Vote with your wallet

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Speaker 4 Our lane and sticking to it, the guts of how this economy works is where we start today.

Speaker 4 From American public media, this is Marketplace.

Speaker 4 In Los Angeles, I'm Kyle Risdahl. It is Wednesday today.
This one is the 19th of February. Good as always to have you along, everybody.

Speaker 4 This program, as I have said a couple of times over the past couple of weeks, cannot and will not chase every pronouncement that comes out of the White House.

Speaker 4 We can and will, though, cover decisions by the Trump administration that are of systemic economic importance, which is how we find ourselves starting today with an executive order entitled Ensuring Accountability for All Agencies, in which President Trump claims for himself direct control over key agencies in this economy.

Speaker 4 Think the Federal Trade Commission, the Securities and Exchange Commission, the Fed, agencies that have traditionally and congressionally exercised independent authority.

Speaker 4 Sarah Binder is a professor of political science at George Washington University. Professor, welcome to the program.

Speaker 6 Good to have you on.

Speaker 1 Great. Thanks for having me.

Speaker 4 With the understanding that Congress did set up these agencies as independent agencies, I guess the first question is, can the president do what he is purporting to do here?

Speaker 7 Well, the president can do it if nobody stops him, right? It's a power grab, this time at the expense of what we call these independent agencies.

Speaker 7 The question is: will anyone in Congress stand up to him? And at some point, this will certainly end up before the federal courts. And so, will the courts be able to constrain the president?

Speaker 7 That we just don't know.

Speaker 4 Help us understand, would you, why Congress decided decades and decades ago that this economy needs independent regulatory agencies to help this economy run?

Speaker 7 Well, keep in mind that the very first of these independent agencies were really the end of the 19th century. And it was a period like today of pretty high partisanship, right?

Speaker 7 Intense electoral competition, frequent shifts in party control.

Speaker 7 So progressives are looking for ways to insulate these sort of implementers of law from politics and especially from presidential whims.

Speaker 7 And so the solution is Congress says, let's find a way to insulate the decision makers, right, who the leaders are and how they wield their power, but also the decision making, like how much review is done by Congress and the President and the courts over these agencies.

Speaker 4 It will not surprise you, even though this order purports to cover the Federal Trade Commission, the Federal Communications Commission, and the SEC and a bunch of them, my eyes went to the Federal Reserve and that section that is in this order saying this covers the Federal Reserve except for its monetary policy operations.

Speaker 4 The catch, of course, with the Fed is they do lots of other stuff that stabilizes this economy, right? They are famously the lender of last resort in a crises.

Speaker 4 And I guess I wonder how concerned you are about the gray areas

Speaker 4 that have to do with the guts of this economy.

Speaker 7 Aaron Powell, well, that is quite problematic because it's really hard to say, even on something like emergency lending, like where does monetary policy start and where does reg and

Speaker 7 supervision and regulation, where does that begin? So emergency lending, the stabilizing of financial crisis. Well, that's also part of the Fed's ability to try to control inflation.

Speaker 7 So it's hard to say where the boundaries of where the president is going to be sticking his nose into those decisions.

Speaker 7 And of course, right, we expect the Fed, the Congress tells the Fed, you are in charge of financial stability, at least one of the agencies in charge of financial stability.

Speaker 7 And the Fed uses monetary policy, right, to meet that regulatory goal.

Speaker 7 So I think there's a lot of question marks from that executive order about how much autonomy the Fed really can keep with letting the President and OMB anywhere into its decision-making.

Speaker 4 Step back for a minute here then and talk about the other and the many institutions of this economy that are now going to be subject to much more direct presidential control.

Speaker 4 What is at stake for this economy?

Speaker 7 Well, the first thing at stake is that it will make it harder for the Fed to keep its eyes on and try to control inflation, which still isn't down to its 2% target, but also some general sense of financial stability that banks are being regulated across the board, big banks, small banks, community banks, but even-handedly.

