October 6, 2023 • 48 mins
In the latest episode of "The Middle with Jeremy Hobson," we tackle how high interest rates and inflation are impacting the financial plans of everyday Americans. He's joined by David Brown, host of the Business Wars podcast and the Texas Standard, and Juli Niemann, a financial analyst with Smith Moore and Company. The Middle's house DJ Tolliver joins as well, plus callers from around the country.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
Welcome to the middle. I'm Jeremy Hobson. It is great
to have you here for our new weekly show. If
you joined us last week, you know we have a
house DJ named Tolliver.
Speaker 2 (00:13):
Hi Tolliver, Hey, Jeremy, how's it going. It's our second show.
We're going up so fast.
Speaker 1 (00:18):
I'm going up so fast. You're joining us today from
Colorado Public Radio in Denver, bouncing across the country and
when it comes to the country, Tolliver. The House is
not in order right now, the House representatives, of course,
and maybe we will find out next week if they
can agree on a replacement for former Speaker Kevin McCarthy,
who was ousted this week. Maybe Kevin McCarthy should have
(00:39):
called into our show last week when we were talking
about how to talk with people you disagree with politically.
Speaker 3 (00:45):
He did.
Speaker 1 (00:47):
I don't think that. I think I listened to the voicemails.
I don't think he did. But we did get some
great ones, and we listened to those voicemails. Let's listen
to some of those calls that came in.
Speaker 4 (00:57):
My name is Karen, I'm calling from all in Missouri.
Speaker 5 (01:01):
The name is Donald.
Speaker 6 (01:02):
I'm in Houston, Texas.
Speaker 7 (01:04):
My name is Christakiger. I am a Presbyterian minister. I
live in Eudora, Kansas.
Speaker 8 (01:10):
Noah Patterson from Cape Maine, New Jersey. Ultimately starts with
an individual's personal choice to be open to listen, and
then from there it's a lot of how you frame
the question. I disagree sounds a lot different than you
were wrong.
Speaker 4 (01:24):
I think what we're actually experiencing is a return to
how politics were back at the beginning of the Civil
rights movement, which is my earliest memory as a sixty
plus year old woman of color.
Speaker 8 (01:37):
One of the things you have to do to disagree
with people who are disagreeing with you is say, excuse me, how.
Speaker 5 (01:42):
About giving me an example of what it is you
disagree with, and I'll do the same.
Speaker 7 (01:47):
Creating that spiritual space where we invite people to listen
even in our differences, Folks in our congregation can still
get along, even if they arrive at different places.
Speaker 1 (02:02):
Just some great calls last week, Thank you if you
called in. But in addition to some of the drama
we just talked about on Capitol Hill, we also got
word this week that the interest rate on a thirty
year fixed mortgage is now averaging almost eight percent, causing
mortgage demand to drop to the lowest level since nineteen
ninety six. So Tolliver, the question we are asking this hour.
Speaker 2 (02:26):
Is how are higher interest rates and inflation affecting you?
Speaker 1 (02:30):
And what is our phone number?
Speaker 2 (02:32):
It's eight four four for Middle that's eight four four
four six four three three five three. You can also
write to us at Listen to the Middle dot com.
And if you want to buy me a house while
you're at it, I'm good with that.
Speaker 1 (02:42):
And by the way, I encourage people to go to
Listen to the Middle dot com and write to us
there or through our social media channel which are linked
to there, because we have a new phone system and
we're still working at the kinks right now. So let's
get to our panel. Guests joining me from Austin, Texas
David Brown, host of the Business Wars podcast. He's also
managing editor and hosts of Texas Standard from Station KUT.
(03:05):
David is great to have you here.
Speaker 3 (03:07):
It's great to be invited to join y'all. Thanks so
much to hear me.
Speaker 1 (03:09):
And I want to ask you just because you're in Texas,
which is a state by the way, that even when
the economy is kind of floundering in other places. Texas
likes to talk about how its economy is doing great.
How does it feel right now inflation wise? To you
in Texas?
Speaker 8 (03:24):
It hurts.
Speaker 3 (03:25):
I think it hurts a lot of folks all over.
I think we've all felt a pinch of somewhere between
a quarter to a third of an increase in prices
for consumer goods. I'll tell you what's not really not
not hurting us so much. I was out in California
talking with an Uber driver and I mean, you know,
(03:47):
we're not suffering from the gas prices. And energy is
such an important and volatile component when it comes to inflation.
So there, you know, gas prices are higher than they
have been, but they're not outrageously high as high as
they have been in past years, past recent years. So
(04:08):
you know, getting along fine. But I say getting along fine,
not everyone's getting along fine, right, And a lot of
people are really hurting.
Speaker 1 (04:16):
And we're going to get to that as we as
we get into this show. Let me bring in our
other guests from Saint Louis, Missouri. Julie Nieman, financial analysts
with Smith Moore and Company. Julie, great to have you
on the show as well.
Speaker 9 (04:26):
Great to be here.
Speaker 1 (04:28):
And how does things how do things feel from your
vantage point as you talked to your clients and other
people in Saint Louis. When it comes to inflation right.
Speaker 9 (04:34):
Now, well, inflation and interest rates were made total linkage
just because of Jerome Pole. But inflation's the thing that's
really hitting people and hitting home because it covers not
only the poor, but it covers also middle class and
low middle class who are making it. But they don't
have much room for a margin of error here. It's
really hitting them on food and energy, the two big
(04:57):
drivers here, and until we see some breaks in that,
you're going to be seeing all of income going out
that way and more debt taking on. So that's where
you're really suffering.
Speaker 1 (05:07):
Julie. We do know that from a high level that
inflation has been coming down over the last year. Does
it feel like that.
Speaker 9 (05:15):
Some areas it has, but service inflation has gone up
and continues to go up. There's not much break in
housing prices. You know, you're still seeing pretty sticky there
because that has been a long term shortage, and you're
not getting massive building there either, So it's strong demand
and that's why Powell's going to have a tough time
with inflation, some of it he can't fix. When you
(05:36):
have strong long term shortage and housing strong long term
demand in areas, there's nothing you can do about that.
Speaker 1 (05:44):
You know, you've brought up your own Powell a couple
of times. The FED chair David Brown, is he the
one with the magic Wand here the people are going
to blame President Biden. They might blame Congress if things
don't get better from an inflation perspective. But how much
power does Jerome and Powell have to fix this problem?
Speaker 3 (06:02):
Has a lot, and he doesn't have very much, doesn't
have enough. You know that One of the reasons I
love talking about business is because you know, these are numbers.
We can all agree on a kind of a baseline, right.
You can look at the data and you can say,
this is what's real. Now what do we make of that?
Whereas in politics often you have two or three narratives
built around you know, the same set of facts. So
(06:23):
I really, I really think that, you know, when it
comes to the power that of the Fed, we're talking
about the Open Market Committee primarily, and wouldn't I wouldn't
put a whole lot of weight in one particular person,
although there have been people Ben Bernanke comes to mind
who have been instrumental in trying to deal with this
(06:45):
issue in the past and who are kinds of lions
in economics. But to be honest, I think a better
perspective is less looking at the personalities. And I don't
say this very often, but I think that it's less
a look at the personalities and more a look at
what this grouping of people who meet several times over
(07:06):
the course of a year and talk about the direction
of the economy where they are leaning. And I think
one of the best gauges of making that determination are
trying to get a consensus around what it is where
the Federal Open Market Committee's leaning. I think you look
at the at Wall Street, you look at the markets,
you know, so.
Speaker 1 (07:26):
You look at the markets right now, I mean that,
you know, we've had a lot of bad days in
the markets recently.
Speaker 3 (07:31):
We have we have you know, you know those vacuum
gauges on a car where it shows you whether or
not you're using too much gas or you're not using
I you know you're saving all right. Well, if you've
ever noticed on those vacuum gauges. If you step on
the gas, you know you're burning up a lot of gas,
and it's showing that. You know, it's showing that your
fuel consumption is too high. So you back off just
(07:54):
a little bit and it seems to line up. Ah,
you're in that eco mode now, right, You're in that groove.
But but if you'll notice, if you're not giving it
enough gas, pretty soon your fuel efficiency will drop off
the other direction. And I think of Wall Street as
kind of doing that. It's that sort of vacuum gauge.
It's telling us just how efficiently things are running. And
(08:15):
right now that's all out of whack. I mean, if
you go on you know, I was just on market
Watch a moment ago, and here's the headline. The stock
market is building up to a major buy signal all
right now. Right below that headline in the picture that
accompanies it is an opinion piece stock market over sold.
So you know you're going to see all kinds of
(08:36):
different takes on what's happening with the market. It'll be
up one day, down the next. But I think a
better read is to try to sort of synthesize a
consensus around which way the market's headed and what that
marketplace is trying to tell us.
Speaker 9 (08:54):
Julie, Well, an intrinsic to that is that you have
the real market indicator is where are going the quality
of earnings that come out of it? Because jolly numbers
are out there all the time and earnings are artificially kided,
we know that. But when earnings are reviewed in terms
of quality earnings, you know which direction the market ultimately
is going to discount. Right now, the quality of earnings
(09:16):
is not good. There are so many accounting gimmicks and
jolly numbers of Wall Street is using to inflate earnings
for one major reason, make them look better than they are,
because that's how everybody's compensated. That you really do have
an over not an over sold market. You probably still
have a lot of froth in the market, especially in
certain sectors. You take a look at the Magnificent seven.
(09:40):
You know, are these semi tech companies really worth all
that money? You're looking at artificial intelligence discounted for the
next fifty years. When the price earnings multiple, it's a
little hard to believe on that. So there's still a
lot of froth out there.
Speaker 1 (09:54):
You know, we're talking about these these things like the
markets and mortgages. I want to point out that there
are a lot of people who do not own homes,
are not invested in big ways in the market, and
in fact, when you look at the numbers, people who
are renting feel inflation in some cases more than people
who are homeowners.
Speaker 3 (10:13):
David Oh, Absolutely, I mean, there's no question about that.
And in fact we're seeing certainly here in the Austin area,
but I think in Texas, which has had extraordinary growth
over the past four years or so, a real housing crunch.
I was reading the other day about this AIRB and
B effect and what that means for real estate, and
(10:37):
the point that was being made was that now you
have a market for people who are looking for places
to buy and basically rent out. That's in a perfect world,
of course, with interest rates as high as they are
right now, not a lot of people wanting to go
out and buy. But those who do buy are heavily capitalized,
which means they have a lot of money and it's
not everyday folks, and that means that there's a real
(10:58):
fight for a lot of those spaces, and that allows
those prices to drift upwards and it's contributing. I mean,
we see it as a major factor in what we
call our rising inflation rates.
