Marketplace - The states making extra off of high gas prices

Episode Date: July 29, 2026

The Trump administration’s war in the Middle East has driven up fuel prices globally. As drivers pay more at the pump, some oil-rich states like New Mexico and Alaska are experiencing a tax revenue windfall. In this episode, one man’s gas spend becomes another man’s state budget booster. Plus: The Fed holds rates steady despite internal disagreement, “kidulting” and collectibles fuel growth in the toy retail space, and a line dancing resurgence driven by social media launches one instructor’s boot scootin’ career.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:Oil-producing states benefit from war-driven windfallAdults are spending big on toysWhat happens if the AI bubble pops?How one entrepreneur is riding a wave in popularity for line dancing

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No, they're not. Escape to Freedom Mobile. With our price freeze promise, you'll keep your wireless plan price for as long as you keep your plan. Conditions applied. Details at freedommobile.com. On the show today, how long until you're not the new guy anymore? So I think officially it's eight weeks and four days, but I'm not counting. From American Public Media, this is Marketplace. In New York, I'm Sabri Benishore in for Kai Risdahl.

It is Wednesday, July 29th. Glad you are here. That was Federal Reserve Chairman Kevin Warsh at his second-ever press conference since getting that job. the occasion being that the Fed just wrapped up its big two-day meeting today. The main point of that meeting was to figure out what to do with interest rates. Where should interest rates be to fight inflation but also protect jobs? And today the Fed went with leaving rates right where they are, although not unanimously three out of the 12 voting members on the committee

actually voted to raise interest rates. I asked for a good family fight and I got one. That's the purpose. That's the design feature. It was the first time since 2016 that there's been a dissent like that all in one direction. Now, why would they vote like that? Well, it means those members think the Fed should fight inflation more aggressively. But Warsh pointed out, markets are kind of already doing that for the Fed.

Like market interest rates have risen on their own in the past month. We're trying not to interfere with that market signal. That's part of the reason why we've been somewhat spare in our words, when we pulled back from forward guidance. So they're reacting to events, I would say much more directly over the 42 days since we last met. This is a good thing. Now, in explaining why the Fed ended up deciding to leave rates alone, it basically said, look, inflation isn't great, higher than we want.

But the job market is actually okay. And there's just a lot of uncertainty. so, you know, let's just not do anything hasty. But Warsh said, as he has said many times these past eight weeks, one way or another, the Fed will get inflation down. The path to central bank heaven requires delivering on our remit. These days, that means delivering on price stability. I wouldn't measure that path in 42 days or any one particular meeting.

And I came out of that meeting even more confident that this is the right team to win the battle against high inflation. Hopefully, because inflation has been above the Fed's target for more than five years now. Wall Street today, not pretty. We'll have the details when we do the numbers. War in the Middle East and oil prices are, of course, looming over this whole inflation question, which is a thorn in the side of the Federal Reserve and obviously us consumers generally. But, you know, it's capitalism, so there's always a winner somewhere, apparently. And that winter today would be oil-producing states.

like Alaska and New Mexico, specifically their budgets. From the Every Cloud has a silver lining, I guess, desk. Marketplaces Elizabeth Trobald has more. Two things are completely certain, death and taxes. But exactly how much taxes can be hard for governments to predict. Lucy Dadan is with the Tax Policy Center. Unfortunately, very hard for revenue forecasters to forecast revenues with any precision. That's especially true for states that rely on taxes from oil production, like Alaska, North Dakota.

New Mexico, Texas, Oklahoma, Louisiana, West Virginia, and to some extent, Montana. It is a volatile source of state funds. That's Rice University's John Diamond. He says when the price of oil is high, like now, states collect more of what are called severance taxes. As we've hit this war where oil prices have spiked, and that's going to drive severance tax revenues way up. That's temporarily good news for oil producing states that are seeing increased revenue projections right now. But Jared Walsack with the Tax Foundation says the gravy train only lasts so long. States want to hedge against an over-reliance on it.

