Marketplace - The clean energy boom can’t come fast enough

Episode Date: June 10, 2024

As the Southwest prepares for 100-plus-degree days this week, we’ll look at where energy grids are prepared for a hot summer. A key factor? Whether grids have new electricity generators, like wind or solar plants. We’ll visit eastern Colorado, where clean energy jobs have been a boon for rural residents. Plus: More first-time homeowners enlist their parents as mortgage cosigners, and brands back away from trans representation, instead angling to keep both LGBTQ and transphobic customers.

Hi, I'm PJ Voht, here to tell you about my new podcast, Search Engine. Search Engine was one of the very best new podcasts of 2023, according to Vulture, Vogue, Time Magazine, and The Economist. We answer fascinating questions about business, tech, and history. Questions like, why are drug dealers putting fentanyl in everything? Who should be in charge of artificial intelligence? How did ADHD medication get so popular so fast? Listen and follow search

engine with PJ Vought and Odyssey podcast available now on the Odyssey app or wherever you get your podcasts. On the show today, companies and industries playing catch-up from Apple to an airline to the energy grid. From American public media, this is Marketplace. In New York, I'm Kristin Schwab and for Kyra's Doll, it's Monday, June 10th. Thanks for listening. NVIDIA is Wall Street's darling right now. The AI chipmaker stock split went into effect today. The company's stock price has more than doubled this year after tripling in 2023.

It even briefly surpassed Apple last week as the second most valuable company in the US. Speaking of Apple and AI, today at its developer conference, Apple announced new AI integrations for text, email, photos, and Siri. It's also partnering with OpenAI to add the capabilities of chat GPT into operating systems. Marketplace's Megan McCarty-Corino has more on where Apple stands in the AI race. In true Apple style, the company has a branded name for the new AI features.

Introducing Apple Intelligence. CEO Tim Cook said Apple's offerings would be unique in the AI landscape because it also has your calendar, your emails, your texts. It has to understand you and be grounded in your personal context, like your routine, your relationships, your communications and more. Which are all contained on your device. And it's those devices, more than two billion of them in use globally, that provide Apple with the biggest advantage, says analyst Angelo Zeno at CFRA. Those are very loyal consumers out there and will start to kind of utilize AI probably more so than any other consumer across any other ecosystem. They won't need to download a new app or navigate to a particular browser or

build trust in a new brand, says marketing professor Anjali Ball at Babson College. There's so much nervousness in the market related to AI, but one of the things I always notice about Apple users is we have faith in Apple. Apple isn't always the first mover on new technology, she says. They typically wait and see what the market is going to do, and then after they see what the market is going to do, then they pounce and they do it better than the other companies. And by partnering with Chachi PT, rather than launching its own large language model, Apple can offload some of the risks now inherent to the technology, like hallucinations and bias, says Eric Sufert, an analyst at Mobile Dev Memo.

You've seen companies rush out some of their AI products to disastrous results, right? And just from a strategic standpoint and an optic standpoint, that's probably something you'd prefer to avoid. He says Apple is ultimately aiming to differentiate itself with its focus on user privacy. The company has touted that many AI features can run on-device, avoiding the need to send so much user data to the cloud. I'm Megan McCarty-Corino for Marketplace. Wall Street today wasn't so sure about Apple but still had plenty to be happy about.

We'll have the details consumer price index on Wednesday, and regardless of what it says about shelter costs, the big takeaway for a lot of first-time home buyers right now is that things feel a bit impossible. According to census data, in the first quarter of this year, the median price of a home was over $420,000. That's about $100,000 more than it was before the pandemic. Those high prices plus higher mortgage rates means it's gotten even harder for young adults to move from renting to owning. So they're increasingly turning to their parents for financial help. Abba Badari is at the Washington Post and she recently wrote about the trend. Abba,

thanks for being here. Thanks so much for having me. So when I first saw your story, I figured this was maybe about parents giving their kids cash for a down payment, but it seems like there are a lot of ways parents are helping out. What are they? Yeah, there are so many ways that parents are helping their children. And I think like you, I assume that help with a down payment, just sort of a cash gift was going to be what we ran up against the most. But it turns out in part because

