Chapter 1: What economic impact do tariffs have on consumer behavior?
President Trump's desired conquest of Greenland is taking an economic turn. From Marketplace, I'm Sabri Beneshour, in for David Brancaccio. Over the weekend, President Trump threatened new tariffs on goods from eight European countries because they are opposed to his desired takeover of Greenland, which is a Danish territory. Julia Coronado is here to talk about it.
She's founder and president of Macro Policy Perspectives. Hi, Julia. So as a baseline, remind us what all the tariffs we already have have done economically.
So we got some tariff boost to consumer inflation, but we also saw it take a bite out of the labor market. So how did companies react faced with the turbulence and the pressure on costs? They got really cautious about hiring.
Chapter 2: How does the 'lipstick effect' influence luxury purchases during economic downturns?
So we did see the imprint on the economy a little bit differently than we had expected.
Can we handle more tariffs at this point? I mean, what would these do for us, for the European economy?
Well, of course, they raise prices on anything we buy from Europe, and that just adds to the pressures companies are feeling on costs. Probably the bigger impact is they just, it's not just the tariffs, it's the global conflict, the geopolitical conflict, and the
uncertainty that comes with that that could, you know, make it harder for companies to make decisions about investing and hiring people.
Julia Coronado is founder and president of Macro Policy Perspectives. Thank you so much. My pleasure. When people are stressed out economically, they may cut back, they may save, they may also micro splurge on small, comforting luxuries.
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Chapter 3: What small luxuries are consumers splurging on and why?
This is what's known in economics as the lipstick effect, and it is expected to be big in 2026. Marketplace's Elizabeth Troval has that.
Accessories like shoe charms and statement necklaces give consumers a sense of rebellion against a bleaker economic backdrop, says Jessica Ramirez, analyst with the Consumer Collective.
If you think of running outfits, you know, you have your vest, you have socks, you know, and it could be colored or it'll be something that's going to make your feet a bit drier as you're running.
These are often cheaper purchases that add personalization and retailers can cash in.
At a time where, you know, the consumer is being so laser focused and we are seeing less items in the basket, this is going to be key in terms of price and how else you can have the consumer buy more than just one item.
And in an economy that favors higher earners, Sophia Begg with Morning Consult says, for low-income consumers, buying a small luxury can make you feel a little bit better about an economy that you feel increasingly left out of. These indulgent purchases also add novelty, says Uma Karmarkar with UC San Diego.
In addition to treating yourself in the moment, it's also reviving things. And that's where accessories are fantastic, right? You take an outfit that might have been boring and then you add a cool necklace and then it feels like the whole outfit is new.
And it's not just apparel. Everyday luxuries can include gum at the grocery checkout or a fancy chocolate. I'm Elizabeth Troval for Marketplace.
All right, let's do the numbers. Hong Kong's Hang Seng closed down a percent. Japan's Nikkei closed down seven-tenths percent. U.S. stocks and bond markets are closed today in observance of Martin Luther King Day.
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Chapter 4: How is the wealthy population in the UAE changing the economy?
The United Arab Emirates has reportedly emerged as the top destination for the world's most wealthy. The BBC's Samir Hashmi looks at what's driving the rich to the Gulf and how their arrival is fueling a boom in luxury real estate.
It's a busy evening at Tia Cafe, run by British boxer Lawrence Oakley. He moved to Dubai three years ago, joining thousands of millionaires now calling the UAE home.
There's a real boom here and a real boost, you know, where you talk about business and stuff like that. For example, we're sitting here now in my restaurant that me and... My manager built and there was nothing but help provided, whether that's the government, whether that's locals. Because it's a growing market and a growing economy, everyone's pushing in that direction of growth and prosperity.
And then you walk around, it's clean all the time. It's extremely safe.
Chapter 5: What factors are attracting millionaires to Dubai?
Oakley is part of a broader global shift of wealth towards the Gulf. According to the UBS Wealth Report, the UAE's millionaire population grew by nearly 13,000 in 2024, one of the fastest increases anywhere in the world.
Dubai's tax-friendly environment, safety and lifestyle have made it a magnet for the wealthy, and the number of family offices and wealth investment firms operating here has almost doubled in the past two years. I'm at Dubai Harbour where multi-million dollar yachts line the waterfront. And just across the road, nine luxury residential towers are under construction.
But they are already sold out even before completion. It's a snapshot of how demand from the world's wealthy is reshaping this city's skyline. But with demand surging, some analysts warn that Dubai's housing market could face challenges.
Faisal Durrani, partner and head of research for the Middle East and North Africa at Night Frank, says much of the new housing being built is already out of reach for many residents.
The government has plans to increase Dubai's population to 5.8 million by 2040. At the moment, our estimates suggest that 92% of housing that is planned will be priced at over 1,000 dirhams per square foot.
That's just over $270 per square foot, the benchmark that's used to define affordable housing.
If we want to grow the population by circa 2 million people in the next 15 years, it is vital that we ensure that we provide housing at all price points.
Still, luxury homes are expected to keep growing, helped by the fact that Dubai's high-end properties remain far cheaper than those in London or New York. In Dubai, I'm the BBC's Samir Hashmi for Marketplace.
In New York, I'm Sabree Beneshour with the Marketplace Morning Report.
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Chapter 6: What challenges does Dubai face with its luxury housing market?
I can quote your figures about insured versus uninsured losses measured in billions. But as people in the fire zones face year two, we go from macro to micro. I'm checking in with the neighbors on one street in Altadena, where 15 homes were destroyed on a single block. These are my own neighbors. I lost a home on that street too.
Join us for on-the-ground reporting as we hear from people still dealing with insurance, getting permits, finding contractors. One guy had to go through 30 contractors to find one with the right skills he could afford. Plus, for most, rebuilding is taking years. How do people find the money to live elsewhere? Listen to the Marketplace Morning Report using your favorite podcast app.