Anna Helhoski

Today's episode was produced by Tess and edited by Rick Vanderkenyde.

Happy Thanksgiving, Tess. And with that said, until next time, turn to the nerds.

And I'm Anna Hilhoski.

Yeah, I have a better idea. Let's bring on some nerds to talk about how we can use AI to help us with our holiday shopping.

Yeah, Amazon employees in 20 countries are planning to protest or even strike against the company on both Black Friday and Cyber Monday.

It's the fourth year of the Make Amazon Pay campaign that coincides with one of the biggest shopping weekends of the year. Thousands of workers are expected to take part in the job actions. If you're wondering how that might affect your Amazon orders, it's highly unlikely to have an impact. As of the second quarter of this year, Amazon had more than 1.5 million full and part-time global employees.

Yes, Turkey Day is upon us. Tomorrow, in fact. If you haven't thought out your bird yet, well, maybe just do a sidesgiving. With or without the bird, the dinner on average will cost less this year than it did last year.

And here's what goes into that average dinner. Turkey, cranberries, sweet potato, carrots and celery, green peas, pie shells, cube stuffing, dinner rolls, pumpkin pie mix, whole milk, and whipping cream.

Wait, since when are mashed potatoes not part of the dinner and an add-on?

Yeah, the latest figures from the National Association of Realtors show sales of existing homes rose 3.4% from September to October.

But folks are still paying more than they were at this time last year. The median price for those existing homes was $407,200, up 4% from October of last year.

And how do these things work?

So event contracts let you bet on future events. What are prediction markets?

So that's how people were legally betting on this recent presidential election, semi-legally anyway. On a related note, does Trump's win mean anything for the future of prediction markets?

So you've mentioned prediction markets in some previous episodes. You've also mentioned something called an event contract. So let's start with that term. What are event contracts?

Sounds like we might be hearing more about these things in the year ahead. Sam, can you tell us a bit about the risks of prediction markets? Are they something that most investors should be participating in?

Sam, thanks so much for joining us.

That core inflation is a key economic indicator that the Federal Reserve looks at as it's deciding what to do with interest rates. The Fed's long-term goal is 2% inflation. So we're not there yet, but we're still way, way down from the peak inflation of June 2022, which was 9.1%.

Listeners might remember a few weeks ago, we mentioned that the Federal Trade Commission issued new rules that would make it easier for consumers to end subscriptions and memberships and the automatic payments that usually come with them.

Well, the Consumer Financial Protection Bureau says it will be enforcing that rule and plans to, quote, take action against consumer financial firms and other covered entities that violate the Click to Cancel rule.

Ah, yes, the Spirit Airlines bankruptcy. Low budget goes even lower.

So here's what this means for you, courtesy of our nerdy colleagues who cover the travel industry. First, yes, your flight might be canceled. Check with the airline.

And third, what happens to your free spirit frequent flyer points? Unknown at this point, but our colleagues say you should be able to use them per usual until it's announced otherwise. Once the airline is in bankruptcy court, it's possible that program will see changes.

Today's episode was produced by Tess and edited by Rick Vanderknife.

And with that said, until next time, turn to the nerds.

Oh, it's the last week of work for us before a holiday break.

Right. The Federal Reserve's Open Market Committee is meeting well as we speak to make the final decision of the year about whether to continue bringing down a key interest rate. We're taping this on Tuesday, and that decision will come on Wednesday.

And if you take out volatile food and energy prices, you get the so-called core CPI, and it rose 3.3% over a year ago. So this economy has not yet fully slayed the inflation dragon, though we're way down from the peak inflation, which hit 9.1% two years ago. The Fed's target inflation rate is 2%.

Sean, the outgoing Biden administration is leaving some items in consumer stockings. Last week, the Consumer Financial Protection Bureau issued the latest rule in its ongoing effort to crack down on so-called junk fees.

The CFPB says, on average, banks charge $35 for overdrafts. It says this new rule could save consumers $5 billion a year in fees. But, Sean, it's possible that these rules could become toothless under the incoming Trump administration. Whomever is appointed to head the bureau could simply decide not to enforce the rule or roll it back.

Yeah, Albertsons pulled out of the proposed deal and sued Kroger for alleged breach of contract. It says Kroger didn't do enough to address the concerns regulators had about the merger.

And remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeart Radio to automatically download new episodes. Today's episode was produced by Tess Biglin and myself and edited by Rick VanderKneife.

And with that said, until next time, turn to the nerds.

What was it that convinced her that the con was real? What about this particular type of scam makes it so believable?

Only they're not just online anymore. They're on your phone. And if you think it can't happen to you because you're either too smart or too informed or too lucky, you're wrong. As has been proven time and time again when completely normal people have their life savings stripped away before they realize what's happening.

You point out the judgment Judith was likely to face in the wake of this crime. How could you hand over so much money and why didn't you see red flags? I do hate to admit it, but anytime I hear about a scam, that tends to be my initial reaction. It's so easy to put blame on the victim. But is one of the takeaways from your reporting that this can actually happen to anyone?

How did Judith ultimately find out that she had been scammed? And is it clear where her money ended up?

We're joined by the author, Michelle Singletary, a personal finance columnist for The Washington Post. Michelle, thanks for joining us. Oh, thank you for having me. We're talking about a seven-part series, so you should check out the entire thing. But Michelle, if you could give us a condensed version of how this scam played out.

Now, Judith is older, and there's this perception that seniors are more vulnerable. I myself saw my grandmother scammed out of quite a bit of money several years ago. They told her that they had my brother held hostage in Canada. But the Federal Trade Commission says people in their 20s are scammed at higher rates than those in older age brackets. That's exactly right.

And I'm Anna Helhosky.

That's great advice. Michelle Singletary, a personal finance columnist for The Washington Post. Thank you so much for taking us through this journey and for your reporting.

How long does it take to pay off a layaway purchase versus a buy-now-pay-later one? And when do you actually get the item that you're financing?

So now that I think about it, layaway isn't something I see offered very often. Now, I'm going to age myself, but when I was a kid, I remember holiday commercials from department stores that specifically advertised layaway as an option. In this day and age, how do you find layaway?

Lauren, let's talk about the potential drawbacks of layaway and BNPL because neither is risk-free. Can either one impact your credit?

We'll be diving into two ways that shoppers break up the costs of one big purchase into multiple smaller payments. The old school way is called layaway, and it's been around since the Great Depression.

So let's assume that all three options are available when you're trying to make a purchase. BNPL, credit card, and layaway. How can shoppers figure out the best option for them?

The new school way is called buy now, pay later, or BNPL, and it's a rapidly rising online payment method that's gaining popularity among Gen Z. Adobe Analytics expects shoppers during this holiday season to spend roughly 11% more using BNPL than they did a year ago.

Yeah, the Labor Department reported that the economy added 227,000 jobs last month. That was a significant increase over the October jobs figures, which were hurt by hurricanes and the Boeing strike.

This is one of those data points that will factor in when the Federal Reserve's Open Market Committee meets next week to discuss what's next for interest rates. The Consumer Financial Protection Bureau announced that it's returning $1.8 billion in junk fees to consumers who use credit repair companies.

The agency says that more than 4 million people will receive payments for being charged advanced fees or being subjected to bait-and-switch advertising by Lexington Law and CreditRepair.com.

After the court ruling, both companies filed for Chapter 11 bankruptcy protection. The CFPB says affected consumers will get payments in the next few weeks without having to do anything.

Oh, this rarely turns out well. To review, market timing is when investors try to predict what's happening in the stock markets and buy and sell based on those predictions. They're typically trying to time their decisions to buy low and sell high, of course, but more often than not, that's a fool's errand.

And they found that this behavior got worse and worse from 2020 to this year. It makes some sense because A, we all had a bit more time on our hands for a while there. And B, there was crazy stuff going on with things like the GameStop meme stock hype and its successors. So maybe just don't try to time the markets.

Today's episode was produced by Tess Vigeland and myself and edited by Rick Vanderkneife.

And with that said, until next time, turn to the nerds.

And I'm Anna Hilhoski.

And I'm Anna Helhofsky.

Yeah, Tess, that's too many influencers if you ask me. Now, as we all know, an influencer's job is to entertain and inform, even if the information isn't all that accurate. Finance TikTok, more commonly known as Fintalk, has some particularly egregious advice from influencers.

Hmm. Sounds a little fishy to me, Tess, but let's ask someone with a little more expertise in that area. Fortunately, we have Alana Benson, an investing writer here at NerdWallet, to talk us through it. Alana, welcome back to Smart Money. Thanks for having me. So first off, set the record straight for us. Is life insurance considered an investment? And how does it differ from a 401k?

And Alana, are there any types of life insurance policies that do grow like an investment account? I'm thinking of the whole life insurance policy that my parents took out for me when I was really young that I've been paying for annually since my early 20s. There is a cash value account in it.

That's right. There was a big election last night and we may or may not have final results, but you won't hear them here because we're taping this on the Tuesday morning of Election Day.

So if the argument is that life insurance can earn interest from the stock market like a 401k does, then other than fees, why is it bad advice?

Do you have any advice for people who are getting investing or other personal finance advice off TikTok? How do you know what's good advice and what's not?

Now, as a reminder, GDP measures the output of all goods and services across the economy. And in part, we can pat ourselves on the back for the boost in that number. Consumer spending was up 3.7%, adjusted for inflation.

Meanwhile, I had to replace my brakes and my tires. Lucky me.

