Judge Blocks Federal Firings During Government Shutdown for Now

Summary

Bloomberg Businessweek – Judge Blocks Federal Firings During Government Shutdown for Now

Date: October 15, 2025
Hosts: Carol Massar, David Gura (in for Tim Stenovec)
Main Guests:

• Laura Davison, Bloomberg News Washington Deputy Bureau Chief
• Dan Letter, President and incoming CEO, Prologis
• David Bellinger, Senior Consumer Analyst, Mizuho
• Michael McKee, Bloomberg TV/Radio International Economics and Policy Correspondent
• Molly Smith, Bloomberg News Economics Editor

---

Episode Overview

This episode covers the latest developments in the ongoing government shutdown, specifically the ruling by a federal judge to temporarily halt federal worker firings, the impact on federal employees and broader government operations, and how this uncertainty is affecting the U.S. economy. The hosts segue into the macroeconomic environment with corporate leaders and analysts, discussing topics from logistics and data centers to Walmart's e-commerce and the implications of AI on commerce. They conclude with analysis of the Federal Reserve’s Beige Book, labor supply dynamics, and economic bifurcation.

---

Key Segments and Topics

1. Federal Judge Blocks Firings During Government Shutdown

With Laura Davison (Bloomberg DC Bureau)
[01:48–05:50]

Summary:

• Federal court issues a temporary block on the Trump administration's plan to fire thousands of federal workers during the prolonged (15 days) government shutdown.
• Immediate consequence: Agencies must halt termination plans; about 4,000 have already received layoff notices, but anticipated layoffs exceeding 10,000 are now on hold.
• This is not a final decision, but a holding action until the merits of the case are heard.
• Unions have mobilized quickly, advocating to keep workers in their roles during legal disputes, noting that rehiring after terminations is a significant challenge.

Memorable Quotes:

• “Right now, those people will be able to keep their jobs for now, and any future rounds of firings ... will also be halted.” — Laura Davison [02:34]
• “It was quite a dramatic moment because just before this ruling came out, Russell Vogt ... said he expects layoffs would exceed 10,000 people.” — Laura Davison [02:55]
• “Once workers leave the building, have their badge and email taken away, it’s really hard to bring some of those people back even if the firings are later ruled illegal.” — Laura Davison [05:31]

Additional Notes:

• No active negotiations between Congress and the White House; the Senate is stuck revisiting the same bill while the House remains out.
• The pain compounds as time goes by, with millions of workers missing paychecks and operational disruptions mounting.

---

2. Prologis Earnings and Macroeconomic Trends

With Dan Letter, President & Incoming CEO, Prologis
[07:05–15:56]

Summary:

• Prologis reports record-breaking quarter: leased 62 million square feet, likened to leasing Central Park twice over.
• Robust leasing activity reflects clients’ (like Amazon, Home Depot, FedEx, UPS, GigaCloud) increasing optimism after years of hesitation, signifying a transition from caution to long-term strategic decisions.
• Geography: Building activities and land acquisitions are global, focusing especially on build-to-suit projects.
• AI’s impact is two-fold:
  • Internal operational efficiency improvements.
  • Major opportunities in powering and constructing data centers (5.2 gigawatts secured/advanced-stage power assets), leveraging Prologis’ vast land holdings near consumption centers.
• Challenges: Construction and labor costs are up (replacement cost rents are 25% above market rates), and labor shortages are impacting the pace of expansion, especially for data centers driven by AI demand.

Memorable Quotes:

• “We leased 62 million square feet ... the equivalent of leasing Central Park in Manhattan twice over in one quarter.” — Dan Letter [07:15]
• “After ... two to three years of uncertainty ... our customers are moving from caution to optimism.” — Dan Letter [08:23]
• “AI is here and it’s big at Prologis ... we announced today we now have 5.2 gigawatts of power either secured or in advanced stages of being secured in sites.” — Dan Letter [11:40]

---

3. Walmart, E-commerce, and the Future of “Agentic Commerce”

With David Bellinger, Senior Consumer Analyst, Mizuho
[18:15–26:54]

Summary:

• Walmart’s aggressive e-commerce investments ($200 billion since 2015) position it to challenge Amazon: U.S. e-commerce run rate nears $100 billion and is turning profitable.
• Walmart’s recent partnership with OpenAI and push into AI-driven “agentic commerce”—software agents that can research and buy products on behalf of users—could transform shopping behavior and accelerate growth.
• The “agentic commerce” model could mean software does all buying (especially for routine or event-based purchases), raising questions about how digital advertising and product promotion will work if synthetic agents bypass traditional search and paid placements.
• Future growth: Walmart’s e-commerce could grow at 15–20% annually, potentially propelling the company into the trillion-dollar market cap club.
• Key consideration: Who controls the “gateway” in this new commerce paradigm, and how will brands secure placement within customer baskets?

Memorable Quotes:

• “You could have a software synthetic agent ... that researches products, finds products, and could essentially buy it on your behalf. You essentially go from an assistant to an agent.” — David Bellinger [19:50]
• “Walmart’s e-commerce business is almost at a $100 billion annual run rate, and that’s actually starting to turn profitable now.” — David Bellinger [18:55]
• “Maybe this is the new search engine.” — Carol Massar [24:12]

Notable Numbers:

• Walmart stock target: $115 (bull case $135); currently $108 and $867 billion market cap.
• Agentic shopping could become 10–20% of Walmart’s transactions within a year, according to blue-sky projections.

