Uncertainty has been the economic buzzword for some time now. Will it continue to be the way we describe the economy in the months to come? From American Public Media, this is Marketplace. In New York, I'm Kristen Schwab, and for Kai Rizdahl, it's Friday, February 27th. It's good to be here with you. As always on Fridays, we cover seven days of this economy in seven-ish minutes. With us today is Anna Swanson, who covers trade and economics at The New York Times. Also, Heather Long, Chief Economist at Navy Federal Credit Union. Hello, you two. Hey, Kristen. Happy Friday. Happy Friday. So, Anna, I guess unsurprisingly, I want to start with tariffs. Since the Supreme Court ruling last week, President Trump created a patchwork of tariffs to keep his policies going. Can you update us on where things stand right now? Yeah, it's been quite a ride over here in tariff land. So last Friday, of course, while I was trying to be on vacation, the Supreme Court overturned the president's tariffs, which was just a really dramatic rebuke of a central policy for the president. Trump, you know, then immediately replaced those old tariffs with a new 10 percent global tariff. He has threatened to raise that to 15 percent, but that has not actually come to pass at this point. So for now, it's 10%, but that tariff has an expiration date. It only lasts for 150 days without congressional approval, which seems kind of unlikely at this point with the midterms approaching and people concerned about tariffs increasing prices. So the administration is working on a variety of other new tariffs that could come into effect potentially this summer to replace it. So it's been a really dramatically shifting landscape. for companies, you know, trying to figure out what these new tariffs could be. And these terms of trade translate into a lot of money for them. So they're watching it very closely, obviously. Yeah, Ana, I think, you know, at first we weren't sure what companies were going to do about this, how intensely they would kind of proceed forward with lawsuits. And it seems like a lot of them have filed. Yeah, I think that is an insurance policy right now. So you are seeing high profile companies like Costco, FedEx, you know, going to court to sue to try to preserve a refund. Of course, doing this brings you into the firing line for the Trump administration. Companies are also kind of wary of raising their hand. And, you know, someone was telling me being perceived as dancing on the grave of the Trump administration's, you know, tariff policy right after it has failed. So there are upsides and downsides to this. I think there's also just a lot of uncertainty about the refund process, whether or not companies even need to do this to ensure that refund. But for them, there's a lot of money at stake, you know, hundreds of millions of dollars potentially. Well, tariffs are certainly a big part of the uncertainty picture that we're seeing in the economy right now. There's also geopolitical tensions, you know, a new headline about AI almost every day, it feels like. Heather, I'm wondering if you feel like the level of uncertainty is higher or lower than it was six or so months ago. And in real terms, what does that mean for the economy? Yeah, it's a hard time to be an economist. You can make a prediction on Friday that could be obsolete by Monday. So don't forget private credit is also in the mix there. I mean, look, is it higher than six months ago? I think it's hard to say it's really come down a lot. And it's no surprise that we're in a hiring recession, that companies are pretty hesitant to hire an environment like this and hesitant to invest much outside of artificial intelligence. But let me throw one more interesting twist in the mix, Kristen. You know, look, 2026 from an economic perspective, it kind of looks like a toddler on a sugar high. There's just a lot of things that are juicing the economy up right now. the tax refunds, the lower interest rates. We're at a four-year low for the mortgage rates at Navy Federal. We're seeing a refinance boom, which is freeing up a couple hundred dollars for people who can refi. We're probably going to see some tariff refunds at some point. And so it looks pretty good in 2026. But the question is, what happens to the toddler after the sugar high? And I think in a lot of corporate suites, that's where that uncertainty is really there. You can think 2026 looks pretty good. But just 2027, what happens after that high? Yeah. I mean, look, you said it yourself, your job is tricky right now. Old tariffs, new tariffs, lots of things happening. Delayed data, we're still getting delayed data from the government shutdown. I mean, how do you do your job right now? How do you see the big picture? Well, the one thing that's really still powering this economy is consumer spending. And so the health of the consumer is top of mind, I think, for the vast majority of economists right now. And, you know, that's another one of these questions of things look a little bit better, you know, despite a lot of headlines, obviously, a lot of credit card debt, you still see, and very gloomy consumer confidence, you still see people spending, and they're still going out to restaurants and entertainment. They're still spending on a lot of core goods. And so that's what really seems to be holding on for now. And looks like 2026 could be pretty good. But strain will return at the end of the year. There are not more tax, large tax refunds coming. Yeah. Heather, we'll keep with you. You know, you're talking about consumer confidence rose slightly in February. The last jobs