Marketplace - Here's what kept GDP climbing last summer

Episode Date: January 22, 2026

Revised GDP data for this past summer shows the U.S. economy grew faster than we initially thought. A few key parts of the private services sector propelled that growth. In this episode, which parts of the economy are actually doing pretty well. Then: Gap leans in to “fashiontainment,” packaging costs weigh on food prices, and elderly care facilities stand to lose critical employees when TPS ends for Haitian immigrants.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.

You got your lagging economic indicators, and then you got your lagging economic indicators. From American public media. This is Marketplace. In Los Angeles, I'm Kyle Risdahl. It is Thursday, today, 22 January. Good as always to have you along, everybody. The macroeconomic news, oh, the day, is brought to us today by the letters P, C, and E, the personal consumption expenditures price index.

It is for November, mind you. So a bit delayed. Thanks. Shut down. Came in this morning at 2.8%. That is hired by just a touch from October. I'm Nina Ihacker, and I am an associate professor of economics at the University of Rhode Island. I'm Laura Veldkamp, and I'm the Cooperman Professor of Economics and Finance at Columbia

Business School. You can also just shorten that to Columbia Business School professor or Columbia a professor. Noted. Services, shelter, and food are still really expensive and they're not slowing. We also have had consistently strong demand in the past few months, you know, surprisingly strong, given everything that happened in the preceding year economically. Now, caveat and btore, because, again, November. It's not really a snapshot of what prices are doing today. It's a snapshot of what prices are doing today.

It's a snapshot of what prices were doing, you know, in October and November when, you know, when much of this data was collected. The changes are probably bigger than they look. If these are part of a trend and that trend was persisting from November to December. PCE matters to all of us, of course, because PCE matters to the Federal Reserve. measure is a little bit broader than some of the other measures of prices that sample a narrower set of goods. While the CPI might include things that are really important, it might not include everything that a household necessarily cares about. The flexibility of the PCE lets economists reflect changes in preferences. Preferences like buying chicken instead of beef because beef is so expensive right now.

The substitution effect is what economists call that. PCE coming in the way it did today by the buy that is higher makes the feds interest rate meeting next week a teeny bit more predictable by which I mean a lot more predictable. Odds of a rate cut are going way down. That said, economic growth has been going up, or at least it was, in the third quarter of last year, July through September. Thanks again, shutdown. 4.4% was the annual rate of growth in this economy back then, better than we'd initially thought, and better than the 3.4.4%. 3.8% growth in Q2. You drill down into the data as we are wanted to do around here, and you'll find one of the

big contributors to that growth is private sector services, think finance and tech and insurance. Marketplace's Stephanie Hughes is on it. Cornell trade economist Ishaar Prasad says he's one of the reasons why the tech industry is adding to GDP growth. He spends a lot of time analyzing giant data sets to understand what's happening in the financial markets. He writes computer code to do his analysis. Last year, he bought subscriptions to a couple AI services, chat GPT and Claude. Now he throws his data sets in there and has the AI write the code, or check his for errors. So it frees me up to do my work as an academic in a much better way,

and think a little more rather than spend my time working around with the data. Prasad is buying a product of the information services industry, which was the leading contributor to GDP growth in the third quarter. are now signing on to and subscribing to AI services probably is what is happening here. Another growth area, insurance. Economist Mike Scordellis at Truis says repairs for a home have gone way up in price in the last six years. And now the cost to insure a home is catching up. All the materials are more expensive. The labor is certainly more expensive. The cost of insuring it is more expensive. Another thing that happened in the third quarter, mortgage rate started to fall.

Scott Anderson, the chief U.S. economist for BMO capital markets, says that led more people to refinance their homes. Consumers wanted to take advantage of the lower mortgage rates to refinance and tap some of that equity in their homes. This was a win for the financial services industry, which also contributed to growth. Also, Mike Scordella said Truist says companies that had been sitting on the sidelines during the tariff on slot last spring finally felt ready to make some deals. This also benefited the banks. If we're thinking about buying another company or we're divesting a particular business line, companies started feeling more comfortable to say, all right, yeah, let's go forward with that. Also, service industries haven't been hit by tariffs as much as, say, manufacturing has, says Scott Anderson at BMO. He says the strength of the service sector is one big reason we're not in a downturn.

