Consumer confidence continues to dim

Summary

Marketplace Podcast Summary: "Consumer Confidence Continues to Dim"

Release Date: March 25, 2025
Host: Kai Ryssdal
Episode Title: Consumer Confidence Continues to Dim

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1. Declining Consumer Confidence Index

Kai Ryssdal opens the episode by highlighting concerning trends in the Consumer Confidence Index. He notes that the index has fallen for the fourth consecutive month, dipping below expectations and reaching its lowest point in twelve years. Ryssdal emphasizes the seriousness of this decline, stating, “Their expectation index fell even more sharply, down to its lowest level in 12 years” (01:13).

2. Impact on Consumer Spending

Transitioning to the implications of this decline, Ryssdal introduces Mitchell Hartman from the Conference Board to delve deeper into what the plummeting consumer sentiment means for consumer spending.

Yaneli Espinal discusses insights from various experts:

• Joanne Hsu (University of Michigan) observes that despite low consumer sentiment during the 2022 inflation surge, strong consumer spending persisted. However, the current environment is different due to factors like tariffs, government layoffs, and rising interest rates.

• Bill Adams (Comerica Bank) questions whether current economic fears will alter consumer behavior, suggesting it might unlike previous instances where spending didn’t align with sentiment declines (02:33).

• Sophia Beg (Morning Consult) and Marshall Cohen (Circana) highlight that while lower-income consumers are reducing spending, higher-income individuals continue their expenditures, driven by momentum in the beauty and personal care sectors.

A notable quote from Cohen summarizes the shift in consumer behavior: “American consumers are becoming more hesitant, asking themselves why they need to rush out and buy something now when they can just wait a while” (04:05).

3. Tariffs and Their Economic Implications

Ryssdal shifts focus to the broader economic landscape, particularly the impact of President Trump's tariffs on the U.S. economy and foreign investment.

Theresa Fort (Dartmouth) explains that tariffs lead to economic isolation by eliminating foreign competition, forcing resources into less efficient sectors. This misallocation results in reduced productivity and higher consumer prices, ultimately slowing economic growth.

Sebastian Malaby (Council on Foreign Relations) warns that tariffs are diminishing the attractiveness of U.S. government bonds for foreign investors, potentially leading to higher borrowing costs and increased risk of U.S. debt sustainability issues (07:31).

Ryssdal further discusses the political fallout, noting tensions with Canadian investors and shifting European economic dynamics, which have led global portfolio managers to consider reallocating investments away from U.S. financial assets (08:16).

4. Corporate News: Walmart Ventures into Premium Beauty

Kristen Schwab reports on Walmart's strategic investment in the premium beauty sector, a market estimated at $35 billion in the U.S. and nearing $100 billion globally. This move aligns with trends showing robust performance from beauty retailers like Ulta and Sephora.

Joseph Nunes (USC Marshall) categorizes Walmart’s beauty products as “affordable luxuries,” appealing to consumers who purchase these items when in a shopping mood. Nunes adds, “Over the years people have become less picky about where they buy their lotions and potions” (09:40).

David Swartz (Morningstar) highlights the category's appeal due to higher profit margins and the continuous influx of new products, making beauty a resilient sector even amid economic uncertainties (09:56).

5. Market Update

Kai Ryssdal provides a brief overview of the day's market movements:

• Dow Industrials: Essentially flat at 42,587
• NASDAQ: Up 83 points (~0.5%)
• S&P 500: Added nine points (~0.2%)
• Notable stock movements include Ulta Beauty rising by 1.25%, Tesla up 3.5%, and fluctuations in other consumer and tech stocks (11:12).

6. In-Depth Interview with Mark Blyth: Economic Policies Under Trump

In a comprehensive segment, Ryssdal interviews Mark Blyth, a political economist at Brown University, about the long-term economic ramifications of President Trump's policies.

Key Discussion Points:

• Long-Term Economic Shifts: Blyth argues that Trump’s approach represents a “once in a generation shift” in global economic management, fundamentally altering the dynamics of international trade and investment (15:18).

• Impact of Policies: Ryssdal references President Trump's rhetoric on enduring short-term pain for long-term gains, to which Blyth responds, “There’s no way to put on the fiscal brakes to stop that recession really hurrying” (17:27).

