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On the program today, the consumer dichotomy, immigration detention as a business, and then we'll go cheese shopping.

From American Public Media, this is Marketplace.

In Los Angeles, I'm Kyle Riznal.

It is Monday today, August the 18th.

Good as always to have you along, everybody.

We talk a lot about consumers on this program.

We do that because consumers drive almost everything that happens in this economy.

But far too often, and we're guilty of this sometimes too, we talk about consumers as a monolith, one cohort of people that behaves in one particular way.

That is, of course, not reality.

And as what's happening in this economy happens, inflation going the wrong way, the labor market slowing, tariffs, and all the rest, the differences in specifically which consumers are doing what is becoming more clear.

The data points at issue for us today are: number one, the July retail sales report up half a percent last month, so consumers still spending.

But also, number two, consumer sentiment, which the University of Michigan told us Friday, fell in early August a lot.

Marketplace's Mitchell Hartman squares that circle, the disconnect between how consumers say they feel

versus how they actually spend.

A dollar spent at a store adds just as much to GDP, whether it's a rich or poor person doing it.

But it turns out differences in spending levels between income cohorts, high, middle, and lower-income households, might help explain why consumer spending overall has held up so well.

Economist Deeron Patkey at the Boston Fed just published a paper analyzing credit card charges by income.

There's a lopsidedness in terms of the extent to which high-income consumers drive overall spending.

Patkey, whose views do not represent the Boston Fed, says the top one-fifth of households making $121,000 or more a year have increasingly been propelling the consumer economy, while lower-income consumers have fallen further behind.

The total spending attributable to high-income consumers is, in our data, seven to one greater than the total spending attributable to low-income households.

For years, lower-income households have been racking up credit card debt, and it's now significantly higher than before the pandemic.

By contrast, the top earners, their credit card debt has not yet caught up to 2019 levels, and those high-income households now have more room to spend the credit they have available.

Also, many higher-income folks have sources of income other than a paycheck, says Caleb Bruhn at Morning Consult.

They can benefit more from things like the stock market has been doing pretty well this year.

Give them a little bit of that wealth effect to spend more.

Here's the thing though.

When the divergence in spending by income started growing back in the pandemic, higher income folks were feeling a lot better about the economy than other consumers.

Now, says Joanne Hsu, director of the University of Michigan Consumer Surveys, all income cohorts are about equally pessimistic.

Higher income consumers are very worried about the trajectory of inflation, about business conditions, unemployment, the negative impact of tariffs on the rest of the economy.

And Shu warns: if they start to pull back, it's hard to see how consumer spending and the overall economy can keep growing.

I'm Mitchell Hartman for Marketplace.

On Wall Street today, there was a little bouncing around, nothing substantive, though.

My guess is the traders are keeping their powder dry for Jay Powell's big speech.

There's a central bank get-together on Friday out in Jackson Hole, Wyoming.

Wall Street, details, numbers, you know the drill.

There has been, you know, a lot going on, so we'll understand if corporate earnings season hasn't been top of mind for you.

We're just about wrapped up with only a couple of big names left.

Walmart, Target, Home Depot report this week.

And so far, it looks like corporate America is hanging in there just fine.

Thank you very much.

Q2 profits are on track for about 12% growth year over year.

That's according to the financial data analytics firm Fact Set.

Marketplace's Samantha Peters has that story.

Heading into this second quarter earnings season, analysts set a pretty low bar for corporate America.

Why?

That's an easy one.

It's the tariff rates that were so extreme.

Jeffrey Bookbinder is chief equity strategist at LPL Financial.

He says the threatened rates were so high and there was so little clarity about when they might take effect.

You know, just the overall kind of muddied tariff backdrop, I think, caused analysts to be really conservative.

Of course, we now know that they were too conservative.

With year-over-year earnings growth on track to more than double many of those analysts' predictions, a lot of that growth was driven by tech companies after their big investments in AI started to pay off.

