The Trump administration has threatened to levy a 5% tax on Mexican imports next month unless the Mexican government takes significant action to reduce the number of migrants crossing the southern border.
The tax could eventually climb to 25%, which would hurt a lot of American industries. The auto industry, which relies heavily on trade with Mexico, could be hit especially hard.
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Disneyland opened a long-awaited, 14-acre section of its Anaheim, California, park to the public Friday. Star Wars: Galaxy’s Edge is set on a fictional planet called Batuu. It’s a pretend world where visitors can spend a lot of real money.
Visitors can build and buy their own droid for $99 or a lightsaber for $200; drink a glass of blue milk in a cantina full of space smugglers and bounty hunters; see a full-size replica of the Millennium Falcon ship; and get a glimpse of “Star Wars” characters like Chewbacca.
Galaxy’s Edge has one ride at the moment and another in the works. But Don Munsil at the travel website MouseSavers.com said the rides aren’t really the point.
“The land is the ride, you know? The experience of being there is supposed to be a lot of the enjoyment factor,” he said.
Seth Kubersky, who co-wrote the “Unofficial Guide to Disneyland,” said Galaxy’s Edge is a way for Disney to compete with the Harry Potter-themed worlds at Universal theme parks. They showed that you can build an entire land around just one intellectual property.
“And not only can you do it, but it will make fans flock from all over the world and spend a lot of money on special merchandise and beverages that they can’t get anywhere else,” he said.
On planet Batuu, you’ve got four hours to buy your lightsabers and droids. After that, a stormtrooper will escort you out.
The Trump administration announced this morning a new tariff on Mexican imports. The proposed goal of the imports tariff is to stop the flow of immigrants across the U.S.-Mexico border, according to the New York Times.
In light of this news, Marketplace decided to check in with a regular on the show, Patrick Smith of Loftus Ranches, a family-run farm that grows apples and hops in Washington state.
Washington produces a large majority of the nation’s apple supply, and Mexico is the biggest export customer of Washington’s apples.
“Exports of U.S. apples are down about 30% year over year after a number of years of solid growth,” Smith told Marketplace. “That just backs up a lot of the product into the U.S. market and throws a lot of uncertainty into the mix.”
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The Environmental Protection Agency is lifting a ban on the sale of gasoline mixed with 15% ethanol this summer. The agency had restricted sales of the gas, known as E-15, because it causes smog in warm weather.
Now the EPA says retailers can sell it year-round. Josh Price, senior analyst at Height Capital Markets, says the move fulfills President Trump’s promise to help farmers who grow corn for ethanol.
“A lot of these farmers are being hurt by his trade policies,” he said. “So this is a glimmer of hope he’s trying to provide farmers in those Midwestern states.”
The EPA says this isn’t a political move; the agency describes it as a compromise.
But refiners who have to mix ethanol into their gasoline are not happy. Derrick Morgan, with the trade group American Fuel & Petrochemical Manufacturers, says smaller refiners will struggle this summer because they don’t have easy access to ethanol.
“They have to buy it from others,” he said.
But small refiners may not have to worry. Morgan says his group will file a lawsuit to stop summertime sales of E-15.
Environmentalists aren’t happy, either. Ben Leard of Resources for the Future says more ethanol could mean shrinking forests.
“Some landowners could shift their range or their forests into cropland to produce more ethanol and that would have potential impacts on overall greenhouse gas emissions,” he said.
There won’t be a huge impact at first. One ethanol advocacy group estimates that sales will increase by around 2% over the next five years.
Workers had just finished their lunch break at a massive construction site in Denver’s Sunnyside neighborhood, when a concrete mixing truck arrived. They got right to work, attaching a huge bucket to a crane and then guiding the concrete down a funnel into the bucket, which was hoisted to the second floor — or what will become the second the floor — of an eight-story building.
The building will be part of the future Zia Sunnyside, a city block’s worth of apartments, condos and retail space, with a $116 million price tag. The complex will include a rooftop sky lounge and will feature 360-degree views of the Front Range and downtown Denver. A pedestrian bridge will connect residents to a nearby light rail station.
“They also have access to all of the other amenities on site, like the swimming pool, the spa, the club rooms,” said Tim Walsh, CEO of Confluence Companies, the developer and property manager. There will also be a co-working space and a yoga studio.
Sounds pretty posh, and it is. The average price for a condo is $440,000. But 25 of the 120 units are designed to be affordable for working-class Denverites. Those will cost $185,000 for one bedroom and $232,000 for two bedrooms.
Given the demand for more affordable housing in this country, you’d think there would be a lot of projects like this.
“Historically, newly built condos have been a source of entry-level housing,” said Robert Dietz, chief economist of the National Association of Home Builders. But there aren’t a lot of Zia Sunnysides going up. Nationally, builders added only 24,000 new condo units over the past year, compared to 60,000 to 70,000 a decade ago. “On the new construction side, this is just one part of the industry that never really recovered after the Great Recession,” Dietz said.
