Fed holds rates, but a future hike is pretty inevitable

Alright, hear me out. What if? Just what if the Federal Reserve had a meeting and nothing happened? From American Public Media, this is Marketplace. In Los Angeles, I'm Karen Rizdal. It is Wednesday today, the 28th of October. Good as it always is. To have you along, everybody. So the Federal Reserve did not raise interest rates today. Chairman Worsh did not say why. The Federal Reserve did not raise interest rates today. Even though by the bank's own description, inflation is elevated. He did say they're working on it. You probably heard me say this. We will deliver a price stability. No whiff sands or butts, and that continues to be the case. Have indeed heard him say that. Substantively, that was pretty much the whole press conference. A relatively brief half an hour. The one newsworthy item was mostly process. Worsh said, starting next year, the Fed is going to take one of its eight meetings that it holds every year and not talk about or vote on interest rates and instead use it for, in his words, strategic deliberations. They will take two strategically deliberative meetings in 2028. But look, no matter what the Chairman says, it's pretty clear that interest rates are headed in exactly one direction over the short term up. So Marketplace is just and spent his day on the phone talking to small business owners about borrowing right now and with lenders about lending. There are a few upgrades that Tiffany Turner would like to pull the trigger on for the company she runs called a drift hospitality, which owns several hotels along the Washington and Oregon coast. Turner says she'd love to update the fireplaces in each room, offer more food and drinks. One of them, it's not very exciting, but one of them needs a new roof. Turner says those upgrades would probably cost somewhere around 300 grand. The roof alone could cost just under 100,000. But right now, she's not sure if she wants to finance that with a new loan at today's interest rates. We have a lot of equity in the building. So ideally, we would pull some of that equity out and then use that. But again, if the cost of borrowing is too expensive, we won't do that. That kind of hesitancy around borrowing has started to weigh on loan demand at first national bank, Colorado. We've definitely seen a slowdown in the pipeline of new business to be had. And I think it is certainly very sensitive. That's Quentin Leedy, the bank's CFO. He says his bank's customers aren't necessarily struggling, but he says they just aren't as willing to take a gamble on a new loan. Uncertainty always does that. You know, when you get an election coming up, you've got rates that are starting to move up a little bit. There's just enough uncertainty that that doesn't lead to a lot of risk taking or expansion projects. Recent surveys of loan officers from the Federal Reserve have found that some banks are also being more cautious about lending. Yeah, I've gone after a bank loan. I want to be tonight or turn down. That's Kyle LaFond, the founder of Natural Contract Manufacturing. A company in Madison Wisconsin that makes shaving creams, soaps, and other grooming products. He's been trying to raise money to purchase manufacturing equipment, including bottle filling machines and storage tanks. And this year, he says he said trouble securing a bank loan. The bankers I've been working with have been transparent in sharing with me that a lot of times it's an unnecessary about my business, but it's about the larger environment. And that could be them just giving me lip service as well. I understand that. But yeah, it is tough. Instead, LaFond says he's been borrowing money from investors and other friends of the company. They set the interest rate at eight and a half to ten and a half percent. Give us a certain time to pay that back. And while that's not exactly cheap, LaFond says it still lets him get the financing he needs. I'm Justin Howe for Marketplace. Eight and a half to ten and a half percent, not exactly cheap indeed. Just so as you know, the Federal Funds Rate, that's the overnight rate that the Federal Reserve actually directly controls. It's the one we talk about when we're talking about the fed raising interest rates. The target range for it right now is 3.7524 percent. So eight and a half to ten. That's a premium. Wall Street today, stock traders kind of shrugged that the fed's non-move and chairman Worses Press Conference, bond traders, same. We will have the details when we do the numbers. One of the beauties of the modern economy for manufacturers of things and for sellers of those things is that thanks to RFID tags and barcodes, they know with a very high degree of certainty what their inventories are, exactly how many widgets they have and what shelf they are on in the warehouse, which is great and brings with it all kinds of efficiencies. But what if your product is alive and has four legs and likes to go wandering around the countryside? This time a year, ranchers on the giant ranges of public lands in the western part of the United States have to round up their cattle. And to keep things straight, each ranch has its own brand. Numbers or letters or shapes seared into the side of a cow. Inventory control of a very different kind, I think you'd agree, for which there is a very niche job. Marketplaces, Caitlin Tan, spent the day with a brand inspector. The sun crests over the mountains near a ranch