0:01

All right, I'm going to date myself here, but do

0:03

you remember before we had all

0:06

this technology at work from

0:09

American Public Media? This

0:12

is Marketplace. In

0:22

Los Angeles, I'm Kyle Rizdahl. It is Monday, today,

0:24

July the 1st. Good as

0:26

always to have you along, everybody. Our new series about

0:28

the technological before times coming up a little later in the

0:30

program, but we are going to talk here at

0:32

the top of the show about price

0:35

levels, about supply chains, and

0:37

about what a difference a couple of years can make.

0:40

Didn't take too long as the

0:42

pandemic really got going for pretty

0:44

much everything home-related to get

0:46

really pricey. People stuck at home

0:49

started spending money on their homes, which

0:51

drove up the price of construction materials

0:53

lumber in particular. Now though,

0:55

with the pandemic in the rearview mirror and people

0:57

out and about and interest rates high and the

0:59

economy slow in a bit, those

1:01

lumber prices have fallen back to earth. Not

1:04

so much though, all the other stuff that goes

1:06

into the home building and renovation business though is

1:09

Marketplace's Mitchell Hartman reports to get us going. This

1:12

summer, it's all about SPF, not

1:14

sunscreen, two by fours. It

1:17

stands for Spruce Pine Fur, and

1:19

it's the benchmark for lumber pricing

1:21

in the U.S. Back

1:23

in 2021, with demand soaring and

1:25

supply chains a mess, the price

1:27

peaked at $1,600 per

1:30

thousand board feet, says Paul Yonke

1:32

at Forest Economic Advisors. Prices

1:35

currently stand at about $355, so lumber prices are extremely

1:37

weak right now. What

1:42

happened? A combination of weaker

1:44

new home construction and renovation plus

1:46

more lumber supply. Those record

1:49

high prices that we saw the second half of 2020

1:51

through the first half of

1:53

2022 led to extensive investment,

1:56

mills investing in existing capacity,

1:58

new capacity. So last

2:00

week I asked economist Robert Dietz at

2:02

the National Association of Home Builders if

2:05

lumber is relatively cheap, why are new

2:07

homes still so expensive? Building material costs

2:09

are 30% higher compared to 2019. A

2:13

lot goes into building or remodeling

2:16

a home, says Carlos Martín at

2:18

the Harvard Joint Center for Housing

2:20

Studies. There are a wide

2:22

range of other materials whose prices have

2:24

climbed up. A lot of plastics, plastic-related

2:26

products, there's been some variability with steel.

2:28

Not to mention electrical equipment like

2:31

transformers, along with air conditioning and

2:33

heating components in high demand because

2:35

of government tax credits and rebates

2:38

for green energy improvements. All

2:41

these higher costs are helping to drive

2:43

a shrinkage trend, says Robert Dietz. New

2:46

homesize has actually been falling

2:48

in recent quarters as builders

2:50

adapt to an environment where

2:52

housing affordability conditions are really

2:55

quite challenged. Construction of townhouses

2:57

rose 6% last year and

2:59

now constitutes a multi-decade high

3:01

share, nearly one in five

3:03

new homes. The smaller

3:06

the home, the less construction materials it

3:08

needs. I'm Mitchell Hartman for

3:10

Marketplace. On Wall Street today,

3:12

traders were upbeat to start the second half

3:14

of the year. We will have the details

3:17

when we always have the details. You'd

3:36

be hard pressed

3:38

to find a

3:41

more beleaguered company

3:44

right now than

3:47

Boeing, its commercial

3:50

airplane division in

3:53

particular. There were

3:55

reports this morning that the Department of

3:57

Justice plans to charge the one-time paragon

3:59

of American-Manuel. manufacturing with fraud after the

4:02

DOJ says it violated an agreement that

4:04

shielded it from prosecution over those two

4:06

fatal crashes involving its 737 MAX

4:09

jets. Also this morning Boeing

4:11

announced it has agreed to buy one of

4:13

its key suppliers, Spirit Aero Systems or rather

4:16

buy it back, I should say, Spirit, which

4:18

makes few salashes, including the one that lost

4:20

the door plug midair back in January. It

4:23

was a subdivision of Boeing until it was spun off in 2005.

