Feeling meh about the economy and anxious about the election

Summary

Marketplace Podcast Summary: "Feeling Meh About the Economy and Anxious About the Election"
Release Date: October 17, 2024

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1. Retail Sales Surpass Expectations Amid Consumer Uncertainty

Timestamp: 00:01 – 03:10

The episode opens with host Amy Scott highlighting a surprising upturn in September retail sales, which rose by 4.10%, outpacing economists' predictions. Notably, when excluding flat car and truck sales and declining gasoline sales, retail growth surged by an impressive 7.10%. This growth comes despite consumer sentiment surveys indicating general unease about the economy and personal finances in the lead-up to the November election.

Mitchell Hartman interviews Mickey Chada, an analyst at Moody's Ratings, who notes, “Consumers are still spending, and that bodes well for the economy as a whole” (01:20). However, Joanne Hsu from the University of Michigan Consumer Surveys points out a contradiction: ongoing retail sales are robust despite below-average consumer confidence, primarily due to strong income levels. As the election approaches, uncertainty about future economic conditions is rising.

Chris Jackson, Senior VP at Ipsos, adds that about half of consumers plan to "spend less and save more" as the election nears (02:08), reflecting heightened caution amid political uncertainty. The mood shift is influenced by partisan perspectives on economic indicators, with Democrats showing improved sentiment as Kamala Harris gains support, while Republicans become more pessimistic (02:54).

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2. Industrial Capacity Utilization and Inflation Pressures

Timestamp: 03:10 – 06:19

Host Amy Scott transitions to an economic indicator often overlooked: capacity utilization. According to the Federal Reserve, current capacity utilization stands at 77.5% (04:54). Sabri Benishour explains capacity utilization as a measure of how much of a company's production capability is being used. Generally, a rate around 70% is typical, with peaks beyond 90% (04:58), which can lead to increased price pressures and inflation.

Despite the moderate capacity utilization, residual inflation persists. Gary Huffbauer from the Peterson Institute suggests that factors like labor costs and housing shortages contribute to ongoing inflationary pressures, rather than the industrial sector operating at full capacity (05:00). This nuanced understanding indicates that the Federal Reserve faces challenges in managing inflation, as traditional indicators like capacity utilization do not fully explain current economic dynamics.

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3. Hurricane Helene's Devastation in Asheville, North Carolina

Timestamp: 06:19 – 10:38

The podcast delves into the aftermath of Hurricane Helene in Asheville, North Carolina. The hurricane caused severe damage to the city's water system, disrupting treatment centers and water supply reservoirs. Amy Scott reports on the community's struggle with non-potable water, which has forced businesses and organizations to seek alternative water sources.

Laura Hackett from Blue Ridge Public Radio narrates the dire situation: "More than two weeks after the hurricane, water is just starting to flow from faucets in Asheville. But it's non-potable and sometimes looks like chocolate soup" (06:48). Local businesses like Mother Bakery and Cafe have resorted to exchanging food for donations due to the inability to legally sell food without clean water (07:04).

Community efforts to establish independent wells are ongoing. Pastor Andrew Sluiter highlights the urgency: "People are practically living off of cases of water" (09:21). Business owners, such as Adam Roper from a funeral home, emphasize the necessity of clean water for essential services, including embalming and handling deceased loved ones (09:43). The prolonged water crisis has significantly impacted Asheville's economy, especially during peak tourism season, exacerbating financial strains on both businesses and residents.

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4. Market Movements and the Phenomenon of Oil Backwardation

Timestamp: 10:38 – 16:03

Amy Scott provides an update on financial markets, noting that major indices like the Dow Jones Industrial Average and Nasdaq closed at record highs, while the S&P 500 remained relatively stable (10:39). Sabri Benishour introduces the concept of backwardation in oil prices, where future prices are lower than current prices—a deviation from typical market behavior.

Gary Huffbauer explains, “The keyword in the term backwardation is, you guessed it, backward” (14:17). This situation arises due to geopolitical tensions threatening oil supply, such as conflicts in the Middle East. Denton Cinque Grana from Opus adds that political instability drives current spot prices higher as markets anticipate potential disruptions (15:03).

Chris Jackson emphasizes the uncertainty: “The world is obviously a dangerous place, so we're not quite sure what's going to happen next” (15:09). Despite these tensions, the oil futures curve is flattening, indicating that oil continues to find its way to market despite global unrest (16:03). This interplay between current geopolitical events and oil pricing dynamics showcases the complex factors influencing global markets.

