Marketplace - Got beef?

Episode Date: August 18, 2026

Cattle herds are at a national low not seen since the 1950s. That’s driving up the price of beef for consumers, but it’s also affecting the companies that process cows into steaks and burgers. In this episode, why meatpacking plants are shuttering. Plus: Home Depot stays afloat despite a “frozen” housing market, retailers prepare to release quarterly earnings, and interior design is stuck in a “color recession.”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:Here's why Home Depot calls housing market "frozen"Retailers should be doing well, despite consumer challengesDespite a slow alcohol retail market, this Wyoming distillery is expandingMeatpacking plants close as U.S. cattle herds shrink to a nearly 75-year lowIs the greige wave here to stay?

Okay, what do you like? The bond market? Meatpackers or gray? The color. No way, you don't have to choose. We got them all. From American public media. This is Marketplace. In Los Angeles, I'm Kyle Rizdahl, Tuesday, today, 18 August good, as it always is to have you along, everybody. 30 years is a long time. It is a long time in life, and it is a long time in financial markets. But all of a sudden, that 30-year time frame seems. seems very, very close at hand. I'm talking here about 30-year bonds, government bonds in particular, the yields on which, the interest rates they have to pay, right? The yields are honestly getting a little alarming. We have touched on this a couple of times in the past couple of weeks. We're going to do it again today with Robin Brooks. He is a senior fellow at the Brookings Institution. Robin, welcome back to the program. So great to be with you, Kai. Thanks for having me on.

All right. I'm going to quote you back to yourself from the socials, today. Global bond markets you wrote have caught fire. Reckless fiscal policy is catching up with governments, emphasis there on governments, many of them. 30-year yields, long bond yields are up all around the planet. What's going on? So long-term yields are different from the kind of policy rate that the Fed sets, right? So when we have a Fed meeting, the Fed sets short-term interest rates. long-term interest rates are very different because they incorporate risk premium. Of course, 30 years, as you said in your intro, that's a very long horizon. So financial markets over that long horizon price, risk premium for inflation, for policy uncertainty,

for the amount of debt that you have. And so what we've seen the last couple days and honestly over the past year is that these long-term yields have risen massively, most of all in places. that are highly indebted or and or politically dysfunctional. So places like Japan, France, the UK, Italy, and of course also the United States. United States, yeah. So it is a global situation. We've touched on the fiscal irresponsibility of some of those countries, including this one.

I want to run through a couple of other possible causes. AI companies are borrowing trillions and trillions and trillions of dollars. maybe that was one too many trillions, but you know what I mean. There is, however, only so much capital to be invested. Could that be part of the challenge that AI borrowing is competing with this necessary government borrowing? So, Kai, I think you're totally right. There's many things that are driving what's been going on lately.

If you look at when did long-term yields start to rise big time in the most recent episode that we're seeing right now, it was after the most recent. and Fed meeting. So that was on July 29th. The Federal Reserve kept rates on hold. And so markets here are worried that there's something wrong with monetary policy. And honestly, they're worried about the politicization of the Federal Reserve that the Fed is keeping rates low because people feel like it's under the influence of Trump. The other thing, obviously, that's happening lately is that it feels like oil prices are going back up again. And so bond markets obviously don't. like that because they think it leads to inflation. But the bigger issue that you're mentioning is,

you know, in the end, there is a finite pool of capital, all the AI investment, the hyperscalers, and so on. Everyone's chasing after the same amount of money. What I would say in terms of differentiating these different factors is in the end, yields have risen most for countries that are most highly indebted. So that tells you this is about some kind of sovereign risk premium. All right. So let me back you up to the Federal Reserve. And you have been clear that you think some of the criticism of Warsh is unwarranted. And that's a whole different podcast for us to get into. But is it possible that part of this reaction is an uncertainty premium related to the Federal Reserve that the bond markets just don't know what he's thinking, you know? Yeah. I mean, I think the bond markets tend to react quite strongly. to if the Fed is easing with this president in the White House. So we saw a similar thing last summer, Jackson Hall almost a year ago, August 22nd, Jay Powell announced, well, he didn't announce,

but he gave a speech that was incredibly dovish and basically said, in so many words, we're going to ease. And we saw a very similar steepening, which means long-term yields rise more than short-term yields, steepening in the yield curve that we're seeing now. So markets here are incredibly sensitive to the perception that monetary policy is dominated by politics, Kai. Super quick. We got like 30 seconds. How worried are you? Scale of like one to 10 about the bond, you know, all of this stuff. Better question, Kai. Ask a better question. You know what I mean? So if you look at the 10-year, right, we're at 4.7. It doesn't seem very worrying.

