Marketplace - Feelings versus facts

Episode Date: March 28, 2024

Americans often vote based on economic conditions, but how voters feel about the economy doesn’t always align with the data. That disconnect can cost candidates an election — it might have happened in 1992 and it might happen in 2024. Also in this episode: Resume-spamming bots speed up job applications, the Federal Reserve hunts for “good data” and Home Depot bets on big construction projects as the DIY craze dies down and infrastructure funding kicks in.

There are 26 letters in the alphabet. Go ahead, pick any six of them to describe this economy. From American Public Media, this is Marketplace. In Los Angeles, I'm Kai Risdell. It is Thursday today, the 28th of March. Good as always to have you along, everybody. We are going to begin today with our six letters. No strangers to regular listeners of this program. I do believe GDP and PCE, gross domestic product of the sum and total of everything this economy produces. The final update of which, for the end of last year, we got today, that's the fourth quarter, 3.4% annualized, of course, up a couple of tenths of 1% from earlier guesses. And then PCE, personal consumption expenditures, which we're going to get tomorrow and with which

we lead today, because it is the inflation gauge the Fed watches most closely. It is, in fact, right in that sweet spot of that good data that Chair Jay Powell and the gang at the Fed say they need to see more of before they'll start easing off on interest rates. Marketplace's Kristen Schwab starts us off right there. Good data. The phrase is murky, even a bit mysterious. Stephanie Kelton is an economist at Stony Brook University. It's intentionally vague, I think, to preserve optionality, to never entirely open the door or close the door on any potential move. Kelton says the Fed's been extra careful with its words because monetary policy isn't working the way it usually does.

Despite high interest rates, the labor market is still chugging along, and recent inflation numbers have been mixed. The committee wants to feel confident. They want to see evidence that is convincing enough to say, all right, the job is essentially done. Essentially done. That's a big statement that requires a steadily falling core PCE. But there are other clues the Fed is likely homing in on in the meantime. Andrew Levin, an economist at Dartmouth, says one is a labor-heavy category, services inflation. Things like haircuts, car repairs, you know, hotels and restaurants. That's the core of the economy where inflation is still running high. Another is housing, which eats up a big portion of people's paychecks. Former Minneapolis Fed President

Narayana Kochlakota says basically the Fed needs to feel the way it felt at the end of 2023, when for a solid half year, inflation was falling. It doesn't have to get down to two by any means. And in fact, I think the Fed would like to start cutting rates before we got to two. That means two point something is the goal. The Fed, of course, is not going to tell us what that something is. Coach Lakota says we've still got a bit to go. The earliest I think we would see a cut in rates would be June. And more likely during the second half of the year. I'm Kristen Schwab for Marketplace. On Wall Street today, I don't know, maybe traders were waiting for more good data

too. It was kind of a wash this session was. We'll have the details when we do the numbers. The all-in cost of the collapse of the Francis Scott Key Bridge is far from the most important part of this story. Very far. Lives and livelihoods have been lost. But the economic disruption is real. Rebuilding the bridge, for one. But before that can happen, two other substantial things do have to get done. The ship, the 984-foot, 95,000-ton Dali, has to be moved. And the wreckage of a mile-and-a-half-long bridge has to be retrieved from the water and taken out of the way. Marketplace's Sabri Beneshour talks salvage. The risk to human life did not end after the Francis Scott Key Bridge collapsed.

We all have to understand, as we're looking at this scene, how incredibly dangerous it is right now. Natalie Simpson is a professor of operations management and strategy at the University at Buffalo School of Management. The Dali appears to have run aground. You know, it's supposed to be floating, and it's not. And it's loaded on the top with an unthinkable amount of tonnage. It's not structurally stable. One way to move a grounded ship is to take off some of the weight carefully. The Coast Guard says a Navy crane is on its way and should arrive by 11 p.m. Eastern tonight. We are not talking run-of-the-mill cranes.

They will require special crane barges to come out that have lift capacities of at least, you know, 500, 600 tons. These crane barges are about the size of a football field in some cases. Robert Mester is president of Northwest Maritime Consultants. He's helped salvage World War II ships and other collapsed bridges. The hole in the Dali needs to be plugged, and the pieces of submerged bridge need to be cut using special oxygen-fueled underwater arc torches by divers. And that means a deceptively simple question needs answering. What was in all of those 4,700 containers on the ship, some of which have plunged into the water

or were torn apart? That ship was carrying hazardous materials. We know that. That makes the work even more difficult. Because there will be humans in that water doing that work. In New York, I'm Sabri Beneshour for Marketplace. For as much as is known about the 2024 presidential election, who the candidates are going to be, what the policy positions are, there are some known unknowns. Among them, exactly what role this economy is going to play. It is at the top of people's minds. We know that. What we don't know is how what we as consumers and participants in the economy believe about it compares to what's actually happening in it and how those beliefs affect our decisions come election day. In the second part of her series, Marketplace's Kimberly Adams reports that it is pretty hard to predict how the performance of the economy will translate into the performance of a candidate.

