, five drops of our sequin caftans all sold out within 10 minutes of us putting them online. ♪
For a solid 14 months, I would say I felt like the business ran us. Virality is fleeting. It is not something that you can count on. We could go viral tomorrow. We could go viral in a year. We could never go viral again. So it's not necessarily a business model that we can count on. Two years ago, it felt like we could do absolutely no wrong. I mean, our stuff was selling out within minutes. Now it feels like we're working really hard for every single sale.
Ultimately, what we have seen going on right now with the slowdown is going to make us a much stronger business because we had to tighten a lot of things. We had to take a look at how we were doing things. And I think ultimately it's going to make us smarter and more successful business owners. It is challenging to navigate. It is challenging emotionally. But ultimately, luckily, I know that...
this is something that we can come out of and that similar to going viral, this slowdown is also a moment in time that in two years we'll look back on and see things very differently. That was Kelsey Campion at Fringe & Company in New Orleans. This series only works with your help. Let us know how your economy is doing at marketplace.org slash my economy.
Coming up... Even a white lie is not great for a relationship. We do economics here with a side of relationship advice, I guess. But first, let's do the numbers.
The Dow Jones Industrial Average rose 294 points, 3 quarters percent, to close at 38,997. The Nasdaq gained 166 points, 1 percent, to end at 16,366. And the S&P 500 added 53 points, again 1 percent, to finish at 5240.
Caterpillar grew 3%. The heavy equipment maker posted second quarter adjusted earnings that topped analysts' estimates. It cited lower than expected manufacturing costs and said higher prices helped offset slowing demand. Uber rode up more than 10% as its second quarter earnings and revenue beat analysts' predictions. The ride-sharing company benefited from more people returning to work in offices as well as dining out. Competitor Lyft picked up 3.8%.
Bond prices fell. The yield on the 10-year T-note rose to 3.9%. You're listening to Marketplace. This is Marketplace. I'm Kristen Schwab.
Google, and frankly the tech industry, woke up to a new, weird world today. Yesterday, a federal judge ruled that Google acted illegally to maintain its online search monopoly. The company had signed multi-billion dollar contracts with smartphone makers Apple and Samsung to make Google their default search engine. Google says it will appeal the decision.
This case will likely have major ramifications for tech giants, aka our modern-day corporate titans. And it got us thinking about another blockbuster antitrust case from more than 100 years ago that changed the game for the corporate titans of yesteryear. I'm talking about the breakup of Standard Oil, a company that once produced something like 90% of America's refined oil output.
Marketplace's Daniel Ackerman looks back at the case and what it might tell us about Google's future. One similarity between Google and Standard Oil? Ubiquity, says Rebecca Ha Allensworth, a Vanderbilt law professor. Both of them were very, very dominant and a big part of all Americans' everyday lives.
Their anti-competitive playbooks have similarities too, says Laura Phillips-Sawyer, a professor of business law at the University of Georgia. Google had exclusive contracts with smartphone makers, and back in the day, Standard Oil was being accused of using anti-competitive, exclusive contracts with its distributors. Distributors like railroads, which were forbidden from transporting anyone else's oil.
In 1911, the court said that's not OK. Supreme Court comes down and issues one of its strongest antitrust rulings. They break up Standard Oil. And that is where parallels with Google likely end, says Spencer Waller, an antitrust researcher at Loyola Chicago.
He says forced breakups have become less common in recent decades. So for Google, I expect that the court will tell them to change various aspects of behavior. Like requiring a choice screen. So when you open your phone, you select whether you want Google, Bing, or something else to run your searches.
I asked Waller if he had that choice, would he still search with Google? Me personally, probably not. Because he says he's a fan of competition. I'm Daniel Ackerman for Marketplace.
Okay, be honest with me here. Have you ever hid a purchase from a significant other? If so, I hope you're not sitting there listening to this together. I'm not here to start a fight. But if you have snuck a purchase into the house, you're not alone. Two-thirds of people who live with their partner have lied about their shopping, according to a survey by Circuit, a company that makes software for package deliveries. Some even go as far as manipulating financial records to keep the secret.
It's called stealthy shopping, and it's a growing trend. Wall Street reporter Suzanne Kappner recently wrote about it. Suzanne, welcome to the program. Thanks so much for having me.
