Yes, the U.S. owes itself money

Until further notice, the only economic certainty around here is uncertainty. Stories along those lines on the program today.
From American Public Media, this is Marketplace. In Los Angeles, I'm Kai Rizdahl.
It is Tuesday today.

This one is the 4th of February. Good as always.
Good to have you along, everybody. Another trade and tariff war? Uncertain, although likely.
Interest rate cuts? Uncertain, although becoming increasingly unlikely. See also trade and tariffs.

Control of the financial plumbing of this economy, as we talked about yesterday, uncertain.

And with uncertainty comes volatility, the chosen manifestation of which for us today is crude oil. Reuters reports President Trump is going to crack down on Iranian oil exports.

There are the tariffs on Canadian oil that are likely or

possible or probable. It's uncertain in a month or less.
But the oil market and oil prices are complicated. So Marketplace's Elizabeth Troval goes global to get us going.
2025 was poised to be kind of chill when it came to the balance of global oil supply and demand, says Opus analyst Tom Closa.

This was supposed to be a year where it would be very, very close on balances. In other words, supply and demand would be pretty much even with maybe a little bit of extra supply.
On the demand side, Joe Delora with RoboBank says the biggest consumers of crude, China, the U.S., and the EU, have seen demand flattening out.

The narrative that oil demand is growing for like the past 50 or 70 years is shifted, okay? Period.

At the same time, on the supply side, there's plenty of new oil being produced. You have Guyana, you have Brazil, you have Canada, and you have the U.S.
And you can't forget about OPEC+. They're trying to find room in the global market for the additional oil they've been sidelining.
Mark Finley is with Rice University. That group has a plan that they endorsed again just yesterday to begin putting more barrels back into the market on the back of, you know, successive rounds of production cuts that the group has implemented going all the way back to 2022.
They're trying to regain some market share. The question is, will the market allow them to do so without weakening prices further?

Because when we look at the oil price forecast, Tom Closa says 2025 could turn out pretty well for consumers.

You were likely to see the highest prices of the year in the first 100 days and you'd see the lowest prices in the last 100 days.

That's right. The trend has been pointing towards lower oil and also gasoline prices, which President Trump has said he's wanted.
All he has to do is leave the market alone. I'm Elizabeth Troval for Marketplace.
Uncertainty factors heavily into how much consumers and businesses are willing to borrow, of course, about which this.

We got a new read on the state of lending in this economy this week of the Federal Reserve's Senior Loan Officer Opinion Survey.

It asks bankers about their lending standards and the loan demand that they are seeing.

The upshot is that lenders are generally seeing less demand for mortgages.

Not a huge surprise given mortgage rates right now, But they are seeing more demand for business loans. So Marketplace's Justin Ho called a couple of bankers to ask him what's what.
At Community Spirit Bank in Red Bay, Alabama, demand for business loans has held fairly steady over the last few years, says CEO Brad Bolton. That's because many of his clients need to borrow to fund their day-to-day operations.
If a logger or someone in construction, if their bulldozer is worn out, they've just got to buy it. But recently, Bolton says some customers have been asking about whether interest rates will fall this year because they're trying to figure out when they should borrow more.
Do I go ahead and make this purchase now, or do I wait six months where maybe rates will be cheaper? Bolton says that's a sign that businesses want to borrow. Alice Frazier is the CEO of the Bank of Charlestown in West Virginia.
She says companies have had several years to figure out how to survive amid high interest rates. As a result...
If they've got the opportunity to grow their business, I think they're looking to go ahead and invest today and get that new revenue sources going for them. Fraser says it helps that the economy in many ways is more certain.
For instance, inflation has cooled. Labor is easier to find.
If I'm a maid service company and I need another car and a couple more people, I'm going to make those investments because now I know what my cost

of labor is going to be because it's settled down. I know what the cost of the car is going to be because they're more available.
There's still plenty of uncertainty going around, too. Robert James II is CEO of Carver Financial Corporation, which owns banks in Alabama and Georgia.
He says businesses that receive money from the federal government, like health care clinics, are hesitant to take out loans. Because if federal funding freezes or dries up.
Then that's going to impact their cash flow, which is going to impact their ability to service any debt that they take on. But James says one thing he's not worried about is his local economy.
There's continual high demand for real estate because we have so much in migration to the Sun Belt. We have strong

job creation in our region. James says that means demand for loans in this region is likely to keep

growing. I'm Justin Ho for Marketplace.
One might think, given all the aforementioned uncertainty,

the traders on Wall Street would have been a tad reserved. Today,

one would have been wrong. We'll have the details when we do the numbers.

