Marketplace - The working man’s Burning Man

Episode Date: September 20, 2024

Ever wanted to burn up physical manifestations of the year’s heart-wrenching grief and financial dread in a 50-foot-tall, marionette-shaped effigy? Same! In this episode, we visit the 100th Burning of Zozobra in Santa Fe, New Mexico, where attendees do just that. Plus: Climate change may be to blame for pricey potato chips and corporations rehire old executives in unstable times.

Hi, I'm Kyle Rizdal, the host of How We Survive. It's a podcast from Marketplace. In 1986, before I was a journalist, I was flying for the Navy. Mr. Gorbachev, tear down this wall. It was the Cold War and my first deployments were intercepting Russian bombers. Today though, there's another threat out there, climate change. This could be the warmest year on record. Climate change is here.

Temperatures here are warming faster than anywhere on earth. And while the threat seems new, the Pentagon's been funding studies on climate change since the 1950s. I think we will put our troops and our forces at higher risk if we don't recognize the impact of climate change. This season, we go to the front lines of the climate crisis to see how the military is preparing for the threat. Listen to how we survive wherever you get your podcasts.

In no particular order today, choo-choo trains, CEOs, and you know, something about the Federal Reserve from American public media this is Marketplace. In Los Angeles I'm Kyle Rizdal it is Friday today this one is the 20th of September good as always to have you along everybody one guess loyal listener In Los Angeles, I'm Kyle Rizdal. It is Friday today. This one is the 20th of September. Good as always to have you along, everybody. One guess, loyal listener, as to where we are going to start on this particular Friday. If you said maybe the Fed's interest rate cut, gold star to you. Heather Long is at The Washington Post.

Eddie Brede is at Politico. Hey, you two. Hi, Kyle. Hi, Kyle. Heather, let me start with you, and I will preface it by saying two things. Number one, I thought for sure that the Fed was gonna go 25 basis points,

a quarter of a percentage point, that's number one. Number two is you wrote a couple of weeks ago that the Fed oughta go half a percentage point, 50 basis points, but you said you thought they were gonna go 25 as well. So were you surprised? Well, as you said, I called for 50 basis points on September 6th, so I'm feeling pretty good about that. Not that anybody's keeping track.

But I did it on the day just after the jobs report. There's been a clear deterioration in the labor market. We're basically at a hiring almost standstill. And I think the Fed really made the right call in acting before it gets worse, take out that insurance policy. And I was really glad to hear the Fed chairman be clear about that, that he doesn't think the labor market and doesn't want to see the labor market get even worse and doesn't think that's necessary to help inflation anymore.

So a little bit of surprise, but very happy. All right. I'm going to come back to you in a second. Sadeep, your reaction, were you surprised? I was surprised. This is a Fed. The Fed generally does not want to indicate that things are worse than they really are.

J-PAL has gotten out there and said, the economy is strong, we shouldn't actually be worrying about it. And the Fed usually takes larger cuts when the economy is weak. And so just historically, the Fed does not want to signal that there's more trouble than there really is.

And you kind of have to wonder, do they know something else when they make a big move like this? I totally agree with that. And so, Heather, back to you. Does this not sort of imply some sense of alarm? And look, let's be clear just for everybody listening. The economy is very strong. The labor market is softening.

Yes, but GDP is growing and things are generally robust. But Heather, does this not signal some sense of alarm? Maybe a little bit. I think what it really signals is regret that they probably should have done a 25 basis point cut in July and then a 25 basis point cut now. But I think the reality is Fed Chair Powell didn't have the votes in July, and that's what changed between then and now. And small, small P politics, not Democrat, Republican politics, but a Fed share politics. And it's good. If you're going to do a move like

this, you want to have, and they only had one descent, you want to have a strong backing and a strong signal so that you can tamp down those worries. Very interesting. Sadeep, let's get you on that dissenting, right? We had the first dissent, Michelle Bowman, the community bank representative on the board of governors. First dissent since 2005.

Interesting, notable, or just, you know, whatever. It's an interesting point for history. This isn't really a major, I told you so, dissent. The dissent and her statement today outlining it was that the economy is actually strong. We don't need to suggest otherwise. And the Fed is still not at its inflation target. The Fed, everyone knows the Fed is not great at forecasting.

