Shrinking spread

Summary

Marketplace Podcast Episode Summary: "Shrinking Spread"

Release Date: December 17, 2024
Host: Kai Ryssdal
Produced by: Marketplace

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Introduction

In the "Shrinking Spread" episode of Marketplace, host Kai Ryssdal delves into a multifaceted exploration of current economic trends, ranging from bond market dynamics and retail sector challenges to the decline of American manufacturing, the ski industry's climate struggles, and shifts in household net worth. The episode weaves expert insights and real-world impacts, providing listeners with a comprehensive understanding of today's economic landscape.

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Bond Market Dynamics: Narrowing Spreads

Timestamp: 02:22 - 04:04

Kai Ryssdal opens the discussion by addressing the intriguing trend in the bond market where corporate bond yields have been increasing at a slower rate compared to government bond yields, resulting in narrowed credit spreads.

• Justin Ho explains, “Bond investors look at government bond yields and corporate bond yields and compare them. The difference is called a spread” (02:22).

• Guy Lebat, Chief Fixed Income Strategist at Jennie Montgomery Scott, comments, “Spreads exist because corporate bonds typically offer more interest. That's because they're seen as riskier” (02:30).

The narrowing spreads are interpreted as a sign of reduced perceived risk in the corporate sector. Winnie Caesar, Global Head of Strategy at CreditSights, adds, “Investors are expecting that the economy is going to fare well, so they're probably not buying Treasuries” (03:00). This optimism is further fueled by expectations of a supportive administration under President Trump, which investors believe will enhance corporate profitability through a looser regulatory environment and potential tax breaks.

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Retail Sector Struggles: Store Closures and Changing Consumer Behavior

Timestamp: 04:04 - 07:10

The episode shifts focus to the retail sector's ongoing challenges, highlighted by the bankruptcy filing of the Container Store, marking the 49th retailer to file that year—double the number from the previous year.

• David Swartz, Senior Equity Analyst at Morningstar, explains, “Walgreens, CVS, and Rite Aid have seen some of the highest store closure rates because the US has too much retail space” (05:08).

John Mercer, Head of Global Research at Coresight, notes, “Retailers that sell furniture or home improvement are hurting” (05:51), attributing these closures to a combination of declining discretionary spending and rising inflation pressures.

The discussion underscores how the removal of pandemic-era lease adjustments, which had temporarily supported struggling retailers, has led to an acceleration in store closures. Mark Cohen, former Director at Columbia's Retail Studies Program, refers to the current situation as a "Covid hangover" (06:02), emphasizing that businesses once sustained by temporary measures are now failing.

Kristen Schwab provides local insights, illustrating the shift from traditional retailers like Big Lots to more resilient chains such as WAWA and Aldi (06:40), reflecting a broader transformation in consumer preferences and retail strategy.

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The Decline of American Manufacturing: Economic and Social Impacts

Timestamp: 07:10 - 13:03

A significant portion of the episode addresses the precipitous decline in American manufacturing jobs—from a quarter of the workforce in 1970 to less than 10% today. Matt Notowigdo, Professor of Economics at the University of Chicago's Booth School, attributes this decline to two primary factors:

1. Technological Advancements: Automation and the replacement of workers with industrial robots have significantly reduced the need for human labor in manufacturing (08:37).

2. The China Shock: The surge in Chinese imports following China's entry into the WTO in the early 2000s has diminished domestic demand for American manufacturing jobs (08:37).

The resulting loss of approximately seven and a half million manufacturing jobs since 1980 has had profound social implications. Many displaced workers have exited the labor force altogether, facing challenges in reemployment and increased reliance on government benefits. Matt Notowigdo discusses the limited success of job retraining programs, noting, “It's hard to come up with training programs that look effective when people are older” (10:42). Instead, there has been a generational shift with younger workers opting for higher education as a pathway out of declining sectors.

The episode also highlights the community-level impacts, including deteriorating health outcomes and increased mortality rates among middle-aged workers experiencing mass layoffs (11:12). Nevertheless, there is a "silver lining" as younger generations pursue higher education, potentially mitigating some economic hardships (12:31).

