Shrinking spread

Summary

Marketplace Podcast Episode Summary: "Shrinking Spread"

Release Date: December 17, 2024
Host: Kai Ryssdal
Podcast Description:
Every weekday, host Kai Ryssdal helps you make sense of the day’s business and economic news — no econ degree or finance background required. “Marketplace” takes you beyond the numbers, bringing you context. Our team of reporters all over the world speak with CEOs, policymakers, and regular people just trying to get by.

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1. Bond Yields and Market Optimism

The episode begins with a discussion on the recent trends in bond yields and what they signify for the economy.

• Justin Ho explains the concept of bond spreads, detailing the difference between government and corporate bond yields. For example, a 10-year government bond yielding 4% compared to a corporate bond at 5% results in a **1% credit spread (00:01:30).

• Guy Labas, Chief Fixed Income Strategist at Janney Montgomery Scott, points out that corporate bonds typically offer higher yields due to their increased risk compared to government bonds (00:01:50).

• Winnie Caesar, Global Head of Strategy at Credit Sites, adds that narrowing spreads indicate investor optimism about corporate profits, especially with expectations tied to the new Trump administration potentially boosting profits through a looser regulatory environment and extended corporate tax breaks (00:02:35).

• Justin Ho summarizes, stating that the narrowing spread suggests investors are optimistic about the economy's trajectory (00:03:01).

2. Struggles in the Retail Sector

The conversation shifts to the retail industry's challenges, highlighting a surge in store closures.

• Kyle Ryssdal notes that 49 retailers have filed for bankruptcy this year, nearly double last year's number, with over 7,000 brick-and-mortar stores closing despite continuous consumer spending (00:03:11).

• David Swartz, Senior Equity Analyst at Morningstar, discusses how giants like Walgreens, CVS, and Rite Aid are closing stores due to excessive retail space and the rise of online shopping, compounded by inflation (00:04:20).

• John Mercer from Coresight adds that retailers dealing in big-ticket items like furniture and home improvement are particularly affected (00:04:45).

• The episode delves into the aftermath of the pandemic, where temporary real estate accommodations helped many retailers survive, but their withdrawal has led to increased bankruptcies (00:05:10).

3. Decline of American Manufacturing

A significant portion of the episode is dedicated to the decline in American manufacturing and its socio-economic impacts.

• Matt Notowodigdo, Professor of Economics at the University of Chicago's Booth School, attributes the decline to technological automation and the China shock, which refers to the surge in Chinese imports post-China's entry into the WTO (00:06:18).

• The Bureau of Labor Statistics reports a loss of 7.5 million manufacturing jobs since 1980, with many workers exiting the labor force altogether due to challenges in finding new employment (00:07:59).

• Matt Notowodigdo explains that many former manufacturing workers either leave the workforce, retire early, or shift to other sectors like construction during booms, though retraining programs have seen limited success (00:09:27).

• The impact on communities is profound, with increased mortality rates among middle-aged workers facing layoffs and a notable increase in college enrollment among younger generations in affected areas as a coping mechanism (00:10:39).

4. Climate Change Challenges in the Ski Industry

The episode examines how climate change is adversely affecting the ski industry, particularly smaller independent resorts.

• Henry Epp reports from Vermont, highlighting how Bolton Valley Resort struggles with insufficient natural snow, necessitating extensive snowmaking efforts, which are becoming increasingly difficult due to rising temperatures (00:12:10).

• Lindsay DeLaurier, President of Bolton Valley, shares their investments in advanced snowmaking systems to mitigate the shorter windows of adequate weather, though challenges persist as Vermont's winters have warmed by over 3°F in the past century (00:14:01).

• Daniel Scott from the University of Waterloo emphasizes the vulnerability of lower elevation resorts to melting and rain events, suggesting that urgent climate action is necessary to sustain the industry (00:15:16).

• Despite advancements, Bolton Valley couldn't make enough snow for Thanksgiving but managed to open by early December as temperatures eventually dropped (00:16:09).

5. Stock Market Gains and Household Net Worth

The discussion transitions to the surge in household net worth driven by stock market gains and rising home values, alongside the disparities in wealth distribution.

• Kyle Ryssdal reports that household net worth reached a record high of nearly $169 trillion, primarily fueled by stock market and real estate appreciation (00:17:03).

• Guy Labas introduces the "Wealth Effect," where increases in stock and home values encourage higher consumer spending. However, this effect is uneven, benefiting predominantly the top 10%, who own approximately 92% of all equities (00:19:00).

• Sam Stovall from CFRA Research notes that while more Americans are investing in stocks through 401(k)s, the benefits are disproportionately skewed towards the wealthier strata (00:19:41).

• Thuan Nguyen from RSM warns of potential risks, such as consumers overspending based on paper profits, leading to increased debt (00:19:54). However, the overall debt-to-assets ratio remains near a multi-decade low, supporting continued consumer spending (00:20:08).

• Mitchell Hartman adds that although credit card debt is at a record high, it is offset by rising household assets and incomes, though lower-income Americans continue to accrue more debt as they lack substantial assets (00:20:33).

