Morning Brew Daily - US Malls Aren't Dead Yet & Americans Want $80k for a New Job

Episode Date: August 22, 2023

Episode 130: Neal and Toby explain why malls in the United States may not be going completely under just yet. Plus, why there is only one car left that costs under $20k and what is the average salary Americans are asking for when applying for new jobs? Also, Toby gets trendy and explains why Gen Z loves pickles and Ozempic is controlling the economy in Denmark. And finally the voice of Mario has called it a career. Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Listen to Money with Katie Here: https://chartable.com/podcasts/the-money-with-katie-show Learn more about your ad choices. Visit megaphone.fm/adchoices

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pwc.c.com slash US slash brew AI. That's pwc.com slash us slash brewAI. Good morning brew daily show. I'm Neil Freyman. And I'm Toby Howell. On today's pod, Americans reveal the minimum salary would take for them to quit their current job for another. And Denmark's economy is riding high thanks to the messy-like performance of just a single

company. Then the amount of car models selling for under $20,000 in America will shock you. Plus, the youths have a new TikTok-fueled obsession with a pickle sweatshirt. that has bite dance laughing all the way to the bank. It's Tuesday, August 22nd. Let's ride. Okay, Neil, let's start today's show off with a little celebrity gossip. So Jack Antonoff, Taylor Swift's close collaborator, songwriter, and producer got married,

and Taylor spoke at the wedding. But here's the absurd part. Her toast lasted 15 minutes. So according to report, she did have the guests in stitches. But, Neil, a 15-minute toast. I do not care if you're the Pope. You cannot give a 15-minute toast. The problem here is that Taylor Swift does not have the correct feedback loop.

She's been playing three-and-a-half-hour concerts to sold-out football stadiums all over the country for the entire summer. So no one's telling her to stop anything. So why would she not give a 15-minute toast? But people like us, they're like, okay, 25-minute podcast. Like, we're done with you. But Taylor Swift, you know, people are literally waiting outside the football stadium to hear her sing, not even paying to go in. So no one's ever told her to say. stop doing anything in her life. So why wouldn't she go 15, 20, 25 minutes for Toast,

which we all know is too long, even for her. Yeah, five minutes up and down. This is the all too well Taylor's version of Toast. Apparently there was also a tattoo artist on hand at this wedding in case any guests wanted to get a permanent tattoo commemorating the wedding, which is another wild move to assume that your guests are going to want to immortalize this moment forever. So So, celeb weddings, man, they're just built different. All you need is a photo booth. That would entertain anybody. Seriously.

All right, to kick off the show, I want to talk about malls and brick and mortar retail, which by my unofficial tally, we're supposed to have died 75 times by now. First, Amazon and e-commerce were predicted to wipe them off the map. Then COVID was supposed to turn us all into a nation of online shoppers by forcing stores to close. But in a major narrative violation, malls and physical stores are thriving. According to new research, retailers are on track to open 1,000 new stores on net this year in the U.S. The availability of retail space is down to 4.8% the lowest level on record, while mall foot traffic is up over 10% since before the pandemic. As we hear all this doom and gloom about commercial real estate, retail is putting the team on its back while offices flounder.

My takeaway here is that people just love to shop and be together in person. We've had every opportunity not to with e-commerce and COVID, and yet we are still going to stores in malls because for many things we buy, it is just preferable. But I'm curious to hear what you think. Yeah, the leasing numbers really stood out to me because anything, occupancy rates are the number one indicator of a mall's health. And malls are leased at 95% as of last year, our top tier malls were. So it's kind of crazy because we've seen these pieces.

You're right. Whereas like animal shelters. Retail apocalypse. Retail apocalypse. this, but like animal shelters were coming in to fill empty space in malls. Pickleball courts were coming in to fill empty space in malls. But apparently there's just not that much empty space in malls at all. So I do think you said narrative violation.

