Marketplace - When does AI become a spending suck?

Episode Date: April 24, 2026

Companies are using AI tools more every day. Some, like Meta, are even encouraging employees to use as many AI tokens as possible. But companies also spending more to access the technology �� most AI firms bill per token, and those costs add up. In this episode, there’s no such thing as free AI. Plus: Procter & Gamble posts strong earnings, Kai visits LA’s first women’s sports bar, and we discuss the latest Federal Reserve news.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.

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And hopefully, make you see the world anew. Radio Lab, adventures on the edge of what we think we know. Wherever you get your podcast. Congratulations, Chairman Warsh, I guess, from American Public Media. This is Marketplace. In Los Angeles, I'm Kyle Risdahl. It is Friday. Today, this one is the 24th of April.

Good, it is always, to have you along, everybody. We have seven minutes at the top of the program today to talk about the week gone by, and I got to tell you, I am not sure it is going to be enough. Kethner-Rampel is at MS now, also at the Bulls. Bolwork, David Gora is at Bloomberg. Hey, you two. Hey, Kai. Catherine, you get to go first.

The news of the day, of course, in our wheelhouse, as it were, is that the U.S. Attorney for the District of Columbia, Janine Piro, is dropping, and you can't see me, but that's in air quotes. The investigation into the Fed and Chair Powell, I guess I wonder, first of all, what you make of that? Well, it seems like the White House is White House-D-O-J. I know that they're supposed to be independent from each other, but it seems like all of the above have recognized that they are getting in their own way or Trump is getting in his own way, that the way to get his pick for the next Fed share, Kevin Warsh, through, is to find an off ramp for what certainly appears to be a politically motivated criminal investigation into Jerome Powell. and that the way to get Kevin Warsh cleared is to abide by Senator Tom Tillis's request to drop this investigation.

Because Tillis says he likes Warsh, but he's not going to move forward any of Trump's picks for the Fed until this investigation is done. And to my knowledge, we still have not heard from Tillis to know whether this satisfies that demand because it's not totally clear that Powell, is out of the woods. Right, right, right. So, David, let's keep going with that. The last line of Piro's tweet this morning, because that's how we do government policy nowadays is by tweet or truth social. Her last line was, I reserve the right to reopen this investigation.

And I guess, you know, to Catherine's point, is that enough for Tillis, who we think is looking for an off-ramp? But also, what about Powell, right? Because let's remember his term is up as chair on the 15th of May, but he does have the statutory right to stay on the board for another two-ish years. It's a great point. So we haven't heard from Senator Tillis. We haven't heard from Jay Powell. And remember what he said a little while back. He said he was going to stick around until this probe was resolved with transparency and finality. Those were his words. And so I think the question is, does this mark a resolution of that? So in that tweet that you referenced in that post, Janiro, passing the buck over to the Inspector General at the Federal Reserve calling upon the Inspector General to do this investigation of the renovations and what Powell said to Congress, I should note back in July, Fed, Chair Jerome Powell called for the same thing. So this work has been underway by the Inspector General already.

But I think that's really the key question here. If this is simply moving from one investigator to the next, is that going to satisfy the Fed chair that this investigation is over with? And I, like Catherine, like you, waiting to see what we hear from the senator who's been threatening to block all of this and from the chair and we'll see if anything emerges here over the course of the weekend. Catherine, with complete awareness of what happens when one assumes, let's assume that this all works out, as it were, for the way the president wants it to.

And Mr. Warsh does get the actual job. What did you make of his confirmation hearing this week? To be honest, I found the whole thing a little bit frustrating because the elephant in the room is this criminal investigation of Powell, which may or may not be dropped. Right. And to the extent that that came up, the question for Warsh was, would you, you know, well, do you agree with Powell that this was politically motivated because of a disagreement over policy? He was also asked about whether he would stand up and defend Lisa Cook, who is a board member whom Donald Trump has been trying to fire. That case is before the Supreme Court. And Warsh punted on both.

