Marketplace - The data dogs

Episode Date: October 10, 2024

Austan Goolsbee, president of the Federal Reserve Bank of Chicago, counts himself as a data dog. It’s a name for economic policymakers who take the long view and are usually game to wait for more numbers. Goolsbee spoke with “Marketplace” host Kai Ryssdal about his voracious appetite for information and what he calls “the hardest thing that a central bank has to do.” Plus: Sports ticket prices are up 10% in the last year, and California requires retailers to help fund textile recycling.

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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. One word, four letters critical to this economy. I know you think I'm going to say jobs right now, J-O-B-S.

I'm not. From American public media, this is Market Plans. In Los Angeles, I'm Kyle Rizdal. It is Thursday today, the 10th of October. Good as always to have you along, everybody. Consider, if you would, the data on which analysis of this economy depends. There is a lot of it. And that data of late has been pretty good. Gross domestic product is growing 3% a year.

The much in the news labor market added more than a quarter of a million new jobs last month, more than most anybody had been guessing. And we learned just this morning that year over year inflation is the lowest it's been in better than three years, 2.4% in September. So let's say just for argument's sake that it's your job to gather all that data, analyze it and figure out which way to point this economy. What you're going to do?

Well, who better to ask than a guy who takes a backseat to no one in his data affinities. Austin Goolsby is the president of the Federal Reserve Bank of Chicago. Austin, welcome back to the program. Kai, thank you for having me back. So we will, of course, talk data with a data dog. I want to talk, though, not about this morning's CPI. I want to talk about the jobs number that came out last Friday, 254,000. First, I want your gut reaction when you saw that number.

I thought it was superb. You cannot complain with big jobs numbers First, I want your gut reaction when you saw that number. I thought it was superb. You cannot complain with big jobs numbers and the unemployment rate coming down a little and staying in a spot that we basically think of as full employment. Yes to all that, but is there nothing in you that says, oh man, we're cutting rates and the unemployment, the jobs numbers are going up and it's looking better and, no? Yeah, some, but you know I'm in the data dogs and the thing about the data dogs that don't respond to one month, you know that.

It was literally 60 days previous that we got a disappointing jobs number and then a bunch of people in the market ran out and said, oh, this means that we need a disappointing jobs number, and then a bunch of people in the market ran out and said, oh, this means that we need to cut 150 basis points. And then you get one number that's better than expected, and then people say, it's an emergency, you need to raise rates. Taking the long view is the right thing to do.

There's a market timetable, and I understand why the market timetable is what it is. They're gonna glean market gyrations from every little zig and zag, but the central bank, I don't think, can do that. We gotta take the through line, and I think the through line so far is pretty clear. Inflation way down. The job market overall has been cooling from overly heated to something like full employment.

And we just want it to stop right there. All right. Let's talk about some of the longer trend items. Last time we had you on the program, which was March, we talked about housing as being a particular thing you were looking at, inflation being sticky there. The report this morning, it's not like housing prices broke, but they certainly moderated that. You must take heart from that. Yeah, but again, it's just one month. If we got several months just like today. Is there anything that's going to make you say yes? Oh, my goodness.

Yes. Look, that was a good month for housing inflation, what we got today. But it followed last month was a bad month for housing inflation. So we just got to take several months before making these averages. It hasn't been as fast as I wanted it back in March. But we have made progress overall, definitely. This is going to sound flip and I do not mean it to be. No, truly I don't. You are data dependent, you call yourself a data dog. I call you a data dog now on this program, which I've never done with anybody.

Powell talks about more data all the time. It does seem like there's, and truly I don't mean to be flip, but it seems like there's nothing that's going to satisfy you guys. It's always more data, more data, more data. What's wrong with us? You know, yes, it is always more data, but we have to make the decisions, as you say. So we get the data.

It's not just backward looking. We also gotta make forecasts and think about where things are headed. And part of that, we supplement with a bunch of interaction with business leaders and CEOs and civic leaders and everything that goes into the beige book. At the end of the day, that's also why we meet every six weeks, is so that we hopefully don't get too far out over the skis

or get too far behind the curve or however you want to think of it. We just got to keep revisiting this. And I always say the hardest thing that a central bank has to do is get the timing right when there are moments of transition. And we're in a moment of transition from an environment where we had overwhelming focus on getting down the inflation part of the mandate to a more normal balanced environment where we got to think about inflation and we got to think about employment and how the real economy is doing.

And we got to think about the tradeoffs and balance those things out. And that's going to mean a lot of close calls. So we're going to have meetings where it's, should it be zero or should it be 25? Should it be 25? Should it be 50? So the thing is, in an environment like that, we go with the data we have, and then we meet again in six weeks, and we try to figure out and keep ourselves on the path.

