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Are slowing home sales a sign of things to come?
May 19, 2022
Episode 676

Are slowing home sales a sign of things to come?

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Experts predicted this, but for buyers, prices still stung.

This Thursday, we talk about the news that home sales slowed in April, though prices still set records. And the Joe Biden administration tries to increase the supply of baby formula using the Defense Production Act. It’s a welcome help to parents, but how did we get here? Plus, more stories from Ukraine that show the toll of the war. We’ll see you tomorrow for Economics on Tap, but before then, we share what geopolitical alliances and beer have in common.

Here’s everything we talked about today:

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Make Me Smart May 19, 2022 transcript

Note: Marketplace podcasts are meant to be heard, with emphasis, tone and audio elements a transcript can’t capture. Transcripts are generated using a combination of automated software and human transcribers, and may contain errors. Please check the corresponding audio before quoting it.

Kai Ryssdal: Come on, let’s go. Let’s just do it. Let’s just do it.

Kimberly Adams: Yeah, we should probably just do it.

Kai Ryssdal: Just before before Kimberly just gets, you know … Sorry. Hey, everybody, I’m Kai Ryssdal. Welcome back to Make Me Smart making today make sense as best we can.

Kimberly Adams: And I’m Kimberly Adams, thank you for joining us this Thursday. I hope you will forgive if you hear thunder and noises behind me. I’m in Missouri, and it’s typical St. Louis weather.

Kai Ryssdal: It is tornado season, which I learned today, and that’s just wow. Wow.

Kimberly Adams: Yeah, yeah. But I’m in a safe place to record and I’m going to, you know, shut down if I need to, but we’re gonna do some news. And then we’re gonna wrap some things up with Make Me Smiles. So let’s, let’s start with the news.

Kai Ryssdal: Let’s start I’ll go first because yours I’ve got some addendums to yours to actually. Okay, I’ve got two, one of which is an observation and one of which is actually substantive. So number one, I just want to talk about this baby formula shortage for a second. First of all, it’s horrible that is happening. It’s absolutely unforgivable, that the regulatory situation and the tariff situation in this economy is the way it is that this has been allowed to come to pass. And let me just say that my firstborn son, who is now 20 – he’s going to be 24. He would not be around. I’m saying this chuckling, but he would not be around if we didn’t have baby formula, because breastfeeding is ridiculously difficult. And that’s something that nobody tells you when you become a parent. It’s crazy hard. And it’s really hard to know, when the kids are not getting the nourishment. When you’re not rested, when it looks like it’s going fine. When you know, near as you can tell the diapers are full. But the pediatrician says “Oh, no, that’s actually something else.” And it’s not pee and you’re like, oh my God, what? Anyway, all of that, as preface for saying this, I noticed that yesterday, President Biden invoked the Defense Production Act, to oblige baby formula makers to prioritize the making of that formula and, and inputs to that formula to be prioritized, which is great. But there is an increasing reliance we saw during the pandemic with PPE, right? There’s an increasing reliance on just waving the Defense Production ACt around and saying, “Oh, we can fix this by executive order,” instead of fixing the structural problems in this economy like tariffs, of up to 17% on baby formula, on regulations that generally prevent until there’s an emergency like now the import of baby formula from countries who meet U.S. standards, or trade agreements like the USMCA which discourages Canada from exporting its baby formula to this country. The DPA is not a substitute for that. And I think we just need to be aware of that.

Kimberly Adams: Yes, but. I find it very interesting that you often hear like complaints about you know, so for example, you had Abbott that makes you know, one of the major makers of baby formula, but shut down because of health code violations or whatever the violation was, and the FDA had to get involved. We chronically underfund the agencies that we rely on to keep us safe, you can make the same argument for the IRS. And then we also blame the same set of agencies when something goes wrong. One could have made, one could make an argument that were the FDA and all these other agencies properly funded and staffed. This issue would have been caught sooner and resolved more quickly, with proper oversight to have stopped the shortage in the first place.

