Marketplace - Services stall as manufacturing booms

Episode Date: May 22, 2026

S&P Global’s flash Purchasing Managers’ Index for May reflects “a tale of two economies.” Input costs increased across industries this month, and while manufacturers could keep up, the services sector faced softening demand. Also in this episode: Birdwatching brings tourist dollars to Northwest Ohio, an independent performance venue in Iowa gets creative to keep the lights on, and we discuss the week’s economic headlines. 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.

Support comes from Helen-in-law representing whistleblowers who experience retaliation or termination for reporting corporate wrongdoing. Results that make a difference. H-A-L-U-N-E-N-Law.com On the program today, a theory about this week in this economy. We'll talk live music in small clubs. And, hey, is that a Wilson's warbler I see up in that tree? From American Public Media. this is Marketplace. In Los Angeles, I'm Kyle.

It is Friday today, the 22nd of May. It is always to have you along, everybody. I'm just going to say this. And then we'll see what Courtney Brown. She's at Axios and David Gurrey. He's at Bloomberg. We will see what they have to say about it. I think this was a deceptively significant week in this economy.

We'll see what they say. Welcome to the program, you two on a Friday. Hello. Hey, Kai. Hi, Kai. All right. Bernie Brown, you get to go first. Here's my theory. The 30-year tops 5%. People get really worried about that. Fed minutes come out the other day. They show a clear signs that an interest rate hike might be next. Forget a cut. Forget holding. They're thinking about hiking. Chris Waller gives a speech. Fed governor gives a speech today to the title of which is policy risks have changed. And oh, by the way, Kevin Warsh takes over today at the Fed. Discuss. My theory, please. Yeah, it's like almost everything that happened this week in macro world pointed to this idea that rate cuts, which, you know, Kevin Warsh is under pressure to deliver.

Just the case gets harder and harder to make. It's like every day this week through Friday, the case got harder to make. And it all culminates in that speech that you mentioned from Fed Governor Christopher Waller. Remember, he was basically on the on the on the on the. front line of arguing for a rate cut not too long ago totally changed his mind because of the inflation data and other economic indicators that have come in this week. So I buy into your theory, Kai. All right. David, David Gurra, join the club. Come on on board with my theory. Yeah. I mean, it was a busy week. A lot of signal moments. You know, I think we had a great piece of Bloomberg this week looking at what we've seen in terms of long-term yields and the fact that manifest in all of that

is this fear that inflation isn't coming down anytime soon. Yes, the war in the Middle East is contributing to that, but there are other factors at play as well. And I think you're right to cap it off with what we saw in the Eastern of the White House today. That's Kevin Warsh being sworn in to the Fed. Now the chairman inheriting a very difficult job. I don't envy him. I think the president made a joke about that as well. There are easier jobs than the one that he faces here.

And I think that removed that he had, the fact that that ceremony took place in the White House was probably a nice thing because it was a bit more of an extended diversion from the fact that when he gets back to the Fed, if he wants to do all that he said he wants to do, implement all the reforms he wants to do, do what the president wants him to do, which is agitate for cuts. That is a harder and harder mission for him to try to accomplish. Getting harder every day. And consumers and also the markets, Courtney Brown, are thinking inflation is going to be higher for longer and we know what happens when expectations become unanchored, right? This is something that, again, referencing the governor Chris Waller, who, you know, we should just say is an influential member of the Fed board. He was nominally in the running to be the chair. Could have been in the chair. Oh, that's right.

Who could forget? So he mentioned this idea that inflation has been stuck over 2% for the time now. And he gave this fantastic analogy of a coin flip to describe how consumers might start thinking about. inflation. Basically, if you flip a coin three, three times a row in its heads, the consumer might start to think that maybe the coin is rigged or something, and he can't quite explain why that happens. But it's kind of the same idea with inflation. If we keep getting higher inflation, consumers might start to believe that this is just the new normal. And that's when the Fed starts to get worried, right? Consumers start to believe higher inflations are coming. They start to

adjust their actions in ways that make inflation more inflation. embedded in the economy and hard to beat. David, there will be much ink spill than airwaves transmitted, I suppose, to torture that analogy a little bit, over the changes that are coming to the Fed with Chair Warsh. One of them will be their communication style. And setting aside the fact that Waller clearly didn't get the memo with that speech today, less is going to have to suffice. Do you not think?

