Will students be shut out of pricier grad programs?

This Marketplace Morning Report episode covers recent economic pressures on consumers from high energy prices, the collapse of Spirit Airlines amid a failed government bailout, and new federal limits on graduate student loans set to restrict access to higher education.

Consumer Spending and GDP Growth Under Inflation Pressure

U.S. GDP grew in the first quarter, but host Sabri Benishor questions how much reflects higher energy costs rather than real expansion, with oil at $110 a barrel and average gas at $4.46 a gallon. Economist Julia Coronado of Macro Policy Perspectives clarifies that real consumer spending did increase, though more slowly than last year. The gains stemmed almost entirely from larger tax refunds due to prior tax cuts, which effectively insulated purchasing power against elevated energy prices. Without those refunds—a one-time boost—consumers would have lost ground. Looking ahead, Coronado notes that post-refund season, sustained high gas prices tied to geopolitical tensions (like the situation with Iran) could erode affordability unless resolved soon. This dynamic complicates the Federal Reserve's interest rate decisions, pitting persistent inflation against potential growth slowdowns.