---

4. Fed Beige Book: Economic Sentiment, Labor, and Inflation

With Michael McKee and Molly Smith
[28:58–39:54]

Summary:

• Fed’s Beige Book characterizes economic activity as slowing (“meh”), with hiring mostly flat and some increase in layoffs.
• Key theme: A bifurcated consumer economy
  • High-income consumers continue to spend on luxury goods and travel.
  • Middle and lower-income consumers are bargain-hunting and pulling back on discretionary spending.
• Data gaps: With government data releases delayed by the shutdown, policymakers rely on private sector reports—mainly for goods, with less insight into services and housing inflation.
• Labor: Declines in hiring are matched by declines in labor force participation, partly due to immigration policy changes—contributing to labor shortages, particularly in hospitality, agriculture, and construction.
• Inflation: Tariffs are feeding into price increases in some categories; expectations are for inflation to level off, but data is limited during the shutdown.
• Implications for housing: Potential labor shortages in construction could hamper new home building, but the current pace is already slowing due to high mortgage rates.

Memorable Quotes:

• “Economic activity slowed and we saw hiring basically flat. ... Companies are increasing the pace of layoffs and some are adopting more technology.” — Michael McKee [30:14]
• “Higher income households are making up an increasing share of overall consumer spending—right now, it’s just about 50%.” — Molly Smith [31:18]
• “There’s going to be 500,000 short construction workers next year ... and that’s going to really slow down the housing industry.” — Michael McKee [39:11]

Notable Points:

• The Fed is shifting to a forecast-heavy approach due to missing real-time data from the government shutdown.
• Immigration policies are a key driver of labor shortages in several economic sectors.

---

Notable Quotes & Moments

• On Federal Worker Firings:
  “[The judge] said, ‘Hey, look, you got to hold your horses here.’” — Laura Davison [02:16]

• On Macro Outlook from Customers:
  “Customers moving from caution to optimism ... we’re really in a classic real estate cycle right now.” — Dan Letter [08:23, 09:30]

• On AI and Data Centers:
  “The next wave in the modern economy is the digital economy and AI and data centers are the logistics of that digital economy.” — Dan Letter [12:06]

• On Agentic Commerce:
  “You go from an assistant to an agent who knows your preferences, has all your credit card information, and could make purchases on your behalf.” — David Bellinger [20:12]

• On Labor Market Bifurcation:
  “High-income households are increasingly making up the share of overall consumer spending ... about 50%.” — Molly Smith [31:18]

---

Timestamps for Key Segments

• Federal Judge Blocks Firings
  [01:48–05:50]
• Prologis and the Macro Backdrop (AI, Warehousing, Data Centers)
  [07:05–15:56]
• Walmart, E-commerce, and Agentic Commerce with Mizuho
  [18:15–26:54]
• Federal Reserve Beige Book, Labor & Economic Sentiment with McKee & Smith
  [28:58–39:54]

---

Conclusion

This episode underscores intensifying economic uncertainty—driven by political gridlock, the government shutdown, shifts in corporate strategy, and technological change. The practical consequences for workers, business leaders, and policymakers are unfolding rapidly, especially as new models (like agentic commerce and the AI buildout) intersect with labor supply issues, shifting consumer behavior, and an economy moving in fits and starts. Listeners come away with a multifaceted view of current challenges facing government, business, and households.

Transcript

[A]

When we go into a new region, networks matter.

[B]

Experience matters. For an inside look at the global.

[A]

Connections that help businesses succeed, search for Turning Point brought to you by Bloomberg Media Studios and HSBC.

[B]

Okay, I have 30 seconds to explain Canva and that's impossible, but here's a glimpse. Canva can take your presentations to another level. With Canva Video, you can generate awesome videos with one prompt. Can Canva Docs lets you create stunning visual documents, reports, plans, whatever magic write can write in your voice using AI and Canva sheets make spreadsheets people will actually like. Canva lets you bring your big ideas to life as fast as you can think of them. Put imagination to [e-mail] this holiday season.

[C]

Is likely to be a roller coaster.

[D]

For logistics and manufacturing, but having the right staff in place can be easy. When you choose Express employment professionals, they can handle everything.

[C]

To ensure you have the right life.

[D]

Size contract workforce, go to expresspros.com solve your workforce challenges when you choose Express.

[C]

To support your hiring in a variety of roles, including two of our biggest.

[D]

Areas, manufacturing and logistics, visit ExpressPros.com today. That's ExpressPros.com.

[B]

Bloomberg Audio Studios podcasts Radio News this is Bloomberg Business Week Daily reporting from the magazine that helps Global Leaders Day ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg businessweek Daily podcast with Carol Massar and Tim Stanweck on Bloomberg Radio.

[D]

There's a lot of headlines out of Washington on this Wednesday afternoon. A federal judge just ordering the Trump administration to pause plans to fire thousands of federal workers during the government shutdown, a shutdown that is now in its 15th day, Carol, really stretching on here and a lot of folks there in Washington, in the federal government more broadly, I should say outside of Washington too, really dealing with a lot of uncertainty who are furloughed, who have been laid off. This now going before the courts, this pause in place. And we're gonna talk about it more with Laura Davison, who's our Washington deputy bureau chief. She joins us now. Laura, I mentioned that uncertainty. I can't put too fine a point on that. Where do things stand now, now that we have this judge's ruling, not a final decision on the merits of the case. What does it mean for those workers who are very worried about their position here in the government going forward?