And nobody asked Warsh, well, what would you do if, in fact, you had a disagreement with the president and he wanted you to cut interest rates and you slash the FOMC did not cooperate? What would you do if he threatened you, smeared you, launched a criminal investigation into you, tried to fire you? And nobody asked that. And so I found that a little bit frustrating because I think that that's really what matters more than anything else, even if Kevin Warsh has indicated. that he would cut interest rates or at least try to encourage the rest of the FMC to cut interest rates. He can't do it solo. It's going to become increasingly difficult for the Fed to do that because inflation has been so stubborn. And so that question will arise should there be a chair, Kevin Horses. Right. So, David, let's keep going with that. You had a great conversation with Michael

McKee, who covers the Fed from Bloomberg earlier this week. And what I want to do. want is an understanding of walking in the door now, what is worse going to be like as a Fed chair? Because this has been a tricky process. It's been a tricky process, and he's somebody who was opined for a very long time about what he would like to see the Fed become how it should operate, how much it should communicate, how much it shouldn't, how it should approach inflation. I think that's another element of frustration to borrow Catherine's word here is that he was very unwilling to engage with what he has spent his whole career talking about during the course of that hearing. And he had a very cute way, and I say that respectfully,

of dealing with this. He said, I'm not a believer in forward guidance. So he used that as a way to kind of shut down any questions that were hypothetical in nature. As we've talked about before on the show, his job is going to be to rally this committee behind him or to try to do so. It's not just his decision alone, emphasizing that again for everybody who doesn't have an intimate knowledge of how the Fed works. I think that is going to be a huge challenge for him going forward. You know, whether he wants to cut rates or the president's telling him to cut rates, he has to work with this committee to convince them that that would be the thing to do even if, in fact, it is not. the right thing to do that particular time.

Catherine, they meet next week the Fed does. And just to bring it to current events, right, we're still in the middle of an energy shock. The mantra at the Fed has been, we're going to try to look through this energy shock to see what's going on. But we also had the International Energy Agency this week saying, you know what, this energy crisis

is going to last two years. How then does one run a central bank when you're trying to do that? They are in a very difficult position. They were in a difficult position before. obviously, given that inflation had been hotter than they wanted and the economy seemed to be slowing down is maybe the right way to describe it. You know, not in a bad space, but unemployment was creeping up, et cetera. So they already had this very difficult set of constraints

around them. And now there is this question of, is this a one-time shock or does this feed into trend inflation? And if you listen to some of the things, that Fed officials have said recently, they have suggested that they are very worried about this feeding into trend inflation. So not something that they would, quote, unquote, look through. I think it was Christopher Waller who said recently that he was worried that kind of the one-two punch of tariffs plus the energy shock slash everything shock would, could potentially create conditions similar to those experienced in the aftermath of the pandemic. I certainly hope we're not in that circumstance.

But, you know, there's good reason to worry about that. If you look at inflation expectations that came out today in the, you know, the University of Michigan. Yes, exactly. So there is reason to worry that this is not just about energy. This is not just about a one-time shock. That this could potentially cause expectations to become on anchor. which is exactly what the Fed does not want.

David, real quick, like 15 seconds. How do you read the tea leaves for the meeting this week? They hold, right? They hold, but I mean, I think everything they had plans is out the window. I expect a robust debate will take place there, but yeah, I think we don't see any kind of movement. David Garrow, Bloomberg, Catherine Impel, MS now, the bulwark as well. Thanks, you too. Thanks, guys.

