Chili's is back (baby back, baby back)

And now, a next-level moment from ATT Business.

Say you've sent out a gigantic shipment of pillows, and they need to be there in time for International Sleep Day.

You've got ATT 5G, so you're fully confident.

But the vendor isn't responding, and International Sleep Day is tomorrow.

Luckily, ATT 5G lets you deal with any issues with ease, so the pillows will get delivered and everyone can sleep soundly, especially you.

ATT 5G requires a compatible plan and device.

Coverage not available everywhere.

Learn more at ATT.com/slash 5G network.

This podcast is supported by Odoo.

Some say Odoo business management software is like fertilizer for businesses because the simple, efficient software promotes growth.

Others say Odoo is like a magic beanstalk because it scales with you and is magically affordable.

And some describe Odoo's programs for manufacturing, accounting, and more as building blocks for creating a custom software suite.

So Odo is fertilizer, magic beanstock building blocks for business.

Odoo, exactly what businesses need.

Sign up at odoo.com.

That's odoo.com.

All right, we had that Powell speech.

Now, what happens?

From American Public Media, this is Marketplace

in Los Angeles.

I'm Kyle Rizdahl.

It is Friday today.

This one is the 22nd of August.

Good as always to have you along, everybody.

Sheriff Powell spoke today for about 22-ish minutes, about 3,200 words, if you want to measure it that way.

That's not counting the footnotes, though.

Tell me, by the way, this was a speech by a central banker without telling me it was a speech by a central banker, right?

Footnotes.

Anyway, that is the point of departure for the top of the program today.

Kate Davidson is at Bloomberg.

Heather Long is the chief economist at Navy Federal Credit Union.

Hey, you two.

Hi, Kai.

Hi, Kai.

Kate, you get to go first.

Now that we've had, what, six, eight hours to digest that speech?

What sticks with you?

Sure.

So I mean I think that the biggest takeaway was that Chair Powell seemed to be open, pretty clearly, you know, opening the door to an interest rate cut at the Fed's next meeting in September.

He didn't say September.

He didn't even use the word soon, but it kind of felt like that's what he's leaning into, right?

You know, we've heard from Powell's colleagues, various Fed officials, and a number of them have kind of signaled that they are open to this.

And,

you know, that is despite worries that they've expressed all year about inflation from tariffs.

You know, they've said prices could be going up, but we want to wait and see how that filters through the economy.

But it feels like they're getting to a point now where they just can't wait too much longer.

And that was, I think, the big idea from Powell's speech today.

Heather Long, same question to you.

What stuck with you?

Yeah, beyond the September rate cut, big opening for that.

I think what stuck with me is two things.

Number one, he did basically a 180 on the labor market.

Now he's talking about all the downside risks to employment arising for regular people.

That's a scary thing to hear a Fed share saying because that means he thinks there could potentially be layoffs.

You know, the second one that I thought was really intriguing as I went back and reread later in the day is his discussion on inflation, kind of what Kate was saying, how he's characterizing the tariff impact.

He really spelled out a pretty compelling case about why tariffs won't cause an inflation crisis.

Prices will go up, but why he thinks it won't be a lasting impact,

why he thinks it'll be a one-time.

And I think that really opens the door to why he feels comfortable cutting.

So, Kate, let's keep going with that, right?

Because I read that same thing, and I had the exact same thought Heather did.

So, the Fed now is kind of betting that inflation stays manageable, right?

It's elevated.

It's above where the central bank wants it to be at 3-ish percent instead of the 2-ish percent.

But they're betting it stays there-ish, and they are now much more seriously turning turning their focus to the labor market.

Do you agree?

I'm sorry, Kai, was that one for me?

That one was for you, if you'd care to.

Thank you.

Yes, no, I think that's right.

I think certainly they, you know, Powell talked today in his speech about this tension over the dual mandate and how much more, you know, are they, are they, have they been more worried?

The big question is then, are they more worried about the labor market or about inflation?

And as Heather said, there's a compelling case, and we've heard some of them making it, that they're, Powell called it today, a reasonable base case, that inflation

might just be this one-time bump.

So I think we're seeing things move in that direction.

If that makes sense.

Yes.

Are either of you Star Trek fans?

No.

Sorry.

No, no, that's all right.

I'm going to roll with a pop culture reference here that I completely will confess here I ripped off from the executive producer of this program from our news meeting this morning.

There is in Star Trek a scenario called the Kobayashi Maru.

And very long long story short, it's an unwinnable battle.

And really, you have to kind of cheat to win it.

And Captain Kirk and all this jazz.

But I wonder, Heather, you get to go first on this one.