in Sublet County, Wyoming. Mike Fickery drives his truck down a long gravel road. There's a couple of semis parked here that will be loading these cattle, so we're going to load about 150 today. Before those cattle can step hoof onto the semis, Fickery has to put eyes on them. That's his job as a brand inspector. He's going on 38 years. And we're checking to make sure that the people selling them or transporting them actually have ownership or the right to do that. We'll pull up to some wooden corals and spot the rancher. This one here, he and I were roommates in college. Are you serious? Yeah. How are you? How are you? Fickery will check for a brand with the letters me on the left side of each cow. We head into an empty muddy pen, black cattle bunch up on the other side. Their backs coated in frost from a cold night. The gate opens. Shall I just say by you? Yeah, just stay here. With the little coaxing, 15 cows stamp you through. 1515. Fickery looks for that ME brand on each cow. It's hard to see the brand do their fluffy hair. He stops to look closer. Hang on a second, David. And less than half an hour, Vickery looks at all 150. I'll go find out who the buyer is. I have to write down a health number, the veterinarian come and look at them, make sure they don't have any contagious diseases. To keep sick cows from being sold to a feedlot and becoming burger at the store. At his truck, Vickery types up how many cattle there were, who's buying. It's the official paper trail for the transaction. And there goes the printer. Yes, he keeps a mini printer in his truck. Okay, here we go again. Vickery is one of three brand inspectors in a county with a lot of ranches, so he's busy most days in fall when cattle are sold here. That's the most important day of the year for the people shipping their cattle, because that's the day they're getting paid. Like this last stop, that was almost half a million dollars worth of cattle. That's big for the beef supply chain and big for the ranchers wallet. And Vickery gets it, his family runs a ranch down the road. So this is my parents place here. We're not very far away by the way a cow walks or a crow flies. Their brand is an F and then another F turned sideways. There's a lot of pride with people when you go, you drive through a herd of cattle and they have your brand on them. Sometimes they have electronic ear tags too, but those can get ripped out. Vickery says brands are permanent, which was especially important in the 1800s when cattle rustling was hot. But Vickery says these days, it's not like what you see in the movies. As we don't shoot people and we're not deputized so to speak. Like you're not carrying my gun. I'm not carrying one, but not because of that. This days if a rancher has someone else's cow, it's likely an honest mistake. And Vickery probably knows everyone involved. He pulls up to the last stop of the day to look at a couple beef cows going to slaughter. They belong to rancher Jean Paul. This is what's the fun part of the job is. You know, Jean and I grew up next to each other also. Really? So he's a little younger than I am, but. Hi. Hello. How are you? Jean and his two-year-old grandson Peter walk over, both in cowboy hats. This is Vickery's last fall as a brand inspector. He's ready to spend time with his own grandkids. It's a state job with benefits, pairs well with ranching, and is the first time the positions opened up in several decades. In sublet county Wyoming, I'm Keat Lynn Tann for Marketplace. Just and got us going today with loans who is making them and who is getting them credit in this economy, though, as you know, comes in many forms, one of which is student loans. According to the Federal Reserve, total student loan debt is just shy of $1.9 trillion that is basically the size of Florida's entire economy. In a survey out this month from the student debt crisis center, found it in nearly two-thirds of student loan borrowers have cut back their spending on basic needs, that's healthcare and food, and housing to be able to make their payments. Well with that, here's today's installment of our series, My Economy. Hi, I'm Annie Gailstrap. I am a 32-year-old mom. I'm currently living with my husband, my daughter, my grandmother, my parents, all under one roof in the Northwest suburbs of Chicago. I think I always knew that I was going to need to have a little bit of assistance for college. I had really amazing supportive parents who encouraged me to do whatever I wanted to follow my dreams. I ended up getting my degree in vocal performance with the intention of studying opera and taking out some Sally Mae private loans. The original amount was $64,700. Then as I was pursuing my studies, I got really excited about artistic administration. That ended up being kind of the new dream. I didn't have to start paying any of the loans until I had landed that first job. But certainly by like 2021, I was paying between $1,100 and $1,200 a month. I have debt from trying to be a musician, which maybe sounds incredibly stupid and irresponsible in hindsight. But when you're a young aspiring person and you think there's a chance that you could do the thing you love as your career and plenty of people have success doing it, you know, you can try to go for it. But at the time, I didn't fully understand what this was going to mean for my life. I have every single one of those tax forms that shows how much I paid towards address towards those specific