Tariff-driven price bloat hasn't arrived just yet

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Here's the TLDR on this economy that too long didn't read. It's fine.
For now.

From American Public Media, fifth month of 2025 consumer prices in that economy specifically the good people at the bureau of labor statistics told us this morning the consumer price index for may was up a tenth of one percent from april 2.4 percent from may a year ago now for those saying reasonably where are those tariff price increases everybody was talking about a month ago, Kai? Well, it's complicated. Marketplace's Sabree Beneshore is going to explain.
If you are a retailer, there are some things you can store and some things you can't. We usually keep a pretty large pile of green coffee inventory.
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.
We roast and package coffee here at our facility in Massachusetts. She was able to bring in some coffee before 10% tariffs hit and store it, blend it, problem solve.
So we can be judicious about how we do a cost increase. Overall in the U.S., coffee went up a percent in May.
Bananas do not work that way. Obviously, we can't stockpile fresh bananas, which, you know, we don't even make.
10% is basically our whole margin. So those prices had to go up.
On average in the U.S., bananas got more than 3 percent more expensive in May. But it's not just perishables that went up last month.
Major appliances went up almost four and a half percent in May. Omar Sharif is president of Inflation Insights.
Appliances have had China tariffs since February and it's starting to show up. But other things we import from China, like furniture, have actually come down.
Some of this has to do with retailers just trying to move merchandise out the door. 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.
Meanwhile, gas prices are down 12 percent 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.
Many private sector data on apartment rents are showing essentially no change from one year ago. 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. Again, Nicole Vitello with Equal Exchange.
So the coffee we're buying from Guatemala, Colombia, Honduras, has been an additional $20,000 per container. In the eight weeks since the tariffs have hit, they've cost the company $250,000.
It can't eat all that. In New York, I'm Sabri Beneshaw for Marketplace.
You'll be surprised, not at all, to hear the President Trump use this morning's inflation report to press Fed Chair Jay Powell again to lower interest rates. A full percentage point is what the president wants.
That seems unlikely. Wall Street today.
Early news from London of a, and this is a quote

from Commerce Secretary Howard Lutnick of a handshake for a framework for trade negotiations

that gave traders an early boost. And then they thought better of it.
We'll have the details

when we do the numbers. The industry leader for layoffs in this economy, January through May.
Government going away. 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.
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.
That is data from the outplacement firm Challenger Grain Christmas. It is, should you be curious, a 274 percent increase from retail job cuts over the same period last year.
Marketplace's has more on that one. A 274 percent 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.
For one... Of all the different sectors, retail's a very volatile one.
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.
We've seen quite a few retailers announce that they're going to be closing stores. JCPenney, Forever 21, Macy's, Right Age, Walgreens.
But other job cuts have nothing to do with store closing, says Christina Boney, a retail analyst at Moody's. Walmart recently announced plans to lay off 1,500 workers in technology operations and e-commerce.
Those would be like the primary spaces that, you know, the customer wouldn't necessarily see. It's not what's in the store.
And those layoffs signal something bigger, that retailers are worried and are looking for places to slim down. Clearly, we're in an environment where efficiencies matter.
They matter because consumers are spending less. They have been since the spending boom of 2021, when many retailers overhired.
Erin Cheris, a retail consultant at Bain & Company,

says brands have been trying to hang on to the optimistic view that the boom will come back. And now 2025 isn't better, and so they actually have to do something about it.
Especially with tariffs looming. Cheris says one option is to raise prices.
Walmart is also doing that. Of course, that's not such a popular move.
You've seen politicians be very aggressive at pressuring retailers not to do that.

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

The next option is to cut workers, because labor is typically the biggest cost for any business.

I'm Kristen Schwab for Marketplace.

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 macro economy comes for us all. I'm so excited to put on that neon yellow vest.
ADP chief economist Neela 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. These are brand new, man.
No scratches on these goggles or anything.

This is great. Once we were all suited up, we did the intros.
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.

