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- [00:01]
Sasha Polico Saransky
Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals, like business management, strategic planning and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more@capella.edu.
- [00:32]
Kai Rysdal
The big three on the program today. Or, you know, the big three of the moment anyway. Interest rates, tariffs and jobs coming at you from American Public Media. This is Marketplace in Los Angeles. I'm Kai Rysdal. It is Monday today, 2nd December. Good as always to have you along, everybody. We will hear elsewhere in the program today about the politics of this economy, tariffs, that is. And we will hear about the labor market in this economy, jobs, that is. But we begin with perhaps the most fundamental item in this economy right now, the cost of money. Interest rates, that is. And the general vibe at the moment. Well, not so much vibe, but the actual minutes from the most recent meeting of the central bank say that after a general expectation of a quarter percentage point cut this month, there's, and this is a quote, considerably more uncertainty about where rates are headed. You do not have to be a regular listener to this program to understand that businesses just do not care for uncertainty, especially in manufacturing. Marketplace's Justin Ho gets us going.
- [01:51]
Sasha Polico Saransky
One type of manufacturing that's been feeling the pinch of high interest rates is the pharmaceutical industry. There definitely has been a lull in their pipelines. That's Wayne Woodard, CEO of Argonaut Manufacturing Services, a company in Carlsbad, California, that manufactures drugs and diagnostic tests for other companies. Woodard says high interest rates have made it harder for his clients to raise the money they need to research and develop drugs. And as a result, they get forced to deal with having a smaller amount of capital to work with, ultimately making very tough decisions about what's in their pipeline. And while the Federal Reserve has begun to cut interest rates, I don't really think that people have yet been convinced that Fed policy is going to be continuing in the direction that it is. So who knows, right? We don't really know. That's because the Fed could change course if inflation picks up again. Scott Paul with the alliance for American Manufacturing says that is a concern. Depending on what the new Trump administration decides to do this coming year, tax cuts potentially could put some upward pressure on inflation, depending on how they're Structured tariffs, depending on how they're structured, can impact prices somewhat or a lot. That said, manufacturers surveyed by the Institute for Supply Management last month said they were more concerned with selling products than with interest rates. ISM's Tim Fiore runs the survey. What the business community is saying here is that my order book has gotten.
- [03:19]
Kai Rysdal
So weak that I need orders.
- [03:22]
Sasha Polico Saransky
If there's no demand, there's no reason for being. Fiore says manufacturers can afford to focus on sales right now because prices are pretty stable. And if prices become unstable and start to grow, then the Fed's going to have to do what they're there to.
- [03:35]
Kai Rysdal
Do, and we'll deal with that when it happens.
- [03:38]
Sasha Polico Saransky
And since any potential tax cuts or tariffs would take some time to enact, Fiore says inflation probably won't pick up until at least the second half of next year. I'm Justin Ho for Marketplace Wall Street.
- [03:51]
Kai Rysdal
Starting the first week of the last month of the year, betwixt and between, we'll have the details. When we do the number. There is a certain Groundhog Day quality to some of the economic policies President Elect Trump is promising, most particularly on tariffs. There will be some new ones, that much is clear. But exactly how high and on whom we can't quite know yet, despite what the president elect is saying. So imagine for a minute that tariffs are literally your job. And while you handled the first four years of a Trump presidency, this time might well be different. So we've gotten Gretchen Blau on the phone to discuss. She's the customs brokerage manager at Logistics plus in Erie, Pennsylvania. Gretchen, good to talk to you again.
- [05:02]
Sasha Polico Saransky
Thank you. Good to be here.
- [05:03]
Kai Rysdal
With the understanding that tariff news changes, one might say, at the drop of a hat these days. What is the vibe at Logistics plus in Erie, Pennsylvania, given the news of late?
- [05:14]
Sasha Polico Saransky
Well, we've been getting a lot of phone calls and emails asking if we have any kind of information as to what the tariffs will be, commodities that people import. And long story short, we don't have any inside information. So we're just kind of, you know, holding hands and with our customers and letting them know, you know, the most likely targets, but not making any promises as to knowing what exactly will occur.
- [05:45]
Kai Rysdal
Without, you know, being able to see their faces. I imagine the stress level amongst your customers is pretty high. Anybody's importing anything into this country, right?