And that's the way it should be. That's how it should be. Let me ask you about the moment of transition. then we meet again in six weeks and we try to figure out and keep ourselves on the path. And that's the way it should be. That's how it should be. Let me ask you about the moment of transition. Yes, we are in a moment of transition with the labor market and inflation and all of that. I wonder how much you think we're still in a moment of transition out of the pandemic and how much that's still affecting this economy.

I still think it's affecting some and of course that was the thing that made all of our historical monetary policy lessons at least not super helpful to understand the business cycle. We had a downturn that wasn't driven by cyclical industries at all, it was driven by people couldn't spend money on services. As we've come out of that, the service sector rebound is not even especially monetary policy and interest rate sensitive. So we've had to think through these issues of is monetary policy less effective than it is at normal times or is it just more delayed than it is at normal times? You got a much higher share of mortgage holders have a 30 year fixed mortgage than they did in the past.

So when we change the interest rates and it flows through into mortgages, the direct impact in the here and now is not as big as it was before. I still think there's some of COVID coming through, but I feel like in most of these areas, the supply chain, some of the labor force participation, and the healing of many of the supply shocks that were damaging, I feel like we're mostly back to normal. And the fact that inflation's around the 2% target

of coming in and unemployment's at the level that we always said was kind of steady state full employment makes me think our job now is to try to hold the picture where it is. Speaking of which, there are, you know, holding the picture and communication and all the stuff that the Fed does other than actually run the economy,

there are, I think, 20 Fed speakers this week, whether it's members of the Board of Governors, regional Fed presidents, whatever. You're doing three. I think this is your second hit of the day. You were on CNBC this morning. Do you ever get sick and tired of it? And do you ever watch anybody else from the Fed

and see what they're doing? I watch everyone from the Fed. Oh, stop it. I, I put a lot of weight on the views of the other members of the committee because we're coming from different regions and we got a lot of different worldviews to the question of, is this a cacophony? There are too many people talking. Wouldn't it be easier for markets if there were just one voice and one

opinion? Yes, I'm sure it would be easier, but it's a committee. It's a committee. And so when you have committees that vote on things, people have different views. And so I don't think it's a problem that everybody expresses what their view is. I think that's the kind of transparency that people should want. If you know that the actual decision is being made by by 19 different people following and talking to each other, you kind of would like to know

that. I'm sure in other voting things, in the whatever, the US Senate, if all hundred senators had the same view and they could just say, here's what the Senate thinks, that would be easier too. But that's not how it's structured. Austin Gouldsby at the Chicago Fed. Austin, thanks for your time. It's always good to talk to you. It's always fun.

As Austin was talking about, the inflation trend is good. Some of the specific data points today though gave traders pause. Core CPI, that's inflation minus the always volatile food and energy sectors, that was up 3.3% year on year. That is a tick higher than core a month earlier. So, you know, something to keep an eye on. Elsewise in market-based American capitalism, we'll have the details when we do Vice-President of the United States of America, Bill Clinton, and the United States of America, You gotta scroll a good ways down in today's inflation report to get to this little nugget, the price of admission to sporting events here in the U.S. of A went up 10.3% in the past year. That includes single and season tickets to everything from pro football to college basketball

to amateur dog shows. It also takes into account tickets sold by the team as well as those sold on the secondary market. Marketplace's Stephanie Hughes looks at why prices have been shooting up like that. A sports stadium only has so many seats, and those seats have been getting nicer, says David Berry, a professor of economics at Southern Utah University. So the image that we used to have of stadiums that were really large and had cheap bleacher seats, that's going away.

The seats are increasingly premium seats, and they are priced to people who have lots of money. And among sports fans with plenty of money, demand for those seats remains high, says economist and sports consultant Andrew Zimbalist. Plus, some fans aren't there just to watch. They're also there to gamble, and they don't want to deal with any kind of television delay. They're betting on plays. They're betting on is the next play going to be a pitch out to the halfback, or is it

going to be a pass down the left side of the field? And in order to do that, you want to be there. Zimbola says another factor is that the fan market is growing thanks in part to the popularity of women's sports, think the WNBA and the National Women's Soccer League. And for events across the board, fans can increasingly turn to the secondary market. And resale ticket prices usually are a good deal higher. Teams have also gotten really good at figuring out how much fans are willing to pay for particular seats.

