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On the program today, making economic sense out of all that uncertainty.

From American Public Media, this is Marketplace. In Los Angeles, I'm Kyle Rizdahl.
It is Tuesday today, the 11th of March. Good as always to have you along, everybody.
It is a hard and fast rule of this program that while the economic headlines matter and should have attention paid to them, what's really important is what people are feeling in their day to day. People and businesses, too.
So I'll give you the headlines. Then Justin Ho is going to come on and tell you what they mean.
We got a couple of data points about the American labor market this morning. The January job openings and labor turnover survey, JOLTS, of course, from the Labor Department, and the February small business optimism index from the National Federation of Independent Business.
The NFIB says a lot of small businesses are still having trouble filling their open positions. So there's that.
But the JOLTS report showed job openings have fallen almost 9 percent since the same period a year ago.

It's a sign that the labor market is slowing a bit, of course.

And then you add the general layer of uncertainty in this economy right now.

Well, here's Justin.

Throughout last year, sales were strong at Rothmans, a men's clothing store in New York.

Co-president Ken Gidden says he went into this year feeling optimistic and he was planning to hire for two new positions.

And then the last week or so has definitely made us think about it a little bit. Gidden says Rothmans imports a lot of the clothing it sells, so he's concerned that the Trump administration's new tariffs will make that clothing more expensive.
And then there's all the stock market gyrations in recent days, which he says can put his customers on edge.

You know, we sell clothing, which is not something that is necessary. And if you're not feeling good about your portfolio or worried about what's going on in the big picture, that can sometimes

make you slow down. As a result, Giddens says he's putting those two new hires on hold.

Sometimes you've got to raise that caution flag just to take a little breath and see what's

Thank you. As a result, Giddens says he's putting those two new hires on hold.
Meanwhile, in Ohio, Heather Whaling, who runs a marketing company called Gebbin Communication, is seeing that kind of caution among some of the clients she works with. In the nonprofit space, there's caution in the education space, certainly in construction and real estate development.
Whaling says it's affecting her hiring decisions. She's already brought on three people this year, and she's planning on hiring more.
But that depends on how her clients are feeling. We even are in a situation right now where we have a person that I am 98 percent ready to make a job offer to, but I need to see how a couple more contracts shake out on my end before making that commitment.
On the plus side, Whaling says she's having an easier time finding new hires. Same with Randy George, co-owner of Red Hen Baking Company in Vermont.
It's been years really since we've put out ads and fairly quickly heard from really great applicants. George says the bakery is in the middle of moving to a new building that's almost twice as big as his current location.
He says his business will be affected by tariffs on Canadian flour, for example. And whatever happens to the economy, he says.
It wouldn't surprise me if we see a downturn in our business in the next four years. But we also look beyond that.

When the business expands, George hopes to staff up, starting with two or three new employees.

I'm Justin Ho for Marketplace.

Wall Street today? Well, not as bad as yesterday. Let's just say that, huh?

We'll have the details when we do the numbers. Kohl's, the department store chain, reported earnings this morning, including, as most companies do, its outlook for the year ahead.
Not so great, it turns out. The company predicts revenue is going to decline between 5% and 7% compared to last year, way worse than what Wall Street was expecting.
And Kohl's joins a growing list of companies making less than rosy guesses about what the future holds. In just the past couple of days, Delta Airlines and Dick's Sporting Goods have each issued gloomy forecasts.
As Marketplace's Matt Levin reports, that kind of corporate guidance is all about setting expectations. Zachary Waring takes these corporate guidances with a grain of salt.
He works for the investment research firm CFRA. Actually, a little more than a grain.
Yeah, I'd say it's probably more like a tablespoon or maybe even a cup. Projections are the hardest thing to get right in finance.
As a broad rule of thumb, if a company's earnings come in lower than what either the company or Wall Street analysts expected, the stock price goes down. If they beat expectations, the price goes up.
So why set high expectations when you can under-promise and over-deliver? You definitely see companies underestimate. They give a range, typically, and you'll almost never see them miss the bottom of that range.
Legally, corporations actually don't have to publish these types of forecasts. David Volant is at Indiana University's Kelly School of Business.
What we've seen is a lot of firms moving away from issuing these estimates. But that doesn't mean they don't have any value, especially since firms have more up-to-date data than, say, what the government puts out.
So, what then to make of so many different companies being such Debbie Downers about the future? Sean Dunlop at Morningstar says it's partly a hedge against all the uncertainty involving tariffs and Doge and the world, but it could also be a sign of a broader downturn that's already begun. While consumer spending held up really well in 2024, it's starting to look like there are cracks in the armor.

