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Find your CFP professional at letsmakeaplan.org Tariffs are top of mind today and honestly, probably tomorrow and maybe seemingly sort of forever, at least for now. So let's just take it one day at a time. From American Public Media, this is Marketplace in New York. I'm Kristen Schwab in for Kai rysdal. It's Monday, March 31st. Thanks for joining me. The economy is on tariff watch this week. Yes, I know that lately most weeks are tariff watch weeks, but the Trump administration has given itself a Wednesday deadline to finalize its reciprocal tariff plan and reportedly an across the board 20% global tariff is back on the table. As we know, markets have reacted to these back and forth tariffs with quite a bit of volatility. As of today, the last trading day of the first quarter, the S and P and Nasdaq posted their worst quarters since 2022. But the stock market isn't the only thing that's been trending down. So has the value of the dollar down more than 4% so far this year? Marketplace's Justin Ho reports. A lot of investors went into the year with a pretty optimistic outlook for the US Economy, says Juan Perez, director of trading at Monex usa, that there was going to be a lot of policies coming from the Trump administration and the pro business, the pro growth. But then the trade wars kicked off. Peres says investors optimism quickly faded. The ultimate consensus is that trade wars will affect growth and right now the narrative is very much not so positive for the United States. Investors who are nervous about economic growth often react by moving their money out of relatively risky assets like stocks. And that flow, if it's significant enough among enough investors, can actually alter the trajectory of a currency. That's Christopher Vecchio head of futures and foreign exchange at the research company Tasty Live. He says that's because US Stocks and other American financial assets are bought and sold in dollars. So when demand for stocks falls, demand for dollars does too. Right now, Vecchio says, a lot of foreign investors are starting to think twice about whether they want to invest in the US to begin with. Those foreign investors have been selling their stocks, they've been taking those US Dollars, converting them back to euros to pounds, what have you, and investing in their domestic markets once again. Another factor that's been luring money away from the dollar is the yield on other countries government bonds, says Vishy Tirpitur, chief fixed income strategist at Morgan Stanley. So, for example, in Japan, local currency government bonds in Japan are yielding meaningfully greater than what they were yielding six months ago. Thing is, Tir Pateur says tariffs could cause other countries economies to slow down, too. And that means their government bonds might not keep attracting investors. The question really is, will the tariffs weaken their growth prospects more? Would their central banks have to cut rates more than they would have otherwise? And if that happens, the dollar's value could start to strengthen again. I'm Justin Ho for Marketplace. Wall street today held its breath as it waits for Wednesday. We'll have the details when we do the numbers. Back in February, when President Trump first announced 25% tariffs on goods from Canada and Mexico, I did a piece on how small businesses were coping. And among the people I talked to was Daniela Velasquez de Leon, general manager at Organix Unlimited in San Diego. The company imports bananas, mostly from Mexico. As we know, Most of the 25% border tariffs were rolled back, at least temporarily. They're now set to resume on Wednesday. Danielle is here to talk about how she's been navigating all this. Welcome to the program. Thank you for having me. Give me an update. How has business been? I mean, for the most part we've been having a good year so far. What's scary is all of the uncertainty around tariffs. Everything could change from one day to the next. And it's just been a lot of whiplash from February to March and now April. Yeah, we talked, I think last in February when tariffs were on the horizon and you were figuring out what to do. And then a lot happened after that. On March 4, the Trump administration enacted a 25% tariff on products coming in from Canada and Mexico. And then March 6, just two days later, he rolled those back. Before we get to the now, can you tell me what those 48 hours were like, if you can remember, they were pretty horrible. We had prepared for it as best we could, but there's very little guidance. We were talking to our customs brokers, our customs brokers were talking to cbp and even CBP didn't have clear direction on how to handle this. And in those two days alone, we paid over $14,000 in tariffs. Wow. And then just like that, they kind of temporarily went away. Does that mean your sort of chaos went away or what's been happening for the last month or so? It feels like it's been psychological torture for the last couple months. We've done as much preparing as we can, and even just the costs of preparing have been crazy. I mean, we're a small business. We got an invoice from our legal team for almost $40,000 just in guidance for how to approach these tariffs. And even so, we didn't have a concrete, clear direction of this is exactly how you should be managing this, how you should be doing the valuation. And so it feels like the fate of our future is in the hands of the President and what he decides this week. Yeah, well, these tariffs are meant to be back on in just a couple days. What does that mean for you? I mean, we're trying to stay optimistic. I'm hopeful that we're going to come together and figure out a way to survive and get through to the other side. But if I'm more realistic than optimistic, that seems very difficult. If these tariffs do go into place all the way, what are you