Marketplace - Maybe next year

Episode Date: December 14, 2024

The coming year will be a good one for housing — at least, the National Association of Realtors says so. It’s forecasting lower mortgage rates and more stable prices for homes in 2025. But not all housing experts agree. Later in the episode: an unexpected way to tap into geothermal energy, new approaches to corporate diversity as a court blocks Nasdaq’s DEI initiative, and a federal health care referral program leaves many Native Americans in debt, apparently in violation of the rules.

Five days, six minutes, what happened in this economy this week and why it matters. From American Public Media, this is Marketplace. In Los Angeles, I'm Carl Rizal. It is Friday today. This one is the 13th of December. Good as always to have you along everybody Inflation and interest rates are where we are gonna start where we go after that is anybody's guess Anna Swanson is the New York Times of our Mokwe is at Bloomberg. Hey you two Okay, Amara. Let me start with you. We will start with

Inflation the consumer price index came out. I guess it was Wednesday, a couple of days ago. Anyway, 2.7%, the headline number, higher than people have been hoping and or expecting. Is this, do you suppose, what the Federal Reserve means when they say it's going to be bumpy? Yeah, precisely. Yeah, it's going to be bumpy. Yeah, people said that report was kind of disappointing. And it was in a string of recent reports, recent inflationary reports that have been kind of sticky, like

causing a little bit of concern here. And so I think investors think that, you know, it's a lock that the Fed will cut another 25 basis points at the meeting coming up this coming week. But then the question becomes what do they signal about the pace of rate cuts going forward? Because if inflation is continuing to be bumpy and concerns about the labor market have eased up a little bit from where we were sort of late summer, then what does the Fed do? How is the Fed going to interpret that? And do they really need to be cutting at consecutive meetings if that's what the scenario looks

like now? Well, Ana Swanson, I think it's very interesting that everybody's just kind of assuming that even if they cut and then hold, that cuts are going to continue. It's not out of the question that if inflation stays sticky and ticks up a little bit, they might raise rates? I don't know. I mean, you know, the Fed had forecast four rate cuts, you know, full percentage cut next year, and now some people are tweaking that down. Maybe we'll see three, but you know, I think you're right. You know, the

economic data inflation has been trending downward. And recently, it's been bumpy, sticky, whatever you want to call it. It's bottomed out. But it's not totally out of the picture that we could see a reversal in trends here. And I think the Fed will just want to proceed extremely cautiously.

There's no reason to rush things, they think, right now. The economy is looking fairly strong. There's some warning signs in there, but on the whole, pretty good. So just wait and see how that unfolds and if things are on the right path. Amara, I need you to pay off something I said on the program yesterday for me.

I told people to get ready for the phrase, hawkish cut. Define, if you would, please. Right. So this is the idea that if the Fed does go ahead and cut, they will somehow still find a way to communicate this idea that we've been talking about, that the pace of cuts could or will slow going forward. And the place where most people think that sort of hawkish tilts could show up is in the dot plot or essentially where officials kind of forecast how many rate cuts they see next year and

the years to come. Which is literally represented in the form of dots on a graph just to be clear. Of dots on a, yeah, dots on a page. And so in September, the last time we got projections, as Ana was saying, they were projecting a full percentage point of cuts in 2025. And so Fed officials could deliver the hawkish cut by cutting and then saying, and then projecting that at the median,

maybe we'll get three or two or fewer cuts in 2025. And then people are also going to be listening to Chair Powell's press conference to see how he messages. Does he continue to kind of lean into this idea that they don't need to be in a hurry to cut rates, that it's okay if they are cautious as they try to find the neutral rate

and that they cut rates going forward. So people are going to be listening to how much he leans and continues to lean into that message. Right, Mara, just to be clear, this is a case where watch not what the Fed does, because we're really sure they're going to cut, watch what they say, yeah? Watch what they say and watch what the projections show, because again, we're going to get projections for the path of interest rates, but also economic growth, unemployment.

