Marketplace - Raising the roof

Episode Date: January 16, 2025

The December consumer price index is in, and inflation did tick up a bit. The stickiest category? Shelter, which was up a whopping 4.6% year over year. In this episode, we break down the multitude of reasons housing prices remain high. Plus: What’s next for humanitarian parole recipients as Trump takes office, why the American workweek is shrinking and EV adoption grows alongside an expanding charging network.

Someday, we are not going to have to cover inflation all the time. Today, however, is not that day. From American Public Media, this is MarketPlace. In Los Angeles, I'm Colin Rizal. It is Wednesday. Today, this one is the 15th of January. Good as always to have you along, everybody. The economic data of the day, as you might have guessed, is of the inflation variety.

We had today what Wall Street types call a downside surprise. That is the core consumer price index came in just a hair lower than expected. Remember, core strips out food and energy, which thus makes it a better gauge of where overall prices are going. Core was up 3.2% year on year. Among the biggest drivers of that core number and a key reason that inflation is proving so sticky, shelter. Rent and owner's equivalent rent, that's economist talk for the math they do to make mortgages match rent levels in their formula, combined they were 4.6% higher in December than they were a year ago. Marketplace is Samantha

Fields gets this going. Housing is most people's biggest expense by far. Steve Reed, a senior economist at the Bureau of Labor Statistics, says that's why it weighs so heavily in the consumer price index. Over 36% of the whole CPI is shelter. As long as housing costs remain high, inflation can only go so low. Purely mathematically, it's hard to get a low headline number without shelter numbers coming down. Shelter numbers have actually come down a fair amount since March of 2023. That's when housing inflation peaked at 8.2 percent. Now it's 4.6 percent. Susan Wachter at the University of Pennsylvania's Wharton School calls that good news.

Shelter inflation has come down and it is coming down and it will come down. But it's still got a ways to go if overall inflation is gonna reach the Fed's 2% target. And Wachter says that could take a while because so many homeowners have low mortgage rates they are loath to give up. Demand is strong because the economy is strong, but supply is still limited and so prices are increasing. But not nearly as quickly as they once were.

That's partly because affordability, if you want to buy, has gotten so bad that fewer people are looking and getting into bidding wars. And two, we're building a lot of apartments and those are coming online. Logan Motoshami, lead analyst at HousingWire, says all that new supply is helping drive rents down, at least in some markets like Austin. In others, like New York, inventory is still very tight. And then you have Los Angeles, where thousands of people have lost their homes in the last

week, and they're now looking for temporary places to live. I've talked to some of my real estate agent friends and one said that there was 167 people applying for one rental. And that's inflationary. Natural disasters are inflationary in the local markets. But as huge as these losses are in Los Angeles, he says they're unlikely to raise shelter costs or inflation at the national level. I'm Samantha Fields for Marketplace.

Inflation data, of course, comes with much detail. Shelter, we just talked about. Also, a good amount of retail goods, which prompted us to get some of our retail regulars on the phone. First up, sweets is the category. Prices were up 7 tenths percent month on month, 3.1 percent for the year. Kristin Tullheimer Bingham is our chocolatier. She's the co-owner of Dean's Sweets in Portland, Maine. November and December were record months for us. Our corporate orders were up over last year and our website orders increased too.

For our walk-in traffic in both of our stores, we had a nice leap of about 25%. We were stretched pretty thin. We had some late nights and some stressful days. We probably could have used one more person. Actually, no, we definitely could have used one more person and it would have made the days a little easier. But we got by, we did it, and all turned out well. So over the next few weeks, we'll work at a slightly less frenzied pace. We'll build up our inventory again, especially working on the ganache for truffles and making and dipping more caramels and all sorts of other things, especially things in the shape of hearts, because yes,

we'll be getting right back into it and getting ready for Valentine's Day. No rest for the weary, huh? Kristin Ptahler-Hammer-Bingham at Dean Sweets in Portland, Maine. Two more retail reports coming up later on in the program. Wall Street did enjoy that downside. Surprise on inflation today softer inflation means maybe Just maybe Powell and the gang are gonna look more kindly on more interest rate cuts Honestly your guess it's as good as mine. Anyway traders. We're looking to buy today

We will have the details when we do the numbers. Bigger, it turns out, might really be better, especially if you're running a Wall Street bank. JPMorgan Chase, Wells Fargo, and Goldman Sachs posted fourth quarter earnings today, most of them exceeding investors' already rosy expectations. JPM, you know what that is, right? And WFC, that's Wells Fargo and Company for the unfamiliar. It saw net income up 50%, five zero percent. Now, this isn't to say as go the big banks, so goes the economy, but there's definitely a correlation. Marketplace is Kayleigh Wells, has it?

