Inflation manifestation

- Don't look back, the economy might be gaining on you from American public media. This is Marketplace. (upbeat music) In Los Angeles, I'm Kyle Rizdoll.

“It is Wednesday, today the 27th day of May.”

It is always, that be a long everybody.

You know, sometimes in this economy, as in life, you can figure out where you're going by figuring out where you've been. So we began today by looking back. Back to the first quarter of the year,

and an update on Q1 gross domestic product that we are gonna get tomorrow morning. The first look that we got from the Bureau of Economic Analysis, this was last month, came in at an annualized growth rate

of 2% January through March. Tomorrow's vision will fill in some more of that data from March especially, as you will call the first full month of the president's war with Iran. Marketplace, this is Henry App gets us going

with economic growth at the beginning of the year, and what it might tell us about the economy today. - These revisions are gonna give us a better sense of whether the Iran war has hurt the fairly positive momentum in the U.S. economy.

The revised data could have both positive

“and negative effects on each of the components”

that make up GDP. Let's start with net exports. The U.S. now sends a lot of oil and gas overseas. So the spike in prices might drive that number up and raise GDP, says each one are per side at Cornell.

- Even if the volume of U.S. exports, especially energy exports stayed the same, just the increase in prices. Could have given a bit of a boost of exports.

- On the flip side, the first quarter was also

when President Trump's tariffs were struck down by the Supreme Court, which may have led to more imports. That would pull GDP down. The next component of GDP is business investment in the last few quarters that's basically meant investment

in AI data centers. Tomorrow's revision will give us a sense of whether companies have been stocking up to build those data centers, says Joanne Fini at Adviser's Capital Management.

- If inventory growth was faster than expected because of the preparation of build those data centers,

“then that would contribute to faster GDP growth”

than we thought a month or so ago. - Then there's government spending. We know that helped drive up GDP in the first quarter as the government shut down ended and the mid-East war began.

And finally, there's consumer spending. So far, it doesn't look terrible, says Stephen Blitz, chief economist at Global Data TS Lombard, but it did slow down a bit. - Just enough to be sort of a diameter on growth.

- All this adds up to a sort of unsteady expansion, Blitz says. An economy that's wobbling, not into a recession, but onto a slower path. I'm Henry App for Marketplace. Also, on the data calendar tomorrow, is the April Personal

Consumption Expenditures Price Index PCE for short. Best guesses are that the headline number that is with Food and Energy is gonna come in right around 3.8% year on year. That's up from three and a half percent in March,

headed very much in the wrong direction, away from the Federal Reserve's ever more elusive inflation target of 2%. And the thing is, and here we get to the where this economy is going part of this story,

what people think inflation is gonna do in inflation expectations in the Lingo, they are up sharply too for consumers and businesses and investors. Marketplace's Mitchell Hartman has that one.

- Inflation expectations are inflating. The University of Michigan reports that consumers expect prices to rise 4.8% over the next year. Back in February, it was just 3.4%.

Here's why this is a problem. Inflation expectations can become a self-fulfilling prophecy. - Joanne Schu directs the University of Michigan surveys. - If you expect inflation to be much higher in the future,

you might front load your purchases now and if enough people do that nationwide that would put in itself some upward pressure on prices. - Another way this can happen is what economists call a wage price spiral.

Prices are shooting up, you see no end in sight. - You might try to find a higher paying job or negotiate a raise and then employers are gonna take those increased labor costs and pass them right back to consumers.

- You can also measure inflation expectations by asking businesses. The Philadelphia Feds lead a survey finds local firms expect a sharp spike in U.S. inflation over the next year to 4.2%.

But they say they'll raise their own prices on average just 2.8%. Filly Fed economist Paul Flora is pretty sure they're low-balling. They're gonna want to say that we're holding prices firm, we're not gonna raise them, but our competitors might.

And the reality is if their competitors do,

then they're probably gonna follow. - One more place to look for inflation expectations

the bond market where investors are also signaling

they expect inflation to move higher.

