What are corporate outlooks without federal data?

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How exactly does one operate in a data-deprived economy?

From American Public Media, this is Marketplace.

I'm Kai Rosdalf.

Tuesday, the 21st of October.

Good as always to have you along, everybody.

We are going to continue today with the thought experiment that we've been running pretty much since the shutdown started.

Without actual government data to depend on, which way do we think the labor market is going?

We've seen plenty to convince us it's kind of slowed to a crawl.

The last four monthly job reports that we got were pretty meh.

Job openings have been trending lower.

Kristen Schwab was telling us yesterday recruiters are seeing a pretty mixed picture as companies hold off investing in new people.

But we're going to examine the flip side of that labor market coin today because there is something happening out there that could turn things around.

Marketplace Adjustin Ho gets us going with labor productivity.

Hiring is a lot weaker than it was back when companies were scrambling to staff up after the pandemic.

That means people are staying in their jobs longer.

And as people have gotten used to their new rules that they got during the pandemic high turnover period, they've been more productive in their jobs.

That's George Perks, macro strategist at Bespoke Investment Group.

He says businesses have made themselves more productive since the pandemic, too.

Imagine you run a bakery.

Maybe you rearrange the layout of your bakeries or change your production process somehow, and suddenly you're now producing a lot more than you were per worker relative to a few years ago.

And producing more bread means generating more profit.

And eventually businesses will have to step in and say, okay, if we want to sell more bread, we need to hire more bakers.

In other words, strong productivity growth can send a signal to businesses that they could rake in even more profits if they hire more workers.

That's why PERCS expects hiring overall to pick up.

Whether that's in the next couple months or in the next couple quarters is hard to say.

But at some point, it'll be hard for firms to grow without investing more in labor.

But right now, many companies are nervous about hiring, says Nicole Servey, an economist at Wells Fargo.

And so even if you are a firm, let's say that's enjoying productivity growth, you haven't necessarily turned around and tried to act on that because you're uncertain about how demand for your product is actually going to evolve in these next few months or in the next year.

But Servey says productivity growth can boost consumer demand.

That's because more productive businesses can afford to raise wages.

Wage growth has actually been pretty steady.

And so I think that's the evidence of where you're seeing that firms are passing along some of that productivity gains via real income growth to consumers.

Survey says that should support the labor market over the next year.

I'm Justin Ho from Marketplace.

On Wall Street today, traders kind of took a breather.

We will have the details when we do the numbers.

This is a busy week for corporate earnings, as we touched on yesterday.

And with those tellings of how companies did in the quarter just past, come their predictions for how they are going to do over the next couple of quarters, which is one of the main things investors are interested in since they buy and sell stocks in anticipation of future earnings.

But here's the thing.

Companies are making those projections, trying to figure out how the economy is going to develop and affect their bottom lines in a shutdown-induced data drought.

So, how reliable do you suppose all those corporate earnings outlooks might be?

Marketplace's Mitchell Hartman has that one.

To start with, big corporations have a lot of their own proprietary data, known only to them.

Reports coming in from the field about how much product is shipping from factories and warehouses, how fast it's moving off shelves and out of showrooms.

They have their P ⁇ L.

That's profit and loss statements, says CFRA analyst Garrett Nelson.

Update on practically a daily basis, so they know exactly three weeks into the fourth quarter, how their sales are looking, how their margins are appearing.

And, says Yale finance professor Matthew Spiegel, to make projections, they're comparing all that to their numbers for previous years and quarters.

None of that involves any government data, right?

That's just what we've had sales of in the past and what we've got booked now.

So, so far, not that much impact from the absence of government economic data.

But in specific sectors, it can make more of a difference to corporate projections, says Spiegel.

Suppose you're a housing builder.

You might want to know where unemployment is high and where it's low, so you know where to sort of focus your construction.

Still, there are private sector alternatives to some missing government data.

The Mortgage Bankers Association, for instance, collects information on builder applications from lenders, says Mike Fratentoni.

And we use it to create an estimate to predict the Census Bureau's new home sales number.

Today, it's a replacement.

For the missing Census Bureau report, helping companies predict what supply, demand, and prices might do in the coming year.

The lack of government economic data about how consumers are doing will matter more as time goes on to retailers, manufacturers, and the Fed, gradually creating more uncertainty for corporate business predictions, says CFRA's Garrett Nelson.

You're just going to see companies being a lot more conservative, cautious with the guidance.

Which he says can be a good thing for them, because when companies lowball their earnings outlooks, they can more easily beat them.

I'm Mitchell Hartman for Marketplace.

I'm going to begin the setup to this next story with a confession that monetary policy, interest rates basically, can be, you know, dense, a little boring sometimes, but at the same time, it's really important, too.

It's all about the cost of money, which I mention because there's a big change coming, not necessarily in the actual interest rates the Federal Reserve sets, but one of the other ways the central bank runs this economy.