I wonder whether the Fed now has, with a weakening labor market, tariffs that they believe are going to be a one-time bump, but we don't really know because uncertainty about what President Trump is going to do in 20 minutes, let alone for the rest of the year, is very high.

Is the Fed sort of looking at a kind of unwinnable situation here?

Well, they're certainly earning their salaries this year and i'm sure they would love to change their motto to live long and prosper but um oh look so you didn't you didn't even confess to being a star trek fan come on hey we gotta have a little fun on jackson old friday but look you know i think what i would say is um

I think that's why, in my eyes, what Fed Chair Powell did today was open the door big time to a September cut, but really try to slam the door on this notion that they're going to cut, cut, cut for the rest of the year.

He wants to keep those options open for the reason that you said that this is really tricky.

It could really backfire.

And he doesn't want to get locked in.

And that's the smart thing to do.

It's worth pointing out here, Kate, that there's a bunch more data to come out between now and the September meeting.

And Chair Powell, as we know, loves his data.

There's another jobs report or two.

There's PCE next week.

I mean, there's a bunch of stuff that could change the conversation that Powell had today.

Yeah, I mean, one thing I thought was really interesting here at Bloomberg, of course, we paid very close attention to how markets were reading the speech, and there was a big market reaction, right?

Big rally, stock surge.

But if you look at the pricing in bond markets for Fed funds futures, sort of a metric of expectations, they're not fully priced.

They're not like at 100% for September, right?

I think they're around 80%.

And so I think that that suggests that there is, even among investors, still a little bit of wariness.

You know, they had been so sure just a couple of weeks ago

after that July JOHDS report that was so terrible.

Oh, absolutely, there's going to be a cut in September.

Maybe it'll even be a jumbo-sized one.

And I think that they were kind of

sort of put in their place, if you will, after

the data went back the other way.

And so now they're maybe not quite sure how Powell and the Fed could react to

a strong jobs report or a surprise on inflation.

So

we'll have to see what happens.

Right.

Let me, since you brought up the markets, I'm going to stick with you on this one.

The markets, as you pointed out, they had a very fun time on Wall Street today.

But here's the thing.

It's only a lousy quarter point cut.

It's not like it's coming down to, you know,

2%, to 2.5%.

It's still going to be up near 4%, the federal funds rate.

And really, you're getting crazy over what's possibly going to be a quarter-point cut?

Yeah, I mean, I think some of it had to do with their,

as I mentioned just now, you know, their wariness over, oh, God, what is he going to say?

It was a little bit of a relief rally as they call it that people were people were literally just relieved that um that he opened the door they there was a lot of uncertainty of is he going to do that everyone kind of thought he would but but maybe he'd surprise by saying no we are still much more worried about inflation so i think it had more to do with that um and then maybe perhaps uh you know markets are are thinking or assuming that um that there could be a series of rate cuts and i think for the reasons heather said it's really unclear that that's going to happen heather you get the last word on this one and and you have to do do it in something less than a minute.

Just the thoughts Chair Powell had today on their framework, the five-year review, and how they think about their path on interest rates.

Yes.

Well, look, he tried to, I think a big part of this meeting this couple of days is to try to project confidence in the face of all of this pressure from the White House and all of that's going on and swirling around here.

You could hear the big applause, standing ovation as he finished that speech.

And, you know, he tried to conclude a five-year review process of saying that they're still committed to the dual mandate and that

trying to set the stage for whoever his next successor is to basically...

pick up the baton and keep the integrity of this institution going.

I think he did a pretty good job on that, but wow, 2026, Jackson Hole couldn't be very different.

Chair Jay Powell, last time as chair at the big dance.

Kate Davidson of Bloomberg,

Heather Long, Navy Federal Credit Union.

Thanks you too.

Have a nice weekend.

Happy Friday.

We'll see you.

Thanks, Kyle.

On Wall Street today,

come on, you tell me.

The Fed chair opens the door to a rate cut.

What do you think stock traders did, huh?

We'll have the details when we do the numbers.

There's been something interesting happening in the auto industry lately.

It's all about tariffs and timing.

Car makers are facing plenty of tariff stress right now.

Think those extra Trump taxes on imported steel and aluminum.

But they also find themselves, car makers do, and right now particularly, with a built-in excuse for raising prices.

It's the new model year.

Those bright, shiny new cars come with new features, yes, maybe a redesign too, but also higher prices, even without tariffs.

Marketplace's Henriette has more on the tariff, new model pricing matrix.

If car companies are going to raise prices, this is the time to do it, says Carl Brower, executive analyst at iCCars.com.

