How are lenders and borrowers feeling?

This episode is brought to you by Huggies Little Movers.

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Huggies Little Movers is designed to move with your baby with either the double grip strips or the new HugFit 360-degree waistband.

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So let's call it a framework, shall we?

From American public media, this is Marketplace.

In Los Angeles, I'm Kyle Risdall.

Monday, today, 28 July.

Good as always to have you along, everybody.

There are some big picture things that we know about the trade framework that President Trump and European Commission President Ursula von der Leyen announced over the weekend.

We know American consumers are going to be paying an extra 15%

on roughly three-quarters of everything we import from Europe.

We know the EU says it's going to increase its investment in this economy by $600 billion, details as yet unclear.

And we know the EU has promised to buy $750 billion worth of U.S.

energy over the next three years.

$750 billion is indeed a big promise.

But as Marketplace Elizabeth Troval reports, it's not at all clear how much the EU-U.S.

energy relationship is really changing.

Europe's promise to buy $250 billion in U.S.

energy every year for the next three years is more of a renewal of vows than a first date.

The U.S.

and EU got serious about energy after the invasion of Ukraine, says Matthew Zaragoza Watkins with UC Davis.

When sanctions were imposed on Russian imports of natural gas and coal, the U.S.

stepped up and started exporting a lot more bituminous coal to Europe, essentially filling a lot of the void that was left over.

The same is true in LNG.

So when we talk about $250 billion a year, more than doubling the size of existing U.S.

energy exports to Europe, Gregory Brew with Eurasia Group says it's not feasible.

But even if it's exaggerated, he says, the announcement does solidify a growing energy relationship, especially around natural gas.

LNG exporters are confident.

This is a sign to them that they're going to continue to get access to this market, that it's not going to be disrupted by tariffs or other potential trade disputes.

U.S.

liquefied natural gas export capacity is expected to roughly double in the next five years, according to S ⁇ P Global Commodity Insights, in part driven by European demand.

So this commitment from Europe could help some of those pending projects get financing, says Tom Tsang with Texas Christian University.

It does signify maybe a more firm commitment for EU member nations to actually purchase longer-term supply.

They've really been more in the short-term marketplace.

Tsang says this also means employment opportunities down the road.

From a job creation standpoint, you're still looking largely at Louisiana and Texas.

New positions to build and work at terminals along the Gulf Coast where LNG export facilities are concentrated.

I'm Elizabeth Troval for Marketplace.

This is going to be a big week, economic data and decision-making-wise.

Should you be updating your personal economic calendar?

The biggies are the Fed meeting tomorrow and Wednesday, and the monthly unemployment report that is Friday, as happens when there is data and the Fed in the offing.

Traders were kind of subdued today.

We will have the details when we do the numbers.

A year or so ago, maybe a little bit more, we were in Claremont, North Carolina, at a fiber optic cable plant owned by Prismian, watching sand sand and glass get turned into the fiber cables that bring us the internet.

We were there because the Biden administration's infrastructure strategy, including something called BEEED, the Broadband Equity Access and Deployment Program, $42 billion

to boost national broadband.

Fiber makers like Prismian weren't getting the money directly, but with fiber as the government's then priority, they were gearing up to meet demand.

And then the Trump administration changed course.

So we got Patrick Jacobi back on the phone.

He is Senior Vice President of Digital Solutions in North America for Prismian.

Pat, it's good to talk to you again.

Hey, Kenny, how are you doing?

Good to talk to you.

I'm good.

So look,

it has been a while.

It feels like it's been a very long time since you and I first spoke and since we first did the series on fiber in this economy.

The landscape, it is safe to say, has changed.

And with the acknowledgement, as I said up in the introduction, that you guys, Prismian and other manufacturers, weren't actually going to be getting money directly from the bead program.

It was going to stimulate demand.

And I guess

where did things stand now with all the changes?

Yeah, so it definitely, you know, stimulated demand.

We made investments.

Other manufacturers made investments.

I'm sure internet service providers made investments along the way to get prepared.

And now we've had a few changes, right?

And so now we're all trying to adjust and kind of understand what the new timeline looks like.

Let me try to reframe.

