The U.S. spending spree continues

Summary

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Marketplace Morning Report: "The U.S. Spending Spree Continues"

Date: May 14, 2026
Host: Nancy Marshall Genzer
Featured Guests: Christopher Lowe (Chief Economist, FHN Financial), Henry Epp (Marketplace Reporter), Robert McCullough (Energy Consultant), Serge Abergel (COO, Hydro Quebec US Arm), Bob Harrison (Head of Engineering, CHPE Project), Sana Barakat (NYC Deputy Commissioner for Energy Management)

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Overview

This episode focuses on two major economic topics:

1. U.S. Retail Spending: Despite persistent inflation, Americans are continuing to spend, with retail sales up in April. The conversation examines the forces driving this spending—higher prices, consumer resilience, and possible influences like tax refunds.
2. Northeast Power and Climate Goals: The show shifts to the Northeast’s electricity market, highlighting new power lines connecting New York and Massachusetts to Canada’s Hydro Quebec. The segment explores how these developments address high electricity prices, increased demand, and carbon reduction mandates.

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Segment 1: Retail Sales and Consumer Resilience

[00:55 – 04:17]

Key Discussion Points

• Retail Sales Up Again

  • April retail sales rose 0.5% month-over-month and 4.9% year-over-year, per the Census Bureau.
  • Despite inflation still being above the Fed’s 2% target, spending remains strong.

• Drivers Behind the Numbers

  • Christopher Lowe: “For now, it's both.” (01:37)
    • Spending is up because:
      • Consumers are paying more due to higher prices, especially gasoline.
      • But also: They're still buying non-fuel items (clothing, electronics, sporting goods).
    • “The biggest contributor to retail sales growth... no surprise in the last two months is higher gasoline prices.” (01:39)
    • “Away from gasoline, we continue to see decent spending...” (02:01)

• Impact of Tax Refunds?

  • April’s surge “was probably at least part of it.” (02:18)
  • Strongest three-month sales growth since 2022, indicating consumers had more money—possibly due to tax refunds.

• What Happens if High Gas Prices Continue?

  • “If gas price increases are sustained... eventually we cut back.” (02:39)
  • Reference to 2022: after a similar spike, consumer spending slumped.

• Change in Gas Station Sales as an Early Signal

  • Gas station sales up just 2.8% in April, after a 20% surge in March.
  • Lowe: “I think it's more a sign of people cutting back.” (03:16)
  • In March: Sales mirrored higher prices—same amount bought at higher prices.
  • In April: Higher prices, but smaller increase in sales—people are beginning to carpool, use public transit, and “trying to figure out how to stretch their dollars.” (03:40)

Notable Quotes

• “These are the strongest three month sales since then [2022] because we had a similar situation. And after that peak in 22, sales were weak...” — Christopher Lowe (02:35)
• “It just hasn’t spread beyond the pump to other goods and services yet.” — Christopher Lowe (03:51)

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Segment 2: The Northeast’s New Power Solution

[05:43 – 08:47]

Key Discussion Points

• Electricity Market Challenges

  • States in the Northeast face three challenges:
    • Meeting rising energy demand
    • Keeping prices in check
    • Legally reducing carbon emissions

• The Champlain Hudson Power Express (CHPE)

  • Two new major power lines connect New York and Massachusetts to Quebec's hydroelectric grid.
  • Bob Harrison (head of engineering, CHPE): “This is where the magic happens.” (06:17)
  • Power is transmitted as direct current from Canada, then converted on site in NYC to alternating current for homes and businesses—serving up to a million users.

• Impact on New York City’s Climate Goals

  • Sana Barakat (NYC government): “This project, Ship P is going to be instrumental in helping us meet our 50% mandate ahead of schedule by next year.” (07:07)
  • Clean Canadian hydro allows NYC to buy up to $6B in carbon offsets over 25 years, paying for the line.

