Deep Dive
Shownotes Transcript
Hey there, and thanks for listening. We want to know more about our audience, so stick around at the end of the episode to hear about how you can provide feedback and potentially walk away with a $75 gift card. What makes Hawaiian Bros so different?
We have no freezers, no fryers, and no microwaves. Because when you skip all that, you're left with one thing. Fresh. Right now, we're grilling, saucing, and tossing fresh ingredients into our mouth-watering new wraps. Choose teriyaki-glazed huli huli chicken, the kickin' sweet heat of our Molokai Mac, or the citrusy, irresistible Pacific Island wrap. Grab one today for just $7.99. Only at Hawaiian Bros.
On the program today, some jobs data, a little political economy, also trampolines. From American Public Media, this is Marketplace. In Los Angeles, I'm Kyle Rizdahl. It is Thursday today, the 5th of June. Good as always to have you along, everybody.
One of the fun things you do as a business and economics reporter is try to figure out from the data you have what the data you're going to get is going to be. I say that with an eye toward the calendar, which tells me that tomorrow we're going to get the May jobs report from the Bureau of Labor Statistics. We have in hand, as of this morning, the regular weekly data we get on people making first-time claims for unemployment benefits. 247,000 was the number.
which is pretty much in the range of where it's been over the past year or so. However, comma, and with an eye toward tomorrow's jobs report, layoffs are in the air. Another round reported at Microsoft earlier this week. It's second in as many months. Procter & Gamble said today it's making cuts to 7,000 jobs, about 15%.
This morning, Challenger Gray and Christmas, the oft-cited outplacement firm, told us companies announced just shy of 700,000 job cuts between January 1st and the end of May. That's 80% more than the same period last year. All in all, the numbers suggest a rising amount of what economists call labor churn, which is where Marketplace's Stephanie Hughes comes in.
People enter and leave the workforce all the time. They graduate and get a job or quit their current position and start a new one. Maybe they retire or get laid off. All of this turnover is labor churn. And UBS economist Jonathan Pingel says in a healthy economy, you can think of it as being a kind of matchmaker. The more churn there is in some sense, you know, the better kind of match you're going to find when you're looking for work or employers looking for you. As individuals, we think of getting laid off as being really bad.
But Pingel says layoffs are also a regular part of the economic cycle. In the healthy economy, there's still actually a pretty brisk pace of layoffs every month. But we're just replacing that with more job openings, jobs being created and new hiring to offset it. But layoffs also come with a cost to the employers doing the laying off.
Andy Challenger with Challenger Grand Christmas says after companies reduce their workforces, they'll see more employee turnover. Because people don't feel safe at the organization and they also see productivity drop.
Challenger says the number of layoffs that are happening at the moment has a more read. The type of cutting that we're seeing right now isn't something that we typically see outside of a recession. He points out the job cuts, they're happening more to people who make more money. For example, managers, as opposed to regular worker bees. So far, if it continues to extend, it'll likely hit the whole labor market.
Not everyone is as worried. What we have today, I don't think, is a sign of an unhealthy amount of churn. Stephen Juno is a senior U.S. economist at Bank of America Global Research. He points out lately the U.S. economy has been adding over 150,000 jobs on average every month. That's not indicative of a slowing economy. It's indicative, I think, of a stable and healthy labor market.
In tomorrow's jobs report, Juno's going to be watching to see how long people are staying unemployed. Job turns only good when people who lose jobs eventually land in the right new ones. I'm Stephanie Hughes for Marketplace. On Wall Street today, generally down, one particular electric car company led the way. We'll have the details when we do the numbers.
We cover a whole lot of economic indicators on this program. There are jobs numbers, May figures out tomorrow, as I said a minute ago. There's housing data and GDP. Here's another that deals with ups and downs. Where are we? We are at Airborne Trampoline Park in Linden, Utah.
