Tariff-driven price bloat hasn't arrived just yet

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Speaker 3 Here's the TLDR on this economy that too long didn't read.

Speaker 3 It's fine. For now.

Speaker 3 From American Public Media. This is Marketplace.

Speaker 3 In Los Angeles, I'm Kai Risdahl. It is Wednesday, today, the 11th of June.
Good as always to have you along, everybody.

Speaker 3 So far, so good. Come see, come sa.
Getting by.

Speaker 3 Any and or all of those would be fair descriptions of the American economy in the fifth month of 2025. Consumer prices in that economy specifically.

Speaker 3 The good people at the Bureau of Labor Statistics told us this morning the consumer price index for May was up a tenth of 1% from April, 2.4%

Speaker 3 from May a year ago. Now, for those saying,

Speaker 3 reasonably, where are those tariff price increases everybody was talking talking about a month ago, Kai?

Speaker 3 Well, it's complicated. Marketplaces Sabri Benishore is going to explain.

Speaker 6 If you are a retailer, there are some things you can store and some things you can't.

Speaker 7 We usually keep a pretty large pile of green coffee inventory.

Speaker 6 Nicole Vitello is vice president of Equal Exchange. It's a worker-owned co-op, brings things like coffee and bananas from small farmers to stores.

Speaker 7 We roast and package coffee here at our facility in Massachusetts.

Speaker 6 She was able to bring in some coffee before 10% tariffs hit and store it, blend it, problem solve.

Speaker 7 So we can be judicious about how we do a cost increase.

Speaker 6 Overall, in the U.S., coffee went up a percent in May. Bananas do not work that way.

Speaker 7 Obviously, we can't stockpile fresh bananas, which, you know, we don't even make 10% is basically our whole margin.

Speaker 6 So those prices had to go up. On average, in the U.S., bananas got more than 3% more expensive in May.
But it's not just perishables that went up last month.

Speaker 8 Major appliances went up almost 4.5% in May.

Speaker 6 Omer Sharif is president of Inflation Insights. Appliances have had China tariffs since February, and it's starting to show up.

Speaker 6 But other things we import from China, like furniture, have actually come down.

Speaker 8 Some of this has to do with... retailers just trying to move merchandise out the door.

Speaker 8 I think in part because there is a concern that the economy is going to be slowing down even more as we get into the second half of the year.

Speaker 6 Meanwhile, gas prices are down 12% in a year to pre-COVID levels, and rent inflation has been on a slow trek downward. Lawrence Yoon is chief economist at the National Association of Realtors.

Speaker 9 Many private sector data on apartment rents are showing essentially no change from one year ago.

Speaker 6 But more tariff price increases on goods are coming, and according to Inflation Insights, should hit around August. Because even for the stockpilers, the price hikes are already here.

Speaker 6 Again, Nicole Vitello with Equal Exchange.

Speaker 7 So the coffee we're buying from Guatemala, Colombia, Honduras has been an additional $20,000 per container.

Speaker 6 In the eight weeks since the tariffs have hit, they've cost the company $250,000.

Speaker 3 It can't eat all that.

Speaker 6 In New York, I'm Sabri Benishore for Marketplace.

Speaker 3 You'll be surprised not at all to hear that President Trump use this morning's inflation report to press Fed Chair Jay Powell, again, to lower interest rates.

Speaker 3 A full percentage point is what the president wants. That seems unlikely.

Speaker 3 Wall Street, today, early news from London of a, and this is a quote from Congress Secretary Howard Luttnick, of a handshake for a framework for trade negotiations.

Speaker 3 That gave traders an early boost, and then they thought better of it. We'll have the details when we do the numbers.

Speaker 3 The industry leader for layoffs in this economy January through May,

Speaker 3 government going away.

Speaker 3 Elon Musk and his operatives, along with various departments and agencies of the Trump administration, have put almost 285,000 people out of work since the beginning of the year.

Speaker 3 In second place, though, and more germane to the consumer side of this consumer-driven economy, is retail. Almost 76,000 fewer jobs there through the end of last month.

Speaker 3 That is data from the outplacement firm Challenger Gray and Christmas. It is, should you be curious, a 274% increase from retail job cuts over the same period last year.

Speaker 3 Marketplace's Kristen Schwab has more on that one.