One big reason: Condos are more expensive and complicated to build than apartments. Materials have to meet higher standards, and financing is harder to get. Insurance costs are also greater because of the risk of lawsuits over construction defects. Builders can make more money with apartments.
“Right now about 96% of multifamily construction is built for rent,” Dietz said. “That compares to about a 80% historic share.”
In Colorado, lawmakers passed legislation two years ago aimed at boosting the condo market by making it harder for homeowners’ associations to sue developers over construction issues. Walsh said the change, as well as his ability to purchase lower-priced industrial land, made the math work for Zia.
“I think you’re going to see more and more condos,” he said. “Plus, with the economy doing so well, there’s a lot of equity out there to invest in in a condo in a downtown or urban core.”
But condos also have an image problem with some potential buyers, who worry their investment won’t pay off.
“Part of the reason for a lack of demand for condos is that perception that, well, people don’t really want this, or a family can’t live in it,” said Allison Arieff, with the urban policy think tank SPUR in San Francisco. Arieff has argued on behalf of the condo as a more sustainable alternative to larger single-family houses.
More buyers are turning to townhouses, which are still more affordable than single-family homes but have that coveted front door. But realtors say condos could get a lift from two types of buyers.
“I call it my bookends,” said Denver broker Allie Carlson, with West and Main Homes. At one end of the shelf are the young professionals wanting a foothold in the market; at the other are empty nesters looking to downsize. “They’re interested in the urban lifestyle downtown, and they want to offload their big house down in the suburbs,” she said.
Charles and Bonnie Goldburg, both retired lawyers, recently traded their four-bedroom farmhouse on Long Island, New York, for a loft in downtown Denver to be closer to their daughter.
“We wanted a place with public transportation, we wanted a place which was walkable,” Charles said. “The other advantage that Denver has, from our perspective, is culture.” (That’s right. A New Yorker said Denver has culture.) Another plus of condo living, he said: “I was glad not to do any more snow shoveling.”
U.S. gross domestic product rose 3.1% on an annual basis in the first quarter of 2019, according to the second estimate released by the Bureau of Economic Analysis. GDP growth for Q1 was previously reported at 3.2%. GDP grew at a 2.2% annual rate in the last three months (Q4) of 2018.
But as the economic expansion enters its 10th year, there are obstacles to continued robust growth — including increasing uncertainty about trade policy, tariffs and negotiations with China; the global economic slowdown; a pronounced slowdown in manufacturing; and a pullback in U.S. consumer and business spending. Many economists now predict that annualized GDP growth in the second quarter will come in at 1.5% to 2%.
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China’s pork prices increased more than 14% in April as the African swine fever epidemic ravaged pig herds. There’s worry in Beijing that rising pork prices could trigger a ripple effect throughout the economy.
“About 690 million pigs were slaughtered in 2018, but the data we’re getting from different channels shows that the number of pigs available for slaughter [this year] has decreased by 20%, and this drop is accelerating,” said analyst Zheng Lili with Chungyi Information Consultancy, which specializes in China’s pork industry.
Officials from China’s Ministry of Agriculture and Rural Affairs last month cited experts who estimate that wholesale pork prices will increase 70% in the second half of 2019 compared to the previous year.
The disease is not harmful to humans, but it is deadly for pigs.
Pork is a staple in the Chinese diet. Its price increase is one of the key reasons the consumer price index (CPI) was up 2.5% in April compared to a year earlier.
China’s government is keen on intervening to stabilize prices, including by increasing contributions to its “strategic pork reserve.”
Pigs are crucial to Chinese cuisine, culture and its economy. Menus in mainland China list pork simply as “meat.”
Pork features prominently during wedding banquets, lunar new year and other celebrations. The country’s pork consumption is greater than all the meat Americans consume annually.
However, the meat was not always plentiful. Some people over the age of 60 told Marketplace that they were lucky if they could have pork once a week.
Now that the country is wealthier, pork accounts for 70% of all meat consumed in China, according to Zheng, the analyst. Chicken is a distant second at 15%, with pricier beef and mutton accounting for only 10%, she said. If pork prices keep climbing, it is bad for consumers and the economy.
“Before 2014, the price of pork accounted for 3% of the CPI. That was later revised to 2.7%. That’s a high ratio. So, fluctuations in pork prices can affect the stability of the macro economy,” said Zhu Zengyong with the Agricultural Information Institute at the state-backed Chinese Academy of Agricultural Sciences.
Some 40% of pigs come from backyard farms, according to Zheng.
national pork reserve was formally set up in 2009 to keep pork prices stable.
