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Speaker 2 I'm just going to say it. We are going heavy on the macroeconomics today.

Speaker 2 Oh, that and spicy food.

Speaker 2 From American Public Media, this is Marketplace.

Speaker 2 In Los Angeles, I'm Kai Risnall. It is Thursday today, August 21.
Good as always to have you along, everybody.

Speaker 2 There is a trifecta leading the macroeconomic conversation in this country right now. Tariffs, because,

Speaker 2 well, you all know why. Inflation pretty much ditto.
It's higher than the Federal Reserve wants it to be. And the labor market, still okay, but trending toward not entirely okay.

Speaker 2 The latest piece of evidence of that came this morning with first-time claims for unemployment benefits, which were up more than expected to the highest level since mid-June.

Speaker 2 And the week before that, continuing claims. That's all the laid-off workers who've been getting benefits for two weeks or more.

Speaker 2 That came in just shy of 2 million people, the most since November of 2021.

Speaker 2 So, Marketplace's Mitchell Harmon gets us started.

Speaker 4 Unemployment claims give us a snapshot of what's happening in in the labor market in near real time. First-time claims reported today were filed just last week.

Speaker 4 And when they're increasing, says Andrew Stettner at the Century Foundation.

Speaker 5 They're one of the key signs we have a weakening job market. More people staying on employment benefits than a year ago.
Hiring really slowing down in all sectors except for health care.

Speaker 4 A lot of employers are still loath to downsize. They remember the labor shortages of the pandemic.

Speaker 5 So New layoffs have not been at a recessionary level, but because people haven't been able to get off unemployment, you've seen the total number steadily increase.

Speaker 4 But the glass may still be half full, says Amy Glaser at staffing firm Adeco.

Speaker 8 We don't want to confuse weakness with moderation. We're seeing a bit of a pause, not a halt, in hiring.

Speaker 4 And we've seen declines in both employers' demand for workers and in the number of people looking for jobs.

Speaker 8 We've got the aging boomers that are retiring every day. And then you also see the demand side of the house where we've got tariffs and geopolitical uncertainty.

Speaker 4 That points to a supply-demand imbalance, explains George Borey at asset management firm Allspring.

Speaker 9 The demand for labor is contracting at a faster pace than the supply of labor. And you may see unemployment now start to move higher.

Speaker 4 As workers on unemployment plus new entrants to the labor force chase a shrinking number of jobs, it's a labor market in transition, possibly something Fed Chair Powell will touch on when he speaks at Jackson Hole.

Speaker 9 The data does show that the labor market is softening, and so from that perspective, there is an argument for the Fed to resume rate cuts.

Speaker 6 However,

Speaker 4 inflation. More to come on that.
I'm Mitchell Hartman for Marketplace.

Speaker 2 More to come indeed in just a second. Wall Street on this Thursday, traders had just the the slightest bit of dyspepsia today.
We will have the details when we do the numbers.

Speaker 2 Jackson Hole, Wyoming is going to be the center of the macroeconomic galaxy tomorrow. It's a gathering the Federal Reserve Bank of Kansas City holds every year.

Speaker 2 Everybody who is anybody is going to be there for a symposium, the theme of which this year is Labor Markets in Transition, Demographics, Productivity, and Macroeconomic Policy.

Speaker 2 I'll tell you what, they could not have timed it better if they had tried. Given that the central bank is wrestling right now with what it ought to do about the U.S.

Speaker 2 labor market in transition, while inflation is still higher than Jay Powell and the gang want it to be.

Speaker 2 Powell is giving the big speech of the session tomorrow morning, as Mitchell alluded to a minute ago.

Speaker 2 Hanging on his every word would be an understatement for what the economic world is doing, us included, full disclosure. So we made some calls today to try to figure out what Powell might say.

Speaker 2 So I'm Bill English, and I'm a professor in the finance department at the Yale School of Management.

Speaker 11 Nellie Lang, and I'm a senior fellow at the Brookings Institution in Washington, D.C.

Speaker 12 My name is Linda Hooks, and I'm a professor of economics and head of the department of economics at Washington and Lee University.

Speaker 2 They're talking to us, which means they're not in Jackson Hole.

Speaker 12 I'm actually in the middle of moving offices. We just moved into a brand new building, and so this was like a reason to stop unpacking boxes.

Speaker 11 I'm in the worst possible lighting. This is, it's only audio, right, not video.

Speaker 2 You know, it's summer, so I'm working on research, so I'm trying to write a paper with a colleague. The Fed chair's speech in Jackson Hole is always a big deal.

