Marketplace - We added a ton of jobs last month. Surprise!

Episode Date: October 7, 2024

Since the COVID-19 pandemic began, firms have taken some unprecedented measures to balance out the effects of lockdown, inflation and supply chain backups, leaving some economic predictors sorta … off. How can forecasters do their jobs when so many economic patterns have changed? Also in this episode: The Author’s Guild announces an anti-AI marketing strategy, consumer credit climbs, and for some agents, the National Association of Realtors settlement was the last straw.

This season, get premium tech that inspires joy from Dell technologies. Bring projects to life with the XPS 16. It delivers supercharged processing for enhanced productivity and freedom to express yourself. Performance-class Dell PCs with Intel Core Ultra processors deliver a dedicated engine to help accelerate AI. Enjoy free shipping, Dell rewards, and expert support. When you get a Dell PC with AI, it gives back. Shop now at dell.com slash deals. From all of us at Marketplace,

we wanna say thank you to those who contributed during our fall fundraiser. We made good progress toward our goal to hear from 2,500 Marketplace investors, but we didn't quite cross the finish line. If you've thought about investing in Marketplace, make today the day you do it. Help us get back on track. Go to marketplace.org slash donate and thank you. Stop me if you've heard me say this before, but figuring out this economy, it's hard. From American public media, this is Marketplace. In Los Angeles, I'm Kyle Rizdal.

It is Monday today, the seventh day of October. Good as always to have you along, everybody. One way to think about the monthly unemployment report that we get the first Friday of every month is that it's kind of the economic data gift that keeps on giving, especially the September report that we got end of last week. It was a big surprise, a good surprise. We covered that part. Way more jobs than anybody had been expecting.

But let's focus for just a second here not on the good surprise, but on the fact that it was a surprise at all. Try though they might, people whose job it is to gauge what might be happening with this labor market have been, well, wrong a lot. Marketplace's Sabri Benishore explains why it is so hard out there for a forecaster. 254,000 jobs was not a number Matthew Penaudi saw coming. I was maybe more positive than some of my coworkers, but I don't think anyone saw 254. Penahti is a senior advisor at Capital Advisors Group, and he and his coworkers were in good

company. Economists surveyed by Factset underestimated job growth by 111,000 jobs. Daniel Jow is lead economist at Glassdoor and also surprised. In the run up to the pandemic, we were going through a period of very stable jobs growth where it was news if the jobs numbers came in like 30,000 above or below the prediction. Times have changed. It should be said that economists are less off about the jobs numbers than they were at the height of the pandemic when the world was completely upside down. But still, it is just really hard, says Matthew Pignotti. Things we've observed in the past just don't always

hold in the future. There are all these trends and connections economists have made by looking at the past that are not working. The Phillips curve says if inflation comes down, so does employment. It didn't. There's the inverted yield curve where the bond market can predict recession. It did, but one didn't happen.

The SOM rule says unemployment rate changes can be used to indicate recession. They did not. The SOM rule says unemployment rate changes can be used to indicate recession. They did not. The SOM rule, it broke. Claudia SOM, for whom that rule was named. It is extremely hard to get a pulse, particularly a quick pulse on the U.S. economy. This is an incredibly dynamic economy. Extra dynamic since the pandemic. John Stewart is with the current employment statistics program at the Bureau of Labor Statistics. Many industries have undergone

fairly substantial changes in their normal seasonal pattern. Schools, for example, aren't letting go as many people in the summer or hiring as hard in the fall, according to Glass Store. Holiday shopping season keeps creeping earlier, changing hiring everywhere from stores to trucking to warehouses. Again, Matthew Pagnati. So we're all flying by the seat of our pants trying to figure out what's going on in the real time. On the bright side, whether it was predicted or not, the economy gained 254,000 jobs last

month. So there's that. In New York, I'm Sabri Beneshur for Marketplace. Wall Street today. Quick, what starts with the numeral four comes in 10-year maturities and is a benchmark of the American treasury market. All right, fine, I kind of gave it away. The yield on the 10-year treasury bipped back up over 4% today. nothing happy there we will have the details when we do the numbers The Authors Guild, the organization representing published novelists and non-fiction writers from Scott Toreau to Gia Tolentino, is working on something new.

