Business

Layoffs are at their highest level since 2020 thanks in part to the Department of Government Efficiency’s attempt to cull the federal workforce. 

U.S. employers announced more than 172,000 job cuts in February, a 245% increase from the nearly 50,000 cuts announced in January, according to a new report from the outplacement firm Challenger, Gray & Christmas. Canceled government contracts, trade war concerns and bankruptcies also fueled the increase, the report found. 

The government announced more than 62,000 job cuts across 17 different agencies last month, the report said, and even more cuts are expected to come. The Department of Veterans Affairs is planning to slash 80,000 jobs, the Associated Press reported on Wednesday.

DOGE, headed by unelected billionaire Elon Musk, is spearheading these federal layoffs to cut what it considers wasteful government spending. In 2024, the government spent  almost $7 trillion. The largest spending categories were Social Security, health insurance programs and defense, which totaled more than $4 trillion.

But federal workers’ salaries only make up a small fraction of total spending. “It’s a tiny little drop in a very, very big bucket,” said Don Kettl, a professor emeritus and former dean of the University of Maryland School of Public Policy. 

The total amount we spend on payroll for federal workers is about $336 billion a year, Kettl said. 

That’s 1% of gross domestic product, and almost 5% of total federal spending. The government payroll for other developed countries is typically 5% of GDP, Kettl said. 

The federal government employs about 3 million workers, a figure that excludes active-duty military personnel.

There’s value in the work that federal employees do, Kettl said. “Everyone is working on a project, a program, a benefit of some kind — whether it’s putting out Medicare and Medicaid money or whether it’s dealing with environmental safety or making sure that the drinking water we have is safe,” Kettl said. 

These workers also drive the services that help make our economy and financial system run efficiently, said Matthew Shapiro, an economics professor at the University of Michigan. 

“When there’s a bank failure, we have federal employees who — as we saw a few years ago with the Silicon Valley Bank — will close it on a Friday and make sure it’s open Monday morning so that depositors can be paid,” Shapiro said. 

The federal civilian workforce as a share of total non-farm employment is on the decline, Shapiro said. In 1960, that share was about 3.5%. Now it’s about 1.5%. 

“There’s a huge amount of federal services delivered by a very small and quite effective federal workforce,” Shapiro said. 

Cutting federal workers indiscriminately will “substantially damage the economy,” Shapiro said. 

Wendy Edelberg, a senior fellow at the Brookings Institution, said there are ways to make the federal workforce efficient. Sometimes, hiring decisions are based on whether a congressman wants a certain number of jobs in his district rather than how many people an agency actually needs, she said. 

But these workers are not what Edelberg would consider “low-hanging fruit” if the U.S. wants to reduce the deficit. 

Spending is growing, largely because of our increasingly aging population, Shapiro said. The number of retirees on Social Security is rising relative to the working-age population, while the U.S. has to pay the Medicare benefits it’s promised retirees, Shapiro said. 

Shapiro said the U.S. does have to figure out how to make these programs more sustainable. 

“But these are important benefits that our citizens are counting on and have earned through their contribution to the tax system throughout their working careers,” he said. 

The U.S. continues to offer tax cuts and tax breaks that hinders its ability to reduce spending, Kettl said. 

And once those tax breaks are in the tax code, they tend to last forever, he said.

When it comes to navigating this economy through a trade war, this isn’t Jerome “Jay” Powell’s first rodeo. 

He, of course, was Federal Reserve chair back in March 2018, when first-term President Donald Trump announced across-the-board 25% tariffs on steel and 10% on aluminum. Then a few months later, he slapped duties on $200 billion worth of Chinese imports, and threatened tariffs on Canada and Mexico. 

But the U.S. economy the Fed was managing back then was very different than the one it’s managing now. So are the Fed’s options for keeping it on track.

The obvious difference between the economies of 2018 and 2025? 

“I think there’s three words. It’s inflation, inflation, inflation,” said Ann Owen, an economist at Hamilton College.

Back in 2018, entire generations of Americans had never really experienced high inflation. It was one of those mythical things from decades past, like print newspapers or civil political discourse. 

So when Trump floated his first-term tariffs, consumers and businesses didn’t really expect inflation to rise above the 2% or so they were used to. 

Now though, after four years of paying through the nose for eggs?  

“So if you are paying attention to any discussion about the impact of tariffs, certainly inflation is a word that you’re going to be sensitive to, and that’s going to influence your expectations about inflation,” Owen said. 

Higher inflation expectations can cause higher inflation, a self-fulfilling nightmare for the Fed. 

Richard Clarida, Fed vice chair in 2018, said consistently low inflation allowed the central bank to basically ignore Trump’s tariffs as one-off shocks. 

Although those 2018 tariffs were also smaller in scope. 

“Right now, there’s a discussion about Mexico and Canada, and potentially the eurozone and reciprocal tariffs,” Clarida said. “So the menu of possible tariff options is vastly longer.”

On the other side of the Fed’s dual mandate, full employment, the 2018 and 2025 economies look similarly strong, with unemployment around 4%.

But over the past few months, payroll numbers and gross domestic product show signs of a slowdown. 

This time around, tariffs are hitting an economy that’s losing momentum, said Stephanie Aliaga at J.P. Morgan Asset Management.

“The economy the 2025 Fed is trying to steer is a far more fragile economy than the one that they encountered in 2019, and given the risks with inflation and growth, it puts the Fed in a really tricky spot,” Aliaga said. 

Either keep rates high to fight the inflationary impact of tariffs and risk recession, or lower rates and risk more inflation.

During the first years of the pandemic, while many companies embraced remote work, the early employees of Whisper Aero, an aerospace technology startup, moved in together. 

“There was a big risk where we could have ended up hating each other,” said Mark Moore, the company’s founder and CEO. 

Prior to starting Whisper Aero, Moore ran engineering at Uber Elevate, a division at the ride-sharing company aimed at developing flying taxis that’s since been spun off into a separate company. 

“The last year that I was at Uber Elevate, I was doing a lot of traveling,” said Moore. While he was traveling in Tennessee and thinking about his next steps, a property in Cumberland County, Tennessee, caught his eye. 