The model year switchover is the most common time to see a price shift, and it always goes up, and it can be pretty substantial in recent years.

Those substantial increases of past years have done two things for car makers and buyers, Brower says, and both of them will affect how companies price model year 2026.

One, automakers have profited a lot.

The car companies are making pretty good money.

They've been making pretty good money since COVID.

Two, consumers have gotten tired of continual price hikes.

So car companies have realized we can't just keep cranking these prices.

There's going to be a tolerance level for consumers that's going to fall off for this.

Which means as car makers face import taxes on their vehicles and parts, many of them are trying to eat those costs.

But that can only last for so long.

At a certain point, they just have to give up on that, and the prices are going to go up.

Ray Shafska is co-founder of CarEdge, a car buying site, but he says, don't expect car companies to tell consumers that tariffs are what's causing price hikes.

These manufacturers are biting their tongues and saying, oh, no, it's not the tariffs.

Of course, it's the tariffs.

But we can't, we're not allowed to deal in reality as long as there's one person that has to be pleased.

As in President Trump, who in recent months has wielded the power of the federal government to sway the actions of private companies.

Everybody is fearful of what will happen.

So rather than confront confront what would happen, they try to sidestep it.

Plus, car companies are still navigating a federal tariff policy that is not settled, even if it's a bit clearer than a few months ago.

Stephanie Brindley at S ⁇ P Global Mobility says that could keep companies from raising prices.

You don't want to say I'm increasing my tariff price by 8% in September, only to find out you don't really need to do that.

Instead, maybe bake just a bit of a price hike in that new 2026 model year car, car, which, oh, by the way, also comes with a better touchscreen or more cup holders.

I'm Henry App for Marketplace.

The thing a lot of companies are worried about right now, consumer-wise, is discretionary spending, the nice-to-haves, not the must-haves.

Eating out is firmly in that latter category, but you know who's not worried about it at all?

Chilies.

Yeah, that chilies.

The casual dining chain has had its best sales and profits for a fiscal year since it went public in 1984.

Its corporate workers are getting big bonuses.

The Wall Street Journal had that story.

And it's planning to expand.

Marketplaces Kristen Schwab looked at how Chili's is not just surviving right now, but thriving.

If you think of this when you think of Chili's...

Well, I hate to break this to you, but you are behind.

Chili's has new marketing.

These are the Nashville hot mozzarella sticks.

They're so good.

These videos of people eating gooey, stretchy fried cheese at Chili's, at home, in their cars are all over the internet.

Lily Jan is a lecturer of food and beverage management at Cornell.

That cheese pole thing was a pretty huge thing for a lot of people.

And when you talk about chilies to a younger demographic, they all think about the cheese pole.

Unlike a lot of food brands that market to millennials who have more cash, chilies went all in on Gen Z.

I don't know that everyone understands just how strong the influential buying power and spending power is of the Gen Z at home, because if your teenager wants something and it'll make them participate in a family activity, you're doing it.

The viral cheese poll looked like the beginning of a renaissance for Chili's.

In reality, the chain had spent years preparing for this moment by cutting its menu in half, cleaning up its dining rooms, and honing in on its brand.

Almost kitschy, but also self-aware.

Stephen Zagor is a business professor at Columbia.

And they priced it right.

They didn't price it necessarily cheaply, but they priced it right.

Chili saw inflation as its opening to reposition itself, and it decided its competitor wasn't other casual dining restaurants, but McDonald's.

Jim Sanderson is a restaurant analyst at North Coast Research.

The pitch there was it's as good, if not better, quality-wise.

In an ad for its $10.99 burger special, which comes with bottomless chips and salsa and a drink, Chili's calls out McDonald's quarter-pounder by name, saying the Chili's version has more beef.

It worked.

The burger brought in customers, and sales of higher-margin foods like mozzarella sticks spiked.

Now the chain has plans to expand.

How many Chili's do we need in the United States going forward?

Sanderson says the tough part is supporting growth.

He says Chili's is hoping to go back to making money off its classic babyback ribs.

I'm Kristen Schwab for Marketplace.

Coming up.

Slight, but I have to underline slight improvement in affordability.

Slight is the new up, it seems.

But first, let's do the numbers.

Yeah, here you go.

Now Industrials jumped 846 points today, 1 and 9 tenths percent, 45,631.

The NASDAQ spiked 396 points, also 1 1 and 9 tenths percent.

Finished at 21,496.

The S ⁇ P 500 picked up 96 points, 1.5%,

64, and 66.

For the five days gone by, the Dow added 1.5%.

The NASDAQ slid, actually, 6 tenths percent.

