Marketplace - Uncertainty is a certainty

Episode Date: March 6, 2025

Ask an economist what’s driving decision-making right now, and the answer may well be “uncertainty.” In this episode, the unpredictable environment fuels a range of change: The labor market softens, surveys of the service sector point in opposite directions and Treasury yields sink. Plus, the Commerce Department just dissolved two expert advisory groups, putting the trustworthiness of future federal data into question.

I say this in the most macroeconomic and analytical way possible. What is happening? From American public media, this is Marketplace. In Los Angeles, I'm Kyle Rizdahl. It is Wednesday, today, the 5th of March. Good as always to have you along, everybody. While there is, of course, a limit to what government economic data can tell you, the federal statistical apparatus is the go-to for information on housing and the job market

and inflation and much, much more. Data that helps people understand where the economy is and where it might be going, and data that informs business decisions and helps policymakers make policy. I say all that because the Commerce Department has disbanded two groups that help make sure the government's economic data paints a realistic picture of what is going on. The Federal Economic Statistics Advisory Committee and the Bureau of Economic Analysis Advisory Committee have been around for decades. Marketplace's Kayleigh Wells explains what happens now that they're gone.

Erica Grotian had no idea this was coming. This came out of the blue. Nothing up until I got the email yesterday. And she was on one of the committees. The economic advisor at Cornell University was told that the decades-old committee was getting disbanded because its purpose had been fulfilled. You don't fulfill an ongoing mission by canceling this communication mechanism. That mission? To get a bunch of experts at the top of their economic fields to help the government.

When the Bureau of Economic Analysis wants to develop a new methodology or maybe go into a new area where they haven't been before, they can run their ideas by the committee. Retired economist and committee member Marshall Reinsdorf says advice was one major benefit. The other was government transparency. The committees opened their doors to the public. It gives them a chance to reach out and get their message out to a broader community. Getting rid of these two committees doesn't save much money, mainly because the members weren't getting paid, says former committee chair David Wilcox with Bloomberg Economics and the Peterson Institute for International Economics. So we're talking about eight plane tickets, twice a year, one night at a non-fancy hotel.

This was really inexpensive stuff. And he says it was money well spent. Former committee chair Louise Schaener with the Brookings Institution says with less input, the data that the government gathers will get worse over time. And that data is supposed to provide answers on GDP and productivity and jobs and inflation. Depending on what question you're asking, you're going to go to the data. And if the data are not good, your answers to those questions are also not going to be good. Schaener says disbanding the committees was a mistake. We asked the government for a response, but the Bureau of Economic Analysis didn't provide

a comment and the Commerce Department didn't respond to our request. I'm Kaylee Wells for Marketplace. One messes with economic data at one's peril. Wall Street today. What is happening indeed? As you've likely heard, President Trump has changed his mind on tariffs. Kinda, and only a little bit. Cars and trucks from Canada and Mexico get a reprieve, but only for a month.

Traders, though, took the win where they could get it. Details, numbers, y'all know the drill. While the pause in car and truck tariffs is indeed good news for Ford and GM and Stellantis, spare a thought would you for the American farmer. Not only are there the rest of those tariffs on Mexico and Canada that we need to affect yesterday, China as well, there are tariffs looming next month that the president promised yesterday will affect farmers' exports. So we of course thought it was a good time to give April Hammes a call. She is our corn and soybean farmer in Iowa. Hi April. Hello, how are

you today? Well I'm fine but it's not about me it's about you. You've been... Yeah we got a full-blown snowstorm going on here in Iowa. That's great. Well rain in LA. What can I tell you? There you go. I want to know what you're thinking about, gestures wildly here, the news and everything. Everything? Yeah. Well, like I heard a TV guy say,

just as soon as I say this, something's going to change. And it's so true. I got the social media, whatever, that the president sent out to farmers. And it's going to hurt you know it's gonna hurt but it's gonna be fun and all I have to say is his definition of fun is way different than the farmers definition because so so they're not fun let's talk about that for a minute first of all this is not your first rodeo with no tariffs from

