Consumer confidence continues to dim

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disclosures. So look, maybe we should start calling it the Lack of Consumer Confidence Index.

From American Public Media, this is Marketplace. In Los Angeles, I'm Kyle Rizdahl.
It is Tuesday today, the 25th of March. Good as always to have you along, everybody.
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, the March Consumer Confidence Index, down again for the fourth straight month and, oh, by the way, farther down than people had been guessing. 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. 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.
What is that cratering consumer sentiment going to mean for consumer spending? Here's Mitchell. We've been here before and pretty recently.
When inflation ramped up in 2022, consumer sentiment tanked. But, says Joanne Hsu at the University of Michigan, we did see strong consumer spending despite below historical average consumer sentiment.
But there are some differences for consumers now. Lots of uncertainty around tariffs, government layoffs, interest rates.
And now we have a slowing economy. Bill Adams is chief economist at Comerica Bank.
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. But Adams says there is reason to think it'll be different this time.
Now consumers are worrying about their employment and income. Fears of job losses are more likely to translate into cutbacks in spending than fears of high prices.
So far in 2025, consumers haven't dramatically pulled back. But Sophia Baig at polling firm Morning Consult is seeing little warning signs.
I wouldn't say flashing red yet, but spending numbers in January were quite a bit muted. 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 Surkana. But now...
Your 401k in the stock market having a seesaw reaction, that gets that upper-end consumer nervous and they pull back a little bit. 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. On Wall Street on this Tuesday, I'm thinking the calculation went something like this.
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.

We had a story the other day about how President Trump's tariffs, both those already imposed and those really bandied about, how 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. 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.
Marketplace's Justin Ho has that one. One of the biggest effects of tariffs is that they make an economy more isolated.
Teresa Fort, a professor at Dartmouth, says trade barriers cut out foreign competitors so American companies can take their market share. And that means? Workers and capital are going to move towards sectors that are probably not what the U.S.
is best at doing. Fort says in that case, companies' output would slow down.
The lack of competition could make them complacent, even lazy. 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.
In other words, slower economic growth. And that would make U.S.
companies a less attractive target for investors. Over the last few weeks, bond markets have been anticipating less growth thanks to the president's tariffs.
Winnie Caesar, head of strategy at credit sites, says in the short run, investors have been fleeing to safety. 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. dollar.
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.

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.

Slower economic growth can make U.S. government bonds riskier.

Teresa Fort at Dartmouth says if the economy stalls, then the debt and the servicing of the debt is going to grow as a share of our GDP to a point where it starts to become unsustainable. OK, and then that is going to start giving the U.S.
stronger and stronger incentives to want it default. About a third of U.S.
government bonds are held by foreign investors, many of them in countries the Trump administration is beefing with. Sebastian Malaby is senior fellow at the Council on Foreign Relations.
Canadians are completely furious about, you know, 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.
And they are subject to political pressure within Canada. 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. Malby says all of a sudden the European economy is looking relatively strong.
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. If foreign investors start doing that, the effects will ripple throughout the U.S.
economy, says Barry Eichengreen, an economics professor at UC Berkeley. For instance, if demand for

government bonds starts to fall, the government will have to pay more interest to try to win

investors back. So that will push up interest rates and borrowing costs across the board.

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 for Marketplace.
The corporate news of the day is to be found in the beauty aisle. 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.
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.
You might not associate Walmart, a store whose tagline is everyday low prices, with fancy face creams. But Joseph Nunes, a marketing professor at USC Marshall, says they're considered affordable luxuries.
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.
And Nuna says over the years, people have become less picky about where they buy their lotions and potions. There are a lot of categories where the retail experience is less important.
That's partly because stores like Ulta and Sephora have gotten rid of the glass case experience found at department stores. Amarachi Chukwuma is a beauty consultant at market intelligence agency Mintel.
So you're already in the space where you're open to buying it at a retailer. 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.
It also has increasingly bigger reach, thanks to social media. Sales in the prestige beauty market grew by 7% last year.
For the most part, it's an industry that's constantly cranking out new products and also new brands. Because consumers tend to be willing to experiment, and beauty products require regular restocking.
Many have come to see them as a

necessity. A lot of women and girls see it as part of their wellness routine.
Which means you're more

likely to buy it even when you're watching your wallet. I'm Kristen Schwab for Marketplace.
coming up we are 100 dependent on imported water water water everywhere not a drop to yeah you know the rest let's do the numbers Dow Industrial is basically flat today, closed at 42,587.

The Nasdaq up 83 points, about a half percent, 18,271. The S&P 500 added nine points, about two-tenths percent, 57 and 76.
Ulta Beauty picked up about one and a quarter percent today. Estee Lauder dropped two percent.
Cody dimmed one and a tenth percent. Tesla charged Tesla charged up 3.5% today despite falling sales in

the European Union. And the UK Chinese rival BYD slowed about a percent and a half.
Bonds up yield

on the 10-year T-note 4.32%. You're listening to Marketplace podcast is supported by the University of Illinois' Geese College of Business.
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This is Marketplace. I'm Kai Rizdal.

Believe me when I tell you I totally understand how easy it is to be overwhelmed by the firehose of economic news right now.

There is just a lot.

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.
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. Always great to be here.
Let's set the stage for one second here. President Trump and his advisors have said in almost this many words, 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? I buy that there's going to be short-term pain, and it's probably not going to be that short term. 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.

Global economy. So it's not just here.