6. Competitive Apple Picking Season in Colorado

The episode concludes with a light-hearted segment on the skyrocketing demand for apple picking in Colorado amidst climatic challenges.

• Ray Sullen narrates the intense competition for apple picking reservations at Yaya Farm and Orchard in Longmont, Colorado, where demand far exceeds supply due to the region's arid climate and limited viable agricultural land (00:21:05).

• Sharon Perdue, owner of Yaya Farm, discusses the necessity of a reservation system to manage the overwhelming demand and the challenges of expanding production due to the time required for new apple trees to mature (00:23:00).

• Families like the Dzubla club exemplify the cherished traditions of apple picking despite the difficulties in securing spots, highlighting both the cultural significance and economic pressures on local orchards (00:24:05).

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Notable Quotes with Timestamps

• Justin Ho (00:02:35): "Investors also expect that the new Trump administration will help companies jack up profits even more."

• David Swartz (00:04:20): "Walgreens to the other seemingly all day."

• Matt Notowodigdo (00:07:05): "The decline in manufacturing comes primarily from technological changes and the China shock."

• Lindsay DeLaurier (00:14:01): "We've spent about a million dollars on our snowmaking system... it's becoming essential because... the windows are getting shorter."

• Guy Labas (00:19:00): "There's a name for what happens when better off Americans see lots of plus signs show up in their brokerage accounts... the Wealth Effect."

• Ray Sullen (00:23:53): "Most of the urban corridor farms, there's nowhere to expand to."

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Conclusion

The "Shrinking Spread" episode of Marketplace delves deep into the interconnected facets of the economy, from bond market optimism to the decline of manufacturing jobs, the resilience of the ski industry amidst climate change, and the growing disparities in household wealth. Additionally, it touches on cultural elements like the competitive apple picking season, illustrating the diverse challenges and adaptations within various sectors. Through insightful interviews and data-driven discussions, the episode paints a comprehensive picture of the current economic landscape and its multifaceted impacts on society.

Transcript

[Kyle Rysdal]

From all of us at Marketplace, we want to say Happy New Year and a special thank you to everybody who stepped up to donate and help us plan for the year ahead. The support of our Marketplace investors is so important to keeping our public service newsroom running strong. If you didn't have a chance to donate, it's never too late to support the news you rely on, you know, give [e-mail] donate and thanks 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 Riznol. 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 and 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's Justin 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.

[Guy Labas]

Between those two is 1%.

[Winnie Caesar]

That would be your credit spread for that one bond.

[Justin Ho]

That's Guy lebat, chief fixed income strategist at Janney 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.

[Kyle Rysdal]

They can try to earn more.

[Guy Labas]

Things go wrong from time to time.

[Winnie Caesar]

And so by nature, it has a.

[Kyle Rysdal]

Bit more risk than the government.

[Justin Ho]

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.

[David Swartz]

Investors are looking at the prospects of a looser regulatory environment, the potential for an extension of corporate tax breaks.

[Justin Ho]

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.

[David Swartz]

When investors are expecting that the economy is going to fare well, they're probably not buying Treasuries.

[Justin Ho]

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.

[Kyle Rysdal]

On this Monday, the yield on the ten year went up. The Nasdaq hit a record. The S and P almost the Dow 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. Bloomb 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.

[David Swartz]

Tell me how many drugstores are in your town around where I live?

[Matt Notowodigdo]

I mean, you can walk from one.

[Winnie Caesar]

Walgreens to the other seemingly all day.

[David Swartz]

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 in retail this year because in general, the US has too much retail space.

[Winnie Caesar]

And that combined with the rise of online shopping, is forcing these retailers to downsize.

[David Swartz]

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.

[Kyle Rysdal]

So that combination of kind of more muted discretionary spending, softer big ticket spending pressures from interest rates have really kind of compounded.

[David Swartz]

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.

[Kyle Rysdal]

Estate, lease adjustments, rent deferrals.

[David Swartz]

They helped keep troubled retailers afloat.

[Kyle Rysdal]

And now those accommodations are pretty much all gone.

[David Swartz]

It means businesses that would have probably failed years ago are finally failing now. And commercial real estate owners, those landlords.

[Kyle Rysdal]

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

[David Swartz]

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.

[Kyle 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.

[Matt Notowodigdo]

Thanks for having me.

[Kyle 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?

[Matt Notowodigdo]

Just to set the table, 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.

[Kyle 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. Where did they go?

[Matt Notowodigdo]

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 number of workers, the employment population ratio has been falling for many decades.

[Kyle Rysdal]

Yeah, sorry, layman's terms, employment population ratio, just for those unfamiliar.

[Matt Notowodigdo]

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

[Kyle Rysdal]

Right.

[Matt Notowodigdo]

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.

[Kyle Rysdal]

So what happened to these people? I mean, if they left, some of them left the 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?

[Matt Notowodigdo]

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.

[Kyle Rysdal]

Like.

[Matt Notowodigdo]

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.

[Kyle 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?

[Matt Notowodigdo]

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.

[Kyle 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.

[Matt Notowodigdo]

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 more likely to die prematurely. 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.