A lot of factors came together in the fourth quarter that spelled good news for big banks. One, there was a lot of market volatility and banks traditionally do very well when markets are volatile. Managing partner Karen Petru at Federal Financial Analytics says volatile markets make people trade and seek advice and look for other services. A lot of that volatility was based on election uncertainty. But Petru doesn't expect that to end. Some of what the president elect says may be just bluster, but bluster from the

Oval Office really moves markets and I think you will see a good deal of volatility. Also, the Fed has been cutting interest rates. Kent Velasco directs the commercial banking program at Marquette University and he says that made companies that use these big banks more optimistic. If they were looking to grow or expand or whatever, they start looking at this as an opportune time to maybe borrow from a bank to do that. On top of that, Belasco says big banks also saw more deposits after the Silicon Valley bank collapse in 2023. People started moving their deposits out of regional banks and into the bigger banks,

mainly because of the size. And I think they felt more comfortable with that. Sam Stovall, chief investment strategist at CFRA Research, says the positive effects of that extend well past the banks. The financial sector is, in a sense, the lifeblood of the economy. Good news for banks is good news for the overall economy. Because that means the companies borrowing from those banks have more money to invest. If there's an increase in demand for loans, then there's the expectation for economic

growth, for improved output, etc. Ann Stovall says all that growth and increased output also spells good news for employment, too. I'm Kaylee Wells for Marketplace. The jobs report that came out last week had the overall unemployment rate at the end of last year at 4.1%. There are, of course, a couple of ways you can slice and dice that data. Workers who are discouraged or are marginally attached, a couple of ways you can slice and dice that data. Workers who are discouraged or are marginally attached, people who aren't working as many

hours as they want to. You can also measure what's known as employment intensity, how many hours workers are putting in every week. Last month, it was 34.3 hours. That's down nearly 45 minutes from its peak in 2021. Daniel Ackerman explains why that's so. Last year, Colin Bergman chose to cut back on how much he worked as a water resources designer

in Western Massachusetts. He went from 40 hours a week to 24. To travel and kind of do some different things for a year instead of distance as usual, working behind my computer screen. Bergman started making more art. He sold his colorful custom maps at local craft markets. Plus, he took a few long canoe trips.

Down the Connecticut River, and then I did another down the Erie Canal for a few days. Sounds like a dream. A dream made possible because his company allowed him to cut back when he asked to go part-time. Celeste Carruthers is an economics professor at the University of Tennessee. She says firms these days are not as desperate for workers as they were back in 2021. We were in the beginnings of a really exceptionally tight

labor market. There was talk of a labor shortage at the time. So companies asked the employees they had to put in longer hours, 35 a week on average. That number? Had been the highest average weekly hours worked that we had seen on record. Now with a cooling job market, firms finally have enough workers but still want to hold on to them, says Martha Gimble, director of the budget lab at Yale.

Part of what's happening in the labor market is employers just aren't laying off a huge number of people. And so workers cutting down on hours is another way for employers to adjust. Gimble says workers don't seem upset about that adjustment because if you look at the share of part-time workers who would rather be full-time, those percentages are still quite low. And what that suggests is that workers are likely still getting the number of hours that they want to get. And the overall reduction in hours worked is really just a return to how things used to be, says Ari Schwader, an economist at the University of Michigan.

So if you look at like the 2012 to 2020 timeframe, we're a tiny bit below sort of the average there, but not dramatically. So Schwader says we could finally be past the pandemic shock to the labor market but maybe that's just in time for the next shock for workers. If you start to think about things like automation or AI of course being the big buzzword well you don't need your customer service people to work as much or as many hours because you can have an AI bot do a lot of the work for them. Schwader says we're not there yet, but AI could mean big changes for how and how long employees work in the future. I'm Daniel Ackerman for Marketplace. Back to our retail regulars now.

Elsewhere in the consumer price index, one finds a category labeled clocks, lamps, and decorator items. Prices there are down just under half a percent for the month, flat for the year. Picture frames are decorator items. Frames like those sold by Eric Vaughn at his shop in Detroit. It's called Eric's I've Been Framed once we get his holiday report. We have people coming in at the last minute. We get that every year.

Then we were able to accommodate most of the requests. A lady came in, she had this picture that she had shipped from New York, and it took forever to get here. And I told her, don't worry about it, I'm going to take care of it. When it was completed, she came back in and she said, here, this is for you. And she gave me $400. I was really shocked. I was like, wow, that made my Christmas.

