That CPI report got a Black Friday discount

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1:51In Los Angeles, I'm Kyle Rizdahl. It is Thursday. Today, this one is the 18th day of December. Good as always to have you along, everybody. You have seen or heard the headline by now, I'm sure. November inflation came in lower than a lot of people had been guessing. Consumer prices were up 2.7 percent over the past year, so said the Bureau of Labor Statistics. But and hang on a minute, because there are some caveats. For one thing, there was no CPI for October to add into the data mix. And for another, the BLS didn't start collecting price data for November until about halfway through the month.

2:29Thanks again. Shutdown. Marketplace's Henry app now on what this report can and cannot tell us. This report shows that our long national nightmare of fast rising prices is coming to an end, right? So this is not a good guide as to what is going on with inflation. Hmm. Omar Sharif leads the firm Inflation Insights. He says this report is just not giving us the whole picture of consumer prices because we're missing October, so we can't compare how prices might have moved month to month. And then the data BLS did collect only captured the second half of November. Most people are pretty familiar with the idea that the back half of November, you get a lot of, you know, deals and discounts around Black Friday and Cyber Monday and so on.

3:12Meaning a lot of the prices the BLS captured were discounted for the holidays. Electronics, appliances, things like that. Some of those things were weak, I think, partly because of this data collection issue. No data collection for six weeks may also have skewed another big item in the report. Shelter, meaning what we pay to rent our own homes. Yelena Sholyetyeva is senior U.S. economist for the Conference Board. She says those shelter numbers might be too good to be true. And if you look at the data, you see that, you know, shelter prices growth slowed very significantly in November. So for now, let's take that with a grain of salt.

3:54But pair this inflation report with the delayed November jobs report and you can get a rough idea of what's going on in this economy, says Anne Owen at Hamilton College. Big picture, we're seeing a weakening labor market, maybe inflation that's relatively stable, possibly coming down a little bit, but still above the Fed's 2 % target. And those two things could be related, Owen says. If people are pulling back on spending because the job market is weakening, that could lower inflation because there'd be less demand for goods and services. That's not a sure thing, though. We'll need data from December to get a better sense.

4:33But the problem with waiting, says Laura Veldkamp at Columbia Business School, is it leaves us guessing. We don't know what we're missing, but that's a big deal because any time that you raise uncertainty, you're going to cause people to pause. Uncertainty, she says, can be its own kind of economic drag. I'm Henry App for Marketplace. Wall Street on this day of soft-ish inflation. Equities loved it. Bond traders did, too. We will have the details when we do the numbers.

5:22This time of year, reporters and editors' inboxes here at Marketplace, and in every other business and economy shop, too, I would wager, fill up with forecasts for the year to come. We decided to do our own research, so Marketplace's Amy Scott assembled a panel of experts to talk about the outlook for the housing market. Before we get to 2026, here's how my panel of experts summed up the year in housing we're leaving behind. I would say 2025 was a year of many headwinds. And as a result, you know, a year of frustration, I think, for both buyers and sellers. Buyers were up against high mortgage rates, high prices, and sellers were feeling like they weren't getting the offers that they deserved.

6:05Underwhelming, I think, is a good way to capture housing. That was Jake Krimmel, Senior Economist at Realtor.com, Daryl Fairweather, Chief Economist at Redfin, and Rick Palacios Jr., Director of Research at John Burns Research and Consulting. Between the high cost of borrowing, stubbornly high prices, and all the economic uncertainty this year, sales of both existing and new homes were pretty lackluster. Most analysts expect sales of existing homes to pick up in 2026. Redfin's Fairweather is predicting a years-long housing reset will begin next year with gradually improving affordability. Mortgage rates have already come down, and we think they're going to stay at these lower levels of around 6.3 percent for a 30-year fixed rate mortgage, which means that it's going to be more affordable to buy a home next year.

7:00Meanwhile, she says incomes should rise faster than home prices for the first prolonged period since the Great Recession. We're only forecasting a 1 % increase in prices, and that's slower than what the wage increases should be across the country. Realtor.com's Jake Krimmel is also looking for modest improvement in affordability. It's not earth-shattering, but it is a trend that's moving in the right direction for the market. And after a years-long seller's market that finally shifted toward buyers this year, Krimmel is expecting the most balanced market in about a decade. That means that neither buyers nor sellers are going to have an upper hand in negotiations as a whole.

