Time to sell!

Prices go up and prices go down. True.
Lately, though, up. From American public media, this is Marketplace.
In Los Angeles, I'm Kyle Rizdahl. It is Thursday, today, the 13th of February.
Good as always to have you along, everybody. Inflation comes in two flavors, if you will.
What consumers pay, the Consumer Price Index, which we learned yesterday, is running at 3% a year. Sticky, bumpy, it's just taking its sweet time getting down to the Federal Reserve's 2% target, as you know.
Today, we learned the second flavor of inflation at the wholesale level is sticky, too. The Labor Department told us the producer price index rose 4 tenths percent December to January, 3.5% year on year.
There are the standard volatile categories, fuel and food. Yes, fine.
Eggs, too. But some other categories that also got more expensive do offer some insights into the broader economy.
Marketplace's Justin Ho offers transportation and warehousing. Shipping and storing goods often gets more expensive in the month of January, says Jason Miller, a professor of supply chain management at Michigan State University.
At the start of the year for different parts of the transportation and warehousing sector, they institute new pricing. New year, new contract, which means that kind of price increase will likely level off.
Historically, there's this big jump in January and then things move much more slowly throughout the year. But transportation and warehousing companies have also been raising prices because of higher demand.
Zach Rogers, a professor at Colorado State University, says that's because many businesses have been stocking up on extra goods. More inventory is coming into the country in January, and we saw this in late December as well, than we normally would have.
Rogers surveys companies about their inventory management, and he says many are trying to re-up after the holidays. But Roger says companies are also concerned about the prospect of new tariffs.
One of the things you really don't want to deal with as a supply manager is uncertainty. And so they brought all this inventory in.
What does that do? Especially on the warehousing side, it's really inflated our stores of inventory and warehousing prices. Consumers could also be driving demand for warehouse space by buying big ticket items like appliances ahead of any potential tariffs.
Sarah House, senior economist at Wells Fargo, says if that's the case, that's not a great sign about where the economy is headed. If it's a pull forward of activity, that just means we could see a steeper drop off later in the year.

But Howe says there are other reasons consumers are buying expensive, durable goods.

Financing conditions are a little bit easier for those big ticket purchases.

And at the same time, some goods are getting a little bit worn out if they were bought in the early part of the pandemic.

And if transportation and warehousing costs are going up

because consumers feel confident enough to buy those things,

Howe says that's a good sign.

I'm Justin Ho for Marketplace.

On Wall Street today, everything's still fine.

Better than fine to judge by the major indices.

We'll have the details when we do the numbers. The tariff word du jour is reciprocal.
President Trump signed an order today that could see the United States raise its import taxes on basically everything from everybody as soon as April the 2nd. That's on top of the 25 percent tariff on all steel and aluminum imports, the extra 10 percent tax on all goods from China and come March, maybe a 25 percent tariff on Canada and Mexico.
I rehash all those details simply to say that there are a lot of trade policy balls in the air right now, which means there are a lot of balls in the air for business owners, too. Marketplace's Kristen Schwab made some calls.
Grant Hennigan has been preparing for this tariff moment for months, as in he woke up bright and early on November 6th, the morning after the election, to set his plan into motion. What we did here is we said, well, we would just get in as much as we possibly could.
And get it in from China before Inauguration Day. Hennigan owns Viridian, a small chain of patio furniture stores in North and South Carolina.
He thinks he has enough extra cushions and sofa frames to last till Labor Day. Meanwhile, he's also importing more from Indonesia to avoid Chinese tariffs.
But as it turns out, we're not the only people doing this, so it does create a lot of constraints on the supply chain. And that's made shipping more expensive.
Hennigan's spending 30 percent more sourcing from Indonesia. It means he took a risk and made a bet that so far hasn't paid off.
I think that's one of the frustrations importers like myself have is that it's hard to make good decisions. It is hard to make good decisions when the rules around you are changing.
We're just holding our breath, really. Daniela Velasquez de Leon is general manager at Organics Unlimited in San Diego, which imports 90% of its produce from Mexico.
There is not a ton she can do while she waits out this tariff delay. And not much she can do if it does go through.
Bananas don't last forever, so she can't stock up. And being physically close to the fruit farms is important.
So the bananas that we source from Mexico make it to the United States within two days. Two days by truck.
Now, if she starts importing from, say, Ecuador instead. It takes the fruit over two weeks to arrive to the United States.
Two weeks by container ship where the bananas may overripen. Business owners who import from Canada are also in tariff limbo.
Chip McElroy, CEO of McElroy Manufacturing in Tulsa, imports 60 percent of the parts he uses to make specialty construction equipment like machines that cut and fuse pipes. He needs hydraulic cylinders and aluminum castings that he can't really get anywhere else.
It's not like going down to a local hardware store and looking to buy a screw. Those kind of what I would call commodity items pretty much have to be built specifically for us.
And he isn't sure where else he'd source them from. Plus, looking for new suppliers is expensive.
He has to visit the manufacturers and they'd need to make new molds and tools. It probably is very easily, you know, a $50,000 to $100,000 cost to our overhead just to resource one engineered item.
And all of this, whether we're talking about business owners paying more taxes on bananas or paying more to ship furniture or paying more to find new suppliers, all of this involves paying more. And everyone I talk to, they say it's not just about paying more once.
They're worried about having to hike prices again after years of inflation. Here's Velasquez de Leon.
Right now, the math I've been doing is how much margin can

