Marketplace - Consumer sentiment takes a tumble

Episode Date: August 17, 2026

Consumer spending fell in early August, according to preliminary results from the University of Michigan’s survey. July retail sales were down, and the average price of gas is nearing a record high for August. In today’s episode, we look at how consumers could be cutting discretionary spending as a result. Also, we’ll look at why China’s economy may be in trouble, the value of GDP as a statistic, fake business registrations in Colorado, Reddit joining the S&P 500, and the global plastics industry.Every story has an economic angle. Want some in your inbox? Subscribe to our daily or weekly newsletter.Marketplace is more than a radio show. Check out our original reporting and financial literacy content at marketplace.org — and consider making an investment in our future.Read the stories in today’s episode:Is the consumer engine of the economy starting to slow down?Is China's economy in trouble?Why we still use GDP to measure economic growthGetting weird mail? In Colorado, it could be business fraudPopular online forum Reddit is joining the S&P 500Middle East conflict raises U.S. plastic industry's sinking ship

It is a data kind of day. Today, ours, China's, and then how we measure things. From American public media, this is Marketplace. In Los Angeles, I'm Kai Rizdahl. It is Monday, today the 17th of August, good as it always is, to have you along, everybody. Well, here we are. Deep into summer, Labor Day sales are practically around the corner.

Back-to-school shopping is either happening, or done depending on when school starts, wherever you are. This is true. I saw a Halloween display at my local hardware store this weekend, and do not blink, because retailers are going to start hitting us with Black Friday and then holiday sales any day now. A passing familiarity with the way this economy works will tell you that the common theme through all of the above is the American consumer, how we're feeling, how we're doing,

what we're spending, and what we can afford. As we learned last week, consumer sentiment fell in the early part of the month for the first time in three months. Retail sales, we told you this, they were down in July. And oh, by the way, the average price of a gallon of regular glass, gas, rather, is $4.6. That's almost a record for this late in the year. So about those consumers and how they're doing? Here's Marketplace's Mitchell Hartman. A lot of economic warning signs were flashing red after the sharp pullback in

consumers retail spending in July, but points out Jeffrey Roach at LPL Financial. You know, this is one month report and you had pretty strong numbers throughout the year. However, Roach admits some categories of discretionary spending have started to weaken. Hotel occupancy rates, TSA throughput because travels a leading indicator for how consumers feel. The job market has also weakened, and wage gains have started to fall behind. overall inflation, says Joanne Schu, director of the University of Michigan surveys. Only 8% of consumers believe that their income growth is going to exceed inflation. That's really not very many people at all.

What we're seeing is that consumers are expecting to be squeezed. They're not anticipating anything catastrophic. And what that means going forward is probably that consumer spending doesn't fall off a cliff, but it doesn't rebound to stronger levels from earlier this year either. Dana Peterson is chief economist at the conference board. Consumers, yes, they are spending, but they're starting to spend less. And the things they are spending the most on are things that they need. And if they do spend on discretionary items, it's on the cheap.

The conference board asks consumers about their plans to buy stuff over the next six months. So in terms of big ticket items, like cars and furniture, that sort of thing, most people are saying maybe. And consumers are cutting their spending on discretionary services as the cost of more necessary ones, like medical care, insurance, and utilities, keeps rising. Streaming internet is pretty high on the services that people continue to spend on, whereas movies are lower. It costs more to take a family out, a family of four, to the movies.

It's like $100 at least. And she says that could be before you even hit. the popcorn and candy counter. I'm Mitchell Hartman for Marketplace. Wall Street today, unenthusiastic is a word one might use. We will have the details when we do the numbers. Okay, from one giant economy that's looking a little bit shaky,

that would be us, to the next. Data out today from the world's second largest economy, that would be China, shows things are slowing down there, especially when it comes to, wait for it, wait for it, consumers and their spending. Marketplace's Supreme Benshore has that one. Overall investment in the Chinese economy by one measure shrank by 6.7% in a year. We haven't seen anything like that outside of COVID.

