Chapter 1: What is the main topic discussed in this episode?
On the program today, we'll take another couple of passes at the Fed meeting. We'll talk China for a bit. And AI comes to your recycling bin. From American Public Media, this is Market Class. In Los Angeles, I'm Kai Rizdal. It is Thursday today, the 11th of December. Good as always to have you along, everybody.
As usually happens, Chair Powell covered a lot of ground in his post-meeting press conference the other day. The central bank's balance sheet was a topic of conversation. What he thinks tariffs are doing to inflation. What he wants his legacy to be, seeing as how he's only got three meetings left before running this economy is somebody else's job. Also, immigration and the macroeconomy.
He talked about how job gains have slowed significantly since earlier this year and how that's likely connected to the Trump administration's immigration policy. And it turns out, as Marketplace's Elizabeth Troval is about to tell us, not only is immigration a labor market story, it's a monetary policy story, too.
To support stable prices and maximum employment, the Fed must decide whether Labor Department data is hot or cold. But to understand that, You have to understand what's happening with the immigrant population. Michael Strain with the American Enterprise Institute says that's because immigrants made up a huge number of new job seekers under President Biden.
But unemployment was steady because massive amounts of new jobs were also created. If we had a month where the economy added 250,000 net new jobs, you know, that looked like a decent month. Those new job seekers from other countries found jobs.
But if the number of foreign-born people drops dramatically, as it has under President Trump relative to President Biden, then the number of net new jobs you need for a decent month drops dramatically. Now, there are far fewer new job seekers out there because of restrictive immigration policies. So the goalposts for what healthy job growth looks like changed.
That could make for some pretty interesting labor data ahead, says economist Yelena Shalitova with the conference board. We could be in an awkward situation when we have a few months of negative payrolls growth, but not in a recession. And it could be like close to zero and still be considered as a relatively healthy labor market.
Part of why these things can balance out is because immigrants aren't just workers. They're consumers, too, says Wendy Edelberg with the Brookings Institution. They are neither supplying their labor nor spending money in the U.S., And so what this means is that the current immigration policy is not just reducing labor supply. It's also reducing how many people employers want to hire.
Immigrants who have left the U.S.
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Chapter 2: What insights did Chair Powell share about immigration and the labor market?
are no longer buying goods and services here, and that eliminates the demand for certain jobs. I'm Elizabeth Troval for Marketplace. Wall Street today, two out of three new record highs. Thanks again, Jay Powell. We'll have the details when we do the numbers. so so
One of the things the president talks about when he talks up his tariffs is that they give him leverage over other countries, which, yes, sometimes for sure. With China, though, not so much. So we're going to talk for a little bit about the state of play between the world's two biggest economies. Adam Posen is the president of the Peterson Institute for International Economics.
Adam, welcome back to the program. Always good to have you on. Glad to be with you, Todd. Let's do a level set here. The temperature of the U.S.-China relationship today versus, oh, say, January 21st. A lot closer to normal, a lot cooler. Well, I mean, too cool is bad, too hot is bad. It's a lot more temperate. How come?
What has been happening just sort of behind the headlines that are making this all seem the way it is? I think there are a few things going on but they all converge.
Chapter 3: How do immigration policies impact job creation in the U.S.?
So one thing which was very important was a month and a half ago or so, the members of the We Hate China Commission which is the US-China Security Commission went to China, met with everybody senior except Xi, made constructive noises that I think are positive about having more military-to-military contact
having reasonable discussions about economic imbalances and what constitutes an export control that's worthwhile or not. And that laid the groundwork that Trump wouldn't get outflanked by people in Congress saying, oh, you have to be more harsh with China. And then finally, we have a situation where for all that China is – dumping exports on the rest of the world.
It's partly due to its own weakness and it's not having that much effect on the US at this point because our economies have disengaged. The other point though is that Trump found out that he doesn't have the leverage over China that he does over others. Right. I want to talk about that weakness domestically in China, and I want to do it on a news item that you alluded to a little bit.
The news a couple of days ago, whatever it was, that China's trade surplus hit a trillion dollars. Yay for Chinese exporters, but that does point up some domestic weakness in that economy. Absolutely.
Generally, you get a trade surplus in large part when your domestic demand is weak, when your consumers are too scared to consume or too busy saving, when you're getting low returns on your economy so investors are not putting money in it. That's when you end up exporting more than you import.
