Marketplace - Inflation manifestation

Episode Date: May 27, 2026

Forget hard inflation data. Where do everyday Americans think our economy is headed? Well, one survey says consumers expect prices to rise 4.8% over the next year. And in a way, that might have jinxed us — expectations alone can raise actual prices. It’s the power of manifestation, baby! After that: Farmers face compounding hardships, a GDP revision will show the Iran war's economic impact, and environmental concerns spur a wool demand surge.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.

Programming is supported by Stoll Reeves, a leading U.S. corporate litigation law firm providing sophisticated business clients' high-quality legal services with offices in seven states and Washington, D.C. Stoll Reeves is a nationally recognized leader in project finance and natural resources industries. From deals and disputes to compliance and counseling, clients turn to Stole Reeves for their most complex business challenges. Learn more at St.O-E-L.com. Don't look back. The economy might be gaining on you from American public media. This is Marketplace. In Los Angeles, I'm Kyle Rizzdahl. It is Wednesday. Today, the 27th day of May. It is always to have you along, everybody.

You know, sometimes in this economy, as in life, you can figure out where you're going by figuring out where you've been. So we begin today by looking back. back to the first quarter of the year and an update on Q1 gross domestic product that we are going to get tomorrow morning. The first look that we got from the Bureau of Economic Analysis, this was last month, came in at an annualized growth rate of 2% January through March. Tomorrow's vision will fill in some more of that data from March, especially, as you'll recall, the first full months of the President's War with Iran. Marketplace's Henry App gets us going with economic growth at the beginning of the year,

and what it might tell us about the economy today. These revisions are going to give us a better sense of whether the Iran war has hurt the fairly positive momentum in the U.S. economy. The revised data could have both positive and negative effects on each of the components that make up GDP. Let's start with net exports. The U.S. now sends a lot of oil and gas overseas. So the spike in prices might drive that number up and raise GDP, says Ishwar Prasad at Cornell. Even if the volumes of U.S. exports, especially energy exports, stayed the same. Just the increase in prices could have given a bit of a boost to exports.

On the flip side, the first quarter was also when President Trump's tariffs were struck down by the Supreme Court, which may have led to more imports. That would pull GDP down. The next component of GDP is business investment. In the last few quarters, that's basically meant investment in AI data centers. Tomorrow's revision will give us a sense of whether companies have been stocking up to build those data centers, says Joanne Feeney at Advisors Capital Management. If inventory growth was faster than expected because of the preparation to build those data

centers, then that would contribute to faster GDP growth than we thought a month or so ago. Then there's government spending. We know that helped drive up GDP in the first quarter as the government shutdown ended and the Mid-East War began. And finally, there's consumer spending. So far it doesn't look terrible, says Stephen Blitz. Blitz, Chief Economist at Global Data T.S. Lombard, but it did slow down a bit. Just enough to be sort of a dampener on growth.

All this adds up to a sort of unsteady expansion, Blitz says, an economy that's wobbling, not into a recession, but onto a slower path. I'm Henry App for Marketplace. Also on the data calendar tomorrow is the April Personal Consumption Expenditures Price Index, PCE, for short. Best guesses are that the headline number, that is, with food and energy, is going to come in right around 3.8% year on year. That's up from 3.5% in March, headed very much in the wrong direction,

away from the Federal Reserve's ever more elusive inflation target of 2%. And the thing is, and here we get to the where this economy is going, part of this story, what people think inflation is going to do, inflation expectations in the lingo. They are up sharply too for consumers and businesses and investors. Marketplaces Mitchell Hartman has that one. Inflation expectations are inflating. The University of Michigan reports that consumers expect prices to rise 4.8% over the next year. Back in February, it was just 3.4%.

