Tumbling economic sentiment — especially for Dems

You saw the markets today, right? That is where we'll start and then, of course, the rest of this week in this economy. From American Public Media, this is Marketplace.
In Los Angeles, I'm Kyle Rizdahl. It is Friday, today, the 21st of February.
Good as always to have you along, everybody. I will note here two things as we get going.
Thing number one is that markets go down too, gang. It's been a while since I've said it, but it is no less true in its absence.
Thing number two, ain't nobody out there likes uncertainty, of which we have a lot. So let's get to it.
Heather Long is at The Washington Post. Sadiq Reddy is at Politico.
Hey, you two. Hey, Kai.
Hi, Kai. Sadiq, let me begin with you and the observation that the markets today finally, actually, after five-ish weeks since the inauguration, and in the face of consumer sentiment and Walmart yesterday, said, yeah, we're not here for this.
Are you surprised it took this long? We all knew there was going to be a moment when markets come off the sugar high. That is happening right now.
And what the adjustment looks like is what we'll be following for a while. It's not a huge surprise today.
It's options expiration day. There are moments when markets act up right around that point, especially in a meme-ified stock market era where people are making day trade bets like they have been in the last few years.
But we have a lot of cross-currents hitting businesses, hitting consumers, obviously, a lot of change in the government. That is all stuff that is starting to create more of that uncertainty.
The University of Michigan is very well known for consumer sentiment, for inflation. They also track people just commenting on uncertainty around economic policy.
This has just shot up to levels that we have not even seen before. Higher than back when we were talking about the debt ceiling 15 years ago.
Higher than the 9-11 period. That is a lot to take in in a historical context of what's happening right now.
And I don't think most of us have even made sense of it yet. Heather Long, it is now your job to make sense of all of this, the uncertainty, the cross currents, the Fed's challenge right now in what they are going to do in managing this economy in the face of in the face of what could be inflationary policies from the White House and Congress doing who knows what with, oh, by the way, the debt limited tax policy.
How do you steer this economy right now? Yeah, you're right. There's a chill in the air and it's not just from winter right now.
And it's hard to know how long it's going to stick around. I think what's really challenging for any policymaker right now or even any investor or any of us who are trying to figure out, are we still going to have jobs in

a few weeks, is really, you know, this question of how serious is President Trump about tariffs, about all these different things he's doing. And what you'll still hear a bit of from Wall Street chief economist types, or from Federal Reserve officials, is this, we're going to wait till it's actually in place you know we're not going to preemptively steer the economy uh before and until we actually see a lot more destruction um but i don't not sure if that if it worked pretty well in trump's first term i'm not sure it's going to be the right approach here in the second term and as suep was laying out and you were laying out, we're already starting to see consumers respond and businesses respond.
And so I'm not I'm not sure how long you could really just sit on the sidelines and say, yeah, but but there's no tariffs yet. So that's I think that's probably the biggest challenge right now.
Well, Sadeep, on that issue of, you know, there's nothing happening tariff-wise yet, you know, a lot of Fed talkers this week, eight or nine regional presidents and members of the Board of Governors, the general theme of which was we're going to look through whatever all the talk is with tariffs. And then the minutes come out, and clearly they're actually worried about it.
And I guess it's just, this isn't really a question, It's a statement. It's just so much more complicated now.
Yeah. The economic policy uncertainty index at the Fed is very, very high right now.
They're trying to make sense of, of, of a period that is, that is actually unprecedented. I don't think we've ever seen a, a secondary government arrive alongside the one that's in place, whacking at the government like this in this way.
We have not seen this scale of tariff threats. And in addition to that, we have to remember, though, that last time around, the tariffs obviously had some impact, but they did not unleash inflation that was out of control.
Inflation was relatively stable for several years, and they don't want to get caught in the trap of thinking that everything is going to go sideways. It is a quite resilient economy, and the threat of tariffs does have some effect on individual industries, a lot of individual companies, but is it really changing the shape of the macro economy that the Fed looks at? And they do need to be cautious about that, but they can't overreact.
And that's the challenge that they've got right now. Heather, can we talk for a second about something you alluded to a minute ago, which was, you know, we don't know if we're going to have jobs.
And that's, of course, referring to the people at the government who have been fired in extremely large numbers. There are probationary employees, something like 200,000 of them who may or may not be terminated really soon.
There are others who have been. And I guess the question is, the micro pain for these people is very, very, very real.
We've heard the stories of these individual people and the tragic circumstances they now find themselves in. How long till the macro pain, the economic systemic pain shows up from all these firings? Yeah, you're right.
That's been a question in a lot of people's minds. You know, some of it is showing up already in terms of what we've just been talking about, the uncertainty.
And I was struck in that University of Michigan consumer sentiment survey that they specifically said that over half of respondents recently are worried and believe unemployment is going to go up. So even if they are personally impacted, they are starting to believe that that's the direction of things.
And then I, and like an actual data perspective, it, because the firings were done just after the reference week for the February unemployment report, we probably won't see a huge sign until early April when the March unemployment report comes out. Obviously, this week, we were all looking closely at that jobless report yesterday.
We don't see that yet. But again, I think everyone's really looking that right into consumer spending and that are people going to start canceling their Netflix or their Amazon Prime or their Hulu? Are they going to stop shopping and stop going out to eat at the Applebee's and Chili's and Olive Gardens? I'm definitely watching that closely.
But the biggest thing of all is we are just hacking our government. And this is backfiring.
It's already backfiring by losing so many talented employees and by sending a message to anybody who ever maybe wanted to go into public service. It's going to think twice about that for years and years to come.
It is, as you both have been talking about this week on the socials, it is a brain drain. And as we talked about yesterday on this program, government savings are not like business savings because government is not a business.

