Consumer sentiment hits three-year low

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1:22I'm Kyle Ruzdal. It is Friday today, the 7th of November. Good as always to have you along, everybody. It should have been Jobs Day today, as you know. It wasn't, as you also know. What nobody knows, up to and including one Jerome Powell, is where we go from here in deciphering where the economy might be going. That's where we're going to start. We're going to do it with Heather Long. She's the chief economist at Navy Federal Credit Union. NCD Bredi, he's the Washington Bureau chief at MSNBC. Hey, you two. Hi, Kai. Heather Long, you get to start today. And here's what I want to know. It's sort of a, it's a, it's a zeitgeisty sort of, you know, schadenfreude sort of, I don't even know what kind of question.

2:04We're not getting all this data. What are we, what are we losing? What don't we have? Because we don't have this data. Oh, you just want to start with the depressing stuff. Okay. So, look, nothing can replace government data. We've got a lot of good alternative indicators, but let's just think big picture. 163 million workers in this economy, 170 million people in the labor force from the top of Alaska down to what is the most southernmost point of the United States. Key West. Hello, Key West. Come on. All right. So you get the point. No one, no private sector data has that kind of visibility into this great nation.

2:41I will say when I look and step back and look at all the data we did get this week, I think the Chicago Fed new metric probably has it best. You know, they said unemployment rate ticked up just barely to 4.4 percent from 4.3 the last time we did get a jobs report. And they said hiring was down a little bit. So basically what I'm seeing is something that continues to deteriorate slowly. Oh, just give me another like 30 seconds on that slowly thing, because that was a that was a weird place to end. All right. Yeah. Yeah. I mean, look, it's been frozen, no hiring all year, basically outside of health care.

3:22But you don't see a huge spike in layoffs. You don't see a huge spike in new unemployment claims. You see, again, a little bit more weakness in some sectors, but nothing that looks like we're falling off a cliff. All right. OK. I think it might be Hawaii, actually, if you go outside the continental United States. But that's a whole different thing. Sudeep, I want to go to the Supreme Court. We're going to bounce around a lot. We're going to do some geographical bouncing around and we're going to do some subject matter bouncing around. Supreme Court this week, the IEPA tariffs, the justices were some of them anyway, the majority perhaps skeptical of the Trump administration's attempt to claim that these are not revenue raising tariffs.

4:01No matter what the court decides, this is still a tense moment for small businesses, right? Because tariffs are still there. They are there. And if small businesses think of tariffs as taxes, which is how historically they've been thought of since the founding of the country, then that will weigh on them for the near term. Even if the Supreme Court comes out and decides that the president can't use tariffs in this way with this particular law, we already have gotten signs from the White House that they're still going to find other laws to use to deploy tariffs. And small businesses are not going to feel total relief from any individual Supreme Court decision because this particular president believes that tariffs are a great tool for doing not just economic policy but foreign policy.

4:51and he will continue to do that. And so there's going to be some tenseness for the years ahead about what does international trade even look like with this kind of approach. Yeah, sure will. And then if it gets overturned, of course, it'll be a mess refund-wise. Heather, let's go to the Federal Reserve. Told you we were going to bounce around. It was interesting to me that in the Fed speakers who were out this week, they give various speeches and stuff. there's a there's a distinct split now in the Federal Reserve it's not like that news but it does that's news but it does seem to be becoming more pronounced I will point out actually that Bank of England this week was five to four to keep its key interest rates steady which is quite the split help me understand why and if that matters well I think there's two things going on number one is the beauty contest the nerdiest beauty contest ever for who's going to be the next Fed chair.

5:46And this White House has a very different view of where, you know, wants lower interest rates and a smaller balance sheet. So you've got a little bit of that at play. But the bigger thing going on here, the more important thing is, let's call it a two-story economy. You know this well, on the one hand, we got the AI boom, consumption at the top looks great. We got some strong growth. We've got the inflation ticking up. All of that says you shouldn't cut interest rates. On the other hand, we've got what we were talking about earlier, a labor market that's frozen and may even be cracking a little bit.

6:16And that suggests we should be cutting interest rates. And so I don't think it's really that surprising, setting politics aside for a minute, that the Fed is split. And I think this is just a preview of 2026. This isn't going away. Sadeep, on that issue of the economy being split, right? We're going to talk about this later in the program, this idea that it is K-shaped. How can an economy that depends so heavily on consumers, when a big chunk of consumers in this economy are at the bottom leg of that K, how can it keep going? How can it be resilient? This is the fraying that we have been seeing and will continue to see.

