Today on the program, macroeconomy, mostly, from American public media. This is Marketplace. In Los Angeles, I'm Kyle Rizdahl. It is Thursday. Today, this one is the 19th of February. Good as always to have you along, everybody. President Trump's understanding of how this economy works is interesting. His tariffs, as we all know, are in fact paid by American consumers and businesses, not whoever he and his administration say are paying them. Relevant research on this topic available upon request. He has also fixated, something about feeling ripped off, on the U.S. trade deficit, the difference between what we sell overseas and what we buy. Those two misapprehensions came together in the headlines today in the release this morning by the Bureau of Economic Analysis of, and this is the official title, U.S. International Trade in Goods and Services, December and Annual 2025. Turns out we imported more goods and services in the last month of last year than we exported, $70 billion worth more, give or take. And net net for all of last year, our trade deficit in goods, that is stuff, hit a record. Now, you might recall the president's repeated promises that his tariffs would bring that number down. As Marketplace's Sabree Beneshaw reports, they have not. Wild does not begin to describe the ride Tomboy X Apparel has been on this past year. They were so volatile, the tariffs. I mean, at one point we were paying 187 percent. Fran Dunaway is president of Tomboy X. She tried to order a bunch of stuff early to get ahead of the tariffs, but eventually had to import again. She moved production from country to country, got the tariffs down to 40 percent. We paid more in tariffs than our operating loss, which means that tariffs were the difference between being profitable and not. Not just her business. Millions of supply chains lurched from tariff crisis to tariff crisis, dragging the trade deficit along for the ride. Bradley Saunders is with Capital Economics. You look back at the start, you see tariff front running. And the trade deficit grew. Over sort of the summer months, you have imports dropping back. And the trade deficit shrank. And then if you look at the end of the year, you see sort of a normalization of trade. And by the end of it all... What happened was really not much. Erica York is a vice president at the Tax Foundation. 2025's trade deficit was about the same as it was in 2024. which is exactly what a lot of economists predicted. The tariff discourages imports. And so that's why some people mistakenly think, oh, we'll use tariffs and we'll shrink the trade deficit. But that is not how this Rube Goldberg device of an economy works. Joe Gagnon is with the Peterson Institute. He says tariffs start a chain reaction. Tariffs historically tend to push a country's currency up. If tariffs make us import less, we use less foreign currency, which makes those currencies weaker and the dollar stronger, which makes U.S. exports harder. So imports shrink a bit and exports shrink a bit and the balance doesn't change. Gagnon says that started to happen in the U.S., but then came a curveball seemingly out of nowhere. Foreign investors. Investors around the world thinking, do I really want to send my money to America? That pulled down the value of the dollar, which helps U.S. exports, which would lower the trade deficit despite the tariffs. And if all that's not complicated enough, enter the A.I. boom. Brad Setzer's with the Council on Foreign Relations. You also are seeing a big increase in imports of computers, of servers. And so that is why so far, if you tally up the trade deficit for 2025, you get pretty much zero change. In New York, I'm Sabri Beneshore for Marketplace. A couple odds and ends before we move on. First of all, oil, both benchmarks, Brent North Sea and West Texas, bumped up a bit more than 2% today, closer to 2.5% actually, as President Trump in his speech today put a 10-day timer on doing whatever he might be thinking about doing in Iran. The U.S. labor market still betwixt and between, if you will. I realize that's not a professionally approved term for describing this economy, but that is kind of what it feels like. We learned this morning first time claims for unemployment benefits fell last week. That is good. Still not a whole lot of hiring. That is not good. Wall Street in the face of all of that. Traders were kind of skittish. We will have the details when we do the numbers. All right, take your pick. A pound of coffee, maybe concert tickets, lunch at the diner of your choice. Sticker shock is real. Inflation, lower though it is now, has pushed prices up substantially since the beginning of 2020. Also up, though, wages more than inflation in point of fact, which means, generally speaking, Americans are making enough to more than keep up with rising prices. But that does not mean getting used to those prices is easy. As Marketplace's Kristen Schwab reports, that has a little bit to do with history and a lot to do with how we shop. Christopher Blackington has been in the market for an air fryer for a year. I just haven't been able to pull the trigger on it because it's just none of it seems reasonable. The options feel endless. There's everything from a basic $50 basket to a $1,000 oven. There's just so many different brands. And then even when you get into those, there's six different options. within that brand. And