The Indicator from Planet Money

Episode•May 9, 2025•10 min

What's in YOUR wallet?

It's ... Indicators of the Week! Our weekly look at some of the most fascinating economic numbers from the news. On today's episode: China bulks up for a financial chill, how much Americans should save for a rainy day, and the price of used cars goes up. Related episodes: America's small GDP bump, China's big stimulus dispersal, and a Monkey King (Apple (https://podcasts.apple.com/us/podcast/americas-small-gdp-bump-chinas-big-stimulus-dispersal/id1320118593?i=1000671008889&l=es-MX) / Spotify (https://open.spotify.com/episode/35wlhEE9ZEQIbQx85d4kQN?si=bFR8WmoDRFuREp48-ViI7Q)) How nonprofits get cash from your clunker (Apple (https://podcasts.apple.com/au/podcast/how-nonprofits-get-cash-from-your-clunker/id1320118593?i=1000700814296) / Spotify (https://open.spotify.com/episode/6f4lwxZvGvLU2JbmaXPVkd)) IRS information sharing, bonds bust, and a chorebot future (Apple (https://podcasts.apple.com/bo/podcast/irs-information-sharing-bonds-bust-and-a-chorebot-future/id1320118593?i=1000703085264) / Spotify (https://open.spotify.com/episode/3xWHbiR8Uvq6BFyftExNo1?si=ubAko4_PRfCLIF6EJa1xIQ)) For sponsor-free episodes of The Indicator from Planet Money, subscribe to Planet Money+ via Apple Podcasts or at plus.npr.org (http://plus.npr.org/). Fact-checking by Sierra Juarez (https://www.npr.org/people/g-s1-26724/sierra-juarez). Music by Drop Electric (https://dropelectric.bandcamp.com/). Find us: TikTok (https://www.tiktok.com/@planetmoney), Instagram (https://www.instagram.com/planetmoney/), Facebook (https://www.facebook.com/planetmoney), Newsletter (https://www.npr.org/newsletter/money). To manage podcast ad preferences, review the links below: See pcm.adswizz.com (https://pcm.adswizz.com) for information about our collection and use of personal data for sponsorship and to manage your podcast sponsorship preferences. Learn more about sponsor message choices: podcastchoices.com/adchoices (https://podcastchoices.com/adchoices) NPR Privacy Policy (https://www.npr.org/about-npr/179878450/privacy-policy)

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Transcript

0:00

A quick note before we start today's show. You might have heard that President Trump has issued an executive order seeking to block all federal funding to npr. This is the latest in a series of threats to media organizations across the country. And whatever changes this action brings, NPR's commitment to reporting the news will never change. Even as paywalls go up elsewhere, we offer this vital resource to everyone. Support the news and programming you and millions rely on by visiting donate.NPR.org and if you already support us via NPR or other means, thank you. Your support means so much to us, now more than ever.

0:39

NPR. This is the Indicator from Planet Money. I'm Waylon Wong.

0:53

And I'm Adrienne Ma.

0:54

And today we are so hashtag blessed to be joined by Keith Roemer from Planet Money.

1:00

I'm even wearing my indigator T shirt today. I'm ready.

1:03

Holy moly. I don't even have an indicator T shirt. Where did you get that?

1:06

Neither do I. Merch is available at NPR. PlanetMoney indicator merch or something. I don't know.

1:13

Good plug? No, I really don't have one, though. I have the tote bag but not the t shirt.

1:16

Merchpr.org this is a good question. I should really know the answer to this. Okay. Well, anyway, thank you for coming from Planet Money to Rep Team Indicator. It's great to have you, Keith.

1:27

Nice to be here.

1:29

It is that time of the week we all know and love. It is Indicators of the Week. This is our weekly look at the most illuminating numbers from the news. And today we're looking at how China

1:42

is bulking up for a financial chill,

1:45

how much we should be saving for

1:47

a rainy day, and how much the price of used cars is going up.

1:52

That's after the break. Shopnpr.org indicator okay.

1:58

Surprised you didn't remember that. Rolls off the tongue.

2:10

It is indicators of the week. Adrian, what's your indicator?

2:14

My indicator this week is 1.4%. That is the new lower benchmark interest rate set by China's central bank. It's part of a whole bundle of economic stimulus measures that the has announced this week.

2:27

1.4%. That is a lot lower than the benchmark rate here in the US Right this week. Federal Reserve Chair Jerome Powell, he said the Fed is going to keep its benchmark interest rate between four and a quarter and 4.5%.

2:41

That's right. So it's already a lot lower than the US Rate. So why is China cutting interest rates now? You ask or you don't ask, but

2:48

I will tell you anyway, I'm curious.

2:51

So some analysts see this as a tactical move to bolster China's economy before it starts trade talks with the US this weekend. The US has had at least 145% tariff on imported Chinese goods. And on top of affecting US Businesses and consumers, this also hurts Chinese businesses. You know, they're taking pain because manufacturers there are having to slow down or pause shipments to the US and that's not good for China's economy. So lowering interest rates is one way China can try and counteract this with lower interest rates. That helps encourage banks to lend and consumers to spend. And the thinking is with a more robust economy, China has a little more leverage in its negotiations with the U.S.

3:36

so the idea is that if China is more comfortable, it can hold out at the negotiation table for longer. Like, wait for a better deal.

3:42

Absolutely, Yeah.

