Deep Dive
Shownotes Transcript
This Marketplace podcast is supported by Dell. The Black Friday in July event from Dell Technologies is here, with great offers on trusted technology. You'll also discover huge deals on new AI-ready laptops, like the Dell 14 Plus featuring Intel Core Ultra processors, starting at $699.99. Save on top accessories, plus enjoy fast, free shipping and other benefits.
Upgrade today by visiting dell.com slash deals.
With the right guidance and vision, incredible things can happen at work. Finding the perfect hire, nurturing talent, making the ordinary extraordinary. LHH doesn't just find beautiful moments at work. LHH creates them. Recruitment, development, career transition. LHH, a beautiful working world. Learn more at lhh.com slash beautiful.
A trillion here, a trillion there. Pretty soon it all adds up. We'll talk debt and data, and then we'll go fishing. From American Public Media, this is Market Class.
I'm Kai Risdahl. It is Tuesday. Today, this one is the first day of July. Good as always to have you along, everybody. As we begin the second half of 2025, it feels like an appropriate moment to consider the six months gone by in this economy or actually better yet, the 90 days since President Trump announced his barrage of tariffs back at the beginning of April and made uncertainty the macroeconomic word of the year.
So far, we touched on manufacturing yesterday. We're going to get the June unemployment report on Thursday. Today from the Census Bureau came construction spending data for May. Not great. Down three tenths percent more than expected. Also, the fifth consecutive monthly decline. Marketplaces of Brebeneshore has the whys and the wherefores.
Some of this slowdown in construction spending is a delayed hangover from the construction party we had a couple years ago. At the end of 2023, there were one million apartments under construction. Robert Dietz is chief economist at the National Association of Home Builders. After that surge in apartment building, the market came back down to earth.
- 2024 saw a 25% decline in apartment construction starts. There was a big slowdown in the apartment development market due to the high cost of financing. - Higher interest rates make it more expensive to build. Meanwhile, the demand side of things hasn't exactly been thrilling builders either. Vacancy rates are higher than normal in more than half of all major metro areas, according to Lou Chen, senior economist with Moody's Analytics.
A lot of these metros have current vacancies sitting above 8%, 9%. Chen says a lot of Sunbelt cities in particular have high vacancies that are holding back construction. And good news for renters, they're holding down rent growth too. And there's a more recent addition to the building buzzkill in general, good old uncertainty. There's uncertainty.
A lot of uncertainty among contractors about what's happening, you know, in tariffs, tax rates and labor availability. Macrina Wilkins is a senior research analyst at the Associated General Contractors of America. How much will building materials cost in a month? Six months. Depends on how tariffs shake out. And it's making them a lot more hesitant to take on new projects.
Meanwhile, over in the world of single-family homes, which take less time to build than apartments, falling construction spending now is a sign that 2025 got off to a slow start, says the National Association of Home Builders' Robert Dietz.
It's just a reminder that the housing market has slowed due to housing affordability and construction cost constraints. The Home Builders Association predicts that unmet demand will actually nudge developers to start building more apartments this year. In New York, I'm Sabri Beneshour for Marketplace. Wall Street here on day two of a four-day week mixed where the major indices, we will have the details. Yeah, when we always have the details.
Ever since President Trump upended global trade with his tariffs, companies have been looking for ways around them.
Some of those companies have been using what are called foreign trade zones, FTZs in the vernacular, are specific designated areas supervised by federal customs officers, usually near ports or airports or border crossings, that for decades have let companies import products tariff-free, store those products in those special areas, and then either pay the import tax later or maybe manufacture something out of those imports so that they end up paying lower tariffs or even no tariffs at all. And what's happening now is
is that a lot of local governments are looking at those FTZs as ways to power their economies. Marketplace's Justin Ho has that one. I'm standing in the headquarters of Micro Commercial Components in Simi Valley, California. It's a semiconductor manufacturer that makes chips in Asia and ships them here for distribution. MCC's Eric Schneider is walking me to the back of the office. We'll come up to a door that's heavily secured by a magnetic lock and by an RFID key reader.
And that will allow us to go through this door and into a foreign trade zone. That foreign trade zone is a 19,000 square foot warehouse filled with boxes upon boxes of semiconductors and plenty of security. So you can see we have across all of our gates, we do have secure fencing across all the different entry points. You have to be a secured employee with a background screening.