- [05:53]
Sasha Polico Saransky
Oh, for sure. And everyone that was, that was importing from Mexico and Canada probably thought they were on the safe side. And that's not looking good either now. So, you know, the 25% tariff for goods from China was left over from Trump's last administration. So that's kind of been part of normal life for everyone. But the 60% that could happen is scaring people a lot.
- [06:19]
Kai Rysdal
Well, since you mentioned it, you know, you have, we have all done this before. You specifically were on the pointing end of the sword with tariffs last time. That must stand you in some kind of good stead with your clients come the 20th of January. You'll have some kind of, you know, background in this.
- [06:33]
Sasha Polico Saransky
Yeah, that's for sure. And, you know, we can help them look at, we have offices all over the world, so we can help them look at different sourcing, where maybe the tariffs are low or non existent or it just kind of depends on how it goes. It's really unpredictable at this point and we're just doing our best to help walk people through it. Anyone that's asking for any kind of estimate on tariffs is being told this is the estimate for today. We can't predict what's going to happen in January, but here we are. I mean, we've been warning everyone trying to get the word out that it could be a new world for sourcing come January.
- [07:13]
Kai Rysdal
Right. So you're helping people think through their supply chains, right?
- [07:16]
Sasha Polico Saransky
Yes, we've been helping with that all along for the tariffs and the forced labor and whatnot, where people have to check and see where things are in their supply chain, who is actually building those parts and whatnot. But it's going to get a little bit stickier.
- [07:34]
Kai Rysdal
Yeah. So just on the nuts and bolts of this thing, let's say on, on the afternoon of January 20, after he's sworn in, President Trump reinstates or instates or does whatever he's going to do with tariffs. Do you get like an email from the Commerce Department that says, okay, now it's 25% on everything or what happens.
- [07:52]
Sasha Polico Saransky
We actually get an alert from Customs and Border Protection. They send out, you know, what's happening with the computer system, what happens with trade policy, like a myriad of subjects that affect us as customs brokers and importers and exporters. So we will get some sort of notice. Typically they wait until it's published in the Federal Register, but I think in this case we might get a little.
- [08:19]
Kai Rysdal
Bit better warning, which would be nice, right?
- [08:22]
Sasha Polico Saransky
Oh yeah, it would be Gretchen Blau.
- [08:24]
Kai Rysdal
At Logistics plus in Erie, Pennsylvania, thinking about the next four years of her. Gretchen, thanks a bunch. Appreciate your time.
- [08:30]
Sasha Polico Saransky
Thank you.
- [08:47]
Kai Rysdal
Inflation isn't quite the problem it was a year or two ago. But if you peruse surveys of business owners or talk to them yourself, both of which we do here, you hear time and time again that the still rising cost of materials and labor is still top of mind. So as we know, companies have raised prices and worked to cut costs. For a fast food restaurant, that might mean replacing workers with kiosks. For a potato chip maker, that might mean putting fewer chips in the bag, right? Clothing manufacturers are facing the same kind of challenges for businesses. Textile and apparel inputs are up more than 50% 5 0% since the start of 2020. For consumers, though, the cost of apparel has risen just 7%. So how are clothing brands making up that gap? As Marketplace's Kristen Schwab reports, it usually comes down to quality.
