Business

A couple of new data points about the labor market came in Tuesday morning — the January Job Openings and Labor Turnover report from the Labor Department and the February Small Business Optimism Index from the National Federation of Independent Business.

The latter found that many businesses are still having trouble filling open positions. But the former found that job openings have fallen almost 9% since the same time last year — a sign that the tight labor market is loosening up.

That said, there is still plenty of uncertainty in this economy, which is weighing on businesses’ hiring decisions. Take Rothmans, a men’s clothing store in New York.

Throughout last year, sales were strong. Co-President Ken Giddon said he went into 2025 feeling optimistic and 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,” he said.

Giddon said Rothmans imports a lot of the clothing it sells. So he’s concerned that the Donald Trump administration’s new tariffs will make that clothing more expensive.

Then there’s the stock market gyrations of recent days, which he said can put his customers on edge.

“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,” he said.

As a result, Giddon said he’s putting those two hires on hold. “Sometimes you gotta raise that caution flag just to take a little breath and see what’s going on,” he said.

Meanwhile in Ohio, Heather Whaling, who runs a marketing company called Geben Communication, is seeing similar caution among some of her clients.

“In the nonprofit space, there’s caution in the education space, certainly in construction and real estate development,” she said.

Whaling said that’s affecting her hiring decisions. She’s already brought on three people this year and is 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% 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,” she said.

On the plus side, Whaling said she’s having an easier time finding new hires. Same with Randy George, co-owner of Red Hen Baking Co. in Vermont.

“It’s been years, really, since we’ve put out ads and fairly quickly heard from really great applicants,” he said.

George said the bakery is in the middle of moving to a new building that’s almost twice as big as its current location.

Still, his business will be affected by tariffs on Canadian flour. So whatever happens to the larger economy, “it wouldn’t surprise me if we see a downturn in our business in the next four years,” he said. “But we also look beyond that.”

When the business expands, George hopes to staff up.

Artificial intelligence can now help you with your next home improvement project — though you will still need to provide your own elbow grease. Home Depot and Lowe’s both launched generative AI assistants on their websites this week: Magic Apron, as Home Depot calls its tool, and Mylow, the Lowe’s version, can give product recommendations, summarize reviews and even offer some how-to advice. They’re just the latest retailers looking to soup up their customer experience with an AI bot.

Personally, I do need a lot of help with weeds after our winter rains. Home Depot’s “president of online,” Jordan Broggi, said it sounds like I’m in the market for some weed killer.

“You might have a set of basic questions, ‘How much do I need? Is this going to, you know, kill the weeds that I have in my lawn, and is it going to harm my grass? You know, how do I apply it?'” he said.

Broggi said Magic Apron, Home Depot’s AI tool, is meant to simulate the in-store experience. “Whatever it may be, this is intended to help answer those questions in real time,” he said.

The Lowe’s Mylow AI suggested 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 the step-by-step,” said Greg Zakowicz, a strategist at ecommerce marketing platform Omnisend.

He said AI assistants are on almost every website now, though many don’t seem to have a clear function. “We’re just at an early stage where the companies put them on, figure out what works, what doesn’t, and then refine them,” he said.

For retailers, these tools provide a valuable new stream of consumer data to analyze, said Anastasiya Ghosh, a marketing professor at the University of Arizona.

“Like, what is the first question a person asks when they’re buying a washing machine?” she said.

But the more personalized and “creative” these chatbots get, the bigger the risks. Generative AI is still prone to hallucination and other errors.

“So if I buy something, let’s say a piece of furniture, and assemble it myself, but if I followed your instructions … and I don’t like it now, that’s your fault,” Ghosh said.

Home Depot’s Jordan Broggi said 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,” he said.

Sort of like weed killer.

The department store chain Kohl’s reported earnings numbers this morning, including its outlook for the year ahead. That outlook, bluntly? Not so great. Kohl’s predicts that revenue will decline between 5% and 7%, compared to last year — way worse than what Wall Street was expecting.

The retailer has joined a growing list of companies that have been making less than rosy predictions about what the future holds: In just the past two days, Delta Air Lines and Dick’s Sporting Goods have also issued gloomy forecasts.

That kind of corporate guidance, to use the technical term? It’s all about setting expectations.

Zachary Warring, vice president of equity research at CFRA, takes these corporate guidances with a grain of salt. Actually, a little more than a grain.

“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,” he said.

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 underpromise and overdeliver? 

“You definitely see companies underestimate. They give a range typically, and you’ll almost never see them miss the bottom of that range,” Warring said.

Legally, corporations don’t have to publish these types of forecasts.

“What we’ve seen is a lot of firms moving away from issuing these, these estimates,” said David Volant, a professor at Indiana University’s Kelley School of Business.

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.

“The way that the macro environment is impacting the internal projections? That’s already happening, so they can observe internally, you know, contracts, canceled sales, increases in growth,” Volant said.

So what then to make of so many different companies being such Debbie Downers about the future? 

Sean Dunlop, a director at Morningstar, said it’s partly a hedge against all the uncertainty involving tariffs, the Department of Government Efficiency and, well, the world.

But it also could 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.

Americans took on an additional $74 billion in credit card debt last year, according to a new analysis from the personal finance company WalletHub. 

The good news is that’s actually a smaller increase than we saw in 2023. The bad news? Credit card defaults are way up.

A household is considered in default on a credit card when they’re over 180 days late on minimum payment. That’s when collections typically kick in.

And in 2024, Americans defaulted on $59 billion in credit card debt — a 34% jump from 2023.

“Inflation is a huge factor,” said Chip Lupo, an analyst with WalletHub. “Because the cost of everything has gotten so high, more and more people are turning to credit cards for their everyday expenses.”

Higher interest rates are also making things worse. Partly because of the Fed’s rate hikes, Lupo said that credit card APRs are averaging around 22% to 23% right now, which is higher than normal.

“You wind up paying more in interest than your actual balance,” Lupo said.

High credit card balances are taking their toll on one demographic group in particular: older adults.

