Time for another supply chain slowdown

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Speaker 2 Coming up on the program today, what to do when you don't got the data from American Public Media. This is Marketplace.

Speaker 2 In Los Angeles, I'm Kyle Rizdal. Wednesday, today, the 15th of October.
Good as always to have you along, everybody.

Speaker 2 One navigates the fortunes of this economy at this moment with more than a little bit of uncertainty.

Speaker 2 The government being shut down means we're not getting the data stream that we are used to, and of proximate interest to us right now, the monthly report on retail sales and business inventories that the Commerce Department is due to deliver, but won't tomorrow morning.

Speaker 2 So we and everybody else are turning to private sector data, in this case, about supply chains which are slowing down.

Speaker 2 Marketplace Justin Ho reports the logistics manager's index for September has fallen to its lowest level since March.

Speaker 5 September and October are typically the months when Ken Gidden likes to bring in holiday inventory for the men's clothing store he runs in New York called Rothman's.

Speaker 6 So much of our business is, you know, big purchases like suits and sport coats and things like that. So people want to buy those before the season ends.

Speaker 5 But this year, Gidden says he had a couple of reasons to stock up early. For one, demand has been strong.

Speaker 6 You know, we do deal with with a higher-end client because we sell luxury goods and the higher-end client seems to be less affected by the ups and downs of the economy, especially with a strong stock market.

Speaker 5 Gidden says the store has also been trying to get as much product on its shelves as it can ahead of tariffs.

Speaker 6 You know, sometime where we might have bought 30 suits from a guy, we bought 300 this year. So we've been well positioned for this season.

Speaker 5 Lots of business owners stocked up early this year, but that's largely over. The Logistics Managers Index found that transportation utilization didn't grow at all last month.

Speaker 7 For the month of September, that is highly unusual.

Speaker 5 That's Zach Rogers, a professor of supply chain management at Colorado State University, who puts together the Logistics Managers Index.

Speaker 5 He says many businesses didn't need to transport goods last month.

Speaker 7 Essentially, because everything's already here. There's nothing to do.
We pulled everything forward to get ahead of tariffs. And now stuff is sitting there and hopefully consumers buy it.

Speaker 5 Rogers also surveys business owners about their future inventory levels and many of them are nervous about consumer demand.

Speaker 7 When we ask our respondents where do you see this going over the next 12 months, we see that inventory level predictions are pretty low.

Speaker 5 That's because businesses also expect their costs to rise largely because of tariffs.

Speaker 7 That cost will have to be passed along probably to consumers. And because consumers tend to buy less when things cost more, retailers will bring less inventory in.

Speaker 5 And Roger says that will cause distress throughout supply chains, whether it's trucking companies, wholesalers, or warehousing companies. Nick Dyer runs Ocatio Capital Partners in San Antonio, Texas.

Speaker 5 It builds warehouses, mostly to serve cross-border trade, and it's had a new project in the planning stage for a few years.

Speaker 9 It's a 160,000 square foot building that we have designed and we could get built within 12 months if we started, you know, soon.

Speaker 5 Problem is, Dyer says the manufacturers that rent space in his warehouses aren't all that interested in signing leases longer than a year or so.

Speaker 9 Most tenants are not willing to make those long-term commitments right now, like a three or five or 10-year lease, because they just don't know what the future holds.

Speaker 5 So Dyer says his company is holding off on building because he doesn't see long-term demand for warehousing space picking up anytime soon.

Speaker 9 Until there's an indication from the Trump administration that we're going to settle on something as a country in terms of the tariff relationships with all these foreign trade partners, that uncertainty is going to be there.

Speaker 5 Dyer says he expects this slowdown to last until at least the summer of 2026. I'm Justin Hoe for Marketplace.

Speaker 2 The Federal Reserve releases its Beige book eight times a year, including today. And if you're thinking right now, wait, Kai, the government's shut down.
How is this happening?

Speaker 2 A reminder that the Fed is self-funded. Anyway, the word tariff shows up 64 times in this edition, and businesses are clearly feeling the pressure.

Speaker 2 So we've taken a page from the Fed's book, if you will, and put together a marketplace beige book of sorts. First up, Todd Adams.
He's the president of Sanitube.

