Marketplace - February inflation data shows more of the same

Episode Date: April 9, 2026

The personal consumption expenditures report, which is the Fed’s preferred measure of inflation, showed costs rose 2.8% year-over-year in Feburary. That’s above the target, but never fear: Resilient consumers keep on spending, despite rising prices. What’ll it take to shake things up? Also in this episode: A war-driven plastic shortage costs U.S. manufacturers, we give that GDP revision some context, and Kai visits a nuclear reactor.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.

On the program today, what we can learn about where this economy might be going by looking where it's been. From American public media, this is Marketplace. In Los Angeles, I'm Kyle. Rizzdall. It is Thursday, today, April the 9th. It is always to have you along everybody. The news of the American economy comes to us today in the form of six simple letters, G, D, and P, and P, C, and E. In layman's terms, that's gross domestic product and personal consumption expenditures, key measures of economic growth and price growth, inflation, that is. And I am sorry to have to tell you that the indicator arrows are kind of going the wrong way. Catherine Ann Edwards is a labor economist, also the host of the Optimist Economy podcast.

Catherine Ann, welcome back to the program. It's good to have you on. Thank you again for having me. All right, so let's take it in order. GDP, we learned this morning in the fourth quarter of last year, for economic growth, one half of one percent annualized, discussed.

What do you make of that? It reflects primarily the longest government shutdown in U.S. history, which shaved a considerable amount of growth off of our economy. Do I detect you not being as concerned, perhaps, as others might be? It comes on the heels of a lot of bad news. This 2025 was the weakest year of job growth outside of a recession that we've seen this century. We shed jobs in four of the months of that year.

We barely added 156,000 total for the year 2025. So I think I'm, there are reasons why it was bad, why it was bad that we can maybe wave away, but we can't wave away all of the other bad news in our economy. So yes, the shutdown was a big component of it, but we still have overreasonry. all economic weakness. We're not seeing strength in every quarter except for this one. Okay. The next one, PCE, personal consumption expenditures index, as I am required to say by law, it is the Fed's favorite indicator of inflation. Month on month, up four-tenths of one percent is a lot, right? The annual number, which we'll get to in a minute with Dan Ackerman, was three percent,

which is, you know, okay. But monthly, it does, the pace of increase does seem to be increasing. Yes, it's a very worrying trend, especially considering that that report does not reflect the world since the war in Iran began. So that's a February print. It's not looking at, and the war started right at the end of February. So it's not taking into account anything that's happened to say oil prices since then. So it's an indicator that our prices were already running a little too hot before all of this happened. I'm going to roll out a word here and I want your like, you know, 15 second reaction. We have slowing economic growth and rising inflation. Stagflation anywhere on your radar screen? Absolutely. In a horrible way, right?

Not in a good way. But this time around, it's worth noting that while there are echoes to the late 1970s, we have a much better fit. We, you know, back in the 1970s, we didn't have a target inflation. They had been wishwashing on interest rates for half of a decade, and they had not signaled that they took inflation seriously, which is one of the reasons why it got out of hand. By the Fed's own historical admission, which you could read on their website, we are in a much better position this time because we have a Fed that is clearly kept aside in the ball. You can come under the worst public fire a federal reserve chairman has ever come under and not blink if you don't take inflation seriously. Fair enough. You had a piece the other day.

We passed around in our production team Slack Channel. in which you said you're not all that worried about a recession right now because not enough bad things have happened, right, acknowledging that a recession is a systemic thing. But I guess how much more bad do we need, you know? I mean, I mean, it feels like we've been through enough. I guess maybe the way that I was, what I was trying to convey was that there are bad things happening in our economy that are relatively contained to a small amount of people. The unemployment rate right now is low, but the

share of people who have been unemployed six months or longer is rising. It's higher now than it was for many recessions in our history. This is the first time it's ever risen outside of a recession. So it's a localized pain that the economy hasn't gotten bad enough for enough people for a recession to be declared. But the point of the piece was to really point out whether you need the title of recession for that pain to matter more. And unfortunately, I think we do.