• Potential Recession Scenarios: Blyth warns that without governmental intervention, the economy could experience prolonged downturns with lasting scarring akin to the Great Recession, citing declining investment and heightened economic insecurity (19:57).

• Political Ramifications: The discussion touches on the political viability of continued austerity measures, with Blyth expressing doubts about public support for aggressive cuts to social programs like Social Security and Medicaid (18:03).

A poignant exchange occurs when Ryssdal asks if the administration might be misleading the public, to which Blyth cautions about the dangers of interpreting disorder as strategic economic maneuvers: “This could simply be sane washing. If somebody has put it the way that the Trump administration is essentially just going for a grift...” (19:00).

7. Consumer Confidence and Labor Market Outlook

Savannah Peters explores how declining consumer confidence reflects broader anxieties about the labor market:

• Survey Insights: Yelena Shuletseva (Conference Board) reports that 28% of respondents anticipate fewer job opportunities in six months, marking the fourth consecutive month of eroding confidence (21:37).

• Economic Uncertainty: Alison Srivastava (Indeed) notes that policy uncertainty heightens worker anxiety, even as hard job data indicates steady hiring and low unemployment.

• Behavioral Implications: Preston Moy (Employ America) suggests that job insecurity may lead to reduced wage demands and increased willingness to accept less favorable employment, thereby shaping the labor market dynamics (21:37).

8. Innovations in Water Desalination Technology

Kelly Wells covers a pioneering project by Oceanwell, focusing on sustainable desalination to combat water scarcity in Southern California.

• Technology Overview: Marc Golay, Engineering Director at Oceanwell, describes their innovative membrane-based system designed to operate 1,500 feet underwater, significantly reducing energy consumption by 30-40% compared to traditional methods (23:59).

• Pilot Project: The technology is currently being tested in Westlake Village, allowing for cost-effective trials due to its proximity to the ocean.

• Economic and Environmental Impact: David Jasby (UCLA) emphasizes the challenge of cost in desalination, with Oceanwell aiming to make seawater desalination more economically viable by lowering energy costs (25:30).

• Future Prospects: With $11 million raised and backing from major investors like Kubota, Oceanwell plans to scale their technology for broader ocean deployment by next year, addressing critical water shortages (26:36).

9. Final Note: Moosehead Breweries’ Presidential Pack

In a light-hearted closing segment, Ryssdal mentions a unique offering from Moosehead Breweries:

• Special Edition: A "Presidential Pack" containing 1,461 cans of beer, priced at CAD $3,500 (~USD $2,450), commemorating each day of President Trump's term (27:51).

• Packaging Details: Each crate, weighing approximately 1,900 pounds, includes a message stating, “You are now 1,461 beers closer to 2029,” blending political sentiment with consumer products (28:55).

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Conclusion

This episode of Marketplace delves into the declining consumer confidence in the United States, exploring its implications for consumer spending, the broader economy, and the labor market. Through expert interviews and detailed analysis, the podcast sheds light on the interconnectedness of economic policies, international trade, and consumer behavior. Additionally, the episode highlights corporate strategic shifts and innovative solutions in essential sectors like water desalination, providing listeners with a comprehensive understanding of current economic challenges and trends.

Note: Timestamps correspond to the provided transcript sections for reference.

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Timestamps

• 01:13: Kai Ryssdal on Consumer Confidence Index decline
• 02:33: Yaneli Espinal discusses consumer spending with experts
• 04:05: Marshall Cohen on consumer hesitancy
• 07:31: Impact of tariffs on foreign investment
• 08:16: Global portfolio reallocations
• 09:40: Walmart’s investment in beauty products
• 09:56: Morningstar on beauty category margins
• 11:12: Market update
• 15:18: Interview with Mark Blyth on economic shifts
• 17:27: Mark Blyth on fiscal policies and recession
• 18:03: Political ramifications of austerity
• 19:00: Discussion on potential misinformation
• 19:57: Long-term scarring from potential recession
• 21:37: Consumer confidence and labor market insights
• 23:59: Oceanwell’s desalination technology
• 25:30: Cost challenges in desalination
• 26:36: Future plans for Oceanwell
• 27:51: Moosehead Breweries’ Presidential Pack
• 28:55: Final remarks and promotions

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This summary is intended to provide an informative overview of the "Consumer Confidence Continues to Dim" episode of Marketplace for listeners seeking comprehensive insights without accessing the full podcast.

