Rate cut? So what?

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1:11What if we covered the Federal Reserve differently, huh? From American Public Media, this is Marketplace.

1:31In Los Angeles, I'm Kyle Riznal. It is Tuesday, today the 23rd of September. Good as always to have you along, everybody. All right, so here's my idea. Actually, the executive producer of this program thought of it, must give her credit where credit is due. But you know the NFL's red zone coverage, where you pop in and out of games at key moments, touchdowns, turnovers, great plays, what have you? That, but for coverage of the Federal Reserve. There are 16, count them, 16 speeches by officials from the central bank this week. Obviously, we're not going to red zone them on you much, though we may want to.

2:08But we are going to concentrate on two of them. Chair Powell was up today. He said, among other things, that there is no, and this is a quote, no risk-free path for the Fed to get inflation where it wants it to be, which basically means the job market's a risk factor, as are higher prices. So there's that. Brand new Fed Governor Stephen Myron spoke yesterday and argued, as he has during his time working directly for President Trump, that interest rates are just too high right now and said, again quoting, that the appropriate Fed funds rate is in the mid-2 % area, almost two percentage points lower than current policy, end of quote.

2:46It's unlikely at best that the other 11 voting members of the Federal Open Market Committee agree with Myron, but we're going to do a little what-if here. Marketplace's Justin Ho looked into how things might play out. What Governor Myron's talking about is a series of half-percentage point rate cuts over the course of the next few Fed meetings. Guy Labas, chief fixed income strategist with Janning Montgomery Scott, says if that were to happen, the first place he'd see an effect is in government bond yields. Two-year treasury yields might drop by, say, 1.5%. Five-year treasury yields might drop by, say, 1%.

3:22and 10-year treasury yields might drop by, say, half a percent. LeBas says that drop tapers off for longer-term bonds because the Fed doesn't have as direct of an influence over that. But either way, he says falling treasury yields would have a similar effect on a variety of loans. On credit card borrowings, which would happen almost immediately. They are tied to short-term interest rates, as are student loan borrowings. And there would be less and more gradual in effect, but still a significant effect on mortgage rates. People would also earn less interest on their savings accounts. LeBas says all of this would encourage more spending.

3:57And that occurs both at the corporate level and also at the consumer level, which is a bigger portion of the overall economy. And that spending might have some side effects. The fear, of course, is what happens with inflation. Winnie Caesar is global head of strategy at credit sites. She says inflation is already higher than the Federal Reserve is comfortable with. So if it rises more? Then the Fed is having to talk about, well, maybe we've been a bit too accommodative in our policy and it may be time to start hiking rates again. Higher inflation would likely cause long-term bond yields to rise ahead of any Fed rate hikes.

4:37Skanda Amranoff, executive director of the research group Employ America, says that's because investors would demand higher yields to reflect all of the risks. Both risks that interest rates might have to rise in the future, and also just that inflation itself might erode my returns. Amrnath says that would push up the cost of mortgages, also corporate borrowing costs, meaning? It's probably more challenging for businesses, for households to spend, whether that's on a house, whether it's a new investment for a business, in a world of higher financing costs. And that could cause the economy to slow down and unemployment to pick up.

5:12I'm Justin Ho for Marketplace. On Wall Street today, traders didn't really much care for things. We will have the details when we do the numbers.

5:411.8 percent might not sound on first listen like great economic growth, but given everything, thing. The forecast this morning from the Organization for Economic Cooperation and Development, well, it ain't so bad. But while the OECD does say that the U.S. economy is holding up better than expected, given President Trump's trade wars, the group also warned that next year could be a different story. Marketplace's Vanna Peters has that one. With this small upward revision, the OECD is still forecasting a sharp slowdown in U.S. growth compared to last year. But it's painting a picture of a sturdier economy than expected.

6:19Given everything that's happened and everything that's changing and everything that's been introduced. Monica DeBoll is a senior fellow with the Peterson Institute for International Economics. And you probably don't need me to explain that she's talking about... First and foremost, the tariffs. And everything we don't know about how the trade war will play out. Like how high the president will raise tariff rates, how long they'll stick around. That uncertainty on its own is enough to sort of bounce the economy off the rails, though not immediately. In the short term, that uncertainty might actually be buffering the U.S.