“When the government finds that the number of pigs has dropped to a certain level, 20%, for example, it will store some pork to ensure everyone has pork to eat in the future,” Zheng said.
Once the government sets a target of how much frozen pork to store, it invites big slaughterhouses to make bids.
“The winners will get government subsidies to buy pork from the market to store in their own freezers,” Zheng said. She said the reserve can store up to 200,000 metric tons (220,000 tons).
The system has its limits. Pork can only be kept frozen for so long, and while the government has its own freezers, it mainly depends on a network of slaughterhouses to store the meat.
Analysts who spoke to Marketplace said the capacity of the national pork reserve is between 100,000 to 350,000 metric tons (110,000 tons to 386,000 tons), which is less than 1% of the annual pork consumption in China.
Plus, the government doesn’t always make it profitable for slaughterhouses to store the pork.
In March, China announced a target of storing 24,000 tons of pork because of the African swine fever outbreak.
“As far as we’ve heard, the government’s call to fill up the pork reserve failed because the offer price was too low.”
Slaughterhouses didn’t have enough incentive to fill up the reserve. Zhu said the mere act of talking about storing pork is a signal to the market that officials will not let prices spiral.
reserve can guide the market,” he said.
Raising imports could help. China imports most of its pork from Europe, Canada and Brazil. U.S. pork producers also anticipated selling more to China because of the African swine fever outbreak.
However, since China slapped tariffs on American pork, some data from the U.S. Department of Agriculture suggest that exports to China have been falling.
Energy drinks are like liquid candy with a kick. They’re sweet and fizzy and quite stimulating, but a study from the Journal of the American Heart Association says drinkers, beware.
“Each individual ingredient on its own may generally be considered as safe, but when you put them together, what happens is where the question remains,” said Sachin Shah, professor of pharmacy at the University of the Pacific and a co-author of the study.
Researchers predict the energy drink market will reach $61 billion by 2021, fueled by consumers like 35-year-old Antoine Smith, who started downing energy drinks while in college eight years ago. Now that he is raising a toddler, they’re part of his routine.
“I have to consume at least six to eight within a day,” he said.
Smith drinks a mix of brands, including Monster Energy, Red Bull, and Full Throttle.
“I have an addiction,” he said, laughing. “It’s sad. I’m laughing about it, but it’s sad.”
Several lawsuits have tried to link energy drinks to health issues and cardiac deaths without success. In a statement, the American Beverage Association said energy drinks meet federal safety rules and already display advisories for consumers who may be at an elevated risk, like children and pregnant women.
But Laura MacCleery with the Center for Science in the Public Interest said one problem is the way the beverage companies are allowed to compare caffeine levels when seeking Food and Drug Administration approval.
“The companies use widely varying assumptions about how much caffeine we consume in other sources,” she said.
In 2014, MacCleery’s group asked the FDA to slap an explicit warning label on energy drinks, but the agency hasn’t done so yet. In the meantime, new energy drinks have rolled out, boasting more natural ingredients.
American workers lose billions of dollars to wage theft each year — as much as $50 billion in 2016, according to research from the Economic Policy Institute.
In another study, the progressive think-tank found that, in the 10 biggest states, 17% of low-wage workers experience wage theft each year.
Despite its prevalence, wage theft is difficult to investigate and often affects low-wage workers who have few resources to go after their money.
In Houston, one advocacy group is helping immigrant workers get back their unpaid wages. But it’s not an easy process.
Even workers with an official ruling in their favor can wait months, or years, to be compensated. Some may never see a dime of the thousands of dollars owed to them, even after months of trying.
Joseph Stiglitz, a Nobel laureate in economics, has argued for years that our economic and political systems are rigged against the middle class and in favor of the wealthy. Marketplace’s David Brancaccio recently sat down with Stiglitz to discuss the themes and recommendations contained in his latest book: People, Power, and Profits: Progressive Capitalism for an Age of Discontent. This is an edited transcript of their conversation.
David Brancaccio: So you blame the discontent on a lot of things, from unregulated media to the financialization of the economy, what some might call “Wall Street unbound.” I think you have “globalization done wrong,” but there’s also tech, technology. Why do you think technology is leading to some of this discontent?
Joseph Stiglitz: Well, partly, it’s giving rise to anxiety. Many people are worried about losing their jobs, other people may feel that they won’t lose their jobs, but their wages are at risk.
David Brancaccio: Exactly. Yet we get taught in econ class that tech is terribly disruptive, but history shows that ultimately more and better jobs are the result. Shouldn’t we just wait this out, this disruptive period?
Joseph Stiglitz: This time we have machines that are not only stronger than humans, that not only can process more information, but, at least in some limited areas, can actually learn better. And the critical issue is whether the innovation will be replacing labor or augmenting labor, making us able to do what we do even better. A lot of the innovations are going to be replacing unskilled labor. The driverless cars and trucks have gotten a lot of attention, and we’re talking about millions of jobs for people who do not have a college education.