Speaker 1 (11:10):
David Brown, host of Business Wars and Texas Standard and
don't go anywhere. We'll be right back with more of
the middle. This is the Middle. I'm Jeremy Hobson. If
you're just tuning in, we are a national call in
show focused on elevating voices from the middle geographically, politically,
and philosophically, or maybe you just want to meet in
(11:32):
the middle. My guests this hour are Julie Nieman of
Financial Analyst with Smith Moore and Company, and David Brown,
who is host of the Business Wars podcast and Texas Standard.
And we're asking you how are high interest rates and
inflation affecting your personal economy? Tolliver, what is that number again?
Speaker 2 (11:51):
It's eight four four for a middle, that's eight four
four four six four three three five three. Come on,
give us a call.
Speaker 1 (11:57):
Give us a call, or go to listen to the
Middle dot com where you can reach out to us online.
And I encourage you to do that because the phone system,
you know, again it's new. We're figuring it out as
we go. Right now. I by the way, I want
to welcome this week the listeners of last former Southern
formerly Southern California Public Radio and KNPR Las Vegas, Nevada
(12:18):
Public Radio. Great to have you with us as well.
Speaker 8 (12:22):
I want to.
Speaker 1 (12:23):
Ask David Brown what other tools are available to policymakers
like people at the FED when thinking about trying to
bring inflation down other than simply raising interest rates further.
Speaker 3 (12:37):
Well, price controls come to mind. I don't know if
how many of our listeners were around back in early
seventies when meat prices began to spike and it was
a real, huge inflation concern and it wasn't at all
clear how the US would get out of it. President
(12:58):
Nixon was in the House and he announced these very
at the time very popular controls on the price of meat.
It would fix it so that folks could afford it.
Sounds great, but there are some real problems with price controls,
and you know, not the least of which you know,
(13:19):
even though you do make certain goods and services more affordable,
that can lead to some real distortions in the market.
You can have producers who are taking it on the
chin and still trying to trying to make their business
work and you have a notable change in quality. Funny
about that, right, I mean, you put a price cap
(13:39):
on it, you can expect people to try to cut
corners and you end up with those sorts of distortions.
So I think a lot of folks point to price controls,
but I wonder if Julie has some other thoughts about
ways to control inflation at that macro level.
Speaker 9 (13:55):
Well, one of the key things that FED has is
monetary policy is open marketing market transactions. They have been
loading up their balance sheet with mortgages, all kinds of
stuff that would border on the definition of crap. Unfortunately,
they will buying so much of this to get so
much money out to take care of the COVID problem
and to keep people alive. Right now, they're letting it
(14:18):
run off, which is also coming giving problems in the
credit markets because they're the single biggest owner of many
sectors of the market. They're letting it mature, they're letting
it run off. But they also have some huge losses
because they bought bonds with interest rates of two percent
one half percent and now we're up at five percent.
Speaker 3 (14:38):
Don't make me use the tools they have.
Speaker 1 (14:40):
Don't make us use the eight second delay button because
of your language. But let's I think we actually have
a call that got through to our system. Let me
go to Bill in Tallahassee, Florida High Bill. Welcome to
the middle Hey, how you doing doing great? Go ahead?
Tell us how how inflation and higher interest rates are you?
Speaker 10 (15:03):
Well? I've been renting a house for five years and
I was trying to buy it last November at one
hundred and ninety thousand, and now it's worth a lot more.
But the interest rates at the time was like four
and now they're at eight, so I can't afford the house.
But my question is, how does raising interest rates?
Speaker 11 (15:25):
Uh?
Speaker 10 (15:25):
The civil government raising interest rates help lower the.
Speaker 8 (15:32):
Uh?
Speaker 1 (15:34):
Inflation?
Speaker 12 (15:36):
Yes, I had a brain fart, I'm old, but the yeah,
I mean it costs if you raise interest rates, it
costs everybody more money, including companies that borrow money to
run their business.
Speaker 10 (15:51):
So how does raising interest rates help the economy? How
does it?
Speaker 13 (15:56):
How does it?
Speaker 10 (15:56):
How does it lower uh conflation for everybody?
Speaker 5 (16:02):
Inflation?
Speaker 10 (16:03):
I just I just don't understand it, all right, company
that's all money to run?
Speaker 1 (16:09):
Yeah, great question, Bill. Let's go to Julian Emon on
that one.
Speaker 9 (16:13):
Julie it's a crude but an effective tool. It kills demand.
The best way to stop inflation is stop buying the stuff.
We've never done that. There were a whole nation. If
I want it all, I want it now, and we're
willing as long as we've got a few extra coins
in the jeans to run out and buy it. But
when you lose your job, when things get tough in
the economy, you no longer have the money or the
(16:34):
ability to buy it, and that's when you see all
the prices starting to drop like a rock. If we
had the discipline of substituting, of conserving, especially in energy,
take the keys away from the kids for crying out loud,
start making them use the bicycles that are in the place,
you know, do things like mass transportation. I know there's
anathema over Middle America we have cars as mass transportation,
(16:58):
but start carpool. There are one hundred and one ways
of conserving energy. And the neat thing about that is
it's cheap and it does kill demand, and you'll see
prices coming down very effectively, which is exactly what they
did before. The saudis absolutely hate conservation. So it's a
cheap one of tool food the same.
Speaker 1 (17:17):
Way, David, what about that question though from Bill and Tallahassee.
Speaker 3 (17:21):
Yeah, I mean, I think it's a great question, and
I think it's an important question, and I think a
lot of people are a little bit afraid of admitting
that they don't know when they hear I mean, we
constantly hear these headlines on the news. You know, the
FED has increased interest rates. But I don't think we
put two and two together. I think it's a very
fair and indeed a very important fundamental question for folks
(17:43):
to understand when the when the FED believes that that
conditions are overheated and we may be headed into a
situation where prices start to rise. One of the reasons
that those prices rise is because there's money out there
floating around and people are willing to pay for it.
(18:05):
But then it reaches a certain pain point and people
are no longer willing or able to pay for it.
And that's where the FED tries to step in somewhere
there in the middle, and they raise interest rates to
make it harder for they're trying to draw the money
out of the market flows, They're trying to make it
harder for those prices to rise in effect, because you
(18:29):
can't tell, for instance, suppliers to stop making things. But
what you can do is try to decrease demand by
making the availability of money well more difficult. It becomes
harder to borrow at the bank, for example, and that's
supposed to cool down the economy.
Speaker 1 (18:45):
But here's the rub.
Speaker 3 (18:47):
People get hurt. It's a bit like I think often about,
like interest rates like a kind of chemotherapy almost. You know,
it's like it's the drug that you need, but it's
also toxic and too much. If you go too high
with those interest rates, it can really be deadly for
the economy. And a lot of folks are really concerned
(19:09):
right now. If the Fed continues to raise interest rates,
at what point do you reach that danger zone? And
a lot of folks think that we might be there
at that danger zone right now.
Speaker 1 (19:20):
Let's go to what you're getting in online, Lisa Rights.
I'm having to work more just to make ends meet
with the high interest rates. I was getting ahead with
paying down debt, but the high interest rates are making
it harder. Any suggestions on how to tackle this, Julie.
Speaker 9 (19:35):
Well, two things. First of all, the inflation's a key
factor too. You're being affected by interest rates, means you're
probably have a floating rate mortgage, which is absolutely deadly.
Really good idea is to try and get that into
a fixed rate mortgage.
Speaker 1 (19:52):
That's right now. If you did that, you'd have a
very high fixed rate mortgage, right you would.
Speaker 9 (19:56):
But the floaters go higher, and they can continue to
go higher. That's part of the anxiety there.
Speaker 3 (20:02):
Man, I got caught. I got caught in a nineteen
percent interest rate thing that was much younger, and I
was buying my first home and this was I guess
it would have been the early nineties if memory serves,
and I got caught in one of those adjustable rate
mortgage situations. Never again, can you imagine nineteen percent? It
was just incredible, But.
Speaker 1 (20:23):
You probably thought it was a good deal at the time.
Speaker 3 (20:27):
Yeah, I mean it was, to be honest, this is
something that I think a lot of folks really need
to pay close attention to. If how the mortgage rate
markets reacting to what the Fed's are doing, and we
may have another adjustment this year, I think that that
seems to be a general consensus there may be one
(20:48):
more interest rate hike. But would you mind, Jeremy, if
I asked Julie real quick. I know we're running out
of time, but Julie, what's your what's your on what
the FED might do next? Do you believe that they're
going to raise interest rates at that in the next meeting?
Speaker 9 (21:06):
The next one I think will be a tweak. But
you have to remember that these all the impact is delayed.
We still haven't seen the full impact of all the
rates that have gone in already. They're going to take
a more of a wait and see. They would love
to have the world's first soft landing.
Speaker 1 (21:22):
Let's go to another call. Michelle is with us from Boston.
Speaker 2 (21:27):
Hi.
Speaker 1 (21:27):
Michelle, welcome to the Middle.
Speaker 11 (21:30):
Hi, thanks so much for having me.
Speaker 1 (21:32):
Well tell us, do you have a question about this
or how's inflation and higher interest rates affecting you?
Speaker 4 (21:39):
Yeah, I was just curious.
Speaker 11 (21:40):
I'm in the process actually of buying a house as
we speak, and interest rates are about at eight percent.
As you were mentioning, I'm just curious what the panelists
think of if they're going to dip in twenty twenty four,
and what the rates might look like maybe toward the
end of twenty four as I'm thinking about hopefully refinancing.
Speaker 1 (21:58):
Yeah, great question, Julie. You think, what about the rates?
Are they going to come down?
Speaker 9 (22:03):
This is more prayer, even in hope, than what the
actuality is. We're not going to know until actually we
get there. I think the Fed is going to take
their break off the accelerator here, but the question is
always going to be at what level do it? Will
they be satisfied with inflation? If they decide three percent
is not so bad, I think we're out of the woods.
If they go hell bent for leather on two percent,
(22:25):
it's going to be a real problem. You're going to
see interest rates go considerably higher.
Speaker 13 (22:29):
Yeah.
Speaker 3 (22:30):
I think one of the things that I've been hearing,
certainly in the past couple of days, is that even
though the FED says it's not working toward a specific
sort of target number, that they may settle for around
two point five percent, which a lot of folks think
will mean another small increase coming up in I guess
what would it be end of October if I'm not mistaken.
Speaker 1 (22:53):
Let's go to another message from coming in online, Nikki Rights.
With mortgage rates higher than they've been in decades, is
a home purchase for a first first time home buyer
an absolute no go right now, David, say.
Speaker 3 (23:04):
That one more time. I want to I want to follow.
Speaker 1 (23:06):
Your first time home buyer.
Speaker 5 (23:07):
Buy her.
Speaker 1 (23:08):
Is a home purchase just a no go right now.
Speaker 3 (23:12):
Let me put it this way. I think that in
situations like this, that old phrase cash is king, I
think that it's never been more true. I do believe
that if in a situation you know, markets, I mean,
what is the what is the old saying markets abhorror?
