Consumers Pull Back Spending, From Luxury Goods to Convenience Stores
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Vladimir Putin rejects a proposal for immediate ceasefire in Ukraine. Plus, a federal judge says the Trump administration must reinstate thousands of federal workers. And possible cuts to Medicaid put startups and their backers at a crossroads.
Investors will continue to show interest, but will be a little bit more circumspect about making new investments in this area.
It's Thursday, March 13th. I'm Alex Osola for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. Russian President Vladimir Putin said today that Russia wouldn't agree to an immediate end to the fighting in Ukraine as Moscow's army made rapid gains towards expelling Ukraine's forces from its Kursk region. He said that any pause in fighting at this point would be in Ukraine's interest and added that Russia wanted a truce that led, quote, to a lasting peace and the elimination of the root causes of the war, which he described as a crisis. Putin's comments were Moscow's first official response to a U.S.-backed proposal, which Ukraine agreed to this week, that would pause the war for 30 days.
The comments came as, according to U.S. officials, President Trump's special envoy Steve Witkoff was headed to Moscow to discuss the ceasefire proposal. President Trump announced another salvo in a fast-escalating trade war with the European Union, saying he would impose a 200% tariff on U.S. imports of wine, champagne, and other alcoholic beverages from the 27-nation bloc. In a post on his Truth Social platform today, Trump said the tariff threat came in response to the EU's decision to impose a 50% levy on American whiskey, itself a response to 25% steel and aluminum tariffs that Trump imposed this week. The tit-for-tat over alcoholic beverages, which push down shares in European drinks companies, could target more than $10 billion worth of European exports to the U.S., depending on how broadly Trump imposes tariffs. Meanwhile, Labor Department data out today showed that wholesale prices held steady last month.
But the department said that a data revision meant that prices charged by producers rose by more than initially estimated in January. The January increase was 0.6 percent, not the 0.4 percent previously estimated. The prices charged for eggs, however, jumped by more than 53 percent in February, fueling a 0.3 percent increase in prices charged for goods overall, balanced by a 0.2 percent decline in prices charged for services. To investors, the producer price figures are most important as data that feed into the Federal Reserve's preferred gauge of inflation, the Personal Consumption Expenditures Price Index. U.S. stocks slid today as investors remained on edge over new tariff threats and mixed signals on inflation.
The S&P 500 fell about 1.4 percent, entering correction territory as it fell more than 10 percent from its record high on February 19th. It's the index's first correction since October 2023. The Dow and the Nasdaq also closed lower, falling about 1.3 percent and 2 percent, respectively. Between a looming trade war, stubborn inflation, and recession fears, American consumers have had a lot to worry about this year. And it's affecting their spending, no matter their income level, and across necessities and luxuries all at once. Take low-income consumers. Recent comments from executives at Walmart, McDonald's, and Dollar General indicate that they're being careful about what they're spending, especially on things beyond essentials. Meanwhile, higher income shoppers have less discretionary spending to use at retailers like Kohl's. Macy's CEO said that affluent customers are just as uncertain and confused by what's happening.
And Costco, where customers pay a membership fee, said last week that demand has shifted towards lower cost proteins such as ground beef and poultry. Another place where budget tightening is playing out? Convenience stores, where consumers often pick up snack foods and cigarettes. According to market research firm Cercana, U.S.
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