4:26

Marketplace's Daniel Ackerman looked into why

4:28

now nearly 20 years later, Boeing

4:31

wants Spirit back. Boeing

4:33

thought selling off Spirit Aero Systems in

4:35

the first place was just good business.

4:38

The idea was they could just not have to worry

4:40

about the enormous problem of building the body of the

4:42

plane. Richard Abilafia is

4:44

with the consultancy Aerodynamic Advisory

4:47

and he says building fuselages is

4:49

expensive. In theory, making Spirit

4:52

standalone would reduce Boeing's overhead

4:54

because rivals, including Airbus, could also do

4:56

business with the new company. Meanwhile,

4:59

Boeing had ambitions of simply

5:01

crunching it on price, basically

5:04

demanding price concessions to

5:06

enhance their own profitability. Boeing

5:08

tried that for almost two decades, but

5:11

then came the two deadly 737 MAX

5:13

crashes plus a supply chain scramble due

5:15

to COVID and the

5:18

great experiment failed. Richard

5:20

Safran is with Seaport Research Partners.

5:22

He says the crashes and pandemic

5:24

slowed down production lines and

5:26

natural attrition shrank Spirit's labor force.

5:28

Then when demand for airplanes picked

5:30

back up, you had to

5:33

rehire massive numbers of people during

5:35

what turned out to be a historic

5:38

labor shortage for suppliers like Spirit. Their

5:40

policies and procedures were geared towards

5:43

a much more sophisticated worker than

5:45

they were able to hire. So

5:48

Boeing decided to bring Spirit back under its

5:50

wing. Well, look, the name

5:52

of the game now is Vertical Integration and

5:54

we should be doing more of that. Making

5:57

its own fuselages could eat into

5:59

profit. but it'll also give

6:01

Boeing more control over a high

6:03

precision process, says Vijay Panderajan of

6:05

Michigan's Ross School of Business. The

6:08

specifications are extremely tight, so you need

6:10

to exercise a lot of control. And

6:13

Panderajan says being in control is

6:15

especially important for a company that's

6:17

losing public confidence. I'm Daniel

6:19

Ackerman for Marketplace. Music

6:50

The thing about history is that you can read it

6:52

and study it and learn as much about it as

6:54

you can. And a lot of times you can see

6:56

the after effects of that history in the present day.

6:59

But you can't really experience it. You

7:02

probably heard the term redlining, right? The

7:04

now illegal practice of denying credit and

7:06

other services to people in certain areas

7:08

based on their race or ethnicity. You

7:11

don't have to look too hard to see the after

7:13

effects of it on those disadvantaged populations today. And

7:16

now a public health expert in Baltimore

7:18

has figured out a way to let people get

7:20

at least a feel for what it

7:23

might have been like back then. Marketplace's Amy Scott went

7:25

to check it out. In the

7:27

auditorium at Patterson High School in

7:29

Baltimore, a bunch of adults seated

7:31

around tables are about to play

7:33

a board game. They're staff at

7:35

Baltimore City Public Schools, here for

7:37

a day of professional development. All

7:40

right, who's ready to play urban cipher? Dr.

7:43

Lawrence Brown is a research

7:46

scientist at Morgan State University

7:48

and creator of urban cipher.

7:51

It's like a rigged game

7:53

of monopoly. Players are assigned

7:55

colors, red, yellow, blue and

7:58

green, that correspond to coded

8:00

maps created by the federal government in

8:02

the 1930s to

8:04

steer lending to certain neighborhoods.

8:07

That's what cipher refers to.

8:10

Ha, great. Like Monopoly,

8:12

players roll a die to move

8:15

around the board, collecting money and

8:17

buying property along the way. But

8:19

how far they can move depends on

8:21

their color. Tierra

8:24

Evans gets red. So if you

8:26

roll a one, you move zero.

