Hear that? It's productivity number noise

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Speaker 4 A whole new batch of tariffs is here, and the strain is starting to show up in the economy. From American Public Media, this is Marketplace.

Speaker 4 In New York, I'm Kristen Schwab in for Kai Riz Doll. It's Thursday, August the 7th.
Thanks for joining us today.

Speaker 4 We're starting today with two reports on jobs. The first is weekly first-time claims for unemployment, which we get every Thursday.
The Labor Department says claims went up a bit last week.

Speaker 4 226,000 people filed. It was 219,000 the week before.
And during that week before, the total number of people claiming unemployment benefits was just shy of 2 million, the most since November of 2021.

Speaker 4 The second report we got today is labor productivity. It was up nearly 2.5% last quarter, according to the Bureau of Labor Statistics.

Speaker 4 Now, usually, a boost in productivity goes hand in hand with a boost in wages and economic growth. But last quarter's gains came with a cooling labor market.

Speaker 4 Daniel Ackerman unpacks what that might mean.

Speaker 6 First thing to keep in mind about labor productivity, says Gary Schlossberg of Wells Fargo, is it tends to bounce around.

Speaker 7 You get a lot of noise in those numbers.

Speaker 6 Schlossberg says today's increase could be the result of a one-off drop in imports last quarter due to tariff policy. That raised GDP, which is used to calculate productivity.

Speaker 7 And so the one-quarter number is really more arithmetic than indicative of a trend.

Speaker 6 He says one way to think about how productivity could trend in the future is to look at what employers are doing now, which is not much.

Speaker 7 I would characterize businesses as sort of a deer in the headlights. They're so unsure about what's happening.

Speaker 5 They don't want to let workers go, but they're reluctant to hire for the same reason.

Speaker 6 That means workers with jobs can't upgrade to something better, says Preston Moy of Employ America.

Speaker 8 There's not a lot of jobs switching, so there's probably not a lot of people moving from these low productivity to higher productivity jobs.

Speaker 6 But Moy says something else is happening in the labor market too. The workforce is growing slowly and could even shrink, in part due to President Trump's immigration crackdown.

Speaker 6 And that could actually boost productivity. Moy says, imagine going into an elementary school classroom and measuring the height of each student.

Speaker 8 Every month, the average height grows because the children are growing.

Speaker 6 But if you take a bunch of the shortest kids out of the class and measure again, suddenly.

Speaker 8 It looks like the average height of the children in the classroom has gone up.

Speaker 6 Even if the remaining students haven't actually grown. Moy says, something like that happens during recessions.
When jobs go away, it tends to be the less productive ones.

Speaker 6 So overall, productivity appears to rise. Guy Berger is with the Burning Glass Institute.

Speaker 8 What you are going to see if you exclude those people is in accounting terms an acceleration in productivity growth. But that's a bit of a statistical illusion.

Speaker 8 Berger says, whether by recession or immigration crackdown, artificially boosting the numbers by excluding lower productivity workers does not actually benefit the U.S. economy.

Speaker 6 But remember, productivity data is noisy, so Berger says it's better to think decade by decade rather than quarter by quarter. I'm Daniel Ackerman for Marketplace.

Speaker 4 Tariffs went into effect for imports from about 90 countries today. Wall Street didn't love it, but it didn't hate it either.
We'll have the details when we do the numbers.

Speaker 4 I know that these days, it can seem like every day is tariff day.

Speaker 4 But today really is a big tariff day because, as I just mentioned, the Trump administration's import taxes on something like 90 countries went into effect this morning, ranging from 10 to 50 percent.

Speaker 4 Those are taxes, of course, that will be passed down to American businesses and consumers. One big exception here is Mexico.

Speaker 4 Last week, the president announced he's pausing higher tariffs on goods coming from the country as trade negotiations continue.

Speaker 4 So, we thought it would be a good time to check in with Daniela Velázquez de Leon.

Speaker 4 She's the general manager at Organics Unlimited, a banana wholesaler in San Diego, importing most of its produce from Mexico. We've been keeping in touch with her as she lives through Tariff Limbo.

Speaker 4 Daniela, thanks for coming back on the show.

Speaker 9 Of course.

Speaker 4 So to catch up, I think the last time we spoke was in March, just days before a 25% tariff on goods from Mexico were set to snap into place.