Speaker 7 And I think whenever you have some stronger tinge of presidential control, people are going to wonder: like, is that a legitimate exercise of power? Am I better off?

Speaker 7 Do I know what's going to happen in the future? And certainly in that economic realm, that's put at risk by injecting presidential and partisan interests into the decision-making of these agencies.

Speaker 4 Do you think this is a legitimate exercise of presidential power?

Speaker 7 Well, I think it grabs power from Congress, who set up the rules of these agencies in the first place. I think it, in my view, is patently unconstitutional, right?

Speaker 7 Because the executive order would allow the executive branch to decide how are you going to spend that money, right?

Speaker 7 Those are decisions that Congress either gives to the agency or certainly sets the budget for many of them and and expects those monies to be spent in the ways Congress directs.

Speaker 7 So grabbing that power seems to me you've taken an equal branch's key authority. You've just taken it away.

Speaker 4 Let me take you sideways for a second since you went there. Are you surprised that the Article I branch, that is to say the Congress,

Speaker 4 is letting its power be taken so easily by the Article II branch, the executive?

Speaker 7 Well, when I teach undergrads Congress, we always start, it's Article I. Why is it there? It's the most important institution, but it has to stand up for itself.

Speaker 7 The Constitution, it doesn't protect itself. It's not self-enforcing.

Speaker 7 And so this is not the first time that Congress has sort of stepped back and watched as presidents have encroached on their powers. Sometimes Congress does it on purpose.

Speaker 7 Hey, President, here's some power to give sanctions. Here's some power to negotiate trade deals and so forth.

Speaker 4 Tariffs also, oh, by the way, right?

Speaker 7 For sure.

Speaker 11 For sure.

Speaker 7 And Congress does that explicitly. Much of this is Congress is doing, but certainly this is Trump really, really going much farther than we've ever seen other presidents do.

Speaker 4 Sarah Binder, she's at Brookings. She's also at GW.
Professor, thanks for your time, ma'am. I appreciate it.

Speaker 6 Thanks for having me.

Speaker 4 Wall Street Midweek, with all the politics of this economy, still fine. We'll have the details when we do the numbers.

Speaker 4 It's been downright cold across much of the country the past couple of months, which helps account for what I am about to tell you.

Speaker 4 Housing starts, just like it sounds, and the number of new homes for which ground was broken, fell 9.8% between December and January.

Speaker 4 But weather aside, there are other signs that homebuilders aren't feeling quite so great about things right now.

Speaker 4 The National Association of Homebuilders Confidence Index is the lowest it's been in five months. Mortgage rates, as we know, are stuck near 7%.

Speaker 4 And tariffs are, of course, in the offing. Marketplace's Henri Epp is on the homebuilder uncertainty beat for us today.

Speaker 12 The NAHB did its survey right around the time President Donald Trump proposed and then paused 25% tariffs on imports from Canada and Mexico. So that really weighed on homebuilder sentiment.

Speaker 12 But builders are hoping for some good news too, says Odetta Kushi, deputy chief economist at First American.

Speaker 13 They're also thinking that there might be a better regulatory climate for building.

Speaker 12 That's the case for Bart Frisbee, president of Sterling Homes in Vermont, a state where lawmakers have loosened some permitting laws in the last few years to encourage more housing construction.

Speaker 12 Frisbee has a couple projects in the pipeline, including a brand new 32-home neighborhood.

Speaker 8 We're optimistic that the market's going to keep on rolling forward.

Speaker 12 But a lot of his lumber comes from Canada. So if President Trump puts an import tax on that, it will increase the price of houses dramatically.
And that's the last thing we need is to raise prices.

Speaker 12 Because a lot of prospective homebuyers are staying on the sidelines with mortgage rates around 7%, says Susan Wachter, a professor at the University of Pennsylvania.

