Marketplace - "Running out of that buffer"

Episode Date: May 28, 2026

The personal savings rate fell to just 2.6% in April — a low not seen since June 2022, according to the Bureau of Economic Analysis. That means Americans have, on average, less cash leftover at the end of the month. Gas and grocery price inflation are partially to blame. Also in this episode: Office real estate looks a little K-shaped, one city tries to relieve budget problems with trademarked merch, and Kai breaks down the April PCE report and Q1 GDP revision.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.

The macroeconomic news of the day today brought to you by the letters G, D, and P, and P, C, and E. From American public media, this is Marketplace. In Los Angeles, I'm Kyle Risdoll. Thursday today, 28 May. Good as always to have you along, everybody. I'm Laura Veldkamp, and I'm a professor at Columbia Business School. I am Professor Tara Sinclair. I'm chair of the economics department at the George Washington University. We made some calls this morning to help us sort out the two big economic data points of the day, PCE, the April personal consumption expenditures price index, which is a fancy way to say inflation. Also, an update to first quarter gross domestic product.

There's a lot to unpack here. It's not very good news. Inflation looks too high. Growth looks too low. And neither of those are the direction that we wanted to see. The first one I opened was the GDP report. And I went, uh-oh. Because downward revisions, we don't like those.

Well, start where Professor Sinclair started Q1 economic growth. That is what this GDP report measures. It fell four tenths percent from an earlier estimate to 1.6 percent annualized. The next thing I did was scroll down and was like, okay, where did it come from? And seeing that it came from both the consumption and investment side, those two sides that really tell us what's going to be happening in future quarters, that was a big area of concern. This is a deer in the headlights moment for American businesses. while businesses are stopping and freezing and asking what's going on and what should they do next. They're not investing.

They're not hiring. They're not expanding. And GDP is not growing as much as it should be. That's GDP. We will do PCE. Now, prices were up 3.8% in April. That is including food and energy. That markers the highest.

It's been since May of 2023. Gasoline prices went up massively last month. And this gas price increase that we just saw is just beginning to filter through the prices of everything else in the economy. We also saw continued pressures on housing costs. And so combining these two things together suggests this is not just purely about what's been happening in Iran. This isn't simply about a short-term blip that we could look through. This is looking more concerning. Pay attention to that look-through thing that Professor Sinclair said. Looking through the energy shock is what the Federal Reserve has been doing,

although there are some signs that tune might be changing at the Central Bank. Wall Street today, what do you know? Technology stocks leading the way. How about that? Details numbers when we get there. Tara Sinclair said things were concerning a minute ago. Here's some more fuel for that. We are saving less of what we make.

The personal savings rate last month was just a lot. 2.6%. That's the lowest it's been since the post-pandemic revenge spending spree of mid-2020. Daniel Ackerman has more on that. The answer to why Americans are keeping less of their paychecks was pretty obvious to everyone I spoke to today. Inflation still remains fairly strong. Gas prices, grocery prices continue to rise. This is really reflective of continued impacts of inflation. People are just not saving much at the end of the month.

That was Ted Rossman of Bank Rate, Matt Schultz of Lendingtree, and Ryan Sweet of Oxford Economics. Sweet says the low savings rate makes it harder for households to weather a job loss or a costly car repair. The consumer is essentially,

you know, running out of that buffer. That safety net is starting to get depleted. And in many cases, that safety net is gone altogether, says Sweet, which means more household debt. We start to get concerned that consumers will turn

to using credit cards, which we've already seen. And Sweet says that could cause people to fall behind on payments. But even as savings dwindle, consumers keep on spending, especially higher income ones. That's not always been the case, says bank rates Ted Rossman. Normally when people are stressed about the economy, they pull back on things. They stop traveling. They stop going out to eat.

Rossman says the fact that we haven't seen pullback on a wide scale could mean consumers think the current oil price spike won't last. We keep hearing, like from the president and others, that war is going to be over soon, gas prices are going to come back down. I do wonder if some people are pulling more of the short-term lever about like, okay, I'll dip into my savings for now, but it's a short-term adjustment they're willing to make. Still, the savings rate is less than half of what it was two years ago, which means the trend has been going on for a while now, says Lending Trees Matt Schultz.