You don't want to fund your education budget, 10% of that on this. and then suddenly it's not there. In New Mexico, the legislature has recently capped how much of the state's general fund comes from oil and gas. Charles Salee is director of New Mexico's legislative finance committee. For most of my career, we would look at this windfall, and the legislature would say, well, how do we spend all of it? And today, the legislature is saying, how do we make the best use of it?

That means that any additional revenue New Mexico gets from a higher-than-expected, oil price? We'll essentially go into our permanent funds. Not spending that extra money today, but using it to smooth out boom and bus cycles in the future. I'm Elizabeth Troval for Marketplace. You know, even when wallets are getting tighter, life is getting stressful, we do still find ways. Maybe there's a small ways, but we find ways to have fun. We will even spend maybe just a little for a moment of joy. And the data backs this up. Discretionary spending on games, specifically puzzles and collectibles marketed to adults, is growing. In fact, consumers 18 and older accounted for

35% of the toy industry's growth in the first four months of this year. That's according to market research firm CERCANA. Marketplaces, Kristen Schwab has more. To the uninitiated, a Lubbubu is kind of a hard thing to explain. The figurine is part charm, part collectible, part fashion trend. I like saw it online and I was like, oh my God, what is this? Almost was like, is this supposed to be something cute? Douglas Estelle instantly fell in love with Labubu's pointy ears and mischievous grin. You know what I mean? I was like, oh my God, it's like adorable. Estelle spent $100 to get into this toy exhibit in New York City today. The pop-up is full of Labubu sketches, videos, and rare collectibles. I have like all the pendants, all the plushes. They're like my, I love the

plushes. They're like my everything. Labubu is always there for me. I love her so much. Estelle has a few hundred Labubus, including some oversized versions, which can stand as tall as five feet, and years of collecting has not come cheap. Realistically, over the past few years, definitely a couple thousand dollars. Yeah, I'd say. You might think a toy exhibit would mostly draw kids, but Exhibit Brand Ambassador Stephen Malloy says the majority of people visiting have been adults here for themselves. Even we had a lady in today and she's a lawyer and she came, she left work early and got a cab here for like 20 minutes just to buy a liboooooo.

Adults are going crazy for toys. Nido Squishies, Jellycat plushies, book nook puzzles. Either that sounded like a lot of gibberish or you know exactly what I'm talking about. And if you do, you've probably heard of this term too. Cadulting. I did not, I did not coin this phrase, by the way. Ryan Spade is a marketing professor at Marquette University. He also researches collecting.

This is really about people giving themselves permission to kind of get in touch with their inner child, go back to their childhood, enjoy the things that they enjoyed as kids. Spade says people are looking for downtime with something low-tech and tangible. After spending their workday hunched over a computer screen and hunched over their phone, wondering if AI is going to take their job or if their lunches. salad was tainted with a parasite. Toys offer an escape. It's kind of like you can turn off your brain. You don't need to think about anything or worry about anything. It's just where does that piece go? Spade says people also collect to find community, and they collect out of nostalgia. That's something the

old classic brands are trying to capitalize on. Lego just revealed a 12,000-piece replica of Barcelona's Sagrada Familia, priced at just under $800. Bill DeBair has an after after dark collection, which includes a silver fox wearing a t-shirt that says Zaddy. And it's become a bit of a thing to throw bachelorette parties at the American Girl Cafe, which does serve cocktails. Brian Baker is a senior vice president at Hasbro, which recently released Blooms by Play-Doh, a floral arrangement modeling kit for adults. You know, we are no longer exclusively focused on offering products to children.

Our play-to-win strategy, you know, one of the key tenants is, aging up. Hasbro has done a lot of research. The company goes into people's homes to see what they buy and collect. It has a fun lab where they observe adults interacting with their products. They're looking to create customers for life. It's probably one of the strongest business strategies we could put in place. You know, as you grow up with our brands, as you grow up with Play-Doh, there is a product there for you that meets your needs at that moment in time. Speaking of moments in time, it's the moment Labibu Collector Douglas Estelle has been waiting for. Every exhibit attendee gets a blind box, a mystery package with a mini Labubu inside.