Kai Ryssdal: Absolutely, I agree 100%. And this is so this is other what’s happening now is actually a choice. Right, because Congress has decided to underfund the FDA and underfund the IRS and all of those organizations. I completely agree.

Kimberly Adams: Yeah. And so like I – Yes, I think it’s dumb to use the defense production act as a shortcut, but sort of the way that we. Hah, “we,” the government uses executive orders when Congress won’t address an issue. You don’t go through the process that was created to solve an issue. So instead, you end up with a shortcut when there’s a crisis. And that’s what I feel like this is, but anyway.

Kai Ryssdal:  Yeah, I agree. I agree. And it’s, look, it’s a failure of our legislative branch. I totally agree. Me piling on Congress again. Anyway. So that’s, that’s news item number one, for me an observation, I suppose. The actual data point news item that I want to bring up is a report this morning from the National Association of Realtors, saying that existing home sales, I always like to call them used homes, because, you know, they’re not existing cars. They’re used cars. Anyway, existing home sales were down two and a half percent in April 2.4%. In April, from March, right. And March sales were down 5.9%, sorry, April sales were down 5.9% from a year earlier. And the reason I bring that up is because of a larger thing that I talked about a Marketplace this afternoon, which is this. Inflation now. And prices now and consumer behavior now are doing what is supposed to be happening in this economy, right? As prices get too high consumer stop buying, as mortgages get more expensive consumer stop buying, as money in this economy gets more expensive. Thank you, Jay Powell, consumers and businesses will stop borrowing and stop spending. That is what is supposed to be happening. It’s a slowdown. And we don’t know yet whether it’s going to be a soft slowdown or a hard slowdown. But this is what is supposed to be happening. And I just need everybody to bear that in mind as the next couple of months, honestly, and maybe a year are going to be kind of bumpy.

Kimberly Adams: What does bumpy mean?

Kai Ryssdal: Well, look, I think inflation is going to remain high, at least through the end of this year. I think consumer demand is going to be not destroyed, but certainly curtailed with energy and gasoline prices. It costs me $6.29 to fill up my minivan the other day, per gallon.

Kimberly Adams: Wow.

Kai Ryssdal: Yeah, right. And so you know, I’m not driving as much as I used to. Demand will be destroyed, which is what is supposed to happen as prices get too high. And that’s going to cool the economy and then eventually prices will get normal. It’s going to be –

Kimberly Adams: Cool the economy.

Kai Ryssdal: At least eight months or a year. Go ahead. Sorry.

Kimberly Adams: Small businesses selling less stuff. More sales when fewer people are buying things.

Kai Ryssdal: Yep, here. Here’s another one. And this is a little weedy. But first time claims for unemployment benefits went up last week, for the first time since January, right? Remember, this is  an indicator that we don’t usually pay a whole lot of attention to in the before didn’t usually pay a lot of attention to in the before times, because it’s notoriously volatile, right? It moves week to week. And when you’re dealing with a $23 trillion economy, whatever week to week, numbers can be misleading. But in the pandemic, we had 16 million people making first l time claims for unemployment benefits in April in May, right. And that was really, really bad. So now, it’s down quite a bit. And while, down to where it was. But it’s ticking up again. And here’s the deal. That is what is supposed to be happening. Jay Powell has said explicitly, we need to take a little bit of heat out of the labor market because wages are too high. And they’re too many – not too high. Wages are going up a lot and that is helping inflation. And also there are too many job openings and we need to cool things down. And so that’s what’s happening. And it’s supposed to be happening. There you go.

Kimberly Adams: Right, okay.

Kai Ryssdal: There you go. Okay.

