Marketplace - “Their job is to make money. My job is to protect America’s national security.”

Episode Date: January 14, 2025

It’s Commerce Secretary Gina Raimondo’s last week on the job. We called her up to discuss the future of the CHIPS Act, her experience working with the tech elite and Donald Trump’s plan to “tariff our way” to revitalizing U.S. manufacturing. Also in this episode: Americans think finding a new job would be tricky but don’t plan to leave or lose their current one. Plus, the co-working industry sees signs of life and producer prices stayed mostly flat in December.

You work hard at something for four long years. What kind of parting thoughts do you suppose you'd have? From American public media, this is Market Plans. In Los Angeles, I'm Kyle Rizdahl. Tuesday, the 14th of January. Good as always to have you along, everybody. The political news of this day was the start to confirmation hearings for President-elect Trump's cabinet nominees, details of this particular day's events to be had elsewhere

in your newsfeed. For every new person coming into the cabinet cabinet though, one is leaving, including Commerce Secretary Gina Raimondo, who we have gotten on the phone one last time. Madam Secretary, welcome back to the program. Thank you, Kai. You are- Yes. I just wanted to say, I know you're in LA.

Yeah. And it's just unbelievable to see how tragic this situation is. So to you and your teammates and everybody out there, heart goes out to you and we're thinking of you. I appreciate that thought. I'm one of the very lucky ones out here. It's been rough. So to the case at hand, you have been working hard the past several months based on everything

that's coming out of your department on the CHIPS Act and AI regulation and all that jazz. And I guess the first question is, how sharply did the results of the election concentrate on everything that's coming out of your department, on the CHIPS Act and AI regulation and all that jazz. And I guess the first question is, how sharply did the results of the election concentrate your mind? Well, they concentrated my mind very sharply. Although I can't say they changed the work I'm doing here very much. We have had a plan all along to make the bulk of these investments by the end of the administration, regardless of who won the election.

And we're sticking to that plan. We'll have invested almost all of the CHIPS money and the broadband money by the end of the week, which was our plan all along. And I'm proud of the team. Your people have said you want to cement a massive industrial legacy. I guess I wonder if that's what you thought you were going to be doing when you took this job. You know, in a way I did, a way I didn't. Of course, I couldn't have predicted we'd be so successful. You know, the Commerce Department, under my leadership here, we will have invested $90 billion.

That being said, when the president hired me for this job, he asked me to take the job to help rebuild American manufacturing. And so certainly that's why I did it. You know, when I hear President Trump say we're just going to tariff our way to a revitalization of American manufacturing, I don't believe that. You need to make investments. And that's what I'm proud of that we've done. Setting aside for a second the question of President Trump's promised tariffs, about which there will be more on this program and certainly in the news in the months in which to come. How worried are you about what President Trump clearly plans to do with this economy, which

is more isolationist, less involved overseas, and perhaps rolling back some of what you and President Biden have set out to do in this administration. Well, he's inaugurated in a few days, and let's see what he does. I will say I met a week ago with my successor. It was a very productive meeting. You know, everything I've worked on,

Kai, the Chips Act broadband is bipartisan. We still enjoy strong Republican support. Becoming isolationist, 100% tariffs, these are not good moves for our economy, but let's see what they do rather than what they've been saying. Speaking of bipartisanship, there's another sort of angle on this, right? You've got Democrats and Republicans who generally favor what has been done in their specific districts or states to use the money that President Biden and the Congress and you have seen fit to spend.

There is, of course, the corporate challenge, right? Corporations are grateful, as we talked about last time, for the seed investment that you have made. But they are also sort of chafing a bit at some of the AI regulations. The tech firms are not happy with some of your restrictions on exports. How do you balance what the tech companies want, which is sales and money versus what you decide and President Biden decides are in the national interests and in national security concerns? Just as you said, it's a balance and you have to be practical.