it's like, I don't know what I need. Do I need that digital doodad? At this point he not even sure how much a good air fryer should cost The proliferation of choice and the push for everything luxury makes it harder for consumers to comprehend prices In fact, economists say we've gotten worse at guessing them. And there's a long-running, albeit unconventional, data set to prove it. Ah, yes, The Price is Right, the guessing game show that's been on TV since 1972. You know, it's one of those game shows that I watched probably more than most other shows growing up. John Hartley is a fellow at the Hoover Institution, also a Price is Right enthusiast. He scraped 50 years of the show's transcripts for the contestants' guesses and the game's correct answers, and he found some patterns. One is that over time... People started getting less good at guessing prices. Contestants have increasingly underestimated the cost of items, a pattern that really took off in the 90s, around the same time online shopping became a thing. Jean-Pierre Dubé teaches pricing at the University of Chicago. The internet creates so much variety that it's impossible. Variety of offerings, think thousands of air fryers, and variety of prices. Retailers can now change them in real time, based on supply and demand, or a shopper's browsing history. And Dubé says constant discounts have become the norm. What does it mean when something is regularly priced at $10, but for like 45 weeks of the year, it's on sale for 40% off? Having little understanding of what prices are makes adjusting to them hard, all at a time when we are also super sensitive to inflation. Which brings us back to the Price is Right study. John Hartley, the researcher, says people were good at guessing prices during the 70s and 80s when inflation hit double digits. One thing that you can take away from that is like, you know, when you do have periods of high inflation, people become more attentive to prices. It makes sense. When prices rise fast, people feel the pain of every dollar. In 2022, inflation peaked at over 9%. That hit people really hard. Heidi Sheerholtz, president of the Economic Policy Institute, says around 2021 and 22, inflation rose nearly as much as it had during the 10 years before. That was too fast for people to just adjust their expectations of how much things cost. Christopher Blackington, the guy who's looking for an air fryer, he's still adjusting. He's 44 and lives in Maine with his wife and two-year-old son. He says his salary as an assistant at a community college has kept up with inflation. But it doesn't feel like it. Like, there's always something that comes up that puts you behind. Most recently, I lost my car keys. A new set, because they're all digital now, cost $1,000. It didn't used to be that way when they were just regular metal keys. We've never been able to just kind of get ahead and stay ahead, basically. So even if we're keeping up with inflation, it doesn't matter. We need to get ahead of inflation just to feel safe. The thing about life is as we grow older and as we grow at work, we expect to grow financially. Treading water never feels good. And if you were underwater before all of this inflation kicked in, the price is never really going to be right. I'm Kristen Schwab for Marketplace. Continuing with the theme of prices and how they are higher, according to the January Consumer Price Index, which was out last week, food away from home, that's basically restaurants, was up 4 percent year over year. Food at home up just 2.1 percent. So since it has become significantly more expensive to eat out, restaurants are working hard to find new ways to get people in the door. One way they're trying to do that? By going smaller. Kate Craters at Bloomberg Pursuits, where she wrote about why restaurants are downsizing. Kate, it's great to talk to you again. Hi, Kai. So smaller, it seems, in many things, but restaurants in particular is better. Explain what's going on, would you? It's fascinating for me as someone who's been going out to restaurants for a while, I can very well flash back to the day when you wanted to stand in a club-like restaurant. And now the script has been totally flipped. And the places you want to be are so small, they could be someone's New York City apartment. They seat like 35 people and they feel intimate. Intimate is the big word right now in the restaurant industry. What happened? Why the switch? It's such a good, it's a great question. and it's got a lot to do with being on your phone and you have access to an infinite number of people and things. And so now you want something that's real. You want to go to a place that tells a real story and that feels like your story. And a guy called Eugene Rem, who's a really great restaurateur in New York, he is the guy behind Catch, but now he has places like the Corner Store. And he smartly compares it to a sneaker drop or a Birkin bag mentality, where you can't really get in. So of course, that's what you have to do. Yeah. There is a, it's not just vibes, right? There's an economics part of this as well, right? They go smaller, they save a little bit on overhead and staff and all that jazz, but they're probably still charging however much it is per meal per plate, right? And so they're making money. Exactly right. No, exactly. I think, you know, you used to think if you scaled up, you would just