Speaker 12 The market and indeed myself and I think my industry peers, we handle this news differently than we did back in

Speaker 12 last spring. We've realized that a lot of this shouting, a lot of this noise kind of gets dumbed down by the time it gets written into law.

Speaker 12 At least during this administration, this is going to be a constantly fluctuating environment.

Speaker 12 And I think the key is to be flexible and responsive and stay in tune with what's happening, but do not overreact.

Speaker 12 In the face of uncertainty and unpredictability, cash remains king. That is the way that we're operating.

Speaker 12 We're just keeping larger than normal cash reserves for the unexpected, for the speed bumps along the way. We were looking at opening new distribution centers.

Speaker 12 We were looking at expanding into new new product lines. All of that requires cash that we're basically conserving at this point.

Speaker 12 Lastly, I don't like the changing of the moving around of the goalposts, if you will. The laws change on a daily, on an hourly basis.
And you don't really know where to turn.

Speaker 12 There's no guidance and there's no roadmap. And I'm not saying life is always going to be laid out in front of you.

Speaker 12 But the government should be there to provide guide rails and to sort of provide a stable environment for companies to thrive. And right now, we're not seeing that stability, and that is concerning.

Speaker 2 It concerned Todd Adams, the president of Sanitube. Stainless steel valves and tubes is their game.
Wall Street today, kind of bouncy, a little choppy. It's another word for it.

Speaker 2 We will have the details when we do the numbers.

Speaker 2 Jay Powell gave a speech yesterday. Nothing unusual about that.
The Fed chair gives more speeches than you can shake a stick at.

Speaker 2 He got an award this time, too, the Adam Smith Award from the National Association of Business Economics, an award given, the group's website says, based upon leadership in the profession and the application of economic principles and knowledge in the workplace and policy arenas.

Speaker 2 Powell's post-award speech was largely about the Federal Reserve's balance sheet.

Speaker 2 And since you always start a speech with a joke, here's what Powell said: and this is a quote: A colleague recently compared this topic to a trip to the dentist, but that comparison may be unfair to dentists.

Speaker 2 Remember, gang, they're Fed officials, not stand-up comedians. Marketplace's Supreme Benishaur explains what the balance sheet is and what it means for you.

Speaker 4 The Fed's balance sheet is like a big list of all the things the Fed owns and all the things it owes. Because when the Fed buys and sells things, that moves the economy.

Speaker 15 I think it's important to back way up to 2008 when we were having the global financial crisis.

Speaker 4 Jill Satina is a professor at Texas A ⁇ M University. The economy was in a world of hurt, so the Fed lowered short-term interest rates all the way to zero and nothing.

Speaker 15 We are still in the midst of a very significant financial crisis.

Speaker 4 So the Fed started buying stuff, long-term treasuries, mortgage-backed securities, trillions worth by the end. That got these markets moving again, and it deeply affected them.

Speaker 4 Don Cohn is a senior fellow at Brookings.

Speaker 11 When it buys longer-term securities, that tends to drive up the price of those securities, drives down the yield of those securities.

Speaker 4 The Fed basically manhandled the market, and that lowered more interest rates in the economy.

Speaker 11 That makes mortgages more affordable, buying cars on credit more affordable, businesses financing capital spending, et cetera.

Speaker 4 But since about 2022, the Fed has been slowly not doing this as much. It's been letting treasuries expire and not buying new ones.
And you can see it in the balance sheet.

Speaker 9 Holdings have declined by about $2.2 trillion.

Speaker 4 Martin Tobias is a strategist at Morgan Stanley. The Fed does not want to manhandle markets anymore.
It doesn't see the need. So it's been slowly lightening its touch.

Speaker 4 In New York, I'm Sabri Benishore for Marketplace.

Speaker 2 With the absolutely necessary caveat here that it is way, way too early for anybody to actually start their holiday shopping because it's October, there is a planning question to be had.

Speaker 14 What's your gift budget going to be this year?

Speaker 2 If you're planning on skipping a stocking stuffer or two, you've got some company. Holiday shoppers say they're going to spend about 10% less this year than last.

Speaker 2 That's according to a survey from Deloitte. Gen Z in particular, feeling particularly thrifty.
The youngest generation in the workforce says they're cutting their gift budget by 33%.

Speaker 2 Marketplace Matt Levin has more on that one.

