WSJ What’s News: Grocers Try to Hold Prices Steady as Tariffs Threaten Produce
Release Date: March 14, 2025

1. Consumer Sentiment Hits Lowest Since 2022

The latest data reveals a significant drop in U.S. consumer sentiment, reaching its lowest level since November 2022. The University of Michigan's sentiment index fell 11% from 64.7 last month to 57.9 mid-March, marking a 27% decline compared to the previous year. This downturn was more pronounced than economists had anticipated.

Key Insights:

• Justin Lehart, WSJ Economics Reporter: "The expectations component of the University of Michigan sentiment index is really the most predictive when it comes to future spending, and we saw that expectations really deteriorated across the board. Even Republicans were feeling less cheery. It doesn't mean that people are going to stop spending just because they're feeling a little down. However, you do have to be a little bit more worried about consumer spending in the months ahead than you might have been before this number came out."
  (Timestamp: 01:26)

The decline in the expectations component, which dropped by 15%, is particularly concerning as it suggests potential reductions in future consumer spending, a critical driver of the economy.

2. Stock Market Reacts Amid Economic Uncertainty

Despite the dip in consumer sentiment, the stock market concluded a challenging week with notable gains. The Dow Jones Industrial Average increased by approximately 1.7%, the S&P 500 rose by about 2%, and the Nasdaq surged by 2.6%.

This positive market performance occurred as the threat of a government shutdown decreased, and investors navigated the complexities of uncertain economic indicators.

3. Tariffs Pose Challenges for Grocers

President Trump's shifting trade policies have introduced significant challenges for the grocery sector, particularly concerning tariffs on imported produce.

Impact on Produce:

• Patrick Thomas, WSJ Agriculture Reporter: Analyzed the effects of Trump's new tariffs, highlighting that fruits and vegetables are the most affected, especially those imported from Mexico and Canada. These perishable goods cannot be stored long-term, causing price increases to ripple quickly through the supply chain.

Grocers' Strategies to Mitigate Costs:

• Alex Osola: "If you think about the supermarket right now, they're balancing a lot of cost increases on certain commodities. One of the grocers that I talked to for the story talked about his 80/20 rule. For example, you price 80% of the wholesale increase and then eat the other 20%. So basically he's been doing this with eggs and what that does for him is his eggs look cheaper than store down the street. Maybe it's a big Kroger Albertson store, Whole Foods and might gain market share from them because the consumer is going to see that and maybe they'll think, wow, this is the low priced retailer. I'm going to keep coming back here."
  (Timestamp: 03:13)

This 80/20 pricing strategy helps grocers remain competitive by absorbing a portion of the increased costs, thereby avoiding significant price hikes for consumers.

Challenges in the Supply Chain:

• Alex Osola: "It's just a tough math for these guys and some of them took losses last week on this. And trying to figure out what to do with it has been really complicated for a lot of people in the supply chain."
  (Timestamp: 03:56)

Grocers are grappling with fluctuating tariffs, uncertain trade policies, and the immediate impact on perishable goods, making supply chain management increasingly complex.

4. Universities Navigate Trump Administration Policies

In response to the Trump administration's actions targeting higher education, universities across the nation are implementing various measures to safeguard their operations and funding.

Federal Actions:

• The administration canceled approximately $400 million in federal grants and contracts to Columbia University over anti-Semitism allegations.

University Responses:

• Sarah Randazzo, WSJ Education Reporter: "A lot of schools are preemptively doing hiring freezes... PhD students are also having some offers withdrawn because they just don't know if they can support those PhD students for the next five years. There was a letter that the Education Department put out that didn't have the force of law, but gave a kind of deadline at the end of February to get rid of a lot of DEI related things. So some schools were worried about that and didn't want to get in the crosshairs."
  (Timestamp: 06:55)

Universities are facing headwinds from directives to eliminate Diversity, Equity, and Inclusion (DEI) programs, potential cuts to research funding from the National Institutes of Health, and increased scrutiny over anti-Semitism. These challenges are prompting institutions to adopt measures such as hiring freezes and reevaluating their support for graduate students to mitigate financial uncertainties.

5. Government Funding and Political Developments

The Senate is poised to vote on a Republican-led measure to fund the government through September, aiming to prevent a shutdown. However, internal pressures persist:

• Chuck Schumer, Senate Minority Leader: Announced support for the bill to avoid a government shutdown, despite opposition from members of his own party.
• Potential Budget Cuts: Ongoing negotiations include possible reductions to Medicaid, a crucial program for low-income Americans, with broader implications for state budgets and healthcare services.

These developments underscore the intricate balance of political maneuvering required to maintain government operations amidst divergent party agendas.

6. Intel’s New CEO, Liam Bhutan, Outlines Vision

As Intel prepares for a leadership transition with Liam Bhutan taking the helm as the new CEO, expectations are high regarding his strategic direction for the tech giant.

Dan Gallagher, WSJ Tech Reporter: "His initial email to employees suggests he's going to keep going down the two tracks of trying to build out a manufacturing business that makes chips for other companies, as well as improving Intel's own products that they design, making those more competitive against AMD and Nvidia. So for the time, it looks like he's going to still do things the way they've been doing them, but I would expect there's going to be some major changes, possibly a lot of restructuring going on."
(Timestamp: 09:39)

Bhutan aims to enhance Intel’s manufacturing capabilities while boosting the competitiveness of its proprietary products. However, his prior departure from Intel's board due to frustrations over the company's pace and size hints at potential significant restructuring initiatives under his leadership.

7. University of Oregon’s Marathon Basketball Season

The University of Oregon’s basketball team, newly joined to the Big Ten Conference, has undertaken an extraordinary season of travel:

• Total Miles Traveled: 26,700 miles, equivalent to circling the Earth plus several thousand more miles.
• Performance: Despite the extensive travel, the Ducks boast the best record among Big Ten newcomers.

This remarkable feat highlights the dedication and resilience of the team amidst the logistical challenges of their expanded conference schedule.

8. Upcoming Content

Listeners can look forward to additional content in the coming days:

• Markets Wrap-Up: A comprehensive review of the week's market movements.
• What’s News in Markets: An in-depth analysis of market trends.
• What’s News Sunday: Featuring an interview with Palmer Luckey, founder of Anduril, on transforming government approaches to national security.

Production Credits: The episode was produced by Pierre Bienname and Anthony Bansi, with supervising producer Michael Kosmides. Theme music was composed by Michael Lavalle, and additional contributions were made by Aisha El Musleam, Scott Salloway, Chris Insinsley, and Falana Patterson.

Notable Quotes

• Justin Lehart: "The expectations component of the University of Michigan sentiment index is really the most predictive when it comes to future spending..."
  (Timestamp: 01:26)

• Alex Osola: "It's just a tough math for these guys and some of them took losses last week on this..."
  (Timestamp: 03:56)

• Sarah Randazzo: "A lot of schools are preemptively doing hiring freezes..."
  (Timestamp: 06:55)

• Dan Gallagher: "His initial email to employees suggests he's going to keep going down the two tracks..."
  (Timestamp: 09:39)

This comprehensive summary encapsulates the key discussions and insights from the episode, providing valuable information for those who have not listened to the podcast.