6:59If people who are most likely to spend are restrained, then they're going to be in some trouble and the overall economy will hobble along until something breaks. As we have long known, things usually break as a result of a shock rather than the expansion and dying of old age. And so we will have to see whether the shocks are small or the shocks are large enough to displace where we are. That's the real test. And that's the real risk when people who are struggling the most just don't have additional money. Then when the shock comes, you will really feel it economy wide. Heather, let's talk about those shocks.

7:47My guess or my my, you know, entry into this category would be the shocks were the tariffs. Right. What what else looms, do you suppose? Well, it feels like a lot is looming at the moment. I think the big question is what we're talking about. Does the Fed make a mistake? You know, does the Fed make a mistake on interest rates by going too low and letting inflation soar or by going too high? And then the other risk that probably isn't getting enough air, although thank you for covering it, is there a risk in the plumbing system of the economy? If the new Fed chair really wants to take the balance sheet down, do we see more of those October 31st spooky moments?

8:26And that would not be pleasant for anyone. Heather Long, chief economist at Navy Federal Credit Union, Citi Bredi at MSNBC. Thanks, you two. Thanks, Guy. on a Friday. The market's today, bumpy, ended a bumpy week. Details, numbers, when we get there.

9:14Government data and the lack thereof, we have talked about ad infinitum. Private data and how we are depending on it, same. So we're going to break out of that data paradigm and do a little job market surveying of our own, the small business job market in particular. Marketplace's Mitchell Hartman was the lucky winner in our assignment meeting this morning. Chris Kessler at Black Flannel Brewing near Burlington, Vermont, is in high spirits. His distillery is growing sales by double digits, and his brew pub is doing really well. We're at about 8 % growth right now over last year. So he's staffing up, adding to his current workforce of about 40.

9:54We're currently hiring a sous chef in the kitchen. By early next year, he's hoping to hire another half dozen employees. And he doesn't think it'll be particularly easy with Vermont's unemployment rate so low. Across the country to another brew pub, Well80 in Olympia, Washington, where owner Chris Knutson says business isn't bad, but it isn't great either. We've certainly scaled back on staffing over the last year and a half, two years. Volume is down and labor obviously is going up. Washington has one of the highest minimum wages in the country,$16.66 an hour. From beer to gear, Maryland-based Bay Dog sells canine adventure equipment.

10:39Owner Barton O 'Brien has six employees on staff. Right now, we are looking for an additional salesperson. And the thing that I found so alarming is that we're getting a lot of applications from candidates who are way overqualified. His business is growing, but he's worried about the cost of tariffs on his imported products going forward and the health of the U.S. consumer. The problem my business has is nobody needs a$70 dog life jacket. We are 100 percent dependent on consumers' discretionary income. The burden of tariffs has forced business owner Sarah Wells in Fairfax, Virginia, to downsize to just four employees.

11:21Her company, Sarah Wells Bags, sells backpacks and shoulder bags for carrying breastfeeding gear. We at our peak were about double the size that we are now. The devastating effects of the tariffs this year means that I cannot pay everyone that we need to operate this business. She says at the same time as the cost of her imported products has gone up, new parents, worried about their finances and job security, are cutting back on their spending. I'm Mitchell Hartman for Marketplace.

12:17There are small businesses out there making their hiring plans, or not, as the holiday season approaches. But there are some small businesses that don't have any paid employees besides the owner of the business. Non-employer firms, they're called. And they make up something like 80 % of the small businesses in this economy. Here's one of them for today's installment of our series, My Economy. My name is Ariel Bonkoski. I own Ariel's Mushroom Company teaching about wild mushrooms, and I am in Duluth, Minnesota. Obviously, I focus on wild mushrooms, the things you find out in the woods. But I teach how to identify and how to safely forage, and I do that in a few different ways.

13:00I do classroom classes. I do guided hikes. I even do like land surveys and tell people what's growing on their property. I work with universities, you know, public schools, nature centers, and then like different mycological societies as well. However we price things, I try to make sure that I am walking away with approximately $100 an hour is the goal. Shortly after, you know, 2020 with COVID and all of that, there was this big boom of people exploring the outdoors. And the mushroom community saw a huge increase in interest. So I think when I first started my business, we were still kind of in that height.