Speaker 4 What's happened on the bananas you import from Mexico since then?

Speaker 9 So we did end up paying tariffs on what crossed the border when the tariffs went into a place for a couple of days. Over $20,000 is what we paid on just a few shipments.
Thankfully,

Speaker 9 there was a pause put in place, and anything that was in compliance with the USMCA agreement was exempt from those tariffs.

Speaker 9 So, while there are certain Mexican products that are subject to higher tariffs, but bananas do fall within the USMCA agreement and are not subject to tariffs right now.

Speaker 4 Was that a big relief for you? How did that feel when you found out?

Speaker 9 It was a huge relief.

Speaker 5 It's,

Speaker 9 I think this is what I told you last time, but it's a roller coaster of emotions:

Speaker 9 we don't know what's going to happen leading up to these deadlines. There's no real direction.

Speaker 9 If we want to do something differently in order to prepare for tariffs, it's not something that can be done from one day to the next. It takes preparation.

Speaker 9 It's going to take months, if not years, to make that switch.

Speaker 9 I talk about this with our leadership probably on a weekly basis because we know, even though the current deadline has passed, there's another one that's coming in 90 days.

Speaker 9 And we've reached the point where we say we've done everything we can to prepare. At this point, whatever happens, happens.

Speaker 4 Well, the thing is, chaos costs time and money. I mean, how much did you spend preparing for this Mexican tariff that so far hasn't even come into play for you?

Speaker 9 Too much time, too many sleepless nights, a lot of leadership meetings. This is something that I've spoken with other folks in the industry.

Speaker 9 There's so much time and effort that has gone into preparing for something that might or might not happen.

Speaker 9 So many investments that haven't been made. We were planning on purchasing some new equipment this year that hasn't happened.

Speaker 9 There's just so many things on pause and so much much time and effort and mental activity that has gone into preparations.

Speaker 4 Not to mention, I think you said $40,000 in legal fees last time we talked.

Speaker 9 That's right. But even after those $40,000 in legal fees, we didn't have

Speaker 9 super clear direction on what the correct path was, which is also what adds stress. Because at the end of the day, if we're going to have to pay the tariffs, we're going to have to pay the tariffs.

Speaker 9 But it's hard hard when we don't have super clear direction on how to stay in compliance. So it's juggling a number of things, it's updating your

Speaker 9 import procedures, it's talking to clients, it's figuring out how that's going to impact sales.

Speaker 9 It impacts everything.

Speaker 4 On the other side of this, you're in touch with growers constantly. How are they feeling?

Speaker 9 So every time we've gotten close to these deadlines, we'll go down there, meet in person, talk to them about what the potential outcomes are. But

Speaker 9 there's just so much uncertainty that everyone's in the same boat of just wait and see because there's nothing else we can do in the meantime.

Speaker 5 Hmm.

Speaker 4 Well, how do you feel looking forward? I mean, you've been sort of spared compared to kind of what we thought was coming for your Mexican imports, at least.

Speaker 4 And you've got a little less than 90 days until I guess we know possibly for sure. Do you feel like you're out of the woods, or what do you feel like is to come?

Speaker 9 I do not feel like I'm out of the woods. We might reach the next 90-day mark and hear, okay, there's another extension for another month or another two months.

Speaker 9 I'm very hopeful that our countries will come to an agreement because I do think that

Speaker 9 we are vital for each other's economies and our food systems.

Speaker 9 So

Speaker 9 part of me is very stressed.

Speaker 9 The other part of me is hopeful that we will come to some sort of agreement that will be beneficial for both countries.

Speaker 4 Well, hey, I hope that we can talk about all those benefits in 90 days. Daniela Velasquez de Leon is general manager at Organics Unlimited in San Diego.
Daniela, thanks again for connecting.

Speaker 9 Thank you, Kristen.

Speaker 4 Now, on to something a little different. We are in the middle of peak wedding season.
And like all industries, weddings follow trends. One that's becoming more popular?

Speaker 4 Wedding planners say couples are using their celebrations to fundraise for causes they care about in lieu of registries full of pots and pans. Marketplace's Savannah Peters has more.

Speaker 11 Robert McNeil is planning a 100-person wedding at a whiskey bar in Raleigh, North Carolina. The big day is a little over a month out, but the paperwork is already taken care of.

Speaker 12 Yeah, we actually were married legally five years ago.

