Marketplace - Where did all the normal-priced stuff go?

Episode Date: February 8, 2025

When you’re shopping, ever feel like your options are low-quality budget items or stuff that’s stunningly unaffordable? The growing gap between the haves and have-nots in the U.S. is reflected in what’s available for us to buy. It’s a phenomenon called bifurcation — we’ll explain. Also in this episode: Wage growth jumped in January and parlay betting makes loads of cash for sports gambling firms. Plus, share with Marketplace: What kind of consumer are you?    

So you know what? This morning's job report was not the most important thing that happened in this economy this week. From American Public Media, this is Marketplace. In Los Angeles, I'm Kai Rizdal. It is Friday today. This one is the 7th of February. Good as always to have you along, everybody. We will talk about this morning's jobs report, of course, because data and the American labor market do matter, but everything else matters too to this economy. Catherine Rampells at The Washington Post.

Sudheep Reddy is at Politico. Hey, you two. Hey you two. Hey Kai. Sudhi, let me start with you. The jobs report 143,000 new jobs last month, 4.0% on the unemployment rate. It was fine, right? I mean, thoughts? It was fine. It was steady. It was a continuation, roughly, of a trend that we had seen in the prior months And this is a pretty good place to be this was also of course a snapshot of mid-january Which is when the the survey gets gets taken So we don't get to see the effects of what happens as a result of terror fears even if they were only fears what happens as a result of terror fears, even if they were only fears? What happens as a result of other uncertainty?

What happens? There's a lot going on in this economy right now. But as we came into January, I think things were in a pretty good place and that's a very solid foundation to build on. And we will take the foundation. Catherine Rampell, there I am at 515 this morning, Los Angeles time, sitting in my chair in the living room. And I pull up my iPad and I try to go to the Bureau of Labor Statistics website to just make sure that I can get there

and the data is coming through. And I can't. And I'm like, oh, man, they actually did it. And then I realized that I was having connectivity problems of my own. Point being, there is data and information being shut down all over the place. You have been tracking this assiduously. Give us the once over on what you've seen, but also why it matters to the health and

the future of this economy. Sure. So to my knowledge, BLS, which produces the jobs report, has not been infiltrated or compromised in any way, just to make that clear. But lots of other sources of data across the federal government have been disappeared, for lack of a better term at this point. CDC data and NIH data from the EPA, greenhouse gas data that had been released, lots of things have been taken down, as well

as other kinds of scientific reports, guidance for physicians, things like that. And this is very troubling for a whole bunch of reasons, including that policymakers need measurements, however imperfect, to make decisions about laws and regulations. Voters need this information to assess their elected officials. Businesses need reliable, quantifiable data to make investment decisions. They need to decide where to place the new store or restaurant based on demographics, based on transit access, all sorts of things. Doctors needed to figure out treatments for their patients. People abroad have lost access to data that helps,

like in Nepal, one example that I saw to predict mudslides that would help people to help save lives. And then there are other miscellaneous things like the CDC blocked or not the CDC was told to stop publishing its weekly morbidity and mortality report, which has come out every week since 1952. And that has critical data and research for physicians, for other providers and scientists around the country, including the first issue that was blocked was slated to have two new studies about bird flu transmission that have since been muzzled. So lots of reasons to be concerned about this. Sudeep, this next question comes as the signage for the USAID offices in Washington, D.C. are

literally being covered up and the letters taken off the wall. What we have here in addition to that and the tariff, will he or won't he? Yes, he did, but then he got rolled and now he's not for another month. We have chaos as economic strategy. My question is, today aside, major indices down about a percent, which all in all is not great, not huge. Why aren't the markets really reacting to this?