President Trump right it wasn't fun last. Are you are you more prepared this time somehow? No, well, like I say same song it's not the second verse It's a whole chorus this time because he's including Mexico and Canada and the consumers are gonna get hurt Usually it's the AG people that get hurt but now it's gonna be a lot more Yeah of the consumer things. But more prepared, no. Actually, we in the ad community are worse off now because the interest rates are higher

than they were before and their cost of production is way up. But it's an interesting world we have out there. It is indeed. And then this, so there was a speech last night and you know, it's there's gonna be disturbance But we're okay with that. Although I don't think he probably called you to check if you were okay with that The other thing he did yesterday though on social was get ready to sell only domestically starting April 2nd And that doesn't seem to me to make a whole bunch of sense No, I'm glad you said that yeah

60% of our soybeans are exported 20 20% to 25% of our corn is exported. So you don't build those markets domestically overnight. We just can't. And you have to build plants and things like that. There's a whole lot that goes into it. So it's not going to happen overnight. And I've heard some interviews with farmers that said, oh, it's okay if these tariffs only last a couple months.

But if it's more than that, it's not okay. And I went, pull your head out of the sand, buddy. It's going to last more than that. I talked to a guy the other day who used to run, because it's about to be shut down, something called the Soybean Innovation Lab at the University of Illinois. Yep, yeah. And that, of course, in the middle of that conversation,

I got to thinking about you and soybeans, and just the work that the government does or has done in building markets for all y'all, and all y'all means like all American farmers, right? And that's now- Yeah, you sound like a Sout like a southerner now you kind of scared me there. Well I went to school in Atlanta you know it's a long time ago. Oh well there you go. But that's kind of what's going on here too right that the mechanisms by which you all find markets is being dismantled. Right I never hardly engage on Twitter X or whatever it's called now. Smart woman.

Smart woman. But, well, yeah. But there's these people out there that are smack talking USAID only thinking it's USDA. And I've been on two USAID trips to Uganda. Yeah. And did great work there. And people don't understand the work and then the products they buy from farmers to feed the world. So it's very disheartening to see all of this going on.

You and I have been talking for a long time and every now and then, just like today actually, I ask you why you do it. But this does seem to be a turning point. And I will say this to you only because I've met you and we've been talking for a while. Drove my combine, yeah. Yeah, I did drive your combine. Yeah. You ain't no spring chicken. No.

And I guess I wonder if there's a point at which this could get so bad that you would just say, the heck with it, I'm done, I'm out, I'm gonna sell off. Yeah, no yeah no I have had this is my 40th year farming I'm gonna be planting my 40th crop and I'm very proud of that you know so I have seen the ups and downs and what we're going through now is what did they call it a revolution Elon the president and mr. mosque want to be revolutionaries. Well, you know, we'll see.

Hopefully this is better for everyone, but it's, I don't know. I think my farm will weather this. I just hope other younger farmers get through this. It is very scary, but I mean, I had a grandpa who lived to be 101 years old. And you think of what, yeah, you started farming with three horses and lived to have an auto steer tractor. So that really is my guiding light. He went through a lot and this farm will go through more,

but I'll still be here. Thanks, April, we'll talk to you soon. You bet, take care. I will in a couple of minutes give you the yield on the 10-year Treasury note, as I do nearly every day, because the 10-year and the bond market generally can give you a good sense of what's going on in this economy. It's a benchmark that affects everything from how much you'll pay for a mortgage to a car loan to a business investment. A couple of weeks ago, we told you Treasury Secretary Scott Besant had said he wants the

yield on the 10-year to go down. And as of today, it's off more than a half a percentage point since mid-January, a pretty steep drop in a pretty short period of time. Well, this is good news, bad news package. Susan Wachter is a professor of real estate and finance at the Wharton School at the University of Pennsylvania. The good news is what happens to the overall cost of money, interest rates, when the 10-year yield drops.