I'm in the process of trying to add another division where I sell black memorabilia. Over the years, I've amassed all types of memorabilia. Over the years, I've amassed all types of memorabilia. It's going to be probably about two to three months before I can really get it up and going. And this is something I've always wanted to add just in the back of my mind. I said, I've got to do this because I just can't hold on to it forever. Eric Vaughn, Eric's I've Been Framed is his shop in Detroit. it forever. Eric Vaughn, Eric's I've Been Framed is his shop in Detroit. Coming up. You know, everyone wanted to take time to go off and be with their families.

Ah, yes. Retail scheduling over the holidays. But first, let's do the numbers. Yeah, the really happy music today. Dow Industrial is up 703 points, 1.6%, 43,221. The NASDAQ jumped 466 points, that is 2.5% on that particular index. Finished at 19,511. The S&P 500 added 107 points, 1.8%, 59.49 there.

Kayleigh Wells was telling us about how big banks reporting better than expected earnings from last quarter JP Morgan Chase rang up 2% Goldman Sachs grew 6% Wells Fargo Gains 6.7 percent Citigroup Sprang up about six and a half percent today according the mortgage Bankers Association rates for 30-year home loans have surpassed 7% the highest since May of last year. Not gonna do anything for the real estate market, right? Bonds up, yield on the ten-year T-notes down 4.65%. You're listening to Marketplace. Hey, it's Kai. My minivan and I, as I've said on the radio, have logged a lot of miles with Marketplace.

Luckily, it's still running, you know, pretty well. But if your car doesn't drive as well as it used to, listen up. It can still help drive Marketplace. When you donate your old car or truck, we'll use the proceeds to support the great programs you hear every day. Start your vehicle donation at marketplace.org slash vehicle. This is Marketplace, I'm Kyle Rizdal. Immigration, as we know, has been a very high profile

public policy issue the past number of years. We also know that a lot of immigration authority in this country rests with the president. The Biden administration, which has just five days left to it, has used its immigration powers broadly, specifically for something called humanitarian parole, which provides work authority here for people escaping violence or oppression or natural disaster back home. Marketplace is Elizabeth Troval reports now. This is the story of a big sister, Marilyn, and a little brother, Jonathan. Both were university students back home. In Nicaragua, universities have been a target of the violent

authoritarian government, or not using their family name because of the risk of persecution. There's no freedom of expression in Nicaragua, says Marilyn, and no job prospects. So two years ago, when President Biden opened up humanitarian parole for Nicaraguans, their stepdad, a U.S. citizen, sponsored them. Within weeks, they were on a plane to Houston, and within months, she and her brother landed jobs as custodians at a local school district with their work permits. They had never worked cleaning jobs before, but the pay was decent, $12 an hour, more than salaries in Nicaragua. And she felt good about making her way.

Humanitarian parole has been a useful tool to getting fleeing migrants quickly into U.S. jobs that are often low-paying and hard to fill. Food production assistant forklift operator, Gardner. In her office at the refugee resettlement agency YMCA International Services in Houston, Joanne Pantaleon reads off a list of jobs filled by her Cuban, Afghan, and Ukrainian clients on humanitarian parole. Security guard, cashier, Uber driver, packer, stalker, babysitter. Just last year, her organization helped around 1,800 Cubans, Afghans, and Ukrainians with humanitarian parole get work permits.

It's immediate access to employment. They're making money for themselves. They're contributing to pay their bills. And in the last couple of years, she says those work permits have been processed more quickly. Just the fact that it only takes a month and a half or two months to get it from the moment you submit your application, it's a vast improvement. Humanitarian parole has been used in unprecedented ways during the Biden administration, though

it's actually been around for decades, since before the U.S. had an asylum and refugee system. But a big difference between today and back then is Congress used to pass adjustment acts. Kathleen Bush Joseph with the Migration Policy Institute says Congress used to recognize that people couldn't go home for humanitarian reasons. So they'd say, We're going to set up a process for you to be able to become a lawful permanent residence and perhaps eventually a citizen. Congress hasn't had the political will to do that in recent years, and humanitarian parole is both fleeting and discretionary. So when Donald Trump takes office,

his officials have said that they think the Biden administration's use of parole has been illegal and they want to end on day one these processes that have allowed for hundreds of thousands of people to come into the country. And even absent Trump administration policy changes, parole is expiring for many. Some have been able to apply for asylum or temporary protected status. Others will return home or stay in the US undocumented. As for Jonathan and Marilyn from Nicaragua, their pathway to stay is their dad who has a green card. But because Jonathan was under 21 when he entered

and Marilyn was older, they're in different immigration lines facing different visa wait times. He gets to stay in Texas, but she has to go back to Nicaragua, and she's afraid. For now, she's had to turn down a promotion at work as she makes plans to return to Nicaragua. But she's grateful for the two years money, she says, and she's actually felt free.

