Deep Dive
Shownotes Transcript
It wasn't so much good news, bad news in this morning's jobs report. It was more good news. Huh. That's interesting. From American public media, this is Market Class. In Los Angeles, I'm Kyle Rizdahl. It is Friday today. This one is the 7th of June. Good as always to have you along, everybody. We begin today.
where we pretty much begin every first Friday of the month with the jobs report. 272,000 new jobs in this economy, as you have surely heard by now, way beating everybody's best guesses. That is, obviously, the good news. The unemployment rate is
And this is the, huh, that's interesting news, moved up to 4%. Here to share their insights on that and much else that happened in this economic week are Anna Swanson. She's at the New York Times. Neela Richardson. She is at ADP. Hey, you two. Hey, Kai. Hi, Kai. So, Anna Swanson, let me start with you. Gut check. What do you think of this jobs report?
It was a confusing one. I mean, there was a big contradiction between the two sort of data sources that underlie the report. And they told different stories about kind of a pretty basic question, were there more people working last month or fewer? The business survey gave a picture of a really strong economy. There were big job gains, wage growth picking up.
But then the other portion of it gave a much weaker picture with unemployment rate, the unemployment rate ticking up. So I think it mostly highlights that, you know, one month of data does not make a trend. But the end result is a pretty mixed, inconclusive picture about, you know, the exact toll that interest rates are having on the economy right now. Neela, first of all, do you agree mixed and inconclusive? Yes.
Yes, it was a tale of two surveys instead of a tale of two cities, right? It was the best of times in the establishment survey with businesses again, healthcare and even the government adding jobs. And it was pretty, uh,
worrying on the household side. These 60,000 people that are reached out to every month, they said that about 408,000 was the estimate left the labor force. So that's not just a tick up in unemployment, which is still very low, but that number of people who fell out of the labor market is actually fairly concerning. So you juxtapose these two and you get this abstract painting of little patterns that
Very contrasting picture. Let me ask you this, though, Neal, and I stay with you because you are the trained economist in the room. Is is this not the opposite of what the Fed wants to see? Right. The Fed wants fewer jobs added and the unemployment rate to stay low. And now they're getting lots of jobs and the unemployment rate goes up.
I think what the Fed really wants is just inflation to come down. However, you get to that point, they'll take it. What's mystifying, I think, from the Fed seat is that the data points aren't lining up in a direction that points to a conclusive action. Right. So you you take this data and you match it with some other data, drop openings fell, gobsmacked.
first quarter GDP was weaker than expected. There's no consistent storyline here through the data points. And so that puts them back in this position of being data dependent, but not knowing what data to depend on. And that's a hard place to be for them. And it's a hard place to be for the rest of us. Let me ask you this, though, Ana, if the Fed is going to be data dependent and the data is confusing at best, they're not going to do anything, right? Right.
Yeah, I mean, I think overall, it just reinforces this idea that, you know, the Fed just needs to take more time to wait and see what effect higher interest rates are having. If, you know, the picture had been a lot of people had expected the picture to come in a bit softer. And, you know, that would have made their job straightforward, more straightforward and made the case that maybe the economy would be ready for interest rate cuts later this year. This time, I think we're just going to, you know, wait and see and wait for more data.
You know, it's interesting, Neela, you have not said the word wages yet. Nice wage gains, right? Yeah, 4.1%. That's very strong. And from the worker point of view, that means that average hourly earnings are above inflation. And I think workers like that. But from the Fed's point of view, it means that wages are still running hotter than they were before the pandemic. And you know that ADP provides
similar data on pay based on paychecks. And we've seen that in May, pay growth was higher this month than it was earlier in this year. So we're not seeing that consistent downward pattern in wage growth. And wages are the bridge between the labor market and inflation. So if it's still strong and robust, it means the Fed still has to worry about it.
Ana, you're a reporter that covers the global economy and trade. I wonder what, if anything, you make just on that idea of the Fed not yet taking conclusive action. The European Central Bank this week did, in fact, take conclusive action. They lowered their rate a quarter of a percentage point despite the differences in the economy. What do you make of that?