Speaker 14 Builders are meeting. price resistance in the market and there's not much that builders can do because their costs are going up.

Speaker 12 Still, there's a strong need for new housing. We're about 1.5 million units short, says Danushka Naniokara at the National Association of Home Builders.
So the demand is there.

Speaker 16 The question is the affordable, the entry-level housing. The lack of that is pushing people out of the housing market.
And that's the issue right now.

Speaker 12 And if rates stay elevated and tariffs make building materials more expensive, she says, that issue won't go away. I'm Henriette for Marketplace.

Speaker 4 Etsy's had a rough week.

Speaker 4 Shares in the Artisanal Merchandise company were off better than 9% today, no small part because it reported a worse-than-expected fourth quarter, even as consumer spending was growing at the end of last year, as we've told you.

Speaker 4 And the company said it expects this quarter to be stuck in the doldrums as well, although that is not entirely Etsy's fault, as Marketplace's Kayleigh Wells explains.

Speaker 17 Etsy got its name from offering stuff like handcrafted candles and custom wedding guest books, but it also started offering cheap, mass-produced stuff. And that market is crowded with competition.

Speaker 18 The trick is that on Timu, the price is lower. Same thing with Amazon.

Speaker 17 Supply chain consultant Britton Ladd says he thinks Etsy has likely peaked.

Speaker 18 And so it's going to be very challenging for Etsy to do something that's so special that it pulls all those other customers away.

Speaker 17 Etsy's strategy so far is to double down on the artisanal stuff, says Sky Canavis. She's a retail analyst at eMarketer.

Speaker 20 That focus is likely to appeal to a smaller audience, and so we would expect to see their sales continue to contract in line with that.

Speaker 17 Because this trend of consumers seeking cheaper prices isn't going anywhere. Economics professor Brett House at Columbia Business School says years of high prices have put more strain on consumers.

Speaker 21 Credit card defaults are up, credit balances are up, and people are likely cutting back on some of their discretionary spending.

Speaker 17 The weird part is the fourth quarter is typically a strong one for consumer spending because of all the holiday shoppers, but this season was different.

Speaker 21 They also saw the election results in November and the increased policy uncertainty that came along with that.

Speaker 17 There is another way out, though. Consultant Britton Ladd says the best next move for Etsy might be getting acquired by Michaels or eBay.
I'm Kayleigh Wells for Marketplace.

Speaker 4 So let's talk about that last piece of sound in Kaylee's piece there. That line from the guy at Columbia about consumers reacting to the election results.

Speaker 4 Turns out, according to a new Harris poll, that since the election, more than 40% of consumers, 4-0% of consumers, have changed their spending habits to align with their beliefs.

Speaker 4 A quarter have stopped buying from their favorite brands, and about a third say they have no interest in supporting the economy this year and are looking for ways to opt out.

Speaker 4 Marketplaces Smith the Fields has more on that one.

Speaker 9 More Democrats say they've changed their spending habits recently than Republicans, according to the Harris poll.

Speaker 9 Timothy Werner at UT Austin says that makes sense given who's in power in Washington right now.

Speaker 19 During the first Trump administration, there was a campaign called Grab Your Wallet to try to get people to not spend money at any companies associated with Trump.

Speaker 19 And you saw no kind of dynamic that was on the other side being supportive of him.

Speaker 9 When people are angry with a company over its politics, he says it's typical for them to stop shopping there, at least for a while.

Speaker 9 Whereas when people support a company's politics, they aren't as likely to shop there more. Bruce Freed at at the Center for Political Accountability says economic boycotts are increasingly common.

Speaker 22 As our politics have become much more polarized and much sharper, you have consumers now who are taking a look very closely at what companies are involved with.

Speaker 9 The idea of opting out of the economy entirely, though, that feels new, at least to John Gerzma at the Harris Poll.

Speaker 23 Just stepping back for a second and thinking about how important consumerism is to America's GDP, you know, it's 70 cents on the dollar.

