Marketplace - Inflation held steady in August. Yay?

Episode Date: October 1, 2026

The PCE price index (that's the Fed's preferred measure of inflation) held steady year-over-year in the latest report. Economists expected it to move up. So, why didn't it budge -- and why aren't we all celebrating? Also in this episode: Seasonal work is hard to find so far this fall, Trump's immigration crackdown weakens construction productivity in South Texas, and Kai explains the long-term implications of rising borrowing costs.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:The Fed's preferred inflation measure was lower than expected in August. Is that a good thing?Can the U.S. just grow its way out of debt?Immigration crackdown adds delays, costs to South Texas constructionMore people are looking for seasonal work this year. So far, it's hard to findThere are more private security guards than police. How much are they paid?

On the program today, money and how much it costs and debt and how much is too much. From American public media, this is Marketplace. In Los Angeles, I'm Kyle Risdahl. It is Thursday. Today, this one is the 1st of October, if you can believe it. Good as always to have you along, everybody. You know, there's a developing truth in this economy, that money is going to be much more expensive than we have been used. used to for much longer than we are ready for. As evidence, I refer you to, and yes, I know,

the bond market yet again yields on long-term government debt while a hair softer today have been high and rising for weeks now with no real relief in sight. We call Tara Sinclair. She's the chair of the economics department at George Washington University out on the road. I'm in Nashville, which means that the hotel lobby is incredibly loud. And So we are very happy we got a room. As are we. Those higher yields mean money is more expensive, not just for the government, but for anybody trying to borrow. Which means that if you want to get a mortgage, it's going to be more expensive.

If you want to have credit card debt, it's going to be more expensive. If you're a business and you want to have a business loan, it's going to be more expensive. The way it works, we all know this. When something gets more expensive, you don't have to be an economist, to understand that people are going to use less of it. So fewer purchases are going to be made from buying a house to swiping your credit. credit card, and that is going to slow economic growth. Now, as bond yields and interest rates go higher? There isn't some specific number that's going to immediately destroy the economy. All right, that's good. There are these moments, like hitting 5%, where the markets look around and

say, is this a good use of our money? Or should we be looking for higher returns elsewhere and stop being so interested in buying government debt? Well, that sounds bad. And that's the really scary point, because if people start looking at government debt and don't think of it any longer as something that's risk-free, then the cost will go up even more. The 10-year treasury note today, the yield on it, 5.23 percent. Slightly, as I said, lower at the close did hit a quarter century high at one point during the session. Equities just kind of tread and water. We will have the details when we do the note.

numbers. One of the things we do around here so you all don't have to is dig deep into the data to try to get a sense of the bigger picture. The data in question today is the Personal Consumption Expenditures Index that we got yesterday, 3% year on year. That's the core inflation number. And as it turns out, it was a bit of a surprise, lower than people had been guessing. Marketplaces Kristen Schwab has more. This inflation report kind of feels like when you're on a flight that lands early, but you sit on the runway for forever. because there's no gate, so your arrival time ends up being the same anyways. Like, yay? You can look at these numbers from a lot of different angles, and sometimes they look prettier than they do from other angles. But in the end, it's all awash, says Stephanie Kelton, an economist at Stony Brook University.

Either way, you got a three on the other side of a decimal point. 3.4%. And Gary Schlossberg, Global Strategist at Wells Fargo Investment Institute, says that number was lower than it would have been otherwise, because in August, the Bureau of Labor Statistics changed the way some categories, like computer software and investment services, are calculated. And that was going to have the effect of lowering inflation by a couple of tenths of a percent. It means by previous standards, inflation would have measured higher, around 3.6 or 3.7 percent. Omer Sharif, president of Inflation Insights, says, really,

it's not the big number that worries him most. It's the little ones that make up PCE, from housing to health care. So more than half the basket is rising at an inflation rate of 3% or higher. Numbers that he says aren't likely to fall, even if the war with Iran ends tomorrow. We've had this set of rolling shocks for six years that have boosted inflation to well above target.