We aren't a goods producing a country anymore, you know, despite all the focuses here on goods and bringing manufacturing jobs, back home. Two other reasons we've stayed out of a downturn, Anderson says, consumers who keep on spending and tech companies that keep on investing in AI infrastructure. I'm Stephanie Hughes for Marketplace. On Wall Street today, generally upbeat. We will have the details when we do the numbers. There is perhaps no phrase in all of economic reporting that generates more panic than these four little words. Too big to fail. think back with me now, if you would, to the Great Recession, the subprime mortgage crisis, the bank failures, and then the very long and very slow recovery. You know, if Institution X collapses suddenly, the damage spills so fast into the real world economy that the state steps in to prevent disorderly failure.

James Van Geelan is founder and CEO of Satrini Research. Orderly failure is fine. Disorderly failure, definitely not fine. The government tried to limit disorderly failure back in 2008. It spent hundreds of billions of dollars to bail out the big banks, got all of that money back, I do have to point out. It took over Fannie Mae and Freddie Mac. It tightened up banking regulations, too. But why are we talking about this today?

We're talking about it because there is a slice of this economy that a simple Google search will tell you is making too big to fail popular again. Artificial intelligence. You probably heard me say in the past couple of months that big tech companies spent something like $400 billion last year, building data centers. In the first half of 2025, they spent more than consumers did, which, again, you hear me say this a lot.

Consumer spending literally drives this economy, and AI spending was beating that. Not only that, but a lot of AI spending is, for lack of a better word, circular. Just for instance, and this is a real example, Microsoft invests $13 billion into OpenAI. Then OpenAI turns around and invests right back into Microsoft for its cloud computing capacity.

Too big to fail. So next week, we're starting a series on AI and you, the infrastructure being built around it and whether there is that systemic risk. Let's go back to James Van Guillen. He spends pretty much every day researching this stuff since AI drove a very big chunk of the market's gains in 2025. Invidia, up almost 40% for the year. Alphabet, around 65%.

Even if the stock market were to go down, AI would still proceed as a technology. Van Gillen doesn't believe AI could fail and bring down the financial system like we saw in 2008. But that does not mean there are not risks. 2026 is probably the year that we start seeing people losing their jobs and those jobs ceasing to exist. That is scarier to me from a sociological perspective than being afraid that it's not going to work like it is working. Until that happens, until artificial intelligence really distorts the labor market, where we are right now, is a ton of money being thrown around by companies like OpenAI, which doesn't expect to be profitable until at least 2009. To be clear, it's not like too big to fail is new, that we haven't seen what we all thought was reasonable risk grow and then grow some more in ways that become unmanageable.

The first time in the modern U.S. economy, the 1970s and 80s, and oh look, a banking crisis. One of those banks was Continental Illinois, which happened to be the largest client of my law firm. That's Patricia McCoy. Today, she's a professor at Boston College, but back in the 1980s, she was right out of law school when Continental Illinois was the six biggest bank in the country. All of us new baby associates at the law firm were wondering, would we hang on to our jobs? Because the firm was in danger of losing its biggest client. Continental Illinois was eventually seized by the FDIC, its assets absorbed into Bank of America. Along the way, becoming the first bank to be called Too Big to Fail on the floor of the United States Congress. Regulators said almost 200 other banks had substantial exposure, their words, to Continental. And businesses outside banking did as well, like Patricia McCoy's firm.

She did keep her job, and in the years since, has been focused on bailouts and on Too Big to Fail. Her work helped shape the Dodd-Frank Act, the 2010 law that in theory would end Too Big to Fail, parts of which We should say the first Trump administration rolled way back. So we asked her whether AI's growing importance in this economy rings any alarm bells for her. It does. It does. One big reason for that, she says, is all the spending on data center buildouts and how interconnected that spending is. These companies, some of them have borrowed financing.

