As the job market slows, inflation speeds up

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Today's program brought to you by the rock and the hard place between which the Federal Reserve now finds itself.

From American public media, this

is Marketplace.

In Los Angeles, I'm Kai Risnall.

It is Thursday, today, the 11th of September.

Good as always to have you along, everybody.

That rock and the hard place betwixt which the central bank now is is actually codified in law, the Full Employment and Balanced Growth Act of 1978 by name.

It says in relevant part that it shall be the economic policy of the United States to have, among other things, price stability and full employment.

That, as you know, has come through the years to be known as the Federal Reserve's dual mandate.

They got to do both things.

And here we find ourselves, mid to late 2025, with the opposing sides of that mandate in some degree of tension.

The labor market, as we know, is slowing, and inflation, the latest read of which we got this morning with the August Consumer Price Index, is nudging higher, 2.9% over this time last year.

So, Marketplace's Samantha Fields reports now on what the Fed is seeing as it settles in between that rock and that hard place.

Nothing about the latest inflation or jobs numbers is all that bad.

Inflation is right around 3% and the unemployment rate is a little over 4%.

But here's the problem.

It's not the level of these variables, it's the trend.

They are moving in the wrong direction.

And Kevin Jakes, a former economist at the Treasury Department, says the Fed has one tool to try to fix that problem, interest rates.

If they decide to cut rates, Inflation would go up,

but unemployment would go down.

And if they decide to leave rates high, that could keep inflation down, but might push unemployment up.

Ann Owen at Hamilton College says that creates a dilemma for the Fed.

Because they can lower rates to improve labor market conditions, or they can choose not to lower rates to keep downward pressure on inflation.

But they can't do both.

For the last couple of years, she says the Fed's focus has clearly been inflation.

It had gotten high and employment had stayed solid, so the priority was clear.

But the predictions about the labor market and the information coming from the labor market is screaming a lot louder than inflation right now.

So the Fed's focus might shift to the other half of its dual mandate, maximum employment.

Bill English at the Yale School of Management says it's not as clear-cut as it was a couple of years ago what to prioritize, though, because inflation isn't exactly where the Fed wants it to be either.

They continue to have to trade off the outlook for inflation and the outlook for employment, and also the risks to those things.

And that's hard to get right.

Still, he says that's what they're trying to do.

I'm Samantha Fields for Marketplace.

Wall Street today, in contrast to the Fed and the jam it is in, traders do seem to think they are sitting pretty.

We will have the details when we do the numbers.

There aren't all that many bright spots in the U.S.

labor market at this particular moment, but not many does not mean none.

Healthcare jobs are growing, which tracks America's getting older, and we all still get sick, no matter how the rest of the economy is doing.

A bit more surprising, perhaps, is that the coffee shop or the pizza place down the street probably still has a Help Wanted sign in the window.

Employment at food services and drinking places grew by about 17,000 June to August, so says the BLS.

And overall, the restaurant industry is up 120,000 jobs year over year.

Marketplace is Matt Levin reports.

The Alston is a new steakhouse in Chicago's Gold Coast neighborhood.

It opened in May.

As you'd expect for a fancy steakhouse in a fancy part of town that also offers something called table side duck press, the steak ain't cheap.

It ranges from, you know, high 50s all the way into,

if you're going into some of the real specialty wagus, $300, $400.

Scott Weiner is part of the ownership group for the Alston.

The table side duck press thing is $225, if you're wondering.

If you think with a weakening job market and sticky inflation and all this this general economic agata out there, consumers may not have much of an appetite for $100 steak.

You'd be wrong.

Weekend reservations at the Alston are booked out weeks in advance.

If you think about the income gap, right?

It tells me that the people that have money have a lot of it and they're spending it.

Nationally, restaurant spending is up almost 6% over the last year.

While higher-income foodies are still splurging on fine dining, middle-income consumers don't want to give up one of the indulgences they can still afford.

Chad Moutre is an economist at the National Restaurant Association.

You hear that people might be not taking vacations, they might not be going out and making those big purchases, but people still want to go out to eat.

You already canceled that trip to the Bahamas, no need to cancel the trip to Chile's.

Return to office mandates and higher grocery costs have also likely lured more customers away from their ovens and air fryers at home.

Mutre says a surprisingly steady flow of diners is keeping restaurant hiring relatively strong.

The toughest positions to hire are number one, managers, right?

But you also have a lot of demand for chefs and for cooks, and especially those where

it's more of a scratch kitchen.

Job postings for food service managers and food prep workers were up by 26,000 this summer compared to last, according to the labor data company Lightcast.

Some of those positions, though, they may be open only because they used to be filled by undocumented immigrants.