“Nearly half of adults over the age of 50 with credit card debt are lacking the money to cover basic expenses,” said Indira Venkat, senior vice president of research at AARP.

An AARP survey also found that more than half of seniors over 75 are carrying credit card debt.

This week marks five years since the World Health Organization declared COVID-19 a global pandemic. Economic reality changed almost overnight as the virus spread, and despite a very strong recovery, we are still dealing with some of the consequences. Inflation is still on its way back down from pandemic highs.

To take a look back at some of the enduring economic marks left by the pandemic, “Marketplace Morning Report” Sabri Ben-Achour was joined by Pavlina Tcherneva, president of the Levy Economics Institute at Bard College where she’s also an economics professor. The following is an edited transcript of their conversation.

Sabri Ben-Achour: We did get new and expanded forms of government relief and service during the pandemic. Did any of that stick? Or really did that change at all what Americans expect from their government?

Pavlina Tcherneva: We were able to really mobilize the public resources. And I’m talking about financial resources, and research capabilities, administrative structures. We were able to mobilize them to, you know, develop obviously vaccines. We offered telehealth, we offered various other subsidies. And so I think people understood, for a brief moment, that this was possible. And those protections then disappeared, and they were left to struggle with high health care bills and the kind of difficulty to access health care, as one example.

Ben-Achour: There were and are differences of opinions on the effectiveness of some of the things the government did. For example, relief payments. On the one hand, they provided much needed relief to people. On the other, people say that they contributed to inflation. I’m wondering what mistakes did we or could we learn from from an economic perspective?

Tcherneva: I mean, I think the first lesson is that income support relief payments clearly can be dispersed on short order, but I think what it also demonstrated is that just income support doesn’t really address the fundamental structural issues that we’re discussing here. Income support doesn’t increase the minimum wage. You have to have minimum wage legislation to do that. You have to have legislation to provide benefits for working people. And I think this is where we missed an opportunity to think very deeply about transforming the labor market. There was, I think, a missed opportunity on extending the expanded child tax credits. We could have tried different types of student debt relief when student debt cancellation didn’t work. We’ve seen homelessness increase — you know, thinking about housing issues. And so I think that income was the expedient thing to do, but it was not a transformative thing to do.

Ben-Achour: Well, if there is, you know, political disagreement about whether to keep some of the measures we took to help people along through the pandemic, are we better or worse prepared for knowing what to do the next time something crazy like this happens?

Tcherneva: I hope we’re better prepared. I mean, one important lesson is that if we’re faced with a major crisis, we need to be looking to the fiscal side. We need to be looking to Congress for swift action, and it is the public sector that can mobilize the resources. Clearly, we’re working in a political environment that is quite antithetical to increasing public investments, an environment in which public administrative structures that acted very effectively during the COVID pandemic are being under attack. So we have a lot of work ahead of us. But in terms of economic policy, I would say a lesson would be the fiscal arm is the one that can act, and it needs to act perhaps in a more surgical way to improve in a long-term manner the problems in the labor market, increasing minimum wage, providing essential benefits, dealing substantively with the accelerating health care costs, child poverty. These are the sorts of things that we saw even during the last election. I think these are the lessons that we can be learning going forward.

People are getting more pessimistic about their own financial outlook for the year ahead, according to the latest Survey of Consumer Expectations from the Federal Reserve Bank of New York.

More than a quarter of households surveyed are expecting their financial situation to deteriorate considerably in the coming year. A growing number expect to be spending more and believe it will get increasingly hard to access credit. Fewer Americans say they’re likely to quit their job voluntarily this year, partly because they expect unemployment to rise.

In economics, the consumer is not always right. Ben Harris, vice president and director of economic studies at Brookings said, take the last couple of years: By almost any measure, the economy has been strong.

“Unemployment has been historically low. The stock market is growing. Economic growth has been continuing,” he said. “We would have expected that people’s outlook, all in all, would be relatively positive.”

Instead, consumers have been feeling pretty negative. He said there’s been a real mismatch between sentiment and reality.

“Middle part of 2022, for example, people were just as down on the economy as they were during the great financial crisis, even though the economy in 2022 was doing so much better,” Harris said.

Consumers then were also saying one thing — that they were worried about the economy — and doing another — continuing to spend like they weren’t worried.

“Just because folks say they’re unhappy about the state of the economy, that doesn’t mean much,” said Justin Wolfers, an economics and public policy professor at the University of Michigan.

He said it’s important to distinguish between how people feel about “the economy” broadly and how they feel about what’s happening in their own lives.

“Because what folks are expert in is not the aggregates, GDP and the unemployment rate, but their own household economies,” he said.

In the last couple of years, when people said they were worried about the economy, Wolfers says they meant they were worried about the headlines of the national economy, not their own household economies.

But this latest survey from the New York Fed shows people are increasingly concerned about their own financial futures. Vicki Bogan, a professor of public policy at the Sanford School of Public Policy at Duke University, said that is worth watching.

Because if people are worried about their own bills and job prospects?

“They’re less likely to spend … they’re more likely to save money. When they’re reducing their spending and saving more, what is it going to do? It’s going to reduce the demand for goods and services. When consumers reduce their demand for goods and services, business sales are going to decline,” she said.

Which is why, when consumer expectations fall, there’s always the possibility an economic slowdown could be coming.

As expected, China has launched its counteroffensive in the trade war. It has retaliated against U.S. tariffs, with additional levies on U.S. agricultural exports. For instance, Chinese buyers will pay a levy of 15% on U.S. chicken, wheat and corn, and 10% on soybeans, pork and fruit.

For agricultural products that are already on their way from the U.S. to China, nothing changes.

“Our understanding is that the product that’s already en route … that the additional duty would not be in effect for that product. That it would clear under the duties that were already in place,” said Joe Schuele with the U.S. Meat Export Federation.

But he said there is an immediate impact on the psychology of the market.

“Any time you inject additional costs or additional uncertainty, certainly suppliers have to look at … how much China will remain part of their sales, their export portfolio,” he said.

If you’re a U.S. producer of, say, corn or chickens and a buyer in China has already agreed to buy a certain amount from you at a certain price, what happens now depends on exactly what kind of deal you made.

