Marketplace - Consumer confidence has been taxed

Episode Date: December 23, 2024

Consumer confidence, as assessed by The Conference Board, grew steadily the past few months. But in December, the index fell 7%. One likely driver? Agita over President-elect Donald Trump’s tariff proposal. Also in this episode: The Senate passes a pricey bill to fix a decades-old Social Security issue, President Joe Biden announces an investigation into China’s trade practices for chips, and we check in with an Asheville business recovering from Hurricane Helene.

Hey everybody, it's Kai. Time is running out to give a tax deductible donation to Marketplace before the end of the year. Donate today to support the public service journalism that you rely on. Every donation and every dollar helps us plan for the new year ahead. Go to Marketplace.org slash donate and invest in news you value and trust. That's Marketplace.org slash donate, or you can follow the link in the show notes. The federal government's been busy in the final days of 2024.

We'll take a look at what some recent actions from the White House and Congress mean for the economy. From American public media, this is Marketplace. In Baltimore, I'm Amy Scott in for Kai Rizdal. It's Monday, December 23rd. Good to have you with us. A new front has opened up in the chip wars. The Biden administration announced today it's investigating alleged unfair trade practices by China, not related to the high-end chips that power AI and seem to get all the attention these days, but the older everyday computer chips found in cars, household appliances, and medical devices. Marketplace's Sabri Benishor gets us started with a look at why China's investment in these so-called legacy

chips has U.S. officials concerned. When the Chinese government invested hundreds of billions of dollars in solar manufacturing in China, solar manufacturing in many other countries was nearly wiped out. It invested hundreds of billions in shipbuilding, and U.S. shipbuilding was almost erased. Now, the Biden administration says, the same is about to happen with traditional computer chips. Over the past decade, the Chinese government has been pouring many billions of dollars each year

into its semiconductor industry. Chris Miller is a professor at Tufts and author of Chip War. He says the Chinese government has given out subsidized loans and grants, even buying up shares of Chinese chipmakers. It's letting Chinese firms sell chips well below market prices. And this is giving them the opportunity to grow their market share at the expense of

Western firms. To the extent, he says, that some U.S. chipmakers are becoming hesitant to invest in their own new capacity for fear that artificially pumped up Chinese competition might make such investment pointless. I'm actually not convinced that that level of risk actually exists for the bulk of these older generation semiconductors. Stacey Raskon is a managing director at Bernstein Research. He says low prices might not be enough for Chinese production to be a global threat.

Price can be a factor, certainly, in your purchase decision, but it's not nearly the only factor. The Biden administration's investigation would open the door to tariffs on chips, which the US doesn't actually import many of, and on anything that has Chinese chips in it, from refrigerators to cars, which the US does import a lot of. That has Jason Oxman concerned. He's president of the ITI, a global technology trade association. Jason Oxman, ITI Director, Global Technology Trade Association

Clearly, global supply chains are at risk. In an escalating trade war between China and the U.S., nobody wins. For its part, China's Ministry of Commerce told Marketplace the investigation was protectionist and pointed to multi-billion dollar American subsidies for U.S.-based chip manufacturing. It said it would take all necessary measures to protect its interests. In New York, I'm Sabri Benishor for Marketplace. Wall Street was in a festive mood on this Christmas Eve Eve. We'll have the details when we do the numbers. The

Appropriations Bill President Biden signed over the weekend, keeping the government running until mid-March, includes $100 billion in disaster aid for communities recovering from recent storms. That was welcome news for business owners in Asheville, North Carolina, who've been waiting on low-interest loans from the Small Business Administration. One such business owner is Jesse Dean whose Asheville Tea Company was wiped out by Hurricane Helene back in September. We checked back in the other day to hear how recovery efforts are going so far. Jesse, good to talk with you again. Hi Amy, it's so nice to talk to you again. Thank you for having me. Well, first of all,

how are you doing? Well, I'm doing okay. I think overall, there's very much a situation of duality here where we've had a lot of wins and a lot of progress and also still a long road to travel. So lot of progress and also still a long road to travel. So I'm feeling good overall, definitely making progress and still dealing with quite a bit as well. Yeah, I'm sure. So the last time we spoke, you said you were hoping to start selling tea again in time for the holidays. Any updates on that front? Yes. I mean, that's one of the good news pieces and really exciting pieces is that we launched pre-sales of our tea just before Thanksgiving. And we sold out of our holiday trio of teas, which is amazing.