Yeah, that was interesting. So for in Europe, inflation is a bit closer to the bank's 2% target than it is in the US, but it's also a pretty bumpy path there as well. So, you know, that move did spark some conjecture about whether they were jumping the gun and they had to kind of reassure everyone that they're also going to be data dependent. They aren't just jumping into this new cutting cycle. They're going to wait and see what happens.
But yeah, in the U.S., you know, inflation has been a little bit stickier and U.S. officials are just waiting a bit more to have more confidence that inflation is moving downward compared to where European officials are at.
If I could just add on to that, I view ECB's move as really a down payment on rate cuts rather than a full-throated support of getting rates back down to a lower level. They actually saw a benchmark policy rate that was at record highs. And remember that these two big central banks don't always follow each other in lockstep. Before the pandemic, ECB's rates were negative. The Fed
would never go below zero, or at least they've stated that they wouldn't. So they don't always follow each other. They're not always in lockstep. And as Anna points out, they're slightly and meaningfully different economic conditions right now. So Anna, as we look forward in the next, I don't know, 90 days in this economy, global or otherwise, what are you looking at?
Hmm. Well, I mean, I think that, you know, Nilo was right to talk about wage growth. I mean, I think that's, you know, something that we definitely need to watch and continue to see if that picks up. I mean, you know, but there were a lot of other interesting trends to watch this month, too. Yeah.
We saw the unemployment rate ticking up as well. I mean, I guess, you know, what we'll want to see is do we continue to see the data have a clearer trend now or, you know, more of this divergent kind of messy picture? Yeah. Neela, I was going to ask you the same question, but I'm going to change my mind because I get to do that. Yes. Okay.
Today aside, right, the addition of 272,000 new jobs aside, it does look like the economy is slowing gradually and maybe not as quickly as the Fed wants it to to get inflation down. But the economy is slowing.
There were pockets of weakness that we've been noticing all year. I'll put one of them as manufacturing and the good sector. And this is lined up with not just hard data, but also sentiment data that it's pointing towards contraction and manufacturing hasn't found its footing in the present economy. I think that's concerning. And then if you look at some of the tech layoffs, you look at
white collar jobs, there is some sense that there's a little bit of slowdown and layoffs there. And if you look at segments of workers, like young people, there's a sense, and you actually saw it in today's report, that for young people, young workers, the labor force participation rate has touched
tipped down, it's a little bit harder to find a job now than it was last year for the same age cohort. So there are pockets of weakness. We're not supposed to cheer those. Those are weaknesses that we'd like to see improve. And we'd like to see an overall balance, not just the health care sector leading the way, but more balanced hiring throughout the economy. Right. Neela Richardson at ADP, Anna Swanson at The New York Times on a Friday afternoon. Thanks, you two.
Thanks, guys. Thanks, guys. Wall Street today, subdued, I'd say. We'll have the details when we do the numbers.
There are obviously a zillion ways to slice and dice the monthly jobs report. We just did that for seven minutes. The slice we're going to take right now is leisure and hospitality. The Bureau of Labor Statistics says we added 42,000 jobs there last month, up about two-tenths percent from April. And we are, of course, well into the leisure and hospitality season with summer travel and nice weather and people wanting to be out at restaurants and bars.
And that and those rising wages we were also talking about a minute ago, that translates into more jobs. Marketplace's Kimberly Adams has that one.
Prices in restaurants and entertainment venues may be higher, but we Americans do like to treat ourselves. Rich Harrell directs the International Tourism Research Institute at the University of South Carolina. The travel and tourism industry saw a sharp rebound after COVID. Some of that's still leveling off, but we're still seeing strong job growth in the United States.
And so, says Sean Snaith, director of the University of Central Florida's Institute for Economic Forecasting. The owners of the restaurants and the hotels and these other leisure and hospitality-related industries need to hire additional workers. And while spending and hiring are up, the leisure and hospitality industry looks a little different than it did in the past.
Hudson Reilly is senior vice president of research at the National Restaurant Association. He says people are spending more on takeout and delivery, but... For table service, that segment now has over 230,000 fewer positions than it did pre-pandemic. So overall, industry traffic patterns are dramatically different as a result of the pandemic also.