Two massive hurricanes, Helene and Milton, plus a significant labor strike at Boeing, all of which took people out of the employment picture. And just to update, those 33,000 striking workers at Boeing approved a new contract this week, so they'll be going back to work. Meanwhile, the unemployment rate stayed steady at 4.1%, with about 7 million people unemployed.

Yeah, the 12,000 jobs added to the economy was the slowest since December of 2020, just a few months into the pandemic. And finally, test this week, because there's not enough going on already. The Federal Reserve's Open Market Committee is meeting to talk interest rates. Everything we just mentioned around GDP and jobs will be fodder for any decisions around lowering the federal funds rate.

There is speculation among economists and other market watchers that we'll see a quarter point cut following the big half point cut in September. But you never know until you hear it from the chair himself. So we'll have more on that in next week's episode.

Today's episode was produced by Tess and myself and edited by Rick Vanderkneife.

And with that said, until next time, turn to the nerds.

Yeah, this falls under the category of don't believe everything you read, watch, or hear just because someone has a big following.

And I'm Anna Helhosky.

He said on Truth Social that the reason for those threats are due to the rise in fentanyl smuggling.

In 2018, Trump levied tariffs ranging from 10% to 50% on goods mostly imported from China. That includes solar panels, washing machines, steel, and aluminum. President Joe Biden also expanded some of those tariffs. Back in May, he increased tariffs on steel and aluminum, semiconductors, electric vehicles, batteries, medical equipment, and solar cells.

One thing I want to note as well is that any new tariffs would be added to the tariffs that already exist. So as you said, Sean, tariffs are nothing new, but it's the scope of Trump's plans that have some economists concerned.

Yeah, they do. But I want to step back and consider how that stuff is made and distributed. In other words, the supply chain. The U.S. is not siloed, as in we don't make everything here that we consume and we don't consume everything that we make.

The supply chain is global, and that means we have a network of companies across the world that supply not just completed goods that you buy, like a car, but the raw materials and components used to make that car, too.

Ah, so now it's time for the washing machine example. In 2018, while Trump was first president, he enacted a 20% tariff on all imported washing machines, and that increased to 50% later in the year. Researchers and economists at the University of Chicago and the Federal Reserve analyzed the effects of those tariffs and found that, as a result, the price of washers rose by nearly 12%.

And dryers also rose by the same amount, even though there was no tariff on dryers. That's because the two are usually sold together. So overall, it was an increase of about $92 in 2018.

I've seen some economists on the left, the center, and the right who all seem to say the same thing. Trump's tariffs don't make sense from an economic standpoint. And it's likely to fuel inflation as costs are passed on to U.S. consumers.

That's right. And we'll explain President-elect Donald Trump's big plans for enacting new tariffs once he steps back in the Oval Office in January. We touched on Trump's tariff plans during our election series in October and in our post-election episode on November 13th. So feel free to check those out. Sean, why don't you kick us off with an explanation of what tariffs are?

There's one other element that I mentioned before, and that's the threat of retaliatory tariffs, which would mean the U.S. exports would cost more as well.

All right, so there's a lot to unpack. First off, yes, economists say that tariffs will raise revenue. The Tax Foundation says that a 10% universal tariff would raise $2 trillion, while a 20% universal tariff would raise $3.3 trillion.

But the revenue raised by those tariffs wouldn't offset the revenue losses that we'd see if the expiring provisions of the 2017 Tax Cuts and Jobs Act are made permanent. There's some other context that's important. Tariffs haven't been an important source of federal revenue, according to the budget lab at Yale University.

In fiscal year 2023, the US collected just $80 billion in net customers' duties. That's about 2% of total federal revenue in that period.

Yes and no. The U.S. doesn't have the capacity to produce everything that the country needs. As I said before, the U.S. is part of a global economy, so manufacturers at home still rely on imports from other countries as part of production. A 2019 paper by the Federal Reserve Board that analyzed the effect of Trump's 2018 tariffs on the U.S.

manufacturing sector found that import tariffs could protect some U.S. manufacturers from foreign competition. But it also said that any gains are offset by increased costs that could hurt U.S. manufacturers' ability to compete. The Federal Reserve Board even found that Trump's 2018 tariffs led to a, quote, relative reduction in manufacturing employment as well as increases in producer prices.

This is tricky because, as you said, you have to make a fair number of assumptions to make a decision like that. But the main assumption is that Trump does indeed enact most or all of the tariffs that he has said that he will. That's what remains unclear and likely will remain unclear until he's officially president again.

Sean, I work a nerd wallet. Of course not. I'm a saver at all times and never spend money on anything. Just kidding. I got some deals on skincare for me, toys for my friend's kids, and the same two flannel shirts that I buy for my dad annually. How about you, Sean?

Oh, yes.

And a lot of us were doing that shopping online, even before Cyber Monday. MasterCard says online sales last Friday shot up almost 15%. In-store sales, by contrast, rose just 0.7%.

Hey, never enough sneaks in the closet. Or maybe boots for the storms that hit the Midwest over the weekend.

Sean, with Thanksgiving behind us, it's time to turn to thoughts of stockings hung by the chimney with care and hopes that a Santa Claus rally might bestow itself upon the stock market.

Yeah, it looked at the Dow Jones industrial averages since the index was created back in May of 1896. It found that if you look at the two months of November and December, the index boasts an average return of 2.6%. Looking at two-month periods across the year, the average is just 1.2%.

Oh, definitely. Work hard, play hard, love hard, you know, bumper sticker philosophy.

Save more than you spend?

So here's why tariffs are in the discourse right now. Trump has promised to levy all kinds of new tariffs when he's president again, including 10% to 20% across the board tariffs on all imported goods, up to 60% tariffs on goods imported from China, and 100% to 200% tariffs on automobiles produced in Mexico.

If I had to live on that, then I guess I could. Unfortunately, only 37% of respondents to the research said that they feel financially successful. But a solid majority, 58%, say they believe it's possible to attain that success during their lifetimes.

Oh, become or stay a regular listener to Smart Money.

Today's episode was produced by Tess Vigeland and myself and edited by Rick Vanderkneife.

And with that said, until next time, turn to the nerds.

Then last week, Trump also said he would levy a 25% tariff on all imports from Canada and Mexico. Those are the top two exporters of goods to the United States. He also promised to levy a 10% tariff above any additional tariffs on China. They're the third biggest exporter of goods to the United States.

In 2011, at the tail end of the Great Recession, S&P Global Ratings lowered the U.S. 's rating to AA plus from AAA. And in 2023, Fitch issued the same downgrade to AA plus. A lower credit rating from Moody's signals that the U.S. government is at bigger risk of default.

They all have to do with multiple macroeconomic factors, but in all three cases, the debt limit has been a major factor in the decisions. The debt limit is the amount of money the government can borrow in order to meet its legal obligations, as in funding programs that have already been approved by Congress. Right now, the government is in danger of running out of money to meet those obligations.

Back in January, the Treasury said it would need to take extraordinary measures so the U.S. could continue to pay for those programs. And that includes things like Social Security, Medicare, military salaries, tax refunds, and interest on the national debt. If the government doesn't lift the debt ceiling, it could run out of money and then default.

Yeah, bad to say the least. A default could be disastrous for the national and world economies. A default that lasts longer than a few days could result in a sell-off of U.S. debt, money market funds selling out, suspension of federal benefits, higher interest rates, tanking stock markets, delayed tax refunds.

On the individual level, it could result in higher interest rates and tightening credit requirements. And biggest of all, a default would trigger a recession that could domino to the rest of the world. So you can see why even nearing a default worries credit ratings agencies. The U.S. government has never defaulted beyond a very brief technical glitch in 1979, but it has come close to it.

In 2011, negotiations over the debt limit dragged on, and it led to the S&P downgrading the U.S. credit rating. Again, in 2023, the government narrowly avoided a fall after months of negotiations, and that led to the Fitch downgrade. Is the debt limit issue the reason Moody's downgraded the U.S. credit limit? It's definitely related, but it's not the only reason. Since 1917, the U.S.

held a perfect credit rating for Moody's, so the one-notch downgrade is a big shift. And that said, the U.S. credit rating is still considered stable, which means it's not dire. But the Moody's action still demonstrates that confidence in the U.S. economy's trajectory has diminished.

In its explanation, Moody's laid out its concerns, including an increase in debt over the last decade and the growing interest payments eating up government revenue. Now over to the debt ceiling. The House GOP's recently passed budget includes a $4 trillion debt ceiling increase.

If approved by the Senate and signed by the president, that could very temporarily stave off another near crisis for about a year and a half, according to the Center on Budget and Policy Priorities. That's because the budget also contains policies that would worsen the deficit, including increased spending for things like defense and lower revenue due to big tax cuts.

Moody's specifically flagged expectations for the next 10 years that show flat growth and higher deficits. I asked our resident economist, Elizabeth Renter, her views on the downgrade, and she said that to Moody's, quote, the situation has reached a tipping point where Moody's believes U.S. economic strengths no longer outweigh its weaknesses.

So to your original question, debt ceiling negotiations are related to Moody's decision, but it's looking at the nation's broader financial stability, including overall debt and interest.

I did, but I'm no investing expert. So I'm bringing in NerdWallet investing writer Sam Taub to talk more about that. Hey, Sam, thanks for helping out.

Sam, what are the most immediate investment implications of the Moody's downgrade? I'm assuming the biggest impact was on treasury bonds.

And what about other investments like foreign bonds or stocks? How are they responding to this downgrade?

What does the downgrade mean for the government or companies borrowing costs? And how might that affect investors down the line?

