That’s a headscratcher

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Speaker 2 On the program today, the quickly developing Trump Economy: where and how to rebuild after wildfire, and then

Speaker 4 rocks.

Speaker 2 Just a bunch of rocks from American public media. This is Marketplace.

Speaker 2 In Los Angeles, I'm Kai Rizdahl. It is Tuesday, today, the 21st of January.
Good as always to have you along, everybody.

Speaker 2 The first of the changes that President Trump is going to be bringing to this economy were revealed last night. We're going to talk about energy later on in the program.

Speaker 2 We're still waiting on his promised immigration crackdowns. That is a labor story, remember.
And the first slice of tariffs seems to be on track for February the 1st.

Speaker 2 In the Oval Office last night, the President said he's looking at 25% import taxes on Canada and Mexico, which are, not for nothing, this country's two biggest trading partners.

Speaker 2 Countless categories of goods cross our mutual borders. But tariffs would spell particular trouble for one very important industry that is spread across all three countries.

Speaker 2 Marketplace's Sabri Benishor starts us off.

Speaker 7 We trade all kinds of things with Canada and Mexico. Milk, timber, meat, minerals.
But the biggest out of all of them is cars and their parts.

Speaker 7 James Rubinstein is Professor Emeritus of Geography at Miami University.

Speaker 8 One-third of the engines that are put in our, still, our gas cars, cross one of the borders.

Speaker 7 The automotive supply chain is draped across the three countries like a cluster of spider webs. For electric cars too, take the Tesla Model 3.
Technically, it's 100% assembled in the U.S.

Speaker 9 But the Model 3 has 20% of its content from Mexico.

Speaker 7 Jonathan Smoke is chief economist at Cox Automotive.

Speaker 9 No vehicle that's assembled in the U.S.

Speaker 9 has more than 70% of its content coming from the U.S.

Speaker 7 A transmission or an engine can have hundreds or thousands of individual parts that are used to make other parts in multiple places. David Gantz is a fellow at the Baker Institute for Public Policy.

Speaker 10 It's not unusual for a part to go back and forth seven or eight times.

Speaker 7 The auto industry is like this because that's how it's developed over 60 years.

Speaker 10 Trade in autos and auto parts between Canada and the U.S. has been pretty much duty-free since 1965.

Speaker 7 Mexico was added in 1994 with NAFTA. The supply chain is spread out in part because some factories are just better at doing certain things and those factories are in different places.

Speaker 7 But it also represents a negotiated sharing of production, says Rubenstein. Take the original free trade agreement with Canada.

Speaker 8 The deal was that Canada could keep

Speaker 8 what we might call a fair share of production up there.

Speaker 7 Introducing tariffs of 25% into this decades-old Byzantine trading system would get difficult and expensive very quickly, says Cox Automotive's Jonathan Smoke.

Speaker 7 Take wiring that might go from Mexico to the U.S. to become a seat harness, then back to Mexico to become a seat, and then back to the U.S.
to actually get put in a car.

Speaker 9 So, does that mean 25% gets applied every time it crosses?

Speaker 7 Unclear, but according to Wolf Research, 25% tariffs on Canada and Mexico would increase the cost of the average new car by about $3,000. In New York, I'm Sabri Benishore for Marketplace.

Speaker 2 You know that big gathering of global elites that happens every year in Switzerland, the World Economic Forum in Davos? Plenty of big parties, gorgeous scenery, usually limited substance, though.

Speaker 2 This year's version is happening this week, and the economic mood there is grim. Ursula von der Leyen, the president of the European Commission, gave her big speech this morning.

Speaker 13 In the last 25 years,

Speaker 13 Europe has relied on the rising tide of global trade to drive its growth.

Speaker 13 It has relied on cheap energy from Russia,

Speaker 13 and Europe has too often outsourced its own own security.

Speaker 14 But those days are gone.

Speaker 2 And that was not all.

Speaker 13 The cooperative world order we imagined 25 years ago has not turned into reality.

Speaker 13 Instead, we have entered a new era of harsh geostrategic competition.

Speaker 2 The competition on Wall Street today not that harsh. Traders were just in a buy-in mood.
We will have the details when we do the numbers.