Sun or shade, afternoon or evening, playing against a big rival or someone you've never heard of. Nola Agha is a professor of sport management at the University of San Francisco. There's an entire industry, let's say, of companies that are focused on dynamic pricing, which helps any live event extract the highest value from every single person. Aga says it's a myth that ticket prices are driven up by the team's payroll. In reality, she says, pricing goes the other way. So they're going to pay a player what they're worth but they're

happy to charge you more first. Even so for many people supporting their team in person is a must-have. In that way live sports have an edge over other kinds of business. Fans may go away disappointed but will still pay to come back for more. I'm Stephanie Hughes from Arc and Place. Coming up. If you even think about China, which is not an Arctic nation, it has ice breaking capability. And we are behind. But first, let's do the numbers. Dow Industrial is off 57 points today, a 10% 42,454. The NASDAQ dipped nine points less than a 10% 42,000 454 the Nasdaq dipped 9 points less than a 10%

18,000 282 the S&P 500 gave up 11 points to 10% 57 and 80 Delta Airlines said in its earnings report today that the effects of the crowd strike outage remember that Well, it cost the company 380 million dollars in lost revenue The airline had to cancel thousands of flights during that July incident. CEO Ed Bastion says Delta is seeking compensation from both Microsoft and CrowdStrike. Delta descended one and one-tenth of 1%. United Airlines rose 1.4%. American Airlines fell about 1.4% as well.

PVH Corporation, which is a parent company of brands including Tommy Hilfiger and Calvin Klein, decreased 1% today. VF Corporation, which owns the Dickies and the North Face brands, racked up 1.4% today. Levi Strauss & Company, blue jeans, right? Come on, you knew that. 9.10%. Gildan Activewear, maker of t-shirts and sweatshirts, slumped 1.6% today. Bond prices went down.

Yield on the 10-year T-note now sits at 4.06%. You're listening to Marketplace. 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.com. That's F-U-N-D-R-I-S-E.com.com. 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. From all of us at Marketplace, we want to 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. This is Marketplace. I'm Kyle Rizdal. A couple of weeks ago, the Coast Guard said it's been seeing an uptick in Chinese and Russian naval activities up near Alaska. As it happens, we were up in Alaska this spring for our climate podcast, How We Survive, and we spent some time with the Coast Guard.

All right, good controls. Start. Starting. We're ready for takeoff. We're in a Coast Guard MH-60 helicopter, Lieutenant Lexi Chavarria Aguilar and Lieutenant Commander Ted Borney at the controls. We're all in matching flight suits, think Ghostbusters but bright orange, also helmets. Weather's not great, low clouds, it's been raining on and off since we got here. The ride's a little bumpy, which is par for the course in a helicopter, you should know. We're about 300 feet above the water just below the cloud layer. We are actually headed toward Narrow Street, which is between Spruce Island and the top

of Kodiak Island, and it's kind of a shortcut. We have the good weather and visibility right now. In their log books, this is gonna go down as a standard proficiency hop for Lexi and Ted. Regular training, just with a couple of journalists in the back. But the very nature of what the Coast Guard does, search and rescue, maritime interdiction, and lots else,

means every flight could turn operational on a moment's notice. Kodiak Island, where we are, is kind of stunning. Mountains right up against the water, thick clouds sitting on top of them, deep blue-green water, and wildlife. There's a couple bears down there. Ooh, that looks like a cow, dude.

Oh, it's a cow. Oh, man. You gotta be excited. I got excited. Is that not a bear? No, dude, that's a cow. It's a cow? There's a couple cows on Woody. They tricked me good.

Forget it. I think Alaska is an interesting place to be as the global climate is shifting. I think that the physical, tangible changes are more poignant here than maybe elsewhere. We saw some of those changes firsthand. Before we went out to Kodiak, we'd been a thousand miles farther north, in Utqiagve, to see the Point Barrow radar, a key piece of military infrastructure that is being threatened by climate change. And the changes happening there and all over Alaska are only going to make the Coast Guard's

job more difficult. You wouldn't talk about you wouldn't have to barrow, there's less ice up there, there's going to be more opportunities for traffic to go through there. You'll need a greater amount of traffic to get through there. are only going to make the Coast Guard's job more difficult. commercial traffic as well as you know things like cruise ships, things like that where you have the potential for now for a mass casualty event somewhere remote and north. As maritime and aviation traffic increases up there, more traffic means more people. More people means more chances for things to go wrong. A stranded cruise ship, unidentified vessels, things the Coast Guard deals with all the time, but... We don't have a permanent presence up there now.

So we're not in a great position to respond. We'll be responding out of the code. It just takes a lot of time to get there. There is kind of an infrastructure challenge, too. Maybe equipment challenge is a better way to put it, as Ted Borney explained to us once we got back on the ground. Right now, we have the Coast Guard has the only icebreakers out of any military service.

We only have two of them, which is not super adequate for the space that we're operating in. You want to operate in the Arctic, you kind of got to have icebreakers. And as maritime traffic and strategic competition increases, the Coast Guard is going to need more than two. Compared to comparable countries, you know, think about Russia. And then if you even think about China, which is not an Arctic nation, has ice breaking capability. So we're behind in that right now and the Coast Guard is working to catch up.

