Consumers were pessimistic before the war. Now what?

From American Public Media, this is Marketplace. [MUSIC]

“In Washington, I'm Kimberly Adams in for Kyrie Resdall.”

It's Monday, March 9th, good to have you along. It's been a little more than a week since the U.S. attacked Iran, starting a war in the Middle East.

And today, the oil markets finally seem to notice.

The price for a barrel of Brent Crude sword to over $100 before coming back down. We haven't seen this kind of shock to the system since Russia invaded Ukraine in 2022. To help explain what all this means for the American consumer and the broader economy, we called up Catherine Rampell at MSNow and the Bowlwork. We hear from her on the occasional Friday, Katherine.

Good to speak with you on Monday, a wild, wild Monday, hey. A wild Monday, thanks for having me, Kimberly. Yeah, so anybody who's driven by gas station last week will have already seen the gas prices are up. How much of the impact from the war is already reflected in those prices that we're seeing at the pump and how much worse are they going to get?

Well, it does depend obviously what happens with the oil and it has been a roller coaster in the last 24 hours, let's say, where, as you mentioned, oil had shot up. I think touching as high as $119 a barrel and it's now last, I had looked anyway. It was below 90 in part because of things that Donald Trump is saying. So, you can move markets, but at the very least, if there is a sustained disruption in the

“state of form, you should expect gas prices to continue rising and that's because at this point,”

the problem is not only that ships, tankers that would be carrying energy can't get through,

it's that the countries that are producing the oil are running out of places to store it because they can't ship it out. So, I had seen something earlier today suggesting that even if everything were to, you know, go back to normal today, right, if shipping lanes reopen and tankers could get through, it could take a couple of months before things actually normalize in terms of oil and natural gas

with that matter being able to get back into production and shift around the world. So, all of that suggests that there could be prolonged consequences at the pump and in other things that Americans buy, but again, lots of contingencies there,

depending on how long this thing lasts.

You know, I mentioned 2022 earlier when we saw that big hike in oil prices after Russia invaded Ukraine, but in 2022, unemployment was super duper low and right now our economy isn't looking quite as strong, especially that jobs report last Friday.

“Do you think that we're going to feel this price shock differently than we did in 2022?”

There's certainly a lot more fragility in the economy mentioned the job market is looking weaker where we've lost jobs in six to the last 12 months, something like that. So, there's weakness in the job market. We already have inflation still above target that was the case of course in 2022 as well, but it has been a while now, you know, so when you see a shock like this, there is the risk

that it becomes somewhat self-perpetuating that it's not just a one-time shock and that things go back to normal, but it feeds into higher inflation expectations. We haven't seen that yet to be clear, but that is something that presumably the Federal Reserve is worried about, and I have seen economic analysts today and over the weekend bringing back the dreaded R award, you know, the risk of recession precisely because there are these

frail fees in the economy, the one sector that seems to be doing well, that related to artificial intelligence and the data center built out and all of the economic activity related to that, is also a little bit iffy and there's a question of how much would it take to knock us off course. And certainly, you know, it's not a foregone conclusion, but having something like a big oil shock can disrupt the economy. I mean, it's already disrupting supply chains around the world,

we saw the knock-on consequences of something like that, most recently during COVID, and so there are a lot of potential ripple effects that we haven't felt yet that when you have, you know, not the greatest foundation for the economy could be troubling and could lead to greater pain. Yeah, you really lay this out in your piece in the bull work because there's a couple other

20% of the world's oil normally transit through the street of Farmoos on Iran Southern coast,

“but there's a lot of other stuff too. A huge portion of the world's fertilizer or at least”

feedstock for the world's fertilizer, which is used to grow crops. That also goes through the straight and that can lead to downstream higher cost or food prices. We're already theme crop prices, for example, fertilizer prices and crop prices for that matter. Get more expensive. Lots of other production happens in that area, so there's a lot of aluminum that is produced in cutter and several different aluminum smelters have had to shut down, at least partially or perhaps

entirely because they're not getting enough energy because liquified natural gas is no longer

able to transit. So there are these, again, knock on effects that happen that it's not just about oil, it's not really just an oil crisis. It's an everything crisis essentially because you have

