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In Los Angeles, I'm Congress. It is Tuesday today the 26th of May good as it always is.
The big economic data, the week, comes Thursday, the personal consumption, expenditures, price index courtesy of the Commerce Department. The Federal Reserve's preferred measure of
“inflation, as you know, on less than a till, chair, wash, decide to otherwise. The 12 regional”
Federal Reserve banks put out reports too, which today comes from the Chicago Fed with its national activity index. National activity it seems is mixed. Manufacturing looks not bad, personal consumption though, not great. Marketplace is just in hell, gets us going with what the heck that Chicago Fed's national activity index is and how the heck to read it. The Chicago Fed's national activity index sums up a bunch of indicators, covering different slices of the economy, including manufacturing
activity, which picked up an April. That's not surprising to us. Nancy Vandenhausen is lead economist at Oxford economics. She says there are a number of factors that are boosting manufacturing right now. One of them is last year's big tax and spending law. Another big factor is the AI build out,
“which has created demand for lots of inputs such as the computers and electronics.”
Manufacturing is also being propped up by businesses boosting their inventory levels. Vandenhausen says a lot of businesses inventories are too low right now. If inventories get too low, you're going to see some increase the sum manufacturing output to restore inventories on the part of businesses. On the negative side of the ledger, the Chicago Fed index also found that consumer spending has been slowing down. Nancy Chen is an economics professor at the University of Wisconsin.
He says consumer spending had been boosted by last year's tax cuts, but then consumers got slapped by the side effects of the mid-east war. So hired gasoline prices for sure. Sort of the uncertainty associated with the war. What that's done is that it's offset what we would have gotten from the tax cuts. The Chicago Fed index also found that employment slowed in April. Peter Orozum, the University of Iowa, says that's not necessarily a bad sign yet, considering that the labor market
overall is in pretty good shape. Put another way? There's plenty of consumer demand to justify the number of jobs that are currently in the U.S. economy. But that also means the health of the labor market depends on consumer demand. So signals that the consumer demand might be weakening is a little bit concerning. Especially since consumer demand has been keeping the U.S. economy strong over the last couple of years. I'm Justin Howe from Marketplace. Wall Street on this
Tuesday that feels like a Monday stop me if you've heard this one before. Text docs, baby. We'll have the details when we do the numbers. I'll tell you what, for all else that ale's this economy and it is not a short list as you know, this is a good time to be a wholesale club. BJs reported last week that quarterly revenue was up nearly 10% from a year ago. Sam's club beat expectations helped by strong gas sales.
This week Thursday we'll get the biggest of them all Costco. It of the more than 80 million paid
memberships worldwide and number of the keeps on growing. Thanks in part as Dana Lackerman is about to explain to the higher income customers who are still driving so very much of consumer spending right now. Michael Baker is a retail analyst with DA Davidson and a member of both Costco and BJs. I do try to spread it out a little bit and go to both both for personal and professional reasons.
Though if he finds himself heading out to shop well hungry,
huge fan of the doll 50 hotdog and Costco so that's a draw for lunch every two often.
Baker says the wholesale clubs, especially Costco, have long appealed to higher income consumers,
“because to get those bulk deals, you need to be able to spend in bulk.”
You do end up walking out of the clubs, having spent a lot of your budget. Recently, more and more higher income customers are opting to do that, says Brian Eshelman of Alex partners. It's been an ongoing trend, but I think it has been kind of heightened of late because of everything that's going on in the economy writ large. Put another way, says Neil Sanders of global data.
Inflation has been a recruiting sergeant for the wholesale clubs. Costco has seen its market share grow enormously out of the past five years or so, partly because they are attracting more affluent consumers into their mix.
To compete with the growing wholesalers, Sanders says retail brands like Walmart are also trying
to appeal to those higher income shoppers. They are making the experience a bit more bougie, they've got some high-end brands, more interesting products. Because, at the end of the day, Sanders says, "It doesn't matter whether you have a lot of money or little money,
most Americans love a bargain." And he says that is what the wholesale clubs offer, at least for shoppers who can afford an 80-pound wheel of Parmesan. That's a real Costco product, by the way. I'm Daniel Acrement for Marketplace. Pull the inflation to much money, chasing too few goods.
You're all familiar with that.