Vacuum like nature does? I guess? And and I think
(23:36):
that as you see volatility and when you have people
pointing in different directions, the bond markets have just been
there's huge you know, there are huge developments in the
bond market that I think raised serious questions about whether
we're headed toward a soft landing or whether we're going
the scenic route to a recession. And as I was
(23:56):
hearing Julie talk about how a lot of this is
guests work in terms of where the Fed's going to be,
you know, next year, I couldn't agree more Based on
everything that I'm hearing, I think your best solid bet
is to preserve as much cash as you can. But
of course, if you're sitting on the sidelines, and you're
(24:17):
not making good investments, then that too is a kind
of loss of money. And so you know the investments
that you do make need to be wise ones. It's
just that there's such an outlay right now for housing.
Not knowing your particular circumstances, it's a little hard to
offer advice, and I think a lot of folks would
(24:38):
be very reluctant to say, here, here's what you need
to do when it comes to making that first home
purchase right now. If it were me, I'd be saving
as much as I possibly could, and I'd be looking
for longer term investments with higher yields.
Speaker 1 (24:55):
Mark writes into us at Listen to the Middle dot com.
I was recent involved in a car accident. I'm an
uber driver, so having a car directly affects me earning money.
My old car will be paid off as part of
the settlement, but I can't get a replacement car right now.
The higher interest rates and new loan requirements prevent me
from getting financing. Julie, this is a This is a
(25:17):
really interesting question because I was looking up some of
the numbers on this. If you're at the low end
in terms of your credit score, you might get a
subprime auto loan, and the rate on that is now
seventeen point nine percent, which means that the monthly payment
on a forty three thousand dollars loan for a new
(25:38):
vehicle would be almost one thousand dollars a month. So
what about? How about how inflation is hitting the auto
market and car loans.
Speaker 9 (25:47):
Probably the biggest thing is that there is not almost
nothing available in the used car market, and that's what's
impacting a lot of people. Nobody's moving up because here
in the Midwest, especially, we're cheap. We'll put a little more
bondo on the buggy rather than run out and buy
another car. I drive two thousand and five pt Cruiser.
What do I know? But people hang onto things for
(26:08):
a long period of time. Here we love to have
new stuff. But that keeps the used car market absolutely horrible.
This young man is in a horrible pinch because there
is no alternative for him. This is going to be
a case of where he's going to have to change
professions because he's not going to be out of the
woods in this for some time.
Speaker 1 (26:28):
Let's go to another call. Ben in Minneapolis is joining us. Ben,
go ahead, Welcome to the middle.
Speaker 13 (26:35):
Hello, long time listeners.
Speaker 1 (26:38):
Two weeks well, tell us tell us your comment.
Speaker 13 (26:46):
I want to comment on how interest rates are affecting me.
And one thing that was surprising to me this week
was revealing some of my student loan payments as they're
resuming this month. Some of the student loans that were
very little rate notes are at a higher interest rate
than they were prior to the pandemic. So I guess
my comment or question was some of the student loan
(27:08):
reform that we're talking about. And you know, even yesterday
the bid Administration announced the nine billion dollar student loan
you know, cancelations. What one thing that hasn't been talked
about is around interest rates, And well, I guess I'm
one of the people that thinks if I borrowed it,
I should be paying it all back. One thing that
(27:30):
hurts is that now you're paying it back at a
higher rate than before, where for many years, those variable
rate studentmons were at a very low percentage.
Speaker 1 (27:39):
Right, Ben, let me ask you, just while we have
you on that topic, how do you, as somebody who's
paying back your student loans, how do you feel about
other people getting their loans forgiven.
Speaker 13 (27:52):
The ones that are getting forgiven right now, they had
been part of special programs that lead towards forgiveness, and
so I think that participating in those programs is a
really great benefit for a lot of those individuals.
Speaker 1 (28:06):
Well, Ben, thank you for your call.
Speaker 13 (28:07):
Blanket A blanket forgiveness to everyone is obviously a little
bit different because there's going to be different circumstances for
each borrower, right David.
Speaker 1 (28:19):
What about Ben's comment and question about student.
Speaker 3 (28:22):
Loans, Yeah, what I would say is, you know, first
of all, if you can get lower rates, it's definitely
worth exploring, you know, so anything that you can do
to lower the interest rate would be a good idea.
But you need to be really careful of making sure
that you check the rate on each loan in case
you have multiple loans that are you know, all bundled
(28:42):
by the same lender and that sort of thing. But
something else that you you want to make sure if
you possibly can, is to is to try to get
something that's that's federally insured. Don't go with the first,
you know, loan consolidation offer that that you come across
that kind of thing. And one other thing, don't stop
at refinancing, you know, paying off the debt once and
(29:04):
for all is a is a huge thing. And I'll
tell you the advice that they give you when you're
you know, thirty, to start saving. It's perhaps these days
that should be revamped to twenty or something because the
money just doesn't go as far as it once did.
So I would say save as much as you possibly
(29:25):
can and do everything that you can to try to
bring that principle down because that's just going to hang
over your head.
Speaker 1 (29:31):
That is David Brown of Business Wars and Texas Standard.
We'll be right back in a moment with more of
the middle. This is the Middle. I'm Jeremy Hobson. We're
talking about high interest rates and inflation. My guests are
Julie Neeban, a financial analyst with Smith Moore and Company
in Saint Louis, and David Brown of the Business Wars podcast.
(29:51):
We are asking that question. Our number is eight four
four four Middle. That's eight four four four six four
three three five three, or you can reach out to
us Listen to the Middle dot com. And I'm going
to go to another call. This is Liz in Topeka, Kansas. Liz,
Welcome to the Middle.
Speaker 14 (30:08):
Hi, how's it going.
Speaker 1 (30:10):
It's going great. How is inflation feeling to you right now?
Speaker 14 (30:14):
It's hurting. It's hurting a lot. I've got a family
of four and I just, you know, as soon as
the money comes in, I head to the grocery store
and it's all spent. Just it feels like you get
six things and you're looking at, you know, one hundred
and thirty dollars bill, and it's stuff that you've got
to have. I've got to send my kids to school
with lunch, and it's so expensive. We you know, you
(30:36):
can't take a family of four out to eat anywhere
and get a reasonable priced meal, but it's equally as
expensive at the grocery store. So it's definitely hurting.
Speaker 1 (30:47):
Do you feel like Washington, and I say that broadly,
not just the FED, but also the Biden administration and
others in power are doing everything they need to be
doing to help you deal with those issues, you know,
I I hope.
Speaker 14 (31:02):
So I don't know what needs to be done. I
don't know the best course of action, you know. I
just try and be as conscious as I can about
my spending. So, you know, I hope, I hope my
representatives have my best interest in mine.
Speaker 1 (31:20):
Well, thanks, for that call Liz David Brown price of groceries.
That's where we notice it. All everybody notices it. I mean,
I'm a I'm a turkey sandwich person at lunch, and
the turkey price is outrageous.
Speaker 3 (31:32):
Now it's like crazy inn a while since I had
some turkey, but I got some uh some fruit loops
the other day, and uh, that's more my speed. Jeremy,
and and I noticed that the box has because it's
it looks like a like a you know, very thin book.
Now it's the shrink flation is what we're talking about there.
But BOYD, listening to that caller, I really felt that,
(31:56):
and I totally understand what she's going through. And and
you know, to be honest, something that has chafed at
me is I'll, you know, hear a headline or a
report on the news about how inflation has fallen to
two percent or three percent, and I'm thinking, what, how
(32:17):
can that three percent? I'm I'm I'm bleeding here right,
And I think a lot of people are feeling that,
and and something that I mean, I get why that
incremental measurement of how much inflation we've seen over the
past month or whatever, that term is is is important
and significant in terms of the data, but cumulatively we're
(32:38):
looking at once you add up all of that inflation,
that's what we're experiencing. So when we hear these headlines
about you know, inflation now down, it sounds great, yay,
And I think in the long term that's true. It's
a it's a good harbinger. But what we are feeling
may very well run counter to what we're hearing on
(32:59):
the rate. You know, we're feeling the cumulative effects of
all of that and what I just heard from the
caller there, you know, shake him ahead and thinking it's
hard enough to just try to put food on the table,
much less save. But if there is any way that
you can put aside just a little, it will it
will accumulate faster than perhaps you may think.
Speaker 1 (33:23):
Well, and you know, we talk about what we hear
on the news. I think this is one of the
points of this show, The Middle, is to bring the
real human voice into exactly what's going on. Let's get
to another call. Sharon is joining us from Fairview Heights, Illinois.
Hi Sharon, Welcome to the Middle.
Speaker 6 (33:40):
Hi Jeremy, I love the program. Thank you very much,
Thank you all I can say is giddo to everything
that the people have said. So for two things occurred
to me yesterday, and I am a seventy six year
old retiring one. I went out to get my mail
and in the mail was a letter from my Medicare
advantage provider informing me that the cope on my prescriptions
(34:03):
was going up by ten percent. Ten percent, not the
three percent inflation. I have yet to get information from
the provider as to what my insurance costs are going
to go up to, what my premiums are.
Speaker 15 (34:18):
Going to go up to.
Speaker 8 (34:19):
Two.
Speaker 6 (34:20):
I went out to Target yesterday and I got their
brand targets brands hot dog funds. The last time I
bought those, they were one dollar and nineteen cents. I
paid one dollar and forty nine cents. It's not just
(34:40):
the inflation. These companies are making a fortune. In my mind,
in my way of thinking, not only that, but they're
passing it on as being inflation. Not when you look
at the earnings of the companies, they're doing mighty darn well.
Speaker 1 (34:59):
What I brea It's yeah, I just want to say,
it's that's a great point. Sharon and Julie Nieman, the
idea that you know, there's inflation that's caused by real
economic forces, and then there's also companies that are taking
advantage of the situation, and people talk about, you know,
the price of gas all the time in this way
that you know it. They just raise the prices because
(35:22):
they can, because they're because everybody's used to paying more, Julie.
Speaker 9 (35:25):
That's exactly right. They raise the prices because they can,
and the only time they'll stop is when demand falls off.
And that's the problem. We're not there yet. People are
still buying and still buying. It's erroneous to really report
inflation as being down, down, down, because they always leave
out the two most volatile sectors, food and energy. Well
what do we consume food and energy? So it's it's
(35:47):
really misleading as to what it is. But again, this
is a situation where, because this is America, this is
basically freedom to mark whatever price you want until people
stop buying. So yes, as a corporate greed, every single
food processing company is making money like crazy and over fist.
(36:07):
And by the way, a lot of that is not
going to the farmers. They're in the same pinch we're in.
They have very high costs, they're not getting the benefit
that the food processing companies are. So if you want
to point a finger, it's the processors.
Speaker 1 (36:20):
Let's have to say, yeah, go ahead.
Speaker 3 (36:22):
Give me for interrupting, but I have to add in,
since we've brought up cars before, I think it's worth
noting something and maybe others, maybe some of the listeners
have some thoughts about this, but I know that we're
seeing something very different and interesting happening in the new
car marketplace that's having a profound effect on used cars
(36:42):
right now. Well, during the pandemic, there was a lot
of money out there floating around because of pandemic checks
and people using their discretionary spending, and in fact, there
was a lot of saving going on at the same
time because there was more money out there in the system.
