Planet Money - Which economic indicator defined 2022?

Episode Date: December 28, 2022

2022 was a year of big economic changes. But what economic story most defined the year? Our hosts from Planet Money and The Indicator battle it out over what should be crowned the indicator of the year. Subscribe to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoneyLearn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

This is Planet Money from NPR. Here on Planet Money and on our sister show, The Indicator, we're like one big podcast family. And like big families, sometimes, especially during the holidays, we have disagreements. Now, people will tell us, don't air your dirty laundry. Nobody wants to know about your weird drama. But today, we are doing the opposite. We are competing head-to-head, planet money versus the indicator, to figure out the indicator of all indicators for 2022.

The thing that when we look back at the economy years from now, we'll say, that's what this year was all about. So it is time for another Family Fe feud. So here are the rules. We have two hosts from Planet Money and two hosts from The Indicator. All of us have prepared something for The Indicator of the year. We'll each make our case in 60 seconds or less. And in the end, you, the listener, will get to vote on who had The Indicator of 2022. So coming up on the show, we've got Sarah Gonzalez in interest rates. The best indicator of all of the indicators, obviously. Adrian Ma in the supply chain.

What's up? I've been drinking coffee and doing push-ups and I'm ready. Jeff Guo in credit card spending. This is my housewife's tagline and it's sassy. And me, your host and the most formidable competitor of all, Waylon Wong and the labor market. Oh, fighting words. I got to write the script right after the break. I was going to say, that's not fair.

Hey, real quick, it's time for another edition of our Planet Money Plus Movie Club. This is where we watch a movie related to finance or the economy, and we talk about it. Our latest pick, 1946 classic with economic themes that still ring true. Every time a bell rings, an angel gets his wings. It's a wonderful life. I cannot handle Uncle Billy. We should talk about the fiduciary irresponsibility of leaving Uncle Billy in charge. I'm really mad at Uncle Billy. That's in our most recent bonus episode for Planet Money Plus listeners.

If that's not you, you can still sign up and support NPR at plus.npr.org. And that link is also in our episode notes. Indicators of the year, family feud. It is Indicator versus Planet Money. We each have 60 seconds to make our case. Sarah, you are up first. I'm first? Yes. I'm going to keep time. All right. Are you ready? Do it, you are up first. I'm first? Yes.

I'm going to keep time. All right. Are you ready? Do it for the team, Sarah. I'm freaking out. Okay. For the team. Okay.

Go Planet Money. Go Planet Money. Count me down. Three, two, one. Okay. My indicator of the year is interest rates. Obviously, how could it not be? The Federal Reserve raised interest rates seven times this year.

Seven. We are talking an unprecedented pace of rate hikes. 2022 hands down has been the year of interest rates because the Federal Reserve is trying to stop inflation and increasing interest rates or the target federal funds rate is really the main tool the Federal Reserve has. They make it harder, more expensive to borrow money, so it slows down the economy. When the Fed raises interest rates, it generally gets more expensive to buy a car, credit cards go up, mortgage rates tend to go in the same direction, so it has big lasting impacts on

consumers. And I think this example really shows you just how powerful interest rate hikes are. If you bought a house in January of this year when rates were at their lowest, you took out a $400,000 30-year fixed rate mortgage, you will end up paying almost a quarter of a million dollars in interest on that loan. Today, with mortgage rates so much higher, you will pay more than double that for the same house, same loan. And now you will pay half a million dollars in interest, more than the cost of the house you just bought. Oh, that is time. Wow. Very nicely done. Sarah, did you even breathe?

I hope you guys got it. I hope you guys got it. Sarah, they should make you read the thing at the end of the drug commercials, right? I feel like I now know all the different side effects to interest rate hikes. That was good. It was, if I'm being honest, it was a little bit expected, you know? Because it's the most important indicator of 2022. Yes, I agree, Adrienne. Thank you for making the point for me. Well, Adrienne, sounds like you're ready to take Sarah on with your own indicator of the year. All right. Let me just...

Do some stretches. Do some jumping jacks here. In three, two, one. Everyone look around your room right now. Every material thing you can see or touch came from somewhere else. Your clothes, your possessions, even the roof over your head wouldn't be here without the supply chain. Even the roof over your head wouldn't be here without the supply chain. So if money and goods and labor are like the lifeblood of an economy, the supply chain is like the vessels.

And I'm no doctor, but if you got blood and no vessels, what you have is a bloody mess. Supply chain problems obviously didn't just start this year, but they are the story of this year. It is one of the main reasons inflation hit a 40-year high. Why fuel got so dang expensive. It is why the price of food skyrocketed around the world. And, you know, a working supply chain is basically a matter of survival. In 2022, this phrase hit the zeitgeist, and maybe that is why Webster's added it to the dictionary. And if you still aren't convinced, take a look at your email inboxes right now now because I've sent you each a supply chain letter. Declaring this the story of the year, if you don't forward it to a dozen friends by this weekend, you will all have shipping delays on all your orders for the next seven years.