And that's what's going on in China for a few years now, partly because of a real estate crash and partly because – President Xi spooked the heck out of average Chinese property rights being safe or not. Consumers aren't consuming. Small businesses aren't investing. And in fact, even manufacturing in China has been slowly trending down.
So yeah, they got a lot of exports and that's annoying a lot of people, but it's not a sign of robust health. With the caveat that you are an economist and not a political scientist, there is a national security thing that I want to talk about with you.
And that is the news earlier this week that President Trump is going to let NVIDIA sell some of its high powered, not highest powered, but some of its, you know, grade A chips to the Chinese. And of course, that is raising national security and military concerns. Also, the president's doing taking 25 percent off the top from NVIDIA on that one. So I guess the question is twofold.
What's your level of concern about national security? And also, this is another step towards state capitalism by the Trump administration. Yeah, I'm concerned about both, Kai. You're right to raise both of them.
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Chapter 4: What role does productivity play in the current economic landscape?
But it is better than provoking fights with China or trying to exert sense of we're about to lose to China or China could be changed when neither of those is really relevant. Trevor Burrus Yeah. Adam Posen is the president of the Peterson Institute for International Economics. Adam, thanks for coming on. Really good to talk to you, as always. Thank you for having me, Guy.
Hey, stop me if you've heard this one before. Without timely government data, it's really hard to see where this economy is at, much less where it's headed. On the list of things not yet delivered is retail sales. We'll get the delayed October report next week. No clue at all when November numbers are going to be here.
So in the indefinite interim, to fill at least a small part of that gap as best we can, we've called one of our regulars, Wesley Rule of Knoxville Fine Violins. Business has been... Okay, actually. I was looking at the numbers. I think that we've grown. Sales went up about 20% from last year.
Chapter 5: How is AI transforming the recycling industry?
It's a time that a lot of rentals go out because you have kids that are asking for violins for Christmas and maybe parents don't want to spend $650 on a violin. So they rent one to see how it goes. So we have been sending out a lot of rentals. This is sort of high symphony season. There's a lot of orchestras that are playing through their concerts online.
We get a lot of professionals coming in with their instruments where it's like, oh, we turn the heat on and my instrument now no longer sounds the way that it did. And so now we have to do some sort of adjustment because it's a natural material. So it's shrinking and expanding. I don't do it in just eight hours. I'm spending more like 10 hours a day.
And of course, our employee is working as much as he can. My wife, Lauren, has been immensely helpful just doing all of those routine things, doing school deliveries or entering bills or just coming in and cleaning instruments that have been returned. I've been doing everything as much as I can, almost maybe more than I should.
I pulled out a muscle in my back the other day and I've been recovering from that. But yeah, it's pretty typical this time of year. And then, of course, after Christmas, things kind of drop off a little bit. I think back in May, we had to take out a business loan in order to purchase instruments at pre-tariff prices. And we ended up buying quite a bit.
And it's really paid off for us because we've been able to use those. We haven't paid off the loan yet, but I'm not worried about it. It seems like everything's going to work out pretty well. We'll start paying it off at the beginning of the year. We shut the shop down from Christmas Eve, which is my birthday, through New Year's Day. And, you know, we always everybody comes in.
We do inventory during that time and we do some other business things. But we always take that off just so that we and our employees can spend time with family. We're going to have a shop Christmas party where we have everybody come over.
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Chapter 6: What challenges does the recycling sector face today?
That'll be fun, I hope. And, you know, cook some good food and just enjoy each other's company. Wesley Rule, a proprietor with his wife Lauren of Knoxville Fine Violins. Just as you may think, it's in Knoxville, Tennessee. . Coming up. So that's our data. That's our fuel. But yes, that's garbage. Well, OK, then. First, though, let's do the numbers. Dow Industrials up 646 today.
One and a third percent closed at 48,704 did the blue chips. The Nasdaq dropped 60 points, about one quarter of one percent, 23,593. The S&P 500 up 14 points, two tenths percent, 6901. Oracle shares took a tumble today and dragged down the Nasdaq. That's what was going on there. Came after the cloud computing company's earnings call stoked fears once again of an AI bubble.
I was going so fast, I couldn't wait to get to those phrases, AI bubble. Oracle down 10.8%. NVIDIA, it makes chips. Maybe you've heard of it. Actually, it designs them. Dipped 1.5%. Disney is making a $1 billion investment in OpenAI. Characters including Mickey Mouse, Ariel, and Cinderella will be licensed for use in ChatGPT images and Sora videos. I insert here this thought.