[E]

So it means that federal agencies right now have to stop and halt all the plans for the firings that took place last week. So that means that those people will be able to keep their jobs for now and that any future rounds of firings, as the White House suggested yesterday is coming, will also be halted. This is just a temporary block, as you mentioned. They are just paused. And there will be a decision to come later on the merits of the case about whether these can proceed. It was quite a dramatic moment this afternoon because just before this ruling came out, Russell Vogt, speaking on the Charlie Kirk podcast, said that he expects that layoffs would exceed 10,000 people. Right now, we've seen about 4,000 or so that have received layoff notices. So this is very much a clash of where the White House sees things going as where the judge came in and said, hey, look, you got to hold your horses here.

[D]

Laura, what's the status of conversations among lawmakers on Capitol Hill, among lawmakers and the White House? The Trump administration just about sort of where we are in this shutdown and where it's, yeah, it's going from here. I know there's a lot of concern about back pay. So the president was able to arrange for members of the military to be paid this week by moving some, some money around. The uncertainty begins to kind of compound and amass as, as time goes on here. What's the status of those negotiations so much as there are negotiations here between Republicans and Democrats?

[E]

Yes, there are no negotiations happening. The House is still out. They've been out for the full three weeks of the shutdown. We're now on day 15. The Senate is in session, but they've continued to vote on the same bill. And they have progress. And there's been no really behind the scenes discussions happening. You've had small groups of moderate members trying to talk together, but those haven't really yielded anything. But the thing about a shutdown is that the first couple days, there's not much pain, but as the shutdown goes on, the pain compounds. You see, you know, today, this week and last week we've had, you know, millions of federal workers who have missed paychecks. You know, military members are getting paid at least this first PayCheck in this August 5th, or rather October 15th paycheck, they'll be paid. But it's unclear if later in the month, if the shutdown persists, if they will. You know, we've already started to see some delays, delays with, with air travel. You know, those could mount as, as the month, as the months go on here. So this is very much unknown about how this ends. But we do know that as the shutdown continues, things get more and more painful and unsustainable from political standpoint.

[B]

Not good for any workers, though, that might be furloughed and not getting paid. But I want to ask you something about this because it made me kind of scratch my head. Lord. My understanding is that this isn't the final decision on the merits of the case, but also it has to do with union workers. How many of government workers are union workers? I didn't realize that there was a distinction.

[E]

Yeah, there's a, there's a high percentage of federal workers who are unionized. I don't know the exact figure, but there's a patchwork of unions that represent various agencies and they've been very involved, you know, in the process here. You know, we really saw them start to mobilize earlier this year in regards to the Doge firings, as that happened very swiftly. This is one of the things that they've kind of realized is they need to get out in front of these cases a lot because once, you know, workers leave the building, they have their badge taken away, they have their email taken away. It's really hard to bring some of those people, people back, even if they are later, if the firings are later ruled illegal. So you see sort of a change in strategy here of, you know, wanting to make sure that those workers don't leave, leave their posts, get out the door while the merits are being decided.

[B]

Laura, always appreciate it. Laura Davidson, of course, joining us from our D.C. bureau. She's Bloomberg News Washington deputy bureau chief. You're listening to the Bloomberg Businessweek Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTub. Hey, listen, we're going to talk a bit about earnings right now. I am also curious to see what our next guest has to say about some of these big macro issues that are coming at us. Dan Letter is president and incoming CEO prologis. He takes over as CEO in January. He joins us from our San Francisco studio. And we should point out that the company shares a rallying. They're up after they reported better than expected quarterly earnings. They boosted their forecast. They talked about data center opportunities, which is always something that catches investors attention. So stock, by the way, is up 15% year to date. Dan, great to have you here with David and myself. I do want to talk earnings, but we got to ask about the macro backdrop, whether it's trade talks between us and China. Government shut down rare earth materials, minerals. What what do you really watch when it comes to some of these big macro issues.

[C]

Well, thanks for having me. It's great to be here. You know, coming off this earnings call, this was certainly a topic for us. We had a tremendous this quarter. As a matter of fact, we broke a record this quarter for leasing. We leased 62 million square feet of space throughout our 1.3 billion square foot portfolio. And you think about that in context, 62 million square feet is the equivalent of leasing Central park in Manhattan twice over again in one quarter. So our team working tirelessly around the world, least 1 million square feet a business day during the third quarter. And certainly these macro business trends are telling by our customers who are the front line of the economy.

[D]

You look at the softer data and there is still some anxiety among a lot of business leaders about where things are headed. Maybe that's restricting them from making some of the CapEx expenditures that they would have other otherwise. You're detailing for us very strong numbers. And I wonder what that says to you just about the capacity of these business leaders to look through or past the uncertainty surrounding policy, including trade policy. Just give us a sense of the moment that we're in right now, as you understand it from talking to your customers about how they're feeling about the business climate going forward.

[C]

Sure, it's a great question. One of the things we're most proud of at prologis is our customer franchise. We have unique proprietary data and we have unique relationships. Just given the size and scale of these relationships. And after what has really been two to three years of uncertainty going back to rate hikes two and a half years ago, we see our customers actually getting off their back foot. What we've seen over this last quarter is actually customers moving from caution to optimism.

[B]

Wow. Why? Because things are getting settled in terms of trade tariff. Like, what is it that has calmed some of your customers?

[C]

I think our customers realized after a couple of sluggish years of not making many decisions that they have to make long term decisions. And that's what they do when they do business with prologis. And they have to look through the short term noise in order to ensure that they're positioned for growth going forward.