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5. Challenges in the Resale Used Clothing Market

Timestamp: 16:03 – 23:17

The podcast shifts focus to the used clothing market, which is experiencing significant demand growth. Amy Scott notes that Americans acquire at least one item of clothing per week on average, with the used clothing market expanding seven times faster than new clothing sales last year. However, major resale platforms like ThredUp, Poshmark, and The RealReal are struggling to achieve profitability.

In an interview, Amanda Mull from Bloomberg discusses the paradox of high demand for used clothes against the backdrop of financial losses for resale platforms (17:14). She explains that while consumers, especially those under 40, are eager for sustainable and unique wardrobe options, the operational costs of managing a high-volume, labor-intensive resale business are prohibitive. "The business of used clothing is just like a really fancy, fiddly, high touch, labor intensive at times gross business," Mull states (17:30).

Amanda Mull further elaborates on the impact of fast fashion on the resale market. The affordability and high availability of new fast fashion items depress the perceived value of secondhand clothing, making it difficult for resale platforms to maintain appropriate pricing. Additionally, an influx of fast fashion items on these platforms dilutes the quality and appeal of unique, higher-priced secondhand goods, leading to inventory challenges and diminished consumer trust (18:43).

Despite these hurdles, there is cautious optimism for the future. Mull suggests that a shakeout in the crowded resale market may eventually lead to consolidation and the emergence of more efficient, scalable platforms. Meanwhile, established players like eBay continue to dominate by offering a broader range of products, including high-ticket items that subsidize lower-margin sales in the secondhand clothing sector (22:08).

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6. Spotlight on Small Businesses: Fruit Fair Farm and Supermarket

Timestamp: 23:17 – 27:33

In the segment "My Economy," Sam Newell shares his experience as the owner of Fruit Fair Farm and Supermarket in Chicopee, Massachusetts. Acquiring the historic grocery store in 2019 for $1.6 million, Sam and his husband faced significant initial costs due to outdated infrastructure, including faulty refrigeration and deteriorating equipment. “Out of the inventory, a quarter of it was dated like Dakota. And we were like, okay, so there is like 40, $50,000. That's right off the bat we have to toss” (24:27).

Five years after acquisition, Fruit Fair has yet to achieve profitability, despite comprehensive upgrades to the store's facilities. Sam reflects on the financial strain: “It's been five years and we have yet to be profitable for a single year. It's been really scary. It's been a constant 70, 80 hour work week” (24:50). Their efforts to modernize the store have been met with positive reinforcement from long-time customers, fostering community support and reaffirming their mission to revitalize the business.

Sam expresses optimism for the future, aiming to break even or turn a profit in 2025. “As we started doing more and more updates, our customers who have been coming for like 20, 30 years, they saw the improvements and right away they were like, you're saving this store that nobody took care of for a long time” (25:15). This narrative underscores the challenges and resilience of small business owners striving to sustain and grow their enterprises amidst financial and operational hurdles.

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7. AI in Fraud Detection: A Positive Use Case

Timestamp: 27:17 – End

The episode concludes on a positive note with a brief discussion on the role of Artificial Intelligence (AI) in combating financial fraud. Amy Scott highlights that the U.S. Treasury Department has successfully utilized machine learning to detect $1 billion in check fraud this fiscal year, nearly tripling last year's recovery (26:30). AI's ability to process vast amounts of data rapidly and identify suspicious patterns makes it an essential tool in fighting financial crimes.

However, the conversation also acknowledges the darker side of AI, noting that criminals are increasingly leveraging the same technology for illicit purposes. Despite these challenges, the effective deployment of AI by government agencies illustrates its potential to enhance security and safeguard financial systems.

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Conclusion

This episode of "Marketplace" offers a comprehensive examination of current economic conditions, highlighting the resilience of retail sales amidst consumer uncertainty, the complexities of industrial capacity utilization, and the profound impact of natural disasters on local economies. Additionally, it explores the nuanced challenges within the resale clothing market and spotlights the perseverance of small business owners. The discussion on AI's role in fraud detection encapsulates both the opportunities and risks associated with technological advancements. Through detailed reporting and insightful interviews, the episode provides listeners with a nuanced understanding of the interconnected factors shaping today's economy and election landscape.