And how should long-term investors think about risk after a downgrade? Are there still safe yield opportunities?

All right, Sam, do you have any other advice to investors who might be feeling a little nervous right now?

All right. Thanks for explaining all that, Sam.

Hey, Anna. Hey, Sean and Elizabeth. Yeah, so Moody's, one of the big credit rating agencies, downgraded the U.S. rating from AAA to AA1. Now, on face value, that sounds pretty far removed from our everyday lives, right? But there are implications for the broader economy that can have ripple effects on our financial lives, especially when it comes to investing.

Before we get to that, can you talk more about the rating system and why it matters? Sure. So the U.S. credit rating evaluates the government's ability to pay its debts. It's set by three major credit rating agencies, Fitch Ratings, S&P Global Ratings, and Moody's Investors Services. Now, Moody's was the last holdout of the three top credit rating agencies to downgrade the U.S. rating.

The timeline for recessions have been anywhere from two months to several years. Now, the recession during the COVID lockdown in spring 2020 only lasted two months, and that was the shortest one on record. Now, the longest recession ever was actually after the Civil War, and it lasted more than five years. Next would be the Great Depression, which lasted from 1929 to 1938.

So since 1948, which we can call the modern era, there have been 12 recessions, and most of those recessions lasted just one year. But there were a few that lasted for two, including the Great Recession, which kicked off in 2007 and ended in 2009. So it's important to remember that economic declines begin before a recession is officially declared.

So things are shaky before it's technically a recession. Now, some recessions are mild and they end quickly. With others, the bounce back takes longer, so the effects can linger even after it's technically over.

Yeah, you're right, Elizabeth. The economy is still generally okay, but there are some recent economic indicators and general mood that has consumers concerned and experts raising red flags. There's just still so much uncertainty. I'll get into those specific signs in a minute, but something telling happened earlier this month that didn't exactly quell fears.

In an interview with Fox News on March 9th, President Trump wouldn't deny the possibility of a recession when he was asked.

What are the economists saying, though? Economists are pretty much aligned. Right now, there's certainly a higher risk of recession than, say, last year, but they're watching and waiting. And on March 10th, former Treasury Secretary Larry Summers posted on X that he was projecting close to a 50-50 chance of a recession in 2025.

And the UCLA Anderson forecast put the nation on a recession watch and said that if Trump's promised policies on trade, deportations, and workforce reductions are fully enacted, it could trigger a recession in the next year or two. And also last week, Federal Reserve Chair Jerome Powell said that the chance of an upcoming recession had risen, but the probability is still not high.

A few things are happening. Consumer sentiment is down on a month-over-month basis for the first time in nearly two years. And then forecasts of GDP for the first quarter of the year, that's gross domestic product, which represents economic growth, are negative, which would be the first time that GDP declined since the first half of 2022.

Inflation is certainly down from where it was, but prices are still elevated, especially for rent and everyday goods like eggs, which we've talked about before. Now, these are just early signs, but even if the data doesn't fully signal, yes, we are headed toward a downturn, the mood has already shifted that direction. Consumer sentiment has taken a dive since the start of the year.

Surveys that feed the major indexes show that the majority of concern is around price increases due to tariffs, as well as other uncertainty surrounding mass layoffs of federal workers. And Trump's policies are also influencing markets. Earlier this month, stocks sank to the lowest levels of the year, erasing all of the gains the markets had made since Trump's election to office.

But on Monday, when Trump walked back some of his tariff plans, the markets rebounded. So there's a lot of volatility there.

Yeah, that's a good question. So let's start with interest rates. The Federal Reserve often lowers interest rates to stimulate the economy. The federal funds rate impacts interest rates for things like mortgages, auto loans, and credit cards. One thing that we also see affected by rates are treasury bonds.

Now, during a recession, if interest rates drop, bond prices increase while bond yields decrease, which makes bonds less attractive for investors to purchase. As for prices, home prices generally go down during a recession since people aren't making a big purchase like that. But historically speaking, that also doesn't always happen.

And things like food prices are volatile, and there are a lot of factors that influence prices, so it's not clear what would happen during a recession. Is there anything people can do to prepare for a recession, and should they? Like death and taxes, there will always be another recession coming. It's inevitable. What we don't know is when the next one will hit.

So there are some ways to prepare your finances. Our first recommendation is to make a spending plan that reduces your must-haves, which will give you more wiggle room in the future, especially if bad economic times hit. And you need to reduce spending due to something like a job loss.

An emergency fund is also crucial to start building if you haven't already. That could mean finding ways to make extra money, putting away more money from your paycheck by increasing automatic transfers, and see if you can switch to a high-yield savings account. What you're trying to do is have a plan B waiting and ready to go if necessary.

You'll need to be able to meet your monthly expenses plus payoff debt.

You may need to lean on credit more to cover expenses if you don't have savings built up. So it's not a bad idea to set up access to additional credit that you can tap if you need to. Homeowners may be able to set up a home equity line of credit, or if you already have a HELOC, then try to replace it with one that has a higher limit.

Now, when it comes to investing, it's hard to see beyond market drops, but you can think about the long term. Don't look at the value of your portfolio every day. And remember that the market historically has been able to recover. And you should still devote what you can to retirement savings. It never hurts to be prepared. That's right.

Hey, so the short version is no, maybe, and it's not a bad idea.

So we are not in a recession right now. The traditional definition is, quote, a significant decline in economic activity spread across the economy lasting more than a few months. In simpler terms, growth stops and the economy begins to shrink.

The National Bureau of Economic Research officially determines and dates recessions, and they look at a range of economic indicators, including economic growth, income, inflation, unemployment, manufacturing, consumer spending, and retail sales.

Glad to be here, although I don't have great news to share. Because if you think eggs are spendy now, just wait. The Department of Agriculture expects prices to increase another 20% in 2025.

Right. Prices aren't just high at the grocery store. Restaurants who buy their eggs at wholesale rates are seeing their costs skyrocket too.

Exactly. And meanwhile, consumers are already seeing more than price increases on the shelves. Grocers like Costco, Trader Joe's, and Kroger are even limiting how many cartons of eggs can be purchased at one time. I have a feeling we'll see other purveyors limiting egg sales. And here in New York City, there is one corner store that's selling Lucy eggs. That is a trio of eggs rather than a dozen.

You're right, bird flu isn't new, and it's impacted egg costs since 2022. The previous high for a dozen eggs was $4.82 in January 2023. Prices have dropped since then, before steadily creeping up over the last year. The big spike was, as you mentioned, quite recent. So what's happening now is bird flu is spreading at some of the worst rates we've seen.

We've lost more hens in the last five months than in all of 2022. It's bad out there. All of this means that there are more chickens being depopulated and fewer eggs coming to market.

Exactly. And bird flu is hitting every single state. Data from the Centers for Disease Control in January showed more than 1,500 outbreaks since January 2022. And more than 162 million birds of all kinds have been affected. That's a lot of birds. So Ana, is it impacting all types of chicken eggs? Yeah, that's a good question.

Without getting too much in the weeds, there are different types of eggs and they're priced differently based on grading, location, and whether or not they're organic. So your conventional white egg comes from caged chickens and those are commodity eggs. When we talk about average egg prices, those are commodity eggs.

The next level up are cage-free eggs. And that doesn't mean chickens are running around outside. They're still inside, but they can stretch their wings and walk around. Then you have free-range eggs, which are laid by hens who are outside and have a bit of a larger space to move. And then pasture-raised eggs are laid by hens who roam even more freely.

Those are likely to be your most expensive eggs.

Yeah, that is happening in some places, and it seems strange, but it actually makes sense. Conventional eggs are factory farmed in massive plants, and that's a far cry from the bucolic hen houses that we'd all like to imagine our eggs coming from. So when a single hen gets sick in one of these plants, it threatens far more chickens than in cage-free or free-range or pasture-range farms.

That's not to say specialty egg-laying chickens are insulated from avian flu. In fact, chickens that produce specialty eggs are actually more susceptible to the disease because they're in direct contact with other birds and potentially outside wildlife. The difference is those farms are much smaller, so fewer birds overall are impacted.

Well, farms are testing chickens regularly. And when H5N1 is found, those chickens are culled or depopulated within 24 hours, which are nicer sounding ways to say selectively killed. I won't go into what that actually entails because this is a family show.

Well, when birds need to be killed due to disease, poultry producers are compensated by the federal government. The USDA says that policy is critical to incentivize farms to report outbreaks and then reduce spreading. The USDA doesn't pay for the birds that die from the flu itself, though, just the hens that are culled.

Yeah, the National Economic Council and the USDA are planning to use, quote, enhanced biosecurity measures and medication, end quote, to control the spread. There's also conditional approval by the USDA for an avian flu vaccine, which is generally backed by the poultry and dairy industry.

So in the midst of shrinking the size of the federal government workforce, the U.S. Department of Agriculture accidentally fired multiple employees who were working on response to the avian flu outbreak. Last week, the USDA said it was able to rehire those workers.

And the mass layoffs at the Food and Drug Administration's Food Division also prompted the food safety chief, Jim Jones, to resign in protest.

So that leads to recalls. And when a recall happens, then you've got bare shelves.

It sure does. But right now, as the markets are volatile and there are mounting concerns about the U.S. economy, something kind of strange is happening. The value of the dollar is falling and investors are selling U.S. assets. Any idea why? It's uncertainty, really. There are two main causes of that uncertainty among investors. The first is Trump's trade policies, i.e.

his wide-reaching tariffs, which have escalated a trade war. And the main partner fighting back is China. And it's an economic powerhouse, so there are a lot of financial implications for global trade. And that makes investors highly concerned about how that's going to play out.