But Stephanie Link, chief strategist at High Tower Advisors, says big banks also fared better than expected as the Trump administration eased oversight on that sector.

There's no question the financial services industry is seeing just better visibility because of deregulation.

And as Mitchell just pointed out, resilient spending helped consumer-facing companies defy gloomy expectations.

Caleb Silver with Investopedia points to airlines that opted to not even guess how the second quarter would go.

Well, they've changed their tune because they've seen pretty strong demand, especially on the high end.

If corporate earnings and sales keep growing, Silver says that could prevent layoffs and help blunt the impact of tariffs for consumers.

Sam Stovall with CFRA Research says that's something for the Fed to consider as it convenes in Jackson Hole this week.

It's almost as if the Fed are pulling petals from a daisy and really aren't sure where they're going to end up.

He says the labor market may be showing some cracks, and it's still not clear how higher tariffs will impact inflation.

But for now, corporate results are one bright spot in a mixed economic picture.

I'm Savannah Peters for Marketplace.

About five years ago, I went over to a place called Grand Central Market, kind of like a best of LA food court, a mile or so from Marketplace World Headquarters downtown.

And I went to talk to Lydia Clark about her business.

It's called DTLA Cheese.

Hey, how are you?

Howdy!

Really nice.

Nice to see you.

Elbow buff.

This is why I'm starting all my interviews these days.

Elbow up.

Well, you could maybe eventually get palm arm.

Palm arm, it seems, is what happens after you break down a bunch of wheels of cheese.

Lydia is all cheese all the time.

Back then, mid-2020, foot traffic was way down at Grand Central Market.

Thank you, COVID.

And the first Trump administration had put a 25% tariff on European cheeses.

And Lydia wasn't sure she would even make it into the following week.

Three years later, though, 2023, she had expanded, moved out of her cheese stall in Grand Central Market and into a standalone space and opened up a bar next door.

So, is business that good?

Is that what's going on?

I mean, I hope so.

I hope we've made the right decision.

So far, so good.

She and her sister own another cheese shop out in Claremont, California.

Anyway, we went back last week to say hi.

Lydia!

Hi!

How are you?

Good, welcome back.

Thank you.

It's been a couple of years.

I know.

I'll give you a hook.

I don't usually do this.

Well, I love that.

You know, after this many years.

Well, that's right.

Because

it's been like five plus years we've been talking to you.

Wow.

Time flies.

It feels like

I'm like 100 now.

You haven't aged.

Oh, stop.

Yeah.

You're too good.

I'll give you the easy first question.

How's business?

How you doing?

We are still open.

Okay, but don't you want to be doing more than that?

Yes.

I would like to be doing more than that.

We were talking about this interview this morning in our production meeting.

Yeah.

And

somebody said, you know, it seems like every time we talk to her, she's kind of barely hanging on.

Oh, right.

Of course, tears already.

Tears already.

It's been 30 seconds.

I know.

Well, we'll get it out of the way.

All right, okay.

But no, I mean, downtown has been hit hard.

Right.

And we'll get there.

Yes.

And I think it's...

It feels like really great, but there are so many moving parts to make a tiny

business work and I think like we just haven't been able to like

see the other side of it

but business is still we still get to wake up every day we still get to do this right the bar is still kicking right next door shop you know the tin to fish and champagne bar right yeah yeah right it's so cute it's a neighborhood bar um cheese cave you know in claremont we're celebrating 15 years

um so let's talk about downtown la yes right because in june with the National Guard and

people just not coming here, how was that for you?

Brutal.

I mean, it felt a little bit of, I think we just still are suffering from the PTSD of COVID.

And so when it was like, we're right across from a federal building, so come noon, there'll be a line for people for lunch.

But when you don't go to the office,

you don't have a line for lunch.

So then curfew.

You have a bar and you have curfew.

It's not the easiest.

And so you try to like, okay, all catering orders that first week were canceled.