Logan Wright is a partner at Rhodium Group and author of the upcoming book, Broken China. Household consumption appears to be weakening pretty significantly, and that reflects the weakness in China's employment and income growth at this point. Growth and income in China are very uneven, Wright says. They have been focused on advanced technologies, which are capital intensive. Great for robots, literally industrial robot production shot up 30% in a year, not as great for regular folks. Some of these economic problems are part of a long and painful hangover from China's

housing bubble, which is still weighing on people. Jennifer Lee is senior economist at BMO Capital Markets. Just like here, right? If you, if your home, which is your biggest asset, continues to lose value, you know, month after month after month, it's going to sort of continue to hurt your confidence. You know, it's like, you know what, do I really need to go out and spend more? Do I need to travel that much? The thing that inflated that housing bubble in the first place hasn't fully gone away. All the industrial capacity that blew up fueled by subsidies and cheap credit is still there. Sometimes on life support, but still there, says right, and it is still making stuff. and looking for somewhere to sell it. But there's no domestic demand. So you end up exporting at very, very low prices. China's exports have exploded 24% in a year, despite tariffs.

The reason that's a problem is China's a very, very large economy. Jay Shambaw is an economics professor at George Washington University. It's the largest manufacturing economy in the world. And if it is depending on the rest of the world for growth, that's something that starts to displace economic activity in other places. Cheap goods can help consumers around the world, but can also wipe out competing industries around the world. So China's exporting more goods, and with them, problems.

In New York, I'm Subrey Beneshaw for Marketplace. One way you measure the health of any given economy is buy its gross domestic product, GDP. GDP is not without its critics, though, which is why a column in Bloomberg opinion. opinion the other day caught my eye. The headline on the thing was why GDP is the greatest of all time of economic statistics. Alison Schrager had the byline. She is also a senior fellow at the Manhattan Institute. Ms. Schroger, welcome to the program. Good to have you on. Thanks for having me. So what is it that you like about GDP? No statistic is perfect. A statistic is by definition and estimate. It leaves some things out. But you know, it pretty much is a very good gauge of the

of an economy, if it's growing, if it's becoming more productive. And, you know, because it includes so many things, it's probably the most complete, incomplete economic statistic we have. All right. I'm going to dig in in a little bit, but I guess, and I probably should have started with this question. Why do you feel the need to defend it? You know, it's getting, there's, it's always been a lot of hate. And people have legitimate grights with it. It doesn't really account for inequality. It doesn't account for leisure. It doesn't account for a stay-at-home mom who does work very hard. But it's now also getting a lot more criticism from the right in J.D. Vance's book. He criticizes it for not accounting for the fact that strawberries are nicer in Japan.

Again, it's not perfect. And I think just as we're trying new economic policies that might sort of lower growth, I think we're going to see a lot more hate on GDP. But we have these consistent statistics that tell us how we're doing across time, how we compare another. countries, and that's going to be super important for accountability. Well, let's keep going with that accountability thing and the idea that we are now trying different economic policies, one of which, as you point out in this piece, are tariffs and the president's decisions to double and triple and quadruple, frankly, down on tariffs, that will lower economic growth.

And your point is that once those tariffs and those policies start to bite, GDP will be a mechanism by which voters can hold politicians accountable. Is that the deal? Yeah, I mean, to one extent, I mean, you, it's, They say, I think they said it in Poland when they're doing their economic reforms. You can break a thermometer, but you still have the fever. I mean, people are going to notice if their quality of life is going down, no matter what statistics we use. But this was an early indication about how our policies are doing.

