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Episode: A more equal nation?

Author: Marketplace
Duration: 00:29:34

Episode Shownotes

There are various ways to measure economic inequality. Sure, pandemic-era aid programs helped low-income Americans grow their wealth. And overall, wages have gone up since COVID hit. But did the gap between the wealthiest and poorest shrink? We’ll get into it. Also in this episode: Walmart is expected to report

a robust third quarter tomorrow, boosted by e-commerce and affordable prices. Plus, retailers fret over a holiday shopping slowdown and the U.S. dollar grows stronger.

Summary

In this episode of Marketplace, host Kai Ryssdal examines economic inequality in the U.S. as various metrics indicate that while pandemic-era assistance has allowed low-income Americans to increase their wealth, the wealth gap remains a significant concern. The strengthening U.S. dollar, driven by high demand and favorable investment conditions, reflects a complex economic landscape, with retailers like Walmart preparing for cautious consumer spending during the holiday season. Despite notable GDP growth since 2020, wealth distribution issues persist, particularly for households at the bottom of the spectrum, demonstrating ongoing economic inequality.

Go to PodExtra AI's episode page (A more equal nation?) to play and view complete AI-processed content: summary, mindmap, topics, takeaways, transcript, keywords and highlights.

Full Transcript

00:00:01 Speaker_12
A dollar is a dollar, of course, until you want to exchange it for something else. From American Public Media, this is Marketplace. In Los Angeles, I'm Kyle Risdoll. It is Monday today, the 18th of November. Good as always to have you along, everybody.

00:00:30 Speaker_12
On the foreign exchange markets today, it went like this. One euro will cost you about $1.06. One British pound, $1.27. One Chinese yuan. about 14 cents. The specifics, honestly, aren't all that important.

00:00:46 Speaker_12
What you need to know about the currency markets is that the U.S. dollar has, broadly speaking, appreciated about 3 percent since Election Day. That is to say, the dollar has gotten stronger

00:00:58 Speaker_12
Which is interesting because presidents like Trump has promised to weaken the dollar as a way to make American exports more attractive. Cheaper, that is, for the world to buy.

00:01:09 Speaker_12
Thing is, though, that the incoming administration policies might actually do the opposite, as we're seeing, of what Mr. Trump intends. Marketplace's Sabree Benashour gets us going.

00:01:19 Speaker_10
The dollar is getting stronger because people here and around the world want more dollars. They're buying them and they want certain other currencies less. They're selling those.

00:01:28 Speaker_15
It's all about supply and demand of currencies.

00:01:31 Speaker_10
Paul Ashworth is chief U.S. economist at Capital Economics. So why the interest in U.S. dollars? In general, it is because investors can make more money with dollars. And a few things are screaming that right now.

00:01:43 Speaker_10
One, and this might sound odd, is inflation.

00:01:47 Speaker_06
The October inflation data came in a bit stronger than we were expecting.

00:01:51 Speaker_10
What happens when inflation sticks around? The Federal Reserve tries to fight it by keeping interest rates high. And what happens when interest rates are high? Investors make more money. So investors want dollars to get in on that.

00:02:05 Speaker_10
The other thing making dollars look good is that other currencies are looking less good. in Canada, their economy is slowing down a little more." Amarjeet Sohoda is executive director of ClarityFX.

00:02:16 Speaker_01
AMARJEET SOHODA, CLARITYFX EXECUTIVE DIRECTOR, CLARITYFX, CANADA So if your neighbor's grass is a little brown, yours looks a little greener.

00:02:25 Speaker_10
But one big thing making the dollar look good is the election result. Eric Winograd is chief economist at Alliance Bernstein.

00:02:33 Speaker_05
Most of the policies that President-elect Trump has talked about, at least in economic terms, are dollar positive.

00:02:40 Speaker_10
That is, of course, despite his desire to weaken the dollar. Trump's spending plans are expected to increase the deficit. The government will borrow more and pay more to do it. Investors want dollars to get in on that.