13:47You know, I am seeing it slow down a little bit and financial times are a little uncertain for a lot of people these days. And there are, I'm sure, things I'm going to have to change in the future for my business to meet the community where they're at as well. When I started foraging mushrooms, that was kind of an interest for me is, hey, how can I cut food costs? You know, I think that's a question that's on a lot of people's minds. And, you know, learning to forage is one great way to cut food costs. So I think there's always going to be an interest in what I'm doing and what I'm teaching. I was able to do just my business for like a year and a half without having to do anything else on the side and I decided I did like to travel a lot so I did need to make a little bit more money so I am doing other jobs on the side now all of my travel is mushroom related I am someone who enjoys tattoos and what I'm trying to do is visit each of the 50 states and mushroom hunt and get a mushroom that I find in each state tattooed on my leg.

14:57I think like 10 years back, if I would imagine myself in this position, and the answer would absolutely be no. Like, I don't think I really had a direction at that point. I was doing like bartending and, you know, it's obviously not what I was like passionate about. So then finding that passion and then becoming, you know, secure enough in that passion that I can start teaching other people about my passion and getting other people passionate is really exciting and it's really fun.

15:26Ariel Bonkoski, owner of Ariel's Mushroom Company in Duluth, Minnesota. Do let us know what's going on with you, would you? Marketplace.org slash my economy is where you do that.

15:52coming up we fundamentally have too many seats in too many classrooms and not enough students supply and demand in higher ed but first let's do the numbers down dust rose up 74 points today just shy at two tenths percent 46 ,987 the nasdaq gave up 49 points two tenths percent 23 ,004 the The S &P 500 found eight points in the couch cushions. That's about a tenth percent, 67.28. For the five days going by, the Dow down 1.2 percent. The Nasdaq subtracted 3 percent. The S &P 500 weakened 1.6 percent. Wall Street not too impressed with that trillion-dollar pay package. Tesla shareholders approved for Elon Musk yesterday by a vote of 75 percent.

16:36Shares down three and two-thirds of 1 percent. Market was also cool to the weight loss drug discount deals that Eli Lilly and Novo Nordisk cut with the Trump administration. Lilly shed 1.4%. Novo Nordis gave up 5.10%. Collateral damage, perhaps. Telehealth firm Hims and Hers dropped 1.2%. Monster Beverage raised prices on its energy drinks over the past years. Does not seem to have dented demand. Sales are up. Monster perked up just shy of 5.2%. Bonds down yield on the 10-year treasury 4.09%. You're listening to Marketplace. You've finally broken loose from work. Three friends. One tea time. And then the text.

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19:04or just stop by. Grainger, for the ones who get it done. This is Marketplace. I'm Kai Rizdahl. Heather and Sudeep and I touched on it real quick, but it's worth another look here because just like about everything else, consumer sentiment is kind of K-shaped. Data out this morning from the University of Michigan's regular survey, hello, private data, shows that we are as cranky now as we have been in more than three years. our collective mood dragged down by sharp drops in how people see their personal finances and what they think of business conditions in the short term. That was true pretty much whatever the respondents age, income or political affiliation, unless whoever was answering the question was in the top one third of owners of stock.

19:52Their sentiment improved by significantly more than everybody else's decline. Marketplace's Carla Javier reports. It makes sense that people with more wealth would feel better about the economy. But according to Joanne Hsu, director of the University of Michigan's Survey of Consumers, after the president announced his tariffs in early April, wealthy consumers weren't feeling great either. And sentiment actually converged. Since then, the folks who are higher wealth, they are no longer quite so worried about the worst case scenario that consumers were broadly expecting back in April and May. and they've been really supported by these strong stock market performances.

20:31On the other hand, she says people with fewer stocks, their sentiment is continuing to deteriorate. So yeah, K-shaped once again. Xu says these more pessimistic consumers are feeling squeezed. They're much more concerned about day-to-day pocketbook issues like high prices and weakening incomes. This survey took place during the government shutdown. And that could also be having a big impact on how consumers feel, says John Lear of Morning Consult, which also tracks sentiment. So it's not surprising to me that consumers are souring on the economy. What we know very clearly is that consumers do not like policy uncertainty.

21:11Lear says he thinks that if the shutdown were to end, sentiment could rebound. I'm fairly optimistic that the underlying health of the consumer is not deteriorating quite as rapidly as the consumer sentiment data suggests it might be. Consumer sentiment is important because how consumers feel can affect how households spend. And that can affect businesses and whether they cut back on hiring, says Sasha Indarte at the University of Pennsylvania's Wharton School. That decline in income means more cutbacks in spending, people get more pessimistic, and you can get this vicious cycle emerging. Those sour sentiments don't necessarily mean a recession is inevitable.

