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I'm Kyle Rizdahl. Wednesday, today, the 30th of April. Good as always to have you along, everybody. On the theory that a little bit of review is always helpful, we are going to begin again today with the formula of the moment. C plus I plus G plus X minus M equals GDP. Consumer spending, that's C, plus business spending, I for investment is what they call it in business, plus
plus G, that's government spending, plus net exports, which is X for exports minus M for imports, equals the entire economy.
We review because we got our first look at first quarter GDP today. And as has been all over your news and social feeds ever since, the economy got smaller January through March. Not a lot, three tenths percent, but smaller. Now, that shrinkage is not good, but it's not terrible because of that formula that you are probably getting sick and tired of.
Consumer spending is fine. Business spending is okay. Government spending is all right as well. But that net exports component, once again, that's exports, and this is the important bit, minus imports component.
skewed the final result. Our example today, line 11 of table one of the report, non-residential fixed investment in equipment. That's economists speak for spending by businesses on things like machines and computer hardware and furniture. And it was up a whopping 22 and a half percent from a quarter earlier, the biggest quarterly increase in nearly five years. Marketplace's Stephanie Hughes takes it from there.
American companies bought a lot of computers in the first quarter. To get specific, business investment in computers and the stuff that goes with them, like monitors and printers, was up nearly 113% for the quarter. The last time it was this high was in 1983, basically when desktop computers were becoming a thing that companies wanted to buy in the first place.
Carleton College economics professor Ethan Strube says this reflects the needs of the modern American economy. Most of what we produce in the United States is still services, and service providers need computers to do their jobs. Think economists, bankers, journalists.
And Strube says back in January, February, March, the period this data covers, businesses were anticipating new tariffs on electronics. So they went ahead and bought tech gear before it got more expensive. This was their chance. They took it. Good for them. Veronique Desrougies is an economist at George Mason. She says this investment doesn't augur a big increase in production in the coming months. Instead, this was simply companies stocking up.
to try to actually temper the growth in their cost of doing business in America that they know is coming. What businesses didn't buy as much of was industrial equipment. Investment in big pieces of machinery, stuff you'd see on a factory floor, actually went down for the quarter.
Unlike a computer, which might run in the hundreds of dollars, one of these machines can cost millions. And Victoria Bloom, chief economist at the National Association of Manufacturers, says companies don't want to risk buying them right now. If they don't know kind of what the business landscape will look like. And that giant growth in computer investment, by the way, Carlton economist Ethan Strube says it's not sustainable. He says as long as your employees don't spill coffee on their computers, they're not going to need new ones for a couple of years.
I'm Stephanie Hughes for Marketplace. We started with a formula. We are going to continue with some vocabulary, an economic portmanteau, if you will, of what happens when you get a stuck economy at the same time you've got rising prices.
The stuck economy part came with today's Q1 GDP number. We just talked about that. The rising prices part came with today's personal consumption expenditures index, which the Fed uses to measure inflation prices up 3.5 percent during the first quarter. Marketplace's Henry Epp is on that one. The short answer is no, we were not experiencing stagflation in the first quarter.
There were a lot of special occurrences during the first quarter of 2025. Julie Smith is an economics professor at Lafayette College. As we've been saying a lot lately, companies have imported like crazy to get ahead of tariffs and imports are subtracted from gross domestic product. But if you look beyond those imports. The economy is doing OK.
In the first quarter, consumers were spending. Unemployment was fairly low. Inflation was higher than the Federal Reserve would like, but not by too much. That is not a stagflationary economy. But that was the economy through the end of March. March is ancient history. Tim Quinlan is a senior economist at Wells Fargo. The Trump administration's barrage of tariffs convinced analysts to cut their expectations for GDP growth and raise their expectations for inflation.
Does that mean that that stagflation is inevitable? No, but it certainly suggests that the implementation of tariffs and the uncertainty around a trade war do introduce a stagflationary shock to the economic outlook.
There are anecdotal signs of a weakening economy, says Stephanie Kelton, an economics professor at Stony Brook University. Many small businesses are already saying, if this continues for even just a little bit longer, I can't survive. I'm going to close my business. That means layoffs. And some big companies are saying they don't have the margin to absorb tariffs. And so I am going to have to pass on to consumers that
some, most, or all of the increased costs. In the form of higher prices. I'm Henry Epp for Marketplace. On Wall Street today, it is kind of amazing, I have to say this, but since he brought it up, this is 100% totally, absolutely, completely Donald Trump's stock market. We will have the details when we do the numbers. ♪
The gist of those stories from Stephanie and Henry was how we are starting to see tariffs affect the real economy even this early. Long term, though, the hope, emphasis on hope, that the Trump administration is offering is that somehow those tariffs are going to help bring back American manufacturing.
