Consumer credit creep

On the program today, a couple of stories about the cost of money and its side effects. We'll talk about the farm economy, and we'll grab a cup of coffee. From American Public Media, this is Marketplace. In Los Angeles, I'm Kyle Rizdahl. It is Monday today. This one is October the 19th. Good as it always is to have you along, everybody. We are going to begin this week by looking back. Not that far, middle-ish of last week, and the inflation data we got for the month of September. The Consumer Price Index, say it with me now, up three and seven-tenths percent over the past 12 months. The Producer Price Index, up six and three-tenths percent. We didn't talk about this one, but the Importation Index, up three and seven-tenths percent over the past 12 months. The Import Price Index, just like it sounds, a measure of inflation for imports into this economy, jumped more than eight percent. All that data is, of course, going to be front and center when the Federal Reserve meets next week. And the central bank is going to do what the central bank is going to do on interest rates at that meeting. No prognostications will be forthcoming here. Instead, a humble reminder that stable prices is only half of the Fed's job. Maximum employment is the other half. Marketplace's Justin Ho reports to get us going now. Whatever Chairman Warsh and the gang do on rates is going to affect the labor market, too. It's safe to say that the Fed is a little more concerned about controlling inflation than it is with the labor market. That's because inflation's been so hot, and the labor market hasn't. It hasn't been cool, either. It's just kind of there. The thing I've been telling people is just that the labor market is actually quite boring right now. That's Preston Moy, senior economist with the advocacy group Employ America. He says boring isn't boring. It's just that the labor market is actually quite boring right now. There are parts of it that are sluggish, such as wage growth and hiring, but we're not seeing any sort of imminent collapse, either. And so I think that's why the Fed feels comfortable shifting its focus towards inflation. If the Fed raises rates, some industries are likely to shed jobs. Think about housing. Courtney Schubert, an economist with macro policy perspectives, says higher mortgage rates discourage new buyers. Simultaneously, homebuilders face higher financing costs, which results in less construction activity and less hiring in that sector. Schubert says companies that use a lot of temp workers are likely to shed them as rates go up. We've already seen temp jobs slow slightly. They lost 11,000 jobs in the month of September, but I would expect that to potentially slow a bit more just in reaction to the higher interest rates. Higher rates would also make things even harder for people who are already facing an uphill struggle to find work and longer and longer job searches. As you raise interest rates, those workers on the job market are going to have to margin who are already facing a more volatile labor market will find it much harder to find a job. That's Kate Bond, chief economist at the Institute for Women's Policy Research. That means they're more likely to accept a worse job that has lower income growth and worse benefits because they have to. Bond says when interest rates go up, it can take anywhere from six months to two years before labor markets feel it. I'm Justin Howe for Marketplace. Wall Street today, traders seem to have decided technology stocks are okay after all, which is interesting seeing as how there are going to be a whole lot of tech earnings coming later this week. We will have the details when we do the numbers. On the face of it, inflation affects everybody, right? We are all paying these higher prices. In reality, though, there are huge disparities in how people are feeling inflation. To be specific, people on the lower end of the income spectrum are being hurt the hardest. And as they try to make ends meet, they're increasingly turning to more expensive money, which is only compounding the problem. Marketplace's Elizabeth Troval has more. New reports from the Kansas City Fed and Pew Research. Struggling consumers are a lot more likely to turn to debt than those who aren't struggling. Juliana Horowitz is with Pew Research. 50% of those who had trouble affording a basic necessity said that they borrowed money from friends and family. And then about 30% of them said they took out a payday loan compared to 4% of those who didn't have those challenges. Strapped families are turning to borrowing as inflation remains elevated, says Lisa Birdie with the Financial Health Network. When we talk about, rising gas prices, or when we talk about rising prices at the grocery, this is really hitting financially vulnerable households, and they are trying to come up with the tools that they need to be able to cover those expenses. But taking on debt comes at a cost, with financially vulnerable households spending 17% of income on interest and fees, says Birdie. One borrowing tool that's popular is Buy Now, Pay Later, says Matt Schultz with LendingTree. We found that 29% of Buy Now, Pay Later, users used the loans for groceries, and that is double the percentage from just a couple of years ago. While Buy Now, Pay Later starts off interest-free, many are paying late and incurring fees. Where all of a sudden that interest-free loan isn't free anymore, and you end up finding yourself stuck. It's the dynamic Kayla Bruhn with Morning Consult says she'll be watching for this holiday season. The concern I think each year, and I'm extra concerned for it this year, is if low-income adults, you know, they have this available, they spend that, and then come January, are there still going to be financial strains? That could make it harder for