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In Los Angeles, I'm Kyle Rizdahl. It is Monday today. This one is the 19th of May. Good as always to have you along, everybody. There are some things swirling around out there in the economic air that we are going to start with today. The dollar is selling off again. U.S. treasuries, too. Government bonds, right? Stocks started the day down. They did end in the green. And then also, the dollar is selling off again.
The big picture financing news from the end of last week talked about this on Friday. Moody's joining Fitch and S&P, downgrading the credit rating of the biggest economy in the world. Debt deficits, political paralysis, and fiscal...
challenges being the proximate causes. Nina Eihacker is a professor of economics at the University of Rhode Island. Professor Eihacker, welcome to the program. Good to have you on again. It's great to be here. Do me a favor, would you? And I'm going to steal a page from Chair Powell's book here. Look through the downgrade itself, right? The way the Fed likes to look through tariffs for inflation. What does it tell you that three out of three of the big rating agencies have now said, you know what, United States...
This is not great. What does it tell you? It tells me that there is a growing acknowledgement of the political turmoil, whatever you want to call it, in Congress as to actually funding government spending. So I think what's interesting about this most recent downgrade is that it's not happening on the heels of
of a debt ceiling showdown, but it's sort of predicting that growing disparity between an administration that talks about wanting to reduce the debt and then pursues policies that do anything but. The thing about the U.S. economy, of course, is that it was built on, well, it's built on many things, right? The rule of law among them, but it's also built on being a place of stability and consistency of policy.
Are we still, do you think, a stable place in which to invest and do business? So when it comes to the stability of the U.S. economy, a big part of that comes from the fact historically there's been a large global demand for the dollar. But it really seems like all of these moves together are chipping away at the perceived advantages of that. So I wouldn't say that...
the stability of the dollar or even the U.S. government bond has necessarily disappeared. But the stability of all of that is definitely being reduced policy by policy. Right. And we should point out here that we've had two significant instances now of what this program and others have called selling America, right? The dollar had a sharp sell off and it happened again, you know, sort of over the weekend, also bonds. So clearly there's an international mood of
Hmm. You know? Yeah. And, you know, I'm someone who's generally pretty...
pretty sanguine about fiscal policy. I'm someone who likes to see government spending on welfare benefits. I'm someone who likes to see spending on things like industrial policy. But that really depends on global economic confidence that the government will continue to pay its bills, that the government will continue to conduct policies that are conducive to economic growth, that the
you know, allow the institutions that undergird all of that business success to continue functioning. And that is rapidly eroding. Let's say and I'm not foreshadowing at all up here, but let's say there is a recession at some point in the next, you know, 18 months to two years. Right. And we need a stimulus package. Do you think that can happen now, given where we are with that deficit and political dysfunction? Yeah.
It looks a lot harder. An administration that has slashed many of the sorts of relief programs that, for example, played such a strong role in the U.S. recovery from the COVID pandemic has
It doesn't necessarily seem like an administration that is going to default to the tools that historically have helped the U.S. get out of recessions. Well, so just following on from that then and take yourself out of your econ professor analytical mode and put it in, you know, participant in this economy mode. Give me your vibe check. Your Nina Einhacker daily life in this economy vibe check.
I'm pretty worried about how things are looking. I think that a lot of firms are internalizing big, bad shocks to their operations. And I don't see that playing out in optimistic ways.
I think that the producers in our economy are going to start showing the effect of all of these cost increases and that that is likely to eventually start rippling out into more unemployment and less spending as those feelings continue to ripple outward towards consumers. Nina Eihacker at the University of Rhode Island. Professor Eihacker, thanks very much for your time. I appreciate it. Thanks so much for having me.
On Wall Street today, bonds were down, stocks were up. Details, numbers, when we get there. Microsoft laid off about 3% of its workforce last week, 6,000 or so people in total, a big chunk of whom, and this is analysis by Bloomberg,
a big chunk of whom were software engineers, computer coders. You fast forward to today, and at its big annual developer conference, Microsoft announced a bunch of new AI products, including what it calls an asynchronous coding agent that can do a whole lot of computer programming things. Now, correlation is not causation, and tech layoffs happen all the time, as we know. But if the robot revolution is coming...
It might come for the coders first. Marketplace's Matt Levin has that one. Okay, so before you start Googling how quickly can I become a professional welder, we really haven't seen hard data yet showing AI is actually taking people's jobs en masse. But it's not a bad idea to keep an eye on those tech layoffs. What happens to coding and software engineering is a bellwether. Molly Kinder is at the Brookings Institution.