What if, though, there was an example from history where a big American company actually did try to move manufacturing from Asia to North America? Wouldn't that be good? John Eamont is a reporter at The Wall Street Journal. He wrote the quasi case study on this. John, welcome to the program. Good to have you on. Thanks so much for having me. It's a delight to be here. So take us back to 2015. Nike decides they need to or want to, I suppose, move sneaker production out of Asia. Why, first of all, do they decide it's time?
Yeah, it's a great question. So 2015, wages were rising in China, which was one of their big production bases. And new technology was becoming available, like 3D printing. And they felt that it made sense to just
rethink the whole process and see if there was actually another different way. Could they, could they make shoes in North America and then, you know, get the shoes into, um, you know, stores near their customers within, you know, a few days. I mean, how crazy would that be? That's what they wanted to try to do. So they, they connect with this company called Flex, which has done, we should say, on-shoring work for, um, Apple and, and the MacBook Pros. How does that go?
So it doesn't go very well is the short answer. They really gave it a try. They poured millions of dollars into setting up this big factory in Guadalajara, and they had really talented engineers thinking through these problems, trying to rethink how can we make a shoe where we just don't need so many people. And
The factory just kept on getting bigger and bigger because they kept on needing more people as production expanded because it just wasn't as easy to replace people with machines as they'd hoped. So within a few years, they had to close the factory, and it was a failed effort. Let's get into the nitty-gritty here, right? I mean, if you're making a computer, you slide a circuit board onto a whatever, and it's all hard components, and they, figuratively speaking, snap together. You're making a shoe...
it's like rubber and glue and fabric and it's soft and squishy. That's right. And machines don't do well with soft and squishy. So machines do well with a circuit board with very precise dimensions and the machine could do the same task millions of times. Nothing is precisely the same with shoes. So when the temperature increases or decreases or humidity increases or decreases, fabric expands, it contracts and all this stuff that if you're a skilled professional
shoe worker in, say, a country like Vietnam or Indonesia, it doesn't really matter to you. You know what you're about, and you're going to make the quick adjustment without thinking. Machines aren't like that. And so it became really difficult. So one example they gave me was it took them about eight months to finally figure out how to automate a way to get the Nike swoosh onto a shoe. And, you know, it was a moment of triumph, right? That's exactly what they're trying to do, get people out of the process. And then
By the time they did it, Nike was onto a new shoe model, and the way that they developed just didn't work anymore. And that's one of the other big problems with shoes. Unlike cars, there's just new models constantly, and so it's really difficult to get machines that can just...
But by the time you get your production line down, you're no longer producing that shoe anymore, basically. And the personalization part of it is this too, right? I mean, you know, you order a new computer, you get a color, you get more memory, whatever. But sneakers have become this thing where you can express yourself through its design. And Nike didn't want to give that up.
Yeah, that's right. I mean, the reason why Nike has been a successful company is because they don't put constraints on their designers. They think of the most interesting shoe, the shoe that's right for the moment. And then once they've decided what shoe they want, then they go to their factories. And they've got very skilled manufacturing partners in Asia who can do it, right? Right.
But you have a much more limited vocabulary when you're making shoes in this very highly automated way. So what Nike was not willing to do was it was not willing to really put constraints on its designers' vision and say, you've got to think about first, what can these machines do? And then think what's the best shoe you can make under those constraints. I mean, that kind of went against the ethos of the company. Right. Nike is the case study here, but Adidas was trying this Under Armour 2, I think, right? Yeah.
That's exactly right. So almost exactly the same time. So Adidas also set up these highly automated production facilities in Germany and Atlanta, Georgia. And Under Armour had something called Project Glory, which was a program to do similar in Baltimore. And
Adidas at about the same time as Nike ended up giving up the effort. And with Under Armour, they haven't really mentioned Project Glory since, as far as I can tell. We haven't really heard anything about it.
The reason we're talking to you, of course, is because President Trump and his tariff and industrial policy wants to reshore all these jobs. Howard Lutnick, the secretary of commerce, as I'm sure everybody listening knows, has promised millions and millions of people screwing tiny little screws into into iPhones. I was struck, therefore, by the kicker of this piece. The guy who ran this process for Flex basically said it's going to take a very long time and take a whole lot of money.