I think that Struggle is driving more of this right now than confidence is. Schultz says the best thing consumers can do is to make the most of whatever savings they're able to pull together. By using something like an online high-yield savings account that is getting, you know, around 4%. Compared to a traditional savings account from a megabank, which Schultz says offers an interest rate closer to zero. I'm Daniel Ackerman for Marketplace. If recent trends hold, this summer is going to be one of, if not the hottest on record, to say the climate crisis is getting more critical. There are ideas big and small on what to do about that. And among the bigger ones, the biggest probably, is dimming the sun. The new season of our

climate podcast, How We Survive, is all about some of those large-scale interventions. Here's Marketplace's Amy Scott. At an undisclosed location in the San Francisco Bay Area, I'm standing about 21 feet off the ground on the roof of two shipping containers stacked on top of each other. Just don't stand on the edge. We don't want anyone dangling. I'm with Luke Isman and his business partner, Andrew Song. We're going to launch some balloons and send them into the stratosphere, filled with sulfur dioxide and hydrogen gas to get it up there. Isman and Song co-founded the climate intervention startup make sunsets. They sell what they call cooling credits. For $1, you can pay them to release one gram of sulfur dioxide into the stratosphere,

which they say is roughly enough to offset the warming caused by a ton of carbon dioxide. The goal of make sunsets is to cool Earth as quickly as we safely can. And they think that this type of solar geoengineering, known as stratospheric aerosol injection, is the way to do it. Eisman and Song get to work, filling a weather balloon, one of those big latex ones meteorologists used to take atmospheric measurements, with hydrogen, so it'll float up into the air, and sulfur dioxide, a pungent gas that's a byproduct of fossil fuel production. When the balloon pops and the sulfur dioxide is released into the upper atmosphere,

it reacts with water vapor to form tiny particles that reflect sunlight, away from the earth and potentially cool the planet. I step over the gas tanks and stand precariously between Isman and Song as they hand me the balloon. You're going to let go and just pull your hand back so that this doesn't catch your hand. So I'm just going to let it go? Go for it. All right. One, two, three.

We watch as the balloon floats up into the clouds and disappears as it makes its way some 60,000, feet into the stratosphere. It sounds crazy, and I'll be the first to agree that this should not be a private company doing this. But the only thing worse than a private company doing this is no one doing this at all. Right now, they're not releasing enough sulfur to meaningfully change the temperature of the Earth. To date, they've released over 250,000 grams of sulfur dioxide. Scientists say it would take millions of tons. Do either of you have a science background?

We don't. No. So why are you qualified to do this? I think I'm no more or less qualified to do geoengineering than anyone else who does geoengineering by getting onto a plane or turning on their gas burning vehicle. We just don't call or scientists try not to call those things geoengineering because we're just used to them. Mother nature, it turns out, doesn't really care about our intentions at all. It's geoengineering, whether we're helping or hurting the planet, whether we're warming or cooling the planet, it's still geoengineering. Stratospheric aerosol injection does come with risks.

Sulfordioxide is a pollutant, and putting it in the stratosphere could damage the ozone layer, letting through more harmful radiation. Nobody is selling this as something that's magic. David Keith is a professor of geosciences at the University of Chicago. He's been in this field since 1990, and the work Make Sunsets is doing is largely based on his research. As we decarbonize, Keith thinks we should slowly ramp up injection of sulfur dioxide into the stratosphere using high-altitude airplanes until we reach about a million tons a year. Any of these interventions is going to cause harms, but we have the CO2 in the air. The harm from climate change is real, and it might make sense to do this, understanding that the benefits would be pretty large and the risks appear to be pretty small.

In stark terms, Keith says the sulfur required to cool the earth by half a degree Celsius could cause 10,000 additional deaths a year from air pollution, but it could reduce half a million deaths from heat. Still, many scientists and climate advocates would rather we didn't go that route. I think we have to understand that if we do this, this is a decision that will affect all, life on the planet. Kate Marvel is a climate scientist at Project Drawdown and is skeptical of humanity's ability to safely deploy something like stratospheric aerosol injection. Right now, I don't see that we have a world government that is capable of making a decision on behalf of

everybody who lives on the planet. Right now, there isn't even consensus in the United States, let alone among world governments, several states in the U.S. have banned or proposed banning solar geoengineering. I'm Amy Scott for Marketplace. First episode of this new season of How We Survive is available right now. Check it out. The market for commercial office space continued. It's slow but steady comeback the first three months of this year. Companies leased more space than they let go of for the third, quarter in a row. So it says a new report from the Commercial Real Estate Development Association. Marketplace's Smith. Fields has that one. If you're looking for new office space for your company right now,

maybe in New York or San Francisco, you're probably going to have a lot of competition. Mark Selvatelli at the Commercial Real Estate Development Association says fancy office buildings with a lot of amenities are leasing exceptionally well these days. You'd be hard pressed in a lot of big cities to find what we would probably call type A or trophy class space to be available. But he says that is not true of the office market as a whole. When you look more towards older buildings, ones that maybe don't have as many amenities

or perhaps are out in suburban locations, they're the market's a little bit more mixed. That is not a new trend, according to Joshua Harris at Fordham University's Real Estate Institute, but the pandemic accelerated it. We have kind of the top tier that is performing very well, and then we have a bottom tier that's performing much worse. A K-shaped office market to go with our K-shaped economy.