- [09:38]
Sasha Polico Saransky
It's a Friday morning during the holiday shopping season at Macy's flagship store in Manhattan. The lights are twinkling, the wreaths are up, and the place is packed with tourists. I'm here with Phyllis Savachko from Stateless, a fashion consulting firm, and we're a little lost among the store's 11 floors. There's got to be a map somewhere. I know, right? We are on women's contemporary fashion. Maybe we'll try this. We'll stroll around here. We're strolling around today because we're on a mission to take stock of the quality of clothing on the racks. Savachko grabs a red holiday sweater bedazzled with silver stones for $99. She flips it inside out and inspects the stitching. The stones are all attached by a single strand of thread, and that is cheaper because can you imagine one person tying off 100 pieces individually? That would take more time. And of course, time is money. It's a shortcut. A shopper might not notice until one of the stone snags and all of them fall off. Savachko says. This is just one of many ways clothing manufacturers cut costs. Instead of taking time to sew in zippers and buttons, they'll use elastic waistbands instead of pricey natural fabrics like wool, they'll use synthetics like acrylic. But other tactics are less obvious. For instance, shrinkflation. It's not just cereal brands putting less cereal in the box. Shrinkflation happens in clothing, too. So that size six that you used to wear might fit a little snugger because the specs might be a little bit smaller. If you ever think you've gained weight when you step in the dressing room, turns out it might just be gaslighting. There's actually less fabric saving on a few Millimeters of material might sound insignificant, but multiply that by thousands of shirts and you've saved a lot. Sometimes cost cutting even influences fashion trends. Crop sweaters. Why do you think crop sweaters are. It's a sweater, but it's crop now, so you've saved all that yarn now. Some brands will use these cost cutting measures more than others. An expensive designer label, its shoppers aren't so sensitive to price increases. But Margaret Bishop at Parsons and the Fashion Institute of Technology says lower priced mass market stores, there are already pretty slim margins on those products, so there's not a lot of room for brands and retailers to absorb increased costs. It's why lower priced brands are more likely to decrease quality, a shift that's been happening for some time now. It's sort of a slow decline. But if you look at the fiber content of clothing labels, and if you've been doing that over time, you may notice some differences. Jennifer Wang has taken notice. She's a content creator with nearly 400,000 followers on TikTok, and she's known for going into stores and highlighting apparel that's well or poorly made. Wang started making these videos because she was tired of buying sweaters that fell apart. You wash it once according to the wash instructions on the label, and it kind of creates little balls on the surface, pills up, and of course that leads to disappointment. Wang does have some sympathy for brands. She's learned it's not easy to balance quality and cost because she's currently designing her own clothing line using natural fabrics. I think that opened my eyes to a lot of the nuances of, you know, fabric compositions. You know, what I thought was possibly four, now I know isn't. Back at Macy's, Savachko gives me some tips for finding quality clothes. She picks up a cream colored skirt that's fully lined and has thick, wavy lace. First of all, it's got all this rounded seam. This is more costly because it's faster to go in a straight line. The fact that you've got gathering, that's expensive because you've got excess fabric, clean finish, that's money. Savatchko says for the quality, she'd expect the skirt to cost $20 more. The sticker price is 60 bucks. In New York, I'm Kristen Schwab for Marketplace.
- [14:05]
Kai Rysdal
Coming up.
- [14:06]
Sasha Polico Saransky
And if the landlord isn't able to pay the mortgage on the property, it could go into foreclosure.
- [14:11]
Kai Rysdal
Debts and bills don't just go away, you know. First though, let's do the numbers. Dow industrial is off 128 points today, about 3. 10%. 44,782 for the blue chips, the NASDAQ gained 185 points. 1% ended things at 19,403. The S&P 500 found 14 points in the couch cushions, about a quarter percent. 6,047 it's only Monday, but I'll tell you what. The auto industry has already been having a weak Stellantis, which makes Jeeps and Chryslers, among other models, said its CEO will step down. The company cited different views of the chief executive and the board of directors. Shares slowed six and three tenths percent. Its Volkswagen, which slipped 1%. Tens of thousands of workers at nine plants in Germany went on strike. That's in response to a 19 billion dollar budget cut into Hyundai recalled more than 226,000 vehicles, citing problems with the rear view mirror camera share stalled 5.25% today. You're listening to Marketplace.
- [15:24]
Sasha Polico Saransky
At Capella University. Learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more@capella.edu. i'm Sasha Polico Saransky, deputy editor at Foreign Policy, and in my new show I bring together diplomats, journalists, academics and activists from across the globe. I think it's an act of war. Lots of countries go to war and give them the chance to debate serious issues that really get to the heart of the world's biggest dilemmas. That's not true. That's not true. Look, diplomacy has been going on. That's Counterpoint, a new podcast from Foreign Policy in partnership with the Doha Forum, available now. Wherever you get your podcasts, Money, money, money. Kids always have questions about it and.
- [16:15]
Kai Rysdal
Maybe you do too. That's why Million Bazillion, the webby winning podcast from Marketplace, is here to answer.
- [16:21]
Sasha Polico Saransky
The awkward and sometimes surprising questions your kids have about money. We explain concepts like savings accounts, retirement, and the differences between brand names and non brand names. Million Bazillion is the place for you and your kids to learn about money. Together we help dollars make more sense. Get it?