Almost all of their forecasts have been off. And so it's just the reality that there is one dissent here to say, well, we've fought this battle, let's make sure we win this battle. And because of the long and variable lag of monetary policy, a few months probably doesn't really matter unless there's something else happening under the surface. And so the dissenters case here was that it's actually not that bad. Heather, on that long and variable lag thing, it of course works both ways. Fed Chair Powell said this repeatedly when he was raising rates.

Monetary policy takes a long time to work its way through the economy on the way up with interest rates. Also, it has to be said on the way down. So we've got some time to wait and see what happens. Yeah, we do. I was happy to see that refinancing, home refinancing jumped 24% this week compared to last week. You're starting to see some reaction to lower mortgage rates already.

The one that I keep watching is those credit card rates. Obviously, we know record credit card debt, a lot of people struggling to pay those bills. So far, those rates are still near record highs, around 25%. So we need to see those come down to really get broader relief throughout the economy. Speaking of relief, Sadeep, shouldn't we take this rate cut as a sigh of relief on behalf of the economy that we've turned a corner now? It's obvious that you look at any chart of inflation, the rate of increases in prices has come back to more normal levels. We're right where we were before the pandemic started. This is a totally acceptable rate of inflation to the public. People are not

panicking about continued price increases. There's still a feeling of angst and anxiety about whether wages have caught up enough, whether we've really allowed people to make ends meet. There's obvious indication across the lower income spectrum that people are struggling with what's happened in the economy at certain levels. And so there's not a whole lot here that should make people feel tremendously comfortable, other than the fact that the labor market has not fallen apart. And all the predictions over the last two years were that things were going to get bad really fast when the Fed raised rates as quickly as they did. And guess what?

Everything's actually been okay with the labor market as they've brought things back to normal now. Heather, just quickly here, what are you going to be looking for? You gave us some of those short-term indicators, refis and all that. What are you looking for sort of medium-ish term to let you know that what the Fed is doing now with this cut is working? Good question. Well, I think it's been really fascinating to watch the bond market. Obviously, we saw a big stock rally just after the Fed cut rates, but the bond market has

been a lot more jittery. We've even had people like the bond king, Jeff Gunlach, come out and predict we may already be in a recession. So I would really like to see the bond market also get to a more normal scenario because really a lot of other indicators look quite good right now as Sudeep was laying out. Speaking of normal scenarios, Sudeep, we're looking at another government shutdown and I don't want to get into the politics of that or prediction of it, but running this economy, it takes two to tango.

You've got your monetary policy people at the Fed. You got fiscal policymakers in Congress Who are doing that thing that fiscal policymakers always do man? You know, they are doing their thing. It's just it is Would obviously be profoundly stupid for the United States Congress McConnell by the way, that's not you opining that's Mitch McConnell, but exactly, and to do it right before an election, I just think it would be, even if they're not that dumb, voters will notice that and you really don't want that on your record four or five weeks before an election. So I actually think they'll get past that. But the fiscal policy questions are enormous after the election. How the election shakes out is going to fundamentally

change the conversation we're having about the course of the economy, because if there's a sweep on either side, there's going to be spending out the wazoo around individual priorities of each party, and that will be striking. Either spending or potentially cuts in certain areas but historically it's actually been spending in both ways. So deep ready at Politico on a Friday and Heather Long at the

Washington Post thanks you two. Thanks Guy. Wall Street today kind of mixed traders coasted into the weekend we'll have the details when we do the numbers. A lesson now that expertise in one industry does not necessarily beget expertise in another. The CEO of Nike announced his retirement on Thursday. Unexpectedly it has to be said, after a tumultuous few years at the shoe and apparel company. John Donahoe came from tech. He used to be the CEO of eBay, joined Nike in 2020. But sales slipped and competitors gained, so next month a long-time former Nike executive is going to take over.

A lot of companies have done this, by the way, where a CEO struggles and they're replaced by a familiar face. Think Disney and Bob Iger, Starbucks and Howard Schultz twice, Apple and Steve Jobs years ago. That can bring stability, but it can also bring some risks, as Marketplace's Henriette reports. The best thing about bringing back an old hand when a company's in crisis is it can happen really fast, says Yo-Jud Chang, an assistant professor at the University of Virginia.