We've had a few changes.

Do you feel like the rug's been pulled out from under you a little bit?

You guys spent a ton of money getting ready for this.

Yeah, you know, we spent a lot of money.

And I would say that, you know, if

it hadn't been years in the making, you know, I'd say, okay, yeah, you know what, things changed.

The rules have changed.

But at the end of the day, I think there was going to be some level of these changes that were inherent in what happened anyways.

And let me dive into details a little bit later.

I think the biggest change from a bead and from a broadband equity access and deployment program standpoint was the need for technology neutrality.

And so

as a wiring cable manufacturer, as a fiber producer, obviously we were looking forward to the ability to have that fiber preference in the NTIA and the bead funding.

Right.

So just to be clear, that's what the Biden administration was fiber first.

And now Secretary Luttnick, the Secretary of Commerce, has said we're going to be tech neutral.

Yes, we're going to be tech neutral.

Right.

But I think what we realized over time, and I think what the states realized, especially as you looked at some of the awards that were made, is that, you know, fixed wireless and satellite was going to have some level of play in this program to be able to provide that broadband access to people in very remote areas regardless.

Now,

you know, the prior preference,

given

who we are and what we make, obviously was a nice to have.

But I think there's still a lot of business to be had and a lot of opportunity to be had as we move forward.

And we just got to see how the states handle it moving forward with the new rules they have to adhere to.

Let's talk then about some of the opportunities you see out there, right?

Because, I mean, just off the top of my head, there are AI data centers popping up right and left.

And there's got to be a ton of fiber and cable needs there.

Yeah, it definitely filled a void that we were feeling while, you know, the states got all their ducks in a row and got ready for the funding.

And so, you know, yes, there's a lot of money to be spent in energy and generation and land and location, but all those data centers need to be connected, right?

And there's a lot of cable going to those as well.

Let me ask you as a guy running a business or a business unit of a much larger company, talk to me for a second about macroeconomic headwinds.

First of all, got to ask you about tariffs.

I mean, your fiber and your cable is American-made, but your inputs are not necessarily all American-made.

Yeah.

So I think this is one of those situations where the heart's in the right place, but we need to go layer deeper.

Obviously, we have challenges because not everything that goes into the cable that we make is made onshore.

And I don't know that it will ever be made onshore.

I think copper is a really good example, right?

So, copper supply has been tight in general for years.

You think about the energy grid, we talk about grid hardening, grid monetization, all the data centers and the energy they consume.

Well, that's a lot of cable, and that's a lot of copper.

And from the U.S.

standpoint, I'm hopefully getting my numbers right here, but I think the U.S.

produces or mines about a million metric tons tons of copper, and we use 2 million.

And so we're always going to have to secure copper from outside.

And you're talking about 2x, right?

It's a big number.

How much time are you spending thinking about growing your business and getting more

cable and fiber out there versus handling the uncertainty that exists out there now?

Yeah, the uncertainty is definitely taking up a lot more time than it historically has, right?

When you're trying to put a forecast together, trying to roll up your numbers, what you're looking at, what headwinds do you see?

You know, there's an August 1st tariff line, and we see the numbers that are out there.

But as we've experienced, up until the last moment, they could change.

At the end of the day, if everything was constant and stable, yeah, you'd be able to focus on the business some more.

But at the same time,

it gives us a lot to do and keeps us busy and keeps us moving forward.

Always better to be busy than not.

Pat Jacoby, he's the senior vice president of Digital Solutions North America for Prismian.

They do fiber and cable stuff.

Pat, thanks a lot.

It's really good to check in again.

Yep, FaceCai, appreciate it.

The big news come this time Wednesday isn't going to be what the Federal Reserve decided to do about interest rates.

Their two-day meeting, as I said, starts tomorrow.

No, the news is going to be what Chair Jay Powell says the central bank is thinking about doing about interest rates, specifically whether maybe

there might be a cut coming in September.

Maybe, maybe not.

But while the cost of borrowing in this economy is probably going to come down at some point,

the interest rates that consumers and businesses are going to be paying is probably going to stay elevated in the short term.

So Marketplace's Justin Ho called some lenders to hear how their customers are feeling about borrowing right now.