When I asked a bunch of political scientists, historians and pollsters about how people's perceptions of the economy affect their choices on Election Day, one example kept cropping up. And we've had three months in a row with unemployment going down, but I don't hear too much noise about it out of here. That's President George H.W. Bush speaking at a campaign rally in Trenton, New Jersey, just before the 1992 election. The economy in 1992 was actually getting better and nobody was feeling it. Or if people were feeling it, it wasn't being described as getting better. Diane Heath is a professor of government and politics at St. John's University and says that 1992 presidential race has a lot of similarities to this year's. The big macroeconomic numbers looked good, but people still felt like the economy was bad,

something that Bush, on the campaign trail, blamed on the media. Instead of the recession that many of those national talking heads in the media have been talking about, we grew, we grew at 2.7 percent. We grew. We grew at 2.7 percent. Conversations about improving economy did not happen until well late in the election year. And as a result, the conversation turned on who could handle it better. And Clinton was winning that argument. Most Americans are working harder for less money. Unemployment's up. Health care costs are exploding.

We are not doing what it takes to compete and win. Many researchers agreed with Bush that the media's hyper-focus on manufacturing industry layoffs and lack of focus on positive economic trends killed his chances. But reporters aren't the only ones with short attention spans when it comes to the economy, says Gabriel Lenz, a political science professor at UC Berkeley. Research suggests that voters are somewhat confused. They think they're evaluating the whole economy. They're trying to answer Reagan's question. Are you better off than you were four years ago?

But they actually end up instead answering the question, am I better off than I was about a year ago? And that's a strange way to elect our presidents, especially since what happens in the election year economy does not predict the future very well at all. People have a hard time remembering the economy of four years ago, especially right now when that economy was COVID. And let's be honest, a lot of us wish we could block that out. Regardless, says Jeff Jones of the polling firm Gallup. I would say typically if the economy is bad, it's going to have more influence on the outcome than if the economy is good.

Jones says the economy almost always ranks at or near the top when Gallup asks people what the most important problem in the country is, which it's been doing for decades. And even though macroeconomic data looks good right now. We still find about six in 10 Americans saying that they're experiencing hardship from paying higher prices. We find that people think they're personally worse off than better off. Part of that, says Diane Heath at St. John's, is because of how we talk about the economy in the media and online. We are living in an era of a challenging time for facts because what do we believe is true? Where do we get that information?

How do we understand information? How do we determine what's? How do we understand information? How do we determine what's true and what is just spin? And that's becoming more and more difficult. Heath says the narrower your bubble of information, the less likely you are to get an accurate picture of economic reality. In Washington, I'm Kimberly Adams for Marketplace. First-time claims for unemployment benefits kept on keeping on last week. That is to say they are low and staying low. 210,000 we learned this morning, if you happen to be keeping track.

It's another sign of a robust, very robust labor market. But still in all, finding a new job can be tedious at best. So job seekers are turning to technology, plugging their resumes and a profile into an artificial intelligence bot that will do all the applying so that you don't have to. Aki Ito wrote about it at Business Insider the other day, talking about these resume spammers. Aki, welcome to the program. Hi, thanks so much for having me on. So at the risk of being pejorative, these resume spammers, what are they for the uninitiated? I don't think that's pejorative. That's exactly what they are. Yeah, they're these bots, you know, they're these software services that automatically apply to jobs for you. And they just, it just blasts out hundreds to whatever kind of category of job you say you're looking for? Yeah, yeah, exactly. Depending on the service, the volume

is very different. Some will apply to, I don't know, maybe like a few dozen a week. There's one I tried that applied to, you know, almost a thousand a day. So yeah, depending on, you know, how much volume you actually want to put out into the universe, you would use a different service. Talk to me about ROI here. How many hits did you get on however many you sent out? And I think I got like six or seven interview requests as a result, which is, you know, a five or six percent success rate, which I think is very good, actually. I was surprised by how many employers actually got back to me. The companies that you got a nibble from, did they have any idea that you had used AI? I mean, most of them didn't, for sure. All of them didn't.

