"Running out of that buffer"

The macroeconomic news of the day today brought to you

“by the letters G, D, and P, and P, C, and E.”

From American public media, this is Marketplace. [MUSIC PLAYING] In Los Angeles, I'm Kyle Rizal.

Thursday today, 28th May, good as always,

to have you along, everybody. A large health camp, and I'm a professor at Columbia Business School. I am a professor of terrorist and clear. I'm chair of the Economics Department at the George Washington University.

We made some calls this morning to help assort out the two big economic data points of the day, P, C, E, the April Personal Consumption expenditures price index, which is a fancy way to say inflation, also an update to first quarter gross domestic product.

There's a lot to unpack here. It's not very good news. Inflatial looks to high growth looks to low, and neither of those are the directions that we wanted to see. The first one I opened was the GDP report.

And I went up, up, up, up, up. Because it's downward revisions. We don't like those. We'll start with Professor Sinclair. Started Q1 economic growth.

That is what this GDP report measures.

“It fell for 10th percent from an earlier estimate”

to 1.6 percent annualized.

The next thing I did was scroll down. I was like, OK, where did it come from? And seeing that it came from both the consumption and investment side, those two sides that really tell us what's going to be happening in future quarters.

That was a big area of concern. This is a deer on the headlights moment for American businesses. Well, businesses are stopping and freezing and asking what's going on and what should they do next.

They're not investing. They're not hiring. They're not expanding. And GDP is not growing as much as it should be. That's GDP.

We will do PCE now, prices were up 3.8% in April. That is including food and energy. That markers of the highest. It's Vincent May of 2023.

“gasoline prices went up massively last month.”

And this gas price increase that we just saw is just beginning to filter through the prices of everything else in the economy. We also saw continued pressures on housing costs. And so combining these two things together

suggests this is not just purely about what's been happening in Iran. This isn't simply about a short-term blip that we could look through. This is looking more concerning.

Pay attention to that look through thing that Professor St. Clair said. Look into through the energy shock is what the Federal Reserve has been doing, although there are some signs that two

might be changing at the central bank. Wall Street today, what do you know? Technology stocks leading the way about that. Details numbers when we get there. [MUSIC PLAYING]

Tarrison Clair said things were concerning a minute ago. Here's some more fuel for that. We are saving less of what we make. The personal savings rate last month was just 2.6%. That's the lowest it's been since the post-pandemic

revenge spending spree of mid 2022. Then your document has more on that. The answer to why Americans are keeping less of their paychecks was pretty obvious to everyone I spoke to today. Inflation still remains fairly strong.

Gas prices, grocery prices continue to rise. This is really reflective of continued impacts of inflation. People are just not saving much at the end of the month. That was Ted Rosman of Bankrate, Matt Schultz of Lendingtree and Ryan Sweet of Oxford Economics.

Sweet says the low savings rate makes it harder for households to weather a job loss or a costly car repair. The consumer is essentially running out of that buffer. That safety net is starting to get depleted. And in many cases, that safety net is gone altogether,

says Sweet, which means more household debt. We started to get concerned that consumers will turn to using credit cards, which we've already seen. And Sweet says that could cause people to fall behind on payments. But even as savings dwindle, consumers keep on spending,

especially higher income ones.

That's not always been the case.

Says Bankrate's Ted Rosman. Normally when people are stressed about the economy, they pull back on things. They stop traveling, they stop going out to eat. Rosman says the fact that we haven't seen pull back

on a wide scale could mean consumers think the current oil price spike won't last. We keep hearing from the president and others that wars can be over soon. Gas prices are going to come back down.

I do wonder if some people are pulling more of the short-term

but it's a short-term adjustment they're willing to make.

But still, the savings rate is less than half of what it was two years ago. Which means the trend has been going on for a while now, says lending trees match salts. I think that struggle is driving more of this right now

than confidence is.

“Shult says the best thing consumers can do”

is to make the most of whatever savings they're able to pull together. By using something like an online high-yield savings account, that is getting around 4% compared to a traditional savings account from a mega bank, which Shult says offers an interest rate

closer to zero. I'm Daniel Acreman for Marketplace. If recent trends hold, this summer is going to be one of if not the hottest on record, which is to say

the climate crisis is getting more critical.

There are ideas, big and small on what to do about that. And among the bigger ones, the biggest, probably, is dimming the sun. The new season of our climate podcast, How We Survive is all about some of those large-scale interventions.