“A lot of these contracts have clauses that are about unexpected trade policy changes,” said Jaya Wen, a professor of business and international economy at the Harvard Business School. “That will determine whether the buyer or the seller is paying the unexpected tariff or how they’re sharing that — is it 50/50, or 70/30?”

In the longer term, tariffs are likely to mean fewer exports, Wen said. And for some products, that will mean more supply on the domestic market.

“U.S. buyers of these goods are going to face relatively cheaper goods. But the problem is that U.S. demand is nowhere near large enough to compensate for the decline in Chinese demand,” she said.

Layer these tariffs on top of the others already affecting the agriculture industry, and, Wen said, the takeaway is that farmers will just make less money.

There’s not much left of 17126 Avenida de la Herradura in the Pacific Palisades‘ Highlands neighborhood. A charred file cabinet a few feet from where the front door probably was. Some blackened cans of paint strewn about what was likely the front yard. Five neighboring homes on the cul-de-sac look similarly obliterated.

But at the end of the street, there’s still an ocean view.

“This is the first publicly listed and closed property in the Palisades,” said Richard Schulman, standing outside what used to be a 2500 square foot ranch house. “This closed for $1.2 million.”

Schulman listed the property on January 15, barely a week after the fires started. It closed in late February.

If you’re wondering how in the world a lot with 9,900 square feet of rubble fetches over a million dollars? It’s the Palisades.

“This is one of the most beautiful places to live in the world,” said Schulman. “You’re in a totally secluded part of LA, but you’re still in the in the city.”

Before the fires, Schulman estimates the property could have sold for upwards of $2.5 million. He listed the property for $999,000, based off a rough calculation of the value of the underlying land. But it’s not like there were other burned down comps he could find on Zillow.

“This hasn’t been done before here, so we’re trying to guess along the way and try to get the best answer,” said Schulman, who has worked in West Los Angeles real estate for 21 years. While he’s completed difficult sales before, including fire-damaged properties, he had never been involved in selling a property quite like this.

Schulman settled on a price he thought would drum up interest. But he wasn’t sure exactly how much demand there would actually be after the fires.

Terri Bromberg, the seller, also had her doubts.

“I couldn’t imagine anybody wanting to buy a completely destroyed, burned up property,” said Bromberg.

Bromberg, 69, is an artist and associate professor at Santa Monica College. She lived at the Herradura property for the past 20 years, the last few with her daughter Rosie Galanis and son-in-law Kenneth.

While Bromberg was at work when the fires came, Rosie and Kenneth had to wait hours to make their escape. Abandoned cars were blocking the only exit route.

At first, Bromberg wanted to rebuild. When she told her daughter she was looking into contractors, Rosie started crying.

“When she brought that up I just broke down and I was like, ‘We go back and rebuild for what? For this to happen again?'” said Galanis.

That $999,000 listing price meant Bromberg would likely be selling the home for less than the $1.5 million she and her late husband paid for it 20 years ago. Even with insurance, Bromberg would be taking a financial hit.

But she had made her mind up that she was going to relocate. Within a week, she had made a successful bid on a new home in Santa Monica. Selling the Palisades property for whatever it was worth would hopefully help restore some of the savings she had to deplete for the new house.

“Our decision was mostly an emotional one,” said Bromberg. “We don’t want to live back there again, we want to relocate.”

Realtor Richard Schulman posted 17126 Herradura on the MLS with pictures of the house before the fires. He knew the pool of buyers would be mostly wealthy developers and investors offering all cash, but didn’t know how deep the pool would be.

“We had over 60 inquiries,” said Schulman. “We had a stack of offers. I think we had six offers over the list price.”

Because access to the Palisades was restricted, all of those offers came without buyers seeing the actual property.

Joe Solamany is the agent who represented the winning bidder, an LA-based investor who declined to be interviewed.

“We did a lot with Google Street view, we did a lot of other stuff,” said Solamany.

Solomany’s client was able to see the property during a 15-day escrow. The plan is to build a new house that the investor can either sell or eventually move into, although it may be a while before construction starts.

Investors like the one Solamany represents are betting that in five to seven years, demand to live in the Palisades will be stronger than before the fires. They believe new fire-hardened homes and infrastructure will convince potential buyers it’s less risky now.

“Because this risk was there before and if you even go back to other places, that in in the past, they had fire or what have you, after a while, people start going back,” said Solamany.

As a condition of the sale, Solamany’s client has accepted responsibility for debris removal from the property. The seller Bromberg will also have a few weeks after the closing date to recover any personal items from the property that may still be there, although her visits so far haven’t yielded much.

Schulman already has three other Palisades listings, including a townhome that was part of a larger complex completely destroyed by the  fires. It looks like a bomb got dropped on the property.

The asking price: $750,000.

“It’s a dream of what this will be in the future,” said Schulman. “What you’re buying is the this view of this hillside here and the trees here, and how this is going to look when it’s done.”

Schulman said he’s already got plenty of interested buyers eager to get into the Palisades for less than a million.

The current upheaval in federal government spending cuts isn’t just a bureaucratic headache in Washington — it has ripple effects felt far beyond the nation’s capital. For people in rural areas, layoffs have already impacted health care. And proposed federal funding cuts might have an even greater impact. That’s because many rural communities rely on federal funding to keep the doors of hospitals and clinics open.

Last fall, Bobbie Nicoliadis was on the once-a-week bus that travels from Christmas Valley to La Pine, Oregon, through the outback. The regular riders one this bus are close-knit. “This bus, we are like family,” Nicoliadis said. “It’s a great group of people.”

Nicoliadis was making the 130-mile round trip to get a blood draw at La Pine Community Health Center. On average, rural patients travel twice as far to health care. Bus driver Debbie Warren said it’s part of rural living.

“Doctor’s appointments are a long ways away, but there’s peace and quiet. You can see the antelope play,” she said.

This weekly bus service is reliant on government funding. It’s just one of many health services that could disappear with federal cuts. Rural community health clinics are also feeling threatened.