You know, I think that's probably the case. And there has been this royaling debate about forward guidance, you know, how, how worthwhile is the information that Fed policymakers are giving us in advance of meetings. I think there's a school of thought that a lot of these policymakers are recognizing the fact that there's a plasticity of this economy that maybe that kind of advance notice isn't as good as it used to be, or that advanced thinking isn't as useful for markets and journalists like us as it used to be here. But I think this is the way that the new Fed chair is going to make the strongest imprint on the Fed in the shortest period of time. Look, he's going to have his work cut out for him with other

kinds of reforms as we were talking about. The wind is blowing in the other direction from cuts. It's pointing to hikes. But I think he's talked about the fact that he thinks policymakers say too much. They talk too often. He hasn't committed to having press conferences with the frequency that Jay Powell did. I think we're in store for perhaps some seemingly kind of radical changes there that bring us back to the way things used to be at the Fenn.

Courtney Brown, I come to you now in your capacity as a bond market expert. And I want to know from you when the bond market is going to say to the American an economy. Nope, we're done with you. We have had it. And then things go downhill really fast. Help me out with that one. Scary prospect, I think. And like when you talk to people on Wall Street, this is the possibility that they always bring up, you know, what if what happens if there is, you know, another type of recession economic shock? And the U.S. needs to spend money to help the American people. And the bond market says, no, no, no, no, we're not, we're not doing that anymore.

you know, and you have kind of the revenge of the bond market. We wrote a piece this week that I think is interesting with respect to Kevin Warsh. And it's kind of ironic that the cure for high rates in the bond market might be the high rates, right? Get the bond market to believe that Kevin Warsh is not going to defy higher inflation expectations and push through lower rates. David, last word to you. You got 40-ish seconds on this one. I was going to ask you about consumer sentiment that came out today and, you know, University of Michigan data that is, you know, reliable with a grain of salt. But the upshot is consumers are really, really angry and upset and cranky.

And yet, that doesn't change their spending behavior. So I guess I'm not going to ask you about that. But I'm going to ask you about why we pay attention to the consumer when we keep on spending. That's my question, right? We keep on spending. We keep on spending. Obviously, it's such a crucial part of this, the U.S. economy. I think we are seeing signs that, yes, with that grouching, as people are beginning to change their habits, they're still buying gas, they're paying more for it, they're spending less on other things.

And I do think that sentiment data is key when you look at kind of a broader complement of other data that we're getting about how consumers feel. And they're worried. They're worried about how long inflation is going to be high, how high it's going to go. And they're worried about this war in the Middle East, which, again, we see these daily undulations, what's going to happen? what's not going to happen. But all signs indicate this is going to last for a while longer. And as gas prices continue to go up, that's just going to be a heavier and heavier weight on the American consumer.

Right. Right. And then consumer economic sentiment, just super quickly here, consumer economic sentiment then becomes a political problem for the White House. Absolutely. And they have to be aware of that. And they're trying all kinds of things to remedy that. None of it's worked so far.

So it's going to be a bigger and bigger promise we get closer to November. David Gura at Bloomberg, Courtney Brown and Axios. Thanks, you too. Thanks, Guy. Thanks, Guy. See you. Wall Street today, forget the war, forget inflation, forget consumers, and forget the Fed. All traders are caring about is earnings and AI.

We will have the details when we do the numbers. Had you come to this program today looking for clarity on what's going on in this economy? Our apologies. It's complicated, as David and Courtney and I were just talking about. And a reading we got this week brings that home. S&P Global's Flash Purchasing Managers Index, we're talking May Data here, is a close to real-time snapshot of pretty much the whole private sector economy. It's based on a survey of the people who do the ordering of supplies and finished goods at manufacturers, as well as consumer and business demand in the services sector.