households to pay off holiday debt. I'm Elizabeth Troval for Marketplace. Here's an observation from the U.S. Department of Agriculture that should raise alarms among those of us with an interest in the farm economy, which should be all of us. Most small family farms in this country, the USDA says, are at high financial risk. Those are their words. Profit margins are in the single digits, and the only thing standing between them and a devastating year is a run of bad weather or a spike in gas and diesel prices. So the government offers financial assistance, financial support in varying degrees to help keep those farms afloat. For 24 years, the Rural Energy for America program has been providing some of that aid with votes from both sides of the aisle. This year, though, the Department of Agriculture changed the rules and rescinded money that had already been promised. Marketplace's Kelly Wells has more on that one. Ron and Susan Rusk have been farming since 1980. Their place is about 60 miles west of Ann Arbor, Michigan, and they specialize in dairy. These are the milk cows. They're out here doing what they do every day. They come out in the morning, and they spend most of the day out here just eating grass and making milk. A couple dozen cows have stopped their grazing and are intently staring at Ron Rusk, who's standing in the middle of their pasture giving a tour. They're watching me because I'm not supposed, I'm supposed to be out here. It's their place. In a separate pasture, away from the many watchful eyes, there's a brand new stretch of about 100 solar panels. We just got it online. It's a 32K setup. It should supply about 80% of our power. Rusk had wanted a solar array for a couple decades. As he sits in his house, he says he liked that it'd save him money, make renewable energy, and fit in with the farm's whole no-plow organic ethos. We rely on the sun to provide grass for our cows to make milk, and the solar array is just an extension of that. But the total cost came to about $86,000. That's more than he makes most years. Cases like Rusk's are why, back in 2002, Congress funded the Rural Energy for America program, or REAP. It's designed to help farmers make their energy use cleaner, more efficient, and cheaper. And it was developed by Congress, bipartisan, to. Veronica McFadden runs Sun Grants Consulting. She helped the Rusks apply for a program grant. He contacted me. I have to show that he exists as a business. It's legit. You know, he has to come up with the matching funds. McFadden shepherds the application through the process, and eventually, Rusk gets his money, which in this case covered about a quarter of the cost. The remaining three quarters is those matching funds Rusk had to come up with himself. Every REAP grant, is generating about $8.75 in total project spending. Jessica O'Donnell is a senior attorney at the Environmental Law and Policy Center. You know, that is boosting the economy in these rural farming communities. The whole process takes over a year. Rusk, the dairy farmer, got all the way through the process, just waiting for a check for more than $20,000 to arrive. And then, in March. I received notice that grants were no longer being awarded. McFadden. Fadden, his consultant, says Rusk didn't get his money because the USDA changed the rules for which projects qualify. According to its website, the new rules disincentivize solar and wind systems on cropland. The USDA says this protects taxpayer dollars. Rusk says he wouldn't have installed the solar array if he knew he'd end up having to cough up another 20 grand. That money that we had to pay for the rest of that system could have been used to update equipment or, you know, just your regular expenses that are on a dairy farm, which are constant. It's always something that you need to spend money on. The Environmental Law and Policy Center, where Jessica O'Donnell works, is co-plaintiff in a lawsuit that aims to reverse the changes. The suit claims the department can't rescind grants that it already awarded and that the rules aren't even its to change. USDA has a pot of money that they're supposed to be implementing in accordance with the criteria that Congress has specified. Since the plaintiffs filed the lawsuit at the end of September, a few farmers whose grants had been rescinded. Got them back. I'm Kaylee Wells for Marketplace. The National Association of Home Builders released its latest survey this morning. Builder confidence this month has fallen to its lowest level since June of 2012. Need I count the ways? We're looking at an average of 7.4% on 30-year mortgages. That's according to Freddie Mac. Diesel prices are higher. Building material prices are higher, too. Also, labor shortages. More than a third of builders reported immigration enforcement activity in their areas, which led to construction delays because even legal workers weren't showing up. Marketplace's Kristen Schwab has the immigration crackdown home construction crosstabs. Robert Dietz, chief economist at the National Association of Home Builders, visits different housing markets all over the country. Last week he was in Alaska. This week he's going to Colorado. And lately, builders have been expressing more worry about workers. We've seen in the data, and I've heard from builders over the last month or two, an increasingly tightened labor market. Dietz says raids by immigration and customs enforcement have been a factor. Legal workers are staying home because they worry about being detained, along with undocumented workers. Typically, when the word gets out that immigration enforcement has taken a step up, it has a ripple effect in a market in the coming weeks. About a third of workers in the trades are foreign-born, says Reardon Frost, a senior research analyst at the Joint Center for Housing Studies at Harvard. And