The case of the missing GDP report

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0:47And next day delivery helps ensure he'll have everything in place and running like clockwork. Call 1-800-GRAINGER, click grainger.com or just stop by. Grainger, for the ones who get it done. We are going to operate today in the land of make-believe. Let's make believe we have a way to know what's actually going on in this economy. From American Public Media, this is Marketplace.

1:23I'm Kai Ruzdal. It is Thursday today, October the 30th. Good as always to have you along, everybody. We've got this economic calendar we use around the office. Helps us keep track of what kind of data is supposed to be coming out day by day and week by week. As you know, since the shutdown started, lo these 30 days ago, more releases have been canceled than have actually happened. The two we are interested in today, and the absence of which is forcing us into the land of economic data make-believe, are initial claims for unemployment benefits. Mitchell Hartman is going to have that later on in the program.

1:56Don't sleep on the labor market, am I right? But we're going to start with the biggie. What was supposed to be an update on economic growth in the third quarter, G, D, and P are the initials there. Marketplace's Daniel Ackerman is our guide. When I called up Bill Adams, chief economist at Comerica Bank, he was more than happy to engage in some educated speculation. I love the premise for this interview. We don't have an economic release. We don't really know what's going on, but let's talk about it anyway. He says there's always some uncertainty about the state of the economy, but it's still useful to guess what GDP might be because...

2:33Over time, real GDP per person in the country is a great predictor of overall standards of living. It's also a really good measure of the business cycle. So some Federal Reserve branches model GDP. The Atlanta Fed estimates the economy grew at a healthy annual rate of 3.9 % last quarter. New York has a more modest 2.4%, and the St. Louis Fed just 0.6%. Mark Zandy is chief economist at Moody's Analytics. I will caution, though, I wouldn't put much stock in any of these numbers at the moment because they're based on data and we don't have any data. At least not the kind that typically feeds these models.

3:13But the estimates all agree that growth last quarter was positive. I'll take it. We're not in recession, but we're not going anywhere very quickly. Zandi pointed to two drivers for the growth. One is business investment. A lot of that's around artificial intelligence and expanding out that infrastructure. The other is consumer spending, especially by wealthier households on things like cars. That got a little juiced because of the expiration of tax subsidies for electric vehicles. Looking ahead, though, Tuan Nguyen, an economist with RSM, says, We are less confident that consumers will keep up the same pace in the final quarter of the year.

3:50Nguyen says with a weakening job market and continued inflation, this quarter's GDP might not be so strong. I'm Daniel Ackerman for Marketplace. You look up the definition of deal, and the good people at Merriam-Webster will tell you it is an act of dealing, an arrangement for mutual advantage. You look up truce and you'll see that it's a respite, especially from a disagreeable or painful state or action. Both arguably apply to the news out of President Trump's meeting with Chinese President Xi Jinping overnight our time. Both sides have suspended, in a manner of speaking, the tit-for-tat trade war that's been happening pretty much since Inauguration Day.

4:31More American soybeans will be bought. Fewer Chinese rare earth metals will be restricted. It is pretty much a return to status quo ante. It does bear a mention here, though, that the effective tariff rate on most Chinese imports to this country are still up near 50 percent. Wall Street on this Thursday, traders were a little bit cranky. Truth be told, we will have the details when we do the numbers.

5:22As is true in life, sometimes it's in what is not said in business that the relevant details lie. My reference here is to the raft of corporate earnings reports we've been getting the past couple of three weeks. We have heard, just for instance, from some of the big banks that despite doing land office business in investment banking and trading, they are concerned, as are many, about where the labor market and the economy as a whole are headed. So far, so good. Not much discussed. A problem they've actually been citing pretty regularly ever since the pandemic. Commercial real estate. Marketplace's Justin Ho explains what's going on there.

6:00Ever since the pandemic, certain types of commercial real estate have struggled with high vacancy rates. Really where the greatest concern was, was in the office sector. That's Tom Collins with the consulting company West Monroe. Office vacancy rates are still elevated, but Collins says big banks just aren't all that concerned because they've been making fewer commercial real estate loans. The bigger banks have been able to avoid it because they have far greater diversity of earnings and a far greater diversity in their loan book. But regional and community banks don't have that luxury. Colin says they've made most of the commercial real estate loans in recent years.

6:36And he says many of those lenders see value in their local office buildings, even if they're sitting vacant. So their strategy has been to work with their borrowers to help them avoid default. So that in the long term, we still have this borrower as a client. We are still collecting money on the asset. and we're not having to take a write-off and deal with the post-bankruptcy foreclosure and all the stuff that goes along with that. But there's an issue on the horizon. A lot of commercial real estate loans are maturing this year. When a loan matures, it forces an owner's hand. That's Xander Snyder, senior commercial real estate economist with First American.