Yep, trampolines. This is the largest trampoline park in Utah County. Might be the largest one in the state of Utah. Second largest is my other trampoline park down in Draper, about 20 minutes south of us. You have two trampoline parks. We have two trampoline parks. Chris Maturne is the operations manager here. It's a 55,000 square foot warehouse with trampolines and an indoor playground, lots of other stuff for kids to bounce around on.
You have possibly been dragged to a place like this for a kid's birthday party at some point. You can find them all over the country. The thing that makes the high concentration of trampoline parks here in Utah County a relevant economic indicator, though, it's what it tells you about how demographics affect the economy.
Talk to me about demand for your product here. You know, Utah is an interesting market in that we have the largest family sizes. It was funny when we swapped to a new point of sale system not too long ago. They're like, okay, so parents have to sign waivers for their kids. We usually average four kids to a waiver per parent. I said, great, we need eight. And they're like...
No, seriously? I said, no, seriously, eight. And sometimes that may not be enough, but that should handle a majority of our guests. And when they were asking us about our locations, they're like, you have two 50,000 square foot parks within 20 minutes of each other. Aren't you guys in competition with yourself? And it's like, nope. And in between me and my other park, I might have a dozen other family entertainment centers. And there's still enough to go around just because Utah families are so big.
As you know, Neela Richardson and I, she's the chief economist at ADP, have been in Utah County for our series, The Age of Work, about how this economy is changing as U.S. workers get older. Utah County is a counterpoint to the aging American labor force. It's one of the youngest counties in the nation. 30% of the population here is under the age of 18. And that is a counterpoint to the aging American labor force.
is a business opportunity. Not for nothing, but there's only one kid on all these trampolines. Correct. Yeah, I mean, it is school day. That's true. I was just looking for a little bounce action. That's all.
We were there off-peak hours, but this company does seven figures of annual revenue at each of its two locations. How much does it cost? What's the ticket cost here? I was just doing this. So if you've got... So zero to two is $5.99. Three to four is $14, $13.99. And that's all day? All day. Stay and play all day? Five and up on a weekday is $20. So if you've got six kids from two to seven years old...
I can't do the math, but it's $100 and something. Yeah, you'd be well over $100. It's not nothing. It's not nothing. It's the cost of a movie. It's probably, honestly, a little bit less nowadays than a movie. Yeah, cheaper than a movie. Right. Do you have some thoughts of what could happen if the economy slowed? So, if we really start to see a recession...
And if we really start to see that household income and if we really start to see unemployment numbers spike, again, we talk about the advantages of Utah. Our unemployment rate in Utah is a 3.2. The national average is a 4.1. But if we see the unemployment in Utah start to spike back up above 4%, 5%, 6%,
One of the first things families are really going to cut out of that household budget is a visit to a place like ours. We're hoping they would cut out all of the streaming services first and say, you know what, let's support a local business. Let's go. No, it's not going to happen. I can't compete. As I said, Airborne's a great business opportunity in this kid-centric economy. In fact, the owner's planning to expand by the end of this year. But the thing is, that opportunity we've been talking about, the demographics of Utah County, it creates obstacles too.
Here, let's walk. Let's walk here. And then we'll walk, kind of walk down. You'll see what we're building. So we have about... Daniel Thomas is a commercial real estate developer in Utah County. His office is just down the street, actually, from Airborne Linden in a brand new mixed-use development called Valley Grove. We own all this land. I shouldn't say all of it, but most of this over here.
He took us up to the vacant top floor of one of his company's office buildings. Big picture windows looking out over Utah Lake, a lot of empty land and housing developments out west, and a construction site right by the freeway. This building's the last building we built. We're a speculative builder, so we'll build a building with the intent of it being 100% vacant when we finish it. Really? Gutsy move, man. It's worked out well for us. What we found is most businesses...
aren't deciding what real estate they need 24 months out. They're usually calling us saying, I've got a problem. What do you have? Daniel's tall and fit. He's an ultra-marathoner wearing a rubber ducky tie that day. He's not originally from Utah. Moved here from the East Coast about 11 years ago. What are you doing here? Making money. He works for a Baltimore-based commercial real estate firm. It's called St. John Properties. I was hired to basically find a new market. Find somewhere outside of the mid-Atlantic that we could...