Speaker 2 The streaming wars are a change, and that change is being driven by the OG. Netflix reported earnings today.
They did find $10 billion in revenue October through December, 19 million new subscribers.

Speaker 2 But this is likely to be the last time the company publicly releases that key and very proprietary piece of data.

Speaker 2 Streaming companies have to date touted how many viewers they have and how many of them they add every quarter, but no more.

Speaker 2 Marketplace's Kristen Schwab looks at what kind of data Netflix might likely brag about instead and what that says about the aforementioned streaming wars.

Speaker 16 In one of Charlotte Howell's classes at Boston University, she gives students an assignment to reimagine streaming.

Speaker 17 And a bunch of them are like, how do we incentivize weekly releases? They are nostalgic for a way of viewing television that they barely remember.

Speaker 16 Turns out, a lot of people want the anticipation of a date with their TV. And that's what Netflix has been leaning into as it becomes less about binge watching and more about live events.

Speaker 16 There was the roast of Tom Brady and two NFL games on Christmas Day. It's branching out into new kinds of content.
Howell says it's a shift that reflects how Netflix is thinking about growth.

Speaker 17 We are nearing or maybe have approached a kind of a saturation point of subscribers or at least a turning point potentially.

Speaker 16 Netflix doesn't have a lot of room to grow subscribers. It already has more than 300 million, while Hulu, for comparison, has around 50 million.

Speaker 16 Michael Smith is a professor of information technology at Carnegie Mellon.

Speaker 19 Netflix is trying to change the conversation towards the metrics that advantage them.

Speaker 16 A few million new subscribers per quarter no longer looks impressive. Instead, Smith thinks Netflix will focus on different data points.

Speaker 19 How much revenue are we bringing in?

Speaker 20 So that's what they want to talk about.

Speaker 19 And then the second thing they want to talk about is user engagement.

Speaker 16 Because long term, streaming profits are about how eyeballs translate into ad dollars, says Tim Hanlon, CEO of the Vertair Group.

Speaker 11 So in terms of a growth story, that narrative is probably going to be

Speaker 11 more appealing to Wall Street.

Speaker 16 Hanlon says as the industry consolidates, this kind of information is going to become more crucial.

Speaker 11 The reality is that it's still very much a black box, and I think Netflix has a long way to go to convince the media industry that the numbers are what they are and that they're accurate.

Speaker 16 Which is increasingly important as investors search for clues about which companies are winning the streaming wars. I'm Kristen Schwab for Marketplace.

Speaker 2 So, here's an idea for something else you can subscribe to. Actually, you can just follow us.
Follow our podcast, would you?

Speaker 2 You can get it on the platform of your choice, obviously, or marketplace.org.

Speaker 2 The weather forecast for the Los Angeles area for the next couple of days is better, not too much wind, even a chance of a little bit of rain. We'll see if that actually shows up.

Speaker 2 But the thousands of people who lost their homes now have some decisions to make.

Speaker 2 Whether to rebuild, first of of all, and then if so, how, so that they might stand a better chance against the wildfire next time.

Speaker 2 Marketplace's Amy Scott has been talking to some people with hard-earned experience.

Speaker 21 When the Marshall fire tore through their neighborhood in Superior, Colorado, near Boulder, three years ago, Matteo Rebeschini was at home with his two kids.

Speaker 20 Very quickly, it became dark outside, and the smoke started coming through the walls.

Speaker 21 They were rescued by a passing police officer, but their house was destroyed. And he and his wife, Melanie Glover, had to decide what to do.

Speaker 20 At first, you are in

Speaker 20 survival mode, right? So you're displaced, you have lost everything, you have a lot of processes.

Speaker 21 They thought about selling the lot and starting over somewhere else, but they loved the area right next to acres of open space, but with easy access to Target and downtown.

Speaker 21 And then they found out their insurance would pay less if they didn't rebuild on the same site.

Speaker 20 We basically knew that, you know, if you want to go back and live there, and that's what we wanted, we need to build differently, we need to build better.

Speaker 21 Glover is an avid gardener, and she'd noticed that while the fire had destroyed the big plastic planters in the yard, the dirt inside the pots was still sitting there intact.

Speaker 18 And I was like, hmm, I need to build a house out of earth because it doesn't burn.