7:13Building owners took out most of these loans back when interest rates were much lower. So when they try to renew their loans, they're going to face a much higher interest rate. As that progresses, more owners are going to have fewer options and they're going to have to do something with their property. Snyder says many property owners will end up selling their buildings. And that can actually be a good thing for the commercial real estate market. That's because prices on commercial properties have been falling. And anyone who can buy a building at today's lower prices is probably in a healthier financial situation than the seller.

7:43So you still have debt, but it's a new loan. It's probably at a higher interest rate. But the total debt service that you pay on that mortgage is low enough to bring that property out of distress, essentially. Property owners are also trying to attract tenants by offering perks, including rent concessions, and by putting money into improving their buildings. Tom Taylor is with the real estate company TREP. So you'll have an allocation from a landlord to build out your space, perform small renovations or bring in fixtures or things that customize a space for a particular tenant. Taylor says that's happening with other types of commercial real estate, too, including retail space and apartment buildings.

8:21You know, one, two, three months free out of a 12-month lease just to get that unit occupied. And, you know, that is one way that folks start to realize, renters, that is, that this is a renter's market, perhaps. Taylor says how healthy the commercial real estate sector is depends on where in the country we're talking about. For instance, vacancy rates are relatively low in New York and other big coastal cities, but they're higher in smaller markets, including Charlotte and Atlanta. David Reiling is CEO of Sunrise Banks in Minneapolis. He says office buildings are still in a slump in central business districts there and in suburban office parks.

8:55But things are looking a lot healthier outside those locations, in areas where there are more types of commercial real estate clustered together. You're going to see restaurants, you're going to see grocery stores, and then you'll see an office building. And that's the place where people will be. Reiling says the bank is seeing demand for commercial real estate loans pick up in those locations, from owners who want to fix up their buildings, offer more amenities, or more flexible space configurations. That means the bank is seeing a lot of opportunity. A good property with a good borrower behind it is where Sunrise and a lot of community banks make their living.

9:30As a result, Riling says competition for those borrowers' business is heating up. I'm Justin Howe for Marketplace.

9:50I'm pretty sure I've seen some ads for Black Friday sales already, which, never mind that it's not even November yet, does mean there are some deals to be had. Among those deals, as always, new TVs. Top-of-the-line offerings today can display in 8K ultra-high definition. That's got to be better, right? They've got deeper blacks, brighter brights, and are thinner and lighter weight than ever. And yet, those modern TVs do have their haters, a dedicated group of video purists who find them lacking in some really important ways. Marketplace's Megan McCarty Carino has that one. There are some people who are just sensitive, you might say, highly attuned.

10:33I tend to be someone who is very, I guess, perceptive and very obsessive. Rahul Banerjee, a tutor in Long Island, is among the afflicted. So is food scientist Vikrant Lal in New Jersey. He notices weird things on screen that other people don't. And then you don't want to say anything because, like, other people, like, don't see it or they don't get it. And you're like, I'm just going to pretend like I didn't notice that. No, this isn't a sixth sense kind of thing. I see dead people. It's a problem with watching cinematic content like that on modern TVs. All those spooky, slow pans and tense tracking shots meant to pull viewers into the imaginary world just look wrong to them somehow.

11:22The only way to describe it is just like it's very surreal and unnatural. The motion seems off to me, like as if there's a skip, like as if the Internet connection broke down. Banerjee has actually bought and returned two top-of-the-line OLED TVs. Even though this is supposed to be a better technology, I'm really not enjoying this. I'm really distracted by the unnatural motion on it. So he bought an old plasma screen on Facebook Marketplace for$40. LOL 2 is a plasma partisan. I don't care that it's 15 years old. I love that old TV. To me, that sounds better, looks better than anything that's on the market right now.

12:03New LED and OLED TVs can display images in much higher resolution than plasmas. The picture is so clear, bright, and sharp, it can feel like you're right there at the 50-yard line of a football game, and you can actually follow the passes downfield. But the same advances that have made TVs better for sports have actually made them worse in some ways for movies, says Samuel Breton at the TV testing site Readings.com. It is always a trade-off, right? Like, there is no perfect TV. Movies, and most prestige narrative content, are shot at a lower frame rate than other TV. It's a relic of film reels, but helps create the dreamy aesthetic we associate with cinema.