Speaker 2 This year, though, feels kind of different.

Speaker 12 This is a moment of high drama.

Speaker 2 President Trump and increasingly his loyalists have been going after the central bank, as you know, Powell and others personally.

Speaker 2 It is a very safe bet, though, that that's not going to come up tomorrow.

Speaker 12 Chairman Powell is generally a

Speaker 12 middle-of-the-road kind of person in terms of his speeches.

Speaker 12 And so I expect him to stay there in the middle lane of the road talking about current economic conditions and about the Fed's forecast for the near-term future economic conditions.

Speaker 11 Chair Powell will take his usual approach, and I expect

Speaker 11 that he will speak to some progress on the new framework.

Speaker 2 Every five years, the Fed reviews the framework it uses to guide monetary policy. The last one was 2020, five years ago, of course, when the economy was in a very different place.

Speaker 2 So the question is, will they make changes to it again? I think the answer is probably yes.

Speaker 2 They've been talking at the last four

Speaker 2 or five, I guess, FOMC meetings about that. So there's been some coverage in the minutes.
And those have suggested they're likely to kind of unwind some of the changes that they made in 2020.

Speaker 2 Also, though, people are looking for Powell to say something about this.

Speaker 11 I think he'll also

Speaker 11 point to his current views on possible outcomes at the September meeting. I know many people are hoping he will.

Speaker 2 I will bet you $5

Speaker 2 it is some version of they're going to want to see more data.

Speaker 2 There are a half a dozen Fed meetings before Powell's term as chair is done.

Speaker 2 So it's not like we're never going to hear from him again, but this is the last Jackson hole for him being the big man on campus.

Speaker 2 I think he has a good story to tell about how the Fed handled policy over the last few years.

Speaker 2 I hope that he'll take the opportunity to tell that story.

Speaker 11 There's lots, you know, big,

Speaker 11 big shocks that happened to the U.S. and to the global economy that he navigated the U.S.
economy through using monetary policy. And the U.S.

Speaker 11 came out of the pandemic extremely strong relative to other countries.

Speaker 12 I'm not sure that Powell will reflect on his own legacy. He is a modest

Speaker 12 person,

Speaker 12 and I think he's going to wait for others to do that.

Speaker 2 Here's my preview. It's going to go 20, maybe 25 minutes.
Powell's speech is very heavy on the monetary policy framework, balancing both sides of the dual mandate.

Speaker 2 He's going to talk about that too, jobs and inflation. He might say it could, emphasis here on the could be appropriate to cut rates later this year.

Speaker 2 And again, remember, I've got a five spot on him saying he wants more data.

Speaker 2 I'm going to generalize here just a little bit, but the way the big AI engines we've all come to know and love and perhaps fear, that's Google's Gemini and ChatGPT, Anthropic's Claw, and all the rest, the way they work are through these things called large language models, LLMs.

Speaker 2 They hoover up basically all the text on the internet. They grind through it and spit out the answers to whatever questions you have asked.

Speaker 2 Like I said, I generalize and I simplify, but that's the basic gist. Now, though, there are things called VLMs, vision language models.
Marketplace's Sabri Benishour makes that make sense.

Speaker 7 Sentences have words, kind of like music has notes.

Speaker 7 Large language models work basically by predicting the next note.

Speaker 7 Now, some AIs do do this with actual music, but fundamentally, large language models do this with words, predicting the next word to form a more complex sentence or paragraph.

Speaker 7 See Va Reddy is a professor of computer science and linguistics at McGill University.

Speaker 13 Each word stands on its own, and then you can build a model on top of that. What word comes next.

Speaker 7 All of this music was, by the way, AI generated. Now, pictures might be worth a certain amount of words, but they aren't made of actual words.

Speaker 7 So researchers had to figure out how an AI is supposed to understand them.

Speaker 13 An image has so many details in it. What would you focus on? So it's much, much harder problem than generating language or anything else.

Speaker 7 The answer researchers figured out was, well, smaller images, little tiny patches of an image.

Speaker 13 You might say it's a sky and which has a tree, leaves some leaves in it and some clouds in it. And you break this image into these patches.

Speaker 13 You treat each patch as a word.

Speaker 7 Once images became words, the power of language model AIs could start to be unleashed on them. And we get what are called vision language models, vision AI.

Speaker 14 We've just seen a proliferation of usage in areas that I don't think we ever would have had the imagination to think of.

Speaker 7 Jay Allen is CEO of M87 Labs, which created an open source vision language model called Moondream.