that share has been growing quite a bit as immigrants have actually been accounting for all of the net growth. in the trades workforce since its kind of post-recession trough in 2013. These workers are especially essential in the South, where home building is busiest. And Frost says they're concentrated in lower-wage trades like drywall, roofing, and construction, where pay is at least $15,000 less than jobs in electrical and plumbing. So you see this clear alignment between the foreign-born share and the median income. Higher pay could help bring more workers in, in general, into these jobs. But it's not a quick fix. Here's Robert Dietz again. It took us years to get into this skilled labor shortage. It's going to take us years to get out. Without immigrant workers, the industry needs time to recruit and train. I'm Kristen Schwab for Marketplace. I'll see you in the next episode of Marketplace, where we'll talk about what it means to be an industrialist and what it means to be a business owner. Coming up. On our shirts it says, I love MF Coffee. What are you trying to tell us? First, though, let's do the numbers. Now, industrials off 36 points, almost a tenth percent, closed at 51,966. The Nasdaq up 290 points, one and a tenth percent, 26,430. The S&P 500 gained 31 points, 410. 76 and 90 there. AI rebounded today after a tough week last week. NVIDIA rose about 1.4 percent. Intel climbed 2.4 percent. AMD, advanced micro-devices, jumped one and three-quarters of one percent. Kroger and Albertsons began squaring off in court today over their failed merger. Albertsons is asking for at least $8 billion from Kroger, alleging Kroger failed to do enough to secure regulatory approval. Kroger, of course, denies those allegations. Says it did what it had to do. Shares of Albertsons rose. Four-tenths percent. Kroger's fell about nine-tenths percent. You're listening to Marketplace. This is Marketplace. I'm Kyle Rizdahl. As we sit here inside two weeks to Election Day, it is perhaps natural that some people's thoughts are turning to making a run of their own for elective office. If and when that becomes the case, there are some things to take care of. Get your lawn signs and your mailers done. Alert the media, of course. And let chat rooms be your home. At GPT and Claude and Gemini or Copilot, know that you exist. The emerging term for that is answer engine optimization. Getting a handle on what the chatbots say when voters inquire. In this world where artificial intelligence is moving deeper into the public spaces of our democracy, there are lessons here for any campaign, as Marketplace's David Brancaccio reports. Jordan Haynes says candidates have the power to shape what the AI chatbots say about them. Yeah, it's an immense amount of control. More control than they realize. Haynes is chief technology officer at Run for Something, a liberal-leaning organization that encourages people to try their hand at seeking office. He leads a team that built a system called Campsite that helps candidates track what the large language model-powered chatbots are saying about them. Sometimes, not much of anything. When voters were asking, what is this race? You know, what does this position do? Often, the LLMs were just not sure and saying it wasn't a real office. For instance, Haynes worked with a candidate in the Denver, who ran this year for what the ballots labeled the Regional Transit District Board of Directors. The campsite system found that when people inquired, the chatbots seemed baffled. Among solutions, the Colorado candidate clued in the AI by posting his profile on the respected election information website, Ballotpedia. But not just for himself, but also for. His opponents, just so that Ballotpedia would list his race. Wait, Jordan, what you're saying is that candidate went to his. Opponents in the race and said, look, we all got to put some stuff on Ballotpedia. Otherwise, the LLM doesn't know it's a race. Yeah, it's important that voters know because they're going to ask before they go into the voting booth. Candidates are increasingly asking how to polish what the AI says about them, according to Tim Chambers. He's co-founder of Dewey Digital, part of the political communications consultancy Dewey Square. Help us understand where we are in AI, help us upgrade our websites, help us do whatever we have to do to be better communicating, to the AI systems. Chambers has strategies. He told us about a massive data repository called Common Crawl that chatbots like to feast upon. A candidate better be in there, he says. But it could also be places like Wikipedia and social media and Reddit and others. It's annoying if the AI draws a blank. It's worse when chatbots decide to fill in the blank with nonsense. There's a documented case out of Scotland where a chatbot fell into a hallucination and offered up a non-existent In the same election, the AI spit out the wrong legislative district when given a voter's address. Now, that said, researchers are now finding chatbots are remarkably persuasive ahead of elections. We found that a conversation of just maybe six minutes on average with a large language model changed people's minds meaningfully about who to vote for. David Rand, professor of information science and marketing at Cornell. He's part of a team that built a special chatbot system for chatbots. A chatbot with one goal, some months before the 2024 election, could it change Kamala Harris people into Donald Trump people and vice versa? For some test subjects, it actually worked. The effects were maybe three to four times bigger than what you'd get from watching a standard political ad. Why are chatbots so good at this compared to ads or haranguing your uncle at a family dinner? The models can come up with really large amounts of information and explain it very clearly. And