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.

At this location specifically, with lumber and trusses.

Did you start actually making the trusses?

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

We had Steve Broadbent with us, too.

He's a company vice president in charge of truss manufacturing and a little bit more. We have insulation, garage door install operations.
We've even got a little gas station that we run. Like retail gas station? Retail gas station.
Swing by, we've got the best milkshakes and chicken you'll ever have. Sadly, we didn't make it to SunPro's gas station while we were in town, so we can neither confirm nor deny the chicken and milkshake thing.
Neela, though, asked Joe the big question. And what is a truss? So trusses are the triangles on a roof that make everything that hits it flow out.
It's a structurally engineered product. We're literally talking about a huge wooden triangle, think 30 to 60 feet long on average, that holds up your roof.
So you prefab those and you sell those to home builders or construction companies? 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.
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.
So here we have a stack of two-by-fours, basically, right? Correct. And they're going to get fed into whatever it is in there? That's right.
There's several different grades of lumber that we use in our trusses depending on the engineering. That's what it's all about.
Explain that to a layperson depending on the engineering. So snow load is something that...
Like snow, snow. Correct.
How much weight a truss can carry, right? So that's the kind of things we're looking at when we design trusses. Right.
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.
I'm going to walk you through an older side of the truss plant. Ten 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. And they're doing it by hand, right? I mean, they're like nailing and all that jazz.
That's correct. Yeah.
Every truss is a special product. Right.
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. But if each truss is highly customizable, then that means you have to have a labor force that has a lot of skill.
That is correct. 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.
They know what they're supposed to be doing throughout the day, and it just runs like clockwork. Also, it's really loud in here and talking this kind of painting.
Correct. There's that, you know.
So loud, in fact, that we had to stop talking a couple of times and move someplace we could actually hear each other. 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, 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 size trusses. And we walk over here

and see this integration of more automation into what we're doing. The new way of building trusses.
A more simplified version of this is where the industry is moving. We went over to the other side of the facility where instead of guys lugging two-by-fours, there were little fancy machine suction cups picking up the pieces of lumber and moving them around.
The machines were shiny, they were new, painted bright blue and yellow. What you see here used to be three bodies carrying two-by-fours to this machine.
Yeah. So now it's one guy standing there monitoring the system.
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. I want to stop for a second at that labor problem.
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. But even 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 macro economy comes for us all. 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.

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

And stretching.

Pablo's just kind of like, what am I doing, man?

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.

So integrating this automation into the system, it takes less people to do the same job. Joe said the machines we're looking at cost something like $2.5 million.
But automation can only go so far to solve his labor problems. 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's also been using H-2B visas. That's a federal program that lets U.S.
employers hire foreign workers for temporary jobs when there aren't enough qualified American workers. It's great to be able to have individuals that are family members of the people we employ,

be able to help them 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 market here in Utah County.

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

With federal immigration policy where it is right now, SunPro's labor pool might not be looking as stable as it was even a year ago. 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 non-technical or customized labor? I mean,

all of our positions are relatively difficult to recruit for, but it can be really intimidating to someone. We can walk out there and see some of these trusses that span 60, 70 feet and stack 20 high.

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.
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.
So are you guys busy? Is this, are you running full scale here or what are you doing? So we're not running full scale. We're actually running at about half capacity of what we can do.
We're building on average about 32,000 board feet a day, which equates to about six homes. 47 workers, six houses a day.

And that's from every process in the plant,

from picking the material to loading the trucks in our front yard.

So let me ask the management guy.

You're building one truss, but you're doing it with lumber from the States,

from Canada, maybe other places as well. I mean, the macroeconomy has to affect what you do.

Oh, absolutely.