SP 500 added about 3 tenths of 1%.

Chris and Traub is telling us about Chili's.

Its parent company, Brinker International, down 1.2% today.

Tick or simple buy the buy on that one.

It's a good one.

Eat, E-A-T.

Dine Brands Global, its own competitor applebee's gobbled up about 5.6 percent today bond prices up yield on the tenure t note down four and a quarter percent 4.25 percent you're listening to marketplace

This episode is brought to you by Huggies Little Movers.

It's fun having a baby that loves to move, but it can be challenging to find a diaper that can keep up with them.

Huggies Little Movers is designed to move with your baby with either the double grip strips or the new HugFit 360 degree waistband.

You can be confident relying on Huggies Little Movers for your active little ones.

Huggies Little Movers, made with double grip strips or the new HugFit 360 degree waistband so your little double can keep moving like you.

Huggies, we got you baby.

These days you've got two choices, buying a new car or making the one you've got run like new.

We know which one we'd choose.

That's why at Firestone Complete Auto Care we have thousands of ASC certified technicians nationwide trained to spot an issue with your car before it becomes a problem, no matter the make or model.

Get more out of your car.

Firestone Complete Auto Care.

Call or go online at FirestoneAuto.com to book the day.

And now, a next level moment from AT ⁇ T Business.

Say you've sent out a gigantic shipment of pillows and they need to be there in time for International Sleep Day.

You've got AT ⁇ T 5G, so you're fully confident, but the vendor isn't isn't responding.

And International Sleep Day is tomorrow.

Luckily, AT ⁇ T 5G lets you deal with any issues with ease, so the pillows will get delivered and everyone can sleep soundly, especially you.

ATT 5G requires a compatible plan and device.

Coverage not available everywhere.

Learn more at ATT.com/slash 5G network.

Did you know Tide has been upgraded to provide an even better, clean and cold water?

Tide is specifically designed to fight any stain you throw at it, even in cold.

Butter?

Yep.

Chocolate ice cream?

Sure thing.

Barbecue sauce?

Tide's got you covered.

You don't need to use warm water.

Additionally, Tide pods let you confidently fight tough stains with new coldzyme technology.

Just remember: if it's got to be clean, it's got to be tide.

This is Marketplace.

I'm Kai Rizdahl.

Sabrid did a story for us yesterday about the latest and greatest in artificial intelligence, these things called VLMs, vision language models, AI, but with pictures instead of words as fodder.

The nuts and bolts reason AI is even possible though, is the data centers the big tech companies are building and building and building.

And all the computers inside of those data centers need lots and lots of power.

The Department of Energy says they used about 4% of all the electricity in this country in 2023.

They figure that's going to go to 12%

by 2028.

And that is an infrastructure problem.

It's a consumer costs problem.

And it's a politics problem, too.

Ivan Penn covers energy for the New York Times.

He had a big piece about exactly those problems the other day.

Thanks for coming on.

My pleasure.

Good to join you.

Let's connect the dots here, establish the grid, as it were.

If I live in a place where data centers are springing up, Virginia and Ohio are the two biggies that come to mind.

Make the connection for me, would you, between

what these big AI companies are doing with data centers and my Electricity Bill?

Sure.

So

you mentioned Virginia.

It is known as Data Center Alley

because there are so many data centers there.

Of course, they run on electricity and principally draw electricity from the greater electric grid,

which we all receive our power from.

So when

anyone

draws power from the grid, we all pay for the wires, the transformers, the costs for power plants that go into all those services.

So when you have a big user like a data center, the system may need upgrades.

And the question is, who pays for those upgrades?

And part of what we're dealing with right now, the question we're dealing with, is are data centers paying their fair share, or are other customers, residential and other businesses, having to share in those costs?

The flip side of this coin, if you will,

the change in paradigm here, and there's a great chart in this piece that lays it out, and it's about electricity sales quarterly.

And starting in 2022-ish,

Amazon Energy LLC, Google Energy LLC, Apple and Microsoft Energy LLC, these big tech companies have energy subsidiaries that are actually selling power now.

That's right.

There was a decision by Apple in particular as the tech companies began to invest in renewable resources, solar power, wind power, to offset their carbon emissions.

They had excess power.

So since, again, they are also connected to the grid, they said, well, we were going to start selling that power.

But in the last few years, they are acquiring enormous amounts of power.

Now, not just the solar and wind power, but they're also, as many may have seen,

begun investing in nuclear power.

Somebody bought Three Mile Island, right?

Was it like Microsoft or something?

Well, yeah, Microsoft entered what is known as a purchase power agreement to support their data center ambitions.

