When is inflation no longer "transitory?"

Oh, look.

Inflation from American Public Media.

This is Marketplace. [MUSIC PLAYING] In Los Angeles, I'm Kyle Riznall. It is Tuesday.

“Today, this one is the 12th of May good as it always is.”

To have you along, everybody. We're going to do a little economic forest for the trees thing, as a way to get going. Today, the April Consumer Price Index came out this morning as you have surely heard.

Inflation is running 3.8% year on your 6th, 10th-percent month on month. That is the headline number. It is not great, and more to the point. It is headed directly away from where

the Fed wants it to be, which is anyone? Anyone? Bueller? Anyone? 2% as you know.

A brief central bank aside here, while I'm at it.

Kevin Worsh was confirmed by the Senate today to a 14-year term on the Fed's Board of Governors, a vote on him to replace Jay Powell. His chair is expected to borrow Powell as you also know, because you were to hear, can stand the board if he likes,

until January of 2028. All right, so back to inflation. Yes, this spike does bring Rising Price's right back front in the center. But as Marketplace is a Christian Schwab explains,

let us not lose sight of the fact that inflation has been a thing in this economy for years now. There is a term economists use to describe a singular and short-lived shock to prices. Maybe one you've heard before, one that Sean Snaith,

who directs the Institute for Economic Forecasting at the University of Central Florida, would use to describe the war with Iran. That is potentially as close to transitory as you can get. He says the spike we're seeing in energy prices

is in theory just a blip, because the war could be resolved tomorrow, but also maybe not. If this continues through the summer and into the fall, then we start to see more downstream effects of higher oil and natural gas prices.

At some point, businesses will have to charge more. Gary Schlossberg, Global Strategist at Wells Fargo Investment Institute, says that will make inflation harder to tame. Even if and when the trade routes are reopened when supply chains and normalize,

inflation will come down, but it could be a more gradual than it might have been a few years ago. - More gradual than it might have been a few years ago, because the war comes after a bunch of other economic shocks. There have been tariffs, which some economists

say caused transitory inflation. There was the pandemic, which the Fed famously said caused transitory inflation. How many consecutive transitory inflation events got a happen before it becomes one big pot

of persistent inflation soup?

“- I think that's also a million dollar question”

that my cook on a misfit like to be able to answer. - Julie Smith, an economist at Lafayette College, says Americans have lived through a five-year period of big increases to the cost of necessities, housing, food, gas.

They feel it, they've come to expect it. - I don't know if that just goes away, if gas comes down. Consumers might assume rising inflation is now a way of life.

A dangerous mindset because consumers expectations can help drive actual inflation. I'm Kristen Schwab for Marketplace. - I'm old enough to remember when the Fed couldn't get inflation up to 2%.

Remember that? Wall Street today, traders were not exactly wild about all that inflation data. We will have the details when we do the numbers. (upbeat music)

(upbeat music) President Trump is on its way to Beijing for talks with Chinese President Xi Jinping about among many other things, the bilateral trade relationship,

an oft forgotten part of which is agriculture. So we got April Hamas on the phone this morning. She goes corn and soybeans in Iowa. - Hi, I was just talking about you with a friend of mine.

- Oh, good, I hope. - I was, I said I went to Des Moines and saw you, she goes, "Oh, if he ever comes back, I'd love listening to him." I said, "Well, you know, we're kind of friends."

So yeah.

“- I don't think we're friends, I think we're friends.”

First of all, the standard question,

You got the crop in the ground, right?

- I got the crop in the ground.

“We had the fourth-wetest Apriling record”

and now we're the sixth-the-dryest Mayan record. So welcome to Iowa. - What does that mean like for a non-farm person? Is that, that can't be good? - For a non-farm, it means I got a good start.

I have good soil moisture and now we're praying for a rain. Farmers are never happy. - Yeah, well, that's true. Look, we're checking back in relatively soon after the last time we talked to you,

which we looked it up was the 20th of February, which becomes relevant in a minute. And we'll call in your back because I want to talk about two things. I want to talk about China and the President's trip

and I want to talk about the farm economy

and it seems to me you're the person

who can do both of those things for us. - So, yes. - Last expectations both of those, right? - Well, the last couple of times we've talked and this is going back, you know,

and way back into Trump one, you were not hopeful about the Chinese interest in American agricultural products being restored. And I guess I wonder where you are on the eve of the President going over there.

- Well, number one, I hope it's more than window dressing. You know, I hope it's more than just, let's meet up and make this look good. As far as soybeans know, we're not looking for anything more than what they promised last fall.