Over the last few months, Brad Bolton, the CEO of Community Spirit Bank in Red Bay, Alabama, says he's been getting a lot of questions about interest rates.

Hey, is the rates falling yet?

Is it time for me to refinance?

And you say, well, no, no, rates have not fallen yet.

Bolton says some of his customers have been waiting for rates to come down but so far this year he says loan volumes are up about six percent since December he says that's because many clients are deciding to go ahead and borrow anyway you know may not have this opportunity to purchase this piece of property or this bulldozer or this piece of heavy equipment I'm willing to go ahead and you know fund this purchase right now at this high rate Many businesses can't afford to wait around for interest rates to drop, says Chris Duncan, chief lending officer at LaSalle State Bank in Illinois.

It's not good business practice to have to wait around too long to do the things that they know that eventually they're going to have to do.

That said, Duncan says his bank has its guard up right now because of how uncertain the economy is.

There's enough disagreement among our advisory staff and among our board members and what we feel we're reading in the news on where we're headed and how quickly we're going to get there.

As a result, Duncan says the bank is doing more check-ins with its borrowers.

Requesting updated financial information from our customers more frequently, asking them how things are going and what they're seeing out in the market and how they feel about the future.

Many borrowers have their guard up too.

Alice Frazier is CEO of Bank of Charlestown in West Virginia.

What we have noticed in the past 30 days or so is a slowing somewhat in the pipeline for new loan demand.

Frazier says some of her smaller business borrowers are feeling stressed by the uncertain economy and years of high interest rates.

And so taking on additional debt requires them to think through what the future might hold.

And whether they'll be pulling in enough revenue to pay back that debt.

I'm Justin Howe for Marketplace.

It's jobs week this week.

As I said a couple of minutes ago, the July jobs report comes on Friday.

But there is a lot of data about employment and American households that doesn't make it onto that report, but that are tracked by the government nonetheless.

Take as just one example the percentage of people that work from home, a new-ish data point that the Bureau of Labor Statistics started collecting just a couple of years ago.

Right now, about one in five men and one in four women in the labor force work from home.

And for small business owners, that work where you live flexibility could be a big reason why they do it at all.

Here's today's installment of our series, My Economy.

My name's Elizabeth Sund.

I'm the owner of Sund Bakes, a home bakery in Minot, North Dakota.

My academic background is in philosophy, so I have a PhD in philosophy that I earned at Monash University in Australia, which was just the most wonderful experience of my life.

I loved that it was self-directed.

I worked for three years on that one big project.

We came back to North Dakota to Minot, where my husband is from.

And when we got here, I had to kind of switch what job I would look for because there was only room for one philosopher at the university in Minot, and that position was taken.

And so I got a different job at the university here working with international students, which I did enjoy, but I was ready for a new challenge.

I wanted something more creative and that I could do on my own that was self-directed.

And I was a pretty good baker, but I honestly didn't know anything about business.

So I dipped my toes into the water with it.

And then within a year, I had left my job at the university and replaced that income.

And I've been working full-time from home on sunbakes, making cakes and macarons

for the last three years.

Every day I get to solve a little problem and work on this project, and it's actually the closest thing I've had to the experience of writing my dissertation that I enjoyed so much.

So, the smallest cakes that I do stand alone are my six-inch cakes, which start at about $120,

and then, depending on what design people want, it goes up from there.

So, usually, adding florals or adding some sort of detailed element like hand-painted macarons on top, those usually start at about $150

or so.

So things are still going really well.

I'm really happy with it.

I

would love to continue doing it while my daughter's in high school.

She's 13 now.

And it's such a good way for me to

work and to enjoy the intellectual challenge of running a business, but also to be available to her and do school drop-offs and pickups, which were impossible when I was working in an office setting.

I still consider myself to be a full-time worker and I work the hours to be full-time, so I don't consider myself to be a stay-at-home mom, but I do get the benefits and flexibility of that.

Elizabeth Sund, Sund Bakes.

It's your home bakery in Minot, North Dakota.

Whether you are running your own business from home or opening a new storefront, or honestly, whatever else you are doing, we want to hear your story.

