The cost of GOP cuts to coal royalties

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Consumers are still spending, but with cracks in other parts of the economy, what is the Fed gonna do?

From American Public Media, this is Marketplace.

In Washington, D.C., I'm Kimberly Adams in for Chair as Dahl.

It's Tuesday, September 16th.

Good to have you along.

Today marks the start of what has to be one of the more awkward Fed meetings in recent memory.

New Fed Governor Stephen Myron joined the Federal Open Market Committee today, despite the unprecedented fact that he's taking that seat without officially resigning his position at the White House.

He's taking a leave of absence.

In the same room is fellow Fed Governor Lisa Cook, the person Myron's former/slash current boss, President Trump, is trying to fire.

Even with all the drama over Fed independence we've seen these past few months, not to mention the tariffs and the national debt and sticky inflation and souring jobs numbers, the stock market doesn't seem to care all that much.

Marketplace's Matt Levin explains why.

Economist David Kelly at JPMorgan Asset Management says if the Fed lowers rates tomorrow, it'll be more about politics than monetary policy.

But I think they are cutting rates because they know how much pressure they're getting from the administration and how much more pressure they'd get if they didn't cut rates.

To be clear, a lot of experts think a rate cut is the right move.

But the specter of eroding Fed independence has people freaking out about the economy's long-run health, to which the record-setting Dow Jones or S ⁇ P 500 says, who cares about the long run?

In the short run, low interest rates means that asset prices can go higher.

And so people are bidding up the asset prices knowing that what the Federal Reserve is doing may be creating a bubble in the future.

But for what right now, the market is partying and everybody must be part of the party.

It's not just the prospect of lower borrowing costs boosting corporate cash flow, says Olu Sonola at Fitch Ratings.

You know, the reconciliation bill is also going to juice the economy first quarter of 2026.

Investors expect those trillion-dollar tax cuts in the big, beautiful bill to goose corporate profits, too.

But all that boosting, juicing, and goosing from the federal government could come with a longer-term cost.

Christia Kuhlian is an economist at BlackRock.

We've all experienced what it feels like to live through inflation.

It doesn't feel great.

And so, if inflation kind of gets out of hand, that's the biggest risk that we're facing.

It's a risk, but she says there's a growing share of individual investors in the stock market, and they tend to be more optimistic.

Of course, it's very possible interest rate cuts and deficit finance tax breaks won't create inflation or the types of asset bubbles we've seen in the past.

Dot-coms in the late 90s, housing in the mid-aughts.

But the thing about bubbles, it's really hard to to tell when they're about to pop.

Again, David Kelly with J.P.

Morgan.

No party lasts forever.

And so eventually we're going to have a bear market.

We do not know the day nor the hour.

That's the way markets work.

No one quite knows when the short run ends and the long run begins.

I'm Matt Levin for Marketplace.

Wall Street today, everyone's just waiting on the Fed and a little jittery in the meantime.

We'll have the details when we do the numbers.

Add to the mix of data the Fed has to consider for its decision tomorrow the fact that the American consumer just keeps on keeping on.

The latest retail sales figures came in better than expected this morning, up 0.6%

in August after a similar monthly gain in July.

That's despite falling consumer confidence because of tariffs and growing cracks in the job market.

Gains were led by non-store spending, which is, generally speaking, e-commerce.

That grew about 2% last month.

And non-store spending was up more than 10% compared to last year.

Marketplace's Megan McCarty-Carino looked into what's been driving consumers online.

If it feels like Marketplace has done the whole more shopping going online story a bunch of times, it's because we have.

I remember, I think I was 23, maybe.

We talked to retailing and consumer science professor Olivia Johnson at the University of Houston about very similar trends in 2023 and again in 2024.

I am always surprised that people are surprised that these sales are increasing.

But she says the fact that e-commerce is sustaining such high growth year after year, even under very different economic conditions, is itself notable.

And it's always driven by new trends.

I mean, I'd never imagined that people would be buying cars online.

