Marketplace - A tale of two deficits

Episode Date: October 5, 2026

Despite Trump’s best efforts (a flurry of loosely targeted tariffs), the U.S. trade deficit is widening. But why is it widening? And what does it all have to do with foreign investment in government debt and the strength of the U.S. dollar? We’ll explain. Plus: Electric truck sales rev up amid record-high diesel prices, a 19th-century novelist popularized economic theory for her broad audience, and investors prep for upcoming Treasury auctions.Every story has an economic angle. Want some in your inbox? Subscribe to our daily or weekly newsletter.Marketplace is more than a radio show. Check out our original reporting and financial literacy content at marketplace.org — and consider making an investment in our future.Read the stories in today’s episode:What exactly are investors looking for in this week's government bond auctions?The U.S. dollar is at its strongest in 18 monthsThe Regency-era novelist who popularized economics through her booksHere's why the trade deficit is growingAs diesel prices soar, so do electric truck salesThe algorithm knows you have a baby, and it will exploit that

I want you to think big picture today. Very big picture. From American public media. This is Marketplace. In Los Angeles, I'm Kyle Rizzdal Monday, today, 5 October. Good, as it always is. Have you along, everybody. There is a relative paucity of economic data this week.

We're going to get some consumer sentiment figures, some monthly trade data as well. More on that in just a second. but we thought we would start today with our new best friend, the bond market. The Treasury Department's going to auction off a new round of government debt over the next couple of days, and therein, as Marketplace's Justin Hoare reports to get us going, will lie clues about our economic future. A couple of weeks ago, the Treasury Department held an auction for two, five, and seven-year treasuries.

And those auctions did not go particularly well. That's Winnie Caesar, head of strategy at credit sites. She says demand for treasuries was much weaker than expected. And Caesar says it's hard to pinpoint just one reason why. I think that this year for the rates market in the U.S. has been death by a thousand paper cuts. Those paper cuts include concerns about long-term government debt, higher energy prices, which cause inflation more broadly. Also, recent economic data that have been stronger than anticipated.

Alex Wolfe, global head of macro and fixed income strategy at J.P. Morgan, says investors are also unsure how the Federal Reserve is going to react to all of this. And that's occurring amid all the noise and volatility that we're seeing both in oil prices and macro data. And it's creating, I think, a difficult environment for those participating in markets to know what is the right level of yields, where yields should be. And in recent weeks, investors have been looking for higher yields than the government's been offering. Investors have those same concerns ahead of this week's 10 and 30-year Treasury auctions. Chris Lowe, Chief Economist with FHN Financial, says,

today, rates are higher across the board. And that's simply jitters about the upcoming auctions. And Lowe says those jitters aren't just about the auctions themselves. What traders are telling you is that their primary concerns, inflation, excessive government spending, excessive government debt, all of those risks are going to remain in place. Which means investors think interest rates are going to keep rising. I'm Justin Howe for Marketplace. Here's an interest rate of no small interest to a large slice of the American economy.

Mortgage News Daily has the average 30-year mortgage at 7.61%. Stocks generally up-to-day technology, in particular, we will have the details when we do the numbers. Seems the first couple of three elements in the program today are very big picture macroeconomically inclined. Justin on bonds just now, Sabri, on the trade. gap in a minute. Right now, though, Kaylee Wells on the dollar. The greenback is the strongest it's been in a year and a half. That is good news if you're planning to buy maybe a fancy new European car. It's good news if you're the U.S. government and you're hoping for more foreign investment. But the reasons the dollar's going up may be not such great news. Here's Kaylee.

Two big reasons the dollar's going up right now, says senior fellow Joe Ganyo at the Peterson Institute for International Economics. One, the U.S. government has a lot of debt, and that pushes up interest rates. And higher U.S. interest rates attract foreign savers because they say, oh, there's a higher rate of return in the United States. More foreign investment means more demand for the dollar. The other reason it's strong now, businesses in the U.S. are also borrowing a lot, too, because of AI. There's just a lot of borrowing to finance data centers in the United States and foreigners are investing in them. Meaning even more demand for the dollar.

