Finding work is tough in a stalled labor market
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Chapter one, where this economy stands right now. Chapter two, cars. And chapter three, hey, what did you do today? From American Public Media, this is Marketplace. In Los Angeles, I'm Kyle Risdell. It is Thursday today, the 26th of June. Good as always to have you along, everybody.

I mentioned yesterday as we got going that today and tomorrow are a busy couple of days for economic data. We got the final update on first quarter gross domestic product this morning, from which we learned the economy contracted faster than we had thought. Let me say that again. The economy got smaller January through March.

New jobless claims fell slightly last week. More on that coming up in a bit. And we will get new data on the Fed's preferred measure of inflation tomorrow. So just get a little perspective on what might be what. We've called Mohamed Al-Aryan. He's the president of Queens College, Cambridge, also chief economic advisor at Allianz. Dr. Al-Aryan, good to talk to you again, sir.

Thanks for having me on. So as I just said, we've got some economic news today. We'll get some more tomorrow. Your sense just as a baseline here of where this economy stands right now. So first, I don't think today's economic news has changed my assessment of where we stand because it's mixed. Second, where do we stand? We have a weakening, not a weak, a weakening economy with inflation staying high.

Last time we had you on, you said this thing that really caught me, and honestly, it has stuck with me. You said, we are dangerously close to stall speed. Do you still think we are, and how much closer are we? We're closer. So just last week, the Federal Reserve revised its growth projection for this year from 1.7% to 1.4%. So the closer we get to 1%, Kai, the more I worry about stall speed.

An economy requires a certain amount of momentum to ensure that

not only is functioning well, but that resources get reallocated without any sector having to contract exceedingly. So the closer we get to 1%, the more I'm going to be worried. So let's talk about some complicating factors then. There are, of course, the president's tariffs. His 90-day pause expires in a couple of weeks-ish. I don't know the exact date. There is, of course, the situation in the Middle East. There are consumers in the United States who are increasingly concerned

unhappy. Where do things go then? So what we're seeing is both the ability and the willingness to spend is under pressure. There's so much uncertainty in the system that consumer confidence has come down and there is evidence of people being hesitant. The last retail sales number was not as encouraged as you'd like it. Businesses have

adopted a wait-and-see attitude on major investments. They just want clarity. That has to do with willingness. Then there's ability. The lower segments of the household income distribution is under significant pressure. And also, certain businesses are having difficulty with their payments. Yeah, but look, you're talking about people and companies wanting clarity, and I would suggest that that's the very last thing we have right now.

That's absolutely right. And that's why the Fed has revised down its growth projections. That's why people are not talking about US economic exceptionalism like they did at the beginning of the year. The other thing that is very surprising is the probability of recessions.

That started the year at 10%. It peaked at almost 80% in April. Now it's down again below 30%. You don't expect that sort of policy-induced volatility for an economy as mature and as big as the U.S.,

What ought the Federal Reserve do then? You have said in the past that, first of all, the Fed blew it with inflation on the front end as the pandemic happened. And now you're worried that they're sort of not doing anything because they're worried about their reputation now. What do you make of what the Fed ought to do? So I am concerned that the Fed has three political narratives right now that are undermining its institutional standing and its operational credibility.

One is this notion that it is making policy not on the basis of economics, but on the basis of either protecting its reputation or the chair wanting to go down as having been the defender of Fed independence. The second narrative has to do with this notion that President Trump is thinking of protecting

early chair powers replacement, this notion of a shadow Fed chair that undermines the credibility of the current chair. And then the third one is how quickly two Republican Fed governors started arguing that the July meeting should be a live meeting and that the Fed should consider a rate cut. These three political narratives are inherently damaging to an institution that has to come across as apolitical.

Well, let's take that apart for a second here, right? So you've got Fed Governor Waller and Fed Governor Bowman saying that maybe July will do it. So they've got their agenda. And look, they get a vote, right? And they're allowed to do what they want. I want to get to President Trump incessantly beating up on the head of the central bank. How damaging is that, do you think? So I don't think it's damaging unless it leaves Chair Powell to err on

too much in keeping policy tight for too long so that he's not seen as doing what President Trump wants him to do. So one really has to ask Chair Powell as to whether that's impacting his judgment. Well, wait, sorry, sorry to interrupt. But but the Federal Reserve Press Corps and I on this program have asked him repeatedly and he says no.