Sudeep, fire hose of news. Heather's watching consumer spending and how consumers are reacting.
What's the thing you're looking at? You got 30 seconds to tell me. I am especially watching business investment.
That is going to be the thing that determines so much else. Everything rests on the employment picture.
If businesses start to get skittish, if they see that consumer spending is not going to stay strong, they're going to start cutting back business investment. And a lot goes wrong at that stage.
There's already enough uncertainty around the world about the trade situation. But there's a lot of investment there.
And I think we've seen through time that businesses try to look through these moments. They see the pendulum swings wildly back and forth in an unhelpful way from policy, and they try to look through that.
But that is really going to be the thing that tells us whether the system is starting to glitch. Sudeep Reddy at Politico, Heather Long at the Washington Post on a Friday afternoon

in unprecedented times.

Thanks, you two.

Thanks, guys.

Hang in there.

You two.

On Wall Street today,

I'm going to go out on a limb here.

Not a big limb,

just a tiny little limb

and say it'll be the Wawa's.

Y'all know the rest. consumers in this economy as we were just alluding to are often an irascible bunch and they are especially not thrilled right now not thrilled at all the university of michigan's consumer consumer sentiment numbers came out this morning, as Heather was saying, down just shy of 10 percent January to now.
But when one digs a little bit deeper, as one must, and breaks consumer sentiment down by political affiliation, well, one should not be surprised by what one finds. Marketplace's Kelly Wells explains.
There is one thing that consumers across the political spectrum agree on. Inflation isn't going anywhere.
Regardless of where you lean, I think there's concern over what does it mean and how's it going to impact me. Sonia Lipinski with the financial advisory firm Alex Partners says inflation fears and talk of tariffs make consumers feel uncertain and uncertainty shows up as negative sentiment.
They don't want to spend money. They don't want to take any risks.
So that's what we're seeing, I think, a lot in the consumer, for sure. Republican sentiment is about the same as last month.
Meanwhile, Democrats are freaking out. That is a switch that happened, you guessed it, last fall.
And then everything went pretty haywire after that, of course, as the political bias, I think gets baked into that data set. Adam Turnquist is chief technical strategist at LPL Financial.
He's hopeful the political chasm will start to shrink soon. There's probably some shock factor on maybe both sides coming out of the election.
So I would expect some of these sentiment indicators to normalize a bit. The divide didn't start last November.
Michael Green, chief strategist at Simplify Asset Management, says consumer sentiment polarized back in 2023 when the University of Michigan stopped gathering data by phone and started using an internet survey. You can imagine a phone interviewer saying something along the lines of, okay, so you're predicting a dramatic jump in inflation.
And somebody on the phone responding and saying, no, I mean, I just think inflation is really high. Meaning when you're talking to another person, you're more likely to moderate your view now that it's people alone with their computers.
You have absolutely no obligation to fill in the survey with any form

of accuracy. You can basically reflect any wild view.
While consumer sentiment remains divided,

business leaders are feeling more confident. New data from the conference board says CEOs

are the most optimistic they've been in three years. I'm Kaylee Wells for Marketplace.
Let's talk maritime shipping here for a minute, shall we?

Specifically, the shipping of crude oil.