Yeah, right. Well, that's why we got to do this dive into history because history is very relevant right now, right? It's not as if these shoe companies have never thought of this. They tried it and everyone is still producing in the three big Asian shoemaking nations that they were before. So this just isn't easy to do. So sometimes –
there's this common view that I get when I see people reading comments to my articles or sending me emails, say, well, we can just automate it and then we can do it in America. And
It's just it's not always as simple as that. And you do need a lot of labor. And, you know, Nike produces about half of its shoes in Vietnam. And there's currently a 90 day reprieve. But President Trump has has put a 46 percent tariff on Vietnam. So so certainly, you know, Nike stands to be among one of the most affected companies by these tariffs. John Emont at the Journal. We got him in Singapore. John, thanks a lot. Fascinating piece. Thank you so much.
Meta reported profits this afternoon after the bell. The parent company of Facebook, Instagram, and WhatsApp made plenty of money, billions and billions of dollars. But it, along with other big tech and social media companies for which advertising dollars are key, are worried about tariffs just like the rest of us. Marketplace's Savannah Peters has that one.
Companies' ad spending tends to track GDP pretty closely, says marketing professor Cohen-Powles at Northeastern. When they feel that, you know, there's boom times, there's a lot of consumers with lots of demand and willingness to pay for their products.
Companies are more willing to invest in getting those consumers' attention. But when the economic horizons look stormy... Marketing budgets are the first to go for many brands. Haley Farini, a tech analyst with Mintel, says that's especially true for digital marketing. Since companies can track an online ad's performance in real time to see if it's driving traffic... If a brand wants it paused, it can be turned off within the hour. So it's a quick way to save some money.
And for some overseas companies, steep tariffs mean there's no longer a market for their products in the U.S. Chinese retailers Xi'an and Timu have reportedly already slashed spending on Google, Facebook, and other major U.S. platforms that rely on those ad dollars. Eric Hagstrom is with the consulting firm Advertiser Perceptions. All of the largest tech companies, advertising contributes either virtually all of their revenue or a significant amount of their profits.
For the last few years, Cohen-Powles at Northeastern says tech companies have been using strong ad revenue to spend big on AI advancements that could help them run more efficiently and attract users down the road. So it does require a lot of investment, but of course, it also is supposed to save the company costs. So that's going to be a very interesting dilemma that they face.
If the trade war leads to a sustained slowdown in digital marketing, Powell says we could see layoffs as tech giants are forced to rein in those investments. I'm Savannah Peters for Marketplace. Coming up. A long road with a set path and a known destination actually works really well for me. The life of a professional backpacker. But first, let's do the numbers. ♪
Dow Industrial is up 141 points today, about a third of 1%, 40,669. The NASDAQ contracted 14 points, 10%, 17,446. S&P 500 added 8 points, two-tenths of 1%, 55,069 there.
Just heard from Savannah Peters about how tariffs could affect advertising dollars. Pubmatic, which allows digital publishers to better monetize their content, down 2.6% today. Magnite slid 3.3%. The Trade Desk, which lets ad buyers manage campaigns, fell 1.9% today.
Bonds up, yield on the 10-year T-note down 4.17%. Yes, indeed, Donald Trump did try today. It's been the stock market. It's on Joe Biden. It's not true. You're listening to Marketplace.
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Only at Public.com. Paid for by Public Investing, Inc., member FINRA, and SIPC. Full disclosures at Public.com slash disclosures. This is Marketplace. I'm Kai Risdahl. There are big changes coming to the way K-12 education works in Texas. Starting in the 26-27 school year, Texas is going to have the biggest universal private school choice program in the country. A billion dollars available as $10,000 per student to pay for private schools.
The money will, of course, be welcome for those schools and for families with kids already or thinking about enrolling. And even as public education advocates fear it's going to drive funding out of public schools. Reporting from Texas, where an analysis from Rice University found 73 percent of school districts are underfunded. Marketplace Elizabeth Troval has more.
Houston area educator Michelle Palmer just got out of her last class, Texas government. We meet at a Starbucks where she grades papers sometimes. She says today students were brainstorming on their final essays. A lot of them are doing theirs on pretty controversial topics because the Texas legislature is
has presented a lot of controversial topics to them. One of those topics? Education, which includes Texas funding vouchers. Vouchers that are unlikely to benefit the students where Palmer teaches, Aldine Independent School District. It serves mostly low-income Latino and Black students. There are very few parents in Aldine that can afford private school, even with vouchers.
While some public school educators worry about vouchers driving down enrollment and funding, Palmer says her bigger concern is the state spending $1 billion on private schools when public schools are struggling with issues like high student-teacher ratios. The amount of time I have to spend grading and giving good feedback and contacting parents is more because I have 150 students instead of 120 students.