Ron Hetrick is an economist with Lightcast.

People were like, look, I can't come to work because I'm afraid that I might, you know, be sent out of the country.

So they just didn't show up.

Despite those deportation fears, restaurants are having an easier time filling positions than they did during that whole post-pandemic great resignation era.

Chicago restaurateur Scott Weiner says he filled 150 positions for the opening of the Alston pretty quickly.

Applications came in from everywhere.

Honestly, all walks of life.

We've had founders of startups that have come in looking for jobs or just, you know, trying to see what you might have.

Tech is one of those industries that's not hiring so much at the moment.

I'm Matt Levin for Marketplace.

The great thing about government economic data is that you can drill way down should you be so inclined.

And we, of course, are.

Inflation's running 2.9%.

As I said, that's year on year.

The category that's up the most since last year, energy services.

Electricity up 6.2%.

Utility-delivered natural gas up 13.8%.

Marketplace Daniel Ackerman is on that one.

One reason electricity costs so much right now, the economy just needs more of it.

Demand is actually skyrocketing all over the place.

Ellen Wald of the Atlantic Council says that's a new trend in the past couple of years.

It used to be that electricity demand was actually fairly consistent.

It didn't really go up all that much.

Now, though, there's a push to electrify machines that burn fossil fuels, like cars and furnaces.

And then you have the data centers.

AI firms are tripping over themselves to build them.

Their copious energy needs are usually met by electric utilities, says Amy Myers-Jaffe of New York University.

They make these investments in new generation capacity and wires, and they pass that on to their rate payers.

Ratepayers, including you and me.

Jaffe says growing exports of natural gas are also raising prices for domestic consumers.

And that is happening just as utilities are spending more in the wake of climate disasters, says Arvindravi Kumar at the University of Texas at Austin.

With hurricanes that have been devastating in Houston, there's been discussions of burying power lines, which is expensive.

Even in places not recovering from disaster, Ravi Kumar says wear and tear is starting to show in electricity distribution systems.

These are the poles, the wires, the substations that supply electricity to our homes.

He says for decades, many utilities have focused on building new infrastructure.

That's left a lot of deferred maintenance on what's already there.

Upgrading and maintaining of sort of local distribution systems have needed to be done for a long time.

We have just postponed the problem and kicked the can down the road.

Ravi Kumar says now utilities can't do that anymore, and we are going to keep feeling it in our energy bills.

I'm Daniel Ackerman for Marketplace.

There's been, as you know, a complete 180 from the Biden administration to the Trump in climate change policy.

As Daniel Ackerman was just telling us, the energy we need to power this economy is only going to get more expensive, and we are going to need a whole lot more of it.

That's the national story.

Things do look a little different, though, when you get down to the state and city level.

Exhibit A for us today, Ann Arbor, Michigan, which is starting up something called a sustainable energy utility.

that'll let locals opt into city-owned microgrids.

Missy Stultz is the Director of Sustainability and Innovation for the City, also one of the architects behind that program.

Thanks for coming on the program.

Oh, Kai, it's such a pleasure to be here.

Thanks for having me.

For those perhaps unfamiliar, what is a microgrid?

Yeah, well, micro, so like a mini little grid, if you will.

Simplest way to think about this, imagine two or three houses connected together, generating their own power, sharing it over small scale distribution lines like what you see outside.

So you got your generation, you got some batteries, and you're sharing that power across property lines.

The grids might be micro.

The task, however, is not.

Why is the city doing this?

Well, I think another question too is why not?

We're at a moment in time where we've got a culmination of issues we're trying to solve for.

We've got here in Ann Arbor a pretty unreliable grid.

We've got global climate change happening and we're feeling the impacts here.

We also have an affordability crisis, right?

Energy prices are going up significantly.

Well, reliability, resilience from a climate perspective, affordability, and clean can all be solved if you generate energy kind of where you use it, as opposed to moving it across lots of long-distance poles and wires.

So we just kind of challenged the current energy model and said, what if we think about this a little bit differently?

This is an infrastructure investment on the part of the city.

Cities, as we know, are strapped.

You got to finance this thing and figure out how to pay for it, yeah?

Yeah, I mean, right?

Sure, we do.

But we have to do it.

You don't seem troubled, right?

Yeah.

No, no.

I mean, one, we already invest in our energy systems, right?

We know we need a lot of energy.

And guess what?

We're going to use more energy as we have advancements in more data centers and we're using more kind of AI of everything that's advancing.

So we're going to have to make investments in energy.

It's just a critical part of our life.

Well, the good news is cities can get dollars generally for cheaper than private market companies can and because renewables are more affordable and no matter what policies we put in place, like that truth is just here.