Speaker 10 A 274% increase in retail job layoffs? That's a big number. At first glance, maybe a red flag kind of number.
But Andy Challenger at Challenger Gray and Christmas says it's more like a yellow flag.

Speaker 11 For one, of all the different sectors, retail's a very volatile one.

Speaker 10 Challenger's firm tracks job cuts through public announcements and financial filings. And he says the industry has a lot of brand turnover right now, some of which is normal.

Speaker 11 We've seen quite a few retailers announce that they're going to be closing stores, JCPenney, Forever 21,

Speaker 11 Macy's, Rite right-age Walgreens.

Speaker 10 But other job cuts have nothing to do with store closing, says Christina Boney, a retail analyst at Moody's.

Speaker 10 Walmart recently announced plans to lay off 1,500 workers in technology operations and e-commerce.

Speaker 12 Those would be like the primary spaces that, you know, the customer wouldn't necessarily see. It's not what's in the store.

Speaker 10 And those layoffs signal something bigger, that retailers are worried and are looking for places to slim down.

Speaker 12 Clearly, we're in an environment where efficiencies matter.

Speaker 10 They matter because consumers are spending less. They have been since the spending boom of 2021, when many retailers overhired.

Speaker 10 Aaron Charis, a retail consultant at Bain and Company, says brands have been trying to hang on to the optimistic view that the boom will come back.

Speaker 13 And now 2025 isn't better. And so they actually have to do something about it.

Speaker 10 Especially with tariffs looming. Charis says one one option is to raise prices.
Walmart is also doing that. Of course, that's not such a popular move.

Speaker 13 You've seen politicians be very aggressive at pressuring retailers not to do that.

Speaker 13 And so, if they don't do that, then you've got to squeeze the balloon somehow.

Speaker 10 The next option is to cut workers because labor is typically the biggest cost for any business. I'm Kristen Schwab for Marketplace.

Speaker 3 We usually wait until the end of a story to tell you what the big idea of it is, but the piece you're about to hear is about how no matter how many young workers you have, the macroeconomy comes for us all.

Speaker 14 I'm so excited to put on that neon yellow vest.

Speaker 3 ADP Chief Economist Neila Richardson and I are putting on protective gear in the offices of a Utah County building supply company that we visited for our series, The Age of Work.

Speaker 3 These are brand new, man. No scratches on these goggles or anything.

Speaker 3 This is great.

Speaker 3 Once we were all suited up, we did the intros.

Speaker 15 So we're at SunPro, the Linden Trust plant. My name is Joseph Cranford.
I manage the plant here. I've been with SunPro for 23 years now.

Speaker 3 Remember all that residential construction we saw in and around Eagle Mountain earlier this week? This is the kind of place that contributes to that.

Speaker 3 At this location, specifically with lumber and trusses. Did you start actually making the trusses?

Speaker 15 No, I actually started pushing a broom in our little retail yard.

Speaker 3 We had Steve Broadbent with us too. He's a company vice president in charge of truss manufacturing and a little bit more.

Speaker 16 We have insulation and garage door install operations. We've even got a little gas station that we run.

Speaker 3 Like retail gas station, retail gas station.

Speaker 16 You swing by, we got the best milkshakes and chicken you'll ever have.

Speaker 3 Sadly, we didn't make it to Sun Pro's gas station while we were in town, so we can neither confirm nor deny the chicken and milkshake thing.

Speaker 3 Neela, though, asked Joe the big question: And what is a truss?

Speaker 15 So, trusses are the triangles on a roof

Speaker 15 that make everything that hits it flow out. It's a structurally engineered product.

Speaker 3 We're literally talking about a huge wooden triangle, think 30 to 60 feet long on average, that holds up your roof.

Speaker 3 So you prefab those and you sell those to home builders or construction companies?

Speaker 15 We sell them to general contractors and we build everything from, I say, dog houses to penthouses. We're in the single-family home building, commercial, residential.

Speaker 3 The place kind of looks like you'd expect. Stacks of lumber in the big yard outside, some of them still wrapped up in plastic.
Country of origin listed on the side, plus the occasional forklift.

Speaker 3 So here we have a stack of two by fours basically, right? Correct.

Speaker 3 And they're going to get fed into whatever it is in there? That's right.

Speaker 15 There's several different grades of lumber that we use in our trusses depending on the engineering. That's what it's all about.

Speaker 3 Explain that to a layperson depending on the engineer.

Speaker 15 So

Speaker 3 snow load is something that... Like snow, snow.
Correct.

