Chapter 1: How do rising ACA premiums affect enrollment rates?
A bond story was promised, a bond story there shall be. We'll do energy as well, and sure, tariffs, why not? From American Public Media, this is Market Plans. In Los Angeles, I'm Colin Risdell. It is Wednesday today, the 20th of May. Good as it always is to have you along, everybody.
If you have, like most normal people in this economy, not been paying a whole lot of attention to the bond market, I get it. Totally. But give me a couple of minutes here to bring you up to speed. The yield on the 30-year U.S. Treasury bond yields, of course, the interest the government has to pay. Hit almost 5.2 percent this week, as high as the long bond has been since 2007.
That is news in and of itself. But if you pull back a little bit, you will see the United States is not alone. Bond yields in Germany, in the UK and in Japan are at multi-year highs as the war and the ensuing energy shock and inflation continue to ripple through the global economy. There is a lot going on here. So we've called Nicole Servi. She's an economist at Wells Fargo.
Nicole, thanks for coming on. Good to have you back.
Thanks for having me.
This is not a solely American phenomenon. I talked about the third year up in the introduction, but things are happening globally. And I want to start with what happens when rates go up like this, yields, like on the whole planet.
Yeah. So if you're an investor looking for yield, that's a great thing. But if you are a government trying to issue debt, not so great of a thing.
Yeah. Say more. I mean, money is more expensive, basically, right?
Yes. And so when we were talking about sovereign bond yields, what we're essentially talking about is the cost of borrowing. And so with the cost of borrowing going up across the globe, if you're issuing debt, it's just going to be more and more expensive to do that.
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Chapter 2: What factors contribute to the increase in bond yields globally?
You have some countries across the globe that are, let's say, more into fiscal austerity and more willing to take on that fight than others. For instance, even if you look in the Eurozone, The fiscal outlook for, let's say, France and Belgium, their leverage ratios, they're projected to continue to rise.
But if you look at a pace like Spain or Italy, they've actually already gone through some pretty tough corrections in this regard. And they're actually making progress towards lowering their debt burdens. And so it depends on the country that you're looking at. But in general, I think that is a true statement.
Can you help me understand why this seems to be sort of in the last, I don't know, couple of weeks-ish? Yields seem to have gotten a whole lot of attention because they've been going up so much. And I guess my question is, you know, the energy shock's been going on for, let's see, February, March, April, May. I mean, it's going on three months now, and the bond markets are paying attention now?
Yeah. So I think some of that has to do with just bond markets. We're kind of waiting to see the duration of this energy price shock. So initially you're going to get a shock and we've seen that already in crude oil and gasoline. But let's say that this conflict magically ended four weeks in, then that shock would have truly been transitory in nature. That's that scary word transitory.
I was just going to say gutsy move, man.
Yeah.
Got to move. I try not to say it too often. But what we've seen is this conflict hasn't proven to be transitory, right? It's actually stuck around. And so what that means is that inflation is just going to be all that more persistent. You're going to see higher transportation costs bleed into other areas as well. There is a growth risk here, too, yes?
Yes, particularly for economies that are really reliant on imported oil. I would say the United States in particular is not in that situation, but many economies across the globe are.
All right, bring it home for me. There is a mythical person in Ottumwa, Iowa, who I always have in mind when I ask this question, and you're the lucky winner today on this question. If I am going about my daily life in Ottumwa, Iowa, why does this matter for me?
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Chapter 3: How are tariff refunds impacting businesses?
And so that is how you bring it home here is you want to have your fiscal situation under control so that you can continue, the government can continue to support those critical areas of the economy.
Nicole Servi, she's at Wells Fargo. Nicole, thanks a lot. I appreciate your time.
Thanks for having me.
I said yesterday the average rate on a 30-year fixed mortgage is up at 6.75%. Well, now you know why. On Wall Street today, bond traders are one thing. Stock traders are a whole different animal. Never met a, yes, we're really close to a peace deal, rumor that they didn't like. We will have the details when we do the numbers.
One of the reasons, one of the many reasons, to be clear, as Nicole was just saying, that bond yields are up is that prices are up and consumer inflation expectations are up. And that is thanks to President Trump's preferred trade tool. Tariffs, in case that somehow wasn't clear.
As you know, the Supreme Court ruled this past February that the president's tariff palooza of April last was illegal. The White House has indeed started paying out some of the $166 billion it owes American consumers and businesses. And actually, as Marketplace's Kristen Schwab reports, those deposits are showing up earlier than businesses had been expecting.
Sarah Wells checked her company bank account last week and got a welcomed surprise. About half of what I claimed for refund was in my bank account. Like the cash was actually already not even pending.
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Chapter 4: What is the current state of the Affordable Care Act?
It was already deposited back into my bank account. There it was, $10,000 in tariff refunds, half of what the government owes her company, Sarah Wells Bags, which makes products for new moms. I was really hesitant to believe it would be real until the check was in the bank, so to speak, and it was exciting to see it. She already has plans for the refund.
She's earmarked the money to pay for other tariffs still in place. But she's not letting herself get too excited. I think it's okay to do both celebration on these refunds, but also be mindful that we're still in a state of real upheaval.
Many of the business owners I've talked to about these tariff refunds are, like Wells, still in disbelief that they're actually happening, even after seeing the cash in their accounts, and even though the process for many businesses has been drama-free. Brian Burke is chief commercial officer at the customs brokerage Seco Logistics.
The refund process that we've seen is actually going very smoothly.
Chapter 5: Why are more people dropping their ACA coverage?
As of about a week ago, U.S. Customs and Border Protection says it's approved more than $35 billion of the $166 billion that's owed to businesses. And Burke says though there's still some tariff uncertainty, businesses are feeling confident enough to order goods regularly again.