They've taken out loans. They've borrowed money through the bond markets. Amazon and Meda. Alphabet and Oracle all sold bonds last year to fund data center construction. For META, it was $30 billion worth just in October, the single biggest offering in the U.S. high-grade bond market last year. The payoff, A, is uncertain, and B, for some of these companies, it's readily becoming apparent that the payoff will be pretty far down the line.

Banks are in the data center financing mix as well. Last year, J.P. Morgan Chase and a Japanese bank agreed to finance $23 billion in data centers for Oracle. The question is, will they be able to honor those debts or will they default on them? That could trigger the failure of at least one large financial firm to whom it owes money, and then the financial firm's failure could set off a domino effect. Domino effect, another phrase, perhaps, for systemic risk. Time and time again, if there is a group that is about to trigger a panic, the federal government has blinked. That's why we're having this conversation, because the bigger AI gets, the more bonds sold and data centers built by a small group of companies that are all interconnected, the bigger influence this industry is going to have on every part of this economy.

So next week on this program, what that looks like on the ground. One of the side effects of this digital economy of ours, an unintended consequence perhaps, is that it is also now an attention economy, not an original idea of mine, to be clear. That plays out in all kinds of ways, specifically for us right now in corporate marketing. Gap has decided it's going to move beyond just. marketing to media. Marketplaces Kristen Schwab has more now and corporations getting into showbiz.

Fashion tainment. It sounds like a newfangled word for something that already exists. Part of it is semantics. Hall Hard Art, who heads the entertainment, media and technology program at NYU Stern, says call it communications, call it marketing, call it advertising.

Company's been doing this to some degree for a long time, but I think this formalizes it a bit. Gap wants to form. what's made the retailer go viral lately. It's pop culture collaborations with musical artists, like it's better in denim campaign featuring Katzai. In some ways, these campaigns look more like music videos. Hardart says that is very much on purpose.

People increasingly are wary of advertising, and so the blurred lines between content and advertising are more and more important. It's likely why Gap has hired a paramount executive, and why the retailer is having her open an L.A.-based office on Sunset Boulevard. Hartnard says we might not see Gap Inc. movies or TV shows, but he could imagine, say, musical events in the same kind of way that Red Bull puts on extreme sports, breakdancing, and gaming competitions. But Brian Weezer, CEO of Advertising Consultancy Madison and Wall, says spending this kind of money can be a big risk for companies. It's not core to the strategy for many marketers.

It probably won't be. Mostly because it's hard to collect data on how much a giant campaign influenced someone to go buy a new hoodie. You have to believe it. It's a very subjective choice. Advertising is a bit mysterious. It's partly why Weezer says when a company finds a bit of magic, everyone piles on. Like, somehow we've gotten to this place where every insurance company has a mascot, the Geico Gecko, Jake from State Farm, the Afflack Duck, flow from progressive. It takes a lot to keep innovating. And sometimes, okay, so you can innovate and then your innovation

is copied. In a lot of ways here, Gap is just copying itself and the khaki commercials of its 90s heyday. I'm Kristen Schwamm for Marketplace. Coming up. You can never replace those bonds that have been built over a decade. The care economy and immigration policy, but first, let's do the numbers. Now industrial is up 306. Today, 6 tenths of 1% closed at 49,384. The NASDAQ up 211 points, about 910%. 23,000 to 436. The S&P 500 expanded 37.610%. 6913 there. So let the Oscars jockeying begin, huh? Sinners in one battle after another got the most nominations today, both, rather, are Warner Brothers productions.

