It’s beginning to look a lot like Christmas … online AI transcript and summary - episode of podcast Marketplace

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Episode: It’s beginning to look a lot like Christmas … online

Author: Marketplace
Duration: 00:28:46

Episode Shownotes

We may be two weeks out from Thanksgiving, but online retailers are already locked in on holiday shopping season. While brick-and-mortar stores might not have flashy displays up yet, online shops decked the virtual halls over a month ago. Also in this episode: Houses of worship go all-in on solar

energy tech and some small banks are in desperate need of technology updates.

Summary

As the holiday season approaches, online retailers are preparing for a busy shopping period, starting as early as October. Despite inflation concerns, consumer spending remains robust, particularly in online retail. The episode also addresses the declining customer satisfaction in banking due to inadequate technology investments, with small banks adopting AI to improve loan processes. Furthermore, Temple Beth Am highlights a trend in houses of worship investing in solar energy technologies, indicating a growing commitment to sustainability and community engagement.

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Full Transcript

00:00:01 Speaker_00
On the program today, the economic news you might have missed given, you know, everything from American public media. This is Marketplace. In Los Angeles, I'm Kai Riznall. It is Friday today. This one is the 15th of November. Good as always.

00:00:28 Speaker_00
Stand me along, everybody. The headlines are all politics all the time. Yes, sure, fine. But there is nonetheless economic news aplenty, which is why we are here. Amara Mokwe is at Bloomberg. Rachel Siegel is at The Washington Post. Hey, you two. Hi, Kai.

00:00:47 Speaker_00
So, Amara, let me start with you. And it will be, let's see. Yes, I will go with inflation, first of all. CPI came out this week, 2.6 percent year over year, obviously just above where the Fed wants it to be.

00:01:00 Speaker_00
But the question is, does it seem to you like disinflation, that is a reduction in the rate of inflation, seems to be stalling out? It seems to be sort of leveling off.

00:01:11 Speaker_11
Yeah, I think people would have liked to see a little bit more progress in the recent inflation numbers. We've got CPI and PPI this week, and I think you saw Fed officials kind of acknowledging that.

00:01:24 Speaker_11
We had a chorus of Fed officials speaking this week, and you heard a lot of them talking about this need to cut rates gradually, carefully, kind of, you know, Chair Powell said yesterday that, you know, the committee is not

00:01:38 Speaker_11
in any kind of hurry to cut rates. And I think that just reflects the fact that they feel like they have more work to do on inflation.

00:01:45 Speaker_11
And also there's a lot of consideration about sort of uncertainty around this idea of the neutral rate and how far the Fed has to cut to get there. And Chair Powell and others have said they kind of don't know where the neutral rate is.

00:01:58 Speaker_11
So that sort of injects some uncertainty into what the path of policy might look like going forward.

00:02:03 Speaker_00
Since you said the words neutral rate, you now have to explain in something less than 20 seconds what the neutral rate is.

00:02:09 Speaker_11
I think I can do it. So the neutral rate is a Fed policy stance that neither sort of promotes economic growth or inhibits it. And right now, Fed officials feel like their policy rate is above that neutral stance.

00:02:22 Speaker_11
So it's having a restraining effect on the economy. And because we've made progress on bringing inflation down to their 2% target, they don't feel like they need to be in this restrictive stance, which is why they're cutting rates.

00:02:32 Speaker_11
but they also don't want to cut too much and risk reigniting inflationary pressures. And so since there's some uncertainty around where the neutral rate is, some of them believe that it's probably higher now than it was pre-pandemic.

00:02:45 Speaker_11
There's uncertainty about how much they need to cut and how fast they kind of need to go.

00:02:50 Speaker_00
And if the neutral rate is indeed higher, Rachel, it suggests that whatever the Fed is doing now is not restraining the economy as much as they might have thought. Let me ask you this, though, Rachel Siegel.