And the other causes of uncertainty, which are not unrelated to Trump's trade war, are some of the recent shaky data about consumer sentiment and forecasts for the U.S. economy, like growth, unemployment, and inflation. And they're not exactly inspiring confidence with investors.

Yeah, so its value is measured in two ways, at home and abroad. Domestically, the dollar value is its purchasing power, which is tied to prices and inflation in the U.S. Purchasing power is just what your money can buy. So when prices increase, the purchasing power goes down and vice versa. Now, at the international level, the dollar's value is measured against the strength of other currencies.

You know when you travel internationally and you exchange your U.S. dollars for the euro, for example, and the amount you get back in euros isn't exactly the same face value as your dollar amount that you put in. So we look at the exchange rate. If the dollar rises compared to another currency, that means the dollar value is strengthening.

But if the exchange rate for the dollar goes down compared to another currency, that means the dollar value is weakening.

We can tell by the dollar index, and that compares the value of the U.S. dollar to a basket of six other key global currencies, including the euro, the Japanese yen, the British pound, the Canadian dollar, the Swedish krona, and the Swiss franc. And those currencies are weighted according to its reach or share. By far, the euro comprises the largest share.

Now, the value of the dollar index, displayed as USDX in markets, will rise and fall based on those domestic and international measurements that I talked about. It's basically supply and demand at home and abroad. Can you talk more about what factors impact supply and demand? For some background, the U.S. dollar was once backed by gold, but that changed in 1971 under Nixon.

Now it's a fiat currency, meaning that because the U.S. government says it's legal tender, it's legitimate. But its actual market value is not determined by the government, but either by factors that influence supply and demand. Now, the first, as you might expect, are international trade policy and the overall geopolitical climate. The U.S.

has instituted protectionist trade policies in the last few months, and as a result, our biggest trade partners have responded in kind. And restrictive trade policies tend to cause volatility in investment markets. Now, as I mentioned before, usually the dollar value increases during volatile times since it's considered a safe haven. But when the economy of the U.S.

itself is unstable, investors may opt to sell off U.S. assets like treasury bonds, and that weakens the dollar.

Yes, that's a big part of it. In stable economic periods, the dollar tends to have greater value. The health of the economy, as we know, is a mix of policy and economic data indicators. First is monetary policy, which is set by the Federal Reserve's Federal Open Markets Committee. The FOMC sets interest rates, which impact the dollar value.

Demand for the dollar goes up when interest rates are high, since high interest rates are more desirable to investors. but lower interest rates create less demand for the dollar, which means the value goes down. Now, other economic indicators like consumer spending and inflation influence market sentiment as well as consumer sentiment and economic forecasts.

All of the above will impact investor assessment and expectations. Positive sentiment leads to more investment in the U.S. economy, and that could increase the dollar value. Right now, the economy is technically doing okay, but there is a lot of fear and uncertainty about the direction it's heading.

What does that mean for people and what can they do? When the dollar weakens, its value does too, which means your dollar won't go as far as it once did. When purchasing power goes down, goods and services are more expensive for you, me, and everyone else in the U.S., So people are going to want to keep an eye on prices and potentially adjust their budgets, find ways to cut back on spending, etc.

It's the usual advice for dealing with inflation that consumers have had to do over the last few years. That said, domestic goods that don't rely on imports may not increase in price due to tariffs. It depends what supply chains that companies are part of. And one last thing, a weaker dollar can, typically, make U.S. goods cheaper for consumers in other countries and ease the trade deficit.

But with the current trade war, that's far from a sure thing.

International travel will also get more expensive for Americans because you won't be getting as favorable an exchange rate. And that'll obviously vary from country to country. If you are planning a trip abroad, keep in mind that your dollar isn't going to go as far as it used to. And that means in local currency, everything from hotels and transportation to transportation

food and gifts for friends back home are going to cost more. But again, it'll really depend on where you go. The dollar is still strong in places with lower costs of living. Does the dollar's strength impact investments? Definitely. Investments in U.S. assets like stocks and bonds may decline because the dollar won't be as appealing anymore.

Foreign investors can get more for their money outside U.S. markets. If you invest, you may want to diversify your portfolio to include other international assets.

Hey, Sean.

So the U.S. dollar is usually considered a safe haven when the market is volatile or when investors are concerned about the economy.

What are some of the signs that stagflation is happening in the economy?

And how does stagflation affect consumers?

One unofficial measure of stagflation is the misery index.

Right.

So when was the most recent instance where stagflation was a concern? And what were the worrying conditions then?

What's the difference between the stagflation era in the 70s through the early 80s versus now?

How do you solve a problem like stagflation? What tools does the government have?

Okay, so right now, based on the key factors that economists usually assess, inflation, growth, and unemployment, is it safe to say that stagflation isn't happening right now?

Is there anything that people can do to prepare for stagflation if that is in fact where we're heading?

Hey, Elizabeth. To learn more about stagflation and what's happening with inflation right now, we're joined today by my news colleague, Taryn Phaneuf, who tracks all things prices and inflation. Welcome, Taryn. Hi, Anna. Thanks for having me. So first off, what is stagflation and how is it different from regular inflation?

So something we've talked about frequently is the disconnect between how people feel and what data says, especially when it comes to the economy. Can you give us an overview about how personal experience tends to shape perception about the economy and, in this case, our relationship with work?

Now, specifically about data, can you give an overview of how the labor market has behaved over the last few years in terms of the data that we've seen?

Now let's talk about labor sentiment. How optimistic are people about the labor market?

Got it. So here's a hypothetical scenario. Say a worker loses their job and they haven't been able to come back from that easily, maybe in terms of part-time versus full-time work or their income. It's safe to say that their perception is probably the labor market is bad. So if they hear that unemployment has been stable, that doesn't really mesh with their personal experience. Is that right?

All right, here's another one. Of these three factors, data, vibes, or personal experiences, what tends to weigh more heavily when it comes to sentiment?

Fair enough. Let's get to the latest NerdWallet survey conducted by Harris Poll. Now, just to note, it was conducted January 2nd through January 6th. Elizabeth, what do the results say about pay satisfaction?

Got it. How about job seekers?

Speaking of job seeking, what do the survey results show about how actively people are looking for work right now?

Now, I know you and I haven't been on the job hunt in quite some time, but I don't remember it as a particularly enjoyable activity. What are some of the negative experiences that those surveyed talked about?

Now, you mentioned something about how things have changed. We've seen a huge shift in how technology has played a role in hiring, like automation and artificial intelligence. But how do workers actually feel about those changes?

All right, are there any other big takeaways from the survey that were notable in terms of people's perceptions about the current labor market?

Now, last week we had the most recent jobs report come out. I'm hoping you can sum up some of the big takeaways from it. Where are we headed?

Elizabeth Renter, thanks so much for joining us today.

Yeah, that's right. And the disconnect continues. So I'm joined by NerdWallet economist, Elizabeth Renter. Welcome back, Elizabeth.

There has, Sean. And that's why an article that I read last week in Politico grabbed my attention. The author argues that people's negative feelings about the economy were actually spot on. and that the government's stats on unemployment, wages, and growth were wrong.

So for today's episode, I spoke with that very author, Eugene Ludwig, chair of the Ludwig Institute for Shared Economic Prosperity, who also served as the U.S. Comptroller of the Currency during the Clinton administration. Eugene Ludwig, welcome to Smart Money.

In your article for Politico, you say that you're skeptical that the government's measurements of things like unemployment and wage growth are capturing the realities of the economy. So before we get into what your team of researchers found, I'm curious what led you to dig into the divide between what stats show and what the economic, for lack of a better word, vibe seemed to be.

So all that led you to assemble a team of researchers who found that for some 20 years, voter perception was, quote, more reflective of reality than the incumbent statistics. That's quite a statement to make. Can you explain what your team found was accurate and inaccurate in the data?

So you wrote in your piece that, quote, those living in more modest circumstances have endured at least 20 years of setbacks. And the last four years did not turn things around enough for the lower 60 percent of American income earners, end quote.

So if public opinion is a reliable gauge of objective economic conditions and most of the public has suffered 20 years of setbacks, then I was curious why Gallup's economic index was much higher during the first Trump administration than that is after the Great Recession and before the pandemic, than it had been in 2004.

And if we've seen a 20-year period of economic decline, wouldn't we expect economic confidence to have been lower toward the end of that period than it was at the beginning of that period?

So in your article, you make another pretty startling claim. If you adjust the unemployment stats, about one in four are functionally unemployed in the U.S. Can you explain that a bit?

Aren't the measurements that you're talking about something kind of distinct from unemployment? Part-time workers have jobs, and so do full-time workers who earn low salaries.

Now, let's dig in a little bit about part-time work. The number of Americans working part-time because they can't find full-time work is near historic lows, and that's despite the U.S. population being historically high. Census Bureau data allows for respondents to give a reason for their work status, and the majority of those who work part-time do so by choice. That's what they say.

So I'm looking at two recent periods. Federal data measuring involuntary part-time work show that there were more involuntary part-time workers in December 2019 than in November 2024. And yet public approval of the economy was higher in December 2019 than it was in November 2024. So what's the explanation for why voters like the economy in December 2019 versus November 2024?

And about wages, in your article, you say that data shows the median wage is just under $62,000 annually. But then if you include part-time workers and unemployed job seekers, the median wage is about $52,300 annually. So that would mean that the median worker actually earns 16% less than the stats would indicate.