Here's why this is a problem. Inflation expectations can become a self-fulfilling prophecy. Joanne Schu directs the University of Michigan surveys. If you expect inflation to be much higher in the future, you might front load your purchases now, and if enough people do that nationwide, that would put in itself some upward pressure on prices. Another way this can happen is what economists call a wage price spiral. Prices are shooting up. You see no end in sight. You might try to find a higher paying job or negotiate a raise, and then employers are going to take those increased labor costs and pass them

right back to consumers. You can also measure inflation expectations by asking businesses. The Philadelphia Fed's latest survey, finds local firms expect a sharp spike in U.S. inflation over the next year to 4.2%. But they say they'll raise their own prices on average just 2.8%. Philly Fed economist Paul Flora is pretty sure they're low-balling. They're going to want to say that we're holding prices firm. We're not going to raise them. But our competitors might. And the reality is if their competitors do, then they're probably going to follow. One more place to look for inflation expectations, says economist Mark Zandi at Moody's

analytics, the bond market, where investors are also signaling they expect inflation to move higher. You know, there's different ways of measuring inflation expectations, and I will say that all of them are pointing in the wrong direction. If the trend continues, he says the Fed will have to hike interest rates to tamp them back down. I'm Mitchell Hartman for Marketplace. Wall Street today, kind of a wash for equities, actually. Oil took a digger, and hey, look, the yield on the 30-year Treasury is still right at 5%. We'll have the details when we do the numbers. Inflation expectations are, perhaps, as Mitchell was saying, keeping us frugal.

But there are some areas in which buyers are willing to shell out a bit more. According to a 2022 survey from Wharton, consumers across generations, that baby boomers to Gen Z will look past a higher price tag if it means buying a more sustainable product. That said, it kind of doesn't matter how much people are willing to pay if the supply ain't there. Wool is our commodity of choice today. Tepan Sveshnikov wrote about it for Offrange. She's also a PhD candidate in history at Yale. Stapal, welcome to the program.

Good to have you on. Good to be with you. I'm just going to read you the first line of this piece, which you know, of course, since you wrote it, but then we're going to talk about it because it contains multitudes here. The U.S. wool industry, you write, is staging a comeback.

So where are all the sheep? First of all, talk to me about wool and this comeback, because clearly I missed that. Yeah. Well, I'm not surprised you've missed it, but there's a group of people who's interested in wool kai, and I think that that group is growing. Wool answers three concerns that are prominent, and I think you've heard about these concerns. One is a health concern about microplastics, right?

The microplastics in our clothes partly, right? And so there's a growing body of research that's showing that that might be affecting us in ways we don't like. Now, if you're talking about wool socks or wool underwear, they even make wool bikinis now. right so those those aren't going to have any microplastics in them so the second concern is environmental and i'm talking about oil which has been in the news those plastic clothes they're made from polyester and polyester is made from crude oil so we're talking about a group of people who are concerned about the environment and wool is a lot more sustainable than oil and the third thing is ethical so there's in the news recently there's been some talk about polyester recycling so you know when you recycle old

clothes. They go off to places like India, and the dust from those recycling operations is making people sick. So I think wool actually is able to answer those concerns, and as there are more people who are worried about these things, they're starting to buy wool products. Okay, here comes the second part then of your first question. Where are all the sheep? You actually say there's not enough sheep in the world to meet all of our demand now. There's not enough sheep in the world, not even in big wool producing countries like Australia. And in the U.S., the situation is especially bad. But surprisingly, the farmers and industry people I talked to were optimistic. So they felt like we've hit rock bottom, but there's room to start bringing some sheep

back. The catch, of course, is that, and look, I don't know much about sheep procreation, but I imagine it takes, I don't know, a couple of years for a sheep to get to the point where it can be sheared and wool can get into the supply chain. That's the problem. Yeah. So Krista Rochford, who's the wool marketing program manager at the American Sheep Industry Association, she told me, it's not like you can rebuild the American herd overnight. You can't just come up with breeding stock. So this is demand spiking, which of course, this is great for farmers because the price for wool goes up, but then they're not going to be able to double their herd size overnight.

There's another part of this infrastructure that you talk about, and it's not just the livestock. It's mills and places where you can go to get your wool, what is it, combed and spun. And, I mean, I forgot, you know, all my fifth grade history stuff, but it's, you got to do stuff to get wool to a place where it can be used. Yes, you do. And there's so many steps. You've got to shear it, wash it, comb it so all the fibers are straight, spin it into yarn, and then that yarn gets woven into a textile, and the textile still has to be sewn into clothing. And those are just some of the steps. So in the U.S. right now, there are probably only about five mils left that can complete all of those steps. Well, all right. So look, you are, as I said in the introduction.