- [16:41]
Kai Rysdal
Listen to Million Bazillion wherever you get your podcasts. This is Marketplace. I'm Kai Rysdal. While the political news careens from topic of the moment to topic of the mom moment, we here in the world of business, in the economy are focused this week on jobs. There is labor market data aplenty these five days, including the Biggie, the November jobs report, which is going to be out with us on Friday. One line item in that data set that's going to be of particular note is the number of permanent job losers, people who weren't temporarily laid off but instead have been let go or laid off from a particular position, obviously permanently. In October, permanent job losers topped 1.8 million people. That's the highest it's been since November of 2021. Marketplace's Stephanie Hughes looks at what's going on there.
- [17:32]
Sasha Polico Saransky
Mia Trujillo has been working without a break for three decades now. Most recently that was at a big tech company, but earlier this year her whole team was laid off. I don't think anybody ever expects it to happen to them. Trujillo was able to treat the break as a kind of sabbatical. She traveled some, caught up on sleep, finished books instead of abandoning them partway through. She's planning to rev up her job search in January and hopes to land at a smaller tech company. You can kind of see your impact a little bit more directly on the work. The tech sector has been harder hit than others when it comes to layoffs, says Brad Hirschbein, a senior economist at the Upjohn Institute. But he says many of those tech workers are able to find new jobs. We know that their unemployment rate is slightly higher than it was, but it's still relatively low. Hirschbein also points out that the number of permanent job losers comes to just over 1% of the labor force. That's slightly higher than it was right after the pandemic, but it's also right about where it was in 2017 or 2007 or 1997, which were hardly bad years in the labor market. Also, when seasoning the October jobs report, it's probably good to add more salt than usual. There were strikes and storms that soured things for the month. I think it's a potentially worrisome trend if it continues for several more months. Lonnie Golden's a professor of economics at Penn State Abington. He says if the labor market continues to add jobs at the rate it has been, then those job losers will be job winners soon enough. But if it doesn't, golden says more of them could stay unemployed for a longer time.
- [19:04]
Kai Rysdal
It can hurt workers earnings permanently and therefore undermine their spending and undermine the wellbeing of a segment of our workforce.
- [19:13]
Sasha Polico Saransky
Tech worker Mia Trujillo says her job search will probably take longer than she'd like, and she's ready for the prep to be kind of intense this time around because she says a lot has changed in technology even in the last year. I'm Stephanie Hughes for Marketplace.
- [19:43]
Kai Rysdal
I'm only a little bit kidding when I say we're going to start a pool here in the shop on how many times a week the word tariffs gets said on our air. In the months and years to come, it will be, one supposes, a lot. Much of the recent news, of course, is of President Elect Trump's plans for across the board duties on imports from, for now, China, Canada and Mexico. But President Biden is still in office and he has imposed some new tariffs of his own aimed at boosting domestic solar manufacturing. On Friday, the White House announced new tariffs on solar cell manufacturers in Malaysia, Cambodia, Vietnam and Thailand, which as it happens, are countries where a lot of Chinese solar manufacturers moved after they were targeted by earlier rounds of U.S. tariffs. And there are going to be implications for solar manufacturers and solar installers here as marketplaces. Henrietta reports.
- [20:36]
Sasha Polico Saransky
There's a tension at the heart of the federal government's policies around solar energy these days. Noah Kaufman at the center on Global Energy Policy at Columbia University says, on the one hand, we want cheap solar because it will lead to faster deployment of solar, so we'll deploy clean energy faster. On the other hand, US Leaders would like those solar panels and cells to be made in America, but for years it's been way cheaper to import them, which is why the US has repeatedly tried to raise import costs on Chinese solar, only to see manufacturing move elsewhere in Southeast Asia. Trade tends to be a game of whack a mole. Mike Carr is head of the Solar Energy Manufacturers for America Coalition. He says these latest tariffs could lead foreign solar companies to just relocate again. But thanks to tax credits and other financial incentives from the Inflation Reduction act, he says, the domestic solar manufacturing industry is starting to get off the ground. We are talking about, for the first time really in the history of solar, globally scaled factories being built here in the United States. But a lot of those factories are building solar panels, which are made up of cells which are mostly imported, says Alyssa Pierce, a solar supply chain analyst at Wood mackenzie, because the tariff is on the solar cell. US Module manufacturers who are importing cells from those four countries will also face increased costs. Those costs will likely get passed along, making solar installation more expensive, says Steve Sacala, an associate professor at Tufts University. And the more expensive it is to do that, the fewer people are going to do it. And if we really want to tackle climate change, he argues, we should be deploying the most cost effective solar, even if it's imported. I'M Henry Epp for Marketplace.
