Challenges in the RV Market

Coming up on the program today, we'll talk about the geopolitics of this economy We'll talk about the risks and rewards of GPS And we'll talk about the RV market. as economic indicators fromrom American Public Media. This is Market Flans In Los Angeles, I'm Ky Risnell. It is Thursday. Today, This one is the eighteenth of June. goodood as it always is to have you along, everybody. You know, sometimes there's just a lot of economic loose ends out there waiting to be tied up. So that is what we're going to do to get going today and we're going to do it with Robin Brooks. He's a senior feellllow at therookings Initution. Welcome back to the program, Robin Good to have you y you Hey guysy, thanks for having me So let's see, there is an agreement to begin negotiations in pursuit of a deal in the Middle East. And thus, I want to start today with you and oil, Brent is at seventy nine dollars a barrel, just a hair under eighty bucks the stit is still closed. It is going to take some time for things get to get back to normal. Crystal ball this for me. W you what happens with oil markets? You're an oil guy. So Let me say two things. I think one thing that's really, really important about this shock that we've kind of learned is, you know, think back a couple of weeks or months There were a lot of scare stories about oil going to one hundred and fifty or two hundred dollars a barrel. That didn't happen. And I think that's really important Here If you think back to before the war Th then we were around sixty, seventy dollars a barrel at seventy nine c I think there's very little risk premium priced. I think we need to be in a range of eighty to ninety dollars a barrel until ship traffic fully resumes until oiless tankers start moving. So I think markets are getting a little bit ahead of themselves on their optimism. Tell me why risk premium here is important. Why in effect, if I listen, if I heard correctly what you just said, oil needs to be a little bit higher Yeah, so Obviously, as you know, the Strait of Formz is a critical artery for global oil markets before all this started. twenty million barrels of oil per day and product moved through the strait Um We are a long way from that number Before all this began, there were about a hundred ships every day that went through the Strait of Fore Mz about fifty West to east and about fifty east to west. S traffic, unlike all the previous ceasefire agreements that we've seen in recent weeks, ship traffic is picking up, but we're still in the tens of ships, not hundreds You know, I read you on substack from time to time and I following on the socials. And you have been through this whole crisis Um sanguine that oil prices were not going to go completely haywire. And I guess I wonder why that was because everybody in the world was like, oh my God, barrel two hundred dollarars a barrel, you know Well, thanks so much for being a subscriber of my Substack. You're probably the single most important subscriber ever. So thank you You're So there's something important here, which is I worked a lot on Russia and Ukraine back in twenty twenty two. And at the time, we had a lot of scare forecasts. Oil at the time, according to one investment bank, was going to go to four hundred dollars a barrel. And so I speent a lot of time digging into how these forecasts are made And it just didn't add up And it's the same this time around. You had scare forecasts of one hundred and fifty or two hundred dollars a barrel If you run the numbers, which I did back in March The max number you get is one hundred and twenty five. and that's basically where we topped out. And this is basically Huge validation of the economic academic research that we have on how world markets work and it kind of invalidates the scare stories that you hear. So My bottom line is steer away from the extremist forecasts. They're usually tail risks The phrase you're looking for here, gang is a price elasticity of demand. I've got thirty seconds for this next answer, Robin, which is not fair to you, but a very quick characterization, if you could of the new era at Feder Reserve Under Chairman thirty seconds So My best guess is that we will have a Fed on hold We will have much less forward guidance and a smaller balance sheet Simpler, cleaner more efficient. betterter And more volatile, may be better We'll see. Okay Well take that Robin Brooks at the Brookings Institut. Thanks, Robin. G to talk to you Thank you Wall Street on this Thursday, you know, as often happens on the day after a press conference for the Fed and the sell offff that follows Traders looked around today and decided maybe things weren't so bad after all We will have the details when we do the numbers This being Thursday, we got our regular report on new claims for unemployment benefits this morning. It was maybe not good, but definitely not bad twow hundred twenty six thousand people filed first time claims last week. That's basically even with what everybody had been guessing Big picture, as you know, the national unemployment rate sits at a historically comfortable four point three percent. Businesses do continue to add jobs The way the job market feels tootally depends on a couple of things. Number one, with a capital one whether you've got a job And number two part of the country you happen to be in This placeac is Kelly Wells is on the labor Market Mood desk for us today The numbers