“I saw this resort on a gorgeous lake right by the airport that was in foreclosure, and I’m like, ‘Man, that would be a really cool place to start the company,’” said Moore. “And so I bought it.”

He purchased the 20-acre resort for around $1.1 million, which is comparable to the median home price in the San Francisco Bay Area, where he was living. “All the engineers just moved in, and we started Whisper Aero,” he said. 

“Marketplace” profiled Cumberland County as part of our series “The Age of Work” which is about the opportunities — and challenges — created by an aging workforce. Cumberland County has one of the oldest labor forces in the U.S., according to payroll processor ADP. It’s a retirement destination where about 1 of every 3 residents is 65 or older. It’s not the type of place you’d typically find tech startups with Silicon Valley roots. 

“We were sequestered kind of out in the boonies,” said Moore. “And I say that lovingly.”

The company eventually outgrew the resort and moved into a facility in downtown Crossville, the county’s biggest town. 

Moore said that convincing employees to stay in Cumberland County became increasingly difficult. “Look, small town living is not for everyone,” he said. “I love it. But, you know, we have a lot of single engineers who are, you know, Ph.D.s from Stanford and [Massachusetts Institute of Technology], and frankly, the dating life in Crossville was not too exciting for them.”

To make recruiting easier, Whisper Aero opened a satellite office in Nashville. “It’s about an hour and a half away between the two offices, but it really works well to give employees the maximum choice of what their lifestyle is,” said Moore. 

Click the audio player above to hear “Marketplace” host Kai Ryssdal’s conversation with Mark Moore and tour Whisper Aero’s facility in Crossville, Tennessee. 

There’s a hard and fast rule about bonds that you may notice every day when Marketplace does the numbers and talks about the 10-year Treasury note: bond prices and bond yields — the interest rates they pay — move in opposite directions. That means if interest rates go up, the value of existing bonds automatically goes down.

That was a big factor behind the collapse of Silicon Valley Bank two years ago. Interest rates rose and so the value of the bonds the bank was holding as assets tumbled.

Banks are still holding on to plenty of exactly those kinds of losses, according to a new report from the Federal Deposit Insurance Corporation. In fact, those unrealized losses jumped last quarter by a third as interest rates rose.

When trillions of dollars of government relief aid went out early in the pandemic, a lot of it ended up being deposited in banks across the country. Banks then had to figure out what to do with that money.

“We sat on our deposits for quite a while, and then ultimately decided that well, the money’s sticking around, it’s a little bit stickier than we thought it was going to be, let’s put it to work,” said Chris Duncan, chief lending officer at La Salle State Bank in Illinois.

Duncan said there wasn’t much demand for loans at the time, so the bank decided to invest a big chunk of those deposits in five- to 10-year government bonds, which at the time were paying next to nothing in interest.

But then, the Federal Reserve started raising interest rates. All of the sudden, those low-interest bonds the bank owned were worth less.

“You can imagine there is no one out in the market that is looking to purchase that very low interest rate-bearing security, when they could now go out on the market and buy a security that’s earning them a much higher interest rate,” Duncan said.

Duncan said he had hoped that interest rates might come down a bit more than they have. But they haven’t.

“We have not seen our unrealized loss position in our securities portfolio reduce as much as maybe we would have anticipated a year ago,” Duncan said.

If a bank needs to sell off any of those securities to scrounge up some cash, for instance, it’d have to do so at a loss, and take a chunk out of its profits.

“Your shareholders are upset, maybe it costs you more to borrow, maybe it’s harder for you to provide loans to your customers,” said Julie Hill, dean at the University of Wyoming College of Law.

But Hill emphasizes that’s only an issue if banks need to sell off their bonds. And right now, most of them are holding on to what they own.

“At some point, some of those securities are going to hit maturity and go away, and they won’t have been sold,” Hill said.

Once those bonds mature, the bank gets back the full amount that it invested.

Banks can afford to do that when they have plenty of excess capital they can use as a cushion.

Quentin Leighty, chief financial officer of First National Bank Colorado, said his bank has plenty of extra capital sitting around, in large part because he said his borrowers are paying back their loans just fine.

“That really is a driver for an environment where you’re building capital over time, because you’re not needing to put more aside for potential loan losses,” Leighty said.

Leighty said it also helps that most of the bank’s assets are invested in loans, rather than bonds. That’s because loans tend to have shorter terms and often allow banks to increase the interest rate.

“We get to experience the rising rate environment quicker with those,” Leighty said.

La Salle State Bank’s Chris Duncan said one strategy is to make more loans, in order to take advantage of today’s elevated interest rates. Another is to sell off some of its old low-interest bonds: taking the hit, and re-investing in new bonds with better yields.

“We feel, in five to 10 years, when rates have come down, those investments will still be earning much higher rates,” Duncan said. “And therefore, those securities will have value.” 

Hope is, Duncan said, that in five to 10 years, we’ll be talking less about unrealized losses, and more about unrealized gains.

The Labor Department releases the February jobs report Friday morning, and to say it’ll be “closely watched” is an understatement.

It’s the first jobs report to fall fully under the new Trump administration, and a lot has happened since Trump took office a second time that could majorly impact the labor market: from mass federal-government layoffs and downsizing being pursued by DOGE, to new tariffs on Canada, Mexico and China, to big drops in consumer confidence and the stock market.

How much all that will show up in Friday’s report is an open question.

January was a weird month: bad winter weather and fires in California kept job creation low, while the unemployment rate actually fell. February could also be weird — or at least, packed with surprises — but not for the reasons one might expect, noted Dan North at credit insurer Allianz Trade North America. 

“It’s not so much the DOGE firings or layings-off— that’s going to show up in the next couple of months,” he said.

Those happened too late to be captured in February’s jobs report. Rather, with tariffs and inflation and market volatility, “uncertainty has reached a magnificent scale under this administration. If corporations feel that much uncertainty, I think that’s going to cool the hiring process,” said North.

Dean Baker at the Center for Economic and Policy Research agrees.  

