When boycotts go your way

Summary

Marketplace Morning Report: "When Boycotts Go Your Way" Release Date: March 6, 2025

In this episode of Marketplace Morning Report, host Sabri Ben and correspondent Kimberly Adams delve into the intricate dynamics of consumer behavior in response to corporate diversity initiatives, the surge in European defense spending amidst geopolitical tensions, and the anticipated impacts of recent tariffs on the U.S. labor market. The episode offers a comprehensive analysis of how strategic boycotts and policy shifts are shaping the economic landscape.

---

1. Costco’s Commitment to Diversity, Equity, and Inclusion (DEI)

Overview: Costco Wholesale is under the spotlight for its steadfast commitment to DEI initiatives, contrasting with other retailers who have scaled back such commitments. This dedication has prompted mixed reactions among consumers, leading to potential shifts in spending patterns.

Key Discussions:

• Consumer Shifts: Kimberly Adams highlights the ambiguity in consumer behavior resulting from Costco’s DEI stance. While some consumers are pledging to support Costco more robustly, others are distancing themselves.

• Expert Insights:

  • Katie Thomas, leading the Carney Consumer Institute, posits, “I think we'll see that some consumers have shifted more purchases to Costco because they are in favor of the DEI announcements” (00:47).
  • Conversely, Ivan Feinseth, director of research at Tigris Financial Partners, counters that the anticipated impact may be minimal: “You’ll see an effect. I think guidance may be more impacted” (01:08).
  • Deidre Popovich, a marketing professor at Texas Tech University, suggests that long-term indicators will be necessary to gauge the true effect (01:20).

Notable Quote: Katie Thomas emphasizes the dual-edged nature of DEI commitments, stating, “Do think that we will be able to see indicators for corporate success in the next few months, and that will tell us just how consumers are voting with their wallets when it comes to companies and their DEI commitments” (01:14).

---

2. Europe’s Escalating Defense Spending Amid the Ukraine Conflict

Overview: In response to the ongoing war in Ukraine and strategic shifts within European politics, European nations, spearheaded by Germany, are significantly increasing their defense budgets. This move represents a substantial departure from traditional fiscal conservatism.

Key Discussions:

• Germany’s Fiscal Policy Shift: Henry Epp reports that Germany is poised to ramp up military spending following the announcement by its likely next chancellor to exempt defense from stringent fiscal policies. The proposed $540 billion package aims to enhance transportation, energy, and digital infrastructure, marking a historic shift for Germany’s typically debt-averse government (01:56).

• Impact on Markets: The news has buoyed European stock markets, while bond yields in Germany have increased due to expectations of higher government debt issuance.

• EU’s Role: The European Union is facilitating other member states to elevate their military budgets without incurring penalties, potentially injecting over $800 billion into defense over the next four years (02:45).

• U.S. Military Aid Context: This increase in European defense spending coincides with the Trump administration’s recent decision to pause military aid to Ukraine, diverging from the bipartisan support seen under the Biden administration (02:15).

Notable Quote: Henry Epp encapsulates the significance of these developments: “The incoming government also proposed the equivalent of a $540 billion package aimed at boosting the country's transportation, energy and digital infrastructure. It would be a significant break from tradition for Germany” (01:56).

---

3. U.S. Tariffs and Their Anticipated Effect on the February Jobs Report

Overview: The imposition of 25% tariffs by the Trump administration on Canada and Mexico has triggered retaliatory measures, notably by Canadian provinces removing U.S. liquor brands like Jack Daniels from their shelves. This tit-for-tat escalation is poised to influence the upcoming February jobs report amidst a backdrop of economic uncertainties.

Key Discussions:

• Immediate Market Reactions: The removal of U.S. liquors from Canadian stores has adversely affected companies like Brown-Forman, leading to a 2.5% decline in pre-market trading (03:08).

• February Jobs Report Outlook: With significant events such as federal government layoffs, new tariffs, declining consumer confidence, and stock market volatility, experts are divided on what the jobs report will reveal.

• Expert Insights:

  • Dan North from Allianz Trade North America suggests the job losses from Doge layoffs may not fully reflect in February’s numbers due to reporting delays (04:29).
  • Dean Baker of the Center for Economic and Policy Research anticipates cautious hiring, especially in sectors like healthcare and government, despite their recent growth (05:02).
  • Ufuk Agcijit, an economist at the University of Chicago, highlights a nearly 1% decline in small business employment, attributing it to inflation, high interest rates, and overarching uncertainty (05:28).
  • Adam Stafford from RecruitX provides a contrasting view, noting that major health systems and tech organizations are still investing and attracting talent, particularly in specialized fields (05:58).

Notable Quotes:

• Ivan Feinseth remarks on the overarching uncertainty affecting hiring: “Uncertainty has reached a magnificent scale under this administration. If corporations feel that much uncertainty, I think that’s going to cool the hiring process” (04:45).
• Dean Baker succinctly captures the cautious optimism in certain sectors: “The two strongest sectors for job growth have been health care and state and local governments” (05:02).

---

Conclusion

This episode of Marketplace Morning Report intricately weaves together the complexities of consumer behavior influenced by corporate DEI policies, the strategic escalation of European defense spending in the face of geopolitical tensions, and the multifaceted impacts of recent U.S. tariffs on the labor market. Through expert analyses and on-the-ground reporting, listeners gain a nuanced understanding of how these elements interplay to shape the current economic climate.

---

For more insights and detailed analyses, tune into the full episode of "When Boycotts Go Your Way" on Marketplace.