I'll assume. There's shrink-flation companies trying to get one over on consumers by putting less in a package, but keeping prices steady. Now meet climate-flation, and don't take it for me, take it from science and data. And McCourt wrote about it the other day from Bloomberg, and we're welcome to the program.
It's good to have you on. Thanks so much for having me.
“Take me back, would you, as you start this piece, to the summer of 2022 in Europe?”
The weather, and then the climate-flation that happened. Your listeners may remember there was a really bad heat wave that year, and it led to all kinds of issues throughout the European food supply. So we saw all of Harvest's getting damaged in Spain. We saw chickens getting really hot in the heat, and chicken production sort of taking a hit in the UK,
and they estimated for European food prices that raised those prices by about 0.7%. And then for overall inflation, it was about 0.3% increase. Now, there's a lot going on that year. There were a lot of other sources of inflation. People may remember Russian invasion of Ukraine.
Lots of other sources of inflation. But this was kind of a pretty substantive, you know, a fact to see from just a sort of a single summer heat wave. Can we talk actually more about that messiness? Because climate deniers will certainly look at, you know, the starticle and listen to this interview
and say, "No, no, no, you can't actually do it."
“And the fact is now that economists are really working diligently in some cases can actually make”
those connections. Yeah, and it's a really important field of study, and it's emerging because central banks are concerned about what the implications of climate change have for sort of their core mandate of price stability, right? They want to keep prices stable, and it is a challenging thing to do because there are so many
different sort of inputs into prices. And there's a lot of differences, especially when you look at a global level, when you're going to, you know, really get your arms around this problem. How do you kind of tease out some of the differences between countries, right? To each country has its own kind of CPI basket, and in some countries, food is a much
bigger portion of that basket, for instance, you know, you have things like recessions, there's a lot of things that can influence these numbers, right? The other things, so you mentioned central banks. The other things central banks worry a lot about is keeping inflation expectations anchored. And as you point out in this piece, people are more attuned to climate change,
maybe anticipating higher prices because of climate change. And as we know, inflation expectations can actually affect what prices do. Yeah, I'm really glad you raised this because, you know, as one, you know, economists of the central bank, I spoke to pointed out, you know, it almost may not matter if you have extreme weather events, you know, prices rise, but then, you know, the inflation cools down things kind of
settle down, it may not almost matter if people think climate change is going to cause
Price inflation, and then they start acting like that, and they start asking ...
That work and things like that, and then you get kind of the effect of climate inflation,
“even if initially the initial event was not, you know, super substantive.”
And also not for nothing, as inflation goes up so too to interest rates because central banks around the world try to control it, and so we all wind up paying more for money as it is. Right, we're talking about central banks being worried about this. What are the tools they have at their disposal? Interest rates, right? And when you start raising interest rates as a tool,
then do start harming the economic activity as well. If the economy is suffering already,
you don't want to add on top of that and make things worse. So there are some limits to like
what central banks may even be able to do with their existing tools. There's also a lot of other tools that not just central banks can think about, for instance, policy makers can think about, you know, what are ways to protect society more from climate change. And then there's adaptation. We know people are able to just to climate change and find ways to, you know, protect crops from the most extreme weather, let's say. But we don't know the total extent of how much adaptation is possible.
We don't know, can we protect ourselves from all of the climate inflation by, you know,
“making all, you know, taking all possible steps available to us?”
And the answer is we just don't know, right? We just don't know. We just don't know.
We're just don't know. And McCorch, she's a reporter, covers climate, and Blueberg, fascinating piece. I'm a thanks so much for your time. I appreciate it. Thank you. [ Music ] California and Texas are one-two on the list of the biggest state economies. And they're really the similarities and one need not digress, I think. Energy is our focus today. That when California
refineries are closing after years of slowing investment and tougher regulations and state goals for decarbonization. In Texas meanwhile, oil and gas are stronger than ever. Marketplaces Elizabeth Troval, those that compare and contrast during this historic energy shock.
