American companies report surprisingly high spending from shoppers despite inflation
MARY LOUISE KELLY, HOST:
Recession? What recession? The numbers are in, and things are looking pretty darn good, painting a picture of insatiable American shoppers and an economy that seems to be looking ahead through rose-tinted glasses. NPR's Alina Selyukh and Stacey Vanek Smith have been studying all these numbers. They are both here in the studio to tell us what they have found. And they have brought a bag, Alina.
ALINA SELYUKH, BYLINE: Can you hear this? Here's the bag.
KELLY: What's the bag?
SELYUKH: It's a first, actually, for me - a paper bag in the studio - yeah, because the theme of the economy this summer is spending. Let me say that again - a really surprising amount of spending.
STACEY VANEK SMITH, BYLINE: So we thought we should jump in and spend some money, too. So we went shopping, and we picked up some of the things that Americans are buying right now to help paint a picture of what is going on in the economy.
KELLY: Excellent. You've brought loot. OK. What...
VANEK SMITH: Yes.
KELLY: ...Did you bring?
SELYUKH: All right. Let's start with this Reese's peanut butter cup...
KELLY: Oh, yes.
SELYUKH: ...The big one and some Coke to wash it down. Would like a Coke, Mary Louise?
KELLY: No. But I will take those Reese's. Pass them over.
SELYUKH: There you go.
KELLY: It's my favorite. Here. Throw.
SELYUKH: I'm going to throw. The two companies...
KELLY: You have brought me these why?
SELYUKH: ...That are making these products, Hershey and Coca-Cola, were among many that basically sang praises to shoppers, saying they've been raising prices trying to cover higher costs like corn syrup, but people are still willing to pay up for brand names.
VANEK SMITH: And this has major implications for our economy because all of the spending that we're doing has the economy going gangbusters. We heard yesterday the economy is growing at a rate of 2.4%. That was a lot higher than people were expecting. And it is all this money that we are throwing around for goods, things like chocolate and Coke, but also for services. We are shelling out a ton of money for things like restaurants, shows, summer travel, which brings us to the next item in our haul.
KELLY: (Laughter) OK. This is less exciting. This is, like, the hotel doorknob sign.
VANEK SMITH: It is a do-not-disturb sign from my Hilton hotel, which I technically did not buy. I borrowed this sign, but I did pay for my stay, and so did a lot of other people.
SELYUKH: Travel is huge. It's hard to overstate. Hilton, the hotel chain where Stacey borrowed her sign from - it had one of the more eye-opening reports this week. The company says people are spending more and more across all types of hotels, from the humble Garden Inn to the posh Waldorf Astoria. Here's CEO Chris Nassetta.
CHRIS NASSETTA: And the other thing that's going on is - I sort of kid - not to be a smartass about it, but part of it is pricing, right?
SELYUKH: Pricing, as in hotel prices are at record highs. And Hilton was kind of like, good. We'll keep going as long as people are into it. And so far, travelers are not really pushing back. You could say companies are having a hot profit summer.
KELLY: A hot profit summer. OK.
VANEK SMITH: And speaking of hot profits, I'm pulling something out of the bag.
KELLY: Oh, my God. What is this pink ponytail?
VANEK SMITH: It is a pink hair clip that I purchased in honor of the impact that all things female are having on the economy, or, as you could say, the sheconomy (ph).
KELLY: The sheconomy.
VANEK SMITH: We may need to workshop that.
SELYUKH: It needs a better name.
VANEK SMITH: But there is no question that a lot of our good economic news is coming from the ladies right now. Take Taylor Swift and Beyonce. They are shaking up economies. The Federal Reserve just produced a report on the economic impact of Taylor Swift. Apparently, she's adding $5 billion to the global economy.
KELLY: Five billion. Wow.
VANEK SMITH: Five billion with her tour. And Beyonce got a lot of criticism from economists for pushing up inflation in the country of Sweden because apparently, when she had a concert there, the prices of hotels, food and everything else went up.
(SOUNDBITE OF SONG, "RUN THE WORLD (GIRLS)")
BEYONCE: (Singing) Who run this mother? Girls. Who run this mother? Girls. Who run this mother?
VANEK SMITH: And, of course, we've got to talk about our lady of the hour.
VANEK SMITH: Barbie, indeed. She's been busting all of these box office records.
(SOUNDBITE OF FILM, "BARBIE")
ALEXANDRA SHIPP: (As Author Barbie) Hey, Barbie.
MARGOT ROBBIE: (As Barbie) Hi, Barbie.
EMMA MACKEY: (As Physicist Barbie) Hi, Barbie.
ISSA RAE: (As President Barbie) Hi, Barbie.
ROBBIE: (As Barbie) Hi, Barbie.
SIMU LIU: (As Ken 2) Hi, Barbie.
RYAN GOSLING: (As Ken) Ugh (ph).
ROBBIE: (As Barbie) Hi, Ken.
SELYUKH: I haven't actually gotten to see it yet because I've spent all week listening to earnings calls. Don't feel sad for me. It was kind of fascinating because brand after brand was saying, basically, they're charging more. They keep waiting for people to resist, and people are still buying.
KELLY: And why? - because I feel like y'all are always here reporting to us about rising prices and how people are struggling and tightening their budget belts. Has all that gone away? Surely not.
SELYUKH: Well, part of the answer is that we are going into a lot of debt to buy all this stuff. Credit card debt is at a record high right now, and it's been at a record high for a while. It's just been rising and rising. Also, though, we do have more money to spend. People are getting raises. Wages have been rising all across the country.
VANEK SMITH: I heard this a lot from companies, too. The labor costs are going up for them. They're having to pay higher wages. They're offsetting these costs, charging more for our meals. But also, they're trying to get maybe robots to do some of the work. Like, Chipotle is working on Autocado, which is a machine that makes its guacamole, which apparently is a pretty tedious task. I actually got some chips and guac here.
VANEK SMITH: That's all the snacks. This one was made by hand by a woman.
KELLY: OK. This all sounds pretty good. Like, higher wages sounds like good news for workers. It also sounds like good news for the economy 'cause we seem to be spending all this money on all this stuff.
VANEK SMITH: Well, it is, like you say, good news for workers and for companies, but it has economists pretty nervous because when wages are rising like this, it can create something called a wage-price spiral. So when companies raise people's wages, they charge higher prices to be able to afford those wages. And then we all go ask for raises to be able to afford those higher prices. And it can create this cycle that can really push up inflation. And in fact, this week the Federal Reserve raised interest rates once again. They are now at their highest level in 22 years.
KELLY: I thought inflation was falling.
VANEK SMITH: Inflation is falling. That is true. But the Federal Reserve has been stressing over and over again that some prices are still very much rising. We're not out of the woods yet. And, like Alina was saying, a lot of companies are testing the pricing limits. So the Federal Reserve has said they may need to take more action that could lead to job losses and possibly an economic downturn in our future.
KELLY: That is NPR's Stacey Vanek Smith and Alina Selyukh. Thanks to you both.
VANEK SMITH: Thank you. Thank you.
SELYUKH: Thank you.
KELLY: And please pass the guacamole over here, please, right away. Transcript provided by NPR, Copyright NPR.
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