for the next 50 plus years. Are you the guy who picked Utah? I picked Utah. Okay, how come? I'd boil it down to three reasons. One, just natural organic population growth. It's growing. If there are people coming to an area, you know, I don't have to try as hard to fill buildings. I don't have to go in and throw elbows with competitors and
Second reason, regulatory environment. These municipalities, most of them appreciate growth, want growth. A lot of places where we conduct our business, it's not always welcome. So you do a lot of commercial office space and maybe restaurants as well? We have built, I was just doing the math this morning, 26 restaurants just right here in this project in the last six years.
But here's what's interesting about that. They're almost all fast, casual, quick serve. I was trying to figure out why that was. And I don't know if this is just my opinion, but there's a very, very young demographic here. There's not a lot of money for higher end things. And there's also Utah County is known for its frugality. You remember Tyler Jackson, the real estate entrepreneur that Neil and I spoke with on Monday? Yeah.
He's got a $6.5 million real estate portfolio, driving a beat-up old Prius because he'd rather save than spend. Young people want to get out, eat, have a meal that they can afford. So of those 26 restaurants, the bulk of them are the fast, casual, quick sit-down type restaurants. There's a Panera Bread, Jersey Mike's, a couple of local chains too. Once this business park is complete, it's going to have a million square feet of office space, retail and a hotel.
What kind of businesses can't make it work here, though, right? I mean, look, you're in the business of selling space to businesses. What kind of businesses do you look at and go, eh? That's a great question. One thing we're trying to figure out
How do we bring some higher-end retailers, right? They need people that want to make luxury purchases, not just convenience purchases or essential purchases. But that goes back to the demographics, right? You got all the young families with young kids who are scraping for every penny. They're not going high-end, right? They're going to the fast cash you were talking about. Yeah.
We're changing. We're evolving. We're trying to create a place for that. We're in conversation with some of those national anchors. We need one or two to make the jump. What he's talking about are high-end retailers that attract other businesses. And before they open up shop, those anchors need to know that people will be willing to spend. And that's where the opportunity, all the young workers living in Utah County, become an obstacle.
What's the pitch? Make the pitch. Make the pitch? Yeah, sell me. Oh. Ah. Put up or shut up, pal. No, it's tough. It's tough. I almost went back to the normal pitch, which is you got 150,000 college students who live right here. I mean, there's a... But again, that... That doesn't do it. I'm a high-end retailer. I don't want college kids, man. It's tough, Kai. You asked the right question. Maybe I need to refine my pitch. Um...
I think we're starting with the pitch of it doesn't exist. I mean, this is one of the fastest growing counties in the nation, right? Do you want to miss it? The thing about demographics is that you can project them out into the future. And with a third of the population under 18 in this county, you know those kids are going to grow up and become consumers themselves.
There is opportunity in those trend lines, of course, but obstacles too, which is why next week on The Age of Work, we're going to a place we could kind of see way out in the distance from Daniel's window. We have a lot of employees that live out there and commute. That's a schlep, man. Took us 45 minutes yesterday in the middle of the day. It's pretty nasty, isn't it? Yeah, it's kind of bad. One of the fastest growing cities in the region.
It's incredible what is happening out there from a kind of residential standpoint. It's still a little early to try to get the commercial to match up with that residential. Obstacle meets opportunity. That's coming next week.
Coming up. I think upper management just realized that, hey, we're sitting on a gold mine here. And all that artificial intelligence gold ain't cheap, you know. First, though, let's do the numbers. Dow Industrial is off 108 points today, a quarter percent, 42,319. The Nasdaq lost 162 points, eight-tenths percent, 19,298.
S&P 500 is down 31 points, about a half percent, 59 and 39 there. Tesla shares took a beating today after President Trump mused he might cut all of the government contracts and subsidies to Elon Musk's companies. This was in response to Musk, of course, calling Trump's tax and spending bill, this is a quote, an abomination. Tesla shares fell more than 14 percent today. In related news, shares of Trump media also took a hit, falling 8 percent. You had to read all those tweets to believe it. It was...
