---
title: "Interest Rates, Steak Dinners, and the Gig Economy"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/223468941.md"
description: "In a recent podcast, Motley Fool analysts discussed the market's reaction to the Federal Reserve's decision to cut interest rates by a quarter point, which led to a sell-off in the S&P 500. They highlighted the importance of long-term investing despite short-term volatility. The conversation also touched on consumer responses to Darden Restaurant Group's offers and rising home sales at Redfin, as well as insights into the gig economy with platforms like Upwork and Fiverr."
datetime: "2024-12-28T03:05:36.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/223468941.md)
  - [en](https://longbridge.com/en/news/223468941.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/223468941.md)
---

> Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/223468941.md) | [繁體中文](https://longbridge.com/zh-HK/news/223468941.md)


# Interest Rates, Steak Dinners, and the Gig Economy

In this podcast, Motley Fool analyst Anthony Schiavone and host Ricky Mulvey discuss:

-   Why traders are sour about the recent Fed meeting, and what long-term investors should focus on.
-   How American diners are responding to **Darden Restaurant Group**'s value offers.
-   Rising home sales at **Redfin**.

Then, Motley Fool analyst Alicia Alfiere and host Mary Long look at **Upwork**, **Fiverr** and the gig workplace economy.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our beginner's guide to investing in stocks. A full transcript follows the video.

_This video was recorded on Dec. 19, 2024._

**Ricky Mulvey:** Some of the steam is coming off your cup of coffee. You're listening to Motley Fool Money. I'm Ricky Mulvey, joined today by Anthony Schiavone. Antony, what a day to get on the A segment. There's a lot going on in the market.

**Anthony Schiavone:** I could not think of a better time to come on the A segment. Happy to be here, Ricky.

**Ricky Mulvey:** Yesterday, the Federal Reserve wrapped up its open market meeting, and here's what seemed to happen. Jerome Powell, the chair, announced that the Fed would take rates down by another quarter point, but that the rate of further cuts may slow. Yes, he prefaced it by saying, don't take this literally because that may change, and also that inflation needed to behave. This rate news triggered a sell off in the market yesterday afternoon. S&P was down about 3%, which is a lot for the Broad index. Ant, I got my markets in turmoil lawn sign. We don't have the Kiron that they do on CNBC, so we go a little bit more old school. Should I put my markets in turmoil lawn sign out in my front yard?

**Anthony Schiavone:** Well, Ricky, as somebody who owns a lot of REITs, I've had my markets and turmoil sign staked out in the lawn for about three years now. But seriously, though, the **S&P 500** is off like 4% from a tie. If anything, I think Wednesday's sell-off was healthy. Last year, the S&P 500 was up nearly 30%, and this year, we're up about, I think, 25% now. It's been two great years for the market. This year, we've really had no volatility in the market whatsoever. We get the yen carry trade in and I think August. But, I mean, other than that, that's about it.

Who knows where this market sell off might go from here? But just know that, a potential larger sell-off is possible. The market tends to sell off, I think, I think it's 10% once out of every two years. As a long-term investor, I don't think this fed meeting or reactionary sell off is really anything to worry about. Jer Powell may have caused us a Santa Claus rally, but it's hard to be unhappy with the returns investors have seen over the past few years.

**Ricky Mulvey:** Who among us could forget the yen carry trade madness of August? A lot of this comes down to the dot plot projections, which is when the central bankers guess where they think interest rates are going to go. Why is this something that the market cares about? Then when you're looking at businesses, is a stock analyst, as a REIT analyst, is this something that you're paying a lot of attention to?

**Anthony Schiavone:** With dot plot, the big news was that the Fed's dot plot is signaling two quarter point rate cuts in 2025. That is down from four quarter point rate cuts back in September when they had their meeting. I think that was a little bit unexpected by the market, and that's why you saw the market sell off. Then, adding to that, Powell's remarks through his press conference, you mentioned that you cutting rates this time around was a close call and that the Fed would have to be cautious with further rate cuts. I think that the market itself really accelerated from there.

As far as why the market cares about the dot plot, I think it gives them some type of concrete data that they can hold onto give them a sense of what Fed officials are thinking. But to me, at the end of the day, the bond market is really going to set the interest rates and signal to the Fed about where to take the Fed funds rate. Personally, I don't look at the dot plot at all. I don't think there's much signal in there for a long-term investor. Like Peter Lynch said, if you spend 13 minutes a year on the economy, you've wasted 10 minutes, or something along those lines. It's not really something that I pay much attention to.