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Climate Change and the Ski Industry: Challenges for Snow Resorts

Timestamp: 13:03 - 18:00

Marketplace explores how climate change is adversely affecting the ski industry, particularly impacting smaller independent resorts that lack the financial flexibility to hedge against unfavorable weather conditions.

• Henry Epp reports from Bolton Valley Resort in Vermont, where snowmaking operations struggled due to marginal weather conditions (13:41). The resort's president, Lindsay DeLaurier, explains the substantial investments made in snowmaking infrastructure to adapt to shorter windows of suitable weather (16:05).

Daniel Scott, a climate change and tourism expert at the University of Waterloo, states, “Average ski season lengths have stabilized or declined in most regional markets over the last few years” (15:59). This trend poses a significant threat, especially to lower-elevation resorts, which are more vulnerable to melting and rain events as temperatures rise (16:05).

The resilience strategies of resorts like Bolton Valley, which invest in both snowmaking and summer attractions, illustrate the broader industry's attempts to diversify and mitigate climate risks (16:34). However, the overarching challenge remains the unpredictability and declining reliability of natural snowfall, underscoring the urgent need for systemic climate action.

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Household Net Worth: Rising Assets Amid Uneven Distribution

Timestamp: 21:27 - 24:16

The episode shifts to an analysis of American household net worth, which has reached a record high of approximately $169 trillion, primarily driven by increases in the stock market and rising home values.

• Eric Friedman from US Bank elaborates on the "wealth effect," where asset gains lead to increased consumer spending, thus fueling further economic growth (22:11).

However, this growth is not uniformly experienced across all demographics. The top 10% of wealth holders own about 92% of all equities, resulting in disproportionate benefits from stock market gains (22:43). Sam Stovall of CFRA Research notes that while stock ownership has become more widespread due to retirement accounts like 401(k)s, there is a risk of overspending based on paper profits (22:43).

Thuan Nguyen from RSM highlights a potential vulnerability: “Consumers could count on their paper profits on stocks and real estate, overspend and get into debt” (22:48). Despite this, the overall debt-to-asset ratio remains near a multi-decade low, suggesting that many consumers are in a relatively stable financial position. Nevertheless, lower-income households, which hold fewer assets, are increasingly relying on credit cards, exacerbating economic disparities (23:30).

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Apple Picking and Agricultural Challenges in Colorado

Timestamp: 24:16 - 28:55

In a lighter yet economically relevant segment, Marketplace examines the booming demand for apple picking in Colorado amid tightening agricultural conditions caused by climate change.

• Henry Epp reports from Yaya Farm and Orchard in Longmont, Colorado, where the owner, Sharon Perdue, has implemented a reservation system due to overwhelming demand for apple picking, reflecting a shift in consumer leisure activities (25:16).

Colorado State University Ag Economist Dom Thilmany explains that urban development pressures are reducing available agricultural land, making it harder for apple farms to expand and meet demand (25:45). Additionally, the high-altitude locations of successful orchards like Yaya Farm provide a natural hedge against warmer temperatures, allowing for more reliable snow production and fruit harvesting (16:05).

The segment also touches on the operational challenges faced by small farms in managing the hospitality aspects of U-pick farms, which require different skill sets compared to traditional farming (26:30). The narrative concludes with a personal touch, showcasing families enjoying the apple picking experience despite the competitive nature of securing reservations.

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Conclusion

The "Shrinking Spread" episode of Marketplace offers a comprehensive look at diverse economic issues affecting Americans today. From the intricacies of bond markets and the decline of manufacturing jobs to the impacts of climate change on leisure industries and the uneven distribution of wealth, the episode underscores the interconnectedness of global events and personal economic realities. Through expert interviews and on-the-ground reporting, Kai Ryssdal provides listeners with nuanced insights into the evolving economic landscape.

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Note: Advertisements, introductory remarks, and non-content sections of the podcast have been excluded from this summary as per the outlined guidelines.

Transcript

[Justin Ho]

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[Kai Rysdal]

Info on the program. Today, bond yields retail and then we'll go Apple Picking From American Public Media, this is Marketplace in Los Angeles. I'm Kyle Rizal. It is Monday today, 16th December. Good as always to have you along everybody. The big calendar item this week, of course, amid various and sundry data releases, November retail sales and an update on inflation among them. The biggie is the Fed meeting tomorrow and Wednesday. Expectations are for another quarter percentage point cut, along with some wait and see language from Chair Powell. But even though the Fed has been cutting rates, something else entirely has been going on in the bond market. Over the past couple of months, yields on 10 year government bonds have been going up and corporate bond yields have been going up too. Marketplace adjustin ho gets us going with what that is telling us about where things might be going.