[B]

So you're talking about Amazon, Home Depot, FedEx, UPS, Giga, cloud technology. I mean, these are some of your big customers. So you're talking about these guys are feeling more sure about the outlook than maybe they did over the last couple of years.

[C]

Yeah, precisely. As a matter of fact, coming out of a cycle, we're really in just a classic real estate cycle right now. And what you're seeing typically at this point in the cycle is it's the big, well capitalized customers that lead the way out of this part of the cycle.

[D]

This is a basic question you'll forgive me for, but when we talk about warehouses, what are we, what are we talking about? Are these just simply places to store stuff or are they places where there's a lot of movement, a lot of products coming, coming in and out? When we talk about sort of the bread and butter of your business, what are you, what are you building? What are you leasing out?

[C]

Yeah, thanks for that question. We own nearly 6,000 buildings. These buildings are located in 20 countries in markets that represent about 78% of the world GDP. As a matter of fact, in 2024 we had the equivalent of nearly 3% of the world GDP go through these buildings. Our focus in building this portfolio, curating this portfolio over the last 42 years is having the highest quality, best located, logistics, real estate, close to consumers.

[B]

So where are you geographically building out the most and you know, where are you looking to kind of increase your square footage or buy properties or buy land?

[C]

Well, the way we've set this organization up is our teams are calibrated to look for good deals around the world and we're heavily focused certainly this year on build to suits with our customers. We're actually going to, we're on track for maybe our highest build to suit volume ever. And what does that mean? That means we have a contract in place with these customers before we start building for them. And we're seeing that broad based across most of the sectors as well as geographies spread throughout the world.

[D]

I bet you can't do an interview without being asked about AI, so forgive me, we're going to do it. I want to ask about it in two ways. The first is sort of how it's changing the way that you conduct your business. And then the second question is picking up on what Carol said. You looking at the demand for data centers, maybe changing your business tack as well? Where do you see opportunity as this revolution, as it's called, continues and there's the need for more space for processing all of this data.

[C]

Yeah, AI is here and it's big and it's big at prologis. Certainly we have all sorts of different operational and tools that we're building to make our teams more efficient and to be able to help them move faster. But when you think of AI and Prologis, we announced today we now have 5.2 gigawatts of power either secured or in the advanced stages of being secured in sites, mostly tier 1 tier 2 sites in the United States and then the tier 1 markets called flapd or, or the Double M in in Europe. So prologis is now we've long been in the higher and better use business, but again, given that footprint we have close to these consumers. Well, the next wave in the modern economy is the digital economy and AI and data centers are the logistics of that digital economy.

[B]

We're talking about Dan Letter. He's president of prologis. He is incoming president, incoming CEO, excuse me, takes over that spot come January. Wait, Dan, so, so give me an idea just to like have explain your business. How much is logistical warehousing right now? How much is data center and where do you see the most growth going forward? Especially on a day where Metta, Microsoft, BlackRock, there's more all doing data center, you know, deals. And it feels like a lot's happening in Texas to point that out as well. So give us an idea of your mix today and where the growth is happening.

[C]

Well, I look at our growth in our base portfolio. We own or control 14,000 acres of land close to these consumption centers that I mentioned. We can build out another 240 million square feet out of that land bank. That's a tremendous amount of space. And when it comes to data centers, this power that we've secured, we have long been in the higher and better use business. Think about the fact that logistics and warehouses is typically the cheapest house on the block. We've always been in the business of optimizing that real estate value for our investors. And data centers are certainly a trend right now that we're able to capitalize on, given the footprint and the raw material that we own and control.

[D]

Just want to note a headline here across the Bloomberg terminal that a judge has blocked federal firings during the government shutdown for now. We were talking about that a few moments ago as we're talking about the beige book from the Federal Reserve, Dan, and what that was telling us about the state of this economy and one thing therein is how difficult it is to find workers, particularly workers to do construction. And I think a theme to the AI story is amid all of this demand, it's hard to get folks to build the data centers that we need to buffet all of it. And I wonder if your company is dealing with that as well, just the difficulty of kind of keeping pace with how fast all this is moving.

[C]

Yeah, thanks for that question. I think about that as we look at what is the replacement cost rent to build the next marginal building whether it's logistics or data centers. And we look at that right now and the cost, the rent to build that next building is actually 25% higher than market rents today. And then I look at that relative to our in place rents today, it's actually nearly 45%. And one of the key issues is the cost to build are getting that much more expensive and labor is certainly a factor there.

[B]

Interesting. Hey, one thing just to follow on going back to data center. In your build out you talked about also the acquisition of 5.2 gigawatts of power. It's a lot. How much though is in terms of the build out for data centers? You've got to track it with having access to power and does that slow some of the build out. Just got about 30 seconds.

[C]

You know this 5.2 gigawatts that we're quoting is just a portion of the universe of opportunities we actually have given our size and scale with our 6,000 buildings as 14,000 acres of land. We already own this land in these buildings at logistics basis. And so we brought in in house expertise. We have a very large energy business. We've got 1 gigawatt of power that will be generating off our rooftops by the end of 2025. So we've been building that energy capability that gives us just a a better relationship with the power companies.

[D]

Yeah.

[C]

And so we're in great shape there.

[B]

Listen, a great interview and I want to keep going. I wish we could. Dan, come back soon. Dan Letter President, incoming President of Prologis joining us here on Bloomberg. Stay with us. More from Bloomberg Businessweek Daily coming up after this. What's the secret to navigating uncharted waters in business?

[A]

Meet Sami Sriram from Clearbot, a startup reshaping autonomous shipping. Hear her take on the real key to success. Frictionless user experiences that move your business forward.