If they're seeing, if they're painting a picture that things are fine and even maybe better than they expected them to be in September, then that would also kind of signal that they don't need to rush to be cutting here. Right. Ana, I want to turn to the future of this economy come the 20th of January and some reporting you've been doing on technology and China and limitations that the United States government is trying to put on our technology transfers chips specifically. And some of the pushback that American companies have been giving and then what we think the Trump administration is gonna do about that. Because obviously the most important

economic relationship in the world really is us and China. So yeah, I did a piece this week looking into lobbying against the effort to kind of cut off technology flows to China. But I think it gets to this really like fascinating debate over, you know, China is at the same time our biggest military rival, but it's also a major trading partner. So where do you draw the line with that? And you are seeing that relationship become a bit more tense. You saw in the last week,

China respond by banning rare earth exports to the United States, starting an investigation into this US chipmaker. So I think that's just kind of another question mark for the economy and for people to think about next year. I mean, I think stepping back to be a little more focused on the economy, there's also the possibility of deregulation and tax cuts and deportation and tariffs. So all of these big unknowns that are being thrown at the Fed and at others as they're trying to predict the path of the economy next year. Anna Swanson at the New York Times, and Amara Mokwe at Bloomberg on a Friday afternoon in

the middle of December. Thanks you two. Thank you. Bye. Have a nice weekend. Wall Street today, technology was up. The rest of it, not so much. We'll have the details when we do the numbers. It is not going to surprise anybody within the sound of my voice when I say that 2024

has not been a banner year for the American housing market. Mortgage rates topped 7% for a while back in the spring. You remember that. A 30-year fixed is at 6.7% today. Home prices keep going up. New home construction and sales thereof are well below where they were in the before time. Sales of existing homes are worse. But hey, maybe it'll be better in 2025.

The National Association of Realtors is out with its forecast and Marketplace's Mitchell Hartman has it. It would be sad if the housing market got worse in 2025. Fortunately, says Nadia Evangelou, senior economist at the National Association of Realtors. The market is gaining momentum. She says one promising sign is price moderation. This year home prices are up about 4% in 2025. 2% increase projected, a significant slowdown compared to recent years.

And buyers will benefit from more homes on the market. Inventory levels expected to improve as new construction picks up and more homeowners release their properties. That's based on the Realtors' prediction that mortgage rates will fall to around 6% next year. But there's plenty of skepticism about that. Guy Ciccola at Inside Mortgage Finance says plans announced by the incoming Trump administration are the main reason. Tariffs and mass deportations don't bode particularly well for housing, nor the mortgage market. Tariffs are likely to push inflation and interest rates higher. Deportations

could sap the labor supply for new home building, pushing up costs. Sakala says there'll be plenty of empty nesters finally ready to sell, but high mortgage rates and home prices will remain a barrier for folks trying to buy, especially for the first time. Home price appreciation has been off the charts for the last few years, and the wage growth has been strong. It hasn't been nearly strong enough to keep up. I'm Mitchell Hartman for Marketplace. Some companies in this economy are working hard on their diversity initiatives on their own.

Other companies have to have it regulated upon them. And that latter group got a win this week. A federal appeals court in Louisiana said a proposed diversity rule from NASDAQ, yes, that NASDAQ, was illegal. Marketplace's Kimberly Adams explains. The SEC originally greenlit NASDAQ's proposal with the goal of boosting diversity on the boards of the almost 3,000 companies on the exchange. Scott Yonker at Cornell explained the rule would have required that every listed firm on the NASDAQ have at least one person who identifies as female and another that identifies as either non-white or as a LGBTQ plus person.

Or disclose to investors why they don't. Opponents argued the rule was discriminatory and amounted to a public shaming of companies and that the SEC had overstepped its authority. Devin Watkins is with the Competitive Enterprise Institute. The SEC has recently been trying to use its powers to force companies to provide more information than companies normally provide to investors. Watkins anticipates that this will be the first of many such provisions to be overturned in the courts. But companies are finding quieter ways to accomplish their diversity goals, says Stephanie Creary, who teaches management at the Wharton School.

She says verdicts like this aren't as much of a win for DEI opponents as they might think. They're creating opportunities for companies to be even more strategic and even more creative around solving these issues and creating opportunities around DEI. Query says the companies that really want to foster more diversity will find a way. In Washington, I'm Kimberly Adams for Marketplace. Coming up... It's sort of Twilight Zone-ish at this point. No, man, I don't do scary. First though, let's do the numbers.