And it's not stopping there.

I mean, there's natural gas plants that they're investing in.

And so when they're not using that power they are selling it into the grid and they're making money off of it.

I'm not going to say AI is a bubble because we don't know yet and it's clearly the new new thing.

But what happens if AI doesn't turn out to be all that?

And we have all these data centers and we've upgraded electricity grids and consumers, because this is the way it always goes, wind up paying a big chunk of that, then what happens?

Well, this is one of the concerns.

Do residential consumers and these other businesses have to shoulder those costs.

And utilities become very concerned about this because

rates have been steadily rising all across the country, as particularly we've been hardening the grids against those extreme events.

So now, if you have these costs, the data centers don't end up delivering what is anticipated, then do you saddle the rest of the ratepayers with more costs on top of what they're already dealing with?

And that could be untenable.

Aaron Powell, that's a rhetorical question, right?

Do you saddle the other ratepayers?

Because, of course, the answer is yes.

Well, I mean, somebody has to pay for it.

You know, the basic equation here is a utility says it costs us X number of dollars a year to run the system, and we have with so many customers, and they all have to share that cost.

So, if you reduce the number of players, even after you've built all this equipment to support that, but they don't show up, the people who are left on the grid have to pay that bill.

Ivan Penn at the New York Times, where he covers energy.

Ivan, thanks a lot.

Appreciate your time.

My pleasure to be with you.

We got a sign this week that maybe, possibly, could be the long-stuck housing market is picking up some steam.

According to the National Association of Realtors, just over 4 million homes were sold in this economy in July.

That's up 2% from the month before.

So, unstuck?

Daniel Ackerman looked into that one.

The uptick in sales was welcome news for Lawrence Yoon, chief economist with the National Association of Realtors, but he says it's an uptick from a low point.

Home sales still remain very sluggish overall.

Yoon says there does seem to be more and more inventory out there.

The latest 1.55 million homes on the market will be the highest since the lockdown period in 2020.

But it's not because sellers are particularly enthusiastic, says Guy Sakala of Inside Mortgage Finance.

You hear about pent-up demand, but there's also pent-up sales.

There are a lot of people my age in the 60s and 70s who have been looking to downsize, move somewhere else, and they've kind of been handcuffed in with low mortgage rates.

But they've decided enough is enough and are starting to list anyway, even if it means a higher rate on their next mortgage.

The increased supply is good for buyers, says Susan Wachter, a professor of real estate at the Wharton School.

We have, in fact, some slight,

but I have to underline slight improvement in affordability.

Wachter says home prices are rising more slowly than wages or inflation overall, but that improvement is again just an uptick from a low point.

We have still near historic lows in affordability.

And so to answer the now years-old question of whether the housing market is still stuck, Lisa Sturtevant of Bright MLS says, I think we're still stuck.

She says it'll likely stay that way, at least until home prices or mortgage rates fall significantly.

But Sturtevant says economics alone can't explain everything happening in the housing market.

Home buying and selling is a big financial decision, but it's also an emotional and a psychological decision.

And frankly, there's a lot of anxiety.

She says until would-be buyers start feeling more confident about the job market, they may just want to stay put.

I'm Daniel Ackerman for Marketplace.

Just final note on the way out today.

We did an interview earlier this week with the Bloomberg reporter who'd broken the news that the Trump administration was going to take a 10% stake in Intel, the beleaguered chipmaker.

Congress Secretary Howard Luttnick confirmed that on CNBC a couple of days later, and President Trump talked about it this morning in the Oval Office.

And just because it's important for the way this new kind of industrial policy that the United States is doing should be on the record, I'm going to give you the President's own words here.

This is a quote.

The president said,

I said, you know what?

I think the United States should be given 10% of intel.

That was it.

That was the quote.

Our theme music was composed by B.J.

Lederman, Marketplace's executive producer is Nancy Pargali.

Joanne Griffith is the chief content officer Neil Scarbo's Vice President and General Manager.

And I'm Kai Risdahl.

Have yourselves a great weekend, everybody.

We'll see you back here on Monday.

All right.

This is APM.

And now, a next level moment from AT ⁇ T Business.

Say you've sent out a gigantic shipment of pillows, and they need to be there in time for International Sleep Day.

You've got AT ⁇ T 5G, so you're fully confident.

But the vendor isn't responding, and International Sleep Day is tomorrow.

Luckily, ATT 5G lets you deal with any issues with ease, so the pillows will get delivered and everyone can sleep soundly, especially you.

ATT 5G requires a compatible plan and device, coverage not available everywhere.

Learn more at ATT.com/slash 5G network.