Footwear will likely still be “Made in China”

Summary

Marketplace: Footwear Will Likely Still Be “Made in China”

Release Date: April 7, 2025
Host: Kai Ryssdal
Podcast: Marketplace

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1. Economic Uncertainty Amid Trade Turbulence

In this episode, Kai Ryssdal opens with a discussion on the significant economic upheaval triggered by the current administration's aggressive tariff policies. He highlights the President's misconception of trade deficits as "losses," leading to drastic shifts in the global economic landscape. Ryssdal notes the volatile reactions in stock markets and the widespread uncertainty among consumers and businesses alike.

"A president who believes, wrongly, that trade deficits are losses... has decided, in the space of something less than a week, to entirely upend the global economic order."
— Kai Ryssdal [00:57]

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2. Fed Policy and the Two-Year Treasury Note

Economist Harry Mamaesky from Columbia Business School explains the Federal Reserve's dilemma in the face of rising tariffs. Tariffs are increasing inflation while simultaneously slowing economic output and employment. This dual pressure forces the Fed to choose between raising interest rates to combat inflation or lowering them to stimulate growth.

"Tariffs also equal economic slowdown. The Federal Reserve can't fight both of those at the same time."
— Harry Mamaesky [02:47]

Mamaesky further discusses investor expectations, noting a significant drop in two-year bond yields, suggesting that the bond market anticipates more aggressive rate cuts due to an economic slowdown.

"Investors think the Fed will have to cut interest rates more than expected because the economy is going to be worse than expected."
— Harry Mamaesky [03:07]

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3. Labor Market Stagnation and Consumer Uncertainty

Elizabeth Crawford, a senior economist with Lightcast, delves into the current labor market dynamics. She describes a "frozen labor market" with stagnant job openings and steady layoffs, contributing to widespread economic uncertainty. This uncertainty hampers consumer confidence, affecting household spending and financial stability.

"There are hirings that have stalled out quits and layoffs are relatively steady... what this means for your household budget and your financial situation."
— Elizabeth Crawford [05:38]

Crawford emphasizes the pervasive impact of uncertainty, noting how consumers are cutting back on expenses due to fears about their job security and income stability.

"We're actually going to hunker down and start saving a little bit more because we don't know what's going to happen to our jobs."
— Elizabeth Crawford [06:14]

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4. Global Trade and the Footwear Industry’s Reliance on China

The episode shifts focus to the footwear industry, illustrating how tariffs have failed to drive manufacturers out of China. James Gao, CEO of Schubot, and Laina Phoenix of Zero Shoe Brand discuss the challenges of relocating production. Specialized footwear requires a skilled workforce and established industrial clusters, which China continues to provide efficiently.

"Shoe manufacturing is labor intensive... Every lacing is manual. There's no robot."
— James Gao [10:38]

Phoenix explains that attempts to move production to Vietnam were thwarted by newly imposed tariffs, reinforcing China's position as the primary hub for shoe manufacturing.

"It would take hundreds of millions of dollars of factory investment, training of a workforce that does not exist. It would take an enormous amount of time."
— Laina Phoenix [13:34]

Despite increased tariffs, companies like Schubot remain optimistic, leveraging their agility to adapt in an uncertain economic climate.

"As an entrepreneur, I'm excited because the tough economic climate and uncertainty means large players don't hold all the advantages."
— James Gao [14:16]

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5. European Automakers Navigate US Tariffs

European car manufacturers, including Audi and Jaguar Land Rover, grapple with US tariffs that have significantly increased the cost of their vehicles. Henry Epp explains that while companies have existing inventories, sustained tariffs force them to consider shifting production to the US or redirecting sales to other markets.

"Selling internal combustion engine cars to the US had been a steady source of revenue... but now they can't really sell even their internal combustion cars because of the tariffs."
— Carl Brauer [19:33]

Marianne Madeira of Lehigh University suggests that European firms might turn to other global markets, although this strategy faces internal challenges within the diverse EU member states.