- [22:40]
Kai Rysdal
Asheville, North Carolina, is still picking up the pieces. More than two months after Hurricane Helene hit, 103 people in that state were killed, says the North Carolina Department of Health and Human Services. Tens of billions of dollars in damage. The storm knocked out water and power and Internet for weeks. Businesses closed. Something like 12,000 people filed for unemployment benefits. But amid all that destruction, economic life goes on. People still have to pay their bills, including rent. From Blue Ridge Public Radio, Laura Hackett has more on that.
- [23:12]
Sasha Polico Saransky
At Grace Covenant Presbyterian Church in Asheville, dozens of families are here to pick up supplies like blankets and baby food, and many are also lining up for rent assistance. Jefferson Bravo hasn't gotten a paycheck since Hurricane Helene devastated the region in late September. He's a handyman, and in the weeks after the storm he was focused on basic necessities like food and water for his family of four. Bravo says his savings are now most A friend told him about the rent relief program, and so he applied. Today he's picking up a check for $1,100, enough to cover the month of rent he missed. We're really trying to respond to the crisis. That's church pastor Marsha Mountshoop. A lot of our folks are service economy workers and they not work. So we are trying to take housing insecurities off the stress list. Her church is using private donations to get people rent relief as fast as possible. We're on a razor's edge every day. The church has given out more than $1 million in rent aid. Other groups are helping, too, but Mount Shoop says nobody can keep up. We have a stack this tall that we're working through. You know, we're behind because the amount is a lot. It's a lot. There is, there is some relief coming from the local government, but red tape slows down the process, says Patricia Cadell, a real estate attorney at Pisgah Legal Services. It takes a lot of time to get the government funds, and there's a lot more paperwork involved rather than whenever you are just asking for some resources from a local organization or a church. Caddell says evictions can happen fast. A lot of landlords are depending on their rental income as part of their income, and they have mortgages to pay pay, too. And if the landlord isn't able to pay the mortgage on the property, it could go into foreclosure. And an eviction doesn't necessarily mean a landlord will get paid. These landlords, they could file an eviction and remove the tenants from the property, but the likelihood of them getting that money back is little to none because the tenants just don't have it to pay. This dilemma isn't new. During the peak of the COVID pandemic, North Carolina Governor Roy Cooper signed an eviction moratorium, and both landlords and renters got hundreds of millions of dollars to help keep everyone housed. But that hasn't happened. In response to the hurricane, says State Representative Lindsey Prather, we need rental assistance desperately. The State has dedicated $1 million in rent assistance for the region, but that's split across 39 counties and is not yet available. There's a lot of talk and frustration about this in Asheville, including at Grace Covenant Church. Pastor Mount Shoup says the entire community has been hurt by this disaster. There's nobody here that wants to not pay landlords. We want everybody to be able to stay in business and get our economy back going. And she says if workers are pushed out of the community, that's only going to make the economy worse. In Asheville, I'm Laura Hackett for Marketplace.
- [26:44]
Kai Rysdal
This final note on the way out today, the Marketplace quote of the day goes to Federal Reserve Board Governor Christopher Waller, who in a speech today in Washington said this and here I overall, I feel like an MMA fighter who keeps getting inflation in a chokehold, waiting for it to tap out. Yet it keeps slipping out of my grasp at the last minute. And he went on, let me assure you that submission is inevitable. Inflation isn't getting out of the Octagon. Come on, right. Our daily production team includes Andy Corbin, Nicholas Guillaume, Alize Hasan, Bria Hollenhorst, Sarah Leeson, Sean McHenry, and Sophia Terenzio. I'm Kai Rysno. We will see you tomorrow. This is apm.
- [27:32]
Sasha Polico Saransky
Hi, I'm Jane Costen, former writer and podcaster for places like the New York Times, the Atlantic and National Review. And now I'm here to hang out with you five days a week on what a Day? Crooked's daily news podcast. That's right. Now, who's respected on both sides These days, it's hard to separate what matters from all the noise, especially when the noise is an elderly guy mumbling conspiracy theories he heard on Newsmax. That's why every weekday the team and I scour the headlines to bring you the stories that matter most to the way you live. In just 20 minutes, you can listen to the show. Wherever you get your podcasts.