And as you said, the Consumer Price Index, that's the CPI, which tracks all the costs of goods and services in the economy, isn't telling the whole story of inflation. Can you talk a little bit more about that?

So when it comes to perception, is the disconnect between stats and how people feel really more about inflation than anything else rather than the actual stats that the government is putting out there?

Overall, you say something needs to change to give people a more realistic perception of the US economy. What does that change look like to you?

All right, Eugene Ludwig, thank you so much for joining us today.

Thanks, Sean.

Sure. So just to be clear, there are tons of ways of financing a home renovation. Right now, though, we are talking about different ways of doing it by leveraging your home equity. And if you are talking about something that's on that six-figure scale, that's the kind of borrowing you're really looking to probably do, right? Clearly, $150,000, you're not going to put on a credit card.

For that much money to a personal loan, the interest rate probably would not be at all in your favor. But in terms of these three options, so we've got cash out refi, we've got home equity loan, and then home equity line of credit, we can just say HELOC. Cash out refinance, I can tell you right now, there's a high likelihood it will be not on the table.

And that's because of where mortgage rates are. So if you bought a couple years ago, there's a good chance that today mortgage rates are higher than when you bought it. So with a cash out refinance, you're refinancing the home. So you're getting an entirely new mortgage. That means a new everything, new term, new interest rate, all of it.

You take out a loan for more than the home is worth, and then you get the difference in cash at closing between the home's value and how much you still own on the mortgage. So that's kind of where your cash out is coming from.

So when we're in an environment where interest rates are really low, this is appealing to people because they can get cash out and at the same time, they're lowering their interest rate, right? But when interest rates have gone up, one, no one's like looking to increase their interest rate, but increasing your interest rate on an even larger loan is kind of like you're just making bad worse there.

So for a lot of people, cash out refi is not going to be an option. And again, you know, that's going to depend what the interest rate on your primary mortgage is. But kind of broadly right now, cash out refi is just not going to make sense for a ton of people. Yeah, I'm not positive what our mortgage interest rate is, but I want to say it's like 6.9 just for reference, I think.

That's not terribly far off the kind of rates we're seeing right now. Something else to consider also is that cash out refis generally have higher interest rates than if you were to just do, say, a rate and term refinance. Because it's that much larger of a loan for the mortgage lender, it's a little more risky. They're going to reflect that in the interest rate you're offered.

So really, unless it's a low rate environment, cash out refi is probably not it.

HELOCs and home equity loans have some similarities, have some differences. One big similarity, though, that fits into what I was just talking about is that both of them are types of second mortgages. So it is a separate loan from your current mortgage. That means if there's anything you don't want to touch about your current mortgage, interest rate, term, whatever it is, you don't have to.

This is just a completely separate loan. That said, each option is pretty different. So home equity loans are pretty straightforward. You just borrow an amount. You get that amount as a lump sum at closing. That's the whole thing. It's got a fixed interest rate that you can pay over as much as 30 years. So you've got this monthly payment. You're just paying it.

It's more or less how most loans work, right? You borrow the money and then you pay it back. Where home equity loans get tricky is that relatively few lenders offer them relative to other home equity borrowing options. Thinking about the dozens of lenders that we review and research at NerdWallet, Cash-out refinance, I would say, is by far the most common.

Most lenders that are offering refi offer you a cash-out option. Keylock comes in second, and then home equity loan is like a distant third. So if there's interest in going down that path, it might take a little bit more research to find lenders that are actively offering home equity loans. So HELOCs are more common, but HELOCs are also kind of more complicated.

So with a home equity line of credit, it's a line of credit, right? So it's a little bit like a credit card in that you have your total dollar amount that you can borrow up to, but you don't have to borrow that dollar amount. You kind of borrow the money individually. as you need it to do the different things.

So that can be really helpful for something like a renovation where, like you said, you have an idea of how much you hope it will cost, but other costs might come up. You also might need the money at different times. So with a HELOC, you're taking the money out as you need it. And then because of that, you're also only paying interest on what you've actually borrowed.

So with a home equity loan, since you've borrowed the whole thing right at the beginning, you are paying interest on the whole thing the whole time. With a HELOC, you're paying interest on what you've spent out of it. The downside is that most HELOCs are adjustable rate. And so that means that the interest rate changes constantly. Pretty regularly, it's going to change along with the prime rate.

So people who have HELOCs get really into what the Federal Reserve is doing and other kinds of wonky interest rates, stuff like that, because suddenly you're very conscious of interest rates going up or down. There are some different tricks you can do with a HELOC. Some lenders will allow you to convert part of it to a fixed rate. But in general, it gets a little bit wonky, a little bit complex.

That said, HELOC is often a really good option for home renovation just because of that flexibility. You can usually borrow from the HELOC for like a 10-year period before you go into all the repayment.

That certainly would be one option. Personally, for me, I am generally an advocate of paying extra principal if that's something that you're able to do. The way that mortgages work, there's this thing called amortization. So at the beginning of the loan, you're paying a lot more toward interest than you are toward principal. And then as the loan progresses, those reverse.

So any amount that you can pay extra directly to the principal each month can be really helpful. And it can also be really satisfying because after a while, you can look at the amortization calendar and see that you've literally cut years off the mortgage. So that's something I personally have enjoyed with paying extra principal is feeling like, hey, I'm literally taking bites out of this mortgage.

The other thing to consider is, again, the home value thing. So if you were to apply for a home equity loan or for a HELOC, the lender would want an appraisal of the home. It'll cost money, as appraisals always do. It'll be a few hundred dollars. But again, that will let you know what the home is actually worth right now in your current market with the updates that you've made.

And so that can be really helpful in terms of giving you more that you could borrow from.

There are a lot of emotions involved in that, right? And so really that is one where, you know, you can look at the numbers and say, okay, this is what we might make if we sold this house. So this is what we would have to work with in terms of a home buying budget for our next home.

But there are also all of these other like intangibles that you're going to have to kind of mentally almost put a price on and decide which among those factors you really value the most.

I think it really depends on the scope of the renovation or the scope of the repair. Another thing to consider is your timeline. So Irene is working with this nice timeline of, okay, we want to do this, but this isn't something where we need to do it immediately. When I bought my house, which... Very much a fixer-upper. Cannot emphasize enough how fixer-upper this home was.

I knew that the roof needed to be replaced. I knew this was going to come up. I was really hoping the roof could just make it like one year before I needed to do that. But before I had even moved in, I started seeing stains on the bedroom ceiling that told me that the roof... Yes, that told me that the roof was leaking. So that's something where...

Like something like home equity borrowing was not even an option. It just simply would have taken too long. With a cash out refinance, you're looking at like a typical loan closing time, roughly the same as you would be for a mortgage. With stuff like HELOCs, you will see some lenders like emphasizing how quickly they can close on HELOC for you. But I needed that roof like today.

So I ended up taking a personal loan to take care of that just because I really needed the money that immediately. But because it was like a five-figure borrow, putting it on a card was not going to work for me. So sometimes there are things like that where, you know, something external could push your timeline one way or another, and then that's going to be a really deciding factor.

Well, an ADU is an amazing goal to have. That's definitely a fun extra and that's really helpful context. So since I am a mortgages nerd, is it okay if I ask you a couple of questions about the mortgage?

One is, do you know what kind of home loan you have? I do not. Do you want me to go ask my husband really quick? Oh my goodness. No, no, no. You do not need to do that. If you don't know, it is most likely that you have a conventional loan. That's just basically a normal mortgage.

Okay. So basically conventional loan. And since you bought the home just two years ago, do you remember how much of a down payment you made in terms of a percentage of the purchase price?

That makes sense. So in terms of equity, our best guess based on what you said is that You have not a ton of equity, but given that you've described that you are in California, you've got this amazing location, this and that. Clearly, if you bought a home in the past couple of years, you're very aware that the real estate market there is...

They're very much alive, very vibrant, very much a seller's market. Prices, home values have been going up. So it is possible that if you got the home appraised now, that it's going to appraise for higher than what you bought it for. Also because you did the renovations on it, right? Bringing it up to date. And simply if home values have appreciated in your area.

So you might have more equity than you initially might seem to have. And that kind of leads into... the obvious question of, okay, so we have all these amazing home renovation goals. How are you thinking about funding them?

Well, because what constitutes an official made-in-America product is up to the Federal Trade Commission, and it has been for decades. In 1997, the FTC provided some guidance for companies to use the made-in-USA label. The standard is that all or virtually all of a product advertised as made-in-the-USA must be made in the U.S.,

A company doesn't have to disclose if their product is made in the U.S., but if it wants to label it made in the U.S., then it must follow the all or virtually all standard laid out by the FTC.

So virtually all means that a product manufactured in the U.S. could still use foreign imports as part of the production process. Many American companies with manufacturing in the U.S. will still rely on global supply chains to complete products. Crayola is a really good example of this. Its corporate headquarters is in Pennsylvania, and it also has manufacturing facilities there and in Mexico.

Like many U.S.-based companies, Crayola is not operating fully independent of global supply chains. And for that reason, tariffs present a challenge for so many U.S. companies. And what are some of those challenges? Well, it means U.S.-based companies will face import costs for components that they require from foreign countries. And they're likely to pass those extra costs along to U.S.

consumers, at least in part, if not fully. But many of these products likely can't be made entirely in the U.S. right now, so there's not much choice they have there. A car is a really great example. Huge auto companies are based in the U.S., Ford, General Motors, and Stellantis. And they may assemble domestically, but assembly is the final step in the manufacturing process.

