| Yes, it's true the Federal Reserve decided to do nothing today. We would suggest, however, that that's actually a decision about a whole lot of something from American public media. This is Market Flats. In Los Angeles, I'm Kai Rizdahl. It is Wednesday, today 14 June. Good as always to have you along, everybody. Ten times. Ten times in a row the Federal Reserve has met over the past 15 months and raised interest rates. Today, as you know by now, nothing. Nada. Bupkis. Except, not really nothing. I think it's a big deal. Nina Ihacker is at the University of Rhode Island. I do think it is a significant statement of some kind and probably a reflection of wheels that have been turning for some time. One thing you got to respect about the Federal Reserve, whatever you think about their policies is that they just don't leave you guessing. Twice on this program, the last six or eight weeks, regional Fed presidents have said, in almost this many words, yeah, we're going to take our time, see what the data says. These news that interest rates are going to stay where they are for now came as no surprise. Something that's telling in a lot of what Jerome Powell and others have been talking about is this idea of lags. What the Fed says is almost as important, if not more important than what they do. That's Sarah Binder, she's at George Washington. So the question is, how does everybody understand the Fed? What do markets here? What do businesses here? What do individuals here? Banks here, politicians, Congress. Here is why I am making such a big deal about what the Fed says. The nuts and bolts of this economy are pretty well known by now. Inflation is elevated, but coming down. Unemployment is low, record lows recently. Consumers still are the driving force, and yet five percentage points of interest rate increases in a remarkably short period of time just aren't doing what they would have done in the before times. So what Powell and his colleagues have to lean on, to misappropriate a phrase here, is the bully pulpit, making sure everybody understands they are not going to be done raising rates until they are done raising rates. A lot of, at risk for the Fed here, it's legitimacy as a policymaker. And even if the level of inflation isn't entirely the Fed's fault, they'll be blamed for it. And I think the Fed wants to try to sort through all the uncertainty and try to be realistic to send a message. So here was the message from Powell today at his press conference, where again, the central bank decided to do nothing, but not really nothing. And then we'll look at those things. We chose to maintain rates at this meeting. It'll really be a three month period of data that we can look at. I think that's a full quarter. And I think you can draw more conclusions from that than you come from any six week period. And then we'll look at those things. We'll also look at the evolving risk picture. We'll look at what's happening in the financial sector. We'll look at all the data, the evolving outlook, and we'll make a decision. All of that said, here's the upshot. Inflation is still not where the Fed wants it to be. Interest rates are going to go up some more. This was a skip, not a pause. The next meeting is the end of July. Wall Street today in the face of all of that? Calm, really. We'll have the details when we do the numbers. That landing was a phrase left unsaid by the Fed chair today, the idea that the central bank is going to be able to get inflation under control without pushing the economy into recession. A year ago, that seemed unlikely. And that's being kind. Now it's, well, it's not likely, but it's less unlikely. Here's Marketplaces Matt Levin. Hamilton College economist, Ann Owen, is not one of those passengers who starts clapping in the cabin when a plane's wheels touch down. I have never actually done that, but sometimes I feel like I want to do that. Jay Powell might demand a standing ovation if he actually does land this economy softly. It'd be only the second time in history the Fed has significantly raised rates and tamed inflation without causing a recession. But Owen says right now any applause would be premature. The captain has ringed a little bell, told the flight attendants to go through the aisles and pick up all the remaining garbage, but we haven't landed yet. The Fed wants inflation to drop down to 2%, which will likely require more rate hikes, which this time could actually mean more unemployment. Plus there's always the risk some external economic shock alters the flight path. Julie Smith is an economist at Lafayette College. So in March we had three regional level banks fail. I think the foreseeable shock is still going to end up being in the banking sector. Not to mention those unknown unknowns that can wreak havoc with the flight controls, like Russia's attack on Ukraine or a pandemic. And ironically, consumers feeling better about the economy right now could actually fuel inflation. Joanne Hsu runs the Consumer Sentiment Survey for the University of Michigan. If consumers believe we're out of the woods, particularly with the lifting of the debt ceiling in combination with easing inflation, they may feel more comfortable spending in the months ahead. Which is the opposite of what J-PAL wants. I'm Matt Levin for Marketplace. There was news today as well about a different kind of interest rates, those on mortgages. The average on a 30-year fixed bumped down last week to just over 6.75%. That's according to the Mortgage Bankers Association. And that seems to have caught the attention of home buyers. The NBA says the number of mortgage applications was up. There is, of course, a big difference between applying for a mortgage and getting one, which I mentioned because a separate report this week, also from the Mortgage Bankers Association, found that credit availability fell in May to the lowest it's been