Speaker 1 (36:59):
Especially with those checks.
Speaker 3 (37:01):
It's my understanding that, based on best estimates, all of
that savings has been almost completely spent down and that
goes directly to inflation. But a big part transportation. Big
part of this factor. What Detroit seems to be doing
at this juncture is they seem to have come to
the decision based on the supply chain issues that we
(37:23):
saw during the pandemic. It appears that what they're doing
is they're moving to a new model instead of selling
large volumes that they're talking about, reducing the number of
units sold and increasing the value or the cost the price,
I should say, of different vehicles. And if you go
out to a new car lot, you'll see cars that
(37:44):
are SpecEd out to the nines, absolutely maxed, and prices
matching it. And you'll also even see market adjustments that's
supposed to reflect the increased pressure of inflation in a
particular market. Who's going to be able to afford that
eight ninety thousand dollars pickup truck, well healed people, people
(38:06):
who are doing well in this situation, who can't come close.
Most folks can't come close. And so that's driving up
of the marketplace in used vehicles. And the used cars
are selling out, and now we're sort of down to
the to the ones that are just sort of limping along.
It's not quite that bad, but a lot of off Broadway. Ex.
Speaker 1 (38:29):
Okay, let's go. Let's go to another called Patricia in
Atlanta is with us. Hi, Patricia, welcome to the middle.
Speaker 16 (38:37):
Hi, thank you for taking my call. I was just
concerned about my full one k that is taken up beating,
and so I wanted to get maybe some advice. I
left the previous employer, but that's where my full one
K is. But I noticed that it keeps going down
and down. Can you speak to this please?
Speaker 1 (39:00):
Four oh one K is going down and down?
Speaker 9 (39:03):
Well, that was September. September was one of the worst
months we've had. It was down about five percent. If
you looked in the year twenty twenty two, it was
a catastrophe. The average balanced portfolio is down seventeen eighteen percent.
So we recovered from that. We started moving ahead this year,
but September we got clocked. We're kind of moving our
way back a little bit now. But that's part and
(39:24):
parcel of the market. You go through corrections, excesses are
burnt off. If you have a well diversified portfolio, one
thing you do to do is review what your what
kinds of stocks and bonds and everything your portfolio is in.
Maybe you need to go out and roll that four
oh one K over into a self directed IRA from
you'll have the world from which to choose rather than
(39:46):
just what that employer is willing to pay for. So
take a look at that have somebody, a professional take
a look at what your four oh one k is doing.
Maybe be doing doing a great job. It's just the
cycle of the market. But at least you'll know if
you can make some good improvements out of if it's
being done efficiently.
Speaker 1 (40:03):
Let's go to Gary in Las Vegas, Nevada. Gary, Welcome
to you, bellow.
Speaker 5 (40:10):
Are all right?
Speaker 1 (40:12):
Tell us how inflation and higher interest rates are affecting you?
Speaker 5 (40:16):
Well, I'm on the sort of the opposite of what
most people have said. We have a fair amount of money,
we're retired, and higher intergrate for us mean that we
get a nice return on our invest on, you know,
our savings, whether it's in a CD or government bonds,
that type of thing. For the first time in golly,
(40:39):
it's been you know, forty years or so. So for me,
I'm on the opposite end of the spectrum, and for
me it's a good thing.
Speaker 1 (40:48):
You know, David Brown, there's always winners and losers in
everything economically, And it is true, you know, a savings
account is doing a lot better now than it used
to be.
Speaker 3 (40:57):
That's true, you know. But I was listening to listening
to the color talking about investments in stocks and bonds
and bond market uh looking a little scary past few
days might be worth taking a closer look at at
you know, what what your what your yields are, and
whether or not the bonds are your bonds are performing well.
(41:18):
But I totally take that point. I mean, I think
for people who did make smart investments, especially during the
pandemic period, UH and played it a little cautious, I
think I think things are going much considerably better for
them than than for lots of everyday folks.
Speaker 1 (41:38):
Ryan is joining us from Chicago, Illinois. Ryan, welcome to you.
Speaker 15 (41:45):
Thank you for jaking my call tonight.
Speaker 1 (41:47):
Great to have you tell us what's what's on your mind?
Speaker 15 (41:50):
Well, I'd like to share an anecdote. I'm a high
school teacher for Chicago Public Schools and I teach government.
And some of my students we were discussing in place,
and several of them hypothesized that the quality and quantity
of the school food portions have diminished as inflation has increased.
(42:11):
They've noted that some of the things that Michelle Obama championed,
such as fresh food and vegetables, have disappeared. The food
actually tastes more disgusting over a two year period, and
I'm I can't help but think that as inflation has increased,
nutritional intake has deflated. And you know that there's long
(42:32):
story short. They pointed out to me they thought there
was a correlation between inflation increasing and the quality of
the school food decreasing, which is pretty difficult considering that
you're already starting at a pretty low bar.
Speaker 1 (42:46):
David Brown, You're you're laughing there. But I will say,
you know, there are some restaurants that I've noticed that
the portions are smaller, that's.
Speaker 3 (42:53):
For sure, any no doubt about that. You know, I
think a lot of that sort of depends on who
the contractor is with, you know, cool food program, right,
that sort of thing. But yeah, I definitely hear that,
and I do think that some foreigners are being cut
there and profits being taken, as they say, but you know,
one thing is always going to be the same. We
(43:14):
can count on it for sure, and that's that students
will not like their lunches at schools. There we are
we can take some So listen that.
Speaker 1 (43:23):
Ida in Louisiana writes to us. At one point I
was able to get debts paid off. However, I can
barely keep up. I realize I'm not the only one
that is financially stressed and challenged, that's for sure. Tyler
and Utah says I ended up unemployed during COVID and
was forced to default on almost ten thousand dollars in debt.
While my credit score is still around the six hundred mark.
I can't get approved for financing to pay back debt,
(43:45):
but I still get pre approved offers from creditors in
the mail. Why do creditors give folks like me false hope, Julie?
Why do they do that?
Speaker 9 (43:53):
It's all wonderful marketing. And yes, do they do a
credit check on you know when they're sending out those
circulars at mailing. Once you start filling out the applications,
then they put on the green eye shade.
Speaker 1 (44:06):
Let me see if I can squeeze in one more call. Here,
guy is calling from Birmingham, Alabama. A guy, go ahead, Hey.
Speaker 17 (44:15):
Thank you for taking my call. I almost hate to
bring this up because it is kind of morbid, but
you know, during COVID, a lot of older people died,
which means there was probably a lot of inheritance passed down,
and that's a lot of cash injectors into the economy.
How much influence do you think that might have on inflation.
Speaker 3 (44:33):
David Brown, It's hard to say. That's an interesting observation.
I'm not sure I would know how to quantify that, Julie.
Speaker 9 (44:41):
You know, at this point, a lot of the people
who died were not that old. We saw a lot
of people in their fifties and sixties die who had
not a master of a large estate as it goes,
so you can't count on old folks for your inheritance.
Bottom line is what it comes down to. Medical bills
chewed everything up, so it's not going to have any
(45:03):
impact at all really on inflation, you know.
Speaker 1 (45:06):
Just in the thirty seconds or so that we have here, though,
I want to ask, because he brings up COVID, David,
how much do you think COVID has to do with
the inflation that we're seeing right now?
Speaker 3 (45:17):
I think the response to the political response to COVID
has a lot to do with what we're seeing right now.
I think that the free flow of money we may
have been saved a catastrophic depression. Who knows, given the
fall off of economic activity during COVID. But I think
that a lot of what we're seeing is related and
supply chain issues, causing a huge rethink of how a
(45:41):
lot of industries do business.
Speaker 1 (45:42):
Julie briefly to you on that.
Speaker 9 (45:45):
Oh, it's not just COVID that has long tail the
disease itself does, but also the economic effects that have
very long tail effects going on here. One of the
big things that we're going to be seeing is basically
how a long term debt is structured. We're going to
be seeing a whole area of how how do you
invest for the future When you have catastrophic catastrophic incidences,
(46:08):
You're gonna see portfolio changes. But we came off of
a period of thirty years when bonds were speculatively priced.
This is a new era, all right.
Speaker 1 (46:18):
We have time for one more thing to kind of
lighten the mood here a little after some of the
difficult stories that we've gotten from callers about how inflation
is hitting them. Tolliver, what's next?
Speaker 2 (46:29):
First off, I just want to say, Julie, if you
taught a class on Midwest colloquialisms, I would take it.
No matter how to play the price the green eye shade.
I'm obsessed the game I have for you all is
called whose drum line is it? Any may?
Speaker 1 (46:42):
Sorry?
Speaker 2 (46:42):
Anyway, I'm going to play a famous drum line by
a famous singer, super famous song. You guess the song
and the singer and you in a mug from the
middle made by me.
Speaker 1 (46:52):
Bye and all right, let's do it. Let's hear it.
Go ahead, Julie, David.
Speaker 3 (47:03):
Well, should I just jump in here? I feel yeah,
this is un pleasure in the air tonight, Phil Collins.
Speaker 1 (47:08):
There you go, There you go, David, David Winns, David
Wins and mugs. Now we've got to make mugs. Okay,
we'll make a couple of months.
Speaker 17 (47:16):
I got ya.
Speaker 1 (47:17):
Well, I want to thank my guest, David Brown, hosted
the podcast Business Wars and Texas Standard. David, so great
to have you on the show.
Speaker 3 (47:23):
Well, great to be invited, Thanks so much enjoying it.
Speaker 1 (47:26):
And Julie Meeman, financial analyst with Smith Moore and Company
in Saint Louis. Julie, great to have you as well.
Thanks and thanks to our DJ Tolliver and to Colorado
Public Radio for hosting him this week. Join us next week,
same time, same place, Tolliver, what is our topic for
next week's show.
Speaker 2 (47:42):
Are America's political leaders too old.
Speaker 11 (47:45):
Oh.
Speaker 1 (47:45):
Now you notice we say leaders. We are not talking
about just President Biden or Donald Trump or Mitch McConnell.
We're talking about all of them. And the reason we're
giving you that question now is because not everyone is
listening to the show live, but we want to hear
from you. Either way, you can reach out at eight
four four four Middle, leave us a voicemail or call
in live next week, or you can go to listen
to the Middle dot com and drop us a line
(48:06):
while you're there. You can also sign up for a
weekly newsletter. The Middle is brought to you by Longnook
Media and produced by joe An Jennings, John Barth, Harrison Patino,
and Danny Alexander. Our digital producer is Charlie Little. Our
technical director is Jason Croft at Illinois Public Media. Our
theme music was composed by Andrew Haig. Thanks also to
Nashville Public Radio, iHeartMedia, and the more than three hundred
(48:28):
and seventy public radio stations that are making it possible
for people across the country to listen to the Middle.