Transcript

[Yaneli Espinal]

Hello listeners. Our goal at Marketplace is to raise the economic intelligence of the country. And that goes for teens and young adults, too. The newest season of Financially Inclined, hosted by Yaneli Espinal, tackles topics like how to align your values with your money decisions, the skill of negotiating, and what you can get out of internships. Financially Inclined is presented in partnership with Greenlight, the debit card and money app for teens. Greenlight helps teens learn to earn, save, spend wisely and invest. Tune in to Financially Inclined wherever you find your podcasts. This Marketplace podcast is supported by Dana Farber Cancer Institute. Their scientists played a substantial role in developing more than half the cancer drugs approved by the fda. Dana Farber Cancer Institute has been making one advanced cancer discovery after another for over 75 years. Dana Farber Cancer Institute is changing lives everywhere. Find out more@dana farber.org everywhere. Data from 2018 to 2022.

[Kai Rysdal]

So look, maybe we should start calling it the Lack of Consumer Confidence Index. From American Public Media, this is Marketplace in Los Angeles. I'm Kyle Rysdal. It is Tuesday today, the 25th of March. Good as always to have you along, everybody. I'm going to start today with a couple of data points. I'm just going to list them and then have Mitchell Hartman take over from the conference board this morning. These indicators the March consumer confidence index down again for the fourth straight month. And oh, by the way, farther down than people had been guessing. Their expectation index fell even more sharply, down to its lowest level in 12 years. Now sitting well below the threshold that signals a recession is on the way. Inflation expectations were up. Expectations for future employment and income were down. Confidence in people's future personal finances was down as well. But here's the all important follow up. What is that crater in consumer sentiment going to mean for consumer spending? Here's Mitchell.

[Yaneli Espinal]

We've been here before and pretty recently, when inflation ramped up in 2022, consumer sentiment tanked. But, says Joanne Hsu at the University of Michigan, we did see strong consumer spending despite below historical average consumer sentiment. But there are some differences for consumers now. Lots of uncertainty around tariffs, government layoffs, interest rates. And now we have a slowing economy. Bill Adams is chief economist at Comerica Bank. It's an open question whether these fears of economic uncertainty really changed behavior or whether this is a repeat where people said one thing and did another. But Adams says there is reason to think it'll be different this time. Now consumers are worrying about their employment and income. Fears of job losses are more likely to translate into cutbacks in spending than fears of high prices. So far in 2025, consumers haven't dramatically pulled back, but Sophia Beg at polling firm Morning Consult is seeing little warning signs. I wouldn't say flashing red yet, but spending numbers in January were quite a bit muted, Bake says Lower income consumers are doing worse and spending less. Upper income consumers have mostly ignored inflation and kept on spending, says Marshall Cohen at market research firm Circana.

[Kai Rysdal]

But now your 401k in the stock market having a seesaw reaction that gets.

[Yaneli Espinal]

That upper end consumer nervous and they.

[Kai Rysdal]

Pull back a little bit.

[Yaneli Espinal]

Overall, Cohen sees American consumers becoming more hesitant, asking themselves why they need to rush out and buy something now when they can just wait a while. Hi, I'm Mitchell Hartman for Marketplace on.

[Kai Rysdal]

Wall street on this Tuesday. I'm thinking the calculation went something like this. Yeah, traders said that consumer confidence stuff was bad, but maybe tariffs are going to be not as bad. We'll have the details when we do the we had a story the other day about how President Trump's tariffs, both those already imposed and those merely bandied about how they've been pushing up the value of the dollar, which in turn is making American goods more expensive for would be overseas buyers and thus less competitive abroad. And because nothing in this global economy has happens in a vacuum, those tariffs and this administration's foreign policy overall seem to be having another undesirable effect, forcing foreign investors to think twice about investing in the United States. Marketplace's Justin Ho has that one One.