So tell us, would you marketplace.org/slash my economy?

Coming up.

The incentive for continuing to improve fuel efficiency and reduce emissions is consumer demand.

Hello, market forces.

But first, let's do the numbers.

Dow Industrial is down 64 points today, a 10th percentile, 44,837.

The NASDAQ up 70 points, about 3 tenths percent, 21,178.

SP 500 subtracted just one point, flat, flat, flat, flat, 6,389.

Elizabeth Troval was telling us about energy in the EU.

LNG company Venture Global added 4.2% today.

Sustainable energy firm Next Decade added six-tenths of 1%.

It was a collective whatever from the U.S.

defense sector after that deal was announced.

Lockheed Martin was a little changed.

RTX used to be Raytheon.

Dropped a half percent.

General Dynamics dipped three-tenths percent.

Bonds down.

Yield on the 10-year T-note creeping up 4.41%.

You're listening to Marketplace.

And now, a next-level moment from ATT Business.

Say you've sent out a gigantic shipment of pillows and they need to be there in time for International Sleep Day.

You've got ATT 5G, so you're fully confident, but the vendor isn't responding.

And International Sleep Day is tomorrow.

Luckily, ATT 5G lets you deal with any issues with ease, so the pillows will get delivered and everyone can sleep soundly, especially you.

ATT 5G requires a compatible plant and device.

Coverage not available everywhere.

Learn more at ATT.com/slash 5G network.

This episode is brought to you by Huggies Little Movers.

It's fun having a baby that loves to move, but it can be challenging to find a diaper that can keep up with them.

Huggies Little Movers is designed to move with your baby with either the double grip strips or the new HugFit 360-degree waistband.

You can be confident relying on Huggies Little Movers for your active little ones.

Huggies Little Movers, made with double grip strips or the new HugFit 360-degree waistband, so your little double can keep moving like you.

Huggies, we got you, baby.

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This is Marketplace.

I'm Kai Rizdahl.

You got your platinum from American Express.

You got your Sapphire Reserve from JPMorgan Chase.

And now you got your Strata Elite from Citigroup.

If the names aren't quite enough of a giveaway, we are talking high-end credit cards here, very high-end credit cards.

The latest entries in the skirmish that big banks are having over the increasingly lucrative premium market.

Marketplace's Kristen Schwab looks at the battle over the IT card.

Kevin Ruiz in Santa Cruz, California, recently got a message about his Chase Sapphire Reserve card.

The annual fee is increasing from $550 to $795.

Enough that I was thinking about canceling it.

He's not using as many of the card's benefits because he's traveling less for work.

Also, he's saved so many points, more than one and a half million.

I'll try to look something up and it's just so convoluted.

You know, like, how do you transfer to different airlines or different hotels or whatever?

Credit card companies, of course, bank the annual fees, even if card holders don't use the perks.

Nick Ewan at the Points Guy, who has 25 credit cards, says card issuers are also increasingly making money by expanding their offerings.

It used to be these cards were so focused on travel.

It was travel, travel, travel.

Cards used to lean on lounge access and hotel status upgrades.

Now it's all about dining and food delivery credits and Uber One subscriptions.

They really want customers using the cards on a regular basis.

Banks want their card to become your go-to way of paying, and credit cards have higher processing fees than debit cards.

Plus, the competition over card signups is getting tough.

Already, 82% of Americans own at least one credit card, according to the Atlanta Fed.

And Stephen Cates at Bankrate, who has eight cards, says people are getting smarter at maximizing benefits.

You know, the knowledge piece of it is just more widespread.

The credit card subreddit has 1.5 million subscribers.

The biggest driver behind the premium card push, though, is the growing number of high earners.

I think the luxury lifestyle is more accessible to more people.

It's more in demand than ever.

The new card from Citigroup includes credits for Blacklane, a luxury chauffeur service.

I'm Kristen Schwab for Marketplace.

We're going to do cars now and congressional, well, let's call it ingenuity.

There are in our transportation economy standards for what kinds of gas mileage car makers have to meet.

Cafe is what they're called, corporate average fuel economy.

Not mileage standards for each specific make and model, but rather what mileage a car company has to hit overall.