And mostly because they can get their soybeans from Brazil, who just finished their harvest for much cheaper than they can buy ours. So what we're really looking for is all the other commodities now are going,

what about corn and let's do weed and things like that. So that's really what we're hopeful for more than soy, which is really kind of new. - Yeah, yeah, yeah, yeah, no totally. And we talked about that.

“You're hoping for it, do you need it, you know what I mean?”

- Yeah, with everything that's happened to us, our markets through tariffs and everything, the more exports we can get the better. We need our prices to come up because our inputs have become so much more.

- Well, I'm glad you went there. It's almost like you have my notes. It's almost like you have my notes on this conversation. Let's talk about those inputs, right? Fertilizer and all of those things, right?

We check back with you, I had some folks call you and check back in and make sure you had gotten your Fertilizer pre-bought in all that jazz. What about next year though, you know? - I did, you know what that is?

The huge question now that all of us are asking. Last year it went up 30% now they're saying another 30%. Fertilizer is the huge question, seed, seed, everything, and fuel. - Yep.

- That has, I don't know, it's taken quite a height. - What are you paying for a gallon of diesel now and how many, that big thing that I drove, whether I don't know if it's a comb on our trip, whatever it was.

- Yeah, that big thing you drove. - That big thing, that comb line, and that was very proud of you didn't run over and you might go on. - Well, it was all automated, it probably came on. I could barely, I could not have ruined it.

I could not have ruined it. - What do you pay for a gallon of diesel and how many gallons does that combine need to do whatever you do on a day? - It needs a lot.

I think it has almost a 300 gallon tank. - Oh. - Yeah. - And well, it's a big engine, it pulls a lot of horsepower but then, you know what I was saying?

- It's like, like, nationally, diesel's like six, 10, 16, 20, something? - Yeah, it's around five here for the road. We get the road tax taken off for farm equipment.

“But that is going to be huge, and that's what I'm here”

more than anything, the fertilizer and the fuel. And I wish I knew the answer to all of this. - Yeah, no, I bet, but look, on a more serious note, do you know people who have said, I can't make this work anymore, I gotta do something else?

- I know a couple who are my age, retirepin age, who are just at, I'm not gonna plow through my savings, you know? Now, there's probably more that are gonna hang on too long. And, you know, I talked to Mike banker and he said, I got, I got guys selling farm land to pay for the equipment

they bought a few years ago when it was good. You know, that's where, when you start selling your assets to pay for other assets, that's not good. So, no farmer wants to rely on the government and the government payments, and here we are.

- We need to all sit down and have meaningful talks on how to get through this, not the window dressing, not the promises. - Yeah. - Oh, I went there, didn't I?

- No, it's a little, that's why we call you.

You, I mean, I can always bank on,

he's definitely in the play it is. April him is corn soybeans and some wisdom there. And I will, April thanks a lot. - You bet. (upbeat music)

According to the small business administration,

“there are just north of 36 million small businesses”

in the United States, that's companies with less than 500 employees and they account for, get this. 99.9% of all the businesses in this economy. And right now it seems the vast majority of them do not plan on growing very much any time soon,

just 7% of small business owners say now is a good time to expand, so it's said the national Federation of independent business today. Then you'll ask him, has more on what's keeping those small firms and getting them just a little bit bigger?

- John Evis owns a landscaping and design firm in Minneapolis. This morning he was on his way to build a new set of doors for a custom designed shed. - The old ones weren't right, so I'm gonna be out there cutting steel

and getting ready to build the doors. - Evis does a lot of this dirty work himself because he likes to, but also because he has just five employees. He has heard from a number of job seekers in the last two months. - They've worked for years in their own companies

“or I think a couple of max you got laid off recently.”

- But Evis says many don't have the skills he needs. And that's a challenge for small business owners nationwide says Celeste Brothers of the University of Tennessee. - Currently there's about as many job seekers as there are job openings.

- However, the candidate might just not have the right mix of skills. - So owners may be wary of taking a chance on new hires says Carothers. - Even in the best of times, the prospect of expansion

for a small business is gonna be a pretty risky one. - And it is far from the best of times for small businesses. Holly Wade from the National Federation of Independent Business says you can see why in today's CPI report. - So those inflation pressures

are becoming more difficult and challenging for small business owners.

“- 16% say inflation is their biggest challenge.”

That's the highest chair in over a year. Beth Wood owns the 21 bar in grill in King New Hampshire. One of her fastest rising costs. - Right now it's tomatoes as crazy as that seems a case. The tomatoes is over $100.

