Marketplace - Retail feels the squeeze

Episode Date: August 14, 2026

In the Commerce Department’s retail sales report for July, sales at stores of all kinds were down 0.6%, when a modest increase in sales had been expected. Though some discretionary purchases are up, consumers are certainly tightening their belts. Also in this episode, we look at the decline of Etsy, how businesses near the Canadian border are dealing with fewer visitors, and the staying power of Candy Crush.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:Inflation dipped slightly in July, but remains above Fed's targetRetail sales dropped sharply in July as consumers tighten spendingThe AI slop-ification of EtsyFewer Canadian shoppers leave border businesses strugglingThe incredible staying power of Candy Crush Saga

On the program today, we will do our Friday thing. Tariffs, it turns out, have domestic economic consequences. Who have thought that? And hey, anybody remember Etsy? From American Public Media. This is Marketplace. In Los Angeles, I'm Kyle Rizdell. It is Friday today.

This one is the 14th day of August. Good as it always is to have you along, everybody. We are going to start with inflation. We're going to make a turn to interest rates. then we are going to see where things take us. Courtney Brown's at Axio. Stacey Vanek-Smith is at Bloomberg. Hey, you two.

Hi, guys. Hey, Courtney, we start with you. We start with inflation. It is cooler. Was, past tense is important here. Was cooler last month. The point of which is this data is already out of date, basically, right? Yeah, we're in this weird time where, okay, this status is always backward.

Yes, yes, yes. Just to state the obvious. But eventually. are moving so quickly these days that a month, a lot can change in a month. And so to bring it back to this week's CPI report, we got good data. But just looking at what's already happening in August and what happened in like the back half of July, the Middle East conflict revved back up in ways that are affecting the energy markets, right? In the wrong direction, in the up direction. And so cool inflation data in July, I mean, we might get some payback in August that makes the inflation data look not so cool.

And that's a problem for the Fed. So core CPI, Stacey, came in at 2.5%, which is pretty good, you know, all things considered, still above where the Fed wants it to be. But that last half a percentage point, as you wrote about this week and did some stuff on the socials, that's where the real money gets made, right? Because it's hard to do. Yeah, it is really interesting. It's kind of sometimes they call it the last mile problem for the Fed that sometimes getting inflation down from, you know, high inflation to moderate inflation. Like we saw that in 2022, our inflation rate was 9.1 percent. 20, 23, 12 months, about around 12 months later, it was down to 3 percent.

And guess where we are now? It is really, really hard to squeeze out those last couple percentage points. Jay Powell had it easy then. Is that what you're saying? Definitely not saying that. But, you know, you kind of get rid of all the easy wins. And then you're down to things like expectations, which can be really sticky. You know, the classic example is if you own a restaurant and you're printing menus, you're anticipating inflation.

So you print prices a little higher. That stuff is hard to get rid of. Right. Right. Corny Brown, can we assume that rates are going to go up this year at some point? Yes. No, maybe? Do you want the answer? I love the deep sigh. All right, sorry. Go ahead. I stepped on your answer. I'm going to, I'm going to be Kevin

Worsh, and I'm going to say, I'm going to say nothing. No, I'm just kidding. I think that financial markets do still believe there is a chance that interest rates go up this year. You know, whether that actually happens. I mean, we still don't understand exactly what the Warsh so-called reaction function is. I don't know how he feels about. the data of the last two weeks. We got a good inflation report. We got a soft jobs report, soft retail sales number. In the mind of Kevin Warsh, is that enough to put off a rate hike in September? Financial markets seem to think so, but is that the way Kevin Warsh thinks? We still don't know. Well, so Courtney, I'm going to stay with you, and I'm going to do a sideways twist on our new favorite game. What is Kevin Warsh thinking in five words or less, which changes, of course, every time the Fed chair changes.

But if you had one piece of data to jump up and down in front of him and say, please decide, what would that piece of data be? I think it would be the inflation numbers because he has said over and over that the Fed will achieve price stability. Okay. So here are the inflation numbers. You don't have price stability. So what are you going to do about it? Are we going to raise rates soon?