Like this is just a classic. You actually look at the data and malls are doing way better than expected. The thing here for why occupancy rates are so high and why vacancy for retail is so low is that we had so much retail space over the past decade. At one point, we had 23.6 square feet of retail space per person in 2015 in the U.S. Just to give you a sense, that is so much. That's more than twice the amount in Australia and about five times the amount of UK and other European countries. So in the early 2000s, we built way too much space for retail.

Then the 2008 financial crisis happened. They stopped building retail. And all of a sudden, all of the retail spaces I've now kind of filled in to where we have this very healthy environment where reds are rising. this retail apocalypse never materialized. Yeah. And then, I mean, just to tap on another big retailer that we've seen go out of business recently, Bed Bath & Beyond, which was a mainstay of malls, which helps contribute to the idea that malls are dying, the fact that Bed Bath & Beyond went under.

Landlords are kind of happy to get those spaces back because Bed Bath and Beyond occupied those spaces for a long time. Now they can lease it to a new tenant and they can raise rents on that. And then also it just gives new life to a mall. I mean, for the last generation, we've seen Bed Bath Beyond was always one of those anchor tenants in malls. And so now we might be seeing some new blood in there. And a lot of people are saying mall should be this living, breathing organism where brands go in and out of style. So it shouldn't just be like the same tenants over decades.

And so Bed Bath and Beyond going under might have been a boost for mall culture. Let's talk about what stores I said at the beginning that 1,000 new stores are opening. And just it's kind of interesting to see what kind of stores, are opening. So the number one is always dollar stores. So nationwide dollar stores are signing the most leases again this year. That is just something you can bet the bank on. Even if you predicted it, we wouldn't have to do the inverse Toby because that is always, you can always count on dollar stores. Dollar General is opening thousands of stores. And then another one that might be surprising to you is crunch fitness. So gyms are leasing a lot of new space and you're talking about

malls now becoming more experiential and people go there not just a shop, but to actually hang out. Yeah, there's like go-karting, trampolining, virtual reality arcades, which is honestly what I want to do when I go to a mall is I love the experiential aspect. So they are social. That was an overlook part of it is like how big of a social hub malls are for young people, especially. You go to the mall and hang out.

Yeah, I mean, Gen Z, there was a new survey. Gen Z went to malls more than any other age cohort. 73% of Gen Z shoppers said they visited a mall in the past month. I know. More so than millennials, which was 65%, and Gen X was 48%. Where else are you going to go as a kid? Like, you got to go to the mall. Like, that's the hangout spot.

Okay, Neil, let's move on. And I want us to flash back to five years ago. I was soon to be graduating college. Corona was just the name of a beer. And there were about a dozen cars for sale under $20,000. But now I'm a grizzled podcast host. We experienced the pandemic. And there is precisely one car under $20,000 for sale in the U.S.

Yes, one car, the Mitsubishi Mirage, a sedan that gets 39 miles to the gallon and tops out at a whopping 76 horsepower, is the only car on U.S. dealership lots that will set you back less than that 20K number. Now, here's the crazy part. No one's really buying it. U.S. sales of the Mirage came in at only 5,316 in the first half of the year, which is 44% lower than last year. Neil, we've talked about this before on the show, but cars are getting way big. and way more expensive, but man, is it crazy to see only one car coming in below that $20,000 number? Are you surprised no one's buying this car? With all the big cars on the road and, you know, the machismo of Americans that they're going to get this little Mitsubishi, I don't know.