housing has become so unaffordable, home prices have gone through the roof in the last few years that a lot more first time buyers are needing help from their parents to actually co-sign those mortgages because they maybe don't even have the incomes to qualify in the first place. Yeah. An increasingly popular route is also taking out a home equity loan. Yeah. Some of the parents I spoke to had borrowed against their existing homes and were lending that money to finance their children's homes, thinking that it was a better transaction than having to pay 7% or whatever

the going rate for mortgages is to the bank. I guess, you know, borrowing against your house requires you to own a home to begin with, but a lot of the families you talk to are not exactly wealthy ones. You know, it really runs the gamut. And one of the leading concerns among the housing economists that I talked to about this trend is that as it becomes more necessary for parents to step in and help their children buy their first homes, it has the effect of making it that much harder for other people to break into the housing market when they don't have that help. And so we're exasperating inequality in a lot of ways by having to rely on so much financial help from parents.

Why do you think so many parents have been willing to step in and help their kids acquire a home? I think for so long, we've thought of home ownership as this really important milestone. I mean, it's the American dream. And for a lot of families, it's the most surefire way of accumulating long-term wealth and generational wealth that they can pass down. And I think parents are starting to realize that if they have the means to help their children, that maybe it makes sense to help their children. And a lot of the realtors I talked to said that many families

were now thinking of helping their children buy a house as sort of a generational family transaction instead of just like a one-time gift to their children. Yeah, very different framing. On the other side of the equation, it seemed like a lot of the young adults you spoke to seem to sort of have to put away their pride almost in getting help. Do they expect to need that from their parents to help them buy a home? Almost everybody I spoke to said that they really had wanted to buy a house without the help. But at the same time, they said, you know, the market is so tough right now. And

if I just kind of worried that if I didn't take this help now, that it was going to be that much harder for me to buy a house in five years or 10 years, whenever that might be. And so I think that is sort of changing the equation a bit for a lot of people. And it's changing the way that young adults and their parents are thinking about how they buy a house and the way they talk about it. A lot of realtors said that there just was less shame around it. It was very common for parents to help out, but people didn't really talk about it. And now the housing market has become so tough that it's kind of like, well, of course I need my parents to help out, but people didn't really talk about it. And now the housing market has become so tough that it's kind of like, well, of course I need my parents to help

out. And so that's sort of taken away the stigma a little bit. Yeah, I hate to end on a sour note, but where might this leave people who don't have the resources like a family home or parents to lean on when it comes to homeownership? You know, it's not clear just how permanent these shifts in the housing market are. We are starting to see home builders build a lot more homes, especially smaller entry-level homes. At the same time, we might start to see prices eventually come down. Interest rates could come down in the next several months, and all of that could change the dynamics a bit here. But for now,

it's really tough for first-time home buyers to break in. Nicole Saad Abba Badara is an economics correspondent at The Washington Post. Thanks so much for joining us. Abba Badara Thank you so much. Just in time for peak summer travel season comes a path to a potential shakeup at Southwest Airlines. Elliott Investment Management announced it's taken a nearly $2 billion stake in the carrier. In a statement, the activist investor firm said, quote, Southwest's rigid commitment to a decades-old approach has inhibited its ability to compete in the modern airline industry. Ouch.

The firm thinks, though, that there's room for improvement. Southwest is the fourth largest airline by revenue. Marketplace's Daniel Ackerman looks into what it might take to turn the company around. One thing Southwest had going for it, says transportation researcher Navin Eluru at the University of Central Florida. It enjoyed a patronage, if you would, of customer loyalty. Then came December 2022. That's when bad weather combined with antiquated scheduling software and caused the airline to cancel more than 16,000 flights and strand millions. When you can't get your vacation or your holidays, all that loyalty is ruined. I mean, I used

to travel southwest, but now I also hesitate to buy the ticket. Customers departed for other carriers. Since then, gradually, they've been coming back. I flew on Southwest this morning and happy to report it was on time and it was a full flight. Nicholas Rupp is an economics professor at East Carolina University, at least when he's not chatting with reporters while on vacation in Florida. He says Southwest has made some unusual business decisions. One way Southwest helps keep costs down is only having Boeing aircraft. That way their pilots only need to be trained in one aircraft type.