Speaker 11 And like a lot of couples these days, McNeil and his husband Paul Ingram had already been living and building a life together even before that.

Speaker 12 I'm 40, my husband is 50, and we kind of have the stuff that you need for a living already. We've kind of figured that out.

Speaker 11 So when they get their friends and family together to celebrate, McNeil and Ingram will not be asking for gifts.

Speaker 11 Instead, they're collecting donations for the Trevor Project, a nonprofit that works on suicide prevention for LGBTQ youth.

Speaker 12 The administration right now is, we'll say, at least unfriendly to people that are LGBTQ.

Speaker 11 It recently eliminated a government hotline for queer kids in crisis.

Speaker 12 I thought that this was a great opportunity to kind of maybe fill that gap a little bit.

Speaker 11 And a way for the couple to honor a cause that matters to them. Instead of getting a bunch of serving dishes they don't need.

Speaker 13 I think a more modern generation is like, that's weird to have somebody buy me my sheets. Like, I could, I can probably pick those out and get those.

Speaker 11 Megan Clem is a wedding planner and CEO of Intertwined Events in Southern California. She says traditional registries have been losing ground to honeymoon and down payment funds for a while.

Speaker 11 But in the last few years, she says more couples are inviting their guests to make donations.

Speaker 13 As we've come out of COVID, as we have seen people really embrace big, hard things in our communities, We have seen them really want to do more.

Speaker 11 Clem, who plans luxury events, says this is still fairly niche. Something like 15% of her clients incorporate charitable giving into their celebrations.

Speaker 11 The free wedding website, Zola, says 5% of its users do the same.

Speaker 11 But the trend tracks with what we know about how younger people engage with charity, says Genevieve Shaker with the Lilly School of Philanthropy at Indiana University.

Speaker 14 They like to give differently than their parents and their grandparents. They like to give in social ways that involve their friends.
They like to make a statement.

Speaker 11 Shaker says that's especially true of Gen Z. And as that generation comes of age, some nonprofits could tap into this trend and make weddings part of their fundraising strategy.

Speaker 11 But getting wedding traditionalists on board might take some work.

Speaker 15 If I were to put on my registry, like, please donate in lieu of, I'm not sure people are necessarily going to do that.

Speaker 11 Jessica Rosenberg is marrying her fiancé next spring on a farm in the Hudson Valley. They do not want stuff, and they'd like to gather donations for Parkinson's research.

Speaker 11 But Rosenberg imagines some of their guests, especially from older generations, will say something like this.

Speaker 15 Well, I could have done this on my own time. I really want to give it to this couple who, you know, I'm here to celebrate their future together.

Speaker 11 So the couple is is compromising. They'll ask the 250 people on their guest list for cash gifts to help them buy a house and plan to donate some of that money to charity.

Speaker 11 Right now, Rosenberg is thinking 5%.

Speaker 11 I'm Savannah Peters for Marketplace.

Speaker 4 Coming up.

Speaker 16 I've been looking at work-from-home jobs to kind of see what I could do while I'm at home part-time.

Speaker 4 How a mom of six moves through the economy. But first, let's do the numbers.

Speaker 4 The Dow Jones Industrial Average fell 224 points, half a percent, to finish at 43,968. The NASDAQ added 73 points, a third of a percent, to close at 21,242.

Speaker 4 And the SP 500 lost 5 points, just shy of a tenth of a percent, to end at 6,340.

Speaker 4 A late-stage study of an oral weight loss drug under development by Eli Lilly found that it seems to be less effective than existing injectable drugs. Shares in Lilly shed 14 and 110%.

Speaker 4 Its rival, Novo Nordisk, which makes the injectable drug Wagovi, pocketed 6.2 thirds percent.

Speaker 4 Croc says tariffs are going to cost it $90 million a year, and that it's going to raise prices to make up for some of that.

Speaker 4 The Footwear Maker also reported bloated inventories as a result of the import taxes. Crocs stepped down 29.25%.

Speaker 4 Bonds fell, the yield on the 10-year T-note rose to 4.24%.

Speaker 4 You're listening to Marketplace.

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Speaker 4 This is Marketplace. I'm Kristen Schwab.

Speaker 4 Even with all the tariffs going into effect today, there is, of course, another tariff announcement coming out out of the White House.