A strong dollar is good news for a very specific subset of consumers. If you want to go travel to Europe, it's great. Your dollar is going to go much further and you can have your vacation for a little bit cheaper. Brendan McKenna, with the European Financial Services Group Society General, says for the rest of us who are not vacationing overseas. The U.S. dollar fluctuates so much where you're probably not going to feel dollar strength. or even dollar weakness in your kind of regular day-to-day purchases. Eventually, the AI investment will calm down, as will the war in the Middle East.

Chris Vakio is head of futures and Forex with the research company, Tasty Live, and he expects the dollar to weaken by the spring. And that wouldn't be a bad thing, quite frankly, because lower interest rates in the United States going in hand with a weaker dollar would provide a lot of stress relief here domestically. Because he says the same things that cause a weaker dollar, lower interest rates, cooling inflation, would also help make day-to-day expenses for cash-strapped Americans a little easier. I'm Kaylee Wells for Marketplace.

The history of economics is dominated by men. Adam Smith, Thomas Malthus, David Ricardo, the list goes on. Said list, of course, leaves out half of the population, including for us today, the British writer Mariah Edgeworth, who lived and wrote back at the beginning of the 19th century. Edgeworth is the subject of a new book by Gina Smilich. She is the Brussels Bureau Chief of the New York Times. Her book is called The Invisible Hand of Mariah Edgeworth. Gina, it's good to talk to you again. Thanks for having me.

So tell me how you came to this story of Mariah Edgeworth. I was reading The Worldly Philosophers by Hill Bruner, which is one of the sort of classic economic histories. And he has a little aside where he mentions Mariah Edgeworth having existed. And I had never heard of her. And I am a big regency novel nerd. So I was surprised I had never heard of her. So I ordered a bunch of her books. And I was reading them.

And I just kept thinking to myself, this is not sort of casually mentioning economics. She is hiding economics all through these books. And so I became really interested in why she was doing that, went down a rabbit hole. And, you know, that was years and years ago. And here we are. Before we, years and years ago, before we get farther into her, Give us the lay of the land of economics in like 1800, right? Adam Smith comes out with a wealth of nations in 1776.

Where do we stand by 1800? We are still very much sort of first generation economics. People are still kind of getting to understand Adam Smith. Wealth of Nations was a big, heavy, hard book. I think it's being reinterpreted in the wake of the French Revolution. And sort of it is very much understood in the politics of the moment. And so that's sort of how we come to Mariah Edgeworth. She's sort of writing at this moment when the wealth of nations, the reputation of the wealth of nations is still really solidifying.

And what she does is she takes, I mean, as you point out in this book, she takes literally some of his ideas and weaves them into these stories, these novels, these books that she is writing. Yeah, which is so interesting to me because she's taking these ideas that are incredibly complex that people find very difficult to understand. And she is putting them in the plots of novels that are often meant for women, in some cases meant for literal children. Like they are educational novels for kids. And she is simplifying them to a point where those people can understand them. And it is working so well that she, while doing this, manages to be one of the most famous authors in the English language. Jane Austen is a Mariah Edgeworth fan girl. Like she's obsessed with Maria Edgeworth and is sending her letters and being like, please review my

books. It is impossible to overstate how popular this woman is as she is writing the wealth of nations into fiction, which I think is really interesting. I think so too. But look, we all know Jane Austen. Nobody knows, until this book comes out and hits it big, nobody knows Mariah Edgeworth. What happened? I think a couple of things happened. The first and kind of most ironic one is that because she was putting so much heavy educational content into her plots, it got labeled boring. I think another thing that happened at the same time is English-Irish relations were very, very strained and remained strained for a long time, as we all know. And she was Anglo-Irish, born in England, raised mostly in England, had an estate in Ireland, but it sort of fit into neither camp. And then I think the third thing is when it comes to economics, I think economics starts professionalizing around the middle of the 1800s.