There's nothing to say there won't be another shock coming in the next six months. The economists I talked to today and the markets are betting the Fed will pause rates this month and hike rates in December. And Sharif? I personally think that they are maybe going to hike one more time in Q1. Inflation tends to go up at the beginning of the year because companies usually raise prices after the holidays. I'm Kristen Schwab for Marketplace. A couple of weeks back, the Secretary of the Treasury Scott Besant did an event at Southern Methodist University, where he got a question about the national debt, which, as you have almost

certainly heard, now tops $40 trillion. We don't have a revenue problem. We have a spending problem. So we've tried to contain the spending, and then with 3% growth, we grow our way out of this. Bessent has said a version of that before, but is it true? I mean, how much growth would it take when you are talking $40 trillion? Ben Steele is a senior fellow at the Council on Foreign Relations, where he took up exactly that question in a recent article.

Ben, welcome to the program. Thank you for having me, Kai. For the late person, what was the Treasury Secretary talking about when he said we could grow our way out of this? Well, the Treasury Secretary was responding to all the turmoil in the bond markets. And, of course, there's been growing concern that the bond market volatility has been driven by concerns about rising U.S. debt. And the Treasury Secretary's point was that debt doesn't need to be a problem. If we could achieve consistent 3% gross domestic product, GDP growth, we can afford to support more debt. All right.

So let's dig in a little bit to sort of the math behind this at, again, a very sort of layperson's level. First of all, consistently growing at 3% is not something the federal government and the U.S. economy has done in the recent past. That's problem number one, right? No, that is, that is indeed problem number one. If you go back to the year 2000, we only hit the 3% growth mark in five calendar years. So that's one-fifth of the years. So it would be a pretty impressive thing if the United States were able consistently going forward to achieve 3% growth.

A word here about the elephant in the room, which is fiscal policy. We talk about monetary policy, interest rates on this program all the time. Fiscal policy gets less attention, I suppose, because Congress and the president never do anything about it. And I guess the question to you is that's the solution here, right, fiscal policy? Yeah, well, the United States, unfortunately, doesn't really have a fiscal policy. It just has fiscal outcomes. We spend money.

We raise money in the form of taxes. And at the end of each year, we tabulate up how far short we fell in terms of raising the revenue we need to cover our spending. And so we just mechanically issued debt, that is, treasury bonds, to fund the growing federal debt. I imagine you spend a decent amount of time on the acela going back and forth between New York and Washington. And I guess the question is when you go down to Washington and wander the halls of Congress or the think tanks or whatever, I mean, is anybody thinking about this or are they just fingers in their ear going la la la la la? Yeah, no, no, they are. I speak to, for example, congressional staffers, Democrats, Republicans, and you can, Put those folks in a room together and have a pretty rational discussion about these issues. When you get into the higher ranks of government, that is the White House, the House and Senate leadership, then politics really does take over.

All right. So look, you're a trained observer of this. What do you think happens? I mean, give me like the 10-year outlook here. You know the old joke, Kai, about asking the old Irishman for the road to Dublin? And he says, if I were you, I wouldn't start from here. I didn't know that one, but that's a good one. Anyway, go ahead. I wouldn't start from here. I mean, we had opportunities in the past to do something about this.

You maybe remember the old Simpson Bowles Commission under President Obama. I do really think we dropped the ball there. With bond prices falling now, that is the price of that we Americans have to. pay to issue debt rising, it's becoming more urgent. Growth is indeed a very important component in a package of measures we need in order to lower our debt burden. But we're also going to need spending cuts and we're going to need revenue increases. So we should start having a rational debate about what the composition of those spending cuts and revenue raising measures should be. Ben Steele is at the Council on Foreign Relations, where he's a senior fellow also director of

international economics. Ben, thanks for your time. I appreciate it. Thanks for having me, Kai. Business in the Rio Grande Valley, way down in South Texas, is booming. SpaceX has a huge base there, and two big liquefied natural gas plants are drawing people from foreign wine. People, though, need housing and residential construction, the workforce for which in Texas is about 25% undocumented workers, is being throttled because of the Trump administration's immigration crackdown. Marketplace's Elizabeth Trouval has that story. Brand new modular duplexes line this growing neighborhood with pristine lawns here in the Harlingen area near the southern tip of Texas, though there's still plenty of work to do and

not enough workers. You'll see that the framing crew that's there now is very slim. But normally it's about 8 to 10 guys. That's Ronnie Cavasso, who is building this neighborhood with his firm, The Structure Team. He shows me a cement slab where just a few framers are working today. They'll make a skeleton for the home out of lumber. It requires a lot of math, a lot of measuring.