And so we can actually bypass a lot of the quagmires of the existing energy system and do it in a financially viable way by generating locally.

I was checking out your CV before we got on the phone, as one does.

You have a PhD in urban resilience, right?

Oh, I do.

It's so wonky.

Well, yeah, well, but it's very appropriate to the subject at hand.

But I'm going to ask you the bigger picture question beyond just Ann Arbor, right?

Even though you had 80% approval of this move within the city,

Ann Arbor's a college town.

It's blue.

Talk to me about scaling this thing to solve the national problem that we have.

Yeah, well, let me also give just a little bit of background that the sustainable energy utility is only authorized to generate from renewable energy.

It cannot touch any fossil system.

That was in the vote.

It also is supplemental.

So we are not trying to take over our existing infrastructure.

There's a lot of kind of

nuance that each individual community has to look at.

But before we got here, my team ran solar programs and we saw a thousand percent growth in solar adoption just through some of the incentive programs that we've run here.

That's transferable.

That's scalable no matter where you are in the US or even in the world.

So you can't take everything I'm doing and just do it in fill-in-the-blank Lewis, Delaware.

But what you can do is figure out what works in Lewis, Delaware and take the models and apply them in your place.

So this is transferable, just not AB.

It might be a more circuitous route.

Let me ask you what is

a political question.

And look, if you want to duck it, since you're a city official, I guess I'll understand.

But this is not a moment at the federal level where what you are trying to do is

treated with great favor.

And I guess I wonder how you think about that.

Or don't you?

Oh, no.

I would reframe it to say nothing about what I do has ever been fully supported, right?

Our entire systems, they're set up to move towards extraction.

They are not set up to be regenerative and in relation with our natural systems.

Like that's just not how we've been for the last fill-in-the-blank decades.

And Kai, what's the alternative?

I mean, literally, what is the alternative?

Is it that I'm going to continue with runaway climate change impacts that are flooding my communities, causing asthma attacks, wildfire smoke that's choking young lungs?

Like that's just not a viable alternative.

And so we say in Ann Arbor on my team, light shines brightest in the dark.

And boy, is it a dark moment.

But guess what?

We're going to shine, right?

Like we're going to shine.

So game on.

Missy Staltz, she's she's the director of sustainability, also in innovation for the city of Ann Arbor, Michigan.

Missy, thanks a lot.

I appreciate your time.

It's such a pleasure.

Thanks, Kay.

Coming up.

I only charge $125 an hour for my house, so it is definitely just a side hustle.

All the world's a stage, you know, even your house.

But first, let's do the numbers.

Dow Industrial is up 617 points today, just over 1.3%, 46,108 for the blue chips.

The NASDAQ added 157 points, about 7 tenths percent, 22,043.

The S ⁇ P 500 up 55%, almost 9-10%, 65, and 87%.

Hey, how about some more CPI huh food at home up six tenths percent the biggest monthly jump in more than three years fruit and vegetables up 1.6 percent tomatoes quick fruit or vegetable huh up four and a half percent also this morning grocer Kroger raised its sales and profit forecast for the year shares up three tenths of one percent today

Another big jump in the price of used cars and trucks, one percent on the nose in August, six percent over 12 months if you happen to be in the market.

Used car retailer Carvana slipped three percent bonds rose yield on on the tenure, Tinot down 4.02%.

It was below 4% at one point during the session.

You're listening to Marketplace.

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This is Marketplace.

I'm Kai Rizdahl.

This is none of my business, of course, but what is your personal risk tolerance?

Financially, I mean.

I'm asking because the Trump administration wants to make it easier for you to be more risk on in your retirement accounts, specifically to give you the chance to invest in private equity.

Think, say, hedge funds that buy companies, take them private, and usually turn them around for a quick profit.

Usually there was doing a lot of work because while the rewards can be higher in those kinds of investments, so too can the risks, as Marketplace Novosaffo explains.

Investors have poured in some $24 trillion into private equity markets, which have three main components.

Steve Kaplan, professor of entrepreneurship and finance at the University of Chicago, says the first is venture capital firms which invest in startups.

Then another group would be companies that are bought by private equity firms, call them in buyouts.

Like this summer when private equity firm Sycamore Partners bought out Walgreens.

The third component in private markets is credit.

The buyouts in particular get funded not by banks any longer, but by private credit funds.

which pool investor resources and make loans.

It's all about high risk, high reward.

A startup could fail or succeed spectacularly.

A buyout could turn a company around or it could go bankrupt.

Managers who run run private funds have been pushing to open up access to employer-sponsored accounts, namely 401ks.

The Biden administration was not sold.

The Trump administration is listening.