For the company's board... It allows them to kind of bypass a long protracted search process in that they already are familiar with the person, they've been more or less vetted to a certain extent. And the returning leader already has relationships with employees, they know the industry. And presumably they can jump into action quickly. That can bring the company some much needed stability and in the short term it could boost their stock price and even quiet down activist investors.

But over the long haul, Companies cannot stand still. They've got to continually innovate and grow. Charles Elson is the founding director of the Weinberg Center for Corporate Governance at the University of Delaware. And that person who comes back to stabilize the company may not necessarily be the best person to grow the company. Because the company, the industry, the economy may all have be the best person to grow the company. Because the company, the industry, the economy may all have changed while that leader was gone.

For example, Elliot Hill has been away from Nike since 2020, says Chris Bingham, a professor at the University of North Carolina. Four years is like, I don't know, how many generations in consumer products? I mean, that's a long time in that industry. And the strategies that worked in the past may not anymore, he says. That's why in some cases, says Yojad Chang at the University of Virginia, companies bringing back a former leader may think of them as an interim CEO, whether or not they say that explicitly. But underlying that, the board is generally going and searching more broadly for a longer-term successor. The risk is that they don't find a successor or the new old boss tries to stick around for too long.

I'm Henry Epp for Marketplace. Ten years ago, says the Bureau of Labor Statistics, the average price of a bag of potato chips, 16 ounce bag to be clear, the average price in this economy was less than $4.50. These days, right around $6.50. Yes, a lot of food got more expensive during and after the pandemic, but the rising price for a plain old bag of chips has outpaced inflation for a lot of those other grocery items. Julie Grant from the Allegheny Front wanted to find out why chips are so hot these days. Kevin Troyer watches a truck unload his August potato crop in Waterford, Pennsylvania.

So these loads are coming in fresh out of the field. The haul of white-skinned, starchy potatoes tumble out of the truck to his conveyor system where they're washed and sorted. The crop looks pretty healthy, and that's good because farming potatoes is becoming more challenging in Pennsylvania. Troyer's farm has been lucky with the weather this season. Potatoes need cool nights. Last night it was down in, I think I had 49 at my house. And actually potatoes love that kind of weather. The clean potatoes are loaded onto another truck,

which is headed to a Snyder, the Berlin potato chip factory a few hours south near Pittsburgh. They'll be made into chips within 48 hours. The big season for potato chips is right around the holidays and the football playoffs. Everybody's having their Super Bowl parties and their playoff parties and stuff like that. Pennsylvania has more potato chip makers than any other state, and factories like to source from nearby. It reduces the need for long-distance transport. Fuel costs are a major factor in the rising price of potato chips.

But growing potatoes here in Pennsylvania is becoming more difficult because of climate change. Bob Leiby is an agronomist and says potatoes are tricky. The crop is sensitive to weather conditions. Weather conditions like temperature. In the 1980s and eerie around Kevin Troyer's farm, there used to be 35 nights a year when temperatures were too hot for potato growth.

Today, it's more like 50 nights a year. And hotter days are also hard on the crop. It's easy to get soil temperatures way up, out of the range that tubers will even continue to grow. If the soils hit 85 degrees for long enough, the potato crop is fried. The climate is changing and changing kind of rapidly. We have to develop potatoes that are adapted to the new climate. This is Walter DeYoung who researches potato genetics at Cornell.

He says places like Idaho and Washington have the advantage of larger tracts of land, a longer growing season, and large scale mechanized irrigation systems. But sourcing potatoes from further away means higher transportation costs for Pennsylvania chip factories. And DeYoung says it's less sustainable. Do they have the water to sustainably use to grow all those potatoes indefinitely at West? I think the answer to that is no. In 2011, Cornell released a potato DeYoung developed that helped northeastern US farmers store their crop long enough for the

football season chip rush, which means fewer potatoes from out of state. Transportation costs are just one aspect of potato chip prices, but after the food shortages and supply chain snags of the COVID pandemic, DeYoung thinks there are reasons to keep potato production close to the factories. In general, potatoes produced out west may be cheaper, but there's some societal value for those disaster years to have production in the Northeast as well. Because local potato production could mean cheaper chips just in time for football season. In Waterford, Pennsylvania, I'm Julie Grant from Marketplace. Coming up. There's a lot of people out there that are fascinated with railroads.