Wall Street, to end the week that was war or what? Me worry? We'll have the details. when we do the numbers. I think we mentioned meta and Microsoft yesterday, almost 25,000 positions between the two of them

that are either going away or aren't going to be filled so that those two companies can spend more on artificial intelligence. A lot of that spending is building physical AI infrastructure, all those data centers,

computer racks, and GPUs, the hardware of it. But it turns out that actually using AI is turning out to be a bigger and bigger expense for a whole lot of companies. KPMG figures companies are going to nearly double their AI usage spend in the next year to the point where it might start to rival

employee salaries in some cases. Marketplace is Megan McCarty Carino has that one. At a fireside chat at the Federal Reserve last year, Open AI CEO Sam Altman mused about the future of AI economics. It does in fact look like we're about to deliver on intelligence too cheap to meter. But for now, it's definitely metered and it's not all that cheap. The way it's metered is with tokens. The way that I like to think about it is sort of like the number of turns, your interaction with the AI sort of takes. Max Can is a tokenomics analyst at semi-analysis. He says a basic conversation with a chatbot takes a handful of turns. You ask the AI some question. It gives you an answer. Maybe you ask like two or three more follow-ups, and that's about it. But new AI

agents might analyze hundreds of documents, talk to other agents, and keep doing these things around the clock. It is easily like 100x,000x, like maybe even 10,000x more tokens. And some companies like meta are reportedly token maxing, says Daniel Newman at Futurum Group. Employees, they're basically being encouraged to consume as many AI tokens as possible. The idea is there's this direct correlation between token consumption and productivity. A recent Goldman Sachs survey of large companies found many are overrunning their AI budgets by orders of magnitude. And AI spending could equal engineer salaries in the near future.

This doesn't really make economical sense. Ed Zittron is a tech critic who hosts the podcast better offline. I don't think a lot of businesses are actually aware of how much this really costs. He says tech companies had been subsidizing AI. Now, they're increasing prices. And most businesses aren't really measuring return on their investments, says Brian Jabari, an economist at the University of Chicago. How do you prove with hard-cordid data that AI has been fruitful for your business? The bigger the AI bill, the bigger the benefits needed to justify it. I'm Megan McCarty Corino for Marketplace. We were talking yesterday about the government's tariff refund website,

opened up this past week. Businesses mostly are going to get back their share of the $166 billion of the Trump administration collected illegally. Today, another occupant of those trade and tariff trenches, Gretchen Blow, she's our customs brokerage manager at Logistics Plus in Erie, Pennsylvania. I've been spending my week working in the Cape Portal. The Cape Portal is where you apply for the IEPA refunds. So my week's been spent a lot with importers making sure that they're registered for those electronic refunds. Our smaller customers were a little bit daunted by the process. So rather than do a basic help desk for them, we decided to just do it on their behalf.

There are 11,600 some entry numbers. The files I'm uploading, I just use the analogy of they're like, the old school Christmas lights. If one bulbs out, they're all out. The entire file fails. So if there's a problem with one line number, you have to find that particular line number and see what the problem is and then go from there. IT says I might be killing my computer. The sound stopped working.

I have two additional monitors, and they started strobing like, They were at a rave because the computer's overheating. Our IT guy looked at me and said, yeah, you might need a new laptop after this is over. I'm hoping to see that everything is appearing in ACE as promised. That's the automated commercial environment for Customs and Border Protection, where our importers, our customers, can run reports and see the status of their refunds. And I'm hoping that people start getting money in their bank account and start getting happy again for that.

Gretchen Blow, she's IT's favorite customer, I'm sure, Logistics Plus in Erie PA. Coming up. We slept maybe two to four hours a night for a whole straight month. Running a women's sports bar is definitely not all fun in games. But first, let's do the numbers. Dow Industrial is off 79. points today, two-tenths of 1% 49,230. The NASDAQ grabbed 3998 points, 1 and 6 tenths percent, finished at 24,836.

The S&P 500 rose 56 points, 8 tenths percent, 71 and 65. Some renewed AI optimism is what's going on with the NASDAQ. For the week, though, the Dow dipped 4 tenths of one percent. The NASDAQ added one and a half percent. The S&P 500 increased six-tenths percent. Bonds up, yields down. Ten years at four point three. 0% you're listening to Marketplace.