loans and the amount has become greater than what the original loan was. And that, that's hard to stomach. In 2024, my husband and I made the decision with my parents blessing to move in with them in order for us to avoid paying rent and put all of that extra money towards my student loans that I had acquired. I am very lucky that I have the opportunity to live with my parents. I know that there are a lot of people that could be in an awful situation like this and they don't have that privilege. Having a child now that I have gone through this has totally affected how we will help try to guide her. I still want to encourage her, of course, to follow all of her dreams, but just be able to kind of have the full equation in anything regarding debt. That's Annie Gilstrap. Four generations under one roof, that's how you count down. Tell us about your economy, would you, the dreams you have or the dreams deferred marketplace.org/myconum. Coming up. Someone gets, I don't know, an old microwave and plops it on the ground. That is not, I believe, what one does with microwaves. First though, let's do the numbers. Down dust rose up 97 points to date, two tenths of 1% 52,475 on the blue chips. The NASDAQ added 72 points, 3/10% 26,549, the S&P 500 up 21 points, 3/10% 77 and 43. As I said, Chairman Worsh, spoke the markets went, "Man, the hedge fund, try and fund management has offered to buy Wendy's and take it private for $1.4 billion trying has been a shareholder of that burger chain. For a while, Wendy's has been struggling for a while and reported the clients in same-store sales for six straight quarters, whereas the beef, indeed, Wendy's surged 15 and a tenth percent. Come on, tell me you remember that ad. Dominic Donald's stacked 4/10% of 1% Shake Shack gained 4 and 1/10th of 1%. Don't at me. Shake Shack is kind of overrated actually. Bonds down, yield on the 10-year T-note rose, 5.01% you are listening to Marketplace. This is Marketplace, I'm Kai Rizdall. Hey, what's your favorite economic indicator? I mean, assuming you have one. I personally, like unemployment data, some people like GDP, others looking bonds, or the housing market the point is, you've got a lot of options. Here with another one, toilet paper, because it turns out, as Marketplace, of course, then Schwab reports, that particular household staple can tell us some things about this economy. The parking lot at this Costco in suburban Minneapolis is a traffic jam of shopping carts and cars. One guy walks out with furnace air filters and a bouquet of roses. Another woman pushes an incredible amount of juice and, of course, one rotisserie chicken. An curious number of people cradle nothing but a single 30-roll pack of Kirkland toilet paper. $29.99 with $3 off. Vangy Krueger came just for the sale. She says, with prices going up, she's shopping around. So is Kirsten Halloran. She goes to Aldi for produce, Trader Joe's for frozen food, Costco for paper products, and she has that same giant pack of Kirkland toilet paper in her cart. When you see brand name being just like double, then I will just look to the store brand and pick that up. The brand name at this store is Charmin, for $29.99. $12 more than the store brand. Still, Rick Summerall paid the premium. So you don't buy the Kirkland brand? No, no, that's my wife Deto that. Personal preference. I'll put it that way. Personal preference is personal, especially when it comes to products as mundane and intimate as toilet paper. It's why Michael Collins, a professor of household finance at the University of Wisconsin, has actually researched T.P. purchasing patterns. Yeah, there's very few goods that we can come across where people have consistently standardized preferences and demand for a product. And more importantly, they don't have substitutes. Something like butter, which is perishable, can be swapped for margarine or cooking oil. But everyone minus those bidet people. Everyone needs toilet paper, which means it can be used to measure how people are spending in the economy. People are pretty willing to move around in different products. People are pretty quickly shift to an alternative that meets their price point. Collins studied nine years of scanner data to understand when people buy more or less toilet paper or change brands. And he found that when people are feeling flush, say right after tax season, they buy 20% more, simply because they can. Meanwhile, when money is tight, they buy cheaper toilet paper and they buy less of it. Aaron Lash is a consumer equity research analyst at Morningstar. We heard a lot about that during the great financial crisis for sure. Lash, who's been working in the household good space for nearly 20 years, says back then, companies kept a smaller inventory of toilet paper because consumers were buying less of it. People were counting squares. Trying to get more out of the products that they are using on a daily basis. Today, during this inflationary but not recessionary period, consumers are sending some mixed signals. But earnings reports show people are buying less toilet paper, but sticking to their favorite more expensive brands. Actually, it was being cited as an opportunity for firms that sell more premium type products. It could reflect an economy where people have jobs. So they can still buy the products they like. But because of inflation, budgets are tight and they're buying less. If at some point people start trading down, it could be a sign