report wasn't too bad. I mean, do you think it sounds like maybe you think the consumer could continue to carry us through? In 2026, yes. I think it's a lot murkier towards once you get to 2027. You know, I think Fed Chair Powell was right that the labor market looks like it's stabilizing. Now, that is not what most people want to hear They want to see it reviving You know we still in a very anemic job market but we not seeing layoffs pick up which is really encouraging And so I would say we in this stable but frustrated consumer era Ana, you know, one number that came out today that helps us look forward a little bit is the producer price index. Those are wholesale prices, which might tell us something about what would happen in the future. Today, the prices show that they were rising at 2.9% year over year. What do you think that means for our economic future? And do you think that the cost is going to be passed down to consumers? Yeah, so inflation on the producer side was a little hotter than expected this morning. And I think it's just a reminder that it remains kind of a balancing act for this economy. We are concerned about slowdowns. we're also still concerned about inflation being stickier. I'm also now concerned about this toddler on a sugar high that Heather was mentioning. Parents all know that doesn't end well, right? But in terms of where tariffs will go and the impact on prices, we've kind of been getting mixed reports. I mean, you do see some analysts say that most of the tariff increases have been priced in by companies. But anecdotally, a lot of companies are still telling me that, you know, they have held off on increasing prices too much so far, but that the time may come for them to do so in the future. They were really concerned about the consumer market being too fragile and whether consumers would put up with price increases. But in the meantime, they've been having to deal with having their profit margins compressed, having less money to invest in new plants and employees. So that situation isn't sustainable forever. So I do think, you know, particularly if you see tariffs, you know, they've gone down a little bit. If you see them go back up again this summer, companies will have to pass on some of those costs to us. Yeah. Anna Swanson is at the New York Times. Heather Long is at Navy Federal Credit Union. Thanks, you two. Thanks. Thank you. Wall Street today. Oh, it registered the uncertainty. We'll have the details when we do the numbers. It's been a full three months since last year's government shutdown ended, and we are still getting delayed data. Today is construction spending. The census report shows in 2025, total construction spending declined 1.4 percent from the previous year. There was one bright spot, though. Data centers. As we know, big tech has been spending hundreds of billions of dollars to build out AI infrastructure. But will it be enough to carry the construction industry? Marketplace's Megan McCarty Carino reports. Spending on data center construction grew by almost 30 percent year over year in December. That's a lot of growth for an industry that only recently became notable, says economic analyst Joseph Politano at Apricotus Economics. The Census Bureau did not break out data centers as their own category because it was presumed that they were just a part of office buildings. Now, he says spending on data center construction is starting to eclipse spending on all other office buildings. It's growing despite some pretty big headwinds in the industry, says Macrina Wilkins, director of Market Insights at the Associated General Contractors of America. We're seeing a lot of slowdowns because you don't have enough workers or material prices are too expensive. Tariffs have raised costs for steel, aluminum and copper, while the immigration crackdown has shrunk an already inadequate labor pool, she says. But for deep-pocketed big tech, these are small problems. because there's a lot of incentive and a lot of motivation and momentum that I think is helping the industry instead of in any way taking away from it. Still, the data center boom hasn't been enough to offset the broader slowdown in the construction industry, says Zach Fritz, an economist at Associated Builders and Contractors. Overall, it's not that large of a category. For context, it's a little bit smaller than the warehouse segment right now. Data center construction spending hit an annual rate of $45 billion in December, which is a pretty small share of those hundreds of billions of dollars in AI capital expenditures we keep talking about. Most of the spending has gone to electronic components. Joseph Briggs is the head of the global economics team at Goldman Sachs. He estimates about two-thirds of all spending on data centers goes into imported semiconductors and other computer parts. They get subtracted from gross domestic product. As a result, the boost to growth is small. Goldman Sachs estimates the data center boom contributed about 0.2 percent to GDP growth in 2025. Not nothing in a 30 trillion dollar economy, but certainly not everything. I'm Megan McCarty Carino for Marketplace. We were talking up in the wrap about the producer price index. That's inflation at wholesale level, prices paid by businesses before they sell stuff to us. For the next installment of our series, My Economy, we've got the story of one producer who's found a way to bring down the cost of business with a little help from her neighbors. My name is Marissa Mender Franklin, and I own Midtown Bramble & Bloom, a flower farm and florist in Memphis, Tennessee. the year was 2021 