The Indicator from Planet Money
Episode: Target, Klarna and Sesame Street's New Addy
Release Date: May 23, 2025
Hosts: Waylon Wong, Adrienne Ma
Guest: Sarah Gonzalez (Planet Money)

Introduction

In this engaging episode of The Indicator from Planet Money, hosts Waylon Wong and Adrienne Ma are joined by Sarah Gonzalez from Planet Money to delve into three significant economic indicators shaping today's landscape: Target's declining sales, the challenges faced by Buy Now, Pay Later (BNPL) services like Klarna, and the strategic move of Sesame Street to a new streaming platform.

Klarna and the Struggles of Buy Now, Pay Later (BNPL)

Sarah Gonzalez kicks off the discussion by highlighting a concerning financial indicator for Klarna, one of the leading BNPL companies.

Sarah Gonzalez [02:19]: "My indicator is 99 million. That is how much... Klarna lost in just the first three months of the year."

This substantial loss underscores the growing issues within the BNPL sector. Gonzalez draws parallels between BNPL and the traditional layaway program, emphasizing that while consumers are eager to purchase immediately, the repayment phase presents significant challenges.

Sarah Gonzalez [03:07]: "Buy now, pay later is like that except pig draw. You don't have to wait to get your... you can get the dress now and pay later, but it's having a little problem right now."

The core issue lies in the "paying part" of the equation. Klarna's financial woes are exacerbated by a surge in late payments and defaults, reflecting broader strains on consumers' financial health.

Sarah Gonzalez [03:34]: "People are not paying off those mini loans or they're paying late. And this may be a sign of the strain that consumers are feeling right now."

Interestingly, a significant portion of BNPL usage is not limited to discretionary spending. About a quarter of Klarna's customers are using these loans for essential groceries, indicating deeper economic pressures on households.

Sarah Gonzalez [04:03]: "A quarter of buy now pay later customers get these loans to pay for their groceries. And that is more than it was last year."

Target's Declining Sales: DEI, Tariffs, and Inflation

Adrienne Ma presents her economic indicator: Target's net sales have declined by 2.8% compared to the previous year.

Adrienne Ma [04:15]: "My indicator is minus 2.8%. So the retailer Target just announced its financials for the first quarter and the company reports its net sales are down 2.8% compared to a year ago."

Target attributes this downturn to three main factors, all of which have been prominent in recent news cycles:

1. Scaling Back DEI Initiatives:
   Target's CEO, Brian Cornell, announced in January a reduction in Diversity, Equity, and Inclusion (DEI) programs. This move has sparked backlash from civil rights activists and faith leaders, leading to consumer boycotts that have negatively impacted sales.

   Adrienne Ma [04:48]: "In January, Target's CEO Brian Cornell announced the company was scaling back its DEI initiatives."

   Waylon Wong [05:07]: "Some of them included goals for hiring more black employees and sourcing more of its products from black owned businesses."

2. Trade Wars and Tariffs:
   Approximately half of Target's merchandise is imported, with a significant portion coming from China. The uncertainty surrounding tariffs has forced Target to navigate complex decisions regarding vendor negotiations, inventory purchasing before tariff implementations, and potential price adjustments for consumers.

   Adrienne Ma [05:41]: "About half the stuff it sells is actually imported from other countries, and a large chunk of those imports come from China."

3. Declining Consumer Confidence Amid Inflation:
   The overarching economic climate, marked by rising inflation and fears of a recession, has dampened consumer spending. The University of Michigan’s Consumer Sentiment Index reflected this sentiment, hitting one of its lowest points.

   Sarah Gonzalez [06:28]: "Inflation. People feel like there's, like, a recession or inflation around the corner."

   Adrienne Ma [06:34]: "The University of Michigan's Consumer Sentiment index... hit 50.8 in May, which is the second lowest level on record."

Sesame Street's New Home on Netflix

Waylon Wong shifts the focus to the beloved children's program Sesame Street, announcing its upcoming 56th season on Netflix.

Waylon Wong [07:20]: "My indicator is 56, as in the upcoming 56th season of Sesame Street."

This move comes after challenges with previous streaming partners, notably HBO, where Sesame Street faced a potential future and financial constraints leading to staff layoffs.

Waylon Wong [07:34]: "Before the Netflix deal, this seemed like a real possibility...[Sesame Street] had been on HBO for the last decade... faced a big funding shortfall."

The new partnership with Netflix is poised to revitalize the program by providing access to over 300 million subscribers. Notably, new episodes will be available simultaneously on PBS and its online platforms, maintaining accessibility.

Waylon Wong [08:09]: "New episodes will be available the same day on PBS and then on PBS online platforms."

Additionally, Netflix plans to expand Sesame Street's reach through educational video games, aiming to blend entertainment with learning.

Adrienne Ma [09:20]: "Children's programming is huge for Netflix. It accounts for 15% of viewing... adding Sesame Street to the mix is maybe a way to encourage parents to keep subscribing."

Conclusion

The episode wraps up with light-hearted banter among the hosts, reflecting on the discussions and the interconnectedness of economic indicators with everyday life decisions, from shopping habits to beloved children's programming.

Notable Quotes with Timestamps:

• Sarah Gonzalez [02:19]: "My indicator is 99 million. That is how much one of the leading buy now, pay later companies Klarna lost in just the first three months of the year."

• Adrienne Ma [04:15]: "My indicator is minus 2.8%... Target reports its net sales are down 2.8% compared to a year ago."

• Waylon Wong [07:20]: "My indicator is 56, as in the upcoming 56th season of Sesame Street."

This episode effectively unpacks the complexities of consumer finance challenges, corporate strategies amidst social and economic pressures, and the ever-evolving landscape of media consumption, providing listeners with a comprehensive understanding of these pivotal issues.