And as it professionalizes, it kind of rewrites the story to suggest that the women who were involved in the early years of economics, were just popularizers, and in fact, they weren't doing a very good job of popularizing and et cetera, et cetera. Basically, they sort of drag the names of the women who were working in the field kind of through the mud in order to be taken more seriously. Let's not skip over that last bit about the men and what they do to her memory. And honestly, to women throughout the history of economics, as you know better than I, back then and today, economics is rife with sexism and misogyny. Yeah, well, and you can really feel sort of the seeds of this getting planted in the years after Mariah Edgeworth's death. So Alfred Marshall writes the seminal text on the history of economics. And in a footnote to that, he really sort of denigrates what women have been doing to popularize economics.

He calls them parasites. I think that sort of lives on to today to the point where, you know, I'm reading Hale Brunner 10 years ago. And he says that, you know, Mariah was the first woman to think of economics, but there weren't really a lot of women in. economics in the early years. And I think I hope that this book helps to dispel that myth. There were actually a lot of women in the early years of economics and they made major contributions. The thing that hits me about Mariah Edgeworth's contributions and obviously that's what this book is about is how important she thinks it is for regular people to understand what's happening in the economy. That's the whole deal with her. Yes. She thinks that economics is kind of a toolbox,

I think. She thinks this gives people the tools they need to make good decisions. about their own lives. She buys this idea that the invisible hand of markets, that if we all sort of pursue our own self-interest, capitalistic society as a whole will be better off. But she kind of adds to that and says, you know, we have to understand our self-interest in order to do that.

Like, you need to give people the tools. And so I think that is her major project throughout her life, is trying to give people those tools. Yeah. Junis Malik is at the moment, the Brussels beer chief of the New York Times. She used to cover the Federal Reserve,

wrote a great book about that. Her latest is called The Invisible Hand of Mariah Edgeworth. Gina, thanks a lot. It was really good to talk to you. Thanks for having me. Nice to talk to you, too. President Trump has what might fairly be called an obsession with the U.S. trade deficit.

He believes, and we know this because he says it out loud, that the fact that we're importing more stuff than we sell overseas means that we are losing. Setting aside the fact that that's not actually, you know, true. When we get the latest update tomorrow morning, best guesses are the trade gap's going to be wider. thanks in part to all the chips we are importing for the AI buildout. There is, though, a more fundamental reason we've got such a big trade gap. And as Marketplace's Rebenishal reports, that reason is probably not what you think. The trade deficit was like the whole point of the first Trump tariffs. It's the greatest theft in the history of the world.

Like that is how they were deciding what country got what tariff. It was based on the U.S. trade deficit with each. country. Well, it turns out one of the big reasons we have such a big trade deficit in the first place is literally the U.S. government, specifically all of its deficit spending. Now, you may be asking. What does this have to do with imports and exports? Joe Gagnon there at the Peterson Institute. Well, let's go on a little journey down the road of unintended economic consequences. So the government spends more than it has, so it has to borrow, right? It says, hey, everybody, lend us your money. We will give you a good interest rate. Foreigners see that and they say, hey, you know,

the U.S. government's paying 4% to borrow and my own government's only paying 2%. So why don't I put some of my money over there in the U.S.? Now, there's just one catch here, which is that to invests in the U.S., those foreigners need dollars. So you've got all these foreign investors looking for dollars, making dollars more popular, making dollars more expensive and stronger. And guess what? That is what makes imports look cheap to Americans, the strong dollar. This is why we import so much. This is why you buy that deck chair on Amazon that was made in Vietnam.

And guess what a strong dollar does to our exports? It also makes our exports more expensive. More imports, fewer exports, bigger trade deficit. So that is how it works. The government's overspending causes borrowing, which strengthens the dollar, shifts, imports and exports, contributes to the U.S. trade deficit. We have a government that is $30 plus trillion in debt, and part of the trade balance reflects that imbalance. Scott Linsicum is with the Cato Institute. If American policymakers are really worried about the trade deficit,

The number one thing they could do isn't enact a bunch of tariffs or trade agreements, it's balanced the budget. Now, to be fair, it's not just our government, gobbling up foreign investment and driving up the price of the dollar and therefore the trade deficit. Foreigners want dollars to invest in all kinds of U.S. stuff, like the AI boom or the stock market or U.S. businesses. So having a big trade deficit is really just a sign there's a lot of investment coming in, which is why, for all the screaming and yelling about trade deficits, most economists don't really care that much.