But relying on one supplier for your most important assets is also risky. Boeing was supposed to deliver dozens of its 737 model this year. So far, it hasn't. Plus, says Henry Hartfeldt, an airline analyst with Atmosphere Research Group, The 737 doesn't lend itself to long-haul international flying. For example, to Europe or into deep South America or to Asia. Adding other aircraft models to its fleet could help Southwest compete on new routes. But Hartfeldt says it'll be tough to turn the proverbial plane around overnight because...

The airline industry is not like other industries. It still has a lot of government regulation. On things like aircraft maintenance and staffing levels. So Hartfeld says Southwest could hit some turbulence on route to boosting its prospects. I'm Daniel Ackerman for Marketplace. Coming up… I've always been interested in climbing something super tall. As long as you're not afraid of heights.

But first, let's do the numbers. The Dow Jones Industrial Average rose 69 points, two tenths percent, to finish at 38,868. The NASDAQ added 59 points, a little over one third percent, to close at 17,192. And the S&P 500 picked up 13 points, a quarter percent, to end at 53.60. Daniel Ackerman was just telling us about that activist investor calling for change at Southwest Airlines. That sent shares seven percent higher. Elsewhere in the industry, American Airlines declined just under one tenth percent. United Airlines holdings was basically unchanged. And Delta Airlines ascended one tenth percent. AI chipmaker NVIDIA kept up its run

after its 10 to 1 share split. It added three quarters percent. Bonds fell. The yield on the And you're listening to Marketplace. Seasons change. Why not your tech? Upgrade now during the Dell Technologies Summer Sale event and save on select PCs, like the XPS16 powered by Intel Core processors. You'll be able to bring your most intensive projects to life with built-in AI, minimalistic design, immersive visuals, and cinematic audio. Plus, complete your dream setup with deals on select monitors, mice, and more must have electronics and accessories. When you shop online at dell.com slash deals, you'll have access to exceptional tech and electronics, plus free shipping on everything. Amazing prices await you for a limited time only at

dell.com slash deals. That's dell.com slash deals. Hi, I'm PJ Voht, here to tell you about my new podcast, Search Engine. Search Engine was one of the very best new podcasts of 2023, according to Vulture, Vogue, Time Magazine, and The Economist. We answer fascinating questions about business, tech, and history. Questions like, why are drug dealers putting fentanyl in everything? Who should be in charge of artificial intelligence? How did ADHD medication get so popular so fast? This is Marketplace. I'm Kristin Schwab. This month marks 55 years since the Stonewall

riots in New York City. It's one reason why June is Pride Month. During this year's celebrations, you may find companies messaging around the events to be a little subdued. Target says it's scaling back its Pride marketing plans. Last year, the retailer became a focus of homophobic and transphobic comments. This year, Target's Pride merchandise will only be sold in select stores as well as online. It's worth noting that many major companies say they're not phased by last year's backlash. Consulting firm Gravity Research surveyed 200 corporate communications execs. Most said they're not making changes to their pride marketing.

But as Marketplace's Savannah Marr reports, some of corporate America may take a more quiet and careful tone. Over a year since Bud Light faced an anti-trans boycott, the brand's sales still haven't rebounded. Bud's reputation on both sides of the political spectrum was damaged. Ted's reputation on both sides of the political spectrum was damaged. Enter five-time NFL MVP Peyton Manning. In this 2024 Super Bowl ad, Manning saunters up to a crowded bar with a rustic vibe. Cowboy hats, football jerseys. What are you having? Two Bud Lights, please.

A couple of burly middle-aged guys give Manning the stink eye. And then... Actually, make it a round for the bar. Round for the bar! Tim Bennett, who heads up the LGBTQ-focused marketing firm Tribury Productions, sees Budlight reaching back out to a familiar demographic. Look, we haven't left you. We're still here.