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Not even specific brand names, but just categories. Somewhat off the top of my head here, it's like five or six in my house easy. So you will not be surprised to hear that the OG Consumer Products Company reported better than expected earnings this morning. Net sales up 7% year. on year. And the thing is, that wasn't just because of higher prices. P&G says there was an increase in volume, too, the straight up amount of stuff that we bought. Marketplace's Carla Javier has more on what that might tell us about already squeezed consumers and their appetite for spending.

Consumers and investors see the maker of pamper's, bounty, Charmin, Tampax, Dawn, and so much more as a litmus test, says Robert Mosco at TD Cowan. If Proctor is doing well, the consumer must be doing well too. The company's 2% growth in volume, Moscow says, is encouraging. Take Tide Laundry Detergent as an example. It's purported to be eight times more effective than the prior formulation. And the message has resonated with consumers. They're buying more of it.

He says that's because the higher performance improves the value equation for potential customers. Innovation matters too, says Aaron Lash and Morningst. star. It's about things that make a consumer's life easier or enhance it in some way, whether that's a smaller pack size, a larger pack size, something that's easier to open, a more favorable scent. Lash says that's why the Tidemaker says it's still upping its investments in research and development and marketing, despite cost headwinds. If you are a consumer that is really pinching pennies right now, you want to make sure that your clothes are getting clean each and every wash cycle and that they're not, you know, becoming tarnished. Because a new wardrobe is expensive.

That all said, Katie Thomas at the Carney Consumer Institute points out that budgets are really tight these days, pressured by rising prices, food, gas. So product quality will only get companies so far. There may be some loyalty there, but we've always. also seen brands discounting, so consumers may be chasing the discount and not being as loyal as perhaps we think they are. Which is why she says companies, including Frito Lay, are rolling back prices. And retailers, including Walmart, Amazon, and Target are leaning into their own loyalty programs and promotions. Because she says, consumers will still spend if they feel

like the prices they're paying are fair. I'm Carla Javier from Marketplace. Hey. Hello. Hi. Nice to see you. How are you? Stephanie. Good to see you.

Stephanie. How are you? Hi, I'm Janie. How are you? Doing great. Tell me where we are. We're at Untamed Spirits. Untamed Spirits is the first women's sports bar in the city of Los Angeles.

Stephanie Ellenwood and Janie Trin started it back in June of last year. There's a big inside bar, tons of TVs, of course, and a great back patio with string lights and hanging plants. Also, of course, more flat screens. We were there one morning about three or six. weeks ago, a couple of days after the Women's March Madness Final. Well, I'm super excited to be here because, number one, women's sports is cool. New bars are always

good. Let's go on the courtyard for like two seconds, and I want to ask you about something. So here's this sign. It says, Untamed Spirits, grateful you came, can't wait to see again. L.A.'s first home for women's sports. Correct. Awesome idea.

How did you come to decide that you guys were going to be the ones to do it? We actually were the first. There's a few others before us, and we're LA City's first home for women's sports. There's other ones around two. There's just this movement in women's sports, and I don't think it's a fad. I think this is a moment in history where things are going to grow. And before, a few years ago, when we go out to sports bars, because we are huge sports fans,

we cannot find women's sports on the TV. And on top of all of that, we couldn't even find audio for women's sports. So we thought, you know, if there is... is a potential. If there is a market for this, we're going to do it. We're going to create a home for women's sports. How heavy was the lift? We both lost 15 to 20 pounds each. No, really? Seriously? Oh, yeah. All right. This is radio, so people can't tell, but you guys do, I don't know how you can afford to lose 50 to 20 pounds. You kidding me? Oh, yeah. It was insane. We slept maybe two to four hours a night for a whole straight month,

and we kept working for half a year non-stop before we finally were able to take a day off of work. And you kept this place open, right? This used to be a different bar, and you kept it open while you were doing the changes. Correct. Yes, yes. And how did you bootstrap yourselves? I mean, you've got a side hustle or two, right? You've got to, you do other stuff?