00:02:52 Speaker_10
And the other dollar growing item is tariffs. So what's the connection between tariffs and the dollar? If you impose tariffs, we will presumably import less.

00:03:01 Speaker_10
If we are importing fewer goods from foreign countries, we don't need as much currency from foreign countries to pay for those goods. Demand falls. Those currencies weaken.

00:03:11 Speaker_05
And that means that the dollar should appreciate as a result.

00:03:15 Speaker_10
Markets are anticipating all of that. So the dollar has already started its upward move. In New York, I'm Sabri Beneshour for Marketplace.

00:03:23 Speaker_12
Wall Street today, not a lot of dollars moving around. A little up, a little down. We'll have the details when we do the numbers.

00:03:56 Speaker_12
Not for nothing, but we are 11 days out from Black Friday, the day, perhaps apocryphally, when retailers go into the black for the year.

00:04:05 Speaker_12
I mention that because a bunch of big retailers are going to be reporting earnings this week, among them Target, Lowe's, The Gap, and TJ Maxx.

00:04:13 Speaker_12
Those earnings calls could give us a preview of what's expected as we close on Black Friday and the rest of the holiday shopping season.

00:04:20 Speaker_12
Marketplace's Kristen Schwab takes stock of where spending is headed and what it might say about how consumers are feeling.

00:04:27 Speaker_07
The winter holidays are here. Stores already put up decorations. They're blasting holiday music. And it isn't Thanksgiving yet, but many retailers are offering Black Friday discounts early.

00:04:38 Speaker_07
Especially last week, we started getting more 50 percent off a site wide, 60 percent off. Jessica Ramirez is an analyst at Jane Hawley and Associates. She says usually you'd only see deals like 20 or 30 percent off right now.

00:04:53 Speaker_07
The deeper discounts could mean retailers are a bit anxious. Deals are especially good if you're in the market for a winter coat.

00:05:00 Speaker_08
Weather right now, it's warm. So outerwear, I'm concerned about.

00:05:06 Speaker_07
Home furnishings isn't expected to be a strong category either, since not many people are buying homes. But as usual, tech will be popular. Same with beauty, an affordable luxury for all ages.

00:05:18 Speaker_07
Catherine Cullen at the National Retail Federation says this mix shows how people are budgeting.

00:05:24 Speaker_06
They're thinking about pulling back in other areas, maybe pulling back in dining out. they may be using some options like buy now pay later.

00:05:32 Speaker_07
All in all, though, this year, Cullen expects holiday spending to increase 2.5 to 3.5 percent. It's a lot less than the nearly 12.5 percent increase we saw in 2021, but it is closer to what we saw in 2019.

00:05:49 Speaker_07
Mari Schor is an analyst at Columbia Threadneedle Investments.

00:05:52 Speaker_00
I don't know if I would specifically say we're back to 2019, but I feel like in a lot of ways, when I look high level, we are back to all the same trends that we discussed before the pandemic.

00:06:03 Speaker_07
In other words, a consumer who's careful with their wallet, but is willing to open it up. I'm Kristen Schwab for Marketplace.

00:06:36 Speaker_12
Walmart is on that list of retailers reporting earnings this week, and expectations are that the world's biggest retailer is going to be sharing some good news.

00:06:44 Speaker_12
Ticker symbol WMT is up almost 60% year-to-date, 6-0%, which puts it on pace for its best year since 1999, when the company was building a bunch of new superstores. and making a bigger name for itself in Canada and Mexico. This is Marketplace.

00:07:03 Speaker_12
I'm Conor Riddell.

00:07:07 Speaker_04
I found three. The first one says Dia Ayer with S&P Global. They're the largest grocer in America. Ayer says roughly 60 percent of Walmart's business is groceries.