We're in early stages of seeing what this is. Obviously a lot of what's going on is outside the law. It is alarming when Congress has passed laws and they are not being executed, seeing how far that goes. And once that starts hitting parts of the domestic economy, I think the markets will start noticing, but this will take time for all the effects to take shape. You don't just start hacking it at government and expect that a few thousand jobs here, a few thousand jobs there, will start to add

up, but you're not going to necessarily notice it in the wider economy for some time, especially with government jobs. There are people who need to be furloughed. There will be long tail effects of this. Even if there are retirements and buyouts, that could take months to take effect. So all of this will happen. At some point, something can break and we will see if the fiddling with the government computer systems and that sort of thing from the so-called Doge people are, as they step in, there are a lot of risk factors,

but you actually have to see some things happen first. You know, we've talked before, Sudeep, you and me just really quickly, because I have one more thing I need to get to Catherine about, but you and I have talked about, you know, at some point something's gonna break and then it'll be trouble, but it was always like a small break. It was like, you know, government shutdown or, you know, maybe, I don't know, default, but that would never

really happen. This does seem to me to be the big they're breaking it thing, no? It could lead to the thing breaking, but these are all always easier to see in the rear view mirror. You can look back and see what happened that led to this point, but we won't know until it actually happens that, oh, that's how it breaks.

There are just dozens of safeguards within government to make sure that doesn't happen. But if you break down the dozens and bring it down to one or two, then eventually something will happen. Catherine, you have one minute for this answer and I apologize for that in advance. There is, as Sadeep said a second ago, lawlessness abroad out there. There is extra constitutionality, if not unconstitutionality. There is a fire hose of things that could really damage this economy that are happening

and that we are having to report on. We talked about whether or not I was going to ask this in the morning meeting this morning that we had. How are you staying focused? You specifically. How am I staying focused? Yeah, you. You.

What makes you think I'm focused? Well, yeah, I mean, join the club. But, you know, people respect your opinion. I feel like I am just trying to get a hold of the fire hose of information. And I definitely feel committed to the mission of, you know, as a journalist, holding power to account. So that's definitely motivating, but it is really challenging

to grasp everything that's going on. Like I'm trying to track the data deletions. I'm trying to track what's going on at Treasury and messing with the payment system. I'm trying to check what's going on with immigration and the effects for both humanitarian reasons and economic reasons. That's just a small subset of what I'm following, and plenty of other journalists have an even larger portfolio. So there's a lot to try to keep track of and it's frankly challenging. Pace yourselves, people. Pace yourselves.

Catherine Rampel at The Washington Post, Deep Ready at Politico on this Friday. Thanks, you two. Thanks, Guy. Wall Street, as I said, it is a Friday, thankfully. It You know, a little down. Details numbers, you know the drill. That jobs report we got this morning is about more than just jobs, of course, lots of data in there, including a category called average hourly earnings, which is to say, wages. They were up in January more than people had been guessing they would be, half a percent month to month, 4.1% year over year. You might remember back in 2021, 2022, wages were really climbing, growing nearly 6% a year at one point as companies scrambled for workers in the pandemic recovery. Well, what then might the wages of January be bringing? Here's Marketplace's Mitchell Hartman.

First thing to know, this could be a one-month blip. An effect of wildfires in California and bad winter weather across the country, says economist Bill Adams at Comerica Bank. When a natural disaster hits, you often see wage growth pick up because salary workers are still getting paid on a snow day. Hourly workers typically don't. Meanwhile, longer-term forces are pushing employers to keep giving workers hefty raises. Even though the labor market's cooling with

fewer job openings and fewer workers quitting to get higher pay in a new job, says Andrew Flowers at recruitment technology firm, AppCast. Employers are hiring less, but they're also firing less. They don't want to lay off workers because they remember the scars of 2021 and 2022 when talent was so hard to find. They're giving into some of these wage demands that compared to pre-COVID times look high. Hot wage growth has spooked the Fed in the recent past

with fears it could generate more inflation, but it shouldn't this time around, says Flowers. This level of wage growth can be sustained because workers are producing more per hour. Right now, we're enjoying a healthy balance of wage and price growth, says Comerica Bank's Bill Adams. Wage growth, outpacing inflation is a good type of economy to have. At last check, consumer prices were up 2.9% year over year, wages 4.1%.