Mortgage rates are declining substantially. And the reason they are is because the 10-year treasury is declining as well. Which if you're trying to buy a house. I, unlike my family members, have a very high interest rate on my mortgage. Nicole Survey is an economist with Wells Fargo. For people like her who bought houses in the past couple of years with a plan to refinance or who maybe can't afford to buy in the current environment, rates coming down is a good thing. But the reasons that the rates are coming down really matter.

Do I think that the drivers of the 10-year Treasury yield today are what the administration would like to see? Likely not. The drivers of that decline are where the bad news comes in. Here's Blarina Uruci, chief U.S. economist at T. Rowe Price. One of the factors driving it lower is this growing uncertainty about the outlook for growth and this growing sense that a growth scare is emerging in the U.S. economy. Tariffs, like April Hems was just talking about a couple of minutes ago, weakening consumer

confidence as well, falling retail sales. All of those things could weigh on economic growth. Case in point, the Atlanta Fed's estimate of first quarter GDP that I think I mentioned the other day is the lowest it's been since early in the pandemic. I think we're likely to get a few months of soft data, both in terms of how the economy is growing, but also how the labor market is doing. Speaking of the labor market jobs report on Friday, Not sure I've mentioned that. So I think the growth scare narrative is partly driving the 10 year yields lower. Slower growth expectations mean that the Fed can cut or might be forced to cut interest rates down the road. I think that's definitely part of the story.

So do treasury yields coming down mean cheaper borrowing for households and businesses? Absolutely yes. However, could that also be a sign that the economy is weakening? Also absolutely yes. Coming up. I could kind of order just what I need rather than things in bulk. Entrepreneurs getting it done. First though, let's us do the numbers. Yeah the really happy music today. Dow Industrial's up 485 points on that

tariff news. One and a tenth percent, 43,006. The Nasdaq added 267 points, one and a half percent, 18,552. The S&P 500 climbed 64 points, 1.1 percent, 58 and 42. Ford Motor Company accelerated 5.8 percent today. Stellantis increased 9 and two-tenths percent. General Motors revved up 7 and two-tenths percent today. In earnings out today, Dine Brands, global parent company of Applebee's and IHOP, reported slightly lower revenue than the same quarter last year but still strong. Dine Brands coupled up 3.4% today. Brinker International with its own chilies chilled 1.5%.

Cheesecake Factory dipped just a tad, a tenth of 1%. Bonds fell and thus as promised, the yield on the 10-year T-note 4.28%. You're listening to Marketplace. This is Marketplace. I'm Kai Rizdal. Painting in very broad strokes here, this economy has two distinct parts to it. The goods part, stuff that we make and sell and buy, and services, haircuts, your accountant, things like that.

We gave you an update on the goods sector the other day, manufacturing specifically. That update was distinctly mixed. Today, the services sector. Two surveys came out this morning, one from the Institute for Supply Management, ISM, the other from S&P Global. ISM showed growth. S&P Global, though, said services are worryingly weak. That's a quote.

One sector, two surveys, two seemingly different outcomes. What gives, you ask? Here's Daniel Ackerman. Here's what Steve Miller of ISM says about his group's optimistic survey. It's a healthy, healthy improvement. And here's what Chris Williamson of S&P Global says about his group's pessimistic survey. It's now reporting the weakest output growth since November 2023. There are a few things that could be causing this discrepancy, including who's answering the surveys.

