Chapter 1: What are the implications of Trump's trade talks in China?
Economic data can come from anywhere, you know. AI is going to be buying TV ads now, which, great. And house-sitting as a job. From American Public Media, this is Marketplace. In Los Angeles, I'm Kai Risdahl. It is Thursday. Today, this one is the 14th of May. Good as always to have you along, everybody.
One does not usually count the Census Bureau among the great statistical agencies of the United States government. But one should, because in addition to all the straight up counting of people that it does, it also tracks a wide swath of what happens in this economy. For our purposes today, two items specifically. First of all, retail sales.
April is the month in question, up half a percent from March. Nice job, American consumers. Retail sales, by the way, measured in dollars, which makes it even more interesting that that half percent bump holds true even when you strip out volatile and expensive items like automobiles and gasoline. So there is that. Also on the rise, item two for us today, business inventories.
That is March data up nine tenths percent from February. Those are headline numbers, of course, those two, and are decent on a first impression. But as Daniel Ackerman reports to start us off, a closer inspection reveals some consternation among both businesses and consumers.
Yes, sales and inventories were up. But Jessica Ramirez of the Consumer Collective says there's something to keep in mind about those numbers. Really, it's prices are high. high and rising fast, according to this week's inflation data. So the jump in the headline numbers is really about stuff getting more expensive and not about more stuff getting sold.
Ramirez says in the face of all that, consumers are making hard choices.
Opting out for some items while they're purchasing others and just being extremely edited in the
She says that could mean a summer road trip instead of a long-distance flight. But even the basics are putting a dent in wallets and bank accounts.
59% of consumers say they are dipping into savings to cover their everyday expenses.
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Chapter 2: How are consumer behaviors shifting in response to economic conditions?
Absolutely, and I think, Chai, that the president is right to be emphasizing foreign direct investment. It was foolishness to say they didn't want that. I mean, if the Chinese are going to quote-unquote steal technology, which to some degree their officials do, it's done through computer means, through surreptitious means, through active bribing and spying in the U.S.,
Meanwhile, if we actually get foreign direct investment into the U.S., we actually get some technology transfer from them inherently. And we win over some of these potential spies. Same thing with getting Chinese students into the U.S. It's a win-win. But you're right on the facts. It's down like 90% since before COVID.
So I'm sure you saw the headlines this morning that President Xi had said to President Trump as they were discussing things that Xi hopes that we can avoid, the United States and China can avoid the Thucydides trap. Now, I confess I had to go look that one up because it's been a long time since I've studied that stuff.
But it's basically the conflict that arises when a rising power like China takes on in every possible way the established power of the United States. you're not a political scientist, but you've been around the block a couple of times. Frame that for me in the context of the global economy and the competition that exists now between these two powers.
Well, what's key about the Thucydides Trap, which is, as you say, Kai, it's about having a rising power get into a conflict with established power, in part because the established power is worried that if they let the rising power continue to rise, they'll lose. And there is that sense in some parts of Washington. But in the economic sphere, for all the rhetoric –
Chinese ability to inflict threats on the U.S. economically can be pushed back against if, A, we provide more value to the Chinese so they have more dependence on us, more incentive to play along, and, B, as long as we're collaborating with the whole world economy to to discipline China. And this is not what we've been doing.
And I think what President Xi is indicating is not peaceful intentions, not nice and kind words, but I think a realistic view that the world is a worse place if U.S. and China are in economic conflict. And ultimately that if he thinks time is on his side, he doesn't have to do anything right now. And that's the other key point about economics.
It's never irreversible the way it might be, say, in a military advantage. There is no end point.
Adam Posen. He's the president of the Peterson Institute for International Economics, also a regular contributor to this program where we have questions about international affairs in China and all that stuff. Adam, thanks a lot. I appreciate it. Thank you, Kyle. Versant reported quarterly profits today better than analysts had been guessing, but not great.
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Chapter 3: What role does AI play in modern advertising strategies?
That has been the case for a good long while. It turns out, though, that a whole lot of Europe's data goes through cables passing through a choke point in the Middle East, which, again, no need, I believe, to recap. Josh Jidza wrote about those cables and what Europeans might be able to do about them in The Verge the other day. Josh, thanks for coming on the program.
Thanks for having me.
So tell me about Europe's connectivity challenges with Asia going through the Red Sea. Sounds not great.
Yeah, so 90% of Europe's internet traffic with Asia goes through the Red Sea and most of that through a very narrow street off the coast of Yemen, which is saying repeated cuts over the last few years, which are a bigger problem because of the conflict there.
Sorry, like literally cuts to the cables?
Yes. Yeah. So in 2024, Houthi rockets hit a cargo ship, which the crew then fled. The cargo ship drifted and its anchor, which was down, cut three cables, disrupting traffic in the region and then as far away as Vietnam.
Yeah.
And then this happened again about a year later. And each time it took several months to negotiate access for a repair vessel to come in and fix the cables.
It's obviously not new that that's a volatile part of the world. The Europeans, I imagine, have been working on plan B, if you will, for a while.
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Chapter 4: How is the EU addressing fiber optic cable vulnerabilities?
I joined some Facebook groups and that's how I came into it. Generally, I would say my average house sit is probably about two weeks. Sometimes it's a couple of days. Sometimes it's a few weeks. I've had a house sit that was four months long. There's almost always a pet. It's just like feeding, walking them if they're a dog. At the moment, the house that I'm at, the irrigation isn't on.
So they've got a very, very big garden. So I'm watering like an entire jungle at the moment. I've been house-sitting for over a year now. I'll be really honest. I don't rely on this entirely as my main source of income because I have a social media job as well. But the only thing I spend my money on is my car expenses and my groceries.
As someone who likes to stick to their comfort zone, going into different houses has been great for me to learn how to adjust to different situations. There has been times where I've woken up in the middle of the night and I've remembered the layout of the last house and I've walked into the door.
But it's really easy to get so used to not paying rental bills that you just don't want to go back into a conventional lifestyle, I guess. I live out of three suitcases. And, you know, it's a lot of, you know, loading up the car, unloading the car. This is what my life looks like. But I'm happy with it. I'm content with it. And if anything, it's taught me not to overconsume.
Carl Little, Down Under, in Darwin, Australia. That thing I say all the time about how it really is a global economy? This is that, right? Tell us, would you, about your adventure in housing, no matter whose house you are living in. Marketplace.org is where you can do that. This final note on the way out today, Stephen Myron is officially looking for a job.
He sent his letter of resignation from the Federal Reserve to President Trump today, effective as soon as Kevin Warsh is sworn in. Warsh gets a fresh 14-year term on the board. He will serve four years at least as chair starting tomorrow. That is Jay Powell's last official day in that job. Myron took his last moment in the monetary policy sun.
double down on some of the things he has pushed for during his relatively short tenure. Better measurements of inflation, looser banking regulation, shrinking the Fed's balance sheet, also lower interest rates. Our daily production team includes Libby Burdett, Andy Corbin, Maria Hollenhorst, Sarah Leeson, Sean McHenry, Michaela Sayah, and Sofia Terenzio.
Will Story is the supervising senior producer. And I'm Kai Rizdal. We will see you tomorrow, everybody.
This is APM.
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