Consumer confidence continues to dim

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Speaker 4 So, look,

Speaker 2 maybe we should start calling it the Lack of Consumer Confidence Index. From American public media, this is Marketplace.

Speaker 2 In Los Angeles, I'm Kai Risdahl. It is Tuesday today, the 25th of March.

Speaker 7 Good as always to have you along, everybody.

Speaker 2 I'm going to start today with a couple of data points. I'm just going to list them and then have Mitchell Hartman take over.
From the conference board this morning, these indicators.

Speaker 2 The March Consumer Confidence Index down

Speaker 2 again for the fourth straight month, and oh, by the way, farther down than people had been guessing.

Speaker 2 Their expectation index fell even more sharply, down to its lowest level in 12 years, now sitting well below the threshold that signals a recession is on the way. Inflation expectations were up.

Speaker 2 Expectations for future employment and income were down. Confidence in people's future personal finances was down as well.
But here's the all-important follow-up.

Speaker 2 What is that crater in consumer sentiment going to mean for consumer spending? Here's Mitchell.

Speaker 8 We've been here before and pretty recently. When inflation ramped up in 2022, consumer sentiment tanked.

Speaker 9 But says Joanne Hsu at the University of Michigan, we did see strong consumer spending despite the low historical average consumer sentiment.

Speaker 8 But there are some differences for consumers now. Lots of uncertainty around tariffs, government layoffs, interest rates, and now we have a slowing economy.

Speaker 8 Bill Adams is chief economist at Co-America Bank.

Speaker 10 It's an open question whether these fears of economic uncertainty really changed behavior or whether this is a repeat where people said one thing and did another.

Speaker 8 But Adams says there is reason to think it'll be different this time. Now consumers are worrying about their employment and income.

Speaker 10 Fears of job losses are more likely to translate into cutbacks in spending than fears of high prices.

Speaker 8 So far in 2025, consumers haven't dramatically pulled back. But Sophia Baig at Polling Firm Morning Consult is seeing.

Speaker 12 Little warning signs. I wouldn't say flashing red yet, but spending numbers in January were quite a bit muted.

Speaker 8 Baig says lower income consumers are doing worse and spending less. Upper income consumers have mostly ignored inflation and kept on spending, says Marshall Cohen at market research firm Circana.

Speaker 13 But now you're 401k in the stock market having a seesaw reaction. That gets that upper end consumer nervous and they pull back a little bit.

Speaker 8 Overall, Cohen sees American consumers becoming more hesitant, asking themselves why they need to rush out and buy something now when they can just wait a while. I'm Mitchell Hartman for Marketplace.

Speaker 2 On Wall Street on this Tuesday, I'm thinking the calculation went something like this.

Speaker 2 Yeah, traders said that consumer confidence stuff was bad, but maybe tariffs are going to be not as bad? We'll have the details when we do the numbers.

Speaker 2 We had a story the other day about how President Trump's tariffs, both those already imposed and those merely bandied about,

Speaker 2 they've been pushing up the value of the dollar, which in turn is making American goods more expensive for would-be overseas buyers and thus less competitive abroad.

Speaker 2 And because nothing in this global economy happens in a vacuum, those tariffs and this administration's foreign policy overall seem to be having another undesirable effect, forcing foreign investors to think twice about investing in the United States.

Speaker 2 Marketplace Justin Ho has that one.

Speaker 14 One of the biggest effects of tariffs is that they make an economy more isolated.

Speaker 14 Teresa Fort, a professor at Dartmouth, says trade barriers cut out foreign competitors, so American companies can take their market share.

Speaker 15 And that means workers and capital are going to move towards sectors that are probably not what the U.S. is best at doing.

Speaker 14 Fort says in that case, companies' output would slow down. The lack of competition could make them complacent, even lazy.

Speaker 15 You know, it might take more U.S. workers to make the same things we were making before.
That's reduced productivity, and that's going to translate into higher prices and less domestic consumption.

Speaker 14 In other words, slower economic growth, and that would make U.S. companies a less attractive target for investors.

Speaker 14 Over the last few weeks, bond markets have been anticipating less growth thanks to the president's tariffs.

Speaker 14 Winnie Caesar, head of strategy at Credit Sites, says in the short run, investors have been fleeing to safety.