can look good while the job market feels bad. That's Laura Ulrich's big takeaway. Two things can be true at once. She's director of economic research at Indeed. Job gains have been picking up and it's a really tough time to be a job seeker. Ulrich calls the job market paralyzed because, yeah, unemployment's low, but so is hiring if you're trying to get hired. There were a couple times this year where the hires rate was as low as it was in april twenty twenty. So think about that. like who was hiring in april twenty twenty? But the market feels alright if you've got a job right now because chances are good, you're not going to lose it. Perhaps the one lesson is if you're in a job and you even likeike it a little, maybe Michael Goldberg teaches in the schoolchool of Management at Case Western Reserve University, and he says his job seeking students are victims of a really uncertain job market. Perhaps the most uncertain I've seen in my career. Another reason the market feels worse than the numbers suggest, They don't tell the whole story, says Michelle Evermore, with the National Employment Law Project Initial claims doesn't measure how many people are unemployed, It measures how many people are unemployed and are able to get an unemployment benefit. So if you say quit to care for an aging parent or didn't bother to sign up for unemployment benefits because it was too difficult or too low to seem worth it, you're not counted in the report today But some regions are painting a rosier picture. Take Ohio, where I live. The unemployment rate here is fourteen percent lower than the national average Beiju Shah leads the Greater Cleveland Partnership, which is the regional Chamber of commomermerce. We talk to employers every single day Everyone has that same challenge of I can't find enough people. Because people have been leaving the Midwest for decades and now there's a bunch of new economic growth here, the job market's just a bit less frozen. Shw says Ohio companies are sending recruiters to other states. that they feel a richher talent have Maybe a more challenging cost of living. And workers are buying what they're selling. Ohio's Department of Development reported that more people moved to Ohio last year than any time in the past twenty five years In Cleveland, Ohio, I'm Kley Wells, Marketplace Monetary policy, Milton Friedman once said operates with a long and variable lag. Chairman Warsh said a version of the same thing yesterday in his press conference, even as the central bank held interest rates steady The other thing that happened at that presser was what didn't happen. Wh giving no hints, no forward guidance about whether an interest rate hike might be common But as happens sometimes and as might happen more now that there looks to be less communication coming from the Fed Markets have made up their minds. Traders are thinking there's going to be at least one quarter point increase by the end of the year Marketplace's Kristian Schwab made some calls At the Fed press conference yesterday, Kevin Warsh forced us to read between the lines a bit persistently high prices burden for the American people But the recent past need not be prologue I am pleased to report that members of the FOMC are unambiguous and unanimous This committee will deliver price stability The markets took that to mean a rate hike is coming, but Randy Crosner thinks markets got it wrong, and he has a pretty good understanding of how the new Fed chair thinks I mean, I know Kevin well. The two worked at the Fed together a couple decades ago The marketss interpreted that well, he's going to be a real hawk But I don't think that was exactly appropriate Traditionally, markets react to what the Fed says Kevin would like to replace that with They should react to the data Data on inflation and the job market The question is, and just stick with me here for a second If the Fed encourages markets to interpret the data Will the markets really just interpret the data Or will they instead make guesses about how the Fed is quietly interpreting the data Alan Blinder, a former vice chairman at the Fed, says the distinction matters. The argument for a more talkative Fed is not that we want to see these people on TV because they're such wonderful personalities. If you can't tell, Blinder is a pro Fed transparency guy. It's that that conditions market expectations so that hopefully The markets don't run off in crazy directions crazy directions can result in pretty painful market corrections. Blinder thinks we'll see one rate hike in the coming months. so does Carola Binder, an economist at UT Austin. But she says the markets could price in more So we would expect other rates to rise if the Fed starts raising rates Eespecially if markets expect like a series of rate hikes instead of a one time rate hike And a series of rate hikes would have the biggest effect on longer term loans, like the thirty year fixed mortgage. I'm Kristen Schwab for Marketplace Coming up She said, Well, how much is it going cost? I said, Well, a quick calculation, about ten thousand dollars. Do not even tell me what the complicated calculation is. Come on First though Let's do the numbers. D indndustrial is up seventy two points today. That's a tenth percent. fifty one thousand five hundred sixty four. The NASDAq added four hundred ninety six points one and nine tenths of one percent. twenty six thousand five hundred seventeen. The S andP