I absorb so that my customers aren't as affected. But the math isn't mathing.
She says at some point,

consumers will have to make up one of the persistent complaints about the post-pandemic housing market has been that those higher rates have been keeping a lot of would-be sellers from putting their homes with their 3% mortgages on the market because they ain't going to get no 3% again. Turns out, though, according to the latest monthly data from Zillow, those sellers do seem to be getting over that hesitation, as Marketplace's Kelly Wells reports.
The higher mortgage rates haven't gone anywhere, but Guy Sakala from Inside Mortgage Finance says impatient sellers who've been wanting to move for several years seem to be pulling the trigger anyway. If you want a downside, you can't wait forever.
Would-be sellers who sat on the fence have said, OK, it's time to move. There's also good news for the years-long housing shortage, because fewer sellers are looking to buy another house.
That's partly because the median age of sellers is the highest it's ever been at 63 years. They might be moving in with family or into assisted living or...
People have second homes, a smaller retirement home that's in a nice vacation area, and they're just going to move there full time. The homes that are going on the market have gained in value thanks to the housing shortage.
Timothy Savage with NYU's Shack Institute of Real Estate says that means even if sellers need to buy another home, it's worth selling anyway. Sellers are motivated, even in the face of high mortgage rates, to lock in the equity gains that they've earned.
Zillow also reported a record number of price cuts in last month's listings. That might seem odd, given the housing shortage, but Savage says that's actually just another sign of motivated sellers.
Sellers are eager to sell and take small haircuts, essentially to lock in the equity gains. The other surprising piece of this, economist Jessica Louts with the National Association of Realtors says it's all happening in the dead of winter.
Winter months are always more sluggish.

People don't necessarily want to put on their snow boots to go look at homes.

Which could mean even more movement in the housing market is on tap

for the busy season in the spring.

I'm Kaylee, are two of the big challenges in the American housing market right now. Here's another one.
Not enough supply. We need houses.
And there's a slew of ideas out there to address that. Changes to zoning, getting rid of red tape, you name it.
Here's another one that was actually talked about a time or two during the presidential campaign. Opening up federally controlled public lands to build houses.
Mike Albertus is a professor of political science at the University of Chicago. He wrote about the topic at hand for Bloomberg the other day.
Mike, welcome to the program. It's great to be here.
Give me a sense of scale, would you? How much land does the federal government own? Do you know? The federal government owns a lot of land, tens of millions of acres of land. And in the American West in particular, it owns even a greater share of all land.
It owns a bit over 50 percent of land in the West. And that's spread across the Forest Service, the Bureau of Land Management, the National Park Service, Fish and Wildlife, and the like.
The catch, of course, is that when you drive from like L.A. to, I don't know, Vegas or Denver or someplace, that's not what we're talking about, right? You don't want to build in the wild expanses.
We need land where people want to live. Of course, yeah.
A proposal to use federal land for building housing should focus really on metropolitan areas, both within city boundaries, as well as at the outskirts where new building is happening and where cities are expanding. Give me a for instance, what does that look like? So one example would come from Las Vegas.
Just at the end of last year, the Bureau of Land Management sold a small piece of land, 20 acres of land at a nominal price to Clark County in Las Vegas for the purposes of building single family homes for low income households. And the county now is going to maintain the land and sell the homes to prospective buyers.
So that's the most recent transaction in a long line of federal land sales in the county that stemmed from the 1998 Southern Nevada Public Land Management Act. But there are many other examples as well.
And there are many growing metropolitan areas that are constrained by federal lands at the outskirts. There are those who will listen to this interview, Professor, who will point out rightly that part of the reason that these lands have not been developed yet is that they are set aside specifically for protection, either just for the natural resource or for recreation or what have you.
And that sound you hear is all those people screaming at the radio saying, what do you mean you're going to build housing on that land? You know? Of course. This is not a proposal or an

