Episode Summary: "Trump's Cuts Come for Food Banks"
The Indicator from Planet Money
Release Date: May 5, 2025

Introduction to the Episode

In this episode of The Indicator from Planet Money, NPR delves into the latest findings from the Federal Reserve's Beige Book, shedding light on the nuanced and often underreported aspects of the current U.S. economy. Hosted by Robert Smith and Waylon Wong, the episode titled "Trump's Cuts Come for Food Banks" explores the profound impacts of government funding cuts on essential social services, particularly food banks, amidst a backdrop of broader economic uncertainties.

The Beige Book Awards

Robert Smith [03:05]:

"Always good to remind everyone how this award show works. There are 12 regional banks in the Federal Reserve System, each one studies their local economy and brings back little stories of what they see. They publish them in the Beige Book. We give awards to the best stories."

The hosts introduce the concept of the Beige Book Awards, an initiative that recognizes outstanding entries from the Federal Reserve's 12 regional banks. These entries offer valuable insights into local economic conditions across the United States.

Highlights from the Beige Book: Freezes and Hiring

Waylon Wong [03:19]:

"Right. So in the last Beige Book, we noted that everyone was using the word uncertainty. And this time around, a new word caught our attention in the Beige Book. Freeze."

The Beige Book's latest edition prominently features the term "freeze," signaling a potential slowdown in economic activities. Businesses are increasingly adopting hiring freezes as a strategic response to maintain stable unemployment rates, despite the necessity for the economy to add 100 to 200,000 jobs monthly to sustain employment levels.

Robert Smith [03:29]:

"Yeah, like the proverbial deer in the headlights, multiple businesses talked about a hiring freeze. Which is better than layoffs. Yes, but in order to keep the unemployment rate stable, the US economy has to add 100 to 200,000 jobs a month. A freeze is definitely bad news."

Positive Indicators with Negative Underpinnings

While there are pockets of positive news, these often carry underlying negative implications. For instance:

Waylon Wong [03:47]:

"Yes, and even the good news parts of the Beige Book were still kind of bad news. For instance, we saw car dealerships reporting higher sales."

Robert Smith [03:55]:

"Good."

Waylon Wong [03:56]:

"From people who wanted to grab a new vehicle before tariffs made them unaffordable."

Robert Smith [04:01]:

"Not good."

The uptick in car sales is a double-edged sword; while positive on the surface, it reflects consumers' urgency to purchase before potential tariff-induced price hikes.

Similarly, increased business for law firms is tied to clients navigating complex policy changes, hinting at broader economic instability.

Waylon Wong [04:07]:

"Because they needed help navigating all the confusing policy changes coming out of D.C."

Robert Smith [04:13]:

"Oh, that's promising."

Runner-Up: Philadelphia Fed on Restaurants

Robert Smith [04:22]:

"For instance, I'd like to give a runner up award to a small entry from the Philadelphia Fed. You know those restaurant weeks where every restaurant in town offers some sort of deal?"

Waylon Wong [04:30]:

"Yeah, it's always like a prefix, right? Three courses for $17.76."

Robert Smith [04:34]:

"So patriotic. But unfortunately, this is the Philadelphia entry in the Beige Book. A significant number of restaurants chose not to participate in an annual Local Restaurant Week promotion because they couldn't afford to discount their menu items."

Waylon Wong [04:49]:

"Oh, yikes. It must mean they're operating right on the edge and we could all use a cheap meal right now."

This entry highlights the fragility of the restaurant industry, where financial constraints prevent participation in promotional activities, signaling deeper economic strains.

Winner: Kansas City Fed's Entries

Robert Smith [05:01]:

"And the winner of the Beige Award. The envelope, please. It's the Kansas City Fed."

The Kansas City Fed's entries stood out for their comprehensive analysis of price increases and the dire impacts of USDA funding cuts on food banks.

Price Increases Across Product Lines

Robert Smith [05:37]:

"We've been talking endlessly on the indicator about price increases from tariffs and which products would be the most impacted. But Jeremy Hill, you noted that some firms are talking about increasing prices across the board."

Robert Smith [05:37 - 06:08]:

"Quote: 'Contacts indicated passing rising costs to customers will occur over the next several months and anticipated goods prices will rise broadly as many suppliers are spreading cost increases across their entire product portfolios.'"

Stephen Howland [06:08]:

"Right. So when firms are thinking about this right now, they shared with us it's about revenue stabilization. We had that recently during COVID where they got taken off guard and demand shift between one product line to another one and they're still not certain how things will shake out. So when they looked at the risk, it is best to start increasing on all those product lines according to those firms."