And there's also security cameras at pretty much every entrance and exit. Schneider says all of this security is required by Customs and Border Protection because everything in this warehouse, from the standpoint of customs law, is not yet inside the U.S. And so with the FTZ, what it allows us to do is basically bring this product over into the port of Long Beach. We bring it into the foreign trade zone. It's being secured and we identify it as foreign merchandise.
That matters because it means Micro Commercial Components hasn't paid any tariffs on these products. Schneider says many of his customers, mostly electronics and auto manufacturers, have foreign trade zones of their own, so Schneider can sell to those customers tariff-free.
Having this directly at our facility in Southern California, we're able to have that as a selling point, essentially. Schneider says the FTZ helped push the company's revenue up by more than 30 percent over the last five years. And now, with the Trump administration's tariffs, other companies in the area have been getting FTZ curious. Potential foreign trade zone users reaching out, asking questions, asking how they can be a part of this and who they would need to speak with.
That's Stacey Lang with the nearby Port of Hueneme, which takes in applications from businesses that want to set up shop in a foreign trade zone. We have been actively mentioning to all of the customers that move through the port that it is a feature that we can offer. Meanwhile, local governments are using foreign trade zones to lure businesses. We are really using it as an attraction tool for advanced manufacturing.
Christine Mackey is director of community and economic development for the city of Phoenix. She says over the past 10 years, FTZs have attracted manufacturers in the electronics and semiconductor industries, as well as aerospace, automotive and solar panel manufacturers.
Which is great for Arizona. We're completely changing the economy of Metro Phoenix into a production-based economy from where we had been, which was a consumption-based economy. Mackey says that shift has created jobs, raised salaries, and generated tax revenue. As a result? We're able to invest more money in our streets, in our parks, in our parks.
in our swimming pools. We're building five new fire stations right now. We're building a ped bridge that crosses over the Salt River. There are limits to these kinds of benefits. Melissa Ehrman, with the National Association of Foreign Trade Zones, says the Trump administration has been tightening up FTZ regulations.
So that has sort of inadvertently disincentivized U.S. manufacturing in a foreign trade zone. But Ehrman says there are plenty of benefits that still apply. Companies can use foreign trade zones to delay paying tariffs on imports until it's most convenient. Or if they're exporters, too, avoid paying any tariffs at all. The U.S. foreign trade zone program has always been one tool in a larger economic development toolkit, especially internationally.
If you're trying to attract manufacturers for export or distributors for export. Ehrman says her organization is focused on trying to educate businesses, local governments and the Trump administration about why all of these benefits can help the economy. I'm Justin Ho for Marketplace. Let's talk for a second about the GOP's big tax and spending bill that passed the Senate today.
The people who do the math at the nonpartisan Congressional Budget Office say that this bill, all by its lonesome, is going to add more than $3 trillion to the national debt. And it's not just the CBO who's saying that. Virtually every model from nonpartisan groups agree that this bill is going to increase the debt. Debt that stands today at $36.2 trillion and counting.
Honestly, it's an unfathomable amount of money. And yes, you probably know the broad strokes of it, but...
Really, how did we get here? My name is Kathleen Day. I am a full-time lecturer at Johns Hopkins Carey Business School. My name is Karola Friedman. I am at the Kellogg School of Management at Northwestern University. I'm Eric Hilt, and I'm an economics professor at Wellesley College. That's our semi-regular panel of economic historians. And since this is going to be a history piece, in case you couldn't tell, we are going to go all the way back.
The Revolutionary War, we had to fund it. Wars cost money. When Alexander Hamilton was Treasury Secretary, he proposed to assume the debts of the states in the Revolutionary War, and in doing so, significantly expanded the debts of the federal government. Debt in and of itself isn't bad. That's really important to understand. Virtually every government has some.
Washington sells Treasury bonds and bills, that's another word for borrows, right? To finance the difference between what it spends and what it takes in. The fact is, the government's responsible for things the private sector isn't. And it does things the private sector can't, most noticeably, when there's a crisis. Like the Great Depression. And, come 1941, for national security.