five hundred gained eighty points, one and a tenth percent seven thousand five hundred on the nose. Markets are closed tomorrow Jenth holiday So for the week the four days gone by, if you will, the D increased seven tenth percent. as that climbed two and four tenth percent. S and P five hundred picked up nine tenth percent Gamers have been waiting for more than thirteen years for the sixth installment in the Grand Theft Auto series. They can start preorddering it next week, according to that's the game's developers Take T Interactive rang up four and nine tenths percent. todayoday you are listening to Marketplace This is Marketplace. I'm Kai Rizdal. It happens I don't know, millions, probably actually billions of times a day all over the planet. Somebody pulls out their phone or the device of their choice to find out where they are and how to get where they want to go And it happens all those billions of times A people giving it a second thought There is a new book out about the technology behind us knowing where we are and behind someone else in this global economy and what its future might hold, it's called littleittle Blue dot PS shape the modern world Katherine Dun Roder, Katherine welc to thegram. Thanks coming Thank you so much for having me. Tell me would you how you came to write this book. You used to be an energy reporter, is that right Yeah. so I used to track oil flows kind of around the world. I used to work for a Wallreet journal and in the doubt out Jones and then I was working for SMP Global and I was just sitting at my desk one day and a colleague sent me a story. about a weird incident in the Black Sea and this was quite soon after Russia invaded Crimea And all these ships were turning up at this Russian port Norosis, which is very close to Crimea and They were looking at the window, they could see where they were. they were at port on their ship tracking, you know, sort of like a Google maps that you or I will use, they seem to be Russian airports, like on the tarmac. And of course ships can't yeah, ships can't fly. So this was very weird It was just this mystery that I got obsessed with Yeah, and I just got hooked basically. Fair enough, and it makes for a good book. I will tell you, it's a great it's a great history of GPS, but but also and the story you just told demonstrates this This is a story of the strength and the weaknesses of this system, right? And we're seeing that play out in virtually every sphere. It is fundamentally an infrastructure storeage. Yeah, yeah, it's an infrastructure story and it's little you to make an infructure story sort of sexy and exciting. But once you realize how deep it is in all of our infrastructure you start to see both how transformative it was and also really how risky it is that we're now starting to see such a high level of interference. Right. And you know, we'll get the to the rich part of it at the end of the interview Am I overstating things to say, you know, globalization came out for a whole lot of reasons But GPS now, certainly in modern globalization and the modern economy It's kind of a critical factor Yes, I would say it is a critical factor. and you have to look at the way it really converged with a lot of other things that were happening around the same time when it was bursting onto the mainstream sort of consumer infrastructure world through the nineties and through the two thousands, we're entering. the ear of the smartphone One of the ways it was really transformative that people often don't know about and it's pretty trippy is the way it underpins time and the way digital time has to be really in sync order to make all these systems stitch together in order to make them agree with each other on what time it is And our electricity grids, our mobile base stations Our stop lights, anything digital actually I didn't realize the stop lights thing Um So let's get back to the risks involved with GPS now. and as you said, at the beginning of this conversation the mysterious ships on the airport Tarmax. There is spoofing and there is obviously some manipulation of GPS signals now about where we are with with those risks and how intertwined it is with the global economy and with virtually everything we do Yeah, so it's definitely we've seen them rising. anywhere that there is conflict or there is the threat of conflict Weird stuff has been happening with GPS. You know, we've got Russia, Ukraine, and we obviously have Israel, Gaza, that whole region. And then you get to Iran, you've had all of this in the Strait of Hormuz, which if you've seen a map lately, you've realized is very, very small and a lot can go wrong. So we're at the point now where there's sort of this wall at least through the Middle East and sort of Eastern Europe, Eastern Mediterranean, where there's just so much interference that if you're flying from the U S or Europe to the Middle East in Asia, you're going to go through it I think a lot of people in that world they really do believe it is a bit of a disaster waiting to happen For aviation, it's important to say that there are lots of backupss. Yeah are lot of backups. Aviation is very safe when say that Yeah, yeah, exactly. But it's not something you want to be failing this scale So let me bring it down to the human scale and the little blue dot of your title. We all stare now at our phones when we're mapping or would have you and there is that little blue dot on the phone