On the program today, sticky inflation. We'll do some video gaming and we'll talk about living on a cruise ship from American public media. This is Marketplace. In Los Angeles, I'm Kai Rizdahl. It is Wednesday today. This one is the 25th of February. Good as always to have you along, everybody. We're going to begin today with a one-two punch of sorts, coming out of our interview with Rafael Bostic, the soon-to-be former president of the Federal Reserve Bank of Atlanta. In the parts of that interview that we played yesterday, And we're going to play some more in a minute, by the way. But we talked a bit, he and I did, about the central bank's credibility, how and why people might start doubting the Fed's ability to do its job. In this instance, specifically, being able to get inflation back to where the central bank wants it to be. Two percent, as you know, after not having been able to do it for years now, as you also know. He worries about that, Bostick said. So, Marketplace's Rebendishor gets us going with this. Have we been away from ideal inflation for so very long now that we're stuck here? You know, in Star Wars, the Empire Strikes Back, Luke is trying to raise a spaceship out of a swamp. I can't. It's too big. And then Yoda uses the force and actually does it. I don't believe it. That is why you fail. This is a common trope in movies. The idea that believing in something or not believing in something makes that something happen or not happen. Inflation is like that. You can have a self-fulfilling prophecy. Yuri Gorochnachenko is a professor of economics at UC Berkeley. If you want to buy a car and you think inflation is going to be high in the future, then you should be willing to buy this car now rather than later. And if everybody does that, then the price of that car goes up. I expect prices to be higher and end up with higher prices. Right now, consumers expect high inflation. According to the Michigan Survey of Consumers, they think on average, inflation will be 6.5% in a year and 7.2% in 5 to 10 years. This is really, really high. It is relatively easy to create this self-fulfilling prophecy. The only thing holding consumers back from getting out there and buying stuff and kicking off a vicious circle is uncertainty about the economy, Grodnichenko says. But there is a wrinkle in all of this, which is that we consumers, turns out, are usually very bad at predicting inflation. Consumer expectations haven't been anchored at the 2% inflation target for like the last four and a half decades. Michael Weber is a professor of finance at Purdue University. He says the spark for a self-fulfilling inflation prophecy isn't the number inside consumers' brains. It's whether that number is changing inside their brains. And right now, it is. Inflation expectations keep coming down. So we might not know where we are, but we have a better sense of where we're headed. And if you look at it that way, we should be headed for lower inflation. But a vicious inflation circle that can throw all of that in the air is only ever a few painful grocery bills away. In New York, I'm Sabri Beneshaw for Marketplace. Do or do not, there is no try. Wall Street seems not to be worried about inflation or the State of the Union or anything else except AI. Honestly, we will have the details when we do the numbers. All right, here we go. One more chunk of my interview yesterday with Rafael Bostic, who until Saturday is the president and CEO of the Federal Reserve Bank of Atlanta. Talk for a second, actually, about the less heralded part of this job. You get all the headlines for monetary policy, but you're a CEO, too. This is radio, so nobody can see it. You're not laughing, not crying, but somewhere in between. Tell me about, you know, this is a big institution. And with all possible respect, what do you know about being a CEO, man? Well, I knew a lot. No, so I had never been a CEO before. You're an academic, right? You're a policymaker. Yeah, yeah. So, you know, it's interesting. My HUD years were actually quite formative. I feel like there are two types of management. One is where you manage, where you can see every worker. You can know where every person is at every moment. And then there's another kind where you can't do that. And, you know, HUD is 150, 160 people scattered all over the country. I couldn't do that. And what I found there was if I really tried to have every staff person believe that they could be great and that they knew that someone had their back, that they wound up doing amazing things. And so I came here trying to do that as well. And the things that the Atlanta Fed is now known for are things that were not my ideas. there are things that came up from the rank and file who thought that there was something that could make us more impactful or make us more effective or efficient. And, you know, I tried to give space for that. You did a thing with Dennis Lockhart a couple of weeks ago, your predecessor. And you said, sorry, let me just pull up the thing that you said. You are, basically, you stand on the shoulders of those who came before you. You are set up by the people ahead of you, is what you said. As you think about the next person to get this job, whoever that may be, how are you setting them up? You know, that's an interesting way to ask that question. To me I feel like I set them up to be present in communities much more easily There an expectation and a comfort with us being around them