And consumers sort of get that, says Joanne Shue at the University of Michigan surveys. They actually are showing a slight uptick in their income expectations. Still, consumer sentiment has fallen sharply since the beginning of the year, driven in part by fears of tariffs causing more inflation. As for rising wages, Shue says, consumers don't necessarily see this passing through to their personal finances because they are expecting any income gains they see to be really eroded away. ...by a resurgence of inflation in the year ahead.

I'm Mitchell Hartman for Marketplace. As we tune in by the tens and tens of millions to the Super Bowl this weekend, consider this. There is more on the line than just that shiny silver trophy. According to the American Gaming Association, Americans are expected to spend $1.3 billion gambling on the big game. I, myself, will not be among them. I lose bets all the time. But for those who are in the mood, parlay bets have apparently become a thing. Catherine Sayre at the Wall Street Journal wrote the other day about parlays, why they

are so popular, and what they mean for gambling companies. Catherine, welcome to the program. Good to have you on. Thanks for having me. As I said up in the introduction, I'm a horrible gambler, and I imagine many in the audience are as well. And, and maybe they're not gamblers at all. What is a parlay bet? So yeah, Americans have really taken to this kind of sports betting that as it turns out is really profitable for gambling companies.

A parlay is where you bet on multiple things happening. Often it's multiple things happening within one game. So you might predict how the quarterback, a tight end and running back are going to perform. All three of those things have to come true in order to win, but the odds are much longer than say picking the winner of the Super Bowl this weekend. And is the payoff greater since the odds are longer, right? Exactly. So that's what makes it so alluring to bettors. The payout is much higher. It also, though, as you talk about in this piece,

has, it's not like a socialization of it, but it has made gambling overall kind of more popular. It really has. Parlay's have tapped into sports fandom in a way that more traditional bets just haven't. You know, we're talking about our favorite players, how they're going to perform, the narratives on and off the field.

And so when you can turn that into a bet, it's just a very fun experience. You know what it is, actually. It reminds me of fantasy leagues, right? That's kind of the analog here. Absolutely, you're right. It's an evolution from fantasy that focused on players and their data. Sportsbooks are making hay out of this.

It's obviously more profitable if more people are betting, right? Absolutely. So when you think about a sportsbook offering a traditional bet on who's going to win the game, the company might take five to 7% of total bets wagered. With these parlays, they could take 20%, 30% or more. We should point out here that gambling is not for everybody. In fact, for a lot of people, it's a big problem. I assume the gaming world knows this. Absolutely.

Sports betting companies all have certain requirements by regulations and they will tell you they have so-called responsible gaming policies in place. Yeah. In the course of reporting this story, did you make some parlayes yourself, yeah? We did at the Wall Street Journal. We placed $209, one dollar, St. James Harley bet. Okay wait first

of all whose money? Journal's money or your money? The Journal's money. Okay all right okay all right continue. We didn't do so well we won only eight of those bets so the gambling companies took almost a hundred and fourteen dollars from. Man, money in the bank. Did it make you want to keep on going, though? It did take my curiosity to see if we kept going. Could we win? I felt that urge inside of me, but we set our limit. Yeah, fair enough.

It's not like it's all nickel and dimes, but as you point out in this piece, some huge number of same-gamelays, that is to say these bets inside the same game, are like 30 bucks or less. Not quite the dollar that you spent, but people are not waging huge amounts of money here. Exactly. They've come to be seen as a new sort of lottery ticket. The odds are long, you're going to put a few bucks down, and it's just a lot of fun. Now there are skeptics out there who call same game parlay's a sucker bet, but the betters I've

talked to for the most part, they kind of understand the odds are long and they're willing to do it anyway. Yeah. You got any money on the game on Sunday or no? I don't. I'll just be watching as a reporter. Same, same, same, same. Katherine Sayre at the Wall Street Journal, Parlay Gambling. Thanks, Katherine. Thank you. Thank you. Thank you.

Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.

Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Coming up.