A certification mark for its 15,000 members, a small badge they can put on their books that contain the following two words, human authored, as opposed to authored or perhaps assembled by artificial intelligence. In the absence of legislation obliging AI-generated text to be labeled as such, the Authors Guild is hoping its new certificate is going to help sway human readers to buy the works of human writers. So how's it going to work? Marketplace at MatLevin is on that one.

I know this sounds like something straight out of a Philip K. Dick novel, but just stay with me. Someday in the not-too-distant future, you may walk into a Barnes & Noble and on the cover of the hottest bestseller, right next to Reese's book club stamp or even that gold Pulitzer Prize emblem, you'll find what Mary Rasenberger is showing me over Zoom. Mary Rasenberger Think of the types of award stickers that you see on books, right? So it's about that size and shape. It says human authored, very simple. Rassenberger is CEO of the Authors Guild.

The inspiration for the human authored seal of approval, which comes in teal, gold, and black and white, came partly from the grocery store. Just like a certified organic sticker on a tangerine, Rassenberger hopes the human authored sticker will be an indicator of quality, setting it apart from the flood of AI books invading certain bookstores. I think it is most important in marketplaces like the Kindle marketplace where you'll see

a lot of AI-generated books. I mean, the plots are a little weird. There's duplication in a way. But over time, if and when AI becomes a better writer, the sticker could also be an indicator of ethics. Something that says, hey, if you don't like the way AI scrapes artists' work without their consent or how it threatens their jobs, buy this. Douglas Preston is a New York Times bestselling novelist and nonfiction writer. It's also a declaration of how important storytelling is to who we are as a species.

And we're not going to let machines elbow us aside and pretend to be telling us stories when it's just regurgitating literary vomitus. The Authors Guild is the highest profile organization to date to do something like this. A non-profit filmmaking group offers a certified human stamp. Several startups, both here and in Europe, provide similar certifications for a price. All are banking on the hope that consumers will care that something is made by a fellow human and not a robot. And as humans, of course, we'll care, right? Right?

So right now is the time to launch these labels because people are scared to death of AI. Ellis Jones is a sociologist at College of the Holy Cross who researches how consumers respond to ethical consumer labels like fair trade or animal cruelty free. So we just have decades of data to show that people are willing to pay enormous premiums for products that they can be certain are more ethical. The more certain, the higher the premium. The problem is that even when you pay 10 bucks for certified organic oat milk, it can still

be hard to know for certain the oat milk is actually organic. It's really hard to tell for certain whether something is created by AI. Author's Guild CEO Mary Rasenberger says for now, writers will not have to submit their manuscripts to AI detection software to get that human authored stamp. The tech is just not good enough yet. We are not going to be able to check upfront whether or not what they're saying is true. However, they do have to certify that it is human written.

Rasenberger says they'll be relying on other authors and readers to report fraud. And if an author does lie about using AI, they may be subject to legal action. While authors have to attest that they wrote the actual words in the book, the certificate does allow for some uses of AI, like spelling and grammar check services, also allowed using AI to help come up

with the idea for the book in the first place. Again, author Douglas Preston. You know, I'm not asking the machine to write it for me. So I think letting the machine in, letting the machine put its foot in the door of my creative mind is okay, but I'm not going to let it into my house and open the refrigerator and let it eat my lunch. Preston says he'd personally feel awkward about brainstorming the idea for a novel with chat GPT.