Speaker 8 Last year for the holidays, 25-year-old Summer Brian and her roommate bought each other CDs. Yeah, CDs.

Speaker 8 Those easily scratched compact diss us older millennial dinosaurs putting our Sony diss mans on the way to Blockbuster Video.

Speaker 15 I think one of them was Surfa Rosa the Pixies. She really loves PJ Harvey, Fiona Apple, that sort of thing.

Speaker 8 Gen Z's love affair with all things 1990s is well documented. But there's another reason a CD is a great Gen Z gift in 2025.
It's relatively cheap.

Speaker 8 At least compared to the rising price of groceries or rent, Brian pays $2,000 a month for her room in a New York apartment.

Speaker 15 I think that it's probably a common understanding among most people my age that like the gifts are going to be cheaper.

Speaker 8 It's not just housing costs and inflation hitting Gen Z especially hard. This year, it's also job security.
Brian McCarthy is a retail strategist with Deloitte.

Speaker 16 Those coming out of college are seeing a very tricky labor market at at the moment.

Speaker 8 McCarthy expects Gen Z shoppers to really go after value this holiday season, think discount in second-hand stores, or maybe they avoid shopping altogether.

Speaker 16 DIY, gift, or do-it-yourself? 67% of Gen Z shoppers are saying they're going to look to actually make a gift this year.

Speaker 8 Wonder if burning a CD counts as making your own gift these days. I'm Matt Levin for Marketplace.

Speaker 2 So the holiday shopping season might look a little bit different this year for consumers, as Matt was just saying. For businesses too, though.

Speaker 2 Lucky for us then that we've got a dispatch from one of our retailers to add to the marketplace beige book. Ashley Morkin is the owner of Unglued.
That's a craft and gift shop in Fargo, North Dakota.

Speaker 18 The last few months for business have been a roller coaster, I'd say.

Speaker 18 We were actually up almost 10% in September for our retail shop, but we were down in August, down in June, and July kind of evened that out.

Speaker 18 The biggest change in buying habits right now is people are shopping even earlier for the holidays. Some people have actually taken out their gift list and started checking things off.

Speaker 18 We do see people do that sometimes, but it's just happening more.

Speaker 18 We are trying so hard to not end this year at a loss the way we did last year. And so, I did cut my wages down.

Speaker 18 Um, and that's really what has evened us out to be about the same profitability-wise as last year.

Speaker 18 Um, which is a little tricky and stressful to see that it-that's what cut it, not other things, not by having higher sales or cutting other expenses very well.

Speaker 18 Um, and so I really want Unglue to be sustainable and to still be here. And so, my stress is really related to that, I would say.

Speaker 2 Yeah, I bet. Ashley Morkin unglued is her shop, Fargo, North Dakota.

Speaker 2 The list of challenges we are going to have to deal with and are dealing with because of climate change is long, and they range from the existential all the way down to the kinds of work that we do.

Speaker 2 Adapting to and controlling how fast the planet is warming is going to mean, in part, coming up with and using newer, cleaner technologies, which will in turn mean new skills that workers are going to have to master.

Speaker 2 The labor market's changing, and increasingly rural communities are part of that change to a more climate-oriented workforce. From KUNC, Ray Solomon has the story.

Speaker 19 A couple hours' drive from Denver, the town of Eagle has all the stunning views and big mountains that Coloradans love. It also has an industrial zone tucked away on a frontage road off of I-70.

Speaker 19 That's where you'll find the headquarters for RH Mechanical, a building systems contractor.

Speaker 19 Josh McCarl stands in front of the classroom, lecturing students on the basics of electricity.

Speaker 20 So AC stands for anybody?

Speaker 20 Alternate current. DC stands for

Speaker 20 correct current.

Speaker 19 McCarl is laying the groundwork for these students to become HVAC technicians and work with heat pump technology, super energy-efficient heating and cooling systems powered by electricity.

Speaker 20 Flow of an electric current through a conductor produces a magnetic field around the conductor. This is that.

Speaker 19 This class is among the first of its kind anywhere in Colorado's high country. It's part of a massive push by the local higher ed system to expand skilled trades workforce training.

Speaker 13 Here in the mountains, it's been challenging to find new talent, so we have to grow our own.

Speaker 19 That's Tim Braun with RH Mechanical. He says his company is so hungry for skilled workers, they partnered with Colorado Mountain College to build this program.