We're just us. We are not venture capitalists. We've put everything that we have into this. Sports as a small business. But first, let's do the numbers. Dow Industrial is down 444 points today, 1%, 44,303. The Nasdaq subtracted 268 points, about 1 1⁄3 percent. 19,523.

S&P 500 down 57, just shy of 1%. 6,025. For the week, the Dow fell 0.5%, as did the Nasdaq. The S&P 500 declined about a quarter percent. Fall of this year, that's when Take Two Interactive reported it's going to be releasing Grand Theft Auto VI. The video game producer also beat analysts' earnings estimates. Shares rang up 14%. Today Frontier Group Holdings, that's Frontier Airlines, do you and me, expects to break even in the first quarter

and turn profitable later in the year. Frontier soared almost 15.5% today. Bonds failed, yield on the 10-year T-note rose to 4.49%. You're listing the marketplace. I was doing so well. ["The Marketplace"] ["The Marketplace"] Hey everybody, it's Kai. We've got an exciting offer for you.

Now through Valentine's Day, you can show off your love for Marketplace by grabbing an investor t-shirt when you donate $5 a month. Invest in the nonprofit journalism you love and get a shirt to show off your support. Give now at marketplace.org slash subscribe. Hi, I'm Kai Rizdal, the host of How We Survive. This season is all about the institution that shaped me, the US military, and how it could shape the future of climate tech.

You've probably heard that 2024 was the hottest year on record, that wildfires devastated Los Angeles, and that the U.S. withdrew from the Paris Agreement again. And while all that might feel pretty terrible, the climate crisis is not an inevitable reality. From simulated climate emergencies to microgrids and sustainable aviation fuel,

we look at how the military is investing part of its $850 billion budget in a greener, more resilient future. Listen to How We Survive wherever you get your podcasts. This is Marketplace. I'm Kai Rizdal. Consumers get a whole lot of airtime on this program because what happens in this economy depends in very large measure on what consumers do. And increasingly, the wealth gap in the United States is affecting what consumers do, how they shop and what they buy,

which in turn is changing what retail looks like. The industry term is bifurcation, the split in stores and brands as they cater to two different kinds of consumers, the budget conscious on the one hand, the luxury focused on the other. And as Marketplace's Kristen Schwab reports, that plays out in how you shop for everything

from pasta sauce to appliances. Claire Tassin's got a thing for old rugs. I'm really into home decor. It's my, that's my passion project. The reason she sways vintage is because it's tricky to find quality new rugs at a reasonable price. They're one of those things that cost something like $1,000 or $100.

When you get up close to a rug and you can see that it's like screen printed and it's not actually woven with the pattern that you want, that to me is just, I don't want that. Lately, Tassin, who's a retail analyst at Morning Consult, has been seeing this high-low split happen in more categories. From sweaters to couches, it's easy to find fast fashion and fiberboard furniture. It's also easy to find cashmere scarves

and hand-carved teak dining sets. Meanwhile... In the middle is kind of falling out. The middle falling out has a lot to do with the middle class falling out. In 2023, just over half of Americans were middle class compared to more than 60% in the 1970s, according to the Pew Research Center. It means American consumers are financially farther apart than ever before. And with that, famously middling stores like JCPenney and Macy's

have nearly disappeared. But Dean Brindle, head of product management for home solutions at LG, says something else is happening. American consumers are changing. It's not always the high income households or high net worth households that are purchasing the premium appliances. Brindle says consumers of all kinds are skewing toward luxury. And a lot of that has to do with aspiration. Aspiration that starts on social media and spills over into certain parts of our homes. When you have guests over, friends, family, etc., they're not typically looking at your

laundry appliances. In the kitchen, where people want to show off a little bit maybe, those home chefs typically will lean in a bit. So LG has been developing more premium appliances. Some refrigerators run up to $9,000 and have fancy features like ice makers that make multiple styles of ice and temperature-controlled drawers for storing kimchi.