So, and those are big things that come in, you know, $3,000 of cheese boards for offices, and that's a lot of sandwiches, and that's a lot of wedges of cheese to make up for.

So.

Obviously, you couldn't keep doing this if you weren't making money, but do you worry ever?

And I'm so not trying to be facetious here, but do you worry that you love your product too much and that you're hanging on because you love it too much?

And you could just go out to your place in Claremont, which has been there for 15 years, and you know, but here you're it's hard here.

Yes, in LA.

Downtown deserves a cheese shop.

And, like, we, I've lived downtown for 13 years.

Yeah, a long time.

Grand Central, we were there for 10 years, we've been here for two years, and so these are my neighbors.

Like, I walk my dog and I see everybody.

Like, oh, what's coming in the cheesecake this week?

Like, oh, what sandwiches do you have?

And we get so much affirmation from our regulars and from the things that are working

that like this is why like I can't disappoint them either okay now I have to be the downer

because I was listening back to the interview that we did in 2020 ish right when we came to see you at Grand Central Market because of tariffs specifically tariffs on foreign cheeses right here we are again with tariffs on cheeses.

Like, so of the, how many cheeses are in this case?

100?

100 cheeses.

How many of of these do you suppose are tariffed?

50.

And what are you doing with those tariff costs?

Are you passing them on?

Are you eating them?

A little bit of both.

I mean, right now, every time we get a cheese in, we have to line item, and you're just seeing.

Really?

You're not seeing anything go down anymore.

And you think it's like, oh, it's a dollar, it's a dollar, it's 50 cents.

So you like raise things up.

So you don't really feel that necessarily at the beginning.

But like Switzerland, 39, like, I mean, this will put cheesemakers out of business.

Cheese makers over in Switzerland is free.

Yeah, for sure.

I mean, U.S.

is top five of consuming cheeses from Switzerland.

But of this, like, it's like all of these beautiful cheeses that come in fourth quarter.

At this time of year, usually we're dreaming.

Like, what gets us through like the dregs of summer where you're like, this is the time everybody should be eating cheese for dinner?

So, wait, so like dreaming.

All those cheeses come in fourth quarter because that's the way cheese gets made.

Like,

it's been aged.

So, it's also

aged in, like, this is the time of year when it's like at perfection.

See?

So it's like after sometimes two years, three years, primigiano regggiano.

And like this is the time of year that this cheese gets to be here.

And now it's like, oh, you're going to pay 39%

more like on an already expensive cheese.

I don't like to say cheese is expensive.

It costs what it costs.

But was it a tariff?

Now it's making it expensive.

Do you worry about your own business?

Just to get back to where I started, this feeling I have every time I come in here that you're kind of hanging on by your fingernails.

yeah do you do you worry about your business as a as a going concern yes I think I've had to like let go of that worry because or else it will become all-consuming

so it's like how do you turn that and find something positive like life can suck at times but you know what's good is cheese so do I worry about it yes do I worry like about not choosing a stable career that could have retirement and like what does that look like for me?

I'm not getting younger.

But my sister and I, when we started the shops, it was like, yeah, we want to be too like old gray hair.

I already have a lot of it, so most of the way there, like slinging cheese.

Like, this is a joy.

We think of cheese, we dream of cheese, like all of our crew, like all of our mongers, they love cheese.

And seeing like the excitement from their eyes, too, when we get these wheels of cheese that we wait all year for.

You know, and it's like, oh, we're cutting into this wheel of conte.

You know, conte's been made for a thousand years.

And you're saying, like, now it's got to cost this.

And I have to explain like why why we're not going to get this because now it's like $20 more, you know, $30 more.

And you do that across the way.

And, like, Cheesecake, like, usually gets these really beautiful Panettones from Italy, but it's like now asking the family to pay even more for the special Panettone.

It's like, what risk?

So, we're having to make decisions out of risk and fear, which we've never had to do in 15 years.

And that sucks.