8:28

Got you. Two, zero, three,

8:30

one. It's a lot of zero options. It's

8:32

crazy. Just can't move around in life, huh?

8:35

Scott Johnson is yellow. He gets to

8:38

move a little more quickly. Hit

8:42

me, hit me, hit me. Thank you

8:44

very much. Annabella Hunter, as

8:46

blue, goes almost all the

8:48

way around the board on

8:50

her first turn, collecting a

8:52

college scholarship, parental inheritance, and

8:54

the Grandparents Trust Fund. She's

8:56

got $700,000. She surely

8:58

did. She

9:01

also gets to draw a card, sort

9:03

of like the Chance and Community Chest

9:05

cards in Monopoly. Okay, so

9:08

this one says, Highway Construction, it's time

9:10

to build a new highway in our

9:12

city. The highway must cut through one

9:14

red in one yellow neighborhood. Hunter

9:16

has to decide which neighborhoods to

9:18

cut through. Oh. I'm

9:21

not able to be gone. Oh,

9:23

no. It's cold, buddy. Finally,

9:27

Reese Cox, who's green, rolls a

9:29

six and moves 24 spaces all

9:33

the way around the board. Since your

9:35

neighborhood is helping keep red players out,

9:37

artificially inflating property values collect an extra

9:39

$100,000. That's

9:42

wild. It goes on like

9:44

this until everyone has rolled three times

9:46

and the game ends. Green

9:49

and blue have each amassed at

9:51

least a million dollars. Yellow has

9:53

a few hundred thousand, and

9:55

red has just a hundred thousand. All

9:58

right, so where are all my red players? Afterward,

10:00

Dr. Brown debriefs. Give

10:03

me one word to explain how you

10:05

felt playing as Red during

10:07

the game. Stuck. Stuck.

10:11

It's reality. This is how a lot

10:14

of our students and ourselves have

10:17

actually come through, if you think about

10:19

it. Evans was raised

10:21

in a historically yellow neighborhood in

10:23

Baltimore by her grandmother and was

10:25

the first in her family to

10:27

graduate from college. You really had

10:29

to have somebody strong, connected to

10:31

you to make those kind of

10:34

moves. Then Brown asks how

10:36

the green players felt. I

10:38

felt blessed. You felt blessed? Barely

10:41

stressed and highly blessed. Is that what you're saying?

10:43

Yes. And highly favored. And

10:45

highly favored. Ha ha ha. Next,

10:49

Brown passes around a printed map

10:51

of the city of Baltimore, the

10:53

original 1937 residential security map created

10:57

as part of the New Deal to

11:00

grade the perceived risk of lending

11:02

in certain neighborhoods. Red

11:04

and yellow neighborhoods, with more

11:06

black residents, immigrants, and low

11:08

wage workers were considered risky.

11:11

And blue and green, with more

11:13

white people and higher incomes, were

11:15

deemed safer. Red and yellow

11:17

neighborhoods would not get loans or would

11:19

get very few loans. Subprime loans, maybe.

11:22

Whereas green and blue neighborhoods would receive

11:25

all kind of resources, all kind of

11:27

loans, good interest rates. Those

11:29

policies have had lasting effects.

11:31

Research has shown that people

11:34

living in formerly red and

11:36

yellow lined communities have worse

11:38

health, social, and economic outcomes.

11:41

Brown says he created the game as

11:43

a teaching tool, but he's

11:46

seen how it also helps build

11:48

empathy, especially when people who grew

11:50

up in green or blue neighborhoods

11:52

play yellow or red. If

11:54

this game can help people say, all

11:57

right, now I understand what it means to

11:59

struggle. and it's based

12:01

on the way that the rules of the game

12:03

are laid out. Not effort,

12:05

because we're rolling the same thing, but we're

12:08

getting different results. I think

12:10

that is incredibly valuable. And

12:13

if they can understand that, maybe they can help

12:15

change it. In Baltimore,

12:17

I'm Amy Scott for Marketplace. Music

12:49

Coming up! We need green

12:52

trees. We need good

12:54

water. We need to

12:56

save our resources. All

12:58

true. But first, sure,

13:01

let's do the numbers. Dow

13:03

Industries up 50 points today. Five zero

13:05

points. 10% close to 39,169. The NASDAQ rose 146 points.

