Marketplace - Why so miserable?

Episode Date: June 25, 2024

Data shows that the U.S. has a strong, thriving economy. Layoffs are at a multidecade low and wages have risen faster than prices. Despite all that and more, many Americans are feeling economic pain. What gives? Also in this episode, third-generation tuna fishermen rethink their livelihood as waters warm. We’ll also explain why most countries buy oil in U.S. dollars and whether the federal minimum wage matters anymore.

Thank you to those who donated during our May fundraiser and to those who gave it year round. Support is still needed though to end our budget year on target, so please help power this important resource. Would you make a budget year-end gift at marketplace.org?donate? Hey, how do you feel? I mean, really, how do you feel? The economy wants to know. From American public media, this is Marketplace. But how do you feel? The economy wants to know. From American public media, this is Marketplace.

In Los Angeles, I'm Conn Rizdall. It is Tuesday. Today, this one is the 25th of June. Good as always to have you along, everybody. Upon us this morning were the latest numbers from the conference board on consumer confidence down just a bit again this month. The latest data point in a string of them, small business optimism, CEO economic outlook, consumer sentiment that have been telling us that we the people maybe don't

feel so great about the economy these days, actual headline data notwithstanding. The word you're looking for here, of course, and for regular listeners this will not be new, is vibe session. It's been in the ether for years now, the vibe session has, but why? We sent Stacey Vanek Smith deep into the vibes to find out. Economists do not like talking about feelings. They didn't sign up for feelings. Economists like talking about data. And the data looks strong. So why do we feel so bad? Martha Gimble heads the Yale Budget Lab. She says, being an economist right now is a little like being a doctor talking to a totally healthy patient who keeps insisting they're sick.

You're saying like your EKG is fine. Your blood work looks fine. The problem is that the patient keeps saying, no, I'm not fine. I'm really not fine. I don't feel good. Take the job market. Right now, people are really worried about losing their jobs a lot more than they were before the pandemic. But the data says... You are incredibly unlikely to be laid off right now. About 20% less likely than in 2019. Gimbels's layoffs are at the lowest level they've been since the government started tracking those numbers.

Since they started recording in 2000. It just doesn't feel like that's true. Like I believe- And yet it is. Yeah, it doesn't feel true. The data vibe disconnect is real. So what is going on? Julia Pollack is a labor economist with ZipRecruiter, and she has a few ideas, all of which involve complicated technical terms, the kinds economists tend to roll out when feelings come up. Technical term number one?

Salience bias. Salience bias. So, there are layoffs happening right now, and they're happening in industries the media covers a lot, like media and tech. The layoffs have grabbed headlines and had an outsized effect on how we see the economy. Those layoffs feel a lot more salient to us than the hiring boom that's been happening in healthcare, even though healthcare is a much bigger part of our economy. Another reason for the data vibe disconnect? Bad things tend

to stick with us. Which brings us to technical term for feelings number two. Loss aversion. It's the tendency for the pain of losing to be psychologically about twice as powerful as the pleasure of gaining. If you lost a job in 2020, even if you eventually got a better job, the pain of the lost job looms larger. The bad times haunt us, and so do the good times. Which brings us to technical term for feelings number three. Reference dependence. Even if you're better off today overall than you were before the pandemic, you will tend to measure your life against one glorious reference point. That month, back in 2021, when you got two job offers in a week, your credit card balance was zero, and that dancing panda NFT you bought was worth $50,000.