There's also the rise of shopping on social media platforms like TikTok and agentic retail, says consultant Michael Brown at Carney.

People using AI bots to find the products that they're looking for at the price they want without browsing, shopping, or leaving your house.

Assisted by bots or not, retail strategist Neil Saunders at Global Data says consumers are looking for value to find the best bargains and to make their dollars go further.

Still, he was surprised to see online purchases increase a month after the avalanche of sales around Amazon Prime Day, aka Christmas in July.

But something happened last month that could have driven shoppers to hit the buy button, says Gregory Daco, chief economist at EY.

The end of the de minimis exemption.

That's the tariff loophole for low-value international shipments the Trump administration scrapped.

This likely pushed a few consumers to essentially order ahead of time.

So they could sneak in buying a few more international Etsy treasures and Korean face lotions before tariffs kicked in.

I'm Megan McCarty-Carino for Marketplace.

Brick and mortar or online, retail stores are struggling with what has now been more than half a year of on-again, off-again trade policy.

And the thing is, even if most of the tariffs end up going away, we've still got a couple of months before the Supreme Court hears the case, there are already economic consequences for consumers and workers, and of course, companies.

As Marketplace's Christian Schwab reports, many business owners, especially small business owners, are stretched to the limit.

The storefront at the Tiny Owl in New York City has gotten a refresh.

There are paper ghost decorations and jack-o'-lantern onesies hanging in the window.

We've got our Halloween decor up, but

the sign is

really sad.

Nicole Paneteri owns the children's store, and the sign she's talking about is big.

It reads, available for lease.

The tiny owl is closing at the end of October.

Paneteri says there are a few reasons why.

Her landlord increased the rent, and sales have dropped since a target opened up down the street.

But these are all problems she's navigated before.

What's new is tariffs, which have increased her costs by about 20%.

So it's a pretty significant jump, especially when it was a lot of our opening price point merchandise.

Like plush toys and puzzles that used to sell for around $8.

Those prices all went up to $10 to $15.

Paneteri started seeing more shoppers pick something up, check the price, and slowly put it back on the shelf.

And the drop in sales is taking a toll.

She's cut her own pay and let go of two workers.

I'm a small business.

I don't have investors.

I don't have, like, this is, this is my life savings.

So she's discounted everything in the store.

And once it closes, she'll refocus on her women's boutique down the street.

The reality of running a business is that it is hard, even when the economy is steady.

Scott Linsicum is Vice President of Economics and Trade at the Cato Institute.

It only takes a small shift to ruin what was an otherwise profitable enterprise.

The tariffs are that kind of tipping point.

That tipping point seems to be coming sooner for small businesses than big ones.

Corporate behemoths have lobbyists and lawyers to fight tax policy.

They can lean on their scale to negotiate better deals with manufacturers and suppliers.

And Linsecum says they have the capital to wait and see what happens.

There's a real dichotomy that's opened up between the haves and the have-nots when it comes to tariffs.

For small businesses, every economic policy change can feel seismic.

That's especially true for manufacturers since they're toward the start of any supply chain.

Ben Kneppler co-owns True Places, a Pennsylvania-based company that manufactures outdoor portable chairs in Cambodia.

He says the teeter-tottering of tariff policy has made business impossible.

The tariff rate on our products has gone from 0%

to 49% to 10%

to 36%

to 19%.

With the rates jumping up and down, Nepler decided it was too hard and too stressful to keep making chairs.

The gymnastics of it all has drained the company's capital.

Nepler doesn't have enough to pay the tariffs on the next shipment, so he's halted production.

No more new chairs.

He only has a handful left in stock.

Just from a business survival and cash flow perspective, it's incredibly difficult.

So we're not sure what we're going to do.

Nepler is worried the company will lose momentum.

We literally cannot afford to bring our own product into our own market.

If they can come up with the money, Nepler is considering only selling the chairs internationally, because avoiding the American market means they'll avoid the tariffs altogether.