7:47On the new home side, Rick Palacios Jr. with John Burns Research and Consulting is a little gloomier. We expect a pretty glacial housing market next year. He predicts single-family construction will fall about 3 % as homebuilders have trouble unloading what they've already built. Going into 2026, the homebuilders that we survey tell us that they have the highest unsold finished inventory that they've had since January 2010. It all goes back to affordability. The consumer is telling us, yeah, we'd like to buy, but at these prices, at these interest rates, it doesn't make sense. And maybe we're a little skittish, too, because what's going on in the economy?

8:31me. Buyers may see some deals in the year ahead. For renters, the outlook is mixed, with forecasts ranging from a slight decline in rents to modest growth. And with any forecast, there are some big caveats. Regional differences, for one. Plus, the job market, tariffs and inflation, and an upcoming leadership change at the Fed are all unknowns that could throw off these predictions. As Palacios Jr. says, no one's ever right. And if they if they say they were right, they're lying. He says his goal is to be less wrong than his competitors. I'm Amy Scott for Marketplace.

9:29This has been an interesting year in this economy. I'm reasonably sure. I don't need to go into why. But when you step back a bit, you see it's been an interesting decade or so, too. And Andrew Prokop, a senior correspondent at Vox, has a theory, which he lays out in a piece titled Why America Gave Up on Economists. Welcome to the program. Thanks so much for having me. Define your terms here for me, would you? Why America gave up on economists? So economists used to have a kind of special status when it came to policy advisors or advisors in the political system. They were viewed as kind of the consummate technocratic experts, kind of more high minded than, you know, grubby interest groups or, you know, others.

10:20And I think that there has been a change in that, that economists and economic thinking have fallen out of fashion among the political class and who are increasingly turning to other sources of expertise and wisdom. Well, so let's talk about Trump for a minute, because he, to be extremely kind, has his own thoughts on economic policy and honestly kind of doesn't have much use for them at all. Yes, you know, obviously his own business career, but also he has his own intuitions and beliefs about how the economy actually works. What I think of as kind of core to the economist credo is the idea that you can grow the pie for everyone.

11:03It doesn't have to be, you know, winners and losers all the time. But Trump thinks it does have to be winners and losers all the time. He's obsessed with this, you know, the bilateral balance of trade, as we saw in his tariff policy this year. And economists have often said this year and their pushback that that this makes absolutely no sense, according to their worldview. But according to to Trump's, it's it's the only thing that makes sense. Biden, on the other hand, as you point out, not a big fan of the robust intellectual debates, just doesn't enjoy them at all. Yeah. So in the Democratic side, I think the transformation was partly because of Biden, but also partly because of this underlying coalitional shift bubbling up that Biden was responding to.

11:50This rise of progressive critiques, you know, Elizabeth Warren, Bernie Sanders, but also this increased belief among many of the party's policymaking class that Obama's administration had gone awry and it had failed to deliver the success and prosperity and change that progressives had hoped for. And that part of the reason was because he had this kind of wonky neoliberal way of thinking that was always kind of considering these economists. And that kind of held the Obama administration back from delivering bold change. That was the theory. Not just the political parties, but also you say America has given up on economists.

12:41And I wonder if that's because they're just completely dissatisfied with the economy now. and anybody associated with it is just persona non grata. You know, now that is true. But if you look at the polling in the first Trump administration, the general public was very happy with the economy. In February 2020, just before COVID hit, Gallup's Economic Confidence Index polling hit a 20-year high. Post-COVID, nobody is happy. But generally, economists were sort of warning about the risks of inflation earlier than the Biden administration wanted to hear. But now the problem is that now that prices have gotten high, economists don't really have a good consensus proposal for how to get them back down.

13:30So if economists don't have like a quick fix, then the political system will keep turning to other ideas of how to do that. One of which is price controls. Lately, we've seen mayor-elect Mamdani in New York proposing a rent freeze. Governor-elect of New Jersey wanted to freeze utility prices. And this stuff pulls well. It's intuitively appealing to people, but economists generally hate price controls. The problem is they don't really have a better plan. So with economists in the wilderness, as it were, what happens to policy? And I mean, what are the effects? Why does it matter? Yeah, I mean, I think for any policymaker, whatever your politics, and you want your policies to actually work, it's useful to take into account economic modeling and thinking.