[Yaneli Espinal]

Of the biggest effects of tariffs is that they make an economy more isolated. Theresa Fort, a professor at Dartmouth, says trade barriers cut out foreign competitors so American companies can take their market share and that means workers and capital are going to move towards sectors that are probably not what the US Is best at doing, fort says. In that case, companies output would slow down. The lack of competition could make them complacent, even lazy. You know, it might take more U.S. workers to make the same things we were making before. That's reduced productivity and that's going to translate into higher prices and less domestic consumption. In other words, slower economic growth. And that would make US Companies a less attractive target for investors. Over the last few weeks, bond markets have been anticipating less growth thanks to the president's tariffs. Winnie Caesar, head of strategy at credit sites, says in the short run investors have been fleeing to safety. When you have people who are expecting slower growth or even an economic contraction, they will move into asset classes that are viewed as less risky overall, like US Treasuries and also the US dollar. But Cesar says the president's tariffs and all of the uncertainty associated with them are causing many investors to question even that strategy and ask themselves whether they want to invest in the United States at all. Whether the administration is willing to go far enough to drive kind of a sour sentiment and actual selling of US Treasuries is very much an open question. Slower economic growth can make U.S. government bonds riskier. Theresa Fort at Dartmouth says if the economy stalls, then the debt and the servicing of the debt is going to grow as a share of our GDP to a point where it starts to become unsustainable, okay? And then that is going to start giving the US Stronger and stronger incentives to want to default. About a third of US Government bonds are held by foreign investors, many of them in countries the Trump administration is beefing with. Sebastian Malaby is senior fellow at the Council on Foreign Relations.

[Kai Rysdal]

Canadians are completely furious about Trump's remarks that Canada should be the 51st state.

[Yaneli Espinal]

And you've got these very, very big.

[Kai Rysdal]

Pension funds in Canada that control a lot of flows into the US and they are subject to political pressure within Canada.

[Yaneli Espinal]

Meanwhile, President Trump's decision to distance the US from the European alliance has caused the German government to ramp up its spending, especially on defense, Malby says. All of a sudden, the European economy is looking relatively strong. This is the first time in as.

[Kai Rysdal]

Long as most people can remember that global portfolio allocators are saying, hey, this could be the moment to switch your money out of American financial assets into Europe.

[Yaneli Espinal]

If foreign investors start doing that, the effects will ripple throughout the US Economy, says Barry Eigengreen, an economics professor at UC Berkeley. For instance, if demand for government bonds starts to fall, the government will have to pay more interest to try to win investors back. So that will push up interest rates and borrowing costs across the board. And Eichengreen says a U.S. economy with less foreign investment is a smaller economy, and that'll mean less spending and lower incomes for Americans. I'm Justin Ho for Marketplace.

[Kai Rysdal]

The corporate news of the day is to be found in the beauty aisle. Walmart says it's going to start investing more in what are called premium beauty products, which I should tell you is estimated to be somewhere in the neighborhood of a $35 billion market in this country, closer to 100 billion globally. That news comes as beauty and personal care name brands like Ulta and Sephora have seen stronger days. Marketplace's Kristen Schwab has that one.

[Yaneli Espinal]

You might not associate Walmart, a store whose tagline is everyday low prices with fancy face creams. But Joseph Nunes, a marketing professor at USC Marshall, says they're considered affordable luxuries.

[Kai Rysdal]

Those are the products that are sort.

[Yaneli Espinal]

Of within everybody's budget and they're quite.

[Kai Rysdal]

Prone to buy when they're in the shopping mood.

[Yaneli Espinal]

And Nunes says over the years people have become less picky about where they buy their lotions and potions. There are a lot of categories where.

[Kai Rysdal]

The retail experience is less important.

[Yaneli Espinal]

That's partly because stores like Ulta and Sephora have gotten rid of the glass case experience found at department stores. Amarachi Chukwuma is a beauty consultant at market intelligence agency Mintel. So you're already in the space where you're open to buying it at a retailer versus directly from a brand rep at a counter. Meanwhile, for Walmart, beauty is likely a safe bet. David Swartz at Morningstar says the category has bigger margins than, say, apparel. It also has increasingly bigger reach. Thanks to social media, sales in the prestige beauty market grew by 7% last year. For the most part, it's an industry that's constantly cranking out new products and also new brands. Because consumers tend to be willing to experiment and beauty products require regular restocking, many have come to see them as a necessity. A lot of women and girls see it as part of their wellness routine, which means you're more likely to buy it even when you're watching your wallet. I'm Kristen Schwab for Marketplace.

