A view of AI, from Mumbai

SPEAKER_1 (0:00)

This Marketplace podcast is brought to you by Wealth Enhancement, who asks, do you have a wealth blueprint? Your advisor might not offer that. Which means your plan could be missing tax strategies, retirement, estate planning, or more.

See what a comprehensive plan has to offer. Find out what the wealth blueprint at no cost, and see what comprehensive planning can do for you. Though you'll wonder what you've been paying for, learn more at wealthenhancement.com/build.

Kai Ryssdal (0:31)

Hey, so we've got six and a half minutes to fill up at the top of the program. What do you want to talk about? From American public media, this is Marketplace.

In Los Angeles, I'm Kai Ryssdal. It is Friday today. This one is October the 16th. Good as it always is to have you along, everybody. So much to talk about, so little time. So here we go. Courtney Brown is at Axios. Catherine Rampell is at MSNOW. Hey, you two.

Catherine Rampell (1:07)

Hey, Kai. Hey, Kai.

Kai Ryssdal (1:09)

So let's see. Courtney Brown, you get to go first. Inflation this week, 3.7% for consumers. The producer price index, I said this yesterday, it is a whopping 6.3% year on year.

What's happening?

Courtney Brown (1:26)

That's hot. That's hot inflation.

Yeah. When I opened that PPI release, I was like, whoa, and I think a lot of people were like, whoa as well. So it seems like the Fed here, if we didn't know before, has an inflation problem, right? That is why they raised rates in September. What was interesting to me is it looks like this is no longer just a Iran war energy problem. The service sector, what we call super core, service sector inflation and other parts of the economy are also pretty hot. So the big question is, how does the Fed respond to this?

Kai Ryssdal (2:07)

Well, we're going to get to Chairman Warsh and his little adventure over in the Pacific, I guess it was last night, East Coast time. Catherine, I do want to talk to you though about real wages having fallen six months in a row.

If Republicans were not already worried about how this election was going to go, you know, real wages are a key indicator of what the electorate is going to be doing come election day.

Catherine Rampell (2:30)

Yes. American consumers have basically hated this economy for years at this point, maybe in ways that were a little bit disconnected from the fundamentals.

But I kind of understand now why consumers might feel yucky, right? Their wage growth is being outpaced by the increase in costs for some of the reasons that you all just talked about related to the war and to energy. But lots of other things are getting more expensive, too. You know, home insurance is just as an example of a category that has gotten a lot more expensive. So it's not just about things that have energy as an input across the board, more or less. Consumers are dealing with higher costs and their paychecks are not keeping up. If you look at their savings rates as a result, they have been trending down just because they're having to dip into savings essentially to pay for their daily costs. And yeah, they hate it.

Kai Ryssdal (3:32)

They do indeed. Courtney Brown, you brought it up. So I will continue on that thread. The Federal Reserve Chairman Warsh was over in, I guess, Bangkok doing a Q&A thing with the IMF.

Not surprisingly at all, he didn't say anything, but it was surprising that given the data we've gotten, he didn't say anything.

Prashant Warrier (3:52)

Yeah.

Courtney Brown (3:52)

And you know, we live in such a weird world right now.

Prashant Warrier (3:55)

So he has committed-

Kai Ryssdal (3:57)

On so many levels.

Courtney Brown (3:58)

On so many levels. But specific to the Fed, he has committed, we know this, to not doing the forward guidance thing. But still, when he says nothing, financial markets interpret that as something. So his silence was interpreted as, okay, October, they probably won't raise rates. And so that, the fun thing is that even though Kevin Warsh has stopped giving forward guidance, his colleagues have not stopped giving forward guidance, have stopped not giving forward guidance, if that makes sense. So we've heard from New York Fed President John Williams, we've heard from the Fed vice chair, and they both signaled that rates were probably not going up in October. So that's where we are. A little bit of non-forward guidance and a little bit of forward guidance. Put that together, you get a clue about what happens in October.

Kai Ryssdal (4:51)