0:01

NPR. This

0:12

is the indicator from Planet Money. I'm

0:14

D'Yaren Woods, and it is time for

0:16

another edition of Listener Questions. I'm

0:20

here with Weilam Wong. I'm brimming

0:22

with answers today. And also

0:25

Adrienne Ma. What's up?

0:27

Today we are answering your questions about

0:30

the economy. We're looking at,

0:32

is chicken getting cheap, cheap, cheaper? Why

0:35

doesn't the Federal Reserve use different interest

0:37

rates around the country? And

0:39

is election spending an indicator of economic

0:42

health? This

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go to viori.com/ NPR. And

2:00

first up we have one for you, Weyland.

2:02

Hello indicator, this is Arthur from Longview, Washington.

2:05

I've been noticing that despite all of the bird

2:07

flu news, our local supermarket has been heavily discounting

2:09

raw and processed chicken products for the past couple

2:11

of months. I was wondering if this

2:13

was just a localized phenomenon or part of a

2:15

larger trend. Thanks! Have either

2:17

of you noticed whether chicken has seemed

2:19

cheaper lately? I haven't honestly.

2:22

I'm a vegetarian. Okay.

2:24

You are exempted from this survey,

2:26

Darien. Fair enough. Our listener, Arthur,

2:28

may have gotten lucky with a

2:31

local supermarket that's been putting chicken

2:33

on sale a lot lately because

2:35

overall, chicken prices are still up

2:37

from a year ago. But

2:39

what makes chicken look cheaper is

2:41

that beef prices are way up.

2:44

That's according to Chad Hart, an economist at

2:46

Iowa State University. What we're seeing right

2:48

now are some of the smallest cattle herds that

2:51

we've had at 60-70 years. Small

2:54

cattle herds mean high beef prices. So

2:56

that's been really pulling the beef prices

2:59

way up, even relative to

3:01

inflation. Drought is also

3:03

causing cattle herds to shrink, and

3:05

that's making chicken more attractive price-wise.

3:07

So if you think about the

3:09

budget-conscious consumer. When they look at that

3:11

meat counter, chicken looks to be

3:14

the, let's call it the relative deal

3:16

compared to other meats right now. What

3:19

about other meats? What about pork? Why

3:21

aren't people buying that? Yeah, I think

3:23

there's just a lot of people who

3:25

grew up on chicken nuggets, chicken strips.

3:28

People are comfortable with chicken. So

3:30

they're often skipping pork in favor of chicken.

3:33

And there are some cuts of chicken

3:35

where prices are coming down somewhat. This

3:38

is thanks to feed prices. The two

3:40

main livestock feed ingredients are corn and

3:42

soybeans, and both are down considerably over

3:45

the past 12 months. Chad

3:47

says with summer here, demand is likely

3:50

to keep on staying strong. So I guess

3:52

this kind of makes chicken the meat

3:54

equivalent of the song of summer. Yes,

3:56

hot chicken summer. Longer term.

3:58

Chad says that eight... bird flu

4:00

outbreak is negatively affecting the supply of

4:03

eggs out there, which could bring down

4:05

the supply of future chickens, and that

4:07

could make chicken more expensive in the

4:09

future. Okay, so Arthur if

4:11

chicken is on sale, stock up.

4:13

Just like fill the fridge. Freezer,

4:16

hopefully. Thank you, Arthur,

4:18

for that question. Darien, you're up next.

4:21

So my question is from Akai Kaya.

4:23

Hi, my name is Akai and I'm

4:26

from DC. Studying economics, I'm

4:28

always told that interest rates are a

4:30

blunt instrument the Fed uses to influence

4:32

demand without much precision. I

4:34

wondered, could this blunt instrument be sharpened

4:37

by introducing regional interest rates, thus allowing

4:39

the Fed to take a more precise

4:41

approach to monetary policy? As

4:43

we remember, the Federal Reserve uses

4:45

interest rates to try to manage

4:48

inflation. If interest rates go

4:50

up, that should encourage consumers to hold

4:52

off on spending because car

4:54

loans and home loans and credit cards

4:56

that are all going to be more

4:58

expensive, that helps cool down spending, cool

5:01

down the economy, and hopefully limit inflation.

5:03

But Akai is right. Economic situations are

5:05

so different depending on where you are.

5:08

So why not, you know, give

5:10

out bespoke interest rates? Well, we

5:12

talked to Monica Duvall about this. She's

5:14

a senior fellow at the Peterson Institute

5:16

for International Economics. The Fed, when

5:19

it is at its best, it

5:21

is sending out a

5:23

signal. One signal, that

5:25

is. Monica says, imagine a

5:27

lighthouse. I'm picturing

5:29

a dark and stormy night. A

5:32

beam shoots out across the clouds,

5:34

a boat catches sight and returns

5:36

to harvest safely. But

5:38

imagine if that very same dark and

5:41

stormy night, there were a bunch of

5:43

lighthouses sending out signals. I would

5:45

be a very stressed out captain. Exactly.

5:47

Monica says it's the same with

5:49

interest rates. It's important to have

5:51

one centralized interest rate to guide

5:54

the masses. To see

5:56

exactly where they are relative

5:58

to this general standard. scenario, and

6:00

therefore how they should act.

6:03

But the Fed's interest rates, like

6:05

lighthouses, are just a guide. Banks

6:08

or any lending institution will have to

6:10

raise the cost of borrowing if interest

6:12

rates go up. But it's

6:14

not uniform. Say it's the

6:16

market for houses or the market

6:18

for cars or whatever it is,

6:21

they will go up differently in

6:23

different parts of the country. It

6:25

might cost less to borrow in some

6:28

small Nevada town compared to Los Angeles.

6:30

So in other words, interest rates are

6:32

localized, just not directly by the Fed.

6:35

Right. The Federal Reserve is

6:37

getting a ton of information from

6:40

regional Feds, from their own surveys

6:42

digging into household information, consumer finances,

6:44

access to credit, and economic fragility.

6:46

So I guess maybe the interest rate

6:48

isn't quite so blunt an instrument after

6:50

all. So it's not quite a scalpel

6:53

either. Maybe it's one of those kind of wavy

6:55

bread knives. It's a good metaphor. And thank you,

6:57

Akai, for the question. Okay.

6:59

Well, I guess that just leaves me. My

7:01

question comes from Gary Bagat.

7:04

Hi, this is Gary Bagat calling

7:06

from Menominee Falls, Wisconsin. And I

7:08

was just curious, with each election

7:10

cycle bringing in an increasing amount

7:13

of funds, does this serve

7:15

as any sort of indicator for the general economy?

7:18

To his question, is election

7:20

spending also some sort

7:22

of economic indicator? I don't know that

7:24

it's a great indicator of the strength

7:26

of the economy. Well, Michael Kang, a

7:28

law professor at the Northwestern Pritzker School

7:30

of Law, says, As

7:32

a general matter, over time, the money

7:35

has gone up. Michael says if the

7:37

economy isn't strong, some people may see

7:39

their disposable income not do so great

7:42

and then choose to give less to

7:44

political campaigns. But that's

7:46

really the only way that Michael sees

7:48

economic health playing a role in political

7:50

spending. But spending has gone up,

7:52

right? So is this more inflation? That's definitely

7:55

part of it, but not the biggest factor. Michael

7:57

says the increased spending comes from the...

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