In World War II. Second, I ask that you invest every cent you can now in war bonds. Which added about $3 trillion of today's dollars to the debt. And that's important for the country's survival. The program's only half an hour, so we're going to fast forward a lot. We have the crisis of 2007. The situation with Lehman Brothers and other financial institutions. The Great Depression.
Recession required billions in bailouts or billions in assistance. Making sure that banks survive was really important to keep the function of the economy in relatively good shape. The Great Recession added about $5 trillion to the debt in the five years after 2008, as the government created programs to help companies and small businesses and help states pay for extended unemployment benefits.
All those bank bailouts, by the way, which I know you are thinking about right now, just for the record, repaid with interest. At its most basic, there are just two parts to the debt equation, revenue and spending. The spending part gets a whole lot more airtime, as you know, than the revenue part does. But the reality is that revenue is really important, or actually the lack of it. The tax cuts and jobs act.
The 2017 Trump tax cuts weren't the biggest ever, but they were plenty big, just shy of $2 trillion added to the debt. By definition, tax cuts reduce revenue, revenue that is needed for mandatory programs, spending required by law, which is the vast majority of what the government does. And in fact, in 2018, after those Trump tax cuts, the government spent about a trillion dollars more than it collected in revenue.
And then came 2020. What happened is we had COVID. The COVID crisis. The COVID pandemic. We added $8 trillion to the federal debt between September 2019 and September 2022 to pay for stimulus checks and the Paycheck Protection Program and all those other COVID benefits you probably remember. And that brings us to today, the GOP's tax and spending bill and what it means for our $36 trillion worth of debt.
The Congressional Budget Office says that bill is going to add $3.3 trillion to that pile of red ink.
And it's just math that the bigger our debt gets, the more expensive it gets. If you expand the debt a lot, it starts to expand itself unsustainably. Then you are being charged interest on interest. And so it will just continue to expand on its own until you start to actually run budget surpluses and pay it down. Last time we ran a budget surplus? Anyone? Fiscal year 2001, Bill Clinton.
The CBO says over the next decade, the GOP bill is going to add more than $400 billion just in interest payments to the national debt. I have said this before and I will say it again. There is no tax cut in the history of tax cuts that has ever paid for itself. The Senate bill goes over to the House today. Speaker Mike Johnson says they are going to vote on it tomorrow.
Thanks to Kathleen Day, Johns Hopkins, Carola Friedman at Northwestern, and Eric Hilt at Wellesley College. Seeing as how you're listening to this program, I am going to take it as a given that you know that the stock market is not the economy. It is, however, economy adjacent. And it probably hasn't escaped your notice that equities have been doing quite nicely of late. Thank you very much. The S&P was up almost 4% in June, the Dow and the Nasdaq up more than that.
You look around, though, at everything and you kind of do have to ask, what are stock traders seeing that the rest of us are missing? Here's Marketplace's Samantha Fields.
If you look at charts for the Dow, S&P and Nasdaq, you can see the day President Trump announced his tariff plans. April 2nd. The markets tanked. To some degree, Justin Wolfers at the University of Michigan says it's surprising investors were so spooked. Trump made clear tariffs were coming. He ran on it. So the market tanked not because he imposed tariffs, but because they were bigger and larger and more incoherent and more destructive than anyone thought.
So much of what happens in the stock market is about expectations. And Wolfer says the fact that it has since rebounded has a lot to do with the pullback on tariffs. Maybe people are optimistic the president is not wedded to such an extreme agenda. Investors also seem optimistic about the big tax cuts and budget bill in Washington, much of which he says favors the kinds of big established companies that are represented in the stock market.
Rohit Chopra, a former director of the Consumer Financial Protection Bureau, says there's often a disconnect between what the market's doing and how small businesses and consumers are doing. We have seen this story before where stocks go up, but really there are warning signs flashing when it comes to consumer credit. People who are falling behind on their credit cards, falling behind on their auto loans.
Even though some of those warning signs are flashing now, consumer spending is still solid. So is the labor market. And inflation is under control. Anvithi Bahuguna at Northern Trust Asset Management says all of that matters a lot to investors too. It's really the macroeconomic volatility that then drives market volatility. And in many ways, the market volatility has come down sharply. Mainly, she says, because key macroeconomic data has been so stable.