Speaker 4 During an Oval Office meeting with Apple CEO Tim Cook yesterday, President Trump said the U.S.

Speaker 4 would impose a whopping 100% tariff on imported semiconductors and computer chips, but not for companies, quote, building in the U.S.

Speaker 4 There are a lot of details that still need to be filled in, but the idea is to use tariffs to pressure firms to create production here. The U.S.

Speaker 4 has tried plenty of strategies to accomplish this goal before. Marketplace's Sabri Benishor takes a look at a few of them.

Speaker 18 For more than a decade, the U.S. has been focused on bringing semiconductor production back to the U.S., and it has cycled through different strategies.

Speaker 20 One is to just have the government pay some of the bill.

Speaker 18 Gregory Allen is with the Center for Strategic and International Studies. The government can subsidize chip plant construction with grants or tax credits.

Speaker 18 That is what Congress did under the Biden administration with the Bipartisan Chips Act.

Speaker 20 The Trump administration also wants wants that increased construction, but they want the incentive to take the form of making it more expensive to build anywhere else, not making it cheaper to build in the United States.

Speaker 18 100% tariffs would for sure make it more expensive to build not in the U.S., but they also risk making products in the U.S. more expensive.

Speaker 18 Still, this was the approach in the first Trump administration and under Biden too. Both place tariffs on Chinese-made chips in particular.

Speaker 20 What Trump's doing, though, is a major dramatic expansion of that effort.

Speaker 18 Chris Miller is author of Chip War, the fight for the world's most critical technology.

Speaker 20 Both because the tariff rate is going to go higher and because it's going to apply not just on chips from China, but on chips from other countries, too.

Speaker 18 One way for companies to get out of the tariff is if they commit to building production in the U.S. Details there are not spelled out yet.

Speaker 18 Vivek Arya, research analyst with Bank of America, says 100% tariff should be convincing.

Speaker 20 To at least commit to enough production to serve, you know, at a minimum, their U.S. customer base.

Speaker 10 Many already have.

Speaker 18 From Samsung to Intel, on the back of the CHIPS Act, and in the years after. Dan Kim is with Tech Insights, and he was the chief economist for the CHIPS program under the Biden administration.

Speaker 20 With the $39 billion of manufacturing incentives in terms of grants, it attracted somewhere north of $400 billion of announced projects in the United States, and that has increased even further with this administration.

Speaker 18 He agrees the latest tariff approach has the potential to build on that.

Speaker 20 This can be complementary or it could be counterproductive.

Speaker 18 But a lot is unclear. For example, to get out of tariffs, does the chip maker need to build here or the phone maker who uses the chips? And what will this mean in the end for prices?

Speaker 18 Devil meet details. In New York, I'm Sabri Benishore for Marketplace.

Speaker 4 The economy is changing fast. Our free daily rap newsletter brings all the day's news and numbers straight to your inbox every weekday evening.

Speaker 4 The goal is to help you catch up in less than five minutes. Read the latest issue and sign up for the Marketplace Daily Wrap at marketplace.org/slash subscribe.

Speaker 4 For the last several months, I've been working on a series called Lived Economies.

Speaker 4 I'm keeping up with a group of people from across the country, people of different ages who work different jobs and earn different salaries, to get an up-close and personal look at the economy.

Speaker 4 One of the people we've been following is Julie Yang. She's a nurse and lives near St.
Paul, Minnesota, with her husband, Daniel Tao, and their five kids. And this summer, their five turned into six.

Speaker 4 Julie joins me now. Hey, Julie, it's been a while.

Speaker 10 Hi, how are you?

Speaker 4 Good, thanks.

Speaker 4 Well, tell me a little bit about baby Saatchi came a little early, and you told me that he has some health problems. Can you fill me in on that?

Speaker 16 Yeah, so when he was in utero, they found that he had a right-sided aortic arch versus a left side.

Speaker 16 And then further along with the pregnancy, they were like, oh, maybe he has a double because they saw a written around his trachea.

Speaker 16 Right now, we're just kind of monitoring his symptoms, kind of seeing how he eats and breathes to determine how urgent surgery is needed with that.

Speaker 16 And then he has possibly a little hole in the heart, also. They couldn't really tell at the last echo because he was moving too much.

Speaker 5 Too squirmy.