21:50Indarte says sentiment is like a temperature check of the economy. It doesn't predict what will definitely happen, but does point to some risk. I'm Carla Javier for Marketplace.

22:21A couple of stipulations on the way to this next story. First of all, demographics really are destiny. that's part labor market and it's part consumer base. Item two, higher education, like it or not, is a business. And those two realities are coming to a head. The birth rate in the United States has been falling for almost 20 years. And at the same time, online college degree programs are on the rise. Young people are looking at jobs that don't need a degree in the first place. And the Trump administration's immigration policies are driving away international students. That is translating into ever-increasing financial pressure on schools, some of which are already squeezed.

23:01So one way they're coping? Shrinking their physical footprint. Marketplace's Henry App reports. For the last 50 years, Troy University in Troy, Alabama, has had a satellite campus 85 miles away in Phoenix City. At one time, I think that campus had 2 ,000 or 3 ,000 students. It was a very robust operation, and the target audience was the nontraditional student. Kerry Palmer is Troy University's senior vice chancellor and provost. In its mid-90s heyday, Palmer says, the Phoenix City campus was a night school where adult students took evening classes. It was convenient in those days to go to class at night when you weren't at work.

23:40And now it's convenient to sit in your pajamas at home on your own time and get your studies online. Online programs, including some from Troy University itself, started eating into Phoenix City's in-person enrollment in the early 2000s, Palmer says. In the last decade, its student population declined drastically. We were spending a tremendous amount of money for building upkeep and just keeping the doors open, staffing, faculty, and administration. And we just weren't getting the type of traffic that would justify that expenditure. So earlier this year, Troy's board voted to close the Phoenix City campus at the end of the year.

24:18Several other colleges and universities will be closing satellite campuses too. Penn State is shuttering seven of its 20 smaller campuses. Middlebury College in Vermont will wind down its graduate programs in Monterey, California. And Champlain College, also in Vermont, will close study abroad campuses in Montreal and Dublin. While each of these satellites is a bit different, their closures are all happening against the same backdrop. We fundamentally have too many seats in too many classrooms and not enough students. Peter Stokes is a managing director at Huron, a consulting group that specializes in higher ed.

24:54For years, college expansions made sense, he says, because the student population was booming. It grew about tenfold from 1950 to 2010, peaking at 21 million. While we went through this period of expansion and growth, we saw institutions create satellite campuses, create extension programs, many of these in rural locations. But the number of higher ed students has fallen by over 2 million in the last 15 years. Waning interest has hurt Middlebury College's satellite in Monterey, California. The graduate school's programs largely focus on international relations and translation, says Jeff Dayton Johnson, the dean.

25:35Many alumni have gone on to work in the State Department. There certainly is, I think, a forecast on the part of many potential students that these are jobs which won't be as plentiful in the future. Enrollment was already declining before Trump's second term, he says, and cuts at the State Department haven't helped. The sad irony of this move is that the world, I would argue, has never needed our graduates more. People who promote intercultural communication, people who promote peace, understanding a more just world. The closure could deal a blow to downtown Monterey. The program occupies 19 buildings there, though city manager Hans Uslar is optimistic about the property's future.

26:20It's a short jump to the beach. It's a short jump to go onto a recreational trail and go on long bike rides. So it is an attractive, attractive property that the right developers can pick up. Meanwhile, in eastern Alabama, Provost Kerry Palmer says Troy University has a potential buyer lined up for its Phoenix City campus. And while it shuts down that satellite location, it's investing in its two others. For us, anyway, our experience, the satellite campus is going to need some means by which you draw foot traffic in. So its newest satellite program will be literally hands-on. A doctorate degree for chiropractors at its campus in Dothan, Alabama.

27:05I'm Henry App for Marketplace.

27:15this final note on the way out today which i really do wish i'd thought of myself but i'm glad the cnn digital team did elon musk has that new pay package trillion dollars you might have heard so here then is some of what musk could buy with that money toyota volkswagen stelantis Hyundai, Ford, and General Motors. Like the companies. All of them. Or every car sold in the United States this year. Or ExxonMobil, Chevron, and ConocoPhillips. The companies. All of them. Or he could pay down one thirty-eighth of the thirty-eighth trillion dollar federal debt. Lots of other things, too, if he put his mind to it, I suppose.