We've had a lot of support. Wow. Yeah. And we still have pre-sales up for many other tea blends that we're able to produce that still feature ingredients from our local farmers. And yeah, we expect our tea to start shipping out to customers within about a week. That's great news. I mean, is it anything close to what you would have done this time of year before, Helene,

or is it a lot less? Helene Lennon It is a lot less than we would have usually done this time of year. Yeah. So, you know, that duality is there too. There's a ton of support and, you know, kind messages and purchases of our products and things like that. And at the same time, yeah, I mean, we've lost well over half of the revenue that we would have typically

seen this time of year. We're definitely not the only ones in that position here either. Hostie So you mentioned there have been a lot of challenges as well. What have been some of the obstacles to getting back up and running. Right. I mean, I think for us, it's a lot. I mean, I think just the personal side of things is really difficult. On one hand, downtown Asheville is starting to see visitors again, and this is wonderful. We need that so much.

And then at the same time, when we're running around town ourselves, holiday shopping or running errands or going to work or whatever, you know, everyone does day to day, there's still debris everywhere in parts of town as well. So, and I mean, tremendous amounts of debris and mud. And so it's personally challenging, I think, just to kind of still be living in that. And then I think for our business specifically too, it's a lack of kind of broader scale financial support. And I'm, you know, it's really getting kind of dire, I think, for so many businesses here. We're almost three months out from the storm and we still haven't received affordable loans to be able to recover our businesses. Folks

are getting pretty worried. How have you personally been able to support yourself during this time of trying to rebuild? Well, our team and I all filed for disaster unemployment pretty quickly following the storm because of the kind of obvious physical impact to our location with it completely being gone. It was pretty obvious that we all would need some help there. So we have all been on disaster unemployment, but we're definitely anxious to get our team back on board and start payroll

up in the new year as soon as we can. So I got to say, Jesse, you do sound down or maybe worn out. I mean, how are you holding up? Oh, thanks. I well, I think it's both. I think that that's true. I've been working so hard and so has our team, members of our team behind the scenes just to try to just get stabilized a little bit as far as getting the business back off the ground, getting some team-made, understanding our payroll timeline and those kinds of things. And so it's been a lot of work. And I think I am a little exhausted, to be fair. But I do still feel really grateful though, too. I mean, I feel like I'm working hard to stay optimistic. And I do feel still really hopeful

for the future of Asheville Tea Company and the future of Asheville and Western North Carolina too. So we got to talk about some tea. I understand that the Christmas blend is sold out, so apologies to any listeners who want it, but tell me about it. What's in it? Oh, thanks. Well, that's one of my favorite topics is the tea. Yeah, so we have three blends that are in that box and it's the spiced apple butter, which apple butter is like a spiced apple jam that's produced here in Western North Carolina. So it's based on that. And then the snow day, which is inspired by a hot chocolate, so it features locally roasted

cacao. And then the Winter Wonderland is the third holiday blend that has actual Frasier fir in it, which is a native Western North Carolina plant. So that one's very cozy. All right. Jesse Dean is owner of Asheville Tea Company. Thanks so much for coming back on the show. Thanks so much for having me, Amy.

It's such a pleasure. Economic indicators are a little sparse in the final days of the year, but we did get one update this morning on consumer confidence, which had been rising in recent months and was expected to rise again. But today the conference board said its consumer confidence index actually fell in December by about 7%. Marketplace's Kaylee Wells has more on why and what that means for the engine that's been keeping this economy going. Consumers aren't necessarily feeling bad about the economy. What's important here is they

feel worse than last month. It is pretty notable, especially after several months of improvement and then in one month we have a big dip down. Dana M. Peterson is chief economist with the Conference Board, which releases the index. She says the consumers in the survey also note which factors they think are most impacting the economy. For the past few months, consumers continue to point to elections, president, White House, and also there was a spike in the number noting tariffs. Tariffs, something that almost no respondents mentioned in recent months. That could be partly why in December inflation actually beat out politics on the list of influencers. Consumers are

expecting that the impact on their costs will be higher. Kayla Brune is the lead economist at Morning Consult. And she says even if prices aren't rising that fast anymore, everyone's still annoyed with the fact that most prices have stayed high. I think it's something consumers are very primed to be upset about, very sensitive to anything that's going to add inflation risk. And there is one demographic that seems to be most upset, says Michael Green. He's chief strategist at Simplify Asset Management. Basically, the older you were, the less confident you became in this environment.