And a lot of companies are revising their guidance accordingly.

Here's hoping those corporate guidances are wrong again.

I'm Matt Levin for Marketplace.

Here's a little guidance for you.

If you miss something on the actual radio and we get it, it happens.

Life is busy.

We've got a podcast.

Marketplace.org is where you can

get that or obviously just follow us, inflation at the retail level. But there is something else burbling around out there that we're going to spend a couple of minutes on.
Stagflation, high inflation and stagnant economic growth. To be clear, we are not, repeat, not seeing this right now.
The unemployment rate is still historically low and inflation, while elevated, is down significantly from its pandemic highs. But Better to know, we think, what the future might hold, no? So we got Shebnam Kalemli Ozkan on the phone.
She's an economist teaching at Brown University. Welcome to the program.
Thank you. How are you? Great to be here.
I'm well, thank you. For those who might not have experienced it back in the 70s, what does stagflation feel like in an economy? It is basically higher prices and higher unemployment recession.
So you have a double whammy. The economy is slow.
People are unemployed. At the same time, prices are high.
To say again, we are not in stagflation right now. That is an important point.
But my question is, what has happened to get us to the point where we're having this conversation again? Why we're having this conversation is what I call extreme uncertainty created by a series of policies of the new administration. We all know that tariff is because it's a tax, it's going to lead to higher prices.
But we didn't know there's going to be so much uncertainty about it, like, you know, back and forth, back and forth. That creates a lot of uncertainty about economic outlook in the future, which means now consumers are going to cut down their demand, investors are going to cut down their investment, and that's the recession part of the stackflash.
What do we do about it? I mean, if you're Jay Powell listening to this interview, I don't know if he's going to listen, but what do you tell the head of the Fed to do? The Fed's role here is look at what happens to expectations, to inflation expectations, because the future plans of businesses and consumers is going to be reflected in that inflation expectations. And if the Fed, Jay Powell, sees those expectations are elevated, but at the same time, the data, which is, of course, always about the past, where the data comes also that inflation is not going down, now we are having a sticky inflation, then obviously they are going to increase the

interest rates. Seems to me, though, based on what you've said about uncertainty in the policies of the Trump administration, that a lot of the solution would be not having so much uncertainty.
That's right. That would be the solution.
So that solution is better than actually Fed solution, Because if the uncertainty really keeps feeding into these lower demand and lower investment plans and consumption plans, and that's also what we are seeing in the stock market meltdown yesterday and today, then it is going to be a very difficult job for Fed because Fed also, you know, they don't want a recession. So if the recession now wins over inflation, that means they need to cut the rates.
If you have both here, your stagflation scenario, stagflation is a very, very hard scenario for a central banker. And the solution here is really not the Fed, but it is not having these type of uncertain policies coming from the administration.
With the understanding that things in an economy, to paraphrase here, happen very slowly and then all at once. We're talking about stagflation now, and again, we are not there, but it could be here.
What's a better way to ask this question? How long do you suppose it'll take? In terms of when are we going to see the recession and the higher prices, that's going to take time. Because remember, for higher price, actual higher price, actual higher inflation to be observed, the tariffs has to be in effect.
Tariffs are not in effect yet. It is just like all this talk creating this uncertainty.
So if tariffs never really happen, but then because now this uncertainty

fed into so much the future plans

of consumers and businesses,

we might really end up with a recession.

Shibnim Kalimle-Oskan at Brown University.

Professor, thank you so much.

Thank you very much. So never mind whether artificial intelligence is going to take your job.
The good news is AI can now help you

with your next home improvement project,

although you will still have to provide the elbow grease.

Home Depot and Lowe's both launched

generative AI assistance this week.

Magic Apron at Home Depot for all those shop aprons they wear

and MyLowe for Lowe's.