Speaker 21 She found a local company that makes blocks out of compressed sand and clay. As we're talking on Zoom, she shows me what looks like a brick wall behind her covered with fire-resistant plaster.

Speaker 18 So you've got two sets of these blocks with a space in the middle. That space in the middle is filled with perlite.
It doesn't catch fire.

Speaker 21 Because the blocks are air-dried, not fired, they have a low carbon impact. The company says they also reduce the energy needed to heat and cool the home by up to 75%.

Speaker 21 The new house also has triple pane windows and a ventless roof to prevent fire from getting inside.

Speaker 22 Sadly, there's not such a thing as a fireproof house, but what we'd like to think of is loading the dice in our favor.

Speaker 21 Andrew Mitchler designs passive houses, low-energy buildings that are also fire resilient. His firm designed several after the fire in Superior.

Speaker 22 The basic principles are making the home as airtight as possible, make the home more simple so there's less places for embers to go in.

Speaker 21 Mitchler says it can cost up to 10% more to build this way, though that's offset by the lower energy bills.

Speaker 21 He got into building after his father lost his house to a firestorm in Oakland, California in 1991. In the aftermath, people built much bigger houses, making it easier for wildfire to spread.

Speaker 22 We've seen a lot of these fires. One big house next to another big house.
It's like dominoes. One leads to another.

Speaker 21 Mitchler says, ideally, whole communities would follow fire-resilient building practices, but every house makes a difference.

Speaker 22 We remove one or two of those dominoes, meaning that we harden a few of those projects, that that protects their neighbors.

Speaker 21 But rethinking where and how we build is difficult in the midst of recovery, says Carolyn Kuski with Environmental Defense Fund.

Speaker 23 And unless we do that work ahead of time, it's very hard to make those changes at the moment of rebuilding when people really just want to get back to any degree of normalcy as fast as they can.

Speaker 21 After the Marshall fire in Colorado, officials waived stricter building codes for fire victims so they could rebuild more quickly and affordably.

Speaker 18 I think that most people did the best job that they could.

Speaker 21 Melanie Glover's family moved into their new earth block home home last July, and she says it feels solid, quiet, and safe in a way their previous drafty wood house never did.

Speaker 21 Would it survive another fire?

Speaker 18 I don't really want to say that.

Speaker 21 But she does feel confident that if it happened again, they would be safe until they could evacuate. I'm Amy Scott for Marketplace.

Speaker 4 Coming up.

Speaker 24 So far, we've removed probably at least 100 tons of CO2 from the atmosphere.

Speaker 2 With rocks, no less.

Speaker 2 But first, let's do the numbers.

Speaker 2 Dow Industrial is up 537 points today, 1.25%, 44,025 for the blue chips. The NASDAQ rose 126 points, 6 tenths percent, 19,756.
The SP 552 points to the good, 9 tenths percent, 6,049.

Speaker 2 We heard from Spree earlier about Mexico and Canada and the U.S. auto industry.
Magna International, based in Ontario, Canada, supplies auto parts to General Motors, Tesla, and Ford, among others.

Speaker 2 It accelerated 1.1% today. Indianapolis-based Allison Transmission, which makes parts for everything from emergency vehicles to school buses to tanks, charged up about a half percent today.

Speaker 2 Chris was telling us about Netflix and not reporting subscriber data. Netflix up one and three-tenths percent during the session, 14%

Speaker 2 after hours after those numbers came out. Bonds were up, yield on the 10-year T-notes down 4.57%.

Speaker 2 You're listening to Marketplace.

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Speaker 2 This is Marketplace. I'm Kai Ruzdahl.
You have heard, perhaps, that there's an energy emergency in this country.

Speaker 2 That's what the president says, even though the United States is pumping more crude oil right now than any other country on the planet, and by a good measure, too.

Speaker 2 Nevertheless, the White House wants more. Catch is, as Marketplace's Henrietta reports, that oil and gas investors are not exactly clamoring for a big expansion of domestic production.

Speaker 28 There was a time when investors wanted to see oil companies invest a lot of money in more production, back in the shale oil and fracking boom of the 2010s.

Speaker 18 There was this attitude and this outlook that if you weren't expanding drilling, then there was no way you're going to make any money.

Speaker 28 Ellen R. Wald is a non-resident fellow at the Atlantic Council.
She says this was the case during much of President Trump's first term.