With export controls, you know, if the US prevents US businesses from selling equipment or technology to China, but China can buy similar product from a Japanese company, a Korean company, a German company, it's just not effective. And as you said, you deny American companies revenue, which I never want to do. So in the case of semiconductors, we've worked in an unprecedented way with the Japanese, the Koreans, the Germans, and the Dutch to align our controls so that American companies aren't at a competitive disadvantage with their European and Asian competitors.

It's also the other thing that I've learned, Kai, there's no substitute for a huge significant amount of industry engagement. You just can't engage enough with industry to learn where to draw the cut line. And as you say, you want to draw it in a way that protects national security but doesn't deny companies revenue that they need. I get that you have to work with with industry, but industry is in some regards a little irritated with you, right? On this?

Yeah, you know, and that's fine, too. I'm very comfortable with that. Their jobs make money, my jobs to protect America's national security. So I have no problem annoying them because China is going to use that to modernize their military and use it against Americans. My only point is this is really sophisticated, complicated technology. And so the only way that we can learn is if we get into the weeds of the technology, and that means talking to industry to understand it. Let me dig in on China just a little bit. You have said in the past, trying to hold China back, this is a quote, trying to hold China back

is a fool's errand. Does that mean you gotta work with China or you gotta stand in their way? How do you manage that relationship, right? And I realize I'm asking the woman who's on her way out, but what have you been doing? Our export controls have been effective and they slow China down. Not to oversimplify it, but you know,

I think about it in terms of a running race. Export controls are like tugging on the shirt of your competitor a little bit. But fundamentally you have to outrun them, which means more research and development, more innovation, more investments, better companies. We're ahead of them now, and the way to stay ahead of them is to out-innovate them. I don't know if you remember this, but maybe a time or two ago when we talked, I told you about this kid in my daughter's high school who I went to speak to their economic

club and he was a sharp kid and he asked me about TSMC, which as you know has received billions of dollars from the US government and is building a huge plan out in Phoenix that we went to go see. And he said, why do these companies need American government support? And we had a conversation about that, you and I did. I guess the last thing I want to ask you is, what do you say to a kid, well, I guess he's now a sophomore in college, what do you say to him about the future of the American economy in a politically perilous time when the rise of the rest, specifically China, is a very,

very real issue. I would say to that kid, America is the best country on the earth, the safest country on the earth, the strongest democracy. Okay, wait, okay, wait, okay, wait. Sorry, sorry. With all possible respect, give me the real answer, not the platitudes, right? I mean, you and I have talked enough over the years

that I think I can poke you in the eye a little bit. You can, but this is what I think. But what I would tell the kid, look, it's the best place. Where would you rather be, Kai? Nowhere else, ma'am. No place I'd rather be. Nowhere else, but I'm not the one on the spot. What I would say to him is, it's the best place there is, but I would tell him, I don't

know this person, but maybe go get a job at TSMC or maybe get a job at Intel or go start your own company. Because the only way that we can stay in the lead is to build the companies that everybody wants to work at, build the technology that keeps us in the lead. I might also tell them to run for office. We need good publicly minded people, not self-interested people to run for office if we're going to solve the biggest problems in front of us. Gina Raimondo, Secretary of Commerce. Ma'am, thanks for your time. It's been great talking to you. Yes. Have a great year.

Happy New Year. Inauguration Day. This year is a federal holiday, by the way way MLK Day stocks aren't gonna trade. Today though a little up a little down details numbers y'all know the drill. In inflation news this week, there are two data points to be had. We'll get a new read on consumer prices tomorrow. Inflation at the wholesale level was this morning, the producer price index by actual name, up 3.3% year on year, but notably up just two tenths of 1% monthly in December. Flat, actually, after you strip out the always volatile food and energy prices.