“The two strongest sectors for job growth have been health care and state and local governments,” he said. “Think of someone operating a hospital or a city counting on government grants — they’re going to be very cautious. So I expect that a lot of hiring won’t show up in February.”

We already know one weak spot last month: small business employment, according to data from Intuit, crunched by University of Chicago economist Ufuk Akcigit.

“Businesses that employ at most nine workers — down by 0.99%, which is a substantial decline,” he said.

Akcigit said they’re suffering from inflation, high interest rates and — again — uncertainty.

“Businesses are forward-looking,” he said. “They would be more risk-averse in new hires. But at the same time, whenever they lose workers, they are not replacing them either.”

The gloom for February’s jobs report is not universal, however.

“We represent the largest health systems in the country, some of the largest tech organizations in the world attract talent, and we’re seeing a lot of investment right now,” said Adam Stafford at Recruitics says.

He said that private sector employers are getting ready for an influx of newly-unemployed but highly-skilled federal workers — like “talent that works in tech, in particular mathematical sciences and economics.”

Stafford worries most about federal clerical workers who could be laid off. The private sector has already offshored most of those jobs or replaced them with automation, he noted.

After the closing bell Thursday, warehouse membership club Costco will release its second quarter earnings. While some retailers and grocery chains have backed away from commitments related to diversity, equity and inclusion, Costco has very publicly dug in.

The move has led some consumers and groups to promise to spend more at the big box stores, but will that impact the bottom line?

When it comes to shifts in consumer spending — particularly at specific retailers — it can be hard to parse exactly what’s behind it.

“I think we’ll see that some consumers have shifted more purchases to Costco, because they are in favor of the DE and I announcements,” said Katie Thomas, who leads the Kearney Consumer Institute.

But at the same time — and for the same reason — some consumers have shifted their shopping dollars away from Costco.

So, “I don’t think you’ll see an effect,” said Ivan Feinseth, director of research at Tigress Financial Partners. “I think guidance may be more impacted by the potential tariffs.”

But over time, “I do think that we will be able to see indicators for corporate success in the next few months,” noted Deidre Popovich, who teaches marketing at Texas Tech University.

And that will tell us just how consumers are voting with their wallets when it comes to companies and their DEI commitments.

This is a big week for labor market data. Friday, when the national unemployment rate for February is released, is the biggest day. But we’re already starting to get a sense of what’s happening.

First-time unemployment claims inched up last week, and we’ll see Thursday whether that trend continues. On Wednesday, we learned from payroll-processing company ADP that hiring in the private sector slowed to its lowest pace since July and that small businesses cut jobs last month.

This week, Elizabeth Pancotti at the Groundwork Collaborative is not expecting a rosy jobs report.

Recent federal layoffs aren’t even the reason — it’s too soon for most of them to show up. Instead, she’s looking at all the data points coming out from ADP, unemployment claims, consumer sentiment surveys and more.

“They are coming together to tell a similar story, that there is a considerable risk for softening in the labor market,” Pancotti said.

Some softening has already been apparent. Michele Evermore at the National Academy of Social Insurance has seen it in one of the indicators she keeps tabs on: continued weekly unemployment claims.

“That means people who are unemployed and continue to file claims after they become unemployed,” Evermore said.

That number has been rising, which indicates it’s getting harder for people who were laid off to find jobs. 

In part, this cooling was engineered by the Federal Reserve as it raised interest rates to bring inflation down and tried to steer the economy to a “soft landing.”

“I think we kind of stuck the landing, but I think that there’s been a lot of new uncertainty in the past month or two,” Evermore said.

Almost every economist I’ve talked to lately has used that word: “uncertainty.”

Guy Berger at the Burning Glass Institute said that’s because “uncertainty is disruptive, and it’s very high right now.”

For instance, are tariffs happening or not? Are billions in federal spending frozen or not? 

“We don’t exactly know, even when policies are implemented, exactly how they’re going to be implemented,” Berger said.

And if you’re an employer, that’s a tough landscape to operate in. Ron Hetrick, senior labor economist at Lightcast, said for many businesses, it’s easier right now to just pause. 

“If you were a company and you were saying, ‘I’m looking to expand, or I’m looking to hire,’ you would have investors in those companies saying, ‘Are you crazy?'” he said.

They’d probably say something like, “This is not the environment to do that in,” he added.

Last month, Treasury Secretary Scott Bessent told reporters that the Donald Trump administration is interested in bringing down yields on 10-year Treasury bonds. As we reported at the time, that might be tough for the administration to do. 

But as of Wednesday, yields on 10-year T-notes have fallen about half a percentage point from highs in mid-January. 

“This is a good news/bad news package,” said Susan Wachter, a professor of real estate finance at the University of Pennsylvania’s Wharton School. 

Ten-year Treasury bonds have a direct relationship to the cost of borrowing. What consumers pay for mortgages, auto loans or business loans are tied to those rates. 

The good news is, falling bond yields can make it cheaper for households and businesses to borrow. 

“I, unlike my family members, have a very high interest rate on my mortgage,” said Nicole Cervi, an economist with Wells Fargo.

Like many people who purchased homes over the past few years, Cervi’s mortgage rate is above 6%. Most people who purchased homes a few years earlier or refinanced while rates were low are hesitant to give up those mortgages, which has led to a slowdown in the housing market.

“They’re not going to move right now,” Cervi said. 

Now that 10-year yields are falling, Wachter said more potential buyers might be able to get into the housing market. Lower borrowing costs could also make it easier for businesses to invest in new projects or factories.

“Of course, it does matter … what is causing the rate to decline,” she said. That’s where the bad news comes in.

“What appears to be causing the 10-year Treasury rate to decline is slower expectations on economic growth and perhaps increased risk of a recession,” Wachter said.

The Federal Reserve Bank of Atlanta recently projected a slowdown in U.S. gross domestic product growth in the first quarter of this year — the biggest contraction since pandemic lockdowns. 

Meanwhile, consumer confidence has dropped, retail sales are shrinking, and U.S. tariff policy is shifting by the hour. Investors weigh all of these factors when buying and selling U.S. Treasury bonds. 