And that reference point is making it very difficult for them to feel happy now. So it seems like there is just no pleasing us. Maybe economists should just write us off as a bunch of haters and ignore our feelings. So economists do worry when consumer confidence falls because they worry that it will have real effects. Effects like people stop buying stuff. And as a result, businesses really will suffer

and lay off workers, and that'll set off a negative cycle. Consumer spending is about two-thirds of our economy. If people stop buying stuff, our vibe session will become a recession. But in a lot of ways, we come by this pessimism honestly, says Martha Gimple, because economic data is just different than a lived experience. Take inflation. When I think about prices, I say, you know, like, look, inflation's come down from its peak, etc. A normal person goes to the grocery store and says, hey, I'm paying X for milk, and I was paying much less than X two years ago. And both the economists and the normal

people are correct. But even by a lived experience measure, we should probably be happier because our wages have risen faster than prices. Our pay has, on average, kept pace with groceries. So why does our cost of milk misery outweigh the pleasure of a plumper paycheck? Economists always emphasize people's utility functions, so how they value different inputs, are their utility functions. Is that like the economics version

of feeling your feelings? Yes, it is exactly. That is a better way of putting this. Feelings that might not be about this moment. Gimbal thinks a lot of the vibe session might be because we are still working through the traumas of the pandemic. If you were talking about one of your friends who had had a really traumatic experience,

you wouldn't be saying to people like, man, Mary just can't get over what happened three years ago. Like, why is she so upset? Right? Because it is no wonder that Mary's all up in her utility functions. Her salience bias probably has her in a loss aversion spiral. But maybe if you give her some time, her reference dependence will shift and she'll feel better. And hopefully so will all of us. And we can get back to good vibes. And economists can get back to talking about data. In New York, I'm Stacey Vanek-Smith for Marketplace.

The utility functions on Wall Street today were kind of all over the place. We will have the details when we do the numbers. A barrel of crude oil today, the global benchmark Brent North Sea, to pick just one variety, that barrel would cost you $82.34. Emphasis there, not on barrel or the kind of oil, but on the denomination of currency in which payment will be required. Marketplace is Sabri Benishur. Explains why. If someone in France wants to buy oil from Saudi Arabia, they would usually use dollars.

Steve Kamen is a senior fellow at the American Enterprise Institute. If someone in Mexico wants to buy oil from Norway, they would use dollars. So even though these countries have their own currencies, they still use another country's currency, the U.S. dollar, to buy oil or gas most of the time. Why? Well, history for one. The U.S. was originally one of the world's biggest oil producers.

We sometimes forget that. Brad Setzer is a senior fellow at the Council on Foreign Relations. The Rockefeller Empire was initially a domestic U.S. oil empire. And going into World War II, the U.S. was one of the world's biggest oil exporters. But the real start of dollar dominance in oil markets into World War Two, the U.S. was one of the world's biggest oil exporters. But the real start of dollar dominance in oil markets came after the oil shock of the early 70s, says Gregory Brew, analyst at Eurasia Group. Saudi Arabia had enormous fiscal surpluses.

It was earning far more money than it could ever hope to invest in its own economy. So it needed a place to park all of that money. And the natural place to park this money was the American market. There was not, Bruce says, some secret agreement to do this. It just made sense. And it still does, says AEI Steve Kamen. The dollar offers the safest, broadest, most liquid markets. The U.S. also is protected by the rule of law, including foreign investors.

This logic applies to more than just oil. Most commodities are priced in dollars. This has perks for the U.S. It creates extra demand for U.S. dollars the world over, pushing up the dollar's value. But oil does not play the big role in this that it used to, says CFR's Brad Setzer. Saudi Arabia these days invest its profits mostly in Saudi Arabia. Right now, the biggest surplus in the global economy is actually in China. It's not in the oil countries. And while some countries like Russia do not use dollars to buy oil, reports of the dollar's imminent demise are greatly exaggerated. In New York, I'm Sabri Benishur for Marketplace.

Dollar's going to be around for a while, peeps. You know what else is going to be around for a while? Our podcast. Should you happen to miss something on the actual radio, we've got you covered. Marketplace.org is where you can find the feed or, of course, on the platform of your choice followers there. Stacey was talking about the vibe session a minute ago. There is, as we were just talking about, one happening here.