“energy that is used to shifting around the world byproduct of oil production and refining,”

going to lots of other products and so you can see these these much broader effects. All over the economy, Katherine Rampell at MSNow and the Bull Work. Thanks so much, Katherine. Thanks, Emily. Like we were saying, just a wild, wild day in the markets. We'll have the details when we did the numbers. For many folks, this situation, a major war involving the US, Israel and Israel, anime, global oil prices, spiking, domestic gasoline prices, spiking, may feel a bit like

deja vu. All this happened back in 1973 during the Yom Kippur war and prices spiked again in 1979 after the Iranian Revolution. More than 50 years later, is the situation really analogous and are there lessons to be learned from the past? We gave Marketplace's Mitchell Hartman today's

“history assignment. Roll the clock back to 1973. Richard Nixon was president. The US was then”

far in a way the biggest economy in the world and says Princeton historian Julian Zellazar. This was a culture after World War II built around automobiles around highways around driving, news the bourbon homes which required a lot of heating and a lot of oil, most of it pumped and shipped from the Middle East, which suddenly becomes a very big problem when OPEC declares an oil

embargo on the US and other allies of Israel. This triggers the first round of an oil crisis where

Americans face long gas lines and high prices. There's a second crisis in 1979 when Iranian oil exports crater after Iran's Islamic Revolution. You can only buy gas there days, people are siphoning off gas from people's cars. There's just this era of desperation. There's also resolve to make the US economy less vulnerable by reducing our dependence on foreign oil. The government encourages more fuel efficiency and more oil exploration. Fast forward to now

says climate economist Gernot Wagner at Columbia Business School. The world moved from the US being the biggest oil importer to the US being the biggest oil exporter. But there's a catch. Even with massive new US oil fields, American businesses and consumers still paid the global market price. And yeah, those prices just shot up. Which means a prolonged war that keeps oil prices high could still create conditions similar to the oil crises of the 1970s, driving higher inflation

and stifling growth. I'm Mitchell Hartman for Marketplace. We got a new snapshot today of how the engines of this economy, consumers, are feeling about it. Or at least how they felt before the war. The New York Fed published its survey of consumer expectations for February this morning. The median expectation for inflation and where it's going to be one year from now, 3%. That's higher than the Fed's target and it's similar to what consumers were expecting

back in January. Views on the labor market were also relatively stable with consumers expecting their earnings to grow in the year ahead by about 2.5%. Marketplace's Daniel Acumen explains, "This kind of so-called soft data can have real impacts on the economy." The fate of this economy depends largely on how consumers behave, says Joanne Chu of the University of Michigan.

to do with their money. For instance, last year when the Trump administration signaled that

“tariffs were coming, consumers worried prices would rise. And we saw a surge of purchasing”

and durable than cars during that time. She says, "If that kind of demand surge last long enough, it can put upward pressure on prices and could make inflation a self-fulfill in prophecy." In February, consumers expected inflation to outpace wage growth by half a percentage point next year. But the survey was fielded just before the war in the Middle East began. It's effects should be apparent in next month's data, says Tuan Nguyen, an economist with RSM.

"Something like an increase in all prices or conflict in the Middle East, it is immediately going to impact consumers' expectations." In fact, consumers are feeling the impact already, says Kayla Brune, an economist with

morning consult, which collects daily sentiment data from consumers.

"They've gotten gas over the past week and they've already started to see higher prices. So just today we saw a drop in sentiment."

“We saw that after Russia invaded Ukraine and oil prices jumped,”

but the consumer reaction then was short-lived, says Joanne Chu of the University of Michigan. As the war continued, consumers began to think more about other factors in addition to the war informing their economic expectations. "She says the current war in the Middle East is still in its early days, so we don't yet know if the negative consumer reaction will persist.

I'm Daniel Akerman for Marketplace." Consumer expectations also shape how willing folks are to splurge on big and little purchases, like maybe the newest viral culinary craze. Take, for example, a Yam called Ube, with violet-colored Ube latte's pastries and even cocktails. According to the research firm data central, Ube appeared in three times as many restaurant

menus in 2025 compared to 2021. "I lane a paying road about America's obsession with Ube, and what it means for its supply chain in Bloomberg the other day." "Thanks for being here, I Lina." "Of course, thanks for having me."

"So tell me a little bit more about where and how Ube is grown." "Yeah, Ube is largely grown in the Philippines. They're one of the world's biggest producers, and they have been growing it for centuries, both for indigenous populations as well as for export, and now we're really seeing that global export market both to the U.S. and Europe a boom quite a bit."