Back in the financial crisis and during the pandemic, the Fed bought a ton, like in the trillions of dollars worth of securities, U.S.

Treasury bonds, mortgage-backed securities, and a bunch of others, as it tried to stimulate the economy, getting cash into the system.

It has been letting those securities just expire and roll off its balance sheet.

But sometime in the next couple of months, probably, the Fed is going to put that on pause and start buying new treasuries to replace the old ones.

Marketplace of Sabri Benishwar has the why are they doing that story for us today.

At one point, back in 2022, the Federal Reserve had a vast hoard of $8 trillion worth of government bonds and mortgage-backed securities that it bought.

It had gobbled them up to keep the financial system running, hold down interest rates, stimulate the economy.

But right now, the Fed doesn't need to use that tool.

Bill Nelson is chief economist at the Bank Policy Institute.

No pandemic, no crisis, no need.

So for the past three years, the Fed's been whittling down its pile of treasuries and whatnot, just letting them expire.

Gradually, not buying as many new ones.

The Fed's been very, you know, they're approaching this very cautiously.

Ken Kuttner is a professor of economics at Williams College.

They don't want to go too far.

They don't want to go too far because all that buying up of securities actually has another purpose besides fighting complete economic meltdown.

And it's kind of still very important.

It is used to sort of toggle up and down, you know, the quantity of money or liquidity in markets.

Russell Brownback is Deputy Chief Investment Officer for Global Fixed Income at BlackRock.

When the Fed gives money to a bank to buy a treasury or a a security, it just kind of creates that money out of nothing.

It will print money and then go into the markets and buy assets from private sector holders.

When the Fed makes up this money, it is usually sent to what are known as reserves.

These are bank accounts for banks.

They keep them at the Fed.

This is money banks use and lend amongst themselves when they're in a little bit of a pinch.

They got to make a loan, but they're waiting on a deposit from somebody else.

Or some company is buying another company, but the bank can't move the money fast enough to cover cover other deposits.

It's bank money for bank problems.

When there's not enough of it, that is a very big problem.

One example of that was September of 2019, the last time the Federal Reserve was shrinking its balance sheet.

Seth Carpenter is global chief economist at Morgan Stanley.

Reserves got to a very low level.

And so when it came time during the day for a borrower in money markets who said, Hey, I need to borrow some money, a lot of the banks said, Well, not from me today.

Not today.

I barely have enough reserves for myself.

And some borrower gets caught short.

And when borrowers get caught short, they start to get more aggressive and bidding for it.

They say, I'm willing to pay more and more and more in interest in order to borrow money.

And you see money market rates start to go up dramatically.

Interest rates within the banking system that September started to shoot up.

Nobody wanted to lend.

It was a big mess.

And the Fed had to come in and fix it by lending banks a bunch of money.

This is what the Fed wants to avoid today.

So it'll have to buy some securities just to make sure there is enough money swishing around in the plumbing of the banking system for the pipes to work and the banks to bank.

In New York, I'm Sabri Benishore for Marketplace.

Did you see this the other day?

That Kelly Blue Book says the average price for a new car in this economy has topped $50,000.

And while it's probably not a directly proportional relationship, every dollar those new car prices go up turns a potential new car shopper into a potential used car shopper, where, by the way, prices aren't getting any cheaper either.

Emily Stewart from Business Insider wrote about the inner workings of the used car market right now.

Emily, welcome back to the program.

Thanks for having me.

So we've done this used car prices dance already during the pandemic.

What's going on this time?

Yeah, I mean, I sort of came to think of this as used cars having almost a COVID hangover.

I think a lot of people were hoping, thinking, praying that used car prices would go back down after the pandemic.

And, you know, they're not up where they were but used cars are still pretty expensive a three-year-old vehicle nowadays is going to run you about thirty one thousand dollars do you think back before the pandemic that was like twenty two thousand even the average transaction price for all used vehicles is twenty six thousand dollars it's it's a lot like this is not there's kind of not a lot of cheap used cars out there anymore and if you do find something cheap it's not very good so is this supply shock is it changing demand patterns?

Is it tariffs?

What is it?

A lot of it is on the supply side.

So, I think it's, you know, this sounds kind of silly to say, but before a car can be a used car, it is a new car.

And if you think back to the pandemic, we had a lot fewer new cars because of supply chain issues, because of semiconductor shortages.

Also, a lot fewer cars were being leased.

And those leased cars show up, you know, three years later as used cars.

So, what's happening now is basically there are not new cars that are becoming used cars.

People aren't showing up in the dealership two, three, four years after buying their cars because they didn't buy those new cars.

And so that is, I think, a big part of it.

You know, there's also a demand issue as well.

Because new cars are so expensive.

There's kind of no such thing as a $30,000 new entry-level car anymore.