I'm Jeremy Hobson. Talk to you next week.
Welcome to the middle. I'm Jeremy Hobson. It is great
to have you here for our new weekly show. If
you joined us last week, you know we have a
house DJ named Tolliver.
Speaker 2 (00:13):
Hi Tolliver, Hey, Jeremy, how's it going. It's our second show.
We're going up so fast.
Speaker 1 (00:18):
I'm going up so fast. You're joining us today from
Colorado Public Radio in Denver, bouncing across the country and
when it comes to the country, Tolliver. The House is
not in order right now, the House representatives, of course,
and maybe we will find out next week if they
can agree on a replacement for former Speaker Kevin McCarthy,
who was ousted this week. Maybe Kevin McCarthy should have
(00:39):
called into our show last week when we were talking
about how to talk with people you disagree with politically.
Speaker 3 (00:45):
He did.
Speaker 1 (00:47):
I don't think that. I think I listened to the voicemails.
I don't think he did. But we did get some
great ones, and we listened to those voicemails. Let's listen
to some of those calls that came in.
Speaker 4 (00:57):
My name is Karen, I'm calling from all in Missouri.
Speaker 5 (01:01):
The name is Donald.
Speaker 6 (01:02):
I'm in Houston, Texas.
Speaker 7 (01:04):
My name is Christakiger. I am a Presbyterian minister. I
live in Eudora, Kansas.
Speaker 8 (01:10):
Noah Patterson from Cape Maine, New Jersey. Ultimately starts with
an individual's personal choice to be open to listen, and
then from there it's a lot of how you frame
the question. I disagree sounds a lot different than you
were wrong.
Speaker 4 (01:24):
I think what we're actually experiencing is a return to
how politics were back at the beginning of the Civil
rights movement, which is my earliest memory as a sixty
plus year old woman of color.
Speaker 8 (01:37):
One of the things you have to do to disagree
with people who are disagreeing with you is say, excuse me, how.
Speaker 5 (01:42):
About giving me an example of what it is you
disagree with, and I'll do the same.
Speaker 7 (01:47):
Creating that spiritual space where we invite people to listen
even in our differences, Folks in our congregation can still
get along, even if they arrive at different places.
Speaker 1 (02:02):
Just some great calls last week, Thank you if you
called in. But in addition to some of the drama
we just talked about on Capitol Hill, we also got
word this week that the interest rate on a thirty
year fixed mortgage is now averaging almost eight percent, causing
mortgage demand to drop to the lowest level since nineteen
ninety six. So Tolliver, the question we are asking this hour.
Speaker 2 (02:26):
Is how are higher interest rates and inflation affecting you?
Speaker 1 (02:30):
And what is our phone number?
Speaker 2 (02:32):
It's eight four four for Middle that's eight four four
four six four three three five three. You can also
write to us at Listen to the Middle dot com.
And if you want to buy me a house while
you're at it, I'm good with that.
Speaker 1 (02:42):
And by the way, I encourage people to go to
Listen to the Middle dot com and write to us
there or through our social media channel which are linked
to there, because we have a new phone system and
we're still working at the kinks right now. So let's
get to our panel. Guests joining me from Austin, Texas
David Brown, host of the Business Wars podcast. He's also
managing editor and hosts of Texas Standard from Station KUT.
(03:05):
David is great to have you here.
Speaker 3 (03:07):
It's great to be invited to join y'all. Thanks so
much to hear me.
Speaker 1 (03:09):
And I want to ask you just because you're in Texas,
which is a state by the way, that even when
the economy is kind of floundering in other places. Texas
likes to talk about how its economy is doing great.
How does it feel right now inflation wise? To you
in Texas?
Speaker 8 (03:24):
It hurts.
Speaker 3 (03:25):
I think it hurts a lot of folks all over.
I think we've all felt a pinch of somewhere between
a quarter to a third of an increase in prices
for consumer goods. I'll tell you what's not really not
not hurting us so much. I was out in California
talking with an Uber driver and I mean, you know,
(03:47):
we're not suffering from the gas prices. And energy is
such an important and volatile component when it comes to inflation.
So there, you know, gas prices are higher than they
have been, but they're not outrageously high as high as
they have been in past years, past recent years. So
(04:08):
you know, getting along fine. But I say getting along fine,
not everyone's getting along fine, right, And a lot of
people are really hurting.
Speaker 1 (04:16):
And we're going to get to that as we as
we get into this show. Let me bring in our
other guests from Saint Louis, Missouri. Julie Nieman, financial analysts
with Smith Moore and Company. Julie, great to have you
on the show as well.
Speaker 9 (04:26):
Great to be here.
Speaker 1 (04:28):
And how does things how do things feel from your
vantage point as you talked to your clients and other
people in Saint Louis. When it comes to inflation right.
Speaker 9 (04:34):
Now, well, inflation and interest rates were made total linkage
just because of Jerome Pole. But inflation's the thing that's
really hitting people and hitting home because it covers not
only the poor, but it covers also middle class and
low middle class who are making it. But they don't
have much room for a margin of error here. It's
really hitting them on food and energy, the two big
(04:57):
drivers here, and until we see some breaks in that,
you're going to be seeing all of income going out
that way and more debt taking on. So that's where
you're really suffering.
Speaker 1 (05:07):
Julie. We do know that from a high level that
inflation has been coming down over the last year. Does
it feel like that.
Speaker 9 (05:15):
Some areas it has, but service inflation has gone up
and continues to go up. There's not much break in
housing prices. You know, you're still seeing pretty sticky there
because that has been a long term shortage, and you're
not getting massive building there either, So it's strong demand
and that's why Powell's going to have a tough time
with inflation, some of it he can't fix. When you
(05:36):
have strong long term shortage and housing strong long term
demand in areas, there's nothing you can do about that.
Speaker 1 (05:44):
You know, you've brought up your own Powell a couple
of times. The FED chair David Brown, is he the
one with the magic Wand here the people are going
to blame President Biden. They might blame Congress if things
don't get better from an inflation perspective. But how much
power does Jerome and Powell have to fix this problem?
Speaker 3 (06:02):
Has a lot, and he doesn't have very much, doesn't
have enough. You know that One of the reasons I
love talking about business is because you know, these are numbers.
We can all agree on a kind of a baseline, right.
You can look at the data and you can say,
this is what's real. Now what do we make of that?
Whereas in politics often you have two or three narratives
built around you know, the same set of facts. So
(06:23):
I really, I really think that, you know, when it
comes to the power that of the Fed, we're talking
about the Open Market Committee primarily, and wouldn't I wouldn't
put a whole lot of weight in one particular person,
although there have been people Ben Bernanke comes to mind
who have been instrumental in trying to deal with this
(06:45):
issue in the past and who are kinds of lions
in economics. But to be honest, I think a better
perspective is less looking at the personalities. And I don't
say this very often, but I think that it's less
a look at the personalities and more a look at
what this grouping of people who meet several times over
(07:06):
the course of a year and talk about the direction
of the economy where they are leaning. And I think
one of the best gauges of making that determination are
trying to get a consensus around what it is where
the Federal Open Market Committee's leaning. I think you look
at the at Wall Street, you look at the markets,
you know, so.
Speaker 1 (07:26):
You look at the markets right now, I mean that,
you know, we've had a lot of bad days in
the markets recently.
Speaker 3 (07:31):
We have we have you know, you know those vacuum
gauges on a car where it shows you whether or
not you're using too much gas or you're not using
I you know you're saving all right. Well, if you've
ever noticed on those vacuum gauges. If you step on
the gas, you know you're burning up a lot of gas,
and it's showing that. You know, it's showing that your
fuel consumption is too high. So you back off just
(07:54):
a little bit and it seems to line up. Ah,
you're in that eco mode now, right, You're in that groove.
But but if you'll notice, if you're not giving it
enough gas, pretty soon your fuel efficiency will drop off
the other direction. And I think of Wall Street as
kind of doing that. It's that sort of vacuum gauge.
It's telling us just how efficiently things are running. And
(08:15):
right now that's all out of whack. I mean, if
you go on you know, I was just on market
Watch a moment ago, and here's the headline. The stock
market is building up to a major buy signal all
right now. Right below that headline in the picture that
accompanies it is an opinion piece stock market over sold.
So you know you're going to see all kinds of
(08:36):
different takes on what's happening with the market. It'll be
up one day, down the next. But I think a
better read is to try to sort of synthesize a
consensus around which way the market's headed and what that
marketplace is trying to tell us.
Speaker 9 (08:54):
Julie, Well, an intrinsic to that is that you have
the real market indicator is where are going the quality
of earnings that come out of it? Because jolly numbers
are out there all the time and earnings are artificially kided,
we know that. But when earnings are reviewed in terms
of quality earnings, you know which direction the market ultimately
is going to discount. Right now, the quality of earnings
(09:16):
is not good. There are so many accounting gimmicks and
jolly numbers of Wall Street is using to inflate earnings
for one major reason, make them look better than they are,
because that's how everybody's compensated. That you really do have
an over not an over sold market. You probably still
have a lot of froth in the market, especially in
certain sectors. You take a look at the Magnificent seven.
(09:40):
You know, are these semi tech companies really worth all
that money? You're looking at artificial intelligence discounted for the
next fifty years. When the price earnings multiple, it's a
little hard to believe on that. So there's still a
lot of froth out there.
Speaker 1 (09:54):
You know, we're talking about these these things like the
markets and mortgages. I want to point out that there
are a lot of people who do not own homes,
are not invested in big ways in the market, and
in fact, when you look at the numbers, people who
are renting feel inflation in some cases more than people
who are homeowners.
Speaker 3 (10:13):
David Oh, Absolutely, I mean, there's no question about that.
And in fact we're seeing certainly here in the Austin area,
but I think in Texas, which has had extraordinary growth
over the past four years or so, a real housing crunch.
I was reading the other day about this AIRB and
B effect and what that means for real estate, and
(10:37):
the point that was being made was that now you
have a market for people who are looking for places
to buy and basically rent out. That's in a perfect world,
of course, with interest rates as high as they are
right now, not a lot of people wanting to go
out and buy. But those who do buy are heavily capitalized,
which means they have a lot of money and it's
not everyday folks, and that means that there's a real
(10:58):
fight for a lot of those spaces, and that allows
those prices to drift upwards and it's contributing. I mean,
we see it as a major factor in what we
call our rising inflation rates.
Speaker 1 (11:10):
David Brown, host of Business Wars and Texas Standard and
don't go anywhere. We'll be right back with more of
the middle. This is the Middle. I'm Jeremy Hobson. If
you're just tuning in, we are a national call in
show focused on elevating voices from the middle geographically, politically,
and philosophically, or maybe you just want to meet in
(11:32):
the middle. My guests this hour are Julie Nieman of
Financial Analyst with Smith Moore and Company, and David Brown,
who is host of the Business Wars podcast and Texas Standard.