It's a tough job, especially in the type of the weather that we're in. You know, the valley will see 108, 110 degree weather. Kavas has struggled to find qualified labor to do the job. In Texas, undocumented workers represent roughly a quarter of the construction labor force. Now, ice raids have finned out the workforce. Some people have been deported. Others, including some who may have legal status, aren't working because they fear immigration enforcement. We go down a list of 30 framers that, I'm not joking you, like 30 framers, just to find

one. And he's probably charging more than what we originally had budgeted. He says construction on this phase will likely take 18 months instead of 12. He's also built $15,000 worth of fences around the construction sites to make it harder for ICE to arrest workers. We've had to file extensions on the loans that we have for the project in order to be able to continue getting that project funded. At this point, point, I'll venture to say that in 2026, we probably are not going to make any money. Work site raids and immigrant arrests are happening while the construction industry continues to face a major worker deficit. Ed Brady is with the Home Builders Institute.

Department of Labor would tell you, on a monthly basis, anywhere from in the last three years, 250,000 to 450,000 empty jobs, vacant jobs in the building construction industry. So however you look at that at the low level, it's still a crisis. According to one industry estimate, some 19,000 fewer houses were built in 2024 in the U.S. because of the ongoing labor deficit. But now he says immigration policy is working against the industry. With immigrants being 30% of our trades, we're losing many more than we're bringing into the industry right now. And those workers have families that depend on that income.

like Brianna, who I meet at her small apartment in South Texas. She tells me how her husband was arrested and deported by immigration on his way to work. I had a construction site this summer. Brianna is a U.S. citizen, but because of her husband's ongoing immigration case were using a different name. Since her husband was deported to Mexico, her household is bringing in $2,000 fewer dollars each month. Even though she worked seven days a week, it's hard to make ends meet. It's been very difficult emotionally and economically for her and her three kids, she says.

Her husband, who she was sponsoring for a visa, has worked in construction his whole life. He learned it from his dad. Just like Ronnie Cavazas. His dad was a framer from Mexico. That's who got him in. into construction. And now he wonders about the future of the industry. We got rid of all the knowledge and we got rid of all the workers. And now what? Without the experienced framers and other workers, how do you build homes, businesses,

and an economy? In the Rio Grande Valley, I'm Elizabeth Troval for Marketplace. Coming up, four hours to 48 hours of training. That's either not enough or, yeah, no. It's not enough. First, though, let's do the numbers. Dow Industrial's up 20 points today, not even a 10th percent. 50,926. NASDAQ added 10 points also, not even a 10th percent. 26,871.

S&P 500 picked up 14 points. That is 2 tenths percent there, and did things at 7666. Constellation Energy has signed a 20-year deal with Amazon to supply electricity. The deal is going to help the power company expand a nuclear plant in Maryland, Ireland and spend around $3 billion on infrastructure constellation powered up 1 and 9 tenths percent on the day. Amazon tick down a little bit over a third of 1 percent seasonings maker. McCormick and company beat estimates for the quarter. People's budgets may be stretched, I guess, but they still want their sauces and their spices.

McCormick dipped. Get it dipped? Four and nine-tenths of 1%. You're listening to Marketplace. This is Marketplace. I'm Kai Risdahl. Data about the American labor market comes in many different flavors. gotten a variety so far this week. The September jobs report will be upon us tomorrow morning.

Today, though, it's employment of the seasonal variety. Challenger Gray and Christmas said in its regular update this morning that the hiring outlook for the rest of the year is cautious. Marketplace of Samantha Fields is on the holiday jobs beat. If it seems early to be thinking about holiday hiring, Corey Staley at Indeed Hiring Lab says it's really not. We do start seeing employers ramping up seasonal hiring in August and in September. According to postings on Indeed, he says August was a strong month for seasonal jobs. But what's interesting is we moved into September, and it kind of came down more in line with what we saw in 2025. And he says the number of people who are looking for seasonal work is rising.

We're seeing that very clearly over the last two or three years, the number of job seekers looking for these types of jobs have continued to grow, but the job postings at best have remained within a range around the previous year. It's still early to know how this holiday season will go, but David Swartz at Morningstar says there are some early indications that hiring in retail might be slower. Retailers are operating more efficiently than used to and using more technology, and so they are operating their stores on a full-time basis with fewer people, and that would also include the holiday period

when they'd hire fewer temporary workers than they had in past years, too. This year, they're also acutely aware of the financial stress so many people are feeling. I think there's a lot of concern about gas prices affecting consumer spending and how that may affect the holiday season as well as general inflation. And Swart says that's likely part of why fewer retailers have announced big holiday hiring plans so far. Their expectations are low for this year. But that's also been the case for the last couple years, and the holiday sales turned out to be stronger than expected.