Josh Lerner is a private markets researcher at Harvard Business School.

They've undertaken a series of steps that make it easier for institutions to offer 401k holders the ability to invest in private equity.

Last month, the president ordered the Labor Department and other agencies agencies to review their policies soon after the Labor Department rescinded a Biden-era effort to limit the practice.

But even if the Trump administration is ultimately successful in lowering barriers, Lerner is skeptical employers and 401k administrators will race into private equity markets.

Traditionally, one of the big fears has been that of legal liability.

For instance, they're worried workers will sue over the higher fees charged by private funds, which could eat away at lifetime gains.

Private funds are also complex instruments, difficult to understand even for professionals.

Add to that, concerns about the quality of some of the underlying assets in private equity.

Lenore Palladino is an associate professor of economics and public policy at the University of Massachusetts.

Private equity firms have had a harder time selling off the companies that they had purchased when the time that they want to hold that company is up.

And they need need to sell to pay back previous investors.

And so they're essentially looking for a fresh pot of money for them to use in their dealmaking.

The $12 trillion in assets sitting in 401ks and other employer-sponsored accounts look awfully fresh.

Palladino worries everyday investors could end up holding the bag for past investments that have not panned out.

It's really clear that, you know, the smart money is already getting out.

And so now it's time to bring in the dumb money.

But Steve Kaplan at the University of Chicago says it's in the interests of big money managers who live on the fees associated with running private funds to figure out a way to make those investments attractive to 401k plan administrators.

You're protected by the fact that the intermediaries, let's say it's a BlackRock, have an incentive to provide product that is good for investors because if they get it right, then they get more money and make more money over time.

There are already some moves in this direction.

In May, retirement services provider Empower announced new private investment trusts on offer.

But individuals would have to meet with an advisor first before adding them to their 401ks.

I'm Nova Soffo for Marketplace.

Here's one more line item from today's Consumer Price Index.

The cost of shelter was up four-tenths percent last month, once again, the biggest single factor driving inflation higher.

It makes sense, given how big that expense is compared to all the other things that people buy.

There are ways to offset the cost of housing, though, if you're creative, maybe with a sense of adventure.

Here's today's installment of our series, Adventures in Housing.

My name is Jill Narsted and I live in Chicago, Illinois.

I have a little side hustle renting my home that we live in out to productions here in Chicago.

I have my home listed on an app called Peer Space that producers look through.

We, you know, text back and forth through the app and then they, I clear out my family and my dog, and they come in.

The first thing I say when the production team walks in is, it's make yourself at home.

A thing they love about my house is that it's lived in.

It looks like a gingerbread house.

It's got a little peaked roof.

I've been told there's a lot of different nooks and crannies that you can photograph or film in.

So I've had some several repeat customers.

One of them is social media campaigns for a dog food dispenser.

And then another one that I've had several times is a jewelry company that I've never heard of, Tuna,

a giant printer company like your desktop printer.

We're very popular with student films because I'm a bleeding heart and they'll shoot one day and rent the house for one day and then call me desperately needing the next day, to which I'll say yes and then they'll call me desperately needing one just one more day.

It's just been really fun like pulling back the curtain and seeing all

so much that goes into production.

Whole houses can go for you know up to $500 an hour.

I only charge $125 an hour for my house.

So it is definitely just a side hustle.

One of my favorite things about renting my house out is the people that come in.

I just met a new neighbor recently

and she was like, what was the, what was going on at your house the other day?

And I explained to her and she looked at me and she was like, you're like the fun mom.

And I was like, dang, I am.

But it's like, boy, can life get mundane.

And it's something for people to talk about.

And I love that for them and for me.

Dang I am.

That was Jill Narstadt giving her neighbors in Chicago something to talk about.

We want you to talk about your adventure in housing.

You can do it at marketplace.org.

This final note on the way out, ticker symbol of the day around here is WBD Warner Brothers Discovery.

The company has been challenged the past couple of years, you might say, since the Warner Brothers buyout by Discovery's David Zaslov.

Anyway, WBD shares up almost 30% day after the Wall Street Journal reported that Paramount Skydance.

Also in the news of late, Skydance bought Paramount and not-for-nothing CBS News.

You probably read about that.

Anyway, the journal says Skydance and its boss, David Ellison, son of Oracle's Larry.

Turns out he now wants WBD.

Mostly in cash, by the way, way, too.

Our daily production team includes Andy Corbin, Nicholas Guillong, Maria Hollenhorst, Euro Ek Benobi, Sarah Leeson, Sean McHenry, and Spia Terenzio.

I'm Kyle Risdall.

We will see you tomorrow, everybody.

This is APM.

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