But as AI gets more and more integrated in our day to day lives, it's possible future authors won't feel as queasy, not to mention future readers. I'm Matt Levin for Marketplace. We We've got a new report on consumer credit today. It came, as it does monthly, from the Federal Reserve. Consumer credit itself comes in two varieties, revolving credit, which is credit cards basically, and non-revolving credit, loans for cars, education, what have you. And while that number was up, the non-revolving number, credit cards, that debt was down 1.2%, about which two things. Number one, even after the Fed's long-awaited rate cut,

the high interest rates on those credit cards have barely budged. And number two, what's that going to mean for the all-important holiday shopping season? Marketplaces of NMR has more on that. To recap, American consumers made a big dent in our collective debt early in the pandemic. Then around mid-2021, we started running the tab right back up to a record $1.14 trillion in credit card debt by the second quarter of this year. It's just the rising costs of everything. Kristi Matherne covers credit cards for WalletHub. She says even as inflation is slowing down, we're still kind of feeling those pinches

of our wallets, basically. And consumers keep borrowing to make ends meet. Ted Rossman, an analyst with Bankrate, says people carrying heavy balances are charging everyday expenses. It's usually practical stuff. It's not usually a vacation or a shopping spree. More like groceries and gas. Holiday gifts tend to fall somewhere in the middle of that spectrum. And according to Bankrate's early surveys, Many people are feeling frugal. A third have responded said they'll spend less on gifts this year than last.

Only about one in four said they'd be taking on debt this holiday season. That's a sign they can no longer stomach the high cost of carrying debt, according to Silvio Tavares, CEO of Vantage Score. They know higher rates are going to continue and they're a little bit concerned about the increasing cost of their monthly credit card bill. Benchmark rate cuts will likely take a while to trickle down to credit cards. Kristi Mathern says the industry is less responsive to Fed policy than, say, the mortgage industry.

If people are going to use credit cards for holiday spending this year, they're not likely to see any meaningful relief. If people are going to use credit cards for holiday spending this year, they're not likely to see any meaningful relief. She says we will likely see more shoppers take out typically interest-free buy now pay later loans offered at the point of sale. If you're going to carry this debt over a month, like past the grace period of your credit card. For those consumers, Mathurne says those offers might be appealing.

I'm Savannah Marr for Marketplace. Coming up. The work that I do, I only get paid when I close on a deal, so that's time I don't get paid for. Yeah, that's not great. First though, let's do the numbers. Speaking of not great, the Dow Industrial is off 398 points today, 9 tenths percent, 41,954. The Nasdaq off 213 points, that's 1.2 percent, 17,923. The S&P 500 descended 55 points, about 1%, 56 and 95 there.

Just heard from Savannah Marr about American's credit card usage, so let's check in on some credit card companies then. Visa, headquartered in San Francisco, fell 1.5% MasterCard out of Purchase New York, down 1.3%. Discover Financial Services dipped 0.6% of 1%. Fun fact about the Discover Card, by the way, originally introduced by Sears in 1986. Social services dipped 0.6% Fun fact about the Discover card, originally

introduced by Sears in 1986. American Express, based in New York City, lost 0.8% today. The luxury wine brand Duckhorn Portfolio is about to become a private company after the equity firm Butterfly Equity agreed to acquire it for just under $2 billion. Duckhorn also reported earnings today, net income $11.3 million. That is down, however, from about $17 million the year before. Bonds, as I mentioned earlier, down. The yield on the ten-year T-note thus went up 4.01%. You're listening to Marketplace. Some of the toughest moments we'll experience in life often come with the hardest financial decisions.

Like how much to spend when your pet is dying. Or what to do if you uncover a loved one's financial secrets after they've passed. It's like having this albatross, this monkey on your back that you don't want amongst everything else. I'm Rima Grace, host of This Is Uncomfortable, a podcast from Marketplace. This season, we've got a wide range of stories about life and how money messes with it, including the unexpected ways money can shape our journeys through loss and grief. Listen to This Is Uncomfortable wherever you get your podcasts. This is Marketplace. I'm Kyle Rizdal. One does not, I'm reasonably certain, when thinking about the Central Intelligence Agency,

think investment company. But the CIA's got one, and John Keegan wrote about it the other day for Sherwood News. John, it's good to have you on. Thank you for having me. So the CIA, it turns out, has an investment arm. Say more. Yeah, this is unusual. It's not exactly breaking news that this company exists, but it's an interesting moment to be looking at it.