They've been in place, those standards have, for almost 50 years since the oil embargoes of the early 1970s.

And should a given car maker fail to meet those standards, fines are authorized to be collected by the National Highway Traffic Safety Administration.

That's the cars part of the story.

The congressional, we'll call it ingenuity part of the story, is that in the GOP's big new tax cut and spending law, those fines are now set at zero dollars.

Incentives mattering as they do, that even with those cafe standards still on the books, car makers aren't going to be feeling a whole lot of pressure to build their cars and trucks so as to get better gas mileage.

Well, that's going to have some trickle-down effects, as Marketplace's Henriette reports.

Maybe you're old enough to remember this Dodge Ram truck commercial from about 20 years ago.

Two guys in a beat-up muscle car pull up next to a shiny new pickup truck.

Hey, I think I'm a Hemi!

Yeah,

sweet.

These ads were everywhere for a while, and the Hemi, an eight-cylinder engine, not terribly fuel-efficient at about 20 miles per gallon, it was a big selling point for Ram and Dodge for years.

But more recently, the brand's parent company, Stellantis, had been winding down its use of the Hemi, says Sean Tucker, lead editor at Kelly Blue Book.

The factory was still running, but they were removing it from model after model and probably likely to shut that factory down in the next couple of years.

Because Tucker says the company was moving towards more fuel-efficient engines and electric motors, in part to comply with federal and state requirements.

But then, shortly before Congress stripped away the financial penalties for violating fuel efficiency standards, Stellantis pulled a U-turn, announcing it'll make more HEMIs.

The Hemi was about to go away, and essentially this gave it a new lease on life.

It's not the only company to shift back to large, gas-powered engines, as Congress and the Trump administration roll back CAFE penalties and federal support for electric vehicles.

In late May, GM announced it would make eight-cylinder engines engines at a plant near Buffalo, New York, where it had previously planned to build electric vehicle motors.

But while these moves might mean more fuel-hungry trucks on the market soon, the overall mix of vehicles on dealer lots in the next few years might not change all that drastically.

These automakers have to make decisions at least four or five years in advance, and in many cases, even more years in advance, eight years in advance.

Kenneth Gillingham is a professor at the Yale School of the Environment.

Because car companies plan so far ahead, he says, they can't count on federal policy remaining friendly towards gas guzzlers.

A future Congress might just put those cafe penalties back in place.

In fact, they may be worried that the pendulum is swung so far in one direction that it might swing in another direction in just a few years.

And so if they're not prepared to accommodate that swing in the other direction, they could be in deep trouble.

Plus, U.S.

car companies also sell vehicles abroad in countries that have fuel efficiency rules that are getting more strict, Gillingham says.

If they want to be making money around the world and not just in the United States, they need to develop a fleet that can accommodate all of these many changes.

One way car makers are trying to do that, says Stephanie Brinley at S ⁇ P Global Mobility, is by designing cars and trucks that can be outfitted with any kind of powertrain.

The transition has been over the last two years or so to move toward vehicles that could be produced with an internal combustion or hybrid system or could be produced with a battery electric system.

And she says, even if car companies are no longer being pushed by the government to make cleaner vehicles in the U.S., they could still be pulled in that direction by some consumers.

The incentive for continuing to improve fuel efficiency and reduce emissions is consumer demand.

It's better for the environment, and that is something that consumers care about.

In the long run, most auto analysts still think that as electric vehicle technology improves, the industry will go all all-electric in a few decades, says Sean Tucker at Kelly Blue Book.

But for now, if you're GM or Ford, you can earn quick cash by selling more of those big VA-powered SUVs and trucks.

So I suspect that we will see the larger, less fuel-efficient engines come back.

While car companies still keep an eye on a more efficient and electric future, I'm Henry Epp for Marketplace.

All right, I talked too long and figured out the time too wrong.

No time for a final today.

My bad.

Amir Babawi, Caitlin Ash, John Gordon, Noia Carr, Amanda Peter, and Stephanie Seek are the marketplace editing staff.

Kelly Silvera is the news director.

And I'm Kyrisdahl.

We will see you tomorrow, everybody.

This is APM.

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