[Justin Ho]

Bond investors like to look at government bond yields and corporate bond yields and compare them. The difference in bond market speak is called a spread. For instance, if a 10 year government bond is offering 4% but a 10 year corporate bond's offering 5, the difference between those two is 1%. That would be your credit spread for that one bond. That's Guy Lebat, chief Fixed Income Strategist at Jennie Montgomery Scott. He says spreads exist because corporate bonds typically offer more interest. That's because they're seen as riskier. After all, companies don't have treasury departments that can just print money to pay off debt. They can try to earn more. Things go wrong from time to time. And so by nature, it has a bit more risk than the government. But in the last few months, corporate bond yields have been rising more slowly than government bond yields. Spreads have narrowed. Labas says that's a sign that companies aren't looking so risky. Profits have generally been solid this year, and many companies expect that to continue. Winnie Caesar, global head of strategy at the research company Credit sites, says investors also expect that the new Trump administration will help companies jack up profits even more. Investors are looking at the prospects of a looser regulatory environment, the potential for an extension of corporate tax breaks. Meanwhile, government bond yields have been rising in a faster clip because demand has slowed down. Cesar says that's a sign the economy is strong, which gives investors a reason to take on more risk. When investors are expecting that the economy is going to fare well, they're probably not buying Treasuries. In other words, the narrowing spread between government and corporate bond yields is a sign that investors are feeling pretty optimistic. I'm Justin Ho for Marketplace Wall Street.

[Kai Rysdal]

On this Monday, the yield on the ten year went up. The Nasdaq hit a record. The S and P almost the Dow and eight losing sessions in a row. If you are keeping track, which we are, details numbers when we get there. There is news of another troubled retailer abroad in the land. Bloomberg is reporting the Container Store is going to file for bankruptcy protection and join the 49 other retailers that have filed so far this year. That is almost double the number from last year. Upwards of 7,000 brick and mortar stores have closed across the country this year despite consumers continuing to spend, spend, spend. Marketplace's Kristen Schwab looked into what's going on.

[Justin Ho]

Tell me how many drugstores are in your town around where I live? I mean, you can walk from one Walgreens to the other seemingly all day. David Swartz in Chicago is a senior equity analyst at Morningstar. And he says Walgreens, CVS and Rite Aid have seen some of the highest store closure rates at retail this year because in general, the US has too much retail space. And that combined with the rise of online shopping, is forcing these retailers to downsize. There's also been the rise of inflation and everything that's come with it. John Mercer, head of global research at Coresight, says retailers like the Container Store that sell furniture or home improvement or anything related to buying a house are hurting.

[Kai Rysdal]

So that combination of kind of more.

[Justin Ho]

Muted discretionary spending, softer big ticket spending.

[Kai Rysdal]

Pressures from interest rates have really kind of compounded.

[Justin Ho]

And it's all happened during what Mark Cohen, former director of the Retail Studies program at Columbia, calls a Covid hangover. During the pandemic, many stores got a break on what is one of the most expensive parts of their business. Real estate.

[Kai Rysdal]

Lease adjustments, rent deferrals.

[Justin Ho]

They helped keep troubled retailers afloat. And now those accommodations are pretty much all gone. It means businesses that would have probably failed years ago are finally failing now. And commercial real estate owners, those landlords.

[Kai Rysdal]

Are eagerly looking for new tenants who are apparently signing up.

[Justin Ho]

It's all part of the churn of retail. Just instead of big lots and footlocker, we're getting more WAWA and Aldi. I'm Kristen Schwab for Marketplace.

[Kai Rysdal]

While it's not at all true, as you sometimes hear, that we don't make anything in this country anymore, it is very true that manufacturing in America just ain't what it used to be. In 1970, about a quarter of Americans had jobs in manufacturing. As of last year, less than 10% of all workers in this economy were employed in factories and the like. So what happened to all those people who lost their jobs when manufacturing fell off an employment cliff? Matt Notoadigdo is a professor of economics at the University of Chicago's Booth School, where he studies, among other things, the decline of manufacturing. Matt, thanks for coming on.