Oh, no. I've been cursed. You cursed us. A threat? You came to this with a threat? Not a threat. A letter. A supply chain letter. Oh, my gosh. You did send us a letter, a supply chain letter. Oh my gosh, you did send us a letter. Wait, really? Yes. When did you hit send? Did you hit send while you were delivering? You're like the Joker in the Dark Knight. You got this all lined up ahead of time. This is a supply chain letter. It's a supply chain chain letter. Hey, that's good. I might use that. Can I go to do that over again? After the break, two more candidates for the indicator of the year.

We look at credit card spending and the clear and obvious winner, the labor market. And the clear and obvious winner, the labor market. Okay, who's next? Is it Jeff? It's Jeff. I'm ready. I'm ready. Just give me the sign. Okay. Three, two, one. I have a sound effect for my indicator, and I'm going to play it. Hear that?

That was the sound of me literally buying something with my credit card. And that's what a lot of Americans have been doing this past year, loading up their credit cards. So credit card balances hit a record high, $865 billion. So people are spending. And that has been the big story of 2022. Even as the Fed has been trying to cool down the economy, people keep buying stuff. Even as the Fed has been trying to cool down the economy, people keep buying stuff. But this indicator is now flashing orange because credit card delinquencies, that's like people who can't make the minimum $25 payment each month, that started to go up in 2022. In fact, the rate of delinquencies is getting close to pre-pandemic levels. We're on our way to a 10-year high.

So I argue that is 2022 in a nutshell. People buying a lot of stuff, high inflation putting pressure on their budgets, and maybe a whiff of danger on the horizon. Everything you need to know in one indicator. Boom. Very nicely done. That is time. So what did you buy?

I bought cat treats. Cat treats! I hope you don't have any shipping delays. I gotta forward that chain letter. You have to forward it to seven cats. It's the small story for Jeff, I think, right? It's granular. Whereas, like, interest rates, for example, all-encompassing.

I don't know. Have you seen my credit card bills? Far-reaching. You want to talk about all-encompassing, far-'t know. Have you seen my credit card bills? Far-reaching. If you want to talk about all-encompassing, far-reaching. Alright. Okay. I'm next. Does someone want to keep time for me? I can do it. No fishy stuff, Jeff.

Only fish treats for my cats. Alright. Three, two, one. My indicator is the part of the economy with the most drama and emotion. And so in that spirit, I will be presenting my indicator in the style of the economy with the most drama and emotion. And so in that spirit, I will be presenting my indicator in the style of the Nicole Kidman commercial for AMC Theaters. Here goes. We come to this place to learn about the economy.

And we come to the labor market to laugh, to cry, to care. This year, the labor market took us somewhere we'd never been before, at least not in a long time. The unemployment rate, 3.7%, is near 50-year lows. It's the tightest labor market in decades. And the labor market has every kind of story to stir the soul. You want a whodunit? We still haven't figured out where all the missing workers are. If you like romance, we've got desperate employers trying to court new hires. In the mood for suspense? We're now seeing layoffs and hiring freezes in industries like tech and media, which could signal gloomier times ahead.

Or how about a dark comedy? Look at all the memes this year about quiet quitting. Somehow, heartbreak feels good in a workplace like this. Amazing. Amazing. And that's time. Three seconds to spare. I could have squeezed in one more genre. I mean, this is really making me want to go to the movies and watch a movie about the supply chain, really. Okay, okay. That's really all I'm thinking about because isn't that all anybody's thinking about?

So wait, so what happens now? Now it's up to you, our listeners. Who made the most compelling case and won you over with their indicator of the year? Was it Sarah with interest rates? Was it Adrian with his threatening supply chain letter? It better be. Jeff with his cat treats bought on credit? You can go on Twitter at The Indicator. Oh, or me, Nicole Kidman with the labor market. You can go to Twitter at The Indicator. You can also send us an email. We are indicator at NPR.org

and just put indicator of indicators in the subject line so we know what you're all about. This episode was produced by Brittany Cronin and it was engineered by Maggie Luthar and Robert Rodriguez. Dylan Sloan checked the facts. It was edited by Kate Kunkanen.

Jess Jang is Planet Money's acting executive producer. I'm Waylon Wong. This is NPR's acting executive producer. I'm Waylon Wong. This is MPR. Thanks for listening. Oops, I think I just bought some more cat treats. And a special thanks to our funder, the Alfred P. Sloan Foundation, for helping to support this podcast.