I think he said what most people would say. Of course he's saying no. If he says yes, that's incredibly damaging, not just to him, but to the institution. But what you really need to know is how does it impact his thinking and the way he guides the FOMC as a whole. Last thing, sir, and then I'll let you go. And I do want to get to sort of America's place in the economic world. With all this turmoil at home, political and economic uncertainty, where is the United States globally now?

So look at the dollar. Those of us who have followed the dollar for a very long time were stunned that it hardly appreciated when Israel attacked Iran. This is a major geopolitical shock. And now we see the dollar is at levels, weak levels that we haven't seen for three years.

And what that tells you that the role of the dollar is starting to be questioned. And that's a real concern for the U.S. because the U.S. gets incredible exorbitant privileges by having its currency as a reserve currency. Last actual last real thing and then I'll let you go. What does that say then about what has come to be called the selling America trade?

So it's interesting that people in the marketplace are making a distinction between sovereign America and corporate America. They're not worried about corporate America. They're worried about sovereign America.

And that's why you see concerns about sovereign debt. You see concerns about the dollar, about U.S. government bonds. It is very unusual to see that distinction. Most of the time, the view is you can't be a good house, that means a good company, in a challenged neighborhood. But investors, both domestic and foreign, are very comfortable with corporate U.S. They are less comfortable with financial sovereign U.S.,

Mohamed El-Erian, he's a chief advisor at Allianz, also the president of Queens College, Cambridge. Dr. El-Erian, thanks for your time, sir. I do appreciate it, as always. Thank you. Corporate U.S. did all right on Wall Street today. All three major indices in the green by quite a bit, I should say. Sovereign America was mixed. Dollar was down a bit. Treasury bonds were up a bit. We will have the details when we do the numbers.

Let's do a little more macro economy here for a second, the labor market in particular. Just shy of 2 million people filed what are called continuing claims for unemployment insurance week before last. That's people who've been out of work for two weeks or more, and it's the highest number of them since November of 2021.

And at the same time, initial claims for jobless benefits, that's the number of people who just lost their jobs, has been hovering just shy of 250,000 for a solid couple of years now. So how to read that? Well, the economy is not shedding a ton of jobs right now, but you're not seeing many help wanted signs out there either. Daniel Ackerman explains what's going on.

Amanda Augustine has been busy. She's a career coach with top resume, and her clients all have one question. What do I do in this job market? Valid, because right now, the labor market? Static. Just kind of maintaining. Eddie Hearn, economist at UKG, says employers are waiting and seeing, given all the uncertainty around tariffs and interest rates. There's not much hiring, and workers with jobs aren't going anywhere.

So a lot of people are, say, not retiring the next year or so, or people are not getting that promotion that they would have before. Hearn says all that staying put cascades down the career ladder, leaving workers under 25 with fewer openings. It's very, very difficult to kind of get a foot in the door anywhere. And so the unemployment claims keep piling up, says Gary Schlossberg with Wells Fargo.

It's sort of like a stop sink. You're not really getting that flow through people finding new jobs that quickly. And that's a concern for the broader economy because... The labor market is a main driver of consumer spending. And consumer spending is two-thirds of the economy. There are ways for job seekers to get a leg up, says Amanda Augustine. For one, write your own resume. Employers are being flooded with AI-generated resumes, seeing the same phrasing, the same language.

And here's a tried and true tip. It really helps if you have that referral. You know, like from a human. I'm Daniel Ackerman for Marketplace. The thing everybody's waiting for in this economy, and by everyone I mean you and me and the Fed and companies and economists, the thing we're all waiting for is for tariff-driven price increases to show up.

I mean, as soon as President Trump announced his pretty much across-the-board tariffs on pretty much everything coming into this economy from pretty much everywhere, consumers went out to buy stuff before those import taxes hit. And now here we are, almost three months on, and prices haven't really budged like we all expected.

That's exactly what's happened in the new car market. Sales shot up and then fell back in May. And despite a 25% tariff on many imported cars and car parts, prices haven't moved much. Marketplace's Henry Epp has more on this odd moment in the automotive market.