Speaker 9 So if a third of consumers were to stop spending, even just for a little while, he says that could have a big impact. But Timothy Werner at UT Austin says it probably won't.

Speaker 19 Especially as attention spans shorten and news cycles shorten, the effects of these things are really very short-lived.

Speaker 9 And for businesses, getting involved in politics through donations and lobbying is often worth it.

Speaker 19 Companies who spend more on lobbying secure more government contracts, they pay lower effective tax rates, they generally benefit from lighter touch regulation.

Speaker 9 And that can affect their bottom line in a way consumer boycotts rarely do. I'm Samantha Fields for Marketplace.

Speaker 4 Coming up.

Speaker 24 I really don't think that we've used voice in the way that many of us have dreamed about.

Speaker 4 Dreaming about actual AI voice assistants. But first, let's do the numbers.
Dow Industrial is up 71 points today, 2 tenths percent on the blue chips, 44,627.

Speaker 4 The NASDAQ lifted 14 points, about a 10th percentile, 20,056. The S ⁇ P 500 also grew 14 points.
That's almost a quarter percent on that index, 61, and 44.

Speaker 4 Intel has had a roller coaster weak stocks rose on news that competitors TSMC and Broadcom might take it over. Yet today, Intel dropped 6.10%.
TSMC down 9 tenths percent.

Speaker 4 Broadcom grew about a 10th percentile today.

Speaker 4 Electric and hydrogen truck maker Nikola has fought for Chapter 11 bankruptcy protection and has finally, the company said it has liabilities of up to $10 billion.

Speaker 4 Nicola plunged 39 and a tenth percent. That 10th percent is the important part there.
Tesla grew one and eight tenths percent. Thor Industries down two and two tenths percent.

Speaker 4 Telehealth company Hims and Hers Health announced it's acquiring Sigmund, also known as Tribe Labs, which will allow Hims and Hers to offer home lab testing shares up 17.5% on the day.

Speaker 4 Bonds up, yield on the tenure. Tinot down 4.53%.

Speaker 12 You're listening to Marketplace.

Speaker 1 And now, a next level moment from ATT Business. Say you've sent out a gigantic shipment of pillows and they need to be there in time for International Sleep Day.

Speaker 1 You've got ATT 5G, so you're fully confident. But the vendor isn't responding.
And International Sleep Day is tomorrow.

Speaker 1 Luckily, AT ⁇ T 5G lets you deal with any issues with ease, so the pillows will get delivered and everyone can sleep soundly, especially you. ATT 5G requires a compatible plan and device.

Speaker 1 Coverage not available everywhere. Learn more at ATT.com/slash 5G network.

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Speaker 13 and then the text. Honey, there's water in the basement.

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Speaker 4 This is Marketplace. I'm Kai Rizdahl.

Speaker 4 It is, as we have learned by now, folly to predict what might or might not happen with tariff policy in this second Trump administration.

Speaker 4 But if all goes according to the president's promises, in less than a month, there are going to be new 25% tariffs on all steel and aluminum that enters this country.

Speaker 4 Here with, by the way, the obligatory reminder that tariffs are paid by the importer and by extension and ultimately by the consumer.

Speaker 4 That said, there is some research from S ⁇ P Global Ratings that shows the impact of higher tariffs will be uneven. Some businesses are going to pass costs along, others might not.

Speaker 4 And as Marketplace Adjustin Ho reports, what side of that line a business falls on depends on who its customers are.

Speaker 10 Mavericks Manufacturing Partners in Escondido, California makes metal components for the energy and defense sectors.

Speaker 10 That's the sound of an employee at the company last April welding a piece of steel, one of the metals set to get hit with higher tariffs next month.

Speaker 10 Meanwhile, the price of the other metal, aluminum, is already rising, says Chris Blench, the company's CEO.

Speaker 27 The tariffs don't even have to be in effect. It's just the threat of them, and that's creating a tremendous amount of uncertainty.