Speaker 3 How much weight a truss can carry, right?

Speaker 15 So that's the kind of things we're looking at when we design trusses. Right.

Speaker 3 and that's why we use different grades of lumber the manufacturing floor is 47 000 square feet huge carts stacked with two by fours more lumber on the floor 10 production lines in all each of them about 40 feet long

Speaker 15 i'm going to walk you through an older side of the truss plant 10 years ago this is how trusses were built You'll see a lot of pieces on carts on the ground, a lot more people involved in the process.

Speaker 3 And they're doing it by hand, right? I mean, they're like nailing and all that that job. That's correct.

Speaker 15 Every truss is a special product.

Speaker 15 Every unique piece is cut specifically for the truss that it's going into and every truss is built unique for the home that it's going into.

Speaker 17 But if each truss is highly customizable, then that means you have to have a labor force that has a lot of skill.

Speaker 3 That is correct.

Speaker 15 So the guys you see on the tables right now, most of them have been doing this for 15 years. And you won't see them talking.

Speaker 15 They know what they're supposed to be doing throughout the day, and it just runs like clockwork.

Speaker 3 Also, it's really loud in here and talking this kind of paint. Correct.
There's that, you know.

Speaker 3 So loud, in fact, that we had to stop talking a couple of times and move someplace we could actually hear each other.

Speaker 3 This production line, which remember, Joe said is the old way of building trusses, was really the only spot where we saw a bunch of guys working.

Speaker 3 Eight people moving two by fours into essentially a massive conveyor belt, which they would then stand on themselves to hammer the wood together into different sized trusses.

Speaker 15 And we walk over here and see this integration of more automation into what we're doing.

Speaker 3 The new way of building trusses.

Speaker 15 A more simplified version of this is where the industry is moving.

Speaker 3 We went over to the other side of the facility where instead of guys lugging 2x4s, There were little fancy machine suction cups picking up the pieces of lumber and moving them around.

Speaker 3 The machines were shiny, they were new, painted bright blue and yellow.

Speaker 15 What you see here used to be three bodies carrying in two by fours to this machine. Yeah.
So now it's one guy standing there monitoring the system.

Speaker 15 This is another step in that automation to be more competitive one and then combat that labor problem we see every once in a while.

Speaker 3 I want to stop for a second at that labor problem.

Speaker 3 We've spent the last couple of days, of course, talking about the labor force here in Utah County, how it's so young, that it attracts companies and that there are people starting businesses of their own everywhere.

Speaker 3 But even with that, for certain kinds of jobs, the same problems you see across the country are happening here too. That's what I mean when I say the macroeconomy comes for us all.

Speaker 17 I'm just going to imagine, because I'm not familiar with this work, there's less wear and tear on the person if they're not lifting these heavy pieces of lumber.

Speaker 15 And not picking on Pablo, but you see him standing there with his arms folded, right?

Speaker 3 And stretching. Pablo dumps kind of like, what else do you do?

Speaker 15 We pick on him a little bit for it. His role was carrying two by fours to this machine, and he did it for years.

Speaker 15 So integrating this automation into the system, it takes less people to do the same job.

Speaker 3 Joe said the machines we're looking at cost something like two and a half million dollars. But automation can only go so far to solve his labor problems.

Speaker 3 Remember, it's a mix of people and machines working to build these trusses. So for the people side of things, for the past three years, SunPro has also been using H-2B visas.

Speaker 3 That's a federal program that lets U.S. employers hire foreign workers for temporary jobs when there aren't enough qualified American workers.

Speaker 16 It's great to be able to have

Speaker 16 individuals that are family members of the people we employ be able to help them come come to the states for a period of time and help us win a battle that we don't have a solution really in the in the market here in Utah County.

Speaker 16 There just aren't enough people that are willing and able to do the job.

Speaker 3 With federal immigration policy where it is right now, Sun Pro's labor pool might not be looking as stable as it was even a year ago.

Speaker 17 What about the rest of your production process? And in terms of the labor, getting the trusses onto a truck, having the drivers, all that kind of stuff. Is it hard to recruit for that more

Speaker 17 non-technical or customized labor?

Speaker 16 I mean all of our positions are relatively difficult to recruit for, but it can be really intimidating to someone.

Speaker 16 We can walk out there and see some of these trusses that span 60-70 feet and stack 20 high.