13:13

It's about 8.10%. Finished to 17,879. S&P 500 picked up 14 points. About

13:19

a quarter percent, 54.75. Mitchell

13:21

Hartman was talking about the decline in lumber prices

13:24

tied to the slowdown in home construction. So, some

13:26

stocks in the timber and building materials industry then,

13:28

shall we? Boise

13:30

Cascade slid 1.3% today.

13:33

We'rehauser retreated 2.9%

13:36

Louisiana Pacific basically flat UFP Industries

13:38

down 1.5% today. Hey, you

13:41

know those red box movie rental kiosks that

13:43

used to be pretty common outside gas stations

13:45

and the like? Its parent company has filed

13:47

for Chapter 11 bankruptcy protection, Chicken Soup for

13:49

the Soul Entertainment, which

13:51

it turns out acquired red box in 2022, taking on more than

13:53

$350 million in debt in the process. Well,

13:56

its stock plummeted 39.4 of one-tenths of $1.5 million. Daniel

14:01

Ackerman was telling us about Boeing's plans to buy Spirit

14:03

Era systems for something like 4.7 billion simoleons. Boeing

14:07

elevated to 2.6% today. Spirit flew

14:09

up 3.3%. Bonds

14:11

down. Yield on the 10-year keynote 4.47%. You're

14:13

listening to Marketplace. From

14:22

all of us at Marketplace, we just want

14:24

to say thank you to those who stepped

14:26

up to join our community of Marketplace investors

14:28

at the end of our budget year. Your

14:30

support empowers us to continue making everybody smarter

14:32

about the economy, and that means everything. It

14:35

is not too late to become a

14:37

Marketplace investor, you know, just go to

14:39

marketplace.org/donate, and thanks again. Plus,

14:59

stellar visuals and immersive sound. Your talents

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now have a device to stream videos,

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edit photos, or create your next masterpiece.

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Black Friday and July

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savings at dell.com/deals. That's

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dell.com/deals. This is Marketplace.

15:29

I'm Kai Rizdall. Artificial intelligence, AI, can

15:31

do a lot of things. Funny images,

15:33

it can ready you speech, computations, all

15:36

of that and more. Some of it,

15:38

in fact, productive and useful. But

15:41

can it revive a once

15:43

mighty but diminished brand? Toys

15:46

R Us, which first filed for bankruptcy protection

15:48

in 2017 and is now

15:50

mostly one of those shop inside of Shop

15:52

Things and Macy's, has released what

15:54

it calls the first ever brand film

15:56

created with AI. AI

16:00

to come up with ads is still very

16:02

much in its novelty phase and it is

16:04

still definitely not risk-free. Marketplace's Matt Levin has

16:07

this one. The Toys R

16:09

Us ad is pretty obviously AI. It's

16:11

got that whole really smooth, this is

16:13

kinda creepy but I'm not sure why

16:15

aesthetic to it. Did you ever

16:18

wonder how Toys R Us and Jeffery the Giraffe came

16:20

to be? Even if you

16:22

don't lay awake at night pondering the Toys R

16:24

Us origin story, that's not really the point. The

16:27

point is, hey, we made this with AI.

