Here's what kept GDP climbing this summer
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What economic indicators are discussed in relation to GDP growth?
You got your lagging economic indicators, and then you got your lagging economic indicators. From American Public Media, this is Market Class.
In Los Angeles, I'm Kai Risdahl. It is Thursday, today, 22 January. Good as always to have you along, everybody. The macroeconomic news of the day is brought to us today by the letters P, C, and E. The Personal Consumption Expenditures Price Index. It is for November, mind you, so a bit delayed. Thanks, shutdown. Came in this morning at 2.8%. That is higher by just a touch from October.
How do private sector services contribute to GDP growth?
I'm Nina Eichacker, and I am an associate professor of economics at the University of Rhode Island.
I'm Laura Veldkamp, and I'm the Cooperman professor of economics and finance at Columbia Business School. You can also just shorten that to Columbia Business School professor or Columbia professor.
Noted.
Services, shelter, and food are still really expensive, and they're not slowing down.
We also have had consistently strong demand in the past few months. You know, surprisingly strong given everything that happened in the preceding year economically.
Now, caveat emptor, because again, November.
It's not really a snapshot of what prices are doing today. It's a snapshot of what prices were doing, you know, in October and November when, you know, when much of this data was collected.
What role does AI play in the current economic landscape?
the changes are probably bigger than they look. If these are part of a trend and that trend was persisting from November to December,
PCE matters to all of us, of course, because PCE matters to the Federal Reserve.
This measure is a little bit broader than some of the other measures of prices that sample a narrower set of goods.
While the CPI might include things that are really important, it might not include everything that a household necessarily cares about. The flexibility of the PCE lets economists reflect changes in preferences.
Preferences like buying chicken instead of beef because beef is so expensive right now. The substitution effect is what economists call that. PCE coming in the way it did today, by the by, that is higher, makes the Fed's interest rate meeting next week a teeny bit more predictable, by which I mean a lot more predictable. Odds of a rate cut. are going way down. That said, economic growth has been going up, or at least it was in the third quarter of last year, July through September. Thanks again, shutdown. 4.4% was the annual rate of growth in this economy back then, better than we'd initially thought, and better than the 3.8% growth in Q2. You drill down into the data, as we are wont to do around here, and you'll find one of the big contributors to that growth is private sector services.
Think finance and tech and insurance. Marketplace's Stephanie Hughes is on it.
Cornell trade economist Ishwar Prasad says he is one of the reasons why the tech industry is adding to GDP growth. He spends a lot of time analyzing giant data sets to understand what's happening in the financial markets. He writes computer code to do his analysis.
How are packaging costs affecting food prices?
Last year, he bought subscriptions to a couple AI services, ChatGPT and Claude. Now he throws his data sets in there and has the AI write the code or check his for errors.
So it frees me up to do my work as an academic in a much better way and think a little more rather than spend my time mucking around with the data.
Prasad is buying a product of the information services industry, which was the leading contributor to GDP growth in the third quarter.
Many of us are now signing on to and subscribing to AI services probably is what is happening here.
Another growth area, insurance. Economist Mike Skordelis at Truist says repairs for a home have gone way up in price in the last six years. And now the cost to insure a home is catching up.
All the materials are more expensive. The labor is certainly more expensive. The cost of insuring it is more expensive.
Another thing that happened in the third quarter, mortgage rates started to fall. Scott Anderson, the chief U.S. economist for BMO Capital Markets, says that led more people to refinance their homes.
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Chapters
8 chapters
1
What economic indicators are discussed in relation to GDP growth?
0:01–0:51
2
How do private sector services contribute to GDP growth?
0:51–1:40
3
What role does AI play in the current economic landscape?
1:40–3:27
4
How are packaging costs affecting food prices?
3:27–5:08
5
What challenges do elder care facilities face with immigration policy changes?
5:08–7:06
6
How does the labor market impact elderly care services?
7:06–9:04
7
What are the implications of 'too big to fail' in the context of AI?
9:04–10:47
8
How are companies like Gap adapting their marketing strategies?
10:47–25:51