[Kyle Rysdal]

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

[Matt Notowodigdo]

Thanks for having.

[Kyle 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.

[Winnie Caesar]

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.

[Kyle Rysdal]

We call it marginal. When the conditions are like this, that's marginal.

[Winnie Caesar]

Snow making 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.

[Matt Notowodigdo]

That's a pretty good amount to start with, but we need, we need some more.

[Winnie Caesar]

So what's like, what's a good base.

[Matt Notowodigdo]

Layer that you're looking for?

[Kyle Rysdal]

A couple of feet spread across the.

[Matt Notowodigdo]

Whole, you know, width of the trail.

[Winnie Caesar]

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.

[Lindsay DeLaurier]

A lot of guns, more hoses, updated pumps, added compressors, which has been totally transformational, to be honest.

[Winnie Caesar]

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.

[Lindsay DeLaurier]

We're getting these really short windows, and we really have to capitalize on it.

[Winnie Caesar]

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.

[Kyle 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.

[Winnie Caesar]

But that's started to change.

[Kyle Rysdal]

We've seen that shift so that the ski season lengths have stabilized or declined in most regional markets over the last.

[Winnie Caesar]

Few years, and those declines could get worse, especially for certain resorts.

[Kyle Rysdal]

The truth is, the biggest fight you're fighting is probably altitude.

[Winnie Caesar]

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.

[Kyle Rysdal]

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.

[David Swartz]

Going to be worth the sort of incremental investment.

[Winnie Caesar]

Lucky for Bolton Valley in Vermont, says president Lindsey delorier, We have a very.

[Lindsay DeLaurier]

High base elevation and you know, we're in the northern part of the state.

[Winnie Caesar]

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 money maker, she says, is winter, which means riding the season's inevitable roller coaster.

[Lindsay DeLaurier]

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.

[Winnie Caesar]

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.

[Kyle Rysdal]

Coming up.

[Ray Sullen]

The first year we did it, we didn't get a spot. So now I make a reservation in January.

[Kyle 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. One 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. 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 1% today. Walgreens Boots alliance subjected 2%. Foot Locker rang up three and two tenths of 1% today. Bonds fell, yield on the 10 year T note up, as I said, 4.40%. You're listening to Marketplace. 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 $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.

[Guy Labas]

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 401ks see their balances going up and the cost of homes keeps rising. The wealth Effect, Eric Friedman at US bank explains.

[Kyle Rysdal]

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.

[Guy Labas]

These gains haven't exactly been evenly distributed. Take stocks for instance.

[Kyle Rysdal]

Top 10% of wealth strata owns roughly 92% of all equities so that's a very disproportionate gain.

[Guy Labas]

Still, evermore Americans are getting a bit of a bump as the stock market rises, says Sam Stovall at CFRA Research.

[Kyle Rysdal]

Stock ownership certainly is much more broad.

[Matt Notowodigdo]

Today than it was 20, 40 years.

[Guy Labas]

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.

[Ray Sullen]

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.

[Guy Labas]

Stock market, American's debt to assets ratio is now near a multi decade low.

[Ray Sullen]

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.

[Guy Labas]

Except lower income Americans with fewer assets are putting more on credit cards and falling further behind. I'm Mitchell Hartman for Marketplace.

[Kyle 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.

[Kristen Schwab]

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.

[Kyle Rysdal]

There's a variety of trees.

[Kristen Schwab]

This September morning she's welcoming three generations of the Dzubla club, three kids, parents and grandparents. Eight year old Gabe has grand ambitions. 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.

[Ray Sullen]

The first year we did it, we didn't get a spot. So now I make a reservation in January.

[Kristen Schwab]

January. Forget about Taylor Swift. When autumn comes to Colorado, the hottest tickets in town are at the local pick your own orchard.

[Ray Sullen]

It's just demand versus supply.

[Kristen Schwab]

Yaya's owner Sharon Perdue says she had to start the reservation system years ago just to keep from being overrun.

[Ray Sullen]

Each year, more and more people want to pick my apples.

[Kristen Schwab]

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.

[Ray Sullen]

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?

[Kristen Schwab]

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.

[Ray Sullen]

You plant a tree five to seven years till you get fruit.

[Kristen Schwab]

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.

[Ray Sullen]

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?

[Kristen Schwab]

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.

[Ray Sullen]

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.

[Kristen Schwab]

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.

[Ray Sullen]

I've tried the last three years and.

[Kristen Schwab]

Every time it's too late.

[Ray Sullen]

It's already full.

[Kristen Schwab]

Meanwhile, the forward thinking Dazublas are soaking up the pretty weather this morning. After about 20 minutes dashing about the orchard, 8 year old Gabe declares, mission accomplished.

[Kyle Rysdal]

We're done with apple pickup.

[Kristen Schwab]

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.

[Ray Sullen]

Now can we go get an apple donut?

[Kyle Rysdal]

Yes, we can.

[Kristen Schwab]

Yay.

[Ray Sullen]

You earn your donut.

[Kristen Schwab]

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 Ray Solomon for Marketplace.

[Kyle 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. Hmm. 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.