Yeah. That sadly, we'll have to be a conversation for another day because we got to go. Catherine Ann Edwards, she's the host of the Optimist Economy podcast. You ought to check it out. Thanks for your time. Thank you for having me. In stocks today, the relief rally continued, tenuous, though the ceasefire does appear to be. Oil traders seem a bit more clear-eyed.

We'll have the details when we do the numbers. The truth of it is, whatever they. headlines or saying about a ceasefire or whether the Strait of Hormuz is opened or closed. Spoiler alert, it's closed. The petroleum price shock we are currently enjoying is going to last for a while, months, easy. And while straight up oil and gas are the primary players, of course, so much more passes through the straight that is critical for the way this and the global economy work. Just one word. Plastics. Here's Marketplace's Elizabeth Trowball. Giant machines are spread across a gray manufacturing floor here at Texas injection molding in southeast Houston, where plastic is heated and molded into all sorts of random widgets. Jeff Applegate founded the company.

The plastic pellets are coming in, they're feeding into the screw and barrel. On the floor today, the machines are making things like medical grade containers for syringes and bait buckets for exterminators. Applegate walks me through how a red. plastic sign is made. And you're going to see this is the screw advancing forward. That's squirting the plastic into the mold. And so now it is complete. The mold is filled. What it's doing, circulating about 55-degree water to chill the park. They're ready to come out. The robot will come in and will pick the parts out of there. Next, we walk into a room filled with giant containers of different types of the plastic pellets he uses. Some are made

from crude oil, some from natural gas. When you think of a commodity plastic, say what your frisbee's made out of or whatever, this is polyethylene. I stick my hand in and grab a fist of polyethylene beads. Plastics like this are in tighter supply around the world and are getting more and more expensive. If the price was, say, 75 cents, you know, we're seeing 10 to 20 cents per pound increases on some of those. So it's a pretty significant percentage. Plastics make up roughly. half of his input costs. He says they use about 8 million pounds of it each year.

The largest input costs to the manufacturing process is the material. And so when your material goes up 10 or 15 percent, it puts a real squeeze on you really quick. Around the world, commodity-grade plastic prices are up, says Al Greenwood, who covers plastics and petrochemicals for ICIS. Polyethylene and polypropylene, those are used in packaging. U.S. contract prices. or March rose by nearly 20%. If you look at plastic used in beverage bottles, nearly 15%. Part of the increase has to do with the rising cost of oil and natural gas around the world. And?

The Middle East is a big producer of plastics and chemicals. And those plants are on the wrong side of the straits. So when all of a sudden, 25% of the plastic exports aren't available to global markets, you have the same amount of demand competing for a smaller piece of the pie. Plastic and petrochemical price hikes are especially hitting sectors like food and beverage, packaging, and pharmaceutical manufacturing, says Tony Bennett, with the Texas Association of Manufacturers. If it goes for an entire quarter, three months, then you're going to see, you know, significant slowing of the economy and consumers being very skittish. and businesses backing off and how many widgets they put out on the truck for delivery. He says some costs could get passed on.

Some may have to be absorbed by manufacturers to not lose customers in the long term. So it's tricky. It's very tricky. Back at Texas injection molding, Jeff Applegate is navigating that trickiness. If there's an increase in raw material cost and we've got to pass that on, They also have to prepare and have to have time to be able to work with their customers. He says the industry is bracing for supply cost increases and figuring out how to keep their business going. In Houston, Texas, I'm Elizabeth Troval for Marketplace. As Catherine Ann Edwards and I were talking about just a couple of minutes ago,

the Bureau of Economic Analysis released the February PCE this morning, not great as we. said. The headline number I mentioned for 10% increase month on month, 2.8% year over year. You strip out those always volatile food and energy prices. The annual increase isn't even 3% for the core, which comes as disposable income ticked down. And yet, consumers were still somehow spending money in this economy. Daniel Ackerman has our consumer check-in. Stop me if you've heard this one before. The American consumer has been remarkably resilient, given a whole set of incredible shocks that have occurred over the last year. Randy Krosner at the University of Chicago says today's report suggests that resilience has continued, at least through February. The consumer is sort of moving along, not strongly, not weakly, continuing to buy goods.