So that's the whole smash right there. And the results were, well, as I said, complicated. So it's a good thing. We got marketplaces Mitchell Hartman to sort it all out for us. We start with an almost quote from Charles Dickens. It's a tale of two economies. That's Chris Williamson, chief business. economist at S&P Global Market Intelligence. Manufacturing doing very well. Production leveled and

order books in the last couple of months have been growing at rates we've not seen for four years or so. On the other hand, in the services economy, you've got a nastier turn, a near stalling of growth. Let's start with manufacturing. It's booming for a couple reasons, says economist Bill Adams at fifth third commercial bank. Investment in data centers and in the AI boom. Also, strong business investment driven by tax changes in the one big beautiful bill. Adam says services, meanwhile, are slowing from... Headwinds to the real estate industry from high mortgage rates and hesitant consumer sentiment translating to softer demand for service-providing businesses.

It's important to note, though, we're not yet seeing a downturn in discretionary spending, says Rob Hayworth at U.S. Bank Wealth Management. Consumer data, like open-table restaurant booking, and TSA throughput at the airports, all those are telling us that consumer behavior is not faltering. One clear warning sign from the PMI report is sharply rising input costs for manufacturing businesses, says Scott Anderson at BMO Capital Markets, caused by... Just the war itself anticipates supply chain disruption, increasing transportation costs. Which will only get worse with time, says Fifth Third Commercial Bank's Bill Adams.

The pickup and input prices is a big warning to the Fed that if the straight stays closed, if energy supplies continue to be interrupted, we are entering into a large inflationary shock. It's starting in the manufacturing sector, but if it lasts a few more months, he says, it'll spread through the whole economy. I'm Mitchell Hartman for Marketplace. Coming up. They saw a bird that actually converted them. They call it a spark bird. Grab your binoculars, gang. But first, let's do the numbers.

Dow Industrial's up 294. Today's 6 tenths percent, 50,000, 579. The NASDAQ added 50 points. That is 2 tenths percent, 26,343. The S&P 500 gained 27 points. That is just shy of four-tenths percent, 74 and 73. Four of the week, the five days gone by. The Dow picked up two and three-tenths percent.

The NASDAQ rose just shy of about a half percent. The S&P 500. added nine-tenths of 1%. The Chinese computer manufacturer Lenovo reported a big jump in quarterly revenue, sent its shares 19 and 3 quarters percent higher in Hong Kong. That news also boosted some

U.S. computer makers. Dell Technologies added 16 and 3 quarters percent H&P, HNP, no, just HP, accumulated 15 and a quarter of 1 percent. Bonds Rose yield on the 10-year T-note fell 4.55 percent. You're listening to Marketplace.

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That's quickbooks.com slash workforce. Programming is supported by Store. Reves, a leading U.S. corporate and litigation law firm providing sophisticated business clients high-quality legal services with offices in seven states and Washington, D.C. Stole 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 S-T-O-E-L.com. This is Marketplace. I'm Kai Risdahl.

Spotify announced the new feature this week. It's called Reserved. It's supposed to get more concert tickets into the hands of actual fans instead of scalpers who are going to sell them on the secondary and inevitably priceier market. But while some big name arena tours are indeed selling out, there's a whole other world of small independent music venues that are just trying to keep their doors open. A report from a National Independent Venue Association last year found almost two-thirds of those clubs. are not making any profit. Toby Parks owns a 250-person capacity venue in Des Moines, Iowa. It's called XBK Live. She's also the vice president of the National Independent Venet Foundation. Toby, welcome back to the program. It's good to have you on. Yeah, thanks for having me, Kai. How are things business-wise at XBK Live?

You know, we're very fortunate that we are doing quite well here in Des Moines, Iowa. but I can't say that that is necessarily the case for other independent venues across the country. It's been kind of a hard road post-pandemic for a number of reasons, but, you know, we're doing okay. We're hanging in there. When you say you're doing okay, I mean, are you sold out on a Friday, Saturday night? I wish we were every Friday or Saturday night. But, you know, really one of the big issues that we're facing is, you know, you know, know, I think we in the independent sector are really trying to remake the connection with music fans.