“- You know, there's different ways of measuring”

inflation expectations and I will say that all of them are pointing in the wrong direction. - If the trend continues, he says the Fed will have to hike interest rates to tamp them back down.

I'm Mitchell Hartman from Marketplace. - Wall Street today, kind of a wash for equities actually. Oil took a digger and hey look, the yield on the 30-year treasury is still right at 5%. We'll have the details when we do the numbers.

(upbeat music) (upbeat music) - Inflation expectations are, perhaps as Mitchell was saying, keeping us frugal, but there are some areas in which buyers are willing to shell out a bit more.

According to a 2020 survey from Wharton, consumers across generations that baby boomers to Gen Z will look past a higher price tag if it means buying a more sustainable product. That said, it kind of doesn't matter how much people

are willing to pay if the supply ain't there. Wall is our commodity of choice today. It's a pond specialty call for road about it for offering. She's also a PhD candidate in history at Yale. It's about welcome to the program, good to have you on.

- Could to be with you.

- I'm just gonna read you the first line of this piece,

which you know, of course, since you wrote it, but then we're gonna talk about it 'cause it contains multitudes here. The U.S. wool industry right is staging a comeback so where are all the sheep?

First of all, talk to me about wool and this comeback because clearly I missed that. - Yeah, well, I'm not surprised you've missed it, but there's a group of people who's interested in wool Kai and I think that that group is growing.

Wall answers three concerns that are prominent

“and I think you've heard about these concerns.”

One is a health concern about microplastics, right? The microplastics in our clothes partly, right? And so there's a growing body of research that's showing that that might be affecting us in ways we don't like.

Now, if you're talking about wool socks or wool underwear, they even make wool bikinis now, right? So those are gonna have any microplastics in them.

So the second concern is environmental

and I'm talking about oil, which has been in the news. Those plastic clothes, they're made from polyester and polyester is made from crude oil. So we're talking about a group of people who are concerned about the environment

and wool is a lot more sustainable than oil. And the third thing is ethical. So in the news recently, there's been some talk about polyester recycling. So when you recycle old clothes, they go off to places like India

and the dust from those recycling operations is making people sick. So I think wool actually is able to answer those concerns and as there are more people who are worried about these things they're starting to buy wool products.

Okay, here comes the second part then of your first question, where are all the sheep? You actually say there's not enough sheep in the world to meet all of our demand now. There's not enough sheep in the world, not even in big wool

producing countries like Australia. And in the US, the situation is especially bad. But surprisingly, the farmers and industry people I talk to were optimistic. So they felt like we've hit rock bottom,

but there's room to start bringing some sheep back. The catch, of course, is that and look, I don't know much about sheep procreation, but I imagine it takes, I don't know, a couple of years for a sheep to get to the point where it can be sheared

and won't get into the supply chain. That's the problem. Yeah, so Christopher, who's the wool marketing program manager at the American sheep industry association. She told me, it's not like you can rebuild the American herd

overnight. You can't just come up with breeding stocks. So this is demand spike in which, of course, this is great for farmers because the price for wool goes up, but then they're not going to be able to double their herd

size overnight. There's another part of this infrastructure that you talk about, and it's not just the livestock. It's mills and places where you can go to get your wool. What is it combed and spun?

And I mean, I forgot, you know, all my fifth grade history stuff, but you got to do stuff to get wool to a place where it can be used. Yes, you do, and there's so many steps. You've got to shear it, wash it, comb it,

so all the fibers are straight, spin it into yarn, and then that yarn gets woven into a textile, and the textile still has to be sewn into clothing. And those are just some of the steps. So in the US right now, they're probably only about five mills

left that can complete all of those steps. Well, all right, so look, you are, as I said, in the introduction, you're the contributing writer, but also you're a PhD student in history. So apply your analytical history lens here,

and tell me where this goes now.

“Yeah, I think we're going to see some more investment”

in infrastructure. It's going to be slow, and a lot of it is going to come from unexpected places. But, you know, I talked to a guy named Chase Hill in Idaho, who's, oh, he must be in his late 20s,

He started an organic wool pillow company. And it's all made in the USA.