I need, I was thinking this morning about cheeses in you.

I had a really lousy manchego the other day.

I need a good manchego or something like it.

Yeah.

Talk to me.

Well, I think let's do, I want to say like two different things.

Okay.

So, one doing something mixed milk like the Campo domantoban, so still same region, but cow, goat, and sheep.

Okay.

And then Sweet Annie, made in Wisconsin, and we call her the Manchego of the Midwest.

Oh, I will do Manchego of the Midwest.

Yeah.

Yes, let's do that one.

Give me a minute.

I don't even know what it measures out to be.

A finger slice, it's a quarter pound.

Yeah, quarter pound.

Cool.

Okay, so I wound up buying a half a pound or so, but I left it in the fridge at work over the weekend.

It is coming home with me today.

Coming up.

They have good pay, they have good retirement.

They have good insurance.

Immigration detention is a business, people, and they are hiring.

First, though, let's do the numbers.

Dow Industrial is down 34 points today, less than a 10th percentile, 44,911.

The NASDAQ basically flat, 21,629.

The S ⁇ P 500 flat as well, $6,449.

As I said, holding their fire for Jay Powell on Friday.

Savannah Peters was talking about corporate America doing just fine.

That includes big banks.

Wells Fargo charged ahead 4 tenths percent today.

Citigroup rang up about 6 tenths percent.

Lots of retail earnings coming from big box stores today.

Could be another read on American Consumers.

Home Depot slid 1.2%.

Target jumped one and 9 tenths percent.

Walmart pocketed about 7 tenths of 1% today.

Bond prices fell.

The yield on the 10-year T-node rose 4.33%

is the number.

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This is Marketplace.

I'm Kai Rizdahl.

Our macroeconomic number O of the day.

Today is 31, followed by 15 zeros.

That's 31 quadrillion, and it's the number of British thermal units worth of energy, BTUs in the vernacular, that the United States exported last year.

It is also, the Energy Information Administration says, a record.

Almost all of it came in various flavors of fossil fuels, of course, crude oil, liquefied natural gas, propane, butane, ethane, a little bit of coal.

All in all, it represented about 30% of total U.S.

energy production.

Daniel Ackerman has more now on how 2024's boom in energy exports happened and whether it might happen again.

Lots of domestic supply and plenty of eager global buyers made last year a good one for energy exporters, says Mark Finlay of Rice University.

He says the supply story is a simple one.

In a nutshell, it's shale.

Finlay says shale fracking continued to yield oil and gas on the cheap.

Meanwhile, Europe was looking to buy natural gas from places other than Russia following its invasion of Ukraine.

That's opened up new market opportunities for U.S.

suppliers.

OPEC provided another opportunity.

The cartel limited its oil production last year, says Jeff Kralowitz of the research firm firm Argus Media.

So you had this confluence of all these factors where the world needed U.S.

energy and the U.S.

had more energy to provide.

But Kralowitz says the outlook for U.S.

energy exports is a little bit of a mixed bag.

He says there's still a lot of global demand for liquefied natural gas, and U.S.

firms are having no problem locking in long-term contracts to supply it.

But oil prices have been falling this year.

At these prices, it's hard to see Permian and other U.S.

shale crude production rising very much this year.

But even with slow production growth, Hugh Daigle of UT Austin says there still should be plenty to export.

Because demand here in the U.S.

is just not rising as rapidly as we're seeing the production output rise.

And so?

I think that we'll continue to see strong exports of American energy, maybe not to the degree we saw last year.

Another thing that could affect energy exports is what kinds of energy the U.S.

consumes, says Tom Tsang at Texas Christian University.

The Trump administration is blocking the permitting for new wind and solar projects.

If we're going to reduce the growth in green energy, you know, the most flexible additional supply out there is natural gas.

Which means some of that gas that would have been exported might be burned here in the U.S.

instead.

I'm Daniel Ackerman for Marketplace.