There's more of a smoothing out of the import volumes. And with certainty, I think companies can also price better as they sell and manufacture in the United States.
One company I talked to even lowered its prices last week after getting a $20,000 refund. Glory International Trade is a distributor that imports small appliances like blenders and fans from China and Vietnam. Vice President of Operations Zhang Luhay hopes to get another $40,000.
I am a little bit skeptical about the remaining amount just because I'm not sure if there will be any money left over for refunds. Getting any money back is good, but it's almost as if tariffs have taken a back seat.
Chapter 6: How do rising premiums affect healthcare costs for individuals?
There are other things to worry about now, like the economy. Luhe says not long after the war started, trucking companies started increasing prices. They started charging fuel surcharges. So I think that's like an extra $200 for every shipment. Luhe is nervous. He's worried about his personal budget, and he's cutting back on spending. Less family vacations or trips, if any at all.
Less going out to eat. He figures if he's spending less, the people who might buy his appliances are spending less too. I'm Kristen Schwab for Marketplace.
Here's one of those what you think a story is going to say is not what the story actually turns out to say stories. The great state of Oklahoma is among the top producers of oil and natural gas in this economy.
So one might well imagine with crude oil prices around $100 a barrel and President Trump's war in the Middle East dragging on, Oklahoma and the region would be in line for an economic boost. Says the Federal Reserve Bank of Kansas City, not necessarily. Marketplace's Elizabeth Troval has the details.
There are a few reasons Oklahoma is simply not seeing a flurry of additional drilling or oil and gas production right now.
These prices have got to be sustainable for a very long period of time.
That's Tom Sang with Texas Christian University, who worked in Oklahoma's energy sector for years.
You'd have to see $70 a barrel going out for several years to be able to say, hey, when we drill this well, which we expect to produce for 20 years, we have to get a return on it that our shareholders are going to be happy with.
There's also a geological reason Oklahoma isn't seeing a big boost from the energy supply crunch, says Courtney Cowley, who is based in Oklahoma with the Kansas City Fed.
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Chapter 7: What challenges do screenwriters face in today's economy?
If there are fewer people in the marketplace to spread risk across, then insurers have to charge those smaller number of people more in order to provide the services that they're providing. They already are. ACA premiums are nearly 60% more expensive this year than they were last year, on average.
And with people continuing to drop out of the marketplace, Sullivan says they're likely to go up again. So people are squeezed right now and could be squeezed even more next year. People who get health insurance through an employer are less likely to see their premiums go up significantly next year.
But Sabrina Corlett at Georgetown's Center on Health Insurance Reform says hospitals and providers will likely see costs go up. As more people become uninsured, they will forego necessary care, they'll skip prescriptions, and they'll get sicker. And they'll end up in the emergency room.
And hospitals will treat them, and in many cases, will end up footing the bill for those who can't afford to pay. And as those costs go up for hospitals, these uncompensated care costs, they have to be passed on. And in many cases, she says, they will eventually be passed on to you and me. I'm Samantha Fields for Marketplace.
Making it in Hollywood is even harder than it used to be. From its most recent peak, that was 2022, there has been a 30% drop in employment for actors, yes, but also for carpenters and designers and the many, many professionals who work behind the scenes to put a production together. That is data, by the way, from the Labor Department put together by the Wall Street Journal.
And since those jobs have been drying up, a lot of people in the industry have been working in a new kind of gig economy. Ruth Fowler is a screenwriter. She wrote in Wired the other day about her side hustle as an AI trainer. Ruth, thanks for coming on.
Thank you. I'm so happy to be here.
So as I said in the introduction a second ago, you are a screenwriter. How did it come to pass that you found yourself working as this thing that's called an AI trainer?
Well, the industry, as everybody knows, is really not going through a great time right now. It's really in flux. A lot of screenwriters are really suffering right now. And we're all trying to find different jobs, different ways to survive. So I was on a Facebook group with a bunch of WGA moms, actually.
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Chapter 8: What does it mean to work as an AI trainer?
So what I found is I actually didn't have any life while I was doing it.
What kinds of tasks? What were you actually doing as you were chained to your laptop?
They were incredibly boring. Some of the tasks were kind of watching like a video, which was taken from Instagram and transcribing every tiny little second of it. So the moment a dog barks, the moment a balloon pops. Other tasks, like I did a little bit of red teaming, which is where we're kind of trying to break the AI system.
And that's like, it's ostensibly meant to be kind of a safety thing, right? But it kind of begs the question, like, why are we doing this now? Surely this kind of safety team issue should have been done before they released it to the public, you know?
Yeah. You spend a good amount of time in this piece talking about the other people who had wound up doing this kind of gig work AI trainer. Some of them, you know, Hollywood screenwriters looking for side hustles and others just needing the money, I suppose, right? Who else is doing this?
It's such a mix of people doing this kind of work. I mean, I met a Harvard educated doctor. I met a plastic surgeon from the UK who was in between jobs, a scientist, a librarian. There's a huge amount of people. I think the economy is not in a good place for anybody and everybody is trying to pick up extra work.
Speaking of extra work, you analogize this work to, you know, sort of the next generation of waiting tables, basically, for would-be, you know, Hollywood screenwriters, actors, take your pick. Are you still doing it? Are you still having to do this kind of work?
I am still doing it. At the moment, I am training as an EMT because my family is medical. I wanted to do something which was kind of giving back. And I kind of had this guilt around the fact that I was working for this system, which so many people hate, so many people are really upset by, and it's taking so many jobs. So I used the money and I retrained as an EMT. And I'm still a writer. I'm
But the plain truth is that while the economy is so bad, I need something else. So I decided to do something which is actually going to do some good for people.
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