and I was an elementary school art teacher and I lived in a house that had a little bit of sun in the front yard like a little patch of garden in the front yard but the whole rest of the space was full shade and I had grown flowers for our wedding the year before which is a crazy thing to do and a story in its own right. Don't do it. Zero stars. But I loved growing on that scale. I was pretty confident that I could find a place in my neighborhood to grow if I could just connect with the right landowner I was part of a local buy nothing group on Facebook and the day before I made this request somebody had put out and asked for a French horn for their kid and within hours the group had provided a free French horn and it just made me think that if the group can provide a French horn surely there's somebody in my neighborhood who has a yard that they would let me grow flowers in. My post was like oh flowers in need of a garden and within that first week I think I had 40 offers of yards to grow in and that was the start of the farm. For that first spring most of the flowers that we grew went to our subscriptions And by the fall, we did our first wedding with flowers that we had grown. Five years in, we're still growing completely in neighbors' yards. They're all free leases. All of our landlords are paid solely in flowers and land care. Memphis is a loving, kind, community-oriented place. and I don't know if this model would work just anywhere. Like it definitely is a model that relies on person-to-person trust and I am grateful that we get to do it here. Marissa Mender Franklin there, growing flowers at Midtown Bramble in Memphis, Tennessee. Tell us about your economy at marketplace.org. Coming up. My brain has said you made a good choice and your heart's saying thank you. Total inner peace. But first, let's do the numbers. The Dow Jones Industrial Average dropped 521 points, 1 in 1 tenth percent, to close at 48,977. The Nasdaq lost 210 points, 9 tenths percent, to finish at 22,668. And the S&P 500 gave up 30 points, 4 tenths of a percent, to end at 6878. For the week, the Dow declined 1 in 3 tenths percent. The Nasdaq slid almost 1 percent. The S&P 500 slipped four-tenths of a percent. Netflix finally backed out of its showdown with Paramount over the $111 billion purchase of Warner Brothers. The deal now goes to regulators for approval. Warner Brothers Discovery lost two and two-tenths. Paramount Skydance reeled in 20 and eight-tenths percent. Netflix jumped 13 and eight-tenths percent. Vons rose. The yield on the 10-year T-note dropped to 3.95 percent. You're listening to Marketplace. This is Marketplace. I'm Kristen Schwab. One category that's been keeping inflation sticky is shelter. It accounts for a third of the Consumer Price Index, and the latest reading had shelter up 3% year-over-year, higher than the overall rate of inflation. That's making it harder for people to pay their rent in full at the end of each month. So some are turning to new lending tools to bridge the gap. These companies are kind of like buy now, pay later, but for rent. Cora Lewis wrote about this for the Associated Press. Thanks for being here, Cora. Thanks so much for having me. So I think most of us have heard of buy now, pay later. How are these rent now, pay later services different? Yeah, so with buy now, pay later, you might be used to seeing it at checkout. You could buy clothes, shoes, furniture, and you break your payments up into several installments. Those are really marketed as zero interest loans. These Rent Now Pay Leader companies say, we're going to extend you money at the beginning of the month to pay the rent. And for that, we're going to charge you maybe a flat subscription fee and 1% of your monthly rent. It seems like it's this internet company that's giving you flexibility. But consumer advocates say this really is a short-term loan. And if you look at the numbers and you calculate out an interest rate, it would be a triple-digit interest rate. It would be mob-level, payday-level interest. How popular are these programs and who uses them? Yeah, the programs have really spread quickly in the last few years. One of them, which is called Liveable, was acquired by a rental platform. And so that one is really integrated into some of the rental market. And the people who use them really are lower income people or people with lower credit scores who are really living paycheck to paycheck and who are looking for this flexibility and a little more time month to month to pay the rent. Yeah. You talked to some people for the story who use these tools. How are they using these services to pay rent? So one person I talked to who had been a contracted delivery worker for Amazon said that he kept getting hit with charges from his landlord at the beginning of the month that were essentially late fees. He wouldn't have all the rent at the top of the month. So he started using Flex. So Flex would break it up for him. And someone else I talked to had experienced domestic violence and she had to move unexpectedly and also had difficulty coming up with the rent. And this company was helping her figure out month to month how to make her finances work is how they framed it to me. I could see how this could be a useful tool to get you from the first of the month to the next first of the month. But do you think there are risks here at all for renters? I do. Yeah. The pattern that advocates have found is that while these are marketed as a way to make your life more stable to be used maybe once or twice a year what ends up happening is people really rely on these products every