Back in April and May, buyers were snapping up SUVs from Scott Polite's dealership just outside Des Moines, Iowa. So when they saw the uncertainty with the tariffs and the deals that Lincoln was offering, we saw a lot of luxury vehicle buyers take advantage of that. It wasn't just fancy Lincolns. Polite sells Fords, too. And he says across the board in April and May, sales were way up compared to last year. Whether it's new or used, it's

And whether it's Ford or Lincoln, but everything was up at least 50 percent, some were up 100 percent. From customers pulling forward their car purchases. But also, Polite says discounts from the manufacturer moved a lot of cars, too. At some point, he says the prices of vehicles he sells will probably go up. But so far, we haven't seen it and nobody's told us what to expect. There are a few reasons for that. Ivan Drury at the car shopping site Edmonds says one is just time.

It's simply the manufacturing of the vehicle, getting it to the port and at the port, having that tariff come into effect. And then again, you have to transport all the way to the dealership. Couple that with the fact that many carmakers this spring were sitting on a lot of unsold cars built before tariffs, Drury says. That's why Ford and Lincoln offered discounts. They had very bloated inventories. So by saying, look, we're going to help you out at the

worst time possible for the consumer, it did help them. They did need to clear out some inventory. But even as that inventory dwindles and cars subject to tariffs hit the market, many carmakers still aren't rushing to raise prices, says Stephanie Brindley at S&P Global Mobility. It is very clear that most automakers are sitting back and saying, OK, let's wait and see how this comes together. Hoping that tariffs might not be permanent.

Car makers, Brinley says, are reluctant to hike prices now because new vehicle prices have already risen over 21 percent in the past five years, according to the Consumer Price Index. There were affordability issues before we had this happen.

So you don't want to be up and down on pricing. You want to raise that price as slowly as you can. But car companies will soon have an opportunity to increase prices. The new model year. 2026 cars will start hitting lots soon, Brinley says. They'll come with new features and technology, and they'll be more expensive. The automakers have kind of wrapped that up into a model year changeover, into some new technology, and to try and

Brindley says that will make it hard for consumers to tell how much of the price change is due to tariffs and how much is for that new touchscreen or leather interior. In the meantime, dealers, including Scott Polite in Iowa, are still trying to move as much of their current inventory as possible.

He says that discount from Ford and Lincoln runs out in early July, right before the end of President Trump's 90-day pause on even higher tariff rates. We're all waiting to see what happens that second week in July. Aren't we all, Scott? I'm Henry App for Marketplace.

Coming up. Everybody kind of called it the unofficial town hall, which is how I ended up with the working title of unofficial mayor. Unofficial mayor after a very real wildfire. But first, let's do the numbers.

Dow Industrials up 404 points today, 9 tenths percent, 43,386. The Nasdaq lifted 194 points, also 9 tenths percent, 20,167. The S&P 500 gained 48 points, 8 tenths percent, 61,41 there. Let's talk McCormick & Company, shall we? It sells crushed Thai style chili pepper.

Adolph's Tenderizer, seasoned and unseasoned, and Cholula hot sauce, and a whole bunch of other things that are probably hiding behind your suspiciously old box of rice-a-roni. Right? You know what I'm talking about. Picked up 5.3% today after investors deemed its earnings report pleasantly spicy. Bond prices were up, as I said. Yield on the 10-year T-note down 4.24%. You're listening to Marketplace.

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This is Marketplace. I'm Kai Risdahl. As of airtime today, I've so far spent about six and a half hours doing paid work, an hour and a half on household activities, that's walking the dog and doing the dishes. I got a load of laundry started this morning too. Also about an hour and a half on leisure and sports activities.

And if you're thinking right about now, that's great, Kai. I'm happy for you. But why are you telling us this? First of all, I can't blame you. But I'm telling you this because we got the latest batch of data from the American Time Use Survey today, courtesy of the Bureau of Labor Statistics, which, just like you might guess, is the latest batch of data.

surveys us about how we use our time. Marketplace's Savannah Peters dug into it for us. When people are asked to account for their time over, say, the last month, they're not exactly reliable, says Jeffrey Godbey, a professor emeritus at Penn State University. Oh yeah, I work 70 hours a week. And how much time do you sit watching TV, drinking beer? It's underestimated.

But when we recall just the last 24 hours as the time use survey asks respondents to do, we're a little more honest about how and where we spend our time. One thing that stands out is an increasing proportion of people's day spent at home. Gordon Rindernacht with the RAND Corporation says that's a long-standing trend in the time use data.

Just 30% of respondents did some form of socializing on an average day in 2024, down 8% from a decade ago. That drop could in part reflect less time spent in the office, though this batch of data showed a slight drop in remote work.