I think, you know, a lot of times due to the secondary ticket market and ticket scalpers, you know, people have gotten used to feeling like they're going to battle to get a ticket to see their favorite artists. So I think a lot of times they're not really thinking like, oh, I can spend 20 bucks and go to my local music venue in their own communities and their own neighborhoods. That's so interesting because it's not like, and this is, I'm not saying this pejoratively, I'm not saying it well at all, but it's not like your competition is like Taylor Swift, right, and those big stadium shows. It actually is. You would be surprised, you know, when people are, you know, in a position where they're paying literally hundreds or thousands of dollars for this one big concert, they're not going and spending $20, you know, they're saving every dime that they can to go to this big concert. So that really is a huge part of some of the things that we're battling is just trying to figure out where we fit in in people's entertainment budgets if they have one. Yeah, that's a good point. Talk to me, would you, about sort of the macroeconomic environment, right?

Inflation is up, and consumers are cranky as they always are. Is that adding to your woes? Yeah, I mean, it's, you know, when people are paying exorbitant gas prices, I mean, that's hard not only from the venue perspective because there's, less money in people's pockets. But I would say, you know, from the artist's perspective, even, you know, there's a lot of concern about artists being able to afford to actually be able to go on tour. So, you know, we're fighting a lot of things on top of. We as concert promoters and venue owners, you know, we make most of our money from concessions and people, you know, buying drinks at the bar. And there's a significant downturn in people drinking, like great for people being healthy, but it's really hard on the pocketbooks of small music venues.

It sounds, we started with me thinking you were doing all right, and now it sounds not great, honestly. It's, you know, it's a battle every day. And, you know, people who do this work, you know, those of us in the independent sector, we don't do this because, you know, we think we're going to make tons of money. We do it because we love our communities and we love helping develop artists, you know, there's no, I always like to say there's no Taylor Swift without stages like mine, you know, and that's why we do it. And, you know, I'm fortunate enough that XPK isn't my primary source of income. Me like, you know, every other person in America right now

has multiple jobs, so I can't complain. Well, let me take that side turn, the side hustle turn you just gave me and talk about this other thing you do. You're an intellectual property attorney, right? I am. I am an IP attorney and entertainment attorney and also have. I've recently just started a new tech company. As we're talking about the economics of the live sector, we as concert promoters and venue owners pay a lot of money into royalties to public performance societies. And so I've created some technology to help make it easier for artists to submit setless data so they can participate in the royalty pools with their respective PROs.

Got it. So the people own the rights of the music? Correct. They represent songwriters and own the rights to the underlying. compositions. Yep. Interesting. So it's a side hustle, but it's very, very parallel, right? It's 100% parallel. And I think that, you know, from the perspective of artists, as we said, it's, it's so expensive for artists to tour these days. And, you know, we need, we need those bands to be on tour to keep our doors open. So, you know, we're doing everything in our sector to

help them. Let me back you up a little bit to some of the things that you're dealing with. You mentioned people not drinking as much anymore, which great for society, maybe, you know, not as good for your profit margin. How else are you using this space? Because I imagine at 10 o'clock on a Tuesday morning, it's you got this space. You've got to figure out how to use it. Forget just Saturday and Sunday night or Friday and Saturday nights. That's not going to do it for you. Yeah.

I mean, we've gotten really creative. You know, we do a lot of kids shows. You know, we'll open up on a Saturday morning and have bands that cater to kids. You know, we've really leaned in heavily to our NA beverage service. So, you know, we have a much broader range of non-alcoholic cocktails and things. And we also do a lot of community service work. So we work with a lot of local nonprofits to give them space. So instead of, you know, seeing your live concert, you might also be going to a yoga class.

Who knows? Got to do what you got to do. Yeah, exactly. Toby Parks. She owns XBK Live. there in Des Moines, Iowa. Toby, thanks a lot. I appreciate your time. Thanks so much, Guy. Roughly one in three people in these United States to the tune of $100 billion a year

participate in the birding industry. I know. I was surprised, too. But if you bought a bird feeder to watch the Robins and the Chickadees in the backyard, then you too are a birdwatcher in the eyes of the U.S. Fish and Wildlife Service. And it turns out there is no better time to talk about birding than May, right in the thick of spring migration season, which as it happens, is when Northwest Ohio hosts the aptly named Biggest Week in American Birding. Marketplace is Kelly Wells went to see what's what. Tanya Tice runs a seasonal ice cream stand called Barnside Creamery. She says she owes a lot of its success to bird watching, a hobby she doesn't really know much about at all.