We get you. We know you. After all the Budlight drama, Bennett says it's easy to forget how it started with a brief and frankly unremarkable collaboration with a transgender TikTok star. It was nothing. There was nothing controversial about it, right? It was just the fact that the person was trans. That's all. brands. That's all." But it made transphobic customers angry. Like film yourself running over a bunch of Bud Lights with your SUV angry. Bennett says the brand became toxic to broad swaths of the market. Especially after Bud Light issued a quasi-apology. The brand's parent company didn't respond to an interview request. Other brands took note of Bud's misfortune and are proceeding with caution.

Whether you want to call it the Bud Light or the Target effect, something has happened. Which is not to say corporate America is abandoning LGBTQ consumers. Sure, companies may value diversity and want to be inclusive, but this is also about making money. It's a market that's a trillion dollar consumer base. Joanna Schwartz, a professor of marketing at Georgia College and State University, says that's why big companies have loudly celebrated pride for the last decade or so. But now that transphobia has become commonplace in right-wing politics, Schwartz says marketing to LGBTQ consumers is no longer an easy win. It is a fine line to walk.

You can create that impact for people around your brand without doing anything that others might perceive as risque or daring. Schwartz says not all companies are retreating. For example, Apple has held steady with a trans-inclusive campaign. But after last year's backlash, Target discontinued its Pride collection for kids, the North Face defended but then didn't resume its partnership with a drag queen, Skittles backed off from 2023's trans-inclusive package designs in favor of a pretty standard six-color rainbow promotion, and for the first time since 2020,

Calvin Klein's Pride campaign won't be headlined by any out, trans or non-binary models. None of these companies responded to an interview request. Having companies back away in the face of anti-LGBTQ plus threats or aggression is really concerning. TJ Billard is a professor of media studies at Northwestern. They say we're seeing the return of generic, apolitical mass-pride marketing. But algorithms and influencer promotions mean brands can save the edgier stuff for a more precise audience.

Whether that's TikTok or Instagram or whatever, like, queer people are going to see queer supportive messages from these companies. It's everyone else who's not going to. Billard says it's easier than ever for companies to offer inclusive messaging to the LGBTQ community in places other consumers won't see it. Are they alienating queer consumers? Probably. But many brands seem to have made a decision that in this political climate, pushing back against homophobia and especially transphobia comes at too high of a cost. I'm Savannah Marr for Marketplace. It's not even technically summer yet, but it sure feels like deep summer in the southwestern

US. We're talking highs of around 105 degrees in parts of Arizona and Southern California this week. Scientists predict it's going to be another extreme season, one that'll have people across the country cranking up the AC more often. And that will put more pressure on some energy grids than they can handle. Marketplace's Elizabeth Troval reports. The bad news is if temps peak far above normal this summer, we could end up short on electricity. Joshua Rhodes with UT Austin has the good news. It's actually better than it has been in the past couple years.

Thanks to new electricity generation coming online. Like wind and solar, as well as energy storage. And each region faces unique challenges, says Mark Olson with the North American Electric Reliability Corporation, which identified an elevated risk of supply shortages in the Southwest and also... In New England, recently there's been some generation that is retired. That's also true in the Midwest. That region is bringing online new electricity sources to help.

But the pace of additions isn't maybe keeping up. And so you can have shortfalls in the Midwest during heat waves, especially if the wind performance is low. And when that happens, the Midwest may have to rely on neighbors for electricity. But that's not an option in Texas, where David Blackman is a consultant. That state has its own independent grid. We have to have adequate capacity on the grid for all situations and we don't. He'd like to see more natural gas on the grid as a buffer, especially during winter cold snaps. Still though, the price per kilowatt hour on his summer electric bill ain't pretty.

That's doubled in four years. Double. As energy generation evolves and weather becomes more extreme, Ram Timsehshansi, an engineer with Carnegie Mellon University, says the risks to the grid are also changing. 30 years ago was they were looking at, okay, on occasion, you know, a handful of the generators are going to fail. Nowadays, generation is more likely to be knocked out by a common event like... The temperatures get very, very high.