It takes something like 30,000 parts to make a car. So somewhere in that sourcing, producing and shipping processes are going to be non-American goods. And every time those parts cross borders, they'll face tariffs. So not only are U.S. cars not really 100% made in the U.S., they're likely to get more expensive the longer tariffs are in place. Pharmaceuticals are another example. A U.S.

company may produce a finished product, say a bottle of pills, in the U.S., but its active pharmaceutical ingredients, or APIs, are crucial to finishing it. Most of those APIs are going to come from China, and those APIs are currently subject to tariffs. So it's likely that the prices of drugs that include foreign-sourced components will increase.

Some companies may still find it cheaper to produce in lower-cost countries rather than return fully to the U.S., even with tariffs increasing shipping costs. That said, investment in U.S. manufacturing is certainly happening. The U.S.

Census Bureau tracks manufacturing construction spending, and its recent report released on May 1st shows that spending in March 2025 was 3.7% higher than a year ago. It's generally been on a steady incline since 2011 at the tail end of the Great Recession. But companies that are investing in U.S. manufacturing can't get up and running in a day.

So even if tariffs prompt companies to reshore, there will be a lag before they can get those factories built, hire workers and get production running. So it'll take time for those newly U.S. made products to hit the shelves. In the meantime, it can take some digging to figure out if something that claims to be made in America actually is. And it's not always obvious.

But to a lot of consumers, most, I'd wager, the origin of a product doesn't necessarily matter. I'm curious if it's something that either of you actually think about while you're shopping.

Sort of the same. I think the only thing that I think about is in the kitchen. And by that, I mean anything that comes in contact with food or drink. So several places where things like plates and mugs are often manufactured, they can have more lax rules when it comes to lead, toxins, or heavy metals and ceramics. And I'd love to find Made in America in that case.

But when I was last buying new dishware, it was really hard. The selection was just really limited. So to find what I wanted, I had to look elsewhere. I have plates made in Portugal, glassware from France, mugs made in the US. But if I wanted to buy those plates or glassware now, they'd probably be more expensive because of exchange rates and tariffs.

So I'd probably look a little bit harder if I needed some new stuff to find something Made in America. Of course, if the price was right.

Yeah, exactly. Bigger companies that source from other countries may be facing higher prices to import, but it's still maybe cheaper to get those products and materials elsewhere. Now, something that's made in America, even if it's 100% source and manufactured in the U.S., might not actually save you money. Even with tariffs in the supply chain mix, Made in America isn't always cheaper.

And those products may not be higher quality than something that's imported either. It really depends on what you're buying, what the products are made of, etc. The bottom line is always shop around.

It can take work to figure out if something that claims to be made in America actually is 100% made in America, but, you know, labels help. So if you pick something up in a store, there's often a made in X country listed on the label. If that maker is following the rules, then made in the U.S. should mean most, if not all, of the product is made here.

There are also directories online that'll list companies that advertise U.S. made goods. But if you're buying something online, look at the product specifications to see where it's sourced. This was an example as I was doing some research. I'm looking for a cast iron pan right now. And I looked at Allclad first. It's a really big company and their products are made in the U.S.,

except not all of their products are. Its stainless steel pans are made 100% in Pennsylvania, but its cast iron pans are made in Vietnam. And to be clear, I love my other all-clad pans, and they're not hiding the fact that their cast iron skillet is made in Vietnam. It's right there in the product description.

But if you're a shopper who is in the market for a cast iron pan, and it really matters to you to have that made fully in the US, then you might look elsewhere. It is always gonna depend on your personal preferences and what works for your budget.

Thanks, Sean and Elizabeth. We've talked a lot over the last few months about how tariffs can impact prices, and that's got me thinking about products that are made in America. People certainly like the idea of made in the US.

A November 2024 poll conducted by Morning Consult on behalf of the Alliance for American Manufacturing showed that 60% of respondents made the effort to buy made in America products over the previous 12 months. and 82% of Americans would buy more made in America products if large retailers made them more available.

Now, the Alliance for American Manufacturing has its pony in this race, but let's assume that this overwhelming desire for homegrown products is true. I've looked, and it can be a challenge to find goods that are actually made in the U.S. Why is that so difficult, Anna?

Yeah, Elizabeth, there has been a lot of tit for tat, but these are some of the main points. Some of Trump's promised 25% tariffs on Mexico and Canada have gone into effect. And an additional 10% tariff has also been levied on Chinese goods, bringing the total added tariff to 20%. But Trump soon made an exemption, a one-month reprieve to the auto industry from the 25% tariffs on import purchases.

And then he walked back some of the Canada and Mexico tariffs by making an additional exemption for any imported products that are included in the 2020 free trade deal known as the United States-Mexico-Canada Agreement. And that's estimated to be around 50% of Mexican imports and 38% of Canadian imports. That pause will be in effect until April 2nd.

Now, yesterday, 25% tariffs on steel and aluminum went into effect, and there are no countries exempt from that. And that prompted the European Union and Canada to respond with countermeasures of their own.

They're mainly punitive, meaning that Trump is blaming Mexico and Canada for not curbing drug trafficking into the United States. But there's an economic side to it, too. He also claims that tariffs would entice companies to bring more manufacturing back to the U.S.

Unsurprisingly, it's not good. There have been retaliatory tariffs from Canada as well as China. Mexico is planning retaliatory tariffs but have pushed those back until the pause ends.

It's unclear exactly what will happen with the existing tariffs, but Trump has threatened additional ones, including unspecified tariffs on foreign cars as well as agricultural products. So basically, we've just entered a trade war, and we know those usually lead to all kinds of economic impacts, but namely higher prices for consumers.

Today, I'm talking with two NerdWallet personal finance experts on some of the ways shoppers can navigate the uncertainty. Kim Palmer and Amanda Barroso, welcome to Smart Money.

So, Kim, let's start with some of the categories of goods that are likely to be impacted by the tariffs.

And are there products that are more vulnerable to price hikes than others?

So it's not just foreign goods that will cost more, right? Even if it says made in the U.S., it could still get more expensive?

So I'm curious about this. Is there any point when companies can change their prices? Say you buy a couch online that's going to ship from China. Hypothetically, if a new tariff was imposed, could a company change its price after you already bought it to accommodate for that new tariff?

All right. So now the big question, what can consumers do?

Yeah, that doesn't seem like a great strategy. Thanks, Kim. Let's turn over to you, Amanda. Now, Kim mentioned that groceries are likely to get more expensive. Can you talk a little bit about what people can do specifically when it comes to managing grocery price increases?

What did you find?

No, that's great advice. I have about four packages of chicken stock currently sitting in my pantry that I absolutely do not need that many. Same here. Kim and Amanda, thanks again for joining us. Thank you. Thanks for having us.

Hey, Sean. Hey, Elizabeth.

Yeah, that's right. So to recap, the CFPB is an independent government agency and it oversees all aspects of consumer finance. That includes banks, lenders and other financial institutions. And it was created in the aftermath of the 2008 financial crisis and Great Recession. So in the 13 years since its founding, the Bureau has recouped $19.7 billion for consumers through enforcement actions.

And as a result of the CFPB's enforcement work, some 205 million consumers have been eligible to receive relief. So the CFPB has been good for consumers overall, which is what has made recent actions so confounding.

Last week, Russell Vogt was confirmed to lead the Office of Management and Budget and and was named acting director of the CFPB. Shortly after that, the so-called Department of Government Efficiency, or DOGE, gained access to CFPB headquarters and its computer systems. Later that day, Elon Musk, the billionaire that's leading Doge, posted on his social platform X, quote, CFPB RIP.

Since then, Musk has also reportedly deleted the CFPB's X page and the CFPB's website's homepage reads 404, page not found.

Chuck, thank you for joining us on Smart Money.

So to start off, I'm hoping that you can tell us some of the big accomplishments of the CFPB since its inception.

It seems pretty clear that the CFPB is objectively helpful for consumers. So what are the criticisms of the CFPB from this administration?

During the Biden administration, the CFPB had issued some really huge reforms and made some wins that were related to junk fees, overdraft fees, medical debt on credit reports, privacy protection, payday lending, and buy now pay later.

What I'm wondering is where recent actions by the Trump administration leave those new rules, especially those that haven't gone into effect yet, like the medical debt on credit reports.

And one thing that you mentioned were all of those lawsuits that the CFPB has brought on behalf of consumers. About a month ago, it filed a suit against Capital One that alleged that it misled customers about savings accounts rates, for example. What happens to those lawsuits?

Right, and there are a lot of current orders to pay fines. Would those still be enforced?

So without the CFPB being there, let's say, to oversee large financial institutions, where does that leave consumers? We didn't have a CFPB before 2011. What are some of the risks of not having a government watchdog?

Yeah. One of the primary roles of the CFPB has been receiving and assessing complaints from consumers. 6.8 million complaints have been submitted since the CFPB start. So with it on ice, is there anyone to lodge complaints with at this point?

Okay.

The agency was created by Congress, so I'd assume that it would take an act of Congress to eliminate it entirely. But does it matter at this point if the Trump administration is dismantling it down to bare bones?

Chuck Bell, thank you so much for your time today.

There are a lot of moving pieces, but today let's zero in on one of them. On March 26th, Trump announced that he would add a 25% tariff on finished cars that are imported into the United States. That tariff is now in effect. And an additional 25% tariff will go into effect on auto parts no later than May 3rd.

