What uncertainty means for back-to-school shopping

Summary

Marketplace Morning Report Summary Episode: What Uncertainty Means for Back-to-School Shopping
Release Date: July 11, 2025

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1. Tariff Uncertainty and Its Economic Implications

Sabri Ben Ashore introduces the episode by highlighting the latest developments in U.S. trade policies. President Trump has signaled potential increases in baseline import taxes from the current 10% to as high as 15-20%, with specific threats against Canadian imports.

Nancy Marshall Genser elaborates on these threats, particularly focusing on the announcement of a 35% tariff on Canadian imports starting August 1st. However, there is a possible exception for Canadian products that comply with the US-Mexico-Canada Agreement (USMCA), especially those contributing to the reduction of fentanyl flows into the U.S. She notes, “President Trump hasn’t made a final decision on energy and fertilizer tariffs yet” (01:28).

Canadian Prime Minister Mark Carney responded positively, emphasizing Canada’s commitment to combating fentanyl and cooperating with the U.S. to protect communities: “Canada has made vital progress towards stopping fentanyl and is committed to working with the US to save lives” (01:28).

2. Back-to-School Shopping Amid Economic Uncertainty

Sabri Ben Ashore sets the stage for discussing the Back-to-School season, noting a bleak sales forecast influenced by economic uncertainties. This sentiment is backed by a Deloitte survey indicating a dip in adjusted Back-to-School spending for the year.

Kristen Schwab reports on the survey findings, quoting Brian McCarthy: “Dipping to the lowest level we've seen in, let's say, five years since the pandemic” (03:03). The survey reveals that over 50% of respondents expect the economy to weaken in the next six months, and more than 80% feel their financial situation has deteriorated compared to the previous year.

Dana Telsey, CEO of Telsey Advisory Group, points out that retailers are grappling with pricing uncertainties due to ongoing tariffs. “Uncertainty surrounding pricing given tariffs is top of mind” (03:08). Retailers anticipate price increases in the summer or early fall, with some already implementing them. Diana Smith from Mintel adds, “Companies are trying to be transparent about tariffs by adding tax line items at checkout” (04:01).

3. Banking Sector Response to Economic Conditions

Transitioning to the financial sector, Sabri Ben Ashore discusses upcoming quarterly reports from major U.S. banks, which analysts expect to surpass profit forecasts due to gains from trading and investment banking.

David Reiling, CEO of Sunrise Banks in Minnesota, shares insights on loan demand: “Demand for loans has been fairly steady” (06:28). Despite steady mortgage demand, other lending areas like commercial real estate and small business loans are experiencing a slowdown. Reiling explains, “Borrowers are uncertain about the economy, leading to increased caution in new lending” (07:01).

David Schiff from FTI Consulting adds that lenders remain hesitant, particularly in sectors like renewable energy and healthcare, due to potential impacts from federal policy changes: “There’s concern around the ability of some borrowers to repay, prompting banks to consider tighter underwriting standards” (07:51).

Conversely, Dominic Miartin, CEO of American Pride Bank, highlights regional variations. In the southern U.S., areas like Atlanta, Florida, and North Carolina are seeing economic growth driven by migration, which sustains loan demand. “With strong loan demand, we can be more selective without expanding geographically or diversifying into new industries” (08:26).

4. Conclusion and Community Engagement

The episode concludes with Anil Scarborough, VP and General Manager of Marketplace’s business shows, inviting listeners to contribute to the future of economic journalism by joining the APM Board of Trustees or the Marketplace Philanthropic Council. Interested individuals are encouraged to apply by July 14th to support Marketplace’s mission of enhancing the nation’s economic intelligence.

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Notable Quotes:

• Brian McCarthy: “Dipping to the lowest level we've seen in, let's say, five years since the pandemic” (03:03)
• Diana Smith: “Companies are trying to be transparent about tariffs by adding tax line items at checkout” (04:01)
• Dominic Miartin: “With strong loan demand, we can be more selective without expanding geographically or diversifying into new industries” (08:26)

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This episode of Marketplace Morning Report provides a comprehensive overview of the economic factors influencing Back-to-School shopping, including tariff uncertainties, consumer financial pressures, and the banking sector's cautious approach to lending amidst broader economic concerns. For retailers and parents alike, understanding these dynamics is crucial for navigating the upcoming shopping season.

Transcript

[Marketplace Host]

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[Sabri Ben Ashore]

Another day, another Tariff from Marketplace I'm Sabri Ben ashore in for David Brancaccio. President Trump signaled the baseline import tax on goods from most countries could be higher than the 10% that's been in place the last few months could be as high as 15 or 20%. He also threatened new tariffs against Canada starting next month. Marketplaces Nancy Marshall Genser has more Trump.

[Nancy Marshall Genser]

Announced this latest tariff threat in a post on social media last night. He said the U.S. would charge a 35% tax on imports from Canada starting Aug. 1. But Trump also said if Canada works with the U.S. to stop the flow of fentanyl, his administration might consider a tariff adjustment. It appears there will be an exception for Canadian products that comply with the U S Mexico Canada agreement, which was negotiated during Trump's first term. And Reuters is reporting that U.S. tariffs on Canadian in energy and fertilizer will stay at 10%, although President Trump hasn't made a final decision on that. In the letter, Trump says he would add the amount of any retaliatory tariffs from Canada to the US Import tax. In his own social media post, Canadian Prime Minister Mark Carney said Canada has made vital progress towards stopping fentanyl and is committed to working with the US to save lives and protect communities in both countries. I'm Nancy Marshall Genser for Marketplace.