Bonds down, yield on the 10-year T-note rose, 4.39%. You're listening to Marketplace. This Marketplace podcast is supported by Greenlight. As a listener of Marketplace, you're likely already building smart money habits for you and your family, trying to instill important lessons on saving and spending and the economy overall and the younger folks in your life. But what about the older generation? Your parents, grandparents, aunts and uncles? As they age, they may need more support in managing their finances too.
With Greenlight's Family Shield, you can take the next steps by protecting your senior loved ones from scams and financial fraud. Family Shield offers account monitoring, real-time alerts, and coverage, including up to $100,000 for deceptive transfer fraud and $1 million for identity theft, so you can keep your whole family financially safe and sound. And with added safety tools like SOS and crash alerts, along with location sharing, you can keep an eye on both your family's wallet and their well-being.
Take care of your whole family, from kids to grandparents, with Family Shield from Greenlight. Sign up today at greenlight.com slash marketplace. This is Marketplace. I'm Kai Risdahl. President Trump and Chinese President Xi Jinping had a call today. Trump described it as very good. The Chinese description was more neutral, but the two leaders did agree that their negotiators would meet again soon to talk trade.
It does seem pretty clear, though, that President Trump doesn't really want a deeper trade relationship with China. Quite the opposite, in fact, which is pretty consequential,
when you consider this is the world's two biggest economies we are talking about here. Sharon O'Halloran is a professor of political economy at Columbia University, also Trinity College in Dublin. Professor, welcome to the program. Thank you very much. We hear from the president and from several of his cabinet secretaries that what they are looking for is a strategic decoupling from China. And I guess the first question that has to be asked is, what does that mean?
So over the last decade or so, the United States has increasingly relied on China to produce the goods that are designed and innovated in the United States.
Consequently, the decoupling is trying to alter the structure of the global productive system where China can't have a hold on what happens in the productivity of the United States. And I think that's the key what they're trying to do is to make U.S. production less dependent on China. That sounds like a big swing. And I guess my next question is,
Can the government of the United States get there with tariffs and some student visa cancellations? So tariffs changed the calculus. What we've seen in the first Trump administration with higher tariffs and the trade wars was a nearshoring of production, moving it away from Asia, China in particular, to our partner countries, Mexico and Canada. Right.
Now, with some of the tensions that have risen there in the second round that we have here, it's a new calculus that's taking place by changing the costs.
The administration definitely changes the incentives of outsourcing and the benefits of outsourcing and gives greater benefits to produce domestically. You know, the trading relationship with the United States and China has been built up over at least a decade. The president is trying to undo it now in a matter of months. My question to you is how long do you think it might reasonably take to reconfigure or decouple strategically, as the president likes to say?
from China. So it will take a significant amount of increased costs for them to move the production process. That's a billion dollar plant. They will have to actually build new plants elsewhere.
and make sure that they have the capability to produce the intermediary parts that they need to produce the finished product. So it is going to take a very long time. It will be very costly to change that whole supply chain structure in the short term. In the intermediary term, that's really a three to five year period, they'll be able to do it. But
If you're expecting six months for Apple to completely change everything over, that's not going to happen. Let me get you to the cost of this thing, because it will be, as you said, expensive in the billions and billions and billions of dollars for companies to reshore their plants and their manufacturing and all of that.
They are not likely to just eat those costs, right? It's going to come down to the rest of us. Exactly. The producers can absorb some of those costs, but those costs will be given to the American consumer. And there's really no way for producers or us to get around that. That will lead to increased inflation and it'll just reduce the standard of living of American families. So look, here's a value judgment question. And if you want to duck it, I understand.
But does it make sense then that the president's trying to do this? I don't believe that if you want to achieve a more level playing field in the global economy, it's not clear that increasing tariffs by 50 and 100 percent is going to be effective.