So I think we all understand maybe the concept of, you know, bringing something in the bottom of a bag, a shirt, a pair of shoes into the house, sneaking them in. But the people you talk to go through pretty great lengths to sneak their purchases in. What are some of the methods that stuck out to you?
Well, one woman will enter the house through the back door after a shopping spree and quickly shove her packages in the coat closet or behind an armoire or in the laundry basket. And she leaves them there until her husband and three sons go to sleep.
And later that night, she quietly puts everything away undetected. That stood out to me. There was another woman who was hiding her Christian Louboutin shoes in her son's toy box. But unfortunately, she was outed when her son started walking around the house in these pumps with the red sole that Christian Louboutin has. And her husband was like, where did those come from? So they seem to be going to great lengths to hide their purchases. Yeah.
Yeah, and you talked to some men who did this too.
Yes, there was a very senior executive at a cable company who would have everything was custom, custom shirts, custom suits. He spent a fortune on his wardrobe and he would have all his clothes sent directly to his office so they didn't arrive home. So his wife didn't see them. When he finally wore something home, his wife would say, is that new? And he could tell her honestly, no, no, I've had it for a couple of months. And one of his colleagues, he bought 12 clothes.
custom-made shirts at one time, and he was feeling a little bit guilty about spending so much money. So he sent them straight to the dry cleaner. And when he brought them home, you know, they were wrapped in sort of the cellophane on hangers as if they were old shirts. And so his wife, you know, was never the wiser. That's a lot of work to hide your purchase. Well, these people take shopping very seriously. You know, people talked about having a little bit of embarrassment
with their shopping in your story, why do you think it's become more common for people to keep it a secret?
Well, I think I talked to a psychologist and asked her that question. And she believes, you know, it's one, the rise of online shopping, where it's gotten just much easier to order things to our homes. I think we've all been in that position where boxes and boxes are showing up on the front stoop. And it can be a little bit embarrassing. So that's one part of it. And then, you know, with the rise of influencer culture,
We're all subject to social media and seeing people kind of hawking things. And, you know, we want that. It looks great. We, you know, it's temptation is everywhere. So it's just become very easy to have a lot of stuff. You know, all fun aside, there are some real impacts here for people's finances and their relationships. What was some of what you learned there? Yeah.
Well, sure. You know, even a white lie is not great for a relationship because your spouse may say, well, if you're lying to me about your shoe purchases, what else are you lying about? So it fosters mistrust in the relationship. Mm-hmm.
So speaking from experience, I know sometimes as a journalist, our stories come from, are inspired by our own lives. So I guess I'm wondering, was this story at all inspired by any purchases you might have hid from someone?
I have learned that I need to have those boxes, whether it's from Amazon or somewhere else, put away by the time my husband comes home. I cannot have him walk in the door to piles of boxes everywhere because, you know, it stresses him out and it's not a good situation. So that's my personal experience.
This is a subject I didn't realize like how widely people do this because in talking to people, everybody has a story and everybody will, you know, one woman was saying how she put on a pair of new shoes before she walked into her home. So her husband, you know, wouldn't see her coming in with yet another pair of shoes. And everybody seems to have their own story of how this touches their lives. Suzanne Kaffner writes about retail for the Wall Street Journal. Suzanne, thanks so much for talking.
Thanks so much for having me. This final note on the way out today. Have you noticed more product placement at this year's Olympic Games? There was all that Louis Vuitton luggage in the opening ceremony. And then all those selfies athletes have been taking on the podium with Samsung smartphones. Read this in the Financial Times. This year's level of advertising saturation is pretty unprecedented for the Games. Unlike regular sporting events, you usually don't see banners lining stadiums or people drinking out of branded cups.
While this year's move to incorporate more advertising has been a bit controversial among officials and spectators, but Olympic hosts say turning to private corporations is a way to avoid largely relying on taxpayers to foot the bill.
Our digital and on-demand team includes Keri Barber, Jordan Mangy, Dylan Miettinen, Janet Nguyen, Olga Oxman, Ellen Rolfes, Virginia K. Smith, and Tony Wagner. Francesca Levy is the executive director of digital and on-demand. I'm Kristen Schwab. We'll be back tomorrow. This is APM.