I mean not the worst thing to be fascinated with, right? First though, let's do the numbers. Dow Industrial is up 38 points today, just under a 10% 42,063. The Nasdaq off 65 points, 4 10s percent, 17,948. The S&P 500 down 11 points, 2 10s percent, 57 and 2 there. For the week, the Dow gained 1.6%. The Nasdaq added 1.5%. The S&P 500 increased 1.4%. We just heard from Julie Grant about potatoes and climate change, so let us look at some

companies that use the tuber in their products. Lay's Potato Chips is a subsidiary of PepsiCo, down 2% today. Utts Brands, which also makes chips under the Dirty and Zaps brands, dropped 2.75%. And did you know that Pringles are technically not a potato chip, but an extruded snack? What? Anyway, they're owned by Kelenova, which picked up two tenths percent today. You're listening to Marketplace. Hi, this is Emily from Paxton, Nebraska. I live in a rural area where the written local news has been outsourced to a bigger city. Hi, this is Emily from Paxton, Nebraska. I live in a rural area where the written local news has been outsourced to a bigger city,

and the local newscast is not very good. I enjoy listening to Marketplace programs because they are informative and thought-provoking. I learn about things, places, and people that I would not have found anywhere else. I am so grateful for Marketplace's dedication to bringing the news to the people. Join me in supporting Marketplace with a gift today. Go to marketplace.org slash donate, and thank you. This is Marketplace, I'm Kyle Rizdahl.

So we had that interest rate cut the other day, a move that could get people feeling a little bit better about this economy because, as we have talked about a lot, consumer sentiment has been kind of sour for a while. Here's a different take on that. In Santa Fe, New Mexico, for a hundred years now, people have been letting go of their collective worries, economic and other, by setting them on fire. It's the annual burning of Zozobra.

People write down their woes, parking tickets, divorce papers, bad report cards, whatever. And the Santa Fe Kiwanis Club builds a giant effigy out of them named Zozobra or Old Man Gloom. Marketplace's Savannah Mar went to this year's festival. Zozobra is a 50-foot tall marionette puppet suspended from a metal frame. He scowls down at the crowd in a white tuxedo with red suspenders and a

boutonniere. Behind the fancy outfit, he's stuffed with bills, tax receipts, and whatever else is keeping people up at night. We're gonna put car troubles in him. Steph and Mario Orozco took the train up from Albuquerque to see the Zobra burn for the first time since high school. Gosh, it's been about 15, 20 years. They couldn't pass up the Centennial burn and with it a chance to process some expensive bad luck. This year, one of their family cars got broken into and damaged. The other one broke down. In New Mexico you live so far away from everything else. You gotta have a dependable vehicle and you know, with a hot summer like this. Public transportation is not sustainable in

any way. They're waiting in line to put all that gloom to paper and drop it in a box that will go up in flames with the puppet. Steven Cordova came all the way from El Paso to do the same. He's here with his partner and their five-year-old son who's wearing tiger face paint. I just want enough money to you know care for my family and not have to live check to check. Cordova says his salary as a manager at a big box store hasn't been stretching so he's searching for a new job, maybe as a firefighter. I wrote that down right now, yeah. So it was a gloom, but it was for more positivity in the next coming year. And that's kind of the point. Letting go to make room for optimism, says Julia Goldberg,

a longtime festival volunteer. She staffs this booth where people drop off their glooms. And somewhere behind sickness and heartbreak, she says money and work stress are always big. People have brought bills, they've brought canceled checks, work memos, pink slips. A woman was in here earlier and said, I'm just writing down the names of all my bad colleagues. Others are hoping to offload more general angst about the economy and where it's headed. It kind of feels like COVID, the war in Ukraine, things that were directly affecting the economy have kind of stabilized. Says Katie Beasley, a law student at the University of New Mexico.