[Justin Ho]

Thanks for having me.

[Kai Rysdal]

With the acknowledgement that this is only a half hour program, what, broadly speaking, happened to American manufacturing in the last, like 50ish years?

[Justin Ho]

Just to set the table, thanks for. Thanks for the reminder that it's only half an hour. So I would say the broad consensus among labor economists is that the decline in manufacturing comes primarily from two main forces. The first is technological changes that have resulted in essentially the automation of work. You could think of manufacturing firms replacing workers with industrial robots, and that's been going on for several decades. And then the second main factor is what we call the China shock, which is just simply the sharp increase in Chinese imports started around the early 2000s when China entered the WTO. So think of these as being the two main push factors that led to the decline in the demand for manufacturing workers.

[Kai Rysdal]

Okay, so on that topic, manufacturing workers, which is why we're here, the bls, the Bureau of Labor Statistics, says, give or take, the American economy has lost seven and a half million manufacturing jobs. Since 1980. Here's my question.

[Justin Ho]

Why?

[Kai Rysdal]

Where did they go?

[Justin Ho]

Yeah, it's a good question. A lot of them sadly just left the labor market. So, you know, another fact to keep in mind is that the, the number of workers, the employment population ratio has been falling for many decades.

[Kai Rysdal]

Yeah, sorry, layman's. Layman's terms. Employment to population ratio, just for those unfamiliar.

[Justin Ho]

Sure thing. So the, the employment population ratio is the number of workers that are employed divided by the total population of workers who could be working.

[Kai Rysdal]

Right.

[Justin Ho]

And that ratio has gone down by several million over the last couple of decades, and a lot of that's coming from declining manufacturing.

[Kai Rysdal]

So what happened to these people? I mean, if they left, some of them left labor force, which I want to follow up on in a second. Some of them didn't, though. What kinds of jobs are they doing now?

[Justin Ho]

Well, when workers lose their job in manufacturing, as I said, a lot of them struggle to get back and finding another job. And if they really struggle to find another job, then they leave the labor force. They don't work. They go to early retirement. In some cases, they collect government benefits like Social Security disability insurance. For the workers that have higher levels of education, they tend to just find a way to move out of manufacturing and do something else.

[Kai Rysdal]

Like.

[Justin Ho]

Well, it's hard to say because we don't have great data tracking workers over time in panel data. In some of the research I've done, it looks like some of them took jobs in the sectors that were booming during the housing boom that people might remember. So remember in early 2000s, 2003, 2004, 2005, house prices were booming. Construction was going up a lot. Real estate jobs are going up a lot. It does look like those jobs provided an opportunity for manufacturing workers that had lost their jobs in the early 2000s.

[Kai Rysdal]

So it's been a while since this has been in sort of the ether out there. But there was a point in this economy, I'm going to say, like 10, 15 years ago, where there was a lot of talk about job retraining programs and government investment in that. Did that go anywhere? What happened to that?

[Justin Ho]

We've been trying job training for a really long time, and it's really hard. It's hard to come up with training programs that look effective when people are older. I think the bigger adjustment that's happened is for the workers that are entering the labor force, if they see all these changes that we're talking about, they can start college with a different mentality. They could go to college in the first place and try to do something else. That seems like that's been a much bigger factor than retraining, which we don't have a lot of successes to point to, unfortunately.

[Kai Rysdal]

Can I ask you about the towns and the people in the towns where these mostly men lost their jobs? Much has been made of the Rust Belt and hollowed out American cities and all that. What happened to the people in these towns, the families of these, again, I'm assuming mostly men who lost their jobs.

[Justin Ho]

Well, one of the sad consequences when you look at people's health outcomes when workers in manufacturing lose their jobs, suppose there's mass layoffs from like a plant closure. It looks quite bad for people's health. So mortality rates spike up. People in middle age end up being being more likely to die prematurely. You know, a kind of silver lining that I've seen in more recent research is that when you go and look at the younger generation of people who are observing what's happening around them, what we found is that in those areas that are most effective, you see people disproportionately increasing the likelihood they go to college. They decide to get a four year college degree rather than just entering the labor force with a high school education. And that turns out to offset some of the income declines that you might have otherwise observed because as long as the college education pays off, this is an investment, you know, that you're making for your lifetime that provides one way that you can try to adjust to the ongoing manufacturing decline.