I have some nagging questions about auto tariffs, so I'm hoping Shannon Bradley, an auto writer here at NerdWallet, can answer some of them. Hey, Shannon.

I'm hoping you can start out by talking about car market prices over the last few years up to now.

Shannon, what did the auto tariffs specifically include?

Why is Trump targeting automobiles specifically?

And what's the response been like from the big three auto manufacturers?

Now, almost half of all vehicles sold in the U.S. are imported. The top suppliers of imported cars are, in descending order, Mexico, Japan, South Korea, Canada, and Germany. Can you give an example of how a tariff might work on a finished vehicle that's imported from one of these countries?

An analysis by S&P Global Mobility projected that 25% tariffs on imported vehicles from Mexico or Canada could increase the average $25,000 price of a car by $6,250. Does that seem accurate from your reporting? Are there any other projections out there?

What kind of effects on vehicles can consumers expect, and how quickly are dealerships expected to start increasing prices? As in, how long will it take to work its way through the production chain?

What about used cars? Could the tariffs somehow affect those? Are used cars imported from other countries? And will there be more demand for used cars that are already in the U.S. ?

Does it also seem likely that there'll be a surge in demand over the next few weeks that could also increase prices?

Hey, Sean. Well, frankly, my anxiety is at a 10 right now with the back and forth nature of these tariff proclamations. I can also say as someone closely tracking the tariffs that the information coming out of the White House is changing too quickly to keep up.

So there's still uncertainty ahead. Trump has ordered tariffs, then pulled them back time and again. Then again, this one might stick. So the big question is, should people buy a car now?

Thanks for walking us through that, Shannon.

It's been chaotic, to say the least, and it's producing a lot of uncertainty for the public, for businesses, the markets and within the government. And just remember, we haven't even begun to see the economic effects settle in.

I am referring mainly to the lag in data. What is it and how does it shape economists' perception?

All right, so we've had a few pieces of data trickle out in the last few weeks. If you put them together, what story are they telling?

Now, about a month ago, we started to hear murmurings that GDP for the first quarter could be negative. Can you talk a little bit about how GDP has behaved over the last few years and what last week's data means for the economy?

Now, are we continuing to see softening in employment? Is the labor market cooling? Is it normalizing? What's happening there?

We got fresh inflation data last week, and the core PCE increased by 2.3% in the past 12 months. Now, for those who don't know, core PCE is a measure of prices for goods and services minus volatile food and energy. And it's the Federal Reserve's preferred indicator of inflation. Elizabeth, is inflation still coming down compared to previous months or are we in sticky territory?

Let's shift over to consumer sentiment. Now, that's a measure of how people feel about the economy or the vibes. We've seen some seriously low figures in the past couple of readings. Last week, the Conference Board released its Consumer Confidence Indexes, and its Expectations Index fell to the lowest level in nearly 14 years.

Now, that index measures consumers' short-term outlook for income, business, and labor market conditions. Whenever the expectations index falls below a threshold of 80, it signals a recession may be ahead. The index for the past three months had been well below 80. What's worrying consumers right now?

Now, as you mentioned, the big economic news story over the last three months has been President Trump's tariffs and the trade war that's increasingly heating up. But are we seeing the effects of those tariffs showing up in the data yet?

I'm going to open the hood up here a bit on how we do things at NerdWallet. Now, I've been keeping an eye on search traffic, as in how many people are typing the same search into Google. And it looks like there's a real uptick in people asking, are we in a recession? So are we or are we headed for one?

All right. Elizabeth, is there anything specific that you're keeping an eye on in the coming months? Anything you're watching that others might be overlooking?

Hey, Sean. Hey, Elizabeth. There is a lot of uncertainty when it comes to how the economy is actually doing. There's data, including recent stats on growth, unemployment, and inflation. And then there's how people feel about the economy and how it's affecting their actions.

And finally, any advice for people on how to navigate all the uncertainty right now?

Thank you for your help as always, Elizabeth.

Since the state of economy is looking a little blurry right now, I've asked NerdWallet's resident economist, Elizabeth Renter, to help create a clearer picture. Elizabeth, welcome back to Smart Money. Hey, thanks for having me, Anna. I'm hoping you can first talk a little about why there's some uncertainty about how the economy is doing at this particular moment.

Hey. So, yeah, I did not look at my retirement account balances either this week.

Agreed. So I'm joined now by our fellow Nerve, Sam Taub, who covers all things investing and has a newsletter dedicated to it as well. Welcome, Sam.

We've been sort of joking about this, but would you agree that now is not the time to go wading into our retirement accounts, trying to figure out whether to make changes while the market is swinging this way and that?

All right, well, let's start with a topic you've addressed in your newsletter, which is private credit and how and whether regular investors should get in on it. So first, what is private credit?

Okay, still with you. And private credit is?

And private credit is growing really fast, right?

And why is that?

So is this what people call shadow banking?

So Sam, what are some ways that retail investors, that is regular people, can get a piece of this action, should they decide that they like some in their portfolios?

What are some pros and cons of getting into the private credit space?

And what about regulation? Is the lack of regulation something to worry about?

So one other question, Sam, what's going on with the markets now that President Trump's 25% tariffs on Mexican and Canadian goods have officially begun?

And what about those retaliatory tariffs?

But it seems like these tariffs aren't exactly a surprise. President Trump talked about them a lot on the campaign trail, and he's been pretty clear that he was going to do this since he got back into office. So why is the market just selling off now?

Is there still some possibility that we'll reach a deal and the markets will go back up?

All right, Sam Taub, thank you so much for your help today.

You got it, Sean.

Yeah, that's right. So President Trump has made a number of tariff promises, but only one has come to fruition so far. As of Tuesday, there is a 10% tariff on all goods from China. Now, there are existing tariffs on certain products from China, but this is an across the board tariff. And there's two other tariffs that Trump announced that have been delayed.

Those were much bigger, 25 percent on all goods from Mexico, 25 percent on all goods from Canada, except for energy exports, which would have a 10 percent tariff. Now, those were supposed to go into effect on February 4th, but implementation will be delayed for a month.

Trump has cited a few reasons for his tariffs. First off, they're punitive. He blames Canada and Mexico, and to a lesser extent China, for the influx of fentanyl and undocumented immigrants into the country. He also says he wants to bring U.S. manufacturing back home. But whether or not the tariffs lead to that kind of change is uncertain.

Yeah, China is enacting tariffs on the U.S., including a 15 percent tariff on certain natural gas products and a 10 percent tariff on about 80 different products, including crude oil, agricultural machinery and large engine car imports. And before the Canadian tariffs were paused, Prime Minister Justin Trudeau had announced 25% tariffs on billions of dollars of American goods.

Now, Trump has floated a number of other tariff plans on specific products, including steel, pharmaceuticals, copper, aluminum, computer chips, and semiconductors.

All in all, tariffs usually end up costing consumers more money. That means consumers will likely see higher prices on goods from China, and that'll extend to products from Mexico and Canada if those tariffs are enacted. And here's one other thing that I want to point out. Products made in the U.S. quite often require parts produced in other countries, like cars.

So even prices of made-in-USA goods could get more expensive for Americans.

Yeah, this is a particularly confusing one, but I'll try and give it a go. So let's go back to January 27th, when the Office of Management and Budget called for a pause of all federal spending, grants, and other financial assistance programs.

So that was the problem, really. There were some apparent exceptions, Medicare, Social Security, food assistance, and student loans. But it was completely unclear what would happen to other federal funding programs, including Medicaid. Suffice to say, the order produced a lot of chaos.

Fundamentally, it isn't clear whether the memo was legal, since the Constitution gives Congress the power to fund programs. And each year after it approves spending, funding for those programs are made legal obligations. So then what was the response, Ana? Well, the next day, a federal judge in D.C. granted an administrative stay that blocked the spending freeze for a few days.

Then on January 29th, the White House issued a memo rescinding the original order, which would have wrapped up this debacle until White House Press Secretary Carolyn Leavitt posted that the funding freeze was still in place. So here's where things stand.

Last Friday, a federal judge in Rhode Island granted a temporary restraining order blocking the pause, and then a similar restraining order was made by the D.C. judge. So to sum it all up, Trump's federal spending pause is paused while we wait for the legal system to work this thing out one way or the other.

Yeah, in the last week, Doge has seized information, begun dismantling departments, and fired federal employees. But there was one particular action that might especially concern Americans. On Friday, Musk was given access to the Treasury Department's federal payment system, which makes $6 trillion in federal payments to Americans. And I'll note that those payments are approved by Congress.

So those payments would include things like Social Security and Medicare benefits? Yeah, as well as tax refunds, payments to federal employees, payments to government contractors, and so on. In the process, a career Treasury official who oversaw the system was even placed on administrative leave after he refused to let Musk's associates access the system.

And by the way, that system holds a ton of personal information on millions of Americans.

Well, it means that Musk, who is neither an elected official or an appointee approved by Congress, can access everyone's personal information. And beyond that, the concern is if Doge can now block or change payments.

On the last day of January, CFPB Director Rohit Chopra was fired. And Scott Besson, who is the new Treasury Secretary, was named acting director.

Well, it seems that, unfortunately, the CFPB is not going to get much done anytime soon. Shortly after Besant was appointed, he quickly halted operations at the agency, saying the CFPB needed to align its actions with the new administration.

Yeah, that's an understatement, Sean. After dismantling the U.S. Agency for International Development, or USAID, and purging other departments, it looks like the U.S. Department of Education could be next.