Sarah Flood, a researcher at the University of Minnesota, noted men were 5% less likely to work from home than the year before. For women, it was flat. It could be this return to the office trend, especially in technology and finance jobs where men tend to be employed at higher rates than women.

Differences across gender are often headline findings of the Time Use Survey, which, according to Jeffrey Godbey at Penn State, could make it a target for elimination as the Trump administration pushes an 8% budget cut at the BLS. I'm Savannah Peters for Marketplace. We're a bit more than six months out from the wildfires we had here in Southern California back in January. And believe me when I tell you

People are still picking up the pieces and likely will be for a while yet because rebuilding after something like that takes years. This September is going to be five years since the Holiday Farm fire in Blue River, Oregon, burned more than 173,000 acres. Most of that town, hundreds of homes and businesses were leveled. And as Brian Bull reports, locals are still putting their community back together.

The Holiday Farm Fire scorched a 27-mile path through this forested valley here. The hills are charred and so are the trees. Reconstruction is taking a while. Today, not even half the 500 homes that were destroyed have been rebuilt. It takes a village to rebuild a village, right?

Brandi Crofter Ferguson is with the non-profit McKenzie Community Land Trust. Near downtown Blue River, a construction crew is building six new houses. They're 1,300 square feet, stick built on site, three bedrooms, one and a half bath. In the five years since the fire, Ferguson says the cost to rebuild a home jumped 40%.

but her organization is trying to make it a little more affordable for displaced families to come back. We will be selling the house, but we won't be selling the land. We will be holding onto the land, and families that buy the house will sign a 99-year lease. And since the value of the land isn't included in the purchase price, these houses can be more affordable. They'll sell for roughly half the typical price of a McKenzie River area home.

A literal stone's throw away is the Myers General Store and Liquor Shop, or rather the new one under construction. Owner Melanie Stanley says it'll replace the original that was destroyed in 2020. Everybody kind of called it the unofficial town hall, which is how I ended up with the working title of unofficial mayor of Blue River. Stanley is hoping to open back up in September, but she might be the only shop on the block.

Many of the lots around hers are still just patches of concrete. She's paying for the rebuild out of pocket, but others? The biggest problem and the biggest hurdle that most people are facing is cash flow and capital in order to be able to rebuild buildings and start those businesses back up or start a business at all. The town's population is now around 200, about a fourth of what it was before the fire.

and that's hampering the town's ability to rebuild, generate business, and boost tourism. The nice part is that at least a certain part of the year, you have an influx of people with money coming to spend it in your community. Chris Lavoie with McKenzie Community Partnerships says Blue River does have lots of seasonal vacation homes and short-term rentals. The influx of cash supports the hospitality and recreation industry at a level that Blue River couldn't on its population alone.

But we also need to have jobs and regular stable income that comes throughout the year. The town is talking about attracting more full-time remote workers, but in the meantime, it's also banking on festivals and events to attract tourists, like the McKenzie River Solstice Arts Festival.

Let's get a last round of applause for Doug and Amy. That was fantastic. Today's event is hitting douse pretty well by steady rain. It is Oregon after all. The sun was shining a few minutes ago and we have tiny baby frogs jumping all over. So it's a good omen. A good omen for generating some cash for the community, says event director Heather Green.

We have a collaborative local booth that is featuring local artists who were affected by the fires or have been economically impacted by the recovery. There's also food trucks, a raffle, a chainsaw artist shows off her work. The only thing missing is a crowd.

In a patio space away from the downpour, comedian Erica Figueroa tries to fire up a shivering audience of a half dozen people. She's trying to talk over a generator. Thank you so much for coming to the party. Look at that tie guy. Look at tie down on black. We know it's going to be a good time.

The forecast is better for the next day, so the festival organizers are hoping for a better turnout. Because in this small town, every visitor counts as it tries to make a comeback. In Blue River, Oregon, I'm Brian Bull for Marketplace. Music

This final note on the way out today in which I don't think Microsoft really gets it. I saw this on The Verge that the company is going to replace its dreaded blue screen of death. That thing that happens when your computer basically rolls over and dies. It's going to replace the blue screen. Wait for it. Wait for it. With a black screen of death. It's really an attempt on clarity and providing better information. The company said, I don't know.

John Gordon, Noya Carr, Amanda Petran, Stephanie Seeker are the Marketplace editing staff. Amir Bebawi is the managing editor. And I'm Kai Risdahl. We will see you tomorrow, everybody. This is APM.

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