00:03:00 Speaker_00
Powell said yesterday to Katharine Pell, one of our Friday regulars here, as we all know, and your colleague at the Washington Post, he said, look, we know what the factors are that are inhibiting inflation from coming down even more than where we want it to be, right?

00:03:13 Speaker_00
Housing, insurance. And so really Powell basically said, look, we just got to sit on our hands a little bit here, right?

00:03:20 Speaker_13
Yeah. And in some ways, that is a familiar message that we're used to hearing from him. He's actually quite committed to this idea of leaving lots of options open, not prescribing what they're going to do in the next meeting or the meeting after that.

00:03:33 Speaker_13
Just in the last couple of months, we've seen them shift quite dramatically, relatively speaking, from needing to cut a lot to saying that they can slow down a little bit.

00:03:41 Speaker_13
They have a lot of uncertainty flying their way, especially with this new election, with so much unknown about Trump's incoming policies that

00:03:50 Speaker_13
You know, even as they're trying to figure out what that final destination of neutral is, there's a lot that they're juggling in the meantime that is going to make him very unlikely to commit to something really firm.

00:04:00 Speaker_00
So, all right. So, Meryl, let's talk about the new administration, the new old administration. And one of the things we can be reasonably sure that is going to happen is that there will be tariffs put into place.

00:04:10 Speaker_00
in this economy, varying percentages and varying applications.

00:04:13 Speaker_00
Catherine Rampell did, though, ask Chair Powell yesterday about his tariff actions in 2018, when Powell said, listen, this is going to have a really big impact, versus now when he's asked. Powell has said, yeah, we don't quite know.

00:04:26 Speaker_00
We've got to wait and see. I wonder what that's all about.

00:04:30 Speaker_11
Yeah, I mean, first, I think Powell doesn't want to wade too far into politics, right? So he's saying, look, we're going to wait until we have more clarity on what the policies are before we talk about how it might influence our policy decisions.

00:04:44 Speaker_11
But I think also, The inflation picture now is just quite different than it was during the first Trump administration. So back in the first Trump administration, we had had low inflation for a long time.

00:04:55 Speaker_11
And the concern back then was actually that inflation was sort of consistently undershooting the Fed's 2% target. And now we've had recent years where inflation was high and the Fed is still trying to get inflation down to its 2% target. So I think

00:05:09 Speaker_11
Powell is just acknowledging that we're just like in a fundamentally different world when it comes to inflation. And I think a big part of their inflation fight is inflation expectations.

00:05:17 Speaker_11
And those have changed a lot too, because we did go through this inflationary period. Whereas back in the first Trump administration, Americans weren't thinking a lot about inflation. Now they are, now they do.

00:05:27 Speaker_11
And so the question of keeping people's inflation expectations anchored and making sure that people believe that the Fed can get inflation under control, all of that is much more relevant now than it was back then.

00:05:38 Speaker_00
Inflation expectations aside, Rachel, we saw again today that the American consumer continues to do their bit in this economy. Retail sales up way more than anybody expected.

00:05:47 Speaker_00
One does have to wonder, and I know I've said this like for the last umpteen freaking months or years, how long can the consumers last? It continues to astound me.

00:05:59 Speaker_13
No, it's incredible. And it's also incredible that you can have these continued strong metrics that are still set against the way people feel about the economy.

00:06:07 Speaker_13
I mean, we saw the election, I think, as one of the strongest markers yet of real discontent around the ongoing lingering effects of inflation, people feeling that their pocketbooks weren't going very far, even though, as you just said, they're continuing to spend.

00:06:22 Speaker_13
We're going into the holidays. It's expected to be another strong season.

00:06:25 Speaker_13
I think this is just still part of this constellation that we've been talking about for a long time of things that seem like they could be at odds with each other, but clearly are not, in a way that continues to challenge policymakers' understanding of where the economy is headed, even without big shocks or these big policy changes that they're going to know they have to steer through anyway.

00:06:46 Speaker_13
It's just amazing that the picture doesn't really seem to get all that much clearer, even as the months tick by and the economy still continues to forge ahead.