hearing from the grower side, from these farmers? They're very concerned. So all of these growers that we've been working with for generations, My great grandfather was a banana grower. It's a whole region that depends on, on this commodity to survive and to thrive. And if these tariffs go into place, that could completely destroy the whole economy in that region. And at retail stores, it's pretty much forbidden to go anywhere above the 99 cent mark for organic bananas. Sure. So growers know that again, it's make it or break it for, for their businesses and their communities. You know, you, you just talked about being a fourth generation member of your family to work at this company. What do you, what comes up when you think about this time and, and what it means for the future of your business? It makes me a little emotional because it's my family's legacy and it's what we've dedicated our lives to. It's our story and we've made a name for ourselves in the industry and also in our growing communities. So it's not just our businesses, our employees, our customers on the line. It's also all of these programs that we've dedicated this business to on the line. So honestly, it's kind of an emotional roller coaster these past few months and going into this week. Daniela Velasquez de Leon is general manager at Organixx Unlimited in San Diego. Daniela, thanks so much for catching up. Thank you. We'll get a new jobs report from the Bureau of Labor Statistics on Friday. And a category I'll be keeping tabs on is one that's super sensitive to how consumers are feeling about the economy. That category is restaurants and bars. Those businesses saw a sharp drop in employment last month, perhaps because consumers spent less at restaurants in February. So we had Marketplace's Sabri Benishore check in on the restaurant industry. Late last year, the US added about 60,000 restaurant and bar workers. And then in January and February, about the same amount of jobs disappeared. Jobs in this industry tend to track sales, and sure enough, sales dropped 1.5% in February. We definitely were not as busy as we would have liked to have been in January and February. Jason Smith is the owner and chef at Cantina 18 in Raleigh, North Carolina. It's been there for 15 years. He put some of this down to the weather. In January, it was sub zero or snowing all the way down into Florida. I have a lot of empty nesters and, you know, older clientele. And when it's, you know, 25 degrees five days in a row, a lot of those folks just don't go out. Understandably. We closed, I think, two nights. You know, the snow's, it's expensive. But it may have been more than just the snow. February is where we start to see a definitive shift in consumer behavior. RJ Hotevey is head of analytical research at Placer AI, which is able to use anonymized mobile device data to see foot traffic. And he zeroed in on restaurants. Visitation trends for really every restaurant category were down year over year. This was around the same time that consumer sentiment surveys showed people were getting extra anxious. And Harvey says that is not a coincidence. People are asking a lot of questions about the direction of the economy. You know, I think that certainly had an impact on things. And the reason why we believe that is because it was so widespread across a lot of retail and restaurant categories. Tariffs pushing up prices is a source of that anxiety for customers, but also for the restaurants themselves, especially if they get certain foods from, say, Mexico. I am a lowly guacamole salesman Jason smith again at Cantina 18. I also am a lowly tequila salesman, so I am more than puckered up about it. Yes, but nothing's happened yet, so let's just hold on before we panic. Some restaurants are trying to plan. Amber Machakis is president of LM Restaurants, which has 34 locations in the Southeast. You know, if we get tariffs on, you know, tequila and Mexican beer, all right, we, we have a formula. We, we know how to respond, we know what to do. But planning for specific tariffs is tough when they keep changing by the day or even the hour. And so instead of trying to get kind of all wrapped up in this, like, go, no go, stop starting kind of mentality, our focus is just creating an agile organization. So no matter what happens this year, we're prepared. The one thing Mishaka says she cannot do is pass costs on to customers. It's going to be our last option. That's the bind a lot of restaurants are in. Customers might just lose it if menu prices start soaring again. The primary headwind to customer traffic formation at restaurants has been inflation. David Portoladin is food industry advisor for market research firm Circana. Price hikes are a no go for another reason. The restaurant landscape has gotten even more competitive. Actually more restaurant locations, but less traffic than in 2019. Restaurants do have options, especially if it's just a few ingredients that are hit by tariffs. Rich Shank is a senior principal at Technomic. They can reformulate their recipes. They can swap product in and out. And despite the rough start to the year, a lot of analysts say 2025 may turn out to be okay for restaurants. We are predicting modest levels of growth this year because Schenck says people do need to eat. And after all the adapting restaurants have had to do over the last five years, they've gotten pretty good at it. In New York, I'm Sabri Benishour for Marketplace. I'm about to say something that probably isn't news for anyone listening. It has gotten a lot harder to afford a home. Just how much harder? Well, a new study out from Bankrate this morning says the household income needed to buy a typical home in the US Typical, meaning a home listed at the median national sales price of about 3,418,000. The household income needed to buy that kind of home has gone from $78,000 in 2020 to $117,000 today. In other words, household needs to make 50% more. Marketplace's Kaylee Wells reports there are two big reasons homes are so difficult to afford, says Redfin's chief economist Darrell Fairweather. It's a combination of high prices and high mortgage rates. With higher home prices comes higher property taxes and home insurance premiums. On top of that, mortgage rates are nearly double what they were five years ago. The barriers to homeownership are really high, especially for people who are borrowing. You know who's more likely to borrow money to pay a mortgage? First time home buyers. Mark Epley teaches real estate at Georgetown University. 