But if you look a little ways up the supply chain, the inflation story gets a bit more complicated as Marketplace's Henry App reports. Quick refresher, PPI measures in part how much retailers pay, says Leah Brooks, a professor at the George Washington University. So if you make nails and you sell nails to Home Depot, this index is about the price at which you're selling the nails to Home Depot, not the price at which Home Depot is selling the nails to you when you go to the store. So today's report tells us that the nail makers of this economy and other producers overall didn't raise their prices much in December.

And because those prices influence how much we consumers pay for things, that's generally good news for the Federal Reserve's long fight to bring inflation down, Brooks says. Maybe the best way to think of it is that we're not out of the woods, but we're near the edge of the woods. We're not quite out because inflation overall is still a bit higher than the Fed would like it to be, and there are pressure points ahead that could keep us in the woods for a while longer.

One, higher costs of transportation and warehousing. Those costs ticked up 2.2 percent in December. Zach Rogers at Colorado State University says that may be because after years of having extra space, trucks got a bit fuller towards the end of the year. And so because of that, we are seeing now carriers able to increase prices more than they had been over the last couple of years. And in warehousing, he says, anecdotally, a lot of people are pulling inventory forward, it seems like, in order to avoid any potential tariffs with the incoming administration. Loading up on inventory, he says, means less available warehouse space,

which means potentially higher prices for that space. Other Trump administration policies could also affect prices, says Denny Cohen, MC, head of economic analysis at Morning Consult. Deporting undocumented workers as well as tax rate cuts all will have an effect on inflation down the line. One of the first places those effects may show up is in the producer price index. I'm Henri Att for Marketplace. The past, what, five years have not been kind to the commercial real estate market. Offices in particular see also this post-pandemic economy. But there are some green shoots, especially in demand for part-time offices.

The commercial real estate giant CBRE said today it's buying the flexible workplace company Industris in a deal worth about $800 million. Turns out that whole hybrid work thing, it's been a boon for the coworking industry. Marketplace's Matt Levin has this one. In pre-pandemic times, big companies used to regularly sign long-term leases for office space, like 10 years or longer. And that made sense in a more predictable world

where your entire workforce slogged to the same sad cubicles five days a week from the same sad suburbs. Not so much when you're managing that hybrid satellite team in Denver you just staffed up last year. Nobody on earth knows how many employees they're gonna have in Denver in 2033,

which makes 10-year leases tough. Jamie Hadari, CEO of Industrius, that co-working company CBRE acquired. To be clear, corporations are still signing some long-term leases for office space, especially for big shiny headquarters. But for that satellite team management wants to meet in person two to three days a week, the one to two year contracts industrious offers make sense. Our revenue is up, you know, three X since COVID. industrious is co working models a bit more like an office Airbnb, typically shorter term rentals for companies to take over an

entire floor. Not the pre pandemic co working stereotype where a bunch of freelance graphic designers hang out at the we work kombucha station. Travis Howell researches co-working at Arizona State University. A lot of the co-working spaces I talked to who you know used to only cater to entrepreneurs or freelancers are now catering to these companies. Howell says some firms will even pay for just one or two employees to go to a co-working site to work next to strangers. It's just to keep their employees happy. It's hard sometimes being at home five days a week.

Although if you think co-working is the solution for the forever war between employer and employee over return to office, flexible workplace consultant Callie Yost is skeptical. She says employers have to know what they want their employees to do when they force them to leave the house. You've got to lead with the work, not the space. As I always say, you have to start with the what and then the where. Even if the where does include a kombucha station. I'm Matt Levin for Marketplace.

There is no kombucha station here at Marketplace World Headquarters. We have coffee, maybe some tea, I think that's about it. We also have a podcast. If you miss us on the air, marketplace.org is where you get that, where the platform of your choice just follows there. I am a recent kombucha convert for what it's worth. Anyway, coming up. Our parents, our grandparents, even, you know, my peers all work for a car company. The family business, you might say. First though, sure, why not?