6:57economy, says Dietrich Vollrath, an economist at the University of Houston. Because while corporate America waits for clarity, it's mostly absorbing the cost of tariffs rather than passing them along. That's where the resilience may, you know, be fragile. Fullrath says the deferral on price hikes can't last. Plus, while companies are in this holding pattern... It also means you're probably not building the new plant, right? Or you're not expanding your product lines because you're not sure whether that'll be facing tariffs or not. The OECD predicts the U.S. economy will lose steam a lot faster in 2026.

7:36But Darren Akamoglu, an economist at MIT, says some tariff effects might take even longer to play out. Effects on investment, on which companies survive, which companies can expand, who is willing to take risks, what type of talent gets attracted to the right sector, those are all slow-moving things. Akamoglu says the U.S. will feel the true and full impacts in longer-term economic growth. I'm Savannah Peters for Marketplace.

8:24If you're in the market for a new or used electric vehicle, you'd best get a move on because the Biden era federal tax credits for EVs go away on October the 1st. We're talking thousands of dollars in credits, by the way, which the GOP and its tax cut law that was signed over the summer decided to end. There's been, as you might imagine, quite the rush at car dealers the past few months as consumers tried to beat the clock. But as Marketplace's Henry App reports, given that this is all about taxes and the Internal Revenue Service, nothing is as straightforward as it might appear. Ever since the GOP gave buyers less than three months to get the tax credit, business has been booming for car dealers who specialize in electric vehicles.

9:05July, August, September have all been just tremendous months. I'm getting five times the normal traffic. Best month ever. We helped 69 families go electric in our communities. I mean, it's been a very steady stream of super busy. That's Alex Lawrence in Utah, Jesse Lohr in New Hampshire, Dan L. Dweehy in Massachusetts, and John Foley in Virginia. All of them run dealerships that sell used electric vehicles. Those are eligible for a$4 ,000 federal tax credit if they sell for under$25 ,000. And ever since January of 2024, buyers have been able to claim that credit at the point of sale. So instead of waiting until they file their taxes, they can apply it to the cost of the car up front.

9:49and the federal government sends the funds straight to the dealer. Scott Case, the CEO of Recurrent, a company that keeps track of the EV market, says until recently, this system worked pretty seamlessly. The dealer makes a sale, uploads the information into the IRS portal, and within a couple of days, they get paid out from Treasury. But a week and a half ago, Case and all of those dealers you heard a minute ago say that process changed without warning. First, the IRS portal suddenly required new information for each sale. That included a photo of the proof of purchase document held up next to the vehicle identification number in the doorjamb of the car.

10:30You kind of have to do it in a proof of lifestyle picture. And then dealers say the IRS started marking every sale they submitted as pending. Rather than getting accepted and processed and then paid out in a timely way, they're all getting sort of like by default shifted into this pending status. That means dealers are unsure when they'll get reimbursed for the thousands of dollars they're passing on to customers for each EV sale. Some are fearing they might not see the money for months or at all. And they're really frustrated. Alex Lawrence runs EV Auto, a dealership with locations in Utah and Tennessee.

11:07Now we're out being asked to all do all these things. During the last two weeks of the credit, when it's going to be the craziest and the busiest, what a horrible time to change your process. An IRS spokesperson did not respond to requests for comment in time for our deadline. Meanwhile, dealers are weighing just how many more tax credit eligible cars they're willing to sell. I'm pretty sure I'll get reimbursed, but how long it takes, that's the question. Dan Eldowahe is owner of 1A Auto Sales outside of Boston. He plans to cut off sales when the IRS owes him$100 ,000 worth of tax credits. When we spoke on Monday, he had four cars to go.

11:44It's our livelihood, too. So, you know, if there's$100 ,000 I have to chase for six months, that's not easy for anyone. If the tax credit payments don't come through soon, Jesse Lohr, who runs Green Wave Electric Vehicles in Northampton, New Hampshire, is worried about a cash crunch. $4 ,000 is a lot of money. It is higher, larger than the profit margin that we make on any one of these vehicles. He buys his inventory of used EVs using a line of credit, which he needs to repay every time he sells a car. But if that federal money doesn't come through? It goes from being a sale that helps us continue our work and our mission to a sale that costs us money to complete.