• Lowering Electricity Prices

  • Robert McCullough: “At the moment, New York City in the power market is like a small town with one grocery store. The prices are phenomenally high. The best way to solve high prices is to bring more sellers into the market. And that's what the new line does.” (07:44)
  • Hydro Quebec will supply power for 25 years at a locked-in rate rising only 2% annually, offering both stability and predictability.
  • Serge Abergel: “This is the beauty for New York of a contract like this. It brings you stability and predictability for the next 25 years.” (08:12)
    • On peak demand: “On those hot summer days, you're going to get this supply of power at a much lower cost than where the market is at.” (08:27)

Notable Quotes

• “Stability and predictability for the next 25 years.” — Serge Abergel (08:12)
• “On those hot summer days, you're going to get this supply of power at a much lower cost...” — Serge Abergel (08:27)
• “At the moment, New York City in the power market is like a small town with one grocery store.” — Robert McCullough (07:38)
• “[The new power lines] could put downward pressure on electricity prices in the New York market as a whole.” — Henry Epp (08:37)

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Memorable Moments & Timestamps

• Hard take on Gas Prices and Behavior Change:
  • Lowe pinpoints the moment consumers pivot from resilience to belt-tightening:
    “People are carpooling more, they're using public transit more, so they are already beginning to change their behavior...” (03:26)
• Big impact for NYC’s Carbon Emissions:
  • “This project ... has the city on track to meet their 50% mandate ahead of schedule.” (07:07)

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Takeaways

• U.S. consumers are still spending, but higher prices—especially for gasoline—are a key reason. Early signals suggest consumers may start to cut back if price pressure persists.
• Tax refunds may have provided a temporary boost, echoing past patterns in 2022.
• Major new energy infrastructure in the Northeast delivers both climate and pricing benefits, promising long-term stability, price control, and progress on carbon reduction mandates for New York and Massachusetts.

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For listeners wanting context about economic and energy trends—and the behavioral shifts driving change—this fast-moving episode delivers clarity with on-the-ground perspectives, expert analysis, and a close look at the forces shaping 2026.

Transcript

[Marketplace Announcer]

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[Christopher Lowe]

I've never been a big fan of FEMA.

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[Serge Abergel]

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[Nancy Marshall Genzer]

How you doing consumer From Marketplace, I'm Nancy Marshall Genzer in Washington. Retail sales in April April were up a half percent compared to the month before and up 4.9% from a year ago, according to the Census Bureau. This as inflation remains stuck above the Federal Reserve's 2% target. For more on this, we're joined by Christopher Lowe, chief economist at FHN Financial in New York. Good morning.

[Christopher Lowe]

Good morning, Nancy.

[Nancy Marshall Genzer]

So are retail sales higher because consumers are resilient in buying more stuff, or are we spending more just because prices are higher and the stuff we want is more, more expensive?

[Christopher Lowe]

For now, it's both. It's the biggest contributor to retail sales growth. No surprise in the last two months is higher gasoline prices. So we're still buying as much gas as we were before. It's a lot more expensive. That's boosting sales. But away from gasoline, we continue to see decent spending on things like clothing, electronics, sporting goods. Those were all decent contributors to sales in April.

[Nancy Marshall Genzer]

Okay, well, that's good. How much of the retail sales increase could have been driven by tax refunds, do you think?

[Christopher Lowe]

I think that was probably at least part of it. You know, the fact that we're looking at sales growth in the last three months on a three month basis, the strongest sales growth since 2022 suggests that there was more money to spend. But if gas price increases are sustained for months, eventually we cut back and we saw exactly this pattern when gas prices rose in 22. No surprise. These are the strongest three month sales since then because we had a similar situation. And after that peak in 22, sales were weak for the better part of the next year.

[Nancy Marshall Genzer]

Yeah, I mean, April sales at gas stations were up just 2.8%. And that's after they shot up more than 20% in March. Is that a signal that things are stabilizing a little bit?