which will allow that person to build those connections quicker and have a better sense of what our district is. I've set them up to work with the staff, and that person will have many options to choose from in terms of what we invest in moving forward. And I think I've set them up to where folks like you will want to talk to them and that we will continue to have our knowledge be out in the world on a regular basis. I'm pleased to inform you that's the end of the personal part of this interview, so I know you don't like talking about yourself and what you're doing. Yeah, I saw some clip of you not too long ago saying you hate giving speeches, which I totally understand. Let me get you back to the moment we're in with the central bank and this economy. And instead of asking you about Kevin Warsh, the man that President Trump has nominated to take over from Chair Powell in May, I want to note your answers to that question, which have basically been along the lines of the Fed's going to keep going, the Fed has credibility, and it has the confidence of the American people. And I guess I wonder why you believe that, given the attacks that the president has made on the central bank and Trey Powell personally, but also, you know, the economy is a little shaky. You guys are in charge of the economy. You've missed your inflation target for, like, years now. Why do you still believe in the Fed and what it can do? All right, so you asked the question differently at the end than at the beginning. Yeah, I know I did. I try not to do that, sorry. No, no. That's my bad. No, it's fine. I like the second question better. Yeah, I was going to say, the second one's easier, so answer that one. I'll answer that one. Interviewing 101 right here. So one of the things that makes me laugh when I think about it, when someone knows who I am, like not on stage or something like that, they almost always come up. And they almost always say, thank you for what you're doing. Just keep up the hard work. It's not complaining, you've made my eggs be too expensive, or I can't buy jeans because you like that. Those are not the responses. I think those experiences have made it easier for me to keep doing it. Because if I really felt that the broad populace had lost faith in us, then that would be a much harder job to do. I don't think we're that way today. But there's always a risk. And so we have to remain transparent. And not to your first question. I'll just go there. I appreciate your work. I'll just go there. Look, I've been working with these folks for a long time. There's not a lot of ego in those rooms. There have been previous feds where there have been lots of personalities and all that kind of stuff. Now, we have personalities, but it's not self-aggrandizement or anything like that. And that, I think, is likely to sustain. Now, there's pressure. This is the economist on the one hand and on the other hand thing. I'm just saying. No, because you talked about the attacks. And I've said many times, you should not be a central banker if you don't like to get yelled at. But we get yelled at. Yeah, but should you be yelled at? I mean, honestly, right? People are going to do what they're going to do, right? So just expect to get yelled at at any time, at any moment, and then just move on. Like, to me, that's kind of how I try to approach it. And that would be my counsel and advice to anyone who's thinking about doing this in the future. Every interview you do, there's a question you wish you'd asked or a follow-up you wish you had pressed. Here is mine from this one. I intentionally stayed away from the politics and the politicization and the independence of the central bank in this second Trump term, because I figured Dr. Bostic would have said what Fed officials always say, and I mean always, that they just don't think about it. Well, shows me. He released his last quarterly message as bank president today, Dr. Bostic did, in which he wrote this. The legal and rhetorical battles raging around the central bank right now have caused people across a wide cross-section of our population to begin to doubt the Fed's independence. This is a major concern. End of quote and note to self. Dr. Bostic has said only that he is going to take some time off after he leaves the Atlanta Fed. No specifics on that, but maybe a cruise somewhere. Don't know whether that's his vibe, honestly, but for some, it is a whole lifestyle. Here's today's installment of our series, Adventures in Housing. My name is Brian James, and I live on a cruise ship. That's what I've been doing for the better part of the last eight or nine years. Everybody that does music, like, wants to be a star, you know, and you think to be a star you got to go down this path of writing and recording and releasing and i found out that you can be totally fulfilled performing but uh doing it on a ship they sit down at your bar and it's just you and a microphone and as long as you're playing them what they want to hear shoot they'll stick around all week long they'll be they'll be pumped to go see you every single night The place to learn to say your grace The place I do When I first started, I think I was making $2,500 a month. And the fact is that can go pretty far because you are living on a cruise ship because you don't have expenses, so you don't have to pay for your food, you don have to pay for your lodging your insurance is covered That just fun money if you want it to