Kimberly Adams:  Okay. All right. Minor, all about Ukraine.   And I’ll just tick through the three of them because they’re they’re all kind of related, related. First of all, an extraordinary yet another extraordinary story from the Associated Press. They were the last team to leave Mariupol before the Russians took over that area. And as part of their exit in a, you know, a rare sort of humanitarian convoy. They smuggled out a memory card given to them by a Ukrainian medic, whose name I’m probably going to get her name wrong. I believe it’s pronounced Taira, T-A-I-R-A. And it’s a nickname that she actually chose in the World of Warcraft video game. Her name on here is – she’s a famous gamer who was also a medic, but her name is Yuliia Paievska? I’m so sorry, but I don’t speak Ukrainian. Anyway, the important thing is, this woman received a sort of body cam to help shoot a documentary I believe it was from Netflix. However, when the Russians invaded, she started using that body cam to record video of her treating wounded Ukrainian civilians, soldiers, some Russian soldiers, and it’s extremely compelling and painful footage and you can just sort of see how bad things were, you know, before the the Russians fully took over that area. She has since been captured by the Russians, and is one of the Associated Press says, one of many forced disappearances. She’s been put on television and forced to read statements. And nobody really knows where she is or what happened to her. But as one of the last things that she did before she was captured, captured, is she made sure these Associated Press, this Associated Press team got this memory card, which was smuggled out in a tampon, to get through the 15 Russian checkpoints that the team had to get through in order to get out. Really powerful reporting, really powerful care. And it just sort of, they draw this comparison in the piece, but it’s similar to sort of the work of the White Hats in Syria, these metrics that are just operating under the worst conditions, and then often targeted for it. So I would encourage everyone to look at it some of the video’s hard to watch, as you can imagine. And that is that story. And that has me looking at a piece that’s in the Guardian. They started war crimes trials already in Ukraine, for some of the Russian soldiers who have been accused of, you know, war crimes. There’s a 21-year-old tank commander who pled guilty to killing an unarmed 62-year-old civilian. And this story talks about the case, and you know, how it was brought in this situation. He pled guilty, and he asked the man’s widow to forgive him. And he acknowledged what he had done. And, you know, the woman is devastated, of course, but she’s saying that she would accept him being used as a prisoner exchange to get other Ukrainian soldiers back. And, you know, it’s just, I found it pretty astonishing that this trial had gone through so quickly. And and that, you know, this young man acknowledged what he had done. And war does things to people and makes people do things that, you know, you would never want to imagine, you know, this young man, you know, he’s talking about, you know, that he’s the eldest in his family of the kids. And, you know, anyway, it’s, it’s awful. Last thing is that the Senate has passed, have an additional $40 billion in aid to Ukraine. It was one of those things that had bipartisan support, it looks like Biden’s probably going to sign it. It also, part of this package is just sort of a sort of nod to the US support of NATO and expanding it. And the U.S. is trying to speed up the admission of Finland and Sweden to NATO, although Turkey seems to be getting in the way of that. And so those are all of my Ukraine stories. It’s a lot, but just keeping in mind that this is still going on. It’s still really bad.

Kai Ryssdal: Yep.

 

Kimberly Adams: 

Yeah, just super quick on the Ukraine thing. There’s a story on the front page of The New York Times or the website of The New York Times from their visual investigations team, showing those execute not showing the actual executions, but the prelude to the executions in Bucha. Check that out. It’s crazy chilling, crazy chillin,g and I think it’s really good point, actually, that you might oops, sorry, kick the microphone that you reminded everybody that this is still going on, because it’s easy for us to just get subsumed by other things, and it’s real. Well, and numbed honestly, it’s hard to keep hearing and to keep caring and especially if you’re a person who like cares about humanity, you know, it’s hard to absorb all of this stuff, which is really bad and really painful. And, you know, keep your sense of self so I just urge everybody to you know, do some self care, and, you know, step back when you need to, but recognize that you can, you can hold all different types of of grief but also choose to put it down for a bit so that you can maintain your mental health if that’s what you need to do, and still be a caring human. So that’s that’s all.

Kai Ryssdal: So alright, let’s move on, shall we? This is the part where I confess that nothing made me smile today. I’m not cranky. I’m not grumpy. I just – nothing did it for me. So I got nothing. I have no input in this segment today.

Kimberly Adams: May I just add that I’m under an actual tornado warning and still found a way to find a Make Me Smile today.

Kai Ryssdal: Oh, fine. Oh, fine. Fine.