26% of all houses purchased in 2024 were all cash and they're squeezing out that first time homebuyer, he says. That's partly why the average age of a first time home buyer has gone up from 32 in 2020 to 38 today. With multiple bidders on limited housing stock, they just can't compete with the empty nesters. If you got a cash buyer in one hand and a buyer who needs a 91% loan to value loan and get approved for financing and you're selling your house, who do you sell to? Home prices are expected to go up another 5% this year, says Bankrate analyst Jeff Ostrowski. Inventory remains tight, but he says, we may have reached the boundaries of affordability. The days of bidding wars and 30 people putting in an offer on an unremarkable suburban house. Those days are gone. Those days might be gone, but better days aren't coming yet either. The lesson of the past four years has been it doesn't look like a great time to buy a house now, but it's probably going to get worse, he says. It's hard to time the market. But Redfin's Darrell Fairweather says if you can't buy, that's not terrible because the rental market is more afford. She says renters should largely be safe from major rent hikes this year. I'm Kaylee Wells for Marketplace. Coming up, the way our funding flows is per kit and as the per kid numbers go down, so does our funding. Schools are their own economies too, you know. But first, let's do the numbers. The Dow Jones Industrial Average gains 417 points 1% to close at 42,001. The Nasdaq lost 23 points, 1/10% to finish at 17,299. And the S&P 500 gained 30 points 6. 10% to end at 56. 11. We heard from Sabri Benishore earlier about a drop in hiring by restaurants and bars. In some related stocks, Brinker International, which owns Chili's and Maggiano's Little Italy, gained 1%. Darden Restaurants, which owns Olive Garden, served up 1 and 3. 10% Cheesecake Factory Inc. Ticker is cake C a k e sank 2% bonds rose. The yield on the 10 year t note fell to 4.21%. You're listening to Marketplace. Are you looking to invest in municipal bonds? For extra protection? Buy bonds insured by Assured guaranty. It guarantees 100% of your principal and interest will be paid when due. Assured Guaranty has demonstrated its reliability and financial strength for nearly four decades. That's why the bonds they back are one of the safest investments you can make. Visit assuredguarantee.com assured guarantee a stronger Bond if you want to be savvy about the economy, the Marketplace newsletter is just what you need. Every Friday you'll get explainers and analysis that make sense of everything from the moving markets to grocery prices. No jargon, no hype, just smart takes delivered to your inbox. Sign up today@Marketplace.org subscribe this podcast is supported by Odoo. Some say Odoo business management software is like fertilizer for businesses because the simple, efficient software promotes growth. Others say Odoo is like a magic beanstalk because it scales with you and is magically affordable. And some describe Odoo's programs for manufacturing, accounting and more as as building blocks for creating a custom software suite. So Odoo is Fertilizer Magic Beanstalk building blocks for business. Odoo exactly what businesses need. Sign up@odoo.com that's O D O O.com this is Marketplace. I'm Kristen Schwab. We started the show with tariffs and its ripple effects here in the U.S. now let's take a look at some of the consequences abroad, or perhaps opportunities. The head of the European Central Bank, Christine Lagarde, said today in an interview with Radio France that the current geopolitical situation marks, quote, the beginning of a march towards independence for Europe, and that the decision to impose tariffs on European exports means the continent can come together to take greater control of its destiny. Europe has been dealing with some macroeconomic challenges, including slow economic growth. Marketplace's Stephanie Hughes has more. The crux of Lagarde's message this isn't so much a moment of crisis, but of opportunity. Make America great again. Maybe actually mega. Maybe make Europe great again. Harold James is a professor of history and international affairs at Princeton. He says Europe's been dealing with an aging population and a relatively low level of investment in innovation. It's not that Europe doesn't produce good ideas but they haven't really translated that into mass marketing of these products. But now, James says, Europe's making more money available for areas like defense spending, and it's not going to be on old fashioned trench digging equipment. The war of the future is about drones and about electronic warfare. James says there's hope some producers in sectors that'll likely be hurt by US Tariffs, like automakers, could convert to high tech defense manufacturing. But Angel Talavera at Oxford Economics warns building this kind of high tech ecosystem is really hard. You hear this very often in many countries, like we're going to turn this area into the Silicon Valley of Country X. Well, but it doesn't happen very often. Talavera says there are things the EU could do to make it easier for companies to grow across borders, like having a less fragmented banking system. You have a bank operating in Spain and