Speaker 6 There was a rancher who owned just an incredible amount of tracts of land and once in a while cows would get lost and the rancher used Moondream to have a drone fly around and to try to identify errant cows.

Speaker 7 M87 Labs also trained its AI not just to look but to look at people looking something called gaze detection.

Speaker 6 And we had people start building retail applications where they could start collecting retail telemetry data to understand when somebody goes into a store, what do they look at and what tends to get the most types of eyeballs.

Speaker 7 One challenge is how to train these models.

Speaker 7 We have civilization-sized amounts of writing for large language models to learn from, but images with a ton of description of what's happening, what the context is, not nearly as much.

Speaker 15 The type of data is very limited in the sense that it's imagine what people upload to the internet represents maybe a very small fraction of what we see every day.

Speaker 7 Meng Yi Ren is an assistant professor of computer science and data science at NYU. He says it can be hard for AIs to generalize.

Speaker 7 Like a self-driving car knows what a stop sign is, but could get confused by a graffitied stop sign or a scooter that's driving weirdly.

Speaker 15 Even though AI models have been seeing so much data on the internet, they may still lack some knowledge in terms of how to control themselves.

Speaker 7 So some companies are training their vision AIs themselves and then combining those AIs with existing language models like from OpenAI or Anthropic.

Speaker 7 James Stripe is chief product officer at Drone Deploy, which uses AI to monitor safety hazards at construction sites and track construction progress.

Speaker 10 It understands the difference between, say, ladders, structures, drywall, insulation, those kinds of things.

Speaker 10 And then there's another layer which has much more detailed understanding of the world, and that's the layer that applies judgment.

Speaker 7 Like you need to block off that ledge so someone does not fall off of it. So, what does the future hold for vision learning models?

Speaker 7 Imagine robots that breeze into an Airbnb and change the sheets, or eyeglasses that can tell you where to find that bracelet you haven't seen in a week, or things we just have not imagined at all.

Speaker 7 In New York, I'm Sabri Benishore for Marketplace.

Speaker 2 Coming up.

Speaker 16 I just need seven mountain goats a year. That's all, guys.

Speaker 2 The material costs of making art. But first, let's do the numbers.

Speaker 2 Town Industrial is down 152 today, about 3 tenths percent, 44,785. The NASDAQ down 72 points, also three-tenths percent, 21,100.
The S ⁇ P 500 off 25 points, 4 tenths percent there, 6,370.

Speaker 2 Waiting on Jay Powell. They definitely are.
Yet another big box store reported earnings today. Walmart boosted its full-year outlook despite higher costs from tariffs.

Speaker 2 The retail giant has been inching prices up on some goods, but for others, prices are kind of holding steady. Walmart sank 4.5% today.

Speaker 2 Clothing brand Guess has negotiated a deal to go private and be bought by its founders and Authentic Brands, which owns Reebok. It's a complicated world out there.
Very complicated world.

Speaker 2 The deal is worth some $1.4 billion.

Speaker 2 Guess shrank two-tenths of 1% today. The U.S.
and Europe have negotiated a tariff deal for a number of sectors, including pharmaceuticals.

Speaker 2 The EU is the U.S.'s top source for drug imports, as you might be aware. Pharmaceuticals tariffed at 15% starting next month.
Novo Nordisk, based in Denmark, climbed to a tenth percent.

Speaker 2 AstraZeneca, global headquarters in Sweden and the UK, slid about a 10th percentile today. Bonds down, yield on the 10, you're T-note up 4.32%.

Speaker 2 You're listening to Marketplace.

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Speaker 2 That's dell.com/slash deals.

Speaker 1 This podcast is supported by Odoo. Some say Odoo business management software is like fertilizer for businesses because the simple, efficient software promotes growth.

Speaker 1 Others say Odoo is like a magic beanstalk because it scales with you and is magically affordable.

Speaker 1 And some describe Odo's programs for manufacturing, accounting, and more as building blocks for creating a custom software suite. So Odoo is fertilizer, magic beanstock building blocks for business.

Speaker 1 Odoo, exactly what businesses need. Sign up at odoo.com.
That's odoo.com.

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Speaker 2 This is Marketplace. I'm Kai Rizdahl.
You got your Dow and your NASDAQ to measure equities. You got your K-Schiller to measure home prices.
You got your GDP to measure economic growth.

Speaker 2 And you got your Scoville scale if you want to measure how hot chilies and peppers are. And if you can extend the tortured metaphor just a little bit, how businesses are using that heat.

Speaker 2 Because spicy, it turns out, is the hottest flavor in town right now.