"Balancing all the competing interests and politics across the 27 member states in the EU is really tricky."
— Marianne Madeira [20:09]

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6. Copper Prices Signal Economic Trends

Philip Striebel, Chief Market Strategist at Blue Line Futures, discusses the unexpected decline in copper prices. Typically a barometer for economic health due to its widespread use in construction and technology, the recent drop suggests weakening demand and potential global economic slowdown, especially in China.

"Demand for copper... usually portends healthy economic growth. But the recent run on the 29th element doesn't quite fit that pattern."
— Philip Striebel [21:42]

Striebel points out that the absence of a specific tariff on copper might have led to preemptive buying, artificially inflating prices temporarily. However, the subsequent decline reflects broader economic concerns.

"Slowing demand for copper could foreshadow a broader slowdown around the world, especially in China."
— Philip Striebel [22:53]

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7. The Closure of Ivanpah Solar Plant Highlights Renewable Challenges

The episode features the imminent shutdown of the Ivanpah Solar Electric Generating System, a concentrated solar power plant in the Mojave Desert. Ed Smeloff explains that Ivanpah's technology, once innovative, is now outcompeted by the dramatically cheaper photovoltaic (PV) solar panels.

"Over the last 15 years... the cost of photovoltaic, or PV, solar power... has fallen about 70%, to the point that it's significantly cheaper than the energy that Ivanpah generates."
— Ed Smeloff [24:20]

Despite its early success and ability to provide energy around the clock using molten salts, Ivanpah's economics became untenable as PV solar technology advanced. Former Department of Energy Director Jigger Shaw acknowledges the project's partial success but notes it failed to catalyze substantial further investment.

"It was clearly successful in that we gave them money and they commercialized the technology here in the United States."
— Harry Mamaesky [25:52]

Smeloff counters by highlighting ongoing interest in concentrated solar power, suggesting technological improvements and niche applications may still hold promise.

"Concentrated solar power won't die when Ivanpah shuts down. There are still people and companies who think the plant has value."
— Ed Smeloff [26:14]

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8. Rising Hardship Withdrawals from Retirement Accounts

Concluding the episode, Kai Ryssdal presents troubling data from Empower, indicating that hardship withdrawals from 401(k) accounts are currently 15-20% above historical norms. This surge suggests increased financial strain among Americans, with many tapping into retirement savings to navigate economic hardships.

"Hardship withdrawals from 401ks are running about 15 to 20% above the historical norm. Those early withdrawals, of course, are taxed and if you're under 59 and a half come with a 10% penalty."
— Kai Ryssdal [27:49]

Ryssdal emphasizes that this trend is a concerning indicator of the broader economic struggles individuals are facing amidst uncertainty and market volatility.

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Notable Quotes

• "Consumers and businesses are increasingly the same, and nobody knows what is going to happen next."
  — Kai Ryssdal [00:57]

• "The Fed keeps interest rates higher to fight inflation. It keeps rates lower to fight an economic slowdown."
  — Harry Mamaesky [02:47]

• "We have such a wide range of styles requiring different technical capabilities, we use a number of different factories."
  — Laina Phoenix [11:48]

• "It was clearly successful... it wasn't successful in catalyzing a trillion dollars worth of investment."
  — Harry Mamaesky [25:52]

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Conclusion

This episode of Marketplace provides a comprehensive analysis of the current economic climate shaped by aggressive tariff policies, labor market stagnation, and global trade tensions. Through expert insights and real-world examples, it underscores the persistent dominance of China in manufacturing, the struggles of European automakers against US tariffs, and the broader indicators signaling potential economic slowdowns. Additionally, the closure of significant renewable energy projects like Ivanpah highlights the challenges within the clean energy sector amidst rapidly evolving technologies. The rising trend of hardship withdrawals from retirement accounts serves as a stark reminder of the personal financial impacts of these macroeconomic shifts.