the same bank operating in Portugal, and they have to be operating under two different licenses. You cannot have a bank account that is the same one in both countries. But getting buy in for this sort of thing is tough, says Shannon O'Neill with the Council on Foreign Relations. It's never easy when you're bringing together more than two dozen countries with all of their politics, o'neill says. It might not be so much a march towards independence, as le'garde suggests, but more of a walk, maybe even the crawl. I'm Stephanie Hughes for Marketplace. When learning went remote during the pandemic five years ago, many families changed course. They switched to homeschooling or enrolled their kids in private schools because they were cautious about catching COVID or wanted to avoid masks and remote learning. Whatever the reasons, today public schools as a whole still have fewer students than they did before the pandemic. And that shift has been accelerating in small towns, which are seeing deep demographic changes. WUNC's Liz Schlemmer has this story from Newton, North Carolina. About an hour outside Charlotte, construction is underway for a brand new Newton Conover High School. Superintendent Aaron Gabriel says it will serve both small towns, which are set just off the interstate in rural North Carolina. We just got to figure out to get people to follow and then more people to have babies and bring them here. In the five years that took to plan and build this school, student enrollment in this small district dropped 11%. Now, a school that was meant to prevent overcrowding isn't likely to be crowded. Gabriel doesn't know why there are no competing charter schools, and it's not like the town recently lost a factory. But fewer kids keep showing up for kindergarten still scratch my head, but I can't control it. Gabriel gets annual enrollment projections from the state, but they're based on historical trends and are not a crystal ball. Nathan Dollar is the director of Carolina Demography at UNC Chapel Hill. He hasn't analyzed what's happening in Newton Conover specifically, but he says there are three factors causing enrollment decline across the state. Number one is births. You have market share, and then you have migration, dollar says. For any school district, you have to look at all three, starting with births. So fertility's on the decline everywhere. The birth rate in North Carolina and the country has been falling for almost 20 years. Then it took a nosedive with the pandemic. As far as migration, North Carolina has been gaining residents from other states, but they're not coming in droves to rural places like Newton. Most of the people that are moving to North Carolina are moving to our urban centers, and they're in those prime working ages, so they're the most likely to have children. Then the last factor is what Dollar calls market share, which is people leaving the particular school district to go to home schools, to charter schools and to private schools. And private school enrollment is on the rise in the state. The problem is that all these forces are hitting districts like Newt and Conover at once, affecting their bottom line. Superintendent Gabriel is now at the end of his day. He's at South Newton Elementary, a school that has been losing students. The way our funding flows is per kid, and as the per kid numbers go down, so does our funding. Most of that funding goes to paying educators. Gabriel hasn't yet let go of teachers, but he has cut about half of the district's administrative positions in the last five years. That means some staff now do the work of several people, like Chief Academic Officer Tammy Brown. Gabriel bumps into her helping students in the car pickup line. They've known each other since elementary school. She was in first grade when I was in kindergarten, so we've known each other that far. But Tammy's the one that took her roles as she had before K8, federal programs, ESL, et cetera, et cetera, and then took on chief academic. I ask how many jobs she's up to now. 50? About that. If she stands for long enough, I'll give her another one. They're laughing, of course, but Gabriel is actually here to meet with staff about more possible cuts. He says he can't name any positions yet because if he did, everyone in town would know who's at risk of losing their job as the district cut staff who manage programs that serve the most vulnerable kids. Gabriel is worried it will affect the students who are still here. I fear you worry, am I going to be able to provide the same level of service? He says big picture drops in enrollment lead to cuts, and that impacts the kids, especially the ones who need the most support. In Newton, North Carolina, I'm Liz Schlemmer for Marketplace. This final note on the way out today, saw this on cnn. The Trump administration says it expects tariffs to bring in $6 trillion in revenue in the next decade, which could amount to the biggest tax hike in US History. It would be triple the tax increase set in 1942 to pay for World War II. First of all, I'm not totally sure how this $6 trillion figure is being calculated if we don't yet have a clearly structured and set tariff policy. Second, the administration continues to say that tariffs are tax cuts for American consumers. So we'll just say it again. Tariffs are taxes that are ultimately paid by American consumers. Our daily production team includes Andy Corbin, Nicholas guillung, Maria Hollenhorst, Iru Ekbanobi, Sarah Leeson, Sean McHenry, and Sophia Terenzio. I'm Kristen Schwab. We'll be back tomorrow. This is apm. 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, Janelie Espinal, and each week I ask experts important money questions, like how to negotiate job offers, how to choose a college that you can afford, and how to talk about money with friends and family. Listen to Financially Inclined wherever you get your podcasts.