“I think we’re likely to get a few months of soft data, both in terms of how the economy is growing, but also how the labor market is doing,” said Blerina Uruci, chief U.S. economist for T. Rowe Price.

That’s likely driving some investors to sell equities and buy bonds.

“I think the growth-scare narrative is partly driving the 10-year yields lower,” Uruci said. “Slower growth expectations mean that the Fed can cut, or might be forced to cut, interest rates down the road — I think that’s definitely part of the story.”

We have a tale of two service sectors today. Two surveys measuring service sector activity in February came out Wednesday, one from the Institute for Supply Management and the other from S&P Global.

But while the ISM survey showed strong growth in services, the S&P survey showed “a worryingly weak picture of service sector business conditions.”

“It’s some healthy, healthy improvement,” said Steve Miller, chair of the ISM Services Report on Business, about his group’s optimistic report.

Meanwhile, Chris Williamson, chief business economist at S&P Global Market Intelligence, had a more pessimistic outlook based on his firm’s survey. “It’s now reporting the weakest output growth since November 2023.”

Two reports, two seemingly different outcomes. The discrepancy could be caused by several things, including who’s answering the surveys. Gary Schlossberg, global strategist with Wells Fargo Investment Institute, said ISM mostly checks with corner office-type purchasing and supply executives.

“The S&P Global number, they also survey people on the shop floor, so it’s a little closer to the action,” he said.

Then there’s the question of timing. The glass-half-full ISM report allowed companies to respond throughout the month. The glass-half-empty S&P survey took answers only in the second half of the month, when the stock market was dropping and tariffs were looming.

“Especially at times like this, things can look good early in the month and collapse late in the month,” Schlossberg said.

Once-a-month data drops aren’t always enough to keep up with changing conditions, he added.

“It’s for that reason we keep an eye on the high-frequency data to corroborate what we’re seeing in the monthly numbers,” he said. That data includes weekly reports on retail sales and mortgage applications.

There was at least one common thread between the two surveys, which both Miller of ISM and Williamson of S&P Global noted: the impact of tariffs.

With those tariffs in effect now, next month’s surveys could have answers everyone agrees on.

In addition to the new tariffs on goods from Mexico, Canada and China that went into effect on Tuesday, President Donald Trump alerted American farmers to another round of tariffs coming early next month. On social media, he wrote, “To the Great Farmers of the United States: Get ready to start making a lot of agricultural product to be sold INSIDE of the United States. Tariffs will go on external product on April 2nd. Have fun!”

“Marketplace” host Kai Ryssdal spoke with April Hemmes about the new and upcoming tariffs and what they’ll mean for her corn and soybean farm in Iowa. The following is an edited transcript of their conversation.

Kai Ryssdal: I want to know what you’re thinking about the news and everything.

April Hemmes: Oh my god, everything? Well, I heard our TV guy say, “Just as soon as I say this, something’s gonna change.” And it’s so true. I got the social media whatever that the president sent out to farmers, and you know, “It’s gonna hurt, but it’s gonna be fun.” And all I have to say is his definition of fun is way different than the farmers’ definition, because tariffs are not fun.

Ryssdal: Let’s talk about that for a minute. First of all, this is not your first rodeo with tariffs and President Trump, right? It wasn’t fun last time. Are you more prepared this time somehow?

Hemmes: No. Well, like I say, same song, it’s not the second verse, it’s a whole chorus this time. Because he’s including Mexico and Canada, and the consumers are going to get hurt. Usually it’s the [agriculture] people that get hurt, but now it’s going to be a lot more of the consumer things. But more prepared? No, actually, we in the ag community are worse off now because the interest rates are higher than they were before, and our cost of production is way up. But it’s an interesting world we have.

Ryssdal: It is indeed. So there was a speech last night, and you know, it’s “There’s going to be disturbance, but we’re OK with that,” although I don’t think he probably called you to check if you were OK with that. The other thing he did yesterday on social was “get ready to sell only domestically starting April 2.” And that doesn’t seem to me to make a whole bunch of sense.

Hemmes: No, I’m glad you said that. Yes, 60% of our soybeans are exported. Twenty to twenty-five percent of our corn is exported. So you don’t build those markets domestically overnight. We just can’t. You have to build, you know, plants and things like that, there’s a whole lot that goes into it. So it’s not going to happen overnight. And I’ve heard some interviews with farmers that said, “Oh, it’s OK if these tariffs only last a couple months, but if it’s more than that, it’s not OK.” And I went, “Pull your head out of the sand, buddy, it’s gonna last more than that.”

Ryssdal: I talked to a guy the other day who used to run, because it’s about to be shut down, something called the Soybean Innovation Lab at the University of Illinois. And in the middle of that conversation, I got to thinking about you, and soybeans, and just the work that the government does or has done in building markets for all American farmers. But the mechanisms by which you all find markets is being dismantled.

Hemmes: Right, I never hardly engage on Twitter, X or whatever it’s called. But there’s these people out there that are smack-talking USAID [U.S. Agency for International Development] only thinking it’s USDA [U.S. Department of Agriculture], and I’ve been on two USAID trips to Uganda and did great work there. And people don’t understand the work and then the products they buy from farmers to feed the world. So it’s very disheartening to see all of this going on.

Ryssdal: You and I have been talking for a long time, and every now and then, I ask you, why you do it. But this does seem to be a turning point, and I will say this to you only because I’ve met you and we’ve been talking for a long time. You ain’t no spring chicken. And I guess I wonder if there’s a point at which this could get so bad that you would just say, “The heck with it. I’m done, I’m out. I’m gonna sell off.”

Hemmes: Oh, yeah, no. This is my 40th year farming. I’m going to be planting my 40th crop, and I’m very proud of that, you know. So I have seen the ups and downs, and what we’re going through now is — what did they call it? A revolution? The president and Mr. [Elon] Musk want to be revolutionaries. Well, you know, we’ll see. You know, hopefully this is better for everyone, but it’s, I don’t know. I think my farm will weather this. I just hope other younger farmers get through this. It’s very scary. But, I mean, I had a grandpa who lived to be 101 years old, and started farming with three horses and lived to have an auto-steer tractor. So that really is my guiding light. You know, he went through a lot, and this farm will go through more, but I’ll still be here.