Speaker 19 The graduates earn nationally recognized credentials. Braun says there's big demand for these workers who can help transition from gas burning, heating, and cooling systems to heat pumps.

Speaker 13 There's been a big gap in our workforce development that we need to pick up more talent to be able to help with that transition in the future.

Speaker 19 There are wait lists to get into these skilled trades classes and the college wants to more than double capacity.

Speaker 19 Andrea Anderson is one of the students here. She works as a quotes administrator for R ⁇ H, preparing bids for contracts with customers and she's taking this class to get better at her job.

Speaker 21 When I started, I really knew nothing about heating and air conditioning. And over the years, I've learned a lot, but now I just want to learn some more.

Speaker 19 Anderson and her classmates are also part of the state's plan to combat climate change. Megan Christensen with the Colorado Energy Office says that includes climate workforce development.

Speaker 22 In almost every single energy and climate action that our state has, the skilled trades are super, super essential to making sure that work gets done.

Speaker 19 And they're super essential in rural areas particularly. State data show that's where the worker shortage is most severe.
It's also where exposure to climate change is greatest.

Speaker 22 It's an issue that is impacting all parts of life and their economies.

Speaker 19 Elizabeth Harbaugh is with Lira Colorado, a Northwest Colorado nonprofit in the education and climate space.

Speaker 22 We work with ranchers up in Northwest Colorado who can speak very openly about the lack of water and how that's changed their outputs over the past 10 years.

Speaker 19 These communities revolve around agriculture and outdoor recreation. Natural resources threatened by climate warming power rural economies and define the region's identity.

Speaker 19 Harbaugh says we need to start preparing young people here to enter the climate workforce now.

Speaker 22 When we look at resilience in rural regions, we need to be thinking what does it look like to be socially sustainable, economically sustainable, and environmentally sustainable.

Speaker 19 Expanded workforce training in the well-paying skilled trades checks all those boxes at once. In Eagle, Colorado, I'm Ray Solomon for Marketplace.

Speaker 2 Coming up.

Speaker 23 We can still get a reasonable night's sleep.

Speaker 2 Get while the getting's good, right? First though, let's do the numbers. Dow Industrial's down 17 points today, more or less unchanged, finished at 46,253.

Speaker 2 The NASDAQ up 148 points, two-thirds percent, 22,670. The SP 500 gained 26 points, 4 tenths percent, 66, and 71.

Speaker 2 Walmart is teaming up with OpenAI to let people shop the retailers' virtual aisles using ChatGPT. Walmart rang up 1 and 7 tenths percent today.
Another rosing set of earnings for some big banks today.

Speaker 2 Morgan Stanley beat analyst profit estimates and found 4.7 tenths percent in the couch cushions. Bank of America beat estimates as well and raised its income forecast for the year.
Climbed 4 and 4

Speaker 2 Did B of A bonds down. The yield on the 10-year T-note rose 4.03%.

Speaker 2 You're listening to Marketplace.

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Speaker 2 This is Marketplace. I'm Kai Rizdahl.

Speaker 2 Getting stuff across international borders now, specifically American borders, is harder than it used to be thanks to the Trump administration's tariff and trade policy.

Speaker 2 But it's not just consumer stuff. Businesses and people aren't the only ones who ship packages across borders, you know.
Libraries do too.

Speaker 2 And just like for the rest of us, tariff chaos and international shipping suspensions have clogged up the whole interlibrary loan system. Emmanuel Meiberg wrote about that for 404 Media.

Speaker 2 Welcome to the program.

Speaker 24 Thank you for having me.

Speaker 2 I confess I had never really considered international library loans until I saw your piece.

Speaker 2 How did this system used to work before, say, the present moment?

Speaker 24 This system has worked for a long time, dating back to the early early 1900s, actually, in order to support mostly academics, libraries at universities, rather than have people travel across the world to access some materials that they have only at their library.

Speaker 24 They just shipped them to people and would lend them the books as if they were lending it to any other patron with the assumption that they will get them back.

Speaker 2 Right. And it's the getting them back part that has become tricky now in this tariff area and the de minimis loophole.
So, how does it work now?

Speaker 2 If I'm in, I don't know, France and I borrow a book from Yale and I go to mail it back and they're like, yeah, I don't think it's going to cross the border that way. What happens?