He tears it open. Oh, it's the red one. So cute. It wasn't the color he wanted, but that's supposed to be part of the fun. He can always buy another one and try again. In New York, I'm Kristen Schwab for Marketplace. It has now been five months since the Super Bowl. Supreme Court struck down the Trump administration's first round of tariffs on just about every country we trade with.

But the administration is back with new and new tariffs. Last week, it imposed 10 to 12.5 percent tariffs on 60 countries. For the small business owners here who end up paying those tariffs, it means the trade chaos is not over, which is why we called up Wesley Rule. He's the co-owner of Knoxville Fine Violins in Knoxville, Tennessee. to see how things are going these days. For now, everything seems to be relatively stable, even though things are kind of going up and down with the tariffs. It can be a hassle, but it can also just be,

it's part of doing a business, right? It's like you own a business. Nothing is ever going to be 100% smooth. There's always going to be bumps in the road, and you have to acclimate and have to kind of adapt and figure out what to do next. We've kind of just factored in random tariffs that were not prepared for into our budget.

So, you know, sometimes we'll order stuff from Italy or from Germany and get hit with a massive tariff and sometimes we won't. And it's really difficult to keep track of when that's going to happen. Sales have been pretty good. I think we're in a little bit of a bubble just because Knoxville is growing so much. So we just have more customers than we used to have. But, you know, they're about the same as they were last year despite the increase in population. So overall, we expected more sales. sales because of that and we didn't get it, but we're still okay.

High-end sales are down. I know that I've spoken to a lot of other violin shop owners, and they definitely seen a larger downturn in high-end sales than even we've seen. High-end for us are instruments that are kind of bred and better for professionals. So a $20, $30,000 violin that somebody's going to purchase to have the rest of their life and make their living on, those sales are down. You know, musicians aren't exactly swimming in pools of gold. So when the economy takes a downturn, they typically, you know, if they have an instrument that's kind of working for them, they might just hold on to it even if they don't love it. And even if they know they need a better one, they may wait to upgrade to see how the economy does in the next, you know, six to eight months. One of the big things in our world is what's happened to violin bows.

Pernambuco is the wood that all professional violin bows are made of. Pernambuco is a Brazilian rainforest wood, and it's not as though bowmaking is depleting the rainforest. But Pernambuco is endangered enough that they have banned it from international trade now. There's not really a great alternative to that, and players do feel it. They can tell. So we ourselves are getting into bowmaking trying to figure out how to fill the gap now that we can no longer order them. So that's kind of fun. I'm learning how to make bows.

My son wants to learn how to make bows already. He's only 12, but he's watched me make some bows and he's genuinely interested in it. So he may sit down at the bench and try his hand at making a few. We'll see. That was Wesley Rule of Knoxville Fine Violins in Knoxville, Tennessee. Coming up. What's happening right now? Like, is my mom going to be proud of this?

Sometimes it's best not to ask. But first, let's do the numbers. The Dow Jones Industrial average plummeted 1,153 points. That's 2 and 2 tenths percent to finish at 51,594. The NASDAQ lost 1 and 3 quarters percent. The S&P fell, one and a half percent. The market was read all the way down, and big tech was not spared from the bloodbath. Microsoft sank 7 tenths percent meta platforms, dropped one and three tenths percent.

Both reported earnings after the bell today. Tomorrow, Amazon and Apple will tell. investors how they did in the second quarter. Too late don't care, investors said today Apple slid half a percent. Amazon gave up one and eight tenths percent. You heard Kristen Schwab reporting on the adult market for kids' toys and the craving for some fun. Well, it was not a very fun day for one toy maker. Hasbro gave back one and two tenths percent. Bonsfeld, the yield on the 10-year tino rose to 4.69 percent. You're listening to Marketplace. It's Charles Barkley with Wayfair.

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This is Marketplace. I'm Sabri Benishore. Fed Chairman Kevin Warsh mentioned in his press conference today. The AI boom was making his and the Fed's job more complicated. Because, you know, nobody. knows how and when all this AI investment will pay off in the real economy. There's, of course, a separate question of whether it will pay off, or at least whether it'll pay off as much as has been promised, or whether it's a bubble. On the one hand, it is this big, weird, circular

investment situation and stock values assume really bright and perfect AI futures. On the other hand, AI is a real product with real revenue, so that's real. But the more important question might not be whether it is a bubble, but rather if it is and it pops, what happens then? Annie Lowry of the Atlantic turned to the case studies of the bubbles of your, like the dot com and housing bubbles of the aughts to look for answers. She joins us. Welcome to the show. Annie hi.