Dow Industrial's down 86 points today, two tenths percent, 43,828. The Nasdaq increased 23 points, a tenth percent, 19,926. The S&P 500 flat 6,051. For the five days gone by, the Dow subtracted 1.8%. The Nasdaq gained 3 tenths percent, the S&P 500 down 6 tenths of 1%. Home builder D.R. Horton slumped 9 tenths percent today

after being downgraded by J.P. Morgan. Pulte Group, Inc. shed 1 and 9 tenths percent today, KB Home sank 2.9%. Warner Brothers Discovery dropped 3.4% today after a big spike on Wall Street yesterday. It announced plans to restructure one division for streaming and another for studios. Restructures and mergers, by the way, are a thing in entertainment right now. Comcast down 8 tenths percent. A new poll from Reuters and Ipsos shows some tariff skepticism out there. Less than a third of respondents indicated it's a good idea for the U.S. to charge higher tariffs on imported goods, even if prices increase. And 17% said tariffs would be good for them.

Personally, I would like to meet those people. You're listening to Marketplace. Got curious kids in your life? Your daughter? Your nephews? Your neighbor? We've got the perfect holiday gift, SmartyPass. It's a membership to a whole suite of award-winning, fun-as-heck podcasts about science, history, and more. The New York Times made SmartyPass a top pick for their gift guide this year, calling

the podcast Dole Drum Destroyers. For just $45 a year, you get ad-free episodes of shows like Brains On, Smash Boom Best, and Forever Ago, plus exclusive bonus content and more. Go to smartypass.org. Those curious kids will thank you. This is Marketplace. I'm Kai Rizdal. You have heard, I'm sure, about geothermal energy, right?

Widely celebrated as a clean alternative to fossil fuels. You've also heard, I'm sure, of fracking, which is not always thought of that same way. The first draws energy from the earth's heat. The second became popular in the natural gas revolution of the 2010s when we figured out we could get energy from drilling into shale deposits. Turns out though that energy, just like politics, makes for strange bedfellows.

A new report from the International Energy Association says there is enough untapped geothermal energy out there to satisfy the electricity demands of India and the United States combined. And it's hydraulic drilling, also known as fracking, that could help find it. Marketplace's Kayleigh Wells explains. This method is essentially fracking, but instead of capturing gas to burn, it's capturing heat to turn into electricity. It's simply adapting the technology from shared oil drilling to use it in geothermal. Roland Horn is a professor of energy science and engineering at Stanford University.

He says there's increasing interest in using fracking equipment to do this. It's just sort of a new way of doing what is actually a rather old idea. The reason it's gaining traction now is because reaching geothermal heat is becoming more affordable in more places, says Brent Wanner at the International Energy Agency, which released the new analysis. The oil and gas industry has been going deeper and deeper, and they've been able to do that in shorter times and for lower cost. He says the concerns about deep drilling, like causing earthquakes and disrupting habitats,

still hold here. But geothermal energy that's extracted doesn't get burned and release carbon. It also solves a problem that wind and solar can't, says Zainab Maghavi, executive director of the thermal energy nonprofit called HEAT. Where is that non intermittent energy supply? Geothermal has the potential to be that answer. Magavvi says now that the technology has advanced and we can afford to use it, the biggest challenge is adoption, including permits and investment commitments.

I'm Kaylee Wells from Marketplace. The Indian Health Service, part of the Department of Health and Human Services, provides care and support to almost three million American Indians and Alaskan Natives, partly through a network of hospitals and clinics. But no matter how it's structured, healthcare is complicated, the finances of it especially. And some patients who are forced to go outside that network of hospitals and clinics are getting stuck with medical bills that they don't actually owe. People in native communities, the Consumer Financial Protection Bureau says, are twice