“His cotton is from Texas, and his wool is from Montana.”

He wasn't happy with the infrastructure, so he actually bought a wool mill this year, and he's bringing more production in house. So look, it's an uphill battle, but there are people doing it,

and I think it's going to grow. There you go. It's the bondage version of the cuff. He's a contributing writer at Off-Range, also, as I said, you study history on the side.

It's the bond. Thanks a lot, I appreciate your time. Thank you. (upbeat music) (upbeat music)

This is a consequential time in the US agriculture economy. Farmers have most of their crops in the ground, and they're checking on corn and beans, and whatnot that are just starting to grow.

“Ranchers are turning their cattle out to summer pastures,”

and just like for other small businesses, and for consumers too, the financial pressures on them are real, everything from higher fuel and fertilizer costs, because of the war to tariffs, and also to drought. Marketplaces can't land tan, checked in on the state

of the farm and ranch economy, and spoiler alert, it's not great. In the West, it's that time when ranchers move their cattle to public grazing lands of the cattle can eat, like in this recent Wyoming cattle drive.

(upbeat music) But that's summer pasture that normally feeds cattle through the fall, is in as green and lush. The big word is drought. Jimmy Gagnas, with the Wyoming Stock Girls Association.

So that means ranchers are looking at having to buy hay. Extra hay could be $30,000 on the low end, hundreds of thousands on the high end. Or sell off some of their livestock.

“Selling could pad rancher's pockets right now,”

and McGagnad buys his ranchers to hold on to that cash. It may surely be needed in 2027, 2028, and beyond. Because financial woes are growing for those who live off the land. So many farmers are reporting their kind of on a brink

of a crisis situation. Aaron Layman grows corn, soybeans, and oats, and he's with the Iowa farmers union. His costs are soaring and soar his neighbors or labor, health insurance, fuel, and fertilizer.

- For a medium sized farm like Malayne, they had an increase in cost of about $20,000. - Last December, the White House announced

a $12 billion aid package for farmers.

And recently, the White House said China will purchase billions of agricultural products from U.S. farms. But Layman is not encouraged by that development. - Farmers don't know exactly what to think.

They hear some big news and big promises, and then there's nothing concrete about it. - And that instability shows up at the bank. Nick Levendowski with the Kansas Farmers Union says lenders are backing off.

- Because they're looking at projections, and it shows, you know, farm income is gonna be down. - And without that money, it can mean big problems. - Like being forced to get another job in town or selling land. - To cover, you know, what you owe.

Or closing up shop all together. I'm Keith Lintan from Marketplace. (upbeat music) - Coming up. I love a dad book.

You don't have to be a dad to like a dad book. - Well, that's good.

First though, let's do the numbers.

Down dust rolls up 182 to day four, 10th percent finished at 50,000 to 644. The Nasdaq added an 18.10th percent, closed at 26,674 S&P 500, basically flat 75 and 20.

Kailin Tan had that story on Rantra's and farmers. Farmland partners owns and leases about 70,000 acres of farmland across the country, grew a tenth of 1% ag and food giant archer Daniels Midland.

Rose, 2% meet processor Tyson Foods added one and four tenths of one percent. The first Wednesday after Memorial Day, which today is, means it is national flip flop day, deckers outdoor maker of Tivas.

You know them, right, climbs two and six tenths, percent flip flop adjacent shoe maker Crocs, improved 2% although how that is, I will never understand. Bond prices up, yield on the 10 year 10 note,

down 4.48 percent, you're listening to Marketplace.

