A cast of hawkish central bankers

SPEAKER_1 (0:00)

At Sentry, understanding starts with taking a seat, talking face to face, getting to know your business firsthand, diving into details, seeing risk from every angle, becoming experts in your business, and crafting coverage that really makes a difference. So save us a seat, we've got work to do. Property and casualty coverages are underwritten by a member of the Sentry Insurance Group, Stevens Point, Wisconsin. For a complete listing of companies, visit sentry.com. Policies, coverages, benefits and discounts are not available in all states. See policy for complete coverage details.

SPEAKER_2 (0:30)

Running a business is hard enough, so why make it harder with a dozen different apps that don't talk to each other? Introducing Odoo, the only business software you'll ever need. It's an all-in-one, fully integrated platform that makes your work easier, from CRM, accounting, inventory, e-commerce and more. And the best part, Odoo replaces multiple expensive platforms for a fraction of the cost. This is why over thousands of businesses have made the switch. So why not you?

Try Odoo for free at odoo.com. That's odoo.com.

Kai Ryssdal (1:01)

Well, ladies and gentlemen, let me just say, it is going to be a week. From American Public Media, this is Marketplace.

In Los Angeles, I'm Kai Ryssdal. It is Monday today. This one is the 14th day of September. If you can believe it, good as always to have you along, everybody.

All right, well, let's see. Shall we wear things stand as we roll toward the last quarter of this year? Borrowing costs are up. Energy costs are up and related as we learned last week. Inflation is still up. The stock market is a little bit dyspeptic. Consumers, the same. So as we tee up what is going to be a big week in this economy, we've called Wendy Edelberg for some insight. She's a senior fellow at the Brookings Institution. Hey, Wendy.

Wendy Edelberg (1:59)

Hey there, Kai.

Kai Ryssdal (2:00)

So let's get a little ground truth here just as a way to get going. Your general thoughts on the state of this economy as we sit here in mid-September?

Wendy Edelberg (2:10)

I mean, policy is doing its best to derail it, that's for sure. But it has remained resilient.

Kai Ryssdal (2:21)

You say resilient like it's a dirty word.

Wendy Edelberg (2:25)

I mean, I think markets have been and businesses have been assuming that surely President Trump will be disciplined by what he knows would be the economic effects if he was too irresponsible with the war in Iran, if he was too irresponsible with tariffs. And I think you're seeing some glitches in market prices as like that theory is being tested. And so, resilient, yes, but I think the trade war with Canada, I think the stepped up hostilities with Iran, with no sense of how that ends.

Yeah, I think he's testing the resilience.

Kai Ryssdal (3:12)

I hate to be hung up on your vocabulary here, but your use of the word disciplined is interesting in regards to the president, because you and I have literally had the conversation before about how the bond market was going to discipline the president and keep him sort of within the lines, as it were, of a productive and functioning economy.

And clearly, that's not the case. We've got the tenure this morning topping 5%, the 30 year was it like 5.3 or something. So the bond market is having none of it.

Wendy Edelberg (3:40)

I mean, I think they are paying, I know they are paying very close attention, the Trump administration is paying very close attention to the level of interest rates. And I think that explains why Besant is trying so hard just to get them down to game of basis points that he's playing.

Kai Ryssdal (3:56)

Right. Hundreds of a percentage point for laypeople.

Wendy Edelberg (3:59)

Yes, hundreds of a percentage points. Yes, sorry.

You know, so they are paying close attention, which suggests that it's affecting their decisions in some way. But I don't think that actions by the Trump administration or by Congress are the sole reason that interest rates are where they are. I think that there's a whole lot of borrowing going on by tech firms.

Kai Ryssdal (4:23)

Yeah, yeah. So we're going to get to that a little later in the program. Do me a favor, would you, and with an eye toward the calendar, which is to say that the Federal Reserve meets tomorrow and Wednesday, channel your inner Kevin Warsh for me.

And as he heads into this meeting, where he's either going to have to disappoint the market if he doesn't raise rates, and he has the choice of disappointing the president who appointed him if he does raise rates, what do you suppose is going through his mind right now?