[Kai Rysdal]

Well, we'll take the silver lining. Matt Notowed, Igdo at the Booth School at Chicago. Matt, thanks a lot. Appreciate your time.

[Justin Ho]

Thanks for having.

[Kai Rysdal]

The first big test for the ski industry is coming up. Christmas week is when most resorts get their first big rush of visitors. But weather sometimes has other plans. For big ski conglomerates like Vail Resorts, which own ski areas across the United States and in Europe and Australia, a lack of snow and or weather cold enough to make snow in one part of the world can be hedged by a good winter someplace else. For smaller independent resorts, though, spreading the risk like that just isn't an option. Instead, they've got to make snow, a lot of snow. But as the planet gets hotter, even that is becoming more challenging. As Marketplace's Henry Epp reports from northern.

[Justin Ho]

Vermont a few days before Thanksgiving, Mark Nelson had hoped to be making snow at Bolton Valley Resort. He's the independent ski area's snowmaking supervisor. But instead, hoses hooked up to air compressors are just blowing air out over the icy ground to Keep the system in working order in case the temperatures drop later in the day. We call it marginal. When the conditions are like this, that's marginal. Snowmaking at 30 degrees Fahrenheit this afternoon is just a bit too warm since the humidity is high. Nelson says he'd like to see the temperature drop to 26, though, in a couple spots. They've already covered trails with at least two feet of snow. That's a pretty good amount to start with, but we need, we need some more. So what's like, what's a good base layer that you're looking for? A couple of feet spread across the whole, you know, width of the trail and top to bottom, meaning there's a lot more work to do and not much time to do it. But as soon as it gets cold enough, Bolton is ready, says president Lindsay DeLaurier. Since her family bought the resort in 2017, she says, they've spent about a million dollars on their snowmaking system. Bought a lot of guns, more hoses, updated pumps, added compressors, which has been totally transformational, to be honest. Now the system can get up and running faster and pump out about twice as much snow as it used to, which is becoming essential because at least anecdotally, she says, the periods when temperatures are cold enough to make snow are getting shorter. We're getting these really short windows, and we really have to capitalize on it. According to a state climate report, Vermont's winters have warmed more than 3 degrees Fahrenheit over the past century, and the state has lost several weeks when temperatures fall below freezing. And across much of the US Winter is warming faster than other seasons are. But until recently, ski resorts could counteract that with snowmaking, says Daniel Scott, who's studied climate change and tourism at the University of Waterloo.

[Kai Rysdal]

From the 1980s to the 90s and the 90s to the 2000s, average ski season length across the US all the different regional markets was actually getting longer.

[Justin Ho]

But that's started to change. We've seen that shift so that the.

[Kai Rysdal]

Ski season lengths have stabilized or declined in most regional markets over the last few years.

[Justin Ho]

And those declines could get worse, especially for certain resorts. The truth is, the biggest fight you're fighting is probably altitude. Sean Kelly analyzes the ski industry for bank of America. If more urgent action isn't taken to cut climate warming emissions, he says, lower lying areas will face the biggest challenges. Lower elevation ski resorts, those are going to be more prone to either melting events or to rain events. And at some point it's just not going to be worth the sort of incremental investment. Lucky for Bolton Valley in Vermont, says president Lindsey Delorier. We have a very high base elevation and you know, we're in the northern part of the state. So. DeLaurier says they plan to invest more in snowmaking in the years ahead. But they're spreading out their risk by spending on summer attractions, too, adding mountain bike trails and a wedding venue. Still, the real moneymaker, she says, is winter, which means riding the season's inevitable roller coaster. We know that we're going to have some thaws. We know it's going to probably rain at some point in December or January and make us all cry. But you know, you kind of get used to it and you know, you just got to, you just got to weather through it and it'll turn around. It'll be all right. Usually it is. Despite its efforts, Bolton wasn't able to make enough snow to open for Thanksgiving. But then the weather started to cooperate. Temperatures dropped and they got some real snow, too. Enough to open the first weekend of December in Bolton, Vermont. I'm Henry Epp for Marketplace. Coming up, the first year we did it, we didn't get a spot. So now I make a reservation in January.