And with policies like tariff or reduce trade in general, they not only show up immediately in terms of just less trade, which is, you know, net exports is a part of our GDP, but also productivity over the long run. there's also this idea that GDP doesn't necessarily, while it gives a very good macro picture, it doesn't tell you how any individual person or even group of people is doing, right? So it's sort of, there's a forest for the trees kind of thing here. Yeah, as I said, it's certainly not perfect. It doesn't sort of wouldn't account for sort of say discrimination in an economy. Of course, arguably discrimination does lower GDP too.

It doesn't account for inequality. You could have a very unequal economy, but if the top 1% is getting crazy rich that would potentially have high GDP too. It's not meant to do everything, but it does a pretty darn good job for what it does do. There is, of course, and you point this out in the piece, I guess the United Nations came up with some commission and, you know, came up with this new like 30-point measuring thing with four different groups. You don't like that? Too much data? What's the deal? Yeah, I mean, this is the problem. Every economy, every culture puts values on different things.

But what we need is something we can compare across all these different countries. ended up with, you know, this dashboard of dozens of different metrics. And that also allows politicians to pick and choose to say, hey, well, growth is down, but, you know, inequality is lower. Or, you know, we're less productive than other countries, but, you know, we have more leisure. So I think that sort of demonstrated the beauty of GDP, which is, it may be incomplete, but it is still near perfect. One imagines that since we've been doing a version of GDP, which used to be called GNP, we've been doing it since like 1930, whatever, one imagines it's reasonably safe. I think so. I think it is notable that, you know, it's getting hate on both sides now, but again, you know, politicians also hate to be held accountable.

Alison Schrager, senior fellow at the Manhattan Institute, also a columnist at Bloomberg opinion. Allison, thanks a lot for your time. I appreciate it. Thanks for having me. Expectations for most people, probably, when they go to their mailboxes every day, their actual USPS mailboxes, they're probably pretty low. There's maybe a couple of random advertising flyers, retail catalogs. somehow, still sometimes, a bill or two, sure, but also increasingly mail addressed to unfamiliar businesses. A mistake sometimes, but other times it's fraud. And in Colorado, it's a significant problem with a number of complaints about fake business registrations growing every single year. Lee Patterson reports now on the mysterious business mail turning up in Colorado's mailboxes.

Jared Taylor lives on a quiet suburban street in Longmont, a small city. city north of Denver, with his wife and kids and three dogs. How are you? How are you? Come on. This is also where several businesses are located, at least according to the U.S. mail. This is VerveTech LLC, JJR Goods LLC, Dynamic Down LLC.

More than a dozen letters from credit card companies and shipping companies offering their services to these new businesses. He sometimes opens this mail to check if any have credit cards with his name on them. Then? Usually they just go straight into the recycling can. It's a little overwhelming at times. Taylor first noticed the mail last summer. The businesses are registered with Colorado Secretary of State by unknown people to his home address.

I can't exactly tell what they want other than either to harass us or try to get money out of us. So far, Taylor hasn't lost any money. but he's still worried. There's no way to know how many seemingly fake businesses are registered to Colorado addresses. In one recent high-profile example, a family in a small Colorado town discovered hundreds of businesses registered to their home. In another, thousands were located at a Denver office building. For the homeowners, this is a nuisance that can be part of a much bigger problem, like fraudsters using business registration to appear legitimate when stealing money from people. Fraudsters are finding all sorts of ways to trick people. A big one is they actually

register a business and they can point people to their registered business. That's how Colorado Attorney General Phil Weiser described the problem to a Denver TV station in May. He had just announced a slew of lawsuits targeting fraudulent companies linked to everything from cryptocurrency to romance scams. The problem of business fraud took off during the COVID-19 pandemic. A couple of years later, Colorado formed a working group to address it. They are created to victimize. They are created to steal. They are created to hide in the shadows. Greg Wurch is a special agent with the U.S. Department of Homeland Security and was a working group member. Back then, during one of its meetings, he said that the people behind these shell companies aren't worried about getting caught.