[F]

When you go into a new region.

[B]

You need to make sure that the experience of using something new is good. Because if not, then you make the bad first impression. They never try it again. We are just trying to find the right partner, somebody who knows the right.

[A]

People to speak to.

[B]

Somebody that is as invested as we are.

[A]

For more on what it takes to unlock global growth, search for turning point.

[B]

That intention really matters. We want to build something that becomes the norm.

[A]

Brought to you by Bloomberg Media Studios and hsbc. Wherever your business takes you, HSBC can help.

[C]

Your next product launch is coming fast. Don't let billing slow you down. Legacy systems can't handle usage based billing. That means your team is stuck gluing.

[D]

Code together, piecing through spreadsheets and running.

[C]

Ad hoc queries just to figure out what to bill.

[D]

With Metronome, you can roll out new.

[C]

Pricing in minutes instead of months, whether.

[D]

It'S usage based, seat based or a hybrid model.

[C]

Visit metronome.com to see how companies like OpenAI and Anthropic launch billing as fast as they launch products. That's metronome.com.

[D]

Did my card go through?

[F]

Oh no.

[D]

Your small business depends on its Internet, so switch to Verizon business and you could get LTE business Internet starting at $39 a month when paired with select business mobile plans. That's unlimited data for unlim.

[B]

There we go.

[D]

Get the Internet you need at the price you want. Verizon Business Starting Price for LTE Business Internet 25 Mbps Unlimited Data Plan with select Verizon business smartphone plan. Savings terms apply. You're listening to the Bloomberg Businessweek Daily Podcast. Catch us live weekday afternoons from 2 to 5pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[B]

The AI world as a result, Wal Mart kind of moving in on this. I feel like as a result it's on track to kind of join the elite crop of companies with $1 trillion valuation. It announced a partnership we might remember with Open Air and that really kind of pushed the stock to a record high. And there's one analyst that's really noticed this and this is David Bellinger. He's over at Mizuho and he is joining us right now to talk a little bit about his thinking. He is senior consumer analyst. He's got an appointment form rating of the on the stock $115 price target. You've had this rating for a while. You upped your price target in early June. The stock's up I think about 12% since then. Good to have you here. Talk to us about your call.

[F]

Great, thanks so much for, for having me on. Yeah, Walmart, we, we launched on this company back in April. We made it a top pick in, in June. And this is actually our E Commerce top pick just given all that they've done. And we pointed out since 2015 these guys have spent more than $200 billion in cumulative capex spend. We think they basically caught up to Amazon now over this past decade. It's, it's essentially taken that long. But you've got the E commerce business in the US almost at about $100 billion annual run rate and that's actually starting to turn profitable now. So you're, you're seeing all these levers come into play.

[B]

Where is Amazon's run rate significantly higher?

[F]

This I thought, it's not disclosed. But it's. If you could back into it. There's some estimates that the annual GMV of all the sales that they push through is in the 500 billion plus type. Type range.

[D]

The phrase is agentic commerce. Help me understand what that is and sort of what, what Walmart is saying it's going to deploy here across its website.

[F]

Great question. We spent a lot of time working on this about three months ago, but somewhat foreign to us. Right. And so we dove into it and it's essentially, you could have a software synthetic agent that researches products, finds products for you and could essentially buy it on your behalf. So it's, you're essentially going from terrified, aren't you?

[B]

If you've got kids, you should be.

[D]

Terrified for the front step. Yeah, yeah.

[F]

You essentially go from an assistant to an agent who knows your preferences, has all your credit card information and could make purchases on your behalf. If you, if you give it that functionality and just think about things like your, your weekly grocery run, something really easy. They know what 20, 40 items you buy. They could do it, say hey, hey Dave, you know, do you want to do your weekly grocery order? Hit yes and go for it. There's also some other use cases that Walmart's starting to talk about, but like a solution based of I've got my kids birthday party, what do I need? There's going to be 20 kids there, make me gift baskets, get me food, all these things.

[B]

There's a theme like that.

[F]

Yeah, yeah.

[B]

It's kind of fascinating. I think about when you're on Amazon and they're like, hey, do you want to just do one purchase or do you want to set it up? So it's like taking this all to the next level to some extent. Even when we do grocery shopping, it's like a list comes up because we do it online. It's like this is just taking this to another level pretty much.

[F]

But it's also as this discovery angle of we saw this chat GPT, they have this overnight new product of things that they think you would like as a recap in the morning. Certain things like that we could see products being pushed to you or things that you've searched for in the past. And hey, this could be a nice complimentary product for your recent purchase. And now you'll basically have the ability to put all that product from Walmart into that summary and you have a quick easy buy instant checkout button. And then this could unlock a lot of E commerce growth still even on top of that $100 billion. So there's no great way to size this. And what I've been telling investors when I get asked to size this is Walmart's growing the US E commerce business about 15% year over year for each of the last 12 quarters. There was a time when Amazon did that north of 20% for four years. Maybe we just have this double digit 20% growth in perpetuity for Walmart and that could be a big lever for them.

[D]

Carol noting that you raised the specter of Walmart joining this trillion dollar market cap club. So your price target 115, as Carol said, the bull case is 135 I think.

[F]

Correct.

[D]

How would they get there? So this is like Rare Air or Rare Company in the sense that when I think of those trillion dollar plus companies, most of them are tech companies, they're not retailers like Walmart.