Speaker 10 As a result, Blench says he's going to have to ensure that the prices he's charging his clients account for that uncertainty.

Speaker 27 So now when he writes up a bid for a project, we'll just have that one little asterisk on the material component that says, you know, depending on the pricing of that particular material at the time of award, we're going to pass on whatever our cost is.

Speaker 10 Blench says he can do that because his customers, largely the defense and energy departments, are so big that they're not going to sweat the increase. And besides, his competitors do the same thing.

Speaker 27 We're trying to compete on our efficiency and other credentials of our businesses, but when it comes to the raw materials, the price goes up 25%.

Speaker 27 All of the other competitors are going to be passing that along.

Speaker 10 Not every business has the leverage to do that. Satyam Pandey is chief U.S.
and Canada economist at S ⁇ P Global Ratings.

Speaker 28 He says if your customers are small businesses, for example, you you would probably want to think twice before doing that. In your renegotiations of the contract, you probably have to share the cost.

Speaker 10 There's also a third kind of business where passing along the cost of tariffs might not make sense at all.

Speaker 29 You know, beer has always been this affordable luxury. It should be very accessible.

Speaker 10 That's J.C. Hill, the owner of Alvarado Street Brewery, which operates a few locations in the Monterey Bay area in California.

Speaker 10 And because he sees beer as an affordable luxury, he doesn't want to pass along any cost increases to his customers, especially after all of the inflation in recent years.

Speaker 29 And in the past, we have been able to raise prices to not take that hit directly. You know, before inflation, I think now people are less likely to want to pay more.

Speaker 10 Hill says he's expecting the price of aluminum cans to rise, along with the price of stainless steel fermenters, kegs, and other equipment. He says he's keeping an eye out for used equipment.

Speaker 10 He doesn't want to have to do anything drastic, like lay off employees.

Speaker 29 You know, it might just be one of those things where we just have to wear it on the chin and hopefully, you know, ride it out.

Speaker 10 In the meantime, Hill says his goal is to keep growing the brewery's capacity a little bit every year so he can cover his costs by selling more beer. I'm Justin Ho from Marketplace.

Speaker 4 Technology moves quickly. We see that every day.
There's for that new gadget or software doing amazing new things. Unless you're talking about what are by now the old reliable Siri and Alexa.

Speaker 4 Upgrades were supposed to be coming for both this spring, but have been pushed back, which sets them back as they play catch-up to ChatGPT and all the new tech kids on the block.

Speaker 4 Marketplace's Megan McCarty-Carino looks at how voice assistants fell behind and where they might be going.

Speaker 11 When Apple unveiled Siri at an event back in 2011, the tech seemed revolutionary. I am a humble personal assistant.

Speaker 11 Scott Forstahl, Apple's senior VP of iOS Software, gave the demo.

Speaker 10 Let's say you need to set an alarm clock. Just ask Siri.

Speaker 10 Wake me up tomorrow at 6 a.m.

Speaker 11 Okay, I said it for 6 a.m.

Speaker 11 13 years later, and Sean Salisbury, a software entrepreneur in Oceanside, California, says that's about all he uses Siri for.

Speaker 30 Just simple reminders on my phone, just, you know, remind me to do this or remind me to do that.

Speaker 11 Siri has gotten updates over the years. You can now set two timers at once.
But Salisbury says it still struggles with basic requests.

Speaker 30 Like I'll get an email and I'll tell it like, hey, read me this email, the one that I have open. You know, read me this email.

Speaker 15 And it just reads me the last, the titles of the last five emails I've gotten.

Speaker 16 It just says start with your priority mail. From Facebook, security alert.

Speaker 15 Log in your Vista.

Speaker 30 I don't need to know my Facebook security alert.

Speaker 11 Alexa from Amazon, a marketplace underwriter, can also set timers well, but Grant Berry uses his eight echo devices to control home electronics like his lights or alarm system.