What could possibly go wrong? The Walt Disney Company added 2.4% on the day. Bond prices went up. When that happens, the yield goes down. Yield on the 10-year Treasury note dipped to 4.15%. And you're listening to Marketplace. Today's number segment is presented by Intuit QuickBooks. When it comes to running your business, the numbers tell the story and cash flow is the headline.
It's about where you stand today and how you plan for tomorrow. Intuit QuickBooks has powerful money management solutions that keep your money and books in sync. giving you clarity and control over your cash flow so you can act with confidence. QuickBooks Money Tools help you get paid faster and pay bills smarter with real-time insights in your business's financial health.
Automation reduces errors and laborious work while keeping you organized and tax-ready all year. And QuickBooks Money Tools allow you to apply for funding when it's time to grow. Turn your numbers into confidence, clarity, and growth. Learn more at QuickBooks.com slash money. That's QuickBooks.com slash money. Terms apply.
Money Movement Services are provided by Intuit Payments, Inc., licensed as a money transmitter by the New York State Department of Financial Services. This is Marketplace. I'm Kai Risdahl.
One more crack at the Federal Reserve on this Thursday, digging a little bit deeper into why the central bank is thinking what it's thinking, which, based on some of the projections from yesterday, suggests they expect decent economic growth, but not necessarily more jobs. Here's Chair Powell answering the why question. The implication is obviously higher productivity. And some of that may be AI.
Also, I think productivity has just been almost structurally higher for several years now. Productivity. Widgets produced per hour worked. Where, though, are those gains coming from? And why are they going to matter? Here's Marketplace's Nova Safa. The economic data right now is a bit of a conundrum, says Josh Hurt, senior U.S. economist at Vanguard.
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Chapter 7: How does the U.S.-China trade relationship affect the economy?
And there are a lot of reasons that that recycle rate is so low. One of them, though, is that it costs more to sort and process some of those materials than the market will pay for them on the other end. So enter now artificial intelligence.
Marketplace's Amy Scott went to have a look at technology that uses computer vision to more quickly and more cheaply extract value from the stuff that we throw away. In a hangar-like building in Louisville, Colorado, outside Denver, I'm standing in front of a giant conveyor belt, eight feet wide and above my head.
Standing on my tippy toes, I can see it's strewn with crumpled plastic bottles and cans and other scraps. So that's our data, that's our fuel, but yes, that's garbage. You know what they say about one man's trash. Matanya Horowitz is founder and chief technology officer of AMP, a company that builds AI-powered recycling systems. And this is the test lab.
It's going to be loud when he turns the system on, so Horowitz explains what I'm about to see. First, this stream of garbage will pass under a pair of security cameras. It's looking at the material taking photos. A computer trained on millions of images of trash will identify different types of recyclable plastic and then send a message to sort it accordingly.
What we do is we accelerate the material and then throw it off the end of a conveyor belt, and it creates almost a garbage waterfall. And so behind the waterfall, we have a couple air jets, and the air jets just use a little puff of air to punch out the material. That's the warning sound. And then a few seconds later, the machine roars to life.
As the stream of waste pours down from one conveyor belt to another below the waterfall, some items get blown up into one of two compartments. This is our double jet. So it's sorting two commodities at once. So number one, plastics are going on the bottom. Number two, plastics, which are milk jugs, up top. Kind of terrifying. Yeah. It's pretty strong.
It can move like phone books and things like that. scary to watch, but much safer and less tedious than sorting it by hand. Sorting jobs at recycling plants are notoriously hard to fill. Horowitz says this AI-driven system is also way faster. If you or me were to do this sorting ourselves, we would do about 40 picks a minute. And honestly, after an hour or two, we'll get pretty tired.
We probably won't be able to sustain that. These jet devices, they'll do thousands of picks a minute. And that means higher recovery rates at a lower cost. For this demo, AMP's system was just sorting plastic from material sent for testing from its facility in Cleveland. But the technology can identify and divert pretty much anything from the waste stream.
AMP has also developed a process to convert organic material that would otherwise rot in the landfill and produce methane into something called biochar. Think food scraps and greasy pizza boxes. We put it through a process called pyrolysis. It's basically the process they use to make charcoal. The biochar can be used to make concrete or added to soil in agriculture.
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