I mean, we source steel that comes from various countries. We're sourcing the lumber.
Primarily, this market comes from Canada, a lot of it. There have been tariffs and things in place for years with Canadian imports on lumber, but it just adds to the uncertainty of how much is lumber going to cost going forward, 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. Do you worry about the macro economy here? The national macro economy, I guess, but it sort of seems like Utah's kind of in a little bubble, right? So many people coming in, so much demand for housing, right? So many young families.
There's always concern. Could we hit a recession in Utah? Absolutely.
Right. 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. Utah is somewhat of a bubble.
Its unemployment rate is lower than the rest of the country. Its population growth is higher.
And obviously, we've spent the last week and a half talking about how its workforce is unusually young. So it's worth noting here that even in Utah County and all the ways it's unique, a company like Sunpro can't just rely on its local labor force.
It's

got to turn to automation and immigration, just like other manufacturing companies across this

country. After the break, Neela Richardson is back.
We'll talk about what we saw and learned

in Utah County. But first, let's do the numbers.
Dow Industrial is basically flat, 42,865. The Nasdaq down 99 points, about a half percent, 19,615.
The S&P 500 down 16 points, about a quarter percent, 6,022. Starbucks jumped four and a third percent today after its CEO told the Financial Times it was seeing, quote, a lot of interest in somebody buying a stake of the coffee chain's China operations.
China is Starbucks' second biggest market, about 8,000 stores there.

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. Here's my quote.
What could possibly go wrong? Rigetti computing climbed

11.4 percent today. Bonds up.
Yield on the 10. Your T-note down 4.42 percent.

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This is Marketplace.

I'm Kai Rizdahl.

That conversation that Neil and I had at Sunpro,

where they make those roof trusses,

that was about a month ago.

It is also the last segment of this leg of the age of

work from Utah County. So we've got Neela back on the phone to talk things over a little bit.
Hi, Neela. Hi, Kai.
So here we are a month out. I've been thinking, you've been thinking, what are your big takeaways? There's so many, Kai, but I'm going to boil them down to Three, maybe four.

See how these three land with you.

And that's boiled down.

Go ahead.

First of all, I mean, invest in 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. 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.
The second is, there's this old research idea in economics that I think is worth bringing to the fore. 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. It's one of the things that I will take away from this experience.
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. Yeah, there was a dynamism there.
The thing that I keep, 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? The social capital, the church, all of that, into the rest of the country. Yeah, that's the struggle, right? But 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. 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, 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.
When you so nicely brought me that latte that first morning we were

there, we got to, but I did not follow up on the issue of immigration. And I want to talk about that, not in the current political dynamic, which is very real and can't be ignored, 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.
Yeah. What we learned at SunPro is no county is an island.
Even with this highly educated, young, socially connected workforce, energized by dirty sodas. You still need outside help.

You need to phone a friend. And sometimes those friends, those colleagues, those people that make

your community literally build your community are from outside your community. A lot of skilled

trades come from South America on temporary visas, just 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. That is also an important part of the infrastructure.
So no county can get everything just from its own resources. 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.
Let me take you back to Cumberland County, Tennessee, one of the oldest workforces in this economy. We have now had the youngest.
Compare and contrast, would you? Yeah. I think for Cumberland, there was a clear divide between the haves and the have-nots, the haves coming from outside the community, in some ways bringing the advantages of that wealth and the disadvantages.
So you saw that line between people who were born there, native there, and who were coming for a retirement experience. And they were living two different lives.
But those lives intersected in a really strong economic concentric circle. I would compare that to this community in that it was almost like there was one message, one goal, and that goal was building innovation.
You heard it everywhere you listened. 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. In the youngest county, it united.
Hmm. Neela 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.
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. Anytime, Ty.
Take care. This final note on the way out today, by way of preface, of which I'm obliged to remind you that President Trump's tariffs are taxes paid by American consumers.
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. Our media production team includes Brian Allison, Jake Cherry, Justin Duller, Drew Jostad, Gary O'Keefe, Charlton Thorpe, Warren College, Toronto, and Becca Weinman.
Jeff Peters is the manager of media production, and I'm Kai Risdahl. We will see you tomorrow, everybody.
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