The stock market isn't the economy — but it's not nothing either
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What is the significance of stock market performance in relation to the economy?
We'll catch up with the week that was, of course. We'll talk stocks and retail and farming, too. From American Public Media, this is Marketplace.
In Los Angeles, I'm Kyle Risdell. It is Friday today. This one is the 12th of December. Good as always to have you along, everybody. We are at three and counting. That is the number of Federal Open Market Committee meetings one Jerome Powell has left before he is done as chair. And honestly, he's going to have his hands full in the homestretch. Not only is the economy not cooperating with what Powell has said he wants to be a smooth transition, but his colleagues are kind of betwixt and between, too. So we, of course, are going to try to sort it all out right now. Sudip Reddy is at MSNOW. Kate Davidson's at Bloomberg. Hey, you two. Hey, Kai. Hey, Kai. Sudeep, we're going to start with you and we'll go to the nuts and bolts of the meeting.
The headlines already everybody has seen. Anything that the chair said that was surprising to you in that meeting?
Well, he was very clear that this is a difficult path they're on right now. There's lots of dissent, three dissents. That's a pretty big deal, most since 2019. And there's a reason there are all these dissents, because it's really hard to tell what's going to happen with inflation. It has been stubbornly high. That's been quite clear. It's in everybody's minds these days. And there's lots of concern that he was articulating about the job market. and you don't know whether those numbers are going to be on a downward path, whether we're going to see the job market continue to deteriorate, which, of course, would solve the inflation problem, but in the worst way imaginable. And he's trying to navigate a committee that's scratching their heads over all of this stuff and figuring out where to go.
So it's not a good place to be in the final months of your tenure.
Kate, my note prompting me on the next question I wanted to ask you is, and this is a quote from my notes, dissent make me care. Much talk, of course, about how there were three dissents in this meeting, two that preferred not to cut at all, one that wanted to cut even more. Is this – and Powell talked about it a little bit. He said we had a robust discussion and all of that jazz. But it seems to me this is what we ought to be bracing ourselves for because the economy can't make up its mind. The board now is more fractured and we ought to just get used to this, no?
Yeah, I think there's some truth to that and I think your point about should we care, it's a really great question. I mean isn't dissent a sign of healthy debate? Is it inherently problematic? I think that some people would certainly ask that. I think when it can become problematic for the Fed is they rely a lot on their ability to guide markets and to guide and signal things to the American public about where they're headed. And that just becomes really difficult when you're in a place where, you know, as Sudip was explaining, there's so many of them, they're uncertain about where the economy is headed. That's what's driving a lot of this. And so they have very divergent views. So it's not surprising that they would be split, but it just makes it harder for the Fed to send one sort of cohesive message about where they're headed.
And so Jay Powell might think cutting right now is important. And they managed to signal that pretty clearly ahead of this meeting that they were going to cut again. But that just continues to get more difficult next year.
Sadiq, let me ask you this, though. This is kind of a cynical question. Every time you talk to a Fed official, Powell or anybody else, about to whom they are trying to communicate, they always say we want the American people to understand what we do, which, fine, sure. But honestly, they're really talking to the markets. And if I'm some guy in Ottumwa, Iowa, trying to make my mortgage and make my car repairs, the unified Fed message doesn't really matter all that much, right?
No.
It does not matter, but the people who are making decisions day to day are looking for some clarity about whether everything's going to be okay.
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Chapters
6 chapters
1
What is the significance of stock market performance in relation to the economy?
0:02–4:31
2
How does Jerome Powell's leadership impact the Federal Reserve's decisions?
4:31–9:25
3
What are the implications of dissent within the Federal Reserve?
9:25–16:08
4
How do stock market trends affect consumer sentiment and spending?
16:08–20:46
5
What challenges do retailers face during the holiday shopping season?
20:46–26:08
6
How are drones transforming the agricultural industry?
26:08–26:41