How are moving companies fairing with high mortgage rates?
SYLVIE DOUGLIS, BYLINE: NPR.
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WAILIN WONG, HOST:
So, Robert, I was watching the Oscars this week, and I was thinking that maybe we need a little bit more glitz and glamour in our awards show.
ROBERT SMITH, HOST:
I know, right? Like, our awards show is for the best writing in an obscure government document called the Beige Book. And the word beige just doesn't have the pizzazz of that golden Academy Award. But you know, Wailin, the Beige Book was, once upon a time, a little more sexy.
WONG: Ooh, are you talking about a scandalous past?
SMITH: I am. In the 1970s, the Beige Book was a secret document published inside the Federal Reserve for fed eyes only. And get this. The cover of it was red. They called it the Red Book.
WONG: Woo (ph) - sounds too hot to handle.
SMITH: Too hot, it turns out, for everyone because when they decided to release this document to the public, they didn't want that bright, flashy red cover to give everyone the wrong idea. So they slapped on a tan cover, which - now that I think about it, even that sounds too risque - tan. So it is now...
WONG: Well, you didn't say flesh-colored (laughter).
SMITH: Oh, that's good.
WONG: Nude-colored (laughter).
SMITH: No, no, no, no - can't have it. It shall now and forever be known as the Beige Book.
WONG: OK. That's nice and anodyne, but is it still filled with red-hot economic anecdotes inside?
SMITH: Scorching. It's the Beigie Awards, our eight-times-a-year salute to the art and science of telling stories about the economy. I'm Robert Smith.
WONG: And I'm Wailin Wong. Today we open that beige cover and show you the colorful anecdotes inside. What it tells us about the economy may still be sexy and a little scandalous, but we promise not to tell anyone.
SMITH: Except, of course, for you, dear listener, after the break.
I always like to remind everyone how this works. There are 12 regional banks in the Federal Reserve System. Each one carefully studies their local economy and brings back little stories of what they see. Eight times a year, they collect these stories in the Beige Book, and we give awards for the very best ones.
WONG: Let's start with our runner-up. We actually have a tie for second place because they are two sides of the same coin from the San Francisco Fed and the Dallas Fed.
SMITH: Let's start with the Dallas Fed. They wrote in the Beige Book, quote, "there were reports of Panama Canal capacity constraints impacting container volumes at Gulf Coast ports."
WONG: We did an episode on the Panama Canal not too long ago. And, yeah, there's been a severe drought in Panama. And so the Panama Canal has less water, which it needs to operate because it's kind of this cool, like, water staircase that takes the big ships up and down. So when there's no water, you can't take as many ships through. So I'm guessing this means that some container ships from China are having trouble getting to ports in the Gulf of Mexico.
SMITH: Makes sense. But we were thinking, where are those ships going instead? We actually see them in the Beige Book entry for the San Francisco Fed. Quote, "a contact in the ocean freight industry reported that severe drought conditions in the Panama Canal boosted traffic at ports across the West Coast. Many container ships heading from Asia opted to dock on the West Coast and use rail to transport cargoes to their destinations across the country." Neither drought nor rain nor gloom of night will keep my $8.99 tropical-print shirt from Shein from making it to my door.
WONG: True, although I bet if it get rained on, it'll immediately bleed all the colors onto you.
SMITH: It'll dissolve. Yeah.
WONG: All right. It is time to announce the winner of the Beigie Award. We usually make it this big production, you know, with, like, a drum roll and all this drama. But if you saw the Oscars this week, Al Pacino invented a new, awkward way of announcing the winner. So, OK, I'm going to do my impression. Hoo-ah (ph). No, that's not it. That's a different Al Pacino impression. OK.
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AL PACINO: Here it comes.
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PACINO: And my eyes see "Oppenheimer."
WONG: And my eyes see the Philadelphia Fed.
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PACINO: Yes.
WONG: Yes. Yes. The Philadelphia Fed.
SMITH: Accepting the award for the Philly Fed is Paul Flora. We spoke to him on Friday, March 8.
Paul, congratulations.
PAUL FLORA: Thank you, Robert. We appreciate being recognized once again.
SMITH: Oh, once again. You're just pointing out that you're a multi-award winner.