This strategic approach aims to stabilize revenue by incrementally raising prices across all products, mitigating the risk of making any single item prohibitively expensive and ensuring a more predictable financial outcome.

USDA Funding Cuts Impact on Food Banks

Waylon Wong [06:59]:

"Funding cuts from the USDA were highlighted as particularly impactful regarding services for seniors. Specifically, one pantry reported cutting back the amount of food they can give from three to five days of shelf-stable food to two days of food every 30 days due to funding cuts."

Robert Smith [06:59 - 07:28]:

"Quote: 'Funding cuts from the USDA were highlighted as particularly impactful regarding services for seniors. Specifically, one pantry reported cutting back the amount of food they can give from three to five days of shelf stable food to two days of food every 30 days due to funding cuts.'"

Jeremy Hill [07:28]:

"Yeah, so the USDA cut about $500 million from food banks, and that substantially impacted the amount of food that food banks could provide to their pantries. So this particular food pantry was responding and trying to serve as many people."

Waylon Wong [08:02]:

"The Trump administration cut $1 billion from USDA programs that provide fresh food for school lunches and then also this money for food banks. They said the Biden levels of food assistance were unsustainable."

These significant budget cuts have forced food banks to drastically reduce their food distribution capabilities, affecting millions of pounds of available food and exacerbating food insecurity across multiple counties.

Interview Insights

Robert Smith [08:09]:

"We wanted to hear what food banks in the region were doing to respond. So we called up one that provides food to 27 counties in Missouri and Kansas."

Jeremy Hill [08:15 - 09:22]:

"Food is incredibly expensive. We all know that all the other costs have gone up. Rent, mortgages, health care costs. So your dollars are just not stretching as far. And often where people have to make sacrifices is on the food that they would purchase."

Waylon Wong [08:25]:

"Stephen from Harvesters said they have a lot of different ways of getting food to give away everything from cans donated by community members to deals with food manufacturers to use stuff that would have gotten thrown out. The USDA budget cut really hurts because this was money they could have spent on staple foods that might not get donated."

Robert Smith [09:02]:

"He estimates that this will mean they will lose out on 2.4 million pounds of food."

Jeremy Hill [09:08]:

"So you think about 2.4 million pounds of food. We distributed 61 million pounds of food last year, but that's a meaningful amount of the food that we distributed that we could use to serve families that all of a sudden just went away."

The interview with Stephen Davis, President and CEO of Harvesters, underscores the tangible human impact of these funding cuts. The reduction translates to millions of pounds less food available, forcing food banks to ration supplies and potentially leading to increased food insecurity among vulnerable populations.

Conclusion and Anticipation of Future Reports

Waylon Wong [09:30]:

"And as we saw in the Beige Book, that can mean essentially food rationing, giving out less food to families so they can serve more people."

Robert Smith [09:40]:

"Now, of course, Harvesters is going back to their donors and volunteers. They're hustling more extra food from manufacturers. But Steven says he doesn't know what will happen if the money doesn't come."

Waylon Wong [09:51]:

"Remember, it might be scary right now, but the unemployment rate in the US is still low. Who knows what the next Beige book will bring?"

Robert Smith [10:11]:

"I have it marked on my calendar in my phone. I'm not going to forget it this time. And I wanted to say congratulations to our two winners from the Kansas City Fed, Jeremy Hill and Stephen Howland. The next beige book is gonna be a crucial one."

As the episode wraps up, the hosts reflect on the precarious balance the economy currently holds. With unemployment rates remaining low but critical services like food banks under threat, the upcoming Beige Book release on June 4th is poised to provide further insights into the evolving economic landscape.

Notable Quotes

• Robert Smith [03:05]: "We give awards to the best stories."

• Waylon Wong [03:29]: "Freeze is definitely bad news."

• Stephen Howland [06:08]: "It is best to start increasing on all those product lines according to those firms."

• Jeremy Hill [07:28]: "So this particular food pantry was responding and trying to serve as many people."

• Waylon Wong [08:25]: "The USDA budget cut really hurts because this was money they could have spent on staple foods that might not get donated."

• Jeremy Hill [09:08]: "That's a meaningful amount of the food that we distributed that we could use to serve families that all of a sudden just went away."

Final Thoughts

This episode of The Indicator from Planet Money highlights the intricate interplay between federal policy decisions and grassroots economic realities. By focusing on the Kansas City Fed's insightful entries, the podcast underscores the critical vulnerabilities within the social safety net, particularly in times of fiscal austerity. Listeners are left with a compelling narrative of resilience and the urgent need for informed policy-making to support essential services.