[Mark Blyth]

Coming up, we are 100% dependent on.

[Kai Rysdal]

Imported water, water, water everywhere. Not a drop tip. You know the rest. Let's do the numbers. Dow Industrials basically flat today, closed at 42,587. The NASDAQ up 83 points, about a half percent. 18,002,71. The S&P 500 added nine points, about 2. 10%. 57 and 76. Ulta Beauty picked up about one and a quarter percent today. Estee Lauder dropped 2%. COTI dimmed one and a tenth percent. Tesla charged up 3.5% today. Despite falling sales in the European Union and the UK Chinese rival BYD slowed about a percent and a half. Bonds up yield on the 10 year T note 4.32%. You're listening to Marketplace.

[Yaneli Espinal]

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[Kai Rysdal]

This is Marketplace. I'm Kai Rysdal. Believe me when I tell you I totally understand how easy it is to to be overwhelmed by the fire hose of economic news. Right now there is just a lot. And that's why we're going to take a step back and try to put everything into some kind of context. What President Trump's policies are going to mean in real life. To do that, we've called Mark Blyth. He's a political economist at Brown University. Mark, it's good to talk to you again.

[Mark Blyth]

Always great to be here.

[Kai Rysdal]

Let's set the stage for one second here. President Trump and his advisors have said in almost this many words, if there's a recession, so be it. We're shooting and we're playing the long game here. We're going to do a little short term pain for a little long term game. Do you buy that?

[Mark Blyth]

I buy that. There's going to be short term pain and it's probably not going to be that short term if they're going where I think they're going. This is a once in a generation shift in how we run the global economy.

[Kai Rysdal]

Global economy. So it's not just here.

[Mark Blyth]

No, it's the whole thing. Here's how to think about it. For the past 40 years, the United States has basically been sending digital dollars called treasury bills to the rest of the world to pay for all its imports. Imagine this. In 1975, the three biggest employers here were ExxonMobil, General Motors and Ford 2025. The biggest employers are, in reverse order, Home Depot, Amazon Logistics and Walmart. In other words, we don't make anything anymore and eventually all those digital dollars we've been sending out, somebody's going to want something real for them. And we stopped making real stuff a long time ago. So whether it was Biden with the IRA with green reindustrialization or Trump with tariffs and trying to double down on a carbon model, it's a bigger thing than just what's going on for local pain and a little bit of Social Security here.

[Kai Rysdal]

Yeah, but look, I'm not going to be a Biden apologist, but he admitted he was playing the long games. We did a whole series about this where he said it was going to take decades. Trump is now trying to do it and like an hour and a half.

[Mark Blyth]

Yeah, I know. And lots of things will break and it's really difficult to execute this type of turn. But they do seem to be serious about this is the direction of travel. America is no longer just right in IOUs to the rest of the world. Everyone else needs to rebalance and that's the one advantage the US has. It can cause the pain to go elsewhere.

[Kai Rysdal]

Let's talk about the pain domestically for a second. If there is, and so to be completely clear, we are not in a recession. A recession is not happening right now, but indicators are not great. If there is a recession in this country, it has typically been the federal government that has come in and, and supported people as we make our way through it. Based on what you see with this administration now, what do you anticipate happens if the economy goes south?

[Mark Blyth]

There will be far less attempt to cushion the effects because this is going to be compounded by Doge's cuts. This is going to be compounded by the desire to do this alongside massive tax cuts. There's simply no way to put on the fiscal brakes to stop that recession really hurrying. If you go down that track and.

[Kai Rysdal]

This is a stupid question, but then what happens?

[Mark Blyth]

That's the $64,000 question, Kai. Nobody has said, hey, I've got a great idea, why don't we take stuff that's been working reasonably well for the rest of the world and for us for the past 30 years and let's just trash it all in a two year period and rebuild the 19th century balance of power with, with us behind McKinley tariffs, if that's what's going on. It's a really, really big challenge.

[Kai Rysdal]

So put on the political side of your political economy hat here. Do you suppose there's a degree of economic pain that would make the politics of this untenable for the Trump administration?

[Mark Blyth]

If you go after Social Security, Roosevelt thought that no one would ever touch it because it's a contributory program. If they go after Social Security, that's really, really tough one. If they go after Medicaid to really fund these tax cuts while at the same time firing people in the IRS who are tax collectors, then that's a really hard sell to the public that you're doing this for the greater reordering of the world to benefit the United States.