**Ricky Mulvey:** We're already three minutes into our macro talk. I did think it was funny that there are financial headlines saying, Jerome Powell signals caution. He does that every single meeting. I've never seen a meeting where he's like, you know what? Now we're going to get wild with interest rate cuts. Let's see what happens. Then this morning, moving away from the Fed, traders started getting a little excited.

That's why you're seeing some green in your portfolio, is the US economy grew more than the Commerce Department thought, 3.1% annualized pace. That was better than they initially thought that the economy grew. These numbers represent macro forces hitting stock prices. But I don't see it meaningfully impacting the businesses when the Commerce Department makes a small change in the revision. However, in some of the stories we are going to get to, I think it is interesting what individual companies have to say about the economy.

**Anthony Schiavone:** I don't think those macro revisions really impact the businesses that I follow. Like you mentioned, it might impact the stock price in a day. But at the end of the day, it really doesn't impact the businesses. Personally, I like to learn much more about the economy by listening to the companies that we follow, like you said, listening to what they're saying about the consumer rather than looking for these small macro revisions. The better than expected GDP growth really tells me nothing about the current state of the housing market. That's a sector that's been in the recession for like two years now. As a bottoms up investor, I'm much more interested in what the companies themselves have to say about the economy and their businesses.

**Ricky Mulvey:** Let's get to some company earnings. Let's get to the business. Darden Restaurant Group, the owner of Olive Garden, Longhorn, Yard House, and Ruth's Chris. That's always a tough restaurant to say. Basically, saying people are going back to the restaurants, the stock is up about 15% when I checked this morning. Here's a rundown of highlights for you, Ant. Six percent sales growth in 2.4% comp restaurant growth, more people are going to the existing restaurants that are already opening and spending more. Fourteen percent, never-ending Post Apples are at Olive Garden. They let you know that early in both the conference call and the investor presentation, and also CEO Rick Cardenas focusing on how Darden's brand teams are filling menu gaps, including a healthier chicken dish at Longhorn Steakhouse, something I'm personally opposed to. But what stood out to you from the quarter?

**Anthony Schiavone:** All those results were pretty impressive. I think the stock, what is it up like? Fifteen percent as we're recording this. Is that an all time high? Really good quarter from them. What caught my eye was that Longhorn Steakhouse. They increased same-store restaurant sales by 7.5%. The American consumers eating a lot of steak. They're eating a lot of pasta too at Olive Garden. That's coming at a time when really the US consumer is pulled back a little bit on discretionary spending. I think the strong results are a testament to their brand concepts. Like you mentioned, the recent promotional activity, like the Post Apples. Then rolling out partnerships with **Uber**, I think it just rolled it out with Uber a couple of months ago, so I think those value deals are really resonating with their consumer, and overall, is a great quarter for them.

**Ricky Mulvey:** There's one restaurant that got me searching to see if it exists in the Denver, Colorado area. This chain Cheddar's will sell you a 16 ounce bone in ribeye with two sides for $22. When I'm looking at that, I know you follow another chain steakhouse. I keep thinking, are you seeing these restaurants getting competitive with even grocery stores now, especially when they're selling these value conscious steaks to people?

**Anthony Schiavone:** I think, absolutely, I've never heard of Cheddar's before being on the East Coast, and I've never been to a long hard steakhouse. But I recently went to a **Texas Roadhouse**, which I think was the company you were referring to that I follow. Very similar concept. My girlfriend and I, we went a couple of months ago, ordered two meals, two drinks, we got free rolls, peanuts, and I think the bill came out to something around $35, which is incredible value. That's not only competitive to grocery store prices, but then you get the experience of dining, and you save time by not having to prepare that food for yourself. I think that's definitely competition for the grocery stores.

**Ricky Mulvey:** Do you like Texas Roadhouse as a stock? I went there too, and I can't get over this. They put their steak on a flattop, they're not putting it through a broiler. It's also a restaurant trading at about 30 times earnings, which is a lot.

**Anthony Schiavone:** I like the business, absolutely. For 35 bucks and you get all that food, that is just incredible value. Every time I go, there's always a line out the door. Doesn't matter what day of the week, always a line out the door. Thirty times earnings, that sounds really expensive. I know they have some other store concepts as well that they're starting to expand a little bit. I actually put Texas Red off of my watch list about a year ago, and I thought it looked expensive at around 20 times earnings. Now the stocks, of course, up like 50% and turning out 30 times earnings. But to me, this is one where you do research now in preparation for a better valuation down the road.