in more than a decade. Or, put another way, mortgage demand and mortgage supply are moving in different directions. Marketplace Justin Ho is on that one. The fact that credit availability is falling is a sign that banks are being cautious about lending. We consider additional criteria. Maybe we only look at customers that have extra liquidity on their own balance sheet that could help them weather any storms. That's Dominic Miaten, CEO of Optus Bank in South Carolina. He says banks like his have a few reasons to hold back. For one, the economy is uncertain. And two, all those bank failures earlier this year still have a lot of banks nervous about their own deposits. We certainly maintain a very conservative posture when it comes to managing our liquidity because we don't know what the future may bring. This is a particular issue for jumbo mortgages, loans bigger than roughly $700,000 or even more in higher cost areas. Oded Akushi is deputy chief economist at First American. She says banks have to hold those on their balance sheets, unlike smaller mortgages, which banks can sell off. So by making fewer jumbo loans, banks can then reduce their exposure to credit risk and conserve that cash if needed. The Mortgage Bankers Association found that standards are also tighter for conventional mortgages, and even government insured mortgages, which are common for first time homebuyers. The tightening credit standards might just be a requirement for higher credit scores or higher down payments. And that could really stretch that potential first time homebuyer. Kushi says demand for mortgages rises whenever rates dip. But rates are still relatively high. That means when people get mortgages, they might get smaller ones, says Peter Alden, CEO of Baystate Savings Bank in Massachusetts. What people qualify for is a little bit different than it was a couple of years ago, certainly. Meanwhile Alden says he has a long list of people that are pre-qualified for home loans, but they still haven't found a home to buy. I'm Justin Ho for Marketplace. Bank of America let us in this week on some internal data they've got about a generational gap in consumer spending. Student debt and high housing costs are dragging down spending by Gen X-ers and Millennials and Gen Z-ers, while baby boomers are finding ways to live it up. Here with the next installment of our series, Adventures in Housing. My name is Barbara Talisman. I'm currently house sitting in the Sacramento area of California. What I'm doing when I leave here in October is TBD. August of 2021, I was living in San Diego and had a job in the nonprofit field, which I had been in for more than 40 years. And I guess I was part of the great resignation. I just looked at what I had in the bank and in investments and in retirement and just said I'm out of here. I got rid of all of my stuff. I donated it. I sold it. Furniture, everything. And left with five suitcases, which I am very proud to say is now down to two. My first pick was a very inexpensive cruise from Los Angeles down the Mexican Riviera for seven days, which I bought for four weeks in a row. The ships had just been allowed to start sailing again. So the prices were just so cheap. I mean, $500 a week. So I did four weeks in a row and I thought about moving to Puerto Vallarta. Puerto Vallarta was very inexpensive. Chicago was a little bit more expensive. After that, the house sitting started up again. And I found a six-week house sit in Melbourne, Australia. You get reflective, I think, in times of your life. And I didn't realize this connection between this trip my mom took my sister and I on in the 70s to what I'm doing today. Back then, she sold everything we had. And then a VW Westphalia van, the pop-up orange van, showed up in the driveway as I'm walking home from school. And she says that we're spending the summer traveling across the United States. Everybody thought she was nuts. I mean, we're living in Shaker Heights, Ohio. You do not do that. A single woman with two girls doesn't travel across the country. She just got this van and we take off. And my questions were like, what if we get lost? And her answer to that always was, as long as we have a full tank of gas, we'll never get lost. So I think that fearlessness started for me then. I guess I would stop doing this when I run out of money. But I'm also looking at less years ahead of me than I have behind me. I look at it and go, this is my lifestyle and I can live it and it'll last me for however long it lasts me. Because I'm at a point where I want to enjoy my life. That was a pretty good story. Barbara Talisman, House Sitting for Now in Northern California. You can follow her journey at where'sbabswithazeed.com. You can tell us about your own adventure in housing or other economic journey you're on. Marketplace.org is how you do that. Coming up. I wouldn't say necessarily the best of times. But not the worst of times, one hopes, right? First though, let's do the numbers. The Al industrial's off 232 points. Sounds like a lot. It's only 7.10% closed at 33,979. And as that gained 53 points, about 4.10%, 13,626. The S&P 500 nearly flat 43 and 72 there. Justin Hope is talking about mortgage demand and supply. So let us, shall we, check in on some residential lenders. Guild Mortgage Stop. Dripped nearly, dripped or dipped. Take your pick. Basically the same 1.5%. Finance of America sank 5%. Rocket companies which owns Quicken Loans and Rocket Mortgages slid 3 tenths of 1%. Today, bond prices rose yield on the 10 year Tino 3.80%. You're listening to Marketplace. These are our hiring goals, they say. They're very aggressive. But when everyone looks to you, you're calm. Why? Because you know you don't need a miracle. You need Indeed. Indeed is the hiring platform where you can attract, interview and hire all in one place. Indeed's hiring platform helps you easily schedule and