So people who maybe would have gotten a new cheap car are getting pushed into the used market.

And so that's pushing prices up too.

Right.

That expensive kind of new car thing is part of this challenge, right?

Because the automakers are making the high-cost, high-margin, you know, luxury SUVs, big trucks, and all those kinds of things.

Right.

New cars are super expensive because, as you said, they have all of these pricey features, they have all these technologies, and Americans tend to like bigger, pricier cars.

And so a lot of automakers have just kind of stopped making these smaller, more affordable cars.

You know, the Ford Focus doesn't exist anymore, Chevy Cruz, Dodge Dart.

And so basically people, if they do do want something that's a little bit more affordable, they kind of have no choice but to go to the used market.

And we also know as new cars get more expensive, used cars of the same model also get more expensive.

So it's just a real pickle.

Are you a driver or do you take mass transit?

What do you do?

I am.

I am a driver, but I live in New York City.

So I obviously do not have

a car here.

But yeah, I hear about it.

But yeah, in New York City, luckily do not have the car problems.

Thank God for the subway.

Emily Stewart at Business Insider.

Emily, thanks a bunch.

Thank you.

Coming up, the new house will have flushing toilets, running water, all the luxuries.

Life on an island, I guess.

First, though, let's do the numbers.

Dow Industrial is up 218 points today, a half percent, 46,924.

The NASDAQ down 36 points, 2 tenths percent, 22,953.

The S ⁇ P 500 unchanged, 6,735.

Emily Stewart and I were just talking about the used car market.

Carvana drove up 5 and 4 tenths percent today.

Lithia Motors added 9 tenths percent.

CarMax revved up 3 and 9 tenths percent.

Beyond Meat soared in the markets today after announcing a deal with more than 2,000 Walmart stores in the United States.

Shares skyrocketed 146%.

Mitchell was talking about earnings.

GM accelerated 14.9%.

Coca-Cola fizzed up 4%.

3M gained 7 and 7 tenths percent today.

You are listening to Marketplace.

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This is Marketplace.

I'm Kai Rizdahl.

You cannot, of course, time the markets.

That's just a truism of investing.

Here, though, is the business and economic journalism corollary.

As soon as you schedule a piece on one slice of the markets or another, that slice will invariably do the exact opposite of whatever the reason was that you decided to do the story in the first place.

Exhibit A for us today, element number 79 on the periodic table, gold.

After months of going straight up, figuratively anyway, it took a bit of a dip today off about 5.5%,

but and still it remains above $4,100,

an ounce of price level that's got people trying to get in on this new gold rush, quite literally.

Tiping Chen wrote about it in the Wall Street Journal.

Welcome to the program.

Thanks for having me.

Tell me about some of these people who are going out and mining for gold.

Yeah, so it really runs the gamut.

I mean, you have folks who've been doing this for a long time who are very dedicated, you know, going all over, driving across the country looking for gold.

You've got sort of newbies who have just jumped in because of gold prices and some families who are just looking for a screen-free activity.

So it really ranges.

I said mining.

They're probably panning, right?

They're in rivers and stuff.

I mean, it's panning.

You've got folks who've got like their little picks.

You've got chisels.

You've got sluice boxes.

There's a lot of different gold mining apparatuses out there that people are trying.

All right.

Even with gold as expensive as it is, setting aside the drop today, it's not like they're making money from the actual gold, yeah?

Maybe not a lot.

That said, there are definitely people who have found other ways to turn it into more serious cash, including by turning into gold mining influencers, which is now a thing.

Are you kidding me?

Stop.

Broadcast,

yep.

Gold social media.

That is the real gold.

You go out, you show people how it's done, you take a lot of pretty photos, and surprise, a lot of people want to follow you, maybe, and figure out how to strike a rich.

On this social media thing, though, I mean, what kinds of are they making like how-to videos?

How much are they making?

Do we know?

In some cases, it might literally be a how-to video, but often, you know, it's just kind of fun to follow along on someone's journey.

And so you might see people posting, hey, this is what I found today.

Here was my haul.

But yeah, I mean, you can make some not insignificant money from it.

I spoke to one family who the father loves.

panning for gold, mining, you know, mining for gold.

He uses a variety of different tools.

And he started bringing along his kids because he doesn't want them on screens all day.

So this is a great way to get outside and get his kids really into something else.

And they've definitely found,

you know, they've found gold, but they also,

you know, more substantively have made about $30,000 just based off their, their social media presence online.

Wow.

Also, much like the actual original Gold Rush, it's people selling equipment and gear and all that stuff to these folks going out looking for gold, yeah?

Absolutely.

Well, so tell me more about that because, you know, it's not like somebody's going to build a Levi's fortune.

Levi's, of course, sold dungarees to the original Gold Rush people.

It's not like that's going to happen this time.

No, but you do see people who are starting their own storefronts, many of them virtual selling equipment.