Speaker 18 And so firms were producing more even at a loss, mostly because they were getting a lot of investment for that.

Speaker 28 Today, investors want something totally different.

Speaker 28 Tom Tseng at Texas Christian University says ever since oil prices recovered from the pandemic lockdowns, their message to oil companies has been, we've been supporting you for a long time.

Speaker 12 We want some reward now for doing that. You're going to pay us dividends and you're going to do share buybacks.
And obviously, the formula for doing that is to have net positive cash flow.

Speaker 28 Translation: Don't spend your money on new drilling projects, give it to us.

Speaker 28 So, the Trump administration can go ahead and ease regulations and permitting requirements and open more federal land to oil and gas exploration as the executive order promises.

Speaker 28 But says Matt Smith at the analytics firm Kepler, we may not necessarily see the response in production because oil is just too cheap to justify drilling more wells.

Speaker 28 But Smith says all bets are off if oil prices go up.

Speaker 30 That would be the thing that would drive on production, and that would likely be in the shale plays, right? They're kind of short cycle investments.

Speaker 28 Meaning, more drilling in the Permian Basin in West Texas and New Mexico, not so much in Alaska or offshore. But higher prices wouldn't be ideal for consumers, Smith says.

Speaker 28 Right now, he says around $75 a barrel is high enough for producers to expand their output incrementally, but low enough to keep prices down at the pump. I'm Henrietta for Marketplace.

Speaker 2 What I'm about to say is in fact true, conventional wisdom to the contrary. Last year, worker pay outpaced inflation by a full percentage point.

Speaker 2 In 2023, pay beat prices by nine-tenths of one percentage point. Even with prices still elevated as they are, that is good news for the American worker.
Now, why is that happening?

Speaker 2 Here's Daniel Ackerman.

Speaker 3 Elizabeth Heilig runs the West Newton Cinema in Newton, Massachusetts. Before the afternoon's films start to roll, she's doing one of the key chores around here.

Speaker 31 I'm tossing popcorn right now, which is an important part of the popcorn making procedure.

Speaker 3 Tossing makes the kernely bits no one wants fall to the bottom.

Speaker 3 And while scooping popcorn in the front of house is still done by hand, Heilig says other employee tasks are getting automated thanks to some new tech upgrades.

Speaker 32 The theater management system, or TMS, was literally installed on Wednesday of last week, and we've been working the kinks out. So it is currently up and running, you know, fingers crossed.

Speaker 3 The new software will let a single worker keep tabs on all six cinema screens at once.

Speaker 32 It will just eliminate a lot of running around and troubleshooting if we're aware of what's going on in every theater from a central location.

Speaker 3 That means more films running on time without more employees. In other words, a productivity gain, which is happening all over the economy right now, says Edward Hearn, lead labor economist at UKG.

Speaker 34 Labor productivity is not everybody's like leading metric they want to talk about because it's kind of wonkish, but I do think it really is kind of the engine that's driving things forward.

Speaker 3 Hearn says businesses have made lots of capital investment in recent years. Think new factory machines or cinema management software to help workers get more done.

Speaker 3 Plus, some firms are still letting employees work from home.

Speaker 34 Meaning people don't have to commute into the office or they have to, you know, travel a lot or anything like that that sort of saps their hours from doing actual productive work.

Speaker 3 And all this productivity is why wage growth keeps beating inflation, says Betsy Stevenson, a professor of economics at the University of Michigan.

Speaker 18 Real wage growth has to come from productivity growth. Because we're doing more with less, we get more in the end.

Speaker 3 American workers have been doing more with less for two straight years, says Stevenson. That's not the case in other countries.

Speaker 18 And that's been the miracle of the U.S. economy.
Americans don't realize how much other countries coming out of the pandemic have had productivity slowdowns and therefore have had real wage declines.

Speaker 3 Stevenson says, as long as productivity in the U.S. keeps climbing, workers can expect their paychecks to keep outpacing inflation.
So maybe an extra trip to the movies this month.

Speaker 3 I'm Daniel Ackerman for Marketplace.

Speaker 2 Okay, here's a story about climate change, steel, industrial byproduct, entrepreneurship, a little bit of thinking outside the box, and a dirt bike track. Here's Marketplace's Kaylee Wells.