FLORA: Yes. We were the inaugural winner way back when you began this and won about two years ago, sometime after the pandemic had started.
SMITH: We are so happy to have you back. And you are a winner this time for your section in the Beige Book about housing.
WONG: Yes. You wrote that, quote, "brokers reported that existing home sales edged lower from levels that were already extremely low," end quote.
SMITH: Home sales down but not because people don't love Philadelphia. I would never say that. There is lots of demand. This, you write, is about supply. People who have low interest rates on their mortgage don't want to move and pay higher interest rates.
WONG: Yes. THE INDICATOR recently did an episode on this, too. The phenomenon is called mortgage lock-in - when people just stay in their homes.
SMITH: I feel this myself. I have a 2.75% mortgage - not to brag. And I'm never moving.
FLORA: Well, in my case, we decided to just add on a third story to our existing house in the city rather than trying to find something different within the market.
SMITH: Which makes total sense. And this brings us to your award-winning quote from the Beige Book. (Reading) With home sales down and people wanting to stay put, a certain group of individuals with extremely large muscles are now unhappy.
WONG: Is it John Cena?
SMITH: No, I'm not talking about a naked John Cena. Here. I'll read the passage. (Reading) A household moving company noted that weak home sales had driven firms out of business, claiming that conditions are, quote, "the worst they've ever been in my career, which dates back to 1968."
Paul, movers, I guess, have a lot of extra time right now on their hands.
FLORA: I think that's true. And if you're hit with a year where suddenly houses aren't being sold, they're not being listed and not being sold, then that's a pretty big gut punch, I suspect, for the industry.
WONG: We wanted to see if the burly movers of Philadelphia have the abs to take that kind of gut punch. So we called one up.
JESSE JONES: My name's Jesse Jones. I live in Philadelphia, and I'm one of the co-owners of Broad Street Movers.
SMITH: Do you actually do the moving? Will you pick up my couch or my refrigerator?
JONES: Yes. And I'll put it back down as well.
SMITH: Jesse has been a professional mover since graduating from college. He eventually became a co-owner of a moving company. He now has eight trucks, and the business really grew during the pandemic.
JONES: In the Philadelphia market, we had a big surge of people coming down from the New York City metro area, buying homes in the city and in the surrounding suburbs. But then interest rates went up. I would say, you know, when we hit the - that peak of about 6 or 7% for a home mortgage, that's when we really started to notice that house moves were slowing down.
SMITH: And you just looked at the calendar and said, wow. Like, this is a sunny weekend, and we're not doing very much.
JONES: Yeah. Yeah. So we looked at our calendar. We looked at our sales data. We could see a downturn in houses, you know, coming to the market or being sold or being listed as pending.
WONG: This is when Jesse says he started to take a closer interest in macroeconomics and how interest rates can affect all these other things in the economy.
JONES: I think you're always a little bit at the mercy of economics. You can't change people's buying habits. You know, you can't will them to want to move. All you can really do is maybe expand your marketing radius, you know, and start advertising in the suburbs, start advertising over in New Jersey perhaps, grab a few of those moves. But you do kind of have to wait for the season to pick back up and then just hope for interest rates to come down a little bit.
WONG: Jesse says they still have all those renters swapping places at the beginning of the month, and they will survive on that until the families start to move again. They can always sell a truck, and his moving crew is used to waiting out slow seasons.
JONES: So everybody knows that the name of the game is - it slows down in the winter, and then you can have all the hours you could ever want in the summertime.
WONG: Our contact at the Philadelphia Fed isn't going to be moving anytime soon with that nice, new third story on his house.
SMITH: Yeah. Paul Flora, did you build an awards case in that new addition?
FLORA: Well, since we don't actually get a Beigie Award (laughter)...
SMITH: Well, not a physical award. You got a...
FLORA: Yeah. Right. Right.
SMITH: Fine.
FLORA: Guess I'll hang it on the wall next to the first one.
SMITH: Yeah, the invisible first one. Yeah, yeah. I get it.
WONG: Hey. The Beigie Award is a lot like the economy itself - powerful, but you can't always see it.
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WONG: This episode was produced by Angel Carreras. It was engineered by Neal Rauch and fact-checked by Sierra Juarez. Kate Concannon is our editor, and THE INDICATOR is a production of NPR.
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