Also different, says Really, who is working in restaurants, which are hiring more than half a million seasonal workers this summer. 16 to 19 year olds are much more likely to be employed in the industry than they were pre-pandemic. And the same is also true for the older cohorts, say age 60 and above.
Those older workers can be a big asset in a sector that's constantly hiring. Perhaps they're picking up a summer job in the industry to supplement their retirement income. In New York, I'm Kimberly Adams for Marketplace. Maybe you've got some time set aside tonight or over the weekend to lounge on the couch and watch TV. If Netflix is part of that plan...
Well, it might look a little bit different. The streaming company said this week it's rolling out a redesigned TV app. The whole goal is to make it less cluttered, easier to navigate, and surprise, surprise, surprise, more tempting to stay on the app for longer. Marketplace's Kelly Wells has more on what it might look like.
When Netflix did some research on its app and tracked where viewers' eyes were focused, the old design had them bouncing all over the screen. Pat Fleming with Netflix called it visual gymnastics. It probably doesn't surprise you that we hear from time to time from members that it can be difficult to choose what to watch or what to play across thousands of options. He works on the member product experience team at Netflix.
Our goal, given that broad range of interests folks have and the broad, really broad set of options, is to make Netflix simpler, more intuitive and easier to navigate. He says they've moved the menu from the side to the top and now it's got fewer options. The title cards are bigger and the text is simpler to read.
That might not seem like a major overhaul, but it can have a surprising effect on churn, which just means the rate that people come and go. That's according to Neil Zuckerman, who chairs the Global Institute for the Future of Television at the Boston Consulting Group. If it creates greater stickiness, if it stops someone from leaving for another service,
out of frustration, then it's obviously a good thing. It's the first major change Netflix has made in a decade.
I think it's very much overdue. Tim Hanlon is founder of a media industry consultancy called the Vertere Group. He says the new, simpler layout will make it easier to get personalized recommendations to viewers. Everybody can tell you a story about a YouTube rabbit hole or two or seven that they've gone through. It's frankly just short of amazing. And I think that's kind of where Netflix and other services are trying to go.
Only a fraction of Netflix's more than 260 million users are seeing the new layout already. The company says it'll take feedback and maybe make some changes before releasing it to everyone else. I'm Kaylee Wells for Marketplace. You know what we release to you every single day? Our podcast. If you miss something on the air, that's where you ought to go. Marketplace.org or follow us on the platform of your choice, of course. Coming up, people want their drugs without their drugs.
coffee still just lights up your brain in a way that nothing else does. Poetic, don't you think? First, though, let's do the numbers. Dow Industrials gave back 87 points today, two-tenths percent, finished at 38,798.
The NASDAQ dropped 39 points, about a quarter percent, 17,133. The S&P 500 down five points, a tenth percent, 53 and 46. For the five days gone by, the Dow up three-tenths percent. The NASDAQ added 2.4 percent. The S&P 500 up one and a third percent. Kelly Wells was telling us about the great redesign at Netflix. The streaming service dipped one and a tenth percent today. Disney and Paramount.
edged up about a third of 1% apiece. GameStop tumbled more than 39% the day after posting first quarter sales and fell way short of expectations. Live by the meme, die by the meme, huh? You're listening to Marketplace.
Men, when we leave the house, it's phone, wallet, keys, how's my hair look? If you're experiencing hair loss, you might not feel so confident stepping outside. It's time to restore your confidence with HIMS. Hair loss is common, but with HIMS, the solution is simple. Join hundreds of thousands of subscribers who got their flow back with HIMS hair loss treatments. HIMS provides a range of treatments that work, all from the comfort of your couch. HIMS offers you chewable, oral, spray, and serum options.
The process is simple and 100% online. Answer a few questions and a medical provider will determine if treatment is right for you. If prescribed, your treatment is sent directly to your door.
Start your free online visit today at HIMSS.com slash marketplace. That's H-I-M-S dot com slash marketplace for your personalized hair loss treatment options. HIMSS.com slash marketplace. Results vary based on studies of topical and oral minoxidil. Prescription products require an online consultation with a health care provider who will determine if a prescription is appropriate. Restrictions apply. See website for full details and important safety information.