And they can simply create a new shell for a buck here in Colorado under 30 seconds. Since then, some security measures for business registration have been put in place. The price to register a business is now up to $50. Meanwhile, complaints about fraud are growing. More than 11,000 have been filed since the complaint system was created three years ago. Honestly, we were expecting a lot fewer complaints to be filed. Colorado Secretary of State Jenna Griswold oversees the complaint system. So this program, I think, has been.

been very much successful. But going through the complaint process doesn't always make the problem go away. Jared Taylor of Longmont has reported the fraud at his address to the Secretary of State's office. They sent a piece of mail that says we've marked these business accounts as fraudulent and they can't be used anymore. He's also frozen his credit and changed all of his passwords just in case. But the strange mail just keeps coming for those old businesses and new ones. That's kind of where we are. I just have to keep reporting them. Taylor is trying to accept the situation, adding, this is just what life is now. In Denver, I'm Lee Patterson for Marketplace.

Coming up. 2025 was another exceptionally challenging year. But this year is going to be different. Right? First, though, let's do the numbers. Down Industrial is off 272. today about a half percent, 53,000, 459. The NASDAQ down 84 points, 3 tenths percent, 26, 64.

The S&P 500 down 40 points, about a half percent, 77 and 45. Mitchell was telling us about the state of the consumer economy. Well, here you go. Procter & Gamble, maker of bounty paper towels, tied detergent, pantine hair products, decreased 1%. Competitor Colgate Palm Olive, which owns Fabuloso Cleaners, Hill's Pet Food, and, and I thought this is independent, actually, Tom's of Maine Toothase, declined 1 and 9 tenths of 1% on the day.

Newell brands. It makes Graco baby products, rubber maids, storage, totes, and sharpie markers, lunged to 3 and 2 tenths of 1% on the day. Sabriwas telling us about China. The Chinese hotel conglomerate H-World Group Limited reported earnings today. They're based in Shanghai, one of the world's biggest hotel

chains, 1.3 million rooms. Their depository receipts sold 11 and 3 tenths of 1% on the day. Bonds down. Yield on the 10-year T-note rose, 4.73% more on bonds coming up at the end of the program. See how I tease that? More on bonds? Keeping you around. You're listening to Marketplace. This is Marketplace. I'm Kai Risdahl. The S&P 500 regular listeners to this program, I believe, no, is a stock market index, specifically an index of 500 of the biggest companies in this economy.

Just like it sounds, it's 500 companies, not 499, not 501. And as it happens, there's an opening to members of the S&P 500 are merging, so it will come to pass tomorrow that Reddit will join the index. Marketplace's Samantha Fields. Explain how that all works. Reddit started two decades ago with a $100,000 investment. Today, it's worth more than $30 billion, which is one reason it's eligible to join the S&P 500. I think it's important to say that the S&P 500 is not mechanically the 500 largest companies. in America. Greg's dollar at Boston University's Questrum School of Business says there are four major criteria a company needs to meet to qualify for the index. First, it has to be worth more than

$22.7 billion. Second qualification is it has to be liquid enough that investors can realistically buy and sell the shares. Third is, it has to be established enough. Meaning it has to have been publicly traded for at least a year. And the biggest one of the four is it has to be profitable enough Reddit checks all of those boxes. Eric Zitzowitz at Dartmouth College says getting selected to join is a pretty big deal for a company. A lot of stock investing is happening via index funds. And a lot of those funds track the S&P 500. So if a stock gets added to that index, they pretty much have to buy the stock in order to track the index.

That's why companies tend to get a bump in their stock price when it's announced they're joining the S&P. Robin Greenwood at Harvard Business School says it's usually not. huge, maybe 5, 10%, but... Multiplying that times the billions of dollars of your stock price, that's real money. Beyond that initial bump, he says economists have tried to quantify the financial benefits of being included in the index. The jury's out a little bit on that question. But ultimately, he says joining the S&P 500 is not going to dramatically change a business's

value long term. I'm Samantha Fields for Marketplace. Brune Oil is, as we have talked about, a number of... of times the global commodity. And the President's War with Iran has squeezed both oil producers and oil users downstream of the wellhead and of refineries. For this next story, though, we go elsewhere in the petrochemical world, and we are going to do it via the U.S. Gulf Coast and the natural gas industry and the increased profitability thanks to the President's War of a derivative product we all use pretty much every day. Marketplace's Elizabeth Trouval has that one.