And there's one happening over in the UK, too. Inflation is actually at the Bank of England's target, that magical 2%, down from a peak of better than 11% a couple of years ago. But with an election around the corner over there, July the 4th, had you not heard, all is not well with the economic electorate. So we did what we do, and we want to know what's on the minds of merchants and the many over there

We called Sam Wallace. She runs a stall selling honey in London's Borough Market. It's called from field and flower Sam it has been a while. It has it has been a while. So how are things in in Borough Market? Well, really good, actually. I appreciate it. I sound slightly surprised. The last six months have been really busy. So the market, as a vibe, feels like it's picking up again pre-pandemic, which I guess is the term of reference that everybody uses nowadays, is pre-pandemic and post-pandemic.

That and vibe. So clearly you're up to speed on everything. You can tell I'm very relaxed today. That's right. Yeah, it's been really good. And it seems like we're just getting more visitors. So I don't know if they're mainly international or local, but it just seems to be busy again, which is wonderful.

Speaking of international, how are your relations with the continent as it were? Because it seems to me every time we've chatted the last number of years, there's been a Brexit, European trade barriers, it's harder now thing that you have been dealing with. And I imagine that's probably still true. Sadly, yes, that is still very much a thing. In fact, I think in April it was the latest, what do they call it? The target operating model for borders changed again. That means that our pallets go through a slightly different system and that means telling customs a good 24 hours before goods land into port what we're landing effectively and what it is so that they can check it. And that requires a lot of coordination, as you might imagine, with the haulier,

with various government systems, which are not necessarily easy for little people like us to navigate. Well, I was just going to say, do you and your very small staff, I mean, last I heard it was like three, maybe three and a half, whatever, do you do that yourselves or do you outsource it? And how much of a bottom line burden is that to you? Well, so we do some of it ourselves and then we have to pay our haulier to represent us as a customs agent and that comes with fees. So they have gone up recently. In general,

haulier costs have gone up, haulier travel times have gone up. So overall, the kind of the cost is increasing all the time if we're trying to kind of have a smooth logistics process where one would try and plan one stock to come in at a certain time and work out your budgets and all of that from there. It's nigh on impossible at the moment to do that accurately. No, I'm sure you more than once have talked about Italian honeys and some of the honeys that you do get from what is now the European Union.

And I guess, is there a point at which you would say, you know what, Chuck it, the heck with this Europe relationship, it is too hard. And we need to further diversify our sources of honey. Ooh, it's a really tricky question, you know. We ask ourselves that quite a lot. I think, in honesty, as you probably remember, our passion is honey, but the different varieties. So for us, it's the diversity of flavor.

So we are trying to source, as we speak, honey from the UK, basically, but looking for those distinctive varietals, which is hard. As I think I've told you before, we have quite a kind of abundance of various wildflower honeys here in the UK that don't vary much in terms of flavor. But I suppose the good thing is, from our point of view, is we found a lovely monofloral variety called borage, which is a very light, delicate honey. It's quite hard to find because the bees don't necessarily make a huge amount of it, but we've managed to source some from Essex, and that has been brilliant because it's far more local, frankly, than Europe.

Okay, last thing, and I'll let you go because you have things to do, I'm sure. With the understanding that you are a honey merchant and not a political scientist, you are the closest thing we have to a source on the ground over there. There's an election coming up in the UK. Yes. Yes. And also, you know, obviously you deal mostly with tourists and international visitors in the market.

But when you go to the local corner market to get, you know, milk for your tea, what's the mood? Yes. Oh, I don't know. I think people are generally quite optimistic. I mean, it is the summer. We've got football over here, which is massive in terms of people's spirits. So everything kind of feels more optimistic in the summer. And I do think the idea that there might be a change of government and perhaps a change of outlook, but it will take

a long time, I think, for things to truly feel better. When I go to my corner shop, my price of milk is much more expensive than it used to be. So you do notice it. Yeah. Well, if you find yourself in London, go by the Borough Market. The stand or the stall is called from Field and Flower. Ask for Sam Wallace. Tell her I sent you. Sam, thanks a lot. It's always good to talk to you. You too. Take care. Thanks, Kai. Talk to you soon. Be good. Talk to you soon.