In New York, I'm Kristen Schwab for Marketplace.

Summer is winding down, and the U.S.

soybean harvest is here.

According to the USDA, farmers have already brought in 5% of this year's crop, and the agency is forecasting record yields.

Where all those soybeans are headed is a different question.

China, typically the destination for over a quarter of it, isn't buying.

As part of the ongoing trade war, China imposed steep tariffs on American beans, making them way more expensive than the crop coming out of, say, Brazil.

Marketplace's Savannah Peters checked in with a couple of farmers who are crossing their fingers for a trade deal.

It's day two of the soybean harvest on Brian Warpup's 4,000-acre farm.

When I rang him this morning, he was behind the wheel of a semi-truck.

Yeah, I am literally hauling soybeans.

soybeans to market, yes.

From Warren to Decatur, Indiana.

Don't worry, he's got both hands on the wheel.

Normally, he'd sell just about all of his soybeans straight off the farm after harvest.

However, with the subdued prices that we have right now, I kind of want to storm a little bit in the hopes that price will eventually go up.

Prices are low now because China, normally the top international buyer of U.S.

soybeans, is so far sitting this harvest out.

Warpup's family farm is scrambling to make room in its grain bins to store much of its soy crop by selling off its corn harvest early.

He's banking on a trade deal to make that worthwhile.

But waiting it out isn't an option for every farmer.

You can't just build new storage overnight.

It's hard to build a new bin right now because there's so much demand.

You know, it's a bit of a supply chain shock.

Kyle Jory farms soybeans in northern Minnesota.

He's also an economist with the ag consulting firm Watts Associates.

If this waiting game goes on much longer, he says storage will run out.

For those producers that are in really a tight cash position or didn't have a lot of working capital,

it could be quite dire.

American farmers have been here before, and just like during President Trump's last trade war, some farmers are expecting the USDA to step in and make them whole.

As much as you don't want that to be the way that farmers make their money, I don't think you're going to have a lot of choice.

That's Jonathan Miller, a corn and soybean farmer based in western Kentucky.

Unlike last time, he says farmers are also getting squeezed by inflated input prices.

I suspect this could get ugly.

Ugly, meaning farm bankruptcies and a stagnating U.S.

ag economy.

I'm Savannah Peters for Marketplace.

Coming up, you know, in the case of my internet company, do I have any other option?

What does it really mean to be a loyal customer?

But first, let's do the numbers.

The Dow Jones Industrial Average fell 125 points, a quarter of a percent, to finish at 45,757.

The NASDAQ subtracted 14 points, a little under a tenth of a percent, to close at 22,333.

The SP 500 lost 8 points, a little over a tenth of a percent, to end at 66.06.

And it looks like a TikTok deal may finally be here.

The Wall Street Journal reports a consortium of U.S.

investors is set to take an 80% stake in the U.S.

version of the app.

Members of the coalition include a couple of big venture capital firms and Oracle, which scrolled up 1.5%.

Bonds rose, the yield on the 10-year T-note fell to 4.02%, and you are listening to Marketplace.

This podcast is supported by Odo.

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

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So, Odoo is fertilizer, magic beanstock building blocks for business.

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Fifth Third Bank's commercial payments are fast and efficient, but they're not just fast and efficient, they're also powered by the latest in payments technology built to evolve with your business.

Fifth Third Bank has the Big Bank Muscle to handle payments for businesses of any size, but they also have the FinTech hustle that got them named one of America's most innovative companies by Fortune magazine.

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This is Marketplace.

I'm Kimberly Adams.

Among the many things included in the big GOP policy law passed earlier this summer was a break for the coal industry.

The law included a provision allowing companies to pay the federal government lower fees for mining coal on public lands.

Here's the thing, though.

Those fees don't just go to the federal government.

They also go to the states where those public lands are situated.

And in the top coal-producing state in the country, that could mean a hit to the state budget.

Wyoming Public Radio's Caitlin Tan has that one.