One clinic that relies on federal funding is Asher Community Health Center in Fossil, Oregon. Fossil is a town of less than 500 people, situated in the high desert. It’s so remote the Census Bureau doesn’t even categorize it as rural, but rather “frontier land.”

Asher Community Health is the only provider in this area, serving 1,200 patients a year. CEO Teresa Hunt said that funding is essential.

“Without the federal money for being a federally qualified health center, there’s no way that we’ll be here,” Hunt said. 

If the clinic loses funding and closes, its patients will have to drive more than three hours over winding mountain passes to get care. “It would be devastating for the people that live here,” said Hunt.

Federally qualified health centers are a key part of rural health care, especially for low-income people. 

“We’re designed to take care of the underserved, we’re the primary care safety net for a community,” said K.C. Bolton, CEO of Aviva Health. Aviva is a community health clinic in rural Douglas County, Oregon. It serves about 18,000 patients a year with the help of federal funding. 

Last month, Bolton started worrying he might not have access to federal service area competition grants that were already promised to the clinic. He tried to withdraw the remaining balance.

Apparently, he wasn’t the only one. The federal portal from the Health Resources and Services Administration crashed.

“Think of it kind of like a run on the bank. Everyone’s trying to draw off the system and overloaded the system,” said Bolton. “We’re all thinking the same thing. Let’s get ahead of this.”

Bolton was eventually able to withdraw the $3 million of grant funding early. 

That grant represents about 8% of Aviva Health’s annual budget. Meanwhile, Bolton is even more worried about possible cuts to Medicaid, which covers more than half of Aviva’s patients. “We’re kind of like the ER for outpatient care. We won’t turn folks away based on their ability to pay,” said Bolton.

Nationally, about 47% of children in rural areas use Medicaid or Children’s Health Insurance Program.

The Republican-backed congressional budget resolution proposed $880 billion in health service cuts over 10 years, including Medicaid.  

Carrie Cochran-McClain, chief policy officer at the National Rural Health Association said that already strapped rural clinics will feel these proposed cuts deeply.

“These are facilities that literally have zero days cash on hand to operate.”

Cochran-McClain said rural health care providers are already scrambling, trying to get federal employees on the phone. She said cuts to federally staffed clinics like the Department of Veterans Affairs and Indian Health Services could shift pressure elsewhere. And in rural areas, community health clinics will have to pick up the slack.

“Those costs have to go somewhere. And frequently they end up being shifted to other parts of our health care system, which then, in turn, kind of raises costs across the board, which is kind of a never-ending spiral,” Cochran-McClain said.

That could mean that federal funding uncertainties threaten to spiral rural health care facilities out of existence altogether.

It’s only Monday, and already Tesla’s not having a great week. Again.

That’s been a theme pretty much all year. The electric vehicle giant’s stock price has nearly been cut in half after it reached an all-time high in mid-December. Now it’s sitting right about where it was in November, meaning it’s lost just about all its post-presidential election hype.

This isn’t an EV market problem. It’s an Elon Musk problem, said climate economist Gernot Wagner at Columbia Business School.

“What’s happening here, you can probably explain through the politics and the optics,” said Wagner. 

Wagner said Tesla stock exploded after the November election because of Elon Musk’s proximity to President Donald Trump.

“That proximity has not turned into Tesla sales, at least not yet, and maybe never,” said Wagner. 

So EV drivers are buying other cars. Equity strategist Seth Goldstein at Morningstar Research said that’s not just because of politics.

“We’re seeing increased competition,” said Goldstein. “Other automakers are now offering comparable long-range vehicles at a similar price point.”

On top of all that, the Trump administration has brought with it some bad news for a huge piece of Tesla’s business.  

“Tesla has one less very serious revenue source, which is selling credits,” said Gil Tal, the director of the Electric Vehicle Research Center at University of California, Davis. 

Tal said Tesla — one of the cleanest automakers — sells carbon credits to its more pollutive colleagues so they can meet state regulations and those imposed by the Environmental Protection Agency. The EPA regulation is now in question.

“By canceling the EPA regulation and so on, they’re just directly canceling this market,” said Tal. 

That would be bad news, when credits make up more than a third of Tesla’s business.

Moreover, Tesla’s sales are cratering in Europe, and there have been protests against the company here and abroad because of Elon Musk’s political involvements.

This summer is going to be a major test for Tesla’s future, said Jessica Caldwell with Edmunds.

“People that buy stock in Tesla, it’s almost like a dream as to what is going to happen. Is Tesla going to dominate the robotaxi field? Because we know who does that is going to be an extremely profitable company,” said Caldwell. 

Whether Tesla dominates the field will depend on whether it makes good on its promise to have autonomous vehicles on the road starting in June.

If you’re thinking of selling your house, the best time to do it is just around the corner.

New data out from the real estate company Zillow says late May is the golden window. Homes sell for about $5,600 more during this time than they do on average. After years of the tumultuous post-2020 housing market, that’s a bit closer to the traditional home shopping season.

The biggest factor here is the academic calendar, according to Richard Green, who directs the USC Lusk Center for Real Estate.

“It’s been the same answer for a long time, which is it’s when the school year ends,” he said.

Green added that buyers shop in the spring so they can move in the summer — when the kids are on break.

But that isn’t happening everywhere. The peak selling time in San Diego arrives in late March; in Phoenix, it won’t hit until late November. There, Green said the weather is responsible.

“It’s just a pain to move when it’s snowy and icy. Whereas in San Diego and in Phoenix, you know, the weather is similar all year,” he said.

Places like Phoenix also are less influenced by the kids’ school calendars and more by the schedule of retirees, noted Zillow’s home trends expert Amanda Pendleton — “snowbirds who may be looking to settle down into a new home before the winter.”

Pendleton said she gets that selling during the seasonal surge is not always possible. “They’ve got to sell when they’ve got to sell, right? The baby’s coming. They’re starting a new job.”

And if that happens, there are other ways to boost a home’s price. She recommends flaunting the outdoor amenities, springing for the virtual 3D home tour and getting the listing in front of as many eyeballs as possible.