[Kai Rysdal]

Of course, that all plays into the austerity that Elon Musk and his minions have said that they want and that the President of the United States is going along with. Right. They want to cut, cut, cut.

[Mark Blyth]

And austerity means recession. I mean, they're basically cinnamon. You can't have one without the other. So it's kind of baked into the cake directionally.

[Kai Rysdal]

So as I sit here internally debating whether to ask you this question or not, I'm going to ask it anyway. Do you think they're lying to us?

[Mark Blyth]

I think there's a real danger that what I could be doing and a lot of other people are doing are basically looking for the signs within disorder. This could simply be sane washing. If somebody has put it the way that the Trump administration is essentially just going for a grift, whether it's on taxes, whether it's hollowing out the state, we don't know. But let's assume for a second that the United States government isn't just a giant grift machine and this is the play. We got to think it through as to what's going to be coming ahead and also how we're going to deal with the fallout from it.

[Kai Rysdal]

Let's talk about that fallout for a second. Last big recession we had in this economy was 2008, 2009, the scarring of which as we've talked about on this program. And a economists and experts such as yourself know the scarring from that lasted a decade or more. If and I don't want to put words in your mouth, but if this is worse than the Great Recession, what does that mean for the scarring for the next 10, 15, 20 years in this economy?

[Mark Blyth]

What it means is it's really hard to get back to where you were at the start. That was the lesson of the Great Recession, because people's skills atrophy, because people get afraid to invest. No one invests in a recession. And then when no one invests, the investment collapses, the recession gets worse. It's really hard to dig yourself out of this. And if you're not going to do it with any type of state action to counterbalance, if you're going to basically say bring it on because we want to break things and purge the system, then there's kind of two ways of looking at this. The world can be divided into people who think the economy can get into trouble. And if the state doesn't step in to stop it, it's one way traffic all the way down. And then there's people who think, no, absolutely not, let's break things. And then when we do, there'll be a huge amount of growth afterwards. We're making a bet one way or the other that that's going to be what's happening.

[Kai Rysdal]

Mark Blyth at Brown, he's got a bazillion titles, but fundamentally he's a political economist. Mark, thanks a lot. I appreciate your time.

[Mark Blyth]

Absolutely.

[Kai Rysdal]

That consumer confidence data that Mitchell was talking about up at the top of the program also gave us some insights into how people are feeling about the labor market, their thoughts about their job prospects right now, not so bad. What things are going to be like six months down the road, though? Well, that's when people start to get anxious. Marketplaces Savannah Peters has more.

[Yaneli Espinal]

If you look at the hard jobs data, you'll see steady hiring and relatively low unemployment. But if you ask regular people, consumers are not particularly excited about the state of the labor market. Yelena Shuletseva with the conference board says this is the fourth month in a row of eroding confidence, with 28% of survey respondents now expecting fewer jobs to be available in six months. Economist Alison Srivastava with the hiring site indeed says workers have plenty to be anxious about anytime there is uncertainty among policies. And even President Trump has said his policies are causing a period of transition in the economy. It's going to make people feel as though they don't have a good hold on what the future brings. But the truth is, nobody really knows where the labor market is heading. Not the experts and certainly not everyday consumers. So why do we bother asking them? There's one strand of thinking that says that actually you should kind of ignore this and wait for signs of actual softening. But Preston Moy with the research group Employ America says if workers are feeling insecure about their job prospects, people are probably going to be less willing to ask for raises from their current employer when they go look for jobs. They're probably willing to take worse jobs than they otherwise would. And in that way, our expectations of the job market can start to shape reality. I'm Savannah Peters for Marketplace.

[Kai Rysdal]

The American west goes in and out of short term drought every couple of years. The big worry, though, is aridification. It's just getting long term drier out here, mostly because of climate change. So water is kind of the whole ball game. And it's also a business opportunity, especially if your company has a technology that makes seawater drinkable without the problems associated with traditional desalination. Marketplace's Kelly Wells went out to take a look at a pilot project.