00:07:17 Speaker_04
It's improved its delivery and curbside pickup services, and that's made it an attractive option.

00:07:22 Speaker_03
And I think that is a lot about their their own execution, actually, not just sort of a natural need for cheaper groceries.

00:07:30 Speaker_04
Although, in this economy, the price point is a plus, too, says Joe Feldman with Telsey Advisory Group.

00:07:36 Speaker_14
You know, the consumer has money to spend and has shown resiliency all year, but they've definitely focused on value and basics and getting food on the table.

00:07:45 Speaker_04
And groceries help Walmart make other sales. Come for the onions, stay for the scarves and iPhone chargers.

00:07:51 Speaker_14
they're seeing the customer on a regular weekly basis. And so that is different from many others in retail that have fully discretionary assortments.

00:08:01 Speaker_04
In other words, you're not going to buy toothpaste at Macy's. The final not-so-secret secret to Walmart's success?

00:08:08 Speaker_15
A digital package of services that is a worthy rival to Amazon.

00:08:15 Speaker_04
Shiraz Mian is director of research at Zacks Investment Research. He says the site, the app, the annual membership, all that has brought in customers.

00:08:25 Speaker_15
As the lower end of the income distribution has struggled, Walmart has been able to more than offset that by attracting higher income households.

00:08:35 Speaker_04
Walmart's fourth quarter is likely to be strong, too. Dia Iyer with S&P Global says the holiday season is shorter than usual this year, so more people will shop online. Good news for Walmart's growing e-commerce business.

00:08:48 Speaker_04
I'm Kaley Wells for Marketplace.

00:09:11 Speaker_12
This is going to run counter to the perceived wisdom abroad in this country right now, but the data-based fact of the matter is that American Gross Domestic Product, the final value of all goods and services produced in this economy, is up nearly 13% over the past four years, and that is adjusted for inflation.

00:09:30 Speaker_12
So, to put it another way, the U.S. economic pie is bigger than it was in 2020. The question, of course, is how that pie is being divided and who is getting the biggest slices. Marketplace's Matt Levin has that one.

00:09:44 Speaker_09
Most Americans are a lot richer now than they were before COVID. From 2019 to 2022, the last year good data is available, total household wealth grew 25%. And that rising tide really did lift all boats, including the poorest 20% of US households.

00:10:01 Speaker_13
So they had, in that three-year period, 83% growth. almost doubling their wealth. It's something that we haven't seen as far back as the data goes.

00:10:12 Speaker_09
Anna Hernandez-Kent is a senior researcher at the Federal Reserve Bank of St. Louis. Wealth here is basically all the assets a household owns, a house, stocks and bonds, savings, minus its debt, mortgages, student loans, credit cards.

00:10:27 Speaker_09
But it wasn't the fevered post-pandemic housing market or Wall Street that helped poor households, the vast majority of which don't own stocks or homes.

00:10:35 Speaker_13
government aid programs like the stimulus checks and enhanced employment benefits. These things disproportionately benefit at lower income families.

00:10:44 Speaker_09
Wealth grew significantly among Black and Hispanic households and never married women.

00:10:49 Speaker_09
But since some households had so little to begin with, $7,000 or so in net worth for those in the bottom 20%, those big gains did not narrow the divide between rich and poor.

00:11:01 Speaker_13
The gap between the wealthy, the top 80%, and the not wealthy, the poor, the bottom 20%, has grown by about $200,000 between 2019 and 2022.

00:11:13 Speaker_09
Wealth, though, isn't the only way to measure equality. There's also the first step towards building wealth, wages. Wage inequality generally declined the first few years after the pandemic.

00:11:23 Speaker_09
That red-hot, low-skilled labor market meant low-skilled wages grew faster than inflation. But Michael Strain with the American Enterprise Institute says that with today's cooling labor market,

00:11:34 Speaker_09
We probably will look back at 2024 and say, OK, you know, the the reductions in wage inequality, you know, kind of petered out.