I'm Samantha Fields for Marketplace. Coming up... Our economy here depends on our tourists, so we need them to come. Taking the temperature of trout tourism. But first, let's do the numbers. ♪
Dow Industrial is up 400 points even today, 9 tenths of 1%, 44,494. The NASDAQ gave up 166 points, that's about 8 tenths percent, 20,202. The S&P 500 down 6 points, about a tenth percent, 61,98. The dollar continued the slide it's been on all year. The U.S. dollar index gave up a little bit more than a tenth of 1% today. Year-to-date, down nearly 11%. When the dollar's worth less,
You need more of them to buy an ounce of gold or silver, and that is very good news indeed for precious metal miners. Newmont dug up 1% to Barrick Mining, found 1.1%. Bonds down, yield on the 10-year T-note rose 4.24%. You're listening to Marketplace.
Are you looking to invest in municipal bonds? For extra protection, buy bonds insured by Assured Guarantee. It guarantees 100% of your principal and interest will be paid when due. Assured Guarantee has demonstrated its reliability and financial strength for nearly four decades. That's why the bonds they back are one of the safest investments you can make. Visit assuredguarantee.com. Assured Guarantee, a stronger bond.
This Marketplace podcast is supported by Commvault. When bad things happen in business, like ransomware attacks, Commvault rewinds data, cloud apps, and environments back to before the incident, like it never happened.
Commvault. It's how companies become a continuous business.
The process is 100% online, no insurance is needed, and one low price covers everything from treatments to ongoing care. If prescribed, your medication ships discreetly to your door for free. Start your free online visit today at hymns.com.
Find ED treatment that's up to 95% less than brand names at HIMS.com slash marketplace. That's HIMS.com slash marketplace. Actual price will depend on product and subscription plan. Featured products include compounded drug products, which the FDA does not approve or verify for safety, effectiveness, or quality. Prescription required. See website for details, restrictions, and important safety information. This Marketplace podcast is supported by Palo Alto Networks.
Listen to Threat Vector, the Palo Alto Network's podcast for in-depth discussions with industry leaders and experts, providing crucial insights for security decision makers. Whether you're looking to stay ahead of the curve with innovative solutions or understand the evolving cybersecurity landscape, Threat Vector equips you with the knowledge needed to safeguard your organization. Tune in and subscribe to Threat Vector wherever you get your podcasts.
This is Marketplace. I'm Kai Risdahl. Spending, it seems, has become an inadvertent theme of the program today. There was government spending and our debt in light of the GOP's big tax cut bill passing the Senate.
Sabree told us earlier about construction spending continuing to slow in May. And now Home Depot is going to do some spending of its own to capture more of those fading construction outlays. The home improvement retailer is going to shell out $4.3 billion to buy GMS. That's a building supply distributor for things like drywall and steel supports.
Home Depot is apparently looking to serve more of the big contractors who work on big construction projects as opposed to the smaller pros and DIYers who shop in-store. Marketplace's Megan McCarty Carino has more on that. Last year, Home Depot acquired a different building supply distributor, SRS, which specializes in roofing, landscaping, and pool materials.
The acquisition of GMS is another sign Home Depot is going after the big guys. Think entire home construction instead of bathroom renovations. Michael Baker is a managing director at investment firm D.A. Davidson. What's attractive about that business is that Lowe's really doesn't compete there.
Lowe's has increasingly focused on contractors, but more at the small and medium end. Baker says Home Depot's pivot could expose the company to vulnerabilities in the construction industry. But in a way, it sort of diversifies their exposure. Without that business, they're really very levered to home sales. And actually, that market is pretty soft.
Home Depot assumes construction won't stay depressed, says Amol Shah at consulting firm Alex Partners. They are making an intrinsic bet that the worst is behind us.
Home Depot actually tried to break into wholesale back in the 90s and early aughts, according to Seth Basham at Wedbush Securities. But it sold its HD Supply subsidiary off in 2007. They weren't executing well in the stores. They were losing market share. They weren't treating their associates right and their customers weren't being treated right.
Basham says Home Depot's retail business is now in much better shape. Consultant Michael Brown at Kearney says he wouldn't be surprised to see the retailer take wholesale up a notch. I think the next move for them is they might be able to move vertical and look to be a manufacturer. In other words, Big Orange could get even bigger. I'm Megan McCarty Carino for Marketplace.