No, it's the whole thing. Here's how to think about it.
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 in 1975, the three biggest employers here were ExxonMobil, General Motors, and Ford.
2025, the biggest employers are, in reverse order, Home Depot, Amazon Logistics, and Walmart. In other words, we don't make anything anymore.
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.
So whether it was Biden with the IRA with green re-industrialization 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. Yeah, but look, I'm not going to be a Biden apologist, but he admitted he was playing the long games.
We've done a whole series about this where he said it was going to take decades. Trump is now trying to do it in like an hour and a half.
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 is the direction of travel. 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.
Let's talk about the pain domestically for a second. 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, it has typically been the federal government that has come in and supported people as we make our way through it.
Based on what you see with this administration now, what do you anticipate happens if the economy goes south? 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.
There's simply no way to put on the fiscal brakes to stop that recession really hurrying if you go down that track. And this is a stupid question, but then what happens? That's the $64,000 question, Kai.
Nobody has said, hey, I've got a great idea. 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.
If that's what's going on, it's a really, really big challenge.

So put on the political side of your political economy hat here. Do you suppose there's a degree

of economic pain that would make the politics of this untenable for the Trump administration? 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.
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 greater reordering of the world to benefit the United States. 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? They want to cut, cut, cut.
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.
So, hmm. As I sit here internally debating whether to ask you this question or not, I'm going to ask it anyway.
Do you think they're lying to us? 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. This could simply be sane washing of somebody who's 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.
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.
We 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. Let's talk about that fallout for a second.
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. If, 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? What it means is it's

really hard to get back to where you were at the start. 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. It's really

hard to dig yourself out of this. 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. 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 a one way traffic all the way down. 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.

We're making a bet one way or the other

that that's going to be what's happening.

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.

Absolutely. 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.
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.
Marketplace's Savannah Peters has more. If you look at the hard jobs data, you'll see steady hiring and relatively low unemployment.
But if you ask regular people, consumers are not particularly excited about the state of the labor market. Yelena Shuletsyeva with the Conference Board says this is the fourth month in a row of eroding confidence, with 28 percent of survey respondents now expecting fewer jobs to be available in six months.
Economist Alison Srivastav with the hiring site Indeed says workers have plenty to be anxious about. Anytime there is uncertainty among policies.
And even President Trump has said his policies are causing a period of transition

in the economy. It's going to make people feel as though they don't have a good hold on what

the future brings. But the truth is, nobody really knows where the labor market is heading,

not the experts and certainly not everyday consumers. So why do we bother asking them?

There's one strand of thinking that says that actually you should kind of ignore this. And wait for signs of actual softening.
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.

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

And in that way, our expectations of the job market can start to shape reality.

I'm Savannah Peters for Marketplace. 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.
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.
Marketplace's Kelly Wells went out to take a look at a pilot project. The star of the show is this 12-foot-long, 4-foot-wide cylinder that's getting lowered into the water.
Just getting it down to the bottom takes a half hour, long enough for a conversation with Mark Gollay about how it works. He's the engineering director of OceanWell and helped make this machine.
He says just like a lot of desalination systems, You have a bulk of fluid that passes through the membrane.

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

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.

OceanWell says compared to other membrane-based systems that take water from close to the surface, where there is lots of pressure to push the water through the membrane. Oceanwell says compared to other membrane-based systems that take water from close to the surface, its technology uses 30 to 40 percent less energy to produce fresh water.
And then it's pumped back up here to the panel. And we have the sampling port is there just to the right of the panel.
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, 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 L.A. Cheaper to try it out here because the cylinder is installed right offshore and not too deep.
But Goley says compared to seawater 1,500 feet down, fresh water is actually more difficult to process. And that's because there's more stuff in this water that we have to filter out.
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 Kubota, the agricultural machine company.
There are also two dozen California water authorities that have signed on to be part of a working group. 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.
And at the risk of stating something really obvious, there's not enough fresh water to go around in Southern California. Mike McNutt is with the Las Virginas Municipal Water District, which is part of the working group and runs this reservoir.
We were disproportionately impacted by the drought like three, four years ago because we are 100 percent dependent on imported water. And because of that, we promised our communities that we would look for other alternative water resources.
Last time there was a drought, his customers had to operate on a quarter of the water they normally get. Now the district wants to be first in line if this tech does become available in case of another severe shortage.
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. Now, the ocean as a drinking water source, it's not a new idea.
Desalination with membranes has been around for decades. We have a mouth strap.
Works pretty well, actually. And in order to beat that, you have to have a hell of a mousetrap.
Environmental engineering professor David Jasby at UCLA says desalination has come a long way, but there's one problem it hasn't solved yet. Its cost.
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. Oceanwell claims its method is less expensive than regular desalination because it

uses so much less energy and energy is the single greatest expense. 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. This final note on the way out today with a hat tip to Henry Epp, the Marketplace reporter most proximate to the Canadian border He saw this on Bloomberg, that Moosehead Breweries up there has a new offering, a special presidential pack.
1,461 cans of beer, one for each day of President Trump's term in office. $3,500 Canadian, about $2,450 U.S., and they will ship a crate to you.
Weighs about 1,900 pounds, All that beer does. And each crate comes with a message.
Congratulations, it says. You are now 1,461 beers, closer to 2029.
Our digital and on-demand team includes Carrie Barber, Jordan Mangy, Dylan Miettinen, Janet Wynn, Olga Oxman, Ellen Rolfes, Virginia Kay Smith, and Tony Wagner. Francesca Levy is the Executive Director of Digital and On Demand.

And I'm Kai Risdahl. We will see you tomorrow, everybody.

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