Speaker 3 These jobs require really specific skills and specific training. And you can see why somebody doesn't know what they're doing, it could be dangerous.

Speaker 3 So if they find a qualified worker, they'll pretty much always hire them, regardless of whether they were looking to fill that job right then. 47 employees here at the moment, by the way.

Speaker 3 So are you guys busy?

Speaker 3 Are you running full scale here or what are you doing? So we're not running full scale.

Speaker 15 We're actually running at about half capacity of what we can do.

Speaker 15 We're building on average about 32,000 board feet a day,

Speaker 15 which equates to about six homes.

Speaker 17 47 workers, six houses a day.

Speaker 15 And that's from every process in the plant from picking the material to loading the trucks in our front yard.

Speaker 3 So let me ask the management guy.

Speaker 3 You're building one trust but you're doing it with lumber from the states, from Canada, maybe other places as well. I mean this is it's the macroeconomy has to affect what you do.
Oh absolutely.

Speaker 16 I mean we source steel that comes from various countries. We're sourcing the lumber.

Speaker 16 Primarily this market comes from Canada, a lot of it. There have been tariffs and things in place for years

Speaker 16 with Canadian imports on lumber, but it just adds to the uncertainty of how much is lumber going to cost going forward.

Speaker 16 And trying to price in this market becomes challenging when you're talking about pricing a trust quote for a house that's going to be built in six months.

Speaker 3 Do you worry about the macroeconomy here? The national macroeconomy, I guess, but it sort of seems like Utah's kind of in a little bubble, right?

Speaker 3 So many people coming in, so much demand for housing, right? So many young families.

Speaker 16 There's always concern. Could we hit a recession in Utah? Absolutely, right?

Speaker 16 To your point, we're underbuilt in Utah, which creates somewhat of a bubble. Right.
And it's a desirable place for families and others to move to, and we're seeing that.

Speaker 3 Utah is somewhat of a bubble. Its unemployment rate is lower than the rest of the country.
Its population growth is higher.

Speaker 3 And obviously, we've spent the last week and a half talking about how its workforce is unusually young.

Speaker 3 So it's worth noting here that even in Utah County, in all the ways it's unique, a company like SunPro can't just rely on its local labor force.

Speaker 3 It's got to turn to automation and immigration, just like other manufacturing companies across this country.

Speaker 3 After the break, Neila Richardson is back. We'll talk about what we saw and learned in Utah County.

Speaker 3 But first, let's do the numbers.

Speaker 3 Dow Industrial is basically flat, 42,865. The NASDAQ down 99 points, about 15%, 19,615.
The S ⁇ P 500 down 16 points, about a quarter percent, 6,022.

Speaker 3 Starbucks jumped 4.3% today after its CEO told the Financial Times it was seeing, quote, a lot of interest. In somebody buying a stake at the coffee chain's China operations.

Speaker 3 China is Starbucks' second biggest market, about 8,000 stores there.

Speaker 3 Shares of some quantum computing companies spiked today after the head of NVIDIA said the technology was at an inflection point and would soon, quote, solve some interesting problems, end of quote.

Speaker 3 Here's my quote. What could possibly go wrong? Regetti Computing climbed 11 and 4 tenths percent today bonds up yield on the 10 your tinot down 4.42 percent you're listening to marketplace

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Speaker 3 This is Marketplace. I'm Kai Rizdahl.
That conversation that Neil and I had at Sun Peru, where they make those roof trusses, that was about a month ago.

Speaker 3 It is also the last segment of this leg of the age of work from Utah County. So we've got Neila back on the phone to talk things over a little bit.
Hi, Neila.

Speaker 14 Hi, Kai.

Speaker 3 So here we are a month out.

Speaker 3 I've been thinking, you've been thinking, what are your big takeaways?

Speaker 14 There's so many, Kai.

Speaker 14 But I'm going to boil them down to three, maybe four.

Speaker 3 See how these three land with you.

Speaker 14 First of all, I mean, invest in the the youth i've never seen so much hustle and grit off a sports field as i saw in utah for anyone who's looking to be inspired by a business opportunity maybe it's time to start talking to high school students

Speaker 3 because um

Speaker 14 they had it they had everything you need to be a great entrepreneur and i think this is a place that grows and nurtures that all right the second is um there's this old research idea in economics that i think is worth bringing to the fore.