Coming up. The fish don't like to come up and bite in that. It makes the fish lazy. Trust me, you don't want lazy fish. First though, let's do the numbers. Dow Industrial is down 299. Today, three quarters of 1% closed at 39,112. The Nasdaq gained 220 points. That's one and a quarter percent on that particular index.

17,000,717. S&P 500 picked up 21 points, 4.4%, 54.69. Spree was just telling us about how oil is bought and sold in U.S. dollars. So, some oil stocks, how about that? ConocoPhillips dipped 0.2% and 1%. Chevron slid 0.5%. Duke Energy down about 1.3% and 1%. Home prices hit another record high in April. That's according to the latest S&P CoreLogic

Case Schiller home price index up 6.3 percent from a year earlier. A tad less than the increase in March. Two major automakers are facing recalls on some high-profile models. Ford is recalling more than half a million F-150s from 2014 over a downshifting issue. Tesla is recalling some 11,000 of its newest EV, the Cybertrucks, you've seen those around, I'm sure. Tesla revved up about 2.6%. Today, Ford Motor Company decelerated one and a tenth. You're listening to Marketplace.

Here's the deal, gang. Marketplace is for the public good, not for profit. We count on you, our listeners, to help us cover the costs of the reporting that you rely on. We are going to remain free and accessible to everybody. That's part of our mission. But if you're in a position to donate, we are counting on you. Please give what you can right now at marketplace.org slash donate or click on the link in the show notes. This is Marketplace. I'm Kai Rizdal. Minimum wage is where we go next,

and the disparities between what some states say companies have to pay and where the federal standard is. Starting next week, minimum wage is gonna get a boost in a couple of three, four places. It goes up to $12 an hour in Nevada, 14.20 in much of Oregon, 16.20 and 17.50 in Chicago and Washington, D.C., respectively. Those increases are all tied in one way or another to the consumer price index, to which

states and municipalities have indexed their base wages so as to keep pace with inflation. The federal floor, not indexed and also not increased at all in almost 15 years. $7.25 an hour is still the law in much of the country as Marketplace's Savannah Ma reminds us. The last time the federal minimum got a boost was in 2009 when skinny jeans were king and the black eyed peas topped the billboard 100. It's the second largest stretch without an increase. Since the federal minimum wage was created in 1938,

says Sebastian Martinez Hickey with the Economic Policy Institute. And during that time, It's declined in its purchasing power and its value by more than 40%. But only around 1% of workers are actually making $7.25 an hour. Clearly the federal minimum wage

is below the market clearing wage virtually everywhere. Especially since the pandemic, says Don Grimes with the University of Michigan, when America's lowest paid workers saw the fastest wage growth. So the federal minimum wage really doesn't matter anymore. And Grimes says there are benefits to leaving it up to cities and states, which can adjust according to their unique cost of living. Like Oregon, they actually have a different minimum wage for the city of Portland and rural areas. And lots of proactive cities and states have implemented scheduled increases indexed to

inflation. Brian Asquith is with the W.E. Upjohn Institute for Employment Research. They allow businesses a chance to anticipate the increase in wages and to make adjustments. So who's left making the federal minimum? They live in the 20 states that haven't adopted a minimum wage above $7.25, mostly in the South, Mid, and Mountain West. Martinez Hickey again, with the Economic Policy Institute. It tends to be workers who are very unlikely to switch jobs, maybe because of disability status,

immigration status. Workers who are less able to take advantage of a hot labor market or hold on to wage gains when it cools off. I'm Savannah Marr for Marketplace. There's some new research out with some sobering news on climate change. More sobering news on climate change, I guess I ought to say. Writing in the journal Nature Geoscience, scientists say warming seawater is pushing

between coastal ice sheets and the ground that they rest on, which risks speeding up the collapse of those ice sheets into the ocean and raising sea levels, putting cities and coastlines at more risk. That warmer water is also reshaping ocean ecosystems and changing the way that fish behave for our purposes today, the migratory patterns of albacore tuna. And that is making life harder for the people on the West Coast who find and catch them for a living. Marketplace's Kaylee Wells is on that one.