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Notable Quotes:

• Chris Jackson (Ipsos Senior VP): "Consumers kind of holding their breath, pulling back a little bit, not necessarily being as willing to take risks or big spending." (02:08)

• Sam Newell (Fruit Fair Farm): "It's been really scary. It's been a constant 70, 80 hour work week." (24:50)

• Amanda Mull (Bloomberg): "Fast fashion is a big problem ... the inventory you do acquire might not be very good." (18:43)

• Pastor Andrew Sluiter (Bible Baptist Church): "People are practically living off of cases of water." (09:21)

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This structured summary encapsulates the key discussions and insights from the "Marketplace" episode, providing a coherent and detailed overview for those who have not listened to the full podcast.

Transcript

[Amy Scott]

Election anxiety. It affects how we spend money, too. From American Public Media, this is Marketplace in Baltimore. I'm Amy Scott in for Kai rysdal. It's Thursday, the 17th of October. Good to have you with us. Retailers started the fall shopping season in pretty good shape after a slump in August September retail sales rose 4, 10% more than economists expected. And if you take out sales of cars and trucks, which were flat, and gasoline sales, which fell dollar wise due to a drop in prices anyway, if you take those things out, sales were up an even stronger 7 10%, which is maybe a little surprising given that surveys of consumer sentiment suggest people are feeling pretty meh right now about the economy and their personal finances and the uncertainty swirling around, which is less than three weeks away, I know I don't have to remind you isn't helping. Marketplace's Mitchell Hartman has the story.

[Mitchell Hartman]

This is one of the last government reports on consumer activity we'll get before the November election. Mickey Chada is an analyst at Moody's Ratings.

[Chris Jackson]

Consumers are still spending, and that bodes.

[Amy Scott]

Well for the economy as a whole.

[Mitchell Hartman]

Now, there is a big contradiction in this continued retail spending rally.

[Amy Scott]

For the past two years, we've seen pretty strong consumer spending in spite of the fact consumer sentiment has been below average.

[Mitchell Hartman]

Joanne Hsu directs the University of Michigan Consumer Surveys.

[Amy Scott]

And the reason for that is that incomes have been very strong.

[Mitchell Hartman]

But now, says Hsu, there's another factor coming into play.

[Amy Scott]

People are incorporating their election expectations into their economic views.

[Mitchell Hartman]

Uncertainty about future economic conditions is increasing. Polling firm Ipsos, meanwhile, finds that half of consumers are planning to spend less and save more in the run up to November 5, says Ipsos senior VP Chris Jackson.

[Chris Jackson]

Consumers kind of holding their breath, pulling back a little bit, not necessarily being as willing to take risks or big spending.

[Mitchell Hartman]

Lately, the economic news has actually been pretty good. Inflation down, job market strong, stock market up. But Jackson says consumers take that news in or don't, largely based on their partisan affiliation. In a survey Ipsos just released, we.

[Chris Jackson]

Asked people is it true or false that the stock market is at or near all time highs.

[Mitchell Hartman]

Only about 40% said it was true.

[Chris Jackson]

And that connects almost directly to how people view the election. People who know that the stock market is at or near all time highs are overwhelmingly supporting Harris, and people who do not think that are overwhelmingly supporting Trump.

[Mitchell Hartman]

This summer, the University of Michigan survey found that as Kamala Harris rose in the polls, sentiment among Democrats improved, while Republicans got more bummed out about the economy. As the polls tightened, that gap diminished. I'm Mitchell Hartman for Marketplace.

[Amy Scott]

Wall street pretty much sat this one out. We'll have the details when we do the Even after all these years, sometimes an economic indicator pops up on the show I swear I haven't heard of today. That's capacity utilization. Basically, how much of a factory or mine or other company's capability to produce is actually being put to use? Turns out it's 77.5% right now, according to the Federal Reserve. So what does that actually mean? Marketplace's Sabri Benishour has our explainer du jour.

[Sabri Benishour]

Have you ever been on a flight where there was like, nobody on the plane and you were like, this is weird? Or have you been on a flight where everybody was on the plane and seven toddlers just screamed for eight hours? What you are experiencing is capacity utilization of that plane. How much is it being used? You can ask the same question about the entire US Industrial economy. Aaron Flan asks.

[Denton Cinque Grana]

Every month we have nearly 300 different individual measures of specific industries and aggregates of industries that we measure every single month.