According to the North Carolina Wildlife Resources Commission, the average brook trout, the only trout native to the western part of that state, is six to eight inches long and weighs a quarter to a half of a pound.
Also, according to the North Carolina Wildlife Resources Commission, in the year 2022, 350,000 people fished for the brook trout and its cousins in the western part of Nat State, bringing the region nearly $1.4 billion in trout-related tourism revenue. The thing about the brook trout, though...
is that they're sensitive little creatures. They favor cold, clear, rocky streams. And Hurricane Helene damaged a whole lot of those streams, squeezing both the fish and the businesses that depend on them. Katie Myers of Grist and Blue Ridge Public Radio reports. Thomas Champeau is ankle deep in the Yellowstone Prong Creek near Brevard, North Carolina.
He's fishing for the elusive brook trout, which love the cool water here at 5,000 feet above sea level. He steps lightly, casting his line into the calm pools. Your approach has to be low and quiet. And so it's a little bit like hunting because you're kind of stalking as opposed to just fishing blindly. All around, the mountain laurels are blooming. This landscape, the combination of the solitude and recreation opportunities, draw millions of visitors to the region.
Champeau helps run a local chapter of Trout Unlimited, and he's trying to help anglers understand the fish's climate sensitivity and how storms like Helene have changed the trout habitat. It's amazing how those big rocks have moved. I mean, the size, rocks bigger than a refrigerator have been pushed around
Bankside trees that used to provide shade were wiped out, which means warmer water. Not good for fish. And that affects not only the little trout, but also the big fishing industry here. Kevin Howell runs Davidson River Outfitters, a well-loved gear shop for anglers. He makes his living off his deep love and longtime knowledge of the local waterways.
Born and raised in Transylvania County, grew up here, fished the river my entire life. Howell says Helene hit his business hard. Anglers couldn't even access some streams because so many trees fell down. We did lose our two busiest months of the fall as far as income. Some fishing guides just had to take other jobs. Howell was hopeful as cleanup began and contractors started work, but clearing all that storm debris, the fallen trees, that affected the river too.
All adding to the sedimentation and adding to the warmer temperatures, which again results in less fishable water and less fish and less habitat. Less fishable water means fewer opportunities for tourists. For example, in the summer, trout fishing is catch and release only in some waters since the fish are so sensitive. But if the water is already too hot, a trout might go belly up after the release.
We had to make the decision today to stop fishing at noon because in the afternoons it's getting to 68 degrees already in June, which is very early. But the county still needs the tourists to come and fish, to pay for lodging, dinner, guides...
Tamika Hunter with the Brevard Chamber of Commerce says recreation is still possible. We're open with being sensitive to those who are still suffering, right? Because our economy here depends on our tourists. So we need them to come. Back out on the Yellowstone Prong Creek, Thomas Champeau waves to a few of those much needed tourists who are fishing on the opposite bank.
Champo has a few close calls, but nothing bites today. But you never know after what I call a fishing in my pet's name. Champo says he'll be back soon to his favorite spot to try again. In Brevard, North Carolina, I'm Katie Myers for Marketplace.
This final note on the way out today, which I mentioned, definitely not because I'm going to see a movie when I get out of here this afternoon. This was a deal that was announced in early June. AMC Theaters and the ad giant National Cinemedia, it takes effect today, that will put yet another ad in there before the actual movie starts. According to AMC's website, all that pre-show filler, trailers, ads, please silence your cell phone, all of that stuff, can last as long as 25,000
to 30 minutes. I say enough. Who's with me? Come on. Jordan Mangy, Zoya Maharj, Janet Wynn, Olga Oxman, Virginia K. Smith, and Tony Wagner are the digital team. Francesca Levy is the executive director of digital. And I'm Kyle Rizdahl. We will see you tomorrow, everybody. This is 8 p.m.
This Old House has been America's most trusted source for all things DIY and home improvement for decades. And now we're on the radio and on demand. I think you're breaking into this wall regardless. I was hoping you wouldn't say that. I need to go and get some whiskey, I think. I would get the whiskey for sure. Subscribe to This Old House Radio Hour from LAist Studios, wherever you get your podcasts.