Speaker 2 According to DataCential, which collects data on the food and beverage industry, 19 out of every 20 restaurants in these United States features an item labeled as spicy.

Speaker 2 Ellen Cushing wrote about it in The Atlantic the other day. Ellen, it's good to have you back.

Speaker 18 Great to be here, always.

Speaker 2 Would you do me a favor, please? And just to set the scene here, tell me about the Carolina Reaper, would you?

Speaker 18 Well, I can't tell you from personal experience because because i am too scared to eat it but it is a very very spicy pepper so by means of comparison tabasco sauce you know the standard sauce is 5 000 scobille heat units a carolina reaper is 2.2 million

Speaker 18 so this is a very very very hot pepper it was invented in 2012 um and it is just super duper hot it makes people hallucinate it makes people pass out it does not seem that that fun to me, but a lot of people are eating them.

Speaker 2 Well, so that gets to the point of this piece. We have become, I mean, you say this in your piece, Americans are setting their mouths on fire.

Speaker 17 We are

Speaker 2 an overwhelmingly spicy food nation now.

Speaker 18 We are. And this is a relatively recent phenomenon, though it's been sort of building for a while.
But I have definitely noticed this in the last decade or so. I bet you probably have too.

Speaker 18 Like at the grocery store, at restaurants, on recipe websites, previously bland food is spicy and then previously spicy food is spicier and this is happening everywhere it's great you you point or you compare uh uh our our spicy food tolerance to calluses right the more spicy food we eat the more spicy food we can tolerate so we're looking for ever spicier foods yeah and you know there are a lot of more macroeconomic trends that are pointing us in this direction too so for example food costs are really high and spice is a great way of masking cheap flavors or sorry cheap ingredients so for example, if you have noticed that a lot of chicken nuggets are spicy now, that's because chicken is a pretty cheap, flavorless meat, but if you put a bunch of spice on it, it starts to taste like something.

Speaker 2 I will also point out here that this is a business opportunity just straight up for food companies. Frito-Lay, you write, has like 25, 26 different varieties of Flamin' Hot, whatever.

Speaker 18 Yeah, they sure do. You know, the Flamin' Hot brand is hugely impactful for them.
If you go to the chip aisle now, you'll see that something like six out of 13 of Dorito's flavors now are spicy.

Speaker 18 Food companies are responding to a real desire in people. And, you know, it's like food manufacturing has gotten a lot more sophisticated recently.

Speaker 18 This is why, at least when I was growing up, there were like five flavors of chips and now there are hundreds. It's a lot easier to inject new flavors in spicy food.

Speaker 18 and people have proven themselves really interested in buying it. So it's a great opportunity for companies that want to make money.

Speaker 2 At the risk of alienating our younger listeners, you point out that 51%

Speaker 2 of Gen Z

Speaker 2 consider themselves hot sauce aficionados. 35% of them have signed a waiver so that they can eat

Speaker 2 atomically spicy foods.

Speaker 18 Yes, they're the flaming hot generation. And it makes sense.
You know, these are the people that were raised with all of those different flavors of Doritos.

Speaker 18 These are the people who were raised in a truly global food culture where you have influences from non-European countries. You know, most people have sriracha in their refrigerator now.

Speaker 18 The most popular fast casual chain in the country is named after this Mexican pepper. Food culture has really changed in the last few decades, and they are the beneficiaries of of that.

Speaker 18 And so, I guess part of that is that they just love spice.

Speaker 2 What about you? I mean, I'm a spicy food guy, not like Carolina Reaper hot, but what about you?

Speaker 18 I'm about probably the same as you. I don't like to torture myself for no reason,

Speaker 18 but I tend to put cholula. Chalula is my hot sauce of choice, and I tend to put it on most things I eat.

Speaker 2 Ellen Cushing at The Atlantic. Thanks, Ellen.

Speaker 16 Thanks, Kyle.

Speaker 2 This past weekend, more than a thousand native artists were able to put their work in front of casual shoppers and museum curators, collectors too, at the Santa Fe Indian Market.

Speaker 2 While the art itself is rooted in indigenous traditions, it's being made in a global economy. Marketplace's Savannah Peters explains how tariffs are shaping the indigenous art economy.

Speaker 16 Most artists come to Indian market with lots of inventory. But when I visit Beverly Bear King Moran's booth, she has just one piece for sale.
So this is a traditional Flakota horse mask.

Speaker 16 It's red, fully beaded, and meant to adorn some very spoiled horse. It took Bear King Moran nine months of full-time beading.

Speaker 16 She tries to pay herself at least least minimum wage, plus the cost of materials. There's actually 300,000 beads on this mask.