In Houston, I'm Elizabeth Troval for Marketplace. There was a survey out the other day, yesterday actually, it was from the National Federation of Independent Business, that showed small business uncertainty about where this economy is headed has dropped sharply since the election. The broad strokes of the soon to be Trump administration's economic policies are pretty clear but what seems certain for one slice of the economy can induce deep uncertainty in another and I speak here of the electric vehicle market. The president-elect has said he will end some of the federal programs that have boosted EVs the past couple of years.

And that gets us to this. Bloomberg has analyzed some data from the Department of Energy that shows a record number of high-speed charging stations were installed in the fourth quarter of 2024. That build out has been boosted by federal dollars, yes, but the cash is also coming from the private sector, as Marketplace's Henriette reports. Two main barriers stand between many drivers and an electric vehicle, higher prices and charging infrastructure, or the lack thereof, says Stephanie Valdez-Streeti at Cox Automotive. It's those edge cases that they're thinking about.

If I'm gonna go on a trip and I wanna be able to charge or I have to go on a long commute. They wanna know that they won't get stranded and more businesses are picking up on the revenue opportunity that comes with that charging anxiety, says Gil Tal, a professor at UC Davis. When you're charging, you will be there

for between 15 minutes to half an hour. You can go grab coffee, do a quick shopping. So if you put some chargers next to your coffee shop or clothing store, you probably won't make much selling electricity, but drivers might spend money in your store while they wait. Very similar to how gas stations make more money from selling soda and stuff. This is happening in a lot of shopping plazas and along interstates. Some truck stops are adding chargers, but so are other companies that haven't traditionally

been in the fueling business, says Jim Hurlis at CBRE. One example? Volvo ChargePoint and Starbucks built out a network of DC batch charging between Seattle and Denver along the interstate corridors. All these new charging stations are a response to the growing number of EVs on the road. Or maybe there are more EVs on the road because there are more chargers? Those of us in this space pretty much universally hate the chicken and egg analogy. Jeff Allen is executive director of an organization called FORTH, which advocates for electrified transportation.

He says EVs and public charging are more like chicken and waffles. They both make the other better. The more EV drivers you have, the more utilization you have of the charging network, and the more charging you have out in public, the easier it is for more people to choose to go electric. And for now, both charging and EVs are growing pretty fast. I'm Henry App for Marketplace. You know what goes together like chicken and waffles? The Marketplace Morning Report and you needing to know what you need to know to get your economic day started. Check it out, David Brancaccio and the gang get up real early in the morning to tell you what there is. For the last of our retail regulars, Kalina Bruce, owner of Noire Luxe Candle Bar in Seattle, Washington.

Candles, should you be curious, are in that same clocks, lamps, and decorator items, CPI categories, picture frames. So prices virtually unchanged year over year. December was really packed with a lot of private sessions, holiday events, and things happening at our candle bar. We also did a ton of offsite markets, vendors markets, so we were in the community three to five times a week, I would say. It does feel like we were very well prepared in terms of staffing and inventory.

However, there was about a week or so where, you know, everyone wanted to take time to go off and be with their families. Of course, that's something that we honor and support. And it also is something that caused a little bit of, you know, trickiness in terms of scheduling during that time. Now that things have gotten a bit quieter, this is really our time to take a look at our inventory, do restocking, reorganize in our workspace, holding our team meetings

and really working on staff development and focusing on some of our business goals for the year so that we can hope to see some more growth. Kalina Bruce there wrapping up our January retail report Noirlux Candle Bar. Should you be in the market for a candle up in Seattle. This final note on the way out today in which central bankers, they're just like the rest of us. The Federal Reserve's beige book came out today.

It's Anecdotal Look at This Economy broken down by regional Federal Reserve Bank. Today's winner comes to us from the Federal Reserve Bank of Kansas City, which offered this insight, and I'm quoting here, ski resort contacts noted busy early season bookings and a sold out holiday season. However, out of state powder hounds opted for lower cost basic passes to save on their ski vacations. Kansas, if you're confused, is, yes, very flat, but the Kansas City Fed's district does include Colorado, famously not flat.

Our media production team includes Brian Allison, Jake Cherry, Jessen Duller, Drew Jostat, Gary O'Keefe, Charlton Thorpe, Juan Carlos Torado, and Becca Weinman. Jeff Peters is the manager of media production. And I'm Kyle Rizdahl. We will see you tomorrow, everybody. This is APM.