There's a thing that's happening that's kind of interesting in a kind of troubling way.

There are, as you've surely heard, Western sanctions on some big oil producers, Iran, Russia, Venezuela, among them.

And in response to the sanctions, a growing number of oil tankers, the ships themselves, have gone dark.

That is, they've shut off tracking systems that would let them be tracked. A new study from the National Bureau of Economic Research estimates a not insignificant 43 percent of seaborne crude oil exports traveled on dark ships the past couple of years.
That 43 percent is, of course, just an estimate because the ships have gone dark. But the logical conclusion is that a whole lot of sanctioned oil is still moving around the global economy.
Dan Ackerman has that one. If you're piloting an oil tanker and you shut off your transponder, you don't disappear altogether.
This is not Star Trek. We don't have cloaking devices.
But Ellen Wald of the Atlantic Council says it does make it harder to find you, which might involve combing through satellite photos and the like. It's just tedious.
So ships go dark to try and hide their cargo. This often happens when two oil tankers rendezvous at sea, says Ian Ralby, CEO of the maritime consultancy IR Consilium.
If you have a small tanker that takes sanctioned oil out from Iran and transships onto a much larger tanker that is carrying a cargo of legitimate oil, they can obscure the fact that that oil is partially sanctioned. And it turns out it's not hard to find a buyer for oil of questionable origin.
Erica Downs, an energy researcher at Columbia University, says a lot of dark-shipped oil ends up at small, independent refineries in China. These refineries operate on very thin margins, and they're highly opportunistic crude buyers.
Meaning they'll take the lowest-cost crude, sanctioned or not. Oil on dark ships also ends up in South Korea, India, and Egypt, according to the National Bureau of Economic Research study.
This all means that sanctions haven't really squeezed the oil market, says Robin Brooks of the Brookings Institution. Global oil supply was not at all materially impacted.
He says neither was the price of oil. What has happened with so many major oil suppliers under sanction is that the global oil trade has basically split into two parallel channels, says Ian Ralby of IR Concilium.
If you put everyone outside of the tent, they're just going to make their own tent. And that's essentially what we've done.
We've created a new marketplace for sanctioned actors and their enablers. Another unintended side effect, says Ralby, these tracking systems are a safety feature to help ships avoid collisions.
It's not a great idea to turn them off.

I'm Daniel Ackerman for Marketplace. Coming up.
The ghost of revenge travel. The spirit of revenge travel lives on.
The ghost of travel future. Perhaps straight ahead.
First, though, let's do the numbers. Told you'd be the wah-wahs.
Dow Industrial's off 748 today, 1.7%, 43,428. Sounded a little chipper there.
I'm just glad I was right about the music, because as we know, I'm not in charge. NASDAQ dropped 438 points, 2.2%, 19,524.
The S&P 500 down 104 points, 1.7% there as well, 6,013. For the week, the Dow and the Nasdaq both down 2.5%.
The S&P 500 down 1.7%. Kelly Wells was telling us about consumer sentiment, partly having to do with anticipated price hikes on imports in possibly affected companies.
Whirlpool slowed 1.2% today.

Honda stalled three-tenths of 1% today.

A German court has ruled that Birkenstock sandals are not art.

They are apparently a design and thus don't qualify for Germany's 70-year art copyright law protections.

Birkenstock Holdings dropped four and a tenth percent.

I don't know how you say ugly in German.

Somebody hook me up.