Big week for labor market data this week is the January unemployment report comes to us on Friday. Today, it was JOLTS, the Job Openings and Labor Turnover Survey.
Lots of data in there. Of interest to us today is the hiring rate, which was flat in December.
If you were with us this past Friday, you heard The Washington Post's Heather Long describe the hiring rate in this economy as anemic. Labor economist Catherine Anne Edwards is worried about that same thing.
She wrote about it in Bloomberg the other day, so we got her on the phone to explain. Catherine, welcome to the program.
Thank you so much for having me. The labor market, as most anybody who is even passingly familiar will tell you, seems pretty good.
You differ, I guess. The unemployment rate is certainly good, but it is not predicting, I would say, strength in every other indicator that we have of the labor market.
You like this thing called the hiring rate. What is it and why do you like it? The hiring rate measures how many workers are being hired into the labor market.
Say more about that. Yeah.
So it's, I think the number itself probably means nothing to people. If I were to tell you the hiring rate is 3.3, like it's not flashing across Times Square.
Oh my God. Right.
It's really just the relative movement of hires lets you know whether or not firms are expanding their workforces. So put that into context, right? One of the things you point out in this piece, and we've said actually through a good part of the pandemic, is, you know, the labor market, a key part of it in terms of workers having power is their ability to leave their jobs with confidence that they can get another one.
Exactly. And when we were coming out of the pandemic, we called it the great resignation, the great reshuffle.
But that was the peak of the hiring rate in the U.S. that so many workers were changing jobs, moving to different jobs.
And that's associated with wage growth. if you can't have that outside offer, if you don't have that leverage, not only can you not leave, but you can't kind of bargain for higher wages as easily.
That outside offer is a really important part of you being able to ask for more. Just to that word you used, leverage, it's the headline of this piece, and writers obviously don't get to choose their own headlines, but you say the headline of this piece is the American worker has lost all leverage in the job market.
And that's going to strike some people because for a long time in the beginning of the pandemic, it was the workers have all the leverage, right? Even as recently as, I don't know, a year, 18 months ago. It was certainly a seller's market and one that was very beneficial for a lot of American workers and their families.
But, you know, their power has shifted.

And it's not as if we don't know what's going on or if there's some mystery we have to unravel. The Fed, through raising interest rates, has been trying to weaken the economy in order to relieve the upward pressure on prices.
Every economist worth their salt, and I'm sure you had someone on your program say,

we're going to have to get the unemployment rate to 6% to really bring prices down. They were all proven wrong, but that's not to say the labor market has been unscathed.
And where you see the weakening of the labor market is on the hiring side. That is a weakness in the labor market.
It's not a high unemployment rate, but it's not nothing.

Right. With the acknowledgement that you're a labor economist and not a media critic, do you suppose we're covering the labor market wrong? Why, Kai, I would never.
No, go ahead, please. Welcome to my program, but also tell me I'm doing it wrong.
Yeah, yeah. So I made a list.
No, I think it's hard to connect all of the pieces of the labor market together and see not just where we're standing, but the direction we're facing. And if the media struggles with it, economists do too.
What I think is the truest thing about the economy right now is that nobody feels like we're normal again. Wow.
It's been five years and we're still not normal. It's been five years and we're still not normal.
We're not hiring like normal. We're not seeing wages like normal.
We're not seeing the same type of investment decisions. And at the same time, we're still watching price reports with bated breath.
So what I tell people is that on some level, you can imagine the labor market is kind of standing over a cliff with a strong wind at its back. I mean, it hasn't fallen over, but it's not in a good place.
And the kind of evidence of its insecurity is just this precipitous decline in hiring. And just to make it clear that I'm not trying to, you know, maybe be dramatic.
Who would ever accuse an economist of that? But, you know, in the Great Recession, hiring fell 1.3 points. The decline in hiring that we have seen is the exact same.

We're going to leave it there.

Catherine Edwards, the labor economist and economic policy consultant writing in Bloomberg most recently in a piece called The American Worker Has Lost All Leverage.

Catherine, thanks so much.

I appreciate your time.

Thank you. We're five short days away from the Super Bowl of American Marketing, also known as, I mean, you know, the Super Bowl.

As we mentioned the other day, $8 million is the going rate for a 30-second spot this year for companies to put their logos and brands front and center in the zeitgeist. And alongside the obligatory beer and car commercials this year, you can expect plenty of ads from big tech companies for their AI assistants or AI agents or even AI eyewear.
But selling artificial intelligence to an audience of more than 125 million people can be tricky, as Marketplace's Matt Levin reports. Commercials for AI products can produce as much backlash as buzz.
Remember this Google ad where a dad uses AI to help his daughter write a fan letter to an Olympic track star? And I'm pretty good with words, but this has to be just right. So Gemini, help my daughter write a letter telling Sydney how inspiring she is.
Audiences really disliked the thought of outsourcing a heartfelt letter to a robot. Google ended up pulling the ad from TV.
Kevin McTeague is a marketing professor at Northwestern. You've got to be very careful of the context in which you present your AI use case.
If it's seen as somehow dehumanizing us, then it's going to probably get a negative reaction. That may be why Google is planning commercials featuring how small businesses are using Gemini.