Here's Marketplace's Amy Scott. - At an undisclosed location in the San Francisco Bay area, I'm standing about 21 feet off the ground

“on the roof of two shipping containers stacked on top of each other.”

- Don't stand on the edge. We don't want anyone dangling. - I'm with Luke Eisenman and his business partner Andrew Song. - We're going to launch some balloons and send them in this trash fair filled with sulfur dioxide

and hydrogen gas to get it up there. - Eisenman and Song co-founded the climate intervention start up makes sunsets. They sell what they call cooling credits. For one dollar, you can pay them to release one gram

of sulfur dioxide into the stratosphere, which they say is roughly enough to offset the warming caused by a ton of carbon dioxide. - The goal of makes sunsets is to cool Earth as quickly as we safely can.

- And they think that this type of solar geoengineering known as stratospheric aerosol injection is the way to do it. - Eisenman and Song get to work filling a weather balloon. One of those big latex ones meteorologists used to take atmospheric measurements with hydrogen

so it'll float up into the air and sulfur dioxide. A pungent gas that's a byproduct of fossil fuel production. When the balloon pops and the sulfur dioxide is released into the upper atmosphere, it reacts with water vapor to form tiny particles

that reflect sunlight away from the Earth and potentially cool the planet. I step over the gas tanks and stand precariously between Eisenman and Song as they hand me the balloon. - You're gonna let go and just pull your hand back

so that this doesn't catch your hand. - So I'm just gonna let it go. - Go for it. - All right, one, two, three. We watch as the balloon floats up into the clouds

and disappears as it makes its way some 60,000 feet into the stratosphere.

- It sounds crazy and I'll be the first to agree

that this should not be a private company doing this,

“but the only thing worse than a private company doing this”

is no one doing this at all. - Right now they're not releasing enough sulfur to meaningfully change the temperature of the Earth. To date, they've released over 250,000 grams of sulfur dioxide. So I had to say it would take millions of tons.

Do you either view how a science background? - We don't. - So why are you qualified to do this? - I think I'm no more or less qualified to do geoengineering than anyone else who does geoengineering by getting onto a plane

or turning on their gas burning vehicle. We just don't call or scientists try not to call those things geoengineering because we're just used to them. Mother Nature, it turns out,

doesn't really care about our intentions at all. It's geoengineering, whether we're helping or hurting the planet, whether we're warming or cooling the planet, it's still geoengineering. - Stratospheric aerosol injection does come with risks.

Sulfur dioxide is a pollutant, and putting it in the stratosphere could damage the ozone layer, letting through more harmful radiation. - Nobody is selling this as something that's magic. David Keith is a professor of geo sciences

at the University of Chicago. He's been in this field since 1990, and the work makes sunsets as doing is largely based on his research.

injection of sulfur dioxide into the stratosphere using high altitude airplanes

until we reach about a million tons a year.

- Any of these interventions is gonna cause harms, but we have the CO2 in the air, the harm from climate change is real, and it might make sense to do this, understanding that the benefits would be pretty large,

and the risks appear to be pretty small. - In stark terms, Keith says the sulfur required to cool the earth by half a degree Celsius could cause 10,000 additional deaths a year from air pollution, but it could reduce half a million deaths from heat.

- Still, many scientists and climate advocates would rather we didn't go that route.

“- I think we have to understand that if we do this,”

this is a decision that will affect all life on the planet. - Kate Marvel is a climate scientist at Project Drawdown, and is skeptical of humanity's ability to safely deploy something like stratospheric aerosol injection. Right now, I don't see that we have a world government

that is capable of making a decision on behalf of everybody who lives on the planet. - Right now, there isn't even consensus in the United States, let alone among world governments. Several states in the US have banned

or proposed banning solar geoengineering. I'm Amy Scott for Marketplace. (upbeat music)

- First episode of this new season of how we survive

is available right now, check it out. (upbeat music) - The Market for Commercial Office space continued.

“It's slow, but steady come back the first three months”

of this year, companies least more space than they let go of for the third quarter in a row. So it says a new report from the Commercial Real Estate Development Association, Marketplace's Smith Fields, as that one.

- If you're looking for new office space for your company right now, maybe in New York or San Francisco, you're probably gonna have a lot of competition. Mark Selvetelli at the Commercial Real Estate Development

Association says fancy office buildings with a lot of amenities are leasing exceptionally well these days. - You'd be hard pressed in a lot of big cities to find what we would probably call type A or trophy class space to be available.