Netflix neon and focus features came in second, third, and fourth place, respectively, for most nominations by a production house. Warner Brothers dipped 6 tenths percent today. Netflix, which has been trying to buy Warner Brothers, fell two and a tenth percent. Focus features belongs to Comcast. It gained one and two tenths percent on the day you're listening to Marketplace. Ever wish you could sit in on a private conversation between the world's top CEOs? The podcast Long Strange Trip, CEO, opens the door to the kind of candid behind closed doors discussions you won't hear anywhere else. Real decisions, real pressure, and real leadership.

In each episode, Brian Halligan, co-founder of HubSpot, speaks with leaders to unpack the real stories behind scaling their companies. Expect candid conversations about hiring, culture, communication, strategy, and staying resilient when the pressure hits. Learn from leaders like Vlad Tenev of Robin Hood and Parker Conrad, of Rippling. Whether you're an aspiring founder, a seasoned CEO, or simply curious about the stories behind CEOs on the long, strange trip of building enduring legendary companies, this is a show you can't miss. Tune in to Sequoia's new show, Long Strange Trip, to hear from some of the top CEOs who are

defining the new CEO rulebook. Long Strange Trip is available everywhere you get your podcasts. Listen to Long Strange Trip today. This is Marketplace. I'm Kai Risdal. When one speaks, as we were up at the top of the program, about the rising cost of things in this economy. Goods, specifically stuff, we don't usually think about the cost of the packaging that those goods come in. On its earnings call this morning, though, McCormick, maker of Old Bay seasoning, among other spices and sauces, said indeed its packaging costs were up last quarter. Marketplace's Daniel Ackerman has more on the changing market for that packaging. The Old Bay in my pantry comes in a plastic container, but that's because it's been sitting there for like a year. McCormick just switched packaging for their Old Bay seasoning to tin plate. Matt Reynolds is chief editor at Packaging World Magazine, and he says the new tin and steel can look better on store shelves.

Customers can reuse it. That also has a lot of nostalgic vintage kind of feel. But those nice vintage cans are getting more expensive, in large part because of 50% tariffs on imported steel and aluminum. Jason Miller is a professor of supply chain management at Michigan State. If you're a canned food maker right now, 2026 is looking to be quite a rough year from a budget standpoint. But he says the picture is not nearly as dire for some other kinds of food packaging. On the plastic side, we haven't seen really any price changes that are worth noting. Plastic is made from oil, the price of which has been low of late. Plus, plastic, along with glass and

cardboard are largely made in the U.S., so tariffs are less of an issue for now, but they could be in the longer term when those packaging factories need an upgrade. A lot of the equipment that is used to make any kind of packaging, it's not always made in the USA. Ryan Fox is a corrugated packaging analyst for Bloomberg Intelligence. So when you need replacement parts, when you need service, those tariffs affect the supply chain, they affect pricing for those parts. There is one thing package makers have done to keep costs down, says Matt Reynolds, a packaging world. We've all had the experience of having a sip out of our aquafina or a single-use plastic water bottle,

and it's basically almost paper. It's so thin. Reducing packaging does cut costs, but Reynolds says many food makers have already done a pretty good job of it. If we take any more out, they won't last as long on the shelves, or they'll burst in transit. Which wouldn't be great for food prices. I'm Daniel Ackerman for Marketplace. Here's another one for the immigration is actually a labor market story file with an added dose of demographics are destiny. As baby boomers get older, elder care facilities are going to be in higher demand.

At the same time, along with all of the other things that it's doing, the Trump administration is making the elder care workforce smaller. Unless a federal court intervenes in early February, temporary protected status is going to be ended for around 350,000 Haitians living and working in the United States legally since the 2010 earthquake in Haiti. Emphasis for our purposes on working because Haitians are critical to the elder care industry in South Florida, which is where Marketplace's Elizabeth Troval picks up the story. You can really choose your own adventure at Sinai Residences retirement community in Boko, Rotone, Florida. There are fancy movie theaters, game rooms, in-house restaurants. Christian Key's VP of Culinary Services is showing me around. We have a full gym, fitness classes throughout the day.