What is new in recent months is that more of those older, less desirable office buildings are getting knocked down or converted into apartments or hotels. We're removing more office spaces than we're building. And I do think that trend is going to continue. So is the demand for fancy new offices. For all the headlines about return to office mandates, Nick Bloom at Stanford University says how we work has shifted. I think the future is a lot of hybrid.

So a lot of folks going in, say, three days a week, working at home for two, probably less fully remote and probably as much fully impersonation as ever had. And he says with so many people now used to working from home, some are all of the time, it's a harder sell to drag them back into a drab windowless office. I just don't see this kind of Dilbert-esque mass ranks of cubicles out in the suburbs coming back. What I do see is nice offices and city centres for, you know, shiny glass windows, gyms, maybe canteens. This stuff is alive and kicking.

And vacancy rates are low. I'm Samantha Fields for Marketplace. Coming up. Postcards, mugs, coosies, glasses. Everything you could ever need, right? First, though, let's do the numbers. Dow Industrial's added a mere 24 points today. We'll call that flat percentage-wise,

50,668. The NASDAQ up 242 points, 910%, 26,917. S&P 500 picked up 43 points, 610%, 75 and 63. With today's inflation data, you may be considering one of the many stripes of budget retailers to save a couple of bucks. Wall Street apparently think so. Dollar trees soared 17 and 9 tenths percent dollar general, climbed 5 in a third percent. Five below went up. Five below went up.

Anyway, it went up four and a 10th percent. Maybe I'm the only one who thought that was funny. Samantha Phil was telling us about office space. CBRE, commercial real estate firm there, felt two and nine-tenths percent. You're listening to Marketplace. This is Marketplace. I'm Kai Risdahl. True story.

I'm walking through my local piggly-wiggly yesterday. And in the soda aisle, the soda aisle, I spot a colorful can that says in big letters on the front, 10 grams of protein in a soda. No wonder then that late last month, the Department of Agriculture was warning of protein shortages. Ellen Cushing wrote about the protein industrial complex in the Atlantic the other day. Ellen, welcome the program. It's good to have you on. I'm so happy to be here. Let me just say at the outset that I have a protein shake sitting on my desk waiting for me after I get out of this interview.

And I guess my first question is, am I the problem? Honestly, maybe. You know, there is, sorry. Sorry to be the fair about news. I kind of knew it when I read your piece. Yeah. As my piece says, we, America is on the brink of a protein shortage, protein powder shortage, I should say. So demand is very high for protein powder, largely from people like you and from industrial food manufacturers who are stuffing protein into everything they possibly can right now. And supply is not able to keep up. up right now. So we're seeing prices go up wholesale and retail, and it's going to be a little bit

rough out there for you, protein heads. It's not like I'm the only one. All right. Let's back up for a minute. So we're talking mostly about way protein, W-H-E-Y, which used to be this thing that farmers would just like throw away. Oh, yeah. Way is a byproduct of cheese making. And farmers would like dump it in rivers and spray it onto their fields. There was a huge problem in places that do a lot of cheese production with like these horribly polluted rivers and fish would die from way pollution. It was a big problem. Nobody wanted way. The biggest problem that farmers had with way until quite recently was getting rid of it cheaply and safely and legally. And now the problem is that they do not have enough of it. So let's get to the industrial production side of this because this was the

amazing thing in this piece that popped out to me. And again, I apologize for all the damage that me and my protein friends are doing. You write in this piece that had somebody broken ground on a protein production plant, a way protein production plant, when this protein maxing things first really caught on like three-ish years ago, we would still not have supply coming from that plant. And oh, by the way, it would probably cost like a billion dollars to build a thing. Yeah, this was the thing that was most interesting to me about reporting this story. I had kind of assumed the problem was the cows, that we didn't have enough cows. That is not true. America is drowning in cows.