make more money. And now again, this guy, Eugene Rem was like everything on this of the pandemic, everything costs 20, 30, 40% more. And whether you talking about HVAC whether you talking about staff whether you talking about real estate and especially if you doing things in a high way you know if you going to get 300 chairs there are going to be 300 nice chairs so why don you just get 35 nice chairs Right, right, all about the chairs. It has to be said here that this is a trend, if you will, for those who can afford it. Yes. I mean, I think that's true. Smaller doesn't necessarily mean cheaper. And a lot of these restaurants, I will say they're not necessarily the most expensive restaurants in town. For instance, one aspect of this you're seeing, there's a wine bar that I absolutely love that just opened in New York called Stars. and they have a horseshoe-shaped bar that only has 12 seats. There, you know, you can have a glass of terrific wine. They make these excellent little shrimp sandwiches and some other like great little snacks. So you can get out of there for less than like $75 a person, which is not something you can say in a lot of New York right now, which is ridiculous. Yeah. Last thing, and it's a great quote from the piece, although as much as I hate this word to describe what's happening in what we're doing in this business and many others. What they're doing here is content per square foot is the quote, right? Yeah, that's, you know what? That's the money quote, so to speak. That comes from Simon Kim, who has another great restaurant. He's, they're making a point of making the place have, feel like it's got more like kind of intimate spaces, even as it's going to be a very popular restaurant. But Simon Kim coined that phrase, content per square foot, and it's so good and true. Yeah, it's kind of apt. Kate Crater, she's at Bloomberg Pursuits in London. She's the food editor there. Kate, thanks a lot. I appreciate your time. Great to talk to you. Coming up, there are a lot of demands for skilled oil, Venezuelan technical people. Apply within if you're interested. But first, let's do the numbers. Dow Industrial's down 267 today. That's about a half of 1 percent. Closed at 49,395. Did the blue chips. The Nasdaq down 70 points. About a third of 1 percent. Finished at 22,682. The S&P 500 gave up 19 points. That's about a quarter percent there. Six, eight, six, one on that particular index. We were just talking about smaller restaurants and hotels. Here's a look at how some of the biggest restaurant chains in the U.S. are doing. We got Dine Brands, which operates Applebee's and IHOP, dipping one and two-tenths of one percent. Today, Darden Corporation, responsible for Ruth's Chris Steakhouse in the Olive Garden. Endless breadsticks, pasta as well, if you're interested, down 1.6 percent. And Texas Roadhouse slumped about two and three-tenths of one percent. United Airlines is making some big changes to its mileage program. If you don't have the credit card or elite status, you will get fewer miles or perhaps even no miles. If you book basic tickets, United slumped 5.9 percent on the day. Delta decreased five and two-tenths of one percent. American Airlines shrank five and three-tenths of one percent. My guess is it's all about oil, right? Bonds up yield on the 10-year T-note. Down 4.07%. You're listening to Marketplace. This is Marketplace. I'm Kai Risdahl. It bears repeating every now and then that nothing, seriously, nothing in this economy happens in a vacuum. Exhibit A for us today is data we got from the Census Bureau this morning about wholesale inventories. how much stuff they've got on their shelves ready to ship to retailers who then sell it to us. The past year has been trying for those wholesalers. Tariffs, geopolitical tensions, not to mention wary retailers and sometimes cranky consumers. But things might be settling down. The Census Bureau says wholesale inventories were basically flat as last year came to a close. Marketplace's Daniel Ackerman has more on that one. Wholesalers don't sell to consumers directly, but we'd better keep track of how they stock their warehouses because Jason Miller of Michigan State says wholesalers are a huge chunk of this economy. The way I think about it is, is all of your retailers combined, so your Walmarts, your Targets, your Amazons, they only have $800 billion of goods in inventory. Wholesalers are holding more than $900 billion. These are entities that are selling not only to retailers, but they're also selling a lot to manufacturers. They're selling to construction companies. And early last year, they took on a strange new role, says Zach Rogers of Colorado State. Wholesalers were used like as a human shield. A shield from tariffs. Rogers says it was too expensive for retailers to stock up ahead of price hikes, so that job fell to wholesalers. Like, you hold all this inventory, get it ahead of tariffs, and then when we're ready for it, we'll tell you. Inventories swelled, then flowed out later in the year. Now things seem slightly more stable. In 2026, the tariffs are there. They start on day one. With no major hikes to get ahead of, Rogers says wholesalers are back to doing what they normally do, trying to move product. We're seeing inventory pass through wholesalers very quickly so it can get to the retailers so that they can sell it right away. That's actually a