Vehicle sales, for one, rose in February, but the uptick in spending was largely a product of higher prices, not household-finding. financial strength, says Tuan Nguyen, an economist with RSM. The short story is consumers are starting to feel the squeeze. Personal savings were down in February as disposable income fell, though Nguyen says that could be a blip. Some of that was just the weather. February was cold and stormy for the East Coast, which may have hurt hiring. Nguen says there could be a bounce back in March. And speaking of the labor market, unemployment rates are still low by historical standards. Sean Snaf at the University of Central Florida says that's a key indicator. The foundation, the cornerstone of consumer behavior is the labor market.

But even if consumers are able to keep their jobs, those paychecks may not go as far in the months ahead. Nancy Vandenhouten, with Oxford Economics, reminds us that today's PCE report covers the month just before the war in Iran. We're expecting some pretty nasty-looking, you know, inflation reports for March and probably April. as well. She says those price increases will pop up in the March consumer price index, which comes out tomorrow morning. I'm Daniel Ackerman for Marketplace. I know it seems like longer ago than this, but it was a mere six or so weeks ago that the average rate on a 30-year fixed-rate mortgage dipped below 6% for the first time in years, 5.98%, if you're curious. And then, well, you know what then? The mortgage market reacted accordingly, one manifestation of which is that the number of

mortgage applications have gotten whacked as have, say the good people at Redfin, pending home sales overall. So we asked Marketplaces Carla Javier to call some real estate agents around the country to see how all of this is playing out. Denise Moore with Bradford Real Estate in Nashville prefers working with home buyers. But this spring, fewer of them are ready to make a purchase. I still have the conversation, so it's not like they don't have the interest and they're not still anticipating jumping in and making a real estate purchase. They're just slower to make that decision. So while she's less busy with showings and listings, she's spending more time on marketing,

education, meeting with clients. To generate business and to make sure I'm ready when the market does stabilize. In Miami, where the Redfin data say pending sales are up year over year, Joanna Jimenez of the Opus group at Compass says, The single-family home market, the spring has been, you know, the best spring we've had in probably the last two, three years. She says she's noticed buyers who had been on pause are coming back out, and some might not be worried about higher mortgage interest rates.

If you go to some neighborhoods, it's 50% of the transactions are cash. Some neighborhoods is as low as 25%, and some are even as high as 70%. In the greater Seattle area, Michael Orbino of Team Foster at Compass says the mortgage interest rates aren't discouraging buyers altogether, but those buyers are getting choosier. All of a sudden, the tolerance for road noise, the tolerance for a poor floor plan,

the tolerance for an outdated kitchen goes down. Because they think, like, look, if I'm going to pay top dollar and have what I perceive as a high interest rate, I want the best of the best. He says buyers who used to look at 10 to 15, houses now want to see 25 to 30, which means that he and his team are working seven days a week, twice as much effort to maintain their typical volume. I'm Carla Javier for Marketplace. Coming up, we care what the weather is. We don't have control over it. It's an energy story,

actually. But first, sure, why not? Let's do the numbers. Dow Industrial is up 275. Today's 6 tenths percent, 48, 185. The NASDAQ added 187 points, 8 tenths percent, 22. 22,822. The S&P 500 lifted 41.610 percent, 68 and 24. What are traders thinking, you ask? I don't know. I don't know. Bonds up, yield on the 10-year T-note down 4.28%. You're listening to Marketplace. This is Marketplace. I'm Kai Risdahl. We've been talking about energy prices a lot of late, the world of oil, specifically, as the day-to-day volatility thereof. is front and center. But if we pull back a bit to well before this war and its energy shock, a completely different slice of our energy economy has been enjoying something of a comeback. That's why, earlier this week, I found myself at a low-rise warehouse-style office building in El Segundo,

California, right near LAX. Hello. Doug, we're an hour. Hey, Doug, Kyle. Nice to see you. How are you? Hi. Nice to see you. Nuclear energy is the topic de jour.