Speaker 16 Bear King Moran values this piece at $47,000, though it might ultimately sell for less. People don't always understand beadwork and why it's so expensive.

Speaker 16 And Bear King Moran says pricing and marketing beadwork is about to get harder. All 300,000 of those beads sewn onto the mask are imported, mostly from the EU.

Speaker 16 Bear King Moran purchased materials for this piece long before President Trump's tariffs took effect. But now? Finding these is getting harder and then you're going to be paying more for them.

Speaker 16 She expects she'll have to raise the price of her next piece and probably accept a thinner profit margin. Other artists work on a shorter timeline and don't have that buffer.

Speaker 16 like Choctaw seamstress Yasmeen Del Rosario. A customer asks the price of one of her linen dresses.
Um, that's 500.

Speaker 16 Oh, thank you.

Speaker 16 Del Rosario makes contemporary clothes with what she calls culturally appreciative elements, like this orange mid-calf skirt with satin ribbon sewn into a herringbone weave.

Speaker 16 I have the long strips and I weave it just like a basket. It took an immense amount of time.
She's hoping it will sell for $400,

Speaker 16 in part to account for the surging cost of imported textiles. That's also making a lot of our garments more expensive, and people are are kind of surprised by that because we want to use quality.

Speaker 16 Del Rosario worries about staying competitive with other booths where artists might be selling from a pre-trade war stash of materials or finding other ways to blunt the effect of tariffs like localizing their supply chains.

Speaker 16 Chillcat weaver Lily Hope is working on that. I just need seven mountain goats a year, that's all guys.

Speaker 16 At her booth, Hope has earrings for sale and a blue and yellow dancing blanket on a loom, about two-fifths of the way done.

Speaker 16 The materials are 100% merino wool with cooked yellow cedar bark spun into it. Right now, that wool comes from New Zealand.

Speaker 16 Tariffs have given Hope fresh motivation to make the switch to mountain goat hair, the traditional chill cat weaving material. She's put out a call for help in her community in southeast Alaska.

Speaker 16 Hey, if you guys are going hunting, I'm going to come with you and just bring down the hide because I need that yesterday. What she saves on import fees, hope will make up for in labor.

Speaker 16 She guesses processing each hide will take up to 45 hours, but she says sourcing from her homelands.

Speaker 16 Instead of having to continue to utilize the world market, I think that's going to be pretty powerful for my work going forward.

Speaker 16 Pass a Maquatti artist Gabriel Frey weaves baskets from a different material, black ash.

Speaker 2 Sourced from the woods.

Speaker 16 So Frey is very much insulated from tariffs, but still felt anxious ahead of this market.

Speaker 19 I don't have a business if the people who are buying the art are affected to the point of not wanting to buy art.

Speaker 16 Collectors surprised Frey by basically buying him out of baskets, which are priced in the thousands, in less than a day.

Speaker 19 I've had multiple people come up today who have said, I've been wanting to do this for a long time and I'm going to do it.

Speaker 19 So they're very well maybe that sort of like the Titanic's sinking, let's just play the band.

Speaker 16 Frey says something is in the air. Like, in these uncertain times, people want to take home something beautiful.
In Santa Fe, I'm Savannah Peters for Marketplace.

Speaker 2 This final note on the way out today comes to us from the CBC, the Canadian Broadcasting Corporation, and it goes out to all the citrus growers here.

Speaker 2 According to Statistics Canada, the United States sent $12 million worth of orange juice north of the border in June 2024. This June, not even $6 million.
You all know why, right?

Speaker 2 Our daily production team includes Andy Corbin, Nicholas Guillain, Maria Hollenhorst, Iru Ekbenobi, Sarah Leeson, Sean McHenry, and Sophia Terenzio. I'm Colin Rizdahl We Wills.

Speaker 2 See you tomorrow, everybody.

Speaker 2 This is APM.

Speaker 16 Imagine a future where chocolate and coffee are rare and expensive, where cheap nutritional staples like corn and wheat are threatened. Sounds unpleasant, doesn't it?

Speaker 16 Well, we could be heading there if we don't recognize that the climate crisis is also a food crisis.

Speaker 7 I've seen yields drop because of drought.

Speaker 2 And believe me, boy have I seen them drop.

Speaker 16 We have had dry spells that have lasted years. I'm Amy Scott.

Speaker 16 This season on How We Survive, we investigate how the climate crisis is threatening our most vital food systems and how scientists are racing to develop alternatives that will shape the future of food.

Speaker 16 Listen to this season of How We Survive on your favorite podcast app.