Green says that's significant because typically the 55 and older crowd is more confident about the economy than less financially stable younger people. Now I'm suddenly looking at a situation as an older person where my income is starting to be cut by the Federal Reserve cutting interest rates. And now that those interest rates are falling, older people who rely on interest from retirement savings are most likely to bring that confidence number down. I'm Kaylee Wells for Marketplace. Coming up... Despite our 9, 930 opening, many of them were here at 4 o'clock this morning. Whatever it takes.

But first, let's do the numbers. The Dow Jones Industrial Average picked up 66 points, two-tenths percent, to end at 42,906. The Nasdaq gained 192 points, one percent, to close at 19,764. And the S&P 500 rose 43 points, seven-tenths percent, to finish at 59.74. Retail giant Walmart dipped two percent after the Consumer Financial Protection Bureau said it was suing the company for forcing its drivers to open costly deposit accounts in order to get paid. Walmart has denied the accusations. Nordstrom dropped 1.5%. The department store announced it would become a private company that will be bought by its founding family. And Mexican department chain El Puerto de Liverpool in a deal worth about six and a quarter billion dollars.

Bond prices fell. The yield on the 10-year T-note rose to 4.59 percent. You're listening to Marketplace. This is Marketplace. I'm Amy Scott. Over the weekend, Congress not only avoided a government shutdown with that last-minute deal to fund the government for another few months. In a rare show of bipartisanship, the Senate also passed something called the Social Security Fairness Act. By a vote of

76 to 20, the House approved its version of the bill last month. The Act addresses an issue faced by about three million former state and local government workers, including teachers, firefighters, and police. They've been receiving reduced Social Security retirement and survivor benefits because they also get separate government pensions. The fix will restore full benefits. And as Marketplace's Mitchell Hartman reports, it'll also cost the Social Security system a whole lot of money. Those three million former state and local government workers get reduced Social Security

benefits alongside their government pensions under a cost-saving reform enacted during the Reagan administration, says Daniel Horowitz at the American Federation of Government Employees. So even if you've paid into both systems, under current law, you stand to lose most of your Social Security benefits. Fortunately, Congress has finally righted this and people will get their full Social Security benefits. But Social Security is progressive, meaning lower-income workers get relatively higher benefits in retirement. Some state and local government workers look like low earners because they aren't required

to pay much into the system, which means they can then end up with bigger Social Security checks. Congress tried to fix this 40 years ago, says Alicia Munnell at the Boston College Center for Retirement Research, but it ended up reducing benefits too much for some retirees, not enough for others. So, the fury of state and local workers persuaded Congress that they should eliminate the provision altogether. It's a step backwards. We should have fixed it, not eliminated it.

So now, some retired government workers will again get outsized Social Security checks, says Maya McGuinness at the Committee for a Responsible Federal Budget. And Congress, she says, created a very expensive benefit, about $200 billion, did not pay for it, leading to the program becoming insolvent even sooner than it already is going to be. About six months sooner, she says, meaning Congress will have to either cut benefits or raise Social Security revenues in eight and a half to nine years. I'm Mitchell Hartman for Marketplace. We talked earlier about how consumers are feeling during this holiday shopping season. It's also a time when many people give money to nonprofits and volunteer their time. That volunteering is worth a lot

to the economy. Nearly 168 billion dollars last year, according to a recent survey from the Census Bureau and AmeriCorps. That same survey also found that volunteering is growing again after a big drop off during the height of the pandemic. More than 75 million people volunteered with a nonprofit last year, up from just over 60 million in 2021. Marketplace's Samantha Fields has more. Hundreds of people are lined up outside on this freezing December morning to get free fruits and vegetables from a mobile food pantry in the Sunset Park neighborhood of Brooklyn. So many that the line stretches down one block, around the corner, and down another, and never seems to get shorter.

Despite our nine, nine-thirty opening, many of them were here at four o'clock this morning. Thomas Chen is a volunteer with City Harvest, a nonprofit that runs this mobile food market here twice a month. He and about two dozen other volunteers are passing out bright red net bags packed with fresh oranges, pineapples, carrots, and mangoes. a month. He and about two dozen other volunteers are passing out bright red net bags packed

with fresh oranges, pineapples, carrots and mangoes. Volunteers were doing great. This line has not stopped. Chen retired in early 2020 and now volunteers a few hours a day, five days a week, gardening, landscaping and collecting trash in Central Park and distributing food here with City Harvest. This is so energizing. So whenever I feel down, sick, wanting to give up on the world, this is the place that inspires me. Olivia McMahon, the Associate Director of Volunteer Programs at City Harvest, says the organization relies heavily on volunteers.

