Chapter 1: What is the main topic discussed in this episode?
Hey, you. Yes, yes, you. How productive were you today? I'm asking because the economy wants to know. From American Public Media, this is Marketplace.
Chapter 2: How can productivity growth exist with a stagnant labor market?
In Los Angeles, I'm Kyle Risdell. It is Thursday. Today, this one is the 8th of January. Good as always to have you along, everybody. Among the mysteries at large in this economy of late, among them, why do consumers keep spending when we are so cranky? Why haven't tariffs taken as big a bite as we expected? We talked about that one yesterday. There is also this.
How can the economy be growing at the decent clip that it is when the labor market is, to be kind, stalled? Well, we got an answer to that last one today. The Labor Department's shutdown delayed report on worker productivity for the third quarter. It grew at the fastest pace in two years, 4.9 percent annualized. Marketblazer Novosafo makes it make sense.
The big jump in productivity in the third quarter is not a surprise to Gerald Cohen, chief economist at UNC Chapel Hill. We knew that GDP was quite strong in the third quarter and employment and in particular hours worked was quite weak. The gap in between is filled by strong productivity.
Inflation and new tariffs are making businesses reluctant to hire and they're getting more out of each worker they already have. But Cohen, whose research focuses on productivity, says it remains to be seen if the gains so far are a long-term trend.
If we saw strong labor force growth and strong productivity growth, I would feel better about this productivity number and say, oh, yeah, maybe this is something. But plenty of analysts on Wall Street today did think it's something. We could be seeing at least the initial stages of some payoff, in particular of the AI-driven automation. Sal Guattieri is senior economist at BMO Capital Markets.
Near term, it does imply that businesses are still cautious about hiring. But hopefully long term, we will see some of those productivity gains spilling down to workers. In the form of higher wages. Meanwhile, the Federal Reserve may find productivity data a reason to cut rates, says analyst Richard de Chazal of William Blair. Productivity growth should help to dampen inflation pressures.
And in theory, could mean that the Fed can keep rates lower, which is probably what this Fed wants to do at the moment. Keep in mind, the Labor Department's productivity measure is notoriously volatile. The Fed will be looking for consistent, convincing gains. I'm Nova Safo for Marketplace. We'll get a slice of holiday retail data Wednesday next.
It's going to be for November, but we did get a sneak peek of sorts this week. Adobe Analytics says online spending was up November to December, but up at a slower pace than a year ago. We've been following, as you might remember, three small business owners over the past month or so to see what their holiday seasons have been like.
Our final check-in is today, and we start with Dylan Demery of She's Fly. That's a women's fly fishing company in Fort Collins, Colorado. We ended 2025 at our highest net revenue that we've ever had. Our sales in December alone were... we're up 28%. And what I guess that is from, I've started diving into the numbers and it looks like our retreat business is really picking up.
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Chapter 3: What was the Labor Department's report on worker productivity?
Litigation is still pending on a whole lot of that. But the reality is that between January and November of last year, more than 300,000 federal workers left their jobs, which means a lot of work simply isn't getting done. So Alexander Petry decided to do some of it herself. She's a staff writer at The Atlantic. Alexander, it's good to talk to you. Great to be on.
I would like you to tell me, please, how it came to be and more importantly, why it came to be that you wound up cutting the grass at Antietam, the national battlefield. Well, it's one of those things that sort of spirals slowly out of control where I saw that Doge was coming in and Elon Musk was taking a... What's the word for that thing?
Elon Musk was taking a chainsaw to the federal government. What a time to forget the word chainsaw. Elon Musk was taking a chainsaw to the federal government. So I kept looking at whenever a function got cut or targeted for cuts, I would try to see if maybe I could just do it myself. So I forecast my own weather. I went to inspect my own dairy farm. I collected economic statistics.
And eventually I tried to help out mowing the national parks. And it turns out you shouldn't do any of that. You should not indeed. And we'll also just point out here, no disparagement implied or openly stated. You got the weather forecast wrong. Just, you know. Well, it turns out these things are hard because I asked a meteorologist.
I was like, well, if I want to forecast my own weather, if I'm not using the radiosondes because they could stop launching them any day, they've already cut back on the launches. If I'm not using the data that the NOAA is putting out there, what should I do to forecast it myself? And he said, well, weather usually travels about 20 miles per hour from west to east. So you could just –
drive to Cincinnati and see what the weather is there. And I'm like, great, let's do it. So I drove to Cincinnati, but the weather that I forecast turned out to be coming from the other direction. And so, no, I just poured a lot of time down the drain and did not get the outcome I was hoping for. We'll just say a hot air balloon was involved.
I do want to talk about what you call, rightly actually, the most bureaucratic sounding office in the federal government, the Bureau of Labor Statistics. You went out and tried to do what they do, which is survey prices. Tell us about that little slice of this adventure. Oh, sure. Well, so the Bureau of Labor Statistics, I actually now I'm obsessed with them.