I'm just hoping that stays the same way. No more crazy global events for at least a year or something. Around 8 p.m., volunteers put out a last call for glooms. Soon, they'll carry the boxes up on stage to meet their fiery end. Claribel Gallegos drops her paper in the box just under the wire. Is it a secret or can I ask?

No, it's for the sadness that I have in my heart with the losing of my mother. Her mother would have been 100 this year, just like Zozobra. And Gallegos remembers coming to this event with her family back in the 50s. It was very different. This is really commercial. She chalks this up as another gloom. Gaigo says the burning was once a small community event. Now it draws big name sponsors and a crowd of 65,000 people from all over for collective

catharsis. After a pageant, a drone show, and some fireworks. Old man gloom finally goes up in flames and takes our money stress and work troubles and fears about an uncertain future with him. For the night anyway. In Santa Fe, I'm and well in the American economy. Last year alone, says the U.S. Chamber of Commerce, a record-breaking 5.5 million Americans filed an application to start a new business.

There are, of course, countless reasons somebody would decide to do that. Sometimes it's because you want to. Sometimes it's because you have to. That's the setup for today's installment of our series, My Economy. I'm Gary LeBlanc. I am the owner of Scenic Rail Riders in Concord, New Hampshire. We provide what we call rail bike tours.

They're essentially four-wheel bicycles that ride on the railroad tracks. We ride on a set of abandoned tracks. Last time they were used was in the 1980s. We opened July 13th in 2019. Essentially my full-time job, I had dodged a number of employee reorganizations over the years and I kind of felt my number was going to come up at some point in the future. So I started thinking about, you know, what can I do? point in the future. So I started thinking about, you know, what can I do?

I came up with a business plan and I presented that business plan to my family and they all looked at me like I had two heads. They thought I was crazy. Business has been great this year so far. The fall is kind of really where we shine, you know, probably the last six weeks of our season. People love to come out and do the foliage. Of course it's cooler then, so it's more induces to people coming out and pedaling. Occasionally a customer will ask me, you know, what did it cost to build this bike? And you know, I tell them and it's like, well, that's what it cost me back then. I said if I had to build it now, it be double that not only the aluminum but all of the parts

that go on it the pedals the chains the seats I mean all of that stuff the price has gone up since we first built them all. So right now Scenic Rail R riders is my only job. So basically I kind of consider myself semi-retired since I worked six months of the year and then the other six months, I kind of have off. I mean, I do have some stuff I'm doing for scenic rail riders in the winter time. My plan is to keep doing it for a bit.

I love working there. I love seeing people come off of the ride happy. There's a lot of people out there that are fascinated with railroads, and you get a lot of kind of the railroad fans, and they come and they do this, and they just think it's unbelievable. And honestly, I love to see that. You know, that's one of the biggest things that keeps me going. Gary LeBlanc, owner of Scenic Rail Riders in Concord, New Hampshire.

Tell us what keeps you going, would you? Maybe we'll get it on the air. Write to us at marketplace.org slash my economy. This final note on the way out today. Inflation shminflation. Lewis DeJoy, the postmaster general, said today that it is not, it is not going to increase first class postage come January for what will be the first time in three years. The USPS, as you may know, has been beset by operating deficits in the billions of dollars for years now. But DeJoy says his turnaround plan is working and quote,

therefore we will wait until at least July before proposing any increases. Now, pop quiz, who among you can tell me what a first class stamp costs right now? Our theme music was composed by BJ Liederman, Marketplace's executive producer is Nancy Fargalli, Donna Tam is the executive editor, Neal Scarborough is vice president and general manager. 73 cents for a first class name.

I'm Kyle Rose, I'll have a great weekend everybody, we'll see you back here on Monday, alright? This is APM. Understanding personal finance can feel like an impossible task, but it doesn't have to be that way. I'm Janelia Espinal, and on Financially Inclined, I'll guide you through simple money lessons that will change your financial future. Learn about credit scores, how to avoid scams, and why you need a savings account. Plus, we explore the brain science behind FOMO and what you can do to make smarter money decisions. Listen to Financially Inclined wherever you get your podcasts.