Well, I would expect, I mean, 39 miles to the gallon, it's not a hybrid or electric. It just has a really small engine. I mean, 76 horsepower. That takes a while to giddy up and go. Well, yeah, you mentioned the price of cars is just absolutely skyrocketing. The average is now just above $48,000 for a new car. That's 25% more than before the pandemic. Why are car prices going up? We should probably talk about that. You mentioned no small cars. Every single car manufacturer has kind of ditched the concept of a compact vehicle. That just kind of doesn't exist anymore. They've seen that SUVs and bigger trucks are much more profitable. So they've invested all of their production in, into making bigger cars. And then there was this supply shortage with chips and other input materials that go into cars and they had to jack up their prices for that, or so they say. But there, you know, carmakers are doing really well right now and a lot of consumers are feeling pain because we need a, you need a car in the U.S. to kind of unlock a lot of

economic opportunity, but it's becoming kind of out of reach. Similar, this really reminded me of what's happening in the housing market. Right. Where the start, you know, the start quotes, quote unquote starting car is becoming. you know, so unaffordable compared to the starting, relative to the starting home, which also nobody can afford these days. I think just the stat that really shows the sign of the times is that there are currently 32 models in the United States that sell for an average price of over $100,000. That's crazy. As recently as 2018, there was only 12 models that sold for over $100,000. So that's

becoming more and more of the norm is a six-figure car. I mean, it's just crazy that people are paying that much for a vehicle when you used to be able to get a, yeah, a couple under $20,000. So I think that stat alone just shows how big the car market has become and how big cars themselves have become. And luxury cars. I don't know. It feels like a market failure here. Like the only way prices will come down is if consumers say, look, this is too expensive.

I'm not going to buy it. I'm going to keep my, you know, Toyota Camry going for 15, 20 years, which they can do. Yeah. And I think if they do that, car dealerships are going to get kind of overloaded with inventory and they're going to have to slash prices and discounts, which doesn't seem to be happening now because prices are still through the roof. But eventually you have to say, you know, the consumer has to put their foot down and help with inflation in the car market and say, look, this is too expensive. I can't do it. But like I said, it's kind of a catch-22 because you

need a car to get around to go to work. And a lot, I mean, a lot of people are saying the only way the return of the $20,000 car happens if China enters the market and kind of makes a new low-cost model, but people are saying there's just no way that happens. China's not going to enter the U.S. market in any way due to just like the geopolitical problem. So it looks like RIP to the $20,000 car. We missed our car buying window, Neil. I got a car for under $20,000, but it was beat up, but I love that thing. All right, for this next story, I have a question for you, Toby. What salary would it take for you to leave this job for another one? I will make you answer. I I'll make you answer. But I do have the number for the typical American, about $79,000.

According to a new survey from the New York Fed, the average lowest salary Americans would be willing to accept for a new job, rose to nearly $79,000 a year, which is the highest on record. That's up from about 73K in July 22, and 62K before the pandemic. This growing wage floor, which is what economists call the minimum salary you'd want to take another job, is a sign of the tight labor market we're in, where despite numerous calls of a recession, workers still feel like they have leverage over their employers. A few other tidbits I thought were interesting from this report, the gender gap in pay expectations. For men, the salary they leave the current job for is $25,000 more than women, but women's salary expectations are surging, growing at twice as fast as men in the past year. So while women don't expect to be paid

nearly as much, they are increasingly aiming for much more. have an answer to your question though, Neil, and my answer has a lot of commas in it. So three commas at least, if anyone wants to pry me away. This trend, though, it's been an accelerating trend over the last few years. There's an 8% increase from just a year ago, and it's the highest level ever in a data series that goes back to the 2014. So people are definitely setting their bar high for what their switch rate would be. And then over the past three years, the level of the switch rate has risen more than 22%. So it really is one of those things where it's kind of rising in line with inflation as well, which is this number makes a lot of central bankers a little

nervous because wages drive inflation. And so the more, the higher the starting wages, that 2% inflation number becomes more and more difficult to hit. So even though you look at it and say high wage is great, like strong labor market great, this is the thing that keeps drone power up at is that these starting salaries are just so dang high these days. The good news about that is for, there were a couple years when we had this high inflation that wages were below inflation. So it was eating away at your pocketbook. But now for the, you know, in the past couple quarters,