[Christopher Lowe]

I think it's more a sign of people cutting back. What we saw in March was that sales rose by about as much as prices, meaning we bought the same amount of fuel at a higher price. But in April, the sales gain was smaller than the price increase. So that's telling you that people are carpooling more, they're using public transit more, so they are already beginning to change their behavior trying to figure out how to stretch their dollars. It just hasn't spread beyond the pump to other goods and services yet.

[Nancy Marshall Genzer]

Christopher Lowe, chief economist at FHN Financial in New York thank you, thank you, Nancy.

[Marketplace Announcer]

Marketplace podcasts are supported by Viking, committed to exploring the world in comfort. Journey through the heart of Europe on an elegant Viking longship with thoughtful service, destination focused dining and cultural enrichment on board and onshore. And every Viking voyage is all inclusive with no children and no casinos. Discover [e-mail] if you're a business leader,

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[Nancy Marshall Genzer]

the Northeast are facing three big challenges in their electricity markets. They need to meet rising demand, keep prices in check and by law cut carbon emissions. Two new power lines could help them tick all three boxes. They connect New York in Massachusetts to Quebec carrying electricity from its massive hydroelectric power dams. Marketplace's Henry Epp visited the site in New York City where one of the power lines is about to switch on.

[Henry Epp]

Bob Harrison pushes open the door to a 70 foot tall industrial building on the east river in Astoria, Queens.

[Christopher Lowe]

So this is where the magic happens.

[Henry Epp]

Hanging from the ceiling are what look like radiators, more than a story tall, a little bit steampunk, a Little bit sci fi. With what looks like a metal rib cage wrapping around each one, they'll take in direct current sent more than 300 miles from Canada through the new Champlain Hudson Power Express line, or Chippy. Harrison is the project's head of engineering.

[Christopher Lowe]

This is where the microprocessors are located that then convert that direct current into

[Henry Epp]

alternating current, which is sent to New York City's homes and businesses, as many as a million of them. That Quebec Hydropower is arriving just in time. The city government has a looming deadline. Cut or offset its carbon emissions by 50% within four years. Sana Barakat is New York's deputy Commissioner for Energy Management.

[Marketplace Announcer]

This project, Ship P is going to be instrumental in helping us meet our 50% mandate ahead of schedule by next year.

[Henry Epp]

That's because the clean power from Canada allows the city to buy up to $6 billion worth of carbon offsets over the next 25 years. And that money in will pay off the cost of building the line.

[Marketplace Announcer]

Without the city's commitment, we couldn't have been able to build this project.

[Henry Epp]

The new line could also address another problem in New York.

[Robert McCullough]

At the moment, New York City in the power market is like a small town with one grocery store.

[Henry Epp]

Robert McCullough is an energy industry consultant.

[Robert McCullough]

The prices are phenomenally high. The best way to solve high prices is to bring more sellers into the market. And that's what the new line does.

[Henry Epp]

The new seller, the government owned utility Hydro Quebec, is under contract to sell to the New York market for the next quarter century at a locked in rate that only rises about 2% per year. Serge Abergel is chief operating officer of Hydro Quebec's US Arm.

[Serge Abergel]

This is the beauty for New York of a contract like this. It brings you stability and predictability for the next 25 years.

[Henry Epp]

Over time, the Canadian power could end up being a lot cheaper than other energy sources, especially on days when lots of residents turn on their air conditioners.

[Serge Abergel]

And that predictability at that price level means that on those hot summer days, you're going to get this supply of power at a much lower cost than where the market is at.

[Henry Epp]

And that, Abergel says, could put downward pressure on electricity prices in the New York market as a whole. In Astoria, Queens, I'm Henriett for Marketplace.

[Nancy Marshall Genzer]

And in Washington, I'm Nancy Marshall Genzer with the Marketplace Morning report from APM American Public Media.

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[Henry Epp]

It.