idea to bulldoze Yellowstone or build condos along the rim of the Grand Canyon or something like that. I think everyone is on the same page that a considerable portion of federal land is intended for conservation, preservation.
There's also, of course, a set of public lands that are used for things like grazing or for natural resource management. But we're talking about maybe 0.1 percent of federal land that tends to be, again, at the outskirts or within metropolitan areas.
It was interesting to me as I read up for this interview that this is broadly supported on a bipartisan basis, both President Trump and then Vice

President Harris supported during the campaign. Does anything else have to happen before land sales could conceivably start, even small ones like the one you talked about? That's right.
There are very few things, it seems like, at the face of it, that Americans will agree on across the aisle. But actually, this is one area where there does appear to be convergence between Democrats and Republicans.

One thing I would say is that there needs to be stipulations not only for the federal lands that are used for this sort of a proposal, but also how building would actually be done in terms of density requirements and affordable housing and the like. And so there, I think we'll see a little bit of a bigger divergence.
But there is the capacity for the federal government to do this on a selective basis already. We should emphasize here we're playing the long game.
None of this is happening tomorrow, right? That's exactly right. The housing crisis has been brewing since the Great Recession, and building has really never caught up with demand.
And as a result, there's a lot of pent-up demand., you know, use of federal land is not going to solve the housing crisis overnight.

It's going to take some time for this sort of thing to bite.

Professor Mike Albertus at the University of Chicago, his book on the subject at hand is called Land Power.

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

Thanks. It was great to be on the show.
Coming up. Are my groceries today going to reflect the PPI change I saw yesterday? Maybe not.
First, though, let's do the numbers. Dow Industrial is up 342 today, three-quarters of 1%, closed at 44,711.
The Nasdaq added 295 points, 1.5%, 19,945. The S&P 500 climbed 63 points, 1%, 61.15.

Tech stocks helped fuel the rally in the markets today.

NVIDIA gained 3.2%.

Alphabet grew 1.4%.

Sandal and clogged company Crocs posted higher than predicted fourth quarter results.

Sales somehow rose 4% that quarter. Shares today jumped 24% for Crocs.
Bonds up. Yield on the 10-year keynote down 4.53%.
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This is Marketplace. I'm Kai Rizdahl.

Justin was telling us about this morning's producer price index at the top of the program.

Wholesale inflation up again last month.

Two things struck us as we dug in a little bit deeper.

The price of vegetables, both fresh and dry, was down hard, about 22 percent. And fruit dipped, too, almost 14 percent.
But you look back at the consumer price index, what we consumers pay, as I mentioned, there was no such drop. Veggies were down just a little bit.
Fruit was actually up in the CPI. And what is up with that? Here's Marketplace's Samantha Fields.
If you look over time, the producer price index and the consumer price index do generally track one another more or less. At least if you look at the long, long run.
Still, Leah Brooks at George Washington University says if you go to the grocery store today and you want to know, are my groceries today going to reflect the PPI change I saw yesterday, then the answer is probably not so quickly. Why not? Anne Owen at Hamilton College says PPI measures the prices producers get for their goods and CPI measures the prices consumers pay at the store.
So what's in the middle of those two things are things like distribution costs and decisions that the retailers are making when they price the products for consumers. The price you pay for, say, apples at the store isn't just based on the price the store paid for those apples.
It also factors in what the store is paying for shipping and wages and rent. Not exactly an apples-to-apples comparison.
Plus, Owen says, retailers know that customers are very sensitive to prices going up, so they're careful not to raise or lower them too often. Especially if they think that the reduction in costs that they're experiencing will be just temporary.
And food prices can be highly volatile because of changes in seasons and weather. Jay Sigorski at Boston University's Questrom School of Business says there's another factor too.
We get a lot of our foodstuffs from outside the United States. For example, avocados, most of them come from Mexico.
Grapes, especially now in the winter, are primarily coming from places like Chile.