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Produced by:
Andy Corbin, Nicholas Guillon, Maria Hollenhorst, Iru Ekpenobi, Sarah Leeson, Sean McHenry, Sofia Terenzio
Podcast Team: Marketplace

Transcript

[Sponsor Voice]

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[Kai Rysdal]

On the program today. Well, pretty much exactly what you'd think. From American public Media, this is Marketplace in Los Angeles. I'm Kyle Rysdal. It is Monday today, the 7th of April. Good as always to have you along, everybody. Let's regroup here for a second at the start of a fresh week, shall we? A president who believes, wrongly, that trade deficits are losses. Those are his words, not mine. He has decided, in the space of something less than a week, to entirely upend the global economic order. Stock markets, as you know, have reacted badly. Consumers and businesses increasingly the same, and nobody knows what is going to happen next. Rules change on a whim and without notice. So for those of us whose job it is to figure out what is going on, well, we are turning to some infrequently used indicators. Marketplace's Sabri Benishore gets us going with the two year treasury note.

[Harry Mamaesky]

Almost everybody out here in this economy is touched in some way by interest rates. Harry Mamaesky is a professor at Columbia Business School. It's what people pay to lease their cars and their home mortgages and their credit card bills. The Federal Reserve influences these interest rates based on what it thinks the economy needs. And what the Fed does is going to depend a lot on what tariffs do to the economy. Right now, economists expect tariff policy is going to hit in two big ways.

[Kai Rysdal]

One is it'll probably push inflation up, at least for a while. And the other is it will push output and employment down.

[Harry Mamaesky]

Bill English is professor of finance at Yale School of Management. So tariffs equal inflation. Tariffs also equal economic slowdown. Here's the tricky part. The Federal Reserve can't fight both of those at the same time. It keeps interest rates higher to fight inflation. It keeps rates lower to fight an economic slowdown. The bond market has to guess which one the Fed will do.

[Kai Rysdal]

Markets seem to think that the Fed will respond more to the weak economy than to the high inflation.

[Harry Mamaesky]

Yields on two year bonds, which look two years out in the future, dropped by a half a percent the past few days. Investors think the Fed will have to cut interest rates more than expected because the economy is going to be worse than expected. Ruben Hovanisian is a fixed income portfolio manager at twc.

[Kai Rysdal]

Investors believe that the growth is going to slow, that we are potentially are going to enter into recession.

[Harry Mamaesky]

At the beginning of the year, markets expected the Fed to cut rates maybe once this year. Now they think the Fed's going to have to do much more than that. Harry Mamaski, something like 2 to 3 rate cuts by the end of the year. So interest rates could fall by three quarters of a percent or more this year. So far, Fed chair Jerome Powell has said the Fed is not in a hurry. Colin Martin is a fixed income strategist at Charles Schwab, a marketplace underwriter. He says that may be because tariffs aren't something the Fed can really help with.

[Kai Rysdal]

And if the Fed were to cut rates, I don't know how much that's.

[Sponsor Voice]

Going to encourage companies to invest more. I don't think it's the level of.

[Kai Rysdal]

Borrowing costs that's necessarily affecting business behaviors right now.

[Sponsor Voice]

It's the uncertainty.

[Harry Mamaesky]

The Fed can't do much about that. In New York, I'm Sabri Benishore for.

[Kai Rysdal]

Marketplace on Wall Street. As we start this fresh week, very ugly start, as you surely know, calmer by the close. We will have the details when we do the numbers. There's a vibey part of this whole thing that can't be ignored. And I say that not to be flip. It's just that things are happening so fast and with such outsized effect that it can be a bit disorienting. And in an economy that runs, I mean, usually on stability and a general sense that people know what's going on, that can really matter. Elizabeth Crawford is a senior economist with Lightcast. Elizabeth, welcome to the program.

[Sponsor Voice]

Thank you so much. Glad to be here.

[Kai Rysdal]

As the trained economist in this conversation, what do you make of everything that's going on right now?

[Sponsor Voice]

Oh, you know, I'm a labor economist, so I think about things from the perspective obviously of the labor market and just all the uncertainty that we're seeing is really manifesting itself in several ways throughout the labor market.

[Kai Rysdal]

Keep going.

[Sponsor Voice]

First of all, we see this frozen labor market, right? There are hirings that have stalled out quits and layoffs are relatively steady. Job openings have been moving sideways since essentially the summer of 2024. So there's not a lot of job opportunity that people are seeing recently. And that's really where you start to see uncertainty come in, at least from the consumer side. Right? Because at the end of the day it's, do you have a job? Are you bringing income into your household? And what does that mean for your household budget and your financial situation? So if you don't have that job and that solid income, that's going to manifest itself in the real economy in terms of your spending power and your. Your ability to be a consumer.