And he would have a clever answer to that. that. It wouldn't be yes or no. But that is what I would like to wave in his face. Stacey, I speak here on behalf of the labor market, which would like some love from the Central Bank, which it does not seem to be getting. Well, I think that's right. I mean, it's, I do feel for Mr. Warsh, because he is a little bit between a rock and a hard place. I mean, the last jobs report we got, not great. You talked about a Kai. The economy lost 23,000 jobs. That's not good. At the same time, I agree with Courtney. We've got to look at a inflation numbers and wages are not keeping up with inflation. That seems really serious to me.

So, you know, it's bad if you raise rates. It's bad if you cut rates. It's a tough spot. I'm going to add a third variable here, Courtney Brown. And I'm going to come to you as I sometimes do with the more challenging questions that I pose on Fridays. The bond market. The 30-year, they had the auction this week, 5.2 something percent, the highest at sale it's been since like 2007. The bond market has thoughts about where rates ought to be, yes? Yes. The bond market does have thoughts about where rates ought to be, and that is higher. Thank you for coming to my dead talk.

I know. I deserve all the big money they pay me at Axios. But that is worth taking seriously, right? So the financial markets, I think there is this question, and a lot of the economists I talk to are trying to figure out whether, you know, they believe in Kevin Warsh, whether they believe that Kevin Warsh will do what it takes to get inflation under control. And I mean, I just, I can't stress enough how important this question is to me and to people who watch the markets and care about the economy. Well, no, Stacey, keep going on that. It's not just us, those of us whose job this is to watch this stuff.

what Worse decides to do and what the bond markets decide that they want Worse to do matters across the economic spectrum. Oh, yeah. For anyone who wants to buy a house or charge something on a credit card, the interest rates, they really affect us all. And it does sometimes feel like it gets kind of wonky and esoteric, but it really affects our lives. And I think what the bond market is reacting to is just a ton of uncertainty. Nobody knows really where Warsh stands yet, how he's going to do the job, which isn't necessarily bad. he's new in the job, but I think what we're seeing, at least in part, is just a lot of uncertainty over what he's going to do.

Yeah. Very quickly, Courtney, consumers, consumer sentiment today from the good people at the University of Michigan. First time in three months it went down, not surprising, right, given gas prices and all that uncertainty that Stacey was just talking about. Yeah, there seems to be this mechanism where consumers are responding to what's happening with the war and in turn higher gas prices. There was a time where it was similar with tariffs, but now that's been replaced with, I think, gas prices.

So consumers are mad about higher gas prices and that's being, you know, displayed in their sentiment numbers. Yeah, sure is. Courtney Brown at Axios and Stacey Vanek-Smith at Bloomberg on a Friday afternoon. Thanks, you too. Thanks, Guy. Have a nice weekend. Wall Street to end this week. Retail sales took a little bit out of Traders' sales today.

Get it? A little humophone right there? Mitchell Hartman coming up on that in just a second. Details numbers when we get there. A funny thing happened on the way to the store last month. Consumers spent less, quite a bit less, it turns out. Sales at stores of all kinds, as well as gas stations and online, they were down 6 tenths percent. That's what the Census Bureau told us this morning.

And it's a turnaround from an uptick in June. Marketplaces Mitchell Hartman sussed out what's going on there. First off, this wasn't an entirely typical statistical July for retail. There were definitely one-time factors holding down retail sales. We had the shifting timing of Amazon Prime Day. It was a month earlier than last year, explains Bill Adams at Fifth Third Commercial Bank, meaning all those Amazon clicks got clocked back in June. Also, we had lower gas prices, which translated into lower spending at the pump, which, you know, good news for consumers. But even after you account for all of that, we just had a quite off month for consumer spending.