00:11:43 Speaker_09
We've done lots of stories about how Americans are disenchanted with this economy, despite all that growth in wages and wealth and a zillion other metrics. And yeah, part of that's inflation.

00:11:54 Speaker_09
But economist Bruce Meyer at the University of Chicago Harris School of Public Policy says inequality may also be throwing off the vibes.

00:12:02 Speaker_11
A lot of people look to others for how they judge whether or not they're well off, even when things are getting better in terms of the level of expenditures people can afford at the bottom.

00:12:19 Speaker_09
Last year, those at the bottom 10th percentile of American household incomes made 19 grand a year. Those at the top 90th percentile made $235,000. I'm Matt Levin for Marketplace.

00:12:57 Speaker_16
Coming up... When you go there, you just see only beaches or sand. There's no trees, just beaches.

00:13:06 Speaker_12
Climate change does actually change stuff, you know. First, though, let's do the numbers. Dow Industrials down 55 points today, about a tenth percent. The blue chips closed at 43,389.

00:13:18 Speaker_12
The Nasdaq picked up 111 points, rather, six tenths percent, finished at 18,791. The S&P 500 gained 23 points, four tenths percent, 58 and 93. Kristen Schwab is just telling us about some of the major retailers reporting before the holiday season.

00:13:36 Speaker_12
Target rang up two and nine tenths percent today. Gap subtracted three quarters of one percent lows. built up about nine-tenths percent. Walmart down two-tenths of one percent on the day. Spirit Airlines dropped 5.6 percent today.

00:13:49 Speaker_12
That's after the budget airline filed for Chapter 11 bankruptcy protection. The carrier says it will continue to operate and will honor all existing tickets as it moves through that process. Delta, meanwhile, sank 1.3 percent. JetBlue

00:14:01 Speaker_12
Shrank about nine and a half percent today. United dipped nine tenths percent. Chipmaker, NVIDIA and Google announced a physics partnership today in quantum computing.

00:14:11 Speaker_12
That is a super fast-ish form of computing that far outpaces the speed of semiconductor based technology. Could still be years away from broad scale use. NVIDIA slipped 1.3 percent today. Google's parent company, Alphabet, sped up about 1.6 percent.

00:14:25 Speaker_12
You're listening to Marketplace. This is Marketplace, I'm Kai Risdahl. You're on. 7.40 in the morning. That diesel rumble you might hear in the background is the ferry we're on. Just pulling into Ibai in Kwajalein.

00:15:05 Speaker_12
I talked a month or so ago on the program about a reporting trip I took this past summer to the Marshall Islands for our climate podcast, How We Survive. There's a critical army missile test range out there, in the Kwajalein Atoll, to be precise.

00:15:20 Speaker_12
The main army garrison is on the island of Kwajalein.

00:15:23 Speaker_12
Almost all of the native Marshallese who work on the base, though, that's a thousand or so people, live on the next island up, Ibai, it's called, and they take a 20-minute ferry ride back and forth.

00:15:34 Speaker_12
That same ferry that's just dropped us off at the docks at Ibai. Most of the island, it's just over a mile long, less than a quarter of a mile wide. Most of it is housing because about 12,000 people live on it.

00:15:48 Speaker_12
It is among the most densely populated islands on the planet.

00:15:53 Speaker_02
Good morning. Haley? Haley. Kaitlin? Okay. Aban. Aban.

00:15:59 Speaker_12
Good to see you. Good morning. How are you? Aban Aralong, our fixer, is 35, born and raised here. He left for school, Honolulu, but came back and now works with the city on disaster response.

00:16:12 Speaker_12
He met us as we got off the ferry and he got us to our first stop, which was a meeting with city officials. This is a big green building. And a conference room. Conference rooms in E-Buy are the same as conference rooms in all of the United States.

00:16:27 Speaker_12
We're sitting down with Hardin Lalit.