- But he says that is not true of the office market as a whole. - When you look more towards older buildings, once it maybe don't have as many amenities or perhaps are out in suburban locations, they're the markets a little bit more mixed.

- That is not a new trend according to Joshua Harris at Ford and University's Real Estate Institute, but the pandemic accelerated it. - We have kind of the top tier that is performing very well and then we have a bottom tier that's performing much worse.

- A K-shaped office market to go with our K-shaped economy. What is new in recent months is that more of those older, less desirable office buildings are getting knocked down or converted into apartments or hotels. - We're removing more office spaces than we're building.

And I do think that trend's going to continue. - So is the demand for fancy new offices? For all the headlines about return to office mandates, Nick Bloom at Stanford University says how we work has shifted.

“- I think the future is a lot of hybrid.”

So a lot of folks going in say three days a week, working at home for two, probably less bully remote and probably as much bully in person you've ever had. - And he says with so many people now used to working

from home, summer, all of the time, it's a harder sell to drag them back into a drab windowless office. - I just don't see this kind of deal but ask mass ranks of cubicles out in the suburbs coming back. What I do see is nice offices and city centers

where you know shiny glass windows, gyms, maybe canteens. This stuff is alive and kicking. - And vacancy rates are low. I'm Samantha Fields from Marketplace. (upbeat music)

(upbeat music) - Coming up. - Postcards, mugs, coosies, classes. - Everything you could ever need, right?

First though, let's do the numbers.

Now industrial's added a mere 24 points today. We'll call that flat percentage wise 50,668. It has that up 242 points, 9/10%, 20,6,917,

With today's inflation data,

“you may be considering one of the many stripes”

of budget retailers to save a couple of bucks. Wall Street apparently thinks so. Dollar Tree sort 17 and 9/10% dollar general climb

five and a third percent five below.

Went up, get five below and up anyway. You're going up four and a 10% maybe I'm the only one who thought that was funny. Samantha Fields was telling us about office space, CBRE, commercial real estate firm there,

fell two and nine, 10% you're listening to Marketplace. This is Marketplace, I'm Kai Rizdahl. True story. I'm walking through my local Piggy Wiggly yesterday and in the soda aisle, the soda aisle,

I spot a colorful can that says in big letters on the front, 10 grams of protein. In a soda, no wonder then that late last month the Department of Agriculture was warning of protein shortages.

Ellen Cushing wrote about the protein industrial complex in the Atlantic the other day. Ellen, welcome to program, it's good to have you on. - I'm so happy to be here. - Let me just say at the outset

that I have a protein shake sitting on my desk waiting for me after I get out of this interview. And I guess my first question is am I the problem?

“- Honestly maybe, you know, there it is.”

Sorry, sorry to be the same. - Oh, look, I kind of knew it when I read your piece. - Yeah, as my piece says, we America is on the brink of a protein shortage. Protein powder shortage, I should say.

So demand is very high for protein powder, largely from people like you and from industrial food manufacturers who are stuffing protein into everything they possibly can right now.

And supply is not able to keep up right now. So we're seeing prices go up, wholesale and retail. And it's gonna be a little bit rough out there for you protein heads. - It's not like I'm the only one.

All right, let's back up for a minute. So we're talking mostly about way protein, WHEY, which used to be this thing that farmers were just like throw away. - Oh yeah, way is if I product of cheese making

and farmers would like dump it in rivers and spray it onto their fields. There was a huge problem in places that do a lot of cheese production with like these horribly polluted rivers

and fish would die from way pollution. It was a big problem. Nobody wanted way. The biggest problem that farmers had with way until quite recently was getting rid of it

cheaply and safely and legally.

And now the problem is that they do not have enough of it.

- So let's get to the industrial production side of this 'cause this was the amazing thing in this piece that popped out to me. And again, I apologize for all the damage that me and my protein friends are doing.

You write in this piece that had somebody broken ground on a protein production plate, a way protein production plant when this protein maxing things first really caught on like three years ago. We would still not have supply coming from that plant

and oh by the way, it would probably cost like a billion dollars to build this thing. - Yeah, this was the thing that was most interesting to me about reporting this story. I had kind of assumed the problem was the cows

that we didn't have enough cows. That is not true. We America is drowning in cows.

The problem is the infrastructure.

So way processing is this tremendously complicated, hugely costly endeavor. You're taking 101 degree liquid from a living animal on a farm and turning it into this shelf stable, highly potent powder, building a way processing plant

is just not a quick thing for anyone to do. And so those plants are coming online, but it takes a really long time. - You talked to a person in this piece who remembers the cottage cheese craze

of some number of years ago.