Speaker 12 When you have people who are expecting slower growth or even an economic contraction, they will move into asset classes that are viewed as less risky overall, like U.S. treasuries and also the U.S.

Speaker 12 dollar.

Speaker 14 But Cesar says the president's tariffs and all of the uncertainty associated with them are causing many investors to question even that strategy and ask themselves whether they want to invest in the United States at all.

Speaker 12 Whether the administration is willing to go far enough to drive kind of a sour sentiment and actual selling of U.S. treasuries is very much an open question.

Speaker 14 Slower economic growth can make U.S. government bonds riskier.
Teresa Fort at Dartmouth says if the economy stalls.

Speaker 15 Then the debt and the servicing of the debt is going to grow as a share of R GDP to a point where it starts to become unsustainable. Okay.
And then that is going to start giving the U.S.

Speaker 15 stronger and stronger incentives to want to default.

Speaker 14 About a third of U.S. government bonds are held by foreign investors, many of them in countries the Trump administration is beefing with.

Speaker 14 Sebastian Malaby is senior fellow at the Council on Foreign Relations.

Speaker 16 Canadians are completely furious about Trump's remarks that Canada should be the 51st state. And you've got these very, very big pension funds in Canada that control a lot of flows into the U.S.

Speaker 16 And they are subject to political pressure within Canada.

Speaker 14 Meanwhile, President Trump's decision to distance the U.S. from the European alliance has caused the German government to ramp up its spending, especially on defense.

Speaker 14 Malby says all of a sudden, the European economy is looking relatively strong.

Speaker 16 This is the first time in, as long as most people can remember, that global portfolio allocators are saying, hey, this could be the moment to switch your money out of American financial assets into Europe.

Speaker 14 If foreign investors start doing that, the effects will ripple throughout the U.S. economy, says Barry Eichengreen, an economics professor at UC Berkeley.

Speaker 14 For instance, if demand for government bonds starts to fall, the government will have to pay more interest to try to win investors back.

Speaker 16 So that will push up interest rates and borrowing costs across the board.

Speaker 14 And Eichengreen says a U.S. economy with less foreign investment is a smaller economy, and that'll mean less spending and lower incomes for Americans.
I'm Justin Ho from Marketplace.

Speaker 2 The corporate news of the day is to be found in the beauty aisle.

Speaker 2 Walmart says it's going to start investing more in what are called premium beauty products, which I should tell you is estimated to be somewhere in the neighborhood of a $35 billion market in this country, closer to $100 billion globally.

Speaker 2 That news comes as beauty and personal care name brands like Ulta and Sephora have seen stronger days. Marketplace's Kristen Schwab has that one.

Speaker 17 You might not associate Walmart, a store whose tagline is everyday low prices, with fancy face creams.

Speaker 17 But Joseph Nunes, a marketing professor at USC Marshall, says they're considered affordable luxuries.

Speaker 18 Those are the products that are sort of within everybody's budget, and they're quite prone to buy when they're in the shopping mood.

Speaker 17 And Nuna says over the years, people have become less picky about where they buy their lotions and potions.

Speaker 18 There are a lot of categories where the retail experience is less important.

Speaker 17 That's partly because stores like Ulta and Sephora have gotten rid of the glass case experience found at department stores.

Speaker 17 Amarachi Chikuma is a beauty consultant at market intelligence agency Mintel.

Speaker 9 So you're already in the space where you're open to buying it at a retailer.

Speaker 17 Versus directly from a brand rep at a counter. Meanwhile, for Walmart, beauty is likely a safe bet.
David Swartz at Morningstar says the category has bigger margins than, say, apparel.

Speaker 17 It also has increasingly bigger reach thanks to social media. Sales in the prestige beauty market grew by 7% last year.

Speaker 20 For the most part, it's an industry that's constantly cranking out new products and also new brands.

Speaker 17 Because consumers tend to be willing to experiment and beauty products require regular restocking. Many have come to see them as a necessity.

Speaker 20 A lot of women and girls see it as part of their wellness routine.

Speaker 17 Which means you're more likely to buy it even when you're watching your wallet. I'm Kristen Schwab for Marketplace.

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Speaker 2 You know the rest. Let's do the numbers.

Speaker 2 Dow Industrial is basically flat today. Closed at 42,587.
The NASDAQ up 83 points, about 12%,

Speaker 2 18,271. The S ⁇ P 500 added 9 points, about 2 tenths percent, 57, and 76.
Ulta Beauty picked up about 1.25% today. Estee Lauder dropped 2%.
Cody dimmed 1.10%.