And we're asking you how are high interest rates and
inflation affecting your personal economy? Tolliver, what is that number again?
Speaker 2 (11:51):
It's eight four four for a middle, that's eight four
four four six four three three five three. Come on,
give us a call.
Speaker 1 (11:57):
Give us a call, or go to listen to the
Middle dot com where you can reach out to us online.
And I encourage you to do that because the phone system,
you know, again it's new. We're figuring it out as
we go. Right now. I by the way, I want
to welcome this week the listeners of last former Southern
formerly Southern California Public Radio and KNPR Las Vegas, Nevada
(12:18):
Public Radio. Great to have you with us as well.
Speaker 8 (12:22):
I want to.
Speaker 1 (12:23):
Ask David Brown what other tools are available to policymakers
like people at the FED when thinking about trying to
bring inflation down other than simply raising interest rates further.
Speaker 3 (12:37):
Well, price controls come to mind. I don't know if
how many of our listeners were around back in early
seventies when meat prices began to spike and it was
a real, huge inflation concern and it wasn't at all
clear how the US would get out of it. President
(12:58):
Nixon was in the House and he announced these very
at the time very popular controls on the price of meat.
It would fix it so that folks could afford it.
Sounds great, but there are some real problems with price controls,
and you know, not the least of which you know,
(13:19):
even though you do make certain goods and services more affordable,
that can lead to some real distortions in the market.
You can have producers who are taking it on the
chin and still trying to trying to make their business
work and you have a notable change in quality. Funny
about that, right, I mean, you put a price cap
(13:39):
on it, you can expect people to try to cut
corners and you end up with those sorts of distortions.
So I think a lot of folks point to price controls,
but I wonder if Julie has some other thoughts about
ways to control inflation at that macro level.
Speaker 9 (13:55):
Well, one of the key things that FED has is
monetary policy is open marketing market transactions. They have been
loading up their balance sheet with mortgages, all kinds of
stuff that would border on the definition of crap. Unfortunately,
they will buying so much of this to get so
much money out to take care of the COVID problem
and to keep people alive. Right now, they're letting it
(14:18):
run off, which is also coming giving problems in the
credit markets because they're the single biggest owner of many
sectors of the market. They're letting it mature, they're letting
it run off. But they also have some huge losses
because they bought bonds with interest rates of two percent
one half percent and now we're up at five percent.
Speaker 3 (14:38):
Don't make me use the tools they have.
Speaker 1 (14:40):
Don't make us use the eight second delay button because
of your language. But let's I think we actually have
a call that got through to our system. Let me
go to Bill in Tallahassee, Florida High Bill. Welcome to
the middle Hey, how you doing doing great? Go ahead?
Tell us how how inflation and higher interest rates are you?
Speaker 10 (15:03):
Well? I've been renting a house for five years and
I was trying to buy it last November at one
hundred and ninety thousand, and now it's worth a lot more.
But the interest rates at the time was like four
and now they're at eight, so I can't afford the house.
But my question is, how does raising interest rates?
Speaker 11 (15:25):
Uh?
Speaker 10 (15:25):
The civil government raising interest rates help lower the.
Speaker 8 (15:32):
Uh?
Speaker 1 (15:34):
Inflation?
Speaker 12 (15:36):
Yes, I had a brain fart, I'm old, but the yeah,
I mean it costs if you raise interest rates, it
costs everybody more money, including companies that borrow money to
run their business.
Speaker 10 (15:51):
So how does raising interest rates help the economy? How
does it?
Speaker 13 (15:56):
How does it?
Speaker 10 (15:56):
How does it lower uh conflation for everybody?
Speaker 5 (16:02):
Inflation?
Speaker 10 (16:03):
I just I just don't understand it, all right, company
that's all money to run?
Speaker 1 (16:09):
Yeah, great question, Bill. Let's go to Julian Emon on
that one.
Speaker 9 (16:13):
Julie it's a crude but an effective tool. It kills demand.
The best way to stop inflation is stop buying the stuff.
We've never done that. There were a whole nation. If
I want it all, I want it now, and we're
willing as long as we've got a few extra coins
in the jeans to run out and buy it. But
when you lose your job, when things get tough in
the economy, you no longer have the money or the
(16:34):
ability to buy it, and that's when you see all
the prices starting to drop like a rock. If we
had the discipline of substituting, of conserving, especially in energy,
take the keys away from the kids for crying out loud,
start making them use the bicycles that are in the place,
you know, do things like mass transportation. I know there's
anathema over Middle America we have cars as mass transportation,
(16:58):
but start carpool. There are one hundred and one ways
of conserving energy. And the neat thing about that is
it's cheap and it does kill demand, and you'll see
prices coming down very effectively, which is exactly what they
did before. The saudis absolutely hate conservation. So it's a
cheap one of tool food the same.
Speaker 1 (17:17):
Way, David, what about that question though from Bill and Tallahassee.
Speaker 3 (17:21):
Yeah, I mean, I think it's a great question, and
I think it's an important question, and I think a
lot of people are a little bit afraid of admitting
that they don't know when they hear I mean, we
constantly hear these headlines on the news. You know, the
FED has increased interest rates. But I don't think we
put two and two together. I think it's a very
fair and indeed a very important fundamental question for folks
(17:43):
to understand when the when the FED believes that that
conditions are overheated and we may be headed into a
situation where prices start to rise. One of the reasons
that those prices rise is because there's money out there
floating around and people are willing to pay for it.
(18:05):
But then it reaches a certain pain point and people
are no longer willing or able to pay for it.
And that's where the FED tries to step in somewhere
there in the middle, and they raise interest rates to
make it harder for they're trying to draw the money
out of the market flows, They're trying to make it
harder for those prices to rise in effect, because you
(18:29):
can't tell, for instance, suppliers to stop making things. But
what you can do is try to decrease demand by
making the availability of money well more difficult. It becomes
harder to borrow at the bank, for example, and that's
supposed to cool down the economy.
Speaker 1 (18:45):
But here's the rub.
Speaker 3 (18:47):
People get hurt. It's a bit like I think often about,
like interest rates like a kind of chemotherapy almost. You know,
it's like it's the drug that you need, but it's
also toxic and too much. If you go too high
with those interest rates, it can really be deadly for
the economy. And a lot of folks are really concerned
(19:09):
right now. If the Fed continues to raise interest rates,
at what point do you reach that danger zone? And
a lot of folks think that we might be there
at that danger zone right now.
Speaker 1 (19:20):
Let's go to what you're getting in online, Lisa Rights.
I'm having to work more just to make ends meet
with the high interest rates. I was getting ahead with
paying down debt, but the high interest rates are making
it harder. Any suggestions on how to tackle this, Julie.
Speaker 9 (19:35):
Well, two things. First of all, the inflation's a key
factor too. You're being affected by interest rates, means you're
probably have a floating rate mortgage, which is absolutely deadly.
Really good idea is to try and get that into
a fixed rate mortgage.
Speaker 1 (19:52):
That's right now. If you did that, you'd have a
very high fixed rate mortgage, right you would.
Speaker 9 (19:56):
But the floaters go higher, and they can continue to
go higher. That's part of the anxiety there.
Speaker 3 (20:02):
Man, I got caught. I got caught in a nineteen
percent interest rate thing that was much younger, and I
was buying my first home and this was I guess
it would have been the early nineties if memory serves,
and I got caught in one of those adjustable rate
mortgage situations. Never again, can you imagine nineteen percent? It
was just incredible, But.
Speaker 1 (20:23):
You probably thought it was a good deal at the time.
Speaker 3 (20:27):
Yeah, I mean it was, to be honest, this is
something that I think a lot of folks really need
to pay close attention to. If how the mortgage rate
markets reacting to what the Fed's are doing, and we
may have another adjustment this year, I think that that
seems to be a general consensus there may be one
(20:48):
more interest rate hike. But would you mind, Jeremy, if
I asked Julie real quick. I know we're running out
of time, but Julie, what's your what's your on what
the FED might do next? Do you believe that they're
going to raise interest rates at that in the next meeting?
Speaker 9 (21:06):
The next one I think will be a tweak. But
you have to remember that these all the impact is delayed.
We still haven't seen the full impact of all the
rates that have gone in already. They're going to take
a more of a wait and see. They would love
to have the world's first soft landing.
Speaker 1 (21:22):
Let's go to another call. Michelle is with us from Boston.
Speaker 2 (21:27):
Hi.
Speaker 1 (21:27):
Michelle, welcome to the Middle.
Speaker 11 (21:30):
Hi, thanks so much for having me.
Speaker 1 (21:32):
Well tell us, do you have a question about this
or how's inflation and higher interest rates affecting you?
Speaker 4 (21:39):
Yeah, I was just curious.
Speaker 11 (21:40):
I'm in the process actually of buying a house as
we speak, and interest rates are about at eight percent.
As you were mentioning, I'm just curious what the panelists
think of if they're going to dip in twenty twenty four,
and what the rates might look like maybe toward the
end of twenty four as I'm thinking about hopefully refinancing.
Speaker 1 (21:58):
Yeah, great question, Julie. You think, what about the rates?
Are they going to come down?
Speaker 9 (22:03):
This is more prayer, even in hope, than what the
actuality is. We're not going to know until actually we
get there. I think the Fed is going to take
their break off the accelerator here, but the question is
always going to be at what level do it? Will
they be satisfied with inflation? If they decide three percent
is not so bad, I think we're out of the woods.
If they go hell bent for leather on two percent,
(22:25):
it's going to be a real problem. You're going to
see interest rates go considerably higher.
Speaker 13 (22:29):
Yeah.
Speaker 3 (22:30):
I think one of the things that I've been hearing,
certainly in the past couple of days, is that even
though the FED says it's not working toward a specific
sort of target number, that they may settle for around
two point five percent, which a lot of folks think
will mean another small increase coming up in I guess
what would it be end of October if I'm not mistaken.
Speaker 1 (22:53):
Let's go to another message from coming in online, Nikki Rights.
With mortgage rates higher than they've been in decades, is
a home purchase for a first first time home buyer
an absolute no go right now, David, say.
Speaker 3 (23:04):
That one more time. I want to I want to follow.
Speaker 1 (23:06):
Your first time home buyer.
Speaker 5 (23:07):
Buy her.
Speaker 1 (23:08):
Is a home purchase just a no go right now.
Speaker 3 (23:12):
Let me put it this way. I think that in
situations like this, that old phrase cash is king, I
think that it's never been more true. I do believe
that if in a situation you know, markets, I mean,
what is the what is the old saying markets abhorror?
Vacuum like nature does? I guess? And and I think
(23:36):
that as you see volatility and when you have people
pointing in different directions, the bond markets have just been
there's huge you know, there are huge developments in the
bond market that I think raised serious questions about whether
we're headed toward a soft landing or whether we're going
the scenic route to a recession. And as I was
(23:56):
hearing Julie talk about how a lot of this is
guests work in terms of where the Fed's going to be,
you know, next year, I couldn't agree more Based on
everything that I'm hearing, I think your best solid bet
is to preserve as much cash as you can. But
of course, if you're sitting on the sidelines, and you're
(24:17):
not making good investments, then that too is a kind
of loss of money. And so you know the investments
that you do make need to be wise ones. It's
just that there's such an outlay right now for housing.