The problem is the infrastructure. So way processing is this tremendously complicated, hugely costly endeavor. You're taking 101 degree liquid from a living animal on a farm and turning. it into this shelf-stable, highly potent powder. Building away processing plant is just not a quick thing for anyone to do. And so those plants are coming online, but it takes a really long time. You talk to a person in this piece who remembers the cottage cheese craze of some number of years ago. And you close with this kind of amazing line, right?

cottage cheese has thankfully faded from the public memory. If you say, our appetites change faster than the systems that satisfy them. I mean, protein maxing will eventually die out, but people are making these big investments. The cottage cheese analogy was really interesting to me because I remember that craze. With cottage cheese, the industry did not immediately pivot to cottage cheese production, which turned out to be pretty wise, because as you say, cottage cheese is not all. all that popular anymore. You know, these trends happen.

They happen online. They move at the speed of light. But moving real products in the real world takes way longer. Yeah. All right. I have to go finish my shake. That's all I'm saying. Ellen Cushing at the Ellen.

Ellen, thanks so much. Thank you. You don't have to be a marketing genius to know that brands are everything. Companies, people, radio programs, even people. cities. And it turns out there's been some drama in Huntington Beach, California over its brand ecosystem from LAist to RepL.L.L.R.L.R. It's mid-morning at the Huntington Beach Pier. Surfers are catching waves. Buskers are busking. And Brian DeLise is walking off breakfast with a few friends. It is Surf City, USA. Come on. This is the sun, the beach. The weather,

you can't beat it. Surf City, USA is Huntington Beach's official trademarked brand. And that is exactly what's for sale at its official store on the pier here. Surf City T-shirts, sweatshirts, postcards, mugs, coosies, glasses. This is Sally Westcott. She and Tina Varee are the private side of this public-private partnership. The store gets cheap rent for its coveted peer location, and the city gets 5% royalty.

royalties on all sales of the store's city-branded merch. They serve mostly tourists, but also some locals and former locals. We do get a lot of people that come in and they say, oh, I used to live here, but now I live in, fill in the blank, and they want to wrap their hometown. I've had it where they start crying and wish they could come back. And then I start crying at the register and then we're all... Westcott and Verre say they felt a little understanding.

under fire when a consultant hired by Huntington Beach questioned why the city wasn't doing more with its brand. He recommended the city establish a creative media department, a film commission, and a merchandising program that would lock down the city's intellectual property. The main goal, more revenue for the city, says Mayor Casey McKeon. Like every city, we're facing, you know, structural budget issues. There's not a lot of ideas out there how to fix it other than a sales tax increase or a hotel tax increase. Or building a lot more housing to increase the tax base, which McKeon does not want.

He envisions digital vending machines around town where you could order city hats, t-shirts, and other swag. He also wants to sell that swag directly to local stores or create licensing agreements with retailers. When you buy it through us, now the money is coming back to the city where it should to help pay for to make the community clean and save. Ryan Short is co-founder of the company's city.

brand, which helps cities and regions define their identity. And yes, make money off of it, but he says that shouldn't be the primary goal. The way I think about it is it's more of a North Star. It's like a shared division. His favorite example is Costa Rica's unofficial brand slash motto, Pura Vida. The phrase, which literally translates to pure life, is all over souvenirs. But it's also a vibe. It's so ingrained in the culture. Their locals buy into it, their tourists buy into it. And to me, that's like the end goal. It's kind of like raises all ships, right? At the city's store, Westcott and Varee say they still follow the mission they were given more than 30 years ago when the store opened to be frontline ambassadors for the city.

I think the value to and the branding is to really get the message out about what your city is so that people are going to visit. Move here or live here. Yeah, anything that projects a positive image. We're here to do our part. Huntington Beach's brand ecosystem reboot is currently on hiatus while the City Council takes a deeper look. So no digital merch machines yet, but you can still get an official Surf City t-shirt at the official city store. In Surf City, I'm Jill RepLogel for Marketplace. This final note on the way out today, I'm just going to be able to. to read you the text of Title 31 of the United States Code, Section 5114, subparagraph

B, quote. United States currency has the inscription in God we trust in a place where the Secretary of the Treasury decides is appropriate. Only the portrait of a deceased individual may appear on United States currency and securities. No reason. Just thought you'd like to know. Our daily production team includes Olivia Burdette, Andy Corbyn, Maria Hollenhorst, Sarah Leeson, Sean McHenry, Michaela Seah, and Sophia Torenzi. A Will Story is the supervising senior producer. And I'm Kyle Rizdahl. We will see you tomorrow, everybody.

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