wages are actually growing faster than inflation. So that's good news on that front. But yes, you're right. It does, it does worry Jerome Powell a little bit. Another few interesting tibbets from this report, early retirements. More people are expecting to retire below 62%. The average expected, or 62 years old, the average expected likelihood of working beyond age 62

for Americans surveyed in this report declined to just 47% from nearly 49% in July 2022. Which was so interesting because remember we talked about how more 60 and 70-year-olds were working further and further into the workforce. But it looks like they started working and they're like, well, it's not all it cracked up to be. You know what I think it is? It's the 401k millionaires. Oh, yeah. We talked about that there was a record number of 401.

or almost a record of 401k millionaires. So they're looking at their 401k. They're like, hey, maybe I don't have to work past 62 and I can dive into Social Security early. But look, the stock market is a fickle beast and it could come back down. It's all fitting together. It's all making sense, then.

Retiring at 62 would be crazy. I've never, I wouldn't. We're still going to be here, Neil. We're going to be in this very studio at 62. Okay, Neil, before we jump into our next story, we're going to take a quick break. It's time to refresh your yard during spring backyard days at the Home Depot.

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Neil, we are back with another edition of Toby's Trend. where I, a young whippersnapper, educate you an adept maven of the news cycle, about a certain trend that has caught my eye recently, and that trend is pickles. Yes, the new hottest thing that the youths are buying, showing off, and rocking on TikTok is a $44 sweatshirt that has various jars of pickles screen printed on it. It's from an online store called Bad Addiction, which the founder describes as a boutique for hot mess, anxious moms. Now, there are two parts of this trend I want to break down in particular.

First, the pickle sweatshirt has gone viral, right as TikTok has begun heavily pushing its TikTok TikTok shop feature that lets you buy items straight from within the app. And two, Gen Z's obsession with pickles is a full-blown generational love story at this point. Remember back in the mid-2000s when millennials got obsessed with bacon? Well, I do because it was super lame. But now Gen Z is falling into the same exact trap with pickles. So, Neil, which side of this trend do you want to tackle first? Let's start with pickles.

Because I'm curious about the obsession with pickles. I've always liked pickles. I haven't seen it as a marker of social status, but clearly it is now because if you want to show off your love of pickles. So I'm just thinking about in my mind right now why people are obsessed with pickles or why people want to show off that they're obsessed with pickles. I guess there's a level of sophistication to pickles because they're pickled. It's not just a straight cucumber. there's a taste associated with it. There's dimensions to pickles. And, you know, people love pickleback shots as well when it comes to drinking in a little more, in a little more interesting way.

So maybe that's why you want to show off your love of pickles. It's like a level of sophistication, also nostalgia going back to maybe a lot of Jewish people like myself would love to show off their love of pickles to go back to our roots. There's like a couple places on the Lower East side in New York where you can go and get, you know, there's very old school pickle places where you're can go. I think it's just a salty snack, honestly. And it's a more sophisticated salty snack. Like, come on, it's better than like eating a cheese it or something like that or a cracker. It is, it gives you like that little hit of salt. And then also, I do think that generations, like millennials really embraced bacon and like every shirt was, I just had like these kind of

cringy like bacon slogans on it. And so now Gen Z is entering into their kind of embrace of a food era. And I think that that food has become pickles. But I also want to talk about this other part of the trend is the fact that TikTok shop is becoming this thing that a lot of people are seeing appearing in their feeds. It actually launched last November in 2022, but ahead of kind of the holiday season, TikTok is really ramping it up, rolling it out to its full user base. And this has a legitimate chance to kind of unseat some of the major the Amazon's of the world, the T-Mus, the Shiennes of the world, because you can literally just scroll a video, see this like pickle sweatshirt, buy it from within the app, and it just removes that entire friction