And it could extend to August and beyond as consumers mood sours. The University of Michigan's sentiment index is down sharply this month with the recent spike in gas prices. The picture from sentiment from retail sales to Fed's Bejewks, consumers have been concerned about household finances and the state of the economy. There's absolutely a bit of tightening. Kiarra Barrett tracks consumer trends at market research firm Sarkana. People are being much more in moment in what they're purchasing versus bigger baskets. She's been tracking back to school spending. That's electronics, apparel, footwear, office supplies,

where prices are up 5% over last year and parents are buying less to try not to end up in the hole. Yes, I need to get the supplies. I'm going to limit to the list. I'm not necessarily going to go and buy all the things for Picture Day. Now, some retail sectors did pretty well in July. says Fifth Third's Bill Adams. Spending was solid at restaurants. Consumers were watching the World Cup and socializing.

Other discretionary categories were up as well. Clothing, health, personal care, and beauty, says Sircana's Kiara Barrett. People wanting maybe a little bit of joy. It's a manifestation of the lipstick effect. The idea that when times are tough, consumers are more inclined to splurge on cheaper indulgences that make them feel good or pretty, but don't. Don't bust the family budget. I'm Mitchell Hartman for Marketplace.

Just randomly, today I went and looked up Etsy's share price, down about a percent, just under 80 bucks apiece. Five years ago, though, in the heyday of our post-pandemic entrepreneurialism, Etsy shares topped $300 as crafts people and makers of all kinds tried their hand at it. There are, of course, countless reasons why any given company's shares do anything, but it's not out of the question that a turn away from its original calling of handmade whatnot is doing the company wrong. E.J. Dixon wrote about the new Etsy and Wired the other day in a piece titled, Etsy is in its flop era and sellers are fleeing.

E.J., welcome to the program. It's good to have you on. Thank you so much for having me. I don't mind telling you I found this piece a little bit depressing, that AI and mass-produced dupes have taken over Etsy. What is going on? I don't mind telling you that I found it depressing, too. Well, there we go. Yeah, basically, ever since Etsy adopted a policy in 2024, allowing people to use AI that's kind of undercut other sellers' prices. And Etsy has sort of been known historically as a bastion for handmade goods.

So a lot of people are really outraged by this shift. There are a couple of sellers you talk to in this piece. What's their, I mean, are they just losing money? Are they getting out? What are they doing? Yes, I talked to one seller who said his sales have declined by 98% over the past year alone because of what he called the AI sloppification of Etsy. Other people have seen their sales declining from like 30% to 50% less dramatically. But basically, yeah, I mean, it seems like a lot of them are considering just leaving the platform altogether because it's impossible for them to make money on it anymore.

Does Etsy care? I mean, it does seem that there is some reputational risk here of this once upon a time, handmade, interesting goods now being mass produced in AI. That would seem to be a reputational problem. I think so, but I also think that they're sort of weighing the fact that they are also competing with sites like Timo and Sheehan drop shipping sites that undercut prices by a great deal. I think that there are a lot of external and internal pressures that are driving them to make this decision. And they're sort of weighing that against the potential backlash from their longtime sellers. That's just my analysis, though. No, no, that's fair. You're the one who wrote the piece and did the work. It does seem interesting to point out here that customers kind of don't seem to care.

Etsy sales are up, right? They are up. Yes. So since 2021, the gross merchandise sales have declined. But its gross revenue has gone up by 2.7% according to the 2025 report. So, yeah, it's doing okay. It's hanging in there. I was about to ask, is that's he going to be around in five years?

But it sort of seems like it is just a different beast. Yeah, I think that's absolutely true. And I think that the same can be said of a lot of platforms that have been affected by the introduction of AI. Right. I'll just point out here on the way out. There is at least one other site. You talk about it in this piece. Are I saying this right, fiber?

Fib. Fib. I believe. Yes. F-Y-B-B-E. F-Y-B-E. Yeah, you tell me how to pronounce that. but they specifically say we are not AI in any way, shape, or form.