[F]

Right? Yeah, it's, it's a very elite group of you know, 10 plus companies that have gotten there. But you've seen it, a very high multiple for Walmart shares. Now I cover the retail space, amount of companies, 10 to 20 times earnings.

[B]

This is 43, almost 42.

[F]

Yeah. And what's really changed that is you've had these alternative and accretive business lines come in so that the membership, the marketplace, advertising. You essentially had Walmart move the needle where you're, you've got double digit earnings growth potential here. The total company has about a 4.5% operating margin that could easily go to 6 US, could be 7, 8%. So it's, it's all these accretive businesses that are turning on and they're, they're essentially 20% of the company's operating profit. But they're the highest margin, they're the fastest growing. One big question we have, and Walmart needs to address this is with all this agentic shopping, what happens to the digital advertising businesses of these companies? So Walmart said about a 5 billion run rate. Amazon 60, 65 billion. Why do you need to serve these sponsored ads if an agent is going to shop on your behalf and they.

[D]

Know what you want to buy?

[B]

That just freaks the heck out of me. Having said that, I want anybody to know what I'm buying. But no, but we've also talked with people about AI that at some point Maybe you do have ads to some extent. Like you've got to figure out how we're going to pay, what's the revenue stream or we all paying to make use of it. And when you we talk about agentic AI, isn't everybody going to be on it? So Amazon maybe will have some collaboration, you know, in terms of feeding into it. So I'm just this, is this an assumption that Walmart owns this space for a long time time on its own. But shouldn't we assume this is the new search engine?

[F]

Yeah.

[B]

And so everybody's going to be on it.

[F]

It seems like this will broaden out, but there will be a priority list of who they point product to so.

[B]

That because they pay for it.

[F]

Yeah, it seems like this, these chat is a perplexity with their browsers. They'll be the gateway to spending and they'll essentially charge a take rate or facilitation fee. Yeah, no one knows the economics of this Walmart partnership yet, but maybe nobody.

[B]

Knows the economics of any of these partnerships. Everybody says we've got this deal right and we're going to do this.

[F]

But anyway there could be, you know, 100 basis point, 200 basis point take rate. It's, it's kind of up in the air. But that'll point you to Walmart. They'll take a slim margin on that product and then on that, that advertising piece. We think at some point Walmart, if you've got these grocery brands like say you know a cereal company, they want to be in that 10, 20, 30 items you're getting every week, maybe they have to pay a slotting fee and that could offset some of the ChatGPT marketplace facilitation fee that Walmart's paying. So essentially you would have these grocery brands pay to beat in your weekly basket for your replenishment type order.

[D]

David Ballinger, let me ask you just about the timeline for all of this. You point out in your note, this is exploratory at this point, but the announcement came out with a lot of splash yesterday and there's a lot of excitement surrounding it. Obviously when you look at the stock price, your sense of the timetable, how quickly this is going to be something that Carol or I or you could take advantage of when you go shopping at Walmart.

[F]

When we started looking at this, speaking to experts, the pace of adoption and escalation was so rapid it was starting to scare a lot of retailers and they had to make the shift of what do we do, start to build up their product catalogs because that that feeds into these LLMs. So we think this could be a small piece of this year's holiday sales. Maybe it's 1 or 2% of transactions. But then what does it go to next year? Could it be 10%, 20% like that? That's sort of the blue sky scenario.

[B]

Just 20 seconds. Does this mean that eventually they don't need their own website because people are going to be buying through ChatGPT or something else just quickly?

[F]

Not necessarily because you've got these big marketplaces. Maybe people still go there directly, but it looks like these, these new sources are becoming a big area of traffic and referral traffic to Walmart.com.

[D]

How quickly does you go migraine Santa says Paul Sweeney has always said he wants to be a Walmart greeter in his retirement. It seems like this is definitely the death knell on that.

[B]

We say that, doesn't he? Hey, how quickly, just 10 seconds. Does Walmart get to a trillion in your view?

[F]

We're on our way. It's got to be about $125 stock price. Our upside target, like you said, it's 135. So it could happen relatively soon. But we'll see what the next steps are.

[B]

It's 108 and change. And right now it's got an $867 billion market cap. Really great. Thank you so much.

[C]

Thank you.

[B]

Yeah. Coming into our studio, David Bellinger, Mizuho Senior Consumer Analyst. Stay with us.

[G]

More from Bloomberg Businessweek Daily coming up after this.

[D]

Your next product launch is coming fast.

[C]

Don't let billing slow you down. Legacy systems can't handle usage based billing. That means your team is stuck gluing.

[D]

Code together pieces, pacing through spreadsheets and.

[C]

Running ad hoc queries just to figure out what to bill.

[D]

With Metronome, you can roll out new.

[C]

Pricing in minutes instead of months, whether.

[D]

It'S usage based, seat based or a hybrid model.

[C]

Visit metronome.com to see how companies like OpenAI and Anthropic launch billing as fast as they launch products. That's metronome.com.

[D]

Did my card go through?

[F]

Oh, no.

[D]

Your small business depends on its Internet. So switch to Verizon business and you could get LTE business Internet starting at $39 a month when paired with select Business mobile plans. That's unlimited data for unlimited business.

[B]

There we go.

[D]

Get the Internet you need at the price you want. Verizon Business Starting Price for LTE Business Internet 25 Mbps Unlimited Data Plan with select Verizon Business smartphone plan savings terms apply.