- Up from 65 a few months ago. Fortunately, her new spring menu leans more pesto and less red sauce. I'm Daniel Aquaman for Marketplace. (upbeat music)

, (upbeat music) - Coming up. - I mean, if you look at me, I'm an old gray hair guy, I've been doing this a long time. - With age comes wisdom, but first, let's do the numbers.

- Well, here you go. - Down Dust Rose added 56 points today about a 10% 49,760. And as deck, well let's say 185 points about 710% closed to 26,000 to and 88, the S&P 500 did the 11.210% 7400 on the nose.

Sportswear brand under Armour cited the Warner on and additional marketing investments

as it reported a loss for the quarter of just over $43 million

revenue down 1%, which is about what animal is expected under Armour plummeted 17% during the session. Competitor Lulu 11, subtracted 1% Nike slipped just under 110 that 1% venture global, which is an exporter of look for natural gas reported

earnings that beat estimates today earnings per share proved 4 cents. That is six cents above analyst expectations. Got a love beaten analyst expectations. Venture global stock climbed 14 and 210 that 1% today.

Total household debt ticked up a 10th of 1% to 18.8 trillion dollars in the first quarter of this year. So set the New York Federal Reserve credit card balance

is down by $25 billion such a decrease

is common in the first quarter as consumers pay off expenses occurring during the previous quarter's holiday spending. Holiday retail reverberates throughout the year. Bond down yield on the 10-year keynote rose, 4.46% seems to me like we need to do

a bond market story or listening to marketplace. This is Marketplace. I'm Kyle Rizdall. May is what the calendar says, which means the job market is a wash and fresh college graduates and it is not easy out there.

The research firm Revealial Labs says since 2023 entry-level job postings in the United States

Part of that seems to be AI outsourcing

“to coin a phrase, artificial intelligence,”

taking out some of those jobs. But universities and the students within are betting on AI for their future. MIT rolled out a new major a couple of years ago called AI and decision-making.

Professor Osumann Osdaglar is the deputy dean of academics for the Schwarzman College of Computing at MIT Professor Welcome to the Program. It's good to have you on. Very good to be with you. Thank you.

Let's say, first of all, let's say that I could get into MIT. But then I decide I want to be an AI major as it were. AI and decision-making, what would I learn? What am I going to be taught? Yes. So AI D major is a new major.

It was designed by ECS department. Actually, even before the chatGPT was released. So we were planning for this big wave of new technologies. But what it teaches you is really about building

these powerful AI systems, how to design them,

how to understand them, how to build them. And how do you deploy these systems? Across the economy. Don't have to read the newspapers too closely to imagine that this is an extremely popular program at MIT.

Yes. Yes. It is a second largest major after the computer size major right now. And then these jobs that these students are going to get once they graduate.

What, I mean, are they going to go work for chatGPT and dropping it all that? I mean, what do you imagine? They can, but it's such a broadly applicable toolset that many students also are interested in using this

in health tech or finance. So I believe this will basically enable the graduates to find job prospects in a variety of different sectors. Let me ask you the epistemic question here, which is, this field is chained and look.

This is from a late person's perspective on the outside as opposed to you, the actual computer scientist. But it seems that this field is changing so very quickly. How do you keep up with teaching students when all these changes are happening at such speed?

It's a very good question. It's a challenge. It used to be before this AI wave. You develop a class. You teach it for whatever 20 years.

Of course, every year you change it a bit. But this is a completely differentable game.

“Like every six months, you need to update your course materials.”

You need to introduce new courses, because there are new paradigms that emerge within a few months time frame. I just also want to highlight, though, that we believe there are some foundations

that are critical for the students to learn

so that it's not just a generative AI and chat GPT. They learn about foundations of to use this intelligence for enhancing human experience, human work, human education, all of those domains, so that no matter how the technology changes, these students can adapt their skills

to the new set of tools and developments. Can I ask you the human question here, Professor? Because a lot of us on the outside of the computer science and AI world are looking at the speed and the power of this technology and there's some alarm.

And I guess I wonder where you stand on that? Yeah, that's another very good question. So new technologies always impacted society. It's not just particular to AI. But this one is, first of all, very rapid.

It affects a lot of different sectors simultaneously. And then, because of the natural language interface, many, many people with varying expertise levels can use it. So it's a very different kind of technology.

“For that reason, I think there's great need”

for being cautious and attentive, I think, to where it will be used, how it will be used. So that's the reason where we put human centered aspect of the AI major, which sort of highlights our thinking

around these issues being critical to the development

of the technology itself. Yeah. Professor Azur, of the alarm at MIT. Thank you so much for your time. I appreciate it.