It's the first occupation to use this technology in mass scale. If AI is pretty good at writing a college history paper or making an image of the Pope in a funny coat, it is really good at programming. In an email, a Microsoft spokesperson said the organizational changes are necessary to best position the company for success. Still, AI already writes up to 30 percent of its code.
Kinder from Brookings says that whole idea of software engineering as the stable career of the present and future, that's so last decade. I recently looked back at the 2015 Obama White House AI and Automation Report. One of their recommendations is everyone should learn coding. And, you know, you cringe reading it now. AI writes about 50 to 60 percent of Avijit Kosh's code. He's with the open source AI company Hugging Face.
But he still gives his work a human polish. I still do like to go through everything in the code because I have often had AI-generated code silently fail. Ghosh says he's unsure whether AI will actually outright replace most programmers.
But he does worry about what happens to the future ability of humans to be good coders when robots do most of the coding. It is very easy for a bot to give like a code that will take more amount of time than something elegant and can be thought of as a more beautiful solution. And the more you outsource to AI, the less practice the human gets.
So that, I worry, is changing. People are using these models as crutches. Kosh isn't just worried about how AI might make lazier coders. He worries it might make us lazier at all our jobs. I'm Matt Levin for Marketplace. ♪
Five years ago, George Floyd, a black man in Minneapolis, was murdered by a white police officer. After that killing and the movement it inspired, George Floyd was killed.
Some of the biggest, the big Wall Street banks, JPMorgan Chase, Bank of America, Wells Fargo among them, said they would invest millions of dollars in small black-owned banks across the country, investments that would let those banks make more loans to small businesses in underserved communities. Marketplace's Justin Ho visited a small business in Columbia, South Carolina that got one of those loans. I'm getting a tour of an apartment building about 10 minutes outside of downtown Columbia.
So Justin, here we are into the apartment here. It's a studio apartment. You can see the stove, the refrigerator, the sink. That's Craig Curry. He's the CEO of Transitions Homeless Center, a nonprofit that runs a shelter nearby. It bought this building about three years ago with the goal of providing affordable apartments for people who were unhoused, especially the elderly, veterans, and people with disabilities. Curry says it was tricky finding a building that would work.
When we started looking for property, it's hard to find like an old nursing home. It's like kind of what you want, but you could find office space. So Transitions bought this old office complex, which used to house an insurance company and a call center. This apartment we're standing in was a corner office. The complex was sitting vacant after the pandemic, and Curry saw potential.
It was like, okay, it's a good price. We can do this. We can get the place and we'll convert the rooms. To buy the property and turn the rooms into ADA-compliant living spaces, Transitions would need to borrow roughly $4 million. Transitions came to us and we were able to help them navigate that financing.
That's Reggie Weber, chief credit officer of Optus Bank in Columbia, the only Black-owned bank with headquarters in South Carolina. He says this loan was more complex than a typical small business loan. That's because a lot of Transitions Homeless Center's revenue comes from donations and grants, so Weber had to do due diligence on those. What's the timeline for the grants? How much are the grants, right? What's the recurring revenue sources, right?
Complex loans like that one require a lot of staff with specialized skills, says Dominic Miartan, Optus Bank's vice chairman. For us to be able to make that loan, we have to have the human talent. We have to have the human capacity. We have to have the underwriters, the analysts to run their numbers. We have to have the processors, the people that send out the statements, that monitor the loan, do the annual reviews on the loans.
And all of those salaries are expensive. That's where the big banks came in. In the year after George Floyd's murder, Optus Bank received about $40 million worth of investment, much of it from four big banks, Wells Fargo and JPMorgan Chase, which both declined comment for this story, as well as Bank of America and Citigroup, which didn't respond to requests for comment. Miartan says their investments, known as Tier 1 Capital, raised the bank's legal lending limit —
It could actually lend out more money, pull in more revenue, and hire more staff. Without that tier one capital, we would not have had the courage to hire talented people to make these more complex, more exotic, more unique jobs.
community loans. The loan helped Transitions Homeless Center bring on more staff, too. You know, I just keep the hallways clean, the restroom, the laundry room. Hillary Hollerman also lives in the building. Before that, he says he was unhoused for more than 10 years. About five months ago, Transitions offered him the job and asked if he wanted to rent an apartment, too. Man, they gave me the keys. I'm moving here. And man, that night I felt so good. I slept so good. I didn't toss and turn.
Hollerman says he makes about $14 an hour, which more than covers his food expenses and the rent on his place. So far, Transitions Homeless Center has built 11 apartments like this, with more to come. The entire complex can accommodate as many as 88.
In Columbia, South Carolina, I'm Justin Ho for Marketplace. Coming up... I will bypass U.S. and buy something from a little farther out. Canadians are taking their money and spending it elsewhere. First, though, let's do the numbers.