We saved up from our previous businesses, which is from real estate development. And we thought, you know what, it's now or never. We've got to go bigger, go home and pray and we don't go home. So this is now our home. Yeah, we also had some friends and family who were super, supportive of us and trying to help us in any way that they can. I mean, they came up here Sunday morning at 9 a.m. to help trim all the plants. Wow. And we should say there are a lot of plants. Sunday, was the, you guys must have been packed for the women's final. Absolutely. It was

spectacular. That's when we should have come, actually. Oh, yeah. It would have been too loud to record for sure. Oh, that's true. Well, good, right? Although the game was kind of a blowout, right? I mean, honestly. I'm glad of UCLA won, whatever. Unexpected. Unexpected. Noon. Everyone was out having a blast in the patio was hot. People were inside, outside. We couldn't have asked for anything

better than that. Other than the big days, right, which, you know, you've got the women's final four, you've got Angel City, right? You guys are affiliated with them or you support them. The sparks. Other than the biggies, how's like day-to-day business? Right? Because that's what you live and die out. Yeah. Definitely that's something

that we focus on a lot, because we always, make sure that during the week we have other types of events. We have trivia every Thursday. That's usually pretty busy. People love it. We have Taco Tuesdays, $3.2 tacos, $3 tequila shots. $10 margaritas. What could possibly go wrong. But one thing that I think we've also curated is a lot of people like to spend their anniversaries here, birthdays here. They'll bring their group of 15, 20 people that can all get together, have an inexcus. expensive meal and just like have a good time and watch sports at the same time. It occurs to me this bar could not have existed like eight, ten years ago.

Probably not, honestly. Absolutely not. Well, the hardest part about that is women's sports wasn't playing on TVs. You couldn't actually find it unless you're on YouTube or trying to find it from someplace else. Like it wasn't accessible. Now in the last like five years, you can turn on ESPN. and actually see, you know, women's sports, which that was definitely not happening 10 years ago.

Yep. Are you profitable yet? Can you guys pay yourselves? Not quite. Not quite. But we'll get there. We'll get there. We'll get there.

We'll get there. We're almost a year. Yeah. Yeah. Our one-year university is coming up real soon, so we can't wait for that. Oh, yes, absolutely. We throw it down. Yeah, no kidding.

No kidding. So in five years, where, you know, where are you with this place, with an expansion? What do you think? This is funny. Stephanie just asked me this question the other day

and we had a crazy day at the bar. So I said, please don't ask me this question. Just answer it. So I'll let you answer. There you don't. Sorry. Our goal that I'm going to convince her to do as well. Our, great.

Yes, our goal is to have a lot. five locations in five years. That's, that's, you grow too fast. It's really dangerous. You know that. I totally get that. Okay. But we also want to be the firsts everywhere. Thanks, you guys. I appreciate. Yeah. Thank you. Thank you. This final note on the way out today, we're going to go out on petroleum since the straight is still closed. Negotiations are, I think, set for this weekend and the unknown unknowns do keep piling up. Brent Norsey, the global benchmark, back over $100 a barrel. 10642, to be precise.

Gas says AAA 405 a gallon. That's within a couple of cents, actually, either way, of where it was both yesterday and a week ago. Our theme music was composed by B.J. Leatherman. Marketplace's executive producer is Nancy Fargolly. Joanne Griffith is the chief content officer. Neil Scarbrose, the vice president and general manager. And I'm Kai Rizdahl.

Have yourselves a great weekend, everybody. We will see you back here on Monday, all right? This is APM. You may have learned recently just how far a barrel of oil has to travel before it makes it into your gas tank. And a lot has to happen to that oil before it even becomes gas that you can actually use. So this week on Million Bazillion, Ryan and I venture on a road trip with stops in Texas and Dubai to learn all about oil and why the price of gas goes up and down. And we even meet Derek, an oil drill who knows a lot about the global economy. OPEC is a group of oil producing countries that work together to do.

Decide how much oil they're going to drill and release for sale. They can drive the price down by releasing a lot of oil. Listen to Million Bazillion on your favorite podcast app.