This podcast is supported by Fundrise. Buy low, sell high. It's a simple concept, but not necessarily an easy concept. Right now, high interest rates have crushed the real estate market. Prices are falling and properties are available at a discount, which means Fundrise believes now is the time to expand the Fundrise flagship fund's billion-dollar real estate portfolio.
You can add the Fundrise flagship fund to your portfolio in minutes by visiting fundrise.com slash marketplace. That's F-U-N-D-R-I-S-E dot com slash marketplace. Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise flagship fund before investing. This and other information can be found in the fund's prospectus at fundrise.com slash flagship. This is a paid advertisement.
This is Marketplace. I'm Kai Risdahl. On Christmas Day 2020 in Nashville, Tennessee, a bomb went off downtown. One person died, the man who set off the explosion, and more than 60 buildings were heavily damaged. All of the buildings on that street, already having a rough go of it because of the pandemic, right? All of them were hit hard. Some had to close completely. And three and a half years later, as Cynthia Abrams from WPLN reports, things have not gotten much easier.
Inside Cerveza Jack's, a Mexican cantina in downtown Nashville, patrons munch on tacos and follow orders when the musician on stage leads a toast to George Strait. It's not a full restaurant, but that might be in part because outside Cerveza Jack's, the sounds are not quite as melodic.
Much of the street is under construction. That's because in 2020, a vehicle exploded here. It's just a block away from Nashville's ultimate tourist destination, Lower Broadway, a street filled with honky-tonks, live music, and more than 15 million visitors per year.
Now, with construction crews ripping up and rebuilding 2nd Avenue, businesses have watched foot traffic decline. My hope is that this is the worst that it's ever going to be at this point. Frank Miller, Cerveza Jack's owner, says revenue is down 60% since construction began. I've said that for three years now, and so it continues to decline.
Heard me wrong. Two doors down at Mike's Ice Cream, owner Mike Duguay points out much of the street's business relies on pedestrians turning onto the street from Broadway. Before the bombing, 27% of visitors turned onto 2nd Avenue. After the bombing, just because of the look of the next block and the limited businesses, that number dropped to 20%. After the erection of the fences to tear up the street, that number dropped to 12%.
That's why there's a new local campaign called Turn the Corner, funded by a nonprofit and Nashville's Department of Transportation. They've put up big pink signs signaling that Second Avenue is open and that tourists should come and spend money.
Lori Johnson, a disaster recovery consultant, says she's seen efforts like this across the globe as cities recover from things like earthquakes, terrorist attacks or hurricanes. I think New Orleans struggled with this after Hurricane Katrina and sort of restarting that tourist-based revenue.
And, you know, hey, we're back. You know, it's a very typical campaign you'll see. Johnson says these initiatives can actually be more effective in kickstarting business than a surge of cash. At Mike's Ice Cream, signage is helping to attract customers, like Colleen Alton, who ordered a single scoop on a sugar cone. She's on vacation from the U.K. and wandered over from her nearby hotel.
But she says it did feel difficult to get to 2nd Avenue. It's kind of closed off without the trellis and everything outside. You'd see the front of the business mall, whereas you're walking up close to it. It's only because we really saw the ice cream sign. The Nashville City Council waived the usual permitting processes for affected businesses so they could build outdoor dining spaces, have live music and advertise from sidewalks.
Still, Mike Duguay says he is really looking forward to when construction wraps up. By the time this construction is over in January of 2025, we will have not had anything near a normal year for five total years. That's a long time for any business to carry it.
He's been wanting to expand the ice cream shop, open up more seating on the second floor of his building. But all that's on hold until Second Avenue is rebuilt. In Nashville, I'm Cynthia Abrams for Marketplace.
Having a cup of coffee in the morning and at various points throughout the day is a worldwide phenomenon. According to S&P Global, coffee drinkers, of which I am one, put away 3 billion cups of coffee a day, bringing in north of $200 billion a year to the coffee industry at large. And increasingly, the portion of that coffee that is being served caffeine-free, decaf, is growing. Decaf is a
Matt Kronsberg wrote about it for Bloomberg. Matt, welcome to the program. Good to be here. Tell me, first of all, about this big win that, oh my goodness, decaf coffee just had in a big competition.