As their birding week festivities have come to be more known and have grown, so as our people, business right alongside of it. Her business is on a rural stretch of road about 25 miles east of Toledo. She's under a migratory flyway. And since she's a mile away from the Lake Erie Shore, lots of birds stop around here before attempting to cross it, which is why Northwest Ohio is home to the country's largest annual birdwatching festival. The week of this year's festival, temperatures were in the 50s, and it was cloudy, not

traditional ice cream weather. But it's Tice's biggest week of the season. and the local businesses that supply her ingredients know it. When I call for my orders, they're like, oh, yep, it's Burning Week because Tanya just talked up. The biggest week in American Birding Festival brings more than $50 million to Northwest Ohio every year. Hotels sell out months in advance. People fly in from most U.S. states and multiple countries, and there's no shortage of gear to buy. The conference center lobby is lined with booths of bird feeders and bird art.

art and bird books and bird tours. Then there's the optics tent filled with binoculars and scopes and camera lenses worth more than my car. That tent is run by Whitney L'Anfranco. Even just these festivals, like the amount of volume we move, I mean, there's more and more people starting birding every day. Burding had a major moment thanks to COVID, obviously, because it's an outdoor socially distanced activity and birds never stop doing their bird things. One popular phone app, eBird, saw engagement double going into the pandemic. Another one, Merlin, grew five-fold. And a lot of newbies go out and buy binoculars.

We might have, again, those folks come in today and buy a $200 pair, but if they stick with it over the years, so continuously buy more equipment, go to cameras, go to spine scopes, upgrade their binoculars. It just, you know, keeps going. So that's what Birdwatchers are spending money on. But the Y still alluded me. So I went on a tour. What's everybody staring at this time? There was a northern Peru. Okay.

It's a warbler. Okay. It's very colorful. This tour consists of a few dozen people following behind a knowledgeable man in a matching yellow lanyard and ball cap, occasionally stopping when they catch a glimpse in the brush that I definitely don't have the skill to spot. Rob Ritma, who runs one of the nature tour companies at the festival, lends me his very nice binoculars, which I learn require skill to use. properly.

You're moving your head to your, move the binoculars to your eyes, not your eyes to the binoculars. Okay. So keep your eyes on the bird. Now I've lost it. We'll try again. An hour later, after more tries than I want to disclose, I finally spot what looks like a yellow ping pong ball with wings.

I see him. I did it. Woo-hoo. That's so exciting. It is. Congratulations. Greg Miller, who's leading the tour, is perhaps even more. more invested in my success than I am.

So people who haven't known about bird and then they saw a bird that actually converted them, they call it a sparkbird. Is that my spark bird? This could be your spark bird if you start birding now because of this. You have to tell me what kind of bird this is again. This is Wilson's warbler. My sparkbird hasn't inspired me to drop $1,000 on binoculars, but I did hang a bird feeder in my yard. or three.

In Oak Harbor, Ohio, I'm Kaylee Wells for Marketplace. This final note on the way out today, a pop quiz for the monetary policy aficionados among you. Kevin Warsh, now properly chair Warsh, was sworn in at the White House this morning by Justice Clarence Thomas. But who do you suppose was the last Fed chair sworn in at the White House? And for bonus points, who did the swearing in? Anybody? Okay, Alan Greenspan, sworn in by Vice President George H.W. Bush in 1987. Alan Greenspan, by the way, a couple of months ago, turned 100 years old.

Our theme music was composed by B.J. Leaterman. Marketplace's executive producer is Nancy Fargolly. Joanne Griffith is the chief content. Officer Neil Scarborough is the vice president and general manager. And I'm Kai Rizdahl. Have yourselves a great weekend, everybody. We'll see you back here on Monday, all right? This is 8 p.m. I'm Rima Gres, host of the weekly marketplace podcast. This is uncomfortable. And this week on the show, we're talking about doom spending. You know, that impulse to spend when the future feels uncertain.

Like, maybe I'll never be able to retire or buy a home anyway. So why not book that vacation or buy that fancy gadget? When we ask ourselves, what's the point of saving? We're just going to die or whatever. I think that's the wrong question. I think the more important thing to ask is, is spending that money even actually making you feel better. Be sure to listen to This is Uncomfortable wherever you get your podcasts.