Speaker 31 I'm able to say what to do exactly using very precise language.

Speaker 11 Barry is a professor of language science at Villanova University, who also worked on Alexa technology for Amazon.

Speaker 11 He says improvements in natural language processing, the way computers understand human language, have helped voice assistants like Alexa become more conversational over time.

Speaker 11 But they're still more rigid than modern AI chatbots.

Speaker 31 Alexa can tell you jokes, but they're all really bad dad jokes. Ask her what her favorite color is.

Speaker 11 I like ultraviolet. It glows with everything.
That's her answer, every time.

Speaker 31 And you know someone hard-coded that in.

Speaker 8 Yeah, had to have.

Speaker 11 Most people don't need stand-up from their voice assistants, but Barry says using more sophisticated AI language models like those powering ChatGPT will make it easier to communicate with devices the way we do with people.

Speaker 31 It is natural for us to omit information or reference back to things that have been previously stated.

Speaker 11 You might ask, hey Siri, who is the president of France?

Speaker 32 Emmanuel Macron is the president of the French Republic.

Speaker 11 Then just use a pronoun. How long has he been president?

Speaker 32 It started May 14th, 2017.

Speaker 11 Okay, how many years is that?

Speaker 32 It started May 14th, 2017.

Speaker 11 Still needs some work. ChatGPT tells me it's been seven years and nine months.

Speaker 11 OpenAI's chatbot can carry on spoken conversations, as can Google Gemini, but today's top AI systems are typically thought of as typing-based, says Larry Heck, an engineering professor at Georgia Tech who has worked on voice assistants for Microsoft, Google, and Samsung.

Speaker 24 I really don't think that we've used voice in the way that many of us have dreamed about.

Speaker 11 He wants an AI conversation partner. He could ask for help, say, brainstorming his trip to Italy.

Speaker 24 The AI says, oh, you know, you're interested in staying at a medieval castle in Tuscany. Oh, you know what? I found a few places.
These are kind of cool. What do you think about these?

Speaker 11 Currently, he says, even the most advanced AI systems can only engage in so much back and forth. They find an answer or confidently make one up instead of asking follow-up questions.

Speaker 11 That's not great if you want a voice assistant you can trust to make purchases or appointments, potentially at a monthly fee.

Speaker 11 Even if voice assistants do improve, users like software entrepreneur Sean Salisbury might not bother.

Speaker 15 Right now, it's hard for me to think of what I would do because I've been frustrated with it.

Speaker 11 Hey, Siri, remind me to try you out again once you get updated. I'm Megan McCarty-Carino for Marketplace.

Speaker 4 This final note on the way out today, in which I read you a sentence from the minutes of the most recent meeting of the interest rate-setting Federal Open Market Committee, the one back in January, and then translate that sentence into regular person English.

Speaker 2 Here you go.

Speaker 4 Quote, the current high degree of uncertainty made it appropriate for the committee to take a careful approach in considering additional adjustments to the stance of monetary policy.

Speaker 4 You know, actually, that's pretty clear already, isn't it? Uncertainty, careful approach, it's all right there.

Speaker 4 For the picking.

Speaker 4 Our media production team includes Brian Allison, Jake Cherry, Jessica, Drew Jostad, Gary O'Keefe, Charlton Thorpe One Color, Toronto, and Becca Wineman.

Speaker 4 Jeff Peters is the manager of media production. I'm Kai Risdall.
We will see you tomorrow, everybody.

Speaker 4 This is APM.

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Speaker 13 and then the text. Honey, there's water in the basement.

Speaker 13 Not exactly how you pictured your Saturday. That's when you call us, Cincinnati Insurance.
We always answer the call because real protection means showing up, even when things are in the rough.

Speaker 13 Cincinnati Insurance, let us make your bad day better.

Speaker 13 Find an agent at cinfin.com.