And PPI only measures things produced in the U.S., while CPI includes those imports too.

I'm Samantha Fields for Marketplace. Trade wars and tariffs aside, a lot of what happens in the global economy depends on how things are going in the Chinese economy.
And with the appropriate degree of skepticism about official economic data from Beijing, the Chinese economy grew right at the government's target of 5 percent last year. Unemployment, Beijing says, was 5.1 percent.
And officials over there say that proves the job market has, quote, stabilized. But as Marketplace's Jennifer Pack reports now from Beijing, that is not how people on the ground seem to be feeling.
On the outskirts of Beijing, dozens of men gather on a street corner known as the Ma Jujiao Day Labor Market. It's a place where people can pick up odd jobs.
Every few steps I take, a man approaches and asks, you've got work? How much are you paying? Among the job seekers is Wang Wei. It's hard to earn money this year, and manual work is not easy.
He's a demolition contractor. Like, if a mall decides to renovate, he goes in and strips out everything.
But there's a lot less renovation these days. The property market in China is still in a slump.
The jobs on offer today at the Majuqiao market? Mostly factory work, which doesn't interest job seeker Jiangshan. Their hourly pay is 20 yuan.
That's $2.70 an hour, lower than the city's minimum wage. China's manufacturing sector is dealing with a lot.
Trade tensions, war in Ukraine, and sluggish domestic demand. Again, demolition contractor Wong.
Now, there are fewer decent jobs and more job seekers. The story is the same for university grads.
Youth unemployment hit a record 21% in June of 2023. Officials stopped reporting the number for months, then rejiggered the calculation method to, quote,

more accurately reflect reality. The jobless rate for youths last year was 16%.

TikTok's Chinese sister site Douyin is full of gripes about the job market.

User Yang Xiguapi says in a video she's graduating from one of China's top 100 universities this June.

I will meet you when I says in a video she's graduating from one of China's top 100 universities this June. I've applied for jobs where there are a few thousand applicants.
But some firms, including listed companies, end up only hiring one or two people. Lucrative sectors that used to hire a lot of grads, including high tech and academic tutoring, have been severely curtailed by the government, so they've been laying people off.
Employers have the upper hand, as Douyin user A Little Octopus found out recently and posted this video. Just had a job interview and it's so outrageous.
They're offering me a monthly salary of 2,500 yuan. That works out to about $4,000 annually to teach six days a week.
Is it really that tough for college grads? That's what an influencer named Yang Mao Yue with 8 million followers on Douyin asks in this video. He implies that young people are maybe too picky.
Within three days, a million fans unfollowed him. Young job seekers face another hurdle, companies that go belly up and end up not paying workers.
Douyin user, a head full of latte, says she's a graduate from a top university. I've had three jobs in the past two years.
Either the company laid me off or it ran out of money and couldn't pay me. And I'm struggling to live in Beijing.
Tell me, is it because I didn't work hard enough? Not getting paid is even more common with manual labor. Demolition contractor Wang Wei says he and other laborers at the market only take jobs that pay at the end of each day.
For us, the employer must transfer on the spot via WeChat Pay. We're very realistic.
Meanwhile, soon-to-be graduate Yang Xiguapi says she's lowering her job expectations.

Only crappy jobs are available, and I'm willing to take those.

I'd work hard too, but I haven't been hired for anything.

She's among the estimated 12 million college students graduating into this job market this year.

In Beijing, I'm Jennifer Pack for Marketplace. This final note on the way out today about what's happening in and to this economy right now, an economy that I am obliged to remind you affects everyone.

A lot of what happens in American capitalism is far from perfect. We all know that.

But the same kind of capitalism that's so problematic is also what makes the United States, despite those flaws, the economic envy of the world. And that doesn't just happen out of nowhere.
There's a baseline set of conditions that foster the investment, the trust, and the confidence that make the American economy what it is. The institutions of this economy work in no small part because the institutions of this democracy work.
The rule of law, regulations, and processes clearly set forth. An expectation of fairness and of recourse when wronged.
And all of them are under assault right now. There are illegal takeovers of government systems.
There are illegal shutdowns of government agencies and departments.

There are mass firings in critical agencies. And there are private operatives assuming government power and government authority.
I said two weeks ago that this program is not going to chase everything that comes out of the White House. And we're not.
But the lasting structural damage that's deliberately being done to this economy

and to everybody in it simply has to be pointed out. We'll see you tomorrow, everybody.
This is APM.