[Kai Rysdal]

Am I wrong if I take your use of the word uncertainty and flip it and talk about economic confidence? Because it seems to me that what is happening now, like since last Wednesday, is that subject to the whims of one man. The global economy now has no confidence in anything.

[Sponsor Voice]

There's literally no stability in terms of that stability. It is definitely the whims of one person. Right? It can change on any given day. The whole uncertainty around tariffs, all of that hits consumers as well. It hits people in their jobs. And, you know, my neighbors, for example, are big travelers and asking them about, you know, what plans do you have for the summer, and they're saying, I don't know, we're actually going to hunker down and start saving a little bit more because we don't know what's going to happen to our jobs. So that's really hitting everybody on so many levels.

[Kai Rysdal]

If you were a business person, which is not to say that economists aren't business people, but if, if you were like running a manufacturing company and, and you had to think about starting a new plant here, what would your set of considerations look like present day?

[Sponsor Voice]

That's a really good question. And actually, in my current position at Lightcast, I do talk to a lot of companies, especially those that are in Canada, having the same exact conversation about what am I going to do? I need to move operations quickly, but they need to be in an area of the country that's going to make sense for them financially, not only from a labor standpoint, but from other costs as well. In terms of energy availability, there's so much that goes into that, rents. So it's a huge equation. It's the whole gamut of starting to run a business from a different country. And what are all of the considerations that they need to make.

[Kai Rysdal]

What is your. This is sort of a squishy question, but what's your overall level of concern right now about what you see, again, as the economist in this conversation.

[Sponsor Voice]

I mean, the real economic data so far is still really solid. I mean, the jobs report from last.

[Kai Rysdal]

Week, that's an important. That's a super important point, actually. Right?

[Sponsor Voice]

Yeah, yeah. I mean, unemployment is still very low, historically low, 4.2%. Really solid job gain. If this was pre pandemic times, we'd be all solid celebrating, right. This huge uptick in jobs. But, yeah, I mean, it's all the uncertainty around that, and we're just in such a vulnerable position. And the thing is that it changes so quickly.

[Kai Rysdal]

Elizabeth Crowfoot, she's a senior economist at Lightcast. Elizabeth, thanks for your time. I really appreciate it.

[Sponsor Voice]

Thank you. Great to be here. Thanks.

[Kai Rysdal]

The thing about global trade is that it's global. So whatever it is that President Trump says he's doing to the American economy, it ain't going to stay in the American economy. Case in point, the second biggest economy in the world. Last week's tariff, O Rama brought the total tax rate on Chinese imported goods to 54%. And then this morning, just to make sure you're completely up to speed, the president threatened another 50% China tariff, which, doing the math for you here, would bring the tally on Chinese imports to 104%. You'll recall perhaps that during Trump won, the tariffs were on things like solar panels and computers and footwear, and that as a workaround, a lot of manufacturers tried to set up shop in places like Vietnam and Cambodia. That didn't always work out, though. And for a lot of reasons, China is still the place to produce a lot of stuff. Marketplace Jennifer Pack explains from the southern Chinese city of Dongguan.

[James Gao]

Shoe manufacturing is labor intensive. Workers punch every hole and lace every shoe by hand, says James Gow, whose company Schubot, owns this factory.

[Sponsor Voice]

Every lacing is manual. There's no robot.

[James Gao]

When local wages get too high, he says, shoe manufacturers like him have to relocate. That's been the pattern ever since shoemaking started out in the West.

[Sponsor Voice]

The footwear starts from Europe and then America.

[James Gao]

By the 1960s, he says, shoe factories had shifted to Japan and Brazil, then Korea and Taiwan. And for the past three decades, the industry has been based largely in mainland China until President Trump's first term, when he hiked tariffs on China and China hit back with tariffs on U.S. goods. So seven years ago, more companies started to look at relocating production to Southeast Asia. Among them, Colorado Shoe Brand 0 spelled with an X.