[B]

Hiscock Small Business Insurance knows there is no business like your business. Across America, over 600,000 small businesses, from accountants and architects to photographers and yoga instructors, look to Hiscox Insurance for protection. Find flexible coverage that adapts to the needs of your small business with a fast, easy online'@hiscox.com that's his c o x.com there's no business like small business. Hiscox Small Business Insurance. You're listening to the Bloomberg Businessweek Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[D]

David Gura here in for Tim Stanweck with Carol Massar on Bloomberg businessweek Daily. The latest beige book coming out, I guess if we use the formal term, that's the summary of commentary on current economic conditions by Federal Reserve District. We're talking about each Federal Reserve bank, gathering anecdotal information on current economic conditions in each of those districts, reporting it up to the Fed and giving us some flavor for how folks in those districts talking about business owners, business leaders, are feeling about the economy at this moment. And what they're seeing is of course coming in advance of the next FOMC meeting at the end of this month.

[B]

That kind of excited.

[D]

The 28th, 29th. You're getting excited.

[B]

I always do.

[D]

Well, you know, a lot of strange factors to this one. You know, we will get that CPI data. We can talk a little bit about that maybe as well with Michael McKee, Bloomberg TV and radio's international economics and policy correspondent. He is in our Bloomberg News D.C. bureau. And here with us in New York, Bloomberg News economics editor Molly Smith. Mike, let me start with you. This is an impossible task to synthesize these many pages just a few minutes after we crossed the Bloomberg. But what are your takeaways? I think back on the last page book that we got and you know, I think that the broad indication I remember is how there's flat declining consumer spending because for many households they were worried about the path of the economy, worried about these tariffs and the effects they were going to have going forward. Picking up on the headline Carol just read a moment ago, sounds like we're seeing more of the same here with this iteration.

[G]

Yeah, pretty much. You asked how consumers and companies are feeling. I think the word would be meh. Economic activity slowed and we saw hiring basically flat. According to the beige book, nobody's really going out and adding employees. There is some sign, according to the beige book, that Companies are increasing the pace of layoffs and some are adopting more technology. They say, I guess a word for AI, prices rising a little bit because of tariffs and there are concerns about spending which is slowing consumers starting to pull back with the exception of autos, which the Beige book says was driven by people trying to buy electric vehicles before the end of the tax credit at the end of September. So right now it looks like the economy is still moving ahead. But there's, you get kind of a different picture. And I'll be interested in Molly, view on this from this Beige Book and what it's saying and The Atlanta Fed's GDP now number for the third quarter, which is about 3.8%.

[B]

Come on in.

[A]

I think what stood out to me here is just this continued observation of this bifurcated economy between high and low income consumers. And that's what the Beige Book noted here, is that higher income spenders were still going out buying luxury, travel and accommodation, that those kinds of categories were still strong, but that lower and middle income households still seeking discounts and promotions in the face of rising costs. So this is just a very much something that we've been seeing for it feels like, I mean this is pretty much to me what has defied every recession call that we've had for like the last two years. It's that high income households are increasingly making up the share of overall consumer spending. Right now it's I think just right about 50%.

[B]

Yeah, it's a big deal. You know, it's funny because I was thinking about LVMH came out, I think with their results and their shares surged, suggesting that maybe that slump in luxury demand is easing because we have seen it in the space. Having said that, Molly, we're in this kind of void a little bit when it comes to government data. Right. We are expecting though the CPI print I think later.

[D]

This supposed to be today, right? Today it was supposed to be.

[A]

But in the absence of that, I compiled for you all of the other.

[B]

Private sector which we say thank you.

[A]

Out there, you're so welcome. There aren't that many though, honestly, which is something that Powell had observed yesterday when he was speaking at the NAB conference that unlike the job market, we have so many private sector alternatives there to see what's going on with labor demand, with hiring, with wage growth, inflation, not so much. So there are a couple of companies that compile price growth throughout the US but it really is biased toward the goods space. They don't do as good of a job looking at services Inflation. There are a couple of companies that specialize in housing inflation in particular, but they don't really get the overall view. So if we're really looking at just what goods inflation seemed to do in September, you definitely did see some signs of tariff pass through in certain categories. But in general, a lot of these economists are saying that the expectation is still that inflation will eventually level off.

[D]

Like I'm going to guess that these policymakers are going to take Molly's data and couple it with what we get from the Labor Department, the CPI data that's been delayed. Just help us understand the mechanics of that and how the Fed is kind of finding its way through this very strange moment with the shutdown extending into two, three weeks now. And I'm just, I'm curious how much of a hindrance that is for them as they plot a path forward here, if any of that kind of resonated in what you heard from Chair Powell yesterday.

[G]

Well, I think there are 19 members of the Open Market Committee and I think we had 19 downloads of Molly's story today about alternative at least.

[D]

Ouch.

[G]

They're looking at alternative data to the extent that they can. And remember they are also in constant contact with companies and with small businesses and consumers to an extent in their districts, the 12 regional bank presidents. So they're getting a picture of what people are saying is happening immediately rather than looking at the past data. And they're going to be making their decision based on what their estimate of what is, excuse me, what is going to happen going forward rather than what has already happened. They will have a pretty complete CPI report because the data was all gathered before the, before the government went out. But the concern is whether they will have any October data because we're getting deep into the month and they'll be able to collect less and less of it as the month goes on. So they really have to do start relying on forecasts for what they think is going to happen. And in that case, what you get is different districts see different developments in markets. And this has just been a story throughout out the Federal Reserve's time in being because the country is one big country, but there are a lot of different changes. We were talking about prices from tariffs coming through, but we're also seeing reports in the Beige book here about how in the agriculture industry and low skilled manufacturing they're having trouble finding workers. And that was a big theme at the NAB conference yesterday, is that there's going to be a big worker shortage shortage next year in these lower paid manual labor industries, and that could drive up prices as well. So a lot of crosscurrents out there for which there isn't great data right now.