The biggest barriers to trade are really non-tariff barriers, regulations, restrictions on procurements and those types of things. That is where the sticky parts are of global trade. And this is not a way to address those issues.
Sharon O'Halloran is professor of political economy at Columbia, also at Trinity College Dublin. Whence we got her on the phone today. Professor, thanks for your time, ma'am. I do appreciate it. You're welcome. Artificial intelligence, those large language models you've heard about,
AI needs, and I mean really needs, two things. Big giant data centers and the electricity to run all those computers with all those NVIDIA chips in them. And it also needs data, specifically all those articles and posts and pictures and whatnot that are out there on the Internet that AI companies use to train those large language models.
There are few repositories of that kind of data bigger than Reddit, which helps explain the lawsuit the company filed this week against the AI firm Anthropic, accusing it of accessing Reddit's data without its permission. All of that content, of course, is a goldmine for teaching AI to sound human, and Reddit's not about to let it go for free, as Marketplace's Megan McCarty Carino reports. Richard Lodgeman ran into some problems hooking up a new computer monitor recently, so he took to the Internet for advice.
I'm getting the vendor's description not helpful. I'm getting people who have very complex, you know, 15 layers deep on some help site, and I'm not finding what I need because the quality is not there. Lachman, who is a professor of media at Toronto Metropolitan University, finally found what he needed on Reddit. It's kind of a meme at this point of saying, I have some weird, obscure problem. I will do a search. And someone three years ago in some other part of the world had exactly the same problem. It was
So Reddit really is a store of highly specialized knowledge that is updated very frequently.
That's made Reddit one of the most popular search keywords as users seek authentic human voices on an Internet full of advertising and SEO drivel. It's also made the platform attractive to AI companies, says Chirag Shah, a computer science professor at the University of Washington. It's not just people posting things, but also people reacting to it.
So Reddit can teach AI not only facts and information, but how to communicate. What things get positive reaction, negative reaction, what things get discussed, how people discuss it. This allows a model to be a lot more fine-tuned to what people may be looking for. And Reddit has caught on to this, says Baird tech strategist Ted Mortensen. A couple years ago, before the company went public, it restricted free public access to its data.
I think upper management just realized that, hey, we're sitting on a gold mine here. Last year, Reddit made deals with Google and OpenAI to license that data for more than $100 million. It's a big boost in revenue for a platform that, unlike Facebook or Instagram, has struggled to monetize its user base with advertising. I'm Megan McCarty Carino for Marketplace.
♪♪♪
This final note on the way out today, a quick detour into this morning's report on the trade deficit that you might have seen already. And also, we're going to close the loop on that point I made up at the top of the program about trying to guesstimate what the next data point we're going to get is going to be. The trade gap in imported goods we learned this morning tumbled in April down better than 16 percent from March. Why, you ask? Well,
Well, because March was when importers were bringing stuff in willy-nilly to beat the Trump tariffs by April. Most of it was already here. So that is today's data. Our crystal ball of future data is the next read we're going to get on gross domestic product that's coming in about three weeks. The formula for GDP, gross domestic product, as I think we've mentioned previously,
Well, for that GDP calculation that's coming at the end of June, imports are going to be relatively small, right? Which means exports are going to be relatively big, which means GDP, again, that's economic growth, is going to be relatively small.
Could look pretty good. C plus I plus G. Net exports, right? You do the math. The caution here, of course, is that that April imports number is going to be a one-off. That was a lot, I know. Sorry, but it's important. John Gordon, Noya Carr, Amanda Peacher, and Stephanie Seek are the Marketplace editing staff. Amir Babawi is the managing editor. And I'm Kyle Risdell. We will see you tomorrow, everybody. This is APM.
Real quick before you go, we'd love it if you'd please complete a short anonymous survey by going to marketplace.org slash survey. It would only take about 10 minutes. And as a token of our appreciation, you can enter your name to win a $75 gift card once you've completed the survey. You do all of us at Marketplace a huge favor by filling it out.