Leading up to the election, economic figures said the economy was doing pretty well and inflation was slowing down significantly. Yet a lot of people just didn’t feel it.  

Now, inflation expectations are rising, polls show economists say there’s a higher risk of recession due to chaotic tariff policy, and consumers have become even more pessimistic, according to survey data. 

Gene Ludwig is chair of the Ludwig Institute for Shared Economic Prosperity and former U.S. Comptroller of the Currency. He’s also author of “The Vanishing American Dream: A Frank Look at the Economic Realities Facing Low- and Middle-Income Americans.” He joined “Marketplace Morning Report” host David Brancaccio to discuss what’s behind the disconnect between the economic data and how people actually experience the economy. The following is an edited transcript of their conversation.

David Brancaccio: People’s lived experience tell us that the economy needs work. Yet — I mean, I end up reporting a lot of these — the headline economic numbers have been saying things are actually a-OK, maybe we should stop whining. How do you resolve this great divide over numbers versus what we see with our eyes?

Eugene Ludwig: We started looking at this back about, oh, five, six years ago when we held a symposium to question why things felt bad for middle- and low-income Americans. But at the time, the headline statistics were looking pretty good, so I decided with the Institute to begin to study the numbers and try to figure out why the folks at that symposium, and in my own experience growing up in a small town in Pennsylvania and seeing it deteriorate, why is this [there] disconnect between what these headline numbers tell us every day and what we’re experiencing?

Brancaccio: Some of it is we do the monthly unemployment rate. It is a crucial piece of data, but the headline one does not account for people who are so discouraged by the job market that they’ve quit looking; sometimes the payroll count that the Labor Department does [does]. Yeah, look at all these people who got jobs this month, but maybe they were working multiple jobs.

Ludwig: Well, all that is absolutely true, but sadly it’s even worse than that. What it doesn’t account for is people who have a piece of a job — they work an hour or two here and there, but they want a full-time job. It doesn’t account for that. If they worked one hour in the last two weeks, they’re counted as being employed. That doesn’t in any way suggest whether the person can earn even above a poverty wage. So unemployment — as we’d like to say it: “functional unemployment” — it’s really in the 20s, which is horrifying. And for people of color, it’s much worse.

Brancaccio: Many orders of magnitude higher than the headline figure that they hand me every month when the unemployment rate comes up.

Ludwig: That’s only one of the headline statistics that’s misleading. The inflation rate is also misleading. CPI is what it’s called, the consumer price index, [it] is a basket of 80,000 goods and services. But for middle- and low-income Americans, they use a relatively narrow group that matter to them most, which is food, housing, education, transportation to work. And if you look at the basic things that they can afford to buy, they have inflated over the last 20 years more rapidly than the CPI. So they’re worse off. And that is a big deal because it means that the net-net, their wages haven’t increased over the last 20 years. For 60% of America, they’ve actually declined or been stagnant.

Brancaccio: I mean, I remember we used to spend a lot of time, when I was a kid, focused on the Misery Index to gauge people’s well-being. But see, that was built on the faulty unemployment number that you were talking about. It was, I think, unemployment rate + inflation = misery. But we need something better, I guess.

Ludwig: We do indeed, and we’ll be coming out with, over the next couple of months, a Shared Economic Prosperity Index and a Minimum Quality of Life measure that, together, will give the country a sense of how people in the middle class are doing in reality.

This is just one of the stories from our “I’ve Always Wondered” series, where we tackle all of your questions about the world of business, no matter how big or small. Ever wondered if recycling is worth it? Or how store brands stack up against name brands? Check out more from the series here.

Listener Tom Scholten from Madison, Wisconsin, asks: 

Income inequality is a term often mentioned in recent years, but by what measure or criteria is it measured? 

While the U.S. economy outperforms other rich countries, it doesn’t feel that way for many Americans. Forty-two percent of Americans don’t have an emergency savings fund, while 40% can’t afford a $1,000 emergency expense, according to a January survey from U.S. News. 

When people discuss concepts like economic performance or economic growth, they’re discussing whether the size of the economic pie is expanding and how fast it’s expanding, said Sonal Pandya, an associate professor of politics at the University of Virginia. 

“But those concepts are distinct from equality, because they’re not telling you how that pie is getting distributed,” Pandya said. 

Measuring inequality and wealth in the U.S. can tell us who’s getting a slice and how much. 

“What defines a good society is that everybody, to the extent possible, can fulfill their potential,” said Steven Durlauf, director of the University of Chicago’s Stone Center for Research on Wealth Inequality and Mobility. 

Inequality inhibits that potential, Durlauf said. 

There are many ways to measure income inequality, including comparing people from different income percentiles and assessing how far away a country’s income distribution is from perfect equality. 

One common measurement is the 90/10 ratio. This looks at the income held by the top 10% divided by the income held by the bottom 10%, Pandya said.  “The larger that number is, the less equal the distribution of income,” she explained.  

Basically, you use this ratio if you want to ask “How much richer is the very, very top of the distribution, as opposed to the very bottom?” Pandya said.

The 90/10 ratio for households reached almost 12.4 in 2023, according to U.S. Census Bureau data. This means households in the top 10%, or 90th percentile, had incomes that were more than 12 times the incomes of households in the bottom 10%, or 10th percentile. In 1980, the ratio was about 9.1. 

Researchers can also use the 90/10 ratio to look at income inequality among different racial and ethnic groups. 

The college-wage premium is another statistic that can provide researchers with insight into inequality. That’s the percentage difference between the average wages of those with four-year degrees and those who have a high school diploma. “That would give you a sense of the way that the economy is pricing certain education skills,” Durlauf said. “The bigger that number is, by implication, the greater the inequality between folks that are educated with college degrees and those that are not.”

In 2000, the wages of those with at least a college degree were about 68% higher than the wages of high school graduates. This percentage peaked at almost 80% in the mid 2010s, then declined to 75% in 2022, according to the Federal Reserve Bank of San Francisco. 