Plants, petroleum pipelines, and a bustling seaport converge in this industrial corridor. Here in Pasadena, Texas, southeast of Houston, rail cars move petrochemical products like plastic pellets. There's this thing called the petrochemical crescent. Jesse Thompson is a Houston-based economist with the Dallas Fed, who says that corridor runs from Corpus Christi into Louisiana, roughly 500 miles. Then there's just this massive slew of interconnected chemical facilities that make a huge portion of the basic chemicals and chemical compounds that are then processed further in the United States to make plastics of every stripe. This part of the U.S. became a major plastics producer in part because of cheap and abundant natural gas. Much of it piped down from the Permian Basin. Natural gas has ethane, which is used to make the plastic polyethylene.

And that's like the bread and butter thing of Houston is those plastic pellets. And then they go on rail cars and they either are railed to a facility for processing or, in the case of Houston, more often just moved over to the port and loaded on a boat. The plastics industry has been shaken up by the onset of the war and not necessarily in a bad way. Just six months ago, Peter Vaneker, CEO of Houston-based plastics company Lionel Bazel described a difficult market in earnings calls. all. 2025 was another exceptionally challenging year. Then war broke out. Here's Bannaker again, just a couple weeks ago.

The global disruption in the petrochemical markets from the conflict in the Middle East impacted production. It also led to substantially improved earnings. The company reported high margins from polyethylene. Polyethylene is a polymer. It is widely used globally in packaging applications. Harrison Jacoby is. an analyst with ICIS. Your milk jugs, that's high-density polyethylene, stretch and shrink film used for packaging applications.

He says before the war, China had been ramping up its polyethylene production, leading to an oversupplied market. And lower oil prices also dragged down prices. Marges got very narrow, very thin in Q4 because of those really lower oil prices. And again, that was the outlook up until, yeah, late February. of this year when the U.S. Iran conflict started. When the Strait of Hormuz closed, polyethylene prices soared, and a lot of that plastic was held up in the Middle East. Plus, crude oil prices went up, which is how a lot of producers make polyethylene. But in the U.S., we make polyethylene from natural gas. Jesse Tiharina is with S&P Global Energy.

Because of this phenomenon called shale gas, the U.S. producers are, really blessed with some of the lowest feedstock costs in the world. U.S. producers were able to buy their feedstock for cheap and sell high. And while prices have come down since the initial polyethylene price spike, they're still elevated. And without a permanent resolution to the conflict, we still expect the market to tighten up and for prices to increase from where they are. And that does boost economic activity in petrochemical hubs like Houston. Jesse Thompson again. High utilization rates means there's more maintenance, there's more work to be done,

there's more parts to replace, there's more logistics to handle. It's more activity, which ripples through the local economy. In Houston, I'm Elizabeth Troval for Marketplace. This final note on the way out today in which, once again, we bring the bond market to your attention. I know this is a couple of times in the past week or so, but you are not going to want to sleep on the long end of the yield curve. The 30-year treasury, the yield on which hit today, 5.31%, the highest it's been since 2007. Pick your own adventure as to why ever-increasing piles of government debt, all that AI borrowing that's happening, markets being a little concerned

about the Fed, or maybe all three. Amir Babawi, Caitlin Ash, John Gordon-Noyek, Steve Mollis and Stephanie Seek are the Marketplace editing staff. Kelly Silvera is the news director. And I'm Kai Risdahl. We will see you tomorrow, everybody. This is APM.