Republicans in Congress and the Trump administration put $45 billion in their tax cut and spending law for more immigration detention facilities.

They're going to use the extra room in service of the government's promise to deport a million immigrants a year.

That is, by any measure, an historic investment in detaining and removing people from this economy.

Marketplace Elizabeth Troval spent some time looking into who's going to profit.

Two companies are likely to gain the most from the more than tripling of ICE's annual detention budget: Core Civic and the GEO Group.

These private prison companies held their Q2 earnings calls earlier this month.

Good morning, everyone.

Good morning, everyone, and thank you for joining us.

I'll admit,

these calls

are dry.

Second quarter 2025 earnings results.

But they're a window into the opaque world of immigrant detention.

If you've seen the footage of people being arrested on the streets and at workplaces, you can guess.

These companies running the detention centers they're sent to are raking it in.

Core Civic CEO, Damon Heineger.

We are in an unprecedented environment with rapid increases in federal detention populations nationwide.

Core Civic's revenue from ICE last quarter went up by 17%

thanks to the highest detention populations ever recorded by ICE, which has been our largest customer for over 10 years.

ICE pays roughly $165 a day for each person held in detention.

More arrests mean more money for these companies.

And that's exactly what GeoGroup's George Zoli told investors happened in Q2 with the highest level of ICE utilization in our company's history.

Now they're making thousands of more beds available as billions in new funding comes through.

Core Civics, Heineger again.

The intensity has really picked up.

Under new contracts with ICE, private prison companies are filling up detention centers in Texas, California, New Jersey, Michigan, and Georgia, bringing in millions in revenue.

And more contracts for new detention centers are on the horizon.

Already, some 180 detention facilities are used by ICE to hold immigrants.

That detention space is concentrated in rural Louisiana and Texas, in places like Polk County.

Deep East Texas.

We're a very rural county, mostly lots of timber and pine trees.

Sidney Murphy is Polk County judge, where median household income is under $60,000 and the employment rate is about 45%.

Limited resources all the way around.

Since the Trump administration ramped up detention and deportation, Murphy has already seen it impact the local economy.

There is an increase in employment out there of our local residents.

The Immigrant Detention Center is a top employer in the county.

It's run by a private company called Management and Training Corporation.

She says those jobs.

They have good pay, they have good retirement, they have good insurance.

And here, for a rural community, that's big.

Other major employers in the county are the prison, a casino, and wood and paper manufacturers.

But the detention center brings more than just jobs, Murphy says.

The county gets paid based on how many people are locked up.

We receive a portion of the funds that ICE is paying.

It's revenue for us.

While detention centers can bring jobs and revenue to a place like Polk County, experts say there's no evidence that they bring about a big economic boom or have a multiplier effect on the local economy.

And if we zoom out a bit, there's a bigger economic story at play, the labor story.

Because when I ask immigration attorney Jose Luis Martinez about who he sees detained and up for deportation in Polk County.

A lot of times with my clients, it's the primary breadwinner that's the one that's detained in detentions.

While the government is paying $165 a day to keep that person locked up, that's one less person working a hard-to-fill job, one less person in the U.S.

labor force, a labor force that needs to expand in order to drive economic growth.

I'm Elizabeth Troval for Marketplace.

This final note on the way out today, a quick follow-up to the conversation Greg Ipp and I had on Friday, the changing nature of American capitalism in the Trump era.

Bloomberg has been all over this story that the White House is thinking about converting some or all of the grants that the Biden administration made to Intel as part of the CHIPS Act, about $8 billion worth or so, into equity, that is to say, shares of stock.

If it happens, it would make the federal government one of that company's biggest shareholders.

Amir Babawi, Caitlin Esch, John Gordon, Noya Carr, Amanda Peeter, and Stephanie Seeker are the marketplace editing staff.

Kelly Silvera is the news director, and I'm Kyle Riznah.

We will see you tomorrow, everybody.

This is APM.

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