WSJ What’s News - How U.S. Retailers Are Luring Back Customers With Discounts

Episode Date: October 11, 2024

P.M. Edition for Oct. 11. WSJ reporter Sarah Nassauer explains why retailers like IKEA and Nike are lowering prices now. And the Journal’s banking reporter Gina Heeb discusses JPMorgan Chase’s call that the U.S. economy has made a soft landing. Plus, a report alleges Donald Trump sent scarce Covid-19 testing equipment to the Kremlin at the height of the pandemic. Tracie Hunte hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Three, two, one. What will the world look like 10 or 20 years from now? The Wall Street Journal's Future of Everything podcast is here to give you a peek. And we can't wait to show you what's coming. Subscribe now. JP Morgan Chase says the U.S. economy has reached its long-sought-after soft landing. And why some companies are trying to lure back customers with discounts. We're in this cycle where inflation is cooling, right, and it's getting less intense. However, for most things that most of us need to buy, prices are still higher than they

were before the pandemic. Plus, a new report alleges Donald Trump sent COVID-19 testing equipment to Russia at the height of the pandemic. It's Friday, October 11th. I'm Tracy Hunt for The Wall Street Journal. This is a PM edition of What's News, the top headlines and business stories that move the world today.

You know that soft landing we've been hearing about? The one the Federal Reserve was trying to achieve for the economy? Well, JPMorgan Chase, the country's biggest bank, is calling it. The U.S. economy has made a soft landing. In its third quarter earnings report released today, JPMorgan said the U.S. economy remains strong for both consumers and big companies with lower inflation and healthy growth. Our banking reporter Gina Hebe joins us now.

Gina, why does JP Morgan believe we've reached this soft landing? So the Fed has been walking very fragile ground over the past few years. It sought to tame inflation through these really aggressive interest rate hikes, but the trick is they don't want to slow it too much and cause a recession. And the signals have been very mixed. JP Morgan, the largest bank in the country, reporting its results for the third quarter, which ended in September, they did not see any deterioration among consumers. despite these high rates and a couple years of inflation. We know that some consumers have come under pressure but there hasn't been really any deterioration and they're still spending

in a healthy manner and businesses remain confident. JP Morgan reported that it continued to earn more than expected on lending in the third quarter and raised forecasts for what it will earn this year. But was it all good news for the bank? No, there was definitely some caveats. To be clear, Chase said that all of these signs were consistent with a soft landing, but I think the jury is still out on whether we're out of the woods yet. We did see deposit balances at JP Morgan go down, and the bank also said that it expects some higher loan losses from credit cards.

This is a sign that consumers are expected to fall behind on loans. And then Wells Fargo also reported today, and they had a bit more cautious of an outlook on corporate America. They said that companies they work with have been hesitant to make big moves, like building inventory or carrying out capital expenditures. Overall, they did say that consumers and businesses are in solid shape

and there's no big alarm bells or anything, but they seem to be in more of a wait-and-see camp on where the economy will ultimately land. So what do they expect looking forward? So if JP Morgan is right and you know these signs are consistent with a soft landing, that means the economy is running at just the right temperature. It's not running too hot where you're getting really high prices and it's not slowing too much where you're getting a recession.

Gina Heap is a reporter for The Wall Street Journal. U.S. consumer confidence declined less than a month before the presidential election, an unexpected downturn after two months of gains. According to the University of Michigan's Index of Consumer Sentiment, consumer confidence declined to 68.9 in mid-October from 70.1 at the end of last month. And producer selling prices stayed flat in September, more evidence of cooling U.S. inflation. The producer price index was unchanged last month compared with August. In September, a 0.2% increase in producer services prices offset a 0.2% decline in goods prices.

The figures are a gauge of how much more companies are charging for their output. But one of the PPI's most important roles is as a data source for the Federal Reserve's preferred measure of overall inflation, the Personal Consumption Expenditure Price Index. The next update on PCE inflation is due on October 31st, a week before the Fed's next rate-setting meeting in early November. The strong earnings results from some of America's largest financial institutions drove the three main U.S. indexes higher. The Dow and the S&P 500 were up 1% and 0.6% respectively. The

DASDAQ gained 0.3%. All three posted weekly gains of more than 1%. Boeing will cut 10% of its global workforce, or roughly 17,000 jobs, and warned of deeper losses in its operations as a machinist strike compounds problems brewing at the jetmaker for years. Along with the job cuts, the manufacturing giant said it would further delay the launch of a new airplane, the 777X, that is already years behind schedule. It will also discontinue the 767 cargo plane. Coming up, some retailers are rolling back prices.

But are these discounts here to stay? That's after the break. There's one thing we know about the future. It's being built now. We all have a stake about the future. It's being built now. We all have a stake in the future. The future. The future. The future.