Nomenclature aside, they can give you product recommendations,

summarize reviews, and maybe offer some how-to advice. They're just the latest retailers those two are, looking to soup up their consumer experience with an AI bot.
Marketplace's Megan McCarty-Curino drills down on that one. I'm actually not in the market for a drill at the moment, but I do need a lot of help with weeds after our winter rains.
You might be looking at weed killer, sounds like. Home Depot's president of online, Jordan Brogy, says their AI assistant is meant to simulate the in-store experience.
You might have a set of basic questions. How much do I need? Is this going to kill the weeds that I have in my lawn? And is it going to harm my grass? How do I apply it? Whatever it may be, this is intended to help answer those questions in real time.
Lowe's Milo AI suggested I might need mulch to suppress new weeds once I've sprayed. And after some coaxing, it calculated how many bags I'd need to buy.
I think they're really promising because they have a step-by-step. Greg Zakowitz, a strategist at e-commerce marketing platform OmniSend, says AI assistants are on almost every website now, though many don't seem to have a clear function.
I think we're just at an early stage where the companies put them on, figure out what works, what doesn't, and then refine them. For retailers, these tools provide a valuable new stream of consumer data to analyze, says Anastasia Ghosh, a marketing professor at the University of Arizona.
Like, what is the first question a person asks when they buy in a washing machine? But the more personalized and creative these chatbots get, the bigger the risk. Generative AI is still prone to hallucination and other errors.
So if I buy something, let's say a piece of furniture, and I assemble it myself. Or I go on a DIY weed-killing mission.
But if I followed your instructions and I don't like it, now that's your fault. Home Depot's Jordan Brogy says the advice is clearly labeled as AI generated.

I think customers are in the process of getting more familiar with using tools like this and knowing that they can be extremely helpful, even if they're not 100% accurate.

Sort of like weed killer. I'm Megan McCarty Carino for Marketplace.
Coming up. They can't tell us if they'll have the chocolate we'll need in six months.
Yeah, now that's a crisis. First, though, let's do the numbers.
Dow Industrials off 478 points today, 1.1%, 41,433. The Nasdaq subtracted 32 points, two-tenths percent, closed at 17,436.
The S&P 500 down 42 points, about three-quarters percent, 55 and 72. They bounced off the lows, is the phrase you're looking for.
That bad outlook from Kohl's that Matt Levin was telling us about, that drove shares in the retailer down more than 24%. Some of the other gloomy gusts he mentioned.
Dick's Sporting Goods deducted 5.7%. Delta Airlines dipped 7.25%.
American Airlines projected a bigger-than-expected first-quarter loss, descended 8.3% as a result. United Airlines got caught in the downdraft, too.
It dropped 2%. There was, though, a ray of light in the airline sector.
Southwest Airlines announced that bags fly free is no longer an operative slogan. Some customers will not have to pay to check luggage.
Southwest flew eight and a third percent higher today. Bond prices fell.
The yield on the tenure T-note rose to 4.28 percent. And you are listening to Marketplace.
This Marketplace podcast is supported by the University of Illinois'

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Get started at onlinemba.illinois.edu. This is Marketplace.
I'm Kai Risdahl. At the risk of repeating myself, tariff and trade policy in this economy right now is unclear at best.
On again, off again, back and forth. You've heard all the descriptions.
So too have business owners who, as they wait for clarity, are exploring their options. We heard yesterday from Sam Desai.
He's the VP of a metals distributor in New Jersey, who back in 2018 had filed for exemptions from the steel and aluminum tariffs in President Trump's first term. Among the many things we don't know about the tariff process this time around is whether there is going to be a formal exemption process.
But if there is, and if it looks anything like it did back then, it might be a little bit messy. Marketplace's Kristen Schwab looks back at the tariff exclusion process in the trade war last time.
When Austin Ramirez learned there was a way to potentially get out of being taxed on imports during the Trump administration's first trade war with China, he knew he had to apply. There are a subset of our products that we just don't have North American alternatives for.
Ramirez's company is called Husco and is headquartered in Waukesha, Wisconsin. It makes hydraulic and electromechanical components for cars and construction and agricultural equipment.
About half the parts he needs to manufacture these goods are imported from abroad. Parts like iron castings.
So these are molten metal that's poured into a mold. You know, it solidifies and ultimately it's machined into a final product.
It's a fairly labor-intensive, you know, not hugely environmentally friendly process. So a lot of those foundries have moved overseas.
This was the main argument Ramirez's lawyers used in tariff exclusion applications back in 2018, that there was no way to source these castings in the U.S. They had to outline reasoning in pages of applications for dozens of items, a process that took months.
The outcome? I'd say probably a third to half of our exclusions were approved. That's higher than the average 13 percent approval rate through early 2020 for tariff exclusions on Chinese imports, according to the Congressional Research Service.
But Ramirez says the whole process was frustrating because it was opaque. We couldn't find any kind of rhyme or reason to why certain component categories were approved and why others were rejected.
Dinesh Haseja at Augusta University researched exclusions data from the 2018 tariffs on steel and aluminum imports. There was a lot of randomness.
Randomness, Haseja says, because it was hard to find consistent reasons why applications were denied or approved. But there were some patterns.
For instance, if your supplier was in a country that had a favorable relationship with the U.S., you were more likely to be granted an exclusion.