Let's do the numbers. Dow Industrial is up 221 points today, about a half percent, 42,518. The Nasdaq down 43 points, that's a quarter percent, finished at 19,044. The S&P 500 pocketed six points, about a tenth percent, 58 and 42 there. The LA fires, still burning by the way, winds seem to be calm downtown, near as I can tell. Anyway, they are going to be very expensive besides as I can tell anyway. They are going to be Very expensive besides the loss of life insurance companies are gonna pick up most of that all state corporation picked up two and a third percent today Travelers companies incorporated up one and a half percent Shub limited added one point four percent

The producers producer price index and Henry up was just telling us about showed a nine point seven percent jump in gasoline Prices in December you want to know why we strip out food and energy prices? That's why ExxonMobil crept up 4 tenths percent. Valero Energy accelerated a half percent. Chevron increased one percent today. Meta told employees it's going to cut five percent of its workforce in the coming year, focused on quote, the lowest performers. It's the biggest layoff for the company since 2021. Metash ranked 2.3% today.

The percentage of workers who feel engaged at work dipped to a 10-year low last year. That's according to Gallup. The polling firm asked about things like clarity of expectations and feeling cared about as a person at work. Just 31% of people surveyed reported feeling engaged in their jobs. The same statistic though, also 31% for managers feeling engaged.

Make of that what you will. You're listening to Marketplace. Hi, this is Nicole from Camp Hill, Pennsylvania. I'm always surprised how much content Marketplace can pack into 30 minutes. Listening is part of my daily routine. I love the way they make the content digestible and relatable for us folks who don't have a strong background in economics or business.

Join me by making a gift to Marketplace today at marketplace.org slash donate. This is Marketplace. I'm Kai Rizdal. 3% seems to be about where people's inflation expectations are settling. Remember, what consumers think is going to happen with prices can affect what actually happens. Anyway, those expectations were the subject of a Federal Reserve Bank of New York survey out this week, showing them, that is to say, the expectations to be anchored, which is a good thing. Also though, and a related but different concern, people are increasingly worried about finding

a new job. Last month, people's confidence in getting hired fell to the lowest it's been since 2021, and people say they are less likely to lose or quit a job. Now the thing is, that's not how hiring and firing usually works. Generally, when one of them goes up, the other one goes down. These days, though, consumers think both

are likely to go down. Marketplaces' Kelly Wells explains why. It looks like a contradiction, but senior economist Preston Moy with Employ America says, consumer expectations about hiring and firing confirm what employer data already shows. Businesses right now are not really looking to expand their workforce. But that doesn't mean the labor market is shrinking.

It's just frozen. Layoff rates are low, but also hiring rates are low. The red hot post-pandemic labor market has been weakening for years now. Yet consumers in the survey said they are less worried about losing a job. And they're just less angsty in general. Economics professor Paul Shea of Bates College says that's because consumers have watched inflation decline over the past couple years. I think they're feeling that things are getting a little bit better economically for them.

And that's kind of leading to generally higher confidence across the board. Shea says that could partially explain why consumers said they expect household income to fall and spending to rise. Consumers are basically taking on more debt in order to reconcile what seems like a bit of a paradox here. I don't expect to be making more, but I can expect to continue consuming at a pretty high clip. Although higher spending doesn't always mean consumers are feeling warm and fuzzy about

the economy, Dan Ariely teaches psychology and behavioral economics at Duke University. Not the cognition is leading them to these two things. One is the cognitive approach and one is the emotional approach. Ariely says that short-term spending and racking up debt is an emotional response. Think three takeout dinners in a week because you just can't deal. I think people are a little sick and tired and they want some bright spots. Paul Shea at Bates College says that can only last so long. With consumer debt at record high levels

and potential new tariffs on the horizon, consumers may finally have to scale back spending in 2025. I'm Kayley Wells for Marketplace. Tennis has the Australian Open, college football has the bowl games, and for years in the American auto industry, the beginning of the year meant the Detroit Auto Show, a chance for car makers to show off their latest and greatest, and for car lovers to gawk at same. This year's version opened over the weekend a switch back from what turned out to be an ill-fated move to warmer months. Michigan Public's Laura Weber Davis has more.

