Chapter 1: What is the current state of consumer sentiment in 2025?
Five days in this economy. What do we know now that we did not know a week ago? Also, some songs about monetary policy. Seriously. From American public media, this is Marketplace. In Los Angeles, I'm Kyle Rizal. It is Friday. Today, this one is the 19th of December. Good as it always is to have you along, everybody. Well, everything's good now, right?
Chapter 2: How has consumer sentiment changed over the year?
We're getting data. The Fed's got a plan. What is not to like? Maybe some things, I think. Amara Mokwe is at Bloomberg. Heather Long is at Navy Federal Credit Union. Hey, you two. Hi, Kyle. Hey, Kyle. Heather, let me begin with you. We got some data this week, as I said, CPI and the jobs report. Did you have a moment of clarity where you said, OK, now I know what's going on in this economy?
Yeah, it almost feels foggier than it did a week ago. I've been sort of comparing it to that fairy tale. The emperor has no clothes. It's like the data walked out in the undergarments and we're all trying to extrapolate what it might look like if these undergarments were tuxedos or ball gowns. But, you know, I think sitting here at the end of the week here is.
I would say that the job market is probably the same or a tad worse than what we thought it was looking at September data. And the inflation seems the same or maybe a tad better than what we were thinking. I don't know that it's a ton better, but that's sort of where I'd read in the margins from what we saw this week.
Chapter 3: What role does the Federal Reserve play in the current economy?
Amar, do you think Jay Powell and the gang would have made a different decision had they had the data? Because, of course, it came out like 10 days after the meeting, a week after the meeting, whatever it was.
No, I feel like they probably feel like with this data in hand now that they made the right decision at their meeting last week. As Heather was saying, some parts of the job report that we got show this continued slowdown. We had a rise in the unemployment rate. the continued slowdown in the pace of job creation.
And so if you're a Fed that wanted to give the labor market a little bit of cushion here with the cut last week and the cuts that they've done since September, I think you feel good about those moves.
You have been writing, though, Amara, about Stephen Myron and John Williams in New York and sort of their diametrically opposed views on what will be happening with interest rates, right?
That's right. I think, you know, what we have at the Fed now is sort of policymakers that are in two camps. You have one group that is still very much concerned about inflation. They flag the fact that inflation has been above the Fed's 2 percent target for several years now. And so, you know, for the most part, policymakers were on board with the cuts that happened since September.
But you have a group that's saying, OK, from here on, we need to be a little careful because we do still have an inflation challenge on our hands. And then you have another group that doesn't see it that way, right? Stephen Myron, Governor Waller, they are flagging concerns in the labor market and saying, you know, we don't want the labor market to weaken further from here.
But interestingly, you heard Chris Waller come out and say, look, we don't have to necessarily be in a rush. You heard John Williams today also saying, you know, there's not necessarily an urgency to cut again. And so I think a pause in January is very much on the table.
Okay.
It's interesting, Heather, because, you know, and Powell said this last week, we have one tool, monetary policy, and we have competing problems, right? We have inflation, which is higher than we want it. And we have a labor market that's weaker than we want it. And the solution is not the same thing for both of those.
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Chapter 4: How is the Kansas City housing market preparing for the World Cup?
I think Fed officials take a lot of comfort in that, that we aren't seeing a whole bunch of layoffs. But if you are a person who is looking for a job, there are a lot of signs that it is very, very difficult. And as we see the unemployment rate tick up and we just understand, especially in my reporting, I hear it, that it's just really hard to find a job.
That really makes me worried for people, their well-being, and also just what we were talking about, consumer spending, which has been such a big, important part of the overall economic story.
Amara Mokwe at Bloomberg on this Friday. Heather Long, Chief Economist at Navy Federal Credit Union. Thanks, you two.
Happy holidays.
Have a nice weekend. Wall Street on this Friday. Investors got their mojo back, kind of. We'll have the details when we do the numbers. All right, as promised, we're going to take a little trip in the consumer sentiment time machine right now, prompted by this morning's release of the December data. Subdued is a word you might use.
We are feeling better than the lows of the mid-2022 post-pandemic lows, but close. Might be hard to remember at this point, though. As Marketplace's Samantha Fields reports, consumers didn't start this year feeling quite so down on this economy.