One of the side-effects of the pandemic back in 2020 and 2021 was the sheer number of new businesses people were forming. Business applications were off the charts for over two years, according to the Census Bureau.

A lot of that had to do with people being unemployed, or working from home, maybe dreaming about a different kind of life they might want to live. People also received plenty of pandemic relief aid that helped them finance those dreams.

Fast forward five years, and while almost everything else in this economy has returned to pre-pandemic levels, business applications have stayed high. And many entrepreneurs are starting businesses that are adapted to post-pandemic realities.

Less than a year-and-a-half ago, JoEllen Depakakibo launched Pinholita Coffee Van, based in Ojai, California. She opened the business after moving here with her wife and newborn from San Francisco, where she still owns a brick and mortar cafe called Pinhole Coffee. 

Depakakibo said a big reason she decided to run her new business out of a van was to improve her work-life balance.

“I can pop up whenever I want to, and not have to open up every single day, and still have time to be with my child,” Depakakibo said.

Running the business out of a van also helps Depakakibo deal with a post-pandemic reality that’s weighing on a lot of businesses: high costs. She said she pays her employees about $20 an hour plus tips. And then, there’s the price of milk and coffee beans. 

Depakakibo said those pressures affect both of her businesses. But the van’s overhead is much lower than the cafe’s. It only has one full-time employee other than her. And Depakakibo doesn’t need to stockpile as many supplies.

“I’m just buying less milk at a time, less disposables, less coffee,” Depakakibo said. “I can order just what I need, rather than things in bulk.”

Meanwhile, in Cincinnati, Jordan Anthony-Brown has been running a new business with much higher overhead: a sit-down restaurant called The Aperture.

“We’re settling into our identity a little bit,” Anthony-Brown said. “Definitely more upscale casual, bordering on fine dining, in terms of price point.”

Anthony-Brown said he recently raised his prices from around $65 a person for dinner a year ago to $80 or $90 today. Part of that was to cover the rising costs of food and wages. But Anthony-Brown said it also reflected another post-pandemic reality: people want a fine dining experience. Many of his customers are older, and they’re comfortable paying those prices.

“We have a lot of business people coming in, a lot of private bookings for business dinners that we’re starting to see,” Anthony-Brown said. “And a lot of people in the neighborhood are in that 60 to 70 range, and they just have more disposable income.”

As a result, Anthony-Brown said he’s happy spending more on overhead. He’s buying more expensive ingredients to justify those prices. And he said he’s paying competitive wages, starting at $21 an hour, to make sure his 25 or so employees are happy.

“It’s the number one reason we look to maintain a strong culture, because that trickles down,” Anthony-Brown said. “As the saying goes, ‘Happy employees make for happy guests.’”

Other aspects of the post-pandemic economy have inspired entrepreneurs to start businesses.

“I’ve been really inspired by what was happening in AI, and then, found this application that I thought there was an opportunity for,” said Sean Steigerwald, CEO and founder of CustomerIQ, a software company he started a couple years ago.

The company uses artificial intelligence technology to help businesses record and summarize meetings, emails and other forms of communication.

“I did ask myself the question, like, fast forward 10 to 15 years, do we have more online meetings or less?” Steigerwald said. “And I thought it’s a pretty safe bet that we’d have the same or more.”

Many of the economic challenges people have faced during and since the pandemic prompted Aria Joughin to start their business about a year-and-a-half ago. It’s called MakeWith Hardware and Learning Center in Portland, Oregon, and it teaches people a wide range of do-it-yourself skills.

“We offer workshops on things like drywall repair, on refinishing furniture, sharpening knives, how to change a tire, how to change your oil,” Joughin said.

Joughin said learning these kinds of skills can be helpful for people who’ve struggled amid high inflation, economic uncertainty, and climate-related challenges — especially women, queer and trans folks, and people of color.

“There are barriers in employment, there are barriers to housing, there are so many different kinds of barriers folks are facing to gaining economic stability,” Joughin said.

Joughin said if the business goes well, one day, they hope to expand by opening a hardware store.

Here at Marketplace, we report on economic data from the government all the time: stats on housing, the job market, inflation, and much more. They help us help you understand where the economy is and where it’s heading. Government data informs business decisions, and assists policy makers to, well, make policy. 

But now, the Commerce Department has disbanded two groups that worked to ensure the government’s economic data paints a realistic picture. The Federal Economic Statistics Advisory Committee and the Bureau of Economic Analysis Advisory Committee have been around for decades. What happens next now that they’re gone?

Erica Groshen had no idea this news was coming: “This came out of the blue, nothing up until I got the email yesterday,” she said.

And she was on one of the committees. An economics advisor at Cornell University, Groshen was told that the decades-old committee was getting disbanded because its purpose had been fulfilled.

“You don’t fulfill an ongoing mission by canceling this communication mechanism,” she said.

That mission? To get a bunch of experts at the top of their economic fields to help the government.

“When the BEA wants to develop a new methodology or maybe go into a new area they haven’t been before, they can run their ideas by the committee,” said retired economist and committee member Marshall Reinsdorf.

He said advice was one major benefit. The other was government transparency — the committees opened their doors to the public.

“It gives them a chance to reach out and get their message out to a broader community,” Reinsdorf said.

Getting rid of these two committees doesn’t save much money. Mainly because the members weren’t getting paid, said former committee chair David Wilcox with Bloomberg Economics and the Peterson Institute for International Economics.

“So we’re talking about eight plane tickets, twice a year, one night at a non-fancy hotel. This was really inexpensive stuff,” he said.

And it was money well spent, Wilcox said.

Former committee chair Louise Sheiner with the Brookings Institution said with less input, the data that the government gathers will get worse over time. And that data is supposed to provide answers on GDP and productivity and jobs and inflation.