“I mean, Blue coveralls touring Chevron's refinery in Pasadena, Texas, facility manager Alan Phillips”
points to a massive gray box and silverished tower. Well, we've got a large furnace here. He's showing me the heart of this refinery, the crew unit. You can definitely hear steam. What steam does we inject it to help separate the molecules out more cleanly? Here crude oil from West Texas is heated to 600 degrees and sent it to a tower that looks like a rocket ship. This tower is about 20 stories high. Inside that tower, as crude oil is heated,
fuels rise to different heights. Lower down, there's diesel towards the top is gasoline. Jetfield is about two thirds of the way up the tower. You can see the line that comes out and wraps around. Okay, so that tube that looks like a water slide coming off the tower. Jetfield will become something close to jetfield at this point. The ceiling needs to be further refined. That jetfield will help planes take off in cities like Atlanta and Philadelphia. And the gas
lean made here will be used to fuel cars, like Devmil Childries Blue Tacoma Childry. An analyst at S&P Global Energy is filling up at a gas station about 25 miles west of the Pasadena refinery. The average retail price in Texas right now is $4 a gallon for regular in California $6 and 15 cents quite a bit higher. He explains why fuel costs and refining looks different here in Texas compared to California. For one, California uses its own special gasoline. They aren't allowed to
use as much butane because of smog requirements. They have to blend in more expensive components and use specialized refineries. And California has much higher taxes on gas. And another reason fuel costs more. Now with the shutdown of two of the major refineries in California, they're more dependent on imports. Those imports come from Asia. Places that rely heavily on crude from the straight of our moves. And so the distance is greater, so the logistics of
the cost is also more expensive, right? You know, Texas, you know, the gasoline at this station probably came from 15 to 20 miles east of here at a refinery. But not all of California are paying more to fuel their vehicles. I asked Matthew Zerko so walk-ins and economists with UC Davis
To record his most recent visit to the charging station.
He's an EV driver and he bought the car with a deal for free charging for life. Even so,
“if he had paid 34 cents a kilowatt hour to charge, what of cost him? A equivalent to about $2.25”
cents a gallon. Much cheaper than gasoline. California is a leader in EV adoption, but the state's regulatory policies and decarbonization goals and other constraints have contributed to refinery shutdowns and higher fuel costs. Zerko so walk-ins and I talked more about these trade-offs on a video call. It's not a great time. I don't think it will be a better time in the future. He says in the next 10 to 15 years after many more Californians switched over to EVs.
A smaller market is going to be one that's going to sort of more sensitive to price spikes
“and potentially more volatile. He says people still drive and gasoline-fueled vehicles will”
be more exposed. Research would suggest that most likely those are going to be the people who are least able to afford the transition. While paying at the pump could get worse in California in Texas, abundant crude oil, fossil fuel-friendly policies and the strength of the state's refining industry are keeping prices more affordable. In Houston, I'm Elizabeth Troval from Marketplace. [Music]
Coming up, being on a bicycle for 10 years in Los Angeles, as my sole form of transportation.
“Dedication! Am I right? First though, let's do the numbers.”
Down industrial's down 118 today, 210 to 1% 50,461. Then as that added 312 points, that's 1 in 210 percent.
26,656 percent, 75 and 19. Should make a micron became the newest member of an exclusive club when its market value market capitalization, you might say, across the trillion dollar mark micron technology up 19 and 3/10 of 1% while you ask, "Hey, hi, yo, come on." In video, it's showing the trillion dollar club in 2023, gave up 2/10 of 1% AMD not yet in the club, but closer AMD up 7 and 8/10 of 1% today. Dan Hackerman reported on wholesale clubs for us.
Investors saw things bit differently than what an at-reporting did. BJ's wholesale club holdings. That's a mouthful. Plus 2% Walmart dipped about 1 and 4/10 of 1% bonds up. You'll learn the 10-year t-note down 4.49% of listening to market price. Support comes from Hellenin Law, Minnesota's trusted advocates for executives, employees, and whistleblowers for over 25 years dedicated to helping clients speak up and get justice.
Hellenin Law results that make a difference. Learn more at HALUE and ENLON.COM. The Everlane site of this deal, it's pretty easy to explain. The brand's popularity has been declining, and Suturita Kodali, a retail analyst at Forster, says it needed cash. They must have been desperate to sell. They must have been shopping themselves around, and this may have been the best offer they received. The deal is reported to be worth
$100 million. They say politics makes strange bedfellows that desperate retailers make strange bedfellows.