12:49On older tech, like projectors and plasma, those frames were displayed in imperceptible flickers, our brain filled in the gaps. But new TVs hold one frame and instantaneously show the next. And because movies have fewer frames per second, they hold each one longer, giving almost a slideshow feel at times. The difference in space between the two frames sometimes is large enough that it looks like it's jumping between. It looks like the image is like flashing and bouncing back and forth. The more clear and bright a TV is, the worse the stutter appears, particularly in panning shots. There is a fix on new TVs, a setting, if you can find it, that inserts fake frames to smooth motion out.

13:37The unfortunate side effect is that it makes most movies look like they were shot on high-speed video rather than film. That's Tom Cruise in a 2018 PSA warning viewers about the dreaded soap opera effect, where everything just looks digitized, overly sharp, and almost hyper-real, like surveillance video of actors on a soundstage. But without motion smoothing, stutter just keeps getting worse. You can actually make these systems more intelligent. Mahesh Balakrishnan is VP of Consumer Technology at Dolby, which has developed a new system to turn motion smoothing on selectively, only for shots or scenes where it's needed.

14:19Creators can encode their preferences in the metadata. We also have built systems where this can be, to a certain extent, automated. Yep, AI could hold the key to more natural cinematic motion. For those more interested in the tried-and-true tech of yesterday, I hear you can get a pretty good deal on a used plasma. I'm Megan McCarty Carino for Marketplace.

15:00coming up people are wanting to drink less and so instead they're going for premium waters h2 oh my but first let's do the numbers Dow Industrial is down 109 points today, just shy of a quarter percent, closed at 47 ,522. The Nasdaq descended 377 points. That's nearly 1.6 percent, 23 ,581 there. The S &P 500 down 68 points, 1 percent, 68 and 22. Meta reported record revenues for the last quarter, but it also took a one-time charge tax-wise of nearly$16 billion. dollars. Weren't investors that it's going to, quote, aggressively boost spending on AI infrastructure. Parents of Facebook and Instagram dropped 11 and a third percent today.

15:50eBay is forecasting its profits for the holiday quarter are likely to come in below expectations. Why, you ask? Tariffs, the elimination of that de minimis exemption, of course. eBay, get this, gave back 15 and nine tenths percent. You're listening to Marketplace.

16:08This is Marketplace. I'm Kai Rizdal. Our journey into the land of economic data make-believe continues now with jobs. Should have gotten the regular weekly report from the Bureau of Labor Statistics today on jobless claims, both the first time and continuing. We did not. And you don't have to be Jay Powell to know that this is a dicey time for the American labor market. So we sent Marketplace's Mitchell Hartman off this morning on the search for alternative information. The last thing we know we know about the job market comes from the August Jobs Report, which told us job creation had already slowed down heading into the government shutdown in early October.

16:48Obviously, everything's not looking great. That's Lisa Simon at Reveglio Labs, which is crunching job numbers of its own, based on 105 million employment profiles on sites like LinkedIn. Reveglio teamed up with private sector payroll processor ADP and came up with an estimate of job creation for September if the jobs report had been released, around 30 ,000. For October, says Simon. I sort of expect a number that is essentially around zero. So no job growth this month. Another useful private sector data source is employment sites, which track online job postings. Here's Zip Recruiter economist Nicole Basho.

17:30ZipRecruiter's marketplace data shows job postings started to fall towards the end of September into October. We don't have an official update on unemployment, which was still pretty low at 4.3 percent in August. But we do have sentiment data on how American workers are doing, says Sophia Baig at polling firm Morning Consult. It's just really difficult to find a job if you don't have a job, and that's been characteristic of the economy over the past year. Consumer sentiment has been in the dumps, and major companies announcing thousands of layoffs recently surely won't help. They include UPS, GM, and Amazon, which is a marketplace underwriter.

18:10John Challenger at outplacement firm Challenger Gray and Christmas says this level of downsizing? Big mega cuts you only see in conditions where the economy is beginning from a labor standpoint to take a turn for the worse. like we saw in the Great Recession and early in the pandemic. And at least then we had up-to-date government data to help understand what was going on. I'm Mitchell Hartman for Marketplace. Fact of the matter is, even when there's no regular government data release scheduled on that calendar I mentioned up top, private data can be instructive. Case in point right now, housing.

18:49The S &P K-Shiller Home Price Index was out earlier this week. Turns out the growth in home prices is slowing. Still growing, those prices are, just more slowly. And Freddie Mac reported today the interest rate on a 30-year fixed-rate mortgage is down for the fourth consecutive week 6.17 percent. All of that should, emphasis there on should, mean home ownership is becoming more affordable. But as Marketplace's Carla Javier reports, it hasn't really moved prospective buyers off the sidelines. Around the country in August, home prices rose just 1.5 % on an annual basis, says Nick Godek at S &P Dow Jones Indices.