"What's behind the growth right now?" "There's really two main factors that are driving the popularity,

and so the first one is obviously the color Ube's like a bright purple route,

“and then the other factor I think that has been driving it is just a broader interest in Asian”

foods and in Southeast Asian flavors, and when you're putting something like Ube into a sweet treat that tends to be an approachable way into a new cuisine." "How much capacity is there in the Philippines or even elsewhere to kind of expand production to catch up with this growing demand?" "I'm told that there's actually quite a bit of capacity to expand production in terms of

land in the Philippines, but really where they're struggling right now is actually being able to get more of the Ube crop into the ground. And so every single time you grow Ube, you basically have to save some of your old crops, but because a lot of the farms in the country are smaller operations, oftentimes they will sell the entire crop, and so the government has actually invested pretty heavily in encouraging farmers to replant, and in some provinces, the government has even

been buying back some of that raw Ube to ensure that there's enough for farmers to keep replanting and keep expanding production." "So because we are talking about Asia, I have to ask about tariffs. As inconsistent as they are, how are the tariffs affecting the Ube supply chain?" "Yeah, well a lot of the Filipino-based supply chain is absorbed domestically. I did speak to a

chocolate tier based in New York who mentioned that some of the suppliers have actually stopped selling to the U.S. entirely, and so he's been sort of circumventing that by just making more business trips to establish direct relationships with farmers or even bring back some of the Ube himself." "How much of this growth and global demand and increase in purchasing of Ube, especially these exports, how much of this is translating to the farmers themselves?"

"Yeah, Ube farmers are definitely in a good moment right now, and they're also

more of that gets back to farmers. And there has also been a push among producers to try to get a geographical indicator for their Ube, and that would also help protect their livelihoods, because it does seem that there is a bit of concern that eventually Ube production might shift to a larger country with more agricultural capital to scale up that crop." "I feel like there have been so many food fads over the years taking one culture's food and often kind of westernizing it

in a way that can affect even traditional consumers access to that food, and I'm thinking about things like "Kinwa" and "Macha, how is Ube fairing in this context?" "I understand it is that domestic supply is still pretty ample, and so most of the people I

“talk to were pretty happy to see Ube getting more recognition. I think the continual push there”

is just to make sure that the understanding of what it is isn't lost and that there continues to be a conversation about making sure that those profits do ultimately flow towards the farmer at end of the day. "Eilena Payne is a reporter for Bloomberg. Thanks so much, Eilena." "Of course, thank you again." Coming up. "That's the experience you're having today in a croaker, brand new store." "It's a whole new world, but first the numbers."

Market started the day way down because of all those factors. Katherine I were talking about at the top of the show, but ended up. The Dow Jones industrial average gained 239 points,

half a percent, to close at 47,740. The Nasdaq added 308 points, one in four, 10 percent,

“to finish at 22,695, and the S&P 500 picked up 55 points, eight tens of a percent,”

to end at 6795. Looking at some gas station stocks, Murphy USA lost four tens percent, the Lero Energy dropped three and nine tens, Philip 66 company fell one and eight tens. Bonds rose the yield on the 10-year t-note fell to 4.11 percent, and you are listening to Marketplace." Programming is supported by prescription landscape, serving commercial clients across the Twin Cities since 1980, with grounds care snowmanagement

parking lot services and seasonal decor. Learn more at rxlanscape.com. Programming is supported by stole Reeves, a leading U.S. corporate and litigation law firm providing sophisticated business clients high quality legal services with offices in seven states

“in Washington, DC. stole Reeves is a nationally recognized leader in project finance and natural”

resources industries. From deals and disputes to compliance and counseling, clients turn to stole Reeves for the most complex business challenges. Learn more at STOEL.com. This is Marketplace. I'm Kimberly Adams. Like Hethern's said earlier, oil is hardly the only commodity whose price has jumped as the

war in the Middle East enters its second week. The palm oil that makes your peanut butter smooth,

hit its highest price in more than a year, wheat is at its highest in almost two years, so it means in corner up too. And even though we don't get those crops from the Middle East, the war is connected to all of those price increases. Marketplace's Kaylee Wells explains. There are two factors pushing commodity prices up. One is the price of oil. When you have crude oil jumping, biofuels become much more attractive. And palm oil gets used

