• From the New York Times:
"Americans’ income and spending both rose in April, a sign of economic resilience amid rising prices and warnings of a possible recession.
"Consumer spending increased 0.8 percent in April, the Commerce Department said Friday. The uptick followed a two-month slowdown in spending and exceeded forecasters’ expectations, as Americans shelled out for cars, restaurant meals, movie tickets and other goods and services.
"After-tax income rose 0.4 percent, fueled by a strong job market that continues to push up wages and bring more people into the work force. Data from the Labor Department this month showed that Americans in their prime working years were employed in April at the highest rate in more than two decades.
"Separate data released by the Commerce Department on Friday showed that a key measure of business investment also picked up in April, a sign that corporate executives aren’t expecting a major slump in demand in coming months.
"Consumers’ resilience is a mixed blessing for officials at the Federal Reserve, who worry that robust spending is contributing to inflation, but who also don’t want it to slow so rapidly that the economy falls into a recession. The gradual slowdown in spending seen in recent months is broadly consistent with the 'soft landing' scenario that policymakers are aiming for, but they have been wary of declaring victory too soon — a concern that April’s data, which showed persistent inflation alongside stronger spending, could underscore."
• From the Financial Times this morning:
"US retailers are warning of a surge in thefts, costing some of them hundreds of millions of dollars as they try to outwit organised criminals with extra security and surveillance.
"Target has alerted investors that 'shrink' — an industry term covering shoplifting, employee theft and organised retail crime — will cut its profits this year by $500mn more than in 2022.
"DIY retailers such as Home Depot and dollar stores including Dollar Tree said shrink had cut their gross margins by several basis points in the first quarter, while Foot Locker was among several retailers citing a 'significant' year-on-year increase.
"Retailers’ concerns about shoplifting grew through the economic and social upheavals of the pandemic, with the industry losing almost $100bn to shrink in 2021, according to the National Retail Federation. But the problem has worsened since then, say industry members, scarring employees and scaring off customers."
• The Washington Post today has a story about how Ahold Delhaize-owned Giant Food recently had to close one of the entrances to a store in Bowie, Maryland, a move that inconvenienced some customers but also created obstacles for potential shoplifters.
Ira Kress, president of Giant Food, tells the Post that he is determined not to close stores. "Giant Food — which has 165 supermarkets across D.C., Delaware, Maryland and Virginia — hasn’t closed any stores yet," the Post writes, and Kress said he’s taking certain actions, knowing they inconvenience shoppers, because 'the alternative is worse for customers.'
"'The last thing I want to do is close stores,' Kress added. 'But I’ve got to be able to run them safely and profitably'."
• From the New York Times this morning:
"The prices of oil, transportation, food ingredients and other raw materials have fallen in recent months as the shocks stemming from the pandemic and the war in Ukraine have faded. Yet many big businesses have continued raising prices at a rapid clip.
"Some of the world’s biggest companies have said they do not plan to change course and will continue increasing prices or keep them at elevated levels for the foreseeable future.
"That strategy has cushioned corporate profits. And it could keep inflation robust, contributing to the very pressures used to justify surging prices.
"As a result, some economists warn, policymakers at the Federal Reserve may feel compelled to keep raising interest rates, or at least not lower them, increasing the likelihood and severity of an economic downturn."
PepsiCo is identified in the piece as "a prime example of how large corporations have countered increased costs, and then some.
"Hugh Johnston, the company’s chief financial officer, said in February that PepsiCo had raised its prices by enough to buffer further cost pressures in 2023. At the end of April, the company reported that it had raised the average price across its products by 16 percent in the first three months of the year. That added to a similar size price increase in the fourth quarter of 2022 and increased its profit margin.
"'I don’t think our margins are going to deteriorate at all,' Mr. Johnston said in a recent interview with Bloomberg TV. 'In fact, what we’ve said for the year is we’ll be at least even with 2022, and may in fact increase margins during the course of the year.'
"The bags of Doritos, cartons of Tropicana orange juice and bottles of Gatorade drinks sold by PepsiCo are now substantially pricier. Customers have grumbled, but they have largely kept buying. Shareholders have cheered. PepsiCo declined to comment."