And so, yeah, back everything from pans to sluice boxes or gear, branded sort of gold-themed gear, and people who are offering guided tours.

Well, I mean, you know, anything really that you can think of.

You got to capitalize on the moment, right?

And it definitely is one.

Goldmine Museum in South Dakota, you talked to a woman running that.

What's business been like for her?

Yeah, so a lot of these different sites, whether it's South Dakota or in California, you know, sort of historic mining museums have been getting a lot of phone calls.

The woman that I spoke to, she's been seeing a lot of interest in people who want to come and take their gold panning lessons and even go home with some of these bags of pea dirt that they sell for about $55 for a five-gallon bag.

Seriously?

It's

not trivial cash, but people take it home, pan in their garage.

Wow.

You know, why not?

Absolutely.

Apparently, it sells.

She says it keeps selling.

Absolutely, why not?

Let's get serious here for a minute, or more serious, right?

Because these people, and that was not fair, these people take this very seriously, even if they're only just having fun.

What does this say?

Not so much the panning and the mining, but the way gold has gone up.

What does it say about how people are feeling in this economy right now?

I think it's a moment when a lot of people are feeling uneasy and uncertain about economic prospects, looking for something that feels stable.

Gold, of course, has always been that thing that has a sense of safety about it.

And so, yeah,

you see more people at the same time turning to, again, a very time-trusted way of trying to get rich, even if maybe it doesn't always pan out.

No point in 10.

No point in 10.

That's right.

Good for you.

Tiping Chen at the Wall Street Journal.

The piece, the headline on the piece, which I love is, I'm out of the office.

I'm digging for gold.

Tiping, thanks a lot.

I appreciate your time.

Thanks, Kai.

A lot of times, life and the economy just work differently in touristy spots.

You can probably think of some of the biggies like Vail.

in Colorado, Park City in Utah, big ski towns, summer destinations like Cape Cod in Massachusetts.

And there are the smaller ones too, like Madeline Island, Wisconsin.

About 200 people live there year-round, triple that in the summertime when tourists take a 20-minute ferry ride to get to the island in Lake Superior.

That's the setting for our series, Adventures in Housing.

My name is Riley Brown, and I own a sauna company on Madeline Island.

And I am Cassidy, Curtis Lugo.

Riley Brown is my husband.

And yeah, together we own Hot Island Sauna, which is a mobile sauna business here on Madeline Island where we build custom saunas for people and we also rent out mobile units that can be dropped off and delivered at your house.

We met in New York.

In New York City, we worked for an event company.

We started spending summers here and going back and forth

from the big city to the little island.

Right.

Until it was like, I think I don't want to go back to the big city anymore and back to that

world.

So we made the big move.

Yeah, so we moved here and then just sort of organically kind of evolved into the business idea for the sauna.

You know, once we decided to live here full time,

I'm from California, you know, so I was like, whoa, winter sounds like a challenge.

Sounds like a lot.

Wisconsin.

I brought her up to the one of the coldest climates you can bring someone.

And so we're we gotta stay warm, either a hot tub or a sauna or something.

We don't have running water, so we're like, okay, I guess the hot tub's not gonna work.

So yeah, then the sauna, that's where we landed with that.

And we weren't sure where we wanted to put it, so we put it on a trailer and then we decided to rent it out.

The sauna for one day is a $300 rental, and then it kind of goes down incrementally from there, $500 for a weekend or $1,000 for a week.

We're making a living on it.

We're still doing other side jobs a lot too, but it's a really great addition

to pay the bills, especially in the winter when things slow down here.

Yeah.

I think a big mentality here is, you know, making hay while the sun shines.

And literally, and so then, yeah, in the winter, a lot of that work slows down or comes to a stop.

The service industry...

We have one restaurant bar open.

Yeah, one place.

So yeah, you know,

you got to get creative with how you make money.

And I think this was a really fun way.

We're currently building our house right now.

Riley's been building it all summer and we're, you know, building for our future here.

And

we're really excited to move into our new house, hopefully next summer.

The new house will have flushing toilets, running water, all the luxuries.

Yeah, yeah.

We're ready for that.

It's fun.

It's a great way to slow down and live off the grid.

But I'm also like, okay,

I'm ready for the hot shower at our house.

Riley Brown and Cassidy Curtis Lugo, they own Hot Island Sauna on Madeline Island in Lake Superior, Wisconsin.

Tell us, would you, about your adventure in housing, whether it leads to a business or not?

We just want to hear from you.

Marketplace.org is where you do that.

Some days I just talk too much, and this is one of them.

No time for a final today.

Jordan Menges, Onil Maharaj, Janet Wynn, Olga Oxman, Virginia K.

Smith, and Tony Wagner are the digital team.

I'm Kai Risdall.

We will see you tomorrow, everybody.

This is APM.

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