You can expect to see plenty of business-to-business AI ads on Sunday.

Think those Salesforce commercials with Matthew McConaughey.

Garish Malapragada at Indiana University says

even if the average Super Bowl watcher

won't ever interact with a Salesforce AI agent.

It's just that they want to tag along with some trendy thing going on in technology. There's also the question of whether companies will use AI to actually create their Super Bowl commercials in the first place.
Van Graves at VCU's Brand Center says that even with controversies over AI-generated commercials, some marketing agencies will dare to experiment.

Don Draper is in a rearview mirror at this point, and this is a way to show that we are on the cutting edge of technology.

Those Super Bowl commercials, remember, they're also commercials for Madison Avenue.

I'm Matt Le in the Super Bowl. Coming up! Our insurance adjuster, when we were looking for a place to rent, said, you know, it's going to be a year and a half to two years at a minimum.
The L.A. fires are over.
The waiting obviously is not. First, though, let's do the numbers.
Dow Industrials grew 134 points today, about three tenths percent, 44,556. The Nasdaq up 262 points, 1.4%, $19,654.
The S&P 500 up 43.7%, $6,037. We were talking about oil earlier.
ExxonMobil released better than expected Q4 earnings and oil production grew 20%. Shares were up 2.7% today.
Chevron, though, released lower than expected earnings, and oil production stayed flat year over year. Shares, nonetheless, up 2.6%.
The National Music Publishers Association sent a notice to Spotify today to take down more than 2,500 unlicensed songs. Spotify turned it up 13.2% today, reporting its first profit ever.
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I'm Kai Rizdahl. You'll be hearing the phrase debt limit or perhaps debt ceiling.
They're interchangeable. You'll be hearing them increasingly over the next weeks and months as congressional Republicans decide what political demands they're going to make in return for lifting the amount the federal government can borrow.
Fact is, the federal government does owe more than $36 trillion. Even in government spending terms, that is a lot.
But to whom all that money is owed? Well, it's quite a story. Here's Marketplace's Sabree Beneshaw.
Once upon a time in a land here, there lived a social security system that wasn't broken. It even had a surplus.
During the years from about, oh, 1980s, 1990s, particularly when the baby boomers were in their peak earning years and hadn't yet retired, that surplus became a little bit larger than usual. Eugene Sturley is co-founder of the Brookings Tax Policy Center and author of Beyond Zombie Rule, Reclaiming Fiscal Sanity in a Broken Congress.
So decades ago, Social Security had this pile of extra money. By law, it could only do one thing with it.

Social Security essentially bought government debt.

It lent its extra money to the rest of the government, which immediately spent it.

But the government told Social Security,

we'll pay you back when there's a rainy day and you need it.

That's what's going on now in Social Security.

Spending is exceeding revenues.

So the government is now paying Social Security back plus interest. This is intra-governmental debt being repaid, debt that one part of the government owes another part.
There is a lot that has not been paid back yet. We have $36 trillion in total governmental debt, and about 20 percent of that, or more than 7 trillion of that, is these intra-governmental holdings or intra-governmental debt.
Alex Arnon is director of policy analysis at the Penn Wharton Budget Model. This debt is special.
They're not really debt or securities in the way that we typically think of. These are non-marketable securities.
They cannot be bought and sold in the market like other debt. And because this debt is not out in the wild being traded in bond markets, it doesn't do things that bond markets do.
It doesn't affect the cost of borrowing. It doesn't affect the government's ability to borrow.
It doesn't influence mortgage rates. Brad Setzer is a senior fellow at the Council on Foreign Relations.
The intergovernmental debt is much more an accounting device. The real focus is on debt owed to the public, stuff that actually has to be financed with treasury bonds or bills in the market.
Out of the total $36 trillion the government's on the hook for, it owes $29 trillion to the public at large, anyone or any organization that holds a government bond. Most of it is held domestically by various financial institutions, pension funds.
Banks hold a lot of it. It's considered, of course, a very safe asset.
Dean Baker is senior economist at the Center for Economic and Policy Research. Some of it's held by the Federal Reserve Board.
About 15% of that's held by the Federal Reserve Board. The Fed bought a lot of U.S.
government debt during COVID and the Great Recession as a way to help out the economy. This debt is considered part of that $29 trillion that's held by the public.
But the Fed is holding less and less of that debt these days. 30% is held by foreigners.
So this would be foreign banks, foreign insurance companies. And foreign central banks.
The share of debt the U.S. owes abroad has also been shrinking from just under half in 2011 to just under a third in 2023 as more U.S.
debt is consumed here. But the breakdown of the U.S.
national debt is less

important than its size. What's a matter of concern is the overall fiscal sustainability

of government. Lawrence Kotlikoff is a professor of economics at Boston University.
The national

debt is currently 20 percent larger than the size of the entire U.S. economy.
And he says

it is on a growth path that is not sustainable.