For people who live in or near Detroit, the annual auto show brings up a lot of memories. Usually something like this. It was always freezing cold. That's Shannon Cason. He's a writer and lifelong Detroit-er. In boots, in big coats, and you know, your feet getting wet right before you get in on those carpeted floors. Always goes to mind for every year. He says it's all part of the tradition here. Well, Detroiters love their cars. It's the Motor City. Our parents, our grandparents, even, you know, my peers all work for a car company. So cars are a part of life.

And so are the freezing temps in January. I think going to the auto show in the cold, feet hurting, fingers hurting, that discomfort makes me remember going to the auto show when I was 10, 12, 15 years old, you know. For much of the show's history, this cold was part of the deal. It's been in January most years since the first Detroit Auto Show back in 1899. Back then, it featured just two electric and two steam-powered cars. Here's the city's official historian, Jemon Jordan. This was like an oddity, these horstous carriages. He says Detroiters really took to the show, and so did the visitors.

It can draw upwards of 800,000 people in a week. That means hotels consider it important, restaurants consider it important, nightclubs, bars. So it becomes a major boom, particularly to the businesses and entities and institutions that are downtown or near downtown. In 2018, organizers made an announcement that shocked the community. The auto show would move to June. They wanted warmer months to give the showcase more of a festival vibe. Then organizers canceled the June shows in 2020 and 2021 because of COVID. They tried

September for a couple years, but attendance was clearly down. It has bounced around. It is trying to find a spot. That's Glenn Stevens. He's with a Detroit-based industry advocacy group, Mish Auto. It was very much a victim of the COVID situation and all the change with that world, but it's also an industry that's changed tremendously. And attendance at big events has fluctuated. Shows like CES have stolen away some of the attention. That's the huge Vegas tech show that's also in January.

The auto industry plays a bigger and bigger role at CES these days. So that's why Stevens says the Detroit Auto Show needs to get back to its roots as a consumer-driven event. And oddly, consumers here seem to want a freezing cold auto show. It's 25 degrees out here. Detroit based auto journalist Phoebe Wall Howard is outside of the event center

where the auto show has long been held downtown. You take your life into your own hands to get to this Detroit auto show and it will be worth it. In fact, I talked to a guy from Florida who's flying in for the auto show and he's like, damn the weather. It's all worth it. She says those warm months in Michigan were likely never going to take off for the auto show and he's like, damn the weather. It's all worth it. She says those warm months in Michigan were likely never going to take off for the auto show. People have too many competing activities, sailing, paddleboarding, swimming,

hiking, and it really drains the crowd. But in January, in the lull after the new year, you have a total captive audience. In Detroit, I'm Laura Webber Davis for Marketplace. This final note on the way out today, which I'll preface by noting that small businesses account for give or take two-thirds of all new jobs created in this economy. Data comes to us courtesy of the Small Business Administration. Told you that so I could tell you this. Small businesses are feeling pretty good these days. The National Federation of Independent Business says its Optimism Index now sits at a six-year high.

Also, the group says its members are expecting the best sales growth they've had since 2020. Our digital and on-demand team includes Carrie Barber, Jordan Mangy, Dylan Manthan, and Janet Nguyen, Olga Oxman, Ellen Rolfus, Virginia K. Smith, and Tony Wagner. Francesca Levy is the executive director of digital and on-demand. And I'm Colin Rizdahl.

We will see you tomorrow, everybody. This is APM. Hey everybody, it's Kai. Listen, is it time to upgrade your car? Give it new life by donating it to Marketplace. We'll use the proceeds to bring you more news about finance and the economy and how they affect you. Let us turn your old car into a donation to power the journalism you rely on. Go to Marketplace.org slash vehicle to donate your car today.