of having to sign out via checkout on another website. It also is just like, it's like a behavioral economics thing where you can, if you can do it within the app with zero friction, you don't get that kind of buyer's remorse type thing. It reduces that unpleasant feeling of having to check out. So I do think that this has a chance to really upend the e-commerce world. And I mean, users are kind of wise to it, though, because they keep seeing these shop features. They keep seeing this pickle sweatshirt everywhere they look. And so they're kind of saying that this is TikTok just accepting TikTok shop. I would love to see people are actually buying the pickle sweatshirt through TikTok shop. Having a bunch of social media companies tried to do the in-app shopping feature like

meta and Instagram, they have. You don't really hear a lot about it, but maybe TikTok is a different beast. Yeah, they are because remember the $400 billion live streaming industry in China, so they're very good at prompting users to buy something within an app. Okay, our next story is about Denmark. Toby, you and I both know that Denmark has had some very famous exports over the years, Legos, Carlsberg Beer, legendary goalkeeper, Peter Schmeichael, but one of its products is becoming so popular that it's having a major impact on Denmark's economy. I'll give our listeners a second to pause the recording if they want to guess. The product is semi-glutide drugs like Ozzympic and with Govi, those diabetes and weight loss medications that Americans are hoarding like

four loco in 2010. Those drugs are made by the Danish pharma company, Novo Nordisk, and their popularity is having a major impact on the country's economy. First of all, thanks to the promise of these obesity drugs, Novo Nordisk's market cap has grown to about $419 billion, which is more than the entire GDP of Denmark. Danish drug makers in general have lifted Danish economic growth by almost two percentage points alone over the last two years. Plus, so much money is coming into Novo Nordisk from the U.S. that it's flooding the Danish economy with dollars, causing the central bank to keep interest rates lower than the European central bank. Those lower interest rates make buying a home cheaper in Denmark than the rest of Europe. Plus, with all the money flooding

into Novo, economists expect a period of strong job gains. So some people are now comparing Denmark to a petro state like Saudi Arabia, but instead of becoming rich through oil, it's becoming rich through weight loss drugs. I think they should use the money to buy back golf from Saudi Arabia. It is truly amazing how big this company has become in kind of just the last two years alone. I do think it's also camouflaging a couple of weak spots in the economy because economists were saying that without Novo Nordus, so Denmark GDP grew 1% in the last quarter, but without Novo Nordus, it would have actually shrunk.

It would have been negative 1%. So you are seeing Novo Nordus kind of come in and paper over a lot of some other weaknesses of the Denmark economy. It's very much a, this is like a classic college group project. One person is doing all the work and everyone else is just absolutely exactly. It is crazy though that it's literally affecting the housing market though because they're keeping interest rates lower so you can get a more affordable house than in other places in the Nordic states simply because Americans love this one drug so much. So the ripple effects are truly amazing. the risk obviously though is when you're concentrated in one company so much you just look at your neighbor

Finland which Nokia was this huge company at one point in accounted for 4% of the country's GDP and 70% of its value on the stock exchange but then the iPhone was released Nokia headset handsets started falling in sales then 2008 hit and Finland entered a decade of like economic stagnation so there are risks when you are, when you have one person in group project that does all the work, because that person is out sick and then you're done. Oh, I know. That was me. Neil, so I also put together a little quiz for you. I went through and found which companies had the biggest market cap in each country. So I'll give you the country, and I want you to give me

the company that has the biggest market cap. All right. Let's go. Listeners can play along too. So we're going to start off easy with Japan. Toyota. Toyota, $264 billion market cap. Then the UK. I will say AstraZeneca. It is Astroseneca. Let's go. I was thinking you're going to say like BP or Shell or something like that, but it's AstraZeneca, which is another pharma company that has done really well in the last few years. Okay, Italy, I'm actually going to ask you not for the number one, but for the number two.

I will say Ferrari. It is Ferrari. So NL is the top one, which is an electric and utility company, but that's no fun. Thank you. That was very nice. Okay, and then I'll give you a choice between India and Turkey for the last one. Maybe just both. Oh, India, is it the Adani group? It's Reliance industry.