[Sabri Benishour]

Flun is a principal economist at the Federal Reserve Board of Governors. And the Fed, with help from the census, literally asks factories and mines across the country, how much could you produce in a perfect world right now? And then they ask, but really, though, how much are you actually producing? A little bit of math later, and they have this percentage of how much of the country's industrial capacity is being.

[Denton Cinque Grana]

Used that typically falls somewhere in, like, the 70% range.

[Sabri Benishour]

This month it was 77 and a half percent.

[Denton Cinque Grana]

We've only ever really pushed up beyond 90% for any period of time for manufacturing as a whole. You know, during times of, like, wartime.

[Sabri Benishour]

And much like the airplane, you really do not want to be at max.

[Denton Cinque Grana]

Capacity because when you get up close to not just 100%, but close to 93%, oh, that's when price pressures really hit.

[Sabri Benishour]

Gary Huffbauer is a senior fellow at the Peterson Institute. He says when supply is at its limit, producers can jack up prices.

[Denton Cinque Grana]

You get reliably more inflation, but the.

[Sabri Benishour]

Capacity utilization numbers don't show that right now. And yet we have some residual inflation in the economy. Diego Comin is professor of economics at Dartmouth.

[Amanda Mull]

The Fed is having a harder time.

[Gary Huffbauer]

With the last mile of inflation because.

[Sabri Benishour]

It'S not that the industrial economy is maxed out like it was in the pandemic. It's something else. Labor costs, housing shortages, he says, things that are a little harder to grapple with. In New York, I'm Sabri Benishore for Marketplace.

[Amy Scott]

When the Remnants of Hurricane Helene swept through Asheville, North Carolina last month. Flooding devastated the area's water system, wiping out treatment centers, ripping apart pipes and muddying a reservoir that supplies water to the community. And with no clear sense of when the taps might start flowing again, at least with clean, drinkable water, some businesses and organizations are tapp into other sources. Laura Hackett from Blue Ridge Public Radio has more.

[Laura Hackett]

More than two weeks after the hurricane, water is just starting to flow from faucets in Asheville. But it's non potable and sometimes looks like chocolate soup. The lack of clean water has made doing business here nearly impossible.

[Amy Scott]

Hey, what can I do for y'all?

[Laura Hackett]

Want a sandwich? At Mother Bakery and Cafe in downtown Asheville, a volunteer hands out free sandwiches to a line of hungry locals. Owner Brett Watson says without clean water, the cafe can't legally sell food, so he's bringing in giant cisterns of water.

[Amanda Mull]

What we are doing is working on having pumps and hoses plumbed into our.

[Sabri Benishour]

Existing lines to bypass the city water system.

[Amanda Mull]

So we're working on that right now, probably a couple weeks away.

[Laura Hackett]

In the meantime, the cafe can only serve food in exchange for donations.

[Amy Scott]

This is either turkey or ham, spicy mayo and tomato, and house made focaccia. And then we've got a classic ham and butter on a bag hatch.

[Laura Hackett]

Donations go to staff who have been temporarily laid off. Co owner Heidi Bass says her workers are getting unemployment benefits, but the checks are not enough.

[Amy Scott]

A tiny fraction of what they would make on a normal basis. That's what's going to keep people from defaulting on mortgages and, you know, not being able to pay rent.

[Laura Hackett]

There are some 20,000 hospitality workers in Asheville who are in a similar situation, says city council member Sage Turner.

[Amy Scott]

I am very worried about our business.

[Gary Huffbauer]

Community, the backbone of our community really.

[Amy Scott]

Our big job providers, employment, employers, facilities, all of it.

[Laura Hackett]

Typically, October is peak tourism season, so with so many businesses unable to operate, it's a gut punch.

[Amy Scott]

Losing this much revenue this time of year and then having so many of your workforce and friends and neighbors also struggling is a lot.

[Laura Hackett]

The lack of water is slowing everything down here. Residents haven't been able to take showers or cook with tap water. Churches, schools and hospitals can't provide some services. And it's still not clear when clean water will come back to the entire city. So some businesses and organizations are getting scrappy. They're digging their own wells.

[Chris Jackson]

When we saw water start gushing out, we literally all started cheering like it was a really kind of wild moment.

[Laura Hackett]

Pastor Andrew Sluiter says of the well at Bible Baptist Church. And he says the well will serve his community of about 100 after the water is tested and deemed safe for drinking. They just couldn't wait for city water to come back on because right now.