3:43

I think it's also worth noting that President Trump really wants lower interest rates here in the US he has been blasting Jerome Powell, telling him to lower rates, and it's like Trump kind of wants.

3:55

Calling him a loser.

3:56

Yes, he's called Powell a loser, and just yesterday he called him a fool who doesn't have a clue. Now, Trump wants lower interest rates to stimulate the economy, which is similar to China's rationale, Right?

4:08

Absolutely. Yeah. And, you know, I think the metaphor that comes to mind for me of what China's doing right now, it reminds me of this. You ever see this survival competition show called Alone?

4:20

Absolutely.

4:20

And so, you know, it's. It's where people compete to survive, to see who can stay in the wilderness the longest. And all they get to start with is, like, a tarp and some fishing line.

4:29

And they either, like, kill a muskox or they eat moss for three weeks.

4:33

Exactly. Yeah. And. Or, you know, one thing a lot of contestants do before they go into the wild is they. They put on a lot of weight. And because they know they'll be roughing it, and they could go days on end with, like, very little food, the extra fat on their bodies actually helps them survive the leaner times. And in a sense, China has been preparing its people for leaner times for a while. Like, for years, President Xi Jinping has been trying to transition their economy to be less reliant on exports to the US So you could think of this stimulus package this week as part of that larger strategy.

5:08

It's the financial cushion that's going to get them to the long winter.

5:11

Yeah, like a financial spare tire.

5:14

Well, speaking of financial cushions, my indicator is $35,000. That is how much an average US household should have in its emergency fund. That's according to the online reference Investopedia. It crunched the numbers for six months worth of expenses, and it came up with 35,000American dollars.

5:37

Waylon, I actually have that amount of money in cash on my person right now. You just.

5:43

You have 17 money belts on you.

5:46

Can't be too safe, I gotta say 35 grand. I mean, is this even close to reality? Like, who has $35,000? Just, like, sitting around for a rainy day?

5:57

Yeah, your instinct is correct. This is way more than what the typical household in the US has in its savings and checkings accounts. So, according to Federal Reserve data, the median account balance was around $8,000 in 2022. If you adjust for inflation, that' around $8,700 today. So nowhere near $35,000.

6:18

Where is the $35,000 number coming from?

6:21

Yeah, so Investopedia breaks down its methodology like this. It focuses on four big categories of household expenses. Medical care, car payments, housing and utilities, and then food. And it drew in data from sources like the US Census Bureau to calculate expenses for an average household of at least two people. The most expensive category, if you're wondering, was medical care. That account $12,000. Car payments add up to almost $11,000.

6:51

So if you don't own a car, you would only need $24,000 in your emergency fund.

6:59

Well, it gets kind of tricky, right? Because if you don't own a car, maybe that's because you live in a big city with good public transit, and that probably means your rent's going to be higher than the national average. Right. So Investopedia says six months of housing and utilities represents around $8,700. If you do the math, I mean, that's not going to last six months if you're paying rent in a city like New York or Chicago.

7:22

We are on Segway fire today. Speaking of how expensive cars can be, Waylon, what kind of car do you drive?

7:29

Oh, I have a Honda Fit.

7:31

And how old is your Honda fit?

7:33

It is 13 years old.

7:35

Well, for your sake, I hope it continues to go strong for at least another year. You don't have to replace it, because my indicator is 4.9%. According to Cox Automotive, who puts out this thing called the Mannheim Index that tracks wholesale used car prices, they have gone up 4.9% since this time last year.

7:57

I mean, didn't we just go through this a few years ago? Like during the pandemic?

8:01

Yeah, Pandemic. It is thankfully not quite pandemic bad out there for used cars right now. You may remember used car prices went way, way up during the pandemic because there were basically no cars coming into the country and basically no cars being made here in the US because of all the problems with the supply chain for all the parts that went into new cars. But now instead of COVID we've got tariffs.

8:23

So you're saying tariffs are making my 13 year old Honda fit more valuable?

8:27

Yes, Waylon, that is the glass. 4.9% more full way to look at it, most of that increase, it came in just the last month since President Donald Trump's Liberation Day tariff announcement.

8:40

Isn't this a knock on effect though? The tariffs are not on used cars.

8:44

Right. The issue here is demand. People seem to be anticipating that tariffs are going to make new cars more expensive, which means more people will choose to buy used cars instead, which in turn will make used cars more expensive. And so people are trying to get ahead of those tariff price effects.

9:01

It's like if we're trying to game out what the effect of tariffs are going to be and how much inflation the tariffs will cause. It's like inflation. Is this the start of some new inflation spike that will be as scary as what we saw during the early part of COVID or is it something else? Keith, you look like you're about to pass out.

9:18

Well, actually, no. The answer is who knows, right? Because one, who knows where the tariff levels are ultimately going to end up? And two, there's this rush of people right now trying to get their hands on used cars, but that is going to work its way through the system and things might actually just chill out. The report from Cox Automotive Hazards, the guess that the used car market might actually slow down the second half of this year.

9:42

Well, I'm not selling my Honda Fit. I am trying to drive this thing until I can't drive anymore. So can't have it. No one can have it.

9:51

Too fast, too wailing.

9:55

This episode was produced by Angel Carreras with engineering by Kwesi Lee. It was fact checked by Sierra Juarez. Katie Cannon edits the show and the indicators of production of npr.

What's in YOUR wallet?

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