And that extreme heat can create even more risk to power generators. I'm Elizabeth Troval for Marketplace. More extreme weather events are going to require a more resilient energy grid. The Biden administration wants to add more sources of renewable power to shore things up. With the Inflation Reduction Act, $400 billion will go towards incentives for electric vehicles, building electrification, and renewables like wind power. Wind energy is getting a lot of attention right now. The sector is expected to more than double over the next 25 years, according to the Department of Energy forecasts. KUNC's Ray Solomon has

more on what its growth means for rural economies. A gale is tearing through Colorado's rural eastern plains. It's an inspiring sound for Benjamin Sussman. It is generating power. All the farms near here, that's why there's so many built out in the plains. Sussman is a student in the renewable energy department at Northeastern Junior College in Sterling, Colorado. It's one of the few degree programs in the country for aspiring wind turbine technicians

like Sussman. I'm hoping to go straight into the wind industry. While his classmates fiddle with wires and circuitry in the lab, the 22-year-old suits up in safety gear to practice the ladder climb. Eventually, he'll be scaling actual turbines. He adjusts his hard hat, buckles into a harness, and up he goes. In this simulation, Sussman's ladder is only about 20 feet tall. In the field, he'll have to climb turbines as high as 300 feet or more.

Sussman I've always been interested in climbing something super tall. I climbed a lot of trees as a kid. Host But Sussman isn't just indulging his love of heights here. He's making a really smart career move. Demand for wind turbine technicians is booming. It's actually the fastest growing occupation in the country, according to the US Bureau of Labor Statistics. So it has been difficult to keep up. Kevin Schrader is with Invenergy, a clean energy producer with wind farms across the

globe. Last year, his company doubled their domestic wind technician workforce to 400. And this year, they're planning to hire hundreds more. Each quarter we have more projects and so we continually have job postings out. We're looking for qualified individuals. National and local climate goals for a rapid transition away from fossil fuel power has been feeding the growth. It also helps that renewables have been getting cheaper to produce. Since 2010, the country's wind capacity more than tripled. It's now the US's largest source of carbon-free energy,

and most of it is produced in rural communities like the area around Sterling, Colorado. Where there's ample real estate for wind turbines and solar panels. So that is pretty common for us to be developing in rural areas across the United States. Which means all those wind tech jobs will be rural jobs and high paying ones at that. The median income for wind techs is just under $62,000 a year. Jason Winter teaches in the renewable energy program at the junior college in Sterling. He grew up in the area and sees the clean energy transition as a potential game changer for the locals. If they don't have a family farm to work on, they really don't have a lot of opportunity.

And so now when we have all of a sudden really good paid jobs that make sense to stay here, I think that's huge for the community. After coming off the ladder, Benjamin Sussman says he can't wait to take advantage of all that rural opportunity. I think this is honestly one of the greatest mix of things that I could do. It involves climbing things, involves working with my hands. There's an electrical component, a mechanical component. I think it's a mix of all the things that I've thought about growing up. He's got an internship this summer maintaining turbines at a wind farm on Colorado's Eastern Plains, and he hopes to continue the work when

he graduates next winter. In Sterling, Colorado, I'm Rae Solomon for Marketplace. This final note on the way out today saw this in the Wall Street Journal. What was once a riskier real estate tenant is now a safer bet. Food services accounted for 19% of all retail leases last year, as Americans spend more time and money at restaurants. Low unemployment, rising wages and foodie culture are behind the boost. Analysts say Millennials' tendency to stay single longer also results in more eating out. Hey, it's one thing we Millennials aren't killing off. Our daily production team includes Andy Corbin, Elise Hassan, Maria Hollenhorst, Sarah Leeson, Sean McHenry,

and Sophia Terenzio. I'm Kristin Schwab. We'll be back tomorrow. This is APM. Kids are full of a million questions like, What is bankruptcy? Why does it feel good to spend money? I want to know what unions are and what they are for. You may not have all the answers, but we do. Million Bazillion, a webby winning podcast for.