Thank you, thank you very much. There is good news for this increasingly power-hungry economy of ours.

going to be getting a hydroelectric power

“from hundreds of miles away up across the Canadian border”

in Quebec.

It's going to be the second to big power line connecting

the American Northeast to the French-Breaking province to come online this year. The first one to Massachusetts powered up in January. Each of those projects has been more than a decade in the making.

From back when states started looking to cut their carbon emissions by turning to go back to surplus of clean hydro power. But as Marketplace is Henry App explains, both the energy market and the economy have changed the whole lot since then.

To get hydro power from Quebec to New York, the developers of the new Champlain Hudson Power Express line designed special barges to drop cables to the bottom of Lake Champlain. They drilled under the East River.

And they built a facility in Astoria, Queens, where the line ends its 300-plus mile journey.

“And if you look down, you can see the two black cables sticking up.”

Those are the cables that come from Quebec. Bob Harrison is the head engineer for this project, showing me an array of electrical equipment connected to the cables. On one end, there's a metallic arm, the length of a pickup truck

sticking straight up. And this large device in front of me here is a disconnect switch. So the fact that that standing straight up tells you that we are disconnected from Quebec.

Soon, that arm will lower sending electricity onto the New York City grid.

And after power, a million homes.

It all makes Harrison a little emotional. He's worked on the project for 11 years. I mean, if you're looking me on an old gray hair guy, I've been doing this a long time. And I have spent 25% of my professional career

trying to get this project across the finish line. When Harrison started 11 years ago, building the line made perfect sense given the region's energy market. HydroCabac, the government owned utility north of the border, had lots of energy to spare.

Pierre Olivier Pino is a professor of energy sector management at the business school HEC Montreal. We had almost 15 years of above average water inflows in terms of rain coming into the reservoir of hydrochabac. It gave an illusion of a plentiness and abundance

of hydropower. So the government of Quebec pushed to sell more power to the northeastern U.S., where states were looking to get away from fossil fuels. We export relatively cheap hydro to the U.S.

They pay us and they decarbonize, so everyone wins.

11 years later, now that the lines are finally installed,

Quebec's surplus is not what it used to be. The province has been in a drought for three years. So there's less water the utility can pass through its dams. Meanwhile, there are new industries and data centers north of the border that want cheap hydropower.

And Pino says Quebec has its own decarbonization goals. So now these lines are not seen as such a good deal because people are starting to think, well, we actually need the electricity in Quebec to decarbonize. So while hydrochabac is meeting all that demand,

it also needs to fulfill its contracts to send power to the south for the next 20 plus years. And New York and Massachusetts are counting on that. Aaron Smith is clean grid director at the environmental league of Massachusetts.

This is going to meet 20% of the region's electric needs. That's very substantial for a single project. The new transmission line will take a huge bite out of the state's mandate to cut carbon emissions from the electric sector, but it can't do the whole job by itself.

It's a piece of the bigger clean energy portfolio. A portfolio that isn't developing as smoothly as policymakers had hoped. In particular, offshore wind. And without that source of electricity,

“the new transmission lines are even more important to the region.”

Mark Montalvo is head of the Energy Consultancy Daymark Energy Advisors. They were going to be two parts of a much bigger set of things. And now they look like they're the things. 20 years from now after the contracts between hydrochabac and the states have expired,

the power lines could wind up running in the opposite direction. If New York and Massachusetts managed to build out more wind and solar, it might be the US that occasionally has surpluses of power. Project Engineer Bob Harrison says, especially in the winter when Quebec typically uses the most electricity.

So there's a thought that in the winter, you could send power north and in the summer, send power south, but that's way in the future. By then, it'll be a different engineer's job to sort out the details.

In a story of Queens, I'm Henry App from Marketplace. (upbeat music) This final note on the way out today in which the straight of our moves is still closed.

or four percent of peace back up above $100 barrel.

“We started with inflation rather, we will end with inflation.”

Jordan Manchys and I am Maharaj,

Jenna Win, Olga Oxman and Virginia Case Smith,

are the digital team.

“I'm Kai Rizdahl, we will see you tomorrow, everybody.”

(upbeat music) - This is APM.

“- Anxiety, depression, bipolar disorder,”

at least half of us will experience

a mental illness in our lifetime. In a new series of special reports from Call to Mind, we hear about the mental health impact of stress, climate change, immigration, and more. Tune in for conversations with people managing hardship

and experts seeking solutions, listen to Call to Mind from American public media. (upbeat music)