Marketplace: Tupperware, Halloween Candy, Claw Machines — Oh My! Release Date: October 25, 2024

Economic Sentiment on the Rise Amid Political Tensions

Consumer Sentiment Reaches Six-Month High

In this episode of Marketplace, host Kristin Schwab delves into the latest economic data, highlighting a significant rise in consumer sentiment reported by the University of Michigan. Despite lingering economic concerns, consumer confidence has hit a six-month peak in October.

Gina Smylik, a reporter at The New York Times, explains, “Confidence really improved a lot among Republicans specifically. [...] People saw a better chance of unemployment staying low and stable and better expectations for income growth” (01:09). This improvement is attributed to a combination of political factors and positive labor market outlooks, indicating a "one, two punch" of enhanced job market perceptions and increased optimism among Republican consumers.

Sadeep Reddy from Politico adds context by linking the rise in sentiment to declining gasoline prices and overall lower inflation. “Gas prices are down from where they were a month ago. [...] It puts consumer spending on a stronger footing” (02:58). These factors collectively bolster consumer confidence despite the charged political climate as the nation approaches a crucial election and the next Federal Reserve meeting.

Federal Reserve's Next Moves and Economic Projections

Anticipation of Fed's Interest Rate Decision

The episode further explores the impending Federal Reserve meeting, with Gina Smylik providing insights into potential interest rate adjustments. “There’s widespread conviction that it makes sense to continue lowering interest rates. Inflation has come down a lot” (03:17). However, the exact magnitude and pace of future rate cuts remain uncertain, hinging on forthcoming economic data.

Sadeep Reddy emphasizes the Fed's cautious approach: “The economy is not really weakening and that's what they're looking for. [...] The Fed just needs to keep finding a way to just bring rates down slowly but not radically” (06:00). This strategy aims to normalize interest rates without triggering a significant downturn, maintaining economic stability.

IMF's Optimistic Economic Growth Projection

Adding to the positive economic outlook, the International Monetary Fund (IMF) has projected that the U.S. economy will outperform other advanced economies this year. Gina Smylik attributes this to robust American consumer spending and business investment. “We are seeing this virtuous cycle where everything's fueling itself that is not happening so much in some of our overseas counterparts” (06:16). In contrast, regions like the Eurozone face slower growth and rapidly declining inflation, highlighting the U.S.'s economic resilience.

Durable Goods Report: Mixed Signals Amid Industry Struggles

Decline in Durable Goods Orders

Marketplace examines the latest durable goods report from the Census Bureau, which indicates a slight decline in new orders for September, primarily due to a downturn in the transportation sector. Durable goods orders fell by 0.8% in September, mirroring August's performance (08:17). Excluding transportation, there was a modest increase of 0.4%.

Impact of Boeing's Labor Strikes

The persistent strike at Boeing has significantly influenced the transportation sector's performance. Kaylee Wells, a reporter for Marketplace, notes that “Boeing is two months into a strike and in a years-long struggle with quality control and faulty planes” (08:17). This strike has not only dragged down durable goods orders but also casts uncertainty over future industrial output.

Future Expectations and Market Responses

David Garfield, global head of industries for Alex Partners, advises caution despite the slight uptick in non-transportation sectors. “The uptick will be gradual” (09:12), anticipating that anticipated rate cuts and the upcoming election will bring more certainty, potentially leading to increased orders over time.

Small Businesses Spotlight: Crane Games Thrives in Colorado

Crane Games' Success Story

In the "My Economy" segment, Kristin Schwab profiles Leanne Tun, co-owner of Crane Games in Aurora, Colorado. Tun shares her journey of establishing a claw machine arcade inspired by her experiences in Asia. “It was overwhelming. We just couldn’t believe that we have gotten this far” (10:38). Despite logistical challenges, Crane Games has thrived, with recent expansions into Thornton, Colorado, slated for mid-December.

Community and Consumer Engagement

Tun emphasizes the community's positive reception: “You actually hear adults squealing inside our arcade. [...] Our hunch about the community's interest in this type of entertainment has been correct and so we're just thriving” (12:00). This success underscores the importance of innovative small businesses in driving local economies and meeting consumer demands.