Reliance. Yeah, which is just like a big conglomerate. Turkey. What's the industry? I can't give you the industry. Really? It would give it away. Is it like shipbuilding or something?

It has to do with transportation. Is it Turkish Air? Turkish Airlines, yeah. So Turkey, Turkish Airlines, only a $13 billion market cap. So I don't know. I knew Neil would get all those. He's pretty plugged into everything. Okay, Neil, let's move on to our last story of the day where,

unfortunately, I might be moving on from Morning Brew Daily because a new gig just opened up and it's got my name all over it. That's because after 25 years, the voice of Super Mario is up for grabs after Charles Martinette is stepping down from his role to become a Mario ambassador. Now, Martinette is a legend of the voice acting world. He's voiced Mario Luigi as well as are. evil counterpart to Wario and Waluigi in more than 100 gaming titles. He actually holds the Guinness World Record for most voiceover performances of the same

character in a video game. Here's my favorite detail about Martinette becoming Mario. So he crashed an audition for Nintendo in the 90s and he got a single prompt from the casting director. And here's the prompt. You're an Italian plumber from Brooklyn for this company called Nintendo. The character's name is Mario, make up a voice. So Charles started listing off instructions on how to make a pizza in Mario's now famous Italian flecked falsetto, and he got the part.

His first gig, a 1994 CD-ROM game called Mario teaches typing. So, Neil, it's the end of an era for Martinette and Mario, and I'm a little sad because I feel like he just missed this huge payday after Chris Pratt took over the role for the Super Mario Bros movie. Toby, you can't just tease us and say this is the perfect role for you. Honestly, I think we need to find a new host. I'm not going to get it. That was pretty good. Oh, thank you. Thank you.

Yeah. No, this is like the Mario voice is so iconic. And there was such a controversy around when Chris Prack came in and did the voice for the Super Mario Bros. movie. So they're going to have to figure out a way to make Mario like Mickey would just like live on forever. So apparently he does have a huge bank of words. He says there are. are over 5 million audio files of me recording Mario because he would go into the studio and he would

record 45 takes of every sound you could think of. So technically we could hear Martinette's voice for a while going forward. I don't know if Nintendo's actually going to do that, but five million audio files. This sounds like a perfect use case to pay this guy a zillion dollars, get his voice and use his voice, make it AI, and use it in perpetuity. So people, so Mario stays the same for forever. Yeah. This is exactly what the guy who played Darth Vader did. Wow, it is escaping me.

James Earl Jones. He signed a deal with Lucasfilm to use an AI generated version of his voice for Darth Vader going forward. He got a great payday, and he can just retire. And I think that's exactly what Nintendo should do. I mean, Mario, not to discredit Charles in any way, but he doesn't say that many words. Like, he just has more... It's super easy.

Super easy. So I hope that they keep the original. Mario voice because it's just so iconic. It's so everyone, everyone knows it, yeah. You don't want people talking about what Mario should sound like. That's not a great. Exactly. All right, that is our show for today.

I hope everyone has a great Tuesday if you want to write in and let us know who should be the next voice of Mario, if not Toby. Our email is Morningbrewdaily at Morningbrew.com. Let's roll these credits. Emily Milliron is our editor and producer. Samantha Velas and Raymond Lou are associate producers. Yuchinawa Ogu is our technical director. Billy Minino is on audio.

Hair and makeup is on their own. way into work, but they're driving a mirage, so it might be a little bit. Devin Emery is our chief content officer and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow. Yamava Resort and Casino at San Manuel is California's number one entertainment destination for today's superstars. Catch the Jonas Brothers return to the Yamava Theater stage on April 30th, the powerful vocals of Demi Lovato on May 17th, and the signature Southern Country Rock of Eric Church on July 19th. Tickets on sale now at Yamava.

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