While Everlane was desperate to be saved, she is desperate to expand. The brand is trying to go public several times. Here in the U.S., also in London and Hong Kong.
It's run into regulatory problems, questions about its supply chain and labor...
Everlane, with its tagline, radical transparency, could help clean up Sheen's image.
“I think it would be marketing at this point. It's a way to cover up a lot.”
Jessica Ramirez is co-founder of the retail consulting firm, the Consumer Collective. So I think that something like this helps give them a positive light that they are trying, or maybe they're taking some of those strategies. Plus, Cheng Lu, who teaches retail merchandising strategy at the University of Delaware, says if Sheen wants to go public, it has to go global. "Sheen is known as a Chinese company, and under the current business or geopolitical environment,
she and definitely face a lot of scrutiny."
Now, Everlane is not Sheen's first foray into other brands.
It had already bought misguided a UK label. It formed a partnership with Forever 21.
“Lu thinks for Sheen, this is just the beginning.”
"It has the ambition to become bigger. Sheen's business model is evolving." Evolving from a single fast-fashioned website into a portfolio of brands, I'm Kristen Schwab for Marketplace. We had big box retail with Dan Ackerman. We had fast-fashioned and big business with Kristen, just now, but there are still places in this economy where you can shop local.
Here's today's installment of our series, "My Economy." My name is Idae. I am the founder of Right On Back Shop in the Murk Park, the Arts and Cultural Hub of Black Las Angeles, and we've been here for like a little over 10 years.
“The idea came from my being on a bicycle for 10 years in Los Angeles as my sole”
former transportation, and I got a massive urban sustainability. So this shop was literally the capstone project. And one of the things that I knew was that I wanted the capstone project that I presented to live, to be alive. I didn't want it to be just "Oh, it's a great idea." And then I go on doing some other thing. Yeah, here is where the magic happens. This is where we do the repairs.
What do you think? I see some air, man. I'm not getting the coach that I need, but her is like, yeah, right. There's one there that I like. This is... My money's going out more than it's coming in. Fortunately for us, one, I don't know how to like give up.
Like when I first started, I didn't have a job or, you know, I'm couch surfing.
And Uber had a program where you could rent a car for $200 a week. I did that for a very long time in order to make sure the rent was paid. That was not easy at all. COVID was devastating. Couldn't get bikes, right? Shipping at stop. And then when shipping started, everything just like double or triple, just
shipping. So like anything from overseas was crazy. And now with the tariff war that late, this present has been done and just affected everything too. So it's like, we feel it. We apply for grant and we got it. So we're doing a bike library program. Part two spent, they get a bike, they get a helmet, they get a lock and they get training on how to write safely in the streets. That's helped sustain the shop.
When we first started the program, we had a member that didn't have a job, it was looking
for work and was trying to get a job at L.A.X. Getting to L.A.X without a vehicle is no easy task. He got in the program, got an e-bike, was able to go to L.A.X on the bike for the interview, got the job, was able to go to work in home because he had a bicycle. That is where we are. That's a good story, huh?
On A.F., we found a ride on bike shop, he's in L.A.X Park, here in Los Angeles.
Whether you ride or walk or bus or bike, this series, much like this economy,
goes nowhere without you. So let us know what's happening,
which in marketplace.org/myconomy.
“This final note on the way out in which history continues to be cool. The Dow Jones industrial”
average turned 133 years old. Today 1896 Charles Dow is the guy who started it, no Jones back then.
Just 12 companies on day one, among them, American cotton oil, Chicago gas, national lead,
“Tennessee, coal and iron, and general electric GE by the way, the longest lived Dow component,”
got the boot in 2018. We covered that when we were there. Jordan Manji's a new Maharaj, whose Janet Winn, Olga Oxman, and Virginia K. Smith are the digital team. I'm Kai Rizdoll, we will see you tomorrow, everybody. Hi, I'm Morgan Sutn, host of Closal tabs from KQVD, where every week we reveal how the online world collides with everyday life. You don't know what's true or not, because you don't know
if AI was involved in it. So my first reaction was haha, this is so funny, and my next reaction
“was wait a minute, I'm a journalist, is this real? And I think we will see it to a streamer,”
president, maybe within our lifetimes. You can find Closal tabs wherever you listen to podcasts.