[Sponsor Voice]

We actually looked at Vietnam, co founder.

[James Gao]

Laina Phoenix says, though the brand didn't make the move to Vietnam because they produce specialized shoes meant to mimic the sensation of being barefoot.

[Sponsor Voice]

We make everything from casual sandals to technical hiking boots to professional quality basketball shoes. So because we have such a wide range of styles requiring different technical capabilities, we use a number of different factories.

[James Gao]

And those factories are in China because that's where the skilled workforces are. Phoenix's company is doing business with James Gao's Shoebot. Schubot works with small and medium sized brands. It also makes shoes in Vietnam, though its operations there are small. One of the company's clients, Mark Olson Co, owns a Portland shoe startup called Avali. He says Vietnam may be good for big brands, not niche ones like his that make volleyball shoes for women and girls.

[Harry Mamaesky]

Vietnam is where China was maybe 15.

[James Gao]

Years ago, but China, he says, has so called industrial clusters with everything you need for shoes, from raw materials to foam manufacturers, knitwear, lacing and embroidery groups. They're all within driving distance of Chinese shoe factories, he says.

[Carl Brauer]

So it's just set up to do it right.

[James Gao]

And he says the Chinese factories are innovative. They find new materials, upgrade machines and cut down production times. Manufacturing in China makes it easier to roll out and test different colors for new volleyball shoe styles, says Avali's co founder Rick Anguilla.

[Kai Rysdal]

There's nothing more satisfying than being at.

[Sponsor Voice]

One of these tournaments and having our product on display. And you hear those four words as they pass by. Oh, those are cute.

[James Gao]

He says his company thought about manufacturing in the US but decided the challenges were too great. Lena Phoenix of Zero Shoes agrees.

[Sponsor Voice]

It would take hundreds of millions of dollars of factory investment, training of a workforce that does not exist. It would take an enormous amount of time.

[James Gao]

Vietnam seemed like a more attractive option despite its less skilled workforce, and her company had hoped to shift manufacturing there. Since Trump increased tariffs on Vietnamese exports by 46% last week, she's been having second thoughts.

[Sponsor Voice]

One of the things that's critical for us to know is whether or not these are in fact the final tariffs. Given all of the changes that have come out of this administration, we are to some extent waiting for the dust to settle.

[James Gao]

In these uncertain times, some manufacturers remain optimistic. Again, Schubot CEO James Gao as an entrepreneur. As an entrepreneur, he says he's excited because the tough economic climate and uncertainty means large players don't hold all the advantages. Small manufacturers like him are more agile and can help clients pivot quickly, he says, for whatever may come next. In Dongguan City, I'm Jennifer Pack for Marketplace.

[Kai Rysdal]

Coming up, it's a beautiful facility. It works clean, carbon free and it's getting shut down. First though, let's do the numbers. Dow Industrials off 349 points at the close today. 9. 10% 37,965 the Nasdaq inched up 15 points, about a 10th percent. 15,600 3. The S&P 500 dipped into bear market territory in Mayday trading before swinging back. Tally at the close was a dip of 11 points, nearly a quarter percent.5062 As I said, very ugly start. Better buy the close. Let us go global now, shall we? Hong Kong's Hang Seng dipped 13.2%, the biggest single day drop since 1997. Japan's Nikkei slumped 7.8%. Over in Europe, Britain's Footsie stepped down about 4 and 4. 10%. The Cat Carant Cat 40 in Paris slipped 4 and 8. 10%. The Dax in Germany off about 4 and a 10% today. The White House has directed rather the Committee on Foreign Investment in the United States CFIUS to take a fresh look at Nippon Steel's bid to acquire U.S. steel. You might remember Biden administration blocked that deal. U.S. steel shares up 16 and 2. 10% today. You're listening to Marketplace.