[D]

And Molly kind of complimenting that as I look at the summary in the beige book that was just released. Labor supply in the hospitality, agriculture, construction and manufacturing sectors have reportedly strained in several districts due to recent changes to immigration policies. This is the other kind of big story looming here, the effect that this administration's crackdown on immigration is going to have on the economy. So there you have the the anecdotal evidence borne out. What are we seeing in the data when it comes to the effects that that policy is having on the labor market in the US I think this.

[A]

Is such a big debate right now as to what kind of shape the labor market is in, because in the one hand you're looking at weaker hiring numbers, that you're thinking that the job market has significantly slowed. And it's true the pace of hiring has come down substantially, but labor supply has come down substantially as well. So do you need as strong of job growth if the working population is that much smaller? I think that's really the key debate right now. And there was a blog post from a Dallas Fed economist recently that argued, no, you don't need that strong job growth because the labor force is that much smaller. So it's really still key to make that distinction of is the labor market really weakening or is it rebalancing?

[B]

It's just a reminder of like kind of all of the tensions that are coming at us that maybe are changing the read on statistics. Mike, I want to bring you in because on that note, still coming at investors, still coming at economists, still coming at business leaders, the trade tensions between US And China. So we've got kind of that going on and trying to figure out the impact on that still yet to be determined. At the same time, we've got to read on the big banks that this week, which is another read on the US Economy and how things are going. How do you fold all of that in?

[G]

Well, if you're at the Fed, you hive off what's happening with the banks and earnings and Wall street, because it's a kind of a different world. To a certain extent, it can represent what's going on in the economy. If you're talking about things like mortgages and car loans, of which they are not making a whole lot. The merger and acquisition business is doing very well, and the stock trading and bond trading and currency trading businesses are doing very well. We learned this week. But that's not the real economy and that's not what's happening to the people on the ground across America. And so they're not really looking at those things. They are looking at whether or not people's wages are going up and whether they're keeping pace with inflation and what we think the inflation rate is and also what consumer sentiment is, whether people think they want to buy something now or whether they're pulling back because they're concerned about the overall economy. One point I want to make about what Molly was just talking about in terms of do you need workers? The conference. I was just at the business economists conference. They were making the point that even though we automate more stuff or we may not need as many workers, certain industries, particularly agriculture and construction, need a lot of trained workers or less trained for agriculture than for construction. And many of those were filled by immigrants. And the euphemistically worded change in immigration policies, as the Beige Book put it, is causing a real problem. There was one survey, one company put out at this meeting that said there's going to be 500,000 short construction workers next year.

[B]

Yeah.

[G]

And that's going to really slow down the housing industry, which of course is a big contributor to the economy as.

[B]

Long as there's demand to build.

[A]

Well, I would, I mean, look, if.

[B]

I do the whiteboard here of all.

[A]

Times to pull back on construction workers, this would be a pretty good time to do it because builders are slowing the pace of construction anyway. There are so many new homes available on the market that have been sitting unsold because they had been ramped up when mortgage rates were a lot lower. And now mortgage rates are where they are. People are not buying these homes. So builders accordingly are pulling back on construction. So, of course, this is, you know, a real strain for these companies, but in the grand scheme of where they're sitting right now, not so bad in terms of a time where you're kind of slowing the pace anyway.

[B]

All right, good stuff, guys. A lot going on it at when it comes to the economy and trying to really figure out what is the way forward, Bloomberg TV and Radio International economics and policy correspondent Michael McKee, along with Bloomberg News economics editor Molly Smith. This is the Bloomberg businessweek daily podcast, available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from 2 to 5pm Eastern on Bloomberg.com, the iHeartRadio app, TuneIn and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

[D]

Mint is still $15 a month for premium wireless. And if you haven't made the switch yet, here are 15 reasons why you should 1.

[B]

It's $15 a month. 2.

[D]

Seriously, it's $15 a month.

[E]

3.

[D]

No big deal contracts 4.

[F]

I use it.

[B]

5.

[D]

My mom uses it. Are you. Are you playing me off?

[B]

That's what's happening, right?

[F]

Okay, give it a try. @mintmobile.com Switch upfront payment of $45 for.

[E]

3 month plan 15 per month equivalent.

[A]

Required New customer offer first 3 months only, then full price plan options available Taxes and fees extra.

[D]

See mint mobile.com this is Jacob Goldstein from what's yous Problem? When you buy business software from lots of vendors, the costs add up and it gets complicated and confusing. Odoo solves this.

[B]

It's a single company that sells a.

[D]

Suite of enterprise apps that handles everything from accounting to inventory to sales. Odoo is all connected on a single platform in a simple and affordable way. You can save money without missing out on the features you need. Check out Odoo at o d o o.com that's o d o o.com Ah, greetings from my bath festive friends.

[G]

The holidays are overwhelming, but I'm tackling.

[D]

This season with PayPal and making the most of my money, getting 5% cash back when I pay in four. No fees, no interest. I used it to get this portable spa with jets.

[G]

Now the bubbles can cling to my sculpted but pruny body.

[D]

Make the most of your money this holiday with PayPal. Save the offer in the app ends 12:31 see paypal.com promoter points can be redeemed for cash and more. Paying for subject to terms and approval. PayPal Inc. And MLS 910457.