So back in 1999, the CIA decided that they needed to get in their hands into the technology that was emerging from Silicon Valley. It was an exciting time. The internet was just booming. All these companies were developing all this cool technology. And over on the other side of the country,

the CIA was watching. And so they started a venture capital firm. It's a most unusual venture capital firm. It's a nonprofit. And they are looking for companies that are making technology that could be useful to them. We're going to get into the technology that they're investing in in a minute.

But I want to give people a sense of the size and the scale of this thing. Since 2011, you write InQtel, which is the name of this investment firm, the nonprofit that the CIA has established. They've gotten $1.2 billion in taxpayer money in the last 13, 14 years. How does it work? The company will go out and look in the marketplace to see what interesting new technologies are emerging with an eye towards things that will be beneficial

to the US intelligence community and the defense community. They might approach them and say, hey, we know you've probably been told don't bother working with the government because of the bureaucracy. It's kind of the antithesis of move fast and break things. But they say, look, if you bring your technology over here, we can teach you, we'll invest in your company, and we'll teach you how to do business with the government, and then you can help your country.

The key phrase here, John, is dual use, right? Dual use technologies. Explain that for me a little bit. Right. So dual use is a really key concept here. They're looking for, InQtel is looking for companies that maybe have a product that's already out in the marketplace, but could be advantageous for the intelligence or defense community. So they might be looking for a company that, you know, on their website is advertising, say, a customer service tools that could detect

the emotion of someone calling a company's customer service line But then elsewhere on their website, they are marketing the same tools towards the government So there's a bunch of companies like that that have these things that can be used for one Sector of the economy and then another use that could be used within the intelligence community I do want to get to a I think it's the subhead of this piece. You can't spell CIA without AI, you're right. AI figures very prominently in what In-Q-Tel is looking at.

Yes, it's actually the largest category of companies that they're investing in right now. Unlike the CIA, which has opaque financials, In-Q-Tel is aprofit, so their tax returns are public and they share quite a bit on their website about the portfolio of companies they invest in. So looking at their website, you can get a sense of some of the different applications within AI that they are looking at.

They do a lot of AI infrastructure and hosting companies. So these would be companies like Databricks where you can host these tools or train AI models. But then also a lot of companies that are involved in geospatial and remote sensing. This could be a satellite company that can identify the number of cars in a parking lot at a shopping mall or shipping containers moving into ports, for example. I should say for listeners who are curious,

go to this story and you can have a look scrolling down a little bit and you'll see some of the companies that Incutel is invested in. Last question, John, and then I'll let you go. Is the CIA good at investing? Yeah, it's actually made some really smart bets in the past. One of the earliest companies they invested in was Keyhole. This is a satellite mapping app that later became Google Earth. They also invested in Palantir.

This is the data analytics firm co-founded by Peter Thiel, and that's now valued at about $80 billion. They also are no longer invested in that company. So yeah, they seem to get in on the ground floor at some of these interesting companies, and they're trying to take these technologies and put them to use for clandestine purposes. Yeah, Palantir we should say is not without controversy, right? True, yeah.

They've definitely received a lot of scrutiny for working with the defense community and how their data tools are being used. Right. John Keegan at Sherwood News. John, thanks a bunch. Appreciate it. Thank you, Kai.