To understand why Wyoming lawmakers are actually not that excited about the GOP policy bill, we have to take a second to remember just how important coal is to the state.

Come along for a visit to a land where coal is king.

That's from a 2007 documentary from Pentrex Train Videos.

Over the last 50 years, the state of Wyoming made bank from coal.

Billions of dollars to fund the government, schools, roads, parks.

The state now has its own sovereign wealth fund, thanks to coal.

If you visit here, you're certain to see hundreds of coal trains, as we did.

But you're not.

Here's how it works.

When coal is mined on federal land, the mining company pays fees or royalties.

Half of those royalties go to the federal government and the other half goes to the state.

Only Congress has the power to change that ratio.

And President Trump's GOP policy bill lowers those royalty fees for mining companies.

State economist Dylan Boehner says that might be a great deal for coal companies.

On the surface, sounds great for Wyoming, but in the way that it is being done, it's going to negatively impact our revenues.

The royalty rate was slashed almost in half.

President Trump's idea is to make it easier and cheaper for companies to mine coal.

The goal of this bill is to try to incentivize people to produce and, you know, as he said, drill, baby, drill.

But the loss to Wyoming's state budget is an estimated $50 million a year.

I know that was not the intent.

That's state Representative Robert Worf.

Everybody said how this is such a great thing for our state.

In a state that had the highest margin of votes for Trump's presidency, there's big support for his vision to prop up the coal industry, but a lot of uncertainty that this is the way to do it.

Demand for Wyoming's coal has been dropping for well over 15 years.

GOP congressional members say the lower rates will help revitalize the declining industry.

But local lawmakers like Worf worry that shift could take time.

If it's going to take us multiple years to see that,

I don't know.

So, Worf and his colleagues are trying to get creative to offset that $50 million loss in annual state revenue.

Republican Representative Bob Ide points to Alaska.

It gets a bigger share of royalty fees for oil and gas.

Alaska actually has a 90-10 split, and they got that at statehood.

Ide is hoping Wyoming can ask Congress to give his state a better deal, but a bill is months out.

In the meantime, Dylan Boehner, the state economist, says the GOP policy bill does lead to an increase in coal production.

That could be a good thing for mining towns.

That would lead to maybe a ripple effect in terms of restaurant activity, lodging activity, stuff like that, retail activity.

But will an increase in potential coal production offset the state revenue loss?

On that, he's not so sure.

In Wyoming, I'm Caitlin Tan from Marketplace.

As we laid out earlier in the show, consumer spending is up, and once you start spending with a company, they typically want to keep you as a customer.

Hence, loyalty and reward programs as a carrot, but companies are also willing to use the stick approach to keep you in-house.

If you think about it, when was the last time you got an upgrade or a perk because of your loyalty to a brand?

Emily Stewart, a reporter at Business Insider, wrote about the changing dynamics of the consumer-business relationship.

Emily, welcome to the program.

Thank you for having me.

You open up this article talking about your own loyalty as a customer, or what you actually say is more like laziness.

Talk to me about how that sort of plays in the minds of the business-consumer relationship.

Yeah.

I mean, like, so kind of I started out saying, you know, according to like Citibank, Apple, Optimum, my internet company, I'm a loyal customer.

But the question is, like, how loyal am I, right?

Or is it just it's too annoying to switch banks?

Or, you know, in the case of my internet company, do I have any other options?

And I think sometimes, you know, we think that being a loyal customer has benefits.

And certainly in some cases it does.

But sometimes it's just a question of like we're a little bit too lazy we have this sense of inertia and we wind up paying more than we should just because we're not shopping around and switching yeah you point out in the article there's something called the loyalty penalty what is that yeah i mean a loyalty penalty basically is a situation where you wind up paying more over time than if you shopped around than if you switched than if you were a promiscuous consumer.

You know, if you think about, let's say with car insurance, this is pretty common.

It will start to get more expensive regardless of your driving record after the first couple of years.