for a lot of biodiesel says David Ortega, who's a food economist at Michigan State University, and when palm oil gets more expensive, then have demand for vegetable oils increasing that leads to a rising prices. The other factor is fertilizer. Michael Deliberto teaches agricultural economics at Louisiana State University. The Middle East is a major production hub,

as well as a distribution hub for those fertilizers. Roughly a third of the global fertilizer trade

goes through the straight of Ormuz, which Iran has largely blocked. So fertilizer supplies down, demands the same. Perfect recipe for a price spike. That is really called that probably the war style for US producers. Because here in the United States, it's planting season. Right when farmers need fertilizer at the most. The good news is these price spikes aren't going to affect a grocery bill for now. Deliberto says only about 15% of the price you pay at the supermarket

storage, all of which require energy. If there's any impact on food inflation, it's largely

“going to be because of energy prices. Joe Glauber is former chief economist at USDA. He says”

the spike in oil that's making you heave big size at the gas station will hit grocery stores at some point. Transporting the goods trucking everywhere, the refrigeration, you know, just running electricity, all those things are tied because of the energy increases. Unlike the gas station, Glauber says it could take months for price spikes to show up at the supermarket. I'm Kaylee Wells from Marketplace. Staying on the food beat, more and more new grocery stores are popping up in

southern cities. That new construction is meeting pent-up demand after millions migrated to sun

belt states like Arizona and Texas over the last several years. Dallas Fort Worth is one of the most active markets at the moment and the competition to win over customers is fierce. Marketplaces are Elizabeth Troval reports. Walking through this expansive new croaker in North Fort Worth, there's not a cucumber or cereal box out of place. The super store opened last fall and has a higher end feel. Local coffee chain Paxi Beneficia is selling lattes just inside the

entrance near the fresh produce section. You can see that this is spacious A and it is well lit.

Bob Young helped develop this property for the real estate firm white cement. It's part of a wave

of new grocery store construction happening in Texas, concentrated in Dallas Fort Worth. The boom is following rapid population growth from the last five to ten years. Grocers like Hmart,

“HGB and Costco are building to meet that pent-up demand. Development jump can it be competitive?”

Yes. In Texas, the grocery wars are on. Rudy DePetro is President of Croaker, Texas. We have a strong competitive set here in DFW. Walmart, HGB, the Albertson's Group has you know, Tom Thumb, maybe the most competitive grocery retail dynamic in the country. He says they're running a new Texas playbook that leans into state pride. They're proud of the brands. They want to support the brands locally here. They're flavors that they desire are different.

And you can really feel the Texas in this new store. There's lots of Texas signage and products that give a local feel like t-shirts from the local high school teams. It reminds me and real estate developer Bob Young of one of Croaker's fiercest competitors, Texas's own HGB, which has such a dedicated customer base that when a new store comes to town, it's a big deal. And they have people camping out at night to go into their store. That's something you talk about customer loyalty.

He says the HGB vibe in this croaker is intentional. People that are close to winners are want to be a winner, watch what winners do. And that's the experience you're having today in a croaker brand new store. Grocers aspire to be like HGB, because its following in Texas is called like this. This sponge guy on TikTok recently commented on HGB's use of Texas iconography in their stores. The chips, Texas shaped, the cheese, Texas shaped. They even have Texas shaped

pasta because apparently your digestive system won't recognize carboyed rate unless it looks like a map of the Palendole. HGB declined to be interviewed for the story, but they're also expanding their North Texas footprint, directly across the street from this shiny new croaker, HGB owns a vacant lot. One day, they will likely compete directly for customers, like Sharon Anderson, who

“I talk to in a croaker parking lot. So HGB owns the property across the street. Do they do?”

Oh, come on, build it up, because I drive all the way over to the one over there off a galer. Yeah. Okay, so if that pops up, then you're going to probably not shop here. You would chop over there. It depends, it depends. I'd still hit it once in a while. And while these brochure rivalries may keep stores on their toes, it's customers like Anderson, who benefit.

No time for a final today, too much oil news. A mere Babawi, Caitlin Esch, John Gordon,

“Noya Carr, and Stephanie Seek are the Marketplace Editing staff. Kelly Silvera is the news director,”

and I'm Kimberly Adams. We'll see you tomorrow.

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