14:28Because, you know, a lot of policies, when they're proposed, it's like, I would like this to happen, and then hopefully it will happen. But the typical economists thinking it more looks at, you know, incentives, how the markets will react, how different, you know, actors in a system would react, unintended consequences. And these models aren't always right, but it's an exercise worth doing if you want to actually ask yourself the tough questions of, will my policies actually achieve what I'm hoping they will? But increasingly, both parties aren't interested in asking themselves these tough questions.

15:07It's always tougher to get back into the tent, though, once you've been cast out, right? So maybe we're economists light for a while in policy? Yeah, I'm not really seeing the quick path back for them. Economists are useful to politicians when they are viewed as being able to help solve the problems of the day. So that's the question for whether they can come back. They're useful until they're not, right? Yes, yes. If they can tell a compelling story about why they need to get some of their groove back, then they could regain their influence. But in the absence of such a compelling pitch, then they'll probably remain in the wilderness for a while.

15:49Andrew Prokop at Vox. Andrew, thanks a lot. I appreciate your time. Thanks so much for having me.

16:15Coming up. We didn't even use the word coal. We said carbon ore. Really? But first, let's do the numbers. Dow Industrials added 65 points today, a 10 percent, 47 ,951. The Nasdaq increased 313 points. That's 1.4 percent. 23 ,006. The S &P 500 grew itself 53 points. Eight-tenths percent, 67 and 74. Amy was telling us about expectations for the housing market come 2026. Rocket Company's owner of Redfin and Rocket Mortgages gained 2.7 percent on the day. Chipmaker Micron reported record revenue in its earnings call after the bell yesterday. We are more than sold out, said the chief business officer.

16:58We're talking about chips that go in cell phones and laptops and, yes, AI data centers. Micron technology jumped 10.2 % on the day. Bonds rose yield on the 10-year T-note, fell to 4.11%. If you don't understand why, given the inflation number today, see me after class. You're listening to Marketplace.

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18:35Hace nueve años que el snack wrap se fue. Así sin explicación, sin despedida, y tú no lo superaste. Hiciste posts, tweets, hasta abriste grupos en las redes sociales. and you focused on achieving your goal, that you'll return. And today, after years of asking, the snack wrap came back. Order it at Ranch or Spicy. Find your snack wrap in your McDonald's favorite. Ba-da-ba-ba-ba. This is Marketplace. I'm Kai Rizdahl. With a continuing recognition that what goes up does eventually come down, we turn now to artificial intelligence. Specifically, share prices of some of the big companies involved in the AI data center boom.

19:20NVIDIA is down 3.5 % in a month. Oracle down 19%. There are the worries over the bubbliciousness of AI, absolutely. Also, though, something a bit more concrete. Concern on Wall Street over the amount of debt companies are taking on to build the infrastructure that's going to power our AI future. A lot of those debt deals are complex. Multiple companies and multiple banks, private equity and private credit. And as Marketplace's Nova Saffo reports, not a whole lot of daylight being shed on the potential risks. Companies are expected to spend nearly$7 trillion, trillion, to build global AI infrastructure.

19:58That's according to consulting firm McKinsey. It's an amount even deep-pocketed big tech firms can't shoulder all by themselves. The cash requirements are extremely high. Stephen Kaplan is professor of entrepreneurship and finance at the University of Chicago. And they feel that it's reasonable to shift some of the risk on to others. The way AI firms have shifted risk is through partnerships with other companies who take out loans from public markets like banks and private markets, which can include pensions as investors. Then those companies use that money to build AI infrastructure. They buy, you know, whatever goes in the data centers, which includes the chips, and then they rent that out.

20:46Firms like OpenAI will be the tenants, and the rental income will theoretically be enough to pay back the debt and make a profit. But Andrew Rocco of Zacks Investment Research says some on Wall Street are starting to question these arrangements. There are certainly risks because a lot of those companies are taking on a lot of debt to get these built out. Rocco says they've done so with the hopes that AI demand and demand for data centers will continue to grow. And that's really the question, of course, is all this debt going to be worth it? Is there a light at the end of the tunnel? All. OpenAI's Sam Altman was essentially asked this in a podcast published about a month and a half ago, and he bristled at the question.