Thank you for having me. So what is different about this bubble versus, you know, the bubbles of your, like the the dot-com bubble, the housing bubble. Sure. There's two things that I would identify. So the first is that this is happening during a time when we have fairly high interest rates. So we normally think about bubbles as being a low interest rate phenomenon, right? The economy is running really, really hot. It's cheap to borrow. There's just a lot of cash flowing around. But interest rates are fairly high right now. And how this could be happening in a time of high interest rates, it's really down to the fact that corporate profits are so very high and the fact that the companies that are

doing the borrowing are enormously credit worthy. The other thing is that because this is happening at a time where a lot of the key companies like Open AI and Anthropic are still private, you're not seeing your average American participate in this at all. The share of Americans who own equities has not gone up. This is not something like Bitcoin where all of a sudden people are getting in off of the sidelines. This is really a phenomenon that's happening in boardrooms. It's not happening around kitchen tables. So let's talk about then, if this is a bubble, what does the popping? Because as you said, in previous bubbles, it was interest rates. That's, you know, interest rates are not super low right now. So, so what would cause this whole thing to pop? I mean, interest rates could go up,

right? Inflation continues to run in hotter than the Federal Reserve wants. It is possible that we could get into a place where interest rates go up. And so that could have an effect. Or I think what's perhaps more likely is that investors look around. They see that a lot of firms are very heavily indebted. They see that these firms are not making money in the way that they expected to be making. Maybe they're having trouble, making their loan payments, maybe they're having to refinance. Or investors could just kind of say, hey, this is all a little frothy for me. I'm done for now. One thing that's been really interesting is that the AI bubble was, or AI boom, however you want to think of it, it was initially financed with a lot of cash.

Increasingly, it's been financed with lending, whether that's through corporate bonds or lending made by shadow banks. We don't have a lot of visibility into especially that latter component. And so I think it's not unlikely that you could see some firms kind of going cabooy. During the housing bubble, there were lots of normal people buying second homes and flipping condos. during the dot-com bubbles, a lot of people were investing in the internet. That's not the case with AI, like Open AI and Anthropic aren't even public yet. So does that make us any safer if we are in a bubble and it pops? If a bubble pops, this could be bad for a number of reasons. And even if you are not a person who has been participating in this bubble directly, you could absolutely get hurt by it.

So the most straightforward thing that would happen is if there's a major stock market correction, people's 401Ks. Their retirement funds are going to lower in value by a lot. And so you end up having what's called by economists the wealth effect. People feel less wealthy. They spend less. And that is one of the ways in which a stock market correction can engender an actual downturn in the real economy. Just general chaos in the economy is not good for common people. And so I wouldn't expect that if we have some sort of correction or, you know, the Fed has to step in to rescue a business or we see companies go bankrupt, that has a tendency to hurt people even if they had nothing to do with it. Out of curiosity, how close do you think we are to a bubble popping moment? I don't know. The thing that I'm very, very worried about is the entire AI boom has this circularity to it.

It's a relatively small number of tech firms that are all buying and selling things from one another, right? So Intel is selling chips to these startups that then are being financed by these Silicon Valley giants. And so that interconnectivity makes me really, really worried. I think it's probably more likely that there's just some kind of correction. But who knows? I could also make a case that just something comes out of left field and all of a sudden all of these stock market gains have all of a sudden just disappeared. So I have no idea. And I feel like if I knew I would be in a different profession and probably much wealthier.

But yeah, I'm not sure. It's worrisome, though. Yeah. Annie Lowry is a staff writer at the Atlantic. Thank you so much. Thanks for having me. Social media algorithms will sometimes take you places you never expected. And that is true for the people watching posts as well as the people in them.