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“To each his own, of course, but my go-to bagel”

is sesame, definitely not toasted, a healthy but not over-dunch mirror, tomato, if it's a good one, locks, capers, and just a hint of thinly sliced ren onion. If it's a genuine New York City bagel, all the better,

but the reality is the popularity of and the desire

for good bagels is picking up across the country, especially out here on the West Coast. As Oregon Public Broadcasting's Crystal Legory reports, the bagel economy is on a roll. It's 830 on a Sunday morning,

and there's already a line around the block, outside PipSqueak Bagels in Southeast Portland. The bagels look really good online, so we thought we'd come give it a try. That's Reagan Manzig, who along with her mom

is one of the 40 or so folks in line for a bagel. And we didn't mind seeing outside 'cause it's wear-mouth, but we did not know it was gonna be 45 minutes. (laughing) A wait this long may seem unheard of for a bagel.

But Sam Silverman says the simple formula of flower, water, and yeast is much more than its ingredients. - Even though the cost of the goods is relatively low, the amount of time and effort that goes into it is much higher than a lot of other foods.

- Silverman is New York's self-proclaimed bagel ambassador, president of bagel-up. An organization he says is dedicated to promoting bagels and the people, culture, and community behind them. And these artists and bagels go way beyond

your grocery store bagged variety. - It's a minimum two-day process, where you make and shape the dough by hand. And then the following day after the dough has been allowed to cold ferment,

it's then boiled seed and baked. - And one of the reasons he says there's been a rise in popularity outside the city. - The exodus of New Yorkers and Northeasterners who went to other places in the country

and brought their standards for bagels with them was the perfect match for local entrepreneurs to fill that hole in the market. - On to Pro-Nores like Andrew Rubenstein. - I'd already been thinking about bagels around 2016,

the fact that they're just weren't what I thought were great bagels in the Seattle area. Rubenstein is the owner of hay bagel and before he went brick and mortar last year, he was meeting people in parking lots to give them bagels.

- I was baking out of a commissary kitchen and I was loading up my Ford Explorer with bags of bagels and I would poach in grocery store parking lots, transit centers and people would come and have their plan destined pickups.

- By then there was already a buzz around bagels, potentially sparked by the viral baking frenzy that seemed to be everyone's pandemic hobby.

“That's how Connecticut's pop-up bagels started.”

And now the company's expanded to 29 locations, growth largely funded by a $35 million investment by private equity firm stripes. It's something many artisanal bagel makers, like Madeline Gibbons, are taking note of.

- You know, I've mixed feelings about it 'cause I'm like, you know, when you start getting venture capital involved, I have a assumption that that will change things. - Gibbons is the owner of Portland's Pip-Squeak Bagels,

who chatted with me while slicing off long strips of dough, deftly twisting them into perfectly round bagels.

- Fred has always been a part of my life.

I come from a long line of bakers and my family and I would always give baked goods away to my neighbors, like Hala or Cakes, et cetera, and it wasn't really enticed or sharing bagels with people that they were like, man, that's a really amazing,

like, are you selling those? - Pip-Squeak opened its doors about a month ago. After years of Gibbons doing farmer's markets and bagel pop-ups, she's grown her staff to about 10 employees and business is going well.

- I mean, on average, we're prepping around 1500, but on Mother's Day, we did 2000, and we're selling through everything every day. Ever since the day we opened, it's been like every single day,

it's been lions around the block,

- And with high profile features on the bagel business,

popping up in the New York Times in Wall Street Journal,

“plus the first West Coast bagel fest last month,”

the bagel boom shows no signs of slowing down. In Portland, I'm Crystal Logori for Marketplace. (upbeat music) - Sometimes from a single data point, a theme can be intuitive.

So here is the data point. So, kind of book scan, just like it sounds, it's a publishing market research firm, says sales of non-fiction print titles are down nearly 8% this year.

Books about politics and current affairs in particular are doing even worse.

And existential decline, some publishers say.

It's a group of titles that has come to be called "Dad Books" about which Pamela Paul wrote in the Wall Street Journal the other day. Pamela good to have you on the program. - Great to be here.

- What is a "Dad Book"? - You know, a "Dad Book" is a kind of informal term. It's a kind of cheeky way to refer to what is often described as serious non-fiction. And that is serious non-fiction

to differentiate it from sort of self-help books, memoir, how to guide books, kind of later non-fiction books that often go under the category on best the littlest of self-help, how to and miscellaneous.