Never mind that downgrade, I guess. Dow Industrials up 137 points, 0.3%, 42,792. The Nasdaq added four points. We'll call that flat, 19,215. S&P 500 up five points, hair under 10%, 59,63. Apropos of today's market shrug, the CEO of JPMorgan Chase said markets and central bankers are not taking present risks to the economy seriously enough. Tariffs, deficits, global tensions, you know the drill.
Jamie Dimon spoke at his bank's yearly investor day. Top gainers of the day. Moderna advanced 6.1% today. UnitedHealth about 8.2% to the good. First Solar down 7.5%. Tesla off 2.25%. Walmart lost a tenth of 1%. That's after a weekend comment from President Trump. Quote, eat the tariffs is what he said. The company has been saying it's going to raise prices. We talked about that last week. You are listening to Marketplace. Recruitment.
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This is Marketplace. I'm Kai Risdahl. There was big news in real estate about a year ago, if you might remember. The National Association of Realtors reached a settlement in a class action lawsuit that a lot of people thought might mean real changes to how home buying and selling works, specifically how agents' commissions got paid. Turns out,
Not much changed at all. Buyer's agents are still making about the same commissions as they were before. So says a new study from Redfin. And most of them are still being paid by the sellers. Marketplace with Samantha Fields has more on that one.
Eva Davis closes roughly 50 deals a year for homes in and around D.C. For about half of those, she's representing the buyer. I don't think I've had any where the seller wasn't willing to pay commission. Even when I'm in a competitive situation, which I often am, my commission has still been paid by the seller.
Occasionally, she says, sellers will float the idea of only covering part of the buyer's agent commission. But in the end, they almost always pay in full. Because they don't want to take a discount on the price. They don't want the buyer to not put in as high of an escalation clause. And a buyer can't finance their agent's commission. So it's just a lot bigger of a hardship on a buyer to pay it. And if sellers of comparable homes are offering to pay it, it's hard to opt out.
Daryl Fairweather, chief economist at Redfin, says the real estate industry is also resistant to change. So I think it's really hard to break free of the status quo because it just makes it easier when everyone is kind of following the same norms. Plus, the market is just slow right now. Tiffany Russell, a broker in Austin, says that benefits buyers.
Now, if we were in a different market, say, back in COVID, where we didn't even have to put a sign in the yard, I think we'd be having a different conversation about that compensation piece. During the height of the pandemic, almost every house was getting multiple offers over asking. So in that scenario, we could tell the buyer the buyer would have to cover their agent compensation. But she says that's not the market we're in.
I'm Samantha Fields for Marketplace. Speaking of homeownership, Home Depot and Lowe's are both going to report earnings for the first quarter later this week. They'll give us some sense of how spendy homeowners were feeling in the first three months of the year, obviously before much of the tariff-driven uncertainty took hold. And as Marketplace's Henry Epp reports, the kinds of projects that homeowners have been choosing could tell us a little something about how they're feeling about this economy.
Back in April, Harvard's Joint Center for Housing Studies put out its latest report on the outlook for the remodeling market, and it looked decent. Slow but steady growth through the next year, with spending around half a trillion dollars. But it didn't take into account the effects of the president's so-called Liberation Day, or of a downturn in existing home sales, says the center's Carlos Martin, which suggests...
That there may be a bit of retrenchment in some of our remodeling home improvement activity. Then there's home repair activity, says Jamie Katz, a senior equity analyst at Morningstar. If you need to replace your refrigerator or your toilet, that sort of replacement can't wait.
So this sector has a cushion that's pretty resistant to economic downturns. The projects that homeowners choose to take on, Kat says, have been trending a bit smaller. Maybe we're not doing an addition to a house and maybe we're not doing a complete kitchen gut rehab, but maybe we're redoing a bath.
Whether or not they can afford it, homeowners are at least interested in upgrades, Katz says. That's playing out at Windows and Doors by Brownell in northern New England, where Kelly Krayuski is the general manager. She says there have been tons of calls lately. Some customers get sticker shock and back out, but...
We also have a handful of people who are eager to lock it in, lock their prices in, and know that they're going to get their project executed under the terms we're offering right now. Because, she says, they're afraid that if they wait, prices will just keep going up. I'm Henry App for Marketplace. There was a poll out from the good people at Ipsos not too long ago asking people about America's reputation in the world. Suffice it to say...
It ain't all that. The proportion of people saying America has a positive influence on the world has dropped in 26 out of 29 countries over the past half year or so, especially in Canada, where late last year more than half said the United States was a force for good. Now, 19%. And that, as Marketplace's Kimberly Adams reports, has economic consequences.