Speaker 2 Tesla charged up 3.5% today despite falling sales in the European Union. And the UK Chinese rival BYD slowed about %.5%.
Bonds up yield on the 10-year T-Note 4.32%. If you're listening to Marketplace.

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Speaker 2 This is Marketplace. I'm Kai Rizdahl.
Believe me when I tell you, I totally understand how easy it is to be overwhelmed by the fire hose of economic news right now. There is just a lot.

Speaker 2 And that's why we're going to take a step back and try to put everything into some kind of context. What President Trump's policies are going to mean in real life.

Speaker 2 To do that, we've called Mark Blythe. He's a political economist at Brown University.
Mark, it's good to talk to you again.

Speaker 11 Always great to be here.

Speaker 2 Let's set the stage for one second here. President Trump and his advisors have said in almost this many words,

Speaker 2 If there's a recession, so be it. We're shooting and we're playing the long game here.
We're going to do a little short-term pain for a little long-term game. Do you buy that?

Speaker 11 I buy that there's going to be short-term pain and it's probably not going to be that short-term.

Speaker 11 If they're going where I think they're going, this is a once-in-a-generation shift in how we run the global economy.

Speaker 2 Global economy. So it's not just here.

Speaker 11 No, it's the whole thing. Here's how to think about it.

Speaker 11 For the past 40 years, the United States has basically been sending digital dollars called treasury bills to the rest of the world to pay for all its imports. Imagine this.

Speaker 11 In 1975, the three biggest employers here were ExxonMobil, General Motors, and Ford.

Speaker 11 2025, the biggest employers are, in reverse order, Home Depot, Amazon Logistics, and Walmart. In other words, we don't make anything anymore.

Speaker 11 And eventually, all those digital dollars we've been sending out, somebody's going to want something real for them. And we stopped making real stuff a long time ago.

Speaker 11 So whether it was Biden with the IRA with green reindustrialization or Trump with tariffs and trying to double down on a carbon model, it's a bigger thing than just what's going on for local pain and a little bit of social security here.

Speaker 2 Yeah, but look, I'm not going to be a Biden apologist, but he admitted he was playing the long games. We did a whole series about this where he said it was going to take decades.

Speaker 2 Trump is now trying to do it in like an hour and a half.

Speaker 11 Yeah, I know. And lots of things will break and it's really difficult to execute this type of turn.
But they do seem to be serious about this as the direction of travel.

Speaker 11 America is no longer just writing IOUs to the rest of the world. Everyone else needs to rebalance.
And that's the one advantage the U.S. has.
It can cause the pain to go elsewhere.

Speaker 2 Let's talk about the pain domestically for a second.

Speaker 2 If there is, and to be completely clear, we are not in a recession. A recession is not happening right now, but indicators are not great.
If there is a recession in this country,

Speaker 2 it has typically been the federal government that has come in and supported people as we make our way through it.

Speaker 2 Based on what you see with this administration now, what do you anticipate happens happens if the economy goes south?

Speaker 11 There will be far less attempt to cushion the effects because this is going to be compounded by Doge's cuts. This is going to be compounded by the desire to do this alongside massive tax cuts.

Speaker 11 There's simply no way to put on the fiscal brakes to stop that recession really hurting if you go down that track.

Speaker 2 And this is a stupid question, but then what happens?

Speaker 11 That's the $64,000 question, Kai. Nobody has said, hey, I've got a great idea.

Speaker 11 Why don't we take stuff that's been working reasonably well for the rest of the world and for us for the past 30 years, and let's just trash it all in a two-year period and rebuild the 19th century balance of power with us behind McKinley tariffs.

Speaker 11 If that's what's going on, it's a really, really big challenge.

Speaker 2 Aaron Powell,

Speaker 2 put on the political side of your political economy hat here.

Speaker 2 Do you suppose there's a degree of economic pain

Speaker 2 that would make the politics of this untenable for the Trump administration?

Speaker 11 If you go after Social Security, Roosevelt thought that no one would ever touch it because it's a contributory program. If they go after Social Security, that's a really, really tough one.