21:32If you want to sell your shares, I'll find you a buyer. Just enough. Altman went on to say that he expects the AI business to grow enough to match the spending. But Stephen Kaplan says the reason these questions persist is because the payoff is way in the future. He says there's no question big tech companies can pay their rents and generate income for data centers for now. But what happens when those rental contracts expire in, say, five years? Will those companies be left holding debt? So then that's called the residual risk is after the term of the lease. Will there be value there? In other words, will AI in the future match hopes in the present?

22:14I'm Novosafo for Marketplace.

22:34One of the realities of a consumer economy is that things change. Specifically here, I'm talking about products. How we use them changes and how companies want us to use them and think of them changes too. Take, for instance, baking soda. Arm & Hammer realized pretty quickly the teaspoon or so that most households use just for baking didn't move enough product. So they pitched it as a way to freshen up a stinky fridge, which meant using a full box. Boom, sales go up, repositioning campaign successful. That strategy has been used time and again by industries trying to reframe all kinds of products.

23:09And now researchers at the University of Wyoming are trying to do the same thing for coal. They're trying to create new markets and keep mines open. From the state with this country's biggest coal supply, Wyoming Public Radio's Caitlin Tan has more. I'm in a University of Wyoming building that houses much of the state's coal research. And before me are tables with construction materials. OK, so I'm picking up the commercial clay brick heavy. And next to the regular bricks are the ones made with coal. Wow, really light. Yeah, really light. But is that good? No, that's really good. It's okay. That's really good because it's compressive strength.

23:50That's Trina Eigelsrud Pfeiffer. The university brought her in eight years ago to help find new uses for coal, as demand from power plants has steadily declined since 2008. It was Wyoming's economic need to make sure that coal stayed relevant and viable and that the coal towns actually kept people employed and, you know, businesses running and things like that. Eigles-Rude Pfeiffer says her team's research proves coal can be used for construction materials, like the bricks or road paving or a soil additive for crop fields. And like do the yield, I guess the crop yield that comes out, does it have like a coal film on it?

24:31No. Oh, no, no, no, no. So sugar beets grown with the help of the coal additive don't come out dusted in black. But it's worries like that that are tricky to overcome. Eichel's Rood-Pfeiffer said that for a long time... We didn't even use the word coal. We said carbon ore. Because of the CO2 issues and things like that, it was the bad actor, if you will. Burning coal releases emissions that are harmful to our health and the environment. But Eichel's Rood-Pfeiffer says that's not the case for these alternative uses. And getting that point across to the public can take a lot of clever marketing.

25:05It's a strategy called repositioning, something Boston University professor Susan Jung-Grant studies closely. You have to start with the associations that people have, whether they are positive, negative, or neutral. Jung-Grant says repositioning usually happens when interest in a product is waning. Old Spice, for example.

25:311970s commercials show weathered sailors and farmers lathering up with the brand's products, shaving soap and aftershave. Come on, wake up to the freshness of the open sea with Old Spice and get a super smooth shave. John Grant says it was viewed as old, something for your dad. Or your grandfather. And it had a very stodgy image. Hello, ladies. Look at your man. Now back to me. Now back at your man. Now back to me. But newer ads show a shirtless, fit man sitting on a white horse on the beach. He could smell like he's mean. Anything is possible when your man smells like Old Spice and not a lady.

26:09I'm on a horse. Old Spice is now a deodorant, shampoo, body spray, and is used by younger brothers, boyfriends, teenagers. It's become redefined and it has a lot of humor in the way it's introduced. So that's repositioning, which is kind of what coal in Wyoming has to do. But it's a bit harder for a so-called climate change bad actor than an old-timey cologne. And the stakes are big here, too. University of Wyoming economics professor Rob Godby says that's because Wyoming needs to find a home for its coal. What we really want is a lot of volume. This year, demand for Wyoming's coal for electricity has been terrible.

26:54It's shaping up to be the second worst year ever for the industry. So the idea would be, what if we could find a product you could use coal for that has a large market, right? A large market, like, say, the construction industry. But Wyoming has to convince builders that bricks made out of coal are a great idea. And that has to happen quick, says Godby. That's the real problem. The decline in coal is happening faster than alternative uses of coal are being developed. And the state hasn't struck any big deals with new industries just yet. The vision of coal brick houses, coal highways, coal crop fields still needs years of research and a hefty market buy-in.