Correct. And I think that's also something that a lot of small business owners are doing in opposition to the large-scale implementation of AI on platforms. I think that they sort of see policies like that as a way of differentiating themselves from their competitors and really catering to a market that emphasizes the need for handmade goods. Right. So there is promise, but the handwriting is kind of on the wall with AI and mass production,

right. Exactly. E.J. Dixon. It wired. E.J. thanks a lot. Interesting piece. Although, as I said, somewhat depressing. Thank you so much. Thanks for having me. Coming up. You're really trying to see the numbers go up. Isn't that generally the idea? First, though, let's do the numbers. Down, industrials down 107 points today. Two-tenths percent, 53,732. The NASDAG fell 73 points. That is nearly 3 tenths percent, 26,729. The S&P 500 down 13 points, about two-tenths percent, 7-785. For the week, the five days gone by. The Dow dropped more than a half percent. Then as that gained more than a tenth percent, S&P 500 up as well, about three-tenths of one percent. Mitchell was telling us about retail sales. Amazon fell more than nine-tenths percent today. Walmart

dipped about four-tenths. Target decreased more than six-tenths of one percent on the day. SpaceX has completed its acquisition. of Cursor, that's an AI coding startup. The deal is worth $60 billion, which makes it the biggest startup acquisition on record. SpaceX, today declined 9 tenths of 1%. Also, this is your reminder. It's not really a rocket company. It's an AI company. Bond prices down. The yield on the 10-year T-note rose 4.690%. You are listening to Marketplace. This is Marketplace. I'm Kai Risdahl. There's less than a week to go five days if you're counting until President. and Trump's latest round of tariffs on Canada hit.

50% important taxes on a whole slew of goods paid. I am professionally required to remind you by American consumers and American businesses. There are all the existing tariffs as well and all that 51st state nonsense, all of which are really putting the squeeze on American businesses up near the border that catered to Canadian visitors. From Minnesota Public Radio, Harshon Rottenpal has more. 71-year-old Deb Weigel says she's feeling like a newlywed again. But not in a good way. We're trying to make ends meet.

Like, we're just starting out right now. She's the manager of Corner Parsal in Pembina, a small town in the northeast corner of North Dakota, right on the border with Canada. And Wigle's shop caters exclusively to Canadians. We're an address for Canadian residents. A lot of places won't ship up into Canada or there's problems with custom papers and stuff. So they ship it here and they drive down and pick it up. The business model depends on Canadians crossing the border.

And lately, fewer of them are. Many say they're feeling cold about America because of President Trump's tariffs and rhetoric about annexing Canada. The number of people crossing in personal vehicles over the Pembina border was down 35% last year. And Weigel's shop has seen a big drop in customers. They get fewer than half of the packages they used to, and that means no bonuses or raises for Weigel. She's been living paycheck to paycheck. I have to work.

I'm well over the age of being able to retire, but I can't afford to. Parcel companies like these are something of a cottage industry in Pemperna. There's at least four of them in this town of 500, helping Canadians avoid international shipping costs. But other areas across the region are feeling the impact of mounting tensions between the U.S. and Canada, too. East Grand Forks, Minnesota is about an hour south of the border. A lot of Canadians travel there to shop, but that's on the decline too. Pat Bopri owns the Blue Moose Bar and Grill there.

He says the restaurant used to attract about 400 Canadians every weekend, but... The last two years were probably down about 6 to 10 percent of traffic just from, uh, He says because of the decreased business, they've had to cut some hours. Maybe losing a shift here or there, you know, over the week. Shops in Pembina are getting hit harder. Deanna Hager has owned D&K grocery with her husband for 20 years and says Canadians used to shop there to buy products that are expensive or hard to find back home. But almost all of that traffic has disappeared, and they've lost 15% of their total business.