as likely to have medical debt in collections as compared to the national average. Katherine Houghton from KFF Health News looks at what that means in actual practice. About 20 years ago, Tasha Hullley was hoping to buy her first home. She's a citizen of the Gros Ventre tribe in Montana and she and her husband at the time had just had their first baby. But when she checked her credit her plans stalled. You had to pull your credit to see if you were even credit worthy to make a major purchase. Hawley discovered that the bills from her son's birth, thousands of dollars, had been sent to collections in her name. Only Holly says she never received late notices. And more

importantly, she didn't actually owe that money. These outstanding debts were from Indian House Service. For tribal citizens across the U.S., this is a big problem that many have to deal with. You see, when a local IHS hospital can't provide a service, Tribal citizens can apply for a program called Purchased Referred Care. It's really common. In Holly's case, she couldn't give birth at the local hospital. It didn't offer labor and delivery. So she went to the next closest option. The idea is if a treatment isn't available through the Indian Health Service, tribal citizens get that care elsewhere, and the government picks up the tab.

But that's not how it always works. Sometimes IHS is late to pay. When IHS does not pay the bill, that private provider usually sees payment directly from the patient. That's Wyoming Representative Harriet Hagaman speaking at a congressional hearing earlier this year. In an email, a spokesperson said the Indian Health Service is working on this. It's training staffers to better help patients who get billed. And it's reminding hospitals not to charge patients who are approved for the program in the first place. And Congress

is considering its own fixes. Frank Whiteclay, chairman of the Crow Tribe in Montana, says he sees the consequences for his community. Frank White Clay, Chairman of the Crow Tribe in Montana, says he sees the consequences for his community. Frank White Clay, Chairman of the Crow Tribe in Montana, says he sees the consequences for his community. Frank White Clay, Chairman of the Crow Tribe in Montana, says he sees the consequences

for his community. Frank White Clay, Chairman of the Crow Tribe in Montana, says he sees the consequences for his community. Frank White Clay, Chairman of the Crow Tribe in Montana, says he sees the consequences for his community. Frank White Clay, Chairman of the Crow Tribe in Montana, says he sees the consequences for his community. Frank White Clay, Chairman of the Crow Tribe in Montana, says he sees the consequences

for his community. Frank White Clay, Chairman of the Crow Tribe in Montana, says he sees the consequences for his community. Frank White Clay, Chairman of the Crow Tribe in Montana, says he sees the consequences for his community. Frank White Clay, Chairman of the Crow Tribe in Montana, says he sees the consequences for his community. Frank White Clay, Chairman of the Crow Tribe in Montana, says he sees the consequences for his community. Frank White Clay, Chairman of the Crow Tribe in Montana, says he sees the consequences the program. The blame here is not always on the government. IHS officials say sometimes hospitals do get paid but still ask patients for more, or the person handling the bills just doesn't know the rules because the program is so complicated. For patients like Holly, the process feels

like an administrative black hole. It feels so hopeless. Back when she was trying to buy a home, Holly thought her only option was to pay off the medical debt. It took me a long time. I was taking monthly payments into the credit bureau. Even after that, the debt hurt her credit score for years. So when she was finally able to buy a house, she had to get a loan with a higher interest

rate. And these days she's still navigating the referral program. She's a cancer survivor and routinely needs specialty care off her reservation. This year alone, she's gotten two notices from clinics about overdue bills. You know how tedious that is? Trying to stay on track. Did they pay it? Keep calling.

Did this get turned into the collection? Keep calling. How many days is this bill late? She's doing what she can to protect herself, like actually hand delivering bills to her local IHS office, making follow-up calls. She even started a nonprofit that helps other tribal citizens figure out the system. Still, Holly wants the federal government to get better at this. Not providing adequate healthcare based on our treaty because we gave up land in exchange

for these services forced to give it up, not willingly. To her, it's not just a healthcare problem. It's one that can cause financial consequences that last for years. I'm Catherine Houghton. Oysters may or may not be your thing, acquired taste, I think it's fair, but they're an historically critical crop along the Mississippi Gulf Coast, or at least they used to be because historically it was doing a lot of work in that last sentence. Between Hurricane Katrina, the BP oil spill, and a not small number of other disasters, the oyster industry on the Mississippi Gulf Coast has seen better days.