He says some retailers may be holding off on hiring for now and waiting to see if it looks like that's happening again. I'm Samantha Fields for Marketplace. If you were to count the number of private security guards that you see as you're just going about your business every day at mall entrances, churches and synagogues, even schools may be, it would almost certainly be more than you would have guessed because there is more private security in this country than there are police and sheriff's deputies. and it is a very randomly regulated and very loosely trained workforce. Curtis Lee wrote about it in the New York Times. Welcome to the program. Good to have you on. Thanks for having me.

How did we get to a place where there are more security guards than our police officers and sheriff's deputies in this country? That's a good question. You know, private security guards are outside. We see them all over outside of strip malls, construction sites, the lobbies of office buildings. These are workers that really don't earn that much money. A recent report from the UC Berkeley Labor Center found that on average security guards normally earn a little less than $19 an hour.

So, but yeah, I mean, it is a striking number to see that there are more security guards in this country than there are police and sheriff's patrol officers. It does sort of seem like it's a demand thing, right? There is a demand for these services. Police and sheriff's departments simply aren't funded or equipped to do it, but people want it. Absolutely. I mean, this is a necessity. And this is a necessity more and more for, you know, houses of worship, you know, synagogues and mosques. And a lot of people feel the need to have security guards as that for online protection.

Let's run down the sort of the labor market demographics of this thing. These private securities guards are, you right, overwhelmingly male. They are majority of people of color. And most of them, almost all of them, I think you say, don't have a bachelor's degree. That's correct. I mean, that's that's a big part of what this UC Berkeley report found. You know, these are individuals that don't necessarily get into police forces, but, you know, want to serve and protect. And that's where they find these jobs as security officers. And, you know, more and more in recent years, we've seen unions jumping into unionized security guards and also basically supporting security guards and looking to help boost pay and training. Can we talk about that training for just a second?

There are no federal standards for private security guards? Correct. Yeah, there are no federal standards. It's mostly realized it's given to the states to set those standards. Some states don't have any training, really, for security guards. And other states have between, you know, four hours to 48 hours of training. It really is a patchwork effect in terms of the training that security officers have, security guards have. It is, you write, a $50 billion industry and growing.

And yet, as you said a minute ago, most of these guys, because they are mostly guys, as we talked about, they're making like $19 an hour. Of course, yeah. They're making around less than $19 an hour. And, you know, recently we've seen local jurisdictions jump into the fray and look to set at least pay minimums for security guards. In New York City earlier this year, local elected officials passed an ordinance that set, pay minimums for security guards. And then here in California, where I'm based on, based in Los Angeles, the state legislature looked to possibly pass a bill this year that would have set pay minimums for security guards. But at the last minute in Sacramento, the legislation was stripped of pay standards

because there was strong pushback from the business community in terms of costs. So that was stripped out of the bill at the last minute. One imagines just given, I mean, you know, read the headlines. One imagines that the demand about which we spoke at the beginning of this interview is only going to increase. Yeah, absolutely. The demand is definitely going to increase as, you know, more and more threats of violence happen in public life. I mean, whether these are at schools, at churches, you know, more and more than there's going to be a need for security and security guards to be on the front lines of protection in public places. Curtis Lee writes for the New York Times. Curtis, thanks a bunch. I appreciate it. Thanks for having you, Kai.

This final note on the way out today in which, yes, bond yields now are high. But as Tara Sinclair reminded us from that hotel in Nashville, we've been here before. Well, I mean, it's actually the old normal. We used to have much higher bond yields in the past. And so that is one perspective on this is that we are just returning back to the previous world. and that actually, particularly the period from 2007 to 2020 or a little bit beyond that because of the pandemic, was really the weird time. And now we're returning to a longer run pattern.

Of course, that was before we were $40 trillion in the hole, right? Our daily production team includes Andy Corbyn, Nick Allison, Maria Hollandhorst, Sarah Lees, and Sean McKenry and Sophia Terensio. Will Story is the supervising senior producer, and I'm Kai Risdall. We will see you tomorrow, everybody. This is APM.