Researchers also use a metric known as intergenerational income elasticity, which looks at the connection between parents’ income and their childrens’ income. One analysis on intergenerational mobility from 1980 to 2010 found that parental income in the U.S. has a greater influence on families at the highest and lowest levels of income. 

Then there’s the Gini index, which determines how unequally incomes are distributed within an economy by assigning it a value from 0 to 1 (or 0% to 100%). Zero represents perfect equality, while 1 or 100% represents perfect inequality. 

In 2019, the U.S. had a Gini coefficient over 40%. Inequality is higher in the U.S. compared to other rich nations, like Canada, France, Germany, the United Kingdom and Sweden. 

When people bring up income inequality, sometimes what they’re actually referring to is wealth inequality and the rise of billionaires, said Chuck Collins, director of the Program on Inequality and the Common Good at the Institute for Policy Studies.

Wealth, or net worth, takes into account home ownership, savings and debt. 

There are now more than 800 billionaires in the U.S. who hold a combined wealth of $6.22 trillion. In 1982, there were only 13. 

Top executives are also becoming increasingly richer. CEO compensation rose 1,085% between 1978 and 2023 compared to a 24% increase in compensation for the typical worker, according to the Economic Policy Institute. In 2023, CEOs received 290 times as much compensation as a typical worker. In 1965, CEOs received only 21 times as much. 

Both income and wealth can tell us how we’re doing as a country and as a society, Collins said. 

To gain a better understanding of wealth inequality, you can look to the Federal Reserve’s Survey of Consumer Finances, which is released every three years, Collins said. This survey shows net worth across different characteristics, like income percentile, age and race/ethnicity.  

Over the past several decades, wealth has become extremely concentrated among a small group. In 1963, the wealthiest families had 36 times the wealth of families at the 50th percentile of the wealth distribution, according to an Urban Institute analysis using Fed data. In 2022, the wealthiest had 71 times the wealth of those in the middle. 

While the U.S. has the data, it’s not fixing the underlying drivers of inequality, Collins said. 

Collins said inequality has increased because the U.S. has failed to increase the minimum wage, cut taxes, and made the tax system less progressive, meaning it’s lowered the top income tax rates. The top income tax rate is currently 37%, a huge decline from 1980, when it stood at 70%.

Collins said global trade policies have also hurt U.S. workers. Critics of free trade deals say they allow corporations to outsource American jobs, which leads to lower wages. 

One of the reasons researchers look at the concentration of wealth among the very rich is because “economic inequality spills over into political inequality,” Durlauf said. 

Those who have the most wealth have the capability to exercise power over elections. During the 2024 election, billionaire families contributed 18% of all the money that was raised. 

The super wealthy are able to influence public policy to enrich themselves even further, Collins said. This creates what he calls an “inequality death loop.”  

“The more unequal we become, the harder it is to reverse,” Collins said.

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Some of the numbers in Friday’s report on the February employment situation suggest that the labor market may be softening a bit. To wit: The number of people who basically said they’re stuck in part-time jobs when they’d prefer full-time work went up about 10%.

The Bureau of Labor Statistics actually has six different ways of measuring unemployment, named — memorably — U1 through U6. The official unemployment rate, U3, came in at 4.1%.

“But they also have a broader measure, which includes discouraged workers, marginally attached workers and people who are involuntarily working part time,” said Jeremy Reynolds, a Purdue University sociologist who studies work and organizations.

This measure, U6, rose to 8% in February.

“That’s the highest level that that measure has been at since 2021,” he said.

And there was a big increase in the number of people working part time who wish they could work full time, up by 460,000 people last month, bringing the total to just under 5 million.

“The jump in part time for economic reasons was surprising. It had been creeping up in the last few months, but it really jumped up,” said Lonnie Golden, a professor of economics at Penn State University, Abington.

Some of that, he said, may have to do with a decrease in the number of so-called “discouraged workers,” people who have given up looking for a job. That was down almost 130,000 last month.

“And when they come back into the workforce, indeed, they’re looking either for part-time, which would be voluntary, or maybe full-time opportunities that are not there, so they’re taking part time instead,” he said.

One reason for all the part-time work is the instability in the broader economy.

“People are taking a more cautious approach to looking for a job, and employers are taking a more cautious approach when it comes to hiring and which positions they’re hiring for,” said Thomas Vick with staffing and consulting firm Robert Half.

Because with everything going on, it’s almost impossible to predict what’s ahead for the job market.

The latest jobs report was, well, kind of uneventful, close to economists’ expectations, no huge surprises. But it did also have some confusing, or seemingly contradictory, details down there in the data.

The unemployment rate rose slightly in February, to 4.1%, because the number of unemployed people went up while the number of people in the labor force went down. Meanwhile, the number of people employed in February fell by 588,000, while U.S. employers added 151,000 jobs to their payrolls.

Confused by that last one — employment went down while the number of jobs went up? Let’s break it down.

We call it the monthly jobs report, but it’s actually two reports mashed together by the Bureau of Labor Statistics, based on two surveys the agency does each month. And they can disagree, because they go to different sources for different information.

The household survey asks people whether they’re working or looking for work, while the payroll survey asks employers how many jobs they have.

That second survey’s a lot bigger, said Dori Allard with the Office of Industry Employment Statistics at the BLS: “121,000 businesses or government agencies, 631,000 individual worksites. And there is a lot more stability in those estimates than there is in the household survey, which is relying on interviews from approximately 60,000 households,” she said.

In the household survey, a change in employment is only considered “statistically significant” if it’s above 600,000.

Joe Brusuelas, chief economist at consulting firm RSM, said February’s employment decline was big, but not that big. 

“Given the large standard error inside that report, we really want to be cautious about overreacting,” he said.

Elise Gould, a senior economist at the Economic Policy Institute, agreed. For a single month, she said, the household survey is less reliable.

“When the surveys tell a different story, we got to take the payroll survey — give that more weight because of the sample size,” she said.

But, she said, over time, “the household survey can’t be ignored. Sometimes the household survey is better at predicting changes in the business cycle. It might find softening sooner,” she said.