In New York, I'm Sabri Beneshore for Marketplace.

there's There's rain in the forecast for Los Angeles this week, which is good news for the fire weary among us.

But even with things calm for now, those most affected by the Eaton and Palisades fires can't start rebuilding quite yet because there are countless truckloads of ash and debris that have to be carted away from all the properties that were damaged or destroyed. And as Marketplace's Kaylee Wells reports, that is a complicated process.
Sue Pascoe left her house in the Pacific Palisades with not much more than a change of clothes. She expected to be back home quickly.
We will go out tonight and we'll be back tomorrow. So you throw a few things in through the dog's dishes and, you know, just packed a couple pairs of underwear and that was it.
Everything else she left behind. After the smoke cleared, when she visited her property, she found a ceramic duck and a vase.
The rest is ash. She says the very first thing that she and her neighbors need to do in this cleanup process is find acceptance.
People need to go in. They need the closure.
They need to go in and say, OK, it is gone. There's nothing I've got here.
I've got to get started. These homes burned nearly four weeks ago.
But Pascoe says some of her neighbors still haven't seen just how bad the damage is yet. She says just waiting in line to get into the neighborhood can take up to three hours.
You have to have the police check your ID and make sure you belong. Her husband had to do that twice to show the insurance adjuster their burned out property.
People work. You know, they're taking time off for work to do this.
The homes of Pascoe and her neighbors are in phase one of FEMA's cleanup process, which is all about removing hazardous waste. Because this is a matter of protecting public safety in the environment.
Carl Banks is deputy incident commander at the U.S. Environmental Protection Agency, which is leading this process of clearing hazardous stuff.
Such as batteries, cleansers, paints, oils, ammunition, that kind of thing. All told, the EPA is sending out more than a thousand people in hazmat suits to comb through the wreckage by hand.
He says it's EPA's largest response in our history for a wildfire. The only thing that any of us who've been doing this for a couple decades now can compare this to is Katrina.
As in the 2005 hurricane that destroyed much of the Gulf Coast. President Trump ordered the EPA to finish the process in 30 days.
Banks says the agency is doing everything it can to follow those marching orders, but won't give an official end date. Once the EPA has given its blessing to enter a house, phase two can begin.
Phase two is the general debris removal. Mark Pastrella is the director of L.A.
County's Department of Public Works. Our role is essentially as an administrator of the program.
Phase two is all the stuff that is not hazardous. Dead trees and cracked house foundations and lots of ash.
The Army Corps of Engineers is in charge of handling that part. It'll do the job free of charge, though it will take any insurance coverage you have for debris removal, and you have to sign up through L.A.
County. We go on that property to do debris removal without your permission, we'd be trespassing.
So in order to relieve that, we have a program called the Right of Entry Program that property owners need to enroll in. To sign up, you have to fill out a 12-page form and send it in to L.A.
County by the end of March. You get to be higher up in the line if you convince your neighbors to fill it out fast, too, because the Army Corps is prioritizing blocks where it can do lots of properties at once.
And then you wait, because Banks says the Army Corps expects phase two to take much longer. 80 to 90 percent of the properties will have their debris removed within a year or less.
And that's just to turn the property into a blank slate. Fire victim Sue Pascoe is expecting to live in her temporary apartment for a while after that.
Our insurance adjuster, when we were looking for a place to rent,

said, you know, it's going to be a year and a half to two years at a minimum,

if we're lucky, if we're lucky.

You can get your property cleared faster,

but in that case, you have to pay for it yourself.

And the cost of that starts at around $10,000.

In Los Angeles, I'm Kaylee Wells for Marketplace. This final note on the way out today, a math pop quiz.
What do you get when you multiply 272 million times 50? 50 cents, specifically. Well, you get, first of all, $136 million, but you also get Waffle House announcing today it's adding a 50-cent-per-egg surcharge on each of the aforementioned 272 million eggs it serves every year.
It is bird flu-induced, mostly, that shortage. Our digital and on-demand team includes Carrie Barber, Jordan Mangy, Dylan Mietanen, Janet Wynn, Olga Oxman, Ellen Rolfes, Virginia K.
Smith, and Tony Wagner. Francesca Levy is the Executive Director of Digital and On Demand.
And I'm Kyle Rizdahl. We will see you tomorrow, everybody.
This is APM. free sources of financial and economic news.
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