You're the contributing writer, but also you're a PhD student in history. So a place. your analytical history lens here and tell me where this goes now. Yeah, I think we're going to see some more investment in infrastructure. It's going to be slow and a lot of it is going to come from unexpected places. But, you know, I talked to a guy named Chase Hill in Idaho who's, oh, he must be in his late 20s, maybe early 30s. He started an organic wool pillow company and it's all made in the USA. His cotton is from Texas and his wool is from Montana. He wasn't happy with the infrastructure. so he actually bought a wool mill this year and he's bringing more production in-house. So, look, it's an uphill battle, but there are people doing it, and I think it's going to grow.

There you go. Stepan Shveshfeshensikov. He's a contributing writer at Offrange. Also, as I said, he studies history on the side. Stepan, thanks a lot. I appreciate your time. Thank you. This is a consequential time in the U.S. agriculture economy.

Farmers have most of their crops in the ground and they're checking on corn and beans and whatnot that are just starting to grow. ranchers are turning their cattle out to summer pastures. And just like for other small businesses and for consumers, too, the financial pressures on them are real. Everything from higher fuel and fertilizer costs because of the war to tariffs and also to drought. Marketplaces Caitlin Tan checked in on the state of the farm and ranch economy. And spoiler alert, it's not great. In the West, it's that time when ranchers move their cattle to public grazing lands so the cattle can eat. like in this recent Wyoming Cattle Drive.

But that summer pasture that normally feeds cattle through the fall isn't as green and lush. The big word is drought. Jim McGagna is with the Wyoming Stock Growers Association. So that means ranchers are looking at having to buy hay. Extra hay could be $30,000 on the low end, hundreds of thousands on the high end. Or sell off some of their livestock. selling could pad ranchers' pockets right now, and McGagnan advises ranchers to hold on to that cash. It may sorely be needed in 2027, 2028, and beyond.

Because financial woes are growing for those who live off the land. So many farmers are reporting they're kind of on the brink of a crisis situation. Aaron Lehman grows corn, soybeans, and oats, and he's with the Iowa Farmers Union. His costs are soaring and so are his neighbors for labor, health. insurance fuel and fertilizer. For a medium-sized farm like mine, they had an increase in cost of about $20,000. Last December, the White House announced a $12 billion aid package for farmers. And recently, the White House said China will purchase billions of agricultural products

from U.S. farms. But Lehman is not encouraged by that development. Farmers don't know exactly what to think. they hear some vague news and vague promises, and then there's nothing concrete about it. And that instability shows up at the bank. Nick Lewandowski with the Kansas Farmers Union says lenders are backing off. Because they're looking at projections and it shows, you know, farm income is going to be down. And without that money? It can mean big problems.

Like being forced to get another job in town or selling land. To cover, you know, what you owe. or closing up shop all together. I'm Caitlin Tan for Marketplace. Coming up. I love a dad book. You don't have to be a dad to like a dad book. Well, that's good. First, though, let's do the numbers. Down Dustrils up 182 today, 410% finished at 50,644.

The NASDAQ added 18 points, 10th percent, closed at 26,074 S&P 500, basically flat 6.7. 75 and 20. Caitlin Tan had that story on ranchers and farmers. Farmland partners owns and leases about 70,000 acres of farmland across the country. Grew a tenth of one percent. Ag and food giant Archer Daniels Midland rose 2 percent. Meat processor Tyson Foods added one and four tenths of one percent. The first Wednesday after Memorial Day, which today is, means it is National Flipflop

Flop Day. Decker's Outdoor Maker of Tevas, you know them, right, climbs two and six tenths percent. Flipflop adjacent shoemaker Croc. improved 2%, although how that is, I will never understand. Bond prices up, yield on the tenure T-note, down 4.48%. You're listening to Marketplace. This Marketplace podcast is supported by Inuit QuickBooks. If you're trying to grow your business, Intuit QuickBooks workforce can help you lead your

business with confidence, clarity, and in a way that makes sense for you. As a sponsor at Marketplace's My Economy, QuickBooks Workforce recognizes that no one person or businesses' finances are the same. As your needs evolve, QuickBooks Workforce evolves with you, bringing together the core HR capabilities businesses expect with the flexibility to adapt to your specific needs. QuickBooks Workforce combines human intelligence and AI-powered tools, so you get smart automation without ever losing control, spend less time reconciling and more time deciding what to do next. Your processes get streamlined, and you get precious time and energy back to move forward proactively. Move from reactive to proactive with brand new tools by making the switch to QuickBooks Workforce to, today. Your Marketplace is My Economy at Marketplace.org slash my economy and learn more about how QuickBooks