19:28Basically, home prices are underperforming inflation, so on a net basis are declining in value. Not great news for home owners, but Godek says for home buyers? It's potentially more attractive than it has been because we're not seeing just the rapid increase of prices that we've seen in the past. But a lot of buyers are still staying on the sidelines. The National Association of Realtors reports no change in pending home sales in September. And year over year, pending sales decreased a little less than 1%, says senior economist Nadia Evangelou. What's interesting is that the market isn't picking up as we expected, but it's not strangling either.

20:14Evangelou anticipates activity will increase next year. The primary reason is because of affordability. Affordability remains the main challenge. Though affordability is slowly starting to improve, with moderate price growth and lower mortgage rates, says Redfin economist Chen Zhao. But the economy is also shakier, so a lot of buyers are still sitting on the sidelines. They're worried about the job market, Zhao says, and timing. I think a lot of buyers are saying, hey, if rates are falling, they might fall more. And if home price growth is moderating, maybe we'll see home prices start to fall later this year or early next year.

20:51And I just want to wait. I don't want to be the one to catch a falling knife, essentially. Zhao says it might just take more time for home prices and mortgage rates to fall significantly enough to motivate buyers to take the plunge. I'm Carla Javier for Marketplace.

21:20When you think fine dining or something to order at a restaurant if you want to splurge, what comes to mind? I'm guessing maybe a really good bottle of wine, some of that wagyu beef, something you'll linger over and remember for a while, right? How about water? Not just any water though. Natasha Dangoor wrote in the Wall Street Journal the other day about the world of fine water, which is, I now know, a thing. Welcome to the program. Nice to be here. Thank you for having me. Let's start here the same way you start this piece. A woman is at a high-end restaurant here in Los Angeles looking over the drinks menu, and the waiter says to her what?

22:01So she's ordering a steak that she's sharing with her friends, and she's looking for a drink, specifically a drink of water. So she opens the drinks menu, and the server comes to her table and recommends that if she's having a steak, she wants something smooth and full-bodied, something that will complement her food. So she goes for this bottle of still water from the east coast of America called Saratoga. And yeah, it's part of this wider trend of fine water where people are wanting to drink less. And so instead, they're going for premium waters that have characteristics that complement certain food types.

22:39Yeah, the whole people drinking less alcohol thing is no small part of this. But there are descriptions in this piece of people who you spoke to who are in the know about water. They talk about them as salty and complex. They talk about them as smooth and easy to swallow. My response here, and I'm not trying to be facetious at all, is it's water. Yeah, that's what I thought too originally. But so they say every water has a different flavor profile. And so it's not just water. And actually what these water sommeliers will tell you is that the taste of your food will change depending on what water you have, just as if you ordered a red wine versus white wine, that would change the taste of your meal.

23:21As I understand the chemistry of this or whatever it actually is, it all depends on something called total dissolved solids, TDS. What might that be? Exactly. So that tells you the mineral content of the water. So a water with a higher TDS would make it potentially more acidic or more metallic tasting or just a general stronger flavor like a red wine. Whereas a water with a lower TDS might pair well with fish because it's kind of lighter and has a lower minerality content. This fine water segment of the market, as you point out in this piece, is still relatively small, all things considered, when you get to restaurant beverage sales.

24:02But you do point out that at this restaurant in LA where we started this story in the interview, they make$100 ,000 a year in water sales. Yeah, absolutely. I think it's something new and it's something different. And like we spoke about before, people drink less alcohol. They want options. And also it's a novelty, right? You know, they see this water menu. People are stealing the water menu from the restaurant. It's become that popular because it's kind of like... Seriously? Yeah. It's, you know, got so much to it. It's got descriptions of all the waters, pictures, tells you whether it's sweet or salty or smooth or complex, you know, it's got all these elements to it, just like wine, but not.

24:39So as you were reporting this piece, there are devotees, yes? I mean, there are people who like go specifically for the water. Yeah, people love it. People go and they enjoy water as a fine dining experience. It's just like, you know, going to a bar and choosing which vodka you like. For them, it's the same thing. And yeah, people laugh at it. And one guy wrote on Reddit, next they'll be charging for air because obviously it's, you know, can be perceived as a silly thing. You can get tap water for free, but other people really love it. It's an experience for them. We should point out that the water menu at this place here in LA does point out that tap water is free on their menu, right?

25:19Yeah, it does. Natasha Dungor at the Wall Street Journal. Natasha, thank you so much. I appreciate your time. Thank you so much. It's great to chat.