None of them said like, oh, I knew you applied with a bot. We should point out here that for transparency's sake, companies all over the place use AI in the recruitment process, including the company that owns Marketplace. So it's a little bit, you know, sauce for the goose, sauce for the gander. Yeah. Yeah, it is. When I spoke to recruiters, they were like, we don't use as much AI as you might imagine. I think recruiters don't use all of the features that applicant tracking systems actually offer. But you're absolutely right that companies use a lot of different kinds of services, a lot of different kinds of software to try to automate the process of picking the right candidates. So this was all fun and games and air quotes for the sake of journalism. would you use one of these for reals? You know, going into the reporting process for the story, I definitely would have said absolutely not. When I first started hearing about these services, I thought it was crazy. And I was like, there's no way that anyone would, you know, trust our current state of AI for something as important as applying for a job.

But coming out of the process, especially given how many responses I got from employers, I think I actually might. And I say that with a few caveats. There was a service called Massive that allowed for a little bit more control. You could vet which jobs you would actually apply to. And they employed a human check after the bot did the work where a human would actually look over the application and make sure that there weren't inconsistencies with the profile that you filled out. So I'd probably use something more like that. And then second of all, you all, I'm 14 years into my career now. So I think for people who are more experienced in their careers, it probably makes more sense to use networking, to use your connections to get your next job just because

these aren't entry-level roles anymore. But for somebody coming straight out of college or just a few years into their career, I think these services would actually be pretty good. I think they'd be helpful. Aki Ito at Business Insider. Aki, thank you so much for your time. I appreciate it. Oh, thank you so much, Kai. It was great to be on your show. Coming up. Trying to get hundreds of pounds of metal and electronics into a truck. Tell you what, I could not do it. But first, let's us do the numbers.

Dow Industrials ticked up 47 points today at 10 percent, finished things at 39,807. The Nasdaq dipped 20 points, about a tenth percent, 16,379. The S&P 500 lifted five points, a tenth percent, 52 and 54. Tomorrow is Good Friday. The markets will be closed in observance of that. So for the week, the Dow ascended 0.8%. The Nasdaq declined 0.3%. The S&P 500 gained 0.4%. Also, by the way, the last trading day of the quarter. Hey, so how much would you pay for an iconic Hollywood prop, huh? Somebody just paid $718,000. Let me say that again slowly. Seven hundred and eighteen thousand dollars for the wooden door that allowed Rose to float to safety in the movie blockbuster Titanic. There was room for Jack, by the way. I'm just saying. Bonds down. You'll want to tend your T-note Rose to 4.2 percent. You're listening to Marketplace. This is Marketplace. I'm Kai Risdahl.

Two things about this next story. First of all, it's properly the Home Depot, not just Home Depot. So that. Also, though, and I grant you more relevant, the Home Depot announced its biggest acquisition ever today. It's buying Texas-based SRS Distribution. $18 billion is the price tag. SRS isn't exactly a household name because it doesn't sell to household consumers.

It supplies building materials to big-scale professional contractors doing roofing and landscaping and pool construction. The Home Depot is looking to grab more of that market as consumers cut back on their own DIY home renovations, as Marketplace's Megan McCarty Carino reports. The early years of the pandemic were a bonanza for home renovations, says Carlos Martin at Harvard's Joint Center for Housing Studies. Oh, it's been a wild ride. Mortgage rates were at record lows and people were stuck at home with a lot of extra time and extra money to tinker around the house. He says spending on home renovations spiked in 2021 and 2022. Now what we're going through is a correction and a stabilizing.

So the Home Depot is looking beyond its big orange warehouses for growth, says Michael Brown, a retail strategist at Carney Consulting. This new acquisition, I think, gives them access to probably one area where they don't play, which is the pool sector. And other specialty construction. About half of Home Depot's current business comes from contractors. But until now, the retailer hadn't really served big construction firms that do complex projects requiring highly specialized

materials at a massive scale. The move continues to cement them as the place to go from the everyday consumer to the local contractor to the regional contractors for their one-stop needs. While professional construction firms have also been affected by the higher interest rates that have slowed down consumer renovations, there's still a severe long-term housing shortage, points out Anibhan Basu, chief economist at Associated Builders and Contractors. Not to mention, the government is spending

more than a trillion dollars on infrastructure projects. They put it all together, professional construction firms tend to be very busy on average during the years ahead. And he says the Home Depot could get a big orange slice of that business. I'm Megan McCarty Carino for Marketplace. The Home Depot. It is also properly the Marketplace Morning Report. You should check it out. David Brancaccio and the gang, all the business and economic news you need to start your day. So you're at work. You need a break. Maybe you're a little bit hungry, but really you only want a snack.