Speaker 14 Community is actually very important for entrepreneurs to thrive. It's alive and well in Utah County, mostly through the church, but there's so many other ways to get that social capital.

Speaker 14 It's one of the things that I will take away from this experience.

Speaker 14 And the final thing, Kai, is just small business, whether it's in your basement or in this amazing innovation hub, small business is the heartbeat of Main Street. It was the heartbeat of Provo.

Speaker 3 Yeah, there was a dynamism there. The thing that I keep,

Speaker 3 I was going to say, struggling with, and I kind of am, because the question is, how do you take what's in Provo, Utah, all those good things, and nationalize them in a place that doesn't have the cultural dynamics, right?

Speaker 3 The social capital, the church, all of that, into the rest of the country.

Speaker 14 Yeah, that's the struggle, right?

Speaker 14 But

Speaker 14 if we go back to economic literature, there is a belief or an empirical result that this kind of connection can be digitized. It can be virtual.

Speaker 14 But there's something about that physical connection too, and shared values that I think is hard. It will be difficult to get like-minded people of multiple generations,

Speaker 14 multiple financial backgrounds together over a common focus on just making a community that thrives for everyone. I think it would be harder to transfer to the rest of the country.

Speaker 3 When you so nicely brought me that latte that first morning we were there,

Speaker 3 we got to, but I did not follow up on the issue of immigration. And I want to talk about that, not in the,

Speaker 3 you know, in the current political dynamic, which is very real and can't be ignored.

Speaker 3 But it seems to me, as we say on marketplace all the time, that since immigration is a labor story, that is one way that perhaps what happens in Provo and in Utah County might be able to be nationalized.

Speaker 14 Yeah.

Speaker 14 What we learned at Sun Pro is no county is an island.

Speaker 14 Even with this highly educated, young, socially connected workforce energized by dirty sodas,

Speaker 14 you still need outside help. You need to phone a friend.

Speaker 14 And sometimes those friends, those colleagues, those people that make your community, literally build your community, are from outside your community.

Speaker 14 A lot of skilled trades come from South America on temporary visas, just

Speaker 14 like we heard from SunPro. And as great as Utah County is, it is totally oriented towards a service economy.
There's not as much production and manufacturing.

Speaker 14 That is also an important part of the infrastructure. So no county can get everything just from its own resources.

Speaker 14 And to build the spaces that are needed, both commercial and residential, they're sourcing talent from the rest of the world and also from other states.

Speaker 3 Let me take you back to Cumberland County, Tennessee, one of the oldest workforces in this economy. We have now had the youngest.

Speaker 3 Compare and contrast, would you?

Speaker 3 Yeah.

Speaker 14 I think for Cumberland, there is a clear divide between the haves and the have-nots, the haves

Speaker 14 coming from outside the community, in some ways bringing the advantages of that wealth and the disadvantages. So you saw

Speaker 14 that line between people who were born there, native there, and who are coming for a retirement experience. And they were living two different lives.

Speaker 14 But those lives intersected in a really strong economic concentric circle.

Speaker 14 I would compare that to this community in that it was almost like there was a

Speaker 14 one message, one goal, and that goal was building innovation. You heard it everywhere you listened.

Speaker 14 There was this undercurrent of innovation and entrepreneurship that united the community, not divided it. So I guess the biggest differences is in the oldest county, economics divided.

Speaker 14 and the youngest county, it united.

Speaker 3 Hmm.

Speaker 3 Neila Richardson is the chief economist at ADP. She is also the brains behind this operation.
It's a series we call The Age of Work.

Speaker 3 We're going overseas next, but you guys are going to have to tune in to figure out where that is. Neela, thanks a bunch.
We'll talk to you soon.

Speaker 14 Anytime, Ty. Take care.

Speaker 3 This final note on the way out today, by way of of preface of which I am obliged to remind you that President Trump's tariffs are taxes paid by American consumers.

Speaker 3 Data from the Treasury Department saw this in the Wall Street Journal that shows the government collected $22 billion in import duties, taxes on imports in the month of May.

Speaker 3 Our media production team includes Brian Allison, Jake Cherry, Justin Dueller, Drew Jostad, Gary O'Keefe, Charlton, Thorpe, One Collisterado, and Becca Weinman.

Speaker 3 Jeff Peters is the manager of media production. I'm Kahai Risdahl.
We will see you tomorrow, everybody.

Speaker 3 This is APM.

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