“Depending on what question you’re asking, you’re going to go to the data, and if the data are not good, your answers to those questions are also not going to be good,” she said.

Sheiner said disbanding the committees was a mistake. The Bureau of Economic Analysis declined to provide Marketplace with a comment, and the Commerce Department didn’t respond to our request.

Government workers are still receiving emails asking them to list what they did last week at work, part of the Elon Musk-led initiative to make the federal workforce leaner and more efficient. This project raises questions about what productivity looks like and the power all workers have at a moment when the labor market isn’t as hot as it used to be and there’s significant new economic uncertainty.

Adam Grant is an organizational psychologist at the University of Pennsylvania’s Wharton School. He’s also host of the podcast Re:Thinking and author of the book “Think Again.” He spoke with “Marketplace Morning Report” host Sabri Ben-Achour for more. The following is an edited transcript of their conversation.

Sabri Ben-Achour: How much leverage have workers lost in the private sector side?

Adam Grant: On its face, if you follow the media headlines, it seems like workers have lost a lot of leverage, because we’re not talking about “quiet quitting” anymore as a major concern. We’re seeing a lot of headlines about return-to-office mandates, but if you actually look at the data just on coming to the office, for example, the trends are completely flat. There has been no meaningful change in the number of days that people are showing up versus working remotely in the past couple of years. And so it seems that we’ve stabilized with around a third of work days happening from anywhere, which is a huge win for employees.

Ben-Achour: The things that we’ve seen Elon Musk do — you know, these emails defending your employment — are these tried-and-true strategies employed by corporate America normally? Or are these just things Elon Musk did one time at Twitter?

Grant: It’s hard to say. I know of no evidence that these are effective strategies. Some strategies that may be common in startups, and may be popular in startups, are being overgeneralized to a large bureaucracy. I’ve seen this a lot, when we see leaders leave Silicon Valley and enter the behemoth of the U.S. government, they often find themselves hammering away at what they discover are screws, and that doesn’t work very well.

Ben-Achour: Is that a constant or common mindset in corporate America? I mean, is there this idea that people are generally not being productive enough, and you gotta fix it through terror?

Grant: It’s more common than I would like it to be. And I think the response to that by many leaders and managers is to say, “Well, we’ve got to monitor people.” And yet, the evidence tells a very different story. There was a great meta-analysis, a study of studies recently — 94 studies in total — showing that monitoring people’s performance fails to improve it. That, if people know they’re being observed, they do not do any better, and meanwhile, they’re more stressed, they’re more dissatisfied, and especially they’re less likely to trust their managers.

Ben-Achour: Well, what is the best way to motivate and specifically to improve productivity?

Grant: I think the research on motivation is pretty clear that people do their best work when they’re given a chance to pursue autonomy, mastery, belonging and purpose. But, of course, they have to be coupled with accountability. And I think what a lot of leaders don’t understand is when it comes to holding people accountable, there’s a huge difference between being demanding and being demeaning. Being demanding is setting high standards and giving tough love. Being demeaning is insulting people, being uncivil, unkind, cruel, belittling, bullying. And it’s the former behavior, not the latter, that tends to bring out the best in people.

Ben-Achour: The labor market is still strong, but it’s been cooling down for a while. There have been a number of high-profile layoffs. If that results in even less leverage for employees, what does that mean for their happiness?

Grant: Well, I think the short-term effect of layoffs, obviously, is to increase job insecurity among people who are still lucky enough to be employed — and with that sometimes comes survivor’s guilt, where people feel like, “It should have been me. I should have been the one whose job was cut.” And we know that’s bad for productivity. We also know that when workplaces start to cut jobs, the biggest superstars — the people who have the most options elsewhere — are the quickest to jump ship, and so this can be a pretty short-sighted strategy for employers. And my hope is that as we see more haphazard downsizings, leaders start to learn that actually this behavior backfires for them. And the evidence is strong on this one. There was a paper published in a top academic journal about downsizing that literally called them “dumb and dumber,” which is not language that academics normally get away with. But it was a study comparing thousands of firms in similarly dire financial straits. Some of them downsized and cut jobs; others found alternative ways to deal with the financial pressure, like, for example, executive pay cuts. And, lo and behold, the firms that downsized actually ended up performing worse.

Ben-Achour: What is the way to manage a workforce that improves productivity and offers a sense of fulfillment and purpose?

Grant: I think instead of being micromanagers, we need leaders to be macromanagers. I think that a great macromanager is somebody who helps you understand why your work counts. I studied this early in my career. I was doing randomized, controlled experiments with fundraising callers who were bringing in donations to a university, and they had no idea where the money they raised actually went. So I designed a simple experiment to connect those dots. And a month later, the average caller had spiked more than double in phone time per week and nearly triple in revenue per week. All I’d done was bring in one scholarship student who was able to say, “Here’s how the money you raised changed my life.” And I think, intellectually, the callers knew that work was happening, right? They were aware that they were raising money that benefited somebody. But it wasn’t until they were able to connect that work to a living, breathing human being that they found a reason to invest their full energy and attention in their job.

It’s the start of the busy spring break travel season, and it’s happening as consumer sentiment has been iffy, at best. 

The planner in me shudders to think this, but a lot of people right now still haven’t decided whether to travel for spring break.  

“The booking windows are decreasing — so the amount of time between when people book and when they actually do the vacation, that has shrunk considerably,” said Jan Freitag, who analyzes hotel data for CoStar.

These last-minute travel decisions speak to the unease consumers are feeling, she said.

“They’re saying, ‘OK, we’re still going to go, but maybe we’re not going to go for four days. Maybe we’re just going to go for three.’ Or, ‘maybe we’re not going to fly somewhere. Maybe we’re going to drive somewhere,'” Freitag said.

Or maybe they’ll opt to hop on a cruise, instead. Pete Larkworthy is the executive vice president of sales at Infinity Research, which analyzes cruise industry data. He said that bookings are strong during this spring of uncertainty.

“There’s a pretty nice cost advantage that the cruise industry enjoys versus, you know, a trip in Vegas or Disney,” he said.