conduct virtual interviews all in one place. On Indeed, over 85% of employers find quality candidates whose resume match their job description the moment they sponsor a job. According to Indeed Data Canada, the moment you post a job on Indeed, you get a short list of quality candidates whose resumes match your job description. And you can even invite them to apply right away. Indeed does the hard work for you and gets you one step closer by immediately matching you with quality candidates on the platform. Start hiring now with a $100 sponsored job credit to upgrade your job post at Indeed.com slash Marketplace PM. Offer good for a limited time. Claim your $100 credit now at Indeed.com slash Marketplace PM. Terms and conditions apply. What you watch depends on what kind of mood you're in. Sometimes you're craving comedies like Friends or South Park and sometimes you're more into dramas like HBO's Succession and House of the Dragon. There's also cooking shows like Chopped and Beat Bobby Flay and even movies like The Lord of the Rings and Shazam! Fury of the Gods. Well, Max is the streaming destination that has the best of entertainment for whatever mood you're in anytime. And plans start at as little as $9.99 a month. Max, the one to watch. Subscription required. Visit max.com. This is Marketplace. I'm Kai Rizdahl. My boss came into my office the other day and spotted a book on my desk that I was getting ready to interview the author about. It's called Black Folk, the Roots of the Black Working Class. And we had a quick conversation, my boss and I, about how you can't really talk about the history of black labor in this economy without talking about black political history and black social history and just black history. It's all really intertwined. Anyway, that's the setup for this. Blair L.M. Kelly is a distinguished professor of Southern Studies at the University of North Carolina, as well as the incoming director of the Center for the Study of the American South. And she has written this history of the black working class as a deeply personal book. Professor Kelly, it's good to have you on. Thanks for having me. Could you frame this conversation for me, I guess, and explain what you think about when you think the black working class, because we hear about the white working class all the time. Well, I think it's interesting that we don't hear about the black working class. Black people are so fundamental to the working class in America. We're probably some of the oldest working class workers in the United States. But I start with thinking about the stories that my family taught me. They came from folks who were agricultural workers and domestic workers and laundresses and elevator operators. My mother wanted me to know that being an elevator operator was a really good job at one point. She wanted me to be able to see and understand the world she came from. My father wanted me to understand that world. So they're what I think of first. You write early on in this book, you say black folk, black workers have had a distinctive experience and that experience points to a better future for all workers. I'm going to get to the all workers thing as we approach the end of this interview. But tell me more about that distinctive experience that black working class Americans have had. Well, they come to America in bondage and they are forced to work. And so in being in that abject kind of situation, you have to remake something to survive. And in that remaking, they make community. They make an expansive sense of family. And as freedom comes, they take all of that with them. And so we oftentimes think of freedom as like the beginning of the working class experience for black people. Building blocks were being created in secret in the quiet moments that they had as enslaved people and they carried those forward. Can we talk for a second actually about black women? Because in a number of interviews over the course of the past three, four years on this program, I've talked to people, black women economists, about centering black women in this economy and how doing that raises the economic potential of all people in this economy and here we go again with the all workers thing, which I'm going to get to at the end. But as we work our way through the 20th century and those black women become a working force in this economy, what does that mean for their families, for the men in their lives who are sometimes having harder problems? Talk to me about that for a second. I think women are facing very particular problems and the migration exacerbates a lot of those the separations, the being pulled apart from community supports that they may have had in the places in which they grew up. In an urban setting, particularly living in white households, cleaning, watching children, that difficulty of watching their own kids, of caring for one another became really hard. And so they had to recreate those networks. They created fictive kin. My mother was raised by a woman. She called Aunt Sis and I one day figured out that's not your aunt at all. She was just a lady who could watch you. She had her own business. And so those difficulties that we see in working women's lives, figuring out childcare, figuring out ways to support themselves, being blocked off from labor protections for generations, we see those pain points. And a lot of those pain points still exist. You have a passage, I think it's the last chapter of this book actually, about how your grandmother, Brunel, when she held your hand, held you real, real tight and wouldn't let you go. And I gather she kept a real close eye on you. And I wonder if that's a legacy of what you were just talking about. Absolutely. She was a worrier and she was really brilliant and kind and open with me when I was in her yard. But as soon as she would take me off her land, she would just knead my hand. I say