[Sponsor Voice]

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[Kai Rysdal]

This is Marketplace. I'm Kai Rysdal. Ursula von der Leyen, the president of the European Commission, said today that Europe is always ready for a good deal as the eu, the world's second biggest economy when taken as a single block, tries to navigate its changing relationship with the United States. Whether there's a deal in the offing or not, some imports from across the pond are already caught in the tariff crossfire. Cars in particular. Audi says it's going to keep recently arrived cars at ports in the United States while it figures out what's what. And Jaguar Land Rover is going to pause shipments of cars from the UK for a month. Marketplace's Henry Epp explains what European cars can tell us about how the rest of the world is responding to Trump's tariffs.

[Carl Brauer]

European car companies have a bit of time to plot their next move because they've got cars on dealer lots that came into the US before the tariffs. So Sean Tucker at Kelley Blue Book says Audi could keep those cars sitting in port for a while because at this point they have more than a three month supply before their dealers reach a point where they're they're having to.

[Harry Mamaesky]

Pay the post tariff cost.

[Carl Brauer]

But pretty quickly they'll have to make a choice. Selling internal combustion engine cars to the US had been a steady source of revenue in a global market that's leaning electric, says carl [e-mail] but now they.

[Sponsor Voice]

Can'T really sell even their internal combustion cars that were that still have plenty of profit built in and to the.

[Harry Mamaesky]

US consumers because of the tariffs.

[Carl Brauer]

So what are their options? If these tariffs stay in place, Brower says they could shift more production to the US to avoid import taxes. Or, says Marianne Madeira, an assistant professor of international relations at Lehigh University, the.

[Sponsor Voice]

Best option for these firms is to divert trade away from the US and towards consumer markets elsewhere in the world.

[Carl Brauer]

European leaders, she says, have already been looking to open up trade to South America and other parts of the globe, but they're all also preparing to respond with retaliatory measures if they don't reach a deal with the U.S. the problem is, Madeira says, balancing all the competing interests and politics across the 27 member states in the EU is really tricky.

[Sponsor Voice]

One example, the automobile industry, you know, is really located in Germany, but a lot of parts and suppliers are in central and Eastern European countries like Czech Republic and Hungary.

[Carl Brauer]

So hurting the exports of one country in the name of standing up for the bloc could hurt relations between EU members. I'm Henry Epp for Marketplace.

[Kai Rysdal]

We told you a couple of weeks ago, I think about copper and how it was then at a fresh record high. Two weeks, as you know, is a very long time the way things are going right now. And copper is cratering, which, as Marketplace's Savannah Peters reports, is something of a macroeconomic tell.

[Philip Striebel]

You need copper to make or build just about anything in this economy. Almost every sector relies on it, from.

[Kai Rysdal]

Construction, infrastructure, and also defense.

[Philip Striebel]

Chief market strategist Philip Striebel at Blue Line Futures says those are the traditional markets for copper, but it's also in high demand for various kinds of emerging.

[Kai Rysdal]

Tech EV vehicles, which use four times more copper than traditional gas vehicles. AI, which is energy intense computing, requires copper in order to perform its function.

[Philip Striebel]

All of this is why demand for copper, both the actual metal and copper futures, usually portends healthy economic growth. But the recent run on the 29th element doesn't quite fit that pattern, says Trevor Yates, senior analyst at global X ETFs.

[Sponsor Voice]

Copper prices were almost synthetically high because.

[Philip Striebel]

Of this pre buying, pre buying ahead of last week's tariff announcements, which ultimately did not target copper. Craig Perrong, professor of finance at the University of Houston, says it's on a short list of products including lumber and semiconductors exempted by the White House.

[Kai Rysdal]

One possible reason would be that they.

[Sponsor Voice]

Surmised that Americans would bear most of the cost of the tariff on copper.

[Philip Striebel]

And decided against a specific tariff for now. So why have copper prices been tanking?

[Sponsor Voice]

This is a verdict about the overall prospects for the economy, not something specific to the copper market.

[Philip Striebel]

Perong says slowing demand for copper could foreshadow a broader slowdown around the world, especially in China, the world's top buyer of the metal. I'm Savannah Peters for Marketplace.