The cruise industry also benefits from recent investment in splashy new ships, Larkworthy said. “There’s always some kind of halo effect surrounding new hardware.”

Royal Caribbean last year introduced the world’s largest cruise ship — just in case you want to spend spring break with 7,000 of your closest friends.

It happens every time Southern California has a devastating wildfire. The supply of contractors, laborers and construction materials stays the same while demand skyrockets from victims trying to rebuild.

Which means that almost overnight, architects like Christopher Norman get their pick of jobs.

“If a contractor could work on a $5 million ground up, versus a $1 million,” Norman said, “they’ll take the bigger project.”

The fact that higher-budget projects attract more attention from contractors is good news for many people rebuilding in Pacific Palisades, a wealthy Los Angeles neighborhood. It’s less good news for the folks rebuilding in middle-class Altadena, about 40 miles away.

“If I wanted to build a house for $750,000 or $1 million, which is what it’s going to cost a regular person in [Los Angeles], that would be very challenging to find a contractor,” Norman said.

The finite resources mean some communities have to wait to rebuild. Another problem in the affected communities is “underinsurance.”

“If you don’t look at your policy on a regular basis and you’re paying the same amount, you’re vastly underinsured,” said Nora O’Brien of Connect Consulting Services, which is an emergency management and disaster resilience company.

That can happen when someone buys, say, a $500,000 house that had appreciated into an $800,000 house when it burned down, but they never updated the policy to reflect its new value.

“When something does happen, you’re only going to get a small fraction of the value,” said O’Brien. “If that gets destroyed, and that’s your only asset, and you don’t have insurance to replace it, there goes your wealth.”

And there goes your chance to rebuild along with it.

Marcus Betts’ whole extended family owns property in Altadena. Between all of them, 16 homes were damaged or destroyed. He knows contractors will prefer rebuilding in the Palisades.

“That’s to be expected. That’s what big companies do — they go for the big money,” Betts said. “But we have a plan in Altadena.”

Betts said he and his neighbors are ready to hammer, frame and paint one another’s homes. Plus, he said, there are architects and builders from Altadena, and he hopes they’ll pick their own community first, regardless of money.

“Because the legacy and everything that is in Altadena needs to be retained,” he said. “And the only way that’s retained is with the family and friends and residents of Altadena to kind of keep that in place.”

“My Economy” tells the story of the new economic normal through the eyes of people trying to make it, because we know the only numbers that really matter are the ones in your economy.

Ben Chehebar has been surrounded by soccer from before he can remember.

“I grew up in a household that was really all about soccer,” said Chehebar. “My dad was our coach. My mom is from Manchester, England, so we grew up watching Manchester United play.”

In 2024, Chehebar made soccer his life when he founded his own soccer brand, Eleven. But taking on industry giants like Nike, Puma or Adidas will not be an easy task. The good news is, the sport is growing in the U.S. and Chehebar is looking to other sports for brand inspiration.

Chehebar playing his weekly pickup game in Washington D.C. (Courtesy Chehebar)

“We’re seeing in other spaces like running or trail running or cycling, where there are a number of indie or startup brands that are really starting to break through,” said Chehebar. “And there really hasn’t been a brand in soccer, so I really think there’s a big opportunity to do this for that market.”

But making the shoe a reality, has been a whole different story. From design to manufacturing, Chehebar had to try and try again.

“Our first sample that we got, I got the first pictures of it on Thanksgiving Day, and it was awful,” Chehebar said. “First, we pushed back and said, ‘Hey, here are all the things that you need to do.’ And when it was clear that they didn’t want to put in that effort, we ended up switching factories.”

Since then, progress has been smooth as Chehebar brings his vision to life. He hopes that by the fall of 2025, his shoe will see its first gametime minutes. After that?

“Really get as many players as possible exposed to our product through a lot of in person demos at tournaments and other events in the lead up to the World Cup, which I think is going to be huge in 2026,” he said.

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The Donald Trump administration’s 25% tariffs on Canada and Mexico started Tuesday, and their effects will ripple across the U.S. economy and abroad. But one state is particularly exposed: Texas. It has what amounts to roughly a $300 billion trade relationship with Mexico all on its own, which has supported hundreds of thousands of jobs and brought in billions in capital investment to the state.

New tariffs could raise the price of what Texans eat and drink. That includes beer, liquor, produce, agave, sugar, coffee and chocolate, said Emily Williams Knight, CEO of the Texas Restaurant Association.

They could also raise the prices of where Texans sleep.

“Softwood lumber, which is like your frame lumber, gypsum board, which is your drywall — all those are largely sourced in Canada and Mexico,” said Matthew Reibenstein, president of Royal Design Build and former president of the Greater Houston Builders Association. “These tariffs on the building materials would drive up the cost to build homes.”

Out in West Texas, oil producers, who get pipes from Canada and Mexico, could also feel the squeeze, said Karr Ingham, president of the Texas Alliance of Energy Producers.

“There’s a lot of steel that is deployed in the business of drilling for and producing and transporting crude oil and natural gas,” he said.

In the trucking industry, which has boomed under free trade, John Esparza, CEO of the Texas Trucking Association, said he worries tariffs will increase the cost of semitrucks and decrease demand for trucking.

“That could mean less business and at a higher cost,” he said.

Many trucks operate out of Laredo, which is particularly exposed to tariffs, said Daniel Covarrubias, director of the Texas Center for Border Economic & Enterprise Development at Texas A&M International University.

“On a 30-mile radius here across the border, you have upwards of 1,500 logistics companies … transportation companies, customs brokers or logistics warehouses,” he said.

These firms grew out of decades of free trade. But now?

“You really rip up an entire supply chain that we’ve spent the last 50, 60 years building,” said Ray Perryman, an economist and president of the Perryman Group. “It really begins to impact employment in a significant way. Because of inflation, consumers have less money to spend.”

He said if tariffs are sustained, all states will feel it, but especially Texas because its economy is so integrated with Mexico’s. 

This story was produced by our colleagues at the BBC.