12:28Meanwhile, in the tax credit's final days, John Foley, owner of Recharged in Richmond, Virginia, plans to sell as many cars as he can. Is it frustrating that I'm going to have to rely on the IRS to make good on all of this? Yes. But, you know, I think that's just a risk I'm willing to take. In part, he says, because he thinks his business will keep thriving after September 30th. Because all of the new EVs sold over the past few years mean the supply of used EVs will stay strong. I'm Henry App for Marketplace.

13:23If you're a renter, house or apartment, how long have you been there? According to Redfin, the most common answers fall somewhere in the one to four year range. Thing is, though, depending on your job, you might be moving way more often. That's the setup for today's installment of our series, Adventures in Housing. My name is Stephanie Fraker. I'm a travel nurse currently working in Maine, but my permanent home is Horseshoe, North Carolina. It's been about seven years now since I started doing travel nursing, and we have been to and worked in Washington State, California, Arizona, Wisconsin, Ohio, North and South Carolina, Maine, and New Hampshire, and Guam.

14:11I think that's everything.

14:16I live and travel with my husband and our two sons. They're nine and six-year-old boys. My husband does homeschool the kids. He takes the lead on that. I do a little bit. I'm the art teacher, basically.

14:34As soon as I'm looking at what's available and where I could apply is when I start looking at what housing is available in those locations. I don't want to apply for a job in a place where I can, you know, just on initial searches tell it's going to be impossible to find a place that's reasonable to rent, you know, has room for me and the family and the dog. I didn't mention we have a dog too, so it has to be dog friendly. You know, we don't have the newest, most expensive phones and all that. We do a lot of thrift shopping and hand-me-downs from cousins in order to be able to live the way we do.

15:13There's definitely places we've gone where it's not like we're trying to save as much money as we can. I mean, like when we went to Guam, it's going to be more expensive. But in general, maybe like a week of pay for the rent is kind of a goal that we go for. Obviously, we definitely go over that many times.

15:39Right now we're in Maine, and it is an old farmhouse on a horse farm. So the owners live kind of on one half, and then we're on the other side. And the cool thing is that there are eight horses boarding, There's chickens, goats. They have some ducks. So it's really great for the kids kind of getting involved a little bit with taking care of the animals and doing some of the farm stuff. Everywhere we go and all the different people we're able to meet, all the different stuff we can do is part of their education, really. I hope it makes them really well-rounded and just empathetic and appreciate how different people live.

16:23Travel nurse Stephanie Fraker, Maine right now, North Carolina, more permanently. Share your housing journey with us, would you? Whether you're moving around or firmly rooted, we want to hear about it. Marketplace.org slash adventures in housing.

16:58Coming up. I just don't think AI solves everything. Not yet. Well, yes, true. But has artificial intelligence met President Trump's tariffs? First, though, let's do the numbers. Dow Industrial is off 88 points today, two tenths percent, 46 ,292. The Nasdaq subtracted 215 points. That is just shy of 1%, 22 ,573. The S &P 500 down 36 points, a bit over half a percent, 66 and 56. Tylenol maker Kenview up 1.6 % today. I'm just going to assume you know why we're talking about them. Some good news for Boeing. Uzbekistan Airways has reportedly signed a deal to buy$8 billion worth of Boeing airplanes.

17:42Turkey's President Erdogan reportedly plans to buy a whole bunch, too. The planemaker climbed 2%. And AutoZone reported quarterly earnings that missed expectation. Shares closed flat. Bonds up yield on the 10-year T-note fell 4.11%. You're listening to Marketplace. This podcast is supported by Odoo. Some say Odoo business management software is like fertilizer for businesses because the simple, efficient software promotes growth. Others say Odoo is like a magic beanstalk because it scales with you and is magically affordable. And some describe Odoo's programs for manufacturing, accounting, and more as building blocks for creating a custom software suite.

18:21So Odoo is fertilizer, magic beanstalk building blocks for business. Odoo, exactly what businesses need. Sign up at odoo.com. That's O-D-O-O dot com. This Marketplace podcast is supported by Wealth Enhancement, who ask, do you have a blueprint for your money? Wealth Enhancement can help you build the right blueprint for investing, retirement, tax, and more. With offices nationwide, there's an advisor who's ready to listen and craft a blueprint for your future. Find out more at wealthenhancement.com slash build. This Marketplace podcast is supported by Justin Wine. Get the celebration ready with Justin Wine.