Tupperware's Bankruptcy: Shifting Consumer Preferences and Sales Models

End of an Era for Tupperware Parties

Tupperware, once a staple in American households through its social selling model, has filed for bankruptcy after experiencing steep revenue declines. Stephanie Hughes explores the factors behind this downturn, noting a shift away from plastic products and changes in consumer shopping behaviors. “Tupperware was a pioneer in selling at social gatherings called Tupperware Parties, a business model that's been replicated by many other companies” (17:26).

Challenges in Adapting to Modern Shopping Trends

Neil Saunders, a retail analyst with Global Data, points out that “The Internet just changed all that” (18:09). While Tupperware has transitioned to online and in-store sales, nearly 90% of its sales previously relied on direct sellers. Additionally, the product lifespan of Tupperware items—lasting a decade or more—contrasts sharply with consumable goods like skincare and makeup, which require regular repurchasing.

Direct Selling Model Limitations

The reliance on direct selling also posed challenges. Lauren Biedelschmacker, a marketing professor at Babson College, notes that the model works best for passionate sellers rather than those relying on it as a primary income source. Legal issues, such as the lawsuit faced by clothing company Lularoe, further illustrate the vulnerabilities of the party plan business model.

Halloween Candy Trends: The Rise of Gummies Over Chocolates

Shifting Preferences Among Generations

With Halloween approaching, Marketplace examines evolving trends in candy preferences. Leanne Tun, contributing insights on candy trends, reveals a notable shift from traditional chocolates to gummies and sour candies, particularly among Gen Z and Millennials. “We're going to see less chocolate this year and probably next year, too” (22:29). Rising cocoa prices and increased consumer interest in diverse flavors drive this change.

Innovative and Seasonal Candy Offerings

Candy manufacturers are responding by diversifying their offerings. “There are more flavors, more varieties, more combination packs of candy than we may have seen in the last couple of years” (22:29). Examples include Twizzlers shaped like ghosts and specialized candy corn with autumn themes. These innovations cater to younger demographics while maintaining traditional favorites for older consumers.

Industry Adjustments to Rising Costs

Chocolate producers are also adapting to higher costs by introducing products that use less cocoa, such as more chocolate-coated items with added nuts. This strategy helps manage expenses while continuing to offer beloved sweets. “With certain, you know, snacky foods, if consumers really like them, they're still going to buy them” (24:55).

Labor Market Updates: Strikes Impacting Employment Metrics

Ongoing Strikes and Their Economic Impact

In the final segments, Sadeep Reddy highlights the latest Bureau of Labor Statistics report showing at least 44,000 workers on strike, with 33,000 of them being machinists at Boeing (26:05). These strikes are expected to influence the upcoming unemployment report, reflecting ongoing labor tensions in key industries.

Notable Quotes

• Gina Smylik: “Confidence really improved a lot among Republicans specifically. [...] People saw a better chance of unemployment staying low and stable and better expectations for income growth.” (01:09)

• Sadeep Reddy: “Gas prices are down from where they were a month ago. [...] It puts consumer spending on a stronger footing.” (02:58)

• Gina Smylik: “There’s widespread conviction that it makes sense to continue lowering interest rates. Inflation has come down a lot.” (03:17)

• Sadeep Reddy: “The economy is not really weakening and that's what they're looking for. [...] The Fed just needs to keep finding a way to just bring rates down slowly but not radically.” (06:00)

• Lauren Biedelschmacker: “If you're doing it as your livelihood to provide for your family, that could be problematic.” (19:35)

• Leanne Tun: “We're going to see less chocolate this year and probably next year, too.” (22:29)

• Sadeep Reddy: “The Fed is clearly trying to normalize interest rates. [...] Until then, the Fed just needs to keep finding a way to just bring rates down slowly but not radically.” (06:00)

Conclusion

This episode of Marketplace offers a comprehensive analysis of current economic trends, the struggles of legacy companies like Tupperware, and evolving consumer preferences, especially surrounding Halloween candy. Through insightful interviews and expert commentary, listeners gain a nuanced understanding of how political dynamics, market shifts, and consumer behavior intersect to shape the economic landscape.

Timestamp Guide:

• All timestamps are referenced in the summary to correlate with specific segments from the transcript.