Speaker 24 Yeah, well, this is exactly the problem: librarians that are part of this system are not certain that they can get their books back.

Speaker 24 And whether they can or what will happen shifts by the day, as you know. So it's not entirely clear.
There is one example where the Australian post office stopped shipping anything to the U.S.

Speaker 24 entirely because they weren't sure how the tariffs would work. So in that case, any book that libraries lent to other libraries in Australia were stuck and they were not able to get them back.

Speaker 2 Sorry, so wait.

Speaker 2 So wait, so those books are just in limbo and it's like, sorry, you're out of luck?

Speaker 24 Correct. Yeah.
There's books in their collections that they're not able to get back.

Speaker 2 So if I'm a librarian at a university that participates in international library loans, I'm just not lending in more books. Thank you very much.

Speaker 2 And that speaks volumes about international cooperation and

Speaker 2 academic research and all of those things.

Speaker 24 Yeah, it's terrible. You know, librarians, they pride themselves on their ability to provide people with knowledge.
That is their job.

Speaker 24 They, in some cases, are shipping books with the understanding that they might not get them back on a normal timetable.

Speaker 24 So they are doing their best. Sometimes it's out of their control because customs will not release the books or post offices will not ship them.

Speaker 2 Necessity being the mother of invention, one has to imagine that these very smart librarians are like, well, we could do it this way, maybe.

Speaker 2 Is there some kind of workaround?

Speaker 24 Yeah, so there's an organization of librarians that they've basically put up this website where they're asking librarians to share information about what works in what regions and what the rules are at any given moment.

Speaker 24 In some cases, it works to say that the package with the books has zero dollar value and then it just goes through. In other cases, there are certain postal codes that they can use.

Speaker 24 But again, this is all changing very fast and they're just trying to keep up with it.

Speaker 2 Yeah, I bet they are.

Speaker 2 This does sort of seem, and this kind of broadens the conversation a little bit, but it does sort of seem like one of the very

Speaker 2 real unintended consequences of the president's tariff and trade regime.

Speaker 24 Yeah, you know, I certainly didn't know about this even being a thing that libraries do, let alone a problem, until librarians reached out to me and told me about it.

Speaker 24 But this is the consequences of like willy-nilly changing our trade policies without any consideration for how it might impact normal people and institutions.

Speaker 24 This is just one example. At 44 Media, we've covered how various hobbies have been impacted, how the entirety of eBay is majorly unusable for a lot of people because of the tariff regime.

Speaker 24 So, just one small example, but an important one, especially if you care about academia and

Speaker 24 research.

Speaker 2 Emmanuel Leiburg, he writes and reports at 404 Media, also co-founded that place. Emmanuel, thanks a lot.
I appreciate your time.

Speaker 24 Thank you.

Speaker 2 We're going to end our tour to business today. The last page, to torture the metaphor, of the Marketplace Beige book.
We're going to end with a sweet treat, chocolate.

Speaker 2 Kristen Talheimer Bingham is co-owner of Dean's Suites in Portland, Maine.

Speaker 23 Business is busy right now, though our financials are showing a mild to medium drop in sales over the past six weeks compared to a year ago.

Speaker 23 Feels like a slight wave, a slight downturn before the next big upturn for the holidays.

Speaker 23 That's not just wishful thinking, but actually based on the number of orders coming in now that we can't bill for yet, but that will pay off in the next two and a half months.

Speaker 23 In the next few weeks, as we get an increase in orders from our website, we'll face the usual conundrum of competing priorities and it will get hectic and stressful. but we're not quite there yet.

Speaker 23 We can still get a reasonable night's sleep, and this time of year can certainly be stressful, but for us, it usually feels more and more fun and energetic.

Speaker 2 Kristen Talheimer Bingham there. She sells chocolates and other treats at Dean's Suites in Portland, Maine.

Speaker 2 All right, we got to go. Too much me talking, not enough time.

Speaker 2 Our media production team includes Brian Allison, Jake Cherry, Justin Dueller, Drew Jostat, Gary O'Keefe, Charlton Thorpe, and Juan Carlos Torado. Jeff Peters is the manager of media production.

Speaker 2 I'm Kyle Rizdahl. We will see you tomorrow.

Speaker 4 This is APM.

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