00:06:53 Speaker_00
But Rachel, why? We're now well post-pandemic, but the things that are happening, people keep going, yeah, it's just weird out there, man.

00:07:01 Speaker_13
Yeah, it is weird out there. And if I had an answer, maybe I would be in line for the Nobel Prize. And instead, I want to put the question right back to you, because I think it's one that continues to stump even people like Powell, right?

00:07:13 Speaker_13
And I don't think that you would hear top policymakers say that they're even assured that it will absolutely always continue this way.

00:07:22 Speaker_13
I don't know that it is so weird out there and possibly only going to get weirder, but it's sort of the data that you have at any given moment that you can make a decision off of.

00:07:30 Speaker_00
It is kind of amazing. Rachel Siegel at The Washington Post, Amara Mokwe at Bloomberg on this Friday, finally. Thanks, you two. Have a nice weekend.

00:07:38 Speaker_11
Thanks, Guy.

00:07:40 Speaker_00
Wall Street today. The post-election bounce gang seems to be over. We will have the details when we do the numbers.

00:08:16 Speaker_00
All right, a teeny little bit more now on retail sales, specifically what the Census Bureau calls non-store retailers, which is a very not online term for online shopping.

00:08:28 Speaker_00
We spent 7% more on non-store retail last month, that's compared to a year ago, and it is the biggest year-on-year jump of any of the spending categories that the Census Bureau tracks.

00:08:39 Speaker_00
Marketplace's Matt Levin breaks down what's been happening of late in the e-commerce economy.

00:08:44 Speaker_17
Olivia Johnson noticed a new aesthetic on Dick's sporting goods website when she was recently doing some online shopping for a pair of Air Jordans.

00:08:53 Speaker_14
I think it was like green streamers on there with red ornaments.

00:08:58 Speaker_17
Johnson researches retail and consumer science at the University of Houston. She says for online retail, the all-important holiday season now basically starts October 1st.

00:09:10 Speaker_17
That's partly because putting a Santa gif on your website is a lot easier than finding an employee willing to let five-year-olds tug on their fake beard all day, not to mention clearing the showroom for that tree and chair.

00:09:22 Speaker_14
In stores, you have to set the store right. You have to tell a story with your merchandising, but you have the ability in these online spaces to start that holiday shopping earlier.

00:09:34 Speaker_17
Plus, online retailers have all kinds of personalized data to target holiday early birds. Hey, we noticed you're one of those bizarre people who bought an advent calendar before Halloween last year. You want another one?

00:09:46 Speaker_17
Declan Gargan at S&P Global Ratings says many retailers doubled down on online promotions in October as a way to grab attention. This fall, those commercials enticing you to come to the store had competition.

00:10:00 Speaker_03
A lot of that kind of advertising gets crowded out by a lot of the political advertising. So we're just seeing retailers do what they can to signal value.

00:10:11 Speaker_17
And for inflation weary consumers, it's often easier to bargain hunt online. Gregory Dako is an economist with EY.

00:10:18 Speaker_16
In a high price environment where consumers have more financial difficulties, they're going to want to compare different prices for similar goods. And doing that online is, of course, much easier.

00:10:33 Speaker_17
Although no matter how cheap they might be or jolly the advertisements, some of us are just not going to buy holiday gifts before November. I'm Matt Levin for Marketplace.

00:11:08 Speaker_00
Your mileage may vary on this one, but consumers generally don't seem to be enjoying themselves as they go about their banking.

00:11:17 Speaker_00
A report from Forrester Research not too long ago showed bank customers' opinions of the banking customer experience have been declining for three years in a row now.

00:11:27 Speaker_00
And that's got a lot to do, it turns out, with the kinds of technology that banking is all about today. Some banks make it really easy to transfer money or pay off a credit card. Others, very much not so much.

00:11:39 Speaker_00
The report from Forrester also found customers' opinions of their banking experience is going to keep on declining if banks don't invest in upgraded technology.