be And for the first couple of years on ships it was purely fun money You sign up for six months at a time, eight months at a time, 10 months at a time. Certain performers do a full year. Everybody is living in these close quarters and you're all below deck and you all eat breakfast at the same place and lunch at the same place. and after work, you all go to the same bar. It's just inevitable that relationships blossom. I met the loveliest girl. I was doing music. She was dancing. But because an entertainer's role is so specific, they hire one of my position on the ship and they hire three of her position on the ship. So we had to make a decision really recently where she got put on a ship and it wasn't a ship that I got hired on. So I had to basically quit. I had to quit my job and instead live on ships full time, but as a guest. So I've been a paying guest for the last eight months or so. I get put on a little standby list by the cruise company because she works for the cruise line. She gets benefits kind of like the airlines do benefits. So I have been maxing out her allotment of times that I can come on the ship. And yeah. I'm very, very fortunate that there's a massive, massive group of people on this planet that are constantly keeping up with what's happening on cruises. And so I literally just post videos every couple of days of what we are doing on the ship, whether it's eating at the buffet or it's going to Jaden shows. Maybe it's walking around at port and YouTube pays us. Home is ships. And I know that's not for everybody. You know, I have two, like, little nephews, and I've missed a lot of their birthdays. It sucks. But I still do think, like, the overall lifestyle of living on a ship is, it's been too good not to do. Brian James Henderson, living on a cruise ship somewhere in the Caribbean for now. You can tell us about your adventure in housing by sea, land, or air at marketplace.org. coming up everyone thinks that gta 6 is going to be one of the hugest moments in an 80 gaming history when it comes out. Everyone? Really? First, though, let's do the numbers. Dow Industrials up 307 points today, six-tenths percent, 49,482. The Nasdaq added 288 points, one and a quarter percent, 23,152. The S&P 500 gained 56 points, eight-tenths of one percent is what that works out to, 69 and 46. The Mediterranean fast casual chain Kama set a record with more than a billion dollars in sales. That is a whole lot of grain bowls. Top with Fed, I'll tell you that. CEO told CNBC that the restaurant provides, and this is a quote, a bit of a bridge across the K-shaped economy. She said the best performing locations are in markets with lower median income. That's interesting. Think about that. Kava Group soared 26.4%. Today's competitor Chipotle added 2.8%. The salad-driven sweet greens climbed 8.3% on the day. Bonds down, yield on the 10-year team of this rose 4.0%. 05%, you're listening to Marketplace. This is Marketplace. I'm Kai Rizdahl. You remember back in the day when the Internet was the new, new thing, that Google had a slogan, Don't be evil, they promised. Time flies, I guess, and corporate priorities change, but artificial intelligence has brought technology safeguards racing back to the fore. This is a tad bit inside baseball, but bear with me. The AI firm Anthropic is in a fight with the Pentagon over its safety guidelines. The Pentagon wants them relaxed, and until today, Anthropic did not. This morning, though, the company said it will, in fact, relax its rules around when to deploy new and more advanced versions of its AI because, this is what the company says, it risks being left behind by its competitors. Marketplace's Novosafo is on the AI and the Future of Humanity desk for us today. Way back when, in the AI dark ages of, oh, 2021, some OpenAI execs left to form what they called a safer alternative, Anthropic. Owen Daniels is with Georgetown University's Center for Security and Emerging Technology. Anthropic has long been one of the frontier labs that's been most acutely focused on ensuring that its systems and applications are used in kind of a safe, responsible, and ethical way. To avoid things like AI that lies to achieve a goal or that builds bioweapons on command. Core to Anthropic's safety effort had been a pledge called the Responsible Scaling Policy, says Sarah Myers-West of the AI Now Institute. Which essentially says if they believe that the capabilities of these tools outstrip their ability to control them and ensure that they're safe, they would stop building them. Anthropic says it was trying to stave off a race to a bottom with that policy. But it admits it failed to persuade other companies to take its stricter safety approach. The change it announced yesterday means they may keep building more advanced models, even if they're riskier. Brent Thill, a tech industry analyst at Jeffries, says AI companies are getting more ambitious. I think there's incredible pressure from OpenAI, from Microsoft, from many of the top technology companies, as AI is going from a consumer technology to now inside the enterprise the race is on right You need more advanced AI to run financial systems versus finding the best latte And as companies spend hundreds of billions of dollars to build those tools Georgetown's Owen Daniels says they need to start making money, too. There is a tension that's difficult for these companies to navigate in deploying the latest versions of models in ways that are economically useful and can be beneficial to their bottom lines. While balancing that with the risks AI may pose. An Anthropic spokesperson said they're now committing to more transparency to publish detailed reports about the risks and capabilities of its AI. I'm Novosalvo for Marketplace. maybe you've heard this data point before i have but every time i run across it i do a double take video games are a bigger industry by annual revenue than movies and music combined and it's not even close. And last year was the industry's second best year on record. So says the Entertainment Software Association, among others. We only spent more on games when we were locked down with little else to do but play Fortnite. And it's not a fluke either. 