Marketplace Morning Report Episode Summary

Title: Digging in to Defense Spending
Date: January 26, 2026
Host: David Brancaccio
Main Theme:
A concise rundown of the day's key economic stories, with a primary focus on U.S. defense spending, global currency shifts, current hiring trends, and emerging issues in air travel—all analyzed through top-tier economic expertise.

Key Discussion Points and Insights

1. Federal Government Spending & Pentagon Budget

[01:01–03:32]

• Appropriations Bill and Pentagon Budget

  • The Pentagon's share of pending U.S. government spending bills is huge at $839 billion for the year.
  • Maya McGinnis, President, Committee for a Responsible Federal Budget, notes that the largest budget area is operations and equipment maintenance, with personnel costs (including a 3.8% pay raise for service members) as the second largest.
  • Quote:
    “The second biggest expensive thing is people, personnel. U.S. service members are set to get a 3.8% pay increase.”
    —Nancy Marshall Genser (01:44)
  • There's significant spending on research, development, and new weapons acquisition as well.

• Hidden/Additional Military Funding

  • The appropriations bill's increase is less than 1% over last year—not keeping pace with inflation.
  • Rashmi Aggarwal, Government Accountability Office, explains there’s additional money ($156 billion) from President Trump’s 2025 legislation, the “One Big Beautiful Bill act.”
  • Combined, this brings actual Pentagon spending closer to $1 trillion, the largest in its history.
  • Quote:
    “Add that in, Aggarwal says, and total Pentagon spending for this year is way up, closer to almost a trillion dollars.”
    —Nancy Marshall Genser (02:49)

• High-Profile Defense Projects

  • Todd Harrison, American Enterprise Institute, notes that $25 billion is earmarked for Trump’s Golden Dome missile defense system.
  • Trump is eyeing a $1.5 trillion military budget for next year.

2. Japanese Yen & U.S. Interest Rates

[03:32–05:10]

• Recent Movements & Concerns
  • The Japanese yen has strengthened by 1.2% after a prolonged decline.
  • The U.S. Treasury is reportedly investigating ways to possibly support the yen.
  • Quote:
    “The yen has been under a lot of pressure on fiscal expansion plans and pretty alarmingly so. … Japanese investors buy a lot of Treasuries.”
    —Julia Coronado (03:57)
• Why It Matters
  • Japanese investors are major buyers of U.S. Treasuries. A weaker yen makes dollar-denominated assets “more expensive,” which could reduce demand for U.S. debt and put upward pressure on U.S. interest rates.
  • The U.S. government is concerned about keeping long-term rates low, especially given rising debt issuance.
  • Quote:
    “If the yen gets more weak, as it's been doing until today, it makes it more expensive to buy those Treasuries if you're a Japanese investor, … you don't want them buying less of our debt at a time that we're putting out a lot.”
    —David Brancaccio (04:23)
  • Rumors of intervention have led to currency market volatility.

3. Weather and Air Travel Disruptions

[05:17–06:06]

• Mass Flight Cancellations
  • Severe weather across the U.S. has caused nearly 4,000 flight cancellations after an already historic high of 11,000 the prior day.
  • Extreme temperature swings: from -40°F in Minnesota to 89°F in DeSoto City, Florida.
• Energy Markets
  • Heating oil futures rose to a two-month high, up 4% to $52 a gallon, due to elevated demand from the cold snap.

4. Business Hiring and AI Productivity

[07:07–08:01]

• Hiring Survey Results
  • The National Association of Business Economists finds businesses are optimistic for 2026, yet hiring remains sluggish.
  • About one-third anticipate hiring freezes as companies assess AI's potential for improving operations.
  • Martha Moore (survey chair) notes labor availability has increased but actual jobs growth is muted.
• AI Impact
  • 73% of survey panelists are “very optimistic” about AI’s productivity benefits.
    • Quote:
      “73% of panelists were very optimistic about the impact of AI on their company's productivity in 2026.”
      —Reema Reis (07:50)
  • Government data shows noticeable productivity acceleration in Q3 2025.

5. Corporate Response to Immigration Tensions

[08:10–08:34]

• After recent deadly incidents involving immigration agents in Minnesota, 60 local CEOs have issued a public letter calling for de-escalation.

Notable Quotes by Segment

• “The second biggest expensive thing is people, personnel. U.S. service members are set to get a 3.8% pay increase.”
  —Nancy Marshall Genser (01:44)
• “Add that in, Aggarwal says, and total Pentagon spending for this year is way up, closer to almost a trillion dollars.”
  —Nancy Marshall Genser (02:49)
• “That's the largest budget that they've had to date.”
  —Julia Coronado (02:57)
• “The yen has been under a lot of pressure on fiscal expansion plans and pretty alarmingly so. … Japanese investors buy a lot of Treasuries.”
  —Julia Coronado (03:57)
• “If the yen gets more weak, as it's been doing until today, it makes it more expensive to buy those Treasuries if you're a Japanese investor, … you don't want them buying less of our debt at a time that we're putting out a lot.”
  —David Brancaccio (04:23)
• “73% of panelists were very optimistic about the impact of AI on their company's productivity in 2026.”
  —Reema Reis (07:50)

Memorable Moments & Tone

• Brancaccio’s Pragmatic Teaching: He translates global currency movements into practical, everyday consequences for listeners—“What happens to the yen can affect what we pay to use credit cards or to borrow for cars, houses, and more.” (03:32)
• Rapid pacing on major figures and stats: near $1 trillion Pentagon spend, staggering flight cancelations, and dramatic weather tales, all articulated with Marketplace’s trademark clear-headed, accessible analysis.

Timestamps for Major Segments

• Pentagon and defense funding deep dive: 01:33–03:32
• Japanese Yen, U.S. Treasuries, and global market impact: 03:32–05:10
• U.S. weather disruptions and energy markets: 05:17–06:06
• Business hiring, AI, and productivity: 07:07–08:01
• Minnesota immigration tensions and corporate response: 08:10–08:34

Overall Summary

A brisk, insight-packed episode centered on the year’s surging U.S. defense budget and its broader economic ripples. Global market anxieties—especially U.S.-Japan currency dynamics—are made tangible for listeners’ wallets, while the labor market reckons with AI’s double-edged promise. Throughout, Marketplace maintains a practical and human-centric tone, making macroeconomic shifts relatable for all.