I think what they do is very cool and adventurous. I was like, how can I do what you do since they're cutting it back? And they suggested we'll go out and ask about it because they have surveyors who go and they try to establish rapport. And they're like they see a poster of, you know. their favorite team. And they'll say, oh, hey, go Sox. And by the way, can you share some of your data with me?
And they have to do all this like investigation. And I'm like, well, as a journalist, I can probably do that. And it just turned into me just confusing a lot of people at various groceries because I would go in and be like, hey, I see that you have a gargoyle here. Can you tell me how much eggs used to cost in the past? You know, it's not an interaction you're expecting.
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Chapter 4: How is AI influencing productivity in the workforce?
I learned that I'm actually glad that I don't usually have to do all of this. There's this concept I say in the piece called mental load, where it's all the stuff that you have to think about in order to keep your household running. So, you know, as a parent, it's like, oh, I have to get my kid picked up and I have to get groceries and all of this stuff.
And if you don't divide it around the entire family unit. then it can destroy your marriage and really stress everybody out. And it turns out that as a citizen, there's also a kind of mental load going on for the whole country. Like when I go to the grocery store and I buy some milk, I know that the milk will not kill me if I drink it. And I look at my phone and I see what the weather is.
And all of these things are because lots of people are taking on a little bit of it so that I, as one individual, don't have to go insane every day trying to drive to Cincinnati to know what the weather is going to be tomorrow. And I think that's beautiful. And I'm sad we're trying to cut it back. Alexander Petrai is a staff writer at The Atlantic. I cannot recommend this piece highly enough.
It's it's dropped, I think, today. It's called I'm not from the government, but I am here to help. Thank you so much for your time. I really appreciate it. Thank you. Child care is often the biggest monthly expense parents have, maybe second biggest after rent or a mortgage. In New York City, three and four year olds can go to preschool for free.
And today, the new mayor, Zoran Mandani, and Governor Kathy Hochul announced that using state money, the city is going to start providing free care to two year olds, beginning in high need areas in September. Every two year old in the city is supposed to be covered by 2029. As expensive as it is, though, a lot of child care providers are still struggling.
So as Marketplace's Samantha Fields reports, some states and some cities are trying to come up with fixes for that. Child care is a textbook example of a broken market, according to Julie Cashin at the Century Foundation. Parents can't afford to pay more, but early educators who do this incredibly valuable work are underpaid.
Providing high-quality child care is a lot of work, and Jessica Brown at the University of South Carolina says it's expensive.
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Chapter 5: What are the implications of productivity growth on wages?
It takes a lot of people to care for kids, and so... Even at low wages, those low wages add up quickly. And on top of wages? There's also benefits for the provider and employer taxes and the facility. And Julie Cashin at the Century Foundation says it doesn't make sense to expect parents to fund it all themselves.
We don't ask a parent to show up with a check to pay for the bricks and mortar building of their K-12 education system or to write the check for their third grade teachers. And she says we shouldn't be asking them to for preschool either. Vicki Shabo at the think tank New America says more cities and states have been trying to find ways to make it more affordable in the last few years.
New Mexico just became the first state to offer universal child care. Vermont is another place that's invested in child care. We've also seen child care investments through ballot initiatives in some red states. Child care doesn't just help kids and parents, Shabo says. It also helps the economy.
We saw during the pandemic the ripple effects that happened when care centers closed and when schools closed and what that meant for parents' employment. And as a result of that, we saw massive swells in public opinion in support of finding solutions to child care. And today, polls show that support remains high. I'm Samantha Fields for Marketplace.
Continuing with our roundup of holiday retail, we've got Kalina Bruce running Noir Lux Candle Bar in Seattle. In terms of sales, we saw a 15 to 20 percent growth in comparison to last year. There were a lot of factors that kind of played into that, but I would say mostly it was doing some different incentives to try to get customers in. I am surprised at how well December went.
Although there were some challenging times, I would say just the amount of challenges leading to getting supplies and materials in a timely fashion, the backup with our main materials such as wax and fragrance oils, that definitely led to some challenges with getting orders on time. And I will say I worked a lot of 12 hour days in December.
So that was a little challenging, just finding that work life balance and really just trying to care for myself as a business owner and as a person. I have a little bit of time off planned in January. I'm turning 40. So I'm very excited about that. And I'm going to have a party and I'm going to take a little bit of time off. Kalina Bruce, getting ready for the big 4-0 up in Seattle. Coming up.
It has definitely increased the stoke of this community. Dude, so stoked to hear what that one's about. But first, let's do the numbers. Dow Industrials added 270 points today, 6 tenths of 1%, 49,266. NASDAQ down 104 points, 4 tenths percent, 23,480. The S&P 500 inched up about a half a point. That's almost flat. No, that's flat. 69 and 21.
Defense contractors rallied after President Trump yesterday called on Congress to increase military spending from $1 trillion to $1.5 trillion American dollars. Northrop Grumman up 2.4% on that. Lockheed Martin expanded 4.3%. Bonds down, yield on the 10-year, 4.16%. You're listening to Marketplace. This Marketplace podcast is supported by Intuit QuickBooks. In a new year, momentum matters.
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