In New York, I'm sorry Beneshore for Marketplace. Coming up. The algorithm was telling her, hey, it's time to have another one. All right, look, do not listen to everything the algorithm says, okay? First, though, let's do the numbers. Down Dustra is up 90 points today, 2 tenths of 1% 51,000, 260. The NASDAQ picked up 286 points, about 1%. 27,477.

The S&P 500 gained 51 points, 2 thirds of 1%. 7773. Brent Crude slid nearly 2% on the day to hover right around $100 a barrel. National average, by the buy for a gallon of regular gas, $4.36. That's a good herning to AAA down 11 cents from one week ago. Bonds down yield on the 10-year T-note. 5.31%. I'm telling you, peeps. You're listening to Marketplace. This is Marketplace. I'm Kai Risdahl. A gallon of diesel fuel right now? $6.32 on average,

says AAA. And that is changing the mileage math for truckers and delivery companies that are driving diesel-powered vehicles. FedEx has just ordered 2,000 all-electric trucks expected to be delivered by the end of next year. California has committed a billion dollars to electric truck rebate through 2030 and, you know, grain of salt because it's Tesla. But the company has just started mass production of a semi-truck that it says will be able to go 500 miles on one charge. Add all of that up, an electric trucking is starting to look like more of a thing. Marketplace's Henriette reports. Harbinger Motors makes electric versions of those box trucks that FedEx and UPS use. Ever since diesel prices started climbing, CEO John Harris says the size of customers' orders has been increasing.

People that we were talking to about 100, now they want us to quote 500. Now they want us to quote 1,000. There's not a lot of price transparency in this market, but electric trucks are generally more expensive than diesel versions for the truck itself and the charging infrastructure. On the other hand, electrons right now are a lot cheaper than diesel. And trucking companies are noticing, says Elaine Buckberg with Harvard's Salada Inc. Institute. I think that's going to make them think a lot more about that trade-off between the upfront cost of the truck and the savings they get over the life of the truck. The high cost of diesel comes at a good moment for electric trucking, says Lauren McDonald,

chief analyst at Chargeonomics. New models can go farther on a charge, and states, including California, are offering incentives. That's what you've been seeing a lot of these big announcements because the companies want to get in there and get those grants before they run out. The party could slow down if incentives run dry and diesel prices fall, but one factor could keep it going, says Craig Siegel, an advisor with the Federation of American Scientists, more predictable financing from lenders. They haven't ridden a lot of these loans. So you don't know quite how much to charge. You're getting a premium on your credit. As banks get more familiar with writing loans for electric trucks, Siegel says it could get a lot easier for trucking companies to switch. I'm Henry App for Marketplace.

It's reasonably easy. most of the time to ignore the ads, the algorithms serve you online. Unless, you know, just for instance, you haven't slept in a week and you're willing to buy almost anything to get your new baby to just go to sleep. Baby products are a nearly $60 billion a year industry in this economy. Its favorite customers, of course, are sleep-deprived parents. Chabelli Carrizana wrote about the baby algorithm for the 19th. Welcome to the program.