Exhibit A, country line dancing. It is blowing up on the socials and IRL in real life. And so are the entrepreneurs who know how to do it. Blake Farmer of WPLN in Nashville brings us this story of a real estate broker who went from selling land to selling moves. Counting beats and calling moves as hundreds follow his lead was not the plan. Until a few years ago, Justin Lee Williams had never lined down. He grew up in rural Tennessee, but real estate was the dream. My whole plan was, I was like, I'm going to be able to find people that want land,

you know, like five, ten plus acres. He started a company called Tennessee Back Road. Just about the time he was ready to go full time in 2020, so was everybody else. The COVID broker boom made it harder to be a newcomer. So he took a part-time job, managing a big boot store. All the money that I saved, all the plans that I had just really started kind of crashing. Then one day a customer asked if he'd ever want to help teach line dancing because Williams had the look, hat, boots, buckle. So I went to one of the classes, nothing but bachelor party is just coming in?

I was like, what's happening right now? Like, is my mom going to be proud of this? Right, left, right, left, right. He was only one step ahead of the students, but he kept at it and got better. Good enough that he started posting videos. And he saw that social media algorithms really like line dancing. Then came the video that turned Tennessee backroad into a line dancing brand. Under the glow of kitchen lights in socked feet, he shows his young niece a few steps to a Shania Twain song.

Hundreds of thousands of views in the first day, then millions. Shania herself made one of those reaction videos. What do you do? How do you keep that viral thing going? I don't think it could have happened at a more perfect time. Pacific line dances were taken off online, so he just kept gigging and clipping. He now has more than 300,000 followers on TikTok. Work started flowing his way, especially when Beyonce put at her Cowboy Carter album. Being a black guy, I don't know if you can tell her now, but I'm black.

Majority of what I focus on is country line dancing. When Beyonce came out, that kind of allowed black people to understand, like, hey, we're country too. He's comfortable choreographing Cotton Eye Joe or songs by Drake. He did a line dance for Neo's Fourth of July performance this year in Nashville, his first experience with professional dancers. Even when he's flying around the country to work corporate retreats, he's usually teaching novices. And there's something about how accessible line dancing can be. A renovated factory that's now retail space asked him to come a couple of times a month. We were looking to fill slow Monday nights and bring in some foot traffic.

Micah Williams is the property manager. She expected dozens. and got hundreds. The owners had hosted dance classes before, but that usually required couples. Line dancing works for individuals and groups. I bet a hundred of our guests are singles just out there dancing or looking to make friends, but able to just come and dance alone. The suburban crowd is also mostly white, which Justin Lee Williams appreciates in this time of polarization and division.

I think it's great for black people to see a black man teaching white people how to do country, line dancing, I also think it's great for black people to see a black man teaching black people how to do country line dancing. He says line dancing has become meaningful work because it brings people together. Still, he knows he's riding a wave. In September, Williams is leading classes on the Texas ranch where they shot Yellowstone and its spinoff shows. He wouldn't mind if the next opportunity involved acting. In Nashville, I'm Blake Farmer for Marketplace. This final note on the way out today here in the U.S., we are still fighting with inflation tooth and nail, but other countries are getting a helping hand, kind of, from China.

China's exports have expanded so much since the latest trade war with the U.S. They're driving down prices in a lot of countries, on average by 6 tenths percent, according to Goldman Sachs. Of course, that also means a bunch of domestic producers somewhere are probably suddenly getting undercut. So every inflation cloud has a silver lining that also has a cloud. Our media production team includes Brian Allison, John Fokie, Montana Johnson, Drew Jostad, Gary O'Keefe, and Charlton Thorpe. Alex Simpson is the manager of media production. And I'm Sabri Benishore. We'll see you tomorrow. This is APM.

I'm Rie McGrace, host of the weekly Marketplace podcast, This Is Uncomfortable. And this week on the show, Marketplace Correspondence, Kristen Schwab and Sabri Benishore, help me give advice about your workplace drama. Everything from Puttebrose. she co-workers to the politics of getting ahead. Relationships at jobs matter. And people who are schmoozy with the boss. It makes a difference.

Makes a difference. Be sure to listen to This is Uncomfortable wherever you get your podcasts.