can help your business grow at quickbooks.com slash workforce. That's quickbooks.com slash workforce. This is Marketplace. I'm Kai Risdahl. To each his own, of course, but my go-to bagel is sesame, definitely not toasted, a healthy but not overdone smear, tomato, if it's a good one, locks, capers, and just a hint of thinly sliced red onion. If it's a genuine New York City bagel, all the better. But the reality is the popularity of and the desire for good bagels is picking up across the country, especially out here on the West Coast. As Oregon Public Broadcasting's Crystal Legory reports,

the bagel economy is on a roll. It's 8.30 on a Sunday morning, and there's already a line around the block outside Pipsqueak bagels in southeast Portland. The bagels looked really good online, so we thought we'd come give it a try. That's Reagan Manzig, who along with her mom, is one of the 40-year-so folks in line for a bagel. We didn't mind standing outside because, you know, it's warm out, but we did not know it was going to be 45 minutes. A weight this long may seem unheard of for a bagel, but Sam Silverman says the simple formula of flour, water, and yeast is much more than its ingredients. Even though the The cost of the goods is relatively low.

The amount of time and effort that goes into it is much higher than a lot of other foods. Silverman is New York's self-proclaimed bagel ambassador, president of Bagel Up, an organization he says is dedicated to promoting bagels and the people, culture, and community behind them. And these artisan bagels go way beyond your grocery store bagged variety. It's a minimum two-day process where you make and shape the dough by hand, and then, Then the following day, after the dough has been allowed to cold ferment, it's then boil, seeded, and baked. And one of the reasons he says there's been a rise in popularity outside the city? The exodus of New Yorkers and northeasterners who went to other places in the country and brought their standards for bagels with them was the perfect match for local entrepreneurs to fill that hole in the market. Entrepreneurs like Andrew Rubinstein.

I'd already been thinking about bagels around 2016, the fact that there just weren't what I thought were great bagels in the Seattle area. Rubenstein is the owner of Hay Bagel, and before he went brick and mortar last year, he was meeting people in parking lots to give them bagels. I was baking out of a commissary kitchen, and I was loading up my Ford Explorer with bags of bagels, and I would poach in grocery store parking lots, transit centers, and people would come and have their clandestine pickups. By then, there was already a buzz around bagels, potentially sparked by the viral baking frenzy that seemed to be everyone's pandemic hobby. That's how Connecticut's pop-up bagels started. And now the companies expanded to 29 locations, growth largely funded by a $35 million investment by private equity firm Stripes. It's something many artisanal bagel makers, like Madeline Gibbons, are taking note of. You know, I have mixed feelings about it because I'm like, you know, when you start getting venture capital involved,

I have an assumption that that will change things. Gibbons is the owner of Portland's Pipsqueak bagels, who chatted with me while slicing off long strips of dough deftly twisting them into perfectly round bagels. Bread has always been a part of my life. I come from a long line of bakers and my family, and I would always give baked goods away to my neighbors, like hala or cakes, et cetera.

And it wasn't really until I started sharing bagels with people that they were like, man, those are really amazing. Like, are you selling them? Pipsqueak opened its stores about a month ago, after years of Gibbons doing farmers' markets and bagel pop-ups. She's grown her staff to about 10 employees in business is going well. I mean, on average, we're prepping around 1,500, but on Mother's Day we did 2000, and we're selling through everything every day. Since the day we opened, it's been like every single day has been lines around the block. It's been amazing.