The survey has been sending warning signals about long-term unemployment, said Brusuelas at RSM.

“There’s a large number of people who’ve been unemployed for six months or more,” he said.

But the survey is telling a different story about America’s least-educated workers, said Jane Oates, senior policy adviser at WorkingNation: “An increase in the labor market participation of people with less than high school, and a drop in their unemployment.”

As for the current divergence between the payroll and household surveys, Dori Allard at BLS said give it a few months.

“Over the long-term, the two series do tend to track well together,” she said. “Typically the trends are in the same direction.”

Investors are falling into the Gap again.

The San Francisco-based retailer and parent company of Old Navy, Banana Republic, Athleta — and its namesake Gap brand — got a boost after reporting strong fourth quarter earnings on Thursday. 

Gap has been selling clothes for more than half a century but had fallen into decline for the better part of the last two decades. In 2023, it brought on a new CEO, Richard Dickson, who oversaw the revitalization of Barbie at Mattel. Sales at Gap’s brands began to turn around last year despite a not-so-friendly environment for discretionary spending. 

Gap might not have its own blockbuster movie like Barbie, but according to Richard Dickson, “Gap is back in the cultural conversation.”

From collaborations with up and coming designers to a new ad campaign featuring emerging young musicians, “There’s some really great momentum around the brand which seemed to be catching the attention of the consumer,” said retail consultant Sonia Lapinsky at AlixPartners. 

Lapinsky said Gap has also leaned into its heritage with callbacks to its iconic dancing commercials, the latest featuring film and TV star Parker Posey.

“They’re really kind of riding this trend that hasn’t quite gone away yet, but this whole ’90s trends and ’90s nostalgia,” said Lapinsky. 

It helps that wide-leg jeans from the retailer’s heyday have been back in style.

But Gap brands like Old Navy also have a durable advantage, said analyst David Swartz at Morningstar.

“People are concerned about inflation and high prices and everything, and Old Navy is known for having relatively low price stuff that’s generally good quality,” said Swartz. 

And those prices aren’t likely to be impacted much by tariffs. Gap imports less than 1% of its components from Canada and Mexico, and less than 10% from China.

“They’ve been preparing for this for some time because this has been discussed now for quite a long time,” said Swartz. 

Mark Cohen, the former director of retail studies at Columbia Business School, worked for Gap in the ’70s, “back in its go, go, days when it really was skyrocketing,” he said. 

Cohen said if it wants to maintain this momentum after decades of struggle, the company will have to do more than splashy marketing. 

“It has to have an extraordinarily powerful five-pocket proposition,” said Cohen. 

Whether those five pockets are in denim or khaki pants, he said Gap needs to deliver on the affordable everyday basics consumers are looking for. 

When Luka Dončić was traded from the Dallas Mavericks to the Lakers, it was a pretty big shock. Dončić, widely considered one of the best young players in the NBA, was expected to stay in Dallas, but the looming cost of an impending $345 million contract extension — plus a web of restrictions on how much teams can pay to keep players — led to his departure.

“Being at that level of salary and investing in him comes with all these penalties in terms of what you can do with your roster,” said Jordan Sargent, who wrote about the financialization of the NBA for The Atlantic.

“Marketplace” host Kai Ryssdal spoke to Sargent about his story. The following is a transcript of their conversation, picking up with how the concept of “moneyball” has affected the NBA.

Jordan Sargent: The NBA is a capped sport. It has a salary cap and a luxury tax and some other aspects that prevent, limit or severely incentivize teams to not spend as much money as they can. And so things can get very complicated, and you don’t need to just know statistical basketball sports terms anymore. You have to understand aspects of the salary cap and aspects of economics in ways that you just didn’t as a casual fan in previous eras of the sport.

Kai Ryssdal: You talk about the collective bargaining agreement, the CBA — the 676-page document — and what that has done to, as you mentioned, salary cap and all that. And it has made draft picks sort of the commodity in the NBA of today. Talk about that a little bit.

Sargent: Yeah. You know, the NBA, like all the major sports, artificially deflates the salaries of rookies as teams pay their best players a lot of money. You know, you’re playing a LeBron James, $50 million or $60 million a year. It becomes very valuable if you can have good players on artificially cheap contracts. You know, you see in a lot of trades these days, five, six draft picks in one trade for one player.

Ryssdal: How did a music and art guy come up with this story?

Sargent: I’ll tell you. I’m a fan of basketball. I listen to a lot of podcasts, read a lot about basketball, and I just noted a shift over the years about how often you were hearing about the CBA and about which team could do what because of this salary cap thing, or they can’t trade this pick. You know, I’m a fan of the Miami Heat. What can the Miami Heat trade? That’s not something I could just tell you off the top of my head.

Ryssdal: You know, it’s so interesting. You said, “what” can they trade instead of “who” can they trade.

Sargent: Exactly, exactly. And it’s because teams don’t really look at it necessarily as “who.” These days, it’s more “what,” meaning what picks do you have, what assets? One of the things that they’ve instituted into their, you know, structure that other sports don’t is this idea of salary-matching — meaning, you know, if you trade a player that makes $10 million and need to get back a player or a group of players that equal that amount of money.

Ryssdal: Is that the rule, really? What a dumb rule.

Sargent: And they actually made it even tighter this year. You know, you start to have these very narrow passage ways for two teams to make a deal, because you have to match all these things up.

Ryssdal: I was going to ask you, just as the ender, whether there’s a way for the league to get out of this place where draft picks have become the commodity. But really, is this a bad thing for the league, and do they need to get out of it?

Sargent: I don’t think that it’s necessarily a bad thing, although there’s a lot of concern right now about something that was instituted recently in the newest CBA that puts even harsher penalties —

Ryssdal: So wait, they’re tying themselves in more knots?