We could not handle the amount of distribution that we do. We could not repack all of distribution that we do. We could not repack all of the amazing produce into family-sized portions without our volunteers. They're really, really essential to the work that we do. About 200 people work at the nonprofit. This year, more than 14,000 have volunteered. Unfortunately, the need for food assistance in New York City is the highest on record. So our need for volunteers is really as high as ever. That's true for many nonprofits doing all kinds of work around the country, according to Michael D. Smith, CEO of AmeriCorps.

Especially coming out of the pandemic, there's an increase in demand for their services. During the height of the pandemic, there was a seven percentage point drop in Americans volunteering. So many people volunteer through their schools or community organizations where they just couldn't go anymore. Lots of nonprofits temporarily also stopped inviting volunteers to help in person in 2020 and 2021. And Smith says lots of parents who make up a big percentage of volunteers suddenly lost child care. And so the hope was this was a blip.

And once Americans returned to work and public life that we would see a rebound. And that's what AmeriCorps found is happening. Brenna Ververs at the Brooklyn Public Library says they've had more than a thousand active volunteers this year, more than before the pandemic. We have volunteers staffing the welcome desk here at Central Library.

We have volunteers stationed in branches serving as computer coaches and personalized tech help. They also have volunteers facilitating English conversation groups, both in person and online, something that's new since the pandemic. These days, Verber says every month when she runs orientation sessions for new library volunteers... I'm kind of surprised at how many more people there were than the last time we did one. Good morning.

Good morning. Thank you. You're welcome. Have a good day. City Harvest has also seen a steady increase in new volunteers over the last couple of years. Danielle Allen is one of them. She's 28 and lives in Brooklyn, and this is her first day volunteering at a mobile market. I actually signed up the day after the election. I think I was feeling a real drive to connect with my community and to help out in a tangible way. She had already been volunteering with an informal group, picking up trash once a month

in her neighborhood, but she wanted to do more. Partly because my family went to food pantries as a beneficiary of them when I was growing up, and so I have felt a real drive to give back now that I'm older and in a position to help. Walking up to the mobile market for her first volunteer shift... I was shocked to see the line wrapped around the building, even on this cold day. So it seems like there's a great need in the community. But she says it also seems like there's a great willingness to help. I'm Samantha Fields for Marketplace. I'm going to guess that at least a couple of you are hearing this as you're out running

last-minute holiday errands. I know I have a few more gifts to pick up before stores close. So as the holiday shopping season wraps up, we thought we'd check in with one of our retail regulars to hear how things have been going. Here's Ashley Morgan, owner of Unglued, a craft and handmade goods gift shop in Fargo, North Dakota. This holiday season has been interesting. We did freak out a couple weeks ago. We were down about 20% for the beginning of the holiday season, and now we're down only about 8%.

If people are like me this year, we're shopping even later than normal because the holiday season is so short. It's suddenly like you freak out and realize that Christmas is like basically tomorrow. And so I think I'm seeing that with other people as well, not just myself. I am a little bit more stressed this year than other years because I have the weight of the responsibility of having grown our team this year to make sure that the holiday season does really well so we can maintain their full-time positions basically.

We've been a shop for 13 years. This is the first year I have two other people being full-time with me along with our part-time crew and so I really need this holiday season to do well to sustain us through the slow season that's quarter one. Individual customers are spending about the same as last year with their purchases, but we hear things anecdotally a little differently. So I had a pile of things somebody was gonna buy

for themselves and they had me take all that back and they chose to only buy for their gift list. They still chose a lot of things for their gift list, but they did set aside the few things that they were going to get for themselves that were more expensive. And so I think I'm seeing that a little bit more. Because we work with local makers they are stocking us every single day and they're seeing what's sold and so that's been really cool. That's one of the

benefits of doing what we do, very mission focused, is that we work with so many local makers, and so now that a lot of their holiday shows are done, they can stock us. So last minute stocking isn't the hardest for us as a local hand-made shop. That was Ashley Morgan, owner of Unglued in Fargo, North Dakota. This final note on the way out today, if you're road tripping for the holidays in a gasoline-powered

vehicle, filling up will be a little more affordable this year. GasBuddy estimates the national average price at $3.01 per gallon, up three cents from last week but nine cents lower than this time a year ago. 32 states still have averages below three dollars a gallon. Our daily production team includes Andy Corbin, Nicholas Giong, Maria Hollenhorst, Sarah Leeson, Sean McHenry and Sophia Terenzio. I'm Amy Scott. we'll be back tomorrow.