Just like being on a cruise, the calendar is never ending. The vibes are great. Residents and staff wave and say hi as they pass each other in the halls. Good morning. Good morning. Everyone that works here, they've got a smile on their face, they're like family. That's Murray Rubin, a 92-year-old resident who counts these years as the best of his life, except for when his wife of 69 years died almost two years ago.

And the warmth and the empathy that the staff showed, come and ask if there's anything he could do for me. You know, you can't put dollars on that. Around 70% of the 450 workers here at Sinai residences are foreign-born. Many are Haitian. 26 of them are expected to lose their temporary protected status. That's their right to work and live legally in the U.S. I ask Rubin what he thinks. I'm worried what's going to happen to them because they're wonderful people,

and they don't deserve that. Mary is one of the workers on TPS. She's a certified nursing assistant here. We're not using her real name because of her immigration situation. I like to care of the people. special from the elderly people. Sometimes when you finish, like, even they have B&E, and you finish clean them, they say, oh, thank you.

But I'm happy. She makes around $40,000 a year at this high-touch job where she helps people stay clean and comfortable. Her salary helps her take care of her dad, who has cancer back in Haiti and her four U.S. citizen children. She's sick with nerves thinking about how she's going to pay the bills come February if she loses her work permit. I don't know what I can do.

I'm going to do something for us because it's really hard. When you've got four kids, you can drive. And then you can wait to give them food. So it's really hard. And it's not just nurses who will be forced to leave their jobs. In a gray uniform, Richard makes the rounds, taking up the trash through carpeted halls. Richard is 30 and fled Haiti a few years ago.

He came under a Biden-era program. I survived many bad treatment. With the $35,000 or so he earns annually on the maintenance team, he's been paying for school to become a licensed practical nurse. Because I love care people. If he loses TPS, they'll try to stay in South Florida. He likes the weather, the people. He'll find gig work, but money will be tight.

You have to pay insurance, car, pay rent, food. So he'll have to stop studying. CEO Rachel Blumberg has tried to figure out how to keep her workers, but there's not much she can do. She is hiring replacements, but she knows it's not the same. You can never replace those bonds that have been built over a decade with those individuals. They held the hand of our residents when they passed away. They celebrated milestones, birthdays, anniversaries.

Someone has to do these jobs, and Blumberg has been forced to hike wages multiple times for the positions affected by TPS. Licensed nurses, CNAs, maintenance, housekeeping, culinary, dishwashers. She's been hiring replacements proactively, but as the competition for labor intensifies and the population ages, not all facilities have the resources to do the same. It could lead to more nursing homes closing wings, downsizing, or maybe even closing their doors. In rural areas, aging care facilities have already downsized because of staffing issues. And now, the labor supply is getting even smaller. In Belco, Ritone, Florida, I'm Elizabeth Troval for Marketplace.

This final note on the way out today, maybe you saw a picture of French president, Emmanuel Macron giving his speech in Davos the other day. He apparently has a burst blood vessel in his eyes, so he was sporting a spiffy pair of sunglasses. Well, just because this is the way the economy works right now, the maker of those shades, a French company called I-Vision Tech, shares up more than 31% in European trading today. I will say, Macron look pretty good. Our daily production team includes Livy Burdette, Andy Corbyn, Maria Hollenhorst, Sarah Leeson, Sean McKenry, Michaela Sia, and Sophia Torenzio.

Will Story is the supervising senior producer. And I'm Kai Rizdahl. We will see you tomorrow, everybody. This is APM. Right now, we are living through some of the most tumultuous political times our country has ever known. I'm David Remnick, and each week on the New Yorker Radio Hour, I'll try to make sense of what's happening, alongside politicians and thinkers like Corey Booker, Nancy Pelosi, Liz Cheney, Tim Walts, Katanji, Brown Jackson, Newt Gingrich, Robert F. Kennedy, Jr., Charlemagne the God, and so many more. That's all in the New Yorker Radio Hour, wherever you listen to podcasts.