The trend toward high end is playing out in the market for phones too. Drew Blackard is a vice president at Samsung America. Consumers, generally speaking, are skewing premium. Historically, that was not the case. You used to see that consumers maybe would opt towards the entry model and decide if they wanted to plus up. So it's kind of gradually changed over time.

Of course, there will always be a market for entry level everything. The profit margins for those products aren't as big, but the sales volume is usually bigger. And it's why Ed Johnson, who leads retail and consumer products at Deloitte, says the high-brow-low-brow split is happening everywhere in retail, even at the grocery store. You can even think about a category as mundane as ground beef. You have different grades, you have organic, you have grass-fed, and you have the fat content. And so on that matrix, based on what you're looking for, you can pay anywhere from $2.99 a pound to $9.99 a pound.

And Johnson says increasingly, the brands making all of these competing products are owned by the same companies. Campbell's makes Prego Pasta Sauce and Rouse, L'Oreal Group owns its namesake drugstore brand and Lancome, Hormel Foods makes Spam and Applegate Organic Meats. And it's done intentionally. It's done to create these sub-brands, again, that maybe appeal to a different audience or maybe that have slightly different formulation, but ultimately can reside on shelf at different price points. Which leaves you, the consumer, with fewer options if you're looking for something not

too fancy, not too basic, but just middle of the road. I'm Kristin Schwab for Marketplace. Speaking of you, the consumer, as we are, we're launching a new series about how you fit into this economy and how you feel about it. Share your story with us, would you? You can do that at marketplace.org slash consumer. Opening up a brick and mortar business is not easy. One of the big hurdles is finding the right brick and mortar space. You've got to think foot traffic, parking availability, rent too.

And everything just gets more complicated when your particular business needs a really particular kind of space for a very specific kind of use. Here's today's installment of our series, My Economy. My name is Christine Herron. I am a co-founder and the CFO of Achieve Sports. We offer everything from gymnastics to turf sports and court sports in Aurora, Colorado.

I run Achieve Gymnastics and Achieve Sports Center with my husband, Alan. Neither one of us had been our own business owners, entrepreneurs prior to this. So not only were we jumping into, hey, we're going to do something new and run our own business, but also, hey, we're going to own some big time real estate. And so both of those things combined, you know, certainly added an element of risk and a little bit of a fear. But very soon after opening our first location, we were at capacity with a very large waitlist. You know, having to turn a kid away is heartbreaking.

And so we went ahead and started the process of searching for a larger and more expansive kind of operation. It probably took us close to five years to find this expansion location. We took over an old grocery store building and completely reimagined it and remodeled it. It's very expensive. I mean, real estate, especially in Colorado within the last several years has been pretty extreme.

So that was definitely a challenge. And then just the costs to remodel it, it was a very, very big challenges for us are cash flow and capital management. Growth as they say, eats cash. And Alan and I are, we're just us. We are not venture capitalists. We've put everything that we have into this. But this week marked two years that we've been open at the new location and we're hoping that year three is our breakout year and that we can actually start to see a turning of a profit.

Running a small business takes guts. Christine Herron, the co-founder of Achieve Sports in Aurora, Colorado. We cannot do this series without you, so let us know what's going on with you at Marketplace.org slash My Economy. This final note on the way out today, an inflation data point that is not all that encouraging. We have talked, I think, about how what consumers think is going to happen with inflation can actually make it happen. So consider this. The University of Michigan's Index of Consumer Sentiment came out today.

We're a tad grouchier than we've been of late, about which fine moods change. But get this, consumer inflation expectations, where we think inflation is gonna be in the year to come, jumped from 3.3% to 4.3%. That is, first of all, not great. And second of all, it's the highest that number's been in almost a year and a half. Our theme music was composed by BJ Liederman.

Marketplace's executive producer is Nancy Fargalli. Donna Tam is the executive editor. Neil Scarborough is the vice president and general manager. And I'm Kyle Rizdahl. Have yourselves a great weekend everybody. We will see you back here on Monday, alright? This is APM.