And yet... And yet, Trump has long promised to get rid of the Education Department. And now there are reports that he may soon issue an executive order to dismantle it.

I mean, getting rid of the department entirely isn't up to a president. That power lies with Congress. Then again, Doge has shuttered USAID, so is it possible? Maybe. I would note that Doge has reportedly already gained access to internal ED systems, including people's financial aid information. So there's more personal information that Musk has access to.

Yeah, that's right. He could still fire more employees and divert department responsibilities, both financial and practical, to other federal agencies and probably to the states.

The majority of the federal government's earnings are made through tax revenue, and it spends money on programs and services for U.S. citizens. And like most debts, it has to pay the interest, too. As you mentioned, the total national debt right now is $36.2 trillion. But that's the kind of number that is so enormous that it practically loses its meaning. It feels too big to comprehend. Exactly.

And when you break down that number by how much money it owes per citizen, it's around $106,000. That's maybe a little bit easier to wrap your head around, but it's not the way that economists prefer to think about the national debt. Instead, they compare the total debt against economic growth, also known as gross domestic product, to find out what the nation's ability to repay our debt is.

In other words, our debt-to-GDP ratio. At the end of fiscal year 2024, the U.S. had a debt-to-GDP ratio of 123%, which means the debt we owe is roughly 123% of our annual growth.

So the national debt grows when the government spending and interest expenses grow faster than revenue can offset. Increased spending, along with tax cuts, have led to where we are now. Now, going way back in U.S. history, we've often seen national debt spikes during wars, the Revolutionary War, Civil War, World War I, and World War II.

In the last couple of decades, the government borrowed a significant amount during the Afghanistan and Iraq wars, as well as the 2008 recession. And the national debt has risen every year over the last 10 years. There are two big reasons why we arrived at that $36.2 trillion amount.

During the first Trump administration, we saw broad new tax cuts implemented, which meant that the federal government has been bringing in less tax revenue. And then spending increased significantly during the pandemic. From 2019 to 2021, spending increased 50%.

Its creditors own the debt. That includes the American public, foreign governments, other securities holders, and government agencies. The national debt is made up almost entirely of treasury securities. And there are two types. Marketable securities, so assets that can be bought and sold quickly, like bonds, bills, or company shares.

And non-marketable securities, financial securities that can't be easily sold, like U.S. savings bonds or shares of a private company. Now, those securities fall into two categories, publicly held debt and intra-governmental debt. And then how do those shake out? Roughly 80% of the national debt is publicly held debt. That's any federal debt held by entities outside the federal government.

The remaining 20% is intra-governmental debt, which is money that's essentially passed back and forth by government departments. As of now, the total outstanding national debt breaks down to $7.3 trillion in intergovernmental holdings and $28.9 trillion owned by the public.

Sure. So let's first break down publicly held debt. It's essentially money borrowed from outside lenders through financial markets. That includes the Federal Reserve System, mutual funds, state and local governments, depository institutions, pension funds, insurance companies, foreign countries, and other domestic holders.

borrow from the most? That'd be Japan at more than $1 trillion, followed by China and the U.K. And some other large debt holders are Luxembourg, the Cayman Islands, Belgium, and Canada. In recent decades, we've come to rely more on foreign lenders than we once did. Now, what about intra-governmental debt? So this isn't a traditional debt in the way a public debt is.

It's money that's shuffled around from one department to another in order to fund programs. But that money still needs to be tracked for the sake of accounting. An example of an intra-governmental debt is the largest one, the Social Security Old Age and Survivors Insurance Trust Fund. And that's one of the funds that the Social Security Administration uses to pay benefit recipients.

Earlier this year, the Congressional Budget Office projected that the national debt will increase by $23.9 trillion over the next 10 years. It also forecast that the federal budget deficit in fiscal year 2025 is on pace to grow by $1.9 trillion.

It doesn't really pay it off. It just manages the debt. And debt can be offset by revenue, so bringing in tax revenue and issuing treasury securities. If people cash in enough treasury securities that it exceeds the total number sold, that can bring down the debt too. Budget surpluses would also reduce the debt, but the U.S. hasn't had a surplus since the 90s during the Clinton administration.

Can you tell me why national debt matters? It matters because it affects the economy at large. It also influences consumer, company, and investor behaviors, and it guides policy decisions. When the national debt is high, individuals and companies may lose confidence in the economy, and that can impact how they invest and spend.

Declining confidence could also lead the Federal Reserve to increase interest rates or keep them high, which makes it more difficult for people to borrow. It could ultimately lead to lower economic growth, which, as I explained earlier, will make it even harder to manage the national debt. And if the U.S.

doesn't have the revenue it needs to offset more of the debt, then interest on the debt just grows, which could lead the U.S. to borrow more, increase taxes or cut spending on programs that people and businesses rely on. It's basically a negatively reinforcing cycle.

They're related, but not the same. Again, the national debt is composed of money that's currently borrowed by the government plus interest on that debt. Meanwhile, the debt ceiling is the total the government can borrow in order to meet its legal obligations. That means funding for things like Social Security, Medicare, military salaries, tax refunds, and interest on the national debt.

The debt ceiling, also known as the debt limit, is $36.1 trillion. And we hit that ceiling back in January. But the Treasury is now taking, quote, extraordinary measures to keep legal obligations funded. But we're hurtling toward potential calamity. The U.S. is expected to run out of the money to meet its obligations as soon as late May. Now, if we get to that point, the U.S.

could default on its debt. And default would be catastrophic. And if it went on long enough, would plunge the U.S., as well as the rest of the world, into a financial crisis. So Congress needs to act soon to avoid that default. I think we'll likely get deeper into this in a future episode.

It's kind of unbelievable, but let's start with what the national debt is, and then I'll explain how we got to where we are now. So the national debt is the sum total of all the money the United States government has borrowed but has not yet repaid. Like you and me, the government earns and spends money. But of course, its earning and spending is pretty different than ours.

As Elizabeth mentioned, it's a bit grim for debt holders right now. Keep in mind that there's always a lag when it comes to economic data, including consumer trends. With that said, the Federal Reserve Bank of New York's most recent household debt report shows that total household debt increased by $93 billion in the last quarter of 2024, to a total of $18.04 trillion.

It seems like borrowers are missing payments more often. Those with less disposable income or lower credit tend to be the borrowers who have more difficulty meeting payments. Delinquency payments tend to rise when people take on more debt than they can repay, when lenders loosen credit standards and extend credit to riskier borrowers, when inflation is high, and during economic downturns.

Again, since there are delays in data reporting, it's difficult to pinpoint exactly why delinquencies are happening, but usually it's due to a perfect storm situation.

Recent data from the Mortgage Bankers Association shows that delinquency rates on government housing loans, that's federal housing administration or FHA loans, as well as Department of Veteran Affair loans, outpaced late payments on conventional mortgages in the fourth quarter of last year. The report showed that delinquencies on conventional mortgages remained near historic lows.

Now, government loans like VA and FHA loans are available for people who most need it, including first-time homebuyers, seniors who own their homes, and people who are buying manufactured homes. All of those borrowers tend to have lower incomes or little savings for a down payment, and that means that they're less insulated from financial shocks.

The MBA report also says that more serious delinquencies, those at risk of default, are rising more with government loans than conventional as well.

It did. The NBA cited, once again, a perfect storm of pressures from inflation, lower personal savings, consumer debt, and higher taxes and insurance, among other factors.

Yeah, there have been some developments indeed, Sean. Student loan borrowers had a five-year respite from penalties if they didn't make payments. But now the federal government is ready to collect. Now, let's back up. In March 2020, student loan payments went on hiatus and didn't restart until October 2023. But the government continued to pause collections on unpaid bills.

But beginning in January of this year, federal student loan servicers, those are the companies that manage federal student loans, began reporting late payments to credit bureaus. The Education Department says that more than 5 million borrowers are in default, while 4 million are in late-stage delinquency.

The Federal Reserve Bank of New York projects that more than 9 million people will be reported to credit bureaus for late payments by the end of June. Now, here's the most recent bad news. Beginning May 5th, the Education Department is going to start involuntary collection. Which means student loan borrowers in default will see tax refunds and even Social Security payments reduced or withheld.

And beginning the summer, could see their wages garnished if they don't catch up with past payments due.

Some recent data from Fitch Ratings shows auto loan delinquencies are up to their highest rate in decades. And as we might expect, those with prime borrower scores are doing better than subprime. Now, that means that borrowers with higher credit scores aren't delinquent on their debts as much as those with lower scores. That's a pretty common trend when delinquencies rise.

One last one on a credit card debt.

The Federal Reserve reports that credit card delinquencies fell to record lows at the start of the pandemic, but quickly returned to pre-pandemic levels by the start of 2023. And it's been rising pretty steadily ever since. And the Fed expects that to continue. All right, we covered a lot of ground, but it pretty much all adds up to a bleak outlook for borrowers with financial insecurity.

Conditions could also be exacerbated, and even more borrowers could be at risk of delinquencies if prices rise due to tariffs, which economists expect. Now, I'll be keeping an eye on consumer behavior data as it trickles out in the next six months to a year, and we can circle back when the picture is clearer.

Sean, how should people generally prioritize which debt to pay off first if they can't make all of their payments on time?

And what should people who are in financial distress who may be considering taking out a higher interest loan to get creditors off their back do instead? Are there any good options?

Hey, Sean. Hey, Elizabeth. And after I run down what's happening with debt payments right now, I'm hoping, Sean, that you can put on your CFP hat to dispense some wisdom.