00:11:48 Speaker_00
As Marketplace's Justin Ho reports, small banks in particular see those upgrades as something of a business imperative.

00:11:55 Speaker_07
Over the last year, a community bank in New Canaan, Connecticut called Bankwell set itself the goal of making more loans to small businesses.

00:12:02 Speaker_07
But Ryan Hildebrand, the bank's chief innovation officer, says the loan approval process was taking way too much time.

00:12:09 Speaker_18
We would have to have a conversation with them, you know, trade emails, text, phone calls, visits in person, and then be able to pull together a paper application to be able to say if a business can be loaned to or not.

00:12:21 Speaker_07
So last spring, the bank started partnering with a tech company to speed up its loan application process by using artificial intelligence. Now, after an applicant enters a few details on the bank's website.

00:12:32 Speaker_18
We connect to their bank account. We are able to understand what their tax returns look like, what industry they're in, to be able to make a quick, high-level prequalification decision.

00:12:43 Speaker_07
As a result, Hildebrand says the bank achieved its goal. It's been making more loans because the whole process is just smoother.

00:12:50 Speaker_07
David Schiff with FTI Consulting says AI tools can also help banks price their loans more competitively so they can turn applicants into actual borrowers.

00:12:59 Speaker_02
To make sure that you get all the way through underwriting and through close. with customers because the rate doesn't feel too high. They're not shopping around as much.

00:13:06 Speaker_07
Schiff says small banks are starting to use A.I. in a bunch of other ways, too. Deposits, loan collection. But so are big banks.

00:13:14 Speaker_07
Christian Rupp, chief innovation officer at Colony Bank, a community lender based in Georgia, says his big national competitors have invested a lot in customer service technology.

00:13:24 Speaker_06
And it's only going to continue to become easier for them because technology is making customer service easier.

00:13:30 Speaker_07
Roop says that's making it harder for him and other smaller lenders to compete. That's because they have traditionally relied on personal relationships to bring in clients.

00:13:39 Speaker_07
The idea that a community banker will pick up the phone when a customer calls, or that it might lend to a local business with unique needs.

00:13:46 Speaker_07
But Roop says as better technology has helped big banks get better at serving customers, those small bank advantages have started to wane.

00:13:54 Speaker_06
More and more you're hearing from customers. Look, we really want to work with you guys.

00:13:57 Speaker_06
But just so you know, it is really hard for us to do what we need to do when your app won't let us do X, Y, Z. That means that many smaller banks feel like they don't have a choice but to upgrade.

00:14:10 Speaker_09
If we don't make this investment, we will cease to be relevant.

00:14:13 Speaker_07
Robert James II is the CEO of Carver Financial Corporation, a company with two community banks in Georgia and Alabama.

00:14:20 Speaker_07
He's in the middle of upgrading their entire digital platform, everything from making it easier for customers to transfer money between accounts to letting them use the bank's debit cards in Apple Pay and Google Pay.

00:14:32 Speaker_07
James says a big motivating factor is that his current customer base is aging.

00:14:37 Speaker_09
And we want to make sure that we have the ability to serve those customers' kids who may not have accounts with us.

00:14:44 Speaker_07
James says his bank has a responsibility to stay relevant because it predominantly serves Black customers in Georgia and Alabama who have historically had a much harder time gaining access to credit and other banking services.

00:14:56 Speaker_09
There's only 23 Black-controlled banks in the United States, and two of them are a part of Carver Financial Corporation. If we don't exist, then there are customers that otherwise would not have access to these critical financial services.

00:15:12 Speaker_07
James says the hope is that the new technology will help the banks get bigger, letting them invest in even more tech upgrades in the future. I'm Justin Ho for Marketplace.

00:15:43 Speaker_15
Coming up. I heard a saying where it says how you start is not necessarily how you finish.

00:15:49 Speaker_00
You gotta believe. But first, let's do the numbers. Yeah, the Wah-Wahs. Dow Industrials off 305 points today, about 0.7%, closed at 43,444. That, however, is not why we got the Wah-Wahs. This is the Nasdaq off 427 points, 2.25%, 18,680.