like, doh. And it was painful because you're just like a little tiny person and she's a strong hand. And I was like, what is she doing? And I would try to get away and she wouldn't let me. And then I began to think in the process of writing this book about her life of the struggles that she had to support my mom, to stay married, to do all those things under those circumstances and to work, to find decent work that could support her. And so I saw that as like her worry that I was her legacy and that she had to keep me right there and take good care. It seems self-evident just to get back to the promise I made earlier in this interview about bringing it back to all workers benefiting from a thriving black working class. It seems self-evident that that's the case, that if that section thrives, then we all thrive. But I don't think a lot of people understand that. Yeah, I think much of the distraction of modern politics has people thinking that their interests aren't their own. But the interests of a black working class of accessibility to decent working conditions and a living wage, good political access, really being able to vote easily and fairly, so many of the things that are hard and difficult about making a living, we really feel first. And we have to think in our policies and in our approach to our humanity. How do we do better? Blair L.M. Kelly is the Williamson Distinguished Professor of Southern Studies. She's also the director of the Center for the Study of the American South at the University of North Carolina. Her most recent book is called Black Folk, the Roots of the Black Working Class. Professor Kelly, thanks for your time. I appreciate it. Thank you so much. We often talk about this economy as an economy, as in a single entity. But the fact is, you've got 340 something million people, each of whom is an economic force. There are real regional differences, rural versus urban as well. There is a whole lot of variation from place to place, state to state and city to city. In Minneapolis over the past year, prices rose just 1.8 percent. You compare that to Miami with inflation there at 9 percent. And it really is, as Marketplace's Elizabeth Trowvall reports, a tale of two cities. With inflation at less than the Fed's 2 percent target rate, I ask University of St. Thomas's Tyler Shipper, is Minneapolis in the best of times? I wouldn't say necessarily the best of times. We still need especially those food prices to come down. But he does say these are better times. A misery index of unemployment plus inflation is definitely way down from where it was a year to year and a half ago. The biggest reason why? It's still much more affordable to rent and own a home in our region. Peter Frosh is CEO of Greater MSP Partnership, which promotes the Twin Cities economy. He says fewer people are moving to Minneapolis compared to other places, keeping demand lower. Also? Every year since 2019, our region has surpassed our goal of creating at least 18,000 new housing units in the rental space. It's a different picture in the ocean-side destination city of Miami. Lots of people moved there when pandemic restrictions were lifted and... We also have better weather conditions, which attracts even more people to Miami. Florida International University economist Hakan Yamaskarai says many of these new buyers are paying in cash, no mortgage needed. Which means that they are not affected by any increase in the interest rate. Also, price hikes for clothing and food are steeper in Miami, which has affected him personally. That's why we started cooking home more. Miami may not be in the worst of times, but it'll take more than monetary policy to address its challenges. I'm Elizabeth Troval for Marketplace. This final note on the way out today, which I offer in the spirit of history matters. Recent history to be sure, but history nonetheless on this very unusual Fed Day. Here's Nina Ihacker at the University of Rhode Island. One more time. It feels a little reminiscent of the moment in 2014 when this is paradoxical, but it reminds me a little bit of the moment in 2014 when Janet Yellen hiked rates for the first time in a long time, but in an opposite way. Tailing to 2015 was when Yellen raised rates for the first time in seven years, but you get the gist. We were through the financial crisis, the recovery was moving right along, and it was time to move back toward normal monetary policy. This might be sort of the through the looking glass version of that. It feels to me like this is a moment where we have come through the, we've been forged in the fire of inflation and rate hikes, and now we responsible grownups at the Fed are willing to sit back and wait to see what happens. All right, we got to go here though. Did your moment of economic context make of this what you will? A report out from the consulting firm McKinsey this morning that says generative AI, that's chat GPT et al., could add as much as four and a half trillion dollars worth of value to the global economy every year. Lest, you think that is all good news? The report does go on to say that half of all work is going to be automated sometime between 2030 and 2060. So think about that. Our media production team whose work will never be automated is Brian Allison, Jake Cherry, Drew Jostat, Gary O'Keefe, Jeff Peters, Charlton Thorpe, One College, Toronto, and Becca Weinman. I'm Kai Rizdahl, we will see you tomorrow, everybody. This is APM. Hey there, this is Emma from Providence, Rhode Island. Marketplace is my favorite program. It provides facts about today's economic and financial situations, context in which to understand them, and a fascinating dash of social psychology. The hosts and the reporters are compelling, entertaining, and most of all trustworthy. I hope you'll join me and make a gift to support Marketplace today at marketplace.org slash donate. Thank you. |