It gets more worrying if you look at the 10-year yield 10 years forward. So that's what markets price implicitly in longer-term yields 10 years from now, and that's 6%. If you then factor in that so many other countries like Japan, like some European countries, are artificially keeping their yields down via their central banks, then things start to look. really worrying. So on a scale from one to 10, I'm a six or a seven. All right. We'll take a six or a seven for now. Call me when you get to like a nine and then we'll have you back, all right? Thanks for having me on.

She's at the Brookings Institution. We'll see you. Wall Street today, bonds we talked about, obviously. Tech stocks got to beat up a little bit, everything else down-ish details numbers when we get there. It is all well and good. I think we point that out not infrequently on this program, but it's what happens behind the data that actually drives this economy. And here is today's exhibit A. Housing starts. Literally, the number of homes on which construction was begun,

dropped in July down 13.5% from the same month a year ago. So said the Census Bureau this morning. And that is obviously the data of which we're talking about today. What is happening behind it? Is that the picture is also kind of sour in the home improvement sector. Home Depot reported earnings today. And the takeaway was, business is generally okay. But the company is worried about what it calls.

the frozen housing market. Marketplace who Kristen Schwab has more on what we can learn about the housing market through the eyes of Home Depot. Home Depot has been consistently outperforming its own corporate guidance for a long time now. But not exactly because the retailer is thriving. It's more like the company has been setting its expectations low. Jamie Katz is an equity analyst at Morningstar. I think, you know, there must be some lumpiness that exists out there in demand that isn't giving leaders confidence. Pending home sales are down, housing starts are down. Meanwhile,

mortgage rates are up and seem kind of stuck there. The average rate on a 30-year fixed is 6.67 percent, according to Freddie Mac. It's been sort of a sideways struggle. That sideways struggle isn't just about the people who can't afford to buy. It's about the people who can't afford to sell. David Zang is a finance professor at Rice University. A lot of people still have mortgages that are below 3% in rates. 20% of mortgages sit below an interest rate of 3%. Half of all mortgages sit below 4%. And yeah, eventually people will give up those rates.

They'll change jobs, they'll divorce, they'll have kids. I think in the long run, these things will all resolve itself in the next year. Yeah, it seems tough to see. Home Depot seems to agree. So it's investing more in Home Depot Pro, to capture more business from contractors and investing more in its services for DIYers. It's launching express delivery in three hours or less.

Brad Thomas is a retail analyst at Key Bank Capital Markets. Right now, the majority of the industry is being driven by repair work. People sitting on those low mortgage rates are spending on renovations, which Home Depot says is the kind of business keeping the company performance okay. They do believe that over the long run, that the housing market is a good place to be? I mean, they kind of have to. Their business depends on it.

I'm Kristen Schwab for Marketplace. This is a big week for big retailer earnings. After Home Depot today, we're going to get Target and TJX and Lowe's tomorrow, Walmart, on Thursday. One might imagine that this is a really challenging environment for those giant multi-channel retailers. They sell all kinds of different products and rely on a broad swath of consumers. to drive their sales, even as the companies deal with higher transportation costs and staggered supply chains and, yes, still tariffs. Also, those consumers themselves are facing sharply higher gas prices, high interest rates,

stagnant wages compared to inflation. Also, the sluggish job market. We talked about that a bunch. Turns out, though, as Marketplace's Mitchell Hartman reports, big retail is doing all right. Overall, the markets had a stellar run of second quarter financial results, says Sam Stovall at CFRA Research. and that extends to the big box chains selling stuff to America's beleaguered consumers. Retailers are actually doing relatively well.

Consumer Staples merchandise category, which holds Walmart, Target, Costco. It is up about 9% for the year. Though it's a bit of a mixed bag. Sellers of some big-ticket items are struggling. Automotive retail, 14% decline in earnings, home furnishing retail, 10% decline in. but apparel has been up 10%. He says it's discount retailers who are getting the most love from cash-strapped consumers. When times get a bit challenging, consumers tend to trade down.

They are going to go to a Walmart rather than a Macy's. And actually, some higher-end consumers are making that trade, too, says Samir Samana at the Wells Fargo Investment Institute. You've seen Walmart and Target start to kind of go. up market, at least compete for a wallet share. You know, it could be that even the upper end of the K is feeling some stress. He attributes that to slowing stock market gains and layoff announcements in tack and middle management. Given all the economic stresses consumers and retailers face right now, Samana isn't overly impressed with the sector's performance. I think what you're seeing in a lot of the consumer discretionary stocks is kind of the sigh of relief that it could have been worse.