[Chris Jackson]

People are practically living off of cases of water.

[Laura Hackett]

Dozens of business owners and organizations have applied for permits for wells, including Adam Roper. He owns a funeral home in west Asheville.

[Chris Jackson]

We absolutely have to have water to care for the deceased loved ones in our care. You know, when it comes to bathing and washing hair, but also for embalming.

[Laura Hackett]

And funeral services are essential right now in the wake of the storm, there have been more than 70 confirmed deaths in the county. Roper had to get a permit to drill. And connecting the well water costs tens of thousands of dollars. But Roper says these services and ceremonies are important.

[Chris Jackson]

It's important to be able to come together, remember, remember, alive.

[Laura Hackett]

Until clean water starts flowing through the city again, business owners and city leaders will keep doing whatever they have to do to get by. In Asheville, North Carolina, I'm Laura Hackett for Marketplace.

[Amy Scott]

Coming up.

[Sam Newell]

So there is like 40, $50,000. That's right off the bat we have to toss.

[Amy Scott]

Well, that's gotta hurt. But first, let's do the numbers. The Dow Jones Industrial Average rose 161 points, 3. 10% to close at 43,239, another record. The Nasdaq added 6 points less than a 10th percent to finish at 18,373. And the S&P 500 lost just 1 point. And at 5,841, the world's largest chip maker, TSMC, saw its U.S. listed shares jump nearly 10%. That's after reporting a 54% increase in profit for the third quarter. Chipmaker Advance Microdevices rose less than a 10th percent. The top seller of chips for AI applications, Nvidia, lifted 9. 10% after hitting a new intraday high. Along the way, bond prices fell. The Yield on the 10 year T note rose to 4.09%. You're listening to Marketplace. Doors take us to summers Away or winter adventures and afternoon getaways. Your dedicated Fidelity advisor can help you open those doors by working with you on a comprehensive plan to help you reach your wealth's full potential. Because doors were meant to be opened, visit fidelity.com Wealth Investment Minimum Supply Fidelity Brokerage Services LLC Member NYSE SIPC There.

[Elizabeth Trovall]

Are over 1.5 million nonprofit organizations in the US and millions more around the world. How do you know which ones can make the biggest impact with your donation. GiveWell was founded to help donors with that exact question. They pour over independent studies and charity data to help donors direct their funds to evidence backed organizations that are saving and improving lives. GiveWell wants as many donors as possible to make informed decisions about high impact giving. You can find all their research and recommendations on their site for free. You can make tax deductible donations to their recommended funds and charities and GiveWell does doesn't take a cut. If you've never used GiveWell to donate, you can have your donation match up to $100 before the end of the year or as long as matching funds last. To claim your match, go to givewell.org and pick podcast and enter Marketplace at the checkout. Make sure they know that you heard about GiveWell from Marketplace to get your donation matched again. That's givewell.org to donate or find out more.

[Laura Hackett]

This podcast is supported by Fortune, dedicated to empowering leaders to make intelligent business.

[Gary Huffbauer]

Decisions and delivering unbiased reporting since 1929. Subscription options, email newsletters and more [e-mail] this is Marketplace.

[Amy Scott]

I'm Amy Scott. I mentioned falling gas prices at the start of the show. Well, something funny has been happening with oil prices. Generally. It's known as backwardation. When the price of oil in the future is lower than what it is today, it's not really how futures markets are supposed to work. Under normal conditions, the price of a future contract is generally higher because of the extra costs of storing commodities like crude oil marketplaces. Elizabeth Trovall looked into what's going on.

[Gary Huffbauer]

The keyword in the term backwardation is, you guessed it, backward, says Tom Tsang with Texas Christian University.

[Denton Cinque Grana]

You have a market that's backwards. The prices in the near months, let's.

[Amy Scott]

Say that in the next 90 days those prices are higher and then we see prices fall off every single month after that.

[Gary Huffbauer]

So if you put prices of oil on a chart, they would be declining.

[Amy Scott]

You'd see this curve going lower and.

[Gary Huffbauer]

Lower and lower and lower as we move out. The price of crude oil in December 2025, for instance, is $3 less than it is today. It boils down to the balance of current and future supply and demand factors like what OPEC and other major producers are planning.