that consumers are shifting what they're spending. And household finance professor Michael Collins argues toilet paper is more than an economic indicator. In some ways, it's a symbol of how frustrating it can be to live in today's economy. The issue of how people feel is, I think, an important one. Because even though I might be able to, quote unquote, afford that high quality product that I'm used to having, the fact that its price goes up, it does make people feel like they're making sacrifices. Sacrifices in categories that aren't even luxurious. I'm Kristen Schwab for Marketplace. Copper hit an all time high last month, tariffs, supply chain problems, also demand data centers for just the most glaringly obvious example, use a whole lot of copper wire. One side effect of the above is that copper wire stripping to repurpose it or sell it has become something of a trend on tick dock. Caroline Haskins wrote about it for Wired, thanks for coming on the program. Yeah, thanks for having me. So describe one of these videos for me, would you, I'm sure you watched a zillion of them. I did, I did. I mean, a typical one is someone gets, I don't know, an old microwave and plops it on the ground. And then there's fast motion of them tearing it apart and then having a bundle of copper in their hands at the end. Or alternatively, they'll have just an old wire and they'll feed it through this machine which kind of splits it into a few different pieces. And then they have the little strip of wire at the end and they do that over and over and over again until they have like a little, a little bundled. It's addicting to watch. Yeah, a little bit. Who are these folks? They're a pretty diverse set of people. And interestingly, like, I wouldn't say they're even like affiliated as a community. They're more like people who happen to be doing and posting about the same thing. So there's a lot of electricians who are getting wire from their job. I've noticed a decent amount of teenagers also who seem to be wanting away to get a little bit of extra money. And then I've seen people who seem to just kind of enjoy it as some type of like an enjoyable side hustle per se. There seems to be like a personal interest. We should say here it is not particularly profitable. I mean, they're not making fortunes doing this. No, not at all. I mean, stripping copper in it of itself, it's sold by the way and it takes a really long amount of time to get enough copper where you would be making money. I mean, even though copper, the price is reaching an all-time high this year, but it's, you know, that's still around like $6, $7 a pound. There have been people who have posted about taking apart a complex piece of machinery and spending like several hours on it. And then at the end, they only made a net of $40 something dollars. So it's not the most profitable thing in it of itself. So they also, these folks do, as you say in this piece, they make money by teaching others, how to strip copper wire and they sell the machine. I guess you need a special machine to strip copper wire and they sell those some of these folks do. Yeah, seemingly the more lucrative path for a lot of people is either a, getting enough use that you're eligible for funds through TikToks like creator program or b, literally being an advertiser on the TikTok shop. There's this one creator in particular. He doesn't post a lot about stripping copper. He said it's not a particularly like profitable use of his time, but he advertises a whole bunch of products and he said the wire stripper is like by far one of the most popular ever since he started doing it, which I thought was interesting. Oh, it absolutely is. You spoke with some observers of this from an academic sense, some economists and whatnot, and they do point out that there are economic conditions that lead people to go after copper wire for one thing. It's sort of a commentary on the state of the economy today and how people are feeling. Definitely. Definitely. I spoke to one expert who, I mean, granted, he did study copper theft, but he mentions that there has to be a state of economic precarity that allows you to kind of get over this barrier that might prevent you from stealing copper or doing something like that. If you think that the profit is going to be enough, I don't have numbers specifically on whether TikTok videos about copper are reaching a high this year, but I'm just noticing that creators seem to be having success posting about it at a minimum. Caroline Haskins, at wire, Caroline, thanks a lot, fascinating piece. Thank you. I appreciate it. This final note on the way out today in which I will totally get it. If you just want to tell me to be quiet, the next time I start wondering out loud about how long consumers are going to be able to keep on spending because the answer apparently is forever. Both UPS and FedEx are saying they anticipate a robust holiday shopping season and the National Retail Federation predicted the other day. I don't know if you saw this, that holiday spending is going to be 4.2% higher this year than the last coming in at a bit more than a trillion dollars. Part of that is inflation, yes, but part of it's not. Our media production team includes Brian Allison, John Fokie, Montana, Johnson Drew Johnson, Garry O'Keefe, and Charlton Thorpe. Alex Simpson is the manager of media production, and I'm Kyle Rizdal. We will see you tomorrow, everybody. (upbeat music) - This is APM.