David Brancaccio: The power of the book is that you don’t just talk about the problems, you list prescriptions, if society would adopt them. But on trying to remedy potential problems with more technology taking over jobs. What are some prescriptions? One that you mentioned is the universal basic income?
Joseph Stiglitz: That’s one. But I’m a little critical of that, because it seems to me that part of dignity is having a job, and a universal basic income would reduce pressure on government to make sure that there’s a job with decent pay, decent working conditions, available for everybody, which I think there should be. And that’s why another suggestion is some kind of guaranteed employment. Hopefully, the market will provide that kind of full employment, but I wouldn’t count on it. And if it doesn’t, I think the government has to be ready to step in.
David Brancaccio: You also just argue for more progressive taxation, because there are certain people who see the benefits of this technology more than others, and you think the tax system could help?
Joseph Stiglitz: Yes it could, we’re unusual in that those at the very top actually pay a lower tax rate than those below. Warren Buffett made a big deal about the fact that he was paying a lower tax rate than his secretary. He thought it was morally wrong, and I agree. Capital taxes, carried interest, the kinds of special deal that’s given to certain hedge funds, private equity, are things that, really, we should get rid of. We could also extend ideas like the earned income tax credit. In other words, making sure that even if the market doesn’t pay adequate wages, the take-home pay of low-income individuals makes sure that they don’t live in poverty.
David Brancaccio: I was interviewing an expert on the effects of robots, A.I. and other automation in the workforce, and he felt that our political process will ultimately do the right thing to mitigate the possibly disruptive effects of all this technology. What do you think? Do you see a political process that’s poised to do the right thing?
Joseph Stiglitz: I think it’s part of the big political battle that we’re engaged in right now. Remember that there have been large pieces of legislation and many court decisions which have weakened the bargaining power of workers, making them even more precarious positions, and many of the new technologies having increased the precariousness of workers, undermining their bargaining positions. And this brings together several of the themes that I’ve talked about in the book, for instance the fact that globalization, the way it’s been managed, has resulted in pitting American workers against low-skilled workers, low-wage workers in developing countries. Again, eviscerating their bargaining power.
David Brancaccio: And your point is it didn’t have to be that way. That globalization could have been managed differently.
Joseph Stiglitz: Very much so. Other countries have managed it much better. Particular criticism I raise is against what are called the “investment provisions” of a number of trade agreements, which basically extend stronger property rights to American firms that invest abroad, protecting them against changes and regulations in ways they are not protected in the United States, and allowing them to despoil the environment, impose safety risks on workers and so forth. The way we managed globalization actually exacerbated the weakening of workers’ bargaining power.
David Brancaccio: But you’re very open in the book. I mean, something big has to change for these shifts to even begin to happen. A lot of it has to do with the role of money in politics, you argue.
Joseph Stiglitz: That’s right. If we’re going to actually achieve the kinds of changes that we need, we’re going to have to have a better politics. A concern that I raise is that we’ve been engaged in processes which entail disenfranchisement, weakening the power of ordinary individuals in the political process, both through gerrymandering and through the power of money, and weakening some of those systems of checks and balances. In fact, we’ve wound up with a system where a minority is determining our politics. We used to worry about a majority, and then protecting the rights of minority. Now we’re in a situation where the question is: Are we protecting the interests of the majority?
David Brancaccio: So, some form of campaign finance reform. But also you argue for addressing the issue of redistricting gerrymandering that accentuates the polarization in American politics.
Joseph Stiglitz: Very much so. And there are lots of other reforms, for instance, the United States is one of the few countries where polling occurs on a workday, and some states have deliberately tried to make it more difficult for people to cast their ballot. They make it more difficult for them to register, they have short polling hours, they put the polling booths in inconvenient places when they’re trying to discourage certain groups from voting. So, we’ve actually had a war, almost, against a full representation of the views of large parts of the country.
David Brancaccio: I’m assuming you hope this view of progressive capitalism gets injected into the coming presidential campaign.
Joseph Stiglitz: Oh, very much so. I was hoping that some of these ideas would be taken up in the political campaign, that the problems, which we as an economy, we as a society, and we as a democracy face; I hope I could articulate them. And the solutions I propose, I hope they will be taken up by various candidates in various ways. I try not to be prescriptive or say, “this is the only way to do it.” It’s trying to provide a menu of alternatives. And in the course of the political debate in the coming months, the country can decide on which of the alternatives best suits our country’s needs.
David Brancaccio: But I do notice you didn’t just write a secret position paper and send it to one candidate. This is up for grabs among many candidates?
Joseph Stiglitz: Very much so. And the good news is that much of what I say reflects the perspectives of many of the candidates who are currently running for president.