Speaker 16 Yeah, way too squirmy. So we go back and see cardiology in September and just kind of doing all these follow-ups and just a bunch of appointments for him.

Speaker 4 Gotcha. And is this something that your family and Saatchi will kind of have to live with forever or?

Speaker 16 Yeah,

Speaker 16 it will be something forever.

Speaker 4 What has it been like to add a sixth kid to the family?

Speaker 16 You know, crazy. There are days where it's like all three of the older ones have activities, so it's everybody has to go together and we have to figure it out.

Speaker 16 And then it's just having to, you know, make adjustments on buying things. Like, you know, we had to buy a new vehicle because we didn't have enough room in our van.
So, that's what we're doing today.

Speaker 16 We're buying a new vehicle today.

Speaker 5 Oh, you're out right now.

Speaker 16 Yeah, we're out right now. My husband's in dangerous inside the bank.

Speaker 16 We're now getting the cashier's check, and then we're going to head back to the dealership and pick up the new van that we just bought.

Speaker 4 Oh, wow. What is this an I guess an eight-seater then to fit all of you?

Speaker 16 We actually got a 12-passenger.

Speaker 4 That's kind of like a bus, not a van.

Speaker 16 Yeah,

Speaker 16 pretty much.

Speaker 4 You know, last time we kind of checked in you mentioned that with a sixth kid and you know Saatchi has some health problems you were talking about kind of weighing the idea of of becoming a stay-at-home mom where are you with that decision

Speaker 16 yeah so we I actually did actually drop down my hours now I'm feeling kind of anxious about it I am now just per diem But you know, it's just, you know, I've always had a job since I was 15, working consistently.

Speaker 16 I'm like, oh my God. I've I've been looking at work-from-home jobs to just kind of see what I could do while I'm at home part-time or possibly doing something on the weekend.

Speaker 16 So then I can still do appointments for Sachi and just kind of be there at home with the other kids.

Speaker 4 When you talk about your anxiety with going per diem and kind of pulling back on work, is that a financial anxiety or is it more yourself as a worker?

Speaker 16 Myself as a worker. You know, myself as a worker and the financial anxiety of it, just kind of not knowing how things would be.

Speaker 16 And just for, you know, me as a worker, my mental health, like, I don't know how much I can just be at home too, but, you know, we just figured it's probably best just because of his health issues.

Speaker 16 We're not too sure where he is at,

Speaker 16 how severe it could be on him. And daycare centers won't take him in just because we have to disclose that he does have his condition.
And right now we don't have a plan.

Speaker 16 So with that they turned him away and then Daniel's mom was mentioning that she wasn't too comfortable watching him also

Speaker 16 alone so we just figured you know with all that it's probably best if I do just stay home then

Speaker 4 yeah

Speaker 4 it sounds like a lot a lot of paperwork a lot of phone calls a lot of extracurricular activities I'm wondering if you two you and Daniel are ever able to find time for yourselves for each other how are you kind of just

Speaker 5 getting through right now?

Speaker 16 We don't. And it's kind of sad.
Like there's been days when I'm like, oh, I don't even remember the last time we went out by ourselves.

Speaker 16 You know, like our kids sleep in our bed because they refuse to get out. So even then, it's like, he sleeps at one end, I sleep on the other end, and we have three right in the middle.

Speaker 5 Wow.

Speaker 4 Julie Yang is one of the people we're talking to in our series, Lived Economies, and she and her family live in the Twin Cities in Minnesota. Julie, thanks so much for making time again.

Speaker 16 Thank you.

Speaker 4 This final note on the way out today, I saw this in the New York Times. It turns out a trade war doesn't necessarily even out a trade imbalance.
Chinese exports to the U.S. were down in July.

Speaker 4 No surprise there, as importers have been trying to avoid higher tariffs. But Chinese exports overall last month surged, up more than 7% compared to the same month last year.

Speaker 4 The uptick in exports was especially high to Southeast Asia and Africa, regions that are major reshippers of goods to the U.S.

Speaker 4 And exports to the European Union were also up. The EU is the primary export competition to the U.S.

Speaker 4 Our daily production team includes Andy Corbyn, Nicholas Geoung, Maria Hollenhorst, Iro Ekbinobi, Sarah Leeson, Sean McHenry, and Sophia Terenzio. And I'm Kristen Schwab.
We'll be back here tomorrow.

Speaker 4 This is APM.

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