And besides, you don't want to spend more than maybe a couple of bucks. Enter the vending machine. They've actually been around vending machines since the 1800s. But here in 2024, vending machines, or the business of them, to be clear, have become something of a side hustle. Joe Pinsker wrote about it in the Wall Street Journal the other day. Joe, welcome to the program. Good to have you on. Thanks for having me. So were I looking for a side hustle in vending machines, about which we can talk more as to the why in a minute, how would I go about it? That is a good question. The formula is pretty simple. You can go online, maybe Facebook Marketplace,

maybe Craigslist, find a used vending machine. Maybe you'll spend $1,000, $2,000 on it. And then start going to Costco or Sam's Club or sort of your warehouse store of choice. Buy a bunch of soda and snacks at sort of lower per unit prices. Double those prices when you stick them in a machine and find a place to put the machine. And ideally, as passersby encounter

your machine, they give you some money. So that all sounds great, except, and this gets to the why thing, people looking for, you know, extra income, sort of passive income. Every now and then it works out well as related in your piece, but a lot of times it kind of doesn't. Yeah, yeah. Many people were enthusiastic about vending machines as a way of making money, and it's going great for them. But there are plenty of other people who have really struggled with this. I spoke with a couple from rural Alabama who had spent a significant chunk of their year 2023 trying to get their vending machine business off the ground. They had to sort of buy this used vending machine and then repair it and stay up till 2 a.m. trying to get it in working order. And they

ended up sticking it in a gym. And at the moment, it's currently making them about $30 a week, which is really not much and not nearly enough to recoup the cost of the original investment. Not to be underestimated is the amount of work it takes to find these things, move these things. They weigh 800 plus pounds, I think you said in the piece. Keep them stocked. Deal with cleaning the money. Money is very dirty, as we all know. It's not, you know, find it and leave it and forget it, right? Yeah, yeah. And this is where the term passive income gets so interesting. I think there is a mushiness to the phrase that people end up using it. A lot of the ideas that are thrown around are hardly passive. I mean, to go back to that couple that I was talking about from Alabama, you referenced the sort of 800 pound weight of these machines. At one point, the two of them were struggling to like wrangle this machine into a U-Haul that they rented. And just to zoom out from that specific scene for a moment, that is the opposite of

passive. That is about as active as it gets, trying to get hundreds of pounds of metal and electronics into a truck. Okay, so as you have reported this piece, and you are now steeped in the side hustle of vending machines, I don't know how often you go into the Wall Street Journal's offices, but do they have one there? Oh, man, I wish I could answer that, but I'm a fully remote worker, and I have not seen one on my visits, but don't rule it out. All right. So let me ask you the same question sideways. When you go out and you see a vending machine now, do you think differently about it? Because I'm going to, we used to have them here at Marketplace and then sort of two thirds of the way through the pandemic, the company that runs them pulled them out and said, nobody's coming. And I'm like, yeah, nobody's coming.

Yeah, no, I, it absolutely has changed the way I look at vending machines. I hadn't, first of all, thought very much about them to begin with, but I had assumed that there was this kind of orderly, streamlined operation, some sort of centralized entity that was, you know, vending machine corp. And they were the ones handling all the vending machines. And what blew my mind about this story, and I've just sort of loved talking with all the everyday people involved with it, is just how homespun of an operation this is. I mean, now I see a vending machine in a grocery store parking lot, and I think my next-door neighbor might own that machine. This is just something that everyday people can do, and lots of them do do it. So that's what changed for me.

Joe Pinsker with The Wall Street Journal. Thanks for your time, Joe. I appreciate it. Hey, thank you for having me. This final note on the way out today, two of them, actually. Number one, unless I miss my plane to San Francisco tonight, we'll have Fed Chair Jay Powell on the program tomorrow, which I mentioned as, number one, a humble brag, but also, B, because the University of Michigan's Consumer Sentiment Index came out today. We're feeling pretty good is the word out of Ann Arbor, but also relevant to the Fed. Our inflation expectations continue to be, as central bankers like to say, anchored. We're thinking prices will go up about 2.9 percent over the next year.

That's down a bit from the prior reading. over the next year. That's down a bit from the prior reading. John Buckley, John Gordon, Noya Karr, Diantha Parker, Amanda Petra, and Stephanie Seek are the Marketplace Editing staff. Amir Bibawi is the Managing Editor. I'm Kyle Risdell. We will see you tomorrow, everybody. This is APM. Calling for a renewed focus on literacy. We have gotten this wrong in New York and all across the nation.

And it's happening because of a podcast. I think your podcast has changed my life. And I'm going to share this podcast with everyone I meet. Sold a Story investigates how teaching kids to read went wrong. New episodes of Sold a Story are available now.