[Kai Rysdal]

Early bird gets the worm right. First though, let's do the numbers. Dow Industrials down 110 points a quarter percent. 43,717. The Nasdaq jumped 247 points. 1 and a quarter percent, a record high 20,173. The S&P 500 gained 22 points. 4. 10% ended things at 6,074. Big Tech, as I was saying, hit an all time high for a number of companies, which helped boost the tech heavy NASDAQ. Tesla accelerated 6 point today. Apple grew 1 and 2, 10%. Alphabet charged up 3.6% today. Kristen Schwab is telling us about tough times for some retailers. CVS Health dripped five and six tenths of one percent today. Walgreens Boots alliance subjected two percent. Foot locker rang up three and two tenths of one percent today. Bonds fell. Yield on the ten year t note up as I said, 4.40%. You're listening to Marketplace.

[Justin Ho]

This Marketplace podcast is supported by Gusto. Look, payday's awesome, but running payroll, calculating taxes and deductions, staying compliant, that's not easy. Unless of course, you have Gusto. Gusto is a simple online payroll and benefits tool built for small businesses like yours. Gusto gets your team paid while automatically filing your payroll taxes. Plus you can offer benefits like 401k health insurance and worker's comp just for listening Today. You also get three months free. Go to Gusto.com marketplace that's Gusto.com marketplace there 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 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. Hey grown ups. Need some holiday gift ideas for the curious kids in your life? Give them a SmartyPass subscription. It's a ticket to award winning podcasts for kids about science, history, debate and more. Smarty Pass was named one of the top gifts for kids this year by the New York Times Gift Guide. With access to shows like Brains on, smashboom, Best and Forever Ago, there's a little something for everyone. For just $45 a year, you get ad free episodes and exclusive bonus content. Head to smartypass.org to sign up. Your kids will thank you.

[Kai Rysdal]

This is Marketplace. I'm Kai Rysdal. Household Net Worth the sum and total of all assets owned by American households, minus their debts, is up. And it is up a lot. A new record high, in fact. That's according to the Federal reserve in the third quarter of this year, $4.8 trillion to the good to just shy of, in total $169 trillion. The caveat here is that the increase is coming primarily from stock market gains and rising home values, parts of this economy which, as we know, not everyone participates. And in fact, the increase doesn't seem to be cheering Americans a whole lot. Consumer sentiment is of course still pretty meh, but as Marketplace's Mitchell Hartman reports, it probably is helping us keep up the spending.

[Justin Ho]

There's a name for what happens when better off Americans see lots of plus signs show up in their brokerage accounts, and folks with 401 s see their balances going up and the cost of homes keeps rising. The wealth effect Eric Friedman at US bank explains, we have this gradual, consistent increase in both home prices as well as the stock market that's led to people spending more money and the cycle continues. These gains haven't exactly been evenly distributed. Take stocks for instance.

[Kai Rysdal]

Top 10% of wealth strata owns roughly.

[Justin Ho]

92% of all equities, so that's a very disproportionate gain. Still, evermore, Americans are getting a bit of a bump as the stock market rises, says Sam Stovall at CFRA Research. Stock ownership certainly is much more broad today than it was 20, 40 years ago because there are 401 s now. There is a risk here. Consumers could count on their paper profits on stocks and real estate, overspend and get into debt, says Thuan Nguyen at consulting firm rsm. It is true that credit card debt hit new record high in recent quarters, but so did household assets. Total income because of the labor market and the stock market, American's debt to assets ratio is now near a multi decade low. The lower the debt ratio, the better it is for American consumers to keep spending without having to worry about how they are able to afford it. Except lower income Americans with fewer assets are putting more on credit cards and falling further behind. I'm Mitchell Hartman for Marketplace.

[Kai Rysdal]

This is a busy time of year. The shopping, the travel, the decorating, the family time and the festivities. If you're in the Mountain west though, there is another thing you gotta find time for apple picking. Seriously. Not for now, but for next fall. KUNC's Ray Sullen has his story from Colorado, where the arid climate makes apple picking so competitive. It's just about time right now to make that orchard reservation for next September.