It's good to have you on. Thanks for having me. So look, parenting is hard enough. Mothering specifically is hard enough. And now there's this digital online baby industrial complex that's making it even nightmarish, right? You know, and it's really intense. I started writing this story because I've experienced it when I had my son a couple years ago. And then me and my editor, who also has a little daughter, we were sort of,

realizing that we had gone through the same thing, seen the onslaught of ads, scrolled our phones at 2 in the morning with the fussy baby trying to figure out, did I buy the wrong thing? And then when we started talking to other moms, it felt like a lot of us had the same experience. Especially with your first child,

the feeling is if I screw this up, this kid's going to be ruined forever, right? So there's that pressure too. And the companies know it, by the way. It's most intense for first-time parents, I think, because think about a first-time parent, as a consumer, you don't have any brand loyalty yet, right? You've never bought baby products. And you're much more likely to impulse buy for your kid than you are for yourself, right? And so

that's where all of this sort of comes to a head. Also, scale, by the way, I was astonished to read in this piece, although I suppose it shouldn't surprise me. The United States accounts for something like 10% of all baby product revenue, even though we've only got 4% of the population? Only China has more. And of course, they have a much larger population. So if you think about it in terms of a share. It's really different here than it is in other countries. And, you know, and we talk about it in the piece. I think part of that is lack of structural support, right? It's, you know, one of the questions I asked myself reporting this was why did the U.S. do this in a way that other places didn't. Well, so let's keep going with that. It's critical to emphasize here that we're the only

industrialized economy with no paid parental leave. Yet, no federal paid parental leave policy. The states have moved forward on it, some of them. But we don't have a national policy and that makes a world of a difference. And when you have less time, when you are going back to work seven weeks is the average, going back to work within seven weeks for a long. Seven weeks. Think about that. That's crazy. Right. A two month old is not sleeping through the night. A two month old is probably not just not have a steady schedule. Right. Right. So, you know, if you want a life that's not a 24-hour circus, you need to lean on something to give you some stability so that you can return to work. That's where the product step in. That is why I paid

leave is sort of an important part of the story because that is what makes the U.S. singular from pretty much every other comfortable nation. Yeah. We are, of course, a digital online economy now. Back when my kids were little, there was literally there was Babies Are Us and you would go and do it at Babies Are Us. And now it's all on the phone, right? It's all on your mobile. It's Babies R Us. It's bye-bye baby. We went to all those, which are gone now, but we went to a Prego Expo. I saw that Prego Expo. Oh, my goodness. When we were reporting this story.

And it was all these parents were clamoring to see these products in person because we've lost that sort of tactile experience. And so we rely so much more heavily online. We all know that companies know a boatload about us. It gets really personal, really fast when you get into maternal information. I mean, they can tell you when your due date is for crying out loud. They can figure it out. And I mean, we are volunteering that information, right?

You're putting it into a due date calendar online and spitting out a date. And now that information is sold. And we know that it's sold. We know these companies are selling it. And then you're getting targeted ads and not just targeted, but targeted to the stage in pregnancy that you're at. So one of my colleagues said that about a year and a half after she had her daughter, she started getting ads for baby things again because the algorithm was telling her, hey, it's time to have another one. Oh, my goodness. Just on the way out here.

Your kid's going to be fine, right? I mean, no matter what you buy, your kid's going to be fine, right? That's the thing that really gave me a little bit of relief working on this story, talking to experts about it. They said, it doesn't really matter that much, you know, if you bought the $50 swaddle or the $30 swaddle or that is not the thing that makes the difference. Do you have a safe home? Do you have a loving environment?

Do you have enough to eat? Those are the things that really make a difference. And the kids are going to be all right, and that's because we care, not because we bought the right swaddle. Can't buy that. There you go. Chabelli Carrazana at the 19. She covers the economy and child care.

Sheveli, thanks a lot. I appreciate your time. Thank you. This final note on the way out today, I'll be quick because we're a little jammed on time, a reminder that we are actually in a truly global economy. Long-time listeners might remember the Eurozone debt crisis of a decade or so ago. Greece and southern Europe, most particularly. Well, it turns out what's past really is prologue, but it is France this time,

whose debt levels and political gridlock are driving the U.S. euro down against the dollar and raising fears that we are going to do it all over again. Amir Babawi and Caitlin as John Gordon and Noia Carr, Steve Mullis, and Stephanie Seek are the marketplace editing staff. Kelly Silvera is the news director, and I'm Kai Risdahl. We will see you tomorrow, everybody. This is APM.