We should say the Coast Guard is just one part of the military presence up there. And every branch of the service is aware that climate change is changing the threat environment. Case in point, on September 23rd, there was another incident near the coast of Alaska. NORAD, which is North American Aerospace Defense Command, released footage of a Russian fighter flying aggressively close to an American military jet. It's happening a lot. One of the ways the American military looks out for future threats, like that increased activity up in the Arctic, and plans for them, is with war games.

This week on our podcast, How We Survive, we're going to play our own climate war game. Yeah, you're going to be playing the president, so you get to take the political responsibility for everything that happens. Oh, good. Oh, now, see, this is it, in real life than it actually is in my pre-gaming of this game. So look, it goes like this. It is a, huh, this is really interesting actually.

It turns out I talk a good game but when the decision comes to me. Wish me luck. You can check it out wherever you get your podcasts. Just search for How We Survive. We generate, that is, we the population of planet Earth, we generate about 100 million tons of textile waste every single year. Put in more simple terms, we throw away almost 100 million tons of textiles a year. The biggest slice of that textile trash pie is clothes.

And if I might guess to where you're headed now, recycling them is really, really tough. Here in the United States, only about 15% of old clothes get recycled. But that rate is likely to improve because California has just passed a law that requires manufacturers figure out how to do it. Marketplace's Kelly Wells has that one. There are three big reasons why recycling clothes isn't as easy as just tossing them into a recycling bin. For one thing, the recycling plants we already have can't handle them, even in environmentally conscious California. Textiles are a

contaminant in our current system because they tangle, they absorb, and they combust. Joanne Brash works for the California Product Stewardship Council. It's a network focused on making producers responsible for the stuff they make after it's useful so it stays out of landfills. Part of Brash's job was getting clothing companies to support the new law. It will create a new system overseen by a new nonprofit funded by textile and clothing companies. You'll be able to bring your old jeans or ripped curtains to more than 1,000 textile collection sites

up and down the state. For those materials to be sorted and then reused, whether that's upcycling, recycling. California State Senator Josh Newman authored the law. Or sorted and turned into additional feedstock for the next generation of products. A second reason clothing recycling is tricky. The sorting process can be prohibitively expensive because right now it requires human labor. But there's already technology that can help. A Norwegian clothes sorting machine recently made the trip to the city of commerce California

for a demonstration event. Louisa Hoyes with Tomer Textiles flew all the way here to demonstrate how it works. As the textiles are placed onto the belts, they will be detected by the sensor and when it has identified the material type that we want to reject, it will use compressed air to reject it over the partition, therefore separating the identified material from the rest of the material. So polyester gets put in one pile, cotton goes into another, and nylon goes into a third. It's more accurate and cheaper and faster than a person.

The pressure from this law to recycle more clothes opens up a market for more machines like it. But sorting is not as simple as polyester versus cotton versus nylon because, and here comes challenge number three, a lot of the clothes in your closet are probably blends of multiple materials, which is a big puzzle for recyclers, Joanne Brash of the California Product Stewardship Council says. And they only can take nylon at 85 percent or higher. If it's 81 percent, they can't take it. The goal of the new law isn't just to stop clothes from going to the landfill. percent or higher. If it's 81 percent, they can't take it. The goal of the new law isn't just to stop clothes from going to the landfill. It could

also incentivize clothing makers to make more clothes that will be recyclable once you're done wearing them. Here's the law's author, California State Senator Josh Newman, again. And if you can do that, you're not only addressing the waste stream landfill question, you're really making a difference in the environmentalism. And the law will have implications beyond California's borders because if H&M, for example, makes more recyclable clothes, it's not going to make them just for Californians. It'll likely sell those clothes elsewhere. With big plans, though, come big lead times. The state has until July of 2028 to implement all the new regulations in this law, and the

companies have until 2030 to comply. I'm Kayley Wells for Marketplace. This final note on the way out today in which inflation giveth and inflation giveth less. Also a brief lesson in inflation versus prices. First of all, the news the Social Security Administration said today the cost of living adjustment this year, it's actually next year, starts January the 1st, is going to be two and a half percent. That is the smallest bump in three years. Three years in which, as we all know, inflation, lots of it, the Wall Street Journal did the math.

Over the past three years, the Social Security cost of living adjustment has been a cumulative 18.8%. But here is the deal, as all of us know. Inflation is down, yes, by a lot. We talked about that up at the top of the program. Inflation of course being the rate of price increases. But those prices themselves, most of them still higher than they were in the before times. John Buckley, John Gordon, Noya Carr, Diantha Parker, Amanda Peacher, and Stephanie Seek

are the Marketplace Editing staff. Amir Bibawe is the Managing Editor. And I'm Kyle Rizdal. We will see you tomorrow everybody. This is APN. 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.