WSJ What’s News - Consumers Pull Back Spending, From Luxury Goods to Convenience Stores

Episode Date: March 13, 2025

P.M. Edition for Mar. 13. Low- and high-income consumers alike are spending less, and that’s having an effect on lots of retailers. WSJ food and agriculture reporter Jesse Newman tells us how fewer convenience store purchases of chips and candy bars could impact snack companies’ bottom line. Plus, a federal judge orders the Trump administration to reinstate thousands of fired workers at six federal agencies. And potential cuts to Medicaid put venture-backed startups at a crossroads. WSJ reporter Brian Gormley joins to discuss who could benefit. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Want to own part of the company that makes your favorite burger? Now you can. With partial shares from TD Direct Investing, you can own less than one full share, so expensive stocks are within reach. Learn more at td.com slash partial shares. TD, ready for you. Vladimir Putin rejects a proposal for immediate ceasefire in Ukraine. Plus, a federal judge says the Trump administration

must reinstate thousands of federal workers. And possible cuts to Medicaid put startups and their backers at a crossroads. Investors will continue to show interest but will be a little bit more circumspect about making new investments in this area. It's Thursday, March 13th. I'm Alex Osola for The Wall Street Journal.

This is the PM edition of What's News, the top headlines and business stories that move the world today. Russian President Vladimir Putin said today that Russia wouldn't agree to an immediate end to the fighting in Ukraine as Moscow's army made rapid gains towards expelling Ukraine's forces from its Kursk region. He said that any pause in fighting at this point would be in Ukraine's interest and added that Russia wanted a truce that led, quote, to a lasting peace and the elimination of the root causes of the war, which he described as a crisis.

Putin's comments were Moscow's first official response to a U.S.-backed proposal, which Ukraine agreed to this week, that would pause the war for 30 days. The comments came as, according to U.S. officials, President Trump's special envoy, Steve Whitkoff, was headed to Moscow to discuss the ceasefire proposal. President Trump announced another salvo in a fast-escalating trade war with the European Union, saying he would impose a 200% tariff on U.S. imports of wine, champagne, and other

alcoholic beverages from the 27-nation bloc. In a post on his Truth Social platform today, Trump said the tariff threat came in response to the EU's decision to impose a 50% levy on American whiskey, itself a response to 25% steel and aluminum tariffs that Trump imposed this week. The tit-for-tat over alcoholic beverages, which pushed down shares in European drinks companies, could target more than $10 billion worth of European exports to the U.S., depending on how broadly Trump imposes tariffs.

Meanwhile, Labor Department data out today showed that wholesale prices held steady last month. But the department said that a data revision meant that prices charged by producers rose by more than initially estimated in January. The January increase was 0.6%, not the 0.4% previously estimated. The prices charged for eggs, however, jumped by more than 53% in February, fueling a 0.3% increase in prices charged for goods overall, balanced by a 0.3% increase in prices charged for goods overall, balanced by a 0.2% decline in prices charged for services.

To investors, the producer price figures are most important as data that feed into the Federal Reserve's preferred gauge of inflation, the Personal Consumption Expenditure's price index. U.S. Stocks Slid Today U.S. stocks slid today as investors remained on edge over new tariff threats and mixed signals on inflation. The S&P 500 fell about 1.4%, entering correction territory as it fell more than 10% from its record high on February 19.

It's the index's first correction since October 2023. The Dow and the Nasdaq also closed lower, falling about 1.3% and 2% respectively. Between a looming trade war, stubborn inflation, and recession fears, American consumers have had a lot to worry about this year. And it's affecting their spending, no matter their income level and across necessities and luxuries all at once. Take low-income consumers. Recent comments from executives at Walmart, McDonald's, and Dollar General indicate that they're being careful about what they're spending, especially on things beyond essentials. Meanwhile, higher-income shoppers have less discretionary spending to use at retailers

like Kohl's. Macy's CEO said that affluent customers are just as uncertain and confused by what's happening. And Costco, where customers pay a membership fee, said last week that demand has shifted towards lower-cost proteins such as ground beef and poultry. Another place where budget tightening is playing out? Convenience stores, where consumers often pick up snack foods and cigarettes. According to market research firm Serkana, U.S. convenience store sales volume fell by more than 4% in the year ended February 23rd. And that

could have an impact on snack companies bottom line. Jesse Newman covers food and agriculture for The Journal. So Jesse, spell it out for us. Why exactly are consumers spending less on snacks? Consumers are definitely buying fewer snacks. That's a trend that we've been seeing for a little while. And some people will tell you it's the economy, stupid. Folks are just really guarding their purse strings very carefully. Food prices have been going up for years now.

And obviously, we all know this is a lot of what convenience stores sell. And so when shoppers start pulling back at convenience stores, that can be a big challenge for food companies. COLLEEN O'BRIEN How important are these convenience store purchases for the snack companies? KATE BOWMAN In some cases, it's really important. You think about Hostess, which makes Twinkies. And convenience stores are really, really important for them.