Gary Schlossberg with Wells Fargo Investment Institute says the ISM survey is mostly of corner office type purchasing and supply executives. The SP Global number, they also survey people on the shop floor, so it's a little closer to the action. Then there's the question of when you're surveying these people. The GlassHalf full ISM report allowed companies to respond throughout February. The GlassHalf empty S&P survey only took answers in the second half of the month, when markets were dropping and tariffs were looming. Especially at times like this, things can look good early in the month and collapse

late in the month. So Schlossberg says once a month data drops aren't always enough to keep up. It's for that reason we keep an eye on the high frequency data to corroborate what we're seeing in the monthly numbers. Data including weekly reports on retail sales and mortgage applications. There was at least one common thread between the two surveys, which Steve Miller of ISM and Chris Williamson of S&P Global both noted. There's a lot of concern around potential tariff impact.

Is tariff impact, what's that going to mean for us? Daniel Ackerman With those tariffs actually in effect now, next month's surveys could have answers everyone agrees on. I'm Daniel Ackerman for Marketplace. It's been mostly lost in the tariff firehose, but this is a big week for the labor market. The February jobs report comes on Friday. First-time claims for unemployment benefits are tomorrow.

Remember, they were up a bunch last week. Today, the payroll processing company ADP said private sector hiring slowed to its lowest level since July and that small businesses cut jobs last month. Marketplace of Samantha Fields has more on that. This week, Elizabeth Pancotti at the Groundwork Collaborative is not excited for Friday, jobs day. I'm not expecting a rosy jobs report. Recent federal layoffs aren't even the reason. It's too soon for most of them to show up. But all the data points coming out lately from ADP, unemployment claims, consumer sentiment

surveys. They are coming together to tell a similar story that there is a considerable risk for softening in the labor market. Some softening has already been showing up. Michelle Evermore at the National Academy of Social Insurance has been seeing it in one of the indicators she keeps tabs on, continued weekly unemployment claims. That means people who are unemployed and continue to file claims after they become unemployed. That number has been rising, which indicates it's getting harder for people who get laid off to find jobs.

This cooling is partly something the Federal Reserve engineered as it raised interest rates to try to bring inflation down and try to steer the economy to a soft landing. Lylee Crosby, Ph.D., Ph.D., Professor of Economics, University of Michigan, University of Michigan, Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D., Ph.D uncertainty. Guy Berger at the Burning Glass Institute says that's because? Uncertainty is disruptive and it's very high right now.

For instance, are tariffs happening or not? Is billions in federal spending frozen or not? We don't exactly know, even when policies are implemented, exactly how they're going to be implemented. And if you're an employer, that's a tough landscape to operate in. Ron Hetrick at Lightcast says for many businesses, it's easier right now to just in. Ron Hetrick at Lightcast says for many businesses it's easier right now to just pause. If you were a company and you were saying I'm looking to expand or I'm looking to hire you would have investors in those companies saying are you crazy? And saying this is not the environment to do that in. I'm

Samantha Fields for Marketplace. One of the really interesting side effects of the pandemic, we're talking back in 2020, 2021 here, was the number of new businesses that people were starting. For more than two years, and this data is from the Census Bureau, what are formally called business formations were off the charts. A lot of that was people having lost their old jobs or working from home with some extra, shall we say, time on their hands, or maybe just thinking about a different life they might want to live. Also not to be forgotten, all that pandemic relief money floating around out there.

You fast forward five years, most everything else in this economy is back to where it was in the before times, except for those new business applications. Entrepreneurs are still on a tear, and a lot of them are starting businesses that are adapted to post-pandemic realities. Marketplace's Justin Ho has more on that.

Joel in the pocket Kibo was whipping up some drinks inside the coffee van she owns and operates in Ojai, California. All right, here's the cinnamon oat matcha with honey. Deepakakibo launched the business less than a year and a half ago, after moving here with her wife and newborn from San Francisco, where she still owns a brick and mortar cafe called Pinhole Coffee.

Dipakakibo says a big reason she decided to run her new business out of a van was to improve her work-life balance. I could pop up whenever I want to and not have to open up every single day and still have time to be with my child. Running it out of a van also helps Deepakakibo deal with a post-pandemic reality that's weighing on a lot of businesses. High costs.