**Ricky Mulvey:** We'll tie this back to the macro economy talk. I want to see if you got a better gauge on the economy from one of two things. One, you got Jerome Powell's commentary on inflation, which excludes volatile energy and food prices, which is what people spend money on. Or you have Darden's CEO Rick Cardenas saying, "It looks like the consumer is starting to feel a little bit better than they were in prior quarters." Which one are you taking for a macro thumb in the wind?

**Anthony Schiavone:** That's a tough one. But I would probably say Darden. But with the caveat that other companies are seeing the same thing as well. A company that I follow fairly closely, **Simon Property Group**, which owns some of the nicest malls around the world in the US, and they released a press release a few weeks ago saying that Black Friday traffic was up more than 6% this year. It's definitely still feeling the impact of inflation, but they're starting to feel a little bit better. I think taking that bottoms up view with Simon Property Group, Darden and other large companies as well, that can be just as useful as to listening what Jerome Powell has to say.

**Ricky Mulvey:** Anything else you want to hit with Darden before we go to Redfin?

**Anthony Schiavone:** Just quickly, I wanted to note that they acquired a company called Chuy's in October. I'm not familiar with Chuy's, but it's a Tex-Mex concept. Not to be confused with **Chewy**, the pet retailer. But Tex-Mex concepts like Taco Bell and **Chipotle**. They performed well in recent years. I think it's going be interesting to see how they fold that new concept into their portfolio brands.

**Ricky Mulvey:** Let's take a look at Redfin, which also had some economic data that it was happy to report this morning, saying that its overall home sales were up 7% from one year ago. This is the largest annual increase since June of 2021, where it had a little bit of a different baseline going on back in June of 2020. The median sales price is up about 5.5% from a year ago. The median price for a home right now in the United States on Redfin is $430,000. When you're looking at that number soup, what does it mean for Redfin?

**Anthony Schiavone:** To be honest, I'm not really sure what to make with those numbers, because the numbers look pretty good right now, but with mortgage rates now above 7% again, what are the numbers going to look like over the next few quarters, next few years? Existing home sales for the full year, they're still in line with last year, and they're the weakest since 1995, according to Redfin.

I just think it's a really interesting dynamic that we have in the housing market right now. We have historically low inventory on the market right now because something like 75% of home owners have a mortgage rate below 5%. That's essentially an asset to them when current mortgage rates are above 7%. Home owners don't want to give that up and list their homes onto the market. Sales are down because home buyers can't really afford a 7% mortgage rate, combined with the price appreciation that you just mentioned. There's a lot of demand for new housing, but the numbers just really aren't penciling out from both the buyer and the seller's perspective. I think that's why we're seeing such a frozen transaction market. That's impacting Redfin as well as some of the other real estate-related companies out there.

**Ricky Mulvey:** Seems like home builders are going to have plenty of demand based on all the forces you just talked about.

**Anthony Schiavone:** With home builders, something I've been thinking about recently is, what happens if interest rates, mortgage rates do fall? They do go back to 4%,5% range. Demand will probably increase because it's more affordable for new buyers who come in the market. But what I'm thinking about is, will supply actually increase faster than demand? It could that actually lead to lower prices and hurt home builders? I don't know anybody who would have expected home builders to perform so well when interest rates were increasing in 2022, but they were great performers. Could we see the opposite scenario unfold if interest rates come down and home builders have to compete with more existing home inventory? Since home owners have so much equity built up in their homes, might they be willing to sell their homes at lower prices in order to move? That's something I'm thinking through now.

**Ricky Mulvey:** Something to noodle on over the holidays. Anthony Schiavone, good to get you on an A Segment. Appreciate your time and your insight. Thanks for being here.

**Anthony Schiavone:** Thanks, Ricky.

**Ricky Mulvey:** \[MUSIC\] Investors have soured on gig workplace platforms since their pandemic hides. But maybe it's time for a second peek. Motley Fool senior analyst, Alicia Alfiere caught up with my colleague, Mary Long for a look at Fiverr and Upwork.

**Mary Long:** \[MUSIC\] Peak pandemic, we heard a lot about the gig economy. Alicia, that economy obviously very much still exists, but it hasn't really boomed in the way that we were once told it likely would. Bloomberg published an article about this a couple weeks ago. They were citing data from the Bureau of Labor Statistics and stated that the percentage of the US workforce in the gig economy has barely budged in the past six years. In 2017, that share was 10.1%, in 2023, 10.2, very minimal movement. Do you got a take on this? Why hasn't the gig economy taken off in the way that many predicted it once would?

