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Chapter 1: What are the implications of Medicaid cuts and work requirements?
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On the program today, what really is in a word? From American Public Media, this is Market Class. In Los Angeles, I'm Kyle Rizdahl. It is Tuesday. Today, this one is the 2nd of June. Good as it always is to have you along, everybody. What I'm about to say is perhaps self-evident, but bear with me here for a second, would you? Words have meaning. I know, basic, but important.
Our words of choice today are wages and income. As we were saying yesterday, we're going to get an update on worker wages on Friday when the May unemployment report lands. But as Marketplace's Justin Ho reports today to get us going, economists and analysts are keeping an eye on incomes, too.
Every month, the Bureau of Economic Analysis offers up a few different ways to measure people's income. There's total personal income. There's income after taxes. But neither of those gives us a clear picture of what's going on with the labor market, because they include payments from the government that are not wages. So the BEA offers another measure of income.
Personal income excluding transfers like Social Security payments and so forth.
That's Menzi Chen, an economics professor at the University of Wisconsin-Madison.
If you're trying to get at the sort of underlying state of the private sector, personal income excluding the current transfers is more useful.
Right now, that number is telling us that income has been falling. It peaked back in September. Shannon Grein is an economist with Wells Fargo. She says one thing that's dragging it down is inflation. Higher prices are eroding a lot of the purchasing power of households, which is obviously a challenge. Grein says wage growth is slowing, too, because demand for labor is weak.
No matter how you want to characterize it, the labor market has moderated over the past number of years, right? We're basically at stall speed in terms of hiring. The latest openings data suggested a little bit of a pickup, but openings remain lower than they've been. This decline in income could drag the rest of the economy down with it.
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Chapter 2: How are personal incomes and consumer spending changing?
People will tend to visit stores probably less often and probably buy more when they're there. Again, a change in spending habits, but not necessarily a change in spending. Swartz says Americans are on edge between high gas prices, low consumer sentiment, a war.
Nothing is stable at the moment.
But the bottom line is that consumer spending is better than what you might expect and better than what a lot of these companies expected. So why are consumers acting cautious but still spending? It's like people are waiting for the other shoe to drop. Ravi Dhar at Yale says that shoe is income, be it a stock market crash or a housing market crash or, most consequential, a job market crash.
Do I have a job? Am I making enough money today? Which allows me to spend on the different things that I like to spend on.
Ravi says consumers are likely to keep spending pretty steadily until they can't. I'm Kristen Schwab for Marketplace.
Famously, around here at least, the Federal Reserve has a favorite measure of inflation, PCE, the Personal Consumption Expenditures Price Index, which, as we learned last week, sits at 3.8 percent. 3.3 percent if you want to talk the core measure, but either way, well above the Fed's 2 percent target.
At his confirmation hearing in April, though, new chair Kevin Warsh had some thoughts about that. The measures I prefer are looking at things that are called trimmed averages. Trimmed averages, also called trimmed means.
What the trimmed mean inflation measure is trying to do is it's trying to exclude price jumps.
Tiffany Wilding, she's a managing director and economist at PIMCO right there.
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Chapter 3: What factors are affecting consumer choices in spending?
The older the well is... The harder it is to fish everything out and clean it out and get to the bottom. Most wells in the state are undocumented, but the number the state knows about has been going up, according to Bettner's report. And that's actually good, according to Sarah Armitage, a Boston University professor who's researched the oil drilling industry.
The availability of federal funding to assist states with this cleanup process has increased the incentive for states to undertake this costly effort to go out and document their orphaned wells. Because step one to solving the orphaned well problem is figuring out how big the problem is. Step two is getting the money to plug the wells.
And so if the well becomes orphaned, the funds available to the state to cover plugging costs are only a fraction of the actual costs incurred. David McMahon, the lawyer, has been trying to get a bill passed in West Virginia that'll help fix that. I'd say there is some hope, but getting anything through the legislature that portions of the oil and gas industry oppose is not going to be easy.
Lawmakers introduced the bill in February. It would force drillers of new wells to set aside money in a bank account that'll cover the cost of plugging them later. In Dunbar, West Virginia, I'm Kaylee Wells for Marketplace.
This final note on the way out today in which our packages may be showing up 4% later. Saw this tidbit in the Wall Street Journal. Data from Inrix, that's a transportation analytics company, that shows commercial truck drivers were driving on average 4% slower in late April than they were at the beginning of the year.
That is surveying 60 million commercial truck trips across 10 major metro areas. Why, I hear you ask? Diesel right now up 44% from before the war. Jordan Manji, Zonil Maharaj, Janet Wynn, Olga Oxman, and Virginia K. Smith are the digital team. I'm Kai Risdell. We will see you tomorrow, everybody. This is APM.
I'm Amy Scott, and this week on our podcast, How We Survive, I travel to an undisclosed location in the San Francisco Bay Area to learn about a controversial solution to the climate crisis. It's called solar geoengineering, and it's basically a way to dim the sun in order to cool the planet. Proponents view this as a necessary intervention. Others are not convinced.
If we do this, this is a decision that will affect all life on the planet. I don't think it should be up to a couple guys in California. And while so far solar geoengineering is happening at a small scale, what happens if a rogue nation or a rogue billionaire makes the decision for us?
I don't see that we have a world government that is capable of making a decision on behalf of everybody who lives on the planet. Listen to this week's episode of How We Survive on your favorite podcast app
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