Speaker 14 This patch of northwest Ohio is a quiet, sparse grid of farms. Right in the middle of it, just seven miles south of the Michigan border, is Delta Raceway.

Speaker 14 It claims to be the state's premier motocross track. But now, in the offseason, it's under a dusting of snow.

Speaker 14 Sean McCauley isn't here for dirt bikes anyway on this 20-degree day in January. He's here for the small rocks we're walking on.

Speaker 14 Under the snow, they've been spread out to cover the surrounding campground and pathways, and he's interested in what those rocks are doing for him.

Speaker 24 So far, we've removed probably at least 100 tons of CO2 from the atmosphere and hope to remove over a thousand tons by the time the process is complete.

Speaker 14 Macaulay's background is in geochemistry, and he's created his own business around these rocks.

Speaker 14 They're a man-made byproduct of steel production called slag, which just by lying here can capture and store carbon. That's where Macaulay's company, Alkali Earth, comes in.

Speaker 24 What we're doing is accelerating the natural processes that the earth uses to remove excess carbon dioxide with minerals.

Speaker 14 The company is a middleman connecting the steel mills that make this slag with the places that want to use it.

Speaker 23 So when you create steel, you can kind of think of it as like a massive soup.

Speaker 14 Yale University's Ella Milliken studies carbon storage. She says steel gets made by dumping all the reactive ingredients in a giant pot and making it really, really hot.

Speaker 23 The steel slag is essentially like, you can think of it as like the fat skim on top that you pour off that's just full of all of the reactive, really good stuff that you don't want in like a steel bar.

Speaker 14 Then all that steel slag goes into a pit to cool. The steel mill crushes it up into these little rocks and then they sit there as inconvenient piles of byproduct, frequently destined for landfill.

Speaker 14 But Milliken says slag is great at capturing carbon. She works with Yale professor Noah Planofsky.

Speaker 29 The steel slag has calcium in its most reactive form. That calcium is going to rapidly react with CO2, CO2 from the atmosphere and eventually convert it to calcium carbonate.

Speaker 14 The gravel-esque slag rocks around the racetrack are covered with an ashy brown substance. That's the calcium carbonate.
That's what the carbon turns into.

Speaker 29 The carbon is removed from the atmosphere and is irreversible on a thousand, even a million year timescale.

Speaker 14 Natural rocks capture carbon dioxide too. Steel slag does it many times faster and it's really cheap.
Actually, Sean Macaulay of Alkali Earth says steel mills will pay people to take it away.

Speaker 14 Macaulay and his company also subsidize the steel slag for buyers like Delta Raceway by selling carbon credits to companies that have carbon reduction climate goals.

Speaker 14 Businesses that bought carbon credits to help pay for the slag on the Delta Raceway include Shopify, the e-commerce platform, and Stripe, the digital payment firm.

Speaker 14 So it might be cheap, but the other thing about steel slag is that it's heavy and annoying to haul.

Speaker 24 There's over 1,200 truckloads that were delivered to this site, but the good thing is it's very close to the steel mill, and so the energy penalty wasn't that large in this case.

Speaker 14 For now, all of Alkali Earth's projects are in the Midwest, where the steel mills are. But Macaulay plans to scale up his business and thinks he won't have a problem doing it.

Speaker 24 Right now, we're the only ones we know of working with steel swag in this way.

Speaker 14 Now he's looking to China, India, Japan, and Australia for his next expansion. In Delta, Ohio, I'm Kayleigh Wells for Marketplace.

Speaker 2 This final note on the way out today. What pays $45,000 a year with benefits, offers extensive travel opportunities, and lets you enjoy the open road.

Speaker 2 If you said driving the Planters Peanut Nutmobile, this job is for you. 26 feet of a giant fiberglass peanut on wheels.
Hormel, which I learned today owns Planters, is accepting applications.

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Speaker 2 Our digital and on-demand team includes Carrie Barber, Jordan Manji, Dylan Mietinen, Janet Wynn, Olga Oxman, Ellen Rolfis, Virginia K. Smith, and Tony Wagner.

Speaker 2 Francesca Levy is the executive director of Digital and On Demand. And I'm Kylie Risdall.
We will see you tomorrow, everybody.

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