And somehow, some way, consumers are still finding dollars in the couch cushions, so to speak, to go out and spend. He says that could change. If consumers start acting the way they say they feel, which is pretty bleak about the economy and their own financial prospects, the run of good results for retailers could peter out. I'm Mitchell Hartman for Marketplace. Retail is, as Mitchell was just reminding us, a mixed bag these days. Retail and other sales of almost all kinds. Data from Nielsen IQ shows total alcohol sales are down more than 3% year over year.

People are just drinking less. At the same time, though, just because consumers are pulling back now doesn't mean things can't or won't change, so businesses have to anticipate. Mallory and Amber Pollock run backwards distilling company that's a family-owned wholesale and tasting room business in Casper, Wyoming. This is Amber. We just opened a second tasting room in Laramie, Wyoming, in Nassau, in New York. May, and that's been consuming most of our time and bandwidth. This is Mallory.

Laramie's a couple hours away, so Amber's gone, which puts me in charge, and then you realize how you're each other's right-hand person, and so that was exhausting. But the family has been running back and forth to fix things and install things and all that jazz, but we're kind of settling into a rhythm now. Also, that was like prime time for tariffs, and so that definitely made the bill more expensive than it would have been otherwise. But I think the location for us, quenched it was like, yes, let's just go ahead with it. It's really neat down there. It's got a patio, which this space up here does not. We're headed into football season. We're like the closest spot to the stadium to get a cocktail,

So we're curious as to what that looks like for our fall. Also, I feel like there's so much uncertainty that it's kind of hard to wait for a like smoother waters. Because you're like, well, when is that going to come? Between tariffs and freight and all of our packaging, that is the thing that's probably the largest challenge in terms of cost. We just looked at shipment on a palette that used to be maybe three or four hundred bucks. This most recent quote was 900 to ship one single palette of bottles. It's not like a really easy thing to do necessarily to just switch up a supplier, but definitely has to be on the table now.

Wholesale's not great. Where we saw growth was in our tasting room. And it was interesting that it was kind of almost offset the wholesale. So I was very happy to just be, you know, net nothing. My parents would like to retire. And so I think that's the ultimate like hope, too, with this second location is that it provides additional revenue that will hopefully mean that we can bring on some other positions. So that's been really exciting. No one's volunteering anymore.

Everyone's on payroll. Rent is getting paid in two locations. It's good now. Good stuff. Mallory and Amber Pollock backwards distilling company is the company, Casper. also in El Laramie, Wyoming. Coming up. We're afraid of being disagreeable.

Where's some fun in that, huh? First, though, let's do the numbers. Well, here you go. Down Dustra is off 116 points to date. Two-tenths percent finished at 53,343. The NASDAQ tumbled 355 points, one and a third percent, 26,289. S&P 500 down 53.7 tenths percent, 769. Niner one there. Kristen Schwab was telling us about Home Depot. Chairs dipped a tenth percent

on the day lows, which reports tomorrow, as I said, setting up Mitchell's piece, fell a tenth percent, as well. Wayfair, dropped one and one-third of one percent. Clarna, pervayor of buy-now, pay later services, cut its full-year revenue guidance today. The Stockholm-based company blamed economic conditions in its biggest market, which is not, as it turns out Sweden, but rather Germany. Clarna plummeted at almost 23 percent rival of firm holdings, saying one and three-tenths of 1% on the day. Bond prices up. The yield on the 10-year T-note, as Robin Brooks was saying, 4.70%, but as he was also saying,

think about the 10-year over the next 10 years. Inflation expectations, again. You're listening to Marketplace. This is Marketplace. I'm Kai Risdahl. The cattle herd in this country right now is smaller than it's been since the early 1950s. Our population, human, of course, is more than twice as big.

So the bee-feeding public, in accordance with the law of supply and demand, is dealing with double-digit inflation in its meat of choice. This is a problem for meat packers, too, the companies that turn cows into steaks and roasts and burgers. Smaller herds mean less business for slaughterhouses and packing plants have indeed closed this year. One in Nebraska, another one in Wisconsin, and last week Tyson announced it's going to be closing a plant in Illinois.

Marketplace's Caitlin Tan takes it from there. David Anderson remembers visiting a meatpacking plant in high school. I'm going to put it this way. Meatpacking plants are not for the fate of heart. It's a slaughterhouse. So the animals walk in, right? But they ain't walking out. Anderson is now a professor at Texas A&M, and he says over the last few years, fewer cattle have been walking into plants every year. We had a packing capacity that was built for

or 130 million head of cattle. And today we're down at 88 million or whatever the number is. It's actually 86 million. Blintanzer at Kansas State University says that makes meatpackers operating costs jump. You can only do that for so long before some business adjustment is going to be made, whether that is shrinking the number of shifts, not running on Saturdays, maybe eventually closing a facility. Which is what we're seeing. Cattle heading to fewer large scale. packing plants. The day after one facility closes, every other facility in the system runs a little more efficiently. Plenty of cattle walking in and conveyor lines full of carcasses, which is good for meat packers margins, but this all could have implications in a few years. The lack of these facilities could get us into a spot where we run out of capacity pretty quick. Josh Maples is at Mississippi

be State University. But the cattle sector is incredibly cyclical. You know, we go through periods of declining supplies and then increasing supplies. Inevitably, he says the national cattle herd will get bigger again. You know, having enough packer capacity to process that is key to getting that amount of beef flowing through the system ultimately to the consumer. Like making sure that there's enough ground beef for your burger and steak for your grill because he says Americans' demand for beef doesn't seem to be going anywhere.