Speaker 11 If they go after Medicaid to really fund these tax cuts, while at the same time firing people in the IRS who are tax collectors, then that's a really hard sell to the public that you're doing this for the great reordering of the world to benefit the United States.

Speaker 2 Aaron Powell, of course, that all plays into the austerity that Elon Musk and his minions have said that they want and that the President of the United States is going along with, right?

Speaker 2 They want to cut, cut, cut.

Speaker 11 And austerity means recession. I mean, they're basically cinnamon.
You can't have one without the other. So it's kind of baked into the cake directionally.

Speaker 2 So, hmm. As I sit here internally debating whether to ask you this question or not, I'm going to ask it anyway.

Speaker 2 Do you think they're lying to us?

Speaker 11 I think there's a real danger that what I could be doing, and a lot of other people are doing, are basically looking for designs within disorder.

Speaker 11 This could simply be sainwashing, if somebody has put it, the way that the Trump administration is essentially just going for a grift, whether it's on taxes, whether it's hollowing out the state.

Speaker 11 We don't know. But let's assume for a second that the United States government isn't just a giant grift machine and this is the play.

Speaker 11 We've got to think it through as to what's going to be coming ahead and also how we're going to deal with the fallout from it.

Speaker 2 Let's talk about that fallout for a second.

Speaker 2 Last big recession we had in this economy was 2008, 2009, the scarring of which, as we've talked about on this program and economists and experts such as yourself know, the scarring from that lasted a decade or more.

Speaker 4 If,

Speaker 2 and I don't want to put words in your mouth, but if this is worse than the Great Recession, what does that mean for the scarring for the next 10, 15, 20 years in this economy?

Speaker 11 What it means is it's really hard to get back to where you were at the start.

Speaker 11 That was the lesson of the Great Recession, because people's skills atrophy, because people get afraid to invest, no one invests in a recession, and then when no one invests, the investment collapses, the recession gets worse.

Speaker 11 It's really hard to dig yourself out of this.

Speaker 11 And if you're not going to do it with any type of state action to counterbalance it, if you're going to basically say bring it on because we want to break things and purge the system, then there's kind of two ways of looking at this.

Speaker 11 The world can be divided into people who think the economy can get into trouble and if the state doesn't step in to stop it, it's one-way traffic all the way down.

Speaker 11 And then there's people who think, no, absolutely not. Let's break things.
And then when we do, there'll be a huge amount of growth afterwards.

Speaker 11 We're making a bet one way or the other that that's going to be what's happening.

Speaker 2 Mark Blythe, Ed Brown, he's got a bazillion titles, but fundamentally, he's a political economist. Mark, thanks a lot.
I appreciate your time.

Speaker 11 Absolutely.

Speaker 2 That consumer confidence data that Mitchell was talking about up at the top of the program also gave us some insights into how people are feeling about the labor market.

Speaker 2 Their thoughts about their job prospects right now, not so bad. What things are going to be like six months down the road, though? Well, that's when people start to get anxious.

Speaker 2 Marketplaces Savannah Peters has more.

Speaker 9 If you look at the hard jobs data, you'll see steady hiring and relatively low unemployment.

Speaker 12 But if you ask regular people, consumers are not particularly excited about the state of the labor market.

Speaker 9 Yelena Shuletseeva with the conference board says this is the fourth month in a row of eroding confidence, with 28% of survey respondents now expecting fewer jobs to be available in six months.

Speaker 9 Economist Alison Srivastov with the hiring site Indeed says workers have plenty to be anxious about.

Speaker 12 Anytime there is uncertainty among policies.

Speaker 9 And even President Trump has said his policies are causing a period of transition in the economy.

Speaker 12 It's going to make people feel as though they don't have a good hold on what the future brings.

Speaker 9 But the truth is, nobody really knows where the labor market is heading. Not the experts and certainly not everyday consumers.

Speaker 9 So why do we bother asking them?

Speaker 22 There's one strand of thinking that says that actually you should kind of ignore this.

Speaker 9 And wait for signs of actual softening.

Speaker 9 But Preston Moy with the research group Employ America says if workers are feeling insecure about their job prospects, people are probably going to be less willing to ask for raises from their current employer.

Speaker 22 When they go look for jobs, they're probably willing to take worse jobs than they otherwise would.

Speaker 9 And in that way, our expectations of the job market can start to shape reality. I'm Savannah Peters for Marketplace.