Sargent: 100%, yeah. And, you know, the most shocking trade really, probably in NBA history — which just recently took place when Luka Dončić got traded to the to the Lakers — the reasoning the Mavericks gave was that they didn’t want to give Luka the most expensive contract in the history of the NBA, which he was going to get and was going to be entitled to, because they they were worried about his body breaking down. And being at that level of salary and investing in him comes with all these penalties in terms of what you can do with your roster. Otherwise, your picks get artificially sent down to the bottom of the draft. There’s all these penalties for spending the amount of money that they felt they were gonna have to spend to retain him. I think there’s a lot of uncertainty from the fan, media and team perspective about what it’s gonna mean for building a basketball team and retaining the best players in the sport when you know they’re bringing the hammer down in various ways on teams that spend a lot of money.

This week, the Bureau of Economic Analysis reported that the trade deficit jumped 34% in January from the month before. That’s largely because many importers have been trying to bring in extra goods ahead of the Trump administration’s new tariffs.

All the uncertainty around U.S. trade policy and the response abroad is also having an impact on American exporters, including the agricultural sector.

Right now, farmers are starting to think about what they’re going to plant this coming spring.

But now that China has slapped retaliatory tariffs on big export crops like soybeans, “some of those producers are thinking, ‘Well, should I be planting as many soybeans as normal if we’re potentially going to be losing some of that demand?'” said Naomi Blohm, senior market advisor at Total Farm Marketing.

In some parts of the country, farmers might decide to diversify and grow crops that can be sold domestically.

“They might decide that they would plant barley instead of soybeans, or they could plant oats,” Blohm said. But farmers don’t always have that option.

Associate professor Aleks Schaefer at Oklahoma State University said that the climate and soil in his state dictate what farmers can grow.

“If I’m a farmer in Oklahoma, I don’t have the choice, really, between wheat — which I might export — versus apples — which I would want to sell domestically,” he said.

Either way, Schaefer said that farmers are going to have to make tough decisions on what to plant not knowing how tariffs will play out.

I’m not usually a nondairy milk guy, but I wanted to see something on my coffee run this morning. I ordered a large iced coffee with almond milk and, lo and behold, it didn’t cost any extra.

Nondairy milks are surging in popularity right now. Oat-, almond-, soy-, rice- and coconut-based milk substitutes (just to name a few) are popping up on menus nationwide. And it’s changing how restaurants are setting prices.

This week, Dunkin’ dropped its surcharges on drinks with nondairy milk. Starbucks did the same late last year, as have lots of indie coffee shops. One person excited about these developments is Lizzy Freier.

“I’m an oat milk fan, yes,” she said. Freier is both an oat milk fan and the director of menu research at the consulting firm Technomic.

Especially for Gen Z and Millennial consumers, “at coffee cafes, they’re expected to have these types of nondairy milks on offer,” she said.

But those alternatives aren’t cheap. A gallon of oat milk can be twice the cost of a gallon of cow’s milk, so coffee shops charging a little extra might make sense.

Thing is, “customers rebel when they see a surcharge,” said Stephen Zagor at Columbia Business School. “It’s like a company directly sticking their hand in their pocket.”

That’s especially true for consumers with dairy allergies or who just prefer plant-based milks for ethical or health reasons, Zagor said. “And then, you go to a Starbucks or you go to a Dunkin’, and they’re being penalized for trying to be healthy.”

It also may not be a coincidence that the country’s two biggest coffee chains are dropping the extra fees right now, per Miguel Gomez, a professor of food marketing at Cornell. 

“Both companies have faced legal challenges that argue that the surcharges were discriminatory,” he said.

And in the grand scheme of running a coffee shop, Gomez said that giving away a bit of nondairy milk isn’t a huge deal.

“The cost of milk to make coffee is so small. It’s single digits as a share of the total cost,” he said. “It’s so small that I think the companies will absorb this cost, and they are not going to increase prices.”

Gomez added that the coffee shop landscape is so competitive, he expects more chains to follow suit. Otherwise, they might lose customers to the Dunkin’ down the street.

The first jobs report of the second Donald Trump administration comes out Friday. So far, we know that weekly jobless claims dropped last week, according to data from the Labor Department, and the number of people continuing to file for unemployment benefits reached nearly a three-year high — showing it’s taking workers longer to find new jobs.

Evidence of a competitive job market also showed up in the latest Beige Book, a report the Federal Reserve puts out eight times a year with anecdotal business conditions gathered from each Fed district. Many businesses, outside chronically short-staffed sectors like health care and construction, reported an easy time finding qualified workers. One said they had “resumes stacked to the ceiling,” while another said jobs that used to get dozens of applications now attract hundreds.

On paper, the job market looks pretty strong this year — layoffs and unemployment have been relatively low. But not so much from the vantage point of career coach Amanda Augustine, who works at outplacement firm Careerminds.

“For those who are looking for a job, you know, get ready to be in it for the long haul,” she said.

Augustine serves mostly white-collar workers who’ve been let go. She said it’s taking an average of 5½ months for them to find new jobs. “It does seem to be a longer, more drawn out process than before,” she said.

Competition is fierce, she said, and many employers are asking applicants to jump through more hoops, such as skill assessments, personality tests or multiple rounds of interviews.

“Nobody wants to make a costly mistake and hire the wrong person, so they’re taking all this extra time,” Augustine said.

The job market in some sectors almost feels frozen, and not just because hiring has slowed, said Allison Shrivastava, an economist with Indeed Hiring Lab.

“People are pretty hesitant to leave their jobs — quit rates are pretty low right now, so it seems as though people don’t have the confidence that they did, you know, a few years ago, to just go out and find a new job,” she said.

Shrivastava said in some fields, like accounting, job postings are well above their pre-pandemic baseline. But they’re down in banking and software development.

Unemployment has had the biggest impact on workers with some college education but no advanced degree, said Julia Pollak, chief economist at job site ZipRecruiter. 

“There are some fields where workers are still doing fine. But for people with communications majors, [public relations, tech, human resources], all of those kinds of fields, this is a very, very unforgiving market right now,” she said.

ZipRecruiter surveys of confidence among job seekers show a decline this year, Pollak added. “And workers are expressing a fair degree of layoff anxiety.”

Especially government workers, who are job searching at higher rates. Pollak said federal employees are concentrated in fields like program management and administration, so those areas are being flooded with applications.