Deepakakibo says she pays her employees about $20 an hour, plus tips. And then there's the cost of milk and coffee beans. She says those pressures affect both of her businesses, but the van's overhead is much lower. It only has one full-time employee other than her, and she doesn't need to stockpile as many supplies. I'm just buying less milk at a time,

less disposables, less coffee. I could kind of order just what I need rather than things in bulk. Meanwhile, in Cincinnati, Jordan Anthony Brown has been running a new business with much higher overhead. It's a sit-down restaurant called The Aperture. We're settling into our identity a little bit and definitely more of upscale, casual, kind of bordering on fine dining in terms of price point.

Anthony Brown says he recently raised his prices from around $65 a person for dinner a year ago to $80 or $90 today. Part of that was to cover the rising costs of food and wages. But he says it also reflected another post-pandemic reality. People want a fine dining experience. Many of them are older and they're comfortable paying those prices. You know, we have a lot of kind of business people come in, a lot of private bookings for business dinners that we're starting to see.

And a lot of people in the neighborhood are definitely kind of in that 60, 70 range and they just have more disposable income. As a result, Anthony Brown says he's happy spending more on overhead. He's buying more expensive ingredients to justify his prices and he says he's paying competitive wages starting at $21 an hour. The goal is to make sure his 25 or so employees are happy. It's the number one reason why we look to maintain a strong culture because that trickles down as the saying goes, happy employees make for happy guests.

Other aspects of the post-pandemic economy have inspired entrepreneurs to start businesses. I've been really inspired by what was happening in AI and then kind of found this application that I thought there was an opportunity for. That's Sean Steigerwald. He started a software company a couple years ago called Customer IQ. It uses AI technology to help businesses record and summarize meetings, emails, and other forms of communication. I did ask myself the question, like, fast forward 10, 15 years, do we have more online

meetings or less? And I thought it was a pretty safe bet that we'd have the same or more. Many of the economic challenges people have faced during and since the pandemic prompted Aria Jocken to start their company about a year and a half ago. It's called Make With Hardware and Learning Center in Portland, Oregon, and it teaches people a wide range of do-it-yourself skills. We offer workshops on things like drywall repair, on refinishing furniture, sharpening knives, how to change a tire, how to change your oil. The courses cost roughly $50 to $250.

Jockin says learning these kinds of skills can be helpful for people who've struggled amid high inflation, economic uncertainty, and climate-related challenges, especially women, queer and trans folks, and people of color. There are barriers in employment, there are barriers to housing, there are so many different kinds of barriers that folks are facing to gaining economic stability. Jockin says if the business goes well, one day they hope to expand by opening a hardware store. I'm Justin Ho for Marketplace. marketplace.

This final note on the way out today. First of all, a hat tip to occasional guest on this program, Wendy Edelberg. The Fed's beige book came out today, 49 pages long, tariffs mentioned 49 times, uncertainty 45 times. Also, just to follow up from yesterday, if perhaps you took your time deciding whether to bid on almost 1.8 million square feet of office space in our nation's capital, too bad, so sad.

The General Services Administration has now taken the J. Edgar Hoover Building, headquarters of the FBI, off its non-core property list. The Justice Department Building and the Department of Agriculture, many others were on the list as well. All of them now, I guess, core properties? Don't know.

Our media production team includes Brian Allison, Jake Cherry, Justin Duller, Drew Jostat, Gary O'Keefe, Charlton Thorpe, Juan Carlos Torado, and Becca Weinman. Jeff Peters is the manager of media production, and I'm Kai Rizdall. We will see you tomorrow, everybody. This is APM. Hi, I'm Kate Laycock, host of DW's weekly European news podcast Inside Europe.

Our correspondents were there when the Berlin Wall fell, when the Balkans Wars broke out, and when Britain voted to leave the European Union. Now the continent is changing again, and we're rising to the challenge with our weekly combination of expert analysis and on-the-ground reporting. Find Inside Europe wherever you get your podcasts.