Billions of dollars in investment are going into companies. companies in this industry that are developing new nuclear technology that's in super high demand in no small part because of AI and data centers and the ever-increasing amount of power this economy is going to need. Tell us who you are and where we are. Yeah, I'm Doug Bernauer. I'm the CEO of Radiant. We're in El Segundo in our headquarters facility. We've been here about two years. We're working on building nuclear reactors that you can actually make in a factory. Most nuclear reactors aren't made this way, nor is our economy using a enough of them for them to be built and sold at scale.

Yet. The 150-ish people who work here at Radiant, engineers of all kinds for the most part, are trying to change that. Describe for me the thing you are trying to be. You are going to build. Sorry. You're going to build it. Yeah. So we're building a, for our first reactor, which is a, it's a one megawatt electric generator.

Layperson's terms, what does that mean, one megawatt? One megawatt. It's enough power for about a thousand homes. Okay. All right. So you're building one of those? Yeah. And in a couple of months, we'll have it finished being built here.

It'll ship out to Idaho National Laboratory, and then we'll turn on a nuclear reactor there. Idaho National Laboratory is part of the Department of Energy. It's been involved with nuclear research for decades now. Radiance microreactor was selected by the federal government for testing there, where it'll be put through its paces to make sure it works the way Doug and his team are hoping. The one-migawatt reactor you're building, what are you going to do with it? Why are you building it?

Yeah. I'm really excited, actually. Normally to build a reactor, you dig a really big hole in the ground, and you take maybe a decade. You know, it's five to 15 years. It sort of depends who... And a couple of gazillion dollars. Yeah, yeah, absolutely.

And sometimes two or three times as many gazillion as you thought. Right, right, right. And so we're not doing anything like that. So that's about a thousand times larger also, right? A reactor, that size is power for a million homes. Right. That's the grid scale, right? Is that the deal?

Exactly. Yeah. And at grid scale, your challenge is to compete with the lowest cost electricity, with solar, with natural gas, with all these other power sources going onto the grid. And what we're doing is making this reactor you can make in a factory, which means you can move it somewhere. And so our customers are those who want to operate it at the hospital or a military base or a data center somewhere. And the grid isn't there yet. Right. Or is not reliable enough.

Show me stuff. What do you have to show me? There's a whole bunch of stuff. I think, let's just do what's in front of us. Yeah, yeah. So this is actually nuclear-grade graphite. I am not going to get into the science. Trust me, you do not want that.

Doug did tell me that that graphite is eventually going to surround the reactor core. We have this, the upper dome of the pressure vessel here. It's about seven feet in diameter, small in the world of nuclear. But what they're building here is designed to fit in a shipping container. So obviously, oil and energy costs right now because of the news are a big, deal. I guess I do wonder where your geopolitical sensitivities are, right? What's your, tolerance level, right? Because the more expensive oil gets, the better this thing becomes. It is true. Right? Yeah. I mean, you think about that. You must.

Certainly. I mean, we care what the weather is. We don't have control over it. For some of our customers, just the volatility of those things is a selling point, right? The fact that oil can suddenly spike. If you had bought a reactor, for our system, it lasts about five years. so you're buying a five years of stable, known energy costs. So let's say I'm on a farm in Iowa or I'm a software developer in San Francisco or whatever, just a random person in this economy. Make me care about this. Do I need to?

Yeah, I think you do. Because honestly, people are going to say, oh, my God, nuclear reactors right next to my farm at this data center and, you know? Yeah. I mean, possibly. The thing is that I don't need to sell a huge number of these and make them go everywhere. It's really for people who need it, who want to have a hospital that when the grid goes out, they don't have a room filled with 12 diesel generators that they're going to just pump a bunch of exhaust fumes out into the environment with. This is a way to do power. And, you know, all of the nuclear material, all the uranium, we didn't make it.