Transcript

[Sabri Ben]

When boycotts go your way. From Marketplace, I'm Sabri Ben, ashore in for David Brancaccio. Later today, after the stock market closes, Costco, the Warehouse Membership Club, will release its latest quarterly earnings. Now, while some retailers and grocery chains have backed away from commitments related to diversity, equity and inclusion, Costco has very publicly dug in, leading some consumers and groups to promise to spend more equipment at the big box stores. But will that impact the bottom line marketplaces? Kimberly Adams reports.

[Kimberly Adams]

When it comes to shifts in consumer spending, particularly at specific retailers, it can be hard to parse exactly what's behind it. Katie Thomas leads the Carney Consumer Institute.

[Katie Thomas]

I think we'll see that some consumers have shifted more purchases to Costco because they are in favor of the DEI announcements.

[Kimberly Adams]

But at the same time, and for the same reason, some consumers have shifted their shopping dollars away from Costco. So says Ivan Feinseth, director of research at Tigris Financial Partners, I don't think.

[Ivan Feinseth]

You'Ll see an effect. I think guidance may be more impacted.

[Katie Thomas]

By the potential tariffs.

[Kimberly Adams]

But over time, says Deidre Popovich, who teaches marketing at Texas Tech University, I.

[Katie Thomas]

Do think that we will be able to see indicators for corporate success in the next few months, and that will.

[Kimberly Adams]

Tell us just how consumers are voting with their wallets when it comes to companies and their DEI commitments. In Washington, I'm Kimberly Adams for Marketplace.

[Sabri Ben]

In a major geopolitical shift, Europe is going to be spending a lot more on defense European leaders are meeting in Brussels today for emergency talks on the war in Ukraine. That is after the Trump administration announced this week the US Will pause military aid to Ukraine. As Marketplace's Henry Epp reports, Germany could.

[Henry Epp]

Soon ramp up its military spending after the country's likely next chancellor announced a plan this week that would exempt defense from Germany's strict fiscal policies. The incoming government also proposed the equivalent of a $540 billion package aimed at boosting the country's transportation, energy and digital infrastructure. It would be a significant break from tradition for Germany, which has historically kept tight limits on government debt. That news pushed European stock markets higher this week. Bond yields in Germany rose on the expect that more spending means the government will issue more debt, sending bond prices lower. Meanwhile, the European Union has made moves to allow other countries in the bloc to increase military budgets as well without incurring penalties. Along with a planned loan package from the EU, the moves could push more than $800 billion into defense over the next four years, according to Bloomberg. All this comes as the Trump administration has walked back from military support of Ukraine. That aid had bipartisan support under the Biden administration, and it's been key to Ukraine Ukraine's efforts to push back on Russia's invasion of the country, which began just over three years ago. I'm Henry app for Marketplace after President.

[Sabri Ben]

Trump imposed 25% tariffs on Canada and Mexico, now Canadian provinces are jumping into the fight. They've started to take US Liquor off the shelves. Brown Foreman stock. Those are the people who make Jack Daniels. The Stock is down 2.5% in pre market trading. Tomorrow morning, the Labor Department releases the February jobs report. It's a tally of all the jobs lost and gained across the country in February. It is the first jobs report to fully fall under the new Trump administration. And so much has happened mass federal government layoffs and downsizing by Doge. There's the new tariffs on Canada, Mexico and China. There were the big drops in consumer confidence and the stock market. So how much all that will show up in tomorrow's jobs numbers is an open question. Marketplace's Mitchell Hartman explains.

[Mitchell Hartman]

January was a weird month. Bad winter weather and fires in California kept job creation low while the unemployment rate actually fell. February could also be weird, or at least packed with surprises, but not for the reasons one might think, says Dan north at credit insurer Allianz Trade North America.

[Ivan Feinseth]

It's not so much the Doge firings or laying offs that's going to show up in the next couple of months.

[Mitchell Hartman]

Those happen too late to be captured in February's jobs report, rather, says North. With tariffs and inflation and market volatility.

[Ivan Feinseth]

Uncertainty has reached a magnificent scale under this administration. If corporations feel that much uncertainty, I think that's going to cool the hiring process.

[Mitchell Hartman]

Dean Baker at the center for Economic and Policy Research agrees.

[Dean Baker]

The two strongest sectors for job growth have been health care and state and local governments. Think of someone operating a hospital or a city counting on government grants. They're going to be very cautious. So I expect a lot of hiring won't show up in February.

[Mitchell Hartman]

We already know one weak spot last month small business employment, according to data from Intuit crunched by University of Chicago economist Ufuk Agcijit.

[Ufuk Agcijit]

Businesses that employ at most nine workers, down by 0.99%, which is a substantial decline, agtajit says.

[Mitchell Hartman]

They're suffering from inflation, high interest rates and again, uncertainty.

[Ufuk Agcijit]

Businesses are forward looking. They would be more risk averse in new hires, but at the same time, whenever they lose workers, they are not replacing either.

[Mitchell Hartman]

The gloom for February's jobs report is not universal.

[Adam Stafford]

We represent the largest health systems in the country, some of the largest tech organizations in the world attract talent. We're seeing a lot of investment right now.

[Mitchell Hartman]

Adam Stafford at RecruitX says private sector employers are getting ready for an influx of newly unemployed but highly skilled federal.

[Adam Stafford]

Talent that works in tech, in particular mathematical sciences and economics.

[Mitchell Hartman]

Stafford worries most about federal clerical workers who could be laid off. He says the private sector has already offshored most of those jobs or replaced them with automation. I'm Mitchell Hartman for Marketplace, and in.

[Sabri Ben]

New York, I'm Sabri Benishore with the Marketplace Morning Report from APM American Public Media.