Convenience stores make up about 40% of Hostess' sales. And when you've got people passing up the snack aisle and passing up the Twinkie aisle, that's a really big deal for your brand. Now, I will say that for hostess in particular, convenience stores really aren't their only problem. But when you're that heavily dependent on convenience stores for sales, any downturn in convenience stores is going to really hit you. So what are they doing about this? They're all trying to figure out how to appeal to convenience store customers.

One of the big things that we see a number of companies doing is new product launches. So PepsiCo, they're developing these sort of mini meals, which are Doritos loaded with a warm nacho cheese sauce. Smucker, which owns Hostess last summer, they launched a limited edition cherry flavored Twinkie with Slurpee. And you've even got the tobacco companies

who are rolling out new, more affordable cigarettes. So they're really trying to appeal to consumers with new products and better prices. That was WSJ reporter Jessi Newman. Thank you, Jessi. Thanks so much. Coming up, what could possible cuts to Medicaid mean for startups? That's after the break.

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Prices exclude delivery. Congress is working on a budget, and cuts to Medicaid are on the table. The program is mainly for low-income Americans, but deep cuts could affect state budgets and health care more broadly. What questions do you have? Send a voice memo to wnpod at wsj.com or leave a voicemail with your name and location at 212-416-4328. We might use it on the show. Those potential cuts to Medicaid could have an impact on the millions of Americans that rely on it, but also on the dozens of venture-backed startups

created to improve care for those patients. Now, those startups are at a crossroads, putting them in a position to benefit or potentially suffer from the shift in funding. Brian Gormley covers venture capital and healthcare for the Wall Street Journal. Brian, you write that this could be a big moment for these healthcare startups.

How could they potentially benefit? Companies that have technology that enable healthcare providers or health insurers to quickly reduce costs could benefit because their services or technology could be even more in demand in an environment in which funding is being taken out of the Medicaid program, especially on the administrative side

where artificial intelligence could be used to automate tasks that humans have had to do. By and large, companies are working with health insurers, health care providers, who are in turn serving patients. So those are the companies that could stand to benefit from this shift. What about the companies that could potentially suffer? Companies that have a service or technology that takes a while to deliver a return on investment might have a harder time in an environment where less funding is available to Medicaid.

And that's where you might see companies have to be creative about how to adapt to a new situation in which funding is tighter in Medicaid. Would you expect a lot more capital to be poured into certain kinds of companies? Venture capitals will continue to be interested in companies that serve Medicaid, but they might take more time to make decisions about where to invest.

They might take a deeper look into whether a company's model would thrive in an environment where there is less funding and whether their services would be something that would be more or less in demand. Investors will continue to show interest, but will be a little bit more circumspect about making new investments in this area. That was WSJ reporter Brian Gormley. Thank you, Brian. Thank you. in this area. That was WSJ reporter Brian Gormley. Thank you, Brian.

Thank you. The White House has withdrawn President Trump's nominee to lead the Centers for Disease Control and Prevention. A Republican familiar with the discussions said that senators told the Trump administration that Dr. Dave Weldon didn't have the votes to be confirmed. It was a rare change in the president's plans to fill top roles with candidates who have mostly won approval. And in another blow to the Trump

administration's efforts to rapidly scale back the size of the federal workforce, a federal judge has ordered six federal agencies to reinstate thousands of probationary employees who were fired last month. A U.S. district judge in California said today that probationary workers from the departments of agriculture, energy, interior, treasury, defense, and veterans affairs had been unlawfully fired. The order didn't extend to other agencies affected by the firings, though the judge didn't rule out potentially expanding that in the future.

The justice department said that the decision to terminate the workers had been lawfully made by each agency's leaders. ————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————— reductions and operations, officials said, with one describing it as a, quote, positive conversation. WSJ columnist Tim Higgins is looking at Musk's first 100 days in the Trump White House and spoke to our tech news briefing podcast about how Musk and Trump are getting along. The biggest question since the election was how long would Trump and Musk stay close? And time and time again, we continue to see them making these public displays of affection. And this past week was no different.

Trump hosting Musk on the White House lawn to essentially hawk Tesla vehicles, which was odd, if you will, because the campaign season, Trump was very much against electric vehicles. To hear more from Tim, listen to tomorrow's episode of our Tech News Briefing Podcast. And finally, can your eye shadow or foundation signal your personal values? On social media, apparently the answer is yes. And even Congress isn't immune. Both Republican Representative Nancy Mace and Democratic Representative Rosa DeLauro recently came under fire for their physical appearance.

On the one side, there's quote, Republican makeup, characterized by heavy foundation and overfilled eyebrows. And on the other, conservatives say liberals are applying clumsy clownish makeup and are mocking bright hair dye, piercings, and neon lipstick. Honestly, to me, a woman being criticized online for her appearance? That's nothing new. But really, are eyeliner and contouring a new political battleground? Online, maybe.

But several professional makeup artists say they think liberal and conservative women did their makeup pretty much the same way. And that's what's news for this Thursday afternoon. Today's show is produced by Pierre Biennome and Anthony Bansi with supervising producer Michael Kosmitis. I'm Alex Osila for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.