If your business depended on people borrowing a whole boatload of money and then trying to get into a market where the thing those people are borrowing for kept getting more and more expensive, then the past couple of years have not been great. Though down now closer to 6%, a year or so ago the interest rate on a 30-year fixed mortgage was bumping right up near 8%. And home prices? Do we even need to remind you? Then you throw in that big realtor trade association class action lawsuit over how agents get paid, and suddenly the traditional 5-6% commission split, usually between the buyers and sellers' agents, was

very much not a sure thing. And in the aftermath of all of that, there are predictions of an exodus from the real estate profession. Marketplace's Amy Scott looked into it. For Nina Katzoff in Chicago, it was the hours, the nights and weekends, showing houses, always being on call. She recently had a baby, and on her husband's first Father's Day, she had to bail on brunch for a showing. Coming out of a really slow spring and also having had taken my maternity leave over the fall winter, I really couldn't turn business down. Slower business also made it harder to justify the hours. With so few houses for sale and the cost of borrowing

so high, several of Katzoff's clients gave up after months of searching. The work that I do, I only get paid when I close on a deal, so that's time I don't get paid for. Then came new rules from the National Association of Realtors that could reduce her commission on sales. It was that last nail in the coffin where I was like, you know what, there's just way too much that's outside of my control in this job.

So over the summer, Katzoff found another job working nine to five for a commercial real estate firm, though she says she'll still handle occasional sales for friends and former clients. In Boulder, Colorado, Eliza Wright recently quit after more than a decade as a realtor. She says in the first two years of the pandemic when people were clamoring for more space and interest rates were low, business was great. Houses just selling themselves, people just coming out of the woodwork. I made

more money in 2020 and 2021 than I ever made in you know my life. Then the Fed started raising interest rates to fight inflation and Wright saw too many families stretching every last dollar to buy. Unfortunately, it's not affordable and it's hard to tell people that it is. It just felt icky to me. So she was already disillusioned when the settlement kicked in. Under the old system, home sellers typically covered the commission for both their agent and the agent representing the buyer. It came out of the proceeds of

the sale. But now sellers don't have to offer the buyer's agent's commission. Wright says if they don't, then she's representing a buyer. I have to ask the buyer to pay me like a large amount of money. And the buyers that I've seen in the past like year and a half, they don't have it. They just don't have it. I just felt like it was a message that I'm done for sure. She bought a camper van, fixed it up and is heading out on the road for at least a year. It's hard to say how many others will follow Wright and Katzoff out the door. Rajiv Kumar is with Flatworld Mortgage Solutions, which found that between 2022 and 2023, the

number of agents dropped sharply in California, Texas, Florida, and North Carolina, but grew in many other states. And Bureau of Labor Statistics data shows that the number of people working in the offices of real estate agents and brokers has dipped so far this year by 3%. It's not a surprise to me that as the overall inventory went down, overall real estate transactions went down, there are more realtors in those states that are no longer active. The National Association of Realtors itself has projected its membership could fall by as much as 10% due to the cooler market.

Because annual membership fees are due in January, more fallout from the settlement could be felt in 2025. Beau Brommel is a longtime realtor in Raleigh, North Carolina. In his state, he says the number of licensed brokers has dropped by almost 5% since May. He'd like to see even more leave what he sees as a bloated industry and hopes the commission changes might put off newcomers. If we can stem the tide of people coming in and maybe if this is what scares them from doing it, that would be great. But if interest rates continue falling and the market picks back up, it could lure more people in.

I'm Amy Scott for Marketplace. This final note on the way out today, oil, not crude, although both benchmarks were up about 4% today. There is that giant hurricane barreling through the Gulf of Mexico you have surely heard about. No, we speak here of olive oil, which has been in something of a supply squeeze the past couple of years. Bad harvests in Spain, the proximate cause. Saw this item in Bloomberg today that Spanish producers are expected to increase their output

by half this year. Futures markets are down around 20% on that news. Our daily production team includes Andy Corbin, Elise Hassan, Maria Hollenhorst, Sarah Leeson, Sean McHenry and Sophia Terenzio. I'm Kyle Rizdahl. We will see you tomorrow, everybody. 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.