Harvesting of wild oysters from reefs in the Mississippi Sound has been prohibited since 2018. But this year, those reefs will be open for two short harvests. Elon Ireland, with the Mississippi River Basin Ag and Water Des water desk went for a boat ride. Captain Richard Beausarge steers his 42 foot boat, the Royster, to the Henderson Point reefs near Paso Cristian. It's a small city 65 miles east of New Orleans on the Gulf of Mexico. Beausarge and his three man crew are going to harvest oysters, but this isn't like past seasons.

It's sort of twilight-zomish at this point because what used to be a hundred or more boats dredging is cut down to, believe it or not, two or three. That's because oyster harvesting has not been allowed for five years in Mississippi. Fishermen used to collect over two million pounds of oysters per year here, but since the mid-2000s the industry has cratered. Beausarge actually had to buy back oyster equipment he'd sold off when he heard the reefs would reopen. It's been so long since we've done it and it's kind of like we want to see it with our own eyes because we never thought we'd get to do this again on our reefs. Mississippi oysters hit their breaking point in 2019 when fresh river water released through a Louisiana spillway poured into Mississippi's coastal waters to prevent flooding.

The influx lowered the salinity in the Sound to a level at which oysters could not survive. There was very few oysters left after the 2019 openings in the Sound. Jessica Pruitt is a postdoctoral researcher at the University of Southern Mississippi. She studied the state's fluctuating oyster population and efforts to revive the species. Since Hurricane Katrina, Mississippi has spent 55 million dollars to restore oyster reefs. They've added chunky limestone and other material in the sound where oyster larvae can attach and grow. Pruitt says some of those efforts seem to be paying off.

There's adult oysters somewhere that are producing larvae that are settling on the reefs, so that is hopeful. Rick Burris is Chief Scientific Officer at Mississippi's Department of Marine Resources. He says limiting this year's oyster harvest will protect the reefs from overfishing. This won't do any damage to the population, but give a little shot in the arm to some of our fishermen and some of our processors, especially right before the holidays, you know, to be able to get some Mississippi oysters on the market. Once Captain Beausarge's boat, the Royster, reaches the reef, he lowers an oyster dredge into the blue-green water. It's a harvesting tool that looks like a hollow pyramid with a net attached to its base that scoops up oysters.

When he pulls the dredge up, the Royster's crew empties it onto a table, and oyster clusters spill out. They fill ten burlap sacks with the best-looking oysters and toss the rest overboard. Boasarge will end up selling the sacks directly to eager customers for $80 each. It's not much profit considering he has to pay his crew for the day's work and cover boat fuel and maintenance costs. We're trying to make it work. We're trying to make it to where, if we can retail them, everybody can make a decent pay. He's brought a couple of sacks home, too, and got to try

his catch. They're good and fat. They got good salt to them, and they're quite delicious. For right now, that's worth it. In Pasquistien, Mississippi, I'm Yalan Ireland for Marketplace. This final note on the way out today in which I learn there's a company whose business it is to keep track of what's flowing through more than a million draft beer taps in this economy.

It's called DraftLine Technologies and first of all, are they hiring? But also, and more to the point I guess than my employment prospects, the company says there has been a switch in the leaderboard capping a run that's been years in the making. McElhough Ultra has displaced Bud Light as the number one beer on draft in this economy. Beer, of course, being used loosely to describe both of those two beverages. Don't at me, people.

Just don'ts. Our theme music was composed by BJ Liederman, Marketplace's executive producer is Nancy Fargoli, Donna Tam is the executive editor, Neil Scarborough is the vice president and general manager, and I'm Kyle Rizal. Have yourselves a great weekend, everybody. We will be back on Monday. This is APM. Got curious kids in your life?

Your daughter? Your nephews? Your neighbor? We've got the perfect holiday gift, SmartyPass. It's a membership to a whole suite of award-winning, fun as heck podcasts about science, history, and more. The New York Times made Smarty Pass a top pick for their gift guide this year, calling the podcasts Dole Drum Destroyers. For just $45 a year, you get ad-free

episodes of shows like Brains On, Smash Boom Best, and Forever Ago, plus exclusive bonus content and more. Go to smartypass.org. Those curious kids will thank you.