[Yaneli Espinal]

The star of the show is this 12 foot long, 4 foot wide cylinder that's getting lowered into the water. Just getting it down to the bottom takes a half hour, long enough for a conversation with Marc Golay about how it works. He's the engineering director of Ocean well and helped make this mach. He says just like a lot of desalination systems, you have a bulk of fluid that passes through the membrane. You shove salty water through a filter and you get fresh water on the other side. This machine is designed to be deployed 1500ft beneath the surface where there is lots of pressure to push the water through the membrane. Oceanwell says compared to other membrane based systems that take water from close to the surface, ITS technology uses 30 to 40% less energy to produce fresh water and then is pumped back up here to the panel. And we have that's the sampling port is there next, just to the right of the panel. Once the machine is up and running, a steady stream of clean water burbles out of a little drinking spout. No bacteria, no harmful chemicals. Add some chlorine and fluoride and you've got drinking water. It's designed for the ocean, but right now it's getting tested in a reservoir in Westlake Village, about 40 miles from downtown LA. Cheaper to try it out here because the cylinder is installed right offshore and not too Deep. But Golay says compared to seawater 1500ft down, fresh water is actually more difficult to process. And that's because there's more stuff in.

[Kai Rysdal]

This water that we have to filter out.

[Yaneli Espinal]

Oceanwell says it has raised $11 million, enough to test this machine and build the next one that'll actually go in the ocean. The biggest investor is Kubota, the agricultural machine company. There are also two dozen California water authorities that have signed on to be part of a working. The reason they're excited, a couple places in Norway proved the concept. But here in the US Ocean well is the only company testing a solution like this. And at the risk of stating something really obvious, there's not enough fresh water to go around in southern California. Mike McNutt is with the Las Vergines Municipal Water District, which is part of the working group and runs this reservoir.

[Kai Rysdal]

We were disproportionately impacted by the drought.

[Yaneli Espinal]

Like three, four years ago because we are 100% dependent on imported water. And because of that, we promised our communities that we would look for other alternative water resources. Last time there was a drought, his customers had to operate on a quarter of the water they normally get. Now the district wants to be first in line if this tech does become available in case of another severe shortage.

[Kai Rysdal]

If we have a local water source.

[Yaneli Espinal]

Like what this can be, you could in fact have physical water molecules available to combat any emergency. Now, the ocean as a drinking water source, it's not a new idea. Desalination with membranes has been around for decades. We have a mousetrap works pretty well, actually. And in order to beat that, you have to have a hell of a mousetrap. Environmental engineering professor David Jasby at UCLA says desalination has come a long way, but there's one problem it hasn't solved yet. Its cost Desalinate is seawater at a well run plant costs about 48 cents a ton. Groundwater is less than 20 cents a ton. You know, river water can be even cheaper. Ocean well claims its method is less expensive than regular desalination because it uses so much less energy. And energy is the single greatest expense. The company's next step is to test its system in the ocean, which it plans to do by the end of next year. In Westlake Village, California, I'm kailey Wells for MarketPL.

[Kai Rysdal]

This final note on the way out today with a hat tip to Henry Epp, the marketplace reporter most proximate to the Canadian border. He saw this on Bloomberg that Moosehead Breweries up there has a new offering. A special presidential pack. 1,461 cans of beer, one for each day of President Trump's term in office. $3,500 Canadian, about 2450 US and they will ship a crate to you weighs about 1,900 pounds. All that beer does and each crate comes with a message. Congratulations. It says you are now 1,461 beers closer to 2029. Our digital and On Demand team includes Kerry Barber, Jordan Manji, Dylan Mietanen, Janet Nguyen, Olga Oxman, Ellen Rolfous, Virginia K. Smith, and Tony Wagner. Francesca Levy is the executive director of Digital and On Demand, and I'm Kai Rysdal. We will see you tomorrow, everybody. This is apm.

[Yaneli Espinal]

If there's one thing we know about social media, it's that misinformation is everywhere, especially when it comes to personal finance. Financially Inclined from Marketplace is a podcast you can trust to help you get serious about your money so you can build a life you've always dreamed of. I'm the host, Jannelli Espinal, and each week I ask experts important money questions, like how to negotiate job offers, how.

[Kai Rysdal]

To choose a college that you can.

[Yaneli Espinal]

Afford, and how to talk about money with friends and family. Listen to Financially Inclined wherever you get your podcasts.