This year has been an emotional rollercoaster for consumers.
And that rollercoaster shows no signs of stopping.
Neil Mahoney at Stanford says people actually started off the year feeling relatively good about the economy.
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Chapter 5: What impact does AI have on macroeconomic education?
How do you be a good neighbor? What should your pricing be? And what international visitors expect?
The city of Kansas City, Missouri, usually charges $200 to register a short-term rental. For the World Cup, it's cutting that to $50. Brown says getting more hosts up and running will help spread around the hundreds of millions of dollars expected to flow into the region.
It gives the average person a little bit of ability to make a little bit of extra money this year.
The average homeowner, that is.
But I'm worried about renters who have leases that expire somewhere around April.
Michael Frisch is an associate professor of urban planning and design at the University of Missouri, Kansas City. He thinks some property owners might not renew leases in the spring so they can rent out their units to World Cup fans, even though he says there isn't enough housing in the region.
Rents are going up faster than the national average. I think that's a sign of a shortage.
Advocates for renters are bracing themselves. Tara Raghavir heads up the local tenant union KC Tenants. She says she hasn't seen many renters getting pushed out yet.
But we're kind of preparing ourselves for... the almost inevitability that tenants will be displaced in order for landlords to make a quick buck.
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Chapter 6: How are consumers adapting their spending behaviors in 2025?
We got an email the other day from a guy named Scott Simpkins. He's an economist, teaches at North Carolina Agricultural and Technical State University. And it turns out he's a bit of an early adopter in integrating artificial intelligence into the classroom, specifically for our purposes today, because I know you are wondering where this is going.
Having his intermediate macro students use AI to write songs about monetary policy. So, of course, we had to get him on the phone. Professor Simpkins, thanks for coming on the program.
It's great to be here. We use your marketplace clips in class all the time and find it really valuable.
I appreciate part of that. I'll be sure to send that along to the marketing folks. Just so we all know what we're talking about here, just baseline. What does one learn in your econ 313 class intermediate macroeconomic theory?
So it's an upper division course. Our majors are in that course. It's one of our core theory courses in the major. And so they're learning to develop the theory about the economy. And then also in my course, it's really important. One of my key learning goals is to connect that to what's happening in the actual economy.
Amen. Now, tell me about this assignment to use AI to come up with these songs. How did you come upon that? And we should say here, AI and macroeconomic education is kind of your thing.
Yeah, I've thought a lot about it in the last year. Other people are in that space as well. But the origin story with this is Nolan Gasser, who was the co-creator for the Pandora Radio Music Genome Project, was a keynote speaker at an AI conference that we hosted at North Carolina A&T. At the end of that, he played a song that he had developed for A&T. He's a composer. He's a musician.
So it was really good. And I said, I turned to a colleague and I said, I'm going to do this in my class. It was toward the end of the class after we had developed this comprehensive model. And the idea was to help them crystallize what they had learned, apply it, but also as a way, as a lead into a final project in the course, which they do a macro briefing report.
And I will say they came up with some amazing stuff.
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Chapter 7: What challenges do renters face in the current housing market?
AD leans left with fading fire. AS unclear, but holding fast. GDP
Let me get a little bit more substantive here on the issue of artificial intelligence and education and how you as an economist are trying to work that in. You have likened it. I think I saw this in a presentation you did to the St. Louis Fed about building the plane while you're flying it or something like that. You all in the education world are trying to figure this out as you go.
Yeah, that's right. We are as well as businesses in the corporate world. One of the key things for me was about a year ago, this was National Academy's consensus study, really pointing out that the The value of AI in the future for people making high stakes decisions is going to be for people that have some expertise.
So if our students are offloading that development of expertise, just using it to get answers, then that's not going to help them. So the question then really focuses on how do we help students develop expertise? Both disciplinary expertise, but alongside that, AI skills that use AI as a complement to their own thinking.
This goes back to that thing you mentioned with your students and these songs about making sure they had the right prompts, that they have to have the technical expertise to get the right prompts to get the desired outcome. Right.
Exactly.
Exactly.
Getting back to where we started, you're going to do this song project again next semester?
What do you think?
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Chapter 8: What are the predictions for the economy heading into 2026?
We will see you back here on Monday, all right? This is APM.