Sure. Back in March, they held the Brewer's Cup competition in Rancho Cucamonga, California. And it was a gathering of specialty coffee professionals, people who make beautiful triple lattes and, you know, just really fancy stuff. And so Wei Hong Zhang, a coffee maker from Houston, came and he won the Brewer's Cup, which is for like pour over style coffee.
But he won it with decaf, which is kind of like winning the Tour de France on a unicycle. So look, I'm a coffee snob up front, never had a cup of decaf that tastes like an actual decent cup of coffee. How did decaf get to this point where it's now winning these competitions?
It's been improving a lot over the years, basically since about 2007. The quality of the process of removing the caffeine improved and it stopped being this kind of really harsh, chemically kind of a taste that people learn to expect. And as that happened,
Growers started getting more comfortable submitting better coffees to be decaffeinated. And so it was sort of a virtuous cycle where, you know, as the process improved, the beans improved, as the beans improved, the coffee tasted better and people got more willing to go long on it.
Yeah, amazing statistic in this piece. It's from SkyQuest Technology that you quoted. Decaf market, decaf coffee only, from $20 billion a couple of years ago to almost $30 billion by the end of the decade. That's kind of amazing. It is. I mean, it's enough to get your heart rate up a little bit, which is great if the coffee isn't going to do it. That's right. That's right.
Which, of course, means companies are in on this thing. Blue Bottle is one. There's a bunch of others. Yeah, no, and it's not just the big ones. I mean, companies like Blue Bottle always have strong contingent to people who, for whatever reason, if they're pregnant or, you know, just anxiety issues or just coming in in the afternoon wanting to have a decaf.
But it also means that smaller roasters, smaller growers, you're really seeing it across the board. I spoke to Adam Paranto, who has a company in Chicago called Reprise Coffee Roasters, and they've gone
gone even a little bit farther and are not just offering decaf, but a wider range of caffeinated levels. They've got, you know, the zero, which is 99.99% caffeine-free, but they also offer a microdose that's only 10% caffeine and a light buzz that's 25%. I suppose this shouldn't be surprising, this rise of decaf, in an era where non-alcoholic cocktails are a thing and...
non-meat meat products or thing, right? I mean, people are, you know, they've got this on the mind. Absolutely. I mean, and that was what Adam from Reprise said. He said, you know, people want their drugs without their drugs. Coffee still just lights up your brain in a way that nothing else does.
This Brewers' Cup win has been compared to, you write, that very famous 1976, I think, win by California Wines at this big competition in France, and American wine sales took off after that. Do you suppose decaf sales take off after this win? Do I think they'll take off? Will they skyrocket? Probably not, but I think there's going to be
continued steady growth and people are going to go into their, you know, their favorite snobby kind of coffee places and seeing decaf put front and center. And I think that's going to change perceptions takes time, but it's very much on the right path. And actually decaf has grown in sales faster than regular coffee every year for the last seven years.
Are you a decaf guy or are you a high-test guy? I'm a high-test guy, but I'm coming around to it. I've had some really beautiful cups of decaf, and it's making me think that an afternoon cup could be part of my ritual soon. I'm going to have to try it. Matt Kronsberg, writing at Bloomberg about decaf. Matt, thanks a lot. Appreciate your time. Thanks for having me. ♪
This final note on the way out today, a callback to the story that Sabri did for us the other day on the wealth effect, how people just feel overwhelmed.
Better off when the stock market is up, which then, of course, affects how they spend. Anyway, from the Federal Reserve today, this item, aggregate household wealth in this economy in the first quarter of this year, up 3.3% to almost $161 trillion. Again, that's the aggregate. Most of it, of course, came from gains in the stock market, almost $4 trillion. Real estate appreciation was another trillion or so. Kind of seems like play money, doesn't it?
Our theme music was composed by B.J. Liederman. Marketplace's executive producer is Nancy Fargali. Donna Tam is the executive editor. Neil Scarborough is the vice president and general manager. And I'm Kai Risdell. Have yourselves a great weekend, everybody. We are back on Monday. This is APM.