And you might say, oh, like, do I really want to go and compare quotes and switch guys or whatever?

But like, you should, because otherwise you're paying a loyalty penalty.

So you're paying more than maybe you.

could be if you maybe were willing to quit or you know had the time and energy or even money to really look around i mean there's also not always a lot of options right that's also part of the problem i mean we look at how concentrated so many industries are.

And so they do have an advantage.

Like, I love to complain about my internet bill.

I've brought it up a couple of times already, but like my internet bill goes up, up, up all of the time.

This is very common experience, right?

And the service isn't getting better.

And you call and you say, hey, what's going on?

And you kind of try to like threaten to leave.

But a lot of the time, what the internet company knows is that they have a monopoly on your area and there's nowhere for you to go.

And so there's nothing for you to be able to do.

And like when somebody new comes in, then maybe you can switch or negotiate with them.

But if for me, Optimum is the only game in town where I live, you know, that's all I can do unless I decide to not have internet in my apartment.

Has it always been this way or has something changed in this relationship between companies and customers when it comes to loyalty?

I mean, it's hard to say.

I do think, especially, you know, to some extent, it's easier than ever to kind of sign up for a bunch of subscriptions now.

And that means like you also have the option to cancel.

There are a lot of options like on streaming or whatever, right?

But at the same time, like only Netflix has the shows that it has, right?

Like you have to be loyal to Netflix if you like whatever show that you like.

And I do think also in the era of the internet, it has become really easy to sign up for things and not so easy to quit.

The FTC, the Federal Trade Commission said it has to be as easy to quit as it was to sign up.

And that has been blocked by the courts.

And so I do think you wind up in a situation where people, everybody knows they have a ton of subscriptions.

They don't always keep track of them.

And it's really easy to kind of have this like fake loyalty that you didn't even know that you had.

So what should consumers do?

I mean, it seems like most of the time we are kind of stuck with what we have or, you know, we're lazy and, or it's just.

such a hassle to jump through all the these hoops that you're talking about.

Yeah, I mean, I do think it's kind of important to note, like you can be a quitter as much as like when you're kids, your parents are like, no, no, no, you can't be a quitter.

Like, you can be a quitter, even if it takes a little bit of time.

And you can also call and ask.

So let's say you've noticed your credit card interest rate is higher than you think it should be.

You can call up your credit card company and be like, hey, you know, can we talk about this?

And like, if your credit score is 500, are you going to get the lowest interest rate?

No, but like you might be able to talk it down a little bit.

And so I do think, you know, that's an option.

Just like shopping around as much as it can be time consuming and a little bit annoying if it's saving you a significant amount of money it is worth it Emily Stewart is a reporter for Business Insider thank you so much for your time thank you

This final note on the way out today, Megan was talking early in the show about the folks going online to shop, but why not go to another space, a bit further out?

A tech company in Finland, Blueforce, just made a deal worth hundreds of millions of dollars for resources mined on the moon.

The deal is with a company called Interloon, and according to reporting in the Washington Post, Blueforce is buying tens of thousands of liters of helium-3 that's supposed to eventually be mined at a future lunar facility.

Helium-3 isn't the stuff we use for birthday balloons.

It's used for quantum computing and is worth as much as $20 million a kilogram.

This is so far the largest purchase of a natural resource from space.

Jordan Manji, Zonil Mahara, Janet Wynne, Olga Oxman, Virginia K.

Smith, and Tony Wagner are the digital team.

And I'm Kimberly Adams.

We'll see you tomorrow everybody.

This is APM.

This week on Million Bazillion, we're giving you an extra special history lesson on bubbles.

Economic bubbles, that is.

We'll learn all about the housing boom and bust of the 2000s.

Plus, we'll explore other famous bubbles like tulips and dot-coms to uncover why they happen and why it's so hard to know you're in one until it pops.

Don't miss miss this week's episode of Million Bazillion.

Listen on your favorite podcast app.