Kimberly Adams: And I, I actually thought of you and I found it because it’s about beer.

Kai Ryssdal: I know I saw it. I saw it. It’s great. I love it. You go.

Kimberly Adams: So this is yet another AP story proving they can do all things. I’m just gonna read the the top line. “Olaf Brewing’s OTAN lager features a blue label with a cartoon version of a beer-drinking medieval knight in metal armor emblazoned with NATO’s compass symbol.  The beer’s name is a play on the Finnish expression “Otan olutta,” which means “I’ll have a beer,” and the French abbreviation for NATO, which is “OTAN.””

Kai Ryssdal: Done. Sold. It’s like those drawings that Audie Norman did of you and me, we’re just sort of like, you know, medium medieval knight looking with the greaves.

Kimberly Adams: Yes, yes.

Kai Ryssdal: See, I learned I learned!

Kimberly Adams: Yes. With the Greaves and the gauntlets with the vambraces. All the things.

Kai Ryssdal: Now we know. All right, so now that you know that Kimberly and I are doing a little fanfic on, you know, medieval knights or whatever very quick turn to remind you of this. It is still fundraising season. What can I tell you, it’s still a fundraising season, we have been daily with your show now for two years, which is crazy. And the truth is, and this is actually true, and I will denied if anybody repeats it to anybody else outside this podcast team. But the Make Me Smart listeners are some of the best and most desert dedicated listeners we have at marketplace full stop. And that includes my show that includes tech that includes the morning report includes everything, you send us your questions, you interact with us, you share your thoughts and your stories, and sometimes, you know, troubles and problems that are happening and and we really value that. And we value that you help us out when we asked you to help us out because that matters, too.

Kimberly Adams: It does. And it it’s heavy. I mean, Make Me Smart went daily, because there was just so much going on in the COVID pandemic and in politics and in our country. And it hasn’t eased up. And the thing that allows us to continue this show daily is is your support. And you know, staying on the beer theme. Of course, you know that $7 a month, gets you the brand new and improved Kai-PA glass. And you know, just because I need in my heart to outdo Kai for $10 a month. $3 more, you can get that Jasper wine tumbler, which everybody knows is super cute. But we have gifts at every level. And anything you can give really we’d be very grateful and appreciative because we need you so marketplace.org/givesmart, that’s where you can go.

Kai Ryssdal: And now we gotta go. I’m back tomorrow Economics on Tap with the one and only Amy Scott we’ll have a drink. I don’t know what Amy’s gonna have. I’m gonna have a beer. We’ll talk about the news, play a game. And we’ll be on YouTube because you know, video is everything now you can join us. 3:30 afternoon in the afternoon, Pacific Time – I’m gonna get fired 6:30 in the evening, Eastern Time. But hey, whatevs.

Kimberly Adams: 5:30 Central where I am right now.

Kai Ryssdal: That’s right.

Kimberly Adams: Yes. So feel feel free to tell folks to join us on the YouTube livestream. If they’ve never decided to hang out, you know, invite them for the cocktail hour even though I can’t make it. I will be drinking with other folks at St. Louis Public Radio looking forward to it because they’re having their 50th Anniversary Gala. So that should be a lot of fun.  Oh, that’s great.  Yeah, yeah, yeah, I’m really looking forward to it. And so yes, meanwhile, please keep sending us your thoughts or questions. Our email is makemesmart@marketplace.org. Or you can leave us a message at 508-U-B-SMART.

Kai Ryssdal: Are you the, are you the featured attraction in St. Louis Public Radio tomorrow evening?

Kimberly Adams: Not even. I just show up. Make Me Smart is produced by Marisa Cabrera with help from our intern Tiffany Bui. Today’s episode was engineered by Juan Carlos Torrado.

Kai Ryssdal: Well, you oughta be, that’s all I’m saying. Bridget Bodnar the senior producer. Director of On Demand is Donna Tam. Donna, Donna, Donna.

Kimberly Adams: So we need to talk about what your understanding of fanfic is.

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The team

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