00:16:02 Speaker_00
S&P 500 down 78 points, 1.3%, landed at 58.74. The five days gone by, the Dow off 0.7%, the Nasdaq down 2.2% S&P 500 contracted 1.3% today. Palantir Technologies surged more than 11% today.

00:16:29 Speaker_00
The analytics and data mining firm is expected to begin trading on the NASDAQ next week. That's a change. Applied materials slumped 9.2% today. Yesterday, the chipmaking equipment company forecast quarterly revenue below estimates.

00:16:41 Speaker_00
That is weak demand aside from AI-powered chips rival KLA dipped about four and three quarters of one percent. The Chinese e-commerce giant Alibaba dropped two and two tenths percent today after posting worse than expected quarterly revenue.

00:16:54 Speaker_00
Yes, that is sluggishness in the Chinese economy that you see happening. Bond prices went down, thus the yield on the 10-year treasury went up 4.44 percent. You're listening to Marketplace. This is Marketplace. I'm Kai Riesdahl.

00:17:26 Speaker_00
If you wanted to put solar panels on your roof, there is federal money in the Inflation Reduction Act to help you do that. The money's there for now.

00:17:35 Speaker_00
The president-elect has, of course, talked about repealing or reversing many of the green energy programs that the Biden administration has put into place. That money, though, is not just for homeowners. It's for businesses, too. Also, nonprofits.

00:17:49 Speaker_00
And one slice of nonprofits in particular is taking advantage. Houses of worship, churches and mosques and synagogues and temples are three times more likely to have solar on the roofs than the average non-residential building.

00:18:01 Speaker_00
That is according to the U.S. Department of Energy. And the impact those panels are having is way bigger than the power that they generate, as Marketplace's Kayleigh Wells found out.

00:18:14 Speaker_04
A Shabbat service is the typical soundtrack of a Friday afternoon at Temple Beth Am. Above the heads of the worshiping congregants, the sun is about to set on dozens of solar panels that, since last year, have adorned the roof.

00:18:30 Speaker_04
Art Mercado is director of facilities, the guy in charge of the keys and the doors that light up here.

00:18:38 Speaker_01
I think the goal was be environmentally green, cost effective, and obviously in the long run is have more money for the school, the temple, and everything else.

00:18:50 Speaker_04
Just about every sun-bathed surface of this synagogue and the gymnasium of its school next door is covered in panels.

00:18:56 Speaker_04
They're designed to supply about half of the power used on this campus, which should slash about $4,000 off of its monthly electric bill. Temple Beth Om is part of a solar trend that Daniel McIntyre sees as a business opportunity.

00:19:10 Speaker_04
He runs a company called Tenco Solar that installs panels.

00:19:13 Speaker_05
We had never done a job with a nonprofit prior to the Inflation Reduction Act being passed.

00:19:20 Speaker_04
Now he's done four churches, a Sikh temple, an Islamic center. Solar is catching on in part because the Internal Revenue Service gives money directly to nonprofits to make climate-friendly changes to their buildings.

00:19:32 Speaker_05
Instead of taking it as a deduction on your tax return, you actually receive that back in the form of a check from the Department of Treasury or IRS.

00:19:40 Speaker_04
So Temple Beth-Thom had a financial incentive from the Inflation Reduction Act, an environmental incentive, and, it turns out, a moral incentive, too.

00:19:48 Speaker_12
In Judaism, you know, there's this whole concept of repairing the world, and there's a responsibility to the world, right?

00:19:55 Speaker_04
Mark Samuel served as president of the temple while the solar panels got installed. He says the community has gotten rid of styrofoam cups and started composting at the school.

00:20:04 Speaker_12
You know, the kids are saying, hey, you know what, mom and dad, I learned about composting, and this is what I did. Why don't we do this at our home as well?