Summerhill Market in Aurora, Ontario, is one of those small, upscale grocery stores with gourmet foods, higher-end, pre-packaged meals, lots of fresh fruits and vegetables from all over, but not as many from the States as they used to carry.
We've delisted some U.S. products, but generally we like to make the customers make the decision. So we've seen a lot of shift towards Canada and away from U.S. products. Brad McMullen is one of the owners and president of the chain of six stores and says once the tariff and 51st state rhetoric started, he pretty quickly started looking for alternatives to his U.S. suppliers. You can buy oranges from Florida or you can buy it from South Africa or
So in those cases, when there's an alternative, we've been buying from different countries. McMullen says for products where there isn't an alternative to the American, he's seen a noticeable drop-off in sales. What is this from? That's Canadian. Are you sure? Yeah. Are you sure? Yeah.
That's because of shoppers like Shelley Hensel, who was shopping with her college-aged daughter Izzy at Gordon's Market and Cafe in Collingwood, Ontario. I look at the packaging a whole lot more. It takes me twice as long to grocery shop so I can see where the food is coming from. One thing that helps are the little Canadian flags on shelves all over the store, indicating which products are domestically produced, a new addition since the start of the trade war. Prepared in Canada. There we go.
This is Canadian. Okay. It's BC. Oh yeah, it's BC. Hensel used to prioritize buying products made as close to home as possible to cut down on the environmental impact of transporting goods all over the world. But now she's prioritizing just not buying from the U.S. While I would love to buy something a little closer, I will bypass U.S. and buy something from a little farther out, like green beans from Peru instead of
She's not alone. That's Karen White, a nurse in Brampton, Ontario.
and the trade war. Jörg Gefeller is a professional ski coach in the town of the Blue Mountains, Ontario, and acknowledges the boycott can be challenging at times. I do like wine.
And I like California wine, but they're off the shelf and we're not buying any of those products anymore. Grocery stores and wine shops aren't the only ones who've pulled U.S. products from their shelves. Scott Irvine owns a cheese store called Dag's and Willow in Collingwood, Ontario. We don't buy any cheese from America anymore, and people don't buy it from us. And the American cheese stock he already had? Yes.
So it's all sitting in the fridge waiting for things to blow over. In addition to Canadians avoiding American products, many are also just avoiding America. I always travel to the States for vacation, my husband and I. And now, like, I'm not interested because I don't want to end up in jail or God knows what the case is. Priscilla Gima is another nurse in Brampton. We've seen a lot of stuff in the media that's not pleasant. So now I'm opting to go somewhere else. We
Which some are hoping might mean a boost to Canadian tourism. Tara Lovell works at the Blue Mountain Resort in Collingwood, Ontario, where there's skiing in the winter and a variety of water sports in the South Georgian Bay during the warmer months.
As we go into the summer, we'll see whether Canadians are staying domestic more so, where it's a little less appealing to go spend twice as much for a destination that you might be able to appreciate in your own backyard. And Lovell emphasized that, despite everything, Americans themselves are still welcome in Canada, even if our products are not. In Ontario, I'm Kimberly Adams for Marketplace. ♪
This final note on the way out today, a brief scene out of the White House this morning from Press Secretary Caroline Levin. Is the president OK with this bill adding to the deficit? This bill does not add to the deficit. In fact, according to the Council of Economic Advisers, this bill will save one point six trillion dollars. It is the policy of this program, as I have said repeatedly over the years, that facts matter. So here are the facts.
The president's press secretary is lying. I'll cite a group not inside the White House for evidence, the Penn Wharton budget model. The overall deficit increase in the bill as approved by various House committees is $4.9 trillion over 10 years.
That is offset, Penn Wharton and the White House do say, by spending cuts totaling $1.6 trillion. So, in fact, the bill does add to the deficit to the tune of $3.3 trillion again over 10 years. And just so we're all clear, no tax cut in the history of taxes or cuts to them has ever paid for itself.
Our daily production team includes Andy Corbin, Nicholas Guillaume, Maria Hollenhorst, Iru Ekbenobi, Sarah Leeson, Sean McHenry, and Sophia Terenzio. I'm Kyle Rizdal. We will see you tomorrow, everybody. This is APN. Personal finance isn't just about spreadsheets and investing. It's emotional. Talking to your partner about money, negotiating a raise. Even the smallest decisions, like splitting a bill, can bring up feelings of shame or anxiety.
I'm Rima Reis, host of This is Uncomfortable, a podcast from Marketplace about life and how money messes with it. In this season, we get into topics like workplace drama, tough financial trade-offs, and the quiet tension that builds when love and finances collide. Listen to This is Uncomfortable wherever you get your podcasts.