[Chris Jackson]

The US Will probably continue to grow oil production, maybe at a slower pace than in previous years.

[Gary Huffbauer]

That's analyst Denton Cinque Grana with Opus, who says today's backwardation actually reflects politics, geopolitics threatening supply.

[Chris Jackson]

The world is obviously a dangerous place, so we're not quite sure what's going to happen next.

[Gary Huffbauer]

Andrew O'Connor with Morningstar points to war in the Middle east when the fear.

[Chris Jackson]

Of escalation was reaching a crescendo. After the first Iranian missile barrage on Israel, the futures curve shifted higher and steepened because there was a fear of a shortage. Today, therefore, the spot price was bid higher.

[Gary Huffbauer]

He says these and other tensions are driving today's backwardation because there's this threat.

[Chris Jackson]

Of escalation of ongoing conflicts. And then there would be fear of a disruption that is associated with that. Okay, that is tending to cause the spot price to be bid higher.

[Gary Huffbauer]

But he says even so, that downsloping oil futures curve has actually been flattening. Crude oil is still finding a way to market despite global unrest. I'm Elizabeth Trovall for Marketplace.

[Amy Scott]

We started the show with today's retail sales numbers up just shy of half a percentage point in September. September. And a not inconsequential part of those sales is clothing. Would you believe Americans acquire on average at least one item of clothing per week? Not all of it is new. Last year the market for used clothes grew seven times faster than for new clothes and platforms for buying resale clothing. Think Thredup Poshmark, the Real real are ready to capitalize on that and yet those platforms have struggled to make a profit. Amanda Mull wrote about it for Bloomberg. Welcome back.

[Amanda Mull]

Thank you so much for having me.

[Amy Scott]

Okay, so I just went to a big pop up vintage market here in Baltimore, Vintage Palooza it's called, and the place was packed. I mean, it really seems like the demand for used clothes is there. So why aren't these sites making money?

[Amanda Mull]

Yes, used clothes have never been in as much demand as they are now, especially among buyers under 40. I think that people are a little bit bored with what's available new now. A lot of a lot. There's a huge abundance of new clothes, but a lot of it looks sort of the same. So like used clothes are a great way to find something that looks like a little bit more interesting and like might be better quality. So like, clearly there is a business case for opening these types of like really high scale, far reaching marketplaces online. But the problem is that like the business of used clothing is just like a really fancy, fiddly, high touch, labor intensive at times gross business. And trying to do that at really, really huge scale and across like a really complicated logistics setup costs a lot of money in a way that the prices of used clothing can't necessarily offset.

[Amy Scott]

You also write that it's hard to compete against fast fashion because you could buy a dress on Sheehan, you know, for $5, where a vintage item, partly because of the work that goes into finding, cleaning, selling, marketing, it is going to be more. What is the role of fast fashion in this dynamic?

[Amanda Mull]

Fast fashion is a big problem on a couple levels for resale. The biggest thing that it does, I think, is that it just depresses the amount of money that people perceive as appropriate to pay for particular types of clothing. If you are a fast fashion consumer and you want to get some cool, like secondhand stuff and the secondhand sellers have priced things at like $30, $50, the stuff that they're selling may be higher quality and may be perfectly reasonable to command those prices, even as secondhand items. But because you're so used to being able to get whatever you want for like impossibly cheap prices, it might feel like those people are trying to rip you off. And then if nobody is willing to pay, then fewer people are willing to list. So it's a real, it's a real inventory acquisition problem for platforms. And then it also just creates a problem of like, the inventory you do acquire might not be very good. The more fast fashion flows into people's closets, the more people are going to end up eventually listing that fast fashion on these platforms. And if a new user logs onto a platform and wants to, to find, you know, a beautiful vintage dress or, you know, an old leather jacket or something like that, and when they search for a leather jacket, all they come up with are a bunch of like faux leather she in pieces or something from Forever 21 that's pleather. It looks to buyers like, actually it's not like I'm not doing myself any favors by doing this the hard way. It's all fast fashion. I could just buy fast fashion. So you've got a bunch of different problems that that industry creates.

[Amy Scott]

We do know that younger shoppers are more interested in sustainability and more concerned about the impact of their buying. Is that not enough of an incentive for consumers if the prices are just the math doesn't work.