00:20:11 Speaker_04
Samuel calls the composting program and now the solar panels appetizers. Ways for families to explore what they can be doing to help the planet too.

00:20:20 Speaker_12
I get phone calls about it. How'd you do it? What are you doing? Is it difficult? Is it worth it? Does it really work?

00:20:28 Speaker_04
That is the part that is most exciting to Kenneth Gillingham. He's an environmental economics professor at Yale. He says the environmental effect of Betham's solar panels extends far beyond the temple's own energy use.

00:20:40 Speaker_08
How many solar adoptions there are around you is one of the most impactful factors that influence whether you install solar.

00:20:50 Speaker_04
The idea is called social contagion. In this case, a good contagion. Gillingham co-wrote a study about it that said solar panels tend to cluster in neighborhoods.

00:21:00 Speaker_08
They're like quiet working ads for themselves, because... You're more likely to actually talk to your close neighbor, find out the financials for the system, find out that they're seeing the solar panel as a good deal.

00:21:10 Speaker_04
A community center like Beth Am, where 1,000 families come to learn and shape their beliefs on what's right and wrong, magnifies that effect.

00:21:20 Speaker_08
So if your church or temple has a very large congregation, then you may actually reach many people you wouldn't have reached otherwise.

00:21:30 Speaker_04
The synagogue's reach extends far beyond L.A. Mark Samuel, the former president, says he got a call from a remote congregant in Texas asking about the solar panels. In Los Angeles, I'm Kaley Wells for Marketplace.

00:22:05 Speaker_00
Matt Levin, up earlier in the program, was telling us about how non-store retailers, online shops, of course, is the translation there. He was telling us how they're doing these days. But what about those brick-and-mortar places, huh?

00:22:18 Speaker_00
We called one of them. Chandra Turner owns the Bougie Grazer in downtown Atlanta, Georgia.

00:22:24 Speaker_15
I heard a saying where it says, how you start is not necessarily how you finish. So we started in charcuterie, but now we've gotten a lot of corporate grace tables and more so box lunches and catering.

00:22:39 Speaker_15
So it's transformed into something a little bit different from just your standard charcuterie boutique. Right now, I am only taking orders of 30 or more, and that is to eliminate some of the spoilage.

00:23:04 Speaker_15
I was seeing last year that I was probably wasting like 30% of fruits and vegetables that I couldn't use because they would either go bad or I didn't have an order for them.

00:23:16 Speaker_15
So now that I'm taking on the bigger orders, I'm able to use a lot of my products in that same day. So right now, I have five total team members. Taking on a payroll cost also has been interesting because I've never had to continuously have payroll.

00:23:44 Speaker_15
It was always just one-off events. But now, week over week, I'm having to steadily pay a payroll. And I'm just like, OK, this is different. So at the end of the year, my lease is up on my studio. This is my first brick and mortar, so it's bittersweet.

00:24:07 Speaker_15
I don't know if I'm going to transition out and go into a smaller space, or I don't know if I am going to stay there and re-sign the lease.

00:24:17 Speaker_15
So it's a really big decision, but I'm sure that my spirit will tell me exactly what to do with my first brick and mortar, which has been definitely an interesting and fun and exciting ride for the last 15 months.

00:24:39 Speaker_00
Chandra Turner, the bougie grazer is her shop. Atlanta, Georgia is her city. This final note on the way out today in which the road to electric vehicle adoption remains bumpy.

00:25:01 Speaker_00
CNBC reported and General Motors later confirmed that it's going to lay off another thousand people, both salaried and hourly workers, as it leans into making more, but also money losing electric vehicles.

00:25:13 Speaker_00
GM has earlier said it's shooting for about $2 billion in cost cuts. Our theme music was composed by B.J. Lederman. Marketplace's executive producer is Nancy Fargalan. Donna Tam is the executive editor.

00:25:26 Speaker_00
Neal Scarborough is the vice president and general manager. And I'm Kyle Rinsdell. Have yourselves a great weekend, everybody. We will see you again on Monday, all right? This is APM.