We used to have our regulars that would come two, three times a week, Canada. And now they don't. They still come in because they're getting their parcels, but I know the parcels businesses as well has gone down. Deb Weigle at the parcel shop says her family is feeling it on both sides of the border. Her husband is a Canadian truck driver. That business has slowed down too. And we don't go anywhere and we don't do anything. We just do what we have to day to day. So I don't know how people are surviving. But business, this was looking up again this summer. Visitors to Pembina in April, May, and June weren't as good as 2024, but were better than last year. And then, in July, Trump announced new 50% tariffs on Canada,

said to take effect next week. I'm Harsh on Rattenpaul for Marketplace. Some facts about a particular product on the way to this next item, after which I will ask you to piece those facts together and try to guess the product in question. Sound all right? Okay, fact number one, it was released in 2012, so it's been around for a while. Fact number two, it still has more than 80 million monthly active users. And fact number three, it generates nearly a billion dollars in annual revenue. Those facts, by the way, courtesy of the market research firm Business of Apps. Okay, now, guesses?

Anyone? I, for one, hope you were thinking Candy Crush, because in a world, where more than 80% of mobile games fold within three years, it still reigns supreme. Here's the story of how Candy Crush hung on for so long. I'm Alana Oaken. I am a writer and game designer based in Brooklyn. And I recently wrote an article for Bloomberg Business Week about the ongoing appeal of Candy Crush saga. The first time I heard about Candy Crush must have been right around when it was first released for mobile platforms in 2012. And partly how this story came about was my editor and I were talking about just how much it's still in the cultural water supply.

You know, I live in New York City. I take the subway every day. I see someone playing Candy Crush or a game that looks a lot like it on the subway every time I think to look. In a sense, it's really kind of become this stand-in for thing people do when they are missing around on their phones. I think I did at first sort of have this impression of it as being very much. minimalist in its gameplay, but maybe perhaps a bit even overwhelming in its UI. You know, you want to match three blue candies in a row such that they will explode and there will be chain reactions. But it's funny because in writing this piece, you know, almost 15 years later, I think those are the things that have given it such longevity, sort of both the simplicity

of the gameplay, as well as some of that really immediate, you know, sonic and visual and haptic feedback. And even in terms of storyline, you're not really trying to free a princess from a castle here. You're really trying to see the numbers go up. There's something very sort of business-like, perhaps, about that. And I think that that's something people actually really like. Candy Crush was not the first game to use what we call the Freemium model, but it was sort of one of the early pioneers. And Freemium is interesting because how it works is that the app is free to download. Anyone can download it for free and play for free, and you can pay for upgrades within the game. Something like only 4% of players ever spend money in the game.

But I spoke with players across a vast spectrum. Like one person I spoke with had spent maybe $25 over the course of their time playing. Another I spoke with said, okay, you know, I've been playing for about 15 years. It wouldn't be crazy if it were around $1,000. There are definitely complaints I've seen, you know, saying, this is pay to win, or, you know, it's impossible to do without paying money. So I think people do have a love-hate relationship with this game, but judging by these player numbers,

I do think it indexes to love most of the time. At this point, it's almost been around for so long that it's kind of crossed beyond cool into classic to some degree. I think it can be a little bit of a punchline at times. But no, I don't think it's cool, and I don't think it needs to be. Alana Oaken, they're writing about and also making video games in Brooklyn, New York. This final note on the way out today, I know I keep harping on this, but I really, really, really don't want people to be surprised when inflation comes in next month above expectations. We've talked about oil a bunch, but it has been crude oil that is, relatively stable for a good solid couple of weeks.

Now, we've talked about crack spreads as well. What happens to prices when refineries, which is where, where the real bottleneck is, get their hands on crude oil. Well, all of that's a long way of saying, do not sleep on diesel. $5.42 a gallon today. That's up a dime from a week ago, up 60 cents from a month ago. And, oh, by the way, the Strait of Hormuz is still closed. Our theme music was composed by B.J. Leiderman, Marketplace's executive producer,

is Nancy Fargolly. Joanne Griffith is the chief content officer. Neil Scarbrose, the vice president and general manager. I'm Kyle, I'm Kyle. Rizdahl. Have yourself. It's a great weekend, everybody. We will see you back here on Monday, all right? This is 8 p.m.