2026 could turn out to be the best year ever. Marketplace's Kelly Wells explains what's going on. Video games used to be a real boom or bust industry, a lot like Hollywood. But instead of everyone rushing to go see Wicked, we'd all rush to buy the newest PlayStation or Nintendo gaming system and wait for months or years for the next installment of Zelda or Star Wars or Madden. Those booms still happen. The market and consumption definitely reacts to big marquee releases, whether those are new machines or really big pieces of IP. Dimitri Williams is a communications professor at USC. He says there was a boom when the Nintendo Switch 2 came out last June, for example. What's different is there don't seem to be busts anymore. Pretty much everybody who wants to play can now because of the proliferation of smartphones all over the world and the drop in costs for bandwidth and access. And most people do want to play. This is not one demographic. Young kids don't spend enough to spend $60.7 billion by themselves. Aubrey Quinn with the trade group The Entertainment Software Association, says one in three people over 80 years old and most baby boomers play video games every week. I feel like every time I sit on a plane next to a woman, 50-year-older, she has got her iPad out or her phone out and she is doing some sort of puzzle matching something game. The eight-year-old Roblox Warriors and the 80-year-old Candy Crushers are primarily spending on what's called the free-to-play games. These are the ones where you can grind for hours without paying a cent, but you get interrupted every five minutes with an ad. And you know, if you just spent $4.99 a month, you could get rid of the ads and unlock this special currency that would make building your virtual garden go way faster. If you've ever done that, you have added to the $61 billion gaming industry. The other growing model here is gaming subscriptions. Just like you pay for Spotify or Netflix, you might buy a season pass that unlocks cool costumes and catchphrases for your character. We see subscription services taking off in terms of adoption across all forms of entertainment. So I don't think it's surprising that we're seeing similar models resonate with consumers in gaming. Meanwhile, the gaming industry itself is resonating with other forms of entertainment. We've had movies on Super Mario and Minecraft, and gaming gets a lot of free advertising on social media. These games are incredibly content creator friendly. They're clip generators. They create clips that people can post on TikTok or YouTube, whatever it might be, and draw more viewers to your channel. Sam Ani with the digital analytics group Sensor Tower says all of that has been driving growth in the industry. 2025 also got a good old-fashioned boost from the new Nintendo console, and this year is set to get a boost too. Grand Theft Auto 6, that's something that we've been waiting for for over a decade. Everyone thinks that GTA 6 is going to be one of the hugest moments in maybe gaming history when it comes out later this year, fingers crossed. Grand Theft Auto has a little bit of everything that makes games profitable. You'll pay a lot of money for it. You can play online and pay money for cool bells and whistles. There'll be clips on social media. Plus, it'll generate the same everybody's doing it fervor as dressing in pink and going to see the Barbie movie. Here's USC's Dimitri Williams again. The one big tentpole sometimes is something that people will rally around. The way that you'd say, well, nobody watches the same thing anymore except for the Academy Awards and the Super Bowl. Sometimes that's the equivalent in games. Except imagine if the Super Bowl only came around every 13 years. Analysts say Grand Theft Auto 6 could help make 2026 the industry's biggest year yet. I'm Kaylee Wells for Marketplace. This final note on the way out today, a financial exclamation point on Nova's story about artificial intelligence. NVIDIA reported earnings after the bell today. The first among equals AI chip design company for its fiscal first quarter had 79 billion American dollars in revenue. 79 billion dollars in 12 short weeks. You take your pick, bubble or structural change. Could be both, too, by the way. Our media production team includes Brian Allison, John Fokey, Montana Johnson, Drew Johnstead, Gary O'Keefe, and Charlton Thorpe. I'm Kai Risdahl. We will see you tomorrow, everybody. This is APM. Want even more Marketplace? Sign up to receive weekly tips from our editorial team to help you make the most of your money. Plus, you'll also be the first to know about exclusive Marketplace merchandise and local events. Text MARKETPLACE to 80568 to sign up.