- As both a "Dad" and a reader of serious non-fiction

“should I be insulted that these are being called "Dad Books"?”

- Oh no, absolutely. I love a "Dad Book" but if you don't have to be a "Dad Book", like a "Dad Book" or "Dad Books" or "History", they are biography, their foreign policy, business, economics through the kind of book that you could reliably

buy for your father on Father's Day, knowing he's not going to be weirded out to straw upset. - That is true, he says speaking from experience. Okay, these books, though, you write, are in trouble. What's going on?

- Well, sales over all of books have not been in a great place for a long time, there's just long-term trends, decline in reading, fewer people are reading books, particularly print books. - So that's a kind of backdrop there.

That said, there are a number of trends going on, both in terms of how people consume books, what they're interested in, what publishers are publishing, and what kind of books grab people's attention. - There is one word here that keeps coming up throughout

this piece that you wrote, podcasts, podcasts, podcasts. - Yes, podcasts, podcasts, anything audio. There are just a lot, there are many more options for the kind of person who wants to take a deep dive into a serious subject.

So in the olden days, when I worked at B. Dalton, for example, in the '80s, and if you wanted to read about this kind of thing, you went, you got a James McPherson, a book about the Civil War, you got David McCullus, biography of Truman.

Now, you can listen to a podcast. The rest is history, which is a British podcast. Is one of the most popular podcasts. I went on actually to listen to a few episodes, because I've heard so much about it.

I turned to a subject that was of interest to me, which is the war in the Congo, and I thought, well, I've read a book about this. Now, I want to find out more. As I turned out, the podcast was essentially

about that particular book, which is a great book by Adam Hochschild, called King Leopold's Ghost. But for the person who had not read that book, they can just listen to the podcast. They don't have to ever read that book.

Right, you yourself are written a book. It's called 100 Things We Lost to the Internet.

“Do you suppose, Dad Books are going that way as well?”

- Oh yeah, it should be a 101. (laughing) If I could go back now, maybe that book was a dad book. I don't know, it's become a really tough time. Yeah, for people who authors who are interested in this,

journalists who want to write books based on their work. And again, I don't think it's that people who have lost an interest in these subjects. It's just that, if I think about my dad, right? My father loved a dad book, loved military history.

He had every time life book collection on World War II. He had these massive books full of colorful military hardware. Things, frankly, I don't care about. All that stuff is online.

There are million podcasts.

There are YouTube videos that could show you every single airplane that flew during World War II. So I don't think it's that the appetite has entirely disappeared.

as one of the interviews in the story,

“put it, the former CEO of Penguin Random House.”

- Yep. - Pamela Paul, writer at large of the journal, latest article has called, "Dad Books are a dying breed." Pamela, thanks a lot, I appreciate your time. - Thank you.

(upbeat music) - This final note on the way out today, which I do believe is some combination

“of this week's Sign the Apocalypse is upon us”

and what could possibly go wrong. Saw this in axios that Robin Hood, the stock trading app that became all the rage in the pandemic, is now going to allow agentic AI to make stock trades for its users.

Caution does seem perhaps to be warranted, but if you are on board with this and you want more, options in crypto and futures trading are coming soon. Our media production team includes Bryan Allison. John Focke, Montana Johnson, your jazz dad,

Gary O'Keefe and Charlton Thorpe. Alex Simpson is the manager of media production, and I'm Kyle Rizdall, we will see you tomorrow, everybody. (upbeat music) This is APM.

(upbeat music) - So by now you've probably heard the latest example of one big company buying another. - Oh yeah, I know exactly what you're talking about. And if you've ever wondered how

and why companies buy each other and what it means for the rest of us, you're not alone.

“- That's right, and that's why we've got”

a whole episode about it this week on Million Basilion.

We're learning all about something called mergers and acquisitions from personal experiences it turns out. (laughs) - Actually, I was looking for you too.

I want to talk to you about something super duper important.

I want to buy Million Basilions.

- Listen to Million Basilion on your favorite podcast app.