Speaker 2 The American West goes in and out of short-term drought every couple of years. The big worry, though, is aridification.
It's just getting long-term drier out here, mostly because of climate change.

Speaker 2 So water is kind of the whole ballgame, and it's also a business opportunity, especially if your company has a technology that makes seawater drinkable without the problems associated with traditional desalination.

Speaker 2 Marketplace's Kelly Wells went out to take a look at a pilot project.

Speaker 19 The star of the show is this 12-foot-long, four-foot-wide cylinder that's getting lowered into the water.

Speaker 19 Just getting it down to the bottom takes a half hour, long enough for a conversation with Mark Golay about how it works. He's the engineering director of Oceanwell and helped make this machine.

Speaker 19 He says, just like a lot of desalination systems.

Speaker 23 You have a bulk of fluid that passes through the membrane.

Speaker 19 You shove salty water through a filter and you get fresh water on the other side.

Speaker 19 This machine is designed to be deployed 1,500 feet beneath the surface, where there is lots of pressure to push the water through the membrane.

Speaker 19 Oceanwell says compared to other membrane-based systems that take water from close to the surface, its technology uses 30 to 40% less energy to produce fresh water.

Speaker 23 And then is pumped back up here to the panel. And we have, that's the sampling port is there next to just to the right of the panel.

Speaker 19 Once the machine is up and running, a steady stream of clean water burbles out of a little drinking spout. No bacteria, no harmful chemicals.

Speaker 19 Add some chlorine and fluoride, and you've got drinking water. It's designed for the ocean, but right now it's getting tested in a reservoir in Westlake Village, about 40 miles from downtown LA.

Speaker 19 Cheaper to try it out here because the cylinder is installed right offshore and not too deep. But Golay says compared to seawater 1,500 feet down, fresh water is actually more difficult to process.

Speaker 23 And that's because there's more stuff in this water that we have to filter out.

Speaker 19 Oceanwell says it has raised $11 million, enough to test this machine and build the next one that'll actually go in the ocean. The biggest investor is Kuboda, the agricultural machine company.

Speaker 19 There are also two dozen California water authorities that have signed on to be part of a working group.

Speaker 19 The reason they're excited, a couple places in Norway proved the concept, but here in the U.S., Oceanwell is the only company testing a solution like this.

Speaker 19 And at the risk of stating something really obvious, there's not enough fresh water to go around in Southern California.

Speaker 19 Mike McNutt is with with the Las Virgines Municipal Water District, which is part of the working group and runs this reservoir.

Speaker 6 We were disproportionately impacted by the drought like three, four years ago because we are 100% dependent on imported water.

Speaker 14 And because of that,

Speaker 6 we promised our communities that we would look for other alternative water resources.

Speaker 19 Last time there was a drought, his customers had to operate on a quarter of the water they normally get.

Speaker 19 Now the district wants to be first in line if this tech does become available in case of another severe shortage.

Speaker 6 If we have a local water source like what this can be, you could in fact have physical water molecules available to combat any emergency.

Speaker 19 Now, the ocean as a drinking water source, it's not a new idea. Desalination with membranes has been around for decades.

Speaker 24 We have a mousetrap.

Speaker 16 Works pretty well, actually.

Speaker 24 And in order to beat that, you have to have a hell of a mousetrap.

Speaker 19 Environmental engineering professor David Jasby at UCLA says says desalination has come a long way, but there's one problem it hasn't solved yet. It's cost.

Speaker 24 Desalinated seawater at a well-run plant costs about 48 cents a ton. Groundwater is less than 20 cents a ton.
River water can be even cheaper.

Speaker 19 Oceanwell claims its method is less expensive than regular desalination because it uses so much less energy and energy is the single greatest expense.

Speaker 19 The company's next step is to test its system in the ocean, which it plans to do by the end of next year. In Westlake Village, California, I'm Kaylee Wells for Marketplace.

Speaker 2 This final note on the way out today with a hat tip to Henry Epp, the Marketplace reporter most proximate to the Canadian border.

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Speaker 2 Our digital and on-demand team includes Carrie Barber, Jordan Manji, Dylan Mietinen, Janet Wynn, Olga Oxman, Ellen Rolfis, Virginia K. Smith, and Tony Wagner.

Speaker 2 Francesca Levy is the executive director of Digital and On-Demand. And I'm Kai Rizno.
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