big relief for wholesalers. Because all that warehousing was expensive. However, carrying narrower inventories comes with its own set of risks, of course. Megan Schoenberger, senior economist with KPMG, says in the event of a supply chain hiccup, you could potentially be opening yourself up to a disruption. And she says now with more wholesale goods imported with tariffs, the added cost could be passed through to retailers and consumers. I don't think it's going to come all at once. But Schoenberger says we could see a prolonged period of elevated inflation. I'm Daniel Ackerman for Marketplace. We're going to do a story now about immigration, geopolitics, oil, culture, and opportunity. And we're going to do it by way of the tens of thousands of Venezuelan expats living in Katy, Texas, just west of Houston. Here's Marketplace's Elizabeth Troval. At La Pradera Latin Market, a clean, well-lit store inside a dingy strip mall, you can buy Venezuelan coffee, chocolate, cookies, and cheese. Leideline Castellanos pulls a soft white cheese out of the fridge, along with a container of a special cream. While she shows me around, one of her regulars stops by. She welcomes her in. Castellanos opened her shop in 2019 to cater to a Venezuelan population that has grown to roughly 75,000 people in the Houston metro area. So many of them live in the small suburban city of Katy. It's sometimes called Katy Suela. Castellanos and her husband first came to Texas because of his job in the oil fields. They chose Katy for the good schools and affordable homes. She's watched the community grow, new immigrants from Venezuela moving here, starting businesses and buying houses. But this recent wave of immigration is not how Houston's relationship with Venezuela started. Francisco Minaldi is a professor at Rice University and is from Venezuela. So the ties between particularly the city of Houston and the city of Maracaibo, which is where the oil industry started in Venezuela. I mean, the links were very, very strong. He says before Houston received tens of thousands of Venezuelan immigrants, it was Americans who sought opportunities in Venezuela. In this training video from the 1950s, an American father is assigned to work in Venezuela's oil fields and is writing back home to his wife. Dear Anne, well, here I am at Lagunillas in the oil fields. The offshore wells run along the edge of Lake Maracaibo for more than 40 miles, sometimes reaching beyond the horizon. It's quite a sight. In Houston, Minaldi often meets Americans who worked in Venezuela many decades ago. I keep finding when I give a speech here, people that tell me I lived in Venezuela, I was a petroleum engineer, I lived, and tons of them are married at Venezuela. And now that the U.S. government wants to develop Venezuela's oil sector, we may start to see this dynamic again, with Venezuelans in the U.S. who work for American energy companies going to Venezuela from places like Haiti. All these companies are doing surveys inside their companies to see how many Venezuelans are in their payroll, which of them are willing or interested in going back to Venezuela. He says there's been lots of interest so far, and it makes a lot of sense for both the Venezuelans in Houston and the energy companies that employ them. They know the culture. They have families there. Venezuelans could serve as sort of guides to going into the country. And so there are a lot of demands for the skilled oil Venezuelan technical people in this city right now. A stint back in Venezuela at a big oil company may be attractive for some. But for Leidolin Castellanos and Katie, she fears returning to Venezuela would endanger her family. Rebuilding the country will take time, and her kids were raised here. But families like hers may not have a choice. Castellanos says community members are getting detained by ICE, but traffic at her store has dropped, and the Trump administration is in a legal battle to end temporary protected status for hundreds of thousands of Venezuelans. She says, even if you have an ID, even if you've had a work permit for years, even if you've followed immigration laws, there's no guarantee you won't be detained and deported. In Katy, Texas, I'm Elizabeth Trofall for Marketplace. This final note on the way out today and which one takes one's housing market wins where one can get them. Data from Freddie Mac out today showed the average rate on a 30-year fixed rate mortgage sits at 6.01%. That is the lowest it's been since September of 2022. The latest Case-Shiller Home Price Index, in the meanwhile, shows home prices up a relatively mild 1.4% year-on-year. Our daily production team includes Livvy Burdette, Andy Corbin, Maria Hollenhorst, Sarah Leeson, Sean McHenry, Michaela Sia, and Sophia Terenzio. Will Story is the supervising senior producer. And I'm Kai Risdahl. We will see you tomorrow, everybody. this is APM what if the most romantic thing you could do is plan for the worst case scenario I think there's nothing more romantic than actually knowing and being prepared for the future Why would you want to have a messy divorce? That's unromantic. I'm Rima Hades, and this week on This Is Uncomfortable, we're talking prenups, the myths that make them feel taboo, what they actually protect, and the bigger questions they bring up about love and power. Listen to This Is Uncomfortable wherever you get your podcasts.