The number one thing we could do for students in Texas is to lower their class sizes. And this is not going to do that. Palmer's district, along with 170 others in Texas, is severely underfunded, according to Rice University sociology professor Ruth Lopez Turley.
She says while the legislature is spending around $6,000 per student in public schools. We're willing to provide, you know, $10,000 for use, you know, toward private schools when we don't have a whole lot of research evidence that shows that this particular strategy is effective for improving student performance.
In states with vouchers, students who benefit are often those already enrolled in private schools. And in big urban areas, private schools have limited slots and are often much more expensive than what vouchers cover.
But Mark Desjardins says it's in smaller Texas cities where schools have more vacancies and are more affordable that vouchers could make a bigger difference. He runs All Saints Episcopal School in Tyler, a city in East Texas. We have 140 kids in our high school. So as it relates to vouchers, we're excited because we're a school that can potentially really grow our high school.
Typically, their program sends all of its kids to college and could take in as many as 120 new students. Tuition starts at around $19,000, and the school also offers financial aid. We're kind of an educational bargain for what we offer in comparison to our peers. We have a pretty wide range of socioeconomic diversity within the school.
In West Texas, Stephen Cox is superintendent at Trinity Christian School in Lubbock. He hopes vouchers relieve the financial burden of tuition on some of their families. Every year, though, yes, we do lose families who just say, you know, I got laid off. I've had unexpected health expenses or whatever it is, and then they have to make a decision. And we would love for folks to not have to make those decisions.
Even more voucher money will go to kids with disabilities. $30,000 extra. Laura English has a 10-year-old daughter with special needs and says vouchers could help her daughter. People trust private schools because they hear they're good and they have a reputation, but there's no guarantee it's going to be for your kid, even when you pay the money.
Like a lot of parents, English believes private schools don't ensure a better education. I'm Elizabeth Troval for Marketplace. I had a conversation on the show yesterday about the many retirements that some younger workers are taking these days. People working to live, not the other way around. That gets us to today's installment of our series, My Economy, where living might actually be the most important thing that we do.
My name is Tasman Alexander. I'm 24 years old. I'm a cross-country biker, backpacker, and photographer from Portland, Oregon. When I was in school at Colorado State, the COVID pandemic broke out, and I decided it wasn't a good decision to stay there at that time for me. So I came home, got a job in Portland working full-time.
I did that for nine or so months, but at one point I remember talking with my roommate and I was saying, I really just want to go do the PCT. And he said something that I think about all the time when I'm making decisions. He said, you already know that you're going to go do it. And I already know that you're going to go do it. So why do you keep calling me and telling me that you're thinking about doing it?
So then I quit that job. And on March 18th, 2021, I went to Campo, California and started walking to Canada. And a few years later, after doing two bike trips across the country, I did the Appalachian Trail. And to this day, the Appalachian Trail has been the most magical experience that I've ever had. ♪
When I'm not on one of these trips, I am wishing I was primarily. I am also trying to save up money looking to the next one. I make money by taking photos, shooting videos, and I live very cheaply. And the trips themselves are very cheap as well. I usually only spend about $1,000 a month when I'm out hiking or biking.
Being on a long road with a set path and a known destination actually works really well for me. When you start out on the Pacific Crest Trail or the Appalachian Trail, you know you've got...
2,000 or more miles ahead of you. And that seems daunting, but the trail is right below your feet. And if you follow it, you know that you'll get there. There was a time in my life when one of my goals was just to spend at least half of my life in a tent. And if I could do that, then I knew I was doing things right.
You know, that's not so bad, right? Not so bad. Tasman Alexander, backpacker and biker extraordinaire from Portland, Oregon.
This final note on the way out today, just a very quick labor market detail. ADP reported its private payrolls number this morning. Just 62,000 new jobs in this economy last month, says ADP. The government's April jobs report, Friday morning, 8.30, Washington time.
Our media production team includes Brian Allison, Jake Cherry, Justin Doolin, Drew Jostad, Gary O'Keefe, Charlton Thorpe, Juan Carlos Torado, and Becca Weinman. Jeff Peters is the manager of media production. And I'm Kai Risdahl. We will see you tomorrow, everybody. This is APM. If there's one thing we know about social media, it's that misinformation is everywhere, especially when it comes to personal finance.
Financially Inclined from Marketplace is a podcast you can trust to help you get serious about your money so you can build a life you've always dreamed of. I'm the host, Janelia Espinal, and each week I ask experts important money questions like how to negotiate job offers, how to choose a college that you can afford, and how to talk about money with friends and family. Listen to Financially Inclined wherever you get your podcasts.