From June till October every year, Scott Hawkins and his small crew set sail from San Diego and travel hundreds of miles scouring the water for albacore tuna. It can take days to stumble upon a school of them. Then, all at once, four men hang over the edge of the deck with poles twice their height dangling over the water. Every few seconds, one of the men hoists a two-foot long albacore tuna at the end of his pole over his shoulder and drops it atop the dozens already flapping on the deck. Hawkins says they do this for 17 hours per day for five months. It's exact same that my grandfather did in the 50s. Last year, his vessel was one of roughly 300 that left the West Coast in search of Albuquartuna.

The year before, there were 400. And before the pandemic, there were more than 500. The numbers are dwindling because Hawkins and his competitors are having a harder time finding fish. Last year was a really bad catch. It was also the warmest year worldwide on record. You know the temperature affects us huge. So on years where we fished like 68 degree water and then there's no wind and the sun's out so you get a thermal

warming on the surface, the fish don't like to come up and bite in that. It makes the fish lazy. So Hawkins tries to find cooler water using data from Mark Hess. He's a director of operations at a company called Ocean Imaging, which tracks conditions in the seas. Hess says after 35 years in the industry, his data is sending Hawkins and other fishermen farther afield. The catch was mainly centered off of kind of California, Oregon, back in the 80s and 90s. Now the fishery, meaning the fishing effort, all the boats, are really fishing from Oregon all the way up to Canada. So in that time, the fishery has moved north for sure.

So instead of fishing 60 to 200 miles offshore, Scott Hawkins says he'll go up to 1500 miles. That trip can take a week each way. So, you know, a lot of your profits go out the exhaust. The Western Fish Boat Owners Association is trying to get disaster relief for fishermen. Based upon, in part, the El Nino pattern that prevented harvesting of these stocks. Executive Director Clayton Wraith is worried that some fishermen who didn't fish last year might never come back. Because they need to pay their mortgage, because they need to pay their crew and all the rest.

Scott Hawkins is earning extra money as the captain of a dredge boat, so he won't be heading out to sea this month. We have a job coming up. So this year, normally I leave around June 10th to June 20th. And this year I'm going to be dredging all the way till mid-July. This year will be his 44th searching for Albuquerque tuna, if he actually ends up going out to sea. For the first time ever in 44 years, I'm contemplating not even untying my boat.

The changing climate is changing his life and those of his two sons. And they both love the fish. Like they would have loved to have taken over the family business, but I think it's going to end with me. Hawkins shows a video of his oldest son Wyatt catching his first fish. In the video, he's 10 years old. Wyatt is 21 now. He's a tugboat engineer hoping one day to captain his own boat like his dad. But his younger brother Colton is in lineman school, learning how to install power lines

on land. I'm Kaylee Wells for Marketplace. This final note on the way out, not necessarily what the flying public wants to hear in the middle of a summer travel season. Here is the operative phrase from the lesser troubled of the two global commercial airplane makers, quote, Airbus is facing persistent specific supply chain issues, mainly in engines, aerostructures and cabin equipment." End of quote. Translation, they're gonna be making fewer planes for the foreseeable future.

Shares off better than 9% today in Paris for Airbus. Boeing, which is of course the more troubled of the two global commercial airplane manufacturers, off 2.25% today in New York. Our digital and on demand team includes Carrie Barber, Jordan Mangy, Dylan Mietinen, Janet Nguyen, Olga Oxman, Ellen Rolfus, Virginia Kaye-Smith, and Tony Wagner. Francesca Levy is the executive director of digital and on-demand. And I'm Kyle Rizdahl. We will see you tomorrow, everybody. This is 8pm.

Hi, this is Julie from Centennial, Colorado. I listen to Marketplace on my drive home from all my three to midnight ER shifts. Kai and the gang keep me awake and interested for my 30-minute drive. For someone not in the financial field, it's a fantastic synopsis of all things business and economics. I love the commitment to showcasing a steady stream of brilliant and articulate women who are experts in their field. Join me in supporting Marketplace with a gift today. Go to marketplace.org slash donate.