“And you close with this kind of amazing line, right?”

Because cottage cheese has thankfully faded from the public memory. You say our appetite's change faster than the systems that satisfy them. I mean protein maxing will eventually die out,

but people are making these big investments. - The cottage cheese analogy was really interesting to me because I remember that craze. With cottage cheese, the industry did not immediately pivot to cottage cheese production,

which turned out to be pretty wise because as you say, cottage cheese is not all that popular anymore. You know, these trends happen, they happen online, they move at the speed of light, but moving real products in the real world takes way longer.

All right, I have to go finish my shake.

That's all I'm saying. Ellen Kushing at the end. Ellen, thanks so much. - Thank you. (upbeat music)

“- You don't have to be a marketing genius”

to know that brands are everything. Companies, people, radio programs, even cities. And it turns out there's been some drama in Huntington Beach, California over its brand ecosystem from L.A.S. to Rep Local Reports.

- It's mid-morning at the Huntington Beach Pier. Surfers are catching waves, buskers are busking, and Brian DeLise is walking off breakfast with a few friends. - It is Surf City, USA. Come on, this is the sun, beach, the water, you can't beat it.

- Surf City, USA is Huntington Beach's official trademarked brand.

And that is exactly what's for sale at its official store on the pier here. Surf City T-shirts, sweatshirts, postcards, mugs, cozys, glasses. - This is Sally Westcott.

She and Tina Vare are the private side of this public private partnership. The store gets cheap rent for its coveted pier location, and the city gets 5% royalties on all sales of the store's city branded merch.

“They serve mostly tourists, but also some locals”

and former locals. - We do get a lot of people that come in, and they say, oh, I used to live here, but now I live in, fill in the blank, and they want to wrap their hometown.

- I've had it for the start crying,

and wish they could come back on. And then I start crying at the register, and then we're all... - Westcott and Vare say they felt a little under fire when a consultant hired by Huntington Beach,

questioned why the city wasn't doing more with its brand. He recommended the city establish a creative media department, a film commission, and a merchandise program that would lock down the city's intellectual property. The main goal, more revenue for the city,

says Mayor Casey McKinney. - Like every city we're facing the structural budget issues, there's not a lot of ideas out there how to fix it other than a sales tax increase, or a hotel tax increase.

“- Or building a lot more housing to increase the tax base,”

which McKinney does not want. He envisions digital vending machines around town where you could order city hats, t-shirts, and other swag. He also wants to sell that swag directly to local stores, or create licensing agreements with retailers.

- When you buy it through us, now the money is coming back to the city where it should to help pay up to make the community clean and safe. - Ryan Short is co-founder of the company's civic brand, which helps cities and regions define their identity.

And yes, make money off of it, but he says that shouldn't be the primary goal. - The way I think about it is, it's more of a north star, it's like a shared vision. - His favorite example is Costa Rica's unofficial brand/modo,

whatever you that. The phrase which literally translates to pure life is all over souvenirs, but it's also a vibe. - It's so ingrained in the culture that locals buy into it, their tourists buy into it.

And to me, that's like the end goal. It's kind of like raise a lot of ships, right? At the city store, Westcott and Varay say, they still follow the mission they were given more than 30 years ago when the store opened.

To be frontline ambassadors for the city. - I think the value too in the branding is to really get the message out about what your city is. So that people are gonna visit, move here, or live here.

- Yeah, anything that projects a positive image. We're here to do our part. Huntington Beach's brand ecosystem reboot is currently on hiatus while the city council takes a deeper look.

So no digital merch machines yet, but you can still get an official surf city t-shirt at the official city store. In surf city, I'm Jill Rep. Local for Marketplace. (upbeat music)

- This final note on the way out today, I'm just gonna read you the text of title 31 of the United States Code Section 51 14 sub paragraph B quote. United States currency has the inscription and God we trust in a place where the secretary

of the treasury decides is appropriate. Only the portrait of a deceased individual may appear on the United States currency and securities. No reason, just thought you'd like to know. Our daily production team includes Olivia Berdett

and the Corbin Maria Hall on horse to Sarah Leeson, Sean McHenry, Michaela Saeha, and Sofia Terendi, a will story

And I'm Kyle Rizdahl, we will see you tomorrow, everybody. (upbeat music) This is APM.