that tells us where we are to within I don't know, six feet ten feet twenty yards, whatever it is Um This system has kind of changed the way we interact with the world Is that too much you there? it's definitely changed the way I interact with the world People have been asking me, o, did writing this book change your relationship with GPS? you know do you use a map now? And I'm like, No. I walk around like an absolute lemming. You know, it hasn't changed anything because I'm so dependent. and for me, it's been transformative. I don't know anybody Transformative in a good way or a bad way I mean, it's hard to say, right? It's an amazing, elegant system. and I We're not going to throw out GPS and stop using it. That's not going to happen Um, I think we've just forgotten that It's one system and it can fail like any other A book called Little Blue Dot Catherine done Casin, thanks a lot for your time. I appreciate Thank you so much for having me Here's a story about the summer travel season, discretionary spending, high gas prices, and the joy of hitting the open road all rolled into one For those whose preferred mode of transportation is the RV This is a tale of two industries. sales of new RVs down, nearly seventeen percent. useded sales percent year on year If you've got one of those really big RV's that you're looking to unload, motor coaches, I think they're called You could be waiting a while to sell it Core Yng report A refurbished nineteen eighty eight vintage motorcoach, Lindsey and Blake Walters bought used in twenty twenty four, has served its purpose. This is a full size jacuzz tub Wh is so funny. that you would see that in a little RV, but we love it The couple and their two boys lived the RV life while building a home in Fairhope, Alabama. The plan was to save on rent, then resell the rig to someone else who might want to do the same. Yeah In January, the Walters scrubbed their RV inside and out then listed it online with social media videos F months later There's been a lot of interest requests for those videos questestions about those videos, but no follow ups Well, the Walters RV is older than most. The time it's taking to sell is in line with Class A motor coaches built before twenty sixteen Classes are the big busust like RV's Those ten years and older make up roughly forty percent of the used Cass A motorhomes on the site RV Trader, the leading online marketplace for new and used RV's And they're expensive, with some selling for more than half a million dollars RV traders Julianna Baina says, in today's economy, Buyers are watching their leisure dollars They are ready to buy, they want to buy but they just can't make the math work or the cash. That's where financing comes in. But Bena says many banks don't want to finance RV's older than ten years That wall is kind of coming into play and the biggest obstacle that a lot of shoppers are seeing right now And then there's the price at the pump. Many cllass A motor coaches can hold one hundred gallons or more. current fuel prices haven't caught up with the sales data, but they're factored into those leisure dollars Papa knows about that He and his wife own a twenty fifteen forty foot rig they bought used during the pandemic. We have a Honda CRV will pull behind. And you know, if the train is not real mountainous, we get about seven miles to the gallon It doesnn't sound great, does it It does not Roba recently told his wife high diesel prices mean fuel for the couple's upcoming cross country trip from Alabama to the Pacific Northwest, is far more expensive than planned She said, well, how much is it going to cost? I said, Well, a quick calculation, about ten thousand dollars The economy isn't the only roadblock Some buyers are wary of the unofficial ten year rule 's the age limit at which some campgrounds won't allow RVs, as vintage RV owner Blake Walters learned So I figured I'd buy an old RV. It was more affordable that I could work on easily And then we ran into the oldld RV's don't fit in all RV parks. Walters is now paying fifty dollars a month to store the RV With no bites, he's willing to make a deal to get it off the lock With so many older RV's on the market, Bena, with RV trrader Avises offering potential buyers a mechanical inspection report Budgeting for the long haul Patience And Maybe take a few lastess trips before before you sell it because it's going to be a little bit of time and summer's right here With the high price of fuel, RV owners might want to take those trips closer to home In Fairhope, Alabama, I'm Corey Young for Marketplace This final note on the way out today in which it seems an eighty five point seven billion dollars initial public offering just ain't enough for SpaceX Bloomberg reported this morning that the rocket slash artificial intelligence, slash social networks, slash satellite, internet company is going to float a new bond issuance, looking for another twenty billion dollars. SpaceX says its debt has gotten investment grade ratings from the three big ratings agencies The company's latest financials say SpaceX lost almost five billion dollars last year on just shy of nineteen billion dollars in revenue. Ticker SPCX fourour percent on the day Our daily production team includes Andy Corpin, Maria Hoanhorse, Sarah Lesason, Seawn McHenry, and Sophia Torenzio. Will Story is the supervising senior producer. And I'm Kai Rizal. We will see you tomorrow everybody. This is APM