if you ask the AI to list sources, it will, which you'll want to click to confirm. Seriously, when I was doing tests, I asked ChatGPT about a campaign financing measure on the California ballot next month, but Chat instead disgorged a bunch of irrelevant info about an old bond measure that also had been called Proposition 4. A survey this summer found that 87% of campaigns and strategists are using artificial intelligence in their work, but in a country with growing biodiversity. If you have a bipartisan concern about AI hogging resources, campaigns are using it more and talking about it less. I'm David Brancaccio for Marketplace. David is our senior correspondent for future effects, that is, things we are doing now that are going to affect us in the future. He's got a video voter guide out, how to use AI to help you think about this election, but not to think for you. YouTube Marketplace APM gets you. ♪ music playing ♪ Let's say you're out and about and you decide you want or maybe you need a cup of coffee. Good, good coffee. There are chains you could go to, sure, of varying quality. The usual suspects, which shall remain nameless. Here's an idea, though. A home-based cafe. Betsy Shepard has the story. Customers are lining up to place their coffee order at a single-family home in Torrance, California, a suburb of Los Angeles. The place is Mi Familia Coffee, run by Isaias Morales and Des Lopez. Mi Familia Coffee is really family-based. And we want you to feel welcome like Familia. We also thought it was a play on words because on our shirts it says, I love MF Coffee. Their menu centers around family recipes, like the Oaxacan mocha that Isaias' grandmother served to him as a kid. It's made from toasted cacao and coffee beans the couple gets from relatives in southern Mexico. Those combined together are just like the perfect cup of coffee. They hit just right, make you feel cozy. For years, Morales and Lopez had been juggling multiple jobs at grocery stores, and coffee shops. They wanted to start their own business, but that dream was financially out of reach. Until they found out about the MECO program. That's an acronym. The MECO program is a micro-enterprise home kitchen operation, which allows you to sell food and goods from home. The couple received their MECO permit after passing food handling and safety tests, and a kitchen inspection. Then, Morales went door-knocking. I was just like, hey, I'm your neighbor, we want to start a coffee shop, we want you guys to come over and have a place to meet. So, we went to a coffee shop, and we were like, hey, we want to start a coffee shop, Those neighbors now make up a big portion of their clientele. But people from all over town come for the cafe's unique vibes. It just feels more authentic, more of a small, get-to-know-your-clientele feel. It's more personalized. And I really, really love the Oaxacan mocha, it's really, really good. Mi Familia is one of roughly 1,300 MECOs operating in California. The program creates a pathway for entrepreneurship that's not available to most Americans. says Roya Bagheri. She heads up the Cook Alliance, a non-profit that advocates for these home operations. The all-in cost to start a MECO is on average around $1,000. That covers all licensing, equipment, and supplies. So, that is much more attainable for people to use it as an incubator to start their food business. And what's been really amazing to see is that a third have used the program as a stepping stone. MECOs were first legalized in Riverside County, California in 2019. They've since spread to 19 other counties in the Golden State. Utah legalized them statewide in 2021. And now Texas, Ohio, and Washington are considering similar legislation. Now that there is data coming out saying, yes, it's working, yes, it's safe, I think hopefully we'll see more areas across the country that are willing to take that jump. Here's Tim's maple matcha with oat milk and cold foam. Mi Familia opened in 2026 as a weekend-only cafe. They've since expanded to five days a week because of high demand. People are asking us to open more. If we get to the point where there's people coming every single day, we're getting lines, then I think we will have to open the brick and mortar. For now, though, Morales and Lopez like operating out of their house because they've built something that's hard to replicate in a commercial space. What's better than knowing your own neighborhood? Now I can talk to them, say hi to them, know them on a first-name basis. That's really the reason why we started this. The coffee business was to connect with people, to make them feel at home. Mico's are supplying a demand. They create business opportunities and dining experiences that people are craving. In Torrance, California, I'm Betsy Shepard for Marketplace. This final note on the way out today, with which a grain of salt might be helpful. Beijing said today the Chinese economy grew at an annualized rate of 4.5% in its third quarter, which, great, except for two things. Number one, the aforementioned allusion to the reliability of Chinese government statistics. But also, and more substantively, we also learned that exports from the world's second biggest economy were up 36%, which is a pretty clear sign that the Chinese economy is growing. That's a pretty clear sign that Beijing still hasn't managed to increase domestic demand, which means that its export-driven economy is still going to be a challenge for its trading partners. There's a story to do here today on global imbalances. Maybe another day, actually. I'm here to bye-bye with Kate Lanesh, John Gordon, Noya Carr, Steve Mullis, and Stephanie Seek are the Marketplace Editing staff. I love how I said that on the way out. Kelly Silvera is the News Director. I'm Kai Rizdal. We will see you tomorrow, everybody. This is APM.