month And so those subscription fees and that 1 of rent every month really adds up It hitting people who are already really strained and it becomes an additional strain on their finances You know, I think buy now, pay later used to be seen as a tool to manage big ticket purchases. But there are all these reports showing that people are increasingly using it for non-discretionary spending, like groceries, now rent, as you're reporting. What do you think that says about people's perhaps growing comfort with using these tools? In some ways, it shows that a lot of people have already overextended themselves on credit cards and are turning to these products and companies. I think it is a sign of the affordability crisis. These companies exist in the space between that unaffordability and people's need to have housing. And if that didn't exist, these companies wouldn't be so successful. Cora Lewis is a business reporter at the Associated Press. Cora, thanks so much for chatting. Thanks so much for having me. So rent is up, and we just talked about ways people are navigating that. Also up, and also outpacing inflation, the cost of food, both at home and out. But now, after increasing prices over the last several years, restaurants are trying to lure diners in more often by leaning into meal deals. McDonald's doing it. Taco Bell is doing it. So are fast casual spots like Panera Bread. The industry calls it the value wars. Marketplace's Kaylee Wells has more. Meal deals make sense at a classic drive-thru because those customers are looking for cheap fast food. Rich Shank, vice president of innovation at the food service industry analysis firm Technomic, says the fast casual restaurant traditionally didn't advertise cheap food. It advertised food that was higher quality. It was, we're going to be better, we're going to be fast, and you're going to really enjoy it. And that's really carried that market for a decade or more. But then there was inflation and rising prices on groceries and utilities and housing taking bigger bites out of our wallets. With this inflationary period sort of hitting its crescendo, you know, that advantage is not fully there anymore for fast casual brands. Now, Panera might pull some customers from traditional drive-thrus, but their $10 value meal can't compete with the price of the $5 value meal at McDonald's. But that's not the point. Disposable income for a sizable group of their potential customers or existing customers is affected, and they're just trying to find ways to bring them along. Professor Alex Susskind teaches food and beverage management at Cornell University. He says this is about helping customers who always came to Panera, but are having a tougher time affording it now that paychecks are getting stretched by all the other rising prices. Which may be beneficial later on when things improve. When that happens then and you enjoy Panera, then that gives Panera an opportunity to get you to move into other products. In other words, off the $10 value meal and back into that $14 sweet spot. But getting customers to walk back in the door is only half the battle. Stephen Zagor, who teaches food entrepreneurship at Columbia Business School, says there are two more factors to Panera's success. One, it has to be easy. We don't like a lot of decision making. It's like, oh my gosh, Panera, just tell me what the best value is and I'll figure it out. And two, the cheaper food only works if the food tastes good. We are really governed by how we feel, not by what we think. You taste it and you go, wow, this is good. Or you look at the portions and you say, this isn't bad. I'm feeling really good about it now. My brain has said, you made a good choice in your heart saying, thank you. Zagor called this value pricing a war, which means Panera won't be the last to try it out. He expects other fast casual restaurants, think Chipotle or Panda Express, to start doing the same thing. I'm Kaylee Wells for Marketplace. This final note on the way out today, as we continue to parse out whether AI is coming for our jobs, what we do know is that it is, at the very least, policing us at work. Read this in The Verge. Burger King is launching an AI chatbot that will live in the headsets of its restaurant employees. Patty, that's its name. Patty will coach employees on meal preparation, like how many strips of bacon go on a maple bourbon barbecue whopper. It will also evaluate employees' friendliness by recognizing phrases and words like, welcome to Burger King. And if you think you're not being watched at work, think again. According to the Washington Center for Equitable Growth, more than two-thirds of workers are being monitored by AI, a finding consistent across industries and occupations. Our theme music was composed by BJ Lederman. Marketplace's executive producer is Nancy Fargali. Joanne Griffith is the chief content officer. Neil Scarborough is the vice president and general manager. And I'm Kristen Schwab. Have a great weekend. We will see you back here on Monday. This is APM. These days, it feels like there's always another headline about layoffs. And even if you're not directly affected, we can still mess with you. I'm Rima Hraes, and this week on my podcast, This Is Uncomfortable, we're talking about layoff anxiety, the fear of losing your job, and some practical tips to cope. Literally list out all the steps that would have to happen to get to our feared outcome. assign each one a percent likelihood and multiply it out we look at how to quiet the spiral and make a plan just in case listen to this is uncomfortable wherever you get your podcasts