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We talked yesterday about what we lose when government data disappears. So we're going to talk today about whether private data might be a suitable replacement.
Tara Sinclair is a professor of economics at George Washington University. But for many years, she was at Indeed, where she founded the Indeed Hiring Lab, one of the sources of said private data.
Professor Sinclair, good to talk to you again. It's great to be back.
You have spent a good chunk of your career working on private indicators about this economy. And I guess the first thing I want to get your sense of is how hard it is to take data from private sources and make it useful to the public.
Well, that's a fantastic question because it is really, really hard. If we think about the ways that companies collect data, it ranges so widely from different company practices and styles.
And to be able to try and take that data and condense it into something that answers a question that is important to the general public really takes specific tools, specific skills. And it's typically outside the scope or objectives that any one particular company has.
That's why it's so important that we have government statistical agencies. Yes.
Go back to that thing you just said, outside the scope of what any specific business has. These businesses are collecting this data for their business purposes, not to, you know, clarify things for the public.
Right, exactly. And they have their own objectives, and those objectives can change over time, so they don't have necessarily a need to keep things consistent from month to month or quarter to quarter, the way that it's so important for us to have that information to be able to make longer run decisions for the general public.
You've got a couple of decks that you put together as you were doing presentations on this throughout your career. And there was a phrase that hit me that I'd like it explained.
You talk about unstructured data and you call that something of a peril. And I want to know why.
why well oftentimes people think that if we can just go and get the data directly from companies it's going to be this you know amazing archaeological find um and and and it is but it requires you all of the tools and digging of archaeologists like it's not not just sitting there as this glorious, perfect data set. It's rather this giant unstructured mess that it has several perils.
One of them is that we might find the wrong story from that data rather than if we had a more comprehensive view from all of the companies in the economy rather than just a few select ones that are willing to offer the data. I think that's one of the biggest concerns.
It does bear a mention here that private data, sometimes called high frequency data, we've done stories on that in the past, this private data already plays a role in government policy decision makings, you know, on the margins, but it's there. Oh, absolutely.
And it can be a great input. In fact, it may be one way that we can save people time because instead of filling out a survey, maybe we can just collect the data of their shopping habits directly from the store.
That sort of thing is already being used at statistical agencies and is really improving

their efficiency. But it's got to be done carefully because we need to make appropriate adjustments for the fact that that data is coming from a select set of sources.
We have to make sure that what we're observing is actually answering the question that we want to be answering. Mm hmm.
So so here comes the more subjective question. What is the risk for this economy if government economic data becomes unreliable or something short of unreliable just gets called into question? Right.
That is really, really scary because that's something that I think the statistical agencies have worked very hard to get that credibility. It may be the case that the typical American household isn't looking up what's going on with inflation from month to month or GDP from quarter to quarter.
But it is the case that it's affecting them because it's affecting decisions that are being made on their behalf by their employers, by their local and state governments.

And without that clear information, we're going to be in the dark making our decisions.

Forward-looking decisions are just already hard enough.

Professor Tara Sinclair, economics at George Washington University.

Professor, thanks for your time, Emma. I appreciate it.

Thank you. I really appreciate it.
Online travel closed out 2024 on a high note. That's according to the earnings report this week from Booking Holdings, holder of Priceline, Kayak and Booking.com.
And those strong earnings follow better than expected readings from Expedia and Airbnb earlier this month. Industry groups do expect bookings to push higher yet in 2025, but the skies are not entirely friendly, as Marketplace's Megan McCarty Carino reports.
The days of post-pandemic revenge travel, when bookings were growing at double-digit rates, those might be over, but... The ghost of revenge travel, the spirit of revenge travel lives on.
Seth Borko, director of research for travel news site Skift, says people seem to have come out of the pandemic with travel as a higher priority. A recent Skift global survey found consumers were most excited to spend discretionary income on travel.
What we think we're seeing, both short-term and long-term, is travel as an identity, right, and experiences as an identity. But as we saw in today's consumer sentiment survey, buyers might be feeling a bit unsettled.
That could be affecting travel plans for May and June, says analyst Patrick Scholes at Truist Securities. The bookings are kind of mediocre.
They're not going down, but they're not, you know, they're not exactly on fire either. He says tariffs could have a direct effect on travel because they affect exchange rates.
A stronger dollar would be good for U.S. travelers internationally, but foreign tourist money won't go as far here.
One thing that's interesting we're watching very closely is inbound Canadian to the United States. Typically, the U.S.
gets its highest number of foreign tourists from Canada, followed by Mexico. Flyers are also voicing concerns about safety, says Jay Sorensen, an airline consultant.
There have been several high-profile air travel incidents in recent weeks. Of course, it's still safe to fly.
But then you add to it the whole disruption that the Trump administration is creating in terms of the FAA. So that begins to magnify itself a little bit in terms of perhaps a hesitation for some.
The administration recently cut hundreds of jobs at the Federal Aviation Administration, but stipulated air traffic controllers and other safety personnel are not affected. I'm Megan McCarty Carino for Marketplace.
This final note on the way out today saw this on Wired, which if you haven't been following their reporting on the Trump administration, you should.

Anyway, they are reporting today that Elon Musk's operatives have put a one dollar spending limit on most government credit cards used by employees and contractors at the General Services Administration, which, among other things, manages IT and office buildings for the federal government.

Similar limits, Wired reports, are coming to the whole rest of the federal workforce.

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And I'm Kyle Rizdahl.

Have yourselves a great weekend, everybody.

We will see you back here on Monday. All right.

This is APM.