**Alicia Alfiere:** Well, first, I would say the gig economy can be really difficult to measure. Back in 2017, which is, I think the last time the BLS did this survey. They only really reported main job, so people whose main job was a freelancer. It looks like Bloomberg is doing the same thing in this article that you're talking about. The government did recently tweak its methodology. In the latest report, it also counts freelancers with more than one job, which I think helps us get a better handle on what's happening in the freelance or gig economy.

The problem is back in 2017, they didn't have that number, so it's hard to gauge what the growth has been. If you look at another data source, so statistic, for example, there has been roughly a 13% increase in freelance workers since the pandemic, though perhaps not at the same rate that we were expecting at the height of the pandemic. Still growth, not gangbusters, like a lot of people were expecting. The last year has been tricky, too. Both Upwork and Fiverr have mentioned in their earnings calls that there have been layoffs and businesses also tend to cut back on spending during an uncertain economy, but even so, freelance or gig economy isn't going away anytime soon.

**Mary Long:** Upwork also has its own data that it contributes to this pile of information that we can pull from. They tell a slightly different story than BLS. The company said in 2023 that nearly 40% of the US labor force was involved in some freelance work, which gets at the same point that you just mentioned. We can measure this in different ways, and is the important measure, how many people are using freelance work or gig economy work, temporary work as their full time job or how many are tapping into this as a side hustle. Not only are there different ways in which people use this work, whether it's a more full time position on a temporary basis or as a side hustle, there's also different gig economy work. You've got your Ubers and DoorDashes.

But for those who are looking to offer digital services, so copywriting, marketing, software development on a freelance basis, there are many platforms, but two major ones that allow you to do so, and that's Upwork and Fiverr. Upwork is the larger of the two, they make about double Fiverr's revenue, despite charging a smaller fee, they charge 10% to Fiverr's closer to 20. Apart from those, any major differences between these two freelancing platforms?

**Alicia Alfiere:** Yeah. Both have pretty similar customer bases of small to medium-sized businesses as well as individuals. But I would say Fiverr started off as a platform where services could start as low as five dollars, hence the name. Since then, it's grown beyond that price point, and now has variety of prices and services. But right now, I think the buyer's spend is a little bit different on these platforms. Fiverr average buyer spend, something like $278 in the last full year, 2023. Upwork looks to have a higher spend on the platform, it's close to $5,000 in 2023. That is a big difference. The number of buyers on the platform is different as well. Upwork had 855,000 as of its most recent quarter and Fiverr had 3.8 billion buyers on the platform. Other difference is how buyers and sellers connect. On Fiverr, buyers can search through a bunch of freelancer listings and hire for specific jobs. On Upwork, freelancers can apply to jobs, so it can involve a lot more sorting through applications on the buyer's side.

**Mary Long:** Whereas the gig economy broadly, has flat lined by some measures, the share prices for both of these platforms have been absolutely decimated in the past five years. Both are bad. Fiverr's downturn is especially steep. Stock is down nearly 90% since its 2020, early 2021 highs. But for all that negativity in the share price, Fiverr's revenue, it's grown its revenue pretty steadily and impressively since 2019. It became profitable on a net income basis in fiscal 2023. Today, it trades at a PS ratio of a little over three. Is Fiverr Story one of a still promising company that had expectations that got out of hand and have now come back down to Earth, or is this a stock that you wouldn't touch with a 10 foot pool?

**Alicia Alfiere:** That's a good question. I think it's more of the former. I think expectations have come back to Earth, and I think that as we talked about before, freelance work isn't going anywhere. On the surface, it's easy to note some of the negative things about Fiverr. One of the things is the number of buyers is falling. But as you said, there is more to the story. Revenues have been growing in those years since the pandemic, though not at the same clip, and the company has been generating cash, which is great.

Despite the number of buyers declining, average spend per buyer is going up, and that's pretty interesting. This can be a function of five or getting bigger customers. Like we talked about, they started as more for individuals, five dollars a pop for this freelance activity, and now they're continuing to move upstream, getting small and medium-sized businesses, which can help the company grow the platform into the future. Most people appreciate customer growth, and it's easy to appreciate customer growth, but customer spending growth is also pretty impressive, and I think it can be a sign of future growth activities.

**Mary Long:** It's not hard for me to imagine a world in which a buyer and seller find each other on Fiverr. They work together, and then they say, we can make this cheaper for the both of us and avoid this 20% take rate and then proceed to continue doing business off of the platform to avoid paying that fee. You talk about growing average spend per customer. Retention, I would think, is a pretty important piece of that puzzle. How does Fiverr retain both buyers and sellers?