00:16:29 Speaker_16
I'm the city manager.

00:16:30 Speaker_12
City manager?

00:16:31 Speaker_16
Yeah, so it's basically, uh... You're in charge, right?

00:16:34 Speaker_12
I mean, I won't tell the mayor, but you're in charge. Yeah, okay. Hardin was born and raised here on E-Buy as well, and he has seen the changes that climate change has brought. Oh, yes.

00:16:46 Speaker_16
The islands are sinking. That's absolutely true. But we see the changes. I see the physical changes that happens to the coral islands, the reefs, islands that we've been living in for the last 30, 40 years.

00:17:02 Speaker_16
Some of the islands within these atolls, they're gone. They're not here. I mean, when you go there, you just see only beaches or sand. There's no trees. It's just, just beaches.

00:17:14 Speaker_12
Do you, and look, I'm asking you to speak for the whole community, but do you feel forgotten out here?

00:17:20 Speaker_16
Yes. Yeah. We, I mean, I'm a descendant of one of the families that migrated from the Mid Atoll Corridor. It was in the 50s, 60s when they started, US government, you know, asking if they could lease these areas.

00:17:40 Speaker_12
After the Second World War, between 1946 and 1958, the United States conducted 67 nuclear tests in the Marshall Islands, the most famous, or infamous, of which were in the Bikini Atoll, a bit more than 200 miles from Mi Bai.

00:17:56 Speaker_12
Marshallese who lived in or even near that mid-atoll corridor that Hardin was talking about were forcibly relocated, many of them, to the Kwajalein Atoll.

00:18:05 Speaker_12
And in the decades since, they've been dealing with cancer and birth defects and other chronic health problems. And areas of the ocean which had kept the islands fed for millennia are now contaminated.

00:18:16 Speaker_12
Do you feel like the United States owes you something? Not you, but the Marshallese?

00:18:21 Speaker_16
Yes. Yeah. I mean, in terms of, you know, give us something valuable that might replace the islands that were here once before.

00:18:38 Speaker_12
The United States has a Compact of Free Association with the Marshall Islands. It was renewed this year. It covers our lease of Kwajalein and 10 other islands in the Atoll in return for $2.3 billion over 20 years.

00:18:51 Speaker_12
And Marshallese citizens can live and work in the United States without a visa. The government of the Marshall Islands has laid out its own plan to make their country livable through the middle of the next century.

00:19:01 Speaker_12
The National Adaptation Plan, it's called. It estimates the cost to protect the islands and the atolls here at $35 billion.

00:19:10 Speaker_12
So when you're an old man, when you're 85 and you have grandchildren running around, maybe great-grandchildren, what's this place going to be like for them?

00:19:20 Speaker_16
To be honest, right now what I'm thinking, I want to build this place. I want to build this place for the generations to come. And I want to be able to provide a better living, living conditions.

00:19:35 Speaker_16
We're trying to make sure this place survives in the next 20, 30 years. Are you hopeful? I am very hopeful, yes. Why? because it doesn't look good. I think if there's a will, there's a way.

00:19:52 Speaker_16
We've always had that, you know, can-do attitude, you know, with the culture, you know, with, you know, the close-knit community that we have, you know, the educations that we're getting today, the resources that we know, the friends that we do have, you know, that can provide us the, you know, the resources, the support,

00:20:16 Speaker_16
Then yes.

00:20:18 Speaker_12
While it was developing its national adaptation plan, the government did a survey. The overwhelming majority of Marshallese said they didn't want to leave.

00:20:29 Speaker_02
So tell us where we're going. What are we doing? We're going for a stroll around Ibai.

00:20:33 Speaker_12
That's Abon again, our fixer. We load up in his car after our meeting to take a quick tour.

00:20:39 Speaker_02
Welcome to the slum of the Pacific. Why do you think they call it that? I don't know, maybe because it looks not that great.