[Kai Rysdal]

Way out in the middle of the Mojave Desert, 200ish miles northeast of downtown LA, right up against the Nevada border is a solar plant known as Ivanpah. It's not a bunch of solar panels generating electricity directly like on a rooftop, but still it's been supplying enough juice to power 140,000 homes for more than a decade. And in yet another example of you just can't fight the market, it's closing soon. Marketplace's Kelly Wells explains.

[Ed Smeloff]

Ivanpah creates what's called concentrated solar power. Basically, you set up a bunch of mirrors in concentric circles, and those mirrors.

[Sponsor Voice]

Reflect the heat of the sun to a receiver that's mounted at the top of a big tower.

[Ed Smeloff]

Clean energy consultant Ed Smeloff says the receiver has molten liquids that then heat up really hot in the focus of the beam, which is hot enough to, cartoon style, fry the occasional bird that flies through it.

[Sponsor Voice]

And the fluid in the receiver, molten salts, is used to drive the energy through conventional steam turbine, just like in.

[Ed Smeloff]

A fossil fuel plant, except using sunlight instead of burning coal or natural gas. Ivanpah opened 11 years ago, and it's run by a company called NRG Energy. It cost $2.2 billion to build, 1.6 billion of which came in the form of loans from the of energy.

[Sponsor Voice]

The cost of the project compared to other renewable technologies looked reasonable. That, of course, has changed dramatically over the last 15 years or so, because.

[Ed Smeloff]

Over that period, the cost of photovoltaic, or PV, solar power, you know, solar panels, has fallen about 70%, to the point where it's significantly cheaper than the energy that Ivanpah generates. The main buyer of the plant's power, California utility pge, released a statement saying it's pulling out to save its customers money. Ivanpah is set to close early next year. Whether that counts as a failure depends on how you view the mission of the Department of Energy's loan programs office. Says Jigger Shaw, he's the former director there.

[Harry Mamaesky]

It was clearly successful in that we gave them money and they commercialized the technology here in the United States.

[Ed Smeloff]

He also says taxpayers will get most of their money back. The Department of Energy declined to say exactly how much. On the other hand, Shah says it.

[Harry Mamaesky]

Didn'T catalyze a trillion dollars worth of investment. So from that perspective, it wasn't successful.

[Sponsor Voice]

Right?

[Harry Mamaesky]

Whereas the solar PV investments that we made did catalyze a trillion dollars of investment.

[Ed Smeloff]

And that trillion dollars of investment is what helped drive the price of PV solar down 70%.

[Harry Mamaesky]

Long term, the reason we're doing all of this is to get the technologies that succeed to get successful at scale.

[Ed Smeloff]

Concentrated solar power won't die when Ivanpause shuts down. There are still people and companies who think the plant has value. Fred Morse is one of them. He's the guy who wrote up the report 55 years ago on whether it made sense to put solar on the roof of the White House. Today, he runs a startup called Solstor Energy that develops concentrated solar.

[Kai Rysdal]

I was there two months ago. It's a beautiful facility. It works clean, carbon free. You really want to shut that down?

[Ed Smeloff]

He says. Sure, PV solar panels are cheaper in the daytime, but they don't do squat at night. Whereas a concentrated solar plant can pump those superheated molten salts it generates into an insulated tank so the plant can generate electricity at night. But Moore says the future investments like the one Ivanpaw needed to get off the ground are more uncertain as the new trade war and the shrinking of the federal government make investment less likely. I'm Kayleigh Wells for Marketplace.

[Kai Rysdal]

This final note on the way out to a not great sign of the economic times. Saw this on Bloomberg. It's data from Empower, which is a retirement services provider. It shows that hardship withdrawals from 401ks are running about 15 to 20% above the historical norm. Those early withdrawals, of course, are taxed and if you're under 59 and a half come with a 10% penalty. It is a not great sign indeed. Our daily production team includes Andy Corbin, Nicholas guillon, Maria Hollenhorst, Iru Ekpenobi, Sarah Leeson, Sean McHenry, and Sofia Terenzio. I'm Kyle Rysdal. We will see you tomorrow, everybody. This is apm.

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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, Janeli Espinal, and each week I ask experts important money questions, like how to negotiate job offers, how to choose a college that you can.

[Philip Striebel]

Afford, and how to talk about money.

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