[Sabri Ben Ashore]

We are only about halfway through July, but for retailers and for some very organized parents, it is technically already Back to School shopping season and the sales forecast is not looking so good. A new survey from Deloitte says Back to School spend is expected to dip this year when adjusting for inflation. Marketplaces Kristen Schwab has more.

[Kristen Schwab]

Aside from the holiday gifting season, Back to School is retailers biggest event of the year and it's shaping up to be a nail biter. Brian McCarthy, who worked on the Deloitte survey, says people's economic expectations are waning.

[Brian McCarthy]

Dipping to the lowest level we've seen in, let's say, five years since the pandemic.

[Kristen Schwab]

More than 50% of people expect the economy to weaken over the next six months. More than 80% say they're in a worse financial position than they were last year. Dana Telsey is CEO of Telsey Advisory Group. The uncertainty surrounding pricing given tariffs and is top of mind, especially as more retailers warn that price increases are coming sometime this summer or early fall. Telsey says in many cases they already have. We do a weekly tracker of 80 items, from jeans to sneakers to dolls. We began to see this past week the beginnings of an uptick in price. Companies are trying to be transparent about tariffs, says Diana Smith, who directs retail and E commerce at Mintel. They're coming up with brand mess and adding tax line items at checkout.

[Marketplace Host]

The we're all in it together type of approach is the best way forward for consumers and retailers because everyone is.

[Kristen Schwab]

A bit tense about tariffs, especially after years of inflation. I'm Kristen Schwab for Marketplace.

[Marketplace Host]

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[Marketplace Sponsor]

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[Sabri Ben Ashore]

The country's big banks will report their latest quarterly results next week. Analysts have a hunch that profits will beat forecasts because banks have been pulling in more money from their trading and investment banking desks. But the thing we usually think of when we hear the word bank, you know, the old fashioned business of taking in deposits and making loans, that's been a mixed bag lately. So Marketplace's Justin Ho called up a few bankers to ask him how that whole lending thing is going.

[David Reiling]

Demand for loans has been fairly steady at Sunrise Banks in Minnesota, CEO David Reiling says look at mortgage demand. While it's not going through the roof.

[Brian McCarthy]

Deals are being done and people are buying homes. And so they're getting maybe a little bit more accustomed to this interest rate environment and the valuation of homes.

[David Reiling]

But Reiling says there are other types of lending that are slowing down, including commercial real estate and small business loans.

[Brian McCarthy]

The small business, I think, is being a little bit more conservative as to purchases of equipment and more infrastructure.

[David Reiling]

Reiling says a lot of that hesitancy is because borrowers are uncertain about the economy. But a few of his commercial real estate borrowers are actually having trouble paying back their loans.

[Brian McCarthy]

They might have lost a tenant or something's happening. The interest rate on their loan went up from an adjustable standpoint, and now they're a bit stressed.

[David Reiling]

As a result, Reiling says the bank is being more careful about the new loans. It makes just a little bit more.

[Brian McCarthy]

Due diligence and maybe a little sharper pencil in terms of looking at deals.

[David Reiling]

That kind of caution is common at banks across the country. David Schiff with FTI Consulting says lenders are still unsure how the Trump administration's policies will play out across industries. For instance, he says companies in the renewable energy and health care sectors might have a tougher time, thanks in part to federal cutbacks.

[Brian McCarthy]

And so there's just concern around the ability of some of those borrowers to repay. And that's causing the banks to think about, although not necessarily enact yet tighter underwriting standards.

[David Reiling]

Schiff says it also depends on where you are. And there are regions of the country where demand for loans is up. Take the south, for instance.

[Dominic Miartin]

Everything from the Atlanta metro area going into Florida, going into North Carolina, South Carolina.

[David Reiling]

Dominic Miartin is CEO of American Pride bank, which serves borrowers in those states he says the south is continuing to see in migration and therefore economic growth.

[Dominic Miartin]

And with that, of course, comes demand for services for construction, hospitality, for all kinds of other businesses that are related.

[David Reiling]

That said, the bank has been preparing for an economic slowdown. Mrt says the bank is stress testing its portfolio more rigorously, checking to see what would happen if its borrowers incomes were to decline. And he says the strong demand he's seeing for loans is allowing the bank to become more selective.

[Dominic Miartin]

We don't have to go geographically outside of our market or we don't have to go into new types of industry or new type of product that way.

[David Reiling]

Mertin says the loans the bank does make are solid. Justin I'm Justin Ho for Marketplace.

[Sabri Ben Ashore]

Our executive producer is Nancy Fargali. Our digital team includes Antoinette Brock, Jamila Huxtable, Emily McCune and Dylan Mietanen. Our engineers are Brian Allison, Rachel Breeze and Jess Berg. And in New York, I'm Sabri Benishore with the Marketplace Morning Report from apm American Public Media.

[Anil Scarborough]

Greetings Marketplace listeners. It's Anil Scarborough, vice president and general manager of your favorite business shows. I'm coming to you today with an opportunity to help shape the future of economic journalism and philanthropy. Marketplace's parent company, American Public Media, is looking for board members, and we'd like to invite listeners like you to join either the APM Board of Trustees or the Marketplace Philanthropic Council. If you believe in our mission to raise the economic intelligence of the nation, and if you love building community through public media, we're looking for strategic, innovative leaders to help ensure that Marketplace continues to evolve and expand its reach and impact across the country. Applications are open now through an extended deadline of Monday, July 14th. Visit marketplace.orgboard for more information. Thanks for your consideration and thanks for listening.