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19:47Assured Guarantee has demonstrated its reliability and financial strength for nearly four decades. That's why the bonds they back are one of the safest investments you can make. Visit AssuredGuarantee.com. Assured Guarantee, a stronger bond. This is Marketplace. I'm Kai Rizdom. It was, the internet tells me, early department store magnate John Wanamaker, who famously said, half the money I spend on advertising is wasted. Trouble is, I don't know which half. Yet here we are more than a century later, and retailers are still trying to figure it out. Exhibit A for us today is Best Buy. The company's making a push to get more advertising inside its physical stores, because it turns out selling ads is generally much more lucrative than selling stuff.

20:35So a lot of retailers have of late styled themselves as media networks. The most successful by far, Amazon, of course. And that's what most others have been trying to imitate, selling banner ads or sponsored search results on their websites. But hardcore big box retailers like Best Buy have a whole lot of actual real estate in store, too. And they're not about to let that go to waste, as marketplace Megan McCarty Carino explains. Stores have been selling advertising for decades, But it's generally been pretty analog, says Kuhn-Powles, a professor of marketing at Northeastern University. What goes right at the checkout counter where you're waiting and you can impulsively grab something?

21:15Very often that's held by manufacturers, by brands. Now, stores are looking to replicate what they've done online, but in real life, where consumers still make 80 percent of their purchases, says analyst Sarah Marzano at eMarketer. So there's this massive potential that really hasn't been effectively tapped into. The potential for ads that literally follow you around, like in the science fiction film Minority Report. It depicts a barrage of personalized billboards and virtual shopping assistants at every turn. Hello, Mr. Yakamoto. Welcome back to The Gap. How those assorted tank tops work out for you.

21:59Retailers aren't scanning our retinas yet, but they are getting more sophisticated at tracking how effective ads are in store, says Ben Reynolds at digital signage company Stratacash. We have a sensor at every screen. We use a millimeter wave sensor to see that, yes, this person was in front of the screen, and then they also made a transaction. Serving ads can be more costly in person than online because retailers need hardware to display them, potentially in thousands of locations. Best Buy already has plenty of that, notes Kirti Kalyanam, a retail management professor at Santa Clara University.

22:39You can provide a very high-quality surround sound experience for the customer, right from the door. Best Buy says it will be offering store takeovers, blanketing the space with ads for a single brand. That, Kalyanam says, is much harder to ignore than the cluttered banner ads on a web page. I'm Megan McCarty Carino for Marketplace.

23:25It's not like tariffs are a new thing in this economy. They have been around literally as long as there has been an American economy. That said, the dysregulated way in which the Trump administration has been using them these past eight months is putting unprecedented strain on businesses big and small. What gets tariffed at what rate and from which countries has turned into a giant game of economic fill in the blank. Wouldn't it be great then if there was a technology that could help, that could take chaotic and unpredictable inputs and, fingers crossed, come up with a viable business solution?

24:02Marketplace's Sabree Beneshore has more now on how artificial intelligence might help those businesses figure it all out. If there is anywhere in this economy where AI could clean up a mess, it is tariffs. Getting a product into the U.S. was already complicated before President Trump piled on even more import taxes. Every single product that is imported gets classified into one of around 20 ,000 tariff codes. Todd Smith is CEO of KYG Trade, which produces AI trade software. Every product has a tariff code, and the government has had a book of them since 1989. It is 4 ,400 pages long. You can look up the tariff on MRI machines, usually zero.

24:44Basmati Rice has a tariff of 38 cents a pound, but not if it's from Jordan or a few other countries, then it's different. Sometimes it's hard to tell which category your product even falls into. A smartwatch can get classified as, you know, watches. It can get classified as computer equipment or even a medical device. Priya Rajgopalan is with 4Kites, which helps companies use AI to manage supply chains. On top of all of the existing tariffs came all of President Trump's tariffs. Importers and manufacturers have to know where a product is actually even from. Sounds easy, but it's not. Janae Siko is CEO of Copper Hill, a customs consultancy that's created its own AI-powered trade software.