[Amanda Mull]

It's really hard to overcome the math not working, especially among younger consumers, people who really, really want to buy second hand. A lot of those same shoppers are people who grew up in a consumer market where you could have anything you wanted at your door in one to two days with free shipping and, you know, a minimal outlay of cash. And when, when you have been sort of like socialized into that understanding of how shopping Works. Anything that doesn't work like that or anything that has more friction or costs more is really difficult to convince yourself to buy into. So personal values in the consumer market have a real hard time winning the battle against math.

[Amy Scott]

Well, do you or the people you talk to see a path to profitability for these platforms? They just have to figure it out.

[Amanda Mull]

Right now the market is pretty crowded. I spoke to several people who thought that there was going to be a lot of sort of a shakeout in this group of companies and eventually like a winner that has, like, better, more efficient processes and that is able to acquire scale from some of these other companies. And then there's always eBay. EBay probably sells more secondhand clothing than any of these platforms.

[Amy Scott]

Honestly, the original. Right. I mean.

[Amanda Mull]

Right.

[Amy Scott]

People have been buying and selling used clothes on ebay forever.

[Amanda Mull]

Yeah, Ebay has the benefit of selling a lot of stuff that isn't clothing, a lot of stuff that has a much higher price point and that can generate much higher fees for them, which can then offset and subsidize some of the really, like, low dollar sales that you see in the sort of mass market resale arena.

[Amy Scott]

Okay, so what about you? Do you shop on any of these platforms?

[Amanda Mull]

I shop constantly on these platforms. I am wearing a dress right now that I bought on Poshmark. I. I would say probably about half of the things that I wear regularly are secondhand in some respects because you do just find, like, more interesting things. The. The things that I get compliments on the most consistently are almost all secondhand finds.

[Amy Scott]

All right. Amanda Mull writes at Bloomberg. We have her on a lot. Good to talk to you again. Thanks so much.

[Amanda Mull]

Thanks so much for having me.

[Amy Scott]

Keeping with the theme of retail, let's take a trip to the other side of the checkout counter for the latest installment of our series, My Economy.

[Sam Newell]

My name is Sam Newell. I'm the owner and operator of Fruit Fair Farm and Fruit Fair Supermarket. And we are located in Chicopee, Massachusetts. Back in 2019, me and my husband wanted to buy a farm, and then we didn't see any available, so we tried to buy a grocery store that does a lot of business with the local farms. This is the oldest grocery store in Chicopee. It was started in 1936 and it started as a farm stand. So we were like, okay, this is probably what we can go for. But we didn't realize that the past couple owners ended up not really updating any refrigeration, any cases. So all the H vac, the floors, the equipment, Everything was way past its service life. Out of the inventory, a quarter of it was dated like Dakota. And we were like, okay, so there is like 40, $50,000. That's right off the bat we have to toss. So we overpaid a lot for the grocery store. We ended up paying 1.6 million for it. But if we caught the inventory, if we caught the equipments that were failing, we would have paid probably 600 to 700,000 for it. It's been five years and we have yet to be profitable for a single year. It's been really scary. It's been a constant 70, 80 hour work week. Hopefully in 2025 we are going to break even or see a profit. That's my goal for next year. As far as making it work, I have made it work. We have replaced all the refrigeration, we have replaced the H Vac, we have replaced the floors. The point of sale, pretty much everything that you could possibly think of. As we started doing more and more updates, our customers who have been coming for like 20, 30 years, they saw the improvements and right away they were like, you're saving this store that nobody took care of for a long time. And then it was a reaffirmation after hearing it from hundreds and hundreds and hundreds of people.

[Amy Scott]

Sam Newell, owner of Fruit Fair in Chicopee, Massachusetts. You know we can't do this series without you, so please let us know what's going on. Marketplace.org/my economy okay, this final note on the way out today, here's a non terrifying story about AI Unless I guess you're trying to rip off the federal government. The U.S. treasury Department said today that machine learning helped officials detect $1 billion worth of check fraud this fiscal year, almost triple the amount the department recovered last year. Machine learning is especially helpful in detecting financial crimes because it can comb through enormous amounts of data and detect patterns in as little as milliseconds. Unfortunately, thieves know how to use AI too. John Buckley, John Gordon, Noya Carr, Diantha Parker, Amanda Peacher and Stephanie Seek are the Marketplace editing staff. Amir Bibawi is the managing editor and I'm Amy Scott. We will see you tomorrow. This is apm.

[Denton Cinque Grana]

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