And the Wall Street Journal's Future of Everything podcast is here to give you a glimpse of what's on the way. I'm Danny Lewis. Join us as we dig into how science and technology are shaping the future. That is where you and I are going to spend the rest of our lives. Subscribe wherever you get your podcasts. Retailers, restaurants and other companies spent years raising prices. Now that consumers are closing their pocketbooks, some companies are turning to discounts to win back business.

Sarah Nassauer writes about large retailers through the Wall Street Journal, and she joins us now. Sarah, which companies have been rolling back their prices, and how are they doing it? We've seen lots of price decreases, you know, on an annual basis from lots of, I'd say, non-food sellers primarily. And so we see companies like IKEA, home furnishing sellers, Nike,

talking about the need to offer lower prices to keep sales growing. And why now? I mean, basically because a lot of folks globally have been paying more for lots of necessities like food and housing for years and years and years, and they're tapped out when it comes to buying home furnishings or fancy sneakers. And so if you're a company that's selling those things, you're going to need to be very price conscious to get people to buy. Is this a temporary move designed to just get customers back in their stores?

I don't know how temporary it is. It's certainly within the trend that we've seen the last few years. And to be clear, in some cases, prices are still much higher than they were, say, five years ago. You know, we're in this cycle where inflation is cooling, right, and it's getting less intense. However, for most things that most of us need to buy, prices are still higher than they were before the pandemic.

The prices going up for the wants and the needs really strain people for years, and then gradually saw prices for the wants and the needs really strained people for years and then gradually saw prices for the wants go down. But the needs, the food and the housing and the insurance and the childcare has stayed pretty elevated. And so that's why you're hearing companies really explicitly say, hey, we reduce prices by 10% like you heard from IKEA. They also want people to know that, right?

It's marketing as well. Do you think other companies will follow the lead of IKEA, Nike? I think lots of companies are heading in this direction if they need to, right? There's two things going on. One is some of the costs that they had to contend with in terms of the supply chain or raw materials over the last, say, four years, those costs have gone down in many cases. So their input costs are a little lower. And then they're dealing with this demand issue.

People just aren't going to spend as much on things they don't absolutely need because overall prices are still pretty high. That was Wall Street Journal reporter Sarah Nassar. Thanks, Sarah. Thanks for having me. Thanks, Sarah. Thanks for having me. The Trump administration sent scarce COVID-19 testing machines to the Kremlin during the height of the pandemic. That's according to a statement by Russian officials following revelations from journalist

Bob Woodward's upcoming book, War. Woodward reports that then President Donald Trump secretly sent Russian President Vladimir Putin some Abbott point-of-care COVID test machines for Putin's personal use. A Trump campaign spokesman said Woodward's account wasn't true. A Kremlin spokesperson told reporters that Russia sent ventilators to the U.S. in exchange for the COVID test. The Wall Street Journal has not independently verified the claims. Social media company X has dropped Unilever from its lawsuit against an advertising industry

coalition and large marketers. That's according to a court filing today. X sued the World Federation of Advertisers back in August, alleging that federation members, including Unilever, had conspired to withhold billions of ad dollars in order to force the platform to maintain certain safety standards. The filing said X had dismissed its claims against Unilever, but that it would continue to pursue its claims

against the other defendants. And finally, pajama-clad students are a familiar sight in American classrooms, but at least one school district in Georgia is officially cosigning the look. This year, a school committee for Whitfield County in Georgia voted in favor of adding PJ pants to the dress code after seeing both teachers and students wear them to school. Our style news reporter, Lane Floresheim, says that while at first some parents were taken aback by how many students were wearing pajama pants, it now seems parents and schools have just

become comfortable with it. I talked to a director of student services for a school district in Georgia and he said that there are just like other things that teachers and parents need to be focused on rather than like whether a kid is wearing pajama pants versus leggings or sweatpants or other loungewear that kids have been wearing for years. Like what difference does it really make? He also said, and it kind of made me laugh that he got no calls from parents since the school district added them to their dress code, that there was more feedback when they said shorts could be shorter. them to their dress code that there was more feedback when they said shorts could be shorter. Pajamas were also popular on TikTok this summer, where the hashtag

Pajamas saw a 13.6% jump from last summer. And that's what's news for this week. Tomorrow you can look out for our weekly markets wrap up What's News in Markets. Then on Sunday we'll be answering your questions about the U.S. fertility rate that has dropped to a historic low and has become a campaign issue in the presidential elections. That's in What's New Sunday. And we'll be back with our regular show on Monday morning. Today's show was produced by Pierre Bienneme and Anthony Bansi with supervising producer Michael Kosmides. Michael Laval wrote our theme music.

Aisha Al-Muslim is our development producer. Scott Salloway and Chris Dinsley are our deputy editors. And Falana Patterson is The Wall Street Journal's head of news audio. I'm Tracy Hunt. Thanks for listening.