It's been incredible. And with high-profile features on the bagel business popping up in the New York Times and Wall Street Journal, plus the first West Coast Bagelfest last month, the bagel boom shows no signs of slowing down. In Portland, I'm Crystal Legory for Marketplace. Sometimes from a single data point, a theme can be intuitive. So here is the data point. Sarkana BookScan, just like it sounds, it's a publishing market research firm, says sales of non-futable. fiction print titles are down nearly 8% this year. Books about politics and current affairs in particular are doing even worse. An existential decline, some publishers say. It's a group of titles

that has come to be called Dad Books, about which Pamela Paul wrote in the Wall Street Journal the other day. Pamela, good to have you on the program. Great to be here. What is a dad book? You know, a dad book is a kind of informal term. It's a kind of cheeky way to refer to what is is often described as serious nonfiction. And that is serious nonfiction to differentiate it from sort of self-help books, memoir, how-to, guidebooks, kind of lighter nonfiction books that often go under the category on best-seller lists of self-help, how-to, and miscellaneous. As both a dad and a reader of serious nonfiction, should I be insulted that these are being called dead books? Oh, no, absolutely. I love a dad book.

You don't have to be a dad, like a dad book. No, dad books are history. They are biography. They're foreign policy, business, economics. They're the kind of book that you could reliably buy for your father on Father's Day, knowing he's not going to be weirded out, distraught, upset. That is true, he says, speaking from experience. Okay, these books, though, you write, are in trouble.

What's going on? Well, sales of, you know, sales overall of books have not been an a great place for a long time. There's just long-term trends decline in reading. Fewer people are reading books, particularly print books. So that's a kind of backdrop there. That said, there are a number of trends going on, both in terms of how people consume books, what they're interested in, what publishers are publishing, and what kind of books grab people's attention. There is one word here that keeps coming up throughout this piece that you wrote, podcasts, podcast, podcasts.

Yes, podcasts, podcast, podcast, anything audio. There are just a lot, there are many more options for the kind of person who wants to take a deep dive into a serious subject. So in, you know, the olden days when I worked at B. Dalton, for example, in the 80s. And, you know, if you wanted to read about this kind of thing, you went, you got a James McPherson book about the Civil War. you've got David McCullough's biography of Truman. Now you can listen to a podcast. The rest is history, which is a British podcast, is one of the most popular podcasts. I went on actually to listen to a few episodes because I'd heard so much about it. I turned to a subject that was of interest to me, which is the war in the Congo, and I thought, well, I've read a book about this. Now I want to find out

more. As it turned out, the podcast was essentially about that particular book, which is a great book by Adam Hochschild called King Leopold's Ghost. But for the person who had not read that book, they can just listen to the podcast. They don't have to ever read that book. Right. You yourself have written a book. It's called 100 Things We Lost to the Internet. Do you suppose dad books are going that way as well? Oh, yeah. It should be 101. If I could go back now, maybe that book was a dad book. I don't know. It's become a really tough time. Yeah, for people who, authors who are interested in this, journalists who want to write books based on their work. And again, I don't think it's that people have lost an interest in these subjects. It's just that, like, if I think about

my dad, right, my father loved a dad book, loved military history, he had every time life book collection on World War II. You know, he had these massive books full of colorful, you know, military hardware, things, frankly, I don't care about. All that stuff is online. There are a million podcasts. There are YouTube videos that could show you every single airplane that flew during World War II. So I don't think it's that the appetite has entirely disappeared. It's just that the, it's a smorgasborg, as one of the interviews in the story put it, the former CEO of Pengland Random House. Pamela Paul,

writer at large at the journal, latest article is called Dad Books Are a dying breed. Pamela, thanks a lot. I appreciate your time. Thank you. This final note on the way out today, which I do believe is some combination of this week's sign the apocalypse is upon us and

what could possibly go wrong. Saw this in Axios that Robin Hood, the stock trading app that became all the rage in the pandemic, is now going to allow a GENTIC AI to make stock trades for its users. Caution does seem perhaps to be warranted, but if you are on board with this and you want more, options in crypto and futures trading are coming soon.

Our media production team includes Brian Allison, John Foki, Montana Johnson, Drew Jostad, Gary O'Keefe, and Charlton Thorpe, Alex Simpson is the manager of media production. And I'm Kai Rizdahl. We will see you tomorrow, everybody. This is APM. There's so much happening in the world, and if you have particularly, shall we say, inquisitive kids, it can be hard to answer their questions. Hi, I'm Ryan. And I'm Bridget, and we host Million Bazillion, a podcast from Marketplace about money for kids and their families. We help your little ones think big about important but tricky topics like taxes, gas prices, and even what a cashless society might be like.

There's a bunch of new episodes out now, so go listen to Million Bazillion on your favorite podcast app.