Not knowing your particular circumstances, it's a little hard to
offer advice, and I think a lot of folks would
(24:38):
be very reluctant to say, here, here's what you need
to do when it comes to making that first home
purchase right now. If it were me, I'd be saving
as much as I possibly could, and I'd be looking
for longer term investments with higher yields.
Speaker 1 (24:55):
Mark writes into us at Listen to the Middle dot com.
I was recent involved in a car accident. I'm an
uber driver, so having a car directly affects me earning money.
My old car will be paid off as part of
the settlement, but I can't get a replacement car right now.
The higher interest rates and new loan requirements prevent me
from getting financing. Julie, this is a This is a
(25:17):
really interesting question because I was looking up some of
the numbers on this. If you're at the low end
in terms of your credit score, you might get a
subprime auto loan, and the rate on that is now
seventeen point nine percent, which means that the monthly payment
on a forty three thousand dollars loan for a new
(25:38):
vehicle would be almost one thousand dollars a month. So
what about? How about how inflation is hitting the auto
market and car loans.
Speaker 9 (25:47):
Probably the biggest thing is that there is not almost
nothing available in the used car market, and that's what's
impacting a lot of people. Nobody's moving up because here
in the Midwest, especially, we're cheap. We'll put a little more
bondo on the buggy rather than run out and buy
another car. I drive two thousand and five pt Cruiser.
What do I know? But people hang onto things for
(26:08):
a long period of time. Here we love to have
new stuff. But that keeps the used car market absolutely horrible.
This young man is in a horrible pinch because there
is no alternative for him. This is going to be
a case of where he's going to have to change
professions because he's not going to be out of the
woods in this for some time.
Speaker 1 (26:28):
Let's go to another call. Ben in Minneapolis is joining us. Ben,
go ahead, Welcome to the middle.
Speaker 13 (26:35):
Hello, long time listeners.
Speaker 1 (26:38):
Two weeks well, tell us tell us your comment.
Speaker 13 (26:46):
I want to comment on how interest rates are affecting me.
And one thing that was surprising to me this week
was revealing some of my student loan payments as they're
resuming this month. Some of the student loans that were
very little rate notes are at a higher interest rate
than they were prior to the pandemic. So I guess
my comment or question was some of the student loan
(27:08):
reform that we're talking about. And you know, even yesterday
the bid Administration announced the nine billion dollar student loan
you know, cancelations. What one thing that hasn't been talked
about is around interest rates, And well, I guess I'm
one of the people that thinks if I borrowed it,
I should be paying it all back. One thing that
(27:30):
hurts is that now you're paying it back at a
higher rate than before, where for many years, those variable
rate studentmons were at a very low percentage.
Speaker 1 (27:39):
Right, Ben, let me ask you, just while we have
you on that topic, how do you, as somebody who's
paying back your student loans, how do you feel about
other people getting their loans forgiven.
Speaker 13 (27:52):
The ones that are getting forgiven right now, they had
been part of special programs that lead towards forgiveness, and
so I think that participating in those programs is a
really great benefit for a lot of those individuals.
Speaker 1 (28:06):
Well, Ben, thank you for your call.
Speaker 13 (28:07):
Blanket A blanket forgiveness to everyone is obviously a little
bit different because there's going to be different circumstances for
each borrower, right David.
Speaker 1 (28:19):
What about Ben's comment and question about student.
Speaker 3 (28:22):
Loans, Yeah, what I would say is, you know, first
of all, if you can get lower rates, it's definitely
worth exploring, you know, so anything that you can do
to lower the interest rate would be a good idea.
But you need to be really careful of making sure
that you check the rate on each loan in case
you have multiple loans that are you know, all bundled
(28:42):
by the same lender and that sort of thing. But
something else that you you want to make sure if
you possibly can, is to is to try to get
something that's that's federally insured. Don't go with the first,
you know, loan consolidation offer that that you come across
that kind of thing. And one other thing, don't stop
at refinancing, you know, paying off the debt once and
(29:04):
for all is a is a huge thing. And I'll
tell you the advice that they give you when you're
you know, thirty, to start saving. It's perhaps these days
that should be revamped to twenty or something because the
money just doesn't go as far as it once did.
So I would say save as much as you possibly
(29:25):
can and do everything that you can to try to
bring that principle down because that's just going to hang
over your head.
Speaker 1 (29:31):
That is David Brown of Business Wars and Texas Standard.
We'll be right back in a moment with more of
the middle. This is the Middle. I'm Jeremy Hobson. We're
talking about high interest rates and inflation. My guests are
Julie Neeban, a financial analyst with Smith Moore and Company
in Saint Louis, and David Brown of the Business Wars podcast.
(29:51):
We are asking that question. Our number is eight four
four four Middle. That's eight four four four six four
three three five three, or you can reach out to
us Listen to the Middle dot com. And I'm going
to go to another call. This is Liz in Topeka, Kansas. Liz,
Welcome to the Middle.
Speaker 14 (30:08):
Hi, how's it going.
Speaker 1 (30:10):
It's going great. How is inflation feeling to you right now?
Speaker 14 (30:14):
It's hurting. It's hurting a lot. I've got a family
of four and I just, you know, as soon as
the money comes in, I head to the grocery store
and it's all spent. Just it feels like you get
six things and you're looking at, you know, one hundred
and thirty dollars bill, and it's stuff that you've got
to have. I've got to send my kids to school
with lunch, and it's so expensive. We you know, you
(30:36):
can't take a family of four out to eat anywhere
and get a reasonable priced meal, but it's equally as
expensive at the grocery store. So it's definitely hurting.
Speaker 1 (30:47):
Do you feel like Washington, and I say that broadly,
not just the FED, but also the Biden administration and
others in power are doing everything they need to be
doing to help you deal with those issues, you know,
I I hope.
Speaker 14 (31:02):
So I don't know what needs to be done. I
don't know the best course of action, you know. I
just try and be as conscious as I can about
my spending. So, you know, I hope, I hope my
representatives have my best interest in mine.
Speaker 1 (31:20):
Well, thanks, for that call Liz David Brown price of groceries.
That's where we notice it. All everybody notices it. I mean,
I'm a I'm a turkey sandwich person at lunch, and
the turkey price is outrageous.
Speaker 3 (31:32):
Now it's like crazy inn a while since I had
some turkey, but I got some uh some fruit loops
the other day, and uh, that's more my speed. Jeremy,
and and I noticed that the box has because it's
it looks like a like a you know, very thin book.
Now it's the shrink flation is what we're talking about there.
But BOYD, listening to that caller, I really felt that,
(31:56):
and I totally understand what she's going through. And and
you know, to be honest, something that has chafed at
me is I'll, you know, hear a headline or a
report on the news about how inflation has fallen to
two percent or three percent, and I'm thinking, what, how
(32:17):
can that three percent? I'm I'm I'm bleeding here right,
And I think a lot of people are feeling that,
and and something that I mean, I get why that
incremental measurement of how much inflation we've seen over the
past month or whatever, that term is is is important
and significant in terms of the data, but cumulatively we're
(32:38):
looking at once you add up all of that inflation,
that's what we're experiencing. So when we hear these headlines
about you know, inflation now down, it sounds great, yay,
And I think in the long term that's true. It's
a it's a good harbinger. But what we are feeling
may very well run counter to what we're hearing on
(32:59):
the rate. You know, we're feeling the cumulative effects of
all of that and what I just heard from the
caller there, you know, shake him ahead and thinking it's
hard enough to just try to put food on the table,
much less save. But if there is any way that
you can put aside just a little, it will it
will accumulate faster than perhaps you may think.
Speaker 1 (33:23):
Well, and you know, we talk about what we hear
on the news. I think this is one of the
points of this show, The Middle, is to bring the
real human voice into exactly what's going on. Let's get
to another call. Sharon is joining us from Fairview Heights, Illinois.
Hi Sharon, Welcome to the Middle.
Speaker 6 (33:40):
Hi Jeremy, I love the program. Thank you very much,
Thank you all I can say is giddo to everything
that the people have said. So for two things occurred
to me yesterday, and I am a seventy six year
old retiring one. I went out to get my mail
and in the mail was a letter from my Medicare
advantage provider informing me that the cope on my prescriptions
(34:03):
was going up by ten percent. Ten percent, not the
three percent inflation. I have yet to get information from
the provider as to what my insurance costs are going
to go up to, what my premiums are.
Speaker 15 (34:18):
Going to go up to.
Speaker 8 (34:19):
Two.
Speaker 6 (34:20):
I went out to Target yesterday and I got their
brand targets brands hot dog funds. The last time I
bought those, they were one dollar and nineteen cents. I
paid one dollar and forty nine cents. It's not just
(34:40):
the inflation. These companies are making a fortune. In my mind,
in my way of thinking, not only that, but they're
passing it on as being inflation. Not when you look
at the earnings of the companies, they're doing mighty darn well.
Speaker 1 (34:59):
What I brea It's yeah, I just want to say,
it's that's a great point. Sharon and Julie Nieman, the
idea that you know, there's inflation that's caused by real
economic forces, and then there's also companies that are taking
advantage of the situation, and people talk about, you know,
the price of gas all the time in this way
that you know it. They just raise the prices because
(35:22):
they can, because they're because everybody's used to paying more, Julie.
Speaker 9 (35:25):
That's exactly right. They raise the prices because they can,
and the only time they'll stop is when demand falls off.
And that's the problem. We're not there yet. People are
still buying and still buying. It's erroneous to really report
inflation as being down, down, down, because they always leave
out the two most volatile sectors, food and energy. Well
what do we consume food and energy? So it's it's
(35:47):
really misleading as to what it is. But again, this
is a situation where, because this is America, this is
basically freedom to mark whatever price you want until people
stop buying. So yes, as a corporate greed, every single
food processing company is making money like crazy and over fist.
(36:07):
And by the way, a lot of that is not
going to the farmers. They're in the same pinch we're in.
They have very high costs, they're not getting the benefit
that the food processing companies are. So if you want
to point a finger, it's the processors.
Speaker 1 (36:20):
Let's have to say, yeah, go ahead.
Speaker 3 (36:22):
Give me for interrupting, but I have to add in,
since we've brought up cars before, I think it's worth
noting something and maybe others, maybe some of the listeners
have some thoughts about this, but I know that we're
seeing something very different and interesting happening in the new
car marketplace that's having a profound effect on used cars
(36:42):
right now. Well, during the pandemic, there was a lot
of money out there floating around because of pandemic checks
and people using their discretionary spending, and in fact, there
was a lot of saving going on at the same
time because there was more money out there in the system.
Speaker 1 (36:59):
Especially with those checks.