Frustrations with the economy are part of what led to Canadian Prime Minister Justin Trudeau’s sinking popularity after nine years in charge — and a calculation by some in his party that a fresh start was needed before the election. Trudeau announced his resignation in January, which paves the way for a leadership contest ahead of a general election later this year.

For the leadership contenders — like former Bank of England and Bank of Canada governor Mark Carney — the economy is front and center, as is the threat of fresh tariffs imposed by President Donald Trump.

“We don’t need their cars. You know, they make 20% of our cars. We don’t need that. I’d rather they make them in Detroit,” Trump said in January.

But Canada’s economic issues have deeper roots, with a sluggish economy and squeezed incomes and falling productivity.

“We don’t have a sense that the economy is becoming more productive over time,” said Stewart Prest, a political science lecturer at the University of British Columbia. “So Canadian industry leaders and Canadian political leaders continue to grapple with this question about how to reignite the economy in ways that can compete on a global scale.”

Public services are also under pressure — with long waiting lists for health care — and pressure on housing. The population has been rising, thanks to welcoming immigration policies. But those policies are now resented by some.

At her Toronto office, realtor Anya Ettinger described how the two issues have become connected.

“Everyone’s wanting to move here. So many people want to come here because it is, I mean, the biggest city in Canada. And with that demand, we only have so much land. We only have so much space,” she said. “So there’s so many people coming that our population will grow, but the amount of housing that we have does not.”

Then, there’s the cost of living: The headline inflation rate has been falling, but people are still feeling the squeeze.

“There is no question that whoever is prime minister next is going to have to find a way to deal with concerns with cost of living,” noted the University of British Columbia’s Stewart Prest.

Who that will be will be decided in March.

As part of our Marketplace Economic Pulse series, we examine the economy from a range of perspectives.

Today, we hear from Clara Mattei, a professor of economics at the University of Tulsa In Oklahoma and director of the newly established Center for Heterodox Economics — which aims to reimagine how we measure economic progress, prioritizing people’s experiences.

She spoke with “Marketplace Morning Report” host David Brancaccio about the Center and its goal of centering people in our understanding of the economy. The following is an edited transcript of their conversation.

David Brancaccio: “Heterodox” — I had to look it up again — [it means] “unorthodox.” What’s the mistake orthodox approaches to economics we’re making that needs new thinking from your team?

Clara Mattei: It is absolutely timely to rethink economics in a broader, pluralist way, so that we’re not stuck in abstract and narrow methods that ultimately hide rather than explain what happens in the real world.

Brancaccio: One remedy for abstraction is to bring it down to earth and put people into the equation. Is there a greater focus on the human experience and the type of work that your center wants to do?

Mattei: The idea is that economics is not a hard science. It has been presented this way to give absolute authorities to experts that ultimately a lot of times justify economic systems that exclude people from decision-making. And as I worked in my own research, I showed that actually neoclassical economics a lot of times supports authoritarian regimes. So instead, the idea is that economics is based on social relations, that people are at the center of the economy, and thus we need to understand these social relations as something that can evolve, and thus we can have a greater say in what our economy should look like.

Brancaccio: The orthodox economic indicators had been showing the U.S. economy was in many ways fine and dandy; many people didn’t feel it was fine and dandy. So do you think some of your approaches to putting the experience of real people back into the analysis would resolve — I hate to use a big 50-cent word — but would resolve the dichotomy? Economic indicators saying things are great, people saying they’re not so great.

Mattei: This is exactly the point. People feel the economic injustices on their own skins. But there’s no tools to understand these, because the type of economics we’re exposed to operates to hide these problems. So the Center is trying to say, if we want to be academics and intellectuals and grow a generation of students that can really tackle issues for people, we need a different approach to economics. The agenda of economics has to be inspired by what people feel and live, and so people can be empowered by these tools in order to potentially participate for a better economic system.

Brancaccio: Professor Mattei, I don’t want to be a spoilsport, but I do have to raise this issue, which is, there was a lot of talk like this, in 2009 in 2010 after the great financial collapse — that mainstream economics didn’t see it coming, that mainstream economics needs new tools — and yet, here we are all these years later, and you’re forced to innovate again in this space. Do you think it’ll stick this time?

Mattei: That’s the real challenge. This is something that is ultimately a political battle. Academic battles are political battles because they are based on resources and the will of institutions. The University of Tulsa has the energy and the courage to give us the resources to start up this institution. We cannot do this alone, but I do think that we can serve as an example that may be able to multiply in which we say we can be a place of serious, courageous scholarship.

We’re continuing to follow reports that the Donald Trump administration has fired more than 6,000 IRS workers, many of them in collections and enforcement.

The administration said it’s doing so to cut costs and because it says many IRS employees aren’t fully occupied. 

But job cuts at the IRS will come with their own costs. That’s because the money the IRS spends on tax collection helps it pull in even more money from taxpayers.

A few years ago, Nathan Hendren, an economics professor at the Massachusetts Institute of Technology, found that when the IRS audits somebody, it costs the agency $6,000 to $7,000 on average. And when it audits people with higher incomes? 

“Those audits get a little more complicated. And we end up spending just over $10,000 on those audits,” said Hendren. 

But he also looked at how much the government receives when the IRS does an audit. Turns out that for people on the bottom half of the income spectrum, the IRS pretty much breaks even.

And for those with the highest incomes? “Every dollar we spend delivers more than $12 in revenue back to the U.S. Treasury,” said Hendren. 

He said that’s not only because audits pull in lost revenue. It’s also because of what happens next.

“Those people end up changing their ways going forward, and you deliver back a lot more revenue to the government even in the future years.”

Another factor pushing up the IRS’ return on investment: the basic taxpayer services it provides, said Nina Olson, executive director of the Center for Taxpayer Rights.

“Everything from the IRS publishing publications and forms to answering the phones on tax law questions to processing returns,” Olson said. 

Olson said those services help the IRS take in revenue by helping taxpayers who have questions, unique situations or even a dispute over a tax return.

“People need to be there to work through those issues, so the return can go its merry way into the system to be processed,” said Olson. 

Cutting staff will slow down those services, she said, making it harder for taxpayers to get the help they need.