**Alicia Alfiere:** I think the power is again the network. To your point, sellers and buyers, if they create a relationship that's a positive one and they have a need for each other in the future, they can definitely work together offline in theory in the future. But again, the power of these platforms are in the network and in the platform itself. How else you're going to have access to a big pool of talented freelancers that you could easily sift through and see reviews, which are really important or have a large group of buyers view your profile and the network helps you gain exposure in that way. Fiverr sellers can also advertise their services off of Fiverr's website. Fiverr even has a page for some ideas of how to do that. But on Fiverr's platform, sellers don't have to worry about advertising on their own, or figuring things out like a CEO. You're on the platform and people can easily find your services. I think it's beneficial to both sides.

**Mary Long:** I think it's easy to think of AI as presenting an existential threat to these companies and the freelance work that they support. But Upwork president and CEO, Hayden Brown, stated in her 2023 letters to shareholders that Upwork was making great strides and was only in the early innings of its AI journey. What do those strides look like? How is Upwork using AI to help buyers and sellers rather than handing work solely to machines rather than the human freelancers that want that work?

**Alicia Alfiere:** Well, they have a few different options that they offer. They have a AI services hub that gives clients resources and tools and also helps them connect with freelancers specifically that have those AI skills. The AI services hub also helps freelancers use AI in their work, and the company has AI courses and content to help freelancers increase or build their AI skills, which I think is important as more and more people are interested in AI. Last year, the company had Upwork Chat Pro, which was designed to help freelancers with their work and job post generator to help talent buyers post jobs quickly and accurately. But there's more ahead. This year, Upwork released its Upwork's Mindful AI or UMA.

On top of improving on those AI capabilities at least last year, the company has hopes of what the AI companion will be able to do. For example, the company is hoping that UMA will be able to help companies assess freelancer proposals and compare freelancers experience and skills side by side so they can help find the right freelancers for their needs. They're also hoping that UMA can help freelancers build proposals that can help them win those job opportunities. It could really be beneficial to both sides of this two-sided marketplace.

**Mary Long:** The idea of building out this AI companion that can help evaluate proposals, help you write proposals. To me, that gets to the long-term growth story of both of these companies. What do those growth stories look like? Do you think there's any interest in growing these platforms into an all you can \[inaudible\] hiring an HR management software? Is that within the lane here, or is it better, just focus on what you know best and focusing solely on the freelancer workforce?

**Alicia Alfiere:** I like this idea, and we've talked about this before. A company's optionality and increased capabilities can help them grow faster and longer than you expect. At the same time, if you grow into some of these areas, the company opens itself up to more competition as well, perhaps people or companies that have been in the space longer, who are innovating and that thing. There are some things that they can potentially do that would feel like a natural extension of a freelance platform. Maybe adding a recruiter function.

If both parties create a positive relationship and they want that to continue on a full time basis, I think that could be a nice natural outgrowth. They can grow into becoming temp worker companies as well. That could be interesting, but honestly, I think the freelancer market in general is enough for Upwork and Fiverr to continue to grow and to be able to perform as companies going forward.

**Mary Long:** Both of these companies right now are trading at relatively low, valuations, Upwork slightly below three times sales, while Fiverr are slightly above. Do you like one of these companies better than the other?

**Alicia Alfiere:** Well, I think do. I usually like to look at price to free cash flow. It's a similar idea, we're using these as thumbnail for valuation. Fiverr is 15 times and Upwork is about 18.6 times. Those are helpful in terms of determining which one is cheaper, if that's what an investor makes their decision on, but it's more than that. What's happening at each of these companies? What's the story that allows us to make sense of the numbers?

Fiverr and Upwork, as we pointed out earlier, both have seen share prices fall after the high flying days of the pandemic. Both are seeing their revenues grow, both are generating cash, both are operating well despite a somewhat difficult market, and neither of these companies are really market darlings right now. If I'm in a contrarian investing mood, I think either can fit the bill. Fiverr is a little bit cheaper, which could mean my investment would have a lower hurdle to clear, but Upwork isn't that much more expensive. Plus, they have an activist investor who's looking to push for changes there, which could be interesting as well. I think just like freelancers, that can utilize either site, I could go with either.

**Mary Long:** Alicia Alfiere, thanks so much for the time for the insight and for the look at these two freelancing platforms. Always a pleasure to talk with you.

**Alicia Alfiere:** Glad to be here. Thanks.

**Ricky Mulvey:** As always, people on the program may have interests in the stocks they talk about. The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and are not approved by advertisers. Motley Fool only picks products that it would personally recommend to friends like you. I'm Ricky Mulvey. Thanks for listening. We'll be back tomorrow.

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