[Justin Ho]

Jay Williams is the orchard guide at Yaya Farm and Orchard on the outskirts of Longmont, Colorado, about 30 minutes north of Boulder. Down here we've got Golden Delicious and Honeycrisp, another Macintosh tree during the autumn rush. This is her day orienting visitors before releasing them to frolic among the trees. And she stays busy. Apple pickers come through in 15 minute intervals. Every single time slot is filled. This is where you'll be picking straight down.

[Kai Rysdal]

There's a variety of trees.

[Justin Ho]

This September morning she's welcoming three generations of the Dzubla cluster, three kids, parents and grandparents. Eight year old Gabe has grand ambitions. I'm gonna make an apple pie as the kids run from apple heavy tree to apple heavy tree. Their mom, Carly, confides that this picture of breezy autumnal wholesomeness took some serious type A planning. The first year we did it, we didn't get a spot. So now I make a reservation in January. January. Forget about Taylor Swift. When autumn comes to Colorado, the hottest tickets in town are at the local pick your own orchard. It's just demand versus supply. Yaya's owner Sharon Perdue says she had to start the reservation system years ago just to keep from being overrun. Each year, more and more people want to pick my apples. About 5,000 people tried to book a spot this autumn, Purdue says that's well more than twice as many as she can accommodate. But supply will always lag far behind demand simply because apple farming is a risky proposition in northern Colorado, where the summers are brutally hot and dry and the growing season notoriously short. If I have a crop that produces 50%, I consider it a success. Like it's not the best climate for apple trees. So why would you do that? Even if she wanted to keep up with the apple pickers, Purdue says it's not like new apple trees can suddenly hype up production. They plant a tree five to seven years till you get fruit. And according to Colorado State University ag economist Dom Thilmany, if opportunities for Colorado apple picking are slim, that's because opportunities for local orchards are disappearing. Most of the urban corridor farms, there's nowhere to expand to. So we're just losing agricultural land and it's got the highest development pressure near urban areas. Where exactly you'd put a U pick farm? Apple farmers can charge a premium for the U pick experience, but many shy away from the model. It comes with its own costs and liabilities, and Filmani says hospitality takes an entirely different skill set than farming. If you do it well, you really do have to manage crowds. Everybody wants to do the apple picking on the same four Saturdays in the fall when the weather's pretty. That certainly rings true for Mary Pacini up by the orchard parking lot. She is more like the rest of us. She did not book an apple picking outing eight full months in advance, but she showed up hoping for a cancellation and she's out of luck. I've tried the last three years and every time it's too late. It's already full. Meanwhile, the forward thinking Dzublas are soaking up the pretty weather. This morning. After about 20 minutes dashing about the orchard, 8 year old Gabe declares, mission accomplished. We're done with apple pickup. His sack is full of fruit. Fruit more than enough for that pie. Before they leave, one last autumn treat. This one from the farm stand. Now can we go get an apple donut? Yes, we can. Yay. You earn your donut. And almost as soon as that pie comes out of the oven, it'll be time to make next year's reservation. In Longmont, Colorado, I'm Rae Solomon for Marketplace.

[Kai Rysdal]

This final note on the way out today, another nod to the American consumer. I saw this on the Verge. The most popular app in the Apple Store this year. The App Store. Not TikTok, not ChatGPT. Temu, the oh so cheap online shopping app.

[Justin Ho]

Hmm.

[Kai Rysdal]

Our daily production team includes Andy Corbin, Nicholas Guillaume, Maria Hollenhorst, Sarah Leeson, Sean McHenry, and Sophia Terenzio. I'm Kyle Rysdal. We will see you tomorrow, everybody. This is apm. You turn to Marketplace for up to the minute news for stories that show you the connections between global events and your personal economy. And you're not alone. Marketplace is the most widely consumed business and economic news program in the country. We're proud to make fact based journalism freely accessible and Marketplace investors make it all possible. Your year end donation today will make a real difference in our nonprofit newsroom and in the lives of millions of Marketplace listeners every single day. So please contribute what you can [e-mail] donate.