16:29

Christine Moreman is a marketing professor at

16:32

Duke's Fuqua School of Business. This

16:34

ad will get publicity. Whether it

16:36

will really compel people to return

16:38

to Toys R Us, I think

16:41

is an open question. Moreman

16:43

says when a brand dips its toes

16:45

in artificial intelligence ads, it's betting its

16:47

target consumer will find it cool and

16:49

interesting, and not scary in a threat

16:51

to their livelihood. If you're an older

16:54

consumer, you may have more of that

16:56

ick factor, that fear factor. If

16:58

you're younger, you may be more in awe of

17:01

it. It's not just Toys R Us. Companies

17:03

like Under Armour and Levi's have also

17:05

hyped their use of AI in marketing

17:08

materials, from short commercials to AI fashion

17:10

models. Right now, some

17:12

companies are using AI to help

17:14

brand themselves to consumers and investors

17:16

as ready for the future, which

17:18

presents an opportunity for other brands

17:20

to counter-program. Hey,

17:22

those guys are with the

17:24

robots. We're 100% certified organic

17:26

human. Asa Hyken is at

17:28

ad age. Dove recently

17:31

did that. They sort of came

17:33

out and said we're not using AI

17:35

to create various things in our marketing.

17:37

We're sort of human-focused. Hyken says

17:40

while AI ads are pretty easy to

17:42

spot now, with their rough around the

17:44

edges fingers and faces and transitions, they

17:46

will get better. Although he

17:48

doesn't see the controversy around them going away.

17:51

I don't think there's ever going to

17:53

be a time where everyone's on board.

17:55

I think that even with

17:57

some pretty awesome technology. like cell phones,

17:59

there's a lot of people who are

18:01

like, this is causing a lot of

18:03

harm. Although it is hard

18:06

to find any ad these days that's

18:08

not optimized for your phone, I'm Matt

18:10

Levin for Marketplace. ["The Biggest

18:24

Thing You Can Do To Get Your Choice,"

18:26

by Matt Levin plays on the screen.] I

18:51

saw a thing go by on Twitter the

18:53

other day that caught my eye. A question

18:55

that is a Marketplace story in the making

18:57

if ever there was one. This

18:59

is the question asker. My

19:02

name is Don Tetman. I am a

19:04

real estate investor. I run a real

19:06

estate fund where we buy strip malls,

19:08

and I'm also known as the strip

19:10

mall guy on social media. And

19:13

this is the question. What did

19:15

an office job look like before computers or

19:17

cell phones? People got to the office at

19:19

9 a.m. There was just a desk there

19:21

and a telephone. What did they even do? I

19:24

know there's an answer to this. I don't know what it

19:26

is. As of today, there

19:28

are 3,600-ish replies to Don's

19:30

tweet people from all kinds of jobs weighing

19:32

in. So, we are cranking

19:34

up the rotary phone for a new series

19:37

we're calling My Analog Life. My

19:43

name is Eric Weishar, and I

19:45

am the president of Breckenridge Landscape

19:47

in Wisconsin. When

19:50

I started, the way we communicated

19:52

with people in the field were

19:55

radios, two-way CB radios

19:57

in the truck. for

26:00

Marketplace. Final

26:28

note on the way out today, a couple of

26:30

calendar notes and a data point. Calendar

26:33

note number one, I mentioned this on

26:35

Friday. Markets close early on Wednesday, closed

26:37

entirely on Thursday for 4th of July.

26:39

Back to work on Friday though, which

26:41

is calendar note number two. That's when

26:43

we get the June jobs report. Now,

26:46

the data points spare a thought, would you, for

26:48

those on the road this holiday. AAA says almost

26:50

71 million people are going to drive 50 miles

26:52

or more over the 4th of July

26:54

and the extended weekend that a lot of

26:56

people are taking roads were very empty here

26:58

in LA today. I will not be

27:00

traveling on the 4th. Thank you very much. Our

27:04

daily production team includes Andy Corbin, Alicia

27:06

Hasan, Maria Hollenhorst, Sarah Leeson, Sean McHenry

27:08

and Sophia Terenzio. I'm Kai Rizdahl, we

27:11

will see you tomorrow everybody. This

27:22

is APM. This

27:25

Marketplace podcast is supported by Bill. If

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