00:20:50 Speaker_12
We pass densely packed streets, people carrying buckets of water back to their homes. There are kids running around on the side of the road and playing with stray dogs.

00:20:58 Speaker_02
This whole area right here, this is where when King Tide came, this was all washed away.

00:21:04 Speaker_12
There's all sorts of debris near the road, rusted out school bus and abandoned machinery. It's hard to pinpoint exactly what the vibe is like in the car. It's heavy.

00:21:15 Speaker_12
Grant that I've known you about six and a half minutes, but you seem, I can't decide if it's angry or depressed or just, I don't know.

00:21:28 Speaker_02
I think I'm good. I don't think I'm angry or depressed. It just saddens me and it's scary to see the sea level rising. It's not looking bright. The ocean is coming quicker than we thought.

00:21:48 Speaker_12
So I was talking to some of the folks who run that base and work the radars and are responsible for things, and I said, you know, what are you going to do? Climate change is going to make this place uninhabitable in 40, 50, 60 years.

00:22:05 Speaker_12
And they said, we're going to fix it. We'll adapt and take care of it. Sounds like you think the United States is kidding itself.

00:22:14 Speaker_02
And it's not 40 to 50 to 60 years. It's within the 15 to 20 years. There's the ocean right there.

00:22:26 Speaker_12
We didn't plan to turn the microphone on our fixer. We paid Aban for his time, and paying sources isn't something that Marketplace does.

00:22:34 Speaker_12
But what he had to say once we started talking is critical to this story, because he sits at the intersection of a gut-wrenching and legitimately existential reality.

00:22:43 Speaker_12
Help eBuy and its people fight to stay here, or help his community get out before it's too late. Aban is, as you can hear, not as positive as the older generation, like city manager Hardin Leland.

00:22:55 Speaker_02
Like you was hearing from them earlier, they're like, oh, they still see themselves here in the next 20 years.

00:23:04 Speaker_12
I don't. That older generation like Hardin want to build the Ibai up, literally higher seawalls, elevated roads and buildings. Aban says money would be better used to come up with an exit strategy.

00:23:16 Speaker_02
We're already on a mass migration. There's more Marshallese in the States than in the Marshall Islands.

00:23:26 Speaker_12
I don't know if you were in the room when I was talking to Hardin, but I asked him that same question, you know, do you think the United States owes the Marshallese people something?

00:23:34 Speaker_02
They owe us more than our lives. Like the nuclear testing, 67 bombs, a thousand times greater than Hiroshima and not getting our justice. Yeah, they're always big.

00:23:53 Speaker_12
There is radioactive debris from those nuclear tests that's stored in the Marshall Islands.

00:23:58 Speaker_12
And while the Department of Energy says the risks of a leak are low, the thing we know about climate change is that risks change and threats multiply really quickly.

00:24:09 Speaker_12
We spent all in all a week in the Marshall Islands reporting on climate change and the American military. And you can check out the rest of our series, Stories of Climate Change and National Security from Alaska to San Diego and Washington, DC.

00:24:22 Speaker_12
Wherever you get your podcasts, just search for How We Survive. This final note on the way out today in which one is reminded, yet again, that credit scores really matter.

00:25:00 Speaker_12
It's Dana from the Federal Reserve Bank of New York that shows applications for all kinds of credit, but especially car loans and mortgage refinancing. have been rejected this year at a rate higher than it's been in more than a decade.

00:25:14 Speaker_12
21 percent rejection rate this year, 17 and a half percent before the pandemic. And said the New York Fed, if your credit score is below 680, you are especially likely to run into loan trouble.

00:25:28 Speaker_12
Our daily production team includes Andy Corbin, Nicholas Guillaume, Elize Hassan, Maria Hollenhorst, Sarah Leeson, Sean McHenry, and Sofia Tarantino. I'm Kyle Rizdal. We will see you tomorrow, everybody. This is APM.