So the country of affiliation matter.

So did, perhaps, a company's political affiliations. A study in the Journal of Financial and Quantitative Analysis found businesses that made campaign contributions to the Republican Party were more likely to be granted exclusions.

Now, the Trump administration has not announced an exclusion process for tariffs this time around. Robert Friedman, who co-leads the international trade practice at law firm Holland & Knight, has been getting calls from clients for months to explore all their options.
This time around, we were seeing companies preparing far in advance of Trump's election. He's a bit skeptical there will be an exclusion process because of how wide-reaching these tariffs are and the kind of government staffing reviewing applications would require.
But however messy the tariff exclusion process was or may be, it would at least give smaller business owners a way to be heard. Friedman says no exclusion process would give more voice to bigger firms.

The companies with greater political power have an easier time conveying their messages,

but that unfortunately is not available to many businesses.

Austin Ramirez at Husco, the hydraulics manufacturer, isn't so worried about Chinese

tariffs this time around. The company has reduced its imports from China by about 80 percent, though none of those supply chains shifted to the U.S.
We now source in Thailand and Malaysia and some to India and some to Europe. That won't save Ramirez if Trump puts global tariffs into place, something he's floated before.
It is so volatile that, you know, I don't know that anybody knows what to do.

He says he can't create a plan until the administration solidifies its own.

I'm Kristen Schwab for Marketplace. Those who follow the corporate fortunes of Swiss chocolatiers closely, of which, to be clear, I am not usually one, might have seen this item the other day that Lindt, that's L-I-N-D-T, announced better than expected profits the other day in the face of historically high cocoa prices.
Point number one, that's about the pricing power that Lint has. But point number two and related is that not everybody can maintain their margins when input costs go up and sometimes go up a lot.
So we called the chocolate retailer we know to ask about her chocolate plans for 2025. Kristen Talheimer Bingham is the co-owner of Dean's Sweets.
It's in Portland, Maine. So cocoa prices, as a lot of people know, have been going up.
In 2024, the price of chocolate we use went up four separate times. And this year, chocolate prices have already gone up again with an increase of 20% just in January.
And then there's maybe an even harder aspect, which is the uncertainty about the supply chain. What we're hearing from our suppliers is that they aren't even sure when their inventory will be available.
They can't tell us if they'll have the chocolate we'll need in six months, and they certainly can't tell us what the prices will be half a year from now.

We plan ahead as best we can. So we purchased a lot of chocolate in late 2024 and early 2025, and that means at least we can predict that we'll have enough chocolate on hand through the summer.
and then there are the tariffs on China, and we aren't sure yet, but it looks very much like some of the packaging we need will be affected by that. But somehow, even with all the uncertainty, we're still working happily as ever.
We were relieved and pleased to get through and have good Valentine's Day sales.

Right now we're doing more and more corporate sales and custom chocolate for hotels. And now because Easter and Passover are a little later this year, we have some extra time.
So we're still working away happily and getting ready with lots of little bunnies for Easter.

Kristen Tullheimer Bingham there, co-owner of Dean's Sweets.

If you're in Portland, Maine, check them out. This final note on the way out today, which takes us to a place this program doesn't usually go, the White House briefing room, where, given the state of the markets and of the president's economic policies, Press Secretary Caroline Leavitt was fielding a lot of questions about the state of the markets and the president's economic policies.
Most of what she said was misleading at best, dissembling at worst. And then this lie.
Tariffs are a tax cut for the American people. We started with one hard and fast rule of this program.
We end with another. Facts matter.
Tariffsiffs are attacks on the American people.

Our digital and on-demand team includes Carrie Barber, Jordan Mangy, Dylan Mietinen, Janet

Wynn, Olga Oxman, Ellen Rolfes, Virginia K. Smith, and Tony Wagner.

Francesca Levy is the executive director of digital and on-demand.

And I'm Kai Rizdahl.

We will see you tomorrow, everybody.