It's all here. It's on Earth. It's completely natural. It's under your feet. If you don't use it, it actually just decays away. within the earth. When it does that, it produces radon gas that goes into people's basements. So not using the nuclear fuel that's here is about as foolish as not holding up a solar panel when the sun is shining. It's free energy. It's right there.

I get all that. But here we get back to the people screaming at me on the radio saying, Kai, come on, nuclear. Right? Well, I think that there's this association with nuclear weapons and nuclear energy. I think there's an association with three miles. Island and Fukushima and that's what people are worried about. And I don't want to go down to the nuclear catastrophe thing, right? Because look, you guys are working on the safety thing and I appreciate that. But, you know, if this is part of the energy future, I think people have to understand what's going on. Sure. For a large reactor, typically a utility chooses to build that. The utility is a public service,

right? The utility has to get approval from the citizens who are going to have to increase. the fees that they're paying. This product doesn't do that. So we sell to businesses. We sell commercially. A data center company, Equinix, could buy a reactor, set it down somewhere, use it for clean power. You're not going to feel it in your pocket directly like you will if some utility chooses to build. Hopefully, if Equinix buys one of these things, it's not going to send electricity rates through the roof, right? I mean, the big thing with data centers now is, oh my God, electricity bills are going up. Yeah. It wouldn't. What it would do is it would offset their need to diesel generators. There are these rooms filled with diesel generators that are sitting and waiting

to be used. So this is really what it would replace. It would replace this thing that people don't really see, but they do breathe the emissions from it. I should say here that Equinix, the data center company we were talking about, has already pre-ordered 20 of Radiance Microreactors. Radiance also got a deal with the Defense Innovation Unit and the Air Force to deliver one of its microreactors to an American military base. You know, you've got some military. contracts are ready. You're working that way. The Trump administration is very pro-nuclear. It doesn't

care much for green energy, but nuclear, right, he's all on board. How important is government involvement and government, if not backing, then certainly support to this project? Yeah, government support is extremely important. It has been and will be always, I think, for nuclear. We're using an enrichment level that's

about a 20% enrichment level. And so we rely on the government to help get us fuel from stockpiles. That's maybe the most important thing. The other is that there's a dome facility at Idaho National Lab. So it's a great big 80-foot diameter dome that we can insert the reactor into and then close it all up from the outside. And then run your test.

Yeah, and it's actually a sealed environment, and there are these filters so that you can see if there's anything radioactive released at all. Right, right. So it's really great because fuel and the testing facilities are the two most important. All right. All right. Well, you want to head to the factory floor? Yeah, sorry, I'm just looking at that whiteboard with all kinds of weird

calculations on it, man. That's a, looks like heat flux from the core. Yes, that's what it looks like. Uh-huh. Sure. I'm a history in Pliockeye got, man. July-ish is when Doug and his team are shooting to have their microreactor in Idaho for testing, and then commercial production as soon as they can after that. This final note on the way out today, you know how the president and his administration keeps saying we're not going to be affected by the closure of the state of Hormuz because we pump so much oil here? Well, it is, true that we do pump a lot of oil. It is also true, though, that oil trades globally, which is why this item in the Financial Times caught my eye. Data from the commodities research firm Kepler

showing U.S. crude exports are set to hit an all-time high this month as mostly Asian countries scramble for supplies to replace what is locked in the Gulf. There is one Kepler analyst said, and this is a quote, an armada of empty oil tankers headed our way. Our daily production team includes Livy Burdette, Andy Corbin, Maria Hollenhorst, Sarah Leeson, Sean McHenry, Michaela Seah, and Sophia Terrenzio. Will Story is the supervising senior producer, and I'm Kai Rizzo. We will see you tomorrow, everybody. This is APM. I'm Maggie Smith, host of the slowdown, where each morning I invite you to step away from your to-do list and spend a few minutes with a moment of reflection and a poem, from both beloved and emerging voices.

Make it part of your morning ritual, on a walk, over breakfast, or while you get ready for the day. It's a daily moment of pause in a world that never stops moving. Find the slowdown, wherever you listen to podcasts.