Speaker 3 (37:01):
It's my understanding that, based on best estimates, all of
that savings has been almost completely spent down and that
goes directly to inflation. But a big part transportation. Big
part of this factor. What Detroit seems to be doing
at this juncture is they seem to have come to
the decision based on the supply chain issues that we
(37:23):
saw during the pandemic. It appears that what they're doing
is they're moving to a new model instead of selling
large volumes that they're talking about, reducing the number of
units sold and increasing the value or the cost the price,
I should say, of different vehicles. And if you go
out to a new car lot, you'll see cars that
(37:44):
are SpecEd out to the nines, absolutely maxed, and prices
matching it. And you'll also even see market adjustments that's
supposed to reflect the increased pressure of inflation in a
particular market. Who's going to be able to afford that
eight ninety thousand dollars pickup truck, well healed people, people
(38:06):
who are doing well in this situation, who can't come close.
Most folks can't come close. And so that's driving up
of the marketplace in used vehicles. And the used cars
are selling out, and now we're sort of down to
the to the ones that are just sort of limping along.
It's not quite that bad, but a lot of off Broadway. Ex.
Speaker 1 (38:29):
Okay, let's go. Let's go to another called Patricia in
Atlanta is with us. Hi, Patricia, welcome to the middle.
Speaker 16 (38:37):
Hi, thank you for taking my call. I was just
concerned about my full one k that is taken up beating,
and so I wanted to get maybe some advice. I
left the previous employer, but that's where my full one
K is. But I noticed that it keeps going down
and down. Can you speak to this please?
Speaker 1 (39:00):
Four oh one K is going down and down?
Speaker 9 (39:03):
Well, that was September. September was one of the worst
months we've had. It was down about five percent. If
you looked in the year twenty twenty two, it was
a catastrophe. The average balanced portfolio is down seventeen eighteen percent.
So we recovered from that. We started moving ahead this year,
but September we got clocked. We're kind of moving our
way back a little bit now. But that's part and
(39:24):
parcel of the market. You go through corrections, excesses are
burnt off. If you have a well diversified portfolio, one
thing you do to do is review what your what
kinds of stocks and bonds and everything your portfolio is in.
Maybe you need to go out and roll that four
oh one K over into a self directed IRA from
you'll have the world from which to choose rather than
(39:46):
just what that employer is willing to pay for. So
take a look at that have somebody, a professional take
a look at what your four oh one k is doing.
Maybe be doing doing a great job. It's just the
cycle of the market. But at least you'll know if
you can make some good improvements out of if it's
being done efficiently.
Speaker 1 (40:03):
Let's go to Gary in Las Vegas, Nevada. Gary, Welcome
to you, bellow.
Speaker 5 (40:10):
Are all right?
Speaker 1 (40:12):
Tell us how inflation and higher interest rates are affecting you?
Speaker 5 (40:16):
Well, I'm on the sort of the opposite of what
most people have said. We have a fair amount of money,
we're retired, and higher intergrate for us mean that we
get a nice return on our invest on, you know,
our savings, whether it's in a CD or government bonds,
that type of thing. For the first time in golly,
(40:39):
it's been you know, forty years or so. So for me,
I'm on the opposite end of the spectrum, and for
me it's a good thing.
Speaker 1 (40:48):
You know, David Brown, there's always winners and losers in
everything economically, And it is true, you know, a savings
account is doing a lot better now than it used
to be.
Speaker 3 (40:57):
That's true, you know. But I was listening to listening
to the color talking about investments in stocks and bonds
and bond market uh looking a little scary past few
days might be worth taking a closer look at at
you know, what what your what your yields are, and
whether or not the bonds are your bonds are performing well.
(41:18):
But I totally take that point. I mean, I think
for people who did make smart investments, especially during the
pandemic period, UH and played it a little cautious, I
think I think things are going much considerably better for
them than than for lots of everyday folks.
Speaker 1 (41:38):
Ryan is joining us from Chicago, Illinois. Ryan, welcome to you.
Speaker 15 (41:45):
Thank you for jaking my call tonight.
Speaker 1 (41:47):
Great to have you tell us what's what's on your mind?
Speaker 15 (41:50):
Well, I'd like to share an anecdote. I'm a high
school teacher for Chicago Public Schools and I teach government.
And some of my students we were discussing in place,
and several of them hypothesized that the quality and quantity
of the school food portions have diminished as inflation has increased.
(42:11):
They've noted that some of the things that Michelle Obama championed,
such as fresh food and vegetables, have disappeared. The food
actually tastes more disgusting over a two year period, and
I'm I can't help but think that as inflation has increased,
nutritional intake has deflated. And you know that there's long
(42:32):
story short. They pointed out to me they thought there
was a correlation between inflation increasing and the quality of
the school food decreasing, which is pretty difficult considering that
you're already starting at a pretty low bar.
Speaker 1 (42:46):
David Brown, You're you're laughing there. But I will say,
you know, there are some restaurants that I've noticed that
the portions are smaller, that's.
Speaker 3 (42:53):
For sure, any no doubt about that. You know, I
think a lot of that sort of depends on who
the contractor is with, you know, cool food program, right,
that sort of thing. But yeah, I definitely hear that,
and I do think that some foreigners are being cut
there and profits being taken, as they say, but you know,
one thing is always going to be the same. We
(43:14):
can count on it for sure, and that's that students
will not like their lunches at schools. There we are
we can take some So listen that.
Speaker 1 (43:23):
Ida in Louisiana writes to us. At one point I
was able to get debts paid off. However, I can
barely keep up. I realize I'm not the only one
that is financially stressed and challenged, that's for sure. Tyler
and Utah says I ended up unemployed during COVID and
was forced to default on almost ten thousand dollars in debt.
While my credit score is still around the six hundred mark.
I can't get approved for financing to pay back debt,
(43:45):
but I still get pre approved offers from creditors in
the mail. Why do creditors give folks like me false hope, Julie?
Why do they do that?
Speaker 9 (43:53):
It's all wonderful marketing. And yes, do they do a
credit check on you know when they're sending out those
circulars at mailing. Once you start filling out the applications,
then they put on the green eye shade.
Speaker 1 (44:06):
Let me see if I can squeeze in one more call. Here,
guy is calling from Birmingham, Alabama. A guy, go ahead, Hey.
Speaker 17 (44:15):
Thank you for taking my call. I almost hate to
bring this up because it is kind of morbid, but
you know, during COVID, a lot of older people died,
which means there was probably a lot of inheritance passed down,
and that's a lot of cash injectors into the economy.
How much influence do you think that might have on inflation.
Speaker 3 (44:33):
David Brown, It's hard to say. That's an interesting observation.
I'm not sure I would know how to quantify that, Julie.
Speaker 9 (44:41):
You know, at this point, a lot of the people
who died were not that old. We saw a lot
of people in their fifties and sixties die who had
not a master of a large estate as it goes,
so you can't count on old folks for your inheritance.
Bottom line is what it comes down to. Medical bills
chewed everything up, so it's not going to have any
(45:03):
impact at all really on inflation, you know.
Speaker 1 (45:06):
Just in the thirty seconds or so that we have here, though,
I want to ask, because he brings up COVID, David,
how much do you think COVID has to do with
the inflation that we're seeing right now?
Speaker 3 (45:17):
I think the response to the political response to COVID
has a lot to do with what we're seeing right now.
I think that the free flow of money we may
have been saved a catastrophic depression. Who knows, given the
fall off of economic activity during COVID. But I think
that a lot of what we're seeing is related and
supply chain issues, causing a huge rethink of how a
(45:41):
lot of industries do business.
Speaker 1 (45:42):
Julie briefly to you on that.
Speaker 9 (45:45):
Oh, it's not just COVID that has long tail the
disease itself does, but also the economic effects that have
very long tail effects going on here. One of the
big things that we're going to be seeing is basically
how a long term debt is structured. We're going to
be seeing a whole area of how how do you
invest for the future When you have catastrophic catastrophic incidences,
(46:08):
You're gonna see portfolio changes. But we came off of
a period of thirty years when bonds were speculatively priced.
This is a new era, all right.
Speaker 1 (46:18):
We have time for one more thing to kind of
lighten the mood here a little after some of the
difficult stories that we've gotten from callers about how inflation
is hitting them. Tolliver, what's next?
Speaker 2 (46:29):
First off, I just want to say, Julie, if you
taught a class on Midwest colloquialisms, I would take it.
No matter how to play the price the green eye shade.
I'm obsessed the game I have for you all is
called whose drum line is it? Any may?
Speaker 1 (46:42):
Sorry?
Speaker 2 (46:42):
Anyway, I'm going to play a famous drum line by
a famous singer, super famous song. You guess the song
and the singer and you in a mug from the
middle made by me.
Speaker 1 (46:52):
Bye and all right, let's do it. Let's hear it.
Go ahead, Julie, David.
Speaker 3 (47:03):
Well, should I just jump in here? I feel yeah,
this is un pleasure in the air tonight, Phil Collins.
Speaker 1 (47:08):
There you go, There you go, David, David Winns, David
Wins and mugs. Now we've got to make mugs. Okay,
we'll make a couple of months.
Speaker 17 (47:16):
I got ya.
Speaker 1 (47:17):
Well, I want to thank my guest, David Brown, hosted
the podcast Business Wars and Texas Standard. David, so great
to have you on the show.
Speaker 3 (47:23):
Well, great to be invited, Thanks so much enjoying it.
Speaker 1 (47:26):
And Julie Meeman, financial analyst with Smith Moore and Company
in Saint Louis. Julie, great to have you as well.
Thanks and thanks to our DJ Tolliver and to Colorado
Public Radio for hosting him this week. Join us next week,
same time, same place, Tolliver, what is our topic for
next week's show.
Speaker 2 (47:42):
Are America's political leaders too old.
Speaker 11 (47:45):
Oh.
Speaker 1 (47:45):
Now you notice we say leaders. We are not talking
about just President Biden or Donald Trump or Mitch McConnell.
We're talking about all of them. And the reason we're
giving you that question now is because not everyone is
listening to the show live, but we want to hear
from you. Either way, you can reach out at eight
four four four Middle, leave us a voicemail or call
in live next week, or you can go to listen
to the Middle dot com and drop us a line
(48:06):
while you're there. You can also sign up for a
weekly newsletter. The Middle is brought to you by Longnook
Media and produced by joe An Jennings, John Barth, Harrison Patino,
and Danny Alexander. Our digital producer is Charlie Little. Our
technical director is Jason Croft at Illinois Public Media. Our
theme music was composed by Andrew Haig. Thanks also to
Nashville Public Radio, iHeartMedia, and the more than three hundred
(48:28):
and seventy public radio stations that are making it possible
for people across the country to listen to the Middle.
I'm Jeremy Hobson. Talk to you next week.
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Nikki Glaser Podcast
Every week comedian and infamous roaster Nikki Glaser provides a fun, fast-paced, and brutally honest look into current pop-culture and her own personal life.