I'm Caitlin Tan for Marketplace. When was the last time you saw a car that wasn't either gray or black or white? Chances are you would remember because it probably stuck out, the share of new cars in some kind of gray scale color rose from 60% in 2004 to 80%, 80%, in 2023. An analogous things are happening with house colors, both interior and air. exterior. We are in, a Mogademri wrote in the Atlantic the other day,

a color recession. Welcome to the program. Good to have you on. Thanks so much for having me. This color recession thing, what is that? It's a problem, Kai. It really is just what I call the lack of color in society today. You know, since the start of the 21st century,

homes, cars, appliances have become gray or beige, black or white, and people seem really afraid of using color. Okay, why? It's a larger cultural a risk aversion, frankly. A lot of people are worried about the resale value of a car or house. And when color becomes less of an expression of personal taste than an investment, then people are afraid of getting that investment wrong. And gray is so inoffensive that you never worry that someone's

not going to buy your house or car because it's gray. Yeah, well, number one, you're talking to a guy who owns a red house, so there's that. But also number two, it's boring. I mean, there will be people who will yell at me about this, but grays and whites and all the just beigees and stuff. they're all just boring. And have we, like, lost the fun in our color palette? I think we have. I think we have. I think the larger culture of us being afraid to experiment with color because we're

afraid of how it might work on the resale market is impacting the way our built environment looks. You know, I talked to one woman who's in Arkansas, and she was stressing over what color to paint her house. And I said, what are the options that you're torn between? And it wasn't blue or green. It was 30 different shades of white. And she couldn't pick one because she was afraid if one might not age as well as the others. Come on. Really? It's true. It's true. 30 shades of white. And there's many more out there.

You know, Sherman Williams is a paint company, and their list of the top 50 most popular colors for the home include shades like agreeable gray and passive. And I think agreeable gray is really epitomizing the current moment we're in. We're afraid of being disagreeable. Also, I read in this piece, Pantone, basically named white the color of the year? Cloud dancer, as they say. You might call it white. Yes, yes. So look, let's get to sort of the marketplace brass tax of this thing. We talked about it as an investment, as in resale value. Are the beige's and the whites and the gray is like cheaper to make and produce and all that?

Yeah, it's a good question. In some industries, like the auto industry, experts told me that they use gray because it's easier to standardize the product. So for the manufacturers on some ends, that is the case. But for consumers largely, I mean, grays are not cheaper. as a product to buy. They just seem like the ones that are the safest. So what do you think? Are we trapped here in this very beige and gray and 30 different colors of white color scape? Or is this going to change? Because as you pointed out in this piece, actually, this trend has been happening for a while. That's true. That's true. For now, it looks like the

trend is here to stay. You know, color experts I spoke to across various industries told me that the biggest hope we have of getting color back is by sneaking it into shades of gray. Now, you I may ask what this looks like. You know, Axolta is a car painting company, and their executives recently picked solar boost as their car color of the year, also known as orange. But they told me that they didn't actually expect that many solar boost cars to roll off the assembly line this year. They just hope that it might change the shade of gray in cars to be a little brighter. One step at a time. I vote Dimry. He's at the Atlantic. Great piece. Thanks so much for your time. Thank you, Guy.

This final note on the way out today, which I am completely sure. sure is this week's sign, the apocalypse is upon us. Saw this on Axios that Google has bought out of Spirit Airlines bankruptcy proceedings, all of the now-defuncted carriers' emails, calendar data, chats, documents, spreadsheets, marketing materials, HR documents, project management information, financial databases, audits, and presentations. Google says everything's going to be anonymized, no personal identifiers in there. Now, why you might ask, does Google want?

all of that stuff? Quoting the company's statement, it can be helpful in improving our products and AI models. In other words, they're going to use it to train their AI. Hey, does anybody remember when Google's motto was, don't be evil? I do. Jordan Manjee Zaharaj, Janet Winn, Oga, Oxman, and Virginia K. Smith are the digital team. I'm Kai Rizdal. We will see you tomorrow, everybody. This is APM. Thank you.